G.R. No.
94151 April 30, 1991
EASTERN SHIPPING LINES, INC., petitioner, vs.THE COURT OF APPEALS and THE FIRST
NATIONWIDE ASSURANCE CORPORATION, respondents.
GANCAYCO, J.:
The extent of the liability of the common carrier and its insurer for damage to the cargo upon its delivery
to the arrastre operator is the center of this controversy.
The findings of fact of the trial court which were adopted by the appellate court and which are not
disputed are as follows:
On September 4, 1978, thirteen coils of uncoated 7-wire stress relieved wire strand for
prestressed concrete were shipped on board the vessel "Japri Venture," owned and operated by
the defendant Eastern Shipping Lines, Inc., at Kobe, Japan, for delivery to Stresstek Post-
Tensioning Phils., Inc. in Manila, as evidenced by the bill of lading, commercial invoice,
packing list and commercial invoice marked Exhibits A, B, C, D; 3, 4, 5 and 6-Razon which
were insured by the plaintiff First Nationwide Assurance Corporation for P171,923 (Exhibit E).
On September 16, 1978, the carrying vessel arrived in Manila and discharged the cargo to the
custody of the defendant E. Razon, Inc. (Exhibits 1, 2, 3, 4 and 5-ESL), from whom the
consignee's customs broker received it for delivery to the consignee's warehouse.
On February 19, 1979, the plaintiff indemnified the consignee in the amount of P171,923.00
for damage and loss to the insured cargo, whereupon the former was subrogated for the latter
(Exhibit I).
The plaintiff now seeks to recover from the defendants what it has indemnified the consignee,
less P48,293.70, the salvage value of the cargo, or the total amount of P123,629.30.
It appears that while enroute from Kobe to Manila, the carrying vessel "encountered very rough
seas and stormy weather" for three days, more or less, which caused it to roll and pound
heavily, moving its master to execute a marine note of protest upon arrival at the port of Manila
on September 15, 1978 (Exhibit 1-Razon); that the coils wrapped in burlap cloth and cardboard
paper were stored in the lower hold of the hatch of the vessel which was flooded with water
about one foot deep; that the water entered the hatch when the vessel encountered heavy
weather enroute to Manila (Exhibits G, 2, 2A, 2B-Razon); that upon request, a survey of bad
order cargo was conducted at the pier in the presence of the representatives of the consignee
and the defendant E. Razon, Inc. and it was found that seven coils were rusty on one side each
(Exhibits F and 10-Razon); that upon survey conducted at the consignee's warehouse it was
found that the "wetting (of the cargo) was caused by fresh water" that entered the hatch when
the vessel encountered heavy weather enroute to Manila (p. 3, Exhibit G); and that all thirteen
coils were extremely rusty and totally unsuitable for the intended purpose (p. 3, Exhibit G),
(pp. 217-218, orig. rec.)1
The complaint that was filed by the First Nationwide Assurance Corporation (insurer) against Eastern
Shipping Lines, Inc. and E. Razon, Inc., in the Regional Trial Court, Manila, was dismissed in a decision
dated November 25, 1985. An appeal therefrom was interposed by the insurer to the Court of Appeals
wherein in due course a decision was rendered on April 27, 1990, the dispositive part of which reads as
follows:
WHEREFORE, the judgment appealed from is hereby SET ASIDE. The appellees are ordered
to pay the appellant the sum of P123,629.30, with legal rate of interest from July 24, 1979 until
fully paid, Eastern Shipping Lines, Inc. to assume 8/13 thereof, and E. Razon, Inc. to assume
5/13 thereof. No pronouncement as to costs.
SO ORDERED.
Only Eastern Shipping Lines, Inc. filed this petition for review by certiorari based on the following
assigned errors:
I. IT REFUSED TO CONSIDER THE COUNTER-ASSIGNMENT OF ERRORS OF
PETITIONER AS CONTAINED IN ITS BRIEF FOR THE DEFENDANT-APPELLEE
EASTERN SHIPPING LINES, INC. AND WHICH ARE ONLY MEANT TO SUSTAIN THE
DECISION OF DISMISSAL OF THE TRIAL COURT;
II. AGAINST ITS OWN FINDINGS OF FACT THAT THE CARGO WAS DISCHARGED
AND DELIVERED COMPLETE UNTO THE CUSTODY OF THE ARRASTRE
OPERATOR UNDER CLEAN TALLY SHEETS, IT NEVERTHELESS ARBITRARILY
CONCLUDED PETITIONER AS LIABLE FOR THE CLAIMED DAMAGES;
III. IT FAILED TO HOLD PETITIONER RELIEVED OF ANY LIABILITY OVER THE
CARGO NOTWITHSTANDING IT FOUND THAT THE SAME WAS DISCHARGED AND
DELIVERED UNTO THE CUSTODY OF THE ARRASTRE OPERATOR UNDER CLEAN
TALLY SHEETS AND ERGO TO BE CONSIDERED GOOD ORDER CARGO WHEN
DELIVERED; and,
IV. IT ARBITRARILY AWARDED INTEREST AT THE LEGAL RATE TO COMMENCE
FROM THE DATE OF THE COMPLAINT IN VIOLATION OF THE DOCTRINAL RULE
THAT IN CASE OF UNLIQUIDATED CLAIMS SUCH AS THE CLAIM IN QUESTION,
INTEREST SHOULD ONLY COMMENCE FROM THE DATE OF THE DECISION OF
THE TRIAL COURT.3
Under the first assigned error, petitioner contends that the appellate court did not consider its counter-
assignment of errors which was only meant to sustain the decision of dismissal of the trial court. An
examination of the questioned decision shows that the appellate court did not consider the counter-
assignment of errors of petitioner as it did not appeal the decision of the trial court.
Nevertheless, when such counter-assignments are intended to sustain the judgment appealed from on other
grounds, but not to seek modification or reversal thereof, the appellate court should consider the same in
the determination of the case but no affirmative relief can be granted thereby other than what had been
obtained from the lower court.4
The contention of petitioner on this aspect is, thus, well-taken.
Be that as it may, under the second and third assigned errors, petitioner claims it should not be held liable
as the shipment was discharged and delivered complete into the custody of the arrastre operator under
clean tally sheets.
While it is true the cargo was delivered to the arrastre operator in apparent good order condition, it is also
undisputed that while en route from Kobe to Manila, the vessel encountered "very rough seas and stormy
weather", the coils wrapped in burlap cloth and cardboard paper were stored in the lower hatch of the
vessel which was flooded with water about one foot deep; that the water entered the hatch; that a survey of
bad order cargo which was conducted in the pier in the presence of representatives of the consignee and E.
Razon, Inc., showed that seven coils were rusty on one side (Exhibits F and 10-Razon); that a survey
conducted at the consignee's warehouse also showed that the "wetting (of the cargo) was caused by fresh
water" that entered the hatch when the vessel encountered heavy rain en route to Manila (Exhibit G); and
that all thirteen coils were extremely rusty and totally unsuitable for the intended purpose. 5
Consequently, based on these facts, the appellate court made the following findings and conclusions:
Plainly, the heavy seas and rains referred to in the master's report were not caso fortuito, but
normal occurrences that an ocean-going vessel, particularly in the month of September which,
in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are
not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would
encounter and provide for, in the ordinary course of a voyage. That rain water (not sea water)
found its way into the holds of the Jupri Venture is a clear indication that care and foresight did
not attend the closing of the ship's hatches so that rain water would not find its way into the
cargo holds of the ship.
Moreover, under Article 1733 of the Civil Code, common carriers are bound to observe "extra-
ordinary vigilance over goods . . . .according to all circumstances of each case," and Article
1735 of the same Code states, to wit:
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated, common carriers
are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as required in article 1733.
Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or
negligence on the part of the carrier applies; and the carrier must present evidence that it has
observed the extraordinary diligence required by Article 1733 of the Civil Code in order to
escape liability for damage or destruction to the goods that it had admittedly carried in this
case. No such evidence exists of record. Thus, the carrier cannot escape liability.
The Court agrees with and is bound by the foregoing findings of fact made by the appellate court. The
presumption, therefore, that the cargo was in apparent good condition when it was delivered by the vessel
to the arrastre operator by the clean tally sheets has been overturned and traversed. The evidence is clear to
the effect that the damage to the cargo was suffered while aboard petitioner's vessel.
The last assigned error is untenable. The interest due on the amount of the judgment should commence
from the date of judicial demand.6
WHEREFORE, the petition is DISMISSED, with costs against petitioner.1âwphi1
SO ORDERED.
G.R. No. 127897 November 15, 2001
DELSAN TRANSPORT LINES, INC., petitioner, vs. THE HON. COURT OF APPEALS and
AMERICAN HOME ASSURANCE CORPORATION, respondents.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals in CA-G.R. CV
No. 39836 promulgated on June 17, 1996, reversing the decision of the Regional Trial Court of Makati
City, Branch 137, ordering petitioner to pay private respondent the sum of Five Million Ninety-Six
Thousand Six Hundred Thirty-Five Pesos and Fifty-Seven Centavos (P5,096,635.57) and costs and the
Resolution2 dated January 21, 1997 which denied the subsequent motion for reconsideration.
The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment with
the petitioner, Delsan Transport Lines, Inc., for a period of one year whereby the said common carrier
agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the
country. Under the contract, petitioner took on board its vessel, MT Maysun 2,277.314 kiloliters of
industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The shipment
was insured with the private respondent, American Home Assurance Corporation.
On August 14, 1986, MT Maysum set sail from Batangas for Zamboanga City. Unfortunately, the vessel
sank in the early morning of August 16, 1986 near Panay Gulf in the Visayas taking with it the entire
cargo of fuel oil.
Subsequently, private respondent paid Caltex the sum of Five Million Ninety-Six Thousand Six Hundred
Thirty-Five Pesos and Fifty-Seven Centavos (P5,096,635.67) representing the insured value of the lost
cargo. Exercising its right of subrogation under Article 2207 of the New Civil Code, the private
respondent demanded of the petitioner the same amount it paid to Caltex.1âw
phi1.nêt
Due to its failure to collect from the petitioner despite prior demand, private respondent filed a complaint
with the Regional Trial Court of Makati City, Branch 137, for collection of a sum of money. After the trial
and upon analyzing the evidence adduced, the trial court rendered a decision on November 29, 1990
dismissing the complaint against herein petitioner without pronouncement as to cost. The trial court found
that the vessel, MT Maysum, was seaworthy to undertake the voyage as determined by the Philippine
Coast Guard per Survey Certificate Report No. M5-016-MH upon inspection during its annual dry-
docking and that the incident was caused by unexpected inclement weather condition or force majeure,
thus exempting the common carrier (herein petitioner) from liability for the loss of its cargo. 3
The decision of the trial court, however, was reversed, on appeal, by the Court of Appeals. The appellate
court gave credence to the weather report issued by the Philippine Atmospheric, Geophysical and
Astronomical Services Administration (PAGASA for brevity) which showed that from 2:00 o’clock to
8:oo o’clock in the morning on August 16, 1986, the wind speed remained at 10 to 20 knots per hour while
the waves measured from .7 to two (2) meters in height only in the vicinity of the Panay Gulf where the
subject vessel sank, in contrast to herein petitioner’s allegation that the waves were twenty (20) feet high.
In the absence of any explanation as to what may have caused the sinking of the vessel coupled with the
finding that the same was improperly manned, the appellate court ruled that the petitioner is liable on its
obligation as common carrier4 to herein private respondent insurance company as subrogee of Caltex. The
subsequent motion for reconsideration of herein petitioner was denied by the appellate court.
Petitioner raised the following assignments of error in support of the instant petition,5 to wit:
I. THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE
REGIONAL TRIAL COURT.
II. THE COURT OF APPEALS ERRED AND WAS NOT JUSTIFIED IN REBUTTING THE
LEGAL PRESUMPTION THAT THE VESSEL MT "MAYSUN" WAS SEAWORTHY.
III. THE COURT OF APPEALS ERRED IN NOT APPLYING THE DOCTRINE OF THE
SUPREME COURT IN THE CASE OF HOME INSURANCE CORPORATION V. COURT
OF APPEALS.
Petitioner Delsan Transport Lines, Inc. invokes the provision of Section 113 of the Insurance Code of the
Philippines, which states that in every marine insurance upon a ship or freight, or freightage, or upon any
thin which is the subject of marine insurance there is an implied warranty by the shipper that the ship is
seaworthy. Consequently, the insurer will not be liable to the assured for any loss under the policy in case
the vessel would later on be found as not seaworthy at the inception of the insurance. It theorized that
when private respondent paid Caltex the value of its lost cargo, the act of the private respondent is
equivalent to a tacit recognition that the ill-fated vessel was seaworthy; otherwise, private respondent was
not legally liable to Caltex due to the latter’s breach of implied warranty under the marine insurance
policy that the vessel was seaworthy.
The petitioner also alleges that the Court of Appeals erred in ruling that MT Maysun was not seaworthy on
the ground that the marine officer who served as the chief mate of the vessel, Francisco Berina, was
allegedly not qualified. Under Section 116 of the Insurance Code of the Philippines, the implied warranty
of seaworthiness of the vessel, which the private respondent admitted as having been fulfilled by its
payment of the insurance proceeds to Caltex of its lost cargo, extends to the vessel’s complement. Besides,
petitioner avers that although Berina had merely a 2nd officer’s license, he was qualified to act as the
vessel’s chief officer under Chapter IV(403), Category III(a)(3)(ii)(aa) of the Philippine Merchant Marine
Rules and Regulations. In fact, all the crew and officers of MT Maysun were exonerated in the
administrative investigation conducted by the Board of Marine Inquiry after the subject accident. 6
In any event, petitioner further avers that private respondent failed, for unknown reason, to present in
evidence during the trial of the instant case the subject marine cargo insurance policy it entered into with
Caltex. By virtue of the doctrine laid down in the case of Home Insurance Corporation vs. CA,7 the failure
of the private respondent to present the insurance policy in evidence is allegedly fatal to its claim
inasmuch as there is no way to determine the rights of the parties thereto.
Hence, the legal issues posed before the Court are:
I. Whether or not the payment made by the private respondent to Caltex for the insured value
of the lost cargo amounted to an admission that the vessel was seaworthy, thus precluding any
action for recovery against the petitioner.
II. Whether or not the non-presentation of the marine insurance policy bars the complaint for
recovery of sum of money for lack of cause of action.
We rule in the negative on both issues.
The payment made by the private respondent for the insured value of the lost cargo operates as waiver of
its (private respondent) right to enforce the term of the implied warranty against Caltex under the marine
insurance policy. However, the same cannot be validly interpreted as an automatic admission of the
vessel’s seaworthiness by the private respondent as to foreclose recourse against the petitioner for any
liability under its contractual obligation as a common carrier. The fact of payment grants the private
respondent subrogatory right which enables it to exercise legal remedies that would otherwise be available
to Caltex as owner of the lost cargo against the petitioner common carrier. 8 Article 2207 of the New civil
Code provides that:
Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the rights of the insured against
the wrongdoer or the person who has violated the contract. If the amount paid by the insurance
company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover
the deficiency from the person causing the loss or injury.
The right of subrogation has its roots in equity. It is designed to promote and to accomplish justice and is
the mode which equity adopts to compel the ultimate payment of a debt by one who in justice and good
conscience ought to pay.9 It is not dependent upon, nor does it grow out of, any privity of contract or upon
written assignment of claim. It accrues simply upon payment by the insurance company of the insurance
claim.10 Consequently, the payment made by the private respondent (insurer) to Caltex (assured) operates
as an equitable assignment to the former of all the remedies which the latter may have against the
petitioner.
From the nature of their business and for reasons of public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by
them, according to all the circumstance of each case.11 In the event of loss, destruction or deterioration of
the insured goods, common carriers shall be responsible unless the same is brought about, among others,
by flood, storm, earthquake, lightning or other natural disaster or calamity. 12 In all other cases, if the goods
are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence. 13
In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, petitioner
attributes the sinking of MT Maysun to fortuitous even or force majeure. From the testimonies of Jaime
Jarabe and Francisco Berina, captain and chief mate, respectively of the ill-fated vessel, it appears that a
sudden and unexpected change of weather condition occurred in the early morning of August 16, 1986;
that at around 3:15 o’clock in the morning a squall ("unos") carrying strong winds with an approximate
velocity of 30 knots per hour and big waves averaging eighteen (18) to twenty (20) feet high, repeatedly
buffeted MT Maysun causing it to tilt, take in water and eventually sink with its cargo. 14 This tale of
strong winds and big waves by the said officers of the petitioner however, was effectively rebutted and
belied by the weather report15 from the Philippine Atmospheric, Geophysical and Astronomical Services
Administration (PAGASA), the independent government agency charged with monitoring weather and sea
conditions, showing that from 2:00 o’clock to 8:00 o’clock in the morning on August 16, 1986, the wind
speed remained at ten (10) to twenty (20) knots per hour while the height of the waves ranged from .7 to
two (2) meters in the vicinity of Cuyo East Pass and Panay Gulf where the subject vessel sank. Thus, as
the appellate court correctly ruled, petitioner’s vessel, MT Maysun, sank with its entire cargo for the
reason that it was not seaworthy. There was no squall or bad weather or extremely poor sea condition in
the vicinity when the said vessel sank.
The appellate court also correctly opined that the petitioner’s witnesses, Jaime Jarabe and Francisco
Berina, ship captain and chief mate, respectively, of the said vessel, could not be expected to testify
against the interest of their employer, the herein petitioner common carrier.
Neither may petitioner escape liability by presenting in evidence certificates16 that tend to show that at the
time of dry-docking and inspection by the Philippine Coast Guard, the vessel MT Maysun, was fit for
voyage. These pieces of evidence do not necessarily take into account the actual condition of the vessel at
the time of the commencement of the voyage. As correctly observed by the Court of appeals:
At the time of dry-docking and inspection, the ship may have appeared fit. The certificates
issued, however, do not negate the presumption of unseaworthiness triggered by an
unexplained sinking. Of certificates issued in this regard, authorities are likewise clear as to
their probative value, (thus):
Seaworthiness relates to a vessel’s actual condition. Neither the granting of
classification or the issuance of certificates established seaworthiness. (2-A
Benedict on Admiralty, 7-3, Sec. 62).
And also:
Authorities are clear that diligence in securing certificates of seaworthiness does not
satisfy the vessel owner’s obligation. Also securing the approval of the shipper of
the cargo, or his surveyor, of the condition of the vessel or her stowage does not
establish due diligence if the vessel was in fact unseaworthy, for the cargo owner
has no obligation in relation to seaworthiness. (Ibid.)17
Additionally, the exoneration of MT Maysun’s officers and crew by the Board of Marine Inquiry merely
concerns their respective administrative liabilities. It does not in any way operate to absolve the petitioner
common carrier from its civil liabilities. It does not in any way operate to absolve the petitioner common
carrier from its civil liability arising from its failure to observe extraordinary diligence in the vigilance
over the goods it was transporting and for the negligent acts or omissions of its employees, the
determination of which properly belongs to the courts. 18 In the case at bar, petitioner is liable for the
insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the
presumption of fault or negligence as common carrier19 occasioned by the unexplained sinking of its
vessel, MT Maysun, while in transit.
Anent the second issue, it is our view and so hold that the presentation in evidence of the marine insurance
policy is not indispensable in this case before the insurer may recover from the common carrier the
insured value of the lost cargo in the exercise of its subrogatory right. The subrogation receipt, by itself, is
sufficient to establish not only the relationship of herein private respondent as insurer and Caltex, as the
assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance
claim. The right of subrogation accrues simply upon payment by the insurance company of the insurance
claim.20
The presentation of the insurance policy was necessary in the case of Home Insurance Corporation v.
CA21 (a case cited by petitioner) because the shipment therein (hydraulic engines) passed through several
stages with different parties involved in each stage. First, from the shipper to the port of departure; second,
from the port of departure to the M/S Oriental Statesman; third, from the M/S Oriental Statesman to the
M/S Pacific Conveyor; fourth, from the M/S Pacific Conveyor to the port or arrival; fifth, from the port of
arrival to the arrastre operator; sixth, from the arrastre operator to the hauler, Mabuhay Brokerage Co.,
Inc. (private respondent therein); and lastly, from the hauler to the consignee. We emphasized in that case
that in the absence of proof of stipulations to the contrary, the hauler can be liable only for any damage
that occurred from the time it received the cargo until it finally delivered it to the consignee. Ordinarily, it
cannot be held responsible for the handling of the cargo before it actually received it. The insurance
contract, which was not presented in evidence in that case would have indicated the scope of the insurer’s
liability, if any, since no evidence was adduced indicating at what stage in the handling process the
damage to the cargo was sustained.
Hence, our ruling on the presentation of the insurance policy in the said case of Home Insurance
Corporation is not applicable to the case at bar. In contrast, there is no doubt that the cargo of industrial
fuel oil belonging to Caltex, in the case at bar, was lost while on board petitioner’s vessel, MT Maysun,
which sank while in transit in the vicinity of Panay Gulf and Cuyo East Pass in the early morning of
August 16, 1986.
WHEREFORE, the instant petition is DENIED. The Decision dated June 17, 1996 of the Court of
Appeals in CA-G.R. CV No. 39836 is AFFIRMED. Costs against the petitioner.
SO ORDERED.1âwp
G.R. No. 80256 October 2, 1992
BANKERS & MANUFACTURERS ASSURANCE CORP., petitioner, vs. COURT OS APPEALS,
F. E. ZUELLIG & CO., INC. and E. RAZON, INC., respondents.
MELO, J.:
After the Court of Appeals in CA-G.R. CV No. 08226 (July 8, 1987, Kapunan, Puno (P), Marigomen, JJ.)
affirmed the dismissal by Branch XVI of the Regional Trial Court of Manila of petitioner's complaint for
recovery of the amount it had paid its insured concerning the loss of a portion of a shipment, petitioner has
interposed the instant petition for review on certiorari.
Petitioner presents the following bare operative facts: 108 cases of copper tubings were imported by Ali
Trading Company. The tubings were insured by petitioner and arrived in Manila on board and vessel S/S
"Oriental Ambassador" on November 4, 1978, and turned over the private respondent E. Razon, the
Manila arrastre operator upon discharge at the waterfront. The carrying vessel is represented in the
Philippines by its agent, the other private respondent, F. E. Zuellig and Co., Inc., Upon inspection by the
importer, the shipment was allegedly found to have sustained loses by way of theft and pilferage for which
petitioner, as insurer, compensated the importer in the amount of P31,014.00.
Petitioner, in subrogation of the importer-consignee and on the basis of what it asserts had been already
established — that a portion of that shipment was lost through theft and pilferage — forthwith concludes
that the burden of proof of proving a case of non-liability shifted to private respondents, one of whom, the
carrier, being obligated to exercise extraordinary diligence in the transport and care of the shipment. The
implication of petitioner's statement is that private respondents have not shown why they are not liable.
The premises of the argument of petitioner may be well-taken but the conclusions are not borne out or
supported by the record.
It must be underscored that the shipment involved in the case at bar was "containerized". The goods under
this arrangement are stuffed, packed, and loaded by the shipper at a place of his choice, usually his own
warehouse, in the absence of the carrier. The container is sealed by the shipper and thereafter picked up by
the carrier. Consequently, the recital of the bill of lading for goods thus transported ordinarily would
declare "Said to Contain", "Shipper's Load and Count", "Full Container Load", and the amount or quantity
of goods in the container in a particular package is only prima facie evidence of the amount or quantity
which may be overthrown by parol evidence.
A shipment under this arrangement is not inspected or inventoried by the carrier whose duty is only to
transport and deliver the containers in the same condition as when the carrier received and accepted the
containers for transport. In the case at bar, the copper tubings were placed in three containers. Upon arrival
in Manila on November 4, 1978, the shipment was discharged in apparent good order and condition and
from the pier's docking apron, the containers were shifted to the container yard of Pier 3 for safekeeping.
Three weeks later, one of the container vans, said to contain 19 cases of the cargo, was "stripped" in the
presence of petitioner's surveyors, and three cases were found to be in bad order. The 19 cases of the van
stripped were then kept inside Warehouse No. 3 of Pier 3 pending delivery. It should be stressed at this
point, that the three cases found in bad order are not the cases for which the claim below was presented,
for although the three cases appeared to be in bad order, the contents remained good and intact.
The two other container vans were not moved from the container yard and they were not stripped. On
December 8, 1978, the cargo was released to the care of the consignee's authorized customs broker, the
RGS Customs Brokerage. The broker, accepting the shipment without exception as to bad order, caused
the delivery of the vans to the consignee's warehouse in Makati. It was at that place, when the contents of
the two containers were removed and inspected, that petitioner's surveyors reported, that checked against
the packing list, the shipment in Container No. OOLU2552969 was short of seven cases (see p. 18, Rollo).
Under the prevailing circumstances, it is therefore, not surprising why the Court of Appeals in sustaining
the trial court, simply quoted the latter, thus:
It must be also considered that the subject container was not stripped of its content at the pier
zone. The two unstripped containers (together with the 19 cases removed from the stripped
third container) were delivered to, and received by, the customs broker for the consignee
without any exception or notation of bad order of shortlanding (Exhs. 1, 2 and 3 Vessel). If
there was any suspicion or indication of irregularity or theft or pilferage, plaintiff or
consignee's representatives should have noted the same on the gate passes or insisted that some
form of protest form part of the documents concerning the shipment. Yet, no such step was
taken. The shipment appears to have been delivered to the customs broker in good order and
condition and complete save for the three cases noted as being apparently in bad order.
Consider further that the stripping of the subject container was done at the consignee's
warehouse where, according to plaintiff's surveyor, the loss of the seven cases was discovered.
The evidence is not settled as whether the defendants' representative were notified of, and were
present at, the unsealing and opening of the container in the bodega. Nor is the evidence clear
how much time elapsed between the release of the shipment from the pier and the stripping of
the containers at consignee bodega. All these fail to discount the possibility that the loss in
question could have taken place after the container had left the pier. (pp. 20-21, Rollo)
Verily, if any of the vans found in bad condition, or if any inspection of the goods was to be done in order
to determine the condition thereof, the same should have been done at the pierside, the pier warehouse, or
at any time and place while the vans were under the care and custody of the carrier or of the arrastre
operator. Unfortunately for petitioner, even as one of the three vans was inspected and stripped, the two
other vans and the contents of the owner previously stripped were accepted without exception as to any
supposed bad order or condition by petitioner's own broker. To all appearances, therefore, the shipment
was accepted by petitioner in good order.
It logically follows that the case at bar presents no occasion for the necessity of discussing the diligence
required of a carrier or of the theory of prima facie liability of the carrier, for from all 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.
WHEREFORE, the petition is hereby DISMISSED and the decision of the Court of Appeals AFFIRMED,
with costs against petitioner.
SO ORDERED.
G.R. No. 108897 October 2, 1997
SARKIES TOURS PHILIPPINES, INC., petitioner,
vs.
HONORABLE COURT OF APPEALS (TENTH DIVISION), DR. ELINO G. FORTADES,
MARISOL A. FORTADES and FATIMA MINERVA A. FORTADES, respondents.
ROMERO, J.:
This petition for review is seeking the reversal of the decision of the Court of Appeals in CA-G.R. CV No.
18979 promulgated on January 13, 1993, as well as its resolution of February 19, 1993, denying
petitioner's motion for reconsideration for being a mere rehash of the arguments raised in the appellant's
brief. The case arose from a damage suit filed by private respondents Elino, Marisol, and Fatima Minerva,
all surnamed Fortades, against petitioner for breach of contract of carriage allegedly attended by bad faith.
On August 31, 1984, Fatima boarded petitioner's De Luxe Bus No. 5 in Manila on her way to Legazpi
City. Her brother Raul helped her load three pieces of luggage containing all of her optometry review
books, materials and equipment, trial lenses, trial contact lenses, passport and visa, as well as her mother
Marisol's U.S. immigration (green) 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
discovered that only one bag remained in the open compartment. The others, including Fatima's things,
were missing and might have dropped along the way. Some of the passengers suggested retracing the
route of the bus to try to recover the lost items, but the driver ignored them and proceeded to Legazpi City.
Fatima immediately reported the loss to her mother who, in turn, went to petitioner's office in Legazpi
City and later at its head office in Manila. Petitioner, however, merely offered her P1,000.00 for each
piece of luggage lost, which she turned down. After returning to Bicol, disappointed but not defeated,
mother and daughter asked assistance from the radio stations and even from Philtranco bus drivers who
plied the same route on August 31st. The effort paid off when one of Fatima's bags was recovered. Marisol
further reported the incident to the National Bureau of Investigation's field office in Legazpi City and to
the local police.
On September 20, 1984, respondents, through counsel, formally demanded satisfaction of their complaint
from petitioner. In a letter dated October 1, 1984, the latter apologized for the delay and said that "(a) team
has been sent out to Bicol for the purpose of recovering or at least getting the full detail"1 of the incident.
After more than nine months of fruitless waiting, respondents decided to file the case below to recover the
value of the remaining lost items, as well as moral and exemplary damages, attorney's fees and expenses
of litigation. They claimed that the loss was due to petitioner's failure to observe extraordinary diligence in
the care of Fatima's luggage and that petitioner dealt with them in bad faith from the start. Petitioner, on
the other hand, disowned any liability for the loss on the ground that Fatima allegedly did not declare any
excess baggage upon boarding its bus.
On June 15, 1988, after trial on the merits, the court a quo adjudged the case in favor of respondents, viz.:
PREMISES CONSIDERED, judgment is hereby rendered in favor of the plaintiffs (herein
respondents) and against the herein defendant Sarkies Tours Philippines, Inc., ordering the
latter to pay to the former the following sums of money, to wit:
1. The sum of P30,000.00 equivalent to the value of the personal belongings of plaintiff Fatima
Minerva Fortades, etc. less the value of one luggage recovered;
2. The sum of P90,000.00 for the transportation expenses, as well as moral damages;
3. The sum of P10,000.00 by way of exemplary damages;
4. The sum of P5,000.00 as attorney's fees; and
5. The sum of P5,000.00 as litigation expenses or a total of One Hundred Forty Thousand
(P140,000.00) Pesos.
to be paid by herein defendant Sarkies Tours Philippines, Inc. to the herein plaintiffs within 30
days from receipt of this Decision.
SO ORDERED.
On appeal, the appellate court affirmed the trial court's judgment, but deleted the award of moral and
exemplary damages. Thus,
 WHEREFORE, premises considered, except as above modified, fixing the award for
transportation expenses at P30,000.00 and the deletion of the award for moral and exemplary
damages, the decision appealed from is AFFIRMED, with costs against defendant-appellant.
SO ORDERED.
Its motion for reconsideration was likewise rejected by the Court of Appeals, so petitioner elevated its
case to this Court for a review.
After a careful scrutiny of the records of this case, we are convinced that the trial and appellate courts
resolved the issues judiciously based on the evidence at hand.
fault of petitioner having been duly established, should be granted to respondents in the amount of
P20,000.00 and P5,000.00, respectively.
WHEREFORE, the assailed decision of the Court of Appeals dated January 13, 1993, and its resolution
dated February 19, 1993, are hereby AFFIRMED with the MODIFICATION that petitioner is ordered to
pay respondents an additional P20,000.00 as moral damages and P5,000.00 as exemplary damages. Costs
against petitioner.
SO ORDERED.

Petitioner claims that Fatima did not bring any piece of luggage with her, and even if she did, none was
declared at the start of the trip. The documentary and testimonial evidence presented at the trial, however,
established that Fatima indeed boarded petitioner's De Luxe Bus No. 5 in the evening of August 31, 1984,
and she brought three pieces of luggage with her, as testified by her brother Raul, 2 who helped her pack
her things and load them on said bus. One of the bags was even recovered by a Philtranco bus driver. In its
letter dated October 1, 1984, petitioner tacitly admitted its liability by apologizing to respondents and
assuring them that efforts were being made to recover the lost items.

The records also reveal that respondents went to great lengths just to salvage their loss. The incident was
reported to the police, the NBI, and the regional and head offices of petitioner. Marisol even sought the
assistance of Philtranco bus drivers and the radio stations. To expedite the replacement of her mother's lost
U.S. immigration documents, Fatima also had to execute an affidavit of loss. 3 Clearly, they would not
have gone through all that trouble in pursuit of a fancied loss.

Fatima was not the only one who lost her luggage. Apparently, other passengers had suffered a similar
fate: Dr. Lita Samarista testified that petitioner offered her P1,000.00 for her lost baggage and she
accepted it;4 Carleen Carullo-Magno lost her chemical engineering review materials, while her brother lost
abaca products he was transporting to Bicol.5

Petitioner's receipt of Fatima's personal luggage having been thus established, it must now be determined
if, as a common carrier, it is responsible for their loss. Under 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 . . . transported by them,"6 and this liability "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 person who has a right to receive
them,"7 unless the loss is due to any of the excepted causes under Article 1734 thereof. 8
The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of the
baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all of the
luggage was lost, to the prejudice of the paying passengers. As the Court of Appeals correctly observed:
. . . . Where the common carrier accepted its passenger's baggage for transportation and even
had it placed in the vehicle by its own employee, its failure to collect the freight charge is the
common carrier's own lookout. It is responsible for the consequent loss of the baggage. In the
instant case, defendant appellant's employee even helped Fatima Minerva Fortades and her
brother load the luggages/baggages in the bus' baggage compartment, without asking that they
be weighed, declared, receipted or paid for (TSN, August 4, 1986, pp. 29, 34, 54, 57, 70;
December 23, 1987, p. 35). Neither was this required of the other passengers (TSN, August 4,
1986, p. 104; February 5, 1988; p. 13).

Finally, petitioner questions the award of actual damages to respondents. On this point, we likewise agree
with the trial and appellate courts' conclusions. There is no dispute that of the three pieces of luggage of
Fatima, only one was recovered. The other two contained optometry books, materials, equipment, as well
as vital documents and personal belongings. Respondents had to shuttle between Bicol and Manila in their
efforts to be compensated for the loss. During the trial, Fatima and Marisol had to travel from the United
States just to be able to testify. Expenses were also incurred in reconstituting their lost documents. Under
these circumstances, the Court agrees with the Court of Appeals in awarding P30,000.00 for the lost items
and P30,000.00 for the transportation expenses, but disagrees with the deletion of the award of moral and
exemplary damages which, in view of the foregoing proven facts, with negligence and bad faith on the