SECOND DIVISION

[G.R. No. L-28673. October 23, 1984.]

SAMAR MINING COMPANY, INC., plaintiff-

appellee, vs. NORDEUTSCHER LLOYD and C.F. SHARP &
COMPANY, INC., defendants-appellants.

P. de Ocampo for plaintiff-appellee.

Ross Salcedo for defendants-appellants.

SYLLABUS

1. COMMERCIAL LAW; COMMON CARRIERS; BILL OF LADING;

BILL OF LADING IS RECEIPT FOR GOODS AND A CONTRACT BETWEEN
THE PARTIES. — A bill of lading operates both as a receipt for the goods,
and more importantly, as a contract to transport and deliver the same as
stipulated therein. Being a contract, it is the law between the parties thereto,
who are bound by its terms and conditions provided that these are not
contrary to law, morals, good customs, public order and public policy.
2. ID.; ID.; ID.; ID.; CASE AT BAR. — Bill of Lading No. 18 sets forth in
page 2 thereof that one (1) crate of Optima welded wedge wire sieves was
received by the carrier NORDEUTSCHER LLOYD at the "port of loading"
which is Bremen, Germany, while the freight had been prepaid, up to the port
of destination or the "port of discharge of goods," in this case, Davao, the
carrier undertook to transport the goods in its vessel, M/S
SCHWABENSTEIN, only up to the "port of discharge from ship" — Manila.
Thereafter, the goods were to be transshipped by the carrier to the port of
destination or "port of discharge of goods." The stipulation is plainly indicated
on the face of the bill which contains the following phrase printed below the
space provided for the "port of discharge from ship," thus: "if goods are to be
transshipped at port of discharge, show destination under the column for
'description of contents.'" As instructed above, the following words appeared
typewritten under the column for "description of contents:" "PORT OF
DISCHARGE OF GOODS: DAVAO FREIGHT PREPAID." It is clear, then,
that in discharging the goods from the ship at the port of Manila, and
delivering the same into the custody of AMCYL, the bonded warehouse,
appellants were acting in full accord with the contractual stipulations
contained in Bill of Lading No. 18. The delivery of the goods to AMCYL was
part of appellants' duty to transship the goods from Manila to their port of
destination — Davao. The word "transship" means: "to transfer for further
transportation from one ship or conveyance to another."
3. ID.; ID.; ID.; ID.; VALIDITY OF STIPULATIONS IN BILL OF LADING
EXEMPTING CARRIER FROM LIABILITY UPHELD. — The extent of
appellant carrier's responsibility and/or liability in the transshipment of the
goods in question are spelled out and delineated under Section 1, paragraph
3 of Bill of Lading No. 18; and in Section 11 of the same Bill. Defendants-
appellants now shirk liability for the loss of the subject goods by claiming that
they have discharged the same in full and good condition unto the custody of
AMCYL at the port of discharge from ship-Manila, and therefore, pursuant to
the stipulation (Sec. 11) in the bill of lading, their responsibility for the cargo
had ceased. We find merit in appellant's stand. The validity of stipulation in bill
of lading exempting the carrier from liability for loss or damage to the goods
when the same are not in its actual custody has been upheld by Us in
PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA
674 (1968). Said case matches the present controversy not only as to the
material facts but more importantly, as to the stipulations contained in the bill
of lading concerned. As if to underline their awesome likeness, the goods in
question in both cases were destined for Davao, but were discharged from
ship in Manila, in accordance with their respective bills of lading. Finding the
stipulations not contrary to law, morals, good customs, public order or public
policy, We sustained their validity. Applying said stipulations as the law
between the parties in the aforecited case, the Court concluded that: ". . . The
short form bill of lading ( )states in no uncertain terms that the port of
discharge of the cargo is Manila, but that the same was to be transshipped
beyond the port of discharge to Davao City. Pursuant to the terms of the long
form Bill of Lading ( ), appellee's responsibility as a common carrier ceased
the moment the goods were unloaded in Manila; and in the matter of
transshipment, appellee acted merely as an agent of the shipper and
consignee. . . . " (Italics supplied)
4. ID.; ID.; LIABILITY OF COMMON CARRIERS; LAWS APPLICABLE
THEREON. — The liability of the common carrier for the loss, destruction or
deterioration of goods transported from a foreign country to the Philippines is
governed primarily by the New Civil Code. In all matters not regulated by said
Code, the rights and obligations of common carriers shall be governed by the
Code of Commerce and by special laws.
5. ID.; ID.; ID.; LIABILITY OF COMMON CARRIER IN CASE AT BAR
GOVERNED BY ART. 1736 IN CASE AT BAR. — Article 1736 is applicable to
the instant suit. Under said article, the carrier may be relieved of the
responsibility for loss or damage to the goods upon actual or constructive
delivery of the same by the carrier to the consignee, or to the person who has
a right to receive them. In sales, actual delivery has been defined as the
ceding of corporeal possession by the seller, and the actual apprehension of
corporal possession by the buyer or by some person authorized by him to
receive the goods as his representative for the purpose of custody or
disposal. By the same token, there is actual delivery in contracts for the
transport of goods when possession has been turned over to the consignee or
to his duly authorized agent and a reasonable time is given him to remove the
goods. The court a quo found that there was actual delivery to the consignee
through its duly authorized agent, the carrier. It becomes necessary at this
point to dissect the complex relationship that had developed between
appellant and appellee in the course of the transactions that gave birth to the
present suit. Two undertakings appeared embodied and/or provided for in the
Bill of Lading in question. The first is FOR THE TRANSPORT OF GOODS
from Bremen, Germany to Manila. The second, THE TRANSSHIPMENT OF
THE SAME GOODS from Manila to DAVAO, with appellant acting as agent of
the consignee. At the hiatus between these two undertakings of appellant
which is the moment when the subject goods are discharged in Manila, its
personality changes from that of carrier to that of agent of the consignee.
Thus, the character of appellant's possession also changes, from possession
in its own name as carrier, into possession in the name of consignee as the
latter's agent. Such being the case, there was, in effect, actual delivery of the
goods from appellant as carrier to the same appellant as agent of the
consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to
be responsible for any loss or damage that may befall the goods from that
point onwards. This is the full import of Article 1736, as applied to the case
before Us.
6. ID.; ID.; ID.; ID.; APPELLANT IN CASE AT BAR NOT LIABLE EVEN
AS AGENT OF THE CONSIGNEE UNDER THE CIVIL CODE. — Even as
agent of the consignee, the appellant cannot be made answerable for the
value of the missing goods. It is true that the transshipment of the goods,
which was the object of the agency, was not fully performed. However,
appellant had commenced said performance, the completion of which was
aborted by circumstances beyond its control. An agent who carries out the
orders and instructions of the principal without being guilty of negligence,
deceit or fraud, cannot be held responsible for the failure of the principal to
accomplish the object of the agency. This can be gleaned from the provisions
of Arts. 1884, 1889, 1892 and 1909 of the New Civil Code on the obligations
of the agent. The records fail to reveal proof of negligence, deceit or fraud
committed by appellant or by its representative in the Philippines. Neither is
there any showing of notorious incompetence or insolvency on the part of
AMCYL which acted as appellant's substitute in storing the goods awaiting
transshipment.
 DECISION

CUEVAS, J  :p

This is an appeal taken directly to Us on certiorari from the decision of

the defunct Court of First Instance of Manila, finding defendants carrier and
agent, liable for the value of goods never delivered to plaintiff consignee. The
issue raised is a pure question of law, which is, the liability of the defendants,
now appellants, under the bill of lading covering the subject shipment.
The case arose from an importation made by plaintiff, now appellee,
SAMAR MINING COMPANY, INC., of one (1) crate Optima welded wedge
wire sieves through the M/S SCHWABENSTEIN, a vessel owned by
defendant-appellant NORDEUTSCHER LLOYD, (represented in the
Philippines by its agent, C.F. SHARP & CO., INC.), which shipment is covered
by Bill of Lading No. 18 duly issued to consignee SAMAR MINING
COMPANY, INC. Upon arrival of the aforesaid vessel at the port of Manila,
the aforementioned importation was unloaded and delivered in good order
and condition to the bonded warehouse of AMCYL. 1 The goods were
however never delivered to, nor received by, the consignee at the port of
destination — Davao.
When the letters of complaint sent to defendants failed to elicit the
desired response, consignee herein appellee, filed a formal claim for
P1,691.93, the equivalent of $424.00 at the prevailing rate of exchange at that
time, against the former, but neither paid. Hence, the filing of the instant suit
to enforce payment. Defendants-appellants brought in AMCYL as third party
defendant.
The trial court rendered judgment in favor of plaintiff, ordering
defendants to pay the amount of P1,691.93 plus attorney's fees and costs.
However, the Court stated that defendants may recoup whatever they may
pay plaintiff by enforcing the judgment against third party defendant AMCYL
which had earlier been declared in default. Only the defendants appealed
from said decision.
 
The issue at hand demands a close scrutiny of Bill of Lading No. 18 and
its various clauses and stipulations which should be examined in the light of
pertinent legal provisions and settled jurisprudence. This undertaking is not
only proper but necessary as well because of the nature of the bill of lading
which operates both as a receipt for the goods; and more importantly, as a
contract to transport and deliver the same as stipulated therein. 2 Being a
contract, it is the law between the parties thereto, 3 who are bound by its
terms and conditions 5
Bill of Lading No. 18 sets forth in page 2 thereof 6 that one (1) crate of
Optima welded wedge wire sieves was received by the carrier
NORDEUTSCHER LLOYD at the "port of loading" which is Bremen,
Germany, while the freight had been prepaid up to the port of destination or
the "port of discharge of goods", in this case, Davao, the carrier undertook to
transport the goods in its vessel, M/S SCHWABENSTEIN, only up to the "port
of discharge from ship" — Manila. Thereafter, the goods were to be
transshipped by the carrier to the port of destination or "port of discharge of
goods". The stipulation is plainly indicated on the face of the bill which
contains the following phrase printed below the space provided for the "port of
discharge from ship", thus:
"if goods are to be transshipped at port of discharge, show destination
under the column for `description of contents'" 7
As instructed above, the following words appeared typewritten under
the column for "description of contents":
"PORT OF DISCHARGE OF GOODS: DAVAO
FREIGHT PREPAID" 8
It is clear, then, that in discharging the goods from the ship at the port of
Manila, and delivering the same into the custody of AMCYL, the bonded
warehouse, appellants were acting in full accord with the contractual
stipulations contained in Bill of Lading No. 18. The delivery of the goods to
AMCYL was part of appellants' duty to transship the goods from Manila to
their port of destination — Davao. The word "transship" means:
"to transfer for further transportation from one ship or conveyance
to another" 9
The extent of appellant carrier's responsibility and/or liability in the
transshipment of the goods in question are spelled out and delineated under
Section 1, paragraph 3 of Bill of Lading No. 18, to wit:  cdphil

"The carrier shall not be liable in any capacity whatsoever for any

delay, loss or damage occurring before the goods enter ship's tackle to
be loaded or after the goods leave ship's tackle to be discharged,
transshipped or forwarded . . . . " (Emphasis supplied)
and in Section 11 of the same Bill, which provides:
"Wherever the carrier or master may deem it advisable or in any
case where the goods are placed at carrier's disposal at or consigned to
a point where the ship does not expect to load or discharge, the carrier
or master may, without notice, forward the whole or any part of the
goods before or after loading at the original port of shipment, . . . This
 carrier, in making arrangements for any transshipping or forwarding
vessels or means of transportation not operated by this carrier shall
be considered solely the forwarding agent of the shipper and without any
other responsibility whatsoever even though the freight for the whole
transport has been collected by him. . . . Pending or during forwarding or
transshipping the carrier may store the goods ashore or afloat solely as
agent of the shipper and at risk and expense of the goods and the carrier
shall not be liable for detention nor responsible for the acts, neglect,
delay or failure to act of anyone to whom the goods are entrusted or
delivered for storage, handling or any service incidental thereto"
(Emphasis supplied) 10
Defendants-appellants now shirk liability for the loss of the subject
goods by claiming that they have discharged the same in full and good
condition unto the custody of AMCYL at the port of discharge from ship —
Manila, and therefore, pursuant to the aforequoted stipulation (Sec. 11) in the
bill of lading, their responsibility for the cargo had ceased. 11
We find merit in appellants' stand. The validity of stipulations in bills of
lading exempting the carrier from liability for loss or damage to the goods
when the same are not in its actual custody has been upheld by Us in
PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA
674 (1968). Said case matches the present controversy not only as to the
material facts but more importantly, as to the stipulations contained in the bill
of lading concerned. As if to underline their awesome likeness, the goods in
question in both cases were destined for Davao, but were discharged from
ship in Manila, in accordance with their respective bills of lading.
The stipulations in the bill of lading in the PHOENIX case which are
substantially the same as the subject stipulations before Us, provides:
"The carrier shall not be liable in any capacity whatsoever for any
loss or damage to the goods while the goods are not in its actual
custody. (Par. 2, last subpar.)
xxx xxx xxx
The carrier or master, in making arrangements with any person
for or in connection with all transshipping or forwarding of the goods or
the use of any means of transportation or forwarding of goods not used
or operated by the carrier, shall be considered solely the agent of the
shipper and consignee and without any other responsibility whatsoever
or for the cost thereof . . . (Par. 16)." 12
Finding the above stipulations not contrary to law, morals, good
customs, public order or public policy, We sustained their validity. 13 Applying
said stipulations as the law between the parties in the aforecited case, the
Court concluded that:
 ". . . The short form Bill of Lading ( ) states in no uncertain terms
that the port of discharge of the cargo is Manila, but that the same was
to be transshipped beyond the port of discharge to Davao City. Pursuant
to the terms of the long form Bill of Lading ( ), appellee's responsibility
as a common carrier ceased the moment the goods were unloaded in
Manila; and in the matter of transshipment, appellee acted merely as an
agent of the shipper and consignee. . . . . " (Emphasis supplied) 14
Coming now to the case before Us, We hold, that by the authority of the
above pronouncements, and in conformity with the pertinent provisions of the
New Civil Code, Section 11 of Bill of Lading No. 18 and the third paragraph of
Section 1 thereof are valid stipulations between the parties insofar as they
exempt the carrier from liability for loss or damage to the goods while the
same are not in the latter's actual custody.
The liability of the common carrier for the loss, destruction or
deterioration of goods transported from a foreign country to the Philippines is
governed primarily by the New Civil Coded. 15 In all matters not regulated by
said Code, the rights and obligations of common carriers shall be governed by
the Code of Commerce and by special laws. 16 A careful perusal of the
provisions of the New Civil Code on common carriers (Section 4, Title VIII,
Book IV) directs our attention to Article 1736 thereof, which reads:  LibLex

"Article 1736. The extraordinary responsibility of the common

carrier lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them, without
prejudice to the provisions of article 1738."
Article 1738 referred to in the foregoing provision runs thus:
"Article 1738. The extraordinary liability of the common carrier
continues to be operative even during the time the goods are stored in a
warehouse of the carrier at the place of destination, until the consignee
has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of them."
There is no doubt that Art. 1738 finds no applicability to the instant case. The
said article contemplates a situation where the goods had already reached
their place of destination and are stored in the warehouse of the carrier. The
subject goods were still awaiting transshipment to their port of destination,
and were stored in the warehouse of a third party when last seen and/or
heard of. However, Article 1736 is applicable to the instant suit. Under said
article, the carrier may be relieved of the responsibility for loss or damage to
the goods upon actual or constructive delivery of the same by the carrier to
the consignee, or to the person who has a right to receive them. In sales,
actual delivery has been defined as the ceding of corporeal possession by the
seller, and the actual apprehension of corporeal possession by the buyer or
by some person authorized by him to receive the goods as his representative
for the purpose of custody or disposal. 17 By the same token, there is actual
delivery in contracts for the transport of goods when possession has been
turned over to the consignee or to his duly authorized agent and a reasonable
time is given him to remove the goods. 18 The court a quo found that there
was actual delivery to the consignee through its duly authorized agent, the
carrier.
It becomes necessary at this point to dissect the complex relationship
that had developed between appellant and appellee in the course of the
transactions that gave birth to the present suit. Two undertakings appeared
embodied and/or provided for in the Bill of Lading 19 in question. The first is
FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila. The
second, THE TRANSSHIPMENT OF THE SAME GOODS from Manila to
Davao, with appellant acting as agent of the consignee. 20 At the hiatus
between these two undertakings of appellant which is the moment when the
subject goods are discharged in Manila, its personality changes from that of
carrier to that of agent of the consignee. Thus, the character of appellant's
possession also changes, from possession in its own name as carrier, into
possession in the name of consignee as the latter's agent. Such being the
case, there was, in effect, actual delivery of the goods from appellant as
carrier to the same appellant as agent of the consignee. Upon such delivery,
the appellant, as erstwhile carrier, ceases to be responsible for any loss or
damage that may befall the goods from that point onwards. This is the full
import of Article 1736, as applied to the case before Us.
But even as agent of the consignee, the appellant cannot be made
answerable for the value of the missing goods. It is true that the
transshipment of the goods, which was the object of the agency, was not fully
performed. However, appellant had commenced said performance, the
completion of which was aborted by circumstances beyond its control. An
agent who carries out the orders and instructions of the principal without being
guilty of negligence, deceit or fraud, cannot be held responsible for the failure
of the principal to accomplish the object of the agency, 21 This can be gleaned
from the following provisions of the New Civil Code on the obligations of the
agent:
"Article 1884. The agent is bound by his acceptance to carry out
the agency, and is liable for the damages which, through his non-
performance, the principal may suffer.
xxx xxx xxx
 Article 1889. The agent shall be liable for damages if, there being
a conflict between his interests and those of the principal, he should
prefer his own.
Article 1892. The agent may appoint a substitute if the principal
has not prohibited him from doing so; but he shall be responsible for the
acts of the substitute:
(1) When he was not given the power to appoint one;
(2) When he was given such power but without designating the
person and the person appointed was notoriously incompetent or
insolvent.
xxx xxx xxx
Article 1909. The agent is responsible not only for fraud, but also
for negligence which shall be judged with more or less rigor by the
courts, according to whether the agency was or was not for a
compensation."
The records fail to reveal proof of negligence, deceit or fraud committed by
appellant or by its representative in the Philippines. Neither is there any
showing of notorious incompetence or insolvency on the part of AMCYL which
acted as appellant's substitute in storing the goods awaiting transshipment.  LLphil

The actions of appellant carrier and of its representative in the

Philippines being in full faith with the lawful stipulations of Bill of Lading No. 18
and in conformity with the provisions of the New Civil Code on common
carriers, agency and contracts, they incur no liability for the loss of the goods
in question.
WHEREFORE, the appealed decision is hereby REVERSED. Plaintiff-
appellee's complaint is hereby DISMISSED.
No costs.
SO ORDERED.
Makasiar, Guerrero, Abad Santos and Escolin, JJ ., concur.
Aquino, J ., concurs in the result as to defendants. AMCYL is liable.
Concepcion, Jr., J ., took no part.
 (Samar Mining Co., Inc. v. Lloyd, G.R. No. L-28673, [October 23, 1984], 217
|||

PHIL 497-508)

FIRST DIVISION

[G.R. No. 156330. November 19, 2014.]

 NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST
ASIATIC CO., LTD., petitioners, vs. GLOW LAKS
ENTERPRISES, LTD., respondent.

DECISION

PEREZ, J  :p

This is a Petition for Review on Certiorari 1 filed pursuant to Rule 45 of

the Revised Rules of Court, primarily assailing the 11 December 2002 Resolution
rendered by the Special Former Sixteenth Division of the Court of Appeals in CA-
G.R. CV No. 48277, 2 the decretal portion of which states:
WHEREFORE, the appeal is GRANTED and the April 29, 1994
Decision of the Regional Trial Court of Manila, Branch 52 thereof in Civil
Case No. 88-45595, SET ASIDE. Nedlloyd Lijnen B.V. Rotterdam and
The East Asiatic Co., Ltd. are ordered to pay Glow Laks Enterprises, Ltd.
the following:
1. The invoice value of the goods lost worth $53,640.00, or its equivalent
in Philippine currency;
2. Attorney's fees of P50,000.00; and
3. Costs. 3
The Facts
Petitioner Nedlloyd Lijnen B.V. Rotterdam (Nedlloyd) is a foreign
corporation engaged in the business of carrying goods by sea, whose vessels
regularly call at the port of Manila. It is doing business in the Philippines thru its
local ship agent, co-petitioner East Asiatic Co., Ltd. (East Asiatic).
Respondent Glow Laks Enterprises, Ltd., is likewise a foreign corporation
organized and existing under the laws of Hong Kong. It is not licensed to do, and
it is not doing business in, the Philippines.
On or about 14 September 1987, respondent loaded on board M/S
Scandutch at the Port of Manila a total 343 cartoons of garments, complete and
in good order for pre-carriage to the Port of Hong Kong. The goods covered by
Bills of Lading Nos. MHONX-2 and MHONX-3 4 arrived in good condition in Hong
Kong and were transferred to M/S Amethyst for final carriage to Colon, Free
Zone, Panama. Both vessels, M/S Scandutch and M/S Amethyst, are owned by
Nedlloyd represented in the Philippines by its agent, East Asiatic. The goods
which were valued at US$53,640.00 was agreed to be released to the consignee,
Pierre Kasem, International, S.A., upon presentation of the original copies of the
covering bills of lading. 5 Upon arrival of the vessel at the Port of Colon on 23
October 1987, petitioners purportedly notified the consignee of the arrival of the
shipments, and its custody was turned over to the National Ports Authority in
accordance with the laws, customs regulations and practice of trade in Panama.
By an unfortunate turn of events, however, unauthorized persons managed to
forge the covering bills of lading and on the basis of the falsified documents, the
ports authority released the goods.
On 16 July 1988, respondent filed a formal claim with Nedlloyd for the
recovery of the amount of US$53,640.00 representing the invoice value of the
shipment but to no avail. 6 Claiming that petitioners are liable for the misdelivery
of the goods, respondent initiated Civil Case No. 88-45595 before the Regional
Trial Court (RTC) of Manila, Branch 52, seeking for the recovery of the amount of
US$53,640.00, including the legal interest from the date of the first demand. 7
In disclaiming liability for the misdelivery of the shipments, petitioners
asserted in their Answer 8 that they were never remiss in their obligation as a
common carrier and the goods were discharged in good order and condition into
the custody of the National Ports Authority of Panama in accordance with the
Panamanian law. They averred that they cannot be faulted for the release of the
goods to unauthorized persons, their extraordinary responsibility as a common
carrier having ceased at the time the possession of the goods were turned over
to the possession of the port authorities.
After the Pre-Trial Conference, trial on the merits ensued. Both parties
offered testimonial and documentary evidence to support their respective causes.
On 29 April 2004, the RTC rendered a Decision 9 ordering the dismissal of the
complaint but granted petitioners' counterclaims. In effect, respondent was
directed to pay petitioners the amount of P120,000.00 as indemnification for the
litigation expenses incurred by the latter. In releasing the common carrier from
liability for the misdelivery of the goods, the RTC ruled that Panama law was duly
proven during the trial and pursuant to the said statute, carriers of goods
destined to any Panama port of entry have to discharge their loads into the
custody of Panama Ports Authority to make effective government collection of
port dues, customs duties and taxes. The subsequent withdrawal effected by
unauthorized persons on the strength of falsified bills of lading does not
constitute misdelivery arising from the fault of the common carrier. The decretal
part of the RTC Decision reads:
WHEREFORE, judgment is rendered for [petitioners] and against
[Respondent], ordering the dismissal of the complaint and ordering the
latter to pay [petitioners] the amount of ONE HUNDRED TWENTY
THOUSAND PESOS (P120,000.00) on their counterclaims.
Cost against [Respondent]. 10
 On appeal, the Court of Appeals reversed the findings of the RTC and held
that foreign laws were not proven in the manner provided by Section 24, Rule
132 of the Revised Rules of Court, and therefore, it cannot be given full faith and
credit. 11 For failure to prove the foreign law and custom, it is presumed that
foreign laws are the same as our local or domestic or internal law under the
doctrine of processual presumption. Under the New Civil Code, the discharge of
the goods into the custody of the ports authority therefore does not relieve the
common carrier from liability because 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 the right to receive them. Absent any proof
that the notify party or the consignee was informed of the arrival of the goods, the
appellate court held that the extraordinary responsibility of common carriers
remains. Accordingly, the Court of Appeals directed petitioners to pay respondent
the value of the misdelivered goods in the amount of US$53,640.00.
The Issues
Dissatisfied with the foregoing disquisition, petitioners impugned the
adverse Court of Appeals Decision before the Court on the following grounds:
I.
THERE IS ABSOLUTELY NO NEED TO PROVE PANAMANIAN
LAWS BECAUSE THEY HAD BEEN JUDICIALLY ADMITTED. AN
ADMISSION BY A PARTY IN THE COURSE OF THE PROCEEDINGS
DOES NOT REQUIRE PROOF.
II.
BY PRESENTING AS EVIDENCE THE [GACETA] OFFICIAL OF
REPUBLICA DE PANAMA NO. 17.596 WHERE THE APPLICABLE
PANAMANIAN LAWS WERE OFFICIALLY PUBLISHED, AND THE
TESTIMONY OF EXPERT WITNESSES, PETITIONERS WERE ABLE
TO PROVE THE LAWS OF PANAMA.
III.
IF WE HAVE TO CONCEDE TO THE COURT OF APPEALS'
FINDING THAT THERE WAS FAILURE OF PROOF, THE LEGAL
QUESTION PRESENTED TO THE HONORABLE COURT SHOULD
BE RESOLVED FAVORABLY BECAUSE THE CARRIER
DISCHARGED ITS DUTY WHETHER UNDER THE PANAMANIAN
LAW OR UNDER PHILIPPINE LAW. 12
The Court's Ruling
We find the petition bereft of merit.
It is well settled that foreign laws do not prove themselves in our
jurisdiction and our courts are not authorized to take judicial notice of them. Like
any other fact, they must be alleged and proved. 13 To prove a foreign law, the
party invoking it must present a copy thereof and comply with Sections 24 and 25
of Rule 132 of the Revised Rules of Court 14 which read:
SEC. 24. Proof of official record. — The record of public
documents referred to in paragraph (a) of Section 19, when admissible
for any purpose, may be evidenced by an official publication thereof or
by a copy attested by the officer having the legal custody of the record,
or by his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. If the
office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation,
consul general, consul, vice-consul, or consular agent or by any
officer in the foreign service of the Philippines stationed in the
foreign country in which the record is kept, and authenticated by
the seal of his office.
SEC. 25. What attestation of copy must state. — Whenever a
copy of a document or record is attested for the purpose of the evidence,
the attestation must state, in substance, that the copy is a correct copy
of the original, or a specific part thereof, as the case may be. The
attestation must be under the official seal of the attesting officer, if there
be any, or if he be the clerk of a court having a seal, under the seal of
such court.
For a copy of a foreign public document to be admissible, the following
requisites are mandatory: (1) it must be attested by the officer having legal
custody of the records or by his deputy; and (2) it must be accompanied by a
certificate by a secretary of the embassy or legation, consul general, consul,
vice-consular or consular agent or foreign service officer, and with the seal of his
office. 15 Such official publication or copy must be accompanied, if the record is
not kept in the Philippines, with a certificate that the attesting officer has the legal
custody thereof. 16 The certificate may be issued by any of the authorized
Philippine embassy or consular officials stationed in the foreign country in which
the record is kept, and authenticated by the seal of his office. 17 The attestation
must state, in substance, that the copy is a correct copy of the original, or a
specific part thereof, as the case may be, and must be under the official seal of
the attesting officer. 18
Contrary to the contention of the petitioners, the Panamanian laws,
particularly Law 42 and its Implementing Order No. 7, were not duly proven in
accordance with Rules of Evidence and as such, it cannot govern the rights and
obligations of the parties in the case at bar. While a photocopy of the Gaceta
Official of the Republica de Panama No. 17.596, the Spanish text of Law 42
which is the foreign statute relied upon by the court a quo to relieve the
common carrier from liability, was presented as evidence during the trial of
the case below, the same however was not accompanied by the required
attestation and certification.
It is explicitly required by Section 24, Rule 132 of the Revised Rules of
Court that a copy of the statute must be accompanied by a certificate of the
officer who has legal custody of the records and a certificate made by the
secretary of the embassy or legation, consul general, consul, vice-consular or by
any officer in the foreign service of the Philippines stationed in the foreign
country, and authenticated by the seal of his office. The latter requirement is not
merely a technicality but is intended to justify the giving of full faith and credit to
the genuineness of the document in a foreign country. 19 Certainly, the deposition
of Mr. Enrique Cajigas, a maritime law practitioner in the Republic of Panama,
before the Philippine Consulate in Panama, is not the certificate contemplated by
law. At best, the deposition can be considered as an opinion of an expert witness
who possess the required special knowledge on the Panamanian laws but could
not be recognized as proof of a foreign law, the deponent not being the custodian
of the statute who can guarantee the genuineness of the document from a
foreign country. To admit the deposition as proof of a foreign law is, likewise, a
disavowal of the rationale of Section 24, Rule 132 of the Revised Rules of Court,
which is to ensure authenticity of a foreign law and its existence so as to justify
its import and legal consequence on the event or transaction in issue.
The above rule, however, admits exceptions, and the Court in certain
cases recognized that Section 25, Rule 132 of the Revised Rules of Court does
not exclude the presentation of other competent evidence to prove the existence
of foreign law. In Willamette Iron and Steel Works v. Muzzal 20 for instance, we
allowed the foreign law to be established on the basis of the testimony in open
court during the trial in the Philippines of an attorney-at-law in San Francisco,
California, who quoted the particular foreign law sought to be established. 21 The
ruling is peculiar to the facts. Petitioners cannot invoke the Willamette ruling to
secure affirmative relief since their so called expert witness never appeared
during the trial below and his deposition, that was supposed to establish the
existence of the foreign law, was obtained ex-parte.
It is worth reiterating at this point that under the rules of private
international law, a foreign law must be properly pleaded and proved as a fact. In
the absence of pleading and proof, the laws of the foreign country or state will be
presumed to be the same as our local or domestic law. This is known as
processual presumption. 22 While the foreign law was properly pleaded in the
case at bar, it was, however, proven not in the manner provided by Section 24,
Rule 132 of the Revised Rules of Court. The decision of the RTC, which
proceeds from a disregard of specific rules cannot be recognized.
 Having settled the issue on the applicable Rule, we now resolve the issue
of whether or not petitioners are liable for the misdelivery of goods under
Philippine laws.
Under the New 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 goods, according to the circumstances of each
case. 23 Common carriers are responsible for loss, destruction or deterioration of
the goods unless the same is due to flood, storm, earthquake or other natural
disaster or calamity. 24 Extraordinary diligence is that extreme care and
caution which persons of unusual prudence and circumspection use for
securing or preserving their own property or rights. 25 This expecting
standard imposed on common carriers in contract of carrier of goods is intended
to tilt the scales in favor of the shipper who is at the mercy of the common carrier
once the goods have been lodged for the shipment. 26 Hence, in case of loss of
goods in transit, the common carrier is presumed under the law to have been in
fault or negligent. 27
While petitioners concede that, as a common carrier, they are bound to
observe extraordinary diligence in the care and custody of the goods in their
possession, they insist that they cannot be held liable for the loss of the
shipments, their extraordinary responsibility having ceased at the time the goods
were discharged into the custody of the customs arrastre operator, who in turn
took complete responsibility over the care, storage and delivery of the cargoes. 28
In contrast, respondent, submits that the fact that the shipments were not
delivered to the consignee as stated in the bill of lading or to the party designated
or named by the consignee, constitutes misdelivery thereof, and under the law it
is presumed that the common carrier is at fault or negligent if the goods they
transported, as in this case, fell into the hands of persons who have no right to
receive them.
We sustain the position of the respondent.
Article 1736 and Article 1738 are the provisions in the New Civil
Code which define the period when the common carrier is required to exercise
diligence lasts, viz.:
Article 1736. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them, without
prejudice to the provisions of article 1738.
Article 1738. The extraordinary liability of the common carrier
continues to be operative even during the time the goods are stored in a
 warehouse of the carrier at the place of destination, until the consignee
has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of them.
Explicit is the rule under Article 1736 of the Civil Code that the
extraordinary responsibility of the common carrier begins from the time the goods
are delivered to the carrier. 29 This responsibility remains in full force and effect
even when they are temporarily unloaded or stored in transit, unless the shipper
or owner exercises the right of stoppage in transitu, and terminates only after the
lapse of a reasonable time for the acceptance, of the goods by the consignee or
such other person entitled to receive them. 30
It was further provided in the same statute that the carrier may be relieved
from the responsibility for loss or damage to the goods upon actual or
constructive delivery of the same by the carrier to the consignee or to the person
who has the right to receive them. 31 In sales, actual delivery has been defined
as the ceding of the corporeal possession by the seller, and the actual
apprehension of the corporeal possession by the buyer or by some person
authorized by him to receive the goods as his representative for the purpose of
custody or disposal. 32 By the same token, there is actual delivery in
contracts for the transport of goods when possession has been turned
over to the consignee or to his duly authorized agent and a reasonable time
is given him to remove the goods. 33
In this case, there is no dispute that the custody of the goods was never
turned over to the consignee or his agents but was lost into the hands of
unauthorized persons who secured possession thereof on the strength of falsified
documents. The loss or the misdelivery of the goods in the instant case gave rise
to the presumption that the common carrier is at fault or negligent.
A common carrier is presumed to have been negligent if it fails to prove
that it exercised extraordinary vigilance over the goods it transported. 34 When
the goods shipped are either lost or arrived in damaged condition, a
presumption arises against the carrier of its failure to observe that
diligence, and there need not be an express finding of negligence to hold it
liable. 35 To overcome the presumption of negligence, the common carrier
must establish by adequate proof that it exercised extraordinary diligence
over the goods. 36 It must do more than merely show that some other party
could be responsible for the damage. 37
In the present case, petitioners failed to prove that they did exercise the
degree of diligence required by law over the goods they transported. Indeed,
aside from their persistent disavowal of liability by conveniently posing an excuse
that their extraordinary responsibility is terminated upon release of the goods to
the Panamanian Ports Authority, petitioners failed to adduce sufficient evidence
they exercised extraordinary care to prevent unauthorized withdrawal of the
shipments. Nothing in the New Civil Code, however, suggests, even remotely,
that the common carriers' responsibility over the goods ceased upon delivery
thereof to the custom authorities. To the mind of this Court, the contract of
carriage remains in full force and effect even after the delivery of the goods to the
port authorities; the only delivery that releases it from their obligation to observe
extraordinary care is the delivery to the consignee or his agents. Even more
telling of petitioners' continuing liability for the goods transported to the fact that
the original bills of lading up to this time, remains in the possession of the notify
party or consignee. Explicit on this point is the provision of Article 353 of
the Code of Commerce which provides:
Article 353. The legal evidence of the contract between the
shipper and the carrier shall be the bills of lading, by the contents of
which the disputes which may arise regarding their execution and
performance shall be decided, no exceptions being admissible other
than those of falsity and material error in the drafting.
After the contract has been complied with, the bill of lading
which the carrier has issued shall be returned to him, and by virtue
of the exchange of this title with the thing transported, the
respective obligations and actions shall be considered cancelled,
unless in the same act the claim which the parties may wish to
reserve be reduced to writing, with the exception of that provided
for in Article 366.
In case the consignee, upon receiving the goods, cannot return
the bill of lading subscribed by the carrier, because of its loss or of any
other cause, he must give the latter a receipt for the goods delivered,
this receipt producing the same effects as the return of the bill of lading.
While surrender of the original bill of lading is not a condition precedent for
the common carrier to be discharged from its contractual obligation, there must
be, at the very least, an acknowledgement of the delivery by signing the delivery
receipt, if surrender of the original of the bill of lading is not possible. 38 There
was neither surrender of the original copies of the bills of lading nor was there
acknowledgment of the delivery in the present case. This leads to the conclusion
that the contract of carriage still subsists and petitioners could be held liable for
the breach thereof.
Petitioners could have offered evidence before the trial court to show that
they exercised the highest degree of care and caution even after the goods was
turned over to the custom authorities, by promptly notifying the consignee of its
arrival at the Port of Cristobal in order to afford them ample opportunity to
remove the cargoes from the port of discharge. We have scoured the records
and found that neither the consignee nor the notify party was informed by the
petitioners of the arrival of the goods, a crucial fact indicative of petitioners' failure
to observe extraordinary diligence in handling the goods entrusted to their
custody for transport. They could have presented proof to show that they
exercised extraordinary care but they chose in vain, full reliance to their cause on
applicability of Panamanian law to local jurisdiction.
It is for this reason that we find petitioners liable for the misdelivery of the
goods. It is evident from the review of the records and by the evidence adduced
by the respondent that petitioners failed to rebut the prima facie presumption of
negligence. We find no compelling reason to depart from the ruling of the Court
of Appeals that under the contract of carriage, petitioners are liable for the value
of the misdelivered goods.
WHEREFORE, premises considered, the petition is hereby DENIED. The
assailed Resolution of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
Sereno, C.J., Velasco, Jr.,  * Leonardo-de Castro and Perlas-Bernabe,
JJ., concur.
 (Nedlloyd Lijnen B.V. Rotterdam v. Glow Laks Enterprises, Ltd., G.R. No.
|||

156330, [November 19, 2014], 747 PHIL 170-187)

THIRD DIVISION

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

PEDRO DE GUZMAN, petitioner, vs. COURT OF APPEALS and

ERNESTO CENDAÑA, respondents.

Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.

SYLLABUS

1. CIVIL CODE; COMMON CARRIERS; ARTICLE 1732, DEFINITION

UNDER ARTICLE 1732 OF THE CODE. — The Civil Code defines "common
carriers" in the following terms: "Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public." The above article makes
no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither does Article
1732 distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or
solicits business only from a narrow segment of the general population. We
think that Article 1733 deliberately refrained from making such distinctions.
2. ID.; ID.; ID.; LAW ON COMMON CARRIERS SUPPLEMENTED BY
THE PUBLIC SERVICE ACT; SCOPE OF PUBLIC SERVICE. — So
understood, the concept of "common carrier" under Article 1732 may be seen
to coincide neatly with the notion of "public service," under the Public Service
Act (Commonwealth Act No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in the Civil Code. Under
Section 13, paragraph (b) of the Public Service Act, "public service" includes:
". . . every person that now or hereafter may own, operate, manage, or control
in the Philippines, for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier service of
any class, express service, steamboat, or steamship line, pontines, ferries
and water craft, engaged in the transportation of passengers or freight or
both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power, water supply
and power petroleum, sewerage system, wire or wireless communications
systems, wire or wireless broadcasting stations and other similar public
services . . ." (Emphasis supplied) 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 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.
3. ID.; ID.; ID.; ID.; CERTIFICATE OF PUBLIC CONVENIENCE; NOT A
REQUISITE FOR INCURRING LIABILITY AS A COMMON CARRIER;
NATURE OF THE BUSINESS OF A COMMON CARRIER. — The Court of
Appeals referred to the fact that private respondent held no certificate of
public convenience, and concluded he was not a common carrier. This is
palpable error. A certificate of public convenience 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. To exempt private respondent from the liabilities of a common
carrier because he has not secured the necessary certificate of public
convenience, would be offensive to sound public policy; that would be to
reward private respondent precisely for failing to comply with applicable
statutory requirements. The business of a common carrier impinges directly
and intimately upon the safety and well being and property of those members
of the general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety and
protection of those who utilize their services and the law cannot allow a
common carrier to render such duties and liabilities merely facultative by
simply failing to obtain the necessary permits and authorizations.
4. ID.; ID.; DEGREE OF DILIGENCE REQUIRED OF, COMMON
CARRIERS. — Common carriers, "by the 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.
5. ID.; ID.; ID.; LIABILITY OF COMMON CARRIERS. — Article 1734
establishes the general rule that common carriers are responsible for the loss,
destruction or deterioration of the goods which they carry, "unless the same is
due to any of the following causes only: (1) Flood, storm, earthquake,
lightning, or other natural disaster or calamity; (2) Act of the public enemy in
war, whether international or civil; (3) Act 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; and (5) Order or act of competent public authority." It is important
to point out that the above list of causes of loss, destruction or deterioration
which exempt the common carrier for responsibility therefor, is a closed list.
Causes falling outside the foregoing list, even if they appear to constitute a
species of force majeure, fall within the scope of Article 1735, which provides
as follows: "In all cases other than those mentioned in numbers 1, 2, 3, 4 and
5 of the preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed extraordinary
diligence as required in Article 1733." (Emphasis supplied)
 6. ID.; ID.; ID.; ID.; COMMON CARRIER'S ARE NOT ABSOLUTE
INSURERS AGAINST ALL RISKS; NO LIABILITY ATTACHES IN CASE OF
FORTUITOUS EVENTS. — 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." In these circumstances, we
hold that the occurrence of the loss must reasonably be regarded as quite
beyond the control of the common carrier and properly regarded as a
fortuitous event. It is necessary to recall that even common carriers are not
made absolute insurers against all risks of travel and of transport of goods,
and are not held liable for acts or events which cannot be foreseen or are
inevitable, provided that they shall have complied with the rigorous standard
of extraordinary diligence.

DECISION

FELICIANO, J  :p

Respondent Ernesto Cendaña, 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.
 llcd

Sometime in November 1970, petitioner 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 on or before 4 December
1970. Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven by
respondent himself; while 600 cartons were placed on board the other truck
which was driven by Manuel Estrada, respondent's driver and employee.
 Only 150 boxes of Liberty filled milk were delivered to petitioner. The
other 600 boxes never reached petitioner, since the truck which carried these
boxes was hijacked somewhere along the MacArthur Highway in Paniqui,
Tarlac, by armed men who took with them the truck, its driver, his helper and
the cargo.
On 6 January 1971, petitioner commenced action against private
respondent in the Court of First Instance of Pangasinan, demanding payment
of P22,150.00, the claimed value of the lost merchandise, plus damages and
attorney's fees. Petitioner argued that private respondent, being a common
carrier, and having failed to exercise the extraordinary diligence required of
him by the law, should be held liable for the value of the undelivered goods.
In his Answer, private respondent denied that he was a common carrier
and argued that he could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.
On 10 December 1975, the trial court rendered a Decision' finding
private respondent to be a common carrier and holding him liable for the value
of the undelivered goods (P22,150.00) as well as for P4,000.00 as damages
and P2,000.00 as attorney's fees.  cdrep

On appeal before the Court of Appeals, respondent urged that the trial
court had erred in considering him a common carrier; in finding that he had
habitually offered trucking services to the public; in not exempting him from
liability on the ground of force majeure; and in ordering him to pay damages
and attorney's fees.
The Court of Appeals reversed the judgment of the trial court and held
that respondent had been engaged in transporting return loads of freight "as a
casual occupation — a sideline to his scrap iron business" and not as a
common carrier.
Petitioner came to this Court by way of a Petition for Review assigning
as errors the following conclusions of the Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force majeure; and
3. that respondent was not liable for the value of the undelivered cargo.
(Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto
Cendaña may, under the facts earlier set forth, be properly characterized as a
common carrier.
The Civil Code defines "common carriers" in the following terms:
 "Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public."
The above article makes no distinction between one
whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity (in local idiom, as
"a sideline"). Article 1732 also carefully avoids making any distinction between
a person or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1733
deliberately refrained from making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may
be seen to coincide neatly with the notion of "public service," under the Public
Service Act (Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, "public service"
includes:
". . . every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and done
for general business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged
in the transportation of passengers or freight or both, shipyard, marine
repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and
power petroleum, sewerage system, wire or wireless communications
systems, wire or wireless broadcasting stations and other similar public
services . . ." (Emphasis supplied)
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 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.
The Court of Appeals referred to the fact that private respondent held
no certificate of public convenience, and concluded he was not a common
carrier. This is palpable error. A certificate of public convenience 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. To exempt private respondent from the
liabilities of a common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound public policy;
that would be to reward private respondent precisely for failing to comply with
applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property
of those members of the general community who happen to deal with such
carrier. The law imposes duties and liabilities upon common carriers for the
safety and protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely facultative
by simply failing to obtain the necessary permits and authorizations.  cdphil

We turn then to the liability of private respondent as a common carrier.

Common carriers, "by the nature of their business and for reasons of
public policy," 2 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.
Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which they
carry, "unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act 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; and
(5) Order or act of competent public authority."
It is important to point out that the above list of causes of loss, destruction or
deterioration which exempt the common carrier for responsibility therefor, is a
closed list. Causes falling outside the foregoing list, even if they appear to
constitute a species of force majeure, fall within the scope of Article 1735,
which provides as follows:
"In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of
the preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed
extraordinary diligence as required in Article 1733." (Emphasis supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly that
the specific cause alleged in the instant case — the hijacking of the carrier's
truck - does not fall within any of the five (5) categories of exempting causes
listed in Article 1734. It would follow, therefore, that the hijacking of the
carrier's vehicle must be dealt with under the provisions of Article 1735, in
other words, that the private respondent as common carrier is presumed to
have been at fault or to have acted negligently. This presumption, however,
may be overthrown by proof of extraordinary diligence on the part of private
respondent.  cdll

Petitioner insists that private respondent had not observed

extraordinary diligence in the care of petitioner's goods. Petitioner argues that
in the circumstances of this case, private respondent should have hired a
security guard presumably to ride with the truck carrying the 600 cartons of
Liberty filled milk. We do not believe, however, that in the instant case, the
standard of extraordinary diligence required private respondent to retain a
security guard to ride with the truck and to engage brigands in a fire fight at
the risk of his own life and the lives of the driver and his helper.
The precise issue that we address here relates to the specific
requirements of the duty of extraordinary diligence in the vigilance over the
goods carried in the specific context of hijacking or armed robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance over
goods is, under Article 1733, given additional specification not only by Articles
1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article 1745
provides in relevant part:
"Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
xxx xxx xxx
(5) that the common carrier shall not be responsible for the
acts or omissions of his or its employees;
 (6) that the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violence or force, is dispensed with or diminished; and
(7) that the common carrier shall not responsible for the
loss, destruction or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage." (Emphasis supplied)
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."
In the instant case, armed men held up the second truck owned by
private respondent which carried petitioner's cargo. The record shows that an
information for robbery in band was filed in the Court of First Instance of
Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the Philippines
v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one
John Doe." There, the accused were charged with willfully and unlawfully
taking and carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk destined for
delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the trial
court shows that the accused acted with grave, if not irresistible, threat,
violence or force. 3 Three (3) of the five (5) hold-uppers were armed with
firearms. The robbers not only took away the truck and its cargo but also
kidnapped the driver and his helper, detaining them for several days and later
releasing them in another province (in Zambales). The hijacked truck was
subsequently found by the police in Quezon City. The Court of First Instance
convicted all the accused of robbery, though not of robbery in band. 4
In these circumstances, we hold that the occurrence of the loss must
reasonably be regarded as quite beyond the control of the common carrier
and properly regarded as a fortuitous event. It is necessary to recall that even
common carriers are not made absolute insurers against all risks of travel and
of transport of goods, and are not held liable for acts or events which cannot
be foreseen or are inevitable, provided that they shall have complied with the
rigorous standard of extraordinary diligence.  prLL

We, therefore, agree with the result reached by the Court of Appeals
that private respondent Cendaña is not liable for the value of the undelivered
 merchandise which was lost because of an event entirely beyond private
respondent's control.
ACCORDINGLY, the Petition for Review on Certiorari is hereby
DENIED and the Decision of the Court of Appeals dated 3 August 1977 is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortés, JJ., concur.
 (De Guzman v. Court of Appeals, G.R. No. L-47822, [December 22, 1988], 250
|||

PHIL 613-624)

SECOND DIVISION

[G.R. No. 101089. April 7, 1993.]

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

Modesto S. Bascos for petitioner.

Pelaez, Adriano & Gregorio for private respondent.

SYLLABUS

1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE

COMMON CARRIER. — Article 1732 of the Civil Code defines a common carrier
as "(a) person, corporation or firm, or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public." The test to determine a
common carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." . . . The
holding of the Court in De Guzman vs. Court of Appeals is instructive. In referring
to Article 1732 of the Civil Code, it held thus: "The above article makes no
distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as a "sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither does Article
1732 distinguished between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that
Article 1732 deliberately refrained from making such distinctions."
2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS
TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE ARISES; HOW
PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. —
Common carriers are obliged to observe extraordinary diligence in the vigilance
over the goods transported by them. Accordingly, they are presumed to have
been at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the presumption of negligence
does not attach and these instances are enumerated in Article 1734. In those
cases where the presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the presumption . . . The
presumption of negligence was raised against petitioner. It was petitioner's
burden to overcome it. Thus, contrary to her assertion, private respondent need
not introduce any evidence to prove her negligence. Her own failure to adduce
sufficient proof of extraordinary diligence made the presumption conclusive
against her.
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOW
CARRIER ABSOLVED FROM LIABILITY. — In De Guzman vs. Court of
Appeals, the Court held that hijacking, not being included in the provisions of
Article 1734, must be dealt with under the provisions of Article 1735 and thus, the
common carrier is presumed to have been at fault or negligent. To exculpate the
carrier from liability arising from hijacking, he must prove that the robbers or the
hijackers acted with grave or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which provides: "Art. 1745. Any of
the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy . . . (6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished"; In the same case, the
Supreme Court also held that: "Under Article 1745 (6) above, a common carrier
is held responsible — and will not be allowed to divest or to diminish such
responsibility — even for acts of strangers like thieves or robbers, except where
such thieves or robbers in fact acted "with grave of irresistible threat, violence of
force," We believe and so hold that the limits of the duty of extraordinary
diligence in the vigilance over the goods carried are reached where the goods
are lost as a result of a robbery which is attended by "grave or irresistible threat,
violence or force."
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE. — In
this case, petitioner herself has made the admission that she was in the trucking
business, offering her trucks to those with cargo to move. Judicial admissions are
conclusive and no evidence is required to prove the same.
5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A
FACT. — Petitioner presented no other proof of the existence of the contract of
lease. He who alleges a fact has the burden of proving it.
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF AFFIANTS
AVAILABLE AS WITNESSES. — While the affidavit of Juanito Morden, the truck
helper in the hijacked truck, was presented as evidence in court, he himself was
a witness as could be gleaned from the contents of the petition. Affidavits are not
considered the best evidence if the affiants are available as witnesses.
7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT LAW
DEFINES IT TO BE. — Granting that the said evidence were not self-serving, the
same were not sufficient to prove that the contract was one of lease. It must be
understood that a contract is what the law defines it to be and not what it is called
by the contracting parties.

DECISION

CAMPOS, JR., J  : p

This is a petition for review on certiorari of the decision ** of the Court of Appeals
in "RODOLFO A. CIPRIANO, doing business under the name CIPRIANO
TRADING ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M. BASCOS,
doing business under the name of BASCOS TRUCKING, defendant-appellant,"
C.A.-G.R. CV No. 25216, the dispositive portion of which is quoted hereunder:
"PREMISES considered, We find no reversible error in the decision
appealed from, which is hereby affirmed in toto. Costs against
appellant." 1
The facts, as gathered by this Court, are as follows:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for
short) entered into a hauling contract 2 with Jibfair Shipping Agency Corporation
whereby the former bound itself to haul the latter's 2,000 m/tons of soya bean
meal from Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods
Corporation in Calamba, Laguna. To carry out its obligation, CIPTRADE, through
Rodolfo Cipriano, subcontracted with Estrellita Bascos (petitioner) to transport
and to deliver 400 sacks of soya bean meal worth P156,404.00 from the Manila
Port Area to Calamba, Laguna at the rate of P50.00 per metric ton. Petitioner
failed to deliver the said cargo. As a consequence of that failure, Cipriano paid
Jibfair Shipping Agency the amount of the lost goods in accordance with the
contract which stated that:
"1. CIPTRADE shall be held liable and answerable for any loss in bags
due to theft, hijacking and non-delivery or damages to the cargo during
transport at market value, . . ." 3
Cipriano demanded reimbursement from petitioner but the latter refused to pay.
Eventually, Cipriano filed a complaint for a sum of money and damages with writ
of preliminary attachment 4 for breach of a contract of carriage. The prayer for a
Writ of Preliminary Attachment was supported by an affidavit 5 which contained
the following allegations:
"4. That this action is one of those specifically mentioned in Sec. 1, Rule
57 the Rules of Court, whereby a writ of preliminary attachment may
lawfully issue, namely:
"(e) in an action against a party who has removed or
disposed of his property, or is about to do so, with intent to
defraud his creditors;"
5. That there is no sufficient security for the claim sought to be enforced
by the present action;
6. That the amount due to the plaintiff in the above-entitled case is above
all legal counterclaims;"
The trial court granted the writ of preliminary attachment on February 17,
1987.
In her answer, petitioner interposed the following defenses: that there was no
contract of carriage since CIPTRADE leased her cargo truck to load the cargo
from Manila Port Area to Laguna; that CIPTRADE was liable to petitioner in the
amount of P11,000.00 for loading the cargo; that the truck carrying the cargo was
hijacked along Canonigo St., Paco, Manila on the night of October 21, 1988; that
the hijacking was immediately reported to CIPTRADE and that petitioner and the
police exerted all efforts to locate the hijacked properties; that after preliminary
investigation, an information for robbery and carnapping were filed against Jose
Opriano, et al.; and that hijacking, being a force majeure, exculpated petitioner
from any liability to CIPTRADE.  prLL

After trial, the trial court rendered a decision *** the dispositive portion of which
reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and
against defendant ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR
HUNDRED FOUR PESOS (P156,404.00) as an (sic) for actual damages
 with legal interest of 12% per cent per annum to be counted from
December 4, 1986 until fully paid;
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for
attorney's fees; and
3. The costs of the suit.
The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated
March 10, 1987 filed by defendant is DENIED for being moot and
academic.
SO ORDERED." 6
Petitioner appealed to the Court of Appeals but respondent Court affirmed the
trial court's judgment.
Consequently, petitioner filed this petition where she makes the following
assignment of errors; to wit:
"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND
PRIVATE RESPONDENT WAS CARRIAGE OF GOODS AND NOT
LEASE OF CARGO TRUCK.
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF
THE RESPONDENT COURT THAT THE CONTRACTUAL
RELATIONSHIP BETWEEN PETITIONER AND PRIVATE
RESPONDENT WAS CARRIAGE OF GOODS IS CORRECT,
NEVERTHELESS, IT ERRED IN FINDING PETITIONER LIABLE
THEREUNDER BECAUSE THE LOSS OF THE CARGO WAS DUE
TO FORCE MAJEURE, NAMELY, HIJACKING.
 
III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING
OF THE TRIAL COURT THAT PETITIONER'S MOTION TO
DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT HAS
BEEN RENDERED MOOT AND ACADEMIC BY THE DECISION OF
THE MERITS OF THE CASE." 7
The petition presents the following issues for resolution: (1) was petitioner a
common carrier?; and (2) was the hijacking referred to a force majeure?
The Court of Appeals, in holding that petitioner was a common carrier, found that
she admitted in her answer that she did business under the name A.M. Bascos
Trucking and that said admission dispensed with the presentation by private
respondent, Rodolfo Cipriano, of proofs that petitioner was a common carrier.
The respondent Court also adopted in toto the trial court's decision that petitioner
was a common carrier, Moreover, both courts appreciated the following pieces of
evidence as indicators that petitioner was a common carrier: the fact that the
truck driver of petitioner, Maximo Sanglay, received the cargo consisting of 400
bags of soya bean meal as evidenced by a cargo receipt signed by Maximo
Sanglay; the fact that the truck helper, Juanito Morden, was also an employee of
petitioner; and the fact that control of the cargo was placed in petitioner's care.  cdphil

In disputing the conclusion of the trial and appellate courts that petitioner was a
common carrier, she alleged in this petition that the contract between her and
Rodolfo A. Cipriano, representing CIPTRADE, was lease of the truck. She cited
as evidence certain affidavits which referred to the contract as "lease". These
affidavits were made by Jesus Bascos 8 and by petitioner herself. 9 She further
averred that Jesus Bascos confirmed in his testimony his statement that the
contract was a lease contract. 10 She also stated that: she was not catering to the
general public. Thus, in her answer to the amended complaint, she said that she
does business under the same style of A.M. Bascos Trucking, offering her trucks
for lease to those who have cargo to move, not to the general public but to a few
customers only in view of the fact that it is only a small business. 11
We agree with the respondent Court in its finding that petitioner is a common
carrier.
Article 1732 of the Civil Code defines a common carrier as "(a) person,
corporation or firm, or association engaged in the business of carrying or
transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public." The test to determine a
common carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." 12 In
this case, petitioner herself has made the admission that she was in the trucking
business, offering her trucks to those with cargo to move. Judicial admissions are
conclusive and no evidence is required to prove the same. 13
But petitioner argues that there was only a contract of lease because they offer
their services only to a select group of people and because the private
respondents, plaintiffs in the lower court, did not object to the presentation of
affidavits by petitioner where the transaction was referred to as a lease contract.
Regarding the first contention, the holding of the Court in De Guzman vs. Court
of Appeals  14 is instructive. In referring to Article 1732 of the Civil Code, it held
thus:
"The above article makes no distinction between one
whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity (in
local idiom, as a "sideline"). Article 1732 also carefully avoids making
any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on
 an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or
solicits business only from a narrow segment of the general population.
We think that Article 1732 deliberately refrained from making such
distinctions."
Regarding the affidavits presented by petitioner to the court, both the trial and
appellate courts have dismissed them as self-serving and petitioner contests the
conclusion. We are bound by the appellate court's factual conclusions. Yet,
granting that the said evidence were not self-serving, the same were not
sufficient to prove that the contract was one of lease. It must be understood that
a contract is what the law defines it to be and not what it is called by the
contracting parties. 15 Furthermore, petitioner presented no other proof of the
existence of the contract of lease. He who alleges a fact has the burden of
proving it. 16
Likewise, We affirm the holding of the respondent court that the loss of the goods
was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in the vigilance
over the goods transported by them. 17 Accordingly, they are presumed to have
been at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated. 18 There are very few instances when the presumption of
negligence does not attach and these instances are enumerated in Article
1734. 19 In those cases where the presumption is applied, the common carrier
must prove that it exercised extraordinary diligence in order to overcome the
presumption.  Cdpr

In this case, petitioner alleged that hijacking constituted force majeure which
exculpated her from liability for the loss of the cargo. In De Guzman vs. Court of
Appeals, 20 the Court held that hijacking, not being included in the provisions of
Article 1734, must be dealt with under the provisions of Article 1735 and thus, the
common carrier is presumed to have been at fault or negligent. To exculpate the
carrier from liability arising from hijacking, he must prove that the robbers or the
hijackers acted with grave or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violences or
force, is dispensed with or diminished;"
In the same case, 21 the Supreme Court also held that:
 "Under Article 1745 (6) above, a common carrier is held responsible —
and will not be allowed to divest or to diminish such responsibility —
even for acts of strangers like thieves or robbers except where such
thieves or robbers in fact acted with grave or irresistible threat, violence
or force. We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."
To establish grave and irresistible force, petitioner presented her
accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito
Morden's 24 "Salaysay". However, both the trial court and the Court of Appeals
have concluded that these affidavits were not enough to overcome the
presumption. Petitioner's affidavit about the hijacking was based on what had
been told her by Juanito Morden. It was not a first-hand account. While it had
been admitted in court for lack of objection on the part of private respondent,
the respondent Court had discretion in assigning weight to such evidence. We
are bound by the conclusion of the appellate court. In a petition for review on
certiorari, We are not to determine the probative value of evidence but to
resolve questions of law. Secondly, the affidavit of Jesus Bascos did not dwell
on how the hijacking took place. Thirdly, while the affidavit of Juanito Morden,
the truck helper in the hijacked truck, was presented as evidence in court, he
himself was a witness as could be gleaned from the contents of the petition.
Affidavits are not considered the best evidence if the affiants are available as
witnesses. 25 The subsequent filing of the information for carnapping and
robbery against the accused named in said affidavits did not necessarily
mean that the contents of the affidavits were true because they were yet to be
determined in the trial of the criminal cases.
The presumption of negligence was raised against petitioner. It was petitioner's
burden to overcome it. Thus, contrary to her assertion, private respondent need
not introduce any evidence to prove her negligence. Her own failure to adduce
sufficient proof of extraordinary diligence made the presumption conclusive
against her.
Having affirmed the findings of the respondent Court on the substantial issues
involved, We find no reason to disturb the conclusion that the motion to
lift/dissolve the writ of preliminary attachment has been rendered moot and
academic by the decision on the merits.  llcd

In the light of the foregoing analysis, it is Our opinion that the petitioner's claim
cannot be sustained. The petition is DISMISSED and the decision of the Court of
Appeals is hereby AFFIRMED.
SO ORDERED.
Narvasa, C .J ., Padilla, Regalado and Nocon, JJ ., concur.
|||  (Bascos v. Court of Appeals, G.R. No. 101089, [April 7, 1993])

EN BANC

[G.R. No. L-10605. June 30, 1958.]

PRECILLANO NECESITO, ETC., plaintiff-appellant, vs.

NATIVIDAD PARAS, ET AL., defendants-appellees.

[G.R. No. L-10606. June 30, 1958.]

GERMAN NECESITO, ET AL., plaintiffs-appellants, vs. NATIVIDAD
PARAS, ET AL., defendants-appellees.
Tomas Besa and Federico Agrava for appellants.
Jose W. Diokno for appellees.

SYLLABUS

1.CARRIERS; LIABILITY FOR DAMAGES CAUSED BY MECHANICAL

DEFECTS. — While the carrier is not an insurer of the safety of the
passengers, it should nevertheless be held to answer for the laws its
equipment if such flaws were at all discoverable. In this connection, the
manufacturer of the defective appliance is considered in law the agent of the
carrier, and the good repute of the manufacturer will not relieve the carrier
from liability. The rationale of the carrier's liability is the fact that the
passenger has no privity with the manufacturer of the defective equipment;
hence, he has no remedy against him, while the carrier usually has.
2.DAMAGES; MORAL DAMAGES FOR BREACH OF CONTRACT,
WHEN RECOVERABLE. — Under Article 2220 of the new Civil Code, in case
to suits for breach of contract, moral damages are recoverable only where the
defendant acted fraudulently or in bad faith, and there is none in the case at
bar. (But see Resolution on the Motion to Reconsider.)
3.CARRIERS; MECHANICAL DEFECTS. — A carrier is liable to its
passengers for damages caused by mechanical defects of the conveyance.
4.ID.; ID.; WHERE INJURY IS PATENT, INDEMNITY CANNOT BE
DENIED. — Where the injury is patent and not denied, the court is
empowered to calculate moderate damages, although there is no definite
proof of the pecuniary loss suffered by the injured party.
 5.ID.; ID.; RIGHT OF HEIRS OF DECEASED PASSENGER TO
RECOVER MORAL DAMAGES. — In case of accident due to a carrier's
negligence, the heirs of a deceased passenger may recover moral damages,
even though a passenger who is injured, but manages to survive, is not
entitled to them. This special rule (Arts. 1264 and 2206, No. 3) in case of
death controls the general rule of Article 2220.
6.ATTORNEY'S FEES; LITIGANT CANNOT BE DEPRIVED OF FEE IF
HE IS ENTITLED TO RECOVERY. — A litigant who improvidently stipulates
higher counsel fees than those to which he is entitled, does not for that reason
earn the right to a larger indemnity; but, by parity of reasoning, he should not
be deprived of counsel fees if by law he is entitled to recover them.

DECISION

REYES, J.B.L., J  :p

These cases involve actions ex contractu against the owners and

operators of the common carrier known as Philippine Rabbit Bus Lines, filed
by one passenger, and the heirs of another, who were injured as a result of
the fall into a river of the vehicle in which they were riding.
In the morning of January 28, 1954, Severina Garces and her one- year
old son, Precillano Necesito, carrying vegetables, boarded passenger auto
truck or bus No. 199 of the Philippine Rabbit Bus Lines at Agno, Pangasinan.
The passenger truck, driven by Francisco Bandonell, then proceeded on its
regular run from Agno to Manila. After passing Mangatarem, Pangasinan,
truck No. 199 entered a wooden bridge, but the front wheels swerved to the
right; the driver lost control, and after wrecking the bridge's wooden rails, the
truck fell on its right side into a creek where water was breast deep. The
mother, Severina Garces, was drowned; the son, Precillano Necesito, was
injured, suffering abrasions and fracture of the left femur. He was brought to
the Provincial Hospital at Dagupan, where the fracture was set but with
fragments one centimeter out of line. The money, wrist watch and cargo of
vegetables were lost.
Two actions for damages and attorney's fees totalling over P85,000
having been filed in the Court of First Instance of Tarlac (Cases Nos. 908 and
909) against the carrier, the latter pleaded that the accident was due to
"engine or mechanical trouble" independent or beyond the control of the
defendants or of the driver Bandonell.
 After joint trial, the Court of First Instance found that the bus was
proceeding slowly due to the bad condition of the road; that the accident was
caused by the fracture of the right steering knuckle, which was defective in
that its center or core was not compact but "bubbled and cellulous", a
condition that could not be known or ascertained by the carrier despite the
fact that regular thirty-day inspections were made of the steering knuckle,
since the steel exterior was smooth and shiny to the depth of 3/16 of an inch
all around; that the knuckles are designed and manufactured for heavy duty
and may last up to ten years; that the knuckle of bus No. 199 that broke on
January 28, 1954, was last inspected on January 5, 1954, and was due to be
inspected again on February 5th. Hence, the trial court, holding that the
accident was exclusively due to fortuitous event, dismissed both actions.
Plaintiffs appealed directly to this Court in view of the amount in controversy.
We are inclined to agree with the trial court that it is not likely that bus
No. 199 of the Philippine Rabbit Lines was driven over the deeply rutted road
leading to the bridge at a speed of 50 miles per hour, as testified for the
plaintiffs. Such conduct on the part of the driver would have provoked instant
and vehement protest on the part of the passengers because of the attendant
discomfort, and there is no trace of any such complaint in the records. We are
thus forced to assume that the proximate cause of the accident was the
reduced strength of the steering knuckle of the vehicle caused by defects in
casting it. While appellants hint that the broken knuckle exhibited in court was
not the real fitting attached to the truck at the time of the accident, the records
show that they registered no objection on that ground at the trial below.
The issue is thus reduced to the question whether or not the carrier is
liable for the manufacturing defect of the steering knuckle, and whether the
evidence discloses that in regard thereto the carrier exercised the diligence
required by law (Art. 1755, new Civil Code).
"ART. 1755.A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances."
It is clear that the carrier is not an insurer of the passengers' safety. His
liability rests upon negligence, his failure to exercise the "utmost" degree of
diligence that the law requires, and by Art. 1756, in case of a passenger's
death or injury the carrier bears the burden of satisfying the court that he has
duly discharged the duty of prudence required. In the American law, where
the carrier is held to the same degree of diligence as under the new Civil
Code, the rule on the liability of carriers for defects of equipment is thus
expressed: "The preponderance of authority is in favor of the doctrine that a
passenger is entitled to recover damages from a carrier for an injury resulting
from a defect in an appliance purchased from a manufacturer, whenever it
appears that the defect would have been discovered by the carrier if it had
exercised the degree of care which under the circumstances was incumbent
upon it, with regard to inspection and application of the necessary tests. For
the purposes of this doctrine, the manufacturer is considered as being in law
the agent or servant of the carrier, as far as regards the work of constructing
the appliance. According to this theory, the good repute of the manufacturer
will not relieve the carrier from liability" (10 Am. Jur. 205, s, 1324; see a]so
Pennsylvania R. Co. vs. Roy, 102 U. S. 451; 20 L. Ed. 141; Southern R.
Co. vs. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788; Ann
Cas. 1916E 929).
The rationale of the carrier's liability is the fact that the passenger has
neither choice nor control over the carrier in the selection and use of the
equipment and appliances in use by the carrier. Having, no privity whatever
with the manufacturer or vendor of the defective equipment, the passenger
has no remedy against him, while the carrier usually has. It is but logical,
therefore, that the carrier, while not an insurer of the safety of his passengers,
should nevertheless be held to answer for the flaws of his equipment if such
flaws were at all discoverable. Thus Hannen, J., in Francis vs. Cockrell, LR 5
Q. P. 184, said:
"In the ordinary course of things, the passenger does not know whether
the carrier has himself manufactured the means of carriage, or
contracted with someone else for its manufacture. If the carrier has
contracted with someone else the passenger does not usually know who
that person is, and in no case has he any share in the selection. The
liability of the manufacturer must depend on the terms of the contract
between him and the carrier, of which the passenger has no knowledge,
and over which he can have no control, while the carrier can introduce
what stipulations and take what securities he may think proper. For injury
resulting to the carrier himself by the manufacturer's want of care, the
carrier has a remedy against the manufacturer; but the passenger has
no remedy against the manufacturer for damage arising from a mere
breach of contract with the carrier . . . Unless, therefore, the presumed
intention of the parties be that the passenger should, in the event of his
being injured by the breach of the manufacturer's contract, of which he
has no knowledge, be without remedy, the only way in which effect can
be given to a different intention is by supposing that the carrier is to be
responsible to the passenger, and to look for his indemnity to the person
whom he selected and whose breach of contract has caused the
mischief." (29 ALR 789)
And in the leading case of Morgan vs. Chesapeake & O. R. Co. 15 LRA
(NS) 790, 16 Ann. Cas. 608, the Court, in holding the carrier responsible for
damages caused by the fracture of a car axle, due to a "sand hole" in the
course of moulding the axle, made the following observations.
 
"The carrier, in consideration of certain well-known and highly
valuable rights granted to it by the public, undertakes certain duties
toward the public, among them being to provide itself with suitable and
safe cars and vehicles in which to carry the traveling public. There is no
such duty on the manufacturer of the cars. There is no reciprocal legal
relation between him and the public in this respect. When the carrier
elects to have another build its cars, it ought not to be absolved by that
fact from its duty to the public to furnish safe care. The carrier cannot
lessen its responsibility by shifting its undertaking to another's shoulders.
Its duty to furnish safe care is side by side with its duty to furnish safe
track, and to operate them in a safe manner. None of its duties in these
respects can be sublet so as to relieve it from the full measure primarily
exacted of it by law. The carrier selecta the manufacturer of its cars, if it
does not itself construct them, precisely as it does those who grade its
road, and lay its tracks, and operate its trains. That it does not exercise
control over the former is because it elects to place that matter in the
hands of the manufacturer, instead of retaining the supervising control
itself. The manufacturer should be deemed the agent of the carrier as
respects its duty to select the material out of which its cars and
locomotive are built, as well as in inspecting each step of their
construction. If there be tests known to the crafts of ear builders, or iron
moulders, by which such defects might be discovered before the part
was incorporated into the car, then the failure of the manufacturer to
make the test will be deemed a failure by the carrier to make it. This is
not a vicarious responsibility. It extends, as the necessity of this
business demands, the rule of respondent superior to a situation which
falls clearly within its scope and spirit. Where an injury is inflicted upon a
passenger by the breaking or wrecking of a part of the train on which he
is riding, it is presumably the result of negligence at some point by the
carrier. As stated by Judge Story, in Story on Bailments, sec. 601a:
'When the injury or damage happens to the passenger by the breaking
down or overturning of the coach, or by any other accident occurring on
the ground, the presumption prima facie is that it occurred by the
negligence of the coachmen, and onus probandi is on the proprietors of
the coach to establish that there has been no negligence whatever, and
that the damage or injury has been occasioned by inevitable casualty, or
by some cause which human care and foresight could not prevent; for
the law will, in tenderness to human life and limb, hold the proprietors
liable for the slightest negligence, and will compel them to repel by
satisfactory proofs every imputation thereof.' When the passenger has
proved his injury as the result of a breakage in the car or the wrecking of
the train on which he was being carried, whether the defect was in the
particular car in which he was riding or not, the burden is then cast upon
the carrier to show that it was due to a cause or causes which the
exercise of the utmost human skill and foresight could not prevent. And
 the carrier in this connection must show, if the accident was due to a
latent defect in the material or construction of the car, that not only could
it not have discovered the defect by the exercise of such care, but that
the builders could not by the exercise of the same care have discovered
the defect or foreseen the result. This rule applies the same whether the
defective car belonged to the carrier or not."
In the case now before us, the record is to the effect that the only test
applied to the steering knuckle in question was a purely visual inspection
every thirty days, to see if any cracks developed. It nowhere appears that
either the manufacturer or the carrier at any time tested the steering knuckle
to ascertain whether its strength was up to standard, or that it had no hidden
flaws that would impair that strength. And yet the carrier must have been
aware of the critical importance of the knuckle's resistance; that its failure or
breakage would result in loss of balance and steering control of the bus, with
disastrous effects upon the passengers. No argument is required to establish
that a visual inspection could not directly determine whether the resistance of
this critically important part was not impaired. Nor has it been shown that the
weakening of the knuckle was impossible to detect by any known test; on the
contrary, there is testimony that it could be detected. We are satisfied that the
periodical visual inspection of the steering knuckle as practiced by the
carrier's agents did not measure up to the required legal standard of "utmost
diligence of very cautious persons" — "as far as human care and foresight
can provide", and therefore that the knuckle's failure can not be considered a
fortuitous event that exempts the carrier from responsibility (Lasam vs. Smith,
45 Phil, 607; Son vs. Cebu Autobus Co., 94 Phil., 892.
It may be impracticable, as appellee argues, to require of carriers to test
the strength of each and every part of its vehicles before each trip; but we are
of the opinion that a due regard for the carrier's obligations toward the
traveling public demands adequate periodical tests to determine the condition
and strength of those vehicle portions the failure of which may endanger the
safety of the passengers.
As to the damages suffered by the plaintiffs, we agree with appellee
that no allowance may be made for moral damages, since under Article 2220
of the new Civil Code, in case of suits for breach of contract, moral damages
are recoverable only where the defendant acted fraudulently or in bad faith,
and there is none in the case before us. As to exemp]ary damages, the carrier
has not acted in a "wanton, fraudulent, reckless, oppressive or malevolent
manner" to warrant their award. Hence, we believe that for the minor
Precillano Necesito (G. R No. L-10605), an indemnity of P5,000 would be
adequate for the abrasions and fracture of the femur, including medical and
hospitalization expenses, there being no evidence that there would be any
permanent impairment of his faculties or bodily functions, beyond the lack of
anatomical symmetry. As for the death of Severina Garces (G. R. No. L-
10606) who was 33 years old, with seven minor children when she died, her
heirs are obviously entitled to indemnity not only for the incidental loses of
property (cash, wrist watch and merchandise) worth P394 that she carried at
the time of the accident and for the burial expenses of P490, but also for the
loss of her earnings (shown to average P120 a month) and for the deprivation
of her protection, guidance and company. In our judgment, an award of
P15,000 would be adequate (cf Alcantara vs. Surro, 49 Off. Gaz. 2769; 93
Phil., 472).
The low income of the plaintiffs-appellants makes an award for
attorney's fees just and equitable (Civil Code, Art. 2208, par. 11). Considering
that the two cases filed were tried jointly, a fee of P3,500 would be
reasonable.
In view of the foregoing, the decision appealed from is reversed, and
the defendants-appellees are sentenced to indemnify the plaintiffs-appellants
in the following amounts: P5,000 to Precillano Necesito, and P15,000 to the
heirs of the deceased Severina Garces, plus P3,500 by way of attorney's fees
and litigation expenses. Costs against defendants-appellees. So ordered.
Paras, C.J., Bengzon, Reyes, A., Bautista Angelo,
Concepcion and Endencia, JJ., concur.
Felix, J., concurs in the result.
RESOLUTION
September 11, 1958
REYES, J.B.L., J.:
Defendants-appellees have submitted a motion asking this Court to
reconsider its decision of June 30, 1958, and that the same be modified with
respect to (1) its holding the carrier liable for the breakage of the steering
knuckle that caused the autobus No. 199 to overturn, whereby the
passengers riding in it were injured; (2) the damages awarded, that appellees
argue to be excessive; and (3) the award of attorneys' fees.
(1)The rule prevailing in this jurisdiction as established in previous
decisions of this Court, cited in our main opinion, is that a carrier is liable to its
passengers for damages caused by mechanical defects of the conveyance.
As early as 1924, in Lasam vs. Smith, 45 Phil. 659 this Court ruled:
"As far as the record shows, the accident was caused either by defects
in the automobile or else through the negligence of its driver. That is not
caso fortuito."
 And in Son vs. Cebu Autobus Company, 94 Phil., 892, this Court held a
common carrier liable in damages to a passenger for injuries caused by an
accident due to the breakage of a faulty drag-link spring.
It can be seen that while the courts of the United States are at variance
on the question of a carrier's liability for latent mechanical defects, the rule in
this jurisdiction has been consistent in holding the carrier responsible. This
Court has quoted from American and English decisions, not because it felt
bound to follow the same, but merely in approval of the rationale of the rule as
expressed therein, since the previous Philippine cases did not enlarge on the
ideas underlying the doctrine established thereby.
The new evidence sought to be introduced do not warrant the grant of a
new trial, since the proposed proof was available when the original trial was
held. Said evidence is not newly discovered.
(2)With regard to the indemnity awarded to the child Precilliano
Necesito, the injuries suffered by him are incapable of accurate pecuniary
estimation, particularly because the full effect of the injury is not ascertainable
immediately. This uncertainty, however, does not preclude the right to an
indemnity, since the injury is patent and not denied (Civil Code, Art. 2224).
The reasons behind this award are expounded by the Code Commission in its
report:
"There are cases where from the nature of the case, definite proof
of pecuniary loss cannot be offered, although the court is convinced that
there has been such loss. For instance, injury to one's commercial credit
or to the goodwill of a business firm is often hard to show with certainty
in terms of money. Should damages be denied for that reason? The
judge should be empowered to calculate moderate damages in such
cases, rather than that the plaintiff should suffer, without redress, from
the defendant's wrongful act." (Report of the Code Commission, p. 75)
 
In awarding to the heirs of the deceased Severina Garces an indemnity
for the loss of her "guidance, protection and company," although it is but
moral damage, the Court took into account that the case of a passenger who
dies in the course of an accident, due to the carrier's negligence constitutes
an exception to the general rule. While, as pointed out in the main decision,
under Article 2220 of the new Civil Code there can be no recovery of moral
damages for a breach of contract in the absence of fraud malice) or bad faith,
the case of a violation of the contract of carriage leading to a passenger's
death escapes this general rule, in view of Article 1764 in connection with
Article 2206, No. 3 of the new Civil Code.
"ART. 1764.Damages in cases comprised in this Section shall be
awarded in accordance with Title XVIII of this Book, concerning
 Damages. Article 2206 shall also apply to the death of a passenger
caused by the breach of contract by a common carrier."
"ART. 2206.. . .
(3)The spouse, legitimate and illegitimate descendants and
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased."
Being a special rule limited to cases of fatal injuries, these articles
prevail over the general rule of Art. 2220. Special provisions control general
ones (Lichauco & Co. vs. Apóstol, 44 Phil. 138; Sancio vs. Lizarraga, 55 Phil.
601).
It thus appears that under the new Civil Code, in case of accident due
to a carrier's negligence, the heirs of a deceased passenger may recover
moral damages, even though a passenger who is injured, but manages to
survive, is not entitled to them. There is, therefore, no conflict between our
main decision in the instant case and that of Cachero vs. Manila Yellow Taxi
Cab Co., 101 Phil., 523, where the passenger suffered injuries, but did not
lose his life.
(3)In the Cachero case this Court disallowed attorneys' fees to the
injured plaintiff because the litigation arose out of his exaggerated and
unreasonable demands for an indemnity that was out of proportion with the
compensatory damages to which he was solely entitled. Put in the present
case, plaintiffs' original claims can not be deemed a priori wholly
unreasonable, since they had a right to indemnity for moral damages besides
compensatory ones, and moral damages are not determined by set and
invariable bounds.
Neither does the fact that the contract between the passengers and
their counsel was on a contingent basis affect the former's right to counsel
fees. As pointed out for appellants, the Court's award is an indemnity to the
party and not to counsel. A litigant who improvidently stipulates higher
counsel fees than those to which he is lawfully entitled, does not for that
reason earn the right to a larger indemnity; but, by parity of reasoning, he
should not be deprived of counsel fees if by law he is entitled to recover them.
We find no reason to alter the main decision heretofore rendered.
Ultimately, the position taken by this Court is that a common carrier's contract
is not to be regarded as a game of chance wherein the passenger stakes his
limb and life against the carrier's property and profits.
Wherefore, the motion for reconsideration is hereby denied. So
ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista
Angelo, Concepcion, Endencia and Felix, JJ., concur.
 (Necesito v. Paras, G.R. No. L-10605, L-10606, [June 30, 1958], 104 PHIL 75-
|||

87)

THIRD DIVISION

[G.R. No. 160219. July 21, 2008.]

VECTOR SHIPPING CORPORATION and FRANCISCO

SORIANO, petitioners, vs. ADELFO B. MACASA, EMELIA B.
MACASA, TIMOTEO B. MACASA, CORNELIO B. MACASA, JR.,
and ROSARIO C. MACASA, SULPICIO LINES, INC., GO GUIOC
SO, ENRIQUE S. GO, EUSEBIO S. GO, RICARDO S. GO,
VICTORIANO S. GO, EDWARD S. GO, ARTURO S. GO, EDGAR
S. GO and EDMUNDO S. GO, respondents.

DECISION

NACHURA, J  : p

Before this Court is a Petition for Review on Certiorari 1 under Rule 45

of the Rules of Civil Procedure seeking the reversal of the Court of Appeals
(CA) Decision 2 dated September 24, 2003, which affirmed with modification
the Decision 3 of the Regional Trial Court (RTC), Branch 17 of Davao City,
dated May 5, 1995. IcADSE

The Facts
On December 19, 1987, spouses Cornelio (Cornelio) and Anacleta
Macasa (Anacleta), together with their eight-year-old grandson, Ritchie
Macasa, (Ritchie) boarded the MV Doña Paz, owned and operated by
respondent Sulpicio Lines, Inc. (Sulpicio Lines), at Tacloban, Leyte bound for
Manila. On the fateful evening of December 20, 1987, MV Doña Paz collided
with the MT Vector, an oil tanker owned and operated by petitioners Vector
Shipping Corporation (Vector Shipping) and Francisco Soriano (Soriano),
which at the time was loaded with 860,000 gallons of gasoline and other
petroleum products, in the vicinity of Dumali Point, Tablas Strait, between
Marinduque and Oriental Mindoro. Only twenty-six persons survived: 24
passengers of MV Doña Paz and 2 crew members of MT Vector. Both
vessels were never retrieved. Worse, only a few of the victims' bodies, who
either drowned or were burned alive, were recovered. Cornelio, Anacleta and
Ritchie were among the victims whose bodies have yet to be recovered up to
this day.
Respondents Adelfo, Emilia, Timoteo, and Cornelio, Jr., all surnamed
Macasa, are the children of Cornelio and Anacleta. On the other hand,
Timoteo and his wife, respondent Rosario Macasa, are the parents of Ritchie
(the Macasas). Some of the Macasas went to the North Harbor in Manila to
await the arrival of Cornelio, Anacleta and Ritchie. When they heard the news
that MV Doña Paz was rammed at sea by another vessel, bewildered, the
Macasas went to the office of Sulpicio Lines to check on the veracity of the
news, but the latter denied that such an incident occurred. According to the
Macasas, Sulpicio Lines was uncooperative and was reluctant to entertain
their inquiries. Later, they were forced to rely on their own efforts to search for
the bodies of their loved ones, but to no avail.
The Macasas manifested that before they filed a case in court, Sulpicio
Lines, through counsel, intimated its intention to settle, and offered the
amount of P250,000.00 for the death of Cornelio, Anacleta and Ritchie. The
Macasas rejected the said offer. Thus, on October 2, 1991, the Macasas filed
a Complaint for Damages arising out of breach of contract of carriage against
Sulpicio Lines before the RTC. The complaint imputed negligence to Sulpicio
Lines because it was remiss in its obligations as a common carrier. The
Macasas prayed for civil indemnity in the amount of P800,000.00 for the death
of Cornelio, Anacleta and Ritchie, as well as for Cornelio's and Anacleta's
alleged unearned income since they were both working as vocational
instructors before their demise. The Macasas also claimed P100,000.00 as
actual and compensatory damages for the lost cash, checks, jewelries and
other personal belongings of the latter, P600,000.00 in moral damages,
P100,000.00 by way of exemplary damages, and P100,000.00 as costs and
attorney's fees.
Sulpicio Lines traversed the complaint, alleging, among others that
(1) MV Doña Paz was seaworthy in all aspects; (2) it exercised extraordinary
diligence in transporting their passengers and goods; (3) it acted in good faith
as it gave immediate assistance to the survivors and kin of the victims; (4) the
sinking of MV Doña Paz was without contributory negligence on its part; and
(5) the collision was MT Vector's fault since it was allowed to sail with an
expired coastwise license, expired certificate of inspection and it was manned
by unqualified and incompetent crew members per findings of the Board of
Marine Inquiry (BMI) in BMI Case No. 653-87 which had exonerated Sulpicio
Lines from liability. Thus, Sulpicio Lines filed a Third-Party Complaint
against Vector Shipping, Soriano and Caltex Philippines, Inc. (Caltex), the
charterer of MT Vector.  DACcIH

Trial on the merits ensued.

 The RTC's Ruling
In its Decision 4 dated May 5, 1995, the RTC awarded P200,000.00 as
civil indemnity for the death of Cornelio, Anacleta and Ritchie; P100,000.00 as
actual damages; P500,000.00 as moral damages; P100,000.00 as exemplary
damages; and P50,000.00 as attorney's fees. The case was disposed of in
this wise:
Accordingly, as a result of this decision, on plaintiffs' complaint
against third-party (sic) defendant Sulpicio Lines Inc., third-party
defendant Caltex Philippines, Inc. and third-party defendant MT Vector
Shipping Corporation and/or Francisco Soriano, are liable against
defendant third-party plaintiff, Sulpicio Lines, for reimbursement,
subrogation and indemnity on all amounts, defendant Sulpicio Lines
was ordered liable against plaintiffs, by way of actual, moral,
exemplary damages and attorney's fee, MT Vector Shipping Lines
and/or Francisco Soriano, third-party defendants, are ordered jointly
and severally, liable to pay third-party plaintiff, Sulpicio Lines, by way
of reimbursement, subrogation and indemnity, of all the above
amounts, ordered against defendant Sulpicio Lines, Inc., to pay in
favor of plaintiff, with interest and cost of suit.
SO ORDERED. 5
Aggrieved, Sulpicio Lines, Caltex, Vector Shipping and Soriano
appealed to the CA.
The CA's Ruling
In the assailed Decision 6 dated September 24, 2003, the CA held:
WHEREFORE, all premises considered, the assailed decision is
hereby modified in that third-party defendant-appellant Caltex Phils.,
Inc. is hereby exonerated from liability. The P100,000 actual damages
is deleted while the indemnity for (sic) is reduced to P150,000. All
other aspects of the appealed judgment are perforce affirmed.
SO ORDERED. 7
The Issues
Hence, this Petition raising the following issues:
1) May the decision of the Board Marine Inquiry (BMI) which, to date, is
still pending with the Department of National Defense (DND) and,
therefore, deemed vacated as it is not yet final and executory, be
binding upon the court?  DTEHIA

2) In the absence of clear, convincing, solid, and concrete proof of

including, but not limited to, absence of eyewitnesses on that
tragic maritime incident on 20 December 1987, will it be in
consonance with law, logic, principles of physics, and/or allied
 science, to hold that MT VECTOR is the vessel solely at fault and
responsible for the collision? How about MV DOÑA PAZ, a bigger
ship of 2,324.08 gross tonnage (5-deck cargo passenger vessel,
then cruising at 16.5 knots)? As compared to MT VECTOR of
629.82 gross tonner tanker, then cruising at 4.5 knots? May it be
considered that, as between the two vessels, MV DOÑA PAZ
could ha[ve] avoid[ed] such collision had there been an official on
the bridge, and that MV DOÑA PAZ could had been earlier
alarmed by its radar for an approaching vessel?
3) May VECTOR and SORIANO be held liable to indemnify/reimburse
SULPICIO the amounts it is ordered to pay the MACASA's
because SULPICIO's liability arises from breach of contract of
carriage, inasmuch as in "culpa contractual" it is sufficient to
prove the existence of the contract, because carrier is presumed
to be at fault or to have acted negligently it being its duty to
exercise extraordinary diligence, and cannot make the [safety] of
its passengers dependent upon the diligence of VECTOR and
SORIANO?
4) Will it be in accord with existing law and/or jurisprudence that both
vessels (MV DOÑA PAZ and MT VECTOR) be declared mutually
at fault and, therefore, each must [bear] its own loss? In the
absence of CLEAR and CONVINCING proof[,] who is solely at
fault? 8
Petitioners posit that the factual findings of the BMI are not binding on
the Court as such is limited to administrative liabilities and does not absolve
the common carrier from its failure to observe extraordinary diligence; that this
Court's ruling in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc. 9 is not res
adjudicata to this case, since there were several other cases which did not
reach this Court but, however, attained finality, previously holding that
petitioners and Sulpicio Lines are jointly and severally liable to the
victims; 10 that the collision was solely due to the fault of MV Doña Paz as it
was guilty of navigational fault and negligence; that due to the absence of the
ship captain and other competent officers who were not at the bridge at the
time of collision, and running at a speed of 16.5 knots, it was the MV Doña
Paz which rammed MT Vector; and that it was improbable for a slower vessel
like MT Vector which, at the time, was running at a speed of merely 4.5 knots
to ram a much faster vessel like the MV Doña Paz. 11  DcCASI

On the other hand, Sulpicio Lines claims that this Court's ruling
in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc. 12 is res adjudicata to this
case being of similar factual milieu and that the same is the law of the case on
the matter; that the BMI proceedings are administrative in nature and can
proceed independently of any civil action filed with the regular courts; that the
BMI findings, as affirmed by the Philippine Coast Guard, holding that MT
Vector was solely at fault at the time of collision, were based on substantial
evidence and by reason of its special knowledge and technical expertise, the
BMI's findings of facts are generally accorded respect by the courts; and that,
as such, said BMI factual findings cannot be the subject of the instant petition
for review asking this Court to look again into the pieces of evidence already
presented. Thus, Sulpicio Lines prays that the instant Petition be denied for
lack of merit. 13
In their memorandum, the Macasas manifest that they are basically
concerned with their claims against Sulpicio Lines for breach of contract of
carriage. The Macasas opine that the arguments raised by Sulpicio Lines in
its attempt to avoid liability to the Macasas are without basis in fact and in law
because the RTC's Decision is supported by applicable provisions of law and
settled jurisprudence on contract of carriage. However, they disagree with the
CA on the deletion of the RTC's award of P100,000.00 actual damages. The
CA's simple justification that if indeed the victims had such huge amount of
money, they could have traveled by plane instead of taking the MV Doña
Paz, according to the Macasas, is unjust, misplaced and adds insult to injury.
They insist that the claim for actual damages was duly established in the
hearings before the RTC by ample proof that Cornelio and Anacleta were both
professionals; that they were in possession of personal effects and jewelries;
and that since it was the Christmas season, the spouses intended a vacation
in Manila and buy things to bring home as gifts. The Macasas also appeal that
the reduction of the civil indemnity for the death of Cornelio, Anacleta and
Ritchie from P200,000.00 to P150,000.00 be reconsidered. Thus, the
Macasas pray that the RTC Decision be affirmed in toto and/or the CA
Decision be modified with respect to the deleted award of actual damages
and the reduced civil indemnity for the death of the victims. 14
This Court's Ruling
The instant Petition lacks merit.
It is a well-established doctrine that in petitions for review
on certiorari under Rule 45 of the Rules of Civil Procedure, only questions of
law may be raised by the parties and passed upon by this Court. This Court
defined a question of law, as distinguished from a question of fact, to wit:
A question of law arises when there is doubt as to what the law
is on a certain state of facts, while there is a question of fact when the
doubt arises as to the truth or falsity of the alleged facts. For a question
to be one of law, the same must not involve an examination of the
probative value of the evidence presented by the litigants or any of
them. The resolution of the issue must rest solely on what the law
provides on the given set of circumstances. Once it is clear that the
issue invites a review of the evidence presented, the question
 posed is one of fact. Thus, the test of whether a question is one of
law or of fact is not the appellation given to such question by the
party raising the same; rather, it is whether the appellate court
can determine the issue raised without reviewing or evaluating
the evidence, in which case, it is a question of law; otherwise it is
a question of fact. 15 
EAIaHD

Petitioners' insistence that MV Doña Paz was at fault at the time of the

collision will entail this Court's review and determination of the weight,
credence, and probative value of the evidence presented. This Court is being
asked to evaluate the pieces of evidence which were adequately passed upon
by both the RTC and the CA. Without doubt, this matter is essentially factual
in character and, therefore, outside the ambit of a petition for review
on certiorari under Rule 45 of the Rules of Civil Procedure. Petitioners ought
to remember that this Court is not a trier of facts. It is not for this Court to
weigh these pieces of evidence all over again. 16
Likewise, we take judicial notice 17 of our decision in Caltex
(Philippines), Inc. v. Sulpicio Lines, Inc. 18 In that case, while Caltex was
exonerated from any third-party liability, this Court sustained the CA ruling
that Vector Shipping and Soriano are liable to reimburse and indemnify
Sulpicio Lines for whatever damages, attorney's fees and costs the latter is
adjudged to pay the victims therein. EaIcAS

Petitioners' invocation of the pendency before this Court of Francisco

Soriano v. Sulpicio Lines, Inc. 19 along with Vector Shipping Corporation and
Francisco Soriano v. American Home Assurance Co. and Sulpicio Lines,
Inc. 20 is unavailing. It may be noted that in a Resolution dated February 13,
2006, this Court denied the petition in Francisco Soriano v. Sulpicio Lines,
Inc. for its failure to sufficiently show that the CA committed any reversible
error in the challenged decision as to warrant the exercise of this Court's
discretionary appellate jurisdiction. As a result, the CA decision 21 dated
November 17, 2003 holding that Sulpicio Lines has a right to reimbursement
and indemnification from the third-party defendants Soriano and Vector
Shipping, who are the same petitioners in this case, was sustained by this
Court. Considering that in the cases which have reached this Court, we have
consistently upheld the third-party liability of petitioners, we see no cogent
reason to deviate from this ruling.
Moreover, in Caltex (Philippines), Inc. v. Sulpicio Lines, Inc., 22 we held
that MT Vector fits the definition of a common carrier under Article 1732 23 of
the New Civil Code. Our ruling in that case is instructive:
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. 
cEATSI

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. 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.
Thus, we are disposed to agree with the findings of the CA when it aptly
held:
We are not swayed by the lengthy disquisition of MT Vector and
Francisco Soriano urging this Court to absolve them from liability. All
evidence points to the fact that it was MT Vector's negligent officers
and crew which caused it to ram into MV Doña Paz. More so, MT
Vector was found to be carrying expired coastwise license and permits
and was not properly manned. As the records would also disclose,
there is a defect in the ignition system of the vessel, and it was not
convincingly shown whether the necessitated repairs were in fact
undertaken before the said ship had set to sea. In short, MT Vector
was unseaworthy at the time of the mishap. That the said vessel was
allowed to set sail when it was, to everyone in the group's knowledge,
not fit to do so translates into rashness and imprudence. 24
We reiterate, anew, the rule that findings of fact of the CA are generally
binding and conclusive on this Court. 25 While this Court has recognized
several exceptions 26 to this rule, none of these exceptions finds application in
this case. It bears emphasis also that this Court accords respect to the factual
findings of the trial court, especially if affirmed by the CA on appeal. Unless
the trial court overlooked substantial matters that would alter the outcome of
the case, this Court will not disturb such findings. In any event, we have
meticulously reviewed the records of the case and found no reason to depart
from the rule. 27
Lastly, we cannot turn a blind eye to this gruesome maritime tragedy
which is now a dark page in our nation's history. We commiserate with all the
victims, particularly with the Macasas who were denied justice for almost two
decades in this case. To accept petitioners' submission that this Court, along
with the RTC and the CA, should await the review by the Department of
National Defense of the BMI findings, would, in effect, limit the courts'
 jurisdiction to expeditiously try, hear and decide cases filed before them. It
would not only prolong the Macasas' agony but would result in yet another
tragedy at the expense of speedy justice. This, we cannot allow. 
cCAIaD

WHEREFORE, the instant Petition is DENIED. The assailed Court of

Appeals Decision dated September 24, 2003 is hereby AFFIRMED. Costs
against petitioners.
SO ORDERED.
Quisumbing,  * Ynares-Santiago, Carpio ** and Reyes, JJ., concur.
 (Vector Shipping Corp. v. Macasa, G.R. No. 160219, [July 21, 2008], 581 PHIL
|||

88-100)

SECOND DIVISION

[G.R. No. 122494. October 8, 1998.]

EVERETT STEAMSHIP CORPORATION, petitioner, vs. COURT

OF APPEALS and HERNANDEZ TRADING CO.
INC., respondents.

SYLLABUS

1. CIVIL LAW; COMMON CARRIERS; BILL OF LADING; LIMITATION

FOR LOSS OR DESTRUCTION OF CARGO, SANCTIONED BY LAW. — A
stipulation in the bill of lading limiting the common carrier's liability for loss or
destruction of a cargo to a certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law, particularly Articles 1749 and 1750 of the
Civil Code. Such limited-liability clause has also been consistently upheld by this
Court in a number of cases.  aCHcIE

2. ID.; ID.; ID.; ID.; REQUISITE. — Pursuant to the afore-quoted provisions

of law, it is required that the stipulation limiting the common carrier's liability for
loss must be "reasonable and just under the circumstances, and has been freely
and fairly agreed upon."
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — In the bill of lading, the carrier
made it clear that its liability would only be up to One Hundred Thousand
(¥100,000.00) Yen. However, the shipper, Maruman Trading, had the option to
declare a higher valuation if the value of its cargo was higher than the limited
liability of the carrier. Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the stipulations. To defeat
the carrier's limited liability, the aforecited Clause 18 of the bill of lading requires
that the shipper should have declared in writing a higher valuation of its goods
before receipt thereof by the carrier and insert the said declaration in the bill of
lading, with the extra freight paid. These requirements in the bill of lading were
never complied with by the shipper, hence, the liability of the carrier under the
limited liability clause stands. The Commercial Invoice No. MTM-941 does not in
itself sufficiently and convincingly show that petitioner has knowledge of the
value of the cargo as contended by private respondent. No other evidence was
proffered by private respondent to support is contention. Thus, we are convinced
that petitioner should be liable for the full value of the lost cargo. In fine, the
liability of petitioner for the loss of the cargo is limited to One Hundred Thousand
(¥100,000.00) Yen, pursuant to Clause 18 of the bill of lading.
4. ID.; OBLIGATIONS AND CONTRACTS; CONTRACTS OF ADHESION,
NOT PER SE INVALID. — Contracts of adhesion are not invalid per se and that
it has on numerous occasions upheld the binding effect thereof. (PAL vs.
CA, 255 SCRA 48, [1996] and other cases cited)
5. ID.; ID.; GREATER VIGILANCE REQUIRED WHEN DEALING
THEREWITH. — Greater vigilance, however, is required of the courts when
dealing with contracts of adhesion in that the said contracts must be carefully
scrutinized "in order to shield the unwary (or weaker party) from deceptive
schemes contained in ready-made covenants," such as the bill of lading in
question. The stringent requirement which the courts are enjoined to observe is
in recognition of Article 24 of the Civil Code which mandates that "(i)n all
contractual, property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his
protection. ASTIED

6. ID.; ID.; CONTRACT OF CARRIAGE; CONSIGNEE; BOUND

THEREBY. — In Sea-Land Service, Inc. vs. Intermediate Appellate Court (153
SCRA 552 [1987]), we held that even if the consignee was not a signatory to the
contract of carriage between the shipper and the carrier, the consignee can still
be bound by the contract.  SDEITC

DECISION

MARTINEZ, J  : p

Petitioner Everett Steamship Corporation, through this petition for review,

seeks the reversal of the decision 1 of the Court of Appeals, dated June 14, 1995,
in CA-G.R. No. 428093, which affirmed the decision of the Regional Trial Court of
Kalookan City, Branch 126, in Civil Case No. C-15532, finding petitioner liable to
private respondent Hernandez Trading Co., Inc. for the value of the lost cargo.  cdphil

Private respondent imported three crates of bus spare parts marked as

MARCO C/No. 12, MARCO C/No. 13 and MARCO C/No. 14, from its supplier,
Maruman Trading Company, Ltd. (Maruman Trading), a foreign corporation
based in Inazawa, Aichi, Japan. The crates were shipped from Nagoya, Japan to
Manila on board "ADELFAEVERETTE," a vessel owned by petitioner's principal,
Everett Orient Lines. The said crates were covered by Bill of Lading No.
NGO53MN.
Upon arrival at the port of Manila, it was discovered that the crate marked
MARCO C/No. 14 was missing. This was confirmed and admitted by petitioner in
its letter of January 13, 1992 addressed to private respondent, which thereafter
made a formal claim upon petitioner for the value of the lost cargo amounting to
One Million Five Hundred Fifty Two Thousand Five Hundred (Y1,552,500.00)
Yen, the amount shown in an Invoice No. MTM-941, dated November 14, 1991.
However, petitioner offered to pay only One Hundred Thousand (Y100,000.00)
Yen, the maximum amount stipulated under Clause 18 of the covering bill of
lading which limits the liability of petitioner.
Private respondent rejected the offer and thereafter instituted a suit for
collection docketed as Civil Case No. C-15532, against petitioner before the
Regional Trial Court of Caloocan City, Branch 126.  cdphil

At the pre-trial conference, both parties manifested that they have no

testimonial evidence to offer and agreed instead to file their respective
memoranda.
On July 16, 1993, the trial court rendered judgment 2 in favor of private
respondent, ordering petitioner to pay: (a) Y1,552,500.00; (b) Y20,000.00 or its
peso equivalent representing the actual value of the lost cargo and the material
and packaging cost; (c) 10% of the total amount as an award for and as
contingent attorney's fees; and (d) to pay the cost of the suit. The trial court ruled:
"Considering defendant's categorical admission of loss and its
failure to overcome the presumption of negligence and fault, the Court
conclusively finds defendant liable to the plaintiff. The next point of
inquiry the Court wants to resolve is the extent of the liability of the
defendant. As stated earlier, plaintiff contends that defendant should be
held liable for the whole value for the loss of the goods in the amount of
Y1,552,500.00 because the terms appearing at the back of the bill of
lading was so written in fine prints and that the same was not signed by
plaintiff or shipper thus, they are not bound by the clause stated in
paragraph 18 of the bill of lading. On the other hand, defendant merely
 admitted that it lost the shipment but shall be liable only up to the
amount of Y100,000.00.  prcd

"The Court subscribes to the provisions of Article 1750 of the New

Civil Code —
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.'
"It is required, however, that the contract must be reasonable and
just under the circumstances and has been fairly and freely agreed
upon. The requirements provided in Art. 1750 of the New Civil Code
must be complied with before a common carrier can claim a limitation of
its pecuniary liability in case of loss; destruction or deterioration of the
goods it has undertaken to transport.  cdphil

"In the case at bar, the Court is of the view that the requirements
of said article have not been met. The fact that those conditions are
printed at the back of the bill of lading in letters so small that they are
hard to read would not warrant the presumption that the plaintiff or its
supplier was aware of these conditions such that he had "fairly and
freely agreed" to these conditions. It can not be said that the plaintiff had
actually entered into a contract with the defendant, embodying the
conditions as printed at the back of the bill of lading that was issued by
the defendant to plaintiff."
On appeal, the Court of Appeals deleted the award of attorney's fees but
affirmed the trial court's findings with the additional observation that private
respondent can not be bound by the terms and conditions of the bill of lading
because it was not privy to the contract of carriage. It said:
"As to the amount of liability, no evidence appears on record to
show that the appellee (Hernandez Trading Co.) consented to the terms
of the Bill of Lading. The shipper named in the Bill of Lading is Maruman
Trading Co., Ltd. whom the appellant (Everett Steamship Corp.)
contracted with for the transportation of the lost goods. prcd

"Even assuming arguendo that the shipper Maruman Trading Co.,

Ltd. accepted the terms of the bill of lading when it delivered the cargo to
the appellant, still it does not necessarily follow that appellee Hernandez
Trading Company as consignee is bound thereby considering that the
latter was never privy to the shipping contract.
xxx xxx xxx
"Never having entered into a contract with the appellant, appellee
should therefore not be bound by any of the terms and conditions in the
bill of lading.
 "Hence, it follows that the appellee may recover the full value of
the shipment lost, the basis of which is not the breach of contract as
appellee was never a privy to the any contract with the appellant, but is
based on Article 1735 of the New Civil Code, there being no evidence to
prove satisfactorily that the appellant has overcome the presumption of
negligence provided for in the law."
Petitioner now comes to us arguing that the Court of Appeals erred (1) in
ruling that the consent of the consignee to the terms and conditions of the bill of
lading is necessary to make such stipulations binding upon it; (2) in holding that
the carrier's limited package liability as stipulated in the bill of lading does not
apply in the instant case; and (3) in allowing private respondent to fully recover
the full alleged value of its lost cargo. cdphil

We shall first resolve the validity of the limited liability clause in the bill of
lading.
A stipulation in the bill of lading limiting the common carrier's liability for
loss or destruction of a cargo to a certain sum, unless the shipper or owner
declares a greater value, is sanctioned by law, particularly Articles 1749 and
1750 of the Civil Code which provide:
"ART. 1749. A stipulation that the common carrier's liability is
limited to the value of the goods appearing in the bill of lading, unless the
shipper or owner declares a greater value, is binding."
"ART. 1750. A contract fixing the sum that may be recovered by
the owner or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the circumstances, and
has been freely and fairly agreed upon."  cdphil

Such limited-liability clause has also been consistently upheld by this Court
in a number of cases. 3 Thus, in Sea Land Service, Inc. vs. Intermediate
Appellate Court  4 , we ruled:
"It seems clear that even if said section 4 (5) of the Carriage of
Goods by Sea Act did not exist, the validity and binding effect of the
liability limitation clause in the bill of lading here are nevertheless fully
sustainable on the basis alone of the cited Civil Code Provisions. That
said stipulation is just and reasonable is arguable from the fact that it
echoes Art. 1750 itself in providing a limit to liability only if a greater
value is not declared for the shipment in the bill of lading. To hold
otherwise would amount to questioning the justness and fairness of the
law itself, and this the private respondent does not pretend to do. But
over and above that consideration, the just and reasonable character of
such stipulation is implicit in it giving the shipper or owner the option of
avoiding accrual of liability limitation by the simple and surely far from
 onerous expedient of declaring the nature and value of the shipment in
the bill of lading . . ."
Pursuant to the aforequoted provisions of law, it is required that the
stipulation limiting the common carrier's liability for loss must be "reasonable and
just under the circumstances, and has been freely and fairly agreed upon."
The bill of lading subject of the present controversy specifically provides,
among others:
"18. All claims for which the carrier may be liable shall be
adjusted and settled on the basis of the shipper's net invoice cost plus
freight and insurance premiums, if paid, and in no event shall the carrier
be liable for any loss of possible profits or any consequential loss.
 llcd

"The carrier shall not be liable for any loss of or any damage to or
in any connection with, goods in an amount exceeding One Hundred
Thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in
any other currency per package or customary freight unit (whichever is
least) unless the value of the goods higher than this amount is declared
in writing by the shipper before receipt of the goods by the carrier and
inserted in the Bill of Lading and extra freight is paid as required."
(Emphasis supplied)
The above stipulations are, to our mind, reasonable and just. In the bill of
lading, the carrier made it clear that its liability would only be up to One Hundred
Thousand (Y100,000.00) Yen. However, the shipper, Maruman Trading, had the
option to declare a higher valuation if the value of its cargo was higher than the
limited liability of the carrier. Considering that the shipper did not declare a
higher valuation, it had itself to blame for not complying with the stipulations.
The trial court's ratiocination that private respondent could not have "fairly
and freely" agreed to the limited liability clause in the bill of lading because the
said conditions were printed in small letters does not make the bill of lading
invalid.
 cdtai

We ruled in PAL, Inc. vs. Court of Appeals 5 that the "jurisprudence on the

matter reveals the consistent holding of the court that contracts of adhesion are
not invalid per se and that it has on numerous occasions upheld the binding
effect thereof." Also, in Philippine American General Insurance
Co., Inc. vs. Sweet Lines, Inc. 6 this Court, speaking through the learned Justice
Florenz D. Regalado, held:
". . . Ong Yiu vs. Court of Appeals, et al., instructs us that
'contracts of adhesion wherein one party imposes a ready-made form of
contract on the other . . . are contracts not entirely prohibited. The one
who adheres to the contract is in reality free to reject it entirely; if he
adheres he gives his consent.' In the present case, not even an
 allegation of ignorance of a party excuses non-compliance with the
contractual stipulations since the responsibility for ensuring full
comprehension of the provisions of a contract of carriage devolves not
on the carrier but on the owner, shipper, or consignee as the case may
be." (Emphasis supplied)
It was further explained in Ong Yiu vs. Court of Appeals 7 that stipulations
in contracts of adhesion are valid and binding.  Cdpr

"While it may be true that petitioner had not signed the plane
ticket . . ., he is nevertheless bound by the provisions thereof. 'Such
provisions have been held to be a part of the contract of carriage, and
valid and binding upon the passenger regardless of the latter's lack of
knowledge or assent to the regulation.' It is what is known as a contract
of 'adhesion,' in regards which it has been said that contracts of
adhesion wherein one party imposes a ready-made form of contract on
the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free to reject
it entirely; if he adheres, he gives his consent. . . ., a contract limiting
liability upon an agreed valuation does not offend against the policy of
the law forbidding one from contracting against his own negligence."
(Emphasis supplied)
Greater vigilance, however, is required of the courts when dealing with
contracts of adhesion in that the said contracts must be carefully scrutinized "in
order to shield the unwary (or weaker party) from deceptive schemes contained
in ready-made covenants," 8 such as the bill of lading in question. The stringent
requirement which the courts are enjoined to observe is in recognition of Article
24 of the Civil Code which mandates that "(i)n all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age or other
handicap, the courts must be vigilant for his protection."  cdphil

The shipper, Maruman Trading, we assume, has been extensively

engaged in the trading business. It can not be said to be ignorant of the business
transactions it entered into involving the shipment of its goods to its customers.
The shipper could not have known, or should know the stipulations in the bill of
lading and there it should have declared a higher valuation of the goods shipped.
Moreover, Maruman Trading has not been heard to complain that it has been
deceived or rushed into agreeing to ship the cargo in petitioner's vessel. In fact, it
was not even impleaded in this case.
The next issue to be resolved is whether or not private respondent, as
consignee, who is not a signatory to the bill of lading is bound by the stipulations
thereof.
 Again, in Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra),
we held that even if the consignee was not a signatory to the contract of carriage
between the shipper and the carrier, the consignee can still be bound by the
contract. Speaking through Mr. Chief Justice Narvasa, we ruled:
"To begin with, there is no question of the right, in principle, of
a consignee in a bill of lading to recover from the carrier or shipper for
loss of, or damage to goods being transported under said bill, although
that document may have been — as in practice it oftentimes is-drawn up
only by the consignor and the carrier without the intervention of the
consignee. . . . prcd

'. . . the right of a party in the same situation as respondent here,

to recover for loss of a shipment consigned to him under a bill of lading
drawn up only by and between the shipper and the carrier, springs from
either a relation of agency that may exist between him and the shipper
or consignor, or his status as stranger in whose favor some stipulation is
made in said contract, and who becomes a party thereto when he
demands fulfillment of that stipulation, in this case the delivery of the
goods or cargo shipped. In neither capacity can he assert personally, in
bar to any provision of the bill of lading, the alleged circumstance that
fair and free agreement to such provision was vitiated by its being in
such fine print as to be hardly readable. Parenthetically, it may be
observed that in one comparatively recent case (Phoenix Assurance
Company vs. Macondray & Co., Inc., 64 SCRA 15) where this Court
found that a similar package limitation clause was "printed in the
smallest type on the back of the bill of lading," it nonetheless ruled that
the consignee was bound thereby on the strength of authority holding
that such provisions on liability limitation are as much a part of a bill of
lading as though physically in it and as though placed therein by
agreement of the parties.  LexLib

There can, therefore, be no doubt or equivocation about the

validity and enforceability of freely-agreed-upon stipulations in a contract
of carriage or bill of lading limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher value and inserts it into
said contract or bill. This proposition, moreover, rests upon an almost
uniform weight of authority." (Emphasis supplied)
When private respondent formally claimed reimbursement for the missing
goods from petitioner and subsequently filed a case against the latter based on
the very same bill of lading, it (private respondent) accepted the provisions of the
contract and thereby made itself a party thereto, or at least has come to court to
enforce it. 9 Thus, private respondent cannot now reject or disregard the carrier's
limited liability stipulation in the bill of lading. In other words, private respondent is
bound by the whole stipulations in the bill of lading and must respect the same.  cdll
 Private respondent, however, insists that the carrier should be liable for the
full value of the lost cargo in the amount of Y1,552,500.00, considering that the
shipper, Maruman Trading, had "fully declared the shipment . . ., the contents of
each crate, the dimensions, weight and value of the contents," 10 as shown in the
commercial Invoice No. MTM-941.
This claim was denied by petitioner, contending that it did not know of the
contents, quantity and value of "the shipment which consisted of three pre-
packed crates described in Bill of Lading No. NGO-53MN merely as '3 CASES
SPARE PARTS."' 11
The bill of lading in question confirms petitioner's contention. To defeat the
carrier's limited liability, the aforecited Clause 18 of the bill of lading requires that
the shipper should have declared in writing a higher valuation of its goods before
receipt thereof by the carrier and insert the said declaration in the bill of lading,
with the extra freight paid. These requirements in the bill of lading were never
complied with by the shipper, hence, the liability of the carrier under the limited
liability clause stands. The commercial Invoice No. MTM-941 does not in itself
sufficiently and convincingly show that petitioner has knowledge of the value of
the cargo as contended by private respondent. No other evidence was proffered
by private respondent to support is contention. Thus, we are convinced that
petitioner should be liable for the full value of the lost cargo. prLL

In fine, the liability of petitioner for the loss of the cargo is limited to One
Hundred Thousand (Y100,000.00) Yen, pursuant to Clause 18 of the bill of
lading.
WHEREFORE, the decision of the Court of Appeals dated June 14, 1995
in C.A.-G.R. CV No. 42803 is hereby REVERSED and SET ASIDE.
SO ORDERED.
Regalado, Melo, Puno and Mendoza, JJ ., concur.
 (Everett Steamship Corp. v. Court of Appeals, G.R. No. 122494, [October 8,
|||

1998], 358 PHIL 129-140)

THIRD DIVISION

[G.R. No. 84680. February 5, 1996.]

SUMMA INSURANCE CORPORATION, petitioner, vs. COURT

OF APPEALS and MANILA PORT SERVICE, INC., respondents.

Dollete, Blanco, Ejercito & Associates for petitioner.

 Cruz Durian Agabin Atienza Alday & Tuason for private respondent.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; ARRASTRE

SERVICE; ARRASTRE OPERATOR IS LIABLE FOR THE LOSS OF THE
SHIPMENT SINCE IT HAS BEEN ESTABLISHED THAT THE SHIPMENT WAS
LOST WHILE IN ITS CUSTODY. — Petitioner was subrogated to the rights of
the consignee. The relationship therefore between the consignee and the
arrastre operator must be examined. This relationship is much akin to that
existing between the consignee or owner of shipped goods and the common
carrier, or that between a depositor and a warehouseman. In the performance of
its obligations, an arrastre operator should observe the same degree of diligence
as that required of a common carrier, and a warehouseman as enunciated under
Article 1733 of the Civil Code and Section 3(b) of the Warehouse Receipts Law,
respectively. Being the custodian of the goods discharged from a vessel, an
arrastre operator's duty is to take good care of the goods and to turn them over to
the party entitled to their possession. In this case, it has been established that
the shipment was lost while in the custody of private respondent. We find private
respondent liable for the loss. This is an issue of fact determined by the trial court
and respondent Court, which is not reviewable in a petition under Rule 45 of the
Rules of Court. ELC

2. ID.; EXTENT OF LIABILITY OF ARRASTRE OPERATOR;

MANAGEMENT CONTRACT; SINCE PETITIONER FAILED TO CONVINCE
THE COURT THAT THE REQUIREMENT OF THE MANAGEMENT CONTRACT
HAS BEEN COMPLIED WITH, THE ARRASTRE OPERATOR WAS NOT
LIABLE FOR THE ACTUAL INVOICE VALUE OF THE LOST SHIPMENT. — In
the performance of its job, an arrastre operator is bound by the management
contract it had executed with the Bureau of Customs. However, a management
contract, which is a sort of a stipulation pour autrui within the meaning of Article
1311 of the Civil Code, is also binding on a consignee because it is incorporated
in the gate pass and delivery receipt which must be presented by the consignee
before delivery can be effected to it.. The insurer, as successor-in-interest of the
consignee, is likewise bound by the management contract. Indeed, upon taking
delivery of the cargo, a consignee (and necessarily its successor-in-interest)
tacitly accepts the provisions of the management contract, including those which
are intended to limit the liability of one of the contracting parties, the arrastre
operator. Section 1, Article VI of the Management Contract between private
respondent and the Bureau of Customs provides: "1. Responsibility and Liability
for Losses and Damages — The CONTRACTOR shall, at its own expense
handle all merchandise in the piers and other designated places and at its own
expense perform all work undertaken by it hereunder diligently and in a skillful
workmanlike and efficient manner; that the CONTRACTOR shall be solely
responsible as an independent CONTRACTOR, and hereby agrees to accept
liability and to promptly pay to the steamship company, consignee, consignor or
other interested party or parties for the loss, damage, or non-delivery of cargoes
to the extent of the actual invoice value of each package which in no case shall
be more than Three Thousand Five Hundred Pesos (P3,500.00) for each
package unless the value of the importation is otherwise specified or manifested
or communicated in writing together with the invoice value and supported by a
certified packing list to the CONTRACTOR by the interested party or parties
before the discharge of the goods, as well as all damage that may be suffered on
account of loss, damage, or destruction of any merchandise while in custody or
under the control of the CONTRACTOR in any pier, shed, warehouse, facility or
other designated place under the supervision of the BUREAU, . . ." In this case,
no evidence was offered by petitioner proving the amount of arrastre fees paid to
private respondent so as to put the latter on notice of the value of the cargo.
While petitioner alleged that prior to the loss of the package, its value had been
relayed to private respondent through the documents the latter had processed,
petitioner does not categorically state that among the submitted documents were
the pro forma invoice value and the certified packing list. Neither does petitioner
pretend that these two documents were prerequisites to the issuance of a permit
to deliver or were attachments thereto. Even the permit to deliver, upon which
petitioner anchors its arguments, may not be considered by the Court because it
was not identified and formally offered in evidence. All told, petitioner failed to
convince the Court that the requirement of the management contract had been
complied with to entitle it to recover the actual invoice value of the lost shipment.
3. REMEDIAL LAW; CIVIL PROCEDURE; EVIDENCE; BURDEN OF
PROOF; IN CIVIL CASES, THE BURDEN OF PROOF IS ON THE PARTY WHO
WOULD BE DEFEATED IF NO EVIDENCE IS GIVEN ON EITHER SIDE. — In
civil cases, the burden of proof is on the party who would be defeated if no
evidence is given on either side. Said party must establish his case by a
preponderance of evidence, which means that the evidence as a whole adduced
by one side is superior to that of the other. Petitioner having asserted the
affirmative of the issue in this case, it should have presented evidence required
to obtain a favorable judgment.
4. LEGAL ETHICS; ATTORNEY'S FEES; AWARD OF ATTORNEY'S
FEES IN THIS CASE IS PROPER, AND THERE IS NO REASON TO RE-
EXAMINE THE APPELLATE COURT'S DETERMINATION OF THE AMOUNT
OF THE AWARD IN VIEW OF THE AMOUNT OF THE PRINCIPAL
OBLIGATION. — Anent the attorney's fees, we find the award to be proper
considering that the acts and omissions of private respondent have compelled
petitioner to litigate or incur expenses to protect its rights. However, as to the
amount of the award, we find no reason to re-examine the appellate court's
determination thereon in view of the amount of the principal obligation.
Otherwise, we would be disregarding the doctrine that discretion, when well
exercised, should not be disturbed.  SDML

DECISION

PANGANIBAN, J  : p

Is an arrastre operator legally liable for the loss of a shipment in its

custody? If so, what is the extent of its liability? These are the two questions that
this Court faced in this petition for review on certiorari of the Decision 1 of the
Court of Appeals 2 in CA-G.R. No. CV 04964 promulgated on April 27, 1988,
which affirmed with modification the decision of the Court of First Instance of
Manila in Civil Case No. 82-13988, ordering petitioner to pay private respondent
a sum of money, with legal interest, attorney's fees and the costs of the suit.
The Facts
On November 22, 1981, the S/S "Galleon Sapphire", a vessel owned by
the National Galleon Shipping Corporation (NGSC), arrived at Pier 3, South
Harbor, Manila, carrying a shipment consigned to the order of Caterpillar Far
East Ltd. with Semirara Coal Corporation (Semirara) as "notify party." The
shipment, including a bundle of PC8U blades, was covered by marine insurance
under Certificate No. 82/012-FEZ issued by petitioner and Bill of Lading No.
SF/MLA 1014. The shipment was discharged from the vessel to the custody of
private respondent, formerly known as E. Razon, Inc., the exclusive arrastre
operator at the South Harbor. Accordingly, three good-order cargo receipts were
issued by NGSC, duly signed by the ship's checker and a representative of
private respondent.  cdll

On February 24, 1982, the forwarder, Sterling International Brokerage

Corporation, withdrew the shipment from the pier and loaded it on the barge
"Semirara 8104." The barge arrived at its port of destination, Semirara Island, on
March 9, 1982. When Semirara inspected the shipment at its warehouse, it
discovered that the bundle of PC8U blades was missing.
On March 15, 1982, private respondent issued a shortlanded certificate
stating that the bundle of PC8U blades was already missing when it received the
shipment from the NGSC vessel. Semirara then filed with petitioner, respondent
and NGSC its claim for P280,969.68, the alleged value of the lost bundle.
 On September 29, 1982, petitioner paid Semirara the invoice value of the
lost shipment. Semirara thereafter executed a release of claim and subrogation
receipt. Consequently, petitioner filed its claims with NGSC and private
respondent but it was unsuccessful.
Petitioner then filed a complaint (Civil Case 82-13988) with the Regional
Trial Court, Branch XXIV, Manila, against NGSC and private respondent for
collection of a sum of money, damages and attorney's fees.
On August 2, 1984, the trial court rendered a decision absolving NGSC
from any liability but finding private respondent liable to petitioner. The dispositive
portion of the decision reads as follows:
"PREMISES CONSIDERED, judgment is hereby rendered
ordering defendant Metro Port Service, Inc. to pay plaintiff Summa
Insurance Corporation the sum of P280,969.68 with legal interest from
November 22, 1982, the date of the filing of the complaint, until full
payment, and attorney's fees in the sum of P20,000.00, with costs of
suit.
"The complaint as against defendant National Galleon Shipping
Corporation and the counterclaim interposed by said defendant are
hereby dismissed." (Rollo, p. 32).
In resolving the issue as to who had custody of the shipment when it was
lost, the trial court relied more on the good-order cargo receipts issued by NGSC
than on the short-landed certificate issued by private respondent. The trial court
held:
"As between the aforementioned two documentary exhibits, the
Court is more inclined to give credence to the cargo receipts. Said cargo
receipts were signed by a checker of defendant NGSC and a
representative of Metro Port. It is safe to presume that the cargo receipts
accurately describe the quantity and condition of the shipment when it
was discharged from the vessel. Metro Port's representative would not
have signed the cargo receipts if only four (4) packages were discharged
from the vessel and given to the possession and custody of the arrastre
operator. Having been signed by its representative, the Metro Port is
bound by the contents of the cargo receipts.
"On the other hand, the Metro Port's short-landed certificate could
not be given much weight considering that, as correctly argued by
counsel for defendant NGSC, it was issued by Metro Port alone and was
not countersigned by the representatives of the shipping company and
the consignee. Besides, the certificate was prepared by Atty. Servillano
V. Dolina, Second Deputy General Manager of Metro Port, and there is
no proof on record that he was present at the time the subject shipment
was unloaded from the vessel and received by the arrastre operator.
 Moreover, the short-landed certificate bears the date of March 15, 1982,
more than three months after the discharge of the cargo from the
carrying vessel.  cda

"Neither could the Court give probative value to the marine report
(Exhibit "J", also Exhibit "1"-Razon). The attending surveyor who
attended the unloading of the shipment did not take the witness stand to
testify on said report. Although Transnational Adjustment Co.'s general
manager, Mariano C. Remorin, was presented as a witness, his
testimony is not competent because he was not present at the time of
the discharge of the cargo.
"Under the foregoing considerations, the Court finds that the one
(1) bundle of PC8U blade in question was not lost while the cargo was in
the custody of the carrying vessel. Considering that the missing bundle
was discharged from the vessel unto the custody of defendant arrastre
operator and considering further that the consignee did not receive this
cargo from the arrastre operator, it is safe to conclude from these facts
that said missing cargo was lost while same was in the possession and
control of defendant Metro Port. Defendant Metro Port has not
introduced competent evidence to prove that the loss was not due to its
fault or negligence. Consequently, only the Metro Port must answer for
the value of the missing cargo. Defendant NGSC is absolved of any
liability for such loss."
On appeal, the Court of Appeals modified the decision of the trial court and
reduced private respondent's liability to P3,500.00 as follows 3 :
"WHEREFORE, the judgment appealed from is MODIFIED in that
defendant Metro Port Service, Inc., is ordered to pay plaintiff Summa
Insurance Corporation:
(1) the sum of P3,500.00, with legal interest from November 22,
1982, until fully paid; and
(2) the sum of P7,000.00, as and for attorney's fees.
"Costs against defendant Metro Port Service, Inc. "
Petitioner moved for reconsideration of the said decision but the Court of
Appeals denied the same. Hence, the instant petition.
The Issues
The issues brought by the parties could be stated as follows:
(1) Is the private respondent legally liable for the loss of the shipment in
question?
(2) If so, what is the extent of its liability?
The First Issue: Liability for Loss of Shipment
 Petitioner was subrogated to the rights of the consignee. The relationship
therefore between the consignee and the arrastre operator must be examined.
This relationship is much akin to that existing between the consignee or owner of
shipped goods and the common carrier, or that between a depositor and a
warehouseman. 4 In the performance of its obligations, an arrastre operator
should observe the same degree of diligence as that required of a common
carrier and a warehouseman as enunciated under Article 1733 of the Civil Code
and Section 3(b) of the Warehouse Receipts Law, respectively. Being the
custodian of the goods discharged from a vessel, an arrastre operator's duty is to
take good care of the goods and to turn them over to the party entitled to their
possession.
In this case, it has been established that the shipment was lost while in the
custody of private respondent. We find private respondent liable for the loss. This
is an issue of fact determined by the trial court and respondent Court, which is
not reviewable in a petition under Rule 45 of the Rules of Court.
The Second Issue: Extent of Liability
In the performance of its job, an arrastre operator is bound by the
management contract it had executed with the Bureau of Customs. However, a
management contract, which is a sort of a stipulation pour autrui within the
meaning of Article 1311 of the Civil Code, is also binding on a consignee
because it is incorporated in the gate pass and delivery receipt which must be
presented by the consignee before delivery can be effected to it. 5 The insurer,
as successor-in-interest of the consignee, is likewise bound by the management
contract. 6 Indeed, upon taking delivery of the cargo, a consignee (and
necessarily its successor-in-interest) tacitly accepts the provisions of the
management contract, including those which are intended to limit the liability of
one of the contracting parties, the arrastre operator. 7
However, a consignee who does not avail of the services of the arrastre
operator is not bound by the management contract. 8 Such an exception to the
rule does not obtain here as the consignee did in fact accept delivery of the cargo
from the arrastre operator.
Section 1, Article VI of the Management Contract between private
respondent and the Bureau of Customs 9 provides:
"1. Responsibility and Liability for Losses and Damages — The
CONTRACTOR shall, at its own expense handle all merchandise in the
piers and other designated places and at its own expense perform all
work undertaken by it hereunder diligently and in a skillful workmanlike
and efficient manner; that the CONTRACTOR shall be solely responsible
as an independent CONTRACTOR, and hereby agrees to accept liability
and to promptly pay to the steamship company, consignee, consignor or
other interested party or parties for the loss, damage, or non-delivery of
 cargoes to the extent of the actual invoice value of each package which
in no case shall be more than Three Thousand Five Hundred Pesos
(P3,500.00) for each package unless the value of the importation is
otherwise specified or manifested or communicated in writing together
with the invoice value and supported by a certified packing list to the
CONTRACTOR by the interested party or parties before the discharge
of the goods, as well as all damage that may be suffered on account of
loss, damage, or destruction of any merchandise while in custody or
under the control of the CONTRACTOR in any pier, shed, warehouse,
facility or other designated place under the supervision of the BUREAU. .
. . (Emphasis supplied).
Interpreting a similar provision in the management contract between
private respondent's predecessor, E. Razon, Inc. and the Bureau of Customs, the
Court said in E. Razon Inc. vs. Court of Appeals: 10
"Indeed, the provision in the management contract regarding the
declaration of the actual invoice value 'before the arrival of the goods'
must be understood to mean a declaration before the arrival of the
goods in the custody of the arrastre operator, whether it be done long
before the landing of the shipment at port, or immediately before turn-
over thereof to the arrastre operator's custody . What is essential is
knowledge beforehand of the extent of the risk to be undertaken by the
arrastre operator, as determined by the value of the property committed
to its care that it may define its responsibility for loss or damage to such
cargo and to ascertain compensation commensurate to such risk
assumed . . . ."
In the same case, the Court added that the advance notice of the actual invoice
of the goods entrusted to the arrastre operator is "for the purpose of determining
its liability, that it may obtain compensation commensurable to the risk it
assumes, (and) not for the purpose of determining the degree of care or diligence
it must exercise as a depository or warehouseman" 11 since the arrastre operator
should not discriminate between cargoes of substantial and small values, nor
exercise care and caution only for handling of goods announced to it beforehand
to be of sizeable value, for that would be spurning the public service nature of its
business.
On the same provision limiting the arrastre operator's liability, the Court
held in Northern Motors, Inc. v. Prince Line:  12
"Appellant claims that the above quoted provision is null and void,
as it limits the liability of appellee for the loss, destruction or damage of
any merchandise, to P500.00 per package, contending that to sustain
the validity of the limitation would be to encourage acts of conversion
and unjust enrichment on the part of the arrastre operator. Appellant,
however, overlooks the fact that the limitation of appellee's liability under
said provision, is not absolute or unqualified, for if the value of the
 merchandise is specified or manifested by the consignee, and the
corresponding arrastre charges are paid on the basis of the declared
value, the limitation does not apply. Consequently, the questioned
provision is neither unfair nor arbitrary, as contended, because the
consignee has it in his hands to hold, if he so wishes, the arrastre
operator responsible for the full value of his merchandise by merely
specifying it in any of the various documents required of him, in clearing
the merchandise from the customs. For then, the appellee arrastre
operator, by reasons of the payment to it of a commensurate charge
based on the higher declared value of the merchandise, could and
should take extraordinary care of the special or valuable cargo. In this
manner, there would be mutuality. What would, indeed, be unfair and
arbitrary is to hold the arrastre operator liable for the full value of the
merchandise after the consignee has paid the arrastre charges only (on)
a basis much lower than the true value of the goods."
In this case, no evidence was offered by petitioner proving the amount of
arrastre fees paid to private respondent so as to put the latter on notice of the
value of the cargo. While petitioner alleged that prior to the loss of the package,
its value had been relayed to private respondent through the documents the
latter had processed, petitioner does not categorically state that among the
submitted documents were the pro forma invoice value and the certified packing
list. Neither does petitioner pretend that these two documents were prerequisites
to the issuance of a permit to deliver or were attachments thereto. Even the
permit to deliver, upon which petitioner anchors its arguments, may not be
considered by the Court because it was not identified and formally offered in
evidence. 13
In civil cases, the burden of proof is on the party who would be defeated if
no evidence is given on either side. Said party must establish his case by a
preponderance of evidence, which means that the evidence as a whole adduced
by one side is superior to that of the other. 14 Petitioner having asserted the
affirmative of the issue in this case, it should have presented evidence required
to obtain a favorable judgment.
On the other hand, on top of its denial that it had received the invoice value
and the packing list before the discharge of the shipment, private respondent was
able to prove that it was apprised of the value of the cargo only after its discharge
from the vessel, ironically through petitioner's claim for the lost package to which
were attached the invoice and packing list. All told, petitioner failed to convince
the Court that the requirement of the management contract had been complied
with to entitle it to recover the actual invoice value of the lost shipment. Anent the
attorney's fees, we find the award to be proper considering that the acts and
omissions of private respondent have compelled petitioner to litigate or incur
expenses to protect its rights. 15 However, as to the amount of the award, we find
no reason to re-examine the appellate court's determination thereon in view of
the amount of the principal obligation. Otherwise, we would be disregarding the
doctrine that discretion, when well exercised, should not be disturbed. 
cdasia

WHEREFORE, the petition for review on certiorari is DENIED and the

decision of the Court of Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo, and Francisco, JJ., concur.
 (Summa Insurance Corp. v. Court of Appeals, G.R. No. 84680, [February 5,
|||

1996], 323 PHIL 214-228)