EASTERN SHIPPING LINES v.

IAC Facts: Sometime in or prior to June, 1977, M/S Asiatica, a vessel operated by Eastern Shipping Lines (ESL) loaded at Kobe, Japan, for transportation to Manila, 5K pieces of calorized lance pipes in 28 packages valued at P256,039 consigned to Philippine Blooming Mills Co. (BMCI) and 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. (CTMI). Both sets of goods were insured against marine risk for their stated value with Development Insurance and Surety Corp. (DISC). During the same period, the vessel took on board 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corp. (MAC), and 2 cases of surveying instruments consigned to Aman Enterprises and General Merchandise. (AEGM). The cartons were insured for their stated value by Nisshin Fire & Marine Insurance Co. (NFMI), and the 2 cases by Dowa Fire & Marine Insurance (DFMI). En route to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective insurers paid the marine insurance values to the consignees and were subrogated unto the rights of the latter as the insured. ESL denied liability on the ground that the loss was due to extraordinary fortuitous event. It also held that the fire which caused the sinking of the ship is an exempting circumstance under Sec. 4(2)(b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss by fire was established, the burden of proving negligence of the vessel was shifted ot the cargo shipper. Issue: 1) Which law should govern, the Civil Code provisions on Common Carriers or the COGSA? 2) Who has the burden of proof to show negligence of the carrier?

Held: 1. Civil Code. The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. As the cargoes were transported from Japan to the Philippines, the liability of ESL is governed primarily by the Civil Code. However, in all matters not regulated by the Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. Thus, the COGSA, a special law, is suppletory to the provisions of the Civil Code. 2. ESL. Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over goods, according to all the circumstances of each case. 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, light night, or other natural disaster or calamity; xxx In this case, contrary to ESL s claim, fire may not be considered a natural disaster or calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier. Hence, the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary

diligence required by law. Even if fire was deemed a natural disaster, it must have been the proximate and only cause of the loss. Here, the respective insurers have proven that the transported goods have been lost, and ESL has proven that the loss was caused by fire. The burden then is upon ESL to prove that it has exercised the extraordinary diligence required by law. Here, what appears is that, after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. The crew could not even explain what could have caused the fire. When the smoke was noticed, the fire was already big, hence the fire must have started 24 hours before it was noticed. 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 latter s 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. Necesito vs. Paras FACTS: A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus Lines. While entering a wooden bridge, its front wheels swerved to the right, the driver lost control and the truck fell into a breast-deep creek. The mother drowned and the son sustained injuries. These cases involve

actions ex contractu against the owners of PRBL filed by the son and the heirs of the mother. Lower Court dismissed the actions, holding that the accident was a fortuitous event. ISSUE: Whether or not the carrier is liable for the manufacturing defect of the steering knuckle, and whether the evidence discloses that in regard thereto the carrier exercised the diligence required by law (Art. 1755, new Civil Code) HELD: Yes, While the carrier is not an insurer of the safety of the passengers, the manufacturer of the defective appliance is considered in law the agent of the carrier, and the good repute of the manufacturer will not relieve the carrier from liability. The rationale of the carrier s liability is the fact that the passengers have no privity with the manufacturer of the defective equipment; hence, he has no remedy against him, while the carrier has. We find that the defect could be detected. The periodical, usual inspection of the steering knuckle did not measure up to the utmost diligence of a very cautious person as far as human care and foresight can provide and therefore the knuckle s failure cannot be considered a fortuitous event that exempts the carrier from responsibility. JUNTILLA V. FONTANAR Facts: Roberto Juntilla was a passenger of a jeepney driven by Berfol Camoro, which was registered under the franchise of Clemente Fontanar and owned by Fernando Banzon. The right rear tire exploded causing the vehicle to turn turtle. Juntilla was seatedin the front and he was thrown out of the vehicle and lost consciousness. When he came to his senses, he found that he had a lacerated wound on his right palm, injuries on his left arm, right thigh and back, and his Omega wristwatch was lost. He filed a case with the City Court of Cebu where judgment was rendered in favor of Juntilla, ordering defendants to pay him damages and reimbursement. The CFI reversed the decision, finding the accident a fortuitous incident and pronouncing them without liability. Issue: W/N the Court committed GAD in failing to take cognizance of the fact that defendants failed to exercise utmost and/or extraordinary diligence required of common carriers contemplated under Art. 1755. Held: There are specific acts of negligence on the part of the respondents. The passenger jeepney turned turtle and jumped into a ditch immediately after its rear tire exploded which shows that the jeepney was running at a very fast speed. It was also overloaded at the time of the accident. The sudden blow-up of the tire could have been caused by too much air pressure injected into the tire coupled by the fact that it was overloaded and speeding at the time of the accident. The accident was caused either through the negligence of the driver or because of the mechanical defects of the tire. The rationale of the carrier s liability is the fact that the passenger has neither choice nor control over the carrier in the selection and use of the equipment and appliances in use by the carrier. Having no privity whatever with the manufacturer or vendor of the defective equipment, the passenger has no remedy against him, while the carrier usually has. It is but logical, therefore, that the carrier, while not an insurer of the safety of his passengers, should nevertheless be held to answer for the flaws of his equipment if such flaws were at all discoverable.

The source of a common carrier s legal liability is the contract of carriage, and by entering into said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with a due regard for all circumstances. A caso fortuito: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will. (2) It must be impossible to foresee the event constituting the caso fortuito, or if it can be foreseen, it must be impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfil his obligation in a normal manner. (4) The obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor Pilapil VS. CA FACTS: Petitioner Pilapil, on board respondent s bus was hit above his eye by a stone hurled by an unidentified bystander. Respondent s personnel lost no time in bringing him to a hospital, but eventually petitioner partially lost his left eye s vision and sustained a permanent scar. Thus, Petitioner lodged an action for recovery of damages before the Court of First Instance of Camarines Sur which the latter granted. On appeal, the Court of Appeals reversed said decision. ISSUE: Whether or not common carriers assume risks to passengers such as the stoning in this case? HELD: In consideration of the right granted to it by the public to engage in the business of transporting passengers and goods, a common carrier does not give its consent to become an insurer of any and all risks to passengers and goods. It merely undertakes to perform certain duties to the public as the law imposes, and holds itself liable for any breach thereof. While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them, it does not, however, make the carrier an insurer of the absolute safety of its passengers. Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Clearly under the above provision, a tort committed by a stranger who causes injury to a passenger does not accord the latter a cause of action against the carrier. The negligence for which a common carrier is held responsible is the negligent omission by the carrier's employees to prevent the tort from being committed when the same could have been foreseen and prevented by them. Further, under the same

provision, it is to be noted that when the violation of the contract is due to the wilful acts of strangers, as in the instant case, the degree of care essential to be exercised by the common carrier for the protection of its passenger is only that of a good father of a family. GACAL vs. PAL Facts: Plaintiffs Franklin G. Gacal and his wife, Corazon M. Gacal along with three others were then passengers boarding defendant s BAC 1-11 at Davao Airport for a flight to Manila, not knowing that on the same flight were members of the MNLF armed with grenades and pistols. Ten minutes after takeoff, the MNLF announced the hijacking of the aircraft and directed its pilot to fly to Libya. With the pilot explaining to them of the fuel limitations of the plane, the hijackers directed the pilot to fly to Sabah. So they landed in Zamboanga Airport to refuel. At the Zamboanga Airport, there ensued hostilities between the military and the hijackers. As a result of such faceoff, the wives of Gacal and Anislag suffered injuries. Now, plaintiffs are claiming for damages averring that PAL exercised negligence, finding basis on its breach of contract of carriage. There was a failure to frisk the passengers adequately in order to discover hidden weapons in the bodies of the hijackers. Despite the prevalence of skyjacking, PAL did not use a metal detector which is the most effective means of discovering potential skyjackers among the passengers. PAL invokes the defense of force majeure or caso fortuito. Issue: WON PAL can invoke caso fortuito to exculpate itself from paying damages to herein plaintiffs? Held: Yes, The existence of force majeure has been established exempting respondent PAL from the payment of damages to its passengers who suffered death or injuries in their persons and for loss of their baggage s. The source of a common carrier s legal liability is the contract of carriage, and by entering into said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide. There is breach of this obligation if it fails to exert extraordinary diligence according to all the circumstances of the case in exercise of the utmost diligence of a very cautious person. The failure to transport petitioners safely from Davao to Manila was due to the skyjacking incident, all members of the MNLF, without any connection with private respondent, hence, independent of the will of either the PAL or of its passengers. Under normal circumstances, PAL might have foreseen the skyjacking incident which could have been avoided had there been a more thorough frisking of passengers and inspection of baggage s as authorized by R.A. No. 6235. But the incident in question occurred during Martial Law where there was a military take-over of airport security including the frisking of passengers and the inspection of their luggage preparatory to boarding domestic and international flights.

The security checks and measures and surveillance precautions in all flights, including the inspection of baggage s and cargo and frisking of passengers at the Davao Airport were performed and rendered solely by military personnel who under appropriate authority had assumed exclusive jurisdiction over the same in all airports in the Philippines. Otherwise stated, these events rendered it impossible for PAL to perform its obligations in a nominal manner and obviously it cannot be faulted with negligence in the performance of duty taken over by the Armed Forces of the Philippines to the exclusion of the former.

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.