Transportation Law Digest Compilation

Chapter 2

Regional Container Lines of Singapore VS

Netherlands Insurance Co.
Facts:
On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped from
Singapore to Manila for Temic Telefunken Microelectronics Philippines (Temic). U-Freight Singapore PTE
Ltd. (U-Freight Singapore), a forwarding agent based in Singapore, contracted the services of Pacific Eagle
Lines PTE. Ltd. (Pacific Eagle) to transport the subject cargo. The cargo was packed, stored, and sealed by
Pacific Eagle in its Refrigerated Container No. 6105660 with Seal No. 13223. As the cargo was highly
perishable, the inside of the container had to be kept at a temperature of 0 Celsius. Pacific Eagle then
loaded the refrigerated container on board the M/V Piya Bhum, a vessel owned by RCL, with which Pacific
Eagle had a slot charter agreement. RCL duly issued its own Bill of Lading in favor of Pacific Eagle.
To insure the cargo against loss and damage, Netherlands Insurance issued a Marine Open
Policy in favor of Temic, as shown by MPO-21-05081-94 and Marine Risk Note MRN-21 14022, to cover all
losses/damages to the shipment.
On October 25, 1995, the M/V Piya Bhum docked in Manila. After unloading the refrigerated
container, it was plugged to the power terminal of the pier to keep its temperature constant. Fidel Rocha
(Rocha), Vice-President for Operations of Marines Adjustment Corporation, accompanied by two surveyors,
conducted a protective survey of the cargo. They found that based on the temperature chart, the
temperature reading was constant from October 18, 1995 to October 25, 1995 at 0 Celsius. However, at
midnight of October 25, 1995 when the cargo had already been unloaded from the ship the temperature
fluctuated with a reading of 33 Celsius. Rocha believed the fluctuation was caused by the burnt condenser
fan motor of the refrigerated container.
On November 9, 1995, Temic received the shipment. It found the cargo completely damaged.
Temic filed a claim for cargo loss against Netherlands Insurance, with supporting claims documents. The
Netherlands Insurance paid Temic the sum of P1,036,497.00 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 or on June 4, 1996, Netherlands Insurance filed a complaint
for subrogation of insurance settlement with the Regional Trial Court, Branch 5, Manila, against the
unknown owner of M/V Piya Bhum and TMS Ship Agencies (TMS), the latter thought to be the local agent
of M/V Piya Bhums unknown owner.
Issue: whether the CA correctly held RCL and EDSA Shipping liable as common carriers under the theory of
presumption of negligence.
Held:
Petition is denied
We do not find the arguments of RCL and EDSA Shipping 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.

2.2 Defense Exclusive

Natural Disaster or calamity
Eastern Shipping Lines, Inc. vs. Court of Appeals
196 SCRA 570
Facts:
SS Eastern Comet, owned by defendant Eastern Shipping Lines was engaged in the business of
shipment from Japan to the Philippines. Through the SS Eastern Comet, two fiber drums of riboflavin were
shipped from Yokohama to Manila. The shipment was discharged upon arrival into the custody of defendant
Metro Port Service, Inc. However, the latter refused to one drum after claiming that such unwanted drum
was in bad order. Defendant Allied Brokerage Corporation received the shipment from Metro Port and
detected that one drum was opened and without seal. The goods were then delivered to the consignees
warehouse. The latter noted that one drum contained spillages, while the rest of the contents were
adulterated. As a consequence of the damage Mercantile Insurance Company paid the consignee under its
marine policy insurance and instituted civil action against defendants as subrogee. The Court of Appeals
affirmed judgment holding the common carrier, arrastre operator, and customs brokers jointly and severally
liable.
Issue:
Whether Eastern Shipping Lines, Inc. can be held severally and jointly liable with Metro Port and
Allied brokerage.
Held:
The Supreme Court held that Esatern Shipping Lines, Inc can be held liable. As what was already
decided in Firemans Fund Isurance, Co. vs Metro Port Service, Inc, the legal relationship between the
consignee and the arrastre operator is analogous to that of a depositor and a warehouseman. Further
explained, the relationship between the consignee and the common carrier is comparable to that of the
consignee and the arrastre operator. Since it is the duty of the Arrastre to take good care of the goods that
are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves
upon the carrier. The duty of the consignee to guard the goods and shelter it from destruction or impairment
is also shouldered by the common carrier. Both are therefore charged with the obligation to deliver the
goods in good condition to the consignee.
Eastern Shipping Lines vs. IAC
150 scra 463
Facts:
In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at
Kobe, Japan for Manila:
1.) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to
Philippine Blooming Mills Co., Inc.,
2.) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.
Both sets of goods were insured for their value with Development
Insurance and Surety Corporation.
1.
2.

In GR 71478, the same vessel took on board :

128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles
Apparel Corporation
two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for US$46,583.00.
The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for Kobe, Japan, to
Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective Insurers
paid the corresponding marine insurance values to the consignees concerned and were thus subrogated
unto the rights of the latter as the insured.
Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary
fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of
Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest,
plus P35,000.00 as attorneys fees and costs. Eastern Shipping took an appeal to the then Court of Appeals
which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a petition for review
on certiorari.

Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the
recovery of the insured value of the cargo lost imputing unseaworthiness of the ship and non-observance of
extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds that
the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the
Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established, the burden of proving
negligence of the vessel is shifted to the cargo shipper. Trial Court rendered judgment in favor of Nisshin
and Dowa. CA affirmed decision. Hence this petition on certiorari.

Issue:

Whether or not the carrier exercised extraordinary diligence.

Held:
Eastern Shipping shall pay the Development Insurance the amount of P256,039 for the 28
packages of calorized lance pipes, and P71,540 for the 7 cases of spare parts, with interest at the legal rate
from the date of the filing of the Complaint on 13 June 1978, plus P5,000 as attorneys fees, and the costs.
The Court, on the other hand, in GR 71478, affirmed the judgment.
The evidence of the defendant did not show that extraordinary diligence was observed by
the vessel to prevent the occurrence of fire at hatches nos. 2 and 3. Defendants evidence did not likewise
show the amount of diligence made by the crew, on orders, in the care of the cargoes. What appears is that
after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the
voyage. The complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern
Shipping. The Carriage of Goods by Sea Act (COGSA), a special law, is merely suppletory to the provisions
of the Civil Code The fire may not be considered a natural disaster or calamity, as it arises almost invariably
from some act of man or by human means. It does not fall within the category of an act of God unless
caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or
privity of the carrier.
2.2.2: Acts of Public Enemy
Prize Cases
Brief Fact Summary. Union ships pursuant to President Lincolns April 1861 Order declared a blockade of
southern ports seized ships carrying goods to the Confederate States.
Synopsis of Rule of Law. It is the Congressional prerogative to declare war under Article , Section: 8,
Clause 11. However, the President has the ability to take action when attacked.
Facts. In April 1861 President Lincoln declared a blockade of southern ports. Pursuant to this blockade in
May and July 1861, Union ships seized Confederate merchant vessels and cargoes of foreign neutrals and
residents of the southern states. The ships were condemned by federal court order. The owners of the ships
and cargo appealed.
Issue. Did President Lincoln have the authority to institute a blockade of southern ports?
Held. Justice Grier. Yes.By the Acts of Congress of 1795 and 1807, the President is authorized to call out
the militia and use the military and naval forces of the United States in case of invasion by foreign nations
and to suppress insurrection against the government of a state or of the United States.Even if it was
necessary to get Congressional sanction for the existence of war Congress did approve of the Presidents
actions by the Acts they passed in 1861, which allowed the government to prosecute the war with vigor and
efficiency. In 1861, Congress approved, legalized and made valid all acts, proclamations and orders of the
President as if they had been done under the previous express authority and direction of the Congress.
Therefore even if he needed Congress to ratify his actions, they did so and therefore cured any defect.
Dissent. Justices Nelson, Catron, Clifford and Chief Justice Taney dissenting.The Acts of 1795 and 1807 did
not and could not confer on the President the power of declaring war against a state. When Congress
declares war, ordinary citizens convert into public enemies are treated accordingly. This great power over
the business and property of the citizen is preserved to Congress by the United States Constitution. It
cannot be delegated or surrendered to the Executive. Until Congress declares war, then no citizen of the
State can be punished in his person or property unless he has committed some offense against a law of
Congress passed before the act was committed which made his act a crime.The Congressional ratification
of the seizures was an ex post facto law and hence invalid.
Discussion. The majority opinion held that the President could resist an attack by a foreign nation. The fact
that the attack in this case came from an internal part of the Union rather than from a foreign power does not
eliminate the Presidents power to take action.

2.2.3: Shippers Fault

DELSAN TRANSPORT LINES, INC, VS. AMERICAN HOME ASSURANCE
CORPORATION,

Facts:

Delsan is a domestic corporation which owns and operates the vessel MT Larusan. On the other
hand, respondent American Home Assurance Corporation (AHAC for brevity) is a foreign insurance
company duly licensed to do business in the Philippines through its agent, the American-International
Underwriters, Inc. (Phils.). It is engaged, among others, in insuring cargoes for transportation within the
Philippines.
On August 5, 1984, Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l
Automotive Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and delivery to the
bulk depot in Bacolod City of Caltex Phils., Inc. (Caltex), pursuant to a Contract of Afreightment. The
shipment was insured by respondent AHAC against all risks under Inland Floater Policy No. AH-IF641011549P and Marine Risk Note No. 34-5093-6.
On August 7, 1984, the shipment arrived in Bacolod City. Immediately thereafter, unloading operations
commenced. The discharging of the diesel oil started at about 1:30 PM of the same day. However, at about
10:30 PM, the discharging had to be stopped on account of the discovery that the port bow mooring of the
vessel was intentionally cut or stolen by unknown persons. Because there was nothing holding it, the vessel
drifted westward, dragged and stretched the flexible rubber hose attached to the riser, broke the elbow into
pieces, severed completely the rubber hose connected to the tanker from the main delivery line at sea bed
level and ultimately caused the diesel oil to spill into the sea. To avoid further spillage, the vessels crew
tried water flushing to clear the line of the diesel oil but to no avail. In the meantime, the shore tender, who
was waiting for the completion of the water flushing, was surprised when the tanker signaled a red light
which meant stop pumping. Unaware of what happened, the shore tender, thinking that the vessel would, at
any time, resume pumping, did not shut the storage tank gate valve. As all the gate valves remained open,
the diesel oil that was earlier discharged from the vessel into the shore tank backflowed. Due to nonavailability of a pump boat, the vessel could not send somebody ashore to inform the people at the depot
about what happened. After almost an hour, a gauger and an assistant surveyor from the Caltexs Bulk
Depot Office boarded the vessel. It was only then that they found out what had happened. Thereafter, the
duo immediately went ashore to see to it that the shore tank gate valve was closed. The loss of diesel oil
due to spillage was placed at 113.788 k/l while some 435,081 k/l thereof backflowed from the shore tank.
As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but
the latter refused to pay. As insurer, AHAC paid Caltex the sum of P479,262.57 for spillage, pursuant to
Marine Risk Note No. 34-5093-6, and P1,939,575.37 for backflow of the diesel oil pursuant to Inland Floater
Policy No. AH-1F64-1011549P.
Issue: Whether or not Delsan liable for the loss of the cargo for its negligence in its duty as a common
carrier?
Held:
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported
by them. They are presumed to have been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated. To overcome the presumption of negligence in case of loss, destruction or
deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There
are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instances when the
presumption of negligence does not attach:
Both the trial court and the CA uniformly ruled that Delsan failed to prove its claim that there
was a contributory negligence on the part of the owner of the goods Caltex. We see no reason to depart
therefrom. As aptly pointed out by the CA, it had been established that the proximate cause of the spillage
and backflow of the diesel oil was due to the severance of the port bow mooring line of the vessel and the
failure of the shore tender to close the storage tank gate valve even as a check on the drain cock showed
that there was still a product on the pipeline. To the two courts below, the actuation of the gauger and the
escort surveyor, both personnel from the Caltex Bulk Depot, negates the allegation that Caltex was remiss
in its duties. As we see it, the crew of the vessel should have promptly informed the shore tender that the
port mooring line was cut off. However, Delsan did not do so on the lame excuse that there was no available
banca. As it is, Delsans personnel signaled a red light which was not a sufficient warning because
such signal only meant that the pumping of diesel oil had been finished. Neither did the blowing of whistle
suffice considering the distance of more than 2 kilometers between the vessel and the Caltex Bulk Depot,
aside from the fact that it was not the agreed signal. Had the gauger and the escort surveyor from Caltex
Bulk Depot not gone aboard the vessel to make inquiries, the shore tender would have not known what
really happened. The crew of the vessel should have exerted utmost effort to immediately inform the shore
tender that the port bow mooring line was severed.
To be sure, Delsan, as the owner of the vessel, was obliged to prove that the loss was caused by one
of the excepted causes if it were to seek exemption from responsibility. Unfortunately, it miserably failed to
discharge this burden by the required quantum of proof.
To recapitulate, common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case.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.

All told, Delsan, being a common carrier, should have exercised extraordinary diligence in the
performance of its duties. Consequently, it is obliged to prove that the damage to its cargo was
caused by one of the excepted causes if it were to seek exemption from responsibility. Having failed to
do so, Delsan must bear the consequences.

2.2.4: Inherent Vice

BELGIAN OVERSEAS CHARTERING AND SHIPPING VS. PHILIPPINE FIRST INSURANCE CO., INC
Facts:
On June 13, 1990, CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg, Germany 242
coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel
Trading Corporation. On July 28, 1990, MN 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 B.O. Tally
sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the
consignee Philippine Steel Trading Corporation declared the same as total loss.
Despite receipt of a formal demand, defendants-appellees refused to submit to the consignees claim.
Consequently, plaintiff-appellant paid the consignee five hundred six thousand eighty six & 50/100 pesos
(P506,086.50), and was subrogated to the latters rights and causes of action against defendants-appellees.
Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount paid by them, to the
consignee as insured.
Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/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 to the act or omission of the
shipper of the goods or their representatives. In addition thereto, defendants-appellees argued that their
liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and other
pertinent laws. Finally, defendants-appellees averred that, in any event, they exercised due diligence and
foresight required by law to prevent any damage/loss to said shipment.
Issues:

1.
2.

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

Whether the notice of loss was timely filed?

Held:
First Issue:
Proof of Negligence

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 reason[a]ble 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.
The , petitioners failed to prove that they observed the extraordinary diligence and precaution which
the law requires a common carrier to know and to follow, to avoid damage to or destruction of the goods
entrusted to it for safe carriage and delivery.
True, the words metal envelopes rust stained and slightly dented were noted on the Bill of Lading;
however, there is no showing that petitioners exercised due diligence to forestall or lessen the loss.[36]
Having been in the service for several years, the master of the vessel should have known at the outset that
metal envelopes in the said state would eventually deteriorate when not properly stored while in transit.
Equipped with the proper knowledge of the nature of steel sheets in coils and of the proper way of
transporting them, the master of the vessel and his crew should have undertaken precautionary measures to
avoid possible deterioration of the cargo. But none of these measures was taken. Having failed to discharge
the burden of proving that they have exercised the extraordinary diligence required by law, petitioners
cannot escape liability for the damage to the four coils.
From the evidence on record, it cannot be reasonably concluded that the damage to the four coils
was due to the condition noted on the Bill of Lading. The aforecited exception refers to cases when goods
are lost or damaged while in transit as a result of the natural decay of perishable goods or the fermentation
or evaporation of substances liable therefor, the necessary and natural wear of goods in transport, defects in
packages in which they are shipped, or the natural propensities of animals. None of these is present in the
instant case.
Further, even if the fact of improper packing was known to the carrier or its crew or was apparent
upon ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once it accepts
the goods notwithstanding such condition.Thus, petitioners have not successfully proven the application of
any of the aforecited exceptions in the present case.
Second Issue:
Notice of Loss

Petitioners claim that pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act[44]
(COGSA), respondent should have filed its Notice of Loss within three days from delivery. They assert that
the cargo was discharged on July 31, 1990, but that respondent filed its Notice of Claim only on September
18, 1990.[45]
We are not persuaded. First, the above-cited provision of COGSA provides that the notice of claim
need not be given if the state of the goods, at the time of their receipt, has been the subject of a joint
inspection or survey. As stated earlier, prior to unloading the cargo, an Inspection Report as to the condition
of the goods was prepared and signed by representatives of both parties.
Second, as stated in the same provision, a failure to file a notice of claim within three days will not bar
recovery if it is nonetheless filed within one year. This one-year prescriptive period also applies to the
shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading.
Inasmuch as the neither the Civil Code nor the Code of Commerce states a specific prescriptive period on
the matter, the Carriage of Goods by Sea Act (COGSA)--which provides for a one-year period of limitation

on claims for loss of, or damage to, cargoes sustained during transit--may be applied suppletorily to the case
at bar.
In the present case, the cargo was discharged on July 31, 1990, while the Complaint was filed by
respondent on July 25, 1991, within the one-year prescriptive period.

Asian Terminals Inc VS Simon Enterprises, Inc

Facts:
On October 25, 1995, Contiquincybunge Export Company loaded 6,843.700 metric tons of U.S. Soybean
Meal in Bulk on board the vessel MN "Sea Dream" at the Port of Darrow, Louisiana, U.S.A., for delivery to
the Port of Manila to respondent Simon Enterprises, Inc., as consignee. When the vessel arrived at the
South Harbor in Manila, the shipment was discharged to the receiving barges of petitioner Asian Terminals,
Inc. (ATI),
On November 25, 1995, Contiquincybunge Export Company made another shipment to respondent and
allegedly loaded on board the vessel M/V Tern at the Port of Darrow, Louisiana, U.S.A. 3,300.000 metric
tons of U.S. Soybean Meal in Bulk for delivery to respondent at the Port of Manila. The carrier issued its
clean Berth Term Grain Bill of Lading.
On January 25, 1996, the carrier docked at the inner Anchorage, South Harbor, Manila. The subject
shipment was discharged to the receiving barges of petitioner ATI and received by respondent which,
however, reported receiving only 3,100.137 metric tons instead of the manifested 3,300.000 metric tons of
shipment. Respondent filed against petitioner ATI and the carrier a claim for the shortage of 199.863 metric
tons, estimated to be worth US$79,848.86 or P2,100,025.00, but its claim was denied.
Issue: WON the CA erred in affirming the decision of the trial court holding petitioner ATI solidarily liable with
its co-defendants for the shortage incurred in the shipment of the goods to respondent?
Held: The CA misapprehended the following facts.
First, petitioner ATI is correct in arguing that the respondent failed to prove that the subject shipment
suffered actual shortage, as there was no competent evidence to prove that it actually weighed 3,300 metric
tons at the port of origin.
Though it is true that common carriers are presumed to have been at fault or to have acted negligently if the
goods transported by them are lost, destroyed, or deteriorated, and that the common carrier must prove that
it exercised extraordinary diligence in order to overcome the presumption, the plaintiff must still, before the
burden is shifted to the defendant, prove that the subject shipment suffered actual shortage. This can only
be done if the weight of the shipment at the port of origin and its subsequent weight at the port of arrival
have been proven by a preponderance of evidence, and it can be seen that the former weight is
considerably greater than the latter weight, taking into consideration the exceptions provided in Article 1734
of the Civil Code.
In this case, respondent failed to prove that the subject shipment suffered shortage, for it was not able to
establish that the subject shipment was weighed at the port of origin at Darrow, Louisiana, U.S.A. and that
the actual weight of the said shipment was 3,300 metric tons.
The Berth Term Grain Bill of Lading states that the subject shipment was carried with the qualification
Shippers weight, quantity and quality unknown, meaning that it was transported with the carrier having
been oblivious of the weight, quantity, and quality of the cargo.
The recital of the bill of lading for goods thus transported [i.e., transported in sealed containers or
containerized] ordinarily would declare Said to Contain, Shippers Load and Count, Full Container
Load, and the amount or quantity of goods in the container in a particular package is only prima facie
evidence of the amount or quantity
A shipment under this arrangement is not inspected or inventoried by the carrier whose duty is only
to transport and deliver the containers in the same condition as when the carrier received and
accepted the containers for transport
Ms. Suarezs testimony regarding the contents of the documents is thus hearsay, based as it is on
the knowledge of another person not presented on the witness stand.
Nor has the genuineness and due execution of these documents been established. In the absence of
clear, convincing, and competent evidence to prove that the shipment indeed weighed 4,415.35
metric tons at the port of origin when it was loaded on the M/V Gao Yang, it cannot be determined
whether there was a shortage of the shipment upon its arrival in Batangas.

The bill of lading carried an added clause the shipments weight, measure, quantity, quality,
condition, contents and valueunknown. Evidently, the weight of the cargo could not be gauged from
the bill of lading.
Second, as correctly asserted by petitioner ATI, the shortage, if any, may have been due to the inherent
nature of the subject shipment or its packaging since the subject cargo was shipped in bulk and had a
moisture content of 12.5%.
In the absence of clear, convincing and competent evidence to prove that the cargo indeed weighed,
albeit the Bill of Lading qualified it by the phrase said to weigh, 6,599.23 MT at the port of origin when it
was loaded onto the MV Hoegh, the fact of loss or shortage in the cargo upon its arrival in Manila cannot
be definitively established. The legal basis for attributing liability to either of the respondents is thus
sorely wanting.
The conclusion that the subject shipment lost weight in transit is bolstered by the testimony of Mr. Fernando
Perez, a Cargo Surveyor of L.J. Del Pan. The services of Mr. Perez were requested by respondent. Mr.
Perez testified that it was possible for the subject shipment to have lost weight during the 36-day voyage, as
it was wintertime when M/V Tern left the United States and the climate was warmer when it reached the
Philippines; hence the moisture level of the Soybean Meal could have changed.Moreover, Mr. Perez himself
confirmed, by answering a question propounded by the RTC, that loss of weight of the subject cargo cannot
be avoided because of the shift in temperature from the colder United States weather to the warmer
Philippine climate. More importantly, the 199.863 metric-ton shortage that respondent alleges is a minimal
6.05% of the weight of the entire Soy Bean Meal shipment. Taking into consideration the previously
mentioned option of the shipper to ship 10% more or less than the contracted shipment, and the fact that the
alleged shortage is only 6.05% of the total quantity of 3,300 metric tons, the alleged percentage loss clearly
does not exceed the allowable 10% allowance for loss, as correctly argued by petitioner. The alleged loss, if
any, not having exceeded the allowable percentage of shortage, the respondent then has no cause of action
to claim for shortages.
Third, we agree with the petitioner ATI that respondent has not proven any negligence on the part of the
former.
As petitioner ATI pointed out, a reading of the Survey Report of Del Pan Surveyors (Exhibits D to D-4 of
respondent) would not show any untoward incident or negligence on the part of petitioner ATI during the
discharging operations.
Also, a reading of Exhibits D, D-1, and D-2 would show that the methods used in determining whether
there was a shortage are not accurate.
These discrepancies only lend credence to petitioner ATI's assertion that the weighing methods respondent
used as bases are unreliable and should not be completely relied upon.
Considering that respondent was not able to establish conclusively that the subject shipment weighed 3,300
metric tons at the port of loading, and that it cannot therefore be concluded that there was a shortage for
which petitioner should be responsible; bearing in mind that the subject shipment most likely lost weight in
transit due to the inherent nature of Soya Bean Meal; assuming that the shipment lost weight in transit due
to desorption, the shortage of 199.863 metric tons that respondent alleges is a minimal 6.05% of the weight
of the entire shipment, which is within the allowable 10% allowance for loss; and noting that the respondent
was not able to show negligence on the part ofthe petitioner and that the weighing methods which
respondent relied upon to establish the shortage it alleges is inaccurate, respondent cannot fairly claim
damages against petitioner for the subject shipment's alleged shortage.

2.2.5: Defense in Packing or in the container

(Regional Container Lines Vs. Singapore )
PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN OWNER OF THE VESSEL M/V
NATIONAL HONOR, NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES

Facts:
On November 5, 1995, J. Trading Co. Ltd. of Seoul, Korea, loaded a shipment of four units of parts
and accessories in the port of Pusan, Korea, on board the vessel M/V National Honor, represented in the
Philippines by its agent, National Shipping Corporation of the Philippines (NSCP). The shipment was for
delivery to Manila, Philippines. Freight forwarder, Samhwa Inter-Trans Co., Ltd., issued Bill of Lading No.
SH9410306[2] in the name of the shipper consigned to the order of Metropolitan Bank and Trust Company
with arrival notice in Manila to ultimate consignee Blue Mono International Company, Incorporated (BMICI),
Binondo, Manila.
NSCP, for its part, issued Bill of Lading No. NSGPBSML512565[3] in the name of the freight
forwarder, as shipper, consigned to the order of Stamm International Inc., Makati, Philippines

The shipment was contained in two wooden crates, namely, Crate No. 1 and Crate No. 2, complete
and in good order condition, covered by Commercial Invoice No. YJ-73564 DTD and a Packing List.There
were no markings on the outer portion of the crates except the name of the consignee.[Crate No. 1
measured 24 cubic meters and weighed 3,620 kgs. It contained the following articles: one (1) unit Lathe
Machine complete with parts and accessories; one (1) unit Surface Grinder complete with parts and
accessories; and one (1) unit Milling Machine complete with parts and accessories. On the flooring of the
wooden crates were three wooden battens placed side by side to support the weight of the cargo. Crate No.
2, on the other hand, measured 10 cubic meters and weighed 2,060 kgs. The Lathe Machine was stuffed in
the crate. The shipment had a total invoice value of US$90,000.00 C&F Manila. It was insured for
P2,547,270.00 with the Philippine Charter Insurance Corporation (PCIC) thru its general agent, Family
Insurance and Investment Corporation, under Marine Risk Note No. 68043 dated October 24, 1994.
The M/V National Honor arrived at the Manila International Container Terminal (MICT) on November
14, 1995. The International Container Terminal Services, Incorporated (ICTSI) was furnished with a copy of
the crate cargo list and bill of lading, and it knew the contents of the crate. The following day, the vessel
started discharging its cargoes using its winch crane. The crane was operated by Olegario Balsa, a
winchman from the ICTSI, the exclusive arrastre operator of MICT.
Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor of the
ICTSI, conducted an inspection of the cargo. They inspected the hatches, checked the cargo and found it in
apparent good condition. Claudio Cansino, the stevedore of the ICTSI, placed two sling cables on each end
of Crate No. 1. No sling cable was fastened on the mid-portion of the crate. In Dauzs experience, this was
a normal procedure. As the crate was being hoisted from the vessels hatch, the mid-portion of the wooden
flooring suddenly snapped in the air, about five feet high from the vessels twin deck, sending all its contents
crashing down hard, resulting in extensive damage to the shipment.
BMICIs customs broker, JRM Incorporated, took delivery of the cargo in such damaged condition.
Upon receipt of the damaged shipment, BMICI found that the same could no longer be used for the intended
purpose. The Mariners Adjustment Corporation hired by PCIC conducted a survey and declared that the
packing of the shipment was considered insufficient. It ruled out the possibility of taxes due to insufficiency
of packing. It opined that three to four pieces of cable or wire rope slings, held in all equal setting, never bypassing the center of the crate, should have been used, considering that the crate contained heavy
machinery.
Issue:
I. WON THE COMMITTED SERIOUS ERROR OF LAW IN NOT HOLDING THAT RESPONDENT
COMMON CARRIER IS LIABLE FOR THE DAMAGE SUSTAINED BY THE SHIPMENT IN THE
POSSESSION OF THE ARRASTRE OPERATOR.
II. WON THE CA GROSSLY MISCOMPREHENDED THE FACTS IN FINDING THAT THE DAMAGE
SUSTAINED BY THE [SHIPMENT] WAS DUE TO ITS DEFECTIVE PACKING AND NOT TO THE FAULT
AND NEGLIGENCE OF THE RESPONDENTS?
Held:
The petition has no merit.
We agree with the contention of the petitioner that 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, according to all the circumstances of each
case. The Court has defined extraordinary diligence in the vigilance over the goods as follows:
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.
Defect is the want or absence of something necessary for completeness or perfection; a lack or
absence of something essential to completeness; a deficiency in something essential to the proper use for
the purpose for which a thing is to be used.On the other hand, inferior means of poor quality, mediocre, or
second rate. A thing may be of inferior quality but not necessarily defective. In other words, defectiveness
is not synonymous with inferiority.
We agree with the trial and appellate courts.
The petitioner failed to adduce any evidence to counter that of respondent ICTSI. The petitioner
failed to rebut the testimony of Dauz, that the crates were sealed and that the contents thereof could not be
seen from the outside.While it is true that the crate contained machineries and spare parts, it cannot thereby
be concluded that the respondents knew or should have known that the middle wooden batten had a hole,
or that it was not strong enough to bear the weight of the shipment.
There is no showing in the Bill of Lading that the shipment was in good order or condition when the
carrier received the cargo, or that the three wooden battens under the flooring of the cargo were not
defective or insufficient or inadequate. On the other hand, under Bill of Lading No. NSGPBSML512565

issued by the respondent NSCP and accepted by the petitioner, the latter represented and warranted that
the goods were properly packed, and disclosed in writing the condition, nature, quality or characteristic that
may cause damage, injury or detriment to the goods. Absent any signs on the shipment requiring the
placement of a sling cable in the mid-portion of the crate, the respondent ICTSI was not obliged to do so.
The statement in the Bill of Lading, that the shipment was in apparent good condition, is sufficient to
sustain a finding of absence of defects in the merchandise. Case law has it that such statement will create a
prima facie presumption only as to the external condition and not to that not open to inspection.

2.2.6: Acts of Public Authority

Ganzon v. Court of Appeals
161 SCRA 646
Facts:
Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron. The contract
was for the petitioner to transport the scrap iron to Manila from Bataan. Tumambing delivered the scrap iron
to Niza, captain of the lighter LCT Batman, to board it on the same. The crew of the Batman started to load
the iron, and when they were about halfway through, Mayor Advincula arrived and demanded P5,000 from
Tumambing. The latter resisted and a heated argument started. Mayor Advincula drew his gun and fired at
Tumambing. He was brought to the hospital for treatment, lucky for him the wound was not fatal.
A few days after this incident, the loading of the scrap metal was resumed. However, the acting
Mayor this time went to the port where the Batman was docked. He was accompanied by 3 policemen and
he ordered Captain Niza to dump the scrap iron where the lighter was docked. What was left or the iron was
confiscated by the Acting Mayor and brought to NASSCO. A receipt was issued showing that the
municipality had taken custody of the scraps or iron.
Tumambing filed a case in order to recover damages for the loss that he sustained. The lower court
rendered a decision in favor of Ganzon. However, on appeal the Court of Appeals reversed the decision
ordering Ganzon to pay Tumambing P5,895 as actual damages, P5,000 for exemplary damages and
attorneys fees as well. Hence this petition by Ganzon.
Issue:
Whether or not Ganzon is liable for the loss that Tumambing sustained.
Held:
The Court held that Ganzon is liable for the loss of Tumambing. The defense that the scraps of iron
were not unconditionally placed in his custody and control is untenable. Petitioner herein admits that the
scraps of iron were delivered to Captain Niza by Tumambing in order to load the same on the lighter
Batman. The employees of Ganzon received the scraps of iron on his behalf, therefore the scraps of metal
were placed in his custody and control. Upon the receipt of the scraps by the carrier in order transport the
same, the contract of carriage was perfected. Upon perfection of the contract, the exercise of extraordinary
diligence in caring for the goods shall also commence to begin.
Article 1738 of the NCC provides that the exercise of extraordinary diligence shall cease only upon
delivery to the consignee or to the person who has the right to receive the same. In this case, there was no
delivery made to the consignee, therefore the carrier should have exercised extraordinary diligence in taking
care of the scraps of iron. It is irrelevant that the scraps of iron were only partially loaded on the lighter. The
scraps of iron were already under the custody and control of the carrier, therefore he shall be liable for its
loss.

2.2.7: Extraordinary Diligence

(De Guzman vs. CA)
2.2.8: Fortuitous Event
(De Guzman Vs. CA)

2.2.9: Partial Defense: Shippers Contributory Fault or Negligence

TABACALERA INSURANCE CO vs. NORTH FRONT SHIPPING SERVICES, INC

Facts:
On 2 August 1990, 20,234 sacks of corn grains valued at P3,500,640.00 were shipped on board
North Front 777, a vessel owned by North Front Shipping Services, Inc. The cargo was consigned to
Republic Flour Mills Corporation in Manila under Bill of Lading No. 001[1] and insured with the herein
mentioned insurance companies. The vessel was inspected prior to actual loading by representatives of the
shipper and was found fit to carry the merchandise. The cargo was covered with tarpaulins and wooden
boards. The hatches were sealed and could only be opened by representatives of Republic Flour Mills
Corporation.
The vessel left Cagayan de Oro City on 2 August 1990 and arrived Manila on 16 August 1990.
Republic Flour Mills Corporation was advised of its arrival but it did not immediately commence the
unloading operations. There were days when unloading had to be stopped due to variable weather
conditions and sometimes for no apparent reason at all. When the cargo was eventually unloaded there
was a shortage of 26.333 metric tons. The remaining merchandise was already moldy, rancid and
deteriorating. The unloading operations were completed on 5 September 1990 or twenty (20) days after the
arrival of the barge at the wharf of Republic Flour Mills Corporation in Pasig City.
Precision Analytical Services, Inc., was hired to examine the corn grains and determine the cause of
deterioration. A Certificate of Analysis was issued indicating that the corn grains had 18.56% moisture
content and the wetting was due to contact with salt water. The mold growth was only incipient and not
sufficient to make the corn grains toxic and unfit for consumption. In fact the mold growth could still be
arrested by drying.
Republic Flour Mills Corporation rejected the entire cargo and formally demanded from North Front
Shipping Services, Inc., payment for the damages suffered by it. The demands however were unheeded.
The insurance companies were perforce obliged to pay Republic Flour Mills Corporation P2,189,433.40.
By virtue of the payment made by the insurance companies they were subrogated to the rights of
Republic Flour Mills Corporation. Thusly, they lodged a complaint for damages against North Front Shipping
Services, Inc., claiming that the loss was exclusively attributable to the fault and negligence of the carrier.
The Marine Cargo Adjusters hired by the insurance companies conducted a survey and found cracks in the
bodega of the barge and heavy concentration of molds on the tarpaulins and wooden boards. They did not
notice any seals in the hatches. The tarpaulins were not brand new as there were patches on them,
contrary to the claim of North Front Shipping Services, Inc., thus making it possible for water to seep in.
They also discovered that the bulkhead of the barge was rusty.
North Front Shipping Services, Inc., averred in refutation that it could not be made culpable for the
loss and deterioration of the cargo as it was never negligent. Captain Solomon Villanueva, master of the
vessel, reiterated that the barge was inspected prior to the actual loading and was found adequate and
seaworthy. In addition, they were issued a permit to sail by the Coast Guard. The tarpaulins were doubled
and brand new and the hatches were properly sealed. They did not encounter big waves hence it was not
possible for water to seep in. He further averred that the corn grains were farm wet and not properly dried
when loaded.
Issue: WON Republic Flour Mills Corporation liable for contributory negligence?
Held:
In fine, we find that the carrier failed to observe the required extraordinary diligence in the vigilance
over the goods placed in its care. The proofs presented by North Front Shipping Services, Inc., were
insufficient to rebut the prima facie presumption of private respondent's negligence, more so if we consider
the evidence adduced by petitioners.
It is not denied by the insurance companies that the vessel was indeed inspected before actual
loading and that North Front 777 was issued a Permit to Sail. They proved the fact of shipment and its
consequent loss or damage while in the actual possession of the carrier. Notably, the carrier failed to
volunteer any explanation why there was spoilage and how it occurred. On the other hand, it was shown
during the trial that the vessel had rusty bulkheads and the wooden boards and tarpaulins bore heavy
concentration of molds. The tarpaulins used were not new, contrary to the claim of North Front Shipping
Services, Inc., as there were already several patches on them, hence, making it highly probable for water to
enter.

However, we cannot attribute the destruction, loss or deterioration of the cargo solely to the carrier.
We find the consignee Republic Flour Mills Corporation guilty of contributory negligence. It was
seasonably notified of the arrival of the barge but did not immediately start the unloading operations. No
explanation was proffered by the consignee as to why there was a delay of six (6) days. Had the unloading
been commenced immediately the loss could have been completely avoided or at least minimized. As
testified to by the chemist who analyzed the corn samples, the mold growth was only at its incipient stage
and could still be arrested by drying. The corn grains were not yet toxic or unfit for consumption. For its
contributory negligence, Republic Flour Mills Corporation should share at least 40% of the loss

3. Commencement, Duration and Termination of Carriers Responsibility over the Goods

3.1: Temporary Unloading and Storage
3.2: Effects of Stoppage in Transitu
3.3: Actual or Constructive Delivery
Compania Maritima v. Insurance Co. of North America
12 SCRA 213
Facts:
Macleod & Co., contracted, first by telephone and later confirmed by a formal written booking
issued by Macleod & Co., the services of the petitioner Comapania Maritima for the shipment of bales of
lamp from Davao to Manila. Two lighters of the petitioners loaded the said cargo from Macleods wharf at
Davao awaiting the arrival of another vessel of the petitioner for reloading. One of the lighters sunk of which
Macleod suffered a total of P64,018. Respondent insurers of said cargo paid Macleod, and being
subrogated to Macleods right, filed a claim to collect from the petitioner the amount it paid to Macleod.
Petitioner denied liability on the grounds that there was no bill of lading issued thereby resulting to be nonexistence of the contract; that the sinking was due to a fortuitous event and the respondent has no
personality.

Issue:
Whether or not there was a contract and whether or not there was a fortuitous event.

Held:
There was complete contract of carriage the consummation of which has already begun when the
shipper delivered the cargo to the carrier and the latter took possession of the same by placing it on a lighter
manned by its two authorized employers under which Macleod become entitled to the privilege of law. The
responsibility of the carrier commenced on the actual delivery and receipt by, the carrier or its authorized
agent of the goods. The barges or lighters were merely employed as the first step of the voyage. As to the
issuance of the bill of lading, it is not required or essential to the contract, although it may become obligatory
by reason of regulations or as a condition injured in the contract by the agreement of the parties themselves.

Lu Do v. Binamara
101 PHIL 120
Facts:
Delta Company of New York shipped 6 cases of film and photographic supplies to respondent
herein. Having arrived at the Cebu port, it discharged her cargo placing it in the custody of the arrastre
operator appointed by the Bureau of Customs. The cargo was checked and found to be in good order. Later
on the goods were delivered to Binamara. After inspection it was found out that some cargo were missing.
Binamara demanded from the carrier indemnity for the loss it sustained. However, the carrier denied liability
relying on the stipulation in the contract of carriage. It provides that the carrier is no longer liable for the
cargo after delivery of the same to the customs authorities. The lower court rendered a decision in favor of
Binamara. Hence this petition.
Issue:
Whether or not the common carrier is liable for the lost cargo.

Held:
The Court held that the carrier is no longer liable for the loss of the goods. The general rule is that
delivery must be made to the consignee or the person authorized to receive the goods, without such delivery
the carrier shall be liable for the loss or destruction of goods while in their custody. However, parties may
agree to limit the liability of the carrier considering that the goods have to go through the inspection of the
customs authorities before they are actually turned
over to the authorities. The stipulation in this case is binding upon the parties it being not contrary to law,
morals, or public policy.
(Ganzon Vs CA)

Macam v. Court of Appeals

313 SCRA 77

Facts:
Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company is
the consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as
consignee and GPC as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the
carrier directly to GPC and not to Pakistan Bank and without surrendering the bill of lading.

Issue:
Whether or not there was a valid delivery.
Held:
The extraordinary responsibility of common carriers last until actual or constructive delivery of the
cargo to the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party.
However, in the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as
such in his demand letter to respondent and his complaint before the court. This premise brings into
conclusion that the deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of the
Civil Code. Therefore, there was a valid delivery.

(Regional container lines of Singapore vs Netherlands insurance)

PHILIPPINES FIRST INSURANCE VS. WALLEM PHILS. SHIPPING.
Facts:
On or about 2 October 1995, Anhui Chemicals Import & Export Corporation loaded on board
M/S Offshore Master a shipment consisting of 10,000 bags of sodium sulphate anhydrous 99 PCT Min.
(shipment), complete and in good order for transportation to and delivery at the port of Manila for consignee,
L.G. Atkimson Import-Export, Inc. (consignee), covered by a Clean Bill of Lading. The Bill of Lading reflects
the gross weight of the total cargo at 500,200 kilograms. The Owner and/or Charterer of M/V Offshore
Master is unknown while the shipper of the shipment is Shanghai Fareast Ship Business Company. Both are
foreign firms doing business in the Philippines, thru its local ship agent, respondent Wallem Philippines
Shipping, Inc.
On or about 16 October 1995, the shipment arrived at the port of Manila on board the vessel
M/S Offshore Master from which it was subsequently discharged. It was disclosed during the discharge of
the shipment from the carrier that 2,426 poly bags (bags) were in bad order and condition, having sustained
various degrees of spillages and losses. This is evidenced by the Turn Over Survey of Bad Order Cargoes
of the arrastre operator, Asian Terminals, Inc. The bad state of the bags is also evinced by the arrastre
operators Request for Bad Order Survey.
Asia Star Freight Services, Inc. undertook the delivery of the subject shipment from the pier to
the consignees warehouse in Quezon City,[10] while the final inspection was conducted jointly by the
consignees representative and the cargo surveyor. During the unloading, it was found and noted that the
bags had been discharged in damaged and bad order condition. Upon inspection, it was discovered that
63,065.00 kilograms of the shipment had sustained unrecovered spillages, while 58,235.00 kilograms had
been exposed and contaminated, resulting in losses due to depreciation and downgrading.

On 29 April 1996, the consignee filed a formal claim with Wallem for the value of the damaged
shipment, to no avail. Since the shipment was insured with petitioner Philippines First Insurance Co., Inc.
against all risks in the amount of P2,470,213.50,[12] the consignee filed a formal claim[13] with petitioner for
the damage and losses sustained by the shipment. After evaluating the invoices, the turn-over survey, the
bad order certificate and other documents,[14] petitioner found the claim to be in order and compensable
under the marine insurance policy. Consequently, petitioner paid the consignee the sum of P397,879.69 and
the latter signed a subrogation receipt.
Petitioner, in the exercise of its right of subrogation, sent a demand letter to Wallem for the
recovery of the amount paid by petitioner to the consignee. However, despite receipt of the letter, Wallem
did not settle nor even send a response to petitioners claim.
Issue:
Whether or not the damage or losses were incurred by the shipment during the unloading, it is
disputed who should be liable for the damage incurred at that point of transport?
Held:
For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable
for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at the port of
loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed
otherwise.
Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea,
the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such
goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth
in the Act.[30] Section 3 (2) thereof then states that among the carriers responsibilities are to properly and
carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
The above doctrines are in fact expressly incorporated in the bill of lading between the shipper
Shanghai Fareast Business Co., and the consignee, to wit:
4. PERIOD OF RESPONSIBILITY. The responsibility of the carrier shall
commence from the time when the goods are loaded on board the vessel and
shall cease when they are discharged from the vessel.
The Carrier shall not be liable of loss of or damage to the goods before
loading and after discharging from the vessel, howsoever such loss or
damage arises.[31]
Thus, in this case the appellate court is correct insofar as it ruled that an arrastre operator and a
carrier may not be held solidarily liable at all times. But the precise question is which entity had custody of
the shipment during its unloading from the vessel?
The aforementioned Section 3(2) of the COGSA states that among the carriers responsibilities
are to properly and carefully load, care for and discharge the goods carried. The bill of lading covering the
subject shipment likewise stipulates that the carriers liability for loss or damage to the goods ceases after its
discharge from the vessel. Article 619 of the Code of Commerce holds a ship captain liable for the cargo
from the time it is turned over to him until its delivery at the port of unloading.
The records are replete with evidence which show that the damage to the bags happened before and after
their discharge and it was caused by the stevedores of the arrastre operator who were then under the
supervision of Wallem.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier. In the instant case, the damage or losses were incurred during the
discharge of the shipment while under the supervision of the carrier. Consequently, the carrier is liable for
the damage or losses caused to the shipment. As the cost of the actual damage to the subject shipment has
long been settled, the trial courts finding of actual damages in the amount of P397,879.69 has to be
sustained.
4. Stipulations Limiting Carriers Liability
4.2
4.3 Void Stipulations

Sweet Lines Inc. v. Teves

G.R. No. L-37750
Facts:
Private respondents Atty. Leovigildo Tandog and Rogelio Tirog bought tickets at the branch office of
the petitioner, a shipping company transporting inter-island passengers and cargoes, at the Cagayan de Oro
City. Respondents were to board M/S Sweet Hope,however upon learning that it will not be proceeding to

Bohol they decided to board M/S Sweet Town. On such vessel the respondents agreed to hide at the cargo
section to avoid inspection of the officers of the Philippine Coast guard.
After suffering the inconviences in the cargo section and paying other tickets because those that
are in their possession were no honored. The respondents sued the petitioners in the Court of First Instance
of Misamis Oriental for breach of contract of carriage in the alleged sum of P110,000.00.
Petitioners moved for the dismissal of the complaint on the ground of improper venue for Conditon
No. 14 printed on the ticket essentially provides that any actions arising out of the ticket will be filed at the
competent court of Cebu.
The trial court ruled in favor of the respondents after denying the motion for dismissal. Having
exhausted all the remedies available and still failed to obtain a ruling in their favor, the petitioner filed this
instant petition for prohibition with preliminary injunction.
The Supreme Court gave due course to their petition and required them to submit their memoranda
in support of their respective contention.
Respondents contend that condition No. 14 is not a part of the contract of carriage and that it is an
independent contract requiring the mutual consent of the parties. In the case at bar the consent of the
respondents was not sought it was imposed on them unilaterally. Venue of actions can only be waived if
there is a written agreement of the parties. Condition No.14 not being agreed to by the respondents is not
valid and enforceable. Supposing that it is otherwise, it is not exclusive and does not, therefore exclude the
filing of the action in Misamis Oriental.
Petioner contend that condition No. 14 is valid and enforceable because private respondents
acceded to it when they purchased passage tickets and it is an effective waiver of venue, valid and binding
as such, since it is printed in bold and capital letters and not in fine print and merely assigns the place where
the action arising from the contract is instituted. That condition No. 14 is unequivocal and mandatory, the
words and phrases any and all, irrespective of where it is issued, and shall leave no doubt that the
intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of all other places.

Issue:
Whether or not condition No. 14 is valid and enforceable.

Held:
Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue
may be changed or transferred from one province to another by agreement of the parties in writing pursuant
to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically
negates the action of the claimants, such as the private respondents herein. The philosophy underlying the
provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to
promote the ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City
would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at
all. The condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner
has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these
places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not
cause inconvience to, much less prejudice, petitioner.
Public policy is . . . that principle of the law which holds that no subject or citizen can lawfully do
that which has a tendency to be injurious to the public or against the public good . . .. Under this principle
. . . freedom of contract or private dealing is restricted by law for the good of the public. Clearly, Condition
No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious
cases, actions of passenger claimants outside of Cebu City, thus placing petitioner company at a decided
advantage over said persons, who may have perfectly legitimate claims against it. The said condition
should, therefore, be declared void and unenforceable, as contrary to public policy to make the courts
accessible to all who may have need of their services.

4.4 Reasonable time in the Delivery of Goods

Maerskline v. Court of Appeals
222 SCRA 108
Facts:

Respondent herein is a firm engaged in the manufacture of pharmaceutical products. It ordered

from Eli Lily, Inc. of Puerto Rico empty gelatin capsules. Said capsules were placed in 6 drums containing
100 capsules each. The drums were placed on board the M/V Anders Maeerskline. However the capsules
were shipped to Virginia, USA instead of the Philippines. The goods arrived in the Philippines 2 months after
the original date of arrival, and respondent herein refused to accept the goods due to its late arrival.
An action was filed by respondent to rescind the contract with Eli Lily, Inc. and Maersk together with
a claim for damages. The lower court dismissed the complaint against Eli Lily, Inc. and held Maersk to be
liable for breach of the contract of common carriage. On appeal, the court affirmed the lower courts
decision. Hence this appeal.
Issue:
Whether or not Maersk is liable for breach of contract of common carriage.
Held:
The Court held that Maersk is liable for the breach of contract of common carriage. Common
carriers are not obligated by law to carry and deliver merchandise promptly unless the common carrier
previously assumes to deliver the goods at a given date or time. However, such delivery should be made
within a reasonable time.
In this case, it appears in the bill of lading that the goods will arrive on April 3. There was no
contract between the parties in this case, however the petitioner was aware of the date of the expected
arrival of the goods. The court finds that the delay of the delivery was unreasonable. It was due to the
negligence of the petitioner why the cargo arrived so late. Petitioner did not even explain the reason for such
delay. Therefore, petitioner herein is held liable for the breach of contract.

4.5 Limitation on the Amount of Liability

4.5.1 Ad Valorem B/L

Juan Ysmael & Co. v. Barreto & Co.

51 PHIL 90

Facts:
Plaintiff seeks to recover from defendant the alleged value of the four cases of merchandise which
it delivered to the steamship ANDRES on October 23, 1922, at Manila, to be shipped to Surogao. Said
shipment was never delivered to the consignee. The defendants rely only on clause 7 of the bill of lading
whereby it was provided that action not brought within 610 days from the time the cause of action accrued
still be barred, and on clause 12 which provided that the defendants are not liable for any package in excess
of P300 unless the value and contracts of such package are correctly stated in the bill of lading at the time of
the shipment. The goods in question were shipped from Manila on October 25, 1922, or a little less that 6
months after the shipment was made.

Issue:
Whether or not the action was brought within a reasonable time.

Held:
The action was brought within a reasonable time as those words are specified and defined in the
authorities sited. It is true that both the plaintiff and the defendants are residents of the City of Manila, but it
is also true that Surigao where the goods in question were to be delivered is one of the most distant places
from Manila in the Philippine Islands. In the very nature of things, plaintiff would not want to commence its
action until such time as it had made a full and careful investigation of all of the material facts and even the
law of the case, so as to determine whether or not defendants were liable for its loss.
Clause 12 places a limit of P300 for any single package of silk. The evidence of each case very
near P2,500. In this situation, the limit of defendants liability for each package of silk for loss or damage
from any cause of for any reason, would put it in the power of the defendant to have taken the whole cargo
of 64 cases of silk at a valuation of P300 of each case, or less than 1/8 of its actual value. If that rule of law
should be sustained, no silk would ever be shipped from one island to another in the Philippines. Such a
limitation in value is valid as against public policy.

Shewaram v. Philippine Airlines

17 SCRA 606
Facts:
Shewaram, petitioner herein, is a Hindu from Davao. He boarded a PAL plane for a trip to Manila.
He checked in 3 pieces of baggage, a suitcase 2 other pieces. One of the suitcases were mistagged by the
defendant and as a result the said suitcase did not arrive with him in Manila. He was shown a similar bag,
but the contents did not belong to him. Among his things in the suitcase was a Rollflex camera and
Transistor Radio 7. His baggage was later on returned but the camera and radio were missing. He
demanded indemnity for his loss from PAL. The latter offered to pay P100 for his loss but Shewaram.
Defendant herein claimed that the PAL ticket, on the reverse side, stated in fine print that if the value of
baggage is not stated, and the baggage is lost, the maximum liability of PAL is P100.00. If value in excess of
P100.00 is stated, PAL will charge extra because PAL is being held liable for an amount exceeding P100.00.
Shewaram rejected the offer and demanded full payment of P800.00 for the amount of the things he lost.
PAL refused to do so.

Issue:
Whether the stipulation limiting the liability of PAL shall apply in the case at bar.

Held:
The Court held that PAL is liable for the loss of the petitioner herein. The stipulation in at the back
of the ticket shall not be binding against the petitioner. Article 1750 of the NCC provides that Article 1750 the
pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is required, however,
that the contract must be "reasonable and just under the circumstances and has been fairly and freely
agreed upon." In this case, the court believes that the requirements of said article have not been met. It
cannot be said that the petitioner had actually entered into a contract with the PAL, embodying the
conditions as printed at the back of the ticket stub that was to the petitioner. The fact that those conditions
are printed at the back of the ticket stub in letters so small that they are hard to read would not warrant the
presumption that the petitioner was aware of those conditions such that he had "fairly and freely agreed" to
those conditions.

Augusto Ong Yiu v. Court of Appeals

91 SCRA 223

Facts:
Petitioner was paying passenger of respondent Philippine Airlines on board flight No. 946-R from
Mactan Cebu bound for Butuan City. He was scheduled to attend the trial in the Court of First instance , Br.
II thereat. As a passenger, he checked in one piece of luggage, a bull maleta. The plane left Mactan
Airport, Cebu City at about 1pm and arrived at Bacasi Airport, Butuan City at past 2pm of the same day.
Upon arrival, petitioner claimed his luggage but it could not be found. According to petitioner, it was only
after reacting indignantly to the loss that the matter was attended by the porter clerk which however, the later
denied. When the luggage was delivered to the petitioner with the information that the lock was open, he
found out that the folder containing documents and transcripts were missing, aside from the two gift items for
his parents-in-law. Petitioner refused to accept the luggage.
Issue:
Whether or not PAL acted with gross negligence so as to entitle petitioner to an award of moral and
exemplary damages.
Held:

PAL did not act in bad faith. It was the duty of PAL to look for petitioners luggage which had been
miscarried. PAL exerted diligent efforts to locate the plaintiffs baggage. Petitioner is neither entitled to
exemplary damages. Exemplary damages can only be granted if the defendant asked in a wanton,
fraudulent, reckless, oppressive or malevolent manner, which loss, in accordance with the stipulation written
at the back of the ticket is limited to P100 per luggage plaintiff not having declared a greater value and not
having called the attention of the defendant on its value ad paid the tariff thereon. Wherefore, for lack of
merit, the instant petition is hereby denied, and judgment sought to be reviewed is hereby affirmed.

Sea-Land Service, Inc. v. Intermediate Appellate Court

153 SCRA 552

Facts:
Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines,
received from Sea-borne Trading Company in California, a shipment consigned to Sen Hiap Hing, the
business name used by Cue. The shipper not having declared the value of the shipment , no value was
indicated in the bill of lading. The shipment was discharged in Manila, and while awaiting transshipment to
Cebu, the cargo was stolen and never recovered.
The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency
value of the lost cargo, P55, 814 for unrealized profit and P25,000 for attorneys fees. CA affirmed the trial
courts decision.

Issue:
Whether or not Sea-Land is liable to pay Cue.

Held:
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 os 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 Comm. Act. 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 alone of Article 1749 and 1750 of the Civil
Code. The justices of such stipulation is implicit in its giving the owner or shipper the option of avoiding
accrual of liability limitation by the simple expedient of declaring the value of the shipment in the bill of
lading.
The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the
shipment covered by said rule to US$500 per package unless the shipper declares the value of the shipment
and pays additional charges is valid and binding on Cue.

Citadel Lines, Inc. v. Court of Appeals

184 SCRA 544
Facts:
Citadel Lines, Inc., petitioner herein is the general agent of the vessel "Cardigan Bay/Strait
Enterprise" . Manila Wine Merchants, Inc. (Consignee) is the importer of the subject shipment of Dunhill
cigarettes from England. The said vessel loaded on board Filbrite cartons of manufactured cigarettes called

"Dunhill International Filter" and "Dunhill International Menthol". The shipment arrived at the Port of Manila in
a container. The said container was received by Metro Port Service, Inc., respondent herein. Subsequently
the container van, which contained two shipments was stripped. One shipment was delivered and the other
shipment containing cigarettes was palletized. Due to lack of space at the Special Cargo Coral, the
aforesaid cigarettes were placed in two containers with two pallets with both containers duly padlocked and
sealed by the representative of the petitioner.
The next day, petitioners headchecker discovered that the container van of the cigarettes had a
different padlock and the seal was tampered with. This was reported to the Pier Superintendent it was found
that 90 cases of imported British manufactured cigarettes were missing. When the Consignee found out that
90 cases were missing it filed a claim demanding the payment of the market value of the missing cargo.
Petitioner, in its reply letter, admitted the loss but alleged that the same occurred at Pier 13, an area
absolutely under the control of the arrastre (Metro Port Service, Inc). Manila Wine Merchants filed a formal
claim, with the arrastre and demanded 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 held the petitioner liable for the
amount representing the market value of the lost shipment. On appeal the court of Appeals affirmed the
decision of the lower court but deleted the award of attorney's fees and costs of suit. Hence this petition.

Issue:
Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on
the consignee.

Held:
The Court held that the stipulation limiting the liability of the carrier is valid and binding upon the
consignee. It was expressly stipulated in the bill of lading that the carriers liability is limited to $2.00 per kilo.
It has been held in previous cases that a stipulation appearing in the bill of lading limiting the liability of the
carrier is binding, unless the owner or shipper declares a higher value.
The consignee in this case did not declare a higher value and admits that the value of the goods
does not appear in the bill of lading. Therefore the stipulation in the bill of lading should be applied. The
contract had been freely agreed upon and the stipulation appears to be just and reasonable. Therefore, the
award of damages should be reduced and computed with regard to the bill of lading.

Everett Steamship Corporation v. Court of Appeals

297 SCRA 496
Facts:
Hernandez Trading Co., respondent herein, imported 3 crates of bus spare parts from its supplier,
Maruman Trading Company, Ltd., a foreign corporation based in Japan. The crates were shipped from
Japan to Manila on board "ADELFAEVERETTE," a vessel owned by the principal of the petitioner herein,
Everett Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN. The vessel arrived in
Manila and it was discovered that the one crate was missing. This was confirmed and admitted by petitioner
in its letter of January 13, 1992 addressed to private respondent, which thereafter made a formal claim upon
petitioner for the value of the lost cargo amounting to One Million Five Hundred Fifty Two Thousand Five
Hundred (Y1,552,500.00) Yen, the amount shown in an Invoice 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. Respondent
rejected the offer and filed a case to collect payment for the loss against the petitioner.

Issue:
Whether or not the petitioner is liable for the actual value and not the maximum value recoverable
under the bill of lading.

Held:

A stipulation in the bill of lading limiting the liability of the common carrier for the loss, damages of cargo to a
certain sum, unless the shipper declares or a higher value is sanctioned by law, particularly Articles 1749
and 1780 of the Civil Code. The stipulations in the bill of lading are reasonable and just. In the bill of lading,
the carrier made it clear that its liability would only be up to 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. The trial courts decision that private respondent could not
have fairly agreed to the limited liability clause in the bill of lading because the said condition were printed in
small letters does not make the bill of lading invalid.

British Airways v. Court of Appeals

G.R. No. 121824
Facts:
On April 6, 1989, Mahtani decided to visit his relative in Bombay, India. In anticipation of his visit,
he obtained the services of a certain Mr. Gemar to prepare his travel plan. Since british Airways had no
ticket flights from Manila to Bombay, Maktani had to take a connecting flight to Bombay on board British
Airways. Prior to his departure, Maktani checked in the PAL counter in Manila his two pieces of luggage
containing his clothing and personal effects, confident that upon reaching Hong Kong, the same would be
transferred to the BA flight bound for Bombay, Unfortunately, when Maktani arrived in Bombay, he
discovered that his luggage was missing and that upon inquiry from the BA representatives, he was told that
the same might have been diverted to London. After plaintiff waiting for his luggage for one week, BA finally
advised him to file a claim accomplishing the property.

Issue:
Whether or not defendant BA is liable for compulsory damages and attorneys fee, as well as the
dismissal of its third party complaint against PAL

Held:
The contract of transportation was exclusively between Maktani and BA. The latter merely
endorsing the Manila to Hong Kong log of the formers journey to PAL, as its subcontractor or agent.
Conditions of contacts was one of continuous air transportation from Manila to Bombay. 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. Since the instant petition was based on breach of contract of carriage, Maktani
can only sue BA and not PAL, since the latter was not a party in the contract.

H.E. Heacock Co. v. Macondray & Co.

42 PHIL 205
Facts:
The plaintiff shipped Edmonton clocks from New York to Manila on board a vessel of the
defendant. It was agreed in the bill of lading that the value of the goods received does not exceed $500 per
freight or on in proportion for any part of a ton, unless the value be expressly stated in the bill and freight
[aid. It was also agreed that in the event of claims for shortage or damages the carrier shall not be liable for
than the net invoice price plus freight and insurances loss charges, and any loss or damage for which the
carrier may be liable shall be adjusted pro rata on said basis. The clocks were not delivered despite
demands. Plaintiff claimed P420.00, the market value of the clocks, while defendant tendered only P76.36,
the proportionate freight for value. The trial court decided in favor of the plaintiff freight ton value. The trial
value plus freight and insurance.

Issue:
Whether or not the stipulation in the bil og lading in the case at bar be followed.

Held:
Three kinds of stipulation have after been made in a bill of lading. First, one exempting the carrier
from any and all liability for ton and damage occasioned by its own negligence. Second, one providing for
an agreed valuation. Third, one limiting the liability of the carrier to an agreed valuation unless the shipper
declares a higher value and pay of authority, the first and second kinds of stipulations are involved as being
contrary to public policy, but the third is valid and enforceable.
The stipulation in a bill of lading which limits the liability of the carrier to a specified amount unless
the shipper declares a higher value and pays a higher freight valid and enforceable. Thus, if a carrier gives
to a shipper the choice of two takes, the lower of them cautioned upon his agreeing to a stipulated valuation
of his property in case of loss even by carriers negligence, if the shipper makes the choice understandingly
and freely, and names his valuation, he cannot thereafter recover move than the value which he puts on this
places upon his property.

5. Passengers Baggages

5.1 Checked-in Vs. Hand-carried

Quisumbing Sr. vs. Court of Appeals

189 SCRA 605
Facts:
Norberto Quisumbing and Gunther Loeffler were passengers of PALs Fokker Friendship plane
flying from Macatan City bound to Manila. A senior NBI agent, Florencio O. Villarin, a senior NBI agent and
also one of the passengers of the said plane, saw a certain Zaldy boarded on the same flight. Zaldy was a
suspect for the killing of a Judge Valdez. Villarin sent a note to the Captain of the plane requesting that they
contact the NBI director to send agents on their point of destination because of the presence of Zaldy.
However, Captain Luis Bonnevie came out of the cockpit and informed Villarin the he could not send the
message because it would be heard by all ground aircraft stations. Villarin advised the Captain of the danger
having Zaldy and his companions onboard. Consequently, gunshots ensued between Zaldys group and
Villarin. Zaldy announced a hold-up and obtained the belongings of the passengers. Zaldy and his
companions successfully escaped upon landing in Manila. Petitioners now demand from PAL indemnity for
their lost belongings. The petitioners contended that PAL is liable for breach of contract of carriage, for not
transporting them and their belongings at the point of destination without loss or damage. As a defense, PAL
interposed that the incident was force majeure.
Issue:
Whether PAL can be held liable for the loss of petitioners belongings due to the hi-jacking?
Held:
The Supreme Court held that PAL cannot be held liable for the loss of property. Where the
defendants has faithfully complied with the requirements of government agencies and adhered to the
established procedures and precautions of the airline industry and particular time, its failure to take certain
steps that a passenger in hindsight believes should have been done is not the negligence or misconduct
which mingles with force majeure as an active and cooperative cause. It was proven that PAL cannot be
faulted with negligence. Hence, there was no breach of contract of carriage because there was no clear
evidence that PAL acted in bad faith in their obligation to transport the passengers and their properties at the
point of destination. The mandatory use of the most sophisticated electronic devices may have minimized
hijackings but all these have proved ineffective against truly determined highjackers. Such incident which
occurred was indeed force majeure.

Pan American World Airways vs. Rapadas

G.R. No. 60673
Facts:
Private respondent Jose Rapadas held passenger ticket and baggage claim check for petitioners
flight No. 841 with the route from Guam to Manila. While standing inline to board the flight at the Guam
Airport, Rapadas was ordered by petitioners hand carry control agent to check-in his samsonite attach
case. Rapadas protested pointing to the fact that other co-pasengers were permitted to hand carry
baggage. He stepped out of the line only to go back again at the end of it to try of he can get through
without having to register his attach case. However, the same man in charge of had carry control did not
fail to notice him and ordered him again to register his baggage. Upon arriving in Manila on the same day,
Rapadas claimed and was given all his checked in baggage except the attach case.
Issue:
Whether or not a passenger is bound by the terms of a passenger under the Warsaw convention,
shall apply in case of loss, damage or destruction to a registered luggage of a passenger.
Held:
After a review of the various arguments of the appointing parties, the court found sufficient basis
under the particular facts of the case for the availment of the liability limitations under the Warsaw
Convention. There is no dispute and the courts below admit that there was such a notice appearing on page
2 of the airline ticket stating that the Warsaw Convention governs in case of death or injury of passengers or
of loss, damage or destructionto a passengers luggage. Art. 22(4) of the Warsaw Convention does not
preclude an award of attorneys fees. That provision states that the limits of liability prescribed in the
instrument shall not prevent the court from awarding in accordance with its own law, in addition, the whole or
part of the court costs and other expenses of litigation incurred by the plaintiff.

(British Airways VS. CA)

Alitalia v. Intermediate Appellate Court

192 SCRA 9
Facts:
Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations in
Ispra, Italy. She was to read a paper regarding foreign substances in food and the agriculture environment
which she had specialized knowledge of. She booked a flight to Italy with Alitalia airlines, petitioner herein.
She had arrived in Milan the day before the meeting however her luggage did not arrive with her. The airline
informed her that her luggage was delayed because it was placed in one of the succeeding flights to Italy.
She never got her luggage.
When she got back to Manila she demanded that Alitalia compensate her for the damages that she
suffered. Petitioner herein offered free airline tickets in order to compensate for the alleged damages,
however she rejected this offer and instead filed a case. Subsequently it was found out that the luggages of
Dr. Pablo were not placed in the succeeding flights. She received her luggage 11 months after and after she
had already instituted a case against Alitalia.
The lower court rendered a decision in favor of Dr. Pablo and ordered plaintiff to pay damages. On
appeal, the Court of Appeals affirmed the decision and even increased the amount of damages to be
awarded to Dr. Pablo. Hence this petition for certiorari.
Issue:
Whether or not Alitalia is liable for damages incurred by Dr. Pablo.
Held:
The Court held that Alitalia is liable to pay Dr. Pablo for nominal damages. The Warsaw Convention
provides that an air carrier is made liable for damages when: (1) the death, wounding or other bodily injury
of a passenger if the accident causing it took place on board the aircraft or in the course of its operations of
embarking or disembarking; (2) the destruction or loss of, or damage to, any registered luggage or goods, if
the occurrence causing it took place during the carriage by air"; and (3) delay in the transportation by air of
passengers, luggage or goods. However, the claim for damages may be brought subject to limitations
provided in the said convention.

In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper in
Italy. This was due to the fact that Alitalia misplaced her luggage. There was no bad faith or malice on the
part of Alitalia in the said delay in the arrival of her luggage. Dr. Pablo received all her things which

Chapter 3: Safety of Passengers

1.

Utmost Diligence Required of Common Carriers

1.1 Common Carriers Doctrine

Nocum v. Laguna Tayabas Bus Co.

G.R. No. L-23733
Facts:
Petitioner boarded the respondents bus. Subsequently, a box containing fireworks inside the bus
exploded which cause the petitioner to be thrown out of the bus and obtained injuries. The petitioner then
filed a case against the respondent for breach of the contract of carriage. The petitioner claims that the
respondent was careless and did not exercised the diligence required of it when the latters employees did
not inspect the box which contained the fireworks and allowed such dangerous objects inside the bus. The
respondent in its defense claimed that it only relied on the statement of the person who carried the box that
such item is safe to be transported inside the bus.
Issue:
Whether or not the respondent committed a breach in the contract of carriage.
Held:
The Court held that the respondent did not commit a breach in the contract of carriage, The Court
applied Art. 1755 of the Civil Code stating that the common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost diligence of very cautious person, with due
regard to all circumstances. The Court emphasized that there was utmost diligence on the part of the carrier
when it asked the person who bought the box what its contents are. It is not duly bound to open the box and
inspect the contents. The carrier had regard to all the circumstances in the case because allowances should
be given to the passengers and their property bought for it is presumed that passengers will not bring
anything that will cause damage to him or to others. In addition, the Court stressed the constitutional right to
privacy which is always present. Therefore, the carrier is not liable
Mecenas v. CA
180 SCRA 83
Facts:
M/T Tacloban City, owned by Philippine National Oil Company (PNOC) collided with M/T Don Juan,
was owned by respondents Negros Navigation Co., Inc. The petitioners in this case are the heirs of two
passengers who boarded the M/T Don Juan and perished due to the collision. The trial court held the
respondents liable for damages. On appeal, the respondents denied the liability by stating that between the
two vessels, the M/T Tacloban City was the one who is negligent and failed to follow the International Rules
of the Road when it did not turn starboard (right) to prevent the collision. The respondent court reversed the
decision applying the doctrine of last clear chance raised by the respondent. Petitioners then appealed.
Issue:
Whether or not the respondent should be held liable.
Held:
The Court held that the respondent should be held liable and the respondent court erred in
reversing the decision of the trial court. The Court found the respondent to be gross negligent based on
certain instances. Such instances are first, the captain was playing mahjong at the time of the collision and
the captain stated that he was on break during the emergency when he should take charge of the ship,
second, the crew of the vessel failed to delay the sinking of the vessel because the ship sank around ten to
fifteen minutes, third, the ship was overloaded with passengers than that prescribed number of passengers
and lastly, there was no ample number of life saving devices such as rafts due to the overloading of
passengers. The respondent can not also raise the defense that it followed the International Rules of the
Road when it had the chance to prevent the collision with proper care and skill. The doctrine of last clear
chance cannot be applied in the case as well because the doctrine is only applicable between two drivers
that are negligent against each other and not to a passenger claiming for damages to the carrier.
Negros Navigation Co., Inc. v. Court of Appeals
281 SCRA 534
Facts:
Ramon Miranda purchased tickets for his wife, daughter, son and niece for a trip to Bacolod on
board the M/V Don Juan. The said vessel is operated by the Negros Navigation Co., petitioner herein.
Unfortunately, the M/V Don Juan collided with the M/T Tacloban City which resulted to the sinking of the
former. Many perished in this accident and some of the bodies of the victims were washed to the shore.
Unfortunately, the bodies of his family members were never found.

Miranda filed a case in order to recover damages from Negros Navigation for the loss of his family.
Petitioner herein alleges that since the bodies of his family cannot be found there is no proof that his family
was in fact on board the vessel, hence they cannot be held liable for the loss of his family. The lower court
rendered a judgment in favor of Miranda. Pursuant to the legal maxim of "stare decisis et non quieta
movere", the court applied the ruling in the case of Mecenas v. Court of Appeals, and held that Negros
Navigation was negligent and that it is liable for the loss of the family of Miranda. On appeal the court
affirmed the decision of the lower court. Hence this petition.
Issue:
1.
2.

Whether or not the family members of Miranda were on the M/V Don Juan therefore making
them liable for the said loss.
Whether or not the legal maxim of stare decisis et non quieta movere is applicable in this case.

Held:
The Court held that there was sufficient evidence to prove that Mirandas family was in fact on
board the M/V Don Juan. Miranda testified that he personally brought his family to the vessel and watched
the departure of the same. This was further proven when the numbers of the purchased tickets appeared on
the passengers manifest of the vessel. There is no reason for Miranda to claim that he had lost his whole
family in the tragedy and even went through the anguish of looking for their bodies. In the Mecenas case the
bodies of the victims were likewise never recovered.
The legal maxim of stare decisis et non quieta movere (Follow past precedents and do not disturb
what has been settled) was properly applied in this case. When the same questions relating to the same
event have been put forward by parties similarly situated as in a previous case litigated and decided by a
competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue. Therefore,
Negros Navigation is liable to pay for the damages incurred by Miranda for the loss of his family.
Korean Airlines Co., Ltd. V. Court of Appeals
234 SCRA 717
Facts:
In 1980, Juanito C. Lopez, an automotive electrician, was contracted for employment in Jeddah ,
Saudi Arabia , for a period of one year through Pan Pacific Overseas Recruiting Services, Inc. Lapuz was
supposed to leave on November 8, 1980, via Korean Airlines. Initially, he was wait listed. When two of such
passengers did not appear, Lapuz and another person by the name of Perico were given two unclaimed
seats.
According to Lapuz, he was allowed to check in with one suitcase and one shoulder bag at the
check-in counter of KAL. He passed through the customs and immigration section for routine check-up and
was cleared by departure. He rode on the shuttle bus and proceeded to the ramp of the KAL aircraft for
boarding. However, when he was the third or fourth rung of the stairs, a KAL officer pointed to him and
shouted. DOWN! DOWN!and was barred from taking the flight. When he later asked for another
booking, his ticket was canceled by KAL. Consequently, he was unable to report for his work in Saudi Arabia
within the stipulated 2 week period and so lost his employment.
Issue:
Whether or not the petitioner should be liable for damages.
Held:
A perusal of the plaintiff-appellants contract of employment shows that the effectivity of the contract
is for only one year, renewable every year for five years. Although plaintiff-appellant intends to renew his
contract, such renewal will still be subject to his foreign employer. Plaintiff appellant had not yet started
working with his foreign, employer, hence, there can be no basis as to whether his contract will be renewed
by his foreign employer or not. Thus, the damages representing the loss of earnings of plaintiff-appellant in
the renewal of the contract of the employment is at most speculative. Damages may not be awarded on the
basis of speculation or conjecture (Gatchalian vs. Delim, 203 SCRA 126). Defendant appellants liability is
limited to the one year contract only. Plaintiff appellant is therefore entitled only to his lost earning for one
year, i.e., P60,000.00 which is 1/5 of P300,000.00 the total amount of actual damages , representing lost
earnings for five years prayed for in the complaint. The legal interest of 6% on the damages awarded to
private respondent should commence from the date of the decision of the trial court on November 14, 1990.

Fortune Express vs. Court of Appeals

305 SCRA 14
Facts:

A bus of petitioner Fortune Express, Inc. figured an accident with a jeepney in Lanao del Norte
which resulted to the death of several passengers of the jeepney including two Maranaos. A Constabulary
agent investigated that the jeepney was owned by a Maranao and certain Maranaos were planning to take
revenge on petitioner by burning some of its buses. Subsequently, the Operations Manager of Fortune
Express was advised to take precautionary measures. Four days after the accident, three armed Maranaos
pretended to be passengers of a bus of petitioner. They seized such bus and set it on fire. The passengers
of the bus were asked to get off, but one passenger, Atty. Talib Caorong went back to retrieve something. He
was shot and killed during the incident. Petitioner contends that the seizure by the armed assailants was a
fortuitous event thus it cannot be held liable.
Issue:
Whether or not Fortune Express is liable for the death of Atty. Caorong.

Held:
The Supreme Court held that the seizure of the bus by the armed Maranaos cannot be assailed as
a fortuitous event. The requisite of unforseeability to be considered forced majeure is lacking. Fortune
Express knew that Maranaos were planning to burn some of its passenger buses and yet petitioner did
nothing to protect the safety of its passengers. Petitioners employees failed to prevent the attack on one of
its passengers because they did not exercise the diligence of a good father of a family. Hence, petitioner
should be held liable for the death of Atty. Caorong. Art. 1763 of the New Civil Code provides that the
common carrier is responsible for injuries suffered by a passenger on account of willful acts of other
passengers, if the employees of the common carrier could have prevented the act through proper diligence.
Because of Fortune Expresss negligence, the seizure of the bus by the armed Maranaos was made
possible.

Gatchalian v. Delim
203 SCRA 126
Facts:
Reynalda Gatchalian boarded a minibus owned and operated by respondent herein. She boarded
the bus at La Union and it was bound for Bauang. While the bus was running, one of the passengers noticed
a snapping sound. She was alarmed and asked the driver about it, he then replied that it was normal.
Subsequently, the minibus hit a flower pot on the side of the road which caused the bus to turn turtle and it
fell into a ditch. Several passengers were injured in the accident. Gatchalian suffered injuries on her leg, arm
and face specifically the forehead.
The injured passengers were brought to the hospital for treatment of their injuries. While the
passengers were confined in the hospital, Mrs. Delim, wife of the respondent visited them and paid for the
medical expenses of the victims. Before leaving the hospital, she made the injured passengers sign a
prepared affidavit which stated that they were no longer interested in filing a complaint whether criminal or
civil against the driver and owner of the minibus. Gatchalian also signed the said document.
Subsequently, Gatchalian filed a complaint for damages even though she had already signed the
affidavit prepared by Mrs. Delim. The lower court dismissed the complaint of Gatchalian and held that there
was a valid waiver of the right to file a complaint. The Court of Appeals reversed the decision that there was
a valid waiver but denied petitioners claim for damages. Hence this petition.
Issue: Whether or not Gatchalian is entitled to the award of damages in lieu of the injuries that she suffered.
Held:
The Court held that there was no valid waiver and that Gatchalian is entitled to the award of
damages. A waiver, in order to be valid, must be couched in clear and equivocal terms which leave no doubt
as to the intention of relinquishing a right that is legally his or hers. A waiver must not be contrary to law,
morals, public policy or good customs. The waiver in this case is not valid because the terms in the affidavit
did not clearly state the intention of giving up the right to file a complaint. The words no longer interested
do not manifestly show such intention. Also, such waiver is against public policy because it would weaken
the standard of utmost diligence required of common carriers in bringing their passengers safely to their
destination.
It was established through evidence that the common carrier is guilty of negligence. The reply of
the driver when asked about the snapping sound is sufficient proof to indicate that such sound had been
there for a while and that the common carrier did not look after the roadworthiness of the vehicle to assure
the safety of the passengers. There was gross negligence on the part of the driver because there was
wanton disregard for the passengers safety when he did not stop the minibus after hearing the snapping
sound and the remark of one of the passengers.
Therefore the petitioner in this case is entitled to receive actual or compensatory damages which
include 15,000 pesos for the cost of plastic surgery to remove the scar on Gatchalians face.
Del Castillo v. Jaymalin
112 SCRA 629
Facts:

Mario a deaf mute is a son of Petitioner Del Castillo. They are paying passengers of defendant
Bicol Transportation operated by A.L Ammen Transportation. Mario fell upon aligting from the bus and died.
An action for damages was filed against the driver, conductor and bus companies. The court
rendered a judgment in favor of the respondent. Trial court dismissed the petition based solely that
damages and liability of the carrier is based on the earning capacity of the victim. In the case at bar, the
court considered there is no loss of earning capacity considering the victim was deaf-mute.
Issue:
Whether or not the bus employees are liable for damages.

Held:
Common carriers are responsible for the death of their passengers as provided in Articles 1964 and
2206 of the Civil Code. It includes the loss of the deceased earning capacity. The conductor was told and
knowledgeable of passenger Mario being deaf and dumb. The court held that the conductor should have
taken extraordinary care for the safety of the said deaf passenger.
Court procedure demands that the case be remanded to the lower court for determination of the
amount of damages to be awarded. However, the court considered the pendency of the case being on roll
for 13 years. The Supreme Court determined the damages at Php12,000 as indemnity for the victims death
without interest and Php2,000 attorney;s fees. The loss of earning capacity is not awarded since the vivtim
is deaf-mute.

(YRASUEGUI vs. PHILIPPINE AIRLINES (Labor Case))

SPOUSES VILORIA VS. CONTINENTAL AIRLINES, INC.,

Facts
On or about July 21, 1997 and while in the United States, Fernando purchased for himself and
his wife, Lourdes, two (2) round trip airline tickets from San Diego, California to Newark, New Jersey on
board Continental Airlines. Fernando purchased the tickets at US$400.00 each from a travel agency called
Holiday Travel and was attended to by a certain Margaret Mager (Mager). According to Spouses Viloria,
Fernando agreed to buy the said tickets after Mager informed them that there were no available seats at
Amtrak, an intercity passenger train service provider in the United States. Per the tickets, Spouses Viloria
were scheduled to leave for Newark on August 13, 1997 and return to San Diego on August 21, 1997.
Subsequently, Fernando requested Mager to reschedule their flight to Newark to an earlier date
or August 6, 1997. Mager informed him that flights to Newark via Continental Airlines were already fully
booked and offered the alternative of a round trip flight via Frontier Air. Since flying with Frontier Air called for
a higher fare of US$526.00 per passenger and would mean traveling by night, Fernando opted to request for
a refund. Mager, however, denied his request as the subject tickets are non-refundable and the only option
that Continental Airlines can offer is the re-issuance of new tickets within one (1) year from the date the
subject tickets were issued. Fernando decided to reserve two (2) seats with Frontier Air.
As he was having second thoughts on traveling via Frontier Air, Fernando went to the
Greyhound Station where he saw an Amtrak station nearby. Fernando made inquiries and was told that
there are seats available and he can travel on Amtrak anytime and any day he pleased. Fernando then
purchased two (2) tickets for Washington, D.C.
From Amtrak, Fernando went to Holiday Travel and confronted Mager with the Amtrak tickets,
telling her that she had misled them into buying the Continental Airlines tickets by misrepresenting that
Amtrak was already fully booked. Fernando reiterated his demand for a refund but Mager was firm in her
position that the subject tickets are non-refundable.
Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998,
demanding a refund and alleging that Mager had deluded them into purchasing the subject tickets.3
In a letter dated February 24, 1998, Continental Micronesia informed Fernando that his
complaint had been referred to the Customer Refund Services of Continental Airlines at Houston, Texas.4
In a letter dated March 24, 1998, Continental Micronesia denied Fernandos request for a refund
and advised him that he may take the subject tickets to any Continental ticketing location for the re-issuance
of new tickets within two (2) years from the date they were issued. Continental Micronesia informed
Fernando that the subject tickets may be used as a form of payment for the purchase of another Continental
ticket, albeit with a re-issuance fee.5
On June 17, 1999, Fernando went to Continentals ticketing office at Ayala Avenue, Makati City

to have the subject tickets replaced by a single round trip ticket to Los Angeles, California under his name.
Therein, Fernando was informed that Lourdes ticket was non-transferable, thus, cannot be used for the
purchase of a ticket in his favor. He was also informed that a round trip ticket to Los Angeles was
US$1,867.40 so he would have to pay what will not be covered by the value of his San Diego to Newark
round trip ticket.
In a letter dated June 21, 1999, Fernando demanded for the refund of the subject tickets as he
no longer wished to have them replaced. In addition to the dubious circumstances under which the subject
tickets were issued, Fernando claimed that CAIs act of charging him with US$1,867.40 for a round trip ticket
to Los Angeles, which other airlines priced at US$856.00, and refusal to allow him to use Lourdes ticket,
breached its undertaking under its March 24, 1998 letter.6
On September 8, 2000, Spouses Viloria filed a complaint against CAI, praying that CAI be
ordered to refund the money they used in the purchase of the subject tickets with legal interest from July 21,
1997 and to pay P1,000,000.00 as moral damages, P500,000.00 as exemplary damages and P250,000.00
as attorneys fees.7
CAI interposed the following defenses: (a) Spouses Viloria have no right to ask for a refund as
the subject tickets are non-refundable; (b) Fernando cannot insist on using the ticket in Lourdes name for
the purchase of a round trip ticket to Los Angeles since the same is non-transferable; (c) as Mager is not a
CAI employee, CAI is not liable for any of her acts; (d) CAI, its employees and agents did not act in bad faith
as to entitle Spouses Viloria to moral and exemplary damages and attorneys fees. CAI also invoked the
following clause printed on the subject tickets:
3. To the extent not in conflict with the foregoing carriage and other services
performed by each carrier are subject to: (i) provisions contained in this ticket, (ii)
applicable tariffs, (iii) carriers conditions of carriage and related regulations which
are made part hereof (and are available on application at the offices of carrier),
except in transportation between a place in the United States or Canada and any
place outside thereof to which tariffs in force in those countries apply.8
Issue:
Whether or not CAI is bound by the acts of Holiday Travels agents and employees such as Mager?
Held:
An examination of this Courts pronouncements in China Air Lines will reveal that an airline
company is not completely exonerated from any liability for the tort committed by its agents employees. A
prior determination of the nature of the passengers cause of action is necessary. If the passengers cause
of action against the airline company is premised on culpa aquiliana or quasi-delict for a tort committed by
the employee of the airline companys agent, there must be an independent showing that the airline
company was at fault or negligent or has contributed to the negligence or tortuous conduct committed by the
employee of its agent. The mere fact that the employee of the airline companys agent has committed a tort
is not sufficient to hold the airline company liable. There is no vinculum juris between the airline company
and its agents employees and the contractual relationship between the airline company and its agent does
not operate to create a juridical tie between the airline company and its agents employees. Article 2180 of
the Civil Code does not make the principal vicariously liable for the tort committed by its agents employees
and the principal-agency relationship per se does not make the principal a party to such tort; hence, the
need to prove the principals own fault or negligence.
On the other hand, if the passengers cause of action for damages against the airline company
is based on contractual breach or culpa contractual, it is not necessary that there be evidence of the airline
companys fault or negligence. As this Court previously stated in China Air Lines and reiterated in Air France
vs. Gillego,24 in an action based on a breach of contract of carriage, the aggrieved party does not have to
prove that the common carrier was at fault or was negligent. All that he has to prove is the existence of the
contract and the fact of its non-performance by the carrier.
Spouses Vilorias cause of action on the basis of Magers alleged fraudulent misrepresentation
is clearly one of tort or quasi-delict, there being no pre-existing contractual relationship between them.
Therefore, it was incumbent upon Spouses Viloria to prove that CAI was equally at fault.
However, the records are devoid of any evidence by which CAIs alleged liability can be
substantiated. Apart from their claim that CAI must be held liable for Magers supposed fraud because
Holiday Travel is CAIs agent, Spouses Viloria did not present evidence that CAI was a party or had
contributed to Magers complained act either by instructing or authorizing Holiday Travel and Mager to issue
the said misrepresentation.
It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the terms
and conditions of the subject contracts, which Mager entered into with them on CAIs behalf, in order to deny
Spouses Vilorias request for a refund or Fernandos use of Lourdes ticket for the re-issuance of a new one,
and simultaneously claim that they are not bound by Magers supposed misrepresentation for purposes of
avoiding Spouses Vilorias claim for damages and maintaining the validity of the subject contracts. It may
likewise be argued that CAI cannot deny liability as it benefited from Magers acts, which were performed in
compliance with Holiday Travels obligations as CAIs agent.

It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over
Mager by preponderant evidence. The existence of control or supervision cannot be presumed and CAI is
under no obligation to prove its denial or nugatory assertion
Therefore, without a modicum of evidence that CAI exercised control over Holiday Travels employees or
that CAI was equally at fault, no liability can be imposed on CAI for Magers supposed misrepresentation.
Emergency Rule
Isaac v. A. L. Ammen Trans. Co., Inc.
1046 SCRA 101
Facts:
Cesar Isaac boarded one of the buses operated by defendant A.L. Ammen Trans. Co., Inc. But
before reaching his destination, the bus collided with a pick up type vehicle. The collision caused the
amputation of the left arm of the plaintiff. Due to the incident, the plaintiff went through several treatments
causing many expenses. Thus, plaintiff filed a case for damages alleging that the collision which resulted in
the loss of his left arm was mainly due to the gross incompetence and recklessness of the driver of the bus
operated by the defendant. In addition, he contended that the defendant incurred liability in culpa contractual
arising from its non-compliance with its obligation to transport plaintiff to his destination. Defendant on its
part set up the defense that the injury caused was due entirely to the fault or negligence of the pick up car
and a contributory negligence on the part of the plaintiff.
Issue:
Whether or not the common carrier liable for the injury caused.
Held:
The Supreme Court held that the defendant A.L. Ammen Trans. Co., Inc., exercised the diligence
required from it and is absolved from liability for the injury caused to its passengers. It was proven in the
case at bar, that the driver of the pick up car was the sole responsible for the accident. Reports show that
the bus was at moderate speed while the pick up was at a full speed and on the wrong lane. The Supreme
Court likewise held that there was indeed contributory negligence on the part of the plaintiff, as he placed his
elbow outside the window knowing that such was dangerous. The injuries caused by the accident worsen.
The Supreme Court held that the following governs the liability of a common carrier: 1) the liability
of a carrier is contractual and arises upon breach of its obligation. There is a breach if it fails to exert
extraordinary diligence according to all the circumstances of each case; 2) a carrier is obliged to carry its
passengers with the utmost diligence of a very cautious person, having due regard for all circumstances; 3)
a carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to, passengers,
it being its duty to prove that it exercised extraordinary diligence; and 4) the carrier is not an insurer against
all risk of travel.

(Delsan Transport Lines Inc Vs. CA)

2.

Doctrine of Last Clear Chance Applicability

Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court
189 SCRA 158

Facts:
Several people boarded a jeepney owned by the spouses Isidro Mangue and Guillermo Carreon.
Said jeepney was driven by Manalo and was travelling to Pampanga to Pangasinan. The passengers wre on
their way home to spend Christmas together with their families. On its way to Pangasinan, one of the rear
tires of the jeepney was detached and it prompted the driver to step on the brakes. Upon applying the
brakes the jeepney made a sudden u-turn and it stopped on the opposite lane of the highway. Subsequent
to the unexpected u-turn a Philippine Rabbit bus bumped the jeepney from behind. As a result of the
collision, three passengers died and the others sustained physical injuries.
The heirs of the passengers filed a case to claim for damages. The lower court held that Manalo,
the driver of the jeep, was negligent. On appeal the Court of Appeals reversed the decision with regard to
the payment of damages to Philippine Rabbit Bus Lines. Hence this petition.
Issue:
1.
2.

Whether or not the doctrine of last clear chance is applicable in this case.
Whether or not Manalo is solely liable for the death and physical injuries of the victims.

Held:
The Court held that the doctrine of last clear chance is not applicable in this case. This doctrine
shall only apply to suits between the owners and drivers of the two colliding vehicles. The case at bar is a
case where the passengers are demanding indemnity from the carrier due to the contract of common
carriage.

It is clear from the evidence that it is Manalo and the owners of the jeepney who are negligent in
this case. There was no proper explanation as to why the rear wheel of the vehicle suddenly became
detached. Therefore the Court affirms the decision of the lower court and holds Manalo and the owners
liable to pay damages.
Bustamante v. Court of Appeals
G.R. No. 89880
Facts:
A sand and gravel truck was descending on a road, on the opposite direction, was a Mazada
passenger bus. The driver of the bus noticed that the truck was wiggling however; the driver still increased
its speed in order to overtake a tractor in front of it. This act of the bus led to the two vehicles side swiping
each other. Several passengers were thrown and caused death and injury to them. The petitioners then filed
a suit against the owner and driver of the truck and the owner and driver of the bus. The trial court held that
both drivers should be solidarily liable to the petitioners. From the decision, only the owner and driver of the
truck appealed. The respondent court reversed the decision as to the two who appealed. The petitioners
now filed this petition.
Issue:
Whether or not the respondents are liable.
Held:
The Court held that the respondents should be liable to the petitioners. The reason is that the
owner of the truck is negligent in hiring the driver and using the old truck in his business which is detrimental
to other due to its poor condition. On the other hand, the driver is liable for he was driving the old truck in a
descending road and in a fast rate. The driver also noticed the wiggling of the tires and did not give regard to
it. Furthermore, the vehicle which is going down or descending is more liable to get out of control because it
has added momentum as provided by the Court. The petitioners raised the doctrine of last clear chance
which the Court disregarded because such doctrine apply only to two drivers against each other in a case
and not in a case where the passenger is claiming for damages against the carrier.
Maritime Collision

3.

Accommodation Passenger
Lara v. Valencia
104 PHIL 65
Facts:
The deceased was an inspector of the Bureau of Forestry in Davao who went to classify logs with
defendant in his Cotabato concession. Lara got sick of malaria. He asked defendant if he could
take him in pick-up back to Davao. Lara sat at the back of the vehicle on a bag. Lara fell off and
later died. CFI rendered judgment ordering defendant to pay damages.
Issue:
Whether or not defendant, as owner of the truck, liable to the death of Lara when the later fell off
his vehicle.
Held:
As accommodation passenger or invited guests, defendant as owner and driver of the pick-up truck
owes them merely the duty to exercise reasonable care so that they may be transported safely to
their destination. Thus, the rule is established by the weight of authority that the owner or operator
of an automobile owes the duty to an invited guest to exercise reasonable care and injury by
increasing the hazards of travels. The rule is that n owner of an automobile owes a guest the duty
to exercise ordinary or reasonable care to avoid injuring him. Since one riding in an automobile is
no less a guest because he asked for the privilege of doing so, the same obligation of care is
imposed upon the driver as in case of one expressing invitation to ride. The extraordinary diligence
required of common carriers is not required.
In the case at bar, declared himself chose the place where he would sit and he was half-asleep
when the accident took place so that the incident is attributed to his lack of care considering that
the pick-up was open and he was then in a crouching position. On the other hand, there is no
showing that the defendant failed to take the precautions necessary to conduct his passengers
safely to this place of destination. Defendant therefore is not liable for damages.
Distinguish Gratuitous Passengers and Discounted Passengers

4.

Carrier not Insurer Against All risk of travel; Exception

Japan Airlines v. Court of Appeals

GR. No. 118864
Facts:
Private respondents were passengers of Japan Airlines from California bound for Manila. The
flights were to make an overnight stopover at Nairita, Japan as an incentive for traveling. However, due to
the eruption of Mt. Pinatubo which rendered the NAIA inaccessible, respondents flight from Japan to Manila
was indefinitely. JAL assumed the hotel expenses for their unexpected overnight stay on June 15, 1991.
However, JAL no longer settled their hotel and accommodation expenses during stay at Nauta, Japan.
Since NAIA was only reopened for airlines traffic on June 22, 1991, private respondent were forced to pay
for their accommodations and meal expenses from their personal funds from June 16 to June 21, 1991.
Hence, they commenced an action for damages against JAL for failing to provide care and comfort to its
stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to
June 21, 1991.

Issue:
Whether or not JAL was liable for the hotel and meal expenses defrayed by private respondents
while pending destination.

Held:
The Supreme Court held that JAL cannot be held liable. In the case at bar, there was absence of
bad faith and negligence on the part of Japan Airlines. Such occurrence of the eruption of Mt.
Pinatubo amounts to a force majeure. When a party is unable to fulfill his obligation because of
force majeure, the general rule is that he cannot be held liable for damages for non-performance.
Common carriers are not insurer of all risks. Airline passengers must take such risks incident to the
mode of travel. However, JAL is not completely absolved from liability. It has the obligation to make
the necessary arrangements to transport private respondents on its first available flight to Manila

Necesito v. Paras
104 PHIL 75
Facts:
A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus Line. While
entering a wooden bridge, its front wheels swerved to the right, the driver lost control and the truck fell into a
breast-deep creek. The mother drowned and the son sustained injuries. These cases involve action ex
contractu against the owner of PRBL filed by the son and heirs of the mother. Lower Court dismissed the
actions, holding that the accident was a fortuitous event.
Issue:
Whether or not the accident was considered a fortuitous event.
Held:
While the carrier is not an insurer of the safety of the passenger, it should nevertheless be held to
answer for the flaws of its equipment it such defects were discoverable. In this connection, the
manufacturer of the defective appliance is considered in law the agent of the carrier, and the good
repute of the manufacturer will not relieve the carrier from liability. The rationale of the carriers
liability is the fact that the passenger has no privity with the manufacturer of the defective
equipment; hence he has no remedy against him, while the carrier has. We find that the defect
could be detected. The periodical, usual inspection of the steering knuckle did not measure up to
the utmost diligence of a very cautious person as far as human care and foresight can provide
and therefore the knuckles failure can not be
JAPAN AIRLINES, vs. ASUNCION

Facts:
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board Japan Airlines
(JAL) Flight 742 bound for Los Angeles. Their itinerary included a stop-over in Narita and an overnight stay
at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of JAL endorsed their applications for

shore pass and directed them to the Japanese immigration official. A shore pass is required of a foreigner
aboard a vessel or aircraft who desires to stay in the neighborhood of the port of call for not more than 72
hours.
During their interview, the Japanese immigration official noted that Michael appeared shorter than his
height as indicated in his passport. Because of this inconsistency, respondents were denied shore pass
entries and were brought instead to the Narita Airport Rest House where they were billeted overnight.
The immigration official also handed Mrs. Higuchi a Notice where it was stated that respondents were
to be watched so as not to escape.
Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by Japans
Immigration Department to handle passengers who were denied shore pass entries, brought respondents to
the Narita Airport Rest House where they stayed overnight until their departure the following day for Los
Angeles. Respondents were charged US$400.00 each for their accommodation, security service and
meals.
On December 12, 1992, respondents filed a complaint for damages claiming that JAL did not fully
apprise them of their travel requirements and that they were rudely and forcibly detained at Narita Airport.
JAL denied the allegations of respondents. It maintained that the refusal of the Japanese
immigration authorities to issue shore passes to respondents is an act of state which JAL cannot interfere
with or prevail upon. Consequently, it cannot impose upon the immigration authorities that respondents be
billeted at Hotel Nikko instead of the airport resthouse.

Issue: whether or not JAL is guilty of breach of contract.

HELD:
Under Article 1755 of the Civil Code, a common carrier such as JAL is bound to carry its passengers
safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons,
with due regard for all the circumstances. When an airline issues a ticket to a passenger, confirmed for a
particular flight on a certain date, a contract of carriage arises. The passenger has every right to expect that
he be transported on that flight and on that date and it becomes the carriers obligation to carry him and his
luggage safely to the agreed destination.[10] If the passenger is not so transported or if in the process of
transporting he dies or is injured, the carrier may be held liable for a breach of contract of carriage.
We find that JAL did not breach its contract of carriage with respondents. It may be true that JAL has
the duty to inspect whether its passengers have the necessary travel documents, however, such duty does
not extend to checking the veracity of every entry in these documents. JAL could not vouch for the
authenticity of a passport and the correctness of the entries therein. The power to admit or not an alien into
the country is a sovereign act which cannot be interfered with even by JAL. This is not within the ambit of
the contract of carriage entered into by JAL and herein respondents. As such, JAL should not be faulted for
the denial of respondents shore pass applications.
5.

Commencement, Duration and Termination of Carriers Responsibility

La Mallorca v. Court of Appeals
17 SCRA 739

Facts:
Plaintiffs husband and wife, together with their minor children, boarded a La Mallorca bus. Upon
arrival at their destination, plaintiffs and their children alighted from the bus and the father led them to a
shaded spot about 5 meters from the vehicle. The father returned to the bus to get a piece of baggage
which was not unloaded. He was followed by her daughter Raquel. While the father was still on the running
board awaiting for the conductor to give his baggage, the bus started to run so that the father had to jump.
Raquel, who was near the bus, was run over and killed.
Lower court rendered judgment for the plaintiff which was affirmed by CA, holding La Mallorca
liable for quasi-delict and ordering it to pay P6,000 plus P400. La Mallorco contended that when the child
was killed, she was no longer a passenger and therefore the contract of carriage terminated.
Issue:
Whether or not the contractual obligation between the parties ceases the moment the passenger
alighted form the vehicle.
Held:
On the question whether the liability of the carrier, as to the child who was already led a place 5
meters from the bus under the contract of carrier, still persists, we rule in the affirmative. It is a recognized
rules that the relation between carrier and passengers does not cease at the moment the passenger alights
from the carriers premises, to be determined from the circumstances. In this case, there was no utmost
diligence. Firstly, the driver, although stopping the bus, did not put off the engine. Secondly, he started to
run the bus even before the bus conductor gave him the signal and while the latter was unloading cargo.
Here, the presence of said passenger near the bus was not unreasonable and the duration of responsibility
still exists. Averment of quasi-delict is permissible under the Rules of Court, although incompatible with the

contract of carriage. The Rules of Court allows the plaintiffs to allege causes of action in the alternative, be
they compatible with each other or not (Sec. 2, Rule 1). Even assuming arguendo that the contract of
carriage has already terminated, herein petitioner can be held liable for the negligence of its driver pursuant
to Art. 2180 of NCC. Decision MODIFIED. Only question raised in the briefs can be passed upon, and as
plaintiffs did not appeals the award of P3,000.00 the increase by the CA of the award to P6,000.00 cannot
be sustained.
Aboitiz Shipping Corporation vs. Court of Appeals
188 SCRA 387
Facts:
Anacleto Viana was a passenger of M/V Antonia bound for Manila which was owned by defendant
Aboitiz. After the said vessel has landed, the Pioneer Stevedoring Corp., as the arrastre operator, took over
the exclusive control of the cargoes loaded on it. One hour after the passengers had disembarked, Pioneer
Stevedoring started operation by unloading the cargoes using its crane. Viana who had already
disembarked remembered that some of his cargoes were still inside the vessel. While pointing to the crew of
the vessel the place where his cargoes were, the crane hit him, pinning him between the side of the vessel
and the crane which resulted to his death. Vianas wife filed a complaint for damages against Aboitiz for
breach of contract f carriage. Aboitiz, however filed a third party complaint against Pioneer since it had
control completely over the vessel during the incident. Furthermore, petitioner contends that one hour has
already elapsed from the time Viana disembarked, thus he has already ceased to be a passenger.
Issue:
Whether or not Aboitiz is liable for the death of Viana.
Held:
The Supreme Court held that the failure of Aboitiz to exercise extraordinary diligence for the safety
of its passengers makes Aboitiz liable. It has been recognized as a rule that the relation of the carrier and
passenger does not cease the moment the passenger alights from the carriers vehicle, but continues until
the passenger has had a reasonable time or a reasonable opportunity to leave the carriers premises. A
reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. The
primary factor to be considered is the existence of a reasonable cause as will justify the presence of the
victim on or near the petitioners vessel. In the case at bar, such justifiable cause exists because he had to
come back for his cargo. Aboitiz has failed to safeguard its passenger with extraordinary diligence in
requiring or seeing to it that precautionary measures were strictly and actually enforced to subserve their
purpose of preventing entry into a forbidden area.
Mallari, Sr. v. Court of Appeals
324 SCRA 147
Facts:
Mallari Jr. was the driving a passenger jeepney owned by his father, co-petitioner herein. The jeep
collided with the delivery van of Bulletin Publishing Corp. while travelling on the National Nighway in Bataan.
Mallari Jr. proceeded to overtake a fiera which had stopped in front of him. He negotiated the curve and
moved in the opposite lane in order to overtake the fiera. As he passed the vehicle he saw the delivery van
of Bulletin and the vehicles collided. The points of collision were the and the left rear portion of the
passenger jeepney and the left front side of the delivery van. The 2 right wheels of the delivery van were on
the right shoulder of the road and pieces of debris from the accident were found scattered along the
shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The impact
caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom
was Israel Reyes who eventually died due to the gravity of his injuries.
The widow of Reyes filed a complaint to recover damages from Mallari, Jr. and Sr. and Bulletin as
well. The trial court found that the proximate cause of the collision was the negligence of the driver of the
Bulletin delivery van, considering the fact that the left front portion of the delivery truck hit and bumped the
left rear portion of the passenger jeepney. On appeal, the court reversed the decision of the lower court and
held that it was Mallari Jr. who was negligent. Hence this petition.
Issue: Whether or not petitioners herein should be held liable for the death of Reyes.
Held:
The Court affirmed the decision of the Court of Appeals and held that Mallari Jr. and Sr. who are
responsible for the death of Reyes. The collision was caused by the sole negligence of petitioner Alfredo
Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway,
he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before
overtaking the Fiera. This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as
amended, otherwise known as The Land Transportation and Traffic Code. The rule is settled that a driver
abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the
duty to see to it that the road is clear and not to proceed if he cannot do so in safety. Article 2185 of the
NCC, there is a presumption of negligence on the part of a person driving a motor vehicle if at the time of the
mishap he was violating a traffic regulation. Petitioners herein failed to present satisfactory evidence to
overcome this legal presumption. Therefore they shall be liable for the loss of Reyes life.

LIGHT RAIL TRANSIT AUTHORITY VS. NAVIDAD,

Facts:
On 14 October 1993, about half an hour past seven oclock in the evening, Nicanor Navidad, then
drunk, entered the EDSA LRT station after purchasing a token (representing payment of the fare). While
Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to
the area approached Navidad. A misunderstanding or an altercation between the two apparently ensued
that led to a fist fight. No evidence, however, was adduced to indicate how the fight started or who, between
the two, delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment that
Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in. Navidad was struck by
the moving train, and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her
children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro
Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and Roman filed
a counterclaim against Navidad and a cross-claim against Escartin and Prudent. Prudent, in its answer,
denied liability and averred that it had exercised due diligence in the selection and supervision of its security
guards.

Issue: WON THE CA GRAVELY ERRED IN FINDING THAT PETITIONERS ARE LIABLE FOR THE DEATH
OF NICANOR NAVIDAD, JR.?
HELD:
The law requires common carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances. Such duty of a common carrier to provide safety to
its passengers so obligates it not only during the course of the trip but for so long as the passengers are
within its premises and where they ought to be in pursuance to the contract of carriage. The statutory
provisions render a common carrier liable for death of or injury to passengers (a) through the negligence or
wilful acts of its employees or b) on account of wilful acts or negligence of other passengers or of
strangers if the common carriers employees through the exercise of due diligence could have
prevented or stopped the act or omission.

In case of such death or injury, a carrier is presumed to have been at fault or been negligent, and by
simple proof of injury, the passenger is relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an
unforeseen event or to force majeure. In the absence of satisfactory explanation by the carrier on how the
accident occurred, which petitioners, according to the appellate court, have failed to show, the presumption
would be that it has been at fault, an exception from the general rule that negligence must be proved.
The foundation of LRTAs liability is the contract of carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its failure to exercise the high diligence required of the
common carrier. In the discharge of its commitment to ensure the safety of passengers, a carrier may
choose to hire its own employees or avail itself of the services of an outsider or an independent firm to
undertake the task. In either case, the common carrier is not relieved of its responsibilities under the
contract of carriage.
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad,
this Court is concluded by the factual finding of the Court of Appeals that there is nothing to link (Prudent) to
the death of Nicanor (Navidad), for the reason that the negligence of its employee, Escartin, has not been
duly proven x x x. This finding of the appellate court is not without substantial justification in our own review
of the records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act
or omission, he must also be absolved from liability. Needless to say, the contractual tie between the LRT
and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be made liable
only for his own fault or negligence.
6.

Presumption of Negligence Liability of Carriers for the Death or Injury to Passengers:

Exceptions
Bayasen v. Court of Appeals
G.R. No. L-25785

Facts:
Petitioner Saturnino Bayasen, the Rural Health Physician in Sagada, Mountain Province, went to
barrio Ambasing to visit a patient. Two nurses from the Saint Theodores Hospital in Sagada, Elena Awichen

and Dolores Balcita, rode with him in the jeep assigned for the use of the Rural Health Unit. Later, at
Ambasing, the girls, who wanted to gather flowers, again asked if they could ride with him up to a certain
place on the way to barrio Suyo which he intended to visit anyway. Dr. Bayasen again allowed them to ride,
Elena sitting herself between him and Dolores.
On the way, the jeep went over a precipice. About 8 feet below the road, it was blocked by a pine
tree. The three, were thrown out of the jeep. Elena was found lying in a creek further below. She suffered a
skull fracture which caused her death. Saturnino Bayasen was charged by with Homicide Thru Reckless
Imprudence. Trial Court found Bayasen sentenced him to an indeterminate penalty of 4 Months and 1 Day of
arresto mayor as minimum, to 1 Year, 7 Months and 10 Days of prision correccional, as maximum,
indemnify the heirs Elena Awichen P3,000.00 as compensatory damages, P1,000.00 as attorneys fees and
P1,886.00 for burial expenses of the deceased, and to pay the costs. On Appeal, CA affirmed the decision of
the trial court with the modifications that the indemnity was increased to P6,000.00; the award of attorneys
fees was set aside; and that the maximum of the prison term was raised to 1 Year, 7 Months, and 17 Days of
prision correccional. The motion for reconsideration of Bayasen was denied. Hence, the petition for review
on certiorari.
Issue:
Whether or not the reckless driving of accused-petitioner was the proximate cause of the death of
the victim.
Held:
The proximate cause of the tragedy was the skidding of the rear wheels of the jeep and not the
unreasonable speed of the petitioner because there was no evidence on record to prove or support the
finding that the petitioner was driving at an unreasonable speed. The star witness of the prosecution,
Dolores Balcita who was one of the passengers in the jeep, testified that Saturnino Bayasen was driving his
jeep moderately just before the accident and categorically stated that she did not know what caused the jeep
to fall into the precipice. It is a well-known physical fact that cars may skid on greasy or slippery roads, as in
the instant case, without fault on account of the manner of handling the car. Skidding means partial or
complete loss of control of the car under circumstances not necessarily implying negligence. It may occur
without fault. Herein, under the particular circumstances, Bayasen who skidded could not be regarded as
negligent, the skidding being an unforeseen event, so that Bayasen had a valid excuse for his departure
from his regular course.
The negligence of Bayasen has not having been sufficiently established, his guilt of the crime
charged has not been proven beyond reasonable doubt. He is, therefore, entitled to acquittal. The Supreme
Court set aside the decision of the Court of Appeals sought to be reviewed, and acquitted Bayasen of the
crime charged in the information in Criminal Case 1056 of the CFI of Mountain Province, with costs de oficio.
Calalas v. Court of Appeals
332 SCRA 356
Facts:
Private respondent Eliza Sunga, then freshman at Siliman University , took a passenger jeepney
owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity, Sunga was given
by the conductor an extension seat, a wooden stool at the back of the door at the rear end of the vehicle.
When the jeepney stopped to a let passenger off and Sunga was about to give way to the outgoing
passenger, an Izuzu truck driven by Verena and owned by Salva bumped the left rear portion of the
jeepney. Sunga sustained multiple injuries and remained on a cast for three months.
Sunga filed a complaint for damages against Calalas, for breach of contract of carriage. Calalas, on
the other hand,filed a third party complaint against Francisco Salva, the owner of the truck. The lower court
rendered judgment against Salva and absolved Calalas of liability.
It took cognizance of other case (Civil Case No. 3490), filed by Calalas against Salva and Verena
,for quasi-delict, in which branch 37 of the same court held Salva and his driver Verena jointly liable to
Calalas for the damage to his jeepney
The CA reversed the lower courts ruling on the ground the ground that Sungas cause of action
was based on a contract of carriage, not quasi-deplict, and that the common carrier failed to exercise the
diligence required under the Civil Code. The appellate court dismissed the third-party complaint against
Salva and adjudged Calalas liable for damages to Sunga.
Issue:
Whether or not there was a breach of contract of carriage.
Held:
Iin quasi-delict, the negligence or fault should be clearly established because it is the basis of the
action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the
contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely
to his destination. In case of death or injuries to passengers, Article 1756 of the Civil Code provides that
common carriers are presumed to have been at fault or have acted negligently unless they proved that they
observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily
shifts to the common carrier the burden of proof.
It is immaterial that the proximate cause of the collision between the jeepney and the truck was the
negligence of the truck driver. The doctrine of proximate cause is applicable only in action for quasi-delict,
not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where
there is no relation between him and another party. In such a case, the obligation is created by law itself.
But, where there is a pre-existing contractual relation between parties, it is the parties themselves who
create the obligation, and the function of the law is merely to regulate the relation thus created.

7. Negligence or Inntentional Assault by carriers Employee

De Gillaco v. Manila Railroad Co.
G.R. No. L-8034
Facts:
Lt. Tomas Gillaco, husband of Cornelia A. de Gillaco, was a passenger in the early morning train of
the Manila Railroad Company (MRC) from Calamba, Laguna to Manila. When the train reached the Paco
Railroad station, Emilio Devesa, a train guard of MRC assigned in the Manila-San Fernando, La Union Line,
happened to be in said station waiting for the same train which would take him to Tutuban Station, where he
was going to report for duty. Devesa had a long standing personal grudge against Tomas Gillaco dating back
during the Japanese occupation. And because of this personal grudge, Devesa shot Gillaco upon seeing
him inside the train. The carbine furnished by the MRC for his use as train guard. Tomas Gillaco died as a
result of the wound sustained from the shot. Devesa was convicted of homicide by final judgment of the
Court of Appeals.
Wife of deceased petitioner, filed an action against the MRC at CFI Laguna. The trial court
sentenced the respondents to pay P4,000 damages to the petitioners. Thus this appeal.
Issue:
Whether or not the carrier should be held liable
Held:
While the passenger is entitled to protection from personal violence by the carrier or its agents or
employees, the responsibility of the carrier extends to those acts that the carrier could foresee or avoid
through the exercise of the degree of care or diligence required of it. The Old Civil Code did not impose
upon the carrier absolute liability for assaults of their employees upon the passenger. In the present case,
the act of Devesa is shooting the passenger was entirely unforeseeable by MRC. They had no means to
ascertain or anticipate that the two would meet, or could it reasonably foresee every personal career that
might exist between each of its may employee and any one of the thousands of passengers riding in its
train. The shooting was therefore, a caso fortuito, both being unforeseeable and inevitable, under the
circumstances. The resulting breach of Manila Railroads contract of safe carriage with the late Tomas
Gillaco was excused thereby. Furthermore, when the crime took place, the guard Devesa had no duties to
discharge in connection with the transportation of the deceased from Calamba to Manila. The stipulation of
facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned to guard the Manila-San
Fernando (La Union) trains, and he was at Paco Station awaiting transportation to Tutuban.
SC reversed the judgment appealed from, and dismissed the complaint, without costs.

Maranan v. Perez
20 SCRA 412
Facts:
Rogelio Carachea was a passenger in a taxicab operated by Pascual perez when he was stabbed
and killed by the driver, who was found guilty of homicide in the CFI. While an appeal at the CA, Antonia
Maranan, Rogelios mother, filed an action to recover damages for the death of her son. The CFI awarded
her P3000 as damages against Perez dismissing the claim against the driver.

Issue:
Whether or not the carrier is liable for the assaults of its employee upon the passengers.

Held:
Under Art. 1739 of the Civil Code, a common carrier are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers employees, although such employees may
have ached beyond the scope of their authority or in violation of the order of the common carrier.
It is the carriers strict obligation to select its drivers and similar employees with due regard not only
to technical competence but also to this total personality, their behavior and thus moral fiber.
The dismissal of the claim against the driver is correct. Plaintiffs action was predicated in breach
of contract of carriage and the cab driver was not a part thereto. His civil liability is covered on the criminal
case.

8. Passengers Duty to Observe Dillegence to avoid injury ; Cotributory negligence

Isaac v. A. L. Ammen Trans. Co., Inc.
1046 SCRA 101
Facts:
Cesar Isaac boarded one of the buses operated by defendant A.L. Ammen Trans. Co., Inc. But
before reaching his destination, the bus collided with a pick up type vehicle. The collision caused the
amputation of the left arm of the plaintiff. Due to the incident, the plaintiff went through several treatments
causing many expenses. Thus, plaintiff filed a case for damages alleging that the collision which resulted in
the loss of his left arm was mainly due to the gross incompetence and recklessness of the driver of the bus
operated by the defendant. In addition, he contended that the defendant incurred liability in culpa contractual
arising from its non-compliance with its obligation to transport plaintiff to his destination. Defendant on its
part set up the defense that the injury caused was due entirely to the fault or negligence of the pick up car
and a contributory negligence on the part of the plaintiff.
Issue:
Whether or not the common carrier liable for the injury caused.
Held:
The Supreme Court held that the defendant A.L. Ammen Trans. Co., Inc., exercised the diligence
required from it and is absolved from liability for the injury caused to its passengers. It was proven in the
case at bar, that the driver of the pick up car was the sole responsible for the accident. Reports show that
the bus was at moderate speed while the pick up was at a full speed and on the wrong lane. The Supreme
Court likewise held that there was indeed contributory negligence on the part of the plaintiff, as he placed his
elbow outside the window knowing that such was dangerous. The injuries caused by the accident worsen.
The Supreme Court held that the following governs the liability of a common carrier: 1) the liability
of a carrier is contractual and arises upon breach of its obligation. There is a breach if it fails to exert
extraordinary diligence according to all the circumstances of each case; 2) a carrier is obliged to carry its
passengers with the utmost diligence of a very cautious person, having due regard for all circumstances; 3)
a carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to, passengers,
it being its duty to prove that it exercised extraordinary diligence; and 4) the carrier is not an insurer against
all risk of travel.
Philippine National Railways vs. CA
139 SCRA 87
Facts:
Winifredo Tupang was a paying passenger who boarded Train No. 516 f the Philippine National
Railways at Camarines Sur bound for Manila. Due to some mechanical defect, the train stopped which took
two hours before the train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at
Lucena, Tupang fell off the train resulting to his death. Alarm was raised by the passengers that somebody
fell but the train did not stop. Instead, the train conductor called the station agent and requested for
verification of the confirmation. Rosario Tupang, the deceaseds widow filed a cmplaint against PNR for
breach of contract f carriage. However, PNR raised as a defense hat it was a mere agency of the Philippine
government without distinct or separate personality of it own. Likewise, they contended that their funds are
governmental in character, thus they are not subject to garnishment or execution.
Issue:
Whether or not PNR could be held liable for damages for the death of Winifredo Tupang.
Held:
The Supreme Court held that PNR should be held liable. The Philippine National Railways is not
exempt from garnishment. It descends to a level of a citizen, thus it cannot assail non-suability as a bar for
damages. Under PA 4156, PNR was created generally with all powers of a corporation under the
Corporation Law. Hence, the characteristics and attributes of a corporation is fully applicable to PNR. PNR
may sue and be sued and could be subjected to court processes just like any other corporation. The
Supreme Court held that PNR should be held liable for the death of Winifredo Tupang because it acted in

bad faith as it did not stop despite the alarm raised by its passengers. PNR has the obligation to transport its
passengers to their destination and to observe extraordinary diligence in doing so.

9. Injury to Passengers due to acts of Co- Passengers or Strangers

Bachelor Express, Inc. v. Court of Appeals
G.R. No. 85691
Facts:
Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner Bachelor
Express, Inc. While the bus was on its way to Cagayan de Oro, a passenger at the rear portion suddenly
stabbed another passenger. The stabbing cause commotion and panic amount the passengers such that
the passengers started running to the sole exit shoving each other resulting in the falling off the bus by
passengers Beter and Rautraut causing them fatal injuries. The heirs of the deceased sued the bus
company Evidence adduced showed that the bus driver did not immediately stop the bus at the height of the
commotion; the bus was speeding from a full stop; and the victims fell from the bus door when it was opened
or gave way while the bus was still running.
Petitioner denied liability on the ground that the death of its two passengers was caused by a force
majeure as it was due to the act of a third person who was beyond its control and supervision. In line with
this, petitioner also argued that it is not an insurer of its passengers.
Issue:
1.
2.

Whether or not the case at bar is within the context of force majeure.
Whether or not the petitioner should be absolved from liability for the death of its passengers.

Held:
The sudden act o the passenger who stabbed another passenger in the bus is within the context of
force majeure. However, in order that a common carrier may be absolved from liability in case of force
majeure, it is not enough that the accident was caused by force majeure. The common carrier must still
proves that it was not negligent in causing the injuries resulting from such accident. Considering the factual
findings in this case, it is clear that petitioner has failed to overcome the presumption of fault and negligence
found in the law governing common carriers. The argument that the petitioners are not insurers of their
passengers deserves no merit in view of the failure of the petitioners to observe extraordinary diligence in
transporting safely the passengers to their destination as warranted by law.

(Fortune Express Inc. Vs. CA)

Chapter IV. Actions and Damages in case of Breach

1. Concurrent Causes of Action
Distinctions
Importance
2.

Solidary Liability
TIU VS. ARRIESGADO

Facts:
At about 10:00 p.m. of March 15, 1987, the cargo truck marked Condor Hollow Blocks and General
Merchandise bearing plate number GBP-675 was loaded with firewood in Bogo, Cebu and left for Cebu
City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the truck passed over a bridge,
one of its rear tires exploded. The driver, Sergio Pedrano, then parked along the right side of the
national highway and removed the damaged tire to have it vulcanized at a nearby shop, about 700
meters away.[3] Pedrano left his helper, Jose Mitante, Jr. to keep watch over the stalled vehicle, and
instructed the latter to place a spare tire six fathoms away[4] behind the stalled truck to serve as a
warning for oncoming vehicles. The trucks tail lights were also left on. It was about 12:00 a.m., March
16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by Virgilio Te
Laspias was cruising along the national highway of Sitio Aggies, Poblacion, Compostela, Cebu. The
passenger bus was also bound for Cebu City, and had come from Maya, Daanbantayan, Cebu. Among
its passengers were the Spouses Pedro A. Arriesgado and Felisa Pepito Arriesgado, who were seated
at the right side of the bus, about three (3) or four (4) places from the front seat.
As the bus was approaching the bridge, Laspias saw the stalled truck, which was then about 25
meters away.[5] He applied the breaks and tried to swerve to the left to avoid hitting the truck. But it was
too late; the bus rammed into the trucks left rear. The impact damaged the right side of the bus and left
several passengers injured. Pedro Arriesgado lost consciousness and suffered a fracture in his right

colles. His wife, Felisa, was brought to the Danao City Hospital. She was later transferred to the
Southern Island Medical Center where she died shortly thereafter.
Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage, damages and
attorneys fees before the Regional Trial Court of Cebu City, Branch 20, against the petitioners, D
Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspias on May 27, 1987. The
respondent alleged that the passenger bus in question was cruising at a fast and high speed along the
national road, and that petitioner Laspias did not take precautionary measures to avoid the accident.
Thus:
That the accident resulted to the death of the plaintiffs wife, Felisa Pepito Arriesgado, as evidenced by
a Certificate of Death, a xerox copy of which is hereto attached as integral part hereof and marked as
ANNEX A, and physical injuries to several of its passengers, including plaintiff himself who suffered
a COLLES FRACTURE RIGHT, per Medical Certificate, a xerox copy of which is hereto attached as
integral part hereof and marked as ANNEX B hereof.
7. That due to the reckless and imprudent driving by defendant Virgilio Te Laspias of the said Rough
Riders passenger bus, plaintiff and his wife, Felisa Pepito Arriesgado, failed to safely reach their
destination which was Cebu City, the proximate cause of which was defendant-drivers failure to
observe utmost diligence required of a very cautious person under all circumstances.
8. That defendant William Tiu, being the owner and operator of the said Rough Riders passenger bus
which figured in the said accident, wherein plaintiff and his wife were riding at the time of the accident, is
therefore directly liable for the breach of contract of carriage for his failure to transport plaintiff and his
wife safely to their place of destination which was Cebu City, and which failure in his obligation to
transport safely his passengers was due to and in consequence of his failure to exercise the diligence of
a good father of the family in the selection and supervision of his employees, particularly defendantdriver Virgilio Te Laspias.
Issue:
First Issue: Whether or not Petitioner Tiu failed to overcome the presumption
Of negligence against him as One engaged in the business Of common carriage?
Second Issue: Whether or not The Doctrine of Last Clear Chance
Is Inapplicable?

Held:

First Issue: The rules which common carriers should observe as to the safety of their passengers are
set forth in the Civil Code, Articles 1733,[32] 1755[33] and 1756.[34] In this case, respondent Arriesgado
and his deceased wife contracted with petitioner Tiu, as owner and operator of D Rough Riders bus
service, for transportation from Maya, Daanbantayan, Cebu, to Cebu City for the price of P18.00.[35] It
is undisputed that the respondent and his wife were not safely transported to the destination agreed
upon. In actions for breach of contract, only the existence of such contract, and the fact that the obligor,
in this case the common carrier, failed to transport his passenger safely to his destination are the
matters that need to be proved.[36] This is because under the said contract of carriage, the petitioners
assumed the express obligation to transport the respondent and his wife to their destination safely and
to observe extraordinary diligence with due regard for all circumstances. Any injury suffered by the
passengers in the course thereof is immediately attributable to the negligence of the carrier.Upon the
happening of the accident, the presumption of negligence at once arises, and it becomes the duty of a
common carrier to prove that he observed extraordinary diligence in the care of his passengers.[39] It
must be stressed that in requiring the highest possible degree of diligence from common carriers and in
creating a presumption of negligence against them, the law compels them to curb the recklessness of
their drivers.

While evidence may be submitted to overcome such presumption of negligence, it must be shown that
the carrier observed the required extraordinary diligence, which means that the carrier must show the
utmost diligence of very cautious persons as far as human care and foresight can provide, or that the
accident was caused by fortuitous event.[41] As correctly found by the trial court, petitioner Tiu failed to
conclusively rebut such presumption. The negligence of petitioner Laspias as driver of the passenger
bus is, thus, binding against petitioner Tiu, as the owner of the passenger bus engaged as a common
carrier.
Second issue: Contrary to the petitioners contention, the principle of last clear chance is inapplicable in
the instant case, as it only applies in a suit between the owners and drivers of two colliding vehicles. It
does not arise where a passenger demands responsibility from the carrier to enforce its contractual
obligations, for it would be inequitable to exempt the negligent driver and its owner on the ground that
the other driver was likewise guilty of negligence.The common law notion of last clear chance permitted
courts to grant recovery to a plaintiff who has also been negligent provided that the defendant had the

last clear chance to avoid the casualty and failed to do so. Accordingly, it is difficult to see what role, if
any, the common law of last clear chance doctrine has to play in a jurisdiction where the common law
concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been
rejected, as it has been in Article 2179 of the Civil Code.

FIREMAN'S FUND INSURANCE CO vs.METRO PORT SERVICE, INC., (Formerly E. Razon, Inc.)
Facts:
Vulcan Industrial and Mining Corporation imported from the United States several machineries and
equipment which were loaded on board the SIS Albert Maersk at the port of Philadelphia, U.S.A., and
transhipped for Manila through the vessel S/S Maersk Tempo.
The cargo which was covered by a clean bill of lading issued by Maersk Line and Compania General de
Tabacos de Filipinas (referred to as the CARRIER) consisted of the following:
1 piece truck mounted core drill, 1 piece trailer mounted core drill, 1 (40') container of 321 pieces steel
tubings, 1 (40') container of 170 pieces steel tubings and 1 (40') container of 13 cases, 3 crates, 2 pallets
and 26 mining machinery parts. (Rollo, p. 4)
The shipment arrived at the port of Manila on June 3, 1979 and was turned over complete and in good order
condition to the arrastre operator E. Razon Inc. (now Metro Port Service Inc. and referred to as the
ARRASTRE).
At about 10:20 in the morning of June 8, 1979, a tractor operator, named Danilo Librando and employed by
the ARRASTRE, was ordered to transfer the shipment to the Equipment Yard at Pier 3. While Librando was
maneuvering the tractor (owned and provided by Maersk Line) to the left, the cargo fell from the chassis and
hit one of the container vans of American President Lines. It was discovered that there were no twist lock at
the rear end of the chassis where the cargo was loaded.
There was heavy damage to the cargo as the parts of the machineries were broken, denied, cracked and no
longer useful for their purposes.
The value of the damage was estimated at P187,500.00 which amount was paid by the petitioner insurance
company to the consignee, Vulcan Industrial and Mining Corporation.
Issue: WHETHER OR NOT THE CA ERRED IN LIMITING LIABILITY SOLELY ON CO-DEFENDANT
MAERSK LINES, CONTRARY TO THE FINDINGS OF FACTS OF THE TRIAL COURT A QUO AND OTHER
FACTORS SHOWING CLEAR JOINT LIABILITY OF DEFENDANTS IN SOLIDUM.
HELD:
Claims. The CONTRACTOR shall, at its own expense handle all merchandise in the piers and other
designated places and at its own expense perform all work undertaken by it hereunder diligently and in
skillful workmanlike and efficient manner; That the CONTRACTOR shall be solely responsible as an
independent CONTRACTOR, and hereby agrees to accept liability and to promptly pay to the ship company,
consignee, consignor or other interested party or parties for the loss, damage, or non-delivery of cargoes to
the extent of the actual invoice value of each package which in no case shall be more than Three Thousand
Five Hundred Pesos (P3,500.00) for each package unless the value of the importation is otherwise specified
or manifested or communicated in writing together with the invoice value and supported by a certified
packing list to the CONTRACTOR by the interested party or parties before the discharge of the goods, as
well as all damage that may be suffered on account of loss, damage, or destruction of any merchandise
while in custody or under the control of the CONTRACTOR in any pier, shed, warehouse, facility; or other
designated place under the supervision of the BUREAU, but said CONTRACTOR shall not be responsible
for the condition of the contents of any package received nor for the weight, nor for any loss, injury or
damage to the said cargo before or while the goods are being received or remained on the piers, sheds,
warehouse or facility if the loss, injury or damage is caused by force majeure, or other cause beyond the
CONTRACTORS control or capacity to prevent or remedy; ...
The CONTRACTOR shall be solely responsible for any and all injury or damage that may arise on account
of the negligence or carelessness of the CONTRACTOR, its agent or employees in the performance of the
undertaking by it to be performed under the terms of the contract, and the CONTRACTOR hereby agree to
and hold the BUREAU at all times harmless therefrom and whole or any part thereof. (Original Records, pp.
110-112; Emphasis supplied)
To carry out its duties, the ARRASTRE is required to provide cargo handling equipment which includes
among others trailers, chassis for containers. In some cases, however, the shipping line has its own cargo
handling equipment.

In this particular instance, the records reveal that Maersk Line provided the chassis and the tractor which
carried the carried the subject shipment. It merely requested the ARRASTRE to dispatch a tractor operator
to drive the tractor inasmuch as the foreign shipping line did not have any truck operator in its employ. Such
arrangement is allowed between the ARRASTRE and the CARRIER pursuant to the Management Contract.
It was clearly one of the services offered by the ARRASTRE. We agree with the petitioner that it is the
ARRASTRE which had the sole discretion and prerogative to hire and assign Librando to operate the tractor.
It was also the ARRASTRE's sole decision to detail and deploy Librando for the particular task from among
its pool of tractor operators or drivers. It is, therefore, inacurrate to state that Librando should be considered
an employee of Maersk Line on that specific occasion.
Handling cargo is mainly the s principal work so its driver/operators, "cargadors", or employees should
observe the stand" and indispensable measures necessary to prevent losses and damage to shipments
under its custody. Since the ARRASTRE offered its drivers for the operation of tractors in the handling of
cargo and equipment, then the ARRASTRE should see to it that the drivers under its employ must exercise
due diligence in the performance of their work. From the testimonies of witnesses presented, we gather that
driver/operator Librando was remiss in his duty. Benildez Cepeda, an arrastre-investigator of Metro Port
admitted that Librando as tractor-operator should first have inspected the chassis and made sure that the
cargo was securely loaded on the chassis
Whether or not the twist lock can be seen by the naked eye when the cargo has been loaded on the chassis,
an efficient and diligent tractor operator must nevertheless check if the cargo is securely loaded on the
chassis.
We, therefore, find Metro Port Service Inc., solidarily liable in the instant case for the negligence of its
employee. With respect to the limited liability of the ARRASTRE, the records disclose that the value of the
importation was relayed to the arrastre operator and in fact processed by its chief claims examiner based on
the documents submitted.
(Eastern Shipping Lines VS CA)
(Philippines First Insurance Co. VS Wallem Phils. Shipping Inc.