Extraordinary Diligence
Delsan Transport vs. CA
Article 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods
is further expressed in articles 1734, 1735, and 1745, Nos.
5, 6, and 7, while the extraordinary diligence for the safety
of the passengers is further set forth in articles 1755 and
1756.
Eastern Shipping Lines vs. CA and First Nationwide
Assurance Co.
FACTS: Defendant Eastern Shipping Lines, Inc., was
contracted by Stresstek Post-Tensioning Phils., Inc. to
ship 13 coils of uncoated 7-wire stress relieved wire
strand from Kobe, Japan to Manila via the former’s
vessel, Japri Venture. The shipment was insured with
respondent, First nationwide Assurance Co.
While enroute from Kobe to Manila, the carrying vessel
"encountered very rough seas and stormy weather" for
more or less three days, causing fresh water to enter the
hatch, damaging the said goods. When it arrived at E.
Razon, Inc., the arrastre operator, it was found that
seven coils were rusty on one side each and that all
thirteen coils were extremely rusty and totally
unsuitable for the intended purpose.
Respondent indemnified the consignee the amount of
P171,923.00 for damage and loss to the insured cargo.
Due to its failure to collect from the petitioner, First
nationwide Assurance Co. filed a complaint for collection
of a sum of money.
ISSUE: Whether or not defendants are liable to plaintiff
insurer-subrogee.
HELD: Yes. Common carriers are bound to observe
extraordinary vigilance over goods according to all
circumstances of each case. Once the carrier has failed
to establish any caso fortuito, the presumption by law of
fault of negligence on the part of carriers applies.
The heavy seas and rains referred to in the master's
report were not caso fortuito, but normal occurrences
that an ocean-going vessel, particularly in the month of
September which, in our area, is a month of rains and
heavy seas would encounter as a matter of routine. They
are neither unforeseen nor unforeseeable as they are
conditions that oceangoing vessels would encounter and
provide for, in the ordinary course of a voyage.
FACTS: Caltex entered into a contract of affreightment
with Delsan for a period of 1 year whereby the latter
agreed to transport Caltex’s industrial fuel oil from the
Batangas-Bataan Refinery to different parts of the
country. Under the contract, petitioner took on board its
vessel, MT Maysun, industrial fuel oil to be delivered to
the Caltex Oil Terminal in Zamboanga City. The shipment
was insured with the private respondent, American
Home Assurance Corporation (AHAC).
While enroute from Batangas to Zamboanga City, the
vessel sank in the early morning near Panay Gulf in the
Visayas taking with it the entire cargo of fuel oil.
AHAC paid Caltex the sum of P5,096,635.57. Due to its
failure to collect from the petitioner, AHAC filed a
complaint for collection of a sum of money.
ISSUE: Whether or not petitioner failed to exercise
extraordinary diligence.
HELD: Yes. From the nature of their business and for
reasons of public policy, common carriers are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of passengers transported by
them, according to all the circumstances of each case. In
all other cases, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have
been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence.
As ruled by the CA, petitioner’s vessel, MT Maysun, sank
with its entire cargo for the reason that it was not
seaworthy. There was no squall or bad weather or
extremely poor sea condition in the vicinity when the
said vessel sank. Petitioner cannot escape liability by
presenting in evidence certificates that tend to show
that at the time of drydocking and inspection by the
Philippine Coast Guard, MT Maysun, was fit for voyage.
These pieces of evidence do not necessarily take into
account the actual condition of the vessel at the time of
the commencement of the voyage.
Philippine Charter Insurance Corp. vs. Unknown
Owner of the MV National Honor
FACTS: Petitioner Philippine Charter Insurance
Corporation (PCIC) is the insurer of a shipment on board
the vessel M/V National Honor, represented in the
Philippines by its agent, National Shipping Corporation
of the Philippines (NSCP).
The M/V National Honor arrived at the Manila
International Container Terminal (MICT). 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, exclusive
arrastre operator of MICT. 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 Dauz’s experience, this was
a normal procedure.
As the crate was being hoisted from the vessel’s hatch,
the mid-portion of the wooden flooring suddenly
snapped in the air, about five feet high from the vessel’s
twin deck, sending all its contents crashing down hard,
resulting in extensive damage to the shipment. PCIC paid
the damage, and as subrogee, filed a case against M/V
National Honor, NSCP and ICTSI. Both RTC and CA
dismissed the complaint.
ISSUE: Whether or not the presumption of negligence is
applicable in the instant case.
HELD: No. Common carriers duty to observe the
requisite diligence in the shipment of goods last from the
times the articles are surrendered to, or unconditionally
placed in the possession of, and received by, the carriers
for transportation until delivered to, or until the lapse of
a reasonable time for their acceptance, by the person
entitled to receive them.
The breakage and collapse of Crate No. 1 and the total
destruction of its contents were not imputable to any
fault or negligence on the part of said defendant in
handling the unloading of the cargoes from the carrying
vessel, but was due solely to the inherent defect and
weakness of the materials used in the fabrication of said
crate. The crate should have three solid and strong
wooden batten placed side by side underneath or on the
flooring of the crate to support the weight of its
contents.
Saludo vs. Court of Appeals
FACTS: The petitioners’ mother, Crispina Saludo, died in
Chicago, Illinois. Pomierski and Son Funeral Home of
Chicago (Pomierski), after embalming and securing a
permit for the body’s disposition, made the necessary
preparations and arrangements for the shipment of the
remains from Chicago to the Philippines. It booked the
shipment with Philippine Airlines with Pomierski as the
shipper and Maria Saludo(who was one of the
petitoners) as the consignee. The routing was from
Chicago to San Francisco on board Trans World Airlines
(TWA) Flight 131 on October 27, 1976, and from San
Francisco to Manila on board PAL Flight No. 107 of the
same date, and from Manila to Cebu on board PAL Flight
149 of October 29, 1976. To confirm the said booking,
PAL Airway Bill No. 079-ORD-01180454 was issued on
Oct 26, 1976. Pomierski brought the remains to C.M.A.S
(Continental Mortuary Air Services) at the airport which
made the necessary arrangements for the flight and
transfer of the body.
Maria Saludo and Saturnino Saludo (petitioners) took
TWA flight 131. However, upon arrival at San Francisco,
it was found out that the body was not in the said flight,
instead it is in a plane to Mexico City. It was discovered
that there were two bodies at the Chicago terminal, and
somehow were switched; It also turned out that TWA,
under the same airway bill, had carried the shipment in
a flight earlier than TWA Flight 131. Upon arriving at
Mexico, the body was sent to San Francisco and arrived
on October 28, 1976, and was subsequently sent to the
Philippines, arriving on Oct 30, 1976, a day after its
expected arrival. Petitioners filed a damage suit against
both TWA and PAL for the delay.
PAL contended that it is not liable for the switching on
Oct 27, 1976 because the cargo was only delivered to
them on October 28, 1976. TWA also denied liability. It
alleged that having duly delivered or transferred the
cargo to its co-respondent PAL, TWA faithfully complied
with its obligation under the airway bill. It also stated
that delivering the cargo thru an earlier flight would not
make them negligent as the airway bill does not specify
a specific aircraft scheduled on a fixed time that would
transport the cargo.
HELD: The two airline companies are not liable for the
delay of delivery. Under Article 1736 of the Civil Code,
extraordinary diligence of a common carrier begins from
the time the goods are delivered to the carrier. 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. 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. 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.
Though not related to extraordinary diligence: TWA is
also not liable. It had only properly fulfilled that
stipulations in the contract with Pomerski which states:
Carrier assumes no obligation to carry the goods by any
specified aircraft or over any particular route or routes
or to make connection at any point according to any
particular schedule, and Carrier is hereby authorized to
select, or deviate from the route or routes of shipment,
notwithstanding that the same may be stated on the
face hereof. At most, CMAS may be held liable for the
switching of the bodies in the airport. However, since it
was not included in the name of the respondents, the
Court has no jurisdiction to order it to pay damages.
Lorenzo Shipping Corp. vs. BJ Marthel International
FACTS: Respondent BJ Marthel International, Inc.
supplied petitioner Lorenzo Shipping Corporation with
spare parts for the latter's vessel, M/V Dadiangas
Express.
The parties executed two purchase orders for the sale of
cylinder liner. Like the first purchase order, the second
purchase order did not state the date of the cylinder
liner's delivery, but stated that the term of payment is
25% upon delivery, the balance payable in 5 bi-monthly
equal installments.
The second purchase being left unpaid due to
dishonored postdated checks, Respondent's vice-
president sent a demand letter dated to petitioner
requiring the latter to pay. However, Petitioner only
offered to pay P150,000 for the cylinder liners, claiming
that as the cylinder liners were delivered late, it
(petitioner) would have to sell the cylinder liners in
Singapore and pay the balance from the proceeds of said
sale. Thus, Respondent filed an action for sum of money
and damages.
ISSUE: Whether or not the presumption of negligence is
applicable in the instant case.
HELD: No. Common carriers duty to observe the
requisite diligence in the shipment of goods last from the
times the articles are surrendered to, or unconditionally
placed in the possession of, and received by, the carriers
for transportation until delivered to, or until the lapse of
a reasonable time for their acceptance, by the person
entitled to receive them.
The breakage and collapse of Crate No. 1 and the total
destruction of its contents were not imputable to any
fault or negligence on the part of said defendant in
handling the unloading of the cargoes from the carrying
vessel, but was due solely to the inherent defect and
weakness of the materials used in the fabrication of said
crate. The crate should have three solid and strong
wooden batten placed side by side underneath or on the
flooring of the crate to support the weight of its
contents.
Sealoader vs. Grand Cement
FACTS: Sealoader executed a Time Charter Party
Agreement with Joyce Launch a domestic corporation,
which owned and operated the motor tugboat M/T
Viper. By virtue of the agreement, Sealoader chartered
the M/T Viper in order to tow the former’s unpropelled
barges for a minimum period of fifteen days from the
date of acceptance. Subsequently, Sealoader entered
into a contract with Grand Cement for the loading of
cement clinkers and the delivery thereof to Manila.
On March 31, 1994, Sealoader’s barge, the D/B
Toploader, arrived at the wharf of Grand Cement tugged
by the M/T Viper. The D/B Toploader, however, was not
immediately loaded with its intended cargo as the
employees of Grand Cement were still loading another
vessel, the Cargo Lift Tres.
On April 4, 1994, Typhoon Bising struck the Visayas area.
Public storm signal number 3 was raised over the
province of Cebu. The D/B Toploader was, at that time,
still docked at the wharf of Grand Cement. In the
afternoon of said date, as the winds blew stronger and
the waves grew higher, the M/T Viper tried to tow the
D/B Toploader away from the wharf. The efforts of the
tugboat were foiled, however, as the towing line
connecting the two vessels snapped. This occurred as
the mooring lines securing the D/B Toploader to the
wharf were not cast off.
The following day, the employees of Grand Cement
discovered the D/B Toploader situated on top of the
wharf, apparently having rammed the same and causing
significant damage thereto. Sealoader contends that
Grand Cement had the last clear chance to prevent the
damage to the latter’s wharf. Had Grand Cement cast off
the mooring lines attached to the D/B Toploader early
on, the barge could have been towed away from the
wharf and the damage thereto could have been avoided.
As Grand Cement failed to act accordingly, Sealoader
argues that the former was barred from recovering
damages.
ISSUE: Whether or not, Grand Cement may recover
damages.
HELD: Yes. The Court cannot subscribe to the ruling of
the Court of Appeals in the Amended Decision that
Grand Cement was likewise negligent inasmuch as
Sealoader was very much aware that the D/B Toploader
would only be loaded with its cargo after the loading of
the Cargo Lift Tres.
One of the bases cited by the RTC for its finding that
Sealoader was negligent was the lack of a radio or any
navigational communication facility aboard the D/B
Toploader. Sealoader’s own witness, Renee Cayang,
 stated on cross-examination that there was no radio on
board the D/B Toploader. This negligence cannot be
ascribed to anyone else but Sealoader. Correlated to the
above finding is the manifest laxity of the crew of the
D/B Toploader in monitoring the weather as they only
knew about the typhoon when it hit their vessel.
Sealoader cannot pass to Grand Cement the
responsibility of casting off the mooring lines connecting
the D/B Toploader to the wharf. The people at the wharf
could not just cast off the mooring lines without any
instructions from the crew of the D/B Toploader and the
M/T Viper. As the D/B Toploader was without an engine,
casting off the mooring lines prematurely might send the
barge adrift or even run the risk of the barge hitting the
wharf sure enough.
Presumption of negligence
Article 1735. In all cases other than those mentioned in
Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods
are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence as required in article 1733.
Delsan Transport vs. American Home
FACTS: On August 5, 1984, Delsan received on board MT
Larusan a shipment consisting of Automotive Diesel Oil
at the Bataan Refinery Corporation for transportation
and delivery to the bulk depot in Bacolod City of Caltex
Phils., Inc., pursuant to a Contract of Afreightment. The
shipment was insured by respondent AHAC.
In Bacolod City, 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 vessel’s 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 non-availability 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 Caltex’s 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.
ISSUE: Whether or not Delsan is liable for damages.
HELD: Yes. 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 found in Article
1734 of the NCC.
Maersk Line vs. CA and Castillo
FACTS: Sealoader executed a Time Charter Party
Agreement with Joyce Launch a domestic corporation,
which owned and operated the motor tugboat M/T
Viper. By virtue of the agreement, Sealoader chartered
the M/T Viper in order to tow the former’s unpropelled
barges for a minimum period of fifteen days from the
date of acceptance. Subsequently, Sealoader entered
into a contract with Grand Cement for the loading of
cement clinkers and the delivery thereof to Manila.
On March 31, 1994, Sealoader’s barge, the D/B
Toploader, arrived at the wharf of Grand Cement tugged
by the M/T Viper. The D/B Toploader, however, was not
immediately loaded with its intended cargo as the
employees of Grand Cement were still loading another
vessel, the Cargo Lift Tres.
On April 4, 1994, Typhoon Bising struck the Visayas area.
Public storm signal number 3 was raised over the
province of Cebu. The D/B Toploader was, at that time,
still docked at the wharf of Grand Cement. In the
afternoon of said date, as the winds blew stronger and
the waves grew higher, the M/T Viper tried to tow the
D/B Toploader away from the wharf. The efforts of the
tugboat were foiled, however, as the towing line
connecting the two vessels snapped. This occurred as
the mooring lines securing the D/B Toploader to the
wharf were not cast off.
The following day, the employees of Grand Cement
discovered the D/B Toploader situated on top of the
wharf, apparently having rammed the same and causing
significant damage thereto. Sealoader contends that
Grand Cement had the last clear chance to prevent the
damage to the latter’s wharf. Had Grand Cement cast off
the mooring lines attached to the D/B Toploader early
on, the barge could have been towed away from the
wharf and the damage thereto could have been avoided.
As Grand Cement failed to act accordingly, Sealoader
argues that the former was barred from recovering
damages.
ISSUE: Whether or not, Grand Cement may recover
damages.
HELD: Yes. The Court cannot subscribe to the ruling of
the Court of Appeals in the Amended Decision that
Grand Cement was likewise negligent inasmuch as
Sealoader was very much aware that the D/B Toploader
would only be loaded with its cargo after the loading of
the Cargo Lift Tres.
One of the bases cited by the RTC for its finding that
Sealoader was negligent was the lack of a radio or any
navigational communication facility aboard the D/B
Toploader. Sealoader’s own witness, Renee Cayang,
stated on cross-examination that there was no radio on
board the D/B Toploader. This negligence cannot be
ascribed to anyone else but Sealoader. Correlated to the
above finding is the manifest laxity of the crew of the
D/B Toploader in monitoring the weather as they only
knew about the typhoon when it hit their vessel.
Sealoader cannot pass to Grand Cement the
responsibility of casting off the mooring lines connecting
the D/B Toploader to the wharf. The people at the wharf
could not just cast off the mooring lines without any
instructions from the crew of the D/B Toploader and the
M/T Viper. As the D/B Toploader was without an engine,
casting off the mooring lines prematurely might send the
barge adrift or even run the risk of the barge hitting the
wharf sure enough.
FGU Insurance Corp. vs. CA
FACTS: These are two separate Petitions for review
assailing the decision of the Court of Appeals which
affirmed the decision of RTC of Cebu City. Evidence
shows that Anco Enterprises Company (ANCO), a
partnership between Ang Gui and Co To, was engaged in
the shipping business. It owned the M/T ANCO tugboat
and the D/B Lucio barge which were operated as
common carriers.
Since the D/B Lucio had no engine of its own, it could not
maneuver by itself and had to be towed by a tugboat for
it to move from one place to another. On September 23,
1979, SMC shipped from Mandaue City, on board the
D/B Lucio for towage by M/T ANCO: (a) Bill of Lading #1:
25,000 cases of Pale Pilsen + 350 cases of Cerveza Negra
to Estancia, Iloilo and (b) Bill of Lading #2: 15,000 cases
of Pale Pilsen + 200 cases of Cerveza Negra to San Jose,
Antique.
When the barge and tugboat arrived at Antique in the
afternoon, the clouds over the area were dark and the
waves were already big. SMCs Supervisor, Fernando
Macabuag, requested ANCOs representative to transfer
the barge to a safer place because the vessel might not
be able to withstand the big waves. ANCO did not heed
the request because he was confident.
On October 01, 1979, 10 pm, the crew of D/B Lucio
abandoned the vessel because the barges rope attached
to the wharf was cut off by the big waves. Thus, ANCO
failed to deliver to SMCs consignee 29,210 cases of Pale
Pilsen and 550 cases of Cerveza Negra. The value
amounted to P1,346,197. SMC filed a complaint for
Breach of Contract of Carriage and Damages against
ANCO for the amount aforesaid plus interest & damages
Upon Ang Gui’s death, ANCO, as a partnership, was
dissolved. Hence, SMC filed a second amended
complaint impleading the surviving partner, Co To and
the Estate of Ang Gui represented by Lucio, Julian and
Jaime, all surnamed Ang. ANCO admitted that the cases
of beer were indeed loaded on the vessel belonging to
them. It claimed however that it had an agreement with
SMC that ANCO would not be liable for any losses or
damages resulting to the cargoes by reason of fortuitous
event. Since the cases of beer Pale Pilsen and Cerveza
Negra were lost by reason of a storm, a fortuitous event
which battered and sunk the vessel in which they were
loaded, they should not be held liable.
ANCO filed a Third-Party Complaint against FGU alleging
that before the vessel of ANCO left for San Jose, the
cargoes were insured with FGU. ANCO alleged that the
third-party defendant corporation should be held liable
to indemnify or reimburse ANCO whatever amounts, or
damages, it may be required to pay to SMC.
The trial court found that while the cargoes were indeed
lost due to fortuitous event, there was failure on ANCOs
part to observe the degree of diligence required. The
trial court thus held the Estate of Ang Gui and Co To
liable to SMC for the amount of the lost shipment. FGU
liable to bear 53% of the amount of the lost cargoes.CA
affirmed in the decision in toto.
ISSUE: Whether or not ANCO’s representatives
exercised the extraordinary degree of diligence required
by the law to exculpate them from liability for the loss of
the cargoes.
HELD: No. As correctly pointed out by the appellate
court, there was blatant negligence on the part of M/T
ANCOs crewmembers, first in leaving the engine-less
barge D/B Lucio at the mercy of the storm without the
assistance of the tugboat, and again in failing to heed the
request of SMCs representatives to have the barge
transferred to a safer place, as was done by the other
vessels in the port; thus, making said blatant negligence
the proximate cause of the loss of the cargoes.
While the loss of the cargoes was admittedly caused by
the typhoon Sisang, a natural disaster, ANCO could not
escape liability to respondent SMC. The records clearly
show the failure of petitioner’s representatives to
exercise the extraordinary degree of diligence mandated
by law. To be exempted from responsibility, the natural
disaster should have been the proximate and only cause
of the loss. There must have been no contributory
negligence on the part of the common carrier.
To be exempted from responsibility, the natural disaster
should have been the proximate and only cause of the
loss. There must have been no contributory negligence
on the part of the common carrier. The Civil Code
provides:
Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported
by them, according to all the circumstances of each case.
Such extraordinary diligence in vigilance over the goods
is further expressed in Articles 1734, 1735, and 1745
Nos. 5, 6, and 7 . . .
Art. 1734. Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the
same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
Art. 1739. In order that the common carrier may be
exempted from responsibility, the natural disaster must
have been the proximate and only cause of the loss.
However, the common carrier must exercise due
diligence to prevent or minimize loss before, during and
after the occurrence of flood, storm, or other natural
disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or
deterioration of the goods .
DSR Senator vs. Federal
FACTS: This is a petition for review on certiorari for
damages arising from the loss of cargo while in transit.
Shipper Berde Plants, Inc. entered into a business with
Al-Mohr International Group in Riyadh, Saudi Arabia.
They acquired the services of C.F. Sharp and Company
Inc. the general ship agent of Petitioner DSR-Senator
Lines.
To which a Bill of Lading was produced by the carrier,
showing an invoice amounting to $34,579.60. Khor
Fakkan Port as its Discharge location and Port Dammam
as the Port of Delivery with M/S “Arabian Senator” as the
assigned vessel.
Federal Phoenix Assurance Company Inc., insured the
cargo for Php 941,429.61
On June 7 1993, the carrier left Manila and arrived Khor
Fakkan to which the cargo was reloaded on board DSR-
Senator Lines vessel M/V “Kapitan Sakharov” bound for
Port Dammam.
While in Transit the vessel caught fire. As a result,
Federal Phoenix paid Berde Plants the insurance; on the
other hand, the latter executed a “Subrogation Receipt.”
Federal Phoenix sent a letter to CF Sharp demanding
reimbursement. CF Sharp denied the letter on the
ground that liability was extinguished when the vessel
carrying the cargo was gutted by fire.
Federal Phoenix filed a complaint in RTC which was
granted and affirmed by CA.
ISSUE: Whether or not, DSR-Senator Lines and CF Shard
and Company’s liabilities are extinguished due to the
fire.
HELD: No. In addition to Article 1734, natural disaster
must have been the proximate and only cause of the
loss, and that the carrier has exercised due diligence to
prevent or minimize the loss before, during or after the
occurrence of the disaster.
PHILAMGEN vs. CA
FACTS: Davao Union Marketing Corporation of Davao
City shipped on board the vessel M/V "Crazy Horse"
operated by the Transpacific Towage, Inc. cargo
consisting of 9,750 sheets of union brand GI sheets with
a declared value of P1,086,750.00 and 86,860 bags of
union Pozzolan and union Portland Cement with a
declared value of P4,300,000.00. The cargo was
consigned to the Bicol Union Center of Pasacao,
Camarines Sur, with a certain Pedro Olivan as the
"Notify-Party." This was insured by the Philippine
American General Insurance Co., Inc., under Marine
Note No. 023408. Upon arrival as scheduled, the
discharging could not be affected immediately and
continuously because of certain reasons. First, the buoys
were installed only on September 11, 1985; second, the
discharge permit was secured by the consignee only on
September 13, 1985; third a wooden catwalk had to be
installed and extension of the wharf had to be made,
which was completed only on September 26, 1985;
fourth, the discharging was not continuous because
there were intermittent rains and the stevedores
supplied by the consignee did not work during the town
fiesta. Typhoon Saling then entered the PAR so the
discharging had to be suspended and the hatches of the
subject cargoes closed. At this time, a total of 59,625
bags of cement and 26 crates of GI sheets had already
been discharged. After further preparation, the
shipmaster ordered the maneuvering but it could not be
steered on account of the strong winds and rough seas.
The vessel's lines snapped, causing her to be dragged
against the rocks, and the anchor chain stopper gave
way. The vessel sustained holes in the engine room and
there was a power failure in the vessel. Water started to
fill the engine room and the engine broke down.
Eventually, the vessel broke into 2 parts and sunk
partially causing the cargo of the cement to be damaged
while the GI sheets were looted and nothing was left of
the discharged pieces. Because the cargo was insured by
it the Philippine American General Insurance Co., Inc.
paid the shipper Davao Union Marketing Corporation
the sum of P1,511,210.00. Thereafter, the said insurer
made demands upon the Transpacific Towage, Inc. for
the payment of said amount as subrogee of the insured,
claiming that the loss of the cargo was directly and
exclusively brought about by the fault and negligence of
the shipmaster and the crew of M/V "Crazy Horse".
ISSUE: Whether or not respondent should be held liable
for the loss as it failed to exercise the extraordinary
diligence required.
HELD: No. Neither of the parties herein could be faulted
for such delay, for the same was due not to negligence.
The cargo having been lost due to typhoon "Saling", and
the delay incurred in its unloading not being due to
negligence, private respondent is exempt from liability
for the loss of the cargo, pursuant to Article 1740 of the
Civil Code. The records also show that before, during and
after the occurrence of typhoon "Saling", private
respondent through its shipmaster exercised due
negligence to prevent or minimize the loss of the cargo,
as shown by the following facts: (1) at 5:20 a.m. of 18
October 1985, as typhoon "Saling" continued to batter
the Pasacao area, the shipmaster tried to maneuver the
vesel amidst strong winds and rough seas; (2) when
water started to enter the engine room and later the
engine broke down, the shipmaster ordered this ship to
be abandoned, but he sought police assistance to
prevent pilferage of the vessel and its cargo; (3) after the
vessel broke into two (2) parts and sank partially, the
shipmaster reported the incident to the Philippine Coast
Guard, but unfortunately, despite the presence of three
(3) coast guards, nothing could be done to stop the
pilferage as almost the entire barrio folk came to loot the
vessel and its cargo, including the G.I. sheets.
Belgian Overseas vs. Philippine First Insurance
FACTS: On June 13, 1990, CMC Trading A.G. shipped on
board the MV Anangel Sky at Hamburg, Germany, 242
coils of various Prime Cold Rolled Steel sheets consigned
to the Philippine Steel Trading Corporation (PSTC). On
July 28, 1990, the MV Anangel Sky arrived the port of
Manila, and within the subsequent days, the cargo was
discharged. Four (4) of the coils were in bad order and
unfit for the intended purpose thus, PSTC declared the
same a total loss and sent a formal demand letter to
Philippine First Insurance (PFI) which the latter refused
to receive. Consequently, Belgian Overseas paid the
consignee the amount of P506,086.50 and was
subrogated to the latter’s rights against PFI.
PFI 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 packaging, or to the act or
omission of the shipper of goods or their
representatives. In addition, they argued that their
liability, if any, should not exceed the liability provided
for in the bill of lading and other pertinent laws. Finally,
they averred that they exercised due diligence and
foresight required by law to prevent any damage/loss to
said shipment. The RTC dismissed the complaint but the
CA reversed, hence the petition.
ISSUE: Whether or not petitioner had overcome the
presumption of negligence of a common carrier.
HELD: No. Petitioner’s contention presumption that the
presumption of fault imposed on common carriers
should not be applied on the basis of the lone testimony
of the offered by the private respondent is untenable.
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. 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. The 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.
Cokaliong Shipping Lines vs. WCPB General Insurance
FACTS: On 11 December 1991, Nestor Angelia, both the
shipper and consignee, delivered to the petitioner,
Cokaliong Shipping Lines, cargo consisting of one carton
of Christmas decorations and two sacks of plastic toys,
to be transported on board the M/V Tandag scheduled
to depart the following day from Cebu City to Surigao del
Sur. Zosimo Mercado, also the shipper and consignee of
cargo, likewise delivered to the petitioner two cartons of
plastic toys and Christmas decor, one roll of floor
matting, and one bundle of assorted goods for
transportation. The cargoes were both insured against
all risk by Feliciana Legaspi through the UCPB General
Insurance Co. for PHP150,000.00. When the vessel left
port, it had thirty-four passengers and assorted cargo on
board, including the goods of Legaspi. However, after
the vessel had passed by the Mandaue-Mactan Bridge, a
fire broke out in the engine room which threatened the
lives of everyone on board. Despite earnest efforts of the
officers and crew of the vessel to safeguard the cargoes,
the fire ultimately engulfed and destroyed the entire
vessel resulting in the loss of the vessel and the cargoes
therein.
As a result of the sinking, Legaspi filed a claim with the
respondent which was subsequently approved with the
issuance of a check for PHP P148,500.00 as payment for
the lost goods. Having been issued a Subrogation
Receipt for both insured cargoes, the UPCB filed a claim
anchored on torts against Cokaliong Shipping Lines and
sought to collect the sum it payed to Legaspi plus legal
interest, attorney’s fees, and the cost of the suit. They
principal claim upon which UPCB anchors its case is that
the loss of the cargo was due to the negligence of the
officers of the shipping company which makes them
liable to pay for damages by reason of their carelessness.
The petitioners, on the other hand, alleged that they had
already been cleared by the Board of Marine Inquiry of
any negligence in the burning of the vessel and the
shippers/consignee had already been paid the value of
the goods as stated in the Bill of Lading and, hence, they
cannot be held liable for the loss of the cargo beyond the
value thereof declared in the Bills of Lading – a total of
PHP20,500.00 for both cargoes it had issued to Legaspi
Marketing Corporation and Nestor Angelia which
supposedly extinguishes their liability with the
respondent.
Both the Regional Trial Court and the Court of Appeals
found the case in favor of the respondent. While it was
true that the petitioner had paid PHP14,000.00 to
Legaspi Marketing, the appellate court held that the
payment did not extinguish the petitioner’s obligation to
pay the insurance price because there was no evidence
that Feliciana Legaspi was the same owner of Legaspi
Marketing. They also pointed out the impropriety of
treating the claim covering the cargo valued therein at
P6,500 as a setoff against Nestor Angelia’s account with
Chester Enterprises, Inc. Finally, it ruled that the UPCB is
not bound by the valuation of the cargo under the Bills
of Lading issued because the goods were insured with
the respondent for the total amount of PHP150,000.00.
ISSUE: Whether or not petitioner be liable for the lost
goods? If it is, what is the extent of their liability?
HELD: Yes. The petitioner is liable for the lost cargoes.
The uncontroverted findings of the Philippine Coast
Guard show that the M/V Tandag sank due to a fire,
which resulted from an unchecked and untended crack
in the auxiliary engine fuel oil service tank from which
fuel spurted out and dripped to the heating exhaust
manifold, causing the ship to burst into flames. The crack
was located on the side of the fuel oil tank, which had a
mere two-inch gap from the engine room walling, thus
precluding constant inspection and care by the crew.
The law provides that a common carrier is presumed to
have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported
therewith. Where loss of cargo results from the failure
of the officers of a vessel to inspect their ship frequently
so that they would have discovered the existence of
cracked, that loss cannot be attributed to force majeure
or even be considered as a caso fortuito, but solely to
the negligence of those officials who were supposed to
have inspected the worthiness of their vessel before
departure. With respect to the extent of its liability, the
respondent contended that the petitioner’s liability
should be based on the actual insured value of the goods
while the petitioner claimed that its liability should be
limited to the value declared by the shipper/consignee
in the Bill of Lading. A stipulation in a Bill of Lading
limiting the common carrier’s liability for loss or
destruction of a cargo to a certain sum, unless the
shipper or owner declares a greater value, is sanctioned
by Articles 1749 and 1750 of the New Civil Code. The
purpose of the limiting stipulations in Bills of Lading is to
protect the common carrier from exorbitant liabilities
since such it obliges the shipper/consignee to notify the
common carrier of the amount that the latter may be
liable for in case of loss of the goods. The common
carrier can then take appropriate measures to protect
itself from harm.
Pursuant to the aforementioned provisions of law, it
then must be required that the stipulation limiting the
common carrier’s liability for loss must be reasonable
and just under the circumstances, and has been freely
and fairly agreed upon. In the present case, however, in
their desire to obtain lower freightage fees, Zosimo
Mercado and Nestor Angelia willfully misled the
petitioner by undervaluing the goods in their respective
Bills of Lading, hence, the petitioner was exposed to a
risk that was deliberately hidden from it, and from which
it could not protect itself. Not only did it violate a valid
contractual stipulation, they likewise committed a
fraudulent act which sought to make the common
carrier liable for more than the amount declared in the
Bills of Lading. Considering these circumstances then, in
addition to the facts that the insurance company was
paid the correct higher premium by Feliciana Legaspi
while the petitioner was paid a fee lower than what it
was entitled to for transporting the goods that had been
deliberately undervalued by the shippers in the Bills of
Lading they prepared, it is in accordance with justice and
equity that between the two of them, UPCB should bear
the loss in excess of the value declared in the Bills of
Lading.
Sarkies Tours Phil. Inc. 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 plaintiff’s 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 or not defendants shipping corporation
and the surety company are liable to the plaintiff for the
latter’s lost logs.
HELD: Yes. Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods transported by them, and this liability lasts from
the time the goods are unconditionally placed in the
possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the person who has a
right to receive them, unless the loss is due to any of the
excepted causes under Art. 1734.
The cause of the loss was Sarkies Tours’ negligence in not
ensuring that the doors of the baggage compartment of
its bus were securely fastened. As a result of this lack of
care, almost all of the luggage was lost, to the prejudice
of the paying passengers.
Valenzuela Hardwood vs. CA
FACTS: On 11 December 1991, Nestor Angelia, both the
shipper and consignee, delivered to the petitioner,
Cokaliong Shipping Lines, cargo consisting of one carton
of Christmas decorations and two sacks of plastic toys,
to be transported on board the M/V Tandag scheduled
to depart the following day from Cebu City to Surigao del
Sur. Zosimo Mercado, also the shipper and consignee of
cargo, likewise delivered to the petitioner two cartons of
plastic toys and Christmas decor, one roll of floor
matting, and one bundle of assorted goods for
transportation. The cargoes were both insured against
all risk by Feliciana Legaspi through the UCPB General
Insurance Co. for PHP150,000.00. When the vessel left
port, it had thirty-four passengers and assorted cargo on
board, including the goods of Legaspi. However, after
the vessel had passed by the Mandaue-Mactan Bridge, a
fire broke out in the engine room which threatened the
lives of everyone on board. Despite earnest efforts of the
officers and crew of the vessel to safeguard the cargoes,
the fire ultimately engulfed and destroyed the entire
vessel resulting in the loss of the vessel and the cargoes
therein.
As a result of the sinking, Legaspi filed a claim with the
respondent which was subsequently approved with the
issuance of a check for PHP P148,500.00 as payment for
the lost goods. Having been issued a Subrogation
Receipt for both insured cargoes, the UPCB filed a claim
anchored on torts against Cokaliong Shipping Lines and
sought to collect the sum it payed to Legaspi plus legal
interest, attorney’s fees, and the cost of the suit. They
principal claim upon which UPCB anchors its case is that
the loss of the cargo was due to the negligence of the
officers of the shipping company which makes them
liable to pay for damages by reason of their carelessness.
The petitioners, on the other hand, alleged that they had
already been cleared by the Board of Marine Inquiry of
any negligence in the burning of the vessel and the
shippers/consignee had already been paid the value of
the goods as stated in the Bill of Lading and, hence, they
cannot be held liable for the loss of the cargo beyond the
value thereof declared in the Bills of Lading – a total of
PHP20,500.00 for both cargoes it had issued to Legaspi
Marketing Corporation and Nestor Angelia which
supposedly extinguishes their liability with the
respondent.
Both the Regional Trial Court and the Court of Appeals
found the case in favor of the respondent. While it was
true that the petitioner had paid PHP14,000.00 to
Legaspi Marketing, the appellate court held that the
payment did not extinguish the petitioner’s obligation to
pay the insurance price because there was no evidence
that Feliciana Legaspi was the same owner of Legaspi
Marketing. They also pointed out the impropriety of
treating the claim covering the cargo valued therein at
P6,500 as a setoff against Nestor Angelia’s account with
Chester Enterprises, Inc. Finally, it ruled that the UPCB is
not bound by the valuation of the cargo under the Bills
of Lading issued because the goods were insured with
the respondent for the total amount of PHP150,000.00.
ISSUE: Whether or not a stipulation in a charter party
that the owners shall not be responsible for loss, split,
short-landing, breakages and any kind of damages to the
cargo is valid
HELD: Yes. Seven Brothers had acted as a private carrier
in transporting petitioner’s lauan logs. Thus, Article 1745
and other Civil Code provisions on common carriers may
not be applied unless expressly stipulated by the parties
in their charter party.
 the proximate cause of the sinking of the vessel
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
 contract of private carriage – 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 Art. 1306, the assailed 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
Yobido vs. CA
FACTS: On April 26, 1988, spouses Tito and Leny Tumboy
and their minor children, Ardee and Jasmin, boarded at
Mangagoy, Surigao del Sur, a Yobido bus bound for
Davao City. Along Picop road in Km. 17, Sta. Maria,
Agusan del Sur, the left front tire of the bus suddenly
exploded. The bus fell into a ravine around three (3) feet
from the road and struck a tree which resulted in the
death of Tito Tumboy and physical injuries to other
passengers. Thereafter, a complaint for breach of
contract of carriage, damages and attorney's fees was
filed by Leny and her children against Alberta Yobido, the
owner of the bus, and Cresencio Yobido, its driver in the
Regional Trial Court of Davao City.
The Tumoboys asserted that violation of the contract of
carriage between them and Yobidos was due to the
driver’s failure to exercise diligence required of the
carrier. According to Leny Tumoboy, the winding road
that it traversed was not cemented and was wet due to
the rain; it was rough with crushed rocks. The bus was
full of passengers and 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. A few
minutes after, she heard something explode and the bus
fell into the ravine. Abundio Salce, who was the bus
conductor when the incident happened, testified that 1)
the 42-seater bus was not full as there were only 32
passengers, such that he himself managed to get a seat;
2) the bus was running at a speed of "60 to 50" and that
it was going slow because of the zigzag road. 3) the left
front tire that exploded was a "brand new tire" that he
mounted on the bus on April 21, 1988 or only five (5)
days before the incident.
ISSUE: Whether or not the explosion of the tire of a
passenger vehicle is a fortuitous event that exempts the
carrier from liability.
HELD: No. As a rule, when a passenger boards a common
carrier, he takes the risks incidental to the mode of travel
he has taken. After all, a carrier is not an insurer of the
safety of its passengers. However, when a passenger is
injured or dies while travelling, the law resumes that the
common carrier is negligent. (Art. 1755 and Art. 1756)
This disputable presumption may only be overcome by
evidence that the carrier had observed extraordinary
diligence or that the death or injury of the passenger was
due to a fortuitous event. In this case, the explosion of a
tire may not be a fortuitous event, there are human
factors involved. The fact that the tire was new did not
imply that it was entirely free from manufacturing
defects or that it was mounted properly. The common
carrier must still prove that it was not negligent in
causing the death or injury resulting from the accident.
Having failed to discharge its duty to overthrow he
presumption of negligence with clear and convincing
evidence, petitioners are hereby held liable for damages.
Defenses and conditions
Article 1734. Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same
is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether international or
civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or
in the containers;
(5) Order or act of competent public authority.
Article 1739. In order that the common carrier may be
exempted from responsibility, the natural disaster must
have been the proximate and only cause of the loss.
However, the common carrier must exercise due diligence
to prevent or minimize loss before, during and after the
occurrence of flood, storm or other natural disaster in order
that the common carrier may be exempted from liability for
the loss, destruction, or deterioration of the goods. The
same duty is incumbent upon the common carrier in case
of an act of the public enemy referred to in article 1734, No.
2.
Article 1740. If the common carrier negligently incurs in
delay in transporting the goods, a natural disaster shall not
free such carrier from responsibility.
Article 1741. If the shipper or owner merely contributed to
the loss, destruction or deterioration of the goods, the
proximate cause thereof being the negligence of the
common carrier, the latter shall be liable in damages, which
however, shall be equitably reduced.
Article 1742. Even if the loss, destruction, or deterioration
of the goods should be caused by the character of the
goods, or the faulty nature of the packing or of the
containers, the common carrier must exercise due diligence
to forestall or lessen the loss.
Article 1743. If through the order of public authority the
goods are seized or destroyed, the common carrier is not
responsible, provided said public authority had power to
issue the order.
Central Shipping Company vs. Insurance Company of
North America
FACTS: On July 25, 1990 at Puerto Princesa, Palawan,
Central Shipping Company received on board its vessel,
the M/V ‘Central Bohol’, 376 pieces [of] Philippine
Apitong Round Logs and undertook to transport said
shipment to Manila for delivery to Alaska Lumber Co.,
Inc.
“The cargo was insured for P3,000,000.00 against total
loss under Insurance Company of North America’s
Marine Cargo Policy No. MCPB- 00170. The vessel
completely sank. Due to the sinking of the vessel, the
cargo was totally lost. The consignee, Alaska Lumber Co.
Inc., presented a claim for the value of the shipment to
Central Shipping but the latter failed and refused to
settle the claim, hence Insurance company, being the
insurer, paid said claim and now seeks to be subrogated
to all the rights and actions of the consignee as against
Central Shipping. Central Shipping raised as its main
defense that the proximate and only cause of the sinking
of its vessel and the loss of its cargo was a natural
disaster, a tropical storm which neither Central Shipping
nor the captain of its vessel could have foreseen.
ISSUE: Whether or not the carrier is liable for the loss of
the cargo.
HELD: Yes. A common carrier is presumed to be at fault
or negligent. It shall be liable for the loss, destruction or
deterioration of its cargo, unless it can prove that the
sole and proximate cause of such event is one of the
causes enumerated in Article 1734 of the Civil Code, or
that it exercised extraordinary diligence to prevent or
minimize the loss. In the present case, the weather
condition encountered by petitioner’s vessel was not a
“storm” or a natural disaster comprehended in the law.
Given the known weather condition prevailing during
the voyage, the manner of stowage employed by the
carrier was insufficient to secure the cargo from the
rolling action of the sea. The carrier took a calculated risk
in improperly securing the cargo. Having lost that risk, it
cannot now disclaim any liability for the loss.
Established is the fact that between 10:00 p.m. on July
25, 1990 and 1:25 a.m. on July 26, 1990, M/V Central
Bohol encountered a southwestern monsoon in the
course of its voyage. Having made such factual
representation in its Note of Marine Protest, petitioner
cannot now be allowed to retreat and claim that the
southwestern monsoon was a “storm.” Normally
expected on sea voyages, however, were such
monsoons, during which strong winds were not
unusual.
According to PAGASA, a storm has a wind force of 48 to
55 knots, equivalent to 55 to 63 miles per hour or 10 to
11 in the Beaufort Scale. The second mate of the vessel
stated that the wind was blowing around force 7 to 8 on
the Beaufort Scale. Consequently, the strong winds
accompanying the southwestern monsoon could not be
classified as a “storm.” Such winds are the ordinary
vicissitudes of a sea voyage.
Also, even if it were a storm, it was not the proximate
and only cause of the loss. The loss of the vessel was
caused not only by the southwestern monsoon, but also
by the shifting of the logs in the hold. Such shifting could
been due only to improper stowage.
Everett Steamship vs. CA
FACTS: Private respondent imported 3 crates of bus
spare parts marked as MARCO C/No. 12,MARCO C/No.
13 and MARCO C/No. 14, from its supplier, Maruman
Trading Company,Ltd. (Maruman Trading), a foreign
corporation based in Inazawa, Aichi, Japan. The crates
were shipped from Nagoya, Japan to Manila on board
“ADELFAEVERETTE,” a vessel owned by petitioner’s
principal, Everett Orient Lines. Upon arrival at the port
of Manila, it was discovered that the crate marked
MARCO C/No. 14 was missing. Privaterespondent 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, theamount shown in an
Invoice No. MTM-941, dated November 14, 1991.
However,petitioner offered to pay only One Hundred
Thousand (Y100,000.00) Yen, the maximum amount
stipulated under Clause 18 of the covering bill of lading
which limits the liability of petitioner. Private
respondent rejected the offer and thereafter instituted
a suit for collection. The trial court rendered a decision
in favour of the private respondents and this was
affirmed by the Court of Appeals. Thus, this instant
petition.
ISSUE: Whether or not the petitioner is liable for the
actual value and not the maximum value recoverable
under the bill of lading.
HELD: The Petitioner is liable for the maximum value
recoverable under the bill of lading.
Art. 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a
greater value, is binding.
Art. 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has
been freely and fairly agreed upon.
Pursuant to the afore-quoted provisions of law, it is
required that the stipulation limiting the common
carrier's liability for loss must be "reasonable and just
under the circumstances, and has been freely and fairly
agreed upon."
The above stipulations are reasonable and just. In the bill
of lading, the carrier made it clear that its liability would
only be up to One Hundred Thousand 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.
Cruz vs. Sun Holidays
FACTS: Spouses Dante and Leonora Cruz files a
complaint for damages against Sun Holidays Inc., the
respondent resort. Arising from the death of their son
who perished with his wife on board the boat M/B Coco
Beach III that capsized on its way to Batangas from
Puerto Galera where the couple had stayed at Coco
Beach Island Resort owned and operated by respondent.
Their stay was virtue of a tour package contract with
respondent that included transportation to and from the
Resort and the point of departure in Batangas. Some of
the passengers died including his wife and son. Sun
denied any responsibility for the incident, which it
considered a fortuitous event. Petitioners allege that as
a common carrier' Sun was negligent in allowing the
boat to sail despite the storm warning bulletins issued by
PAGASA.
ISSUE: Whether or not respondent may be held liable.
HELD: Yes. The elements of a "fortuitous event" are: (a)
the cause of the unforeseen and unexpected
occurrence, or the failure of the debtors to comply with
their obligations, must have been independent of
human will; (b) the event that constituted the caso
fortuito must have been impossible to foresee or, if
foreseeable, impossible to avoid; (c) the occurrence
must have been such as to render it impossible for the
debtors to fulfill their obligation in a normal manner; and
(d) the obligor must have been free from any
participation in the aggravation of the resulting injury to
the creditor.[24]
To fully free a common carrier from any liability, the
fortuitous event must have been the proximate and
only cause of the loss. And it should have exercised due
diligence to prevent or minimize the loss before, during
and after the occurrence of the fortuitous event.[25]
Respondent cites the squall that occurred during the
voyage as the fortuitous event that overturned M/B
Coco Beach III. As reflected above, however, the
occurrence of squalls was expected under the weather
condition of September 11, 2000. Moreover, evidence
shows that M/B Coco Beach III suffered engine trouble
before it capsized and sank.[26]The incident was,
therefore, not completely free from human
intervention.
The Court need not belabor how respondents evidence
likewise fails to demonstrate that it exercised due
diligence to prevent or minimize the loss before, during
and after the occurrence of the squall.
Southern Lines Inc. vs. CA
FACTS: The City of Iloilo requisitioned for rice from the
National Rice and Corn Corporation (NARIC) in Manila.
NARIC, pursuant to the order, shipped 1,726 sacks of rice
consigned to the City of Iloilo on board the SS “General
Wright” belonging to the Southern Lines, Inc.
 The City of Iloilo received the shipment and paid the
total charged amount. However, it was discovered in the
bill of lading that there was shortage equivalent to 41
sacks of rice. The City of Iloilo filed a complaint against
NARIC and the Southern Lines, Inc. for the recovery of
the amount representing the value of the shortage of
the shipment of rice. The lower court absolved NARIC,
but held Southern Lines, Inc. liable to pay the shortage.
CA affirmed the trial court’s decision, hence, this
petition.
ISSUE: Whether or not Southern Lines is liable for the
loss or shortage of the rice shipped
HELD: Yes. Under the provisions of Article 361, the
defendant-carrier in order to free itself from liability was
only obliged to prove that the damages suffered by the
goods were “by virtue of the nature or defect of the
articles.” Under the provisions of Article 362, the
plaintiff, in order to hold the defendant liable, was
obliged to prove that the damages to the goods by virtue
of their nature, occurred on account of its negligence or
because the defendant did not take the precaution
adopted by careful persons.
The contention is untenable, for, if the fact of improper
packing is known to the carrier or his servants, or
apparent upon ordinary observation, but it accepts the
goods notwithstanding such condition, it is not relieved
of liability for loss or injury resulting therefrom.
Petitioner itself frankly admitted that the strings that
tied the bags of rice were broken; some bags were with
holes and plenty of rice were spilled inside the hull of the
boat, and that the personnel of the boat collected no
less than 26 sacks of rice which they had distributed
among themselves. This finding, which is binding upon
this Court, shows that the shortage resulted from the
negligence of petitioner.
Duration of responsibility
Article 1736. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by
the carrier for transportation until the 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.
Article 1737. The common carrier’s duty to observe
extraordinary diligence over the goods remains in full force
and effect even when they are temporarily unloaded or
stored in transit, unless the shipper or owner has made use
of the right of stoppage in transitu.
Article 1738. The extraordinary liability of the common
carrier continues to be operative even during the time the
goods are stored in a warehouse of the carrier at the place
of destination, until the consignee has been advised of the
arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.
Mitsui Lines vs. CA
FACTS: Petitioner Mitsui O.S.K. Lines Ltd. is a foreign
corporation represented in the Philippines by its agent,
Magsaysay Agencies. It entered into a contract of
carriage through Meister Transport, Inc., an
international freight forwarder, with private respondent
Lavine Loungewear Manufacturing Corporation to
transport goods of the latter from Manila to Le Havre,
France. Petitioner undertook to deliver the goods to
France 28 days from initial loading. On July 24, 1991,
petitioner's vessel loaded private respondent's
container van for carriage at the said port of origin.
However, in Kaoshiung, Taiwan the goods were not
transshipped immediately, with the result that the
shipment arrived in Le Havre only on November 14,
1991. The consignee allegedly paid only half the value of
the said goods on the ground that they did not arrive in
France until the "off season" in that country. The
remaining half was allegedly charged to the account of
private respondent which in turn demanded payment
from petitioner through its agent.
ISSUE: Whether or not private respondent's action is
for "loss or damage" to goods shipped, within the
meaning of the Carriage of Goods by Sea Act (COGSA).
HELD: No. The suit is not for "loss or damage" to goods
contemplated in §3(6), the question of prescription of
action is governed not by the COGSA but by Art. 1144 of
the Civil Code which provides for a prescriptive period of
ten years. As defined in the Civil Code and as applied to
Section 3(6), paragraph 4 of the Carriage of Goods by Sea
Act, "loss" contemplates merely a situation where no
delivery at all was made by the shipper of the goods
because the same had perished, gone out of commerce,
or disappeared in such a way that their existence is
unknown or they cannot be recovered.
There would be some merit in appellant's insistence that
the damages suffered by him as a result of the delay in
the shipment of his cargo are not covered by the
prescriptive provision of the Carriage of Goods by Sea
Act above referred to, if such damages were due, not to
the deterioration and decay of the goods while in transit,
but to other causes independent of the condition of the
cargo upon arrival, like a drop in their market value.
Suplicio vs. First Lepanto
FACTS:
ISSUE:

HELD:
Coastwise Ligtherage vs. CA
FACTS: Pag-asa Sales Inc. entered into a contract to
transport molasses from the province of Negros to
Manila with Coastwise Lighterage Corporation
(Coastwise for brevity), using the latter's dumb barges.
The barges were towed in tandem by the tugboat MT
Marica, which is likewise owned by Coastwise. Upon
reaching Manila Bay, one of the barges, "Coastwise 9",
struck an unknown sunken object. The forward
buoyancy compartment was damaged, and water
gushed in through a hole "two inches wide and twenty-
two inches long". As a consequence, the molasses at the
cargo tanks were contaminated. Pag-asa filed a claim
against Philippine General Insurance Company, the
insurer of its cargo. Philgen paid P700,000 for the value
of the molasses lost.
Philgen then filed an action against Coastwise to recover
the money it paid, claiming to be subrogated to the
claims which the consignee may have against the carrier.
Both the trial court and the Court of Appeals ruled
against Coastwise.
ISSUE: Whether or not petitioner Coastwise Lighterage
exercised the diligence required of him.
HELD: No. Although a charter party may transform a
common carrier into a private one, the same however is
not true in a contract of affreightment. The law and
jurisprudence on common carriers both hold that the
mere proof of delivery of goods in good order to a carrier
and the subsequent arrival of the same goods at the
place of destination in bad order makes for a prima facie
case against the carrier. It follows then that the
presumption of negligence that attaches to common
carriers, once the goods it transports are lost, destroyed
or deteriorated, applies to the petitioner. This
presumption, which is overcome only by proof of the
exercise of extraordinary diligence, remained
unrebutted in this case.
Jesus R. Constantino, the patron of the vessel admitted
that he was not licensed. It cannot safely claim to have
exercised extraordinary diligence, by placing a person
whose navigational skills are questionable, at the helm
of the vessel which eventually met the fateful accident.
Had the patron been licensed, he could be presumed to
have both the skill and the knowledge that would have
prevented the vessel's hitting the sunken derelict ship
that lay on their way to Pier 18. As a common carrier,
petitioner is liable for breach of the contract of carriage,
having failed to overcome the presumption of
negligence with the loss and destruction of goods it
transported, by proof of its exercise of extraordinary
diligence.
Philippine First Insurance vs. Wallem First Shipping
FACTS: October 1995, Anhui Chemicals Import and
Export Corp. loaded on board M/S Offshore Master a
shipment consisting of sodium sulphate anhydrous,
complete and in good order for transportation to and
delivery at the port of Manila for consignee, covered by
a clean bill of lading.
On October 16, 1995, the shipment arrived in port of
manila and was discharged which caused various
degrees of spillage and losses as evidence by the turn
over survey of the arrastre operator. Asia Star Freight
delivered the shipments from pier to the consignees in
Quezon City, during the unloading, it was found by the
consignee that the shipment was damaged and in bad
condition.
April 29, 1996, the consignee filed a claim with Wallem
for the value of the damaged shipment, to no avail. Since
the shipment was insured with Phil. First Insurance
against all risks in the amount of P2,470,213.50. The
consignee filed a claim against the First Insurance. First
insurance after examining the turn-over survey, the bad
order certificate and other documents paid the
consignee but later on sent a demand letter to Wallem
for the recovery of the amount paid to the consignee (in
exercise of its right of subrogation). Wallem did not
respond to the claim.
First Insurance then instituted an action before RTC for
damages against Wallem. RTC held the shipping
company and the arrastre operator solidarily liable since
both are charged with the obligation to deliver the goods
in good order condition.
The CA reversed and set aside the RTC's decision. CA says
that there is no solidary liability between the carrier and
the arrastre because it was clearly established that the
damage and losses of the shipment were attributed to
the mishandling by the arrastre operator in the
discharge of the shipment.
ISSUE: Whether or not the Court of Appeals erred in not
holding that as a common carrier, the carriers duties
extend to the obligation to safely discharge the cargo
from the vessel.
HELD: Yes. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to
the consignee, or to the person who has a right to
receive them. A 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.
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.
Samar Mining vs. Nordeutscher Lloyd
FACTS: Samar Mining imported 1 crate optima welded
wire (amounting to around USD 424 or PhP 1,700) from
Germany, which was shipped on a vessel owned by
Nordeutscher Lloyd (M/S Schwabenstein). The shipment
was unloaded in Manila into a barge for transshipment
to Davao and temporarily stored in a bonded warehouse
owned by AMCYL. The goods never reached Davao and
were never delivered to or received by the consignee,
Samar Mining Co.
CFI ruled in favor of Samar Mining holding Nordeutscher
Lloyd liable. However, defendants may recoup whatever
they may pay Samar Mining by enforcing the judgment
against third party defendant AMCYL.
ISSUE: Whether or not Nordeustscher Lloyd is liable for
the loss of the goods as common carrier.
HELD: No. At the time of the loss of the goods, the
character of possession of Nordeutscher Lloyd shifted
from common carrier to agent of Samar Mining Co.
The Bill of Lading is serves both as a receipt of goods and
is likewise the contract to transport and deliver the same
as stipulated. It is a contract and is therefore the law
between the parties. The Bill of Lading in question
stipulated that Nordeutscher Lloyd only undertook to
transport the goods in its vessel only up to the port of
discharge from ship, which is Manila. The Bill of Lading
further stipulated that the goods were to be
transshipped by the carrier from Manila to the port of
destination – Davao. By unloading the shipment in
Manila and delivering the goods to the warehouse of
AMCYL, the appellant was acting within the contractual
stipulations contained in the Bill of Lading.
Article 1736 of the Civil Code relives the carrier of
responsibility over the shipment as soon as the carrier
makes actual or constructive delivery of the goods to the
consignee or to the person who has a right to receive
them.
Under the Civil Code provisions governing Agency, an
agent can only be held liable in cases where his acts are
attended by fraud, negligence, deceit or if there is a
conflict of interest between him and the principal. Under
the same law an agent is likewise liable if he appoints a
substitute when he was not given the power to appoint
one or otherwise appoints one that is notoriously
incompetent or insolvent. These facts were not proven
in the record.
Ganzon vs. CA
FACTS: On November 28, 1956, Gelacio Tumambing
contracted the services of Mauro B. Ganzon to haul 305
tons of scrap iron from Mariveles, Bataan, to the port of
Manila on board the lighter LCT "Batman. Pursuant to
that agreement, Mauro B. Ganzon sent his lighter
"Batman" to Mariveles where it docked in three feet of
water. Gelacio Tumambing delivered the scrap iron to
defendant Filomeno Niza, captain of the lighter, for
loading which was actually begun on the same date by
the crew of the lighter under the captain's supervision.
When about half of the scrap iron was already loaded,
Mayor Jose Advincula of Mariveles, Bataan, arrived and
demanded P5,000.00 from Gelacio Tumambing. The
latter resisted the shakedown and after a heated
argument between them, Mayor Jose Advincula drew
his gun and fired at Gelacio Tumambing who sustained
injuries.
After sometime, the loading of the scrap iron was
resumed. But on December 4, 1956, Acting Mayor Basilio
Rub, accompanied by three policemen, ordered captain
Filomeno Niza and his crew 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.
Tumabing sued Ganzon; the latter alleged that the goods
have not been unconditionally placed under his custody
and control to make him liable. The trial court dismissed
the case but on appeal, respondent Court rendered a
decision reversing the decision of the trial court and
ordering Ganzon to pay damages.
ISSUE: Whether or not a contract of carriage has been
perfected.
HELD: Yes. By the said act of delivery, the scraps were
unconditionally placed in the possession and control of
the common carrier, and upon their receipt by the
carrier for transportation, the contract of carriage was
deemed perfected. Consequently, the petitioner-
carrier's extraordinary responsibility for the loss,
destruction or deterioration of the goods commenced.
Pursuant to Art. 1736, such extraordinary responsibility
would cease only upon the delivery, actual or
constructive, by the carrier to the consignee, or to the
person who has a right to receive them. The fact that
part of the shipment had not been loaded on board the
lighter did not impair the said contract of transportation
as the goods remained in the custody and control of the
carrier, albeit still unloaded.
Before Ganzon could be absolved from responsibility on
the ground that he was ordered by competent public
authority to unload the scrap iron, it must be shown that
Acting Mayor Basilio Rub had the power to issue the
disputed order, or that it was lawful, or that it was issued
under legal process of authority. The appellee failed to
establish this. Indeed, no authority or power of the
acting mayor to issue such an order was given in
evidence. Neither has it been shown that the cargo of
scrap iron belonged to the Municipality of Mariveles.
What we have in the record is the stipulation of the
parties that the cargo of scrap iron was accumulated by
the appellant through separate purchases here and
there from private individuals. The fact remains that the
order given by the acting mayor to dump the scrap iron
into the sea was part of the pressure applied by Mayor
Jose Advincula to shakedown Tumambing for P5,000.00.
The order of the acting mayor did not constitute valid
authority for Ganzon and his representatives to carry
out.
Saludo Jr. vs. CA
FACTS: Spouses Dante and Leonora Cruz files a
complaint for damages against Sun Holidays Inc., the
respondent resort. Arising from the death of their son
who perished with his wife on board the boat M/B Coco
Beach III that capsized on its way to Batangas from
Puerto Galera where the couple had stayed at Coco
Beach Island Resort owned and operated by respondent.
Their stay was virtue of a tour package contract with
respondent that included transportation to and from the
Resort and the point of departure in Batangas. Some of
the passengers died including his wife and son. Sun
denied any responsibility for the incident, which it
considered a fortuitous event. Petitioners allege that as
a common carrier' Sun was negligent in allowing the
boat to sail despite the storm warning bulletins issued by
PAGASA.
ISSUE: Whether or not respondent may be held liable.
HELD: Yes. The elements of a "fortuitous event" are: (a)
the cause of the unforeseen and unexpected
occurrence, or the failure of the debtors to comply with
their obligations, must have been independent of
human will; (b) the event that constituted the caso
fortuito must have been impossible to foresee or, if
foreseeable, impossible to avoid; (c) the occurrence
must have been such as to render it impossible for the
debtors to fulfill their obligation in a normal manner; and
(d) the obligor must have been free from any
participation in the aggravation of the resulting injury to
the creditor.[24]
To fully free a common carrier from any liability, the
fortuitous event must have been the proximate and
only cause of the loss. And it should have exercised due
diligence to prevent or minimize the loss before, during
and after the occurrence of the fortuitous event.[25]
Respondent cites the squall that occurred during the
voyage as the fortuitous event that overturned M/B
Coco Beach III. As reflected above, however, the
occurrence of squalls was expected under the weather
condition of September 11, 2000. Moreover, evidence
shows that M/B Coco Beach III suffered engine trouble
before it capsized and sank.[26]The incident was,
therefore, not completely free from human
intervention.
The Court need not belabor how respondents evidence
likewise fails to demonstrate that it exercised due
diligence to prevent or minimize the loss before, during
and after the occurrence of the squall.
Macam vs. CA
FACTS: The City of Iloilo requisitioned for rice from the
National Rice and Corn Corporation (NARIC) in Manila.
NARIC, pursuant to the order, shipped 1,726 sacks of rice
consigned to the City of Iloilo on board the SS “General
Wright” belonging to the Southern Lines, Inc.
The City of Iloilo received the shipment and paid the
total charged amount. However, it was discovered in the
bill of lading that there was shortage equivalent to 41
sacks of rice. The City of Iloilo filed a complaint against
NARIC and the Southern Lines, Inc. for the recovery of
the amount representing the value of the shortage of
the shipment of rice. The lower court absolved NARIC,
but held Southern Lines, Inc. liable to pay the shortage.
CA affirmed the trial court’s decision, hence, this
petition.
ISSUE: Whether or not Southern Lines is liable for the
loss or shortage of the rice shipped
HELD: Yes. Under the provisions of Article 361, the
defendant-carrier in order to free itself from liability was
only obliged to prove that the damages suffered by the
goods were “by virtue of the nature or defect of the
articles.” Under the provisions of Article 362, the
plaintiff, in order to hold the defendant liable, was
obliged to prove that the damages to the goods by virtue
of their nature, occurred on account of its negligence or
 because the defendant did not take the precaution
adopted by careful persons.
The contention is untenable, for, if the fact of improper
packing is known to the carrier or his servants, or
apparent upon ordinary observation, but it accepts the
goods notwithstanding such condition, it is not relieved
of liability for loss or injury resulting therefrom.
Petitioner itself frankly admitted that the strings that
tied the bags of rice were broken; some bags were with
holes and plenty of rice were spilled inside the hull of the
boat, and that the personnel of the boat collected no
less than 26 sacks of rice which they had distributed
among themselves. This finding, which is binding upon
this Court, shows that the shortage resulted from the
negligence of petitioner.
Stipulation limiting carrier’s liability
Article 1744. A stipulation between the common carrier
and the shipper or owner limiting the liability of the former
for the loss, destruction, or deterioration of the goods to a
degree less than extraordinary diligence shall be valid,
provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Article 1745. Any of the following or similar stipulations
shall be considered unreasonable, unjust and contrary to
public policy:
(1) That the goods are transported at the risk of the owner
or shipper;
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence
in the custody of the goods;
(4) That the common carrier shall exercise a degree of
diligence less than that of a good father of a family, or of a
man of ordinary prudence in the vigilance over the
movables transported;
(5) That the common carrier shall not be responsible for the
acts or omission of his or its employees;
(6) That the common carrier’s liability for acts committed
by thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or
diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or
other equipment used in the contract of carriage.
Article 1746. An agreement limiting the common carrier’s
liability may be annulled by the shipper or owner if the
common carrier refused to carry the goods unless the
former agreed to such stipulation.
Article 1747. If the common carrier, without just cause,
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the common
carrier’s liability cannot be availed of in case of the loss,
destruction, or deterioration of the goods.
Article 1748. An agreement limiting the common carrier’s
liability for delay on account of strikes or riots is valid.
Article 1749. A stipulation that the common carrier’s
liability is limited to the value of the goods appearing in the
bill of lading, unless the shipper or owner declares a greater
value, is binding.
Article 1750. A contract fixing the sum that may be
recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has been
fairly and freely agreed upon.
Article 1751. The fact that the common carrier has no
competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into consideration
on the question of whether or not a stipulation limiting the
common carrier’s liability is reasonable, just and in
consonance with public policy.
Article 1752. Even when there is an agreement limiting the
liability of the common carrier in the vigilance over the
goods, the common carrier is disputably presumed to have
been negligent in case of their loss, destruction or
deterioration.
Article 1753. The law of the country to which the goods are
to be transported shall govern the liability of the common
carrier for their loss, destruction or deterioration.
Amount of liability
Passenger’s Baggages
Article 1754. The provisions of articles 1733 to 1753 shall
apply to the passenger’s baggage which is not in his
personal custody or in that of his employee. As to other
baggage, the rules in articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be
applicable.

Article 1998. The deposit of effects made by travellers in

hotels or inns shall also be regarded as necessary. The
keepers of hotels or inns shall be responsible for them as
depositaries[1], provided that notice was given to them, or
to their employees, of the effects brought by the guests and
that, on the part of the latter, they take the precautions
which said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects.

Article 2000. The responsibility referred to in the two

preceding articles shall include the loss of, or injury to the
personal property of the guests caused by the servants or
employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force
majeure. The fact that travellers are constrained to rely on
the vigilance of the keeper of the hotels or inns shall be
considered in determining the degree of care required of
him.

Article 2001. The act of a thief or robber, who has entered

the hotel is not deemed force majeure, unless it is done
with the use of arms or through an irresistible force.

Article 2002. The hotel-keeper is not liable for

compensation if the loss is due to the acts of the guest, his
family, servants or visitors, or if the loss arises from the
character of the things brought into the hotel.

Article 2003. The hotel-keeper cannot free himself from

responsibility by posting notices to the effect that he is not
liable for the articles brought by the guest. Any stipulation
between the hotel-keeper and the guest whereby the
responsibility of the former as set forth in Articles 1998 to
2001 is suppressed or diminished shall be void.