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COMMERCIAL LAW REVIEW

| ATTY. ZARAH VILLANUEVA-CASTRO |
casE DIGEST IN TRANSPORTATION LAW
NATIONAL DEVELOPMENT COMPANY VS. COURT OF APPEALS
G.R. No. L-49407; August 19, 1988
Paras, J.
FACTS:
In accordance with a memorandum agreement entered into between defendants
National Development Company (NDC) and Maritime Company of the Philippines
(MCP), NDC appointed MCP as its agent to manage and operate its vessel, ‘Dona
Nati’, for and in behalf of its account. E. Philipp Corporation loaded on board the
vessel 1,200 bales of American raw cotton consigned to the order of Manila
Banking Corporation, Manila and the People’s Bank and Trust Company acting for
and in behalf of the Pan Asiatic Commercial Company, Inc., who represents
Riverside Mills Corporation. Also loaded on the same vessel were the cargo of
Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation
consisting of 200 cartons of sodium lauryl sulfate and 10 cases of aluminum foil.
En route to Manila the vessel figured in a collision with a Japanese vessel, ‘SS
Yasushima Maru’, as a result of which some of aforesaid cargo were lost and/or
destroyed. The private respondent Development Insurance and Surety
Corporation (DISC), as insurer to the consigners, paid a total amount of
P364,915.86 for said lost and damaged cargo and instituted an action to recover
from NDC and MCP as owner and ship agent respectively. Trial court and CA
rendered a decision ordering MCP and NDC to pay jointly and solidarily to DISC.
ISSUE:
Which laws govern the loss and destruction of goods due to collision of vessels
outside Philippine waters?
HELD:
In a previously decided case (Court of Eastern Shipping Lines Inc. v. IAC), it was
held under similar circumstance "that the law of the country to which the goods
are to be transported governs the liability of the common carrier in case of their
loss, destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was
specifically laid down that for cargoes transported from Japan to the Philippines,
the liability of the carrier is governed primarily by the Civil Code and in all
matters not regulated by said Code, the rights and obligations of common carrier
shall be governed by the Code of commerce and by laws (Article 1766, Civil
Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely
suppletory to the provision of the Civil Code.
In the case at bar, it has been established that the goods in question are
transported from San Francisco, California and Tokyo, Japan to the Philippines and
that they were lost or due to a collision which was found to have been caused by
the negligence or fault of both captains of the colliding vessels. Under the above
ruling, it is evident that the laws of the Philippines will apply, and it is immaterial
that the collision actually occurred in foreign waters, such as Ise Bay, Japan.
BUCU | BUENDIA | CAMALIG | DE BELEN | ESPARES | FERRIOL | HORNILLA | MANALIGOD | MARCIAL | NARSOLES | RIVERA | SALAZAR | SAN DIEGO | SILVA | STA. ANA | SUYOSA
It appears, however, that collision falls among matters not specifically regulated
by the Civil Code, so that no reversible error can be found in respondent courses
application to the case at bar of Articles 826 to 839, Book Three of the Code of
Commerce, which deal exclusively with collision of vessels.
There is, therefore, no room for NDC's interpretation that the Code of Commerce
should apply only to domestic trade and not to foreign trade. Aside from the fact
that the Carriage of Goods by Sea Act (Com. Act No. 65) does not specifically
provide for the subject of collision, said Act in no uncertain terms, restricts its
application "to all contracts for the carriage of goods by sea to and from Philippine
ports in foreign trade."
TATAD v. GARCIA; April 16, 1995; 243 SCRA 436
FACTS:
In 1989, the government planned to build a railway transit line along EDSA. No
bidding was made but certain corporations were invited to prequalify. The only
corporation to qualify was the EDSA LRT Consortium which was obviously formed
for this particular undertaking. An agreement was then made between the
government, through the Department of Transportation and Communication
(DOTC), and EDSA LRT Consortium. The agreement was based on the Build-
Operate-Transfer scheme provided for by law (RA 6957, amended by RA 7718).
Under the agreement, EDSA LRT Consortium shall build the facilities, i.e.,
railways, and shall supply the train cabs. Every phase that is completed shall be
turned over to the DOTC and the latter shall pay rent for the same for 25 years.
By the end of 25 years, it was projected that the government shall have fully paid
EDSA LRT Consortium. Thereafter, EDSA LRT Consortium shall sell the facilities to
the government for $1.00.
However, Senators Francisco Tatad, John Osmeña, and Rodolfo Biazon opposed
the implementation of said agreement as they averred that EDSA LRT Consortium
is a foreign corporation as it was organized under Hongkong laws; that as such, it
cannot own a public utility such as the EDSA railway transit because this falls
under the nationalized areas of activities. The petition was filed against Jesus
Garcia, Jr. in his capacity as DOTC Secretary.
ISSUE:
Whether or not the petition shall prosper
HELD:
NO. The Supreme Court made a clarification. The SC ruled that EDSA LRT
Consortium, under the agreement, does not and will not become the owner of a
public utility hence, the question of its nationality is misplaced. It is true that a
foreign corporation cannot own a public utility but in this case what EDSA LRT
Consortium will be owning are the facilities that it will be building for the EDSA
railway project. There is no prohibition against a foreign corporation to own
facilities used for a public utility. Further, it cannot be said that EDSA LRT
Consortium will be the one operating the public utility for it will be DOTC that will
operate the railway transit. DOTC will be the one exacting fees from the people
for the use of the railway and from the proceeds, it shall be paying the rent due
to EDSA LRT Consortium. All that EDSA LRT Consortium has to do is to build the
facilities and receive rent from the use thereof by the government for 25 years –
it will not operate the railway transit. Although EDSA LRT Consortium is a
corporation formed for the purpose of building a public utility it does not
automatically mean that it is operating a public utility. The moment for
determining the requisite Filipino nationality is when the entity applies for a
franchise, certificate or any other form of authorization for that purpose. 
RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. vs.
NATIONAL TELECOMMUNICATIONS COMMISSION and KAYUMANGGI
RADIO NETWORK INCORPORATED
FACTS:
1. Kayumanggi Radio Network was authorized by NTC to operate radio
communications systems in Catarman, Samar and in San Jose, Mindoro.
2. On 1983, respondent filed a complaint with the NTC alleging that the petitioner
was operating in Catarman, Samar and in San Jose, Mindoro without a certificate
of public covenience and necessity. The petitioner, counter-alleged that its
telephone services are covered by a legislative franchise.
3. After hearing, NTC, ordered petitioner RCPI to immediately cease or desist
from the operation of its radio telephone services in Sorsogon stating that under
Executive Order No. 546, a certificate of public convenience and necessity is
mandatory for the operation of communication utilities and services including
radio communications.
ISSUE:
Whether or not petitioner RCPI, a grantee of a legislative franchise to operate a
radio company, is required to secure a certificate of public convenience and
necessity before it can validly operate its radio stations.
HELD:
Yes. Executive Order No. 546, is applicable to the petitioner who must be bound
by its provisions. The petitioner cannot install and operate radio telephone
services on the basis of its legislative franchise alone. The position of the
petitioner that by the mere grant of its franchise under RA No. 2036 it can
operate a radio communications system anywhere within the Philippines is
erroneous. Section 4 of said statute reads:
Sec. 4(a). This franchise shall not take effect nor shall any powers thereunder be
exercised by the grantee until the Secretary of Public works and Communications
shall have allotted to the grantee the frequencies and wave lengths to be used,
and issued to the grantee a license for such case. (Emphasis supplied)
Thus, in the words of R.A. No. 2036 itself, approval of the then Secretary of Public
Works and Communications was a precondition before the petitioner could put up
radio stations in areas where it desires to operate. It has been repeated time and
again that where the statutory norm speaks unequivocally, there is nothing for
the courts to do except to apply it. The law, leaving no doubt as to the scope of
its operation, must be obeyed.
The records of the case do not show any grant of authority from the then
Secretary of Public Works and Communications before the petitioner installed the
questioned radio telephone services in San Jose, Mindoro in 1971. The same is
true as regards the radio telephone services opened in Sorsogon, Sorsogon and
Catarman, Samar in 1983. No certificate of public convenience and necessity
appears to have been secured by the petitioner from the public respondent when
such certificate,was required by the applicable public utility regulations.
Under the circumstances of this case, the mere fact that the petitioner possesses
a franchise to put up and operate a radio communications system in certain areas
is not an insuperable obstacle to the public respondent's issuing the proper
certificate to an applicant desiring to extend the same services to those areas.
BRITISH AIRWAYS, INC. V. COURT OF APPEALS 12TH DIVISION, FIRST
INTERNATIONAL TRADING AND GENERAL SERVICES
G.R. NO. 92288 FEBRUARY 9, 1993
FACTS:
✗ First International Trading and General Services Co. – duly licensed
domestic recruitment and placement agency; it received a telex message
from its principal ROLACO Engineering and Contracting Services in Jeddah,
Saudi Arabia to recruit Filipino contract workers in behalf of said principal
✗ ROLACO paid to the Jeddah branch of petitioner British Airways, Inc. airfare
tickets for 93 contract workers with specific instruction to transport said
workers to Jeddah on or before March 30, 1981
✗ March 1981: First International was informed by British Airways that
ROLACO had forwarded 93 prepaid tickets; First International instructed its
travel agent, ADB Travel and Tours. Inc., to book the 93 workers with
petitioner but the latter failed to fly said workers, thereby compelling
private respondent to borrow money in the amount of P304,416.00 in order
to purchase airline tickets from the other airlines for the 93 workers it had
recruited who must leave immediately since the visas of said workers are
valid only for 45 days and the Bureau of Employment Services mandates
that contract workers must be sent to the job site within a period of 30
days
✗ June 1981: First International was again informed by British Airways that it
had received a prepaid ticket advice from its Jeddah branch for the
transportation of 27 contract workers; First International instructed its
travel agent to book the 27 contract workers with the petitioner but the
latter was only able to book and confirm 16 seats on its June 9, 1981 flight;
on the date of the scheduled flight only 9 workers were able to board said
flight while the remaining 7 workers were rebooked to June 30, 1981 which
bookings were again cancelled by the petitioner without any prior notice to
either private respondent or the workers; thereafter, the 7 workers were
rebooked to the July 4,1981 flight of petitioner with 6 more workers booked
for said flight; but the confirmed bookings of the 13 workers were again
cancelled and rebooked to July 7, 1981
✗ First International paid the travel tax of the said workers as required by
British Airways but when the receipt of the tax payments was submitted,
the latter informed First International that it can only confirm the seats of
the 12 workers on its July 7, 1981 flight; but the confirmed seats of said
workers were again cancelled without any prior notice either to First
International or said workers; the 12 workers were finally able to leave for
Jeddah after First International had bought tickets from the other airlines
✗ July 1981: First International sent a letter to petitioner demanding
compensation for the damages in the amount of P350,000.00 it had
incurred by the latter’s repeated failure to transport its contract workers
despite confirmed bookings and payment of the corresponding travel taxes
✗ British Airways’ narration:
✗ it received a telex message from Jeddah advising that ROLACO had prepaid
the airfares of 100 persons to transport First International’s contract
workers from Manila to Jeddah on or before March 30, 1981; however, due
to the unavailability of space and limited time, it had to return to its
sponsor in Jeddah the prepaid ticket advice consequently not even one of
the alleged 93 contract workers were booked in any of its flights
✗ June 1981: British Airways received another prepaid ticket advice to
transport 16 contract workers of First International to Jeddah but the travel
agent of First International booked only 10 contract workers for British
Airways’ June 9, 1981 flight; however, only 9 contract workers boarded the
scheduled flight with 1 passenger not showing up as evidenced by the
Philippine Airlines’ passenger manifest
✗ First International’s travel agent booked seats for 5 contract workers on
British Airways’ July 4, 1981 flight but said travel agent cancelled the
booking of 2 passengers while the other 3 passengers did not show up on
said flight
✗ July 1981: the travel agent of First International booked 7 more contract
workers in addition to the previous 5 contract workers who were not able to
board the July 4, 1981 flight with British Airways’ July 7, 1981 flight which
was accepted by British Airways subject to reconfirmation
✗ July 1981: British Airways’ computer system broke down which resulted to
its failure to get a reconfirmation from Saudi Arabia Airlines causing the
automatic cancellation of the bookings of First International’s 12 contract
workers; the computer system of the petitioner was reinstalled the next day
and immediately British Airways tried to reinstate the bookings of the 12
workers with either Gulf Air or Saudi Arabia Airlines but both airlines replied
that no seat was available on that date and had to place the 12 workers on
the wait list; said information was duly relayed to the First International and
the 12 workers before the scheduled flight
ISSUE:
WON British Airways is liable
HELD:
Yes. Its repeated failures to transport First International’s workers in its flight
despite confirmed booking of said workers clearly constitutes breach of contract
and bad faith on its part.
✗ two aspects of contract of common carriage of passengers:
✗ a. contract to carry at some future time –consensual and is necessarily
perfected by mere consent
✗ b. contract of carriage or of common carriage itself –real contract for
not until the carrier is actually used can the carrier be said to have already
assumed the obligation of a carrier
✗ contract to carry was involved in the case; its elements are consent,
consideration and object certain
✗ CONSENT: British Airways consent to the contract was manifested by its
acceptance of the PTA or prepaid ticket advice that ROLACO has prepaid the
airfares of the First International’s contract workers advising the appellant
that it must transport the contract workers on or before the end of March,
1981 and the other batch in June, 1981
✗ CONSIDERATION: the fare paid for the passengers by the principal of First
International
✗ OBJECT CERTAIN: the transport of the passengers from the place of
departure to the place of destination
✗ First International has fully complied with the obligation, namely, the
payment of the fare and its willingness for its contract workers to leave for
their place of destination.
✗ On the other hand, British Airways was remiss in its obligation to transport
the contract workers on their flight despite confirmation and bookings made
by First International’s travelling agent. British Airways should have refused
acceptance of the PTA from by First International’s principal or to at least
inform by First International that it could not accommodate the contract
workers.
A.F Sanchez Brokerage, Inc. vs. CA G.R. No. 147079, December 21, 2004
FACTS:
AF Sanchez is engaged in a broker business wherein its main job is to calculate
customs duty, fees and charges as well as storage fees for the cargoes. Part also
of the services being given by AF Sanchez is the delivery of the shipment to the
consignee upon the instruction of the shipper.
Wyett engaged the services of AF Sanchez where the latter delivered the
shipment to Hizon Laboratories upon instruction of Wyett. Upon inspection, it
was found out that at least 44 cartons containing contraceptives were in bad
condition.
Wyett claimed insurance from FGU which paid Wyeth-Suaco the amount of
P181,431.49. Wyett thus issued a issued Subrogation Receipt in favor of FGU
Insurance. FGU Insurance Corporation (FGU) then brought an action for
reimbursement against petitioner A.F. Sanchez Brokerage Inc. (Sanchez
Brokerage) to collect the amount paid by the former to Wyeth-Suaco Laboratories
Inc.
A.F. Brokerage refused to admit liability for the damaged goods as it maintained
that the damage was due to improper and insufficient export packaging,
discovered when the sealed containers were opened outside the PSI warehouse.
The trial court dismissed the complaint, holding that the Survey Report prepared
by the Elite Surveyors is bereft of any evidentiary support and a mere product of
pure guesswork.
On appeal, the appellate court reversed the decision of the trial court, holding
that the Sanchez Brokerage engaged not only in the business of customs
brokerage but also in the transportation and delivery of the cargo of its clients,
hence, a common carrier within the context of Article 1732 of the NCC.
ISSUE:
Whether or not AF Sanchez a common carrier?
HELD:
YES. As defined under Article 1732 of the Civil Code, common carriers are
persons, corporations, firms or associations engaged in the business of carrying
or transporting passengers or goods or both by land, water or air for
compensation, offering their services to the public. It does not distinguish
between one whose principal business activity is the carrying of goods and one
who does such carrying only as an ancillary activity.
The contention therefore of Sanchez Brokerage that it is not a common carrier
but a customs broker whose principal function is to prepare the correct customs
declaration and proper shipping documents as required by law is bereft of merit.
It suffices that petitioner undertakes to deliver the goods for pecuniary
consideration.
In this light, Sanchez Brokerage as a common carrier is mandated to
observe, under Article 1733 of the Civil Code, extraordinary diligence in the
vigilance over the goods it transports according to all the 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 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.
CRISOSTOMO VS. CA
G.R. No. 138334
August 25, 2003
FACTS:
In May 1991, petitioner Estela L. Crisostomo contracted the services of
respondent Caravan Travel and Tours International, Inc. to arrange and facilitate
her booking, ticketing and accommodation in a tour dubbed Jewels of Europe at a
total cost of P74,322.70. Without checking her travel documents, petitioner went
to NAIA on Saturday, June 15, 1991, to take the flight for the first leg of her
journey from Manila to Hongkong. To petitioners dismay, she discovered that the
flight she was supposed to take had already departed the previous day. She
learned that her plane ticket was for the flight scheduled on June 14, 1991.
Subsequently, Menor prevailed upon petitioner to take another tour the British
Pageant which included England, Scotland and Wales in its itinerary. Upon
petitioners return from Europe, she demanded from respondent the
reimbursement of P61,421.70, representing the difference between the sum she
paid for Jewels of Europe and the amount she owed respondent for the British
Pageant tour. Despite several demands, respondent company refused to
reimburse the amount, contending that the same was non-refundable. Petitioner
was thus constrained to file a complaint against respondent for breach of contract
of carriage and damages. In her complaint, petitioner alleged that her failure to
join Jewels of Europe was due to respondents fault since it did not clearly indicate
the departure date on the plane ticket.Respondent was also negligent in informing
her of the wrong flight schedule through its employee Menor. She insisted that
the British Pageant was merely a substitute for the Jewels of Europe tour, such
that the cost of the former should be properly set-off against the sum paid for the
latter.
For its part, respondent company, through its Operations Manager, Concepcion
Chipeco, denied responsibility for petitioners failure to join the first tour. Chipeco
insisted that petitioner was informed of the correct departure date, which was
clearly and legibly printed on the plane ticket. The travel documents were given
to petitioner two days ahead of the scheduled trip.Petitioner had only herself to
blame for missing the flight, as she did not bother to read or confirm her flight
schedule as printed on the ticket.
ISSUE:
Whether or not the respondent company is a common carrier.
HELD:
No. Respondent is not an entity engaged in the business of transporting either
passengers or goods and is therefore, neither a private nor a common carrier.
Respondent did not undertake to transport petitioner from one place to another
since its covenant with its customers is simply to make travel arrangements in
their behalf. Respondent’s services as a travel agency include procuring tickets
and facilitating travel permits or visas as well as booking customers for tours.
While petitioner concededly bought her plane ticket through the efforts of
respondent company, this does not mean that the latter ipso facto is a common
carrier. At most, respondent acted merely as an agent of the airline, with whom
petitioner ultimately contracted for her carriage to Europe. Respondent’s
obligation to petitioner in this regard was simply to see to it that petitioner was
properly booked with the airline for the appointed date and time. Her transport to
the place of destination, meanwhile, pertained directly to the airline. It is thus not
bound under the law to observe extraordinary diligence in the performance of its
obligation, as petitioner claims. Since the contract between the parties is an
ordinary one for services, the standard of care required of respondent is that of a
good father of a family under Article 1173 of the Civil Code. Also, we do not agree
with the finding of the lower court that Menor’s negligence concurred with the
negligence of petitioner and resultantly caused damage to the latter. Menor’s
negligence was not sufficiently proved, considering that the only evidence
presented on this score was petitioner’s uncorroborated narration of the events.
PEDRO DE GUZMAN vs.COURT OF APPEALS and ERNESTO CENDANA
G.R. No. L-47822 December 22, 1988
FACTS:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used
bottles and scrap metal in Pangasinan. Upon gathering sufficient quantities of
such scrap material, respondent would bring such material to Manila for resale.
He utilized two (2) six-wheeler trucks which he owned for hauling the material to
Manila. On the return trip to Pangasinan, respondent would load his vehicles with
cargo which various merchants wanted delivered to differing establishments in
Pangasinan. For that service, respondent charged freight rates which were
commonly lower than regular commercial rates.
Petitioner de Guzman a merchant and authorized dealer of General Milk Company

Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of 750
cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to
petitioner's establishment in Urdaneta. Accordingly, respondent loaded in Makati
the merchandise on to his trucks: 150 cartons were loaded on a truck driven by
respondent himself, while 600 cartons were placed on board the other truck which
was driven by Manuel Estrada, respondent's driver and employee.Only 150 boxes
of Liberty filled milk were delivered to petitioner. The other 600 boxes never
reached petitioner, since the truck which carried these boxes was hijacked
somewhere along the MacArthur Highway in Tarlac, by armed men.
Petitioner commenced action against private respondent in the Court of First

Instance of Pangasinan, demanding payment of P 22,150.00, the claimed value of
the lost merchandise, plus damages and attorney's fees.
The trial court rendered a Decision finding private respondent to be a common

carrier and holding him liable for the value of the undelivered goods (P
22,150.00) as well as for P 4,000.00 as damages and P 2,000.00 as attorney's
fees. The Court of Appeals reversed the judgment of the trial court and held that
respondent had been engaged in transporting return loads of freight "as a casual
occupation — a sideline to his scrap iron business" and not as a common carrier.
ISSUES:
1. Whether or not private respondent is a common carrier?
2. Whether or not the private respondent is liable for the loss of goods?
HELD:
1. Yes. The respondent is a common carrier. The Civil Code defines "common
carriers" under Article 1732 as persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air for compensation, offering their services to the
public. The article makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local Idiom as "a sideline"). Article
1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population.
The private respondent is properly characterized as a common carrier even

though he merely "back-hauled" goods for other merchants from Manila to
Pangasinan, although such back-hauling was done on a periodic or occasional
rather than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of goods for others.
There is no dispute that private respondent charged his customers a fee for
hauling their goods; that fee frequently fell below commercial freight rates is
not relevant here.
The respondent is also a common carrier even though he does not possess a
certificate of public convenience since it is not a requisite for the incurring of
liability under the Civil Code provisions governing common carriers. That
liability arises the moment a person or firm acts as a common carrier, without
regard to whether or not such carrier has also complied with the requirements
of the applicable regulatory statute and implementing regulations and has
been granted a certificate of public convenience or other franchise. To exempt
private respondent from the liabilities of a common carrier because he has not
secured the necessary certificate of public convenience, would be offensive to
sound public policy; that would be to reward private respondent precisely for
failing to comply with applicable statutory requirements.
2. Common carriers, "by the nature of their business and for reasons of public
policy" 2 are held to a very high degree of care and diligence ("extraordinary
diligence") in the carriage of goods as well as of passengers.
Applying the Articles 1734 and 1735, we note firstly that the specific cause
alleged in the instant case — the hijacking of the carrier's truck — does not fall
within any of the five (5) categories of exempting causes listed in Article 1734.
It would follow, therefore, that the hijacking of the carrier's vehicle must be
dealt with under the provisions of Article 1735, in other words, that the private
respondent as common carrier is presumed to have been at fault or to have
acted negligently. This presumption, however, may be overthrown by proof of
extraordinary diligence on the part of private respondent.
Under Article 1745 (6) above, a common carrier is held responsible — and will
not be allowed to divest or to diminish such responsibility — even for acts of
strangers like thieves or robbers, except where such thieves or robbers in fact
acted "with grave or irresistible threat, violence or force." We believe and so
hold that the limits of the duty of extraordinary diligence in the vigilance over
the goods carried are reached where the goods are lost as a result of a
robbery which is attended by "grave or irresistible threat, violence or force."
In the instant case, armed men held up the second truck owned by private
respondent which carried petitioner's cargo. The record shows that an
information for robbery in band was filed in the CFI or Tarlac entitled "People
of the Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar
Oria and one John Doe."
In these circumstances, we hold that the occurrence of the loss must

reasonably be regarded as quite beyond the control of the common carrier and
properly regarded as a fortuitous event. It is necessary to recall that even
common carriers are not made absolute insurers against all risks of travel and
of transport of goods, and are not held liable for acts or events which cannot
be foreseen or are inevitable, provided that they shall have complied with the
rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that
private respondent Cendana is not liable for the value of the undelivered
merchandise which was lost because of an event entirely beyond private
respondent's control.
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, vs. COURT
OF APPEALS
G.R. No. 125948 December 29, 1998
MARTINEZ, J.:
FACTS:
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as
amended, to contract, install and operate oil pipelines. Sometime in January
1995, petitioner applied for a mayor's permit with the Office of the Mayor of
Batangas City. However, before the mayor's permit could be issued, the
respondent City Treasurer required petitioner to pay a local tax based on its gross
receipts for the fiscal year 1993 pursuant to the Local Government Code. In order
not to hamper its operations, petitioner paid the tax under protest. The
respondent City Treasurer denied the protest contending that petitioner cannot be
considered engaged in transportation business, thus it cannot claim exemption
under Section 133 (j) of the Local Government Code. In its complaint for tax
refund, petitioner alleged, among others, that the authority of cities to impose
and collect a tax on the gross receipts of "contractors and independent
contractors" under Sec. 141 (e) and 151 does not include the authority to collect
such taxes on transportation contractors for, as defined under Sec. 131 (h), the
term "contractors" excludes transportation contractors. Respondents assert that
pipelines are not included in the term "common carrier" which refers solely to
ordinary carriers such as trucks, trains, ships and the like. Respondents further
posit that the term "common carrier" under the said code pertains to the mode or
manner by which a product is delivered to its destination.
RTC: Denied the the complaint for tax refund.

CA: Affirmed RTC.
ISSUE:
Is Petitioner FIRST PHILIPPINE INDUSTRIAL CORPORATION a common carrier?
HELD:
YES.
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation
of goods for person generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is
confined;
3. He must undertake to carry by the method by which his business is conducted
and over his established roads; and
4. The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt that
petitioner is a common carrier. It is engaged in the business of transporting or
carrying goods, i.e. petroleum products, for hire as a public employment. It
undertakes to carry for all persons indifferently, that is, to all persons who choose
to employ its services, and transports the goods by land and for compensation.
The fact that petitioner has a limited clientele does not exclude it from the
definition of a common carrier.
Also, respondent's argument that the term "common carrier" as used in Section
133 (j) of the Local Government Code refers only to common carriers transporting
goods and passengers through moving vehicles or vessels either by land, sea or
water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in the
Civil Code makes no distinction as to the means of transporting, as long as it is by
land, water or air. It does not provide that the transportation of the passengers or
goods should be by motor vehicle.
EREZO vs JEPTE
FACTS:
Jepte is the registered owner of a six by six truck bearing. On August, 9,
1949, while the same was being driven by Rodolfo Espino y Garcia, it collided with
a taxicab at the intersection of San Andres and Dakota Streets,Manila. As the
truck went off the street, it hit Ernesto Erezo and another. Erezo suffered injuries
causing his death. The driver was prosecuted for homicide through reckless
negligence. The accused pleaded guilty and was sentenced to suffer imprisonment
and to pay the heirs of Ernesto Erezo the sum of P3,000. As the amount of the
judgment could not be enforced against him, plaintiff brought this action against
the registered owner of the truck.
The defendant does not deny at the time of the fatal accident, the cargo
truck driven by Rodolfo Espino y Garcia was registered in his name. He, however,
claims that the vehicle belonged to the Port Brokerage, of which he was the
broker at the time of the accident. He explained, and his explanation was
corroborated by Policarpio Franco, the manager of the corporation. The trucks of
the corporation were registered in his name as a convenient arrangement so as to
enable the corporation to pay the registration fee with his backpay as a pre-war
government employee. Franco, however, admitted that the arrangement was not
known to the Motor Vehicle Office.
The trial court held that as the defendant-appellant represented himself to
be the owner of the truck and the Motor Vehicle Office, relying on his
representation, registered the vehicles in his name, the Government and all
persons affected by the representation had the right to rely on his declaration of
ownership and registration. It, therefore, held that the defendant-appellant is
liable because he
cannot be permitted to repudiate his own declaration.
ISSUE:
Whether or not Jepte is liable.
HELD:
YES. The registered owner, the defendant-appellant herein, is primarily
responsible for the damage caused to the vehicle of the plaintiff-appellee, but he
(defendant-appellant) has a right to be indemnified by the real or actual owner of
the amount that he may be required to pay as damage for the injury caused to
the plaintiff-appellant.
The Revised Motor Vehicle Law provides that no vehicle may be used or
operated upon any public highway unless the same is properly registered. Not
only are vehicles to be registered and that no motor vehicles are to be used or
operated without being properly registered for the current year, but that dealers
in motor vehicles shall furnish the Motor Vehicles Office a report showing the
name and address of each purchaser of motor vehicle during the previous month
and the manufacturer's serial number and motor number. Registration is required
not to make said registration the operative act by which ownership in vehicles is
transferred, as in land registration cases, because the administrative proceeding
of registration does not bear any essential relation to the contract of sale between
the parties, but to permit the use and operation of the vehicle upon any public.
The main aim of motor vehicle registration is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicles on the
public highways, responsibility therefore can be fixed on a definite individual, the
registered owner. A registered owner who has already sold or transferred a
vehicle has the recourse to a third-party complaint, in the same action brought
against him to recover for the damage or injury done, against the vendee or
transferee of the vehicle.
[G.R. No. 125817. January 16, 2002]
ABELARDO LIM and ESMADITO GUNNABAN, petitioners, vs. COURT OF
APPEALS and DONATO H. GONZALES, respondents.
BELLOSILLO, J.:
DOCTRINE: The thrust of the law in enjoining the kabit system is not so much as
to penalize the parties but to identify the person upon whom responsibility may
be fixed in case of an accident with the end view of protecting the riding
public. The policy therefore loses its force if the public at large is not deceived,
much less involved, or when the evil it seeks to suppress does not exist.
FACTS:
Private respondent Donato Gonzales purchased an Isuzu passenger jeepney from
Gomercino Vallarta, holder of a certificate of public convenience for the operation
of public utility vehicles. While private respondent Gonzales continued offering the
jeepney for public transport services, he did not have the registration of the
vehicle transferred in his name nor did he secure for himself a certificate of public
convenience for its operation. Thus, Vallarta remained on record as its registered
owner and operator.
The jeepney collided with a ten-wheeler-truck owned by petitioner Abelardo Lim

and driven by his co-petitioner Esmadito Gunnaban. Gunnaban owned
responsibility for the accident. Petitioner Lim negotiated with private respondent
and offered to have the passenger jeepney repaired at his shop. Private
respondent however did not accept the offer so Lim offered him P20,000.00, the
assessment of the damage. It was rejected; instead, private respondent
demanded a brand-new jeep. Lim increased his bid to P40,000.00 but private
respondent was unyielding. Negotiations were futile, hence, the filing of the
complaint for damages by private respondent against petitioners.
Petitioner Lim denied liability by contending that he exercised due diligence in

the selection and supervision of his employees. He further asserted that as the
jeepney was registered in Vallarta’s name, it was Vallarta and not private
respondent who was the real party in interest.
RTC RULING: RTC ruled in favor of private respondent. It ratiocinated that as

vendee and current owner of the passenger jeepney, private respondent stood for
all intents and purposes as the real party in interest. Even Vallarta himself
supported private respondent's assertion of interest over the jeepney for, when he
was called to testify, he dispossessed himself of any claim or pretension on the
property.
Petitioner appealed to the CA.
CA RULING: CA affirmed the decision of the RTC. It concluded that while an

operator under the kabit system could not sue without joining the registered
owner of the vehicle as his principal, equity demanded that the present case be
made an exception.
Hence, this petition.
Petitioner’s contention: An operator of a vehicle continues to be its operator as

long as he remains the operator of record. To recognize an operator under
the kabit system as the real party in interest damages is utterly subversive of
public policy.
ISSUE: W/N the new owner (Gonzales) has legal personality to bring the action,
or is he the real party in interest in this case, despite the fact that he is not the
registered owner under the certificate of public convenience
HELD: YES.
The kabit system is an arrangement whereby a person who has been granted a
certificate of public convenience allows other persons who own motor vehicles to
operate them under his license, sometimes for a fee or percentage of the
earnings. Although the parties to such an agreement are not outrightly penalized
by law, the kabit system is invariably recognized as being contrary to public policy
and therefore void and inexistent under Art. 1409 of the Civil Code.
The thrust of the law in enjoining the kabit system is not so much as to penalize
the parties but to identify the person upon whom responsibility may be fixed in
case of an accident with the end view of protecting the riding public. The policy
therefore loses its force if the public at large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be prevented in
enjoining the kabit system does not exist.
First, neither of the parties to the pernicious kabit system is being held liable for
damages.
Second, the case arose from the negligence of another vehicle in using the public
road to whom no representation, or misrepresentation, as regards the ownership
and operation of the passenger jeepney was made and to whom no such
representation, or misrepresentation, was necessary. Thus it cannot be said that
private respondent Gonzales and the registered owner of the jeepney were in
estoppel for leading the public to believe that the jeepney belonged to the
registered owner.
Third, the riding public was not bothered nor inconvenienced at the very least by
the illegal arrangement. On the contrary, it was private respondent himself who
had been wronged and was seeking compensation for the damage done to
him. Certainly, it would be the height of inequity to deny him his right.
Therefore, private respondent has the right to proceed against petitioners for the
damage caused on his passenger jeepney as well as on his business. Any effort
then to frustrate his claim of damages by the ingenuity with which petitioners
framed the issue should be discouraged, if not repelled.
LITA ENTERPRISES INC. VS IAC
FACTS:
Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein
private respondents, purchased in installment from the Delta Motor Sales
Corporation five (5) Toyota Corona Standard cars to be used as taxicabs. Since
they had no franchise to operate taxicabs, they contracted with petitioner Lita
Enterprises, Inc., through its representative, Manuel Concordia, for the use of the
latter's certificate of public convenience in consideration of an initial payment of
P1,000.00 and a monthly rental of P200.00 per taxicab unit. To effectuate said
agreement, the aforesaid cars were registered in the name of petitioner Lita
Enterprises, Inc. Possession, however, remained with the spouses Ocampo who
operated and maintained the same under the name Acme Taxi, petitioner's trade
name.
About a year later, on March 18, 1967, one of said taxicabs driven by their
employee, Emeterio Martin, collided with a motorcycle whose driver, one Florante
Galvez, died from the head injuries sustained therefrom. A criminal case was
eventually filed against the driver Emeterio Martin, while a civil case for damages
was instituted by Rosita Sebastian Vda. de Galvez, heir of the victim, against Lita
Enterprises, Inc., as registered owner of the taxicab. In the latter case, Civil Case
No. 72067 of the Court of First Instance of Manila, petitioner Lita Enterprises, Inc.
was adjudged liable for damages in the amount of P25,000.00 and P7,000.00 for
attorney's fees.
On appeal by petitioner, docketed as CA-G.R. No. 59157-R, the Intermediate
Appellate Court modified the decision by including as part of its dispositive portion
another paragraph, to wit:
“In the event the condition of the three Toyota cars will no longer serve the
purpose of the deed of conveyance because of their deterioration, or because
they are no longer serviceable, or because they are no longer available, then Lita
Enterprises, Inc. is ordered to pay the plaintiffs their fair market value as of July
22, 1975.
ISSUE:
WON the decision of the IAC was correct
HELD:
No. Unquestionably, the parties herein operated under an arrangement,
commonly known as the "kabit system", whereby a person who has been granted
a certificate of convenience allows another person who owns motor vehicles to
operate under such franchise for a fee. A certificate of public convenience is a
special privilege conferred by the government. Abuse of this privilege by the
grantees thereof cannot be countenanced. The "kabit system" has been identified
as one of the root causes of the prevalence of graft and corruption in the
government transportation offices. In the words of Chief Justice Makalintal, "this
is a pernicious system that cannot be too severely condemned. It constitutes an
imposition upon the good faith of the government."
Although not outrightly penalized as a criminal offense, the "kabit system" is

invariably recognized as being contrary to public policy and, therefore, void and
inexistent under Article 1409 of the Civil Code. It is a fundamental principle that
the court will not aid either party to enforce an illegal contract, but will leave
them both where it finds them. Upon this premise, it was flagrant error on the
part of both the trial and appellate courts to have accorded the parties relief from
their predicament.
TEJA MARKETING VS. IAC
148 SCRA 347
FACTS:
Pedro Nale bought from Teja Marketing a motorcycle with complete accessories
and a sidecar. A chattel mortgage was constituted as a security for the payment
of the balance of the purchase price. The records of the Land Transportation
Commission show that the motorcycle sold to the defendant was first mortgaged
to the Teja Marketing by Angel Jaucian though the Teja Marketing and Angel
Jaucian are one and the same, because it was made to appear that way only as
the defendant had no franchise of his own and he attached the unit to the
plaintiff's MCH Line. The agreement also of the parties here was for the plaintiff to
undertake the yearly registration of the motorcycle with the Land Transportation
Commission. The plaintiff, however failed to register the motorcycle on that year
on the ground that the defendant failed to comply with some requirements such
as the payment of the insurance premiums and the bringing of the motorcycle to
the LTC for stenciling, the plaintiff said that the defendant was hiding the
motorcycle from him. Lastly, the plaintiff also explained that though the
ownership of the motorcycle was already transferred to the defendant, the vehicle
was still mortgaged with the consent of the defendant to the Rural Bank of
Camaligan for the reason that all motorcycle purchased from the plaintiff on
credit was rediscounted with the bank.
Teja Marketing made demands for the payment of the motorcycle but just the
same Nale failed to comply, thus forcing Teja Marketing to consult a lawyer and
file an action for damage before the City Court of Naga in the amount of P546.21
for attorney's fees and P100.00 for expenses of litigation. Teja Marketing also
claimed that as of 20 February 1978, the total account of Nale was already P2,
731, 05 as shown in a statement of account; includes not only the balance of P1,
700.00 but an additional 12% interest per annum on the said balance from 26
January 1976 to 27 February 1978; a 2% service charge; and P546.21
representing attorney's fees. On his part, Nale did not dispute the sale and the
outstanding balance of P1,700.00 still payable to Teja Marketing; but contends
that because of this failure of Teja Marketing to comply with his obligation to
register the motorcycle, Nale suffered damages when he failed to claim any
insurance indemnity which would amount to no less than P15,000.00 for the more
than 2 times that the motorcycle figured in accidents aside from the loss of the
daily income of P15.00 as boundary fee beginning October 1976 when the
motorcycle was impounded by the LTC for not being registered. The City Court
rendered judgment in favor of Teja Marketing, dismissing the counterclaim, and
ordered Nale to pay Teja Marketing On appeal to the Court of First Instance of
Camarines Sur, the decision was affirmed in toto. Nale filed a petition for review
with the Intermediate Appellate Court. On 18 July 1983, the appellate court set
aside the decision under review on the basis of doctrine of "pari delicto," and
accordingly, dismissed the complaint of Teja Marketing, as well as the
counterclaim of Nale; without pronouncements as to costs. Hence, the petition for
review was filed by Teja Marketing and/or Angel Jaucian.
ISSUE:
Whether the defendant can recover damages against the plaintiff?
HELD:
Unquestionably, the parties herein operated under an arrangement, commonly
known as the "kabit system" whereby a person who has been granted a
certificate of public convenience allows another person who owns motor vehicles
to operate under such franchise for a fee. A certificate of public convenience is a
special privilege conferred by the government. Abuse of this privilege by the
grantees thereof cannot be countenanced.
The "kabit system" has been identified as one of the root causes of the
prevalence of graft and corruption in the government transportation offices.
Although not out rightly penalized as a criminal offense, the kabit system is
invariably recognized as being contrary to public policy and, therefore, void and in
existent under Article 1409 of the Civil Code. It is a fundamental principle that the
court will not aid either party to enforce an illegal contract, but will leave both
where it finds then. Upon this premise it would be error to accord the parties
relief from their predicament.
SANTOS V. SIBUG AND CA
G.R. NO. L-26815; MAY 26, 1981
MELENCIO- HERRERA, J.
FACTS:
Vidad was a duly authorized passenger jeepney operator, while Santos was
the owner of a passenger jeep, but he had no certificate of public convenience for
its operation. Santos, as a kabit operator, transferred his jeep to the name of
Vidad so that it could be operated under his certificate. For the protection of
SANTOS, VIDAD executed a re-transfer document to the former, which was to be
a private document presumably to be registered if and when it was decided that
the passenger jeep of SANTOS was to be withdrawn from the kabit arrangement.
During the pendency of such arrangement, Sibug was bumped by a
passenger jeepney operated by Vidad and driven by Gragas, causing him to file a
complaint for damages against the two. A judgment was rendered sentencing
Vidad and the driver to jointly and severally pay actual and moral damages. The
Sheriff also levied a motor vehicle registered in the name of Vidad.
SANTOS presented a third-party claim with the Sheriff alleging actual
ownership of the motor vehicle levied upon, and stating that registration thereof
in the name of VIDAD was merely to enable SANTOS to make use of VIDAD’s
Certificate of Public Convenience. Before the scheduled sale, Santos filed an
action for damages against Sibug, Vidad, the Sheriff, and the bonding company.
The lower court dismissed Santos’ action for damages on the ground that
he admitted his participation in the illegal practice of the kabit system. SANTOS,
as the kabit, should not be allowed to defeat the levy on his vehicle and to avoid
his responsibilities as a kabit owner for he had led the public to believe that the
vehicle belonged to VIDAD. Aggrieved, Santos filed the present petition.
ISSUE:
Whether or not the third-party claimant has a right to vindicate his claim to
the vehicle levied upon through a separate action.
HELD:
Yes. As a matter of procedure, it was proper for Santos as third-party
claimant, to vindicate his claim of ownership in a separate action under Sec. 17 of
Rule 39, since property belonging to a stranger is not subject to levy. However, as
a matter of substance and on the merits, the auction should have been upheld.
Legally speaking, it was not a “stranger’s property” that was levied upon by the
Sheriff. The vehicle was, in fact, registered in the name of VIDAD, one of the
judgment debtors. And what is more, the aspect of public service, with its effects
on the riding public, is involved.
Where a jeepney is registered in the name of an authorized public utility operator

but is actually owned by another (kabit operator) and the same bumped
somebody through the negligence of its driver, such jeepney can be sold at public
auction to satisfy the court’s award. It cannot be considered a “stranger’s
property.”
BALIWAG TRANSIT V CA
GR NO. 116110 | MAY 15, 1996
FACTS:
The records show that on July 31, 1980, Leticia Garcia, and her five-year old son,
Allan Garcia, boarded Baliwag Transit Bus No. 2036 bound for Cabanatuan City
driven by Jaime Santiago. They took the seat behind the driver.
At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus
passengers saw a cargo truck parked at the shoulder of the national highway. Its
left rear portion jutted to the outer lane, the shoulder of the road was too narrow
to accommodate the whole truck. A kerosene lamp appeared at the edge of the
road obviously to serve as a warning device. The truck driver, Julio Recontique,
and his helper, Arturo Escala, were then replacing a flat tire. The truck is owned
by respondent A & J Trading.
Bus driver Santiago was driving at an inordinately fast speed and failed to notice
the truck and the kerosene lamp at the edge of the road. Santiago's passengers
urged him to slow down but he paid them no heed. Santiago even carried
animated conversations with his co-employees while driving. When the danger of
collision became imminent, the bus passengers shouted "Babangga
tayo!". Santiago stepped on the brake, but it was too late. His bus rammed into
the stalled cargo truck. It caused the instant death of Santiago and Escala, and
injury to several others. Leticia and Allan Garcia were among the injured
passengers.
Leticia suffered a fracture in her pelvis and right leg. She underwent an operation
for partial hip prosthesis.[4]
Allan, on the other hand, broke a leg. He was also given emergency treatment at
the provincial hospital.
Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading and
Julio Recontique for damages in the Regional Trial Court of Bulacan.[5] Leticia sued
as an injured passenger of Baliwag and as mother of Allan. At the time of the
complaint, Allan was a minor, hence, the suit initiated by his parents in his favor.
Baliwag, A & J Trading and Recontique disclaimed responsibility for the
mishap. Baliwag alleged that the accident was caused solely by the fault and
negligence of A & J Trading and its driver, Recontique. Baliwag charged that
Recontigue failed to place an early warning device at the corner of the disabled
cargo truck to warn oncoming vehicles.[6] On the other hand, A & J Trading and
Recontique alleged that the accident was the result of the negligence and reckless
driving of Santiago, bus driver of Baliwag.
RTC: both defendants should be held liable; the defendant Baliwag Transit, Inc.
for having failed to deliver the plaintiff and her son to their point of destination
safely in violation of plaintiff's and defendant Baliwag Transit's contractual
relation. The defendant A & J and Julio Recontique for failure to provide its cargo
truck with an early warning device in violation of the Motor Vehicle Law.
CA: Absolved A&J from liability
ISSUE:
Did the Court of Appeals err in absolving A & J Trading from liability and holding
Baliwag solely liable for the injuries suffered by Leticia and Allan Garcia in the
accident?
HELD: NO.
As a common carrier, Baliwag breached its contract of carriage when it failed to
deliver its passengers, Leticia and Allan Garcia to their destination safe and
sound. A common carrier is bound to carry its passengers safely as far as human
care and foresight can provide, using the utmost diligence of a very cautious
person, with due regard for all the circumstances.[11] In a contract of carriage, it
is presumed that the common carrier was at fault or was negligent when a
passenger dies or is injured. Unless the presumption is rebutted, the court need
not even make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence
that the carrier exercised extraordinary diligence as prescribed in Articles 1733
and 1755 of the Civil Code.[12]
The records are bereft of any proof to show that Baliwag exercised extraordinary
diligence. On the contrary, the evidence demonstrates its driver's
recklessness. Leticia Garcia testified that the bus was running at a very high
speed despite the drizzle and the darkness of the highway. The passengers
pleaded for its driver to slow down, but their plea was ignored.[13] Leticia also
revealed that the driver was smelling of liquor.[14] She could smell him as she was
seated right behind the driver. Another passenger, Felix Cruz testified that
immediately before the collision, the bus driver was conversing with a co-
employee.[15] All these prove the bus driver's wanton disregard for the physical
safety of his passengers, which makes Baliwag as a common carrier liable for
damages under Article 1759 of the Civil Code:
Art. 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or willfull acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of
the orders of the common carriers.
This liability of the common carriers do not cease upon proof that they exercised
all the diligence of a good father of a family in the selection or supervision of their
employees.
Baliwag cannot evade its liability by insisting that the accident was caused solely
by the negligence of A & J Trading and Julio Recontique. It harps on their alleged
non use of an early warning device as testified to by Col. Demetrio dela Cruz, the
station commander of Gapan, Nueva Ecija who investigated the incident, and
Francisco Romano, the bus conductor.
The records do not bear out Baliwag's contention. Col. dela Cruz and Romano
testified that they did not see any early warning device at the scene of the
accident.[16] They were referring to the triangular reflectorized plates in red and
yellow issued by the Land Transportation Office.However, the evidence shows that
Recontique and Ecala placed a kerosene lamp or torch at the edge of the road,
near the rear portion of the truck to serve as an early warning device.[17] This
substantially complies with Section 34 (g) of the Land Transportation and Traffic
Code
NOSTRADAMUS VILLANUEVA VS. DOMINGO
FACTS:
Priscilla Domingo, respondent is the registered owner of the car driven by one of
the respondent Leando Domingo. While petitioner was the registered owner of the
green Mitsubishi Lancer driven by Ocfamia hit the car owned as Domingo
Villanueva. Ocfemia was driving with expired license and positive for alcoholic
breath. Hence, Manila Assistant City Prosecutor Oscar A. Pascua recommended
the filing of information for reckless imprudence resulting to damage to property
and physical injuries. Nostradamus Villanueva claimed that he was no longer the
owner of the car at the time of the mishap because it was swapped with a Pajero
owned by Albert Jaucian/Auto Palace Car Exchange
ISSUE:
May the registered owner of a motor vehicle be held liable for damages arising
from a vehicular accident involving his motor vehicle while being operated by the
employee of its buyer without the latter’s consent and knowledge?
HELD:
YES. SC ruled that the registered owner of any vehicle is directly and primarily
responsible to the public and third persons while it is being operated. The
principle upon which this doctrine is based is that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume or
presume that the registered owner is the actual owner thereof, for it would be
difficult for the public to enforce the actions that they may have for injuries
caused to them by the vehicles being negligently operated if the public should be
required to prove who the actual owner is.
SC, however, did not imply by his doctrine, however, that the registered owner
may not recover whatever amount he had paid by virtue of his liability to third
persons from the person to whom he had actually sold, assigned or conveyed the
vehicle.
Under the same principle the registered owner of any vehicle, even if not used for
a public service, should primarily be responsible to the public or to third persons
for injuries caused the latter while the vehicle is being driven on the highways or
streets.
A registered owner who has already sold or transferred a vehicle has the recourse
to a third-party complaint, in the same action brought against him to recover for
the damage or injury done, against the vendee or transferee of the vehicle.
Whether the driver is authorized or not by the actual owner is irrelevant

to determining the liability of the registered owner who the law holds
primarily and directly responsible for any accident, injury or death caused by the
operation of the vehicle in the streets and highways.
SPOUSES HERNANDEZ V. SPOUSES DOLOR
G.R. NO. 160286. JULY 30, 2004
FACTS:
Lorenzo Menard Boyet Dolor, Jr. was driving an owner-type jeepney owned
by her mother, Margarita, towards Anilao, Batangas. As he was traversing the
road, his vehicle collided with a passenger jeepney driven by petitioner Juan
Gonzales and owned by his co-petitioner Francisco Hernandez. Boyet and his
passenger died. Passengers also on board the owner-type jeep, which was totally
wrecked, suffered physical injuries. The collision also damaged the passenger
jeepney of Francisco Hernandez and caused physical injuries to its passengers.
Respondents commenced an action for damages alleging that driver Juan
Gonzales was guilty of negligence and lack of care and that the Hernandez
spouses were guilty of negligence in the selection and supervision of their
employees. Petitioners countered that the proximate cause of the death and
injuries sustained by the passengers of both vehicles was the recklessness of
Boyet who was driving in a zigzagging manner under the influence of
alcohol. Petitioners also alleged that Gonzales was not the driver-employee of the
Hernandez spouses as the former only leased the jeepney on a daily basis.
Hernandez spouses further claimed that even if an employer-employee
relationship is found to exist between them, they cannot be held liable because as
employers they exercised due care in the selection and supervision of their
employee. The trial court rendered a decision in favor of respondents. CA affirmed
with modifications. Hence the present petition.
ISSUE:
W/N Hernandez spouses are solidarily liable with Juan Gonzales, although it
is of record that they were not in the passenger jeepney when the accident
occurred.
HELD:
YES. They are still answerable under several provisions of the Civil Code
namely Article 2180 and Article 2176. While the above provisions do not
expressly provide for the solidary liability, they should be read in consonance with
Article 2180 – one can be liable for the acts or omission of another whom he is
responsible for, meaning that an employer is accountable for the actions of his
employees. Article 2194 categorically states that responsibility of two or more
persons who are liablefor quasi-delict is solidary. The Hernandez spouses
maintained that Julian Gonzales is not their employee because the latter pays
them daily for the use of the jeepney. They argued that they are practicing a
lease agreement using the “boundary system”. SC held that there exists an
employer-employee relationship because by agreeing with spouses Hernandez,
there would be a violation of the Public Service Law and the riding public is placed
at the mercy of reckless and irresponsible drivers because most drivers are in no
position to pay for damages when accidents occur. 
DELSAN TRANSPORT LINES, INC. VS. AMERICAN HOME ASSURANCE
CORPORATION
G.R. No. 149019; August 15, 2006
GARCIA, J.
FACTS:
Delsan, a domestic corporation which owns and operates the vessel MT Larusan,
received on board a shipment consisting of diesel oil for the transportation and
delivery to the bulk depot in Bacolod City of Caltex, pursuant to a Contract of
Afreignment. The shipment was insured by respondent AHAC, a foreign insurance
company duly licensed to do business in the Philippines through its agent
American-International Underwriters Phils., against all risks under Inland Floater
Policy and Marine Risk Policy. The shipment arrived in Bacolod City and unloading
operations commenced. Upon discharging of the diesel oil, spillage and backflow
of diesel oil resulted. AHAC, as insurer, paid Caltex for the loss and then instituted
a civil case against Delsan for the loss caused by the spillage and backflow. The
trial court and CA rendered a decision in favor of AHAC holding Delsan liable for
the loss of the cargo for its negligence in its duty as a common carrier.
ISSUE:
Whether or not Delsan is exculpated from liability applying the rule on ctributory
negligence and the fact that the loss due to backflow occurred when the diesel oil
was already completely delivered to Caltex.
HELD:
No. Common carriers are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. They are presumed to have been
at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated. To overcome the presumption of negligence in case of loss,
destruction or deterioration of the goods, the common carrier must prove that it
exercised extraordinary diligence. There are, however, exceptions to this rule.
Article 1734 of the Civil Code enumerates the instances when the presumption of
negligence does not attach:
Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following causes
only:
1) Flood storm, earthquake, lightning, or other natural disaster or calamity;
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;
5) Order or act of competent public authority.
Delsan failed to prove its claim that there was a contributory negligence on the
part of Caltex. The proximate cause of the spillage and backflow of the diesel oil
was due to the severance of the port bow mooring line of the vessel and the
failure of the shore tender to close the storage tank gate valve even as a check
on the drain cock showed that there was still a product on the pipeline. The crew
of the vessel should have promptly informed the shore tender that the port
mooring line was cut off. However, Delsan did not do so on the lame excuse that
there was no available banca. Delsan was obliged to prove that the loss was
caused by one of the excepted causes if it were to seek exemption from
responsibility but it failed to discharge this burden by the required quantum of
proof.
Delsan’s argument that it should not be held liable for the loss of diesel oil due to
backflow because the same had already been actually and legally delivered to
Caltex at the time it entered the shore tank holds no water. It had been settled
that the subject cargo was still in the custody of Delsan because the discharging
thereof has not yet been finished when the backflow occurred.
SARKIES TOURS v. CA; G.R. No. 108897. October 2, 1997
FACTS:
Fatima Minerva boarded Sarkies Tours’ bus in Manila on her way to Legazpi City.
She had her 3pieces 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 belongingsloaded in the bus’ luggage
compartment. 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.
Fatima filed an action against Sarkies Tours, claiming that the loss was due to its
failure to observe extraordinary diligence in the care of her luggage and that
Sarkies Tours dealt with them in bad faith from the start
ISSUE:
W/N Sarkies should be held liable for the lost baggage
HELD:
YES. 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, 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, unless the loss is due to
any of the excepted causes under Art. 1734.
The cause of the loss was Sarkies Tours’ 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:
x x x. Where the common carrier accepted its passengers 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 carriers own lookout. It is
responsible for the consequent loss of the baggage. In the instant case,
defendant appellants 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 Neither was this
required of the other passengers.
TABACALERA INSURANCE CO., PRUDENTIAL GUARANTEE & ASSURANCE,
INC., and NEW ZEALAND INSURANCE CO., LTD.
vs. NORTH FRONT SHIPPING SERVICES, INC., and COURT OF APPEALS
FACTS:
1. 20,234 sacks of corn grains valued at P3,500,640.00 were shipped on board
North Front 777 of North Front Shipping. The cargo was consigned to Republic
Flour Mills, and insured with petitioners.
2. The vessel was inspected prior to actual loading and was found fit to carry the
merchandise. The cargo was covered with tarpaulins and wooden boards. The
hatches were sealed and could only be opened by representatives of Republic
Flour Mills Corporation.
3. Republic Flour Mills was advised of its arrival but it did not immediately
commence the unloading operations. When the cargo was eventually unloaded
there was a shortage of 26.333 metric tons. The remaining merchandise was
already moldy, rancid and deteriorating.
4. Republic Flour Mills rejected the entire cargo and formally demanded from
North Front Shipping payment for the damages. The demands however were
unheeded. The insurance companies were perforce obliged to pay Republic Flour
Mills P2,189,433.40.
5. The insurance companies were subrogated to the rights of Republic Flour Mills,
they lodged a complaint for damages against North Front Shipping Services, Inc.,
claiming that the loss was exclusively attributable to the fault and negligence of
the carrier.
6. The court dismissed the complaint and ruled that the contract entered into
between North Front Shipping Services, Inc., and Republic Flour Mills Corporation
was a charter-party agreement. As such, only ordinary diligence in the care of
goods was required of North Front Shipping Services, Inc. On the other hand, the
Court of Appeals ruled that the charter-party agreement between North Front
Shipping Services, Inc., and Republic Flour Mills Corporation did not in any way
convert the common carrier into a private carrier.
ISSUE:
Whether or not the respondent is liable for the damaged goods.
HELD:
Yes. When goods placed in its care are lost or damaged, the carrier is presumed
to have been at fault or to have acted negligently. North Front Shipping Services,
Inc., therefore has the burden of proving that it observed extraordinary diligence
in order to avoid responsibility for the lost cargo.The master of the vessel testified
that the corn grains were farm wet when loaded. However, this testimony was
disproved by the clean bill of lading issued by North Front Shipping Services, Inc.,
which did not contain a notation that the corn grains were wet and improperly
dried. Having been in the service since 1968, the master of the vessel would have
known at the outset that corn grains that were farm wet and not properly dried
would eventually deteriorate when stored in sealed and hot compartments as in
hatches of a ship. Equipped with this knowledge, the master of the vessel and his
crew should have undertaken precautionary measures to avoid or lessen the
cargo's possible deterioration as they were presumed knowledgeable about the
nature of such cargo. But none of such measures was taken.
In fine, we find that the carrier failed to observe the required extraordinary
diligence in the vigilance over the goods placed in its care. The proofs presented
by North Front Shipping Services, Inc., were insufficient to rebut the prima facie
presumption of privaterespondent's negligence, more so if we consider the
evidence adduced by petitioners.
However, we cannot attribute the destruction, loss or deterioration of the cargo
solely to the carrier. We find the consignee Republic Flour Mills Corporation guilty
of contributory negligence. It was seasonably notified of the arrival of the barge
but did not immediately start the unloading operations. No explanation was
proffered by the consignee as to why there was a delay of six (6) days. Had the
unloading been commenced immediately the loss could have been completely
avoided or at least minimized. As testified to by the chemist who analyzed the
corn samples, the mold growth was only at its incipient stage and could still be
arrested by drying. The corn grains were not yet toxic or unfit for consumption.
For its contributory negligence, Republic Flour Mills Corporation should share at
least 40% of the loss.
MACAM vs. COURT OF APPEALS GR No. 125524; August 25, 1999
FACTS:
Benito Macam, doing business under name Ben-Mac Enterprises, shipped on
board vessel Nen-Jiang, owned and operated by respondent China Ocean
Shipping Co. through local agent Wallem Philippines Shipping Inc., 3,500 boxes of
watermelon covered by Bill of Lading No. HKG 99012, and 1,611 boxes of fresh
mangoes covered by Bill of Lading No. HKG 99013. The shipment was bound for
Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of
Rowloon (GPC) as notify party.
Upon arrival in Hongkong, shipment was delivered by respondent WALLEM

directly to GPC, not to PAKISTAN BANK and without the required bill of lading
having been surrendered. Subsequently, GPC failed to pay PAKISTAN BANK, such
that the latter, still in possession of original bill of lading, refused to pay petitioner
thru SOLIDBANK. Since SOLIDBANK already pre-paid the value of shipment, it
demanded payment from respondent WALLEM but was refused. MACAM
constrained to return the amount paid by SOLIDBANK and demanded payment
from WALLEM but to no avail.
WALLEM submitted in evidence a telex dated 5 April 1989 as basis for delivering
the cargoes to GPC without the bills of lading and bank guarantee. The telex
instructed delivery of various shipments to the respective consignees without
need of presenting the bill of lading and bank guarantee per the respective
shipper’s request since “for prepaid shipt ofrt charges already fully paid.” MACAM,
however, argued that, assuming there was such an instruction, the consignee
referred to was PAKISTAN BANK and not GPC.
The RTC ruled for MACAM and ordered value of shipment. CA reversed RTC’s
decision.
ISSUE:
Are the respondents liable to the petitioner for releasing the goods to GPC without
the bills of lading or bank guarantee?
HELD:
It is a standard maritime practice when immediate delivery is of the essence, for
shipper to request or instruct the carrier to deliver the goods to the buyer upon
arrival at the port of destination without requiring presentation of bill of lading as
that usually takes time. Thus, taking into account that subject shipment consisted
of perishable goods and SOLIDBANK pre-paid the full amount of value thereof, it
is not hard to believe the claim of respondent WALLEM that petitioner indeed
requested the release of the goods to GPC without presentation of the bills of
lading and bank guarantee.
To implement the said telex instruction, the delivery of the shipment must be to
GPC, the notify party or real importer/buyer of the goods and not the PAKISTANI
BANK since the latter can very well present the original Bills of Lading in its
possession. Likewise, if it were the PAKISTANI BANK to whom the cargoes were
to be strictly delivered, it will no longer be proper to require a bank guarantee as
a substitute for the Bill of Lading. To construe otherwise will render meaningless
the telex instruction. After all, the cargoes consist of perishable fresh fruits and
immediate delivery thereof the buyer/importer is essentially a factor to reckon
with.
We emphasize that the extraordinary responsibility of the common carriers lasts

until actual or constructive delivery of the cargoes to the consignee or to the
person who has a right to receive them. PAKISTAN BANK was indicated in the bills
of lading as consignee whereas GPC was the notify party. However, in the export
invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC
as such in his demand letter to respondent WALLEM and in his complaint before
the trial court. This premise draws us to conclude that the delivery of the cargoes
to GPC as buyer/importer which, conformably with Art. 1736 had, other than the
consignee, the right to receive them was proper.
SAMAR MINING COMPANY VS NORDEUTSCHER LLOYD, ET AL., OCT. 23,
1984
FACTS:
The case arose from an importation made by Samar Mining Co. Inc. of 1 crate
Optima welded wedge wire sieves through the M/S Schwabenstein, a vessel
owned by Nordeutscher Lloyd, (represented in the Philippines by its agent, C.F.
Sharp & Co., Inc.), which shipment is covered by Bill of Lading No. 18 duly issued
to consignee Samar Mining.
As plainly indicated on the face of the bill, the vessel M/S Schwabenstein is to
transport the goods only up to Manila. Thereafter, the goods are to be
transshipped by the carrier to the port of destination.
Upon arrival of the vessel at the port of Manila, the importation was unloaded and
delivered in good order and condition to the bonded warehouse of AMCYL. The
goods were however never delivered to, nor received by, the consignee at the
port of destination — Davao.
When the letters of complaint were sent to Nordeutscher Lloyd failed to elicit the
desired response, Samar Mining filed a formal claim enforce payment.
Nordeutscher Lloyd and CF Sharp & Co. brought in AMCYL as third party
defendant. The trial court rendered judgment in favor of Samar Mining, ordering
Nordeutscher Lloyd, et. al. to pay the amount of P1,691.93 plus attorney’s fees
and costs. However, the Court stated that Nordeutscher Lloyd, et. al. may recoup
whatever they may pay Samar Mining by enforcing the judgment against third
party defendant AMCYL, which had earlier been declared in default. Nordeutscher
Lloyd and C.F. Sharp & Co. appealed from said decision.
ISSUE:
Whether or not a stipulation in the bill of lading exempting the carrier from
liability for loss of goods not in its actual custody is valid?
RULING:
YES. Section 11 of Bill of Lading No. 18 and the third paragraph of Section 1
thereof are valid stipulations between the parties insofar as they exempt the
carrier from liability for loss or damage to the goods while the same are not in the
latter's actual custody. Article 1736 is applicable to the instant suit. Under said
article, the carrier may be relieved of the responsibility for loss or damage to the
goods upon actual or constructive delivery of the same by the carrier to the
consignee, or to the person who has a right to receive them.
The Bill of Lading serves both as a receipt of goods and is likewise the contract to
transport and deliver the same as stipulated. It is a contract and is therefore the
law between the parties. The Bill of Lading in question stipulated that
Nordeutscher Lloyd only undertook to transport the goods in its vessel only up to
the port of discharge from ship, which is Manila. The Bill of Lading further
stipulated that the goods were to be transshipped by the carrier from Manila to
the port of destination – Davao. By unloading the shipment in Manila and
delivering the goods to the warehouse of AMCYL, the appellant was acting within
the contractual stipulations contained in the Bill of Lading.
Furthermore, the records fail to reveal proof of negligence, deceit or fraud

committed by appellant or by its representative in the Philippines. Neither is there
any showing of notorious incompetence or insolvency on the part of AMCYT, which
acted as appellant's substitute in storing the goods awaiting transshipment.
The actions of appellant carrier and of its representative in the Philippines being
in full faith with the lawful stipulations of Bill of Lading No. 18 and in conformity
with the provisions of the New Civil Code on common carriers, agency and
contracts, they incur no liability for the loss of the goods in question.
SERVANDO VS. PHILIPPINE STEAM NAVIGATION CO.
G.R. No. L-36481-2
October 23, 1982
FACTS:
On November 6, 1963, appellees Clara Uy Bico and Amparo Servando loaded on
board the appellant's vessel, FS-176, for carriage from Manila to Pulupandan,
Negros Occidental, several cargoes. Upon arrival of the vessel at Pulupandan, in
the morning of November 18, 1963, the cargoes were discharged, complete and
in good order, unto the warehouse of the Bureau of Customs. At about 2:00 in the
afternoon of the same day, said warehouse was razed by a fire of unknown origin,
destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able
to take delivery of 907 cavans of rice. Appellees' claims for the value of said goods
were rejected by the appellant. It should be pointed out, however, that in the bills
of lading issued for the cargoes in question, the parties agreed to limit the
responsibility of the carrier for the loss or damage that may be caused to the
shipment by inserting therein the following stipulation: Clause 14. Carrier shall
not be responsible for loss or damage to shipments billed 'owner's risk' unless
such loss or damage is due to negligence of carrier. Nor shall carrier be
responsible for loss or damage caused by force majeure, dangers or accidents of
the sea or other waters; war; public enemies; . . . fire . ... Appellees contend that
the said stipulation does not bind them because it was printed in fine letters on
the back-of the bills of lading; and that they did not sign the same.
ISSUE:
Whether or not the carrier is liable for the loss of the cargoes caused by the fire.
RULING:
We sustain the validity of the above stipulation; there is nothing therein that is
contrary to law, morals or public policy. While it may be true that petitioner had
not signed the plane ticket (Exh. '12'), he is nevertheless bound by the provisions
thereof. 'Such provisions have been held to be a part of the contract of carriage,
and valid and binding upon the passenger regardless of the latter's lack of
knowledge or assent to the regulation'. It is what is known as a contract of
'adhesion', in regards which it has been said that contracts of adhesion wherein
one party imposes a ready made form of contract on the other, are contracts not
entirely prohibited. The one who adheres to the contract is in reality free to reject
it entirely; if he adheres, he gives his consent. Besides, the agreement contained
in the above quoted Clause 14 is a mere iteration of the basic principle of law
written in Article 1174 of the Civil Code. Thus, where fortuitous event or force
majeure is the immediate and proximate cause of the loss, the obligor is exempt
from liability for non-performance. There is nothing in the record to show that
appellant carrier, incurred in delay in the performance of its obligation. It appears
that appellant had not only notified appellees of the arrival of their shipment, but
had demanded that the same be withdrawn 
EDGAR COKALIONG SHIPPING LINES, INC. vs. UCPB GENERAL
INSURANCE COMPANY, INC.
G.R. No. 146018. June 25, 2003
FACTS:
Sometime on December 11, 1991, Nestor Angelia delivered to the Edgar
Cokaliong Shipping Lines, Inc. (now Cokaliong Shipping Lines), cargo consisting
of one (1) carton of Christmas dcor and two (2) sacks of plastic toys, to be
transported on board the M/V Tandag on its Voyage No. T-189 scheduled to
depart from Cebu City, to Surigao del Sur. Petitioner issued Bill of Lading No. 58,
freight prepaid, covering the cargo. Nestor Angelia was both the shipper and
consignee of the cargo valued, on the face thereof, in the amount of P6,500.00.
Zosimo Mercado likewise delivered cargo to petitioner, consisting of two (2)
cartons of plastic toys and Christmas decor, one (1) roll of floor mat and one (1)
bundle of various or assorted goods for transportation thereof from Cebu City to
Tandag, Surigao del Sur, on board the said vessel, and said voyage.
Petitionerissued Bill of Lading No. 59 covering the cargo which, on the face
thereof, was valued in the amount of P14,000.00. Under the Bill of Lading,
Zosimo Mercado was both the shipper and consignee of the cargo.
Feliciana Legaspi insured the cargo, covered by Bill of Lading No. 59, with the
UCPB General Insurance Co., Inc., for the amount of P100,000.00 against all
risks. She also insured the cargo covered by Bill of Lading No. 58, with
respondent, for the amount of P50,000.00.
When the vessel left port, it had thirty-four (34) passengers and assorted cargo
on board, including the goods of Legaspi. After the vessel had passed by the
Mandaue-Mactan Bridge, fire ensued in the engine room, and, despite earnest
efforts of the officers and crew of the vessel, the fire engulfed and destroyed the
entire vessel resulting in the loss of the vessel and the cargoes therein. The
Captain filed the required Marine Protest.
Shortly thereafter, Feliciana Legaspi filed a claim, with respondent, for the value
of the cargo insured. She submitted, in support of her claim, a Receipt,
purportedly signed by Zosimo Mercado, and Order Slips purportedly signed by
him for the goods he received from Feliciana Legaspi valued in the amount of
P110,056.00. Respondent approved the claim of Feliciana Legaspi and drew and
issued UCPB Check No. 612939, dated March 9, 1992, in the net amount of
P99,000.00, in settlement of her claim after which she executed a Subrogation
Receipt/Deed, for said amount, in favor of respondent. She also filed a claim for
the value of the cargo covered by Bill of Lading No. 58. She submitted to
respondent a Receipt and Order Slips, purportedly signed by Nestor Angelia for
the goods he received from Feliciana Legaspi valued at P60,338.00. Respondent
approved her claim and remitted to Feliciana Legaspi the net amount of
P49,500.00, after which she signed a Subrogation Receipt/Deed, dated March 9,
1992, in favor of respondent.
Respondent as subrogee of Feliciana Legaspi, filed a complaint anchored on torts

against petitioner with the RTC for the collection of the total principal amount of
P148,500.00, which it paid to Feliciana Legaspi for the loss of the cargo, praying
that judgment be rendered in its favor and against the petitioner as follows:
1. Actual damages in the amount of P148,500.00 plus interest thereon at the

legal rate from the time of filing of this complaint until fully paid;
2. Attorneys fees in the amount of P10,000.00; and
3. Cost of suit.
The CA held that petitioner had failed to prove that the fire which consumed the
vessel and its cargo was caused by something other than its negligence in the
upkeep, maintenance and operation of the vessel.
ISSUES:
1. Is petitioner liable for the loss of the goods?
2. If it is liable, what is the extent of its liability?
HELD:
1. Yes. The uncontroverted findings of the Philippine Coast Guard show that the
M/V Tandag sank due to a fire, which resulted from a crack in the auxiliary engine
fuel oil service tank. Fuel spurted out of the crack and dripped to the heating
exhaust manifold, causing the ship to burst into flames. The crack was located on
the side of the fuel oil tank, which had a mere two-inch gap from the engine room
walling, thus precluding constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel oil service tank, the fire
could not have been caused by force majeure. Broadly speaking, force majeure
generally applies to a natural accident, such as that caused by a lightning, an
earthquake, a tempest or a public enemy. Hence, fire is not considered a natural
disaster or calamity.
Where loss of cargo results from the failure of the officers of a vessel to inspect
their ship frequently so as to discover the existence of cracked parts, that loss
cannot be attributed to force majeure, but to the negligence of those officials.
The law provides that a common carrier is presumed to have been negligent if it
fails to prove that it exercised extraordinary vigilance over the goods it
transported. Ensuring the seaworthiness of the vessel is the first step in
exercising the required vigilance. Petitioner did not present sufficient evidence
showing what measures or acts it had undertaken to ensure the seaworthiness of
the vessel. It failed to show when the last inspection and care of the auxiliary
engine fuel oil service tank was made, what the normal practice was for its
maintenance, or some other evidence to establish that it had exercised
extraordinary diligence. It merely stated that constant inspection and care were
not possible, and that the last time the vessel was dry-docked was in November
1990. Necessarily, in accordance with Article 1735 [17] of the Civil Code.
2. A stipulation that limits liability is valid Steamship Corporation v. Court of

Appeals,
as long as it is not against public policy. In Everett the Court stated:
A stipulation in the bill of lading limiting the common carriers liability for loss or
destruction of a cargo to a certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law, particularly Articles 1749 and 1750 of the
Civil Code.
Pursuant to the afore-quoted provisions of law, it is required that the stipulation

limiting the common carriers liability for loss must be reasonable and just under
the circumstances, and has been freely and fairly agreed upon.
In the present case, the stipulation limiting petitioners liability is not contrary to
public policy. In fact, its just and reasonable character is evident. The shippers/
consignees may recover the full value of the goods by the simple expedient of
declaring the true value of the shipment in the Bill of Lading. Other than the
payment of a higher freight, there was nothing to stop them from placing the
actual value of the goods therein. In fact, they committed fraud against the
common carrier by deliberately undervaluing the goods in their Bill of Lading, thus
depriving the carrier of its proper and just transport fare.
Zosimo Mercado and Nestor Angelia misled petitioner by undervaluing

the goods in their respective Bills of Lading. Hence, petitioner was
exposed to a risk that was deliberately hidden from it, and from which it
could not protect itself.
It is well to point out that, for assuming a higher risk (the alleged actual value of
the goods) the insurance company was paid the correct higher premium by
Feliciana Legaspi; while petitioner was paid a fee lower than what it was entitled
to for transporting the goods that had been deliberately undervalued by the
shippers in the Bill of Lading. Between the two of them, the insurer should bear
the loss in excess of the value declared in the Bills of Lading. This is the just and
equitable solution.
We find no cogent reason to disturb the CAs finding that Feliciana Legaspi was the
owner of the goods covered by Bills of Lading Nos. 58 and 59. Undoubtedly, the
goods were merely consigned to Nestor Angelia and Zosimo Mercado,
respectively; thus, Feliciana Legaspi or her subrogee (respondent) was entitled to
the goods or, in case of loss, to compensation therefor. There is no evidence
showing that petitioner paid her for the loss of those goods. It does not even
claim to have paid her.
On the other hand, Legaspi Marketing filed with petitioner a claim for the lost
goods under Bill of Lading No. 59, for which the latter subsequently paid P14,000.
But nothing in the records convincingly shows that the former was the owner of
the goods. Respondent was, however, able to prove that it was Feliciana Legaspi
who owned those goods, and who was thus entitled to payment for their loss.
Hence, the claim for the goods under Bill of Lading No. 59 cannot be deemed to
have been extinguished, because payment was made to a person who was not
entitled thereto.
With regard to the claim for the goods that were covered by Bill of Lading No. 58
and valued at P6,500, the parties have not convinced us to disturb the findings of
the CA that compensation could not validly take place. Thus, we uphold the
appellate courts ruling on this point.
The Petition is PARTIALLY GRANTED. The assailed Decision is MODIFIED in the

sense that petitioner is ORDERED to pay respondent the sums of P14,000 and
P6,500, which represent the value of the goods stated in Bills of Lading Nos. 59
and 58, respectively.
EASTERN SHIPPING LINES, INC. vs. INTERMEDIATE APPELLATE COURT
G.R. No. L-69044 May 29, 1987
MELENCIO-HERRERA, J.:
FACTS:
These two cases, both for the recovery of the value of cargo insurance, arose
from the same incident, the sinking of the M/S ASIATICA when it caught fire,
resulting in the total loss of ship and cargo. A vessel operated by petitioner
Eastern Shipping Lines, Inc loaded at Kobe, Japan for transportation to
Manilacargoes consigned to Philippine Blooming Mills Co., Inc, and consigned to
Central Textile Mills, Inc. Both sets of goods were insured against marine risk for
their stated value. Enroute for Kobe, Japan, to Manila, the vessel caught fire and
sank, resulting in the total loss of ship and cargo. The respective respondent
Insurers paid the corresponding marine insurance values to the consignees
concerned and were thus subrogated unto the rights of the latter as the insured.
Respondent insurance companies filed suit against Petitioner Carrier for the
recovery of the insured value of the cargo lost with the then Court of First
Instance of Manila imputing unseaworthiness of the ship and non-observance of
extraordinary diligence by petitioner Carrier.
Petitioner Carrier denied liability on the principal grounds that the fire which
caused the sinking of the ship is an exempting circumstance under Section 4(2)
(b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire
is established, the burden of proving negligence of the vessel is shifted to the
cargo shipper.
ISSUE:
(1) Which law should govern — the Civil Code provisions on Common carriers or
the Carriage of Goods by Sea Act?
(2) Who has the burden of proof to show negligence of the carrier?
HELD:
(1)The law of the country to which the goods are to be transported governs the
liability of the common carrier in case of their loss, destruction or
deterioration. As the cargoes in question were transported from Japan to the
Philippines, the liability of Petitioner Carrier is governed primarily by the Civil
Code. 5 However, in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of Commerce and by
special laws. 6 Thus, the Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code.
(2)Under the Civil Code, common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over goods, according to all the circumstances of each case. 8Common
carriers are responsible for the loss, destruction, or deterioration of the goods
unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
xxx xxx xxx
Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability
under the phrase "natural disaster or calamity. " However, we are of the opinion
that fire may not be considered a natural disaster or calamity. This must be so as
it arises almost invariably from some act of man or by human means. 10 It does
not fall within the category of an act of God unless caused by lightning 11 or by
other natural disaster or calamity. 12 It may even be caused by the actual fault or
privity of the carrier. In this case, the respective Insurers. as subrogees of the
cargo shippers, have proven that the transported goods have been lost. Petitioner
Carrier has also proved that the loss was caused by fire. The burden then is upon
Petitioner Carrier to proved that it has exercised the extraordinary diligence
required by law.
ESTRELLITA M. BASCOS vs. COURT OF APPEALS
G.R. No. 101089. April 7, 1993
CAMPOS, JR.
FACTS:
CIPTRADE entered into a hauling contract with Jibfair Shipping Agency
Corporation whereby the former bound itself to haul the latter's 2,000 m/tons of
soya bean meal from Magallanes Drive, Del Pan, Manila to the warehouse of
Purefoods Corporation in Calamba, Laguna. To carry out its obligation, CIPTRADE,
through Rodolfo Cipriano, subcontracted with Estrellita Bascos (petitioner) to
transport and to deliver 400 sacks of soya bean meal worth P156,404.00 from the
Manila Port Area to Calamba, Laguna at the rate of P50.00 per metric ton.
Petitioner failed to deliver the said cargo. As a consequence of that failure,
Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance
with the contract which stated that:
In her answer, petitioner interposed the following defenses: that there was no
contract of carriage since CIPTRADE leased her cargo truck to load the cargo from
Manila Port Area to Laguna; that CIPTRADE was liable to petitioner in the amount
of P11,000.00 for loading the cargo; that the truck carrying the cargo was
hijacked along Canonigo St., Paco, Manila on the night of October 21, 1988; that
the hijacking was immediately reported to CIPTRADE and that petitioner and the
police exerted all efforts to locate the hijacked properties; that after preliminary
investigation, an information for robbery and carnapping were filed against Jose
Opriano, et al.; and that hijacking, being a force majeure, exculpated petitioner
from any liability to CIPTRADE.
ISSUE:
(1) Was petitioner a common carrier?
(2) Was the hijacking referred to a force majeure?
HELD:
(1)Petitioner is a common carrier. Article 1732 of the Civil Code defines a
common carrier as "(a) person, corporation or firm, or association engaged in the
business of carrying or transporting passengers or goods or both, by land, water
or air, for compensation, offering their services to the public." The test to
determine a common carrier is "whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as
his occupation rather than the quantity or extent of the business transacted." In
this case, petitioner herself has made the admission that she was in the trucking
business, offering her trucks to those with cargo to move. Judicial admissions are
conclusive and no evidence is required to prove the same.
The holding of the Court in De Guzman vs. Court of Appeals is instructive. In
referring to Article 1732 of the Civil Code, it held thus: "The above article makes
no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary
activity (in local idiom, as a "sideline"). Article 1732 also carefully avoids making
any distinction between a person or enterprise offering transportation service on
a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguished between a
carrier offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a narrow
segment of the general population. We think that Article 1732 deliberately
refrained from making such distinctions."
(2)NO. In this case, petitioner alleged that hijacking constituted force majeure
which exculpated her from liability for the loss of the cargo. In De Guzman vs.
Court of Appeals, the Court held that hijacking, not being included in the
provisions of Article 1734, must be dealt with under the provisions of Article 1735
and thus, the common carrier is presumed to have been at fault or negligent. To
exculpate the carrier from liability arising from hijacking, he must prove that the
robbers or the hijackers acted with grave or irresistible threat, violence, or force.
This is in accordance with Article 1745 of the Civil Code which provides: "Art.
1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy . . . (6) That the common
carrier's liability for acts committed by thieves, or of robbers who do not act with
grave or irresistible threat, violences or force, is dispensed with or diminished"; In
the same case, the Supreme Court also held that: "Under Article 1745 (6) above,
a common carrier is held responsible — and will not be allowed to divest or to
diminish such responsibility — even for acts of strangers like thieves or robbers,
except where such thieves or robbers in fact acted "with grave of irresistible
threat, violence of force," We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are reached where
the goods are lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force."
GANZON vs CA
FACTS:
Gelacio Tumambing contracted the services of of Mauro B. Ganzon to haul 305
tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the light
LCT “Batman”. Gelacio delivered the scrap iron to Filomeno Niza, captain of the
lighter, for loading which actually begun on the same date by the crew of the
lighter under the captain’s supervisor. When about half of the scrap iron was
already loaded, Mayor Jose Advincula of Mariveles, Bataan arrived and demanded
P5000 from Gelacio. Upon resisting, the Mayor fired at Gelacio, as a result Gelacio
had to be taken to the hospital. The loading was interrupted but after sometime
the loading of the scrap iron was resumed.
On December 4, 1956, Acting Mayor Basilio Rub, accompanied by 3 policemen,
ordered captain Filomeno Niza and his crew to dump the scrap iron where the
lighter was docked. Later on, Acting Mayor Rub had taken custody of the scrap
iron.
Petitioner Ganzon insists that the scrap iron had not been unconditionally
placed under his custody and control to make him liable. However, he completely
agrees with the respondent Court's finding that on December 1, 1956, the private
respondent delivered the scraps to Captain Filomeno Niza for loading in the
lighter “Batman,”. That the petitioner, thru his employees, actually received the
scraps is freely admitted. Further, petitioner maintains that he is exempt from any
liability because the loss of the scraps was due mainly to the intervention of the
municipal officials of Mariveles which constitutes a caso fortuito as defined in
Article 1174 of the Civil Code.
ISSUE:
W/N Ganzon should be held liable under the contract of carriage
HELD:
YES. Ganzon thru his employees, actually received the scraps is freely
admitted. By the said act of delivery, the scraps were unconditionally placed in
the possession and control of the common carrier, and upon their receipt by the
carrier for transportation, the contract of carriage was deemed perfected.
Consequently, the petitioner-carrier's extraordinary responsibility for the loss,
destruction or deterioration of the goods commenced.Pursuant to Art. 1736, such
extraordinary responsibility would cease only upon the delivery, actual or
constructive, by the carrier to the consignee, or to the person who has a right to
receive them. The fact that part of the shipment had not been loaded on board
the lighter did not impair the said contract of transportation as the goods
remained in the custody and control of the carrier, albeit still unloaded.
We cannot sustain the theory of caso fortuito - "order or act of competent
public authority”. There is no showing of authority or power of the acting mayor
to issue such an order. Neither has it been shown that the cargo of scrap iron
belonged to the Municipality of Mariveles. Ganzon was not duty bound to obey the
illegal order to dump into the sea the scrap iron. Moreover, there is absence of
sufficient proof that the issuance of the same order was attended with such force
or intimidation as to completely overpower the will of the petitioner's employees.
The mere difficulty in the fulfilment of the obligation is not considered force
majeure.
[G.R. No. 135645. March 8, 2002]
THE PHILIPPINE AMERICAN GENERAL INSURANCE CO.,
INC., petitioner, vs. MGG MARINE SERVICES, INC. and DOROTEO
GAERLAN, respondents.
KAPUNAN, J.:
DOCTRINE: In order that a common carrier may be absolved from liability where
the loss, destruction or deterioration of the goods is due to a natural disaster or
calamity, it must further be shown that the such natural disaster or calamity was
the proximate and only cause of the loss; there must be an entire exclusion of
human agency from the cause of the injury of the loss.
FACTS:
San Miguel Corporation insured several beer bottle cases with petitioner Philippine
American General Insurance Company. The cargo were loaded on board the M/V
Peatheray Patrick-G to be transported from Mandaue City to Surigao del Sur. The
vessel was owned by Gaerlan with MCG Marine Services, Inc. as agent.
After having been cleared by the Coast Guard the previous day, the vessel left the
port. The weather was calm when the vessel started its voyage. The following
day, M/V Peatheray Patrick-G listed and subsequently sunk. As a consequence
thereof, the cargo belonging to San Miguel Corporation was lost.
San Miguel Corporation claimed the amount of its loss from petitioner. Petitioner
paid San Miguel the full amount pursuant to the terms of their insurance contract.
Petitioner as subrogee of San Miguel filed with the RTC a case for collection
against private respondents to recover the amount it paid to San Miguel for the
loss of the latter’s cargo.
The Board of Marine Inquiry conducted its own investigation. It exonerated the
captain and crew for any administrative liability. It found that the cause of the
sinking of the vessel was the existence of strong winds and enormous waves in
Surigao del Sur, a fortuitous event that could not have been forseen at the time
the M/V Peatheray Patrick-G left the port of Mandaue City. It was further held by
the Board that said fortuitous event was the proximate and only cause of the
vessels sinking.
RTC DECISION: Private respondents solidarily liable for the loss of San Miguel
Corporation’s cargo
Private respondents appealed to the CA.
CA DECISION: Reversed the RTC ruling. It held that private respondents could
not be held liable for the loss of San Miguel Corporation’s cargo because said loss
occurred as a consequence of a fortuitous event, and that such fortuitous event
was the proximate and only cause of the loss.
ISSUE:
W/N private respondents are liable for the loss of the cargo
HELD: NO.
Common carriers, from the nature of their business and for reasons of public
policy, are mandated to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by 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 transported by them are
lost, destroyed or if the same deteriorated.
However, this presumption of fault or negligence does not arise in the cases
enumerated under Article 1734 of the Civil Code: Common carriers are
responsible for the loss, destruction, or deterioration of the goods, unless the
same is due to any of the following causes only: (1) Flood, storm, earthquake,
lightning or other natural disaster or calamity; xxx
In order that a common carrier may be absolved from liability where the loss,
destruction or deterioration of the goods is due to a natural disaster or calamity, it
must further be shown that the such natural disaster or calamity was the
proximate and only cause of the loss; there must be an entire exclusion of
human agency from the cause of the injury of the loss.
The findings of the Board of Marine Inquiry indicate that the attendance of strong
winds and huge waves was indeed fortuitous. An event is considered fortuitous if
the following elements concur: xxx (a) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtor to comply with his obligations,
must be independent of human will; (b) it must be impossible to foresee the
event which constitutes the caso fortuito, or if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it impossible
for the debtor to fulfill his obligation in a normal manner; and (d) the obligor
must be free from any participation in the aggravation of the injury resulting to
the creditor. Xxx
In the case at bar, it was adequately shown that before the M/V Peatheray
Patrick-G left the port, the Captain confirmed with the Coast Guard that the
weather condition would permit the safe travel of the vessel. Thus, he could not
be expected to have foreseen the unfavorable weather condition that awaited the
vessel. It was the presence of the strong winds and enormous waves which
caused the vessel to list, keel over, and consequently lose the cargo contained
therein. It likewise found that there was no negligence on the part of the crew of
the M/V Peatheray Patrick-G.
Since the presence of strong winds and enormous waves was shown to be the
proximate and only cause of the sinking of the M/V Peatheray Patrick-G and the
loss of the cargo belonging to San Miguel Corporation, private respondents cannot
be held liable for the said loss.
CALVO VS UCPB
FACTS:
Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services,
Inc. (TCTSI), a sole proprietorship customs broker. At the time material to this
case, petitioner entered into a contract with San Miguel Corporation (SMC) for
the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft
liner board from the Port Area in Manila to SMC’s warehouse at the Tabacalera
Compound, Romualdez St., Ermita, Manila. The cargo was insured by respondent
UCPB General Insurance Co., Inc. 
 
On July 14, 1990, the shipment in question, contained in 30 metal vans, arrived
in Manila on board “M/V Hayakawa Maru” and, after 24 hours, were unloaded
from the vessel to the custody of the arrastre operator, Manila Port Services, Inc.
From July 23 to July 25, 1990, petitioner, pursuant to her contract with SMC,
withdrew the cargo from the arrastre operator and delivered it to SMC’s
warehouse in Ermita, Manila. On July 25, 1990, the goods were inspected by
Marine Cargo Surveyors, who found that 15 reels of the semi-chemical fluting
paper were “wet/stained/torn” and 3 reels of kraft liner board were likewise torn.
The damage was placed at P93,112.00. 
 
SMC collected payment from respondent UCPB under its insurance contract for
the aforementioned amount. In turn, respondent, as subrogee of SMC, brought
suit against petitioner in the Regional Trial Court, Branch 148, Makati City, which,
on December 20, 1995, rendered judgment finding petitioner liable to respondent
for the damage to the shipment.
ISSUE:
WON Calvo is liable for the damages
HELD:
Yes. She claims that the “spoilage or wettage” took place while the goods were in
the custody of either the carrying vessel which transported the cargo to Manila, or
the arrastre operator, to whom the goods were unloaded and who allegedly kept
them in open air for nine days notwithstanding the fact that some of the
containers were deformed, cracked, or otherwise damaged, as noted in the
Marine Survey Report. From the [Survey Report], it [is] clear that the shipment
was discharged from the vessel to the arrastre, Marina Port Services Inc., in good
order and condition as evidenced by clean Equipment Interchange Reports
(EIRs). Had there been any damage to the shipment, there would have been a
report to that effect made by the arrastre operator. The cargoes were withdrawn
by the defendant-appellant from the arrastre still in good order and condition as
the same were received by the former without exception, that is, without any
report of damage or loss. Surely, if the container vans were deformed, cracked,
distorted or dented, the defendant-appellant would report it immediately to the
consignee or make an exception on the delivery receipt or note the same in the
Warehouse Entry Slip (WES). None of these took place. Nor is there basis to
exempt petitioner from liability under Art. 1734(4), which provides —
Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only: 
(4) The character of the goods or defects in the packing or in the containers
For this provision to apply, the rule is that if the improper packing or, in this case,
the defect/s in the container, is/are known to the carrier or his employees or
apparent upon ordinary observation, but he nevertheless accepts the same
without protest or exception notwithstanding such condition, he is not relieved of
liability for damage resulting therefrom. In this case, petitioner accepted the
cargo without exception despite the apparent defects in some of the container
vans.
BELGIAN OVERSEAS CHARTERING VS. PHIL. FIRST INSURANCE CO.
383 SCRA 23
FACTS:
Eastern Shipping Lines Inc shipped uncoated 7-wire stress relieved wire strand for
prestressed concrete were shipped on board the vessel "Japri Venture". Upon
arrival at the port of Manila, it discharged the cargo to the custody of the
defendant E. Razon, Inc. from whom the consignee's customs broker received it
for delivery to the consignee's warehouse. First Nationwide Assurance,
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. The
insurer now seeks to recover from the defendants what it has indemnified the
consignee. The petitioner protested alleging that it should not be hel liable to
answer for damages for the event that caused the rusting of the goods was due
to the “encountered very rough seas and stormy weather” classified as force
majeure, hence relieving them of any liability. Aggrieved, respondent filed a case
against petitioner.
RTC dismissed. CA ruled that Belgian liable. Failed to overcome presumption of

negligence. Belgian inadequately proven petitioners' claim that the loss or the
deterioration of the goods was due to pre-shipment damage.
ISSUE:
W/N petitioner was negligent and should be held liable for the payment of
damages.
HELD:
YES. 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 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.
ABOITIZ SHIPPING CORP. V. COURT OF APPEALS
G.R. NO. 84458; NOVEMBER 6, 1989
REGALADO, J.
FACTS:
Viana bought a ticket boarded the vessel M/V Antonia, owned by petitioner,
at Occidental Mindoro bound for Manila. Upon arrival at Manila, a gangplank was
provided to disembark the vessel. Instead of using the gangplank, Viana
disembarked on the third deck which was on the level of the pier. An hour after
the passengers disembarked, Pioneer Stevedoring Corp. based on their
agreement with petitioner, started unloading the cargoes with a crane Viana
returned to the vessel having remembered that he left some of his cargoes, and
while doing so he was hit by the loaded crane, pinning him between the side of
the vessel and the crane, causing his death. Viana’s heirs filed a complaint for
damages against petitioner for breach of contract of carriage. Aboitiz denied
responsibility contending that at the time of the accident, the vessel was
completely under the control of respondent Pioneer, as its exclusive stevedoring
contractor.
Thereafter, Aboitiz, filed a third party complaint against Pioneer imputing
liability for the death by reason of the negligence of its employee. Pioneer raised
the defense that since the action originally filed was for breach of contract of
carriage, it cannot be included since it is not a party thereto. The lower court
ruled that Aboitiz should pay the Vianas for the damages. On appeal, it was the
lower court’s ruling was affirmed by the CA, causing petitioner to file the present
petition
ISSUE:
Whether or not Aboitiz should be liable for damages arising from the death
of Viana.
HELD:
Yes. It is of common knowledge that, by the very nature of petitioner’s
business as a shipper, the passengers of vessels are allotted a longer period of
time to disembark from the ship than other common carriers such as a passenger
bus. With respect to the bulk of cargoes and the number of passengers it can
load, such vessels are capable of accommodating a bigger volume of both as
compared to the capacity of a regular commuter bus. Consequently, a ship
passenger will need at least an hour as is the usual practice, to disembark from
the vessel and claim his baggage whereas a bus passenger can easily get off the
bus and retrieve his luggage in a very short period of time. When the accident
occurred, the victim was in the act of unloading his cargoes, which he had every
right to do, from petitioner’s vessel. As earlier stated, a carrier is duty bound not
only to bring its passengers safely to their destination but also to afford them a
reasonable time to claim their baggage. The victim had to claim his baggage
which was possible only one (1) hour after the vessel arrived since it was
admittedly standard procedure in the case of petitioner’s vessels that the
unloading operations shall start only after that time. Consequently, under the
foregoing circumstances, the victim is still deemed a passenger of said carrier at
the time of his tragic death.
Under the law, common carriers are, from the nature of their business and
for reasons of public policy, 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. More, particularly, 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. Thus, where a passenger dies or is injured,
the common carrier is presumed to have been at fault or to have acted
negligently. This gives rise to an action for breach of contract of carriage where all
that is required of plaintiff is to prove the existence of the contract of carriage and
its non-performance by the carrier, that is, the failure of the carrier to carry the
passenger safely to his destination, which necessarily includes its failure to
safeguard its passenger with extraordinary diligence while such relation subsists.
The presumption is, therefore, established by law that in case of a
passenger’s death or injury the operator of the vessel was at fault or negligent,
having failed to exercise extraordinary diligence, and it is incumbent upon it to
rebut the same. This is in consonance with the avowed policy of the State to
afford full protection to the passengers of common carriers which can be carried
out only by imposing a stringent statutory obligation upon the latter.
Concomitantly, this Court has likewise adopted a rigid posture in the application
of the law by exacting the highest degree of care and diligence from common
carriers, bearing utmost in mind the welfare of the passengers who often become
hapless victims of indifferent and profit-oriented carriers.
While the victim was admittedly contributorily negligent, still petitioner’s
aforesaid failure to exercise extraordinary diligence was the proximate and direct
cause of, because it could definitely have prevented, the former’s death.
DANGWA TRANSPORTATION CO., INC V COURT OF APPEALS
GR NO. 95582
OCTOBER 7, 1991
FACTS:
On March 25, 1985, Theodore Lardizabal was driving a passenger bus belonging
to the petitioner corporation in a reckless and imprudent manner and without due
regard to traffic rules and regulations and safety to persons and property. Upon
its arrival between Bunkhouses 53 and 54, it went on full stop as one of its
passengers alighted. Thereafter, the victim Pedro Cudiamat boarded the same.
However, the sudden acceleration of the bus caused the victim to fall from the
platform and was run over by the bus.
The victim was not brought immediately to the nearest hospital. Instead, the
driver first brought his other passengers and cargo to their respective
destinations.
As a result, the heirs of Cudiamat filed a complaint for damages against the
petitioners. Petitioners, on the other hand, contended that the driver and
conductor had no knowledge that the victim would ride on the bus, since the
latter had supposedly not manifested his intention to board the same.
ISSUE:
Whether or not the petitioners are negligent and liable for the damages claimed
HELD:
Yes. A public utility bus, once it stops, is in effect making a continuous offer to
bus riders. Hence, it becomes the duty of the driver and the conductor, every
time the bus stops, to do no act that would have the effect of increasing the peril
to a passenger while he was attempting to board the same. The premature
acceleration of the bus in this case was a breach of such duty.
The victim herein, by stepping and standing on the platform of the bus, is already
considered a passenger and is entitled to all the rights and protection pertaining
to such a contractual relation. Hence, it has been held that the duty which the
carrier of passengers owes to its patrons extends to persons boarding the cars as
well to those alighting therefrom. Moreover, the circumstances under which the
driver and the conductor failed to bring the gravely injured victim immediately to
the hospital for medical treatment is a patent and incontrovertible proof of their
negligence.
LRTA VS. NAVIDAD
FACTS:
Drunk Nicanor Navidad entered the LRT station after purchasing a “token”. While
Nicanor was standing at the platform near the LRT tracks, the guard Escartin
approached him. Due to misunderstanding, they had a fist fight Nicanor fell on
the tracks and killed upon being hit by a moving train operated by Rodolfo Roman
The widow of Nicanor, for damages against Escartin, Roman, LRTA, agency of
security guards. LRTA and Roman filed a counter-claim against Nicanor and a
cross-claim against Escartin and Prudent Prudent: denied liability – averred that it
had exercised due diligence in the selection and surpervision of its security guards
while LRTA and Roman presented evidence. Prudent and Escartin filed for
demurrer contending that Navidad had failed to prove that Escartin was negligent
in his assigned task
ISSUE:
W/N LRTA and Roman should be liable according to the contract of carriage
HELD:
NO. 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 off
exercising utmost diligence in ensuring the safety of passengers
In case of death or injuries to passengers, common carriers are presumed to

have been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence. This liability of the common carriers does NOT
cease upon proof that they exercised all the diligence of a good father of a family
in the selection and of their employees
Carriers are presumed to be at fault or been negligent and by simple proof of

injury, the passenger is relieved of the duty to establish the fault or negligence of
the carrier and the burden shifts upon the carrier to prove that the injury is due
to an unforeseen event or to force majeure
Where it hires its own employees or avail itself of the services of an outsider or an
independent firm to undertake the task, the common carrier is NOT relieved of its
responsibilities under the contract of carriage.
However, factual finding of the CA is that there is no link between the death of
Nicanor for the reason that the negligence of Escartin was NOT proven.
Also, NO showing that Roman himself is guilty of any culpable act or omission, he
must also be absolved from liability. Contractual tie bet. LRT and Nicanor is NOT
itself a juridical relation bet. Nicanor and Roman. While Roman can be liable only
for his own fault or negligence.
LA MALLORCA V. CA
G.R. NO. L-20761, JULY 27, 1966
FACTS:
Plaintiffs, Mariano Beltran and his wife, together with their three minor
daughters boarded the Pambusco Bus, owned and operated by the defendant, at
San Fernando bound for Anao, Mexico, Pampanga. After about an hour’s trip, the
bus reached Anao where it stopped to allow the passengers, among whom were
the plaintiffs and their children to get off. Mariano, carrying some of their
baggage was the first to get down the bus, followed by his wife and children.
Mariano led his companions to a shaded spot on the left pedestrian side of the
road. Afterwards, he returned to the bus in controversy to get his bayong, which
he had left behind. His daughter followed him unnoticed. While Mariano was on
the running board of the bus waiting for the conductor to hand him his bayong,
the bus, whose motor was not shut off while unloading, suddenly started moving
forward, notwithstanding the fact that the conductor was still attending to the
baggage. The bus stopped about 10 meters from point where plaintiffs had gotten
off. The bus was again in motion, so Mariano immediately jumped from the
running board without getting his bayong. He landed on the side of the road
almost board in front of the shaded place where he left his wife and his children.
At that time, he saw people beginning to gather around the body of a child lying
prostrate on the ground, her skull crushed, and without life. The child was none
other than his daughter Raquel. For the death of the said child, plaintiffs comment
the suit against the defendant to recover from the latter damages.
ISSUE:
Whether or not the child was no longer the passenger of the bus involved in
the incident, and therefore, the contract of carriage was already terminated?
HELD:
There can be no controversy that as far as the father is concerned, when he
returned to the bus for his bayong which was not unloaded, the relation of
passenger and carrier between him and the petitioner remained subsisting. The
relation of carrier and passenger does not necessarily cease where the latter,
after alighting from the car, aids the carrier’s servant or employee in removing his
baggage from the car.
It is a rule that the relation of carrier and passenger does not cease the
moment the passenger alights from the carrier’s vehicle at a place selected by the
carrier at the point of destination but continues until the passenger has had a
reasonable time or a reasonable opportunity to leave the carrier’s premises.
The father returned to the bus to get his baggage which was not unloaded.
Raquel must have followed her father. However, although the father was still on
the running board of the bus awaiting for the conductor to hand him the bag or
bayong, the bus started to run, so that even he had jumped down from the
moving vehicle. It was that this instance that the child, who must be near the
bus, was run over and killed. In the circumstances, it cannot be claimed that the
carrier’s agent had exercised the “utmost diligence” of a “very cautious person”
required by Article 1755 of the Civil Code to be observed by a common carrier in
the discharge of its obligation to transport safely its passengers. The driver,
although stopping the bus, nevertheless did not put off the engine. He started to
run the bus even before the conductor gave him the signal to go and while the
latter was still unloading part of the baggage of the passengers Beltran and
family. The presence of the said passengers near the bus was not unreasonable
and they are, therefore, to be considered still as passengers of the carrier,
entitled to the protection under their contract of carriage.
JAPAN AIRLINES VS. COURT OF APPEALS
G.R. No. 118664; August 7, 1998
ROMERO, J.
FACTS:
Private respondents respectively boarded JAL flights in San Francisco and Los
Angeles, California bound for Manila. As an incentive for travelling on the said
airline, both flights were to make an overnight stopover at Narita, Japan, at the
airlines' expense, thereafter proceeding to Manila the following day. Due to the
Mt. Pinatubo eruption, private respondents’ trip to Manila was cancelled. JAL
rebooked all the Manila-bound passengers and paid for the hotel expenses of
their unexpected overnight stay. The flight of private respondents was again
cancelled due to NAIA’s indefinite closure. JAL informed the respondents that it
would no longer defray their hotel and accommodation expense during their stay
in Narita. The respondents were forced to pay for their accommodations and meal
expenses for 5 days. Private respondents commenced an action for damages
against JAL. The trial court and CA rendered judgment in favor of the private
respondents.
ISSUE:
Whether or not JAL, as a common carrier has the obligation to shoulder the hotel
and meal expenses of its stranded passengers until they have reached their final
destination, even if the delay were caused by force majeure
HELD:
No. When a party is unable to fulfill his obligation because of force majeure, the
general rule is that he cannot be held liable for damages for non-performance.
When JAL was prevented from resuming its flight to Manila due to the effects of
the eruption, whatever losses or damages in the form of hotel and meal expenses
the stranded passengers incurred cannot be charged to JAL. The predicament of
the private respondents was not due to the fault or negligence of JAL. Airline
passengers must take such risks incident to the mode of travel. Common carriers
are not the insurer of all risks.
While JAL was no longer required to defray private respondents' living expenses
during their stay in Narita on account of the fortuitous event, JAL had the duty to
make the necessary arrangements to transport private respondents on the first
available connecting flight to Manila. However, it failed to look after the comfort
and convenience of its passengers when it made the passengers arrange their
flight back to Manila on their own and after waiting in the airport for a whole day.
The award of nominal damages is in order.
PAL v. CA; 266 SCRA 423; GR 92501; March 6, 1996
FACTS:
At about 5:30 a.m. on 17 April 1985, Isidro Co, accompanied by his wife and son,
arrived at the Manila International Airport aboard the airline’s PAL Flight 107 from
San Francisco, California, U.S.A. Soon after embarking, Co proceeded to the
baggage retrieval area to claim his 9 pieces of checked-in luggage with the
corresponding claim checks in his possession.
Co found eight of his luggage, but despite diligent search, he failed to locate the
9th luggage. Co’s lost luggage was a Samsonite suitcase measuring about 62
inches in length, worth about US $200.00 and containing various personal effects
purchased by Co and his wife during their stay in the United States and similar
other items sent by their friends abroad to be given as presents to relatives in the
Philippines.
Co then immediately notified PAL through its employee, Willy Guevarra, who was
then in charge of the PAL claim counter at the airport. Willy Guevarra filled up a
printed form known as a Property Irregularity Report, acknowledging one of the
Co’s luggages to be missing, and signed it after asking Co himself to sign the
same document. In accordance with his procedure in cases of this nature, Willy
Guevarra asked Co to surrender to him the nine claim checks corresponding to
the nine luggages, i.e., including the one that was missing. Co, on several
occasions, unrelentingly called at PAL’s office in order to pursue his complaint
about his missing luggage but to no avail.
Thus, on 15 April 1985, Co through his lawyer wrote a demand letter to PAL:
through Rebecca V. Santos, its manager for Central Baggage Services. On 17 April
1985, Rebecca Santos replied to the demand letter acknowledging ‘that to date
we have been unable to locate your client’s baggage despite our careful search”
and requesting Co’s counsel to “please extend to him our sincere apologies for the
inconvenience he was caused by this unfortunate incident”. Despite the letter,
however, PAL never found Co’s missing luggage or paid its corresponding value.
On 3 May 1985, Co filed a complaint against PAL for damages. The Regional Trial
Court of Pasay City found PAL liable, and rendered judgment on 3 June 1986,
sentencing PAL to pay Co the amounts of (1) P42,766.02 by way of actual
damages; (2) P20,000.00 by way of exemplary damages; (3) P10,000.00 as
attorney’s fees; all in addition to the costs or the suit.” The court also dismissed
PAL’s counterclaim for lack of merit.
On appeal, and on 19 July 1989, the Court of Appeals affirmed in toto the trial
court’s award. Hence, the petition for review.
ISSUE:
W/N PAL should be liable for damages
HELD:
YES. In Alitalia vs. IAC (192 SCRA 9, 18, citing Pan American World Airways, Inc.
vs. IAC, 164 SCRA 268), the Warsaw Convention limiting the carrier’s liability was
applied because of a simple loss of baggage without any improper conduct on the
part of the officials or employees of the airline, or other special injury sustained
by the passengers. The petitioner therein did not declare a higher value for his
luggage, much less did he pay an additional transportation charge. In Samar
Mining Company, Inc. vs. Nordeutscher Lloyd (132 SCRA 529), the Court ruled
that “the liability of the common carrier for the loss, destruction or deterioration
of goods transported from a foreign country to the Philippines is governed
primarily by the New Civil Code. In all matters not regulated by said Code, the
rights and obligations of common carriers shall be governed by the Code of
Commerce and bySpecial Laws.” Herein, since the passenger’s destination was
the Philippines, Philippine law governs the liability of the carrier for the loss of the
passenger’s luggage.
Article 1733 provides 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 and for the safety of the passengers transported by
them, according to all the circumstances of each case.”
Article 1735 provides that “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.
Article 1753 provides that “The law of the country to which the goods are to be
transported shall govern the liability of the common carrier for their loss,
destruction or deterioration.”
There is no error in disregarding limits of liability under Warsaw Convention
Herein, PAL failed to overcome, not only the presumption, but more importantly,
Co’s evidence, proving that the carrier’s negligence was the proximate cause of
the loss of his baggage. Furthermore, PAL acted in bad faith in faking a retrieval
receipt to bail itself out of having to pay Co’s claim. The appellate cout therefore
did not err in disregarding the limits of liability under the Warsaw Convention. The
award of exemplary damages and attorney’s fees to Co was justified.
FRANKLIN G. GACAL and CORAZON M. GACAL, the latter assisted by her
husband, FRANKLIN G. GACAL 
vs. 
PHILIPPINE AIR LINES, INC., and THE HONORABLE PEDRO SAMSON C.
ANIMAS, in his capacity as PRESIDING JUDGE of the COURT OF FIRST
INSTANCE OF SOUTH COTABATO, BRANCH I
FACTS:
1. Plaintiffs were then passengers boarding defendant's BAC 1-11 at Davao
Airport for a flight to Manila, not knowing that on the same flight, Macalinog,
Taurac Pendatum, Nasser Omar, Liling Pusuan Radia, Dimantong Dimarosing and
Mike Randa, members of the MNLF, were their co-passengers; armed with
grenades and caliber pistols.
2. At 2:30 in the afternoon, the hijackers announced the hijacking of the aircraft
and directed its pilot to fly first to Libya but because of fuel limitations, the pilot
was ordered to fly to Sabah. They directed the aircraft to land at Zamboanga for
refueling. When the plane began to taxi at the runway, it was met by the military.
3. The commander demanded that a DC-aircraft take them to Libya with the
President of the company as hostage and that they be given $375,000 and six
armalites, otherwise they will blow up the plane.
4. An armored car bumped the stairs which commenced the battle between the
military and the hijackers which led to the liberation of the surviving crew and the
passengers, 10 passengers and 3 hijackers were dead on the spot 3 hijackers
captured.
5. The plaintiffs filed an cation for damages against PAL, alleged that the main
cause of the unfortunate incident is the gross, wanton and inexcusable negligence
of Airline personnel in their failure to frisk the passengers in order to discover
hidden weapons in the bodies of the hijackers. The trial court dismissed the
complaints finding that all the damages were attributed to force majeure.
ISSUE:
Whether or not hijacking or air piracy during martial law and under the
circumstances obtaining herein, is a caso fortuito or force majeure which would
exempt an aircraft from payment of damages to its passengers whose lives were
put in jeopardy and whose personal belongings were lost during the incident.
HELD:
In order to constitute a caso fortuito or force majeure that would exempt a
person from liability, it is necessary that the following elements must concur:
(a) the cause of the breach of the obligation must be independent of the human
will (the will of the debtor or the obligor);
(b) the event must be either unforeseeable or unavoidable;
(c) the event must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner; and
(d) the debtor must be free from any participation in, or aggravation of the injury
to the creditor.
Applying the above guidelines to the case at bar, the failure to transport
petitioners safely from Davao to Manila was due to the skyjacking incident staged
by six (6) passengers of the same plane, all members of the Moro National
Liberation Front (MNLF), without any connection with private respondent, hence,
independent of the will of either the PAL or of its passengers. The incident in
question occurred during Martial Law where there was a military take-over of
airport security including the frisking of passengers and the inspection of their
luggage preparatory to boarding domestic and international flights.
Otherwise stated, these events rendered it impossible for PAL to perform its
obligations in a nominal manner and obviously it cannot be faulted with
negligence in the performance of duty taken over by the Armed Forces of the
Philippines to the exclusion of the former.
Finally, there is no dispute that the fourth element has also been satisfied.
Consequently the existence of force majeure has been established exempting
respondent PAL from the payment of damages to its passengers who suffered
death or injuries in their persons and for loss of their baggages.
FORTUNE EXPRESS vs. COURT OF APPEALS and PAULIE CAORONG and
HER MINOR CHILDREN, 305 SCRA 14 (1999)
FACTS:
• Pauli Caurong filed a complaint for damages against petitioner, a bus
company operating in Northern Mindanao, for the death of her husband,
Atty. Talib Caorong. Atty. Caurong was shot by Maranaos in an ambush
involving said bus.
• BACKGROUND OF THE STORY:
o In November 1989, a bus of Fortune was involved in an accident with
a passenger jeepney resulting in the deaths of several passengers.
o Crisanto Generalao, a local field agent of the Philippine Constabulary,
conducted an investigation on the accident and found that the owner
of the jeepney was a Maranao and that several Maranaos were
planning to burn some of Fortune’s buses for revenge.
o Generalao informed Diosdado Bravo, operations manager of Fortune,
about the plot, and Bravo assured him that they would take the
necessary precautions for safety.
o Several days later, Atty. Caorong was on board a bus to Iligan when
three Maranaos went on board the vehicle. The leader of the group
ordered the passengers to leave the bus. Atty. Caorong later went
back to get something when he saw that the Maranaos were already
pouring gasoline on the bus and on the driver. Atty. Caorong pleaded
for the life of the driver, after which the driver jumped out of the
vehicle. Caorong was shot to death as a result.
• RTC dismissed the complaint:
o Fortune was not negligent. Disregarding the suggestion of providing
its buses with security guards is not an omission of petitioner’s duty.
The evidence showed that the assailants did not intend to harm the
passengers. The death of Atty. Caorong was an unexpected and
unforeseen occurrence beyond petitioner’s control.
• CA REVERSED RTC’s ruling:
o Fortune is negligent. Despite the tip to Manager Bravo of the
devious plan by several Maranaos, management did not do not take
any safety precautions at all.
o One available safeguard that could have absolved Fortune from
liability was frisking of incoming passengers en route to
dangerous areas and bag inspection at the terminals, which
Fortune failed to do. The frisking system is not novel in sensitive and
dangerous places. Many companies adopt this measure. Fortune did
“absolutely nothing”.
ISSUE:
1. W/N Petitioner is liable for the death of Atty. Caorong by failing to take
necessary precautions to ensure the safety of its passengers;
2. W/N the attack by the Maranaos constituted causo fortuito?
HELD:
Petitioner is liable. Attack was not a fortuitous event.
• Article 1763 holds common carriers liable for the injuries to passengers
caused by the wilful act of other passengers, if its employees failed to
exercise the diligence of a good father in preventing the act.
• Despite the warning by the constabulary officer, petitioner did nothing to
protect the safety of its passengers.
• If petitioner took the necessary precautions, they would have discovered
the weapons and the large quantity of gasoline the malefactors carried with
them.
• A common carrier is liable for failing to prevent hijacking by frisking
passengers and inspecting baggages.
• The seizure of the bus was not force majeure. Of the four elements to
constitute an event as caso fotuito, the element of “unforeseeable or
unavoidable circumstances” was lacking. The seizure of the bus was
foreseeable, given the fact that petitioner was well-informed of the
possibility, days before the incident. This situation was likened to a case
where the common carrier failed to take safety precautions despite
warnings of an approaching typhoon.
• Petitioner is solely liable for Atty. Caorong’s death. There was no
contributory negligence on the part of the victim, since all he did was
pleading for the life of the driver. His heroic effort was neither an act of
negligence or recklessness.
PILAPIL VS. CA, DEC, 22, 1989
FACTS:
Petitioner Jose Pilapil, a paying passenger, boarded respondent’s bus No. 409 at
San Nicolas, Iriga City on September 16, 1971 at around 6:00 PM. While the bus
was traversing the distance between Iriga and Naga City and upon reaching the
vicinity of the cemetery of the Municipality of Baao, Camarines Sur, on the way to
Naga City, an unidentified man, a bystander along said national highway, hurled a
stone at the left side of the bus, which hit petitioner above his left eye. Petitioner
lost partially his left eye's vision and sustained a permanent scar above the left
eye. Petitioner thus instituted before the Court of First Instance of Camarines Sur,
Branch I an action for recovery of damages sustained as a result of the stone-
throwing incident.
The trial court ruled in favor or Pilapil but said decision was reversed upon appeal.
In seeking a reversal of the decision of the Court of Appeals, petitioner contends
that said court has decided the issue not in accord with law. Specifically,
petitioner argues that the nature of the business of a transportation company
requires the assumption of certain risks, and the stoning of the bus by a stranger
resulting in injury to petitioner-passenger is one such risk from which the
common carrier may not exempt itself from liability.
ISSUE:
Is the bus company liable?
RULING:
NO. There is no showing that any such incident previously happened so as to
impose an obligation on the part of the personnel of the bus company to warn the
passengers and to take the necessary precaution. Such hurling of a stone
constitutes fortuitous event in this case. The bus company is not an insurer of the
absolute safety of its passengers.
Petitioner contends that respondent common carrier failed to rebut the

presumption of negligence against it by proof on its part that it exercised
extraordinary diligence for the safety of its passengers. The court disagreed.
In the instant case, the injury sustained by the petitioner was in no way due to
any defect in the means of transport or in the method of transporting or to the
negligent or willful acts of private respondent's employees, and therefore
involving no issue of negligence in its duty to provide safe and suitable cars as
well as competent employees, with the injury arising wholly from causes created
by strangers over which the carrier had no control or even knowledge or could not
have prevented, the presumption is rebutted and the carrier is not and ought not
to be held liable. To rule otherwise would make the common carrier the insurer of
the absolute safety of its passengers which is not the intention of the lawmakers. 
MARANAN VS. PEREZ
G.R. No. L-22272
June 26, 1967
FACTS:
Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and
operated by Pascual Perez when he was stabbed and killed by the driver, Simeon
Valenzuela. Rogelio's mother, filed an action in the Court of First Instance of
Batangas to recover damages from Perez and Valenzuela for the death of her son.
Defendants asserted that the deceased was killed in self-defense, since he first
assaulted the driver by stabbing him from behind. Defendant Perez further
claimed that the death was a caso fortuito for which the carrier was not liable.
Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila
Railroad Co., 97 Phil. 884, that the carrier is under no absolute liability for
assaults of its employees upon the passengers.
ISSUE:
Whether or not the carrier is liable for the assaults of its employees upon the
passengers.
RULING:
Yes. The attendant facts and controlling law of that case and the one at bar are
very different however. In the Gillaco case, the passenger was killed outside the
scope and the course of duty of the guilty employee. Now here, the killing was
perpetrated by the driver of the very cab transporting the passenger, in whose
hands the carrier had entrusted the duty of executing the contract of carriage. In
other words, unlike the Gillaco case, the killing of the passenger here took place
in the course of duty of the guilty employee and when the employee was acting
within the scope of his duties. Moreover, the Gillaco case was decided under the
provisions of the Civil Code of 1889 which, unlike the present Civil Code, did not
impose upon common carriers absolute liability for the safety of passengers
against wilful assaults or negligent acts committed by their employees. Unlike the
old Civil Code, the new Civil Code of the Philippines expressly makes the common
carrier liable for intentional assaults committed by its employees upon its
passengers, by the wording of Art. 1759. Accordingly, it is the carrier's strict
obligation to select its drivers and similar employees with due regard not only to
their technical competence and physical ability, but also, no less important, to
their total personality, including their patterns of behavior, moral fibers, and social
attitude.
SINGAPORE AIRLINES LIMITED vs. ANDION FERNANDEZ
G.R. No. 142305 December 10, 2003
FACTS:
Respondent Andion Fernandez is an acclaimed soprano here in the Philippines and
abroad. At the time of the incident, she was availing an educational grant from
the Federal Republic of Germany, pursuing a Master’s Degree in Music majoring in
Voice.
She was invited to sing before the King and Queen of Malaysia. For this singing
engagement, an airline passage ticket was purchased from petitioner Singapore
Airlines which would transport her to Manila from Frankfurt, Germany on January
28, 1991. From Manila, she would proceed to Malaysia on the next day. It was
necessary for the respondent to pass by Manila in order to gather her wardrobe;
and to rehearse and coordinate with her pianist her repertoire for the aforesaid
performance.
The petitioner issued the respondent a Singapore Airlines ticket for Flight No. SQ
27, leaving Frankfurt, Germany on January 27, 1991 bound for Singapore with
onward connections from Singapore to Manila. On January 27, 1991, Flight No.
SQ 27 left Frankfurt but arrived in Singapore two hours late or at about 11:00 in
the morning of January 28, 1991. By then, the aircraft bound for Manila had left
as scheduled, leaving the respondent and about 25 other passengers stranded in
the Changi Airport in Singapore.
Upon disembarkation at Singapore, the respondent approached the transit

counter who referred her to the nightstop counter and told the lady employee
thereat that it was important for her to reach Manila on that day, January 28,
1991. The lady employee told her that there were no more flights to Manila for
that day and that respondent had no choice but to stay in Singapore. Upon
respondent’s persistence, she was told that she can actually fly to Hong Kong
going to Manila but since her ticket was non-transferable, she would have to pay
for the ticket. The respondent could not accept the offer because she had no
money to pay for it. Her pleas for the respondent to make arrangements to
transport her to Manila were unheeded.
The respondent then requested the lady employee to use their phone to make a
call to Manila. Over the employees’ reluctance, the respondent telephoned her
mother to inform the latter that she missed the connecting flight. The respondent
was able to contact a family friend who picked her up from the airport for her
overnight stay in Singapore.
The next day, after being brought back to the airport, the respondent proceeded
to petitioner’s counter which says: "Immediate Attention To Passengers with
Immediate Booking." There were four or five passengers in line. The respondent
approached petitioner’s male employee at the counter to make arrangements for
immediate booking only to be told: "Can’t you see I am doing something." She
explained her predicament but the male employee uncaringly retorted: "It’s your
problem, not ours."
The respondent never made it to Manila and was forced to take a direct flight
from Singapore to Malaysia on January 29, 1991, through the efforts of her
mother and travel agency in Manila. Her mother also had to travel to Malaysia
bringing with her respondent’s wardrobe and personal things needed for the
performance that caused them to incur an expense of about P50,000.
As a result of this incident, the respondent’s performance before the Royal Family
of Malaysia was below par. Because of the rude and unkind treatment she
received from the petitioner’s personnel in Singapore, the respondent was
engulfed with fear, anxiety, humiliation and embarrassment causing her to suffer
mental fatigue and skin rashes. She was thereby compelled to seek immediate
medical attention upon her return to Manila for "acute urticaria."
The RTC rendered a decision ordering defendant Singapore Airlines is to pay

herein plaintiff Andion H. Fernandez the sum of:
1.FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual damages;

2. TWO HUNDRED and FIFTY THOUSAND (P250,000.00) PESOS as moral
damages considering plaintiff’s professional standing in the field of culture at
home and abroad;
3. ONE HUNDRED THOUSAND (P100,000.00) PESOS as exemplary damages;
4. SEVENTY-FIVE THOUSAND (P75,000.00) PESOS as attorney’s fees; and
5. To pay the costs of suit.
The CA promulgated the assailed decision of the RTC
ISSUE:
Whether or not the petitioner is liable for breach of contract of carriage?
HELD:
Yes.
When an airline issues a ticket to a passenger, confirmed for a particular flight on

a certain date, a contract of carriage arises. The passenger then has every right
to expect that he be transported on that flight and on that date. If he does not,
then the carrier opens itself to a suit for a breach of contract of carriage.
The contract of air carriage is a peculiar one. Imbued with public interest, the law
requires common carriers to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons
with due regard for all the circumstances. In an action for breach of contract of
carriage, the aggrieved party does not have to prove that the common carrier
was at fault or was negligent. All that is necessary to prove is the existence of the
contract and the fact of its non-performance by the carrier.
Since the petitioner did not transport the respondent as covenanted by it on said
terms, the petitioner clearly breached its contract of carriage with the respondent.
The respondent had every right to sue the petitioner for this breach. The defense
that the delay was due to fortuitous events and beyond petitioner’s control is
unavailing. In PAL vs. CA, 22 we held that:
.... Undisputably, PAL’s diversion of its flight due to inclement weather was a
fortuitous event. Nonetheless, such occurrence did not terminate PAL’s contract
with its passengers. Being in the business of air carriage and the sole one to
operate in the country, PAL is deemed to be equipped to deal with situations as in
the case at bar. What we said in one case once again must be stressed, i.e., the
relation of carrier and passenger continues until the latter has been landed at the
port of destination and has left the carrier’s premises. Hence, PAL necessarily
would still have to exercise extraordinary diligence in safeguarding the comfort,
convenience and safety of its stranded passengers until they have reached their
final destination...
"...If the cause of non-fulfillment of the contract is due to a fortuitous event, it

has to be the sole and only cause (Art. 1755 C.C., Art. 1733 C.C.). Since part of
the failure to comply with the obligation of common carrier to deliver its
passengers safely to their destination lay in the defendant’s failure to provide
comfort and convenience to its stranded passengers using extraordinary
diligence, the cause of non-fulfillment is not solely and exclusively due to
fortuitous event, but due to something which defendant airline could have
prevented, defendant becomes liable to plaintiff."
Indeed, in the instant case, petitioner was not without recourse to enable it to
fulfill its obligation to transport the respondent safely as scheduled as far as
human care and foresight can provide to her destination. Tagged as a premiere
airline as it claims to be and with the complexities of air travel, it was certainly
well-equipped to be able to foresee and deal with such situation. The petitioner’s
indifference and negligence by its absence and insensitivity was exposed by the
trial court, thus:
(a) Under Section 9.1 of its Traffic Manual (Exhibit 4) "…flights can be delayed to
await the uplift of connecting cargo and passengers arriving on a late in-bound
flight…" As adverted to by the trial court,…"Flight SQ-27/28 maybe delayed for
about half an hour to transfer plaintiff to her connecting flight. As pointed out
above, delay is normal in commercial air transportation" (RTC Decision, p. 22); or
(b) Petitioner airlines could have carried her on one of its flights bound for
Hongkong and arranged for a connecting flight from Hongkong to Manila all on
the same date. But then the airline personnel who informed her of such possibility
told her that she has to pay for that flight. Regrettably, respondent did not have
sufficient funds to pay for it. Knowing the predicament of the respondent,
petitioner did not offer to shoulder the cost of the ticket for that flight; or
(c) As noted by the trial court from the account of petitioner’s witness, Bob
Khkimyong, that "a passenger such as the plaintiff could have been
accommodated in another international airline such as Lufthansa to bring the
plaintiff to Singapore early enough from Frankfurt provided that there was prior
communication from that station to enable her to catch the connecting flight to
Manila because of the urgency of her business in Manila.
When a passenger contracts for a specific flight, he has a purpose in making that
choice which must be respected. This choice, once exercised, must not be
impaired by a breach on the part of the airline without the latter incurring any
liability. For petitioner’s failure to bring the respondent to her destination, as
scheduled, we find the petitioner clearly liable for the breach of its contract of
carriage with the respondent.
We are convinced that the petitioner acted in bad faith. Bad faith means a breach
of known duty through some motive of interest or ill will. Self-enrichment or
fraternal interest, and not personal ill will, may well have been the motive; but it
is malice nevertheless. Bad faith was imputed by the trial court when it found that
the petitioner’s employees at the Singapore airport did not accord the respondent
the attention and treatment allegedly warranted under the circumstances. The
lady employee at the counter was unkind and of no help to her. The respondent
further alleged that without her threats of suing the company, she was not
allowed to use the company’s phone to make long distance calls to her mother in
Manila. The male employee at the counter where it says: "Immediate Attention to
Passengers with Immediate Booking" was rude to her when he curtly retorted
that he was busy attending to other passengers in line. The trial court concluded
that this inattentiveness and rudeness of petitioner’s personnel to respondent’s
plight was gross enough amounting to bad faith. This is a finding that is generally
binding upon the Court which we find no reason to disturb.
Article 2232 of the Civil Code provides that in a contractual or quasi-contractual

relationship, exemplary damages may be awarded only if the defendant had acted
in a "wanton, fraudulent, reckless, oppressive or malevolent manner." In this
case, petitioner’s employees acted in a wanton, oppressive or malevolent manner.
The award of exemplary damages is, therefore, warranted in this case.
BACHELOR EXPRESS vs CA
FACTS:
Ornominio and Narcisa were on board a Bachelor bus bound for Cagayan de
Oro. When they were passing Butuan, a passenger ran amuck and stabbed a
policeman who was on board. A stampede ensued; Ornominio and Narcisa were
pushed off the bus as the passengers scampered for the solitary door. As the bus
was still running, the unlucky couple fell into the road and died, as the door was
forced open by the panicking passengers. Their parents sued Bachelor, its owner
and the bus driver. RTC absolved them from liability on the ground of caso
fortuito and lack of negligence. CA reversed, holding that RTC overlooked
material facts showing negligence of Bachelor.
Bachelor set-up the following defenses. There was no breach of contract
because it was able to transport the passengers safely to their respective places
of destination except Ornominio and Narcisa, who jumped off the bus without the
knowledge and consent of the bus driver and the employee. Bachelor had
exercised due diligence in the choice of its employees. The incident was not a
traffic accident or vehicular accident but a fortuitous event which was beyond the
control of Bachelor. Lastly, the running amuck of the passenger was the
proximate cause of the incident as it triggered off a commotion and panic among
the passengers such that the passengers started running to the sole exit shoving
each other resulting in the falling off the bus by passengers Beter and Rautraut
causing them fatal injuries. The sudden act of the passenger who stabbed another
passenger in the bus is within the context of force majeure.
ISSUE:
Whether or nor Bacchelor Express is liable.
HELD:
Yes. The Supreme Court held that there is no question that Bachelor
Express, Inc. is a common carrier. Hence, from the nature of its business and for
reasons of public policy Bachelor Express, Inc. is bound to carry its passengers
safely as far as human care and foresight can provide using the utmost diligence
of very cautious persons, with a due regard for all the circumstances.
It is conceded that the running amuck of one of the passengers is a
fortuitous event, however, in order that a common carrier may be absolved from
liability in case of force majeure, it is not enough that the accident was caused by
force majeure. The common carrier must still prove that it was not negligent in
causing the injuries resulting from such accident.
The Supreme Court adopted the ruling of the Court of Appeals in holding
the following, the bus driver did not immediately stop the bus at the height of the
commotion; the bus was speeding from a full stop; the victims fell from the bus
door when it was opened or gave way while the bus was still running; the
conductor panicked and blew his whistle after people had already fallen off the
bus; and the bus was not properly equipped with doors in accordance with law.
From the following factual circumstance, it is clear that the petitioners have
failed to overcome the presumption of fault and negligence found in the law
governing common carriers. The petitioners' argument that the petitioners "are
not insurers of their passengers" deserves no merit in view of the failure of the
petitioners to prove that the deaths of the two passengers were exclusively due to
force majeure and not to the failure of the petitioners to observe extraordinary
diligence in transporting safely the passengers to their destinations as warranted
by law.
G.R. No. L-8034 November 18, 1955
CORNELIA A. DE GILLACO, ET AL., plaintiffs-appellees, vs. MANILA
RAILROAD COMPANY, defendant-appellant.
REYES, J.B.L., J.:
DOCTRINE: There can be no quarrel with the principle that a passenger is

entitled to protection from personal violence by the carrier or its agents or
employees, since the contract of transportation obligates the carrier to transport a
passenger safely to his destination. But under the law of the case, this
responsibility extends only to those that the carrier could foresee or avoid
through the exercise of the degree of car and diligence required of it.
FACTS:
Lieut. Tomas Gillaco, husband of the plaintiff, was a passenger in the early
morning train of the Manila Railroad Company from Calamba, Laguna to Manila.
When the train reached the Paco Railroad station, Emilio Devesa, a train guard of
the Manila Railroad Company assigned in the Manila-San Fernando, La Union Line,
happened to be in said station waiting for the same train which would take him to
Tutuban Station, where he was going to report for duty. Emilio Devesa had a long
standing personal grudge against Tomas Gillaco, same dating back during the
Japanese occupation. Because of this personal grudge, Devesa shot Gillaco with
the carbine furnished to him by the Manila Railroad Company for his use as such
train guard, upon seeing him inside the train coach. Tomas Gillaco died. Devesa
was convicted with homicide.
Appellant's contention: no liability attaches to it as employer of the killer, Emilio

Devesa; it is not responsible subsidiary ex delicto, under Art. 103 of the Revised
Penal Code, because the crime was not committed while the slayer was in the
actual performance of his ordinary duties and service; nor is it responsible ex
contractu, since the complaint did not aver sufficient facts to establish such
liability, and no negligence on appellant's party was shown.
The Court below held the Railroad company responsible on the ground that a
contract of transportation implies protection of the passengers against acts of
personal violence by the agents or employees of the carrier.
ISSUE: W/N appellant Manila Railroad could be held liable for the acts of its
employee Emilio Devesa
HELD: NO.
There can be no quarrel with the principle that a passenger is entitled to
protection from personal violence by the carrier or its agents or employees, since
the contract of transportation obligates the carrier to transport a passenger safely
to his destination. But under the law of the case, this responsibility extends only
to those that the carrier could foresee or avoid through the exercise of the degree
of car and diligence required of it.
Article 1105 of the Old Civil Code (which was in force when Gillaco was shot)
provides that "No one shall be liable for events which could not be foreseen or
which, even if foreseen, were inevitable, with the exception of the cases in which
the law expressly provides otherwise and those in which the obligation itself
imposes such liability."
The act of guard Devesa in shooting passenger Gillaco (because of a personal

grudge nurtured against the latter since the Japanese occupation) was entirely
unforeseeable by the Manila Railroad Co. The latter had no means to ascertain or
anticipate that the two would meet, nor could it reasonably foresee every
personal rancor that might exist between each one of its many employees and
any one of the thousands of eventual passengers riding in its trains. The shooting
in question was therefore "caso fortuito" within the definition of article 1105 of
the old Civil Code, being both unforeseeable and inevitable under the given
circumstances; and pursuant to established doctrine, the resulting breach of
appellant's contract of safe carriage with the late Tomas Gillaco was excused
thereby.
No doubt that a common carrier is held to a very high degree of care and
diligence in the protection of its passengers; but, considering the vast and
complex activities of modern rail transportation, to require of appellant that it
should guard against all possible misunderstanding between each and every one
of its employees and every passenger that might chance to ride in its
conveyances at any time, strikes us as demanding diligence beyond what human
care and foresight can provide.
Furthermore, Devesa was under no obligation to safeguard the passenger of the

Calamba-Manila train, where the deceased was riding; and the killing of Gillaco
was not done in line of duty. The position of Devesa at the time was that of
another would be passenger, a stranger also awaiting transportation, and not that
of an employee assigned to discharge any of the duties that the Railroad had
assumed by its contract with the deceased. As a result, Devesa's assault cannot
be deemed in law a breach of Gillaco's contract of transportation by a servant or
employee of the carrier.
CATHAY PACIFIC AIRWAYS VS CA
FACTS:
On 19 October 1975, respondent Tomas L. Alcantara was a first class passenger
of petitioner Cathay on its Flight No. CX-900 from Manila to Hongkong and
onward from Hongkong to Jakarta on Flight No. CX-711. The purpose of his trip
was to attend the following day, 20 October 1975, a conference with the Director
General of Trade of Indonesia. He checked in his luggage which contained not
only his clothing and articles for personal use but also papers and documents he
needed for the conference. 
 
Upon his arrival in Jakarta, respondent discovered that his luggage was missing.
When he inquired about his luggage from CATHAY’s representative in Jakarta,
private respondent was told that his luggage was left behind in Hongkong. For
this, respondent Alcantara was offered $20.00 as “inconvenience money” to buy
his immediate personal needs until the luggage could be delivered to him. 
 
His luggage finally reached Jakarta more than twenty four (24) hours after his
arrival. However, it was not delivered to him at his hotel but was required by
petitioner to be picked up by an official of the Philippine Embassy. 
 
On 1 March 1976, respondent filed his complaint against petitioner with the Court
of First Instance (now Regional Trial Court) of Lanao del Norte praying for
temperate, moral and exemplary damages, plus attorney’s fees.
ISSUE:
WON Cathay should be liable
HELD:
Yes. In the case at bar, both the trial court and the appellate court found that
CATHAY was grossly negligent and reckless when it failed to deliver the luggage
of petitioner at the appointed place and time. We agree. CATHAY alleges that as a
result of mechanical trouble, all pieces of luggage on board the first aircraft bound
for Jakarta were unloaded and transferred to the second aircraft which departed
an hour and a half later. Yet, as the Court of Appeals noted, petitioner was not
even aware that it left behind private respondent’s luggage until its attention was
called by the Hongkong Customs authorities. More, bad faith or otherwise
improper conduct may be attributed to the employees of petitioner. While the
mere failure of CATHAY to deliver respondent’s luggage at the agreed place and
time did not ipso facto amount to willful misconduct since the luggage was
eventually delivered to private respondent, albeit belatedly,[6] We are persuaded
that the employees of CATHAY acted in bad faith.
If the defendant airline is shown to have acted fraudulently or in bad faith, the
award of moral and exemplary damages is proper. When petitioner airline
misplaced respondent’s luggage and failed to deliver it to its passenger at the
appointed place and time, some special species of injury must have been caused
to him. For sure, the latter underwent profound distress and anxiety, and the fear
of losing the opportunity to fulfill the purpose of his trip. In fact, for want of
appropriate clothings for the occasion brought about by the delay of the arrival of
his luggage, to his embarrassment and consternation respondent Alcantara had to
seek postponement of his pre-arranged conference with the Director General of
Trade of the host country. 
 
In one case, this Court observed that a traveler would naturally suffer mental
anguish, anxiety and shock when he finds that his luggage did not travel with him
and he finds himself in a foreign land without any article of clothing other than
what he has on.
MAPA VS. CA
JULY 8, 1998
FACTS:
In 1983, Hongkong Government Supplies Department (HGSD) contracted Mayer
Steel Pipe Corporation for the latter to manufacture and deliver various steel
pipes and fittings. Before Mayer Steel shipped the said pipes, it insured them
with two insurance companies namely, South Sea Surety and Insurance Co., Inc.
and Charter Insurance Corporation – each insurer covering different portions of
the shipment. The insurance policies cover “all risks” which include all causes of
conceivable loss or damage.
When the pipes reached Hongkong, the pipes were discovered to have been
damaged. The insurance companies refused to make payment. On April 17,1986,
Mayer Steel sued the insurance companies. The case reached the Court of
Appeals. The CA ruled that the case filed by Mayer Steel should be dismissed. It
held that the action is barred under Section 3(6) of the Carriage of Goods by Sea
Act since it was filed only on April 17, 1986, more than two years from the time
the goods were unloaded from the vessel. Section 3(6) of the Carriage of Goods
by Sea Act provides that “the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is brought within one year after
delivery of the goods or the date when the goods should have been delivered.”
The CA ruled that this provision applies not only to the carrier but also to the
insurer.
ISSUE:
Whether or not the Court of Appeals is correct.
HELD:
No. Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and
the ship shall be discharged from all liability for loss or damage to the goods if no
suit is filed within one year after delivery of the goods or the date when they
should have been delivered. Under this provision, only the carrier’s liability is
extinguished if no suit is brought within one year. But the liability of the insurer is
not extinguished because the insurer’s liability is based not on the contract of
carriage but on the contract of insurance. A close reading of the law reveals that
the Carriage of Goods by Sea Act governs the relationship between the carrier on
the one hand and the shipper, the consignee and/or the insurer on the other
hand. It defines the obligations of the carrier under the contract of carriage. It
does not, however, affect the relationship between the shipper and the insurer.
The latter case is governed by the Insurance Code.
The Filipino Merchants case is different from the case at bar. In Filipino
Merchants, it was the insurer which filed a claim against the carrier for
reimbursement of the amount it paid to the shipper. In the case at bar, it was the
shipper which filed a claim against the insurer. The basis of the shipper’s claim is
the “all risks” insurance policies issued by the insurers to Mayer Steel.
The ruling in Filipino Merchants should apply only to suits against the carrier filed
either by the shipper, the consignee or the insurer. 
ISAAC V. A. L AMMEN TRANSPORTATION CO.
G.R. NO. L-9671; AUGUST 23, 1957
BAUSTISTA ANGELO, J.
FACTS:
A.L. Ammen is a corporation engaged in the business of transporting passengers
by land for compensation in the Bicol provinces, with one line connecting Legaspi
City with Naga City. One of its buses was boarded by petitioner upon payment of
the required fare to Camarines Sur, but it collided with a pick-up causing his left
arm to be completely severed.
Petitioner brought an action for damages against respondent alleging that
the collision was due to the recklessness of the driver of the bus and for breach of
its obligation to transport him safely to his destination based on culpa contractual.
However, respondent contended that it was the driver of the pick-up who was
negligent, and that petitioner was contributorily negligent. The lower court found
that it was indeed the driver of the pick-up car who was negligent, dismissing the
complaint.
ISSUE:
Whether or not respondent corporation should be held liable for the injury caused
to petitioner.
HELD:
No. Based on the facts of the case, it was apparent that the pick-up driver was
negligent since it was running outside of its proper line and was at full speed. The
driver of the bus, running at moderate speed, upon seeing the manner in which
the pick-up was then running, swerved the bus to the very extreme right of the
road until its front and rear wheels have gone over the pile of stones or gravel
situated on the rampart of the road. Said driver could not move the bus farther
right and run over a greater portion of the pile, the peak of which was about 3
feet high, without endangering the safety of his passengers. And notwithstanding
all these efforts, the rear left side of the bus was hit by the pick-up car.
Considering all the circumstances, the court concluded that the driver of the bus
has done what a prudent man could have done to avoid the collision and in our
opinion this relieves appellee from liability under our law.
Petitioner was also guilty of contributory negligence since he rested his left
arm on the window sill with his elbow out, causing the severance of his arm. Had
he not placed his left arm on the window sill with a portion thereof protruding
outside, perhaps the injury would have been avoided as is the case with the other
passengers. It is to be noted that appellant was the only victim of the collision.
It is true that such contributory negligence cannot relieve appellee of its liability
but will only entitle it to a reduction of the amount of damage caused but this is a
circumstance which further militates against the position taken by petitioner in
this case.  
COMPAÑIA MARITIMA, vs. COURT OF APPEALS and VICENTE
CONCEPCION
G.R. No. L-31379 August 29, 1988
FACTS:
Being a Manila — based contractor, Vicente E. Concepcion had to ship his
construction equipment to Cagayan de Oro City. Having shipped some of his
equipment through petitioner and having settled the balance of P2,628.77 with
respect to said shipment, Concepcion negotiated anew with petitioner, thru its
collector, Pacifico Fernandez, on August 28, 1964 for the shipment to Cagayan de
Oro City of one (1) unit payloader, four (4) units 6x6 Reo trucks and two (2)
pieces of water tanks. He was issued Bill of Lading 113 on the same date upon
delivery of the equipment at the Manila North Harbor. 2
These equipment were loaded aboard the MV Cebu in its Voyage No. 316, which
left Manila on August 30, 1964 and arrived at Cagayan de Oro City in the
afternoon of September 1, 1964. The Reo trucks and water tanks were safely
unloaded within a few hours after arrival, but while the payloader was about two
(2) meters above the pier in the course of unloading, the swivel pin of the heel
block of the port block of Hatch No. 2 gave way, causing the payloader to
fall. 3 The payloader was damaged and was thereafter taken to petitioner's
compound in Cagayan de Oro City.
On September 7, 1964, Consolidated Construction, thru Vicente E. Concepcion,

wrote Compañia Maritima to demand a replacement of the payloader which it was
considering as a complete loss because of the extent of damage. 4 Consolidated
Construction likewise notified petitioner of its claim for damages. Unable to elicit
response, the demand was repeated in a letter dated October 2, 1964. 5
Meanwhile, petitioner shipped the payloader to Manila where it was weighed at

the San Miguel Corporation. Finding that the payloader weighed 7.5 tons and not
2.5 tons as declared in the B-111 of Lading, petitioner denied the claim for
damages of Consolidated Construction in its letter dated October 7, 1964,
contending that had Vicente E. Concepcion declared the actual weight of the
payloader, damage to their ship as well as to his payloader could have been
prevented. 6
On July 6, 1965., Vicente E. Concepcion filed an action for damages against
petitioner with the then Court of First Instance of Manila, Branch VII, docketed as
Civil Case No. 61551, seeking to recover damages in the amount of P41,225.00
allegedly suffered for the period of 97 days that he was not able to employ a
payloader in the construction job at the rate of P450.00 a day; P34,000.00
representing the cost of the damaged payloader; P11, 000. 00 representing the
difference between the cost of the damaged payloader and that of the new
payloader; P20,000.00 representing the losses suffered by him due to the
diversion of funds to enable him to buy a new payloader; P10,000.00 as
attorney's fees; P5,000.00 as exemplary damages; and cost of the suit. 7
RTC: dismissed the complaint, with costs against Concepcion

CA: ruled in favor of Concepcion
ISSUE:
Whether or not the act of private respondent Vicente E. Concepcion in furnishing
petitioner Compañia Maritima with an inaccurate weight of 2.5 tons instead of the
payloader's actual weight of 7.5 tons was the proximate and only cause of the
damage on the Oliver Payloader OC-12 when it fell while being unloaded by
petitioner's crew, as would absolutely exempt petitioner from liability for damages
under paragraph 3 of Article 1734 of the Civil Code
HELD: NO.
The general rule under Articles 1735 and 1752 of the Civil Code is that common
carriers are presumed to have been at fault or to have acted negligently in case
the goods transported by them are lost, destroyed or had deteriorated. To
overcome the presumption of liability for the loss, destruction or deterioration of
the goods under Article 1735, the common carriers must prove that they
observed extraordinary diligence as required in Article 1733 of the Civil Code. The
responsibility of observing extraordinary diligence in the vigilance over the goods
is further expressed in Article 1734 of the same Code, the article invoked by
petitioner to avoid liability for damages.
Corollary is the rule that mere proof of delivery of the goods in good order to a
common carrier, and of their arrival at the place of destination in bad order,
makes out prima facie case against the common carrier, so that if no explanation
is given as to how the loss, deterioration or destruction of the goods occurred, the
common carrier must be held responsible. 10 Otherwise stated, it is incumbent
upon the common carrier to prove that the loss, deterioration or destruction was
due to accident or some other circumstances inconsistent with its liability.
In the instant case, We are not persuaded by the proferred explanation of
petitioner alleged to be the proximate cause of the fall of the payloader while it
was being unloaded at the Cagayan de Oro City pier. Petitioner seems to have
overlooked the extraordinary diligence required of common carriers in the
vigilance over the goods transported by them by virtue of the nature of their
business, which is impressed with a special public duty.
Thus, Article 1733 of the Civil Code provides:

Art. 1733. Common carriers, from the nature of their business and for reason 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.
Such extraordinary diligence in the vigilance over the goods is further expressed
in Articles 1734, 1735 and 1745, Nos. 5, 6 and 7, ...
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
characteristic of goods tendered for shipment, and to exercise due care in the
handling and stowage including such methods as their nature requires."11 Under
Article 1736 of the Civil Code, the responsibility to observe extraordinary
diligence commences and 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 the right to receive them without prejudice to the
provisions of Article 1738.
Where, as in the instant case, petitioner, upon the testimonies of its own crew,
failed to take the necessary and adequate precautions for avoiding damage to, or
destruction of, the payloader entrusted to it for safe carriage and delivery to
Cagayan de Oro City, it cannot be reasonably concluded that the damage caused
to the payloader was due to the alleged misrepresentation of private respondent
Concepcion as to the correct and accurate weight of the payloader. As found by
the respondent Court of Appeals, the fact is that petitioner used a 5-ton capacity
lifting apparatus to lift and unload a visibly heavy cargo like a payloader. Private
respondent has, likewise, sufficiently established the laxity and carelessness of
petitioner's crew in their methods of ascertaining the weight of heavy cargoes
offered for shipment before loading and unloading them, as is customary among
careful persons.
The weights stated in a bill of lading are prima facie evidence of the amount
received and the fact that the weighing was done by another will not relieve the
common carrier where it accepted such weight and entered it on the bill of
lading. 16 Besides, common carriers can protect themselves against mistakes in
the bill of lading as to weight by exercising diligence before issuing the same. 17
While petitioner has proven that private respondent Concepcion did furnish it with
an inaccurate weight of the payloader, petitioner is nonetheless liable, for the
damage caused to the machinery could have been avoided by the exercise of
reasonable skill and attention on its part in overseeing the unloading of such a
heavy equipment. And circumstances clearly show that the fall of the payloader
could have been avoided by petitioner's crew. Evidence on record sufficiently
show that the crew of petitioner had been negligent in the performance of its
obligation by reason of their having failed to take the necessary precaution under
the circumstances which usage has established among careful persons, more
particularly its Chief Officer, Mr. Felix Pisang, who is tasked with the over-all
supervision of loading and unloading heavy cargoes and upon whom rests the
burden of deciding as to what particular winch the unloading of the payloader
should be undertaken. Acknowledging that there was a "jumbo" in the MV Cebu
which has the capacity of lifting 20 to 25 ton cargoes, Mr. Felix Pisang chose not
to use it, because according to him, since the ordinary boom has a capacity of 5
tons while the payloader was only 2.5 tons, he did not bother to use the "jumbo"
anymore. 20
While the act of private respondent in furnishing petitioner with an inaccurate

weight of the payloader cannot successfully be used as an excuse by petitioner to
avoid liability to the damage thus caused, said act constitutes a 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, to wit:
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or
deterioration of the goods, the proximate cause thereof being the negligence of
the common carrier, the latter shall be liable in damages, which however, shall be
equitably reduced.
PNR VS CA; ROSARIO TUPANG
FACTS: 
Winifredo Tupang, husband of respondent, boarded 'Train No. 516 of petitioner at,
Camarines Sur, as a passenger. Due to some mechanical defect, the train stopped
at Sipocot, , for repairs,. Unfortunately, upon passing Iyam Bridge, Tupang fell off
the train resulting in his death. The train did not stop despite the alarm raised by
the other passengers that somebody fell from the train. Instead, the train
conductor, called the station agent at Candelaria, Quezon, and requested for
verification of the information. Police were dispatched to the Iyam Bridge where
they found the lifeless body of Tupang. 
 
Upon complaint filed by the deceased's widow, the then CFI Rizal, after trial, held
the PNR liable for damages for breach of contract of carriage and ordered "to pay
the plaintiff the sum of P12,000,00 for the death of Tupang, and other damages.
On appeal, the Appellate Court sustained the holding of the trial court that the
PNR did not exercise the utmost diligence required by law of a common carrier. It
further increased the amount adjudicated by the trial court by ordering PNR to
pay the plaintiff an additional sum of P5,000.00 as exemplary damages. 
 
ISSUE: 
Whether or not petitioner is liable as a common carrier. 
 
HELD: 
Since petitioner does not deny, that the train boarded by the deceased Tupang
was so over-crowded that he and many other passengers had no choice but to sit
on the open platforms between the coaches of the train. It is undisputed that the
train did not slow down when it approached the Iyam Bridge which was under
repair at the time, Neither did the train stop, despite the alarm raised that a
person had fallen off the train at lyam Bridge. 
 
PNR 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 the petitioner
failed to overthrow such presumption of negligence with clear and convincing
evidence.  
 
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 platform between the coaches of the train, he should
have held tightly and tenaciously on the upright metal bar found at the side of
said platform to avoid falling off from the speeding train. Such contributory
negligence, while not exempting the PNR from liability, nevertheless justified the
deletion of the amount adjudicated as moral damages. By the same token, the
award of exemplary damages must be set aside. Exemplary damages may be
allowed only in cases where the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner. There being no evidence of fraud,
malice or bad faith on the part of petitioner, the grant of exemplary damages
should be discarded.
STANDARD VACUUM OIL COMPANY V. LUZON STEVEDORING CO., INC.
G.R. NO. L-5203 APRIL 18, 1956
FACTS:
Defendant's barge No. L-522 was laden with gasoline belonging to the plaintiff to
be transported from Manila to the Port of Iloilo. Defendant's tugboat "Snapper"
picked up the barge outside the breakwater. The barge was placed behind the
tugboat, it being connected to the latter by a tow rope. Behind the barge, three
other barges were likewise placed. The weather was good when on that day the
tugboat with its tow started on its voyage. The weather remained good on
February 3, 1947. About 3:00 AM on February 4, the engine of the tugboat came
to a dead stop. The engineer found out that the trouble was due to a broken idler.
A message was then sent to the defendant's radio station in Manila informing its
official of the engine trouble. The master of the Snapper attempted to cast anchor
but the water areas around Elefante Island were so deep. In the afternoon, the
weather become worse and due to the rough condition of the sea the anchor
chains of the Snapper' and the four barges broke. They were drifted and were
dashed against the rocks. A hole was opened in the hull of the Snapper', which
ultimately caused it to sink, while the barge No. L-522 was so badly damaged that
the gasoline it had on board leaked out. Defendant failed to transport the gasoline
so plaintiff brought an action with CFI Manila to recover damages. Defendant
pleaded that its failure to deliver was due to fortuitous event or caused by
circumstances beyond its control and not to its fault or negligence or that of any
of its employees. The court found that the disaster was the result of an
unavoidable accident and the loss of the gasoline was due to a fortuitous event
hence it dismissed the case.
ISSUE:
W/N defendant exercised extraordinary diligence and that the accident was due to
force majeure.
HELD:
NO. While the breaking of the idler may be due to an accident, or to something
unexpected, the cause of the disaster which resulted in the loss of the gasoline
can only be attributed to the negligence or lack of precaution to avert it on the
part of defendant. Defendant had enough time to effectuate the rescue if it had
only a competent tug for the purpose because the weather was good from 3:00
o'clock a.m. to 12:00 o'clock noon of February 4, 1947 and it was only in the
afternoon that the wind began to blow with some intensity,1 but failed to do so
because of that shortcoming. The loss of the gasoline certainly cannot be said to
be due to force majeure or unforeseen event but to the failure of defendant to
extend adequate and proper help. Considering these circumstances, the Court
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.
PLANTERS PRODUCTS, INC. VS. COURT OF APPEALS
G.R. No. 101503 September 15, 1993
BELLOSILLO, J.
FACTS:
Planters Products purchased from Mitsubishi International Corporation urea
fertilizer which the latter shipped in bulk aboard the cargo vessel M/V Sun Plum
owned by Kyosei Kisen Kabushiki Kaisha (KKKK). A time charter-party was
entered into between Mitsubishi as shipper/charterer and KKKK as shipowner.
Before loading the fertilizer aboard the vessel, they were inspected by the
charterer’s representative and found fit. After the Urea fertilizer was loaded in
bulk by stevedores hired by and under the supervision of the shipper, the steel
hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin, then
tied with steel bonds. The hatches remained closed and tightly sealed throughout
the entire voyage. The port area was windy, certain portions of the route to the
warehouse were sandy and the weather was variable, raining occasionally while
the discharge was in progress. The survey report revealed a shortage in the cargo
and that a portion of the Urea fertilizer was contaminated with sand, rust and dirt
and were rendered unfit for commerce. Planters Products sent a claim letter to
Soriamont Steamship Agencies, the resident agent of the carrier, for damages but
was denied for payment. Planters Products filed an action for damages. CFI of
Manila sustained the claim of the plaintiff but on appeal, CA absolved the carrier
from liability.
ISSUES:
1. Whether or not a common carrier becomes a private carrier by reason of
charter party
2. Whether or not the shipowner was able to prove that he had exercised that
degree of diligence required of him under the law
HELD:
1. A "charter-party" is defined as a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a specified time or
use; Charter parties are of two types: (a) contract of affreightment which involves
the use of shipping space on vessels leased by the owner in part or as a whole, to
carry goods for others; and, (b) charter by demise or bareboat charter, by the
terms of which the whole vessel is let to the charterer with a transfer to him of its
entire command and possession and consequent control over its navigation,
including the master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the vessel is leased to the
charterer for a fixed period of time, or voyage charter, wherein the ship is leased
for a single voyage.
On the other hand, the term "common or public carrier", as defined in Art. 1732
of the Civil Code, extends to carriers either by land, air or water which hold
themselves out as ready to engage in carrying goods or transporting passengers
or both for compensation as a public employment and not as a casual occupation.
The distinction between a "common or public carrier" and a "private or special
carrier" lies in the character of the business, such that if the undertaking is a
single transaction, not a part of the general business or occupation, although
involving the carriage of goods for a fee, the person or corporation offering such
service is a private carrier.
Article 1733 of the Civil Code mandates that common carriers, by reason of the
nature of their business, should observe extraordinary diligence in the vigilance
over the goods they carry. In the case of private carriers, however, the exercise of
ordinary diligence in the carriage of goods will suffice. Moreover, in case of loss,
destruction or deterioration of the goods, common carriers are presumed to have
been at fault or to have acted negligently, and the burden of proving otherwise
rests on them. On the contrary, no such presumption applies to private carriers,
for whosoever alleges damage to or deterioration of the goods carried has the
onus of proving that the cause was the negligence of the carrier.
When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its
officers and compliment were under the employ of the shipowner and therefore
continued to be under its direct supervision and control. Hardly then can we
charge the charterer, a stranger to the crew and to the ship, with the duty of
caring for his cargo when the charterer did not have any control of the means in
doing so. This is evident in the present case considering that the steering of the
ship, the manning of the decks, the determination of the course of the voyage
and other technical incidents of maritime navigation were all consigned to the
officers and crew who were screened, chosen and hired by the shipowner. It is
only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned.
2. Yes. The carrier has sufficiently overcome, by clear and convincing proof,
the prima facie presumption of negligence. The hatches remained close and
tightly sealed while the ship was in transit as the weight of the steel covers
made it impossible for a person to open without the use of the ship's boom.
Common carriers are not responsible for the loss, destruction or
deterioration of the goods if caused by the character of the goods or defects
in the packaging or in the containers. Bulk shipment of highly soluble
goods like fertilizer carries with it the risk of loss or damage, more so, with
a variable weather condition prevalent during its unloading, as was the case
at bar. This is a risk the shipper or the owner of the goods has to face.
Clearly, 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.
MECENAS v. CA; GR 88052, December 14, 1989
FACTS:
On the morning of 22 April 1980, the M/T “Tacloban City,” a barge-type oil tanker
owned and operated by Philippine National Oil Company (PNOC), having unloaded
its cargo of petroleum products, left Negros Occidental and headed towards
Bataan.
On the same day, the M/V “Don Juan,” an interisland vessel owned and operated
by Negros Navigation, left Manila bound for Bacolod with 750 passengers listed in
its manifest, and a complete set of officers and crew members.
On the evening of the same day, the two vessels became aware of each other’s
presence in the area by visual contact at a distance of 6 miles. They were fully
aware that if they continued on their course, they will meet head on. Don Juan
steered to the right; Tacloban City continued its course to the left. The two
vessels thus collided and as a result, the “Don Juan” sank and hundreds of its
passengers perished.
Petitioners who were the children of the spouses Perfecto and Sofia Mecenas,
their parents among the passengers whose bodies were never found, filed a
complaint against Negros Navigation and its Captain Roger Santisteban. The trial
court ruled that both vessels were at fault in the collision and awarded petitioners
actual or compensatory damages, which was reduced on appeal. Petitioners
likewise claim for exemplary damages.
ISSUE:
W/N the petition should prosper
HELD:
YES. The report of the Philippine Coast Guard Commandant set out that there had
been fault or negligence on the part of Capt. Santisteban and his officers and
crew before the collision and immediately after contact of the 2vessels. The
decision of Commodore Ochoco said “MS Don Juan’s Master, Capt. Rogelio
Santisteban, was playing mahjong before and up to the time of collision.
Moreover, after the collision, he failed to institute appropriate measures to delay
the sinking of MS Don Juan and to supervise properly the execution of his order of
abandonship. As regards the officer on watch, Senior 3rd Mate Rogelio Devera, he
admitted that he failed or did not call or inform Capt. Santisteban of the imminent
danger of collision and of the actual collision itself . Also, he failed to assist his
master to prevent the fast sinking of the ship. The record also indicates that
Auxiliary Chief Mate Antonio Labordo displayed laxity in maintaining order among
the passengers after the collision.” The behaviour of the captain of the “Don Juan”
in this instance — playing mahjong “before and up to the time of collision” —
constitutes behaviour that is simply unacceptable on the part of the master of a
vessel to whose hands the lives and welfare of at least 750 passengers had been
entrusted
Whether or not Capt. Santisteban was “off-duty” or “on-duty” at or around the
time of actual collision is quite immaterial; there is, both realistically speaking
and in contemplation of law, no such thing as “offduty” hours for the master of a
vessel at sea that is a common carrier upon whom the law imposes the duty of
extraordinary diligence, i.e. “the duty 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.” The record does
not show that was the first or only time that Capt. Santisteban had entertained
himself during a voyage by playing mahjong with his officers and passengers;
Negros Navigation in permitting, or in failing to discover and correct such
behaviour, must be deemed grossly negligent.
The grossness of the negligence of the “Don Juan” is underscored by the facts:
(1) The “Don Juan” was more than twice as fast as the “Tacloban City.” The “Don
Juan’s” top speed was 17 knots; while that of the “Tacloban City” was 6.3. knots.
(2) The “Don Juan” carried the full complement of officers and crew members
specified for a passenger vessel of her class. (3) The “Don Juan” was equipped
with radar which was functioning that night. (4) The “Don Juan’s” officer on-watch
had sighted the “Tacloban City” on his radar screen while the latter was still 4
nautical miles away. Visual confirmation of radar contact was established by the
“Don Juan” while the “Tacloban City” was still 2.7 miles away.
The total set of circumstances which existed, the “Don Juan,” had it taken
seriously its duty of extraordinary diligence, could have easily avoided the
collision with the “Tacloban City.” Indeed, the “Don Juan” might well have avoided
the collision even if it had exercised ordinary diligence merely.
CLEMENTE BRIÑAS vs. THE PEOPLE OF THE PHILIPPINES and
HONORABLE COURT OF APPEALS
FACTS:
1. An information alleged that in Quezon, Victor Milan, Clemente Briñas and
Hermogenes Buencamino, being persons in charge of passenger Train No. 522-6
of the Manila Railroad Company, as engine driver, conductor and assistant
conductor, respectively, wilfully operated the same in a negligent manner.
2. That when said passenger Train No. 522-6 was passing the railroad tracks in
Tiaong, Quezon, two of its passengers, Martina Bool, an old woman, and Emelita
Gesmundo, a child about three years of age, fell from the passenger coach of the
said train, as a result of which, they were over run, causing their instantaneous
death.
3. The Court of First Instance of Quezon convicted defendant-appellant Clemente
Briñas for double homicide thru reckless imprudence but acquitted Hermogenes
Buencamino and Victor Millan. The separate civil action was filed for the recovery
of P30,350.00 from the Manila Railroad Company as damages resulting from the
accident.
ISSUE: Whether or not petitioner's negligence is the proximate cause of the
death of the 2 passengers.
HELD: Yes. It is undisputed that the victims were on board the second coach
where the petitioner-appellant was assigned as conductor and that when the train
slackened its speed and the conductor shouted "Lusacan, Lusacan", they stood up
and proceeded to the nearest exit. It is also undisputed that the train
unexpectedly resumed its regular speed and as a result "the old woman and the
child stumbled and they were seen no more.
The appellant's announcement was premature and erroneous, for it took a full
three minutes more before the next barrio of Lusacan was reached. In making the
erroneous and premature announcement, appellant was negligent. He ought to
have known that train passengers invariably prepare to alight upon notice from
the conductor that the destination was reached and that the train was about to
stop. Upon the facts, it was the appellant's negligent act which led the victims to
the door. Said acts virtually exposed the victims to peril, for had not the appellant
mistakenly made the announcement, the victims would be safely ensconced in
their seats when the train jerked while picking up speed, Although it might be
argued that the negligent act of the appellant was not the immediate cause of, or
the cause nearest in time to, the injury, for the train jerked before the victims
stumbled, yet in legal contemplation appellant's negligent act was the proximate
cause of the injury.
The proximate cause of the injury is not necessarily the immediate cause of, or
the cause nearest in time to, the injury. It is only when the causes are
independent of each other that the nearest is to be charged with the disaster. So
long as there is a natural, direct and continuous sequence between the negligent
act the injury (sic) that it can reasonably be said that but for the act the injury
could not have occurred, such negligent act is the proximate cause of the injury,
and whoever is responsible therefore is liable for damages resulting therefrom.
BLTB & ARMANDO PON VS. IAC

G.R. NOS. 74387-90 NOVEMBER 14, 1988
FACTS:
BLTB Bus was negotiating the bend of the highway, it tried to overtake a Ford
Fiera car just as Bus of Superlines was coming from the opposite direction. Seeing
thus, Armando Pon (driver of the BLTB Bus) made a belated attempt to slacken
the speed of his bus and tried to return to his proper lane. It was an unsuccessful
try as the two (2) buses collided with each other.
The collision resulted in the death of Rosales, Pamfilo and Neri, as well as injuries
to the wife of Rosales, and Sales. These people were passengers of the
petitioner's bus.
Rosales and Sales, as well as the surviving heirs of Pamfilo, Rosales and
Neri instituted separate cases ih the CFI against BLTB and Superlines, together
with their drivers. Criminal cases against the drivers were also filed in a different
CFI.
CFI ruled that only BLTB and Pon should be liable, and they were ordered
jointly and severally to pay damages. On appeal, the IAC affirmed the CFI's
ruling.
Petitioners contended that the CFI erred in ruling that the actions of
private respondents are based on culpa contractual, since if it were private
respondents' intention to file an action based on culap contractual, they could
have done so by merely impleading BLTB and Pon. Instead the respondents filed
an action against all defendants based on culpa aquiliana or tort.
ISSUE:
WON erred in ruling that the actions of private respondents are based on culpa
contractual
HELD:
IAC anchored its decision on both culpa contractual and culpa aquiliana
The proximate cause of the death and injuries of the passengers was the
negligence of the bus driver Pon, who recklessly overtook a car despite knowing
that that the bend of highway he was negotiating on had a continuous yellow line
signifying a “no-overtaking” zone.
It is presumed that a person driving a motor vehicle has been negligent if at

the time of the mishap, he was violating any traffic regulation.
In the instant case, the driver of the BLTB bus failed to act with diligence
demanded by the circumstances. Pon should have remembered that when a
motor vehicle is approaching or rounding a curve there is special necessity for
keeping to the right side of the road and the driver has not the right to drive on
the left hand side relying upon having time to turn to the right if a car is
approaching from the opposite direction comes into view.
As to the liability of the petitioners, Pon is primarily liable for his negligence
in driving recklessly the truck owned by BLTB. The liability of the BLTB itself is
also primary, direct and immediate in view of the fact that the death of or injuries
to its passengers was through the negligence of its employee.
The common carrier's liability for the death of or injuries to its passengers is
based on its contractual obligation to carry its passengers safely to their
destination. They are presumed to have acted negligently unless they prove that
they have observed extaordinary diligence.
In the case at bar, the appellants acted negligently.
BLTB is also solidarly liable with its driver even though the liability of the driver
springs from quasi delict while that of the bus company from contract.
BATANGAS TRANSPORTATION COMPANY VS. CAGUIMBAL, ET AL, JAN. 24,
1968
FACTS:
Caguibal, a paying passenger of Batangas Transportation Company (BTCO) died
when the said bus which was coming from the opposite direction and a calesa
managed by Makahiya, which was then ahead of BTCO bus met an accident.
A passenger requested the conductor of BTCO to stop as he was going to alight,

and when he heard the signal of the conductor, the driver slowed down his bus
swerving it farther to the right in order to stop; at this juncture, a calesa, then
driven by Makahiya was at a distance of several meters facing the BTCO bus
coming from the opposite direction; that at the same time the Biñan bus was
about 100 meters away likewise going northward and following the direction of
the calesa; that upon seeing the Biñan bus the driver of the BTCO bus dimmed
his light; that as the calesa and the BTCO bus were passing each other from the
opposite directions, the Biñan bus following the calesa swerved to its left in an
attempt to pass between the BTCO bus and the calesa; that without diminishing
its speed of about seventy (70) kilometers an hour, the Biñan bus passed through
the space between the BTCO bus and the calesa hitting first the left side of the
BTCO bus with the left front corner of its body and then bumped and struck the
calesa which was completely wrecked; that the driver was seriously injured and
the horse was killed; that the second and all other posts supporting the top of the
left side of the BTCO bus were completely smashed and half of the back wall to
the left was ripped open. The BTCO bus suffered damages for the repair of its
damaged portion.As a consequence of this occurrence, Caguimbal and Tolentino
died, apart from others who were injured.
The widow and children of Caguimbal sued to recover damages from the BTCO.
The latter, in turn, filed a third-party complaint against the Biñan and its driver,
Ilagan. Subsequently, the Caguimbals amended their complaint, to include
therein, as defendants, said Biñan and Ilagan.
CFI dismissed the complaint insofar as the BTCO is concerned, without prejudice
to plaintiff's right to sue Biñan and Ilagan. CA reversed said decision and
rendered judgment for Caguimbal. BTCO appealed to SC.
ISSUE:
Whether or not BTCO is liable due to failure to observe extraordinary diligence?
HELD:
YES. The recklessness of the driver of Binan was, manifestly, a major factor in
the occurrence of the accident which resultedin the death of Pedro Caguimbal.
Indeed, as driver of the Biñan bus, he overtook Makahiya's horse-driven rig or
calesa and passed between the same and the BTCO bus despite the fact that the
space available was not big enough therefor, in view of which the Biñan bus hit
the left side of the BTCO bus and then the calesa.
Article 1733 of the Civil Code provides the general rule that extraordinary
diligence must be exercised by the driver of a bus in the vigilance for the safety of
his passengers. The record shows that, in order to permit one of them to
disembark, the BTCO bus driver drove partly to the right shoulder of the road and
partly on the asphalted portion thereof. Yet, he could have and should have seen
to it — had he exercised "extraordinary diligence" — that his bus was completely
outside the asphalted portion of the road, and fully within the shoulder thereof,
the width of which being more than sufficient to accommodate the bus. When the
BTCO bus driver slowed down his BTCO bus to permit said passenger to
disembark, he must have known, therefore, that the Biñan bus would overtake
the calesa at about the time when the latter and BTCO bus would probably be on
the same line, on opposite sides of the asphalted portions of the road, and that
the space between the BTCO bus and the "calesa" would not be enough to allow
the Biñan bus to go through. It is true that the driver of the Biñan bus should
have slowed down or stopped, and, hence, was reckless in not doing so; but, he
had no especial obligations toward the passengers of the BTCO unlike the BTCO
bus driver whose duty was to exercise "utmost" or "extraordinary" diligence for
their safety. Perez was thus under obligation to avoid a situation which would be
hazardous for his passengers, and, make their safety dependent upon the
diligence of the Biñan driver.
In an action based on a contract of carriage, the court need not make an express
finding of fault or negligence on the part of the carrier in order to hold it
responsible to pay the damages sought for by the passenger. By the contract of
carriage, the carrier assumes the express obligation to transport the passenger to
his destination safely and to observe extraordinary diligence with a due regard for
all the circumstances, and any injury that might be suffered by the passenger is
right away attributable to the fault or negligence of the carrier (Article 1756, new
Civil Code). This is an exception to the general rule that negligence must be
proved, and it is therefore incumbent upon the carrier to prove that it has
exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the
new Civil Code.
MALLARI VS. CA
G.R. NO. 128607
JANUARY 31, 2000
FACTS:
The passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his
co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent
Bulletin Publishing Corp. (BULLETIN, for brevity) along the National Highway in
Barangay San Pablo, Dinalupihan, Bataan. Petitioner Mallari Jr. testified that he
went to the left lane of the highway and overtook a Fiera which had stopped on
the right lane. Before he passed by the Fiera, he saw the van of respondent
BULLETIN coming from the opposite direction. It was driven by one Felix Angeles.
The sketch of the accident showed that the collision occurred after Mallari Jr.
overtook the Fiera while negotiating a curve in the highway. The impact caused
the jeepney to turn around and fall on its left side resulting in injuries to its
passengers one of whom was Israel Reyes who eventually died due to the gravity
of his injuries. The widow of Israel M. Reyes, filed a complaint for damages with
the Regional Trial Court of Olongapo City against Alfredo Mallari Sr. and Alfredo
Mallari Jr., and also against BULLETIN, its driver Felix Angeles, and the N.V.
Netherlands Insurance Company. The complaint alleged that the collision which
resulted in the death of Israel Reyes was caused by the fault and negligence of
both drivers of the passenger jeepney and the Bulletin Isuzu delivery van. The
Court of appeals held that the collision was caused by the sole negligence of
petitioner Alfredo Mallari Jr. who admitted that immediately before the collision
and after he rounded a curve on the highway, he overtook a Fiera which had
stopped on his lane and that he had seen the van driven by Angeles before
overtaking the Fiera. Petitioners contend that there is no evidence to show that
petitioner Mallari Jr. overtook a vehicle at a curve on the road at the time of the
accident and that the testimony of Angeles on the overtaking made by Mallari Jr.
was not credible and unreliable.
ISSUE:
Whether or not the negligence of the petitioner was the proximate cause of the
collision.
HELD:
Yes. The Court of Appeals correctly found, based on the sketch and spot report of
the police authorities which were not disputed by petitioners, that the collision
occurred immediately after petitioner Mallari Jr. overtook a vehicle in front of it
while traversing a curve on the highway. This act of overtaking was in clear
violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known
as The Land Transportation and Traffic Code. The rule is settled that a driver
abandoning his proper lane for the purpose of overtaking another vehicle in an
ordinary situation has the duty to see to it that the road is clear and not to
proceed if he cannot do so in safety. When a motor vehicle is approaching or
rounding a curve, there is special necessity for keeping to the right side of the
road and the driver does not have the right to drive on the left hand side relying
upon having time to turn to the right if a car approaching from the opposite
direction comes into view.
In the instant case, by his own admission, petitioner Mallari Jr. already saw that
the BULLETIN delivery van was coming from the opposite direction and failing to
consider the speed thereof since it was still dark at 5:00 o'clock in the morning
mindlessly occupied the left lane and overtook two (2) vehicles in front of it at a
curve in the highway. Clearly, the proximate cause of the collision resulting in the
death of Israel Reyes, a passenger of the jeepney, was the sole negligence of the
driver of the passenger jeepney, petitioner Alfredo Mallari Jr., who recklessly
operated and drove his jeepney in a lane where overtaking was not allowed by
traffic rules. Under Art. 2185 of the Civil Code, unless there is proof to the
contrary, it is presumed that a person driving a motor vehicle has been negligent
if at the time of the mishap he was violating a traffic regulation.
HERMINIO L. NOCUM VS. LAGUNA TAYABAS BUS COMPANY
G.R. NO. L-23733 OCTOBER 31, 1969
FACTS:
According to Severino Andaya, a witness for the plaintiff, a man with a box went
up the baggage compartment of the bus where he already was and said box was
placed under the seat. They left Azcarraga at about 11:30 in the morning and
when the explosion occurred, he was thrown out.
The bus conductor, Sancho Mendoza, testified that the box belonged to a
passenger whose name he does not know and who told him that it contained
miscellaneous items and clothes. He helped the owner in loading the baggage
which weighed about twelve (12) kilos and because of company regulation, he
charged him for it twenty-five centavos (P0.25). From its appearance there was
no indication at all that the contents were explosives or firecrackers. Neither did
he open the box because he just relied on the word of the owner.
Dispatcher Nicolas Cornista of defendant company corroborrated the testimony of

Mendoza and he said, among other things, that he was present when the box was
loaded in the truck and the owner agreed to pay its fare. He added that they were
not authorized to open the baggages of passengers because instruction from the
management was to call the police if there were packages containing articles
which were against regulations.
Appeal of the Laguna Tayabas Bus Co., defendant in the Court below, from a
judgment of the said court (Court of First Instance of Batangas) in its Civil Case
No. 834, wherein appellee Herminio L. Nocum was plaintiff, sentencing appellant
to pay appellee the sum of P1,351.00 for actual damages and P500.00 as
attorney's fees with legal interest from the filing of the complaint plus costs.
Appellee, who was a passenger in appellant's Bus No. 120 then making a trip
within the barrio of Dita, Municipality of Bay, Laguna, was injured as a
consequence of the explosion of firecrackers, contained in a box, loaded in said
bus and declared to its conductor as containing clothes and miscellaneous items
by a co-passenger. The findings of fact of the trial court are not assailed. The
appeal is purely on legal questions.
ISSUE:
Whether or not the respondent company is liable for the passenger’s injury for
not exercising extraordinary diligenceof a very cautious person required by the
Civil Code?
HELD:
No. In this particular case before Us, it must be considered that while it is true
the passengers of appellant's bus should not be made to suffer for something
over which they had no control, as enunciated in the decision of this Court cited
by His Honor, fairness demands that in measuring a common carrier's duty
towards its passengers, allowance must be given to the reliance that should be
reposed on the sense of responsibility of all the passengers in regard to their
common safety. It is to be presumed that a passenger will not take with him
anything dangerous to the lives and limbs of his co-passengers, not to speak of
his own. Not to be lightly considered must be the right to privacy to which each
passenger is entitled. He cannot be subjected to any unusual search, when he
protests the innocuousness of his baggage and nothing appears to indicate the
contrary, as in the case at bar. In other words, inquiry may be verbally made as
to the nature of a passenger's baggage when such is not outwardly perceptible,
but beyond this, constitutional boundaries are already in danger of being
transgressed. Calling a policeman to his aid, as suggested by the service manual
invoked by the trial judge, in compelling the passenger to submit to more rigid
inspection, after the passenger had already declared that the box contained mere
clothes and other miscellaneous, could not have justified invasion of a
constitutionally protected domain. Police officers acting without judicial authority
secured in the manner provided by law are not beyond the pale of constitutional
inhibitions designed to protect individual human rights and liberties. Withal, what
must be importantly considered here is not so much the infringement of the
fundamental sacred rights of the particular passenger herein involved, but the
constant threat any contrary ruling would pose on the right of privacy of all
passengers of all common carriers, considering how easily the duty to inspect can
be made an excuse for mischief and abuse. Of course, when there are sufficient
indications that the representations of the passenger regarding the nature of his
baggage may not be true, in the interest of the common safety of all, 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. It is in this sense that the mentioned service manual issued by
appellant to its conductors must be understood.
The principle that must control the servants of the carrier in a case like the one
before us is correctly stated in the opinion in the case of Clarke v. Louisville &
N.R. Co. 20 Ky L. Rep. 839, 49 S.W. 1120. In that case Clarke was a passenger
on the defendant's train. Another passenger took a quantity of gasoline into the
same coach in which Clarke was riding. It ignited and exploded, by reason of
which he was severely injured. The trial court peremptorily instructed the jury to
find for the defendant. In the opinion, affirming the judgment, it is said: "It may
be stated briefly, in assuming the liability of a railroad to its passengers for injury
done by another passenger, only where the conduct of this passenger had been
such before the injury as to induce a reasonably prudent and vigilant conductor to
believe that there was reasonable ground to apprehend violence and danger to
the other passengers, and in that case asserting it to be the duty of the conductor
of the railroad train to use all reasonable means to prevent such injury, and if he
neglects this reasonable duty, and injury is done, that then the company is
responsible; that otherwise the railroad is not responsible."
Explosive or Dangerous Contents. — A carrier is ordinarily not liable for

injuries to passengers from fires or explosions caused by articles brought
into its conveyances by other passengers, in the absence of any evidence
that the carrier, through its employees, was aware of the nature of the
article or had any reason to anticipate danger therefrom. (Bogard v. Illinois
C. R Co. 144 Ky. 649, 139 S. W. 855, 36 L. R. A.[N. S.] 337; Clarke v. Louisville &
N. R. Co. 101 Ky. 34, 39 S. W. 840, 36 L. R. A. 123 [explosion of can of gasoline];
East Indian R. Co. v. Mukerjee [1901] A. C. [Eng.] 396, 3 B. R. C. 420 — P. C.
[explosion of fireworks]; Annotation: 37 L. R. A. [N. S.] 725.) 3
Appellant further invokes Article 1174 of the Civil Code which relieves all obligors,
including, of course, common carriers like appellant, from the consequence of
fortuitous events. The court a quo held that "the breach of contract (in this case)
was not due to fortuitous event and that, therefore, the defendant is liable in
damages." Since We hold that appellant has succeeded in rebutting the
presumption of negligence by showing that it has exercised extraordinary
diligence for the safety of its passengers, "according to the circumstances of the
(each) case", We deem it unnecessary to rule whether or not there was any
fortuitous event in this case.
PHILIPPINE AIRLINES, INC. VS. COURT OF APPEALS
G.R. NO. L-82619 SEPTEMBER 15, 1993
BELLOSILLO, J.:
FACTS:
On 25 November 1976, private respondent filed a complaint for damages for
breach of contract of carriage2 against Philippine Airlines, Inc. (PAL), before the
then Court of First Instance. Zapatos purchased a ticket from Philippine Air Lines
(PAL) wherein it was agreed that the latter would transport him to Ozamiz City.
The plane’s route was from Cebu -Ozamiz-Cotabato. However, due to
unfavoarable weather conditions and the fact that PAL did nothave an all-weather
airport, PAL had bypassed Ozamiz City. PAL then informed Zapatos ofhis options,
to return to Cebu on the same day, or take the next flight to Cebu the
followingday, or to take the next available flight to Ozamiz City. Zapatos chose to
return to OzamizCity on the same day. However, there were only six (6) seats
available and, the seats weregiven to the passengers according to their check-in
sequence at Cebu. Consequently,Zapatos was stranded in Cotabato City, where a
battle between the government and theMuslims was ongoing.During his stay in
Cotabato City, PAL also failed to provide accomodations for Zapatos. Italso
refused to have the latter hitch a ride with its employees on a ford truck bound
for the City. It also failed to return Zapatos’ luggage. This prompted Zapatos to
file a complaint for damages against Philippine Air Lines forbreach of contract.PAL
claimed that it should not be charged with the task of looking after
the passengers'comfort and convenience because the diversion of the flight was
due to a fortuitous event,and that if made liable, an added burden is given to PAL
which is over and beyond its dutiesunder the contract of carriage
ISSUE:
Is PAL liable for the breach of contract of carriage?
HELD:
YES. Undisputably, PAL's diversion of its flight due to inclement weather was a
fortuitous event. Nonetheless, such occurrence did not terminate PAL's contract
with its passengers. Being in the business of air carriage and the sole one to
operate in the country, PAL is deemed equipped to deal with situations as in the
case at bar. What we said in one case once again must be stressed, i.e., the
relation of carrier and passenger continues until the latter has been landed at the
port of destination and has left the carrier's premises. Hence, PAL necessarily
would still have to exercise extraordinary diligence in safeguarding the comfort,
convenience and safety of its stranded passengers until they have reached their
final destination. On this score, PAL grossly failed considering the then ongoing
battle between government forces and Muslim rebels in Cotabato City and the
fact that the private respondent was a stranger to the place. While we find PAL
remiss in its duty of extending utmost care to private respondent while being
stranded in Cotabato City, there is no sufficient basis to conclude that PAL failed
to inform him about his non-accommodation on Flight 560, or that it was
inattentive to his queries relative thereto. 
VDA DE ABETO vs PAL
FACTS:
Judge Quirico Abeto, with the necessary tickets, boarded the Philippine Air Lines
plane at the Mandurriao Airport, Iloilo City for Manila. The plane did not reach its
destination due to a plane crash at Mr. Baco, Province of Mindoro.
PAL tried to prove that the plane crash was beyond the control of the pilot. PAL
conceded that there was navigational error but no negligence on the part of the
pilot. Further, deviation from its prescribed route was due to the bad weather
conditions between Mt. Baco and Romblon and strong winds which caused the
plane to drift to Mt. Baco. Under the circumstances, appellant argues that the
crash was a fortuitous event and, therefore, defendant-appellant cannot be held
liable under the provisions of Article 1174 of the New Civil Code.
ISSUE:
Whether or not the defendant is liable for violation of contract of carriage.
HELD:
Yes. Article 1756 fixes the burden of proof by providing that "in case of death of
or injuries to passengers, common carriers are presumed to have been at fault or
to have acted negligently, unless they prove that they observed extra-ordinary
diligence as prescribed in Articles 1733 and 1755." Lastly, Article 1757 states that
"the responsibility of a common carrier for the safety of passengers ... cannot be
dispensed with or lessened by stipulation, by the posting of notices, by
statements on tickets, or otherwise.”
It is clear that the pilot did not follow the designated route for his flight between
Romblon and Manila. The weather was clear and he was supposed to cross airway
"Amber I" over Romblon; instead, he made a straight flight to Manila in violation
of air traffic rules.
At any rate, in the absence of a satisfactory explanation by appellant as to how
the accident occurred, the presumption is, it is at fault. In an action based on a
contract of carriage, the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to pay the
damages sought for by the passenger. By the contract of carriage, the carrier
assumes the express obligation to transport the passenger to his destination
safely and to observe extraordinary diligence with a due regard for all the
circumstances, and any injury that might be suffered by the passenger is right
away attributable to the fault or negligence of the carrier. This is an exception to
the general rule that negligence must be proved.
[G.R. NO. 161730. JANUARY 28, 2005]
JAPAN AIRLINES, PETITIONER, VS. MICHAEL ASUNCION AND JEANETTE
ASUNCION, RESPONDENTS.
YNARES-SANTIAGO, J.:
DOCTRINE: It may be true that JAL has the duty to inspect whether its
passengers have the necessary travel documents, however, such duty does not
extend to checking the veracity of every entry in these documents. JAL could not
vouch for the authenticity of a passport and the correctness of the entries therein.
The power to admit or not an alien into the country is a sovereign act which
cannot be interfered with even by JAL. This is not within the ambit of the contract
of carriage entered into by JAL and herein respondents. As such, JAL should not
be faulted for the denial of respondents shore pass applications.
FACTS:
Respondents Michael and Jeanette Asuncion left Manila on board Japan Airlines
(JAL) Flight 742 bound for Los Angeles. Their itinerary included a stop-over in
Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs.
Higuchi of JAL endorsed their applications for shore pass and directed them to the
Japanese immigration official. A shore pass is required of a foreigner aboard a
vessel or aircraft who desires to stay in the neighborhood of the port of call for
not more than 72 hours.
During their interview, the Japanese immigration official noted that Michael
appeared shorter than his height as indicated in his passport. Because of this
inconsistency, respondents were denied shore pass entries and were brought
instead to the Narita Airport Rest House where they were billeted overnight.
Respondents were charged US$400.00 each for their accommodation, security
service and meals.
The immigration official also handed Mrs. Higuchi a Notice where it was stated
that respondents were to be watched so as not to escape.
Respondents filed a complaint for damages claiming that JAL did not fully apprise
them of their travel requirements and that they were rudely and forcibly detained
at Narita Airport.
JAL denied the allegations of respondents. It maintained that the refusal of the
Japanese immigration authorities to issue shore passes to respondents is an act
of state which JAL cannot interfere with or prevail upon.
The RTC ruled in favor of plaintiffs ordering defendant JAL to pay plaintiffs for
their expenses, moral and exemplary damages, attorney’s fees, and costs of suit.
The CA affirmed in toto the decision of the trial court. Hence, this petition.
ISSUE:
W/N there was breach of contract of carriage
HELD:
NONE.
Under Article 1755 of the Civil Code, a common carrier such as JAL is bound to
carry its passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with due regard for all the
circumstances. When an airline issues a ticket to a passenger, confirmed for a
particular flight on a certain date, a contract of carriage arises. The passenger has
every right to expect that he be transported on that flight and on that date and it
becomes the carrier’s obligation to carry him and his luggage safely to the agreed
destination. If the passenger is not so transported or if in the process of
transporting he dies or is injured, the carrier may be held liable for a breach of
contract of carriage.
It may be true that JAL has the duty to inspect whether its passengers have the
necessary travel documents, however, such duty does not extend to checking the
veracity of every entry in these documents. JAL could not vouch for the
authenticity of a passport and the correctness of the entries therein. The power to
admit or not an alien into the country is a sovereign act which cannot be
interfered with even by JAL. This is not within the ambit of the contract of
carriage entered into by JAL and herein respondents. As such, JAL should not be
faulted for the denial of respondents shore pass applications.
Respondents claim that petitioner also breached its contract of carriage when it
failed to explain to the immigration authorities that they had overnight vouchers
at the Hotel Nikko Narita is bereft of merit. They further imputed that JAL did not
exhaust all means to prevent the denial of their shore pass entry applications.
To reiterate, JAL or any of its representatives have no authority to interfere with

or influence the immigration authorities. The most that could be expected of JAL
is to endorse respondents applications, which Mrs. Higuchi did immediately upon
their arrival in Narita.
Wherefore, there being no breach of contract on the part of petitioner, the award
of actual, moral and exemplary damages, as well as attorney’s fees and costs of
the suit in favor of respondents Michael and Jeanette Asuncion, is deleted for lack
of basis.
HE HEACOCK VS MACONDRAY
FACTS:
On or about the 5th day of June, 1919, the plaintiff caused to be delivered on
board the steamship Bolton Castle, then in the harbor of New York, four cases of
merchandise. one of which contained twelve (12) 8-day Edmond clocks, properly
boxed and marked for transportation to Manila, and paid freight on said clocks
from New York to Manila in advance. The said steamship arrived in the port of
Manila on or about the 10th day of September, 1919, consigned to the defendant
herein as agent and representative of said vessel in said port. Neither the master,
of said vessel nor the defendant herein, as its agent, delivered to the plaintiff the
aforesaid twelve 8-day Edmond clocks, although demand was made upon them
for their delivery.
The bill of lading issued and delivered to the plaintiff by the master of the said
steamship Bolton Castle contained, among others, the following clauses:
"1. It is mutually agreed that the value of the goods receipted for above does not
exceed $500 per freight ton, or, in proportion for any part of a ton, unless the
value be expressly stated herein and ad valorem freight paid thereon."
"9. Also, that in the event of claims for short delivery of, or damage to, cargo
being made, the carrier shall not be liable for more than the net invoice price plus
freight and insurance less all charges saved, and any loss or damage for which
the carrier may be liable shall be adjusted pro rata on the said basis."
For damages to the clocks, petitioner sued respondent to recover damages.
ISSUE:
WON the stipulations in the bill of lading are valid
HELD:
Yes. Three kinds of stipulations have often been made in a bill of lading.
The first is one exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence. The second is one providing for an unqualified
limitation of such liability to an agreed valuation. And the third is one limiting the
liability of the carrier to an agreed valuation unless the shipper declares a higher
value and pays a higher rate of freight. According to an almost uniform weight of
authority, the first and second kinds of stipulations are invalid as being contrary
to public policy, but the third is valid and enforceable.
A reading of clauses 1 and 9 of the Bill of lading here in question, however, clearly
shows that the present case falls within the third stipulation, to wit: That a clause
in a bill of lading limiting the liability of the carrier to a certain amount unless the
shipper declares a higher value and pays a higher rate of freight, is valid and
enforceable. This proposition is supported by a uniform lien of decisions of the
Supreme Court of the United States. "A limitation of liability based upon an
agreed value to obtain a lower rate does not conflict with any sound principle of
public policy; and it is not conformable to plain principles of justice that a shipper
may understate value in order to reduce the rate and then recover a larger value
in case of loss." (Adams Express Co. vs. Croninger, 226 U. S, 491, 492.)
ONG YIU VS. CA
JUNE 29, 1979
FACTS:
Petitioner Ong Yiu was a fare paying passenger of respondent Philippine Air Lines,
Inc. (PAL) from Mactan Cebu, bound for Butuan City. He was scheduled to attend
the trial of Civil and Spec Pro cases in the Court of First Instance, for hearing on
August 28-31, 1967. As a passenger, he checked in one piece of luggage, a blue
"maleta" containing vital documents needed for trial the next day. Upon arrival,
petitioner claimed his luggage but it could not be found. Upon the arrival of the
maleta, Dagorro, petitioner’s driver, delivered it to the latter with the information
that the lock was open. Upon inspection, petitioner found that a folder containing
certain exhibits, transcripts and private documents in the civil and specpro cases
were missing, aside from two gift items for his parents-in-law. Petitioner refused
to accept the luggage. Dagorro returned it to the porter clerk, Maximo Gomez,
who sealed it and forwarded the same to PAL Cebu.
On September 13, 1967, petitioner filed a Complaint against PAL for damages for
breach of contract of transportation with the Court of First Instance of Cebu which
PAL traversed. After due trial, the lower Court found PAL to have acted in bad
faith and with malice and declared petitioner entitled to moral and exemplary
damages.
The Court of Appeals, finding that PAL was guilty only of simple negligence,
reversed the judgment of the trial Court granting petitioner moral and exemplary
damages, but ordered PAL to pay plaintiff the sum of P100.00, the baggage
liability assumed by it under the condition of carriage printed at the back of the
ticket stating that the plaintiff did not declare a greater value and did not call the
attention of the defendant on its true value and paid the tariff therefor. The
validity of this stipulation is also not questioned by the plaintiff. They are printed
in reasonably and fairly big letters, and are easily readable. Moreover, plaintiff
had been a frequent passenger of PAL from Cebu to Butuan City and back, and
he, being a lawyer and businessman, must be fully aware of these conditions.
ISSUES:
WON Petitioner is entitled to damages
WON defandant’s liability is limited to 100.00 / baggage.
HELD:
Plaintiff is not entitled to damages since PAL had not acted in bad faith. Bad faith
means a breach of a known duty through some motive of interest or ill will. It was
the duty of PAL to look for petitioner's luggage which had been miscarried and
PAL exerted due diligence in complying with such duty.
Thus, in the absence of a wrongful act or omission or of fraud or bad faith,
petitioner is not entitled to moral damages.
Furthermore, there is no dispute that petitioner did not declare any higher value
for his luggage, much less did he pay any additional transportation charge.
While it may be true that petitioner had not signed the plane ticket, he is
nevertheless bound by the provisions thereof. "Such provisions have been held to
be a part of the contract of carriage, and valid and binding upon the passenger
regardless of the latter's lack of knowledge or assent to the regulation". It is what
is known as a contract of "adhesion", in regards which it has been said that
contracts of adhesion wherein one party imposes a ready made form of contract
on the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free to reject it
entirely; if he adheres, he gives his consent. And as held in previous
jurisprudence, "a contract limiting liability upon an agreed valuation does not
offend against the policy of the law forbidding one from contracting against his
own negligence.
Considering, therefore, that petitioner had failed to declare a higher value for his
baggage, he cannot be permitted a recovery in excess of P100.00. Besides,
passengers are advised not to place valuable items inside their baggage but "to
avail of our V-cargo service." It is likewise to be noted that there is nothing in the
evidence to show the actual value of the goods allegedly lost by petitioner.
SEA-LAND SERVICE INC. V. IAC
G.R. NO. L-75118; AUGUST 31, 1987
NARVASA, J.
FACTS:
Petitioner Sea-Land is a foregin shipping and forwarding company licensed to do
business in the Phils., received from Seaborne Trading Co. a shipment consigned
to Sen Hiap Hing, the business name used by Cue in the wholesale and retail
trade which he operated out of an establishment on Cebu City. The shipper not
having declared the value of the shipment, no value was indicated in the bill of
lading. Upon arriving in Manila on February 12, 1981, it was placed in a container
for trans-shipment to Cebu but was stolen by pilfers and was never recovered.
On March 10, 1981, the consignee (Cue) made a formal claim upon Sea-
Land for the value of the lost shipment allegedly amounting to P30,600 asserting
that said amount represented its maximum liability for the loss of the shipment
under the package limitation clause in the covering bill of lading. Cue rejected the
offer and instead brought a suit for damages against petitioner. The lower court
held that petitioner was liable for P186,048 representing the value of the lost
cargo, including another amount for unrealized profit and attorney’s fees.
Petitioner appealed to the IAC but the latter court upheld the lower court’s
decision.
ISSUE:
Whether or not the consignee of seaborne freight is bound by stipulations in the
covering bill of lading limiting to a fixed amount the liability of the carrier for loss
or damage to the cargo where its value is not declared in the bill .
HELD:
Yes. Since the liability of a common carrier for loss or damage to goods
transported by it under a contract of carriage is governed by the laws of the
country of destination and the goods in question were shipped from the US to the
Phils., the liability of petitioner to respondent consignee is governed primarily by
the Civil Code, and as ordained by the Code, suppletorily, in all matter s not
determined thereby, by the Code of Commerce and special laws.
One of theses suppletory special laws is the COGSA, which was made
applicable to all contracts for the carriage of goods by sea to and from Philippine
ports in foreign trade by Commonwealth Act No. 65.
It has already been held that the provisions of the COGSA on package
limitation [sec. 4(5) of the Act hereinabove referred to] are as much a part of a
bill of lading as though actually placed therein by agreement of the parties. 
Private respondent, by making claim for loss on the basis of the bill of lading, to
all intents and purposes accepted said bill. Having done so, he becomes bound by
all stipulations contained therein whether on the front or the back thereof.
Respondent cannot elude its provisions simply because they prejudice him and
take advantage of those that are beneficial. Secondly, the fact that respondent
shipped his goods on board the ship of petitioner and paid the corresponding
freight thereon shows that he impliedly accepted the bill of lading which was
issued in connection with the shipment in question, and so it may be said that the
same is binding upon him as if it had been actually signed by him or by any other
person in his behalf.
CITADEL LINES V CA
GR NO. 88092 | APRIL 25, 1990
FACTS:
Petitioner Citadel Lines, Inc. (CARRIER) is the general agent of the vessel
"Cardigan Bay/Strait Enterprise," while respondent Manila Wine Merchants, Inc.
(CONSIGNEE) is the importer of the subject shipment of Dunhill cigarettes from
England.
On or about March 17, 1979, the vessel "Cardigan Bay/Strait Enterprise" loaded
on board at Southampton, England, for carriage to Manila, 180 Filbrite cartons of
mixed British manufactured cigarettes called "Dunhill International Filter" and
"Dunhill International Menthol," as evidenced by Bill of Lading No.
70621374 2 and Bill of Lading No. 70608680 3 of the Ben Line Containers Ltd. The
shipment arrived at the Port of Manila Pier 13, on April 18, 1979 in container van
No. BENU 204850-9. The said container was received by E. Razon, Inc.
(ARRASTRE) under Cargo Receipt No. 71923 dated April 18, 1979. 4
On April 30, 1979, the container van, which contained two shipments was
stripped. One shipment was delivered and the other shipment consisting of the
imported British manufactured cigarettes was palletized. Due to lack of space at
the Special Cargo Coral, the aforesaid cigarettes were placed in two containers
with two pallets in container No. BENU 204850-9, the original container, and four
pallets in container No. BENU 201009-9, with both containers duly padlocked and
sealed by the representative of the CARRIER.
In the morning of May 1, 1979, the CARRIER'S head checker discovered that
container van No. BENU 201009-9 had a different padlock and the seal was
tampered with. The matter was reported to Jose G. Sibucao, Pier Superintendent,
Pier 13, and upon verification, it was found that 90 cases of imported British
manufactured cigarettes were missing. Per investigation conducted by the
ARRASTRE, it was revealed that the cargo in question was not formally turned
over to it by the CARRIER but was kept inside container van No. BENU 201009-9
which was padlocked and sealed by the representatives of the CARRIER without
any participation of the ARRASTRE.
When the CONSIGNEE learned that 90 cases were missing, it filed a formal claim
dated May 21, 1979, 7 with the CARRIER, demanding the payment of
P315,000.00 representing the market value of the missing cargoes. The CARRIER,
in its reply letter dated May 23, 1979, 8 admitted the loss but alleged that the
same occurred at Pier 13, an area absolutely under the control of the ARRASTRE.
In view thereof, the CONSIGNEE filed a formal claim, dated June 4, 1979, 9 with
the ARRASTRE, demanding payment of the value of the goods but said claim was
denied.
ISSUES:
1. Whether the loss occurred while the cargo in question was in the custody of E.
Razon, Inc. or of Citadel Lines, Inc – it occurred while the cargo was in the
custody of the carrier
2. Whether the stipulation limiting the liability of the carrier contained in the bill
of lading is binding on the consignee. - YES
HELD:
1. The Court of Appeals declared in no uncertain terms that, on the basis of the
evidence presented, the subject cargo which was placed in a container van,
padlocked and sealed by the representative of the CARRIER was still in its
possession and control when the loss occurred, there having been no formal
turnover of the cargo to the ARRASTRE. Besides, there is the categorical
admission made by two witnesses, namely, Atty. Lope M. Velasco and Ruben
Ignacio, Claims Manager and Head Checker, respectively, of the CARRIER, 10 that
for lack of space the containers were not turned over to and as the responsibility
of E. Razon Inc. The CARRIER is now estopped from claiming otherwise.
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 and for the safety of the passengers transported by them, according to all
the circumstances of each case. 11 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 extra ordinary diligence
as required in Article 1733 of the Civil Code. 12 The duty of the consignee is to
prove merely that the goods were lost. Thereafter, the burden is shifted to the
carrier to prove that it has exercised the extraordinary diligence required by law.
And, its extraordinary responsibility 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 the right to receive them. 13
Considering, therefore, that the subject shipment was lost while it was still in the
custody of herein petitioner CARRIER, and considering further that it failed to
prove that the loss was occasioned by an excepted cause, the inescapable
conclusion is that the CARRIER was negligent and should be held liable therefor.
2. We, however, find the award of damages in the amount of P312,800.00 for the
value of the goods lost, based on the alleged market value thereof, to be
erroneous. It is clearly and expressly provided under Clause 6 of the
aforementioned bills of lading issued by the CARRIER that its liability is limited to
$2.00 per kilo. Basic is the rule, long since enshrined as a statutory provision,
that a stipulation limiting the liability of the carrier to the value of the
goods appearing in the bill of lading, unless the shipper or owner
declares a greater value, is binding. 14 Further, a contract fixing the sum that
may be recovered by the owner or shipper for the loss, destruction or
deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon. 15
The CONSIGNEE itself admits in its memorandum that the value of the goods
shipped does not appear in the bills of lading. 16 Hence, the stipulation on the
carrier's limited liability applies. There is no question that the stipulation is just
and reasonable under the circumstances and have been fairly and freely agreed
upon. In Sea-land Service, Inc.vs. Intermediate Appellate Court, et al. 17 we there
explained what is a just and reasonable, and a fair and free, stipulation, in this
wise:
. . . That said stipulation is just and reasonable arguable from the fact that it
echoes Art. 1750 itself in providing a limit to liability only if a greater value is not
declared for the shipment in the bill of lading. To hold otherwise would amount to
questioning the justice and fairness of that law itself, and this the private
respondent does not pretend to do. But over and above that consideration the
just and reasonable character of such stipulation is implicit in it giving the shipper
or owner the option of avoiding accrual of liability limitation by the simple and
surely far from onerous expedient of declaring the nature and value of the
shipment in the bill of lading. And since the shipper here has not been heard to
complain of having been "rushed," imposed upon or deceived in any significant
way into agreeing to ship the cargo under a bill of lading carrying such a
stipulation — in fact, it does not appear, that said party has been heard from at
all insofar as this dispute is concerned — there is simply no ground for assuming
that its agreement thereto was not as the law would require, freely and fairly
sought and well.
Since 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at
$2.00 per kilo the CARRIER's liability amounts to only US$4,467.60.
EVERETT STEAMSHIP VS CA
FACTS:
Private respondent imported 3 crates of bus spare parts marked as, from its
supplier, Maruman Trading a foreign corporation based in Inazawa, Aichi, Japan.
The crates were shipped from Nagoya, Japan to Manila on board
“ADELFAEVERETTE,” a vessel owned by petitioner’s principal, Everett Orient Lines.
Upon arrival at the port of Manila, it was discovered that the crate marked MARCO
C/No. 14 was missing. Private respondent claim upon petitioner for the value of
the lost cargo amounting to One Million Five Hundred Fifty Two Thousand Five
Hundred (Y1, 552,500.00) Yen, the amount shown in an Invoice, dated November
14, 1991. However, petitioner offered to pay only One Hundred Thousand
(Y100,000.00) Yen, the maximum amount stipulated under Clause 18 of the
covering bill of lading which limits the liability of petitioner.
Private respondent rejected the offer and thereafter instituted a suit for collection.
The trial court rendered a decision in favor of the private respondents and this
was affirmed by the Court of Appeals. Thus, this instant petition.
ISSUE:
1. W/N the limited liability clause in the Bill of Lading is valid
2. Is private respondent, as consignee, who is not a signatory to the bill of
lading bound by the stipulations thereof?
HELD:
1. A stipulation in the bill of lading limiting the common carrier’s liability for
loss or destruction of a cargo to a certain sum, unless the shipper or owner
declares a greater value, is sanctioned by law, particularly Articles 1749 and
1750 of the Civil Code
Maruman Trading, had the option to declare a higher valuation if the value of its
cargo was higher than the limited liability of the carrier. Considering that the
shipper did not declare a higher valuation, it had itself to blame for not complying
with the stipulations.
Maruman Trading, we assume, has been extensively engaged in the trading
business. It can not be said to be ignorant of the business transactions it entered
into involving the shipment of its goods to its customers. The shipper could not
have known, or should know the stipulations in the bill of lading and there it
should have declared a higher valuation of the goods shipped. Moreover,
Maruman Trading has not been heard to complain that it has been deceived or
rushed into agreeing to ship the cargo in petitioner’s vessel. In fact, it was not
even impleaded in this case.
2. Yes. The consignee who is not a signatory to the contract of carriage
between the shipper and the carrier, the consignee can still be bound by the
contract.
The next issue to be resolved is whether or not private respondent, as consignee,
who is not a signatory to the bill of lading is bound by the stipulations thereof.
Again, in Sea-land Service, Inc. vs. IAC (Supra), we held that even in the
consignee between the shipper and the carrier, the consignee can still be bound
by the contract.
SC also ruled: “To begin with, there is no question of the right, in the principle, of
a consignee in a bill of lading to recover from the carrier or shipper for loss of, or
damage to goods being transported under the said bill, although that document
may have been-as in practice it oftentimes is-drawn up only by the consignor and
the carrier without the intervention of the consignee.
When private respondent formally claimed reimbursement for the missing goods
from petitioner and subsequently filed a case against the latter based on the very
same bill of lading, it (private respondent) accepted the provisions of the contract
and thereby made itself a party thereto, or at least has come to court to enforce
it.
Thus private respondent cannot now reject or disregard the carrier’s limited
liability stipulation in the bill of lading. In other words, private respondent is
bound by the whole stipulations in the bill of lading and must respect the same.
SALUDO, JR. V. CA
207 SCRA 498
FACTS:
The mother of the petitioners died in Chicago, Illinois. Pomierski Funeral
Home of Chicago made the necessary preparations and arrangements for the
shipment of the remains to the Philippines. Pomierski brought the remains to
Continental Mortuary Air Services (CMAS) at the Chicago Airport which made the
necessary arrangements. CMAS booked the shipment with PAL. PAL Airway Bill
was issued wherein the requested routing was from Chicago to San Francisco on
board Trans World Airline (TWA) and from San Francisco to Manila on board PAL.
Salvacion, one of the petitioners, upon arrival at San Francisco, went to the TWA
to inquire about her mother’s remains. But she was told they did not know
anything about it. She then called Pomierski that her mother’s remains were not
at the West Coast terminal. Pomierski immediately called CMAS which informed
that the remains were on a plane to Mexico City, that there were two bodies at
the terminal, and somehow they were switched. Petitioners filed a complaint
against TWA and PAL for the erroneous shipment and delay of the cargo.
Petitioners alleged that private respondents received the casketed remains of the
deceased on October 26, 1976, as evidenced by the issuance of PAL Airway Bill
and from said date, private respondents were charged with the responsibility to
exercise extraordinary diligence so much so that the alleged switching of the
caskets on October 27, the latter must be liable. PAL contended that it was
October 28 when they received the physical delivery of the body, thus, it is not
liable for the switching which happened the day before.
ISSUES:
1) Is the Airway Bill a bill of lading?
2) Was there delivery of the cargo upon mere issuance of the Airway Bill?
HELD:
1) YES. A bill of lading is a written acknowledgement of the receipt of the goods
and an agreement to transport and deliver them at a specified place to a person
named or on his order. It may be called a shipping receipt, forwarder’s receipt
and receipt for transportation. Designation is immaterial. It was held that freight
tickets for bus companies as well as receipts for cargo transported by all forms of
transportation, whether by sea or land, fall within the definition. Under the Tariff
and Customs Code, a bill of lading includes airway bills of lading.
2) NO. While delivery of the goods to the carrier normally precedes the issuance
of the bill, or delivery of the goods and issuance of the bill are regarded in
commercial practice as simultaneous acts, there is nothing to prevent an inverse
order of events. It is a general rule to the parties to a contract of carriage of
goods where a bill of lading is issued, that the recital being in essence a receipt
alone, is not conclusive but may be explained, varied, or contradicted by parol or
other evidence. For instance, when no goods have been delivered for shipment,
no recitals in the bill can estop the carrier from showing the true facts. It only
raises a rebuttable presumption that the goods were delivered for shipment but
the fact must always outweigh the recital. Here, the explanation of private
respondents that the Airway Bill was issued, not as evidence of receipt of delivery
but merely as a confirmation of the book made sufficiently overcomes the
presumption relied on by petitioners that the remains of their mother were
delivered to and received by private respondents on October 26. The Court is
convinced that private respondent received the physical delivery of the body only
on October 28 as evidenced by the Interline Freight Transfer Manifest of the
American Airline Freight System. It was from that date that private respondents
became responsible for the agreed cargo under their undertakings in PAL Airway
Bill. Consequently, for the switching of caskets prior thereto which was not caused
by them, private respondents cannot be held liable.
NORTHWEST AIRLINES, INC. VS. CUENCA
G.R. No. L-22425; August 31, 1965
CONCEPCION, J.
FACTS:
When his contract of carriage was violated by the petitioner, respondent Cuenca
was the Commissioner of Public Highways. Having boarded petitioner's plane in
Manila with a first class ticket to Tokyo, he was, upon arrival at Okinawa,
transferred to the tourist class compartment. Although he revealed that he was
traveling in his official capacity as official delegate of the Republic to a conference
in Tokyo, an agent of petitioner rudely compelled him in the presence of other
passengers to move, over his objection, to the tourist class, under threat of
otherwise leaving him in Okinawa. In order to reach the conference on time,
respondent had no choice but to obey.
This is an action for damages for alleged breach of contract. After appropriate
proceedings, the CFI of Manila rendered judgment sentencing Northwest Airlines,
Inc. to pay to Cuenca damages, attorney's fees and expenses of litigation. On
appeal taken by petitioner, said decision was affirmed by the Court of Appeals,
except as to theP5,000.00 exemplary damages, which was eliminated, and the
P20,000.00 award for moral damages, which was converted into nominal
damages.
ISSUE:
Whether or not the Warsaw Convention relative to transportation by air is in force
in the Philippines and that respondent has cause of action
HELD:
Yes. Articles 17 to 19 of the Warsaw Convention provides:
ART. 17. The carrier shall be liable for damages sustained in the event of the
death or wounding of a passenger or any other bodily injury suffered by a
passenger, if the accident which caused the damage so sustained took place on
board the aircraft or in the course of any of the operations of embarking or
disembarking.
ART. 18. (1) The carrier shall be liable for damage sustained in the event of the
destruction or loss of, or of damage to, any checked baggage, or any goods, if the
occurrence which caused the damage so sustained took place during the
transportation by air.
(2) The transportation by air within the meaning of the preceding paragraph shall
comprise the period during which the baggage or goods are in charge of the
carrier, whether in an airport or on board an aircraft, or, in the case of a landing
outside an airport, in any place whatsoever.
(3) The period of the transportation by air shall not extend to any transportation
by land, by sea, or by river performed outside an airport. If, however, such
transportation takes place in the performance of a contract for transportation by
air, for the purpose of loading, delivery, or transhipment, any damage is
presumed, subject to proof to the contrary, to have been the result of an event
which took place during the transportation by air.
ART. 19. The carrier shall be liable for damage occasioned by delay in the
transportation by air of passengers, baggage, or goods.
Petitioner argues that pursuant to those provisions, an air "carrier is liable only"
in the event of death of a passenger or injury suffered by him, or of destruction
or loss of, or damage to any checked baggage or any goods, or of delay in the
transportation by air of passengers, baggage or goods. This pretense is not borne
out by the language of said Articles. The instances specified in Arts. 17 to 19 of
the Warsaw Convention merely declare the carrier liable for damages in the
enumerated cases, if the conditions therein specified are present. Neither said
provisions nor others in the aforementioned Convention regulate or exclude
liability for other breaches of contract by the carrier. Otherwise, an air carrier
would be exempt from any liability for damages in the event of its absolute
refusal, in bad faith, to comply with a contract of carriage. Thus, Cuenca has a
cause of action for breach of contract against Northwest.
ALITALIA v. IAC; GR 71929; December 4, 1990
FACTS:
Dr. Felipa Pablo, an associate professor in the University of the Philippines, and a
research grantee of the Philippine Atomic Energy Agency was invited to take part
at a meeting of the Department of Research and Isotopes of the United Nations in
Ispra, Italy. To fulfill this engagement, Dr. Pablo booked passage on petitioner
airline, ALITALIA. She arrived in Milan on the day before the meeting. She was
however told by the ALITALIA personnel there at Milan that her luggage was
"delayed inasmuch as the same . . . (was) in one of the succeeding flights from
Rometo Milan." Her luggage consisted of two (2) suitcases: one contained her
clothing and other personal items; the other, her scientific papers, slides and
other research material. But the other flights arriving from Rome did not have her
baggage on board. By then feeling desperate, she went to Rome to try to locate
her bags herself.
However, her baggage could not be found. Completely distraught and
discouraged, she returned to Manila without attending the meeting in Ispra, Italy.
Once back in Manila she demanded that ALITALIA make reparation for the
damages thus suffered by her. She rejected Alitalia’s offer of free airline tickets
and commenced an action for damages. As it turned out, the luggage was
actually forwarded to Ispra, but only a day after the scheduled appearance. It was
returned to her after 11 months. The trial court ruled in favor of Dr. Pablo
awarding P20,000 as nominal damages, the Appellate Court not only affirmed the
Trial Court's decision but also increased the award of nominal damages payable
by ALITALIA to P40,000.
ISSUES:
1) W/N the Warsaw Convention should have been applied to limit ALITALIA'S
liability
2) W/N Dr. Pablo is entitled to nominal damages
HELD:
1) NO. Under the Warsaw Convention, an air carrier is made liable for damages
for:
a. The death, wounding or other bodily injury of a passenger if the accident
causing it took place on board the aircraft or I the course of its operations of
embarking or disembarking;
b. The destruction or loss of, or damage to, any registered luggage or goods, if
the occurrence causing it took place during the carriage by air; and
c. Delay in the transportation by air of passengers, luggage or goods.
The convention however denies to the carrier availment of the provisions which
exclude or limit his liability, if the damage is caused by his wilful misconduct, or
by such default on his part as is considered to be equivalent to wilful misconduct.
The Convention does not thus operate as an exclusive enumeration of the
instances of an airline's liability, or as an absolute limit of the extent of that
liability. It should be deemed a limit of liability only in those cases where the
cause of the death or injury to person, or destruction, loss or damage to property
or delay in its transport is not attributable to or attended by any wilful
misconduct, bad faith, recklessness, or otherwise improper conduct on the part of
any official or employee for which the carrier is responsible, and there is
otherwise no special or extraordinary form of resulting injury.
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to
the employees of petitioner airline; and Dr. Pablo's luggage was eventually
returned to her, belatedly, it is true, but without appreciable damage. The fact is,
nevertheless, that some species of injury was caused to Dr. Pablo because
petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the
time appointed - a breach of its contract of carriage. Certainly, the compensation
for the injury suffered by Dr. Pablo cannot under the circumstances be restricted
to that prescribed by the Warsaw Convention for delay in the transport of
baggage.
2) YES. The opportunity to claim this honor or distinction was irretrievably lost to
Dr. Pablo because of Alitalia's breach of its contract. Apart from this, there can be
no doubt that Dr. Pablo underwent profound distress and anxiety, which gradually
turned to panic and finally despair, from the time she learned that her suitcases
were missing up tothe time when, having gone to Rome, she finally realized that
she would no longer be able to take part in the conference. As she herself put it,
she "was really shocked and distraught and confused. "Certainly, the
compensation for the injury suffered by Dr. Pablo cannot under the circumstances
be restricted to that prescribed by the Warsaw Convention for delay in the
transport of baggage.
PAN AMERICAN WORLD AIRWAYS, INC.,
vs. 
INTERMEDIATE APPELLATE COURT, RENE V. PANGAN, SOTANG BASTOS
PRODUCTIONS and ARCHER PRODUCTIONS,
FACTS:
1. Pangan, president and general manager of Sotang Bastos and Archer
Production entered into an agreement whereby the former, in consideration of the
amount of US $2,500.00 per picture, bound himself to supply the latter with three
films. 'Ang Mabait, Masungit at ang Pangit,' 'Big Happening with Chikiting and
Iking,' and 'Kambal Dragon' for exhibition in the United States.
2. Pangan visited Guam where he entered into a verbal agreement with
Slutchnick for the exhibition of two of the films above-mentioned at the Hafa Adai
Theater in Guam on May 30, 1978 for the consideration of P7,000.00 per picture
3. Pangan obtained from defendant Pan Am's Manila Office, an economy class
airplane ticket. Two hours before departure time, Pangan was at the defendant's
ticket counter at the Manila International Airport and presented his ticket and
checked in his two luggages, containing the promotional and advertising
materials, the clutch bags, barong tagalog and his personal belongings.
4. Subsequently, Pangan was informed that his name was not in the manifest and
so he could not take Flight No. 842 in the economy class. Pangan took the first
class because he wanted to be on time in Guam to comply with his commitment,
paying an additional sum of $112.00.
5. Pangan arrived in Guam but his two luggages did not arrive with his flight, as
a consequence of which his agreements with Slutchnick and Quesada for the
exhibition of the films in Guam and in the United States were
cancelled.Thereafter, he filed a written claim (Exh. J) for his missing luggages.
6. The Court of First Instance found petitioner liable for damages and cost of suit.
ISSUE:
Whether or not the court can award damages exceeding the limit of liability set
forth in the Warsaw Convention.
HELD:
No. The airline ticket contains the following conditions:
NOTICE
If the passenger's journey involves an ultimate destination or stop in a country
other than the country of departure the Warsaw Convention may be applicable
and the Convention governs and in most cases limits the liability of carriers for
death or personal injury and in respect of loss of or damage to baggage.
CONDITIONS OF CONTRACT
xxx
2. Carriage hereunder is subject to the rules and limitations relating to liability
established by the Warsaw Convention unless such carriage is not "international
carriage" as defined by that Convention.
xxx xxx xxx
8. BAGGAGE LIABILITY ... The total liability of the Carrier for lost or damage
baggage of the passenger is LIMITED TO P100.00 for each ticket unless a
passenger declares a higher valuation in excess of P100.00, but not in excess,
however, of a total valuation of Pl,000.00 and additional charges are paid
pursuant to Carrier's tariffs.
There is no dispute that petitioner did not declare any higher value for his
luggage, much less (lid he pay any additional transportation charge.
While it may be true that petitioner had not signed the plane ticket (Exh. "12"),
he is nevertheless bound by the provisions thereof. "Such provisions have been
held to be a part of the contract of carriage, and valid and binding upon the
passenger regardless of the latter's lack of knowledge or assent to the regulation.
It is what is known as a contract of "adhesion," in regards which it has been said
that contracts of adhesion wherein one party imposes a ready made form of
contract on the other, as the plane ticket in the case at bar, are contracts not
entirely prohibited. The one who adheres to the contract is in reality free to reject
it entirely; if he adheres, he gives his consent.
Considering, therefore, that petitioner had failed to declare a higher value for his
baggage, he cannot be permitted a recovery in excess of P100.00.
CHINA AIRLINES VS CHIOK
GR 152122 30 JULY 2003
DOCTRINE: A common carrier has a peculiar relationship with and an exacting

responsibility to its passengers. For reasons of public interest and policy, the
ticket-issuing airline acts as
FACTS:
On September 18, 1981, Daniel Chiok purchased from China Airlines, Ltd. (CAL
for brevity) a passenger ticket for air transportation covering Manila-Taipei-
Hongkong-Manila. Said ticket was exclusively endorsable to Philippine Airlines,
Ltd. (PAL for brevity)
Subsequently, on November 21, 1981, Chiok took his trip from Manila to Taipei
using the CAL ticket. Before he left for said trip, the trips covered by the ticket
were pre-scheduled and confirmed by the former. When he arrived in Taipei, he
went to the CAL office and confirmed his Hongkong to Manila trip on board PAL
Flight No. PR 311. The CAL office attached a yellow sticker indicating that his
flight status was OK.
When Chiok reached Hongkong, he went to the PAL office and sought to reconfirm
his flight back to Manila. The PAL office also confirmed his return trip on board
Flight No. PR 311 and attached its own sticker.
On November 24, 1981, Chiok proceeded to Hongkong International Airport for

his return trip to Manila. However, upon reaching the PAL counter, Chiok saw a
poster stating that PAL Flight No. PR 311 was cancelled due to typhoon in
Manila. He was then informed that all the confirmed ticket holders of PAL Flight
No. PR 311 were automatically booked for the next flight the following day.
On November 25, 1981, Chiok was not able to board the plane because his name
did not appear in PAL’s computer list of passengers. Chiok then sought to recover
his luggage but found only two and realized that his new Samsonite luggage was
missing which contained cosmetics worth HK$14,128.80
He then proceeded to PAL and confronted the reservation officer who previously
confirmed his flight back to Manila. However, the reservation officer showed him
that his name was on the list.
Chiok then decided to use his CAL ticket and asked PAL’s reservation officer if he
could use the ticket to book him for the said flight; The latter, once again, booked
and confirmed the former’s trip on a flight scheduled to depart that evening
Later, Chiok went to the PAL check-in counter and it was Carmen Chan, PAL’s
terminal supervisor who attended to him. As this juncture, Chiok had already
placed his travel documents, including his clutch bag, on top of the PAL check-in
counter.Thereafter, Carmen directed PAL personnel to transfer counters. In the
ensuing commotion, Chiok lost his clutch bag containing the following, to wit: (a)
$2,000.00; (b) HK$2,000.00; (c) Taipei $8,000.00; (d) P2,000.00; (e) a three-
piece set of gold (18 carats) cross pens valued atP3,500; (f) a Cartier watch
worth about P7,500.00; (g) a tie clip with a garnet birthstone and diamond
worth P1,800.00; and (h) a [pair of ] Christian Dior reading
glasses. Subsequently, he was placed on stand-by and at around 7:30 p.m., PAL
personnel informed him that he could now check-in
Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for

damages, against PAL and CAL, as defendants, docketed as Civil Case No.
82-13690, with Branch 31, Regional Trial Court, National Capital Judicial Region,
Manila.
ISSUE:
W/N CAL is liable for damages
HELD:
Yes, CAL is liable for damages. It is significant to note that the contract of air
transportation was between petitioner and respondent, with the former endorsing
to PAL the Hong Kong-to-Manila segment of the journey. Such contract of
carriage has always been treated in this jurisdiction as a single operation. This
jurisprudential rule is supported by the Warsaw Convention, to which the
Philippines is a party, and by the existing practices of the International Air
Transport Association (IATA).
Article 1, Section 3 of the Warsaw Convention states:

“Transportation to be performed by several successive air carriers shall be
deemed, for the purposes of this Convention, to be one undivided transportation,
if it has been regarded by the parties as a single operation, whether it has been
agreed upon under the form of a single contract or of a series of contracts, and it
shall not lose its international character merely because one contract or a series
of contracts is to be performed entirely within a territory subject to the
sovereignty, suzerainty, mandate, or authority of the same High Contracting
Party.”
Article 15 of IATA-Recommended Practice similarly provides:

“Carriage to be performed by several successive carriers under one ticket, or
under a ticket and any conjunction ticket issued therewith, is regarded as a single
operation.”
In American Airlines v. Court of Appeals, we have noted that under a general pool
partnership agreement, the ticket-issuing airline is the principal in a contract of
carriage, while the endorsee-airline is the agent.
Likewise, as the principal in the contract of carriage, the petitioner in British
Airways v. Court of Appeals was held liable, even when the breach of contract had
occurred, not on its own flight, but on that of another airline. The Decision
followed our ruling in Lufthansa German Airlines v. Court of Appeals, in which we
had held that the obligation of the ticket-issuing airline remained and did not
cease, regardless of the fact that another airline had undertaken to carry the
passengers to one of their destinations.
In the instant case, following the jurisprudence cited above, PAL acted as the
carrying agent of CAL. In the same way that we ruled against British Airways
and Lufthansa in the aforementioned cases, we also rule that CAL cannot
evade liability to respondent, even though it may have been only a ticket
issuer for the Hong Kong-Manila sector.
SANTOS III VS. NORTHWEST AIRLINES, JUNE 23, 1992;
FACTS:
Augusto Benedicto Santos III is a minor represented by his dad. In October 1986,
he bought a round trip ticket from Northwest Orient Airlines (NOA) in San
Francisco. His flight would be from San Francisco to Manila via Tokyo and back to
San Francisco. His scheduled flight was in December. A day before his departure
he checked with NOA and NOA said he made no reservation and that he bought
no ticket. The next year, due to the incident, he sued NOA for damages. He sued
NOA in Manila. NOA argued that Philippine courts have no jurisdiction over the
matter pursuant to Article 28(1) of the Warsaw Convention, which provides that
complaints against international carriers can only be instituted in:
1. the court of the domicile of the carrier (NOA’s domicile is in the USA);
2. the court of its principal place of business (which is San Francisco, USA);
3. the court where it has a place of business through which the contract had
been made (ticket was purchased in San Francisco so that’s where the contract
was made);
4. the court of the place of destination (Santos bought a round trip ticket which
final destination is San Francisco).
The lower court ruled in favor of NOA. Santos III averred that Philippine courts
have jurisdiction over the case and he questioned the constitutionality of Article
28 (1) of the Warsaw Convention.
ISSUE:
Whether or not Philippine courts have jurisdiction over the matter to conduct
judicial review?
HELD:
NO. The Supreme Court ruled that they cannot rule over the matter for the SC is
bound by the provisions of the Warsaw Convention which was ratified by the
Senate. Until & unless there would be amendment to the Warsaw Convention, the
only remedy for Santos III is to sue in any of the place indicated in the
Convention such as in San Francisco, USA.
The SC cannot rule upon the constitutionality of Article 28(1) of the Warsaw
Convention. In the first place, it is a treaty which was a joint act by the legislative
and the executive. The presumption is that it was first carefully studied and
determined to be constitutional before it was adopted and given the force of law
in this country. In this case, Santos was not able to offer any compelling
argument to overcome the presumption. 
UNITED AIRLINES VS. WILLIE UY
G.R. NO. 127768
NOVEMBER 19, 1999
FACTS:
On 13 October 1989 respondent Willie J. Uy, a revenue passenger on United
Airlines Flight No. 819 for the San Francisco - Manila route, checked in together
with his luggage one piece of which was found to be overweight at the airline
counter. To his utter humiliation, an employee of petitioner rebuked him saying
that he should have known the maximum weight allowance and that he should
have packed his things accordingly. Then, in a loud voice in front of the milling
crowd, she told respondent to repack his things and transfer some of them from
the overweight luggage to the lighter ones. Not wishing to create further scene,
respondent acceded only to find his luggage still overweight. The airline then
billed him overweight charges which he offered to pay with a miscellaneous
charge order (MCO) or an airline pre-paid credit. However, the airlines employee,
and later its airport supervisor, adamantly refused to honor the MCO pointing out
that there were conflicting figures listed on it. Despite the explanation from
respondent that the last figure written on the MCO represented his balance,
petitioner’s employees did not accommodate him. Faced with the prospect of
leaving without his luggage, respondent paid the overweight charges with his
American Express credit card. Upon arrival in Manila, he discovered that one of
his bags had been slashed and its contents stolen. Respondent filed a complaint
for damages against United Airlines alleging that he was a person of good station,
sitting in the board of directors of several top 500 corporations and holding senior
executive positions for such similar firms; that petitioner airline accorded him ill
and shabby treatment to his extreme embarrassment and humiliation. United
Airlines moved to dismiss the complaint on the ground that respondent’s cause of
action had prescribed, invoking Art. 29 of the Warsaw Convention.
Respondent countered that par. (1) of Art. 29 of the Warsaw Convention must be
reconciled with par. (2) thereof which states that "the method of calculating the
period of limitation shall be determined by the law of the court to which the case
is submitted." Interpreting thus, respondent noted that according to Philippine
laws the prescription of actions is interrupted "when they are filed before the
court, when there is a written extrajudicial demand by the creditors, and when
there is any written acknowledgment of the debt by the debtor." Since he made
several demands upon United Airlines: first, through his personal letter dated 16
October 1989; second, through a letter dated 4 January 1990 from Atty. Pesigan;
and, finally, through a letter dated 28 October 1991 written for him by Atty.
Ampil, the two (2)-year period of limitation had not yet been exhausted.
ISSUE:
Whether or not the action had already prescribed.
HELD:
Within our jurisdiction we have held that the Warsaw Convention can be applied,
or ignored, depending on the peculiar facts presented by each case. Likewise, we
have held that the Convention does not preclude the operation of the Civil Code
and other pertinent laws. It does not regulate, much less exempt, the carrier
from liability for damages for violating the rights of its passengers under the
contract of carriage, especially if willful misconduct on the part of the carrier's
employees is found or established. Respondent's complaint reveals that he is
suing on two (2) causes of action: (a) the shabby and humiliating treatment he
received from petitioner's employees at the San Francisco Airport which caused
him extreme embarrassment and social humiliation; and, (b) the slashing of his
luggage and the loss of his personal effects amounting to US $5,310.00.
While his second cause of action - an action for damages arising from theft or
damage to property or goods - is well within the bounds of the Warsaw
Convention, his first cause of action -an action for damages arising from the
misconduct of the airline employees and the violation of respondent's rights as
passenger - clearly is not.
Consequently, insofar as the first cause of action is concerned, respondent's
failure to file his complaint within the two (2)-year limitation of the Warsaw
Convention does not bar his action since petitioner airline may still be held liable
for breach of other provisions of the Civil Code which prescribe a different period
or procedure for instituting the action, specifically, Art. 1146 thereof which
prescribes four (4) years for filing an action based on torts. Respondent's
complaint reveals that he is suing on two (2) causes of action: (a) the shabby and
humiliating treatment he received from petitioner's employees at the San
Francisco Airport which caused him extreme embarrassment and social
humiliation; and, (b) the slashing of his luggage and the loss of his personal
effects amounting to US $5,310.00.
While his second cause of action - an action for damages arising from theft or
damage to property or goods - is well within the bounds of the Warsaw
Convention, his first cause of action -an action for damages arising from the
misconduct of the airline employees and the violation of respondent's rights as
passenger - clearly is not.
Consequently, insofar as the first cause of action is concerned, respondent's
failure to file his complaint within the two (2)-year limitation of the Warsaw
Convention does not bar his action since petitioner airline may still be held liable
for breach of other provisions of the Civil Code which prescribe a different period
or procedure for instituting the action, specifically, Art. 1146 thereof which
prescribes four (4) years for filing an action based on torts. As for respondent's
second cause of action, indeed the travaux preparatories of the Warsaw
Convention reveal that the delegates thereto intended the two (2)-year limitation
incorporated in Art. 29 as an absolute bar to suit and not to be made subject to
the various tolling provisions of the laws of the forum. Verily, respondent filed his
complaint more than two (2) years later, beyond the period of limitation
prescribed by the Warsaw Convention for filing a claim for damages. However, it
is obvious that respondent was forestalled from immediately filing an action
because petitioner airline gave him the runaround, answering his letters but not
giving in to his demands. True, respondent should have already filed an action at
the first instance when his claims were denied by petitioner but the same could
only be due to his desire to make an out-of-court settlement for which he cannot
be faulted. Hence, despite the express mandate of Art. 29 of the Warsaw
Convention that an action for damages should be filed within two (2) years from
the arrival at the place of destination, such rule shall not be applied in the instant
case because of the delaying tactics employed by petitioner airline itself. Thus,
private respondent's second cause of action cannot be considered as time-barred
under Art. 29 of the Warsaw Convention.
MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL vs. COURT OF
APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC.,
AMYLINE ANTONIO, JOHN RICHARDS et. al. G.R. No. 111127 July
26, 1996
FACTS:
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda
minibus. They used the bus principally in connection with a bus service for school
children which they operated in Manila. The couple had a driver, Porfirio J. Cabil,
whom they hired in 1981, after trying him out for two weeks, His job was to take
school children to and from the St. Scholastica's College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian Fellowship
Inc. (WWCF) arranged with petitioners for the transportation of 33 members of its
Young Adults Ministry from Manila to La Union and back in consideration of which
private respondent paid petitioners the amount of P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the
afternoon. However, as several members of the party were late, the bus did not
leave the Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o'clock
in the evening. Petitioner Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan. However,
the bridge at Carmen was under repair, sot hat petitioner Cabil, who was
unfamiliar with the area (it being his first trip to La Union), was forced to take a
detour through the town of Baay in Lingayen, Pangasinan. At 11:30 that night,
petitioner Cabil came upon a sharp curve on the highway, running on a south to
east direction, which he described as "siete." The road was slippery because it
was raining, causing the bus, which was running at the speed of 50 kilometers
per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace
and sign along the road and rammed the fence of one Jesus Escano, then turned
over and landed on its left side, coming to a full stop only after a series of
impacts. The bus came to rest off the road. A coconut tree which it had hit fell on
it and smashed its front portion.
Several passengers were injured. Private respondent Amyline Antonio was thrown
on the floor of the bus and pinned down by a wooden seat which came down by a
wooden seat which came off after being unscrewed. It took three persons to
safely remove her from this portion. She was in great pain and could not move.
The driver, petitioner Cabil, claimed he did not see the curve until it was too late.
He said he was not familiar with the area and he could not have seen the curve
despite the care he took in driving the bus, because it was dark and there was no
sign on the road. He said that he saw the curve when he was already within 15 to
30 meters of it. He allegedly slowed down to 30 kilometers per hour, but it was
too late.
Amyline Antonio, who was seriously injured, brought this case in the RTC of
Makati, Metro Manila. As a result of the accident, she is now suffering from
paraplegia and is permanently paralyzed from the waist down. During the trial
she described the operations she underwent and adduced evidence regarding the
cost of her treatment and therapy. Immediately after the accident, she was taken
to the Nazareth Hospital in Baay, Lingayen. As this hospital was not adequately
equipped, she was transferred to the Sto. Niño Hospital, also in the town of Ba-
ay, where she was given sedatives. An x-ray was taken and the damage to her
spine was determined to be too severe to be treated there. She was therefore
brought to Manila, first to the Philippine General Hospital and later to the Makati
Medical Center where she underwent an operation to correct the dislocation of her
spine.
The trial court adjudged against Mr. and Mrs. Engracio Fabre and Cabil and
pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said
defendants are ordered to pay jointly and severally to the plaintiffs the following
amount:
1) P93,657.11 as compensatory and actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff
Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorney's fees;
6) Costs of suit.
The Court of Appeals affirmed the decision of the trial court with respect to
Amyline Antonio but dismissed it with respect to the other plaintiffs on the ground
that they failed to prove their respective claims. The Court of Appeals modified
the award of damages as follows:
1) P93,657.11 as actual damages;

2) P600,000.00 as compensatory damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorney's fees; and
6) Costs of suit.
ISSUES:
1.WHETHER OR NOT PETITIONERS WERE NEGLIGENT?
2.WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED
BY PRIVATE RESPONDENTS?
HELD:
1. YES.
The finding that Cabil drove his bus negligently, while his employer, the Fabres,
who owned the bus, failed to exercise the diligence of a good father of the family
in the selection and supervision of their employee is fully supported by the
evidence on record. These factual findings of the two courts we regard as final
and conclusive, supported as they are by the evidence. Indeed, it was admitted
by Cabil that on the night in question, it was raining, and as a consequence, the
road was slippery, and it was dark. He averred these facts to justify his failure to
see that there lay a sharp curve ahead. However, it is undisputed that Cabil drove
his bus at the speed of 50 kilometers per hour and only slowed down when he
noticed the curve some 15 to 30 meters ahead. By then it was too late for him to
avoid falling off the road. Given the conditions of the road and considering that
the trip was Cabil's first one outside of Manila, Cabil should have driven his
vehicle at a moderate speed. There is testimony that the vehicles passing on that
portion of the road should only be running 20 kilometers per hour, so that at 50
kilometers per hour, Cabil was running at a very high speed.
Considering the foregoing — the fact that it was raining and the road was
slippery, that it was dark, that he drove his bus at 50 kilometers an hour when
even on a good day the normal speed was only 20 kilometers an hour, and that
he was unfamiliar with the terrain, Cabil was grossly negligent and should be held
liable for the injuries suffered by private respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the
presumption that his employers, the Fabres, were themselves negligent in the
selection and supervisions of their employee.
Due diligence in selection of employees is not satisfied by finding that the

applicant possessed a professional driver's license. The employer should also
examine the applicant for his qualifications, experience and record of service. Due
diligence in supervision, on the other hand, requires the formulation of rules and
regulations for the guidance of employees and issuance of proper instructions as
well as actual implementation and monitoring of consistent compliance with the
rules.
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 had been driving for school children
only, from their homes to the St. Scholastica's College in Metro Manila. They had
hired him only after a two-week apprenticeship. They had hired him only after a
two-week apprenticeship. They had tested him for certain matters, such as
whether he could remember the names of the children he would be taking to
school, which were irrelevant to his qualification to drive on a long distance
travel, especially considering that the trip to La Union was his first. The existence
of hiring procedures and supervisory policies cannot be casually invoked to
overturn the presumption of negligence on the part of an employer.
A person who hires a public automobile and gives the driver directions as to the
place to which he wishes to be conveyed, but exercises no other control over the
conduct of the driver, is not responsible for acts of negligence of the latter or
prevented from recovering for injuries suffered from a collision between the
automobile and a train, caused by the negligence or the automobile driver.
As already stated, this case actually involves a contract of carriage. Petitioners,

the Fabres, did not have to be engaged in the business of public transportation for
the provisions of the Civil Code on common carriers to apply to them.
Article 1732 makes no distinction between one whose principal business activity is
the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or solicits business
only from a narrow segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions.
As common carriers, the Fabres were found to exercise "extraordinary diligence"

for the safe transportation of the passengers to their destination. This duty of
care is not excused by proof that they exercise the diligence of a good father of
the family in the selection and supervision of their employee. As Art. 1759 of the
Code provides:
Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the former's employees although such employees may
have acted beyond the scope of their authority or in violation of the orders of the
common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
2. YES.
We sustain the award of damages in favor of Amyline Antonio. However, we think
the Court of Appeals erred in increasing the amount of compensatory damages
because private respondents did not question this award as inadequate. To the
contrary, the award of P500,000.00 for compensatory damages which the
Regional Trial Court made is reasonable considering the contingent nature of her
income as a casual employee of a company and as distributor of beauty products
and the fact that the possibility that she might be able to work again has not
been foreclosed. In fact she testified that one of her previous employers had
expressed willingness to employ her again.
With respect to the other awards, while the decisions of the trial court and the
Court of Appeals do not sufficiently indicate the factual and legal basis for them,
we find that they are nevertheless supported by evidence in the records of this
case. Viewed as an action for quasi delict, this case falls squarely within the
purview of Art. 2219(2) providing for the 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 is authorized by Art. 1764, in relation to
Art. 2220, since Cabil's gross negligence amounted to bad faith. 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.
The award of exemplary damages and attorney's fees was also properly made.
However, for the same reason that it was error for the appellate court to increase
the award of compensatory damages, we hold that it was also error for it to
increase the award of moral damages and reduce the award of attorney's fees,
inasmuch as private respondents, in whose favor the awards were made, have
not appealed.
As above stated, 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, 14 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 15 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.
The same rule of liability was applied in situations where the negligence of the
driver of the bus on which plaintiff was riding concurred with the negligence of a
third party who was the driver of another vehicle, thus causing an accident. In
Anuran v. Buño, 16 Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate
Court, and Metro Manila Transit Corporation v. Court of Appeals, the bus
company, its driver, the operator of the other vehicle and the driver of the vehicle
were jointly and severally held liable to the injured passenger or the latters' heirs.
The basis of this allocation of liability was explained in Viluan v. Court of Appeals,
thus:
Nor should it make any difference that the 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.
The Court of Appeals is AFFIRMED with MODIFICATION as to award of damages.

Petitioners are ORDERED to PAY jointly and severally the private respondent
Amyline Antonio the following amounts:
1) P93,657.11 as actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff
Amyline Antonio;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorney's fees; and
6) costs of suit.
PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. and TAGUM
PLASTICS, INC., vs. SWEET LINES, INC., DAVAO VETERANS ARRASTRE
AND PORT SERVICES, INC. and HON. COURT OF APPEALS
G.R. No. 87434 August 5, 1992
REGALADO, J.:
FACTS:
Petitioners Philippine American General Insurance Co. (PHILAMGEN) and Tagum
Plastics (TAGUM) were the insurers and importers, respectively, of an order of
polyethylene (the basic material for your common plastics). The polyethylenes are
to be shipped from F. E. Zuellig in the United States through an Indian ship, SS
Vishva Yash, and are to be received at Manila. After which, the subject matter is
to be shipped to Davao, TAGUM’s place of business. When the Indian vessel
arrived at Manila, it sought the services of respondent Sweet Lines, Inc. for the
inter-island shipment to Davao. However, when the M/V Sweet Love, owned and
operated by Sweet Lines, arrived at Davao, petitioners found that the some of the
imported polyethylene were undelivered or damaged. For this reason, petitioners
filed suit against respondent Sweet Lines and the Davao Veterans Arrastre which
handled the cargoes at the Davao port. The basis for such suit are the bills of
lading, which serves as the contract between parties that the goods indicated
therein are to be delivered complete in number and in the condition specified.
Militating against the petitioners, however, is the prescriptive period included in
the bills of lading. It states that any action arising from shortage or damages
must be brought within sixty (60) days from accrual of right of action. Also,
notice of claims for loss or damages is required to be given to the carrier before
the institution of judicial claims. The bills of lading were not formally offered as
evidence; hence it was not shown that a contractual prescriptive period was
indicated therein. The Trial Court ruled in favor of petitioners PHILAMGEN and
TAGUM, but the CA reversed on the basis of prescription. Hence, this petition for
review on certiorari.
ISSUES:
1. Whether or not the CA correctly ruled on the basis of prescription even without
formal evidence of its existence.
2. Assuming arguendo that a prescriptive period exists in the contract, on not
finding such as null and void for being contrary to public policy as contracts of
adhesion.
3. Assuming further that such is valid and legal, in not finding that petitioners
substantially complied therewith.
HELD:
1. YES, because such was sufficiently raised in the pleadings. Ruling on
Prescription EVEN without formal evidence of its existence.
• The litigation obviously revolves on such bills of lading which are practically the
documents or contracts sued upon, hence, they are inevitably involved and their
provisions cannot be disregarded in the determination of the relative rights of the
parties thereto.
• Respondent court correctly passed upon the matter of prescription, since that
defense was so considered and controverted by the parties.
• Since petitioners are suing on the basis of contractual obligations indicated in
the bills of lading, such bills can be categorized as actionable documents which
under the Rules of Court must be properly pleaded either as causes of action or
defenses, and the genuineness and due execution of which are deemed admitted
unless specifically denied under oath by the adverse party.
• Failure to specifically deny the existence of the instruments in question amounts
to an admission.
• Judicial admissions, verbal or written, made by the parties in the pleadings or in
the course of the trial or other proceedings in the same case are conclusive, no
evidence being required to prove the same, and cannot be contradicted unless
shown to have been made through palpable mistake or that no such admission
was made.
• In the case at bar, prescription as an affirmative defense was seasonably raised
by respondent Sweet Lines in its answer, except that the bills of lading embodying
the same were not formally offered in evidence.
• Petitioner specifically replied to such defense in respondent’s answer, but it
failed to controvert the existence of the bills of lading. It is thus in the nature of a
negative pregnant. Consequently, they impliedly admitted the same when they
merely assailed the validity of subject stipulations. Petitioners MUST
SPECIFICALLY DENY THE EXISTENCE OR PRESENTATION OF EVIDENCE. This is
petitioners’ reply to respondent’s answer:
o “In connection with Pars. 14 and 15 of defendant Sweet Lines, Inc.'s Answer,
plaintiffs state that such agreements are what the Supreme Court considers as
contracts of adhesion and, consequently, the provisions therein which are
contrary to law and public policy cannot be availed of by answering defendant as
valid defenses.”
• Petitioners failed to touch on the matter of the non-presentation of the bills of
lading. Hence it is too late in the day to now allow the litigation to be overturned
on that score, for to do so would mean an over-indulgence in technicalities.
Petitioners' feigned ignorance of the provisions of the bills of lading does not
deserve serious attention.
2. NO, because contracts of adhesion, while frowned upon, are not absolutely
illegal.
Are the prescriptive periods void for being contracts of adhesion?
• Petitioners posit that the alleged shorter prescriptive period which is in the
nature of a limitation on petitioners' right of recovery is unreasonable and that
SLI has the burden of proving otherwise, citing the earlier case of Southern Lines,
Inc. vs. Court of Appeals, et al.
• BUT the validity of a contractual limitation of time for filing the suit has
generally been upheld as such stipulation merely affects the plaintiff's remedy
and does not affect the liability of the defendant.
• In the absence of any statutory limitation and subject only to the requirement
on the reasonableness of the stipulated limitation period, the parties to a contract
of carriage may fix by agreement a shorter time for the bringing of suit on a claim
for the loss of or damage to the shipment than that provided by the statute of
limitations.
• Such limitation is not contrary to public policy for it does not in any way defeat
the right to recover, but merely requires the assertion of that right by action at an
earlier period than would be necessary to defeat it through the operation of the
ordinary statute of limitations.
• The fundamental reason or purpose of such a stipulation is not to relieve the
carrier from just liability, but reasonably to inform it that the shipment has been
damaged and that it is charged with liability therefor.
3. NO, because petitioners have not substantially complied with the conditions
precedent to their right of action.
Is there substantial compliance by petitioner with regard to the prescriptive
period?
• Before an action can properly be commenced all the essential elements of the
cause of action must be in existence, that is, the cause of action must be
complete. All valid conditions precedent to the institution of the particular action,
whether prescribed by statute, fixed by agreement of the parties or implied by
law must be performed or complied with before commencing the action, unless
the conduct of the adverse party has been such as to prevent or waive
performance or excuse non-performance of the condition
• Stipulations in bills of lading requiring notice of claim for loss or damage is a
condition precedent. The carrier is not liable if notice is not given in accordance
with the stipulation.
• The bills of lading, are reasonable conditions precedent, they are not limitations
of action. Being conditions precedent, their performance must precede a suit for
enforcement and the vesting of the right to file suit does not take place until the
happening of these conditions.
ANG vs AMERICAN STEAMSHIP AGENCIES
FACTS:
Yau Yue Commercial Bank agreed to sell 140 packages of galvanised steel
to Teves. Pursuant to their agreement, Yau Yue shipped the articles aboard the
S.S. Tensai Maru, which belongs to Nissho Shipping. American Steamship is the
agent of the aforementioned company in the Philippines. The shipment arrived in
Manila and was in the custody of America Steamship.
Teves was not able to pay the purchase price but was able to obtain a bank
guaranty in favor of the American Steamship Agencies, Inc., as carrier's agent, to
the effect that he would surrender the original and negotiable bill of lading duly
indorsed by Yau Yue. On the strength of this guaranty, Teves succeeded in
securing a "Permit To Deliver Imported Articles" from the carrier's agent, which
he presented to the Bureau of Customs which in turn released to him the articles
covered by the bill of lading.
Subsequently, Domingo Ang claimed for the articles from American
Steamship Agencies, Inc., by presenting the indorsed bill of lading, but he was
informed by the latter that it had delivered the articles to Teves. Domingo Ang
filed a complaint in the Court of First Instance of Manila against the American
Steamship Agencies, Inc., for having allegedly wrongfully delivered and/or
converted the goods covered by the bill of lading belonging to plaintiff Ang, to the
damage and prejudice of the latter. American Steamship filed a motion to dismiss
upon the ground that plaintiff's cause of action has prescribed under the Carriage
of Goods by Sea Act.
ISSUE:
1. Whether or not there was loss of goods.
2. Whether or not the cause of action has prescribed under COGSA.
HELD:
1. No. As defined in the Civil Code and as applied to Section 3 (6) paragraph 4 of
the Carriage of Goods by Sea Act, “loss" contemplates merely a situation where
no delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared that their existence is unknown
or they cannot be recovered. It does not include a situation where there was
indeed delivery — but delivery to the wrong person, or a misdelivery, as alleged
in the complaint in this case. From the allegations of the complaint, therefore, the
goods cannot be deemed “lost". Thus, the goods were either rightly delivered or
misdelivered, but they were not lost.
2. No. There being no loss or damage to the goods, the aforequoted provision of
the Carriage of Good by Sea Act stating that "In any event, the carrier and the
ship shall be discharged from all liability in respect of loss or damage unless suit
is brought within one year after delivery of the goods or the date when the goods
should have been delivered," does not apply. The proper period to follow is found
in the Civil Code, namely, either ten years for breach of a written contract or four
years for quasi-delict. 
[G.R. NO. 119571. MARCH 11, 1998]
MITSUI O.S.K. LINES LTD., REPRESENTED BY MAGSAYSAY AGENCIES,
INC., PETITIONER, VS. COURT OF APPEALS AND LAVINE LOUNGEWEAR
MFG. CORP., RESPONDENTS.
MENDOZA, J.:
FACTS:
Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the
Philippines by its agent, Magsaysay Agencies. It entered into a contract of
carriage through Meister Transport, Inc., an international freight forwarder, with
private respondent Lavine Loungewear Manufacturing Corporation to transport
goods of the latter from Manila to Le Havre, France.
Petitioner undertook to deliver the goods to France 28 days from initial

loading. On July 24, 1991, petitioner’s vessel loaded private respondents
container van for carriage at the said port of origin.
However, in Taiwan, the goods were not transshipped immediately. The shipment
arrived in Le Havre only on November 14, 1991. The consignee allegedly paid
only half the value of the said goods on the ground that they did not arrive in
France until the off season in that country. The remaining half was allegedly
charged to the account of private respondent which in turn demanded payment
from petitioner through its agent.
As petitioner denied private respondents claim, the latter filed a case in the RTC.
Petitioner filed a motion to dismiss alleging that the claim against it had
prescribed under the COGSA.
RTC denied petitioners motion. On petition for certiorari, the CA sustained the
RTC orders. Hence, this petition.
ISSUE:
W/N private respondent’s action is for loss or damage to goods shipped is within
the meaning of 3(6) of the COGSA
HELD:
NO. As defined in the Civil Code and as applied to Section 3(6), paragraph 4 of
the Carriage of Goods by Sea Act, loss contemplates merely a situation where no
delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared in such a way that their
existence is unknown or they cannot be recovered.
In one case, the SC ruled that whatever damage or injury is suffered by the
goods while in transit would result in loss or damage to either the shipper or the
consignee. As long as it is claimed that the losses or damages were due to the
arrival of the goods in damaged or deteriorated condition, the action is still
basically one for damage to the goods, and must be filed within the period of one
year from delivery or receipt, under the COGSA.
But the Court allowed that the damages suffered by as a result of the delay in the
shipment of cargo are not covered by the prescriptive provision of the COGSA, if
such damages were not due to the deterioration and decay of the goods while in
transit, but to other causes independent of the condition of the cargo upon
arrival, like a drop in their market value.
In the case at bar, there is neither deterioration nor disappearance nor

destruction of goods caused by the carrier’s breach of contract. Whatever
reduction there may have been in the value of the goods is not due to their
deterioration or disappearance because they had been damaged in transit.
Petitioner’s potential liability for damages is governed by the Civil Code, the Code
of Commerce and COGSA, for the breach of its contract of carriage with private
respondent.
Therefore, this case is not for loss or damage to goods contemplated in 3(6), the
question of prescription of action is governed not by the COGSA but by Art. 1144
of the Civil Code which provides for a prescriptive period of ten years.
FIL MERCHANTS VS ALEJANDRO
FACTS:
On August 3, 1977, plaintiff Choa Tiek Seng filed a complaint, docketed as Civil
Case No. 109911, against the petitioner before the then Court of First Instance of
Manila for recovery of a sum of money under the marine insurance policy on
cargo. Mr. Choa alleged that the goods he insured with the petitioner sustained
loss and damage in the amount of P35,987.26. The vessel SS Frotario which was
owned and operated by private respondent Frota Oceanica Brasiliera, (Frota)
discharged the goods at the port of Manila on December 13, 1976. The said
goods were delivered to the arrastre operator E. Razon, Inc., on December 17,
1976 and on the same date were received by the consignee-plaintiff. 
 
The goods were delivered to the plaintiff-consignee on or about January 25-28,
1977. 
 
The private respondents alleged in their separate answers that the petitioner is
already barred from filing a claim because under the Carriage of Goods by Sea
Act, the suit against the carrier must be filed "within one year after delivery of the
goods or the date when the goods should have been delivered. x x x." 
 
The petitioner contended that the provision relied upon by the respondents
applies only to the shipper and not to the insurer of the goods.
ISSUE:
WON the action was filed within the prescriptive period
HELD:
No. Neither do we find tenable the claim that the prescriptive period contained in
said act can only be invoked by the shipper, excluding all other parties to the
transaction. While apparently the proviso contained in the portion of section 3(6)
of the act we have quoted gives the impression that the right to file suit within
one year after delivery of the goods applies to the shipper alone, however,
reading the proviso in conjunction with the rest of section 3(6), it at once
becomes apparent that the conclusion drawn by petitioner is unwarranted. In the
first place, said section provides that the notice of loss or damage for which a
claim for indemnity may be made should be given in writing to the carrier at the
port of discharge before or at the time of the removal of the goods, and if the loss
or damage is not apparent said notice should be given 'within three days on
delivery.' From the language of this section, it seems clear that the notice of loss
or damage is required to be filed not necessarily by the shipper but also by the
consignee or any legal holder of the bill of lading. In fact, said section requires
that the notice be given at the port of discharge and the most logical party to file
the notice is either the consignee or the endorsee of the bill of lading. In the
second place, a study of the historical background of this particular provision will
show that although the word shipper is used in the proviso referred to by the
petitioner, the intention of the law was not to exclude the consignee or endorsee
of the bill of lading from bringing the action but merely to limit the filing of the
same within one year after the delivery of the goods at the port of discharge.
In the case at bar, the petitioner's action has prescribed under the provisions of
the Carriage of Goods by Sea Act. Hence, whether it files a third-party complaint
or chooses to maintain an independent action against herein respondents is of no
moment. Had the plaintiffs in the civil cases below filed an action against the
petitioner after the one-year prescriptive period, then the latter could have
successfully denied liability on the ground that by their own doing, the plaintiffs
had prevented the petitioner from being subrogated to their respective rights
against the herein respondents by filing a suit after the one-year prescriptive
period. The situation, however, does not obtain in the present case. The
plaintiffs in the civil cases below gave extra-judicial notice to their respective
carriers and filed suit against the petitioner well within one year from their receipt
of the goods. The petitioner had plenty of time within which to act. In Civil Case
No. 109911, the petitioner had more than four months to file a third-party
complaint while in Civil Case No. 110061, it had more than five months to do so.
In both instances, however, the petitioner failed to file the appropriate action.
MAYER STEEL PIPE CORP. VS. CA
274 SCRA 432
FACTS:
In 1983, Hongkong Government Supplies Department (HGSD) contracted Mayer
Steel Pipe Corporation for the latter to manufacture and deliver various steel
pipes and fittings. Before Mayer Steel shipped the said pipes, it insured them
with two insurance companies namely, South Sea Surety and Insurance Co., Inc.
and Charter Insurance Corporation – each insurer covering different portions of
the shipment. The insurance policies cover “all risks” which include all causes of
conceivable loss or damage.
When the pipes reached Hongkong, the pipes were discovered to have been
damaged. The insurance companies refused to make payment. On April 17, 1986,
Mayer Steel sued the insurance companies. The case reached the Court of
Appeals. The CA ruled that the case filed by Mayer Steel should be dismissed. It
held that the action is barred under Section 3(6) of the Carriage of Goods by Sea
Act since it was filed only on April 17, 1986, more than two years from the time
the goods were unloaded from the vessel. Section 3(6) of the Carriage of Goods
by Sea Act provides that “the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is brought within one year after
delivery of the goods or the date when the goods should have been delivered.”
The CA ruled that this provision applies not only to the carrier but also to the
insurer.
ISSUE:
Whether or not the Court of Appeals is correct.
HELD:
No. Section 3(6) of the Carriage of Goods by Sea Act states that the carrier and
the ship shall be discharged from all liability for loss or damage to the goods if no
suit is filed within one year after delivery of the goods or the date when they
should have been delivered. Under this provision, only the carrier’s liability is
extinguished if no suit is brought within one year. But the liability of the insurer is
not extinguished because the insurer’s liability is based not on the contract of
carriage but on the contract of insurance. A close reading of the law reveals that
the Carriage of Goods by Sea Act governs the relationship between the carrier on
the one hand and the shipper, the consignee and/or the insurer on the other
hand. It defines the obligations of the carrier under the contract of carriage. It
does not, however, affect the relationship between the shipper and the insurer.
The latter case is governed by the Insurance Code.
The Filipino Merchants case is different from the case at bar. In Filipino
Merchants, it was the insurer which filed a claim against the carrier for
reimbursement of the amount it paid to the shipper. In the case at bar, it was the
shipper which filed a claim against the insurer. The basis of the shipper’s claim is
the “all risks” insurance policies issued by the insurers to Mayer Steel.
The ruling in Filipino Merchants should apply only to suits against the carrier filed
either by the shipper, the consignee or the insurer.
DOLE PHILS. INC. V. MARTIME COMPANY OF THE PHILS.
G.R. NO. L-61352; FEBRUARY 27, 1987
NARVASA, J.
FACTS:
The case involved a claim for loss and/or damage to a shipment of machine parts
sought to be enforced by the consignee, petitioner DOLE, against the carrier
respondent. The cargo was discharge in the custody of DOLE on December 18,
1971. The claim for damages was filed on May 4, 1972. Thereafter, a complaint
was filed before the CFI involving the cargo as a cause of action, but was
dismissed without prejudice. Petitioner filed another complaint, but respondent
filed an answer pleading the affirmative defense of prescription under the COGSA,
causing it to be dismissed by the court.
ISSUE:
Whether or not Article 1155 of the Civil Code providing that the prescription of
actions is interrupted by the making of an extrajudicial written demand by the
creditor is applicable to actions brought under the Carriage of Goods by Sea Act
(Sec. 3, Par. 6).
HELD:
No. Jurisprudence has already provided that “where suit to recover for damage to
cargo shipped by vessel from Tokyo to Manila was filed more than two years after
the consignee's receipt of the cargo, the Court rejected the contention that an
extrajudicial demand tolled the prescriptive period provided for in the Carriage of
Goods by Sea Act.”
No different result would obtain even if the Court were to accept the proposition
that a written extrajudicial demand does toll prescription under the COGSA. The
demand in this instance would be the claim for damage filed by Dole with
Maritime on May 4,1972. The effect of that demand would have been to renew
the one- year prescriptive period from the date of its making, Stated otherwise,
under Dole's theory, when its claim was received by Maritime, the one-year
prescriptive period was interrupted - "tolled" would be the more precise term -
and began to run anew from May 4, 1972, affording Dole another period of one
(1) year counted from that date within which to institute action on its claim for
damage. Unfortunately, Dole let the new period lapse without filing action. It
instituted the case only on June 11, 1973, more than one month after that period
has expired and its right of action had prescribed.
 
ABOITIZ SHIPPING CORPORATION V.GENERAL ACCIDENT FIRE AND LIFE
ASSURANCE CORPORATION, LTD.
G.R. NO. 100446 JANUARY 21, 1993
FACTS:
Petitioner is a corporation organized and operating under Philippine laws and
engaged in the business of maritime trade as a carrier. As such, it owned and
operated the ill-fated "M/V P. ABOITIZ," a common carrier which sank on a
voyage from Hongkong to the Philippines on October 31, 1980. Private
respondent General Accident Fire and Life Assurance Corporation, Ltd. (GAFLAC),
on the other hand, is a foreign insurance company pursuing its remedies as a
subrogee of several cargo consignees whose respective cargo sank with the said
vessel and for which it has priorly paid.
The incident of said vessel's sinking gave rise to the filing of suits for recovery of
lost cargo either by the shippers, their successor-in-interest, or the cargo insurers
like GAFLAC as subrogees. The sinking was initially investigated by the Board of
Marine Inquiry (BMI Case No. 466, December 26, 1984), which found that such
sinking was due to force majeure and that subject vessel, at the time of the
sinking was seaworthy. This administrative finding notwithstanding, the trial court
in said Civil Case No. 144425 found against the carrier on the basis that the loss
subject matter therein did not occur as a result of force majeure. Thus, in said
case, plaintiff GAFLAC was allowed to prove, and. was later awarded, its claim.
This decision in favor of GAFLAC was elevated all the way up to this Court in G.R.
No. 89757 (Aboitiz v. Court of Appeals, 188 SCRA 387 [1990]), with Aboitiz, like
its ill-fated vessel, encountering rough sailing. The attempted execution of the
judgment award in said case in the amount of P1,072,611.20 plus legal interest
has given rise to the instant petition.
On the other hand, other cases have resulted in findings upholding the conclusion
of the BMI that the vessel was seaworthy at the time of the sinking, and that such
sinking was due to force majeure. One such ruling was likewise elevated to this
Court in G.R. No. 100373, Country Bankers Insurance Corporation v. Court of
Appeals, et al., August 28, 1991 and was sustained. Part of the task resting upon
this Court, therefore, is to reconcile the resulting apparent contrary findings in
cases originating out of a single set of facts.
It is in this factual milieu that the instant petition seeks a pronouncement as to

the applicability of the doctrine of limited liability on the totality of the claims vis
a vis the losses brought about by the sinking of the vessel M/V P. ABOITIZ, as
based on the real and hypothecary nature of maritime law. This is an issue which
begs to be resolved considering that a number of suits alleged in the petition
number about 110 (p. 10 and pp. 175 to 183, Rollo) still pend and whose
resolution shall well-nigh result in more confusion than presently attends the
instant case.
(Note: The limited liability issue was not discussed in other cases involving
Aboitiz)
ISSUES:
1. Whether the Limited Liability Rule arising out of the real and hypothecary
nature of maritime law should apply in this and related cases - YES
2. Whether or not there was negligence in the instant case - NO
HELD:
1. The real and hypothecary nature of maritime law simply means that the
liability of the carrier in connection with losses related to maritime contracts is
confined to the vessel, which is hypothecated for such obligations or which stands
as the guaranty for their settlement. It has its origin by reason of the conditions
and risks attending maritime trade in its earliest years when such trade was
replete with innumerable and unknown hazards since vessels had to go through
largely uncharted waters to ply their trade. It was designed to offset such adverse
conditions and to encourage people and entities to venture into maritime
commerce despite the risks and the prohibitive cost of shipbuilding. Thus, the
liability of the vessel owner and agent arising from the operation of such vessel
were confined to the vessel itself, its equipment, freight, and insurance, if any,
which limitation served to induce capitalists into effectively wagering their
resources against the consideration of the large profits attainable in the trade.
It might be noteworthy to add in passing that despite the modernization of the

shipping industry and the development of high-technology safety devices
designed to reduce the risks therein, the limitation has not only persisted, but is
even practically absolute in well-developed maritime countries such as the United
States and England where it covers almost all maritime casualties. Philippine
maritime law is of Anglo-American extraction, and is governed by adherence to
both international maritime conventions and generally accepted practices relative
to maritime trade and travel. In this jurisdiction, on the other hand, its application
has been well-nigh constricted by the very statute from which it originates. The
Limited Liability Rule in the Philippines is taken up in Book III of the Code of
Commerce, particularly in Articles 587, 590, and 837, hereunder quoted in toto:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of
third persons which may arise from the conduct of the captain in the care of the
goods which he loaded on the vessel; but he may exempt himself therefrom by
abandoning the vessel with all her equipment and the freight it may have earned
during the voyage.
Art. 590. The co-owners of a vessel shall be civilly liable in the proportion of their
interests in the common fund for the results of the acts of the captain referred to
in Art. 587.
Each co-owner may exempt himself from this liability by the abandonment, before
a notary, of the part of the vessel belonging to him.
Art. 837. The civil liability incurred by shipowners in the case prescribed in this
section (on collisions), shall be understood as limited to the value of the vessel
with all its appurtenances and freightage served during the voyage. (Emphasis
supplied)
Taken together with related articles, the foregoing cover only liability for injuries
to third parties (Art. 587), acts of the captain (Art. 590) and collisions (Art. 837).
In view of the foregoing, this Court shall not take the application of such limited
liability rule, which is a matter of near absolute application in other jurisdictions,
so lightly as to merely "imply" its inapplicability, because as could be seen, the
reasons for its being are still apparently much in existence and highly regarded.
We now come to its applicability in the instant case. In the few instances when
the matter was considered by this Court, we have been consistent in this
jurisdiction in holding that the only time the Limited Liability Rule does not
apply is when there is an actual finding of negligence on the part of the
vessel owner or agent.
2. A careful reading of the decision rendered by the trial court in Civil Case No.
144425 (pp. 27-33, Rollo) as well as the entirety of the records in the instant
case will show that there has been no actual finding of negligence on the part of
petitioner.
The rights of a vessel owner or agent under the Limited Liability Rule are akin to
those of the rights of shareholders to limited liability under our corporation law.
Both are privileges granted by statute, and while not absolute, must be swept
aside only in the established existence of the most compelling of reasons. In the
absence of such reasons, this Court chooses to exercise prudence and shall not
sweep such rights aside on mere whim or surmise, for even in the existence of
cause to do so, such incursion is definitely punitive in nature and must never be
taken lightly.
More to the point, the rights of parties to claim against an agent or owner of a
vessel may be compared to those of creditors against an insolvent corporation
whose assets are not enough to satisfy the totality of claims as against it. While
each individual creditor may, and in fact shall, be allowed to prove the actual
amounts of their respective claims, this does not mean that they shall all be
allowed to recover fully thus favoring those who filed and proved their claims
sooner to the prejudice of those who come later. In such an instance, such
creditors too would not also be able to gain access to the assets of the individual
shareholders, but must limit their recovery to what is left in the name of the
corporation.
In both insolvency of a corporation and the sinking of a vessel, the claimants or
creditors are limited in their recovery to the remaining value of accessible assets.
In the case of an insolvent corporation, these are the residual assets of the
corporation left over from its operations. In the case of a lost vessel, these are
the insurance proceeds and pending freightage for the particular voyage.
In the instant case, there is, therefore, a need to collate all claims preparatory to
their satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its
pending freightage at the time of its loss. No claimant can be given precedence
over the others by the simple expedience of having filed or completed its action
earlier than the rest. Thus, execution of judgment in earlier completed cases,
even those already final and executory, must be stayed pending completion of all
cases occasioned by the subject sinking. Then and only then can all such claims
be simultaneously settled, either completely or pro-rata should the insurance
proceeds and freightage be not enough to satisfy all claims.
Finally, the Court notes that petitioner has provided this Court with a list of all
pending cases (pp. 175 to 183, Rollo), together with the corresponding claims
and the pro-rated share of each. We likewise note that some of these cases are
still with the Court of Appeals, and some still with the trial courts and which
probably are still undergoing trial. It would not, therefore, be entirely correct to
preclude the trial courts from making their own findings of fact in those cases and
deciding the same by allotting shares for these claims, some of which, after all,
might not prevail, depending on the evidence presented in each. We, therefore,
rule that the pro-rated share of each claim can only be found after all the cases
shall have been decided.
CHUA YUEK HONG VS. IAC
FACTS:
Petitioner contracted with the herein private respondent to deliver 1,000 sacks of
copra, valued at P101,227.40, on board the vessel M/V Luzviminda I owned by
the latter. However it did not reach its destination, the vessel capsized and sank
with all its cargo.
Petitioner instituted a complaint against private respondent for breach of contract

incurring damages.
Private respondent’s defense is that even assuming that the alleged cargo was
truly loaded aboard their vessel, their liability had been extinguished by reason of
the total loss of said vessel.
RTC rendered judgment in favor of Chua Yek Hong however CA reversed the
decision by applying Article 587 of the Code of Commerce and the doctrine in
Yangco vs. Lasema (73 Phil. 330 [1941]) and held that private respondents'
liability, as ship owners, for the loss of the cargo is merely co-extensive with their
interest in the vessel such that a total loss thereof results in its extinction.
ISSUE:
Whether or not respondent Appellate Court erred in applying the doctrine of
limited liability under Article 587 of the Code of Commerce as expounded in
Yangco vs. Laserna, supra.
HELD:
As this Court held:
If the ship owner or agent may in any way be held civilly liable at all for injury to
or death of passengers arising from the negligence of the captain in cases of
collisions or shipwrecks, his liability is merely co-extensive with his interest in the
vessel such that a total loss thereof results in its extinction. (Yangco vs. Laserna,
et al., supra).
The limited liability rule, however, is not without exceptions, namely: (1) where
the injury or death to a passenger is due either to the fault of the ship owner, or
to the concurring negligence of the ship owner and the captain (Manila Steamship
Co., Inc. vs. Abdulhaman supra); (2) where the vessel is insured; and (3) in
workmen's compensation claims Abueg vs. San Diego, supra).
In this case, there is nothing in the records to show that the loss of the cargo was
due to the fault of the private respondent as ship owners, or to their concurrent
negligence with the captain of the vessel. The judgment sought to be reviewed is
hereby AFFIRMED 
MONARCH INSURANCE CO., INC. v. CA
G.R. No. 92735 June 8, 2000
(This is a consolidation of three cases which arose from the loss of cargoes of
various shippers when M/V P. Aboitiz, a common carrier owned and operated by
Aboitiz, sank on her voyage from Hong Kong to Manila on October 31, 1980. The
claims are for the total amount of P41,230,115.00 which is almost thrice the
amount of the insurance proceeds of P14,500,000.00 plus earned freight of
500,000.00.)
FACTS:
The M/V P. Aboitiz left Hong Kong for Manila at about 7:30 PM on October
29, 1980 after securing a departure clearance from the HK Port Authority.
Departure was delayed for two hours because Capt. Racines was observing the
direction of the storm that crossed the Bicol Region. He proceeded with the
voyage only after being informed that the storm had abated. The ship sank at
about 7:00 p.m. of October 31, 1980. A meteorologist of PAGASA testified in both
cases that during the inclusive dates of October 28-31, 1980, a stormy weather
condition prevailed within the PAR, particularly along the sea route from HK to
Manila because of tropical depression Yoning. Petitioners refuted the allegation
that the ship and its cargo were lost due to force majeure, relying on the marine
protest filed by Capt. Racines under scale No. 4 that describes the sea condition
as "moderate breeze," and "small waves becoming longer, fairly frequent white
horses."
Monarch and Tabacalera are insurance carriers of lost cargoes. They
indemnified the shippers and were consequently subrogated to their rights,
interests and actions against Aboitiz. Because Aboitiz refused to compensate
Monarch, the latter filed two complaints against Aboitiz. Aboitiz rejected
responsibility for the claims on the ground that the sinking was due to force
majeure or an act of God. The survey established the vessel did not encounter
weather so inclement that Aboitiz would be exculpated from liability for losses.
The seaworthiness of the vessel was in question especially because the breaches
of the hull and the serious flooding of two (2) cargo holds occurred
simultaneously in "seasonal weather." The trial court rendered judgment against
Aboitiz. The appeal to the CA was dismissed. Petitioners moved for execution of
judgment. However, Aboitiz, invoking the real and hypothecary nature of liability
in maritime law, filed an urgent motion to quash the writs of execution.
According to Aboitiz, since its liability is limited to the value of the vessel which
was insufficient to satisfy the aggregate claims of all 110 claimants, to indemnify
Monarch and Tabacalera ahead of the other claimants would be prejudicial to the
latter. Aboitiz filed with the CA a petition for certiorari and prohibition with prayer
for preliminary injunction/ TRO, which was granted.
ISSUE:
W/N the Limited Liability Rule is applicable.
HELD:
YES. Petitioners assert that the vessel did not sink by reason of force majeure but
because of its unseaworthiness and the concurrent fault and/or negligence of
Aboitiz, the captain and its crew, thereby barring Aboitiz from availing of the
benefit of the limited liability rule. The failure of Aboitiz to present sufficient
evidence to exculpate itself from fault and/or negligence in the sinking of its
vessel in the face of the foregoing expert testimony constrains us to hold that
Aboitiz was concurrently at fault and/or negligent with the ship captain and crew
of the M/V P. Aboitiz. This is in accordance with the rule that in cases involving
the limited liability of shipowners, the initial burden of proof of negligence or
unseaworthiness rests on the claimants. However, once the vessel owner or any
party asserts the right to limit its liability, the burden of proof as to lack of privity
or knowledge on its part with respect to the matter of negligence or
unseaworthiness is shifted to it. This burden, Aboitiz had unfortunately failed to
discharge. That Aboitiz failed to discharge the burden of proving that the
unseaworthiness of its vessel was not due to its fault and/or negligence should
not however mean that the limited liability rule will not be applied to the present
cases. The peculiar circumstances here demand that there should be no strict
adherence to procedural rules on evidence lest the just claims of shippers/
insurers be frustrated. The rule on limited liability should be applied in accordance
with the latest ruling in Aboitiz Shipping Corporation vs. General Accident that
claimants be treated as "creditors in an insolvent corporation whose assets are
not enough to satisfy the totality of claims against it."
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY VS. COURT OF
APPEALS
G.R. NO. 116940; JUNE 11, 1997
BELLOSILLO, J.
FACTS:
Coca-Cola Bottlers, loaded on board MV Asilda, a vessel owned and operated by
respondent Felman Shipping Lines (Felman), 7,500 cases of 1-liter Coca-Cola
softdrink bottles to be transported from Zamboanga City to Cebu City for
consignee Coca-Cola Bottlers Cebu. The shipment was insured with petitioner
Philippine American General Insurance Co., Inc. (PHILAMGEN). The vessel sank
bringing down her entire cargo. Coca-Cola Bottlers Cebu filed a claim with
respondent Felman but was denied, hence, an insurance claim with PHILAMGEN
was filed which it paid its claim. PHILAMGEN sued the shipowner for sum of
money and damages, alleging that the total loss of cargo was due to the vessel’s
unseaworthiness as she was put to sea in an unstable condition. Felman, on the
other hand, filed a motion to dismiss contending that there was no right of
subrogation in favor of PHILAMGEN since it had abandoned all its rights, interests
and ownership over the vessel together with her freight and appurtenances for
the purpose of limiting and extinguishing its liability under Art. 587 of the Code of
Commerce.
The trial court rendered judgment in favor of Felman. It ruled that the vessel was
seaworthy and even if assumed unseaworthy, PHILAMGEN still could not recover
from FELMAN since Coca-Cola Bottlers had breached its implied warranty on the
vessel’s seaworthiness. On appeal, he CA ruled that the vessel was unseaworthy
for being top-heavy as 2,500 cases of Coca-Cola softdrinks bottles were
improperly stowed on deck. Even though the vessel possessed the necessary
Coast Guard certification indicating its seaworthiness with respect to the structure
of the ship itself, it was not seaworthy with respect to the cargo. However, it
denied the money claim of PHILAMGEN because of the implied breach of warranty
of seaworthiness by Coca-Cola Bottlers. Furthermore, the filing of notice of
abandonment had absolved Felman from liability under the limited liability rule.
ISSUES:
1. Whether or not MV Asilda was seaworthy when it left port of Zamboanga
2. Whether or not the limited liability under Article 587 of the Code of
Commerce should apply
3. Whether or not PHILAMGEN was properly subrogated to the rrights and
legal actions which the shipper had against Felman, the shipowner
HELD:
1. No. The Supreme Court subscribe to the findings of the Elite Adjusters and
the Court of Appeals that the proximate cause of the sinking of the MV
Asilda was its being top-heavy. As according to the report submitted by the
Elite Adjusters, while the vessel may not have been overloaded, the
distribution or stowage of the cargo on board was done in such a manner
that the vessel was in top-heavy condition at the time of its departure
which rendered it unstable and unseaworthy for that particular voyage.
Furthermore, MV Asilda was designed as a fishing vessel and was not
designed to carry a substantial amount or quantity of cargo in deck and
from the moment it was utilized to load heavy cargo, the vessel was
rendered unseaworthy for the purpose of carrying the type of cargo and
that the capsizing and sinking of the vessel was bound to happen and an
inevitable occurrence.
2. No. The Supreme Court held that Article 587 of the Code of Commerce is
not applicable. The ship agent is liable for the negligent acts of the captain
in the care of the goods loaded on the vessel. This liability, although can be
limited through abandonment of the vessel, its equipment and freightage,
as provided in Art. 587, there exceptional circumstances wherein the ship
agent could still be held answerable, as where the loss or injury was due to
the fault of the ship owner and the captain. The international rule is to the
effect that the right of abandonment of vessels, as a legal limitation of a
ship owner's liability, does not apply to cases where the injury or average
was occasioned by the ship owner'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 ship owner 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. 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 ship owner, was not able to rebut this presumption.
3. Yes. The doctrine 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, equity and
good conscience ought to pay. Therefore, the payment made by
PHILAMGEN to Coca-Cola Bottlers Philippines, Inc., gave the former the
right to bring an action as subrogee against FELMAN. Having failed to rebut
the presumption of fault, the liability of FELMAN for the loss of the 7,500
cases of 1-liter Coca-Cola softdrink bottles is inevitable.
VASQUEZ V. CA, GR L-42926, 13 SEPTEMBER 1985
FACTS:
When the interisland vessel MV ‘Pioneer Cebu’ left the Port of Manila in the early
morning of 15 May 1966 bound for Cebu, it had on board the spouses Alfonso
Vasquez and Filipinas Bagaipo and a 4-year old boy, Mario Marlon Vasquez,
among her passengers. The MV ‘Pioneer Cebu’ encountered typhoon ‘Klaring’ and
struck a reef on the southern part of Malapascua Island, located somewhere north
of the island of Cebu and subsequently sunk. Said passengers were unheard from
since then.
Pedro Vasquez and Soledad Ortega are the parents of Alfonso Vasquez. Cleto
Bagaipo and Agustina Virtudes are the parents of Filipinas Bagaipo. Romeo
Vasquez and Maximina Cainay are the parents Mario Marlon Vasquez.
Due to the loss of their children, they sued for damages before the CFI of Manila
(Civil Case 67139). Filipinas Pioneer Lines Inc. defended on the plea of force
majeure, and the extinction of its liability by the actual total loss of the vessel.
After proper proceedings, the trial Court awarded damages, ordering Filipinas
Pioneer to pay the heirs of the victims.
On appeal, the appellate court reversed the judgment and absolved Filipinas
Pioneer from any and all liability.
ISSUE:
W/N Filipinas Pioneer should be free from liability on account of fortuitous event
HELD:
NO. To constitute a caso fortuito that would exempt a person from responsibility,
it is necessary that (1) the event must be independent of the human will; (2) the
occurrence must render it impossible for the debtor to fulfill the obligation in a
normal manner; and that (3) the obligor must be free of participation in, or
aggravation of, the injury to the creditor.” In the language of the law, the event
must have been impossible to foresee, or if it could be foreseen, must have been
impossible to avoid. There must be an entire exclusion of human agency from the
cause of injury or loss.
Herein, while the typhoon was an inevitable occurrence, yet, having been kept
posted on the course of the typhoon by weather bulletins at intervals of 6 hours,
the captain and crew were well aware of the risk they were taking as they hopped
from island to island from Romblon up to Tanguingui. They held frequent
conferences, and oblivious of the utmost diligence required of very cautious
persons, they decided to take a calculated risk. In so doing, they failed to observe
that extraordinary diligence required of them explicitly by law for the safety of the
passengers transported by them with due regard for all circumstances and
unnecessarily exposed the vessel and passengers to the tragic mishap. They
failed to overcome that presumption of fault or negligence that arises in cases of
death or injuries to passengers.
With respect to the submission that the total loss of the vessel extinguished its
liability pursuant to Article 587 of the Code of Commerce as construed in Yangco
vs. Laserna, 73 Phil. 330 [1941], suffice it to state that even in said case, it was
held that the liability of a shipowner is limited to the value of the vessel or to the
insurance thereon. Despite the total loss of the vessel therefore, its insurance
answers for the damages that a shipowner or agent may be held liable for by
reason of the death of its passengers.
DIONISIA ABUEG, ET AL.,  
vs. 
BARTOLOME SAN DIEGO
FACTS:
1.Dionisia Abueg is the widow of the deceased, Amado Nuñez, who was a
machinist on board the M/S San Diego II belonging to the defendant-appellant.
2.The M/S San Diego II , while engaged in fishing operations around Mindoro
Island on Oct. 1, 1941 were caught by a typhoon as a consequence of which they
were sunk and totally lost. The vessel was not covered by any insurance.
3.Counsel for the appellant cite article 587 of the Code of Commerce which
provides that if the vessel together with all her tackle and freight money earned
during the voyage are abandoned, the agent's liability to third persons for tortious
acts of the captain in the care of the goods which the ship carried is extinguished.
From these premises counsel draw the conclusion that appellant's liability, as
owner of the two motor ships lost or sunk as a result of the typhoon was
extinguished.
ISSUE:
Whether or not respondent's liability to compensate Nuñez' death is extinguished.
HELD:
No, the provisions of the Code of Commerce invoked by counsel of appellant have
no room in the application of the Workmen's Compensation Act which seeks to
improve, and aims at the amelioration of, the condition of laborers and
employees. It is not the liability for the damage or loss of the cargo or injury to,
or death of, a passenger by or through the misconduct of the captain or master of
the ship; nor the liability for the loss of the ship as result of collision; nor the
responsibility for wages of the crew, but a liability created by a statute to
compensate employees and laborers in cases of injury received by or inflicted
upon them, while engaged in the performance of their work or employment, or
the heirs and dependents and laborers and employees in the event of death
caused by their employment. Such compensation has nothing to do with the
provisions of the Code of Commerce regarding maritime commerce. It is an item
in the cost of production which must be included in the budget of any well-
managed industry.
It has been repeatedly stated that the Workmen's Compensation Act was enacted
to abrogate the common law and our Civil Code upon culpable acts and
omissions, and that the employer need not be guilty of neglect or fault, in order
that responsibility may attach to him, and that shipowner is liable to pay
compensation provided for in the Workmen's Compensation Act, notwithstanding
the fact that the motorboat was totally lost.
LUZON STEVEDORING CORPORATION VS. CA
FACTS:
A maritime collision occurred between the tanker CAVITE owned by LSCO and MV
Fernando Escano (a passenger ship) owned by Escano, as a result the passenger
ship sunk. An action in admiralty was filed by Escano against Luzon. The trial
court held that LSCO Cavite was solely to blame for the collision and held that
Luzon’s claim that its liability should be limited under Article 837 of the Code of
Commerce has not been established. The Court of Appeals affirmed the trial
court. The SC also affirmed the CA. Upon two motions for reconsideration, the
Supreme Court gave course to the petition.
ISSUE:
Whether or not in order to claim limited liability under Article 837 of the Code of
Commerce, it is necessary that the owner abandon the vessel
HELD:
Yes, abandonment is necessary to claim the limited liability wherein it shall be
limited to the value of the vessel with all the appurtenances and freightage
earned in the voyage. However, if the injury was due to the ship owner’s fault, the
ship owner may not avail of his right to avail of limited liability by abandoning the
vessel.
The real nature of the liability of the ship owner or agent is embodied in the Code
of Commerce. Articles 587, 590 and 837 are intended to limit the liability of the
ship owner, provided that the owner or agent abandons the vessel. Although
Article 837 does not specifically provide that in case of collision there should be
abandonment, to enjoy such limited liability, said article is a mere amplification of
the provisions of Articles 587 and 590 which makes it a mere superfluity.
The exception to this rule in Article 837 is when the vessel is totally lost in which
case there is no vessel to abandon, thus abandonment is not required. Because of
such loss, the liability of the owner or agent is extinguished. However, they are
still personally liable for claims under the Workmen’s Compensation Act and for
repairs on the vessel prior to its loss.
In case of illegal or tortious acts of the captain, the liability of the owner and
agent is subsidiary. In such cases, the owner or agent may avail of Article 837 by
abandoning the vessel. But if the injury is caused by the owner’s fault as where
he engages the services of an inexperienced captain or engineer, he cannot avail
of the provisions of Article 837 by abandoning the vessel. He is personally liable
for such damages.
In this case, the Court held that the petitioner is a t fault and since he did not
abandon the vessel, he cannot invoke the benefit of Article 837 to limit his liability
to the value of the vessel, all appurtenances and freightage earned during the
voyage. 
YANGCO VS. LASERNA, OCT. 29, 1941
FACTS:
At about one o'clock in the afternoon of May 26, 1927, the steamer S.S. Negros,
belonging to petitioner here, Teodoro R. Yangco, left the port of Romblon on its
retun trip to Manila. Typhoon signal No. 2 was then up, of which fact the captain
was duly advised and his attention thereto called by the passengers themselves
before the vessel set sail. The boat was overloaded as indicated by the loadline
which was 6 to 7 inches below the surface of the water. After two hours of sailing,
the boat encountered strong winds and rough seas between the islands of Banton
and Simara. As the sea became increasingly violent, the captain ordered the
vessel to turn left, evidently to return to port, but in the manuever, the vessel
was caught sidewise by a big wave which caused it to capsize and sink. Many of
the passengers died in the mishap. Several civil actions were then filed to recover
damages prompting the petitioner, by a verified pleading, sought to abandon th
evessel to the plainitffs in the three cases, together with all its equipments,
without prejudice to his right to appeal.
ISSUE:
May the shipowner or agent, notwithstanding the total loss of the vessel as a
result of the negligence of its captain, be properly held liable in damages for the
consequent death of its passengers?
HELD:
NO. If the shipowner or agent may in any way be held civilly liable at all for injury
to or death of passengers arising from the negligence of the captain in cases of
collisions or shipwrecks, his liability is merely co-extensive with his interest in the
vessel such that a total loss thereof results in its extinction. In arriving at this
conclusion, we have not been unmindful of the fact that the ill-fated steamship
Negros, as a vessel engaged in interisland trade, is a common carrier (De Villata
v. Stanely, 32 Phil., 541), and that the as a vessel engaged in interisland trade, is
a common carrier (De Villata v. Stanely, 32 Phil., 541), and that the relationship
between the petitioner and the passengers who died in the mishap rests on a
contract of carriage. But assuming that petitioner is liable for a breach of contract
of carriage, the exclusively "real and hypothecary nature" of maritime law
operates to limit such liability to the value of the vessel, or to the insurance
thereon, if any. In the instant case it does not appear that the vessel was insured.
Whether the abandonment of the vessel sought by the petitioner in the instant
case was in accordance with law of not, is immaterial. The vessel having totally
perished, any act of abandonment would be an idle ceremony.
YU CON VS. IPIL
G.R. NO. L-10195
DECEMBER 29, 1916
FACTS:
The action was brought for the recovery from the defendants jointly and severally
the sum of P450, which had been delivered by the plaintiff to the defendants,
master and supercargo, respectively, of a banca named Maria belonging to the
second defendant, to be carried, together with various merchandise belonging to
the plaintiff, from the port of Cebu to the town of Catmon of the Province of Cebu.
By virtue of the contract between the parties, the money and merchandise were
to be transported by the said craft between the points above-named in
consideration of the payment of a certain sum for each voyage. The money
disappeared from said craft during the night of October 18, 1911, while it was
anchored in the port of Cebu and ready to sail for its destination, Catmon, and
was not afterwards found. The plaintiff based his action on the charge that the
disappearance of said sum was due to the abandonment, negligence, or voluntary
breach, on the part of the defendants, of the duty they had in respect to the safe-
keeping of the aforementioned sum.
The defendants denied the liability and contend that the plaintiff, at his own
expense and under his exclusive responsibility, chartered the said banca, the
property of the defendant Lauron, for the fixed period of three days, at the price
of P10 per diem, and that, through the misfortune, negligence, or abandonment
of the plaintiff himself, the loss complained of occurred, while said banca was at
anchor in the port of Cebu, and was caused by theft committed by unknown
thieves.
ISSUE:
Whether or not the defendants are liable for the loss of the money.
HELD:
It is unquestionable that the defendants Glicerio Ipil and Justo Solamo were the
carriers of the said P450 belonging to the plaintiff, and that they received this
sum from the latter for the purpose of delivering it to the store of the town of
Catmon, to which it had been consigned. Under such circumstances, said
defendants were the depositaries of the money. The said two defendants being
the depositaries of the sum in question, and they having failed to exercise for its
safe-keeping the diligence required by the nature of the obligation assumed by
them and by the circumstances of the time and the place, it is evident that, in
pursuance of the provisions of articles 1601 and 1602, in their relation to articles
1783 and 1784, and as prescribed in articles 1770, of the Civil Code, they are
liable for its loss or misplacement and must restore it to the plaintiff. With respect
to the other defendant, Narciso Lauron, as he was the owner of the vessel in
which the loss or misplacement of the P450 occurred, in accordance with the
provisions of the Code of Commerce in force, which are applicable to the instance
case, the defendant Narciso Lauron, as the proprietor and owner of the craft of
which Glicerio Ipil was the master and in which, through the fault and negligence
of the latter and of the supercago Justo Solamo, there occurred the loss, theft, or
robbery of the P450 that belonged to the plaintiff and were delivered to said
master and supercargo, a theft which, on the other hand, as shown by the
evidence, does not appear to have been committed by a person not belonging to
the craft, should, for said loss or theft, be held civilly liable to the plaintiff, who
executed with said defendant Lauron the contract for the transportation of the
merchandise and money aforementioned between the port of Cebu and the town
of Catmon, by means of the said craft.
FAR EASTERN SHIPPING COMPANY VS. COURT OF APPEALS
G.R. NO. 130068 OCTOBER 1, 1998
REGALADO, J.
FACTS: 
M/V Pavlodar owned and operated by the Far Eastern Shipping Company (FESC)
arrived at the port of Manila. Senen Gavino was assigned by the Manila Pilot's
Association (MPA) to conduct docking manuevers for the safe berthing of the
vessel. Gavino stationed himself in the bridge, with the master of the vessel,
Victor Kavankov, beside him.
When the vessel was already about 2000 feet from the pier, Gavino ordered the
anchor dropped. Kavankov relayed the orders to the crew of the vessel. However
the anchor did not hold as expected. The speed of the vessel did not slacken. 
A commotion ensued between the crew members. When Gavino inquired about
the commotion, Kavankov assured Gavino that there was nothing to it.
The bow of the vessel rammed into the apron of the pier causing considerable
damage to the pier. PPA filed a complaint for a sum of money against FESC,
Gavino and MPA. CA ruled in favor of PPA holding them liable with MPA (employer
of Kavankov) entitled to reimbursement from Gavino.
ISSUE: 
Are the counsels for the parties committed acts which require the exercise of the
court's disciplinary powers?
HELD: 
YES. The records show that the law firm of Del Rosario and Del Rosario thru its
associate, Atty Tria, is the counsel of record for FESC in both GR no 130068 and
GR no 130150. GR 130068 which is assigned to the Court's second division,
commenced with the filing of a verified motion for extension of time which
contained a certification against forum shopping signed by counsel Tria stating
that to the best of his knowledge there is no action or proceeding pending in the
SC, CA or any other tribunal.
Reviewing the records, the court finds that the petition filed by MPA in GR no,
130150 then pending with the third division was duly filed with a copy thereof
furnished by registered mail to counsel for FESC (atty Tria). It would be fair to
conclude that when FESC filed its petition GR no 130068, it would aready have
received a copy of the copy of the petition by MPA. It wa therefore encumbent
upon FESC to inform the court of the pending action. But considering that it was a
superfluity at that stage of the proceeding , it being unnecessary to file such
certification of non forum shopping with a mere motion for extension, the court
disregarded such error.
On the other hand it took the OSG, representing PPA, an ordinately and
unreasonably long period of time to file its comment, thus unduly delaying the
resolution of these cases. In GR no 130068, it took 210 days before the OSG filed
its comment. FESC was not even furnished with a copy. In Gr no 130150 it took
180 days before comment was filed. This disinclination of the OSG to seasonably
file required pleadings constitutes deplorable disservice to the public and can only
be categorized as inefficiency on the part of the govt law office.
Counsel for FESC, the law firm of Del Rosario and Del Rosario, specifically its
asscociate Tria is reprimaded and warned that a repetition of the same acts shall
be dealt with severely.
The original members of the legal tean of the OSG are admonished and warned
tha a repetition shall also be dealt with more stringently.
Baka lang itanong kung ano ruling: The decision of the CA is affirmed. Gavino,
MPA and FESC are declared solidarily liable with MPA entitled to reimbursement
from Gavino for such amount of the adjudged pecuniary liability in excess of the
amount equivalent to 75% of its prescribed reserved fund.
CALTEX PHILS. vs SULPICIO LINES
FACTS:
On December 19, 1987, A motor tanker named MT Vector owned and
operated by Vector Shipping Corporation carried 8,800 barrels of
petroleum products of Caltex by virtue of a charter contract. On December 20,
1987, MV Doña Paz passenger and cargo vessel owned and operated by Sulpicio
Lines, Inc. left the port of Tacloban headed for Manila with 1,493
passengers indicated in the Coast Guard Clear. MT Vector collided with MV Doña
Paz in the open sea within the vicinity of Dumali Point between Marinduque and
Oriental Mindoro, killing almost all the passengers and crew members of both
ships except for 24 survivors.
MV Doña Paz carried an estimated 4,000 passengers most were not in the
passenger manifest. The board of marine inquiry found that the MT Vector, its
registered operator Francisco Soriano, and its owner and actual operator Vector
Shipping Corporation, were at fault and responsible for its collision with MV Doña
Paz.
Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife and
mother respectively, filed a complaint for “Damages Arising from Breach of
Contract of Carriage” against Sulpicio Lines, Inc. for the death of Sebastian E.
Cañezal and his 11-year old daughter Corazon G. Cañezal. As a response, Sulpicio
Lines Inc., in turn, filed a 3rd party complaint against Francisco Soriano, Vector
Shipping Corporation and Caltex. Sulpicio Lines Inc., alleged that Caltex chartered
MT Vector with gross and evident bad faith knowing fully well that MT Vector was
improperly manned, ill-equipped, unseaworthy and a hazard to safe navigation.
ISSUE:
Whether or not Caltex as a voyage charterer of a sea vessel liable for damages
resulting from a collision between the chartered vessel and a passenger ship.
HELD:
Petitioner and Vector entered into a contract of affreightment, also known as a
voyage charter. A charter party is a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a specified time or
use; a contract of affreightment is one by which the owner of a ship or other
vessel lets the whole or part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of the payment of
freight. A contract of affreightment may be either time charter, wherein the
leased vessel is leased to the charterer for a fixed period of time, or voyage
charter, wherein the ship is leased for a single voyage. In both cases, the charter-
party provides for the hire of the vessel only, either for a determinate 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 master of the crew, and defray the expenses for
the maintenance of the ship. If the charter is a contract of affreightment, which
leaves the general owner in possession of the ship as owner for the voyage, the
rights and the responsibilities of ownership rest on the owner. The charterer is
free from liability to third persons in respect of the ship.
The charter party agreement did not convert the common carrier into a private
carrier. The parties entered into a voyage charter, which retains the character of
the vessel as a common carrier. It is imperative that a public carrier shall remain
as such, notwithstanding the charter of the whole or portion of a vessel by one or
more persons, provided the charter is limited to the ship only, as in the case of a
time-charter or voyage charter. It is only when the charter includes both the
vessel and its crew, as in a bareboat or demise that a common carrier becomes
private, at least insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a ship-owner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be
the property of the charterer. A common carrier is a person or corporation whose
regular business is to carry passengers or property for all persons who may
choose to employ and to remunerate him. 16 MT Vector fits the definition of a
common carrier under Article 1732 of the Civil Code.
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.
The charterer of a vessel has no obligation before transporting its cargo to ensure
that the vessel it chartered complied with all legal requirements. The duty rests
upon the common carrier simply for being engaged in "public service." The
relationship between the parties in this case is governed by special laws. Because
of the implied warranty of seaworthiness, shippers of goods, when transacting
with common carriers, are not expected to inquire into the vessel’s
seaworthiness, genuineness of its licenses and compliance with all maritime laws.
To demand more from shippers and hold them liable in case of failure exhibits
nothing but the futility of our maritime laws insofar as the protection of the public
in general is concerned. Such a practice would be an absurdity in a business
where time is always of the essence. Considering the nature of transportation
business, passengers and shippers alike customarily presume that common
carriers possess all the legal requisites in its operation.
G.R. NO. 101503 SEPTEMBER 15, 1993
PLANTERS PRODUCTS, INC., VS. COURT OF APPEALS
BELLOSILLO, J.:
DOCTRINE: A public carrier shall remain as such, notwithstanding the charter of

the whole or portion of a vessel by one or more persons, provided the charter is
limited to the ship only, as in the case of a time-charter or voyage-charter. It is
only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned. Indubitably, a shipowner in a
time or voyage charter retains possession and control of the ship, although her
holds may, for the moment, be the property of the charterer.
FACTS:
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation
(MITSUBISHI), 9,329.7069 metric tons of Urea 46% fertilizer which the latter
shipped in bulk on aboard the cargo vessel M/V "Sun Plum" owned by private
respondent Kyosei Kisen Kabushiki Kaisha (KKKK).
Prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" was
entered into between Mitsubishi as shipper/charterer and KKKK as shipowner.
Before loading the fertilizer aboard the vessel, 4 of her holds were all presumably
inspected by the charterer's representative and found fit to take a load of urea in
bulk. After the Urea fertilizer was loaded in bulk by stevedores hired by and under
the supervision of the shipper, the steel hatches were closed with heavy iron lids,
covered with 3 layers of tarpaulin, then tied with steel bonds. The hatches
remained closed and tightly sealed throughout the entire voyage.
Upon arrival of the vessel at her port of call, petitioner unloaded the cargo from
the holds into its steel-bodied dump trucks, using metal scoops attached to the
ship, pursuant to the terms and conditions of the charter-party. The hatches
remained open throughout the duration of the discharge. It took 11 days for PPI
to unload the cargo.
A surveyor determined the "outturn" of the cargo shipped. The report revealed a
shortage in the cargo of 106.726 M/T and a portion of the Urea fertilizer
approximating 18 M/T was contaminated with dirt. PPI sent a claim to Soriamont
Steamship Agencies (SSA), the resident agent of the carrier, KKKK, representing
the cost of the alleged shortage in the goods shipped and the diminution in value
of that portion said to have been contaminated with dirt.
Respondent SSA explained that they were not able to respond to the consignee's
claim for payment because what they received was just a request for short landed
certificate and not a formal claim, and that this "request" was denied by them
because they "had nothing to do with the discharge of the shipment."
PPI filed an action for damages with the CFI. The defendant carrier argued that
the strict public policy governing common carriers does not apply to them
because they have become private carriers by reason of the provisions of the
charter-party.
CFI ruled against the defendant carrier. On appeal, CA reversed the lower court
and absolved the carrier from liability for the value of the cargo that was lost or
damaged. Relying on the case of Home Insurance Co. v. American Steamship
Agencies, Inc., the CA ruled that the cargo vessel M/V "Sun Plum" owned by
private respondent KKKK was a private carrier and not a common carrier by
reason of the time charterer-party. Accordingly, the Civil Code provisions on
common carriers which set forth a presumption of negligence do not find
application in the case at bar.
ISSUES:
1. W/N a common carrier becomes a private carrier by reason of a time
charter-party
2. W/N respondent carrier was remiss in exercising extraordinary diligence
HELD:
1. NO. It is not disputed that respondent carrier, in the ordinary course of
business, operates as a common carrier, transporting goods indiscriminately
for all persons. When petitioner chartered the vessel M/V "Sun Plum", the
ship captain, its officers and compliment were under the employ of the
shipowner and therefore continued to be under its direct supervision and
control. Hardly then can we charge the charterer, a stranger to the crew
and to the ship, with the duty of caring for his cargo when the charterer did
not have any control of the means in doing so. This is evident in the present
case considering that the steering of the ship, the manning of the decks,
the determination of the course of the voyage and other technical incidents
of maritime navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner.
It is therefore imperative that a public carrier shall remain as such,

notwithstanding the charter of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the ship only, as in the case of a time-
charter or voyage-charter. It is only when the charter includes both the vessel
and its crew, as in a bareboat or demise that a common carrier becomes private,
at least insofar as the particular voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage charter retains possession and
control of the ship, although her holds may, for the moment, be the property of
the charterer.
Respondent carrier's heavy reliance on the case of Home Insurance
Co. v. American Steamship Agencies, supra, is misplaced for the reason that the
meat of the controversy therein was the validity of a stipulation in the charter-
party exempting the shipowners from liability for loss due to the negligence of its
agent, and not the effects of a special charter on common carriers.
2. NO. The record discloses ample evidence showing that defendant carrier
was not negligent in performing its obligations. Particularly, the following
testimonies of plaintiff-appellee's own witnesses clearly show absence of
negligence by the defendant carrier; that the hull of the vessel at the time
of the discharge of the cargo was sealed and nobody could open the same
except in the presence of the owner of the cargo and the representatives of
the vessel; that the cover of the hatches was made of steel and it was
overlaid with tarpaulins, three layers of tarpaulins and therefore their
contents were protected from the weather; and, that to open these
hatches, the seals would have to be broken, all the seals were found to be
intact.
Article 1734 of the New Civil Code provides that common carriers are not
responsible for the loss, destruction or deterioration of the goods if caused by the
charterer of the goods or defects in the packaging or in the containers.
The dissipation of quantities of fertilizer, or its deterioration in value, is caused

either by an extremely high temperature in its place of storage, or when it comes
in contact with water. When Urea is drenched in water, either fresh or saline,
some of its particles dissolve. The probability of the cargo being damaged or
getting mixed or contaminated with foreign particles was made greater by the
fact that the fertilizer was transported in "bulk," thereby exposing it to the
inimical effects of the elements and the grimy condition of the various pieces of
equipment used in transporting and hauling it.
The evidence of respondent carrier also showed that it was highly improbable for
sea water to seep into the vessel's holds during the voyage since the hull of the
vessel was in good condition and her hatches were tightly closed and firmly
sealed, making the M/V "Sun Plum" in all respects seaworthy to carry the cargo
she was chartered for.
Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss
or damage, more so, with a variable weather condition (it was raining) prevalent
during its unloading. This is a risk the shipper or the owner of the goods has to
face. Clearly, 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. 
MAGSAYSAY, INC. VS AGAN
FACTS:
The S S "San Antonio", a vessel owned and operated by plaintiff, left Manila on
October 6, 1949, bound for Basco, Batanes, via Aparri, Cagayan, with general
cargo belonging to different shippers, among them the defendant. The vessel
reached Aparri on the 10th of that month, and after a day's stopover in that port,
weighed anchor to proceed to Basco. But while still in port, it ran aground at the
mouth of the Cagayan river, and, attempts to refloat it under its own power
having failed, plaintiff had it refloated by the Luzon Stevedoring Co. at an agreed
compensation. Once afloat, the vessel returned to Manila to refuel and then
proceeded to Basco, the port of destination. There the cargoes were delivered to
their respective owners or consignees, who, with the exception of defendant,
made a deposit or signed a bond to answer for their contribution to the average.
On the theory that the expenses incurred in floating the vessel constitute general
average to which both ship and cargo should contribute, plaintiff brought the
present action in the Court of First Instance of Manila to make defendant pay his
contribution, which, as determined by the average adjuster, amounts to P841.40.
Defendant, in his answer, denies liability for this amount, alleging, among other
things, that the stranding of the vessel was due to the fault, negligence and lack
of skill of its master, that the expenses incurred in putting it afloat did not
constitute general average, and that the liquidation of the average was not made
in accordance with law. After trial, the lower court found for plaintiff and rendered
judgment against the defendant for the amount of the claim, with legal interests.
From this judgment defendant has appealed directly to this Court.
ISSUE:
WON the expenses for the refloating could be classified as an average
HELD:
No. The law on averages is contained in the Code of Commerce . Under that law,
averages are classified into simple or particular and general or gross. Generally
speaking, simple or particular averages include all expenses and damages caused
to the vessel or cargo which have not inured to the common benefit (Art. 809,
and are, therefore, to be borne only by the owner of the property which gave rise
to the same (Art. 810); while general or gross averages include "all the damages
and expenses which are deliberately caused in order to save the vessel, its cargo,
or both at the same time,, from a real and known risk" (Art. 811). Being for the
common benefit, gross averages are to be borne by the owners of the articles
saved (Art. 812).Let us now see whether the expenses here in question could
come within the legal concept of general average. Tolentino, in his commentaries
on the Code of Commerce, gives the following requisites for general average:
"First, there must be a common danger. This means, that both the ship and the
cargo, after it has been loaded, are subject to the same danger, whether during
the voyage, or in the port of loading or unloading; that the danger arises from
accidents of the sea, dispositions of the authority, or faults of men, provided, that
the circumstance producing the peril should be ascertained and imminent or may
rationally be said to be certain and imminent. This last requirement excludes
measures undertaken against a distant peril.
"Second, that for the common safety part of the vessel or of the cargo or both is
sacrificed deliberately.
"Third, that from the expenses or damages caused follows the successful saving
of the vessel and cargo.
"Fourth, that the expenses or damages should have been incurred or inflicted
after taking proper legal steps and authority."
The final requisite has not been proved, for it does not appear that the expenses
here in question were incurred after following the procedure laid down in articles
813 et seq.
In conclusion, we find that plaintiff has not made out a case for general average,
with the result that its claim for contribution against the defendant cannot be
granted.
AMERICAN HOME ASSURANCE VS. CA
MAY 5, 1992
FACTS:
American Home Assurance Co. and the National Marine Corporation (NMC) are
foreign corporations licensed to do business in the Philippines. On or about 19
June 1988, Cheng Hwa Pulp Corporation shipped 5,000 bales (1,000 ADMT) of
bleached kraft pulp from Haulien, Taiwan on board “SS Kaunlaran”, which is
owned and operated by NMC. The said shipment was consigned to Mayleen Paper,
Inc. of Manila, which insured the shipment with American Home Assurance Co.
On 22 June 1988, the shipment arrived in Manila and was discharged into the
custody of the Marina Port Services, Inc., for eventual delivery to the consignee-
assured. However, upon delivery of the shipment to Mayleen Paper, Inc., it was
found that 122 bales had either been damaged or lost. The loss was calculated to
be 4,360 kilograms with an estimated value of P61,263.41. Mayleen Paper, Inc.
then duly demanded indemnification from NMC for the damages and losses in the
shipment but to no avail. Mayleen Paper, Inc. sought recovery from American
Home Assurance Co.. Upon demand and submission of proper documentation,
American Home Assurance paid Mayleen Paper, Inc. the adjusted amount of P31,
506.75 for the damages/losses suffered by the shipment, hence, AHA was
subrogated to the rights and interests of Mayleen Paper, Inc.
AHA brought a suit against respondent NMC for the amount it paid Mayleen Paper,
Inc.
The RTC rendered a decision dismissing the complaint, such decision was affirmed
by the CA.
ISSUE:
WON American Home Assurance Company is entitled to reimbursement from NMC
of what it paid to Mayleen Paper?
HELD:
YES. The Supreme Court reversed the decisions of both the Court of Appeals and
the Regional Trial Court of Manila, Branch 41, appealed from; and ordered NMC to
reimburse the subrogee, American Home Assurance, the amount of P31,506.75.
Under Article 1733 of the Civil Code, common carriers from the nature of their
business and for reasons of public policy are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of passengers
transported by them according to all circumstances of each case. Thus, under
Article 1735 of the same Code, in all cases other than those mentioned in Article
1734 thereof, the common carrier shall be presumed to have been at fault or to
have acted negligently, unless it proves that it has observed the extraordinary
diligence required by law.
Common carriers cannot limit their liability for injury or loss of goods where such
injury or loss was caused by its own negligence. Otherwise stated, the law on
averages under the Code of Commerce cannot be applied in determining liability
where there is negligence.
Under the foregoing principle and in line with the Civil Code’s mandatory
requirement of extraordinary diligence on common carriers in the care of goods
placed in their stead, it is but reasonable to conclude that the issue of negligence
must first be addressed before the proper provisions of the Code of Commerce on
the extent of liability may be applied.
As resolved in National Development Co. v. C.A. (164 SCRA 593 [1988]; citing
Eastern Shipping Lines, Inc. v. I.A.C., 150 SCRA 469, 470 [1987], “the law of the
country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration.” (Article 1753,
Civil Code). Herein, thus, for cargoes transported to the Philippines, the liability of
the carrier is governed primarily by the Civil Code and in all matters not regulated
by said Code, the rights and obligations of common carrier shall be governed by
the Code of Commerce and by special laws (Article 1766, Civil Code).
The filing of a motion to dismiss on the ground of lack of cause of action carries
with it the admission of the material facts pleaded in the complaint (Sunbeam
Convenience Foods, Inc. v. C.A., 181 SCRA 443 [1990]). Herein, upon delivery of
the shipment in question at Mayleen’s warehouse in Manila, 122 bales were found
to be damaged/lost with straps cut or loose, calculated by the so-called
“percentage method” at 4,360 kilograms and amounting to P61,263.41. Instead
of presenting proof of the exercise of extraordinary diligence as required by law,
NMC filed its Motion to Dismiss dated 7 August 1989, hypothetically admitting the
truth of the facts alleged in the complaint to the effect that the loss or damage to
the 122 bales was due to the negligence or fault of NMC. Such being the case, it
is evident that the Code of Commerce provisions on averages cannot apply.
Article 1734 of the Civil Code provides that common carriers are responsible for
loss, destruction or deterioration of the goods, unless due to any of the causes
enumerated therein. Herein, it is obvious that the present case does not fall
under any of the exceptions. Thus, American Home Assurance Company is
entitled to reimbursement of what it paid to Mayleen Paper, Inc. as insurer.
NATIONAL DEVELOPMENT COMPANY V. COURT OF APPEALS
G.R.. NO. L-49407; AUGUST 19, 1988
PARAS, J.
FACTS:
In accordance with a memorandum agreement entered into between petitioners
NDC and Maritime Company of the Phils., NDC as the first preferred mortgagee of
3 ocean going vessesls including the Doña Nati, appointed MCP as its agent to
manage and operate the vessel in its behalf and account. E. Philipp Corp. of New
York loaded on board the vessel at California, a total of 1,200 bales of American
raw cotton consigned to the order of Manila Banking Corporation and the People’s
Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial
Company, Inc., who represents Riverside Mills Corp. Also loaded were 200 cartons
of sodium lauryl sulfate and 10 cases of aluminum foil from Japan consigned to
Manila Banking Corp. En route to Manila the vessel figured in a collision with
another vessel in Japan, resulting to the loss of 550 bales of Cotton and the
shipment of chemicals from Japan. Respondent Development Insurance and
Surety Corp., as insurer, paid the total amount of P364,915.86 to the consignees
or their successors-in-interest, for the said lost or damaged cargoes.
Hence, respondent filed this complaint to recover said amount from the
defendants-NDC and MCP as owner and ship agent respectively, of the said “Doña
Nati” vessel. The lower court held petitioners liable for the payment of sums plus
interest and attorney’s fees. On appeal, the CA upheld the ruling of the lower
court, causing the petitioner to file the present petition for certiorari.
ISSUE:
What laws govern loss or destruction of goods due to collision of vessels outside
Philippine waters, extent of liability, and prescription?
HELD:
Art. 1753 of the Civil Code provides that “the law of the country to which the
goods are to be transported governs the liability of the common carrier in case of
their loss, destruction or deterioration.” Thus, the rule was specifically laid down
that for cargoes transported from Japan to the Philippines, the liability of the
carrier is governed primarily by the Civil Code and in all matters not regulated by
said Code, the rights and obligations of common carrier shall be governed by the
Code of Commerce and by special laws (Article 1766, Civil Code). Hence, the
COGSA, a special law, is merely suppletory to the provisions of the Civil Code.
In the case at bar, it has been established that the goods in question are
transported from San Francisco, California and Tokyo, Japan to the Philippines and
that they were lost or damaged due to a collision which was found to have been
caused by the negligence or fault of both captains of the colliding vessels. Under
the above ruling, it is evident that the laws of the Philippines will apply, and it is
immaterial that the collision actually occurred in foreign waters such as Japan.
Under Article 1733 of the Civil Code, common carriers from the nature of their
business and for reasons of public policy are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to all circumstances of each case. Accordingly,
under Article 1735 of the same Code, in all cases other than those mentioned is
Article 1734 thereof, the common carrier shall be presumed to have been at fault
or to have acted negligently, unless it proves that it has observed the
extraordinary diligence required by law.
It appears, however, that collision falls among matters not specifically regulated
by the Civil Code, so that no reversible error can be found in respondent court’s
application to the case at bar of Articles 826 to 839, Book Three of the Code of
Commerce, which deal exclusively with collision of vessels.
More specifically, Article 826 of the Code of Commerce provides that where
collision is imputable to the personnel of a vessel, the owner of the vessel at
fault, shall indemnify the losses and damages incurred after an expert appraisal.
But more in point to the instant case is Article 827 of the same Code, which
provides that if the collision is imputable to both vessels, each one shall suffer its
own damages and both shall be solidarily responsible for the losses and damages
suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce, particularly Articles

826 to 839, the shipowner or carrier, is not exempt from liability for damages
arising from collision due to the fault or negligence of the captain. Primary liability
is imposed on the shipowner or carrier in recognition of the universally accepted
doctrine that the shipmaster or captain is merely the representative of the owner
who has the actual or constructive control over the conduct of the voyage.
Extent of Liability
The declared value of the goods was stated in the bills of lading and corroborated
no less by invoices offered as evidence during the trial. Besides, common carriers
“cannot limit its liability for injury to a loss of goods where such injury or loss was
caused by its own negligence.” Negligence of the captains of the colliding vessel
being the cause of the collision, and the cargoes not being jettisoned to save
some of the cargoes and the vessel, the trial court and the Court of Appeals acted
correctly in not applying the law on averages.
Prescription
The bills of lading issued allow trans- shipment of the cargo, which simply means
that the date of arrival of the ship Doña Nati on April 18, 1964 was merely
tentative to give allowances for such contingencies that said vessel might not
arrive on schedule at Manila and therefore, would necessitate the trans-shipment
of cargo, resulting in consequent delay of their arrival. In fact, because of the
collision, the cargo which only on June 12, 13, 18, 20 and July 10, 13 and 15,
1964. Hence, had the cargoes in question been saved, they could have arrived in
Manila on the above-mentioned dates. Accordingly, the complaint in the instant
case was filed on April 22, 1965, that is, long before the lapse of one (1) year
from the date the lost or damaged cargo “should have been delivered” in the light
of Section 3, sub-paragraph (6) of the COGSA.
MACONDRAY & CO., INC V PROVIDENT INSURANCE CORPORATION
G.R. NO. 154305. DECEMBER 9, 2004
FACTS:
On February 16, 1991, at Vancouver, B.C. Canada, CANPOTEX SHIPPING
SERVICES LIMITED INC., (SHIPPER), shipped and loaded on board the vessel M/V
Trade Carrier, 5000 metric tons of Standard Grade Muriate of Potash in bulk for
transportation to and delivery at the port of Sangi, Toledo City, Cebu, in favor of
ATLAS FERTILIZER CORPORATION, (CONSIGNEE). Subject shipments were
insured with Provident Insurance Corporation (respondent) against all risks under
and by virtue of an Open Marine Policy No. MOP-00143 and Certificate of Marine
Insurance No. CMI-823-91.
When the shipment arrived, CONSIGNEE discovered that the shipment sustained
losses/shortage of 476.140 metric tons valued at P1,657,700.95, Philippine
Currency. Provident paid losses. Formal claims was then filed with Trade &
Transport and Macondray but the same refused and failed to settle the
same. Hence, this complaint.
As per Officers Return dated 4 June 1992, summons was UNSERVED to defendant
TRADE AND TRANSPORT at the given address for reason that TRADE AND
TRANSPORT is no longer connected with Macondray & Co. Inc., and is not holding
office at said address as alleged by Ms. Guadalupe Tan. For failure to effect
service of summons the case against TRADE & TRANSPORT was considered
dismissed without prejudice.
Defendant MACONDRAY filed ANSWER, denying liability over the losses, having
NO absolute relation with defendant TRADE AND TRANSPORT, the alleged
operator of the vessel who transported the subject shipment; that accordingly,
MACONDRAY is the local representative of the SHIPPER; the charterer of M/V
TRADE CARRIER and not party to this case; that it has no control over the acts of
the captain and crew of the Carrier and cannot be held responsible for any
damage arising from the fault or negligence of said captain and crew; that upon
arrival at the port of Sangi, Toledo City, Cebu, the M/V Trade Carrier discharged
the full amount of shipment, as shown by the draft survey with a total quantity of
5,033.59 metric tons discharged from the vessel and delivered to the
CONSIGNEE.
Evident was presented for petitioner Macondray wherein witness Ricardo de la

Cruz testified as Supercargo of MACONDRAY, that MACONDRAY was not an agent
of defendant TRADE AND TRANSPORT; that his functions as Supercargo was to
prepare a notice of readiness, statement of facts, sailing notice and customs
clearance in order to attend to the formalities and the need of the vessel; that
MACONDRAY is performing functions in behalf of CANPOTEX and was appointed as
local agent of the vessel, which duty includes arrangement of the entrance and
clearance of the vessel.
RTC: dismissed the complaint against Macondray

CA: Macondray is a ship agent of Canpotex - it is liable
ISSUE:
Whether or not Macondray is liable for loss which was allegedly sustained by the
respondent in this case.
HELD:
YES. Article 586 of the Code of Commerce states that a ship agent is the person
entrusted with provisioning or representing the vessel in the port in which it may
be found.
Hence, whether acting as agent of the owner[10] of the vessel or as agent of the
charterer,[11] petitioner will be considered as the ship agent[12] and may be held
liable as such, as long as the latter is the one that provisions or represents the
vessel.
The trial court found that petitioner was appointed as local agent of the vessel,
which duty includes arrangement for the entrance and clearance of the vessel.
[13]
Further, the CA found and the evidence shows that petitioner represented the
vessel. The latter prepared the Notice of Readiness, the Statement of Facts, the
Completion Notice, the Sailing Notice and Customs Clearance.[14] Petitioners
employees were present at Sangi, Toledo City, one day before the arrival of the
vessel, where they stayed until it departed. They were also present during the
actual discharging of the cargo.[15]Moreover, Mr. de la Cruz, the representative of
petitioner, also prepared for the needs of the vessel, like money, provision, water
and fuel.[16]
These acts all point to the conclusion that it was the entity that represented the
vessel in the Port of Manila and was the ship agent[17] within the meaning and
context of Article 586 of the Code of Commerce.
As ship agent, it may be held civilly liable in certain instances. The Code of
Commerce provides:
Article 586. The shipowner and the ship agent shall be civilly liable for the acts of
the captain and for the obligations contracted by the latter to repair, equip, and
provision the vessel, provided the creditor proves that the amount claimed was
invested for the benefit of the same.
Article 587. The ship agent shall also be civilly liable for the indemnities in favor
of third persons which may arise from the conduct of the captain in the care of
the goods which he loaded on the vessel; but he may exempt himself therefrom
by abandoning the vessel with all her equipments and the freight it may have
earned during the voyage.
Petitioner does not dispute the liabilities of the ship agent for the loss/shortage of
4 7 6 . 1 4 0 m e t r i c t o n s o f s t a n d a r d - g ra d e M u r i a t e o f Po t a s h va l u e d
at P1,657,700.95. Hence, we find no reason to delve further into the matter or to
disturb the finding of the CA holding petitioner, as ship agent, liable to respondent
for the losses sustained by the subject shipment.

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commrev besties San Beda LAw Page 1 of 188

COMMERCIAL LAW REVIEW

Petitioner de Guzman a merchant and authorized dealer of General Milk Company

Petitioner commenced action against private respondent in the Court of First

The trial court rendered a Decision finding private respondent to be a common

The private respondent is properly characterized as a common carrier even

In these circumstances, we hold that the occurrence of the loss must

RTC: Denied the the complaint for tax refund.

The jeepney collided with a ten-wheeler-truck owned by petitioner Abelardo Lim

Petitioner Lim denied liability by contending that he exercised due diligence in

RTC RULING: RTC ruled in favor of private respondent. It ratiocinated that as

Petitioner appealed to the CA.

CA RULING: CA affirmed the decision of the RTC. It concluded that while an

Hence, this petition.

Petitioner’s contention: An operator of a vehicle continues to be its operator as

Although not outrightly penalized as a criminal offense, the "kabit system" is

Where a jeepney is registered in the name of an authorized public utility operator

Whether the driver is authorized or not by the actual owner is irrelevant

Upon arrival in Hongkong, shipment was delivered by respondent WALLEM

We emphasize that the extraordinary responsibility of the common carriers lasts

Furthermore, the records fail to reveal proof of negligence, deceit or fraud

Respondent as subrogee of Feliciana Legaspi, filed a complaint anchored on torts

1. Actual damages in the amount of P148,500.00 plus interest thereon at the

2. A stipulation that limits liability is valid Steamship Corporation v. Court of

Pursuant to the afore-quoted provisions of law, it is required that the stipulation

Zosimo Mercado and Nestor Angelia misled petitioner by undervaluing

The Petition is PARTIALLY GRANTED. The assailed Decision is MODIFIED in the

Private respondents appealed to the CA.

Hence, this petition.

RTC dismissed. CA ruled that Belgian liable. Failed to overcome presumption of

In case of death or injuries to passengers, common carriers are presumed to

Carriers are presumed to be at fault or been negligent and by simple proof of

Petitioner contends that respondent common carrier failed to rebut the

Upon disembarkation at Singapore, the respondent approached the transit

The RTC rendered a decision ordering defendant Singapore Airlines is to pay

1.FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual damages;

The CA promulgated the assailed decision of the RTC

When an airline issues a ticket to a passenger, confirmed for a particular flight on

"...If the cause of non-fulfillment of the contract is due to a fortuitous event, it

Article 2232 of the Civil Code provides that in a contractual or quasi-contractual

DOCTRINE: There can be no quarrel with the principle that a passenger is

Appellant's contention: no liability attaches to it as employer of the killer, Emilio

The act of guard Devesa in shooting passenger Gillaco (because of a personal

Furthermore, Devesa was under no obligation to safeguard the passenger of the

On September 7, 1964, Consolidated Construction, thru Vicente E. Concepcion,

Meanwhile, petitioner shipped the payloader to Manila where it was weighed at

RTC: dismissed the complaint, with costs against Concepcion

Thus, Article 1733 of the Civil Code provides:

While the act of private respondent in furnishing petitioner with an inaccurate

BLTB & ARMANDO PON VS. IAC

It is presumed that a person driving a motor vehicle has been negligent if at

In the case at bar, the appellants acted negligently.

A passenger requested the conductor of BTCO to stop as he was going to alight,

Dispatcher Nicolas Cornista of defendant company corroborrated the testimony of

Explosive or Dangerous Contents. — A carrier is ordinarily not liable for

To reiterate, JAL or any of its representatives have no authority to interfere with

DOCTRINE: A common carrier has a peculiar relationship with and an exacting

On November 24, 1981, Chiok proceeded to Hongkong International Airport for

Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for

Article 1, Section 3 of the Warsaw Convention states:

Article 15 of IATA-Recommended Practice similarly provides:

1) P93,657.11 as compensatory and actual damages;

1) P93,657.11 as actual damages;