Sps Zarate vs Sps Perena In June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perea

to transport their (Zarates) son, aron Zarate, to and !ro" school# The Pereas $ere o$ners o! a van %ein& used !or private school transport# t a%out 6'()a" o! u&ust **, 1996, the driver o! the said private van, +le"ente l!aro, $hile the children $ere on %oard includin& aron, decided to ta,e a short cut in order to avoid tra!!ic# The usual short cut $as a railroad crossin& o! the Philippine National -ail$a. (PN-)# l!aro sa$ that the barandilla (the pole used to %loc, vehicles crossin& the rail$a.) $as up $hich "eans it $as o,a. to cross# /e then tried to overta,e a %us# /o$ever, there $as in !act an onco"in& train %ut l!aro no lon&er sa$ the train as his vie$ $as alread. %loc,ed %. the %us he $as tr.in& to overta,e# The %us $as a%le to cross unscathed %ut the vans rear end $as hit# 0urin& the collision, aron, $as thro$n o!! the van# /is %od. hit the railroad trac,s and his head $as severed# /e $as onl. 1) .ears old# It turns out that l!aro $as not a%le to hear the train hon,in& !ro" )1 "eters a$a. %e!ore the collision %ecause the vans stereo $as pla.in& loudl.# The Zarates sued PN- and the Pereas ( l!aro %eca"e at2lar&e)# Their cause o! action a&ainst PN- $as %ased on 3uasi2delict# Their cause o! action a&ainst the Pereas $as %ased on %reach o! contract o! co""on carria&e# In their de!ense, the Pereas invo,ed that as private carriers the. $ere not ne&li&ent in selectin& l!aro as their driver as the. "ade sure that he had a drivers license and that he $as not involved in an. accident prior to his %ein& hired# In short, the. o%served the dili&ence o! a &ood !ather in selectin& their e"plo.ee# PN- also disclai"ed lia%ilit. as the. insist that the railroad crossin& the. placed there $as not "eant !or railroad crossin& (reall., thats their de!ense4)# The -T+ ruled in !avor o! the Zarates# The +ourt o! ppeals a!!ir"ed the -T+# In the decision o! the -T+ and the + , the. a$arded da"a&es in !avor o! the Zarates !or the loss o! earnin& capacit. o! their dead son# The Pereas appealed# The. ar&ued that the a$ard $as i"proper as aron $as "erel. a hi&h school student, hence, the a$ard o! such da"a&es $as "erel. speculative# The. cited the case o! People vs Teehan,ee $here the Supre"e

+ourt did not a$ard da"a&es !or the loss o! earnin& capacit. despite the !act that the victi" there $as enrolled in a pilot school# ISS56S' 7hether or not the de!ense o! due dili&ence o! a &ood !ather %. the Pereas is untena%le# 7hether or not the a$ard o! da"a&es !or loss o! inco"e is proper# /680' 9es, in %oth issues# Defense of Due Diligence of a Good Father This de!ense is not tena%le in this case# The Pereas are co""on carriers# The. are not "erel. private carriers# (Prior to this case, the status o! private transport !or school services or school %uses is not $ell settled as to $hether or not the. are private or co""on carriers : %ut the. $ere &enerall. re&arded as private carriers)# Private transport !or schools are co""on carriers# The Pereas, as the operators o! a school %us service $ere' (a) en&a&ed in transportin& passen&ers &enerall. as a %usiness, not ;ust as a casual occupation< (%) underta,in& to carr. passen&ers over esta%lished roads %. the "ethod %. $hich the %usiness $as conducted< and (c) transportin& students !or a !ee# 0espite caterin& to a li"ited client=le, the Pereas operated as a co""on carrier %ecause the. held the"selves out as a read. transportation indiscri"inatel. to the students o! a particular school livin& $ithin or near $here the. operated the service and !or a !ee# >ein& a co""on carrier, $hat is re3uired o! the Pereas is not "ere dili&ence o! a &ood !ather# 7hat is speci!icall. re3uired !ro" the" %. la$ is e?traordinar. dili&ence : a !act $hich the. !ailed to prove in court# @eril., their o%li&ation as co""on carriers did not cease upon their e?ercise o! dili&entl. choosin& l!aro as their e"plo.ee# lthou&h in this ;urisdiction the operator o! a school %us service has %een usuall. re&arded as a private carrier,9 pri"aril. %ecause he onl. caters to so"e speci!ic or privile&ed individuals, and his operation is neither open to the inde!inite pu%lic nor !or pu%lic use, the e?act nature o! the operation o! a school %us service has not %een !inall. settled# This is the occasion to la. the "atter to rest# carrier is a person or corporation $ho underta,es to transport or conve. &oods or persons !ro" one place to another, &ratuitousl. or !or hire# The carrier is classi!ied either as a privateAspecial carrier or as a co""onApu%lic carrier#11 private carrier is one $ho, $ithout "a,in& the activit. a vocation, or $ithout holdin& hi"sel! or itsel! out to the pu%lic as read. to act

!or all $ho "a. desire his or its services, underta,es, by special agreement in a particular instance only, to transport &oods or persons !ro" one place to another either &ratuitousl. or !or hire#11The provisions on ordinar. contracts o! the +ivil +ode &overn the contract o! private carria&e#The dili&ence re3uired o! a private carrier is onl. ordinar., that is, the dili&ence o! a &ood !ather o! the !a"il.# In contrast, a co""on carrier is a person, corporation, !ir" or association en&a&ed in the %usiness o! carr.in& or transportin& passen&ers or &oods or %oth, %. land, $ater, or air, !or co"pensation, offering such services to the public#1*+ontracts o! co""on carria&e are &overned %. the provisions on co""on carriers o! the +ivil +ode, the Pu%lic Service ct,1B and other special la$s relatin& to transportation# co""on carrier is re3uired to o%serve e?traordinar. dili&ence, and is presu"ed to %e at !ault or to have acted ne&li&entl. in case o! the loss o! the e!!ects o! passen&ers, or the death or in;uries to passen&ers#1( In relation to co""on carriers, the +ourt de!ined pu%lic use in the !ollo$in& ter"s in United States v. Tan Piaco,1)viC' DPu%lic useE is the sa"e as Duse %. the pu%licE# The essential !eature o! the pu%lic use is not con!ined to privile&ed individuals, %ut is open to the inde!inite pu%lic# It is this inde!inite or unrestricted 3ualit. that &ives it its pu%lic character# In deter"inin& $hether a use is pu%lic, $e "ust loo, not onl. to the character o! the %usiness to %e done, %ut also to the proposed "ode o! doin& it# I! the use is "erel. optional $ith the o$ners, or the pu%lic %ene!it is "erel. incidental, it is not a pu%lic use, authoriCin& the e?ercise o! the ;urisdiction o! the pu%lic utilit. co""ission# There "ust %e, in &eneral, a ri&ht $hich the la$ co"pels the o$ner to &ive to the &eneral pu%lic# It is not enou&h that the &eneral prosperit. o! the pu%lic is pro"oted# Pu%lic use is not s.non."ous $ith pu%lic interest# The true criterion %. $hich to ;ud&e the character o! the use is $hether the pu%lic "a. en;o. it %. ri&ht or onl. %. per"ission# In De Guzman v. Court of ppeals!16 the +ourt noted that rticle 1FB* o! the +ivil +ode avoided an. distinction %et$een a person or an enterprise o!!erin& transportation on a re&ular or an isolated %asis< and has not distin&uished a carrier o!!erin& his services to the &eneral pu%lic, that is, the &eneral co""unit. or population, !ro" one o!!erin& his services onl. to a narro$ se&"ent o! the &eneral population# Nonetheless, the concept o! a co""on carrier e"%odied in rticle 1FB* o! the +ivil +ode coincides neatl. $ith the notion o! pu%lic service under the Pu%lic

Service ct, $hich supple"ents the la$ on co""on carriers !ound in the +ivil +ode# Pu%lic service, accordin& to Section 1B, para&raph (%) o! the Pu%lic Service ct, includes' ? ? ? ever. person that no$ or herea!ter "a. o$n, operate, "ana&e, or control in the Philippines, !or hire or co"pensation, $ith &eneral or li"ited client=le, $hether per"anent or occasional, and done !or the &eneral %usiness purposes, an. co""on carrier, railroad, street rail$a., traction rail$a., su%$a. "otor vehicle, either !or !rei&ht or passen&er, or %oth, $ith or $ithout !i?ed route and $hatever "a. %e its classi!ication, !rei&ht or carrier service o! an. class, e?press service, stea"%oat, or stea"ship line, pontines, !erries and $ater cra!t, en&a&ed in the transportation o! passen&ers or !rei&ht or %oth, ship.ard, "arine repair shop, ice2re!ri&eration plant, canal, irri&ation s.ste", &as, electric li&ht, heat and po$er, $ater suppl. and po$er petroleu", se$era&e s.ste", $ire or $ireless co""unications s.ste"s, $ire or $ireless %roadcastin& stations and other si"ilar pu%lic services# ? ? ?#1F Given the %readth o! the a!ore3uoted characteriCation o! a co""on carrier, the +ourt has considered as co""on carriers pipeline operators,1H custo" %ro,ers and $arehouse"en,19 and %ar&e operators*1 even i! the. had li"ited client=le# s all the !ore&oin& indicate, the true test !or a co""on carrier is not the 3uantit. or e?tent o! the %usiness actuall. transacted, or the nu"%er and character o! the conve.ances used in the activit., %ut $hether the underta,in& is a part o! the activit. en&a&ed in %. the carrier that he has held out to the &eneral pu%lic as his %usiness or occupation# I! the underta,in& is a sin&le transaction, not a part o! the &eneral %usiness or occupation en&a&ed in, as advertised and held out to the &eneral pu%lic, the individual or the entit. renderin& such service is a private, not a co""on, carrier# The 3uestion "ust %e deter"ined %. the character o! the %usiness actuall. carried on %. the carrier, not %. an. secret intention or "ental reservation it "a. entertain or assert $hen char&ed $ith the duties and o%li&ations that the la$ i"poses "ard of Damages for aron#s loss of earning capacity despite he being a high school student at the time of his death The a$ard is proper# aron $as enrolled in a reputa%le school (0on >osco)# /e $as o! nor"al health and $as an a%le2%odied person# Iurther, the %asis o! the co"putation o! his earnin& capacit. $as not on $hat he $ould have %eco"e# It $as %ased on the current "ini"u" $a&e# The "ini"u" $a&e $as

validl. used %ecause $ith his circu"stances at the ti"e o! his death, it is "ost certain that had he lived, he $ould at least %e a "ini"u" $a&e earner %. the ti"e he starts $or,in&# This is not %ein& speculative at all# The Teehan,ee case $as di!!erent %ecause in that case, the reason $h. no da"a&es $ere a$arded !or loss o! earnin& capacit. $as that the de!endants there $ere alread. assu"in& that the victi" $ould indeed %eco"e a pilot : hence, that "ade the assu"ption speculative# >ut in the case o! aron, there $as no speculation as to $hat he "i&ht %e : %ut $hatever hell %eco"e, it is certain that he $ill at the least %e earnin& "ini"u" $a&e Iron >ul, Shippin& Phils# +o# 8T0# vs -e"in&ton Industrial Sales +orp# (*11B) Iron -e"in&ton Industrial Sales +orp# Jrdered !ro" 7an&s +o# 19( pac,a&es o! hot steel sheets # Goods $ere loaded on %oard vessel K@ Indian -eliance !ro" Poland upon issuance o! a clean >ill o! 8adin&# /o$ever, upon arrival in Kanila, the. $ere alread. rust.# -e"in&ton sued Iron >ul, Shippin& and insurer Pioneer sia insurance# The court ruled !or -e"in&ton rel.in& on the >ills o! 8adin& $hich stated that the &oods $ere in &ood condition $hen loaded# Iron >ul,s assails the reliance o! the court on the Pro Ior"a >ills o! 8adin& in esta%lishin& the condition o! the car&o# +an a >ill o! ladin& %e relied upon to indicate the car&o condition upon loadin&L/eld' 9es# There is no "erit to petitionerMs contention that the >ill o! 8adin& coverin& the su%;ect car&o cannot %e relied upon to indicate the condition o! the car&o upon loadin&# It is settled that a %ill o! ladin& has a t$o2!old character# In Phoeni? ssurance +o#, 8td# vs# 5nited States 8ines, $e held that' N O %ill o! ladin& operates %oth as a receipt and as a contract# It is a receipt !or the &oods shipped and a contract to transport and deliver the sa"e as therein stipulated# s a receipt, it recites the date and place o! ship"ent, descri%es the &oods as to 3uantit., $ei&ht, di"ensions,identi!ication "ar,s and condition, 3ualit. and value# s a contract, it na"es the contractin& parties,$hich include the consi&nee, !i?es the route, destination, and !rei&ht rate or char&es, and stipulates t he ri&hts and o%li&ations assu"ed %. the parties# 7e !ind no error in the !indin&s o! the appellate court that the 3uestioned %ill o! ladin& is a clean %ill o! ladin&, i#e#, it does not indicate an. de!ect in the &oods covered %. it, as sho$n %. the notation, P+86 N JN >J -0P and PShipped at the Port o! 8oadin& in apparent &ood condition on %oard the vessel !or carria&e to Port o! 0ischar&eP#The !act that the issued %ill o! ladin& is pro !or"a is o! no "o"ent# I! the %ill o! ladin& is not trul. re!lective o! the true condition o! the car&o at the ti"e o! loadin& to the e!!ect that the said car&o $as indeed in a da"a&ed state, the carrier could have re!used to accept it, or at the least, "ade a"ar&inal

note in the %ill o! ladin& indicatin& the true condition o! the "erchandise# >ut it did not# Jnthe contrar., it accepted the su%;ect car&o and even a&reed to the issuance o! a clean %ill o! ladin& $ithout ta,in& an. e?ceptions $ith respect to the recitals contained therein# Since the carrier !ailed t o annotate in the %ill o! ladin& the alle&ed da"a&ed condition o! the car&o $hen it $as loaded, said carrier and the petitioner, as its representative, are %ound %. the description appearin& therein and t he. are no$ estopped !ro" den.in& the contents o! the said %ill#6ven &rantin&, !or the sa,e o! ar&u"ent, that the su%;ect car&o $as alread. in a da"a&ed condition at the ti"e it $as accepted !or transportation, the carrier is not relieved !ro" its responsi%ilit. to e?ercise due care in handlin& the "erchandise and in e"plo.in& the necessar. precautions to prevent the car&o !ro" !urther deterioratin&# 5nder rticle 1F(* o! the +ivil +ode, even i! the loss,destruction, or deterioration o! the &oods should %e caused, a"on& others, %. the character o! the &oods, the co""on carrier "ust e?ercise due dili&ence to !orestall or lessen the loss#6QT- J-0IN -9 -6SPJNSI>I8IT9 8 STS I-JK T/6 TIK6 T/6 GJJ0S -6 5N+JN0ITIJN 889P8 +60 IN ITS PJSS6SSIJN 5NTI8 T/6 S K6 -6 068I@6-60 TJ T/6 +JNSIGN66# 5N86SS P-J@6NTJ / @6 >66N J>S6-@60, +JKKJN + --I6- IS P-6S5K60 TJ / @6 >66N T I 58T J- TJ / @6 +T60 N6G8IG6NT89# FGU INSURANCE CORPORATION, Petitioners, vs# THE COURT OF APPEALS, SAN MIGUEL CORPORATION, and ESTATE OF ANG GUI, represented by LUCIO, JULIAN, and JAIME, all surna ed ANG, and CO TO, -espondents# G!R! N"! #$%&%$! Mar'( )#, *%%+ ESTATE OF ANG GUI, Represented by LUCIO, JULIAN and JAIME, all surna ed ANG, and CO TO,Petitioners, vs# THE HONORA,LE COURT OF APPEALS, SAN MIGUEL CORP!, and FGU INSURANCE CORP!, -espondents# 06+ISIJN CHICO-NA.ARIO, $#' >e!ore 5s are t$o separate Petitions !or revie$ assailin& the 0ecision 1 o! the +ourt o! ppeals in + 2G#-# +@ No# (96*( entitled, PSan Ki&uel

+orporation, Plainti!!2 ppellee versus 6state o! n& Gui, represented %. 8ucio, Julian and Jai"e, all surna"ed n&, and +o To, 0e!endants2 ppellants, Third:Part. Plainti!!s versus IG5 Insurance +orporation, Third2 Part. 0e!endant2 ppellant,P $hich a!!ir"ed in toto the decision* o! the -e&ional Trial +ourt o! +e%u +it., >ranch **# The dispositive portion o! the +ourt o! ppeals decision reads' 7/6-6IJ-6, !or all the !ore&oin&, ;ud&"ent is here%. rendered as !ollo$s' 1) Jrderin& de!endants to pa. plainti!! the su" o! P1,B(6,19F#11 and an interest o! 6R per annu" to %e rec,oned !ro" the !ilin& o! this case on Jcto%er *, 1991< *) Jrderin& de!endants to pa. plainti!! the su" o! P*),111#11 !or attorne.s !ees and an additional su" o! P11,111#11 as liti&ation e?penses< B) 7ith cost a&ainst de!endants# Ior the Third2Part. +o"plaint' 1) Jrderin& third2part. de!endant IG5 Insurance +o"pan. to pa. and rei"%urse de!endants the a"ount o! P6B*,F11#11#B The Iacts 6vidence sho$s that nco 6nterprises +o"pan. ( N+J), a partnership %et$een n& Gui and +o To, $as en&a&ed in the shippin& %usiness# It o$ned the KAT N+J tu&%oat and the 0A> 8ucio %ar&e $hich $ere operated as co""on carriers# Since the 0A> 8ucio had no en&ine o! its o$n, it could not "aneuver %. itsel! and had to %e to$ed %. a tu&%oat !or it to "ove !ro" one place to another# Jn *B Septe"%er 19F9, San Ki&uel +orporation (SK+) shipped !ro" Kandaue +it., +e%u, on %oard the 0A> 8ucio, !or to$a&e %. KAT N+J, the !ollo$in& car&oes' >ill o! 8adin& No# Ship"ent 0estination

1 *),111 cases Pale Pilsen 6stancia, Iloilo B)1 cases +erveCa Ne&ra 6stancia, Iloilo * 1),111 cases Pale Pilsen San Jose, nti3ue *11 cases +erveCa Ne&ra San Jose, nti3ue The consi&nee !or the car&oes covered %. >ill o! 8adin& No# 1 $as SK+s >eer Kar,etin& 0ivision (>K0)26stancia >eer Sales J!!ice, 6stancia, Iloilo, $hile the consi&nee !or the car&oes covered %. >ill o! 8adin& No# * $as SK+s >K02San Jose >eer Sales J!!ice, San Jose, nti3ue# The 0A> 8ucio $as to$ed %. the KAT N+J all the $a. !ro" Kandaue +it. to San Jose, nti3ue# The vessels arrived at San Jose, nti3ue, at a%out one ocloc, in the a!ternoon o! B1 Septe"%er 19F9# The tu&%oat KAT N+J le!t the %ar&e i""ediatel. a!ter reachin& San Jose, nti3ue# 7hen the %ar&e and tu&%oat arrived at San Jose, nti3ue, in the a!ternoon o! B1 Septe"%er 19F9, the clouds over the area $ere dar, and the $aves $ere alread. %i&# The arrastre $or,ers unloadin& the car&oes o! SK+ on %oard the 0A> 8ucio %e&an to co"plain a%out their di!!icult. in unloadin& the car&oes# SK+s 0istrict Sales Supervisor, Iernando Kaca%ua&, re3uested N+Js representative to trans!er the %ar&e to a sa!er place %ecause the vessel "i&ht not %e a%le to $ithstand the %i& $aves# N+Js representative did not heed the re3uest %ecause he $as con!ident that the %ar&e could $ithstand the $aves# This, not$ithstandin& the !act that at that ti"e, onl. the KAT N+J $as le!t at the $har! o! San Jose, nti3ue, as all other vessels alread. le!t the $har! to see, shelter# 7ith the $aves &ro$in& %i&&er and %i&&er, onl. Ten Thousand Seven /undred Ninet. (11,F91) cases o! %eer $ere dischar&ed into the custod. o! the arrastre operator# t a%out ten to eleven ocloc, in the evenin& o! 11 Jcto%er 19F9, the cre$ o! 0A> 8ucio a%andoned the vessel %ecause the %ar&es rope attached to the $har! $as cut o!! %. the %i& $aves# t around "idni&ht, the %ar&e run

a&round and $as %ro,en and the car&oes o! %eer in the %ar&e $ere s$ept a$a.# s a result, N+J !ailed to deliver to SK+s consi&nee T$ent.2Nine Thousand T$o /undred Ten (*9,*11) cases o! Pale Pilsen and Iive /undred Ii!t. ())1) cases o! +erveCa Ne&ra# The value per case o! Pale Pilsen $as Iort.2Iive Pesos and T$ent. +entavos (P()#*1)# The value o! a case o! +erveCa Ne&ra $as Iort.2Seven Pesos and Ten +entavos (P(F#11), hence, SK+s clai" a&ainst N+J a"ounted to Jne Killion Three /undred Iort.2 Si? Thousand Jne /undred Ninet.2Seven Pesos (P1,B(6,19F#11)# s a conse3uence o! the incident, SK+ !iled a co"plaint !or >reach o! +ontract o! +arria&e and 0a"a&es a&ainst N+J !or the a"ount o! Jne Killion Three /undred Iort.2Si? Thousand Jne /undred Ninet.2Seven Pesos (P1,B(6,19F#11) plus interest, liti&ation e?penses and T$ent.2Iive Percent (*)R) o! the total clai" as attorne.s !ees# 5pon n& Guis death, N+J, as a partnership, $as dissolved hence, on *6 Januar. 199B, SK+ !iled a second a"ended co"plaint $hich $as ad"itted %. the +ourt i"pleadin& the survivin& partner, +o To and the 6state o! n& Gui represented %. 8ucio, Julian and Jai"e, all surna"ed n&# The su%stituted de!endants adopted the ori&inal ans$er $ith counterclai" o! N+J Psince the su%stantial alle&ations o! the ori&inal co"plaint and the a"ended co"plaint are practicall. the sa"e#P N+J ad"itted that the cases o! %eer Pale Pilsen and +erveCa Ne&ra "entioned in the co"plaint $ere indeed loaded on the vessel %elon&in& to N+J# It clai"ed ho$ever that it had an a&ree"ent $ith SK+ that N+J $ould not %e lia%le !or an. losses or da"a&es resultin& to the car&oes %. reason o! !ortuitous event# Since the cases o! %eer Pale Pilsen and +erveCa Ne&ra $ere lost %. reason o! a stor", a !ortuitous event $hich %attered and sun, the vessel in $hich the. $ere loaded, the. should not %e held lia%le# N+J !urther asserted that there $as an a&ree"ent %et$een the" and SK+ to insure the car&oes in order to recover inde"nit. in case o! loss# Pursuant to that a&ree"ent, the car&oes to the e?tent o! T$ent. Thousand (*1,111) cases $as insured $ith IG5 Insurance +orporation (IG5) !or the total a"ount o! 6i&ht /undred Ii!t.26i&ht Thousand Iive /undred Pesos (PH)H,)11#11) per Karine Insurance Polic. No# *9)91#

Su%se3uentl., N+J, $ith leave o! court, !iled a Third2Part. +o"plaint a&ainst IG5, alle&in& that %e!ore the vessel o! N+J le!t !or San Jose, nti3ue $ith the car&oes o$ned %. SK+, the car&oes, to the e?tent o! T$ent. Thousand (*1,111) cases, $ere insured $ith IG5 !or a total a"ount o! 6i&ht /undred Ii!t.26i&ht Thousand Iive /undred Pesos (PH)H,)11#11) under Karine Insurance Polic. No# *9)91# N+J !urther alle&ed that on or a%out 1* Jcto%er 19F9, %. reason o! ver. stron& $inds and heav. $aves %rou&ht a%out %. a passin& t.phoon, the vessel run a&round near the vicinit. o! San Jose, nti3ue, as a result o! $hich, the vessel $as totall. $rec,ed and its car&oes o$ned %. SK+ $ere lost andAor destro.ed# ccordin& to N+J, the loss o! said car&oes occurred as a result o! ris,s insured a&ainst in the insurance polic. and durin& the e?istence and li!eti"e o! said insurance polic.# N+J $ent on to assert that in the re"ote possi%ilit. that the court $ill order N+J to pa. SK+s clai", the third2part. de!endant corporation should %e held lia%le to inde"ni!. or rei"%urse N+J $hatever a"ounts, or da"a&es, it "a. %e re3uired to pa. to SK+# In its ans$er to the Third2Part. co"plaint, third2part. de!endant IG5 ad"itted the e?istence o! the Insurance Polic. under Karine +over Note No# *9)91 %ut "aintained that the alle&ed loss o! the car&oes covered %. the said insurance polic. cannot %e attri%uted directl. or indirectl. to an. o! the ris,s insured a&ainst in the said insurance polic.# ccordin& to IG5, it is onl. lia%le under the polic. to Third2part. Plainti!! N+J andAor Plainti!! SK+ in case o! an. o! the !ollo$in&' a) total loss o! the entire ship"ent< %) loss o! an. case as a result o! the sin,in& o! the vessel< or c) loss as a result o! the vessel %ein& on !ire# Iurther"ore, IG5 alle&ed that the Third2Part. Plainti!! N+J and Plainti!! SK+ !ailed to e?ercise ordinar. dili&ence or the dili&ence o! a &ood !ather o! the !a"il. in the care and supervision o! the car&oes insured to prevent its loss andAor destruction# Third2Part. de!endant IG5 pra.ed !or the dis"issal o! the Third2Part.

+o"plaint and as,ed !or actual, "oral, and e?e"plar. da"a&es and attorne.s !ees# The trial court !ound that $hile the car&oes $ere indeed lost due to !ortuitous event, there $as !ailure on N+Js part, throu&h their representatives, to o%serve the de&ree o! dili&ence re3uired that $ould e?onerate the" !ro" lia%ilit.# The trial court thus held the 6state o! n& Gui and +o To lia%le to SK+ !or the a"ount o! the lost ship"ent# 7ith respect to the Third2Part. co"plaint, the court a 3uo !ound IG5 lia%le to %ear Ii!t.2Three Percent ()BR) o! the a"ount o! the lost car&oes# ccordin& to the trial court' # # # 6vidence is to the e!!ect that the 0A> 8ucio, on $hich the car&o insured, run2a&round and $as %ro,en and the %eer car&oes on the said %ar&e $ere s$ept a$a.# %t is the sense of this Court that the ris& insured against "as the cause of the loss# ### Since the total car&o $as (1,))1 cases $hich had a total a"ount o! P1,HBB,91)#11 and the a"ount o! the polic. $as onl. !or PH)H,)11#11, defendants as assured! therefore! "ere considered co'insurers of third'party defendant FGU %nsurance Corporation to the e(tent of )*+!,-+.-- value of the cargo. +onse3uentl., inas"uch as there $as partial loss o! onl. P1,B(6,19F#11, the assured shall %ear )BR o! the lossS( N6"phasis oursO The appellate court a!!ir"ed in toto the decision o! the lo$er court and denied the "otion !or reconsideration and the supple"ental "otion !or reconsideration# /ence, the petitions# The Issues In G#-# No# 1BFFF), the &rounds !or revie$ raised %. petitioner IG5 can %e su""ariCed into t$o' 1) 7hether or not respondent +ourt o! ppeals co""itted &rave a%use o! discretion in holdin& IG5 lia%le under the insurance contract considerin& the circu"stances surroundin& the loss o! the car&oes<

and *) 7hether or not the +ourt o! ppeals co""itted an error o! la$ in holdin& that the doctrine o! res .udicata applies in the instant case# In G#-# No# 1(1F1(, petitioner 6state o! n& Gui and +o To assail the decision o! the appellate court %ased on the !ollo$in& assi&n"ents o! error' 1) The +ourt o! ppeals co""itted &rave a%use o! discretion in a!!ir"in& the !indin&s o! the lo$er court that the ne&li&ence o! the cre$"e"%ers o! the 0A> 8ucio $as the pro?i"ate cause o! the loss o! the car&oes< and *) The respondent court acted $ith &rave a%use o! discretion $hen it ruled that the appeal $as $ithout "erit despite the !act that said court had accepted the decision in +ivil +ase No# -219B(1, as a!!ir"ed %. the +ourt o! ppeals and the Supre"e +ourt, as res .udicata# -ulin& o! the +ourt Iirst, $e shall endeavor to dispose o! the co""on issue raised %. %oth petitioners in their respective petitions !or revie$, that is, $hether or not the doctrine o! res .udicata applies in the instant case# It is N+Js contention that the decision in +ivil +ase No# -219B(1, ) $hich $as decided in its !avor, constitutes res .udicata $ith respect to the issues raised in the case at %ar# The contention is $ithout "erit# There can %e no res .udicata as %et$een +ivil +ase No# -219B(1 and the case at %ar# In order !or res .udicata to %e "ade applica%le in a case, the !ollo$in& essential re3uisites "ust %e present' 1) the !or"er ;ud&"ent "ust %e !inal< *) the !or"er ;ud&"ent "ust have %een rendered %. a court havin& ;urisdiction over the su%;ect "atter and the parties< B) the !or"er ;ud&"ent "ust %e a ;ud&"ent or order on the "erits< and ()there must be bet"een the first and second action identity of parties! identity of sub.ect matter! and identity of causes of action. 6 There is no 3uestion that the !irst three ele"ents o! res ;udicata as enu"erated a%ove are indeed satis!ied %. the decision in +ivil +ase No# -219B(1# /o$ever, the doctrine is still inapplica%le due to the a%sence o! the last essential re3uisite o! identit. o! parties, su%;ect "atter and causes o! action#

The parties in +ivil +ase No# -219B(1 $ere N+J as plainti!! and IG5 as de!endant $hile in the instant case, SK+ is the plainti!! and the 6state o! n& Gui represented %. 8ucio, Julian and Jai"e, all surna"ed n& and +o To as de!endants, $ith the latter "erel. i"pleadin& IG5 as third2part. de!endant# The su%;ect "atter o! +ivil +ase No# -219B(1 $as the insurance contract entered into %. N+J, the o$ner o! the vessel, $ith IG5 coverin& the vessel 0A> 8ucio, $hile in the instant case, the su%;ect "atter o! liti&ation is the loss o! the car&oes o! SK+, as shipper, loaded in the 0A> 8ucio and the resultin& !ailure o! N+J to deliver to SK+s consi&nees the lost car&o# Jther$ise stated, the controvers. in the !irst case involved the ri&hts and lia%ilities o! the shipo$ner vis'/'vis that o! the insurer, $hile the present case involves the ri&hts and lia%ilities o! the shippervis'/'vis that o! the shipo$ner# Speci!icall., +ivil +ase No# -219B(1 $as an action !or Speci!ic Per!or"ance and 0a"a&es %ased on IG5 Karine /ull Insurance Polic. No# @KI2K/21B)19 coverin& the vessel 0A> 8ucio, $hile the instant case is an action !or >reach o! +ontract o! +arria&e and 0a"a&es !iled %. SK+ a&ainst N+J %ased on >ill o! 8adin& No# 1 and No# *, $ith de!endant N+J see,in& rei"%urse"ent !ro" IG5 under Insurance Polic. No# K 2)H(H6, should the !or"er %e held lia%le to pa. SK+# Koreover, the su%;ect "atter o! the third2part. co"plaint a&ainst IG5 in this case is di!!erent !ro" that in +ivil +ase No# -219B(1# In the latter, N+J $as suin& IG5 !or the insurance contract over the vessel $hile in the !or"er, the third2part. co"plaint arose !ro" the insurance contract coverin& the car&oes on %oard the 0A> 8ucio# The doctrine o! res .udicata precludes the re2liti&ation o! a particular !act or issue alread. passed upon %. a court o! co"petent ;urisdiction in a !or"er ;ud&"ent, in another action %et$een the sa"e parties %ased on a di!!erent clai" or cause o! action# The ;ud&"ent in the prior action operates as estoppel onl. as to those "atters in issue or points controverted, upon the deter"ination o! $hich the !indin& or ;ud&"ent $as rendered#F I! a particular point or 3uestion is in issue in the second action, and the ;ud&"ent $ill depend on the deter"ination o! that particular point or 3uestion, a !or"er ;ud&"ent %et$een the sa"e parties or their privies $ill %e !inal and conclusive in the second i! that sa"e point or 3uestion $as in issue and ad;udicated in the !irst suit# H

Since the case at %ar arose !ro" the sa"e incident as that involved in +ivil +ase No# -219B(1, onl. !indin&s $ith respect to "atters passed upon %. the court in the !or"er ;ud&"ent are conclusive in the disposition o! the instant case# care!ul perusal o! the decision in +ivil +ase No# -219B(1 $ill reveal that the pivotal issues resolved %. the lo$er court, as a!!ir"ed %. %oth the +ourt o! ppeals and the Supre"e +ourt, can %e su""ariCed into three le&al conclusions' 1) that the 0A> 8ucio %e!ore and durin& the vo.a&e $as sea$orth.< *) that there $as proper notice o! loss "ade %. N+J $ithin the re&le"entar. period< and B) that the vessel 0A> 8ucio $as a constructive total loss# Said decision, ho$ever, did not pass upon the issues raised in the instant case# %sent therein $as an. discussion re&ardin& the lia%ilit. o! N+J !or the loss o! the car&oes# Neither did the lo$er court pass upon the issue o! the alle&ed ne&li&ence o! the cre$"e"%ers o! the 0A> 8ucio %ein& the cause o! the loss o! the car&oes o$ned %. SK+# There!ore, %ased on the !ore&oin& discussion, $e are reversin& the !indin&s o! the +ourt o! ppeals that there isres .udicata# nent N+Js !irst assi&n"ent o! error, i.e#, the appellate court co""itted error in concludin& that the ne&li&ence o! N+Js representatives $as the pro?i"ate cause o! the loss, said issue is a 3uestion o! !act assailin& the lo$er courts appreciation o! evidence on the ne&li&ence or lac, thereo! o! the cre$"e"%ers o! the 0A> 8ucio# s a rule, !indin&s o! !act o! lo$er courts, particularl. $hen a!!ir"ed %. the appellate court, are dee"ed !inal and conclusive# The Supre"e +ourt cannot revie$ such !indin&s on appeal, especiall. $hen the. are %orne out %. the records or are %ased on su%stantial evidence#9 s held in the case o! Donato v. Court of ppeals,11 in this ;urisdiction, it is a !unda"ental and settled rule that !indin&s o! !act %. the trial court are entitled to &reat $ei&ht on appeal and should not %e distur%ed unless !or stron& and co&ent reasons %ecause the trial court is in a %etter position to e?a"ine real evidence, as $ell as to o%serve the de"eanor o! the $itnesses $hile testi!.in& in the case#11 It is not the !unction o! this +ourt to anal.Ce or $ei&h evidence all over a&ain, unless there is a sho$in& that the !indin&s o! the lo$er court are totall.

devoid o! support or are &larin&l. erroneous as to constitute palpa%le error or &rave a%use o! discretion#1* care!ul stud. o! the records sho$s no co&ent reason to !ault the !indin&s o! the lo$er court, as sustained %. the appellate court, that N+Js representatives !ailed to e?ercise the e?traordinar. de&ree o! dili&ence re3uired %. the la$ to e?culpate the" !ro" lia%ilit. !or the loss o! the car&oes# First, N+J ad"itted that the. !ailed to deliver to the desi&nated consi&nee the T$ent. Nine Thousand T$o /undred Ten (*9,*11) cases o! Pale Pilsen and Iive /undred Ii!t. ())1) cases o! +erveCa Ne&ra# Second, it is %orne out in the testi"on. o! the $itnesses on record that the %ar&e 0A> 8ucio had no en&ine o! its o$n and could not "aneuver %. itsel!# 9et, the patron o! N+Js tu&%oat KAT N+J le!t it to !end !or itsel! not$ithstandin& the !act that as the t$o vessels arrived at the port o! San Jose, nti3ue, si&ns o! the i"pendin& stor" $ere alread. "ani!est# s stated %. the lo$er court, $itness Kr# nastacio Kanila& testi!ied that the captain or patron o! the tu&%oat KAT N+J le!t the %ar&e 0A> 8ucio i""ediatel. a!ter it reached San Jose, nti3ue, despite the !act that there $ere alread. %i& $aves and the area $as alread. dar,# This is corro%orated %. de!endants o$n $itness, Kr# Iernando Kaca%ue&#1B The trial court continued' t that precise "o"ent, since it is the dut. o! the de!endant to e?ercise and o%serve e?traordinar. dili&ence in the vi&ilance over the car&o o! the plainti!!, the patron or captain o! KAT N+J, representin& the de!endant could have placed 0A> 8ucio in a ver. sa!e location %e!ore the. le!t ,no$in& or sensin& at that ti"e the co"in& o! a t.phoon# The presence o! %i& $aves and dar, clouds could have $arned the patron or captain o! KAT N+J to insure the sa!et. o! 0A> 8ucio includin& its car&o# 0A> 8ucio %ein& a %ar&e, $ithout its en&ine, as the patron or captain o! KAT N+J ,ne$, could not possi%l. "aneuver %. itsel!# /ad the patron or captain o! KAT N+J, the representative o! the de!endants o%served e?traordinar. dili&ence in placin& the 0A> 8ucio in a sa!e place, the loss to the car&o o! the plainti!! could not have occurred# In short, there!ore, de!endants throu&h their representatives, !ailed to o%serve the de&ree

o! dili&ence re3uired o! the" under the provision o! rt# 1FBB o! the +ivil +ode o! the Philippines#1( Petitioners 6state o! n& Gui and +o To, in their 0emorandum, asserted that the contention o! respondents SK+ and IG5 that Pthe cre$ "e"%ers o! 0A> 8ucio should have le!t port at the onset o! the t.phoon is li,e advisin& the !ish to ;u"p !ro" the !r.in& pan into the !ire and an advice that %orders on "adness#P1) The ar&u"ent does not persuade# The records sho$ that the 0A> 8ucio $as the onl. vessel le!t at San Jose, nti3ue, durin& the ti"e in 3uestion# The other vessels $ere trans!erred and te"poraril. "oved to Kalandon&, ) ,ilo"eters !ro" $har! $here the %ar&e re"ained# 16 +learl., the trans!erred vessels $ere de!initel. sa!er in Kalandon& than at the port o! San Jose, nti3ue, at that particular ti"e, a !act $hich petitioners !ailed to dispute N+Js ar&u"ents %oil do$n to the clai" that the loss o! the car&oes $as caused %. the t.phoon Sisang, a !ortuitous event (caso fortuito), and there $as no !ault or ne&li&ence on their part# In !act, N+J clai"s that their cre$"e"%ers e?ercised due dili&ence to prevent or "ini"iCe the loss o! the car&oes %ut their e!!orts proved no "atch to the !orces unleashed %. the t.phoon $hich, in petitioners o$n $ords $as, %. an. .ardstic,, a natural cala"it., a !ortuitous event, an act o! God, the conse3uences o! $hich petitioners could not %e held lia%le !or#1F The +ivil +ode provides' Art! #&))# +o""on carriers, !ro" the nature o! their %usiness and !or reasons o! pu%lic polic. are %ound to o%serve e?traordinar. dili&ence in the vi&ilance over the &oods and !or the sa!et. o! the passen&ers transported %. the", accordin& to all the circu"stances o! each case# Such e?traordinar. dili&ence in vi&ilance over the &oods is !urther e?pressed in rticles 1FB(, 1FB), and 1F() Nos# ), 6, and F # # # Art! #&)$# +o""on carriers are responsi%le !or the loss, destruction, or deterioration o! the &oods, unless the sa"e is due to an. o! the !ollo$in&

causes onl.' (1) Ilood, stor", earth3ua,e, li&htnin&, or other natural disaster or cala"it.< Art! #&)/# In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss# /o$ever, the co""on carrier "ust e?ercise due dili&ence to prevent or "ini"iCe loss %e!ore, durin& and a!ter the occurrence o! !lood, stor", or other natural disaster in order that the co""on carrier "a. %e e?e"pted !ro" lia%ilit. !or the loss, destruction, or deterioration o! the &oods # # # (6"phasis supplied) Caso fortuito or force ma.eure ($hich in la$ are identical inso!ar as the. e?e"pt an o%li&or !ro" lia%ilit.) 1H %. de!inition, are e?traordinar. events not !oreseea%le or avoida%le, events that could not %e !oreseen, or $hich thou&h !oreseen, $ere inevita%le# It is there!ore not enou&h that the event should not have %een !oreseen or anticipated, as is co""onl. %elieved %ut it "ust %e one i"possi%le to !oresee or to avoid#19 In this case, the cala"it. $hich caused the loss o! the car&oes $as not un!oreseen nor $as it unavoida%le# In !act, the other vessels in the port o! San Jose, nti3ue, "ana&ed to trans!er to another place, a circu"stance $hich pro"pted SK+s 0istrict Sales Supervisor to re3uest that the 0A> 8ucio %e li,e$ise trans!erred, %ut to no avail# The 0A> 8ucio had no en&ine and could not "aneuver %. itsel!# 6ven i! N+Js representatives $anted to trans!er it, the. no lon&er had an. "eans to do so as the tu&%oat KAT N+J had alread. departed, leavin& the %ar&e to its o$n devices# The captain o! the tu&%oat should have had the !oresi&ht not to leave the %ar&e alone considerin& the pendin& stor"# 7hile the loss o! the car&oes $as ad"ittedl. caused %. the t.phoon Sisang, a natural disaster, N+J could not escape lia%ilit. to respondent SK+# The records clearl. sho$ the !ailure o! petitioners representatives to e?ercise the e?traordinar. de&ree o! dili&ence "andated %. la$# To %e e?e"pted !ro" responsi%ilit., the natural disaster should have %een the pro?i"ate and onl. cause o! the loss#*1 There "ust have %een no contri%utor. ne&li&ence on the part o! the co""on carrier# s held in the case o! 1impangco Sons v. 2angco

Steamship Co#'*1 # # # To %e e?e"pt !ro" lia%ilit. %ecause o! an act o! God, the tu& "ust %e !ree !ro" an. previous ne&li&ence or "isconduct %. $hich that loss or da"a&e "a. have %een occasioned# Ior, althou&h the i""ediate or pro?i"ate cause o! the loss in an. &iven instance "a. have %een $hat is ter"ed an act o! God, .et, i! the tu& unnecessaril. e?posed the t$o to such accident %. an. culpa%le act or o"ission o! its o$n, it is not e?cused#** There!ore, as correctl. pointed out %. the appellate court, there $as %latant ne&li&ence on the part o! KAT N+Js cre$"e"%ers, !irst in leavin& the en&ine2less %ar&e 0A> 8ucio at the "erc. o! the stor" $ithout the assistance o! the tu&%oat, and a&ain in !ailin& to heed the re3uest o! SK+s representatives to have the %ar&e trans!erred to a sa!er place, as $as done %. the other vessels in the port< thus, "a,in& said %latant ne&li&ence the pro?i"ate cause o! the loss o! the car&oes# 7e no$ co"e to the issue o! $hether or not IG5 can %e held lia%le under the insurance polic. to rei"%urse N+J !or the loss o! the car&oes despite the !indin&s o! the respondent court that such loss $as occasioned %. the %latant ne&li&ence o! the latters e"plo.ees# Jne o! the purposes !or ta,in& out insurance is to protect the insured a&ainst the conse3uences o! his o$n ne&li&ence and that o! his a&ents# Thus, it is a %asic rule in insurance that the carelessness and ne&li&ence o! the insured or his a&ents constitute no de!ense on the part o! the insurer# *B This rule ho$ever presupposes that the loss has occurred due to causes $hich could not have %een prevented %. the insured, despite the e?ercise o! due dili&ence# The 3uestion no$ is $hether there is a certain de&ree o! ne&li&ence on the part o! the insured or his a&ents that $ill deprive hi" the ri&ht to recover under the insurance contract# 7e sa. there is# /o$ever, to $hat e?tent such ne&li&ence "ust &o in order to e?onerate the insurer !ro" lia%ilit. "ust %e evaluated in li&ht o! the circu"stances surroundin& each case# 7hen evidence sho$ that the insureds ne&li&ence or rec,lessness is so &ross as to %e su!!icient to constitute a $ill!ul act, the insurer "ust %e e?onerated#

In the case o! Standard 0arine %ns. Co. v. 3ome 4each 1. 5 T. Co#,*( the 5nited States Supre"e +ourt held that' The ordinar. ne&li&ence o! the insured and his a&ents has lon& %een held as a part o! the ris, $hich the insurer ta,es upon hi"sel!, and the e?istence o! $hich, $here it is the pro?i"ate cause o! the loss, does not a%solve the insurer !ro" lia%ilit.# 4ut "illful e(posure! gross negligence! negligence amounting to misconduct! etc.! have often been held to release the insurer from such liability#*) N6"phasis oursO In the case o! 7illia"s v# Ne$ 6n&land Insurance +o#, B +li!!# *((, Ied# +as# No# 1F,FB1, the o$ners o! an insured vessel atte"pted to put her across the %ar at /atteras Inlet# She struc, on the %ar and $as $rec,ed# The "aster ,ne$ that the depth o! $ater on the %ar $as such as to "a,e the atte"pted passa&e dan&erous# Jud&e +li!!ord held that, under the circu"stances, the loss $as not $ithin the protection o! the polic., sa.in&' uthorities to prove that persons insured cannot recover !or a loss occasioned %. their o$n $ron&!ul acts are hardl. necessar., as the proposition involves an ele"entar. principle o! universal application# 8osses "a. %e recovered %. the insured, thou&h re"otel. occasioned %. the ne&li&ence or "isconduct o! the "aster or cre$, i! pro?i"atel. caused %. the perils insured a&ainst, %ecause such "ista,es and ne&li&ence are incident to navi&ation and constitute a part o! the perils $hich those $ho en&a&e in such adventures are o%li&ed to incur< but it "as never supposed that the insured could recover indemnity for a loss occasioned by his o"n "rongful act or by that of any agent for "hose conduct he "as responsible#*6 N6"phasis oursO Iro" the a%ove2"entioned decision, the 5nited States Supre"e +ourt has "ade a distinction %et$een ordinar. ne&li&ence and &ross ne&li&ence or ne&li&ence a"ountin& to "isconduct and its e!!ect on the insureds ri&ht to recover under the insurance contract# ccordin& to the +ourt, $hile "ista,e and ne&li&ence o! the "aster or cre$ are incident to navi&ation and constitute a part o! the perils that the insurer is o%li&ed to incur, such ne&li&ence or rec,lessness "ust not %e o! such &ross character as to a"ount to "isconduct or $ron&!ul acts< other$ise, such ne&li&ence shall release the insurer !ro" lia%ilit. under the insurance contract#

In the case at %ar, %oth the trial court and the appellate court had concluded !ro" the evidence that the cre$"e"%ers o! %oth the 0A> 8ucio and the KAT N+J $ere %latantl. ne&li&ent# To $it' There $as blatant negligence on the part o! the e"plo.ees o! de!endants2 appellants $hen the patron (operator) o! the tu& %oat i""ediatel. le!t the %ar&e at the San Jose, nti3ue $har! despite the loo"in& %ad $eather# Ne&li&ence $as li,e$ise e?hi%ited %. the de!endants2appellants representative $ho did not heed Kaca%ua&s re3uest that the %ar&e %e "oved to a "ore secure place# The prudent thin& to do, as $as done %. the other sea vessels at San Jose, nti3ue durin& the ti"e in 3uestion, $as to trans!er the vessel to a sa!er $har!# The negligence of the defendants'appellants is proved by the fact that on -6 7ctober 6)*)! the only simple vessel left at the "harf in San $ose "as the D84 1ucio#*F N6"phasis oursO s stated earlier, this +ourt does not !ind an. reason to deviate !ro" the conclusion dra$n %. the lo$er court, as sustained %. the +ourt o! ppeals, that N+Js representatives had !ailed to e?ercise e?traordinar. dili&ence re3uired o! co""on carriers in the ship"ent o! SK+s car&oes# Such %latant ne&li&ence %ein& the pro?i"ate cause o! the loss o! the car&oes a"ountin& to Jne Killion Three /undred Iort.2Si? Thousand Jne /undred Ninet.2Seven Pesos (P1,B(6,19F#11) This +ourt, ta,in& into account the circu"stances present in the instant case, concludes that the %latant ne&li&ence o! N+Js e"plo.ees is o! such &ross character that it a"ounts to a $ron&!ul act $hich "ust e?onerate IG5 !ro" lia%ilit. under the insurance contract# 0HEREFORE, pre"ises considered, the 0ecision o! the +ourt o! ppeals dated *( Ie%ruar. 1999 is here%. III-K60 $ith KJ0III+ TIJN dis"issin& the third2part. co"plaint# SJ J-06-60# Isaac vs ""en I +TS'

Ka. B1, 19)1' +esar Isaac %oarded >us No# B1 !ro" 8i&ao, l%a. %ound !or Pili, +a"arines Sur and seated hi"sel! on the le!t side restin& his le!t ar" on the $indo$ sill %ut $ith his le!t el%o$ outside the $indo$ >e!ore reachin& his destination, a pic,2up car at !ull speed and $as runnin& outside o! its proper lane ca"e !ro" the opposite direction The driver o! the %us s$erved the %us to the ver. e?tre"e ri&ht o! the road until its !ront and rear $heels have &one over the pile o! stones or &ravel situated on the ra"part o! the road# The %us could not %us !arther ri&ht and run over a &reater portion o! the pile o! &ravel, the pea, o! $hich $as a%out B !eet hi&h, $ithout endan&erin& the sa!et. o! his passen&ers# 0espite e!!orts, the rear le!t side o! the %us $as hit %. the pic,2upcar /e $as rushed to a hospital in Iri&a, +a"arines Sur $here he $as &iven %lood trans!usion to save his li!e !ter ( da.s, he $as trans!erred to another hospital in Ta%aco, l%a., $here he under $ent treat"ent !or B "onths 8ater, he $as "oved to the Jrthopedic /ospital $here he $as operated on and sta.ed !or another * "onths# /e incurred e?penses o! P6*B#(1, e?cludin& "edical !ees $hich $ere paid %. #8# ""en Trans# +o# Trial +ourt' 0is"issed the co"plaint 2 collision occurred due to the ne&li&ence o! the driver o! the pic,2 up car ISS56' 7AN i! there is no ne&li&ence on the part o! the co""on carrier %ut that the accident resultin& in in;uries is due to causes $hich are inevita%le and $hich could not have %een avoided or anticipated not$ithstandin& the e?ercise o! that hi&h de&ree o! care and s,ill $hich the carrier is %ound to e?ercise !or the sa!et. o! his passen&ers neither the co""on carrier nor the driver is lia%le there!or /680' 96S# ppealed decision is III-K60#

the" accordin& to all the circu"stances o! each case# Such e?traordinar. dili&ence in the vi&ilance over the &oods is !urther e?pressed in articles 1FB(, 1FB), and 1F(), Nos# ), 6, and F, $hile the e?traordinar. dili&ence !or the sa!et. o! the passen&ers is !urther set !orth in articles 1F)) and 1F)6 Joo"# -T# 1F))# co""on carrier is %ound to carr. the passen&ers sa!el. as !ar as hu"an care and !oresi&ht can provide, usin& the ut"ost dili&ence o! ver. cautious persons, $ith a due re&ard !or all the circu"stances# -T# 1F)6# In case o! death o! or in;uries to passen&ers, co""on carriers are presu"ed to have %een at !ault or to have acted ne&li&entl., unless the. prove that the. o%served e?traordinar. dili&ence as prescri%ed in articles 1FBB and 1F))# principles &overnin& the lia%ilit. o! a co""on carrier' the lia%ilit. o! a carrier is contractual and arises upon %reach o! its o%li&ation# There is %reach i! it !ails to e?ert e?traordinar. dili&ence accordin& to all circu"stances o! each case a carrier is o%li&ed to carr. its passen&er $ith the ut"ost dili&ence o! a ver. cautious person, havin& due re&ard !or all the circu"stances a carrier is presu"ed to %e at !ault or to have acted ne&li&entl. in case o! death o!, or in;ur. to, passen&ers, it %ein& its dut. to prove that it e?ercised e?traordinar. dili&ence the carrier is not an insurer a&ainst all ris,s o! travel $here a carrierMs e"plo.ee is con!ronted $ith a sudden e"er&enc., the !act that he is o%li&ed to act 3uic,l. and $ithout a chance !or deli%eration "ust %e ta,en into account, and he is held to the so"e de&ree o! care that he $ould other$ise %e re3uired to e?ercise in the a%sence o! such e"er&enc. %ut "ust e?ercise onl. such care as an. ordinar. prudent person $ould e?ercise under li,e circu"stances and conditions, and the !ailure on his part to e?ercise the %est ;ud&"ent the case renders possi%le does not esta%lish lac, o! care and s,ill on his part +onsiderin& all the circu"stances, $e are persuaded to conclude that the driver o! the %us has done $hat a prudent "an could have done to avoid the collision It is true that IsaacMs contri%utor. ne&li&ence cannot relieve #8# ""en o! its lia%ilit. %ut $ill onl. entitle it to a reduction o! the a"ount o!

-T# 1FBB# +o""on carriers, !ro" the nature o! their %usiness and !or reasons o! pu%lic polic., are %ound to o%serve e?tra ordinar. dili&ence in the vi&ilance over the &oods and !or the sa!et. o! the passen&ers transported %.

da"a&e caused ( rticle 1F6*, ne$ +ivil +ode), %ut this is a circu"stance $hich !urther "ilitates a&ainst the position ta,en %. Isaac 1SR Senat"r L2nes 3s! Federal P("en24 & O't"ber *%%) Fa'ts' >erde plants, Inc# delivered 6B* units o! arti!icial trees to +#I# Sharp and +o"pan., Inc#, the General Sip &ent o! 0S-2 Senator 8ines, a !orei&n shippin& corporation, !or transportation and deliver. to the consi&nee, l2 Kohr International Group, in -i.adh, Saudi ra%ia# Sharp issued an international %ill o! landin& !or the car&o, $ith a stipulation that the port o! dischar&e !or the car&o $as at the Thor Ia,,an port and the port o! deliver. $as -i.adh, Saudi ra%ia# Jn June F, 199B, the vessel le!t Kanila !or Saudi ra%ia $ith the car&o on %oard# 7hen the vessel arrived in Thor Ia,,an Port, the car&o $as reloaded on %oard 0S-2Senator 8ines !eeder vessel, ho$ever $hile in transit, the vessel and all its car&o cau&ht !ire# +onse3uentl., Iederal Phoeni? ssurance paid >erde Plants correspondin& to the a"ount o! the insurance !or the car&o# In turn, >erde Plants e?ecuted in its !avor a DSu%ro&ation -eceipt#E Iederal Phoeni? de"andin& pa."ent on the %asis o! the su%ro&ation receipt# +#!# Sharp denied an. lia%ilit. that such lia%ilit. $as e?tin&uished $hen the vessel carr.in& the car&o $as &utted %. !ire# Thus, Iederal Phoeni? !iled a co"plaint !or da"a&es a&ainst 0S-2Senator 8ines and +#I, Sharp# Issue5 7hether or not there $as a %reach o! contract o! carria&e# Held5 Iire is not one o! those enu"erated under rticle 1FB( o! the +ivil +ode to $it, rt# 1FB(, +o""on carriers are responsi%le !or the loss, destruction, or deterioration o! the &oods, unless the sa"e is due to an. o! the !ollo$in& causes onl.' Ilood, stor", earth3ua,e, li&htnin&, or other natural disaster or

cala"it.< ct o! the pu%lic ene". in $ar, $hether international civil< ct or o"ission o! the shipper or the o$ner o! the &oods< The character o! the &oods or de!ects in the pac,in& or in the containers< Jrder or act o! co"petent pu%lic authorit.# +o""on carriers are o%li&ed to o%serve e?traordinar. dili&ence in the vi&ilance over the &oods transported %. the"# ccordin&l., the. are presu"ed to have %een at !ault or to have acted ne&li&entl. o! the &oods are lost, destro.ed or deteriorated# In those cases $here the presu"ption is applied, the co""on carrier "ust prove that it e?ercised e?traordinar. dili&ence in order to overco"e the presu"ption# 8oadstar Shippin& vs# +ourt o! ppeals (G- 1B16*1, *H Septe"%er 1999)

I +TS ' 8oadstar Shippin& +o# Inc# received on %oard its KA@ D+hero,eeE &oods, a"ountin& to P6,16F,1FH, $hich $ere insured !or the sa"e a"ount $ith the respondent Kanila Insurance +o# (KI+) a&ainst various ris,s includin& Dtotal loss %. total loss o! the vessel#E The vessel, in turn, $as insured %. Prudential Guarantee U ssurance, Inc# (PG I) !or P( "illion# Jn its $a. to Kanila !ro" the port o! Nasipit, &usan del Norte, the vessel, alon& $ith its car&o, san, o!! 8i"asa$a Island# s a result o! the total loss o! its ship"ent, the consi&nee "ade a clai" $ith 8oadstar $hich, ho$ever, i&nored the sa"e# s the insurer, KI+ paid P6,1F),111 to the insured in !ull settle"ent o! its clai", and the latter e?ecuted a su%ro&ation receipt there!or# KI+ !iled a co"plaint a&ainst 8oadstar and PG I, alle&in& that the sin,in& o! the vessel $as due to the !ault and ne&li&ence o! 8oadstar and its e"plo.ees# PG I $as later dropped as a part. de!endant a!ter it paid the insurance proceeds to 8oadstar# 8oadstar su%"its that the vessel $as a private carrier %ecause it $as not issued a certi!icate o! pu%lic convenience, it did not have a re&ular trip or schedule nor a !i?ed route, and there $as onl. Pone shipper,

one consi&nee !or a special car&o# The trial court rendered ;ud&"ent in !avor o! KI+# 8oadstar elevated the "atter to the +ourt o! ppeals, $hich a!!ir"ed the -T+s decision in toto# ISS56' 7hether or not 8oadstar is a co""on carrier# /680' 9es# ? ? ? N7Oe hold that 8J 0ST - is a co""on carrier# It is not necessar. that the carrier %e issued a certi!icate o! pu%lic convenience, and this pu%lic character is not altered %. the !act that the carria&e o! the &oods in 3uestion $as periodic, occasional, episodic or unscheduled# In support o! its position, 8J 0ST - relied on the 196H case o! /o"e Insurance +o# v# "erican Stea"ship &encies, Inc#, $here this +ourt held that a co""on carrier transportin& special car&o or charterin& the vessel to a special person %eco"es a private carrier that is not su%;ect to the provisions o! the +ivil +ode# n. stipulation in the charter part. a%solvin& the o$ner !ro" lia%ilit. !or loss due to the ne&li&ence o! its a&ent is void onl. i! the strict polic. &overnin& co""on carriers is upheld# Such polic. has no !orce $here the pu%lic at lar&e is not involved, as in the case o! a ship totall. chartered !or the use o! a sin&le part.# 8J 0ST - also cited @alenCuela /ard$ood and Industrial Suppl., Inc# v# +ourt o! ppeals and National Steel +orp# v# +ourt o! ppeals, %oth o! $hich upheld the /o"e Insurance doctrine# These cases invo,ed %. 8J 0ST - are not applica%le in the case at %ar !or si"ple reason that the !actual settin&s are di!!erent# The records do not disclose that the KA@ P+hero,ee,P on the date in 3uestion, undertoo, to carr. a special car&o or $as chartered to a special person onl.# There $as no charter part.# The %ills o! ladin& !ailed to sho$ an. special arran&e"ent, %ut onl. a &eneral provision to the e!!ect that the KA@ P+hero,eeP $as a P&eneral car&o carrier#P1( NP &eneral ship carr.in& &oods !or hire, $hether e"plo.ed in internal, in coastin&, or in !orei&n co""erce is a co""on carrier#P (>aer,

Senior U +o#s Successors v# 8a +o"pania Kariti"a, 6 Phil# *1), *1F2*1H, 3uotin& 8iverpool Stea"ship +o# v# Phoeni? Ins# +o#, 1*9 5#S# B9F, (BF), cited in B T6J0J-I+J +# K -TIN, P/I8IPPIN6 +JKK6-+I 8 8 7S 11H (-ev# 6d# 19H9)#O Iurther, the %are !act that the vessel $as carr.in& a particular t.pe o! car&o !or one shipper, $hich appears to %e purel. coincidental, is not reason enou&h to convert the vessel !ro" a co""on to a private carrier, especiall. $here, as in this case, it $as sho$n that the vessel $as also carr.in& passen&ers# PAL 3s! SA6ILLO FACTS Savillo $as a ;ud&e o! the -T+ o! Iloilo /e $as invited to participate in the 199B S6 N Seniors nnual Gol! Tourna"ent in Ja,arta Indonesia# So, in order to ta,e part in such event, he purchased a tic,et !ro" P 8 $ith the !ollo$in& itinerar.' Kanila2Sin&apore2Ja,arta2Sin&apore2Kanila# P 8 $ould ta,e the" !ro" Kanila to Si&napore, $hile Sin&apore irlines $ould ta,e the" !ro" Sin&apore to Ja,arta# 7hen the. arrived in Sin&apore, Sin&apore irlines re;ected the tic,ets o! Savillo %ecause the. $ere not endorsed %. P 8# It $as e?plained that i! Sin&apore irlines honoured the tic,ets $ithout P 8S endorse"ent, P 8 $ould not pa. Sin&apore irlines !or their passa&e# Savillo de"anded co"pensation !ro" %oth P 8 and Sin&apore irlines, %ut his e!!orts $ere !utile# /e then sued P 8 a!ter B .ears, de"andin& "oral da"a&es# P 8 , in its KT0, clai"ed that the cause o! action has alread. prescri%ed invo,in& the 7arsa$ +onvention (providin& !or a * .ear prescriptive period)# >oth -T+ and + ruled a&ainst P 8# ISSUE 7hat is the applica%le la$, the +ivil +ode or the 7arsa$ +onventionL /as the action prescri%edL RULING The +ivil +ode is applica%le# There!ore the action has not .et prescri%ed !or the prescription period is ( .ears# I7 'ause "7 a't2"n 'la2 s "ral da a8es, n"t '"3ered by 0arsa9 C"n3ent2"n! rticle 19 o! the 7arsa$ +onvention provides !or lia%ilit. on

the part o! a carrier !or Dda"a&es occasioned %. dela. in the transportation %. air o! passen&ers, %a&&a&e or &oods# rticle *( e?cludes other re"edies %. !urther providin& that D(1) in the cases covered %. articles 1H and 19, an. action !or da"a&es, ho$ever !ounded, can onl. %e %rou&ht su%;ect to the conditions and li"its set out in this convention#E There!ore, a clai" covered %. the 7arsa$ +onvention can no lon&er %e recovered under local la$, i! the statue o! li"itations o! t$o .ears has elapsed# Nevertheless, this +ourt notes that ;urisprudence in the Philippines and the 5nited States also reco&niCes that the 7arsa$ +onvention does not De?clusivel. re&ulateE the relationship %et$een passen&er and carrier on an international !li&ht# In 5#S# v# 5., this +ourt distin&uished %et$een the (1) da"a&e to the passen&ers %a&&a&e and (*) hu"iliation he su!!ered at the hands o! the airlines e"plo.ees# The Iirst cause o! action $as covered %. the 7arsa$ +onvention $hich prescri%es in t$o .ears, $hile the second $as covered %. the provisions o! the +ivil +ode on torts, $hich prescri%es in !our .ears# In Kahane. v# ir Irance (5S case), the court therein ruled that i! the plainti!! $ere to clai" da"a&es %ased solel. on the dela. she e?perienced2 !or instance, the costs o! rentin& a van, $hich she had to arran&e on her o$n as a conse3uence o! the dela. the co"plaint $ould %e %arred %. the t$o:.ear statute o! li"itations# /o$ever, $here the plainti!! alle&ed that the airlines su%;ected her to un;ust discri"ination or undue or unreasona%le pre!erence or disadvanta&e, an act punisha%le under the 5S la$, then the plainti!! "a. clai" purel. no"inal co"pensator. da"a&es !or hu"iliation and hurt !eelin&s, $hich are not provided !or %. the 7arsa$ +onvention# In the Petition at %ar, Savillos +o"plaint alle&ed that %oth P 8 and Sin&apore irlines $ere &uilt. o! &ross ne&li&ence, $hich resulted in his %ein& su%;ected to Dhu"iliation, e"%arrass"ent, "ental an&uish, serious an?iet., !ear and distressE there!ore this case is not covered %. the 7arsa$ +onvention# 0(en t(e ne8l28en'e (appened be7"re t(e per7"r an'e "7 t(e '"ntra't "7 'arr2a8e, n"t '"3ered by t(e 0arsa9 C"n3ent2"n! lso, this case is co"para%le to 8athi&ra v# >ritish ir$a.s# In that case, it $as held that the airlines ne&li&ent act o! recon!ir"in& the passen&ers reservation da.s %e!ore departure and !ailin& to in!or" the latter that the !li&ht had alread. %een discontinued is not a"on& the acts covered %. the 7arsa$ +onvention, since the alle&ed ne&li&ence did not occur durin& the per!or"ance o! the contract o!

carria&e %ut, rather, da.s %e!ore the scheduled !li&ht# In the case at hand, Sin&apore irlines %arred Savillo !ro" %oardin& the Sin&apore irlines !li&ht %ecause P 8 alle&edl. !ailed to endorse the tic,ets o! private respondent and his co"panions, despite P 8s assurances to Savillo that Sin&apore irlines had alread. con!ir"ed their passa&e# 7hile this !act still needs to heard and esta%lished %. ade3uate proo! %e!ore the -T+, an action %ased on these alle&ations $ill not !all under the 7arsa$ +onvention, since the purported ne&li&ence on the part. o! P 8 did not occur durin& the per!or"ance o! the contract o! carria&e %ut da.s %e!ore the scheduled !li&ht# Thus, the present action cannot %e dis"issed %ased on the Statue o! 8i"itations provided under rticle *9 o! the 7arsa$ +onvention#

8i" vs + K 9 T/6 -6GIST6-60 J7N6- JI T/6 @6/I+86 >6 88J760 TJ P-J@6 T/ T T/6-6 IS 8-6 09 T- NSI6- JI J7N6-S/IP TJ NJT/6- P6-SJN 5N06- T/6 T >IT S9ST6KL No# Jne o! the pri"ar. !actors considered in the &rantin& o! a certi!icate o! pu%lic convenience !or the %usiness o! pu%lic transportation is the !inancial capacit. o! the holder o! the license, so that lia%ilities arisin& !ro" accidents "a. %e dul. co"pensated# The ,a%it s.ste" renders illusor. such purpose and, $orse, "a. still %e availed o! %. the &rantee to escape civil lia%ilit. caused %. a ne&li&ent use o! a vehicle o$ned %. another and operated under his license# I! a re&istered o$ner is allo$ed to escape lia%ilit. %. provin& $ho the supposed o$ner o! the vehicle is, it $ould %e eas. !or hi" to trans!er the su%;ect vehicle to another $ho possesses no propert. $ith $hich to respond !inanciall. !or the da"a&e done# (L2 3! CA, G!R! N"! #*+:#&, Jan! #;, *%%*) S$eet 8ines vs Teves I +TS' tt.# 8eovi&ildo Tando& and -o&elio Tiro %ou&ht tic,ets !or Ta&%ilaran +it. via the port o! +e%u Since "an. passen&ers $ere %ound !or Suri&ao, KAS PS$eet /ope $ould not %e proceedin& to >ohol The. $ent to the proper %ranc& o!!ice and $as relocated to KAS PS$eet To$nP $here the. $ere

!orced to a&ree Pto hide at the car&o section to avoid inspection o! the o!!icers o! the Philippine +oast&uard#P and the. $ere e?posed to the scorchin& heat o! the sun and the dust co"in& !ro" the shipMs car&o o! corn &rits and theirtic,ets $ere not honored so the. had to purchase a ne$ one The. sued S$eet 8ines !or da"a&es and !or %reach o! contract o! carria&e %e!ore the +ourt o! Iirst Instance o! Kisa"is Jriental $ho dis"issed the co"palitn !or i"proper venue "otion $as pre"ised on the condition printed at the %ac, o! thetic,ets 2dis"issed instant petition !or prohi%ition !or preli"inar. in;unction ISS56' 7AN a co""on carrier en&a&ed in inter2island shippin& stipulate thru condition printed at the %ac, o! passa&e tic,ets to its vessels that an. and all actions arisin& out o! the contract o! carria&e should %e !iled onl. in a particular province or cit.

Fa'ts5 5r%ano and 6"ilia Ka&%oo are the parents o! +esar Ka&%oo, a child o! H .ears old, $ho lived $ith the" and $as under their custod. until his death on *( Jcto%er 19)6 $hen he $as ,illed in a "otor vehicle accident, the !atal vehicle %ein& a passen&er ;eepne. o$ned %. 0el!in >ernardo# t the ti"e o! the accident, said passen&er ;eepne. $as driven %. +onrado -o3ue# The contract %et$een -o3ue and >ernardo $as that -o3ue $as to pa. to >ernardo the su" o! PH#11, $hich he paid to >ernardo, !or privile&e o! drivin& the ;eepne., it %ein& their a&ree"ent that $hatever earnin&s -o3ue could "a,e out o! the use o! the ;eepne. in transportin& passen&ers !ro" one point to another in the +it. o! Kanila $ould %elon& entirel. to -o3ue# s a conse3uence o! the accident and as a result o! the death o! +esar Ka&%oo in said accident, -o3ue $as prosecuted !or ho"icide thru rec,less i"prudence %e!ore the +II Kanila# -o3ue $as sentenced to 6 "onths o! arresto "a.or, $ith the accessor. penalties o! the la$< to inde"ni!. the heirs o! the deceased in, $ith su%sidiar. i"prison"ent in case o! insolvenc., and to pa. the costs# Pursuant to said ;ud&"ent -o3ue served his sentence %ut he $as not a%le to pa. the inde"nit. %ecause he $as insolvent# n action $as !iled %. the spouses Ka&%oo a&ainst >ernardo is !or en!orce"ent o! his su%sidiar. lia%ilit.# The trial court ordered >ernardo to pa. the# >ernardo appealed to the +ourt o! ppeals, $hich certi!ied the case to the Supre"e +ourt on the &round that onl. 3uestions o! la$ are involved# Issue5 7hether or not an e"plo.er2e"plo.ee relationship %et$een the ;eepne. operator and the driverL Held5 n e"plo.er2e"plo.ee relationship e?ists %et$een a ;eepne. o$ner and a driver under a %oundar. s.ste" arran&e"ent# The !eatures $hich characteriCe the %oundar. s.ste" 2 na"el. the !act that the driver does not receive a !i?ed $a&e %ut &ets onl. the e?cess o! the a"ount o! !ares collected %. hi" over the a"ount he pa.s to the ;eep2o$ner, and the &asoline consu"ed %. the ;eep is !or the a"ount o! the driver 2 are not su!!icient to $ithdra$ the relationship %et$een the" !ro" that o! e"plo.ee and e"plo.er# +onse3uentl., the ;eepne. o$ner is su%sidiar. lia%le as e"plo.er in accordance $ith rt#11B, -evised Penal +ode# ACE NA6IGATION CO!, INC!, petitioner, vs# FGU INSURANCE CORPORATION and PIONEER INSURANCE

/680' NJ#petition !or prohi%ition is 0ISKISS60# -estrainin& order 8IIT60 and S6T SI06 contract o! adhesion not that ,ind o! a contract $here the parties sit do$n to deli%erate, discuss and a&ree speci!icall. on all its ter"s, %ut rather, one $hich respondents too, no part at all in preparin& ;ust i"posed upon the" $hen the. paid !or the !are !or the !rei&ht the. $anted to ship 7e !ind and hold that +ondition No# 1( printed at the %ac, o! the passa&e tic,ets should %e held as void and unen!orcea%le !or the !ollo$in& reasons circu"stances o%li&ation in the inter2island ship 1 $ill pre;udice ri&hts and interests o! innu"era%le passen&ers in di!!erent s o! the countr. $ho, under +ondition No# 1(, $ill have to !ile suits a&ainst petitioner onl. in the +it. o! +e%u su%versive o! pu%lic polic. on trans!ers o! venue o! actions philosoph. underl.in& the provisions on trans!er o! venue o! actions is the convenience o! the plainti!!s as $ell as his $itnesses and to pro"ote *1 the ends o! ;ustice Ma8b"" 3! ,ernard" & SCRA /+*

AN1 SURET< CORPORATION, -espondents# 06+ISIJN PERLAS-,ERNA,E, J.: This is an appeal under -ule () o! the -ules o! +ourt see,in& to reverse the June **, *11( 0ecision1 and Ie%ruar. 1F, *116 -esolution* o! the +ourt o! ppeals (+ ) orderin& petitioner ce Navi&ation +o#, Inc#, ;ointl. and severall. $ith +ardia 8i"ited, to pa. respondents IG5 Insurance +orp# and Pioneer Insurance and Suret. +orp# the su" o! P*1B,)1H#*1 plus interest at the rate o! si? percentu" (6R) !ro" the !ilin& o! the co"plaint until paid# The Iacts Jn Jul. 19, 1991, +ardia 8i"ited (+ -0I ) shipped on %oard the vessel KA@ Pa,arti Ti&a at Shan&hai Port +hina, H,*61 "etric tons or 16),*11 %a&s o! Gre. Portland +e"ent to %e dischar&ed at the Port o! Kanila and delivered to its consi&nee, /eindrich Tradin& +orp# (/6IN0-I+/)# The su%;ect ship"ent $as insured $ith respondents, IG5 Insurance +orp# (IG5) and Pioneer Insurance and Suret. +orp# (PIJN66-), a&ainst all ris,s under Karine Jpen Polic. No# 16*H91*F) !or the a"ount o! P1H,1(H,(*1#11# B The su%;ect vessel is o$ned %. P#T# Pa,arti Tata (P T -TI) $hich it chartered to Shin$a Taiun Taisha 8td# (S/IN7 )# ( -epresentin& itsel! as o$ner o! the vessel, S/IN7 entered into a charter part. contract $ith S,. International, Inc# (ST9), an a&ent o! Tee 9eh Kariti"e +o# (T66 96/), ) $hich !urther chartered it to -e&enc. 6?press 8ines S# # (-6G6N+9)# Thus, it $as -6G6N+9 that directl. dealt $ith consi&nee /6IN0-I+/, and accordin&l., issued +lean >ill o! 8adin& No# SK21# 6 Jn Jul. *B, 1991, the vessel arrived at the Port o! Kanila and the ship"ent $as dischar&ed# /o$ever, upon inspection o! /6IN0-I+/ and petitioner ce Navi&ation +o#, Inc# ( +6N @), a&ent o! + -0I , it $as !ound that out o! the 16),*11 %a&s o! ce"ent, (B,91) %a&s $ere in %ad order and condition# 5na%le to collect the sustained da"a&es in the a"ount o! P1,(*B,()(#61 !ro" the shipper, + -0I , and the charterer, -6G6N+9, the respondents, as co2

insurers o! the car&o, each paid the consi&nee, /6IN0-I+/, the a"ounts o! P(*F,1B6#(1 and P*H(,691#9(, respectivel., F and conse3uentl. %eca"e su%ro&ated to all the ri&hts and causes o! action accruin& to /6IN0-I+/# Thus, on u&ust H, 1991, respondents !iled a co"plaint !or da"a&es a&ainst the !ollo$in& de!endants' P-6G6N+9 6QP-6SS 8IN6S, S# #A 5NTNJ7N +/ -T6-6- JI T/6 @6SS68 MP T -TI TIG MA 5NTNJ7N J7N6andAor 06KII6 (sic) +/ -T6-6- JI T/6 @6SS68 MP T -TI TIG M, ST9 INT6-N TIJN 8, IN+# andAor +6 N @IG TIJN +JKP N9, IN+#P H $hich $as doc,eted as +ivil +ase No# 912*116# In their ans$er $ith counterclai" and cross2clai", P T -TI and S/IN7 alle&ed that the suits a&ainst the" cannot prosper %ecause the. $ere not na"ed as parties in the %ill o! ladin&# 9 Si"ilarl., +6N @ clai"ed that, not %ein& priv. to the %ill o! ladin&, it $as not a real part.2in2interest !ro" $ho" the respondents can de"and co"pensation# It !urther denied %ein& the local ship a&ent o! the vessel or -6G6N+9 and clai"ed to %e the a&ent o! the shipper, + -0I # 11 Ior its part, ST9 denied havin& acted as a&ent o! the charterer, T66 96/, $hich chartered the vessel !ro" S/IN7 , $hich ori&inall. chartered the vessel !ro" P T -TI# ST9 also averred that it cannot %e sued as an a&ent $ithout i"pleadin& its alle&ed principal, T66 96/# 11 Jn Septe"%er B1, 1991, /6IN0-I+/ !iled a si"ilar co"plaint a&ainst the sa"e parties and +o""ercial 5nion ssurance +o# (+JKK6-+I 8), doc,eted as +ivil +ase No# 912*(1), $hich $as later consolidated $ith +ivil +ase No# 912*116# /o$ever, the suit a&ainst +JKK6-+I 8 $as su%se3uentl. dis"issed on ;oint "otion %. the respondents and +JKK6-+I 8# 1* Proceedin&s >e!ore the -T+ and the + In its Nove"%er *6, *111 0ecision, 1B the -T+ dis"issed the co"plaint, the fallo o! $hich reads'

7/6-6IJ-6, pre"ises considered, plainti!!s co"plaint is 0ISKISS60# 0e!endants counter2clai" a&ainst the plainti!!s are li,e$ise dis"issed, it appearin& that plainti!!NsO did not act in evident %ad !aith in !ilin& the present co"plaint a&ainst the"# 0e!endant Pa,arti and Shin$as cross2clai"s a&ainst their co2de!endants are li,e$ise dis"issed !or lac, o! su!!icient evidence# No costs# SJ J-06-60# 0issatis!ied, the respondents appealed to the + $hich, in its assailed June **, *11( 0ecision, 1( !ound P T -TI, S/IN7 , T66 96/ and its a&ent, ST9, solidaril. lia%le !or F1R o! the respondentsM clai", $ith the re"ainin& B1R to %e shouldered solidaril. %. + -0I and its a&ent, +6N @, thus' 7/6-6IJ-6, pre"ises considered, the 0ecision dated Nove"%er *6, *111 is here%. KJ0III60 in the sense that' a) de!endant2appellees P#T# Pa,arti Tata, Shin$a Taiun Taisha, 8td#, Tee 9eh Kariti"e +o#, 8td# and the latters a&ent S,. International, Inc# are here%. declared ;ointl. and severall. lia%le, and are 0I-6+T60 to pa. IG5 Insurance +orporation the a"ount o! T$o /undred Ninet. 6i&ht Thousand Nine /undred T$ent. Iive and ()A111 (P*9H,9*)#()) Pesos and Pioneer Insurance and Suret. +orp# the su" o! Jne /undred Ninet. Nine Thousand T$o /undred 6i&ht. Three and 66A111 (P199,*HB#66) Pesos representin& Sevent. (F1R) percentu" o! their respective clai"s as actual da"a&es plus interest at the rate o! si? (6R) percentu" !ro" the date o! the !ilin& o! the co"plaint< and %) de!endant +ardia 8td# and de!endant2appellee ce Navi&ation +o#, Inc# are 06+8 -60 ;ointl. and severall. lia%le and are here%. 0I-6+T60 to pa. IG5 Insurance +orporation Jne /undred T$ent. 6i&ht Thousand Jne /undred Ten and 9*A111 (P1*H,111#9*) Pesos and Pioneer Insurance and Suret. +orp# 6i&ht. Iive Thousand Iour /undred Seven and *HA111 (PH),(1F#*H) Pesos representin& thirt. (B1R) percentu" o! their respective

clai"s as actual da"a&es, plus interest at the rate o! si? (6R) percentu" !ro" the date o! the !ilin& o! the co"plaint# SJ J-06-60# Iindin& that the parties entered into a ti"e charter part., not a de"ise or %are%oat charter $here the o$ner co"pletel. and e?clusivel. relin3uishes possession, co""and and navi&ation to the charterer, the + held P T -TI, S/IN7 , T66 96/ and its a&ent, ST9, solidaril. lia%le !or F1R o! the da"a&es sustained %. the car&o# This solidarit. lia%ilit. $as %orne %. their !ailure to prove that the. e?ercised e?traordinar. dili&ence in the vi&ilance over the %a&s o! ce"ent entrusted to the" !or transport# Jn the other hand, the + passed on the re"ainin& B1R o! the a"ount clai"ed to the shipper, + -0I , and its a&ent, +6N @, upon a !indin& that the da"a&e $as partl. due to the car&oMs in!erior pac,in&# 7ith respect to -6G6N+9, the + a!!ir"ed the !indin&s o! the -T+ that it did not ac3uire ;urisdiction over its person !or de!ective service o! su""ons# P T -TIMs, S/IN7 Ms, ST9Ms and +6N @Ms respective "otions !or reconsideration $ere su%se3uentl. denied in the + Ms assailed Ie%ruar. 1F, *116 -esolution# Issues >e!ore the +ourt P T -TI, S/IN7 , ST9 and +6N @ !iled separate petitions !or revie$ on certiorari %e!ore the +ourt, doc,eted as G#-# Nos# 1F1)91, 1F161(, and 1F166B, $hich $ere ordered consolidated in the +ourts -esolution dated Jul. B1, *116# 1) Jn pril *1, *116, ST9 "ani!ested 16 that it $ill no lon&er pursue its petition in G#-# No# 1F161( and has pre!erred to a$ait the resolution in G#-# No# 1F166B !iled %. P T -TI and S/IN7 # ccordin&l., an entr. o! ;ud&"ent 1F a&ainst it $as "ade on u&ust 1H, *116# 8i,e$ise, on Nove"%er *9, *11F, P T -TI and S/IN7 "oved 1H !or the $ithdra$al o! their petitions !or lac, o! interest, $hich the +ourt &ranted in its Januar. *1, *11H -esolution# 19 The correspondin& entr. o! ;ud&"ent *1 a&ainst the" $as "ade on Karch 1F,

*11H# Thus, onl. the petition o! +6N @ re"ained !or the +ourtMs resolution, $ith the lone issue o! $hether or not it "a. %e held lia%le to the respondents !or B1R o! their clai"# Kaintainin& that it $as not a part. to the %ill o! ladin&, +6N @ asserts that it cannot %e held lia%le !or the da"a&es sou&ht to %e collected %. the respondents# It also alle&ed that since its principal, + -0I , $as not i"pleaded as a part.2de!endantArespondent in the instant suit, no lia%ilit. can there!ore attach to it as a "ere a&ent# Koreover, there is dearth o! evidence sho$in& that it $as responsi%le !or the supposed de!ective pac,in& o! the &oods upon $hich the a$ard $as %ased# The +ourtMs -ulin& %ill o! ladin& is de!ined as Pan instru"ent in $ritin&, si&ned %. a carrier or his a&ent, descri%in& the !rei&ht so as to identi!. it, statin& the na"e o! the consi&nor, the ter"s o! the contract !or carria&e, and a&reein& or directin& that the !rei&ht to %e delivered to the order or assi&ns o! a speci!ied person at a speci!ied place#P *1 It operates %oth as a receipt and as a contract# s a receipt, it recites the date and place o! ship"ent, descri%es the &oods as to 3uantit., $ei&ht, di"ensions, identi!ication "ar,s and condition, 3ualit., and value# s a contract, it na"es the contractin& parties, $hich include the consi&nee, !i?es the route, destination, and !rei&ht rates or char&es, and stipulates the ri&hts and o%li&ations assu"ed %. the parties# ** s such, it shall onl. %e %indin& upon the parties $ho "a,e the", their assi&ns and heirs# *B In this case, the ori&inal parties to the %ill o! ladin& are' (a) the shipper + -0I < (%) the carrier P T -TI< and (c) the consi&nee /6IN0-I+/# /o$ever, %. virtue o! their relationship $ith P T -TI under separate charter arran&e"ents, S/IN7 , T66 96/ and its a&ent ST9 li,e$ise %eca"e parties to the %ill o! ladin&# In the sa"e vein, +6N @, as ad"itted a&ent o! + -0I , also %eca"e a part. to the said contract o! carria&e#

The respondents, ho$ever, "aintain *( that +6N @ is a ship a&ent and not a "ere a&ent o! + -0I , as !ound %. %oth the + *) and the -T+# *6 The +ourt disa&rees# rticle )H6 o! the +ode o! +o""erce provides' -T# )H6# The shipo$ner and the ship a&ent shall %e civill. lia%le !or the acts o! the captain and !or the o%li&ations contracted %. the latter to repair, e3uip, and provision the vessel, provided the creditor proves that the a"ount clai"ed $as invested therein# 4y ship agent is understood the person entrusted "ith the provisioning of a vessel! or "ho represents her in the port in "hich she may be found. (6"phasis supplied) -ecords sho$ that the o%li&ation o! +6N @ $as li"ited to in!or"in& the consi&nee /6IN0-I+/ o! the arrival o! the vessel in order !or the latter to i""ediatel. ta,e possession o! the &oods# No evidence $as o!!ered to esta%lish that +6N @ had a hand in the provisionin& o! the vessel or that it represented the carrier, its charterers, or the vessel at an. ti"e durin& the unloadin& o! the &oods# +learl., +6N @Ms participation $as si"pl. to assu"e responsi%ilit. over the car&o $hen the. $ere unloaded !ro" the vessel# /ence, no reversi%le error $as co""itted %. the courts a 3uo in holdin& that +6N @ $as not a ship a&ent $ithin the "eanin& and conte?t o! rticle )H6 o! the +ode o! +o""erce, %ut a "ere a&ent o! + -0I , the shipper# Jn this score, rticle 1H6H o! the +ivil +ode states' -T# 1H6H# >. the contract o! a&enc., a person %inds hi"sel! to render so"e service or to do so"ethin& in representation or on %ehal! o! another, $ith the consent or authorit. o! the latter# +orollaril., rticle 1H9F o! the sa"e +ode provides that an a&ent is not personall. lia%le to the part. $ith $ho" he contracts, unless he e?pressl. %inds hi"sel! or e?ceeds the li"its o! his authorit. $ithout &ivin& such part.

su!!icient notice o! his po$ers# >oth e?ceptions do not o%tain in this case# -ecords are %ere!t o! an. sho$in& that +6N @ e?ceeded its authorit. in the dischar&e o! its duties as a "ere a&ent o! + -0I # Neither $as it alle&ed, "uch less proved, that +6N @Ms li"ited o%li&ation as a&ent o! the shipper, + -0I , $as not ,no$n to /6IN0-I+/# Iurther"ore, since + -0I $as not i"pleaded as a part. in the instant suit, the lia%ilit. attri%uted upon it %. the + *F on the %asis o! its !indin& that the da"a&e sustained %. the car&o $as due to i"proper pac,in& cannot %e %orne %. +6N @# s "ere a&ent, +6N @ cannot %e "ade responsi%le or held accounta%le !or the da"a&e supposedl. caused %. its principal# *H ccordin&l., the +ourt !inds that the+ erred in orderin& +6N @ ;ointl. and severall. lia%le $ith + -0I to pa. B1oAo o! the respondentsM clai"# 7/6-6IJ-6, the assailed 0ecision and -esolution o! the +ourt o! ppeals are here%. -6@6-S60#6a"p99i6 The co"plaint a&ainst petitioner ce Navi&ation +o#, Inc# is here%. 0ISKISS60# SJ J-06-60# HOME INSURANCE COMPAN< 3s! AMERICAN STEAMSHIP AGENCIES, INC! and LU.ON STE6E1ORING CORPORATION G!R! N"! L-*++// Apr2l $, #/;: FACTS5 D+onsorcio Pes3uero del Peru o! South "ericaE shipped !rei&ht pre2paid at Peru, ;ute %a&s o! Peruvian !ish "eal throu&h SS +ro$%orou&h, covered %. clean %ills o! ladin&# The car&o, consi&ned to San Ki&uel >re$er., Inc#, no$ San Ki&uel +orporation, and insured %. /o"e Insurance +o"pan. arrived in Kanila and $as dischar&ed into the li&hters o! 8uCon Stevedorin& +o"pan.# 7hen the car&o $as delivered to consi&nee San Ki&uel >re$er. Inc#, there $ere shorta&es causin& the latter to la. clai"s a&ainst 8uCon Stevedorin& +orporation, /o"e Insurance +o"pan. and the "erican Stea"ship &encies (shipo$ner), o$ner and operator o! SS +ro$%orou&h#

>ecause the others denied lia%ilit., /o"e Insurance +o"pan. paid SK>I the insurance value o! the loss, as !ull settle"ent o! the clai"# /avin& %een re!used rei"%urse"ent %. %oth the 8uCon Stevedorin& +orporation and "erican Stea"ship &encies, /o"e Insurance +o"pan., as su%ro&ee to the consi&nee, !iled a&ainst the" %e!ore the +II o! Kanila a co"plaint !or recover. o! the pa."ent paid $ith le&al interest, plus attorne.s !ees# In ans$er, 8uCon Stevedorin& +orporation alle&ed that it delivered $ith due dili&ence the &oods in the sa"e 3uantit. and 3ualit. that it had received the sa"e !ro" the carrier# The +II, a!ter trial, a%solved 8uCon Stevedorin& +orporation, havin& !ound the latter to have "erel. delivered $hat it received !ro" the carrier in the sa"e condition and 3ualit., and ordered "erican Stea"ship &encies to pa. /o"e Insurance +o"pan. the a"ount de"anded $ith le&al interest plus attorne.s !ees# 0isa&reein& $ith such ;ud&"ent, "erican Stea"ship &encies appealed directl. to 5s# ISSUE' Is the stipulation in the charter part. o! the o$ners non2lia%ilit. valid so as to a%solve the "erican Stea"ship &encies !ro" lia%ilit. !or lossL HEL1' The ;ud&"ent appealed !ro" is here%. re3ersed and appellant is a%solved !ro" lia%ilit. to plainti!!# 96S The %ills o! ladin&, coverin& the ship"ent o! Peruvian !ish "eal provide at the %ac, thereo! that the %ills o! ladin& shall %e &overned %. and su%;ect to the ter"s and conditions o! the charter part., i! an., other$ise, the %ills o! ladin& prevail over all the a&ree"ents# Jn the %ills are sta"ped DIrei&ht prepaid as per charter part.# Su%;ect to all ter"s, conditions and e?ceptions o! charter part. dated 8ondon, 0ec# 1B, 196*#E Se't2"n *, para8rap( * "7 t(e '(arter party, provides that the o$ner is lia%le !or loss or da"a&e to the &oods caused %. pers"nal 9ant "7 due d2l28en'e on its part or its "ana&er to "a,e the vessel in all respects sea$orth. and to secure that she %e properl. "anned, e3uipped and supplied or %. the pers"nal a't "r de7ault "7 t(e "9ner "r 2ts ana8er # Said para&raph, ho$ever, e4e pts the o$ner o! the vessel !ro" an. loss or da"a&e or dela. arisin& !ro" an. other source, even !ro" the ne&lect or 7ault "7 t(e 'apta2n "r 're9 "r s" e "t(er pers"n e"plo.ed %. the o$ner on %oard, !or $hose acts the o$ner $ould ordinaril. %e lia%le e?cept !or said para&raph##

The provisions o! our +ivil +ode on co""on carriers $ere ta,en !ro" n&lo2 "erican la$# 5nder "erican ;urisprudence, a co""on carrier underta,in& to carr. a special car&o or '(artered t" a spe'2al pers"n "nly, be'" es a pr23ate 'arr2er# s a private carrier, a stipulation e?e"ptin& the o$ner !ro" lia%ilit. !or the ne&li&ence o! its a&ent is not a&ainst pu%lic polic., and is dee"ed valid# Such doctrine 7e !ind reasona%le# The +ivil +ode provisions on co""on carriers should not %e applied $here the carrier is not actin& as such %ut as a private carrier# The stipulation in the charter part. a%solvin& the o$ner !ro" lia%ilit. !or loss due to the ne&li&ence o! its a&ent $ould %e void onl. i! the strict pu%lic polic. &overnin& co""on carriers is applied# Such polic. has no !orce $here the pu%lic at lar&e is not involved, as in the case o! a ship totall. chartered !or the use o! a sin&le part.# nd !urther"ore, in a charter o! the entire vessel, the %ill o! ladin& issued %. the "aster to the charterer, as shipper, is in !act and le&al conte"plation "erel. a receipt and a docu"ent o! title not a contract, !or the contract is the charter part.# The consi&nee "a. not clai" i&norance o! said charter part. %ecause the %ills o! ladin& e?pressl. re!erred to the sa"e# ccordin&l., the consi&nees under the %ills o! ladin& "ust li,e$ise a%ide %. the ter"s o! the charter part.# nd as stated, recover. cannot %e had thereunder, !or loss or da"a&e to the car&o, a&ainst the shipo$ners, unless the sa"e is due to personal acts or ne&li&ence o! said o$ner or its "ana&er, as distin&uished !ro" its other a&ents or e"plo.ees# In this case, no such personal act or ne&li&ence has %een proved# Insurance +o# J! North "erica vs sian Ter"inal 0J+T-IN6' The ter" Dcarria&e o! &oodsE in the +arria&e o! Goods %. Sea ct (+JGS ) covers the period !ro" the ti"e the &oods are loaded to the vessel to the ti"e the. are dischar&ed there!ro"# V The carrier and the ship shall %e dischar&ed !ro" all lia%ilit. in respect o! loss or da"a&e unless suit is %rou&ht $ithin one .ear a!ter deliver. o! the &oods or the date $hen the &oods should have %een delivered# I +TS' V Jn Nove"%er 9, *11*, Kacro28ito +orporation, throu&h KA@ D0IKI PE vessel, 1H) pac,a&es o! electrol.tic tin !ree steel, co"plete and in &ood condition# V The &oods are covered %. a %ill o! ladin&, had a declared value o! W169,H)1#B) and $as insured $ith the Insuracne +o"pan. o! North "erica (Petitioner) a&ainst all ris,# V The carr.in& vessel arrived at the port o! Kanila on Nove"%er 19, *11*,

and $hen the ship"ent $as dischar&ed there!ro", it $as noted that F o! the pac,a&es $ere da"a&ed and in %ad condition# V Jn Nover"%er *1, *11*, the ship"ent $as then turned over to the custod. o! sian Ter"inals# Inc# (-espondent) !or stora&e and sa!e,eepin& pendin& its $ithra$al %. the consi&nee# V Jn Nove"%er *9, *11*, prior to the $ithra$al o! the ship"ent, a ;oint inspection o! the said car&o $as conducted# The e?a"ination report sho$ed that an additional ) pac,a&es $ere !ound to %e da"a&ed and in %ad order# V Jn Januar. 6, *11B, the consi&nee, San Ki&uel +orporation !iled separate clai"s a&ainst %oth the Petioner and the -espondent !or the da"a&e caused to the pac,a&es# V The Petitioner then paid San Ki&uel +orporation the a"ound o! PhP (B1,)9*#1( $hich is %ased on a report o! its independent ad;uster# V The Petitioner then !or"all. de"anded reparation a&ainst the -espondent !or the a"ount it paid San Ki&uel +orporation# V Ior the !ailure o! the -espondent to satis!. the de"and o! the Petitioner, the Petitioner !iled !or an action !or da"a&es $ith the -T+ o! Ka,ati# V The trial court !ound that indeed, the ship"ent su!!ered additional da"a&e under the custod. o! the -espondent prior to the turn over o! the said ship"ent to San Ki&uel# V s to the e?tent o! lia%ilit., -espondent invo,ed the +ontract !or +ar&o /andlin& Services e?ecuted %et$een the Philippine Ports uthorit. and the -espondent# 5nder the contract, the -espondents lia%ilit. !or da"a&e to car&oes in its custod. is li"ited to PhP),111 !or each pac,a&e, unless the value o! the car&o ship"ent is other$ise speci!ied or "ani!ested in $ritin& to&ether $ith the declared >ill o! 8adin&# The trial +ourt !ound that the shipper and consi&nee $ith the said re3uire"ents# V /o$ever, the trial court dis"issed the co"plaint on the &round that the Petitioners clai" $as %arred %. the statute o! li"itations# It held that the +arria&e o! Goods %. Sea ct (+JGS ), e"%odied in +o""on$ealth ct No# 6) is applica%le# The trial court held that under the said la$, the shipper has the ri&ht to %rin& a suit $ithin one .ear a!ter the deliver. o! the &oods or the date $hen the &oods should have %een delivered, in respect o! loss or da"a&e thereto# V Petitioner then !iled %e!ore the Supre"e +ourt a petition !or revie$ on certiorari assailin& the trial courts order o! dis"issal# ISS56AS' 1#) 7hether or not the trial court co""itted an error in dis"issin& the co"plaint o! the petitioner %ased on the one2.ear prescriptive period !or !ilin& a suit under the +JGS to an arrastre operatorL 96S# *#) 7hether or not the Petitioner is entitled to recover actual da"a&es a&ainst the -espondentL 96S, %ut onl. PhP16(,(*H#F6

/680' V The ter" Dcarria&e o! &oodsE covers the period !ro" the ti"e $hen the &oods are loaded to the ti"e $hen the. are dischar&ed !ro" the ship# Thus, it can %e in!erred that the period o! ti"e $hen the &oods have %een dischar&ed !ro" the ship and &iven to the custod. o! the arrastre operator is not covered %. the +JGS # V The Petitioner, $ho !iled the present action !or the ) pac,a&es that $ere da"a&ed $hile in the custod. o! the respondent $as not !ortri&ht in its clai", as it ,ne$ that the da"a&es it sou&ht, %ased on the report o! its ad;uster covered 9 pac,a&es# >ased on the report, onl. !our o! the nine pac,a&es $ere da"a&ed in the custod. o! the -espondent# The Petitioner can %e &ranted onl. the a"ount o! da"a&es that is due to it ,ENJAMIN CUA =CUA UlAN TE>?, Petitioner,2versus2 0 ALLEM PHILIPPINES SHIPPING,INC! and A16ANCE SHIPPINGCORPORATION, -espondents# G!R! N"! #&#))& Jn Nove"%er 1*, 1991, +ua !iled a civil action !or da"a&es a&ainst7alle" and dvance Shippin& %e!ore the -T+ o! Kanila# +ua sou&ht the pa."ent o! P*,1B1,B1B#)* !or da"a&e to *1H tons and !or a shorta&e o! )1tons o! ship"ent o! >raCilian So.a%ean consi&ned to hi", as evidenced %.>ill o! 8adin& No# 11# /e clai"ed that the loss $as due to the respondents !ailure to o%serve e?traordinar. dili&ence in carr.in& the car&o# dvance Shippin& !iled a "otion to dis"iss the co"plaint, ssailin& the -T+s ;urisdiction over +uas clai"< it ar&ued that +uas clai" should have !irst %een %rou&ht to ar%itration# +ua opposed dvance Shippin&s ar&u"ent< he contended that he, as a consi&nee, $as not %ound %. the+harter Part. &ree"ent, $hich $as a contract %et$een the ship o$ner ( dvance Shippin&) and the charterers# The -T+ initiall. de!erredresolvin& the 3uestion o! ;urisdiction until a!ter trial on the "erits, %ut upon "otion %. dvance Shippin&, the -T+ ruled that +ua $as not %ound %. thear%itration clause in the +harter Part. &ree"ent# In the "eanti"e, 7alle" !iled its o$n "otion to dis"iss, raisin& the sole &round o! prescription# Section B(6) o! the +arria&e o! Goods %. Sea ct (C7GS ) provides that Dthe carrier and the ship shall %e dischar&ed !ro" all lia%ilit. in respect o! loss or da"a&e unless suit is %rou&ht 92t(2n "ne year a7ter del23ery "7 t(e 8""ds #E 7alle" alle&ed that the &oods $ere delivered to +ua on u&ust 16, 19H9, %ut the da"a&es suit $as institutedonl. on Nove"%er 1*, 1991 : "ore than one .ear than the period allottedunder the +JGS # Since the action $as !iled %e.ond the one .ear prescriptive period, 7alle" ar&ued that +uas action has %een %arred# +ua !iled an opposition to 7alle"s "otion to dis"iss, den.in& the latters clai" o! prescription#

+ua re!erred to the Au8ust #%, #//% tele4 "essa&e sent %. Kr# #-# Iilder o! Tho"as Killer, "ana&er o! the 5T PUI +lu%, $hich stated that dvance Shippin& a&reed to e?tend theco""ence"ent o! suit !or 91 da.s, !ro" u&ust 1(, 1991 to Nove"%er 1*, 1991< the e?tension $as "ade $ith the concurrence o! the insurer o! the vessel, the 5T PUI +lu%#Jn Ie%ruar. 11, 199*, 7alle" !iled an o"ni%us "otion, $ithdra$in& its "otion to dis"iss and adoptin& instead the ar&u"ents in dvance Shippin&s "otion to dis"iss# It "ade an e?press reservation, ho$ever, that it $as not $aivin& Dthe de!ense o! prescription and $ill alle&e as one o! its de!enses, such de!ense o! prescription andAor laches in its ns$er should this %e re3uired %. the circu"stances# n order dated June ), 199*, the -T+ resolved that Dthe +ourt need not act on the Kotion to 0is"iss !iled %. the de!endant 7alle" Philippines Shippin&, Inc#N,OE and re3uired the de!endants therein to !ile their ns$er# The respondents !iled an appeal $ith the + , insistin& that +uas clai" is ar%itra%le and has %een %arred %. prescription andAor laches# The + !ound the respondents clai" o! prescription "eritorious a!ter !indin& that the u&ust 11, 1991 tele? "essa&e, e?tendin& the period to !ile an action, $as neither attached to +uas opposition to 7alle"s "otion to dis"iss, nor presented durin& trial# The + ruled that there $as no %asis !or the -T+ to conclude that the prescriptive period $as e?tended %. the parties a&ree"ent# /ence, it set aside the -T+ decision and dis"issed +uas co"plaint# +ua !iled a "otion !or reconsideration o! the + decision, $hich $as denied %. the + in a resolution dated Januar. B1, *116# +ua thus !iled the present petition to assail the + rulin&s# SS56S' "hether or not Cua#s claim for payment of damages against the respondents has prescribed #-58ING' !ter considerin& the !acts and the applica%le la$, the +ourt !inds that +ua ti"el. !iled his clai" %e!ore the trial court#Section 1, -ule 16 o! the -ules o! +ourt enu"erates the &rounds on $hich a "otion to dis"iss a co"plaint "a. %e %ased, and the prescription o! an action is included as one o! the &rounds under para&raph (!)# The de!endant "a. either raise the &rounds in a "otion to dis"iss or plead the" as an a!!ir"ative de!ense in his ans$er# The !ailure to raise or plead the&rounds &enerall. a"ounts to a $aiver, e?cept

i! the &round pertains to (1)lac, o! ;urisdiction over the su%;ect "atter, (*) litis pendentia, (B)res .udicata , or (() prescription# I! the !acts supportin& an. o! these !our listed &rounds are apparent !ro" the pleadin&s or the evidence on record, thecourts "a. consider these &rounds motu proprio and accordin&l. dis"iss the co"plaint#The +ourt, there!ore, need notresolve the 3uestion o! $hether 7alle" actuall. $aived the de!ense o! prescription< an in3uir. into this 3uestion is useless, as courts are e"po$ered to dis"iss actions on the %asis o! prescription even i! it is not raised %. the de!endant so lon& as the !acts supportin& this &round are evident !ro" the records# In the present case, $hat is decisive is $hether the pleadin&s and the evidence support a !indin& that +uas clai" has prescri%ed, and it is on this point that $e disa&ree $ith the + s !indin&s# 7e !ind that the + !ailed to appreciate the ad"issions "ade %. the respondents in their pleadin&s that ne&ate a !indin& o! prescription o! +uas clai"# -espondentsad"ittedthea&ree"ente?tendin&theperiodto!iletheclai"The +JGS is the applica%le la$ !or all contracts !or carria&e o! &oods %. sea to and !ro" Philippine ports in !orei&n trade< it is thus the la$that the +ourt shall consider in the present case since the car&o $as transported !ro" >raCil to the Philippines#5nder Se't2"n )=;? "7 t(e COGSA , the carrier is dischar&ed !ro" lia%ilit. !or loss or da"a&e to the car&o Dunless the suit is %rou&ht $ithin "ne year a7ter del23ery "7 t(e 8""ds or the date $hen the &oods should have %een delivered#E Jurisprudence, ho$ever, reco&niCed the validit. o! an a&ree"ent %et$een the carrier and the shipperAconsi&nee e?tendin& theone2.ear period to !ile a clai"#The vessel K@ rgo Trader arrived in Kanila on Jul. H, 19H9< +uas co"plaint !or da"a&es $as !iled %e!ore the -T+ o! Kanila on Nove"%er 1*, 1991# lthou&h the co"plaint $as clearl. !iled %e.ond the one2.ear period, +ua additionall. alle&ed in his co"plaint (under para&raph 11) that @AtB(e de7endants 4 4 4 a8reed t" e4tend t(e t2 e 7"r 72l2n8 "7 t(e a't2"n up t" N"3e ber #*, #//%!C The alle&ation o! an a&ree"ent e?tendin& the period to !ile an action in +ua s co"plaint is a "aterial aver"ent that, under Section 11, -ule H o! the -ules o! +ourt, "ust %e speci!icall. denied %. the respondents<other$ise, the alle&ation is dee"ed ad"itted# speci!ic denial is "ade %. speci!.in& each "aterial alle&ation o! !act, the

truth o! $hich the de!endant does not ad"it and, $henever practica%le, settin& !orth the su%stance o! the "atters upon $hich he relies to support his denial# The purpose o! re3uirin& the de!endant to "a,e a speci!ic denial is to "a,e hi" disclose the "atters alle&ed in the co"plaint$hich he succinctl. intends to disprove at the trial, together "ith the matter "hich he relied upon to support the denial A re32e9 "7 t(e plead2n8s sub 2tted by t(e resp"ndents d2s'l"ses t(at t(ey 7a2led t" spe'272'ally deny CuaDs alle8at2"n "7 an a8ree ent e4tend2n8 t(e per2"d t" 72le an a't2"n t" N"3e ber #*, #//%! 7alle"s "otion to dis"iss si"pl. re!erred to the !act that +uas co"plaint $as !iled "ore than one .ear !ro" the arrival o! the vessel, %ut it did not contain a denial o! the e?tension# Since the +JGS is the applica%le la$, the respondents discussion to support their clai" o! prescription under rticle B66 o! the +ode o! +o""erce $ould, there!ore, not constitute a re!utation o! +uas alle&ation o! e?tension# Given the respondents !ailure to speci!icall. den. the a&ree"ent on the e?tension o! the period to !ile an action, the +ourtconsiders the e?tension o! the period as an ad"itted !act# 0HEREFORE, the decision dated Ka. 16, *11) and the resolution dated Januar. B1, *116 o! the +ourt o! ppeals in + 2G#-# +@ No# )B)BHare SET ASI1E! The decision dated 0ece"%er *H, 199) o! the -e&ional Trial +ourt o! Kanila, >ranch B1, in +ivil +ase No# 912))19H is REINSTATE1! +osts a&ainst the respondents# E1NA 1IAGO LHUILLIER v! ,RITISH AIR0A<SG!R! N"! #&#%/*, Mar'( #+, *%#%, SECON1 1I6ISION =1el Cast2ll", :here the matter is governed by the :arsa" Convention! .urisdiction ta&es on a dual concept. $urisdiction in the international sense must be established in accordance "ith rticle ;<=6> of the :arsa" Convention! follo"ing "hich the .urisdiction of a particular court must be established pursuant to the applicable domestic la". 7nly after the ?uestion of "hich court has .urisdiction is determined "ill the issue of venue be ta&en up. This second ?uestion shall be governed by the la" of the court to "hich the case is submitted.

6dna 0ia&o 8huillier too, >ritish ir$a. !li&ht )(H !ro" 8ondon to -o"e# Jnce on %oard,she re3uested Julian /allida., one o! its !li&ht attendants, to assist her in placin& her hand2carried lu&&a&e in the overhead %in# /allida. alle&edl. re!used to help and assist her, and even sarcasticall. re"ar,ed that PI! I $ere to help all B11 passen&ers in this !li&ht, I $ould have a %ro,en %ac,4P# 6dna !urther alle&ed that $hen the plane $as a%out to land in -o"e, another !li&ht attendant, Nic,olas Terri&an (Terri&an), sin&led her out !ro" a"on& all the passen&ers in the %usiness class section to lecture on plane sa!et.# 5pon arrival in -o"e, petitioner co"plained to >ritish ir$a.ss &round "ana&er and de"anded an apolo&.# /o$ever, the latter declared that the !li&ht ste$ards $ere Ponl. doin& their ;o%#P6dna then !iled a co"plaint a&ainst >ritish ir$a.s %e!ore the -e&ional Trial +ourt (-T+) o! Ka,ati +it.# Su""ons, to&ether $ith a cop. o! the co"plaint, $as served on >ritish ir$a.sthrou&h @ioleta 6chevarria, General Kana&er o! 6uro2Philippine irline Services, Inc# >ritish ir$a.s !iled a Kotion to 0is"iss on &rounds o! lac, o! ;urisdiction over the case and over theperson o! the respondent# It alle&ed that onl. the courts o! 8ondon, 5nited Tin&do" or -o"e, Ital.,have ;urisdiction over the co"plaint !or da"a&es pursuant to the 7arsa$ +onvention, rticle *H(1)# The -T+ o! Ka,ati +it. &ranted the Kotion to 0is"iss# 6dna !iled a Kotion !or -econsideration%ut the "otion $as denied# /ence, this petition# ISSUES5 7hether Philippine +ourts have ;urisdiction over a tortious conduct co""itted a&ainst aIilipino citiCen and resident %. airline personnel o! a !orei&n carrier travellin& %e.ond the territorialli"it o! an. !orei&n countr. HEL15 Petition 1ENIE1 #It is settled that the 7arsa$ +onvention has the !orce and e!!ect o! la$ in this countr.# ??? The +onvention is thus a treat. co""it"ent voluntaril. assu"ed %. the Philippine &overn"ent and,as such, has the !orce and e!!ect o! la$ in this countr.# The 7arsa$ +onvention applies %ecause theair travel, $here the alle&ed tortious conduct occurred, $as %et$een the 5nited Tin&do" and Ital., $hich are %oth si&natories to the 7arsa$ +onvention#

rticle 1 o! the 7arsa$ +onvention provides' 1# This +onvention applies to all international carria&e o! persons, lu&&a&e or &oods per!or"ed %. aircra!t !or re$ard# Itapplies e3uall. to &ratuitous carria&e %. aircra!t per!or"ed %. an air transport underta,in&# Thus, $hen the place o! departure and the place o! destination in a contract o! carria&e aresituated $ithin the territories o! t$o /i&h +ontractin& Parties, said carria&e is dee"ed anPinternational carria&eP# The /i&h +ontractin& Parties re!erred to herein $ere the si&natories to the 7arsa$ +onvention and those $hich su%se3uentl. adhered to it# In the case at %ench, petitioners place o! departure $as 8ondon, 5nited Tin&do" $hile her place o! destination $as -o"e, Ital.# >oth the 5nited Tin&do" and Ital. si&ned and rati!ied the 7arsa$ +onvention# s such, the transport o! the petitioner is dee"ed to %e an Pinternational carria&eP $ithin the conte"plation o! the 7arsa$ +onvention# Since the 7arsa$ +onvention appliesin the instant case, then the ;urisdiction over the su%;ect "atter o! the action is &overned %. theprovisions o! the 7arsa$ +onvention#5nder rticle *H(1) o! the 7arsa$ +onvention, the plainti!! "a. %rin& the action !orda"a&es %e!ore : 1# the court $here the carrier is do"iciled<*# the court $here the carrier has its principal place o! %usiness<B# the court $here the carrier has an esta%lish"ent %. $hich the contract has %een "ade< or(# the court o! the place o! destination# In this case, it is not disputed that respondent is a >ritish corporation do"iciled in 8ondon,5nited Tin&do" $ith 8ondon as its principal place o! %usiness# /ence, under the !irst and second ;urisdictional rules, the petitioner "a. %rin& her case %e!ore the courts o! 8ondon in the 5nited Tin&do"# In the passen&er tic,et and %a&&a&e chec, presented %. %oth the petitioner and respondent, it appears that the tic,et $as issued in -o"e, Ital.# +onse3uentl., under the third;urisdictional rule, the petitioner has the option to %rin& her case %e!ore the courts o! -o"e in Ital.#Iinall., %oth the petitioner and respondent aver that the place o! destination is -o"e, Ital., $hich is properl. desi&nated &iven the routin& presented in the said passen&er tic,et and %a&&a&e chec,# ccordin&l., petitioner "a. %rin& her action %e!ore the courts o! -o"e, Ital.# The +ourt !inds that the -T+ o! Ka,ati correctl. ruled that it does not have ;urisdiction over the case !iled %. the petitioner# The +ourt !urther held that rticle *H(1) o! the 7arsa$ +onvention is ;urisdictional in character'

nu"%er o! reasons tends to support the characteriCation o! rticle *H(1) as a ;urisdiction and not a venue provision# Iirst,the $ordin& o! rticle B*, $hich indicates the places $here the action !or da"a&es P"ustP %e %rou&ht, underscores the"andator. nature o! rticle *H(1)# Second, this characteriCation is consistent $ith one o! the o%;ectives o! the +onvention, $hich is to Pre&ulate in a uni!or" "anner the conditions o! international transportation %. air#P Third, the +onvention doesnot contain an. provision prescri%in& rules o! ;urisdiction other than rticle *H(1), $hich "eans that the phrase Prules as to;urisdictionP used in rticle B* "ust re!er onl. to rticle *H(1)# In !act, the last sentence o! rticle B* speci!icall. deals $iththe e?clusive enu"eration in rticle *H(1) as P;urisdictions,P $hich, as such, cannot %e le!t to the $ill o! the parties re&ardlesso! the ti"e $hen the da"a&e occurred#? ? ? ? In other $ords, $here the "atter is &overned %. the 7arsa$ +onvention, ;urisdiction ta,es on a dual concept# Jurisdiction in the international sense "ust %e esta%lished in accordance $ith rticle *H(1) o! the 7arsa$ +onvention, !ollo$in& $hich the ;urisdiction o! a particular court "ust%e esta%lished pursuant to the applica%le do"estic la$# Jnl. a!ter the 3uestion o! $hich court has;urisdiction is deter"ined $ill the issue o! venue %e ta,en up# This second 3uestion shall %e &overned %. the la$ o! the court to $hich the case is su%"itted# Tortious conduct as &round !or the 8huillers co"plaint is $ithin the purvie$ o! the 7arsa$ +onvention# It is thus settled that alle&ations o! tortious conduct co""itted a&ainst an airline passen&er durin& the course o! the international carria&e do not %rin& the case outside the a"%it o! the 7arsa$ +onvention# >ritish ir$a.s, in see,in& re"edies !ro" the trial court throu&h special appearance o! counsel, is not dee"ed to have voluntaril. su%"itted itsel! to the ;urisdiction o! the trial court# ??? In re!utin& the contention o! petitioner, respondent cited 1a 3aval Drug Corporation v.Court of ppeals $here the +ourt held that even i! a part. Pchallen&es the ;urisdiction o! the court over his person, as %. reason o! a%sence or de!ective service o! su""ons, and he also invo,es other &rounds !or the dis"issal o! the action under -ule 16, he is not dee"ed to %e in estoppel or to have $aived his o%;ection to the ;urisdiction over his person#P