1) GANZON V.

COURT OF APPEALS
G.R. NO. L-48757, MAY 30, 1988

Facts:
On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul
305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman.”
On December 1, 1956, Tumambing delivered the scrap iron to defendant Filomeno Niza, captain
of the lighter, for loading, which was actually begun on the same date by the crew of the lighter under the
captain's supervision.
When about half of the scrap iron was already loaded, Mariveles Mayor Jose Advincula arrived
and demanded P5,000.00 from Tumambing. The latter resisted and after a heated argument, Mayor
Advincula drew his gun and fired at Tumambing, who survived.
After some time, the loading of the scrap iron was resumed. But on December 4, 1956, Acting
Mayor Basilio Rub, accompanied by three policemen, ordered captain Niza and his crew to dump the
scrap iron where the lighter was docked. The rest was brought to the compound of NASSCO and later
taken into custody by the Municipality of Mariveles.
On the basis of the above findings, the respondent Court rendered a decision ordering defendant-
appellee Ganzon to pay Tumambimg damages.
In the present case, the petitioner contends that he should not be liable for a breach of contract of
transportation over his staff’s dumping of the scrap into the sea, namely because it was not him who
ordered the same but the local government. In addition, the loss of the scrap should be considered a
fortuitous event.

Issue:
1. Whether or not petitioner is liable for the loss of the scrap metal thrown into the sea by the order
of Mariveles’ acting mayor.
2. Whether or not the petitioner’s defense that the loss was due to a fortuitous event is tenable.

Ruling:
1. Yes, he is liable for the loss. By the 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.
 Likewise, the petitioner failed to show that the loss of the scraps was due to any of the following
causes enumerated in Article 1734 of the Civil Code. Hence, the petitioner is presumed to have
been at fault or to have acted negligently.
By reason of this presumption, the court is not even required to make an express finding of fault
or negligence before it could hold the petitioner answerable for the breach of the contract of
carriage. The petitioner could have been exempted from any liability had he been able to prove
that he observed extraordinary diligence in the vigilance over the goods in his custody, however,
there was hardly any attempt on the part of the petitioner to prove that he exercised such
extraordinary diligence.
2. No, the defense that the loss was due to a fortuitous event is untenable. As found by the courts,
Ganzon failed to show that Acting Mayor Basilio Rub had the power to issue the disputed order,
or that it was lawful, or that it was issued under legal process of authority. The order of the acting
mayor did not constitute valid authority for appellee Mauro Ganzon and his representatives to
carry out the dumping, even under pressure.
In any case, the intervention of the municipal officials was not, in any case, of a character that
would render impossible the fulfillment by the carrier of its obligation. The petitioner 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 fulfillment of the obligation is not considered force majeure.
 2) FISHER V. YANGCO STEAMSHIP CO.
G.R. NO. 8095, MARCH 31, 1915

FACTS:
F.C. Fisher is a stockholder in the Yangco Steamship Company, which owns a large number of steam
vessels, engaged in coastwise trade. In 1912, the directors of the company adopted a resolution "expressly
declaring and providing that the classes of merchandise to be carried by the company in its business
as a common carrier do not include dynamite, powder or other explosives, and expressly prohibiting
the officers... from offering to carry...”

Acting Collector of Customs Stanley demanded and required of the company the acceptance and carriage
of such explosives, the refusal and suspension of the issuance of the necessary clearance documents
of the vessels of the company unless and until the company consents to accept such explosives for
carriage and that should the company decline to accept, Attorney-General Villamor and the prosecuting
attorney intend to institute proceedings under the penal provisions of sections 4, 5, and 6 of Act No. 98
of the Philippine Commission against the company to enforce the requirements.

Plaintiff seeks in these proceedings to enjoin the steamship company from accepting for carriage on any
of its vessels, dynamite, powder or other explosives, under any conditions whatsoever; to prohibit the
Collector of Customs and the prosecuting officers of the government from all attempts to compel the
company to accept such explosives for carriage on any of its vessels under any conditions whatsoever;

Plaintiff prays for the issuance of a writ of prohibition.

ISSUE: Whether the refusal of the owners and officers of a steam vessel, duly licensed to engage in the
coastwise trade of the Philippine Islands and engaged in that trade as a common carrier, to accept for
carriage "dynamite, powder or other explosives" from any and all shippers who may offer such
explosives for carriage can be held to be a lawful act without regard to any question as to the conditions
under which such explosives are offered to carriage, or as to the suitableness of the vessel for the
transportation of such explosives, or as to the possibility that the refusal to accept such articles of
commerce in a particular case may have the effect of subjecting any person or locality or the traffic in
such explosives to an undue, unreasonable or unnecessary prejudice or discrimination. (Justice Carson) -
NO

RULING:

We agree with counsel for petitioner that the provision of the Act which prescribes that, "No common
carrier ... shall, under any pretense whatsoever, fail or refuse to receive for carriage ... to carry any person
or property offering for carriage," is not to be construed in its literal sense and without regard to the
context, so as to impose an imperative duty on all common carriers to accept for carriage, and to carry all
and any kind of freight which may be offered for carriage without regard to the facilities which they may
have at their disposal. The legislator could not have intended and did not intend to prescribe that a
common carrier running passenger automobiles for hire must transport coal in his machines; nor that the
owner of a tank steamer, expressly constructed in small watertight compartments for the carriage of crude
oil must accept common carrier must accept and carry contraband articles, such as opium, morphine,
cocaine, or the like, the mere possession of which is declared to be a criminal offense; nor that common
carriers must accept eggs offered for transportation in paper parcels or any merchandise whatever do
defectively packed as to entail upon the company unreasonable and unnecessary care or risks. It was
clearly intended merely to forbid failures or refusals to receive persons or property for carriage involving
any "unnecessary or unreasonable preference or advantage to any particular person, company, firm,
corporation, or locality, or any particular kind of traffic in any respect whatsoever," or which would
"subject any particular person, company, firm, corporation or locality, or any particular kind of traffic to
any undue or unreasonable prejudice or discrimination whatsoever."

The prayer of the petition in the case at bar cannot be granted unless we hold that the refusal of the
defendant steamship company to accept for carriage on any of its vessels "dynamite, gunpowder or other
explosives" would in no instance involve a violation of the provisions of this statute. There can be little
doubt, however, that cases may and will arise wherein the refusal of a vessel "engaged in the coastwise
trade of the Philippine Islands as a common carrier" to accept such explosives for carriage would subject
some person, company, firm or corporation, or locality, or particular kind of traffic to a certain prejudice
or discrimination. Indeed it cannot be doubted that the refusal of a "steamship company, the owner of a
large number of vessels" engaged in that trade to receive for carriage any such explosives on any of its
vessels would subject the traffic in such explosives to a manifest prejudice and discrimination. The only
question to be determined therefore is whether such prejudice or discrimination might in any case prove
to be undue, unnecessary or unreasonable.

It is not alleged in the complaint that "dynamite, gunpowder and other explosives" can in no event be
transported with reasonable safety on board steam vessels engaged in the business of common carriers. It
is not alleged that all, or indeed any of the defendant steamship company's vessels are unsuited for the
carriage of such explosives. It is not alleged that the nature of the business in which the steamship
company is engaged is such as to preclude a finding that a refusal to accept such explosives on any of its
vessels would subject the traffic in such explosives to an undue and unreasonable prejudice and
discrimination.

The traffic in dynamite, gunpowder and other explosives is vitally essential to the material and general
welfare of the people of these Islands. If dynamite, gunpowder and other explosives are to continue in
general use throughout the Philippines, they must be transported by water from port to port in the various
islands which make up the Archipelago. We are satisfied therefore that the refusal by a particular vessel,
engaged as a common carrier of merchandise in the coastwise trade of the Philippine Islands, to accept
any or all of these explosives for carriage would constitute a violation of the prohibitions against
discriminations penalized under the statute, unless it can be shown by affirmative evidence that there is so
real and substantial a danger of disaster necessarily involved in the carriage of any or all of these articles
of merchandise as to render such refusal a due or a necessary or a reasonable exercise of prudence and
discretion on the part of the shipowner.

Petition is denied
3) BENEDICTO V. INTERMEDIATE APPELLATE COURT;
G.R. NO. 70876, JULY 19, 1990
Doctrine: The prevailing doctrine on common carriers makes the registered owner liable for
consequences flowing from the operations of the carrier, even though the specific vehicle involved may
already have been transferred to another person. This doctrine rests upon the principle that in dealing with
vehicles registered under the Public Service Law, the public has the right to assume that the registered
owner is the actual or lawful owner thereof. It would be very difficult and often impossible as a practical
matter, for members of the general public to enforce the rights of action that they may have for injuries
inflicted by the vehicles being negligent operated if they should be required to prove who the actual
owner is.

Facts:

Nature: This Petition for Review asks us to set aside the Decision of the then Intermediate Appellate
Court which affirmed in toto the decision of the Regional Trial Court ("RTC") of Dagupan City in Civil
Case No. 5206.
There, the RTC held petitioner Ma. Luisa Benedicto liable to pay private respondent Greenhills
Wood Industries Company, Inc. ("Greenhills") the amounts of P16,016.00 and P2,000.00 representing the
cost of Greenhills' lost sawn lumber and attorney's fees, respectively.

Factual antecedents:
1. Private respondent Greenhills, a lumber manufacturing firm with business address at Dagupan
City, operates a sawmill in Maddela, Quirino.
2. Sometime in May 1980, private respondent bound itself to sell and deliver to Blue Star
Mahogany, Inc. ("Blue Star"), a company with business operations in Valenzuela, Bulacan
100,000 board feet of sawn lumber with the understanding that an initial delivery would be made
on 15 May 1980.
3. For delivery purpose, private respondent's resident manager in Maddela, Dominador Cruz,
contracted Virgilio Licuden, the driver of a cargo truck bearing Plate No. 225 GA TH to transport
its sawn lumber to the consignee Blue Star in Valenzuela, Bulacan.
4. This cargo truck was registered in the name of petitioner Ma. Luisa Benedicto, the proprietor of
Macoven Trucking, a business enterprise engaged in hauling freight, with a main office in B.F.
Homes, Parañaque.
5. On 15 May 1980, Cruz in the presence and with the consent of driver Licuden, supervised the
loading of 7,690 board feet of sawn lumber with invoice value of P16,918.00 aboard the cargo
truck.
6. On 16 May 1980, the Manager of Blue Star called up by long distance telephone Greenhills'
president, Henry Lee Chuy, informing him that the sawn lumber on board the subject cargo truck
had not yet arrived in Valenzuela, Bulacan.
7. In a letter 5 dated 18 May 1980, Blue Star's administrative and personnel manager, Manuel R.
Bautista, formally informed Greenhills' president and general manager that Blue Star still had not
received the sawn lumber which was supposed to arrive on 15 May 1980 and because of this
delay, "they were constrained to look for other suppliers.
 8. Subsequently, Greenhills filed Criminal Case No. 668 against driver Licuden for estafa.
Greenhills also filed against petitioner Benedicto Civil Case No. D-5206 for recovery of the value
of the lost sawn lumber plus damages before the RTC of Dagupan City.
9. Petitioner Benedicto denied liability alleging that she was a complete stranger to the
contract of carriage, the subject truck having been earlier sold by her to Benjamin Tee, on
28 February 1980 as evidenced by a deed of sale. She claimed that the truck had remained
registered in her name notwithstanding its earlier sale to Tee because the latter had paid
her only P50,000.00 out of the total agreed price of P68,000.00

RTC Ruling:
1. Renders judgment against defendant Maria Luisa Benedicto, ordering her to pay the Greenhills
Wood Industries Co. Inc., thru its President and General Manager, the amount of P16,016 cost of
the sawn lumber loaded on the cargo truck, with legal rate of interest from the filing of the
complaint.
2. Finding that the petitioner Benedicto was still the registered owner of the subject truck, and
Licuden was her employee.
Ca affirmed in Toto.

In the SC:
Petitioner contention:
1. That she could not be held answerable for the loss of the cargo, because the doctrine which makes
the registered owner of a common carrier vehicle answerable to the public for the negligence of
the driver despite the sale of the vehicle to another person, applies only to cases involving death
of or injury to passengers.
2. That what applies in the present case, according to petitioner, is the rule that a contract of carriage
requires proper delivery of the goods to and acceptance by the carrier.

Issue: W/not under the facts and applicable law, the petitioner, being the registered owner of the carrier,
should be held liable for the value of the undelivered or lost sawn lumber.

Ruling:
The prevailing doctrine on common carriers makes the registered owner liable for consequences
flowing from the operations of the carrier, even though the specific vehicle involved may already have
been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume that the registered owner is the
actual or lawful owner thereof. It would be very difficult and often impossible as a practical matter, for
members of the general public to enforce the rights of action that they may have for injuries inflicted by
the vehicles being negligent operated if they should be required to prove who the actual owner is.

The registered owner is not allowed to deny liability by proving the identity of the alleged
transferee. Thus, contrary to petitioner's claim, private respondent is not required to go beyond the
vehicle's certificate of registration to ascertain the owner of the carrier. In this regard, the letter presented
by petitioner allegedly written by Benjamin Tee admitting that Licuden was his driver, had no evidentiary
value not only because Benjamin Tee was not presented in court to testify on this matter but also because
of the aforementioned doctrine. To permit the ostensible or registered owner to prove who the actual
owner is, would be to set at naught the purpose or public policy which infuses that doctrine.

A common carrier, both from the nature of its business and for insistent reasons of public policy,
is burdened by the law with the duty of exercising extraordinary diligence not only in ensuring the safety
of passengers but also in caring for goods transported by it. The loss or destruction or deterioration of
goods turned over to the common carrier for conveyance to a designated destination, raises instantly a
presumption of fault or negligence on the part of the carrier, save only where such loss, destruction or
damage arises from extreme circumstances such as a natural disaster or calamity or act of the public
enemy in time of war, or from an act or omission of the shipper himself or from the character of the goods
or their packaging or container.

As to the contention of the not perfected contract of carriage, the Supreme Court held that
Licuden is in law regarded as the employee and agent of the petitioner, for whose acts the petitioner must
respond. A contract of carriage of goods was shown; the sawn lumber was loaded on board the freight
truck; loss or non-delivery of the lumber at Blue Star's premises in Valenzuela, Bulacan was also proven;
and petitioner has not proven either that she had exercised extraordinary diligence to prevent such loss or
non-delivery or that the loss or non-delivery was due to some casualty or force majeure inconsistent with
her liability.

WHEREFORE, the petition for review is denied for lack of merit.

 4) EASTERN SHIPPING LINES, INC. V. COURT OF APPEALS
G.R. No. 94151, 30 April 1991

FACTS:

On September 4, 1978, thirteen coils of uncoated 7-wire stress relieved wire strand for prestressed
concrete were shipped on board the vessel "Japri Venture," owned and operated by the defendant Eastern
Shipping Lines, Inc., at Kobe, Japan, for delivery to Stresstek Post-Tensioning Phils., Inc. in Manila.

It appears that while enroute from Kobe to Manila, the carrying vessel "encountered very rough seas and
stormy weather" for three days, more or less, which caused it to roll and pound heavily, moving its master
to execute a marine note of protest upon arrival at the port of Manila on September 15, 1978.

On September 16, 1978, the carrying vessel arrived in Manila and discharged the cargo to the custody of
the defendant E. Razon, Inc. (Exhibits 1, 2, 3, 4 and 5-ESL), from whom the consignee's customs broker
received it for delivery to the consignee's warehouse. On February 19, 1979, the plaintiff indemnified the
consignee in the amount of P171,923.00 for damage and loss to the insured cargo, whereupon the former
was subrogated for the latter.

ISSUE:

Whether or not the carrier is excused from liability when the carrying vessel encountered very rough seas
and stormy weather causing damages to cargoes

HELD:

No. 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.

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.
 5) Sarkies Tours Philippines, Inc. v. Court of Appeals
G.R. No. 108897, October 2, 1997
ROMERO, J.:

FACTS:

Fatima boarded petitioner's De Luxe Bus No. 5 in Manila on her way to Legazpi City. Her brother Raul
helped her load three pieces of luggage containing all of her optometry review books, materials and
equipment, trial lenses, trial contact lenses, passport and visa, as well as her mother Marisol's U.S.
immigration (green) card, among other important documents and personal belongings. Her belongings
were kept in the baggage compartment of the bus, but during a stopover at Daet, it was discovered that
only one bag remained in the open compartment. Some of the passengers suggested retracing the route of
the bus to try to recover the lost items, but the driver ignored them and proceeded to Legazpi City.

Fatima immediately reported the loss to her mother who, in turn, went to the petitioner's office in Legazpi
City and later at its head office in Manila. Petitioner, however, merely offered her P1,000.00 for each
piece of luggage lost, which she turned down. After returning to Bicol, mother and daughter asked
assistance from the radio stations and even from Philtranco bus drivers who plied the same route. The
effort paid off when one of Fatima's bags was recovered. They further reported the incident to the
National Bureau of Investigation's field office in Legazpi City and to the local police.

After more than nine months of fruitless waiting, respondents decided to file the case to recover the value
of the remaining lost items, as well as moral and exemplary damages, attorney's fees and expenses of
litigation. Petitioner disowned any liability for the loss on the ground that Fatima allegedly did not declare
any excess baggage upon boarding its bus.

ISSUE:

Is petitioner liable for the loss of the Fatima’s luggage?

RULING:

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

Petitioner's receipt of Fatima's personal luggage having been established, it must now be determined if, as
a common carrier, it is responsible for their loss. 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 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," 7
unless the loss is due to any of the excepted causes under Article 1734 thereof.

The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of the
baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all of the
luggage was lost, to the prejudice of the paying passengers.
Where the common carrier accepted its passenger's baggage for transportation and even had it placed in
the vehicle by its own employee, its failure to collect the freight charge is the common carrier's own
lookout. It is responsible for the consequent loss of the baggage. In the instant case, defendant appellant's
employee even helped Fatima Minerva Fortades and her brother load the luggages/baggages in the bus'
baggage compartment, without asking that they be weighed, declared, receipted or paid for. Neither was
this required of the other passengers.

6) VALENZUELA HARDWOOD & INDUSTRIAL SUPPLY, INC. V. CA

G.R. No. 102316, June 30, 1997

DOCTRINE: In a contract of private carriage, the parties may validly stipulate that responsibility for the
cargo rests solely on the charterer, exempting the shipowner from liability for loss of or damage to the
cargo caused even by the negligence of the ship captain.

FACTS:
 On 16 January 1984, plaintiff (Valenzuela Hardwood and Industrial Supply, Inc.) entered into an
agreement with the defendant Seven Brothers (Shipping Corporation) whereby the latter undertook to
load on board its vessel M/V Seven Ambassador the former's lauan round logs numbering 940 at the port
of Maconacon, Isabela for shipment to Manila.
On 20 January 1984, plaintiff insured the logs against loss and/or damage with defendant South
Sea Surety and Insurance Co., Inc. for P2,000,000.00 and the latter issued its Marine Cargo Insurance
Policy No. 84/24229 for P2,000,000.00 on said date.
On 24 January 1984, the plaintiff gave the check in payment of the premium on the insurance
policy to Mr. Victorio Chua.
In the meantime, the said vessel M/V Seven Ambassador sank on 25 January 1984 resulting in
the loss of the plaintiff's insured logs.
On 30 January 1984, a check for P5,625.00 to cover payment of the premium and documentary
stamps due on the policy was tendered due to the insurer but was not accepted. Instead, the South Sea
Surety and Insurance Co., Inc. cancelled the insurance policy it issued as of the date of the inception for
nonpayment of the premium due in accordance with Section 77 of the Insurance Code.
On 2 February 1984, plaintiff demanded from defendant South Sea Surety and Insurance Co., Inc.
the payment of the proceeds of the policy but the latter denied liability under the policy. Plaintiff likewise
filed a formal claim with defendant Seven Brothers Shipping Corporation for the value of the lost logs but
the latter denied the claim.
After due hearing and trial, the court a quo rendered judgment in favor of plaintiff and against
defendants. Both defendants shipping corporation and the surety company appealed.
The Court of Appeals affirmed in part the RTC judgment by sustaining the liability of South Sea
Surety and Insurance Company ("South Sea"), but modified it by holding that Seven Brothers Shipping
Corporation ("Seven Brothers") was not liable for the lost cargo.
The CA, in holding that Seven Brothers is not liable ratiocinated thus:
● It appears that there is a stipulation in the charter party that the ship owner would be exempted
from liability in case of loss.
● The court a quo erred in applying the provisions of the Civil Code on common carriers to
establish the liability of the shipping corporation. The provisions on common carriers should not
be applied where the carrier is not acting as such but as a private carrier.

ISSUE: Is a stipulation in a charter party that the "(o)wners shall not be responsible for loss, split,
shortlanding, breakages and any kind of damages to the cargo" valid?

RULING: YES. The Court ruled that it is undisputed that private respondent had acted as a private
carrier in transporting petitioner's lauan logs. Thus, Article 1745 and other Civil Code provisions on
common carriers which were cited by petitioner may not be applied unless expressly stipulated by the
parties in their charter party.
In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo
rests solely on the charterer, exempting the shipowner from liability for loss of or damage to the cargo
caused even by the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code, such
stipulation is valid because it is freely entered into by the parties and the same is not contrary to law,
morals, good customs, public order, or public policy. Indeed, their contract of private carriage is not even
a contract of adhesion. We stress that in a contract of private carriage, the parties may freely stipulate
their duties and obligations which perforce would be binding on them. Unlike in a contract involving a
common carrier, private carriage does not involve the general public. Hence, the stringent provisions of
the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship
transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is
not contravened by stipulations in a charter party that lessen or remove the protection given by law in
contracts involving common carriers.
Furthermore, in Home Insurance Co. vs. American Steamship Agencies, Inc., the Court ruled that:
The provisions of our Civil Code on common carriers were taken from Anglo- American law.
Under American jurisprudence, a common carrier undertaking to carry a special cargo or chartered
to a special person only, becomes a private carrier. As a private carrier, a stipulation exempting the
owner from liability for the negligence of its agent is not against public policy, and is deemed valid.

Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be
applied where the carrier is not acting as such but as a private carrier. The stipulation in the charter
party absolving the owner from liability for loss due to the negligence of its agent would be void if
the strict public policy governing common carriers is applied. Such policy has no force where the
public at large is not involved, as in this case of a ship totally chartered for the used of a single
party.

WHEREFORE, premises considered, the petition is hereby DENIED for its utter failure to show any
reversible error on the part of Respondent Court. The assailed Decision is AFFIRMED.

NOTES:
Other Arguments of Petitioner:
1. Petitioner Valenzuela insists that the charter party stipulation is contrary to Articles 586 and 587 of
the Code of Commerce which confer on petitioner the right to recover damages from the shipowner
and ship agent for the acts or conduct of the captain.
a. Ruling: We are not persuaded. Whatever rights petitioner may have under the
aforementioned statutory provisions were waived when it entered into the charter party.
Legal Basis: Article 6 of the Civil Code provides that "(r)ights may be waived, unless the
waiver is contrary to law, public order, public policy, morals, or good customs, or
prejudicial to a person with a right recognized by law."
2. Petitioner likewise argues that the stipulation subject of this controversy is void for being contrary to
Articles 1170 and 1173 of the Civil Code.
a. Ruling: The Court notes that the foregoing articles are applicable only to the obligor or
the one with an obligation to perform. In the instant case, Private Respondent Seven
Brothers is not an obligor in respect of the cargo, for this obligation to bear the loss was
shifted to petitioner by virtue of the charter party. This shifting of responsibility, as
earlier observed, is not void. The provisions cited by petitioner are, therefore,
inapplicable to the present case.
b. Moreover, the factual milieu of this case does not justify the application of the second
paragraph of Article 1173 of the Civil Code which prescribes the standard of diligence to
be observed in the event the law or the contract is silent. In the instant case, Article 362
of the Code of Commerce provides the standard of ordinary diligence for the carriage of
goods by a carrier. The standard of diligence under this statutory provision may,
however, be modified in a contract of private carriage as the petitioner and private
respondent had done in their charter party.
 7) YOBIDO V. COURT OF APPEALS,
G.R. NO. 113003, OCTOBER 17, 1997

DOCTRINE: In this case, the explosion of the new tire may not be considered a fortuitous event. There
are human factors involved in the situation. The fact that the tire was new did not imply that it was
entirely free from manufacturing defects or that it was properly mounted on the vehicle. Neither may the
fact that the tire bought and used in the vehicle is of a brand name noted for quality, resulting in the
conclusion that it could not explode within five days’ use. Be that as it may, it is settled that an accident
caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito that
would exempt the carrier from liability for damages.

FACTS:
On April 26, 1988, Tito and Leny Tumboy, together with their minor children, boarded a Yobido
Liner bus bound for Davao City. While traveling, the left front tire of the bus exploded which resulted to
the death of 28-yr old Tito Tumboy. Consequently, Leny filed for a breach of contract against Alberta
Yobido., the owner of the bus and Cresecncio Yobido, its driver before the RTC of Davao City. The
plaintiffs asserted that violation of the contract of carriage between them and the defendants was brought
about by the driver’s failure to exercise the diligence required of the carrier in transporting passengers
safely to their place of destination. Further, the bus was full of passengers and was running fast before the
tire exploded. For their part, the defendants raised the defense of fortuitous event. The bus conductor
testified that the 42-seater bus was not full as there were only 32 passengers; that the bus was running at a
speed of "60 to 50" and that it was going slow because of the zigzag road; and that the left front tire that
exploded was a "brand new tire", having only mounted on the bus five days before the incident. The RTC
dismissed the action for lack of merit and ruled that the tire blowout was a fortuitous event which was
completely an extraordinary circumstance independent of the will of the defendants who should be
relieved of whatever liability.
The plaintiffs appealed to the CA which REVERSED the ruling of the RTC. The CA said that the
explosion of the tire was not in itself a fortuitous event. The cause of the blow-out, if due to a factory
defect, improper mounting, excessive tire pressure, is not an unavoidable event. The fact that the cause of
the blow-out was not known does not relieve the carrier of liability. Owing to the statutory presumption
of negligence against the carrier and its obligation to exercise the utmost diligence of very cautious
persons to carry the passenger safely as far as human care and foresight can provide, it is the burden of
the defendants to prove that the cause of the blow-out is a fortuitous event. It is not incumbent upon the
plaintiff to prove that the cause of the blow-out is not caso fortuito. Moreover, there was evidence that the
bus was moving fast, and the road was wet and rough. The driver could have explained that the blow out
that precipitated the accident that caused the death of Tito Tumboy could not have been prevented even if
he had exercised due care to avoid the same, but he was not presented as witness. Thus, the CA ordered
the defendants to pay plaintiffs the sum of P50,000.00 for the death of Tito Tumboy, P30,000.00 in moral
damages, and P7,000.00 for funeral and burial expenses. The defendants filed a motion for
reconsideration of said decision but was denied. Hence, the present petition.
ISSUE: Whether or not the explosion of a newly installed tire of a passenger vehicle is a fortuitous event
that exempts the carrier from liability for the death of a passenger.

HELD:
No. As a rule, when a passenger boards a common carrier, he takes the risks incidental to the
mode of travel he has taken. After all, a carrier is not an insurer of the safety of its passengers and is not
bound absolutely and at all events to carry them safely and without injury. However, when a passenger is
injured or dies, while traveling, the law presumes that the common carrier is negligent. Thus, the Civil
Code provides:

"Art. 1756. 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 as
prescribed in articles 1733 and 1755.”

Accordingly, in culpa contractual, once a passenger dies or is injured, the carrier is presumed to
have been at fault or to have acted negligently. This disputable presumption may only be overcome by
evidence that the carrier had observed extraordinary diligence as prescribed by Articles 1733, 1755 and
1756 of the Civil Code or that the death or injury of the passenger was due to a fortuitous event. Further, a
fortuitous event is possessed of the following characteristics: (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. Thus, there must be an entire
exclusion of human agency from the cause of injury or loss.

Under the circumstances of this case, the explosion of the new tire may not be considered a
fortuitous event. There are human factors involved in the situation. The fact that the tire was new did not
imply that it was entirely free from manufacturing defects or that it was properly mounted on the vehicle.
Neither may the fact that the tire bought and used in the vehicle is of a brand name noted for quality,
resulting in the conclusion that it could not explode within five days’ use. Be that as it may, it is settled
that an accident caused either by defects in the automobile or through the negligence of its driver is not a
caso fortuito that would exempt the carrier from liability for damages. Moreover, a common carrier may
not be absolved from liability in case of force majeure or fortuitous event alone. The common carrier
must still prove that it was not negligent in causing the death or injury resulting from an accident. In this
case, the fact that the tire that blew-up was good does not make the explosion of the tire a fortuitous
event. No evidence was presented to show that the accident was due to adverse road conditions or that
precautions were taken by the jeepney driver to compensate for any conditions liable to cause accidents.
The sudden blowing-up, therefore, could have been caused by too much air pressure injected into the tire
coupled by the fact that the jeepney was overloaded and speeding at the time of the accident. They also
failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she cautioned the
driver to slow down. Having failed to discharge its duty to overthrow the presumption of negligence with
clear and convincing evidence, petitioners are hereby held liable for damages.
WHEREFORE, the Decision of the Court of Appeals is hereby AFFIRMED subject to the modification
that petitioners shall, in addition to the monetary awards therein, be liable for the award of exemplary
damages in the amount of P20,000.00. Costs against petitioners.
 8) GANZON V. COURT OF APPEALS,
G.R. NO. L-48757, MAY 30, 1988

Doctrine:
The burden of proving that damages were caused by the fault or negligence of the carrier rests
upon him. The carrier must be able to establish that the loss or deterioration was occasioned by one of the
excepted causes or was due to an unforeseen event or to force majeure.

Facts:
Gelacio Tumambing, the private respondent, contracted the services of the petitioner, Mauro B.
Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter
LCT "Batman". Pursuant to the agreement, Ganzon sent his lighter "Batman" to Mariveles. Thereafter,
Tumambing delivered the scrap iron to Niza, the captain of the lighter, for loading which was actually
begun on the same date by the crew of the lighter under the captain's supervision. When about half of the
scrap iron was already loaded, Mayor Advincula of Mariveles, Bataan, arrived and demanded P5,000.00
from Tumambing. However, Tumambing resisted the shakedown and after a heated argument between
them, Mayor Advincula drew his gun and fired at Tumambing. The gunshot was not fatal but
Tumambing had to be taken to a hospital for treatment.
After some time, the loading of the scrap iron resumed, however, the Acting Mayor Rub, accompanied by
three policemen, ordered captain Niza and his crew to dump the scrap iron where the lighter was docked
ad the rest were brought to a compound of NASSCO. Later on Acting Mayor Rub issued a receipt stating
that the Municipality of Mariveles had taken custody of the scrap iron. Thereafter, the private respondent
Tumambing, instituted in the Court of First Instance of Manila an action against the petitioner for
damages based on culpa contractual. The CFI held that Ganzon is not liable for damages. The respondent
appealed and the CA reversed the ruling of the CFI. The CA ruled that Ganzon is guilty of breach of
contract and is liable to pay Tumambing for the damages. Hence, the appeal of Ganzon to the Supreme
Court.
Ganzon contends that: (1) the CA erred in holding that he is guilty of breach of contract and in imposing
liability against him, commencing from the time the scrap was placed in his custody and control; (2) that
the acts of dumping the scrap metals by his employees were upon the order of a local government official
and without his participation; and (3) the CA failed to consider that the loss of scrap metal was due to a
fortuitous event.

Issue:
Whether or not Ganzon is liable for the breach of contract of carriage.

Ruling:
Yes. The Court ruled that Ganzon is liable for the breach of contract.
In his first contention, he insists that the scrap iron had not been unconditionally placed under his
custody and control to make him liable. However, it was shown that he agreed with the delivery of the
scraps to Captain Filomeno Niza for loading in the lighter "Batman,”. With this, he received the scraps
freely through his employees. Also, there is not the slightest allegation or showing of any condition,
qualification, or restriction accompanying the delivery by the private respondent-shipper of the scraps, or
the receipt of the same by the petitioner. It was shown that soon after the scraps were delivered to, and
received by the petitioner-common carrier, loading was commenced. 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.
In his second and third contention that the scraps were lost due to the intervention or order of a
local government official and is considered a caso fortuito, the Court does not find merit. Before Ganzon
can be absolved from the liability, the order by the public authority must be lawful or issued under legal
process of authority. In this case, there is no evidence that the given order was lawful. The order given by
the acting mayor to dump the scrap iron into the sea was merely part of the pressure applied by Mayor
Advincula to shakedown the appellant for P5,000.00. The order of the acting mayor did not constitute
valid authority for appellee Mauro Ganzon and his representatives to carry out. The petitioner 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 fullfilment of the
obligation is not considered force majeure.
The Court also disagrees as the petitioner failed to show that the loss of the scraps was due to any
of the following causes enumerated in Article 1734 of the Civil Code, namely: (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.
Hence, the petitioner is presumed to have been at fault or to have acted negligently. The Court need not to
make an express finding of fault or negligence before it could hold the petitioner answerable for the
breach of the contract of carriage.
The burden of proving that damages were caused by the fault or negligence of the carrier rests
upon him. The carrier must be able to establish that the loss or deterioration was occasioned by one of the
excepted causes or was due to an unforeseen event or to force majeure.

WHEREFORE, the petition is DENIED; the assailed decision of the Court of Appeals is hereby
AFFIRMED. Costs against the petitioner.
 9) SALUDO, JR. V. COURT OF APPEALS,
G.R. NO. 95536, MARCH 23, 1992

DOCTRINE:

Under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins
from the time the goods are delivered to the carrier. This responsibility remains in full force and effect
even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the
right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance,
of the goods by the consignee or such other person entitled to receive them. And, there is delivery to the
carrier when the goods are ready for and have been placed in the exclusive possession, custody and
control of the carrier for the purpose of their immediate transportation and the carrier has accepted them.
Where such a delivery has thus been accepted by the carrier, the liability of the common carrier
commences eo instanti.

FACTS:

After the death of plaintiffs' mother, Crispina Galdo Saludo, in Chicago Illinois, Pomierski and Son
Funeral Home of Chicago, made the necessary preparations and arrangements for the shipment of the
remains from Chicago to the Philippines. Pomierski brought the remains to C.M.A.S. (Continental
Mortuary Air Services) at the airport (Chicago) which made the necessary arrangements such as flights,
transfers, etc. C.M.A.S. booked the shipment with PAL thru the carrier's agent Air Care International,
with Pomierski F.H. as the shipper and Mario (Maria) Saludo as the consignee. PAL Airway Bill No.
079-01180454 Ordinary was issued wherein the requested routing was from Chicago to San Francisco on
board TWA Flight 131 of October 27, 1976 and from San Francisco to Manila on board PAL Flight No.
107 of the same date, and from Manila to Cebu on board PAL Flight 149 of October 29, 1976.

In the meantime, plaintiff Maria Salvacion Saludo went to the funeral director of Pomierski Funeral
Home who had her mother's remains and she told the director that they were booked with United Airlines.
But the director told her that the remains were booked with TWA flight to California. They went to the
airport and watched from the look-out area. She saw no body being brought. So, she went to the TWA
counter again, and she was told there was no body on that flight. Upon arrival at San Francisco, she went
to the TWA counter there to inquire about her mother's remains. She was told they did not know anything
about it. It turned out that TWA had carried a shipment under PAL Airway Bill No. 079-ORD-01180454
on TWA Flight 603 of October 27, 1976, a flight earlier than TWA Flight 131 of the same date. TWA
delivered or transferred the said shipment said to contain human remains to PAL at 1400H or 2:00 p.m. of
the same date, October 27, 1976. Due to a switching in Chicago, this shipment was withdrawn from PAL
by CMAS at 1805H of the same date, October 27.

What transpired is explained in a memo or incident report by Pomierski. In that memo or incident report,
it is stated that the remains of Crispina Saludo were taken to CMAS at the airport; that there were two
bodies at the Chicago Airport terminal, and somehow they were switched, that the remains of Crispina
Saludo were on a plane to Mexico City.

In a letter, petitioners' counsel informed private respondent Trans World Airlines (TWA) of the
misshipment and eventual delay in the delivery of the cargo containing the remains of the late Crispin
Saludo, and of the discourtesy of its employees to petitioners Maria Salvacion Saludo and Saturnino
Saludo. In a separate letter addressed to co-respondent Philippine Airlines (PAL), petitioners stated that
they were holding PAL liable for said delay in delivery and would commence judicial action should no
favorable explanation be given.
Both private respondents denied liability. Thus, a damage suit 6 was filed by petitioners before the then
Court of First Instance, Branch III, Leyte, praying for the award of actual damages of P50,000.00, moral
damages of P1,000,000.00, exemplary damages, attorney's fees and costs of suit.

The court absolved the two respondent airlines companies of liability. The Court of Appeals affirmed the
decision of the lower court, and in a subsequent resolution, 7 denied herein petitioners' motion for
reconsideration for lack of merit.

ISSUE:

1. Whether or not the delay in the delivery of the casketed remains of petitioners' mother was due to
the fault of respondent airline companies.– NO

2. Whether or not the one-day delay in the delivery of the same constitutes contractual breach as
would entitle petitioners to damages.– NO

3. Whether or not damages are recoverable by petitioners for the humiliating, arrogant and
indifferent acts of the employees of TWA and PAL.– NO

4. Whether or not private respondents should be held liable for actual, moral and exemplary
damages, aside from attorney's fees and litigation expenses.– NO

HELD:

1. Petitioner allege that private respondents received the casketed remains of petitioners' mother on
October 26, 1976, as evidenced by the issuance of PAL Air Waybill No. 079-01180454 by Air Care
International as carrier's agent; and from said date, private respondents were charged with the
responsibility to exercise extraordinary diligence so much so that for the alleged switching of the
caskets on October 27, 1976, or one day after private respondents received the cargo, the latter must
necessarily be liable. To support their assertion, petitioners rely on the jurisprudential dictum, both
under American and Philippine law, that "(t)he issuance of a bill of lading carries the presumption
that the goods were delivered to the carrier issuing the bill, for immediate shipment, and it is nowhere
questioned that a bill of lading is prima facie evidence of the receipt of the goods by the carrier.

A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to transport
and deliver them at a specified place to a person named or on his order. Such instrument may be
called a shipping receipt, forwarder's receipt and receipt for transportation. A bill of lading, when
properly executed and delivered to a shipper, is evidence that the carrier has received the goods
described therein for shipment. Except as modified by statute, it is a general rule as to the parties to a
contract of carriage of goods in connection with which a bill of lading is issued reciting that goods
have been received for transportation, that the recital being in essence a receipt alone, is not
conclusive, but may be explained, varied or contradicted by parol or other evidence.

While we agree with petitioners' statement that "an airway bill estops the carrier from denying receipt
of goods of the quantity and quality described in the bill," a further reading and a more faithful
quotation of the authority cited would reveal that "(a) bill of lading may contain constituent elements
of estoppel and thus become something more than a contract between the shipper and the carrier. . . .
(However), as between the shipper and the carrier, when no goods have been delivered for shipment
no recitals in the bill can estop the carrier from showing the true facts . . . Between the consignor of
goods and receiving carrier, recitals in a bill of lading as to the goods shipped raise only a
rebuttable presumption that such goods were delivered for shipment. As between the consignor and a
receiving carrier, the fact must outweigh the recital."

For this reason, we must perforce allow explanation by private respondents why, despite the issuance
of the airway bill and the date thereof, they deny having received the remains of Crispina Saludo on
October 26, 1976 as alleged by petitioners. On October 26, 1976 the cargo containing the casketed
remains of Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco for
Manila on October 27, 1976, PAL Airway Bill No. 079-01180454 was issued, not as evidence of
receipt of delivery of the cargo on October 26, 1976, but merely as a confirmation of the booking thus
made for the San Francisco-Manila flight scheduled on October 27, 1976. Actually, it was not until
October 28, 1976 that PAL received physical delivery of the body at San Francisco, as duly
evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and
signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.

Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. This responsibility
remains in full force and effect even when they are temporarily unloaded or stored in transit, unless
the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse of
a reasonable time for the acceptance, of the goods by the consignee or such other person entitled to
receive them. And, there is delivery to the carrier when the goods are ready for and have been placed
in the exclusive possession, custody and control of the carrier for the purpose of their immediate
transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the
carrier, the liability of the common carrier commences eo instanti.

Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be
observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty
to commence there must in fact have been delivery of the cargo subject of the contract of carriage.
Only when such fact of delivery has been unequivocally established can the liability for loss,
destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under
Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked.

As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the
cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be shipped
as agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it
was from that date that private respondents became responsible for the agreed cargo under their
undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior
thereto which was not caused by them, and subsequent events caused thereby, private respondents
cannot be held liable.

2. The contention that there was contractual breach on the part of private respondents is founded on
the postulation that there was ambiguity in the terms of the airway bill, hence petitioners' insistence
on the application of the rules on interpretation of contracts and documents. We find no such
ambiguity. The terms are clear enough as to preclude the necessity to probe beyond the apparent
intendment of the contractual provisions.

Turning to the terms of the contract at hand, as presented by PAL Air Waybill No. 079-01180454,
respondent court approvingly quoted the trial court's disquisition on the aforequoted condition
appearing on the reverse side of the airway bill and its disposition of this particular assigned error:

The foregoing stipulation fully answers plaintiffs' objections to the one-day delay and the
shipping of the remains in TWA Flight 603 instead of TWA Flight 131. Under the stipulation,
 parties agreed that no time was fixed to complete the contract of carriage and that the carrier may,
without notice, substitute alternate carriers or aircraft. The carrier did not assume the obligation to
carry the shipment on any specified aircraft.

Furthermore, contrary to the claim of plaintiffs-appellants, the conditions of the Air Waybill are
big enough to be read and noticed. Also, the mere fact that the cargo in question was shipped in
TWA Flight 603, a flight earlier on the same day than TWA Flight 131, did not in any way cause
or add to the one-day delay complained of and/or the switching or mix-up of the bodies.

Indubitably, that private respondent can use substitute aircraft even without notice and without the
assumption of any obligation whatsoever to carry the goods on any specified aircraft is clearly
sanctioned by the contract of carriage as specifically provided for under the conditions thereof.

In any event, the contract has provided for such a situation by explicitly stating that the above
condition remains effective "notwithstanding that the same (fixed time for completion of carriage,
specified aircraft, or any particular route or schedule) may be stated on the face hereof." While
petitioners hinge private respondents' culpability on the fact that the carrier "certifies goods described
below were received for carriage," they may have overlooked that the statement on the face of the
airway bill properly and completely reads —

Carrier certifies goods described below were received for carriage subject to the Conditions on
the reverse hereof the goods then being in apparent good order and condition except as noted
hereon.

Private respondents further aptly observe that the carrier's certification regarding receipt of the goods
for carriage "was of a smaller print than the condition of the Air Waybill, including Condition No. 5
— and thus if plaintiffs-appellants had recognized the former, then with more reason they were aware
of the latter.

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

3. In riposte, TWA claims that its employees have always dealt politely with all clients, customers
and the public in general. PAL, on the other hand, declares that in the performance of its obligation to
the riding public, other customers and clients, it has always acted with justice, honesty, courtesy and
good faith.

The initial answer of the TWA personnel at the counter that they did not know anything about the
remains, and later, their answer that they have not heard anything about the remains, and the inability
of the TWA counter personnel to inform the two plaintiffs of the whereabouts of the remains, cannot
 be said to be total or complete indifference to the said plaintiffs. At any rate, it is any rude or
discourteous conduct, malfeasance or neglect, the use of abusive or insulting language calculated to
humiliate and shame passenger or had faith by or on the part of the employees of the carrier that gives
the passenger an action for damages against the carrier, and none of the above is obtaining in the
instant case.

The records reveal that petitioners, particularly Maria and Saturnino Saludo, agonized for nearly five
hours over the possibility of losing their mother's mortal remains, unattended to and without any
assurance from the employees of TWA that they were doing anything about the situation. This is not
to say that petitioners were to be regaled with extra special attention. They were, however, entitled to
the understanding and humane consideration called for by and commensurate with the extraordinary
diligence required of common carriers, and not the cold insensitivity to their predicament. It is hard to
believe that the airline's counter personnel were totally helpless about the situation. Common sense
would and should have dictated that they exert a little extra effort in making a more extensive inquiry,
by themselves or through their superiors, rather than just shrug off the problem with a callous and
uncaring remark that they had no knowledge about it. With all the modern communications
equipment readily available to them, which could have easily facilitated said inquiry and which are
used as a matter of course by airline companies in their daily operations, their apathetic stance while
not legally reprehensible is morally deplorable.

The foregoing observations, however, do not appear to be applicable or imputable to respondent PAL
or its employees. No attribution of discourtesy or indifference has been made against PAL by
petitioners and, in fact, petitioner Maria Saludo testified that it was to PAL that they repaired after
failing to receive proper attention from TWA. It was from PAL that they received confirmation that
their mother's remains would be on the same flight to Manila with them.

4. The uniform decisional tenet in our jurisdiction bolds that moral damages may be awarded for
wilful or fraudulent breach of contract or when such breach is attended by malice or bad faith.
However, in the absence of strong and positive evidence of fraud, malice or bad faith, said damages
cannot be awarded. Neither can there be an award of exemplary damages nor of attorney's fees as an
item of damages in the absence of proof that defendant acted with malice, fraud or bad faith.

The censurable conduct of TWA's employees cannot, however, be said to have approximated the
dimensions of fraud, malice or bad faith. It can be said to be more of a lethargic reaction produced
and engrained in some people by the mechanically routine nature of their work and a racial or societal
culture which stultifies what would have been their accustomed human response to a human need
under a former and different ambience.

Nonetheless, the facts show that petitioners' right to be treated with due courtesy in accordance with
the degree of diligence required by law to be exercised by every common carrier was violated by
TWA and this entitles them, at least, to nominal damages from TWA alone. Articles 2221 and 2222
of the Civil Code make it clear that nominal damages are not intended for indemnification of loss
suffered but for the vindication or recognition of a right violated of invaded. They are recoverable
where some injury has been done but the amount of which the evidence fails to show, the assessment
of damages being left to the discretion of the court according to the circumstances of the case.

WHEREFORE, with the modification that an award of P40,000.00 as and by way of nominal damages is
hereby granted in favor of petitioners to be paid by respondent Trans World Airlines, the appealed
decision is AFFIRMED in all other respects.

SO ORDERED.
 10) MACAM V. COURT OF APPEALS,
G.R. NO. 125524, AUGUST 25, 199

Doctrine: Art. 1736 Civil Code (read provision). 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. The personality enlisted as buyer/importer in the export invoices
is a person who has a right to receive them. /

"Telegraphic Transfer" It was his practice to ask the shipping lines to immediately release
shipment of perishable goods through telephone calls by himself or his "people." He no longer required
presentation of a bill of lading nor of a bank guarantee as a condition to releasing the goods in case he
was already fully paid.

Facts: On 4 April 1989 petitioner Benito Macam, doing business under the name and style Ben-Mac
Enterprises, shipped on board the vessel through local agent respondent Wallem Philippines, 3500 boxes
of watermelons, and 1611 boxes of fresh mangoes exported covered by a Bill of Lading and through
Letter of Credit, issued by the National Bank of Pakistan, Hongkong (hereinafter PAKISTAN BANK).
The Bills of Lading contained the following pertinent provision: "One of the Bills of Lading must be
surrendered duly endorsed in exchange for the goods or delivery order. 1 The shipment was bound for
Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of Kowloon, Hongkong
(hereinafter GPC) as notify party.

On 6 April 1989, per letter of credit requirement, copies of the bills of lading and commercial invoices
were submitted to petitioner's depository bank, Consolidated Banking Corporation (hereinafter
SOLIDBANK), which paid petitioner in advance the total value of the shipment of US$20,223.46.

Upon arrival in Hongkong, the 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 the original
bills of lading, refused to pay petitioner through SOLIDBANK. Since SOLIDBANK already pre-paid
petitioner the value of the shipment, it demanded payment from respondent WALLEM through five (5)
letters but was refused. Petitioner was thus allegedly constrained to return the amount involved to
SOLIDBANK, then demanded payment from respondent WALLEM in writing but to no avail.

Issue: Whether or not respondents are liable to petitioner for releasing the goods to (Great Prospect
Company of Kowloon, Hongkong (GPC) without the bills of lading or bank guarantee. – NO.

HELD: No. Respondent Wallem is not liable.

Art. 1736. The extraordinary responsibility of the common carriers lasts from the time the goods
are unconditionally placed in the possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a
right to receive them, without prejudice to the provisions of article 1738.

Wallem delivered the goods to the person who has the right to receive them. 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. GPC, even though designated as
notify party in the bills of lading, was clearly named as buyer/importer in the export invoices.

Respondents 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."

From the testimony of petitioner, we gather that he has been transacting with GPC as
buyer/importer for around two (2) or three (3) years already.

It has been the practice of petitioner to request the shipping lines to immediately release perishable
cargoes such as watermelons and fresh mangoes through telephone calls by himself or his "people." In
transactions covered by a letter of credit, bank guarantee is normally required by the shipping lines prior
to releasing the goods. But for buyers using telegraphic transfers, petitioner dispenses with the bank
guarantee because the goods are already fully paid. In his several years of business relationship
with GPC and respondents, there was not a single instance when the bill of lading was first
presented before the release of the cargoes.

Telegraphic transfer, it means advance payment that I am already fully paid

It was his practice to ask the shipping lines to immediately release shipment of perishable goods through
telephone calls by himself or his "people." He no longer required presentation of a bill of lading nor
of a bank guarantee as a condition to releasing the goods in case he was already fully paid. Thus,
taking into account that subject shipment consisted of perishable goods and SOLIDBANK pre-paid the
full amount of the value thereof, it is not hard to believe the claim of respondent WALLEM that petitioner
indeed requested the release of the goods to GPC without presentation of the bills of lading and bank
guarantee.

WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals of 13 March 1996
dismissing the complaint of petitioner Benito Macam and the counterclaims of respondents China Ocean
Shipping Co. and/or Wallem Philippines Shipping, Inc., as well as its resolution of 5 July 1996 denying
reconsideration, is AFFIRMED

11) SEALAND SERVICES v INTERMEDIATE APPELLATE COURT

G.R. No. 75118 | August 31, 1987 | Narvasa, J.
DOCTRINE: There can be no doubt or equivocation about the validity and enforceability of freely-
agreed-upon stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an
agreed valuation unless the shipper declares a higher value and inserts it into said contract or bill.

FACTS:
Sea-land, a foreign shipping and forwarding company licensed to do business in the Philippines,
received from Seaborne Trading Company in California a shipment consigned to Sen Hiap Hing (private
respondent’s business name). The shipper not having declared the value of the shipment, no value was
indicated in the BOL. The shipment was discharged in Manila, and while awaiting transshipment to Cebu
the cargo was stolen by pilferers and never recovered.
Private respondent filed a complaint, alleging the value of the lost shipment was P179,643.48. Sea-land
offered to settle for $4,000, asserting that the amount represented its maximum liability for the loss of
shipment under the package limitation clause in the BOL. The lower court ruled for the respondent, which
was affirmed by the respondent court.

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.

RULING:
Yes, there can be no doubt or equivocation about the validity and enforceability of freely-
agreed-upon stipulations in a contract of carriage or bill of lading limiting the liability of the
carrier to an agreed valuation unless the shipper declares a higher value and inserts it into said
contract or bill.
There is no question of the right 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 said bill, although that document may
have been drawn up only by the consignor and the carrier without the intervention of the consignee.
Since the liability of a common carrier for loss of or damage to goods transported by it under a
contract of carriage so governed by the laws of the country of destination and the goods in question were
shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily
by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby,
by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of
goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the
Philippines Ports in Foreign Trade by C.A. No. 65. Even if Section 4(5) of COGSA did not list the
validity and binding effect of the liability limitation clause in the bill of lading here are fully substantial
on the basis of Article 1749 and 1750 of the Civil Code.
WHEREFORE, the Decision of the Intermediate Appellate Court complained of is reversed and
set aside. The stipulation in the questioned bill of lading limiting Sea- Land's liability for loss of or
damage to the shipment covered by said bill to US$500.00 per package is held valid and binding on
private respondent. There being no question of the fact that said shipment consisted of eight (8) cartons or
packages, for the loss of which Sea-Land is therefore liable in the aggregate amount of US$4,000.00, it is
the judgment of the Court that said petitioner discharge that obligation by paying private respondent the
sum of P32,000.00, the equivalent in Philippine currency of US$4,000.00 at the conversion rate of P8.00
to $1.00. Costs against private respondent.
 12) CITADEL LINES, INC. V. COURT OF APPEALS,
G.R. NO. 88092, APRIL 25, 1990
Regalado, J.
DOCTRINE: 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; 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.

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 and Bill of Lading No. 70608680
of the Ben Line Containers Ltd. The shipment arrived at the Port of Manila, Pier 13, on April 18, 1979.
The said container was received by E. Razon, Inc. (ARRASTRE). 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 headchecker discovered that container van No. BENU
201009-9 had a different padlock and the seal was tampered with. 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 with the CARRIER,
demanding the payment of the market value of the missing cargoes. The CARRIER 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 with the ARRASTRE, demanding payment of the
value of the goods but said claim was denied.

The lower court rendered a decision exonerating the ARRASTRE of any liability on the ground that the
subject container van was not formally turned over to its custody, and adjudging the CARRIER liable for
the principal amount of P312,480.00 representing the market value of the lost shipment, and the sum of
P30,000.00 as and for attorney's fees and the costs of suit.

The Court of Appeals affirmed the decision of the court a quo but deleted the award of attorney's fees and
costs of suit.

ISSUE:

1. Whether the loss occurred while the cargo in question was in the custody of E. Razon, Inc. or of
Citadel Lines, Inc; and
2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is
binding on the consignee.
RULING:

1. 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. 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. 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 of the Civil Code. 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.
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. The Court, however, found 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 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.
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.

The CONSIGNEE itself admits in its memorandum that the value of the goods shipped does not appear in
the bills of lading. 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.

WHEREFORE, the judgment of respondent court is hereby MODIFIED and petitioner Citadel Lines, Inc.
is ordered to pay private respondent Manila Wine Merchants, Inc. the sum of US$4,465.60 or its
equivalent in Philippine currency at the exchange rate obtaining at the time of payment thereof. In all
other respects, said judgment of respondent Court is AFFIRMED.
 13) EVERETTE STEAMSHIP CORP. V. COURT OF APPEALS;
G.R. NO. 122494, OCTOBER 8, 1998

Petitioner Everett Steamship Corporation, through this petition for review, seeks the reversal of the
decision1 of the Court of Appeals which affirmed the decision of the Regional Trial Court of Kalookan
City, Branch 126, in Civil Case No. C-15532, finding petitioner liable to private respondent Hernandez
Trading Co., Inc. for the value of the lost cargo.

Private respondent imported three crates of bus spare parts marked as MARCO C/No. 12, 13 and 14, from
its supplier, Maruman Trading Company, Ltd. (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. The said crates
were covered by Bill of Lading No. NGO53MN.

Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was
missing. Admitted by the petitioner that private respondent made a formal claim upon petitioner for the
value of the lost cargo amounting to (Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM-
941, 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 before the Regional Trial Court. At the pre-trial conference, both parties manifested that they
have no testimonial evidence to offer and agreed instead to file their respective memoranda.

RTC RULING: On July 16, 1993, the trial court rendered judgment 2 in favor of private respondent,
ordering petitioner to pay: (a) Y1,552,500.00; The trial court ruled: Considering defendant's categorical
admission of loss and its failure to overcome the presumption of negligence and fault, the Court
conclusively finds defendant liable to the plaintiff,

CA RULING: On appeal, the Court of Appeals deleted the award of attorney's fees but affirmed the trial
court's findings with the additional observation that private respondent cannot be bound by the terms and
conditions of the bill of lading because it was not privy to the contract of carriage. It said: As to the
amount of liability, no evidence appears on record to show that the appellee (Hernandez Trading
Co.) consented to the terms of the Bill of Lading. Never having entered into a contract with the
appellant, appellee should therefore not be bound by any of the terms and conditions in the bill of lading.
Hence, it follows that the appellee may recover the full value of the shipment lost, the basis of which is
not the breach of contract as appellee was never a privy to the any contract with the appellant, but is
based on Article 1735 of the New Civil Code.

ISSUES:

1. Whether or not the carrier’s liability is limited in the bill of lading. - YES

2. Whether or not the consent of the consignee to the terms and conditions of the bill of lading is
necessary to make such stipulations binding upon it. - NO

RULING:
 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 which provide:

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the
goods appearing in the bill of lading, unless the shipper or owner declares a greater value,
is binding.

Art. 1750. 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 freely and fairly agreed upon.

Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common
carrier's liability for loss must be "reasonable and just under the circumstances, and has been freely
and fairly agreed upon."

The bill of lading subject of the present controversy specifically provides, among others:

(18) The carrier shall not be liable for any loss of or any damage to or in any connection with,
goods in an amount exceeding One Hundred thousand Yen in Japanese Currency (Y100,000.00)
or its equivalent in any other currency per package or customary freight unit (whichever is least)
unless the value of the goods higher than this amount is declared in writing by the shipper
before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is
paid as required. (Emphasis supplied)

The above stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier made it clear
that its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper,
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.

2. Again, in Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra), the Supreme Court held
that even if the consignee was not a signatory to the contract of carriage between the shipper and the
carrier, the consignee can still be bound by the contract. Speaking through Mr. Chief Justice Narvasa, the
court ruled that the consignee was bound thereby on the strength of authority holding that such provisions
on liability limitation are as much a part of a bill of lading as through physically in it and as though placed
therein by agreement of the parties.

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. 9 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.

Private respondent, however, insists that the carrier should be liable for the full value of the lost cargo in
the amount of Y1,552,500.00, considering that the shipper, Maruman Trading, had fully declared the
value as shown in the commercial Invoice No. MTM-941. This claim was denied by petitioner,
contending that it did not know of the contents, quantity and value of "the shipment which consisted of
three pre-packed crates described in Bill of Lading No. NGO-53MN merely as '3 CASES SPARE
PARTS.'"
The bill of lading in question confirms petitioner's contention. To defeat the carrier's limited liability, the
aforecited Clause 18 of the bill of lading requires that the shipper should have declared in writing a
higher valuation of its goods before receipt thereof by the carrier and insert the said declaration in the bill
of lading, with extra freight paid. These requirements in the bill of lading were never complied with by
the shipper, hence, the liability of the carrier under the limited liability clause stands. The commercial
Invoice No. MTM-941 does not in itself sufficiently and convincingly show that petitioner has
knowledge of the value of the cargo as contended by private respondent. No other evidence was
proffered by private respondent to support is contention. Thus, we are convinced that petitioner should be
liable for the full value of the lost cargo.

In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand
(Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading.

WHEREFORE, the decision of the Court of Appeals dated June 14, 1995 in C.A.-G.R. CV No. 42803 is
hereby REVERSED and SET ASIDE.

SO ORDERED.
 14) BRITISH AIRWAYS V. COURT OF APPEALS
G.R. NO. 121824, JANUARY 29, 1998

FACTS:
In April 1989, Mahtani decided to visit his relatives in Bombay, India and obtain the services of Mr.
Gumar regarding his travel plans. Since BA had no direct flights from Manila to Bombay, Mahtani had to
take a flight to Hongkong via PAL, and upon arrival in Hongkong he had to take a connecting flight to
Bombay on board BA.

Mahtani checked in at the PAL counter in Manila his two pieces of luggage containing his clothings and
personal effects, thinking the same would be transferred to the BA flight bound for Bombay. When
Mahtani arrived in Bombay he discovered that his luggage was missing. BA advised him to file a claim
by accomplishing the "Property Irregularity Report"

Mahtani filed his complaint for damages and attorney's fees Mahtani led his complaint for damages and
attorney's fees.

BA filed its answer with counterclaim against Mahtani and filed a third-party complaint against PAL for
the non-transfer of luggage.

ISSUE:
Whether or not BA is liable for compensatory damages and attorney's fee? YES
Whether or not the dismissal of the third party complaint is correct? NO

HELD:
1. The nature of an airline's contract of carriage partakes of two types, namely: a contract to deliver a
cargo or merchandise to its destination and a contract to transport passengers to their destination. A
business intended to serve the travelling public primarily, it is imbued with public interest, hence, the law
governing common carriers imposes an exacting standard. Neglect or malfeasance by the carrier's
employees could predictably furnish bases for an action for damages.

In the instant case, it is apparent that the contract of carriage was between Mahtani and BA. Moreover, it
is indubitable that his luggage never arrived in Bombay on time. Therefore, as in a number of cases 16 we
have assessed the airlines' culpability in the form of damages for breach of contract involving misplaced
luggage.

In determining the amount of compensatory damages in this kind of cases, it is vital that the claimant
satisfactorily prove during the trial the existence of the factual basis of the damages and its causal
connection to defendant's acts.

However, as earlier stated, it is the position of BA that there should have been no
separate award for the luggage and the contents thereof since Mahtani failed to declare a separate higher
valuation for the luggage, 18 and therefore, its liability is limited, at most, only to the amount stated in the
ticket.
2. In resolving this issue, it is worth observing that the contract of air transportation was exclusively
between Mahtani and BA, the latter merely endorsing the Manila to Hongkong leg of the former's journey
to PAL, as its subcontractor or agent. In fact, the fourth paragraph of the "Conditions of Contracts" of the
ticket issued by BA to Mahtani confirms that the contract was one of continuous air transportation from
Manila to Bombay.

"4. . . . carriage to be performed hereunder by several successive carriers is regarded as a single

operation."

It is undisputed that PAL, in transporting Mahtani from Manila to Hongkong acted as the agent of BA.

The Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible
for any negligence in the performance of its function
and is liable for damages which the principal may suffer by reason of its negligent act. Hence, the Court
of Appeals erred when it opined that BA, being the principal, had no cause of action against PAL, its
agent or sub-contractor.

The contractual relationship between BA and PAL is one of agency, the former being the principal, since
it was the one which issued the confirmed ticket, and the latter the agent.

To deny BA the procedural remedy of 􀀼ling a third-party complaint against PAL for the purpose of
ultimately determining who was primarily at fault as between them, is without legal basis. After all, such
proceeding is in accord with the doctrine against multiplicity of cases which would entail receiving the
same or similar evidence for both cases and enforcing separate judgments therefore. It must be borne in
mind that the purpose of a third-party complaint is precisely to avoid delay and circuity of action and to
enable the controversy to be disposed of in one suit.

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CAG. R. CV No. 43309
dated September 7, 1995 is hereby MODIFIED, reinstating the third-party complaint filed by British
Airways dated November 9, 1990 against Philippine Airlines. No costs.
 15) SWEET LINES, INC. VS. TEVES
G.R. NO. L-37750
MAY 19, 1978
Doctrine:
The fourteen (14) conditions — one of which is "Condition No. 14" which is in issue in this case
— printed at the back of the passage tickets, are commonly known as "contracts of adhesion," the validity
and/or enforceability of which will have to be determined by the peculiar circumstances obtaining in each
case and the nature of the conditions or terms sought to be enforced. For, "While generally, stipulations in
a contract come about after deliberate drafting by the parties thereto, ... there are certain contracts almost
all the provisions of which have been drafted only by one party, usually a corporation. Such contracts are
called contracts of adhesion, because the only participation of the party is the signing of his signature or
his 'adhesion' thereto. Insurance contracts, bills of lading, contracts of make of lots on the installment plan
fall into this category."
Facts:
Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, a contractor by professions,
bought 2 tickets for Voyage 90 at the branch office of petitioner, a shipping company transporting inter-
island passengers and cargoes, at Cagayan de Oro City. Respondents were to board the petitioner's
vessel, M/S "Sweet Hope" bound for Tagbilaran City via the port of Cebu. Upon learning that the vessel
was not proceeding to Bohol, since many passengers were bound for Surigao, private respondents per
advice, went to the branch office for proper relocation to M/S "Sweet Town". Because the said vessel was
already filled to capacity, they were forced to agree "to hide at the cargo section to avoid inspection of the
officers of the Philippine Coastguard." Private respondents alleged that they were, during the trip,"
"exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits," and
that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were
constrained to pay for other tickets.

In view thereof, private respondents sued petitioner for damages and for breach of contract of carriage in
the alleged sum of P10,000.00 before respondents Court of First Instance of Misamis Oriental.

Petitioner moved to dismiss the complaint on the ground of improper venue. This motion was premised
on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads:

14. It is hereby agreed and understood that any and all actions arising out of the conditions and
provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the
City of Cebu.

The motion was denied by the trial court. Petitioner moved to reconsider the order of denial, but no avail.
Hence, this instant petition.

Issue:
Whether or not a common carrier engaged in inter-island shipping stipulate thru condition
printed at the back of passage tickets to its vessels that any and all actions arising out of the contract of
carriage should be filed only in a particular province or city, in this case the City of Cebu, to the exclusion
of all others?
Held:
No, a common carrier engaged in inter-island shipping cannot stipulate thru condition
printed at the back of passage tickets to its vessels that any and all actions arising out of the
contract of carriage should be filed only in a particular province or city, in this case the City of
Cebu, to the exclusion of all others.
The fourteen (14) conditions — one of which is "Condition No. 14" which is in issue in this case
— printed at the back of the passage tickets, are commonly known as "contracts of adhesion," the validity
and/or enforceability of which will have to be determined by the peculiar circumstances obtaining in each
case and the nature of the conditions or terms sought to be enforced. For, "While generally, stipulations
in a contract come about after deliberate drafting by the parties thereto, ... there are certain contracts
almost all the provisions of which have been drafted only by one party, usually a corporation. Such
contracts are called contracts of adhesion, because the only participation of the party is the signing of his
signature or his 'adhesion' thereto. Insurance contracts, bills of lading, contracts of make of lots on the
installment plan fall into this category."
It is a matter of public knowledge that there is a dearth of and acute shortage in inter- island
vessels plying between the country's several islands, and the facilities they offer leave much to be desired.
Thus, even under ordinary circumstances, the piers are congested with passengers and their cargo waiting
to be transported. The conditions are even worse at peak and/or the rainy seasons, when Passengers
literally scramble to whatever accommodations may be availed of, even through circuitous routes, and/or
at the risk of their safety — their immediate concern, for the moment, being to be able to board vessels
with the hope of reaching their destinations. The schedules are — as often as not if not more so —
delayed or altered. This was precisely the experience of private respondents when they were relocated to
M/S "Sweet Town" from M/S "Sweet Hope'' and then any to the scorching heat of the sun and the dust
coming from the ship's cargo of corn grits, " because even the latter was filled to capacity.
Under these circumstances, it is hardly just and proper to expect the passengers to examine their
tickets received from crowded/congested counters, more often than not during rush hours, for conditions
that may be printed much charge them with having consented to the conditions, so printed, especially if
there are a number of such conditions in fine print, as in this case.
Again, it should be noted that Condition No. 14 was prepared solely by the petitioner,
respondents had no say in its preparation. Neither did the latter have the opportunity to take the into
account prior to the purpose chase of their tickets. For, unlike the small print provisions of contracts —
the common example of contracts of adherence — which are entered into by the insured in his awareness
of said conditions, since the insured is afforded the opt to and co the same, passengers of inter-island
voyage do not have the same chance, since their alleged adhesion is presumed only from the fact that they
purpose chased the tickets.
It should also be stressed that shipping companies are franchise holders of certificates of public
convenience and therefore, possess a virtual monopoly over the business of transporting passengers
between the ports covered by their franchise. This being so, shipping companies, like petitioner, engaged
in inter-island shipping, have a virtual monopoly of the business of transporting passengers and may thus
dictate their terms of passage, leaving passengers with no choice but to buy their tickets and avail of their
vessels and facilities. Finally, judicial notice may be taken of the fact that the bulk of those who board
these inter-island vested come from the low-income groups and are less literate, and who have little or no
choice but to avail of petitioner's vessels.
 Therefore, Condition No. 14 printed at the back of the passage tickets is held as void and
unenforceable

WHEREFORE, the petition for prohibition is DISMISSED. The restraining order issued on November
20, 1973, is hereby LIFTED and SET ASIDE. Costs against petitioner.
 16) BELGIAN OVERSEAS CHARTERING VS. PHIL. FIRST INSURANCE CO.,
G.R. NO. 143133; JUNE 5, 2002

FACTS:

On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky', owned by petitioner
Belgian Overseas Chartering, at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets
for transportation to Manila consigned to the Philippine Steel Trading Corporation (PSTC). On July 28,
1990, M/V Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the
subject cargo. Four (4) coils were found to be in bad order. Finding 4 coils in their damages state to be
unfit for the intended purpose, the consignee PSTC declared the same as total loss. PSTC demanded from
Belgian the payment for the loss but the latter refused to submit to the claim. Instead, respondent
Philippine First Insurance Co. (PFIC), as insurer, paid for the loss suffered by PSTC totalling
P506,086.50, thereby subrogating itself to PFIC’s rights against Belgian.

PFIC instituted a complaint against Belgian, as common carrier, for recovery of the amount paid by them
to the consignee. Belgian imputed that the damage or loss was due to pre-shipment damage, to the
inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to
insufficiency of packing thereof, or the act or omission of the shipper of the goods or their
representatives. (In short, Belgian denies liability by claiming that the situation falls under instances
provided in Article 1734). Moreover, Belgian argued that their liability, if any, should not exceed the
limitations of liability provided for in the bill of lading. Finally, they averred, in any event, they exercised
due diligence and foresight required by law to avoid any damage to the shipment. The RTC dismissed the
complaint. The CA reversed the RTC decision holding that Belgian is liable for the loss or the damage of
the goods shipped because they failed to overcome the presumption of negligence imposed on common
carriers. Hence, this petition was filed by Belgian.

ISSUE:

Whether petitioners have overcome the presumption of negligence of a common carrier.

RULING:

NO. Well-settled is the rule that common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the
goods and the passengers they transport. Thus, common carriers are required to render service with the
greatest skill and foresight and "to use all reasonable means to ascertain the nature and characteristics of
the goods tendered for shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires." The extraordinary responsibility lasts from the time the goods are
unconditionally placed in the possession of and received for transportation by the carrier until they are
delivered, actually or constructively, to the consignee or to the person who has a right to receive them.

This strict requirement is justified by the fact that, without a hand or a voice in the preparation of such
contract, the riding public enters into a contract of transportation with common carriers. Even if it wants
to, it cannot submit its own stipulations for their approval. Hence, it merely adheres to the agreement
prepared 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 they transported deteriorated or got lost or destroyed. That
is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to
avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed
such diligence.

However, the presumption of fault or negligence will not arise if the loss is due to any of the following
causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) an act of the
public enemy in war, whether international or civil; (3) an act or omission of the shipper or owner of the
goods; (4) the character of the goods or defects in the packing or the container; or (5) an order or act of
competent public authority. This is a closed list. If the cause of destruction, loss or deterioration is other
than the enumerated circumstances, then the carrier is liable therefor.

Corollary to the foregoing, mere proof of delivery of the goods in good order to a common carrier and of
their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against
the carrier. If no adequate explanation is given as to how the deterioration, the loss or the destruction of
the goods happened, the transporter shall be held responsible.

That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by
a review of the records and more so by the evidence adduced by Respondent.

First, as stated in the Bill of Lading, petitioners received the subject shipment in good order and condition
in Hamburg, Germany.

Second, prior to the unloading of the cargo, an Inspection Report prepared and signed by representatives
of both parties showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and
the contents thereof exposed and rusty.

Third, the Bad Order Tally Sheet issued by Jardine Davies Transport Services, Inc., stated that the four
coils were in bad order and condition. Normally, a request for a bad order survey is made in case there is
an apparent or a presumed loss or damage.

Fourth, the Certificate of Analysis stated that, based on the sample submitted and tested, the steel sheets
found in bad order were wet with fresh water.

Fifth, petitioners — in a letter addressed to the Philippine Steel Coating Corporation (PSTC) — admitted
that they were aware of the condition of the four coils found in bad order and condition.
 17) DELSAN TRANSPORT LINES, INC. vs. AMERICAN HOME ASSURANCE
CORPORATION

G.R. No. 149019 August 15, 2006 Garcia, J.

DOCTRINE: The mere proof of delivery of goods in good order to the carrier, and their arrival in the
place of destination in bad order, make out a prima facie case against the carrier, so that if no explanation
is given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the
carrier to prove that the loss was due to accident or some other circumstances inconsistent with its
liability.

FACTS: Delsan, a domestic corporation which owns and operates the vessel MT Larusan, received on
board MT Larusan a shipment consisting of 1,986.627k/l diesel oil at the Bataan Refinery Corporation for
transportation and delivery to the bulk depot in Bacolod City of Caltex. The shipment was insured by the
respondent, AHAC. The shipment arrived and the unloading operations commenced. The discharge had
to be stopped upon discovery that the port bow mooring of the vessel was intentionally cut or stolen by
unknown persons. As such, the diesel oil spilled into the sea and the diesel oil that was discharged from
the vessel into the shore tank backflowed. As a result of the spillage and backflow of diesel oil, Caltex
sought to recover loss from Delsan but the latter refused to pay. As insurer, AHAC paid Caltex the sum
total for the spillage and the backflow. Respondent, as Caltex’ subrogee, instituted a case against Delsan
for loss caused by the spillage. The RTC held Delsan liable for loss of the cargo for its negligence in its
duty as a common carrier. Upon appeal, the CA affirmed the judgment of the trial court and declared that
Delsan failed to exercise extraordinary diligence. Hence, this petition.

ISSUE: Whether or not Delsan should be held liable for the spillage and backflow of the diesel oil.

RULING: YES. The Court held that Delsan, as a common carrier, is 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 such presumption,
Delsan should be able to prove that it exercised extraordinary diligence which in this case, it failed to do
so. The extraordinary responsibility of common carrier lasts from the time the goods are unconditionally
placed in the possession of, and received by, the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to a person who has the right to receive
them. The discharging of oil products to Caltex Bulk Depot has not yet been finished, Delsan still has the
duty to guard and to preserve the cargo. The carrier still has in it the responsibility to guard and preserve
the goods, a duty incident to its having the goods transported. The mere proof of delivery of goods in
good order to the carrier, and their arrival in the place of destination in bad order, make out a prima facie
case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must
be held responsible. It is incumbent upon the carrier to prove that the loss was due to accident or some
other circumstances inconsistent with its liability.
 18) SERVANDO VS. PHIL. STEAM NAVIGATION CO

117 SCRA 832, Nos. L-36481-2 October 23, 1982, Escolin, J

DOCTRINE: Under Article 1738 of the Civil Code "the extraordinary liability of the common carrier
continues to be operative even during the time the goods are stored in the warehouse of the carrier at the
place of destination, until the consignee has been advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or otherwise dispose of them.’’

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. Cargoes were
discharged completely and in good order, to the warehouse of the Bureau of Customs. In the afternoon,
on the same day, the warehouse was razed by a fire of unknown origin, destroying appellees' cargoes.
Judgement rendered that the defendant is hereby ordered to pay the plaintiff Servando and Bico the sum
and the full amount with legal interest. Art 1736 imposes upon common carriers, without the prejudice to
the provision of article 1738.

ISSUE: Is there negligence on the part of the plaintiffs to be held liable for the damages?

RULING: No. The court held the delivery of the shipment in question to the warehouse of the bureau of
customs, since the burning of the warehouse occurred before actual or constructive delivery of the goods
to the appellees, the loss is chargeable against the appellant. 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;

Nor can the appellant or its employees be charged with negligence. The storage of the goods in the
Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with their
knowledge and consent. Since the warehouse belonged to and was maintained by the government, it
would be unfair to impute negligence to the appellant, the latter having no control whatsoever over the
same.

The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio6, where this
Court held the defendant liable for damages arising from a fire caused by the negligence of the
defendant's employees while loading cases of gasoline and petroleon products. But unlike in the said case,
there is not a shred of proof in the present case that the cause of the fire that broke out in the Custom's
warehouse was in any way attributable to the negligence of the appellant or its employees. Under the
circumstances, the appellant is plainly not responsible.

WHEREFORE, the judgment appealed from is hereby set aside. No costs.

SO ORDERED.
 19) PHILAMGEN VS. MCG MARINE SERVICES,
MARCH 8, 2002

THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. vs. MGG MARINE
SERVICES, INC. and DOROTEO GAERLAN

NOTE: M/V Peatheray Patrick-G is owned by Gaerlan with MCG Marine Services, Inc. as agent.

FACTS:

San Miguel Corporation insured several beer bottle cases with an aggregate value of
P5,836,222.80 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 Bislig, Surigao del Sur.
After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel left the port of
Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The weather was calm when the vessel
started its voyage but later on encountered unfavorable weather condition. The following day, March 3,
1987, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As
a consequence, thereof, the cargo belonging to San Miguel Corporation was lost. Subsequently, San
Miguel Corporation claimed the amount of its loss from petitioner.

Petitioner paid San Miguel Corporation the full amount of P5,836,222.80 pursuant to the terms of
their insurance contract. Petitioner as subrogee of San Miguel Corporation filed with the Regional Trial
Court (RTC) of Makati City a case for collection against private respondents Doroteo Gaerlan as owner
of the M/V Peatheray Patrick-G and MCG Marine Services, Inc. as agent. to recover the amount it paid to
San Miguel Corporation for the loss of the latter's cargo. Meanwhile, the Board of Marine Inquiry 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 and was the proximate and only cause of the vessel's sinking.

The RTC of Makati City, Branch 134, promulgated its Decision finding private respondents
solidarily liable for the loss of San Miguel Corporation's cargo and ordering them to pay petitioner the full
amount of the lost cargo plus legal interest, attorney's fees and costs of suit. On appeal, the appellate court
issued the assailed Decision, which reversed the ruling of the RTC. 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:
Whether or not the private respondents – Doroteo Gaerlan, as owner of M/V Peatheray Patrick-G
and MCG Marine Services, Inc., as agent should be absolved of any liability regarding the loss of the
cargo.

HELD:
YES. 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;

(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.

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."

Moreover, even in cases where a natural disaster is the proximate and only cause of the loss, a common
carrier is still required to exercise due diligence to prevent or minimize loss before, during and after the
occurrence of the natural disaster, for it to be exempt from liability under the law for the loss of the
goods. If a common carrier fails to exercise due diligence--or that ordinary care which the circumstances
of the particular case demand -- to preserve and protect the goods carried by it on the occasion of a
natural disaster, it will be deemed to have been negligent, and the loss will not be considered as having
been due to a natural disaster under Article 1734(1).

In the case at bar, the findings of the Board of Marine Inquiry indicate that the attendance of strong winds
and huge waves while the M/V Peatheray Patrick-G was sailing through Cortes, Surigao del Norte on
March 3, 1987 was indeed fortuitous. A fortuitous event has been defined as one which could not be
foreseen, or which though foreseen, is inevitable. An event is considered fortuitous if the following
elements concur: (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.

In the case at bar, it was adequately shown that before the M/V Peatheray Patrick-G left the port of
Mandaue City, the Captain confirmed with the Coast Guard that the weather condition would permit the
safe travel of the vessel to Bislig, Surigao del Sur. Thus, he could not be expected to have foreseen the
unfavorable weather condition that awaited the vessel in Cortes, Surigao del Sur. 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. The appellate court likewise found that there was no negligence on the
part of the crew of the M/V Peatheray Patrick-G. Overloading was also eliminated as a possible cause of
the sinking of the vessel, as the evidence showed that its freeboard clearance was substantially greater
than the authorized freeboard clearance.

Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur on March 3,
1987 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.
 20) CALVO VS. UCPB GENERAL INSURANCE,
G.R. NO. 148896, MARCH 19, 2002

DOCTRINE

Under Article 1735 of the Civil Code, if the goods are proved to have been lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove that
they have observed the extraordinary diligence required by law. The mere proof of delivery of goods in
good order to a carrier, and of their arrival at the place of destination in bad order, makes out a prima
facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier
must be held responsible.

Now, one of the basis of the exemption from liability from loss, destruction or deterioration of the goods
under Article 1734(4) is 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

FACTS:

Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole
proprietorship customs broker. She entered into a contract wit

h 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 in Ermita, Manila. The cargo
was insured by respondent UCPB General Insurance Co., Inc.

Upon arrival of the shipment in Manila , the goods were unloaded afrom the vessel to the custody pf the
arrastre operator in 24 hours. Calvo withdrew the cargo and delivered it to SMC’s warehouse in Manila.
The goods were inspected and 15 reels of the semi-chemical fluting paper and 3 reels of kraft liner board
were found to be wet and damaged.

ISSUE:

1. Is petitioner, a customs broker or warehouseman who offers his services to select clients, a common
carrier?

2. Is petitioner liable for the damage of the goods?

RULING:

1. Yes. Petitioner is a common carrier as transportation of goods is an integral part of her business. Article
1732 defines “common carriers” 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. This 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 . 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.

To uphold petitioner's contention that she is not a common carrier but a private carrier because she does
not indiscriminately hold her services out to the public would be to deprive those with whom she
contracts the protection which the law affords them notwithstanding the fact that the obligation to carry
goods for her customers, as already noted, is part and parcel of petitioner's business.

2. Yes. Under Article 1735 of the Civil Code, if the goods are proved to have been lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they
prove that they have observed the extraordinary diligence required by law. The burden of the plaintiff is
to prove merely that the goods he transported have been lost, destroyed or deteriorated. Thereafter, the
burden is shifted to the carrier to prove that he has exercised the extraordinary diligence required by law.
The mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of
destination in bad order, makes out a prima facie case against the carrier, so that if no explanation is given
as to how the injury occurred, the carrier must be held responsible.

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 sale, 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." (Companio Maritima v CA).

As found by the CA from the Survey Report, 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). 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. Whenever the thing is lost (or damaged) in the possession of the debtor (or obligor), it
shall be presumed that the loss (or damage) was due to his fault, unless there is proof to the contrary.

Petitioner is insisting that the cargo was not damaged while in her custody as she immediately delivered it
to SMC’s warehouse. To prove the exercise of extraordinary diligence, petitioner must do more than
merely show the possibility that some other party could be responsible for the damage. It must prove that
it used "all reasonable means to ascertain the nature and characteristic of goods tendered for [transport]
and that [it] exercise[d] due care in the handling [thereof]." Petitioner failed to do this.

Now, one of the basis of the exemption from liability from loss, destruction or deterioration of the goods
under Article 1734(4) is 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.
Hence, for failure of petitioner to prove that she exercised extraordinary diligence in the carriage of goods
in this case or that she is exempt from liability, the presumption of negligence as provided under Art. 173
holds.