Bascos v.

CA
Facts:
Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair
Shipping Agency Corporation whereby the former bound itself to haul the latters
2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted with
petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans.
Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the
amount of goods lost in accordance with their contract. Cipriano demanded
reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint
for breach of contract of carriage. Petitioner denied that there was no contract of
carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force
majeure. The trial court ruled against petitioner.
Issues:
(1) Was petitioner a common carrier?
(2) Was the hijacking referred to a force majeure?
Held:
(1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or
firm, or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water or air, for compensation, offering their services to the
public." The test to determine a common carrier is "whether the given undertaking is a
part of the business engaged in by the carrier which he has held out to the general public
as his occupation rather than the quantity or extent of the business transacted." In this
case, petitioner herself has made the admission that she was in the trucking business,
offering her trucks to those with cargo to move. Judicial admissions are conclusive and
no evidence is required to prove the same.
(2) Common carriers are obliged to observe extraordinary diligence in the vigilance over
the goods transported by them. Accordingly, they are presumed to have been at fault or
to have acted negligently if the goods are lost, destroyed or deteriorated. There are very
few instances when the presumption of negligence does not attach and these instances
are enumerated in Article 1734. In those cases where the presumption is applied, the
common carrier must prove that it exercised extraordinary diligence in order to
overcome the presumption. The presumption of negligence was raised against
petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion,
private respondent need not introduce any evidence to prove her negligence. Her own
failure to adduce sufficient proof of extraordinary diligence made the presumption
conclusive against her.

FGU Insurance Corp. v. CA

Facts:
On April 21, 1987, a car owned by private respondent FILCAR Transport Inc., rented to
and driven by Dahl-Jensen, a Danish tourist, swerved into the right and hit the car
owned by Lydia Soriano and driven by Benjamin Jacildone. Dahl-Jensen did not possess
a Philippine drivers license. Petitioner, as the insurer of Sorianos car, paid the latter

P25,382.20 and, by way of subrogation, sued FILCAR, Dahl-Jensen, and Fortune

Insurance Corporation, FILCARs insurer, for quasi-delict. The trial court dismissed the
petition for failure to substantiate the claim for subrogation. The Court of Appeals
affirmed the decision, but on the ground that only Dahl-Jensens negligence was proven,
not that of FILCAR. Hence, this instant petition.
Issues:
(1) Whether an action based on quasi-delict will prosper against a rent-a-car company
and, consequently, its insurer for fault or negligence of the car lessee in driving the
rented vehicle
(2) Whether the ruling in MYC-Agro-Industrial Corporation v. Vda. de Caldo is
applicable in the case at bar
Held:
(1) We find no reversible error committed by respondent court in upholding the
dismissal of petitioner's complaint. The pertinent provision is Art. 2176 of the Civil Code
which states: "Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties, is called a quasi-delict . . . .
". To sustain a claim based thereon, the following requisites must concur: (a) damage
suffered by the plaintiff; (b) fault or negligence of the defendant; and, (c) connection of
cause and effect between the fault or negligence of the defendant and the damage
incurred by the plaintiff. We agree with respondent court that petitioner failed to prove
the existence of the second requisite, i.e., fault or negligence of defendant FILCAR,
because only the fault or negligence of Dahl-Jensen was sufficiently established, not that
of FILCAR. It should be noted that the damage caused on the vehicle of Soriano was
brought about by the circumstance that Dahl-Jensen swerved to the right while the
vehicle that he was driving was at the center lane. It is plain that the negligence was
solely attributable to Dahl-Jensen thus making the damage suffered by the other vehicle
his personal liability. Respondent FILCAR did not have any participation therein.
Respondent FILCAR being engaged in a rent-a-car business was only the owner of the
car leased to Dahl-Jensen. As such, there was no vinculum juris between them as
employer and employee. Respondent FILCAR cannot in any way be responsible for the
negligent act of Dahl-Jensen, the former not being an employer of the latter.
(2) Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a
misapprehension of our ruling therein. In that case, the negligent and reckless operation
of the truck owned by petitioner corporation caused injuries to several persons and
damage to property. Intending to exculpate itself from liability, the corporation raised
the defense that at the time of the collision it had no more control over the vehicle as it
was leased to another; and, that the driver was not its employee but of the lessee. The
trial court was not persuaded as it found that the true nature of the alleged lease
contract was nothing more than a disguise effected by the corporation to relieve itself of
the burdens and responsibilities of an employer. We upheld this finding and affirmed
the declaration of joint and several liability of the corporation with its driver.

Crisostomo v. CA, 409 SCRA 528 (2003)

Facts
Menor went to her aunts residence on a Wednesday to deliver petitioners travel
documents and plane tickets. Estela, in turn, gave Menor the full payment for the
package tour. Menor then told her to be at the Ninoy Aquino International Airport (NAIA)
on Saturday, two hours before her flight on board British Airways.
Without checking her travel documents, Estela went to NAIA on Saturday, to take the
flight for the first leg of her journey from Manila to Hongkong. She discovered that the
flight she was supposed to take had already departed the previous day. She learned
that her plane ticket was for the flight scheduled on June 14, 1991. She thus called up
Menor to complain.
Subsequently, Menor prevailed upon Estela to take another tour the "British Pageant,
which cost P20, 881.00. She gave caravan travel and tours P7, 980.00 as partial
payment and commenced the trip in July 1991.
Upon petitioners return from Europe, she demanded from respondent the
reimbursement of P61, 421.70, representing the difference between the sum she paid
for "Jewels of Europe" and the amount she owed respondent for the "British Pageant"
tour. Despite several demands, respondent company refused to reimburse the amount,
contending that the same was non-refundable.
Estela filed a complaint against Caravan travel and Tours for breach of contract of
carriage and damages.
A) Will the action prosper?
B) Will she be entitled to damages?
Answer:
No, for there was no contract of carriage.
By definition, a contract of carriage or transportation is one whereby a certain person or
association of persons obligate themselves to transport persons, things, or news from
one place to another for a fixed price.
From the above definition, Caravan Travel and Tours is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private
nor a common carrier. Caravan Travel and Tours did not undertake to transport Estela
from one place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Caravan travel and tours services as a travel agency
include procuring tickets and facilitating travel permits or visas as well as booking
customers for tours.

While Estela concededly bought her plane ticket through the efforts of respondent
company, this does not mean that the latter ipso facto is a common carrier. At most,
Caravan Travel and Tours acted merely as an agent of the airline, with whom the former
ultimately contracted for her carriage to Europe.
B) No.
The negligence of the obligor in the performance of the obligation renders him liable for
damages for the resulting loss suffered by the obligee. Fault or negligence of the obligor
consists in his failure to exercise due care and prudence in the performance of the
obligation as the nature of the obligation so demands.
In the case at bar, Caravan Travel and Tours exercised due diligence in performing its
obligations under the contract and followed standard procedure in rendering its services
to Estela. The plane ticket issued to petitioner clearly reflected the departure date and
time, contrary to Estelas contention. The travel documents, consisting of the tour
itinerary, vouchers and instructions, were likewise delivered to her two days prior to the
trip. The Caravan Travel and Tours also properly booked Estela for the tour, prepared
the necessary documents and procured the plane tickets. It arranged Estelas hotel
accommodation as well as food, land transfers and sightseeing excursions, in
accordance with its avowed undertaking.
From the foregoing, it is clear that the Caravan Travel and Tours performed its
prestation under the contract as well as everything else that was essential to book
Estela for the tour.
Hence, Estela cannot recover and must bear her own damage.

CARGOLIFT SHIPPING, INC. vs. L. ACUARIO MARKETING CORP. and SKYLAND

BROKERAGE, INC
G.R. No. 146426. June 27, 2006
FACTS:
Respondent L. Acuario Marketing Corp., ("Acuario") and respondent Skyland

Brokerage, Inc., ("Skyland") entered into a time charter agreement whereby Acuario
leased to Skyland its L. Acuario II barge for use by the latter in transporting electrical
posts from Manila to Limay, Bataan. At the same time, Skyland also entered into a
separate contract with petitioner Cargolift, for the latters tugboats to tow the aforesaid
barge.
After the whole operation was concluded, the barge was brought to Acuarios shipyard
where it was allegedly discovered by that the barge was listing due to a leak in its hull. It
was informed by the skipper of the tugboat that the damage was sustained in Bataan. It
was learned later the due to strong winds and large waves, the barge repeatedly hit its
hull on the wall, thus prompting the barge patron to alert the tugboat captain of the M/T
Count to tow the barge farther out to sea. However, the tugboat failed to pull the barge
to a safer distance due to engine malfunction, thereby causing the barge to sustain a
hole in its hull.
Acuario spent the total sum of P97,021.20 for the repairs, and, pursuant to the contract,
sought reimbursement from Skyland, failing which, it filed a suit before the RTC which
was granted. On appeal, it was affirmed by the CA. Skyland, in turn, filed a third-party
complaint against petitioner alleging that it was responsible for the damage sustained by
the barge.
ISSUE:
Whether or not petitioner should be held liable.
HELD:
Yes.
Thus, in the performance of its contractual obligation to Skyland, petitioner was required
to observe the due diligence of a good father of the family. This much was held in the
old but still relevant case of Baer Senior & Co.s Successors v. La Compania Maritima
where the Court explained that a tug and its owners must observe ordinary diligence in
the performance of its obligation under a contract of towage. The negligence of the
obligor in the performance of the obligation renders him liable for damages for the
resulting loss suffered by the obligee. Fault or negligence of the obligor consists in his
failure to exercise due care and prudence in the performance of the obligation as the
nature of the obligation so demands.
In the case at bar, the exercise of ordinary prudence by petitioner means ensuring that
its tugboat is free of mechanical problems. While adverse weather has always been a
real threat to maritime commerce, the least that petitioner could have done was to
ensure that the M/T Count or any of its other tugboats would be able to secure the
barge at all times during the engagement. This is especially true when considered with
the fact that Acuarios barge was wholly dependent upon petitioners tugboat for
propulsion. The barge was not equipped with any engine and needed a tugboat for
maneuvering.
Needless to say, if petitioner only subjected the M/T Count to a more rigid check-up or

inspection, the engine malfunction could have been discovered or avoided. The M/T
Count was exclusively controlled by petitioner and the latter had the duty to see to it that
the tugboat was in good running condition. There is simply no basis for petitioners
assertion that Skyland contractually assumed the risk of any engine trouble that the
tugboat may encounter. Skyland merely procured petitioners towing service but in no
way assumed any such risk.

SANTOS VS SIBUG
Facts:
Vicente Vidad was a duly authorized passenger jeepney operator. Petitioner Adolfo
Santos was the owner of a passenger jeep without a certificate of public convenience.
Santos transferred his jeepney to Vidad in an agreement called the kabit system, and
Vidad executed a re-transfer document presumably to be registered when they decide
that the jeepney be withdrawn from the arrangement. On April 26, 1963, private
respondent Abraham Sibug was bumped by the jeepney driven by Severo Gragas. Sibug
filed a complaint against Vidad and Gragas with Branch XVII of the Court of First
Instance in Manila. Judgment was rendered sentencing the defendants to pay P506.20
as actual damages, P3,000 as moral damages, and P500 as attorneys fees and costs. On
April 10, 1964, the sheriff levied on the motor vehicle and scheduled an auction sale. On
April 11, petitioner submitted a third-party complaint, alleging that he was the real
owner of the jeepney. Sibug submitted a bond to the sheriff to save the latter from
liability if he were to proceed with the sale and the third-party complaint would be
ultimately upheld. On April 22, petitioner instituted with CFI Branch X an action for
Damages and Injunction, with Preliminary Mandatory Injunction against Sibug, Vidad
and the sheriff. The complaint was amended to include the bonding company. On May
11, Branch X issued a restraining order enjoining the sheriff from conducting the auction
sale. On October 14, 1965, Branch X upheld petitioners ownership. Sibug appealed from
the decision of Branch X. The Court of Appeals nullified the appealed decision.

Issues:
(1) Whether the CFI has jurisdiction to issue an injunction restraining the execution sale
of the jeepney levied upon by a judgment creditor in another CFI
(2) Whether the third-party claimant has a right to vindicate his claim to the vehicle
levied upon through a separate action
Held:
In asserting his rights of ownership to the vehicle in question, SANTOS candidly
admitted his participation in the illegal and pernicious practice in the transportation
business known as the kabit system. Although SANTOS, as the kabit, was the true owner
as against VIDAD, the latter, as the registered owner/operator and grantee of the
franchise, is directly and primarily responsible and liable for the damages caused to
SIBUG, the injured party, as a consequence of the negligent or careless operation of the
vehicle. This ruling is based on the principle that the operator of record is considered
the operator of the vehicle in contemplation of law as regards the public and third
persons even if the vehicle involved in the accident had been sold to another where such
sale had not been approved by the then Public Service Commission.
The levy on execution against said vehicle should be enforced so that the judgment in
the BRANCH XVII CASE may be satisfied, notwithstanding the fact that the secret
ownership of the vehicle belonged to another. SANTOS, as the kabit, should not be
allowed to defeat the levy on his vehicle and to avoid his responsibilities as a kabit owner
for he had led the public to believe that the vehicle belonged to VIDAD. This is one way
of curbing the pernicious kabit system that facilitates the commission of fraud against
the travelling public. SANTOS' remedy, as the real owner of the vehicle, is to go against
VIDAD, the actual operator who was responsible for the accident, for the recovery of
whatever damages SANTOS may suffer by reason of the execution. In fact, if SANTOS,
as the kabit, had been impleaded as a party defendant in the BRANCH XVII CASE, he
should be held jointly and severally liable with VIDAD and the driver for damages
suffered by SIBUG, as well as for exemplary damages.
Contrary to the rationale in the Decision of respondent Court, it was appropriate, as a
matter of procedure, for SANTOS, as an ordinary third-party claimant, to vindicate his
claim of ownership in a separate action under Section 17 of Rule 39. And the judgment
rendered in his favor by Branch X, declaring him to be the owner of the property, did
not as a basic proposition, constitute interference with the powers or processes of
Branch XVII which rendered the judgment, to enforce which the jeepney was levied
upon. And this is so because property belonging to a stranger is not ordinarily subject to
levy. While it is true that the vehicle in question was in custodia legis, and should not be
interfered with without the permission of the proper Court, the property must be one in
which the defendant has proprietary interest. Where the Sheriff seizes a stranger's
property, the rule does not apply and interference with his custody is not interference
with another Court's Order of attachment.
However, as a matter of substance and on the merits, the ultimate conclusion of
respondent Court nullifying the Decision of Branch X permanently enjoining the auction
sale, should be upheld. Legally speaking, it was not a "stranger's property" that was
levied upon by the Sheriff pursuant to the judgment rendered by Branch XVII. The
vehicle was, in fact, registered in the name of VIDAD, one of the judgment debtors. And
what is more, the aspect of public service, with its effects on the riding public, is
involved. Whatever legal technicalities may be invoked, we find the judgment of

respondent Court of Appeals to be in consonance with justice.

LITA ENTERPRISES, INC., vs.INTERMEDIATE APPELLATE COURT, NICASIO M.

OCAMPO and FRANCISCA P. GARCIA.
[G.R. No. L-64693 April 27, 1984]
FACTS:
Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein
private respondents, purchased in installment from the Delta Motor Sales Corporation
five (5) Toyota Corona Standard cars to be used as taxicabs. Since they had no
franchise to operate taxicabs, they contracted with petitioner Lita Enterprises, Inc.,
through its representative, Manuel Concordia, for the use of the latter's certificate of
public convenience in consideration of an initial payment of P1,000.00 and a monthly
rental of P200.00 per taxicab unit. To effectuate Id agreement, the aforesaid cars were
registered in the name of petitioner Lita Enterprises, Inc, Possession, however,
remained with tile spouses Ocampo who operated and maintained the same under the
name Acme Taxi, petitioner's trade name.
About a year later one of said taxicabs driven by their employee, Emeterio Martin,
collided with a motorcycle whose driver, one Florante Galvez, died from the head
injuries sustained therefrom. A criminal case was eventually filed against the driver
Emeterio Martin, while a civil case for damages was instituted by Rosita Sebastian Vda.
de Galvez, heir of the victim, against Lita Enterprises, Inc., as registered owner of the
taxicab in the latter case. Petitioner Lita Enterprises, Inc. was adjudged liable for
damages by the CFI.
This decision having become final, a writ of execution was issued. Two of the vehicles
of respondent spouses were levied upon and sold at public auction.
Thereafter, Nicasio Ocampo decided to register his taxicabs in his name. He requested
the manager of petitioner Lita Enterprises, Inc. to turn over the registration papers to
him, but the latter allegedly refused. Hence, he and his wife filed a complaint against
Lita Enterprises, Inc., Mrs. de Galvez and the Sheriff of Manila for reconveyance of
motor vehicles with damages.
ISSUE: Whether or not petitioner has a cause of action against defendants.
HELD:
No.
Unquestionably, the parties herein operated under an arrangement, commonly known
as the "kabit system", whereby a person who has been granted a certificate of
convenience allows another person who owns motors vehicles to operate under such
franchise for a fee. A certificate of public convenience is a special privilege conferred by

the government . Abuse of this privilege by the grantees thereof cannot be

countenanced. The "kabit system" has been Identified as one of the root causes of the
prevalence of graft and corruption in the government transportation offices. In the words
of Chief Justice Makalintal, "this is a pernicious system that cannot be too severely
condemned. It constitutes an imposition upon the goo faith of the government.
Although not outrightly penalized as a criminal offense, the "kabit system" is invariably
recognized as being contrary to public policy and, therefore, void and inexistent under
Article 1409 of the Civil Code, It is a fundamental principle that the court will not aid
either party to enforce an illegal contract, but will leave them both where it finds them.
Upon this premise, it was flagrant error on the part of both the trial and appellate courts
to have accorded the parties relief from their predicament. Article 1412 of the Civil Code
denies them such aid. It provides:
ART. 1412. if the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
(1) when the fault, is on the part of both contracting parties, neither may recover what
he has given by virtue of the contract, or demand the performance of the other's
undertaking.
Having entered into an illegal contract, neither can seek relief from the courts, and each
must bear the consequences of his acts.
The defect of inexistence of a contract is permanent and incurable, and cannot be cured
by ratification or by prescription. As this Court said in Eugenio v. Perdido, "the mere
lapse of time cannot give efficacy to contracts that are null void."
The principle of in pari delicto is well known not only in this jurisdiction but also in the
United States where common law prevails. Under American jurisdiction, the doctrine is
stated thus: "The proposition is universal that no action arises, in equity or at law, from
an illegal contract; no suit can be maintained for its specific performance, or to recover
the property agreed to be sold or delivered, or damages for its property agreed to be
sold or delivered, or damages for its violation. The rule has sometimes been laid down
as though it was equally universal, that where the parties are in pari delicto, no
affirmative relief of any kind will be given to one against the other." Although certain
exceptions to the rule are provided by law, We see no cogent reason why the full force
of the rule should not be applied in the instant case.

Teja Marketing and/or Angel Jaucian v. IAC and Pedro Nale

G.R. No. L-65510 March 9, 1987
Paras, J.
FACTS:
Jaucian bought from the Nale a motorcycle with complete accessories and a sidecar;
out of
the total purchase price the Jaucian gave a downpayment of 1,700.00 with a promise
that
he would pay Nale the balance within sixty days. The Jaucian, however, failed to comply
with his promise and so upon his own request, the period of paying the balance was
extended to one year in monthly installments until January 1976 when he stopped
paying
anymore a chattel mortgage was constituted as a security for the payment of the
balance of the
purchase price it has been the practice of financing firms that whenever there is a
balance of the
purchase price the registration papers of the motor vehicle subject of the sale are not
given to the buyer
the motorcycle sold to the defendant was first mortgaged to the Teja Marketing by
Jaucian
because the latter had no franchise of his own (CPC) so he attached the unit to Nales
MCH
Line the agreement of the parties was for Nale to undertake the yearly registration of the
motorcycle with the Land Transportation Commission; pursuant to this agreement
Jaucian
gave Nale P90.00, the P8.00 would be for the mortgage fee and the P82.00 for the
registration fee of the motorcycle; Nale failed to register the motorcycle on the ground
that the Jaucian failed to comply with some requirements such as the payment of the
insurance premiums and the bringing of the motorcycle to the LTC for stenciling, Nale

saying that the defendant was hiding the motorcycle from him; Nale explained that
though
the ownership of the motorcycle was already transferred to Jaucian, the vehicle was still
mortgaged with the consent of the Jaucian to the Rural Bank of Camaligan for the
reason
that all motorcycle purchased from Nale on credit was rediscounted with the bank
because of the failure of Nale to register the motorcycle Jaucian suffered damages
when
he failed to claim any insurance indemnity for the more than two times that the
motorcycle figured in accidents
Nale filed an action for collection of sum of money with damages against Nale
ISSUE:
WON not respondent court erred in applying the doctrine of pari delicto
HELD:
No.
kabit system is contrary to public policy and, therefore, void and in existent under Article
1409 of the Civil Code; the court will not aid either party to enforce an illegal contract,
but
will leave both where it finds then
Art. 1412: If the act in which the unlawful or forbidden cause consists does not
constitute
a criminal offense, the following rules shall be observed: 1. When the fault is on the part
of
both contracting parties, neither may recover that he has given by virtue of the contract,
or demand, the performance of the others undertaking.

Sarkies Tours Phils. V. IAC

Facts:
On August 31, 1984, Fatima boarded petitioners bus from Manila to Legazpi. Her
belongings consisting of 3 bags were kept at the baggage compartment of the bus, but
during the stopover in Daet, it was discovered that only one remained. The others might
have dropped along the way. Other passengers suggested having the route traced, but
the driver ignored it. Fatima immediately told the incident to her mother, who went to
petitioners office in Legazpi and later in Manila. Petitioner offered P1,000 for each bag,
but she turned it down. Disapointed, she sought help from Philtranco bus drivers and
radio stations. One of the bags was recovered. She was told by petitioner that a team is
looking for the lost luggage. After nine months of fruitless waiting, respondents filed a
case to recover the lost items, as well as moral and exemplary damages, attorneys fees
and expenses of litigation. The trial court ruled in favor of respondents, which decision
was affirmed with modification by the Court of Appeals, deleting moral and exemplary
damages.
Issues:
(1) Whether petitioner is liable for the loss of the luggage
(2) Whether the damages sought should be recovered
Held:
(1) The cause of the loss in the case at bar was petitioner's negligence in not ensuring
that the doors of the baggage compartment of its bus were securely fastened. As a result
of this lack of care, almost all of the luggage was lost, to the prejudice of the paying

passengers.
(2) There is no dispute that of the three pieces of luggage of Fatima, only one was
recovered. Respondents had to shuttle between Bicol and Manila in their efforts to be
compensated for the loss. During the trial, Fatima and Marisol had to travel from the
United States just to be able to testify. Expenses were also incurred in reconstituting
their lost documents. Under these circumstances, the Court agrees with the Court of
Appeals in awarding P30,000.00 for the lost items and P30,000.00 for the
transportation expenses, but disagrees with the deletion of the award of moral and
exemplary damages which, in view of the foregoing proven facts, with negligence and
bad faith on the fault of petitioner having been duly established, should be granted to
respondents in the amount of P20,000.00 and P5,000.00, respectively.

Valenzuela Hardwood vs CA
FACTS:
Plaintiff shipped at Maconcon Port, Isabela 940 round logs on board M/V
Seven Ambassador, a vessel owned by defendant Seven Brothers Shipping
Corporation. Plaintiff insured the logs against loss and/or damage with
defendant South Sea Surety and Insurance Co., Inc. for P2M and the latter
issued its Marine Cargo Insurance Policy on said date. In the meantime, the
M/V Seven Ambassador sank resulting in the loss of the plaintiffs insured
logs.
Plaintiff demanded from defendant South Sea Surety and Insurance Co., Inc.
the payment of the proceeds of the policy but the latter denied liability under
the policy. Plaintiff likewise filed a formal claim with defendant Seven
Brothers Shipping Corporation for the value of the lost logs but the latter
denied the claim.
Court of Appeals affirmed in part the RTC judgment by sustaining the liability
of South Sea Surety and Insurance Company (South Sea), but modified it
by holding that Seven Brothers Shipping Corporation (Seven Brothers) was
not liable for the lost cargo.
ISSUE:
Whether defendants shipping corporation and the surety company are liable
to the plaintiff for the latters lost logs.
HELD:
The charter party between the petitioner and private respondent stipulated
that the (o)wners shall not be responsible for loss, split, short-landing,
breakages and any kind of damages to the cargo VALID
There is no dispute between the parties that the proximate cause of the

sinking of M/V Seven Ambassadors resulting in the loss of its cargo was the
snapping of the iron chains and the subsequent rolling of the logs to the
portside due to the negligence of the captain in stowing and securing the
logs on board the vessel and not due to fortuitous event. Likewise
undisputed is the status of Private Respondent Seven Brothers as a private
carrier when it contracted to transport the cargo of Petitioner Valenzuela.
Even the latter admits this in its petition.
Private respondent had acted as a private carrier in transporting petitioners
lauan logs. Thus, Article 1745 and other Civil Code provisions on common
carriers which were cited by petitioner may not be applied unless expressly
stipulated by the parties in their charter party.
In a contract of private carriage, the parties may validly stipulate that
responsibility for the cargo rests solely on the charterer, exempting the
shipowner from liability for loss of or damage to the cargo caused even by
the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code,
such stipulation is valid because it is freely entered into by the parties and
the same is not contrary to law, morals, good customs, public order, or public
policy. Indeed, their contract of private carriage is not even a contract of
adhesion. We stress that in a contract of private carriage, the parties may
freely stipulate their duties and obligations which perforce would be binding
on them. Unlike in contract involving a common carrier, private carriage does
not involve the general public. Hence, the stringent provisions of the Civil
Code on common carriers protecting the general public cannot justifiably be
applied to a ship transporting commercial goods as a private carrier.
Consequently, the public policy embodied therein is not contravened by
stipulations in a charter party that lessen or remove the protection given by
law in contracts involving common carriers.
The provisions of our Civil Code on common carriers were taken from AngloAmerican law. Under American jurisprudence, a common carrier undertaking
to carry a special cargo or chartered to a special person only, becomes a
private carrier. As a private carrier a stipulation exempting the owner from
liability for the negligence of its agent is not against public policy and is
deemed valid. Such doctrine We find reasonable. The Civil Code provisions
on common carriers should not be applied where the carrier is not acting as
such but as a private carrier. The stipulation in the charter party absolving
the owner from liability for loss due to the negligence of its agent would be
void only if the strict public policy governing common carriers is applied.
Such policy has no force where the public at large is not involved as in this
case of a ship totally chartered for the use of a single party. (Home Insurance
Co. vs. American Steamship Agencies Inc., 23 SCRA 24, April 4, 1968)

ALBERTA YOBIDO v. COURT OF APPEALS

G.R. No. 113003, October 17, 1997
FACTS:
April 26, 1988, spouses Tito and Leny Tumboy, boarded a Yobido
Liner bus from Surigao del Sur bound for Davao City. Along Picop rd.,
the left front tire of the bus exploded. The bus fell into a ravine around
and struck a tree. The incident resulted in the death of 28-year-old Tito
Tumboy.

A complaint for breach of contract of carriage, damages and attorneys

fees was filed by Leny against Alberta Yobido, the owner of the bus,
and Cresencio Yobido, its driver, before the Regional Trial Court of
Davao City. When the defendants therein filed their answer to the
complaint, they raised the affirmative defense of caso fortuito.

The plaintiffs asserted that violation of the contract of carriage

between them and the defendants was brought about by the drivers
failure to exercise the diligence required of a carrier. According to Leny
Tumboy, the winding road it traversed was not cemented and was wet
due to the rain; it was rough with crushed rocks. The bus which was
full of passengers had cargoes on top. Since it was running fast, she
cautioned the driver to slow down but he merely stared at her through
the mirror. At around 3:30 p.m., in Trento, she heard something
explode and immediately, the bus fell into a ravine.

The defendants tried to establish that the accident was due to a

fortuitous event. Abundio Salce, who was the bus conductor when the
incident happened, testified that the 42- seater bus was not full as
there were only 32 passengers, such that he himself managed to get a
seat. He added that the bus was running at a speed of 60 to 50 and
that it was going slow because of the zigzag road. He affirmed that the
left front tire that exploded was a brand new tire that he mounted on
the bus 5 days before the incident. That all driver applicants in Yobido
Liner underwent actual driving tests before they were employed.

Defendant Cresencio Yobido underwent such test and submitted his

professional
drivers license and clearances from the barangay, the fiscal and the
police.
ISSUE:
Whether or not Yobido bus liner is liable for the death of Tito
Tumboy .
Whether or not the tire blowout that caused the death of Tito
Tumboy was a caso fortuito.
HELD:YES: As a rule, when a passenger boards a common
carrier,
he takes the risks incidental to the mode of travel he has taken. After
all, a carrier is not an insurer of the safety of its passengers and
is not bound absolutely and at all events to carry them safely and
without injury. However, when a passenger is injured or dies
while travelling, the law presumes that the common carrier is
negligent. Thus, the Civil Code provides:
o Art. 1756. In case of death or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
Article 1755 provides that (a) common carrier is bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard
for all the circumstances. Accordingly, in culpa contractual, once a
passenger dies or is injured, the carrier is presumed to have been at
fault or to have acted negligently. This disputable presumption may
only be overcome by evidence that the carrier had observed
extraordinary diligence as prescribed by Articles 1733, 1755 and 1756
of the Civil Code or that the death or injury of the passenger was due

to a fortuitous event.
NO: A fortuitous event is possessed of the following characteristics:
(a) the cause of the unforeseen and unexpected occurrence, or the
failure of the debtor to comply

Ganzon v. CA
FACTS
On November 28, 1956, Gelacio Tumambing contracted the services
of Mauro B. Ganzon to haul 305 tons of scrap iron from Bataan, to the
port of Manila on board the lighter LCT "Batman. Pursuant to that
agreement, Ganzon sent his lighter "Batman" to Mariveles where it
docked in three feet of water. On December 1, 1956, Gelacio
Tumambing delivered the scrap iron to defendant Filomeno Niza,
captain of the lighter, for loading.
When half of the scrap iron was already loaded, Mayor Jose Advincula
of Mariveles, demanded P5,000.00 from Tumambing. The latter
resisted and after a heated argument between them, Mayor Advincula
drew his gun and fired at Tumambing.
The loading of the scrap iron was resumed. But on December 4, 1956,
Acting Mayor Rub ordered captain Niza to dump the scrap iron where
the lighter was docked. The rest was brought to the compound of
NASSCO. Later on Acting Mayor Rub issued a receipt stating that the
Municipality of Mariveles had taken custody of the scrap iron.
CA ruled in favor of Tumambimg, holding Ganzon liable for damages.
Petitioner contends that the scrap iron had not been unconditionally
placed under his custody and control to make him liable.
ISSUE
Whether or not the Court of Appeals erred in finding the herein
petitioner guilty of breach of the contract of transportation and in
imposing a liability against him commencing from the time the scrap
was placed in his custody and control have no basis in fact and in law.
RULE NO
That the petitioner, thru his employees, actually received the scraps is
freely admitted. Significantly, there is not the slightest allegation or
showing accompanying the delivery by the private respondent-shipper

of the scraps, or the receipt of the same by the petitioner. On the

contrary, soon after the scraps were received by the petitionercommon carrier, loading was commenced.
By the said act of delivery, the scraps were unconditionally placed in
the possession and control of the common carrier, and upon their
receipt, the contract of carriage was deemed perfected. Consequently,
the petitioner-carrier's extraordinary responsibility for the loss,
destruction or deterioration of the goods commenced. Pursuant to Art.
1736, such extraordinary responsibility would cease only upon the
delivery, actual or constructive, by the carrier to the consignee, or to
the person who has a right to receive them. The fact that part of the
shipment had not been loaded on board the lighter did not impair the
said contract of transportation as the goods remained in the custody
and control of the carrier, albeit still unloaded.
The petitioner has failed to show that the loss of the scraps was due to
any of the following causes enumerated in Article 1734 of the Civil
Code. Hence, the petitioner is presumed to have been at fault or to
have acted negligently. The petitioner could have been exempted from
any liability had he been able to prove that he observed extraordinary
diligence in the vigilance over the goods in his custody. The petition is
DENIED.

SALUDO v. CA[G.R. No. 95536 March 23, 1992]

ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO,
LEOPOLDO G. SALUDO and SATURNINO G. SALUDO, petitioners,
vs. HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC.,
and PHILIPPINE AIRLINES, INC., respondents.
Facts:
Mother of the petitioners, Crispina Galdo Saludo died in Chicago,
Illinois. Pomierski and Son Funeral Home of Chicago, made the
necessary preparations and arrangements for the shipment of the
remains from Chicago to the Philippines.
Pomierski brought the remains to Continental Mortuary Air Services
(CMAS) at the Chicago Airport which made the necessary
arrangements such as flights, transfers , to ensure thatt the remains
are taken to the proper air freight terminal. CMAS booked the
shipment with PAL thru the carriers agent Air Care International. PAL
Airway Bill Ordinary was issued wherein the requested routing was
from Chicago to San Francisco on board Trans World Airline (TWA)
and from San Francisco to Manila on board PAL.
Upon arrival at San Francisco, petitioner Salvacion Saludo, went to
the TWA to inquire about her mothers remains. She was told they did
not know anything about it. She then told Pomierski that her mothers
remains were not at the West Coast terminal. Immediately, Pomierski
called CMAS which in a matter of 10 minutes informed him that the
remains were on a plane to Mexico City, that there were two bodies at
the terminal, and somehow they were switched. CMAS called and told
Pomierski that they were sending the remains back to California via
Texas.
Petitioners filed a damage suit against TWA and PAL for the
misshipment, delay of the cargo containing the remains of the late
Crispina Saludo and for the discourtesy of its employees to the
petitioners. It was alleged that private respondents received the
casketed remains of Crispina on October 26, 1976, as evidenced by

the issuance of PAL Airway Bill by Air Care and from said date, private
respondents are responsible for the alleged switching of the caskets
on October 27, 1976.
Issues:
1. Whether or not a delivery of cargo was made upon the issuance of
airway bill
2. Whether or not the delay in the delivery of the casketed remains of
petitioners mother was due to the fault of respondent airline
companies
SC Ruling:
1. NO. The cargo containing the casketed remains of Crispina Saludo
was booked for PAL Flight Number PR-107 leaving San Francisco for
Manila on October 27, 1976, PAL Airway Bill No. 079-01180454 was
issued, not as evidence of receipt of delivery of the cargo on October
26, 1976, but merely as a confirmation of the booking thus made for
the San Francisco-Manila flight scheduled on
October 27, 1976. Actually, it was not until October 28, 1976 that PAL
received physical delivery of the body at San Francisco, as duly
evidenced by the Interline Freight Transfer Manifest of the American
Airline Freight System and signed for by Virgilio Rosales at 1945H, or
7:45 P.M. on said date.
2. NO. Explicit is the rule under Article 1736 of the Civil Code that the
extraordinary responsibility of the common carrier begins from the
time the goods are delivered to the carrier. This responsibility remains
in full force and effect even when they are temporarily unloaded or
stored in transit, unless the shipper or owner exercises the right of
stoppage in transitu, and terminates only after the lapse of a
reasonable time for the acceptance, of the goods by the consignee or
such other person entitled to receive them. And, there is delivery to
the carrier when the goods are ready for and have been placed in the
exclusive possession, custody and control of the carrier for the
purpose of their immediate transportation and the carrier has

accepted them. Where such a delivery has thus been accepted by the
carrier, the liability of the common carrier commences instantly.
As already demonstrated, the facts in the case at bar belie the
averment that there was delivery of the cargo to the carrier on October
26, 1976. Rather, as earlier explained, the body intended to be
shipped as agreed upon was really placed in the possession and
control of PAL on October 28, 1976 and it was from that date that
private respondents became responsible for the agreed cargo under
their undertakings in PAL Airway Bill No. 079-01180454.
Consequently, for the switching of caskets prior thereto which was not
caused by them, and subsequent events caused thereby, private
respondents cannot be held liable.
TWA was held to pay petitioners nominal damages of P40,000 for its
violation of the degree of diligence required by law to be exercised by
every common carrier.

Macam v. CA, 313 SCRA 77 (1999) Facts:

Petitioner Benito Macam, doing business under the name and style
Ben-Mac Enterprises shipped on board the vessel Nen Jiang, owned
and operated by respondent China Ocean Shipping Co., 3,500 boxes
of watermelons valued at US$5,950.00 covered by Bill of Lading No.
HKG 99012 and exported through Letter of Credit No. HK 1031/30
issued by National Bank of Pakistan, Hongkong. and 1,611 boxes
of fresh mangoes with a value of US$14,273.46 covered by Bill of
Lading No. HKG 99013 and exported through Letter of Credit No. HK
1032/30 also issued by PAKISTAN BANK.
The Bills of Lading contained the following pertinent provision: "One
of the Bills of Lading must be surrendered duly endorsed in exchange
for the goods or delivery order.
The shipment was bound for Hongkong, PAKISTAN BANK as
consignee and Great Prospect Company of Kowloon, Hongkong
(GPC) as notify party.
Copies of the bills of lading and commercial invoices were submitted
to petitioner's depository bank, Consolidated Banking Corporation
( SOLIDBANK), which paid petitioner in advance the total value of the
shipment of US$20,223.46
Upon arrival in Hongkong, the shipment was delivered by respondent
WALLEM directly to GPC, not to PAKISTAN BANK, and without the
required bill of lading having been surrendered. GPC failed to pay
PAKISTAN BANK such that the latter, still in possession of the original
bills of lading, refused to pay petitioner through SOLIDBANK. Since
SOLIDBANK already pre-paid petitioner the value of the shipment, it
demanded payment from respondent WALLEM through 5 letters but
was refused. Petitioner was thus allegedly constrained to return the
amount involved to SOLIDBANK, then demanded payment from
respondent WALLEM in writing but to no avail.
Petitioner sought collection of the value of the shipment of US
$20,223.46 or its equivalent of P546,033.42 from respondents before
the Regional Trial Court of Manila, based on delivery of the

shipment to GPC without presentation of the bills of lading and

bank guarantee.
Respondents contended that the shipment was delivered to GPC
without presentation of the bills of lading and bank guarantee per
request of petitioner himself because the shipment consisted of
perishable goods.
Respondents explained that it is a standard maritime practice, when
immediate delivery is of the essence, for the shipper to request or
instruct the carrier to deliver the goods to the buyer upon arrival at the
port of destination without requiring presentation of the bill of lading as
that usually takes time.
the trial court ordered respondents to pay, jointly and severally, the
following amounts: (1) P546,033.42 plus legal interest.
The trial court opined that respondents breached the provision in the
bill of lading requiring that "one of the Bills of Lading must be
surrendered duly endorsed in exchange for the goods or delivery
order," when they released the shipment to GPC without presentation
of the bills of lading and the bank guarantee that should have been
issued by PAKISTAN BANK in lieu of the bills of lading. The trial court
added that the shipment should not have been released to GPC at all
since the instruction contained in the telex was to arrange delivery to
the respective consignees and not to any party.
Respondent Court of Appeals appreciated the evidence in a different
manner. According to it, as established by previous similar
transactions between the parties, shipped cargoes were sometimes
actually delivered not to the consignee but to notify party GPC without
need of the bills of lading or bank guarantee. Moreover, the bills of
lading were viewed by respondent court to have been properly
superseded by the telex instruction and to implement the instruction,
the delivery of the shipment must be to GPC, the real importer/buyer
of the goods as shown by the export invoices.
Respondent court set aside the decision of the trial court and
dismissed the complaint together with the counterclaims.

ISSUE:
Whether or not there was misdelivery on the part of WALLEM.
Whether or not WALLEM is liable therefor.
Held:No. There was no misdelivery and no liability on the part of
WALLEM. SC Ruling:
At any rate, we shall dwell on petitioners submission only as a
prelude to our discussion on the imputed liability of respondents
concerning the shipped goods. Article 1736 of the Civil Code provides
Art. 1736. The extraordinary responsibility of the common carriers
lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them, without
prejudice to the provisions of article 1738.
We emphasize that the extraordinary responsibility of the common
carriers lasts until actual or constructive delivery of the cargoes to the
consignee or to the person who has a right to receivethem.
PAKISTAN BANK was indicated in the bills of lading as consignee
whereas GPC was the notify party. However, in the export invoices
GPC was clearly named as buyer/importer. Petitioner also referred to
GPC as such in his demand letter to respondent WALLEM and in his
complaint before the trial court. This premise draws us to conclude
that the delivery of the cargoes to GPC as buyer/importer which,
conformably with Art. 1736 had, other than the consignee, the right to
receive them was proper.
Petitioner declared that it was his practice to ask the shipping lines to
immediately release shipment of perishable goods through telephone
calls by himself or his people. He no longer required
presentation of a bill of lading nor of a bank guarantee as a condition
to releasing the goods in case he was already fully paid. Thus, taking
into account that subject shipment consisted of perishable goods and

SOLIDBANK pre-paid the full amount of the value thereof, it is not

hard to believe the claim of respondent WALLEM that petitioner
indeed requested the release of the goods to GPC without
presentation of the bills of lading and bank guarantee

Transportation of Goods: Amount of Liability Citadel Lines vs. CA

GR No. 88092Facts:

Citadel Lines, Inc. is the general agent of the vessel Cardigan

Bay/Strait Enterprise (CBE for brevity), and private respondent Manila
Wine Merchants, Inc is the importer of the subject shipment of Dunhill
cigarettes from England.

On March 1979, the vessel CBE loaded on board, for carriage to

Manila, 180 Filbrite cartons of mixed British manufactured cigarettes,
as evidenced by Bill of Lading of Ben Line Containers LTD.

Said shipment arrived at the port of Manila on April 1979 and was then
received by E. Razon, Inc. (Arrastre). The shipment was then stripped,
one shipment was delivered, and the other shipment consisting the
imported British manufactured cigarettes was palletized. The aforesaid
cigarettes were placed in two containers with two pallets which were
both duly padlocked and sealed by the representative of Citadel Lines.

Citadel Lines headchecker then discovered that that container van

had a different padlock and the seal was tampered with. It was later
discovered that 90 cases of imported cigarettes were missing.

Per investigation conducted by the Arrastre, it was revealed that the

cargo in question was not formally turned over to it by Citadel but was
kept inside the container van which was padlocked and sealed by the
Citadels representatives.

Manila Wine Merchants, Inc., upon learning that 90 cases were

missing, filed a formal complaint against Citadel, demanding the
payment of P315,000.

Citadel Lines, Inc, in it reply, admitted the loss, but alleged that the
same occurred at an area absolutely under the control of the Arrastre,
E. Razon, Inc.
Issue:Whether the loss occurred while the cargo in question was in

the custody of E. Razon, Inc., or of Citadel Lines

Whether the stipulation limiting the liability of the carrier contained in
the bill of lading is binding on the Manila Wine Merchants, Inc.
Held:The Supreme Court ruled in favor of the respondents.
.

1) The Supreme Court held that that the subject shipment was lost
while it was still in the custody of herein petitioner Citadel Lines, Inc.,
and considering further that it failed to prove that the loss was
occasioned by an excepted cause, the inescapable conclusion is that
the CARRIER was negligent and should be held liable. The Court
states that Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence
in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
If the goods are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless
they prove that they observed extra ordinary diligence as required in
Article 1733 of the Civil Code. The duty of the consignee is to prove
merely that the goods were lost. Thereafter, the burden is shifted to
the carrier to prove that it has exercised the extraordinary diligence
required by law. And, its extraordinary responsibility lasts from the time
the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee or to the
person who has the right to receive them.

2) The Supreme Court held that since Manila Wine Merchants, Inc.
admits in its memorandum that the value of the goods shipped does
not appear in the bills of lading, and that there is no question that the
stipulation is just and reasonable under the circumstances and have
been fairly and freely agreed upon, therefore, the stipulation on the
carrier's limited liability applies. It was explained in the case of Sealand Service, Inc. vs. Intermediate Appellate Court, et al, that . . . That
said stipulation is just and reasonable arguable from the fact that it
echoes Art. 1750 itself in providing a limit to liability only if a greater
value is not declared for the shipment in the bill of

lading. To hold otherwise would amount to questioning the justice and

fairness of that law itself, and this private respondent does not pretend
to do. But over and above that consideration the just and reasonable
character of such stipulation is implicit in it giving the shipper or owner
the option of avoiding accrual of liability limitation by the simple and
surely far from onerous expedient of declaring the nature and value of
the shipment in the bill of lading. And since the shipper here has not
been heard to complain of having been "rushed," imposed upon or
deceived in any significant way into agreeing to ship the cargo under a
bill of lading carrying such a stipulation in fact, it does not appear,
that said party has been heard from at all insofar as this dispute is
concerned there is simply no ground for assuming that its
agreement thereto was not as the law would require, freely and fairly
sought and well.

EVERETT STEAMSHIP CORPORATION v CA and HERNANDEZ

TRADING CO

FACTS

- Everette (carrier); Maruman (supplier-shipper); Hernandez

(consignee);

- Private respondent Hernandez Trading Co imported three

creates of bus spare parts from its supplier, Maruman Trading
Company Ltd (Maruman Trading) which was based in Japan o
ThecrateswereshippedfromJapantoManilaon board the
ADELFAEVERETTE, a vessel owned by petitioners principal, Everett
Orient Lines

- Upon arrival in Manila, it was discovered that the crate marked

MARCO C/No. 14 was missing, which was confirmed and admitted by
petitioner o Hernandezmadeaformalclaimuponpetitionerforthe value
amounting to 1,552,500.00 Yen

- Petitioner offered to pay only 100k Yen, which was the max
amount stipulated under Clause 18 of the covering of the bill of lading,
which limits petitioner Everetts liability

- Trial court rendered judgment in favor of private respondent

based on the ff premise: o
Art1750;Itisrequired,however,thatthecontractmust be reasonable and
just under the circumstances and has been fairly and freely agreed
upon.
o Inthecaseatbar,theCourtisoftheviewthatthe requirements of said
article have not been met.
o Thefactthatthoseconditionsareprintedatthebackof the bill of lading in
letters so small that they are hard to read would not warrant suppliers
awareness
- CA affirmed.o EvenassumingarguendothattheshipperMaruman
in this case
Whether or not the consent of the consignee on the terms and
conditions of the bill of lading is necessary to make such binding upon

it
Whether or not the limited package liability in the bill of lading applies

HELD
1st issue: Art 1749, 1750, CC. Everett has limited liability.
A stipulation in the bill of lading limiting the common carriers liability for
loss or destruction of a cargo to a certain sum, unless the shipper or
owner declares a greater value, is sanctioned by law, particularly
Articles 1749 and 1750 of the Civil Code
.

- It has been held in cases such as Sea Land Services Inc v IAC

- It seems clear that even if said section 4 (5) of the Carriage of

Goods by Sea Act did not exist, the validity and binding effect of the
liability limitation clause in the bill of lading here are nevertheless fully
sustainable on the basis alone of the cited Civil Code Provisions.

- That said stipulation is just and reasonable is arguable from

the fact that it echoes Art. 1750 itself in providing a limit to liability only
if a greater value is not declared for the shipment in the bill of lading.
Pursuant to the provisions above, it is required that the stipulation
limiting the common carriers liability for loss must be REASONABLE
and JUST under the circumstances, and has been FREELY AGREED
UPON
- The bill of lading subject of the present controversy specifically
provides, among others:
o Thecarriershallnotbeliable...inanamount exceeding 100k Yen...
unless the value of the goods higher than this amount is
declared in writing by the shipper before receipt of the goods by
the carrier and inserted in the Bill of Lading and extra freight is
paid as required.

Trading Co., Ltd. accepted the terms of the bill of lading

whenitdeliveredthecargototheappellant,stillitdoes not necessarily
follow that appellee Hernandez Trading Company as consignee is
bound thereby considering that the latter was never privy to the
shipping contract.

ISSUE
- This stipulation is reasonable and just.
- 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
shipper, Maruman Trading, we assume, has been extensively
engaged in the trading business.
- It can not be said to be ignorant of the business transactions it
entered into involving the shipment of its goods to its customers
- he shipper could not have known, or should know the
stipulations in the bill of lading and there it should have declared a
higher valuation of the goods shipped.
- he shipper could not have known, or should know the
stipulations in the bill of lading and there it should have declared a
higher valuation of the goods shipped. 2nd issue: Hernandez Trading
Co, as consignee, is bound by the bill of lading. It has been held in
cases that:
- that document may have been- as in practice it oftentimes is- drawn
up only by the consignor and the carrier without the intervention of the

consignee. x x x.
When private respondent formally claimed reimbursement for the
missing goods from petitioner carrier, and subsequently filed a case
against the latter based on the very same bill of lading, it (private
respondent) accepted the provisions of the contract and thereby made
itself a party thereto
- private respondent cannot now reject or disregard the carriers
limited liability stipulation in the bill of lading
- private respondent is bound by the whole stipulations in the bill
of lading and must respect the same.
Hernandez contends that the carrier herein Everett should be liable for
the full amount of 1.5Yen considering that the shipper, Maruman, had
fully declared the shipment as shown by the commercial invoice
- This claim was denied by petitioner, contending that it did not know
of the contents, quantity and value of "the shipment which consisted of
three pre-packed crates described in Bill of Lading No. NGO-53MN
merely as 3 CASES SPARE PARTS
To defeat the carriers limited liability, the aforecited Clause 18 of
the bill of lading requires that the shipper should have declared
in writing a higher valuation of its goods before receipt thereof
by the carrier and insert the said declaration in the bill of lading,
with the extra freight paid.
- such was never complied with by the shipper, hence,
carriers liability falls within the limited liability stipulated.
- Consequently, Everett is only liable to pay 100k Yen
pursuant to Clause 18 of the Bill of Lading
Sweet lines vs teves
FACTS:

Atty. Leovigildo Tandog and Rogelio Tiro bought

tickets for Tagbilaran City via the port of Cebu

Since many passengers were bound for Surigao, M/S

"Sweet Hope would not be proceeding to Bohol
They went to the proper brancg office and was
relocated to M/S "Sweet Town" where they were forced to
agree "to hide at the cargo section to avoid inspection of
the officers of the Philippine Coastguard." and they
were exposed to the scorching heat of the sun and the
dust coming from the ship's cargo of corn grits and their
tickets were not honored so they had to purchase a new
one
They sued Sweet Lines for damages and for breach
of contract of carriage before the Court of First Instance
of Misamis Oriental who dismissed the compalitn for
improper venue
A motion was premised on the condition printed at
the back of the tickets -dismissed
instant petition for prohibition for preliminary
injunction
ISSUE: W/N a common carrier engaged in inter-island
shipping stipulate thru condition printed at the back of
passage tickets to its vessels that any and all actions
arising out of the contract of carriage should be filed only
in a particular province or city
HELD: NO.petition for prohibition is DISMISSED.

Restraining order LIFTED and SET ASIDE

.

contract of adhesion
1
not that kind of a contract where the
parties sit down to deliberate, discuss and agree
specifically on all its terms, but rather, one which
respondents took no part at all in preparing

just imposed upon them when they

paid for the fare for the freight they wanted to
ship
We find and hold that Condition No. 14 printed at the
back of the passage tickets should be held as void and
unenforceable for the following reasons
1
circumstances obligation in the interisland ship
1
will prejudice rights and interests
of innumerable passengers in different s of
the country who, under Condition No. 14,
will have to file suits against petitioner only
in the City of Cebu
2
subversive of public policy on transfers
of venue of actions
philosophy underlying the provisions on transfer
of venue of actions is the convenience of the plaintiffs as
well as his witnesses and to promote 21 the ends of
justice
2

Nocum vs Laguna Tayabas bus co.

Facts:
Herminio L. Nocum was a passenger in appellants Bus No. 120 then making a trip within the
barrio of Dita, Municipality of Bay, Laguna, was injured as a consequence of the explosion of
firecrackers, contained in a box, loaded in said bus and declared to its conductor as
containing clothes and miscellaneous items by a co-passenger. The injuries suffered by Nocum
were not due to mechanical defects but to the explosion of firecrackers.
Issue: WON the bus company was negligent, hence liable for the injuries suffered by Nocum.
Held:
No. The Bus Company has succeeded in rebutting the presumption of negligence by showing
that it has exercised extraordinary diligence for the safety of its passengers, according to
the circumstances of the (each) case.
Article 1733 qualifies the extraordinary diligence required of common carriers for the safety
of the passengers transported by them to be according to all the circumstances of each
case.
In this case, the circumstance that must be considered in measuring a common carriers duty
towards its passengers is the reliance that should be reposed on the sense of responsibility of
all the passengers in regard to their common safety. It is to be presumed that a passenger will
not take with him anything dangerous to the lives and limbs of his co-passengers, not to speak
of his own. Not to be lightly considered must be the right to privacy to which each passenger
is entitled. He cannot be subjected to any unusual search, when he protests the
innocuousness of his baggage and nothing appears to indicate the contrary, as in the case at
bar. (Hence, the bus companys failure to confiscate the baggage cannot be considered as a
negligent act, but in accord to the circumstance of the case.)

Korean Airlines v. CA
Facts:
Juanito Lapuz was contracted for employment in Saudi Arabia through Pan
Pacific Recruiting Services, Inc. He was supposed to leave via Korean Airlines,
but was initially listed as a chance passenger. According to Lapuz, he was
allowed to check in and was cleared for departure. When he was on the stairs
going to the airplane, a KAL officer pointed at him and shouted, Down! Down!
and he was barred from taking the flight. When he asked for another booking, his
ticket was cancelled. He was unable to report for work and so he lost his
employment. KAL alleged that the agent of Pan Pacific was informed that there
are 2 seats possibly available. He gave priority to Perico, while the other seat was
won by Lapuz through lottery. But because only 1 seat became available, it was
given to Perico. The trial court adjudged KAL liable for damages. The decision
was affirmed by the Court of Appeals, with modification on the damages
awarded.
Issues:
(1) Whether there is already a contract of carriage between KAL and Lapuz to
hold KAL liable for breach of contract
(2) Whether moral and exemplary damages should be awarded, and to what
extent
Held:
(1) The status of Lapuz as standby passenger was changed to that of a confirmed
passenger when his name was entered in the passenger manifest of KAL for its
Flight No. KE 903. His clearance through immigration and customs clearly shows
that he had indeed been confirmed as a passenger of KAL in that flight. KAL thus
committed a breach of the contract of carriage between them when it failed to
bring Lapuz to his destination. A contract to transport passengers is different in
kind and degree from any other contractual relation. The business of the carrier
is mainly with the traveling public. It invites people to avail themselves of the
comforts and advantages it offers. The contract of air carriage generates a

relation attended with a public duty. Passengers have the right to be treated by
the carrier's employees with kindness, respect, courtesy and due consideration.
They are entitled to be protected against personal misconduct, injurious
language, indignities and abuses from such employees. So it is that any
discourteous conduct on the part of these employees toward a passenger gives the
latter an action for damages against the carrier. The breach of contract was
aggravated in this case when, instead of courteously informing Lapuz of his being
a "wait-listed" passenger, a KAL officer rudely shouted "Down! Down!" while
pointing at him, thus causing him embarrassment and public humiliation. The
evidence presented by Lapuz shows that he had indeed checked in at the
departure counter, passed through customs and immigration, boarded the shuttle
bus and proceeded to the ramp of KAL's aircraft. In fact, his baggage had already
been loaded in KAL's aircraft, to be flown with him to Jeddah. The contract of
carriage between him and KAL had already been perfected when he was
summarily and insolently prevented from boarding the aircraft.
(2) The Court of Appeals granted moral and exemplary damages because:
a. The findings of the court a quo that the defendant-appellant has committed
breach of contract of carriage in bad faith and in wanton, disregard of
plaintiff-appellant's rights as passenger laid the basis and justification of
an award for moral damages.
b. In the instant case, we find that defendant-appellant Korean Air Lines acted in
a wanton, fraudulent, reckless, oppressive or malevolent manner when it
"bumped off" plaintiff-appellant on November 8, 1980, and in addition
treated him rudely and arrogantly as a "patay gutom na contract worker
fighting Korean Air Lines," which clearly shows malice and bad faith,
thus entitling plaintiff-appellant to moral damages.
c. Considering that the plaintiff-appellant's entitlement to moral damages has
been fully established by oral and documentary evidence, exemplary
damages may be awarded. In fact, exemplary damages may be awarded,
even though not so expressly pleaded in the complaint. By the same
token, to provide an example for the public good, an award of exemplary
damages is also proper.
A review of the record of this case shows that the injury suffered by Lapuz is not
so serious or extensive as to warrant an award of P1.5 million. The assessment of
P100,000 as moral and exemplary damages in his favor is, in our view,
reasonable and realistic.

Dangwa Transco. Co. Inc. v. CA

Facts:
Private respondents filed a complaint for damages against petitioners for the
death of Pedrito Cudiamat. The deceased was attempting to board a bus, but it
suddenly accelerated forward. He fell off and the bus ran over him, resulting to
his death.
Issue:
Whether the bus is liable as a common carrier to the deceased who was still
attempting to board
Held:
It is the duty of common carriers of passengers to stop their conveyances a
reasonable length of time in order to afford passengers an opportunity to board
and enter, and they are liable for injuries suffered by boarding passengers
resulting from the sudden starting up or jerking of their conveyances while they
are doing so.

Fortune v CA G.R. No. 115278 May 23,

1995
J. Davide Jr.
Facts:
Producers Banks money was stolen while it was being transported from
Pasay to Makati. The people guarding the money were charged with the
theft. The bank filed a claim for the amount of Php 725,000, and such was
refused by the insurance corporation due to the stipulation:
GENERAL EXCEPTIONS
The company shall not be liable under this policy in report of
(b) any loss caused by any dishonest, fraudulent or criminal act of the
insured or any officer, employee, partner, director, trustee or authorized
representative of the Insured whether acting alone or in conjunction with
others. . . .
In the trial court, the bank claimed that the suspects were not any of the
above mentioned. They won the case. The appellate court affirmed on the
basis that the bank had no power to hire or dismiss the guard and could
only ask for replacements from the security agency.
Issue: Did the guards fall under the general exceptions clause of the
insurance policy and thus absolved the insurance company from liability?
Held: Yes to both. Petition granted.
Ratio:
The insurance agency contended that the guards automatically became the
authorized representatives of the bank when they cited International
Timber Corp. vs. NLRC where a contractor is a "labor-only" contractor in
the sense that there is an employer-employee relationship between the
owner of the project and the employees of the "labor-only" contractor.
They cited Art. 106. Of the Labor Code which said:
Contractor or subcontractor. There is "labor-only" contracting where the
person supplying workers to an employer does not have substantial capital
or investment in the form of tools, equipment, machineries, work premises,
among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of

such employer. In such cases, the person or intermediary shall be

considered merely as an agent of the employer who shall be responsible to
the workers in the same manner and extent as if the latter were directly
employed by him.
The bank asserted that the guards were not its employees since it had
nothing to do with their selection and engagement, the payment of their
wages, their dismissal, and the control of their conduct.
They cited a case where an employee-employer relationship was governed
by (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct.
The case was governed by Article 174 of the Insurance Code where it
stated that casualty insurance awarded an amount to loss cause by
accident or mishap.
The term "employee," should be read as a person who qualifies as such
as generally and universally understood, or jurisprudentially established in
the light of the four standards in the determination of the employeremployee relationship, or as statutorily declared even in a limited sense as
in the case of Article 106 of the Labor Code which considers the employees
under a "labor-only" contract as employees of the party employing them
and not of the party who supplied them to the employer.
But even if the contracts were not labor-only, the bank entrusted the
suspects with the duty to safely transfer the money to its head office, thus,
they were representatives. According to the court, a representative is
defined as one who represents or stands in the place of another; one who
represents others or another in a special capacity, as an agent, and is
interchangeable with agent.

Phil. Rabbit bus lines vs. IAC. G.R. Nos. L-66102-04

August 30, 1990. A TRANSPORTATION CASE. BY C Y.
Phil. Rabbit bus lines vs. IAC.
FACTS.
1.The passengers boarded the jeep owned by the Mangune Spouses and driven
by Manalo to bring them to Carmen Rosales Pangasinan.
2. Upon reaching barrio Sinayoan Tarlack,The right rear wheel of the truck was
detouch so the driver steps on the brake as a result of which, the jeep
who is running unbalance made a uturn so that the front part face the south
where it come from and its rear face the north where it is going.
3. The bus of the petitioner driven by Delos Reyes bump the jeep resulting in
the death of the three passengers of the jeepney and injuries to others.
4. The two drivers was charged of multiple homicide before the MTC of
SanMiguel Tarlack.
5. A probable cause was found with respect to the case of Manalo and the case
of Delos Reyes was dismissed and Manalo was convicted By the court of first
instance of Pangasinan.
6. Then the heirs of the deceased passengers filed a complaint for recovery of
civil damages before the court of first instance impleading both the defendant
and the respondent.
7. the CFI found Manalo guilty of negligence but this was reverse by the IAC.
ISSUE.
Who is liable for the death and physical injuries suffered by the passengers of
the jeepney?
Ruling
According to the supreme court, The IAC erred in applying the doctrine of last
clear chance in this case because this doctrine applies only in a suit between
the owners and drivers of two colliding vihicles and not in a suit where
passengers demand responsibility from a carries to enforce its contractual
obligation.
So the decision of the IAC was set aside and the decision of the CFI was
reinstated.