REGIONAL CONTAINER LINES (RCL) OF SINGAPORE

NETHERLANDS INSURANCE CO. (PHILIPPINES), INC.

vs.

THE

G.R. No. 168151; September 4, 2009

BRION, J.:
RCL is a foreign corporation based in Singapore. It does business in the
Philippines through its agent, EDSA Shipping, a domestic corporation
organized and existing under Philippine laws.
Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands
Insurance) is likewise a domestic corporation engaged in the marine
underwriting business.
FACTS: 405 cartons of Epoxy molding compound were consigned to be
shipped from Singapore to Manila for TEMIC. U-Freight Singapore contracted
Pacific Eagle to transport cargo. It was stored in its refrigerated container as
cargo is highly presihable. The temperature was 0 Celsius. Pacific Eagle
loaded it to M/V Piya Bhum owned by RCL which the former had a slot charter
agreement with. RCL issued Bill of Lading in favor of Pacific Eagle.
Netherlands Insurance issued a Marine Open Policy to insure cargo in favor of
Temic to cover loss/damages. Upon arrival at Manila, the cargoes were
surveyed and it was found to be at the constant required temperature for
several ldays. But later on, it was found out that the temperature changed
when the cargo had already been unloaded, to 33 Celsius. Surveyor
believed the fluctuation was caused by the burnt condenser fan motor of the
refrigerated container. Temic received the shipment and found it to be
damaged. Temic filed a claim for cargo loss against Netherlands Insurance,
with supporting claims documents. The Netherlands Insurance paid Temic the
sum ofP1,036,497.00 under the terms of the Marine Open Policy. Temic then
executed a loss and subrogation receipt in favor of Netherlands Insurance.
Seven months from delivery of the cargo - Netherlands Insurance filed a
complaint for subrogation of insurance settlement with the Regional Trial
Court, RCL and TMS Ship Agencies (TMS) thought to be the local agent of M/V
Piya, EDSA Shipping, Eagle Liner Shipping Agencies, U-Freight Singapore, and
U-Ocean (Phils.), Inc. (U-Ocean). RCL and EDSA Shipping filed motion to
dismiss based on demurer to evidence. They attributed negligence to their
co-defendants, that fluctuation of temperature occurred after cargo has been
discharged from vessel but in the reefer van and that Netherlands is not
party in interest hence has no cause of action. RTC found RCL and EDSA

Shipping not liable but this was reversed by CA and barred them from
presenting evidence since they filed for demurer.
Defense of RCL and EDSA Shipping:
1. They attributed any negligence that may have caused the loss of the
shipment to their co- defendants.
a. They contend that the cause of the damage to the cargo was the
fluctuation of the temperature in the reefer van, which fluctuation occurred
after the cargo had already been discharged from the vessel; no fluctuation,
they point out, arose when the cargo was still on board M/V Piya Bhum.
b. As the cause of the damage to the cargo occurred after the same
was already discharged from the vessel and was under the custody of the
arrastre operator (International Container Terminal Services, Inc. or ICTSI),
RCL and EDSA Shipping posit that the presumption of negligence provided
in Article 1735 of the Civil Code should not apply. What applies in this
case is Article 1734, particularly paragraphs 3 and 4 thereof, which
exempts the carrier from liability for loss or damage to the cargo when it is
caused either by an act or omission of the shipper or by the character of the
goods or defects in the packing or in the containers.
2. They likewise asserted that no valid subrogation exists, as the payment
made by Netherlands Insurance to the consignee was invalid.
3. That the Netherland Insurance has no cause of action, and is not the real
party-in-interest,
4. The claim is barred by laches/prescription.
RCL and EDSA Shipping, in their motion to dismiss based on demurrer to
evidence:
1. Netherlands Insurance had failed to prove any valid subrogation,
2. Netherlands Insurance had failed to establish that any negligence on their
part or that the loss was sustained while the cargo was in their custody.
RTC ruled:
1. There was valid subrogation.

2. The defendants could not be held liable for the loss or damage, as their
respective liabilities ended at the time of the discharge of the cargo from
the ship at the Port of Manila.
Netherlands Insurance seasonably appealed the order of dismissal to the CA.
CA ruled:
1. Against EDSA Shipping Agency and RCL. They were held liable for the
damages/ reimbursement.
2. The CA dismissed Netherland Insurances complaint against the other
defendants after finding that the claim had already been barred by
prescription
3. They are deemed to have waived their right to present evidence,
and the presumption of negligence must stand.
ISSUE: Whether the CA correctly held RCL and EDSA Shipping liable as
common carriers under the theory of presumption of negligence.
RULING: Yes CA is correct. RCL and EDSA Shipping failed to satisfy this
standard of evidence and in fact offered no evidence at all on this point; a
reversal of a dismissal based on a demurrer to evidence bars the
defendant from presenting evidence supporting its allegations. The CA
correctly ruled that they are deemed to have waived their right to
present evidence, and the presumption of negligence must stand. It is for
this reason as well that the court finds RCL and EDSA Shippings claim that
the loss or damage to the cargo was caused by a defect in the
packing or in the containers.
The present case is governed by the following provisions of the Civil Code:
ART. 1733. 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.
Such extraordinary diligence in the vigilance over
the goods is further expressed in articles 1734, 1735,
and 1745, Nos. 5, 6, and 7, while the extraordinary

diligence for the safety of the passengers is further

set forth in articles1755 and 1756.
ART. 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
1)
Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
2)
Act of the public enemy in war, whether
international or civil;
3)
Act of 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.

ART. 1735. In all cases other that 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
by article 1733.
ART. 1736. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the
sane 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 articles 1738.
ART. 1738. The extraordinary
liability of the
common carrier continues to be operative even
during the time the goods are stored in a warehouse
of the carrier at the place of destination, until the
consignee has been advised of the arrival of the

goods
and has had reasonable
opportunity
thereafter to remove them or otherwise dispose of
them.
ART. 1742. Even if the loss, destruction, or
deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the
packing or of the containers, the common carrier
must exercise due diligence to forestall or lessen
the loss.
Rules for the liability of a common carrier for lost or damaged cargo as
follows: (Central Shipping Company, Inc. v. Insurance Company of North
America)
(1) Common carriers are bound to observe
extraordinary diligence over the goods they transport,
according to all the circumstances of each case;
(2) In the event of loss, destruction, or deterioration
of the insured goods, common carriers are
responsible, unless they can prove that such loss,
destruction, or deterioration was brought about by,
among others, flood, storm, earthquake, lightning, or
other natural disaster or calamity; and
(3) In all other cases not specified under Article 1734
of the Civil Code, common carriers are presumed to
have been at fault or to have acted negligently,
unless they observed extraordinary diligence.
Arguments of RCL and EDSA Shipping are not meritorious.
A common carrier is presumed to have been negligent if it fails to
prove that it exercised extraordinary vigilance over the goods it
transported. When the goods shipped are either lost or arrived in damaged
condition, a presumption arises against the carrier of its failure to observe
that diligence, and there need not be an express finding of negligence to
hold it liable.
To overcome the presumption of negligence, the common
carrier
must establish by adequate
proof that it exercised
extraordinary diligence over the goods. It must do more than

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

Aboitiz v New India G..R. No. 156978 May 2, 2006

J. Quisimbing
Facts:
Textile cargo owned by General Textile was shipped to Manila using M/V P.
Aboitiz. Before departing, the vessel was advised that it was safe to travel to
its destination, but while at sea, the vessel received a report of a typhoon
moving within its path. It was at the edge of a typhoon when its hull leaker.
The vessel sank, but the captain and his crew were saved.
The captain filed his Marine Protest, stating that the weather was
moderate breeze, small waves, becoming longer, fairly frequent white horse
General Textile lodged a claim with respondent for the amount of its loss.
Respondent paid General Textile and was subrogated to the rights of the
latter.
After investigation, the cause was found to be the vessels unsearworthiness.
General filed a complaint with Aboitiz and the trial court consequently ruled
in favor of the former.
Petitioner elevated the case to the Court of Appeals, which in turn, affirmed
the trial courts decision. It moved for reconsideration but the same was
denied. Hence, this petition for review
Issue:
WON the limited liability doctrine applies in this case
Held: No
Ratio:
Where the shipowner fails to overcome the presumption of negligence, the
doctrine of limited liability cannot be applied.
From the nature of their business and for reasons of public policy,
common carriers are bound to observe extraordinary diligence over the
goods they transport according to all the circumstances of each case. In the
event of loss, destruction or deterioration of the insured goods,
common carriers are responsible, unless they can prove that the loss,
destruction or deterioration was brought about by the causes specified in
Article 1734 of the Civil Code. In all other cases, common carriersare
presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence. Moreover, where the
vessel is found unseaworthy, the shipowner is also presumed to
be negligent since it is tasked with the maintenance of its vessel. Though
this duty can be delegated, still, the shipowner must exercise
closesupervision over its men.
In the present case, petitioner has the burden of showing that it exercised
extraordinary diligence in the transport of the goods it had on board in order

to invoke the limited liability doctrine. Differently put, to limit its liability to
the amount of the insurance proceeds, petitioner has the burden of proving
that the unseaworthiness of its vessel was not due to its fault or negligence.
Considering the evidence presented and the circumstances obtaining in this
case, we find that petitioner failed to discharge this burden. Both the trial
and the appellate courts, in this case, found that the sinking was not due to
the typhoon but to its unseaworthiness. Evidence on record showed that the
weather was moderate when the vessel sank. These factual findings of the
Court of Appeals, affirming those of the trial court are not to be disturbed on
appeal, but must be accorded great weight. These findings are conclusive
not only on the parties but on this Court as well.

HERMINIO MARIANO JR. V. IDELFONSO CALLEJAS GR 166640

Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr. Frelinda Mariano
who was a passenger of a Celyrosa Express bus bound for Tagaytay when
she met her death.
allejas is the registered owner of Celyrosa Express, while respondent Edgar
de Borja was the driver of the bus on which the deceased was a passenger
carrying Dr. Mariano as its passenger, collided with an Isuzu truck with trailer
bearing plate numbers PJH 906 and TRH 531. The passenger bus was bound
for Tagaytay while the trailer truck came from the opposite direction, bound
for Manila.
Due to the impact, the passenger bus fell on its right side on the right
shoulder of the highway and caused the death of Dr. Mariano and physical
injuries to four other passengers. Dr. Mariano was 36 years old at the time of
her death. She left behind three minor children, aged four, three and two
years.
Petitioner filed a complaint for breach of contract of carriage and damages
against respondents for their failure to transport his wife and mother of his
three minor children safely to her destination. Respondents
denied
claimed that the proximate cause of the accident was the recklessness of the
driver of the trailer truck which bumped their bus
Thus, respondent Callejas filed a third-party complaint against Liong Chio
Chang, doing business under the name and style of La Perla Sugar Supply,
the owner of the trailer truck, for indemnity in the event that he would be
held liable for damages to petitioner.
Callejas filed a complaint
against La Perla Sugar Supply and Arcadio Arcilla, the truck driver, for
damages he incurred due to the vehicular accide
court dismissed the complaint against La Perla Sugar Supply for lack of
evidence. It, however, found Arcilla liable to pay Callejas the cost of the

repairs of his passenger bus, his lost earnings, exemplary damages and
attorneys fees
criminal case,
truck driver Arcilla
convicted truck driver Arcadio Arcilla of the crime of reckless imprudence
resulting to homicide, multiple slight physical injuries and damage to
property
trial court
found respondents Ildefonso Callejas
, jointly and severally liable to pay petitioner damage
Court of Appeals reversed the decision of the trial court.
the presumption of fault or negligence against the carrier is only a disputable
presumption. It gives in where contrary facts are established proving either
that the carrier had exercised the degree of diligence required by law or the
injury suffered by the passenger was due to a fortuitous event. Where, as in
the instant case, the injury sustained by the petitioner was in no way due to
any defect in the means of transport or in the method of transporting or to
the negligent or wilful acts of private respondent's employees, and therefore
involving no issue of negligence
provisions of the Civil Code p
ART. 1733
ART. 1755
ART. 1756.
Celyrosa Express, a common carrier, through its driver, respondent De Borja,
and its registered owner, respondent Callejas, has the express obligation to
carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all
the circumstances,[11] and to observe extraordinary diligence in the
discharge of its duty. The death of the wife of the petitioner in the course of
transporting her to her destination gave rise to the presumption of
negligence of the carrier. To overcome the presumption, respondents have to
show that they observed extraordinary diligence in the discharge of their
duty, or that the accident was caused by a fortuitous event.
Article 1755 of the Civil Code qualifies the duty of extraordinary care,
vigilance and precaution in the carriage of passengers by common carriers to
only such as human care and foresight can provide. What constitutes
compliance with said duty is adjudged with due regard to all the
circumstances.
Article 1756 of the Civil Code, in creating a presumption of fault or
negligence on the part of the common carrier when its passenger is injured,
merely relieves the latter, for the time being, from introducing evidence to
fasten the negligence on the former, because the presumption stands in the
place of evidence. Being a mere presumption, however, the same is
rebuttable by proof that the common carrier had exercised extraordinary
diligence as required by law in the performance of its contractual obligation,

or that the injury suffered by the passenger was solely due to a fortuitous
event.
In fine, we can only infer from the law the intention of the Code Commission
and Congress to curb the recklessness of drivers and operators of common
carriers in the conduct of their business.
the case at bar, petitioner cannot succeed in his contention that respondents
failed to overcome the presumption of negligence against them. The totality
of evidence shows that the death of petitioners spouse was caused by the
reckless negligence of the driver of the Isuzu trailer truck which lost its
brakes and bumped the Celyrosa Express bus, owned and operated by
respondents.
In fine, the evidence shows that before the collision, the passenger bus was
cruising on its rightful lane along the Aguinaldo Highway when the trailer
truck coming from the opposite direction, on full speed, suddenly swerved
and encroached on its lane, and bumped the passenger bus on its left middle
portion. Respondent driver De Borja had every right to expect that the trailer
truck coming from the opposite direction would stay on its proper lane. He
was not expected to know that the trailer truck had lost its brakes. The
swerving of the trailer truck was abrupt and it was running on a fast speed as
it was found 500 meters away from the point of collision. Secondly, any
doubt as to the culpability of the driver of the trailer truck ought to vanish
when he pleaded guilty to the charge of reckless imprudence resulting to
multiple slight physical injuries and damage to property in Criminal Case No.
2223-92, involving the same incident.
petition is DENIED