Bachelor Express vs.
Court of Appeals, July 31, 1990 Fortuituous Event requisites: (1 ) The cause of the unforeseen and unexpected
Bus No. 800 owned by Bachelor Express, Inc. and driven by Cresencio Rivera was
the situs of a stampede which resulted in the death of passengers Ornominio Beter
and Narcisa Rautraut.
 the bus came from Davao City on its way to Cagayan de Oro City passing
Butuan City.
 while at Tabon-Tabon, Butuan City, the bus picked up a passenger;
 about fifteen (15) minutes later, a passenger at the rear portion suddenly
stabbed a PC soldier which caused commotion and panic among the
passengers;
 when the bus stopped, passengers Ornominio & Narcisa were found lying
down the road, the former already dead as a result of head injuries and the
latter also suffering from severe injuries which caused her death later.
 The passenger-assailant alighted from the bus and ran toward the bushes
but was killed by the police.
Thereafter, the heirs of Ornomino Beter and Narcisa Rautraut, private respondents
herein a complaint for "sum of money" against Bachelor Express, Inc. its alleged
owner Samson Yasay, and the driver Rivera.
Bachelor Express Defense:
1) Ornominio Beter and Narcisa Rautraut jumped off the bus without the knowledge
and consent, much less, the fault of the driver and conductor and the defendants
in this case;
2) the defendant corporation had exercised due diligence in the choice of its
employees to avoid as much as possible accidents;
3) the incident was an incident or event very much beyond the control of the
defendants;
4) defendants were not parties to the incident complained of as it was an act of a
third party who is not in any way connected with the defendants and of which the
latter have no control and supervision; . . ." (Rollo, pp. 112-113).
RTC dismissed: transportation companies are not insurers of their passengers If and
when passengers harm other passengers without the knowledge of the transportation
company s personnel, the latter should not be faulted. when the commotion ensued
inside the bus, the two deceased panicked and, in state of shock and fear, they
jumped off from the bus by passing through the window.
CA reversed.
Issue: WON Bachelor Express is liable for the death of Ornomino and Narcia
Held: YES.
pursuant to Article 1756 of the Civil Code, petitioner Bachelor Express, Inc. is
presumed to have acted negligently unless it can prove that it had observed
extraordinary diligence in accordance with Articles 1733 and 1755 of the New Civil
Code.
occurrence, or of the failure of the debtor to comply with his obligation, must be
independent of the human will. (2) It must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid.
(3) The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner. And (4) the obligor (debtor) must be free from any
participation in the aggravation of the injury resulting to the creditor.
The running amuck of the passenger was the proximate cause of the incident as it
triggered off a commotion and panic among the passengers such that the passengers
started running to the sole exit shoving each other resulting in the falling off the bus
by passengers Beter and Rautraut causing them fatal injuries. The sudden act of the
passenger who stabbed another passenger in the bus is within the context of force
majeure.
However, in order that a common carrier may be absolved from liability in case of
force majeure, it is not enough that the accident was caused by force majeure. The
common carrier must still prove that it was not negligent in causing the injuries
resulting from such accident.
Therefore, the next question to be determined is whether or not the petitioner’s
common carrier observed extraordinary diligence to safeguard the lives of its
passengers.
the petitioner common carrier was negligent in the provision of safety precautions so
that its passengers may be transported safely to their destinations.
There is nothing in the record to support the conclusion that the solitary door of the
bus was locked as to prevent the passengers from passing through. Leonila Cullano,
testifying for the defense, clearly stated that the conductor opened the door when the
passengers were shouting that the bus stop while they were in a state of panic.
Pedro Collango, on the other hand, testified that he shut the door after the last
passenger had boarded the bus. But he had quite conveniently neglected to say that
when the passengers had panicked, he himself panicked and had gone to open the
door.
At such speed of not less than 30 to 40 miles . . ., or about 48 to 65 kilometers per
hour, the speed of the bus could scarcely be considered slow considering that
according to Collango himself, the bus had just come from a full stop after picking a
passenger and that the bus was still on its second or third gear
Thus: the bus driver did not immediately stop the bus at the height of the commotion;
the bus was speeding from a full stop; the victims fell from the bus door when it was
opened or gave way while the bus was still running; the conductor panicked and blew
his whistle after people had already fallen off the bus; and the bus was not properly
equipped with doors in accordance with law — it is clear that the petitioners have
failed to overcome the presumption of fault and negligence found in the law governing
common carriers.

1. Dole Phils. vs. Maritime Company of the Phils. Feb. 27, 1987
 Shipment of machine parts;
 consignee: Dole Phils; carrier: Maritime
 December 18, 1971: Dole received the machine parts in Dadiangas (Gen
Santos) on on December 18, 1971;
 May 4, 1972: Filed a claim/demand for damages with the defendant
vessel on
 June 11, 1973: filed a complaint against Maritime
 Maritime: prescribed; beyond one year period under COGSA
 Dole: May 4 demand interrupted prescriptive period pursuant to Art 1155
 SC: Civil Code not applicable. desirable that matters affecting transportation of
goods by sea be decided in as short a time as possible
 further no different result would obtain even if the Court were to accept
the proposition
This appeal, which was certified to the Court by the Court of Appeals as involving only
questions of law, 1 relates to a claim for loss and/or damage to a shipment of
machine parts sought to be enforced by the consignee: Dole Philippines, Inc.
(hereinafter called Dole) against the carrier, Maritime Company of the Philippines
(hereinafter called Maritime), under the provisions of the Carriage of Goods by Sea
Act. 2  ". . . the carrier and the ship shall be discharged from all liability in respect of loss or
The basic facts are succinctly stated in the order of the Trial Court 3 dated March 16,
1977, the relevant portion of which read:chanrobles virtual lawlibrary
"x       x       x
Before the plaintiff started presenting evidence at today’s trial, at the instance of the
Court the lawyers entered into the following stipulation of facts:chanrob1es virtual 1aw
library
1. The cargo subject of the instant case was discharged in Dadiangas unto the
custody of the consignee Dole Phils on December 18, 1971;
2. The corresponding claim for the damages sustained by the cargo was filed by the
plaintiff with the defendant vessel on May 4, 1972;
3. On June 11, 1973 the plaintiff filed a complaint in the Court of First Instance of
Manila, docketed therein as Civil Case No. 91043, embodying three (3) causes of
action involving three (3) separate and different shipments. The third cause of action
therein involved the cargo now subject of this present litigation;
4. On December 11, 1974, Judge Serafin Cuevas issued an Order in Civil Case No.
91043 dismissing the first two causes of action in the aforesaid case with prejudice
and without pronouncement as to costs because the parties had settled or
compromised the claims involved therein. The third cause of action which covered the
cargo subject of this case now was likewise dismissed but without prejudice as it was
not covered by the settlement. The dismissal of that complaint containing the three
causes of action was upon a joint motion to dismiss filed by the parties;
5. Because of the dismissal of the (complaint in Civil Case No. 91043 with respect to
the third cause of action without prejudice, plaintiff instituted this present complaint on
January 6, 1975.
x       x       x" 4 
To the complaint in the subsequent action Maritime filed an answer pleading inter alia
the affirmative defense of prescription under the provisions of the Carriage of Goods
by Sea Act, 5 and following pre-trial, moved for a preliminary hearing on said defense.
6 The Trial Court granted the motion, scheduling the preliminary hearing on April 27,
1977. 7 The record before the Court does not show whether or not that hearing was
held, but under date of May 6, 1977, Maritime filed a formal motion to dismiss
invoking once more the ground of prescription. 8 The motion was opposed by Dole 9
and the Trial Court, after due consideration, resolved the matter in favor of Maritime
and dismissed the complaint. 10 Dole sought a reconsideration, which was denied, 11
and thereafter took the present appeal from the order of dismissal.
The pivotal issue is whether or not Article 1155 of the Civil Code providing that the
prescription of actions is interrupted by the making of an extrajudicial written demand
by the creditor is applicable to actions brought under the Carriage of Goods by Sea
Act which, in its Section 3, paragraph 6, provides that:
damage unless suit is brought within one year after delivery of the goods or the date
when the goods should have been delivered; Provided, That, if a notice of loss or
damage, either apparent or conceded, is not given as provided for in this section, that
fact shall not affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have been
delivered.
library
Dole concedes that its action is subject to the one-year period of limitation prescribed
in the above-cited provision. 12 The substance of its argument is that since the
provisions of the Civil Code are, by express mandate of said Code, suppletory of
deficiencies in the Code of Commerce and special laws in matters governed by the
latter, 13 and there being." . . a patent deficiency . . . with respect to the tolling of the
prescriptive period . . ." provided for in the Carriage of Goods by Sea Act, 14
prescription under said Act is subject to the provisions of Article 1155 of the Civil
Code on tolling; and because Dole’s claim for loss or damage made on May 4, 1972
amounted to a written extrajudicial demand which would toll or interrupt prescription
under Article 1155, it operated to toll prescription also in actions under the Carriage of
Goods by Sea Act. To much the same effect is the further argument based on Article
1176 of the Civil Code which provides that the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws in all
matters not regulated by the Civil Code.
These arguments might merit weightier consideration were it not for the fact that the
question has already received a definitive answer, adverse to the position taken by
Dole, in The Yek Tong Lin Fire & Marine Insurance Co., Ltd. v. American President
Lines, Inc. 15 There, in a parallel factual situation, where suit to recover for damage
to cargo shipped by vessel from Tokyo to Manila was filed more than two years after
the consignee’s receipt of the cargo, this Court rejected the contention that an
extrajudicial demand tolled the prescriptive period provided for in the Carriage of
Goods by Sea Act, viz:jgc:chanrobles.com.ph

"In the second assignment of error plaintiff-appellant argues that it was error for the
court a quo not to have considered the action of plaintiff-appellant suspended by the
extrajudicial demand which took place, according to defendant’s own motion to
dismiss, on August 22, 1952. We notice that while plaintiff avoids stating any date
when the goods arrived in Manila, it relies upon the allegation made in the motion to
dismiss that a protest was filed on August 22, 1952 — which goes to show that
plaintiff-appellant’s counsel has not been laying the facts squarely before the court for
the consideration of the merits of the case. We have already decided that in a case
governed by the Carriage of Goods by Sea Act, the general provisions of the Code of
Civil Procedure on prescription should not be made to apply. (Chua Kuy v. Everett
Steamship Corp., G.R. No. L-5554, May 27, 1953.) Similarly, we now hold that in
such a case the general provisions of the new Civil Code (Art. 1155) cannot be made
to apply, as such application would have the effect of extending the one-year period
of prescription fixed in the law. It is desirable that matters affecting transportation of
goods by sea be decided in as short a time as possible; the application of the
provisions of Article 1155 of the new Civil Code would unnecessarily extend the
period and permit delays in the settlement of questions affecting transportation,
contrary to the clear intent and purpose of the law.
. . ."cralaw virtua1aw library

Moreover, further no different result would obtain even if the Court were to accept the
proposition that a written extrajudicial demand does toll prescription under the
Carriage of Goods by Sea Act. The demand in this instance would be the claim for
damage filed by Dole with Maritime on May 4, 1972. The effect of that demand would
have been to renew the one-year prescriptive period from the date of its making
Stated otherwise, under Dole’s theory, when its claim was received by Maritime, the
one-year prescriptive period was interrupted — "tolled" would be the more precise
term — and began to run anew from May 4, 1972, affording Dole another period of
one (1) year counted from that date within which to institute action on its claim for
damage. Unfortunately, Dole let the new period lapse without filing action. It instituted
Civil Case No. 91043 only on June 11, 1973, more than one month after that period
has expired and its right of action had prescribed.chanrobles lawlibrary : rednad

Dole’s contention that the prescriptive period." . . remained tolled as of May 4, 1972 . .
. (and that) in legal contemplation . . . (the) case (Civil Case No. 96353) was filed on
January 6, 1975 . . . well within the one-year prescriptive period in Sec. 3(6) of the
Carriage of Goods by Sea Act," 16 equates tolling with indefinite suspension. It is
clearly fallacious and merits no consideration.

WHEREFORE, the order of dismissal appealed from is affirmed, with Costs against
the appellant, Dole Philippines, Inc.

SO ORDERED.

Yap (Chairman), Melencio-Herrera, Cruz, Feliciano, Gancayco and Sarmiento, JJ.,

concur.

2. LRT vs. Navidad, Feb. 6, 2003
G.R. No. 145804. February 6, 2003
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,
vs.  MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT
SECURITY AGENCY, Respondents.
DECISION
LRTA V. NAVIDAD,
GR 145804, 397 SCRA 75 (2003)
NOTE: SAMPLEX Q #25, MT 2015-2016
 7:30 pm: drunk NAVIDAD got into a fist fight with a Security GUARD Escartin of a
EDSA LRT Station. It resulted in him falling on the tracks and getting killed by the
train.
 The wife sues the train DRIVER roman, the GUARD escartin, the LRTA, and
PRUDENT (security agency).
 TC: Prudent and Roman liable; CA: only LRTA and Roman
 LRTA defense: Escartins assault upon Navidad was an act of a stranger that could not
have been foreseen or prevented.
 SC: LRTA – LIABLE; BREACH OF CONTRACT OF CARRIAGE
 carrier may choose to hire its own employees or avail itself of the services of an
outsider or an independent firm to undertake the task. Still, the common carrier is
not relieved of its responsibilities under the contract of carriage.
 PRUDENT SECURITY AGENCY – not liable since negligence of escartin
(guard) not established. had escartin been found negligent, prudent’s liability
would have been for quasi-delict or culpa aquiliana under art 2176 in relation to
art 2180.
 Roman (LRT driver) and ESCARTIN (guard): NOT LIABLE; IF EVER, BASIS
OF LIABILITY COULD HAVE BEEN QUASI-DELICT
Should Prudent be made likewise liable? If at all, that liability could only be for tort under
the provisions of Article 2176 and related provisions, in conjunction with Article 2180, of
the Civil Code.
 The premise, however, for the employer’s liability is negligence or fault on the part of
the employee. Once such fault is established, the employer can then be made liable on
the basis of the presumption juris tantum that the employer failed to exercise
diligentissimi patris families in the selection and supervision of its employees.
 The liability is primary and can only be negated by showing due diligence in the
selection and supervision of the employee, a factual matter that has not been shown.
Absent such a showing, one might ask further, how then must the liability of the common
carrier [in this case LRTA], on the one hand, and an independent contractor [Prudent], on
the other hand, be described? It would be solidary. A contractual obligation can be
breached by tort and when the same act or omission causes the injury, one resulting
in culpa contractual and the other in culpa aquiliana, Article 2194 of the Civil Code
can well apply.
 Zabala: Thus, even if Art 2194 states that the responsibility of two or more persons
liable for a quasi-delict is solidary, there is basis (that being LRTA v Navidad) to say
that if two persons are liable, one being liable for culpa contractual and the other for
culpa aquiliana, their liability is still solidary.
In fine, a liability for tort may arise even under a contract, where tort is that which breaches
the contract. Stated differently, when an act which constitutes a breach of contract would
have itself constituted the source of a quasi-delictual liability had no contract existed
between the parties, the contract can be said to have been breached by tort, thereby
allowing the rules on tort to apply.
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor
Navidad, this Court is concluded by the factual finding of the Court of Appeals that “there
is nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason that the
negligence of its employee, Escartin, has not been duly proven x x x.”
3. Roman (LRT driver) and ESCARTIN (guard): NOT LIABLE; IF EVER, BASIS
OF LIABILITY COULD HAVE BEEN QUASI-DELICT
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any
culpable act or omission, he must also be absolved from liability. Needless to say, the
contractual tie between the LRT and Navidad is not itself a juridical relation between the
latter and Roman; thus, Roman can be made liable only for his own fault or negligence
On 14 October 1993, about half an hour past seven oclock in the evening, Nicanor
Navidad, then drunk, entered the EDSA LRT station after purchasing a token
(representing payment of the fare). While Navidad was standing on the platform near
the LRT tracks, Junelito Escartin, the security guard assigned to the area approached
Navidad. A misunderstanding or an altercation between the two apparently ensued
that led to a fist fight. No evidence, however, was adduced to indicate how the fight
started or who, between the two, delivered the first blow or how Navidad later fell on
the LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by
petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train,
and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad,
along with her children, filed a complaint for damages against Junelito Escartin,
Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and
Prudent for the death of her husband. LRTA and Roman filed a counterclaim against
Navidad and a cross-claim against Escartin and Prudent. Prudent, in its answer,
denied liability and averred that it had exercised due diligence in the selection and
supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and Escartin, instead
of presenting evidence, filed a demurrer contending that Navidad had failed to prove
that Escartin was negligent in his assigned task. On 11 August 1998, the trial court
rendered its decision; it adjudged:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendants Prudent Security and Junelito Escartin ordering the latter to pay jointly
and severally the plaintiffs the following: xxx
The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack
of merit.
The compulsory counterclaim of LRTA and Roman are likewise
dismissed.1cräläwvirtualibräry
Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court
promulgated its now assailed decision exonerating Prudent from any liability for the
death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and
severally liable thusly:
WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the
appellants from any liability for the death of Nicanor Navidad, Jr. Instead, appellees
Rodolfo Roman and the Light Rail Transit Authority (LRTA) are held liable for his
death and are hereby directed to pay jointly and severally to the plaintiffs-appellees,
the following amounts:
The appellate court ratiocinated that while the deceased might not have then as yet
boarded the train, a contract of carriage theretofore had already existed when the
victim entered the place where passengers were supposed to be after paying the fare
and getting the corresponding token therefor. In exempting Prudent from liability, the
court stressed that there was nothing to link the security agency to the death of
Navidad. It said that Navidad failed to show that Escartin inflicted fist blows upon the
victim and the evidence merely established the fact of death of Navidad by reason of
his having been hit by the train owned and managed by the LRTA and operated at the
time by Roman. The appellate court faulted petitioners for their failure to present
expert evidence to establish the fact that the application of emergency brakes could
not have stopped the train.
The appellate court denied petitioners motion for reconsideration in its resolution of
10 October 2000.
In their present recourse, petitioners recite alleged errors on the part of the appellate
court; viz:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING
THE FINDINGS OF FACTS BY THE TRIAL COURT
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
RODOLFO ROMAN IS AN EMPLOYEE OF LRTA. 3cräläwvirtualibräry
Petitioners would contend that the appellate court ignored the evidence and the
factual findings of the trial court by holding them liable on the basis of a sweeping
conclusion that the presumption of negligence on the part of a common carrier was
not overcome. Petitioners would insist that Escartins assault upon Navidad was an
act of a stranger that could not have been foreseen or prevented. The LRTA would
add that the appellate courts conclusion on the existence of an employer-employee
relationship between Roman and LRTA lacked basis because Roman himself had
testified being an employee of Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate court, contended that a
contract of carriage was deemed created from the moment Navidad paid the fare at
the LRT station and entered the premises of the latter, entitling Navidad to all the
rights and protection under a contractual relation, and that the appellate court had
correctly held LRTA and Roman liable for the death of Navidad in failing to exercise
extraordinary diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the nature of its
business and for reasons of public policy, is burdened with the duty of exercising
utmost diligence in ensuring the safety of passengers. 4 The Civil Code, governing the
liability of a common carrier for death of or injury to its passengers, provides:
Article 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.
Article 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in articles 1733 and 1755.
Article 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the formers employees, although such
employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all
the diligence of a good father of a family in the selection and supervision of their
employees.
Article 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the willful acts or negligence of other passengers or of strangers, if the
common carriers employees through the exercise of the diligence of a good father of
a family could have prevented or stopped the act or omission.
The law requires common carriers to carry passengers safely using the utmost
diligence of very cautious persons with due regard for all circumstances. 5 Such duty
of a common carrier to provide safety to its passengers so obligates it not only during
the course of the trip but for so long as the passengers are within its premises and
where they ought to be in pursuance to the contract of carriage. 6 The statutory
provisions render a common carrier liable for death of or injury to passengers (a)
through the negligence or wilful acts of its employees or b) on account of wilful between the latter and Roman; thus, Roman can be made liable only for his own fault
acts or negligence of other passengers or of strangers if the common carriers or negligence.
employees through the exercise of due diligence could have prevented or
stopped the act or omission.7 In case of such death or injury, a carrier is presumed The award of nominal damages in addition to actual damages is untenable. Nominal
to have been at fault or been negligent, and 8 by simple proof of injury, the passenger damages are adjudicated in order that a right of the plaintiff, which has been violated
is relieved of the duty to still establish the fault or negligence of the carrier or of its or invaded by the defendant, may be vindicated or recognized, and not for the
employees and the burden shifts upon the carrier to prove that the injury is due to an purpose of indemnifying the plaintiff for any loss suffered by him. 18 It is an established
unforeseen event or to force majeure. 9 In the absence of satisfactory explanation by rule that nominal damages cannot co-exist with compensatory
the carrier on how the accident occurred, which petitioners, according to the appellate damages.19cräläwvirtualibräry
court, have failed to show, the presumption would be that it has been at fault, 10 an
exception from the general rule that negligence must be proved.11cräläwvirtualibräry
WHEREFORE, the assailed decision of the appellate court is AFFIRMED with
MODIFICATION but only in that (a) the award of nominal damages is DELETED and
The foundation of LRTAs liability is the contract of carriage and its obligation to (b) petitioner Rodolfo Roman is absolved from liability. No costs.
indemnify the victim arises from the breach of that contract by reason of its failure to
exercise the high diligence required of the common carrier. In the discharge of its
commitment to ensure the safety of passengers, a carrier may choose to hire its own SO ORDERED.
employees or avail itself of the services of an outsider or an independent firm to
undertake the task. In either case, the common carrier is not relieved of its Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur.
responsibilities under the contract of carriage.

Should Prudent be made likewise liable? If at all, that liability could only be for tort
under the provisions of Article 217612and related provisions, in conjunction with Article
2180,13 of the Civil Code. The premise, however, for the employers liability is
negligence or fault on the part of the employee. Once such fault is established, the
employer can then be made liable on the basis of the presumption juris tantum that
the employer failed to exercise diligentissimi patris families in the selection and
supervision of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the employee, a factual
matter that has not been shown. Absent such a showing, one might ask further, how
then must the liability of the common carrier, on the one hand, and an independent
contractor, on the other hand, be described? It would be solidary. A contractual
obligation can be breached by tort and when the same act or omission causes the
injury, one resulting in culpa contractual  and the other in culpa aquiliana, Article
219414 of the Civil Code can well apply.15 In fine, a liability for tort may arise even
under a contract, where tort is that which breaches the contract. 16 Stated differently,
when an act which constitutes a breach of contract would have itself constituted the
source of a quasi-delictual liability had no contract existed between the parties, the
contract can be said to have been breached by tort, thereby allowing the rules on tort
to apply.17cräläwvirtualibräry

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late
Nicanor Navidad, this Court is concluded by the factual finding of the Court of Appeals
that there is nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason
that the negligence of its employee, Escartin, has not been duly proven x x x. This
finding of the appellate court is not without substantial justification in our own review
of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of
any culpable act or omission, he must also be absolved from liability. Needless to say,
the contractual tie between the LRT and Navidad is not itself a juridical relation
 3. Aboitiz Shipping Corporation vs. General Accident Fire and Life
Assurance Corporation, 217 SCRA 359
 Aboitiz Shipping – owner of M/V P. ABOITIZ; sank on a voyage from
Hongkong to the Philippines which resulted to over 110 cases being filed against
Aboitiz
 GAFLAC - foreign insurance company; subrogee of several cargo consignees
whose respective cargo sank with the said vessel
 Previous case: GAFLAC proved sinking NOT due to force majeure and won. Now
wants to execute decision.
 Aboitiz defense: limited Liability Rule warrants immediate stay of execution of
judgment to prevent impairment of other creditors' shares
 GAFLAC contention: limited liability issue already decided in previous case; law
of the case
 RTC granted exec, Aboitiz appealed;
 CA dismissed appeal based on SC ruling in previous case: all claims for the
losses should first be determined before GAFLAC's judgment may be
satisfied," such ruling "in effect necessarily negated the application of the
limited liability principle
 SC: limited liability rule applies. Only xpn thereto is if shipowner negligent which
has not been shown.
 Execution must be stayed pending reso and finality of ALL cases filed
since LLR dictates that shipowner’s liab, similar to insolvent corp, limited
to residual assets; in case of carriage that’s the insurance and
freightage
 Since it cannot be determined WON all claimants will fully recover,
finality on all other cases must be had and collated so that in case
freightage and insurance insufficient, claims must be prorated
 Meantime, aboitiz directed to deposit in trust freightage and insurance
This refers to a petition for review which seeks to annul and set aside the decision of
the Court of Appeals dated June 21, 1991, in CA G.R. SP No. 24918. The appellate
court dismissed the petition for certiorari filed by herein petitioner, Aboitiz Shipping
Corporation, questioning the Order of April 30, 1991 issued by the Regional Trial
Court of the National Capital Judicial Region (Manila, Branch IV) in its Civil Case No.
144425 granting private respondent's prayer for execution for the full amount of the
judgment award. The trial court in so doing swept aside petitioner's opposition which
was grounded on the real and hypothecary nature of petitioner's liability as ship
owner. The application of this established principle of maritime law would necessarily
result in a probable reduction of the amount to be recovered by private respondent,
since it would have to share with a number of other parties similarly situated in the
insurance proceeds on the vessel that sank.
The basic facts are not disputed.
Petitioner is a corporation organized and operating under Philippine laws and
engaged in the business of maritime trade as a carrier. As such, it owned and
operated the ill-fated "M/V P. ABOITIZ," a common carrier which sank on a voyage
from Hongkong to the Philippines on October 31, 1980. Private respondent General
Accident Fire and Life Assurance Corporation, Ltd. (GAFLAC), on the other hand, is a
foreign insurance company;subrogee of several cargo consignees whose respective
cargo sank with the said vessel and for which it has priorly paid.
The incident of said vessel's sinking gave rise to the filing of suits for recovery of lost
cargo either by the shippers, their successor-in-interest, or the cargo insurers like
GAFLAC as subrogees. The sinking was initially investigated by the Board of Marine
Inquiry (BMI Case No. 466, December 26, 1984), which found that such sinking was
due toforce majeure and that subject vessel, at the time of the sinking was seaworthy.
This administrative finding notwithstanding, the trial court in said Civil Case No.
144425 found against the carrier on the basis that the loss subject matter therein did
not occur as a result of  force majeure. Thus, in said case, plaintiff GAFLAC was
allowed to prove, and. was later awarded, its claim. This decision in favor of GAFLAC
was elevated all the way up to this Court in G.R. No. 89757 (Aboitiz v. Court of
Appeals, 188 SCRA 387 [1990]), with Aboitiz, like its ill-fated vessel, encountering
rough sailing. The attempted execution of the judgment award in said case in the
amount of P1,072,611.20 plus legal interest has given rise to the instant petition.
On the other hand, other cases have resulted in findings upholding the conclusion of
the BMI that the vessel was seaworthy at the time of the sinking, and that such
sinking was due to force majeure. One such ruling was likewise elevated to this Court
in G.R. No. 100373, Country Bankers Insurance Corporation v. Court of Appeals, et
al., August 28, 1991 and was sustained. Part of the task resting upon this Court,
therefore, is to reconcile the resulting apparent contrary findings in cases originating
out of a single set of facts.
It is in this factual milieu that the instant petition seeks a pronouncement as to the
applicability of the doctrine of limited liability on the totality of the claims vis a vis the
losses brought about by the sinking of the vessel M/V P. ABOITIZ, as based on the
real and hypothecary nature of maritime law. This is an issue which begs to be
resolved considering that a number of suits alleged in the petition number about 110
(p. 10 and pp. 175 to 183, Rollo) still pend and whose resolution shall well-nigh result
in more confusion than presently attends the instant case.
In support of the instant petition, the following arguments are submitted by the
petitioner:
1. The Limited Liability Rule warrants immediate stay of execution
of judgment to prevent impairment of other creditors' shares;
2. The finding of unseaworthiness of a vessel is not necessarily
attributable to the shipowner; and
3 The principle of "Law of the Case" is not applicable to the present
petition. (pp. 2-26, Rollo.)
On the other hand, private respondent opposes the foregoing contentions, arguing
that:
 1. There is no limited liability to speak of or applicable real and
hypothecary rule under Article 587, 590, and 837 of the Code of
Commerce in the face of the facts found by the lower court (Civil
Case No. 144425), upheld by the Appellate Court (CA G.R. No.
10609), and affirmed in toto by the Supreme Court in G.R. No.
89757 which cited G.R. No. 88159 as the Law of the Case; and
2. Under the doctrine of the Law of the Case, cases involving the
same incident, parties similarly situated and the same issues
litigated should be decided in conformity therewith following the
maxim stare decisis et non quieta movere. (pp. 225 to 279, Rollo.)
Before proceeding to the main bone of contention, it is important to determine first
whether or not the Resolution of this Court in G.R. No. 88159, Aboitiz Shipping,
Corporation vs. The Honorable Court of Appeals and Allied Guaranty Insurance
Company, Inc., dated November 13, 1989 effectively bars and precludes the instant
petition as argued by respondent GAFLAC.
An examination of the November 13, 1989 Resolution in G.R. No. 88159 (pp. 280 to
282, Rollo) shows that the same settles two principal matters, first of which is that the
doctrine of primary administrative jurisdiction is not applicable therein; and second is
that a limitation of liability in said case would render inefficacious the extraordinary
diligence required by law of common carriers.
It should be pointed out, however, that the limited liability discussed in said case is not
the same one now in issue at bar, but an altogether different aspect. The limited
liability settled in G.R. No. 88159 is that which attaches to cargo by virtue of
stipulations in the Bill of Lading, popularly known as package limitation clauses, which
in that case was contained in Section 8 of the Bill of Lading and which limited the
carrier's liability to US$500.00 for the cargo whose value was therein sought to be
recovered. Said resolution did not tackle the matter of the Limited Liability Rule
arising out of the real and hypothecary nature of maritime law, which was not raised
therein, and which is the principal bone of contention in this case. While the matters
threshed out in G.R. No. 88159, particularly those dealing with the issues on primary
administrative jurisdiction and the package liability limitation provided in the Bill of
Lading are now settled and should no longer be touched, the instant case raises a
completely different issue. It appears, therefore, that the resolution in G.R. 88159
adverted to has no bearing other than factual to the instant case.
This brings us to the primary question herein which is whether or not respondent
court erred in granting execution of the full judgment award in Civil Case No. 14425
(G.R. No. 89757), thus effectively denying the application of the limited liability
enunciated under the appropriate articles of the Code of Commerce. The articles may
be ancient, but they are timeless and have remained to be good law. Collaterally,
determination of the question of whether execution of judgments which have become
final and executory may be stayed is also an issue.
We now come to the determination of the principal issue as to whether the Limited
Liability Rule arising out of the real and hypothecary nature of maritime law should
apply in this and related cases. We rule in the affirmative.
In deciding the instant case below, the Court of Appeals took refuge in this Court's
decision in G.R. No. 89757 upholding private respondent's claims in that particular
case, which the Court of Appeals took to mean that this Court has "considered,
passed upon and resolved Aboitiz's contention that all claims for the losses should
first be determined before GAFLAC's judgment may be satisfied," and that such ruling
"in effect necessarily negated the application of the limited liability principle" (p.
175, Rollo). Such conclusion is not accurate. The decision in G.R. No. 89757
considered only the circumstances peculiar to that particular case, and was not meant
to traverse the larger picture herein brought to fore, the circumstances of which
heretofore were not relevant. We must stress that the matter of the Limited Liability
Rule as discussed was never in issue in all prior cases, including those before the
RTCs and the Court of Appeals. As discussed earlier, the "limited liability" in issue
before the trial courts referred to the package limitation clauses in the bills of lading
and not the limited liability doctrine arising from the real and hypothecary nature of
maritime trade. The latter rule was never made a matter of defense in any of the
cases a quo, as properly it could not have been made so since it was not relevant in
said cases. The only time it could come into play is when any of the cases involving
the mishap were to be executed, as in this case. Then, and only then, could the
matter have been raised, as it has now been brought before the Court.
The real and hypothecary nature of maritime law simply means that the liability of the
carrier in connection with losses related to maritime contracts is confined to the
vessel, which is hypothecated for such obligations or which stands as the guaranty for
their settlement. It has its origin by reason of the conditions and risks attending
maritime trade in its earliest years when such trade was replete with innumerable and
unknown hazards since vessels had to go through largely uncharted waters to ply
their trade. It was designed to offset such adverse conditions and to encourage
people and entities to venture into maritime commerce despite the risks and the
prohibitive cost of shipbuilding. Thus, the liability of the vessel owner and agent
arising from the operation of such vessel were confined to the vessel itself, its
equipment, freight, and insurance, if any, which limitation served to induce capitalists
into effectively wagering their resources against the consideration of the large profits
attainable in the trade.
It might be noteworthy to add in passing that despite the modernization of the
shipping industry and the development of high-technology safety devices designed to
reduce the risks therein, the limitation has not only persisted, but is even practically
absolute in well-developed maritime countries such as the United States and England
where it covers almost all maritime casualties. Philippine maritime law is of Anglo-
American extraction, and is governed by adherence to both international maritime
conventions and generally accepted practices relative to maritime trade and travel.
In this jurisdiction, its application has been well-nigh constricted by the very statute
from which it originates. The Limited Liability Rule in the Philippines is taken up in
Book III of the Code of Commerce, particularly in Articles 587, 590, and 837,
hereunder quoted in toto:
Art. 587. The ship agent shall also be civilly liable for the
indemnities in favor of third persons which may arise from the
conduct of the captain in the care of the goods which he loaded on
 the vessel; but he may exempt himself therefrom by abandoning
the vessel with all her equipment and the freight it may have earned
during the voyage.
Art. 590. The co-owners of a vessel shall be civilly liable in the
proportion of their interests in the common fund for the results of
the acts of the captain referred to in Art. 587.
Each co-owner may exempt himself from this liability by the
abandonment, before a notary, of the part of the vessel belonging
to him.
Art. 837. The civil liability incurred by shipowners in the case
prescribed in this section (on collisions), shall be understood
as limited to the value of the vessel with all its appurtenances and
freightage served during the voyage. (Emphasis supplied)
Taken together with related articles, the foregoing cover only liability for injuries to
third parties (Art. 587), acts of the captain (Art. 590) and collisions (Art. 837).
In view of the foregoing, this Court shall not take the application of such limited liability
rule, which is a matter of near absolute application in other jurisdictions, so lightly as
to merely "imply" its inapplicability, because as could be seen, the reasons for its
being are still apparently much in existence and highly regarded.
We now come to its applicability in the instant case. In the few instances when the
matter was considered by this Court, we have been consistent in this jurisdiction in
holding that the only time the Limited Liability Rule does not apply is when there is an
actual finding of negligence on the part of the vessel owner or agent (Yango v.
Laserna, 73 Phil. 330 [1941]; Manila Steamship Co., Inc. v. Abdulhanan, 101 Phil. 32
[1957]; Heirs of Amparo delos Santos v. Court of Appeals, 186 SCRA 649 [1967]).
The pivotal question, thus, is whether there is a finding of such negligence on the part
of the owner in the instant case.
A careful reading of the decision rendered by the trial court in Civil Case No. 144425
(pp. 27-33, Rollo) as well as the entirety of the records in the instant case will show
that there has been no actual finding of negligence on the part of petitioner. In its
Decision, the trial court merely held that:
. . . Considering the foregoing reasons, the Court holds that the
vessel M/V "Aboitiz" and its cargo were not lost due to fortuitous
event or force majeure." (p. 32, Rollo)
The same is true of the decision of this Court in G.R. No. 89757 (pp. 71-86, Rollo)
affirming the decision of the Court of Appeals in CA-G.R. CV No. 10609 (pp. 34-
50, Rollo) since both decisions did not make any new and additional finding of fact.
Both merely affirmed the factual findings of the trial court, adding that the cause of the
sinking of the vessel was because of unseaworthiness due to the failure of the crew
and the master to exercise extraordinary diligence. Indeed, there appears to have
been no evidence presented sufficient to form a conclusion that petitioner shipowner
itself was negligent, and no tribunal, including this Court will add or subtract to such
evidence to justify a conclusion to the contrary.
The qualified nature of the meaning of "unseaworthiness," under the peculiar
circumstances of this case is underscored by the fact that in the Country
Banker's case, supra, arising from the same sinking, the Court sustained the decision
of the Court of Appeals that the sinking of the M/V P. Aboitiz was due to force
majeure.
On this point, it should be stressed that unseaworthiness is not a fault that can be laid
squarely on petitioner's lap, absent a factual basis for such a conclusion. The
unseaworthiness found in some cases where the same has been ruled to exist is
directly attributable to the vessel's crew and captain, more so on the part of the latter
since Article 612 of the Code of Commerce provides that among the inherent duties
of a captain is to examine a vessel before sailing and to comply with the laws of
navigation. Such a construction would also put matters to rest relative to the decision
of the Board of Marine Inquiry. While the conclusion therein exonerating the captain
and crew of the vessel was not sustained for lack of basis, the finding therein
contained to the effect that the vessel was seaworthy deserves merit. Despite
appearances, it is not totally incompatible with the findings of the trial court and the
Court of Appeals, whose finding of "unseaworthiness" clearly did not pertain to the
structural condition of the vessel which is the basis of the BMI's findings, but to the
condition it was in at the time of the sinking, which condition was a result of the acts
of the captain and the crew.
The rights of a vessel owner or agent under the Limited Liability Rule are akin to
those of the rights of shareholders to limited liability under our corporation law. Both
are privileges granted by statute, and while not absolute, must be swept aside only in
the established existence of the most compelling of reasons. In the absence of such
reasons, this Court chooses to exercise prudence and shall not sweep such rights
aside on mere whim or surmise, for even in the existence of cause to do so, such
incursion is definitely punitive in nature and must never be taken lightly.
More to the point, the rights of parties to claim against an agent or owner of a vessel
may be compared to those of creditors against an insolvent corporation whose assets
are not enough to satisfy the totality of claims as against it. While each individual
creditor may, and in fact shall, be allowed to prove the actual amounts of their
respective claims, this does not mean that they shall all be allowed to recover fully
thus favoring those who filed and proved their claims sooner to the prejudice of those
who come later. In such an instance, such creditors too would not also be able to gain
access to the assets of the individual shareholders, but must limit their recovery to
what is left in the name of the corporation. Thus, in the case of Lipana v.
Development Bank of Rizal  earlier cited, We held that:
In the instant case, the stay of execution of judgment is warranted
by the fact that the respondent bank was placed under receivership.
To execute the judgment would unduly deplete the assets of
respondent bank to the obvious prejudice of other depositors and
creditors, since, as aptly stated in Central Bank v. Morfe (63 SCRA
 114), after the Monetary Board has declared that a bank is SO ORDERED.
insolvent and has ordered it to cease operations, the Board
becomes the trustee of its assets for the equal benefit of all
creditors, and after its insolvency, one cannot obtain an advantage
or preference over another by an attachment, execution or
otherwise. (at p. 261).

In both insolvency of a corporation and the sinking of a vessel, the claimants or

creditors are limited in their recovery to the remaining value of accessible assets. In
the case of an insolvent corporation, these are the residual assets of the corporation
left over from its operations. In the case of a lost vessel, these are the insurance
proceeds and pending freightage for the particular voyage.

In the instant case, there is, therefore, a need to collate all claims preparatory to their
satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its pending
freightage at the time of its loss. No claimant can be given precedence over the
others by the simple expedience of having filed or completed its action earlier than
the rest. Thus, execution of judgment in earlier completed cases, even those already
final and executory, must be stayed pending completion of all cases occasioned by
the subject sinking. Then and only then can all such claims be simultaneously settled,
either completely or pro-rata should the insurance proceeds and freightage be not
enough to satisfy all claims.

Finally, the Court notes that petitioner has provided this Court with a list of all pending
cases (pp. 175 to 183, Rollo), together with the corresponding claims and the pro-
rated share of each. We likewise note that some of these cases are still with the Court
of Appeals, and some still with the trial courts and which probably are still undergoing
trial. It would not, therefore, be entirely correct to preclude the trial courts from making
their own findings of fact in those cases and deciding the same by allotting shares for
these claims, some of which, after all, might not prevail, depending on the evidence
presented in each. We, therefore, rule that the pro-rated share of each claim can only
be found after all the cases shall have been decided.

In fairness to the claimants, and as a matter of equity, the total proceeds of the
insurance and pending freightage should now be deposited in trust. Moreover,
petitioner should institute the necessary limitation and distribution action before the
proper admiralty court within 15 days from the finality of this decision, and thereafter
deposit with it the proceeds from the insurance company and pending freightage in
order to safeguard the same pending final resolution of all incidents, for final pro-
rating and settlement thereof.

ACCORDINGLY, the petition is hereby GRANTED, and the Orders of the Regional
Trial Court of Manila, Branch IV dated April 30, 1991 and the Court of Appeals dated
June 21, 1991 are hereby set aside. The trial court is hereby directed to desist from
proceeding with the execution of the judgment rendered in Civil Case No. 144425
pending determination of the totality of claims recoverable from the petitioner as the
owner of the M/V P. Aboitiz. Petitioner is directed to institute the necessary action and
to deposit the proceeds of the insurance of subject vessel as above-described within
fifteen (15) days from finality of this decision. The temporary restraining order issued
in this case dated August 7, 1991 is hereby made permanent.
 4. Mitsui vs. Court of Appeals 287 SCRA 366
G.R. No. 119571 March 11, 1998
MITSUI O.S.K. LINES LTD., represented by MAGSAYSAY AGENCIES,
INC., petitioner,  defendants on the other.
vs.
COURT OF APPEALS and LAVINE LOUNGEWEAR MFG. CORP., respondents.
MENDOZA, J.:
This is a petition for review on certiorari of the January 25, 1995 decision of the Court
of Appeals1 and its resolution of March 22, 1995 denying petitioner's motion for
reconsideration. The appellate court upheld orders of Branch 68 (Pasig) of the
Regional Trial Court, National Capital Judicial Region, denying petitioner's motion to
dismiss in the original action filed against petitioner by private respondent.
The facts are not in dispute.2
Shipment of goods from Manila to Paris, supposedly to be within 28 days from loading
 Shipper: Lavine Loungewear Manufacturing Corporation
 Carrier: Mitsui (foreign corp represented by Magsaysay Agencies)
 Meister international freight forwarder
Taiwan: goods not transshipped immediately; delay
 Consignee only paid for half; did not arrive until off season so Lavine had to
bear the other half, now suing Mitsui, Magsaysay as agent and Mitsui
Mitsui: barred by prescription under COGSA
Lavine: COGSA applies to lost/damage goods; not delay
SC: Lavine correct. Civil Code applies. Ratio for limitation of prescriptive period under
COGSA
Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the
Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage
through Meister Transport, Inc., an international freight forwarder, with private
respondent Lavine Loungewear Manufacturing Corporation to transport goods of the
latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to
France 28 days from initial loading. On July 24, 1991, petitioner's vessel loaded
private respondent's container van for carriage at the said port of origin.
However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with
the result that the shipment arrived in Le Havre only on November 14, 1991. The
consignee allegedly paid only half the value of the said goods on the ground that they
did not arrive in France until the "off season" in that country. The remaining half was
allegedly charged to the account of private respondent which in turn demanded
payment from petitioner through its agent.
As petitioner denied private respondent's claim, the latter filed a case in the Regional
Trial Court on April 14, 1992. In the original complaint, private respondent impleaded
as defendants Meister Transport, Inc. and Magsaysay Agencies, Inc., the latter as
agent of petitioner Mitsui O.S.K. Lines Ltd. On May 20, 1993, it amended its complaint
by impleading petitioner as defendant in lieu of its agent. The parties to the case thus
became private respondent as plaintiff, on one side, and Meister Transport Inc. and
petitioner Mitsui O.S.K. Lines Ltd. as represented by Magsaysay Agencies, Inc., as
Petitioner filed a motion to dismiss alleging that the claim against it had prescribed
under the Carriage of Goods by Sea Act.
The Regional Trial Court, as aforesaid, denied petitioner's motion as well as its
subsequent motion for reconsideration. On petition for certiorari, the Court of Appeals
sustained the trial court's orders. Hence this petition containing one assignment of
error:
THE RESPONDENT COURT OF APPEALS COMMITTED A
SERIOUS ERROR OF LAW IN RULING THAT PRIVATE
RESPONDENT'S AMENDED COMPLAINT IS (sic) NOT
PRESCRIBED PURSUANT TO SECTION 3(6) OF THE
CARRIAGE OF GOODS BY SEA ACT.
The issue raised by the instant petition is whether private respondent's action is for
"loss or damage" to goods shipped, within the meaning of §3(6) of the Carriage of
Goods by Sea Act (COGSA).
Section 3 provides:
(6) Unless notice of loss or damage and the general nature of such
loss or damage be given in writing to the carrier or his agent at the
port of discharge or at the time of the removal of the goods into the
custody of the person entitled to delivery thereof under the contract
of carriage, such removal shall beprima facie  evidence of the
delivery by the carrier of the goods as described in the bill of lading.
If the loss or damage is not apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt
for the goods given by the person taking delivery thereof.
The notice in writing need not be given if the state of the goods has
at the time of their receipt been the subject of joint survey or
inspection.
In any event the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is brought within
one year after delivery of the goods or the date when the goods
should have been delivered: Provided, that, if a notice of loss or
 damage, either apparent or concealed, is not given as provided for
in this section, that fact shall not affect or prejudice the right of the
shipper to bring suit within one year after the delivery of the goods
or the date when the goods should have been delivered.
In the case of any actual or apprehended loss or damage, the
carrier and the receiver shall give all reasonable facilities to each
other for inspecting and tallying the goods.
In Ang v. American Steamship Agencies, Inc., the question was whether an action for
the value of goods which had been delivered to a party other than the consignee is for
"loss or damage" within the meaning of §3(6) of the COGSA. It was held that there
was no loss because the goods had simply been misdelivered. "Loss" refers to the
deterioration or disappearance of goods.3
As defined in the Civil Code and as applied to Section 3(6),
paragraph 4 of the Carriage of Goods by Sea Act, "loss"
contemplates merely a situation where no delivery at all was made
by the shipper of the goods because the same had perished, gone
out of commerce, or disappeared in such a way that their existence
is unknown or they cannot be recovered.4
Conformably with this concept of what constitutes "loss" or "damage," this Court held
in another case5 that the deterioration of goods due to delay in their transportation
constitutes "loss" or "damage" within the meaning of §3(6), so that as suit was not
brought within one year the action was barred:
Whatever damage or injury is suffered by the goods while in transit
would result in loss or damage to either the shipper or the
consignee. As long as it is claimed, therefore, as it is done here,
that the losses or damages suffered by the shipper or consignee
were due to the arrival of the goods in damaged or deteriorated
condition, the action is still basically one for damage to the goods,
and must be filed within the period of one year from delivery or
receipt, under the above-quoted provision of the Carriage of Goods
by Sea Act.6
But the Court allowed that —
There would be some merit in appellant's insistence that the
damages suffered by him as a result of the delay in the shipment of
his cargo are not covered by the prescriptive provision of the
Carriage of Goods by Sea Act above referred to, if such damages
were due, not to the deterioration and decay of the goods while in
transit, but to other causes independent of the condition of the
cargo upon arrival, like a drop in their market value. . . .7
The rationale behind limiting the said definitions to such parameters is not hard to find
or fathom. As this Court held in Ang:
Said one-year period of limitation is designed to meet the
exigencies of maritime hazards. In a case where the goods shipped
were neither lost nor damaged in transit but were, on the contrary,
delivered in port to someone who claimed to be entitled thereto, the
situation is different, and the special need for the short period of
limitation in cases of loss or damage caused by maritime perils
does not obtain.8
In the case at bar, there is neither deterioration nor disappearance nor destruction of
goods caused by the carrier's breach of contract. Whatever reduction there may have
been in the value of the goods is not due to their deterioration or disappearance
because they had been damaged in transit.
Petitioner contends:
Although we agree that there are places in the section (Article III) in
which the phrase need have no broader meaning than loss or
physical damage to the goods, we disagree with the conclusion that
it must so be limited wherever it is used. We take it that the phrase
has a uniform meaning, not merely in Section 3, but throughout the
Act; and there are a number of places in which the restricted
interpretation suggested would be inappropriate. For example
Section 4(2) [Article IV(2) (sic) exempts exempts (sic) the carrier,
the ship (sic), from liability "loss or damage" (sic) resulting from
certain courses beyond their control.9
Indeed, what is in issue in this petition is not the liability of petitioner for its
handling of goods as provided by §3(6) of the COGSA, but its liability under
its contract of carriage with private respondent as covered by laws of more
general application.
Precisely, the question before the trial court is not the particular sense of "damages"
as it refers to the physical loss or damage of a shipper's goods as specifically covered
by §3(6) of COGSA but petitioner's potential liability for the damages it has caused in
the general sense and, as such, the matter is governed by the Civil Code, the Code of
Commerce and COGSA, for the breach of its contract of carriage with private
respondent.
We conclude by holding that as the suit below is not for "loss or damage" to goods
contemplated in §3(6), the question of prescription of action is governed not by the
COGSA but by Art. 1144 of the Civil Code which provides for a prescriptive period of
ten years.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Regalado, Melo, Puno and Martinez, JJ., concur.