TRANSPORTATION LAW

Atty. Chester C. Castaños

CHAPTER 2 OBLIGATIONS OF THE COMMON CARRIER

DUTY TO MAKE TIMELY DELIVERY

1. Saludo, Jr. vs. Court of Appeals. (G.R. No. 95536. March 23, 1992);
2. Maersk Line vs. Court of Appeals. (G.R. No. 94761. May 19, 1993);
3. Magellan Marketing Mfg. Corp. vs. Court of Appeals. G.R. No. 95529. August 22, 1991;

TO WHOM DELIVERED
4. Mendoza vs. Philippine Airlines. (G.R. No. L-3678. February 29, 1952);

EFFECT OF DELAY TO TRANSPORT PASSENGERS

5. Trans-Asia Shipping Lines vs. Court of Appeals. (G.R. No. 118126. March 4, 1996);

DUTY TO EXERCISE
6. Aboitiz Shipping Corporation vs. Insurance Company of North America. (G.R. No. 168402. August 6, 2008)
7. Picart vs. Smith. (G.R. No. L-12219. March 15, 1918)
8. Tiu vs. Arriesgado. (G.R. No. 138060. September 1, 2004);
9. Compania Maritima vs. Court of Appeals. (G.R. No. L-31379. August 29, 1958);
10. Sabena Belgian World Airlines vs. Court of Appeals. (G.R. No. 104685. March 14, 1996);
11. Westwind Shipping Corporation vs. UCPB General Insurance CO., Inc. (G.R. Nos. 200289 and 200314. November 25,
2013);
12. Regional Container Lines vs. The Netherlands Insurance Co. (G.R. No. 168151. September 4, 2009);
13. Mariano Jr. vs. Callejas. (G.R. No. 166640. July 31, 2009.);
14. Air France vs. Bonifacio H. Gillego. (G.R. No. 165266. December 15, 2010)
15. Belgian Overseas Chartering vs. Philippine First Insurance. (G.R. No. 143133. June 5, 2002);
 16. Tabacalera Insurance vs. North Front Shipping Services. (G.R. No. 119197. May 16, 1997);
17. Asian Terminals vs. Simon Enterprise. (G.R. No. 177166. February 27, 2013);
18. Lu Do and Lu Ym Corp. vs. I.V. Binamira. (G.R. No. L-9840. April 22, 1957);
19. Victory Liner vs. Gammad. (G.R. No. 159636. November 25, 2004);
20. Ford Philippines vs. Court of Appeals. (G.R. No. 99039. February 3, 1997);
21. Heirs of Marcial Ochoa vs. G&S Transport Corporation. (G.R. Nos. 170071 and 170125. March 9, 2011);
22. Planters Products, Inc. vs. Court of Appeals. (G.R. No. 10153. September 15, 1993);
23. Gacal vs. Philippine Airlines. (G.R. No. 55300. March 15, 1990);

DURATION OF DUTY TO EXERCUSE EXTRAORDINARY DILIGENCE

24. Benito Macam vs. Court of Appeals. (G.R. No. 125524. August 25, 1999);
25. Saludo, Jr. vs. Court of Appeals. (G.R. No. 95536. March 23, 1992);
26. Ganzon vs. Court of Appeals. (G.R. No. L-48757. May 30, 1988);
27. Republic of the Philippines vs. Lorenzo Shipping Corp. (G.R. No. 153563. February 7, 2005);
28. Eastern Shipping Lines vs. BPI/MS Insurance Corp. (G.R. No. 193986. January 15, 2014);
29. Westwind Shipping Corporation vs. UCPB General Insurance CO., Inc. (G.R. Nos. 200289 and 200314. November 25,
2013);
30. Regional Container Lines vs. The Netherlands Insurance Co. (G.R. No. 168151. September 4, 2009);
31. Lu Do and Lu Ym Corp. vs. I.V. Binamira. (G.R. No. L-9840. April 22, 1957);
32. Philippines First Insurance vs. Wallem Philippines. (G.R. No. 165647. March 26, 2009);
33. Asian Terminals vs. Philam Insurance. (G.R. Nos. 181163, 181262 and 181319. July 24, 2013);
34. Jesusa vda. De Nueca vs. The Manila Railroad Company. (CA-G.R. No. 31731. January 30, 1968.);
35. LRTA vs. Marjorie Navidad. (G.R. No. 145804. February 6, 2003);
36. Dangwa Transportation Co., Inc. vs. Court of Appeals. (G.R. No. 95582. October 7, 1991);

IS THE DUTY OWED TO THIRD PERSONS?

37. Kapalaran Bus Lines vs. Coronado. G.R. No. 85331. August 25, 1989

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EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA
38. Trans-Asia Shipping Lines vs. Court of Appeals. (G.R. No. 118126. March 4, 1996);
39. Caltex vs. Sulpicio Lines. (G.R. No. 131166. September 30, 1999);
40. Vector Shipping Corp. vs. Adelfo Macasa. (G.R. No 160219. July 21, 2008);
41. Standard Vacuum Oil Co. vs. Luzon Stevedoring. (G.R. No. L-5203. April 18, 1956);
42. Negros Navigation vs. Court of Appeals. (G.R. No. 100398. November 7, 1997);
43. Philippine Home Assurance Corp. vs. Court of Appeals. (G.R. No. 106999. June 20, 1996);
44. Philippine American General Insurance vs. Court of Appeals. (G.R. No. 116940. June 11, 1997);
45. Loadstar vs. Pioneer. (G.R. No. 157481. January 24, 2006);
46. Saludo, Jr. vs. Court of Appeals. (G.R. No. 95536. March 23, 1992);
47. Magellan Manufacturing Marketing vs. Court of Appeals. (G.R. No. 95529. August 22, 1991);

EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND

48. MMDA vs. Viron Transportation. (G.R. No. 170656. August 15, 2007);
49. [Link] Highway Transit vs. Court of Appeals. (G.R. No. 16086. May 29, 1964);
50. Nocum vs. Laguna Tayabas Bus Company. (G.R. No. L-23733. October 31, 1969);

CARRIAGE BY TRAIN AND RAILROAD CROSSING CASES

51. LRTA vs. Marjorie Navidad. (G.R. No. 145804. February 6, 2003);
52. Cangco vs. Manila Railroad Company. (G.R. No. L-121191. October 14, 1918);
53. Ma-ao Sugar Central vs. Court of Appeals. (G.R. No. 83491. August 27, 1990);
54. Brinas vs. People. (G.R. No. L-30309. November 25, 1953);
55. Philippine National Railways vs. Court of Appeals. (G.R. No. L-55347. October 4, 1985);
56. Philippine National Railways vs. Vizcara. (G.R. No. 190022. February 15, 2012);

PASSENGER’S BAGGAGE
57. Sarkies Tours vs. Court of Appeals. (G.R. No. 108897. October 2, 1997);

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 CHAPTER 3 OBLIGATIONS OF THE COMMON CARRIER
DUTY TO EXERCISE DUE DILIGENCE
58. Sps. Fabre vs. Court of Appeals. (G.R. No. 111127. July 26, 1996);

DUTY TO DISCLOSE
59. Saludo, Jr. vs. Court of Appeals. (G.R. No. 95536. March 23, 1992);

PAYMENT OF FREIGHT
60. Republic vs. Manila Electric Company. (G.R. No. 141314. November 15, 2002);

TIMELY LOADING AND UNLOADING

61. Magellan Manufacturing Marketing vs. Court of Appeals. (G.R. No. 95529. August 22, 1991);
62. Philam Insurance Company vs. Heung-A Shipping Corp. (G.R. Nos. 187701 and 187812. July 23, 2014);
63. Bankers & Manufacturers Assurance Corp. vs. Court of Appeals. (G.R. No. 80256. October 2, 1992);
64. Amparo Servando vs. Philippine Steam Navigation. (G.R. Nos 36481-2. October 23, 1982);

DUTY OF PASSENGERS
65. De Prado vs. Manila Electric Co. (G.R. No. 29462. March 7, 1929);
66. Air France/KLM Air France vs. John Anthony de Camilis. (G.R. No. 188961. October 13, 2009);
67. Crisostomo vs. Court of Appeals. (G.R. No. 138334. August 25, 2003);
68. Philippine Airlines vs. Court of Appeals. (G.R. No. 123238. September 22, 2008);

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 DUTY TO MAKE TIMELY DELIVERY

1. SALUDO, JR. VS. COURT OF APPEALS Held: No. The SC rule that “The oft-repeated rule regarding a
G.R. No. 95536 carrier's liability for delay is that in the absence of a special
March 23, 1992 contract, a carrier is not an insurer against delay in
transportation of goods. When a common carrier undertakes to
Doctrine:
convey goods, the law implies a contract that they shall be
Facts: Petitioners Saludo, Jr. herein together with Pomierski delivered at destination within a reasonable time, in the
and Son Funeral Home of Chicago brought the remains of absence of any agreement as to the time of delivery.
petitioners’ mother to Continental Mortuary Air Services
A common carrier undertaking to transport property has the
(CMAS) which booked the shipment of the remains from
implicit duty to carry and deliver it within a reasonable time,
Chicago to San Francisco by Trans World Airways (TWA) and
absent any particular stipulation regarding time of delivery, and
from San Francisco to Manila with Philippine Airlines (PAL).
to guard against delay. In case of any unreasonable delay, the
The remains were taken to the Chicago Airport, but it turned
carrier shall be liable for damages immediately and
out that there were two (2) bodies in the said airport. Somehow
proximately resulting from such neglect of duty. As found by
the two (2) bodies were switched, and the remains of
the trial court, the delay in the delivery of the remains of
petitioners’ mother was shipped to Mexico instead. The
Crispina Saludo, undeniable and regrettable as it was, cannot
shipment was immediately loaded on another PAL flight and it
be attributed to the fault, negligence or malice of private
arrived the day after the expected arrival. Petitioners filed a
respondents, a conclusion concurred in by respondent court
claim for damages in court. Petitioners consider TWA's
and which we are not inclined to disturb.
statement that "it had to rely on the information furnished by
the shipper" a lame excuse and that its failure to prove that its Transportation Law; Common Carriers; Bill of Lading.—
personnel verified and identified the contents of the casket A bill of lading is a written acknowledgment of the receipt of
before loading the same constituted negligence on the part of the goods and an agreement to transport and deliver them at a
TWA. The lower court absolved both airlines and upon appeal specified place to a person named or on his order. Such
it was affirmed by the court. instrument may be called a shipping receipt, forwarder’s
receipt and receipt for transportation. The designation,
Issue: Whether or not the one-day delay in the delivery of the
however, is immaterial. It has been held that freight tickets for
same constitutes contractual breach as would entitle petitioners
bus companies as well as receipts for cargo transported byall
to damages.
forms of transportation, whether by sea or land, fall within the even when they are temporarily unloaded or stored in transit,
definition. Under the Tariff and Customs Code, a bill of lading unless the shipper or owner exercises the right of stoppage in
includes airway bills of lading. The two-fold character of a bill transitu, and terminates only after the lapse of a reasonable
of lading is all too familiar; it is a receipt as to the quantity and time for the acceptance of the goods by the consignee or such
description of the goods shipped and a contract to transport the other person entitled to receive them. And, there is delivery to
goods to the consignee or other person therein designated, on the carrier when the goods are ready for and have been placed
the terms specified in such instrument. in the exclusive possession, custody and control of the carrier
for the purpose of their immediate transportation and the carrier
Same; Same; Same; A bill of lading, when properly has accepted them. Where such a delivery has thus been
executed and delivered to a shipper, is evidence that the carrier accepted by the carrier, the liability of the common carrier
has received the goods described therein for shipment.— commences eo instanti. Hence, while we agree with petitioners
Ordinarily, a receipt is not essential to a complete delivery of that the extraordinary diligence statutorily required to be
goods to the carrier for transportation but, when issued, is observed by the carrier instantaneously commences upon
competent and prima facie, but not conclusive, evidence of delivery of the goods thereto, for such duty to commence there
delivery to the carrier. A bill of lading, when properly executed must in fact have been delivery of the cargo subject of the
and delivered to a shipper, is evidence that the carrier has contract of carriage. Only when such fact of delivery has been
received the goods described therein for shipment. Except as unequivocally established can the liability for loss, destruction
modified by statute, it is a general rule as to the parties to a or deterioration of goods in the custody of the carrier, absent
contract of carriage of goods in connection with which a bill of the excepting causes under Article 1734, attach and the
lading is issued reciting that goods have been received for presumption of fault of the carrier under Article 1735 be
transportation, that the recital being in essence a receipt alone, invoked.
is not conclusive, but may be explained, varied or contradicted
by parol or other evidence. Same; Same; Carrier’s liability for delay.—The oft-
repeated rule regarding a carrier’s liability for delay is that in
Same; Same; Observance of extraordinary diligence, the absence of a special contract, a carrier is not an insurer
when it commences.—Explicit is the rule under Article 1736 of against delay in transportation of goods. When a common
the Civil Code that the extraordinary responsibility of the carrier undertakes to convey goods, the law implies a contract
common carrier begins from the time the goods are delivered to that they shall be delivered at destination within a reasonable
the carrier. This responsibility remains in full force and effect time, in the absence of any agreement as to the time of

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delivery. But where a carrier has made an express contract to
transport and deliver property within a specified time, it is
bound to fulfill its contract and is liable for any delay, no
matter from what cause it may have arisen. This result logically
follows from the well-settled rule that where the law creates a
duty or charge, and the party is disabled from performing it
without any default in himself, and has no remedy over, then
the law will excuse him, but where the party by his own
contract creates a duty or charge upon himself, he is bound to
make it good notwithstanding any accident or delay by
inevitable necessity because he might have provided against it
by contract. Whether or not there has been such an undertaking
on the part of the carrier is to be determined from the
circumstances surrounding the case and by application of the
ordinary rules for the interpretation of contracts.

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2. MAERSK LINE VS. COURT OF APPEALS subject merchandise was due solely to the gross negligence of
G.R. No. 94761 petitioner Maersk Line.
May 17, 1993
Issue: Whether or not Maersk Line is liable for damages
Facts: Efren Castillo ordered from Eli Lilly. Inc. of Puerto resulting from the delay in the delivery of the shipment in
Rico through its agent in the Philippines, Elanco Products, absence in the bill of lading of a stipulation on the period of
600,000 empty gelatin capsules for the manufacture of its delivery.
products. Through a Memorandum of Shipment, the shipper
Held: Yes. SC ruled that “The oft-repeated rule regarding a
advised private respondent that ordered products were already
carriers liability for delay is that in the absence of a special
shipped on board its vessel for shipment to the Philippines. In
contract, a carrier is not an insurer against delay in
said Memorandum, shipper Eli Lilly, Inc. specified the date of
transportation of goods. When a common carrier undertakes to
arrival to be April 3, 1977. For reasons unknown, said cargo
convey goods, the law implies a contract that they shall be
were mishipped and diverted to USA and then transported back
delivered at destination within a reasonable time, in absence of
to Califorilia. The goods finally arrived in the Philippines after
any agreement to the time of delivery.
two (2) months from the date specified in the memorandum. As
a consequence, private respondent as consignee refused to take An examination of the subject bill of lading shows that the
delivery of the goods on account of its failure to arrive on time. subject shipment was estimated to arrive in Manila on April 3,
Private respondent alleging gross negligence and undue delay 1977. While there was no special contract entered into by the
in the delivery of the goods, filed an action before the court a parties indicating the date of arrival of the subject shipment,
quo for rescission of contract with damages against petitioner petitioner nevertheless, was very well aware of the specific
and Eli Lilly, Inc. as defendants. Denying that it committed date when the goods were expected to arrive as indicated in the
breach of contract, petitioner alleged in its that answer that the bill of lading itself. In this regard, there arises no need to
subject shipment was transported in accordance with the execute another contract for the purpose as it would be a mere
provisions of the covering bill of lading and that its liability superfluity. In the case before us, we find that a delay in the
under the law on transportation of good attaches only in case of delivery of the goods spanning a period of two (2) months and
loss, destruction or deterioration of the goods as provided for in seven (7) days falls way beyond the realm of reasonableness.
Article 1734 of Civil Code. Defendant Eli Lilly, Inc., on the Described as gelatin capsules for use in pharmaceutical
other hand, filed its answer with compulsory and crossclaim. In products, subject shipment was delivered to, and left in, the
its cross-claim, it alleged that the delay in the arrival of the possession and custody of petitioner-carrier for transport to
Manila via Oakland, California. But through petitioner's

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negligence was mishipped to Richmond, Virginia. Petitioner's make it good notwithstanding any accident or delay by
insistence that it cannot be held liable for the delay finds no inevitable necessity because he might have provided against it
merit. by contract. Whether or not there has been such an undertaking
on the part of the carrier is to be determined from the
ID.; SPECIAL CONTRACTS; COMMON CARRIER;
circumstances surrounding the case and by application of the
GENERALLY, NOT OBLIGATED BY LAW TO CARRY
ordinary rules for the interpretation of contracts."
AND TO DELIVER MERCHANDISE PROMPTLY;
EXCEPTION. — While it is true that common carriers are not 5. ID.; ID.; ID.; ID.; DELAY FOR A PERIOD OF MORE
obligated by law to carry and to deliver merchandise, and THAN TWO (2) MONTHS IN BEYOND THE REALM OF
persons are not vested with the right to prompt delivery, unless REASONABLENESS. — An examination of the subject bill
such common carriers previously assume the obligation to of lading shows that the subject shipment was estimated to
deliver at a given date or time (Mendoza v. Philippine Air arrive in Manila on April 3, 1977. While there was no special
Lines, Inc., 90 Phil. 836 [1952]), delivery of shipment or cargo contract entered into by the parties indicating the date of arrival
should at least be made within a reasonable time. In Saludo, Jr. of the subject shipment, petitioner nevertheless, was very well
v. Court of Appeals (207 SCRA 498 [1992]) this Court held: aware of the specific date when the goods were expected to
"The oft-repeated rule regarding a carrier's liability for delay is arrive as indicated in the bill of lading itself. In this regard,
that in the absence of a special contract, a carrier is not an there arises no need to execute another contract for the purpose
insurer against delay in transportation of goods. When a as it would be a mere superfluity. In the case before us, we find
common carrier undertakes to convey goods, the law implies a that a delay in the delivery of the goods spanning a period of
contract that they shall be delivered at destination within a two (2) months and seven (7) days falls way beyond the realm
reasonable time, in the absence, of any agreement as to the time of reasonableness. Described as gelatin capsules for use in
of delivery. But where a carrier has made an express contract to pharmaceutical products, subject shipment was delivered to,
transport and deliver property within a specified time, it is and left in, the possession and custody of petitioner-carrier for
bound to fulfill its contract and is liable for any delay, no transport to Manila via Oakland, California. But through
matter from what cause it may have arisen. This result logically petitioner's negligence was mishipped to Richmond, Virginia.
follows from the well-settled rule that where the law creates a Petitioner's insistence that it cannot be held liable for the delay
duty or charge, and the party is disabled from performing it finds no merit.
without any default in himself, and has no remedy over, then
the law will excuse him, but where the party by his own
contract creates a duty or charge upon himself, he is bound to

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3. MAGELLAN MFG. MKTG. CORP. VS. COURT OF ship and loading it in another," or "the transfer of goods from
APPEALS the vessel stipulated in the contract of affreightment to another
G.R. No. 95529 vessel before the place of destination named in the contract has
August 22, 1991 been reached," or "the transfer for further transportation from
one ship or conveyance to another." Clearly, either in its
Facts: Magellan Manufacturers Marketing Corp. (MMMC)
ordinary or its strictly legal acceptation, there is transhipment
entered into a contract with Choju Co. of Japan to export
whether or not the same person, firm or entity owns the vessels.
anahaw fans for a consideration. As payment, a letter of credit
In other words, the fact of transhipment is not dependent upon
was issued to MMMC by the buyer. James Cu, presidentof
the ownership of the transporting ships or conveyances or in
MMMC then contracted F.E. Zuellig, a shipping agent, to ship
the change of carriers, as the petitioner seems to suggest, but
the anahaw fans through Orient Overseas Container Lines, Inc.,
rather on the fact of actual physical transfer of cargo from one
specifying that he needed an on-board bill of lading and that
vessel to another.
transhipment is not allowed under the LC. MMMC paid F.E.
Zuellig the freight charges and secured a copy of the bill of The holding in most jurisdictions has been that a
lading which was presented to Allied Bank. The bank then shipper who receives a bill of lading without objection after an
credited the amount covered by the LC to MMMC's account. opportunity to inspect it, and permits the carrier to act on it by
However, when MMMC's president James Cu, went back to proceeding with the shipment is presumed to have accepted it
the bank later, he was informed that the payment was refused as correctly stating the contract and to have assented it its
by the buyer allegedly because there was no on-board bill of terms. In other words, the acceptance of the bill without dissent
lading, and there was a transhipment of goods. As a result of raises the presumption that all the terms therein were brought
the refusal of the buyer to accept, the anahaw fans were to the knowledge of the shipper and agreed to by him and, in
shipped back to Manila, for which they demanded from the absence of fraud or mistake, he is estopped from thereafter
MMMC payment. MMMC abandoned the whole cargo and denying that he assented to such terms. This rule applies with
asked OOCL for damages. particular force where a shipper accepts a bill of lading with
full knowledge of its contents and acceptance under such
Issue: Whether or not the bill of lading which reflected the
circumstances makes it a binding contract.
transhipment is consented by MMMC.

Held: Yes. The Court ruled that “Transhipment is defined, in

maritime law, is defined as "the act of taking cargo out of one

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 TO WHOM DELIVERED
4. MENDOZA V. PHILIPPINE AIRLINES Code of Commerce was that at the time of its promulgation
G.R. No. L-3678 transportation by air on a commercial basis was not yet known.
March 4, 1996
The defendant company cannot be held liable for damages
Facts: Sometime in 1948, Mendoza was the owner of Cita where it could not have forseen the damages that would be
Theater in Naga, where he used to exhibit movie pictures suffered by the plaintiff upon failure to deliver the can of film
booked from movie producers or film owners in Manila. As a for reason that the plans of the plaintiff to exhibit that film
good businessman, Mendoza usually takes advantage of the during the town fiesta and his preparation, specially the
city fiesta to exhibit films. A month before the fiesta, Mendoza announcement of said exhibition by poster and advertisement
contracted with LVN pictures the film “Himala ng Birhen”, in the newspapers were not called to the defendant's attention.
and so made extensive preparations. LVN delivered to PAL a
Sunday Common carriers are not obligated by law to carry and
an containing the film. PAL issued an Air Way Bill. However,
to deliver merchandise, and persons are not vested with the
when the plane arrived at the Pili airport, the can with the film
right to prompt delivery, unless such common carriers
was not unloaded and was bought back to Manila. Mendoza
previously assume the obligation. Said rights and obligations
went to the airport and inquired with PAL. Unfortunately, the
are created by a specific contract entered into by the parties.
can was flown back to Manila. Three days after the fiesta, the
film was shipped to Pili airtport to which was received by Where failure to exhibit films on a certain day would spell
Mendoza. He then exhibited the film but had missed the substantial damages or considerable loss of profits, including
opportunity to realized a large profit. To recoup his losses, waste of efforts on preparations and expense incurred in
Mendoza filed an action against PAL. The trial court did not advertisements, exhibitors, for their security, may either get
hold PAL liable for damages. hold of the films well ahead of the time of exhibition in order
to make allowances for any hitch in the delivery, or else enter
Issue: Whether or not PAL is liable for damages because of
into a special contract or make a suitable arrangement with the
Mendoza’s loss of profit.
common carrier for the prompt delivery of the films, calling the
Held: No. The Court ruled that “a contract of transportation by attention of the carrier to the circumstances surrounding the
air may be regarded as commercial. The reason is that the case and the approximate amount of damages to be suffered in
transportation company is a common carrier; besides, air case of delay.
transportation is clearly similar or analogous to land and water
transportation. The obvious reason for its non-inclusion in the
 EFFECT OF DELAY OF TRANSPORT OF PASSENGERS
5. TRANS-ASIA SHIPPING LINES VS. COURT OF before the trial court a complaint for damages against
APPEALS defendant.
G.R. No. 118126
Issue: Whether or not Trans-Asia is liable for the damages for
March 4, 1996
the delay in the performance of its obligation to transport its
Facts: Plaintiff Atty. Renato Arroyo, a public attorney, bought passengers.
a ticket from Trans-Asia, for the voyage of to Cagayan de Oro
Held: Yes. Trans-Asia is liable for the breach of contract of
City from Cebu City on November 12, 1991.
carriage and for its failure to exercise extraordinary diligence in
When plaintiff boarded the vessel on Nov. 12 at 5:30pm, he the performance of its obligation to transport its passengers.
noticed that some repair works were undertaken on the engine
The Court ruled that “there was no delay in the
of the vessel. The vessel departed at around 11:00 in the
commencement of the contracted voyage. If any delay was
evening with only one (1) engine running.
incurred, it was after the commencement of such voyage,
After an hour of slow voyage, the vessel stopped near Kawit specifically, when the voyage was subsequently interrupted
Island and dropped its anchor thereat. After half an hour of when the vessel had to stop after the only functioning engine
stillness, some passengers demanded that they should be conked out. As to the rights and duties of the parties strictly
allowed to return to Cebu City for they were no longer willing arising out of such delay, Article 698 of the Code of Commerce
to continue their voyage to Cagayan de Oro City. The captain specifically provides for such a situation which applies
acceded to their request and thus the vessel headed back to suppletorily pursuant to Article 1766 of the Civil Code. The
Cebu City. cause of the delay or interruption was the petitioner's failure to
observe extraordinary diligence. Article 698 must then be read
At Cebu City, plaintiff together with the other passengers who
together with Articles 2199, 2200, 2201, and 2208 in relation to
requested to be brought back to Cebu City, were allowed to
Article 21 of the Civil Code. So read, it means that petitioner is
disembark. Thereafter, the vessel proceeded to Cagayan de Oro
liable for any pecuniary loss or loss of profits which the private
City. Plaintiff, the next day, boarded another vessel of Trans-
respondent may have suffered by reason thereof. For the
Asia for its voyage to Cagayan de Oro City.
private respondent, such would be the loss of income if unable
On account of this failure of defendant to transport him to the to report to his office on the day he was supposed to arrive
place of destination on November 12, 1991, plaintiff filed were it not for the delay. This, however, assumes that he stayed
on the vessel and was with it when it thereafter resumed its
voyage; but he did not. Any further delay then in the private damages must be proved, but private respondent failed to do
respondent's arrival at the port of destination was caused by his so. There is no convincing evidence that he did not receive his
decision to disembark. At any rate, his actual or compensatory salary nor that his absence was not excused

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 DUTY TO EXERCISE
6. ABOITIZ SHIPPING CORP. VS. INSURANCE for collection of damages against Aboitiz. The RTC ruled in
COMPANY OF NORTH AMERICA favor of Aboitiz but the CA reversed.
G.R. No. 168402
Aboitiz contends that STIP failed file its claim within
August 6, 2008
the period prescribed under the Code of Commerce, hence
Facts: STIP was the consignee of a cargo containing wooden ICNA has no cause of action.
tools and workbenches insured with Insurance Company of
Issue: Whether or not Aboitiz is liable for damages.
North America. The container van was shipped from Germany
to Singapore, then to Manila. In Manila, the container van was Held: Yes. The court ruled that “the rule as stated in Article
received by Aboitiz Shipping and was then boarded on 1735 of the Civil Code is that in cases where the goods are lost,
Aboitiz’s ship which arrived in Cebu. destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they
On August 11, 1993, the cargo was withdrawn from the port
prove that they observed extraordinary diligence required by
by the representative of STIP and was delivered to Don Bosco
law. Extraordinary diligence is that extreme measure of care
Technical School Cebu. It was received by Mr. Bernhard
and caution which persons of unusual prudence and
Willig. On August 13, 1993, Willig called the Claims Head of
circumspection use for securing and preserving their own
Aboitiz Shipping, Mr. Mayo Perez, informing him that the
property rights. This standard is intended to grant favor to the
cargo sustained water damage. Perez immediately went to the
shipper who is at the mercy of the common carrier once the
warehouse and checked the condition of the container and other
goods have been entrusted to the latter for shipment.”
cargoes. He found that the bottom of the crate was slightly
broken but the crate had no water marks. However, he To prove the exercise of extraordinary diligence,
confirmed that the tools which were stored inside the crate petitioner must do more than merely show the possibility that
were already corroded. In a letter dated August 15, 1993, some other party could be responsible for the damage. It must
Willig informed Aboitiz of the damage noticed up on opening prove that it used "all reasonable means to ascertain the nature
of the cargo. and characteristic of the goods tendered for transport and that it
exercised due care in handling them. Extraordinary diligence
STIP contacted ICNA for insurance claims. On
must include safeguarding the shipment from damage coming
September 21, 1993, the consignee STIP filed a formal claim
from natural elements such as rainfall.
with Aboitiz for the damage to its cargo. Aboitiz refused to
settle the claim. ICNA paid the consignee and filed a complaint

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 DUTY TO EXERCISE

7. Picart vs. Smith. (G.R. No. L-12219. March 15, 1918) The horse fell and its rider was thrown off. As a result of its
injuries the horse died. The plaintiff received contusions which
FACTS: caused temporary unconsciousness and required medical
attention for several days.
Amado Picart was riding on his pony over Carlatan Bridge in
San Fernando, La Union When Smith approached from the ISSUE:
opposite direction in an automobile with rate of speed of about
ten or twelve miles per hour. As the Smith neared the bridge he Whether Smith was guilty of negligence and liable for civil
saw a horseman on it and blew his horn to give warning of his obligations
approach. He continued his course and after he had taken the
bridge he gave two more successive blasts, as it appeared to HELD:
him that the man on horseback before him was not observing
Yes. The control of the situation had then passed entirely to the
the rule of the road.
defendant; and it was his duty either to bring his car to an
Picart saw the automobile and heard the warning signals. Being immediate stop or, seeing that there were no other persons on
perturbed by the rapid approach of the vehicle, he pulled the the bridge, to take the other side and pass sufficiently far away
pony closely up against the railing on the right side of the from the horse to avoid the danger of collision. Instead of
bridge instead of going to the left. The bridge is about 75 doing this, the defendant ran straight on until he was almost
meters and a width of only 4.80 meters. The vehicle upon the horse.
approached without slowing down. Smith quickly turned his
A prudent man, placed in the position of the defendant, would
car sufficiently to the right to escape hitting the horse alongside
in our opinion, have recognized that the course which he was
of the railing where it as then standing; but due to the
pursuing was fraught with risk, and would therefore have
automobile’s close proximity to the animal, the animal became
foreseen harm to the horse and the rider as reasonable
frightened and turned its body across the bridge with its head
consequence of that course. Under these circumstances the law
toward the railing. In so doing, it as struck on the hock of the
imposed on the defendant the duty to guard against the
left hind leg by the flange of the car and the limb was broken.
threatened harm.
It goes without saying that the plaintiff himself was not free last reasonable opportunity to avoid the impending harm and
from fault, for he was guilty of antecedent negligence in fails to do so is chargeable with the consequences, without
planting himself on the wrong side of the road. But as we have reference to the prior negligence of the other party.
already stated, the defendant was also negligent; and in such
case the problem always is to discover which agent is 3. ID.; ID.; CASE AT BAR. — The plaintiff was riding a pony
immediately and directly responsible. Under these on a bridge. Seeing an automobile ahead he improperly pulled
circumstances the law is that the person who has the last fair his horse over to the railing on the right. The driver of the
chance to avoid the impending harm and fails to do so is automobile, however, guided his car toward the plaintiff
chargeable with the consequences, without reference to the without diminution of speed until he was only a few feet away.
prior negligence of the other party. He then turned to the right but passed so closely to the horse
that the latter being frightened, jumped around and was killed
SYLLABUS by the passing car. Held: That although the plaintiff was guilty
of negligence in being on the wrong side of the bridge, the
1. NEGLIGENCE; CRITERION FOR DETERMINING defendant was nevertheless civilly liable for the legal damages
EXISTENCE OF NEGLIGENCE. — The test for determining resulting from the collision, as he had a fair opportunity to
whether a person is negligent in doing an act whereby injury or avoid the accident after he realized the situation created by the
damage results to the person or property of another is this: negligence of the plaintiff and failed to avail himself of that
Would a prudent man, in the position of the person to whom opportunity; while the plaintiff could by no means then place
negligence is attributed, foresee harm to the person injured as a himself in a position of greater safety.
reasonable consequence of the course about to be pursued. If
so, the law imposes a duty on the actor to refrain from that
course or to take precaution against its mischievous results, and
the failure to do so constitutes negligence. Reasonable
foresight of harm, followed by the ignoring of the admonition
born of this prevision, is the constitutive fact in negligence.

2. ID.; CONTRIBUTORY NEGLIGENCE; SUCCESSIVE

NEGLIGENT ACTS. — Where both parties are guilty of
negligence, but the negligent act of one succeeds that of the
other by an appreciable interval of time, the one who has the

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8. Tiu vs. Arriesgado. (G.R. No. 138060. September 1, 2004) which would therefore make the same liable for part of the
damages that may arise as well.
Facts:
PPSI, however argued that it already attended to and settled
On March 15, 1987, a Truck marked “Condor Hollow Blocks claims of those who were injured in the collision and that it
and General Merchandise” was on its way to Cebu when it’s could not accede to the claim of Arriesgado because it was
rear tire exploded. The driver Sergio Pedrano then parked the beyond that of the terms of the insurance.
truck on the side of the National Highway, left the rear lights
on, and instructed his helper, Jose Mitante, to watch over the The trial court found that the contention of the petitioner was
truck and place a spare tire on the road a few meters away from invalid because the said truck had left it’s tail lights open and
the tire to serve as a warning device as he went and had the that the said road was well lit at the time of the accident.
faulty tire vulcanized. Hence, it was the fault of the bus, for traveling at a fast pace,
that the collision happened. The Petitioner, Tiu, appealed to the
After Pedrano left, D’ Rough Riders passenger bus carrying the CA but was denied which prompted him to seek another
respondent, passed by the same route and hit the truck. The reconsideration.
petitioner was injured in the collision and his wife,
FelissaArriesgadoeventually died after sustaining injuries from Issue:
the same. Hence, he filed a complaint against the petitioner for
breach of contract of carriage, damages and for attorneys fees W/N The owner and driver of the Truck, Benjamin Condor and
against the petitioner, the owner of the bus, William Tiu and Sergio Pedrano, was liable due to their negligence in the lack
his driver, Laspinas. of an early warning device and hence liable to the respondent
as well. (Violation of Sec 34 of LTO Land traffic code.)
However, the petitioner filed a third-party complaint alleging
that the said truck was parked in a slanted manner and did not W/N Petitioner was negligent
have any early warning devices displayed while it was left by
W/N Petitioner was also liable for exemplary damages,
the driver which resulted to the collision and would therefore
attorney’s fees and litigation expenses.
make, Benjamin Condor, the owner of the truck liable as well.
W/N PPSI is also liable.
Also, the petitioner included that he was covered by Philippine
Phoenix Surety and Insurance (PPSI) at the time of the incident Held:

Page | 17
The court found that indeed, the petitioner, was liable for being Civil Law; Contracts; Contracts of Carriage; Common
negligent while being engaged in the business of common Carriers; Extraordinary Diligence; A man must use common
carriage. The SC could no longer change the facts that were sense, and exercise due reflection in all his acts—it is his duty
sustained in the trial court and court of appeals hence, since it to be cautious, careful and prudent, if not from instinct, then
was deemed that the bus was moving in a very fast speed through fear of recurring punishment.—A man must use
which was the cause of the accident, the SC will have to common sense, and exercise due reflection in all his acts; it is
sustain that ruling and hold that indeed, there was negligence his duty to be cautious, careful and prudent, if not from
on the part of the petitioner. instinct, then through fear of recurring punishment. He is
responsible for such results as anyone might foresee and for
Also, the doctrine of “Last Clear Chance” is inapplicable to the acts which no one would have performed except through
case because it could only apply to a controversy between two culpable abandon. Otherwise, his own person, rights and
colliding vehicles. In this case, it was the passenger and not property, and those of his fellow beings, would ever be
another driver who was injured and thus, the said doctrine exposed to all manner of danger and injury.
could not be applied.
Same; Same; Same; Same; Same; Negligence; Upon the
However, the respondents Pedrano and Condor was found by happening of the accident, the presumption of negligence at
the court to be negligent as well. The court found that there once arises, and it becomes the duty of a common carrier to
was merit in the contention of the petitioner that the said truck prove that he observed extraordinary diligence in the care of
violated Section 34 or RA 4136, wherein they did not have his pasengers.—Under the said contract of carriage, the
proper warning devices in accordance with the said law. petitioners assumed the express obligation to transport the
respondent and his wife to their destination safely and to
Lastly, with regard to PPSI, the court held that since it admitted
observe extraordinary diligence with due regard for all
to being bound by a contract with the petitioner, it would be
circumstances. Any injury suffered by the passengers in the
liable as well. However, the said liability would only fall
course thereof is immediately attributable to the negligence of
within the amount settled in the said contract.
the carrier. Upon the happening of the accident, the
Hence, the petition was partially granted. presumption of negligence at once arises, and it becomes the
duty of a common carrier to prove that he observed
SYLLABUS extraordinary diligence in the care of his passengers. It must be
stressed that in requiring the highest possible degree of

Page | 18
diligence from common carriers and in creating a presumption any, the common law of last clear chance doctrine has to play
of negligence against them, the law compels them to curb the in a jurisdiction where the common law concept of
recklessness of their drivers. contributory negligence as an absolute bar to recovery by the
plaintiff, has itself been rejected, as it has been in Article 2179
Same; Same; Same; Same; Same; Same; The carrier must show of the Civil Code.
the utmost diligence of very cautious persons as far as human
care and foresight can provide, or that the accident was caused Same; Same; Same; Same; Same; Same; Presumed
by fortuitous event.— While evidence may be submitted to Negligence; It is such a firmly established principle, as to have
overcome such presumption of negligence, it must be shown virtually formed part of the law itself, that the negligence of the
that the carrier observed the required extraordinary diligence, employee gives rise to the presumption of negligence on the
which means that the carrier must show the utmost diligence of part of the employer.—It is such a firmly established principle,
very cautious persons as far as human care and foresight can as to have virtually formed part of the law itself, that the
provide, or that the accident was caused by fortuitous event. negligence of the employee gives rise to the presumption of
negligence on the part of the employer. This is the presumed
Same; Same; Same; Same; Same; Same; Principle of Last negligence in the selection and supervision of employee. The
Clear Chance; Contrary to the petitioner’s contention, the theory of presumed negligence, in contrast with the American
principle of last clear chance is inapplicable in the instant case, doctrine of respondeat superior, where the negligence of the
as it only applies in a suit between the owners and drivers of employee is conclusively presumed to be the negligence of the
colliding vehicles.—Contrary to the petitioner’s contention, the employer, is clearly deducible from the last paragraph of
principle of last clear chance is inapplicable in the instant case, Article 2180 of the Civil Code which provides that the
as it only applies in a suit between the owners and drivers of responsibility therein mentioned shall cease if the employers
two colliding vehicles. It does not arise where a passenger prove that they observed all the diligence of a good father of a
demands responsibility from the carrier to enforce its family to prevent damages. . . .
contractual obligations, for it would be inequitable to exempt
the negligent driver and its owner on the ground that the other Same; Same; Same; Same; Same; Same; Indemnity;
driver was likewise guilty of negligence. The common law Compulsory Vehicle Liability Insurance; The nature of
notion of last clear chance permitted courts to grant recovery to Compulsory Motor Vehicle Liability Insurance is such that it is
a plaintiff who has also been negligent provided that the primarily intended to provide compensation for the death or
defendant had the last clear chance to avoid the casualty and bodily injuries suffered by innocent third parties or passengers
failed to do so. Accordingly, it is difficult to see what role, if as a result of the negligent operation and use of motor

Page | 19
vehicles.—The nature of Compulsory Motor Vehicle Liability the law seeks to benefit. For if common carriers carefully
Insurance is such that it is primarily intended to provide observed the statutory standard of extraordinary diligence in
compensation for the death or bodily injuries suffered by respect of their own passengers, they cannot help but
innocent third parties or passengers as a result of the negligent simultaneously benefit pedestrians and the passengers of other
operation and use of motor vehicles. The victims and/or their vehicles who are equally entitled to the safe and convenient use
dependents are assured of immediate financial assistance, of our roads and highways. The law seeks to stop and prevent
regardless of the financial capacity of motor vehicle owners. the slaughter and maiming of people (whether passengers or
not) on our highways and buses, the very size and power of
Same; Same; Same; Same; Same; Same; Same; Same; Extent; which seem to inflame the minds of their drivers. Article 2231
Although the victim may proceed directly against the insurer of the Civil Code explicitly authorizes the imposition of
for indemnity, the third party liability is only up to the extent of exemplary damages in cases of quasi-delicts “if the defendant
the insurance policy and those required by law.—Although the acted with gross negligence.” . . .
victim may proceed directly against the insurer for indemnity,
the third party liability is only up to the extent of the insurance Same; Same; Same; Same; Same; Same; Solidary Liability; In
policy and those required by law. While it is true that where the case of injury to a passenger due to the negligence of the driver
insurance contract provides for indemnity against liability to of the bus on which he was riding and of the driver of another
third persons, and such persons can directly sue the insurer, the vehicle, the drivers as well as the owners of the two vehicles
direct liability of the insurer under indemnity contracts against are jointly and severally liable for damages.— The same rule
third party liability does not mean that the insurer can be held of liability was applied in situations where the negligence of
liable in solidum with the insured and/or the other parties found the driver of the bus on which plaintiff was riding concurred
at fault. For the liability of the insurer is based on contract; that with the negligence of a third party who was the driver of
of the insured carrier or vehicle owner is based on tort. . . . another vehicle, thus causing an accident. In Anuran v. Buño,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate
Same; Same; Same; Same; Same; Same; Exemplary Damages; Court, and Metro Manila Transit Corporation v. Court of
Article 2231 of the Civil Code explicitly authorizes the Appeals, the bus company, its driver, the operator of the other
imposition of exemplary damages in quasi-delicts “if the vehicle and the driver of the vehicle were jointly and severally
defendant acted with gross negligence.”— While the held liable to the injured passenger or the latter’s heirs. The
immediate beneficiaries of the standard of extraordinary basis of this allocation of liability was explained in Viluan v.
diligence are, of course, the passengers and owners of cargo Court of Appeals, thus: “Nor should it make difference that the
carried by a common carrier, they are not the only persons that

Page | 20
liability of petitioner [bus owner] springs from contract while
that of respondents [owner and driver of other vehicle] arises
from quasi-delict. As early as 1913, we already ruled in
Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a
passenger due to the negligence of the driver of the bus on
which he was riding and of the driver of another vehicle, the
drivers as well as the owners of the two vehicles are jointly and
severally liable for damages. Some members of the Court,
though, are of the view that under the circumstances they are
liable on quasi-delict.”

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9. CompaniaMaritima vs. Court of Appeals. (G.R. No. L- Contention of CompañiaMaritima: It is not liable for damages
31379. August 29, 1958); as Concepcion’s act of furnishing it with an inaccurate weight
of the payloader is the proximate cause of the incident and it
FACTS: Concepcion, a civil engineer doing business under the constitutes as misrepresentation within the meaning of "act or
name and style of Consolidated Construction, had a contract omission of the shipper or owner of the goods" under Article
with the Civil Aeronautics Administration (CAA) for the 1734 (3) of the Civil Code.
construction of the airport in Cagayan de Oro City (CDO).
Concepcion contracted with CompañaMaritima, for the ISSUE: Whether or not CompañaMaritima is liable for the
shipment to CDO of 1-unit payloader, 4 units 6x6 Reo trucks damage on the payloader.
and 2 pieces of water tanks. These equipments were loaded
aboard the MV Cebu in its Voyage No. 316. RULING: YES, CompañaMaritima is liable as common
carriers are presumed negligent in case of damage to the goods
After arriving in CDO, the Reo trucks and water tanks were while in their possession.
safely unloaded within a few hours. While the payloader was
about 2 meters above the pier in the course of unloading, the Common carriers are presumed to have been at fault or to have
swivel pin of the heel block of the port block of Hatch No. 2 acted negligently in case the goods transported by them are
gave way, causing the payloader to fall. The payloader was lost, destroyed or had deteriorated. To overcome the
damaged and was thereafter taken to CompañaMaritima’s presumption of liability, common carriers must prove that they
compound in CDO. observed extraordinary diligence as required in Article 1733 of
the Civil Code. As such, it is incumbent upon the common
Then, Consolidated Construction, thru Concepcion, wrote carrier to prove that the loss, deterioration or destruction was
CompañiaMaritima to claim for damages resulting from the due to accident or some other circumstances inconsistent with
complete loss of the payloader. However, CompañiaMaritima its liability.
denied the claim for damages of Consolidated Construction. As
such, Concepcion filed an action for damages against The extraordinary diligence in the vigilance over the goods
CompañiaMaritima. After trial, the CFI ruled in favor of tendered for shipment requires the common carrier to know
CompañiaMaritima. On appeal, the CA reversed the CFI’s and to follow the required precaution for avoiding damage to,
decision and thereby ruled in favor of Concepcion. 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

Page | 22
ascertain the nature and characteristic of goods tendered for an inaccurate weight of the payloader constitutes a contributory
shipment, and to exercise due care in the handling and stowage circumstance to the damage caused on the payloader, which
including such methods as their nature requires." Under Article mitigates the liability for damages of CompañaMaritima.
1736 of the Civil Code, the responsibility to observe
extraordinary diligence commences and lasts from the time the SYLLABUS
goods are unconditionally placed in the possession of, and
1. CIVIL CODE; CONTRACT OF CARRIAGE;
received by the carrier for transportation until the same are
PRESUMPTION OF LIABILITY OF THE COMMON
delivered, actually or constructively, by the carrier to the
CARRIER; OVERCOME BY PROOF OF OBSERVANCE
consignee, or to the person who has the right to receive them
OF EXTRAORDINARY DILIGENCE. — The general rule
without prejudice to the provisions of Article 1738.
under Articles 1735 and 1752 of the Civil Code is that common
In the instant case, CompañaMaritima failed to take the carriers are presumed to have been at fault or to have acted
necessary and adequate precautions for avoiding damage to, or negligently in case the goods transported by them are lost,
destruction of, the payloader entrusted to it for safe carriage destroyed or had deteriorated. To overcome the presumption of
and delivery to Cagayan de Oro City. As such, it cannot be liability for the loss, destruction or deterioration of the goods
reasonably concluded that the damage caused to the payloader under Article 1735, the common carriers must prove that they
was due to the alleged misrepresentation of private respondent observed extraordinary diligence as required in Article 1733 of
Concepcion as to the correct and accurate weight of the the Civil Code. The responsibility of observing extraordinary
payloader. Besides, common carriers can protect themselves diligence in the vigilance over the goods is further expressed in
against mistakes in the bill of lading as to weight by exercising Article 1734 of the same Code, the article invoked by
diligence before issuing the same. petitioner to avoid liability for damages.

The incident could have been avoided had CompañaMaritima 2. ID.; ID.; ID.; COMMON CARRIER MUST PROVE THAT
utilized the "jumbo" lifting apparatus which has a capacity of THE LOSS, DETERIORATION OR DESTRUCTION WAS
lifting 20 to 25 tons of heavy cargoes. Even if DUE TO ACCIDENT OR TO OTHER CIRCUMSTANCES
CompañaMaritima chose not to take the necessary precaution INCONSISTENT WITH ITS LIABILITY. — Corollary is the
to avoid damage by checking the correct weight of the rule that mere proof of delivery of the goods in good order to a
payloader, extraordinary care and diligence compel the use of common carrier, and of their arrival at the place of destination
the "jumbo" lifting apparatus as the most prudent course for in bad order, makes out prima facie case against the common
CompañaMaritima. However, Concepcion’s act of furnishing carrier, so that if no explanation is given as to how the loss,

Page | 23
deterioration or destruction of the goods occurred, the common 5. ID.; ID.; FACT THAT WEIGHING OF CARGOES WAS
carrier must be held responsible. Otherwise stated, it is DONE BY ANOTHER DOES NOT EXEMPT CARRIER
incumbent upon the common carrier to prove that the loss, FROM LIABILITY. — The weights stated in a bill of lading
deterioration or destruction was due to accident or some other are prima facie evidence of the amount received and the fact
circumstances inconsistent with its liability. that the weighing was done by another will not relieve the
common carrier where it accepted such weight and entered it
3. ID.; ID.; ID.; EXTRAORDINARY DILIGENCE on the bill of lading. Besides, common carriers can protect
REQUIRES THAT SERVICE IS WITH GREATEST SKILL themselves against mistakes in the bill of lading as to weight
AND FORESIGHT. — The extraordinary diligence in the by exercising diligence before issuing the same.
vigilance over the goods tendered for shipment requires the
common carrier to know and to follow the required precaution 6. ID.; ID.; COMMON CARRIER STILL LIABLE EVEN IF
for avoiding damage to, or destruction of the goods entrusted to SHIPPER FURNISHED IT WITH INACCURATE WEIGHT;
it for safe carriage and delivery. It requires common carriers to CASE AT BAR. — While petitioner has proven that private
render service with the greatest skill and foresight and "to use respondent Concepcion did furnish it with an inaccurate weight
all reasonable means to ascertain the nature and characteristic of the payloader, petitioner is nonetheless liable, for the
of goods tendered for shipment, and to exercise due care in the damage caused to the machinery could have been avoided by
handling and stowage, including such methods as their nature the exercise of reasonable skill and attention on its part in
requires." overseeing the unloading of such a heavy equipment. And
circumstances clearly show that the fall of the payloader could
4. ID.; ID.; RESPONSIBILITY ATTACHES WHEN have been avoided by petitioner's crew. Evidence on record
CARRIER HAS POSSESSION OF GOODS AND CEASES sufficiently show that the crew of petitioner had been negligent
WHEN THE SAME ARE DELIVERED. — Under Article in the performance of its obligation by reason of their having
1736 of the Civil Code, the responsibility to observe failed to take the necessary precaution under the circumstances.
extraordinary diligence commences and lasts from the time the
goods are unconditionally placed in the possession of, and 7. ID.; ID.; ID.; SHIPPER'S ACT OF
received by the carrier for transportation until the same are MISREPRESENTATION MITIGATES LIABILITY OF
delivered, actually or constructively, by the carrier to the PETITIONER. — While the act of private respondent in
consignee, or to the person who has the right to receive them furnishing petitioner with an inaccurate weight of the payloader
without prejudice to the provisions of Article 1738. cannot successfully be used as an excuse by petitioner to avoid
liability to the damage thus caused, said act constitutes a

Page | 24
contributory circumstance to the damage caused on the
payloader, which mitigates the liability for damages of
petitioner in accordance with Article 1741 of the Civil Code.

Page | 25
10. Sabena Belgian World Airlines vs. Court of Appeals. (G.R. ISSUE: Whether or not Sabena Belgian Airlines is liable for
No. 104685. March 14, 1996); the loss of San Agustin’s luggage.

FACTS: San Agustin was a passenger on board Flight SN 284 RULING: YES, Sabena Belgian Airlines is liable for the loss
of Sabena Belgian Airlines, originating from Casablanca to of San Agustin’s luggage as it failed to exercise extraordinary
Brussels, Belgium on her way back to Manila. San Agustin diligence in the vigilance over the property of San Agustin.
checked in her luggage which contained her valuables, for
which she was issued Tag No. 71423. She stayed overnight in Art. 1733 of the Civil Code provides that from the very nature
Brussels and her luggage was left on board Flight SN 284. of their business and by reasons of public policy, common
When San Agustin arrived at Manila International Airport, she carriers are bound to observe extraordinary diligence in the
immediately submitted her Tag No. 71423 to facilitate the vigilance over the goods transported by them. This
release of her luggage but the luggage was missing. She was extraordinary responsibility, according to Art. 1736, lasts from
advised to accomplish and submit a property Irregularity the time the goods are unconditionally placed in the possession
Report which she submitted and filed on the same day. She of and received by the carrier until they are delivered actually
followed up her claim, but the luggage remained to be missing. or constructively to the consignee or person who has the right
to receive them. Art. 1737 states that the common carrier's duty
Thereafter, San Agustin was informed that the Burssel's Office to observe extraordinary diligence in the vigilance over the
of Sabena Belgain Airlines found the luggage and she was goods transported by them remains in full force and effect even
assured that the luggage will be shipped to Manila. But when they are temporarily unloaded or stored in transit. Then,
unfortunately, San Agustin was informed that the luggage was Art. 1735 establishes the presumption that if the goods are lost,
lost for the second time. As such, San Agustin filed a case for destroyed or deteriorated, common carriers are presumed to
damages. After trial, the trial court ruled in favor of San have been at fault or to have acted negligently, unless they
Agustin. On appeal, the CA affirmed the trial court’s decision. prove that they had observed extraordinary diligence as
required in Article 1733.
Contention of Sabena Belgian Airlines: The negligence of San
Agustin is the proximate cause for the loss of her luggage. It remained undisputed that San Agustin’s luggage was lost
Despite her awareness that the flight ticket had been confirmed while it was in the custody of Sabena Belgain Airlines. It was
only for Casablanca and Brussels and that her flight from supposed to arrive on the same flight that San Agustin took in
Brussels to Manila had yet to be confirmed, she did not retrieve returning to Manila on 02 September 1987. When she
the luggage upon arrival in Brussels. discovered that the luggage was missing, she promptly

Page | 26
accomplished and filed a Property Irregularity Report. She prestation gives rise to the presumption of fault on the part of
followed up her claim on 14 September 1987, and filed, on the the obligor.
following day, a formal letter-complaint with petitioner. She
felt relieved when, on 23 October 1987, she was advised that 3. ID.; ID.; COMMON CARRIERS; BOUND TO OBSERVE
her luggage had finally been found, with its contents intact EXTRAORDINARY CARE IN THE VIGILANCE OVER
when examined, and that she could expect it to arrive on 27 THE GOODS. — This rule is no different in the case of
October 1987. She then waited anxiously only to be told later common carriers in the carriage of goods which, indeed are
that her luggage had been lost for the second time. Thus, bound to observe not just the due diligence of a good father of
Sabena Belgain Airlines is ultimately guilty of "gross a family but that of "extraordinary" care in the vigilance over
negligence" in the handling of San Agustin’s luggage. The loss the goods.
of said baggage not only once but twice, underscores the
4. ID.; ID.; TORT; PROXIMATE CAUSE, CONSTRUED. —
wanton negligence and lack of care on the part of Sabena
Proximate cause is that which, in natural and continuous
Belgain Airlines.
sequence, unbroken by any efficient intervening cause,
SYLLABUS produces injury and without which the result would not have
occurred. The exemplification by the Court in one case is
1. CIVIL LAW, OBLIGATIONS AND CONTRACTS; simple and explicit; viz: "(T)he proximate legal cause is that
FAULT OR NEGLIGENCE CONSISTS IN THE OMISSION acting first and producing the injury, either immediately or by
OF DILIGENCE DEMANDED BY THE NATURE OF AN setting other events in motion, all constituting a natural and
OBLIGATION. — Fault or negligence consists in the omission continuous chain of events, each having a close causal
of that diligence which is demanded by the nature of an connection with its immediate predecessor, the final event in
obligation and corresponds with the circumstances of the the chain immediately affecting the injury as a natural and
person, of the time, and of the place. probable result of the cause which first acted under such
circumstances that the person responsible for the first event
should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default
2. ID.; ID.; ID.; PRESUMPTION OF FAULT ARISES UPON
that an injury to some person might probably result therefrom."
BREACH OR NON-FULFILLMENT OF THE
PRESTATION. — When the source of an obligation is derived 5. ID.; ID.; COMMON CARRIERS; LOSS OF
from a contract, the mere breach or non-fulfillment of the PASSENGER'S BAGGAGE NOT ONLY ONCE BUT

Page | 27
TWICE CONSTITUTES GROSS NEGLIGENCE; CASE AT by the trial court, of the usual rules on the extent of recoverable
BAR. — It remained undisputed that private respondent's damages beyond the Warsaw limitations. Under domestic law
luggage was lost while it was in the custody of petitioner. It and jurisprudence (the Philippines being the country of
was supposed to arrive on the same flight that private destination), the attendance of gross negligence (given the
respondent took in returning to Manila on 02 September 1987. equivalent of fraud or bad faith) holds the common carrier
When she discovered that the luggage was missing, she liable for all damages which can be reasonably attributed,
promptly accomplished and filed a Property Irregularity although unforeseen, to the non-performance of the obligation,
Report. She followed up her claim on 14 September 1987, and including moral and exemplary damages.
filed, on the following day, a formal letter-complaint with
petitioner. She felt relieved when, on 23 October 1987, she was
advised that her luggage had finally been found, with its
contents intact when examined, and that she could expect it to
arrive on 27 October 1987. She then waited anxiously only to
be told later that her luggage had been lost for the second time.
Thus, the appellate court, given all the facts before it, sustained
the trial court in finding petitioner ultimately guilty of "gross
negligence" in the handling of private respondent's luggage.
The "loss of said baggage not only once but twice," said the
appellate court, "underscores the wanton negligence and lack
of care" on the part of the carrier. The above findings, which
certainly cannot be said to be without basis, foreclose whatever
rights petitioner might have had to the possible limitation of
liabilities enjoyed by international air carriers under the
Warsaw Convention (Convention for the Unification of Certain
Rules Relating to International Carriage by Air, as amended by
the Hague Protocol of 1955, the Montreal Agreement of 1966,
the Guatemala Protocol of 1971 and the Montreal Protocols of
1975). The Court thus sees no error in the preponderant
application to the instant case by the appellate court, as well as

Page | 28
11. Westwind Shipping Corporation vs. UCPB General the customs broker and representative of SMC. On appeal by
Insurance CO., Inc. (G.R. Nos. 200289 and 200314. UCPB, the CA reversed and set aside the trial court. It
November 25, 2013); concluded that the common carrier, not the arrastre operator, is
responsible during the unloading of the cargoes and is still
FACTS: Kinsho-Mataichi Corporation shipped from the bound to exercise extraordinary diligence at the time. The CA
port of Kobe, Japan, 197 metal containers/skids of tin-free steel also considered that OFII is liable, agreeing with UCPB’s
for delivery to the consignee, San Miguel Corporation The contention that OFII is a common carrier bound to observe
shipment was loaded and received clean on board M/V Golden extraordinary diligence and is presumed to be at fault or have
Harvest Voyage No. 66, a vessel owned and operated by acted negligently for such damage.
Westwind Shipping Corporation. SMC insured the cargoes
against all risks with UCPB General Insurance Co., Inc. ISSUE: Whether Westwind and OFII are liable to exercise
extraordinary diligence
The shipment arrived in Manila and was discharged in the
custody of the arrastre operator, Asian Terminals, Inc. During RULING:YES. Common carriers, from the nature of their
the unloading operation six containers/skids sustained dents business and for reasons of public policy, are bound to observe
and punctures from the forklift used by the stevedores of Ocean extraordinary diligence in the vigilance over the goods
Terminal Services, Inc. in centering and shuttling the transported by them. The extraordinary responsibility of the
containers/skids. Orient Freight International, Inc., the customs common carrier lasts from the time the goods are
broker of SMC, withdrew from ATI the 197 containers/skids unconditionally placed in the possession of, and received by
and delivered the same at SMC’s warehouse. It was discovered the carrier for transportation until the same are delivered,
upon discharge that additional nine containers/skids were also actually or constructively, by the carrier to the consignee, or to
damaged due to the forklift operations; thus, making the total the person who has a right to receive them.
number of 15 containers/skids in bad order.
In this case, since the discharging of the containers/skids,
SMC filed complaints. The RTC opined that Westwind is not which were covered by only one bill of lading, had not yet
liable, since the discharging of the cargoes were done by ATI been completed at the time the damage occurred, there is no
personnel using forklifts. It likewise absolved OFII from any reason to imply that there was already delivery, actual or
liability, reasoning that it never undertook the operation of the constructive, of the cargoes to ATI.
forklifts which caused the dents and punctures, and that it
merely facilitated the release and delivery of the shipment as

Page | 29
The mere proof of delivery of goods in good order to the the common carrier lasts from the time the goods are
carrier, and their arrival in the place of destination in bad order, unconditionally placed in the possession of, and received by
make out a prima facie case against the carrier, so that if no the carrier for transportation until the same are delivered,
explanation is given as to how the injury occurred, the carrier actually or constructively, by the carrier to the consignee, or to
must be held responsible. It is incumbent upon the carrier to the person who has a right to receive them; Handling cargo is
prove that the loss was due to accident or some other mainly the arrastre operator’s principal work so its
circumstances inconsistent with its liability.18 drivers/operators or employees should observe the standards
and measures necessary to prevent losses and damage to
The contention of OFII is likewise untenable. A customs shipments under its custody.—The case of Philippines First
broker has been regarded as a common carrier because Insurance Co., Inc. v. WallemPhils. Shipping, Inc., 582 SCRA
transportation of goods is an integral part of its business. 457 (2009), applies, as it settled the query on which between a
Article 1732 does not distinguish between one whose principal common carrier and an arrastre operator should be responsible
business activity is the carrying of goods and one who does for damage or loss incurred by the shipment during its
such carrying only as an ancillary activity. The contention, unloading. We elucidated at length: Common carriers, from the
therefore, of petitioner that it is not a common carrier but a nature of their business and for reasons of public policy, are
customs broker whose principal function is to prepare the bound to observe extraordinary diligence in the vigilance over
correct customs declaration and proper shipping documents as the goods transported by them. Subject to certain exceptions
required by law is bereft of merit. It suffices that petitioner enumerated under Article 1734 of the Civil Code, common
undertakes to deliver the goods for pecuniary consideration. As carriers are responsible for the loss, destruction, or
the transportation of goods is an integral part of a customs deterioration of the goods. The extraordinary responsibility of
broker, the customs broker is also a common carrier. For to the common carrier lasts from the time the goods are
declare otherwise "would be to deprive those with whom [it] unconditionally placed in the possession of, and received by
contracts the protection which the law affords them the carrier for transportation until the same are delivered,
notwithstanding the fact that the obligation to carry goods for actually or constructively, by the carrier to the consignee, or to
[its] customers, is part and parcel of petitioner’s business." the person who has a right to receive them. x x x x x x On the
other hand, the functions of an arrastre operator involve the
SYLLABUS
handling of cargo deposited on the wharf or between the
Civil Law; Common Carriers; Arrastre Operators; establishment of the consignee or shipper and the ship’s tackle.
Extraordinary Diligence; The extraordinary responsibility of Being the custodian of the goods discharged from a vessel, an

Page | 30
arrastre operator’s duty is to take good care of the goods and to occurred, there is no reason to imply that there was already
turn them over to the party entitled to their possession. delivery, actual or constructive, of the cargoes to ATI.
Handling cargo is mainly the arrastre operator’s principal work
so its drivers/operators or employees should observe the Same; Same; Customs Brokers; A customs broker has been
standards and measures necessary to prevent losses and regarded as a common carrier because transportation of goods
damage to shipments under its custody. is an integral part of its business.—A customs broker has been
regarded as a common carrier because transportation of goods
Same; Same; Extraordinary Diligence; The extraordinary is an integral part of its business. In Schmitz Transport &
responsibility of the common carrier lasts until the time the Brokerage Corporation v. Transport Venture, Inc., 456 SCRA
goods are actually or constructively delivered by the carrier to 557 (2005), the Court already reiterated: It is settled that under
the consignee or to the person who has a right to receive them. a given set of facts, a customs broker may be regarded as a
There is actual delivery in contracts for the transport of goods common carrier. Thus, this Court, in A.F. Sanchez Brokerage,
when possession has been turned over to the consignee or to Inc. v. The Honorable Court of Appeals held: The appellate
his duly authorized agent and a reasonable time is given him to court did not err in finding petitioner, a customs broker, to be
remove the goods.—We cannot agree with Westwind’s also a common carrier, as defined under Article 1732 of the
disputation that “the carrier in Wallem clearly exercised Civil Code, to wit, Art. 1732. Common carriers are persons,
supervision during the discharge of the shipment and that is corporations, firms or associations engaged in the business of
why it was faulted and held liable for the damage incurred by carrying or transporting passengers or goods or both, by land,
the shipment during such time.” What Westwind failed to water, or air, for compensation, offering their services to the
realize is that the extraordinary responsibility of the common public. x xxx Article 1732 does not distinguish between one
carrier lasts until the time the goods are actually or whose principal business activity is the carrying of goods and
constructively delivered by the carrier to the consignee or to one who does such carrying only as an ancillary activity. The
the person who has a right to receive them. There is actual contention, therefore, of petitioner that it is not a common
delivery in contracts for the transport of goods when carrier but a customs broker whose principal function is to
possession has been turned over to the consignee or to his duly prepare the correct customs declaration and proper shipping
authorized agent and a reasonable time is given him to remove documents as required by law is bereft of merit. It suffices that
the goods. In this case, since the discharging of the petitioner undertakes to deliver the goods for pecuniary
containers/skids, which were covered by only one bill of consideration. And in Calvo v. UCPB General Insurance Co.,
lading, had not yet been completed at the time the damage Inc., this Court held that as the transportation of goods is an

Page | 31
integral part of a customs broker, the customs broker is also a containers/skids already damaged, OFII received the cargoes
common carrier. For to declare otherwise “would be to deprive from ATI in good order and condition; and that upon its
those with whom [it] contracts the protection which the law delivery to SMC, additional nine containers/skids were found
affords them notwithstanding the fact that the obligation to to be in bad order, as noted in the Delivery Receipts issued by
carry goods for [its] customers, is part and parcel of OFII and as indicated in the Report of Cares Marine & Cargo
petitioner’s business.” That OFII is a common carrier is Surveyors. Instead of merely excusing itself from liability by
buttressed by the testimony of its own witness, [Link] putting the blame to ATI and SMC, it is incumbent upon OFII
Panganiban Cueto, that part of the services it offers to clients is to prove that it actively took care of the goods by exercising
cargo forwarding, which includes the delivery of the shipment extraordinary diligence in the carriage thereof. It failed to do
to the consignee. Thus, for undertaking the transport of cargoes so. Hence, its presumed negligence under Article 1735 of the
from ATI to SMC’s warehouse in Calamba, Laguna, OFII is Civil Code remains unrebutted.
considered a common carrier. As long as a person or
corporation holds itself to the public for the purpose of
transporting goods as a business, it is already considered a
common carrier regardless of whether it owns the vehicle to be
used or has to actually hire one.

Same; Same; Same; Extraordinary Diligence; As a common

carrier, a customs broker is mandated to observe, under Article
1733 of the Civil Code, extraordinary diligence in the vigilance
over the goods it transports according to the peculiar
circumstances of each case.—As a common carrier, OFII is
mandated to observe, under Article 1733 of the Civil Code,
extraordinary diligence in the vigilance over the goods it
transports according to the peculiar circumstances of each case.
In the event that the goods are lost, destroyed or deteriorated, it
is presumed to have been at fault or to have acted negligently,
unless it proves that it observed extraordinary diligence. In the
case at bar, it was established that, except for the six

Page | 32
12. Regional Container Lines vs. The Netherlands Insurance subrogated to the rights of Temic. As such, Netherlands
Co (G.R. No. 168151. September 4, 2009) Insurance filed a complaint for damages against RCL, Et Al.
After trial, the RTC ruled in favor of RCL, Et Al. On appeal,
FACTS: 405 cartons of Epoxy Molding Compound were the CA reversed the RTC’s decision and thereby ruled in favor
consigned to be shipped from Singapore to Manila for Temic of Netherlands Insurance.
Telefunken Microelectronics Philippines (Temic). U-Freight
Singapore, a forwarding agent based in Singapore, contracted Contention of RCL and EDSA: It denied any form of
the services of Pacific Eagle to transport the subject cargo. As negligence in the transport of the cargo. The cause of the
the cargo was highly perishable, the inside of the refrigerated damage to the cargo was the "fluctuation of the temperature in
container had to be kept at a temperature of 0º Celsius. Pacific the reefer van," which fluctuation occurred after the cargo had
Eagle then loaded the container on board the M/V PiyaBhum, a already been discharged from the vessel.
vessel owned by RCL, which does business in the Philippines
ISSUE: Whether or not RCL and EDSA Shipping liable are as
through its agent, EDSA Shipping. Then, Temic insured the
common carriers under the theory of presumption of
cargo against loss and damage, with Netherlands Insurance.
negligence.
Thereafter, the M/V PiyaBhum docked in Manila. After
RULING: YES, RCL and EDSA are liable as common carriers
unloading the refrigerated container, it was plugged to the
as they failed to exercise extraordinary diligence in this
power terminal of the pier to keep its temperature constant.
handling of the cargo in this case.
When protective survey of the cargo was conducted, it was
found out that based on the temperature chart, the temperature A common carrier is presumed to have been negligent if it fails
reading was constant from October 18, 1995 to October 25, to prove that it exercised extraordinary vigilance over the
1995 at 0º Celsius. However, at midnight of October 25, 1995 goods it transported. When the goods shipped are either lost or
– when the cargo had already been unloaded from the ship – arrived in damaged condition, a presumption arises against the
the temperature fluctuated with a reading of 33º Celsius. It was carrier of its failure to observe that diligence, and there need
believed the fluctuation was caused by the burnt condenser fan not be an express finding of negligence to hold it liable. To
motor of the refrigerated container. overcome the presumption of negligence, the common carrier
must establish by adequate proof that it exercised extraordinary
Then when Temic received the shipment and found the cargo
diligence over the goods. It must do more than merely show
completely damaged, it filed an insurance claim with
that some other party could be responsible for the damage.
Netherlands Insurance, which paid the said claim and was

Page | 33
In the present case, RCL and EDSA Shipping failed to prove as follows: (1) Common carriers are bound to observe
that they did exercise that degree of diligence required by law extraordinary diligence over the goods they transport,
over the goods they transported. Indeed, there is sufficient according to all the circumstances of each case; (2) In the event
evidence showing that the fluctuation of the temperature in the of loss, destruction, or deterioration of the insured goods,
refrigerated container van, as recorded in the temperature chart, common carriers are responsible, unless they can prove that
occurred after the cargo had been discharged from the vessel such loss, destruction, or deterioration was brought about by,
and was already under the custody of the arrastre operator, among others, “flood, storm, earthquake, lightning, or other
ICTSI. This evidence, however, does not disprove that the natural disaster or calamity”; and (3) In all other cases not
condenser fan – which caused the fluctuation of the specified under Article 1734 of the Civil Code, common
temperature in the refrigerated container – was not damaged carriers are presumed to have been at fault or to have acted
while the cargo was being unloaded from the ship. It is settled negligently, unless they observed extraordinary diligence.
in maritime law jurisprudence that cargoes while being
unloaded generally remain under the custody of the carrier; Same; Same; Same; To overcome the presumption of
RCL and EDSA Shipping failed to dispute this. negligence, the common carrier must establish by adequate
proof that it exercised extraordinary diligence over the goods—
RCL and EDSA Shipping could have presented proof to show it must do more than merely show that some other party could
that they exercised extraordinary care and diligence in the be responsible for the damage.—A common carrier is
handling of the goods, but they opted to file a demurrer to presumed to have been negligent if it fails to prove that it
evidence. As the order granting their demurrer was reversed on exercised extraordinary vigilance over the goods it transported.
appeal, the CA correctly ruled that they are deemed to have When the goods shipped are either lost or arrived in damaged
waived their right to present evidence, and the presumption of condition, a presumption arises against the carrier of its failure
negligence must stand. to observe that diligence, and there need not be an express
finding of negligence to hold it liable. To overcome the
SYLLABUS presumption of negligence, the common carrier must establish
by adequate proof that it exercised extraordinary diligence over
Maritime Law; Common Carriers; Negligence; Rules for
the goods. It must do more than merely show that some other
Liability of Common Carriers for Lost or Damaged Cargo.—In
party could be responsible for the damage.
Central Shipping Company, Inc. v. Insurance Company of
North America, 438 SCRA 511 (2004), we reiterated the rules Same; Same; Same; It is settled in maritime law jurisprudence
for the liability of a common carrier for lost or damaged cargo that cargoes while being unloaded generally remain under the

Page | 34
custody of the carrier.—In the present case, RCL and EDSA
Shipping failed to prove that they did exercise that degree of
diligence required by law over the goods they transported.
Indeed, there is sufficient evidence showing that the fluctuation
of the temperature in the refrigerated container van, as recorded
in the temperature chart, occurred after the cargo had been
discharged from the vessel and was already under the custody
of the arrastre operator, ICTSI. This evidence, however, does
not disprove that the condenser fan—which caused the
fluctuation of the temperature in the refrigerated container—
was not damaged while the cargo was being unloaded from the
ship. It is settled in maritime law jurisprudence that cargoes
while being unloaded generally remain under the custody of
the carrier; RCL and EDSA Shipping failed to dispute this.

Page | 35
13. Mariano Jr. vs. Callejas. (G.R. No. 166640. July 31, negligence of the carriers, but such presumption may be
2009.); overcome by giving sufficient evidence that the common
carrier had exercised extraordinary diligence in the
FACTS:
discharge of their duty, or through a fortuitous event. The
Petitioner Mariano Jr.’s wife, Dr. Frelinda Mariano,
first exception applies.
boarded the Celyrosa Express bus, driven by respondent
It is clearly shown in the facts that it was through the
Edgar de Borja, bound for Tagaytay when said bus was hit
negligence of Arcilla driving the trailer truck that
by a trailer truck. The crash killed Dr. Mariano, leading
proximately caused the death of Dr. Mariano. The truck had
Mariano Jr. to file a claim for damages against both de
lost its brakes and encroached upon the bus’s rightful lane.
Borja and Ildefonso Callejas, co-respondent and registered
Respondent de Borja had every right to expect that the
owner of Celyrosa Express. Respondents denied liability by
trailer truck coming from the opposite direction would stay
claiming that the proximate cause of death was the
on its proper lane. He was not expected to know that the
recklessness of the driver of the trailer truck owned by
trailer truck had lost its brakes. Thus, de Borja and Callejas
Liong Chio Chang, doing business under the name La Perla
should not be held liable for the death of Dr. Mariano as
Sugar Supply, and truck driver Arcadio Arcilla, leading a
they have exercised extraordinary diligence at the time of
third-party complaint filed by Callejas against La Perla and
the accident.
Arcilla
.
ISSUE:
Whether or not Callejas and de Borja are liable.

HELD:
No. Callejas and de Borja are not liable. While common
carriers like de Borja and registered owner 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, with a due regard for all
the circumstances", it does not, however, make the carrier
an insurer of the absolute safety of its passenger. Dr.
Mariano’s death may have given rise to the presumption of

Page | 36
14. Air France vs. Bonifacio H. Gillego. (G.R. No. 165266. public interest. The law governing common carriers
December 15, 2010) consequently imposes an exacting standard. Article 1735 of
the Civil Code provides that in case of lost or damaged
FACTS:
goods, common carriers are presumed to have been at fault
Respondent Bonifacio Gillego was invited to aprticpate
or to have acted negligently, unless they prove that they
as one of the keynote speakers at the 89th Inter-
observed extraordinary diligence as required by Article
Parliamentary Conference Symposium on Parliament
1733. Thus, in an action based on a breach of contract of
Guardian of Human Rights to be held in Budapest,
carriage, the aggrieved party does not have to prove that the
Hungary and Tokyo, Japan from May 19 to 22, 1993. On
common carrier was at fault or was negligent. All that he
May 16, Gillego left Manila aboard petitioner Air France’s
must prove is the existence of the contract and the fact of
aircraft bound for Paris. While waiting for his next
its non-performance by the [Link] respondent's
scheduled flight, he noticed that Air France had another
checked-in luggage was not found upon arrival at his
flight to Budapest with an earlier departure time, so he
destination and was not returned to him until about two
arranged a new booking with Air France, who granted him
years later is not disputed. The action filed by the
the corresponding documents. Upon arriving in Budapest,
respondent is founded on such breach of the contract of
Gillego was unable to locate his luggage. Despite Air
carriage with petitioner who offered no satisfactory
France’s assurance and follow-up inquiries, the luggage,
explanation for the unreasonable delay in the delivery of
containing his personal effects, medicines, and prepared
respondent's baggage. The presumption of negligence was
speeches, was never delivered. Gillego then filed a claim of
not overcome by the petitioner and hence its liability for the
1,000,000 against Air France as compensation for his loss,
delay was sufficiently established.
inconvenience, and moral damages.

ISSUE:
Whether or not Air France is liable for damages
incurred by Gillego.
HELD:

Yes. Air France is liable for damages, subject to a

reduced amount. A business intended to serve the travelling
public primarily, a contract of carriage is imbued with

Page | 37
15. Belgian Overseas Chartering vs. Philippine First safety of the goods and the passengers they transport. Thus,
Insurance. (G.R. No. 143133. June 5, 2002); as a general rule, the common carrier is presumed to have
FACTS: been at fault or negligent if the goods they transported
In June 1990, CMC Trading A.G. shipped on board the deteriorated or got lost or destroyed. That is, unless they
M/V ‘Anangel Sky’ at Hamburg,Germany 242 coils of prove that they exercised extraordinary diligence in
various steel sheets for transportationto Manila consignedto transporting the goods. In this case,even if the fact of
the Philippine Steel Trading [Link] July 1990, improper packing was known to the carrier or its crew or
Anangel Sky arrived at the Port of Manila and, within the was apparentupon ordinary observation, it is not relieved of
subsequent days, discharged the subject cargo. Four coils liability for loss or injury resulting therefrom, once it
were found to be in bad order. Finding the 4 coils in their accepts the goods notwithstanding such condition. Thus,
damaged state to be unfit for the intended purpose, the Belgian Overseas and Jardine Davies failed to prove that
consignee Philippine Steel Trading Corporation declared they exercised extraordinary diligence in keeping the sheets
the same as total loss. Despite receipt of a formal demand, from getting damaged, and therefore they are liable for
petitioners Belgian Overseas Chartering and Shipping NV damages.
(BOCSNV) and Jardine Davies Transport Services Inc.
(JDTSI) refused to submit to the consignee’s claim.
Consequently, Philippine First Insurance Co. Inc. (PFIC)
paid the consignee P506,086.50, and was subrogated to the
latter’s rights and causes of action against BOCSNV and
JDTSI. PFCI instituted a complaint for recovery of the
amount paid by them, to the consignee as insured.
ISSUE:
Whether or not Belgian Overseas and Jardine Davies
are liable.
HELD:
Yes. The petitioners are liable. Well-settled is the rule
that common carriers, from the nature of their business and
forreasons of public policy, are bound to observe
extraordinary diligence and vigilance with respect to the

Page | 38
 to have acted negligently. North Fronttherefore has the
16. Tabacalera Insurance vs. North Front Shipping burden of proving that it observed extraordinary diligence
Services. (G.R. No. 119197. May 16, 1997); in order to avoid responsibility for the lost cargo. North
FACTS: Front failed in this regard. Having been in the service since
In August 1990, 20,234 sacks of corn grains valued at 1968, the master of the vessel would have known at the
P3,500,640.00 were shipped on board North Front 777, a outset that corn grains that were farm wet and not properly
vessel owned by North Front Shipping Services, Inc. The dried would eventually deteriorate when stored in sealed
cargo was consigned to Republic Flour Mills Corporation and hot compartments as in hatches of a ship. Equipped
in Manila and insured the goods with Tabacalera Insurance with this knowledge, the master of the vessel and his crew
and other co-petitioner insurance companies. The grains should have undertaken precautionary measures to avoid or
were inspected and sealed, but upon reaching Manila lessen the cargo's possible deterioration as they were
Republic Flour did not immediately commence the presumed knowledgeable about the nature of such cargo.
unloading. Upon various delays and setbacks, there a But none of such measures was taken. However, by not
shortage of 26.33 metric tons and the remaining grains immediately collecting the cargo upon reaching the port
were already moldy, rancid and deterorating. While still and with notice, Republic Flour is guilty of contributory
marked safe by an expert, Republic Flour rejected the negligence as it could have lessened the damages occurred
report and filed a complaint for damages against North had it not delayed such act. For its contributory negligence,
Front Shipping, why they claimed is the one exclusively Republic Flour Mills Corporation should share at least 40%
liable with the moldy grains. of the loss.
ISSUE:
Whether or not North Front is liable for damages.
HELD:
Yes. North Front is liable for damages. It is a
corporation engaged in the business of transporting cargo
and offers its services indiscriminately to the public. It is
without doubt a common carrier. As such it is required to
observe extraordinary diligence in its vigilance over the
goods it transports. When goods placed in its care are lost
or damaged, the carrier is presumed to have been at fault or

Page | 39
17. Asian Terminals vs. Simon Enterprise. (G.R. No. actednegligently if the goods transported by them are lost,
177166. February 27, 2013); destroyed, or deteriorated, and that the commoncarrier must
FACTS: prove that it exercised extraordinary diligence in order to
overcome the presumption, theplaintiff must still, before
Contiquincy Export Company loaded 6,843,700
the burden is shifted to the defendant, prove that the subject
metric tons of soybean meal in bulk on board the M/V Sea
shipmentsuffered actual shortage. This can only be done if
Dream at Louisiana for delivery to Manila to respondent
the weight of the shipment at the port of origin andits
Simon Enterprises, as consignee. The shipment was
subsequent weight at the port of arrival have been proven
discharged to the receiving barges of petitioner Asian
by a preponderance of evidence, and itcan be seen that the
Terminals, the arrastre operator, upon arrival in Manila.
former weight is considerably greater than the latter weight,
Simon Enterprises later received the shipment but claimed
taking intoconsideration the exceptions provided in Article
that there was shortage of 18,556 metric tons. Contiquincy
1734 of the Civil [Link] this case, Simon Enterprises
made another shipment of soybean meal aboard the M/V
failed to prove that the subject shipment suffered shortage,
Tern, and again Simon Enterprises claimed that it only
for it was not ableto establish that the subject shipment was
received 3,100,137 out of the manifested 3,300,000 metric
weighed at the port of origin at Darrow, Louisiana,
tons of shipment. For this, Simon Enterprises filed a claim
[Link] that the actual weight of the said shipment was
against Asian Terminals, among others, for losses through
3,300 metric [Link] that respondentwas not able
the fault or negligence incurred.
to establish conclusively that the subject shipmentweighed
ISSUE: 3,300 metric tons at the port of loading, and that it cannot
therefore be concluded thatthere was a shortage for which
Whether or not Asian Terminals is solidarily
petitioner should be responsible
liable for the shortage
HELD:

No. Asian Terminals is not solidarily liable as

Simon Enterprises failed to prove that the subjectshipment
suffered actual shortage, as there was no competent
evidence to prove that it actuallyweighed 3,300 metric tons
at the port of [Link] it is true that common carriers
are presumed to have been at fault or to have

Page | 40
18. Lu Do and Lu Ym Corp. vs. I.V. Binamira. (G.R. No. them, however the parties may agree to limit the liability of
L-9840. April 22, 1957); the carrier considering that the goods have still to go
FACTS: through the inspection of the customs authorities before
they are actually turned over to the consignee. This is a
In August 1951, Delta Photo Supply of New York shipped on
situation where the carrier loses control of the goods
board M/S FERNSIDE six (6) cases of films and/or
because of a custom regulation and it is unfair that it be
photographic supplies consigned to the order of I. V.
made responsible for any loss or damage that may be
Binamera, and that the Bill of Lading was issued
caused to the goods during the interregnum. In this case,
accordingly. The shipment was unloaded to the port of
the Bill of Lading executed by Delta Photo and Binamera
Cebu by the stevedoring company hired by petitioner Lu
clearly stipulated a limit to Delta Photo’s responsibility for
Do, as agent of the carrier, and was placed in the custody of
the loss or damage that may occur to the goods before they
the arrastre operatorof Visayan Cebu Terminal Company. 3
are actually delivered, and that the carrier does not assume
days after, I.V. Binamera received the goods from the
liability for any loss or damage once they have been taken
arrastre operator and discovered that the cases showed
into the custody of customs or other authorities or when
signs of pilferage. While the initial check by the
they have been delivered at ship’s tackle.
stevedoring company and the arrastre operator found the
goods to be in good order and condition, another check
done by the marine surveyor showed that some films and
supplies were missing.
ISSUE:
Whether or not the carrier is liable for the loss.
HELD:

No. The carrier is not liable for the loss. While delivery of the
cargo to the customs authorities is not delivery to the
consignee, or "to the person who has a right to receive
them" contemplated in Article 1736 of the New Civil Code,
because in such case the goods are still in the hands of the
Government and the owner cannot exercise dominion over

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19. VICTORY LINER, INC., Petitioner, -versus - damages arising from culpa contractual against the petitioner.
ROSALITO GAMMAD, et al The latter claimed that the incident was purely accidental and
G.R. No. 159636, November 25, 2004, that it has always exercised extraordinary diligence in its 50
years of operation.
YNARES- SANTIAGO, J.
Trial court ruled in favor of the respondents. This was affirmed
A common carrier is bound to carry its passengers safely as far by the CA and granted P88,270 as actual damages,
as human care and foresight can provide using the utmost P1,135,536.10 as compensatory damages, P400,000 as moral
diligence of very cautious persons with due regard to all the and exemplary damages and attorney’s fees.
circumstances. In a contract of carriage, it is presumed that the
common carrier was at fault or was negligent when a passenger ISSUES:
dies or is injured. Unless the presumption is rebutted through
evidence that the carrier exercised extraordinary diligence, the A. Whether petitioner should be held liable for breach of
court need not even make an express finding of fault or contract of carriage. (YES)
negligence on the part of the common carrier.
B. Whether the award of damages was proper. (NO)
In the instant case, there is no evidence to rebut the statutory RULING:
presumption that the proximate cause of Marie Grace’s death (A) A common carrier is bound to carry its passengers
was the negligence of the petitioner. Petitioner was indeed safely as far as human care and foresight can provide using the
guilty of breach of contract of carriage. utmost diligence of very cautious persons with due regard to all
the circumstances. In a contract of carriage, it is presumed that
FACTS: the common carrier was at fault or was negligent when a
passenger dies or is injured. Unless the presumption is rebutted
Marie Grace Pagulayan-Gammad was on board an air- through evidence that the carrier exercised extraordinary
conditioned Victory Liner bus bound for Tuguegarao, Cagayan diligence, the court need not even make an express finding of
from Manila. At about 3:00 a.m., the bus while running at a fault or negligence on the part of the common carrier.
high speed fell on a ravine which resulted in the death of Marie
Grace and physical injuries to other passengers. As such, the In the instant case, there is no evidence to rebut the statutory
respondents who are heirs of Marie Grace filed a complaint for presumption that the proximate cause of Marie Grace’s death

Page | 42
was the negligence of petitioner. Petitioner was indeed guilty Exemplary damages, on the other hand, may be recovered in
of breach of contract of carriage. contractual obligations if the defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner.
(B) A common carrier who is in breach of its contract of Considering that the petitioner failed to prove that it exercised
carriage that results in the death of a passenger is liable to pay the extraordinary diligence, it is presumed that it acted
the following: (1) indemnity for death, (2) indemnity for loss of recklessly. Thus, the award of exemplary damages is proper.
earning capacity, and (3) moral damages. Although
documentary evidence should generally be presented to As to the actual damages awarded, however, the same must be
substantiate the claim for damages for loss of earning capacity, reduced. Only substantiated and proven expenses incurred in
such damages may be awarded despite the absence of the said connection with the death, wake or burial of the victim shall be
documentary evidence when (1) the deceased is self-employed recognized. The list of expenses and the contract/receipt for the
earning less than the minimum wage and judicial notice may be construction of the tomb submitted in the present case cannot
taken of the fact that in the decease’s line of work, no be considered competent proof and cannot replace the official
documentary evidence is available; or (2) the deceased is receipts necessary to justify the award. Actual damages must
employed as a daily wage worker earning less than the be reduced to such amount supported by official receipts.
minimum wage. In the present case, respondent heirs are
entitled to indemnity for the death of Marie Grace which under
current jurisprudence is fixed at P50,000.00.

As to moral damages in breach of contract, the same may be

recovered when the defendant acted in bad faith or was guilty
of gross negligence amounting to bad faith or was in wanton
disregard of contractual obligations and when the act of breach
of contract itself constitutes the tort that results in physical
injuries. In the case at bar, respondent heirs should be awarded
moral damages to compensate for the grief caused by the death
of the deceased resulting from the petitioner’s breach of
contract of carriage.

Page | 43
20. FORD PHILIPPINES VS COURT OF APPEALS, G.R. taxicab to ram the railing throwing itself off the flyover and fell
NO. 99039, FEB 3, 1997 on the middle surface of EDSA below. The forceful drop of the
vehicle on the floor of the road broke and split it into two parts.
21. HEIRS OF JOSE MARCIAL K. OCHOA Petitioners vs Padilla survived while Jose Marcial was declared dead on
G & S TRANSPORT CORPORATION and G & S arrival at the hospital.
TRANSPORT CORPORATION vs HEIRS OF JOSE
MARCIAL K. OCHOA Jose Marcial‟s wife, Ruby Bueno Ochoa, and his two minor
G.R. No. 170071 and G.R. No. 170125, 09 March 2011, children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs)
sent G & S a letter demanding that the latter indemnify them.
Common carriers are required to exercise extraordinary As G & S failed to heed the same, the heirs filed a Complaint
diligence; In order for a fortuitous event to exempt one from for Damages before the Regional Trial Court of Pasig City
liability, it is necessary that the common carrier committed no (RTC).
negligence or misconduct that may have occasioned the loss.
The heirs alleged that G & S, as a common carrier, is under
legal obligation to observe and exercise extraordinary diligence
FACTS: in transporting its passengers to their destination safely and
securely. G & S failed the same because its employee failed to
Jose Marcial K. Ochoa (Jose Marcial) was on board an Avis transport Jose Marcial to his destination safely causing a
taxicab owned and operated by G & S Transport Corporation breached contract of common carriage.
(G & S) driven by its employee and authorized driver Bibiano
Padilla, Jr. (Padilla) from the Manila Domestic Airport to his G & S claimed that while passing the fly-over the Avis taxicab
home in Teacher‟s Village, Diliman, Quezon City. While was bumped by an on-rushing delivery van at the right portion
cruising along the Santolan fly-over in Epifanio delos Santos causing the taxicab to veer to the left, ram through the left side
Avenue (EDSA) at high speed, the taxicab overtook another of the railings of the fly-over and fall to the center of the island
cab and tried to pass a ten-wheeler cargo truck but because of below. It posited that the proximate cause of Jose Marcial‟s
the narrow space between the left side railing of the fly-over death is a fortuitous event and/or the fault or negligence of the
and the ten-wheeler truck, the Avis cab was unable to pass and driver of the delivery van that hit the taxicab. It likewise
due to its speed, Padilla was unable to control it. Hoping to claimed that it exercised the diligence required of a good father
avoid collision, Padilla turned the wheel to the left causing his

Page | 44
of a family in the selection and supervision of its employees received congratulatory messages from the latter as shown by
including Padilla. the inter-office memos; and that (5) Padilla attended a seminar
at the Pope Pius Center as part of the NAIA Taxi Operation
The RTC rendered a Decision finding the vehicular mishap Program.
was not caused by a fortuitous event but by the negligence of
Padilla. It likewise found the evidence adduced by G & S to G & S also argued that the proximate cause of Jose Marcial‟s
show that it exercised the diligence of a good father of a family death is a fortuitous event and/or the fault or negligence of
in the selection and supervision of its employees as another and not of its employee. According to G & S, the
insufficient. collision was totally unforeseen since Padilla had every right to
expect that the delivery van would just overtake him and not
Before the Court of Appeals (CA), G & S insists that it hit the right side of the taxicab. There was no negligence on his
exercised the diligence of a good father of the family in the part but on the part of the driver of the delivery van.
selection and supervision of its employees through carrying out
seminars for its drivers even before they were made to work; The heirs maintained that Padilla was grossly negligent as
periodic evaluations for their performance; monthly check-up shown in the manner by which he drove the taxicab which was
of its automobiles, and; regular issuance of rules regarding the without regard to the safety of his passenger. The heirs also
conduct of its drivers. It claimed that it was able to establish a averred that in order for a fortuitous event to exempt one from
good name in the industry and maintain a clientele. In an liability, it is necessary that he has committed no negligence or
conduct that may have occasioned the loss. G & S must clearly
effort to build up Padilla‟s character as an experienced and show that the proximate cause of the casualty was entirely
careful driver, G & S averred that: independent of human will and that it was impossible to avoid.
(1) before G & S employed Padilla, he was a delivery truck And since in the case at bar it was Padilla‟s inexcusable poor
driver of Inter Island Gas Service for 11 years; (2) Padilla has judgment, utter lack of foresight and extreme negligence which
been an employee of G & S from 1989 to 1996 and during said were the immediate and proximate causes of the accident, the
period, there was no recorded incident of his being a negligent same cannot be considered to be due to a fortuitous event. At
driver; (3) despite his qualifications, G & S still required any rate, the heirs contended that regardless of whether G & S
Padilla to submit an NBI clearance, driver‟s license and police observed due diligence in the selection of its employees, it
clearance; (4) Padilla‟s being a good driver-employee was should nonetheless be held liable for the death of Jose Marcial
manifest in his years of service with G & S, as in fact, he has pursuant to Article 1759 of the Civil Code which provides:

Page | 45
 utmost diligence of very cautious persons, with due regard for
ART. 1759 – Common carriers are liable for the death of or all the circumstances." However, Jose Marcial was not able to
injuries to passengers through the negligence or willful acts of reach his destination safely as he died during the course of the
the former’s employees, although such employees may have travel. "In a contract of carriage, it is presumed that the
acted beyond the scope of their authority or in violation of the common carrier is at fault or is negligent when a passenger dies
orders of the common carriers. or is injured. In fact, there is even no need for the court to make
an express finding of fault or negligence on the part of the
This liability of the common carriers does not cease upon proof common carrier. This statutory presumption may only be
that they exercised all the diligence of a good father of a family overcome by evidence that the carrier exercised extraordinary
in the selection and supervision of their employees. diligence." Unfortunately, G & S miserably failed to overcome
this presumption. Both the trial court and the CA found that the
The CA ruled in favor of the heirs as it gave weight to their accident which led to Jose Marcial‟s death was due to the
argument and that Padilla failed to employ reasonable reckless driving and gross negligence of G & S‟ driver, Padilla,
foresight, diligence and care needed to exempt G & S from thereby holding G & S liable to the heirs of Jose Marcial for
liability for Jose Marcial‟s death. It found insufficient the breach of contract of carriage.
evidence adduced by G & S to support its claim that it
exercised due diligence in the selection and supervision of its WHEREFORE, the petition for review on certiorari in G.R.
employees. No. 170071 is PARTLY GRANTED while the petition in G.R.
No. 170125 is DENIED. The assailed Decision and Resolution
ISSUE: dated June 29, 2005 and October 12, 2005 of the Court of
Appeals in CA-G.R. CV No. 75602 are AFFIRMED with the
Whether the G & S exercised the diligence of a good father of MODIFICATIONS that G & S is ordered to pay the heirs of
a family in the selection and supervision of its employees Jose Marcial K. Ochoa the sum of ₱6,611,634.59 for loss of
particularly Mr. Bibiano Padilla. (NO) earning capacity of the deceased and ₱100,000.00 as moral
damages.
HELD:

As a common carrier, G & S "is bound to carry Jose Marcial

safely as far as human care and foresight can provide, using the

Page | 46
22. PLANTERS PRODUCTS, INC. V. CA, tied with steel bonds. It remained sealed throughout the entire
GR NO. 10153, SEP. 15, 1993. voyage.

Article 1733 of the New Civil Code mandates that common Upon the arrival of the vessel, petitioner unloaded the cargo,
carriers, by reason of the which took 11 days. A private marine and cargo surveyor,
nature of their business, should observe extraordinary diligence Cargo Superintendents Company, Inc. (CSCI) was hired by
in the vigilance over the goods they carry. In the case of private petitioner to determine the outturn of the cargo shipped. CSCI
carriers, however, the exercise of ordinary reported a shortage of 106.726 metric tons, and contamination
diligence in the carriage of goods will suMce. Moreover, in of 18 metric tons due to dirt. PPI sent a claim letter against
case of loss, destruction or deterioration of the goods, common Soriamont Steamship Agencies, the resident agent of KKKK.
carriers are presumed to have been at fault or to have acted The request was denied, hence, PPI filed an action for damages
negligently, and the burden of proving otherwise rests on them. before the CFI Manila. The lower court sustained the
26 On the contrary, no such presumption applies to private petitioner’s claim, but such decision was reversed by the
carriers, for whosoever alleges damage to or deterioration of appellate court, which absolved the carrier from liability. The
the goods carried has the onus of proving that the cause was the appellate court ruled that the vessel was a private carrier and
negligence of the carrier. not a common carrier by reason of the charter party.

Facts: Issues:

Planters Products, Inc. purchased from Mitsubishi International Whether the ship owner was able to prove the exercise of the
Corporation 9,329.7069 metric tons of Urea 46% fertilizer, diligence required under the circumstances
which the latter shipped aboard the cargo vessel M/V Sun Plum
on June 16, 1974. Prior to its voyage, a time-charter party was Held:
entered into between Mitsubishi as shipper, and Kyosei Kisen
Kabushiki Kaisha as shipowner. Before loading the fertilizer In an action for recovery of damages against a common carrier
aboard the vessel, four of her holds were presumably inspected on the goods shipped, the shipper or consignee should first
by the charterer’s representative and found it fit to take the prove the fact of shipment and its consequent loss or damage
load. After loading the cargo, the steel hatches were closed while the same was in the possession, actual or constructive, of
with heavy iron lids, covered with 3 layers of tarpaulin then the carrier. Thereafter, the burden of proof shifts to respondent

Page | 47
to prove that he has exercised extraordinary diligence required the time the cargo was unconditionally placed in its charge
by law or that the loss, damage or deterioration of the cargo after the vessel's holds were duly inspected and passed scrutiny
was due to fortuitous event, or some other circumstances by the shipper, up to and until the vessel reached its destination
inconsistent with its liability. To our mind, respondent carrier and its hull was re-examined by the consignee, but prior to
has sufficiently overcome, by clear and convincing proof, the unloading. A shipowner is liable for damage to the cargo
prima facie presumption of negligence. resulting from improper stowage only when the stowing is
done by stevedores employed by him, and therefore under his
Before the fertilizer was loaded, the four (4) hatches of the control and supervision, not when the same is done by the
vessel were cleaned, dried and fumigated. After completing the consignee or stevedores under the employ of the latter.
loading of the cargo in bulk in the ship's holds, the steel
pontoon hatches were closed and sealed with iron lids, then Common carriers are not responsible for the loss, destruction or
covered with three (3) layers of serviceable tarpaulins which deterioration of the goods if caused by the character of the
were tied with steel bonds. The hatches remained close and goods or defects in the packaging or in the containers. The
tightly sealed while the ship was in transit as the weight of the primary cause of these spillages is the clamped shell which
steel covers made it impossible for a person to open without does not seal very tightly. Also, the wind tends to blow away
the use of the ship's boom. It was also shown during the trial some of the materials during the unloading process. The
that the hull of the vessel was in good condition, foreclosing probability of the cargo being damaged or getting mixed or
the possibility of spillage of the cargo into the sea or seepage of contaminated with foreign particles was made greater by the
water inside the hull of the vessel. When M/V "Sun Plum" fact that the fertilizer was transported in "bulk," thereby
docked at its berthing place, representatives of the consignee exposing it to the inimical effects of the elements and the
boarded, and in the presence of a representative of the grimy condition of the various pieces of equipment used in
shipowner, the foreman, the stevedores, and a cargo surveyor transporting and hauling it. If there was loss or contamination
representing CSCI, opened the hatches and inspected the of the cargo, it was more likely to have occurred while the
condition of the hull of the vessel. The stevedores unloaded the same was being transported from the ship to the dump trucks
cargo under the watchful eyes of the shipmates who were and finally to the consignee's warehouse.
overseeing the whole operation on rotation basis.
Bulk shipment of highly soluble goods like fertilizer carries
The period during which private respondent was to observe the with it the risk of loss or damage, more so, with a variable
degree of diligence required of it as a public carrier began from weather condition prevalent during its unloading, as was the

Page | 48
case at bar. This is a risk the shipper or the owner of the goods
has to face. Clearly, the respondent carrier has sufficiently
proved the inherent character of the goods which makes it
highly vulnerable to deterioration; as well as the inadequacy of
its packaging which further contributed to the loss. On the
other hand, no proof was adduced by the petitioner showing
that the carrier was remiss in the exercise of due diligence in
order to minimize the loss or damage to the goods it carried.

Page | 49
23. GACAL VS PHILIPPINE AIRLINES, National Labor Relations Commission, 124 SCRA 583 [1983])
G.R. No. 55300, Mar. 15, 1990 or for the loss, destruction or deterioration of goods in cases
other than those enumerated in Article 1734 of the Civil Code
SYLLABUS (Eastern Shipping Lines, Inc. v. Intermediate Appellate Court,
150 SCRA 463 [1987]). It is the duty of a common carrier to
1. CIVIL LAW; COMMON CARRIER; REQUIRED TO overcome the presumption of negligence (Philippine National
EXERCISE Railways v. Court of Appeals, 139 SCRA 87 [1985]) and it
EXTRAORDINARY DILIGENCE IN THEIR must be shown that the carrier had observed the required
VIGILANCE OVER GOODS AND FOR THE extraordinary diligence of a very cautious person as far as
SAFETY OF PASSENGER TRANSPORTED. — Under the human care and foresight can provide or that the accident was
Civil Code, common carriers are required to exercise caused by a fortuitous event (Estrada v. Consolacion, 71 SCRA
extraordinary diligence in their vigilance over the goods and 523 [1976]). Thus, as ruled by this Court, no person shall be
for the safety of passengers transported by them, according so responsible for those "events which could not be foreseen or
all the circumstances of each case (Article 1733). The source of which though foreseen were inevitable." (Article 1174, Civil
a common carrier's legal liability is the contract of carriage, Code). The term is synonymous with caso fortuito (Lasam v.
and by entering into said contract, it binds itself to carry the Smith, 45 Phil. 657 [1924]) which is of the same sense as
passengers safely as far as human care and foresight can "force majeure" (Words and Phrases, Permanent Edition, Vol.
provide. There is breach of this obligation if it fails to exert 17, p. 362).
extraordinary diligence according to all the circumstances of
the case in exercise of the utmost diligence of a FACTS:

very cautious person (Isaac v. Ammen Transportation Co., 101 Petitioners Franklin G. Gacal and his wife, Corazon M. Gacal,
Phil. 1046 [1957]; Juntilla v. Fontanar, 136 SCRA 624 [1985]). together with other plaintiffs, were passengers of the Philippine
Airlines flight from Davao to Manila that was hijacked by the
2. PRESUMED NEGLIGENT IN CASE OF DEATH OR commander and members of the Moro National Liberation
INJURY Front (MNLF). The hijacking took place in May 1976, the
RESULTED; DUTY TO OVERCOME THEREOF. — They height of Martial Law.
are presumed at fault or to have acted negligently whenever a
passenger dies or is injured (Philippine Airlines, Inc. v.

Page | 50
Fiscal Gacal was unhurt but his wife suffered injuries. Thus, The trial court dismissed the complaints finding that all the
was hospitalized. The petitioners filed a case for damages damages sustained in the premises were attributed to force
against PAL alleging that the airlines was grossly negligent in majeure.
their failure to discover hidden weapons in the bodies of the
hijackers. They claimed that despite the prevalence of ISSUE:
skyjacking, PAL did not use a metal detector which is the most
effective means of discovering potential skyjackers among the Whether or not PAL is responsible for the injuries and death
passengers. resulting from the hijacking or air piracy?

Respondent Airline averred that in the performance of its

obligation to safely transport passengers as far as human care RULING:
and foresight can provide, it has exercised the utmost diligence
of a very cautious person with due regard to all circumstances, Under the Civil Code, common carriers are required to exercise
but the security checks and measures and surveillance extraordinary diligence in their vigilance over the goods and
precautions in all fights, including the inspection of baggages for the safety of passengers transported by them, according so
and cargo and frisking of passengers at the Davao Airport were all the circumstances of each case (Article 1733). They are
performed and rendered solely by military personnel who presumed at fault or to have acted negligently whenever a
under appropriate authority had assumed exclusive jurisdiction passenger dies or is injured (Philippine Airlines, Inc. v.
over the same in all airports in the Philippines. Similarly, the National Labor Relations Commission, 124 SCRA 583 [1983])
negotiations with the hijackers were a purely government or for the loss, destruction or deterioration of goods in cases
matter and a military operation, handled by and subject to the other than those enumerated in Article 1734 of the Civil Code
absolute and exclusive jurisdiction of the military authorities. (Eastern Shipping Lines, Inc. v. Intermediate Appellate Court,
Hence, it concluded that the accident that befell RP-C1161 was 150 SCRA 463 [1987]).
caused by fortuitous event, force majeure and other causes
beyond the control of the respondent Airline. The source of a common carrier's legal liability is the contract
of carriage, and by entering into said contract, it binds itself to
carry the passengers safely as far as human care and foresight
can provide. There is breach of this obligation if it fails to exert
extraordinary diligence according to all the circumstances of

Page | 51
the case in exercise of the utmost diligence of a very cautious
person (Isaac v. Ammen Transportation Co., 101 Phil. 1046 Under normal circumstances, PAL might have foreseen the
[1957]; Juntilla v. Fontanar, 136 SCRA 624 skyjacking incident which could have been avoided had there
[1985]). been a more thorough frisking of passengers and inspection of
baggages as authorized by R.A No. 6235. But the incident in
It is the duty of a common carrier to overcome the presumption question occurred during Martial Law where there was a
of negligence (Philippine National Railways v. Court of military take-over of airport security including the frisking of
Appeals, 139 SCRA 87 [1985]) and it must be shown that the passengers and the inspection of their luggage preparatory to
carrier had observed the required extraordinary diligence of a boarding domestic and international fights. In fact military
very cautious person as far as human care and foresight can take-over was specifically announced on October 20, 1973 by
provide or that the accident was caused by a fortuitous event General Jose L. Rancudo, Commanding General of the
(Estrada v. Consolacion, 71 SCRA 523 [1976]). Thus, as ruled Philippine Air Force in a letter to Brig. Gen. Jesus Singson,
by this Court, no person shall be responsible for those "events then Director of the Civil Aeronautics Administration (Rollo,
which could not be foreseen or which though foreseen were pp. 71-72) later confirmed shortly before the hijacking incident
inevitable." (Article 1174, Civil Code). The term is of May 21, 1976 by Letter of Instruction No. 399 issued on
synonymous with caso fortuito (Lasam v. Smith, 45 Phil. 657 April 28, 1976 (Rollo, p. 72). Otherwise stated, these events
[1924]) which is of the same sense as "force majeure" (Words rendered it impossible for PAL to perform its obligations in a
and Phrases, Permanent Edition, Vol. 17, p. 362). normal manner and obviously it cannot be faulted with
negligence in the performance of duty taken over by the Armed
Caso fortuito or force majeure, by definition, are extraordinary Forces of the Philippines to the exclusion of the former.
events not foreseeable or avoidable, events that could not be
foreseen, or which, though foreseen, are inevitable. It is,
therefore, not enough that the event should not have been
foreseen or anticipated, as is commonly believed, but it must be
one impossible to foresee or to avoid. The mere difficulty to
foresee the happening is not impossibility to foresee the same
(Republic v. Luzon Stevedoring Corporation, 21 SCRA 279
[1967]).

Page | 52
 DURATION OF DUTY TO EXERCUSE EXTRAORDINARY DILIGENCE

24. BENITO MACAM vs COURT OF APPEALS, CHINA mangoes. The shipment was bound for Hongkong with
OCEAN SHIPPING CO., and/or WALLEM PAKISTAN BANK as consignee and Great Prospect Company
PHILIPPINES SHIPPING, INC, of Kowloon, Hongkong as notify party.
G.R. No. 125524, August 25, 1999
Upon arrival in Hongkong, the shipment was delivered by
Extraordinary responsibility of the common carriers lasts until respondent WALLEM directly to GPC, not to PAKISTAN
actual or constructive delivery of the cargoes to the consignee BANK, and without the required bill of lading having been
or to the person who has a right to receive them. surrendered. Subsequently, GPC failed to pay PAKISTAN
BANK such that the latter, still in possession of the original
PAKISTAN BANK was indicated in the bills of lading as bills of lading, refused to pay petitioner through SOLIDBANK.
consignee whereas GPC was the notify party. However, in the Since SOLIDBANK already pre-paid petitioner the value of
export invoices GPC was clearly named as buyer/importer. the shipment, it demanded payment from respondent
Petitioner also referred to GPC as such in his demand letter to
respondent WALLEM and in his complaint before the trial WALLEM through five (5) letters but was refused. Petitioner
court. This premise draws us to conclude that the delivery of was thus allegedly constrained to return the amount involved to
the cargoes to GPC as buyer/importer which, conformably with SOLIDBANK, then demanded payment from respondent
Art. 1736 had, other than the consignee, the right to receive WALLEM in writing but to no avail.
them was proper.
Petitioner sought collection of the value of the shipment from
FACTS: respondents before the Regional Trial Court of Manila, based
on delivery of the shipment to GPC without presentation of the
Benito Macam, doing business under the name and style Ben- bills of lading and bank guarantee.
Mac Enterprises, shipped on board the vessel Nen Jiang,
owned and operated by respondent China Ocean Shipping Co., Respondents contended that the shipment was delivered to
through local agent respondent Wallem Philippines Shipping, GPC without presentation of the bills of lading and bank
Inc. 3,500 boxes of watermelons and 1,611 boxes of fresh
guarantee per request of petitioner himself because the Whether private respondents are liable to petitioner for
shipment consisted of perishable goods. releasing the goods to GPC without the bills of lading or bank
guarantee.(NO)
Respondents explained that it is a standard maritime practice,
when immediate delivery is of the essence, for the shipper to RULING
request or instruct the carrier to deliver the goods to the buyer
upon arrival at the port of destination without requiring Article 1736 of the Civil Code provides —
presentation of the bill of lading as that usually takes time. As
proof thereof, respondents apprised the trial court that for the Art. 1736. The extraordinary responsibility of the common
duration of their twoyear business relationship with petitioner carriers lasts from the time the goods are unconditionally
concerning similar shipments to GPC deliveries were effected placed in the possession of, and received by the carrier for
without presentation of the bills of lading. Respondents transportation until the same are delivered, actually or
advanced next that the refusal of PAKISTAN BANK to pay the constructively, by the carrier to the consignee, or to the person
letters of credit to SOLIDBANK was due to the latter's failure who has a right to receive them, without prejudice to the
to submit a Certificate of Quantity and Quality. provisions of article 1738.12

The trial court ordered respondents to pay, jointly and The Court emphasized that the extraordinary responsibility of
severally. Respondent Court of Appeals appreciated the the common carriers lasts until actual or constructive delivery
evidence in a different manner. According to it, as established of the cargoes to the consignee or to the person who has a right
by previous similar transactions between the parties, shipped to receive them. PAKISTAN BANK was indicated in the bills
cargoes were sometimes actually delivered not to the consignee of lading as consignee whereas GPC was the notify party.
but to notify party GPC without need of the bills of lading or However, in the export invoices GPC was clearly named as
bank guarantee. Respondent court set aside the decision of the buyer/importer. Petitioner also referred to GPC as such in his
trial court and dismissed the complaint together with the demand letter to respondent WALLEM and in his complaint
counterclaims. before the trial court. This premise draws us to conclude that
the delivery of the cargoes to GPC as buyer/importer which,
ISSUE conformably with Art. 1736 had, other than the consignee, the
right to receive them was proper.

Page | 54
Respondents submitted in evidence a telex dated 5 April 1989 telex of 5 April 1989 because he could not remember having
as the basis for delivering the cargoes to GPC without the bills made such a request.
of lading and bank guarantee. The telex instructed delivery of
various shipments to the respective consignees without need of Conformably, to implement the said telex instruction, the
presenting the bill of lading and bank guarantee per the delivery of the shipment must be to GPC, the notify party or
respective shipper's request since "for prepaid shipt ofrt real importer/buyer of the goods and not the Pakistani Bank
charges already fully paid." Petitioner was named therein as since the latter can very well present the original Bills of
shipper and GPC as consignee with respect to Bill of Lading Lading in its possession. Likewise, if it were the Pakistani
Nos. HKG 99012 and HKG 99013. Petitioner disputes the Bank to whom the cargoes were to be strictly delivered, it will
existence of such instruction and claims that this evidence is no longer be proper to require a bank guarantee as a substitute
self-serving. for the Bill of Lading. To construe otherwise will render
meaningless the telex instruction. After all, the cargoes consist
From the testimony of the petitioner, we gather that he has of perishable fresh fruits and immediate delivery thereof to the
been transacting with GPC as buyer/importer for around two buyer/importer is essentially a factor to reckon with. Besides,
(2) or three (3) years already. It has been the practice of GPC is listed as one among the several consignees in the telex
petitioners to request the shipping lines to immediately release (Exhibit 5-B) and the instruction in the telex was to arrange
perishable cargoes such as watermelons and fresh mangoes delivery of A/M shipment (not any party) to respective
through telephone calls by himself or his "people." In consignees without presentation of OB/L and bank guarantee . .
transactions covered by a letter of credit, bank guarantee is ..
normally required by the shipping lines prior to releasing the Apart from the foregoing obstacles to the success of petitioner's
goods. But for buyers using telegraphic transfers, petitioner cause, petitioner failed to substantiate his claim that he returned
dispenses with the bank guarantee because the goods are to SOLIDBANK the full amount of the value of the cargoes. It
already fully paid. In his several years of business relationship is not far-fetched to entertain the notion, as did respondent
with GPC and respondents, there was not a single instance court, that he merely accommodated SOLIDBANK in order to
when the bill of lading was first presented before the release of recover the cost of the shipped cargoes from respondents. We
the cargoes. He admitted the existence of the telex of 3 July note that it was SOLIDBANK which initially demanded
1989 containing his request to deliver the shipment to the payment from respondents through five (5) letters.
consignee without presentation of the bill of lading but not the SOLIDBANK must have realized the absence of privity of

Page | 55
contract between itself and respondents. That is why petitioner
conveniently took the cudgels for the bank.

In view of petitioner's utter failure to establish the liability of

respondents over the cargoes, no reversible error was
committed by respondent court in ruling against him.

Page | 56
25. ANICETO G. SALUDO, JR., MARIA SALVACION necessary arrangements such as flights, transfers, etc.;
SALUDO, LEOPOLDO G. SALUDO and SATURNINO G. C.M.A.S. is a national service used by undertakers to
SALUDO, petitioners, throughout the nation (U.S.A.). C.M.A.S. booked the
vs. shipment with PAL thru the carrier's agent Air Care
HON. COURT OF APPEALS, TRANS WORLD International, with Pomierski F.H. as the shipper and Maria
AIRLINES, INC., and PHILIPPINE AIRLINES, (Maria) Saludo as the consignee. The requested routing was
INC., respondents. from Chicago to San Francisco on board TWA Flight 131
and from San Francisco to Manila on board PAL Flight No.
FACTS: 107. Maria Saludo upon arriving at San Francisco Airport,
 Shipper - Pomierski and Son Funeral Home she then called Pomierski that her mother's remains were
not at the West Coast terminal, and Pomierski immediately
 Consignee – Maria Saludo
called C.M.A.S., which in a matter of 10 minutes informed
 Carrier - Transworld Airlines (TWA) Chicago – San him that the remains were on a plane to Mexico City, that
Francisco, and there were two bodies at the terminal, and somehow they
Philippine Airlines (PAL)- San Francisco – Manila were switched. The following day, the shipment or remains
of CrispinaSaludo arrived in San Francisco from Mexico on
board American Airlines. This shipment was transferred to
 After the death of petitioner's mother, or received by PAL. This casket bearing the remains of
CrispinaGaldoSaludo, in Chicago Illinois, Pomierski and CrispinaSaludo, which was mistakenly sent to Mexico and
Son Funeral Home of Chicago, made the necessary was opened there was resealed by Crispin F. Patagas for
preparations and arrangements for the shipment, of the shipment to the Philippines. The shipment was immediately
remains from Chicago to the Philippines. Philippine Vice loaded on PAL flight for Manila that same evening and
Consul in Chicago, Illinois, Bienvenido M. Llaneta, at the arrived Manila a day after its expected arrival. Aggrieved
Pomierski& Son Funeral Home, sealed the shipping case by the incident, the petitioners instituted an action against
containing a hermetically sealed casket that is airtight and respondents and were asked to pay for damages.
waterproof wherein was contained the remains of
CrispinaSaludoGaldo. On the same date, Pomierski brought  Petitioner allege that private respondents received the
the remains to C.M.A.S. (Continental Mortuary Air casketed remains of petitioners' mother on October 26,
Services) at the airport (Chicago) which made the 1976, as evidenced by the issuance of PAL Air Waybill by
Air Care International as carrier's agent; and from said date,

Page | 57
 private respondents were charged with the responsibility to TWA, had no way of determining its actual contents, since the
exercise extraordinary diligence so much so that for the casket was hermetically sealed by the PhilippineVice-Consul in
alleged switching of the caskets on October 27, 1976, or Chicago. At this point, it can be categorically stated that, as
one day after private respondents received the cargo, the culled from the findings of both the trial court and appellate
latter must necessarily be liable. courts, the entire chain of events which culminated in the
present controversy was not due to the fault or negligence of
 RTC - absolved the two respondent airlines companies of
private respondents. Rather, the facts of the case would point to
liability.
CMAS as the [Link] classified as forwarder, is an agent
 CA - affirmed the decision of the lower court in toto, and in of the shipper and not of the carrier. While the actual
a subsequent resolution, denied herein petitioners' motion participation of CMAS has been sufficiently and correctly
for reconsideration for lack of merit. Hence, the petition for established, to hold that it acted as agent for TWA and PAL
review on certiorari to SC. would be both an inaccurate appraisal and an unwarranted
categorization of the legal position it held in the entire
 SC –The Supreme Court affirmed the appealed decision, [Link] cannot grant damages at expense of TWA
with the modification that an award or P40,000.00 as and and PAL; Possible liability of CMAS best deferred to another
by way of nominal damages is granted in favor of the time and addressed to another forum. However, SC Award of
Saludos to be paid by TWA. nominal damages warranted; Articles 2221 and 2222 NCC The
ISSUE facts show that the Saludos' right to be treated with due
W/N the delay in the delivery of the casketed remains of courtesy in accordance with the degree of diligence required by
petitioners' mother was due to the fault of respondent airline law to be exercised by every common carrier was violated by
companies. TWA and this entitles them, at least, to nominal damages from
TWA alone. cles 2221 and 2222 of the Civil Code make it clear
HELD: that nominal damages are not intended for indemnification of
NO. PAL and TWA are not liable for switching of loss suffered but for the vindication or recognition of a right
caskets prior to their receipt of agreed [Link] without violated or invadedThey are recoverable where some injury has
authority, even prohibited, to verify contents of casketWhen been done but the amount of which the evidence fails to show,
the cargo was received from C.M.A.S. at the Chicago airport the assessment of damages being left to the discretion of the
terminal for shipment, which was supposed to contain the court according to the circumstances of the case.
remains of CrispinaSaludo, Air Care International and/or

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 A bill of lading is a written acknowledgment of the In the case at bar, it was on October 26, 1976 the cargo
receipt of the goods and an agreement to transport and containing the casketed remains of CrispinaSaludo was booked
deliver them at a specified place to a person named or on for PAL Flight Number PR-107 leaving San Francisco for
his order. According to foreign and local jurisprudence, "the Manila on October 27, 1976, PAL Airway Bill No. 079-
issuance of a bill of lading carries the presumption that the 01180454 was issued, not as evidence of receipt of delivery of
goods were delivered to the carrier issuing the bill, for the cargo on October 26, 1976, but merely as a confirmation of
immediate shipment, and it is nowhere questioned that a bill of the booking thus made for the San Francisco-Manila flight
lading is prima facie evidence of the receipt of the goods by the scheduled on October 27, 1976. Actually, it was not until
carrier. . . . In the absence of convincing testimony establishing October 28, 1976 that PAL received physical delivery of the
mistake, recitals in the bill of lading showing that the carrier body at San Francisco.
received the goods for shipment on a specified date controls.
However, except as may be prohibited by law, there is Explicit is the rule under Article 1736 of the Civil Code
nothing to prevent an inverse order of events, that is, the that the extraordinary responsibility of the common carrier
execution of the bill of lading even prior to actual possession begins from the time the goods are delivered to the carrier. This
and control by the carrier of the cargo to be transported. There responsibility remains in full force and effect even when they
is no law which requires that the delivery of the goods for are temporarily unloaded or stored in transit, unless the shipper
carriage and the issuance of the covering bill of lading must or owner exercises the right of stoppageintransitu, 29 and
coincide in point of time or, for that matter, that the former terminates only after the lapse of a reasonable time for the
should precede the latter. acceptance, of the goods by the consignee or such other person
entitled to receive them. 30 And, there is delivery to the carrier
As between the shipper and the carrier, when no goods when the goods are ready for and have been placed in the
have been delivered for shipment no recitals in the bill can exclusive possession, custody and control of the carrier for the
estop the carrier from showing the true facts . . . Between the purpose of their immediate transportation and the carrier has
consignor of goods and receiving carrier, recitals in a bill of accepted them. 31 Where such a delivery has thus been accepted
lading as to the goods shipped raise only a rebuttable by the carrier, the liability of the common carrier
presumption that such goods were delivered for shipment. As commences eoinstanti.
between the consignor and a receiving carrier, the fact must
outweigh the recital." As already demonstrated, the facts in the case at bar
belie the averment that there was delivery of the cargo to the

Page | 59
carrier on October 26, 1976. Rather, as earlier explained, the relevant facts not disputed by the parties and which, if properly
body intended to be shipped as agreed upon was really placed considered, would justify a different conclusion; and (h) where
in the possession and control of PAL on October 28, 1976 and the findings of fact of the Court of Appeals are contrary to
it was from that date that private respondents became those of the trial court, or are mere conclusions without citation
responsible for the agreed cargo under their undertakings in of specific evidence, or where the facts set forth by the
PAL Airway Bill No. 079-01180454. Consequently, for the petitioner are not disputed by the respondent, or where the
switching of caskets prior thereto which was not caused by findings of fact of the Court of Appeals are premised on the
them, and subsequent events caused thereby, private absence of evidence and are contradicted by the evidence on
respondents cannot be held liable. record.

Transportation Law; Common Carriers; Bill of Lading.—

Remedial Law; Appeals; Petition for review on certiorari;
A bill of lading is a written acknowledgment of the receipt of
Exceptions to rule on conclusiveness of Court of Appeals
the goods and an agreement to transport and deliver them at a
findings of fact.—At the outset and in view of the spirited
specified place to a person named or on his order. Such
exchanges of the parties on this aspect, it is to be stressed that
instrument may be called a shipping receipt, forwarder’s
only questions of law may be raised in a petition filed in this
receipt and receipt for transportation. The designation,
Court to review on certiorari the decision of the Court of
however, is immaterial. It has been held that freight tickets for
Appeals. This being so, the factual findings of the Court of
bus companies as well as receipts for cargo transported byall
Appeals are final and conclusive and cannot be reviewed by the
forms of transportation, whether by sea or land, fall within the
Supreme Court. The rule, however, admits of established
definition. Under the Tariff and Customs Code, a bill of lading
exceptions, to wit: (a) where there is grave abuse of discretion;
includes airway bills of lading. The two-fold character of a bill
(b) when the finding is grounded entirely on speculations,
of lading is all too familiar; it is a receipt as to the quantity and
surmises or conjectures; (c) when the inference made is
description of the goods shipped and a contract to transport the
manifestly mistaken, absurd or impossible; (d) when the
goods to the consignee or other person therein designated, on
judgment of the Court of Appeals was based on a
the terms specified in such instrument.
misapprehension of facts; (e) when the factual findings are
conflicting; (f) when the Court of Appeals, in making its
Same; Same; Same; A bill of lading, when properly
findings, went beyond the issues of the case and the same are
executed and delivered to a shipper, is evidence that the carrier
contrary to the admissions of both appellant and appellee; (g)
has received the goods described therein for shipment.—
when the Court of Appeals manifestly overlooked certain

Page | 60
Ordinarily, a receipt is not essential to a complete delivery of that the extraordinary diligence statutorily required to be
goods to the carrier for transportation but, when issued, is observed by the carrier instantaneously commences upon
competent and prima facie, but not conclusive, evidence of delivery of the goods thereto, for such duty to commence there
delivery to the carrier. A bill of lading, when properly executed must in fact have been delivery of the cargo subject of the
and delivered to a shipper, is evidence that the carrier has contract of carriage. Only when such fact of delivery has been
received the goods described therein for shipment. Except as unequivocally established can the liability for loss, destruction
modified by statute, it is a general rule as to the parties to a or deterioration of goods in the custody of the carrier, absent
contract of carriage of goods in connection with which a bill of the excepting causes under Article 1734, attach and the
lading is issued reciting that goods have been received for presumption of fault of the carrier under Article 1735 be
transportation, that the recital being in essence a receipt alone, invoked.
is not conclusive, but may be explained, varied or contradicted
by parol or other evidence. Same; Same; Right of carrier to require good faith on the
part of shipper; Duty of carrier to make general inquiry as to
Same; Same; Observance of extraordinary diligence, nature of articles shipped.—It is the right of the carrier to
when it commences.—Explicit is the rule under Article 1736 of require good faith on the part of those persons who deliver
the Civil Code that the extraordinary responsibility of the goods to be carried, or enter into contracts with it, and
common carrier begins from the time the goods are delivered to inasmuch as the freight may depend on the value of the article
the carrier. This responsibility remains in full force and effect to be carried, the carrier ordinarily has the right to inquire as to
even when they are temporarily unloaded or stored in transit, its value. Ordinarily, too, it is the duty of the carrier to make
unless the shipper or owner exercises the right of stoppage in inquiry as to the general nature of the articles shipped and of
transitu, and terminates only after the lapse of a reasonable their value before it consents to carry them; and its failure to do
time for the acceptance of the goods by the consignee or such so cannot defeat the shipper’s right to recovery of the full value
other person entitled to receive them. And, there is delivery to of the package if lost, in the absence of showing of fraud or
the carrier when the goods are ready for and have been placed deceit on the part of the shipper. In the absence of more
in the exclusive possession, custody and control of the carrier definite information, the carrier has the right to accept
for the purpose of their immediate transportation and the carrier shipper’s marks as to the contents of the package offered for
has accepted them. Where such a delivery has thus been transportation and is not bound to inquire particularly about
accepted by the carrier, the liability of the common carrier them in order to take advantage of a false classification and
commences eoinstanti. Hence, while we agree with petitioners where a shipper expressly represents the contents of a package

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to be of a designated character, it is not the duty of the carrier
to ask for a repetition of the statement nor disbelieve it and Same; Same; Carrier’s liability for delay.—The oft-
open the box and see for itself. However, where a common repeated rule regarding a carrier’s liability for delay is that in
carrier has reasonable ground to suspect that the offered goods the absence of a special contract, a carrier is not an insurer
are of a dangerous or illegal character, the carrier has the right against delay in transportation of goods. When a common
to know the character of such goods and to insist on an carrier undertakes to convey goods, the law implies a contract
inspection, if reasonable and practical under the circumstances, that they shall be delivered at destination within a reasonable
as a condition of receiving and transporting such goods. time, in the absence of any agreement as to the time of
delivery. But where a carrier has made an express contract to
Same; Same; Interpretation of contracts.—The hornbook transport and deliver property within a specified time, it is
rule on interpretation of contracts consecrates the primacy of bound to fulfill its contract and is liable for any delay, no
the intention of the parties, the same having the force of law matter from what cause it may have arisen. This result logically
between them. When the terms of the agreement are clear and follows from the well-settled rule that where the law creates a
explicit, that they do not justify an attempt to read into any duty or charge, and the party is disabled from performing it
alleged intention of the parties, the terms are to be understood without any default in himself, and has no remedy over, then
literally just as they appear on the face of the contract. The the law will excuse him, but where the party by his own
various stipulations of a contract shall be interpreted together contract creates a duty or charge upon himself, he is bound to
and such a construction is to be adopted as will give effect to make it good notwithstanding any accident or delay by
all provisions thereof. A contract cannot be construed by parts, inevitable necessity because he might have provided against it
but its clauses should be interpreted in relation to one another. by contract. Whether or not there has been such an undertaking
The whole contract must be interpreted or read together in on the part of the carrier is to be determined from the
order to arrive at its true meaning. Certain stipulations cannot circumstances surrounding the case and by application of the
be segregated and then made to control; neither do particular ordinary rules for the interpretation of contracts.
words or phrases necessarily determine the character of a
contract. The legal effect of the contract is not to be determined Same; Same; Acceptance of bill of lading without
alone by any particular provision disconnected from all others, dissent.—There is a holding in most jurisdictions that the
but in the ruling intention of the parties as gathered from all the acceptance of a bill of lading without dissent raises a
language they have used and from their contemporaneous and presumption that all terms therein were brought to the
subsequent acts. knowledge of the shipper and agreed to by him, and in the

Page | 62
absence of fraud or mistake, he is estopped from thereafter the contract is in reality free to reject it entirely; if he adheres,
denying that he assented to such terms. This rule applies with he gives his consent. Accordingly, petitioners, far from being
particular force where a shipper accepts a bill of lading with the weaker party in this situation, duly signified their presumed
full knowledge of its contents, and acceptance under such assent to all terms of the contract through their acceptance of
circumstances makes it a binding contract. In order that any the airway bill and are consequently bound thereby. It cannot
presumption of assent to a stipulation in a bill of lading limiting be gainsaid that petitioners were not without several choices as
the liability of a carrier may arise, it must appear that the clause to carriers in Chicago with its numerous airways and airlines
containing this exemption from liability plainly formed a part servicing the same.
of the contract contained in the bill of lading. A stipulation
printed on the back of a receipt or bill of lading or on papers
attached to such receipt will be quite as effective as if printed
on its face, if it is shown that the consignor knew of its terms.
Thus, where a shipper accepts a receipt which states that its
conditions are to be found on the back, such receipt comes
within the general rule, and the shipper is held to have accepted
and to be bound by the conditions there to be found.

Same; Same; Contracts of adhesion. —Granting arguendo that

Condition No. 5 partakes of the nature of a contract of adhesion
and as such must be construed strictly against the party who
drafted the same or gave rise to any ambiguity therein, it
should be borne in mindthat a contract of adhesion may be
struck down as void and unenforceable, for being subversive of
public policy, only when the weaker party is imposed upon in
dealing with the dominant bargaining party and is reduced to
the alternative of taking it or leaving it, completely deprived of
the opportunity to bargain on equal footing. However, Ong Yiu
vs. Court of Appeals, et al. instructs us that contracts of
adhesion are not entirely prohibited. The one who adheres to

Page | 63
26. RODOLFO GANZON VS COURT OF APPEALS HELD: YES. Petition is DENIED.
G.R. No. L-48757. May 30, 1988  Ganzon thru his employees, actually received the scraps is
freely admitted.
FACTS: Gelacio > Ganzon (via Capt. Niza) > Lighter  Pursuant to Art. 1736, such extraordinary responsibility
“Batman” (common carrier) (loaded half) would cease only upon the delivery, actual or
 November 28, 1956: Gelacio Tumambing (Gelacio) constructive, by the carrier to the consignee, or to the
contracted the services of of Mauro B. Ganzon to haul 305 person who has a right to receive them.
tons of scrap iron from Mariveles, Bataan, to the port of  The fact that part of the shipment had not been loaded on
Manila on board the light LCT “Batman” board the lighter did not impair the said contract of
 December 1, 1956: Gelacio delivered the scrap iron to transportation as the goods remained in the custody and
Filomeno Niza, captain of the lighter, for loading which control of the carrier, albeit still unloaded.
was actually begun on the same date by the crew of the  failed to show that the loss of the scraps was due to any of
lighter under the captain’s supervisor. the following causes enumerated in Article 1734 of the
 When about half of the scrap iron was already loaded, Civil Code, namely:
Mayor Jose Advincula of Mariveles, Bataan arrived and
demanded P5000 from Gelacio (1) Flood, storm, earthquake, lightning, or other natural disaster
 Upon resisting, the Mayor fired at Gelacio so he had to be or calamity;
taken to the hospital (2) Act of the public enemy in war, whether international or
 Loading of the scrap iron was resumed civil;
 December 4, 1956: Acting Mayor Basilio Rub (Rub), (3) Act or omission of the shipper or owner of the goods;
accompanied by 3 policemen, ordered captain Filomeno (4) The character of the goods or defects in the packing or in
Niza and his crew to dump the scrap iron where the lighter the containers;
was docked (5) Order or act of competent public authority.
 Later on Rub had taken custody of the scrap iron
 RTC: in favor of Gelacio and against Ganzon Hence, the petitioner is presumed to have been at fault or to
have acted negligently.
ISSUE: W/N Ganzon should be held liable under the contract  By reason of this presumption, the court is not even
of carriage required to make an express finding of fault or negligence

Page | 64
 before it could hold the petitioner answerable for the breach delivery, the scraps were unconditionally placed in the
of the contract of carriage. possession and control of the common carrier, and upon their
 exempted from any liability had he been able to prove that receipt by the carrier for transportation, the contract of carriage
he observed extraordinary diligence in the vigilance over was deemed perfected. Consequently, the petitioner-carrier’s
the goods in his custody, according to all the circumstances extraordinary responsibility for the loss, destruction, or
of the case, or that the loss was due to an unforeseen event deterioration of the goods commenced, Pursuant to Art. 1736,
or to force majeure. As it was, there was hardly any attempt such extraordinary responsibility would cease only upon the
on the part of the petitioner to prove that he exercised such delivery, actual or constructive, by the carrier to the consignee,
extraordinary diligence. or to the person who has a right to receivethem. The fact that
 We cannot sustain the theory of caso fortuito - "order or act part of the shipment had not been loaded on board the lighter
of competent public authority"(Art. 1174 of the Civil Code) did not impair the said contract of transportation as the goods
 no authority or power of the acting mayor to issue such an remained in the custody and control of the carrier, albeit still
order was given in evidence. Neither has it been shown that unloaded.
the cargo of scrap iron belonged to the Municipality of
Mariveles. Same; Same; Same; Failure of petitioner to show that the
 Ganzon was not duty bound to obey the illegal order to loss of the goods was due to causes under Art. 1734 of the Civil
dump into the sea the scrap iron. Code.—The petitioner has failed to show that the loss of the
 Moreover, there is absence of sufficient proof that the scraps was due to any of the following causes enumerated in
issuance of the same order was attended with such force or Article 1734 of the Civil Code.
intimidation as to completely overpower the will of the
petitioner's employees. The mere difficulty in the Same; Same; Same; Same; Presumption that petitioner
fullfilment of the obligation is not considered force acted negligently for his failure to show that the loss of the
majeure. goods was due to causes under Art. 1734 of the Civil
Code; Effect of the presumption; Failure of petitioner to prove
the exercise of extraordinary diligence.—Hence, the petitioner
Civil Law; Obligations; Contracts; Common is presumed to have been at fault or to have acted negligently.
Carriers; Perfection of contract of carriage; Extraordinary By reason of this presumption, the court is not even required to
responsibility of carrier for loss, destruction or deterioration of make an express finding of fault or negligence before it could
the goods, when it commences and ceases.—By the said act of hold the petitioner answerable for the breach. of the contract of

Page | 65
carriage, Still, the petitioner could have been exempted from considered force majeure. We agree with the private
any liability had he been able to prove that he observed respondentthat the scraps could have been properly unloaded at
extraordinary diligence in the vigilance over the goods in his the shore or at the NASSCO compound, so that after the
custody, according to all the circumstances of the case, or that dispute with the local officials concerned was settled, the
the loss was due to an unforeseen event or to force majeure. As scraps could then be delivered in accordance with the contract
it was, there was hardly any attempt on the part of the of carriage.
petitioner to prove that he exercised such extraordinary
diligence. Same; Same; Same; Absence of incompatibility between
the provisions on common carriers and of the Code of
Same; Same; Same; Same; Loss of the scraps not due to Commerce; Articles 1734 and 1735 of the Civil Code,
casofortuito.—We cannot sustain the theory of casofortuito. In interpreted; Requirement for the exercise of carrier of ordinary
the courts below, the petitioner’s defense was that the loss of diligence, deemed modified by Art. 1733 of the Civil Code.—
the scraps was due to an “order or act of competent public There is no incompatibility between the Civil Code provisions
authority,” and this contention was correctly passed upon by on common carriers and Articles 361 and 362 of the Code of
the Court of Appeals. Commerce which were the basis for this Court’s ruling in
Same; Same; Same; Same; Change of theory on appeal, Government of the Philippine Islands vs. Ynchausti& Co. and
not allowed; Intervention of municipal officials, not of a which the petitioner invokes in this petition. For Art. 1735 of
character that would render impossible the fulfillment by the the Civil Code, conversely stated, means that the shipper will
carrier of its obligations.—Now the petitioner is changing his suffer the losses and deterioration arising from the causes
theory to casofortuito. Such a change of theory on appeal we enumerated in Art. 1734; and in these instances, the burden of
cannot, however, allow. In any case, the intervention of the proving that damages were caused by the fault or negligence of
municipal officials was not of a character that would render the carrier rests upon him. However, the carrier must first
impossible the fulfillment by the carrier of its obligation. The establish that the loss or deterioration was occasioned by one of
petitioner was not duty bound to obey the illegal order to dump the excepted causes or was due to an unforeseen event or to
into the sea the scrap iron. Moreover, there is absence of force majeure. Be that as it may, insofar as Art. 362 appears to
sufficient proof that the issuance of the same order was require of the carrier only ordinary diligence, the same is
attended with such force or intimidation as to completely deemed to have been modified by Art. 1733 of the Civil Code.
overpower the will of the petitioner’s employees. The mere
difficulty in the fulfillment of the obligation is not

Page | 66
 Same; Same; Same; Damages; Award of actual and
exemplary damages, proper, as they were not sufficiently
controverted.—Finding the award of actual and exemplary
damages to be proper, the same will not be disturbed by us.
Besides, these were not sufficiently controverted by the
petitioner.

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27. REPUBLIC VS. LORENZO SHIPPING CORPORATION delivery receipts. However, at times when Abdurahman had to
450 SCRA 550, G.R. NO. 153563 FEBRUARY 7, 2005 attend to other business before a delivery was completed, he
instructed his subordinates to sign the delivery receipts for him.
FACTS
The petitioner allegedly did not receive the subject goods.
Republic of the Philippines, through the Department of Health
Thus, petitioner NTFC filed a formal claim for non-delivery of
(DOH), and the Cooperative for American Relief Everywhere,
the goods shipped through respondent. In reply, the respondent
Inc. (CARE) signed an agreement wherein CARE would
explained that the cargo had already been delivered to
acquire from the United States government donations of non-
Abdurahman. The petitioner then decided to investigate the
fat dried milk and other food products from January 1, 1987 to
loss of the goods. But before the investigation was over,
December 31, 1989. In turn, the Philippines would transport
Abdurahman resigned as branch supervisor of petitioner.
and distribute the donated commodities to the intended
beneficiaries in the country.
Disbelieving respondent’s insistence that the goods were
delivered, the government through the DOH, CARE, and
The government entered into a contract of carriage of goods
NTFC as plaintiffs filed an action for breach of contract of
with petitioner National Trucking and Forwarding Corporation
carriage, against respondent as defendant, with the RTC of
(NTFC) and the latter shipped 4,868 bags of non-fat dried milk
Manila.
through respondent Lorenzo Shipping Corporation (LSC). The
consignee named in the bills of lading issued by the respondent
After trial, the RTC resolved the case in favor of the defendant.
was Abdurahman Jama, petitioner’s branch supervisor in
Petitioner appealed to the Court of Appeals on the grounds that
Zamboanga City
the lower court faulted for not holding that respondent failed to
deliver the cargo, and that respondent failed to exercise the
On reaching the port of Zamboanga City, respondent’s agent,
extraordinary diligence required of common carriers. The
Efren Ruste Shipping Agency, unloaded the 4,868 bags of non-
Court of Appeals found that the trial court did not commit any
fat dried milk and delivered the goods to petitioner’s
error. It dismissed the appeal, and affirmed the assailed
warehouse. Before each delivery, the delivery checkers of
decision in toto. Hence, this petition.
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 ISSUE
each delivery, the checkers asked Abdurahman to sign the

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Whether the respondent is negligent as common carrier for the This practice, which respondent’s agents testified to be
loss or deterioration of the goods. their standard operating procedure, finds support in Article 353
of the Code of Commerce:
RULING
ART. 353. . . .
We rule for respondent.
After the contract has been complied with, the
Article 1733 of the Civil Code demands that a common
bill of lading which the carrier has issued shall be
carrier observe extraordinary diligence over the goods
returned to him and by virtue of the exchange of
transported by it. Extraordinary diligence is that extreme
this title with the thing transported, the respective
measure of care and caution which persons of unusual
obligations and actions shall be considered
prudence and circumspection use for securing and preserving
cancelled.
their own property or rights. This exacting standard imposed on
common carriers in a contract of carriage of goods is intended
In case the consignee, upon receiving the goods, cannot
to tilt the scales in favor of the shipper who is at the mercy of return the bill of lading subscribed by the carrier, because of its
the common carrier once the goods have been lodged for
loss or of any other cause, he must give the latter a receipt for
shipment. Hence, in case of loss of goods in transit, the the goods delivered, this receipt producing the same effects as
common carrier is presumed under the law to have been at fault the return of the bill of lading. (Emphasis supplied)
or negligent. However, the presumption of fault or negligence,
may be overturned by competent evidence showing that the Conformably with the aforecited provision, the
common carrier has observed extraordinary diligence over the surrender of the original bill of lading is not a condition
goods. precedent for a common carrier to be discharged of its
contractual obligation. If surrender of the original bill of lading
In the instant case, we agree with the court a quo that
is not possible, acknowledgment of the delivery by signing the
the respondent adequately proved that it exercised delivery receipt suffices. This is what respondent did.
extraordinary diligence. Although the original bills of lading
remained with petitioner, respondent’s agents demanded from Civil Law; Common Carriers; Extraordinary diligence is that
Abdurahman the certified true copies of the bills of lading. extreme measure of care and caution which persons of unusual
They also asked the latter and in his absence, his designated prudence and circumspection use for securing and preserving
subordinates, to sign the cargo delivery receipts. their own property or rights; The presumption of fault or

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negligence, may be overturned by competent evidence showing
that the common carrier has observed extraordinary diligence
over the goods.—Article 1733 of the Civil Code demands that
a common carrier observe extraordinary diligence over the
goods transported by it. 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 or rights. This exacting standard imposed on
common carriers in a contract of carriage 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
shipment. Hence, in case of loss of goods in transit, the
common carrier is presumed under the law to have been at fault
or negligent. However, the presumption of fault or negligence,
may be overturned by competent evidence showing that the
common carrier has observed extraordinary diligence over the
goods.

Same; Same; The surrender of the original bill of lading is not

a condition precedent for a common carrier to be discharged
of its contractual obligation.—Conformably with the
aforecited provision, the surrender of the original bill of lading
is not a condition precedent for a common carrier to be
discharged of its contractual obligation. If surrender of the
original bill of lading is not possible, acknowledgment of the
delivery by signing the delivery receipt suffices. This is what
respondent did.

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JAPAN AIRLINES VS. SIMANGAN States Embassy" because no one from JAL's airport staff had
552 SCRA 341, G.R. NO. 170141 APRIL 22, 2008 encountered a parole visa before. The RTC rendered its
decision in favor of the respondent. JAL appealed to the CA
FACTS contending that it is not guilty of breach of contract of carriage,
hence, not liable for damages. The CA affirmed the decision of
Jesus Simangan needed to go to the USA to donate a the RTC. Hence, this petition.
kidney to his ailing cousin, Loreto Simangan. He was issued an
emergency U.S. visa by the American Embassy in Manila. ISSUE
Then respondent purchased a round trip plane ticket from
petitioner JAL. On July 29, 1992, the date of his flight, Whether JAL is guilty of breach of contract of
respondent went to Ninoy Aquino International Airport and carriage.
after passing through said immigration and security procedures,
respondent was allowed by JAL to enter its airplane. While RULING
inside the airplane, JAL's airline crew suspected respondent of
Yes, JAL is guilty of contract of carriage.
carrying a falsified travel document and imputed that he would
only use the trip to the United States as a pretext to stay and JAL did not allow respondent to fly. It informed
work in Japan. The stewardess asked respondent to show his respondent that there was a need to first check the authenticity
travel documents and was ordered to stand up and leave the of his travel documents with the U.S. Embassy. As admitted by
[Link] pleaded but his pleas were ignored. The JAL, “the flight could not wait for Mr. Simangan because it
plane took off and he was left behind. was ready to depart.” Since JAL definitely declared that the
flight could not wait for respondent, it gave respondent no
Respondent filed an action for damages against JAL choice but to be left behind. The latter was unceremoniously
with the Regional Trial Court. He claimed he was not able to bumped off despite his protestations and valid travel
donate his kidney to Loreto; and that he suffered terrible documents and notwithstanding his contract of carriage with
embarrassment and mental anguish. He prayed that he be JAL. Damage had already been done when respondent was
awarded damages. JAL denied the material allegations of the offered to fly the next day on July 30, 1992. Said offer did not
complaint. It argued, among others, that its failure to allow cure JAL’s default.
respondent to fly on his scheduled departure was due to "a need
for his travel documents to be authenticated by the United Apart from the fact that respondent’s plane ticket,
boarding pass, travel authority and personal articles already

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passed the rigid immigration and security routines, JAL, as a prudence and circumspection use for securing and preserving
common carrier, ought to know the kind of valid travel their own property or rights. This exacting standard imposed on
documents respondent carried. As provided in Article 1755 of common carriers in a contract of carriage of goods is intended
the New Civil Code: “A common carrier is bound to carry the to tilt the scales in favor of the shipper who is at the mercy of
passengers safely as far as human care and foresight can the common carrier once the goods have been lodged for
provide, using the utmost diligence of very cautious persons, shipment. Hence, in case of loss of goods in transit, the
with a due regard for all the circumstances.” Thus, We find common carrier is presumed under the law to have been at fault
untenable JAL’s defense of “verification of respondent’s or negligent. However, the presumption of fault or negligence,
documents” in its breach of contract of carriage. It bears may be overturned by competent evidence showing that the
repeating that the power to admit or not an alien into the common carrier has observed extraordinary diligence over the
country is a sovereign act which cannot be interfered with even goods.
by JAL.
In an action for breach of contract of carriage, all that is Same; Same; The surrender of the original bill of lading is
required of plaintiff is to prove the existence of such contract not a condition precedent for a common carrier to be
and its non-performance by the carrier through the latter’s discharged of its contractual obligation.—Conformably with
failure to carry the passenger safely to his destination. the aforecited provision, the surrender of the original bill of
Respondent has complied with these twin requisites. lading is not a condition precedent for a common carrier to be
discharged of its contractual obligation. If surrender of the
original bill of lading is not possible, acknowledgment of the
Civil Law; Common Carriers; Extraordinary diligence is delivery by signing the delivery receipt suffices. This is what
that extreme measure of care and caution which persons of respondent did.
unusual prudence and circumspection use for securing and Same; Attorney’s Fees; An adverse decision does not ipso
preserving their own property or rights; The presumption of facto justify an award of attorney’s fees to the winning party.—
fault or negligence, may be overturned by competent evidence The right to litigate should bear no premium. An adverse
showing that the common carrier has observed extraordinary decision does not ipso facto justify an award of attorney’s fees
diligence over the goods.—Article 1733 of the Civil Code to the winning party. When, as in the instant case, petitioner
demands that a common carrier observe extraordinary diligence was compelled to sue to protect the credibility of the
over the goods transported by it. Extraordinary diligence is that government with international organizations, we are not
extreme measure of care and caution which persons of unusual inclined to grant attorney’s fees. We find no ill motive on

Page | 72
petitioner’s part, only an erroneous belief in the righteousness
of its claim.
Same; Same; While the law allows some degree of
discretion on the part of the courts in awarding attorney’s fees
and expenses of litigation, the discretion must be exercised
with great care approximating as closely as possible, the
instances exemplified by the law.— An award of attorney’s
fees, in the concept of damages under Article 2208 of the Civil
Code, requires factual and legal justifications. While the law
allows some degree of discretion on the part of the courts in
awarding attorney’s fees and expenses of litigation, the
discretion must be exercised with great care approximating as
closely as possible, the instances exemplified by the law. We
have searched but found nothing in petitioner’s suit that
justifies the award of attorney’s fees.

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28. EASTERN SHIPPING LINES, INC., vs. second shipment arrived at the port of Manila partly damaged
BPI/MS INSURANCE CORP., & MITSUI SUMITOMO and in bad order. The coils sustained further damage during the
INSURANCE CO., LTD. discharge from vessel to shore until its turnover to ATI’s
G.R. No. 182864, January 12, 2015 custody for safekeeping. Upon withdrawal from ATI and
delivery to Calamba Steel, As it did before, Calamba Steel
rejected the damaged shipment for being unfit for the intended
FACTS:
purpose.
For two separate transactions in 2004, Sumitomo Calamba Steel attributed the damages on both
Corporation, a corporation based in Yokohama, Japan shipped shipments to ESLI as the carrier and ATI as the arrastre
on board the vessels of petitioner Eastern Shipping Lines Inc. operator in charge of the handling and discharge of the coils
(ESLI) coils of various steel sheet for transportation and and filed a claim against them. When ESLI and ATI refused to
delivery at the port of Manila in favor of consignee Calamba pay, Calamba Steel filed an insurance claim for the total
Steel Center located in Saimsim, Calamba, Laguna. The amount of the cargo against BPI/MS and Mitsui as cargo
Shipments were insured with the respondents BPI/MS insurers. As a result, BPI/MS and Mitsui became subrogated in
Insurance Corporation (BPI/MS) and Mitsui Sumitomo place of and with all the rights and defenses accorded by law in
Insurance Company (Mitsui) against all risks. favor of Calamba Steel.
Opposing the complaint, ATI denied the allegations and
The first shipment arrived at the port of Manila in an
insisted that the coils in two shipments were already damaged
unknown condition and was turned over to Asian Terminals
upon receipt from ESLI’s vessels. It likewise insisted that it
Inc. (ATI) for safekeeping. Upon withdrawal of the shipment
exercised due diligence in the handling of the shipments and
by Calamba Steel, it was found out that part of the shipment
invoked that in case of adverse decision, its liability should not
was damaged and was in bad order condition such that there
exceed P5,000.00 pursuant to Section 7.01, Article VII of the
was a Request for Bad Order Survey. It was found out that the
Contract for Cargo Handling Services between Philippine Ports
damage amounted to US$4,598.85 prompting Calamba Steel to
Authority (PPA) and ATI.
reject the damaged shipment for being unfit for the intended
On its part, ESLI denied the allegations of the
purpose.
complainants and averred that the damage to both shipments
Sumitomo Corporation again shipped on board ESLI’s
was incurred while the same were in the possession and
vessel coils of various Steel for transportation to and delivery
custody of ATI and/or of the consignee or its representatives.
at the port of Manila in favor of Calamba Steel. Again, the
shipment was insured by respondents against all risk. The

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 The RTC Makati City rendered a decision finding both carrier to the consignee, or to the person who has a right to
the ESLI and ATI liable for the damages sustained by the two receive them.
shipments. Upon appeal, Both ESLI and ATI invoked the In maritime transportation, a bill of lading is issued by a
limitation of liability of US$500.00 per package as provided in common carrier as a contract, receipt and symbol of the goods
Commonwealth Act No. 65 or the Carriage of Goods by Sea covered by it. If it has no notation of any defect or damage in
Act (COGSA). The CA absolved ATI from liability in its the goods, it is considered as a "clean bill of lading." A clean
decision. bill of lading constitutes prima facie evidence of the receipt by
the carrier of the goods as therein described.
ISSUE:
Based on the bills of lading issued, it is undisputed that
1. Whether or not ESLI is liable for the damaged
ESLI received the two shipments of coils from shipper
shipment transported and delivered by its vessels.
Sumitomo Corporation in good condition at the ports of
2. Whether or not ESLI can invoke the limitation of Yokohama and Kashima, Japan. However, upon arrival at the
liability of US$500.00 per package as provided in port of Manila, some coils from the two shipments were partly
Commonwealth Act No. 65 or the Carriage of dented and crumpled as evidenced by the Turn Over Survey of
Goods by Sea Act (COGSA). Bad Order Cargoes prior to turnover to ATI. Mere proof of
delivery of the goods in good order to a common carrier and of
their arrival in bad order at their destination constitutes a prima
HELD:
facie case of fault or negligence against the carrier. If no
Common carriers, from the nature of their business and
adequate explanation is given as to how the deterioration, loss,
on public policy considerations, are bound to observe extra
or destruction of the goods happened, the transporter shall be
ordinary diligence in the vigilance over the goods transported
held responsible. From the foregoing, the fault is attributable to
by them. Subject to certain exceptions enumerated under
ESLI. While no longer an issue, it may be nonetheless state that
Article 1734 of the Civil Code, common carriers are
ATI was correctly absolved of liability for the damage.
responsible for the loss, destruction, or deterioration of the
goods. The extraordinary responsibility of the common carrier In the issue of limitation of liability, the law of the
lasts from the time the goods are unconditionally placed in the country to which the goods are to be transported shall govern
possession of, and received by the carrier for transportation the liability of the common carrier for their loss, destruction or
until the same are delivered, actually or constructively, by the deterioration. The Code takes precedence as the primary law
over the rights and obligations of common carriers with the

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Code of Commerce and COGSA applying suppletorily. The their successors in interest, no evidence of such terms other
New Civil Code provides that a stipulation limiting a common than the contents of the written agreement.
carrier’s liability to the value of the goods appearing in the bill As to the non-declaration of the value of the goods on
of lading is binding, unless the shipper or owner declares a the second bill of lading, we see no error on the part of the
greater value. In addition, a contract fixing the sum that may be appellate court when it ruled that there was a compliance of the
recovered by the owner or shipper for the loss, destruction, or requirement provided by COGSA. The declaration requirement
deterioration of the goods is valid, if it is reasonable and just does not require that all the details must be written down on the
under the circumstances, and has been fairly and freely agreed very bill of lading itself. It must be emphasized that all the
upon. needed details are in the invoice, which "contains the itemized
COGSA, on the other hand, provides under Section 4, list of goods shipped to a buyer, stating quantities, prices,
Subsection 5 that an amount recoverable in case of loss or shipping charges," and other details which may contain
damage shall not exceed US$500.00 per package or per numerous sheets. Compliance can be attained by incorporating
customary freight unless the nature and value of such goods the invoice, by way of reference, to the bill of lading provided
have been declared by the shipper before shipment and inserted that the former containing the description of the nature, value
in the bill of lading. Accordingly, the issue whether or not and/or payment of freight charges is as in this case duly
ESLI has limited liability as a carrier is determined by either admitted as evidence.
absence or presence of proof that the nature and value of the Wherefore, the petition for review on certiorari of ESLI
goods have been declared by Sumitomo Corporation and was denied and the decision of the CA was affirmed.
inserted in the bills of lading.
There is no question about the declaration of the nature,
Civil Law; Common Carriers; Extraordinary Diligence; It is
weight and description of the goods on the first bill of lading.
settled in maritime law jurisprudence that cargoes while being
The bills of lading represent the formal expression of the
unloaded generally remain under the custody of the carrier;
parties’ rights, duties and obligations. It is the best evidence of
Theextraordinary responsibility of the common carrier lasts
the intention of the parties which is to be deciphered from the
from the time the goods are unconditionally placed in the
language used in the contract, not from the unilateral post facto
possession of, and received by the carrier for transportation
assertions of one of the parties, or of third parties who are
until the same are delivered, actually or constructively, by the
strangers to the contract. Thus, when the terms of an agreement
carrier to the consignee, or to the person who has a right to
have been reduced to writing, it is deemed to contain all the
receive them.—Verily, it is settled in maritime law
terms agreed upon and there can be, between the parties and
jurisprudence that cargoes while being unloaded generally

Page | 76
remain under the custody of the carrier. As hereinbefore found
by the RTC and affirmed by the CA based on the evidence
presented, the goods were damaged even before they were
turned over to ATI. Such damage was even compounded by the
negligent acts of petitioner and ATI which both mishandled the
goods during the discharging operations. Thus, it bears
stressing unto petitioner that common carriers, from the nature
of their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods
transported by them. Subject to certain exceptions enumerated
under Article 1734 of the Civil Code, common carriers are
responsible for the loss, destruction, or deterioration of the
goods. 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. Owing to this high degree of diligence required
of them, common carriers, as a general rule, are presumed to
have been at fault or negligent if the goods they transported
deteriorated or got lost or destroyed. That is, unless they prove
that they exercised extraordinary diligence in transporting the
goods. In order to avoid responsibility for any loss or damage,
therefore, they have the burden of proving that they observed
such high level of diligence.

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29. WESTWIND SHIPPING CORPORATION v. Ocean Terminal Services, Inc. in centering and shuttling the
UCPB GENERAL INSURANCE CO., INC. and ASIAN containers/skids. Orient Freight International, Inc., the customs
TERMINALS INC broker of SMC, withdrew from ATI the 197 containers/skids
and delivered the same at SMC’s warehouse. It was discovered
ORIENT FREIGHT INTERNATIONAL INC.v. upon discharge that additional nine containers/skids were also
UCPB GENERAL INSURANCE CO., INC. and ASIAN damaged due to the forklift operations; thus, making the total
TERMINALS INC. number of 15 containers/skids in bad order.
G.R. No. 200314, G.R. No. 200289, November 25, 2013
THIRD DIVISION PERALTA, J. SMC filed complaints. The RTC opined that Westwind
is not liable, since the discharging of the cargoes were done by
Common carriers, from the nature of their business and for ATI personnel using forklifts. It likewise absolved OFII from
reasons of public policy, are bound to observe extraordinary any liability, reasoning that it never undertook the operation of
diligence in vigilance over the goods and for the safety of the the forklifts which caused the dents and punctures, and that it
passengers transported by them, according to all the merely facilitated the release and delivery of the shipment as
circumstances of each case. the customs broker and representative of [Link] appeal by
UCPB, the CA reversed and set aside the trial court. It
FACTS: Kinsho-Mataichi Corporation shipped concluded that the common carrier, not the arrastre operator, is
from the port of Kobe, Japan, 197 metal containers/skids of tin- responsible during the unloading of the cargoes and is still
free steel for delivery to the consignee, San Miguel bound to exercise extraordinary diligence at the time. The CA
Corporation The shipment was loaded and received clean on also considered that OFII is liable, agreeing with UCPB’s
board M/V Golden Harvest Voyage No. 66, a vessel owned contention that OFII is a common carrier bound to observe
and operated by Westwind Shipping [Link] insured extraordinary diligence and is presumed to be at fault or have
the cargoes against all risks with UCPB General Insurance Co., acted negligently for such damage.
Inc.
ISSUE: Whether Westwind and OFII are liable to exercise
The shipment arrived in Manilaand was discharged in extraordinary diligence
the custody of the arrastre operator, Asian Terminals, Inc.
During the unloading operationsix containers/skids sustained RULING: YES. Common carriers, from the nature of their
dents and punctures from the forklift used by the stevedores of business and for reasons of public policy, are bound to observe

Page | 78
extraordinary diligence in the vigilance over the goods customs broker whose principal function is to prepare the
transported by them. The extraordinary responsibility of the correct customs declaration and proper shipping documents as
common carrier lasts from the time the goods are required by law is bereft of merit. It suffices that petitioner
unconditionally placed in the possession of, and received by undertakes to deliver the goods for pecuniary consideration. As
the carrier for transportation until the same are delivered, the transportation of goods is an integral part of a customs
actually or constructively, by the carrier to the consignee, or to broker, the customs broker is also a common carrier. For to
the person who has a right to receive them. declare otherwise "would be to deprive those with whom [it]
contracts the protection which the law affords them
In this case, since the discharging of the notwithstanding the fact that the obligation to carry goods for
containers/skids, which were covered by only one bill of [its] customers, is part and parcel of petitioner’s business."21
lading, had not yet been completed at the time the damage
occurred, there is no reason to imply that there was already
delivery, actual or constructive, of the cargoes to ATI.
Civil Law; Common Carriers; Arrastre Operators;
Extraordinary Diligence; The extraordinary responsibility of
The mere proof of delivery of goods in good order to
the common carrier lasts from the time the goods are
the carrier, and their arrival in the place of destination in bad
unconditionally placed in the possession of, and received by
order, make out a prima facie case against the carrier, so that if
no explanation is given as to how the injury occurred, the the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to
carrier must be held responsible. It is incumbent upon the
carrier to prove that the loss was due to accident or some other the person who has a right to receive them; Handlingcargo is
circumstances inconsistent with its liability.18 mainly the arrastre operator’s principal work so its
drivers/operators or employees should observe the standards
The contention of OFII is likewise untenable. A and measures necessary to prevent losses and damage to
customs broker has been regarded as a common carrier because shipments under its custody.—The case of Philippines First
transportation of goods is an integral part of its [Link] Insurance Co., Inc. v. WallemPhils. Shipping, Inc., 582 SCRA
1732 does not distinguish between one whose principal 457 (2009), applies, as it settled the query on which between a
business activity is the carrying of goods and one who does common carrier and an arrastre operator should be responsible
such carrying only as an ancillary activity. The contention, for damage or loss incurred by the shipment during its
therefore, of petitioner that it is not a common carrier but a unloading. We elucidated at length: Common carriers, from the
nature of their business and for reasons of public policy, are

Page | 79
bound to observe extraordinary diligence in the vigilance over disputation that “the carrier in Wallem clearly exercised
the goods transported by them. Subject to certain exceptions supervision during the discharge of the shipment and that is
enumerated under Article 1734 of the Civil Code, common why it was faulted and held liable for the damage incurred by
carriers are responsible for the loss, destruction, or the shipment during such time.” What Westwind failed to
deterioration of the goods. The extraordinary responsibility of realize is that the extraordinary responsibility of the common
the common carrier lasts from the time the goods are carrier lasts until the time the goods are actually or
unconditionally placed in the possession of, and received by constructively delivered by the carrierto the consignee or to the
the carrier for transportation until the same are delivered, person who has a right to receive them. There is actual delivery
actually or constructively, by the carrier to the consignee, or to in contracts for the transport of goods when possession has
the person who has a right to receive them. x x x x x x On the been turned over to the consignee or to his duly authorized
other hand, the functions of an arrastre operator involve the agent and a reasonable time is given him to remove the goods.
handling of cargo deposited on the wharf or between the In this case, since the discharging of the containers/skids,
establishment of the consignee or shipper and the ship’s tackle. which were covered by only one bill of lading, had not yet been
Being the custodian of the goods discharged from a vessel, an completed at the time the damage occurred, there is no reason
arrastre operator’s duty is to take good care of the goods and to to imply that there was already delivery, actual or constructive,
turn them over to the party entitled to their possession. of the cargoes to ATI.
Handling cargo is mainly the arrastre operator’s principal work
so its drivers/operators or employees should observe the Same; Same; Customs Brokers; A customs broker has been
standards and measures necessary to prevent losses and regarded as a common carrier because transportation of goods
damage to shipments under its custody. is an integral part of its business.—A customs broker has been
regarded as a common carrier because transportation of goods
Same; Same; Extraordinary Diligence; The extraordinary is an integral part of its business. In Schmitz Transport &
responsibility of the common carrier lasts until the time the Brokerage Corporation v. Transport Venture, Inc., 456 SCRA
goods are actually or constructively delivered by the carrier to 557 (2005), the Court already reiterated: It is settled that under
the consignee or to the person who has a right to receive them. a given set of facts, a customs broker may be regarded as a
There is actual delivery in contracts for the transport of goods common carrier. Thus, this Court, in A.F. Sanchez Brokerage,
when possession has been turned over to the consignee or to Inc. v. The Honorable Court of Appeals held: The appellate
his duly authorized agent and a reasonable time is given him to court did not err in finding petitioner, a customs broker, to be
remove the goods.—We cannot agree with Westwind’s also a common carrier, as defined under Article 1732 of the

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Civil Code, to wit, Art. 1732. Common carriers are persons, of whether it owns the vehicle to be used or has to actually hire
corporations, firms or associations engaged in the business of one.
carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the Same; Same; Same; Extraordinary Diligence; As a
public. x xxx Article 1732 does not distinguish between one common carrier, a customs broker is mandated to observe,
whose principal business activity is the carrying of goods and under Article 1733 of the Civil Code, extraordinary diligence
one who does such carrying only as an ancillary activity. The in the vigilance over the goods it transports according to the
contention, therefore, of petitioner that it is not a common peculiar circumstances of each case.—As a common carrier,
carrier but a customs broker whose principal function is to OFII is mandated to observe, under Article 1733 of the Civil
prepare the correct customs declaration and proper shipping Code, extraordinary diligence in the vigilance over the goods it
documents as required by law is bereft of merit. It suffices that transports according to the peculiar circumstances of each case.
petitioner undertakes to deliver the goods for pecuniary In the event that the goods are lost, destroyed or deteriorated, it
consideration. And in Calvo v. UCPB General Insurance Co., is presumed to have been at fault or to have acted negligently,
Inc., this Court held that as the transportation of goods is an unless it proves that it observed extraordinary diligence. In the
integral part of a customs broker, the customs broker is also a case at bar, it was established that, except for the six
common carrier. For to declare otherwise “would be to deprive containers/skids already damaged, OFII received the cargoes
those with whom [it] contracts the protection which the law from ATI in good order and condition; and that upon its
affords them notwithstanding the fact that the obligation to delivery to SMC, additional nine containers/skids were found
carry goods for [its] customers, is part and parcel of petitioner’s to be in bad order, as noted in the Delivery Receipts issued by
business.” That OFII is a common carrier is buttressed by the OFII and as indicated in the Report of Cares Marine & Cargo
testimony of its own witness, Mr. Loveric Panganiban Cueto, Surveyors. Instead of merely excusing itself from liability by
that part of the services it offers to clients is cargoforwarding, putting the blame to ATI and SMC, it is incumbent upon OFII
which includes the delivery of the shipment to the consignee. to prove that it actively took care of the goods by exercising
Thus, for undertaking the transport of cargoes from ATI to extraordinary diligence in the carriage thereof. It failed to do
SMC’s warehouse in Calamba, Laguna, OFII is considered a so. Hence, its presumed negligence under Article 1735 of the
common carrier. As long as a person or corporation holds itself Civil Code remains unrebutted.
to the public for the purpose of transporting goods as a
business, it is already considered a common carrier regardless

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30. REGIONAL CONTAINER LINES (RCL) OF  Seven months from delivery of the cargo - Netherlands
SINGAPORE vs. THE NETHERLANDS INSURANCE Insurance filed a complaint for subrogation of insurance
CO. (PHILIPPINES), INC. settlement with the Regional Trial Court, RCL and TMS
Ship Agencies (TMS) thought to be the local agent of M/V
FACTS:
Piya, EDSA Shipping, Eagle Liner Shipping Agencies, U-
 405 cartons of Epoxy molding compound were consigned Freight Singapore, and U-Ocean (Phils.), Inc. (U-Ocean).
to be shipped from Singapore to Manila for TEMIC. U- RCL and EDSA Shipping filed motion to dismiss based on
Freight Singapore contracted Pacific Eagle to transport demurer to evidence. They attributed negligence to their co-
cargo. It was stored in its refrigerated container as cargo is defendants, that fluctuation of temperature occurred after
highly perishable. Pacific Eagle loaded it to M/V cargo has been discharged from vessel but in the reefer van
PiyaBhum owned by RCL which the former had a slot and that Netherlands is not party in interest hence has no
charter agreement with. cause of action. RTC found RCL and EDSA Shipping not
 RCL issued Bill of Lading in favor of Pacific Eagle. liable but this was reversed by CA and barred them from
Netherlands Insurance issued a Marine Open Policy to presenting evidence since they filed for demurer.
insure cargo in favor of Temic to cover loss/damages. Upon
arrival at Manila, the cargoes were surveyed and it was
Defense of RCL and EDSA Shipping:
found to be at the constant required temperature for several
days. But later on, it was found out that the temperature 1. They attributed any negligence that may have caused the loss
changed when the cargo had already been unloaded, to of the shipment to their co- defendants.
33º Celsius. Surveyor believed the fluctuation was caused
a. They contend that the cause of the damage to the
by the burnt condenser fan motor of the refrigerated
cargo was the “fluctuation of the temperature in the reefer
container.
van,” which fluctuation occurred after the cargo had already
 Temic received the shipment and found it to be damaged.
been discharged from the vessel; no fluctuation, they point out,
Temic filed a claim for cargo loss against Netherlands
arose when the cargo was still on board M/V PiyaBhum.
Insurance, with supporting claims documents. The
Netherlands Insurance paid Temic the sum ofP1,036,497.00 b. As the cause of the damage to the cargo occurred
under the terms of the Marine Open Policy. Temic then after the same was already discharged from the vessel and was
executed a loss and subrogation receipt in favor of under the custody of the arrastre operator (International
Netherlands Insurance. Container Terminal Services, Inc. or ICTSI), RCL and EDSA

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Shipping posit that the presumption of negligence provided in Arguments of RCL and EDSA Shipping are not meritorious.
Article 1735 of the Civil Code should not apply. What
A common carrier is presumed to have been negligent if
applies in this case is Article 1734, particularly paragraphs
it fails to prove that it exercised extraordinary vigilance
3 and 4 thereof, which exempts the carrier from liability for
over the goods it transported. When the goods shipped are
loss or damage to the cargo when it is caused either by an act
either lost or arrived in damaged condition, a presumption
or omission of the shipper or by the character of the goods or
arises against the carrier of its failure to observe that diligence,
defects in the packing or in the containers.
and there need not be an express finding of negligence to hold
2. They likewise asserted that no valid subrogation exists, as it liable.
the payment made by Netherlands Insurance to the consignee
To overcome the presumption of negligence, the
was invalid.
common carrier must establish by adequate proof that it
3. That the Netherland Insurance has no cause of action, and is exercised extraordinary diligence over the goods. It must
not the real party-in-interest, do more than merely show that some other party could be
responsible for the damage.
4. The claim is barred by laches/prescription.
In the present case, RCL and EDSA Shipping failed to
ISSUE:Whether the RCL and EDSA Shipping liable as
prove that they did exercise that degree of diligence
common carriers under the theory of presumption of
required by law over the goods they transported.
negligence.
Indeed, there is sufficient evidence showing that the fluctuation
RULING: Yes. RCL and EDSA Shipping failed to satisfy of the temperature in the refrigerated container van, as recorded
this standard of evidence and in fact offered no evidence at all in the temperature chart, occurred after the cargo had been
on this point; a reversal of a dismissal based on a demurrer to discharged from the vessel and was already under the custody
evidence bars the defendant from presenting evidence of the arrastre operator, ICTSI. This evidence, however, does
supporting its allegations. The CA correctly ruled that they not disprove that the condenser fan – which caused the
are deemed to have waived their right to present fluctuation of the temperature in the refrigerated container –
evidence, and the presumption of negligence must stand. It is was not damaged while the cargo was being unloaded from the
for this reason as well that the court finds RCL and EDSA ship. It is settled in maritime law jurisprudence that cargoes
Shipping’s claim that the loss or damage to the cargo was while being unloaded generally remain under the custody
caused by a defect in the packing or in the containers. of the carrier; RCL and EDSA

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Shipping failed to dispute this. Maritime Law; Common Carriers; Negligence; Rules for
Liability of Common Carriers for Lost or Damaged Cargo.—
RCL and EDSA Shipping could have offered evidence before
In Central Shipping Company, Inc. v. Insurance Company of
the trial court to show that the damage to the condenser fan did
North America, 438 SCRA 511 (2004), we reiterated the rules
not occur: (1) while the cargo was in transit; (2) while they
for the liability of a common carrier for lost or damaged cargo
were in the act of discharging it from the vessel; or (3) while
as follows: (1) Common carriers are bound to observe
they were delivering it actually or constructively to the
extraordinary diligence over the goods they transport,
consignee. They could have presented proof to show that they
according to all the circumstances of each case; (2) In the event
exercised extraordinary care and diligence in the handling of
of loss, destruction, or deterioration of the insured goods,
the goods, but they opted to file a demurrer to evidence. As the
common carriers are responsible, unless they can prove that
order granting their demurrer was reversed on appeal, the
such loss, destruction, or deterioration was brought about by,
CA correctly ruled that they are deemed to have waived
among others, “flood, storm, earthquake, lightning, or other
their right to present evidence, and the presumption of
natural disaster or calamity”; and (3) In all other cases not
negligence must stand.
specified under Article 1734 of the Civil Code, common
It is for this reason as well that we find RCL and EDSA carriers are presumed to have been at fault or to have acted
Shipping’s claim that the loss or damage to the cargo negligently, unless they observed extraordinary diligence.
was caused by a defect in the packing or in the Same; Same; Same; To overcome the presumption of
containers. To exculpate itself from liability for the negligence, the common carrier must establish by adequate
loss/damage to the cargo under any of the causes, the common proof that it exercised extraordinary diligence over the
carrier is burdened to prove any of the causes in Article 1734 goods—it must do more than merely show that some other
of the Civil Code claimed by it by a preponderance of party could be responsible for the damage.—A common carrier
evidence. If the carrier succeeds, the burden of evidence is is presumed to have been negligent if it fails to prove that it
shifted to the shipper to prove that the carrier is negligent. exercised extraordinary vigilance over the goods it transported.
RCL and EDSA Shipping, however, failed to satisfy this When the goods shipped are either lost or arrived in damaged
standard of evidence and in fact offered no evidence at all on condition, a presumption arises against the carrier of its failure
this point; a reversal of a dismissal based on a demurrer to to observe that diligence, and there need not be an express
evidence bars the defendant from presenting evidence finding of negligence to hold it liable. To overcome the
supporting its allegations. presumption of negligence, the common carrier must
establish by adequate proof that it exercised extraordinary

Page | 84
diligence over the goods. It must do more than merely show extraordinary care and diligence in the handling of the goods,
that some other party could be responsible for the damage. but they opted to file a demurrer to evidence. As the order
granting their demurrer was reversed on appeal, the CA
Same; Same; Same; It is settled in maritime law correctly ruled that they are deemed to have waived their
jurisprudence that cargoes while being unloaded generally right to present evidence, and the presumption of
remain under the custody of the carrier.—In the present case, negligence must stand. It is for this reason as well that we find
RCL and EDSA Shipping failed to prove that they did exercise RCL and EDSA Shipping’s claim that the loss or damage to the
that degree of diligence required by law over the goods they cargo was caused by a defect in the packing or in the
transported. Indeed, there is sufficient evidence showing that containers. To exculpate itself from liability for the
the fluctuation of the temperature in the refrigerated container loss/damage to the cargo under any of the causes, the common
van, as recorded in the temperature chart, occurred after the carrier is burdened to prove any of the causes in Article 1734
cargo had been discharged from the vessel and was already of the Civil Code claimed by it by a preponderance of
under the custody of the arrastre operator, ICTSI. This evidence. If the carrier succeeds, the burden of evidence is
evidence, however, does not disprove that the condenser fan— shifted to the shipper to prove that the carrier is negligent. RCL
which caused the fluctuation of the temperature in the and EDSA Shipping, however, failed to satisfy this standard of
refrigerated container—was not damaged while the cargo was evidence and in fact offered no evidence at all on this point; a
being unloaded from the ship. It is settled in maritime law reversal of a dismissal based on a demurrer to evidence bars the
jurisprudence that cargoes while being unloaded generally defendant from presenting evidence supporting its allegations.
remain under the custody of the carrier; RCL and EDSA
Shipping failed to dispute this.
Demurrer to Evidence; Pleadings and Practice; A
dismissal based on a demurrer to evidence bars the defendant
from presenting evidence supporting its allegations.—RCL and
EDSA Shipping could have offered evidence before the trial
court to show that the damage to the condenser fan did not
occur: (1) while the cargo was in transit; (2) while they were in
the act of discharging it from the vessel; or (3) while they were
delivering it actually or constructively to the consignee. They
could have presented proof to show that they exercised

Page | 85
 IS THE DUTY OWED TO THIRD PERSONS?

31. Lu Do and Lu Ym Corp. vs. I.V. Binamira On August 10, 1951, the Delta Photo Supply Company
G.R. No. L-9840 of New York shipped on board the M/S "FERNSIDE" at New
April 22,1957 York, U.S.A., six cases of Films and/or photographic supplies
consigned to the order of respondent I. V. Binamira. For this
shipment, Bill of Lading No. 29 was issued.
SYLLABUS:
The ship arrived at the port of Cebu on September 23,
CONTRACT OF CARRIAGE; LIABILITY OF 1951 and discharged her cargo on September 23 and 24, 1951,
CARRIERS WHILE THE GOODS ARE IN THE including the shipment in question, placing it in the possession
CUSTODY OF CUSTOMS AUTHORITIES. — and custody of the arrastre operator of said port, the Visayan
Cebu Terminal Company, Inc. Petitioner, as agent of the
While delivery of the cargo to the customs authorities carrier, hired the Cebu Stevedoring Company, Inc. to unload its
is not delivery to the consignee, or "to the person who has a cargo. During the discharge, good order cargo was separated
right to receive them" contemplated in Article 1736 of the New from the bad order cargo on board the ship, and a separate list
Civil Code, because in such case the goods are still in the hands of bad order cargo was prepared by PascualVillamor, checker
of the Government and the owner cannot exercise dominion of the stevedoring company. All the cargo unloaded was
over them, however the parties may agree to limit the liability received at the pier by the Visayan Cebu Terminal Company,
of the carrier considering that the goods have still to go through Inc., arrastre operator of the port. This terminal company had
the inspection of the customs authorities before they are also its own checker, Romeo Quijano, who also recorded and
actually turned over to the consignee. This is a situation where noted down the good cargo from the bad one. The shipment in
the carrier loses control of the goods because of a custom question was not included in the report of bad order cargo of
regulation and it is unfair that it be made responsible for any both checkers, indicating that it was discharged from the ship
loss or damage that may be caused to the goods during the in good order and condition.
interregnum. Three days after the goods were unloaded from the
ship, respondent took delivery of his six cases of photographic
FACTS: supplies from the arrastreoperator. He discovered that the cases
showed signs of pilferage and, consequently, he hired marine
surveyors, R. J. del Pan & Company, Inc. to examine them. It is true that, as a rule, a common carrier is responsible
The surveyors examined the cases and made a physical count for the loss, destruction or deterioration of the goods it assumes
of their contents in the presence of representatives of petitioner, tocarry from one place to another unless the same is due to any
respondent and the stevedoring company. The finding of the of the causes mentioned in Article 1734 of the new Civil Code,
surveyors showed that some films and photographic supplies and that, if the goods are lost, destroyed or deteriorated, for
were missing valued at P324.63. causes other than those mentioned, the common carrier is
All the unloaded cargo, including the shipment in presumed to have been at fault or to have acted negligently,
question, was received by the Visayan Cebu Terminal unless it proves that it has observed extraordinary diligence in
Company, Inc., the arrastre operator appointed by the Bureau their care (Article 1735, I d e m .), and that this extraordinary
of Customs. It also appears that during the discharge, the cargo liability lasts from the time the goods are placed in the
was checked both by the stevedoring company hired by possession of the carrier until they are delivered to the
petitioner as well as by the arrastre operator of the port, and the consignee, or "to the person who has the right to receive them"
shipment in question, when discharged from the ship, was (Article 1736, I d e m .), but these provisions only apply when
found to be in good order and condition. But after it was the loss, destruction or deterioration takes place while the
delivered to respondent three days later, the same was goods are in the possession of the carrier, and not after it has
examined by a marine surveyor who found that some films and lost control of them. The reason is obvious. While the goods
supplies were missing valued at P324.63. are in its possession, it is but fair that it exercise extraordinary
diligence in protecting them from damage, and if loss occurs,
the law presumes that it was due to its fault or negligence. This
ISSUE: is necessary to protect the interest of the owner who is at its
Is the carrier responsible for the loss considering that mercy. The situation changes after the goods are delivered to
the same occurred after the shipment was discharged from the the consignee.
ship and placed in the possession and custody of the customs
authorities?

HELD:
No. The carrier is not responsible for the loss.

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32. Philippines First Insurance vs. Wallem Philippines Asia Star Freight Services, Inc. undertook the delivery
G.R. No. 165647 of the subject shipment from the pier to the consignee's
March 26,2009 warehouse in Quezon City, while the final inspection was
conducted jointly by the consignee's representative and the
FACTS: cargo surveyor. During the unloading, it was found and noted
On or about 2 October 1995, Anhui Chemicals Import & that the bags had been discharged in damaged and bad order
Export Corporation loaded on board M/S Offshore Master a condition. Upon inspection, it was discovered that 63,065.00
shipment consisting of 10,000 bags of sodium sulphate kilograms of the shipment had sustained unrecovered spillages,
anhydrous 99 PCT Min. (shipment), complete and in good while 58,235.00 kilograms had been exposed and
order for transportation to and delivery at the port of Manila for contaminated, resulting in losses due to depreciation and
consignee, L.G. Atkimson Import-Export, Inc. (consignee), downgrading.
covered by a Clean Bill of Lading.
Petitioner, in the exercise of its right of subrogation,
The Bill of Lading reflects the gross weight of the total cargo at sent a demand letter to Wallem for the recovery of the amount
500,200 kilograms. The Owner and/or Charterer of M /V paid by petitioner to the consignee. However, despite receipt of
Offshore Master is unknown while the shipper of the shipment the letter, Wallem did not settle nor even send a response to
is Shanghai Fareast Ship Business Company. Both are foreign petitioner's claim. 15 15 Consequently, petitioner instituted an
firms doing business in the Philippines, thru its local ship action before the RTC for damages against respondents for the
agent, respondent Wallem Philippines Shipping, Inc. (Wallem). recovery of P397,879.69 representing the actual damages
suffered by petitioner plus legal interest.
The shipment arrived at the port of Manila on board the vessel
It was disclosed during the discharge of the shipment from the
carrier that 2,426 poly bags (bags) were in bad order and ISSUE:
condition, having sustained various degrees of spillages and Whether or not, as a common carrier, the carrier's duties
losses. This is evidenced by the Turn over Survey of Bad Order extend to the obligation to safely discharge the cargo from the
Cargoes (turn-over survey) of the arrastre operator. Thebas vessel.
state of the bag is also evinced by the arrastre operator's
Request for Bad Order Survey.
HELD:

Page | 88
 Yes. It extends to the obligation to safely discharge the the trial court's finding of actual damages in the amount of
cargo. P397,879.69 has to be sustained.

It is undisputed that the shipment was damaged prior to

its receipt by the insured consignee. The damage to the
shipment was documented by the turn-over survey and Request
for Bad Order Survey. The turn-over survey, in particular,
expressly stipulates that 2,426 bags of the shipment were
received by the arrastre operator in damaged condition. With
these documents, petitioner insists that the shipment incurred
damage or losses while still in the care and responsibility of
Wallem and before it was turned over and delivered to the
arrastre operator.

PERIOD OF RESPONSIBILITY. The responsibility

of the carrier shall commence from the time when the goods
are loaded on board the vessel and shall cease when they are
discharged from the vessel.
The Carrier shall not be liable of loss of or damage to
the goods before loading and after discharging from the vessel,
howsoever such loss or damage arises.

It is settled in maritime law jurisprudence that cargoes

while being unloaded generally remain under the custody of the
carrier. In the instant case, the damage or losses were incurred
during the discharge of the shipment while under the
supervision of the carrier. Consequently, the carrier is liable for
the damage or losses caused to the shipment. As the cost of the
actual damage to the subject shipment has long been settled,

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33. Asian Terminals vs. Philam Insurance found that one Frame Axle Sub without LWR was deeply
G.R. Nos. 181163, 181262 and 181319. dented on the buffle plate while six Frame Assembly with Bush
July 24,2013 were deformed and misaligned. Owing to the extent of the
damage to said cargoes, Universal Motors declared them a total
loss.
On August 4, 1995, Universal Motors led a formal
FACTS: claim for damages in the amount of P643,963.84 against
Westwind, ATI and R.F . Revilla Customs Brokerage, Inc.
On April 15, 1995, Nichimen Corporation When Universal Motors' demands remained unheeded, it
shipped to Universal Motors Corporation (Universal Motors) sought reparation from and was compensated in the sum of
219 packages containing 120 units of brand new Nissan Pickup P633,957.15 by Philam. Accordingly, Universal Motors issued
Truck Double Cab 4x2 model, without engine, tires and a Subrogation Receipt dated November 15, 1995 in favor of
batteries, on board the vessel S/S "Calayan Iris" from Japan to Philam. On January 18, 1996, Philam, as subrogee of Universal
Manila. The shipment, which had a declared value of Motors, led a Complaint for damages against Westwind, ATI
US$81,368 or P29,400,000, was insured with Philam against and R.F . Revilla Customs Brokerage, Inc. before the RTC of
all risks under Marine Policy No. 708-8006717-4. Makati City, Branch 148.
The carrying vessel arrived at the port of Manila
on April 20, 1995, and when the shipment was unloaded by the
staff of ATI, it was found that the package marked as 03245- ISSUE:
42K/1 was in bad order. The Turn Over Survey of Bad Order Who between Westwind and ATI should be liable for
Cargoes 6 6 dated April 21, 1995 identified two packages, the damage to the cargo?
labeled 03-245-42K/1 and 03/237/7CK/2, as being dented and
broken. Thereafter, the cargoes were stored for temporary HELD:
safekeeping inside CFS Warehouse in Pier No. 5.
On May 11, 1995, the shipment was withdrawn by R.F . They are both liable solidarily. The court a quo ,
Revilla Customs Brokerage, Inc., the authorized broker of however, found both petitioners Westwind and ATI, jointly and
Universal Motors, and delivered to the latter's warehouse in severally, liable for the damage to the cargo. It observed that
Mandaluyong City. Upon the request of Universal Motors, a while the staff of ATI undertook the physical unloading of the
bad order survey was conducted on the cargoes and it was cargoes from the carrying vessel, Westwind's duty officer

Page | 90
exercised full supervision and control over the entire process. arrastre operator's duty is to take good care of the goods and to
The appellate court armed the solidary liability of Westwind turn them over to the party entitled to their possession. 59 59
and ATI, but only for the damage to one Frame Axle Sub Handling cargo is mainly the arrastre operator's principal work
without Lower. so its drivers/operators or employees should observe the
While it is true that an arrastre operator and a carrier standards and measures necessary to prevent losses and
may not be held solidarily liable at all times, the facts of these damage to shipments under its custody.
cases show that apart from ATI's stevedores being directly in
charge of the physical unloading of the cargo, its foreman
picked the cable sling that was used to hoist the packages for
transfer to the dock. Moreover, the fact that 218 of the 219
packages were unloaded with the same sling unharmed is
telling of the inadequate care with which ATI's stevedore
handled and discharged the case.
It is settled in maritime law jurisprudence that cargoes
while being unloaded generally remain under the custody of the
carrier. The Damage Survey Report of the survey conducted by
Phil. Navtech Services, Inc. from April 20-21, 1995 reveals
that the cargo was damaged by ATI stevedores due to over
tightening of a cable sling hold during discharge from the
vessel's hatch to the pier. Since the damage to the cargo was
incurred during the discharge of the shipment and while under
the supervision of the carrier, the latter is liable for the damage
caused to the cargo.
This is not to say, however, that petitioner ATI is
without liability for the damaged cargo.
The functions of an arrastre operator involve the
handling of cargo deposited on the wharf or between the
establishment of the consignee or shipper and the ship's tackle.
Being the custodian of the goods discharged from a vessel, an

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34. Jesusavda. De Nueca vs. The Manila Railroad Company that there was nothing to link the security agency to the death
CA-G.R. No. 31731. of Navidad. It ruled that Navidad failed to show that
January 30,1968 Escartininictedst blows upon the victim and the evidence
merely established the fact of death of Navidad by reason of his
35. LRTA vs. Marjorie Navidad having been hit by the train owned and managed by the LRTA
G.R. No. 145804 and operated at the time by Roman. The appellate court faulted
February 6,2003 petitioners for their failure to present expert evidence to
establish the fact that the application of emergency brakes
could not have stopped the train. Hence, the present petition for
SYNOPSIS review. IcTEaCThe Supreme Court armed the decision of the
On 14 October 1993, NicanorNavidad, then drunk, Court of Appeals. If there is any liability that could be
entered the EDSA LRT station after purchasing a "token" attributed to Prudent, it could only be for tort under the
(representing payment of the fare). JunelitoEscartin, the provisions of Article 2176 and related provisions, in
security guard assigned to the area, approached Navidad. A conjunction with Article 2180, of the Civil Code. In the
misunderstanding or an altercation between the two apparently absence of satisfactory explanation by the carrier on how the
ensued that led to a stght. At the exact moment that Navidad accident occurred, which petitioners, according to the appellate
fell, an LRT train, operated by petitioner Rodolfo Roman, was court, have failed to show, the presumption would be that it has
coming in. Navidad was struck by the moving train, and he was been at fault, an exception from the general rule that negligence
killed instantaneously. Private respondent Marjorie Navidad, must be proved. Regrettably for LRT , as well as the surviving
the widow of Nicanor, along with her children, led a complaint spouse and heirs of the late NicanorNavidad, the Court is
for damages against JunelitoEscartin, Rodolfo Roman, the concluded by the factual nding of the Court of Appeals that
LRTA, the Metro Transit Organization, Inc. and Prudent there was nothing to link Prudent to the death of
Security Agency for the death of her husband. The trial court NicanorNavidad, for the reason that the negligence of its
ruled in favor of private respondent by awarding actual, moral employee, Escartin, has not been duly proven. The Court also
and compensatory damages. Prudent Security Agency appealed absolved petitioner Rodolfo Roman, there being no showing
to the Court of Appeals. The appellate court exonerated that he is guilty of any culpable act or omission and also for the
Prudent from any liability for the death of Nicanor and instead reason that the contractual tie between the LRT and Navidad is
held LRTA and Roman jointly and severally liable. In not itself a juridical relation between the latter and Roman;
exempting Prudent from liability, the appellate court stressed thus, Roman can be made liable only for his own fault or

Page | 92
negligence. The Court also ruled that the award of nominal shifts upon the carrier to prove that the injury is due to an
damages, in addition to actual damages, is untenable stressing unforeseen event or to f o r c e m aje u r e . In the absence of
that nominal damages are adjudicated in order that a right of satisfactory explanation by the carrier on how the accident
the plaintiff, which has been violated or invaded by the occurred, which petitioners, according to the appellate court,
defendant, may be vindicated or recognized, and not for the have failed to show, the presumption would be that it has been
purpose of indemnifying the plaintiff for any loss suffered by at fault, an exception from the general rule that negligence
him. It is also an established rule that nominal damages cannot must be proved.
co-exist with compensatory damages.

[Link].; EXTRA CONTRACTUAL OBLIGATIONS;

SYLLABUS
QUASI-DELICTS; AN EMPLOYER CANNOT BE HELD
LIABLE FOR DAMAGES ABSENT PROOF OF FAULT
[Link] LAW; COMMON CARRIERS; LIABILITY FOR
OR NEGLIGENCE ON THE PART OF ITS EMPLOYEE;
DEATH OR INJURY TO PASSENGERS. — The law
CASE AT BAR. — The foundation of LRTA's liability is the
requires common carriers to carry passengers safely using the
contract of carriage and its obligation to indemnify the victim
utmost diligence of very cautious persons with due regard for
arises from the breach of that contract by reason of its failure to
all circumstances. Such duty of a common carrier to provide
exercise the high diligence required of the common carrier. In
safety to its passengers so obligates it not only during the
the discharge of its commitment to ensure the safety of
course of the trip but for so long as the passengers are within its
passengers, a carrier may choose to hire its own employees or
premises and where they ought to be in pursuance to the
avail itself of the services of an outsider or an independent rm
contract of carriage. The statutory provisions render a common
to undertake the task. In either case, the common carrier is not
carrier liable for death of or injury to passengers (a) through the
relieved of its responsibilities under the contract of carriage.
negligence and wilful acts of its employees or b ) on account of
Should Prudent be made likewise liable? If at all, that liability
wilful acts or negligence of other passenger and strangers if
could only be for tort under the provisions of Article 2176 and
the common carrier’s employees through the exercise of due
related provisions, in conjunction with Article 2180, of the
diligence could have prevented or stopped the act or omission.
Civil Code. The premise, however, for the employer's liability
In case of such death or injury, a carrier is presumed to have
is negligence or fault on the part of the employee. Once such
been at fault or been negligent, and by simple proof of injury,
fault is established, the employer can then be made liable on
the passenger is relieved of the duty to still establish the fault
the basis of the presumption juristantum that the employer
or negligence of the carrier or of its employees and the burden
failed to exercise diligentissimipatrisfamilias in the selection

Page | 93
and supervision of its employees. The liability is primary and and Roman; thus, Roman can be made liable only for his own
can only be negated by showing due diligence in the selection fault or negligence.
and supervision of the employee, a factual matter that has not
been shown. Absent such a showing, one might ask further, FACTS:
how then must the liability of the common carrier, on the one On 14 October 1993, about half an hour past seven
hand, and an independent contractor, on the other hand, be o'clock in the evening, NicanorNavidad, then drunk, entered
described? It would be solidary. A contractual obligation can the EDSA LRT station after purchasing a "token" (representing
be breached by tort and when the same act or omission causes payment of the fare). While Navidad was standing on the
the injury, one resulting in culpa contractual and the other in platform near the LRT tracks, JunelitoEscartin, the security
culpa aquillana , Article 2194 of the Civil Code can well apply. guard assigned to the area approached Navidad. A
In ne, a liability for tort may arise even under a contract, where misunderstanding or an altercation between the two apparently
tort is that which breaches the contract. Stated differently, ensued that led to a stght. No evidence, however, was adduced
when an act which constitutes a breach of contract would have to indicate how the ght started or who, between the two,
itself constituted the source of a quasi-delictual liability had no delivered the rst blow or how Navidad later fell on the LRT
contract existed between the parties, the contract can be said to tracks. At the exact moment that Navidad fell, an LRT train,
have been breached by tort, thereby allowing the rules on tort operated by petitioner Rodolfo Roman, was coming in.
to apply. Regrettably for LRT , as well as perhaps the surviving Navidad was struck by the moving train, and he was killed
spouse and heirs of the late NicanorNavidad, this Court is instantaneously.
concluded by the factual finding of the Court of Appeals that On 08 December 1994, the widow of Nicanor, herein
"there is nothing to link (Prudent) to the death of Nicanor respondent Marjorie Navidad, along with her children, led a
(Navidad), for the reason that the negligence of its employee, complaint for damages against JunelitoEscartin, Rodolfo
Escartin, has not been duly proven . . . ." This finding of the Roman, the LRTA, the Metro Transit Organization, Inc. (Metro
appellate court is not without substantial justification in our Transit), and Prudent for the death of her husband. LRTA and
own review of the records of the case. There being, similarly, Roman led a counterclaim against Navidad and a crossclaim
no showing that petitioner Rodolfo Roman himself is guilty of against Escartin and Prudent. Prudent, in its answer, denied
any culpable act or omission, he must also be absolved from liability and averred that it had exercised due diligence in the
liability. Needless to say, the contractual tie between the LRT selection and supervision of its security guards
and Navidad is not itself a juridical relation between the latter

Page | 94
ISSUE: observed extraordinary diligence as prescribed in Articles 1733
Whether or not, petitioners are liable for the death of and 1755."
NicanorNavidad, Jr. "Article [Link] carriers are liable for the death
of or injuries to passengers through the negligence or wilful
acts of the former's employees, although such employees may
HELD: have acted beyond the scope of their authority or in violation of
Yes. They are liable. the orders of the common carriers.

Respondents, supporting the decision of the appellate

court, contended that a contract of carriage was deemed created
from the moment Navidad paid the fare at the LRT station and
entered the premises of the latter, entitling Navidad to all the
rights and protection under a contractual relation, and that the
appellate court had correctly held LRTA and Roman liable for
the death of Navidad in failing to exercise extraordinary
diligence imposed upon a common carrier. Law and
jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is
burdened with the duty of exercising utmost diligence in
ensuring the safety of passengers. The Civil Code, governing
the liability of a common carrier for death of or injury to its
passengers, provides:
"Article 1755.A common carrier is bound to carry the
passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons,
with a due regard for all the circumstances.
"Article [Link] 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

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36. Dangwa Transportation Co., Inc. vs. Court of Appeals.
G.R. No. 95582. 3. ID.; ID.; ID.; BOARDING AND ALIGHTING FROM A
October 7,1991 SLOWLY MOVING VEHICLE; NOT A NEGLIGENCE P
E R S E . — It is not negligence p e r s e , or as a matter of
SYLLABUS law, for one to attempt to board a train or streetcar which is
moving slowly. An ordinarily prudent person would have made
2. CIVIL LAW; COMMON CARRIERS; LIABLE FOR the attempt to board the moving conveyance under the same or
INJURIES SUFFERED BY BOARDING PASSENGERS similar circumstances. The fact that passengers board and
RESULTING FROM THE PREMATURE alight from a slowly moving vehicle is a matter of common
ACCELERATION OF THEIR CONVEYANCES. — The experience and both the driver and conductor in this case could
contention of petitioners that the driver and the conductor had not have been unaware of such an ordinary practice.
no knowledge that the victim would ride on the bus, since the
latter had supposedly not manifested his intention to board the
same, does not merit consideration. When the bus is not in 4. ID.; ID.; ID.; LIABILITY THEREOF; EXTENDS TO
motion there is no necessity for a person who wants to ride the PERSONS BOARDING THE VEHICLE AS WELL AS
same to signal his intention to board. A public utility bus, once THOSE ALIGHTING THEREFROM. — The victim herein,
it stops, is in effect making a continuous offer to bus riders. by stepping and standing on the platform of the bus, is already
Hence, it becomes the duty of the driver and the conductor, considered a passenger and is entitled to all the rights and
every time the bus stops, to do no act that would have the effect protection pertaining to such a contractual relation. Hence, it
of increasing the peril to a passenger while he was attempting has been held that the duty which the carrier of passengers
to board the same. The premature acceleration of the bus in this owes to its patrons extends to persons boarding the cars as well
case was a breach of such duty. It is the duty of common as to those alighting therefrom. (Del Prado v s . Manila Electric
carriers of passengers, including common carriers by railroad Co., s u p r a. )
train, streetcar, or motorbus, to stop their conveyances a
reasonable length of time in order to afford passengers an
opportunity to board and enter, and they are liable for injuries 5. ID.; ID.; ID.; BOUND TO OBSERVE
suffered by boarding passengers resulting from the sudden EXTRAORDINARY DILIGENCE FOR THE SAFETY
starting up or jerking of their conveyances while they are doing OF THE PASSENGERS TRANSPORTED BY THEM. —
so. Common carriers, from the nature of their business and for

Page | 96
reasons of public policy, are bound to observe extraordinary FACTS:
diligence for the safety of the passengers transported by them, On May 13, 1985, private respondents filed a complaint
according to all the circumstances of each case. A common 1 1 for damages against petitioners for the death of
carrier is bound to carry the passengers safely as far as human PedritoCudiamat as a result of a vehicular accident which
care and foresight can provide, using the utmost diligence of occurred on March 25, 1985 at Marivic, Sapid, Mankayan,
very cautious persons, with a due regard for all the Benguet. Among others, it was alleged that on said date, while
circumstances. (Art. 1755, Civil Code.) petitioner Theodore M. Lardizabal was driving a passenger bus
belonging to petitioner corporation in a reckless and imprudent
6. ID.; DAMAGES; ACTION BASED ON A CONTRACT manner and without due regard to traffic rules and regulations
OF CARRIAGE; FINDING OF FAULT OR and safety to persons and property, it ran over its passenger,
NEGLIGENCE ON THE PART OF CARRIER NEED PedritoCudiamat. However, instead of bringing Pedrito
NOT BE EXPRESS. — It has also been repeatedly held that immediately to the nearest hospital, the said driver, in utter bad
in an action based on a contract of carriage, the court need not faith and without regard to the welfare of the victim, first
make an express finding of fault or negligence on the part of brought his other passengers and cargo to their respective
the carrier in order to hold it responsible to pay the damages destinations before bringing said victim to the Lepanto
sought by the passenger. By the contract of carriage, the carrier Hospital where he expired.
assumes the express obligation to transport the passenger to On the other hand, petitioners alleged that they had
destination safely and to observe extraordinary diligence with a observed and continued to observe the extraordinary diligence
due regard for all the circumstances, and any injury that might required in the operation of the transportation company and the
be suffered by the passenger is right away attributable to the supervision of the employees, even as they add that they are
fault or negligence of the carrier. This is an exception to the not absolute insurers of the safety of the public at large.
general rule that negligence must be proved, and it is therefore Further, it was alleged that it was the victim's own carelessness
incumbent upon the carrier to prove that it has exercised and negligence which gave rise to the subject incident, hence
extraordinary diligence as prescribed in Articles 1733 and 1755 they prayed for the dismissal of the complaint plus an award of
of the Civil Code. damages in their favor by way of a counterclaim.

ISSUE:
Whether or not, petitioner is guilty of negligence.

Page | 97
HELD:
Yes. Petitioner is guilty of negligence.

It is the duty of common carriers of passengers,

including common carriers by railroad train, streetcar, or
motorbus, to stop their conveyances a reasonable length of time
in order to afford passengers an opportunity to board and enter,
and they are liable for injuries suffered by boarding passengers
resulting from the sudden starting up or jerking of their
conveyances while they are doing so.
Further, even assuming that the bus was moving, the act
of the victim in boarding the same cannot be considered
negligent under the circumstances. As clearly explained in the
testimony of the aforestated witness for petitioners, Virginia
Abalos, the bus had "just started" and "was still in slow
motion" at the point where the victim had boarded and was on
its platform.
It is not negligence perse, or as a matter of law, for one
to attempt to board a train or streetcar which is moving slowly.
An ordinarily prudent person would have made the
attempt to board the moving conveyance under the same or
similar circumstances. The fact that passengers board and
alight from a slowly moving vehicle is a matter of common
experience and both the driver and conductor in this case could
not have been unaware of such an ordinary practice.

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37. KAPALARAN BUS LINES VS. CORONADO.
G.R. NO. 85331. AUGUST 25, 1989
was directly on the path of the KBL bus. The impact indicates
Facts: that the KBL bus was travelling at a fast rate of speed because,
The jeepney driven by Lope Grajera was then coming from after the collision, it did not stop; it travelled for another
Pila, Laguna and traversing the old highway towards Sta. Cruz 50meters and stopped only when ithit an electric post.
collided with a KAPALARAN BUS LINE (KBL), a bus driven
by its regular driver Virgilio Llamoso. As testified to by Atty. Issue: WON KAPALARAN BUS LINE (KBL) is liable for
Conrado L. Manicad who was driving a Mustang car coming damages from the collision;
from the direction of Sta. Cruz and proceeding towards the
direction of Manila, he stopped at the intersection to give way Ruling: Yes, KBL is liable for the damages in the collision.
to the jeepney driven by Grajera. The sketch marked very The patent and gross negligence on the part of the petitioner
clearly that the jeepney had already traversed the intersection Kapalaran's driver raised the legal presumption that Kapalaran
when it met the KBL bus head-on. It is also obvious that the as employer was guilty of negligence either in the selection or
point of impact was on the right lane of the highway which is in the supervision of its bus driver. Where the employer is held
the lane properly belonging to the jeepney. Judging from the liable for damages, it has of course a right of recourse against
testimony of Atty. Conrado L. Manicad and the sketch (Exhibit its own negligent employee. If petitioner Kapalaran was
'E'), the sequence of events shows that the first vehicle to arrive interested in maintaining its right of recourse against or
at the intersection was the jeepney. Seeing that the road was reimbursement from its own driver, it should have appealled
clear, the jeepney which had stopped at the intersection began from that portion of the trial court's decision which had failed
to move forward, and for his part, Atty. Manicad stopped his to hold the bus driver is not "merely subsidiary," and is not
car at the intersection to give way to the jeepney. The KBL bus limited to cases where the employee "cannot pay his liability"
had no more room within which to stop without slamming into nor are private respondents compelled first to proceed against
the rear of the vehicle behind the car of Atty. Manicad. The the bus driver. The liability of the employer under Article 2180
KBL driver chose to gamble on proceeding on its way, of the Civil Code is direct and immediate; it is not conditioned
unfortunately, the jeepney driven by Grajera, which had the upon prior recourse against the negligent employee and a prior
right-of-way, was about to cross the center of the highway and showing of the insolvency of such employee. So far as the
record shows, petitioner Kapalaran was unable to rebut the

Page | 99
presumption of negligence on its own part. The award of moral of their drivers. Article 2231 of theCivil Code explicitly
damages against petitioner Kapalaran is not only entirely in authorizes the imposition of exemplary damages in cases of
order; it is also quite modest considering Dionisio Shinyo's quasi-delicts "if the defendant acted with gross
death during the pendency of this petition, a death hastened by, negligence."Thus, we believe that the award of exemplary
if not directly due to, the grievous injuries sustained by him in damages by the trial court was quite proper, although granted
the violent [Link] law requires petitioner as common for the wrong reason, andshould not only be restored but
carrier to exercise extraordinary diligence in carrying and augmented in the present case. The Court is aware that
transporting their passenger safely "as far as human care and respondent Shinyo did not file a separate petition for review to
foresight can proved, using the utmost diligence of very set aside that portion of the Court of Appeals' decision which
cautious persons, with due regard for all circumstances."In deleted the grant by the trial court of exemplary damages. It is
requiring the highest possible degree of diligence from settled, however, that issues which must be resolvedif
common carriers and creating a presumption of negligence substantial justice is to be rendered to the parties, may and
against them, the law compels them to curb the recklessness of should be considered and decided by this Court even if those
their drivers. issues had not been explicitly raised by the party affected. In
the instant case, it is not only the demands of substantial justice
While the immediate beneficiaries of the standard of but also the compelling considerations of public policy noted
extraordinary diligence are, of course, the passengers and above, which impel us to the conclusion that the trial court's
owners of cargo carried by a common carrier, they are not only award of exemplary damages was erroneously deleted and
persons that the law seeks to benefit. For if common carriers must be restored and brought more nearly to the level which
carefully observed the statutory standard of extraordinary public policy and substantial justice require.
diligence in respect of their own passengers, they cannot help
but simultaneously benefit pedestrians and the owners and Torts and Damages; Quasi-Delict; If the driver was found
passengers of other vehicles who are equally entitled to the safe violating traffic rules, a legal presumption that he was
and convenient use of our roads and highways. negligent arises.—The bus driver, who was driving at a speed
too high to be safe and proper at or near an intersection on the
The law seeks to stop and prevent the slaughter and maiming highway, and in any case too high to be able to slow down and
of people (whether passengers or not) and the destruction of stop behind the cars which had preceded it and which had
property (whether freight or not) on our highways by buses, the stopped at the intersection, chose to swerve to the left lane and
very size and power of whichseem often to inflame the minds overtake such preceding vehicles, entered the intersection and

Page | 100
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: x x x Thus, a legal presumption
arose that the bus driver was negligent, a presumption
Kapalaran was unable to overthrow.
Same; Same; Damages; The patent and gross negligence of
petitioner’s driver raises the legal presumption that petitioner,
as employer, was negligent either in the selection or in the
supervision of its employees.—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 is thoroughly unpersuasive. The patent and gross
negligence on the part of 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
drivers.

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 EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA

38. TRANS-ASIA SHIPPING LINES VS. CA

G.R. NO. 118126. MARCH 4, 1996

FACTS:
Respondent Atty. Renato Arroyo, a public attorney, bought a City. Petitioner, the next day, boarded the M/V Asia Japan for
ticket from herein petitioner for the voyage of M/V Asia its voyage to Cagayan de Oro City, likewise a vessel of
Thailand vessel to Cagayan de Oro City from Cebu City on defendant.
November 12, 1991.
On account of this failure of defendant to transport him to the
At around 5:30 in the evening of November 12, 1991, place of destination on November 12, 1991, respondent Arroyo
respondent boarded the M/V Asia Thailand vessel during filed before the trial court “an action for damage arising from
which he noticed that some repairs were being undertaken on bad faith, breach of contract and from tort,” against petitioner.
the engine of the vessel. The vessel departed at around 11:00 in The trial court ruled only for breach of contract. The CA
the evening with only one (1) engine running. reversed and set aside said decision on appeal.

After an hour of slow voyage, the vessel stopped near Kawit ISSUE: Whether or not the petitioner Trans-Asia was
Island and dropped its anchor thereat. After half an hour of negligent?
stillness, some passengers demanded that they should be
allowed to return to Cebu City for they were no longer willing HELD: Yes.
to continue their voyage to Cagayan de Oro City. The captain
acceded to their request and thus the vessel headed back to Before commencing the contracted voyage, the petitioner
Cebu City. undertook some repairs on the cylinder head of one of the
vessel’s engines. But even before it could finish these repairs, it
In Cebu City, plaintiff together with the other passengers who allowed the vessel to leave the port of origin on only one
requested to be brought back to Cebu City, were allowed to functioning engine, instead of two. Moreover, even the lone
disembark. Thereafter, the vessel proceeded to Cagayan de Oro functioning engine was not in perfect condition as sometime

Page | 102
after it had run its course, it conked out. This caused the vessel a contract of carriage is a clear breach of its duty prescribed in
to stop and remain adrift at sea, thus in order to prevent the Article 1755 of the Civil Code.
ship from capsizing, it had to drop anchor. Plainly, the vessel
was unseaworthy even before the voyage began. 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.[21] The failure of a common carrier to maintain in
seaworthy condition its vessel involved in a contract of
carriage is a clear breach of is duty prescribed in Article 1755
of the Civil Code.

Common Carriers; 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.—Before commencing the
contracted voyage, the petitioner undertook some repairs on the
cylinder head of one of the vessel’s engines. But even before it
could finish these repairs, it allowed the vessel to leave the port
of origin on only one functioning engine, instead of two.
Moreover, even the lone functioning engine was not in perfect
condition as sometime after it had run its course, it conked out.
This caused the vessel to stop and remain adrift at sea, thus in
order to prevent the ship from capsizing, it had to drop anchor.
Plainly, the vessel was unseaworthy even before the voyage
began. 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

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39. CALTEX VS. SULPICIO LINES.
G.R. NO. 131166. SEPTEMBER 30, 1999 The charterer of a vessel has no obligation before transporting
all legal requirements. The duty rests upon the common carrier
SYNOPSIS simply for being engaged in public service.
On December 19, 1987, the MV Doña Paz, a passenger ship
bound for Manila colided with motor tanker MT Vector. MT Facts:
Vector carried on board oil products owned by Caltex by virtue On December 20, 1987, motor tanker MV Vector, carrying
of a charter contract. Numerous people died in that accident petroleum products of Caltex, collided in the open sea with
including public school teacher Sebastian Cañezal and his 11 passenger ship MV Doña Paz, causing the death of all but 25 of
year old daughter. In 1989, Cañezal's wife and mother filed a the latter’s passengers. Among those who died were Sebastian
complaint for "Damages arising from Breach of Contract of Canezal and his daughter Corazon Canezal. On March 22,
Carriage" against Sulpicio Lines, Inc. Sulpicio Lines, in turn, 1988, the board of marine inquiry found that Vector Shipping
filed a third party complaint against Vector Shipping, Inc. and Corporation was at fault. On February 13, 1989, Teresita
Caltex Phils. The trial court rendered decision against Sulpicio Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife and
Lines and dismissed the third-party complaint. On appeal, the mother respectively, filed with the Regional Trial Court of
Court of Appeals modified the trial court's ruling and held Manila a complaint for damages arising from breach of
Vector Shipping Co. and Caltex Phils., Inc., equally liable. contract of carriage against Sulpicio Lines. Sulpicio filed a
Hence, this petition. third-party complaint against Vector and Caltex. The trial court
dismissed the complaint against Caltex, but the Court of
Caltex Phils. and Vector entered into a contract of Appeals included the same in the liability. Hence, Caltex filed
affreightment also known as a voyage charter. In a voyage this petition.
charter, the charter party provides for the hire of the vessel
only, the ship owner to supply the ship's store, pay for the Issue: Is the charterer of a sea vessel liable for damages
wages of the master of the crew, and defray the expenses for resulting from a collision between the chartered vessel and a
the maintenance of the ship. If the charter is a contract of passenger ship?
affreightment, which leaves the general owner in possession of
the ship as owner for the voyage, the rights and the Held:
responsibilities of ownership rest on the owner. The Charterer First: The charterer has no liability for damages under
is free from liability to third persons in respect of the ship. Philippine Maritime laws.

Page | 104
 carrier. It is imperative that a public carrier shall remain as
Petitioner and Vector entered into a contract of affreightment, such, notwithstanding the charter of the whole or portion of a
also known as a voyage charter. 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
A charter party is a contract by which an entire ship, or some charter. It is only when the charter includes both the vessel and
principal part thereof, is let by the owner to another person for its crew, as in a bareboat or demise that a common carrier
a specified time or use; a contract of affreightment is one by becomes private, at least insofar as the particular voyage
which the owner of a ship or other vessel lets the whole or part covering the charter-party is concerned. Indubitably, a ship-
of her to a merchant or other person for the conveyance of owner in a time or voyage charter retains possession and
goods, on a particular voyage, in consideration of the payment control of the ship, although her holds may, for the moment, be
of freight. A contract of affreightment may be either time the property of the charterer. A common carrier is a person or
charter, wherein the leased vessel is leased to the charterer for a corporation whose regular business is to carry passengers or
fixed period of time, or voyage charter, wherein the ship is property for all persons who may choose to employ and to
leased for a single voyage. In both cases, the charter-party remunerate him. 16 MT Vector fits the definition of a common
provides for the hire of the vessel only, either for a determinate carrier under Article 1732 of the Civil Code.
period of time or for a single or consecutive voyage, the ship
owner to supply the ship’s store, pay for the wages of the The public must of necessity rely on the care and skill of
master of the crew, and defray the expenses for the common carriers in the vigilance over the goods and safety of
maintenance of the ship. If the charter is a contract of the passengers, especially because with the modern
affreightment, which leaves the general owner in possession of development of science and invention, transportation has
the ship as owner for the voyage, the rights and the become more rapid, more complicated and somehow more
responsibilities of ownership rest on the owner. The charterer is hazardous. For these reasons, a passenger or a shipper of goods
free from liability to third persons in respect of the ship. is under no obligation to conduct an inspection of the ship and
its crew, the carrier being obliged by law to impliedly warrant
Second: MT Vector is a common carrier its seaworthiness.

The charter party agreement did not convert the common Third: Is Caltex liable for damages under the Civil Code?
carrier into a private carrier. The parties entered into a voyage
charter, which retains the character of the vessel as a common

Page | 105
The charterer of a vessel has no obligation before transporting Same; Same; Words and Phrases; A charter party is a
its cargo to ensure that the vessel it chartered complied with all contract by which an entire ship, or some principal part
legal requirements. The duty rests upon the common carrier thereof, is let by the owner to another person for a specified
simply for being engaged in "public service." The relationship time or use.—A charter party is a contract by which an entire
between the parties in this case is governed by special laws. ship, or some principal part thereof, is let by the owner to
Because of the implied warranty of seaworthiness, shippers of another person for a specified time or use; a contract of
goods, when transacting with common carriers, are not affreightment is one by which the owner of a ship or other
expected to inquire into the vessel’s seaworthiness, vessel lets the whole or part of her to a merchant or other
genuineness of its licenses and compliance with all maritime person for the conveyance of goods, on a particular voyage, in
laws. To demand more from shippers and hold them liable in consideration of the payment of freight.
case of failure exhibits nothing but the futility of our maritime
laws insofar as the protection of the public in general is Same; Same; Same; A contract of affreightment may be
concerned. Such a practice would be an absurdity in a business either time charter, wherein the leased vessel is leased to the
where time is always of the essence. Considering the nature of charterer for a fixed period of time, or voyage charter, wherein
transportation business, passengers and shippers alike the ship is leased for a single voyage.—A contract of
customarily presume that common carriers possess all the legal affreightment may be either time charter, wherein the leased
requisites in its operation. vessel is leased to the charterer for a fixed period of time,
or voyage charter, wherein the ship is leased for a single
Contracts; Common Carriers; Respective rights and voyage. In both cases, the charter-party provides for the hire of
duties of a shipper and carrier depends on whether the the vessel only, either for a determinate period of time or for a
contract of carriage is a bill of lading or equivalent shipping single or consecutive voyage, the ship owner to supply the
documents on the one hand, or a charter party or similar ship’s store, pay for the wages of the master of the crew, and
contract on the other.—The respective rights and duties of a defray the expenses for the maintenance of the ship.
shipper and the carrier depends not on whether thecarrier is
public or private, but on whether the contract of carriage is a Same; Same; Same; Under a demise or bareboat charter
bill of lading or equivalent shipping documents on the one on the other hand, the charterer mans the vessel with his own
hand, or a charter party or similar contract on the other. people and becomes, in effect, the owner for the voyage or
service stipulated, subject to liability for damages caused by
negligence.—Under a demise or bareboat charter on the other

Page | 106
hand, the charterer mans the vessel with his own people and cargo to ensure that the vessel it chartered complied with all
becomes, in effect, the owner for the voyage or service legal requirements. The duty rests upon the common carrier
stipulated, subject to liability for damages caused by simply for being engaged in “public service.” The Civil Code
negligence. demands diligence which is required by the nature of the
obligation and that which corresponds with the circumstances
Same; Same; Same; A common carrier is a person or of the persons, the time and the place. Hence, considering the
corporation whose regular business is to carry passengers or nature of the obligation between Caltex and MT Vector, the
property for all persons who may choose to employ and to liability as found by the Court of Appeals is without basis.
remunerate him.—A common carrier is a person or corporation
whose regular business is to carry passengers or property for all Same; Same; Same; Because of the implied warranty of
persons who may choose toemploy and to remunerate him. MT seaworthiness, shippers of goods, when transacting with
Vector fits the definition of a common carrier under Article common carriers, are not expected to inquire into the vessel’s
1732 of the Civil Code. seaworthiness.—The relationship between the parties in this
case is governed by special laws. Because of the implied
Same; Same; Same; For a vessel to be seaworthy it must warranty of seaworthiness, shippers of goods, when transacting
be adequately equipped for the voyage and manned with a with common carriers, are not expected to inquire into the
sufficient number of competent officers and crew.—The vessel’s seaworthiness, genuineness of its licenses and
carriers are deemed to warrant impliedly the seaworthiness of compliance with all maritime laws. To demand more from
the ship. For a vessel to be seaworthy, it must be adequately shippers and hold them liable in case of failure exhibits nothing
equipped for the voyage and manned with a sufficient number but the futility of our maritime laws insofar as the protection of
of competent officers and crew. The failure of a common the public in general is concerned. By the same token, we
carrier to maintain in seaworthy condition the vessel involved cannot expect passengers to inquire every time they board a
in its contract of carriage is a clear breach of its duty prescribed common carrier, whether the carrier possesses the necessary
in Article 1755 of the Civil Code. papers or that all the carrier’s employees are qualified. Such a
practice would be an absurdity in a business where time is
Same; Same; Same; The charterer of a vessel has no always of the essence. Considering the nature of transportation
obligation before transporting its cargo to ensure that the business, passengers and shippers alike customarily presume
vessel it chartered complied with all legal requirements.—The that common carriers possess all the legal requisites in its
charterer of a vessel has no obligation before transporting its operation.

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40. VECTOR SHIPPING CORP. VS. ADELFO MACASA. immediate assistance to the survivors and kin of the victims;
G.R. NO 160219. JULY 21, 2008 (4) the sinking of MV Doña Paz was without contributory
negligence on its part; and (5) the collision was MT Vector's
FACTS fault since it was allowed to sail with an expired
Spouses Cornelio (Cornelio) and Anacleta Macasa coastwise license, expired certificate of inspection and it
(Anacleta), together with their eight-year-old grandson, was manned by unqualified and incompetent crew
Ritchie Macasa, (Ritchie) boarded the MV Doña Paz, owned members per findings of the Board of Marine Inquiry (BMI).
and operated by respondent Sulpicio Lines, Inc. (Sulpicio
Lines), at Tacloban, Leyte bound for Manila. MV Doña Paz The RTC ruled in favor of petitioners. Aggrieved, Sulpicio
collided with the MT Vector, an oil tanker owned and Lines, Caltex, Vector Shipping and Soriano appealed to the
operated by petitioners Vector Shipping Corporation CA. The Court of Appeals affirmed the RTC decision
(Vector Shipping) and Francisco Soriano (Soriano). with modification on the amount of damages awarded.
Only twenty-six persons survived: 24 passengers of MV
Doña Paz and 2 crew members of MT Vector. Both vessels ISSUE: Whether petitioner is liable.
were never retrieved. Respondents Adelfo, Emilia, Timoteo,
and Cornelio, Jr., all surnamed Macasa, are the children of RULING
Cornelio and Anacleta. On the other hand, Timoteo and his In Caltex (Philippines), Inc. v. Sulpicio Lines, Inc., we
wife, respondent Rosario Macasa, are the parents of Ritchie held that MT Vector fits the definition of a common
(the Macasas. carrier under Article 1732 of the New Civil Code. Our ruling in
that case is instructive:
The Macasas filed a Complaint for Damages arising out of
breach of contract of carriage against Sulpicio Lines before the Thus, the carriers are deemed to warrant impliedly the
RTC. The complaint imputed negligence to Sulpicio Lines seaworthiness of the ship. For a vessel to be seaworthy, it must
because it was remiss in its obligations as a common carrier. be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure
Sulpicio Lines traversed the complaint, alleging, among others of a common carrier to maintain in seaworthy condition the
that (1) MV Doña Paz was seaworthy in all aspects; (2) it vessel involved in its contract of carriage is a clear breach of its
exercised extraordinary diligence in transporting their duty prescribed in Article 1755 of the Civil Code.
passengers and goods; (3) it acted in good faith as it gave

Page | 108
The provisions owed their conception to the nature of the In its ruling, the Supreme Court held that, the rule that
business of common carriers. This business is impressed findings of fact of the CA are generally binding and
with a special public duty. The public must of necessity rely on conclusive on this Court. While this Court has recognized
the care and skill of common carriers in the vigilance over the several exceptions to this rule, none of these exceptions finds
goods and safety of the passengers, especially because with application in this case. It bears emphasis also that this Court
the modern development of science and invention, accords respect to the factual findings of the trial court,
transportation has become more rapid, more complicated and especially if affirmed by the CA on appeal. Unless the trial
somehow more hazardous. For these reasons, a passenger court overlooked substantial matters that would alter the
or a shipper of goods is under no obligation to conduct an outcome of the case, this Court will not disturb such findings.
inspection of the ship and its crew, the carrier being obliged by In any event, we have meticulously reviewed the records of the
law to impliedly warrant its seaworthiness. case and found no reason to depart from the rule.

Thus, the Court was disposed to agree with the findings of the Lastly, the Court cannot turn a blind eye to this gruesome
CA when it aptly held: maritime tragedy which is now a dark page in our nation's
history. We commiserate with all the victims, particularly with
We are not swayed by the lengthy disquisition of MT Vector the Macasas who were denied justice for almost two decades in
and Francisco Soriano urging this Court to absolve them this case. To accept petitioners' submission that this Court,
from liability. All evidence points to the fact that it was along with the RTC and the CA, should await the review by the
MT Vector's negligent officers and crew which caused it to Department of National Defense of the BMI findings, would,
ram into MV Doña Paz. More so, MT Vector was found to be in effect, limit the courts' jurisdiction to expeditiously try, hear
carrying expired coastwise license and permits and was and decide cases filed before them. It would not only prolong
not properly manned. As the records would also disclose, the Macasas' agony but would result in yet another tragedy at
there is a defect in the ignition system of the vessel, and it was the expense of speedy justice. This, we cannot allow.
not convincingly shown whether the necessitated repairs were
in fact undertaken before the said ship had set to sea. In short, Civil Law; Common Carriers; In Caltex (Philippines), Inc. vs.
MT Vector was unseaworthy at the time of the mishap. That Sulpicio Lines, Inc., 315 SCRA 709 (1999), we held that MT
the said vessel was allowed to set sail when it was, to everyone Vector fits the definition of a common carrier under Article
in the group's knowledge, not fit to do so translates into 1732 of the New Civil Code.—In Caltex (Philippines), Inc. v.
rashness and imprudence. Sulpicio Lines, Inc., 315 SCRA 709 (1999), we held that MT

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Vector fits the definition of a common carrier under Article
1732 of the New Civil Code. Our ruling in that case is
instructive: Thus, the carriers are deemed to warrant impliedly
the seaworthiness of the ship. For a vessel to be seaworthy, it
must be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure
of a common carrier to maintain in seaworthy condition the
vessel involved in its contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code. 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.

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41. STANDARD VACUUM OIL CO. VS. LUZON to recover damages. Defendant pleaded that its failure to
STEVEDORING. deliver was due to fortuitous event or caused by
G.R. NO. L-5203. APRIL 18, 1956 circumstances beyond its control and not its fault or
negligence or that any of its employees. The court found
FACTS: that the disaster was the result of an unavoidable accident
Defendant's barge No. L-522 was laden with gasoline and the loss of the gasoline was due to a fortuitous event
belonging to the plaintiff to be transported from Manila hence it dismissed the case.
to the Port of Iloilo. Defendant's tugboat "Snapper"picked
up the barge outside the breakwater. The barge was ISSUE:
placed behind the tugboat, it being connected to the latter W/N defendant exercised extraordinary diligence and that
by a tow rope. Behind the barge, three other barges were the accident was due to
likewise placed. The weather was good when on that day
force majeure.
the tugboat with its tow started on its voyage. The
weather remained good on February 3, 1947. About 3:00
HELD:
AM on February 4, the engine of the tugboat came to a
dead stop. The engineer found out that the trouble was NO. While the breaking of the idler may be due to an
due to a broken idler. A message was then sent to the accident, or to something unexpected, the cause of the
defendant's radio station in Manila informing its official disaster which resulted in the loss of the gasoline can
of the engine trouble. The master of the Snapper only be attributed to the negligence or lack of precaution
attempted to cast anchor but the water areas around to avert it on the part of defendant. Defendant had enough
Elefante Island were so deep. In the afternoon, the time to effectuate the rescue if it had only a competent
weather become worse and due to the rough condition of tug for the purpose because the weather was good from
the sea the anchor chains of the Snapper' and the four 3:00 o'clock a.m. to 12:00 o'clock noon of February 4,
barges broke. They were drifted and were dashed against 1947 and it was only in the afternoon that the wind began
the rocks. A hole was opened in the hull of the Snapper', to blow with some intensity, but failed to do so because of
which ultimately caused it to sink, while the barge No. L- that shortcoming. The loss of the gasoline certainly cannot
522 was so badly damaged that the gasoline it had on be said to be due to force majeure or unforeseen event but
board leaked out. Defendant failed to transport the to the failure of defendant to extend adequate and proper
gasoline so plaintiff brought an action with CFI Manila help. Considering these circumstances, the Court

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persuaded to conclude that defendant has failed to
established that it is exempt from liability under the law.
Defendant is hereby ordered to pay to plaintiff the sum of
P75,578.50, with legal interest from the date of the filing
of the complaint, with costs.

CARRIERS; MERCHANDISE TRANSPORTED AT RISK

OF SHIPPERS; WHEN SHIPOWNER LIABLE.—Under
Article 361 of the Code of Commerce, merchandise
transported in the sea by virtue of a contract entered into
between the shipper and the carrier, is deemed transported at
the risk and venture of the shipper, if the contrary is not
stipulated, and all damages suffered by the merchandise
during the transportation by reason of accident or force
majeure shall be for the account and risk of the shipper, but
the proof of these accidents is incumbent on the carrier. In the
present case, the gasoline was delivered in accordance with
the contract but defendant failed to transport it to its place of
destination, not because of accident or force majeure or cause
beyond its control, but due to the unseaworthiness of the
tugboat towing the barge carrying the gasoline, lack of
necessary spare parts on board, and deficiency or
incompetence in the man power of the tugboat. The loss was
also caused because the defendant did not have in readiness
any tugboat sufficient in tonnage and equipment to attend to
the rescue. Under the circumstances, defendant is not exempt
from liability under the law.

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42. NEGROS NAVIGATION VS. COURT OF not disturb what has been settled.) Where, as in this case, the
APPEALS. same questions relating to the same event have been put
G.R. NO. 110398. NOVEMBER 7, 1997 forward by parties similarly situated as in a previous case
litigated and decided by a competent court, the rule of stare
SYNOPSIS decisis is a bar to attempt to relitigate the same issue. Indeed,
This is a petition for review on certiorari of the decision of the the evidence presented in the instant case was the same as
Court of Appeals affirming with modification the Regional those presented in the Mecenas case. As to the third case, the
Trial Court's award of damages to private respondents for the rule is that a shipowner may be held liable for injuries to
death of their four relatives as a result of the sinking of M/V passengers notwithstanding the exclusively real and
Don Juan, a vessel owned by petitioner. The issues raised in hypothecary nature of martime law if fault can be attributed to
this petition were: first, whether the members of private shipowner. As to the damages awarded, the Court ruled that the
respondents; families were actually passengers of the M/V Don principle of stare decisis does not apply here in view of the
Juan; second, whether the ruling in the previous case (Mecenas differences in the personal circumstances of the victims. For
vs. Court of Appeals) involving the same incident be binding that matter differentiation would be justified even if private
on this case; third, whether the total loss of the M/V Don Juan respondents had joined the private respondents in the Mecenas
extinguished petitioner's liability; and whether the damages case. The doctrine of stare decisis works as a bar only against
awarded by the appellate court are excessive, unreasonable and issues litigated in a previous case.
unwarranted.
Facts:
The decision of the Court of Appeals affirmed with the
modification as to the amount of damages. On the first issue, Private respondent Ramon Miranda purchased from the Negros
the Supreme Court held that the fact that the victims were Navigation Co., Inc. four special cabin tickets. The tickets were
passengers of the M/V Don Juan was sufficiently testified to by for Voyage No. 457-A of the M/V Don Juan, leaving Manila
private respondents Ramon Miranda, who purchased from the and going to Bacolod.
company four special cabin tickets for his family and niece. On
the second issue, the Court ruled that adherence to the Mecenas Subsequently, the Don Juan collided off the Tablas Strait in
case was dictated by the Court's policy of maintaining stability Mindoro, with the M/T Tacloban City, an oil tanker owned by
in jurisprudence in accordance with the legal maxim "stare the Philippine National Oil Company (PNOC) and the PNOC
decisis et non quieta movere" (Follow past precedents and do Shipping and Transport Corporation (PNOC/STC). As a result,

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the M/V Don Juan sank. Several of her passengers perished in Petitioner criticizes the lower court’s reliance on the Mecenas
the sea tragedy. The bodies of some of the victims were found case, arguing that, although this case arose out of the same
and brought to shore, but the four members of private incident as that involved in Mecenas, the parties are different
respondents’ families were never found. and trial was conducted separately. Petitioner contends that the
decision in this case should be based on the allegations and
Private respondents filed a complaint against the Negros defenses pleaded and evidence adduced in it or, in short, on the
Navigation, the Philippine National Oil Company (PNOC), and record of this case.
the PNOC Shipping and Transport Corporation (PNOC/STC),
seeking damages for the death. Petitioner, however, denied that Issues:
the four relatives of private respondents actually boarded the
vessel as shown by the fact that their bodies were never 1. Whether the ruling in Mecenas v. Court of Appeals, finding
recovered. Petitioner further averred that the Don Juan was the crew members of petitioner to be grossly negligent in the
seaworthy and manned by a full and competent crew, and that performance of their duties, is binding in this case;
the collision was entirely due to the fault of the crew of the
M/T Tacloban City. 2. Whether the award for damages in Mecenas v. Court of
Appeals is applicable in this case.
In finding petitioner guilty of negligence and in failing to
exercise the extraordinary diligence required of it in the Held:
carriage of passengers, both the trial court and the appellate
court relied on the findings of this Court in Mecenas v. 1. No. The contention is without merit.
Intermediate Appellate Court, which case was brought for the Adherence to the Mecenas case is dictated by this Court’s
death of other passengers. In Mecenas, SC found petitioner policy of maintaining stability in jurisprudence. Where, as in
guilty of negligence in (1) allowing or tolerating the ship this case, the same questions relating to the same event have
captain and crew members in playing mahjong during the been put forward by parties similarly situated as in a previous
voyage, (2) in failing to maintain the vessel seaworthy and (3) case litigated and decided by a competent court, the rule of
in allowing the ship to carry more passengers than it was stare decisis is a bar to any attempt to relitigate the same issue.
allowed to carry. Petitioner is, therefore, clearly liable for
damages to the full extent. 2. No, it is not applicable.

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Petitioner contends that, assuming that the Mecenas case extraordinary diligence required of it in the carriage of
applies, private respondents should be allowed to claim only passengers, both the trial court and the appellate court relied on
P43,857.14 each as moral damages because in the the findings of this Court in Mecenas v. Intermediate Appellate
Mecenascase, the amount of P307,500.00 was awarded to the Court, which case was brought for the death of other
seven children of the Mecenas couple. Here is where the passengers. In that case it was found that although the
principle of stare decisis does not apply in view of differences proximate cause of the mishap was the negligence of the crew
in the personal circumstances of the victims. For that matter, of the M/T Tacloban City, the crew of the Don Juan was
differentiation would be justified even if private respondents equally negligent as it found that the latter’s master, Capt.
had joined the private respondents in the Mecenas case. Rogelio Santisteban, was playing mahjong at the time of
collision, and the officer on watch, Senior Third Mate Rogelio
The doctrine of stare decisis works as a bar only against issues De Vera, admitted that he failed to call the attention of
litigated in a previous case. Where the issue involved was not Santisteban to the imminent danger facing them. This Court
raised nor presented to the court and not passed upon by the found that Capt. Santisteban and the crew of the M/V Don
court in the previous case, the decision in the previous case is Juan failed to take steps to prevent the collision or at least
not stare decisis of the question presently presented. delay the sinking of the ship and supervise the abandoning of
the ship.
The Mecenas case cannot be made the basis for determining
the award for attorney’s fees. The award would naturally vary Same; Same; Adherence to the Mecenas case is dictated
or differ in each case. by the Court’s policy of maintaining stability in jurisprudence
in accordance with the legal maxim “stare decisis et non
WHEREFORE, the decision of the Court of Appeals is quieta movere.”— Adherence to the Mecenas case is dictated
AFFIRMED with modification and petitioner is ORDERED to by this Court’s policy of maintaining stability in jurisprudence
pay private respondents damages. in accordance with the legal maxim “stare decisis et non quieta
movere” (Follow past precedents and do not disturb what has
Civil Law; Negligence; Court finds that Capt. Santisteban been settled.) Where, as in this case, the same questions
and the crew of the M/V Don Juan failed to take steps to relating to the same event have been put forward by parties
prevent the collision or at least delay the sinking of the ship similarly situated as in a previous case litigated and decided by
and supervise the abandoning of the ship.—In finding a competent court, the rule of stare decisis is a bar to any
petitioner guilty of negligence and in failing to exercise the attempt to relitigate the same issue.

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 Same; Same; A shipowner may be held liable for injuries
to passengers notwithstanding the exclusively real and
hypothecary nature of maritime law if fault can be attributed to
the shipowner. The next issue is whether petitioner is liable to
pay damages notwithstanding the total loss of its ship. The
issue is not one of first impression. The rule is well-entrenched
in our jurisprudence that a shipowner may be held liable for
injuries to passengers notwithstanding the exclusively real and
hypothecary nature of maritime law if fault can be attributed to
the shipowner.

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43. G.R. No. 106999 June 20, 1996 ESLI charged the consignees several amounts corresponding to
additional freight and salvage [Link] charges were all
PHILIPPINE HOME ASSURANCE CORPORATION vs. paid by Philippine Home Assurance Corporation (PHAC)
COURT OF APPEALS and EASTERN SHIPPING LINES, under protest for and in behalf of the consignees.
INC.
PHAC, as subrogee of the consignees, thereafter filed a
Eastern Shipping Lines, Inc. (ESLI) loaded on board SS complaint before the Regional Trial Court of Manila, against
Eastern Explorer in Japan, shipments for carriage to Manila ESLI to recover the sum paid under protest on the ground that
and Cebu, (a) two (2) boxes internal combustion engine parts, the same were actually damages directly brought about by the
consigned to William Lines, Inc.; (b) ten (l0) metric ton. (334 fault, negligence, illegal act and/or breach of contract of ESLI.
bags) ammonium chloride, consigned to Orca's Company; (c)
two hundred (200) bags Glue 300, consigned to Pan Oriental The trial court dismissed PHAC's complaint. On appeal to the
Match Company; and (d) garments, consigned to Ding Velayo. Court of Appeals, respondent court affirmed the trial court's
findings and conclusions,
While the vessel was off Japan, a small flame was detected on
the acetylene cylinder located in the accommodation area. As ISSUE:
the crew was trying to extinguish the fire, it suddenly exploded
sending a flash of flame throughout the accommodation area, Whether or not Eastern Shipping Lines is liable.
thus causing death and severe injuries to the crew and instantly
setting fire to the whole superstructure of the vessel. The RULING:
incident forced the master and the crew to abandon the ship.
Yes. It is worthy to note that the goods were neither lost nor
Thereafter, SS Eastern Explorer was found to be a constructive damaged in transit by the fire that razed the carrier. The said
total loss and its voyage was declared abandoned. goods were all delivered to the consignees. The Court ruled
that fire may not be considered a natural disaster or calamity
A tugboat under the control of Fukuda Salvage Co. since it almost always arises from some act of man or by
commenced to tow the vessel for the port of Naha, Japan. Fire human means.
fighting operations were again conducted at the said port. The
cargoes which were saved were loaded to another vessel for Here, the acetylene cylinder which was fully loaded should not
delivery to their original ports of destination. have been stored in the accommodation area near the engine

Page | 117
room where the heat generated therefrom could cause the detected on the acetylene cylinder and that by reason thereof,
acetylene cylinder to explode by reason of spontaneous the same exploded despite efforts to extinguish the fire. Neither
combustion. The fact that the acetylene cylinder was checked, is there any doubt that the acetylene cylinder, obviously fully
tested and examined and subsequently certified as having loaded, was stored in the accommodation area near the engine
complied with the safety measures and standards by qualified room and not in a storage area considerably far, and in a safe
experts before it was loaded in the vessel only shows to a great distance, from the engine room. Moreover, there was no
extent that negligence was present in the handling of the showing, and none was alleged by the parties, that the fire was
acetylene cylinder after it was loaded and while it was on board caused by a natural disaster or calamity not attributable to
the ship. human agency. On the contrary, there is strong evidence
indicating that the acetylene cylinder caught fire because of the
It follows that the cargo consignees cannot be made liable to fault and negligence of respondent ESLI, its captain and its
respondent carrier for additional freight and salvage charges. crew. As a rule, general or gross averages include all damages
Consequently, ESLI must refund Phil. Home the amount it paid and expenses which are deliberately caused in order in order
under protest for additional freight and salvage charges in to save the vessel, its cargo, or both at the same time, from a
behalf of the consignees. real and known risk. While the instant case may technically fall
within the purview of the said provision, the formalities
COMMERCIAL LAW; COMMON CARRIER; LIABILITY FOR prescribed under Articles 813 and 814 of the
EXPENSES IN SALVAGE OPERATION AND Code of Commerce in order to incur the expenses and cause
TRANSSHIPMENT OF GOODS VIA DIFFERENT CARRIER; the damage corresponding to gross average were not complied
CASE AT BAR. — What is at issue here is who, among the with. Consequently, respondent ESLI's claim for contribution
carrier, consignee or insurer of the goods, is liable for the from the consignees of the cargo at the time of the
additional charges or expenses incurred by the owner of the occurrence of the average turns to naught. Hence, cargo
ship in the salvage operations and in the transshipment of the consignees cannot be made liable to respondent carrier for
goods via a different carrier. In our jurisprudence, fire may not additional freight and salvage charges. Respondent carrier
be considered a natural disaster or calamity since it almost must refund the amount paid under protest for additional
always arises from some act of man or by human means. It freight and salvage charges.||| (Philippine Home Assurance
cannot be an act of God unless caused by lightning or a Corp. v. Court of Appeals, G.R. No. 106999, [June 20, 1996],
natural disaster or casualty not attributable to human agency. 327 PHIL 255-269)
In the case at bar, it is not disputed that a small flame was

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44. G.R. No. 116940 June 11, 1997 PHILAMGEN. On appeal the Court of Appeals set aside the
dismissal and remanded the case to the lower court for trial on
THE PHILIPPINE AMERICAN GENERAL INSURANCE the merits. FELMAN filed a petition for certiorari with this
COMPANY, INC., petitioner, Court but it was subsequently denied.
vs.
On 28 February 1992 the trial court rendered judgment in favor
COURT OF APPEALS and FELMAN SHIPPING
LINES, respondents. of FELMAN. It ruled that "MV Asilda" was seaworthy when it
left the port of Zamboanga as confirmed by certificates issued
Coca-Cola Bottlers loaded on board "MV Asilda," a vessel by the Philippine Coast Guard and the shipowner's surveyor
owned and operated by respondent Felman Shipping Lines, attesting to its seaworthiness. Thus the loss of the vessel and its
7,500 cases of 1-liter Coca-Cola softdrink bottles to be entire shipment could only be attributed to either a fortuitous
transported from Zamboanga City to Cebu City for consignee event,
Coca-Cola Bottlers Philippines, Inc., Cebu. The shipment was
insured with petitioner Philippine American General Insurance ISSUE:
Co., Inc. (PHILAMGEN)
Whether or not FELMAN is liable.
July 7, 1983, the vessel sank in the waters of Zamboanga del
W/N limited liability rule will apply.
Norte bringing down her entire cargo with her including the
subject 7,500 cases of 1-liter Coca-Cola softdrink bottles.
RULING:
Then, the consignee Coca-Cola Bottlers Philippines, Inc., Cebu
plant, filed a claim with respondent FELMAN for recovery of 1. Yes. The Court ruled that the sinking was due to its
damages it sustained as a result of the loss of its softdrink unseaworthiness even at the time of its departure from the
bottles. Respondent denied the claim thus prompting the port of Zamboanga. It was top-heavy as an excessive
consignee to file an insurance claim with PHILAMGEN. amount of cargo was loaded on deck. Closer supervision on
the part of the shipowner could have prevented this fatal
Claiming its right of subrogation PHILAMGEN sought
miscalculation. As such, FELMAN was equally negligent.
recourse against respondent FELMAN which disclaimed any
It cannot therefore escape liability through the expedient of
liability for the loss. Consequently, on 29 November 1983
filing a notice of abandonment of the vessel by virtue of
PHILAMGEN sued the shipowner for sum of money and
Art. 587 of the Code of Commerce.
damages. The trial court dismissed the complaint of

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 Under Art 1733 of the Civil Code, "(c)ommon carriers, COMMERCIAL LAW; MARINE INSURANCE;
from the nature of their business and for reasons of public VESSELS' PROXIMATE CAUSE OF SINKING WAS ITS
policy, are bound to observe extraordinary diligence in the BEING TOP-HEAVY. — The proximate cause of the
vigilance over the goods and for the safety of the sinking of "MV Asilda" was its being top-heavy. Evidence
passengers transported by them, according to all the shows that approximately 2,500 cases of softdrink bottles were
circumstances of each case . . ." In the event of loss of stowed on deck. Several days after "MV Asilda" sank, an
goods, common carriers are presumed to have acted estimated 2,500 empty Coca-Cola plastic cases were recovered
negligently. FELMAN, the shipowner, was not able to near the vicinity of the sinking. Considering that the ship's
rebut this presumption. hatches were properly secured, the empty Coca-Cola cases
recovered could have come only from the vessel's deck cargo.
2. Art. 587 of the Code of Commerce is not applicable to the It is settled that carrying a deck cargo raises the
case at bar.8 Simply put, the ship agent is liable for the presumption of unseaworthiness unless it can be shown that the
negligent acts of the captain in the care of goods loaded on deck cargo will not interfere with the proper
the vessel. This liability however can be limited through management of the ship. However, in this case it was
abandonment of the vessel, its equipment and freightage as established that "MV Asilda" was not designed to carry
provided in Art. 587. Nonetheless, there are exceptional substantial amount of cargo on deck. The inordinate
circumstances wherein the ship agent could still be held loading of cargo deck resulted in the decrease of the vessel's
answerable despite the abandonment, as where the loss or metacentric height thus making it unstable. The strong winds
injury was due to the fault of the shipowner and the and waves encountered by the vessel are but the ordinary
captain.9 The international rule is to the effect that the right vicissitudes of a sea voyage and as such merely contributed to
of abandonment of vessels, as a legal limitation of a its already unstable and unseaworthy condition. DEICTS
shipowner's liability, does not apply to cases where the
2. ID.; CODE OF COMMERCE; ART. 587 ON
injury or average was occasioned by the shipowner's own
ABANDONMENT OF VESSEL; NOT APPLICABLE WHERE
fault. 10 It must be stressed at this point that Art. 587 speaks
SHIP AGENT IS ALSO LIABLE FOR THE NEGLIGENT
only of situations where the fault or negligence is
ACTS OF THE CAPTAIN IN THE CARE OF GOODS. — Art.
committed solely by the captain. Where the shipowner is
587, of the Code of Commerce is not applicable to the case at
likewise to be blamed, Art. 587 will not apply, and such
bar. The ship agent is liable for the negligent acts of the
situation will be covered by the provisions of the Civil
captain in the care of goods loaded on the vessel. This liability
Code on common carrier.
however can be limited through abandonment of the vessel, its

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equipment and freightage as provided in Art. 587. Nonetheless,
there are exceptional circumstances wherein the ship agent
could still be held answerable despite the abandonment, as
where the loss or injury was due to the fault of the shipowner
and the captain. 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 average was occasioned by the shipowner's own fault. It
must be stressed at this point that Art. 587 speaks
only of situations where the fault or negligence is committed
solely by the captain. Where the shipowner is likewise to be
blamed, Art. 587 will not apply, and such situation will be
covered by the provisions of the Civil Code on common carrier.
3. CIVIL LAW; COMMON CARRIERS; REQUIRED
DILIGENCE; PRESUMPTION IN CASE OF LOSS. — Under
Art. 1733 of the Civil Code, "(c)ommon carriers, from the
nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over
the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case . . . ." In
the event of loss of goods, common carriers are presumed to
have acted negligently. FELMAN, the shipowner, was not able
to rebut this presumption.
||| (Phil-Am General Insurance Co., Inc. v. Court of Appeals,
G.R. No. 116940, [June 11, 1997], 339 PHIL 455-467)

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45. G.R. No. 157481 The consignee demanded from petitioner full
reimbursement of the cost of the lost shipment. Petitioner,
Loadstar vs Pioneer
however, refused to reimburse the consignee.
January 24, 2006 Nonetheless, respondent insurance company paid
Facts: the consignee plus the value of the lost shipment of cement.
In return, the consignee executed a Loss and Subrogation
Petitioner Loadstar Shipping is the registered owner Receipt in favor of respondent concerning the latter's
and operator of the vessel M/V Weasel. Loadstar entered subrogation rights against petitioner.
into a voyage-charter with Northern Mindanao Transport
Company, Inc. for the carriage of 65,000 bags of cement Respondent filed a complaint with the Regional
from Iligan City to Manila. The shipper was Iligan Cement Trial Court of Manila. The RTC rendered a Decision in
Corporation, while the consignee in Manila was Market favor of respondent. The RTC reasoned that Loadstar, as a
Developers, Inc. common carrier, bears the burden of proving that it
exercised extraordinary diligence in its vigilance over the
On June 24, 1984, 67,500 bags of cement were goods it transported. On appeal, the Court of Appeals
loaded on board M/V Weasel and stowed in the cargo holds affirmed the RTC Decision.
for delivery to the consignee. Prior to the voyage, the
consignee insured the shipment of cement with ||
Pioneer Asia Insurance Corporation for P1,400,000, for Issue:
which respondent issued Marine Open Policy covering all
shipments. 1. Whether or not Loadstar is converted to a private carrier.

However, on June 25, 1984, Captain Vicente C. 2. Whether or not Loadstar is liable.
Montera, master of M/V Weasel,ordered the vessel to be
Ruling:
forced aground. Consequently, the entire shipment of
cement was good as gone due to exposure to sea water. 1. No. Conformably, petitioner remains a common carrier
Loadstar thus failed to deliver the goods to the consignee in notwithstanding the existence of the charter agreement with
Manila. the Northern Mindanao Transport Company, Inc. since the
said charter is limited to the ship only and does not involve
both the vessel and its crew.|||

Page | 122
2. As a common carrier, the extraordinary diligence in the CARRIER. — The voyage-charter agreement between
vigilance over the goods tendered for shipment requires petitioner and Northern Mindanao Transport Company,
the common carrier to know and to follow the required Inc. did not in any way convert the common carrier into a
precaution for avoiding damage to, or destruction of the private carrier. We have already resolved this issue with
goods entrusted to it for safe carriage and delivery. It finality in Planters Products, Inc. v. Court of
requires common carriers to render service with the Appeals where we ruled that: It is therefore imperative that
greatest skill and foresight and "to use all reasonable a public carrier shall remain as such, notwithstanding the
means to ascertain the nature and characteristics of goods charter of the whole or portion of a vessel by one or more
tendered for shipment, and to exercise due care in the persons, provided the charter is limited to the ship only, as
handling and stowage, including such methods as their in the case of a time-charter or voyage-charter. It is only
nature requires." When the goods placed in its care are when the charter includes both the vessel and its crew, as
lost, petitioner is presumed to have been at fault or to in a bareboat or demise that a common carrier becomes
have acted negligently. Petitioner therefore has the private, at least insofar as the particular voyage covering
burden of proving that it observed extraordinary diligence the charter-party is concerned. Indubitably, a shipowner in
in order to avoid responsibility for the lost cargo a time or voyage charter retains possession and control of
Article 1734 enumerates the instances when a the ship, although her holds may, for the moment, be the
property of the charterer. Conformably, petitioner remains
carrier might be exempt from liability for the loss of the
goods. a common carrier notwithstanding the existence of the
charter agreement with the Northern Mindanao Transport
Loadstar claims that the loss of the goods was due Company, Inc. since the said charter is limited to the ship
to a fortuitous event. Yet, its claim is not substantiated. On only and does not involve both the vessel and its crew. As
the contrary, we find supported by evidence on record the elucidated in Planters Products, its charter is only a
conclusion of the trial court and the Court of Appeals that voyage-charter, not a bareboat charter.
the loss of the entire shipment of cement was due to the
2. ID.; ID.; ID.; THE DILIGENCE REQUIRED TO
gross negligence of petitioner.
AVOID LIABILITY IS EXTRAORDINARY DILIGENCE. —
As a common carrier, petitioner is required to observe
1. CIVIL LAW; COMMON CARRIERS; A extraordinary diligence in the vigilance over the goods it
VOYAGE-CHARTER AGREEMENT SHALL NOT transports. When the goods placed in its care are lost,
CONVERT A COMMON CARRIER INTO A PRIVATE petitioner is presumed to have been at fault or to have

Page | 123
acted negligently. Petitioner therefore has the burden of
proving that it observed extraordinary diligence in order to
avoid responsibility for the lost cargo.
In CompaniaMaritima v. Court of Appeals, we said: . . . 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. . . .
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."
3. ID.;ID.;ID.;INSTANCES WHICH MAY EXEMPT
CARRIER FROM LIABILITY FOR THE LOSS OF THE
GOODS. — Article 1734 enumerates the instances when a
carrier might be exempt from liability for the loss of the
goods. These are: (1) Flood, storm, earthquake, lightning,
or other natural disaster or calamity; (2) Act of the public
enemy in war, whether international or civil; (3) Act or
omission of the shipper or owner of the goods; (4) The
character of the goods or defects in the packing or in the
containers; and (5) Order or act of competent public
authority.

Page | 124
46. G.R. No. 95536 Saludo filed a complaint against TWA and PAL for the
misshipment and delay in the delay of the cargo containing the
Saludovs CA
remains of the late CrispinaSaludo. Petitioners alleged that
March 23, 1992 private respondents received the casketed remains of Crispina
on October 26, 1976, as evidenced by the issuance of PAL
Facts:
Airway Bill by Air Care and from said date, private
CrispinaGaldoSaludo, mother of the petitioners, died in respondents were charged with the responsibility to exercise
Chicago, Illinois. Pomierski and Son Funeral Home of extraordinary diligence so much so that the alleged switching
Chicago, made the necessary preparations and arrangements of the caskets on October 27, 1976, or one day after the private
for the shipment of the remains from Chicago to the respondents received the cargo, the latter must necessarily be
Philippines. Pomierski brought the remains to Continental liable.
Mortuary Air Services (CMAS) at the Chicago Airport which
made the necessary arrangements such as flights, transfers, etc. Issue:
CMAS booked the shipment with PAL thru the carrier’s agent
Whether or not the delay in the delivery of the casketed
Air Care International. PAL Airway Bill Ordinary was issued
remains of petitioners’ mother was due to the fault of
wherein the requested routing was from Chicago to San
respondent airline companies, TWA and PAL.
Francisco on board Trans World Airline (TWA) and from San
Francisco to Manila on board PAL. Ruling:
Yes. the facts show that petitioners' right to be treated with due
Salvacion (one of the petitioners), upon arrival at San
courtesy in accordance with the degree of diligence required by
Francisco, went to the TWA to inquire about her mother’s
law to be exercised by every common carrier was violated by
remains. But she was told they did not know anything about it.
TWA and this entitles them, at least, to nominal damages from
She then called Pomierski that her mother’s remains were not
TWA alone. Explicit is the rule under Article 1736 of the Civil
at the West Coast terminal. Pomierski immediately called
Code that the extraordinary responsibility of the common
CMAS which informed that the remains were on a plane to
carrier begins from the time the goods are delivered to the
Mexico City, that there were two bodies at the terminal, and
carrier. This responsibility remains in full force and effect even
somehow they were switched. CMAS called and told
when they are temporarily unloaded or stored in transit, unless
Pomierski that they were sending the remains back to
the shipper or owner exercises the right of stoppage in
California via Texas.
transitu, and terminates only after the lapse of a reasonable

Page | 125
time for the acceptance, of the goods by the consignee or such events caused thereby, private respondents cannot be held
other person entitled to receive them. And, there is delivery to liable.
the carrier when the goods are ready for and have been placed
in the exclusive possession, custody and control of the carrier ID.; COMMON CARRIER; EXTRAORDINARY
for the purpose of their immediate transportation and the carrier RESPONSIBILITY THEREOF OVER THE GOODS
has accepted them. Where such a delivery has thus been BEGINS FROM THE TIME THE GOODS ARE
accepted by the carrier, the liability of the common carrier DELIVERED THERETO. — Explicit is the rule under
commences eoinstanti. Article 1736 of the Civil Code that the extraordinary
responsibility of the common carrier begins from the time
Hence, while we agree with petitioners that the extraordinary
the goods are delivered to the carrier. This responsibility
diligence statutorily required to be observed by the carrier
remains in full force and effect even when they are
instantaneously commences upon delivery of the goods thereto,
temporarily unloaded or stored in transit, unless the
for such duty to commence there must in fact have been
shipper or owner exercises the right of stoppage in transitu,
delivery of the cargo subject of the contract of carriage. Only
and terminates only after the lapse of a reasonable time for
when such fact of delivery has been unequivocally established
the acceptance of the goods by the consignee or such other
can the liability for loss, destruction or deterioration of goods
person entitled to receive them. And, there is delivery to the
in the custody of the carrier, absent the excepting causes under
carrier when the goods are ready for and have been placed
Article 1734, attach and the presumption of fault of the carrier
in the exclusive possession, custody and control of the
under Article 1735 be invoked.
carrier for the purpose of their immediate transportation
and the carrier has accepted them. Where such a delivery
As already demonstrated, the facts in the case at bar belie the
has thus been accepted by the carrier, the liability of the
averment that there was delivery of the cargo to the carrier on
common carrier commences eoinstanti.
October 26, 1976. Rather, as earlier explained, 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 10. ID.; ID.; ID.; FACT OF DELIVERY MUST BE
from that date that private respondents became responsible for UNEQUIVOCABLY ESTABLISHED. — While we agree
the agreed cargo under their undertakings in PAL Airway Bill with petitioners that the extraordinary diligence statutorily
No. 079-01180454. Consequently, for the switching of caskets required to be observed by the carrier instantaneously
prior thereto which was not caused by them, and subsequent commences upon delivery of the goods thereto, for such

Page | 126
duty to commence there must in fact have been
delivery of the cargo subject of the contract of carriage.
Only when such fact of delivery has been unequivocally
established can the liability for loss, destruction or
deterioration of goods in the custody of the carrier, absent
the excepting causes under Article 1734, attach and the
presumption of fault of the carrier under Article 1735 be
invoked.
11. ID.; ID.; NOT LIABLE FOR EVENTS PRIOR
TO THE DELIVERY OF THE GOODS THERETO. — The
facts in the case at bar belie the averment that there was
delivery of the cargo to the carrier on October 26, 1976.
Rather, as earlier explained, 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.

Page | 127
47. G.R. No. 95529 buyer to accept, upon appellant's request, the anahaw
fans were shipped back to Manila by appellees, for
Magellan Manufacturing Marketing vs Court of Appeals
which the latter demanded from appellant
August 22, 1991 payment of P246, 043.43. Appellant abandoned the
Facts: whole cargo and asked appellees for damages.

On May 20, 1980, The lower court decided the case in

Magellan Manufacturers Marketing Corp. (MMMC) favor of private respondents. It dismissed the complaint
entered into a contract with Choju Co. of Yokohama, on the ground that petitioner had given its consent to
Japan to export 136,000 anahaw fans for and in the contents of the bill of lading where it is clearly
consideration of $23,220.00. indicated that there will be transshipment.||| CA
affirmed the lower court’s decision.
As payment thereof, a letter of credit was issued
to plaintiff MMMC by the buyer. Through its president,
James Cu, MMMC then contracted F.E. Zuellig, a
Issue:
shipping agent, through its solicitor, one Mr. King, to
ship the anahaw fans through the other appellee, Orient W/N MMMC liable for the abandonment.
Overseas Container Lines, Inc., (OOCL) specifying that Ruling:
he needed an on-board bill of lading and that
No. It will be remembered that in overland
transshipment is not allowed under the letter of credit.
transportation, an unreasonable delay in the
On June 30, 1980, appellant MMMC paid F.E. delivery of transported goods is sufficient ground for the
Zuellig the freight charges and secured a copy of the abandonment of goods. By analogy, this can also apply to
bill of lading which was presented to Allied Bank. The maritime transportation. Further, with much more reason can
bank then credited the amount of US$23, 220.00 petitioner in the instant case properly abandon the goods, not
covered by the letter of credit to appellant's account. only because of the unreasonable delay in its delivery but
However, when appellant's president James Cu, went because of the option which was categorically granted to and
back to the bank later, he was informed that the exercised by it as a means of settling its liability for the cost
payment was refused by the buyer allegedly because and expenses of reshipment. And, said choice having been
there was no on-board bill of lading, and there was a duly communicated, the same is binding upon the parties on
transshipment of goods. As a result of the refusal of the legal and equitable considerations of estoppel.|||

Page | 128
 are not contrary to law, morals, good customs, public order
and public policy. A bill of lading usually becomes effective
COMMERCIAL LAW; MARITIME LAW; TRANSHIPMENT IS
NOT DEPENDENT UPON THE OWNERSHIP OF THE upon its delivery to and acceptance by the shipper. It is
presumed that the stipulations of the bill were in the
TRANSPORTING SHIPS OR CONVEYANCES OR IN THE
absence of fraud, concealment or improper conduct, known to
CHANGE OF CARRIER. — Transhipment, in maritime law, is
the shipper, and he is generally bound by his acceptance
defined as "the act of taking cargo out of one ship and loading
whether he reads the bill or not.
it in another," or "the transfer of goods from the vessel
stipulated in the contract of affreightment to another vessel 3. ID.; ID.; ID.; A SHIPPER WHO RECEIVES A
before the place of destination named in the contract has been BILL OF LADING WITHOUT OBJECTION IS PRESUMED
reached," or "the transfer for further transportation from one TO HAVE ASSENTED TO ALL ITS TERMS. — The holding in
ship or conveyance to another." Clearly, either in its ordinary most jurisdictions has been that a shipper who receives a
or its strictly legal acceptation, there is transhipment whether bill of lading without objection after an opportunity to inspect
or not the same person, firm or entity owns the vessels. In other it, and permits the carrier to act on it by proceeding with the
words, the fact of transhipment is not dependent upon the shipment is presumed to have accepted it as correctly stating
ownership of the transporting ships or conveyances or in the the contract and to have assented it its terms. In other words,
change of carriers, as the petitioner seems to suggest, but the acceptance of the bill without dissent raises the
rather on the fact of actual physical transfer of cargo from one presumption that all the terms therein were brought to the
vessel to another. knowledge of the shipper and agreed to by him and, in the
absence of fraud or mistake, he is estopped from thereafter
2. ID.; ID.; BILL OF LADING; OPERATES BOTH AS A
denying that he assented to such terms. This rule applies with
RECEIPT AND AS A CONTRACT. — It is a long standing
particular force where a shipper accepts a bill of lading with
jurisprudential rule that a bill of lading operates both as a
full knowledge of its contents and acceptance under such
receipt and as a contract. It is a receipt for the goods shipped
circumstances makes it a binding contract.
and a contract to transport and deliver the same as therein
stipulated. As a contract, it names the parties, which includes 4. ID.; ID.; TRANSHIPMENT WITHOUT LEGAL EXCUSE IS
the consignee, fixes the route, destination, and freight rates or A VIOLATION OF CONTRACT. — Moreover, it is a well-
charges, and stipulates the rights and obligations assumed by known commercial usage that transhipment of freight without
the parties. Being a contract, it is the law between the parties legal excuse, however, competent and safe the vessel into
who are bound by its terms and conditions provided that these which the transfer is made, is a violation of the contract and an

Page | 129
infringement of the right of the shipper, and subjects the 6. ID.; ID.; DEMURRAGE IS A CLAIM FOR DAMAGES FOR
carrier to liability if the freight is lost even by a cause FAILURE TO ACCEPT DELIVERY AND EXISTS ONLY
otherwise excepted. It is highly improbable to suppose that WHEN EXPRESSLY STIPULATED. — Demurrage, in its strict
private respondents, having been engaged in the shipping sense, is the compensation provided for in the
business for so long, would be unaware of such a custom of the contract of affreightment for the detention of the vessel beyond
trade as to have undertaken such transhipment without the time agreed on for loading and unloading. Essentially,
petitioner's consent and unnecessarily expose themselves to a demurrage is the claim for damages for failure to accept
possible liability. Verily, they could only have undertaken delivery. In a broad sense, every improper detention of a vessel
transhipment with the shipper's permission, as evidenced by the may be considered a demurrage. Liability for demurrage, using
signature of James Cu. the word in its strictly technical sense, exists only when
expressly stipulated in the contract. Using the term in its
5. ID.; ID.; ON BOARD OF LADING AND RECEIVED FOR
broader sense, damages in the nature of demurrage are
SHIPMENT BILL OF LADING, DISTINGUISHED. — An on
recoverable for a breach of the implied obligation to load or
board bill of lading is one in which it is stated that the goods
unload the cargo with reasonable dispatch, but only by the
have been received on board the vessel which is to carry the
party to whom the duty is owed and only against one who is a
goods, whereas a received for shipment bill of lading is one in
party to the shipping contract. Notice of arrival of vessels or
which it is stated that the goods have been received for
conveyances, or of their placement for purposes of unloading is
shipment with or without specifying the vessel by which the
often a condition precedent to the right to collect demurrage
goods are to be shipped. Received for shipment bills of lading
charges.
are issued whenever conditions are not normal and there is
insufficiency of shipping space. An on board bill of lading is 7. ID.; ID.; BILL OF LADING; CONTENTS THEREOF
issued when the goods have been actually placed aboard the EVIDENCING INTENTION PREVAILS OVER SHIPPER'S
ship with every reasonable expectation that the shipment is as THESIS. — As between such stilted thesis of petitioner and the
good as on its way. It is, therefore, understandable that a party contents of the bill of lading evidencing the intention of the
to a maritime contract would require an on board bill of lading parties, it is irremissible that the latter must prevail. Petitioner
because of its apparent guaranty of certainty of shipping as conveniently overlooks the first paragraph of the very article
well as the seaworthiness of the vessel which is to carry the that he cites which provides that "(i)f the terms of the contract
goods. are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of the stipulations shall
control." In addition, Article 1371 of the same Code provides

Page | 130
that "(i)n order to judge the intention of the contracting pleadings, such that if not raised inceptively in the complaint
parties, their contemporaneous and subsequent acts shall be or in the answer, as the case may be, a party can not later on
principally considered." be permitted to introduce parol evidence thereon.
8. REMEDIAL LAW; EVIDENCE; PAROL EVIDENCE RULE; 9. CIVIL LAW; CONTRACTS; MUTUALITY OF CONTRACT
MUST BE RAISED INCEPTIVELY IN THE COMPLAINT. — IS VIOLATED IF PARTY IS ALLOWED TO BACK
Under the parol evidence rule, the terms of a contract are OUT OF THE OFFER. — There is no dispute that private
rendered conclusive upon the parties, and evidence aliunde is respondents expressly and on their own volition granted
not admissible to vary or contradict a complete and petitioner an option with respect to the
enforceable agreement embodied in a document, subject to well satisfaction of freightage and demurrage charges. Having
defined exceptions which do not obtain in this case. The parol given such option, especially since it was accepted by
evidence rule is based on the consideration that when the petitioner, private respondents are estopped from reneging
parties have reduced their agreement on a particular matter thereon. Petitioner, on its part, was well within its right to
into writing, all their previous and contemporaneous exercise said option. Private respondents, in giving the option,
agreements on the matter are merged therein. Accordingly, and petitioner, in exercising that option, are concluded by their
evidence of a prior or contemporaneous verbal agreement is respective actions. To allow either of them to unilaterally back
generally not admissible to vary, contradict or defeat the out on the offer and on the exercise of the option would be to
operation of a valid instrument. The mistake contemplated as countenance abuse of rights as an order of the day, doing
an exception to the parol evidence rule is one which is a violence to the long entrenched
mistake of fact mutual to the parties. Furthermore, the rules on principle of mutuality of contracts.
evidence, as amended, require that in order that parol evidence
may be admitted, said mistake must be put in issue by the

Page | 131
 EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
48. THE METROPOLITAN MANILA DEVELOPMENT existing bus terminal, constituted a deprivation of property
AUTHORITY, et al . v . VIRON TRANSPORTATION without due process; that it contravened the Public Service Act
CO., INC., et al . which mandates public utilities to provide and maintain their
own terminals as a requisite for the privilege of operating as
To solve the worsening traffic congestions problem in Metro common carriers; and that Republic Act 7924, which created
Manila the President issued Executive Order (E.O.) 179, MMDA, did not authorize the latter to order the closure of bus
―Providing for the Establishment of Greater Manila Mass terminals. The trial court declared the E.O. unconstitutional.
Transportation System. As determined in E.O. 179, the primary The MMDA argued before the Court that there was no
cause of traffic congestion in Metro Manila has been the justiciable controversy in the case for declaratory relief filed by
numerous buses plying the streets that impede the flow of the respondents; that E.O. 179 was only an administrative
vehicles and commuters and the inefficient connectivity of the directive to government agencies to coordinate with the
different transport modes. To decongest traffic, petitioner MMDA, and as such did not bind third persons; that the
Metropolitan Manila Development Authority (MMDA) came President has the authority to implement the Project pursuant to
up with a recommendation, proposing the elimination of bus E.O. 125; and that E.O. 179 was a valid exercise of police
terminals located along major Metro Manila thoroughfares, and power.
the construction of mass transport terminal facilties to provide
a more convenient access to mass transport system to the ISSUE:
commuting public. The project provided for under this E.O.
was called ―Greater Manila Transport System (Project) Whether or not E.O, 179 is constitutional.
wherein the MMDA was designated as the implementing
agency. Accordingly, the Metro Manila Council the governing HELD:
board of the MMDA issued a resolution, expressing full
support of the project. The respondents, which are engaged in Under E.O. 125 A, the DOTC was given the objective of
the business of public transportation with a provincial bus guiding government and private investment in the development
operation, Viron Transport Co., Inc. and Mencorp of the country’s intermodal transportation and communications
Transportation System, Inc., assailed the constitutionality of systems. It was also tasked to administer all laws, rules and
E.O. 179 before the Regional Trial Court of Manila. They regulations in the field of transportation and communications.
alleged that the E.O., insofar as it permitted the closure of
It bears stressing that under the provisions of E.O. No. 125, as means employed are reasonably necessary for the
amended, it is the DOTC, and not the MMDA, which is accomplishment of the purpose and not unduly oppressive
authorized to establish and implement a project such as the one upon individuals. Stated differently, the police power
subject of the cases at bar. Thus, the President, although legislation must be firmly grounded on public interest and
authorized to establish or cause the implementation of the welfare and a reasonable relation must exist between the
Project, must exercise the authority through the instrumentality purposes and the means.
of the DOTC which, by law, is the primary implementing and
administrative entity in the promotion, development and
regulation of networks of transportation, and the one so
authorized to establish and implement a project such as the
Project in question.

By designating the MMDA as the implementing agency of the

Project, the President clearly overstepped the limits of the
authority conferred by law, rendering E.O. No. 179 ultra vires.
There was no grant of authority to MMDA. It was delegated
only to set the policies concerning traffic in Metro Manila, and
shall coordinate and regulate the implementation of all
programs and projects concerning traffic management,
specifically pertaining to enforcement, engineering and
education.
In light of the administrative nature of its powers and functions,
the MMDA is devoid of authority to implement the Project as
envisioned by the E.O; hence, it could not have been validly
designated by the President to undertake the Project.

MMDA’s move didn’t satisfy police power requirements such

as that (1) the interest of the public generally, as distinguished
from that of a particular class, requires its exercise; and (2) the

Page | 133
49. M. Ruiz Highway Transit, Inc. v. Court of Appeals, an act of God; and (2) even if negligence was attributable to
G.R. No. L-16086, [May 29, 1964], 120 PHIL 102-106 defendants, their liability had been discharged, as evidenced
by a signed instrument where Spouses Monserrat
Acontractofcarriageexistswhentherearepayingpassengersin
acknowledged that the accident was an act of
the bus, and the carrier is duty bound to transport them
God,sothey“cannotanddonotclaimanythingbeforethecourtsof
using the utmost diligence of very cautious persons. If one of
the passengers die because the
floorofthebusgaveway,thisreinforcesthepresumptionthatthec ISSUE:
arrierhad neglected to provide a safeconveyance. 1.W/N there was a contract of carriage, making Buena
FACTS: liable for not exercisingextraordinary – YES.
2.W/N the liability has beenwaived. – NO.
On May 22, 1954, Spouses Guillermo Monserrat and Marta
Consignado(SpousesMonserrat)andtheirfour-
yearolddaughter Victoria were paying passengers in a bus of RULING:
M. Ruiz Highway
Transit,Inc.([Link])drivenMartinBuena,boundfor A A contract if carriage existed and M. Ruiz was required to
ntipolo, Rizal. exercise extraordinary diligence.

In Sta. Rosa, Laguna, while the bus was running, a rear tire The issue is inarguable, it being partly factual. Also,CA
exploded, blasting a hole on the floor where Victoria was [Link] Monserrat
standing in front of her mother. As a result, the child fell and Victoria were paying,and M. Ruiz Transit and Buena
through the hole, and died that were duty bound to transport them using the utmost
samemorningfrominjuriessustainedinthefall. diligence of very cautious persons. Victoria died because
the floor of the bus gave way. This reinforces the
Spouses Monserrat sued M. Ruiz Transit, and Buena at CFI presumption that petitioners had neglected to provide a
Laguna to recover damages for the death of their four-year safe conveyance (Art. 1756). Evidence of the required
old daughter Victoria. extraordinary
diligencewasnotintroducedtorebutthepresumption.
CFI dismissed the complaint on the ground that (1) the
accident was not due to negligence of the carrier, but was As found by the CA, the bus was overcrowding and

Page | 134
overspeeding, and the floor thereof was weak and that the have discharged their legal liability to claimants, where such
tire exploded due to one or a combination of the following: belief is erroneous and said claimants are ignorant.
“the tire was not strong and safe; the air pressure was not ID.; ID.; MORAL DAMAGES AND ATTORNEY'S
properly checked; the load was heavy; the excessive speed
FEES AWARDED. — In a contract of carriage breached by
of the bus must have overstained the tire; and the high
the passenger's death, moral damages and attorney's fees may
velocity generated heat in the tire which could have
be awarded.
expanded the already compressed air therein.”

M. Ruiz Transit and Buena, however, venture due either to

guess that it was due either to accidental puncture by a
sharp instrument, as a nail, or to latent defect in the tire.
However, no evidence was presented to
[Link]-out was
accidental, we could still hold the carrier liable for failure
to provide a safe floor in thebus.
DAMAGES; CONTRACT OF CARRIAGE;
LIABILITY FOR FAILURE TO PROVIDE SAFE FLOOR
IN PASSENGER BUS. — A common carrier neglects its
duty to transport its passengers safely where one of its
passengers died because the floor of its bus gave way after a
tire blow-out caused by overcrowding, overspeeding and
weak flooring.
ID.; ID.; CARRIER'S LIABILITY NOT
DISCHARGED BY ERRONEOUS AFFIDAVITS OF
PARENTS OF VICTIM. — Signed statements of the
claimants expressing their belief that the transportation
company is not liable to them are not proof that the latter

Page | 135
50. HERMINIO L. NOCUM, plaintiff-appellee, vs. by them to be “according to all the circumstances of each
LAGUNA TAYABAS BUS COMPANY, defendant- case.”
appellant. In this case, the circumstance that must be considered in
measuring a common carrier‘s duty towards its passengers is
the reliance that should be reposed on the sense of
The bus company‘s failure to confiscate the baggage cannot
be considered as a negligent act, but in accord to the responsibility of all the passengers in regard to their common
safety. It is to be presumed that a passenger will not take with
circumstance of the case.
him anything dangerous to the lives and limbs of his co-
FACTS: passengers, not to speak of his own. Not to be lightly
Herminio L. Nocum was a passenger in appellant Laguna considered must be the right to privacy to which each
Tayabas Bus Co.’s Bus No. 120 then making a trip within the passenger is entitled. He cannot be subjected to any unusual
barrio of Dita, Municipality of Bay, Laguna, was injured as a search, when he protests the innocuousness of his baggage
consequence of the explosion of firecrackers, contained in a and nothing appears to indicate the contrary, as in the case at
box, loaded in said bus and declared to its conductor as bar. (Hence, the bus company‘s failure to confiscate the
containing clothes and miscellaneous items by a co- baggage cannot be considered as a negligent act, but in
passenger. The injuries suffered by Nocum were not due to accord to the circumstance of the case.)
mechanical defects but to the explosion of firecrackers. N.B. Thus, in other jurisdictions, and squarely applicable in
ISSUE: the instant case: There is need for evidence of circumstances
indicating cause or causes for apprehension that the
Whether or not the bus company was negligent, and therefore
passenger‘s baggage is dangerous and that it is failure of the
liable for the injuries suffered by Nocum
common carrier‘s employee to act in the face of such
RULING: evidence that constitutes the cornerstone of the common
No. The Bus Company has succeeded in rebutting the carrier‘s liability in cases similar to the present one.
presumption of negligence by showing that it has exercised
extraordinary diligence for the safety of its passengers,
CIVIL LAW; COMMON CARRIERS;
“according to the circumstances of the (each) case.”
EXTRAORDINARY DILIGENCE REQUIRED BY LAW;
Article 1733 qualifies the extraordinary diligence required of QUALIFICATION. — Article 1733 of the Civil Code
common carriers for the safety of the passengers transported reasonably qualifies the extraordinary diligence required of

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common carriers for the safety of the passengers transported ID.; ID.; ID.; ID.; WHEN COMMON CARRIER
by them to be "according to all the circumstances of each LIABLE BECAUSE OF PASSENGER'S DANGEROUS
case." In fact Article 1755 repeats this same qualification. BAGGAGE. — Where there is evidence of circumstances
indicating cause or causes for apprehension that the
ID.; ID.; ID.; COMMON CARRIER IN INSTANT
passenger's baggage in dangerous, and the common carrier's
CASE NOT LIABLE FOR DAMAGES TO INJURED
employee has failed to act in the fact of such evidence, the
PASSENGER. — A passenger in appellant's bus was injured
common carrier becomes liable for any injury caused to its
as a consequence of the explosion of firecrackers, contained
passengers by reason of such baggage.
in a box, loaded in the bus and declared by another passenger
to the conductor as containing clothes and miscellaneous
items. The lower court sentenced appellant to pay damages to
the injured passenger. Held. Appellant should not be made
liable for damages to the injured passenger. 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.
ID.; ID.; ID.; DUTY REGARDING PASSENGER'S
BAGGAGES. — 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. When there are
sufficient indications that the representations of the passenger
regarding the nature of his baggage may not be true, the
assistance of the police authorities may be solicited, not
necessarily to force the passenger to open his baggage, but to
conduct the needed investigation consistent with the rules of
propriety and, above all, the constitutional rights of the
passenger.

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 CARRIAGE BY TRAIN AND RAILROAD CROSSING CASES
. LRTA and Rodolfo Roman were dismissed for lack of
51. LIGHT RAIL TRANSIT AUTHORITY &
merit. CA held LRTA and Roman liable, hence the petition.
RODOLFO ROMAN, petitioners, vs. MARJORIE
NAVIDAD, Heirs of the Late NICANOR NAVIDAD
& PRUDENT SECURITY AGENCY, respondents. ISSUE:
Whether or not there was a perfected contract of carriage
FACTS: between Navidad and LRTA.
Nicanor Navidad, then drunk, entered the EDSA LRT station
after purchasing a "token" (representing payment of the fare).
RULING:
While Navidad was standing on the platform near the LRT
tracks, Junelito Escartin, the security guard assigned to the AFFIRMED with MODIFICATION but only in that (a) the
area approached him. A misunderstanding or an altercation award of nominal damages is DELETED and (b) petitioner
between the two apparently ensued that led to a fist fight. No Rodolfo Roman is absolved from liability Contract of
evidence, however, was adduced to indicate how the fight carriage was deemed created from the moment Navidad paid
started or who, between the two, delivered the first blow or the fare at the LRT station and entered the premises of the
how Navidad later fell on the LRT tracks. At the exact latter, entitling Navidad to all the rights and protection under
moment that Navidad fell, an LRT train, operated by a contractual relation. The appellate court had correctly held
LRTA and Roman liable for the death of Navidad in failing
petitioner Rodolfo Roman, was coming in. Navidad was
to exercise extraordinary diligence imposed upon a common
struck by the moving train, and he was killed instantaneously.
carrier. While the deceased might not have then as yet
The widow of Nicanor, Marjorie Navidad, along with her
boarded the train, a contract of carriage theretofore had
children, filed a complaint for damages against Junelito
already existed when the victimentered the place where
Escartin, Rodolfo Roman, the LRTA, the Metro Transit
passengers were supposed tobe after paying the fare and
Organization, Inc. (Metro Transit), and Prudent for the death
getting the correspondingtoken [Link] law requires
of her husband. Trial court ruled in favor Navidad’s wife and common carriers to carry passengerssafely using the utmost
against the defendants Prudent Security and Junelito Escartin
diligence of very cautiouspersons with due regard for all

Page | 138
circumstances. Suchduty of a common carrier to provide contract of carriage. The statutory provisions render a
safety to itspassengers so obligates it not only during the common carrier liable for death of or injury to passengers (a)
course ofthe trip but for so long as the passengers are within through the negligence or willful acts of its employees or b)
itspremises and where they ought to be in pursuance tothe on account of willful acts or negligence of other passengers
contract of carriage. The statutory provisionsrender a or of strangers if the common carrier's employees through
common carrier liable for death of or injury topassengers (a) the exercise of due diligence could have prevented or stopped
through the negligence or willful acts ofits employees or b) the act or omission. In case of such death or injury, a carrier
on account of willful acts ornegligence of other passengers or is presumed to have been at fault or been negligent, and by
of strangers if thecommon carrier’s employees through the simple proof of injury, the passenger is relieved of the duty to
exercise ofdue diligence could have prevented or stopped the still establish the fault or negligence of the carrier or of its
actor omission. employees and the burden shifts upon the carrier to prove that
In case of such death or injury, a carrier is presumed tohave the injury is due to an unforeseen event or to force majeure.
In the absence of satisfactory explanation by the carrier on
been at fault or been negligent, and by simpleproof of injury,
the passenger is relieved of the duty tostill establish the fault how the accident occurred, which petitioners, according to
the appellate court, have failed to show, the presumption
or negligence of the carrier or ofits employees and the burden
shifts upon the carrier toprove that the injury is due to an would be that it has been at fault, an exception from the
general rule that negligence must be proved.
unforeseen event orto force majeure. The liability of the
common carrier and that of the independent contractor is ID.; EXTRA CONTRACTUAL OBLIGATIONS;
solidary. QUASI-DELICTS; AN EMPLOYER CANNOT BE HELD
LIABLE FOR DAMAGES ABSENT PROOF OF FAULT
OR NEGLIGENCE ON THE PART OF ITS EMPLOYEE;
CIVIL LAW; COMMON CARRIERS; LIABILITY CASE AT BAR. — The foundation of LRTA's liability is the
FOR DEATH OR INJURY TO PASSENGERS. — The law contract of carriage and its obligation to indemnify the victim
requires common carriers to carry passengers safely using the arises from the breach of that contract by reason of its failure
utmost diligence of very cautious persons with due regard for to exercise the high diligence required of the common carrier.
all circumstances. Such duty of a common carrier to provide In the discharge of its commitment to ensure the safety of
safety to its passengers so obligates it not only during the passengers, a carrier may choose to hire its own employees or
course of the trip but for so long as the passengers are within avail itself of the services of an outsider or an independent
its premises and where they ought to be in pursuance to the firm to undertake the task. In either case, the common carrier

Page | 139
is not relieved of its responsibilities under the contract of finding of the Court of Appeals that "there is nothing to link
carriage. Should Prudent be made likewise liable? If at all, (Prudent) to the death of Nicanor (Navidad), for the reason
that liability could only be for tort under the provisions of that the negligence of its employee, Escartin, has not been
Article 2176 and related provisions, in conjunction with duly proven . . . ." This finding of the appellate court is not
Article 2180, of the Civil Code. The premise, however, for without substantial justification in our own review of the
the employer's liability is negligence or fault on the part of records of the case. There being, similarly, no showing that
the employee. Once such fault is established, the employer petitioner Rodolfo Roman himself is guilty of any culpable
can then be made liable on the basis of the presumption juris act or omission, he must also be absolved from liability.
tantum that the employer failed to exercise diligentissimi Needless to say, the contractual tie between the LRT and
patris familias in the selection and supervision of its Navidad is not itself a juridical relation between the latter and
employees. The liability is primary and can only be negated Roman; thus, Roman can be made liable only for his own
by showing due diligence in the selection and supervision of fault or negligence.
the employee, a factual matter that has not been shown.
ID.; DAMAGES; AWARD OF NOMINAL
Absent such a showing, one might ask further, how then must DAMAGES IN ADDITION TO ACTUAL DAMAGES IS
the liability of the common carrier, on the one hand, and an
UNTENABLE; NOMINAL DAMAGES CANNOT CO-
independent contractor, on the other hand, be described? It EXIST WITH COMPENSATORY DAMAGES. — The
would be solidary. A contractual obligation can be breached
award of nominal damages in addition to actual damages is
by tort and when the same act or omission causes the injury, untenable. Nominal damages are adjudicated in order that a
one resulting in culpa contractual and the other in culpa
right of the plaintiff, which has been violated or invaded by
aquiliana, Article 2194 of the Civil Code can well apply. In the defendant, may be vindicated or recognized, and not for
fine, a liability for tort may arise even under a contract,
the purpose of indemnifying the plaintiff for any loss suffered
where tort is that which breaches the contract. Stated by him. It is an established rule that nominal damages cannot
differently, when an act which constitutes a breach of
co-exist with compensatory damages.
contract would have itself constituted the source of a quasi-
delictual liability had no contract existed between the parties,
the contract can be said to have been breached by tort,
thereby allowing the rules on tort to apply. Regrettably for
LRT, as well as perhaps the surviving spouse and heirs of the
late Nicanor Navidad, this Court is concluded by the factual

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52. JOSE CANGCO, plaintiff- Manila Railroad: Although there were sacks of watermelon
appellant, vs. MANILA RAILROAD CO., defendant- in the platform, the direct and proximate cause of the injury
appellee suffered by the plaintiff was his own contributory negligence
in failing to wait until the trail had come to a complete stop
before alighting. Under the doctrine of comparative
FACTS: negligence announced in the case of Rakes, if the accident
Jose Cangco was a clerk of Manila Railroad Company. He was caused by the plaintiff's own negligence, no liability is
comes daily to his work on board the train to the company's imposed upon defendant, whereas if the accident was caused
office and since he was an employee, he was riding for free. by defendant's negligence and plaintiff's negligence merely
One day while he was returning home by rail. As the train contributed to his injury, the damages should be apportioned.
drew up to the station Cangco arose from his seat making his
exit though the door, took his position upon the steps of the
coach, seizing the upright guardril with his right hand for ISSUE:
support. As the train slowed down some passengers got off 1. WON the Doctrine of Contributory Negligence is
and they alighted safely. When the train proceeded a little applicable in this case
further, Cangco steeped off also but one or both of his feet
2. WON Manila Railroad should be held liable to Jose
came in contact with a sack of watermelons with the result Cangos injuries
that his feet slipped from and he fell violently on the
platform. His body at once rolled from the platform and as
drawn under the moving train where his right arm was badly RULING:
crushed and lacerated. It appears that Cangco alighted from
[Link], the Doctrine of Contributory Negligence is not
the train possibly six meters before it came to a full stop.
applicable. The proper doctrine applicable is the Thompson's
Jose Cangco had his arm amputed. He had two surgeries that work on Negligence:
caused his arm to be amputed upto his shoulder. The cost was
"The test by which to determine whether the passenger has
P790.25for all medical and surgical fees. He, then, sued
been guilty of negligence in attempting to alight from a
Manila Rail Road for negligence.
moving railway train, is that of ordinary or reasonable care. It
is to be considered whether an ordinary prudent person, of
the age, sex and condition of the passenger, would have acted

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as the passenger acted under the circumstances disclosed by would have been in an aged or feeble person. In determining
the evidence. This care has been defined to be, not the care the contributory negligence of the passenger it should be
which may or should be used by the prudent man generally, determine -- whether the passenger acted prudently or
but the care which a man of ordinary prudence would use recklessly - the age, sex, and physical condition. It may be
under the similar circumstances, to avoid injury." 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
Under the Picart case, the test is; was there anything in the
station. There could, be no uncertainty in his mind with
circumstances surrounding the Plaintiff at the time he
regard either to the length of the step which he was required
alighted from the train which would have admonished a
to take of the character of the platform where he was
person of average prudence that to get off the train under the
alighting. His conduct in undertaking to alight while the train
conditions then existing was dangerous? If so, the plaintiff
was yet slightly under way was not characterized by
should have desisted from alighting: and his failure so to
desist was contributory negligence. imprudence and that therefore he was not guilty of
contributory negligence.
In this case, the only fact which a conclusion can be drawn to
Manila Railroad is liable to the actual damages that Jose
the effect that the plaintiff was guilty of contributory
Cangco suffered. It includes the injuries he suffered
negligence is that he stepped off the car without being able to
permanently and being disabled to continue his employment.
discern clearly the condition of the platform and while the
He is not shown to have any other gainful occupation in
train was yet slowly moving.
future.
[Link], Manila Railroad is negligent. The following should be
noted in considering the negligence: The Company’s
platform was constructed upon a level higher than that of the MASTER AND SERVANT; CONTRACT;
roadbed and the surrounding ground. The distance from the NEGLIGENCE. — Failure to perform a contract cannot be
steps of the train to the spot where the alighting passenger excused upon the ground that the breach was due to the
would place his feet on the platform was thus reduced, negligence of a servant of the obligor, and that the latter
thereby decreasing the risk incident to stepping off. The exercised due diligence in the selection and control of the
nature of the platform, constructed as it was of cement servant.
material, also assured to the passenger of the vigor and agility
CONTRACTS; NEGLIGENCE:; CULPA
of the young manhood, and it was by no means so risky for
AQUILIANA; CULPA CONTRACTUAL. — The
him to get off while the train was yet moving as the same act
distinction between negligence as the source of an obligation

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(culpa aquiliana) and negligence in the performance of a
contract (culpa contractual ) pointed out.
CARRIERS; PASSENGERS; NEGLIGENCE;
ALIGHTING FROM MOVING TRAIN. — It is not
negligence per se for a traveler to alight from a slowly
moving train.

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53. MA-AO SUGAR CENTRAL CO., INC. and had stayed in the front car rather than at the back; and that he
GUILLERMO had been killed because he chose to ride in the caboose
ARANETA, petitioners, vs. HON. COURT OF APPEAL
S and HERMINIA FAMOSO, respondents.
ISSUE:
WHETHER OR NOT DECEDENT CAN BE HELD GUILTY
FACTS:
OF CONTRIBUTORY NEGLIGENCE.
On March 22, 1980, Famoso was riding with a co-employee in
the caboose or "carbonera" of PlymouthNo. 12, a cargo train of
the petitioner, when the locomotive was suddenly derailed. He HELD:
and his companion jumped off to escape injury, but the train [Link] negligence has been defined as "the act or
fell on its side, caught his legs by its wheels and pinned him omission amounting to want of ordinary care on the part of the
down. He was declared dead on the spot. person injured which, concurring with the defendant's
Petitioner denied death and other benefits, and negligence, is the proximate cause of the injury. “It has been
Famoso’s widow filed a suit in the RTC Baguio. held that "to hold a person as having contributed to his injuries,
it must be shown that he performed an act that brought about
RTC ruled in her favor but deducted 25% from the total his injuries in disregard of warnings or signs of an impending
damages awarded due to decedent’s contributory negligence.
danger to health and body."There is no showing that the
caboose where Famoso was riding was a dangerous place and
Widow and petitioner appealed; widow claimed that deductions that he recklessly dared to stay there despite warnings or signs
of impending danger.
were illegal, petitioner that it was not negligent and therefore
not liable at all. Investigation of the accident revealed that the derailment was
CA sustained RTC except as to deceased’s contributory caused by protruding rails which had come loose as they were
not connected and fixed in place by fishplates (which could
negligence and disallowed the deductions protested bythe
private respondent. only be removed thru the use of special tools). The same
fishplates could not be found at the scene of the accident.
Petitioner contends that there is contributory negligence on the
part of Famoso as he was not at his assigned station when the
train was derailed; that he would not have been injured if he

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SC applied the doctrine of Res ipsa loquitur: the absence of the agree. The record shows it was in fact lax in requiring them
fish plates – whatever the case or reason-is by itself alone proof to exercise the necessary vigilance in maintaining the rails in
of the negligence of the petitioner. good condition to prevent the derailments that sometimes
happened "every hour." Obviously, merely ordering the
Petitioner is liable because it was lax in requiring its employees
brakemen and conductors to fill out prescribed forms
to exercise the necessary vigilance in maintainingthe rails in
reporting derailments — which reports have not been acted
good condition to prevent the derailments that sometimes
upon as shown by the hourly derailments — is not the
happened “every hour”.
kind of supervision envisioned by the Civil Code.
ID.; ID.; CONTRIBUTORY NEGLIGENCE;
DEFINITION THEREOF. — We also do not see how the
CIVIL LAW; QUASI-DELICTS; RES IPSA decedent can be held guilty of contributory negligence from
LOQUITOR; DESCRIPTION THEREOF. — The the mere fact that he was not at his assigned station when the
absence of the fish plates — whatever the cause or reason — train was derailed. That might have been a
is by itself alone proof of the negligence of the petitioner. Res violation of company rules but could not have directly
ipsa loquitur. The doctrine was described recently in contributed to his injury, as the petitioner suggests. It is pure
Layugan v. Intermediate Appellate Court. (167 SCRA 376) speculation to suppose that he would not have been injured if
thus: Where the thing which causes injury is shown to be he had stayed in the front car rather than at the back and that
under the management of the defendant, and the accident is he had been killed because he chose to ride in the caboose.
such as in the ordinary course of things does not happen if Contributory negligence has been defined as "the act or
those who have the management use proper care, it affords omission amounting to want of ordinary care on the
reasonable evidence, in the absence of an explanation by the part of the person injured which, concurring with the
defendant, that the accident arose from want of care. defendant's negligence, is the proximate cause of the injury."
It has been held that "to hold a person as having contributed
ID.; ID.; DUE DILIGENCE IN THE SELECTION
to his injuries, it must be shown that he performed an act that
AND SUPERVISION OF EMPLOYEES; NOT
brought about his injuries in disregard of warnings or
EXERCISED IN THE CASE AT BAR. — The petitioner
signs of an impending danger to health and body." There is
also disclaims liability on the ground of Article 2176 of the
no showing that the caboose where Famoso was riding was a
Civil Code, contending it has exercised due diligence in the
dangerous place and that he recklessly dared to stay there
selection and supervision of its employees. The Court cannot
despite warnings or signs of impending danger.

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 LABOR LAW AND SOCIAL LEGISLATION; ECC. The certification would have said so if the pension
SOCIAL SECURITY SYSTEM; PENSION, THE BENEFIT represented the death benefits accruing to the heirs under the
DERIVABLE FROM AN EMPLOYEE'S REGULAR Workmen's Compensation Act. This conclusion is supported
CONTRIBUTIONS; DOES NOT REPRESENT THE by the express provision of Art. 173 as amended.
DEATH BENEFITS PAYABLE UNDER THE
WORKMEN'S COMPENSATION ACT. — The last point
raised by the petitioner is easily resolved. Citing the
case of Floresca v. Philex Mining Corporation, it argues that
the respondent court erred in disauthorizing the deduction
from the total damages awarded the private respondent of the
amount of P41,367.60, representing the pension to be
received by the private respondent from the Social Security
System for a period of five years. The argument is that such
deduction was quite proper because of Art. 173 of the Labor
Code, as amended. This article provides that any amount
received by the heirs of a deceased employee from the
Employees Compensation Commission, whose funds are
administered by the SSS, shall be exclusive of all other
amounts that may otherwise be claimed under the Civil Code
and other pertinent laws. The amount to be paid by the SSS
represents the usual pension received by the heirs of a
deceased employee who was a member of the SSS at the
time of his death and had regularly contributed his premiums
as required by the System. The pension is the benefit
derivable from such contributions. It does not represent the
death benefits payable under the Workmen's Compensation
Act to an employee who dies as a result of a work-connected
injury. Indeed, the certification from the SSS does not
indicate that the pension is to be taken from the funds of the

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54. CLEMENTE Hondagua, the train's complement were relieved, with Victor
BRIÑAS, petitioner, vs. THE PEOPLE OF THE Millan taking over as engineman, Clemente Briñas as
PHILIPPINES, and HONORABLE COURT OF conductor, and Hermogenes Buencamino as assistant
APPEALS, respondents.G.R. No. L-30309. November conductor.
25, 1953 Upon approaching Barrio Lagalag in Tiaong, the train slowed
The proximate cause of the injury is not necessarily the down and the conductor shouted 'Lusacan', 'Lusacan'.
immediate cause of, or the cause nearest in time to, the Thereupon, the old woman walked towards the left front door
injury. It is only when the causes are independent of each facing the direction of Tiaong, carrying the child. When the
other that the nearest is to be charged with the disaster. So two were near the door, the train suddenly picked up speed.
long as there is a natural, direct and continuous sequence As a result the two stumbled and they were seen no more. It
between the negligent act and the injury that it can took 3 mins more before the train stopped at the next barrio,
reasonably be said that but for the act the injury could not Lusacan, and the victims were not among the passengers who
have occurred, such negligent act is the proximate cause of disembarked thereat. The next morning, the dead bodies of
the injury, and whoever is responsible therefore is liable for the old woman and the child were seen in the railroad tracks
damages resulting therefrom. One who negligently creates a by the police.
dangerous condition cannot escape liability for the natural
CFI of Quezon convicted defendant-appellant Clemente
and probable consequences thereof, although the act of a
Briñas for double homicide thru reckless imprudence but
third person, or an act of God for which he is not responsible
acquitted Buencamino and Millan OTG of reasonable doubt.
intervenes to precipitate the loss. Apart from imprisonment for violation of Art. 305 in rel to
Art. 249 of the RPC, the lower court ordered Briñas to
indemnify the heirs of the deceased. As to the responsibility
FACTS:
of the Manila Railroad Company, the court held that it shall
On Jan 1957, Juanito Gesmundo bought a train ticket at the be the subject of a separate [Link] affirmed.
railroad station in Tagkayawan, Quezon for his 55-year old
mother Martina Bool and his 3-year old daughter Emelita Petitioner argues that it was negligence per se for Martina
Bool to go to the door of the coach while the train was still in
Gesmundo who were bound for Barrio Lusacan, Tiaong.
motion and that it was this negligence that was the proximate
At about 2pm that day, the train left Tagkawayan with the old cause of their deaths?
woman and her granddaughter among the passengers. At
ISSUE:

Page | 147
W/N Brinas’ premature announcement of the train’s stop was
the proximate cause of Bool and Gesmundo’s death?
The proximate cause of the death of the victims was the
RULING: premature and erroneous announcement of petitioner'
YES. The proximate cause of the injury is not necessarily the appellant Briñas. This announcement prompted the victims to
stand and proceed to the nearest exit. Without said
immediate cause of, or the cause nearest in time to, the
injury. It is only when the causes are independent of each announcement, the victims would have been safely seated in
their respective seats when the train jerked as it picked up
other that the nearest is to be charged with the disaster. So
long as there is a natural, direct and continuous sequence speed. The connection between the premature and erroneous
announcement of petitioner-appellant and the deaths of the
between the negligent act and the injury that it can reasonably
be said that but for the act the injury could not have occurred, victims is direct and natural, unbroken by any intervening
efficient causes.
such negligent act is the proximate cause of the injury, and
whoever is responsible therefore is liable for damages
resulting therefrom. One who negligently creates a dangerous CIVIL LAW; OBLIGATIONS AND CONTRACT;
condition cannot escape liability for the natural and probable
CULPA CONTRACTUAL; TRAIN CONDUCTOR'S
consequences thereof, although the act of a third person, or NEGLIGENCE; PROXIMATE CAUSE OF PASSENGERS'
an act of God for which he is not responsible intervenes to
DEATH. — The proximate cause of the death of the victims
precipitate the loss. was the premature and erroneous announcement of
petitioner-appellant Brinas. It was negligence on the
conductor's part to announce the next flag stop when said
It was negligence on the conductor's part to announce the
next flag stop when said stop was still a full three minutes stop was still a full three minutes ahead. This announcement
prompted the two victims to stand and proceed to the nearest
ahead. As the respondent CA correctly observed, "the
appellant's announcement was premature and erroneous. That exit. Without said announcement, the victims would have
been safely seated in their respective seats when the train
the announcement was premature and erroneous is shown by
the fact that immediately after the train slowed down, it jerked as it picked up speed. The connection between the
premature and erroneous announcement of petitioner-
unexpectedly accelerated to full speed. Petitioner-appellant
appellant and the deaths of the victims is direct and natural,
failed to show any reason why the train suddenly resumed its
unbroken by any intervening efficient causes.
regular speed. The announcement was made while the train
was still in Barrio Lagalag.

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 ID.; ID.; ID.; CONTRIBUTORY NEGLIGENCE OF
THE VICTIMS; NOT A GROUND FOR EXCULPATION
OF OFFENDER. — The negligence of petitioner-appellant in
prematurely and erroneously announcing the next flag stop
was the proximate cause of the deaths of Martina Bool and
Emelita Gesmundo. Any negligence of the victims was at
most contributory and does not exculpate the accused from
criminal liability.
CIVIL LAW; OBLIGATIONS AND CONTRACT;
INDEMNITY RECOVERABLE SEPARATELY FROM
AND IN ADDITION TO THE FIXED INDEMNITY FOR
THE SOLE FACT OF DEATH. — The indemnity for loss of
earning capacity, moral damages, exemplary damages,
attorney's fees, and interests are recoverable separately from
and in addition to the fixed sum of P12,000.00 corresponding
to the indemnity for the sole fact of death. This indemnity
arising from the fact of death due to a crime is fixed whereas
the others are still subject to the determination of the court
based on the evidence presented. The fact that the witnesses
were not interrogated on the issue of damages is of no
moment because the death indemnity fixed for death is
separate and distinct from the other forms of indemnity for
damages.

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55. PHILIPPINE NATIONAL RAILWAYS VS. damages. The Appellate Court sustained the holding of the trial
COURT OF APPEALS. (G.R. NO. L-55347. court that the PNR did not exercise the utmost diligence
OCTOBER 4,1985); required by law of a common carrier. It further increased the
amount adjudicated by the lower court.
FACTS:
The Philippine National Railways, PNR for short, instituted
this petition for review on certiorari to set aside the decision of ISSUE:
the respondent Appellate Court which held petitioner PNR W/N petitioner can be held responsible for the death of
liable for damages for the death of WinifredoTupang, a paying WinifredoTupang as it invokes the principle of state immunity
passenger who fell off a train operated by the petitioner. The from suit?
facts show that on September 10, 1972, at about 9:00 o'clock in
the evening, WinifredoTupang, husband of plaintiff Rosario RULING:
Tupang, boarded Train No. 516 of appellant at Libmanan, The petition is devoid of merit. The PNR was created
Camarines Sur, as a paying passenger bound for Manila. Due under Rep. Act 4156, giving it all the powers, the
to some mechanical defect, the train stopped at Sipocot, characteristics and attributes of a corporation under the
Camarines Sur, for repairs, taking some two hours before the Corporation Law. There can be no question then that the PNR
train could resume its trip to Manila. Unfortunately, upon may sue and be sued and may be subjected to court processes
passing Iyam Bridge at Lucena, Quezon, WinifredoTupang fell just like any other corporation. The petitioner has the
off the train resulting in his death. The train did not stop despite obligation to transport its passengers to their destinations and to
the alarm raised by the other passengers that somebody fell observe extraordinary diligence in doing so. Death or any
from the train. Instead, the train conductor, Perfecto Abrazado, injury suffered by any of its passengers gives rise to the
called the station agent at Candelaria, Quezon, and requested presumption that it was negligent in the performance of its
for verification of the information. Police authorities of Lucena obligation under the contract of carriage. Thus, as correctly
City were dispatched to the Iyam Bridge where they found the ruled by the respondent court, the petitioner failed to overthrow
lifeless body of WinifredoTupang. The autopsy report showed such presumption of negligence with clear and convincing
that WinifredoTupang died due to the traumatic injury he evidence. While petitioner failed to exercise extraordinary
sustained. The Court of First Instance of Rizal, after trial, held diligence as required by law, 8 it appears that the deceased was
the petitioner PNR liable for damages for breach of contract of chargeable with contributory negligence. Since he opted to sit
carriage and ordered it to pay the plaintiff indemnity with on the open platform between the coaches of the train, he

Page | 150
should have held tightly and tenaciously on the upright metal platform between the coaches of the train, he should have held
bar found at the side of said platform to avoid falling off from tightly and tenaciously on the upright metal bar found at the
the speeding train. Such contributory negligence, while not side of said platform to avoid falling off from the speeding
exempting the PNR from liability, nevertheless justified the train. Such contributory negligence, while not exempting the
deletion of the amount adjudicated as moral damages. PNR from liability, nevertheless justified the deletion of the
Therefore the decision of the respondent appellate court is amount adjudicated as moral damages. By the same token, the
hereby modified by eliminating therefrom the amounts of award of exemplary damages must be set aside. Exemplary
P10,000.00 and P5,000.00 adjudicated as moral and exemplary damages may be allowed only in cases where the .defendant
damages, respectively. acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner, There being no evidence of fraud, malice
Same; Common Carriers; It is the duty of a common or bad faith on the part of petitioner, the grant of exemplary
carrier to overcome the presumption of negligence that accrues damages should be discarded.
once. its passenger dies of an accident.—The petitioner has the
obligation to transport its passengers to their destinations and to
observe extraordinary diligence in doing so. Death or any
injury suffered by any of' its passengers gives rise to the
presumption that it was negligent in the performance of its
obligation under the contract of carriage. Thus, as correctly
ruled by the respondent court, the petitioner failed to overthrow
such pr esumption of negligence with clear and convincing
evidence.

Same; Same; A passenger is guilty of contributory

negligence where he chose to ride on the open platform of a
train and failed to hold tightly on the vertical grab bar. Moral
and exemplary damages not due in such a case.—But while
petitioner failed to exercise extraordinary diligence as required
by law, it appears that the deceased was chargeable with
contributory negligence. Since he opted to sit on the open

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56. PHILIPPINE NATIONAL RAILWAYS VS. The RTC ruled on the matter, ordering that the petitioner pay
VIZCARA. (G.R. NO. 190022. FEBRUARY 15, the respondents.
2012);
ISSUE: W/N the CA erred in finding that the proximate cause
FACTS: of the accident was the negligence of the petitioners.
This is a petition for review on certiorari seeking to annul and
set aside the decision of the Court of Appeals (CA) which RULING:
affirmed with modification the Regional Trial Court ofPalayan The Court agrees with the findings made by the lower courts
City. Reynaldo Vizcara (Reynaldo) was driving a passenger identifying the petitioners' failure to install adequate safety
jeepney headed towards Bicol to deliver onion crops, with his devices at the railroad crossing was the proximate cause of the
companions. While crossing the railroad track in Quezon, a collision. The Court also asserted that there was no
Philippine National Railways (PNR) train suddenly turned up contributory negligence on the part of the respondents as the
and rammed their passenger jeepney. The collision resulted in driver of the jeepney merely followed the vehicle in front of
the instantaneous death of Vizcara and some companions, them on the belief that it was safe to do so. The driver was
while others sustained injuries. At the time of the accident, merely relying on his faculties of sight and hearing, and had no
there was no level crossing installed at the railroad crossing. reason to anticipate the impending danger. At this age of
Additionally, the "Stop, Look and Listen" signage was poorly modern transportation, it behooves the PNR to exert serious
maintained. the survivors of the mishaptogether with the heirs efforts to catch up with the trend, including the contemporary
of the deceased victimsfiled an action for damages against standards in railroad safety. As an institution established to
PNR. They alleged that the proximate cause of the fatalities alleviate public transportation, it is the duty of the PNR to
and serious physical injuries sustained by the victims of the promote the safety and security of the general riding public and
accident was the petitioners' gross negligence in not providing provide for their convenience, which to a considerable degree
adequate safety measures to prevent injury to persons and may be accomplished by the installation of precautionary
properties. The petitioners claimed that they exercised due warning devices. Every railroad crossing must be installed with
diligence in operating the train and monitoring its barriers on each side of the track to block the full width of the
roadworthiness. In fact, the train operator immediately stepped road until after the train runs past the crossing, and equipped
on the brakes to avoid hitting the jeepney but due to the sheer with a device which rings a bell or turns on a signal light to
weight of the train, it did not instantly come to a complete stop. signify the danger or risk of crossing. It is similarly beneficial
to mount advance warning signs at the railroad crossing, such

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as a reflectorized crossbuck sign to inform motorists of the there was no pre-existing contractual relation between the
existence of the track, and a stop, look and listen signage to parties, is called quasi-delict and is governed by the provisions
prompt the public to take caution. These warning signs must be of this chapter.
erected in a place where they will have ample lighting and
unobstructed visibility both day and night. If only these safety Same; Same; Negligence; Words and Phrases; Negligence
devices were installed at the Tiaong railroad crossing and the is the omission to do something which a reasonable man,
accident nevertheless occurred, we could have reached a guided by considerations which ordinarily regulate the conduct
different disposition in the extent of the petitioner's liability. of human affairs, would do, or the doing of something which a
The maintenance of safety equipment and warning signals at prudent and reasonable man would not do.—In Layugan v.
railroad crossings is equally important as their installation since Intermediate Appellate Court, 167 SCRA 363 (1988),
poorly maintained safety warning devices court as much negligence was defined as the omission to do something which
danger as when none was installed at all. The presence of a reasonable man, guided by considerations which ordinarily
safety warning signals at railroad crossing carries with it the regulate the conduct of human affairs, would do, or the doing
presumption that they are in good working condition and that of something which a prudent and reasonable man would not
the public may depend on them for assistance. If they happen do. It is the failure to observe for the protection of the interests
to be neglected and inoperative, the public may be misled into of another person, that degree of care, precaution, and vigilance
relying on the impression of safety they normally convey and which the circumstances justly demand, whereby such other
eventually bring injury to themselves in doing so. person suffers injury. To determine the existence of negligence,
the time-honored test was: Did the defendant in doing the
The petition is denied, and the CA decision is affirmed. alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the
Civil Law; Quasi-Delicts; Article 2176 of the New Civil Code same situation? If not, then he is guilty of negligence. The law
prescribes a civil liability for damages caused by a person’s here in effect adopts the standard supposed to be supplied by
act or omission constituting fault or negligence.2176. Whoever the imaginary conduct of the discreet pater familias of the
by act or omission causes damage to another, —Article 2176 Roman law. The existence of negligence in a given case is not
of the New Civil Code prescribes a civil liability for damages determined by reference to the personal judgment of the actor
caused by a person’s act or omission constituting fault or in the situation before him. The law considers what would be
negligence. It states: Articlethere being fault or negligence, is reckless, blameworthy, or negligent in the man of ordinary
obliged to pay for the damage done. Such fault or negligence, if intelligence and prudence and determines liability by that.

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 contributory negligence on the part of the respondents, this
Civil Law; Quasi-Delicts; Negligence; A reliable court rule in the negative. Contributory negligence is conduct
signaling device in good condition, not just a dilapidated on the part of the injured party, contributing as a legal cause to
“Stop, Look and Listen” signage, is needed to give notice to the harm he has suffered, which falls below the standard which
the public. It is the responsibility of the railroad company to he is required to conform for his own protection. It is an act or
use reasonable care to keep the signal devices in working omission amounting to want of ordinary care on the part of the
order. Failure to do so would be an indication of negligence.— person injured which, concurring with the defendant’s
Both courts ruled that the petitioners fell short of the diligence negligence, is the proximate cause of the injury. Here, we
expected of it, taking into consideration the nature of its cannot see how the respondents could have contributed to their
business, to forestall any untoward incident. In particular, the injury when they were not even aware of the forthcoming
petitioners failed to install safety railroad bars to prevent danger.
motorists from crossing the tracks in order to give way to an
approaching train. Aside from the absence of a crossing bar, Same; Same; Same; At this age of modern transportation, it
the “Stop, Look and Listen” signage installed in the area was behooves the Philippine National Railways (PNR) to exert
poorly maintained, hence, inadequate to alert the public of the serious efforts to catch up with the trend, including the
impending danger. A reliable signaling device in good contemporary standards in railroad safety.—At this age of
condition, not just a dilapidated “Stop, Look and Listen” modern transportation, it behooves the PNR to exert serious
signage, is needed to give notice to the public. It is the efforts to catch up with the trend, including the contemporary
responsibility of the railroad company to use reasonable care to standards in railroad safety. As an institution established to
keep the signal devices in working order. Failure to do so alleviate public transportation, it is the duty of the PNR to
would be an indication of negligence. Having established the promote the safety and security of the general riding public and
fact of negligence on the part of the petitioners, they were provide for their convenience, which to a considerable degree
rightfully held liable for damages. may be accomplished by the installation of precautionary
warning devices. Every railroad crossing must be installed with
Same; Same; Same; Contributory Negligence; Words and barriers on each side of the track to block the full width of the
Phrases; Contributory negligence is conduct on the part of the road until after the train runs past the crossing. To even draw
injured party, contributing as a legal cause to the harm he has closer attention, the railroad crossing may be equipped with a
suffered, which falls below the standard which he is required to device which rings a bell or turns on a signal light to signify the
conform for his own protection.—As to whether there was danger or risk of crossing. It is similarly beneficial to mount

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advance warning signs at the railroad crossing, such as a did not have any participation in the occurrence of the
reflectorized crossbuck sign to inform motorists of the unfortunate incident which befell them. Likewise, they did not
existence of the track, and a stop, look and listen signage to exhibit any overt act manifesting disregard for their own safety.
prompt the public to take caution. These warning signs must be Thus, absent preceding negligence on the part of the
erected in a place where they will have ample lighting and respondents, the doctrine of last clear chance cannot be applied.
unobstructed visibility both day and night.
Same; Same; Doctrine of Last Clear Chance; Words and
Phrases; The doctrine of last clear chance provides that where
both parties are negligent but the negligent act of one is
appreciably later in point of time than that of the other, or
where it is impossible to determine whose fault or negligence
brought about the occurrence of the incident, the one who had
the last clear opportunity to avoid the impending harm but
failed to do so, is chargeable with the consequences arising
therefrom.—The doctrine of last clear chance provides that
where both parties are negligent but the negligent act of one is
appreciably later in point of time than that of the other, or
where it is impossible to determine whose fault or negligence
brought about the occurrence of the incident, the one who had
the last clear opportunity to avoid the impending harm but
failed to do so, is chargeable with the consequences arising
therefrom. Stated differently, the rule is that the antecedent
negligence of a person does not preclude recovery of damages
caused by the supervening negligence of the latter, who had the
last fair chance to prevent the impending harm by the exercise
of due diligence. To reiterate, the proximate cause of the
collision was the petitioners’ negligence in ensuring that
motorists and pedestrians alike may safely cross the railroad
track. The unsuspecting driver and passengers of the jeepney

Page | 155
 PASSENGER’S BAGGAGE
The Supreme Court held that both the trial and appellate courts
57. SARKIES TOURS VS. COURT OF APPEALS. (G.R. resolved the issues judiciously based on the evidence at hand.
NO. 108897. OCTOBER 2, 1997); The cause of the loss was petitioner's negligence. The cause of
the loss in the case at bar was petitioner's negligence in not
FACTS (Based on the synopsis): ensuring that the doors of the baggage

On August 31, 1984, Fatima boarded petitioner's De Luxe Bus

No. 5 in Manila on her way to Legazpi City. Her brother
helped her load three pieces of luggage containing all of her
optometry things, passport and visa, her mother's U.S.
immigration card, among other important documents and
personal belongings. Her belongings were kept in the baggage
compartment of the bus, but during a stopover at Daet, it was compartment of its bus were securely fastened. As a result of
discovered that only one bag remained in the open this lack of care, almost all of the luggage was lost, to the
compartment. Fatima's things were missing and might have prejudice of the paying passengers. The assailed decision of the
dropped along the way. Petitioner merely offered her P1,000.00 Court of Appeals and its resolution are hereby AFFIRMED
for each piece of luggage lost, which she turned down. She with the MODIFICATION that petitioner is ordered to pay
then filed suit to recover the value of the lost items, as well as respondents an additional moral damages and exemplary
moral and exemplary damages, attorney's fees and expenses of damages.
litigation. The court a quo adjudged the case in favor of CIVIL LAW; COMMON CARRIERS; VIGILANCE
respondents, which was affirmed by the Court of Appeals, OVER THE GOODS; EXTRAORDINARY DILIGENCE,
except for the award of damages which was deleted. CTDAaE REQUIRED. — Under the Civil Code, "(c)ommon carrier,
ISSUE: from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the
W/N the CA erred in finding the petitioner liable for the loss of vigilance over the goods . . . transported by them," and this
the private respondent’s luggage. liability "lasts from the time the goods are unconditionally
RULING: placed in the possession of, and received by the carrier for

Page | 156
transportation until the same are delivered, actually or
constructively, by the carrier to . . . the person who has a right
to receive them," unless the loss is due to any of the excepted
causes under Article 1734 thereof.

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 CHAPTER 3 OBLIGATIONS OF THE COMMON CARRIER
DUTY TO EXERCISE DUE DILIGENCE

58. SPS. FABRE VS. COURT OF APPEALS. (G.R. NO. Several passengers were seriously injured and some had to
111127. JULY 26,1996); go through medical procedures. A case was brought to the
FACTS: Makati RTC which found that there was no convincing
Petitioners Engracio Fabre, Jr. and his wife were evidence was showing that the minibus was properly checked
owners of a 1982 model Mazda minibus. They used the bus for travel to a long distance trip and that the driver was
principally in connection with a bus service for school children properly screened and tested before being admitted for
which they operated in Manila. The couple had a driver, employment. Indeed, all the evidence presented have shown
Porfirio J. Cabil, whom they hired in 1981, after trying him out the negligent act of the defendants which ultimately resulted to
for two weeks. His job was to take school children to and from the accident.
the St. Scholastica's College in Malate, Manila. Private
respondent Word for the World Christian Fellowship Inc. ISSUE:WHETHER OR NOT PETITIONERS WERE LIABLE
(WWCF) arranged with petitioners for the transportation of 33 FOR THE INJURIES SUFFERED BY PRIVATE
members of its Young Adults Ministry from Manila to La Union RESPONDENTS.
and back in consideration of which private respondent paid RULING:
petitioners the amount of P3,[Link] group was scheduled As common carriers, the Fabres were bound to exercise
to leave on at 5:00 p.m. However, as several members of the "extraordinary diligence" for the safe transportation of the
party were late, the bus did not leave until 8:00 p.m. Petitioner passengers to their destination. This duty of care is not
PorfirioCabil drove the minibus, unfamiliar with the road, was excused by proof that they exercised the diligence of a good
forced to take a detour through the town of Ba-ay in Lingayen, father of the family in the selection and supervision of their
Pangasinan. At 11:30 that night, petitioner Cabil came upon a employee. As Art. 1759 of the Code provides:
sharp curve on the highway, running on a south to east
direction, which he described as "siete." The road was slippery Common carriers are liable for the
because it was raining, causing the bus, which was running at death of or injuries to passengers through the
the speed of 50 kilometers per hour, to skid to the left road negligence or wilful acts of the former's
shoulder. The bus hit the left traffic steel brace and sign along employees, although such employees may
the road and rammed the fence of one Jesus Escano, then have acted beyond the scope of their
turned over and landed on its left side, coming to a full stop authority or in violation of the orders of the
only after a series of impacts. The bus came to rest off the common carriers.
road. A coconut tree which it had hit fell on it and smashed its This liability of the common carriers
front portion. does not cease upon proof that they
exercised all the diligence of a good father of

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 a family in the selection and supervision of look into the sealed casket to verify the remains. Failure of the
their employees. company to verify the contents is not negligence on their part.)
In the case at bar, the Fabres, in allowing Cabil to drive the
bus to La Union, apparently did not consider the fact that Cabil Same; Same; Same; As common carriers, the Fabres
had been driving for school children only, from their homes to were bound to exercise “extraordinary diligence” for
the St. Scholastica's College in Metro Manila. They had hired the safe transportation of the passengers to their
him only after a two-week apprenticeship. They had tested him destination.—As common carriers, the Fabres were
for certain matters, such as whether he could remember the bound to exercise “extraordinary diligence” for the
names of the children he would be taking to school, which
were irrelevant to his qualification to drive on a long distance
safe transportation of the passengers to their
travel, especially considering that the trip to La Union was his destination. This duty of care is not excused by proof
first. The existence of hiring procedures and supervisory that they exercised the diligence of a good father of
policies cannot be casually invoked to overturn the the family in the selection and supervision of their
presumption of negligence on the part of an employer. employee.
NEGLIGENCE OF AN EMPLOYEE GIVES RISE TO THE
PRESUMPTION THAT HIS EMPLOYERS ARE Same; Same; Same; On the theory that
THEMSELVES NEGLIGENT IN THE SELECTION AND petitioners are liable for breach of contract of
SUPERVISION OF THEIR EMPLOYEE. — Pursuant to Arts. carriage, the award of moral damages is authorized
2176 and 2180 of the Civil Code his negligence gave rise to by Art. 1764, in relation to Art. 2220, since Cabil’s
the presumption that his employers, the Fabres, were gross negligence amounted to bad faith.—With
themselves negligent in the selection and supervision of their
employee. Due diligence in selection of employees is not respect to the other awards, while the decisions of
satisfied by finding that the applicant possessed a professional the trial court and the Court of Appeals do not
driver's license. The employer should also examine the sufficiently indicate the factual and legal basis for
applicant for his qualifications, experience and record of them, we find that they are nevertheless supported
service. Due diligence in supervision, on the other hand, by evidence in the records of this case. Viewed as an
requires the formulation of rules and regulations for the
guidance of employees and the issuance of proper instructions
action for quasi delict, this case falls squarely within
as well as actual implementation and monitoring of consistent the purview of Art. 2219(2) providing for the
compliance with the rules. payment of moral damages in cases of quasi delict.
On the theory that petitioners are liable for breach
of contract of carriage, the award of moral damages
DUTY TO DISCLOSE – (In this case, the contents of the thing
is authorized by Art. 1764, in relation to Art. 2220,
to be delivered are remains of deceased mother of the
petitioners. The airline company transporting could not further since Cabil’s gross negligence amounted to bad faith.

Page | 159
Amyline Antonio’s testimony, as well as the
testimonies of her father and copassengers, fully
establish the physical suffering and mental anguish
she endured as a result of the injuries caused by
petitioners’ negligence.

Same; Same; Same; In Dangwa Trans. Co., Inc.

vs. Court of Appeals, the Court held the bus company
and the driver jointly and severally liable for
damages for injuries suffered by a passenger.—The
decision of the Court of Appeals can be sustained
either on the theory of quasi delict or on that of
breach of contract. The question is whether, as the
two courts below held, petitioners, who are the
owners and driver of the bus, may be made to
respond jointly and severally to private respondent.
We hold that they may be. In Dangwa Trans. Co.,
Inc. v. Court of Appeals, on facts similar to those in
this case, this Court held the bus company and the
driver jointly and severally liable for damages for
injuries suffered by a passenger. Again, in Bachelor
Express, Inc. v. Court of Appeals a driver found
negligent in failing to stop the bus in order to let off
passengers when a fellow passenger ran amuck, as a
result of which the passengers jumped out of the
speeding bus and suffered injuries, was held also
jointly and severally liable with the bus company to
the injured passengers.

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 DUTY TO DISCLOSE

59. SALUDO, JR. VS. COURT OF APPEALS. (G.R. NO. Airway Bill by Air Care and from said date, private respondents
95536. MARCH 23,1992); were charged with the responsibility to exercise extraordinary
diligence so much so that the alleged switching of the caskets
FACTS:CrispinaGaldoSaludo, mother of the petitioners, died on October 27, 1976, or one day after the private respondents
in Chicago, Illinois. Pomierski and Son Funeral Home of received the cargo, the latter must necessarily be liable.
Chicago, made the necessary preparations and arrangements
for the shipment of the remains from Chicago to the ISSUE:Whether or not the delay in the delivery of the casketed
Philippines. Pomierski brought the remains to Continental remains of petitioners’ mother was due to the fault of
Mortuary Air Services (CMAS) at the Chicago Airport which respondent airline companies
made the necessary arrangements such as flights, transfers,
etc. CMAS booked the shipment with PAL thru the carrier’s HELD:
agent Air Care International. PAL Airway Bill Ordinary was
issued wherein the requested routing was from Chicago to
Explicit is the rule under Article 1736 of the Civil Code that the
San Francisco on board Trans World Airline (TWA) and from
extraordinary responsibility of the common carrier begins from
San Francisco to Manila on board PAL.
the time the goods are delivered to the carrier. This
responsibility remains in full force and effect even when they
Salvacion (one of the petitioners), upon arrival at San are temporarily unloaded or stored in transit, unless the
Francisco, went to the TWA to inquire about her mother’s shipper or owner exercises the right of stoppage in
remains. But she was told they did not know anything about it. transitu, and terminates only after the lapse of a reasonable
She then called Pomierski that her mother’s remains were not time for the acceptance, of the goods by the consignee or
at the West Coast terminal. Pomierski immediately called such other person entitled to receive them. And, there is
CMAS which informed that the remains were on a plane to delivery to the carrier when the goods are ready for and have
Mexico City, that there were two bodies at the terminal, and been placed in the exclusive possession, custody and control
somehow they were switched. CMAS called and told of the carrier for the purpose of their immediate transportation
Pomierski that they were sending the remains back to and the carrier has accepted them. Where such a delivery has
California via Texas. thus been accepted by the carrier, the liability of the common
carrier commences eoinstanti.
Petitioners filed a complaint against TWA and PAL fir the
misshipment and delay in the delay of the cargo containing the Hence, while we agree with petitioners that the extraordinary
remains of the late CrispinaSaludo. Petitioners alleged that diligence statutorily required to be observed by the carrier
private respondents received the casketed remains of Crispina instantaneously commences upon delivery of the goods
on October 26, 1976, as evidenced by the issuance of PAL thereto, for such duty to commence there must in fact have

Page | 161
been delivery of the cargo subject of the contract of carriage. by inevitable necessity because he might have provided
Only when such fact of delivery has been unequivocally against it by contract. Whether or not there has been such an
established can the liability for loss, destruction or undertaking on the part of the carrier to be determined from
deterioration of goods in the custody of the carrier, absent the the circumstances surrounding the case and by application of
excepting causes under Article 1734, attach and the the ordinary rules for the interpretation of contracts.
presumption of fault of the carrier under Article 1735 be
invoked. Echoing the findings of the trial court, the respondent court
correctly declared that —
As already demonstrated, the facts in the case at bar belie the In a similar case of delayed delivery of air cargo under a very
averment that there was delivery of the cargo to the carrier on similar stipulation contained in the airway bill which reads:
October 26, 1976. Rather, as earlier explained, the body “The carrier does not obligate itself to carry the goods by any
intended to be shipped as agreed upon was really placed in specified aircraft or on a specified time. Said carrier being
the possession and control of PAL on October 28, 1976 and it hereby authorized to deviate from the route of the shipment
was from that date that private respondents became without any liability therefor”, our Supreme Court ruled that
responsible for the agreed cargo under their undertakings in common carriers are not obligated by law to carry and to
PAL Airway Bill No. 079-01180454. Consequently, for the deliver merchandise, and persons are not vested with the right
switching of caskets prior thereto which was not caused by to prompt delivery, unless such common carriers previously
them, and subsequent events caused thereby, private assume the obligation. Said rights and obligations are created
respondents cannot be held liable. by a specific contract entered into by the parties (Mendoza vs.
PAL, 90 Phil. 836).
The oft-repeated rule regarding a carrier’s liability for delay is
that in the absence of a special contract, a carrier is not an There is no showing by plaintiffs that such a special or specific
insurer against delay in transportation of goods. When a contract had been entered into between them and the
common carrier undertakes to convey goods, the law implies a defendant airline companies.
contract that they shall be delivered at destination within a
reasonable time, in the absence, of any agreement as to the
time of delivery. But where a carrier has made an express And this special contract for prompt delivery should call the
contract to transport and deliver property within a specified attention of the carrier to the circumstances surrounding the
time, it is bound to fulfill its contract and is liable for any delay, case and the approximate amount of damages to be suffered
no matter from what cause it may have arisen. This result in case of delay. There was no such contract entered into in
logically follows from the well-settled rule that where the law the instant case.”
creates a duty or charge, and the party is disabled from
performing it without any default in himself, and has no remedy
over, then the law will excuse him, but where the party by his A common carrier undertaking to transport property has the
own contract creates a duty or charge upon himself, he is implicit duty to carry and deliver it within reasonable time,
bound to make it good notwithstanding any accident or delay absent any particular stipulation regarding time of delivery, and

Page | 162
to guard against delay. In case of any unreasonable delay, the presenting the casket for shipment. And so as a matter of fact,
carrier shall be liable for damages immediately and TWA carried to San Francisco and transferred to defendant
proximately resulting from such neglect of duty. As found by PAL a shipment covered by or under PAL Airway Bill No. 079-
the trial court, the delay in the delivery of the remains of ORD-01180454, the airway bill for the shipment of the
CrispinaSaludo, undeniable and regrettable as it was, cannot casketed remains of CrispinaSaludo. Only, it turned out later,
be attributed to the fault, negligence or malice of private while the casket was already with PAL, that what was inside
respondents,a conclusion concurred in by respondent court the casket was not the body of CrispinaSaludo so much so
and which we are not inclined to disturb. that it had to be withdrawn by C.M.A.S from PAL. The body of
CrispinaSaludo had been shipped to Mexico. The casket
FAILURE TO VERIFY AND IDENTIFY THE CONTENTS OF containing the remains of CrispinaSaludo was transshipped
THE CARGO; DOES NOT CONSTITUTE NEGLIGENCE; from Mexico and arrived in San Francisco the following day on
CASE AT BAR. — Petitioners consider TWA's statement that board American Airlines. It was immediately loaded by PAL on
it had to rely on the information furnished by the shipper" a its flight for Manila. The foregoing points at C.M.A.S., not
lame, excuse and that its failure to prove that its personnel defendant TWA much less defendant PAL, as the ONE
verified and identified the contents of the casket before loading responsible for the switching or mix-up of the two bodies at the
the same constituted negligence on the part of TWA. We Chicago Airport terminal, and started a chain reaction of the
uphold the favorable consideration by the Court of Appeals of misshipment of the body of CrispinaSaludo and a one-day
the following findings of the trial court: "It was not (to) TWA, delay in the delivery thereof to its destination. Verily, no
but to C.M.A.S. that the Pomierski& Son Funeral Home amount of inspection by respondent airline companies could
delivered the casket containing the remains of CrispinaSaludo. have guarded against the switching that had already taken
TWA would have no knowledge therefore that the remains of place. Or, granting that they could have opened the casket to
CrispinaSaludo were not the ones inside the casket that was inspect its contents, private respondents had no means of
being presented to it for shipment. TWA would have to rely on ascertaining whether the body therein contained was indeed
the representations of C.M.A.S. The casket was hermetically that of CrispinaSaludo except, possibly, if the body was that of
sealed and also sealed by the Philippine Vice Consul in a male person and such fact was visually apparent upon
Chicago. TWA or any airline for that matter would not opening the casket. However, to repeat, private respondents
have opened such sealed casket just for the purpose of had no authority to unseal and open the same nor did they
ascertaining whose body was inside and to make sure have any reason or justification to resort thereto.||| (Saludo, Jr.
that the remains inside were those of the particular person v. Court of Appeals, G.R. No. 95536, [March 23, 1992])
indicated to be by C.M.A.S. TWA had to accept whatever
information was being furnished by the shipper or by the one

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 PAYMENT OF FREIGHT
60. REPUBLIC VS. MANILA ELECTRIC COMPANY. The regulation of rates to be charged by public utilities is
(G.R. NO. 141314. NOVEMBER 15, 2002); founded upon the police powers of the State and statutes
prescribing rules for the control and regulation of public utilities
are a valid exercise thereof. When private property is used for
SYNOPSIS a public purpose and is affected with public interest, it ceases
to be juris privati only and becomes subject to regulation. The
The Court here resolves the following issues: 1. regulation is to promote the common good. Submission to
Whether the income tax paid by Meralco should be treated as regulation may be withdrawn by the owner by discontinuing
part of its operating expenses and thus considered in use; but as long as use of the property is continued, the same
determining the amount of increase in the electric rates. 2. is subject to public regulation. In regulating rates charged by
Whether it is the net average investment method of the COA public utilities, the State protects the public against arbitrary
and the ERB, or the average investment method of the and excessive rates while maintaining the efficiency and
Meralco that should be used. quality of services rendered. However, the power to regulate
rates does not give the State the right to prescribe rates which
On the first issue, the Court ruled in the negative. are so low as to deprive the public utility of a reasonable return
Income tax paid by a public utility is inconsistent with the on investment. Thus, the rates prescribed by the State must
nature of operating expenses. Operating expenses are those be one that yields a fair return on the public utility upon the
which are reasonably incurred in connection with business value of the property performing the service and one that is
operations to yield revenue or income. Income tax is imposed reasonable to the public for the services rendered. The fixing
on the entity, for the privilege of earning income and for the of just and reasonable rates involves a balancing of the
benefits received by the taxpayer from the State. On the investor and the consumer interests.
second issue, the Court ruled on the propriety of using the net
average investment method in the determination of the rate 2. REMEDIAL LAW; EVIDENCE; FINDINGS OF THE
base. The ERB did not abuse its discretion when it applied the ENERGY REGULATORY BOARD ON THE DETERMINATION
method as its reasonableness is borne by the records of the OF PROPER ENERGY RATES; RESPECTED. — While the
case. Meralco had not adequately shown that the rates power to fix rates is a legislative function, whether exercised
prescribed by the ERB are unjust or confiscatory as to deprive by the legislature itself or delegated through an administrative
its stockholders a reasonable return on investment. agency, a determination of whether the rates so fixed are
reasonable and just is a purely judicial question and is subject
to the review of the courts. Settled jurisprudence holds that
SYLLABUS factual findings of administrative bodies on technical matters
within their area of expertise should be accorded not only
respect but even finality if they are supported by substantial
1. POLITICAL LAW; INHERENT POWERS OF THE evidence even if not overwhelming or preponderant. In one
STATE; POLICE POWER; REGULATION OF RATES TO BE case, we cautioned that courts should "refrain from substituting
CHARGED BY PUBLIC UTILITIES FOUNDED THEREON. — their discretion on the weight of the evidence for the discretion
of the Public Service Commission on questions of fact and will reasonable rates to; be charged by a public utility, three major
only reverse or modify such orders of the Public Service factors are considered by the regulating agency: a) rate of
Commission when it really appears that the evidence is return; b) rate base; and c) the return itself or the computed
insufficient to support their conclusions." In the cases at bar, revenue to be earned by the public utility based on the rate of
findings and conclusions of the ERB on the rate that can be return and rate base. The rate of return is a judgment
charged by MERALCO to the public should be respected. The percentage which, if multiplied with the rate base, provides a
function of the court, in exercising its power of judicial review, fair return on the public utility for the use of its property for
is to determine whether under the facts and circumstances, service to the public: The rate of return of a public utility is not
the final order entered by the administrative agency is unlawful prescribed by statute but by administrative and judicial
or unreasonable. Thus, to the extent that the administrative pronouncements. This Court has consistently adopted a 12%
agency has not been arbitrary or capricious in the exercise of rate of return for public utilities. The rate base, on the other
its power, the time-honored principle is that courts should not hand, is an evaluation of the property devoted by the utility to
interfere. The principle of separation of powers dictates that the public service or the value of invested capital or property
courts should hesitate to review the acts of administrative which the utility is entitled to a return.
officers except in clear cases of grave abuse of
discretion. DTIaCS 4. ID.; ID.; ID.; ID.; INCOME TAX NOT INCLUDED IN
THE COMPUTATION OF OPERATING EXPENSES OF A
3. POLITICAL LAW; ADMINISTRATIVE LAW; PUBLIC UTILITY. — In determining whether or not a rate
ENERGY REGULATORY BOARD; ON FIXING RATES TO BE yields a fair return to the utility, the operating expenses of the
CHARGED IN THE DISTRIBUTION OF ELECTRICITY; utility must be considered. The return allowed to a public utility
DETERMINES WHAT IS REASONABLE AND JUST. — The in accordance with the prescribed rate must be sufficient to
ERB was created under Executive Order No. 172 to regulate, provide for the payment of such reasonable operating
among others, the distribution of energy resources and to fix expenses incurred by the public utility in the provision of its
rates to be charged by public utilities involved in the services to the public. Thus, the public utility is allowed a
distribution of electricity. In the fixing of rates, the only return on capital over and above operating expenses.
standard which the legislature is required to prescribe for the However, only such expenses and in such amounts as are
guidance of the administrative authority is that the rate be reasonable for the efficient operation of the utility should be
reasonable and just. It has been held that even in the absence allowed for determination of the rates to be charged by a
of an express requirement as to reasonableness, this standard public utility. The ERB correctly ruled that income tax should
may be implied. What is a just and reasonable rate is a not be included in the computation of operating expenses of a
question of fact calling for the exercise of discretion, good public utility. Income tax paid by a public utility is inconsistent
sense, and a fair, enlightened and independent judgment. The with the nature of operating expenses. In general, operating
requirement of reasonableness comprehends such rates expenses are those which are reasonably incurred in
which must not be so low as to be confiscatory, or too high as connection with business operations to yield revenue or
to be oppressive: In determining whether a rate is confiscatory, income. They are items of expenses which contribute or are
it is essential also to consider the given situation, requirements attributable to the production of income or revenue. As
and opportunities of the utility. In determining the just and correctly put by the ERB, operating expenses "should be a

Page | 165
requisite of or necessary in the operation of a utility, recurring, proportionate value of the property by adding the value of the
and that it redounds to the service or benefit of customers." property at the beginning and at the end of the test year with
Income tax, it should be stressed, is imposed on an individual the resulting sum divided by two.
or entity as a form of excise tax or a tax on the privilege of
earning income. In exchange for the protection extended by 6. ID.; ID.; ID.; ID.; ID.; PROPRIETY OF THE NET
the State to the taxpayer, the government collects taxes as a AVERAGE INVESTMENT METHOD. — The ERB did not
source of revenue to finance its activities. Clearly, by its abuse its discretion when it applied the net average
nature, income tax payments of a public utility are not investment method. The reasonableness of net average
expenses which contribute to or are incurred in connection investment method is borne by the records of the case. In its
with the production of profit of a public utility. Income tax report, the COA explained that the computation of the
should be borne by the taxpayer alone as they are payments proportionate value of the property and equipment in
made in exchange for benefits received by the taxpayer from accordance with the actual number of months such property or
the State. No benefit is derived by the customers of a public equipment is in service for purposes of determining the rate
utility for the taxes paid by such entity and no direct base is favored, as against the trending method employed by
contribution is made by the payment of income tax to the MERALCO, "to reflect the real status of the property." By using
operation of a public utility for purposes of generating revenue the net average investment method, the ERB and the COA
or profit. Accordingly, the burden of paying income tax should considered for determination of the rate base the value of
be Meralco's alone and should not be shifted to the consumers properties and equipment used by MERALCO in proportion to
by including the same in the computation of its operating the period that the same were actually used during the period
expenses. ETDSAc in question. This treatment is consistent with the settled rule in
rate regulation that the determination of the rate base of a
5. ID.; ID.; ID.; DETERMINATION OF THE RATE public utility entitled to a return must be based on properties
BASE ON THE PROPERTY USED IN THE OPERATION OF and equipment actually being used or are useful to the
THE PUBLIC UTILITY; NET AVERAGE INVESTMENT operations of the public utility.
METHOD AND AVERAGE INVESTMENT METHOD. — In the
determination of the rate base, property used in the operation Facts:
of the public utility must be subject to appraisal and evaluation
to determine the fair value thereof entitled to a fair return. With MERALCO filed with petitioner ERB an application for the
respect to those properties which have not been used by the revision of its rate schedules to reflect an average increase in
public utility for the entire duration of the test year, i.e., the its distribution charge. ERB granted a provisional increase
year subject to audit examination for rate-making purposes, a subject to the condition that should the COA thru its audit
valuation method must be adopted to determine the report find MERALCO is entitled to a lesser increase, all
proportionate value of the property. Under the "net average excess amounts collected from the latter’s customers shall
investment method," properties and equipment used in the either be refunded to them or correspondingly credited in their
operation of a public utility are entitled to a return only on the favor. The COA report found that MERALCO is entitled to a
actual number of months they are in service during the period. lesser increase, thus ERB ordered the refund or crediting of
In contrast, the "average investment method" computes the

Page | 166
the excess amounts. On appeal, the CA set aside the ERB use; but as long as use of the property is continued, the same
decision. MRs were denied. is subject to public regulation.

Issue: In regulating rates charged by public utilities, the State

protects the public against arbitrary and excessive rates while
Whether or not the regulation of ERB as to the adjustment of maintaining the efficiency and quality of services rendered.
rates of MERALCO is valid. However, the power to regulate rates does not give the State
the right to prescribe rates which are so low as to deprive the
public utility of a reasonable return on investment. Thus, the
Ruling: YES. rates prescribed by the State must be one that yields a fair
return on the public utility upon the value of the property
The regulation of rates to be charged by public utilities is performing the service and one that is reasonable to the public
founded upon the police powers of the State and statutes for the services rendered. The fixing of just and reasonable
prescribing rules for the control and regulation of public utilities rates involves a balancing of the investor and the consumer
are a valid exercise thereof. When private property is used for interests.
a public purpose and is affected with public interest, it ceases
to be juris privati only and becomes subject to regulation. The
regulation is to promote the common good. Submission to
regulation may be withdrawn by the owner by discontinuing

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 TIMELY LOADING AND UNLOADING

61. MAGELLAN MANUFACTURING MARKETING VS. HELD: Yes. It appears on the face of the bill of lading that
COURT OF APPEALS. (G.R. NO. 95529. AUGUST the entry “Hong Kong” in the blank space labeled
22,1991); “Transshipment” which can only mean that transshipment
actually took place. This fact is bolstered by the
FACTS: certification issued by private respondent F.E. Zuellig,
Choju Co., Ltd purchased from Magellan Manufacturers Inc., although it carefully used the word “transfer” instead
Marketing Corp. (MMMC) 136,000 anahaw fans for $23,220. of transshipment. No amount of semantic juggling can
MMMC contracted with F.E. Zuellig, a shipping agent of Orient mask the fact that transshipment occurred in this case.
Overseas Container Lines, Inc., (OOCL) specifying that he
needed an on-board bill of lading and that transhipment is not FROM THE CASE: The Supreme Court found no fault on the
allowed under the letter of credit. MMMC paid F.E. Zuellig the part of private respondents. On the matter of transshipment,
freight charges and secured a copy of the bill of lading which petitioner maintains that ". . . while the goods were transferred
was presented to Allied Bank. The bank then credited the in Hong Kong from MV Pacific Despatcher, the feeder vessel,
amount of US$23,220 covered by the letter of credit to MMMC. to MV Oriental Researcher, a mother vessel, the same cannot
When MMMC's President James Cu, went back to the bank be considered transshipment because both vessels belong to
later, he was informed that the payment was refused by the the same shipping company, the private respondent Orient
buying for lack of bill of lading and there was a transhipment of Overseas Container Lines, Inc." Petitioner emphatically goes
goods. The anahaw fans were shipped back to Manila through on to say: "To be sure, there was no actual transshipment of
OOCL who are demanding from MMMC P246,043.43 (freight the Anahaw fans. The private respondents have executed a
charges from Japan to Manila, demurrage incurred in Japan certification to the effect that while the Anahaw fans were
and Manila from October 22, 1980 up to May 20, 1981 transferred from one vessel to another in Hong Kong, since
and charges for stripping the container van of the Anahaw fans the two vessels belong to one and the same company then
on May 20, 1981). MMMC abandoned the whole cargo and there was no transshipment."
asked OOCL for damages. OOCL: bill of lading clearly shows
that there will be a transhipment and that petitioner was well Transshipment, in maritime law, is defined as "the act of taking
aware that MV (Pacific) Despatcher was only up to Hongkong cargo out of one ship and loading it in another," or "the transfer
where the subject cargo will be transferred to another vessel of goods from the vessel stipulated in the contract of
for Japan. RTC rendered a decision which favored OOCL. affreightment to another vessel before the place of destination
MMMC was the one who ordered the reshipment of the cargo named in the contract has been reached," or "the transfer for
from Japan to Manila. The Court of Appeals affirmed the RTC further transportation from one ship or conveyance to
with modification of excluding demurrage in Manila another." Clearly, either in its ordinary or its strictly legal
acceptation, there is transshipment whether or not the same
ISSUE: W/N there was transshipment person, firm or entity owns the vessels. In other words, the fact
of transshipment is not dependent upon the ownership of the
transporting ships or conveyances or in the change of camera, because of the option which was categorically granted to
as the petitioner seems to suggest, but rather on the fact of and exercised by it as a means of settling its liability for
actual physical transfer of cargo from one vessel to another. the cost and expenses of reshipment. And, said choice
having been duly communicated, the same is binding upon the
That there was transshipment within this contemplation is the parties on legal and equitable considerations of estoppel.
inescapable conclusion, as there unmistakably appears on the
face of the bill of lading the entry "Hong Kong" in the blank DISPOSITIVE:WHEREFORE, the judgment of respondent
space labeled "Transshipment," which can only mean that Court of Appeals is AFFIRMED with the MODIFICATION that
transshipment actually took place. This fact is further bolstered petitioner is likewise absolved of any liability and the award of
by the certification issued by private respondent F.E. Zuellig, P52,102.45 with legal interest granted by respondent court on
Inc. dated July 19, 1980, although it carefully used the term private respondents' counterclaim is SET ASIDE, said
"transfer" instead of transshipment. Nonetheless, no amount of counterclaim being hereby DISMISSED, without
semantic juggling can mask the fact that transshipment in truth pronouncement as to costs.
occurred in this case.
DEMURRAGE IS A CLAIM FOR DAMAGES FOR FAILURE
TO ACCEPT DELIVERY AND EXISTS ONLY WHEN
Now, there is no dispute that private respondents expressly EXPRESSLY STIPULATED. — Demurrage, in its strict sense,
and on their own volition granted petitioner an option with is the compensation provided for in the contract of
respect to the satisfaction of freightage and demurrage affreightment for the detention of the vessel beyond the time
charges. Having given such option, especially since it was agreed on for loading and unloading. Essentially, demurrage is
accepted by petitioner, private respondents are estopped from the claim for damages for failure to accept delivery. In a broad
reneging thereon. Petitioner, on its part, was well within its sense, every improper detention of a vessel may be
right to exercise said option. Private respondents, in giving the considered a demurrage. Liability for demurrage, using the
option, and petitioner, in exercising that option, are concluded word in its strictly technical sense, exists only when expressly
by their respective actions. To allow either of them to stipulated in the contract. Using the term in its broader sense,
unilaterally back out on the offer and on the exercise of the damages in the nature of demurrage are recoverable for a
option would be to countenance abuse of rights as an order of breach of the implied obligation to load or unload the cargo
the day, doing violence to the long entrenched principle of with reasonable dispatch, but only by the party to whom the
mutuality of contracts. duty is owed and only against one who is a party to the
It will be remembered that in overland transportation, an shipping contract. Notice of arrival of vessels or conveyances,
unreasonable delay in the delivery of transported goods is or of their placement for purposes of unloading is often a
sufficient ground for the abandonment of goods. By condition precedent to the right to collect demurrage charges.
analogy, this can also apply to maritime transportation.
Further, with much more reason can petitioner in the BILL OF LADING; CONTENTS THEREOF EVIDENCING
instant case properly abandon the goods, not only INTENTION PREVAILS OVER SHIPPER'S THESIS. — As
because of the unreasonable delay in its delivery but between such stilted thesis of petitioner and the contents of

Page | 169
the bill of lading evidencing the intention of the parties, it is
irremissible that the latter must prevail. Petitioner conveniently
overlooks the first paragraph of the very article that he cites
which provides that "(i)f the terms of the contract are clear and
leave no doubt upon the intention of the contracting parties,
the literal meaning of the stipulations shall control." In addition,
Article 1371 of the same Code provides that "(i)n order to
judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally
considered."||| (Magellan Manufacturing Marketing Corp. v.
Court of Appeals, G.R. No. 95529, [August 22, 1991], 278
PHIL 118-141)

CIVIL LAW; CONTRACTS; MUTUALITY OF CONTRACT IS

VIOLATED IF PARTY IS ALLOWED TO BACK OUT OF THE
OFFER. — There is no dispute that private respondents
expressly and on their own volition granted petitioner an option
with respect to the satisfaction of freightage and demurrage
charges. Having given such option, especially since it was
accepted by petitioner, private respondents are estopped from
reneging thereon. Petitioner, on its part, was well within its
right to exercise said option. Private respondents, in giving the
option, and petitioner, in exercising that option, are concluded
by their respective actions. To allow either of them to
unilaterally back out on the offer and on the exercise of the
option would be to countenance abuse of rights as an order of
the day, doing violence to the long entrenched principle of
mutuality of contracts.||| (Magellan Manufacturing Marketing
Corp. v. Court of Appeals, G.R. No. 95529, [August 22, 1991],
278 PHIL 118-141)

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62. PHILAM INSURANCE COMPANY, INC. (now Risk Marine Open Insurance Policy against all loss, damage,
CHARTIS PHILIPPINES INSURANCE, INC.) vs. liability, or expense before, during transit and even after the
HEUNG-A SHIPPING CORPORATION and discharge of the shipment from the carrying vessel until its
WALLEM PHILIPPINES SHIPPING, INC complete delivery to the consignee’s premises. The shipment
reached NOVARTIS’ premises and was thereupon inspected
G.R. No. 187701. July 23, 2014 by the company’s Senior Laboratory Technician, CAPAROSO
*same case in Chapter 1 on Effect of Charter Party who found the container van locked with its load intact. She
inspected its contents and discovered that the boxes of the
FACTS: NOVARTIS imported from JINSUK in South Korea, shipment were wet and damp. Caparoso rejected the entire
19 pallets of 200 rolls of Ovaltine Power 18 G laminated shipment. All 17 pallets of the 184 cartons/rolls contained in
plastic packaging material. In order to ship the goods to the the sea van were found wet/water damaged.
Philippines, JINSUK engaged the services of PROTOP, a
freight forwarder likewise based in South Korea, to forward the NOVARTIS demanded indemnification for the lost/damaged
goods to their consignee, NOVARTIS. Based on Bill of Lading shipment from PROTOP, SAGAWA, ATI and CAPAROSO
issued by PROTOP, the cargo was on freight prepaid basis and but was denied. Insurance claims were, thus, filed with
on "shipper’s load and count" which means that the "container PHILAM which paid the insured value of the shipment.
[was] packed with cargo by one shipper where the quantity, PHILAM sent a demand letter to WALLEM for reimbursement
description and condition of the cargo is the sole responsibility of the insurance claims paid to NOVARTIS. When WALLEM
of the shipper." Likewise stated in the bill of lading is the name ignored the demand, PHILAM impleaded it as additional
Sagawa Express Phils., Inc., (SAGAWA) who was designated defendant in an Amended Complaint.
as the entity in the Philippines which will obtain the delivery
contract. The RTC ruled that the damage to the shipment occurred
onboard the vessel while in transit from Korea to the
PROTOP shipped the cargo through DONGNAMA which in Philippines. On appeal, the CA agreed with the RTC that
turn loaded the same on M/V Heung-A Bangkok V-019 owned PROTOP, HEUNG-A and WALLEM are liable for the
and operated by Heung-A Shipping Corporation, (HEUNG-A). damaged shipment. The fact that HEUNG-A was not a party to
WALLEM is the ship agent of HEUNG-A in the Philippines. the bill of lading did not negate the existence of a contract of
NOVARTIS insured the shipment with PHILAM under All

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carriage between HEUNG-A and/or WALLEM and
NOVARTIS.

ISSUE: Whether or not HEUNG-A remained responsible as

the carrier, hence, answerable for the damages incurred by the
goods received for transportation.

HELD: Yes. Despite its contract of affreightment with

DONGNAMA, HEUNG-A remained responsible as the carrier,
hence, answerable for the damages incurred by the goods
received for transportation. Common carriers, from the nature
of their business and for reasons of public policy, are bound to
observe extraordinary diligence and vigilance with respect to
the safety of the goods and the passengers they transport. Thus,
common carriers are required to render service with the
greatest skill and foresight and to use all reasonable means to
ascertain the nature and characteristics of the goods tendered
for shipment, and to exercise due care in the handling and
stowage, including such methods as their nature requires. As a
general rule, common carriers are presumed to have been at
fault or negligent if the goods they transported deteriorated or
got lost or destroyed. That is, unless they prove that they
exercised extraordinary diligence in transporting the goods. In
order to avoid responsibility for any loss or damage, therefore,
they have the burden of proving that they observed such
diligence.

Page | 172
63. BANKERS & MANUFACTURERS ASSURANCE choice, usually his own warehouse, in the absence of the
CORP vs. COURT OF APPEALS, F. E. ZUELLIG & carrier. The container is sealed by the shipper and thereafter
CO., INC. and E. RAZON, INC picked up by the carrier and the recital of the bill of lading for
G.R. No. 80256. October 2, 1992 goods ordinarily would declare "Said to Contain", "Shipper’s
Load and Count", "Full Container Load", and the amount or
FACTS: Ali Trading Company imported 108 cases of copper quantity of goods in the container in a particular package is
tubings which were insured by petitioner. The copper tubings only prima facie evidence of the amount or quantity which may
which were placed in three containers, arrived in Manila on be overthrown by parol evidence. A shipment under this
board and vessel S/S “Oriental Ambassador” on November 4, arrangement is not inspected or inventoried by the carrier
1978, and turned over to the Manila arrastre operator upon whose duty is only to transport and deliver the containers
discharge at the waterfront. The carrying vessel is represented in the same condition as when the carrier received and
in the Philippines by its agent, F. E. Zuellig and Co., Inc. One accepted the containers for transport
of the containers was stripped of its content at the pier zone but
the other two were left unstripped. The two unstripped The circumstances show that the respondents were not liable.
containers (together with the 19 cases removed from the When a shipment is placed in a container and is not inspected
stripped third container) were delivered to, and received by, the nor inventoried by the carrier, the carrier’s duty is only to
customs broker for the consignee without any exception or transport and deliver the containers in the same condition as
notation of bad order of shortlanding. Upon inspection of the when the carrier received and accepted the containers for
two unstripped containers by the importer at the consignee’s transport. Moreover, Bankers failed to establish that the loss
warehouse, the shipment was allegedly found to have sustained occurred prior acceptance of the shipment. Inspection should
losses by way of theft and pilferage for which the insurer have been done at the pierside, the pier warehouse, or at any
compensated the importer in the amount of P31,014.00. time and place while the vans were under the care and custody
of the carrier or of the arrastre operator. The two other vans and
ISSUE: Whether the carrier is liable for the loss goods the contents of the owner previously stripped were accepted
allegedly due to theft and pilferage without exception as to any supposed bad order or condition by
Bankers’ own broker. The shipment was accepted by Bankers
HELD: No. Records show that the shipment involved was in good order. The case at bar presents no occasion for the
"containerized", thus, the goods under this arrangement are necessity of discussing the diligence required of a carrier or of
stuffed, packed, and loaded by the shipper at a place of his the theory of prima facie liability of the carrier for from all

Page | 173
indications, the shipment did not suffer loss or damage while it
was under the care of the carrier, or of the arrastre operator, it
must be added.

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64. AMPARAO SERVANDO vs. PHILIPPINE STEAM performance of its obligation. It appears that appellant had not
NAVIGATION only notified Servanda of the arrival of their shipment, and they
G.R. Nos. 36481-2. October 23, 1982 had demanded that the same be withdrawn. In fact, pursuant to
such demand, appellee Uy Bico had taken delivery of 907
FACTS: Appellees Clara Uy Bico and Amparo Servando cavans of rice before the burning of the warehouse. Nor can the
loaded their respective cargoes on board PSN's vessel for appellant or its employees be charged with negligence. The
carriage from Manila to Negros Occidental. Upon arrival of the storage of the goods in the Customs warehouse pending
vessel at the place of destination, the cargoes were discharged, withdrawal thereof by the appellees was undoubtedly made
complete and in good order, into the warehouse of the Bureau with their knowledge and consent. Since the warehouse
of Customs. After appellee Uy Bico had taken delivery of a belonged to and was maintained by the government, it would
portion of her cargoes, the warehouse was rated by fire of be unfair to impute negligence to the appellant, the latter
unknown origin, destroying the rest of the two appellees' having no control whatsoever over the same. Under the
cargoes. Appellees filed their claims from appellant for the circumstances, the PSN is not responsible.
recovery of the value of the goods destroyed by fire. Appellant
rejected the claims but the trial court ruled in favor of appellees -------------oOo-------------
and ordered payment of their claims, stating that 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.

ISSUE: Whether the lower court is correct that Philippine

Steam Navigation is exempt from liability of non-performance.

HELD: Yes. The Supreme Court held that appellant, as

obligor, is exempt from liability for non-performance because
the burning of the warehouse containing appellees' goods,
which is the immediate and proximate cause of the loss, is a
fortuitous event or force majeure which could not have been
foreseen by appellant. The PSN did not incur delay in the

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 DUTY OF PASSENGERS

the ground, and his right foot was caught and crushed by the
65. DEL PRADO vs. MANILA ELECTRIC CO. moving car. The foot had to be amputated in the hospital.
G.R. No. 29462, March 7, 1929
An action was instituted in the CFI of Manila by Ignacio del
[think of kids who tries to catch a moving jeepney; mga Prado to recover damages for personal injuries alleged to have
“konduktor”] been caused by the negligence of Meralco in the operation of
one of its streetcars in the City of Manila. The trial court
FACTS: On the morning of 18 November 1925, Florenciano, awarded Del Prado the sum of P10,000, as damages, with costs
the motorman, was in charge of car 74 running from east to of suit. Meralco appealed. The Supreme Court affirmed the
west on R. Hidalgo Street, where the accident took place. After appealed judgment with the modification that the sum to be
the car had stopped at its designated stop, just east of the recovered reduced to P2,500; with costs against MERALCO.
intersection, it resumed its course at a moderate speed. The car
had proceeded only a short distance, however, when Ignacio ISSUE: Whether the motorman is negligent in prematurely
del Prado ran across the street to catch the car, his approach accelerating while Del Prado attempted to board the car.
being made from the left.
HELD: Yes. There is no obligation on the part of a street
Del Prado, upon approaching the car, raised his hand as an railway company to stop its cars to let on intending passengers
indication to the motorman of his desire to board the car, in at other points than those appointed for stoppage. In fact it
response to which the motorman eased up a little, without would be impossible to operate a system of street cars if a
stopping. Upon this, del Prado seized, with his left hand, the company engaged in this business were required to stop any
front perpendicular handpost, at the same time placing his left and everywhere to take on people who are too indolent, or who
foot upon the platform. However, before del Prado’s position imagine themselves to be in too great a hurry, to go to the
had become secure, and even before his raised right foot had proper places for boarding the cars, Nevertheless, although the
reached the platform, the motorman accelerated thus the car motorman of this car was not bound to stop to let the plaintiff
gave a slight lurch forward. del Prado’s foot slipped, and his on, it was his duty that he should not do any act to increase the
hand was jerked loose from the handpost. He therefore fell to peril of such person; and if, in violation of this duty, the
motorman in charge of a car prematurely accelerates speed
while the intending passenger is in the act of boarding the car,
with the result that he slips and gets his foot crushed under the
wheel of the moving car, the company is civilly liable in
damages.

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66. AIR FRANCE PHILIPPINES/KLM AIR FRANCE vs. contract of carriage plus damages and fees in the RTC. The
JOHN ANTHONY DE CAMILIS lower court ruled that AF breached its contract of carriage. The
G.R. No. 188961, October 13, 2009 CA affirmed with modifications. Hence this petition
[think of A Series of Unfortunate Events :( ]
ISSUE: Whether de Camilis was responsible for producing the
FACTS: de Camilis went on a pilgrimage with a group of correct travel documents for his entry to Moscow, thus AF
Filipinos to selected countries in Europe. According to him, Air should not be liable for damages.
France’s (AF) agent in Paris failed to inform him of the need to
secure a transit visa for Moscow, which prevented him entry to HELD: The petition is denied. The Supreme Court affirmed
Moscow and was subjected to humiliating interrogation by the the decision of the CA. The CA correctly ruled that de Camilis
police. When he wanted to contact his companions, a certain as passenger, not AF, was responsible for having the correct
agent Ms. Soeyesol rudely denied his request and even reported travel documents. However, this fact did not absolve AF from
him as a security threat which resulted in his being subjected to liability for damages. The CA agreed with the findings of fact
further interrogation by the police in Paris and Rome, and of the RTC that AF's agents and representatives repeatedly
worse, also lifted his flight coupons for the rest of his trip. subjected de Camilis to very poor service, verbal abuse and
abject lack of respect and consideration as shown from the
Then, AF agents in Rome refused to honor his confirmed flight facts. As such, AF was guilty of bad faith for which respondent
to Paris and when he reached Paris for his connecting flight to ought to be compensated.
Manila, he found out that the AF agents did not check in his
baggage and since he had to retrieve his bags at the baggage
area, he missed his connecting flight. He even had to shoulder -------------oOo-------------
his extended stay in Paris for AF's failure to make good its
representation that he would be given a complimentary motel
pass and he was given a computer print-out of his flight
reservation for Manila but when he went to the airport, he was
told that the flight was overbooked. It was only when he made
a scene that the AF agent boarded him on an AF flight to
Hongkong and placed him on a connecting Philippine Airlines
flight to Manila. de Camilis then filed for a case of breach of

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67. CRISOSTOMO vs. CA and CARAVAN TRAVEL & amount for the contributory negligence of Crisostomo. On
TOURS INTERNATIONAL, INC. appeal, the Court of Appeals found Crisostomo to be more
G.R. No. 138334, August 25, 2003 negligent, hence, it directed her to pay the balance of the price
*this case is found in Chapter 1 for the "British Pageant." Hence, this petition

FACTS: Estela L. Crisostomo contracted the services of

CARAVAN CaravanTravel and Tours International, Inc. to ISSUE: Whether CARAVAN did not observe the standard of
facilitate her tour known as "Jewels of Europe." On June 12, care required of a common carrier when it informed her
1991, Meriam Menor, CARAVAN's ticketing manager as well wrongly of the flight schedule
as Crisostomo's niece, delivered Crisostomo's travel documents
and plane tickets and informed her to be at the airport on June
15, 1991, two hours before departure. On the stated date when HELD: No. First, CARAVAN is not a common carrier under
Crisostomo went to the airport, the flight that she was supposed Art. 1732 of the Civil Code. CARAVAN is not an entity
to take had departed the previous day. She complained to engaged in the business of transporting either passengers or
Menor, but the latter prevailed upon her to take another tour goods and is therefore, neither a private nor a common carrier.
known as "British Pageant." Upon Crisostomo's return from Respondent did not undertake to transport Crisostomo from
Europe, she demanded from CARAVAN the reimbursement of one place to another since its covenant with its customers is
P61,421.70 representing the difference between the sum she simply to make travel arrangements on their behalf.
paid for "Jewels of Europe" and the amount she owed CARAVAN's services as a travel agency include procuring
CARAVAN for the "British Pageant" tour, but despite several tickets and facilitating travel permits or visas as well as
demands, CARAVAN company refused to reimburse the booking customers for tours.
amount, contending that the same was non-refundable. Thus,
she filed a complaint against CARAVAN for breach of contract At most, respondent acted merely as an agent of the airline,
of carriage and damages. In its answer, CARAVAN denied the with whom the petitioner ultimately contracted for her carriage
responsibility and insisted that Crisostomo was duly informed to Europe. Respondent's obligation to petitioner in this regard
of the correct departure as legibly printed on the plane ticket was simply to see to it that petitioner was properly booked with
two days ahead of the scheduled trip. After trial, the lower the airline for the appointed date and time. Her transport to the
court awarded damages to Crisostomo on the basis that the place of destination, meanwhile, pertained directly to the
CARAVAN was negligent, but it deducted 10% from the airline. Since CARAVAN is not a common carrier, the

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standard of diligence required in the performance of their
obligation is the diligence of a good father of a family, not
extraordinary diligence. The date and time of departure was
legibly written on the plane ticket and the travel papers were
delivered two days in advance precisely so that Crisostomo
could prepare for the trip. It performed all its obligations to
enable Crisostomo to join the tour and exercised due diligence
in its dealings with the latter. In the case at bar, the evidence on
record shows that CARAVAN performed its duty diligently
and did not commit any contractual breach. Hence, Crisostomo
cannot recover and must bear her own damage.

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68. PHILIPPINE AIRLINES INC vs. CA and SPOUSES whereabouts. Mr. Strigl later informed the grandmother that the
BUNCIO children will be in San Francisco the next day.
G.R. No. 123238, September 22, 2003
TOPIC: Duty of Passengers The Spouses demanded for payment of damages from PAL but
they did not heed the demand. Thus, the Spouses filed a
FACTS: Sometime in 1980, Spouses Buncio purchased airline complaint for damages against PAL with the RTC, alleging
tickets from PAL for their two minor children, Deanna (age 9), that the indemnity bond was lost on account of gross
and Nikolai (age 8). Since Deanna and Nikolai will be negligence and malevolent conduct. PAL contends that they
unaccompanied minors during the flight, PAL required the were not negligent and that they always have exercised the
spouses to accomplish, sign, and submit an indemnity bond, diligence of a good father of a family in the selection,
which they complied. PAL agreed to transport the children supervision, and control of its employees. Furthermore, the
from Manila to San Francisco, USA (May 2) then a connecting children were not left unattended. The RTC held that PAL was
flight with United Airways 996 on the same date to Los liable for breach of contract of carriage. The CA affirmed the
Angeles, USA. Then the children will be fetched by their decision in toto. Hence, this petition.
grandmother at the airport on May 3. The children boarded
their flight for San Francisco as scheduled. On their arrival at ISSUE: Whether PAL was liable for the breach of contract of
San Francisco, the staff of United Airways 996 refused to let carriage.
the children board the connecting flight because PAL’s
personnel lost the indemnity bond due to a stop-over in Hawaii. HELD: Yes. When an airline issues a ticket to a passenger,
The children were stranded. The Lead Traffic Agent of PAL, confirmed for a particular flight on a certain date, a contract of
Mr. Strigl took the kids to his residence, where they stayed carriage arises. The passenger has every right to expect that he
overnight. will be transported on that flight and on that date, and it
becomes the airline's obligation to carry him and his luggage
When United Airways landed in San Francisco, the safely to the agreed destination without delay. If the passenger
grandmother could not locate the kids. She asked a stewardess is not so transported or if in the process of transporting, he dies
on their whereabouts, but was informed that there were no or is injured, the carrier may be held liable for a breach of
minor passengers on board. The Spouses inquired about their contract of carriage.
location but PAL replied that they were still verifying the

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In breach of contract of air carriage, moral damages may be the connecting flight. Yet, despite knowledge of the foregoing,
recovered where (1) the mishap results in the death of a it did not exercise utmost care in handling the indemnity bond
passenger; or (2) where the carrier is guilty of fraud or bad resulting in its loss in Honolulu, Hawaii. This was the
faith; or (3) where the negligence of the carrier is so gross and proximate cause why Deanna and Nikolai were not allowed to
reckless as to virtually amount to bad faith. Gross negligence take the connecting flight and were thus stranded overnight in
implies a want or absence of or failure to exercise even slight San Francisco. Further, petitioner discovered that the indemnity
care or diligence, or the entire absence of care. It evinces a bond was lost only when Flight 106 had already landed in San
thoughtless disregard of consequences without exerting any Francisco Airport and when the staff of United Airways 996
effort to avoid them. demanded the indemnity bond. This only manifests that the
petitioner did not check or verify if the indemnity bond was in
Evidently, petitioner was fully aware that Deanna and Nikolai its custody before leaving Honolulu, Hawaii for San Francisco.
would travel as unaccompanied minors and, therefore, should The foregoing circumstances reflect petitioner's utter lack of
be specially taken care of considering their tender age and care for and inattention to the welfare of Deanna and Nikolai as
delicate situation. Petitioner also knew well that the indemnity unaccompanied minor passengers. They also indicate
bond was required for Deanna and Nikolai to make a petitioner's failure to exercise even slight care and diligence in
connecting flight from San Francisco to Los Angeles, and that handling the indemnity bond. Clearly, the negligence of PAL
it was its duty to produce the indemnity bond to the staff of was so gross and reckless that it amounted to bad faith. Thus,
United Airways 996 so that Deanna and Nikolai could board PAL is liable.

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