TRANSPORTATION LAW | Compilation of Case Digests #3 | EH403 (1st Sem.
, SY 2017-208)
OBLIGATIONS OF SHIPPER AND PASSENGER (ARTS. 1741, 1761
AND 1762, NCC)
1. Manay, Jr., et al vs. Cebu Air
Purchase of the contract of carriage binds the passenger and imposes
reciprocal obligations on both the airline and the passenger. The airline
must exercise extraordinary diligence in the fulfilment of the terms and
conditions of the contract of carriage. The passenger, however, has the
correlative obligation to exercise ordinary diligence in the conduct of his or
her affairs.
FACTS:
On June 13, 2008, Carlos S. Jose (Jose) purchased 20 Cebu Pacific round-
trip tickets from Manila to Palawan for himself and on behalf of his
relatives and friends. He made the purchase at Cebu Pacific's branch office
in Robinsons Galleria. He paid a total amount of ₱42,957.00 using his
credit card. He alleged that after paying for the tickets, Alou (Cebu Pacific
ticketing agent) printed the tickets, which consisted of three (3) pages,
and recapped only the first page to him. Since the first page contained the
details he specified to Alou, he no longer read the other pages of the flight
information.
Petitioners were able to board the Cebu Pacific flight to Palawan, but there
was a problem on their flight back to Manila. During the processing of their
boarding passes (on the afternoon of July 22, 2008) they were informed
by Cebu Pacific personnel that nine of them could not be admitted because
their tickets were for the 1005 (or 10:05 a.m.) flight earlier that day.
Upon checking the tickets, they learned that only the first two (2)
pages had the schedule Jose specified. They were left with no other option
but to rebook their tickets. The cost to rebook the flight would be
₱7,000.00 more expensive than the promo tickets. The sum of the new
tickets amounted to ₱65,000.00. The other four (4) were left behind in
Palawan, incurring additional expenses. Upon his arrival in Manila, Jose
immediately purchased four (4) tickets for the companions they left
behind, which amounted to ₱5,205.
Jose and his companions were frustrated and annoyed by Cebu
Pacific’s handling of the incident so they sent the airline demand letters.
Cebu Pacific, through its Guest Services Department, sent petitioners’
counsel an email explaining that “ticketing agents, like Alou, recap [the]
flight details to the purchaser to avoid erroneous booking[s].” The recap is
given one other time by the cashier. Cebu Pacific stated that according to
its records, Jose was given a full recap and was made aware of the flight
restriction of promo tickets, “which included [the] promo fare being non-
refundable.”
Petitioners were unsatisfied with Cebu Pacific’s response so they filed a
Complaint for Damages against Cebu Pacific before Branch 59 of the
Metropolitan Trial Court of Mandaluyong. The Complaint prayed for actual
damages in the amount of ₱42,955.00, moral damages in the amount of
₱45,000.00, exemplary damages in the amount of ₱50,000.00, and
attorney’s fees.
MTC: ordered Cebu Pacific to pay petitioners ₱41,044.50 in actual
damages and ₱20,000.00 in attorney’s fees with costs of suit.
RTC: affirmed the findings of the Metropolitan Trial Court but deleted the
award of attorney’s fees.
Court of Appeals: rendered the Decision granting the appeal and
reversing the Decisions of the Metropolitan Trial Court and the Regional
Trial Court. According to the Court of Appeals, the extraordinary diligence
expected of common carriers only applies to the carriage of passengers
and not to the act of encoding the requested flight schedule. It was
incumbent upon the passenger to exercise ordinary care in reviewing flight
details and checking schedules. Cebu Pacific’s counterclaim, however, was
denied since there was no evidence that Jose and his companions filed
their Complaint in bad faith and with malice.
ISSUE:
Whether or not respondent Cebu Air, Inc. is liable to petitioners for
damages for the issuance of a plane ticket with an allegedly erroneous
flight schedule
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RULING:
Petitioners, in failing to exercise the necessary care in the conduct of their
affairs, were without a doubt negligent. Thus, they are not entitled to
damages.
Once a plane ticket is issued, the common carrier binds itself to deliver the
passenger safely on the date and time stated in the ticket. The contractual
obligation of the common carrier to the passenger is governed principally
by what is written on the contract of carriage. Respondent, as one of the
four domestic airlines in the country, is a common carrier required by law
to exercise extraordinary diligence.
Extraordinary diligence requires that the common carrier must transport
goods and passengers “safely as far as human care and foresight can
provide,” and it must exercise the “utmost diligence of very cautious
persons . . . with due regard for all the circumstances.”
When a common carrier, through its ticketing agent, has not yet issued a
ticket to the prospective passenger, the transaction between them is still
that of a seller and a buyer. The obligation of the airline to exercise
extraordinary diligence commences upon the issuance of the contract of
carriage. Ticketing, as the act of issuing the contract of carriage, is
necessarily included in the exercise of extraordinary diligence.
In this case, both parties stipulated that the flight schedule stated on the
nine (9) disputed tickets was the 10:05 a.m. flight of July 22, 2008.
According to the contract of carriage, respondent’s obligation as a common
carrier was to transport nine (9) of the petitioners safely on the 10:05
a.m. flight of July 22, 2008.
The common carrier’s obligation to exercise extraordinary diligence in the
issuance of the contract of carriage is fulfilled by requiring a full review of
the flight schedules to be given to a prospective passenger before
payment. Based on the information stated on the contract of carriage, all
three (3) pages were recapped to petitioner Jose.
The only evidence petitioners have in order to prove their true intent of
having the entire group on the 4:15 p.m. flight is petitioner Jose’s self-
serving testimony that the airline failed to recap the last page of the
tickets to him. They have neither shown nor introduced any other evidence
before the Metropolitan Trial Court, Regional Trial Court, Court of Appeals,
or to the Supreme Court.
Proof of negligence on the part of Petitioners:
1. Even assuming that the ticketing agent encoded the incorrect flight
information, it is incumbent upon the purchaser of the tickets to at
least check if all the information is correct before making the
purchase. Once the ticket is paid for and printed, the purchaser is
presumed to have agreed to all its terms and conditions.
2. One of the terms stated in petitioners’ tickets stipulates that the
photo identification of the passenger must match the name
entered upon booking.
Considering that respondent was entitled to deny check-in to passengers
whose names do not match their photo identification, it would have been
prudent for petitioner Jose to check if all the names of his companions
were encoded correctly. Since the tickets were for 20 passengers, he was
expected to have checked each name on each page of the tickets in order
to see if all the passengers’ names were encoded and correctly spelled.
Had he done this, he would have noticed that there was a different flight
schedule encoded on the third page of the tickets since the flight schedule
was stated directly above the passengers’ names.
3. Most of the petitioners were balikbayans.
It is reasonable to presume that they were adequately versed with the
procedures of air travel including familiarizing themselves with the
itinerary before departure. Moreover, the tickets were issued 37 days
before their departure from Manila and 39 days from their departure from
Palawan. There was more than enough time to correct any alleged mistake
in the flight schedule.
Before damages may be awarded, “the claimant should satisfactorily show
the existence of the factual basis of damages and its causal connection to
defendant’s acts.” The cause of petitioners’ injury was their own
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negligence; hence, there is no reason to award moral damages. Since the
basis for moral damages has not been established, there is no basis to
recover exemplary damages and attorney’s fees as well.
DEFENSES OF COMMON CARRIER (FIRE AS CAUSE)
2. DSR-Senator Lines and CF Sharp and Co., Inc. vs. Federal
Phoenix Assurance
The peril of fire is not comprehended within the exceptions in Article 1734,
then 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 low.
FACTS:
Berde Plants Inc. delivered 632 units of artificial trees to CF Sharp and
Company, the General Ship Agent of DSR-Senator Lines, a foreign
shipping corporation. The cardo is for delivery to Al-Mohr International
Group in Riyadh, Saudi Arabia.
Federal Phoenix Assurance insured the cardo against all risks in the
amount of P941,429.61.
The cargo was loaded in M/S Arabian Senator which left Manila for Saudi in
1993. The cargo was reloaded on board DSR-Senator Lines' feeder vessel
M/V Kapitan Sakharov for Saudi. However, while in transit, the vessel and
all its cargo caught fire.
Federal Phoenix Assurance paid Berde Plants P941,429.61 for the
insurance on the cargo. Then, Federal Phoenix sent the subrogation receipt
to CF Sharp demanding payment, CF Sharp denied any liability because
such liability was extinguished when the vessel carrying the cargo caught
fire.
RTC - ruled in favor of Federal Phoenix; found CF Sharp/DSR liable for the
damage
CA - affirmed RTC
ISSUE:
Whether CF Sharp/DSR-Senator Lines should be liable for the destruction
and loss of the cargo due to fire
RULING:
No, the Supreme Court ruled that under Article 1734, fire is not included
as one of the defenses of common carriers. Therefore, the CF Sharp/DSR
is not exempted from liability for loss or destruction of cargo.
Article 1734 of the Civil Code provides:
"Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following
causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act 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.
In Eastern Shipping Lines, Inc. vs. Intermediate Appellate Court, we ruled
that since the peril of fire is not comprehended within the exceptions in
Article 1734, then 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 low.
Even if fire were to be considered a natural disaster within the purview of
Article 1734, it is required under Article 1739 of the same Code that the
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.
There are very few instances when the presumption of negligence does not
attach and these instances are enumerated in Article 1739. In those cases
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where the presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the presumption.
Respondent Federal Phoenix Assurance raised the presumption of
negligence against petitioners. However, they failed to overcome it by
sufficient proof of extraordinary diligence.
SHORE PASS REQUIREMENT
3. Japan Airlines vs. Asuncion
The power to admit or not an alien into the country is a sovereign act
which cannot be interfered with even by JAL. This is not within the ambit
of the contract of carriage entered into by JAL and herein respondents.
FACTS:
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila
on board Japan Airlines (JAL) Flight 742 bound for Los Angeles. Their
itinerary included a stop-over in Narita and an overnight stay at Hotel
Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of JAL
endorsed their applications for shore pass and directed them to the
Japanese immigration official. A shore pass is required of a foreigner
aboard a vessel or aircraft who desires to stay in the neighborhood of the
port of call for not more than 72 hours.
During their interview, the Japanese immigration official noted that Michael
appeared shorter than his height as indicated in his passport. Because of
this inconsistency, respondents were denied shore pass entries and were
brought instead to the Narita Airport Rest House where they were billeted
overnight.
Respondents filed a complaint for damages claiming that JAL did not fully
apprise them of their travel requirements and that they were rudely and
forcibly detained at Narita Airport.
The Trial Court rendered a judgment in favor of respondents, ordering JAL
to pay damages. This was affirmed in toto by the CA. Hence, this petition.
ISSUE:
WON JAL breached its contract of carriage
RULING:
The Supreme Court ruled in the negative.
Under Article 1755 of the Civil Code, a common carrier such as JAL is
bound to carry its passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances. When an airline issues a ticket to a
passenger, confirmed for a particular flight on a certain date, a contract of
carriage arises. The passenger has every right to expect that he be
transported on that flight and on that date and it becomes the carrier's
obligation to carry him and his luggage safely to the agreed destination. If
the passenger is not so transported or if in the process of transporting he
dies or is injured, the carrier may be held liable for a breach of contract of
carriage.
It may be true that JAL has the duty to inspect whether its passengers
have the necessary travel documents, however, such duty does not extend
to checking the veracity of every entry in these documents. JAL could not
vouch for the authenticity of a passport and the correctness of the entries
therein. The power to admit or not an alien into the country is a sovereign
act which cannot be interfered with even by JAL. This is not within the
ambit of the contract of carriage entered into by JAL and herein
respondents. As such, JAL should not be faulted for the denial of
respondents' shore pass applications.
Also, they were already apprised by the fact that they have to secure by
themselves the shore pass entries to be entitled to stay overnight. JAL
even assisted them by endorsing their applications to the Immigration and
upon such denial, they were brought to Narita Airport Rest House which is
really more a hotel than a detention house as claimed by respondents.
EXERCISE OF EXTRAORDINARY DILIGENCE AND DOCTRINE OF
LAST CLEAR CHANCE
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4. William Tiu vs. Pedro Arriesgado
It is a common carriers duty to transport a passenger to their destination
safely, failure to do so gives rise to a presumption of negligence on the
part of the common carrier. Common carriers must exercise extraordinary
diligence, such is not present when the driver of the common carriers
vehicle was violating traffic rules.
The doctrine of last chance only applies in cases where two colliding
vehicle owners are the parties. It does not apply against a passenger of a
common carrier.
FACTS:
At about 10:00 p.m. of March 15, 1987, the cargo truck marked "Condor
Hollow Blocks and General Merchandise" bearing plate number GBP-675
was loaded with firewood in Bogo, Cebu and left for Cebu City. Upon
reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the truck
passed over a bridge, one of its rear tires exploded. The driver, Sergio
Pedrano, then parked along the right side of the national highway and
removed the damaged tire to have it vulcanized at a nearby shop, about
700 meters away. Pedrano left his helper, Jose Mitante, Jr. to keep watch
over the stalled vehicle, and instructed the latter to place a spare tire six
fathoms away behind the stalled truck to serve as a warning for oncoming
vehicles. The trucks tail lights were also left on. It was about 12:00 a.m.,
March 16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number
PBP-724 driven by Virgilio Te Laspiñas was cruising along the national
highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus
was also bound for Cebu City, and had come from Maya, Daanbantayan,
Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and
Felisa Pepito Arriesgado, who were seated at the right side of the bus,
about three (3) or four (4) places from the front seat.
As the bus was approaching the bridge, Laspiñas saw the stalled truck,
which was then about 25 meters away. He applied the brakes and tried to
swerve to the left to avoid hitting the truck. But it was too late; the bus
rammed into the trucks left rear. The impact damaged the right side of the
bus and left several passengers injured. Pedro Arriesgado lost
consciousness and suffered a fracture in his right colles. His wife, Felisa,
was brought to the Danao City Hospital. She was later transferred to the
Southern Island Medical Center where she died shortly thereafter.
Respondent Pedro A. Arriesgado then filed a complaint for breach of
contract of carriage, damages and attorney’s fees before the Regional Trial
Court of Cebu City, Branch 20, against the petitioners, D Rough Riders bus
operator William Tiu and his driver, Virgilio Te Laspiñas on May 27, 1987.
The respondent alleged that the passenger bus in question was cruising at
a fast and high speed along the national road, and that petitioner Laspiñas
did not take precautionary measures to avoid the accident.
The petitioners, for their part, filed a Third-Party Complaint against the
following: respondent Philippine Phoenix Surety and Insurance, Inc.
(PPSII), petitioner Tiu’s insurer; respondent Benjamin Condor, the
registered owner of the cargo truck; and respondent Sergio Pedrano, the
driver of the truck. They alleged that petitioner Laspiñas was negotiating
the uphill climb along the national highway of Sitio Aggies, Poblacion,
Compostela, in a moderate and normal speed. It was further alleged that
the truck was parked in a slanted manner, its rear portion almost in the
middle of the highway, and that no early warning device was displayed.
Petitioner Laspiñas promptly applied the brakes and swerved to the left to
avoid hitting the truck head-on, but despite his efforts to avoid damage to
property and physical injuries on the passengers, the right side portion of
the bus hit the cargo truck’s left rear.
ISSUE:
WON Tiu is liable to arriesgado for exemplary damages
RULING:
The rules which common carriers should observe as to the safety of their
passengers are set forth in the Civil Code, Articles 1733, 1755and 1756. It
is undisputed that the respondent and his wife were not safely transported
to the destination agreed upon. In actions for breach of contract, only the
existence of such contract, and the fact that the obligor, in this case the
common carrier, failed to transport his passenger safely to his destination
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are the matters that need to be proved. This is because under the said
contract of carriage, the petitioners assumed the express obligation to
transport the respondent and his wife to their destination safely and to
observe extraordinary diligence with due regard for all circumstances. Any
injury suffered by the passengers in the course thereof is immediately
attributable to the negligence of the carrier. Upon the happening of the
accident, the presumption of negligence at once arises, and it becomes the
duty of a common carrier to prove that he observed extraordinary
diligence in the care of his passengers. It must be stressed that in
requiring the highest possible degree of diligence from common carriers
and in creating a presumption of negligence against them, the law compels
them to curb the recklessness of their drivers. While evidence may be
submitted to overcome such presumption of negligence, it must be shown
that the carrier observed the required extraordinary diligence, which
means that the carrier must show the utmost diligence of very cautious
persons as far as human care and foresight can provide, or that the
accident was caused by fortuitous event. As correctly found by the trial
court, petitioner Tiu failed to conclusively rebut such presumption. The
negligence of petitioner Laspiñas as driver of the passenger bus is, thus,
binding against petitioner Tiu, as the owner of the passenger bus engaged
as a common carrier.
Contrary to the petitioner’s contention, the principle of last clear chance is
inapplicable in the instant case, as it only applies in a suit between the
owners and drivers of two colliding vehicles. It does not arise where a
passenger demands responsibility from the carrier to enforce its
contractual obligations, for it would be inequitable to exempt the negligent
driver and its owner on the ground that the other driver was likewise guilty
of negligence.[43] The common law notion of last clear chance permitted
courts to grant recovery to a plaintiff who has also been negligent
provided that the defendant had the last clear chance to avoid the casualty
and failed to do so. Accordingly, it is difficult to see what role, if any, the
common law of last clear chance doctrine has to play in a jurisdiction
where the common law concept of contributory negligence as an absolute
bar to recovery by the plaintiff, has itself been rejected, as it has been in
Article 2179 of the Civil Code.
FORTUITOUS EVENT
5. Central Shipping Co., Inc. vs. Insurance Co. of North
America
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 petitioners 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.
FACTS:
Central Shipping Company received on board its vessel Philippine Apitong
Round Logs and undertook to transport said shipment to Manila for
delivery to Alaska Lumber Co., Inc. Upon completion of loading of the
cargo, the vessel left Palawan and commenced the voyage to Manila. While
enroute to Manila, the vessel listed about 10 degrees starboardside, due to
the shifting of logs in the hold. After the listing of the vessel had increased
to 15 degrees, the ship captain ordered his men to abandon ship and at
the same day the vessel completely sank. Due to the sinking of the vessel,
the cargo was totally lost.
Respondent: the total loss of the shipment was caused by the fault and
negligence of the petitioner and its captain.
Petitioner: the vessel was fully manned, fully equipped and in all respects
seaworthy; that all the logs were properly loaded and secured; that the
vessels master exercised due diligence to prevent or minimize the loss
before, during and after the occurrence of the storm. 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 petitioner nor the captain
of its vessel could have foreseen.]
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RTC: unconvinced that the sinking of M/V Central Bohol had been caused
by the weather or any other caso fortuito. Monsoons, which were common
occurrences during the months of July to December, could have been
foreseen and provided for by an ocean-going vessel. Applying the rule of
presumptive fault or negligence against the carrier, petitioner is liable for
the loss of the cargo.
CA: affirmed the RTC finding that the southwestern monsoon encountered
by the vessel was not unforeseeable. The weather disturbance was not the
sole and proximate cause of the sinking of the vessel, which was also due
to the concurrent shifting of the logs in the hold that could have resulted
only from improper stowage. Thus, the carrier was held responsible for the
consequent loss of or damage to the cargo, because its own negligence
had contributed thereto.
ISSUE:
1) Whether the carrier is liable for the loss of the cargo;
2) Whether the doctrine of limited liability is applicable
RULING:
First Issue: Liability for Lost Cargo
From the nature of their business and for reasons of public policy, common
carriers are bound to observe extraordinary diligence over the goods they
transport, according to all the circumstances of each case. In the event of
loss, destruction or deterioration of the insured goods, common carriers
are responsible; that is, unless they can prove that such loss, destruction
or deterioration was brought about -- among others -- by flood, storm,
earthquake, lightning or other natural disaster or calamity. In all other
cases not specified under Article 1734 of the Civil Code, common carriers
are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence.
In the present case, petitioner disclaims responsibility for the loss of the
cargo by claiming the occurrence of a storm under Article 1734(1).
The Note of Marine Protest (issued by captain and his crew) stated that he
and his crew encountered a southwestern monsoon. Even petitioner
admitted that the sinking of M/V Central Bohol had been caused by the
strong southwest monsoon. Having made such factual representation, it
cannot now be allowed to retreat and claim that the southwestern
monsoon was a storm.
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.
Even if the weather encountered by the ship is to be deemed a natural
disaster under Article 1739 of the Civil Code, petitioner failed to show that
such natural disaster or calamity was the proximate and only cause of the
loss. The defense of fortuitous event or natural disaster cannot be
successfully made when the injury could have been avoided by human
precaution.
Hence, if a common carrier fails to exercise due diligence -- or that
ordinary care that the circumstances of the particular case demand -- to
prevent or minimize the loss before, during and after the occurrence of the
natural disaster, the carrier shall be deemed to have been negligent. The
loss or injury is not, in a legal sense, due to a natural disaster under
Article 1734(1).
We also find no reason to disturb the CAs finding that 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.
Witnesses testified that the vessel encountered two weather disturbances.
Both disturbances were coupled with waves and heavy rains, yet, the
vessel endured the first and not the second. Why? The reason is plain. The
vessel felt the strain during the second onslaught because the logs in the
bodega shifted and there were already seawater that seeped inside.
We are inclined to believe that the logs did indeed shift, and that they had
been improperly loaded. According to the boatswains testimony, the logs
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were piled properly, and the entire shipment was lashed to the vessel by
cable wire. The logs stored in the lower hold were not secured by cable
wire, because they fitted exactly from floor to ceiling. However, while they
were placed side by side, there were unavoidable clearances between
them owing to their round shape. The manner of stowage in the lower hold
was not sufficient to secure the logs in the event the ship should roll in
heavy weather because they were of different lengths ranging from 3.7 to
12.7 meters. Being clearly prone to shifting, the round logs should not
have been stowed with nothing to hold them securely in place. Considering
the strong force of the wind and the roll of the waves, the loose
arrangement of the logs did not rule out the possibility of their shifting.
The evidence indicated that strong southwest monsoons were common
occurrences during the month of July. Thus, the officers and crew of M/V
Central Bohol should have reasonably anticipated heavy rains, strong
winds and rough seas. They should then have taken extra precaution in
stowing the logs in the hold, in consonance with their duty of observing
extraordinary diligence in safeguarding the goods. But the carrier took a
calculated risk in improperly securing the cargo. Having lost that risk, it
cannot now escape responsibility for the loss.
Second Issue: Doctrine of Limited Liability
This doctrine is not applicable to the present case. This rule does not apply
to situations in which the loss or the injury is due to the concurrent
negligence of the shipowner and the captain. It has already been
established that the sinking of M/V Central Bohol had been caused by the
fault or negligence of the ship captain and the crew, as shown by the
improper stowage of the cargo of logs. Closer supervision on the part of
the shipowner could have prevented this fatal miscalculation. As such, the
shipowner was equally negligent.
6. Bernales vs. Northwest Airlines
FACTS:
The petitioner Marito T. Bernales is a lawyer, a university dean, and a
board member of the Sangguniang Panlalawigan of Camarines Sur. On 1
October 2002, he and several other prominent personalities from Bicol
were on their way to Honolulu, Hawaii, as the delegates of a trade and
tourism mission for the province. They were economy class passengers of
Northwest Airlines Flight No. 10 from Manila to Honolulu via Narita, Japan.
The delegation arrived at Narita International Airport (NRT) at around
11:00 a.m. Their connecting flight was scheduled at 8:40 p.m., later that
evening. At around 6:00 p.m., a typhoon hit Japan, leading to the
cancellation of most flights, including NWA Flight No. 10. However, NWA
did not cancel Flight No. 22, also bound for Honolulu later that night, to
minimize delays and to accommodate stranded passengers in case the
typhoon would subside.
The delegates opted to be wait-listed for Flight No. 22. The petitioner was
placed last in the wait-list as he was the last economy class passenger to
check in for Flight No. 10. To ensure departure before the 1:00 a.m.
curfew, NWA gave out "dummy" boarding passes to the wait-listed
passengers even before the priority passengers boarded the plane.
The passengers of Flight 22 were called for boarding at around 11:00 p.m.
and the delegates boarded the shuttle taking them to the airplane. But
before the shuttle bus could leave, NWA Customer Service Agent Tsuruki
Ohashi entered the shuttle and informed the petitioner that he could not
take Flight 22 as no available seat was left for him.
According to petitioner: Ohashi barged into the bus and shouted
"Marito, Marito Bernales, where are you?" When the petitioner identified
himself, Ohashi allegedly yelled, "Bullshit, Marito Bernales, you are not
included in the manifest. Get out! Get out!" Ohashi allegedly took the
petitioner's boarding pass and grabbed him by the arm before ejecting him
from the shuttle. The shuttle bus carrying his hand-carried bag left the
petitioner alone outside the terminal without his money, passport, and
other travel documents. Because of the incident, the other delegates
refused to board the airplane unless the petitioner was physically brought
to them at the tarmac. After a stalemate between the delegates and the
airline's employees, the petitioner was transported by shuttle to the
aircraft to rejoin his group.
According to NWA: NWA narrates in its narration of events, that Ohashi
politely approached the petitioner in the shuttle bus and informed him that
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they needed to accommodate two original priority passengers who arrived.
Ohashi politely asked the petitioner to alight. Ohashi assured the petitioner
that he would look for a volunteer passenger who would give up his seat to
accommodate the petitioner and asked him to wait inside the terminal.
NWA alleges that the petitioner gracefully complied without objections.
Ohashi found a volunteer passenger within ten minutes. NWA immediately
transported the petitioner to the airplane for the flight. NWA maintains
that Ohashi has an impeccable service record in customer relations and
has received multiple commendations.
In either case, the petitioner was given a dummy boarding pass for Seat
No. 35 in the name of "Eddie Tanno." The dummy boarding pass was
issued out of necessity due to the lack of time to issue a new one. The
petitioner, however, thought it was a real boarding pass. He proceeded to
Seat No. 35-H and found it occupied by Eddie Tanno. He showed the
dummy boarding pass to Tanno who, noticing his name irately asked,
"Can't you read?" An attendant noticed the commotion and immediately
escorted the petitioner to Seat No. 15-H, his allotted vacant seat.
Unfortunately, Flight No. 22 failed to depart in time to beat the Narita
curfew. The pilot thus instructed the passengers to disembark and wait for
the next flight. The passengers of Flight No. 22 were returned to the
terminal where they had to wait with 1,500 other stranded passengers.
All the nearby hotels were fully booked from the many flight cancellations.
Because it was already late, NWA failed to find billeting for the stranded
Flight No. 22 passengers and they had to spend the night at the airport;
they were given blankets, pillows, snacks, water, and food coupons. The
petitioner claims that he was made to sleep on the terminal floor "akin to
the beggars of Quiapo and Baclaran" and had to suffer the discomfort of
using the public toilets.
In the morning of 2 October 2002, NWA gave the delegates two options:
(1) take a direct flight to Honolulu scheduled for 3 October 2002; or (2)
take a 3:35 p.m. flight later that day to Los Angeles, California, with an
immediate connecting flight to Honolulu. The delegates chose the second
option so they could leave immediately. The delegates arrived at Honolulu
on 2 October 2002 between 3:00 and 4:00 p.m., Honolulu time. But they
had already missed the courtesy calls they were to make on the governor
and the mayor, which were scheduled for earlier that day.
On 12 February 2003, the petitioner filed a complaint for moral and
exemplary damages against the respondent NWA for breach of their
contract of carriage.
ISSUE:
Whether or not Bernales is entitled to damages because of the alleged
incident
RULING:
NO. Moral damages predicated upon a breach of a carriage contract is only
recoverable in instances where the mishap results in the death of a
passenger, or where the carrier is guilty of fraud or bad faith. Bad faith is
not simple negligence or bad judgment; it involves ill intentions and a
conscious design to do a wrongful act for a dishonest purpose.
On Ohasi’s Alleged Discourtesy
As the CA did, we do not believe the petitioner's accusations that Ohashi
barged into shuttle bus, verbally abused him, and forced him off the bus.
It makes no sense for Ohashi to suddenly yell, "Bullshit, Marito Bernales,
you are not included in the manifest. Get out! Get out!" out of nowhere
without any prior exchanges. Moreover, we find it hard to believe that
neither the petitioner nor the other delegates protested on the spot
against the alleged abusive treatment. As the CA observed, this version of
events is contrary to ordinary human experience.
Moreover, Ohashi has a good track record in customer service and was the
recipient of several commendation letters that were presented in court. We
agree with the petitioner that under the rules of evidence, his previous
acts are not admissible to prove how Ohashi behaved during the incident.
But as the respondent pointed out, previous conduct may be received as
evidence to prove specific intent, habit, and tendencies. Ohashi's track
record contradicts the petitioner's portrayal of him as an unreasonably
rude person.
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We also find it hard to swallow the petitioner's theory that Ohashi only
brought him to the plane because the other delegates stayed on the
tarmac and refused to board unless the petitioner was with them. These
delegates did not object when the petitioner was allegedly maltreated and
ejected from the shuttle bus, yet the petitioner would have us believe that
they protested on the tarmac for thirty to forty minutes in his behalf. We
find it contrary to common experience for people to do or say nothing
when a companion is being abused, then suddenly protest after the fact
when they were already away from the incident. These, to us, are
inconsistent reactions. Thus, we find NWA's account to be more credible.
On the insulting remark from Eddie Tanno, we cannot possibly hold NWA
responsible for the actions of the other passengers. The RTC blames the
mistake of NWA's agents in the issuance of the dummy boarding pass for
putting the petitioner in that situation. Moral damages, however, cannot
be awarded for simple mistakes in the absence of bad faith.
On the defense of fortuitous event against breach of contract
Under the carriage contract, NWA had the obligation to transport the
petitioner from Narita International Airport to Honolulu, Hawaii, on 1
October 2002 at 8:40 p.m. NWA failed to perform this duty because a
strong typhoon hit Japan that evening, forcing widespread flight
cancellations. Nevertheless, NWA attempted to fly the petitioner to
Honolulu on a later flight after the typhoon passed. This attempt failed
because NWA was prevented by the mandatory airport curfew. NWA was
only able to fulfill its obligation at 3:35 p.m. the following day.
The primary cause of NWA's delay in the fulfillment of its obligation was
the unusually strong typhoon that struck Japan that evening. We take
notice that this was Typhoon Higos, one of the most powerful typhoons to
hit Japan as of that date. Typhoon Higos resulted in the cancellation of
more than 200 flights.
From this perspective, we cannot attribute bad faith or ill motives on NWA
for cancelling Flight No. 10. Pushing through would have recklessly
endangered the lives of the passengers and the crew. Evidently, the real
and proximate cause of NWA's breach of contract was a fortuitous event.
Moreover, NWA demonstrated good faith when it exerted its best efforts to
accommodate the delayed Flight No. 10 passengers on Flight No. 22. While
Flight No. 22 also failed to leave, the failure was caused by the 1:00 p.m.
Narita curfew. Again, we cannot attribute malice on NWA for the
cancellation of Flight No. 22.
On the alleged bad accommodation
Finally, we also cannot impute bad faith on NWA's failure to house the
passengers in any nearby hotels. Flight No. 22 was cancelled at around 1
a.m. Considering the number of flights cancelled earlier that evening, it is
understandable that hotel rooms had already been booked by the other
airlines also billeting their passengers. The petitioner paints the dismal
picture that he was forced to use the public comfort rooms and sleep on
the floor like "the beggars of Quiapo and Baclaran."He fails to mention
though that the 1,500 other stranded passengers had to endure the same
discomforts that he experienced; NWA did not maliciously single him out.
All the stranded passengers suffered the same experience because of
Typhoon Higos. NWA did the next best thing it could and provided the
passengers with blankets, snacks, and other comforts available under the
circumstances. The arrival of Typhoon Higos was an extraordinary and
unavoidable event. Its occurrence made it impossible for NWA to bring the
petitioner to Honolulu in time for his commitments.
We cannot hold the respondent liable for a breach of contract resulting
from a fortuitous event. Moreover, we find that NWA did not act in bad
faith or in a wanton, fraudulent, reckless, or oppressive manner. On the
contrary, it exerted its best efforts to accommodate the petitioner on Flight
No. 22 and to lessen the petitioner's discomfort when he and the other
passengers were left to pass the night at the terminal.
STORM OR PERIL OF THE SEA
7. Transimex Co. vs. Mafre Asian Insurance Corp.
FACTS:
On 21 May 1996, M/V Meryem Ana received a shipment consisting of
21,857 metric tons of Prilled Urea Fertilizer from Odessa, Ukraine. The
shipment was covered by two separate bills of lading and consigned to
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Fertiphil for delivery of two ports, one in La Union and the other in Albay.
It was insured by respondent. As soon as the vessel docketed in Albay, the
fertilizer was bagged and stored insides a warehouse by employees of the
consignee. When it was weighed, it was discovered that only 7,350 metric
tons of fertilizer had been delivered. Because of the alleged shortage,
Fertiphil filed a claim with respondent which the latter subrogated the
rights of the former in claiming from Transimex.
According to Transimex, the shortage in the shipment was cause by
inclement weather encountered by vessel at sea. The bad weather resulted
to the melting of the fertilizer after seawater entered the vessel. The
captain, after being informed that sea water entered the compartment
where the fertilizer was, said that they encountered bad weather. The wind
reading was up to 40 knots and very high swells were encountered from
southwest direction. The vessel was rolling and pitching heavily and heavy
sea water were washing all main deck and were jumping from the main
deck o=to the top of the seven hatch covers.
Transimex denied liability as it claims that the loss or damage was caused
by bad weather. In it reply, after initially arguing that Section 4 of COGSA
is the law governing on the issue, conceded that the Civil Code primarily
governs its liability as a carrier, with COGSA as a suppletory source. Under
both laws, petitioner contends that it is exempt from liability, because
damage to the cargo was cause by the bad weather encountered by the
vessel while at sea. This kind of weather supposedly qualifies as a violent
storm under the Civil Code; or as a peril, danger, or accident of the sea
under COGSA.
On the other hand, respondent insurance company maintains that
petitioner was correctly held liable by the lower court and appellate court
for the shortage of the cargo in accordance with the Civil Code provisions
of the common carrier.
ISSUE:
Is petitioner liable due to the bad weather under Civil Code or COGSA?
RULING:
The presence of the “storm” or “peril” of the sea was not
established.
It must be emphasized that not all instances of bad weather may be
categorized as "storms" or "perils of the sea" within the meaning of the
provisions of the Civil Code and COGSA on common carriers. To be
considered absolutory causes under either statute, bad weather conditions
must reach a certain threshold of severity.
With respect to storms, this Court has explained the difference between a
storm and ordinary weather conditions in Central Shipping Co. Inc. v.
Insurance Company of North America:
Nonetheless, to our mind it would not be sufficient to categorize the
weather condition at the time as a "storm" within the absolutory causes
enumerated in the law. Significantly, no typhoon was observed within the
Philippine area of responsibility during that period.
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.
The phrase "perils of the sea" carries the same connotation. Although the
term has not been definitively defined in Philippine jurisprudence, courts in
the United States of America generally limit the application of the phrase
to weather that is "so unusual, unexpected and catastrophic as to be
beyond reasonable expectation." Accordingly, strong winds and waves are
not automatically deemed perils of the sea, if these conditions are not
unusual for that particular sea area at that specific time, or if they could
have been reasonably anticipated or foreseen.
In this case, the documentary and testimonial evidence cited by petitioner
indicate that M/V Meryem Ana faced winds of only up to 40 knots while at
sea. This wind force clearly fell short of the 48 to 55 knots required for
"storms" under Article 1734 (1) of the Civil Code based on the threshold
established by PAGASA. Petitioner also failed to prove that the inclement
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weather encountered by the vessel was unusual, unexpected, or
catastrophic. In particular, the strong winds and waves, which allegedly
assaulted the ship, were not shown to be worse than what should have
been expected in that particular location during that time of the year.
Consequently, this Court cannot consider these weather conditions as
"perils of the sea" that would absolve the carrier from liability.
Petitioner failed to prove the other requisites for exemption from liability
under Article 1734 of the Civil Code.
Even assuming that the inclement weather encountered by the vessel
amounted to a "storm" under Article 1734 (1) of the Civil Code, there are
two other reasons why this Court cannot absolve petitioner from liability
for loss or damage to the cargo under the Civil Code. First, there is no
proof that the bad weather encountered by M/V Meryem Ana was the
proximate and only cause of damage to the shipment. Second, petitioner
failed to establish that it had exercised the diligence required from
common carriers to prevent loss or damage to the cargo.
Common carriers are automatically presumed to have been at fault or to
have acted negligently if the goods they were transporting were lost,
destroyed or damaged while in transit. This presumption can only be
rebutted by proof that the carrier exercised extraordinary diligence and
caution to ensure the protection of the shipment in the event of foul
weather.
In the instant case, there is absolutely no evidence that petitioner satisfied
the two requisites. Before the trial court, petitioner limited itself to the
defense of denial. The latter refused to admit that the shipment sustained
any loss or damage and even alleged overage of the cargo delivered. As a
result, the evidence it submitted was severely limited, i.e., the testimony
of a witness that supposedly confirmed the alleged excess in the quantity
of the fertilizer delivered to the consignee in Albay. No other evidence was
presented to demonstrate either the proximate and exclusive cause of the
loss or the extraordinary diligence of the carrier.
Under these circumstances, the Court cannot absolve petitioner from
liability for the shortage incurred by the shipment.
NOTICE OF CLAIM
8. Phil. Charter Insurance Corp. vs. Chemoil Lighterage
Art. 366. Within twenty-four hours following the receipt of the
merchandise a claim may be made against the carrier on account of
damage or average found upon opening the packages, provided that the
indications of the damage or average giving rise to the claim cannot be
ascertained from the exterior of said packages, in which case said claim
shall only be admitted at the time of the receipt of the packages.
After the periods mentioned have elapsed, or after the transportation
charges have been paid, no claim whatsoever shall be admitted against
the carrier with regard to the condition in which the goods transported
were delivered.
FACTS:
Chemical company in Korea shipped liquid chemicals to Plastic Group Phils,
Inc (PGP) thru Chemoil in Manila, insured by PCIC. Upon inspection by
PGP, the samples taken from the shipment showed discoloration from
yellowish to amber, demonstrating that it was damaged. PCIC paid PGP for
the insurance claim. CA dismissed claims of PCIC against Chemoil and
ruled that the notice of claim was not filed within the required period.
ISSUE:
WON NOTICE OF CLAIM was filed within the required period
RULING:
Athough a telephone call was made by Alfredo Chan (employee of PGP) to
Abastillas (VP for Operations of Chemoil) informing the latter of the
contamination, the court having examined the entire records of the case,
they cannot find a shred of evidence that will precisely and ultimately point
to the conclusion that the notice of claim was timely relayed or filed. The
allegation of the petitioner that not only the Vice President of the
respondent was informed, but also its drivers, as testified by Alfredo Chan,
during the time that the delivery was actually being made, cannot be given
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great weight as no driver was presented to the witness stand to prove this.
From the testimony of Chan, he was not at the site and had no personal
knowledge that the drivers of Chemoil were informed of the
contamination.
The object sought to be attained by the requirement of the submission of
claims in pursuance of this article is to compel the consignee of goods
entrusted to a carrier to make prompt demand for settlement of alleged
damages suffered by the goods while in transport, so that the carrier will
be enabled to verify all such claims at the time of delivery or within
twenty-four hours thereafter, and if necessary fix responsibility and secure
evidence as to the nature and extent of the alleged damages to the goods
while the matter is still fresh in the minds of the parties.
The filing of a claim with the carrier within the time limitation therefore
actually constitutes a condition precedent to the accrual of a right of action
against a carrier for loss of, or damage to, the goods. The shipper or
consignee must allege and prove the fulfillment of the condition. If it fails
to do so, no right of action against the carrier can accrue in favor of the
former. The aforementioned requirement is a reasonable condition
precedent; it does not constitute a limitation of action
PRESUMPTION OF NEGLIGENCE
9. Diaz vs. CA
A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
FACTS:
Petitioner operated a common carrier, a Tamaraw FX taxi plying the route
of Cagayan de Oro City to any point in Region 10. On July 20, 1996,
petitioner’s taxi, driven by Arman Retes, was moving at an excessive
speed when it rammed into the rear portion of a Hino cargo truck owned
by Lantoria and Francisco. As a result, 9 passengers of taxi died including
Sherly Moneño.
Heirs of Moneño filed before RTC an action for breach of contract of
carriage and damages against petitioner and driver. Lantoria and Francisco
filed third-party complaint.
Due to petitioner and counsel’s failure to appear (3x) in the pre-trial
conference despite due notice, court allowed petitioners to present
evidence ex parte. Seven months after conclusion of respondents
presentation of evidence, petitioner filed motion for leave to present
evidence but was denied.
RTC: Petitioner and driver Retes jointly and severally liable to pay heirs.
CA: Affirmed RTC decision
ISSUE:
1) Whether denial of petitioner’s motion for leave to present evidence
on her defense was proper?
2) Whether petitioner is liable for breach of contract?
RULING:
1.) Yes. Petitioner was represented by counsel to whom the notice was
sent. It was incumbent on the latter to advise petitioner accordingly. His
failure to do so constituted negligence which bound petitioner.
2.) Yes. A common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
In a contract of carriage, it is presumed that the common carrier is at fault
or is negligent when a passenger dies or is injured. In fact, there is even
no need for the court to make an express finding of fault or negligence on
the part of the common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary diligence.
In this case, petitioner, as common carrier, failed to establish sufficient
evidence to rebut the presumption of negligence. Findings of lower courts
showed that the accident which led to the death of Moneño was caused by
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reckless speed and gross negligence of petitioner’s driver who
demonstrated no regard for the safety of his passengers.
BURDEN ON COMMON CARRIER
10. Regional Container Lines (RCL) of Singapore, et al vs. The
Netherlands Insurance Co. (Philippines), Inc.
In all other cases not specified under Article 1734 of the Civil Code,
common carriers are presumed to have been at fault or to have acted
negligently, unless they observed extraordinary diligence.
FACTS:
405 cartons of Epoxy Molding Compound were consigned to be shipped
from Singapore to Manila for Temic Telefunken Microelectronics Philippines
(Temic). U-Freight Singapore PTE Ltd. (U-Freight Singapore), a forwarding
agent based in Singapore, contracted the services of Pacific Eagle Lines
PTE. Ltd. (Pacific Eagle) to transport the subject cargo.
The cargo was packed, stored and sealed by Pacific Eagle. As the cargo
was highly perishable, the inside of the container had to be kept at a
temperature of 0 Celcius. Pacific Eagle then loaded the refrigerated
container on board the M/V Piya Bhum, a vessel owned by RCL, with which
Pacific Eagle had a slot charter agreement. RCL duly issued its own Bill of
Lading in favor of Pacific Eagle.
To insure the cargo against loss and damage, Netherlands Insurance
issued a Marine Open Policy in favor of Temic, to cover all losses/damages
to the shipment.
M/V Piya Bhum subsequently docked in Manila. After unloading the
refrigerated container, it was plugged to the power terminal of the pier to
keep its temperature constant. Fidel Rocha (Rocha), Vice-President for
Operations of Marines Adjustment Corporation, accompanied by two
surveyors, conducted a protective survey of the cargo. They found that
based on the temperature chart, the temperature reading was constant at
0 Celcius.
However, when the cargo had already been unloaded from the ship, the
temperature fluctuated with a reading of 33 Celsius. Rocha believed the
fluctuation was caused by the burnt condenser fan motor of the
refrigerated container.
Temic received the shipment and found the cargo completely damaged.
Temic filed a claim for cargo loss against Netherlands Insurance, with
supporting claims documents. The Netherlands Insurance paid Temic the
sum of P1,036,497.00 under the terms of the Marine Open Policy.
Netherlands Insurance filed a complaint against EDSA Shipping, RCL, U-
Freight Singapore, U-Ocean and Pacific Eagle.
The defendants all disclaimed liability for the damage caused to the cargo,
citing several reasons why Netherland Insurances claims must be rejected.
Specifically, RCL and EDSA Shipping denied negligence in the transport of
the cargo; they attributed any negligence that may have caused the loss
of the shipment to their co-defendants.
REGIONAL TRIAL COURT: The defendants could not be held liable for
the loss or damage, as their respective liabilities ended at the time of the
discharge of the cargo from the ship at the Port of Manila.
COURT OF APPEALS: RCL and EDSA Shipping were found liable for the
damage to the cargo
ISSUE:
Whether the CA correctly held RCL and EDSA Shipping liable as common
carriers under the theory of presumption of negligence
RULING:
YES.
A common carrier is presumed to have been negligent if it fails to prove
that it exercised extraordinary vigilance over the goods it transported.
When the goods shipped are either lost or arrived in damaged condition, a
presumption arises against the carrier of its failure to observe that
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diligence, and there need not be an express finding of negligence to hold it
liable.
To overcome the presumption of negligence, the common carrier must
establish by adequate proof that it exercised extraordinary diligence over
the goods. It must do more than merely show that some other party could
be responsible for the damage.
In the present case, RCL and EDSA Shipping failed to prove that they did
exercise that degree of diligence required by law over the goods they
transported. Indeed, there is sufficient evidence showing that the
fluctuation of the temperature in the refrigerated container van, as
recorded in the temperature chart, occurred after the cargo had been
discharged from the vessel and was already under the custody of the
arrastre operator, ICTSI. This evidence, however, does not disprove that
the condenser fan which caused the fluctuation of the temperature in the
refrigerated container was not damaged while the cargo was being
unloaded from the ship. It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain under the custody of the
carrier; RCL and EDSA Shipping failed to dispute this.
ACTS OF STRANGERS AND OTHER PASSENGERS (ART. 1763,
NCC)
11. MRR vs. Ballesteros
Art. 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilfull 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.
FACTS:
Private respondents here, plaintiffs below, were passengers on petitioner's
bus, the driver of which was Jose Anastacio. In Bayombong, Nueva
Vizcaya, Anastacio stopped the bus and got off to replace a defective spark
plug. While he was thus engaged, one Dionisio Abello, an auditor assigned
to defendant company by the General Auditing Office, took the wheel and
told the driver to sit somewhere else. With Abello driving, the bus
proceeded on its way, from time to time stopping to pick up passengers.
Anastacio tried twice to take the wheel back but Abello would not
relinquish it. Then, in the language of the trial court, "while the bus was
negotiating between Km. posts 328 and 329 (in Isabela) a freight truck ...
driven by Marcial Nocum ... bound for Manila, was also negotiating the
same place; when these two vehicles were about to meet at the bend of
the road Marcial Nocum, in trying to evade several holes on the right lane,
where his truck was running, swerved his truck towards the middle part of
the road and in so doing, the left front fender and left side of the freight
truck smashed the left side of the bus resulting in extensive damages to
the body of the bus and injuries to seventeen of its passengers, ...
including the plaintiffs herein."
In rejecting petitioner's contention that the negligence of Marcial Nocum
could not be imputed to it and relieved it from liability, the trial court
found that Dionisio Abello "was likewise reckless when he was driving the
bus at the rate of from 40 to 50 kilometers per hour on a bumpy road at
the moment of the collision."
Another defense put up by petitioner is that since Abello was not its
employee it should not be held responsible for his acts. This defense was
correctly overruled by the trial court, considering the provisions of Article
1763 of the Civil Code and section 48 (b) of the Motor Vehicle Law, which
respectively provide as follows:
Art. 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilfull 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.
Sec. 48(b). No professional chauffeur shall permit any unlicensed person
to drive the motor vehicle under his control, or permit a person, sitting
beside him or in any other part of the car, to interfere with him in the
operation of the motor vehicle, by allowing said person to take hold of the
steering wheel, or in any other manner take part in the manipulation or
control of the car.
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It appears further, and so the trial court found, that there were
negotiations between the parties to compromise the case, as a result of
which respondents herein, plaintiffs below, considerably reduced their
claims to the amounts subsequently awarded in the judgment; that
petitioner had in fact settled the claims of the other passengers who were
also injured in the same accident and even the claim for damages filed in
another action by the owner of the freight truck; and that the Government
Corporate Counsel himself, who represents herein petitioner, rendered two
separate opinions (Op. No. 86, May 19, 1960; and Op. No. 99, series of
1961) wherein, after analyzing the facts and the law applicable, he
reached the conclusion that the acts of the bus personnel, particularly "in
allowing Mr. Abello to drive despite two occasions when the bus stopped
and the regular driver could have taken over, constitute reckless
imprudence and wanton injurious conduct on the part of the MRR
employees." On the basis of those opinions the Government Corporate
Counsel advised petitioner that the offer of the claimants was reasonable
and should be accepted. His advice, however, was not favorably acted
upon, petitioner obviously preferring to litigate.
ISSUE:
W/N Dionisio Abello acted with reckless negligence while driving
petitioner's bus at the time of the accident, and whether or not petitioner
may be held liable on account of such negligence, considering that he was
not its employee
RULING:
These are no longer justiciable questions which would justify our issuing
the peremptory writ prayed for. The first is a question of fact on which the
affirmative finding of respondent court is not reviewable by Us; and the
second is one as to which there can be no possible doubt in view of the
provisions of the Civil Code and of the Motor Vehicle Law hereinbefore
cited. There would be no point in giving the appeal due course.
12. Bacarro vs. Castano
The hazards of modern transportation demand extraordinary diligence. A
common carrier is vested with public interest. Under the new Civil Code,
instead of being required to exercise mere ordinary diligence a common
carrier is exhorted to carry the passengers safely as far as human care and
foresight can provide "using the utmost diligence of very cautious
persons." (Article 1755) Once a passenger in the course of travel is
injured, or does not reach his destination safely, the carrier and driver are
presumed to be at fault.
FACTS:
Respondent Castano boarded a jeep driven by Petitioner Montefalcon who
thereafter drove it at around 40 kilometers per hour. While approaching
Sumasap Bridge at the said speed, a cargo truck coming from behind,
blowing its horn to signal its intention to overtake the jeep. The jeep,
without changing its speed, gave way by swerving to the right, such that
both vehicles ran side by side for a distance of around 20 meters.
Thereafter as the jeep was left behind, its driver was unable to return it to
its former lane and instead it obliquely or diagonally ran down an inclined
terrain towards the right until it fell into a ditch pinning down and crushing
Castano’s right leg in the process.
Castano filed a case for damages against Rosita Bacarro, William Sevilla,
and Felario Montefalcon. Defendants alleged that the jeepney was
sideswiped by the overtaking cargo truck. After trial, the CFI of Misamis
Oriental ordered Bacarro, et.al. to jointly and severally pay Castano. It
was affirmed by the CA upon appeal.
ISSUE:
1. Whether or not there was a contributory negligence on the part of
the jeepney driver.
2. Whether or not extraordinary diligence is required of the jeepney
driver.
3. Whether or not the sideswiping is a fortuitous event.
RULING:
1.) Yes. X x x. The fact is, petitioner-driver Montefalcon did not slacken his
speed but instead continued to run the jeep at about forty (40) kilometers
per hour even at the time the overtaking cargo truck was running side by
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side for about twenty (20) meters and at which time he even shouted to
the driver of the truck.
Thus, had Montefalcon slackened the speed of the jeep at the time the
truck was overtaking it, instead of running side by side with the cargo
truck, there would have been no contact and accident. He should have
foreseen that at the speed he was running, the vehicles were getting
nearer the bridge and as the road was getting narrower the truck would be
to close to the jeep and would eventually sideswiped it. Otherwise stated,
he should have slackened his jeep when he swerved it to the right to give
way to the truck because the two vehicles could not cross the bridge at the
same time.
2.) Yes. x x x [T]he fact is, there was a contract of carriage between the
private respondent and the herein petitioners in which case the Court of
Appeals correctly applied Articles 1733, 1755 and 1766 of the Civil Code
which require the exercise of extraordinary diligence on the part of
petitioner Montefalcon.
"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 circum-stances of each case.
"Art. 1755. A common carrier is bound to carry the passengers safely as
far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
"Art. 1766. In all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the Code of
Commerce and by special laws."
Indeed, the hazards of modern transportation demand extraordinary
diligence. A common carrier is vested with public interest. Under the new
Civil Code, instead of being required to exercise mere ordinary diligence a
common carrier is exhorted to carry the passengers safely as far as human
care and foresight can provide "using the utmost diligence of very cautious
persons." (Article 1755). Once a passenger in the course of travel is
injured, or does not reach his destination safely, the carrier and driver are
presumed to be at fault.
3.) The third assigned error of the petitioners would find fault upon
respondent court in not freeing petitioners from any liability, since the
accident was due to a fortuitous event. But, We repeat that the alleged
fortuitous event in this case - the sideswiping of the jeepney by the cargo
truck, was something which could have been avoided considering the
narrowness of the Sumasap Bridge which was not wide enough to admit
two vehicles. As found by the Court of Appeals, Montefalcon contributed to
the occurrence of the mishap.
13. GV Florida Transport, Inc. vs. Heirs of Romeo L. Battung, Jr.
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.
FACTS:
Battung boarded the bus of petitioner in Delfin Albano, Isabela, bound for
Manila. He was seated at the first row behind the driver and slept during
the ride. Battung was seated at the first row behind the driver and slept
during the ride. When the bus reached the Philippine Carabao Center in
Muñoz, Nueva Ecija, the bus driver, Duplio, stopped the bus and alighted
to check the tires. At this point, a man who was seated at the fourth row
of the bus stood up, shot Battung at his head, and then left with a
companion. The bus conductor, Daraoay, notified Duplio of the incident
and thereafter, brought Romeo to the hospital, but the latter was
pronounced dead on arrival. Hence, respondents filed a complaint on July
15, 2008 for damages in the aggregate amount of P1,826,000.00 based on
a breach of contract of carriage against petitioner, Duplio, and Baraoay
(petitioner, et al.) before the RTC, docketed as Civil Case No. 22-1103.
ISSUE:
Whether petitioner is liable for damages arising from culpa contractual
RULING:
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No. Where, as in the instant case, the injury sustained by the petitioner
was in no way due to any defect in the means of transport or in the
method of transporting or to the negligent or wilful acts of [the common
carrier'sl employees, and therefore involving no issue of negligence in its
duty to provide safe and suitable [care] as well as competent employees,
with the injury arising wholly from causes created by strangers over which
the carrier had no control or even knowledge or could not have prevented,
the presumption is rebutted and the carrier is not and ought not to be held
liable. To rule otherwise would make the common carrier the insurer of the
absolute safety of its passengers which is not the intention of the
lawmakers. (Emphasis and underscoring supplied)
The case involves the death of Battung wholly caused by the surreptitious
act of a co-passenger who, after consummating such crime, hurriedly
alighted from the vehicle.
The law exacts from common carriers (i.e., those persons, corporations,
firms, or associations 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 highest degree of diligence (i.e.,
extraordinary diligence) in ensuring the safety of its passengers.
Articles 1733 and 1755 of the Civil Code state:
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.
Art. 1755. A common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
In this relation, Article 1756 of the Civil Code provides that "[i]n case of
death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed in Articles 1733 and 1755."
This disputable presumption may also be overcome by a showing that the
accident was caused by a fortuitous event.
The foregoing provisions notwithstanding, it should be pointed out that the
law does not make the common carrier an insurer of the absolute safety of
its passengers.
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.
ABSENCE OR PRESENCE OF CONTRIBUTORY NEGLIGENCE
14. Cangco vs. Manila Railroad Co.
FACTS:
Jose Cangco is a clerk working in Manila Railroad Co. As an employee, he
was given a pass that entitles him to ride the company’s train free of
charge.
On the night of Jan. 20, 1915, Cangco was riding the train on his way
home. When it reached the San Mateo station (where he lives) he stood up
and positioned himself near the exit. A person gets off before him. When
he was about to come down, he was suppose to step on a certain
platform. However, that day, there were watermelons piled in that
platform and he stepped on them. The watermelons are there because it
was harvest season. It was ready for shipment to the market.
Since the place was lighted dimly, he couldn’t properly see if the
watermelons were there or not. Also, when he got off, the train was still
moving. As a consequence of his fall, he was drawn to the platform and
was crushed by a moving car. He was taken to a hospital where his arms
were amputated. Afterwards, he was taken to another hospital where his
shoulders were also amputated. All in all, the expenses had a total of Php
790. 25.
He filed a case against MRR in CFI Manila to recover damages. However,
CFI ruled in favor of MRR because there was CONTRIBUTORY NEGLIGENCE
on the part of Cangco. CFI ruled that while MRR was negligent by placing
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the watermelons on the platform and the train failing to bring him safely,
Cangco failed to exercise due caution in alighting from the train.
ISSUE:
Is Cangco barred from recovering damages against MRR because of his
own CONTRIBUTORY NEGLIGENCE?
RULING:
NO, he is not barred from recovering damages. SC reversed the decision
of the CFI.
uncertainty in his mind with regard either to the length of the step which
he was required to take or the character of the platform where he was
alighting.”
As a conclusion, the conduct of the plaintiff in undertaking to alight while
the train was yet slightly under way was not characterized by imprudence
and that therefore he was not guilty of contributory negligence. With this,
MRR should pay the damages. They are ordered to pay Php 3, 290. 25 to
Cangco.
15. Isaac vs. AL Ammen Transportation
FACTS:

A. L. Ammen Transportation Co., Inc., is a corporation engaged in the

SC said that the PRIMARY RESPONSIBILITY of MRR should be examined
business of transporting passengers by land for compensation in the Bicol
separately from the CONTRIBUTORY NEGLIGENCE of Cangco. On the one
provinces. On May 31, 1951, Isaac boarded said Bus No. 31 as a
hand, there is the contract of carriage on the part of MRR to bring Cangco
passenger paying the required fare from Ligao, Albay bound for Pili,
safely to his destination. There is the presumption of responsibility on the
Camarines Sur, but before reaching his destination, the bus collided with a
part of MRR to make sure that in order to bring Cangco and other
motor vehicle of the pick-up type coming from the opposite direction, as a
passengers safely to their destination, MRR should have exercised the
result of which Isaac's left arm was completely severed and the severed
proper discretion in selecting and directing its employees and workers.
portion fell inside the bus. Isaac was rushed to a hospital where he was
MRR is deemed negligent if is proven that they failed in their discretion in
given blood transfusion to save his life. After four days, he was transferred
selecting and directing its employees. To prove that MRR exercised
to another hospital where he underwent treatment for three months. He
DILIGENCE in this area would exonerate MRR from liability.
was moved later to the Orthopedic Hospital where he was operated on and
stayed there for another two months. For these services, he incurred
On the other hand, Cangco alighted from the train when the train was still
expenses amounting to P623.40, excluding medical fees which were paid
moving. It is negligence on his part to have not waited the train to stop
by Ammen.
before he alighted. In that way, he should’ve seen the pile of watermelons
piled in the platform.
Isaac brought this action against Ammen for damages alleging that the
collision which resulted in the loss of his left arm was mainly due to the
However, in the case at bar, there were circumstances to prove that MRR
gross incompetence and recklessness of the driver of the bus operated by
did not exercise diligence. FIRST, “the place, as we have already stated,
Ammen and that IT incurred in culpa contractual arising from its non-
was dark, or dimly lighted, and this also is proof of a failure upon the part
compliance with its obligation to transport Isaac safely to his destination.
of the defendant in the performance of a duty owing by it to the plaintiff;
for if it were by any possibility concede that it had right to pile these sacks
Ammen set up as special defense that the injury suffered by Isaac was due
in the path of alighting passengers, the placing of them adequately so that
entirely to the fault or negligence of the driver of the pick-up car which
their presence would be revealed.” SECOND, “it may be noted that the
collided with the bus driven by its driver and to the contributory negligence
place was perfectly familiar to the plaintiff as it was his daily custom to get
of Isaac himself. Ammen further claims that the accident which resulted in
on and off the train at this station. There could, therefore, be no
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the injury of Isaac is one which it could not foresee or, though foreseen,
was inevitable.
Trial court found that the collision occurred due to the negligence of the
driver of the pick-up car and not to that of the driver of the bus it
appearing that the latter did everything he could to avoid the same but
that notwithstanding his efforts, he was not able to avoid it. As a
consequence, the court dismissed the complaint, with costs against Isaac.
Isaac invoked that once the contract of carriage is established and there is
proof that the same was broken by failure of the carrier to transport the
passenger safely to his destination, the liability of the former attaches. On
the other hand, Ammen claims that "if there is no negligence on the part
of the common carrier but that the accident resulting in injuries is due to
causes which are inevitable and which could not have been avoided or
anticipated notwithstanding the exercise of that high degree of care and
skill which the carrier is bound to exercise for the safety of his
passengers", neither the common carrier nor the driver is liable therefor.
ISSUE:
1) Has Ammen observed extraordinary diligence or the utmost
diligence of every cautious person, having due regard for all
circumstances, in avoiding the collision which resulted in the injury
caused to the Isaac?
2) Is Isaac guilty of contributory negligence?
RULING:
1. YES, Ammen observed extraordinary diligence. A common carrier is
bound to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with due
regard for all circumstances. This extraordinary diligence required of
common carriers is calculated to protect the passengers from the tragic
mishaps that frequently occur in connection with rapid modern
transportation. This high standard of care is imperatively demanded by the
preciousness of human life and by the consideration that every person
must in every way be safeguarded against all injury.
The following are the principles governing the liability of a
common carrier:
1) The liability of a carrier is contractual and arises upon breach of its
obligation. There is breach if it fails to exert extraordinary diligence
according to all the circumstances of each case;
2) A carrier is obliged to carry its passenger with the utmost diligence
of a very cautious person, having due regard for all the
circumstances;
3) A carrier is presumed to be at fault or to have acted negligently in
case of death of, or injury to, passengers, it being its duty to prove
that it exercised extraordinary diligence; and
4) The carrier is not an insurer against all risks of travel.
In this case, it appears that Bus No. 31, immediately prior to the collision,
was running at a moderate speed because it had just stopped at the
school zone. The pick-up car was at full speed and was running outside of
its proper lane. The driver of the bus, upon seeing the manner in which
the pick-up was then running, swerved the bus to the very extreme right
of the road until its front and rear wheels have gone over the pile of stones
or gravel situated on the rampart of the road. Said driver could not move
the bus farther right and run over a greater portion of the pile, the peak of
which was about 3 feet high, without endangering the safety of his
passengers. And notwithstanding all these efforts, the rear left side of the
bus was hit by the pick-up car.
Of course, this finding is disputed by Isaac who cannot see eye to eye with
the evidence for the Ammen and insists that the collision took place
because the driver of the bus was going at a fast speed. He contends that,
having seen that a car was coming from the opposite direction at a
distance which allows the use of moderate care and prudence to avoid an
accident, and knowing that on the side of the road along which he was
going there was a pile of gravel, the driver of the bus should have stopped
and waited for the vehicle from the opposite direction to pass, and should
have proceeded only after the other vehicle had passed.
While the position taken by Isaac appeals more to the sense of caution
that one should observe in a given situation to avoid an accident or
mishap, such however cannot always be expected from one who is placed
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suddenly in a predicament where he is not given enough time to take the
proper course of action as he should under ordinary circumstances. One
who is placed in such a predicament cannot exercise such coolness or
accuracy of judgment as is required of him under ordinary circumstances
and he cannot therefore be expected to observe the same judgment, care
and precaution as in the latter. For this reason, authorities abound where
failure to observe the same degree of care that as ordinary prudent man
would exercise under ordinary circumstances when confronted with a
sudden emergency was held to be warranted and a justification to exempt
the carrier from liability.
Considering all the circumstances, we are persuaded to conclude that the
driver of the bus has done what a prudent man could have done to avoid
the collision.
2. YES, Isaac of is guilty of contributory negligence. A circumstance which
militates against the stand of Isaac is the fact borne out by the evidence
that when he boarded the bus in question, he seated himself on the left
side thereof resting his left arm on the window sill but with his left elbow
outside the window, this being his position in the bus when the collision
took place. It is for this reason that the collision resulted in the severance
of said left arm from the body of Isaac thus doing him a great damage. It
is therefore apparent that Isaac is guilty of contributory negligence. Had
he not placed his left arm on the window sill with a portion thereof
protruding outside, perhaps the injury would have been avoided as is the
case with the other passengers. It is to be noted that Isaac was the only
victim of the collision. It is true that such contributory negligence cannot
relieve Ammen of its liability but will only entitle it to a reduction of the
amount of damage caused but this is a circumstance which further
militates against the position taken by Isaac in this case.
16. Compania Maritima vs. CA, et al
FACTS:
Conception is a civil engineer doing business under the name and style of
Consolidated Construction. He had a contract with the Civil Aeronautics
Administration for the construction of the airport in Cagayan de Oro City.
Concepcion had to ship his construction equipment from Manila to
Cagayan. He shipped the equipment with Compania Maritima. The
shipment were 1 unit payloader, 4 unit 6x6 Reo trucks and 2 pieces of
water tanks.
This equipment were loaded MV Cebu. When it arrived in Cagayan, the
Reo trucks and the water tanks were safely unloaded within hours after
arrival but while the payloader was about 2 meters above the pier in the
course of unloading, the swivel pin of the heel block of the port block of
Hotch No. 2 gave way, causing the payloader to fall. The payloader was
damaged and was thereafter taken to Compania Maritima's compound.
Concepcion and Consolidated Construction demanded from Compania a
replacement of the payloader which it was considering as a complete loss.
The latter did not oblige.
Meanwhile, Compania shipped the payloader to SMC. It found that the
payloader weighed 7.5 tons and not 2.5 tons as declared in the Bill of
Lading, hence, it denied claim for damages.
Consolidated construction bought a new payloader at P45 thousand.
Concepcion filed an action for damages against Compania Marina.
RTC: Dismissed the complaint stating that the proximate cause of the fall
of the payloader was Concepcion's act or omission in having
misrepresented the weight of the payloader.
CA: Reversed RTC's ruling.
ISSUE:
WON the act of private respondent Concepcion in furnishing petitioner
Compania Maritima with an inaccurate weight of 2.5 tons instead of the
payloader's actual weight of 7.5 tons was the proximate and only cause of
the damage on the payloader when it fell while being unloaded by the
petitioner's crew, as would exempt petitioner from liability for damages
RULING:
No, Compania Maritima is liable.
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Under 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:
xxx xxx xxx
(3) Act or omission of the shipper or owner of the goods.
Petitioner claims absolute exemption under this provision upon the
reasoning that private respondent's act of furnishing it with an accurate
weight of the payloader constitutes misrepresentation within the meaning
of act or omission of the shipper or owner of the goods" under the above-
quoted article. It would thus insist that the proximate and only cause of
the damage to the payloader was private respondent's alleged
misrepresentation of the weight of the machinery in question; hence, any
resultant damage to it must be borne by private respondent Concepcion.
The general rule under Art 1735 and 1752 of the Civil Code is that
common carriers are presumed to have been at fault or to have acted
negligently in case the goods transported by them are lost, destroyed or
had deteriorated. To overcome this presumption, the common carriers
must prove that they observed extraordinary diligence required in Art.
1733.
The mere proof of delivery of the goods in good order to a common carrier
and of their arrival at the place of destination in bad order is a prima facie
case against the common carrier. It is incumbent upon the latter to prove
that the loss, deterioration or destruction was due to accident or some
other circumstances.
The extraordinary diligence in the vigilance over the goods tendered for
shipment requires the common carrier to know and to follow the required
precaution. t requires common carriers to render service with the greatest
skill and foresight and to use all reasonable means to ascertain the nature
and characteristic of goods tendered for shipment, and to exercise due
care in the handling and stowage. Said responsibility commences and
lasts from the time the goods are unconditionally placed in the possession
of and received by the carrier for transportation until the same is
delivered, actually or constructively.
In this case, Compania Maritima failed to take the necessary and adequate
precautions for avoiding damage to the payloader. It cannot reasonably
conclude that the damage caused to the payloader was due to the alleged
misrepresentation as to the correct and accurate weight. Private
respondent has sufficiently established the laxity and carelessness of
petitioner' crew in their methods of ascertaining the weight of heavy
cargoes offered for shipment.
The weigh stated in a bill of lading are prima facie evidence of the amount
received and the fact that the weighing was done by another will not
relieve the common carrier where it accepted such weight and entered it
on the bill of lading. Besides, common carriers can protect themselves
against mistakes in the bill of lading as to weight by exercising diligence
before issuing the same.
Circumstances clearly show that thee fall could have been avoided by the
petitioner's crew. Evidence show that Chief Pisang who was tasked of the
over-all supervision of the loading and unloading relied on the face of the
bill of lading and presumed the same as correct by merely seeing it.
Acknowledging that there was a jumbo in the MV Cebu which has the
capacity to lift 20 to 25 tons, the Pisang chose not to use it because the
payloader was assumed to be only 2.5 tons.
While the act of private respondent in furnishing petitioner with an
accurate weight of the payloader cannot successfully be used as an excuse
by petitioner to avoid liability to the damage, said act constituted a
contributory circumstance to the damage caused on the payloader which
mitigates the liability of Compania Maritima n accordance with Art. 1741.
17. Del Prado vs. Manila Electric Co.
FACTS:
The Manila Electric Company, is engaged in operating street cars in the
City of Manila for the conveyance of passengers; and on the morning of 18
November 1925, one Teodorico Florenciano, as Meralco’s motorman, was
in charge of Car 74 running from east to west on R. Hidalgo Street, the
scene of the accident being at a point near the intersection of said street
and Mendoza Street. After the car had stopped at its appointed place for
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taking on and letting off passengers, just east of the intersection, it
resumed its course at a moderate speed under the guidance of the
motorman. The car had proceeded only a short distance, however, when
Ignacio del Prado ran across the street to catch the car, his approach
being made from the left. The car was of the kind having entrance and exit
at either end, and the movement of del Prado was so timed that he arrived
at the front entrance of the car at the moment when the car was passing.
Del Prado, upon approaching the car, raised his hand as an indication to
the motorman of his desire to board the car, in response to which the
motorman eased up a little, without stopping. Upon this, del Prado seized,
with his left hand, the front perpendicular handpost, at the same time
placing his left foot upon the platform. However, before del Prado’s
position had become secure, and even before his raised right foot had
reached the platform, the motorman applied the power, with the result
that the car gave a slight lurch forward. This sudden impulse to the car
caused del Prado’s foot to slip, and his hand was jerked loose from the
handpost. He therefore fell to the ground, and his right foot was caught
and crushed by the moving car. The next day the member had to be
amputated in the hospital.
An action was instituted in the CFI of Manila by Ignacio del Prado to
recover damages in the amount of P50,000 for personal injuries alleged to
have been caused by the negligence of Meralco in the operation of one of
its street cars in the City of Manila. Upon hearing the cause the trial court
awarded to del Prado the sum of P10,000, as damages, with costs of suit.
Meralco appealed.
ISSUE:
WON There is absence or presence of Contributory Negligence
RULING:
The Supreme Court affirmed the appealed judgment with the modification
that the sum to be recovered reduced to P2,500; with costs against
Meralco.
No obligation on the part of a street railway company to stop cars
at points other than appointed for stoppage. There is no obligation
on the part of a street railway company to stop its cars to let on intending
passengers at other points than those appointed for stoppage. It would be
impossible to operate a system of street cars if a company engaged in this
business were required to stop any and everywhere to take on people who
are too indolent, or who imagine themselves to be in too great a hurry, to
go to the proper places for boarding the cars.
Duty of the motorman of the car. Although the motorman of the car
was not bound to stop to let the passenger on, it was his duty to do no act
that would have the effect of increasing the passenger’s peril while he was
attempting to board the car. The premature acceleration of the car was a
breach of this duty.
Nature of relation between a carrier of passengers for hire and its
patrons; Duty of the carrier. The relation between a carrier of
passengers for hire and its patrons is of a contractual nature; and a failure
on the part of the carrier to use due care in carrying its passengers safely
is a breach of duty (culpa contractual) under articles 1101, 1103, and
1104 of the Civil Code. Furthermore, the duty that the carrier of
passengers owes to its patrons extends to persons boarding the cars as
well as to those alighting therefrom.
Relevance of distinction between Culpa Contractual and Culpa
Aquiliana as to defenses available. The distinction between the two
sorts of negligence is important in this jurisdiction, for the reason that
where liability arises from a mere tort (culpa aquiliana), not involving a
breach of positive obligation, an employer, or master, may exculpate
himself, under the last paragraph of article 1903 of the Civil Code, by
proving that he had exercised due diligence to prevent the damage;
whereas this defense is not available if the liability of the master arises
from a breach of contractual duty (culpa contractual).
Training of motorman irrelevant in breach of obligation under
Article 1101 of the Civil Code. Herein, the company pleaded as a
special defense that it had used all the diligence of a good father of a
family to prevent the damage suffered by del Prado; and to establish this
contention the company introduced testimony showing that due care had
been used in training and instructing the motorman in charge of this car in
his art. This proof is irrelevant in view of the fact that the liability involved
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was derived from a breach of obligation under article 1101 of the Civil
Code and related provisions.
Relevance of distinction between negligence arising under Article
1902 and 1101 as to mitigation of liability. Another practical
difference between liability for negligence arising under article 1902 of the
Civil Code and liability arising from negligence in the performance of a
positive duty, under article 1101 and related provisions of the Civil Code,
is that, in dealing with the latter form of negligence, the court is given a
discretion to mitigate liability according to the circumstances of the case
(art 1103). No such general discretion is given by the Code in dealing with
liability arising under article 1902; though possibly the same end is
reached by courts in dealing with the latter form of liability because of the
latitude of the considerations pertinent to cases arising under this article.
Contributory negligence a mitigating circumstance under Article
1103 Civil Code. As to the contributory negligence of del Prado, as in
Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil., 359), it is treated as a
mitigating circumstance under article 1103 of the Civil Code. Herein, the
negligence of del Prado was contributory to the accident and must be
considered as a mitigating circumstance.
Proximate cause. Del Prado’s negligence in attempting to board the
moving car was not the proximate cause of the injury. The direct and
proximate cause of the injury was the act of Meralco’s motorman in
putting on the power prematurely. A person boarding a moving car must
be taken to assume the risk of injury from boarding the car under the
conditions open to his view, but he cannot fairly be held to assume the risk
that the motorman, having the situation in view, will increase his peril by
accelerating the speed of the car before he is planted safely on the
platform. Again, the situation is one where the negligent act of the
company’s servant succeeded the negligent act of the passenger, and the
negligence of the company must be considered the proximate cause of the
injury.
Rule analogous to the doctrine of “the last clear chance”. The rule
applicable seems to be analogous to, if not identical with that which is
sometimes referred to as the doctrine of “the last clear chance.” In
accordance with this doctrine, the contributory negligence of the party
injured will not defeat the action if it be shown that the defendant might,
by the exercise of reasonable care and prudence, have avoided the
consequences of the negligence of the injured party.
18. PNR vs. CA, et al
Contributory negligence, while not exempting PNR from liability,
nevertheless justified the deletion of the amount adjudicated as moral
damages.
FACTS:
Winifredo Tupang boarded a train in Camarines Sur that was bound for
Manila. Due to overcrowding, Winifredo Tupang opted to sit on the open
platform. Upon passing the Iyam Bridge, Winifredo Tupang fell off the train
resulting to his death. The train didn’t stop despite knowing that a
passenger fell from the train. Instead the conductor requested for the
verification of the information by the police. The police found the body of
Winifredo Tupang. The wife of Winifredo Tupang, Rosario Tupang, filed an
action for breach of contract of carriage in the CFI of Rizal. The court ruled
in favor of Rosario Tupang. On appeal, the CA affirmed the decision of the
CFI. The PNR raised the issue on contributory negligence on the part of
Winifredo Tupang. That he did not hold tenaciously on the upright metal
bar found in the open platform.
ISSUE:
Whether or not there was contributory negligence on the part of Winifredo
Tupang
RULING:
Yes. There was. It appears that the deceased was chargeable with
contributory negligence. Since he opted to sit on the open platform
between the coaches of the train, he should have held tightly and
tenaciously on the upright metal bar found at the side of the said platform
to avoid falling off from the speeding train. Such contributory negligence,
while not exempting PNR from liability, nevertheless justified the deletion
of the amount adjudicated as moral damages. By the same token, the
award of exemplary damages must be set aside. Exemplary damages may
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be allowed only in cases where the defendant acted in wanton, fraudulent,
reckless, oppressive or malevolent manner. There being no evidence of
fraud, malice or bad faith on the part of the petitioner, the grant of
exemplary damages should be discarded.
19. Tabacalera Insurance Co., et al vs. North Front Shipping
Services, Inc.
FACTS:
Sacks of grains were loaded on board a vessel owned by North Front
Shipping (common carrier); the consignee: Republic Floor Mills. The vessel
was inspected by representatives of the shipper prior to the transport and
was found fitting to carry the cargo; it was also issued a Permit to Sail.
The goods were successfully delivered but it was not immediately unloaded
by the consignee. There were a shortage of 23.666 metric tons and some
of the merchandise was already moldy and deteriorating. Hence, the
consignee rejected all the cargo and demanded payment of damages from
the common carrier. Upon refusal, the insurance companies (petitioners)
were obliged to pay. Petitioners now allege that there was negligence on
the part of the carrier. The trial court ruled that only ordinary diligence
was required since the charter-party agreement converted North Front
Shipping into a private carrier.
ISSUE:
WON North Front Shipping is a common carrier. If indeed, did it fail to
exercise the required diligence and thus should be held liable
RULING:
North Front Shipping is a common carrier. Thus, it has the burden of
proving that it observed extraordinary diligence in order to avoid
responsibility for the lost cargo. The charter-party agreement between
North Front Shipping Services, Inc., and Republic Flour Mills Corporation
did not in any way convert the common carrier into a private carrier. A
“charter-party” is defined as a contract by which an entire ship, or some
principal part thereof, is lent by the owner to another person for a
specified time or use.
Having been in the service since 1968, the master of the vessel would
have known at the outset that corn grains that were farm wet and not
properly dried would eventually deteriorate when stored in sealed and hot
compartments as in hatches of a ship. Equipped with this knowledge, the
master of the vessel and his crew should have undertaken precautionary
measures to avoid or lessen the cargo’s possible deterioration as they
were presumed knowledgeable about the nature of such cargo. But none
of such measures was taken.
It did not even endeavor to establish that the loss, destruction or
deterioration of the goods was due to the following: (a) flood, storm,
earthquake, lightning, or other natural disaster or calamity; (b) act of the
public enemy in war, whether international or civil; © act or omission of
the shipper or owner of the goods; (d) the character of the goods or
defects in the packing or in the containers; (e) order or act of competent
public authority. This is a closed list. If the cause of destruction, loss or
deterioration is other than the enumerated circumstances, then the carrier
is rightly liable therefor.
However, the destruction, loss or deterioration of the cargo cannot be
attributed solely to the carrier. The consignee Republic Flour Mills
Corporation is guilty of contributory negligence. It was seasonably notified
of the arrival of the barge but did not immediately start the unloading
operations.
BILL OF LADING (CONCEPT; CHARACTER)
20. Eastern Shipping Lines, Inc. vs. BPI/MS Insurance Corp.
The bills of lading represent the formal expression of the parties' rights,
duties and obligations. It is the best evidence of the intention of the
parties which is to be deciphered from the language used in the contract,
not from the unilateral post facto assertions of one of the parties, or of
third parties who are strangers to the contract. Thus, when the terms of
an agreement have been reduced to writing, it is deemed to contain all the
terms agreed upon and there can be, between the parties and their
successors in interest, no evidence of such terms other than the contents
of the written agreement.
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FACTS:
BPI/MS and Mitsui alleged that on February 2004 at Japan, Sumitomo
Corporation shipped on board the vessel of Eastern Shipping Lines Inc.
(ESLI) 22 coils of various Steel Sheet in good order and condition for
transportation to and delivery at the port of Manila, Philippines in favor of
consignee Calamba Steel Center, Inc. as evidenced by a Bill of Lading. The
shipment was insured with the respondents BPI/MS and Mitsui against all
risks.
The shipment arrived at the port of Manila in an unknown condition and
was turned over to Asian Terminals Inc. (ATI) for safekeeping. Upon
withdrawal of the shipment by the Calamba Steel’s representative, it was
found out that part of the shipment was damaged and was in bad order
condition such that there was a Request for Bad Order Survey. The
amount of damages prompted Calamba Steel to reject the damaged
shipment for being unfit for the intended purpose.
On May 2004, Sumitomo again shipped on board ESLI’s vessel 50 coils in
various Steel Sheet in good order and condition for transportation to and
delivery in favor of the same consignee (Calamba Steel) as evidenced by a
Bill of Lading. The shipment was insured with the respondents BPI/MS and
Mitsui against all risks. ESLI’s vessel with the second shipment arrived at
the port of Manila partly damaged and in bad order. The coils sustained
further damage during the discharge from vessel to shore until its turnover
to ATI’s custody for safekeeping. As it did before, Calamba Steel rejected
the damaged shipment for being unfit for the intended purpose.
Calamba Steel: the damages were caused by ESLI as the carrier and ATI
as the arrastre operator in charge of the handling and discharge of the
coils and filed a claim against them. When ESLI and ATI refused to pay,
Calamba Steel filed an insurance claim for the total amount of the cargo
against BPI/MS and Mitsui as cargo insurers. As a result, BPI/MS and
Mitsui became subrogated in place of and with all the rights and defenses
accorded by law in favor of Calamba Steel
ATI: denied allegations and insisted that the coils in 2 shipments were
already damaged upon receipt from ESLI’s vessels. ATI insisted that it
exercised due diligence in the handling of the shipments
ESLI: denied allegations of the complaints and averred damage to both
shipments was incurred in the possession and custody of ATI and/or of the
consignee and its representatives
RTC: ESLI and ATI are liable for damages sustained by the two shipments
CA: ATI absolved from liability
ESLI and BPI/MS and Mitsui are aware of the non-inclusions of ATI, the
arrastre operator, as a party to this review of the Decision of the CA. By
blaming each other for the exclusion of ATI, they both impliedly agree that
the absolution of ATI from liability is final and beyond review.
ISSUE:
Is ESLI liable? If yes, whether or not ESLI has limited liability as a
common carrier?
RULING:
1. Yes, ESLI is liable.
Common carriers, from the nature of their business and on public policy
considerations, are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. Subject to certain
exceptions enumerated under Article 1734 51 of the Civil Code, common
carriers are responsible for the loss, destruction, or deterioration of the
goods. 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. In maritime transportation, a bill of lading
is issued by a common carrier as a contract, receipt and symbol of the
goods covered by it. If it has no notation of any defect or damage in the
goods, it is considered as a "clean bill of lading." A clean bill of lading
constitutes prima facie evidence of the receipt by the carrier of the goods
as therein described. Based on the bills of lading issued, it is undisputed
that ESLI received the two shipments of coils from shipper Sumitomo
Corporation in good condition at the ports of Yokohama and Kashima,
Japan. However, upon arrival at the port of Manila, some coils from the
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two shipments were partly dented and crumpled as evidenced by the Turn
Over Survey of Bad Order Cargoes.
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, loss, or destruction of the goods
happened, the transporter shall be held responsible. 61 From the
foregoing, the fault is attributable to ESLI. While no longer an issue, it may
be nonetheless state that ATI was correctly absolved of liability for the
damage.
2. Non-limitation of liability applies in the case.
The issue whether or not ESLI has limited liability as a carrier is
determined by either absence or presence of proof that the nature and
value of the goods have been declared by Sumitomo Corporation and
inserted in the bills of lading.
ESLI contends that the invoices specifying the weight, quantity, description
and value of the cargo in reference to the bills of lading do not prove the
fact that the shipper complied with the requirements mandated by the
COGSA. It contends that there must be an insertion of this declaration in
the bill of lading itself to fall outside the statutory limitation of liability.
There is no question about the declaration of the nature, weight and
description of the goods on the first bill of lading. The bills of lading
represent the formal expression of the parties' rights, duties and
obligations. It is the best evidence of the intention of the parties which is
to be deciphered from the language used in the contract, not from the
unilateral post facto assertions of one of the parties, or of third parties
who are strangers to the contract. Thus, when the terms of an agreement
have been reduced to writing, it is deemed to contain all the terms agreed
upon and there can be, between the parties and their successors in
interest, no evidence of such terms other than the contents of the written
agreement.
The declaration requirement does not require that all the details must be
written down on the very bill of lading itself. It must be emphasized that
all the needed details are in the invoice, which "contains the itemized list
of goods shipped to a buyer, stating quantities, prices, shipping charges,"
and other details which may contain numerous sheets. Compliance can be
attained by incorporating the invoice, by way of reference, to the bill of
lading provided that the former containing the description of the nature,
value and/or payment of freight charges is as in this case duly admitted as
evidence.
The effect of admission of the genuineness and due execution of a
document means that the party whose signature it bears admits that he
voluntarily signed the document or it was signed by another for him and
with his authority. A review of the bill of ladings and invoice on the second
shipment indicates that the shipper declared the nature and value of the
goods with the corresponding payment of the freight on the bills of lading.
From the foregoing, we rule that the non-limitation of liability applies in
the present case. We likewise accord the same binding effect on the
contents of the invoice on the first shipment.
KINDS; CLEAN BILL OF LADING
21. Iron Bulk Shipping Phils., Co., Ltd. vs. Remmington
Industrial Sales Corp.
The questioned bill of lading is a “clean bill of lading” it does not indicate
any defect in the goods covered by it, as shown by the notation” CLEAN
ON BOARD” and “shipped at the port of loading in apparent good
condition on board the vessel for carriage to port of discharge”
FACTS:
Sometime in the latter part of 1991, plaintiff Remington Industrial Sales
Corporation ordered from defendant Wangs Company, Inc.194 packages of
hot rolled steel sheets, weighing 686.565 metric tons, with a total value of
$219,380.00, then equivalent to P6,469,759.17.
Wangs forwarded the order to its supplier, Burwill (Agencies) Ltd., in
Hongkong. On or about November 26, 1991, the 194 packages were
loaded on board the vessel MV 'Indian Reliance' at the Port of Gdynia,
Poland, for transportation to the Philippines, under Bill of Lading No. 27.
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The vessel's owner/charterer is represented in the Philippines
defendant Iron Bulk Shipping Phils., Inc.
Remington had the cargo insured for P6,469,759.17 during the voyage by
Marine Insurance Policy No. 7741 issued by defendant Pioneer Asia
Insurance Corporation.
On or about January 3, 1992, the MV 'Indian Reliance' arrived in the Port
of Manila, and the 194 packages of hot rolled steel sheets were discharged
from the vessel. The cargo was inspected twice by SGS Far East Ltd. and
found to be wet (with slight trace of salt) and rusty, extending from 50%
to 80% of each plate.
Plaintiff filed formal claims for loss amounting to P544,875.17 with
Pioneer, Iron Bulk, Manila Port Services, Inc. (MPS) and ESE Brokerage
Corporation (ESE). No one honored such claims.
by It further alleges that the Pro forma Bill of Lading covering the subject
cargo cannot be relied upon to indicate the condition of the cargo upon
loading even though it was found to be a clean bill of lading.
ISSUE:
WON a pro forma bill of lading be relied upon to indicate the condition of
the cargo upon loading
RULING:
Yes, There is no merit to petitioner's contention that the Bill of Lading
covering the subject cargo cannot be relied upon to indicate the condition
of the cargo upon loading. It is settled that a bill of lading has a two-fold
character. In Phoenix Assurance Co., Ltd. vs. United States Lines, we
held that:

Thus, plaintiff filed an action for collection, plus attorney's fees, against
Wangs, Pioneer and Iron Bulk . . ."
The evidence on record shows that the direct and immediate cause of the
rusting of the goods imported by the plaintiff was the water found inside
the cargo hold of M/V 'Indian Reliance' wherein those goods were stored
during the voyage, particularly the water found on the surface of the
merchandise and on the floor of the vessel hatch.
[A] bill of lading operates both as a receipt and as a contract. It is a
receipt for the goods shipped and a contract to transport and deliver the
same as therein stipulated. As a receipt, it recites the date and place of
shipment, describes the goods as to quantity, weight, dimensions,
identification marks and condition, quality and value. As a contract, it
names the contracting parties, which include the consignee, fixes the
route, destination, and freight rate or charges, and stipulates the rights
and obligations assumed by the parties.

Tan-Gatue Adjustment Co., Inc., a claims adjustment firm hired by We find no error in the findings of the appellate court that the questioned
defendant Pioneer, submitted a Report dated February 20, 1992 to Pioneer bill of lading is a clean bill of lading, i.e., it does not indicate any defect in
which pertinently reads as follows: the goods covered by it, as shown by the notation, "CLEAN ON BOARD"
and "Shipped at the Port of Loading in apparent good condition on board
All the above 3,971 sheets were heavily rusty at the vessel for carriage to Port of Discharge".
sides/ends/edges/surfaces. Pieces of cotton were rubbed by us on different
rusty steel sheets and submitted to Precision Analytical Services, Inc. to The fact that the issued bill of lading is pro forma is of no moment. If the
determine the cause of wetting. Result thereof as per Laboratory Report bill of lading is not truly reflective of the true condition of the cargo at the
No. 077-92 of this firm showed that: 'The sample was time of loading to the effect that the said cargo was indeed in a damaged
wetted/contaminated by fresh water. state, the carrier could have refused to accept it, or at the least, made a
marginal note in the bill of lading indicating the true condition of the
However, Iron Bulk alleges that the subject cargo was already in a merchandise. But it did not. On the contrary, it accepted the subject cargo
damaged condition at the time it was accepted for transportation, that the and even agreed to the issuance of a clean bill of lading without taking any
sheets were already rusty when they were loaded on the ship.
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exceptions with respect to the recitals contained therein. Since the carrier
failed to annotate in the bill of lading the alleged damaged condition of the
cargo when it was loaded, said carrier and the petitioner, as its
representative, are bound by the description appearing therein and they
are now estopped from denying the contents of the said bill.
22. Lorenzo Shipping Corp. vs. Chubb and Sons, Inc., et al
“A bill of lading, aside from being a contract and receipt, is also a symbol
of the goods covered by it. A bill of lading which has no notation of any
defect or damage in the goods is called a “clean bill of lading.” A clean bill
of lading constitutes prima facie evidence of the receipt by the carrier of
the goods as therein described.”
FACTS:
Mayer Steel Pipe Corp. loaded 581 bundles of ERW black steel pipes on
board the vessel M/V Lorcon IV, owned by Lorenzo Shipping, for shipment
to Davao City. Lorenzo Shipping issued a clean bill of lading designated as
Bill of Lading No. T-3 for the account of the consignee, Sumitomo Corp. of
San Francisco, California, USA, which in turn, insured the goodswith Chubb
and Sons, Inc.
M/V Lorcon IV arrived at the Sasa Wharf in Davao City. Transmarine
Carriers received the subject shipment. It discovered seawater in the
hatch of M/V Lorcon IV, and found the steel pipes submerged in it.
Sumitomo then hired the services of a surveyor to inspect the shipment
prior to and subsequent to discharge. The report showed that the subject
shipment was no longerin good condition, as in fact, the pipes were found
with rust formation on top and/or at the sides.
After the survey, Gearbulk loaded the shipment on board its vessel M/V
San Mateo Victory, for carriage to the US. All bills of lading it issued were
marked “ALL UNITS HEAVILYRUSTED.” M/V San Mateo Victory arrived at
the U.S.A., where it unloaded the subject steel pipes. The steel pipes were
surveyed, and it was discovered that they are heavily rusted.
Due to its condition, Sumitomo rejected the damaged steel pipes and
declared them unfit forthe purpose they were intended. It then filed a
marine insurance claim with respondent Chubband Sons, Inc. which the
latter settled in the amount of US$104,151.00. Chubb and Sons, Inc. filed
a complaint for collection of a sum of money, against Lorenzo Shipping,
Gearbulk, and Transmarine. Lorenzo Shipping denied its liability. The RTC
ruled infavor of Chubb and Sons, Inc. It appealed to the CA, but was
denied.
ISSUE:
Whether petitioner Lorenzo Shipping is negligent in carrying the subject
cargo
RULING:
Yes. Lorenzo Shipping was negligent in its care and custody of the
consignee’s goods.
Lorenzo Shipping issued clean bills of lading covering the subject
shipment. A bill of lading, aside from being a contract and receipt, is also a
symbol of the goods covered by it. A bill of lading which has no notation of
any defect or damage in the goods is called a “clean bill of lading.” A clean
bill of lading constitutes prima facie evidence of the receipt by the carrier
of the goods as therein described.
Mere proof of delivery of goods in good order to a carrier and the
subsequent arrival in damaged condition at the place of destination carries
a prima facie case against the carrier. M/V Lorcon IV of Lorenzo Shipping
received the steel pipes in good order and condition, evidenced by the
clean bills of lading it issued. When the cargo was unloaded from Lorenzo
Shipping’s vessel at the Sasa Wharf in Davao City, the steel pipes were
rusted all over. M/V San Mateo Victory of Gearbulls, Ltd, which received
the cargo, issued Bills of Lading, all of which were marked “ALL UNITS
HEAVILY RUSTED.” R.J. Del Pan Surveyors found that the cargo hold of the
M/V Lorcon IV was flooded with seawater, and the tank top was rusty,
thinning and perforated, thereby exposing the cargo to sea water. There
can be no other conclusion than that the cargo was damaged while on
board the vessel of petitioner Lorenzo Shipping, and that the damage was
due to the latters negligence.
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In the case at bar, not only did the legal presumption of negligence attach
to petitioner Lorenzo Shipping upon the occurrence of damage to the
cargo. More so, the negligence of petitioner was sufficiently established.
Petitioner Lorenzo Shipping failed to keep its vessel in seaworthy
condition. R.J. Del Pan Surveyors found the tank top of M/V Lorcon IV to
be rusty, thinning, and with several holes at different places. Witness
Captain Pablo Fernan, Operations Manager of respondent Transmarine
Carriers, likewise observed the presence of holes at the deck of M/V
Lorcon IV. The unpatched holes allowed seawater, reaching up to three (3)
inches deep, to enter the flooring of the hatch of the vessel where the
steel pipes were stowed, submerging the latter in sea water. The contact
with sea water caused the steel pipes to rust. The silver nitrate test, which
Toplis and Harding employed, further verified this conclusion. Significantly,
petitioner Lorenzo Shipping did not even attempt to present any contrary
evidence. Neither did it offer any proof to establish any of the causes that
would exempt it from liability for such damage.
KINDS; ON BOARD BILL VS. RECEIVED FOR SHIPMENT BILL
23. Magellan Mfg. Marketing Corporation vs. CA
Bill of lading operates both as a receipt and as a contract. It is a receipt for
the goods shipped and a contract to transport and deliver the same as
therein stipulated. As a contract, it names the parties, which includes the
consignee, fixes the route, destination, and freight rates or charges, and
stipulates the rights and obligations assumed by the parties.
FACTS:
Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract
with Choju Co. of Yokohama, Japan to export 136,000 anahaw fans.
MMMC then contracted F.E. Zuellig, a shipping agent, to ship the anahaw
fans through Orient Overseas Container Lines, Inc., (OOCL) specifying that
he needed an on-board bill of lading and that transhipment is not allowed
under the letter of credit. MMMC paid F.E. Zuellig the freight charges and
secured a copy of the bill of lading which was presented to Allied Bank.
The bank then credited the amount of US$23,220.00 covered by the letter
of credit to appellant's account. However, when MMMC’s president James
Cu, went back to the bank later, he was informed that the payment was
refused by the buyer allegedly because there was no on-board bill of
lading, and there was a transhipment of goods. As a result of the refusal of
the buyer to accept, upon MMMC's request, the anahaw fans were shipped
back to Manila by OOCL, for which the latter demanded payment of
P246,043.43. MMMC abandoned the whole cargo and asked OOCL and F.E.
Zuellig for damages.
Petitioner additionally avers that:
When petitioner informed private respondents about what happened, the
latter issued a certificate stating that its bill of lading it issued is an on
board bill of lading and that there was no actual transhipment of the fans.
According to private respondents when the goods are transferred from one
vessel to another which both belong to the same owner which was what
happened to the Anahaw fans, then there is (no) transhipment. Petitioner
sent this certification to Choju Co., Ltd., but the said company still refused
to accept the goods which arrived in Japan on July 19, 1980.
Petitioner filed the complaint in this case praying that private respondents
be ordered to pay whatever petitioner was not able to earn from Choju
Co., Ltd., amounting to P174,150.00 and other damages like attorney's
fees since private respondents are to blame for the refusal of Choju Co.,
Ltd. to accept the Anahaw fans. In answer thereto the private respondents
alleged that the bill of lading clearly shows that there will be a
transhipment and that petitioner was well aware that MV (Pacific)
Despatcher was only up to Hongkong where the subject cargo will be
transferred to another vessel for Japan. Private respondents also filed a
counterclaim praying that petitioner be ordered to pay freight charges
from Japan to Manila and the demurrages in Japan and Manila amounting
to P298,150.93.
The lower court decided the case in favor of private respondents. On
appeal to the respondent court, the finding of the lower (court) that
petitioner agreed to a transhipment of the goods was affirmed but the
finding that petitioner is liable for P298,150.93 was modified.
ISSUE:
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WON the bill of lading that was issued was not an on-board bill of lading
thus violating the term of the letter of credit
RULING:
It is a long standing jurisprudential rule that a bill of lading operates both
as a receipt and as a contract. It is a receipt for the goods shipped and a
contract to transport and deliver the same as therein stipulated. As a
contract, it names the parties, which includes the consignee, fixes the
route, destination, and freight rates or charges, and stipulates the rights
and obligations assumed by the parties.15 Being a contract, it is the law
between the parties who are bound by its terms and conditions provided
that these are not contrary to law, morals, good customs, public order and
public policy.16 A bill of lading usually becomes effective upon its delivery
to and acceptance by the shipper. It is presumed that the stipulations of
the bill were, in the absence of fraud, concealment or improper conduct,
known to the shipper, and he is generally bound by his acceptance
whether he reads the bill or not.17
The holding in most jurisdictions has been that a shipper who receives a
bill of lading without objection after an opportunity to inspect it, and
permits the carrier to act on it by proceeding with the shipment is
presumed to have accepted it as correctly stating the contract and to have
assented to its terms. In other words, the acceptance of the bill without
dissent raises the presumption that all the terms therein were brought to
the knowledge of the shipper and agreed to by him and, in the absence of
fraud or mistake, he is estopped from thereafter denying that he assented
to such terms. This rule applies with particular force where a shipper
accepts a bill of lading with full knowledge of its contents and acceptance
under such circumstances makes it a binding contract.18
In the light of the series of events that transpired in the case at bar, there
can be no logical conclusion other than that the petitioner had full
knowledge of, and actually consented to, the terms and conditions of the
bill of lading thereby making the same conclusive as to it, and it cannot
now be heard to deny having assented thereto.
Another ground for the refusal of acceptance of the cargo of anahaw fans
by Choju Co., Ltd. was that the bill of lading that was issued was not an on
board bill of lading, in clear violation of the terms of the letter of credit
issued in favor of petitioner.
Petitioner knew that its buyer, Choju Co., Ltd., particularly required that
there be an on board bill of lading, obviously due to the guaranty afforded
by such a bill of lading over any other kind of bill of lading. Herein
petitioner cannot feign ignorance of the distinction between an "on board"
and a "received for shipment" bill of lading, as manifested by James Cu's
testimony. It is only to be expected that those long engaged in the export
industry should be familiar with business usages and customs.
An on board bill of lading is one in which it is stated that the goods have
been received on board the vessel which is to carry the goods, whereas a
received for shipment bill of lading is one in which it is stated that the
goods have been received for shipment with or without specifying the
vessel by which the goods are to be shipped. Received for shipment bills of
lading are issued whenever conditions are not normal and there is
insufficiency of shipping space.29An on board bill of lading is issued when
the goods have been actually placed aboard the ship with every
reasonable expectation that the shipment is as good as on its way.30 It is,
therefore, understandable that a party to a maritime contract would
require an on board bill of lading because of its apparent guaranty of
certainty of shipping as well as the seaworthiness of the vessel which is to
carry the goods.
It cannot plausibly be said that the aforestated certification of F.E. Zuellig,
Inc. can qualify the bill of lading, as originally issued, into an on board bill
of lading as required by the terms of the letter of credit issued in favor of
petitioner. For one, the certification was issued only on July 19, 1980, way
beyond the expiry date of June 30, 1980 specified in the letter of credit for
the presentation of an on board bill of lading.
The fact remains, though, that on the crucial date of June 30, 1980 no on
board bill of lading was presented by petitioner in compliance with the
terms of the letter of credit and this default consequently negates its
entitlement to the proceeds thereof. Said certification, if allowed to
operate retroactively, would render illusory the guaranty afforded by an on
board bill of lading, that is, reasonable certainty of shipping the loaded
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cargo aboard the vessel specified, not to mention that it would indubitably
be stretching the concept of substantial compliance too far.
In sum, petitioner had full knowledge that the bill issued to it contained
terms and conditions clearly violative of the requirements of the letter of
credit. Nonetheless, perhaps in its eagerness to conclude the transaction
with its Japanese buyer and in a race to beat the expiry date of the letter
of credit, petitioner took the risk of accepting the bill of lading even if it did
not conform with the indicated specifications, possibly entertaining a
glimmer of hope and imbued with a touch of daring that such violations
may be overlooked, if not disregarded, so long as the cargo is delivered on
time. Unfortunately, the risk did not pull through as hoped for. Any
violation of the terms and conditions of the letter of credit as would defeat
its right to collect the proceeds thereof was, therefore, entirely of the
petitioner's making for which it must bear the consequences. As finally
averred by private respondents, and with which we agree, "... the
questions of whether or not there was a violation of the terms and
conditions of the letter of credit, or whether or not such violation was the
cause or motive for the rejection by petitioner's Japanese buyer should not
affect private respondents therein since they were not privies to the terms
and conditions of petitioner's letter of credit and cannot therefore be held
liable for any violation thereof by any of the parties thereto."34
WHEREFORE, the judgment of respondent Court of Appeals is AFFIRMED
with the MODIFICATION that petitioner is likewise absolved of any liability
and the award of P52,102.45 with legal interest granted by respondent
court on private respondents' counterclaim is SET ASIDE, said
counterclaim being hereby DISMISSED, without pronouncement as to
costs.
PAROL EVIDENCE RULE
24. Saludo vs. CA
A bill of lading, when properly executed and delivered to a shipper, is
evidence that the carrier has received the goods described therein for
shipment. Except as modified by statute, it is a general rule as to the
parties to a contract of carriage of goods in connection with which a bill of
lading is issued reciting that goods have been received for transportation,
that the recital being in essence a receipt alone, is not conclusive, but may
be explained, varied or contradicted by parol or other evidence.
FACTS:
Crispina Galdo Saludo, mother of herein plaintiffs, died in Chicago, Illinois.
On October 23, 1976, they engaged the services of Pomierski and Son
Funeral Home of Chicago to make the necessary preparations and
arrangements for the shipment of their mother’s remains from Chicago to
the Philippines. The funeral home had the remains embalmed and secured
a permit for the disposition of dead human body on October 25, 1976 at
the Philippine Vice Consul in Chicago, Illinois. Bienvenido M. Llaneta, at
3:00 p.m. on October 26, 1976 at the Pomierski & Son Funeral Home,
sealed the shipping case containing a hermetically sealed casket that is
airtight and waterproof wherein was contained the remains of Crispina
Saludo Galdo. On the same date, October 26, 1976, Pomierski brought the
remains to C.M.A.S. (Continental Mortuary Air Services) at the airport
(Chicago) which made the necessary arrangements such as flights,
transfers, etc.; C.M.A.S. is a national service used by undertakers to
throughout the nation (U.S.A.), they furnish the air pouch which the
casket is enclosed in, and they see that the remains are taken to the
proper air freight terminal. C.M.A.S. booked the shipment with PAL thru
the carrier's agent Air Care International, with Pomierski F.H. as the
shipper and Mario (Maria) Saludo as the consignee. PAL Airway Bill No.
079-01180454 Ordinary was issued wherein the requested routing was
from Chicago to San Francisco on board TWA Flight 131 of 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
In the meantime, plaintiffs Maria Salvacion Saludo and Saturnino Saludo,
thru a travel agent, were booked with United Airlines from Chicago to
California, and with PAL from California to Manila. She then went to the
funeral director of Pomierski Funeral Home who had her mother's remains
and she told the director that they were booked with United Airlines. But
the director told her that the remains were booked with TWA flight to
California. This upset her, and she and her brother had to change
reservations from UA to the TWA flight after she confirmed by phone that
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her mother's remains should be on that TWA flight. They went to the
airport and watched from the look-out area. She saw no body being
brought. So, she went to the TWA counter again, and she was told there
was no body on that flight. Upon arrival at San Francisco at about 5:00
p.m., she went to the TWA counter there to inquire about her mother's
remains. She was told they did not know anything about it.
It was found out that her mother’s remains were on a plane to Mexico
City, after being informed by Pomierski, when the latter called C.M.A.S.
There were actually two bodies at the terminal and somehow they were
switched. C.M.A.S assured them that they were sending the remains back
to California via Texas.
It-turned out that TWA had carried a shipment under PAL Airway Bill No.
079-ORD-01180454 on TWA Flight 603 of October 27, 1976, a flight
earlier than TWA Flight 131 of the same date. TWA delivered or
transferred the said shipment said to contain human remains to PAL at
1400H or 2:00 p.m. of the same date, October 27, 1976. "Due to a
switch(ing) in Chicago", this shipment was withdrawn from PAL by CMAS
at 1805H (or 6:05 p.m.) of the same date, October 27.
On October 28, 1976, the shipment or remains of Crispina Saludo arrived
(in) San Francisco from Mexico.This shipment was transferred to or
received by PAL at 1945H or 7:45 p.m.This casket bearing the remains of
Crispina Saludo, which was mistakenly sent to Mexico and was opened
(there), was resealed by Crispin F. Patagas for shipment to the Philippines.
The shipment was immediately loaded on PAL flight for Manila that same
evening and arrived (in) Manila on October 30, 1976, a day after its
expected arrival on October 29, 1976.
Plaintiffs informed both Trans World Airlines (TWA) and Philippine Airlines
(PAL) via separate letters, about the misshipment and eventual delay.
However, both private respondents denied liability. Thus, a damage suit
was filed by petitioners before the then Court of First Instance, Branch III,
Leyte, praying for the award of actual damages of P50,000.00, moral
damages of P1,000,000.00, exemplary damages, attorney's fees and costs
of suit.
The CFI (now RTC) ruled dismissed the complaint for lack of evidence. On
appeal, the CA affirmed in toto the CFI’s decision and subsequently denied
plaintiff’s motion for reconsideration for lack of merit.
ISSUE:
1) WON the issuance of a Bill of Lading is a conclusive proof of
delivery of the goods to be shipped, to the carrier.
2) WON TWA and PAL are liable failing to exercise extraordinary
diligence as manifested by the switching of the bodies for shipment
and for the eventual delay caused by it.
3) WON TWA is liable for failing to inspect and verify the contents of
the casket.
4) WON C.M.A.S (the one responsible for the switching of bodies)
acted as an agent of private respondents airline companies.
RULING:
1. NO. It is merely a rebuttable presumption.
A bill of lading is a written acknowledgment of the receipt of the goods and
an agreement to transport and deliver them at a specified place to a
person named or on his order. Such instrument may be called a shipping
receipt, forwarder's receipt and receipt for transportation. The designation,
however, is immaterial. It has been hold that freight tickets for bus
companies as well as receipts for cargo transported by all forms of
transportation, whether by sea or land, fall within the definition. Under the
Tariff and Customs Code, a bill of lading includes airway bills of lading. 21
The two-fold character of a bill of lading is all too familiar; it is a receipt as
to the quantity and description of the goods shipped and a contract to
transport the goods to the consignee or other person therein designated,
on the terms specified in such instrument.
Ordinarily, a receipt is not essential to a complete delivery of goods to the
carrier for transportation but, when issued, is competent and prima facie,
but not conclusive, evidence of delivery to the carrier. A bill of lading,
when properly executed and delivered to a shipper, is evidence that the
carrier has received the goods described therein for shipment. Except as
modified by statute, it is a general rule as to the parties to a contract of
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carriage of goods in connection with which a bill of lading is issued reciting
that goods have been received for transportation, that the recital being in
essence a receipt alone, is not conclusive, but may be explained, varied or
contradicted by parol or other evidence.
For this reason, we must perforce allow explanation by private
respondents why, despite the issuance of the airway bill and the date
thereof, they deny having received the remains of Crispina Saludo on
October 26, 1976 as alleged by petitioners.
2. NO. TWA and PAL are not liable.
On October 26, 1976 the cargo containing the casketed remains of
Crispina Saludo was booked for PAL Flight Number PR-107 leaving San
Francisco for Manila on October 27, 1976, PAL Airway Bill No. 079-
01180454 was issued, not as evidence of receipt of delivery of the cargo
on October 26, 1976, but merely as a confirmation of the booking thus
made for the San Francisco-Manila flight scheduled on October 27, 1976.
Actually, it was not until October 28, 1976 that PAL received physical
delivery of the body at San Francisco, as duly evidenced by the Interline
Freight Transfer Manifest of the American Airline Freight System and
signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
Explicit is the rule under Article 1736 of the Civil Code that the
extraordinary responsibility of the common carrier begins from the time
the goods are delivered to the carrier. This responsibility remains in full
force and effect even when they are temporarily unloaded or stored in
transit, unless the shipper or owner exercises the right of stoppage in
transitu, and terminates only after the lapse of a reasonable time for the
acceptance, of the goods by the consignee or such other person entitled to
receive them. And, there is delivery to the carrier when the goods are
ready for and have been placed in the exclusive possession, custody and
control of the carrier for the purpose of their immediate transportation and
the carrier has accepted them. Where such a delivery has thus been
accepted by the carrier, the liability of the common carrier commences eo
instanti.
Hence, while we agree with petitioners that the extraordinary diligence
statutorily required to be observed by the carrier instantaneously
commences upon delivery of the goods thereto, for such duty to
commence there must in fact have been delivery of the cargo subject of
the contract of carriage. Only when such fact of delivery has been
unequivocally established can the liability for loss, destruction or
deterioration of goods in the custody of the carrier, absent the excepting
causes under Artichle 1734, attach and the presumption of fault of the
carrier under Article 1735 be invoked.
As already demonstrated, the facts in the case at bar belie the averment
that there was delivery of the cargo to the carrier on October 26, 1976.
Rather, as earlier explained, the body intended to be shipped as agreed
upon was really placed in the possession and control of PAL on October 28,
1976 and it was from that date that private respondents became
responsible for the agreed cargo under their undertakings in PAL Airway
Bill No. 079-01180454. Consequently, for the switching of caskets prior
thereto which was not caused by them, and subsequent events caused
thereby, private respondents cannot be held liable.
3. NO. TWA was not obliged to inspect and verify the casket as it
had no reason whatsoever to doubt the representations of the
shipper.
The SC uphold the favorable consideration by the Court of Appeals of the
following findings of the trial court:
It was not (to) TWA, but to C.M.A.S. that the Pomierski & Son Funeral
Home delivered the casket containing the remains of Crispina Saludo. TWA
would have no knowledge therefore that the remains of Crispina Saludo
were not the ones inside the casket that was being presented to it for
shipment. TWA would have to rely on the presentations of C.M.A.S. The
casket was hermetically sealed and also sealed by the Philippine Vice
Consul in Chicago. TWA or any airline for that matter would not have
opened such a sealed casket just for the purpose of ascertaining whose
body was inside and to make sure that the remains inside were those of
the particular person indicated to be by C.M.A.S. TWA had to accept
whatever information was being furnished by the shipper or by the one
presenting the casket for shipment. And so as a matter of fact, TWA
carried to San Francisco and transferred to defendant PAL a shipment
covered by or under PAL Airway Bill No. 079-ORD-01180454, the airway
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bill for the shipment of the casketed remains of Crispina Saludo. Only, it
turned out later, while the casket was already with PAL, that what was
inside the casket was not the body of Crispina Saludo so much so that it
had to be withdrawn by C.M.A.S. from PAL. The body of Crispina Saludo
had been shipped to Mexico. The casket containing the remains of Crispina
Saludo was transshipped from Mexico and arrived in San Francisco the
following day on board American Airlines. It was immediately loaded by
PAL on its flight for Manila.
The foregoing points at C.M.A.S., not defendant TWA much less defendant
PAL, as the ONE responsible for the switching or mix-up of the two bodies
at the Chicago Airport terminal, and started a chain reaction of the
misshipment of the body of Crispina Saludo and a one-day delay in the
delivery thereof to its destination.
Verily, no amount of inspection by respondent airline companies could
have guarded against the switching that had already taken place. Or,
granting that they could have opened the casket to inspect its contents,
private respondents had no means of ascertaining whether the body
therein contained was indeed that of Crispina Saludo except, possibly, if
the body was that of a male person and such fact was visually apparent
upon opening the casket. However, to repeat, private respondents had no
authority to unseal and open the same nor did they have any reason or
justification to resort thereto.
It is the right of the carrier to require good faith on the part of those
persons who deliver goods to be carried, or enter into contracts with it,
and inasmuch as the freight may depend on the value of the article to be
carried, the carrier ordinarily has the right to inquire as to its value.
Ordinarily, too, it is the duty of the carrier to make inquiry as to the
general nature of the articles shipped and of their value before it consents
to carry them; and its failure to do so cannot defeat the shipper's right to
recovery of the full value of the package if lost, in the absence of showing
of fraud or deceit on the part of the shipper. In the absence of more
definite information, the carrier has a the right to accept shipper's marks
as to the contents of the package offered for transportation and is not
bound to inquire particularly about them in order to take advantage of a
false classification and where a shipper expressly represents the contents
of a package to be of a designated character, it is not the duty of the
carrier to ask for a repetition of the statement nor disbelieve it and open
the box and see for itself. However, where a common carrier has
reasonable ground to suspect that the offered goods are of a dangerous or
illegal character, the carrier has the right to know the character of such
goods and to insist on an inspection, if reasonable and practical under the
circumstances, as a condition of receiving and transporting such goods.
It can safely be said then that a common carrier is entitled to fair
representation of the nature and value of the goods to be carried, with the
concomitant right to rely thereon, and further noting at this juncture that a
carrier has no obligation to inquire into the correctness or sufficiency of
such information. The consequent duty to conduct an inspection thereof
arises in the event that there should be reason to doubt the veracity of
such representations. Therefore, to be subjected to unusual search, other
than the routinary inspection procedure customarily undertaken, there
must exist proof that would justify cause for apprehension that the
baggage is dangerous as to warrant exhaustive inspection, or even refusal
to accept carriage of the same; and it is the failure of the carrier to act
accordingly in the face of such proof that constitutes the basis of the
common carrier's liability.
In the case at bar, private respondents had no reason whatsoever to doubt
the truth of the shipper's representations. The airway bill expressly
providing that "carrier certifies goods received below were received for
carriage," and that the cargo contained "casketed human remains of
Crispina Saludo," was issued on the basis of such representations. The
reliance thereon by private respondents was reasonable and, for so doing,
they cannot be said to have acted negligently. Likewise, no evidence was
adduced to suggest even an iota of suspicion that the cargo presented for
transportation was anything other than what it was declared to be, as
would require more than routine inspection or call for the carrier to insist
that the same be opened for scrutiny of its contents per declaration.
4. NO.
While we agree that the actual participation of CMAS has been sufficiently
and correctly established, to hold that it acted as agent for private
respondents would be both an inaccurate appraisal and an unwarranted
categorization of the legal position it held in the entire transaction.
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It bears repeating that CMAS was hired to handle all the necessary
shipping arrangements for the transportation of the human remains of
Crispina Saludo to Manila. Hence, it was to CMAS that the Pomierski & Son
Funeral Home, as shipper, brought the remains of petitioners' mother for
shipment, with Maria Saludo as consignee. Thereafter, CMAS booked the
shipment with PAL through the carrier's agent, Air Care International. With
its aforestated functions, CMAS may accordingly be classified as a
forwarder which, by accepted commercial practice, is regarded as an agent
of the shipper and not of the carrier. As such, it merely contracts for the
transportation of goods by carriers, and has no interest in the freight but
receives compensation from the shipper as his agent.
VALIDITY OF STIPULATIONS
25. Ysmael vs. Barretto
Reasonable of Limitation. — The validity of stipulations limiting the
carrier’s liability is to be determined by their reasonableness and their
conformity to the sound public policy, in accordance with which the
obligations of the carrier to the public are settled.
FACTS:
In this action Ysmael & Co., Inc., a domestic corporation, seeks to recover
Barretto & Co. the value of four cases of merchandise which it delivered to
the steamship Andres at Manila to be shipped to Surigao, but which were
never delivered to Salomon Sharuff, the consignee, or returned to the
Ysmael & Co., Inc.
Barretto & Co., Ltd., et. al alleged that the four cases of merchandise in
question were never delivered to them, and that under the provisions of
paragraph 7 of the printed conditions appearing on the back of the bill of
lading, Ysmael & Co., Inc.'s right of action is barred for the reason that it
was not brought within sixty days from the time the cause of action
accrued.
They further alleged that under and by virtue of provision 12 of the bill of
lading, Barretto & Co. Ltd., et. al are not liable in excess of three hundred
pesos (P300) for any package of silk unless the value and contents of such
packages are correctly declared in the bill of lading at the time of
shipment, etc.
The goods in question were shipped from Manila on October 25, 1922, to
be delivered to Salomon Sharuff in Surigao, Ysmael & Co.'s original
complaint was filed on April 17, 1923, or a little less than six months after
the shipment was made.
It appears that the Ysmael & Co. made its claim of loss within seven days
after receipt of information that 160 cases only were delivered. Its second
claim was made on December 29, 1922, in which it said that, if the claim
was not paid before January 3, 1923, it would be placed in the hands of
attorneys for collection. On January 3, 1923, Gabino Barretto & Company
advised the Ysmael & Co., that it would not pay the claim, and on April
seventeenth Ysmael & Co. filed its complaint.
Lower court: rendered judgment in favor of Ysmael & Co., Inc. for the full
amount of its claim.
ISSUE:
1) Did Ysmael & Co., Inc. bring the action within a reasonable time?
2) Is the stipulation under par. 12 a valid stipulation?
RULING:
1. YES. All things considered, we are clearly of the opinion that the action
was brought with a "reasonable time" as those words are specified and
defined in the authorities cited. It is true that both the plaintiff and the
defendants are residents of the City of Manila, but it is also true that
Surigao where the goods in question were to be delivered is one of the
most distant places from Manila in the Philippine Islands. In the very
nature of things, Ysmael & Co., Inc. would not want to commence its
action until such time as it had made a full and careful investigation of all
of the material facts and even the law of the case, so as to determine
whether or not defendants were liable for its loss.
In the case of Aguinaldo vs. Daza (G. R. No. 25961), in which the printed
conditions on the bill of lading were identical with those in the instant
case, the action was not commenced for more than year after the delivery
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of the goods by the plaintiff and the receipt of the bill of lading, and it was
there held that:
…the contractual limitation stated in this bill of lading with respect to the
time for presentation of the written claim was insufficient. The same
considerations are necessarily decisive with respect to the time required
for the institution of judicial action. It results that the stipulations relied
upon by the defendant-appellee constitute no obstacle to the maintenance
of the present action.
2. NO. Such a limitation of value is unconscionable and void as against
public policy. The ship in question was a common carrier and, as such,
must have been operated as a public utility. It is a matter of common
knowledge that large quantities of silk are imported in the Philippine
Islands, and that after being imported, they are sold by the merchants in
Manila and other large seaports, and then shipped to different points and
places in the Islands. Clause 12 above quoted places a limit of P300 "for
any single package of silk." The evidence shows that 164 "cases" were
shipped, and that the value of each case was very near P2,500. In this
situation, the limit of defendants' liability for each case of silk "for loss or
damage from any cause or for any reason" would put it in the power of the
defendants to have taken the whole cargo of 164 cases of silk at a
valuation of P300 for each case, or less than one-eight of its actual value.
If that rule of law should be sustained, no silk would ever be shipped from
one island to another in the Philippines.
26. Sweet Lines, Inc. vs. Teves
The validity or enforceability of contracts of adhesion are to be determined
by the peculiar circumstances obtaining in each case and the nature and
conditions or terms sought to be enforced. For, while generally, stipulation
in a contract come about after deliberate drafting by the parties thereto, in
a contract of adhesion, however, all its provisions have been drafted only
by one party, usually a corporation, and the only participation of the other
party is the signing of his signature or his adhesion thereto.
FACTS:
Private respondents Atty. Leovigildo Tandog and Rogelio Tiro bought
tickets for Voyage 90 on December 31, 1971 at the branch office of
petitioner Sweet Line, Inc., a shipping company transporting inter-island
passengers and cargoes, at Cagayan de Oro City. Respondents were to
board the vessel M/S Sweet Hope bound for Tagbilaran City via Cebu.
However, the vessel was not proceeding to Bohol since many passengers
were bound for Surigao. Per advice, respondents asked for proper
relocation to M/S Sweet Town but the vessel was filled to capacity and
thus, they were forced to agree “to hide at the cargo section to avoid
inspection of the officers of the Philippine Coastguard.”
Private respondents sued petitioner for damages and for breach of contract
of carriage before the CFI of Misamis Oriental. Private respondents alleged
that they were, during the trip," "exposed to the scorching heat of the sun
and the dust coming from the ship's cargo of corn grits," and that the
tickets they bought at Cagayan de Oro City for Tagbilaran were not
honored and they were constrained to pay for other tickets.
Petitioner moved to dismiss the complaint on the ground of improper
venue. This motion was premised on the condition printed at the back of
the tickets, i.e., Condition No. 14, which reads:
"14. It is hereby agreed and understood that any and all actions arising
out of the conditions and provisions of this ticket, irrespective of where it
is issued, shall be filed in the competent courts in the City of Cebu."
The motion was denied by the trial court. Petitioner moved to reconsider
the order of denial, but to no avail.
ISSUE:
Whether or not Condition 14 printed at the back of the petitioner’s passage
tickets purchased by private respondents, which limits the venue of
actions arising from the contract of carriage to the CFI of Cebu, valid and
enforceable
RULING:
NO. The SC held that Condition No. 14 printed at the back of the passage
tickets should be held as void and unenforceable for the following reasons
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— first, under circumstances obtaining in the inter-island shipping
industry, it is not just and fair to bind passengers to the terms of the
conditions printed at the back of the passage tickets, on which Condition
No. 14 is printed in fine letters, and second, Condition No. 14 subverts the
public policy on transfer of venue of proceedings of this nature, since the
same will prejudice rights and interests of innumerable passengers in
different parts of the country who, under Condition No. 14, will have to file
suits against petitioner only in the City of Cebu.
It is hardly just and proper to expect the passengers to examine their
tickets received from crowded/congested counters, more often than not
during rush hours, for conditions that may be printed thereon, much less
charge them with having consented to the conditioner so printed,
especially if there are a number of such conditions in fine print, as in this
case. Again, it should be noted that Condition No. 14 was prepared solely
at the instance of the petitioner; respondents had no say in its
preparation. Neither did the latter have the opportunity to take the same
into account prior to the purchase of their tickets.
Condition No. 14 is subversive of public policy on transfers of venue of
actions. For, although venue may be changed or transferred from one
province to another by agreement of the parties in writing pursuant to
Rule 4, Section 3, of the Rules of Court, such an agreement will not be
held valid where it practically negates the action of the claimants, such as
the private respondents herein. The philosophy underlying the provisions
on transfer of venue of actions is the convenience of the plaintiffs as well
as his witnesses and to promote the ends of justice. Considering the
expense and trouble a passenger residing outside of Cebu City would incur
to prosecute a claim in the City of Cebu, he would most probably decide
not to file the action at all. The condition will thus defeat, instead of
enhance, the ends of justice. Upon the other hand, petitioner has branches
or offices in the respective ports of call of its vessels and can afford to
litigate in any of these places. Hence, the filing of the suit in the CFI of
Misamis Oriental, as was done in the instant case, will not cause
inconvience to, much less prejudice, petitioner.
27. Provident Insurance Corp. vs. CA
The bill of lading defines the rights and liabilities of the parties in reference
to the contract of carriage. Stipulations therein are valid and binding in the
absence of any showing that the same are contrary to law, morals,
customs, public order and public policy. Where the terms of the contract
are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of the stipulations shall control.
FACTS:
The vessel MV "Eduardo II" took and received on board at Sangi, Toledo
City a shipment of 32,000 plastic woven bags of various fertilizer in good
order and condition for transportation to Cagayan de Oro City. The subject
shipment was consigned to Atlas Fertilizer Corporation, and covered by Bill
of Lading No. 01 and Marine Insurance Policy No. CMI-211/89-CB.
Upon its arrival at General Santos City, the vessel MV "Eduardo II" was
instructed by the consignee's representative to proceed to Davao City and
deliver the shipment to its Davao Branch in Tabigao.
The MV "Eduardo II" arrived in Davao City where the subject shipment was
unloaded. In the process of unloading the shipment, three bags of fertilizer
fell overboard and 281 bags were considered to be unrecovered spillages.
Because of the mishandling of the cargo, it was determined that the
consignee incurred actual damages in the amount of P68,196.16.
Petitioner Provident Insurance Corporation indemnified the consignee Atlas
Fertilizer Corporation for its damages. Thereafter, petitioner, as subrogee
of the consignee, filed a complaint against respondent carrier seeking
reimbursement for the value of the losses/damages to the cargo.
Respondent carrier moved to dismiss the complaint on the ground that the
claim or demand by petitioner has been waived, abandoned or otherwise
extinguished for failure of the consignee to comply with the required claim
for damages set forth in the first sentence of Stipulation No. 7 of the bill of
lading:
7. All claims for damages to the goods must be made to the carrier
at the time of delivery to the consignee or his agent if the package
or containers show exterior sign of damage, otherwise to be made in
writing to the carrier within twenty-four hours from the time of
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delivery . Notice of loss due to delay must be given in writing to the
carrier within 30 days from the time the goods were ready for
delivery, or in case of non-delivery or misdelivery of shipment the
written notice must be given within 30 days after the arrival at the
port of discharge of the vessels on which the goods were received in
case of the failure of the vessel on which the goods were shipped to
arrived at the port of discharge, misdelivery must be presented in
writing to the carrier within two months after the arrival of the
vessel of the port of discharge or in case of the failure of the vessel
in which the goods were shipped to arrive at the port of discharge
written claims shall be made within 30 days of the time the vessel
should have arrived. The giving of notice and the filing of claims as
above provided shall be conditions precedent to the securing of the
right of actions against the carrier for losses due to delay, non-
delivery, or misdelivery. In the case of damage to goods, the filing
of the suit based upon claims arising from damage, delay, non-
delivery or misdelivery shall be instituted within one year from the
date of the accrual of the right of action.
Failure to institute judicial proceedings as herein provided shall
constitute a waiver of the claim or right of action, and no agent nor
employee of the carrier shall have authority to waive any of the
provisions or requirements of this bill of lading. Any action by the
ship owner or its agents or attorneys in considering or dealing with
claims where the provisions or requirements of this bill of lading
have not been complied with shall not be considered a waiver of
such requirements and they shall not be considered as waived
except by an express waiver.
RTC dismissed the complaint. Provident Insurance appealed to CA. CA
rendered the assailed decision which affirmed the RTC’s order.
Provident Insurance Corp argues:
 It is unreasonable for the consignee Atlas Fertilizer Corporation to
be required to abide by the provisions of Stipulation No. 7 of the
bill of lading.
 Since the place of delivery was remote and inaccessible, the
consignee cannot be expected to have been able to immediately
inform its main office and make the necessary claim for damages
for the losses and unrecovered spillages in the subject cargo.
 Bill of lading are printed in small letters that no one would bother
to read them, as they are difficult to read. Petitioner also makes
much of the fact that it had nothing to do with the preparation of
the bill of lading.
 The respondent carrier’s knowledge of the loss and spillages was
substantial compliance with the notice of claim required under
Stipulation No.7 of the bill of lading.
Both parties admit that the losses and damages were caused by the
mishandling of the cargo by respondent carrier. There is also no dispute
that the consignee failed to strictly comply with Stipulation No. 7 of the Bill
of Lading in not making claims for damages to the goods within the
twenty-four hour period from the time of delivery, and that there was no
exterior sign of damage of the goods.
ISSUE:
Whether the failure to make the prompt notice of claim as required is fatal
to the right of petitioner to claim indemnification for damages
RULING:
The petition is bereft of merit.
The bill of lading defines the rights and liabilities of the parties in reference
to the contract of carriage. Stipulations therein are valid and binding in the
absence of any showing that the same are contrary to law, morals,
customs, public order and public policy. Where the terms of the contract
are clear and leave no doubt upon the intention of the contracting parties,
the literal meaning of the stipulations shall control.
The twenty-four hour requirement under the said stipulation is, by
agreement of the contracting parties, a sine qua non for the accrual of the
right of action to recover damages against the carrier.
In Consuji v Manila Port Service it was held:
Carriers and depositaries sometimes require presentation of claims within
a short time after delivery as a condition precedent to their liability for
losses. Such requirement is not an empty formalism. It has a definite
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purpose, i.e., to afford the carrier or depositary a reasonable opportunity
and facilities to check the validity of the claims while the facts are still
fresh in the minds of the persons who took part in the transaction and the
document are still available.
Considering that a prompt demand was necessary to foreclose the
possibility of fraud or mistake in ascertaining the validity of claims, there
was a need for the consignee or its agent to observe the conditions
provided for in Stipulation No. 7. Hence, petitioner's insistence that
respondent carrier had knowledge of the damage because one of
respondent carrier's officers supervised the unloading operations and
signed a discharging report, cannot be construed as sufficient compliance
with the aforementioned proviso. The Discharge Report is not the notice
referred to in Stipulation No. 7, hence, its accomplishment cannot be
considered substantial compliance of the requirement embodied therein.
A bill of lading is in the nature of a contract of adhesion, defined as one
where one of the parties imposes a ready-made form of contract which the
other party may accept or reject, but which the latter cannot modify. One
party prepares the stipulation in the contract, while the other party merely
affixes his signature or his "adhesion" thereto, giving no room for
negotiation and depriving the latter of the opportunity to bargain on equal
footing. Nevertheless, these types of contracts have been declared as
binding as ordinary contracts, the reason being that the party who adheres
to the contract is free to reject it entirely.
After it received the bill of lading without any objection, consignee Atlas
Fertilizer Corporation was presumed to have knowledge of its contents and
to have assented to the terms and conditions set forth therein.
The pronouncement by this court in Magellan Manufacturing Marketing
Corp v CA may be cited by analogy:
The acceptance of the bill without dissent raises the presumption that all
the terms therein were brought to the knowledge of the shipper and
agreed to by him and, in the absence of fraud or mistake, he is estopped
from thereafter denying that he assented to such terms.
We are likewise not inclined to lend credence to petitioner's allegation that
the lack of communications facilities in the place of delivery prevented the
consignee from making a prompt claim for recovery of damages as
prescribed by Stipulation No. 7. It is indeed hard to believe that Atlas
Fertilizer Corporation, being an established corporation and a regular
shipper, would be so inept as not to have the necessary facilities to at
least monitor, in the form of communications equipment, the condition of
its large shipment involving 32,000 bags of fertilizer. As pointed out by the
appellate court, at this day and age of advanced telecommunications and
modern transportation, even in the year 1989, the time limitation provided
for in Stipulation No. 7 are just and reasonable
AS RECEIPT
28. Asian Terminals, Inc. vs. Simon Enterprises
It is presumed that the Bill of Lading serves as prima facie evidence of the
weight of the cargo to be shipped.
However such presumption is rebutted, when a clause on a bill of lading,
stating that "Shipper’s weight, quantity and quality unknown" exists, since
it means that it was transported with the carrier having been oblivious of
the weight, quantity, and quality of the cargo.
FACTS:
On October 25, 1995, Contiquincybunge Export Company loaded
6,843.700 metric tons of U.S. Soybean Meal in Bulk on board the vessel
MN "Sea Dream" at the Port of Darrow, Louisiana, U.S.A., for delivery to
the Port of Manila to respondent Simon Enterprises, Inc., as consignee.
When the vessel arrived at the South Harbor in Manila, the shipment was
discharged to the receiving barges of petitioner Asian Terminals, Inc.
(ATI), the arrastre operator. Respondent later received the shipment but
claimed having received only 6,825.144 metric tons of U.S. Soybean Meal,
or short by 18.556 metric tons, which is estimated to be worth
US$7,100.16 or ₱186,743.20.
On November 25, 1995, Contiquincybunge Export Company made another
shipment to respondent and allegedly loaded on board the vessel M/V
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"Tern" at the Port of Darrow, Louisiana, U.S.A. 3,300.000 metric tons of
U.S. Soybean Meal in Bulk for delivery to respondent at the Port of Manila.
The carrier issued its clean Berth Term Grain Bill of Lading.
On January 25, 1996, the carrier docked at the inner Anchorage, South
Harbor, Manila. The subject shipment was discharged to the receiving
barges of petitioner ATI and received by respondent which, however,
reported receiving only 3,100.137 metric tons instead of the manifested
3,300.000 metric tons of shipment. Respondent filed against petitioner ATI
and the carrier a claim for the shortage of 199.863 metric tons, estimated
to be worth US$79,848.86 or ₱2,100,025.00, but its claim was denied.
On December 3, 1996, respondent filed with the RTC of Manila an action
for damages against the unknown owner of the vessels M/V "Sea Dream"
and M/V "Tern," its local agent Inter-Asia Marine Transport, Inc., and
petitioner ATI alleging that it suffered the losses through the fault or
negligence of the said defendants. Respondent sought to claim damages
plus attorney’s fees and costs of suit. Its claim against the unknown owner
of the vessel M/V "Sea Dream" was later settled in a Release and Quitclaim
dated June 9, 1998, and only the claims against the unknown owner of the
M/V "Tern," Inter-Asia Marine Transport, Inc., and petitioner ATI
remained.
The unknown owner of the vessel M/V "Tern" and its local agent
Inter-Asia Marine Transport, Inc., alleged:
(1) that because the bill of lading states that the goods are carried on
a "shipper’s weight, quantity and quality unknown" terms and on
"all terms, conditions and exceptions as per charter party dated
October 15, 1995," the vessel had no way of knowing the actual
weight, quantity, and quality of the bulk cargo when loaded at the
port of origin and the vessel had to rely on the shipper for such
information;
(2) that damage/loss occurred while the cargo was in the possession,
custody or control of plaintiff or its representative, or due to
plaintiff’s own negligence and careless actuations in the handling
of the cargo;
(3) that the loss is less than 0.75% of the entire cargo and is well
within the accepted parameters when loading this type of bulk
cargo;
(4) that defendants exercised the required diligence under the law in
the performance of their duties;
(5) that the subject shipment was received in bulk and thus defendant
carrier has no knowledge of the condition, quality and quantity of
the cargo at the time of loading;
Petitioner ATI alleged:
(1) that it exercised the required diligence in handling the subject
shipment;
(2) that the cargo was completely discharged from the vessel M/V
"Tern" to the receiving barges owned or hired by the plaintiff; and
that petitioner ATI exercised the required diligence in handling the
shipment.
RTC Ruling
The RTC of Manila held petitioner ATI and its co-defendants solidarily liable
to respondent for damages arising from the shortage. Ordering defendants
M/V "Tern" Inter-Asia Marine Transport, Inc. and Asian Terminal Inc.
jointly and severally liable to pay plaintiff Simon Enterprises the sum of
₱2,286,259.20 with legal interest.
RTC found that respondent has established that the losses/shortages were
incurred prior to its receipt of the goods. As such, the burden shifted to
the carrier to prove that it exercised extraordinary diligence as required by
law to prevent the loss, destruction or deterioration.
RTC held that the defendants failed to prove that they did so. The trial
court gave credence to the testimony of Eduardo Ragudo, a super cargo of
defendant Inter-Asia Marine Transport, Inc., who admitted that there were
spillages or overflow down to the spillage saver. The trial court also noted
that said witness also declared that respondent’s representative was not
allowed to sign the Master’s Certificate. Such declaration placed petitioner
ATI in a bad light and weakened its stand.
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Appeal to the CA
On appeal, the CA affirmed the RTC Decision. It agreed with the findings of
the trial court that the unknown owner of the vessel M/V "Tern" and Inter-
Asia Marine Transport, Inc. failed to establish that they exercised
extraordinary diligence in transporting the goods or exercised due
diligence to forestall or lessen the loss as provided in Article 1742 of the
Civil Code. The CA also ruled that petitioner ATI, as the arrastre operator,
should be held jointly and severally liable with the carrier considering that
petitioner ATI’s stevedores were under the direct supervision of the
unknown owner of M/V "Tern" and that the spillages occurred when the
cargoes were being unloaded by petitioner ATI’s stevedores.
ISSUE:
WON the CA erred in affirming the decision of the RTC holding petitioner
ATI solidarily liable with its codefendants for the shortage incurred in the
shipment of the goods to respondent
RULING:
The CA erred in affirming the decision of the trial court holding petitioner
ATI solidarily liable with its co-defendants for the shortage incurred in the
shipment of the goods to respondent.
The matters raised by petitioner ATI involve questions of fact.
1) Considering that respondent was not able to establish conclusively that
the subject shipment weighed 3,300 metric tons at the port of loading,
and that it cannot therefore be concluded that there was a shortage for
which petitioner should be responsible;
2) The subject shipment most likely lost weight in transit due to the
inherent nature of Soya Bean Meal;
3) Assuming that the shipment lost weight in transit due to desorption,
the shortage of 199.863 metric tons that respondent alleges is a minimal
6.05% of the weight of the entire shipment, which is within the allowable
10% allowance for loss;
4) And noting that the respondent was not able to show negligence on the
part of the petitioner and that the weighing methods which respondent
relied upon to establish the shortage it alleges is inaccurate, respondent
cannot fairly claim damages against petitioner for the subject shipment's
alleged shortage.
Petition for review on certiorari granted. Reversed and set aside insofar as
Asian Terminals, Inc. is concerned.
ART. 353, CC
29. Designer Baskets, Inc. vs. Air Sea Transport, Inc., et al
A common carrier may release the goods to the consignee even without
the surrender of the bill of lading.
FACTS:
DBI is a domestic corporation engaged in the production of housewares
and handicraft items for export. Sometime in October 1996, Ambiente, a
foreign-based company, ordered from DBI 223 cartons of assorted wooden
items. Ambiente designated ACCLI as the forwarding agent that will ship
out its order from the Philippines to the United States. ACCLI is a domestic
corporation acting as agent of the ASTI, a US based corporation engaged
in carrier transport business in the Philippines.
DBI delievered the shipment to ACCLI for sea transport. To acknowledge
receipt and to serve as the contract of sea carraigfe, ACCLI issued DBI
copies of ASTI Bill of Lading. DBI retained the original.
Ambiente and ASTI enetered into an Indemnity Agreement wherein
Ambiente obligated ASTI to deliver the shipment to its order “without the
surrender of the relevant bill(s) of lading due to the non-arrival or loss
thereof” Ambiente, in exchange hold its agent ASTI free from any liability.
ASTO released the shipment to Ambiente without knowledge of DBI, and
without it receivingpayment for the total cost of shipment.
DBI made several demands, but to no avail. DBI filed a complaint caliming
that under the Bill of Lading ASTI or ACCLI is “to release and deliver the
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cargo/shipment to the consignee, only after the original copy of the Bill of
Lading is surrendered to them otherwise they become liable to the shipper
for the value of the shipment.
RTC: The liability of Ambiente is “very clear”. As the buyer, it has an
obligation to pay for the value of the shipment. With respect to ASTI, the
trial court held that as a common carrier, ASTI is bound to observe
extraordinary diligence in the vigilance over the goods. Furthermore, the
Agreement only involved the Ambiente and ASRI. Since DBI is not Privy to
the agreement, it is not bound by its terms.
In case the consignee, upon kreceiving the goods, cannot return the bill of
lading subscribed by the carrier, because of its loss or any other cause, he
must give the latter a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill of lading.
Clearly, law and jurisprudence is settled that the surrender of the original
bill of lading is not absolute, that in case of loss or any other cause, a
common carrier may release the goods to the consignee even without it.

Court of Appeals: The CA affirmed the trial court’s finding that Ambiente
is liable to DBI but absolved ASTI and ACCLI from liability.

ISSUE:

Did ASTI and ACCLI fail to exercise the required extraordinary diligence
when they allowed cargoes o be withdrawn by the consignee without the
surrender of the original bill of lading?

RULING:

Bill of lading is defined as a “written acknowledgment of the receipt of

goods and an agreement to transport and to deliver them at a specified
place to a person named or on his order.”

Under Article 350 of the Code of Commerce, “the shipper as well as the
carrier of the merchandise or goods may mutually demand that a bill of
lading be made.” “A bill of lading, when issued by the carrier to the
shipper, is the legal evidence of the contract of carriage between the
former and the latter.

Here, as shown from provisions on the bill of lading that there is no

obligation on the part of ASDTI and ACCLI to release the goods only upon
the surrender of the original bill of lading. Further, a carrier is allowed by
law to release the goods to the consignee even without the latter’s
surrender of the bill of lading. The third paragraph of Article 353 of the
Code of Commerce is enlightening:

Article 353. xxxx

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