C.
OBLIGATIONS OF THE PARTIES AND DEFENSES Macleod became entitled to the privilege secured to him
1. Obligations of Common Carrier
Basic obligations
COMPANIA MARITIMA V. INSURANCE COMPANY OF
NORTH AMERICA
GR NO. L-18965, OCTOBER 30, 1964
The goods were not yet actually loaded on the vessel
which would carry the hemp to its destination and that
no bill of lading was issued when the vessel sank. SC
held that this fact is irrelevant, and that the contract of
carriage already commenced when the shipping
company’s lighters went to shipper’s private pier to get
the goods.
FACTS:
Macleod and Company of the Philippines contracted by
telephone the services of the Compañia Maritima (CM), a
shipping corporation, for shipment of hemp from the
Macleod's Sasa private pier at Davao City to Manila to be
subsequently transhipped to Boston.
This oral contract was later on confirmed and the
loading of the hemp was completed when CM sent 2
private lighters to Macelod’s pier. The 2 lighters were
manned each by a patron and an assistant patron.
One of the lighters sank, resulting in the damage or loss
of 1,162 bales of hemp loaded therein. All abaca
shipments of Macleod were insured with the Insurance
Company of North America. Macleod filed a claim for the
loss it suffered with the insurance company and was
paid P64,018.55.
The insurance company failing to recover from the
carrier instituted the present action.
CA and RTC both ordered CM to pay the insurance
company.
ISSUES:
(1)Was there a contract of carriage between the carrier
and the shipper even if the loss occurred when the hemp
was loaded on a barge owned by the carrier which was
loaned free of charge and was not actually loaded on the
S.S. Bowline Knot (Compania Maritima’s ship) which
would carry the hemp to Manila and no bill of lading
was issued therefor?; YES
(2)Was the damage caused to the cargo or the sinking of
the barge where it was loaded due to a fortuitous event,
storm or natural disaster that would exempt the carrier
from liability?; NO
HELD:
1. YES. The fact that the carrier sent its lighters free
of charge to take the hemp from Macleod's wharf at Sasa
preparatory to its loading unto the ship Bowline Knot
does not in any way impair the contract of carriage
already entered into between the carrier and the
shipper, for that preparatory steps is but a part and
parcel of said contract of carriage.
In other words, here we have a complete contract of
carriage the consummation of which has already begun:
the shipper delivering the cargo to the carrier, and the
latter taking possession thereof by placing it on a lighter
manned by its authorized employees, under which
by law for its safe transportation and delivery, and the
carrier to the full payment of its freight upon completion
of the voyage.
The liability and responsibility of the carrier under a
contract for the carriage of goods commence on their
actual delivery to, or receipt by, the carrier or an
authorized agent. Delivery to a lighter in charge of a
vessel for shipment on the vessel, where it is the custom
to deliver in that way, is a good delivery and binds the
vessel receiving the freight, the liability commencing at
the time of delivery to the lighter.
A bill of lading is not indispensable for the creation of a
contract of carriage. As regards the form of the contract
of carriage it can be said that provided that there is a
meeting of the minds and from such meeting arise rights
and obligations, there should be no limitations as to
form.' The bill of lading is not essential to the contract,
although it may become obligatory by reason of the
regulations of railroad companies, or as a condition
imposed in the contract by the agreement of the parties
themselves.
2. The mishap that caused the damage or loss was
due, not to force majeure, but to lack of adequate
precaution or measures taken by the carrier to prevent
the loss as may be inferred.
The ill-fated barge had cracks on its bottom which
admitted sea water in the same manner as rain entered
'thru tank manholes,' according to the patron of LCT No.
1023 conclusively showing that the barge was not
seaworthy it should be noted that on the night of the
nautical accident there was no storm, flood, or other
natural disaster or calamity. Certainly, winds of 11 miles
per hour, although stronger than the average 4.6 miles
per hour then prevailing in Davao on October 29, 1952 ,
cannot be classified as storm.
AMPARO C. SERVANDO v. PHILIPPINE STEAM
NAVIGATION
GR Nos. L-36481-2, Oct 23, 1982
A stipulation limiting liability of the common carrier for
loss or damage or cargoes is valid as long as it is not
contrary to law, morals or public policy. Where
fortuitous event or force majeure is the immediate and
proximate cause of the loss, the obligor is exempt from
liability for non-performance.
FACTS:
Clara Uy Bico and Amparo Servando loaded on board a
vessel of Philippine Steam Navigation Co. for carriage
from Manila to Negros Occidental 1,528 cavans of rice
and 44 cartons of colored paper, toys and general
merchandise.
The contract of carriage of cargo was evidenced by a Bill
of Lading (B/L). There was a stipulation limiting the
responsibility of the carrier for loss or damage that may
be caused to the shipment. The stipulation states:
a.“carrier shall not be responsible for loss or damage to
shipments billed ‘owner’s risk’ unless such loss or
damage is due to the negligence of the carrier. Nor shall
the carrier be responsible for loss or damage caused
by force majeure, dangers or accidents of the sea, war,
public enemies, fire”.
 Upon arrival of the vessel at its destination, the cargoes
were discharged in good condition and placed inside the
warehouse of the Bureau of Customs. Unfortunately, the
warehouse was razed by fire of unknown origin later
that same day destroying the remaining cargoes. Uy Bico
and Servando filed a claim for the value of the goods
against the carrier.
The lower court ruled in their favor. It held that the
delivery of the shipment to the warehouse is not the
delivery contemplated by Art. 1736 of the CC. And since
the burning of the warehouse occurred prior to the
actual or constructive delivery of the goods, the loss is
chargeable against the vessel.
ISSUE:
Whether or not the carrier is liable for the loss of the
goods? NO
HELD:
Article 1736 of the CC imposes upon common carriers
the duty to observe extraordinary diligence from the
moment the goods are unconditionally placed in their
possession "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.” The court a
quo held that the delivery of the shipment in question to
the warehouse of the Bureau of Customs is not the
delivery contemplated by Article 1736; and since the
burning of the warehouse occurred before actual or
constructive delivery of the goods to the appellees, the
loss is chargeable against the appellant (the steamship).
It should be pointed out, however, that in the bills of
lading issued for the cargoes in question, the parties
agreed to limit the responsibility of the carrier. The
stipulation is valid not being contrary to law, morals or
public policy.
The petitioners however, contend that the stipulation
does not bind them since it was printed at the back of
the B/L and that they did not sign the same. However,
as the Court held in Ong Yiu vs. CA, while it may be true
that a passenger 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.
Also, where fortuitous event is the immediate and
proximate cause of the loss, the obligor is exempt from
liability for non-performance. In the case at bar, the
burning of the customs warehouse was an extraordinary
event which happened independently of the will of the
appellant. The latter could not have foreseen the event.
There is nothing in the record to show that the carrier
incurred in delay in the performance of its obligation. It
appears that it had not only notified Uy Bico and
Servando of the arrival of their shipment, but had
demanded that the same be withdrawn. In fact,
pursuant to such demand, Uy Bico had taken delivery of
907 cavans of rice before the burning of the warehouse.
Nor can the carrier or its employees be charged with
negligence. The storage of the goods in the Customs
warehouse pending withdrawal thereof by Uy Bico and
Servando was undoubtedly made with their knowledge
and consent. Since the warehouse belonged to and was
maintained by the government, it would be unfair to
impute negligence to the carrier, the latter having no
control whatsoever over the same.
*Bonus*
Essential Characteristics for one to become a fortuitous
event:
(1) the cause of the unforeseen and unexpected
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 must be free from
any participation in the aggravation of the injury
resulting to the creditor.
MAERSK LINE v. CA
GR No. 94761, May 17, 1993
While it is true that common carriers are not obligated
by law to carry and to deliver merchandise, and persons
are not vested with the right to prompt delivery, unless
such common carriers previously assume the obligation
to deliver at a given date or time delivery of shipment or
cargo should at least be made within a reasonable time.
In the case before us, we find that a delay in the delivery
of the goods spanning a period of two (2) months and
seven (7) days falls way beyond the realm of
reasonableness.
FACTS:
Petitioner Maersk Line is engaged in the transportation
of goods by sea, doing business in the Philippines
through its general agent Compania de Tabacos de
Filipinas, while private respondent Efren Castillo is the
proprietor of Ethegal Laboratories, a firm engaged in the
manufacture of pharmaceutical products.
On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of
Puerto Rico 600,000 empty gelatin capsules for the
manufacture of his pharmaceutical products. The
capsules were placed in 6 drums of 100,000 capsules
each valued at US$1,668.71. Shipper Eli Liily,Inc.
advised Castillo through a Memorandum of Shipment
that the products were already shipped on board MV
“Anders Maesrkline” and date of arrival to be April 3,
1977.
However, for unknown reasons, said cargoes of capsules
were diverted to Richmond, VA and then transported
back to Oakland, CA and with the goods finally arriving
in the PI on June 10, 1977. Consignee Castillo refused
to take delivery of the goods on account of its failure to
arrive on time, and filed an action for rescission of
contract with damages against Maersk and Eli Lilly
alleging gross negligence and undue delay.
Maersk contends that it is liable only in case of loss,
destruction or deterioration of goods under Art 1734
NCC while Eli Lilly in its cross claim argued that the
delay was due solely to the negligence of Maersk Line.
Trial Court dismissed the complaint against Eli Lilly and
the latter withdrew cross claim but TC still held Maersk
liable and CA affirmed with modifications.
ISSUE:
WON Maersk Line is liable for damages resulting from
delay in the delivery of the shipment in the absence in
the bill of lading of a stipulation on the period of
delivery? Yes
HELD:
Petitioner maintains that it cannot be held for damages
for the alleged delay in the delivery of the 600,000 empty
gelatin capsules since it acted in good faith and there
was no special contract under which the carrier
undertook to deliver the shipment on or before a specific
date.
The bill of lading covering the subject shipment among
others, reads:
6. GENERAL
(1) The Carrier does not undertake that the goods shall
arive at the port of discharge or the place of delivery at
any particular time or to meet any particular market or
use and save as is provided in clause 4 the Carrier shall
in no circumstances be liable for any direct, indirect or
consequential loss or damage caused by delay. If the
Carrier should nevertheless be held legally liable for any
such direct or indirect or consequential loss or damage
caused by delay, such liability shall in no event exceed
the freight paid for the transport covered by this Bill of
Lading.
It is not disputed that the aforequoted provision at the
back of the bill of lading, in fine print, is a contract of
adhesion. Generally, contracts of adhesion are
considered void since almost all the provisions of these
types of contracts are prepared and drafted only by one
party, usually the carrier . The only participation left of
the other party in such a contract is the affixing of his
signature thereto, hence the term "Adhesion".
Nonetheless, settled is the rule that bills of lading are
contracts not entirely prohibited. One who adheres to
the contract is in reality free to reject it in its entirety; if
he adheres, he gives his consent.
However, the aforequoted ruling applies only if such
contracts will not create an absurd situation as in the
case at bar. The questioned provision in the subject bill
of lading has the effect of practically leaving the date of
arrival of the subject shipment on the sole determination
and will of the carrier.
While it is true that common carriers are not obligated
by law to carry and to deliver merchandise, and persons
are not vested with the right to prompt delivery, unless
such common carriers previously assume the obligation
to deliver at a given date or time, delivery of shipment or
cargo should at least be made within a reasonable time.
An examination of the subject bill of lading shows that
the subject shipment was estimated to arrive in Manila
on April 3, 1977. While there was no special contract
entered into by the parties indicating the date of arrival
of the subject shipment, petitioner nevertheless, was
very well aware of the specific date when the goods were
expected to arrive as indicated in the bill of lading itself.
In this regard, there arises no need to execute another
contract for the purpose as it would be a mere
superfluity.
In the case before us, we find that a delay in the delivery
of the goods spanning a period of two (2) months and
seven (7) days falls was beyond the realm of
reasonableness. Described as gelatin capsules for use in
pharmaceutical products, subject shipment was
delivered to, and left in, the possession and custody of
petitioner-carrier for transport to Manila via Oakland,
California. But through petitioner's negligence was
mishipped to Richmond, Virginia.
Petitioner's insitence that it cannot be held liable for the
delay finds no merit.
BENITO MACAM doing business under the name and
style BEN-MAC ENTERPRISES, vs. COURT OF
APPEALS, CHINA OCEAN SHIPPING CO., and/or
WALLEM PHILIPPINES SHIPPING, INC.
ONE LINER: The extraordinary responsibility of the
common carriers terminates when it is delivered,
actually or constructively, by the carrier to (1) the
consignee, or (2) to the person who has a right to receive
them.
FACTS: On 4 April 1989 petitioner Benito Macam, doing
business under the name and style Ben-Mac
Enterprises, shipped on board the vessel Nen Jiang,
owned and operated by respondent China Ocean
Shipping Co., through local agent respondent Wallem
Philippines Shipping, Inc. (hereinafter WALLEM), 3,500
boxes of watermelons and 1,611 boxes of fresh mangoes.
Both shipments were covered by their respective Bills of
Lading and were exported through Letters of Credit
issued by the National Bank of Pakistan (Pakistan
Bank). The Bills of Lading contained the following
pertinent provision: "One of the Bills of Lading must be
surrendered duly endorsed in exchange for the goods or
delivery order." The shipment was bound for Hongkong
with PAKISTAN BANK as consignee and Great Prospect
Company of Kowloon, Hongkong (hereinafter GPC) as
notify party.
Upon arrival in Hongkong, shipment was delivered by
respondent WALLEM directly to GPC, not to PAKISTAN
BANK and without the required bill of lading having
been surrendered. Subsequently, GPC failed to pay
PAKISTAN BANK, such that the latter, still in possession
of original bill of lading (So hantod sa hantod ha, si
Pakistan Bank jud ang nagdala sa bill of lading), refused
to pay petitioner thru SOLIDBANK. Since SOLIDBANK
already pre-paid the value of shipment, it demanded
payment from respondent WALLEM but was refused.
MACAM constrained to return the amount paid by
SOLIDBANK and demanded payment from WALLEM but
to no avail.
WALLEM submitted in evidence a telex dated 5 April
1989 as basis for delivering the cargoes to GPC without
the bills of lading and bank guarantee. The telex
instructed delivery of various shipments to the
respective consignees without need of presenting the bill
of lading and bank guarantee per the respective
shipper’s request since “for prepaid shipt ofrt charges
already fully paid.” MACAM, however, argued that,
assuming there was such an instruction, the consignee
referred to was PAKISTAN BANK and not GPC.
ISSUE: WoN China Ocea Shipping Co and WALLEM are
liable to Ben Macam for releasing the goods to GPC
without the bills of lading or bank guarantee?
HELD: No.
Article 1736 of the Civil Code provides -
Art. 1736. The extraordinary responsibility of the
common carriers 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.
We emphasize that the extraordinary responsibility of
the common carriers lasts until actual or constructive
delivery of the cargoes to the consignee or to the person
who has a right to receive them. PAKISTAN BANK was
indicated in the bills of lading as consignee whereas
GPC was the notify party. However, in the export
invoices GPC was clearly named as buyer/importer.
Macam also referred to GPC as such in his demand
letter to respondent WALLEM and in his complaint
before the trial court. This premise draws us to conclude
that the delivery of the cargoes to GPC as
buyer/importer which, conformably with Art. 1736 had,
other than the consignee, the right to receive them was
proper.
Based on the testimony of the petitioners, it has been
the practice of petitioner to request the shipping lines to
immediately release perishable cargoes such as
watermelons and fresh mangoes through telephone calls
by himself or his people. In his several years of business
relationship with GPC and respondents, there was not a
single instance when the bill of lading was first
presented before the release of the cargoes.
Moreover, he admitted that it was his practice to ask the
shipping lines to immediately release shipment of
perishable goods through telephone calls by himself or
his people, upon its arrival at the port of destination
without requiring presentation of the bill of lading as
that usually takes time. He also no longer required
presentation of a bill of lading nor of a bank guarantee
as a condition to releasing the goods in case he was
already fully paid. Thus, taking into account that
subject shipment consisted of perishable goods and
SOLIDBANK pre-paid the full amount of the value
thereof, it is not hard to believe the claim of respondent
WALLEM that petitioner indeed requested the release of
the goods to GPC without presentation of the bills of
lading and bank guarantee.
Basta ang point is (based sa ako pagsabot) ingon si
Macam, ang consignee daw na gibutang sa Bill of Lading
kay ang Bank, dli ang GPC (notify party lang daw ang
GPC) nya wa sad daw nagpresent ug Bill of Lading
before gikuha ang goods. However, based sa export
invoice, demand letter ug complaint ni Macam, GPC was
clearly named as buyer/importer. Therefore, according
to Art. 1736 there was proper delivery na kay ang GPC
mahulog na, person other than the consignee who has a
right to receive the goods. Moreover, practice na daw na
nila in case of perishable goods na i-effect ang delivery
without presenting the bill of lading.
DELSAN TRANSPORT LINES, INC., vs. AMERICAN
HOME ASSURANCE CORPORATION
ONE LINER: The discharging of the goods by the carrier
has to be completely delivered/finished, otherwise, it
still has in it the responsibility to guard and preserve the
goods, a duty incident to its having the goods
transported.
FACTS: Delsan owns and operates the vessel MT
Larusan. On the other hand, respondent American
Home Assurance Corporation (AHAC for brevity) is a
foreign insurance company duly licensed to do business
in the Philippines through its agent, the American-
International Underwriters, Inc. (Phils.).
On August 5, 1984, Delsan received on board MT
Larusan a shipment consisting of 1,986.627 k/l
Automotive Diesel Oil (diesel oil) at the Bataan Refinery
Corporation for transportation and delivery to the bulk
depot in Bacolod City of Caltex Phils., Inc. (Caltex),
pursuant to a Contract of Afreightment. The shipment
was insured by respondent AHAC against all risks under
Inland Floater Policy No. AH-IF64-1011549P and Marine
Risk Note No. 34-5093-6.
On August 7, 1984, the shipment arrived in Bacolod
City. Immediately thereafter, unloading operations
commenced. The discharging of the diesel oil started at
about 1:30 PM of the same day. However, at about 10:30
PM, the discharging had to be stopped on account of the
discovery that the port bow mooring of the vessel was
intentionally cut or stolen by unknown persons.
Because there was nothing holding it, the vessel drifted
westward, dragged and stretched the flexible rubber
hose attached to the riser, broke the elbow into pieces,
severed completely the rubber hose connected to the
tanker from the main delivery line at sea bed level and
ultimately caused the diesel oil to spill into the sea. To
avoid further spillage, the vessel’s crew tried water
flushing to clear the line of the diesel oil but to no avail.
In the meantime, the shore tender, who was waiting for
the completion of the water flushing, was surprised
when the tanker signaled a "red light" which meant stop
pumping. Unaware of what happened, the shore tender,
thinking that the vessel would, at any time, resume
pumping, did not shut the storage tank gate valve. As all
the gate valves remained open, the diesel oil that was
earlier discharged from the vessel into the shore tank
backflowed. Due to non-availability of a pump boat, the
vessel could not send somebody ashore to inform the
people at the depot about what happened. After almost
an hour, a gauger and an assistant surveyor from the
Caltex’s Bulk Depot Office boarded the vessel. It was
only then that they found out what had happened.
Thereafter, the duo immediately went ashore to see to it
that the shore tank gate valve was closed.
As a result of spillage and backflow of diesel oil, Caltex
sought recovery of the loss from Delsan, but the latter
refused to pay. As insurer, AHAC paid Caltex the sum of
P479,262.57 for spillage, and P1,939,575.37 for
backflow of the diesel oil.
AHAC, as Caltex’s subrogee, instituted two separate civil
cases against Delsan for the loss caused by the spillage
and by the backflow. The cases were later consolidated.
ISSUE: WoN delivery was already completed in order to
exculpate Delsan of its liability for the loss of the cargo.
RULING: No.
First Ground: Contributory Negligence of Caltex (ako
nlng apilon mga ser kay naa ni sa book)
Delsan failed to prove its claim that there was a
contributory negligence on the part of the owner of the
goods – Caltex. It had been established that the
proximate cause of the spillage and backflow of the
diesel oil was due to the severance of the port bow
mooring line of the vessel and the failure of the shore
tender to close the storage tank gate valve even as a
check on the drain cock showed that there was still a
product on the pipeline. The actuation of the gauger and
the escort surveyor, both personnel from the Caltex Bulk
Depot, negates the allegation that Caltex was remiss in
its duties. As we see it, the crew of the vessel should
have promptly informed the shore tender that the port
mooring line was cut off. However, Delsan did not do so
on the lame excuse that there was no available banca.
As it is, Delsan’s personnel signaled a "red light" which
was not a sufficient warning because such signal only
meant that the pumping of diesel oil had been finished.
Neither did the blowing of whistle suffice considering the
distance of more than 2 kilometers between the vessel
and the Caltex Bulk Depot, aside from the fact that it
was not the agreed signal. Had the gauger and the
escort surveyor from Caltex Bulk Depot not gone aboard
the vessel to make inquiries, the shore tender would
have not known what really happened. The crew of the
vessel should have exerted utmost effort to immediately
inform the shore tender that the port bow mooring line
was severed.
Second Ground: There was already actual and legal
delivery to Caltex.
Delsan’s argument that it should not be held liable for
the loss of diesel oil due to backflow because the same
had already been actually and legally delivered to Caltex
at the time it entered the shore tank holds no water. It
had been settled that the subject cargo was still in the
custody of Delsan because the discharging thereof has
not yet been finished when the backflow occurred. Since
the discharging of the cargo into the depot has not yet
been completed at the time of the spillage when the
backflow occurred, there is no reason to imply that there
was actual delivery of the cargo to the consignee. To be
sure, the extraordinary responsibility of 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 a
person who has the right to receive them. The
discharging of oil products to Caltex Bulk Depot has not
yet been finished, Delsan still has the duty to guard and
to preserve the cargo. The carrier still has in it the
responsibility to guard and preserve the goods, a duty
incident to its having the goods transported.
To recapitulate, common carriers, from the nature of
their business and for reasons of public policy, are
bound to observe extraordinary diligence in vigilance
over the goods and for the safety of the passengers
transported by them, according to all the circumstances
of each case. The mere proof of delivery of goods in good
order to the carrier, and their arrival in the place of
destination in bad order, make out a prima facie case
against the carrier, so that if no explanation is given as
to how the injury occurred, the carrier must be held
responsible. It is incumbent upon the carrier to prove
that the loss was due to accident or some other
circumstances inconsistent with its liability.
WESTWIND SHIPPING CORP VS. UCPB
NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST
ASIATIC CO., LTD., vs. GLOW LAKS ENTERPRISES,
LTD.
ONE LINER: The loss or the misdelivery of the goods
gives rise to the presumption that the common carrier is
at fault or negligent, and there need not be an express
finding of negligence to hold it liable.
FACTS: Nedlloyd Lijnen B.V. Rotterdam (Nedlloyd) is a
foreign corporation engaged in the business of carrying
goods by sea. 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 arrived
in good condition in Hong Kong and were transferred to
M/S Amethyst for final carriage to Colon, Free Zone,
Panama. Both aforementioned vesseles are owned by
Nedlloyd represented in the Phlippines by its agent, East
Asiatic. The goods were agreed to be released to the
consignee, Pierre Kasem, International, S.A., upon
presentation of the original copies of the covering bills of
lading. Upon arrival of the vessel at the Port of Colon,
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. 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.
Claiming that petitioners are liable for the misdelivery of
the goods, respondent initiated a civil case, seeking for
the recovery of the amount of the goods.
In disclaiming liability for the misdelivery of the
shipments, petitioners asserted 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. They argue that their
responsibility 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.
ISSUE: WoN Nedlloyd (common carrier) is liable for
misdelivery of the goods.
RULING: YES. Petitioners are liable for the value of the
misdelivered goods.
(Pakapin lang ni ha, but important prelude sa main
issue.) On the issue of what the applicable law is: 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. 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. 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. (Kay
diba, if under Panama laws daw, naa na daw delivery
according to the carrier, so dapat daw discharged na
sila sa ilang responsibility sa goods).
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. 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. 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. 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.
Hence, in case of loss of goods in transit, the common
carrier is presumed under the law to have been in fault
or negligent.
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. 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.
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. 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.
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, and
there need not be an express finding of negligence to
hold it liable. To overcome the presumption of
negligence, the common carrier must establish by
adequate proof that it exercised extraordinary diligence
over the goods. It must do more than merely show that
some other party could be responsible for the damage.
In the present case, petitioners failed to prove that they
did exercise the degree of diligence required by law over
the goods they transported. 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. 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 failed 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. They
however, in vain, relied on applicability of Panamanian
law to local jurisdiction. It is for this reason that we find
petitioners liable for the misdelivery of the goods.
Duty to Exercise Extraordinary Diligence

Rationale
KAPALARAN BUS LINE vs. ANGEL CORONADO
Facts: The accident happened on the National Highway
at 10:30 A.M. on August 2, 1982. The jeepney driven by
Lope Grajera was then corning from Pila, Laguna on its
way towards the direction of Sta. Cruz, traversing the
old highway. As it reached the intersection where there
is a traffic sign 'yield,' it stopped and cautiously treated
the intersection as a "Thru Stop' street, which it is not.
KBL bus was on its way from Sta. Cruz, Laguna, driven
by its regular driver Virgilio Llamoso, on its way towards
Manila. The regular itinerary of the KBL bus is through
the town proper of Pila, Laguna, but at times it avoids
this if a bus is already fully loaded with passengers and
can no longer accommodate additional passengers. As
the KBL bus neared the intersection, Virgilio Llamoso
inquired from his conductor if they could still
accommodate passengers and learning that they were
already full, he decided to bypass Pila and instead, to
proceed along the national highway. Virgilio Llamoso
admitted that there was another motor vehicle ahead of
him.
General rules:
1.)The vehicle on the national highway has the right-of-
way as against a feeder road.
2.)The vehicle coming from the right has the right-of-way
over the vehicle coming from the left.
The general rules on right-of-way may be invoked only if
both vehicles approach the intersection at almost the
same time.
In the case at bar, both roads are national roads. Also,
KBL bus was still far from the intersection when the
jeepney reached the same. As testified to by Atty.
Conrado L. Manicad who was driving a Mustang car
coming from the direction of Sta. Cruz and proceeding
towards the direction of Manila, he stopped at the
intersection to give way to the jeepney driven by Grajera.
Behind Manicad were two vehicles, a car of his client
and another car. A Laguna Transit bus had just entered
the town of Pila ahead of Atty. Manicad.
The sketch marked Exhibit 'E' indicates very clearly that
the jeepney had already traversed the intersection when
it met the KBL bus head-on. It is also obvious that the
point of impact was on the right lane of the highway
which is the lane properly belonging to the jeepney. As
testified to by Lope Grajera, the KBL bus ignored the
stopped vehicles of Atty. Manicad and the other vehicles
behind Atty. Manicad and overtook both vehicles at the
intersection, therefore, causing the accident.
The first vehicle to arrive at the intersection was the
jeepney. Seeing that the road was clear, the jeepney
which had stopped at the intersection began to move
forward, and for his part, Atty. Manicad stopped his car
at the intersection to give way to the jeepney. At about
this time, the KBL bus was approaching the intersection
and its driver was engaged in determining from his
conductor if they would still pass through the town
proper of Pila. Upon learning that they were already full,
he turned his attention to the road and found the
stopped vehicles at the intersection with the jeepney
trying to cross the intersection. The KBL bus had no
more room within which to stop without slamming into
the rear of the vehicle behind the car of Atty. Manicad.
The KBL driver chose to gamble on proceeding on its
way, unfortunately, the jeepney driven by Grajera, which
had the right-of-way, was about to cross the center of
the highway and was directly on the path of the KBL
bus. The gamble made by Llamoso did not pay off. The
impact indicates that the KBL bus was travelling at a
fast rate of speed because, after the collision, it did not
stop; it travelled for another 50 meters and stopped only
when it hit an electric post.
Kapalaran, apparently believing that the best defense
was offense, filed a complaint for damage to property
and physical injuries through reckless imprudence
against respondents Angel Coronado and Lope Grajera
in the RTC. Respondents answered with their own
claims (counter-claims) for damages. A third-party
complaint and/or a complaint for intervention was also
filed in the same case against Kapalaran by jeepney
passenger Dionisio Shinyo.
RTC rendered a judgment in favor of private
respondents.
CA affirmed the decision but modified the award of
damages by setting aside the grant of exemplary
damages as well as the award of attorney's fees and
litigation expenses made to Dionisio Shinyo.
Issues:
1. Whether or not Kapalaran Bus Line’s driver
exercised the diligence required of common carriers? NO
2. Whether or not the employer can be held liable
for damages arising from the negligence of its bus
driver? YES
Held:
Kapalaran's bus driver was grossly negligent and had
acted wantonly and in obvious disregard of the
applicable rules on safety on the highway.
Kapalaran's driver had become aware that some vehicles
ahead of the bus and travelling in the same direction
had already stopped at the intersection obviously to give
way either to pedestrians or to another vehicle about to
enter the intersection. The bus driver, who was driving
at a speed too high to be safe and proper at or near an
intersection on the highway, and in any case too high to
be able to slow down and stop behind the cars which
had preceded it and which had stopped at the
intersection, chose to swerve to the left lane and
overtake such preceding vehicles, entered the
intersection and directly smashed into the jeepney
within the intersection. Immediately before the collision,
the bus driver was actually violating the following traffic
rules and regulations, among others, in the Land
Transportation and Traffic Code, Republic Act No. 4136,
as amended:
Sec. 35. Restriction as to speed. — (a) Any person
driving a motor vehicle on a highway shall drive the
same at a careful and prudent speed, not greater nor
less than is reasonable and proper, having due regard
for the traffic, the width of the highway, and or any other
condition then and there existing; and no person shall
drive any motor vehicle upon a highway at such a speed
as to endanger the life, limb and property of any person,
nor at a speed greater than will permit him to bring the
vehicle to a stop within the assured clear distance
ahead.
Sec. 41. Restrictions on overtaking and passing. _1 (a)
The driver of a vehicle shall not drive to the left side of
the center line of a highway in overtaking or passing
another vehicle, proceeding in the same direction,
unless such left side is clearly visible, and is free of
oncoming traffic for a sufficient distance ahead to permit
such overtaking or passing to be made in safety.
(c) The driver of a vehicle shall not overtake or pass any
other vehicle proceeding in the same direction, at any
railway grade crossing, or at any intersection of
highways, unless such intersection or crossing is
controlled by traffic signal, or unless permitted to do so
by a watchman or a peace officer, except on a highway
having two or more lanes for movement of traffic in one
direction where the driver of a vehicle may overtake or
pass another vehicle on the right. Nothing in this section
shall be construed to prohibit a driver overtaking or
passing, upon the right, another vehicle which is making
or about to make a left turn.
Thus, a legal presumption arose that the bus driver was
negligent, a presumption Kapalaran was unable to
overthrow.
The jeepney driver, seeing the cars closest to the
intersection on the opposite side of the highway come to
a stop to give way to him, had the right to assume that
other vehicles further away and behind the stopped cars
would similarly come to a stop and not seek illegally to
overtake the stopped vehicles and come careening into
the intersection at an unsafe speed. Petitioner's bus was
still relatively far away from the intersection when the
jeepney entered the same; the bus collided head on into
the jeepney because the bus had been going at an
excessively high velocity immediately before and at the
time of overtaking the stopped cars, and so caught the
jeepney within the intersection. It was also the
responsibility of the bus driver to see to it, when it
overtook the two (2) cars ahead which had stopped at
the intersection, that the left lane of the road within the
intersection and beyond was clear. The point of impact
was on the left side of the intersection (the light lane so
far as concerns the jeepney coming from the opposite
side), which was precisely the lane or side on which the
jeepney had a right to be.
Petitioner Kapalaran also assails the award of moral
damages against itself, upon the ground that its own
bus driver, third-party defendant, was apparently not
held liable by the trial court. Hence, Kapalaran argues
that there was no justification for holding it, the
employer, liable for damages, considering that such
liability was premised upon the bus driver's negligence
and that petitioner "as mere employer" was not guilty of
such negligence or imprudence. This contention in
thoroughly unpersuasive.
The patent and gross negligence on the part of the
petitioner Kapalaran's driver raised the legal
presumption that Kapalaran as employer was guilty of
negligence either in the selection or in the supervision of
its bus driver.
Where the employer is held liable for damages, it has of
course a right of recourse against its own negligent
employee. If petitioner Kapalaran was interested in
maintaining its right of recourse against or
reimbursement from its own driver, 8 it should have
appealed from that portion of the trial court's decision
which had failed to hold the bus driver is not "merely
subsidiary," and is not limited to cases where the
employee "cannot pay his liability" nor are private
respondents compelled first to proceed against the bus
driver.
The liability of the employer under Article 2180 of the
Civil Code is direct and immediate; it is not conditioned
upon prior recourse against the negligent employee and
a prior showing of the insolvency of such employee. 9 
Kapalaran was unable to rebut the presumption of
negligence on its own part. The award of moral damages
against Kapalaran is not only entirely in order; it is also
quite modest considering Dionisio Shinyo's death during
the pendency of this petition, a death hastened by, if not
directly due to, the grievous injuries sustained by him in
the violent collision.
The law requires petitioner as common carrier to
exercise extraordinary diligence in carrying and
transporting their passenger safely "as far as human
care and foresight can proved, using the utmost
diligence of very cautious persons, with due regard for
all circumstances." 10  Article 2231 of the Civil Code
explicitly authorizes the imposition of exemplary
damages in cases of quasi-delicts "if the defendant acted
with gross negligence." The award of exemplary damages
by the trial court was quite proper, although granted for
the wrong reason, and should not only be restored but
augmented in the present case. The Court is aware that
respondent Shinyo did not file a separate petition for
review to set aside that portion of the Court of Appeals'
decision which deleted the grant by the trial court of
exemplary damages. In the instant case, it is not only
the demands of substantial justice but also the
compelling considerations of public policy noted above,
which impel us to the conclusion that the trial court's
award of exemplary damages was erroneously deleted
and must be restored and brought more nearly to the
level which public policy and substantial justice require.
How duty is complied
ROBERTO JUNTILLA vs. CLEMENTE FONTANAR
Plaintiff was a passenger of the public utility jeepney
bearing plate No. PUJ-71-7 on the course of the trip
from Danao City to Cebu City. The jeepney was driven
by defendant Berfol Camoro. It was registered under the
franchise of Clemente Fontanar but was actually owned
by Fernando Banzon. When the jeepney reached
Mandaue City, the right rear tire exploded causing the
vehicle to turn turtle. In the process, the plaintiff who
was sitting at the front seat was thrown out of the
vehicle. Upon landing on the ground, the plaintiff
momentarily lost consciousness. When he came to his
senses, he found that he had a lacerated wound on his
right palm. Aside from this, he suffered injuries on his
left arm, right thigh and on his back. Because of his
shock and injuries, he went back to Danao City but on
the way, he discovered that his "Omega" wrist watch was
lost. Upon his arrival in Danao City, he immediately
entered the Danao City Hospital to attend to his injuries,
and also requested his father-in-law to proceed
immediately to the place of the accident and look for the
watch. In spite of the efforts of his father-in-law, the
wrist watch, which he bought for P 852.70 could no
longer be found.
Juntilla filed for breach of contract with damages
against Clemente Fontanar, Fernando Banzon and
Berfol Camoro.
Respondents filed their answer alleging that the accident
that caused losses to the petitioner was beyond the
control of the respondents taking into account that the
tire that exploded was newly bought and was only
slightly used at the time it blew up.
After trial, Judge Romulo Senining rendered judgment in
favor of the petitioner and against the respondents.
Judge Leonardo Canares reversed the judgment of the
City Court of Cebu upon a finding that the accident in
question was due to a fortuitous event.  coupled by the fact that the jeepney was overloaded and
The petitioner raises the following alleged errors
committed by the Court of First Instance of Cebu on
appeal—
a. The Honorable Court below committed grave abuse of
discretion in failing to take cognizance of the fact that
defendants and/or their employee failed to exercise
"utmost and/or extraordinary diligence" required of
common carriers contemplated under Art. 1755 of the
Civil Code of the Philippines.
b. The Honorable Court below committed grave abuse of
discretion by deciding the case contrary to the doctrine
laid down by the Honorable Supreme Court in the case
of Necesito et al. v. Paras, et al.
Issue: Whether or not the tire blow-out is a fortuitous
event? No.
Held:
The Court of First Instance of Cebu erred when it
absolved the carrier from any liability upon a finding
that the tire blow out is a fortuitous event. It relied on
the ruling of the Court of Appeals in Rodriguez v. Red
Line Transportation Co where the Court of Appeals ruled
that:
A tire blow-out does not constitute negligence unless the
tire was already old and should not have been used at
all. Indeed, this would be a clear case of fortuitous
event.
The conclusion of the Court of First Instance of Cebu is
based on a misapprehension of overall facts from which
a conclusion should be drawn. The reliance of the Court
of First Instance on the Rodriguez case is not in order.
In La Mallorca and Pampanga Bus Co. v. De Jesus, et
al. we held that:
The rulings of the CA in Rodriguez v. Red Line
Transportation Co., and People v. Palapad, however, not
only are not binding on this Court but were based on
considerations quite different from those that obtain in
the case at bar. The appellate court there made no
findings of any specific acts of negligence on the part of
the defendants and confined itself to the question of
whether or not a tire blow-out, by itself alone and
without a showing as to the causative factors, would
generate liability.
In the case at bar, there are specific acts of negligence
on the part of the respondents. The records show that
the passenger jeepney turned turtle and jumped into a
ditch immediately after its right rear tire exploded. The
evidence shows that the passenger jeepney was running
at a very fast speed before the accident. The public
utility jeep running at a regular and safe speed will not
jump into a ditch when its right rear tire blows up.
There is also evidence to show that the passenger
jeepney was overloaded at the time of the accident. The
petitioner stated that there were three (3) passengers in
the front seat and fourteen (14) passengers in the rear.
While it may be true that the tire that blew-up was still
good because the grooves of the tire were still visible,
this fact alone does not make the explosion of the tire a
fortuitous event. No evidence was presented to show
that the accident was due to adverse road conditions or
that precautions were taken by the jeepney driver to
compensate for any conditions liable to cause accidents.
The sudden blowing-up, therefore, could have been
caused by too much air pressure injected into the tire
speeding at the time of the accident.
In Lasam v. Smith, we laid down the following essential
characteristics of caso fortuito:
Caso fortuito presents the following essential
characteristics: (1) The cause of the unforeseen and
unexpected 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. 
In the case at bar, the cause of the unforeseen and
unexpected occurrence was not independent of the
human will. The accident was caused either through the
negligence of the driver or because of mechanical defects
in the tire. Common carriers should teach their drivers
not to overload their vehicles, not to exceed safe and
legal speed limits, and to know the correct measures to
take when a tire blows up thus insuring the safety of
passengers at all times. Relative to the contingency of
mechanical defects, we held in Necesito, et al. v. Paras,
et al. that:
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.
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.
The source of a common carrier's legal liability is the
contract of carriage, and by entering into the said
contract, it binds itself to carry the passengers safely as
far as human care and foresight can provide, using the
utmost diligence of a very cautious person, with a due
regard for all the circumstances. The records show that
this obligation was not met by the respondents.
EASTERN SHIPPING LINES, INC. vs. IAC (medyo taas
ni siya)
In G.R. No. 69044, sometime in or prior to June, 1977,
M/S ASIATICA, a vessel operated by petitioner Eastern
Shipping Lines, Inc., (referred to as Petitioner Carrier)
loaded at Kobe, Japan for transportation to Manila,
5,000 pieces of calorized lance pipes in 28 packages
valued at P256,039.00 consigned to Philippine Blooming
Mills Co., Inc., and 7 cases of spare parts valued at
P92,361.75, consigned to Central Textile Mills, Inc. Both
sets of goods were insured against marine risk for their
stated value with respondent Development Insurance
and Surety Corporation.
In G.R. No. 71478, during the same period, the same
vessel took on board 128 cartons of garment fabrics and
accessories, in two (2) containers, consigned to
Mariveles Apparel Corporation, and two cases of
surveying instruments consigned to Aman Enterprises
and General Merchandise. The 128 cartons were insured
for their stated value by respondent Nisshin Fire &
Marine Insurance Co., for US $46,583.00, and the 2
cases by respondent Dowa Fire & Marine Insurance Co.,
Ltd., for US $11,385.00.
En route for Kobe, Japan, to Manila, the vessel caught
fire and sank, resulting in the total loss of ship and
cargo. The respective respondent Insurers paid the
corresponding marine insurance values to the
consignees concerned and were thus subrogated unto
the rights of the latter as the insured.
G.R. NO. 69044
On May 11, 1978, respondent Development Insurance &
Surety Corporation (Development Insurance), having
been subrogated unto the rights of the two insured
companies, filed suit against petitioner Carrier for the
recovery of the amounts it had paid to the insured
before the then Court of First instance of Manila.
Petitioner-Carrier denied liability mainly on the ground
that the loss was due to an extraordinary fortuitous
event, hence, it is not liable under the law.
On August 31, 1979, the Trial Court rendered judgment
in favor of Development Insurance. Petitioner Carrier
took an appeal to the then Court of Appeals which, on
August 14, 1984, affirmed.
G.R. NO. 71478
On June 16, 1978, respondents Nisshin Fire & Marine
Insurance Co. NISSHIN), and Dowa Fire & Marine
Insurance Co., Ltd. (DOWA), as subrogees of the
insured, filed suit against Petitioner Carrier for the
recovery of the insured value of the cargo lost with the
then Court of First Instance of Manila, imputing
unseaworthiness of the ship and non-observance of
extraordinary diligence by petitioner Carrier.
Petitioner Carrier denied liability on the principal
grounds that the fire which caused the sinking of the
ship is an exempting circumstance under Section 4(2)
(b) of the Carriage of Goods by Sea Act (COGSA); and
that when the loss of fire is established, the burden of
proving negligence of the vessel is shifted to the cargo
shipper.
On September 15, 1980, the Trial Court rendered
judgment in favor of NISSHIN and DOWA. On appeal by
petitioner, the then CA on September 10, 1984, affirmed
with modification the Trial Court's judgment by
decreasing the amount recoverable by DOWA to US
$1,000.00 because of $500 per package limitation of
liability under the COGSA.
Hence, this Petition for Review on certiorari by Petitioner
Carrier.
At the outset, we reject Petitioner Carrier's claim that it
is not the operator of the M/S Asiatica but merely a
charterer thereof. We note that in G.R. No. 69044,
Petitioner Carrier stated in its Petition:
There are about 22 cases of the "ASIATICA" pending in
various courts where various plaintiffs are represented
by various counsel representing various consignees or
insurance companies. The common defendant in these
cases is petitioner herein, being the operator of said
vessel.
Petitioner Carrier should be held bound to said
admission. As a general rule, the facts alleged in a
party's pleading are deemed admissions of that party
and binding upon it. 2 And an admission in one
pleading in one action may be received in evidence
against the pleader or his successor-in-interest on the
trial of another action to which he is a party, in favor of
a party to the latter action. 3
Issues:
(1) Which law should govern — the Civil Code provisions
on Common carriers or the Carriage of Goods by Sea
Act? Civil Code
(2) Who has the burden of proof to show negligence of
the carrier? Petitioner
On the Law Applicable
The law of the country to which the goods are to be
transported governs the liability of the common carrier
in case of their loss, destruction or deterioration. 4 As
the cargoes in question were transported from Japan to
the Philippines, the liability of Petitioner Carrier is
governed primarily by the Civil Code. 5 However, in all
matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the
Code of Commerce and by special laws. 6 Thus, the
Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code. 7
On the Burden of Proof
Under the Civil Code, common carriers, from the nature
of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance
over goods, according to all the circumstances of each
case. 8Common carriers are responsible for the loss,
destruction, or deterioration of the goods unless the
same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural
disaster or calamity; xxx
Petitioner Carrier claims that the loss of the vessel by
fire exempts it from liability under the phrase "natural
disaster or calamity." However, fire may not be
considered a natural disaster or calamity. This must be
so as it arises almost invariably from some act of man or
by human means. It does not fall within the category of
an act of God unless caused by lightning or by other
natural disaster or calamity. It may even be caused by
the actual fault or privity of the carrier.
As the peril of the fire is not comprehended within the
exception in Article 1734, supra, Article 1735 of the Civil
Code provides that all cases than those mention in
Article 1734, the common carrier shall be presumed to
have been at fault or to have acted negligently, unless it
proves that it has observed the extraordinary diligence
required by law.
In this case, the respective Insurers as subrogees of the
cargo shippers, have proven that the transported goods
have been lost. Petitioner Carrier has also proved that
the loss was caused by fire. The burden is upon
Petitioner Carrier to prove that it has exercised the
extraordinary diligence required by law.
Having failed to discharge the burden of proving that it
had exercised the extraordinary diligence required by
law, Petitioner Carrier cannot escape liability for the loss
of the cargo.
Nor may Petitioner Carrier seek refuge from liability
under the Carriage of Goods by Sea Act, It is provided
therein that:
Sec. 4(2). Neither the carrier nor the ship shall be
responsible for loss or damage arising or resulting from
(b) Fire, unless caused by the actual fault or privity of
the carrier.
In this case, both the Trial Court and the Appellate
Court, in effect, found, as a fact, that there was "actual
fault" of the carrier shown by "lack of diligence" in that
"when the smoke was noticed, the fire was already big;
that the fire must have started twenty-four (24) hours
before the same was noticed; " and that "after the
cargoes were stored in the hatches, no regular
inspection was made as to their condition during the
voyage." The foregoing suffices to show that the
circumstances under which the fire originated and
spread are such as to show that Petitioner Carrier or its
servants were negligent in connection therewith.
Consequently, the complete defense afforded by the
COGSA when loss results from fire is unavailing to
Petitioner Carrier.
On the US $500 Per Package Limitation:
Petitioner Carrier avers that its liability if any, should
not exceed US $500 per package as provided in section
4(5) of the COGSA, which reads:
(5) Neither the carrier nor the ship shall in any event be
or become liable for any loss or damage to or in
connection with the transportation of goods in an
amount exceeding $500 per package lawful money of the
United States, or in case of goods not shipped in
packages, per customary freight unit, or the equivalent
of that sum in other currency, unless the nature and
value of such goods have been declared by the shipper
before shipment and inserted in bill of lading. This
declaration if embodied in the bill of lading shall be
prima facie evidence, but all be conclusive on the
carrier.
By agreement between the carrier, master or agent of the
carrier, and the shipper another maximum amount than
that mentioned in this paragraph may be fixed:
Provided, that such maximum shall not be less than the
figure above named. In no event shall the carrier be
Liable for more than the amount of damage actually
sustained.
Article 1749 of the New Civil Code also allows the
limitations of liability in this wise:
Art. 1749. A stipulation that the common carrier's
liability as limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a
greater value, is binding.
It is to be noted that the Civil Code does not of itself
limit the liability of the common carrier to a fixed
amount per package although the Code expressly
permits a stipulation limiting such liability. Thus, the
COGSA which is suppletory to the provisions of the Civil
Code, steps in and supplements the Code by
establishing a statutory provision limiting the carrier's
liability in the absence of a declaration of a higher value
of the goods by the shipper in the bill of lading. The
provisions of the Carriage of Goods by Sea Act on limited
liability are as much a part of a bill of lading as though
physically in it and as much a part thereof as though
placed therein by agreement of the parties.
In G.R. No. 69044, there is no stipulation in the
respective Bills of Lading limiting the carrier's liability
for the loss or destruction of the goods. Nor is there a
declaration of a higher value of the goods. Hence,
Petitioner Carrier's liability should not exceed US $500
per package, or its peso equivalent, at the time of
payment of the value of the goods lost, but in no case
"more than the amount of damage actually sustained."
In G.R. No. 71478, in so far as the two (2) cases of
surveying instruments are concerned, the amount
awarded to DOWA which was already reduced to $1,000
by the Appellate Court following the statutory $500
liability per package, is in order.
In respect of the shipment of 128 cartons of garment
fabrics in two (2) containers and insured with NISSHIN,
the Appellate Court also limited Petitioner Carrier's
liability to $500 per package and affirmed the award of
$46,583 to NISSHIN. it multiplied 128 cartons
(considered as COGSA packages) by $500 to arrive at
the figure of $64,000, and explained that "since this
amount is more than the insured value of the goods,
that is $46,583, the Trial Court was correct in awarding
said amount only for the 128 cartons, which amount is
less than the maximum limitation of the carrier's
liability."
We find no reversible error. The 128 cartons and not the
two (2) containers should be considered as the shipping
unit.
In Mitsui & Co., Ltd. vs. American Export Lines, Inc. it
was held:
When what would ordinarily be considered packages are
shipped in a container supplied by the carrier and the
number of such units is disclosed in the shipping
documents, each of those units and not the container
constitutes the "package" referred to in liability
limitation provision of Carriage of Goods by Sea Act.
Even if language and purposes of Carriage of Goods by
Sea Act left doubt as to whether carrier-furnished
containers whose contents are disclosed should be
treated as packages, the interest in securing
international uniformity would suggest that they should
not be so treated.
The case of Smithgreyhound v. M/V Eurygenes, followed
the Mitsui test:
Eurygenes concerned a shipment of stereo equipment
packaged by the shipper into cartons which were then
placed by the shipper into a carrier-furnished
container. The number of cartons was disclosed to the
carrier in the bill of lading. Eurygenes followed the
Mitsui test and treated the cartons, not the container, as
the COGSA packages. However, Eurygenes indicated
that a carrier could limit its liability to $500 per
container if the bill of lading failed to disclose the
number of cartons or units within the container, or if
the parties indicated, in clear and unambiguous
language, an agreement to treat the container as the
package.
In this case, the Bill of Lading disclosed the following
data:
2 Containers
(128) Cartons)
Men's Garments Fabrics and Accessories Freight Prepaid
Say: Two (2) Containers Only.
Considering, therefore, that the Bill of Lading clearly
disclosed the contents of the containers, the number of
cartons or units, as well as the nature of the goods, and
applying the ruling in the Mitsui and Eurygenes cases it
is clear that the 128 cartons, not the two (2) containers
should be considered as the shipping unit subject to the
$500 limitation of liability.
True, the evidence does not disclose whether the
containers involved herein were carrier-furnished or not.
Usually, however, containers are provided by the
carrier. In this case, the probability is that they were so
furnished for Petitioner Carrier was at liberty to pack
and carry the goods in containers if they were not so
packed (as can be found at the dorsal side of the Bill of
Lading).
The foregoing would explain the use of the estimate
"Say: Two (2) Containers Only" in the Bill of Lading,
meaning that the goods could probably fit in two (2)
containers only. It cannot mean that the shipper had
furnished the containers for if so, "Two (2) Containers"
appearing as the first entry would have sufficed and if
there is any ambiguity in the Bill of Lading, it is a
cardinal principle in the construction of contracts that
the interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the
obscurity. 20 This applies with even greater force in a
contract of adhesion where a contract is already
prepared and the other party merely adheres to it, like
the Bill of Lading in this case, which is drawn up by the
carrier.
NATIONAL TRUCKING AND FORWARDING
CORPORATION vs. LORENZO SHIPPING
CORPORATION
Republic of the Philippines, through the DOH, and the
Cooperative for American Relief Everywhere, Inc. (CARE)
signed an agreement wherein CARE would acquire from
the United States government donations of non-fat dried
milk and other food products from January 1, 1987 to
December 31, 1989. In turn, the Philippines would
transport and distribute the donated commodities to the
intended beneficiaries in the country.
The government entered into a contract of carriage of
goods with herein petitioner National Trucking and
Forwarding Corporation (NTFC). Thus, the latter shipped
4,868 bags of non-fat dried milk through herein
respondent Lorenzo Shipping Corporation (LSC) from
September to December 1988. The consignee named in
the bills of lading issued by the respondent was
Abdurahman Jama, petitioners branch supervisor in
Zamboanga City.
On reaching the port of Zamboanga City, respondents
agent, Efren Ruste[4] Shipping Agency, unloaded the
4,868 bags of non-fat dried milk and delivered the goods
to petitioners warehouse. Before each delivery, Rogelio
Rizada and Ismael Zamora, both delivery checkers of
Efren Ruste Shipping Agency, requested Abdurahman to
surrender the original bills of lading, but the latter
merely presented certified true copies thereof. Upon
completion of each delivery, Rogelio and Ismael asked
Abdurahman to sign the delivery receipts. However, at
times when Abdurahman had to attend to other
business before a delivery was completed, he instructed
his subordinates to sign the delivery receipts for him.
Notwithstanding the precautions taken, the petitioner
allegedly did not receive the subject goods. Thus, in a
letter dated March 11, 1989, petitioner NTFC filed a
formal claim for non-delivery of the goods shipped
through respondent.
In its letter of April 26, 1989, the respondent explained
that the cargo had already been delivered to
Abdurahman Jama. The petitioner then decided to
investigate the loss of the goods. But before the
investigation was over, Abdurahman Jama resigned as
branch supervisor of petitioner.
Noting but disbelieving respondents insistence that the
goods were delivered, the government through the DOH,
CARE, and NTFC as plaintiffs filed an action for breach
of contract of carriage, against respondent as defendant,
with the RTC of Manila.
RTC resolved the case in favor of the defendant.
Dissatisfied with the ruling, petitioner appealed to CA. It
faulted the lower court for not holding that respondent
failed to deliver the cargo, and that respondent failed to
exercise the extraordinary diligence required of common
carriers. Petitioner also assailed the lower court for
denying its claims for actual, moral, and exemplary
damages, and for awarding actual damages and
attorney’s fees to the respondent.[6]
CA affirmed the decision in toto.
Petitioner now comes, assigning the error:
THE COURT OF APPEALS GRAVELY ERRED WHEN IT
FAILED TO APPRECIATE AND APPLY THE LEGAL
STANDARD OF EXTRAORDINARY DILIGENCE IN THE
SHIPMENT AND DELIVERY OF GOODS TO THE
RESPONDENT AS A COMMON CARRIER, AS WELL AS
THE ACCOMPANYING LEGAL PRESUMPTION OF FAULT
OR NEGLIGENCE ON THE PART OF THE COMMON
CARRIER, IF THE GOODS ARE LOST, DESTROYED OR
DETERIORATED, AS REQUIRED UNDER THE CIVIL
CODE.
Issue: Is respondent presumed at fault or negligent as
common carrier for the loss or deterioration of the
goods?
Held: No.
Petitioner contends that respondent is presumed
negligent and liable for failure to abide by the terms and
conditions of the bills of lading; that Abdurahman
Jama’s failure to testify should not be held against
petitioner; and that the testimonies of Rogelio Rizada
and Ismael Zamora, as employees of respondents agent,
Efren Ruste Shipping Agency, were biased and could not
overturn the legal presumption of respondents fault or
negligence.
For its part, the respondent avers that it observed and after he was cleared of any responsibility for the loss
extraordinary diligence in the delivery of the goods. Prior of the goods. With Abdurahman outside of its reach,
to releasing the goods to Abdurahman, Rogelio and petitioner cannot now pass to respondent what could be
Ismael required the surrender of the original bills of Abdurahman’s negligence, if indeed he were responsible.
lading, and in their absence, the certified true copies
showing that Abdurahman was indeed the consignee of
the goods. In addition, they required Abdurahman or his
designated subordinates to sign the delivery receipts VICTORY LINER VS. RACE (2007)
upon completion of each delivery.
To allow the respondent to drive the petitioner’s bus
We rule for respondent. under such uncertain condition would, undoubtedly,
expose to danger the lives of the passengers and the
Article 1733[8] of the Civil Code demands that a property of the petitioner. This would place the
common carrier observe extraordinary diligence over the petitioner in jeopardy of violating its extra-ordinary
goods transported by it. Extraordinary diligence is that diligence obligation and, thus, may be subjected to
extreme measure of care and caution which persons of numerous complaints and court suits.
unusual prudence and circumspection use for securing
and preserving their own property or rights.[9] This FACTS:
exacting standard imposed on common carriers in a
Respondent Pablo Race was employed by Petioner as a
contract of carriage of goods is intended to tilt the scales
bus driver for the Alaminos-Cubao evening route. On
in favor of the shipper who is at the mercy of the
August 1994, the bus which was being driven by Race
common carrier once the goods have been lodged for
met an accident. As a result, he suffered a fractured leg
shipment. Hence, in case of loss of goods in transit, the
and was confined in the hospital until October 10, 1994.
common carrier is presumed under the law to have been
Exactly a month after, he was again confined for one
at fault or negligent.[10] However, the presumption of
more month. All of the medical expenses were
fault or negligence, may be overturned by competent
shouldered by Victory Liner.
evidence showing that the common carrier has observed
extraordinary diligence over the goods.
On January 1998, Race reported for work but was
informed that he was considered resigned and he was
In the instant case, the respondent adequately proved
offered consideration, which he rejected. Before
that it exercised extraordinary diligence. Although the
Christmas of 1998, Victory Liner reiterated that he was
original bills of lading remained with petitioner,
considered as resigned. He was offered a bigger amount
respondent’s agents demanded from Abdurahman the
of money, which he rejected.
certified true copies of the bills of lading. They also
asked the latter and in his absence, his designated
On June 30, 1999, Race sent a letter to Victory Liner
subordinates, to sign the cargo delivery receipts. demanding employment-related claims but he received
no response from the latter. He then filed a complaint on
This practice, which respondent’s agents testified to be
September 1, 1999 before the Labor Arbiter for unfair
their standard operating procedure, finds support in
labor practice, illegal dismissal and underpayment of
Article 353 of the Code of Commerce:
wages.
ART. 353. After the contract has been complied with, the
The Labor Arbiter dismissed the case because of
bill of lading which the carrier has issued shall be
prescription. NLRC reversed the decision and held that
returned to him, and by virtue of the exchange of this
Race’s cause of action accrued in January 1998, when
title with the thing transported, the respective
the respondent reported for work but was rejected by the
obligations and actions shall be considered cancelled,
petitioner. Thus, the respondent's filing of complaint was
In case the consignee, upon receiving the goods, cannot well-within the prescriptive period. This decision was
return the bill of lading subscribed by the carrier, affirmed by the Court of Appeals.
because of its loss or of any other cause, he must give
ISSUE: WON RESPONDENT IS ENTITLED TO
the latter a receipt for the goods delivered, this receipt
REINSTATEMENT WITH FULL BACKWAGES AND
producing the same effects as the return of the bill of
OTHER BENEFITS.
lading.
RULING: reinstatement- no; full backwages and other
The surrender of the original bill of lading is not a
benefits - yes
condition precedent for a common carrier to be
discharged of its contractual obligation. If surrender of
Petitioner neglected to observe the substantial and
the original bill of lading is not possible, procedural due process in terminating the employment
acknowledgment of the delivery by signing the delivery
of respondent, we rule that the latter was illegally
receipt suffices. This is what respondent did. dismissed from work by the petitioner. Consequently,
the respondent is entitled to reinstatement without loss
Also, some delivery receipts were signed by
of seniority rights and full backwages, inclusive of
Abdurahman’s subordinates and not by Abdurahman
allowances, and other benefits or their monetary
himself as consignee. Further, delivery checkers Rogelio
equivalent. It appears, however, that respondent was not
and Ismael testified that Abdurahman was always
seeking reinstatement. In the letter he sent to the
present at the initial phase of each delivery, although on
petioner, the respondent explained that since he cannot
the few occasions when Abdurahman could not stay to
drive anymore due to his leg injury, he was willing to be
witness the complete delivery of the shipment, he
hired as a dispatcher or conductor.
authorized his subordinates to sign the delivery receipts
for him. This is sufficient and substantial compliance Even assuming that respondent is willing to be
with the requirements.
reinstated as petitioner’s bus driver, the reinstatement is
still unwarranted. There is a serious doubt as to
Strangely, petitioner made no effort to disapprove
whether the respondent is physically capable of driving a
Abdurahman’s resignation until after the investigation
bus based on the following undisputed facts: (1)
respondent was operated on and confined twice in two
different hospitals for a fractured left leg; (2) steel plates
were attached to his fractured leg (3) each confinement
lasted for a month; (4) after his discharge from the
second confinement, respondent was still limping
heavily; (5) when respondent had reported for work to
the petitioner in January 1998, he was also limping; and
(6) respondent does not have a medical certificate which
guarantees that his leg injury has already healed and
that he is now physically capable of driving a bus.
Petitioner is a common carrier and, as such, is obliged
to exercise extra-ordinary diligence in transporting its
passengers safely. To allow the respondent to drive the
petitioner’s bus under such uncertain condition would,
undoubtedly, expose to danger the lives of the
passengers and the property of the petitioner. This
would place the petitioner in jeopardy of violating its
extra-ordinary diligence obligation and, thus, may be
subjected to numerous complaints and court suits. It is
clear therefore that the reinstatement of respondent not
only would be deleterious to the riding public but would
also put unreasonable burden on the business and
interest of the petitioner. In this regard, it should be
remembered that an employer may not be compelled to
continue to employ such persons whose continuance in
the service will patently be inimical to his interests. The
reinstatement of the respondent is no longer feasible.
Thus, in lieu of reinstatement, payment to respondent of
separation pay equivalent to one month pay for every
year of service is in order.
VICTORY LINER, INC. VS. RACE (2008) RESOLUTION
Petitioner Victory Liner, Inc. challenged the Decision
dated 28 March 2007. In the said Decision, that
respondent Pablo Race, employed as one of petitioner’s
bus drivers, was illegally dismissed by petitioner since
petitioner failed to comply with both substantive and
procedural due process in terminating respondent’s
employment. However, considering the leg injury
sustained by respondent in an accident which already
rendered him incapable of driving a bus, SC ordered
payment of his separation pay instead of his
reinstatement.
In its present motion, petitioner is asserting that it
should be deemed to have acted in good faith when it
considered respondent as resigned from work because
the Court itself stated in the Decision that respondents
reinstatement is no longer feasible due to his leg injury,
and that to allow the respondent to drive petitioners bus
in his present physical condition would place petitioner
in jeopardy of violating its obligation as a common
carrier to always exercise extra-ordinary diligence. Thus,
invoking good faith, petitioner denies any liability to
respondent for the payment of his backwages and
allowances from 1 January 1998 to the date of finality of
our Decision.
We agree.
In attributing good faith to petitioner, we give due regard
to the following circumstances:
First, respondent had been working for petitioner for
only 15 months, from June 1993 to August 1994, when
the accident occurred causing injury to his leg. Hence,
he was able to render actual service to petitioner as a
bus driver for the mere period of a little over a year.
Second, in January 1998, when he went to petitioners
office and was informed that he was deemed resigned
from work, he was still limping heavily. In fact,
respondent’s letter to petitioner’s Vice President, dated
18 March 1996, requesting that he be transferred to the
position of dispatcher or conductor, is very revealing of
the fact that he could no longer drive a bus because of
his leg injury.
Third, despite respondent’s inability to render actual
service for four years following the accident in 1994,
petitioner still continued to pay him his salary and
shoulder his medical expenses. When petitioner
informed respondent that he was deemed resigned in
1998, petitioner even offered respondent the amount of
P50,000.00 as financial assistance; and when
respondent refused to receive the said amount,
petitioner raised its offer to P100,000.00.
And finally, as we discussed in our Decision, petitioner
is a common carrier and, as such, is obliged to exercise
extra-ordinary diligence in transporting its passengers
safely. Understandably, petitioner feared that it would
be exposing to danger the lives of its passengers if it
allowed the respondent to drive its bus despite the fact
that his leg was injured.
Although we still cannot depart from our original ruling
that respondent was illegally dismissed since petitioner
was, at the beginning, unable to identify with certitude
its basis for respondents termination, as well as the date
of effectivity thereof, we are now convinced, taking into
account the foregoing circumstances, that petitioner
acted without malice and in good faith when it formally
informed respondent in 1998 that he was deemed
resigned from work.
We then proceed to determining what is the effect of
petitioner’s good faith on its liability for backwages. The
employer cannot be compelled to continuously pay an
employee who can no longer perform the tasks for which
he was hired. Seeing as petitioner continued to pay
respondent his salaries and medical expenses for four
years following the accident which caused his leg injury,
despite the fact that respondent was unable to render
actual service to petitioner, it would be the height of
injustice to still require petitioner to pay respondent full
backwages from the time of his termination in 1998
until the finality of this Decision. 
Reasons of fairness and equity, as well as the particular
factual circumstances attendant in this case, dictate us
to modify our Decision by ordering petitioner to pay
respondent limited backwages (inclusive of allowances
and other benefits or their monetary equivalent) for five
years, from 1 January 1998 to 31 December 2002, in
addition to the separation pay of one month for every
year of service awarded in lieu of reinstatement. We
must clarify, however, that for purposes of computing
respondents separation pay, he must still be deemed in
petitioners employ until the finality of this Decision
since his termination remains illegal, and is only
mitigated by petitioner’s good faith.
To whom duty is owed
PAL vs. CA
“The duty to exercise the utmost diligence on the part of
common carriers is for the safety of passengers as well
as for the members of the crew or the complement
operating the carrier.”
FACTS:
Jesus V. Samson, private respondent, averred that on
January 8, 1951, he flew as co-pilot on a regular flight
from Manila to Legaspi with stops at Daet, Camarines
Norte and Pili, Camarines Sur, with Captain Delfin
Bustamante as commanding pilot of a C-47 plane
belonging to PAL; that on attempting to land the plane at
Daet airport, Captain Delfin Bustamante due to his very
slow reaction and poor judgment overshot the airfield
and as a result, notwithstanding the diligent efforts of
the Samson co-pilot to avert an accident, the airplane
crashlanded beyond the runway; that the jolt caused the
head of the Samson to hit and break through the thick
front windshield of the airplane causing him severe
brain concussion, wounds and abrasions on the
forehead with intense pain and suffering.
Samson further alleged that instead of giving him an
expert and proper medical treatment called for by the
nature and severity of his injuries, PAL simply referred
him to a company physician, a general medical
practitioner, who limited the treatment to the exterior
injuries without examining the severe brain concussion
of Samson; that several days after the accident, PAL
called back Samson to active duty as co-pilot, and
inspite of the latter's repeated request for expert medical
assistance, PAL had not given him any; that as a
consequence of the brain injury sustained by him from
the crash, he had been having periodic dizzy spells and
had been suffering from general debility and
nervousness; that PAL instead of submitting him to
expert medical treatment, discharged the latter from its
employ on grounds of physical disability, thereby
causing him not only to lose his job but to become
physically unfit to continue as aviator due to PAL's
negligence in not giving him the proper medical
attention.
PAL denied the substantial averments in the complaint,
alleging among others, that the accident was due solely
and exclusively to inevitable unforeseen circumstances
whereby Samson sustained only superficial wounds and
minor injuries which were promptly treated by PAL's
medical personnel; that Samson did not sustain brain
injury or cerebral concussion from the accident since he
passed the annual physical and medical examination
given thereafter; that the headaches and dizziness
experienced by Samson were due to emotional
disturbance over his inability to pass the required up-
grading or promotional course given by PAL company,
and that, as confirmed by an expert neuro-surgeon,
Samson was suffering-from neurosis and in view of this
unfitness and disqualification from continuing as a pilot,
PAL had to terminate Samson's employment.
Further, PAL alleged that by the very nature of its
business as a common carrier, it is bound to employ
only pilots who are proficient and in good mental,
emotional and physical condition; that the pilot, Captain
Delfin Bustamante, was a competent and proficient
pilot, and although he was already afflicted with a tumor
of the nasopharynx even before the accident, the Civil
Aeronautics Administration, in passing upon the fitness
of pilots, gave Capt. Bustamante a waiver of physical
standards to enable him to retain his first class airman
certificate since the affliction had not in the least
affected his.
ISSUE:
Is PAL, a common carrier, has the duty to exercise
utmost diligence to Samson a member of the crew or a
complement operating the carrier?
RULING:
The dizzy spells, headache and general debility of
Samson was an after-effect of the crash-landing and that
such holding is supported by substantial evidence. Even
the doctors presented by PAL admit vital facts about
Samson’s brain injury. Dr. Bernardo admits that due to
the incident, Samson continuously complained of his
fainting spells, dizziness and headache everytime he flew
as a co-pilot and everytime he went to PAL's clinic no
less than 25 times, that he complained of the same to
Dr. Reyes; that he promised to help send Samson to the
United States for expert medical assistance provided
that whatever finding thereat should not be attributed to
the crash-landing incident to which Samson did not
agree and that Samson was completely ignored by PAL
in his plea for expert medical assistance. They admitted
that they could not determine definitely the cause of the
fainting spells, dizziness and headache, which justifies
the demand for expert medical assistance.
There was gross negligence by PAL for having allowed
Capt. Delfin Bustamante to fly on that fateful day of the
accident. The pilot was sick and he admittedly had
tumor of the nasopharynx (nose). He is now in the Great
Beyond(tigok na). No one will certify the fitness to fly a
plane of one suffering from the disease. Even assuming
that the pilot was not sick or that the tumor did not
affect the pilot in managing the plane, the evidence
shows that the overshooting of the runway and crash-
landing at the mangrove was caused by the pilot for
which acts the PAL must answer for damages caused
thereby. And for this negligence of PAL's employee, it is
liable. At least, the law presumes the employer negligent
imposing upon it the burden of proving that it exercised
the diligence of a good father of a family in the
supervision of its employees.
Petitioner is a common carrier 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 law is clear in requiring a
common carrier to exercise the highest degree of care in
the discharge of its duty and business of carriage and
transportation. 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.
The duty to exercise the utmost diligence on the part of
common carriers is for the safety of passengers as well
as for the members of the crew or the complement
operating the carrier, the airplane in the case at bar.
And this must be so for any omission, lapse or neglect
thereof will certainly result to the damage, prejudice,
injuries and even death to all aboard the plane,
passengers and crew members alike.
CANGCO VS. MANILA RAILROAD CO.
It is the duty of public carrier to afford to its passengers
facilities for safe egress from its trains, the plaintiff had
a right to assume, in the absence of some circumstance
to warn him to the contrary, that the platform was clear
FACTS:
Jose Cangco was a clerk of Manila Railroad Company.
He comes daily to his work on board the train to the
company's office and since he was an employee, he was
riding for free. One day while he was returning home by
rail.  When he was about to alight from the train (which
was still slightly moving) he accidentally stepped on a
sack of watermelons which he failed to notice due to the
fact that it was dim. This caused him to lose his balance
at the door and he fell. His body at once rolled from the
platform and as drawn under the moving train where his
right arm was badly crushed and lacerated. It appears
that Cangco alighted from the train possibly six meters
before it came to a full stop.
Jose Cangco had his arm amputed. He had two
surgeries that caused his arm to be amputed upto his
shoulder. The cost was P790.25for all medical and
surgical fees. He, then, sued Manila Rail Road for
negligence.
It was established that the employees of MRC were
negligent in piling the sacks of watermelons. MRC raised
as a defense the fact that Cangco was also negligent as
he failed to exercise diligence in alighting from the train
as he did not wait for it to stop.
ISSUE:
WON Manila Railroad should be held liable to Jose
Cangos injuries?
RULING:
Yes, Manila Railroad is negligent.
The only fact from which a conclusion can be drawn to
the effect that plaintiff was guilty of contributory
negligence is that he stepped off the car without being
able to discern clearly the condition of the platform and
while the train was yet slowly moving. In considering the
situation thus presented, it should not be overlooked
that the plaintiff was, as we find, ignorant of the fact
that the obstruction which was caused by the sacks of
melons piled on the platform existed; and as the
defendant was bound by reason of its duty as a public
carrier to afford to its passengers facilities for safe egress
from its trains, the plaintiff had a right to assume, in the
absence of some circumstance to warn him to the
contrary, that the platform was clear. The place, as we
have already stated, was dark, or dimly lighted, and this
also is proof of a failure upon the part of the defendant
in the performance of a duty owing by it to the plaintiff;
for if it were by any possibility concede that it had right
to pile these sacks in the path of alighting passengers,
the placing of them adequately so that their presence
would be revealed.
The Company’s platform was constructed upon a level
higher than that of the roadbed and the surrounding
ground. The distance from the steps of the train to the
spot where the alighting passenger would place his feet
on the platform was thus reduced, thereby decreasing
the risk incident to stepping off. The nature of the
platform, constructed as it was of cement material, also
assured to the passenger of the vigor and agility of the
young manhood, and it was by no means so risky for
him to get off while the train was yet moving as the same
act would have been in an aged or feeble person.
In determining the contributory negligence of the
passenger it should be determine -- whether the
passenger acted prudently or recklessly - the age, sex,
and physical condition. It may be noted that the place
was perfectly familiar to Jose Cangco as it was his daily
custom to get on and off the train at the same station.
There could, be no uncertainty in his mind with regard
either to the length of the step which he was required to
take of the character of the platform where he was
alighting. His conduct in undertaking to alight while the
train was yet slightly under way was not characterized
by imprudence and that therefore he was not guilty of
contributory negligence.
Manila Railroad is liable to the actual damages that Jose
Cangco suffered. It includes the injuries he suffered
permanently and being disabled to continue his
employment.
Imbued with public interest
SOLIDBANK CORP. VS. SPS TAN
FACTS: Through their representative Frias, respondents
deposited with petitioner ten checks worth ₱455,962.
The teller of the bank received two deposit slips for the
checks, an original and a duplicate. Teller verified the
checks and their amounts in the deposit slips then
returned the duplicate copy to Frias and kept the
original copy for petitioner. Later, when respondents
retrieved their passbook, they discovered that one of the
checks, Metrobank check no. 403954, payable to cash
in the sum of ₱250,000 was not posted therein.
Immediately, respondents notified petitioner of the
problem. Petitioner showed respondent Peter Tan a
duplicate copy of a deposit slip indicating the list of
checks deposited by Frias. But it did not include the
missing check.
Still later, respondent Peter Tan learned from Metrobank
that Metrobank check no. 403954 had cleared after it
was inexplicably deposited by a certain Dolores Lagsac
in Premier Bank. Respondents demanded that petitioner
pay the amount of the check but it refused, hence, they
filed a case for collection of a sum of money in the RTC
of Manila
Petitioner averred that the deposit slips Frias used when
she deposited the checks were spurious. Petitioner
accused respondents of engaging in a scheme to illegally
exact money from it.
RTC: In favor of respondents. “…For failure to comply
with its obligation, [petitioner] is presumed to have been
at fault or to have acted negligently unless they prove
that they observe extraordinary diligence as prescribed
in the Civil Code.”
CA: Affirmed in toto.
ISSUE: W/N the application by the RTC, as affirmed by
the CA, of the provisions of the Civil Code on common
carriers to the instant case was erroneous.
RULING: No. In citing the different provisions of the Civil
Code on common carriers, the RTC merely made
reference to the kind of diligence that petitioner should
have performed under the circumstances. In other
words, like a common carrier whose business is also
imbued with public interest, petitioner should have
exercised extraordinary diligence to negate its liability to
respondents.
In one case, the Court did not hesitate to apply the
doctrine of last clear chance (commonly used in
transportation laws involving common carriers) to a
banking transaction where it adjudged the bank
responsible for the encashment of a forged check. There,
the Court enunciated that the degree of diligence
required of banks is more than that of a good father of a
family in keeping with their responsibility to exercise the
necessary care and prudence in handling their clients’
money.
The Court finds no compelling reason to disallow the
application of the provisions on common carriers to this
case if only to emphasize the fact that banking
institutions (like petitioner) have the duty to exercise the
highest degree of diligence when transacting with the
public. By the nature of their business, they are
required to observe the highest standards of integrity
and performance, and utmost assiduousness as well.
In carriage by sea
Seaworthiness
Warranty
CALTEX PHILIPPINES VS. SULPICIO LINES
Sufficient evidence
DELSAN TRANSPORT LINES, INC. VS. COURT OF
APPEALS AND AMERICAN HOME ASSURANCE CORP.
FACTS: Caltex entered into a contract of affreightment
with Delsan for a period of one year where the latter
agreed to transport Caltex’ industrial fuel oil from the
Batangas-Bataan Refinery to different parts of the
country. Under the contract, petitioner took on board its
vessel, MT Maysun, 2,277.314 kiloliters of industrial
fuel oil to be delivered to the Caltex Oil Terminal in
Zamboanga City. The shipment was insured with private
respondent, American Home Assurance Corporation.
Unfortunately, the vessel sank near Panay Gulf in the
Visayas taking with it the entire cargo of fuel oil.
Subsequently, private respondent paid Caltex
P5,096,635.57 representing the insured value of the lost
cargo. Exercising its right of subrogation under Article
2207 of the New Civil Code, the private respondent
demanded of the petitioner the same amount it paid to
Caltex.
Due to its failure to collect from the petitioner despite
prior demand, private respondent filed a complaint with
the Regional Trial Court of Makati City for collection of a
sum of money.
RTC: Dismissed the complaint. Vessel was seaworthy to
undertake the voyage; incident was caused by force
majeure.
CA: Reversed.
Delsan appealed invoking the Insurance Code stating
that in every marine insurance there is an implied
warranty by the shipper that the ship is seaworthy.
Consequently, the insurer will not be liable to the
assured for any loss in case the vessel would later on be
found as not seaworthy at the inception of the
insurance. It theorized that since private respondent
paid Caltex the value of its lost cargo, that act of the
private respondent is equivalent to a tacit recognition
that the ill-fated vessel was seaworthy. Delsan further
averred that private respondent failed, for unknown
reason, to present in evidence during the trial of the
instant case the subject marine cargo insurance policy it
entered into with Caltex. By virtue of the doctrine laid
down in the case of Home Insurance Corporation vs. CA,
the failure of the private respondent to present the
insurance policy in evidence is allegedly fatal to its claim
inasmuch as there is no way to determine the rights of
the parties thereto.
ISSUES: 1) W/N the payment made by the private
respondent to Caltex for the insured value of the lost
cargo amounted to an admission that the vessel was
seaworthy.
2) W/N the non-presentation of the marine insurance
policy bars the complaint for recovery of sum of money
for lack of cause of action.
RULING: 1) No. The payment made by the private
respondent for the insured value of the lost cargo
operates as waiver of its (private respondent) right to
enforce the term of the implied warranty against Caltex
under the marine insurance policy. However, the same
cannot be validly interpreted as an automatic admission
of the vessels seaworthiness by the private respondent
as to foreclose recourse against the petitioner for any
liability under its contractual obligation as a common
carrier. The fact of payment grants the private
respondent subrogatory right (under the Civil Code)
which enables it to exercise legal remedies that would
otherwise be available to Caltex as owner of the lost
cargo against the petitioner common carrier.
Moreover, Delsan tried to escape liability by saying that
the incident was caused by force majeure when the
weather unexpectedly changed. However, this was belied
by PAGASA stating that there was no squall or bad
weather or extremely poor sea condition in the vicinity
when the said vessel sank. Absent any force majeure,
Delsan, as common carrier, is presumed to be
responsible for the loss of the goods. Delsan is,
therefore, liable for the insured value of the lost cargo of
industrial fuel oil belonging to Caltex for its failure to
rebut the presumption of fault or negligence as common
carrier occasioned by the unexplained sinking of its
vessel while in transit.
2) No. The presentation in evidence of the marine
insurance policy is not indispensable in this case before
the insurer may recover from the common carrier the
insured value of the lost cargo in the exercise of its
subrogatory right. The subrogation receipt, by itself, is
sufficient to establish not only the relationship of herein
private respondent as insurer and Caltex, as the assured
shipper of the lost cargo of industrial fuel oil, but also
the amount paid to settle the insurance claim. The right
of subrogation accrues simply upon payment by the
insurance company of the insurance claim.
Moreover, the present case is different from the Home
Insurance case. In the latter case, the shipment therein
passed through several stages. It was therefore
necessary to present the insurance contract in order to
determine the scope of the insurer’s liability since there
was no evidence as to which part of the handling of the
cargo was the damage sustained. In the present case,
however, there is no doubt that the goods were lost while
aboard the vessel of the petitioner.
NATIONAL STEEL CORP V. CA

LOADSTAR SHIPPING V. COURT OF APPEALS AND
MANILA INSURANCE CO., INC. (MIC)
FACTS: Aboard M/V Cherokee, owned by Loadstar, are
goods amounting to P6,067,178 which was insured by
MIC against various risks including total loss by total
loss of the vessel. Unfortunately, while on its way to
Manila from Agusan del Sur, the vessel and all its cargo
sank. As a result of the total loss of its shipment, the
consignee made a claim with Loadstar which, however,
ignored the same. As the insurer, MIC paid P6,075,000
to the insured in full settlement of its claim, and the
latter executed a subrogation receipt therefor.
MIC filed a complaint against LOADSTAR and PGAI (the
insurer of the vessel but later on dropped as a party
after it paid Loadstar its claim), alleging that the sinking
of the vessel was due to the fault and negligence of
LOADSTAR and its employees. In its answer, LOADSTAR
denied any liability for the loss of the shippers goods
and claimed that the sinking of its vessel was due to
force majeure.
RTC: In favor of MIC.
CA. Affirmed in toto. Loadstar cannot be considered a
private carrier on the sole ground that there was a single
shipper on that fateful voyage. The charter of the vessel
was limited to the ship, but LOADSTAR retained control
over its crew. Moreover, the vessel was not seaworthy
because it was undermanned on the day of the voyage.
The vessel sank, not because of force majeure, but
because it was not seaworthy. LOADSTARS allegation
that the sinking was probably due to the convergence of
the winds, as stated by a PAGASA expert, was not duly
proven at the trial. The limited liability rule, therefore, is
not applicable considering that, in this case, there was
an actual finding of negligence on the part of the carrier.
ISSUES: 1) Is the M/V Cherokee a private or a common
carrier?
2) Did LOADSTAR observe due and/or ordinary diligence
in these premises?
RULING: 1) LOADSTAR is a common carrier. It is not
necessary that the carrier be issued a certificate of
public convenience, and this public character is not
altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or
unscheduled.
Moreover, the records do not disclose that the M/V
Cherokee, on the date in question, undertook to carry a
special cargo or was chartered to a special person only.
There was no charter party. The bills of lading failed to
show any special arrangement, but only a general
provision to the effect that the M/V Cherokee was a
general cargo carrier. Further, the bare fact that the
vessel was carrying a particular type of cargo for one
shipper, which appears to be purely coincidental, is not
reason enough to convert the vessel from a common to a
private carrier, especially where, as in this case, it was
shown that the vessel was also carrying passengers.
In addition, 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.
2) No. The M/V Cherokee was not seaworthy when it
embarked on its voyage. The vessel was not even
sufficiently manned at the time. 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 its vessel
involved in a contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code. In any
event, the vessel did not sink because of any storm that
may be deemed as force majeure, inasmuch as the wind
condition in the area where it sank was determined to be
moderate. Since it was remiss in the performance of its
duties, LOADSTAR cannot hide behind the limited
liability doctrine to escape responsibility for the loss of
the vessel and its cargo.
Loadstar also claims that since the right of the assured
in case of loss or damage to the goods is limited or
restricted by the provisions in the bills of lading, a suit
by the insurer as subrogee is necessarily subject to the
same limitations and restrictions. The Court ruled that
the stipulation in the case at bar effectively reduces the
common carriers liability for the loss or destruction of
the goods to a degree less than extraordinary, that is,
the carrier is not liable for any loss or damage to
shipments made at owners risk. Such stipulation is
obviously null and void for being contrary to public
policy. It has been said:
Three kinds of stipulations have often been made in a
bill of lading. The first is one exempting the carrier from
any and all liability for loss or damage occasioned by its
own negligence. The second is one providing for an
unqualified limitation of such liability to an agreed
valuation. And the third is one limiting the liability of
the carrier to an agreed valuation unless the shipper
declares a higher value and pays a higher rate of freight.
According to an almost uniform weight of authority, the
first and second kinds of stipulations are invalid as
being contrary to public policy, but the third is valid and
enforceable.
Since the stipulation in question is null and void, it
follows that when MIC paid the shipper, it was
subrogated to all the rights which the latter has against
the common carrier, LOADSTAR.
Proper manning
COASTWISE LIGHTERAGE vs CA and PHIL. GEN.
INSURANCE COMPANY
One-Liner:
Embarking on a voyage with an unlicensed patron
violates the rule on proper manning.
Facts:
Pag-asa Sales, Inc. entered into a contract to transport
molasses with Coastwise, using the latter's dumb
barges. Upon reaching Manila Bay, while approaching
Pier 18, one of the barges struck an unknown sunken
object. The forward buoyancy compartment was
damaged, and water gushed in through a hole. As a
consequence, the molasses at the cargo tanks were
contaminated and rendered unfit for the use it was
intended. This prompted Pag-asa Sales to reject the
shipment of molasses as a total loss and filed a formal
claim with the insurer of its lost cargo, PhilGen and
against the carrier, Coastwise. Latter denied the claim
and it was PhilGen which paid only. PhilGen then filed
an action against Coastwise Lighterage to recover the
amount it paid and claims to be subrogated to all the
contractual rights and claims which the consignee may
have against the carrier, which is presumed to have
violated the contract of carriage. Both RTC and CA ruled
in favor of PhilGen.
Issue:
WON Coastwise exercised the diligence required from it.
Ruling:
NO. Pag-asa Sales only leased three of petitioner's
vessels, in order to carry cargo from one point to
another, but the possession, command and navigation of
the vessels remained with petitioner Coastwise
Lighterage. Thus, the latter, by the contract of
affreightment, was not converted into a private carrier,
but remained a common carrier and was still liable as
such. The law and jurisprudence on common carriers
both hold that the mere proof of delivery of goods in
good order to a carrier and the subsequent arrival of the
same goods at the place of destination in bad order
makes for a prima facie case against the carrier.
(Main point, onwards) The patron of the vessel
"Coastwise 9" admitted that he was not licensed. The
Code of Commerce, which subsidiarily governs common
carriers provides:
Art. 609. — Captains, masters, or patrons of vessels
must be Filipinos, have legal capacity to contract in
accordance with this code, and prove the skill capacity
and qualifications necessary to command and direct the
vessel, as established by marine and navigation laws,
ordinances or regulations, and must not be disqualified
according to the same for the discharge of the duties of
the position. . . .
Clearly, petitioner Coastwise’s embarking on a voyage
with an unlicensed patron violates this rule. It cannot
safely claim to have exercised extraordinary diligence, by
placing a person whose navigational skills are
questionable, at the helm of the vessel which eventually
met the fateful accident. It may also logically, follow that
a person without license to navigate, lacks not just the
skill to do so, but also the utmost familiarity with the
usual and safe routes taken by seasoned and legally
authorized ones. Had the patron been licensed, he could
be presumed to have both the skill and the knowledge
that would have prevented the vessel's hitting the
sunken derelict ship that lay on their way to Pier 18.
Lastly, upon payment by PhilGen of the amount of to
Pag-asa Sales, the former was subrogated into all the
rights which Pag-asa Sales may have had against the
carrier, herein petitioner Coastwise Lighterage.
MANILA STEAMSHIP vs INSA ABDULHAMAN and LIM
HONG TO
One-Liner:
Mere inability to meet the salary demands of duly
licensed masters and engineers would not excuse one in
complying with the law and authorize operation without
licensed officers.
Facts:
Insa, with his wife and five (5) children, was on board
M/V Consuelo V (CV) owned by Lim which left from
Zamboanga to Siokon. On the same night, M/V Bowline
Knot (BK), owned by petitioner, was navigating from
Maribojoc to Zamboanga. During such course, the
weather got worse which caused rain to fall and through
strong wind, it lashed the waves into a choppy roaring
sea. An hour after when the weather became fair, the
passengers of CV felt a collision by their vessel with a
big motorship, which was later on identified as the BK.
The CV capsized which caused the death of the five
children of Insa, although one of the bodies was not
found. Insa filed a case for recovery of damages from
both vessels’ owners in the Court of First Instance. But
when the case was brought to CA, it exempted Lim from
liability for the reason of the sinking and total loss of his
vessel CV. It is from this decision that petitioner
appealed to SC.
Issue:
WON Lim should be exempted from liability.
Ruling:
NO. While it is true that Plaintiff’s action
against Petitioner is based on a tort or quasi-delict, the
tort in question is not a civil tort under the Civil Code
but a maritime tort resulting in a collision at sea,
governed by Articles 826-939 of the Code of Commerce.
Under Article 827 of the Code of Commerce, in case of
collision between two vessels imputable to both of them,
each vessel shall suffer her own damage and both shall
be solidarily liable for the damages occasioned to their
cargoes. The characteristic language of the law in
making the “vessels” solidarily liable for the damages
due to the maritime collision emphasizes the direct
nature of the responsibilities on account of the collision
incurred by the shipowner under maritime law, as
distinguished from the civil law and mercantile law in
general. This direct responsibility is recognized in Article
618 of the Code of Commerce under which the captain
shall be civilly liable to the ship agent, and the latter is
the one liable to third persons. As such, Lim should not
be exempted from liability.
(Main point, onwards) It is to be noted that both the
master and the engineer of the CV were not duly
licensed as such. In applying for permission to operate,
despite the lack of properly trained and experienced
crew, Lim gave as a reason that the income derived from
the vessel is insufficient to pay licensed officers who
demand high salaries and expressly declared that in
case of any accident, damage or loss, he shall assume
full risk and responsibility for all the consequences
thereof.
Disregarding the question whether mere inability to
meet the salary demands of duly licensed masters and
engineers constitutes non-availability thereof that would
excuse noncompliance with the law and authorize
operation without licensed officers, the fact remains that
by operating with an unlicensed master, Lim deliberately
increased the risk to which the passengers and shippers
of cargo aboard the “Consuelo V” would be subjected. In
his desire to reap greater benefits in the maritime trade,
Lim willfully augmented the dangers and hazards to his
vessel’s unwarry passengers, who would normally
assume that the launch officers possessed the necessary
skill and experience to evade the perils of the sea.
Hence, his cannot be identical to that of a shipowner
who bears in mind the safety of the passengers and
cargo by employing duly licensed officers.
The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a
shipowner’s liability, does not apply to cases where the
injury or the average is due to shipowner’s own fault.
Proper loading
NEGROS NAVIGATION vs CA, RAMON MIRANDA, SPS.
RICARDO and VIRGINIA DE LA VICTORIA
One-liner:
Overloading of passengers violates the rule on proper
loading, thus, failing to comply with being seaworthy.
Facts:
Miranda, with his wife, 2 children and a niece, boarded
M/V Don Juan (DJ), owned by petitioner, bound for
Bacolod. In the evening of the voyage, it however collided
with M/T Tacloban City (TC) an oil tanker owned by
Philippine National Oil Company and the PNOC
Shipping and Transport Corporation. As a result, DJ
sank. Miranda’s members of the family were never found
after. Thus, private respondents (De la Victorias were
parents of the niece) filed recovery for damages against
petitioner. The latter however, denied that the four
relatives of private respondents actually boarded the
vessel as shown by the fact that their bodies were never
recovered. It further averred that the DJ was seaworthy
and manned by a full and competent crew, and that the
collision was entirely due to the fault of the crew of the
TC. Later on petitioner entered into a compromise
agreement, to which, however, private respondents did
not join.
Issue:
WON petitioner, owner of DJ, should be exempted from
liability.
Ruling:
NO. Private respondent Miranda testified that he
personally took his family and his niece to the vessel on
the day of the voyage and stayed with them on the ship
until it was time for it to leave. There is no reason he
should claim members of his family to have perished in
the accident just to maintain an action. People do not
normally lie about so grave a matter as the loss of dear
ones.  consignees several amounts for additional freights. The
In finding petitioner guilty of negligence and in failing to
exercise the extraordinary diligence required of it in the
carriage of passengers, both the trial court and the
appellate court relied on the Mecenas v. Intermediate
Appellate Court, which case was brought for the death of
other passengers. That although the proximate cause of
the mishap was the negligence of the crew of the TC, the
crew of the DJ was equally negligent as it found that the
latters master, Capt. Santisteban, was playing mahjong
at the time of collision, and the officer on watch
admitted that he failed to call the attention of
Santisteban to the imminent danger facing them. Thus,
they failed to take steps to prevent the collision or at
least delay the sinking of the ship and supervise the
abandoning of the ship.
Petitioner was found equally negligent in tolerating the
playing of mahjong by the ship captain and other crew
members while on board the ship and failing to keep the
DJ seaworthy so much so that the ship sank within 10
to 15 minutes of its impact with the TC.
In addition, DJ was overloaded. The Certificate of
Inspection stated that the total number of persons
allowed on the ship was 864, of whom 810 are
passengers, but there were actually 1,004 on board the
vessel when it sank.
Taking these circumstances together, and the fact that
the DJ, as the faster and better-equipped vessel, could
have avoided the collision, thus, even if the TC had been
at fault for failing to observe an internationally-
recognized rule of navigation, the DJ was guilty of
contributory negligence.
The rule is well-entrenched in our jurisprudence that a
shipowner may be held liable for injuries to passengers
(despite loss of ship) notwithstanding the exclusively real
and hypothecary nature of maritime law if fault can be
attributed to the shipowner.
In Mecenas, this Court found petitioner guilty of
negligence in (1) allowing or tolerating the ship captain
and crew members in playing mahjong during the
voyage, (2) in failing to maintain the vessel seaworthy
and (3) in allowing the ship to carry more passengers
than it was allowed to carry. Petitioner is, therefore,
clearly liable for damages to the full extent.
Proper storage
PHILIPPINE HOME ASSURANCE CORP. VS CA
Facts:
Eastern Shipping Lines loaded several cargoes onboard
SS Easter Explorer in Kobe Japan, among others
ammonium chloride. Off Okinawa Japan, a small flame
was detected in the acetylene cyclinder located in the
accommodation room near the engine room. As the crew
tried to extinguish the fire, the cylinder exploded
sending a flash flame throughout the accommodation
area causing death to the crew and setting fire to the
superstructure of the vessel. The incident forced the
captain and the crew to abandon. The vessel was then
declared as constructive loss and its voyage was
declared abandoned. A tugboat under Fukuda Salvage
arrived and commenced in towing the vessel back to
Japan. The cargoes were loaded to another vessel to port
of destination in the Philippines. ESLI charged the
charges were paid bu PHAC under protest of the
consignees. PHAC as subrogee filed a complaint before
the RTC. This was dismissed by the RTC. On appeal,
this was affirmed by the CA.
Issue:
Whether the CA committed an error when it affirmed the
ruling of the TC in its conclusion that the expenses
incurred are considered general average?
Held:
Yes. As a rule, general or gross averages include all
damages and expenses which are deliberately caused in
order to save the vessel, its cargo, or both at the same
time, from a real and known risk. While the instant case
may technically fall within the purview of the said
provision, the formalities prescribed under Articles 813
and 814 of the Code of Commerce in order to incur the
expenses and cause the damage corresponding to gross
average were not complied with. Consequently,
respondent ESLI's claim for contribution from the
consignees of the cargo at the time of the occurrence of
the average turns to naught. Prescinding from the
foregoing premises, it indubitably follows that the cargo
consignees cannot be made liable to respondent carrier
for additional freight and salvage charges. Consequently,
respondent carrier must refund to herein petitioner the
amount it paid under protest for additional freight and
salvage charges in behalf of the consignees.
PHIL-AM GENERAL INSURANCE VS CA
Facts:
Cocal-Bottlers Philippines Inc (Coca-Cola) loade on
board MV Asilda softdrink bottles to be transported from
Zamboanga City to Cebu City, consigned to Coca Cola
Cebu. While the vessel left the port of Zamboanga under
a fine weather, she sank off the sea of Zamboanga Del
Norte the following day bringing down with her the
entire cargo. Coca-Cola filed a claim against Felman
Shipping and when it denited the recovery for damages,
Coca-Cola then demanded against Phil-Am General
Insurance who actually paid Coca-Cola for damages.
Claiming its right of subrogation, PhilamGen demanded
against Felman and denial of its claim led to the filing of
complaint against Felman Shipping for a sum of money.
It alleged that the vessel was improperly manned and
that its officers were grossly negligent in failing to take
appropriate measures to proceed to a nearby port or
beach after the vessel started to list. The lower court
dismissed the complaint. On appeal, the CA reversed the
ruling that MV Asilda is unseaworthy for being top-
heavy as 2,500 cases of Coca-Cola softdrink bottles were
improperly stowed on deck. Hence this appeal.
Issue:
1.Whether "MV Asilda" was seaworthy when it left the
port of Zamboanga?
2.Whether the limited liability under Art. 587 of the
Code of Commerce should apply?
Held:
1.Yes. MV Asilda" was unseaworthy when it left the port
of Zamboanga. The Elite Adjusters, Inc., submitted a
report:
We found in the course of our investigation that a
reasonable explanation for the series of lists experienced
by the vessel that eventually led to her capsizing and
sinking, was that the vessel was top-heavy which is to
say that while the vessel may not have been overloaded,
yet the distribution or stowage of the cargo on board was
done in such a manner that the vessel was in top-heavy
condition at the time of her departure and which
condition rendered her unstable and unseaworthy for
that particular voyage.
2.No. The ship agent is liable for the negligent acts of the
captain in the care of goods loaded on the vessel. This
liability however can be limited through abandonment of
the vessel, its equipment and freightage as provided in
Art. 587. The international rule is to the effect that the
right of abandonment of vessels, as a legal limitation of a
shipowners liability, does not apply to cases where the
injury or average was occasioned by the shipowners own
fault. Closer supervision on the part of the shipowner
could have prevented this fatal miscalculation. As such,
FELMAN was equally negligent. It cannot therefore
escape liability through the expedient of filing a notice of
abandonment of the vessel by virtue of Art. 587 of the
Code of Commerce.
BELGIAN VS. PHIL FIRST
Facts: CMC Trading A.G. shipped on board the MN
Anangel Sky at Germany 242 coils of various Prime Cold
Rolled Steel sheets to Manila consigned to the Philippine
Steel Trading Corporation. On July 28, 1990, MN
Anangel Sky arrived at the port of Manila and, within
the subsequent days, discharged the subject cargo. Four
(4) coils were found to be in bad order as noted in
the Bad Order Tally Sheet No. 154979. Finding the four
(4) coils in their damaged state to be unfit for the
intended purpose, the consignee Philippine Steel Trading
Corporation declared the same as total loss.
Plaintiff-appellant (Phil First Insurance) paid the
consignee P506,086.50, and was subrogated to the
latter’s rights and causes of action against defendants-
appellees. Subsequently, plaintiff-appellant instituted
this complaint for recovery of the amount paid by them,
to the consignee as insured.
Defendants-appellees imputed that the damage and/or
loss was due to pre-shipment damage, to the inherent
nature of the sea, or to insufficiency of packing thereof,
or to the act or omission of the shipper of the goods or
their representatives. In addition thereto, defendants-
appellees argued that their liability, if there be any,
should not exceed the limitations of liability provided for
in the bill of lading. Finally, defendants-appellees
averred that, in any event, they exercised due diligence
and foresight required by law to prevent any
damage/loss to said shipment.[6]
Issues:
Whether petitioners have overcome the presumption of
negligence of a common carrier.
Whether the notice of loss was timely filed.
Whether the package limitation of liability under COGSA
is applicable
Ruling:
Caveat: Proof of the delivery of goods in good order to a
common carrier and of their arrival in bad order at their
destination constitutes prima facie fault or negligence on
the part of the carrier. If no adequate explanation is
given as to how the loss, the destruction or the
deterioration of the goods happened, the carrier shall be
held liable therefor.
1) Petitioners failed to rebut the prima facie presumption
of negligence.
First, petitioners received the subject shipment in good
order and condition in Germany.[26]
Second, prior to the unloading of the cargo, an
Inspection Report showed the steel bands broken, the
metal envelopes rust-stained and heavily buckled, and
the contents thereof exposed and rusty.
Third, Bad Order Tally Sheet No. 154979 stated that the
four coils were in bad order and condition.  was prepared.
Fourth, the Certificate of Analysis[30] stated that, based
on the sample submitted and tested, the steel sheets
found in bad order were wet with fresh water.
Fifth, petitioners, in a letter, admitted that they were
aware of the condition of the four coils found in bad
order and condition.
All these conclusively prove the fact of shipment in good
order, and condition, and the consequent damage to the
four coils, was while in the possession of petitioner,
[33] who notably failed to explain why.[34]
Further, petitioners failed to prove that they observed
the extraordinary diligence and precaution which the
law requires a common carrier to know and to follow, to
avoid damage to or destruction of the goods entrusted to
it for safe carriage and delivery.[35]
True, the words metal envelopes rust stained and
slightly dented were noted on the Bill of Lading;
however, there is no showing that petitioners exercised
due diligence to forestall or lessen the loss. Equipped
with the proper knowledge of the nature of steel sheets
in coils and of the proper way of transporting them, the
master of the vessel and his crew should have
undertaken precautionary measures to avoid possible
deterioration of the cargo. But none of these measures
was taken.
In their attempt to escape liability, petitioners further
contend that they are exempted from liability under
Article 1734(4) of the Civil Code. They cite the notation
metal envelopes rust stained and slightly dented printed
on the Bill of Lading as evidence that the character of
the goods or defect in the packing or the containers was
the proximate cause of the damage. We are not
convinced.
From the evidence on record, it cannot be reasonably
concluded that the damage to the four coils was due to
the condition noted on the Bill of Lading.[40] The
aforecited exception refers to cases when goods are lost
or damaged while in transit as a result of the natural
decay of perishable goods or the fermentation or
evaporation of substances liable therefor, the necessary
and natural wear of goods in transport, defects in
packages in which they are shipped, or the natural
propensities of animals.[41] None of these is present in
the instant case.
Further, even if the fact of improper packing was known
to the carrier or its crew or was apparent upon ordinary
observation, it is not relieved of liability for loss or injury
resulting therefrom, once it accepts the goods
notwithstanding such condition.[42] Thus, petitioners
have not successfully proven the application of any of
the aforecited exceptions in the present case.[43]
2) Yes, it was timely filed.
Petitioners claim that pursuant to COGSA, respondent
should have filed its Notice of Loss within three days
from delivery. They assert that the cargo was discharged
on July 31, 1990, but that respondent filed its Notice of
Claim only on September 18, 1990.[45]
We are not persuaded. First, the above-cited provision of
COGSA provides that the notice of claim need not be
given if the state of the goods, at the time of their
receipt, has been the subject of a joint inspection or
survey. As stated earlier, prior to unloading the cargo,
an Inspection Report[46] as to the condition of the goods
Second, as stated in the same provision, a failure to file
a notice of claim within three days will not bar recovery
if it is nonetheless filed within one year.
Inasmuch as the neither the Civil Code nor the Code of
Commerce states a specific prescriptive period on the
matter, the Carriage of Goods by Sea Act (COGSA)--
which provides for a one-year period of limitation on
claims for loss of, or damage to, cargoes sustained
during transit--may be applied suppletorily to the case
at bar.
In the present case, the cargo was discharged on July
31, 1990, while the Complaint[51] was filed by
respondent on July 25, 1991, within the one-year
prescriptive period.
3) Yes.
Petitioners contend that their liability should be limited
to US$500 per package as provided in the Bill of Lading
and by Section 4(5)[52] of COGSA.[53]
A stipulation in the bill of lading limiting to a certain
sum the common carriers liability for loss or destruction
of a cargo -- unless the shipper or owner declares a
greater value -- is sanctioned by law. There are,
however, two conditions to be satisfied:
(1) the contract is reasonable and just under the
circumstances, and
(2) it has been fairly and freely agreed upon by the
parties.[60] 
It is to be noted, however, that the Civil Code does not
limit the liability of the common carrier to a fixed
amount per package. In all matters not regulated by the
Civil Code, the right and the obligations of common
carriers shall be governed by the Code of Commerce and
special laws. Thus, the COGSA, which is suppletory to
the provisions of the Civil Code, supplements the latter
by establishing a statutory provision limiting the carriers
liability in the absence of a shippers declaration of a
higher value in the bill of lading.
In the case before us, there was no stipulation in the Bill
of Lading limiting the carrier’s liability. Neither did the
shipper declare a higher valuation of the goods to be
shipped. (Dom: therefore, ang COGSA na ang mu apply,
dili na ang Civil Code)
First, a notation in the Bill of Lading which indicated the
amount of the Letter of Credit obtained by the shipper
for the importation of steel sheets did not effect a
declaration of the value of the goods as required by the
bill.[67] That notation was made only for the
convenience of the shipper and the bank processing the
Letter of Credit.[68]
Second, we held in a case that a bill of lading was
separate from the Other Letter of Credit
arrangements. We ruled thus:
The contract of carriage, as stipulated in the bill of
lading, must be treated independently of the contract of
sale between the seller and the buyer, and the contract
of issuance of a letter of credit between the amount of
goods described in the commercial invoice in the
contract of sale and the amount allowed in the letter of
credit will not affect the validity and enforceability of the
contract of carriage as embodied in the bill of lading. 
In the light of the foregoing, petitioners liability should
be computed based on US$500 per package and not on
the per metric ton price declared in the Letter of Credit.
Competence of captain and crew
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY
VS. COURT OF APPEALS
In carriage by land
Duty to inspect
NOCUM V LAGUNA TAYABAS BUS COMPANY
Facts:
Nocum, who was a passenger in appellant's Bus No. 120
then making a trip within the barrio of Dita,
Municipality of Bay, Laguna, was injured as a
consequence of the explosion of firecrackers, contained
in a box, loaded in said bus and declared to its
conductor as containing clothes and miscellaneous
items by a co-passenger.
Nocum sued Laguna Tayabas for breach of contract of
carriage.
Trial Court: Laguna Tayabas liable since it did not
observe the extraordinary or utmost diligence of a very
cautious person required by the Civil Code, and defense
of fortuitous event is unavailing.
TC decision based on:
-According to Severino Andaya, a witness for the
plaintiff, a man with a box went up the baggage
compartment of the bus where he already was and said
box was placed under the seat. They left Azcarraga at
about 11:30 in the morning and when the explosion
occurred, he was thrown out. PC investigation report
states that thirty seven (37) passengers were injured.
-The bus conductor, Sancho Mendoza, testified that the
box belonged to a passenger whose name he does not
know and who told him that it contained miscellaneous
items and clothes. He helped the owner in loading the
baggage which weighed about twelve (12) kilos and
because of company regulation, he charged him for it
twenty-five centavos (P0.25). From its appearance there
was no indication at all that the contents were
explosives or firecrackers. Neither did he open the box
because he just relied on the word of the owner.
-Dispatcher Nicolas Cornista of defendant company
corroborrated the testimony of Mendoza and he said,
among other things, that he was present when the box
was loaded in the truck and the owner agreed to pay its
fare. He added that they were not authorized to open the
baggages of passengers because instruction from the
management was to call the police if there were
packages containing articles which were against
regulations.
Issue:
Whether Laguna Tayabas is liable?
Held:
No. The operator is not liable for damages. In overland
transportation, the common carrier is not bound nor
empowered to make an examination on the contents of
packages or bags, particularly those handcarried by
passengers. In approving the draft of the Civil Code as
prepared by the Code Commission, Congress must have
concurred with the Commission that by requiring the
highest degree of diligence from common carriers in the
safe transport of their passengers and by creating a
presumption of negligence against them. Article 1733 of
the Civil Code reasonably qualifies the extraordinary
diligence required of common carriers for the safety of
the passengers transported by them to be "according to
all the circumstances of each case." In fact, Article 1755
repeats this same qualification.
Fairness demands that in measuring a common carrier's
duty towards its passengers, allowance must be given to
the reliance that should be reposed on the sense of
responsibility of all the passengers in regard to their
common safety. It is to be presumed that a passenger
will not take with him anything dangerous to the lives
and limbs of his co-passengers, not to speak of his own.
Not to be lightly considered must be the right to privacy
to which each passenger is entitled, he cannot be
subjected to any unusual search, when he protests the
innocuousness of his baggage and nothing appears to
indicate the contrary, as in the case at bar. In other
words, inquiry may be verbally made as to the nature of
a passenger's baggage when such is not outwardly
perceptible, but beyond this, constitutional boundaries
are already in danger of being transgressed. Calling a
policeman to his aid, as suggested by the service manual
invoked by the trial judge, in compelling the passenger
to submit to more rigid inspection, after the passenger
had already declared that the box contained mere
clothes and other miscellaneous, could not have justified
invasion of a constitutionally protected domain.
There is need, as We hold here, for evidence of
circumstances indicating cause or causes for
apprehension that the passenger's baggage is dangerous
and that it is failure of the common carrier's employee to
act in the face of such evidence that constitutes the
cornerstone of the common carrier's liability.
Skill and Expertise of Driver; Condition of
Vehicle; Proof of lack of prudence
BARITUA V. NIMFA
FACTS: The original complaint was filed against JB
Lines. Petitioners filed a motion to dismiss complaint, to
strike out false-impertinent matters therefrom, and/or
bill of particulars on the primary grounds that
respondents failed to implead Jose Baritua as an
indispensable party and that the cause of action is a
suit against a wrong and non-existent party.
Respondents filed an opposition to the said motion and
an amended complaint.
Trial court denied the motion and admitted the amended
complaint of respondents impleading Jose Baritua and
alleging that the late Dominador Mercader boarded
petitioners’ bus in Manila Station bound for Northern
Samar, and that he was not able to reach his destination
because the bus fell into the river due to the driver
negligently and recklessly operating the bus.
Respondents then filed a motion to declare petitioners in
default which motion was opposed by petitioners.
Respondents withdrew the said motion prompting the
trial court to cancel the scheduled hearing of the said
motion to declare petitioners in default.
In their answer, petitioners denied specifically the
material allegations in the complaint and alleged that
Dominador Mercader did not board the bus because he
was not issued any passenger-freight ticket conformably
with law and practice. It is a fact of common knowledge
that the public utility operators, thru his conductors,
issue a passenger-freight ticket. They also alleged that it
is a fact of public knowledge that petitioner does not
have any Manila station/terminal, only one in Pasay.
Further, they alleged that they had no prior knowledge
of the dangerous condition of the bridge they passed,
that due to the condition of said bridge, their bus fell
despite the exercise and compliance of petitioner of their
duties in the matter of the requisite degree of diligence,
that Baritua also exercised and complied with the
requisite duty of diligence, care, and prudence in the
selection and supervision of its driver, that said driver
did not violate and traffic rule or regulation, and that
they did not commit any actionable breach of contract
with Mercader.
The RTC decided in favor of the respondents. Upon
appeal to CA, the RTC decision was affirmed.
ISSUE: WON the CA disregarded petitioners’ procedural
rights.
(naa ni issue about docket fees, the gist of which is that
ni cite ang petitioners ug case which says that the court
only acquires jurisdiction after payment of said fees, but
the court in the case at bar said that this has no
retroactive application because that case was final in
1987, while the case at bar was filed in 1984)
RULING: NO. This Court is not convinced by petitioners’
contention, that both the trial and appellate courts failed
to state clearly and distinctly the facts and the law
involved in the case. As can be gleaned from their
decisions, both courts clearly laid down their bases for
awarding monetary damages to respondents.
Both the RTC and CA found that a contract of carriage
existed between petitioners and Dominador Mercader
when he boarded the bus. Petitioners failed to transport
him to his destination, because the bus fell into a river
while traversing the Bugko Bailey Bridge. Although he
survived the fall, he later died of asphyxia secondary to
drowning.
We agree with the findings of both courts that
petitioners failed to observe extraordinary diligence that
fateful morning. It must be noted that as a common
carrier, the nature of its business and for reasons of
public policy, is bound to carry passengers safely as far
as human care and foresight can provide. It is supposed
to do so by using the utmost diligence of very cautious
persons, with due regard for all the circumstances. In
case of death or injuries to passengers, it is presumed to
have been at fault or have acted negligently, unless it
proved that it observed extraordinary diligence.
We sustain the ruling of the CA that petitioners failed to
prove that they had observed extraordinary diligence.
First, petitioners did not present evidence on the skill or
expertise of their bus driver or the condition of the
vehicle at the time of the incident.
Second, the bus was overloaded at the time. In fact,
several individuals were standing when the incident
occurred.
Third, the bus was over speeding. Its conductor testified
that it had overtaken several buses before it reached the
bridge. Moreover, prior to crossing the bridge, it had
accelerated and maintained its speed towards the
bridge.
We therefore believe that there is no reason to overturn
the CA decision affirming the RTC. It is a well-settled
rule that the trial court’s factual findings, when affirmed
by the appellate court, are conclusive and binding, if not
tainted with arbitrariness or oversight. As clearly
discussed above, petitioners have not presented
sufficient ground to warrant a deviation from this rule.
JOSE SANICO AND VICENTE CASTRO v
WERHERLINA P. COLIPANO
FACTS: Colipano filed a complaint for breach of contract
of carriage and damages against Sanico and Castro. In
her complaint, Colipano claimed that at 4:00 P.M. more
or less of December 25, 1993, Christmas Day, she and
her daughter were; paying passengers in the jeepney
operated by Sanico, which was driven by Castro.
Colipano claimed she was made to sit on an empty beer
case at the edge of the rear entrance/exit of the jeepney
with her sleeping child on her lap. And, at an uphill
incline in the road to Natimao-an, Carmen, Cebu, the
jeepney slid backwards because it did not have the
power to reach the top. Colipano pushed both her feet
against the step board to prevent herself and her child
from being thrown out of the exit, but because the step
board was wet, her left foot slipped and got crushed
between the step board and a coconut tree which the
jeepney bumped, causing the jeepney to stop its
backward movement. Colipano's leg was badly injured
and was eventually amputated.
In their answer, Sanico and Castro admitted that
Colipano's leg was crushed and amputated but claimed
that it! was Colipano's fault that her leg was crushed.
They admitted that the jeepney slid backwards because
the jeepney lost power. The conductor then instructed
everyone not to panic but Colipano tried to disembark
and her foot got caught in between the step board and
the coconut tree. Sanico claimed that he paid for all the
hospital and medical expenses of Colipano, and that
Colipano eventually freely and voluntarily executed an
Affidavit of Desistance and Release of Claim.
After trial, the RTC found that Sanico and Castro
breached the contract of carriage between them and
Colipano but only awarded actual and compensatory
damages in favor of Colipano. CA affirmed.
ISSUE: Whether Sanico and Casrto breached the
contract of carriage with Colipano.
RULING: Only Sanico breached the contract of carriage.
Since the cause of action is based on a breach of a
contract of carriage, the liability of Sanico is direct as
the contract is between him and Colipano. Castro, being
merely the driver of Sanico's jeepney, cannot be made
liable as he is not a party to the contract of carriage.
This extraordinary diligence, following Article 1755 of
the Civil Code, means that common carriers have the
obligation to carry passengers safely as far as human
care and foresight can provide, using the utmost
diligence of very cautious persons, with due regard for
all the circumstances.
In case of death of or injury to their passengers, Article
1756 of the Civil Code provides that common carriers
are presumed to have been at fault or negligent, and this
presumption can be overcome only by proof of the
extraordinary diligence exercised to ensure the safety of
the passengers.
Being an operator and owner of a common carrier,
Sanico was required to observe extraordinary diligence
in safely transporting Colipano. When Colipano's leg was
injured while she was a passenger in Sanico's jeepney,
the presumption of fault or negligence on Sanico's part
arose and he had the burden to prove that he exercised
the extraordinary diligence required of him. He failed to
do this.
In Calalas v. Court of Appeals,the Court found that
allowing the respondent in that case to be seated in an
extension seat, which was a wooden stool at the rear of
the jeepney, "placed respondent in a peril greater than
that to which the other passengers were exposed."The
Court further ruled that the petitioner in Calalas was
not only "unable to overcome the presumption of
negligence imposed on him for the injury sustained by
respondent, but also, the evidence shows he was
actually negligent in transporting passengers."
Calalas squarely applies here. Sanico failed to rebut the
presumption of fault or negligence under the Civil Code.
More than this, the evidence indubitably established
Sanico's negligence when Castro made Colipano sit on
an empty beer case at the edge of the rear entrance/exit
of the jeepney with her sleeping child on her lap, which
put her and her child in greater peril than the other
passengers.
The CA also correctly held that the defense of engine
failure, instead of exonerating Sanico, only aggravated
his already precarious position. The engine failure
"hinted lack of regular check and maintenance to ensure
that the engine is at its best, considering that the
jeepney regularly passes through a mountainous area."
This failure to ensure that the jeepney can safely
transport passengers through its route which required
navigation through a mountainous area is proof of fault
on Sanico's part. In the face of such evidence, there is
no question as to Sanico's fault or negligence.
Further, common carriers may also be liable for
damages when they contravene the tenor of their
obligations. Article 1170 of the Civil Code states:
ART. 1170. Those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and
those who in any manner contravene the tenor thereof,
are liable for damages.
In Magat v. Medialdea,the Court ruled: "The phrase 'in
any manner contravene the tenor' of the obligation
includes any illicit act or omission which impairs the
strict and faithful fulfillment of the obligation and every
kind of defective performance." There is no question here
that making Colipano sit on the empty beer case was a
clear showing of how Sanico contravened the tenor of his
obligation to safely transport Colipano from the place of
departure to the place of destination as far as human
care and foresight can provide, using the utmost
diligence of very cautious persons, and with due regard
for all the circumstances.
Proof of Extraordinary Diligence
MARIANO v CALLEJAS
FACTS: Petitioner Mariano Jr. is the surviving spouse
of Dr. Frelinda Mariano who was a passenger of a
Celyrosa Express bus bound for Tagaytay when she met
her death. Respondent Ildefonso C. Callejas is the
registered owner of Celyrosa Express, while respondent
Edgar de Borja was the driver of the bus on which the
deceased was a passenger.
At around 6:30 pm on November 12, 1991, along
Aguinaldo Highway, Cavite, the Celyrosa Express bus,
carrying Dr. Mariano as its passenger, collided with an
Isuzu truck. Due to the impact, the passenger bus fell
on its right side and caused the death of Dr. Mariano
and physical injuries to 4 other passengers. 
Petitioner filed a complaint for breach of contract of
carriage and damages against respondents for their
failure to transport his wife and mother of his three
minor children safely to her destination
Respondents denied liability for the death of Dr.
Mariano. They claimed that the proximate cause of the
accident was the recklessness of the driver of the trailer
truck which bumped their bus. Thus, respondent
Callejas filed a third-party complaint against Liong Chio
Chang, the owner of the trailer truck, for indemnity in
the event that he would be held liable for damages to
petitioner.
The RTC found respondents Callejas and Edgar de
Borja, together with Liong Chio Chang, jointly and
severally liable to pay petitioner damages. This was,
however, overturned by the CA hence the case at bar.
ISSUE: WON respondents are guilty
RULING: NO. Respondents are not guilty. The decision
of the CA is sustained.
Celyrosa Express, a common carrier, through its driver,
respondent De Borja, and its registered owner,
respondent Callejas, has the express obligation to carry
the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious
persons, and to observe extraordinary diligence in the
discharge of its duty. The death of the wife of the
petitioner in the course of transporting her to her
destination gave rise to the presumption of negligence of
the carrier. To overcome the presumption, respondents
have to show that they observed extraordinary diligence
in the discharge of their duty, or that the accident was
caused by a fortuitous event.
While the law requires the highest degree of diligence
from common carriers in the safe transport of their
passengers and creates a presumption of negligence
against them, it does not, however, make the carrier an
insurer of the absolute safety of its passengers.
The Civil Code qualifies the duty of extraordinary care,
vigilance and precaution in the carriage of passengers by
common carriers to only such as human care and
foresight can provide. What constitutes compliance with
said duty is adjudged with due regard to all the
circumstances.
In the case at bar, petitioner cannot succeed in his
contention that respondents failed to overcome the
presumption of negligence against them. The totality of
evidence shows that the death of petitioners spouse was
caused by the reckless negligence of the driver of the
Isuzu trailer truck which lost its brakes and bumped the
Celyrosa Express bus, owned and operated by
respondents.
First, we advert to the sketch prepared by PO3 De Villa,
who investigated the accident. De Villa stated that he
interviewed the respondent driver of the passenger bus
who said that he was about to unload some passengers
when his bus was bumped by the driver of the trailer
truck that lost its brakes. PO3 De Villa checked out the
trailer truck and found that its brakes really failed.
In fine, the evidence shows that before the collision, the
passenger bus was cruising on its rightful lane along the
Aguinaldo Highway when the trailer truck coming from
the opposite direction, on full speed, suddenly swerved
and encroached on its lane, and bumped the passenger
bus on its left middle portion. Respondent driver De
Borja had every right to expect that the trailer truck
coming from the opposite direction would stay on its
proper lane. He was not expected to know that the
trailer truck had lost its brakes. The swerving of the
trailer truck was abrupt and it was running on a fast
speed as it was found 500 meters away from the point of
collision.  its services indiscriminately to the public. It is without
Secondly, any doubt as to the culpability of the driver of
the trailer truck ought to vanish when he pleaded guilty
to the charge of reckless imprudence resulting to
multiple slight physical injuries and damage to property
in a separate criminal case involving the same incident.
In carriage by sea
Precautionary Measures; Knowledgeable of
nature of cargo
TABACALERA INSURANCE vs. NORTH FRONT
SHIPPING SERVICES
FACTS: 20,000 sacks of corn grains are shipped on
board North Front 777, a vessel owned by North Front
Shipping. The cargo was to be consigned to Republic
Flour Mills. The vessel was inspected and was found to
be seaworthy and fit. When the vessel left Cagayan de
Oro City, Republic Flour Mills was advised of its arrival
but did not immediately commence the unloading. There
were also days when they could not unload due to
weather conditions, and sometimes for no apparent
reason. When the unloading was completed after 20
days, they found out that there were shortages.
Precision Analytical Services, Inc., was hired to examine
the corn grains and determine the cause of
deterioration. It found out that most of the grains were
having mold growth due to the contact with salt water.
The molds, however, were not toxic and could still be
“arrested” by drying.
Republic Flour Mills rejected the entire cargo and
claimed for insurance. Now, the insurance companies
are subrogated to the rights and are now suing for
damages. The Marine Cargo Adjusters hired by the
insurance companies found that there were cracks in
the bodega, the bulkhead was rusty and the tarpaulins
were not new as claimed by North Front.
North Front denied such findings. Captain Solomon
Villanueva, master of the vessel, reiterated that the
barge was inspected prior to the actual loading and was
found adequate and seaworthy. In addition, they were
issued a permit to sail by the Coast Guard. The
tarpaulins were doubled and brand new and the hatches
were properly sealed. They did not encounter big waves
hence it was not possible for water to seep in. He further
averred that the corn grains were farm wet and not
properly dried when loaded.
The lower court dismissed the complaint and ruled that
there was a charter-party and thus ordinary diligence
was only required. On the other hand, CA ruled that
North Front should have exercised extraordinary
diligence.
ISSUE: Should the respondent be held liable?
RULING: YES. It is imperative that a public carrier shall
remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons,
provided the charter is limited to the ship only, as in the
case of a time-charter or voyage-charter (underscoring
supplied).
North Front Shipping Services, Inc., is a corporation
engaged in the business of transporting cargo and offers
doubt a common carrier. As such it is required to
observe extraordinary diligence in its vigilance over the
goods it transports.
North Front Shipping Services, Inc., proved that the
vessel was inspected prior to actual loading by
representatives of the shipper and was found fit to take
a load of corn grains. They were also issued Permit to
Sail by the Coast Guard. The master of the vessel
testified that the corn grains were farm wet when loaded.
However, this testimony was disproved by the clean bill
of lading issued by North Front Shipping Services, Inc.,
which did not contain a notation that the corn grains
were wet and improperly dried. Having been in the
service since 1968, the master of the vessel would have
known at the outset that corn grains that were farm wet
and not properly dried would eventually deteriorate
when stored in sealed and hot compartments as in
hatches of a ship. Equipped with this knowledge, the
master of the vessel and his crew should have
undertaken precautionary measures to avoid or lessen
the cargo's possible deterioration as they were
PRESUMED knowledgeable about the nature of such
cargo. But none of such measures was taken.
In Compania Maritima v. Court of Appeals[5] we ruled -
x x x x Mere proof of delivery of the goods in good order
to a common carrier, and of their arrival at the place of
destination in bad order, makes out prima facie case
against the common carrier, so that if no explanation is
given as to how the loss, deterioration or destruction of
the goods occurred, the common carrier must be held
responsible. Otherwise stated, it is incumbent upon the
common carrier to prove that the loss, deterioration or
destruction was due to accident or some other
circumstances inconsistent with its liability x x x x
The extraordinary diligence in the vigilance over the
goods tendered for shipment requires the common
carrier to know and to follow the required precaution for
avoiding damage to, or destruction of the goods
entrusted to it for safe carriage and delivery. It requires
common carriers to render service with the greatest skill
and foresight and 'to use all reasonable means to
ascertain the nature and characteristics of goods
tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their
nature requires' (underscoring supplied).
In fine, we find that the carrier failed to observe the
required extraordinary diligence in the vigilance over the
goods placed in its care. Laboratory analysis revealed
that the corn grains were contaminated with salt water.
North Front Shipping Services, Inc., failed to rebut all
these arguments.
However, we cannot attribute the destruction, loss or
deterioration of the cargo solely to the carrier. We find
the consignee Republic Flour Mills Corporation guilty of
contributory negligence. It was seasonably notified of the
arrival of the barge but did not immediately start the
unloading operations. No explanation was proffered by
the consignee as to why there was a delay of six (6) days.
Had the unloading been commenced immediately the
loss could have been completely avoided or at least
minimized.
Knowing and following the required precaution
SULPICIO LINES INC V. FIRST LEPANTO-TAISHO
INSURANCE CORP
FACTS:
On Feb. 1992, Taiyo Yuden Philippines (owner of
the goods) and Delbros, Inc (shipper), entered into a
contract evidenced by a bill of lading. Delbros will
transport a shipment of goods (3 wooden crates of
inductors) of Taiyo from Cebu City to Singapore. Delbros
engaged the services of a vessel of Sulpicio Lines to
transport the goods from Cebu to Manila. Upon
unloading, 1 crate dropped from the cargo hatch to the
pier apron, damaging the goods, leading to its rejection.
Likewise, upon inspection, 2 cartons were torn and 2
cello bags containing 50 pieces inductors were missing.
This led to the non-shipment of the goods. So Taiyo filed
a claim with Sulpicio for the recovery of the rejected
cargo which was refused. Taiyo then sought payment
from First Lepanto-Taisho Insurance Corp under a
marine insurance policy, which the latter paid less 35%
salvage value. Lepanto then claimed reimbursement
through damages from Delbros and Sulpicio after it has
been subrogated. Delbros answered that the fault falls
on Sulpicio who unloaded the crates. Sulpicio counter
that it observed extraordinary diligence in handling and
storing the goods. RTC dismissed the complaint of
Lepanto. On appeal, CA reversed the decision saying
that Delbros failed to deliver the goods in good
condition. Sulpicio was also negligent in unloading the
goods. Hence, the petition. (Delbros’ petition was filed
out of time hence it was dismissed)
ISSUE:
WON CA erred in reversing the RTC decision
RULING:
(Decision pertaining to technical issue – attachment of
the trial court decision – not included)
> Sulpicio argues that it should only be liable to the
extent of the cargo damage or loss and should not
include the lack of fitness of the shipment for transport
to Singapore due to the damaged packing, such that the
damage to the packaging is not tantamount to damage
to the cargo.
> SC said that the falling of the crate during the
unloading is evidence of petitioner-carriers negligence in
handling the cargo. As a common carrier, it is expected
to observe extraordinary diligence in the handling of
goods placed in its possession for transport. The
standard of extraordinary diligence imposed upon
common carriers is considerably more demanding than
the standard of ordinary diligence, i.e., the diligence of a
good paterfamilias established in respect of the ordinary
relations between members of society. A common carrier
is bound to transport its cargo and its passengers safely
"as far as human care and foresight can provide, using
the utmost diligence of a very cautious person, with due
regard to all circumstances. The extraordinary diligence
in the vigilance over the goods tendered for shipment
requires the common carrier to know and to follow the
required precaution for avoiding the damage to, or
destruction of, the goods entrusted to it for safe carriage
and delivery. It requires common carriers to render
service with the greatest skill and foresight and to use
all reasonable means to ascertain the nature and
characteristic of goods tendered for shipment, and to
exercise due care in the handling and stowage, including
such methods as their nature requires.
> Due to the damages suffered upon unloading, Sulpicio
have been negligent in the handling of the damaged
cargo. Under Articles 1735 and 1752 of the Civil Code,
common carriers are presumed to have been at fault or
to have acted negligently in case the goods transported
by them are lost, destroyed or had deteriorated.
> Sulpicio also miserably failed to adduce any shred of
evidence of the required extraordinary diligence to
overcome the presumption that it was negligent in
transporting the cargo.
DENIED. Sulpicio is liable.
No proof of repairs
VECTOR SHIPPING V. MACASA ET. AL
Facts: Respondents are families of passengers who
boarded MT Dona Paz owned and operated by
respondent Sulpicio Lines. Upon on its way to Manila,
MT Dona Paz collided with MT Vector which was owned
and operated by petitioner. Respondents filed a case for
damages on the grounds of negligence against
respondent Sulpicio Lines and Petitioner. RTC and CA
decided against petitioner and respondent Sulpicio
Lines.
Issue: WON petitioner is a common carrier
WON petitioner is liable
Ruling: 1. Yes petitioner is a common carrier
(Supreme Court did not discuss as to why petitioner is
considered to be a common carrier but more on
implications on being a common carrier)
 2. Petitioner is liable
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.
Use of all reasonable means
ABOITIZ SHIPPING VS INSURANCE COMPANY OF
NORTH AMERICA
Facts: On June 20, 1993, MSAS Cargo International
Limited and/or Associated and/or Subsidiary
Companies (MSAS) (partner of petitioner Aboitize)
procured a marine insurance policy from respondent
ICNA UK Limited of London. The insurance was for a
transshipment of certain wooden work tools and
workbenches purchased for the consignee Science
Teaching Improvement Project (STIP), Ecotech Center,
Sudlon Lahug, Cebu City, Philippines.[3] ICNA issued an
all-risk open marine policy,[4] stating:
  This Company, in consideration of a premium as
agreed and subject to the terms and conditions printed
hereon, does insure for MSAS Cargo International
Limited &/or Associated &/or Subsidiary Companies on
behalf of the title holder: Loss, if any, payable to the
Assured or order.[5]
The cargo was shipped from Germany to Singapore
where it was offloaded and then transhipped again to
Manila where it was again offloaded. On its arrival in
Manila, it was received by petitioner Aboitiz. However,
due to heavy rains on July 28 and 29, 1993, the cargoes
stayed outside of a warehouse in Manila Port and this
was the cause of the water damage sustained by the
cargoes. Thereafter, it was transferred to another
container before it was ultimately shipped to Cebu and
was then received by Science Teaching Improvement
Project (STIP) and delivered to Don Bosco Technical High
School, Punta Princesa, Cebu City.
After receipt of the cargoes, the representatives of Don
Bosco discovered the damages and immediately called
Aboitiz. Since, Aboitiz failed to respond to a claim made
Don Bosco for the loss, the latter went to the insurance
company to claim indemnity and after proper
subrogation, the insurance company filed a formal claim
against Aboitiz.
Issue: WON Aboitiz is liable for the loss.
Held: Yes, petitioner Aboitiz is liable for having failed
to exercise extraordinary diligence.
A foreign corporation not licensed to do business in
the Philippines is not absolutely incapacitated from
filing a suit in local courts. Only when that foreign
corporation is transacting or doing business in the
country will a license be necessary before it can institute
suits.[24] It may, however, bring suits on isolated
business transactions, which is not prohibited under
Philippine law. It is the act of engaging in business
without the prescribed license, and not the lack of
license per se, which bars a foreign corporation from
access to our courts.[26
Respondents cause of action is founded on it being
subrogated to the rights of the consignee of the damaged
shipment. The right of subrogation springs from Article
2207 of the Civil Code, which states:
  Article 2207. If the plaintiffs property has been
insured, and he has received indemnity from the
insurance company for the injury or loss arising out of
the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of
the insured against the wrongdoer or the person who
has violated the contract. If the amount paid by the
insurance company does not fully cover the injury or
loss, the aggrieved party shall be entitled to recover the
deficiency from the person causing the loss or
injury. (Emphasis added)
 As this Court held in the case of Pan Malayan
Insurance Corporation v. Court of Appeals,[28] payment
by the insurer to the assured operates as an equitable
assignment of all remedies the assured may have
against the third party who caused the
damage. Subrogation is not dependent upon, nor does it
grow out of, any privity of contract or upon written
assignment of claim. It accrues simply upon payment of
the insurance claim by the insurer.[29]
Upon payment to the consignee of indemnity for damage
to the insured goods, ICNAs entitlement to subrogation
equipped it with a cause of action against petitioner in
case of a contractual breach or negligence.[30] This right
of subrogation, however, has its limitations. First, both
the insurer and the consignee are bound by the
contractual stipulations under the bill of lading.
[31] Second, the insurer can be subrogated only to the
rights as the insured may have against the wrongdoer. If
by its own acts after receiving payment from the insurer,
the insured releases the wrongdoer who caused the loss
from liability, the insurer loses its claim against the
latter.[32]
The giving of notice of loss or injury is a condition
precedent to the action for loss or injury or the right to
enforce the carriers liability. Circumstances peculiar to
this case lead Us to conclude that the notice
requirement was complied with.
Provisions specifying a time to give notice of damage to
common carriers are ordinarily to be given a reasonable
and practical, rather than a strict construction.[37] We
give due consideration to the fact that the final
destination of the damaged cargo was a school
institution where authorities are bound by rules and
regulations governing their actions. Understandably,
when the goods were delivered, the necessary clearance
had to be made before the package was opened. Upon
opening and discovery of the damaged condition of the
goods, a report to this effect had to pass through the
proper channels before it could be finalized and
endorsed by the institution to the claims department of
the shipping company.
The call to petitioner was made two days from delivery, a
reasonable period considering that the goods could not
have corroded instantly overnight such that it could only
have sustained the damage during transit. Moreover,
petitioner was able to immediately inspect the damage
while the matter was still fresh. In so doing, the main
objective of the prescribed time period was
fulfilled. Thus, there was substantial compliance with
the notice requirement in this case.
The rule as stated in Article 1735 of the Civil Code is
that in cases where 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
required by law.[38] Extraordinary diligence is that
extreme measure of care and caution which persons of
unusual prudence and circumspection use for securing
and preserving their own property rights.[39] This
standard is intended to grant favor to the shipper who is
at the mercy of the common carrier once the goods have
been entrusted to the latter for shipment.[40]
Here, the shipment delivered to the consignee sustained
water damage. We agree with the findings of the CA that
petitioner failed to overturn this presumption:
x x x upon delivery of the cargo to the consignee Don
Bosco Technical High School by a representative from
Trabajo Arrastre, and the crates opened, it was
discovered that the workbenches and work tools suffered
damage due to wettage although by then they were
already physically dry. Appellee carrier having failed to
discharge the burden of proving that it exercised
extraordinary diligence in the vigilance over such goods
it contracted for carriage, the presumption of fault or
negligence on its part from the time the goods were
unconditionally placed in its possession (July 26, 1993)
up to the time the same were delivered to the consignee
(August 11, 1993), therefore stands. The presumption
that the carrier was at fault or that it acted negligently
was not overcome by any countervailing evidence. x x
x[41] (Emphasis added)
To prove the exercise of extraordinary diligence,
petitioner must do more than merely show the
possibility that some other party could be responsible
for the damage. It must prove that it used all reasonable
means to ascertain the nature and characteristic of the
goods tendered for transport and that it exercised due
care in handling them.[42]Extraordinary diligence must
include safeguarding the shipment from damage coming
from natural elements such as rainfall.
Aside from denying that the grounded outside
warehouse notation referred not to the crate for
shipment but only to the carrier van, petitioner failed to
mention where exactly the goods were stored during the
period in question. It failed to show that the crate was
properly stored indoors during the time when it
exercised custody before shipment to Cebu.
Prompt notification
NEDLLOYD LINEN B.V. ROTTERDAM, ET AL VS.
GLOW LAKS ENTERPRISES
In carriage by air
Inspection
SALUDO VS CA, TRANS WORLD AIRLINES AND PHIL
AIRLINES
Facts:
After the death of plaintiffs' mother, Crispina Galdo
Saludo, in Chicago Illinois, (on) October 23, 1976
,Pomierski and Son Funeral Home of Chicago, made the
necessary preparations and arrangements for the
shipment, of the remains from Chicago to the
Philippines. The funeral home had the remains
embalmed and secured a permit for the disposition of
dead human body on October 25, 1976 Philippine Vice
Consul in Chicago, Illinois, Bienvenido M. Llaneta, at
3:00 p.m. on October 26, 1976 at the Pomierski & Son
Funeral Home, sealed the shipping case containing a
hermetically sealed casket that is airtight and
waterproof wherein was contained the remains of
Crispina Saludo Galdo. the same date, October 26,
1976, Pomierski brought the remains to C.M.A.S.
(Continental Mortuary Air Services) at the airport
(Chicago) which made the necessary arrangements such
as flights, transfers, etc. The casket was supposed to be
transferred from Chicago to San Francisco and from San
Francisco to Manila on board a Phil. Airline Flight. PAL
Airway Bill No. 079-01180454 Ordinary was
consequently issued.
In the meantime, plaintiffs Maria Salvacion Saludo and
Saturnino Saludo, thru a travel agent, were booked with
United Airlines from Chicago to California, and with PAL
from California to Manila. After, they went to the airport
and watched from the look-out area. She saw no body
being brought. So, she went to the TWA counter again,
and she was told there was no body on that flight.
Reluctantly, they took the TWA flight upon assurance of
her cousin, Ani Bantug, that he would look into the
matter and inform her about it on the plane or have it
radioed to her. But no confirmation from her cousin
reached her that her mother was on the West Coast.
Upon arrival at San Francisco at about 5:00 p.m., she
went to the TWA counter there to inquire about her
mother's remains. She was told they did not know
anything about it. Later, in a matter of 10 minutes, they
informed him that the remains were on a plane to
Mexico City, that there were two bodies at the terminal,
and somehow they were switched. It-turned out that
TWA had carried a shipment under PAL Airway Bill No.
079-ORD-01180454 on TWA Flight 603 of October 27,
1976, a flight earlier than TWA Flight 131 of the same
date. The following day October 28, 1976, the shipment
or remains of Crispina Saludo arrived (in) San Francisco
from Mexico on board American Airlines. This shipment
was transferred to or received by PAL at 1945H or 7:45
p.m. (Exh. 2-PAL, Exh. 2-a-PAL). This casket bearing the
remains of Crispina Saludo, which was mistakenly sent
to Mexico and was opened (there), was resealed by
Crispin F. Patagas for shipment to the Philippines (See
Exh. B-1). The shipment was immediately loaded on PAL
flight for Manila that same evening and arrived (in)
Manila on October 30, 1976, a day after its expected
arrival on October 29, 1976.
In a letter dated December 15, 1976,4 petitioners'
counsel informed private respondent Trans World
Airlines (TWA) of the misshipment and eventual delay in
the delivery of the cargo containing the remains of the
late Crispin Saludo, and of the discourtesy of its
employees to petitioners Maria Salvacion Saludo and
Saturnino Saludo. In a separate letter on June 10, 1977
addressed to co-respondent Philippine Airlines (PAL),5
petitioners stated that they were holding PAL liable for
said delay in delivery and would commence judicial
action should no favorable explanation be given.
Both private respondents denied liability. Thus, a
damage suit6 was filed by petitioners before the then
Court of First Instance, Branch III, Leyte, praying for the
award of actual damages of P50,000.00, moral damages
of P1,000,000.00, exemplary damages, attorney's fees
and costs of suit.
As earlier stated, the court below absolved the two
respondent airlines companies of liability. The Court of
Appeals affirmed the decision of the lower court in toto,
and in a subsequent resolution,7 denied herein
petitioners' motion for reconsideration for lack of merit.
Issue: WON the 2 respondent airlines were negligent
Held: Not negligent.
Petitioner allege that private respondents received the
casketed remains of petitioners' mother on October 26,
1976, as evidenced by the issuance of PAL Air Waybill
No. 079-01180454 18 by Air Care International as
carrier's agent; and from said date, private respondents
were charged with the responsibility to exercise
extraordinary diligence so much so that for the alleged
switching of the caskets on October 27, 1976, or one day
after private respondents received the cargo, the latter
must necessarily be liable.
To support their assertion, petitioners rely on the
jurisprudential dictum, both under American and
Philippine law, that "(t)he issuance of a bill of lading
carries the presumption that the goods were delivered to
the carrier issuing the bill, for immediate shipment, and
it is nowhere questioned that a bill of lading is prima
facie evidence of the receipt of the goods by the
carrier. . . . In the absence of convincing testimony
establishing mistake, recitals in the bill of lading
showing that the carrier received the goods for shipment
on a specified date control”
A bill of lading is a written acknowledgment of the
receipt of the goods and an agreement to transport and
deliver them at a specified place to a person named or
on his order. Under the Tariff and Customs Code, a bill
of lading includes airway bills of lading. The two-fold
character of a bill of lading is all too familiar; it is a
receipt as to the quantity and description of the goods
shipped and a contract to transport the goods to the
consignee or other person therein designated, on the
terms specified in such instrument. Ordinarily, a receipt
is not essential to a complete delivery of goods to the
carrier for transportation but, when issued, is competent
and prima facie, but not conclusive, evidence of delivery
to the carrier.
While we agree with petitioners' statement that "an
airway bill estops the carrier from denying receipt of
goods of the quantity and quality described in the bill," a
further reading and a more faithful quotation of the
authority cited would reveal that "(a) bill of lading may
contain constituent elements of estoppel and thus
become something more than a contract between the
shipper and the carrier. . . . (However), as between the
shipper and the carrier, when no goods have been
delivered for shipment no recitals in the bill can estop
the carrier from showing the true facts . . . Between the
consignor of goods and receiving carrier, recitals in a bill
of lading as to the goods shipped raise only a rebuttable
presumption that such goods were delivered for
shipment. As between the consignor and a receiving
carrier, the fact must outweigh the recital.
In other words, on October 26, 1976 the cargo
containing the casketed remains of Crispina Saludo was
booked for PAL Flight Number PR-107 leaving San
Francisco for Manila on October 27, 1976, PAL Airway
Bill No. 079-01180454 was issued, not as evidence of
receipt of delivery of the cargo on October 26, 1976, but
merely as a confirmation of the booking thus made for
the San Francisco-Manila flight scheduled on October
27, 1976. Actually, it was not until October 28, 1976
that PAL received physical delivery of the body at San
Francisco, as duly evidenced by the Interline Freight
Transfer Manifest of the American Airline Freight System
and signed for by Virgilio Rosales at 1945H, or 7:45 P.M.
on said date. The body intended to be shipped as agreed
upon was really placed in the possession and control of
PAL on October 28, 1976 and it was from that date that
private respondents became responsible for the agreed
cargo under their undertakings in PAL Airway Bill No.
079-01180454. Consequently, for the switching of
caskets prior thereto which was not caused by them,
and subsequent events caused thereby, private
respondents cannot be held liable.
FURTHER, Air Care International and/or TWA, had no
way of determining its actual contents, since the casket
was hermetically sealed by the Philippine Vice-Consul in
Chicago and in an air pouch of C.M.A.S., to the effect
that Air Care International and/or TWA had to rely on
the information furnished by the shipper regarding the
cargo's content. Neither could Air Care International
and/or TWA open the casket for further verification,
since they were not only without authority to do so, but
even prohibited. Thus, under said circumstances, no
fault and/or negligence can be attributed to PAL (even if
Air Care International should be considered as an agent
of PAL) and/or TWA, the entire fault or negligence being
exclusively with C.M.A.S. Verily, no amount of
inspection by respondent airline companies could have
guarded against the switching that had already taken
place. Or, granting that they could have opened the
casket to inspect its contents, private respondents had
no means of ascertaining whether the body therein
contained was indeed that of Crispina Saludo except,
possibly, if the body was that of a male person and such
fact was visually apparent upon opening the casket.
In the case at bar, private respondents had no reason
whatsoever to doubt the truth of the shipper's
representations. The airway bill expressly providing that
"carrier certifies goods received below were received for
carriage," and that the cargo contained "casketed
human remains of Crispina Saludo," was issued on the
basis of such representations. The reliance thereon by
private respondents was reasonable and, for so doing,
they cannot be said to have acted negligently. Likewise,
no evidence was adduced to suggest even an iota of
suspicion that the cargo presented for transportation
was anything other than what it was declared to be, as
would require more than routine inspection or call for
the carrier to insist that the same be opened for scrutiny
of its contents per declaration.
At this point, it can be categorically stated that, as
culled from the findings of both the trial court and
appellate courts, the entire chain of events which
culminated in the present controversy was not due to
the fault or negligence of private respondents. Rather,
the facts of the case would point to CMAS as the culprit.
Reasonableness of weight standards
YSAREGUI VS PAL
GR No. 168081
Facts: This case portrays the peculiar story of an
international flight steward who was dismissed because
of his failure to adhere to the weight standards of the
airline company.
For 2 years, PAL advised Armando Ysareugi to go on 2
vacation leaves to address his weight concerns (he
weighed over 200lbs). Few years after being able to meet
the required weight, his problem recurred prompting
another leave without pay.
Ysaregui was removed from flight duty and was formally
requested to trim down to his ideal weight and report for
several weight checks on several dates. Despite the
several chances PAL had given him, Ysaregui failed to
meet the weight standards.
PAL informed Ysaregui that due to his inability to attain
his ideal weight, and considering the utmost leniency
extended to him which spanned a period covering a total
of almost five (5) years, his services were considered
terminated effective immediately.
Issue: W/N Ysaregui's dismissal for obesity can be
predicated on the bona fide occupational qualification
(BFOQ) defense
Held:
Employment in particular jobs may not be limited to
persons of a particular sex, religion, or national origin
unless the employer can show that sex, religion, or
national origin is an actual qualification for performing
the job. The qualification is called a bona fide
occupational qualification (BFOQ).
The law leaves no room for mistake or oversight on the
part of a common carrier. Thus, it is only logical to hold
that the weight standards of PAL show its effort to
comply with the exacting obligations imposed upon it by
law by virtue of being a common carrier.
The business of PAL is air transportation. As such, it
has committed itself to safely transport its passengers.
In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew
who are on board the aircraft. The weight standards of
PAL should be viewed as imposing strict norms of
discipline upon its employees.
In other words, the primary objective of PAL in the
imposition of the weight standards for cabin crew is
flight safety. It cannot be gainsaid that cabin attendants
must maintain agility at all times in order to inspire
passenger confidence on their ability to care for the
passengers when something goes wrong. It is not
farfetched to say that airline companies, just like all
common carriers, thrive due to public confidence on
their safety records. People, especially the riding public,
expect no less than that airline companies transport
their passengers to their respective destinations safely
and soundly. A lesser performance is unacceptable.
The task of a cabin crew or flight attendant is not limited
to serving meals or attending to the whims and caprices
of the passengers. The most important activity of the
cabin crew is to care for the safety of passengers and the
evacuation of the aircraft when an emergency occurs.
Passenger safety goes to the core of the job of a cabin
attendant. Truly, airlines need cabin attendants who
have the necessary strength to open emergency doors,
the agility to attend to passengers in cramped working
conditions, and the stamina to withstand grueling flight
schedules.
On board an aircraft, the body weight and size of a cabin
attendant are important factors to consider in case of
emergency. Aircrafts have constricted cabin space, and
narrow aisles and exit doors. Thus, the arguments of
respondent that whether the airlines flight attendants
are overweight or not has no direct relation to its
mission of transporting passengers to their destination;
and that the weight standards has nothing to do with
airworthiness of respondents airlines, must fail.
That an obese cabin attendant occupies more space
than a slim one is an unquestionable fact which courts
can judicially recognize without introduction of evidence.
It would also be absurd to require airline companies to
reconfigure the aircraft in order to widen the aisles and
exit doors just to accommodate overweight cabin
attendants like petitioner.
The biggest problem with an overweight cabin attendant
is the possibility of impeding passengers from
evacuating the aircraft, should the occasion call for it.
The job of a cabin attendant during emergencies is to
speedily get the passengers out of the aircraft safely.
Being overweight necessarily impedes mobility. Indeed,
in an emergency situation, seconds are what cabin
attendants are dealing with, not minutes. Three lost
seconds can translate into three lost lives. Evacuation
might slow down just because a wide-bodied cabin
attendant is blocking the narrow aisles. These
possibilities are not remote.