● The plaintiff (First Nationwide Assurance Corp.

) now seeks
II. TRANSPORTATION OF GOODS to recover from the defendants (Eastern Shipping Lines,
Inc. & E. Razon, Inc. what it has indemnified the
1. Extraordinary Diligence consignee, less P48,293.70, the salvage value of the cargo,
or the total amount of P123,629.30.
EASTERN SHIPPING LINES, INC. petitioner vs. ● The facts from the master’s report were as follows:
THE COURT OF APPEALS and the FIRST NATIONWIDE ○ It appears that while enroute from Kobe to Manila,
ASSURANCE CORPORATION, respondents the carrying vessel encountered very rough seas
G.R. No. 94151. April 30, 1991 and stormy weather' for three days, more or less,
which caused it to roll and pound heavily.
Facts: ○ That the coils wrapped in burlap cloth and
● On September 14, 1978 thirteen coils of uncoat ed 7-wire cardboard paper were stored in the lower hold of
stress relieved wire strand for prestressed concrete were the hatch of the vessel which was flooded with
shipped on board the vessel 'Japri Venture,' owned and water about one foot deep; that the water entered
operated by the defendant Eastern Shipping Lines, Inc., at the hatch when the vessel encountered heavy
Kobe, Japan, for delivery to Stresstek Post-Tensioning weather enroute to Manila
Phils., Inc. in Manila, as evidenced by the bill of lading, ○ A survey of bad order cargo was conducted at the
commercial invoice, packing list and commercial invoice. pier in the presence of the representatives of the
● Said cargo was insured by the plaintiff First Nationwide consignee and the defendant E. Razon, Inc. and it
Assurance Corporation for P171,923. was found that seven coils were rusty on one side
● On September 16, 1978, the carrying vessel arrived in each;
Manila and discharged the cargo to the custody of the ○ Upon survey conducted at the consignee's
defendant E. Razon, Inc. from whom the consignee's warehouse it was found that the wetting (of the
customs broker received it for delivery to the consignee's cargo) was caused by fresh water' that entered the
warehouse. hatch when the vessel encountered heavy weather
● On February 19, 1979, the plaintiff (First Nationwide enroute to Manila.
Assurance Corp.) indemnified the consignee in the ○ And that all thirteen coils were extremely rusty
amount of P171,923.00 for damage and loss to the and totally unsuitable for the intended purpose.
insured cargo, whereupon the former was subrogated for
the latter.
 ● The complaint filed by the First Nationwide Assurance Held:
Corp. against Eastern Shipping Lines, Inc. and E. Razon, Petition dismissed. The court ruled that the petitioner’s
Inc. was dismissed by the Regional Trial Court in a decision reliance on the arrastre operator’s issuance of a clean tally sheet
dated November 25, 1985. The plaintiff appealed to the over the cargo was overturned by the fact that:
Court of Appeals, which set aside the RTC decision, 1. The heavy seas and rains referred in the master’s
ordering the appellees to pay the appellant the sum report were not fortuitous events since these were
demanded. conditions that an ocean-going vessel should
● Eastern Shipping Lines, Inc. filed this petition for review by naturally expect during the month of September.
certiorari based on the following errors: 2. Rain-water (and not sea-water) found its way to
xxxxxxxxxxx the cargo hold of the ship. Which clearly indicates
1. CA erred in concluding that the petitioner that care and foresight did not attend the closing
herein is liable despite the fact that the of the ship’s hatches in order to avoid this
cargo was discharged and delivered incident.
complete unto the custody of the arrastre 3. Lastly, since the carrier had failed to establish any caso fortuito,
operator under clean tally sheets. the presumption by law of fault or negligence on the part of the
2. CA failed to hold the petitioner relieved of carrier, under Art. 1735 of the Civil Code applies. And since the
any liability over the cargo notwithstanding petitioner failed to adduce evidence showing that it exercised
it found that the same was discharged and EXTRAORDINARY DILIGENCE in carrying the cargo, the petitioner
delivered unto the custody arrastre was thus held liable.
operator under clean tally sheets and ergo
to be considered good order cargo when
delivered.
xxxxxxxxxx

Issue:
W/N the petitioner’s contention is proper, which relieves
him of liability due to the clean tally sheet issued upon the cargo
when the same was delivered to the arrastre operator.
DELSAN TRANSPORT LINES, INC. vs. THE HON. COURT OF loss, destruction or deterioration of the insured goods, common
APPEALS and AMERICAN HOME ASSURANCE CORPORATION carriers shall be responsible unless the same is brought about,
G.R. No. 127897. November 15, 2001 among others, by flood, storm, earthquake, lightning or other
DE LEON, JR., J. natural disaster or calamity. In all other cases, if the goods are
lost, destroyed or deteriorated, common carriers are presumed
FACTS: Caltex entered into a contract of affreightment to have been at fault or to have acted negligently, unless they
with Delsan for a period of 1year whereby the said common prove that they observed extraordinary diligence.
carrier agreed to transport Caltex’s industrial fuel oil from the In order to escape liability for the loss of its cargo of industrial
Batangas-Bataan Refinery to different parts of the country. fuel oil belonging to Caltex, petitioner attributes the sinking of MT
Under the contract, petitioner took on board its vessel, MT Maysun to fortuitous event. From the testimonies of Jarabe and
Maysun, 2,277.314 kl of industrial fuel oil to be delivered to the Berina, captain and chief mate, respectively of the ill-fated vessel,
Caltex Oil Terminal in Zamboanga City. The shipment was insured it appears that a sudden and unexpected change of weather
with the private respondent, American Home Assurance condition occurred in the early morning of August 16, 1986; that
Corporation. at around 3:15a.m. a squall (“unos”) carrying strong winds with
MT Maysun set sail from Batangas for Zamboanga City. an approximate velocity of 30 knots per hour and big waves
Unfortunately, the vessel sank in the early morning of August 16, averaging eighteen 18-20ft. high, repeatedly buffeted MT Maysun
1986 near Panay Gulf in the Visayas taking with it the entire cargo causing it to tilt, take in water and eventually sink with its cargo.
of fuel oil. AHAC paid Caltex the sum of P5,096,635.57. Due to its This tale of strong winds and big waves by the said officers of the
failure to collect from the petitioner, AHAC filed a complaint with petitioner however, was effectively rebutted and belied by the
the RTC for collection of a sum of money. weather report from PAGASA showing that from 2:00 o’clock to
RTC ruled that Delsan shall be free from liability due to force 8:00 o’clock in the morning on August 16, 1986, the wind speed
majeure. The decision of the trial court, however, was reversed, remained at 10-20 knots per hour while the height of the waves
by CA. In the absence of any explanation as to what may have ranged from .7 -2 meters in the vicinity of Cuyo East Pass and
caused the sinking of the vessel coupled with the finding that the Panay Gulf where the subject vessel sank. Thus, as the appellate
same was improperly manned, CA ruled that the petitioner is court correctly ruled, petitioner’s vessel, MT Maysun, sank with
liable on its obligation as common carrier. Thus, this instant its entire cargo for the reason that it was not seaworthy. There
petition. was no squall or bad weather or extremely poor sea condition in
ISSUE: Whether or not petitioner failed to exercise extraordinary the vicinity when the said vessel sank.
diligence. Neither may petitioner escape liability by presenting in evidence
HELD:YES, thus petitioner shall be held liable. From the nature of certificates that tend to show that at the time of dry-docking and
their business and for reasons of public policy, common carriers inspection by the Philippine Coast Guard, MT Maysun, was fit for
are bound to observe extraordinary diligence in the vigilance over voyage. These pieces of evidence do not necessarily take into
the goods and for the safety of passengers transported by them, account the actual condition of the vessel at the time of the
according to all the circumstances of each case. In the event of commencement of the voyage.
Additionally, the exoneration of MT Maysun’s officers and crew PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN
by the Board of Marine Inquiry merely concerns their respective OWNER OF THE VESSEL M/V “NATIONAL HONOR,” NATIONAL
administrative liabilities. It does not in any way operate to SHIPPING CORPORATION OF THE PHILIPPINES and
absolve the petitioner common carrier from its civil liability INTERNATIONAL CONTAINER SERVICES, INC.
arising from its failure to observe extraordinary diligence in the [G.R. No. 161833. July 8, 2005]
vigilance over the goods it was transporting and for the negligent
acts or omissions of its employees, the determination of which FACTS:
properly belongs to the courts. In the case at bar, petitioner is Petitioner Philippine Charter Insurance Corporation (PCIC) is the
liable for the insured value of the lost cargo of industrial fuel oil insurer of a shipment on board the vessel M/V “National Honor,”
belonging to Caltex for its failure to rebut the presumption of represented in the Philippines by its agent, National Shipping
fault or negligence as common carrier occasioned by the Corporation of the Philippines (NSCP).
unexplained sinking of its vessel, MT Maysun, while in transit.
The M/V “National Honor” arrived at the Manila International
Container Terminal (MICT). The International Container Terminal
Services, Incorporated (ICTSI) was furnished with a copy of the
crate cargo list and bill of lading, and it knew the contents of the
crate. The following day, the vessel started discharging its cargoes
using its winch crane. The crane was operated by Olegario Balsa,
a winchman from the ICTSI, exclusive arrastre operator of MICT.

Denasto Dauz, Jr., the checker-inspector of the NSCP, along with

the crew and the surveyor of the ICTSI, conducted an inspection
of the cargo. They inspected the hatches, checked the cargo and
found it in apparent good condition. Claudio Cansino, the
stevedore of the ICTSI, placed two sling cables on each end of
Crate No. 1. No sling cable was fastened on the mid-portion of
the crate. In Dauz’s experience, this was a normal procedure. As
the crate was being hoisted from the vessel’s hatch, the mid-
portion of the wooden flooring suddenly snapped in the air,
about five feet high from the vessel’s twin deck, sending all its
contents crashing down hard, resulting in extensive damage to
the shipment.

PCIC paid the damage, and as subrogee, filed a case against M/V
National Honor, NSCP and ICTSI. Both RTC and CA dismissed the arises against the carrier of its failure to observe that diligence,
complaint. and there need not be an express finding of negligence to hold it
liable. To overcome the presumption of negligence in the case of
ISSUE:  loss, destruction or deterioration of the goods, the common
Whether or not the presumption of negligence is applicable in the carrier must prove that it exercised extraordinary diligence.
instant case.
However, under Article 1734 of the New Civil Code, the
HELD:  presumption of negligence does not apply to any of the following
No. causes:
We agree with the contention of the petitioner that common
carriers, from the nature of their business and for reasons of 1. Flood, storm, earthquake, lightning or other natural disaster or
public policy, are mandated to observe extraordinary diligence in calamity;
the vigilance over the goods and for the safety of the passengers 2. Act of the public enemy in war, whether international or civil;
transported by them, according to all the circumstances of each 3. Act or omission of the shipper or owner of the goods;
case. he Court has defined extraordinary diligence in the vigilance 4. The character of the goods or defects in the packing or in the
over the goods as follows: containers;
5. Order or act of competent public authority.
The extraordinary diligence in the vigilance over the goods
tendered for shipment requires the common carrier to know and It bears stressing that the enumeration in Article 1734 of the New
to follow the required precaution for avoiding damage to, or Civil Code which exempts the common carrier for the loss or
destruction of the goods entrusted to it for sale, carriage and damage to the cargo is a closed list. To exculpate itself from
delivery. It requires common carriers to render service with the liability for the loss/damage to the cargo under any of the causes,
greatest skill and foresight and “to use all reasonable means to the common carrier is burdened to prove any of the aforecited
ascertain the nature and characteristic of goods tendered for causes claimed by it by a preponderance of evidence. If the
shipment, and to exercise due care in the handling and stowage, carrier succeeds, the burden of evidence is shifted to the shipper
including such methods as their nature requires.” to prove that the carrier is negligent.

The common carrier’s duty to observe the requisite diligence in “Defect” is the want or absence of something necessary for
the shipment of goods lasts from the time the articles are completeness or perfection; a lack or absence of something
surrendered to or unconditionally placed in the possession of, essential to completeness; a deficiency in something essential to
and received by, the carrier for transportation until delivered to, the proper use for the purpose for which a thing is to be used. On
or until the lapse of a reasonable time for their acceptance, by the other hand, inferior means of poor quality, mediocre, or
the person entitled to receive them.] >When the goods shipped second rate. A thing may be of inferior quality but not necessarily
are either lost or arrive in damaged condition, a presumption defective. In other words, “defectiveness” is not synonymous
with “inferiority.”
SALUDO v. CA
In the present case, the trial court declared that based on the G.R. No. 95536, March 23, 1992
record, the loss of the shipment was caused by the negligence of
the petitioner as the shipper: FACTS:
After the death of plaintiffs' mother, Crispina Galdo
The same may be said with respect to defendant ICTSI. The Saludo, in Chicago, Illinois, (on) October 23, 1976, Pomierski and
breakage and collapse of Crate No. 1 and the total destruction of Son Funeral Home of Chicago, made the necessary preparations
its contents were not imputable to any fault or negligence on the and arrangements for the shipment of the remains from Chicago
part of said defendant in handling the unloading of the cargoes to the Philippines. On October 26, 1976, Pomierski brought the
from the carrying vessel, but was due solely to the inherent remains to C.M.A.S. (Continental Mortuary Air Services) at the
defect and weakness of the materials used in the fabrication of airport (Chicago) which made the necessary arrangements such
said crate. as flights, transfers, etc. C.M.A.S. booked the shipment with PAL,
with Pomierski F.H. as the shipper and Mario (Maria) Saludo as
The crate should have three solid and strong wooden batten the consignee. PAL Airway Bill No. 079- 01180454 Ordinary was
placed side by side underneath or on the flooring of the crate to issued wherein the requested routing was from Chicago to San
support the weight of its contents. Francisco on board Trans World Airlines (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. When petitioners
arrived at the Chicago Airport, they were informed that their
mother’s remains were on a place to Mexico City, that there were
two bodies at the terminal, and somehow they were switched.
The following day, October 28, 1976, the shipment of the remains
of Crispina Saludo arrived in San Francisco from Mexico, and was
then transferred to or received by PAL. The shipment arrived in
Manila on October 30, 1976, a day after its expected arrival on
October 29, 1976. Petitioner then filed a damage suit against
TWA and PAL. The court below absolved the two respondent
airline companies of liability. The Court of Appeals affirmed the
decision of the lower court in toto, and in a subsequent
resolution, denied herein petitioners' motion for reconsideration
for lack of merit.
ISSUE: thereto, for such duty to commence there must in fact have been
Whether or not private respondents failed to exercise delivery of the cargo subject of the contract of carriage. Only
extraordinary diligence required by law which resulted in the when such fact of delivery has been unequivocally established
switching and/or misdelivery of the remains of Crispina Saludo to can the liability for loss, destruction or deterioration of goods in
Mexico. the custody of the carrier, absent the excepting causes under
RULING: Article 1734, attach and the presumption of fault of the carrier
No. On October 26, 1976, the cargo containing the under Article 1735 be invoked.
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. 30 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
 RULING:
LORENZO SHIPPING V. BJ MARTHEL Petition denied. By accepting the cylinders when they were
G.R. NO. 145483 delivered to the warehouse, petitioner waived the claimed delay
Facts: in the delivery of said items. Supreme Court held that time was
Petitioner Lorenzo Shipping is engaged in coastwise not of the essence. In determining whether time is of the essence
shipping and owns the cargo M/V Dadiangas Express. BJ Marthel in a contract, the ultimate criterion is the actual or apparent
is engaged in trading, marketing and selling various industrial intention of the parties and before time may be so regarded by a
commodities. Since 1987, Respondent supplied petitioner with court, there must be a sufficient manifestation, either in the
spare parts for the latter's marine engines. Sometime in 1989, contract itself or the surrounding circumstances of that intention.
petitioner asked respondent for a quotation for various machine Petitioner insists that although its purchase orders did not specify
parts. According to the quotation it sent, deliveries of such items the dates when the cylinder liners were supposed to be
are “within 2 months after receipt of firm order.” Petitioner delivered, nevertheless, respondent should abide by the term of
thereafter issued a Purchase Order for the procurement of one delivery appearing on the quotation it submitted to petitioner.
set of cylinder liner, valued at P477,000. Petitioner ordered for Petitioner theorizes that the quotation embodied the offer from
the second time cylinder lines from the respondent stating the respondent while the purchase order represented its
term of payment to be 25% upon delivery, the balance payable in (petitioner's) acceptance of the proposed terms of the contract of
5 bi-monthly equal installments, not again stating the date of the sale. Thus, petitioner is of the view that these two documents
cylinder’s delivery. It was allegedly paid through post dated "cannot be taken separately as if there were two distinct
checks but the same was dishonored due to insufficiency of contracts."
funds.  The remaining nine postdated checks were eventually
returned by respondent to petitioner. Despite due demands by
the respondent, petitioner falied contending that time was of the
essence in the delivery of the cylinders and that there was a delay
since the respondent committed said items “ within two months
after receipt of fir order”. RTC held respondents bound to the
quotation with respect to the term of payment, which was
reversed by the Court of appeals ordering appellee to pay
appellant P954,000 plus interest. There was no delay since there
was no demand. 
Issue:
Whether or not there was late delivery of the subjects of
the contract of sale to justify petitioner to disregard the terms of
the contract considering that time was of the essence thereof
 On April 4, typhoon Bising struck Cebu area. The barge was still
SEALOADER SHIPPING CORPORATION, Petitioner, docked at the wharf of Grand Cement. As it became stronger, MT
vs. Viper tried to tow the barge away but it was unsuccessful
because the towing lines connecting the vessels snapped since
GRAND CEMENT MANUFACTURING CORPORATION, JOYCE the mooring lines were not cast off, which is the ultimate cause.
LAUNCH & TUG CO., INC., ROMULO DIANTAN & JOHNNY Hence, the barge rammed the wharf causing significant damage.
PONCE, Respondents.

Grand Cement filed a complaint for damages (P2.4M) since

Sealoader ignored its demands. They allege that Sealoader was
Facts: negligent when it ignored its employee’s advice to move the
Sealoader Shipping Corporation (Sealoader) is a domestic vessels after it had received weather updates. Sealoader filed a
corporation engaged in the business of shipping and hauling motion to dismiss on the ground that Joyce Launch is the one
cargo from one point to another using sea-going inter-island liable since it was the owner of MT Viper, who’s employees were
barges.Grand Cement Manufacturing Corporation (now Taiheiyo manning the vessel. Sealoader filed a cross-claim against Joyce
Cement Philippines, Inc.), on the other hand, is a domestic Launch. Joyce maintains that the damages were due to force
corporation engaged in the business of manufacturing and selling majeure and faulted Grand Cement’s employees for abandoning
cement through its authorized distributors and, for which the wharf leaving them helpless and for not warning them early
purposes, it maintains its own private wharf in San Fernando, on.
Cebu, Philippines
Upon testimonies, the RTC rendered judgment in favor of Grand
Cement holding the two companies liable since there was
Sealoader executed a Time Charter Party Agreement with Joyce
complete disregard of the storm signal, the captain of the vessel
Launch for the chartering of MT Viper in order to tow its
was not present and the vessel was not equipped with a radio or
unpropelled barges for a minimum of 15 days.
any navigational facility, which is mandatory. Joyce launch did not
appeal.
Sealoder entered into a contract with Grand Cement for the
loading of cement clinkers and the delivery thereof to Manila. On
On appeal, the CA affirmed the decision but on MR, it partly
March 31, 1994, Sealoder’s barge arrived at the wharf of Grand
reversed its decision finding Grand Cement to be guilty of
Cement tugged by MT Viper. It was not immediately loaded as
contributory negligence since it was found that it was still loading
the employees of Grand Cement were loading another vessel.
the other vessel at the last minute just before the storm hit,
hence Sealoder’s vessel did not move. Damages were reduced to
50%. Hence, petition for review to SC.
 2. Presumption of Negligence
Issue:
DELSAN TRANSPORT V. AMERICAN HOME
Whether or not Sealoader should be liable for damage sustained
by the wharf of Grand Cement -Delsan is a domestic corporation that owns and operates MT
Larusan. On aug. 5 1984 Delsan received on board Larusan a
Ruling: shipment consisting of 1,986,627 k/l of diesel oil at the bataan
refinery corporation for transportation and delivery to the bulk
YES. Sealoader is liable for its negligence. First because it was not depot in Bacolod City of Caltex Phil., pursuant to a contract of
equipped with a radio or a navigational facility and it failed to afreightment.
monitor the prevailing weather conditions. Second, it cannot pass -On August 7, 1984 the shipment arrived in Bacolod City.
the responsibility of casting off the mooring lines because the Unloading operations commenced however later on it had to be
people at the wharf could not just cast off the mooring lines stopped because of the discovery that the port bow mooring of
without any instructions from the crew of the vessel. It should the vessel was intentionally cut or stolen by unknown persons.
have taken the initiative to cast off the mooring lines early on. - Because of that the vessel drifted and the hose connected to the
tanker broke and caused the diesel oil to spill into the sea.
With regard to Grand Cement’s contributory negligence, the -Caltex sought recovery of the loss from Delsan but the latter
court found that it was not guilty thereof. It had timely informed refused to pay.
the barge of the impending typhoon and directed the vessels to -RTC ruled in favor of respondent and against delsan and the
move to a safer place. Sealoader had the responsibility to inform same wait sustained by the CA
itself of the prevailing weather conditions in the areas where its -Delsan contended that the spillage was partly due to the
vessel was to sail. It cannot merely rely on other vessels for contributory negligence of Caltex and that the loss through the
weather updates and warnings on approaching storms. For to do backflow should not be borne by Delsan because it was already
so would be to gamble with the safety of its own vessel, putting delivered to Caltex’s shore tank.
the lives of its crew under the mercy of the sea, as well as running
the risk of causing damage to property of third parties for which ISSUE:
it would necessarily be liable. WON DELSAN SHOULD BE ABSOLVED?
HELD:
NO. a.) The trial cour and the CA uniformly ruled that
Delsan failed to prove its claim that there was contributory
negligence on the part of the owner of the goods- Caltex. The
actuation of the guager and the escort surveyor, both personnel
from the Caltex Bulk Depot, negates the allegation that Caltex
was remiss in its duties. the crew of the vessel should have
exerted utmost effort to immediately inform the shore tender DELSAN TRANSPORT LINES, INC. vs. THE HON. COURT OF
that the port bow mooring line was severed. Delsan is obliged to APPEALS and AMERICAN HOME ASSURANCE
prove that the damage to its cargo was caused by one of the CORPORATION
excepted causes if it were to seek exemption from
responsibility. DE LEON, JR., J.:
b.) The subject cargo was still in the custody of Delsan
because the discharging thereof has not yet been finished when
the backflow occurred. There is no reason to imply that there was
actual delivery of the cargo to the consignee. Before us is a petition for review on certiorari of the Decision of
the Court of Appeals promulgated on June 17, 1996, reversing the
decision of the Regional Trial Court of Makati City, Branch 137,
ordering petitioner to pay private respondent the sum of
P5,096,635.57 and costs and the Resolution dated January 21,
1997 which denied the subsequent motion for reconsideration.

Facts:Caltex Philippines (Caltex for brevity) entered into a

contract of affreightment with the petitioner, Delsan Transport
Lines, Inc., for a period of one year whereby the said common
carrier agreed to transport Caltex’s industrial fuel oil from the
Batangas-Bataan Refinery to different parts of the country. Under
the contract, petitioner took on board its vessel, MT Maysun,
2,277.314 kiloliters of industrial fuel oil of Caltex to be delivered
to the Caltex Oil Terminal in Zamboanga City.  The shipment was
insured with the private respondent, American Home Assurance
Corporation. On August 14, 1986, MT Maysun set sail from
Batangas for Zamboanga City.  Unfortunately, the vessel sank in
the early morning of August 16, 1986 near Panay Gulf in the
Visayas taking with it the entire cargo of fuel oil.
Subsequently, private respondent paid Caltex the sum of Caltex.  The subsequent motion for reconsideration of herein
P5,096,635.57 representing the insured value of the lost petitioner was denied by the appellate court.
cargo.  Exercising its right of subrogation under Article 2207 of
the New Civil Code, the private respondent demanded of the Petitioner invokes the provision of Section 113 of the Insurance
petitioner the same amount it paid to Caltex. Due to its failure to Code of the Philippines, which states that in every marine
collect from the petitioner despite prior demand, private insurance upon a ship or freight, or freightage, or upon any thing
respondent filed a complaint with the Regional Trial Court of which is the subject of marine insurance there is an implied
Makati City, Branch 137, for collection of a sum of money.  After warranty by the shipper that the ship is seaworthy. Consequently,
the trial and upon analyzing the evidence adduced, the trial court the insurer will not be liable to the assured for any loss under the
rendered a decision on November 29, 1990 dismissing the policy in case the vessel would later on be found as not
complaint against herein petitioner without pronouncement as to seaworthy at the inception of the insurance.  It theorized that
cost.  The trial court found that the vessel, MT Maysun, was when private respondent paid Caltex the value of its lost cargo,
seaworthy to undertake the voyage as determined by the the act of the private respondent is equivalent to a tacit
Philippine Coast Guard per Survey Certificate Report upon recognition that the ill-fated vessel was seaworthy; otherwise,
inspection during its annual dry-docking and that the incident private respondent was not legally liable to Caltex due to the
was caused by unexpected inclement weather condition or force latter’s breach of implied warranty under the marine insurance
majeure, thus exempting the common carrier from liability for policy that the vessel was seaworthy.
the loss of its cargo.

Issue 1: Whether or not the payment made by the private

The decision of the trial court, however, was reversed, on appeal, respondent to Caltex for the insured value of the lost cargo
by the Court of Appeals.  The appellate court gave credence to amounted to an admission that the vessel was seaworthy, thus
the weather report issued by the PAGASA which showed that precluding any action for recovery against the petitioner?
from 2:00 o’clock to 8:00 o’clock in the morning on August 16,
1986, the wind speed remained at 10 to 20 knots per hour while
the waves measured from .7 to 2 meters in height only in the
vicinity of the Panay Gulf where the subject vessel sank, in Issue 2: Whether or not the non-presentation of the marine
contrast to herein petitioner’s allegation that the waves were 20 insurance policy bars the complaint for recovery of sum of money
feet high.  In the absence of any explanation as to what may have for lack of cause of action?
caused the sinking of the vessel coupled with the finding that the
same was improperly manned, the appellate court ruled that the
petitioner is liable on its obligation as common carrier to herein
private respondent insurance company as subrogee of
Held 1: No.The payment made by the private respondent for the belonging to Caltex for its failure to rebut the presumption of
insured value of the  lost cargo operates as waiver of its right to fault or negligence as common carrier occasioned by the
enforce the term of the implied warranty against Caltex under unexplained sinking of its vessel, MT Maysun, while in transit.
the marine insurance policy.  However, the same cannot be
validly interpreted as an automatic admission of the vessel’s
seaworthiness by the private respondent as to foreclose recourse
against the petitioner for any liability under its contractual Held 2: No. It is our view and so hold that the presentation in
obligation as a common carrier.  The fact of payment grants the evidence of the marine insurance policy is not indispensable in
private respondent subrogatory right which enables it to exercise this case before the insurer may recover from the common
legal remedies that would otherwise be available to Caltex as carrier the insured value of the lost cargo in the exercise of its
owner of the lost cargo against the petitioner common subrogatory right.  The subrogation receipt, by itself, is sufficient
carrier. Article 2207 of the New Civil Code provides that: to establish not only the relationship of herein private
respondent as insurer and Caltex, as the assured shipper of the
Art. 2207.  If the plaintiff’s property has been insured, and he has lost cargo of industrial fuel oil, but also the amount paid to settle
received indemnity from the insurance company for the injury or the insurance claim.  The right of subrogation accrues simply
loss arising out of the wrong or breach of contract complained of, upon payment by the insurance company of the insurance claim.
the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated
the contract.  If the amount paid by the insurance company does
not fully cover the injury or loss, the aggrieved party shall be
entitled to recover the deficiency from the person causing the
loss or injury.

Additionally, the exoneration of MT Maysun’s officers and crew

by the Board of Marine Inquiry merely concerns their respective
administrative liabilities.  It does not in any way operate to
absolve the petitioner common carrier from its civil liability
arising from its failure to observe extraordinary diligence in the
vigilance over the goods it was transporting and for the negligent
acts or omissions of its employees, the determination of which
properly belongs to the courts. In the case at bar, petitioner is
liable for the insured value of the lost cargo of industrial fuel oil
 MAERSK LINE vs. COURT OF APPEALS AND EFREN V. the absence in the bill of lading of a stipulation on the delivery of
CASTILLO goods

Petitioner Maersk Line is engaged in the transportation of Held: Yes. While it is true that common carriers are not
goods by sea, doing business in the Philippines. Private obligated by law to carry and to deliver merchandise, and persons
respondent Efren Castillo is the proprietor of Ethegal are not vested with the right to prompt delivery, unless such
Laboratories, a firm engaged in the manufacture of common carriers previously assume the obligation to deliver at a
pharmaceutical products. given date or time, delivery of shipment or cargo should at least
On November 12, 1976, private respondent ordered from Eli Lilly. be made within a reasonable time. An examination of the subject
Inc. of Puerto Rico through its agent in the Philippines, Elanco bill of lading shows that the subject shipment was estimated to
Products, 600,000 empty gelatin capsules for the manufacture of arrive in Manila on April 3, 1977. While there was no special
his pharmaceutical products. contract entered into by the parties indicating the date of arrival
Eli Lilly, Inc. of Puerto Rico advised private respondent as of the subject shipment, petitioner nevertheless, was very well
consignee that the 600,000 empty gelatin capsules were already aware of the specific date when the goods were expected to
shipped on board MV "Anders Maerskline" for shipment to the arrive as indicated in the bill of lading itself. In this regard, there
Philippines via Oakland, California and specified the date of arises no need to execute another contract for the purpose as it
arrival to be April 3, 1977. would be a mere superfluity. The court ruled that a delay in the
For reasons unknown, said cargo of capsules were mishipped and delivery of the goods spanning a period of two (2) months and
diverted to Richmond, Virginia, USA and then transported back seven (7) days falls was beyond the realm of reasonableness.
Oakland, California. The goods finally arrived in the Philippines on Petitioner never even bothered to explain the course for
June 10, 1977 or after two (2) months from the date specified. As the delay for more than two (2) months, in the delivery of subject
a consequence, private respondent as consignee refused to take shipment. The petitioner is liable for breach of contract of
delivery of the goods on account of its failure to arrive on time. carriage through gross negligence amounting to bad faith and
Private respondent filed an action before the court a awarded moral damages.
quo for rescission of contract with damages against petitioner
alleging gross negligence and undue delay in the delivery of the The court held also that even though generally, contracts
goods. Petitioner alleged the shipment was transported in of adhesion are considered void since almost all the provisions of
accordance with the provisions of the covering bill of lading and these types of contracts are prepared and drafted only by one
that its liability under the law on transportation of good attaches party, usually the carrier, bills of lading are contracts not entirely
only in case of loss, destruction or deterioration of the goods as prohibited. They further explained that one who adheres to the
provided for in Article 1734 of Civil Code contract is in reality free to reject it in its entirety; if he adheres,
he gives his consent.
Issue: Whether or not private respondent Castillo is entitled to
damages resulting from delay in the delivery of the shipment in
 FGU INSURANCE CORP. V. CA the plaintiff. We agree with respondent court that petitioner
Facts: failed to prove the existence of the second requisite, i.e., fault or
On April 21, 1987, a car owned by private respondent FILCAR negligence of defendant FILCAR, because only the fault or
Transport Inc., rented to and driven by Dahl-Jensen, a Danish negligence of Dahl-Jensen was sufficiently established, not that of
tourist, swerved into the right and hit the car owned by Lydia FILCAR. It should be noted that the damage caused on the vehicle
Soriano and driven by Benjamin Jacildone. Dahl-Jensen did not of Soriano was brought about by the circumstance that Dahl-
possess a Philippine driver’s license. Petitioner, as the insurer of Jensen swerved to the right while the vehicle that he was driving
Soriano’s car, paid the latter P25,382.20 and, by way of was at the center lane. It is plain that the negligence was solely
subrogation, sued FILCAR, Dahl-Jensen, and Fortune Insurance attributable to Dahl-Jensen thus making the damage suffered by
Corporation, FILCAR’s insurer, for quasi-delict. The trial court the other vehicle his personal liability. Respondent FILCAR did not
dismissed the petition for failure to substantiate the claim for have any participation therein. Respondent FILCAR being engaged
subrogation. The Court of Appeals affirmed the decision, but on in a rent-a-car business was only the owner of the car leased to
the ground that only Dahl-Jensen’s negligence was proven, not Dahl-Jensen. As such, there was no vinculum juris between them
that of FILCAR. Hence, this instant petition. as employer and employee. Respondent FILCAR cannot in any
way be responsible for the negligent act of Dahl-Jensen, the
Issues: former not being an employer of the latter.
(1) Whether an action based on quasi-delict will prosper against a (2) Petitioner's insistence on MYC-Agro-Industrial Corporation is
rent-a-car company and, consequently, its insurer for fault or rooted in a misapprehension of our ruling therein. In that case,
negligence of the car lessee in driving the rented vehicle the negligent and reckless operation of the truck owned by
(2) Whether the ruling in MYC-Agro-Industrial Corporation v. Vda. petitioner corporation caused injuries to several persons and
de Caldo is applicable in the case at bar damage to property. Intending to exculpate itself from liability,
the corporation raised the defense that at the time of the
Held: collision it had no more control over the vehicle as it was leased
(1) We find no reversible error committed by respondent court in to another; and, that the driver was not its employee but of the
upholding the dismissal of petitioner's complaint. The pertinent lessee. The trial court was not persuaded as it found that the true
provision is Art. 2176 of the Civil Code which states: "Whoever by nature of the alleged lease contract was nothing more than a
act or omission causes damage to another, there being fault or disguise effected by the corporation to relieve itself of the
negligence, is obliged to pay for the damage done. Such fault or burdens and responsibilities of an employer. We upheld this
negligence, if there is no pre-existing contractual relation finding and affirmed the declaration of joint and several liability
between the parties, is called a quasi-delict . . . . ". To sustain a of the corporation with its driver.
claim based thereon, the following requisites must concur: (a)
damage suffered by the plaintiff; (b) fault or negligence of the
defendant; and, (c) connection of cause and effect between the
fault or negligence of the defendant and the damage incurred by
 DSR-SENATOR LINES AND C.F. SHARP AND COMPANY, INC., extinguished when the vessel carrying the cargo was gutted by
petitioners, vs. FEDERAL PHOENIX ASSURANCE CO., INC., fire. Thus, Federal Phoenix Assurance filed with the RTC a
respondent. complaint for damages against DSR-Senator Lines and C.F. Sharp.

Nature: Petition for review on certiorari RTC rendered a decision in favor if Federal Phoenix Assurance. CA
affirmed, appellant carrier presumed to have acted negligently
FACTS: for the fire. It’s liability as ship agent continued and remained
Berde Plants, Inc. (Berde Plants) delivered 632 units of artificial until the carge was delivered to the consignee.
trees to C.F. Sharp and Company, Inc. (C.F. Sharp), the General
Ship Agent of DSR-Senator Lines, a foreign shipping corporation, ISSUE: WON C.F. Sharp’s liability is extinguished by reason of the
for transportation and delivery to the consignee, Al-Mohr fire
International Group, in Riyadh, Saudi Arabia. C.F. Sharp issued a
Bill of Lading for the cargo. Under the Bill of Lading, the port of HELD:
discharge for the cargo was at the Khor Fakkan port and the port No. Fire is not one of those enumerated under Art. 1734 of the
of delivery was Riyadh, Saudi Arabia, via Port Dammam. The Civil Code which exempts a carrier from liability for loss or
cargo was loaded in M/S “Arabian Senator.” destruction of the cargo. In Eastern Shipping Lines, Inc. vs.
Intermediate Appellate Court, we ruled that since the peril of fire
FederalPhoenix Assurance Company, Inc. (Federal Phoenix is not comprehended within the exceptions in Article 1734, then
Assurance) insured the cargo against all risks. On July 3, 1993 M/S the common carrier shall be presumed to have been at fault or to
“Arabian Senator” left the Manila South Harbor for Saudi Arabia have acted negligently, unless it proves that it has observed the
with the cargo on board. When the vessel arrived in Khor Fakkan extraordinary diligence required by law.
Port, the cargo was reloaded on board DSR-Senator Lines’ feeder
vessel, M/V “Kapitan Sakharov,” bound for Port Dammam, Saudi Even if fire were to be considered a natural disaster within the
Arabia. purview of Article 1734, it is required under Article 1739[10] of
the same Code that the natural disaster must have been the
However, while intransit, the vessel and all its cargo caught fire. proximate and only cause of the loss, and that the carrier has
exercised due diligence to prevent or minimize the loss before,
On July 5, 1993, DSR-Senator Lines informed Berde Plants that during or after the occurrence of the disaster.
M/V “Kapitan Sakharov” with its cargo was gutted by fire and
sank on or about July 4, 1993. Consequently, Federal Phoenix A common carrier's duty to observe the requisite diligence in the
Assurance paid Berde Plants corresponding to the amount of shipment of goods lasts from the time the articles are
insurance for the cargo. Federal Phoenix Assurance sent a letter surrendered to or unconditionally placed in the possession of,
to C.F. Sharp demanding payment from C.F. Sharp. C.F. Sharp and received by, the carrier for transportation until delivered to
denied any liability on the ground that such liability was or until the lapse of a reasonable time for their acceptance by the
person entitled to receive them. When the goods shipped either PHILLIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC
are lost or arrive in damaged condition, a presumption arises vs. CA
against the carrier of its failure to observe that diligence, and
there need not be an express finding of negligence to hold it FACTS:
liable.
On September 4, 1985 the Davao Union Marketing Corporation of
Common carriers are obliged to observe extraordinary diligence Davao City shipped on board the vessel M/V "Crazy Horse"
in the vigilance over the goods transported by them. Accordingly, operated by the Transpacific Towage, Inc. cargo consisting of
they are presumed to have been at fault or to have acted 9,750 sheets of union brand GI sheets with a declared value of
negligently if the goods are lost, destroyed or deteriorated. There P1,086,750.00 and 86,860 bags of union Pozzolan and union
are very few instances when the presumption of negligence does
Portland Cement with a declared value of P4,300,000.00. The
not attach and these instances are enumerated in Article 1734. In
those cases where the presumption is applied, the common cargo was consigned to the Bicol Union Center of Pasacao,
carrier must prove that it exercised extraordinary diligence in Camarines Sur, with a certain Pedro Olivan as the "Notify-Party."
order to overcome the presumption. On October 16, 1985, a super typhoon code named "Saling"
entered the Philippine area of responsibility and was felt in the
Respondent Federal Phoenix Assurance raised the presumption eastern coast of the country. At the time the discharging of the
of negligence against petitioners. However, they failed to
cargo was suspended, a total of 59,625 bags of cement and 26
overcome it by sufficient proof of extraordinary diligence
crates of GI sheets had already been discharged.
Dispositive: Petition DENIED The wharf where the vessel had to dock was shallow and rocky,
hence it had to drop anchor some distance away in a private port.
Buoys had to be constructed in order that the vessel may
properly moored. After the buoys were installed a wooden stage
had to be constructed so that the stevedores could reach the
vessel. For this they needed a floating crane which was not
immediately available. The barges that were to load the cargo
from the vessel could not go near the wharf because of the
shallow and rocky condition. A catwalk had to be installed
between the barge and the wharf. This necessitated the
dismantling of the wooden stage previously installed.
Apart from these preparations and constructions that had to be earlier discussed. The cargo having been lost due to typhoon
made, the weather was not cooperative. Even before the "Saling", and the delay incurred in its unloading not due to
typhoon struck there were intermittent rains, hence the negligence, private respondent is exempt from liability for the
unloading was not continuous. The actual unloading started on loss of the cargo, pursuant to Art. 1740 of the Civil Code.
September 13, 1985 and could have been finished in 4 or 5 days
but because of the rains it was delayed. Another factor that
caused further delay was the fact that the fiesta of the Virgin of
Penafrancia was celebrated and for the length of time that the
celebrations were held, the stevedores who were from the place
refused to work.

ISSUE:

WON the delay involved in the unloading of the goods is deemed

negligently incurred in so as not to free private respondent from
responsibility?

HELD:

No, the delay incurred in the unloading of the goods was not due
to the negligence of the parties but was occasioned by causes
that may not be attributed solely to human factors, among which
were the natural conditions of the port where the M/V Crazy
Horse had docked, the customs of the place and the weather
conditions. Under Art. 1740 of the New Civil Code, if the common
carrier negligently incurs in delay in transporting the goods, a
natural disaster shall not free the carrier from responsibility.
While it is true that there was indeed delay in discharging the
cargo from the vessel, we agree with the Court of Appeals that
neither of the parties herein could be faulted for such delay , for
the same delay was due not to negligence, but to several factors
 BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and - CMC Trading A.G. (CMC) -
JARDINE DAVIES TRANSPORT SERVICES, INC., petitioners,, shipper
vs. Philippine Steel Trading Corporation (PSTC) -
PHILIPPINE FIRST INSURANCE CO., INC., respondent. consignee
June 5, 2002 Belgian Overseas Chartering and Shipping N.V. (Belgian) -
PANGANIBAN, J.: carrier
Jardine Davies Transport Services, Inc. (Jardine) -
NATURE: Petition for review under Rule 45 of a CA Decision carrier
Philippine First Insurance Co., Inc. (PFIC) -
SUMMARY: Belgian Overseas Chartering and Shipping N.V. and insurer
Jardine Davies Transport Services Inc. are common carriers who
are carrying 242 coils of Prime Cold Rolled Steel Sheets, shipped  On June 13, 1990, CMC shipped on board the M/V
by CMC Trading A.G. to consignee, Phil. Steel Trading Corp. (PSTC) 'Anangel Sky' at Hamburg, Germany 242 coils of various
4 coils were found to be in bad order, PSTC declared the Prime Cold Rolled Steel sheets for transportation to
shipment a total loss, causing insurer-respondent, Phil. First Manila consigned to the Philippine Steel Trading
Insurance Corp. (PFIC) to pay PSTC and seek recovery of the sum Corporation.
from the carriers. The carriers tried to exempt themselves from o July 28, 1990, M/V Anangel Sky arrived at the port
liability by alleging they had exercised extraordinary diligence, of Manila and, within the subsequent days,
but the Court ruled that as a general rule, are presumed to have discharged the subject cargo
been at fault or negligent if the goods they transported o Four (4) coils were found to be in bad order. It was
deteriorated or got lost or destroyed. That is, unless they prove noted on the Bill of Lading that “metal envelopes
that they exercised extraordinary diligence in transporting the rust stained and slightly dented.”
goods. (Art. 1735, NCC) In order to avoid responsibility for any o PSTC declared them to be a total loss.
loss or damage, therefore, they have the burden of proving that  PFIC paid the insurance for the damaged goods (Php
they observed such diligence. 506,086.50) to PSTC. It formally demanded Belgian and
Jardine for recovery of the said amount but both refused
to submit to PFIC’s claim which then instituted a
DOCTRINE: complaint for recovery
- Mere proof of delivery of the goods in good order to a  Belgian and Jardine contend the following
common carrier and of their arrival in bad order at their o that damage and/or loss was due to pre-shipment
destination constitutes a prima facie case of fault or damage, to the inherent nature, vice or defect of
negligence against the carrier the goods, or to perils, danger and accidents of the
FACTS: sea, or to insufficiency of packing thereof, or to
 the act or omission of the shipper of the goods or 1. Negligence; Presumption of Fault or Negligence; Owing to
their representatives; the high degree of diligence required of them, common
o that their liability, if there be any, should not carriers, as a general rule, are presumed to have been at
exceed the limitations of liability provided for in fault or negligent if the goods they transported
the bill of lading and other pertinent laws; deteriorated or got lost or destroyed.
o they exercised due diligence and foresight o The extraordinary responsibility lasts from the time
required by law to prevent any damage/loss to the goods are unconditionally placed in the possession
said shipment. of and received for transportation by the carrier until
they are delivered, actually or constructively, to the
o RTC of Makati dismissed the petition of PFIC for consignee or to the person who has a right to receive
not proving its claims with quantum of proof them.
required by law. o unless they prove that they exercised extraordinary
 CA: Overturned the RTC, and ruled that Belgian and diligence in transporting the goods. In order to avoid
Jardine were liable for the loss or the damage of the responsibility for any loss or damage, therefore, they
goods shipped. They had failed to overcome the have the burden of proving that they observed such
presumption of negligence imposed on common carriers diligence
o Found that the Stay Order of Branch could not be o The exceptions to the presumption of fault or
clearer. It was lifted because of Rombe’s negligence is a closed list—if the cause of destruction,
insolvency, misrepresentations, and infeasible loss or deterioration is other than the enumerated
rehabilitation plan circumstances, then the carrier is liable therefor.
o Also observe that the Branch 15 TRO interfered  The presumption of fault or negligence will not
with and set aside the earlier Branch 7 Order, and arise if the loss is due to any of the following
such intervention thwarted the foreclosure of causes: (1) flood, storm, earthquake, lightning,
Rombe’s assets or other natural disaster or calamity; (2) an act
ofthe public enemy in war, whether
ISSUE: international or civil; (3) an act or omission of
1. WON petitioners have overcome the presumption of the shipper or owner of the goods; (4) the
negligence of a common carrier. NO character of the goods or defects in the
2. WON the notice of loss was timely filed. YES packing or the container; or (5) an order or act
3. WON the stipulation in a bill of lading limiting to a certain of competent public authority.
sum the carrier’s liability is valid. YES  This is a closed list. If the cause of destruction,
loss or deterioration is other than the
RATIO:
 enumerated circumstances, then the carrier is fermentation or evaporation of substances
liable therefor liable therefor, the necessary and natural wear
 Mere proof of delivery of the goods in good of goods in transport, defects in packages in
order to a common carrier and of their arrival which they are shipped, or the natural
in bad order at their destination constitutes a propensities of animals. None of these is
prima facie case of fault or negligence against present in the instant case.
the carrier.  Furthermore, even if the fact of improper
 If no adequate explanation is given as to how packing was known to the carrier or its crew or
the deterioration, the loss or the destruction of was apparent upon ordinary observation, it is
the goods happened, the transporter shall be not relieved of liability for loss or injury
held responsible. resulting therefrom, once it accepts the goods
o The master of the vessel, having been in the service notwithstanding such condition. Thus,
for several years, should have known at the outset petitioners have not successfully proven the
that metal envelopes in the said state would application of any of the aforecited exceptions
eventually deteriorate when not properly stored while in the present case
in transit.
2. The cargo was discharged on July 31, 1990, while the
complaint was filed by PFIC on July 25, 1991. Within the 1
year prescriptive period.
o Petitioners attempt to argue:  a failure to file a notice of claim within three days
 They cite the notation “metal envelopes rust will not bar recovery if it is nonetheless filed within
stained and slightly dented” printed on the Bill one year.
of Lading as evidencethat the character of the  This one-year prescriptive period also applies to
goods or defect in the packing or the the shipper, the consignee, the insurer of the
containers was the proximate cause of the goods or any legal holder of the bill of lading.
damage.
 However, from the evidence on record, it 3. A stipulation in the bill of lading limiting to a certain sum
cannot be reasonably concluded that the the common carrier’s liability for loss or destruction of a
damage to the four coils was due to the cargo, unless the shipper or owner declares a greater
condition noted on the Bill of Lading. value, is sanctioned by law
 Exception refers to cases when goods are lost  two conditions to be satisfied:
or damaged while in transit as a result of the  the contract is reasonable and just
natural decay of perishable goods or the under the circumstances,
  it has been fairly and freely agreed EDGAR COKALIONG SHIPPING LINES, INC. vs UCPB GENERAL
upon by the parties. INSURANCE COMPANY
 Petitioners contend that their liability should be [G.R. No. 146018. June 25, 2003.]
limited to US$500 per package as provided in the
Bill of Lading and by Section 4(5) of COGSA but Facts:
respondent asserts otherwise. Section 4(5) of  On December 11, 1991, Nestor Angelia delivered to Edgar
COGSA is inapplicable, because the value of the Cokaliong Shipping Lines, Inc., one carton of Christmas
subject shipment was declared by petitioners décor and two sacks of plastic toys, to be transported on
beforehand, as evidenced by the reference to and board the M/V Tandang on its Voyage No. T-189, to
the insertion of the Letter of Credit or "L/C No. depart from Cebu the next day for Tandang Surigao del
90/02447" in the said Bill of Lading. Sur. Cokaliong issued Bill of Lading No. 58, freight prepaid,
 The Civil Code does not limit the liability of the covering the cargo. Nestor Angelia was both the
common carrier to a fixed amount per package. consignee and shipper of the goods valued at P6,500.
The COGSA, meanwhile, which is suppletory to the  Zosimo Mercado, likewise, delivered two cartons of plastic
provisions of the Civil Code, supplements the latter toys and Christmas décor, one roll of floor mat and one
by establishing a statutory provision limiting the bundle of assorted goods for transport from Cebu to
carrier's liability in the absence of a shipper's Tandang covered by Bill of Lading No. 59 valued at
declaration of a higher value in the bill of lading. P14,000. Under the Bill of Lading Zosimo Mercado was
 There was no stipulation in the Bill of Lading both shipper and consignee.
limiting the carrier's liability. Neither did the  Feliciana Legaspi insured the cargo covered by Bill of
shipper declare a higher valuation of the goods to Lading No. 59 with UCPB General Insurance Co. Inc. for
be shipped. This fact notwithstanding, the P100,000 against all risk. She also insured the cargo
insertion of the words "L/C No. 90/02447 cannot covered by Bill of Lading No. 58, for the amount of
be the basis for petitioners' liability. P50,000.
 Petiioners' liability should be computed based on  The fire ensued in the engine room of the vessel after it
US$500 per package and not on the per metric ton had passed the Mandaue Mactan Bridge. Despite earnest
price declared in the Letter of Credit. By efforts, the fire consumed the whole vessel resulting in
“package,” in accordance with COGSA, it means the loss of the vessel and the cargo therein.
the number of units disclosed in the shipping  Feliciana Legaspi filed a claim for the cargo covered by Bill
documents. of Lading No. 59 with UCPB. She was given P99,000 and
after which she executed a Subrogation Receipt/Deed for
said amount. She also filed another claim for the cargo
DISPOSITIVE: Petition DENIED. covered by Bill of Lading No. 58 and was remitted the net
 amount of P49,500. She signed another Subrogation constant inspection and care by the crew. Having originated from
Receipt/Deed. an unchecked crack in the fuel oil service tank, the fire could not
 UCPB, as a subrogee of Feliciana Legaspi, filed a complaint have been caused by force majeure. Broadly speaking, force
against Cokaliong with the RTC for the collection of the majeure generally applies to a natural accident, such as that
total principal amount of 148,500.00 for the loss of cargo. caused by a lightning, an earthquake, a tempest or a public
UCPB alleged that the loss was due to the negligence of enemy.
Cokaliong. The law provides that a common carrier is presumed to
 Cokaliong in its Answer to the complaint alleged that it have been negligent if it fails to prove that it exercised
was cleared by the Board of Marine Inquiry of any extraordinary vigilance over the goods it transported. Ensuring
negligence and that the shippers/consignee had been the seaworthiness of the vessel is the first step in exercising the
already paid the value of goods stated in the Bill of Lading required vigilance. Petitioner did not present sufficient evidence
and cannot be held liable beyond the value declared in showing what measures or acts it had undertaken to ensure the
the Bill of Lading. seaworthiness of the vessel. It failed to show when the last
 CA held the Cokaliong failed to prove that the fire was inspection and care of the auxiliary engine fuel oil service tank
caused by something other than its negligence in the was made, what the normal practice was for its maintenance, or
upkeep, maintenance of the vessel. It also ruled that some other evidence to establish that it had exercised
Cokaliong is not bound by the valuation of the cargo extraordinary diligence. 
unther the Bills of Lading, nor is the value of the cargo
under said Bills of Lading conclusive because goods were 2) The records show that the Bills of Lading covering the lost
insured with UCPB for the total amount of P150,000 goods contain the stipulation that in case of claim for loss or for
which is considered the face value of the goods. damage to the shipped merchandise or property, the liability of
ISSUES: the common carrier x x x shall not exceed the value of the goods
1) Whether or not Cokaliong is liable for the goods. as appearing in the bill of lading.
2) If it is liable, what is the extent of its liability? A stipulation in the bill of lading limiting the common carriers
liability for loss or destruction of a cargo to a certain sum, unless
HELD: the shipper or owner declares a greater value, is sanctioned by
1) Yes. The uncontroverted findings of the Philippine Coast law, particularly Articles 1749 and 1750 of the Civil Code which
Guard show that the M/V Tandag sank due to a fire, which provides:
resulted from a crack in the auxiliary engine fuel oil service Art. 1749. A stipulation that the common carriers liability is
tank. Fuel spurted out of the crack and dripped to the heating limited to the value of the goods appearing in the bill of lading,
exhaust manifold, causing the ship to burst into flames. The crack unless the shipper or owner declares a greater value, is binding.
was located on the side of the fuel oil tank, which had a mere Art. 1750. A contract fixing the sum that may be recovered by the
two-inch gap from the engine room walling, thus precluding owner or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the circumstances, SARKIES TOURS PH, INC. vs CA, DR. ELINO FORTADES, MARISOL
and has been freely and fairly agreed upon.
FORTADES & FATIMA MINERVA FORTADES
The purpose of the limiting stipulation in the Bill of Lading is to
FACTS:
protect the common carrier. Such stipulation obliges the
shipper/consignee to notify the common carrier of the amount
that the latter may be liable for in case of loss of the goods. The On Aug 31, 1984, Fatima Fortades boarded the petitioner's
common carrier can then take appropriate measures -- getting deluxe bus no.5 in Manila on her way to Legaspi City. With her
insurance, if needed, to cover or protect itself. This precaution on was 3 pieces of luggage containing all of her optometry review
the part of the carrier is reasonable and prudent. Hence, a books, materials and equipment, trial lenses, trial contact lenses,
shipper/consignee that undervalues the real worth of the goods it passport and visa, as well as her mother Marisol’s U.S.
seeks to transport does not only violate a valid contractual immigration (green) card, among other important documents and
stipulation, but commits a fraudulent act when it seeks to make personal belongings. Her brother helped her load her 3 pieces of
the common carrier liable for more than the amount it declared luggage and were kept in the baggage compartment of the bus.
in the bill of lading. However, during a stopover at Daet it was discovered that only
one bag remained in the open compartment. All others, including
Zosimo Mercado and Nestor Angelia misled Cokaliong by
undervaluing the goods in their respective Bills of Lading. Hence, Fatima's things, were missing and could have dropped along the
Cokaliong was exposed to a risk that was deliberately hidden way. Some of the passengers suggested retracing the route to try
from it, and from which it could not protect itself. to recover the lost items but the driver ignored them and
It is well to point out that, for assuming a higher risk (the alleged proceeded to Legaspi City.
actual value of the goods) the insurance company was paid the
correct higher premium by Feliciana Legaspi; while Cokaliong was
paid a fee lower than what it was entitled to for transporting the Fatima immediately reported the loss to her mother who then
goods that had been deliberately undervalued by the shippers in went to petitioner's office in Legaspi City, and later in Manila. The
the Bill of Lading.Between the two of them, the insurer should
petitioner offered her 1,000 pesos for each piece of luggage lost
bear the loss in excess of the value declared in the Bills of
which she turned down. One of Fatima's bags was recovered thru
Lading. This is the just and equitable solution.
their own effort such as asking assistance from radio stations and
from Philtranco bus drivers who plied the same route on Aug 31.
Fatima and others, thru counsel, formally demanded satisfaction right to receive them,” unless the loss is due to any of the
of their claim from petitioner. In a letter, the petitioner excepted causes under Article 1734 thereof.
apologized for the delay and said that a team was sent to Bicol  The cause of the loss in the case at bar was petitioner’s
for the purpose of recovering or at least getting the full detail of negligence in not ensuring that the doors of the baggage
the incident. After more than 9 months of fruitless waiting, they compartment of its bus were securely fastened. As a
decided to file a case to recover the value of the lost items. result of this lack of care, almost all of the luggage was
lost, to the prejudice of the paying passengers.
 Moreover, records revealed that Fatima was not the only
Respondents claimed that the loss was due to petitioner’s failure
one who lost her luggage. Apparently other passengers
to observe extraordinary diligence in the care of Fatima’s luggage
suffered a similar fate. Also, in the letter made by the
and that petitioner dealt with them in bad faith from the start.
petitioner, the petitioner admitted its liability by
Petitioner, on the other hand, disowned any liability for the loss
apologizing to the respondents and assuring them that
on the ground that Fatima allegedly did not declare any excess
efforts were being made to recover the lost items.
baggage upon boarding its bus. The trial court and the CA rules
against the petitioner, hence this appeal.

ISSUE: WON the petitioner, Sarkies Tours PH, is liable for the loss
of the baggage

HELD: YES. The decision of the CA was affirmed.

 Under the Civil Code, “Common carriers, from the nature

of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance
over the goods transported by them,” and this liability
“lasts from the time the goods are unconditionally placed
in the possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to. . . the person who has a
 VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY, The charter party between the petitioner and private
INC., petitioner, vs. COURT OF APPEALS AND SEVEN BROTHERS respondent stipulated that the (o)wners shall not be responsible
SHIPPING CORPORATION, respondents. for loss, split, short-landing, breakages and any kind of damages
Facts: to the cargo.  In a contract of private carriage, the parties may
16 January 1984, plaintiff (Valenzuela Hardwood and validly stipulate that responsibility for the cargo rests solely on
Industrial Supply, Inc.) entered into an agreement with the the charterer, exempting the shipowner from liability for loss of
defendant Seven Brothers (Shipping Corporation) whereby the or damage to the cargo caused even by the negligence of the ship
latter undertook to load on board its vessel M/V Seven captain. Pursuant to Article 1306[17] of the Civil Code, such
Ambassador the formers lauan round logs numbering 940 at the stipulation is valid because it is freely entered into by the parties
port of Maconacon, Isabela for shipment to Manila. 20 January and the same is not contrary to law, morals, good customs, public
1984, plaintiff insured the logs against loss and/or damage with order, or public policy. Unlike in a contract involving a common
defendant South Sea Surety and Insurance Co., Inc. carrier, private carriage does not involve the general
for P2,000,000.00 and the latter issued its Marine Cargo public. Hence, the stringent provisions of the Civil Code on
Insurance Policy No. 84/24229 for P2,000,000.00 on said date. common carriers protecting the general public cannot justifiably
25 January 1984 The said vessel M/V Seven Ambassador sank, be applied to a ship transporting commercial goods as a private
resulting in the loss of the plaintiffs insured logs. 30 January carrier. Consequently, the public policy embodied therein is not
1984, a check for P5,625.00 to cover payment of the premium contravened by stipulations in a charter party that lessen or
and documentary stamps due on the policy was tendered due to remove the protection given by law in contracts involving
the insurer but was not accepted. Instead, the South Sea Surety common carriers.
and Insurance Co., Inc. cancelled the insurance policy it issued as “Common carrier undertaking to carry a special cargo or
of the date of the inception for non-payment of the premium due chartered to a special person only, becomes a private carrier. As a
in accordance with Section 77 of the Insurance Code. private carrier, a stipulation exempting the owner from liability
2 February 1984, plaintiff demanded from defendant South Sea for the negligence of its agent is not against public policy, and is
Surety and Insurance Co., Inc. the payment of the proceeds of the deemed valid.Such doctrine We find reasonable. The Civil Code
policy but the latter denied liability under the policy. Plaintiff provisions on common carriers should not be applied where the
likewise filed a formal claim with defendant Seven Brothers carrier is not acting as such but as a private carrier. The
Shipping Corporation for the value of the lost logs but the latter stipulation in the charter party absolving the owner from liability
denied the claim. After due hearing and trial, REGIONAL trial for loss due to the negligence of its agent would be void only if
court rendered judgment in favor of plaintiff. CA affirmed in part the strict public policy governing common carriers is
the RTC judgment by sustaining the liability of South Sea Surety applied. Such policy has no force where the public at large is not
and Insurance Company (South Sea), but modified it by holding involved, as in this case of a ship totally chartered for the use of a
that Seven Brothers Shipping Corporation (Seven Brothers) was single party. ( Home Insurance Co. vs. American Steamship
not liable for the lost cargo. THUS, this case. Agencies)
HELD: PETITION UNMERITORIOUS. RESPONDENT NOT LIABLE.
 The general public enters into a contract of transportation  The charter party between the Valenzuela Hardwood and
with common carriers without a hand or a voice in the Seven Brothers stipulated that owner (Seven Brothers)
preparation thereof. The riding public merely adheres to the will not be responsible for the split split, short-landing,
contract; even if the public wants to, it cannot submit its own
breakages and any kind of damages to the cargo.
stipulations for the approval of the common carrier. Thus, the law
on common carriers extends its protective mantle against one-
 On 20 January 1984, plaintiff insured the logs against loss
sided stipulations inserted in tickets, invoices or other documents
over which In common carriers the riding public has no and/or damage with defendant South Sea Surety and
understanding or, worse, no choice. Compared to the general Insurance Co., Inc. for P2,000,000.00.
public, a charterer in a contract of private carriage is not similarly  In the meantime, the said vessel M/V Seven Ambassador
situated. It can -- and in fact it usually does -- enter into a free sank on 25 January 1984 resulting in the loss of the
and voluntary agreement. In practice, the parties in a contract of plaintiff's insured logs.
private carriage can stipulate the carriers obligations and
 On 30 January 1984, a check for P5,625.00 to cover
liabilities over the shipment which, in turn, determine the price or
payment of the premium and documentary stamps due
consideration of the charter. Thus, a charterer, in exchange for
convenience and economy, may opt to set aside the protection of on the policy was tendered due to the insurer but was not
the law on common carriers. When the charterer decides to accepted. Instead, the South Sea Surety and Insurance
exercise this option, he takes a normal business risk. Co., Inc. cancelled the insurance policy it issued as of the
date of the inception for non-payment of the premium
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC. vs. due.
COURT OF APPEALS AND SEVEN BROTHERS SHIPPING  On 2 February 1984, plaintiff demanded from defendant
CORPORATION South Sea Surety and Insurance Co., Inc. the payment of
the proceeds of the policy but the latter denied liability
FACTS: under the policy. Plaintiff likewise filed a formal claim with
 It appears that on 16 January 1984, plaintiff (Valenzuela defendant Seven Brothers Shipping Corporation for the
Hardwood and Industrial Supply, Inc.) entered into an value of the lost logs but the latter denied the claim.
agreement with the defendant Seven Brothers (Shipping
Corporation) whereby the latter undertook to load on RESPONDENT’S CONTENTION:
board its vessel M/V Seven Ambassador the former's
lauan round logs numbering 940 at the port of  That the lower court erred in declaring that the non-
Maconacon, Isabela for shipment to Manila. liability clause of the Seven Brothers Shipping
Corporation for logs of the cargo stipulated in the
 charter party is void for being contrary to public policy the negligence of the ship captain. The Civil Code
invoking article 1745 of the New Civil Code provisions on common carriers should not be applied
 The Court of Appeals affirmed in part the RTC judgment where the carrier is not acting as such but as a private
by sustaining the liability of South Sea Surety and carrier. The stipulation in the charter party absolving the
Insurance Company (South Sea), but modified it by owner from liability for loss due to the negligence of its
holding that Seven Brothers Shipping Corporation agent would be void only if the strict public policy
(Seven Brothers) was not liable for the lost cargo. governing common carriers is applied. Such policy has no
force where the public at large is not involved, as in this
ISSUE: case of a ship totally chartered for the use of a single
 W/N a stipulation in a charter party that the "owners shall party. Pursuant to Article 1306 of the Civil Code, such
not be responsible for loss, split, short-landing, breakages stipulation is valid because it is freely entered into by the
and any kind of damages to the cargo" is valid parties and the same is not contrary to law, morals, good
customs, public order, or public policy. Indeed, their
RULING: contract of private carriage is not even a contract of
 VALID. It should be noted at the outset that there is no adhesion. We stress that in a contract of private carriage,
dispute between the parties that the proximate cause of the parties may freely stipulate their duties and
the sinking of M/V Seven Ambassadors resulting in the obligations which perforce would be binding on them.
loss of its cargo was the "snapping of the iron chains and Unlike in a contract involving a common carrier, private
the subsequent rolling of the logs to the portside due to carriage does not involve the general public. Hence, the
the negligence of the captain in stowing and securing the stringent provisions of the Civil Code on common carriers
logs on board the vessel and not due to fortuitous event." protecting the general public cannot justifiably be applied
Likewise undisputed is the status of Private Respondent to a ship transporting commercial goods as a private
Seven Brothers as a private carrier when it contracted to carrier. Consequently, the public policy embodied therein
transport the cargo of Petitioner Valenzuela. Even the is not contravened by stipulations in a charter party that
latter admits this in its petition. lessen or remove the protection given by law in contracts
In a contract of private carriage, the parties may involving common carriers.
validly stipulate that responsibility for the cargo rests The issue were resolved long ago by this Court in
solely on the charterer, exempting the ship owner from Home Insurance Co. vs. American Steamship Agencies.
liability for loss of or damage to the cargo caused even by
 ALBERTA YOBIDO V CA failed to discharge its duty to overthrow the presumption of
negligence with clear and convincing evidence, petitioners are
hereby held liable for damages. Moreover, Art. 1755 provides A
FACTS:
common carrier is bound to carry the passengers safely as far as
Spouses Tito Tumboy and Leny Tumboy together with
human care and foresight can provide, using the utmost diligence
their minor child boarded Yobido liner, owned by petitioners
of very cautious persons, with a due regard for all the
Alberta Yobido. The tires of the bus they boarded exploded,
circumstances.
which caused it to fall into a ravine and struck a tree. Leaving
Also, it has been well settled that an accident caused by the
some injured, and Tito dead. A complaint was filed by his widow
defects in the automobile or through negligence of the driver is
against petitioners of r the breach of contract of carriage, the
not a caso fortuito and would not exempt carrier from liability.
petitioners interposed the defense of caso fortuito, and also that
they exercised extraordinary diligence as: 1) the tire that
exploded was new 2) they were also cruising at 50 to 60 kph and
that 3) drivers under went driving tests before they were
employed and were professionals. Private respondents
contended that the bus driver failed to exercise diligence
required of the carrier as they were, according to the widow,
speeding eventhough it was raining and the road was rough. She
also contends that she told the driver to slow down but the driver
did not listen.

ISSUE:
W/N petitioners exercised extraordinary diligence
required.

HELD:
Art. 1756 of the Civil Code states that in 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. A common carrier may not be absolved from
liability in case of force majeure or fortuitous event alone. The
common carrier must still prove that it was not negligent in
causing the death or injury resulting from an accident. Having
3. Defenses and Conditions vessel and the loss of its cargo was a natural disaster, a tropical
storm which neither petitioner nor the captain of its vessel could
CENTRAL SHIPPING COMPANY, INC VS. INSURANCE COMPANY have foreseen.
OF NORTH AMERICA RTC – petitioner was found to be negligent because monsoons
Facts: were normal occurrences during the months of July to December,
On July 25, 1990 at Puerto Princesa, Palawan, petitioner received could have been foreseen and provided for by an ocean-going
on board its vessel, the M/V Central Bohol, 376 pieces of vessel.
Philippine Apitong Round Logs and undertook to transport said CA – Affirmed RTC adding that weather disturbance was not the
shipment to Manila for delivery to Alaska Lumber Co., Inc. The sole and proximate cause of the sinking of the vessel, which was
cargo was insured for P3,000,000.00 against total loss under also due to the concurrent shifting of the logs in the hold that
respondents Marine Cargo. On July 25, 1990, upon completion of could have resulted only from improper stowage. Thus, the
loading of the cargo, the vessel left Palawan and commenced the carrier was held responsible for the consequent loss of or damage
voyage to Manila. At about 0125 hours on July 26, 1990, while to the cargo, because its own negligence had contributed
enroute to Manila, the vessel listed about 10 degrees starboard thereto.
side, due to the shifting of logs in the hold. At about 0128 hours, petitioner disclaims responsibility for the loss of the cargo by
after the listing of the vessel had increased to 15 degrees, the claiming the occurrence of a storm under Article 1734(1). It
ship captain ordered his men to abandon ship and at about 0130 attributes the sinking of its vessel solely to the weather condition
hours of the same day the vessel completely sank. Due to the between 10:00 p.m. on July 25, 1990 and 1:25 a.m. on July 26,
sinking of the vessel, the cargo was totally lost. Respondent 1990.
alleged that the total loss of the shipment was caused by the fault
and negligence of the petitioner and its captain and as direct Issue:
consequence thereof the consignee suffered damage in the sum Whether or not petitioner is negligent and liable for the loss of
of P3,000,000.00. The consignee, Alaska Lumber Co. Inc., the cargo
presented a claim for the value of the shipment to the petitioner
but the latter failed and refused to settle the claim, hence Held:
respondent, being the insurer, paid said claim and now seeks to YES. The pieces of evidence with respect to the weather
be subrogated to all the rights and actions of the consignee as conditions encountered by the vessel showed that there was a
against the petitioner. Petitioner, while admitting the sinking of southwestern monsoon at the time. The PAGASA, testified that a
the vessel, interposed the defense that the vessel was fully thunderstorm occurred in the midst of a southwest monsoon at
manned, fully equipped and in all respects seaworthy; that all the the time of the voyage. Nonetheless, to our mind it would not be
logs were properly loaded and secured; that the vessels master sufficient to categorize the weather condition at the time as a
exercised due diligence to prevent or minimize the loss before, storm within the absolutory causes enumerated in the law.
during and after the occurrence of the storm. It raised as its main Significantly, no typhoon was observed within the Philippine area
defense that the proximate and only cause of the sinking of its of responsibility during that period. Even if the weather
encountered by the ship is to be deemed a natural disaster under securely in place. Each pile of logs should have been lashed
Article 1739 of the Civil Code, petitioner failed to show that such together by cable wire, and the wire fastened to the side of the
natural disaster or calamity was the proximate and only cause of hold. Considering the strong force of the wind and the roll of the
the loss. Human agency must be entirely excluded from the cause waves, the loose arrangement of the logs did not rule out the
of injury or loss. In other words, the damaging effects blamed on possibility of their shifting. By force of gravity, those on top of the
the event or phenomenon must not have been caused, pile would naturally roll towards the bottom of the ship.
contributed to, or worsened by the presence of human
participation. 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).
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 have been
due only to improper stowage. The fact that the vessel proceeded
through the first southwestern monsoon without any mishap,
and that it began to list only during the second monsoon
immediately after the logs had shifted and seawater had entered
the hold. In the hold, the sloshing of tons of water back and forth
had created pressures that eventually caused the ship to sink.
Had the logs not shifted, the ship could have survived and
reached at least the port of El Nido. In fact, there was another
motor launch that had been buffeted by the same weather
condition within the same area, yet it was able to arrive safely at
El Nido. 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. Notably, 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
EVERETT STEAMSHIP CORP. VS. CA AND HERNANDEZ TRADING The Supreme Court ruled in favor of petitioner. Article 1749
297 SCRA 496 states that a stipulation limiting the carrier’s liability to value of
the goods in the bill of lading is valid, unless the shipper or owner
FACTS: declares a higher value. Article 1750 states that a contract fixing
Hernandez Trading (Hernandez) imported three crates of the sum of what the owner or shipper may recover for the loss of
bus spare parts (labelled Marco 12, 13, 14) from its supplier, the goods is valid, if it is just and reasonable under the
Maruman Trading in Japan. The ships were transported to Manila circumstances and is freely and fairly agreed upon. The limited-
on board ADELFAEVERETTE, a vessel owned by petitioner’s liability clause has constantly been sustained by the Court in
principal, Everett Orient Lines. A bill of lading was issued for the numerous cases. The bill of lading expressly provided that the
crates. When the vessel arrived in Manila, it was discovered that liability of the carrier shall be limited to Y100,000 unless a higher
Marco 14 was missing. Petitioner admitted and confirmed the amount is declared in writing by the shipper in the bill of lading,
loss in a letter. Hernandez made a claim of Y1,552,500, the and extra freight is paid. The stipulation is reasonable and just.
amount shown in the invoice. Petitioner claims its liability was Maruman Trading had the option of declaring a higher value, yet
only limited to Y100,000, which was the maximum limit on its it failed to do so. Contracts of adhesion are not invalid per se. The
liability as stated in Clause 18 of the Bill of Lading. Hernandez other party is free to accept or reject it in its entirety. Ignorance is
filed a collection suit against petitioner with the RTC of Caloocan. not an excuse because the shipper, owner, or consignee has the
The RTC ruled in favour of Hernandez, making petitioner liable for responsibility to fully comprehend the contract. Maruman
Y1,552,500 plus attorney’s fees and cost of the suit. RTC ruled trading, the shipper is extensively engaged in the trading
that Everett categorically admitted to its fault. It failed to business, and is presumed to be aware of the terms and
overcome the presumption of negligence. The limitation clause conditions of shipping transactions. Consignee is bound by the
was in fine print at the back of the bill of lading. CA affirmed the transaction, even if the shipping contract was between shipper
ruling of the RTC. It added that Hernandez was not bound by the and carrier. The relationship between consignee and shipper is
conditions of the bill of lading because it was not a privy to the one of agency, or his status as some stranger in whose favor
contract of carriage between Everett and Maruman Trading, the some stipulation is made in the contract. He automatically
shipper named in the bill of lading. Everett never overcame the becomes a party thereto the moment he enforces and demands
presumption of negligence. the fulfilment of that stipulation. When Hernandez formally
claimed reimbursement for the missing goods based on the very
ISSUES: same bill of lading, it accepted the provisions of the contract and
Whether or not the consent of the consignee to the bill of consequently became bound by it. It is thus estopped from
lading is necessary to make the terms and conditions therein rejecting the limited–liability clause in the bill of lading.
binding upon him; Whether or not the limited liability under
Clause 18 applies to this case.

RULING:
 CRUZ V. SUN HOLIDAYS properly considered ancillary thereto. The constancy of
respondents ferry services in its resort operations is underscored
Facts: by its having its own Coco Beach boats. And the tour packages it
Spouses Dante and Leonora Cruz lodged a Complaint offers, which include the ferry services, may be availed of by
against Sun Holidays, Inc. for damages arising from the death of anyone who can afford to pay the same. These services are thus
their son Ruelito C. Cruz who perished with his wife on board the available to the public. That respondent does not charge a
boat M/B Coco Beach III that capsized en route to Batangas from separate fee or fare for its ferry services is of no moment. It
Puerto Galera, Oriental Mindoro where the couple had stayed at would be imprudent to suppose that it provides said services at a
Coco Beach Island Resort owned and operated by respondent. loss. The Court is aware of the practice of beach resort operators
Eight passengers, including petitioner’s son and his wife, died offering tour packages to factor the transportation fee in arriving
during the incident. Petitioners demanded indemnification from at the tour package price. That guests who opt not to avail of
respondent for the death of their son but denied any liability on respondents ferry services pay the same amount is likewise
the ground of fortuitous event. Petitioners then filed a complaint inconsequential. These guests may only be deemed to have
alleging that respondent, as a common carrier, was guilty of overpaid.
negligence in allowing M/B Coco Beach III to sail notwithstanding
storm warning bulletins issued by PAGASA. They added that
respondent is a common carrier since by its tour package; the
transporting of its guests is an integral part of its resort business.
On the other hand, respondent contends that petitioners failed to
present evidence to prove that it is a common carrier alleging
that its boats are not available to the general public as they only
ferry Resort guests and crew members, that the Resorts ferry
services for guests cannot be considered as ancillary to its
business as no income is derived therefrom; that it exercised
extraordinary diligence; that the incident was caused by a
fortuitous event without any contributory negligence on its part.

Issue:
Whether or not respondent is a common carrier

Ruling:
Yes. Petitioners correctly rely on De Guzman v. Court of
Appeals in characterizing respondent as a common carrier. Its
ferry services are so intertwined with its main business as to be
 SOUTHERN LINES VS CA
Held:
FACTS: YES. The SC held that the contention of Southern Lines with
In 1948, the City of Iloilo requisitioned for rice from the National Rice and respect to the improper packing is untenable. Under Art. 361 of
Corn Corporation (hereafter referred to as NARIC) in Manila. On August 24 of the Code of Commerce, the carrier, in order to free itself from
the same year, NARIC, pursuant to the order, shipped 1,726 sacks of rice liability, was only obliged to prove that the damages suffered by
consigned to the City of Iloilo on board the SS "General Wright" belonging to the goods were “by virtue of the nature or defect of the
the Southern Lines, Inc. Each sack of rice weighed 75 kilos and the entire articles.” Under Art. 362, the plaintiff, in order to hold the
shipment as indicated in the bill of lading had a total weight of 129,450 kilos. defendant liable, was obliged to prove that the damages to the
According to the bill of lading, the cost of the shipment was P63,115.502. goods is by virtue of their nature, occurred on account of its
NARIC shipped 1,726 sacks of rice on board a vessel owned by Southern negligence or because the defendant did not take the
Lines (SS Gen Wright) precaution adopted by careful persons. It held that if the fact of
improper packing is known to the carrier or his servants, or
After paying for the shipment, it was noted at the foot of the bill of lading that apparent upon ordinary observation, but it accepts the goods
the City of Iloilo received the above mentioned merchandise apparently in notwithstanding such condition, it is not relieved of liability for
same condition as when shipped, save as noted below: actually received loss or injury resulting therefrom.
1685 sacks with a gross weight of 116,131 kilos upon actual weighing.

Total shortage ascertained 13,319 kilos." The shortage was equivalent to 41

sacks of rice with the proportionate value of which was P6, 486.353. City filed
a case against NARIC and Southern Lines for the recovery of the amount lost.
Southern Lines' contention: it is exempt from liability because the shortage in
the shipment of rice was due to such factors as the shrinkage, leakage or
spillage of the rice on account of the bad condition of the sacks at the time it
received the same and the negligence of the agents of respondent City of
Iloilo in receiving the shipment.

The lower court ordered Southern Lines to pay, and NARIC was absolved
of liability. The Court of Appeals affirmed lower court ruling. Hence, this
petition.

Issue:
Whether Southern Lines is liable for the loss or shortage of the
rice shipped.
4. Duration of Responsibility No. The suit is not for "loss or damage" to goods
MITUSI LINES V. COURT OF APPEALS, contemplated in §3(6), the question of prescription of action is
G.R. NO. 119571, MARCH 11, 1998. governed not by the COGSA but by Art. 1144 of the Civil Code
FACTS: which provides for a prescriptive period of ten years. As defined
Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation in the Civil Code and as applied to Section 3(6), paragraph 4 of
represented in the Philippines by its agent, Magsaysay Agencies. the Carriage of Goods by Sea Act, "loss" contemplates merely a
It entered into a contract of carriage through Meister Transport, situation where no delivery at all was made by the shipper of the
Inc., an international freight forwarder, with private respondent goods because the same had perished, gone out of commerce, or
Lavine Loungewear Manufacturing Corporation to transport disappeared in such a way that their existence is unknown or
goods of the latter from Manila to Le Havre, France. Petitioner they cannot be recovered. There would be some merit in
undertook to deliver the goods to France 28 days from initial appellant's insistence that the damages suffered by him as a
loading. On July 24, 1991, petitioner's vessel loaded private result of the delay in the shipment of his cargo are not covered by
respondent's container van for carriage at the said port of origin. the prescriptive provision of the Carriage of Goods by Sea Act
above referred to, if such damages were due, not to the
However, in Kaoshiung, Taiwan the goods were not deterioration and decay of the goods while in transit, but to other
transshipped immediately, with the result that the shipment causes independent of the condition of the cargo upon arrival,
arrived in Le Havre only on November 14, 1991. The consignee like a drop in their market value. Said one-year period of
allegedly paid only half the value of the said goods on the ground limitation is designed to meet the exigencies of maritime hazards.
that they did not arrive in France until the "off season" in that In a case where the goods shipped were neither lost nor
country. The remaining half was allegedly charged to the account damaged in transit but were, on the contrary, delivered in port to
of private respondent which in turn demanded payment from someone who claimed to be entitled thereto, the situation is
petitioner through its agent. As petitioner denied private different, and the special need for the short period of limitation
respondent's claim, the latter filed a case in the RTC. Petitioner in cases of loss or damage caused by maritime perils does not
filed a motion to dismiss alleging that the claim against it had obtain. In the case at bar, there is neither deterioration nor
prescribed under the Carriage of Goods by Sea Act. The RTC disappearance nor destruction of goods caused by the carrier's
denied petitioner's motion as well as its subsequent motion for breach of contract. Whatever reduction there may have been in
reconsideration. On petition for certiorari, the CA sustained the the value of the goods is not due to their deterioration or
RTC’s orders. disappearance because they had been damaged in transit.

ISSUE: Whether private respondent's action is for "loss or

damage" to goods shipped, within the meaning of §3(6) of the
Carriage of Goods by Sea Act (COGSA).
HELD:
 SULPICIO LINES, INC., petitioner, vs. FIRST LEPANTO-TAISHO Petitioner-carrier contends that its liability, if any, is only to
INSURANCE CORPORATION, respondent. the extent of the cargo damage or loss and should not include
the lack of fitness of the shipment for transport to Singapore due
DECISION to the damaged packing. This is erroneous. Petitioner-carrier
seems to belabor under the misapprehension that a distinction
FACTS: Taiyo Yuden Philippines, Inc. (owner of the goods) and must be made between the cargo packaging and the contents of
Delbros, Inc. (shipper) entered into a contract, for Delbros, Inc. to the cargo. According to it, damage to the packaging is not
transport a shipment of goods consisting of three (3) wooden tantamount to damage to the cargo. It must be stressed that in
crates. the case at bar, the damage sustained by the packaging of the
cargo while in petitioner-carriers custody resulted in its unfitness
For the carriage of said shipment from Cebu City to Manila,
to be transported to its consignee in Singapore. Such failure to
Delbros, Inc. engaged the services of the vessel M/V Philippine
ship the cargo to its final destination because of the ruined
Princess, owned and operated by petitioner Sulpicio Lines, Inc.
packaging, indeed, resulted in damages on the part of the owner
(carrier/subcontracted vessel). The vessel arrived at the North
of the goods.
Harbor, Manila, on 24 February 1992.
The falling of the crate during the unloading is evidence of
During the unloading of the shipment, one crate fell and
petitioner-carriers negligence in handling the cargo. As a common
contents were damaged beyond use.
carrier, it is expected to observe extraordinary diligence in the
Owners claimed from Sulpicio but was denied. They then handling of goods placed in its possession for transport. Thus,
went after respondent FLPI (First Lepanto) for recovery and when the shipment suffered damages as it was being unloaded,
payment. FLPI then went after Delbros and Sulpicio upon being petitioner-carrier is presumed to have been negligent in the
subrogated to the rights of the owner. Delbros answered that the handling of the damaged cargo. Under Articles 1735 [17] and
negligence lay upon Sulpicio for damaging the cargo. RTC 1752[18] of the Civil Code, common carriers are presumed to have
dismissed the complaint of insurer against Sulpicio but CA been at fault or to have acted negligently in case the goods
reversed decision hence the appeal to SC. transported by them are lost, destroyed or had deteriorated. To
overcome the presumption of liability for loss, destruction or
deterioration of goods under Article 1735, the common carrier
ISSUE: respondent-insurers predecessor-in-interest, did incur must prove that they observed extraordinary diligence as
damages, and if so, whether or not petitioner-carrier is liable for required in Article 1733[19] of the Civil Code.[20]
the same.
Petitioner-carrier miserably failed to adduce any shred of
evidence of the required extraordinary diligence to overcome
RULING: It cannot be denied that the shipment sustained damage the presumption that it was negligent in transporting the cargo.
while in the custody of petitioner-carrier.
 Coming now to the issue of the extent of petitioner-carriers COASTWISE LIGHTERAGE V. CA
liability, it is undisputed that respondent-insurer paid the owner 245 SCRA 796
of the goods under the insurance policy the amount of
P194,220.31 for the alleged damages the latter has incurred. The FACTS: Pag-asa Sales entered into a contract to transport
question then is: To what extent is Sulpicio Lines, Inc., as common molasses from the province of Negros to Manila with Coastwise
carrier, liable for the damages suffered by the owner of the Lighterage Corporation using the latter’s dumb barges. The
goods? barges were towed in tandem by the tugboat MT Marica. Upon
reaching Manila Bay, one of the barges struck an unknown
Upon respondent-insurers payment of the alleged amount of
sunken object. The forward buoyancy compartment was
loss suffered by the insured (the owner of the goods), the insurer
damaged and the molasses at the cargo tanks were contaminated
is entitled to be subrogated pro tanto to any right of action
and rendered unfit for the use it was intended
which the insured may have against the common carrier whose
negligence or wrongful act caused the loss
Pag-asa Sales rejected the shipment of molasses as total loss.
As found by the Court of Appeals, the falling of the crate was Pag-asa then filed a formal claim with the insurer of its lost cargo,
negligence on the part of Sulpicio Lines, Inc. for which it cannot Philippine General Insurance Company and against Coastwise
exculpate itself from liability because it failed to prove that it Lighterage. PhilGen paid Pag-asa P700K. PhilGen filed an action
exercised extraordinary diligence.[27] against Coastwise Lighterage seeking to recover the amount paid
to Pag-asa. PhilGen claims to be subrogated to all the contractual
Hence, we uphold the ruling of the appellate court that
rights and claims which the consignee may have against the
herein petitioner-carrier is liable to pay the amount paid by
carrier.
respondent-insurer for the damages sustained by the owner of
the goods.
Coastwise stresses the fact that it contracted with Pag-asa Sales
to transport the shipment of the molasses and refers to this
contract as a “charter agreement”; it claims therefore to be a
private carrier citing Home INSURENACE Company v. America
Steamship Agencies ruling “… a common carrier undertaking to
carry a special cargo or chartered to a special person only
becomes a private carrier.”

Moreover, Coastwise contends that subrogation does not apply

in this case.

ISSUE:
(1) WON Coastwise was transformed into a private carrier, by PHILIPPINES FIRST INSURANCE CO., INC. (PFI), petitioner
virtue of the contract of affreightment which it entered into v.
with the consignee. WALLEM PHILS. SHIPPING, INC., UNKNOWN CHARTERER OF THE
(2) WON the insurer was subrogated into the rights of the VESSEL M/S “OFFSHORE MASTER”, AND SHANGHAI FAREAST
consignee against the carrier, upon payment of the insurer of SHIP BUSINESS COMPANY, respondents
the value of consignee’s goods lost  
Facts:
HELD: On or about 02 October 1995,  a shipment of 10,000 bags of
(1) Petitioner’s reliance of the case is misplaced. The conclusions sodium sulphate anhydrous 99 PCT Min. was loaded on board the
of the court is that “the charter party contract is one of M/S Offshore Master for consignee L.G. Atkimson Import-Export,
affreightment over the whole vessel, rather than a demise. As Inc. The shipper of the shipment is Shanghai Fareast Ship
such, the liability of the ship owner for acts or negligence of Business Company. Wallem Philippines Shipping, Inc (Wallem). is
its captain and crew, would remain in the absence of the local ship agent of shipper and the unknown owner and
stipulation.” Although a charter party may transform a charterer of M/S Offshore Master. On 16 October 1995, the
common carrier into a private one, the same is not true in a shipment arrived at Manila. It was discovered that 2,426 bags
contract of affreightment on account of the distinctions were in bad order and condition; and around 120,000 kilograms
between the two. By the contract of affreigtment, Coastwise of the total 500,000 kilograms of shipment had been exposed and
was not converted into a private carrier, but remained a contaminated, resulting in losses due to depreciation and
common carrier and was still liable as such. As a common downgrading. Petitioner PFI paid consignee for the damages that
carrier, petitioner is liable for breach of the contract of the latter suffered and in the exercise of its right of subrogation,
carriage, having failed to overcome the presumption of sent a demand letter to respondent Wallem for recovery of the
negligence with the loss and destruction of goods it amount paid to consignee, which Wallem did not pay. An action
transported, by proof of its exercise of extraordinary before the Regional Trial Court was filed, which ordered Wallem
diligence. to pay PFI. The RTC attributed the damage and losses sustained
by the shipment to the arrastre operator’s mishandling in its
(2) Undoubtedly, upon payment by respondent insurer PhilGen discharge; and held Wallem and arrastre operator solidarily
of the amount of P700,000.00 to Pag-asa Sales, Inc., the liable. The Court of Appeals reversed the RTC decision, holding
consignee of the cargo of molasses totally damaged while the arrastre operator solely liable to consignee, hence this
being transported by petitioner Coastwise Lighterage, the petition.
former was subrogated into all the rights which Pag-asa Sales,  
Inc. may have had against the carrier, herein petitioner Issue:
Coastwise Lighterage. Whether or not Wallem, as common carrier, is obligated to safely
discharge the cargo from the vessel and be held liable for the
damages suffered by consignee.
  Samar Mining v. Nordeutscher Lloyd (supra),
Held: G.R. No. L-28673. October 23, 1984
Yes. Article 1736 of the Civil code provides that the extraordinary FACTS: The case arose from an importation made by Samar
responsibility of the common carrier lasts from the time the
Mining Co. Inc. of 1 crate Optima welded wedge wire sieves
goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are through the M/S Schwabenstein, a vessel owned by
delivered, actually or constructively, by the carrier to the Nordeutscher Lloyd, (represented in the Philippines by its agent,
consignee, or to the person who has a right to receive them. C.F. Sharp & Co., Inc.), which shipment is covered by Bill of Lading
Although the damage was attributed to mishandling of the No. 18 duly issued to consignee Samar Mining. Upon arrival of the
stevedores of the arrastre operator, the stevedores were under vessel at the port of Manila, the importation was unloaded and
the supervision of Wallem. It is settled in maritime law delivered in good order and condition to the bonded warehouse
jurisprudence that cargoes while being unloaded generally of AMCYL. The goods were however never delivered to, nor
remain under the custody of the carrier. In the instant case, the received by, the consignee at the port of destination — Davao.
damage or losses were incurred during the discharge of the When the letters of complaint sent to Nordeutscher Lloyd failed
shipment while under the supervision of the carrier.
to elicit the desired response, Samar Mining filed a formal claim
Consequently, the carrier is liable for the damage or losses
for P1,691.93, the equivalent of $424.00 at the prevailing rate of
caused to the shipment.
exchange at that time, against the former, but neither paid.

Samar Mining filed a suit to enforce payment. Nordeutscher Lloyd

and CF Sharp & Co. brought in AMCYL as third party defendant.
The trial court rendered judgment in favor of Samar Mining,
ordering Nordeutscher Lloyd, et. al. to pay the amount of
P1,691.93 plus attorney’s fees and costs. However, the Court
stated that Nordeutscher Lloyd, et. al. may recoup whatever they
may pay Samar Mining by enforcing the judgment against third
party defendant AMCYL, which had earlier been declared in
default. Nordeutscher Lloyd and C.F. Sharp & Co. appealed from
said decision.

Notes
The following are the pertinent ports, as provided in the bill of of the same bill, it was provided that “this carrier, in making
lading: arrangements for any transshipping or forwarding vessels or
Port of Loading: Bremen, Germany means of transportation not operated by this carrier shall be
Port of discharge from ship: Manila considered solely the forwarding agent of the shipper and
Port of destination/Port of discharge of the goods: Davao without any other responsibility whatsoever even though the
freight for the whole transport has been collected by him…
As plainly indicated on the face of the bill, the vessel M/S Pending or during forwarding or transshipping the carrier may
Schwabenstein is to transport the goods only up to Manila. store the goods ashore or afloat solely as agent of the shipper…”
Thereafter, the goods are to be transshipped by the carrier to the
port of destination. We find merits in Nordeutscher’s contention that they are not
liable for the loss of the subject goods by claiming that they have
ISSUE: Whether or not a stipulation in the bill of lading exempting discharged the same in full and good condition unto the custody
the carrier from liability for loss of goods not in its actual custody of AMCYL at the port of discharge from ship — Manila, and
(i.e., after their discharge from the ship) is valid. therefore, pursuant to the aforequoted stipulation (Sec. 11) in
the bill of lading, their responsibility for the cargo had ceased.The
HELD: YES! It is clear that in discharging the goods from the ship validity of stipulations in bills of lading exempting the carrier from
at the port of Manila, and delivering the same into the custody of liability for loss or damage to the goods when the same are not in
AMCYL, the bonded warehouse, appellants were acting in full its actual custody has been upheld by Us in PHOENIX ASSURANCE
accord with the contractual stipulations contained in Bill of Lading CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968), ruling
No. 18. The delivery of the goods to AMCYL was part of that “pursuant to the terms of the Bill of Lading, appellee's
appellants' duty to transship (meaning to transfer for further responsibility as a common carrier ceased the moment the goods
transportation from one ship or conveyance to another) the were unloaded in Manila and in the matter of transshipment,
goods from Manila to their port of destination-Davao. appellee acted merely as an agent of the shipper and consignee”

The extent of appellant carrier's responsibility and/or liability in

the transshipment of the goods in question are spelled out and
delineated under Section 1, paragraph 3 of Bill of Lading No. 18,
to wit: “the carrier shall not be liable in any capacity whatsoever
for any delay, loss or damage occurring before the goods enter
ship's tackle to be loaded or after the goods leave ship's tackle to
be discharged, transshipped or forwarded”. Further, in Section 11
 G.R. No. L-48757 May 30, 1988 control), that it condemned the petitioner despite the fact the
MAURO GANZON, petitioner,  dumping of the scrap iron into the sea was due to the order of a
vs. local government official, and that it did not consider the such
COURT OF APPEALS and GELACIO E. TUMAMBING, respondents. loss was due to a fortuitous event.

Facts: Issue:

Gelacio Tumambing contracted the services of Mauro B. Ganzon Whether or not the scrap iron was placed unconditionally under
to haul 305 tons of scrap iron from Mariveles, Bataan, to the port the custody and control of the petitioner to make him liable
of Manila on board the lighter LCT "Batman". Ganzon sent his
lighter to Mariveles. Tumambing delivered the scrap iron to Ruling:
Filomeno Niza, captain of the lighter, for loading and on the same
day, the loading commenced. When about half of the scrap iron The private respondent delivered the scraps to Captain Niza for
was already loaded, Mayor Jose Advincula of Mariveles, Bataan, loading in the lighter and the petitioner, thru his employees,
arrived and demanded P5,000.00 from Tumambing. The latter actually received the scraps. By the said act of delivery, the scraps
resisted the shakedown and after a heated argument between were unconditionally placed in the possession and control of the
them, Mayor Advincula drew his gun and fired at Tumambing. common carrier, and upon their receipt by the carrier for
The gunshot was not fatal. Tumambing was taken to the hospital transportation, the contract of carriage was deemed perfected.
for treatment. Consequently, the petitioner-carrier's extraordinary responsibility
for the loss, destruction or deterioration of the goods
After sometime, the loading of the scrap iron was resumed. But commenced. Pursuant to Art. 1736, such extraordinary
sometime later, Acting Mayor Basilio Rub, accompanied by three responsibility would cease only upon the delivery, actual or
policemen, ordered captain Niza and his crew to dump the scrap constructive, by the carrier to the consignee, or to the person
iron. Acting Mayor Rub issued a receipt stating that the who has a right to receive them. The fact that part of the
Municipality of Mariveles had taken custody of the scrap iron. shipment had not been loaded on board the lighter did not impair
Tumambing an instituted an action against Ganzon for damages the said contract of transportation as the goods remained in the
based on culpa contractual before the CFI which did not rule in its custody and control of the carrier, albeit still unloaded.
favor. On appeal, the CA reversed and set aside the decision of Hence, the petitioner is presumed to have been at fault or to
the CFI, ordering that Ganzon should pay Tumambing for have acted negligently. By reason of this presumption, the court
damages. is not even required to make an express finding of fault or
The petitioner, in a Petition for Review, alleged that the CA erred negligence before it could hold the petitioner answerable for the
in finding that there was breach of contract (commencing from breach of the contract of carriage. Still, the petitioner could have
the scrap iron was placed into the petitioner’s custody and been exempted from any liability had he been able to prove that
he observed extraordinary diligence in the vigilance over the SALUDO v. CA
goods in his custody, according to all the circumstances of the G.R. No. 95536, March 23, 1992
case, or that the loss was due to an unforeseen event or to force
majeure. As it was, there was hardly any attempt on the part of FACTS:
the petitioner to prove that he exercised such extraordinary After the death of plaintiffs' mother, Crispina Galdo
diligence. Saludo, in Chicago, Illinois, (on) October 23, 1976, Pomierski and
Son Funeral Home of Chicago, made the necessary preparations
and arrangements for the shipment of the remains from Chicago
*Ung ibang issues: to the Philippines. On October 26, 1976, Pomierski brought the
We cannot sustain the theory of caso fortuito. before the remains to C.M.A.S. (Continental Mortuary Air Services) at the
appellee Ganzon could be absolved from responsibility on the airport (Chicago) which made the necessary arrangements such
ground that he was ordered by competent public authority to as flights, transfers, etc. C.M.A.S. booked the shipment with PAL,
unload the scrap iron, it must be shown that Acting Mayor Basilio with Pomierski F.H. as the shipper and Mario (Maria) Saludo as
Rub had the power to issue the disputed order, or that it was the consignee. PAL Airway Bill No. 079- 01180454 Ordinary was
lawful, or that it was issued under legal process of authority. The issued wherein the requested routing was from Chicago to San
appellee failed to establish this. Indeed, no authority or power of Francisco on board Trans World Airlines (TWA) Flight 131 of
the acting mayor to issue such an order was given in evidence. October 27, 1976, and from San Francisco to Manila on board PAL
Neither has it been shown that the cargo of scrap iron belonged Flight No. 107 of the same date, and from Manila to Cebu on
to the Municipality of Mariveles. What we have in the record is board PAL Flight 149 of October 29, 1976. When petitioners
the stipulation of the parties that the cargo of scrap iron was arrived at the Chicago Airport, they were informed that their
accilmillated by the appellant through separate purchases here mother’s remains were on a place to Mexico City, that there were
and there from private individuals. The fact remains that the two bodies at the terminal, and somehow they were switched.
order given by the acting mayor to dump the scrap iron into the The following day, October 28, 1976, the shipment of the remains
sea was part of the pressure applied by Mayor Jose Advincula to of Crispina Saludo arrived in San Francisco from Mexico, and was
shakedown the appellant for P5,000.00. The order of the acting then transferred to or received by PAL. The shipment arrived in
mayor did not constitute valid authority for appellee Mauro Manila on October 30, 1976, a day after its expected arrival on
Ganzon and his representatives to carry out. October 29, 1976. Petitioner then filed a damage suit against
TWA and PAL. The court below absolved the two respondent
airline companies of liability. The Court of Appeals affirmed the
decision of the lower court in toto, and in a subsequent
resolution, denied herein petitioners' motion for reconsideration
for lack of merit.

ISSUE:
 Whether or not private respondents failed to exercise delivery of the cargo subject of the contract of carriage. Only
extraordinary diligence required by law which resulted in the when such fact of delivery has been unequivocally established
switching and/or misdelivery of the remains of Crispina Saludo to can the liability for loss, destruction or deterioration of goods in
Mexico. the custody of the carrier, absent the excepting causes under
RULING: Article 1734, attach and the presumption of fault of the carrier
No. On October 26, 1976, the cargo containing the under Article 1735 be invoked.
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. 30 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
 BENITO MACAM V CA
Held:
Facts: It is a standard maritime practice when immediate delivery is of
Benito Macam, doing business under name Ben-Mac the essence, for shipper to request or instruct the carrier to
Enterprises, shipped on board vessel Nen-Jiang, owned and deliver the goods to the buyer upon arrival at the port of
operated by respondent China Ocean Shipping Co. through local destination without requiring presentation of bill of lading as that
agent Wallem Philippines Shipping Inc., 3,500 boxes of usually takes time. Thus, taking into account that subject
watermelon and 1,611 boxes of fresh mangoes covered by 2 shipment consisted of perishable goods and SOLIDBANK pre-paid
separate Bills of Lading. The bills covered the provision that it the full amount of value thereof, it is not hard to believe the
must be surrendered and duly indorsed for the exchange of the claim of respondent WALLEM that petitioner indeed requested
delivered goods. The shipment was bound for Hongkong with the release of the goods to GPC without presentation of the bills
PAKISTAN BANK as consignee and Great Prospect Company of of lading and bank guarantee. To implement the said telex
Rowloon (GPC) as notify party. Upon arrival in Hongkong, instruction, the delivery of the shipment must be to GPC, the
shipment was delivered by respondent WALLEM directly to GPC, notify party or real importer/buyer of the goods and not the
not to PAKISTAN BANK and without the required bill of lading PAKISTANI BANK since the latter can very well present the
having been surrendered. Subsequently, GPC failed to pay original Bills of Lading in its possession. Likewise, if it were the
PAKISTAN BANK, such that the latter, still in possession of original PAKISTANI BANK to whom the cargoes were to be strictly
bill of lading, refused to pay petitioner thru SOLIDBANK. Since delivered, it will no longer be proper to require a bank guarantee
SOLIDBANK already pre-paid the value of shipment, it demanded as a substitute for the Bill of Lading. To construe otherwise will
payment from respondent WALLEM but was refused. MACAM render meaningless the telex instruction. After all, the cargoes
constrained to return the amount paid by SOLIDBANK and consist of perishable fresh fruits and immediate delivery thereof
demanded payment from WALLEM but to no avail. WALLEM the buyer/importer is essentially a factor to reckon with. We
submitted in evidence a telex dated 5 April 1989 as basis for emphasize that the extraordinary responsibility of the common
delivering the cargoes to GPC without the bills of lading and bank carriers lasts until actual or constructive delivery of the cargoes to
guarantee. The telex instructed delivery of various shipments to the consignee or to the person who has a right to receive them.
the respective consignees without need of presenting the bill of PAKISTAN BANK was indicated in the bills of lading as consignee
lading and bank guarantee per the respective shipper’s request whereas GPC was the notify party. However, in the export
since “for prepaid shipt ofrt charges already fully paid.” MACAM, invoices GPC was clearly named as buyer/importer. Petitioner
however, argued that, assuming there was such an instruction, also referred to GPC as such in his demand letter to respondent
the consignee referred to was PAKISTAN BANK and not GPC. WALLEM and in his complaint before the trial court. This premise
draws us to conclude that the delivery of the cargoes to GPC as
Issue: buyer/importer which, conformably with Art. 1736 had, other
W/N respondents are liable to petitioners for releasing the goods than the consignee, the right to receive them was proper.
without the bills
1. Stipulation Limiting Carrier’s Liability liable for: 1) P42,766.02 by way of actual damages; 2) P20,000.00
by way of exemplary damages; 3) P10,000.00 as attorney's fees;
G.R. No. 92501 March 6, 1992 all in addition to the costs of the suit. Defendants' counterclaim is
PHILIPPINE AIR LINES, petitioner vs. HON. COURT OF APPEALS dismissed for lack of merit. Petitioner contends that under the
and ISIDRO CO, respondents. Warsaw Convention, its liability, if any, cannot exceed US $20.00
Facts: At about 5:30 a.m. on April 17, 1985, plaintiff [Co] with his based on weight as private respondent Co did not declare the
wife and son, arrived at the Manila International Airport aboard contents of his baggage nor pay traditional charges before the
defendant airline's PAL Flight No. 107 from San Francisco, flight.
California. Plaintiff proceeded to the baggage retrieval and found Issue: Whether petitioner’s liability is limited to $20.00 under the
eight of his luggage, but despite diligent search, he failed to Warsaw Convention?
locate ninth luggage, with claim check number 729113 which is Held: No. The provisions of the New Civil Code on common
the one in question in this case. Plaintiff then immediately carriers are Articles 1733, 1735 and 1753 shall govern. Art. 1753.
notified defendant company through its employee, Willy The law of the country to which the goods are to be transported
Guevarra, who filled up the printed form known as a Property shall govern the liability of the common carrier for their loss,
Irregularity Report  acknowledging one of the plaintiff's luggages destruction or deterioration. Since the passenger's destination
to be missing. Plaintiff's invoices evidencing their purchases show in this case was the Philippines, Philippine law governs the
their missing personal effects to be worth US$1,243.01, in liability of the carrier for the loss of the passenger's luggage. In
addition to the presents entrusted to them by their friends which this case, the petitioner failed to overcome, not only the
plaintiffs testified to be worth about US$500.00 to US$600.00 presumption, but more importantly, the private respondent's
Plaintiff on several occasions unrelentingly called at defendant's evidence, proving that the carrier's negligence was the proximate
office in order to pursue his complaint about his missing luggage cause of the loss of his baggage. Furthermore, petitioner acted in
but no avail. Thus, on April 15, 1985, plaintiff through his lawyer bad faith in faking a retrieval receipt to bail itself out of having to
wrote a demand letter to defendant company though Rebecca V. pay Co's claim. (Art. 1735) The Court of Appeals therefore did not
Santos, its manager, Central Baggage Services, who replied, "that err in disregarding the limits of liability under the Warsaw
to date we have been unable to locate your client's (plaintiff's) Convention. The award of exemplary damages and attorney's
baggage despite our careful search" and requesting plaintiff's fees to the private respondent was justified.
counsel to "please extend to him our sincere apologies for the
inconvenience he was caused by this unfortunate incident".
Despite the letter, however, defendants never found plaintiff's Additional Note: (if ever lang itanong)
missing luggage or paid its corresponding value. Consequently, on Plaintiff’s lost luggage was a Samsonite suitcase 62 inches in
May 3, 1985, plaintiff filed his present complaint against said length, worth about US$200.00 and containing personal effects
defendants. Co sued the airline for damages. The Regional Trial purchased by plaintiff and his wife and similar other items sent by
Court of Pasay City found the defendant airline (now petitioner)
their friends abroad to be given as presents to relatives in the CATHAY PACIFIC AIRWAYS, LTD, petitioner, vs. COURT OF
Philippines. APPEALS and TOMAS L. ALCANTARA, respondents.
In Alitalia vs. IAC (192 SCRA 9, 18, citing Pan American World BELLOSILLO, J p:
Airways, Inc. vs. IAC 164 SCRA 268), the Warsaw Convention FACTS:
limiting the carrier's liability was applied because of a simple loss
On 19 October 1975, Tomas L. Alcantara was a first class
of baggage without any improper conduct on the part of the
passenger of Cathay Pacific Airways, Ltd. (CATHAY for brevity) on
officials or employees of the airline, or other special injury
its Flight No. CX-900 from Manila to Hongkong and onward from
sustained by the passengers. The petitioner therein did not
Hongkong to Jakarta on Flight No. CX-711. The purpose of his trip
declare a higher value for his luggage, much less did he pay an
was to attend the following day, 20 October 1975, a conference
additional transportation charge. – (used by petitioner to support
with the Director General of Trade of Indonesia, Alcantara being
their contention)
the Executive Vice-President and General Manager of Iligan
Cement Corporation, Chairman of the Export Committee of the
Philippine Cement Corporation, and representative of the
Cement Industry Authority and the Philippine Cement
Corporation. He checked in his luggage which contained not only
his clothing and articles for personal use but also papers and
documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his
luggage was missing. When he inquired about his luggage from
CATHAY's representative in Jakarta, Alcantara was told that his
luggage was left behind in Hongkong. For this, he was offered
$20.00 as "inconvenience money" to buy his immediate personal
needs until the luggage could be delivered to him. His luggage
finally reached Jakarta more than twenty four (24) hours after his
arrival. However, it was not delivered to him at his hotel but was
required by CATHAY to be picked up by an official of the
Philippine Embassy.
Alcantara filed his complaint against CATHAY with the CFI of
Lanao del Norte praying for temperate, moral and exemplary
damages, plus attorney's fees. The trial court rendered its
decision ordering CATHAY to pay Plaintiff P20,000.00 for moral
damages, P5,000.00 for temperate damages, P10,000.00 for
exemplary damages, and P25,000.00 for attorney's fees, and the In the case at bar, both the CFI and CA found that CATHAY was
costs. grossly negligent and reckless when it failed to deliver the
Both parties appealed to the CA. CATHAY assailed the conclusion luggage of Alcantara at the appointed place and time. CATHAY
of the trial court that it was accountable for breach of contract alleges that as a result of mechanical trouble, all pieces of luggage
and questioned the non-application by the court of the Warsaw on board the first aircraft bound for Jakarta were unloaded and
Convention as well as the excessive damages awarded on the transferred to the second aircraft which departed an hour and a
basis of its finding that respondent Alcantara was rudely treated half later. Yet, as the CA noted, CATHAY was not even aware that
by petitioner's employees during the time that his luggage could it left behind Alcantara's luggage until its attention was called by
not be found. For his part, Alcantara assigned as error the failure the Hongkong Customs authorities. More, bad faith or otherwise
of the trial court to grant the full amount of damages sought in improper conduct may be attributed to the employees of
his complaint. CATHAY. While the mere failure of CATHAY to deliver
respondent's luggage at the agreed place and time did not ipso
CA rendered its decision affirming the findings of fact of the trial facto amount to willful misconduct since the luggage was
court but modifying its award by increasing the moral damages to eventually delivered to private respondent, albeit belatedly, We
P80,000.00, exemplary damages to P20,000.00 and temperate or are persuaded that the employees of CATHAY acted in bad faith.
moderate damages to P10,000.00. The award of P25,000.00 for
attorney's fees was maintained. Hence, this petition. -The duty officer told Alcantara: 'What can we do, the baggage is
missing. I cannot do anything.' something like it. 'Anyhow you can
ISSUES: buy anything you need, charged to Cathay Pacific.' 'You can buy
Whether or not Cathay is liable to Alcantara for moral, exemplary anything chargeable to Cathay Pacific'. The duty officer would like
and temperate damages as well as attorney's fees? to dismiss the affair as soon as possible by saying indifferently
Whether or not the Warsaw Convention on the libility of a carrier 'Don't worry. It can be found.'
to its passngers is applicable in the instant case? Indeed, the aforequoted testimony shows that the language and
HELD: conduct of CATHAY's representative towards Alcantara was
discourteous or arbitrary to justify the grant of moral damages.
1. YES, Cathay is liable to Alcantara for damages except for The CATHAY representative was not only indifferent and
temperate damages. impatient; he was also rude and insulting. He simply advised
A. Moral Damages Alcantara to buy anything he wanted. But even that was not
Moral damages predicated upon a breach of contract of carriage sincere because the representative knew that the passenger was
may only be recoverable in instances where the mishap results in limited only to $20.00 which, certainly, was not enough to
death of a passenger, or where the carrier is guilty of fraud or bad purchase comfortable clothings appropriate for an executive
faith. conference.
Considering that Alcantara was not only a revenue passenger but
even paid for a first class airline accommodation and
accompanied at the time by the Commercial Attache of the It does not regulate, much less exempt, the carrier from liability
Philippine Embassy who was assisting him in his problem, for damages for violating the rights of its passengers under the
CATHAY or its agents should have been more courteous and contract of carriage, especially if wilfull misconduct on the part of
accommodating to private respondent, instead of giving him a the carrier's employees is found or established, which is clearly
curt reply, "What can we do, the baggage is missing. I cannot do the case before Us. For, the Warsaw Convention itself provides in
anything . . . Anyhow, you can buy anything you need, charged to Art. 25 that —
Cathay Pacific." CATHAY's employees should have been more "(1) The carrier shall not be entitled to avail himself of the
solicitous to a passenger in distress and assuaged his anxieties provisions of this convention which exclude or limit his liability, if
and apprehensions. To compound matters, CATHAY refused to the damage is caused by his wilfull misconduct or by such default
have the luggage of Alcantara delivered to him at his hotel; on his part as, in accordance with the law of the court to which
instead, he was required to pick it up himself and an official of the the case is submitted, is considered to be equivalent to wilfull
Philippine Embassy. Under the circumstances, it is evident that misconduct."
petitioner was remiss in its duty to provide proper and adequate
assistance to a paying passenger, more so one with first class (2) Similarly the carrier shall not be entitled to avail himself of the
accommodation. said provisions, if the damage is caused under the same
circumstances by any agent of the carrier acting within the scope
B. Temperate Damages of his employment."
However, Alcantara is not entitled to temperate damages, When petitioner airline misplaced Alcantara's luggage and failed
contrary to the ruling of the court a quo, in the absence of any to deliver it to its passenger at the appointed place and time,
showing that he sustained some pecuniary loss. It cannot be some special species of injury must have been caused to him. For
gainsaid that Alcantara's luggage was ultimately delivered to him sure, the latter underwent profound distress and anxiety, and the
without serious or appreciable damage. fear of losing the opportunity to fulfill the purpose of his trip. In
2. NO, the Warsaw Convention is not applicable in the instant fact, for want of appropriate clothings for the occasion brought
case. about by the delay of the arrival of his luggage, to his
Although the Warsaw Convention has the force and effect of law embarrassment and consternation respondent Alcantara had to
in this country, being a treaty commitment assumed by the seek postponement of his pre-arranged conference with the
Philippine government, said convention does not operate as an Director General of Trade of the host country.
exclusive enumeration of the instances for declaring a carrier In one case, this Court observed that a traveller would naturally
liable for breach of contract of carriage or as an absolute limit of suffer mental anguish, anxiety and shock when he finds that his
the extent of that liability. The Warsaw Convention declares the luggage did not travel with him and he finds himself in a foreign
carrier liable for damages in the enumerated cases and under land without any article of clothing other than what he has on.
certain limitations. However, it must not be construed to
preclude the operation of the Civil Code and other pertinent laws.
 TRANS-ASIA SHIPPING LINES v COURT OF APPEALS and ATTY. compensatory, moral, and exemplary damages. Petitioner knew
RENATO T. ARROYO from the very start of the voyage knew for a fact that the vessel
G.R. No. 118126 March 4, 1996 was not yet in its sailing condition because the second engine was
still being repaired. He may call him a very "panicky passenger" or
DAVIDE, JR., J. a "nervous person", but this will not relieve it from the liability it
Facts: Atty. Renato Arroyo, a public attorney, bought a ticket from incurred for its failure to exercise utmost diligence. As discussed,
petitioner a corporation engaged in inter-island shipping, for the petitioner in sailing to Cagayan de Oro City with only one engine
voyage of M/V Asia Thailand vessel to Cagayan de Oro City from and with full knowledge of the true condition of the vessel, acted.
Cebu City. Upon boarding, he noticed that some repair works [sic] in bad faith with malice, in complete disregard for the safety of
were being undertaken on the engine of the vessel. The vessel the passengers and only for its own personal
departed at around 11:00 in the evening with only one (1) engine advancement/interest. Moral damages are recoverable in a
running. After an hour of slow voyage, the vessel stopped near damage suit predicated upon a breach of contract of carriage
Kawit Island and dropped its anchor thereat. After half an hour of where it is proved that the carrier was guilty of fraud or bad faith
stillness, some passengers demanded that they should be even if death does not result. When entitlement to moral
allowed to return to Cebu City for they were no longer willing to damages has been established, the award of exemplary damages
continue their voyage to, Cagayan de Oro City. The captain is proper.
acceeded [sic] to their request and thus the vessel headed back Issue: WON Petitioner observed extraordinary diligence in
to Cebu City. At Cebu City, plaintiff together with the other ensuring the safety of its passengers
passengers who requested to be brought back to Cebu City, were
allowed to disembark. Thereafter, the vessel proceeded to Held: NO. The failure of a common carrier to maintain in
Cagayan de Oro City. Plaintiff, the next day, boarded the M/V Asia seaworthy condition its vessel involved in a contract of carriage is
Japan for its voyage to Cagayan de Oro City, likewise a vessel of a clear breach of its duty prescribed in Article 1755 of the Civil
defendant. On account of this failure of defendant to transport Code. Before commencing the contracted voyage, the petitioner
him to the place of destination on November 12, 1991, plaintiff undertook some repairs on the cylinder head of one of the
filed before the trial court a complaint for damages against vessel's engines. But even before it could finish these repairs, it
defendant. allowed the vessel to leave the port of origin on only one
functioning engine, instead of two. Moreover, even the lone
After due trial, the trial court rendered its decision and ruled that functioning engine was not in perfect condition as sometime after
the action was only for breach of contract, with Articles 1170, it had run its course, it conked out. This caused the vessel to stop
1172, and 1173 of the Civil Code as applicable law — not Article and remain a drift at sea, thus in order to prevent the ship from
2180 of the same Code. capsizing, it had to drop anchor. Plainly, the vessel was
On appeal, the Court of Appeals reversed the trial court's decision unseaworthy even before the voyage began. For a vessel to be
by applying Article 1755 in relation to Articles 2201, 2208, 2217, seaworthy, it must be adequately equipped for the voyage and
and 2232 of the Civil Code and, accordingly, awarded manned with a sufficient number of competent officers and crew.
*On issue of damages: Affirmed. (No actual damages since no SWEET LINES, INC., petitioner, vs.HON. BERNARDO TEVES,
evidence of delay. Any further delay then in the private Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO
respondent's arrival at the port of destination was caused by his TANDOG, JR., and ROGELIO TIRO, respondents.
decision to disembark. Had he remained on the first vessel, he TOPIC: Stipulation Limiting Carrier’s Liability
would have reached his destination at noon of 13 November
1991, thus been able to report to his office in the afternoon. He,
therefore, would have lost only the salary for half of a day. But FACTS:
actual or compensatory damages must be proved, which the Private respondents Atty. Tandog and Tiro bought tickets for
private respondent failed to do. There is no convincing evidence Voyage at the branch office of petitioner, a shipping company
that he did not receive his salary for 13 November 1991 nor that transporting inter-island passengers and cargoes, at Cagayan de
his absence was not excused.) Oro City. Respondents were to board petitioner's vessel bound
for Tagbilaran City via the port of Cebu. Upon learning that the
vessel was not proceeding to Bohol, since many passengers were
bound for Surigao, private respondents per advice, went to the
branch office for proper relocation to another vessel. Because the
said vessel was already filled to capacity, they were forced to
agree "to hide at the cargo section to avoid inspection of the
officers of the Philippine Coastguard." 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. In view thereof, private
respondents sued petitioner for damages and for breach of
contract of carriage before Court of First Instance of Misamis
Oriental. 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, Condition No. 14,
which reads: “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 hence the
instant petition.
 2. Amount of Liability
ISSUE: WON Condition No. 14 printed at the back of the
petitioner's passage tickets purchased by private respondents, YSMAEL v BARRETTO
which limits the venue of actions arising from the contract of G.R. No. 28028. November 25, 1927.
carriage to the Court of First Instance of Cebu, valid and FACTS:
enforceable In this action plaintiff, a domestic corporation, seeks to
recover from the defendants P9,940.95 the alleged value of four
cases of merchandise which it delivered to the steamship Andres
HELD: on October 25, 1922, at Manila to be shipped to Surigao, but
No. Considered in the light of circumstances prevailing in the which were never delivered to Salomon Sharuff, the consignee, or
inter-island shipping industry in the country today, the SC held returned to the plaintiff. The original complaint was amended to
that Condition No. 14 printed at the back of the passage tickets include Gabino Barretto and P. E. Soon as members of the limited
should be held as void and unenforceable for the following partnership of Gabino Barretto & Company, Limited. In their
reasons: First, under circumstances obligation in the inter-island amended answers defendants make a specific denial of all of the
shipping industry, it is not just and fair to bind passengers to the material allegations of the complaint, and as a special defense
terms of the conditions printed at the back of the passage tickets, allege that the four cases of merchandise in question were never
on which Condition No. 14 is Printed in fine letters, and Second, delivered to them, and that under the provisions of paragraph 7
Condition No. 14 subverts the public policy on transfer of venue of the printed conditions appearing on the back of the bill of
of proceedings of this nature, since the same will prejudice rights lading, plaintiff's right of action is barred for the reason that it
and interests of innumerable passengers located in different was not brought within sixty days from the time the cause of
places of the country who, under Condition No. 14, will have to action accrued. The defendant Soon did not answer the
file suits against petitioner only in the City of Cebu. Considering complaint, and the defendants further alleged: "I. That under and
the expense and trouble a passenger residing outside of Cebu by virtue of provision 12 of the bill of lading referred to in
City would incur to prosecute a claim in the City of Cebu, he plaintiff's amended complaint, the defendants are not liable in
would most probably decide not to file the action at all. The excess of three hundred pesos (P300) for any package of silk
condition will thus defeat, instead of enhance, the ends of justice. unless the value and contents of such packages are correctly
Upon the other hand, petitioner has branches or offices in the declared in the bill of lading at the time of shipment, etc." The
respective ports of call of its vessels and can afford to litigate in evidence was taken upon such issues, and the lower court
any of these places. Hence, the filing of the suit in the CFI of rendered judgment for the plaintiff for the full amount of its
Misamis Oriental, as was done in the instant case, will not cause claim, from which the defendants Andres H. Limgengco and
inconvenience to, much less prejudice, petitioner. Vicente Javier appeal and assign this error among others: "the
lower court erred in rendering judgment against appellants in the
sum of P9,940.95."
ISSUE: limit of defendants' liability for each case of silk "for loss or
Whether or not the lower court erred in rendering damage from any cause or for any reason" would put it in the
judgment against appellants in the sum of P9,940.95. power of the defendants to have taken the whole cargo of 164
RULING: cases of silk at a valuation of P300 for each case, or less than one-
No. Appellants rely on clause 12 of the bill of lading, which eighth of its actual value. If that rule of law should be sustained,
is as follows: "It is expressly understood that carrier shall not be no silk would ever be shipped from one island to another in the
liable for loss or damage from any cause or for any reason to an Philippines. Such a limitation of value is unconscionable and void
amount exceeding three hundred pesos (P300) Philippine as against public policy.
currency for any single package of silk or other valuable cargo,
nor for an amount exceeding one hundred pesos (P100)
Philippine currency for any single package of other cargo, unless
the value and contents of such packages are correctly declared in
this bill of lading at the time of shipment and freight paid in
accord with the actual measurement or weight of the cargo
shipped." That condition is printed on the back of the bill of
lading. In disposing of that question, the lower court points out
that the conditions in question "are not printed on the triplicate
copies which were delivered to the plaintiff," and that by reason
thereof they "are not binding upon the plaintiff." The clause in
question provides that the carrier shall not be liable for loss or
damage from any cause or for any reason to an amount in excess
of P300 "for any single package of silk or other valuable cargo."
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. Hence, there
is nothing unusual about the shipment of silk. In truth and in fact,
it is a matter of usual and ordinary business. There was no fraud
or concealment in the shipment in question. 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
PARMANAND SHEWARAM, plaintiff and appellee, vs.PHILIPPINE Prior to having his suitcase returned, Shewaram was offered
AIR LINES, INC., defendant and appellant. another similar suitcase which was the only baggage left for the
G.R. No. L-20099 July 7, 1966 flight on November 23, 1959. This apparently belonged to a
certain Del Rosario who was bound for Iligan in the same flight
ZALDIVAR, J. with Shewaram. The said suitcase was nevertheless opened to
Amount of Liability ascertain if such belonged to Shewaram without the permission
and presence of Mr. Del Rosario. Shewaram rejected the suitcase
as it contained a pistol instead of his Transistor Radio 7 (Php
This is an appeal from the CFI Zamboanga Decision 176.00) and Rollflex Camera (Php 373.00). Moreover, there was a
eliminating exemplary damages and modifying MTC Zamboanga’s space in the suitcase where the two items in question could have
Decision ordering PAL to pay actual damages, exemplary been placed. PAL admitted that the two items could not be found
damages, attorney’s fees and cost of suit to Shewaram. inside the suitcase. There was no evidence on record sufficient to
show that Shewaram’s suitcase was never opened during the
time it was placed in PAL’s possession and prior to its recovery by
the Shewaram. However, PAL had presented evidence that it had
FACTS authority to open passengers' baggage to verify and find its
ownership or identity.
Parmanand Shewaram - passenger
Philippine Air Lines, Inc. (PAL)- carrier Shewaram instituted an action to recover damages suffered by
him due to PAL’s failure to observe extraordinary diligence in the
vigilance and carriage of his luggage. This was lodged before the
On November 23, 1959, Parmanand Shewaram, was a MTC Zamboanga.
paying passenger on PAL’s aircraft from Zamboanga City bound
for Manila. On the same day, he checked in 3 baggages – a
suitcase and 2 other pieces. The suitcase was mistagged with MTC Zamboanga Decision
“I.G.N.” (for Iligan) instead of MNL (for Manila) by PAL personnel
in Zamboanga. The suitcase was then sent to Iligan and thus did
not arrive with Shewaram. The PAL station agent in Iligan caused It ordered PAL to pay Shewaram Php 373.00 as actual
to send the suitcase for delivery to Manila which arrived on damages, Php 100.00 as exemplary damages, Php 150.00 as
November 24, 1959. attorney's fees, and the costs of the action.

PAL appealed to CFI Zamboanga.

 additional charge therefor, the value shall be conclusively
CFI Zamboanga Decision deemed not to exceed P100.00 for each ticket.

It modified the judgment of the inferior court by ordering This was printed in small letters at the back of the ticket.
the PAL to pay the Shewaram only the sum of P373.00 as actual PAL even admits that passengers do not sign the ticket, much less
damages, with legal interest from May 6, 1960 and the sum of did Shewaram herein sign his ticket when he made the flight on
P150.00 as attorney's fees, eliminating the award of exemplary November 23, 1959.
damages.
Corollary with the abovementioned condition is Art. 1750
Shewaram appealed to the SC on a question of law. of the NCC:

A contract fixing the sum that may be recovered by the owner or

shipper for the loss, destruction, or deterioration of the goods is
valid, if it is reasonable and just under the circumstances, and has
ISSUE been fairly and freely agreed upon.

WON Shewaram was bound by the provisions of the tariff Pecuniary liability of a common carrier may, by contract,
regulations filed by PAL with the civil aeronautics board and the be limited to a fixed amount. It is required, however, that the
conditions of carriage printed at the back of the plane ticket stub. contract must be "reasonable and just under the circumstances
HELD and has been fairly and freely agreed upon.” However,
requirements in Art. 1750 have not been met. The fact that those
conditions are printed at the back of the ticket stub in letters so
NO. One of the focal conditions in the Domestic Tariff Regulations small that they are hard to read would not warrant the
No. 2 filed with the Civil Aeronautics Board which is vital in the presumption that the appellee was aware of those conditions
case provides: such that he had "fairly and freely agreed" to those conditions.
Also, it was clear by the admission of PAL that Shewaram did not
sign his ticket. Therefore, he is not, and can not be, bound by the
The liability, if any, for loss or damage to checked baggage or for conditions of carriage found at the back of the ticket stub issued
delay in the delivery thereof is limited to its value and, unless the to him when he made the flight on appellant's plane on
passenger declares in advance a higher valuation and pay an November 23, 1959.
 The validity of stipulations limiting the carrier's liability is
Moreover, the carrier cannot limit its liability for injury to to be determined by their reasonableness and their conformity to
or loss of goods shipped where such injury or loss was caused by the sound public policy, in accordance with which the obligations
its own negligence. PAL is undoubtedly and undisputedly a of the carrier to the public are settled. It cannot lawfully stipulate
common carrier. It was accused of being negligent because it for exemption from liability, unless such exemption is just and
admittedly mistagged Shewaram’s suitcase and the some of the reasonable, and unless the contract is freely and fairly made. No
contents of the said suitcase were missing under its custody. Also, contractual limitation is reasonable which is subversive of public
with the manner in which Mr. Del Rosario’s suitcase was policy.
inspected without his necessary authorization and presence may The shipper and the common carrier are not on equal
and could be applied to Shewaram’s suitcase as well. PAL is had terms; the shipper must send his freight by the common carrier,
been remiss of its duty to observe extraordinary diligence and is or not at all; he is therefore entirely at the mercy of the carrier
therefore liable subject to the provisions of Arts. 1734 and 1735 unless protected by the higher power of the law against being
of the NCC: forced into contracts limiting the carrier's liability. Such contracts
are wanting in the element of voluntary assent.

ART. 1734. Common carries are responsible for the loss,

destruction, or deterioration of the goods, unless the same is due
to any of the following causes only: In view of the foregoing, the decision appealed from is affirmed,
(1) Flood, storm, earthquake, or other natural disaster or with costs against the appellant.
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.
ART. 1735. In all cases other than those mentioned in Nos. 1, 2, 3,
4 and 5 of the preceding article, if the goods are lost, destroyed
or deteriorated, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as required in Article 1733.
 ONG YUI V. CA Sea-Land Service, Inc. v. Intermediate Appellate Court
Facts: Sea-Land, a foreign shipping and forwarding company
-Petitioner is a passenger of PAL in a Cebu to Butuan City flight licensed to do business in the Philippines, received from
wherein he was scheduled to attend a trial. Seaborne Trading Company in California, a shipment consigned to
-He checked in one piece of luggage, which is a blue maleta. Sen Hiap Hing, the business name used by Paulino Cue in the
-upon arrival to Butuan City he claimed his luggage but it could wholesale and retail trade which he operated. The shipper not
not be found. having declared the value of the shipment, NO VALUE WAS
-the luggage was overcarried to Manila. INDICATED IN THE BILL OF LADING. The shipment was discharged
-it was carried back to Cebu however its carriage to Butuan could in Manila, and while awaiting transshipment to Cebu, the cargo
only be conducted the next day. was stolen by pilferers and never recovered.
-Petitioner on the day of the maleta’s arrival wen to the airport
but did not wait for the arrival of the moring flight of the plane Paulino Cue, the consignee, made formal claim upon Sea-Land for
which carried his luggage. the value of the lost shipment allegedly amounting to
-A certain Dagorro volunteered to take the luggage to the P179,643.48. Sea-Land offered to settle for US$4,000.00, or its
petitioner. He revealed the documents were lost. then Philippine peso equivalent of P30,600.00. asserting that said
-petitioner demanded PAL cebu actual and compensatory amount represented its maximum liability for the loss of the
damages as an incident of breach of contract of carriage. shipment under the package limitation clause in the covering bill
of lading. Cue rejected the offer and thereafter brought suit for
ISSUE: WON PAL CEBU SHOULD BE HELD LIABLE FOR DAMAGES damages against Sea-Land in the then Court of First Instance of
Cebu
HELD: NO. PAD did not act in bad faith. It exercised due diligence The trial court sentenced Sea-Land to pay Cue P186,048
in looking for petitioner’s luggage which had been miscarried. representing the Philippine currency value of the lost cargo, P55,
Had petitioner waited or caused someone to wait at the airport 814 for unrealized profit and P25,000 for attorney’s fees. CA
for the arrival of the morning flight he would have been able to affirmed the trial court’s decision.
retrieve his luggage. In the absence of a wrongful act or omission Issue: Whether or not Sea-Land is liable to pay Cue.
or fraud, the petitioner is entitled to moral damages. Neither is
he entitled to exemplary damages absent any proof that the Held: There is no question of the right of a consignee in a bill of
defendant acted in a wanton, fraudulent and reckless manner. lading to recover from the carrier or shipper for loss of, or
damage to, goods being transported under said bill, although that
document may have been drawn up only by the consignor and
the carrier without the intervention of the consignee.
Since the liability of a common carrier for loss of or damage to
goods transported by it under a contract of carriage is governed
by the laws of the country of destination and the goods in ART. 1749 A stipulation that the common carrier's liability is
question were shipped from the United States to the Philippines, limited to the value of the goods appearing in the bill of lading,
the liability of Sea-Land has Cue is governed primarily by the Civil unless the shipper or owner declares a greater value, is binding.
Code, and as ordained by the said Code, supplementary, in all ART. 1750. A contract fixing the sum that may be recovered by
matters not cluttered thereby, by the Code of Commerce and the owner or shipper for the loss, destruction, or deterioration of
special laws. One of these supplementary special laws is the the goods is valid, if it is reasonable and just under the
Carriage of goods by Sea Act (COGSA), made applicable to all circumstances, and has been fairly and freely agreed upon.
contracts for the carriage by sea to and from the Philippines Ports
in Foreign Trade by Comm. Act. 65. Sec. 4(5) of said Act in part Even if Section 4(5) of COGSA did not list the validity and binding
reads: effect of the liability limitation clause in the bill of lading here are
fully substantial on the basis alone of Article 1749 and 1750 of
(5) Neither the carrier nor the ship shall in any event be or the Civil Code. The justices of such stipulation is implicit in its
become liable for any loss or damage to or in connection with the giving the owner or shipper the option of avoiding accrual of
transportation of goods in an amount exceeding $500 per liability limitation by the simple expedient of declaring the value
package lawful money of the United States, or in case of goods of the shipment in the bill of lading.
not shipped in packages, per customary freight unit, or the
equivalent of that sum in other currency, unless the nature and The stipulation in the bill of lading limiting the liability of Sea-Land
value of such goods have been declared by the shipper before for loss or damages to the shipment covered by said rule to
shipment and inserted in the bill of lading. This declaration, if US$500 per package unless the shipper declares the value of the
embodied in the bill of lading, shall be prima facie evidence, but shipment and pays additional charges is valid and binding on Cue.
shall not be conclusive on the carrier.
By agreement between the carrier, master, or agent of the
carrier, and the shipper another maximum amount than that
mentioned in this paragraph may be fixed: Provided, That such
maximum shall not be less than the figure above named. In no
event shall the carrier be liable for more than the amount of
damage actually sustained.
Not only is there nothing in the Civil Code which absolutely
prohibits agreements between shipper and carrier limiting the
latter's liability for loss of or damage to cargo shipped under
contracts of carriage; it is also quite clear that said Code in fact
has agreements of such character in contemplation in providing,
in its Articles 1749 and 1750, that:
 CITADEL LINES V. CA occasioned by an excepted cause, the inescapable conclusion is
Facts: that the carrier was negligent and should be held liable therefor.
Petitioner Citadel Lines, Inc. (carrier) is the general agent of the 2. Yes. Basic is the rule, long since enshrined as a statutory
vessel Cardigan Bay/Strait Enterprise. Respondent Manila Wine provision, that a stipulation limiting the liability of the carrier to
Merchants, Inc. (consignee) is the importer of the subject the value of the goods appearing in the bill of lading, unless the
shipment of Dunhill cigarettes from England. On March 17, 1979, shipper or owner declares a greater value, is binding. Further, a
the vessel loaded on board at England 180 Filbrite cartons of contract fixing the sum that may be recovered by the owner or
mixed British manufactured cigarettes. The shipment arrived at shipper for the loss, destruction or deterioration of the goods is
the Port of Manila Pier in container vans received by E. Razon Inc valid, if it is reasonable and just under the circumstances, and has
(arrastre). Due to lack of space, the representatives of the carrier been fairly and freely agreed upon. The consignee itself admitted
kept the cigarettes in containers, padlocked and sealed. The next in its memorandum that the value of the goods shipped does not
morning, the head checker of the carrier discovered that 90 cases appear in the bills of lading. Hence, the stipulation on the carrier's
of imported British manufactured cigarettes were missing. The limited liability applies. Petitioner was ordered to pay respondent
consignee sought to recover from the carrier the market value of the sum of US$4,465.60.
the missing cargoes in the amount of Php 315,000 but the carrier
argued that the arrastre operator should be held liable as the
incident occurred in an area absolutely under the control of the
latter. The trial court and the appellate court adjudged the carrier
as the party liable for the loss of cargoes. Hence, the present
recourse by Citadel.
Issues:
1. Whether the loss occurred while the cargo in question was in
the custody of Citadel Lines
2. Whether the stipulation limiting the liability of the carrier
contained in the bill of lading is binding on the consignee
Ruling: 1. Yes. On the basis of the evidence presented, further
bolstered by the testimonies of Citadel’s Claims Manager and
Head Checker, the subject cargo which was placed in a container
van, padlocked and sealed by the representative of the carrier
was still in its possession and control when the loss occurred,
there having been no formal turnover of the cargo to the
arrastre. Considering, therefore, that the subject shipment was
lost while it was still in the custody of herein petitioner carrier,
and considering further that it failed to prove that the loss was
 BRITISH AIRWAYS (BA) V CA, GOP MAHATNI, AND PHILIPPINE award as compensatory damages: "Since plaintiff did not declare
AIRLINES (PAL) the value of the contents in his luggage and even to show
GR no 121824 ; 29 January 1998 receipts of the alleged gifts for the members of his family in
Doctrine: Bombay, the most that can be expected for compensation of his
In a contract of air carriage a declaration by the passenger lost luggage (2 suit cases) is Twenty U.S. Dollars ($20.00) per kilo,
of a higher value is needed to recover a greater amount. (Article or a combined value of Four Hundred ($400.00) U.S. Dollars for
22[1] of the Warsaw Convention). American jurisprudence Twenty kilos representing the contents plus Seven Thousand
provides that an air carrier is not liable for the loss of baggage in (P7,000.00) Pesos representing the purchase price of the two (2)
an amount in excess of the limits specified in the tariff which was suit cases."
filed with the proper authorities, such tariff being binding on the CA: Affirms in toto BA's Contention:
passenger regardless of the passenger's lack of knowledge • BA asserts that the award of compensatory damages in
thereof or assent thereto. This doctrine is recognized in this the separate sum of P7,000.00 for the loss of Mahtani's
jurisdiction. two pieces of luggage was without basis since Mahtani in
his complaint stated the following as the value of his
Facts: personal belongings:
Mahtani decided to visit his relatives in Bombay, India. He 1. personal belonging P10,000.00
obtained the services of a certain Mr. Gumar to prepare his travel 2. gifts for his parents and relatives $5,000.00
plans. The latter, in turn, purchased a ticket from BA. Since BA • He failed to declare a higher valuation with respect to
had no direct flights from Manila to Bombay, Mahtani had to take his luggage, a condition provided for in the ticket.
a flight to Hongkong via PAL, and upon arrival in Hongkong he "Liability for loss, delay, or damage to baggage is limited
had to take a connecting flight to Bombay on board BA. Prior to unless a higher value isdeclared in advance and additional
his departure, Mahtani checked in at the PAL counter in Manila charges are paid"
his two pieces of luggage containing his clothings and personal • THUS, there should have been no separate award for
effects, confident that upon reaching Hongkong, the same would the luggage and the contents thereof since Mahtani failed
be transferred to the BA flight bound for Bombay. Unfortunately, to declare a separate higher valuation for the luggage, and
when Mahtani arrived in Bombay he discovered that his luggage therefore, its liability is limited, at most, only to the
was missing and that upon inquiry from the BA representatives, amount stated in the ticket.
he was told that the same might have been diverted to London.
After patiently waiting for his luggage for one week, BA finally ISSUE:
advised him to file a claim by accomplishing the "Property W/N the CA erred affirming the RTCs award for
Irregularity Report." Back in the Philippines, Mahtani filed his compensatory damages.
complaint for damages and attorney's fees against BA and Mr. HELD:
Gumar before the trial court. BA filed a third party suit against In determining the amount of compensatory damages in
PAL. RTC : Favors Mahatni, the trial court granted the following this kind of cases, it is vital that the claimant satisfactorily prove
during the trial the existence of the factual basis of the damages LOADSTAR Shipping Co. vs. CA
and its causal connection to defendant's acts. Admittedly, in a
contract of air carriage a declaration by the passenger of a higher On 19 November 1984, LOADSTAR received on board its M/V
value is needed to recover a greater amount. (Article 22[1] of the Cherokee (hereafter, the vessel) the following goods for
Warsaw Convention). American jurisprudence provides that an shipment: a) 705 bales of lawanit hardwood; b) 27 boxes and
air carrier is not liable for the loss of baggage in an amount in crates of tilewood assemblies and others; and c) 49 bundles of
excess of the limits specified in the tariff which was filed with the
mouldings R & W (3) Apitong Bolidenized all amounting to
proper authorities, such tariff being binding on the passenger
P6,067,178 (goods herein insured by Manila Insurance Co.
regardless of the passenger's lack of knowledge thereof or assent
thereto. This doctrine is recognized in this jurisdiction. (MIC))On 20 November 1984, on its way to Manila from the port
Notwithstanding the foregoing, we have, nevertheless, ruled of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank
against blind reliance on adhesion contracts where the facts and off Limasawa Island.
circumstances justify that they should be disregarded. Needless
to say, factual findings of the trial court, as affirmed by the Court On 4 February 1985, MIC filed a complaint against LOADSTAR and
of Appeals, are entitled to great respect. Since the actual value of PGAI, alleging that the sinking of the vessel was due to the fault
the luggage involved appreciation of evidence, a task within the and negligence of LOADSTAR and its employees. It also prayed
competence of the Court of Appeals, its ruling regarding the that PGAI be ordered to pay the insurance proceeds from the loss
amount is assuredly a question of fact, thus, a finding not
of the vessel directly to MIC, said amount to be deducted from
reviewable by this Court. NOTE: Benefits of limited liability are
MICs claim from LOADSTAR.
subject to waiver such as when the air carrier failed to raise
timely objections during the trial when questions and answers LOADSTAR denied any liability for the loss of the shippers goods
regarding the actual claims and damages sustained by the
and claimed that the sinking of its vessel was due to force
passenger were asked.
majeure. PGAI was later dropped as a party defendant after it
paid the insurance proceeds to LOADSTAR.

RTC rendered judgement in favor of MIC, which was affirmed by

the trial court.

Petitioner's (Loadstar) Contention:

1. LOADSTAR submits that the vessel was a private carrier

because it was not issued a certificate of public convenience, it
did not have a regular trip or schedule nor a fixed route, and
there was only one shipper, one consignee for a special cargo. 5. LOADSTAR goes on to argue that, being a private carrier, any
agreement limiting its liability, such as what transpired in this
While it is true that the vessel had on board only the cargo of
case, is valid. Since the cargo was being shipped at owners risk,
wood products for delivery to one consignee, it was also carrying
LOADSTAR was not liable for any loss or damage to the same.
passengers as part of its regular business. Moreover, the bills of
lading in this case made no mention of any charter party but only Private Respondent (MIC) answer:
a statement that the vessel was a general cargo carrier. Neither
1. MIC claims that LOADSTAR was liable, notwithstanding that the
was there any special arrangement between LOADSTAR and the
loss of the cargo was due to force majeure, because the same
shipper regarding the shipment of the cargo. The singular fact
concurred with LOADSTARs fault or negligence.
that the vessel was carrying a particular type of cargo for one
shipper is not sufficient to convert the vessel into a private 2. The limited liability theory is not applicable in the case at bar
carrier. because LOADSTAR was at fault or negligent, and because it
failed to maintain a seaworthy vessel. Authorizing the voyage
2. Petitioner argues that as a private carrier, it cannot be
notwithstanding its knowledge of a typhoon is tantamount to
presumed to have been negligent and the burden of proving
negligence.
otherwise devolved upon MIC.
ISSUE:
3. LOADSTAR also maintains that the vessel was seaworthy.
Before the fateful voyage, the vessel was allegedly dry docked 1. Is the M/V Cherokee a private or a common carrier?
was inspected and certified that the ship was fit to undertake a
voyage by the maritime safety engineers of the Philippine Coast 2. Did Loadstar observe due diligence in these premises?
Guard. Its crew at the time was experienced, licensed and
HELD:
unquestionably competent. Therefore it exercised the diligence
of a good father of a family in ensuring the vessels seaworthiness. 1.Yes, LOADSTAR is a common carrier. It is not necessary that the
carrier be issued a certificate of public convenience, and this
4. LOADSTAR further claims that it was not responsible for the
public character is not altered by the fact that the carriage of the
loss of the cargo, such loss being due to force majeure. It points
goods in question was periodic, occasional, episodic or
out that when the vessel left Nasipit, Agusan del Norte the
unscheduled.
weather was fine until the next day when the vessel sank due to
strong waves 2. No. M/V Cherokee was not seaworthy when it embarked on its
voyage on 19 November 1984. The vessel was not even
sufficiently manned at the time. For a vessel to be seaworthy, it 3. Passenger’s Baggages
must be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure of a NORBERTO QUISUMBING, SR., and GUNTHER LOEFFLER,
petitioners,
common carrier to maintain in seaworthy condition its vessel
vs.
involved in a contract of carriage is a clear breach of its duty COURT OF APPEALS and PHILIPPINE AIR LINES, INC.,
prescribed in Article 1755 of the Civil Code. respondents.
September 14, 1990.
Neither do we agree with LOADSTARs argument that the limited
liability theory should be applied in this case. The doctrine of
limited liability does not apply where there was negligence on the NARVASA, J.:
part of the vessel owner or agent. LOADSTAR was at fault or
negligent in not maintaining a seaworthy vessel and in having NATURE: Petition to review the decision of the Court of Appeals.
allowed its vessel to sail despite knowledge of an approaching
SUMMARY: A hijacking occurred onboard a PAL flight from
typhoon
Mactan to Manila. The hijackers were able to rob Norberto
Quisumbing, Sr. was divested of jewelries and cash in the total
amount of P18,650.00 out of which recoveries were made
amounting to P4,550.00 and Gunther Loeffler who was divested
of a wrist watch, cash and a wallet in the total amount of
P1,700.00. Petitioners are seeking damages and indemnification
form their loss. However, the Court decided that such a hijacking
event constitutes as an exemption to the liability of a common
carrier as PAL had followed all civil aeronautic guidelines, and
that the hijacking constituted a force majeure.

DOCTRINE:
 Transportation of Goods; Passengers Baggages;
Exemption due to force majuere

FACTS:
 Norberto Quisumbing, Sr. and Gunther Loeffler were
among the passengers of (PAL’s) Fokker ‘Friendship’ PIC-
536 plane in its flight of November 6, 1968 which left
Mactan City at about 7:30 in the evening with Manila for who, sensing danger, stood up and went back to his
its destination original seat across the aisle on the second to the last
o After the plane had taken off, Florencio O. Villarin, a seat near the window. ‘
Senior NBI Agent who was also a passenger of the said o an exchange of gunshots ensued between Villarin and
plane, noticed a certain ‘Zaldy,’ a suspect in the killing ‘Zaldy’ and the latter’s companions. ‘Zaldy’ announced
of Judge Valdez, seated at the front seat near the door to the passengers and the pilots in the cockpit that it
leading to the cockpit of the plane. was a hold-up and ordered the pilot not to send any
o Villarin checked the passenger’s ticket in the SOS. The hold-uppers divested the passengers of their
possession of flight Stewardess Annie Bontigao, who belongings.
was seated at the last seat right row, revealed that o Norberto Quisumbing, Sr. was divested of jewelries
‘Zaldy’ had used the name ‘Cardente,’ one of his and cash in the total amount of P18,650.00 out of
aliases known to Villarin. Villarin had 3 other which recoveries were made amounting to P4,550.00.
companions onboard. Gunther Loeffler was divested of a wrist watch, cash
o “Villarin then scribbled a note addressed to the pilot and a wallet in the total amount of P1,700.00.
of the plane requesting the latter to contact NBI duty o Zaldy’ and his three companions succeeded in
agents in Manila for the said agents to ask the Director escaping
of the NBI to send about six NBI agents to meet the  Quisumbing and Loeffler filed for indemnity cases against
plane because the suspect in the killing of Judge PAL for their loss, but PAL refused to pay.
Valdez was on board. The said note was handed by  Petitioners argue that the “aforesaid loss is a result of
Villarin to the stewardess who in turn gave the same breach Of PAL’s contractual obligation to carry them and
to the pilot.” their belongings and effects to their Manila destination
o The pilot received the note. 15 minutes after take off, without loss or damage, and constitutes a serious
the pilot of the plane, Capt. Luis Bonnevie, Jr., came dereliction of PAL’s legal duty to exercise extraordinary
out of the cockpit and sat beside Villarin at the rear diligence in the vigilance over the same.
portion of the plane and explained that he could not  RTC dismissed the petition of the current petitioners.
send the message because it would be heard by all o plaintiffs “did not notify defendant or its
ground aircraft stations. employees that they were in possession of the
o While the pilot and Villarin were talking, ‘Zaldy’ and cash, jewelries, and the wallet they are now
one of his companions walked to the rear and stood claiming,” the very provision of law invoked by
behind them. Capt. Bonnevie then stood up and went them, Article 1998 of the Civil Code, denies them
back to the cockpit. ‘Zaldy’ and his companions any recourse against PAL.
returned to their seats, but after a few minutes they o the armed robbery that took place constitutes
moved back to the rear throwing ugly looks at Villarin force majeure
  CA dismissed the appeal of petitioners. profiles, the assignment of sky
marshals, and the weight of outraged
world opinion may have minimized
ISSUE: hijackings but all these have proved
4. Whether PAL was negligent and must indemnify ineffective against truly determined
petitioners. NO hijackers.

RATIO: DISPOSITIVE: Petition DENIED.

1. the evidence does indeed fail to prove any want of
diligence on the part of PAL
o PAL complied with applicable regulations or
universally accepted and observed procedures
to preclude hijacking
o the particular acts singled out by the
petitioners as supposedly demonstrative of
negligence were, in the light of the
circumstances of the case, not in truth
negligent acts
o PAL’s failure to take certain steps that a
passenger in hindsight believes should have
been taken is not the negligence or misconduct
which mingles with force majeure as an active
and cooperative cause.
o The Court, quoting the appellate court,
 it is illusive to assume that had these
precautions been taken, the hijacking
or the robbery would not have
succeeded. The mandatory use of the
most sophisticated electronic detection
devices and magnetometers, the
imposition of severe penalties, the
development of screening procedures,
the compilation of hijacker behavioural
 PAN AMERICAN WORLD AIRWAYS V. RAPADAS
GR. NO. 60673. MAY 19, 1992 HELD: Yes.

FACTS: Private respondent Jose Rapadas was standing in line to The Notice and paragraph 2 of the “Conditions of Contract”
board the flight at the Guam airport when he was ordered by Pan (which provides that carriage is subject to rules and limitations
Am’s employee to check-in his Samsonite attaché case. Rapadas established by the Warsaw Convention) should be sufficient
protested. He stepped out of the line only to get back again at the notice showing the applicability of the Warsaw limitation. It is not
end of it to try if he can get through without having to register his required under the Warsaw Convention that there be a detailed
attaché case. However, the same man in charge of handcarry notice of baggage liability limitation in the passenger ticket.
control did not fail to notice him and ordered him again to
register his baggage. Contracts of adhesion, such as the one involved here, are not
entirely prohibited, unless there are facts and circumstances
For fear that he would miss the flight if he insisted, he acceded to showing its one-sided nature. This does not obtain here.
checking it in. He then gave his attaché case to his brother who
happened to be around but without declaring its contents or the Passengers are expected to be vigilant insofar as his luggage is
value of its contents. Rapadas was given a baggage claim tag. concerned. If the passenger fails to adduce evidence to overcome
the stipulations, he cannot avoid the application of the liability
Upon arriving in Manila, Rapadas discovered that his attaché case limitations.
was missing. Pan Am exerted efforts to locate the missing
luggage, but to no avail. Pan Am offered Mr. Rapadas the sum of Had Mr. Rapadas not wavered in his decision to register his
one hundred sixty dollars ($160.00) representing the petitioner’s luggage, he could have had enough time to disclose the true
alleged limit of liability for loss or damage to a passenger’s worth of the articles in it and pay the extra charges or remove
personal property under the contract of carriage between them from the checked-in-luggage.
Rapadas and Pan Am.
Unless the contents are declared, it will always be the word of a
Rapadas refused the settlement. He filed an action for damages. passenger against that of the airline. If the loss of life or property
The RTC decided in favor of Mr. Rapadas and rejected Pan Am’s is caused by the gross negligence or arbitrary acts of the airline or
contention limiting it’s liability to $160. The Court of Appeals the contents of the lost luggage are proved by satisfactory
affirmed. evidence other than the self-serving declarations of one party,
the Court will not hesitate to disregard the fine print in a contract
ISSUE: Whether a passenger is bound by the terms of a passenger of adhesion. Otherwise, the contract would have to be enforced,
ticket declaring that the limitations of liability set forth in the as it is the only reasonable basis to arrive at a just award.
Warsaw Convention shall apply in case of loss, damage or
destruction to a registered luggage of a passenger?
 BRITISH AIRWAYS (BA) V CA, GOP MAHATNI, AND PHILIPPINE Favors Mahatni, the trial court granted the following
AIRLINES (PAL) award as compensatory damages: "Since plaintiff did not
GR no 121824 ; 29 January 1998 declare the value of the contents in his luggage and even to
Doctrine: show receipts of the alleged gifts for the members of his family
The nature of an airline's contract of carriage partakes of in Bombay, the most that can be expected for compensation
two types, namely: a contract to deliver a cargo or merchandise of his lost luggage (2 suit cases) is Twenty U.S. Dollars ($20.00)
to its destination and a contract to transport passengers to their per kilo, or a combined value of Four Hundred ($400.00) U.S.
destination. A business intended to serve the travelling public Dollars for Twenty kilos representing the contents plus Seven
primarily, it is imbued with public interest, hence, the law Thousand (P7,000.00) Pesos representing the purchase price
governing common carriers imposes an exacting standard. of the two (2) suit cases."
Neglect or malfeasance by the carrier's employees could CA:
predictably furnish bases for an action for damages. Affirms in toto BA's Contention:
• BA asserts that the award of compensatory
Facts: damages in the separate sum of P7,000.00 for the loss
Mahtani decided to visit his relatives in Bombay, India. He of Mahtani's two pieces of luggage was without basis
obtained the services of a certain Mr. Gumar to prepare his travel since Mahtani in his complaint stated the following as
plans. The latter, in turn, purchased a ticket from BA. Since BA the value of his personal belongings: 1. personal
had no direct flights from Manila to Bombay, Mahtani had to take belonging P10,000.00 2. gifts for his parents and
a flight to Hongkong via PAL, and upon arrival in Hongkong he relatives $5,000.00 2
had to take a connecting flight to Bombay on board BA. Prior to • He failed to declare a higher valuation with
his departure, Mahtani checked in at the PAL counter in Manila respect to his luggage, a condition provided for in the
his two pieces of luggage containing his clothings and personal ticket. "Liability for loss, delay, or damage to baggage is
effects, confident that upon reaching Hongkong, the same would limited unless a higher value is declared in advance and
be transferred to the BA flight bound for Bombay. Unfortunately, additional charges are paid"
when Mahtani arrived in Bombay he discovered that his luggage • THUS, there should have been no separate award
was missing and that upon inquiry from the BA representatives, for the luggage and the contents thereof since Mahtani
he was told that the same might have been diverted to London. failed to declare a separate higher valuation for the
After patiently waiting for his luggage for one week, BA finally luggage, and therefore, its liability is limited, at most,
advised him to file a claim by accomplishing the "Property only to the amount stated in the ticket.
Irregularity Report." Back in the Philippines, Mahtani filed his ISSUE:
complaint for damages and attorney's fees against BA and Mr. The contract of carriage of an airline.
Gumar before the trial court. BA filed a third party suit against
PAL. HELD:
RTC :
 The nature of an airline's contract of carriage partakes of
two types, namely: a contract to deliver a cargo or merchandise
to its destination and a contract to transport passengers to their
destination. A business intended to serve the travelling public
primarily, it is imbued with public interest, hence, the law
governing common carriers imposes an exacting standard.
Neglect or malfeasance by the carrier's employees could
predictably furnish bases for an action for damages. In the instant
case, it is apparent that the contract of carriage was between
Mahtani and BA. Moreover, it is indubitable that his luggage
never arrived in Bombay on time. Therefore, as in a number of
cases we have assessed the airlines' culpability in the form of
damages for breach of contract involving misplaced luggage.