Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 101089. April 7, 1993.
ESTRELLITA M. BASCOS, petitioners,
vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.
Modesto S. Bascos for petitioner.
Pelaez, Adriano & Gregorio for private respondent.
SYLLABUS
1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE COMMON CARRIER. Article 1732 of the Civil Code
defines a common carrier as "(a) person, corporation or firm, or association engaged in the business of carrying or
transporting passengers or goods or both, by land, water or air, for compensation, offering their services to the public." The
test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which
he has held out to the general public as his occupation rather than the quantity or extent of the business transacted." . . . The
holding of the Court in De Guzman vs. Court of Appeals is instructive. In referring to Article 1732 of the Civil Code, it held thus:
"The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity (in local idiom, as a "sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguished
between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the general population. We think that Article 1732 deliberately
refrained from making such distinctions."
2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE
ARISES; HOW PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. Common carriers are obliged to
observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have
been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very few instances when
the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the
presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the
presumption . . . The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus,
contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to
adduce sufficient proof of extraordinary diligence made the presumption conclusive against her.
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOW CARRIER ABSOLVED FROM LIABILITY. In De
Guzman vs. Court of Appeals, the Court held that hijacking, not being included in the provisions of Article 1734, must be dealt
with under the provisions of Article 1735 and thus, the common carrier is presumed to have been at fault or negligent. To
exculpate the carrier from liability arising from hijacking, he must prove that the robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in accordance with Article 1745 of the Civil Code which provides: "Art. 1745. Any
of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy . . . (6) That the
common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat,
violences or force, is dispensed with or diminished"; In the same case, the Supreme Court also held that: "Under Article 1745
(6) above, a common carrier is held responsible and will not be allowed to divest or to diminish such responsibility even
for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave of irresistible
threat, violence of force," We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat,
violence or force."
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE. In this case, petitioner herself has made the admission
that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and
no evidence is required to prove the same.
5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A FACT. Petitioner presented no other proof of the
existence of the contract of lease. He who alleges a fact has the burden of proving it.
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF AFFIANTS AVAILABLE AS WITNESSES. While the affidavit of
Juanito Morden, the truck helper in the hijacked truck, was presented as evidence in court, he himself was a witness as could
be gleaned from the contents of the petition. Affidavits are not considered the best evidence if the affiants are available as
witnesses.
7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT LAW DEFINES IT TO BE. Granting that the said
evidence were not self-serving, the same were not sufficient to prove that the contract was one of lease. It must be understood
that a contract is what the law defines it to be and not what it is called by the contracting parties.
D E C I S I O N
CAMPOS, JR., J p:
This is a petition for review on certiorari of the decision ** of the Court of Appeals in "RODOLFO A. CIPRIANO, doing business
under the name CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M. BASCOS, doing business under the
name of BASCOS TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216, the dispositive portion of which is quoted
hereunder:
"PREMISES considered, We find no reversible error in the decision appealed from, which is hereby affirmed in toto. Costs
against appellant." 1
The facts, as gathered by this Court, are as follows:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short) entered into a hauling contract 2 with
Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latter's 2,000 m/tons of soya bean meal from
Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods Corporation in Calamba, Laguna. To carry out its obligation,
CIPTRADE, through Rodolfo Cipriano, subcontracted with Estrellita Bascos (petitioner) to transport and to deliver 400 sacks
of soya bean meal worth P156,404.00 from the Manila Port Area to Calamba, Laguna at the rate of P50.00 per metric ton.
Petitioner failed to deliver the said cargo. As a consequence of that failure, Cipriano paid Jibfair Shipping Agency the amount of
the lost goods in accordance with the contract which stated that:
"1. CIPTRADE shall be held liable and answerable for any loss in bags due to theft, hijacking and non-delivery or damages to
the cargo during transport at market value, . . ." 3
Cipriano demanded reimbursement from petitioner but the latter refused to pay. Eventually, Cipriano filed a complaint for a
sum of money and damages with writ of preliminary attachment 4 for breach of a contract of carriage. The prayer for a Writ of
Preliminary Attachment was supported by an affidavit 5 which contained the following allegations:
"4. That this action is one of those specifically mentioned in Sec. 1, Rule 57 the Rules of Court, whereby a writ of preliminary
attachment may lawfully issue, namely:
"(e) in an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his
creditors;"
5. That there is no sufficient security for the claim sought to be enforced by the present action;
6. That the amount due to the plaintiff in the above-entitled case is above all legal counterclaims;"
The trial court granted the writ of preliminary attachment on February 17, 1987.
In her answer, petitioner interposed the following defenses: that there was no contract of carriage since CIPTRADE leased her
cargo truck to load the cargo from Manila Port Area to Laguna; that CIPTRADE was liable to petitioner in the amount of
P11,000.00 for loading the cargo; that the truck carrying the cargo was hijacked along Canonigo St., Paco, Manila on the night
of October 21, 1988; that the hijacking was immediately reported to CIPTRADE and that petitioner and the police exerted all
efforts to locate the hijacked properties; that after preliminary investigation, an information for robbery and carnapping were
filed against Jose Opriano, et al.; and that hijacking, being a force majeure, exculpated petitioner from any liability to
CIPTRADE.
After trial, the trial court rendered a decision *** the dispositive portion of which reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR HUNDRED FOUR PESOS (P156,404.00) as an (sic) for actual
damages with legal interest of 12% per cent per annum to be counted from December 4, 1986 until fully paid;
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for attorney's fees; and
3. The costs of the suit.
The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March 10, 1987 filed by defendant is DENIED for being
moot and academic.
SO ORDERED." 6
Petitioner appealed to the Court of Appeals but respondent Court affirmed the trial court's judgment.
Consequently, petitioner filed this petition where she makes the following assignment of errors; to wit:
"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND
PRIVATE RESPONDENT WAS CARRIAGE OF GOODS AND NOT LEASE OF CARGO TRUCK.
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE RESPONDENT COURT THAT THE CONTRACTUAL
RELATIONSHIP BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF GOODS IS CORRECT,
NEVERTHELESS, IT ERRED IN FINDING PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS OF THE CARGO WAS DUE TO
FORCE MAJEURE, NAMELY, HIJACKING.
III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF THE TRIAL COURT THAT PETITIONER'S MOTION TO
DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT HAS BEEN RENDERED MOOT AND ACADEMIC BY THE DECISION
OF THE MERITS OF THE CASE." 7
The petition presents the following issues for resolution: (1) was petitioner a common carrier?; and (2) was the hijacking
referred to a force majeure?
The Court of Appeals, in holding that petitioner was a common carrier, found that she admitted in her answer that she did
business under the name A.M. Bascos Trucking and that said admission dispensed with the presentation by private
respondent, Rodolfo Cipriano, of proofs that petitioner was a common carrier. The respondent Court also adopted in toto the
trial court's decision that petitioner was a common carrier, Moreover, both courts appreciated the following pieces of evidence
as indicators that petitioner was a common carrier: the fact that the truck driver of petitioner, Maximo Sanglay, received the
cargo consisting of 400 bags of soya bean meal as evidenced by a cargo receipt signed by Maximo Sanglay; the fact that the
truck helper, Juanito Morden, was also an employee of petitioner; and the fact that control of the cargo was placed in
petitioner's care.
In disputing the conclusion of the trial and appellate courts that petitioner was a common carrier, she alleged in this petition
that the contract between her and Rodolfo A. Cipriano, representing CIPTRADE, was lease of the truck. She cited as evidence
certain affidavits which referred to the contract as "lease". These affidavits were made by Jesus Bascos 8 and by petitioner
herself. 9 She further averred that Jesus Bascos confirmed in his testimony his statement that the contract was a lease contract.
10 She also stated that: she was not catering to the general public. Thus, in her answer to the amended complaint, she said that
she does business under the same style of A.M. Bascos Trucking, offering her trucks for lease to those who have cargo to move,
not to the general public but to a few customers only in view of the fact that it is only a small business. 11
We agree with the respondent Court in its finding that petitioner is a common carrier.
Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association engaged in the
business of carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their
services to the public." The test to determine a common carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the
business transacted." 12 In this case, petitioner herself has made the admission that she was in the trucking business, offering
her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same. 13
But petitioner argues that there was only a contract of lease because they offer their services only to a select group of people
and because the private respondents, plaintiffs in the lower court, did not object to the presentation of affidavits by petitioner
where the transaction was referred to as a lease contract.
Regarding the first contention, the holding of the Court in De Guzman vs. Court of Appeals 14 is instructive. In referring to
Article 1732 of the Civil Code, it held thus:
"The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity (in local idiom, as a "sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a
carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or
solicits business only from a narrow segment of the general population. We think that Article 1732 deliberately refrained from
making such distinctions."
Regarding the affidavits presented by petitioner to the court, both the trial and appellate courts have dismissed them as self-
serving and petitioner contests the conclusion. We are bound by the appellate court's factual conclusions. Yet, granting that
the said evidence were not self-serving, the same were not sufficient to prove that the contract was one of lease. It must be
understood that a contract is what the law defines it to be and not what it is called by the contracting parties. 15 Furthermore,
petitioner presented no other proof of the existence of the contract of lease. He who alleges a fact has the burden of proving it.
16
Likewise, We affirm the holding of the respondent court that the loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. 17
Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated. 18 There are very few instances when the presumption of negligence does not attach and these instances are
enumerated in Article 1734. 19 In those cases where the presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the presumption.
In this case, petitioner alleged that hijacking constituted force majeure which exculpated her from liability for the loss of the
cargo. In De Guzman vs. Court of Appeals, 20 the Court held that hijacking, not being included in the provisions of Article 1734,
must be dealt with under the provisions of Article 1735 and thus, the common carrier is presumed to have been at fault or
negligent. To exculpate the carrier from liability arising from hijacking, he must prove that the robbers or the hijackers acted
with grave or irresistible threat, violence, or force. This is in accordance with Article 1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished;"
In the same case, 21 the Supreme Court also held that:
"Under Article 1745 (6) above, a common carrier is held responsible and will not be allowed to divest or to diminish such
responsibility even for acts of strangers like thieves or robbers except where such thieves or robbers in fact acted with
grave or irresistible threat, violence or force. We believe and so hold that the limits of the duty of extraordinary diligence in
the vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave
or irresistible threat, violence or force."
To establish grave and irresistible force, petitioner presented her accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and
Juanito Morden's 24 "Salaysay". However, both the trial court and the Court of Appeals have concluded that these affidavits
were not enough to overcome the presumption. Petitioner's affidavit about the hijacking was based on what had been told her
by Juanito Morden. It was not a first-hand account. While it had been admitted in court for lack of objection on the part of
private respondent, the respondent Court had discretion in assigning weight to such evidence. We are bound by the conclusion
of the appellate court. In a petition for review on certiorari, We are not to determine the probative value of evidence but to
resolve questions of law. Secondly, the affidavit of Jesus Bascos did not dwell on how the hijacking took place. Thirdly, while
the affidavit of Juanito Morden, the truck helper in the hijacked truck, was presented as evidence in court, he himself was a
witness as could be gleaned from the contents of the petition. Affidavits are not considered the best evidence if the affiants are
available as witnesses. 25 The subsequent filing of the information for carnapping and robbery against the accused named in
said affidavits did not necessarily mean that the contents of the affidavits were true because they were yet to be determined in
the trial of the criminal cases.
The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her
assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient
proof of extraordinary diligence made the presumption conclusive against her.
Having affirmed the findings of the respondent Court on the substantial issues involved, We find no reason to disturb the
conclusion that the motion to lift/dissolve the writ of preliminary attachment has been rendered moot and academic by the
decision on the merits.
In the light of the foregoing analysis, it is Our opinion that the petitioner's claim cannot be sustained. The petition is
DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25599 April 4, 1968
HOME INSURANCE COMPANY, plaintiff-appellee,
vs.
AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING CORPORATION, defendants,
AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellant.
William H. Quasha and Associates for plaintiff-appellee.
Ross, Selph, Salcedo and Associates for defendant-appellant.
BENGZON, J.P., J.:
"Consorcio Pesquero del Peru of South America" shipped freight pre-paid at Chimbate, Peru, 21,740 jute bags of Peruvian fish
meal through SS Crowborough, covered by clean bills of lading Numbers 1 and 2, both dated January 17, 1963. The cargo,
consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and insured by Home Insurance Company for $202,505,
arrived in Manila on March 7, 1963 and was discharged into the lighters of Luzon Stevedoring Company. When the cargo was
delivered to consignee San Miguel Brewery Inc., there were shortages amounting to P12,033.85, causing the latter to lay claims
against Luzon Stevedoring Corporation, Home Insurance Company and the American Steamship Agencies, owner and operator
of SS Crowborough.
Because the others denied liability, Home Insurance Company paid the consignee P14,870.71 the insurance value of the
loss, as full settlement of the claim. Having been refused reimbursement by both the Luzon Stevedoring Corporation and
American Steamship Agencies, Home Insurance Company, as subrogee to the consignee, filed against them on March 6, 1964
before the Court of First Instance of Manila a complaint for recovery of P14,870.71 with legal interest, plus attorney's fees.
In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the same quantity and
quality that it had received the same from the carrier. It also claimed that plaintiff's claim had prescribed under Article 366 of
the Code of Commerce stating that the claim must be made within 24 hours from receipt of the cargo.
American Steamship Agencies denied liability by alleging that under the provisions of the Charter party referred to in the bills
of lading, the charterer, not the shipowner, was responsible for any loss or damage of the cargo. Furthermore, it claimed to
have exercised due diligence in stowing the goods and that as a mere forwarding agent, it was not responsible for losses or
damages to the cargo.
On November 17, 1965, the Court of First Instance, after trial, absolved Luzon Stevedoring Corporation, having found the latter
to have merely delivered what it received from the carrier in the same condition and quality, and ordered American Steamship
Agencies to pay plaintiff P14,870.71 with legal interest plus P1,000 attorney's fees. Said court cited the following grounds:
(a) The non-liability claim of American Steamship Agencies under the charter party contract is not tenable because
Article 587 of the Code of Commerce makes the ship agent also civilly liable for damages in favor of third persons due
to the conduct of the captain of the carrier;
(b) The stipulation in the charter party contract exempting the owner from liability is against public policy under
Article 1744 of the Civil Code;
(c) In case of loss, destruction or deterioration of goods, common carriers are presumed at fault or negligent under
Article 1735 of the Civil Code unless they prove extraordinary diligence, and they cannot by contract exempt
themselves from liability resulting from their negligence or that of their servants; and
(d) When goods are delivered to the carrier in good order and the same are in bad order at the place of destination,
the carrier is prima facie liable.
Disagreeing with such judgment, American Steamship Agencies appealed directly to Us. The appeal brings forth for
determination this legal issue: Is the stipulation in the charter party of the owner's non-liability valid so as to absolve the
American Steamship Agencies from liability for loss?
The bills of lading,
1
covering the shipment of Peruvian fish meal provide at the back thereof that the bills of lading shall be
governed by and subject to the terms and conditions of the charter party, if any, otherwise, the bills of lading prevail over all
the agreements.
2
On the of the bills are stamped "Freight prepaid as per charter party. Subject to all terms, conditions and
exceptions of charter party dated London, Dec. 13, 1962."
A perusal of the charter party
3
referred to shows that while the possession and control of the ship were not entirely
transferred to the charterer,
4
the vessel was chartered to its full and complete capacity (Exh. 3). Furthermore, the, charter had
the option to go north or south or vice-versa,
5
loading, stowing and discharging at its risk and expense.
6
Accordingly, the
charter party contract is one of affreightment over the whole vessel rather than a demise. As such, the liability of the
shipowner for acts or negligence of its captain and crew, would remain in the absence of stipulation.
Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods caused by
personal want of due diligence on its part or its manager to make the vessel in all respects seaworthy and to secure that she be
properly manned, equipped and supplied or by the personal act or default of the owner or its manager. Said paragraph,
however, exempts the owner of the vessel from any loss or damage or delay arising from any other source, even from the
neglect or fault of the captain or crew or some other person employed by the owner on board, for whose acts the owner would
ordinarily be liable except for said paragraph..
Regarding the stipulation, the Court of First Instance declared the contract as contrary to Article 587 of the Code of Commerce
making the ship agent civilly liable for indemnities suffered by third persons arising from acts or omissions of the captain in
the care of the goods and Article 1744 of the Civil Code under which a stipulation between the common carrier and the shipper
or owner limiting the liability of the former for loss or destruction of the goods to a degree less than extraordinary diligence is
valid provided it be reasonable, just and not contrary to public policy. The release from liability in this case was held
unreasonable and contrary to the public policy on common carriers.
The provisions of our Civil Code on common carriers were taken from Anglo-American law.
7
Under American jurisprudence, a
common carrier undertaking to carry a special cargo or chartered to a special person only, becomes a private carrier.
8
As a
private carrier, a stipulation exempting the owner from liability for the negligence of its agent is not against public policy,
9
and
is deemed valid.
Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where the carrier is
not acting as such but as a private carrier. The stipulation in the charter party absolving the owner from liability for loss due to
the negligence of its agent would be void only if the strict public policy governing common carriers is applied. Such policy has
no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party.
And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as shipper, is in fact
and legal contemplation merely a receipt and a document of title not a contract, for the contract is the charter party.
10
The
consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. Accordingly,
the consignees under the bills of lading must likewise abide by the terms of the charter party. And as stated, recovery cannot
be had thereunder, for loss or damage to the cargo, against the shipowners, unless the same is due to personal acts or
negligence of said owner or its manager, as distinguished from its other agents or employees. In this case, no such personal act
or negligence has been proved.
WHEREFORE, the judgment appealed from is hereby reversed and appellant is absolved from liability to plaintiff. No costs. So
ordered.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 98243 July 1, 1992
ALEJANDRO ARADA, doing business under the name and style "SOUTH NEGROS ENTERPRISES", petitioner,
vs.
HONORABLE COURT OF APPEALS, respondents.
PARAS, J.:
This is a petition for review on certiorari which seeks to annul and set aside the decision * of the Court of Appeals dated April
8, 1991 in CA-G.R. CV No. 20597 entitled "San Miguel Corporation v. Alejandro Arada, doing business under the name and style
"South Negros Enterprises", reversing the decision of the RTC, Seventh Judicial Region, Branch XII, Cebu City, ordering
petitioner to pay the private respondent tho amount of P172,284.80 representing the value of the cargo lost on board the ill-
fated, M/L Maya with interest thereon at the legal rate from the date of the filing of the complaint on March 25, 1983 until fully
paid, and the costs.
The undisputed facts of the case are as follows: Alejandro Arada, herein petitioner, is the proprietor and operator of the firm
South Negros Enterprises which has been organized and established for more than ten (10) years. It is engaged in the business
of small scale shipping as a common carrier, servicing the hauling of cargoes of different corporations and companies with the
five (5) vessels it was operating (Rollo, p. 121).
On March 24, 1982. petitioner entered into a contract with private respondent to safely transport as a common carrier,
cargoes of the latter from San Carlos City, Negros Occidental to Mandaue City using one of petitioner's vessels, M/L Maya. The
cargoes of private respondent consisted of 9,824 cases of beer empties valued at P176,824.80, were itemized as follows:
NO.
OF
CASES
CARGO VALUE
7,515
CS
PPW
STENIE
MTS
P136.773.00
1,542
CS
PLW
GRANDE
MTS
23,438.40
58 CS G.E.
PLASTIC
MTS
1,276.00
24 CS PLP MTS 456.00
37 CS CS
WOODEN
MTS
673.40
8 CS LAGERLITE
PLASTIC
MTS
128.00
640
CS
STENEI
PLASTIC
MTS
14,080.00
9,824 P176,824.80
CS
On March 24, 1982, petitioner thru its crew master, Mr. Vivencio Babao, applied for a clearance with the Philippine Coast
Guard for M/L Maya to leave the port of San Carlos City, but due to a typhoon, it was denied clearance by SNI Antonio Prestado
PN who was then assigned at San Carlos City Coast Guard Detachment (Rollo, p. 122).
On March 25, 1982 M/L Maya was given clearance as there was no storm and the sea was calm. Hence, said vessel left for
Mandaue City. While it was navigating towards Cebu, a typhoon developed and said vessel was buffeted on all its sides by big
waves. Its rudder was destroyed and it drifted for sixteen (16) hours although its engine was running.
On March 27, 1982 at about 4:00 a.m., the vessel sank with whatever was left of its cargoes. The crew was rescued by a passing
pump boat and was brought to Calanggaman Island. Later in the afternoon, they were brought to Palompon, Leyte, where
Vivencio Babao filed a marine protest (Rollo, p. 10).
On the basis of such marine protest, the Board of Marine Inquiry conducted a hearing of the sinking of M/L Maya wherein
private respondent was duly represented. Said Board made its findings and recommendation dated November 7, 1983, the
dispositive portion of which reads as:
WHEREFORE, premises considered, this Board recommends as it is hereby recommended that the
owner/operator, officers and crew of M/L Maya be exonerated or absolved from any administrative liability
on account of this incident (Exh. 1).
The Board's report containing its findings and recommendation was then forwarded to the headquarters of the Philippine
Coast Guard for appropriate action. On the basis of such report, the Commandant of the Philippine Coast Guard rendered a
decision dated December 21, 1984 in SBMI Adm. Case No. 88-82 exonerating the owner/operator officers and crew of the ill-
fated M/L Maya from any administrative liability on account of said incident (Exh. 2).
On March 25, 1983, Private respondent filed a complaint in the Regional Trial Court its first cause of action being for the
recovery of the value of the cargoes anchored on breach of contract of carriage. After due hearing, said court rendered a
decision dated July 18, 1988, the dispositive portion of which reads
WHEREFORE, judgment is hereby rendered as follows:
(1) With respect to the first cause of action, claim of plaintiff is hereby dismissed;
(2) Under the second cause of action, defendant must pay plaintiff the sum of P2,000.00;
(3) In the third cause of action, the defendant must pay plaintiff the sum of P2,849.20;
(4) Since the plaintiff has withheld the payment of P12,997.47 due the defendynt, the plaintiff should deduct
the amount of P4,849.20 from the P12,997.47 and the balance of P8,148.27 must be paid to the defendant;
and
(5) Defendant's counterclaim not having been substantiated by evidence is likewise dismissed. NO COSTS.
(Orig. Record, pp. 193-195).
Thereafter, private respondent appealed said decision to the Court of Appeals claiming that the trial court erred in
(1) holding that nothing was shown that the defendant, or any of his employees who manned the M/L Maya
was negligent in any way nor did they fail to observe extraordinary diligence over the cargoes of the plaintiff;
and
(2) holding that the sinking of said vessel was caused by the storm, consequently, dismissing the claim of
plaintiff in its first cause of action for breach of contract of carriage of goods (Rollo, pp. 33-34; Decision, pp. 3-
4).
In its decision Promulgated on April 8, 1991, the Court of Appeals reversed the decision of the court a quo, the dispositive
portion and the dispositive part of its decision reads as:
WHEREFORE, that part of the Judgment appeal6d from is REVERSED and the appellee Aleiandro Arada, doing
business by the name and style, "South Negros Enterprises", ordered (sic) to pay unto the appellant San
Miguel Corporation the amount of P176,824.80 representing the value of the cargo lost on board the ill-fated
vessel, M/L Maya, with interest thereon at the legal rate from date of the filing of the complaint on March 25,
1983, until fully paid, and the costs. (Rollo, p. 37)
The Court of Appeals ruled that "in view of his failure to observe extraordinary diligence over the cargo in question and his
negligence previous to the sinking of the carrying vessel, as above shown, the appellee is liable to the appellant for the value of
the lost cargo.
Hence the present recourse.
On November 20, 1991, this Court gave due course to the petition. The pivotal issue to be resolved is whether or not petitioner
is liable for the value of the lost cargoes.
Petitioner contends that it was not in the exercise of its function as a common carrier when it entered into a contract with
private respondent,but was then acting as a private carrier not bound by the requirement of extraordinary diligence (Rollo, p.
15) and that the factual findings of the Board of Marine Inquiry and the Special Board of Marine Inquiry are binding and
conclusive on the Court (Rollo, pp. 16-17).
Private respondent counters that M/L Maya was in the exercise of its function as a common carrier and its failure to observe
the extraordinary diligence required of it in the vigilance over their cargoes makes Petitioner liable for the value of said
cargoes.
The petition is devoid of merit.
Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water or air, for compensation offering their services to the public (Art. 1732 of the New
Civil Code).
In the case at bar, there is no doubt that petitioner was exercising its function as a common carrier when it entered into a
contract with private respondent to carry and transport the latter's cargoes. This fact is best supported by the admission of
petitioner's son, Mr. Eric Arada, who testified as the officer-in-charge for operations of South Negros Enterprises in Cebu City.
In substance his testimony on January 14, 1985 is as follows:
Q. How many vessels are you operating?
A. There were all in all around five (5).
Q. And you were entering to service hauling of cargoes to different companies, is that
correct?
A. Yes, sir.
Q. In one word, the South Negros Enterprises is engaged in the business of common carriers,
is that correct?
A. Yes, sir,
Q. And in fact, at the time of the hauling of the San Miguel Beer, it was also in the same
category as a common carrier?
A. Yes, sir,
(TSN. pp. 3-4, Jan. 29, 1985)
A common carrier, both from the nature of its business and for insistent reasons of public policy is burdened by law with the
duty of exercising extraordinary diligence not only in ensuring the safety of passengers, but in caring for the goods transported
by it. The loss or destruction or deterioration of goods turned over to the common carrier for the conveyance to a designated
destination raises instantly a presumption of fault or negligence on the part of the carrier, save only where such loss,
destruction or damage arises from extreme circumstances such as a natural disaster or calamity ... (Benedicto v. IAC, G.R. No.
70876, July 19, 1990, 187 SCRA 547) (Emphasis supplied).
In order that the common carrier may be exempted from responsibility, the natural disaster must have been
the proximate andonly cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize the
loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be
exempted from liability for the destruction or deterioration of the goods (Article 1739, New Civil Code).
In the instant case, the appellate court was correct in finding that petitioner failed to observe the extraordinary diligence over
the cargo in question and he or the master in his employ was negligent previous to the sinking of the carrying vessel. In
substance, the decision reads:
... VIVENCIO BABAO, the master of the carrying vessel, knew that there was a typboon coming before his
departure but did not check where it was.
xxx xxx xxx
If only for the fact that he was first denied clearance to depart on March 24, 1982, obviously because of a
typhoon coming, Babao, as master of the vessel, should have verified first where the typhoon was before
departing on March 25, 1982. True, the sea was calm at departure time. But that might be the calm before the
storm. Prudence dictates that he should have ascertained first where the storm was before departing as it
might be on his path. (Rollo, pp. 35-36)
Respondent court's conclusion as to the negligence of petitioner is supported by evidence. It will be noted that Vivencio Babao
knew of the impending typhoon on March 24, 1982 when the Philippine Coast Guard denied M/L Maya the issuance of a
clearance to sail. Less than 24 hours elapsed since the time of the denial of said clearance and the time a clearance to sail was
finally issued on March 25, 1982. Records will show that Babao did not ascertain where the typhoon was headed by the use of
his vessel's barometer and radio (Rorlo, p. 142). Neither did the captain of the vessel monitor and record the weather
conditions everyday as required by Art, 612 of the Code of Commerce (Rollo, pp. 142-143). Had he done so while navigating
for 31 hours, he could have anticipated the strong winds and big waves and taken shelter (Rollo, pp- 36; 145). His testimony
on May 4, 1982 is as follows:
Q. Did you not check on your own where the typhoon was?
A. No. sir. (TSN, May 4, 1982, pp. 58-59)
Noteworthy is the fact that as Per official records of the Climatological Division of the Philippine Atmospheric, Geophysical and
Astronomical Services Administration (PAG-ASA for brevity) issued by its Chief of Climatological Division, Primitivo G. Ballan,
Jr. as to the weather and sea conditions that prevailed in the vicinity of Catmon, Cebu during the period March 25-27, 1982, the
sea conditions on March 25, 1982 were slight to rough and the weather conditions then prevailing during those times were
cloudy skies with rainshowers and the small waves grew larger and larger, to wit:
SP
EE
D
WAVE
HT.
SEA WEAT
HER

KN
OT
S
(MET
ERS)
CONDIT
IONS

Ma
rch
25

8
AM
15 1-2 slight cloudy
skies
w/
rainsho
wers
2
PM
20-25 2.0-3.0 moder
ate
overcas
t skies
to
rough
w/
some
rains
8
PM
30 3.7 rough sea
heaps
up
white
foam
from
breakin
g waves
begin to
be
blown
in
streaks
along
the
directio
n of
the
wind;
Spindrif
t begins
2
AM
30 3.7 rough sea
heaps
up
white
foam
from
breakin
g waves
begin to
be
blown
in
streaks
along
the
directio
n of the
wind;
Spindrif
t begins
(Exh. 3)
A common carrier is obliged to observe extraordinary diligence and the failure of Babao to ascertain the direction of the storm
and the weather condition of the path they would be traversing, constitute lack of foresight and minimum vigilance over its
cargoes taking into account the surrounding circumstances of the case.
While the goods are in the possession of the carrier, it is but fair that it exercises extraordinary diligence in protecting them
from loss or damage, and if loss occurs, the law presumes that it was due to the carrier's fault or negligence; that is necessary
to protect the interest of the shipper which is at the mercy of the carrier (Art. 1756, Civil Code, Aboitiz Shipping Corporation v.
Court of Appeals, G.R. No. 89757, Aug. 6, 1990, 188 SCRA 387).
Furthermore, the records show that the crew of M/L Maya did not have the required qualifications provided for in P.D. No. 97
or the Philippine Merchant Marine Officers Law, all of whom were unlicensed. While it is true that they were given special
permit to man the vessel, such permit was issued at the risk and responsibility of the owner (Rollo, p. 36).
Finally, petitioner claims that the factual findings of the Special Board of Marine Inquiry exonerating the owner/operator,
crew officers of the ill-fated vessel M/L Maya from any administrative liability is binding on the court.
In rejecting petitioner's claim, respondent court was correct in ruling that "such exoneration was but with respect to the
administrative liability of the owner/operator, officers and crew of the ill-fated" vessel. It could not have meant exoneration of
appellee from liability as a common carrier for his failure to observe extraordinary diligence in the vigilance over the goods it
was transporting and for the negligent acts or omissions of his employees. Such is the function of the Court, not the Special
Board of Marine Inquiry." (Rollo, P. 37, Annex A, p. 7)
The Philippine Merchant Marine Rules and Regulations particularly Chapter XVI thereof entitled "Marine Investigation and
Suspension and Revocation Proceedings" prescribes the Rules governing maritime casualties or accidents, the rules and
Procedures in administrative investigation of all maritime cases within the jurisdiction or cognizance of the Philippine Coast
Guard and the grounds for suspension and revocation of licenses/certificates of marine officers and seamen (1601 SCOPE);
clearly, limiting the jurisdiction of the Board of Marine Inquiry and Special Board of Marine Inquiry to the administrative
aspect of marine casualties in so far as it involves the shipowners and officers.
PREMISES CONSIDERED, the appealed decision is AFFIRMED.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner,
vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA,respondents.
Gonzales, Sinense, Jimenez & Associates for petitioner.
Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.
BELLOSILLO, J.:
Does a charter-party
1
between a shipowner and a charterer transform a common carrier into a private one as to negate the
civil law presumption of negligence in case of loss or damage to its cargo?
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of New York, U.S.A.,
9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June 1974 aboard the cargo vessel
M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point,
San Fernando, La Union, Philippines, as evidenced by Bill of Lading No. KP-1 signed by the master of the vessel and issued on
the date of departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General
Charter
2
was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan.
3
Riders to the
aforesaid charter-party starting from par. 16 to 40 were attached to the pre-printed agreement. Addenda Nos. 1, 2, 3 and 4 to
the charter-party were also subsequently entered into on the 18th, 20th, 21st and 27th of May 1974, respectively.
Before loading the fertilizer aboard the vessel, four (4) of her holds
4
were all presumably inspected by the charterer's
representative and found fit to take a load of urea in bulk pursuant to par. 16 of the charter-party which reads:
16. . . . At loading port, notice of readiness to be accomplished by certificate from National Cargo Bureau
inspector or substitute appointed by charterers for his account certifying the vessel's readiness to receive
cargo spaces. The vessel's hold to be properly swept, cleaned and dried at the vessel's expense and the vessel to
be presented clean for use in bulk to the satisfaction of the inspector before daytime commences. (emphasis
supplied)
After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel hatches
were closed with heavy iron lids, covered with three (3) layers of tarpaulin, then tied with steel bonds. The hatches remained
closed and tightly sealed throughout the entire voyage.
5

Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon hatches were opened with the use of the vessel's
boom. Petitioner unloaded the cargo from the holds into its steelbodied dump trucks which were parked alongside the berth,
using metal scoops attached to the ship, pursuant to the terms and conditions of the charter-partly (which provided for an
F.I.O.S. clause).
6
The hatches remained open throughout the duration of the discharge.
7

Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the consignee's
warehouse located some fifty (50) meters from the wharf. Midway to the warehouse, the trucks were made to pass through a
weighing scale where they were individually weighed for the purpose of ascertaining the net weight of the cargo. The port area
was windy, certain portions of the route to the warehouse were sandy and the weather was variable, raining occasionally
while the discharge was in progress.
8
The petitioner's warehouse was made of corrugated galvanized iron (GI) sheets, with an
opening at the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI
sheets were placed in-between and alongside the trucks to contain spillages of the ferilizer.
9

It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974 (except July 12th, 14th and 18th).
10
A private
marine and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the
cargo shipped, by taking draft readings of the vessel prior to and after discharge.
11
The survey report submitted by CSCI to the
consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer
approximating 18 M/T was contaminated with dirt. The same results were contained in a Certificate of Shortage/Damaged
Cargo dated 18 July 1974 prepared by PPI which showed that the cargo delivered was indeed short of 94.839 M/T and about
23 M/T were rendered unfit for commerce, having been polluted with sand, rust and
dirt.
12

Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship Agencies (SSA), the resident agent of
the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in the goods shipped and the diminution in
value of that portion said to have been contaminated with dirt.
13

Respondent SSA explained that they were not able to respond to the consignee's claim for payment because, according to
them, what they received was just a request for shortlanded certificate and not a formal claim, and that this "request" was
denied by them because they "had nothing to do with the discharge of the shipment."
14
Hence, on 18 July 1975, PPI filed an
action for damages with the Court of First Instance of Manila. The defendant carrier argued that the strict public policy
governing common carriers does not apply to them because they have become private carriers by reason of the provisions of
the charter-party. The court a quo however sustained the claim of the plaintiff against the defendant carrier for the value of the
goods lost or damaged when it ruled thus:
15

. . . Prescinding from the provision of the law that a common carrier is presumed negligent in case of loss or
damage of the goods it contracts to transport, all that a shipper has to do in a suit to recover for loss or damage
is to show receipt by the carrier of the goods and to delivery by it of less than what it received. After that, the
burden of proving that the loss or damage was due to any of the causes which exempt him from liability is
shipted to the carrier, common or private he may be. Even if the provisions of the charter-party aforequoted
are deemed valid, and the defendants considered private carriers, it was still incumbent upon them to prove
that the shortage or contamination sustained by the cargo is attributable to the fault or negligence on the part
of the shipper or consignee in the loading, stowing, trimming and discharge of the cargo. This they failed to do.
By this omission, coupled with their failure to destroy the presumption of negligence against them, the
defendants are liable (emphasis supplied).
On appeal, respondent Court of Appeals reversed the lower court and absolved the carrier from liability for the value of the
cargo that was lost or damaged.
16
Relying on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc.,
17
the
appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a
common carrier by reason of the time charterer-party. Accordingly, the Civil Code provisions on common carriers which set
forth a presumption of negligence do not find application in the case at bar. Thus
. . . In the absence of such presumption, it was incumbent upon the plaintiff-appellee to adduce sufficient
evidence to prove the negligence of the defendant carrier as alleged in its complaint. It is an old and well settled
rule that if the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a
satisfactory manner the facts upon which he bases his claim, the defendant is under no obligation to prove his
exception or defense (Moran, Commentaries on the Rules of Court, Volume 6, p. 2, citing Belen v. Belen, 13 Phil.
202).
But, the record shows that the plaintiff-appellee dismally failed to prove the basis of its cause of action, i.e. the
alleged negligence of defendant carrier. It appears that the plaintiff was under the impression that it did not
have to establish defendant's negligence. Be that as it may, contrary to the trial court's finding, the record of
the instant case discloses ample evidence showing that defendant carrier was not negligent in performing its
obligation . . .
18
(emphasis supplied).
Petitioner PPI appeals to us by way of a petition for review assailing the decision of the Court of Appeals. Petitioner theorizes
that the Home Insurance case has no bearing on the present controversy because the issue raised therein is the validity of a
stipulation in the charter-party delimiting the liability of the shipowner for loss or damage to goods cause by want of due
deligence on its part or that of its manager to make the vessel seaworthy in all respects, and not whether the presumption of
negligence provided under the Civil Code applies only to common carriers and not to private carriers.
19
Petitioner further
argues that since the possession and control of the vessel remain with the shipowner, absent any stipulation to the contrary,
such shipowner should made liable for the negligence of the captain and crew. In fine, PPI faults the appellate court in not
applying the presumption of negligence against respondent carrier, and instead shifting the onus probandi on the shipper to
show want of due deligence on the part of the carrier, when he was not even at hand to witness what transpired during the
entire voyage.
As earlier stated, the primordial issue here is whether a common carrier becomes a private carrier by reason of a charter-
party; in the negative, whether the shipowner in the instant case was able to prove that he had exercised that degree of
diligence required of him under the law.
It is said that etymology is the basis of reliable judicial decisions in commercial cases. This being so, we find it fitting to first
define important terms which are relevant to our discussion.
A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another
person for a specified time or use;
20
a contract of affreightment by which the owner of a ship or other vessel lets the whole or
a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the
payment of freight;
21
Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space
on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter,
by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and
consequent control over its navigation, including the master and the crew, who are his servants. Contract of affreightment may
either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the
ship is leased for a single voyage.
22
In both cases, the charter-party provides for the hire of vessel only, either for a
determinate period of time or for a single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages
of the master and the crew, and defray the expenses for the maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code.
23
The definition extends to
carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or transporting
passengers or both for compensation as a public employment and not as a casual occupation. The distinction between a
"common or public carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking
is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the
person or corporation offering such service is a private carrier.
24

Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should observe
extraordinary diligence in the vigilance over the goods they carry.
25
In the case of private carriers, however, the exercise of
ordinary diligence in the carriage of goods will suffice. Moreover, in the case of loss, destruction or deterioration of the goods,
common carriers are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests
on them.
26
On the contrary, no such presumption applies to private carriers, for whosoever alleges damage to or deterioration
of the goods carried has the onus of proving that the cause was the negligence of the carrier.
It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting
goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and
compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control.
Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the
charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of
the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime
navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner.
27

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-
charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in
a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of
the charterer.
28

Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American Steamship Agencies, supra, is misplaced for
the reason that the meat of the controversy therein was the validity of a stipulation in the charter-party exempting the
shipowners from liability for loss due to the negligence of its agent, and not the effects of a special charter on common carriers.
At any rate, the rule in the United States that a ship chartered by a single shipper to carry special cargo is not a common
carrier,
29
does not find application in our jurisdiction, for we have observed that the growing concern for safety in the
transportation of passengers and /or carriage of goods by sea requires a more exacting interpretation of admiralty laws, more
particularly, the rules governing common carriers.
We quote with approval the observations of Raoul Colinvaux, the learned barrister-at-law
30

As a matter of principle, it is difficult to find a valid distinction between cases in which a ship is used to
convey the goods of one and of several persons. Where the ship herself is let to a charterer, so that he takes
over the charge and control of her, the case is different; the shipowner is not then a carrier. But where her
services only are let, the same grounds for imposing a strict responsibility exist, whether he is employed by
one or many. The master and the crew are in each case his servants, the freighter in each case is usually
without any representative on board the ship; the same opportunities for fraud or collusion occur; and the
same difficulty in discovering the truth as to what has taken place arises . . .
In an action for recovery of damages against a common carrier on the goods shipped, the shipper or consignee should first
prove the fact of shipment and its consequent loss or damage while the same was in the possession, actual or constructive, of
the carrier. Thereafter, the burden of proof shifts to respondent to prove that he has exercised extraordinary diligence
required by law or that the loss, damage or deterioration of the cargo was due to fortuitous event, or some other
circumstances inconsistent with its liability.
31

To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima faciepresumption of
negligence.
The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April 1977 before the Philippine Consul
and Legal Attache in the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer was loaded, the four (4) hatches
of the vessel were cleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ship's holds, the steel
pontoon hatches were closed and sealed with iron lids, then covered with three (3) layers of serviceable tarpaulins which
were tied with steel bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the
steel covers made it impossible for a person to open without the use of the ship's boom.
32

It was also shown during the trial that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the
cargo into the sea or seepage of water inside the hull of the vessel.
33
When M/V "Sun Plum" docked at its berthing place,
representatives of the consignee boarded, and in the presence of a representative of the shipowner, the foreman, the
stevedores, and a cargo surveyor representing CSCI, opened the hatches and inspected the condition of the hull of the vessel.
The stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on
rotation basis.
34

Verily, the presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the showing of
extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. This was confirmed by respondent appellate
court thus
. . . Be that as it may, contrary to the trial court's finding, the record of the instant case discloses ample evidence
showing that defendant carrier was not negligent in performing its obligations. Particularly, the following
testimonies of plaintiff-appellee's own witnesses clearly show absence of negligence by the defendant carrier;
that the hull of the vessel at the time of the discharge of the cargo was sealed and nobody could open the
same except in the presence of the owner of the cargo and the representatives of the vessel (TSN, 20 July
1977, p. 14); that the cover of the hatches was made of steel and it was overlaid with tarpaulins, three layers
of tarpaulins and therefore their contents were protected from the weather (TSN, 5 April 1978, p. 24); and,
that to open these hatches, the seals would have to be broken, all the seals were found to be intact (TSN, 20
July 1977, pp. 15-16) (emphasis supplied).
The period during which private respondent was to observe the degree of diligence required of it as a public carrier began
from the time the cargo was unconditionally placed in its charge after the vessel's holds were duly inspected and passed
scrutiny by the shipper, up to and until the vessel reached its destination and its hull was reexamined by the consignee, but
prior to unloading. This is clear from the limitation clause agreed upon by the parties in the Addendum to the standard
"GENCON" time charter-party which provided for an F.I.O.S., meaning, that the loading, stowing, trimming and discharge of the
cargo was to be done by the charterer, free from all risk and expense to the carrier.
35
Moreover, a shipowner is liable for
damage to the cargo resulting from improper stowage only when the stowing is done by stevedores employed by him, and
therefore under his control and supervision, not when the same is done by the consignee or stevedores under the employ of
the latter.
36

Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss, destruction or deterioration
of the goods if caused by the charterer of the goods or defects in the packaging or in the containers. The Code of Commerce
also provides that all losses and deterioration which the goods may suffer during the transportation by reason of fortuitous
event, force majeure, or the inherent defect of the goods, shall be for the account and risk of the shipper, and that proof of these
accidents is incumbent upon the carrier.
37
The carrier, nonetheless, shall be liable for the loss and damage resulting from the
preceding causes if it is proved, as against him, that they arose through his negligence or by reason of his having failed to take
the precautions which usage has established among careful persons.
38

Respondent carrier presented a witness who testified on the characteristics of the fertilizer shipped and the expected risks of
bulk shipping. Mr. Estanislao Chupungco, a chemical engineer working with Atlas Fertilizer, described Urea as a chemical
compound consisting mostly of ammonia and carbon monoxide compounds which are used as fertilizer. Urea also contains
46% nitrogen and is highly soluble in water. However, during storage, nitrogen and ammonia do not normally evaporate even
on a long voyage, provided that the temperature inside the hull does not exceed eighty (80) degrees centigrade. Mr.
Chupungco further added that in unloading fertilizer in bulk with the use of a clamped shell, losses due to spillage during such
operation amounting to one percent (1%) against the bill of lading is deemed "normal" or "tolerable." The primary cause of
these spillages is the clamped shell which does not seal very tightly. Also, the wind tends to blow away some of the materials
during the unloading process.
The dissipation of quantities of fertilizer, or its daterioration in value, is caused either by an extremely high temperature in its
place of storage, or when it comes in contact with water. When Urea is drenched in water, either fresh or saline, some of its
particles dissolve. But the salvaged portion which is in liquid form still remains potent and usable although no longer saleable
in its original market value.
The probability of the cargo being damaged or getting mixed or contaminated with foreign particles was made greater by the
fact that the fertilizer was transported in "bulk," thereby exposing it to the inimical effects of the elements and the grimy
condition of the various pieces of equipment used in transporting and hauling it.
The evidence of respondent carrier also showed that it was highly improbable for sea water to seep into the vessel's holds
during the voyage since the hull of the vessel was in good condition and her hatches were tightly closed and firmly sealed,
making the M/V "Sun Plum" in all respects seaworthy to carry the cargo she was chartered for. If there was loss or
contamination of the cargo, it was more likely to have occurred while the same was being transported from the ship to the
dump trucks and finally to the consignee's warehouse. This may be gleaned from the testimony of the marine and cargo
surveyor of CSCI who supervised the unloading. He explained that the 18 M/T of alleged "bar order cargo" as contained in
their report to PPI was just an approximation or estimate made by them after the fertilizer was discharged from the vessel and
segregated from the rest of the cargo.
The Court notes that it was in the month of July when the vessel arrived port and unloaded her cargo. It rained from time to
time at the harbor area while the cargo was being discharged according to the supply officer of PPI, who also testified that it
was windy at the waterfront and along the shoreline where the dump trucks passed enroute to the consignee's warehouse.
Indeed, we agree with respondent carrier that bulk shipment of highly soluble goods like fertilizer carries with it the risk of
loss or damage. More so, with a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk
the shipper or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent character of
the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further
contributed to the loss. On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the
exercise of due diligence in order to minimize the loss or damage to the goods it carried.
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals, which reversed the trial court,
is AFFIRMED. Consequently, Civil Case No. 98623 of the then Court of the First Instance, now Regional Trial Court, of Manila
should be, as it is hereby DISMISSED.
Costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 70876 July 19, 1990
MA. LUISA BENEDICTO, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT and GREENHILLS WOOD INDUSTRIES COMPANY, INC.respondents.
Britanico, Panganiban, Benitez, Africa, Linsangan and Barinaga for petitioner.
Abelardo V. Viray for private respondent.
FELICIANO, J.:
This Petition for Review asks us to set aside the Decision of the then Intermediate Appellate Court dated 30 January 1985 in
A.C.-G.R. CV No. 01454, which affirmed in toto the decision of the Regional Trial Court ("RTC") of Dagupan City in Civil Case No.
5206. There, the RTC held petitioner Ma. Luisa Benedicto liable to pay private respondent Greenhills Wood Industries
Company, Inc. ("Greenhills") the amounts of P16,016.00 and P2,000.00 representing the cost of Greenhills' lost sawn lumber
and attorney's fees, respectively.
Private respondent Greenhills, a lumber manufacturing firm with business address at Dagupan City, operates sawmill in
Maddela, Quirino.
Sometime in May 1980, private respondent bound itself to sell and deliver to Blue Star Mahogany, Inc., ("Blue Star") a
company with business operations in Valenzuela, Bulacan 100,000 board feet of sawn lumber with the understanding that an
initial delivery would be made on 15 May 1980.
1
To effect its first delivery, private respondent's resident manager in Maddela,
Dominador Cruz, contracted Virgilio Licuden, the driver of a cargo truck bearing Plate No. 225 GA TH to transport its sawn
lumber to the consignee Blue Star in Valenzuela, Bulacan. This cargo truck was registered in the name of petitioner Ma. Luisa
Benedicto, the proprietor of Macoven Trucking, a business enterprise engaged in hauling freight, with main office in B.F.
Homes, Paraaque.
On 15 May 1980, Cruz in the presence and with the consent of driver Licuden, supervised the loading of 7,690 board feet of
sawn lumber with invoice value of P16,918.00 aboard the cargo truck. Before the cargo truck left Maddela for Valenzuela,
Bulacan, Cruz issued to Licuden Charge Invoices Nos. 3259 and 3260 both of which were initialed by the latter at the bottom
left corner.
2
The first invoice was for the amount of P11,822.80 representing the value of 5,374 board feet of sawn lumber,
while the other set out the amount of P5,095.20 as the value of 2,316 board feet. Cruz instructed Licuden to give the original
copies of the two (2) invoices to the consignee upon arrival in Valenzuela, Bulacan
3
and to retain the duplicate copies in order
that he could afterwards claim the freightage from private respondent's Manila office.
4

On 16 May 1980, the Manager of Blue Star called up by long distance telephone Greenhills' president, Henry Lee Chuy,
informing him that the sawn lumber on board the subject cargo truck had not yet arrived in Valenzuela, Bulacan. The latter in
turn informed Greenhills' resident manager in its Maddela saw-mill of what had happened. In a letter
5
dated 18 May 1980,
Blue Star's administrative and personnel manager, Manuel R. Bautista, formally informed Greenhills' president and general
manager that Blue Star still had not received the sawn lumber which was supposed to arrive on 15 May 1980 and because of
this delay, "they were constrained to look for other suppliers."
On 25 June 1980, after confirming the above with Blue Star and after trying vainly to persuade it to continue with their
contract, private respondent Greenhill's filed Criminal Case No. 668 against driver Licuden for estafa. Greenhills also filed
against petitioner Benedicto Civil Case No. D-5206 for recovery of the value of the lost sawn lumber plus damages before the
RTC of Dagupan City.
In her answer,
6
petitioner Benedicto denied liability alleging that she was a complete stranger to the contract of carriage, the
subject truck having been earlier sold by her to Benjamin Tee, on 28 February 1980 as evidenced by a deed of sale.
7
She
claimed that the truck had remained registered in her name notwithstanding its earlier sale to Tee because the latter had paid
her only P50,000.00 out of the total agreed price of P68,000.00 However, she averred that Tee had been operating the said
truck in Central Luzon from that date (28 February 1980) onwards, and that, therefore, Licuden was Tee's employee and not
hers.
On 20 June 1983, based on the finding that petitioner Benedicto was still the registered owner of the subject truck, and holding
that Licuden was her employee, the trial court adjudged as follows:
WHEREFORE, in the light of the foregoing considerations, this Court hereby renders judgment against
defendant Maria Luisa Benedicto, ordering her to pay the Greenhills Wood Industries Co. Inc., thru its
President and General Manager, the amount of P16,016 cost of the sawn lumber loaded on the cargo truck,
with legal rate of interest from the filing of the complaint to pay attorney's fees in the amount of P2,000.00;
and to pay the costs of this suit.
SO ORDERED.
8

On 30 January 1985, upon appeal by petitioner, the Intermediate Appellate Court affirmed
9
the decision of the trial court in
toto. Like the trial court, the appellate court held that since petitioner was the registered owner of the subject vehicle, Licuden
the driver of the truck, was her employee, and that accordingly petitioner should be responsible for the negligence of said
driver and bear the loss of the sawn lumber plus damages. Petitioner moved for reconsideration, without success.
10

In the present Petition for Review, the sole issue raised is whether or not under the facts and applicable law, the appellate
court was correct in finding that petitioner, being the registered owner of the carrier, should be held liable for the value of the
undelivered or lost sawn lumber.
Petitioner urges that she could not be held answerable for the loss of the cargo, because the doctrine which makes the
registered owner of a common carrier vehicle answerable to the public for the negligence of the driver despite the sale of the
vehicle to another person, applies only to cases involving death of or injury to passengers. What applies in the present case,
according to petitioner, is the rule that a contract of carriage requires proper delivery of the goods to and acceptance by the
carrier. Thus, petitioner contends that the delivery to a person falsely representing himself to be an agent of the carrier
prevents liability from attaching to the registered owner.
The Court considers that petitioner has failed to show that appellate court committed reversible error in affirming the trial
court's holding that petitioner was liable for the cost of the sawn lumber plus damages.
There is no dispute that petitioner Benedicto has been holding herself out to the public as engaged in the business of hauling
or transporting goods for hire or compensation. Petitioner Benedicto is, in brief, a common carrier.
The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations
of the carrier, even though the specific vehicle involved may already have been transferred to another person. This doctrine
rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to
assume that the registered owner is the actual or lawful owner thereof It would be very difficult and often impossible as a
practical matter, for members of the general public to enforce the rights of action that they may have for injuries inflicted by
the vehicles being negligently operated if they should be required to prove who the actual owner is.
11
The registered owner is
not allowed to deny liability by proving the identity of the alleged transferee. Thus, contrary to petitioner's claim, private
respondent is not required to go beyond the vehicle's certificate of registration to ascertain the owner of the carrier. In this
regard, the letter presented by petitioner allegedly written by Benjamin Tee admitting that Licuden was his driver, had no
evidentiary value not only because Benjamin Tee was not presented in court to testify on this matter but also because of the
aforementioned doctrine. To permit the ostensible or registered owner to prove who the actual owner is, would be to set at
naught the purpose or public policy which infuses that doctrine.
In fact, private respondent had no reason at all to doubt the authority of Licuden to enter into a contract of carriage on behalf
of the registered owner. It appears that, earlier, in the first week of May 1980, private respondent Greenhills had contracted
Licuden who was then driving the same cargo truck to transport and carry a load of sawn lumber from the Maddela sawmill to
Dagupan City.
12
No one came forward to question that contract or the authority of Licuden to represent the owner of the
carrier truck.
Moreover, assuming the truth of her story, petitioner Benedicto retained registered ownership of the freight truck for her own
benefit and convenience, that is, to secure the payment of the balance of the selling price of the truck. She may have been
unaware of the legal security device of chattel mortgage; or she, or her buyer, may have been unwilling to absorb the expenses
of registering a chattel mortgage over the truck. In either case, considerations both of public policy and of equity require that
she bear the consequences flowing from registered ownership of the subject vehicle.
Petitioner Benedicto, however, insists that the said principle should apply only to cases involving negligence and resulting
injury to or death of passengers, and not to cases involving merely carriage of goods. We believe otherwise.
A common carrier, both from the nature of its business and for insistent reasons of public policy, is burdened by the law with
the duty of exercising extraordinary diligence not only in ensuring the safety of passengers but also in caring for goods
transported by it.
13
The loss or destruction or deterioration of goods turned over to the common carrier for conveyance to a
designated destination, raises instantly a presumption of fault or negligence on the part of the carrier, save only where such
loss, destruction or damage arises from extreme circumstances such as a natural disaster or calamity or act of the public
enemy in time of war, or from an act or omission of the shipper himself or from the character of the goods or their packaging
or container.
14

This presumption may be overcome only by proof of extraordinary diligence on the part of the carrier.
15
Clearly, to permit a
common carrier to escape its responsibility for the passengers or goods transported by it by proving a prior sale of the vehicle
or means of transportation to an alleged vendee would be to attenuate drastically the carrier's duty of extraordinary diligence.
It would also open wide the door to collusion between the carrier and the supposed vendee and to shifting liability from the
carrier to one without financial capability to respond for the resulting damages. In other words, the thrust of the public policy
here involved is as sharp and real in the case of carriage of goods as it is in the transporting of human beings. Thus, to sustain
petitioner Benedicto's contention, that is, to require the shipper to go behind a certificate of registration of a public utility
vehicle, would be utterly subversive of the purpose of the law and doctrine.
Petitioner further insists that there was no perfected contract of carriage for the reason that there was no proof that her
consent or that of Tee had been obtained; no proof that the driver, Licuden was authorized to bind the registered owner; and
no proof that the parties had agreed on the freightage to be paid.
Once more, we are not persuaded by petitioner's arguments which appear to be a transparent attempt to evade statutory
responsibilities. Driver Licuden was entrusted with possession and control of the freight truck by the registered owner (and
by the alleged secret owner, for that matter).itc-asl Driver Licuden, under the circumstances, was clothed with at least
implied authority to contract to carry goods and to accept delivery of such goods for carriage to a specified destination. That
the freight to be paid may-not have been fixed before loading and carriage, did not prevent the contract of carriage from
arising, since the freight was at least determinable if not fixed by the tariff schedules in petitioner's main business office. Put in
somewhat different terms, driver Licuden is in law regarded as the employee and agent of the petitioner, for whose acts
petitioner must respond. A contract of carriage of goods was shown; the sawn lumber was loaded on board the freight truck;
loss or non-delivery of the lumber at Blue Star's premises in Valenzuela, Bulacan was also proven; and petitioner has not
proven either that she had exercised extraordinary diligence to prevent such loss or non-delivery or that the loss or non-
delivery was due to some casualty or force majeure inconsistent with her liability.
16
Petitioner's liability to private respondent
Greenhills was thus fixed and complete, without prejudice to petitioner's right to proceed against her putative transferee
Benjamin Tee and driver Licuden for reimbursement or contribution.
17

WHEREFORE, the Petition for Review is DENIED for lack of merit and the Decision of the former Intermediate Appellate Court
dated 30 January 1985 is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 98275 November 13, 1992
BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, REGIONAL TRIAL COURT OF ANGELES CITY, BRANCH LVI, CARLOS OCAMPO, INOCENCIO
TURLA, SPOUSES MOISES AGAPITO and SOCORRO M. AGAPITO and NICOLAS CRUZ,respondents.
MELO, J.:
The question of petitioner's responsibility for damages when on March 6, 1983, an accident occurred involving petitioner's
Isuzu ten-wheeler truck then driven by an employee of Lino Castro is the thrust of the petition for review on certiorari now
before Us considering that neither the driver nor Lino Castro appears to be connected with petitioner.
On October 13, 1988, the disputed decision in the suit below was rendered by the court of origin in this manner:
1. Ordering Rock B.A. and Rogelio Villar y Amare jointly and severally to pay the plaintiffs as follows:
a) To the plaintiff Carlos Ocampo P121,650.00;
b) To the plaintiff Moises Ocampo P298,500.00
c) To the plaintiff Nicolas Cruz P154,740.00
d) To the plaintiff Inocencio Turla, Sr. 48,000.00
2. Dismissing the case against Lino Castro
3. Dismissing the third-party complaint against STRONGHOLD
4. Dismissing all the counterclaim of the defendants and third-party defendants.
5. Ordering ROCK to reimburse B.A. the total amount of P622,890.00 which the latter is adjudged to pay to the
plaintiffs. (p. 46, Rollo)
Respondent Court of Appeals affirmed the appealed disposition in toto through Justice Rasul, with Justices De Pano, Jr. and
Imperial concurring, on practically the same grounds arrived at by the court a quo (p. 28, Rollo). Efforts exerted towards re-
evaluation of the adverse were futile (p. 37, Rollo). Hence, the instant petition.
The lower court ascertained after due trial that Rogelio Villar y Amare, the driver of the Isuzu truck, was at fault when the
mishap occurred in as much as he was found guilty beyond reasonable doubt of reckless imprudence resulting in triple
homicide with multiple physical injuries with damage to property in a decision rendered on February 16, 1984 by the
Presiding Judge of Branch 6 of the Regional Trial Court stationed at Malolos, Bulacan. Petitioner was adjudged liable for
damages in as much as the truck was registered in its name during the incident in question, following the doctrine laid down
by this Court in Perez vs. Gutierrez (53 SCRA 149 [1973]) and Erezo, et al. vs. Jepte (102 Phil. 103 [1957]). In the same breadth,
Rock Component Philippines, Inc. was ordered to reimburse petitioner for any amount that the latter may be adjudged liable
to pay herein private respondents as expressly stipulated in the contract of lease between petitioner and Rock Component
Philippines, Inc. Moreover, the trial court applied Article 2194 of the new Civil Code on solidary accountability of join
tortfeasors insofar as the liability of the driver, herein petitioner and Rock Component Philippines was concerned (pp. 6-7,
Decision; pp. 44-45, Rollo).
To the question of whether petitioner can be held responsible to the victim albeit the truck was leased to Rock Component
Philippines when the incident occurred, the appellate court answered in the affirmative on the basis of the jurisprudential
dogmas which, as aforesaid, were relied upon by the trial court although respondent court was quick to add
the caveat embodied in the lease covenant between petitioner and Rock Component Philippines relative to the latter's duty to
reimburse any amount which may be adjudged against petitioner (pp. 32-33, Rollo).
Petitioner asseverates that it should not have been haled to court and ordered to respond for the damage in the manner
arrived at by both the trial and appellate courts since paragraph 5 of the complaint lodged by the plaintiffs below would
indicate that petitioner was not the employer of the negligent driver who was under the control an supervision of Lino Castro
at the time of the accident, apart from the fact that the Isuzu truck was in the physical possession of Rock Component
Philippines by virtue of the lease agreement.
Aside from casting clouds of doubt on the propriety of invoking the Perez and Erezo doctrines, petitioner continue to persist
with the idea that the pronouncements of this Court in Duavit vs. Court of Appeals (173 SCRA 490 [1989]) and Duquillo vs.
Bayot (67 Phil 131 [1939]) dovetail with the factual and legal scenario of the case at hand. Furthermore, petitioner assumes,
given the so-called hiatus on the basis for the award of damages as decreed by the lower and appellate courts, that Article
2180 of the new Civil Code on vicarious liability will divest petitioner of any responsibility absent as there is any employer-
employee relationship between petitioner and the driver.
Contrary to petitioner's expectations, the recourse instituted from the rebuffs it encountered may not constitute a sufficient
foundation for reversal of the impugned judgment of respondent court. Petitioner is of the impression that
the Perez and Erezo cases are inapplicable due to the variance of the generative facts in said cases as against those obtaining in
the controversy at bar. A contrario, the lesson imparted by Justice Labrador in Erezo is still good law, thus:
. . . In previous decisions, We already have held that the registered owner of a certificate of public
convenience is liable to the public for the injuries or damages suffered by passengers or third persons caused
by the operation of said vehicle, even though the same had been transferred to a third person. (Montoya vs.
Ignacio, 94 Phil., 182 50 Off. Gaz., 108; Roque vs. Malibay Transit, Inc., G.R. No. L-8561, November 18, 1955;
Vda. de Medina vs. Cresencia, 99 Phil., 506, 52 Off. Gaz., [10], 4606.) The principle upon which this doctrine is
based is that in dealing with vehicles registered under the Public Service Law, the public has the right to
assume or presumed that the registered owner is the actual owner thereof, for it would be difficult with the
public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently
operated if the public should be required to prove who actual the owner is. How would the public or third
persons know against whom to enforce their rights in case of subsequent transfer of the vehicles? We do not
imply by this doctrine, however, that the registered owner may not recover whatever amount he had paid by
virtue of his liability to third persons from the person to whom he had actually sold, assigned or conveyed the
vehicle.
Under the same principle the registered owner of any vehicle, even if not used for a public service, should
primarily responsible to the public or to the third persons for injuries caused the latter while the vehicle is being
driven on the highways or streets. The members of the Court are in agreement that the defendant-appellant
should be held liable to plaintiff-appellee for the injuries occasioned to the latter because of the negligence of the
driver, even if the defendant-appellant was no longer an owner of the vehicle at the time of the damage because
he had previously sold it to another. What is the legal basis for his (defendants-appellant's) liability?
There is a presumption that the owner of the guilty vehicle is the defendant-appellant as he is the registered
owner in the Motor Vehicle Office. Should he not be allowed to prove the truth, that he had sold it to another
and thus shift the responsibility for the injury to the real and the actual owner? The defendants hold the
affirmative of this proposition; the trial court hold the negative.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that the vehicle may be used or
operated upon any public highway unless the same is properly registered. It has been stated that the system
of licensing and the requirement that each machine must carry a registration number, conspicuously
displayed, is one of the precautions taken to reduce the danger of injury of pedestrians and other travelers
from the careless management of automobiles, and to furnish a means of ascertaining the identity of persons
violating the laws and ordinances, regulating the speed and operation of machines upon the highways (2 R. C.
L. 1176). Not only are vehicles to be registered and that no motor vehicles are to be used or operated without
being properly registered from the current year, furnish the Motor Vehicle Office a report showing the name
and address of each purchaser of motor vehicle during the previous month and the manufacturer's serial
number and motor number. (Section 5[c], Act No. 3992, as amended.)
Registration is required not to make said registration the operative act by which ownership in vehicles is
transferred, as in land registration cases, because the administrative proceeding of registration does not bear
any essential relation to the contract of sale between the parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil.
888), but to permit the use and operation of the vehicle upon any public highway (section 5[a], Act No. 3992,
as amended). the main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways, responsibility therefor
can be fixed on a definite individual, the registered owner. Instances are numerous where vehicles running on
public highways caused accidents or injuries to pedestrians or other vehicles without positive identification
of the owner or drivers, or with very scant means of identification. It is to forestall these circumstances, so
inconvenient or prejudicial to the public, that the motor vehicle registration is primarily obtained, in the
interest of the determinations of persons responsible for damages or injuries caused on public highways.
One of the principle purposes of motor vehicles legislation is identification of the vehicle and
of the operator, in case of accident; and another is that the knowledge that means of
detection are always available my act as a deterrent from lax observance of the law and of
the rules of conservative and safe operation. Whatever purpose there may be in these
statutes, it is subordinate at the last to the primary purpose of rendering it certain that the
violator of the law or of the rules of safety shall not escape because of lack of means to
discover him. The purpose of the statute is thwarted, and the displayed number becomes a
"share and delusion," if courts would entertain such defenses as that put forward by appellee
in this case. No responsible person or corporation could be held liable for the most
outrageous acts of negligence, if they should be allowed to pace a "middleman" between
them and the public, and escape liability by the manner in which they recompense their
servants. (King vs. Breham Automobile Co., Inc. 145 S. W. 278, 279.)
With the above policy in mind, the question that defendant-appellant poses is: should not the registered
owner be allowed at the trial to prove who the actual and real owner is, and in accordance with such proof
escape or evade responsibility and lay the same on the person actually owning the vehicle? We hold with the
trial court that the law does not allow him to do so; the law, with its aim and policy in mind, does not relieve
him directly of the responsibility that the law fixes and places upon him as an incident or consequence of
registration. Were a registered owner allowed to evade responsibility by proving who the supposed
transferee or owner is, it would be easy for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one who possesses no property with which
to respond financially for the damage or injury done. A victim of recklessness on the public highways is
usually without means to discover or Identify the person actually causing the injury or damage. He has no
means other then by a recourse to the registration in the Motor Vehicles Office to determine who is the
owner. The protection that the law aims to extend to him would become illusory were the registered owner
given the opportunity to escape liability by disproving his ownership. If the policy of the law is to be enforced
and carried out, the registered owner should not be allowed to prove the contrary to the prejudice of the
person injured, that is, to prove that a third person or another has become the owner, so that he may thereby
be relieved of the responsibility to the injured person.
The above policy and application of the law may appear quite harsh and would seem to conflict with truth
and justice. We do not think it is so. A registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against him to recover for the damage or
injury done, against the vendee or transferee of the vehicle. The inconvenience of the suit is no justification
for relieving him of liability; said inconvenience is the price he pays for failure to comply with the registration
that the law demands and requires.
In synthesis, we hold that the registered owner, the defendant-appellant herein, is primarily responsible for
the damage caused to the vehicle of the plaintiff-appellee, but he (defendant-appellant) has a right to be
indemnified by the real or actual owner of the amount that he may be required to pay as damage for the
injury caused to the plaintiff-appellant.
If the foregoing words of wisdom were applied in solving the circumstance whereof the vehicle had been alienated or sold to
another, there certainly can be no serious exception against utilizing the same rationale to the antecedents of this case where
the subject vehicle was merely leased by petitioner to Rock Component Philippines, Inc., with petitioner retaining ownership
over the vehicle.
Petitioner's reliance on the ruling of this Court in Duavit vs. Court of Appeals and in Duquillo vs. Bayot (supra) is legally
unpalatable for the purpose of the present discourse. The vehicles adverted to in the two cases shared a common thread, so to
speak, in that the jeep and the truck were driven in reckless fashion without the consent or knowledge of the respective
owners. Cognizant of the inculpatory testimony spewed by defendant Sabiniano when he admitted that he took the jeep from
the garage of defendant Dauvit without the consent or authority of the latter, Justice Gutierrez, Jr. in Duavit remarked;
. . . Herein petitioner does not deny ownership of the vehicle involved in the mishap but completely denies
having employed the driver Sabiniano or even having authorized the latter to drive his jeep. The jeep was
virtually stolen from the petitioner's garage. To hold, therefore, the petitioner liable for the accident caused
by the negligence of Sabiniano who was neither his driver nor employee would be absurd as it would be like
holding liable the owner of a stolen vehicle for an accident caused by the person who stole such vehicle. In
this regard, we cannot ignore the many cases of vehicles forcibly taken from their owners at gunpoint or
stolen from garages and parking areas and the instances of service station attendants or mechanics of auto
repair shops using, without the owner's consent, vehicles entrusted to them for servicing or repair.(at p. 496.)
In the Duquillo case, the defendant therein cannot, according to Justice Diaz, be held liable for anything because of
circumstances which indicated that the truck was driven without the consent or knowledge of the owner thereof.
Consequently, there is no need for Us to discuss the matter of imputed negligence because petitioner merely presumed,
erroneously, however, that judgment was rendered against it on the basis of such doctrine embodied under Article 2180 of the
new Civil Code.
WHEREFORE, the petition is hereby DISMISSED and decision under review AFFIRMED without special pronouncement as to
costs.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-8095 March 31, 1915
F.C. FISHER, plaintiff,
vs.
YANGCO STEAMSHIP COMPANY, J.S. STANLEY, as Acting Collector of Customs of the Philippine Islands, IGNACIO
VILLAMOR, as Attorney-General of the Philippine Islands, and W.H. BISHOP, as prosecuting attorney of the city of
Manila, respondents.
Haussermann, Cohn and Fisher for plaintiff.
Office of the Solicitor-General Harvey for respondents.
CARSON, J.:
The real question involved in these proceedings is whether the refusal of the owners and officers of a steam vessel, duly
licensed to engage in the coastwise trade of the Philippine Islands and engaged in that trade as a common carrier, to accept for
carriage "dynamite, powder or other explosives" from any and all shippers who may offer such explosives for carriage can be
held to be a lawful act without regard to any question as to the conditions under which such explosives are offered to carriage,
or as to the suitableness of the vessel for the transportation of such explosives, or as to the possibility that the refusal to accept
such articles of commerce in a particular case may have the effect of subjecting any person or locality or the traffic in such
explosives to an undue, unreasonable or unnecessary prejudice or discrimination.
Summarized briefly, the complaint alleges that plaintiff is a stockholder in the Yangco Steamship Company, the owner of a
large number of steam vessels, duly licensed to engage in the coastwise trade of the Philippine Islands; that on or about June
10, 1912, the directors of the company adopted a resolution which was thereafter ratified and affirmed by the shareholders of
the company, "expressly declaring and providing that the classes of merchandise to be carried by the company in its business
as a common carrier do not include dynamite, powder or other explosives, and expressly prohibiting the officers, agents and
servants of the company from offering to carry, accepting for carriage said dynamite, powder or other explosives;" that
thereafter the respondent Acting Collector of Customs demanded and required of the company the acceptance and carriage of
such explosives; that he has refused and suspended the issuance of the necessary clearance documents of the vessels of the
company unless and until the company consents to accept such explosives for carriage; that plaintiff is advised and believes
that should the company decline to accept such explosives for carriage, the respondent Attorney-General of the Philippine
Islands and the respondent prosecuting attorney of the city of Manila intend to institute proceedings under the penal
provisions of sections 4, 5, and 6 of Act No. 98 of the Philippine Commission against the company, its managers, agents and
servants, to enforce the requirements of the Acting Collector of Customs as to the acceptance of such explosives for carriage;
that notwithstanding the demands of the plaintiff stockholder, the manager, agents and servants of the company decline and
refuse to cease the carriage of such explosives, on the ground that by reason of the severity of the penalties with which they
are threatened upon failure to carry such explosives, they cannot subject themselves to "the ruinous consequences which
would inevitably result" from failure on their part to obey the demands and requirements of the Acting Collector of Customs as
to the acceptance for carriage of explosives; that plaintiff believes that the Acting Collector of Customs erroneously construes
the provisions of Act No. 98 in holding that they require the company to accept such explosives for carriage notwithstanding
the above mentioned resolution of the directors and stockholders of the company, and that if the Act does in fact require the
company to carry such explosives it is to that extent unconstitutional and void; that notwithstanding this belief of complainant
as to the true meaning of the Act, the questions involved cannot be raised by the refusal of the company or its agents to comply
with the demands of the Acting Collector of Customs, without the risk of irreparable loss and damage resulting from his refusal
to facilitate the documentation of the company's vessels, and without assuming the company to test the questions involved by
refusing to accept such explosives for carriage.
The prayer of the complaint is as follows:
Wherefore your petitioner prays to this honorable court as follows:
First. That to the due hearing of the above entitled action be issued a writ of prohibition perpetually restraining the
respondent Yangco Steamship Company, its appraisers, agents, servants or other representatives from accepting to
carry and from carrying, in steamers of said company dynamite, powder or other explosive substance, in accordance
with the resolution of the board of directors and of the shareholders of said company.
Second. That a writ of prohibition be issued perpetually enjoining the respondent J.S. Stanley as Acting Collector of
Customs of the Philippine Islands, his successors, deputies, servants or other representatives, from obligating the said
Yangco Steamship Company, by any means whatever, to carry dynamite, powder or other explosive substance.
Third. That a writ of prohibition be issued perpetually enjoining the respondent Ignacio Villamor as Attorney-General
of the Philippine Islands, and W.H. Bishop as prosecuting attorney of the city of Manila, their deputies representatives
or employees, from accusing the said Yangco Steamship Company, its officers, agents or servants, of the violation of
Act No. 98 by reason of the failure or omission of the said company to accept for carriage out to carry dynamite
powder or other explosive.
Fourth. That the petitioner be granted such other remedy as may be meet and proper.
To this complaint the respondents demurred, and we are of opinion that the demurrer must be sustained, on the ground that
the complaint does not set forth facts sufficient to constitute a cause of action.
It will readily be seen that plaintiff seeks in these proceedings to enjoin the steamship company from accepting for carriage on
any of its vessels, dynamite, powder or other explosives, under any conditions whatsoever; to prohibit the Collector of
Customs and the prosecuting officers of the government from all attempts to compel the company to accept such explosives
for carriage on any of its vessels under any conditions whatsoever; and to prohibit these officials from any attempt to invoke
the penal provisions of Act No. 98, in any case of a refusal by the company or its officers so to do; and this without regard to
the conditions as to safety and so forth under which such explosives are offered for carriage, and without regard also to any
question as to the suitableness for the transportation of such explosives of the particular vessel upon which the shipper offers
them for carriage; and further without regard to any question as to whether such conduct on the part of the steamship
company and its officers involves in any instance an undue, unnecessary or unreasonable discrimination to the prejudice of
any person, locality or particular kind of traffic.
There are no allegations in the complaint that for some special and sufficient reasons all or indeed any of the company's
vessels are unsuitable for the business of transporting explosives; or that shippers have declined or will in future decline to
comply with such reasonable regulations and to take such reasonable precautions as may be necessary and proper to secure
the safety of the vessels of the company in transporting such explosives. Indeed the contention of petitioner is that a common
carrier in the Philippine Islands may decline to accept for carriage any shipment of merchandise of a class which it expressly
or impliedly declines to accept from all shippers alike, because as he contends "the duty of a common carrier to carry for all
who offer arises from the public profession he has made, and limited by it."
In support of this contention counsel cites for a number of English and American authorities, discussing and applying the
doctrine of the common law with reference to common carriers. But it is unnecessary now to decide whether, in the absence of
statute, the principles on which the American and English cases were decided would be applicable in this jurisdiction. The
duties and liabilities of common carriers in this jurisdiction are defined and fully set forth in Act No. 98 of the Philippine
Commission, and until and unless that statute be declared invalid or unconstitutional, we are bound by its provisions.
Sections 2, 3 and 4 of the Act are as follows:
SEC. 2. It shall be unlawful for any common carrier engaged in the transportation of passengers or property as above
set forth to make or give any unnecessary or unreasonable preference or advantage to any particular person,
company, firm, corporation or locality, or any particular kind of traffic in any respect whatsoever, or to subject any
particular person, company, firm, corporation or locality, or any particular kind of traffic, to undue or unreasonable
prejudice or discrimination whatsoever, and such unjust preference or discrimination is also hereby prohibited and
declared to be unlawful.
SEC. 3. No common carrier engaged in the carriage of passengers or property as aforesaid shall, under any pretense
whatsoever, fail or refuse to receive for carriage, and as promptly as it is able to do so without discrimination, to carry
any person or property offering for carriage, and in the order in which such persons or property are offered for
carriage, nor shall any such common carrier enter into any arrangement, contract or agreement with any other person
or corporation whereby the latter is given an exclusive or preferential or monopolize the carriage any class or kind of
property to the exclusion or partial exclusion of any other person or persons, and the entering into any such
arrangement, contract or agreement, under any form or pretense whatsoever, is hereby prohibited and declared to be
unlawful.
SEC. 4. Any willful violation of the provisions of this Act by any common carrier engaged in the transportation of
passengers or property as hereinbefore set forth is hereby declared to be punishable by a fine not exceeding five
thousand dollars money of the United States, or by imprisonment not exceeding two years, or both, within the
discretion of the court.
The validity of this Act has been questioned on various grounds, and it is vigorously contended that in so far as it imposes any
obligation on a common carrier to accept for carriage merchandise of a class which he makes no public profession to carry, or
which he has expressly or impliedly announced his intention to decline to accept for carriage from all shippers alike, it is ultra
vires, unconstitutional and void.
We may dismiss without extended discussion any argument or contention as to the invalidity of the statute based on alleged
absurdities inherent in its provisions or on alleged unreasonable or impossible requirements which may be read into it by a
strained construction of its terms.
We agree with counsel for petitioner that the provision of the Act which prescribes that, "No common carrier ... shall, under
any pretense whatsoever, fail or refuse to receive for carriage ... to carry any person or property offering for carriage," is not to
be construed in its literal sense and without regard to the context, so as to impose an imperative duty on all common carriers
to accept for carriage, and to carry all and any kind of freight which may be offered for carriage without regard to the facilities
which they may have at their disposal. The legislator could not have intended and did not intend to prescribe that a common
carrier running passenger automobiles for hire must transport coal in his machines; nor that the owner of a tank steamer,
expressly constructed in small watertight compartments for the carriage of crude oil must accept common carrier must accept
and carry contraband articles, such as opium, morphine, cocaine, or the like, the mere possession of which is declared to be a
criminal offense; nor that common carriers must accept eggs offered for transportation in paper parcels or any merchandise
whatever do defectively packed as to entail upon the company unreasonable and unnecessary care or risks.
Read in connection with its context this, as well as all the other mandatory and prohibitory provisions of the statute, was
clearly intended merely to forbid failures or refusals to receive persons or property for carriage involving any "unnecessary or
unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular kind
of traffic in any respect whatsoever," or which would "subject any particular person, company, firm, corporation or locality, or
any particular kind of traffic to any undue or unreasonable prejudice or discrimination whatsoever."
The question, then, of construing and applying the statute, in cases of alleged violations of its provisions, always involves a
consideration as to whether the acts complained of had the effect of making or giving an "unreasonable or unnecessary
preference or advantage" to any person, locality or particular kind of traffic, or of subjecting any person, locality, or particular
kind of traffic to any undue or unreasonable prejudice or discrimination. It is very clear therefore that the language of the
statute itself refutes any contention as to its invalidity based on the alleged unreasonableness of its mandatory or prohibitory
provisions.
So also we may dismiss without much discussion the contentions as to the invalidity of the statute, which are based on the
alleged excessive severity of the penalties prescribed for violation of its provisions. Upon general principles it is peculiarly and
exclusively within the province of the legislator to prescribe the pains and penalties which may be imposed upon persons
convicted of violations of the laws in force within his territorial jurisdiction. With the exercise of his discretion in this regard
where it is alleged that excessive fines or cruel and unusual punishments have been prescribed, and even in such cases the
courts will not presume to interfere in the absence of the clearest and most convincing argument and proof in support of such
contentions. (Weems vs. United States, 217 U.S., 349; U.S. vs. Pico, 18 Phil. Rep., 386.) We need hardly add that there is no
ground upon which to rest a contention that the penalties prescribed in the statute under consideration are either excessive or
cruel and unusual, in the sense in which these terms are used in the organic legislation in force in the Philippine Islands.
But it is contended that on account of the penalties prescribed the statute should be held invalid upon the principles
announced in Ex parte Young (209 U.S., 123, 147, 148); Cotting vs. Goddard (183 U.S., 79, 102); Mercantile Trust Co. vs. Texas
Co. (51 Fed., 529); Louisville Ry. vs. McCord (103 Fed., 216); Cons. Gas Co. vs.Mayer (416 Fed., 150). We are satisfied however
that the reasoning of those cases is not applicable to the statute under consideration. The principles announced in those
decisions are fairly indicated in the following citations found in petitioner's brief:
But when the legislature, in an effort to prevent any inquiry of the validity of a particular statute, so burdens any challenge
thereof in the courts that the party affected is necessarily constrained to submit rather than take the chances of the penalties
imposed, then it becomes a serious question whether the party is not deprived of the equal protection of the laws.
(Cotting vs. Goddard, 183 U. S., 79, 102.)
It may therefore be said that when the penalties for disobedience are by fines so enormous and imprisonment so
severe as to intimidate the company and its officers from resorting to the courts to test the validity of the legislation,
the result is the same as if the law in terms prohibited the company from seeking judicial construction of laws which
deeply affect its rights.
It is urged that there is no principle upon which to base the claim that a person is entitled to disobey a statute at least
once, for the purpose of testing its validity, without subjecting himself to the penalties for disobedience provided by
the statute in case it is valid. This is not an accurate statement of the case. Ordinarily a law creating offenses in the
nature of misdemeanors or felonies relates to a subject over which the jurisdiction of the legislature is complete in any
event. In the case, however, of the establishment of certain rates without any hearing, the validity of such rates
necessarily depends upon whether they are high enough to permit at least some return upon the investment (how
much it is not now necessary to state), and an inquiry as to that fact is a proper subject of judicial investigation. If it
turns out that the rates are too low for that purpose, then they are illegal. Now, to impose upon a party interested the
burden of obtaining a judicial decision of such a question (no prior hearing having been given) only upon the
condition that, if unsuccessful, he must suffer imprisonment and pay fines, as provided in these acts, is, in effect, to
close up all approaches to the courts, and thus prevent any hearing upon the question whether the rates as provided
by the acts are not too low, and therefore invalid. The distinction is obvious between a case where the validity of the
act depends upon the existence of a fact which can be determined only after investigation of a very complicated and
technical character, and the ordinary case of a statute upon a subject requiring no such investigation, and over which
the jurisdiction of the legislature is complete in any event.
We hold, therefore, that the provisions of the acts relating to the enforcement of the rates, either for freight or
passengers, by imposing such enormous fines and possible imprisonment as a result of an unsuccessful effort to test
the validity of the laws themselves, are unconstitutional on their face, without regard to the question of the
insufficiency of those rates. (Ex parte Young, 209 U.S., 123 147, 148.)
An examination of the general provisions of our statute, of the circumstances under which it was enacted, the mischief which it
sought to remedy and of the nature of the penalties prescribed for violations of its terms convinces us that, unlike the statutes
under consideration in the above cited cases, its enactment involved no attempt to prevent common carriers "from resorting
to the courts to test the validity of the legislation;" no "effort to prevent any inquiry" as to its validity. It imposes no arbitrary
obligation upon the company to do or to refrain from doing anything. It makes no attempt to compel such carriers to do
business at a fixed or arbitrarily designated rate, at the risk of separate criminal prosecutions for every demand of a higher or
a different rate. Its penalties can be imposed only upon proof of "unreasonable," "unnecessary" and "unjust" discriminations,
and range from a maximum which is certainly not excessive for willful, deliberate and contumacious violations of its
provisions by a great and powerful corporation, to a minimum which may be a merely nominal fine. With so wide a range of
discretion for a contention on the part of any common carrier that it or its officers are "intimidated from resorting to the
courts to test the validity" of the provisions of the statute prohibiting such "unreasonable," "unnecessary" and "unjust"
discriminations, or to test in any particular case whether a given course of conduct does in fact involve such discrimination.
We will presume, for the purpose of declaring the statute invalid, that there is so real a danger that the Courts of First Instance
and this court on appeal will abuse the discretion thus conferred upon us, as to intimidate any common carrier, acting in good
faith, from resorting to the courts to test the validity of the statute. Legislative enactments, penalizing unreasonable
discriminations, unreasonable restraints of trade, and unreasonable conduct in various forms of human activity are so familiar
and have been so frequently sustained in the courts, as to render extended discussion unnecessary to refute any contention as
to the invalidity of the statute under consideration, merely it imposes upon the carrier the obligation of adopting one of
various courses of conduct open to it, at the risk of incurring a prescribed penalty in the event that the course of conduct
actually adopted by it should be held to have involved an unreasonable, unnecessary or unjust discrimination. Applying the
test announced in Ex parte Young, supra, it will be seen that the validity of the Act does not depend upon "the existence of a
fact which can be determined only after investigation of a very complicated and technical character," and that "the jurisdiction
of the legislature" over the subject with which the statute deals "is complete in any event." There can be no real question as to
the plenary power of the legislature to prohibit and to penalize the making of undue, unreasonable and unjust discriminations
by common carriers to the prejudice of any person, locality or particular kind of traffic. (See Munn vs. Illinois, 94 U.S., 113, and
other cases hereinafter cited in support of this proposition.)
Counsel for petitioner contends also that the statute, if construed so as to deny the right of the steamship company to elect at
will whether or not it will engage in a particular business, such as that of carrying explosives, is unconstitutional "because it is
a confiscation of property, a taking of the carrier's property without due process of law," and because it deprives him of his
liberty by compelling him to engage in business against his will. The argument continues as follows:
To require of a carrier, as a condition to his continuing in said business, that he must carry anything and every thing is
to render useless the facilities he may have for the carriage of certain lines of freight. It would be almost as complete a
confiscation of such facilities as if the same were destroyed. Their value as a means of livelihood would be utterly
taken away. The law is a prohibition to him to continue in business; the alternative is to get out or to go into some
other business the same alternative as was offered in the case of the Chicago & N.W. Ry. vs. Dey (35 Fed. Rep., 866,
880), and which was there commented on as follows:
"Whatever of force there may be in such arguments, as applied to mere personal property capable of removal
and use elsewhere, or in other business, it is wholly without force as against railroad corporations, so large a
proportion of whose investment is in the soil and fixtures appertaining thereto, which cannot be removed.
For a government, whether that government be a single sovereign or one of the majority, to say to an
individual who has invested his means in so laudable an enterprise as the construction of a railroad, one
which tends so much to the wealth and prosperity of the community, that, if he finds that the rates imposed
will cause him to do business at a loss, he may quit business, and abandon that road, is the very irony of
despotism. Apples of Sodom were fruit of joy in comparison. Reading, as I do, in the preamble of the Federal
Constitution, that it was ordained to "establish justice," I can never believe that it is within the property of an
individual invested in and used for a purpose in which even the Argus eyes of the police power can see
nothing injurious to public morals, public health, or the general welfare. I read also in the first section of the
bill of rights of this state that "all men are by nature free and equal, and have certain inalienable rights, among
which are those of enjoying and defending life and liberty, acquiring, possessing, and protecting property, and
pursuing and obtaining safety and happiness;" and I know that, while that remains as the supreme law of the
state, no legislature can directly or indirectly lay its withering or destroying hand on a single dollar invested
in the legitimate business of transportation." (Chicago & N.W. Ry. vs. Dey, 35 Fed. Rep., 866, 880.)
It is manifest, however, that this contention is directed against a construction of the statute, which, as we have said, is not
warranted by its terms. As we have already indicated, the statute does not "require of a carrier, as a condition to his continuing
in said business, that he must carry anything and everything," and thereby "render useless the facilities he may have for the
carriage of certain lines of freight." It merely forbids failures or refusals to receive persons or property for carriage which have
the effect of giving an "unreasonable or unnecessary preference or advantage" to any person, locality or particular kind of
traffic, or of subjecting any person, locality or particular kind of traffic to any undue or unreasonable prejudice or
discrimination.
Counsel expressly admits that the statute, "as a prohibition against discrimination is a fair, reasonable and valid exercise of
government," and that "it is necessary and proper that such discrimination be prohibited and prevented," but he contends that
"on the other hand there is no reasonable warrant nor valid excuse for depriving a person of his liberty by requiring him to
engage in business against his will. If he has a rolling boat, unsuitable and unprofitable for passenger trade, he may devote it to
lumber carrying. To prohibit him from using it unless it is fitted out with doctors and stewards and staterooms to carry
passengers would be an invalid confiscation of this property. A carrier may limit his business to the branches thereof that suit
his convenience. If his wagon be old, or the route dangerous, he may avoid liability for loss of passengers' lives and limbs by
carrying freight only. If his vehicles require expensive pneumatic tires, unsuitable for freight transportation, ha may
nevertheless carry passengers. The only limitation upon his action that it is competent for the governing authority to impose is
to require him to treat all alike. His limitations must apply to all, and they must be established limitations. He cannot refuse to
carry a case of red jusi on the ground that he has carried for others only jusi that he was green, or blue, or black. But he can
refuse to carry red jusi, if he has publicly professed such a limitation upon his business and held himself out as unwilling to
carry the same for anyone."
To this it is sufficient answer to say that there is nothing in the statute which would deprive any person of his liberty "by
requiring him to engage in business against his will." The prohibitions of the statute against undue, unnecessary or
unreasonable regulations which the legislator has seen fit to prescribe for the conduct of the business in which the carrier is
engaged of his own free will and accord. In so far as the self-imposed limitations by the carrier upon the business conducted by
him, in the various examples given by counsel, do not involve an unreasonable or unnecessary discrimination the statute
would not control his action in any wise whatever. It operates only in cases involving such unreasonable or unnecessary
preferences or discriminations. Thus in the hypothetical case suggested by the petitioner, a carrier engaged in the carriage of
green, blue or black jusi, and duly equipped therefor would manifestly be guilty of "giving an unnecessary and unreasonable
preference to a particular kind of traffic" and of subjecting to "an undue and reasonable prejudice a particular kind of traffic,"
should he decline to carry red jusi, to the prejudice of a particular shipper or of those engaged in the manufacture of that kind
of jusi, basing his refusal on the ground of "mere whim or caprice" or of mere personal convenience. So a public carrier of
passengers would not be permitted under this statute to absolve himself from liability for a refusal to carry a Chinaman, a
Spaniard, an American, a Filipino, or a mestizo by proof that from "mere whim or caprice or personal scruple," or to suit his
own convenience, or in the hope of increasing his business and thus making larger profits, he had publicly announced his
intention not to carry one or other of these classes of passengers.
The nature of the business of a common carrier as a public employment is such that it is clearly within the power of the state
to impose such just and reasonable regulations thereon in the interest of the public as the legislator may deem proper. Of
course such regulations must not have the effect of depriving an owner of his property without due process of law, nor of
confiscating or appropriating private property without just compensation, nor of limiting or prescribing irrevocably vested
rights or privileges lawfully acquired under a charter or franchise. But aside from such constitutional limitations, the
determination of the nature and extent of the regulations which should be prescribed rests in the hands of the legislator.
Common carriers exercise a sort of public office, and have duties to perform in which the public is interested. Their business is,
therefore, affected with a public interest, and is subject of public regulation. (New Jersey Steam Nav. Co. vs. Merchants Bank, 6
How., 344, 382; Munn vs. Illinois, 94 U.S., 113, 130.) Indeed, this right of regulation is so far beyond question that it is well
settled that the power of the state to exercise legislative control over railroad companies and other carriers "in all respects
necessary to protect the public against danger, injustice and oppression" may be exercised through boards of commissioners.
(New York etc. R. Co. vs. Bristol, 151 U.S., 556, 571; Connecticut etc. R. Co. vs. Woodruff, 153 U.S., 689.)
Regulations limiting of passengers the number of passengers that may be carried in a particular vehicle or steam vessel, or
forbidding the loading of a vessel beyond a certain point, or prescribing the number and qualifications of the personnel in the
employ of a common carrier, or forbidding unjust discrimination as to rates, all tend to limit and restrict his liberty and to
control to some degree the free exercise of his discretion in the conduct of his business. But since the Granger cases were
decided by the Supreme Court of the United States no one questions the power of the legislator to prescribe such reasonable
regulations upon property clothed with a public interest as he may deem expedient or necessary to protect the public against
danger, injustice or oppression. (Munn vs.Illinois, 94 U.S., 113, 130; Chicago etc. R. Co. vs. Cutts, 94 U.S., 155; Budd vs. New
York, 143 U.S., 517; Cottingvs. Goddard, 183 U.S., 79.) The right to enter the public employment as a common carrier and to
offer one's services to the public for hire does not carry with it the right to conduct that business as one pleases, without
regard to the interest of the public and free from such reasonable and just regulations as may be prescribed for the protection
of the public from the reckless or careless indifference of the carrier as to the public welfare and for the prevention of unjust
and unreasonable discrimination of any kind whatsoever in the performance of the carrier's duties as a servant of the public.
Business of certain kinds, including the business of a common carrier, holds such a peculiar relation to the public interest that
there is superinduced upon it the right of public regulation. (Budd vs. New York, 143 U.S., 517, 533.) When private property is
"affected with a public interest it ceases to be juris privati only." Property becomes clothed with a public interest when used in
a manner to make it of public consequence and affect the community at large. "When, therefore, one devotes his property to a
use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be
controlled by the public for the common good, to the extent of the interest he has thus created. He may withdraw his grant by
discontinuing the use, but so long as he maintains the use he must submit to control." (Munn vs. Illinois, 94 U.S., 113; Georgia R.
& Bkg. Co. vs. Smith, 128 U.S., 174; Budd vs. New York, 143 U.S., 517; Louisville etc. Ry. Co. vs. Kentucky, 161 U.S., 677, 695.)
Of course this power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation. Under pretense
of regulating fares and freight the state can not require a railroad corporation to carry persons or property without reward.
Nor can it do that which in law amounts to a taking of private property for public use without just compensation, or without
due process of law. (Chicago etc. R. Co. vs. Minnesota, 134 U.S., 418; Minneapolis Eastern R. Co. vs. Minnesota, 134 U.S., 467.)
But the judiciary ought not to interfere with regulations established and palpably unreasonable as to make their enforcement
equivalent to the taking of property for public use without such compensation as under all the circumstances is just both to the
owner and to the public, that is, judicial interference should never occur unless the case presents, clearly and beyond all doubt,
such a flagrant attack upon the rights of property under the guise of regulations as to compel the court to say that the
regulation in question will have the effect to deny just compensation for private property taken for the public use. (Chicago etc.
R. Co. vs. Wellman, 143 U.S., 339; Smyth vs. Ames, 169 U.S., 466, 524; Henderson Bridge Co. vs.Henderson City, 173 U.S., 592,
614.)
Under the common law of England it was early recognized that common carriers owe to the public the duty of carrying
indifferently for all who may employ them, and in the order in which application is made, and without discrimination as to
terms. True, they were allowed to restrict their business so as to exclude particular classes of goods, but as to the kinds of
property which the carrier was in the habit of carrying in the prosecution of his business he was bound to serve all customers
alike (State vs. Cincinnati etc. R. Co., 47 Ohio St., 130, 134, 138; Louisville etc. Ry. Co. vs. Quezon City Coal Co., 13 Ky. L. Rep.,
832); and it is to be observed in passing that these common law rules are themselves regulations controlling, limiting and
prescribing the conditions under which common carriers were permitted to conduct their business. (Munn vs. Illinois, 94 U. S.,
113, 133.)
It was found, in the course of time, that the correction of abuses which had grown up with the enormously increasing business
of common carriers necessitated the adoption of statutory regulations controlling the business of common carriers, and
imposing severe and drastic penalties for violations of their terms. In England, the Railway Clauses Consolidation Act was
enacted in 1845, the Railway and Canal Traffic Act in 1854, and since the passage of those Acts much additional legislation has
been adopted tending to limit and control the conduct of their business by common carriers. In the United States, the business
of common carriers has been subjected to a great variety of statutory regulations. Among others Congress enacted "The
Interstate Commerce Act" (1887) and its amendments, and the Elkins Act as amended (1906); and most if not all of the States
of the Union have adopted similar legislation regulating the business of common carriers within their respective jurisdictions.
Unending litigation has arisen under these statutes and their amendments, but nowhere has the right of the state to prescribe
just and reasonable regulations controlling and limiting the conduct of the business of common carriers in the public interest
and for the general welfare been successfully challenged, though of course there has been wide divergence of opinion as to the
reasonableness, the validity and legality of many of the regulations actually adopted.
The power of the Philippine legislator to prohibit and to penalize all and any unnecessary or unreasonable discriminations by
common carriers may be maintained upon the same reasoning which justified the enactment by the Parliament of England and
the Congress of the United States of the above mentioned statutes prohibiting and penalizing the granting of certain
preferences and discriminations in those countries. As we have said before, we find nothing confiscatory or unreasonable in
the conditions imposed in the Philippine statute upon the business of common carriers. Correctly construed they do not force
him to engage in any business his will or to make use of his facilities in a manner or for a purpose for which they are not
reasonably adapted. It is only when he offers his facilities as a common carrier to the public for hire, that the statute steps in
and prescribes that he must treat all alike, that he may not pick and choose which customer he will serve, and, specifically, that
he shall not make any undue or unreasonable preferences or discriminations whatsoever to the prejudice not only of any
person or locality but also of any particular kind of traffic.
The legislator having enacted a regulation prohibiting common carriers from giving unnecessary or unreasonable preferences
or advantages to any particular kind of traffic or subjecting any particular kind of traffic to any undue or unreasonable
prejudice or discrimination whatsoever, it is clear that whatever may have been the rule at the common law, common carriers
in this jurisdiction cannot lawfully decline to accept a particular class of goods for carriage, to the prejudice of the traffic in
those goods, unless it appears that for some sufficient reason the discrimination against the traffic in such goods is reasonable
and necessary. Mere whim or prejudice will not suffice. The grounds for the discrimination must be substantial ones, such as
will justify the courts in holding the discrimination to have been reasonable and necessary under all circumstances of the case.
The prayer of the petition in the case at bar cannot be granted unless we hold that the refusal of the defendant steamship
company to accept for carriage on any of its vessels "dynamite, gunpowder or other explosives" would in no instance involve a
violation of the provisions of this statute. There can be little doubt, however, that cases may and will arise wherein the refusal
of a vessel "engaged in the coastwise trade of the Philippine Islands as a common carrier" to accept such explosives for
carriage would subject some person, company, firm or corporation, or locality, or particular kind of traffic to a certain
prejudice or discrimination. Indeed it cannot be doubted that the refusal of a "steamship company, the owner of a large
number of vessels" engaged in that trade to receive for carriage any such explosives on any of its vessels would subject the
traffic in such explosives to a manifest prejudice and discrimination. The only question to be determined therefore is whether
such prejudice or discrimination might in any case prove to be undue, unnecessary or unreasonable.
This of course is, in each case, a question of fact, and we are of the opinion that the facts alleged in the complaint are not
sufficient to sustain a finding in favor of the contentions of the petitioner. It is not alleged in the complaint that "dynamite,
gunpowder and other explosives" can in no event be transported with reasonable safety on board steam vessels engaged in
the business of common carriers. It is not alleged that all, or indeed any of the defendant steamship company's vessels are
unsuited for the carriage of such explosives. It is not alleged that the nature of the business in which the steamship company is
engaged is such as to preclude a finding that a refusal to accept such explosives on any of its vessels would subject the traffic in
such explosives to an undue and unreasonable prejudice and discrimination.
Plaintiff's contention in this regard is as follows:
In the present case, the respondent company has expressly and publicly renounced the carriage of explosives, and
expressly excluded the same terms from the business it conducts. This in itself were sufficient, even though such
exclusion of explosives were based on no other ground than the mere whim, caprice or personal scruple of the carrier.
It is unnecessary, however, to indulge in academic discussion of a moot question, for the decision not a carry
explosives rests on substantial grounds which are self-evident.
We think however that the answer to the question whether such a refusal to carry explosives involves an unnecessary or
unreasonable preference or advantage to any person, locality or particular kind of traffic or subjects any person, locality or
particular to traffic to an undue or unreasonable prejudice and discrimination is by no means "self-evident," and that it is a
question of fact to be determined by the particular circumstances of each case.
The words "dynamite, powder or other explosives" are broad enough to include matches, and other articles of like nature, and
may fairly be held to include also kerosene oil, gasoline and similar products of a highly inflammable and explosive character.
Many of these articles of merchandise are in the nature of necessities in any country open to modern progress and
advancement. We are not fully advised as to the methods of transportation by which they are made commercially available
throughout the world, but certain it is that dynamite, gunpowder, matches, kerosene oil and gasoline are transported on many
vessels sailing the high seas. Indeed it is a matter of common knowledge that common carriers throughout the world transport
enormous quantities of these explosives, on both land and sea, and there can be little doubt that a general refusal of the
common carriers in any country to accept such explosives for carriage would involve many persons, firms and enterprises in
utter ruin, and would disastrously affect the interests of the public and the general welfare of the community.
It would be going to far to say that a refusal by a steam vessel engaged in the business of transporting general merchandise as
a common carrier to accept for carriage a shipment of matches, solely on the ground of the dangers incident to the explosive
quality of this class of merchandise, would not subject the traffic in matches to an unnecessary, undue or unreasonable
prejudice and discrimination without proof that for some special reason the particular vessel is not fitted to carry articles of
that nature. There may be and doubtless are some vessels engaged in business as common carriers of merchandise, which for
lack of suitable deck space or storage rooms might be justified in declining to carry kerosene oil, gasoline, and similar
products, even when offered for carriage securely packed in cases; and few vessels are equipped to transport those products
in bulk. But in any case of a refusal to carry such products which would subject any person, locality or the traffic in such
products would be necessary to hear evidence before making an affirmative finding that such prejudice or discrimination was
or was not unnecessary, undue or unreasonable. The making of such a finding would involve a consideration of the suitability
of the vessel for the transportation of such products ; the reasonable possibility of danger or disaster resulting from their
transportation in the form and under the conditions in which they are offered for carriage; the general nature of the business
done by the carrier and, in a word, all the attendant circumstances which might affect the question of the reasonable necessity
for the refusal by the carrier to undertake the transportation of this class of merchandise.
But it is contended that whatever the rule may be as to other explosives, the exceptional power and violence of dynamite and
gunpowder in explosion will always furnish the owner of a vessel with a reasonable excuse for his failure or refusal to accept
them for carriage or to carry them on board his boat. We think however that even as to dynamite and gunpowder we would
not be justified in making such a holding unaided by evidence sustaining the proposition that these articles can never be
carried with reasonable safety on any vessel engaged in the business of a common carrier. It is said that dynamite is so erratic
an uncontrollable in its action that it is impossible to assert that it can be handled with safety in any given case. On the other
hand it is contended that while this may be true of some kinds of dynamite, it is a fact that dynamite can be and is
manufactured so as to eliminate any real danger from explosion during transportation. These are of course questions of fact
upon which we are not qualified to pass judgment without the assistance of expert witnesses who have made special studies
as to the chemical composition and reactions of the different kinds of dynamite, or attained a thorough knowledge of its
properties as a result of wide experience in its manufacture and transportation.
As we construe the Philippine statute, the mere fact that violent and destructive explosions can be obtained by the use of
dynamite under certain conditions would not be sufficient in itself to justify the refusal of a vessel, duly licensed as a common
carrier of merchandise, to accept it for carriage, if it can be proven that in the condition in which it is offered for carriage there
is no real danger to the carrier, nor reasonable ground to fear that his vessel or those on board his vessel will be exposed to
unnecessary and unreasonable risk in transporting it, having in mind the nature of his business as a common carrier engaged
in the coastwise trade in the Philippine Islands, and his duty as a servant of the public engaged in a public employment. So
also, if by the exercise of due diligence and the taking of unreasonable precautions the danger of explosions can be practically
eliminated, the carrier would not be justified in subjecting the traffic in this commodity to prejudice or discrimination by proof
that there would be a possibility of danger from explosion when no such precautions are taken.
The traffic in dynamite, gunpowder and other explosives is vitally essential to the material and general welfare of the people of
these Islands. If dynamite, gunpowder and other explosives are to continue in general use throughout the Philippines, they
must be transported by water from port to port in the various islands which make up the Archipelago. We are satisfied
therefore that the refusal by a particular vessel, engaged as a common carrier of merchandise in the coastwise trade of the
Philippine Islands, to accept any or all of these explosives for carriage would constitute a violation of the prohibitions against
discriminations penalized under the statute, unless it can be shown by affirmative evidence that there is so real and
substantial a danger of disaster necessarily involved in the carriage of any or all of these articles of merchandise as to render
such refusal a due or a necessary or a reasonable exercise of prudence and discretion on the part of the shipowner.
The complaint in the case at bar lacking the necessary allegations under this ruling, the demurrer must be sustained on the
ground that the facts alleged do not constitute a cause of action.
A number of interesting questions of procedure are raised and discussed in the briefs of counsel. As to all of these questions
we expressly reserve our opinion, believing as we do that in sustaining the demurrer on the grounds indicated in this opinion
we are able to dispose of the real issue involved in the proceedings without entering upon the discussion of the nice questions
which it might have been necessary to pass upon had it appeared that the facts alleged in the complaint constitute a cause of
action.
We think, however, that we should not finally dispose of the case without indicating that since the institution of these
proceedings the enactment of Acts No. 2307 and No. 2362 (creating a Board of Public Utility Commissioners and for other
purposes) may have materially modified the right to institute and maintain such proceedings in this jurisdiction. But the
demurrer having been formallly submitted for judgment before the enactment of these statutes, counsel have not been heard
in this connection. We therefore refrain from any comment upon any questions which might be raised as to whether or not
there may be another adequate and appropriate remedy for the alleged wrong set forth in the complaint. Our disposition of the
question raised by the demurrer renders that unnecessary at this time, though it may not be improper to observe that a careful
examination of those acts confirms us in the holding upon which we base our ruling on this demurrer, that is to say "That
whatever may have been the rule at the common law, common carriers in this jurisdiction cannot lawfully decline to accept a
particular class of goods for carriage, to the prejudice of the traffic in those goods, unless it appears that for some sufficient
reason the discrimination against the traffic in such goods is reasonable and necessary. Mere prejudice or whim will not
suffice. The grounds of the discrimination must be substantial ones, such as will justify the courts in holding the discrimination
to have been reasonable and necessary under all the circumstances of the case."
Unless an amended complaint be filed in the meantime, let judgment be entered ten days hereafter sustaining the demurrer
and dismissing the complaint with costs against the complainant, and twenty days thereafter let the record be filed in the
archives of original actions in this court. So ordered.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 47065 June 26, 1940
PANGASINAN TRANSPORTATION CO., INC., petitioner,
vs.
THE PUBLIC SERVICE COMMISSION, respondent.
C. de G. Alvear for petitioner.
Evaristo R. Sandoval for respondent.
LAUREL, J.:
The petitioner has been engaged for the past twenty years in the business of transporting passengers in the Province of
Pangasinan and Tarlac and, to a certain extent, in the Province of Nueva Ecija and Zambales, by means of motor vehicles
commonly known as TPU buses, in accordance with the terms and conditions of the certificates of public convenience issued in
its favor by the former Public Utility Commission in cases Nos. 24948, 30973, 36830, 32014 and 53090. On August 26, 1939,
the petitioner filed with the Public Service Commission an application for authorization to operate ten additional new
Brockway trucks (case No. 56641), on the ground that they were needed to comply with the terms and conditions of its
existing certificates and as a result of the application of the Eight Hour Labor Law. In the decision of September 26, 1939,
granting the petitioner's application for increase of equipment, the Public Service Commission ordered:
Y de acuerdo con que se provee por el articulo 15 de la ley No. 146 del Commonwealth, tal como ha sido enmendada
por el articulo 1 de la Ley No. 454, por la presente se enmienda las condiciones de los certificados de convenciencia
publica expedidos en los expedientes Nos. 24948, 30973, 36831, 32014 y la authorizacion el el expediente No. 53090,
asi que se consideran incorporadas en los mismos las dos siguientes condiciones:
Que los certificados de conveniencia publica y authorizacion arriba mencionados seran validos y subsistentes
solamente durante de veinticinco (25) anos, contados desde la fecha de la promulgacion de esta decision.
Que la empresa de la solicitante porda ser adquirida por el Commonwealth de Filipinas o por alguna dependencia del
mismo en cualquier tiempo que lo deseare previo pago del precio d costo de su equipo util, menos una depreciacion
razonable que se ha fijar por la Comision al tiempo de su adquisicion.
Not being agreeable to the two new conditions thus incorporated in its existing certificates, the petitioner filed on October 9,
1939 a motion for reconsideration which was denied by the Public Service Commission on November 14, 1939. Whereupon,
on November 20, 1939, the present petition for a writ of certiorari was instituted in this court praying that an order be issued
directing the secretary of the Public Service Commission to certify forthwith to this court the records of all proceedings in case
No. 56641; that this court, after hearing, render a decision declaring section 1 of Commonwealth Act No. 454 unconstitutional
and void; that, if this court should be of the opinion that section 1 of Commonwealth Act No. 454 is constitutional, a decision be
rendered declaring that the provisions thereof are not applicable to valid and subsisting certificates issued prior to June 8,
1939. Stated in the language of the petitioner, it is contended:
1. That the legislative powers granted to the Public Service Commission by section 1 of Commonwealth Act No. 454,
without limitation, guide or rule except the unfettered discretion and judgment of the Commission, constitute a
complete and total abdication by the Legislature of its functions in the premises, and for that reason, the Act, in so far
as those powers are concerned, is unconstitutional and void.
2. That even if it be assumed that section 1 of Commonwealth Act No. 454, is valid delegation of legislative powers, the
Public Service Commission has exceeded its authority because: (a) The Act applies only to future certificates and not
to valid and subsisting certificates issued prior to June 8, 1939, when said Act took effect, and (b) the Act, as applied
by the Commission, violates constitutional guarantees.
Section 15 of Commonwealth Act No. 146, as amended by section 1 of Commonwealth Act No. 454, invoked by the respondent
Public Service Commission in the decision complained of in the present proceedings, reads as follows:
With the exception to those enumerated in the preceding section, no public service shall operate in the Philippines
without possessing a valid and subsisting certificate from the Public Service Commission, known as "certificate of
public convenience," or "certificate of convenience and public necessity," as the case may be, to the effect that the
operation of said service and the authorization to do business will promote the public interests in a proper and
suitable manner.
The Commission may prescribed as a condition for the issuance of the certificate provided in the preceding paragraph
that the service can be acquired by the Commonwealth of the Philippines or by any instrumentality thereof upon
payment of the cost price of its useful equipment, less reasonable depreciation; and likewise, that the certificate shall
valid only for a definite period of time; and that the violation of any of these conditions shall produce the immediate
cancellation of the certificate without the necessity of any express action on the part of the Commission.
In estimating the depreciation, the effect of the use of the equipment, its actual condition, the age of the model, or
other circumstances affecting its value in the market shall be taken into consideration.
The foregoing is likewise applicable to any extension or amendment of certificates actually force and to those which
may hereafter be issued, to permits to modify itineraries and time schedules of public services and to authorization to
renew and increase equipment and properties.
Under the first paragraph of the aforequoted section 15 of Act No. 146, as amended, no public service can operate without a
certificate of public convenience or certificate of convenience and public necessity to the effect that the operation of said
service and the authorization to do business will "public interests in a proper and suitable manner." Under the second
paragraph, one of the conditions which the Public Service Commission may prescribed the issuance of the certificate provided
for in the first paragraph is that "the service can be acquired by the Commonwealth of the Philippines or by any instrumental
thereof upon payment of the cost price of its useful equipment, less reasonable depreciation," a condition which is virtually a
restatement of the principle already embodied in the Constitution, section 6 of Article XII, which provides that "the State may,
in the interest of national welfare and defense, establish and operate industries and means of transportation and
communication, and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises
to be operated by the Government. "Another condition which the Commission may prescribed, and which is assailed by the
petitioner, is that the certificate "shall be valid only for a definite period of time." As there is a relation between the first and
second paragraphs of said section 15, the two provisions must be read and interpreted together. That is to say, in issuing a
certificate, the Commission must necessarily be satisfied that the operation of the service under said certificate during a
definite period fixed therein "will promote the public interests in a proper and suitable manner." Under section 16 (a) of
Commonwealth Act. No. 146 which is a complement of section 15, the Commission is empowered to issue certificates of public
convenience whenever it "finds that the operation of the public service proposed and the authorization to do business will
promote the public interests in a proper and suitable manner." Inasmuch as the period to be fixed by the Commission under
section 15 is inseparable from the certificate itself, said period cannot be disregarded by the Commission in determining the
question whether the issuance of the certificate will promote the public interests in a proper and suitable manner. Conversely,
in determining "a definite period of time," the Commission will be guided by "public interests," the only limitation to its power
being that said period shall not exceed fifty years (sec. 16 (a), Commonwealth Act No. 146; Constitution, Art. XIII, sec. 8.) We
have already ruled that "public interest" furnishes a sufficient standard. (People vs. Fernandez and Trinidad, G. R. No. 45655,
promulgated June 15, 1938; People vs. Rosenthal and Osmea, G. R. Nos. 46076 and 46077, promulgated June 12, 1939, citing
New York Central Securities Corporation vs. U.S.A., 287 U.S. 12, 24, 25, 77 Law. ed. 138, 145, 146; Schenchter Poultry
Corporation vs. I.S., 295, 540, 79 Law. ed. 1570, 1585; Ferrazzini vs. Gsell, 34 Phil., 697, 711-712.)
Section 8 of Article XIII of the Constitution provides, among other things, that no franchise, certificate, or any other form of
authorization for the operation of a public utility shall be "for a longer period than fifty years," and when it was ordained, in
section 15 of Commonwealth Act No. 146, as amended by Commonwealth Act No. 454, that the Public Service Commission may
prescribed as a condition for the issuance of a certificate that it "shall be valid only for a definite period of time" and, in section
16 (a) that "no such certificates shall be issued for a period of more than fifty years," the National Assembly meant to give
effect to the aforesaid constitutional mandate. More than this, it has thereby also declared its will that the period to be fixed by
the Public Service Commission shall not be longer than fifty years. All that has been delegated to the Commission, therefore, is
the administrative function, involving the use discretion, to carry out the will of the National Assembly having in view, in
addition, the promotion of "public interests in a proper and suitable manner." The fact that the National Assembly may itself
exercise the function and authority thus conferred upon the Public Service Commission does not make the provision in
question constitutionally objectionable.
The theory of the separation of powers is designed by its originators to secure action and at the same time to forestall
overaction which necessarily results from undue concentration of powers, and thereby obtain efficiency and prevent
deposition. Thereby, the "rule of law" was established which narrows the range of governmental action and makes it subject to
control by certain devices. As a corollary, we find the rule prohibiting delegation of legislative authority, and from the earliest
time American legal authorities have proceeded on the theory that legislative power must be exercised by the legislature
alone. It is frankness, however, to confess that as one delves into the mass of judicial pronouncement, he finds a great deal of
confusion. One thing, however, is apparent in the development of the principle of separation of powers and that is that the
maxim of delegatus non potest delegari or delegata potestas non potest delegari, attributed to Bracton (De Legius et
Consuetedinious Angliae, edited by G. E. Woodbine, Yale University Press, 1922, vol. 2, p. 167) but which is also recognized in
principle in the Roman Law (D. 17.18.3), has been made to adapt itself to the complexities of modern governments, giving rise
to the adoption, within certain limits, of the principle of "subordinate legislation," not only in the United States and England
but in practically all modern governments. (People vs. Rosenthal and Osmea, G. R. Nos. 46076 and 46077, promulgated June
12, 1939.) Accordingly, with the growing complexity of modern life, the multiplication of the subjects of governmental
regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency toward the
delegation of greater powers by the legislature, and toward the approval of the practice by the court. (Dillon Catfish Drainage
Dist, v. Bank of Dillon, 141 S. E. 274, 275, 143 S. Ct. 178; State vs. Knox County, 54 S. W. 2d. 973, 976, 165 Tenn. 319.) In
harmony with such growing tendency, this Court, since the decision in the case of Compaia General de Tabacos de Filipinas vs.
Board of Public Utility Commissioner (34 Phil., 136), relied upon by the petitioner, has, in instances, extended its seal of
approval to the "delegation of greater powers by the legislature." (Inchausti Steamship Co. vs. Public Utility Commissioner, 44
Phil., Autobus Co. vs. De Jesus, 56 Phil., 446; People vs. Fernandez & Trinidad, G. R. No. 45655, promulgated June 15, 1938;
People vs. Rosenthal & Osmea, G. R. Nos. 46076, 46077, promulgated June 12, 1939; and Robb and Hilscher vs. People, G. R.
No. 45866, promulgated June 12, 1939.).
Under the fourth paragraph of section 15 of Commonwealth Act No. 146, as amended by Commonwealth Act No. 454, the
power of the Public Service Commission to prescribed the conditions "that the service can be acquired by the Commonwealth
of the Philippines or by any instrumentality thereof upon payment of the cost price of its useful equipment, less reasonable,"
and "that the certificate shall be valid only for a definite period of time" is expressly made applicable "to any extension or
amendment of certificates actually in force" and "to authorizations to renew and increase equipment and properties." We have
examined the legislative proceedings on the subject and have found that these conditions were purposely made applicable to
existing certificates of public convenience. The history of Commonwealth Act No. 454 reveals that there was an attempt to
suppress, by way of amendment, the sentence "and likewise, that the certificate shall be valid only for a definite period of
time," but the attempt failed:
x x x x x x x x x
Sr. CUENCO. Seor Presidente, para otra enmienda. En la misma pagina, lineas 23 y 24, pido que se supriman las
palabras 'and likewise, that the certificate shall be valid only for a definite period time.' Esta disposicion del proyecto
autoriza a la Comision de Servicios Publicos a fijar un plazo de vigencia certificado de conveniencia publica. Todo el
mundo sabe que bo se puede determinar cuando los intereses del servicio publico requiren la explotacion de un
servicio publico y ha de saber la Comision de Servisios, si en un tiempo determinado, la explotacion de algunos buses
en cierta ruta ya no tiene de ser, sobre todo, si tiene en cuenta; que la explotacion de los servicios publicos depende de
condiciones flutuantes, asi como del volumen como trafico y de otras condiciones. Ademas, el servicio publico se
concede por la Comision de Servicios Publicos el interes publico asi lo exige. El interes publico no tiene duracion fija,
no es permanente; es un proceso mas o menos indefinido en cuanto al tiempo. Se ha acordado eso en el caucus de
anoche.
EL PRESIDENTE PRO TEMPORE. Que dice el Comite?
Sr. ALANO. El Comite siente tener que rechazar esa enmienda, en vista de que esto certificados de conveniencia
publica es igual que la franquicia: sepuede extender. Si los servicios presentados por la compaia durante el tiempo de
su certificado lo require, puede pedir la extension y se le extendera; pero no creo conveniente el que nosotros demos
un certificado de conveniencia publica de una manera que podria pasar de cincuenta anos, porque seria
anticonstitucional.
x x x x x x x x x
By a majority vote the proposed amendment was defeated. (Sesion de 17 de mayo de 1939, Asamblea Nacional.)
The petitioner is mistaken in the suggestion that, simply because its existing certificates had been granted before June 8, 1939,
the date when Commonwealth Act No. 454, amendatory of section 15 of Commonwealth Act No. 146, was approved, it must be
deemed to have the right of holding them in perpetuity. Section 74 of the Philippine Bill provided that "no franchise, privilege,
or concession shall be granted to any corporation except under the conditions that it shall be subject to amendment, alteration,
or repeal by the Congress of the United States." The Jones Law, incorporating a similar mandate, provided, in section 28, that
"no franchise or right shall be granted to any individual, firm, or corporation except under the conditions that it shall be
subject to amendment, alteration, or repeal by the Congress of the United States." Lastly, the Constitution of the Philippines
provided, in section 8 of Article XIII, that "no franchise or right shall be granted to any individual, firm, or corporation, except
under the condition that it shall be subject to amendment, alteration, or repeal by the National Assembly when the public
interest so requires." The National Assembly, by virtue of the Constitution, logically succeeded to the Congress of the United
States in the power to amend, alter or repeal any franchise or right granted prior to or after the approval of the Constitution;
and when Commonwealth Acts Nos. 146 and 454 were enacted, the National Assembly, to the extent therein provided, has
declared its will and purpose to amend or alter existing certificates of public convenience.
Upon the other hand, statutes enacted for the regulation of public utilities, being a proper exercise by the state of its police
power, are applicable not only to those public utilities coming into existence after its passage, but likewise to those already
established and in operation.
Nor is there any merit in petitioner's contention, that, because of the establishment of petitioner's operations prior to
May 1, 1917, they are not subject to the regulations of the Commission. Statutes for the regulation of public utilities
are a proper exercise by the state of its police power. As soon as the power is exercised, all phases of operation of
established utilities, become at once subject to the police power thus called into operation. Procedures'
Transportation Co. v. Railroad Commission, 251 U. S. 228, 40 Sup. Ct. 131, 64 Law. ed. 239, Law v. Railroad
Commission, 184 Cal. 737, 195 Pac. 423, 14 A. L. R. 249. The statute is applicable not only to those public utilities
coming into existence after its passage, but likewise to those already established and in operation. The 'Auto Stage and
Truck Transportation Act' (Stats. 1917, c. 213) is a statute passed in pursuance of the police power. The only
distinction recognized in the statute between those established before and those established after the passage of the
act is in the method of the creation of their operative rights. A certificate of public convenience and necessity it
required for any new operation, but no such certificate is required of any transportation company for the operation
which was actually carried on in good faith on May 1, 1917, This distinction in the creation of their operative rights in
no way affects the power of the Commission to supervise and regulate them. Obviously the power of the Commission
to hear and dispose of complaints is as effective against companies securing their operative rights prior to May 1,
1917, as against those subsequently securing such right under a certificate of public convenience and necessity.
(Motor Transit Co. et al. v. Railroad Commission of California et al., 209 Pac. 586.)
Moreover, Commonwealth Acts Nos. 146 and 454 are not only the organic acts of the Public Service Commission but are "a
part of the charter of every utility company operating or seeking to operate a franchise" in the Philippines. (Streator Aqueduct
Co. v. et al., 295 Fed. 385.) The business of a common carrier holds such a peculiar relation to the public interest that there is
superinduced upon it the right of public regulation. When private property is "affected with a public interest it ceased to
be juris privati only." When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants
to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the
interest he has thus created. He may withdraw his grant by discounting the use, but so long as he maintains the use he must
submit to control. Indeed, this right of regulation is so far beyond question that it is well settled that the power of the state to
exercise legislative control over public utilities may be exercised through boards of commissioners. (Fisher vs.Yangco
Steamship Company, 31 Phil., 1, citing Munn vs. Illinois, 94 U.S. 113; Georgia R. & Bkg. Co. vs. Smith, 128 U.S. 174; Budd vs. New
York, 143 U.S. 517; New York etc. R. Co. vs. Bristol 151 U.S. 556, 571; Connecticut etc. R. Co. vs. Woodruff, 153 U.S. 689;
Louisville etc. Ry Co. vs. Kentucky, 161 U.S. 677, 695.) This right of the state to regulate public utilities is founded upon the
police power, and statutes for the control and regulation of utilities are a legitimate exercise thereof, for the protection of the
public as well as of the utilities themselves. Such statutes are, therefore, not unconstitutional, either impairing the obligation of
contracts, taking property without due process, or denying the equal protection of the laws, especially inasmuch as the
question whether or not private property shall be devoted to a public and the consequent burdens assumed is ordinarily for
the owner to decide; and if he voluntarily places his property in public service he cannot complain that it becomes subject to
the regulatory powers of the state. (51 C. J., sec. 21, pp. 9-10.) in the light of authorities which hold that a certificate of public
convenience constitutes neither a franchise nor contract, confers no property right, and is mere license or privilege.
(Burgess vs. Mayor & Alderman of Brockton, 235 Mass. 95, 100, 126 N. E. 456; Roberto vs.Commisioners of Department of
Public Utilities, 262 Mass. 583, 160 N. E. 321; Scheible vs. Hogan, 113 Ohio St. 83, 148 N. E. 581; Martz vs. Curtis [J. L.] Cartage
Co. [1937], 132 Ohio St. 271, 7 N. E. [d] 220; Manila Yellow Taxicab Co. vs. Sabellano, 59 Phil., 773.)
Whilst the challenged provisions of Commonwealth Act No. 454 are valid and constitutional, we are, however, of the opinion
that the decision of the Public Service Commission should be reversed and the case remanded thereto for further proceedings
for the reason now to be stated. The Public Service Commission has power, upon proper notice and hearing, "to amend, modify
or revoke at any time any certificate issued under the provisions of this Act, whenever the facts and circumstances on the
strength of which said certificate was issued have been misrepresented or materially changed." (Section 16, par. [m],
Commonwealth Act No. 146.) The petitioner's application here was for an increase of its equipment to enable it to comply with
the conditions of its certificates of public convenience. On the matter of limitation to twenty five (25) years of the life of its
certificates of public convenience, there had been neither notice nor opportunity given the petitioner to be heard or present
evidence. The Commission appears to have taken advantage of the petitioner to augment petitioner's equipment in imposing
the limitation of twenty-five (25) years which might as well be twenty or fifteen or any number of years. This is, to say the
least, irregular and should not be sanctioned. There are cardinal primary rights which must be respected even in proceedings
of this character. The first of these rights is the right to a hearing, which includes the right of the party interested or affected to
present his own case and submit evidence in support thereof. In the language of Chief Justice Hughes, in Morgan v. U.S., (304
U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed. 1129), "the liberty and property of the citizen shall be protected by the rudimentary
requirements of fair play." Not only must the party be given an opportunity to present his case and to adduce evidence tending
to establish the rights which he asserts but the tribunal must consider the evidence presented. (Chief Justice Hughes in
Morgan vs. U.S., 298 U.S. 468, 56 S. Ct. 906, 80 :Law. ed. 1288.) In the language of this Court in Edwards vs. McCoy (22 Phil.,
598), "the right to adduce evidence, without the corresponding duty on the part of the board to consider it, is vain. Such right
is conspicuously futile if the person or persons to whom the evidence is presented can thrust it aside without or
consideration." While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity which
cannot be disregarded, namely, that of having something to support its decision. A decision with absolutely nothing to support
it is a nullity, at least when directly attacked. (Edwards vs. McCoy, supra.) This principle emanates from the more fundamental
principle that the genius of constitutional government is contrary to the vesting of unlimited power anywhere. Law is both a
grant and a limitation upon power.
The decision appealed from is hereby reversed and the case remanded to the Public Service Commission for further
proceedings in accordance with law and this decision, without any pronouncement regarding costs. So ordered.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-12191 October 14, 1918
JOSE CANGCO, plaintiff-appellant,
vs.
MANILA RAILROAD CO., defendant-appellee.
Ramon Sotelo for appellant.
Kincaid & Hartigan for appellee.
FISHER, J.:
At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the employment of Manila
Railroad Company in the capacity of clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of
Rizal, which is located upon the line of the defendant railroad company; and in coming daily by train to the company's office in
the city of Manila where he worked, he used a pass, supplied by the company, which entitled him to ride upon the company's
trains free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose from his seat in the second class-car
where he was riding and, making, his exit through the door, took his position upon the steps of the coach, seizing the upright
guardrail with his right hand for support.
On the side of the train where passengers alight at the San Mateo station there is a cement platform which begins to rise with a
moderate gradient some distance away from the company's office and extends along in front of said office for a distance
sufficient to cover the length of several coaches. As the train slowed down another passenger, named Emilio Zuiga, also an
employee of the railroad company, got off the same car, alighting safely at the point where the platform begins to rise from the
level of the ground. When the train had proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of
his feet came in contact with a sack of watermelons with the result that his feet slipped from under him and he fell violently on
the platform. His body at once rolled from the platform and was drawn under the moving car, where his right arm was badly
crushed and lacerated. It appears that after the plaintiff alighted from the train the car moved forward possibly six meters
before it came to a full stop.
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted dimly by a single light
located some distance away, objects on the platform where the accident occurred were difficult to discern especially to a
person emerging from a lighted car.
The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found in the fact that it was
the customary season for harvesting these melons and a large lot had been brought to the station for the shipment to the
market. They were contained in numerous sacks which has been piled on the platform in a row one upon another. The
testimony shows that this row of sacks was so placed of melons and the edge of platform; and it is clear that the fall of the
plaintiff was due to the fact that his foot alighted upon one of these melons at the moment he stepped upon the platform. His
statement that he failed to see these objects in the darkness is readily to be credited.
The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the injuries which he had
received were very serious. He was therefore brought at once to a certain hospital in the city of Manila where an examination
was made and his arm was amputated. The result of this operation was unsatisfactory, and the plaintiff was then carried to
another hospital where a second operation was performed and the member was again amputated higher up near the shoulder.
It appears in evidence that the plaintiff expended the sum of P790.25 in the form of medical and surgical fees and for other
expenses in connection with the process of his curation.
Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to recover damages of
the defendant company, founding his action upon the negligence of the servants and employees of the defendant in placing the
sacks of melons upon the platform and leaving them so placed as to be a menace to the security of passenger alighting from the
company's trains. At the hearing in the Court of First Instance, his Honor, the trial judge, found the facts substantially as above
stated, and drew therefrom his conclusion to the effect that, although negligence was attributable to the defendant by reason
of the fact that the sacks of melons were so placed as to obstruct passengers passing to and from the cars, nevertheless, the
plaintiff himself had failed to use due caution in alighting from the coach and was therefore precluded form recovering.
Judgment was accordingly entered in favor of the defendant company, and the plaintiff appealed.
It can not be doubted that the employees of the railroad company were guilty of negligence in piling these sacks on the
platform in the manner above stated; that their presence caused the plaintiff to fall as he alighted from the train; and that they
therefore constituted an effective legal cause of the injuries sustained by the plaintiff. It necessarily follows that the defendant
company is liable for the damage thereby occasioned unless recovery is barred by the plaintiff's own contributory negligence.
In resolving this problem it is necessary that each of these conceptions of liability, to-wit, the primary responsibility of the
defendant company and the contributory negligence of the plaintiff should be separately examined.
It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the
obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of
the failure of defendant to exercise due care in its performance. That is to say, its liability is direct and immediate, differing
essentially, in legal viewpoint from that presumptive responsibility for the negligence of its servants, imposed by article 1903
of the Civil Code, which can be rebutted by proof of the exercise of due care in their selection and supervision. Article 1903 of
the Civil Code is not applicable to obligations arising ex contractu, but only to extra-contractual obligations or to use the
technical form of expression, that article relates only to culpa aquiliana and not to culpa contractual.
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly points out this distinction,
which was also recognized by this Court in its decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In
commenting upon article 1093 Manresa clearly points out the difference between "culpa, substantive and independent, which
of itself constitutes the source of an obligation between persons not formerly connected by any legal tie" and culpa considered
as an accident in the performance of an obligation already existing . . . ."
In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition that article 1903 of the
Civil Code is not applicable to acts of negligence which constitute the breach of a contract.
Upon this point the Court said:
The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be those not
growing out of pre-existing duties of the parties to one another. But where relations already formed give rise to
duties, whether springing from contract or quasi-contract, then breaches of those duties are subject to article 1101,
1103, and 1104 of the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)
This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases imposed upon
employers with respect to damages occasioned by the negligence of their employees to persons to whom they are not bound
by contract, is not based, as in the English Common Law, upon the principle of respondeat superior if it were, the master
would be liable in every case and unconditionally but upon the principle announced in article 1902 of the Civil Code, which
imposes upon all persons who by their fault or negligence, do injury to another, the obligation of making good the damage
caused. One who places a powerful automobile in the hands of a servant whom he knows to be ignorant of the method of
managing such a vehicle, is himself guilty of an act of negligence which makes him liable for all the consequences of his
imprudence. The obligation to make good the damage arises at the very instant that the unskillful servant, while acting within
the scope of his employment causes the injury. The liability of the master is personal and direct. But, if the master has not been
guilty of any negligence whatever in the selection and direction of the servant, he is not liable for the acts of the latter,
whatever done within the scope of his employment or not, if the damage done by the servant does not amount to a breach of
the contract between the master and the person injured.
It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves the master from
liability for the latter's acts on the contrary, that proof shows that the responsibility has never existed. As Manresa says (vol.
8, p. 68) the liability arising from extra-contractual culpa is always based upon a voluntary act or omission which, without
willful intent, but by mere negligence or inattention, has caused damage to another. A master who exercises all possible care in
the selection of his servant, taking into consideration the qualifications they should possess for the discharge of the duties
which it is his purpose to confide to them, and directs them with equal diligence, thereby performs his duty to third persons to
whom he is bound by no contractual ties, and he incurs no liability whatever if, by reason of the negligence of his servants,
even within the scope of their employment, such third person suffer damage. True it is that under article 1903 of the Civil Code
the law creates a presumption that he has been negligent in the selection or direction of his servant, but the presumption is
rebuttable and yield to proof of due care and diligence in this respect.
The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico Code, has held that these
articles are applicable to cases of extra-contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)
This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua and Leynes, (30 Phil. rep.,
624), which was an action brought upon the theory of the extra-contractual liability of the defendant to respond for the
damage caused by the carelessness of his employee while acting within the scope of his employment. The Court, after citing
the last paragraph of article 1903 of the Civil Code, said:
From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or
employee there instantly arises a presumption of law that there was negligence on the part of the master or employer
either in selection of the servant or employee, or in supervision over him after the selection, or both; and (2) that that
presumption is juris tantum and not juris et de jure, and consequently, may be rebutted. It follows necessarily that if
the employer shows to the satisfaction of the court that in selection and supervision he has exercised the care and
diligence of a good father of a family, the presumption is overcome and he is relieved from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant. This
is the notable peculiarity of the Spanish law of negligence. It is, of course, in striking contrast to the American doctrine
that, in relations with strangers, the negligence of the servant in conclusively the negligence of the master.
The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based upon negligence, it is
necessary that there shall have been some fault attributable to the defendant personally, and that the last paragraph of article
1903 merely establishes a rebuttable presumption, is in complete accord with the authoritative opinion of Manresa, who says
(vol. 12, p. 611) that the liability created by article 1903 is imposed by reason of the breach of the duties inherent in the
special relations of authority or superiority existing between the person called upon to repair the damage and the one who, by
his act or omission, was the cause of it.
On the other hand, the liability of masters and employers for the negligent acts or omissions of their servants or agents, when
such acts or omissions cause damages which amount to the breach of a contact, is not based upon a mere presumption of the
master's negligence in their selection or control, and proof of exercise of the utmost diligence and care in this regard does not
relieve the master of his liability for the breach of his contract.
Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual obligation has its source in the
breach or omission of those mutual duties which civilized society imposes upon it members, or which arise from these
relations, other than contractual, of certain members of society to others, generally embraced in the concept of status. The
legal rights of each member of society constitute the measure of the corresponding legal duties, mainly negative in character,
which the existence of those rights imposes upon all other members of society. The breach of these general duties whether due
to willful intent or to mere inattention, if productive of injury, give rise to an obligation to indemnify the injured party. The
fundamental distinction between obligations of this character and those which arise from contract, rests upon the fact that in
cases of non-contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris,
whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties
when entering into the contractual relation.
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the
legislature to elect and our Legislature has so elected whom such an obligation is imposed is morally culpable, or, on the
contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include
responsibility for the negligence of those person who acts or mission are imputable, by a legal fiction, to others who are in a
position to exercise an absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit
extra-contractual liability with certain well-defined exceptions to cases in which moral culpability can be directly
imputed to the persons to be charged. This moral responsibility may consist in having failed to exercise due care in the
selection and control of one's agents or servants, or in the control of persons who, by reason of their status, occupy a position
of dependency with respect to the person made liable for their conduct.
The position of a natural or juridical person who has undertaken by contract to render service to another, is wholly different
from that to which article 1903 relates. When the sources of the obligation upon which plaintiff's cause of action depends is a
negligent act or omission, the burden of proof rests upon plaintiff to prove the negligence if he does not his action fails. But
when the facts averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that plaintiff
has failed or refused to perform the contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of
the contract is due to willful fault or to negligence on the part of the defendant, or of his servants or agents. Proof of the
contract and of its nonperformance is sufficientprima facie to warrant a recovery.
As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor should assume the burden of
proof of its existence, as the only fact upon which his action is based; while on the contrary, in a case of negligence
which presupposes the existence of a contractual obligation, if the creditor shows that it exists and that it has been
broken, it is not necessary for him to prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).
As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach was due to the negligent
conduct of defendant or of his servants, even though such be in fact the actual cause of the breach, it is obvious that proof on
the part of defendant that the negligence or omission of his servants or agents caused the breach of the contract would not
constitute a defense to the action. If the negligence of servants or agents could be invoked as a means of discharging the
liability arising from contract, the anomalous result would be that person acting through the medium of agents or servants in
the performance of their contracts, would be in a better position than those acting in person. If one delivers a valuable watch
to watchmaker who contract to repair it, and the bailee, by a personal negligent act causes its destruction, he is unquestionably
liable. Would it be logical to free him from his liability for the breach of his contract, which involves the duty to exercise due
care in the preservation of the watch, if he shows that it was his servant whose negligence caused the injury? If such a theory
could be accepted, juridical persons would enjoy practically complete immunity from damages arising from the breach of their
contracts if caused by negligent acts as such juridical persons can of necessity only act through agents or servants, and it
would no doubt be true in most instances that reasonable care had been taken in selection and direction of such servants. If
one delivers securities to a banking corporation as collateral, and they are lost by reason of the negligence of some clerk
employed by the bank, would it be just and reasonable to permit the bank to relieve itself of liability for the breach of its
contract to return the collateral upon the payment of the debt by proving that due care had been exercised in the selection and
direction of the clerk?
This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a mere incident to the
performance of a contract has frequently been recognized by the supreme court of Spain. (Sentencias of June 27, 1894;
November 20, 1896; and December 13, 1896.) In the decisions of November 20, 1896, it appeared that plaintiff's action
arose ex contractu, but that defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a defense.
The Spanish Supreme Court rejected defendant's contention, saying:
These are not cases of injury caused, without any pre-existing obligation, by fault or negligence, such as those to which
article 1902 of the Civil Code relates, but of damages caused by the defendant's failure to carry out the undertakings
imposed by the contracts . . . .
A brief review of the earlier decision of this court involving the liability of employers for damage done by the negligent acts of
their servants will show that in no case has the court ever decided that the negligence of the defendant's servants has been
held to constitute a defense to an action for damages for breach of contract.
In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was not liable for the damages
caused by the negligence of his driver. In that case the court commented on the fact that no evidence had been adduced in the
trial court that the defendant had been negligent in the employment of the driver, or that he had any knowledge of his lack of
skill or carefulness.
In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued the defendant for
damages caused by the loss of a barge belonging to plaintiff which was allowed to get adrift by the negligence of defendant's
servants in the course of the performance of a contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the
"obligation of the defendant grew out of a contract made between it and the plaintiff . . . we do not think that the provisions of
articles 1902 and 1903 are applicable to the case."
In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover damages for the personal
injuries caused by the negligence of defendant's chauffeur while driving defendant's automobile in which defendant was riding
at the time. The court found that the damages were caused by the negligence of the driver of the automobile, but held that the
master was not liable, although he was present at the time, saying:
. . . unless the negligent acts of the driver are continued for a length of time as to give the owner a reasonable
opportunity to observe them and to direct the driver to desist therefrom. . . . The act complained of must be continued
in the presence of the owner for such length of time that the owner by his acquiescence, makes the driver's acts his
own.
In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep., 8), it is true that the court
rested its conclusion as to the liability of the defendant upon article 1903, although the facts disclosed that the injury
complaint of by plaintiff constituted a breach of the duty to him arising out of the contract of transportation. The express
ground of the decision in this case was that article 1903, in dealing with the liability of a master for the negligent acts of his
servants "makes the distinction between private individuals and public enterprise;" that as to the latter the law creates a
rebuttable presumption of negligence in the selection or direction of servants; and that in the particular case the presumption
of negligence had not been overcome.
It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though founded in tort rather
than as based upon the breach of the contract of carriage, and an examination of the pleadings and of the briefs shows that the
questions of law were in fact discussed upon this theory. Viewed from the standpoint of the defendant the practical result
must have been the same in any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent
and that his negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that defendant had been
guilty of negligence in its failure to exercise proper discretion in the direction of the servant. Defendant was, therefore, liable
for the injury suffered by plaintiff, whether the breach of the duty were to be regarded as constituting culpa aquiliana or culpa
contractual. As Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in the course of the
performance of a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its essential
characteristics are identical. There is always an act or omission productive of damage due to carelessness or inattention on the
part of the defendant. Consequently, when the court holds that a defendant is liable in damages for having failed to exercise
due care, either directly, or in failing to exercise proper care in the selection and direction of his servants, the practical result is
identical in either case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada case that
defendant was liable for the damages negligently caused by its servants to a person to whom it was bound by contract, and
made reference to the fact that the defendant was negligent in the selection and control of its servants, that in such a case the
court would have held that it would have been a good defense to the action, if presented squarely upon the theory of the
breach of the contract, for defendant to have proved that it did in fact exercise care in the selection and control of the servant.
The true explanation of such cases is to be found by directing the attention to the relative spheres of contractual and extra-
contractual obligations. The field of non- contractual obligation is much more broader than that of contractual obligations,
comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively speaking, concentric; that is
to say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such
person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act
which constitutes the source of an extra-contractual obligation had no contract existed between the parties.
The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide
safe means of entering and leaving its trains (civil code, article 1258). That duty, being contractual, was direct and immediate,
and its non-performance could not be excused by proof that the fault was morally imputable to defendant's servants.
The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in
placing an obstruction upon the platform was a breach of its contractual obligation to maintain safe means of approaching and
leaving its trains, the direct and proximate cause of the injury suffered by plaintiff was his own contributory negligence in
failing to wait until the train had come to a complete stop before alighting. Under the doctrine of comparative negligence
announced in the Rakes case (supra), if the accident was caused by plaintiff's own negligence, no liability is imposed upon
defendant's negligence and plaintiff's negligence merely contributed to his injury, the damages should be apportioned. It is,
therefore, important to ascertain if defendant was in fact guilty of negligence.
It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the particular injury
suffered by him could not have occurred. Defendant contends, and cites many authorities in support of the contention, that it is
negligence per se for a passenger to alight from a moving train. We are not disposed to subscribe to this doctrine in its absolute
form. We are of the opinion that this proposition is too badly stated and is at variance with the experience of every-day life. In
this particular instance, that the train was barely moving when plaintiff alighted is shown conclusively by the fact that it came
to stop within six meters from the place where he stepped from it. Thousands of person alight from trains under these
conditions every day of the year, and sustain no injury where the company has kept its platform free from dangerous
obstructions. There is no reason to believe that plaintiff would have suffered any injury whatever in alighting as he did had it
not been for defendant's negligent failure to perform its duty to provide a safe alighting place.
We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's work on Negligence
(vol. 3, sec. 3010) as follows:
The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a
moving railway train, is that of ordinary or reasonable care. It is to be considered whether an ordinarily prudent
person, of the age, sex and condition of the passenger, would have acted as the passenger acted under the
circumstances disclosed by the evidence. This care has been defined to be, not the care which may or should be used
by the prudent man generally, but the care which a man of ordinary prudence would use under similar circumstances,
to avoid injury." (Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)
Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep., 809), we may say that the
test is this; Was there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which
would have admonished a person of average prudence that to get off the train under the conditions then existing was
dangerous? If so, the plaintiff should have desisted from alighting; and his failure so to desist was contributory
negligence.1awph!l.net
As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect that plaintiff was
guilty of contributory negligence is that he stepped off the car without being able to discern clearly the condition of the
platform and while the train was yet slowly moving. In considering the situation thus presented, it should not be overlooked
that the plaintiff was, as we find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the
platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities
for safe egress from its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him to the
contrary, that the platform was clear. The place, as we have already stated, was dark, or dimly lighted, and this also is proof of
a failure upon the part of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by any possibility
concede that it had right to pile these sacks in the path of alighting passengers, the placing of them adequately so that their
presence would be revealed.
As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following circumstances are
to be noted: The company's platform was constructed upon a level higher than that of the roadbed and the surrounding
ground. The distance from the steps of the car to the spot where the alighting passenger would place his feet on the platform
was thus reduced, thereby decreasing the risk incident to stepping off. The nature of the platform, constructed as it was of
cement material, also assured to the passenger a stable and even surface on which to alight. Furthermore, the plaintiff was
possessed of the vigor and agility of young manhood, and it was by no means so risky for him to get off while the train was yet
moving as the same act would have been in an aged or feeble person. In determining the question of contributory negligence in
performing such act that is to say, whether the passenger acted prudently or recklessly the age, sex, and physical
condition of the passenger are circumstances necessarily affecting the safety of the passenger, and should be considered.
Women, it has been observed, as a general rule are less capable than men of alighting with safety under such conditions, as the
nature of their wearing apparel obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly
familiar to the plaintiff as it was his daily custom to get on and of the train at this station. There could, therefore, be no
uncertainty in his mind with regard either to the length of the step which he was required to take or the character of the
platform where he was alighting. Our conclusion is that the conduct of the plaintiff in undertaking to alight while the train was
yet slightly under way was not characterized by imprudence and that therefore he was not guilty of contributory negligence.
The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a copyist clerk, and that the
injuries he has suffered have permanently disabled him from continuing that employment. Defendant has not shown that any
other gainful occupation is open to plaintiff. His expectancy of life, according to the standard mortality tables, is approximately
thirty-three years. We are of the opinion that a fair compensation for the damage suffered by him for his permanent disability
is the sum of P2,500, and that he is also entitled to recover of defendant the additional sum of P790.25 for medical attention,
hospital services, and other incidental expenditures connected with the treatment of his injuries.
The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of P3,290.25, and for the costs
of both instances. So ordered.


EN BANC
[G.R. No. L-8194. July 11, 1956.]
EMERENCIANA M. VDA. DE MEDINA, ET AL., Plaintiffs-Appellees, vs. GUILLERMO CRESENCIA, ET AL., Defendants.
GUILLERMO CRESENCIA, Appellant.

D E C I S I O N
REYES, J.B.L., J.:
Appeal by Defendant Guillermo Cresencia from the judgment of the Court of First Instance of Manila in its civil case No. 19890,
sentencing Appellant, jointly and severally with his co-Defendant Brigido Avorque, to pay Plaintiffs Emerencia M. Vda. de
Medina and her minor children damages in the total amount of P56,000, P5,000 attorneys fees, and costs.
It appears that on May 31, 1953, passenger jeepney bearing plate No. TPU-2232 (Manila), driven by Brigido Avorque, smashed
into a Meralco post on Azcarraga Street, resulting in the death of Vicente Medina, one of its passengers. A criminal case for
homicide through reckless imprudence was filed against Avorque (criminal case No. 22775 of the Court of First Instance of
Manila), to which he pleaded guilty on September 9, 1953. The heirs of the deceased, however, reserved their right to file a
separate action for damages, and on June 16, 1953, brought suit against the driver Brigido Avorque and Appellant Guillermo
Cresencia, the registered owner and operator of the jeepney in question. Defendant Brigido Avorque did not file any
answer; chan roblesvirtualawlibrarywhile Defendant Cresencia answered, disclaiming liability on the ground that he had sold
the jeepney in question on October 14, 1950 to one Maria A. Cudiamat; chan roblesvirtualawlibrarythat the jeepney had been
repeatedly sold by one buyer after another, until the vehicle was purchased on January 29, 1953 by Rosario Avorque, the
absolute owner thereof at the time of the accident. In view of Cresencias answer, Plaintiffs filed leave, and was allowed, to
amend their complaint making Rosario Avorque a co-Defendant; chan roblesvirtualawlibraryand the latter, by way of answer,
admitted having purchased the aforesaid jeepney on May 31, 1953, but alleged in defense that she was never the public utility
operator thereof. The case then proceeded to trial, during which, after the Plaintiffs had presented their
evidence, Defendants Guillermo Cresencia and Rosario Avorque made manifestations admitting that the former was still the
registered operator of the jeepney in question in the records of the Motor Vehicles Office and the Public Service Commission,
while the latter was the owner thereof at the time of the accident; chan roblesvirtualawlibraryand submitted the case for the
decision on the question of who, as between the two, should be held liable to Plaintiffs for damages. The lower court, by Judge
Jose Zulueta, held that as far as the public is concerned, Defendant Cresencia, in the eyes of the law, continued to be the legal
owner of the jeepney in question; chan roblesvirtualawlibraryand rendered judgment against him, jointly and severally with
the driver Brigido Avorque, for P6,000 compensatory damages, P30,000 moral damages, P10,000 exemplary damages,
P10,000 nominal damages, P5,000 attorneys fees, and costs, while Defendant Rosario Avorque was absolved from liability.
From this judgment, Defendant Cresencia appealed.
We have already held in the case of Montoya vs. Ignacio, 94 Phil., 182 (December 29, 1953), which the court below cited, that
the law (section 20 [g], C. A. No. 146 as amended) requires the approval of the Public Service Commission in order that a
franchise, or any privilege pertaining thereto, may be sold or leased without infringing the certificate issued to the
grantee; chan roblesvirtualawlibraryand that if property covered by the franchise is transferred or leased without this
requisite approval, the transfer is not binding against the public or the Service Commission; chan roblesvirtualawlibraryand in
contemplation of law, the grantee of record continues to be responsible under the franchise in relation to the Commission and
to the public. There we gave the reason for this rule to be as follows:chanroblesvirtuallawlibrary
cralaw Since a franchise is personal in nature any transfer or lease thereof should be notified to the Public Service
Commission so that the latter may take proper safeguards to protect the interest of the public. In fact, the law requires that,
before the approval is granted, there should be a public hearing, with notice to all interested parties, in order that the
Commission may determine if there are good and reasonable grounds justifying the transfer or lease of the property covered
by the franchise, or if the sale or lease is detrimental to public interest cralaw .
The above ruling was later reiterated in the cases of Timbol vs. Osias, L-7547, April 30, 1955 and Roque vs. Malibay Transit
Inc., L- 8561, November 18, 1955.
As the sale of the jeepney here in question was admittedly without the approval of the Public Service
Commission, Appellant herein, Guillermo Cresencia, who is the registered owner and operator thereof, continued to be liable
to the Commission and the public for the consequences incident to its operation. Wherefore, the lower court did not err in
holding him, and not the buyer Rosario Avorque, responsible for the damages sustained by Plaintiff by reason of the death of
Vicente Medina resulting from the reckless negligence of the jeepneys driver, Brigido Avorque.
Appellant also argues that the basis of Plaintiffs action being the employers subsidiary liability under the Revised Penal Code
for damages arising from his employees criminal acts, it is Defendant Rosario Avorque who should answer subsidiarily for the
damages sustained byPlaintiffs, since she admits that she, and not Appellant, is the employer of the negligent driver Brigido
Avorque. The argument is untenable, because Plaintiffs action for damages is independent of the criminal case filed against
Brigido Avorque, and based, not on the employers subsidiary liability under the Revised Penal Code, but on a breach of the
carriers contractual obligation to carry his passengers safely to their destination (culpa contractual). And it is also for this
reason that there is no need of first proving the insolvency of the driver Brigido Avorque before damages can be recovered
from the carrier, for in culpa contractual, the liability of the carrier is not merely subsidiary or secondary, but direct and
immediate (Articles 1755, 1756, and 1759, New Civil Code).
The propriety of the damages awarded has not been questioned, Nevertheless, it is patent upon the record that the award of
P10,000 by way of nominal damages is untenable as a matter of law, since nominal damages cannot co-exist with
compensatory damages. The purpose of nominal damages is to vindicate or recognize a right that has been violated, in order to
preclude further contest thereon; chan roblesvirtualawlibraryand not for the purpose of indemnifying the Plaintiff for any
loss suffered by him (Articles 2221, 2223, new Civil Code.) Since the court below has already awarded compensatory and
exemplary damages that are in themselves a judicial recognition that Plaintiffs right was violated, the award of nominal
damages is unnecessary and improper. Anyway, ten thousand pesos cannot, in common sense, be deemed nominal.
With the modification that the award of P10,000 nominal damages be eliminated, the decision appealed from is affirmed.
Costs against Appellant. SO ORDERED.


FIRST DIVISION
[G.R. No. L-46558 : July 31, 1981.]
PHILIPPINE AIR LINES, INC., Petitioner, vs. THE COURT OF APPEALS and JESUS V. SAMSON, Respondents.

D E C I S I O N

GUERRERO, J.:

This is a petition for review on Certiorari of the decision of the Court of Appeals 1 dated April 18, 1977, affirming with
modification the decision of the Court of First Instance of Albay in Civil Case No. 1279, entitled Jesus V. Samson, plaintiff, vs.
Philippine Air Lines, Inc., defendant, for damages.
The dispositive portion of the trial courts decision reads:
WHEREFORE, for all the foregoing considerations, judgment is hereby rendered in favor of the plaintiff and against the
defendant ordering the defendant to pay the plaintiff, the following sums: P1988,000.00 as unearned income or damages;
P50,000.00 for moral damages; P20,000.00 as attorneys fees and P5,000.00 as expenses of litigation, or a total of P273,000.00.
Costs against the defendant.
The appellate court modified the above decision, to wit:
However, Plaintiff-Appellee, who has been deprived of his job since 1954, is entitled to the legal rate of interest on the
P198,000.00 unearned income from the filing of the complaint cranad(Sec. 8, Rule 51, Rules of Court).
WHEREFORE, with the modification indicated above, the judgment appealed from is affirmed, with costs against
defendant-appellant.
The complaint filed on July 1, 1954 by plaintiff Jesus V. Samson, private respondent herein, averred that on January 8, 1951, he
flew as co-pilot on a regular flight from Manila to Legaspi with stops at Daet, Camarines Norte and Pili, Camarines Sur, with
Captain Delfin Bustamante as commanding pilot of a C-47 plane belonging to defendant Philippine Air Lines, Inc., now the
herein petitioner; that on attempting to land the plane at Daet airport, Captain Delfin Bustamante due to his very slow reaction
and poor judgment overshot the airfield and as a result, notwithstanding the diligent efforts of the plaintiff co-pilot to avert an
accident, the airplane crashlanded beyond the runway; that the jolt caused the head of the plaintiff to hit and break through
the thick front windshield of the airplane causing him severe brain concussion, wounds and abrasions on the forehead with
intense pain and suffering cranad(par. 6, complaint).:onad
The complaint further alleged that instead of giving plaintiff expert and proper medical treatment called for by the nature and
severity of his injuries, defendant simply referred him to a company physician, a general medical practitioner, who limited the
treatment to the exterior injuries without examining the severe brain concussion of plaintiff cranad(par. 7, complaint); that
several days after the accident, defendant Philippine Air Lines called back the plaintiff to active duty as co-pilot, and inspite of
the latters repeated request for expert medical assistance, defendant had not given him anycranad(par. 8, complaint); that as
a consequence of the brain injury sustained by plaintiff from the crash, he had been having periodic dizzy spells and had been
suffering from general debility and nervousness cranad(par. 9, complaint); that defendant airline company instead of
submitting the plaintiff to expert medical treatment, discharged the latter from its employ on December 21, 1953 on grounds
of physical disability, thereby causing plaintiff not only to lose his job but to become physically unfit to continue as aviator due
to defendants negligence in not giving him the proper medical attentioncranad(pars. 10-11, complaint). Plaintiff prayed for
damages in the amount of P180,000.00 representing his unearned income, P50,000.00 as moral damages, P20,000.00 as
attorneys fees and P5,000.00 as expenses, or a total of P255,000.00.
In its answer filed on July 28, 1954, defendant PAL denied the substantial averments in the complaint, alleging among others,
that the accident was due solely and exclusively to inevitable unforeseen circumstances whereby plaintiff sustained only
superficial wounds and minor injuries which were promptly treated by defendants medical personnel cranad(par. 5, answer);
that plaintiff did not sustain brain injury or cerebral concussion from the accident since he passed the annual physical and
medical examination given thereafter on April 24, 1951; that the headaches and dizziness experienced by plaintiff were due to
emotional disturbance over his inability to pass the required up-grading or promotional course given by defendant
company cranad(par. 6, answer), and that, as confirmed by an expert neuro-surgeon, plaintiff was suffering-from neurosis and
in view of this unfitness and disqualification from continuing as a pilot, defendant had to terminate plaintiffs
employment cranad(pars. 7, 9, answer).
Further, defendant alleged that by the very nature of its business as a common carrier, it is bound to employ only pilots who
are proficient and in good mental, emotional and physical condition; that the pilot, Captain Delfin Bustamante, was a
competent and proficient pilot, and although he was already afflicted with a tumor of the nasopharynx even before the
accident of January 8, 1951, the Civil Aeronautics Administration, in passing upon the fitness of pilots, gave Capt. Bustamante a
waiver of physical standards to enable him to retain his first class airman certificate since the affliction had not in the least
affected his proficiency cranad(pars. 16-17, answer). By way of counterclaim, defendant prayed for P10,000.00 as expenses for
the litigation.
On March 25, 1958, defendant filed a Motion to Dismiss on the ground that the complaint is essentially a Workmens
Compensation claim, stating a cause of action not cognizable within the general jurisdiction of the court. The Motion to Dismiss
was denied in the order of April 14, 1958. After the reception of evidence, the trial court rendered on January 15, 1973 the
decision, the dispositive portion of which has been earlier cited.
The defendant Philippine Air Lines, Inc. appealed the decision to the Court of Appeals as being contrary to law and
unsupported by the evidence. It raised as errors of the trial court cranad(a) the holding that the damages allegedly suffered by
plaintiff are attributable to the accident of January 8, 1951 which was due to the negligence of defendant in having allowed
Capt. Delfin Bustamante to continue flying despite his alleged slow reaction and poor judgment; cranad(b) the finding that
defendant was negligent in not having given plaintiff proper and adequate expert medical treatment and assistance for the
injuries allegedly sustained in the accident of January 8, 1951; andcranad(c) in ordering defendant to pay actual or
compensatory damages, moral damages and attorneys fees to the plaintiff.
On April 18, 1977, the Court of Appeals rendered its decision affirming the judgment of the lower court but modified the
award of damages by imposing legal rate of interest on the P198,000.00 unearned income from the filing of the complaint,
citing Sec. 8, Rule 51 of the Rules of Court.
Its motion for reconsideration of the above judgment having been denied, Philippine Air Lines, Inc. filed this instant petition
for Certiorari on the ground that the decision is not in accord with law or with the applicable jurisprudence, aside from its
being replete with findings in the nature of speculation, surmises and conjectures not borne out by the evidence on record
thereby resulting to misapprehension of facts and amounting to a grave abuse of discretion cranad(p. 7, Petition).
Petitioner raises the fundamental question in the case at bar as follows: Is there a causal connection between the injuries
suffered by private respondent during the accident on 8 January 1951 and the subsequent periodic dizzy spells, headache and
general debility of which private respondent complained every now and then, on the one hand, and such periodic dizzy
spells, headache and general debility allegedly caused by the accident and private respondents eventual discharge from
employment, on the other? PAL submits that respondent courts award of damages to private respondent is anchored on
findings in the nature of speculations, surmises and conjectures and not borne out by the evidence on record, thereby resulting
in a misapprehension of facts and amounting to a grave abuse of discretion.
Petitioners submission is without merit.
As found by the respondent court, the following are the essential facts of the case:
It appears that plaintiff, a licensee aviator, was employed by defendant a few years prior to January 8, 1951 as a
regular co-pilot on a guaranteed basic salary of P750.00 a month. He was assigned to and/or paired with pilot Delfin
Bustamante.
Sometime in December 1950, he complained to defendant through its authorized official about the slow reaction and
poor judgment of pilot Delfin Bustamante. Notwithstanding said complaint, defendant allowed the pilot to continue
flying.
On January 8, 1951, the two manned the regular afternoon flight of defendants plane from Manila to Legaspi, with
stops at Daet, Camarines Norte, and Pili, Camarines Sur. Upon making a landing at Daet, the pilot, with his slow
reaction and poor judgment, overshot the airfield and, as a result of and notwithstanding diligent efforts of plaintiff to
avert an accident, the airplane crash-landed beyond the runway into a mangrove. The jolt and impact caused plaintiff
to hit his head upon the front windshield of the plane thereby causing his brain concussions and wounds on the
forehead, with concomittant intense pain.
Plaintiff was not given proper medical attention and treatment demanded by the nature and severity of his injuries.
Defendant merely referred him to its clinic attended by general practitioners on his external injuries. His brain injury
was never examined, much less treated. On top of that negligence, defendant recalled plaintiff to active duty as a co-
pilot, completely ignoring his plea for expert medical assistance.
Suffering periodic dizzy spells, headache and general debility, plaintiff every now and then complained to defendant.
To make matters worst for plaintiff, defendant discharged him from his employment on December 21, 1953. In
consequence, plaintiff has been beset with additional worries, basically financial. He is now a liability instead of a
provider, of his family.
On July 1, 1954, plaintiff filed a complaint for damages. Defendant vainly sought to dismiss the complaint after filing
an answer. Then, the judgment and this appeal.
Continuing, the respondent Court of Appeals further held:
There is no question about the employment of plaintiff by defendant, his age and salary, the overshooting by pilot
Bustamante of the airfield and crashlanding in a mangrove, his hitting his head on the front windshield of the plane,
his intermittent dizzy spells, headache and general debility for which he was discharged from his employment on
December 21, 1953. As the lower court aptly stated:
From the evidence adduced by the parties, the Court finds the following facts to be uncontroverted: That the
plaintiff Jesus V. Samson, on January 8, 1951 and a few years prior thereto, December 21, 1953, was a duly
licensed pilot employed as a regular co-pilot of the defendant with assignment in its domestic air service in
the Philippines; that on January 8, 1951, the defendants airplane met an accident in crashlanding at the Daet
Airport, Camarines Norte by overshooting the runway and reaching the mangroves at the edge of the landing
strip; that the jolt caused plaintiffs head to hit the front windshield of the airplane causing him to suffer
wounds and abrasion on the forehead; that the defendant, instead of giving the plaintiff expert and proper
medical treatment called for by the nature and severity of the injuries of the plaintiff, simply referred him to
the clinic of the defendants physicians who are only general medical practitioners and not brain specialists;
that the defendants physicians limited their treatment to the exterior injuries on the forehead of the plaintiff
and made no examination of the severe concussion of the brain of the plaintiff; that the Medical Director and
Flight Surgeon of the defendant were not able to definitely determine the cause of the complaint of the
plaintiff as to the periodic attack of dizziness, spells and headache; that due to this laxity of the defendants
physician and the continuous suffering of the ailment of the plaintiff complained of, he demanded for expert
medical assistance for his brain injury and to send him to the United States, which demand was turned down
and in effect denied by the defendant; that instead the defendant referred the plaintiff to a neurologist, Dr.
Victor Reyes; that from the time that said accident occurred on January 21, 1953, he was ordered grounded
on several occasions because of his complaint of dizzy spells and headache; that instead of submitting the
plaintiff to expert medical treatment as demanded by him and denied by the defendant, he was discharged
from its employment on December 21, 1953 on the ground of physical disability, and that the plaintiff, at the
time when the defendants plane met the accident, up to the time he was discharged, was regularly employed
as a co-pilot and receiving a basic salary of P750.00 a month plus extra pay for flying time, and bonuses
amounting to P300.00 a month.
Even defendant-appellant itself admits as not controverted the following facts which generally admit what have been
stated above as not controverted.
In the case at bar, the following facts are not the subject of controversy:
(1) First, that from July 1950 to 21 December 1953, plaintiff was employed with defendant company as a first
officer or co-pilot and served in that capacity in defendants domestic services.
(2) Second, that on January 1951, plaintiff did fly on defendants PI-C 94, as first officer or co-pilot, with the
late Capt. Delfin Bustamante in command as pilot; that while making a landing at the Daet airport on that
date, PI-C 94 did meet an accident as stated above.
(3) Third, that at or about the time of the discharge from defendant company, plaintiff had complained of
spells of dizziness, headaches and nervousness, by reason of which he was grounded from flight duty. In
short, that at that time, or approximately from November 1953 up to the date of his discharge on 21
December 1953, plaintiff was actually physically unfit to discharge his duties as pilot.
(4) Fourth, that plaintiffs unfitness for flight duty was properly established after a thorough medical
examination by competent medical experts.cralaw cranad(pp. 11-12, appellants brief)
hence, there can hardly be an issue, factual, legal or medical.
Taking exception from the rest of the essential facts of the case as found by the respondent court PAL claims said facts are
not fully borne out by the evidence on record and insists that the injuries suffered by private respondent during the accident
on January 8, 1951 were superficial in nature; that the periodic spells, headache, and general debility complaint of every now
and then by private respondent subsequent to the Jan. 8, 1951 incident were due to emotional disturbances and that no
negligence can be attributed to Capt. Delfin Bustamante much less to PAL for the occurrence on January 8, 1951, hence PAL
cannot be held liable for damages.
Petitioner claims absence of any causal connection between private respondents superficial injuries and his alleged
subsequent periodic spells, headache and general debility, pointing out that these subsequent ailments were found by
competent physician, including an expert neuro-surgeon, to be due to emotional disturbances insights the conclusions of Dr.
Trajano V. Bernardo that respondents complaints were psychosomatic symptoms on the basis of declarations made by
respondent himself, which conclusions are supported by similar diagnosis made by Drs. Damaceno J. Ago and Villaraza stating
that respondent Samson was suffering from neurosis as well as the report of Dr. Victor Reyes, a neurological specialist,
indicating that the symptoms were probably, most probably due to psychogenic factors and have no organic basis.
In claiming that there is no factual basis for the finding of the respondent court that the crash-landing caused respondents
brain concussion . cra ., with concomittant intense pain, for on the contrary, testimonial evidence establish the superficiality
of the injuries sustained by respondent during the accident of January 8, 1951, petitioner quotes portions of the testimony of
Dr. Manuel S. Sayas, who declared that he removed the band-aid on the forehead of respondent and that he found out after
removal that the latter had two contussed superficial wounds over the supra orbiter regions or just above the eyes measuring
one centimeter long and one millimeter deep. He examined and found his blood pressure normal, no discharges from the nose
and ears. Dr. Trajano V. Bernardo also testified that when he examined respondent Samson three days after the accident, the
wound was already healed and found nothing wrong with his ears, nose and throat so that he was declared fit for duty after
the sixth day.
Petitioner goes further. It contends that there is no causal connection between respondents superficial injuries sustained
during the accident on January 8, 1951 and plaintiffs discharge from employment with PAL on December 21, 1953. According
to PAL, it was the repeated recurrence of respondents neurasthenic symptoms cranad(dizzy spells, headache, nervousness)
which prompted PALs Flight Surgeon, Dr. Bernardo, to recommend that plaintiff be grounded permanently as respondent was
psychologically unfit to resume his duties as pilot. PAL concludes that respondents eventual discharge from employment
with PAL was effected for absolutely valid reasons, and only after he was thoroughly examined and found unfit to carry out his
responsibilities and duties as a pilot.:onad
We agree with the respondent court in finding that the dizzy spells, headache and general debility of private respondent
Samson was an after-effect of the crash-landing and We find that such holding is supported by substantial evidence, which We
quote from the courts decision, to wit:
Defendant would imply that plaintiff suffered only superficial wounds which were treated and not brain injury. It
would, by the opinion of its company doctors, Dr. Bernardo and Dr. Reyes, attribute the dizzy spells and headache to
organic or as phychosomatic, neurasthenic or psychogenic, which we find outlandishly exaggerated.
That plaintiffs condition as psychosomatic rather than organic in nature is allegedly confirmed by the fact that on
six cranad(6) separate occasions after the accident he passed the required CAA physical examination for airmans
certificate. cranad(Exhs. 78, 79, 80, 81, 83 and 92). We noticed, however, that there were other similar physical
examinations conducted by the CAA on the person of plaintiff the report on which were not presented in evidence.
Obviously, only those which suited defendants cause were hand-picked and offered in evidence.
We hesitate to accept the opinion of the defendants two physicians, considering that Dr. Bernardo admittedly
referred to Dr. Reyes because he could not determine the cause of the dizzy spells and headache and the latter
admitted that it is extremely hard to be certain of the cause of his dizzy spells, and suggested a possibility that it was
due to postraumatic syndrome, evidently due to the injuries suffered by the plaintiff in hitting the forehead against the
windshield of the plane during the accident. Judgment are not based on possibilities.
The admitted difficulty of defendants doctors in determining the cause of the dizzy spells and headache cannot be a
sound basis for finding against the plaintiff and in favor of defendant. Whatever it might be, the fact is that such dizzy
spells, headache and general debility was an after-effect of the crash-landing. Be it brain injury or psychosomatic,
neurasthenic or psychogenic, there is no gainsaying the fact that it was caused by the crash-landing. As an effect of the
cause, not fabricated or concocted, plaintiff has to be indemnified. The fact is that such effect caused his discharge.
We are prone to believe the testimony of the plaintiffs doctors.
Dr. Morales, a surgeon, found that blood was coming from plaintiffs ears and nose. He testified that plaintiff was
suffering from cerebral concussion as a result of traumatic injury to the brain caused by his head hitting on the
windshield of the plane during the crash-landing cranad(Exhibit G).
Dr. Conrado Aramil, a neurologist and psychiatrist with experience in two hospitals abroad, found abnormality
reflected by the electroencephalogram examination in the frontal area on both sides of plaintiffs head cranad(Exhibits
K, K-1).
The opinion of these two specialist renders unnecessary that of plaintiffs wife who is a physician in her own right and
because of her relation to the plaintiff, her testimony and opinion may not be discussed here, although her testimony
is crystallized by the opinions of Dr. Ador Dionisio, Dr. Marquez, Dr. Jose O. Chan, Dr. Yambao and Dr. Sandico.
Even the doctors presented by defendant admit vital facts about plaintiffs brain injury. Dr. Bernardo admits that due
to the incident, the plaintiff continuously complained of his fainting spells, dizziness and headache everytime he flew
as a co-pilot and everytime he went to defendants clinic no less than 25 timescranad(Exhibits 15 to 36), that he
complained of the same to Dr. Reyes; that he promised to help send plaintiff to the United States for expert medical
assistance provided that whatever finding thereat should not be attributed to the crash-landing incident to which
plaintiff did not agree and that plaintiff was completely ignored by the defendant in his plea for expert medical
assistance. They admitted that they could not determine definitely the cause of the fainting spells, dizziness and
headache, which justifies the demand for expert medical assistance.
We also find the imputation of gross negligence by respondent court to PAL for having allowed Capt. Delfin Bustamante to fly
on that fateful day of the accident on January 8, 1951 to be correct, and We affirm the same, duly supported as it is by
substantial evidence, clearly established and cited in the decision of said court which states as follows:
The pilot was sick. He admittedly had tumor of the nasopharynx cranad(nose). He is now in the Great Beyond. The
spot is very near the brain and the eyes. Tumor on the spot will affect the sinus, the breathing, the eyes which are very
near it. No one will certify the fitness to fly a plane of one suffering from the disease.
. cra . The fact First Pilot Bustamante has a long standing tumor of the Nasopharynx for which reason he was
grounded since November 1947 is admitted in the letter cranad(Exh. 69-A) of Dr. Bernardo to the Medical Director of
the CAA requesting waiver of physical standards. The request for waiver of physical standards is itself a positive proof
that the physical condition of Capt. Bustamante is short of the standard set by the CAA. The Deputy Administrator of
the CAA granted the request relying on the representation and recommendation made by Dr. Bernardo cranad(See
Exh. 69). We noted, however, that the request cranad(Exh. 69-A) says that it is believed that his continuing to fly as a
co-pilot does not involve any hazard.cralaw cranad(Italics supplied). Flying as a First Officer entails a very different
responsibility than flying as a mere co-pilot. Defendant requested the CAA to allow Capt. Bustamante to fly merely as a
co-pilot and it is safe to conclude that the CAA approved the request thus allowing Bustamante to fly only as a co-pilot.
For having allowed Bustamante to fly as a First Officer on January 8, 1951, defendant is guilty of gross negligence and
therefore should be made liable for the resulting accident.
As established by the evidence, the pilot used to get treatments from Dr. Sycangco. He used to complain of pain in the face
more particularly in the nose which caused him to have sleepless nights. Plaintiffs observation of the pilot was reported to the
Chief Pilot who did nothing about it. Captain Carbonel of the defendant corroborated plaintiff of this matter. The complaint
against the slow reaction of the pilot at least proved the observation. The observation could be disregarded. The fact that the
complaint was not in writing does not detract anything from the seriousness thereof, considering that a miscalculation would
not only cause the death of the crew but also of the passengers.
One month prior to the crash-landing, when the pilot was preparing to land in Daet, plaintiff warned him that they were not in
the vicinity of Daet but above the town of Ligao. The plane hit outside the airstrip. In another instance, the pilot would hit the
Mayon Volcano had not plaintiff warned him. These more than prove what plaintiff had complained of. Disregard thereof by
defendant is condemnable.
To bolster the claim that Capt. Bustamante has not suffered from any kind of sickness which hampered his flying ability,
appellant contends that for at least one or more years following the accident of January 8, 1951, Capt. Bustamante continued to
fly for defendant company as a pilot, and did so with great skill and proficiency, and without any further accident or mishap,
citing tsn. pp. 756-765, January 20, 1965. We have painstakingly perused the records, particularly the transcript of
stenographic notes cited, but found nothing therein to substantiate appellants contention. Instead, We discovered that the
citation covers the testimony of Dr. Bernardo on the physical condition of Bustamante and nothing about his skills or
proficiency to fly nor on the mishaps or accidents, matters which are beyond Dr. Bernardos competence anyway.
Assuming that the pilot was not sick or that the tumor did not affect the pilot in managing the plane, the evidence shows that
the overshooting of the runway and crash-landing at the mangrove was caused by the pilot for which acts the defendant must
answer for damages caused thereby. And for this negligence of defendants employee, it is liable cranad(Joaquin vs. Aniceto, 12
SCRA 308). At least, the law presumes the employer negligent imposing upon it the burden of proving that it exercised the
diligence of a good father of a family in the supervision of its employees.
Defendant would want to tie plaintiff to the report he signed about the crash-landing. The report was prepared by his pilot and
because the latter pleaded that he had a family too and would have nowhere to go if he lost his job, plaintiffs compassion
would not upturn the truth about the crash-landing. We are for the truth not logic of any argumentation.
At any rate, it is incorrect to say that the Accident Report cranad(Exh. 12 & 12-A), signed by plaintiff, exculpated Capt.
Bustamante from any fault. We observed that the Report does not categorically state that Capt. Bustamante was not at fault. It
merely relates in chronological sequence what Capt. Bustamante and plaintiff did from the take-off from Manila to the landing
in Daet which resulted in an accident. On the contrary, we may infer the negligence of Bustamante from the following portion
of the Report, to wit:
. cra . I felt his brakes strong but as we neared the intersection of the NE-SW runway, the brakes were not as strong
and I glanced at the system pressure which indicated 900 lbs. per sq. m.
It was during the above precise instance that Capt. Bustamante lost his bearing and disposition. Had he maintained the
pressure on the brakes the plane would not have overshot the runway. Verily, Bustamante displayed slow reaction and poor
judgment.cranad(CA decision, pp. 8-12).
This Court is not impressed by, much less can We accept petitioners invocation to calibrate once again the evidence testified
to in detail and plucked from the voluminous transcript to support petitioners own conclusion. It is not the task of this Court
to discharge the functions of a trier of facts much less to enter into a calibration of the evidence, notwithstanding petitioners
wail that the judgment of the respondent court is based entirely on speculations, surmises and conjectures. We are convinced
that respondent courts judgment is supported by strong, clear and substantial evidence.:onad
Petitioner is a common carrier engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public, as defined in Art. 1732, New Civil Code. The law is clear in
requiring a common carrier to exercise the highest degree of care in the discharge of its duty and business of carriage and
transportation under Arts. 1733, 1755 and 1756 of the New Civil Code. These Articles provide:
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to
all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, and 1745, Nos. 5, 6, and 7,
while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passenger safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755.
The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the
members of the crew or the complement operating the carrier, the airplane in the case at bar. And this must be so for any
omission, lapse or neglect thereof will certainly result to the damage, prejudice, nay injuries and even death to all aboard the
plane, passengers and crew members alike.
Now to the damages. The Court of Appeals affirmed the award of damages made by the trial court, stating that the damages
awarded plaintiff by the lower court are in accordance with the facts, law and jurisprudence. The court further observed that
defendant-appellant is still fortunate, considering that the unearned income was reckoned with only up to 1968 and not up to
the present as plaintiff-appellee is still living. Whatever mathematical error defendant-appellant could show by abstract
argumentation, the same must be compensated by such deficiency of the damages awarded to plaintiff-appellee.
As awarded by the trial court, private respondent was entitled to P198,000.00 as unearned income or compensatory damages;
P50,000.00 for moral damages, P20,000.00 as attorneys fees and P5,000.00 as expenses of litigation, or a total of P273,000.00.
The trial court arrived at the sum of P198,000.00 as unearned income or damages by considering that respondent Samson
could have continued to work as airline pilot for fifteen more years, he being only 38 years at the time the services were
terminated by the defendant cranad(PAL) and he would have earned P120,000.00 from 1954 to 1963 or a period of
ten cranad(10) years at the rate of one thousand per month cranad(P750.00 basic salary plus P300.00 extra pay for extra
flying time and bonuses; and considering further that in 1964 the basic pay of defendants pilot was increased to P12,000.00
annually, the plaintiff could have earned from 1964 to 1968 the sum of P60,000.00 in the form of salaries and another
P18,000.00 as bonuses and extra pay for extra flying time at the same rate of P300 a month, or a grand total of P198,000.00 for
the entire period. This claim of the plaintiff for loss or impairment of earning capacity is based on the provision of Article 2205
of the New Civil Code of the Philippines which provides that damages may be recovered for loss or impairment of earning
capacity in cases of temporary or permanent personal injury. This provision of law has been construed and interpreted in the
case of Aureliano Ropato, et al. vs. La Mallorca General Partnership, 56 O.G., 7812, which rules that law allows the recovery of
damages for loss or impairment of earning capacity in cases of temporary or permanent personal
injury. chanroblesvirtualawlibrary(Decision, CFI, pp. 98-99, Record on Appeal)
The respondent appellate court modified the above award by ordering payment of legal interest on the P198,000.00 unearned
income from the filing of the claim, citing Sec. 8, Rule 51 of the Rules of Court.
Petitioner assails the award of the total sum of P198,000.00 as unearned income up to 1968 as being tenuous because firstly,
the trial courts finding affirmed by the respondent court is allegedly based on pure speculation and conjecture and secondly,
the award of P300.00 a month as extra pay for extra flying time from 1954 to 1968 is likewise speculative. PAL likewise rejects
the award of moral damages in the amount of P50,000.00 on the ground that private respondents action before the trial court
does not fall under any of the cases enumerated in the law cranad(Art. 2219 of the New Civil Code) for which moral damages
are recoverable and that although private respondents action gives the appearance that it is covered under quasi-delict as
provided in Art. 21 of the New Civil Code, the definition of quasi-delict in Art. 2176 of the New Civil Code expressly excludes
cases where there is a pre-existing contractual relation between the parties, as in the case under consideration, where an
employer-employee relationship existed between PAL and private respondent. It is further argued that private respondents
action cannot be deemed to be covered by Art. 21, inasmuch as there is no evidence on record to show that PAL wilfully
cause(d) loss or injury tocranad(private respondent) in a manner that is contrary to morals, good customs or public policy
. cra . Nor can private respondents action be considered analogous to either of the foregoing, for the reasons are obvious
that it is not. chanroblesvirtualawlibrary(Memorandum of petitioner, pp. 418-421, Records)
Having affirmed the gross negligence of PAL in allowing Capt. Delfin Bustamante to fly the plane to Daet on January 8, 1951
whose slow reaction and poor judgment was the cause of the crash-landing of the plane which resulted in private respondent
Samson hitting his head against the windshield and causing him injuries for which reason PAL terminated his services and
employment as pilot after refusing to provide him with the necessary medical treatment of respondents periodic spells,
headache and general debility produced from said injuries, We must necessarily affirm likewise the award of damages or
compensation under the provisions of Art. 1711 and Art. 1712 of the New Civil Code which provide:
Art. 1711. Owners of enterprises and other employers are obliged to pay compensation for the death or injuries to their
laborers, workmen, mechanics or other employees, even though the event may have been purely accidental or entirely due to a
fortuitous cause, if the death or personal injury arose out of and in the course of the employment. The employer is also liable
for compensation if the employee contracts any illness or disease caused by such employment or as the result of the nature of
the employment. If the mishap was due to the employees own notorious negligence, or voluntary act, or drunkenness, the
employer shall not be liable for compensation. When the employees lack of due care contributed to his death or injury, the
compensation shall be equitably reduced.
Art. 1712. If the death or injury is due to the negligence of a fellow-worker, the latter and the employer shall be solidarily liable
for compensation. If a fellow-workers intentional or malicious act is the only cause of the death or injury, the employer shall
not be answerable, unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the
plaintiffs fellow-worker.
The grant of compensatory damages to the private respondent made by the trial court and affirmed by the appellate court by
computing his basic salary per annum at P750.00 a month as basic salary and P300.00 a month for extra pay for extra flying
time including bonus given in December every year is justified. The correct computation however should be P750 plus P300 x
12 months = P12,600 per annum x 10 years = P126,000.00 cranad(not P120,000.00 as computed by the court a quo). The
further grant of increase in the basic pay of the pilots to P12,000 annually for 1964 to 1968 totalling P60,000.00 and another
P18,000.00 as bonuses and extra pay for extra flying time at the same rate of P300.00 a month totals P78,000.00. Adding
P126,000.00 cranad(1964 to 1968 compensation) makes a grand total of P204,000.00 cranad(not P198,000.00 as originally
computed).
As to the grant of moral damages in the sum of P50,000.00 We also approve the same. We have noted and considered the
holding of the appellate court in the matter of bad faith on the part of PAL, stated hereunder, this wise:
None of the essential facts material to the determination of the case have been seriously assailed: the overshooting of
runway and crash-landing into the mangroves; the hitting of plaintiffs head to the front windshield of the plane; the
oozing of blood out of his ears, nose and mouth; the intermittent dizzy spells, headaches and general debility
thereafter for which he was discharged from his employment; the condition of not to attribute the cause of the ailment
to the crash-landing imposed in bad faith for a demanded special medical service abroad; and the resultant brain
injury which defendants doctors could not understand nor diagnose.
x x x
The act of defendant-appellant in unjustly refusing plaintiff-appellees demand for special medical service abroad for
the reason that plaintiff-appellees deteriorating physical condition was not due to the accident violates the provisions
of Article 19 of the Civil Code on human relations to act with justice, give everyone his due, and observe honesty and
good faith. chanroblesvirtualawlibrary(CA Resolution, pp. 151-152, Records)
We reject the theory of petitioner that private respondent is not entitled to moral damages. Under the facts found by the trial
court and affirmed by the appellate court and under the law and jurisprudence cited and applied, the grant of moral damages
in the amount of P50,000.00 is proper and justified.
The fact that private respondent suffered physical injuries in the head when the plane crash-landed due to the negligence of
Capt. Bustamante is undeniable. The negligence of the latter is clearly a quasi-delict and therefore Article 2219, cranad(2) New
Civil Code is applicable, justifying the recovery of moral damages.
Even from the standpoint of the petitioner that there is an employer-employee relationship between it and private respondent
arising from the contract of employment, private respondent is still entitled to moral damages in view of the finding of bad
faith or malice by the appellate court, which finding We hereby affirm, applying the provisions of Art. 2220, New Civil Code
which provides that willful injury to property may be a legal ground for awarding moral damages if the court should find that,
under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant
acted fraudulently or in bad faith.
The justification in the award of moral damages under Art. 19 of the New Civil Code on Human Relations which requires that
every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith, as applied by respondent court is also well-taken and We hereby give Our affirmance thereto.
With respect to the award of attorneys fees in the sum of P20,000.00 the same is likewise correct. As pointed out in the
decision of the Court of Appeals, the plaintiff is entitled to attorneys fees because he was forced to litigate in order to enforce
his valid claim cranad(Ganaban vs. Bayle, 30 SCRA 365; De la Cruz vs. De la Cruz, 22 SCRA 33; and many others); defendant
acted in bad faith in refusing plaintiffs valid claimcranad(Filipino Pipe Foundry Corporation vs. Central Bank, 23 SCRA 1044);
and plaintiff was dismissed and was forced to go to court to vindicate his right cranad(Nadura vs. Benguet Consolidated, Inc., 5
SCRA 879).
We also agree with the modification made by the appellate court in ordering payment of legal interest from the date judicial
demand was made by Pilot Samson against PAL with the filing of the complaint in the lower court. We affirm the ruling of the
respondent court which reads:
Lastly, the defendant-appellant claims that the legal rate of interest on the unearned compensation should be
computed from the date of the judgment in the lower court, not from the filing of the complaint, citing a case where
the issue raised in the Supreme Court was limited to when the judgment was rendered in the lower court or in the
appellate court, which does not mean that it should not be computed from the filing of the complaint.
Articles 1169, 2209 and 2212 of the Civil Code govern when interest shall be computed. Thereunder interest begins to
accrue upon demand, extrajudicial or judicial. A complaint is a judicial demand cranad(Cabarroguis vs. Vicente, 107
Phil. 340). Under Article 2212 of the Civil Code, interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point. chanroblesvirtualawlibrary(CA Resolution, pp.
153-154, Records).
The correct amount of compensatory damages upon which legal interest shall accrue from the filing of the complaint is
P204,000.00 as herein computed and not P198,000.00.
WHEREFORE, in view of all the foregoing, the judgment of the appellate court is hereby affirmed with slight modification in
that the correct amount of compensatory damages is P204,000.00. With costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 92501 March 6, 1992
PHILIPPINE AIR LINES, petitioner,
vs.
HON. COURT OF APPEALS and ISIDRO CO, respondents.
GRIO-AQUINO, J.:
This is a petition for review of the decision dated July 19, 1989 of the Court of Appeals affirming the decision of the Regional
Trial Court of Pasay City which awarded P72,766.02 as damages and attorney's fees to private respondent Isidro Co for the
loss of his checked-in baggage as a passenger of petitioner airline.
The findings of the trial court, which were adopted by the appellate court, are:
"At about 5:30 a.m. on April 17, 1985, plaintiff [Co], accompanied by his wife and son, arrived at the Manila
International Airport aboard defendant airline's PAL Flight No. 107 from San Francisco, California, U.S.A. Soon
after his embarking (sic), plaintiff proceeded to the baggage retrieval area to claim his checks in his
possession. Plaintiff found eight of his luggage, but despite diligent search, he failed to locate ninth luggage,
with claim check number 729113 which is the one in question in this case.
"Plaintiff then immediately notified defendant company through its employee, Willy Guevarra, who was then
in charge of the PAL claim counter at the airport. Willy Guevarra, who testified during the trial court on April
11, 1986, filled up the printed form known as a Property Irregularity Report (Exh. "A"), acknowledging one of
the plaintiff's luggages to be missing (Exh. "A-1"), and signed after asking plaintiff himself to sign the same
document (Exh. "A-2"). In accordance with this procedure in cases of this nature, Willy Guevarra asked
plaintiff to surrender to him the nine claim checks corresponding to the nine luggages, i.e., including the one
that was missing.
The incontestable evidence further shows that plaintiff lost luggage was a Samsonite suitcase measuring
about 62 inches in length, worth about US$200.00 and containing various personal effects purchased by
plaintiff and his wife during their stay in the United States and similar other items sent by their friends
abroad to be given as presents to relatives in the Philippines. Plaintiff's invoices evidencing their purchases
show their missing personal effects to be worth US$1,243.01, in addition to the presents entrusted to them by
their friends which plaintiffs testified to be worth about US$500.00 to US$600.00 (Exhs. "D", "D-1", to "D-17";
tsn, p. 4, July 11, 1985; pp. 5-14, March 7, 1986).
Plaintiff on several occasions unrelentingly called at defendant's office in order to pursue his complaint about
his missing luggage but no avail. Thus, on April 15, 1985, plaintiff through his lawyer wrote a demand letter
to defendant company though Rebecca V. Santos, its manager, Central Baggage Services (Exhs. "B" & "B-1").
On April 17, 1985, Rebecca Santos replied to the demand letter (Exh. "B") acknowledging "that to date we
have been unable to locate your client's (plaintiff's) baggage despite our careful search" and requesting
plaintiff's counsel to "please extend to him our sincere apologies for the inconvenience he was caused by this
unfortunate incident" (Exh. "C"). Despite the letter (Exh. "C"), however, defendants never found plaintiff's
missing luggage or paid its corresponding value. Consequently, on May 3, 1985, plaintiff filed his present
complaint against said defendants. (pp. 38-40, Rollo.)
Co sued the airline for damages. The Regional Trial Court of Pasay City found the defendant airline (now petitioner) liable, and
rendered judgment on June 3, 1986, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered sentencing defendant Philippine Airlines, Inc. to pay plaintiff
Isidro Co:
1) P42,766.02 by way of actual damages;
2) P20,000.00 by way of exemplary damages;
3) P10,000.00 as attorney's fees;
all in addition to the costs of the suit.
"Defendants' counterclaim is hereby dismissed for lack of merit."
(p. 40, Rollo.)
On appeal, the Court of Appeals affirmed in toto the trial court's award.
In his petition for review of the Court of Appeal's decision, petitioner alleges that the appellate court erred:
1. in affirming the conclusion of the trial court that the petitioner's retrieval baggage report was a fabrication;
2. in not applying the limit of liability under the Warsaw Convention which limits the liability of an air carrier
of loss, delay or damage to checked-in baggage to US$20.00 based on weight; and
3. in awarding private respondent Isidro Co actual and exemplary damages, attorney's fees, and costs.
The first and third assignments of error raise purely factual issues which are not reviewable by this Court (Sec. 2, Rule 45,
Rules of Court). The Court reviews only questions of law which must be distinctly set forth in the petition. (Hodges vs. People,
68 Phil. 178.) The probative value of petitioner's retrieval report was passed upon by the Regional Trial Court of Pasay City,
whose finding was affirmed by the Court of Appeals as follows:
In this respect, it is further argued that appellee should produce his claim tag if he had not surrendered it
because there was no baggage received. It appeared, however, that appellee surrendered all the nine claim
checks corresponding to the nine luggages, including the one that was missing, to the PAL officer after
accomplishing the Property, Irregularity Report. Therefore, it could not be possible for appellee to produce
the same in court. It is now for appellant airlines to produce the veracity of their Baggage Retrieval Report by
corroborating evidence other than testimonies of their employees. Such document is within the control of
appellant and necessarily requires other corroborative evidence. Since there is no compelling reason to
reverse the factual findings of the lower court, this Court resolves not to disturb the same. (p. 41, Rollo.)
Whether or not the lost luggage was ever retrieved by the passenger, and whether or not the actual and exemplary damages
awarded by the court to him are reasonable, are factual issues which we may not pass upon in the absence of special
circumstances requiring a review of the evidence.
In Alitalia vs. IAC (192 SCRA 9, 18, citing Pan American World Airways, Inc. vs. IAC 164 SCRA 268), the Warsaw Convention
limiting the carrier's liability was applied because of a simple loss of baggage without any improper conduct on the part of the
officials or employees of the airline, or other special injury sustained by the passengers. The petitioner therein did not declare
a higher value for his luggage, much less did he pay an additional transportation charge.
Petitioner contends that under the Warsaw Convention, its liability, if any, cannot exceed US $20.00 based on weight as private
respondent Co did not declare the contents of his baggage nor pay traditional charges before the flight (p. 3, tsn, July 18, 1985).
We find no merit in that contention. In Samar Mining Company, Inc. vs. Nordeutscher Lloyd (132 SCRA 529), this Court ruled:
The liability of the common carrier for the loss, destruction or deterioration of goods transported from a
foreign country to the Philippines is governed primarily by the New Civil Code. In all matters not regulated by
said Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by
Special Laws.
The provisions of the New Civil Code on common carriers are Articles 1733, 1735 and 1753 which provide:
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article if the goods
are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as required in article 1733.
Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the
common carrier for their loss, destruction or deterioration.
Since the passenger's destination in this case was the Philippines, Philippine law governs the liability of the carrier for the loss
of the passenger's luggage.
In this case, the petitioner failed to overcome, not only the presumption, but more importantly, the private respondent's
evidence, proving that the carrier's negligence was the proximate cause of the loss of his baggage. Furthermore, petitioner
acted in bad faith in faking a retrieval receipt to bail itself out of having to pay Co's claim.
The Court of Appeals therefore did not err in disregarding the limits of liability under the Warsaw Convention.
The award of exemplary damages and attorney's fees to the private respondent was justified. In the cases ofImperial Insurance,
Inc. vs. Simon, 122 Phil. 189 and Bert Osmea and Associates vs. CA, 120 SCRA 396, the appellant was awarded attorney's fees
because of appellee's failure to satisfy the former's just and valid demandable claim which forced the appellant to litigate.
Likewise, in the case of Phil. Surety Ins. Co., Inc. vs. Royal Oil Products, 102 Phil. 326, this Court justified the grant of exemplary
damages and attorney's fees to the petitioner's failure, even refusal, to pay the private respondent's valid claim.
WHEREFORE, the petition for review is DENIED for lack of merit. Costs against the petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 94149 May 5, 1992
AMERICAN HOME ASSURANCE, COMPANY, petitioner,
vs.
THE COURT OF APPEALS and NATIONAL MARINE CORPORATION and/or NATIONAL MARINE CORPORATION
(Manila), respondents.
PARAS, J.:
This is a petition for review on certiorari which seeks to annul and set aside the (a) decision
1
dated May 30, 1990 of the Court
of Appeals in C.A. G.R. SP. No. 20043 entitled "American Home Assurance Company v. Hon. Domingo D. Panis, Judge of the
Regional Trial Court of Manila, Branch 41 and National Marine Corporation and/or National Marine Corporation (Manila)",
dismissing petitioner's petition for certiorari, and (b) resolution
2
dated June 29, 1990 of the Court of Appeals denying
petitioner's motion for reconsideration.
The undisputed facts of the case are follows:
Both petitioner American Home Assurance Co. and the respondent National Marine Corporation are foreign corporations
licensed to do business in the Philippines, the former through its branch. The American Home Assurance Company
(Philippines), Inc. and the latter through its branch. The National Marine Corporation (Manila) (Rollo, p. 20, Annex L, p.1).
That on or about June 19, 1988, Cheng Hwa Pulp Corporation shipped 5,000 bales (1,000 ADMT) of bleached kraft pulp from
Haulien, Taiwan on board "SS Kaunlaran", which is owned and operated by herein respondent National Marine Corporation
with Registration No. PID-224. The said shipment was consigned to Mayleen Paper, Inc. of Manila, which insured the shipment
with herein petitioner American Home Assurance Co. as evidenced by Bill of Lading No. HLMN-01.
On June 22, 1988, the shipment arrived in Manila and was discharged into the custody of the Marina Port Services, Inc., for
eventual delivery to the consignee-assured. However, upon delivery of the shipment to Mayleen Paper, Inc., it was found that
122 bales had either been damaged or lost. The loss was calculated to be 4,360 kilograms with an estimated value of
P61,263.41.
Mayleen Paper, Inc. then duly demanded indemnification from respondent National Marine Corporation for the aforesaid
damages/losses in the shipment but, for apparently no justifiable reason, said demand was not heeded (Petition, p. 4).
As the shipment was insured with petitioner in the amount of US$837,500.00, Mayleen Paper, Inc. sought recovery from the
former. Upon demand and submission of proper documentation, American Home Assurance paid Mayleen Paper, Inc. the
adjusted amount of P31,506.75 for the damages/losses suffered by the shipment, hence, the former was subrogated to the
rights and interests on Mayleen Paper, Inc.
On June 6, 1989, the petitioner, as subrogee, then brought suit against respondent for the recovery of the amount of
P31.506.75 and 25% of the total amount due as attorney's fees, by filing a complaint for recovery of sum of money (Petition, p.
4).
Respondent, National Marine Corporation, filed a motion to dismiss dated August 7, 1989 stating that American Home
Assurance Company had no cause of action based on Article 848 of the Code of Commerce which provides "that claims for
averages shall not be admitted if they do not exceed 5% of the interest which the claimant may have in the vessel or in the
cargo if it be gross average and 1% of the goods damaged if particular average, deducting in both cases the expenses of
appraisal, unless there is an agreement to the contrary." It contended that based on the allegations of the complaint, the loss
sustained in the case was P35,506.75 which is only .18% of P17,420,000.00, the total value of the cargo.
On the other hand, petitioner countered that Article 848 does not apply as it refers to averages and that a particular average
presupposes that the loss or damages is due to an inherent defect of the goods, an accident of the sea, or a force majeure or the
negligence of the crew of the carrier, while claims for damages due to the negligence of the common carrier are governed by
the Civil Code provisions on Common Carriers.
In its order dated November 23, 1989, the Regional Trial Court sustained private respondent's contention. In part it stated:
Before the Court for resolution is a motion for reconsideration filed by defendant through counsel dated
October 6, 1989.
The record shows that last August 8, 1989, defendant through counsel filed a motion to dismiss plaintiff's
complaint.
Resolving the said motion last September 18, 1989, the court ruled to defer resolution thereof until after trial
on the merits. In the motion now under consideration, defendant prays for the reconsideration of the order of
September 18, 1989 and in lieu thereof, another order be entered dismissing plaintiff's complaint.
There appears to be good reasons for the court to take a second look at the issues raised by the defendant.
xxx xxx xxx
It is not disputed defendants that the loss suffered by the shipment is only .18% or less that 1% of the interest
of the consignee on the cargo Invoking the provision of the Article 848 of the Code of Commerce which reads:
Claims for average shall not be admitted if they do not exceed five percent of the interest
which the claimant may have in the vessels or cargo if it is gross average, and one percent of
the goods damaged if particular average, deducting in both cases the expenses of appraisal,
unless there is an agreement to the contrary. (Emphasis supplied)
defendant claims that plaintiff is barred from suing for recovery.
Decisive in this case in whether the loss suffered by the cargo in question is a "particular average."
Particular average, is a loss happening to the ship, freight, or cargo which is not be (sic)
shared by contributing among all those interested, but must be borne by the owner of the
subject to which it occurs. (Black's Law Dictionary, Revised Fourth Edition, p. 172, citing
Bargett v. Insurance Co. 3 Bosw. [N.Y.] 395).
as distinguished from general average which
is a contribution by the several interests engaged in the maritime venture to make good the
loss of one of them for the voluntary sacrifice of a part of the ship or cargo to save the
residue of the property and the lives of those on board, or for extraordinary expenses
necessarily incurred for the common benefit and safety of all (Ibid., citing California
Canneries Co. v. Canton Ins. Office 25 Cal. App. 303, 143 p. 549-553).
From the foregoing definition, it is clear that the damage on the cargo in question, is in the nature of the
"particular average." Since the loss is less than 1% to the value of the cargo and there appears to be no
allegations as to any agreement defendants and the consignee of the goods to the contrary, by express
provision of the law, plaintiff is barred from suing for recovery.
WHEREOF, plaintiff's complaint is hereby dismissed for lack of cause of action. (Rollo, p. 27; Annex A, pp. 3-4).
The petitioner then filed a motion for reconsideration of the order of dismissal but same was denied by the court in its order
dated January 26, 1990 (supra).
Instead of filing an appeal from the order of the court a quo dismissing the complaint for recovery of a sum of money,
American Home Assurance Company filed a petition for certiorari with the Court of Appeals to set aside the two orders or
respondent judge in said court (Rollo, p. 25).
But the Court of Appeals in its decision dated May 30, 1990, dismissed the petition as constituting plain errors of law and not
grave abuse of discretion correctible by certiorari (a Special Civil Action). If at all, respondent court ruled that there are errors
of judgment subject to correction by certiorari as a mode of appeal but the appeal is to the Supreme Court under Section 17 of
the Judiciary Act of 1948 as amended by Republic Act No. 5440. Otherwise stated, respondent Court opined that the proper
remedy is a petition for review on certiorari with the Supreme Court on pure questions of law (Rollo, p. 30).
Hence, this petition.
In a resolution dated December 10, 1990, this Court gave due course to the petition and required both parties to file their
respective memoranda (Rollo, p. 58).
The procedural issue in this case is whether or not certiorari was the proper remedy in the case before the Court of Appeals.
The Court of Appeals ruled that appeal is the proper remedy, for aside from the fact that the two orders dismissing the
complaint for lack of cause of action are final orders within the meaning of Rule 41, Section 2 of the Rules of Court, subject
petition raised questions which if at all, constituting grave abuse of discretion correctible bycertiorari.
Evidently, the Court of Appeals did not err in dismissing the petition for certiorari for as ruled by this Court, an order of
dismissal whether right or wrong is a final order, hence, a proper subject of appeal, not certiorari(Marahay v. Melicor, 181
SCRA 811 (1990]). However, where the fact remains that respondent Court of Appeals obviously in the broader interests of
justice, nevertheless proceeded to decide the petition for certiorari and ruled on specific points raised therein in a manner akin
to what would have been done on assignments of error in a regular appeal, the petition therein was therefore disposed of on
the merits and not on a dismissal due to erroneous choice of remedies or technicalities (Cruz v. I.A.C., 169 SCRA 14 (1989]).
Hence, a review of the decision of the Court of Appeals on the merits against the petitioner in this case is in order.
On the main controversy, the pivotal issue to be resolved is the application of the law on averages (Articles 806, 809 and 848
of the Code of Commerce).
Petitioner avers that respondent court failed to consider that respondent National Marine Corporation being a common
carrier, in conducting its business is regulated by the Civil Code primarily and suppletorily by the Code of Commerce; and that
respondent court refused to consider the Bill of Lading as the law governing the parties.
Private respondent countered that in all matters not covered by the Civil Code, the rights and obligations of the parties shall be
governed by the Code of Commerce and by special laws as provided for in Article 1766 of the Civil Code; that Article 806, 809
and 848 of the Code of Commerce should be applied suppletorily as they provide for the extent of the common carriers'
liability.
This issue has been resolved by this Court in National Development Co. v. C.A. (164 SCRA 593 [1988]; citingEastern Shipping
Lines, Inc. v. I.A.C., 150 SCRA 469, 470 [1987] where it was held that "the law of the country to which the goods are to be
transported persons the liability of the common carrier in case of their loss, destruction or deterioration." (Article 1753, Civil
Code). Thus, for cargoes transported to the Philippines as in the case at bar, the liability of the carrier is governed primarily by
the Civil Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by
the Code of Commerce and by special laws (Article 1766, Civil Code).
Corollary thereto, the Court held further that under Article 1733 of the Civil Code, common carriers from the nature of their
business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for
the safety of passengers transported by them according to all circumstances of each case. Thus, under Article 1735 of the same
Code, in all cases other than those mentioned in Article 1734 thereof, the common carrier shall be presumed to have been at
fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law (Ibid., p.
595).
But more importantly, the Court ruled that common carriers cannot limit their liability for injury or loss of goods where such
injury or loss was caused by its own negligence. Otherwise stated, the law on averages under the Code of Commerce cannot be
applied in determining liability where there is negligence (Ibid., p. 606).
Under the foregoing principle and in line with the Civil Code's mandatory requirement of extraordinary diligence on common
carriers in the car care of goods placed in their stead, it is but reasonable to conclude that the issue of negligence must first be
addressed before the proper provisions of the Code of Commerce on the extent of liability may be applied.
The records show that upon delivery of the shipment in question of Mayleen's warehouse in Manila, 122 bales were found to
be damaged/lost with straps cut or loose, calculated by the so-called "percentage method" at 4,360 kilograms and amounting
to P61,263.41 (Rollo, p. 68). Instead of presenting proof of the exercise of extraordinary diligence as required by law, National
Marine Corporation (NMC) filed its Motion to Dismiss dated August 7, 1989, hypothetically admitting the truth of the facts
alleged in the complaint to the effect that the loss or damage to the 122 bales was due to the negligence or fault of NMC (Rollo,
p. 179). As ruled by this Court, the filing of a motion to dismiss on the ground of lack of cause of action carries with it the
admission of the material facts pleaded in the complaint (Sunbeam Convenience Foods, Inc. v. C.A., 181 SCRA 443 [1990]).
Such being the case, it is evident that the Code of Commerce provisions on averages cannot apply.
On the other hand, Article 1734 of the Civil Code provides that common carriers are responsible for loss, destruction or
deterioration of the goods, unless due to any of the causes enumerated therein. It is obvious that the case at bar does not fall
under any of the exceptions. Thus, American Home Assurance Company is entitled to reimbursement of what it paid to
Mayleen Paper, Inc. as insurer.
Accordingly, it is evident that the findings of respondent Court of Appeals, affirming the findings and conclusions of the court a
quo are not supported by law and jurisprudence.
PREMISES CONSIDERED, (1) the decisions of both the Court of Appeals and the Regional Trial Court of Manila, Branch 41,
appealed from are REVERSED; and (2) private respondent National Marine Corporation is hereby ordered to reimburse the
subrogee, petitioner American Home Assurance Company, the amount of P31,506.75.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15652 December 14, 1920
THE YNCHAUSTI STEAMSHIP COMPANY, petitioner,
vs.
I. B. DEXTER, as Auditor of the Philippine Islands, and C. E. UNSON, as Acting Purchasing Agent of the Philippine
Islands, respondents.
Cohn & Fisher for petitioner.
Attorney-General Paredes and Assistant Attorney-General A. Santos for respondents.
STREET, J.:
This a petition for a writ of mandamus filed in this court of the Ynchausti Steamship Company to compel the Purchasing Agent
of the Philippine Islands and the Insular Auditor to sign, countersign, and deliver to the petitioner a warrant upon the
Treasurer of the Philippine Islands for the sum of P82.79 in satisfaction of a claim for that amount, which is alleged to be due
the petitioner as a common carrier for freight earned in transporting for the Government two distinct consignments of mineral
oil from Manila to two other ports in the Philippine Islands. After the defendants had duly answered, denying all the
allegations of the petition except such as relate to the character and places of residence of the parties to the petition (which are
admitted) the controversy was submitted for determination by this court upon an agreed statement of facts as follows:
On July 23, 1918, the Government of the Philippine Islands, acting by and through the respondent Insular Purchasing
Agent, employed the services of the petitioner, Ynchausti Steamship Co., a common carrier, for the transportation, on
board the steamship Venus, from the port of Manila to the port of Aparri, Cagayan, of a consignment of merchandise,
consisting of thirty (30) cases of "White Rose" mineral oil of two five-gallon cans to the case; and on September 18,
1918, the said Government likewise employed the services of petitioner for the transportation on board the
steamship Venus, from Manila to Aparri, Cagayan, of ninety-six cases of "Cock" Brand mineral oil, ten gallons to the
case. The goods were delivered by the shipper to the carrier, which accordingly received them, and to evidence the
contract of transportation, the parties duly executed and delivered what is popularly called the Government bill of
lading (General Form 9-A), hereto attached, marked Exhibit A and made a part hereof, wherein and whereby it was
stipulated that the carrier, the petitioner Ynchausti & Co., received the above-mentioned supplies in apparent good
condition, obligating itself to carry said supplies to the place agreed upon, in accordance with the authorized and
prescribed rates and classifications, and subject to the law of common carriers in force on the date of the shipment,
and to the conditions prescribed by the Insular Collector of Customs in Philippine Marine Regulations at page 16
under the heading of "Bill of Lading Conditions," hereto attached, marked Exhibit B and made a part hereof.
Upon the delivery of the said shipment of "Cock" brand oil and consignee claimed that one case was delivered empty,
and noted such claim upon the bill of lading; and upon the delivery of the said shipment of "White Rose," brand oil the
consignee claimed that one case was delivered empty, and noted said claim upon the bill of lading.
Thereafter, notwithstanding the protestations of the petitioner, Ynchausti Steamship Co., that said shortages were due
to causes entirely unknown to it, and were not due to any fault or negligence on its part, or on the part of its agents or
servants, the Acting Insular Purchasing Agent of the Philippine Islands notified the petitioners herein that after due
investigation the Insular Auditor found and decided that the leakages of the two whole cases were due to its
negligence and that the deduction of the sum of P22.53, the invoice value of the goods lost, and held by the Auditor to
be the true value thereof had been authorized by the said Insular Auditor.
Petitioner thereupon protested against the threatened deduction, and demanded that it be paid the full amount due
for the transportation of the two said shipments of merchandise, to wit, the sum of P82.79, as shown by its
transportation voucher presented in this cause, hereto attached. marked Exhibit C and made a part hereof.
Thereafter, notwithstanding the protest and demand of the petitioner as aforesaid, the Insular Auditor, in conformity
with his ruling, declined and still declines to issue to the petitioner a warrant for the full sum of P82.79, and has
tendered to it a warrant for the sum of P60.26, which the petitioner has refused to accept.lawphi1.net
The sum of P22.53 authorized to be deducted by the Insular Auditor, as appears herein, has not at any time been
liquidated by consent, agreement, or by the judgment of any court of competent jurisdiction.
Upon a perusal of the foregoing agreed statement it will be seen that the present litigation had its origin in a situation
practically identical with that considered by this court in Compaia General de Tabacos vs. French and Unson (39 Phil., 34). It
will be noted, however, that the case mentioned was decided upon demurrer, while the one now before us is to be heard and
determined upon the petition, answer, and the admitted facts.
We note that in this case, as in the case of Compaia General de Tabacos vs. French and Unson (supra), the petition alleges that
the leakage of the lost gasoline was due to causes unknown to the petitioner and was not due to any fault or negligence of
petitioner, its agents, or servants. The respondents, by demurring to the petition in the earlier case, admitted that allegation. In
the case now before us that allegation is put in issue, and we find nothing in the admitted statement of facts to support it. It
results that if that allegation is material to the relief here sought, the petition must fail.
We are of the opinion that the allegation in question is material and that the belief sought in this case cannot be granted.
In section 646 of the Administrative Code it is provided that when Government property is transmitted from one place to
another by carrier, it shall be upon proper bill of lading, or receipt, from such carrier, and it shall be the duty of the consignee,
or his representative, to make full notation of any evidence of loss, shortage, or damage, upon the bill of lading, or receipt,
before accomplishing it. It is admitted by the petitioner in the agreed statement of facts that the consignee, at the time the oil
was delivered, noted the loss in the present case upon the two respective bills of lading. The notation of these losses by the
consignee, in obedience to the precept of section 646 of the Administrative Code, is competent evidence to show that the
shortage in fact existed. As the petitioner admits that the oil was received by it for carriage and inasmuch as the fact of loss is
proved in the manner just stated, it results that there is a presumption that the petitioner was to blame for the loss; and it was
incumbent upon the petitioner in order to entitle it to relief in the case to rebut that presumption by proving, as is alleged in
the petition, that the loss was not due to any fault or negligence of the petitioner.
The mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of destination in bad order,
makes out a prima facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier
must be held responsible. (4 R. C. L., p. 917.) It is incumbent upon the carrier to prove that the loss was due to accident or
some other circumstance inconsistent with its liability. (Articles
361-363, Code of Commerce.) Indeed, if the Government of the Philippine Islands had instituted an action in a court of law
against the petitioner to recover the value of the oil lost while these consignments were in the court of transportation, it
would, upon the facts appearing before us, have been entitled to judgment.
From this it is apparent that the mandamus prayed for cannot be granted. It is a rule of universal application that a petition for
extraordinary relief of the character here sought must show merit. That is, the petitioner's right to relief must be clear. Such
cannot be said to be the case where, as here, a presumption of responsibility on the part of the petitioner stands unrefuted
upon the record.
We are of the opinion that, in the absence of proof showing that the carrier was not at fault in respect to the matter under
discussion, the Insular Auditor was entitled to withhold, from the amount admittedly due to the petitioner for the freight
charges, a sum sufficient to cover the value of the oil lost in transit.
The petition will be dismissed, with costs against the petitioner. So ordered.


EN BANC
G.R. No. L-29721 March 27, 1929
AMANDO MIRASOL, Plaintiff-Appellant, vs. THE ROBERT DOLLAR CO., Defendant-Appellant.
Vicente Hilado for plaintiff-appellant.
J.A. Wolfson for defendant-appellant.
STATEMENTchanrobles virtual law library
After the promulgation of the decision rendered by the Second Division of February 13, 1929,
1
the defendant filed a motion to
have the case heard and decided in banc, and inasmuch as the legal questions involved are important to the shipping interests,
the court thought it best to do so.chanroblesvirtualawlibrary chanrobles virtual law library
After the formal pleas, plaintiff alleges that he is the owner and consignee of two cases of books, shipped in good order and
condition at New York, U.S.A., on board the defendant's steamshipPresident Garfield, for transport and delivery to the plaintiff
in the City of Manila, all freight charges paid. That the two cases arrived in Manila on September 1, 1927, in bad order and
damaged condition, resulting in the total loss of one case and a partial loss of the other. That the loss in one case is P1,630, and
the other P700, for which he filed his claims, and defendant has refused and neglected to pay, giving as its reason that the
damage in question "was caused by sea water." That plaintiff never entered into any contract with the defendant limiting
defendant's liability as a common carrier, and when he wrote the letter of September 3, 1927, he had not then ascertained the
contents of the damaged case, and could not determine their value. That he never intended to ratify or confirm any agreement
to limit the liability of the defendant. That on September 9, 1927, when the other case was found, plaintiff filed a claim for the
real damage of the books therein named in the sum of $375.chanroblesvirtualawlibrary chanrobles virtual law library
Plaintiff prays for corresponding judgment, with legal interest from the filing of the complaint and
costs.chanroblesvirtualawlibrary chanrobles virtual law library
For answer the defendant made a general and specific denial, and as a separate and special defense alleges that the
steamshipPresident Garfield at all the times alleged was in all respects seaworthy and properly manned, equipped and
supplied, and fit for the voyage. That the damage to plaintiff's merchandise, if any, was not caused through the negligence of
the vessel, its master, agent, officers, crew, tackle or appurtenances, nor by reason of the vessel being unseaworthy or
improperly manned, "but that such damage, if any, resulted from faults or errors in navigation or in the management of said
vessel." As a second separate and special defense, defendant alleges that in the bill of lading issued by the defendant to
plaintiff, it was agreed in writing that defendant should not be "held liable for any loss of, or damage to, any of said
merchandise resulting from any of the following causes, to wit: Acts of God, perils of the sea or other waters," and that
plaintiff's damage, if any, was caused by "Acts of God" or "perils of the sea." As a third special defense, defendant quoted clause
13 of the bill of lading, in which it is stated that in no case shall it be held liable "for or in respect to said merchandise or
property beyond the sum of two hundred and fifty dollars for any piece, package or any article not enclosed in a package,
unless a higher value is stated herein and ad valorem freight paid or assessed thereon," and that there was no other
agreement. That no September 3, 1927 the plaintiff wrote the defendant a letter as follows:
Therefore, I wish to file claim of damage to the meager maximum value that your bills of lading will indemnify me, that is $250
as per condition 13.
As a fourth special defense, defendant alleges that the damage, if any, was caused by "sea water," and that the bill of lading
exempts defendant from liability for that cause. That damage by "sea water" is a shipper's risk, and that defendant is not
liable.chanroblesvirtualawlibrary chanrobles virtual law library
As a result of the trial upon such issues, the lower court rendered judgment for the plaintiff for P2,080, with legal interest
thereon from the date of the final judgment, with costs, from which both parties appealed, and the plaintiff assigns the
following errors:
I. The lower court erred in holding that plaintiff's damage on account of the loss of the damaged books in the partially
damaged case can be compensated with an indemnity of P450 instead of P750 as claimed by
plaintiff.chanroblesvirtualawlibrary chanrobles virtual law library
II. The lower court, consequently, also erred in giving judgment for plaintiff for only P2,080 instead of
P2,380.chanroblesvirtualawlibrary chanrobles virtual law library
III. The lower court erred in not sentencing defendant to pay legal interest on the amount of the judgment, at least, from the
date of the rendition of said judgment, namely, January 30, 1928.
The defendant assigns the following errors:
I. The lower court erred in failing to recognize the validity of the limited liability clause of the bill of lading, Exhibit
2.chanroblesvirtualawlibrary chanrobles virtual law library
II. The lower court erred in holding defendant liable in any amount and in failing to hold, after its finding as a fact that the
damage was caused by sea water, that the defendant is not liable for such damage by sea
water.chanroblesvirtualawlibrarychanrobles virtual law library
III. The lower court erred in awarding damages in favor of plaintiff and against defendant for P2,080 or in any other amount,
and in admitting, over objection, Exhibits G, H, I and J.
JOHNS, J.:
Plaintiff's contention that he is entitled to P700 for his Encyclopedia Britannica is not tenable. The evidence shows that the
P400 that the court allowed, he could buy a new set which could contain all of the material and the subject matter of the one
which he lost. Plaintiff's third assignment of error is well taken, as under all of the authorities, he is entitled to legal interest
from the date of his judgement rendered in the lower court and not the date when it becomes final. The lower court found that
plaintiff's damage was P2,080, and that finding is sustained by that evidence. There was a total loss of one case and a partial
loss of the other, and in the very nature of the things, plaintiff could not prove his loss in any other way or manner that he did
prove it, and the trial court who heard him testify must have been convinced of the truth of his
testimony.chanroblesvirtualawlibrary chanrobles virtual law library
There is no claim or pretense that the plaintiff signed the bill of lading or that he knew of his contents at the time that it was
issued. In that situation he was not legally bound by the clause which purports to limit defendant's liability. That question was
squarely met and decided by this court in banc in Juan Ysmael and Co., vs. Gabino Baretto and Co., (51 Phil., 90; see numerous
authorities there cited).chanroblesvirtualawlibrary chanrobles virtual law library
Among such authorities in the case of The Kengsington decided by the Supreme Court of the U.S. January 6, 1902 (46 Law. Ed.,
190), in which the opinion was written by the late Chief Justice White, the syllabus of which is as follows:
1. Restrictions of the liability of a steamship company for its own negligence or failure of duty toward the passenger, being
against the public policy enforced by the courts of the United States, will not to be upheld, though the ticket was issued and
accepted in a foreign country and contained a condition making it subject to the law thereof, which sustained such
stipulation.chanroblesvirtualawlibrary chanrobles virtual law library
2. The stipulation in a steamship passenger's ticket, which compels him to value his baggage, at a certain sum, far less than it is
worth, or, in order to have a higher value put upon it, to subject it to the provisions of the Harter Act, by which the carrier
would be exempted from all the liability therefore from errors in navigation or management of the vessel of other negligence is
unreasonable and in conflict with public policy.chanroblesvirtualawlibrary chanrobles virtual law library
3. An arbitrary limitation of 250 francs for the baggage of any steamship passenger unaccompanied by any right to increase
the amount of adequate and reasonable proportional payment, is void as against public policy.
Both the facts upon which it is based and the legal principles involved are square in point in this
case.chanroblesvirtualawlibrary chanrobles virtual law library
The defendant having received the two boxes in good condition, its legal duty was to deliver them to the plaintiff in the same
condition in which it received them. From the time of their delivery to the defendant in New York until they are delivered to
the plaintiff in Manila, the boxes were under the control and supervision of the defendant and beyond the control of the
plaintiff. The defendant having admitted that the boxes were damaged while in transit and in its possession, the burden of
proof then shifted, and it devolved upon the defendant to both allege and prove that the damage was caused by reason of some
fact which exempted it from liability. As to how the boxes were damaged, when or where, was a matter peculiarly and
exclusively within the knowledge of the defendant and in the very nature of things could not be in the knowledge of the
plaintiff. To require the plaintiff to prove as to when and how the damage was caused would force him to call and rely upon the
employees of the defendant's ship, which in legal effect would be to say that he could not recover any damage for any reason.
That is not the law.chanroblesvirtualawlibrary chanrobles virtual law library
Shippers who are forced to ship goods on an ocean liner or any other ship have some legal rights, and when goods are
delivered on board ship in good order and condition, and the shipowner delivers them to the shipper in bad order and
condition, it then devolves upon the shipowner to both allege and prove that the goods were damaged by the reason of some
fact which legally exempts him from liability; otherwise, the shipper would be left without any redress, no matter what may
have caused the damage.chanroblesvirtualawlibrary chanrobles virtual law library
The lower court in its opinion says:
The defendant has not even attempted to prove that the two cases were wet with sea water by fictitious event, force majeure
or nature and defect of the things themselves. Consequently, it must be presumed that it was by causes entirely distinct and in
no manner imputable to the plaintiff, and of which the steamerPresident Garfield or any of its crew could not have been
entirely unaware.
And the evidence for the defendant shows that the damage was largely caused by "sea water," from which it contends that it is
exempt under the provisions of its bill of lading and the provisions of the article 361 of the Code of Commerce, which is as
follows:
Merchandise shall be transported at the risk and venture of the shipper, if the contrary was not expressly
stipulated.chanroblesvirtualawlibrary chanrobles virtual law library
Therefore, all damages and impairment suffered by the goods during the transportation, by reason of accident, force majeure,
or by virtue of the nature or defect of the articles, shall be for the account and risk of the
shipper.chanroblesvirtualawlibrary chanrobles virtual law library
The proof of these accidents is incumbent on the carrier.
In the final analysis, the cases were received by the defendant in New York in good order and condition, and when they arrived
in Manila, they were in bad condition, and one was a total loss. The fact that the cases were damaged by "sea water," standing
alone and within itself, is not evidence that they were damaged by force majeure or for a cause beyond the defendant's control.
The words "perils of the sea," as stated in defendant's brief apply to "all kinds of marine casualties, such as shipwreck,
foundering, stranding," and among other things, it is said: "Tempest, rocks, shoals, icebergs and other obstacles are within the
expression," and "where the peril is the proximate cause of the loss, the shipowner is excused." "Something fortuitous and out
of the ordinary course is involved in both words 'peril' or 'accident'."chanrobles virtual law library
Defendant also cites and relies on the case of Government of the Philippine Islands vs. Ynchausti & Company (40 Phil., 219),
but it appears from a reading of that case that the facts are very different and, hence, it is not in point. In the instant case, there
is no claim or pretense that the two cases were not in good order when received on board the ship, and it is admitted that they
were in bad order on their arrival at Manila. Hence, they must have been damaged in transit. In the very nature of things, if
they were damaged by reason of a tempest, rocks, icebergs, foundering, stranding or the perils of the sea, that would be a
matter exclusively within the knowledge of the officers of defendant's ship, and in the very nature of things would not be
within plaintiff's knowledge, and upon all of such questions, there is a failure of proof.chanroblesvirtualawlibrary chanrobles
virtual law library
The judgment of the lower court will be modified, so as to give the plaintiff legal interest on the amount of his judgment from
the date of its rendition in the lower court, and in all respects affirmed, with costs. So ordered.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 83613 February 21, 1990
FIREMAN'S FUND INSURANCE CO., petitioner,
vs.
METRO PORT SERVICE, INC., (Formerly E. Razon, Inc.), respondent.
Dollete, Blanco, Ejercito & Associates for petitioner.
Cruz, Durian, Agabin, Atienza, Alday & Tuason for respondent.
GUTIERREZ, JR., J.:
This is a petition for review of the decision and resolution denying reconsideration of the Court of Appeals in CA-G.R. CV No.
00673 entitled "Fireman's Fund Insurance Co. v. Maersk Line, Compaia General de Tabacos de Filipinas and E. Razon, Inc."
The facts are as follows:
Vulcan Industrial and Mining Corporation imported from the United States several machineries and equipment which were
loaded on board the SIS Albert Maersk at the port of Philadelphia, U.S.A., and transhipped for Manila through the vessel S/S
Maersk Tempo.
The cargo which was covered by a clean bill of lading issued by Maersk Line and Compania General de Tabacos de Filipinas
(referred to as the CARRIER) consisted of the following:
xxx xxx xxx
1 piece truck mounted core drill
1 piece trailer mounted core drill
1 (40') container of 321 pieces steel tubings
1 (40') container of 170 pieces steel tubings
1 (40') container of 13 cases, 3 crates, 2 pallets and 26 mining machinery parts. (Rollo, p. 4)
The shipment arrived at the port of Manila on June 3, 1979 and was turned over complete and in good order condition to the
arrastre operator E. Razon Inc. (now Metro Port Service Inc. and referred to as the ARRASTRE).
At about 10:20 in the morning of June 8, 1979, a tractor operator, named Danilo Librando and employed by the ARRASTRE,
was ordered to transfer the shipment to the Equipment Yard at Pier 3. While Librando was maneuvering the tractor (owned
and provided by Maersk Line) to the left, the cargo fell from the chassis and hit one of the container vans of American
President Lines. It was discovered that there were no twist lock at the rear end of the chassis where the cargo was loaded.
There was heavy damage to the cargo as the parts of the machineries were broken, denied, cracked and no longer useful for
their purposes.
The value of the damage was estimated at P187,500.00 which amount was paid by the petitioner insurance company to the
consignee, Vulcan Industrial and Mining Corporation.
The petitioner, under its subrogation rights, then filed a suit against Maersk Line, Compania General de Tabacos (as agent) and
E. Razon, Inc., for the recovery of the amount it paid the assured under the covering insurance policy. On October 26, 1980, the
trial court rendered judgment, the decretal portion of which reads as follows:
xxx xxx xxx
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants by ordering
the latter to pay, jointly and severally, the plaintiff the sum of P187,500.00, with legal interest thereon from
August 29, 1980 until full payment thereof.
Defendants are also ordered to pay, in solidum, the sum of P10,000.00 as attorney's fees to the plaintiff, and
to pay the costs of this suit.
There shall be no award for exemplary damages in favor of the plaintiff, for the reason that defendants are
probably acting in good faith in resisting the complaint. (Rollo, pp. 45-46)
All the defendants appealed to the Court of Appeals. Eventually, Maersk Line and Compania General de Tabacos negotiated
with the petitioner for the settlement of the latter's claim and no longer pursued their appeal.
On the appeal of the ARRASTRE, the Court of Appeals rendered a decision with the following dispositive portion:
WHEREFORE, foregoing premises considered, the decision of the court a quo insofar as herein defendant-
appellant is concerned is REVERSED It is hereby ordered that the complaint against herein defendant-
appellant be dismissed. No costs. (Rollo, p. 50)
Reconsideration of the decision was denied in a resolution dated May 23, 1988.
Hence, the present recourse.
The petitioner raises this lone assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN LIMITING LIABILITY SOLELY ON CO-DEFENDANT MAERSK
LINES, CONTRARY TO THE FINDINGS OF FACTS OF THE TRIAL COURT A QUO AND OTHER FACTORS
SHOWING CLEAR JOINT LIABILITY OF DEFENDANTS IN SOLIDUM.
There is merit in this petition.
This Court has held in a number of cases that findings of fact of the Court of Appeals are, in general, conclusive on the Supreme
Court when supported by the evidence on record. The rule is not absolute, however, and allows exceptions, which we find
present in the case at bar. The respondent court's findings of facts are contrary to those of the trial court and appear to be
contradicted by the evidence on record thus calling for our review. (Metro Port Service, Inc. v. Court of Appeals, 131 SCRA 365
[1984]).
In absolving the ARRASTRE, the respondent Court ruled that although Librando was an employee of the ARRASTRE, since he
was included in its payroll, he was technically and strictly an employee of Maersk Line in this particular instance when he
drove the tractor admittedly owned by the foreign shipping line. The Court ruled that he received instructions not from Metro
Port but from Maersk Line relative to this job. He was performing a duty that properly pertained to Maersk Line which, for lack
of a tractor operator, had to get or hire from the ARRASTRE as per their management contract. Nevertheless, Librando was not
remiss in his duty as tractor-driver considering that the proximate and direct cause of the damage was the absence of twist
locks in the rear end of the chassis which Maersk Line failed to provide. The respondent court thereby placed the entire
burden of liability on the owner of the Chassis which in this case was the foreign shipping company, Maersk Line.
The foregoing conclusion disregarded the pertinent findings of facts made by the lower court which are supported by the
evidence on record, to wit:
1. The accident occurred while the cargoes were in the custody of the arrastre operator.
2. The tractor operator was an employee of the arrastre operator.
xxx xxx xxx
4. By the management contract inasmuch as the foreign shipping company has no tractor operator in its
employ, the arrastre provided the operator.
xxx xxx xxx
8. It was likewise the responsibility of the tractor operator, an employee of the arrastre operator to inspect
the chassis and tractor before driving the same, but which obligation the operator failed to do.
9. It was also the responsibility of the supervisor in the employ of the arrastre operator to see that their men
complied with their respective tasks, which included the examination if the chassis has twist lock. (Rollo, pp.
44-45)
The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua
Kian v. Manila Railroad Co., 19 SCRA 5 [1967]). The relationship between the consignee and the common carrier is similar to
that of the consignee and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). Since it is the
duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the
consignee, such responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore charged
with and obligated to deliver the goods in good condition to the consignee.
In general, the nature of the work of an arrastre operator covers the handling of cargoes at piers and wharves (Visayan Cebu
Terminal Co., Inc. v. Commissioner of Internal Revenue, 13 SCRA 357 [1965]). This is embodied in the Management Contract
drawn between the Bureau of Customs and E. Razon Inc., as the Arrastre Operator. The latter agreed to bind itself, to wit:
CLAIMS AND LIABILITY FOR LOSSES AND DAMAGES
1. Responsibility and Liability for Losses and Damages;
Claims. The CONTRACTOR shall, at its own expense handle all merchandise in the piers and other
designated places and at its own expense perform all work undertaken by it hereunder diligently and in
skillful workmanlike and efficient manner; That the CONTRACTOR shall be solely responsible as an
independent CONTRACTOR, and hereby agrees to accept liability and to promptly pay to the s hip company,
consignee, consignor or other interested party or parties for the loss, damage, or non-delivery of cargoes to
the extent of the actual invoice value of each package which in no case shall be more than Three Thousand
Five Hundred Pesos (P3,500.00) for each package unless the value of the importation is otherwise specified
or manifested or communicated in writing together with the invoice value and supported by a certified
packing list to the CONTRACTOR by the interested party or parties before the discharge of the goods, as well
as all damage that may be suffered on account of loss, damage, or destruction of any merchandise while in
custody or under the control of the CONTRACTOR in any pier, shed, warehouse, facility; or other designated
place under the supervision of the BUREAU, but said CONTRACTOR shall not be responsible for the condition
of the contents of any package received nor for the weight, nor for any loss, injury or damage to the said cargo
before or while the goods are being received or remained on the piers, sheds, warehouse or facility if the loss,
injury or damage is caused by force majeure, or other cause beyond the CONTRACTORS control or capacity to
prevent or remedy; ...
xxx xxx xxx
The CONTRACTOR shall be solely responsible for any and all injury or damage that may arise on account of
the negligence or carelessness of the CONTRACTOR, its agent or employees in the performance of the
undertaking by it to be performed under the terms of the contract, and the CONTRACTOR hereby agree to and
hold the BUREAU at all times harmless therefrom and whole or any part thereof. (Original Records, pp. 110-
112; Emphasis supplied)
To carry out its duties, the ARRASTRE is required to provide cargo handling equipment which includes among others trailers,
chassis for containers. In some cases, however, the shipping line has its own cargo handling equipment.
In this particular instance, the records reveal that Maersk Line provided the chassis and the tractor which carried the carried
the subject shipment. It merely requested the ARRASTRE to dispatch a tractor operator to drive the tractor inasmuch as the
foreign shipping line did not have any truck operator in its employ. Such arrangement is allowed between the ARRASTRE and
the CARRIER pursuant to the Management Contract. It was clearly one of the services offered by the ARRASTRE. We agree with
the petitioner that it is the ARRASTRE which had the sole discretion and prerogative to hire and assign Librando to operate the
tractor. It was also the ARRASTRE's sole decision to detail and deploy Librando for the particular task from among its pool of
tractor operators or drivers. It is, therefore, inacurrate to state that Librando should be considered an employee of Maersk
Line on that specific occasion.
Handling cargo is mainly the s principal work so its driver/operators, "cargadors", or employees should observe the stand"
and indispensable measures necessary to prevent losses and damage to shipments under its custody. Since the ARRASTRE
offered its drivers for the operation of tractors in the handling of cargo and equipment, then the ARRASTRE should see to it
that the drivers under its employ must exercise due diligence in the performance of their work. From the testimonies of
witnesses presented, we gather that driver/operator Librando was remiss in his duty. Benildez Cepeda, an arrastre-
investigator of Metro Port admitted that Librando as tractor-operator should first have inspected the chassis and made sure
that the cargo was securely loaded on the chassis. He testified:
xxx xxx xxx
Q My question is in your investigation report including enclosures, the principal reason was
that the chassis has no rear twist lock?
A Yes, sir.
Q Did you investigate whether the driver Librando inspected the the truck before he
operated the same whether there was rear twist lock or not?
A I have asked him about that question whether he had inspected the has any rear twist lock
and the answer he did not inspect, sir.
Q As a operator, do you agree with me that it is the duty also of Librando to see to it that the
truck is in good condition and fit to travel, is that correct?
A Yes, sir.
Q And as a tractor operator it is his duty to see to it that the van mounted on top of the
tractor was properly is that correct?
A Yes, sir. (At pp. 18-20, T.S.N., February 17, 1982)
Again Danilo Librando also admitted that it was usually his practice to inspect not only the tractor but the chassis as well but
failed to do so in this particular instance.
xxx xxx xxx
Q You mentioned of the absence of a twist lock. Will you tell us where is this twist lock
supposed to be located?
A At the rear end of the chassis.
Q Before you operated the tractor which carried the mounted cord drill truck and trailer did
you examine if the chasiss had any twist locks?
A No, sir, because I presumed that it had twist locks and I was confident that it had twist
locks.
Q As a matter of procedure and according to you, you examined the tractor, do you not make
it a practice to examine whether the chassis had any twist locks?
A I used to do that but in that particular instance I thought it had already its twist locks. (p. 8,
T.S.N., October 5, 1981)
It is true that Maersk Line is also at fault for not providing twist locks on the chassis. However, we find the testimony of
Manuel Heraldez who is the Motor Pool General Superintendent of Metro Port rather significant. On cross-examination, he
stated that:
Q In your experience, Mr. witness, do you know which is ahead of the placing of the
container van or the placing of the twist lock on the chassis?
A The twist lock is already permanently attached on the chassis, sir.
Q Earlier, you mentioned that you cannot see the twist lock if the chassis is loaded, correct?
A Yes, sir.
Q Do you what to impress upon the Honorable Court that, by mere looking at a loaded
chassis, the twist lock cannot be seen by the naked eye? Because the van contained a hole in
which the twist lock thus entered inside the hold and locked itself. It is already loaded. So.
you cannot no longer see it.
Q But if you closely examine this chassis which has a load of container van. You can see whether
a twist lock is present or not?
A Yes, sir. A twist lock is present.
Q In other words, if the driver of this tractor closely examined this van, he could have detected
whether or not a twist lock is present?
A Yes, sir. (pp. 33-35, T.S.N., March 23, 1982; Emphasis supplied)
Whether or not the twist lock can be seen by the naked eye when the cargo has been loaded on the chassis, an efficient and
diligent tractor operator must nevertheless check if the cargo is securely loaded on the chassis.
We, therefore, find Metro Port Service Inc., solidarily liable in the instant case for the negligence of its employee. With respect
to the limited liability of the ARRASTRE, the records disclose that the value of the importation was relayed to the arrastre
operator and in fact processed by its chief claims examiner based on the documents submitted.
WHEREFORE, the appealed judgment of respondent Court of Appeals is hereby REVERSED and SET ASIDE and that of the
Court of First Instance of Manila, 6th Judicial District, Branch II is REINSTATED. No costs.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 89757 August 6, 1990
ABOITIZ SHIPPING CORPORATION, petitioner,
vs.
COURT OF APPEALS AND GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, LTD.,respondents.
Sycip, Salazar, Hernandez & Gatmaitan for petitioner.
Dollete, Blanco, Ejercito & Associates for private respondent.
GANCAYCO, J.:
The extent of the liability of a carrier of goods is again brought to the fore in this case.
On October 28, 1980, the vessel M/V "P. Aboitiz" took on board in Hongkong for shipment to Manila some cargo consisting of
one (1) twenty (20)-footer container holding 271 rolls of goods for apparel covered by Bill of Lading No. 515-M and one (1)
forty (40)-footer container holding four hundred forty- seven (447) rolls, ten (10) bulk and ninety-five (95) cartons of goods
for apparel covered by Bill of Lading No. 505-M. The total value, including invoice value, freightage, customs duties, taxes and
similar imports amounts to US$39,885.85 for the first shipment while that of the second shipment amounts to US$94,190.55.
Both shipments were consigned to the Philippine Apparel, Inc. and insured with the General Accident Fire and Life Assurance
Corporation, Ltd. (GAFLAC for short). The vessel is owned and operated by Aboitiz Shipping Corporation (Aboitiz for short).
On October 31, 1980 on its way to Manila the vessel sunk and it was declared lost with all its cargoes. GAFLAC paid the
consignee the amounts US$39,885.85 or P319,086.80 and US$94,190.55 or P753,524.40 for the lost cargo. As GAFLAC was
subrogated to all the rights, interests and actions of the consignee against Aboitiz, it filed an action for damages against Aboitiz
in the Regional Trial Court of Manila alleging that the loss was due to the fault and negligence of Aboitiz and the master and
crew of its vessel in that they did not observe the extraordinary diligence required by law as regards common carriers.
After the issues were joined and the trial on the merits a decision was rendered by the trial court on June 29, 1985, the
dispositive part of which reads as follows:
PREMISES CONSIDERED, the Court finds in favor of the plaintiff and against the defendant, ordering the latter
to pay the former actual damages in the sum of P1,072,611.20 plus legal interest from the date of the filing of
the complaint on October 28, 1981, until full payment thereof, attorney's fees in the amount of 20% of the
total claim and to pay the costs.
SO ORDERED.
1

Not satisfied therewith, Aboitiz appealed to the Court of Appeals wherein in due course a decision was rendered on March 9,
1989 affirming in toto the appealed decision, with costs against defendant Aboitiz .
2

A motion for reconsideration of said decision filed by Aboitiz was denied in a resolution dated August 15, 1989.
Hence the herein petition for review alleging that the Court of Appeals decided the case not in accordance with law when
1. The Court of Appeals held that "findings of administrative bodies are not always binding on court . This is
especially so in the case at bar where GAFLAC was not a party in the BMI proceedings and which proceedings
was not adversary in characther." This ruling is contrary to the principle established in Vasquez vs. Court of
Appeals (138 SCRA 559), where it was held that since the BMI possesses the required expertise in shipping
matters and is imbued with quasi-judicial powers, its factual findings are conclusive and binding on the court.
Likewise, the case of Timber Export Inc. vs. Retla Steamship Co. (CA-G.R. No. 66143-R) also established the rule
that decision of BMI must be given "great materiality and weight to the determination and resolution of the
case."
2. The Court of Appeals also held that the trial court did not err when it fixed the liability of Aboitiz not on the
basis of the stipulation in the bills of lading at US$500.00 per package/container but on the actual value of the
shipment lost notwithstanding the long line of cases decided by this Honorable Supreme Court holding a
contrary opinion, as shown below.
3. The Court of Appeals also held that the trial court did not abuse its discretion in granting GAFLAC's motion
for execution pending appeal notwithstanding the absence of reasonable and justifiable grounds to support
the same.
3

Under the first issue petitioner state that the sinking of the vessel M/V "P. Aboitiz" was the subject of an administrative
investigation conducted by the Board of Marine Inquiry (BMI) whereby in a decision dated December 26, 1984, it was found
that the sinking of the vessel may be attributed to force majeure on account of a typhoon. Petitioner contends that these
findings are conclusive on the courts.
In rejecting the evidence offered by the petitioner the appellate court ruled
But over and above all these considerations, the trial court did not err in not giving weight to the finding of
the BMI that the vessel sank due to a fortuitous event. Findings of administrative bodies are not always
binding on courts. This is especially so in the case at bar where plaintiff was not a party in the BMI
proceedings and which proceeding was not adversary in character.
4

As a general rule, administrative findings of facts are not disturbed by the courts when supported by substantial evidence
unless it is tainted with unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction.
5
Even
in Vasquez vs. Court of Appeals,
6
which is cited by petitioner, this Court ruled that We nevertheless disagree with the
conclusion of the BMI exonerating the captain from any negligence "since it obviously had not taken into account the legal
responsibility of a common carrier towards the security of the passengers involved."
This case was brought to court on October 28, 1981. The trial court was never informed of a parallel administrative
investigation that was being conducted by the BMI in any of the pleadings of the petitioner. It was only on March 22, 1985
when petitioner revealed to the trial court the decision of the BMI dated December 26, 1984 (one day after Christmas
day).
7
The said decision appears to have been rendered over three (3) years after the case was brought to court.
Moreover, said administrative investigation was conducted unilaterally. Private respondent GAFLAC was not notified or given
an opportunity to participate therein. It cannot thereby be bound by said findings and conclusions of the BMI.
The trial court and the appellate court found that the sinking of the M/V "P. Aboitiz" was not due to the waves caused by
tropical storm "Yoning" but due to the fault and negligence of petitioner, its master and crew. The court reproduces with
approval said findings
xxx xxx xxx
After a careful examination of the evidence, the Court is convinced in the plaintiffs claim that the M/V
"Aboitiz" and its cargo were not lost due to fortuitous event or force majeure.
To begin with, paragraph 4 of the marine protest (Exh. "4", also Exhibit "M"), which is defendant's own
evidence, shows that the wind force when the ill-fated ship foundered was 10 to 15 knots. According to the
Beaufort Scale (Exhibit "I"), which is admittedly an accurate reference for measuring wind velocity, the wind
force of 10 to 15 knots is classified as scale No. 4 and described as "moderate breeze," small waves, becoming
longer, fairly frequent white horses. Meteorologist Justo Iglesias, Jr. himself affirms the above description of a
wind force of 10 to 15 knots and adds that the weather condition prevailing under said wind force is usual
and forseeable. Thus Iglesias, Jr. testified:
Q. In the marine protest of the master of the vessel of Aboitiz, there is reference to wind
force from ten to 15 knots. In this Beaufort Scale, will you be able to clarify what this wind
force of 10 to 15 as stated in the marine protest?
A. It will be under Force 4 of the Beaufort Scale.
Q. What is the basis of your answer?
A. 10 to 15 falls within this scale of the Beaufort Scale, Force 4.
Atty. Dollete:
May I read into the records, Your Honor. Force 4, descriptive term moderate breeze. Near
velocity in knots 11-16 meters per second, 5.5-7.9 in kilometers per hour to 20 to 28
kilometers per hour and 13 to 18 miles per hour. Sea the description of this will be small
waves becoming longer fairly frequent white horse (sic).
Q. In the layman's language how do you interpret this white horses?
A. It means white forms. At the top of the crest they were beginning to form white foams.
Q. How about this moderate breeze as described under this Force 4 of the Beaufort Scale,
how will you interpret that?
A. Moderate breeze will only give winds of 29 kilometers per hour which is equivalent to just
extending your hand out of a running car at that speed.
Q. This weather condition between October 28 and November 1, 1980, will you classify this
as extraordinary or ordinary?
A. It was ordinary.
Q. When you said ordinary, was it usual or unusual?
A. It is usual.
Q. When you said it is usual it is foreseeable and predictable?
A. For an experienced meteorologist like a ship captain, it is foreseeable.
Q. When it is foreseeable, necessarily it follows that the weather could be predicted based on
the weather bulletin or report?
A. Yes, sir.
Q. And usually the bulletin states the condition in other words, this weather condition which
you testified to and reflected in your Exhibit "7" is an ordinary occurrence within that area of
Philippine responsibility?
A. Yes, sir.
Q. And in fact this weather condition is to be anticipated at that time of the year with respect
to weather condition which is reflected in Exhibit "7"?
A. It is a regular occurrence.
xxx xxx xxx
Moreover, Capt. Racines again admitted in Court that his ill-fated vessel was 200 miles away
from the storm 'Yoning when it sank. Said Capt. Racines:
Q. How far were you from this depression or weather disturbance on October 30, 1980?
A. Two hundred miles.
xxx xxx xxx
Q. In other words, this depression was far from your route because it took a northern
approach whereas you were towards the south approach?
A. As I have said, I was 200 miles away from the disturbance.
xxx xxx xxx
Considering the foregoing reasons, the Court holds that the vessel M/V "Aboitiz" and its cargo were not lost
due to fortuitous event or force majeure.
In accordance with Article 1732 of the Civil Code, the defendant common carrier, from the nature of its
business and for reasons of public policy, is bound to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by it according to all the circumstances of each case.
While the goods are in the possession of the carrier, it is but fair that it exercise extra ordinary diligence in
protecting them from loss or damage, and if its occurs the law presumes that it was due to the carrier's fault
or negligence; that is necessary to protect the interest of the shipper which is at the mercy of the carrier
(Article 1756, Civil Code; Anuran vs. Puno, 17 SCRA 224; Nocum vs. Laguna Tayabas Bus Co., 30 SCRA 69;
Landigan vs. Pangasinan Transportation Company, 88 SCRA 284). In the case at bar, the defendant failed to
prove that the loss of the subject cargo was not due to its fault or negligence.
8

The said factual findings of the appellate court and the trial court are finding on this Court. Its conclusion as to the
negligence of the petitioner is supported by the evidence.
The second issue raised to the effect that the liability of the petitioner should be fixed at US$500.00 per package/container, as
stipulated in the bill of lading and not at the actual value of the cargo, should be resolved against petitioner.
While it is true that in the bill of lading there is such stipulation that the liability of the carrier is US$500.00 per
package/container/customary freight, there is an exception, that is, when the nature and value of such goods have been
declared by the shipper before shipment and inserted in the bill of lading. This is provided for in Section 4(5) of the Carriage of
Goods by Sea Act to wit
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount exceeding $500 per package of lawful money of the
United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that
sum in other currency,unless the nature and value of such goods have been inserted in the bill of lading. This
declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the
carrier.
By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount
than that mentioned in this paragraph may be fixed: Provided, that such maximum shall not be less than the
figure above named. In no event shall the carrier be liable for more than the amount of damage actually
sustained.
Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with
the transportation of the goods if the nature or value thereof has been knowingly and fraudulently mis-stated
by the shipper in the bill of lading. (Emphasis supplied.)
In this case the description of the nature and the value of the goods shipped are declared and reflected in the bills of lading.
Thus, it is the basis of the liability of the carrier as the actual value of the loss.
Moreover, it is absurd to interpret "container," as provided in the bill of lading to be valued at US$500.00 each, to refer to the
container which is the modern substitute for the hold of the vessel.
9
The package/container contemplated by the law to limit
the liability of the carrier should be sensibly related to the unit in which the shipper packed the goods and described them, not
a large metal object, functionally a part of the ship, in which the carrier used them to be contained.
10
Such "container" must be
given the same meaning and classification as a "package" and "customary freight unit."
The appellate court in disposing this issue quoted its decision in Allied Guarantee Insurance Co. Inc. vs. Aboitiz Shipping
Corporation, CA GR. CV No. 04121, March 23, 1987, viz;
Third. Still it is contended that the carrier's liability is limited to $500.00, pursuant to section 8 of the Bill of
Lading which provides that 'The liability of the Carrier for any loss or damage to the goods shall in no case
exceed the sum of U.S. $500.00 per package/container/customary freight unit, unless the value of the goods
has been correctly declared and extra freight paid, prior to the shipment and a signed declaration to this
effect appears in the bill of lading, duly confirmed by the Carrier. ... It is contended that the Bill of Lading does
not indicate the value of the goods. Nor was the corresponding freight ... paid prior to shipment.
Generally speaking a stipulation, limiting the common carrier's liability to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is valid. (Civil Code, Art. 1749). Such
stipulation, however, must be reasonable and just under the circumstances and must have been fairly and
freely agreed upon. (St. Paul Fire & Marine Insurance Co. vs. Macondray Co., 70 SCRA 122, 126-127 (1976)
In the case at bar, the goods shipped on the M/V "P. Aboitiz" were insured for P278,530.50, which may be
taken as their value. To limit the liability of the carrier to $500.00 would obviously put it in its power to have
taken the whole cargo. In Juan Ysmael & Co. vs. Gabino Barreto & Co., 51 Phil. 90 (1927), it was held that a
stipulation limiting the carrier's liability to $500.00 per package of silk when the value of such package was
P2,500.00 unless the true value had been declared and the corresponding freight paid was "void as against
public policy." That ruling applies to this case.
Moreover, by the weight of modern authority, a carrier cannot limit its liability for injury or loss of goods
shipped where such injury or loss was caused by its own negligence. (Juan Ysmael & Co. v. Gabino Barreto &
Co., supra) Here to limit the liability of Aboitiz Shipping to $500.00 would nullify the policy of the law
imposing on common carriers the duty to observe extraordinary diligence in the carriage of goods.
Indeed, it is even doubtful whether the word "container" in section 8 of the Bill of Lading includes containers
which are a substitute for the hold of a vessel. This provision limits the carrier's liability to "the sum of
US$500.00 per package /container customary freight unit." By the rule of noscitur a sociis the word
"container" must be given the same meaning as package and customary freight unit and therefore cannot
possibly refer to modern containers which are used for shipment of goods in bulk.
11

In the same light, the third issue questioning the order of execution pending appeal of the trial court must be resolved against
petitioner as well.
The averments in the motion for execution pending appeal dated December 8, 1985 are as follows
Aside from the fact that petitioner can easily post a supersedeas bond to stay execution, still other
circumstances are present peculiar in the incident of the sinking of M/V P. Aboitiz which would justify the
issuance of execution pending appeal. There are other decided cases adjudging petitioner liable in the lower
court in the same incident. Other cases are on appeal, upcoming and about to be decided. The value of cargo
loss caused by the sinking of petitioner's vessel is in the tune of no less than fifty million pesos inclusive of
interests fees and all claims. Its insurer has gone bankrupt and petitioner alone must face and answer for all
these claims. In one branch of the Regional Trial Court of Manila alone there are twenty five (25) cases
pending against petitioner involving the same loss of cargoes aboard M/V "P. Aboitiz" as per certification
herewith attached as Annex "A". This claim do not include others, pending in various courts in Metro Manila
which would have to be satisfied ultimately by petitioner, it being a common carrier which failed to exercise
extraordinary diligence over the goods lost. The judgment sought to be enforced may indeed be rendered
imminently ineffectual in the ultimate analysis.
The purpose of Sec. 2 Rule 39 would not be achieved or execution pending appeal would not be achieved if
insolvency would still be awaited. The remedy is available to petitioner under Sec. 3 Rule 39 of the Rules of
Court but to place insolvency as a condition to issuance of a writ of execution pending appeal would render it
illusory and ineffectual.
Justice and equity therefore dictates, that as a consequence of the bond posted by private respondent and
there being several other cases against petitioner, decided as well as pending, the totality of which claims may
render the appealed decision imminently ineffectual and the further fact that the appeal being interposed is
evidently for delay as a consequence of the several adverse decisions against it as a common carrier in the
lower court, a reconsideration of the decision dated November 25, 1985 of the Honorable Court will be in
consonance with law, jurisprudence and equity.
In order to erase all apprehensions that the aforesaid judgment award will wind up ineffectual when not
immediately executed, it is most respectfully prayed that herein respondent be required to post a
supersedeas bond. The statutory undertaking of posting a bond will then achieve a three-pronged direction of
justice, (1) it will cast no doubt on the solvency of the herein petitioner; (2) it will not defeat or render
phyrric a just resolution of the case whichever party prevails in the end or in the main case on appeal, since
both of their claims are secured by their corresponding bonds; and (3) it will put to equitable operation Sec. 3
Rule 39 of the Revised Rules of Court.
12

The foregoing allegations which were not traversed that petitioner is facing many law suits arising from said sinking of its
vessel involving cargo loss of no less than 50 million pesos, in some cases of which judgment had been rendered against
Aboitiz, and considering that its insurer is now bankrupt, leaving Aboitiz alone to face and answer the suits, which may render
any judgment for GAFLAC ineffectual, that the appeal is interposed manifestly for delay and the willingness of GAFLAC to put
up a bond certainly are cogent bases for the issuance of an order of execution pending appeal.
Finally, in a similar case for damages arising from the same incident entitled Aboitiz Shipping Corporation vs. Honorable Court
of Appeals and Allied Guaranteed Insurance Company, Inc., G.R. No. 88159, this Court in a resolution dated November 13, 1989
dismissed the petition for lack of merit. Therein this Court held in part
The appellate court affirmed the decision of the lower court based on its findings that the cause of sinking of
the vessel was due to its unseaworthiness and the failure of its crew and the master to exercise extraordinary
diligence.
The petitioner, however, contends that the appellate court erred on this matter and insists that the contrary
findings of the Board of Marine Inquiry (BMI), which conducted a separate investigation to the effect that the
proximate cause of the sinking of the vessel was due toforce majeure and that the officers and crew had
exhausted all preventive measures to save the vessel and her cargo but to no avail, should prevail. This,
according to the petitioner is based on the doctrine of primary administrative jurisdiction.
This argument is untenable.
A cursory reading of the decision and resolution of the appellate court shows that the same took into
consideration not only the findings of the lower court but also the findings of the BMI. Thus, the appellate
court stated:
Indeed, the decision of the Board was based simply on its finding that the Philippine Coast
Guard had certified the vessel to be seaworthy and that it sank because it was exposed later
to an oncoming typhoon plotted within the radius where the vessel was positioned. This
generalization certainly cannot prevail over the detailed explanation of the trial court in this
case as basis for its contrary conclusion. (Rollo, at p. 42)
We find no cogent reason to deviate from the factual findings of the appellate court and rule that the doctrine
of primary administrative jurisdiction is not applicable in the case at bar.
The other issue raised is whether or not the carrier's liability is limited to $500.00 pursuant to section 8 of the
Bill of Lading. The petitioner claims that the appellate court erred in disregarding the limitation of liability
stipulated in the bill of lading. It argues that the consignee agreed to this amount (and) therefore is bound by
this rate and that there is no basis for the appellate court's finding that the rate is unreasonable.
The argument is not well-taken. As aptly stated by the appellate court:
Generally speaking any stipulation, limiting the common carrier's liability to the value of the goods appearing
in the bill of lading, unless the shipper or owner declares a greater value is valid. (Civil Code, Art. 1749) Such
stipulation, however, must be reasonable and just under the circumstances and must have been fairly and
freely agreed upon. (St. Paul Fire & Marine Insurance Co. v. Macondray & Co., 70 SCRA 122, 126-127 [1976] In
the case at bar, the goods shipped on the M/V "P. Aboitiz" were insured for P278,536.50, which may be taken
as their value. To limit the liability of the carrier to $500.00 would obviously put in its power to have taken
the whole cargo. In Juan Ysmael & Co. v. Gabino Barretto & Co., 51 Phil. 90 [1927], it was held that a stipulation
limiting the carrier's liability to P300.00 per package of silk, when the value of such package was P2,500.00,
unless the true value had been declared and the corresponding freight paid; was void as against public policy.
That ruling applies to this case.
As argued by the respondent, a limitation of liability in this case would render inefficacious the extraordinary
diligence required by law of common carriers.
13

The motion for reconsideration of said resolution filed by petitioner was denied with finality in a resolution dated January 8,
1990. Said resolution of the case had become final and executory, entry of judgment having been made and the records
remanded for execution on March 22, 1990.
Said case is now the law of the case applicable to the present petition.
WHEREFORE, the petition is dismissed with costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 80256 October 2, 1992
BANKERS & MANUFACTURERS ASSURANCE CORP., petitioner,
vs.
COURT OS APPEALS, F. E. ZUELLIG & CO., INC. and E. RAZON, INC., respondents.
MELO, J.:
After the Court of Appeals in CA-G.R. CV No. 08226 (July 8, 1987, Kapunan, Puno (P), Marigomen, JJ.) affirmed the dismissal by
Branch XVI of the Regional Trial Court of Manila of petitioner's complaint for recovery of the amount it had paid its insured
concerning the loss of a portion of a shipment, petitioner has interposed the instant petition for review on certiorari.
Petitioner presents the following bare operative facts: 108 cases of copper tubings were imported by Ali Trading Company.
The tubings were insured by petitioner and arrived in Manila on board and vessel S/S "Oriental Ambassador" on November 4,
1978, and turned over the private respondent E. Razon, the Manila arrastre operator upon discharge at the waterfront. The
carrying vessel is represented in the Philippines by its agent, the other private respondent, F. E. Zuellig and Co., Inc., Upon
inspection by the importer, the shipment was allegedly found to have sustained loses by way of theft and pilferage for which
petitioner, as insurer, compensated the importer in the amount of P31,014.00.
Petitioner, in subrogation of the importer-consignee and on the basis of what it asserts had been already established that a
portion of that shipment was lost through theft and pilferage forthwith concludes that the burden of proof of proving a case
of non-liability shifted to private respondents, one of whom, the carrier, being obligated to exercise extraordinary diligence in
the transport and care of the shipment. The implication of petitioner's statement is that private respondents have not shown
why they are not liable. The premises of the argument of petitioner may be well-taken but the conclusions are not borne out or
supported by the record.
It must be underscored that the shipment involved in the case at bar was "containerized". The goods under this arrangement
are stuffed, packed, and loaded by the shipper at a place of his choice, usually his own warehouse,in the absence of the carrier.
The container is sealed by the shipper and thereafter picked up by the carrier. Consequently, the recital of the bill of lading for
goods thus transported ordinarily would declare "Said to Contain", "Shipper's Load and Count", "Full Container Load", and the
amount or quantity of goods in the container in a particular package is only prima facie evidence of the amount or quantity
which may be overthrown by parol evidence.
A shipment under this arrangement is not inspected or inventoried by the carrier whose duty is only to transport and deliver
the containers in the same condition as when the carrier received and accepted the containers for transport. In the case at bar,
the copper tubings were placed in three containers. Upon arrival in Manila on November 4, 1978, the shipment was discharged
in apparent good order and condition and from the pier's docking apron, the containers were shifted to the container yard of
Pier 3 for safekeeping. Three weeks later, one of the container vans, said to contain 19 cases of the cargo, was "stripped" in the
presence of petitioner's surveyors, and three cases were found to be in bad order. The 19 cases of the van stripped were then
kept inside Warehouse No. 3 of Pier 3 pending delivery. It should be stressed at this point, that the three cases found in bad
order are not the cases for which the claim below was presented, for although the three cases appeared to be in bad order, the
contents remained good and intact.
The two other container vans were not moved from the container yard and they were not stripped. On December 8, 1978, the
cargo was released to the care of the consignee's authorized customs broker, the RGS Customs Brokerage. The broker,
accepting the shipment without exception as to bad order, caused the delivery of the vans to the consignee's warehouse in
Makati. It was at that place, when the contents of the two containers were removed and inspected, that petitioner's surveyors
reported, that checked against the packing list, the shipment in Container No. OOLU2552969 was short of seven cases (see p.
18, Rollo).
Under the prevailing circumstances, it is therefore, not surprising why the Court of Appeals in sustaining the trial court, simply
quoted the latter, thus:
It must be also considered that the subject container was not stripped of its content at the pier zone. The two
unstripped containers (together with the 19 cases removed from the stripped third container) were delivered
to, and received by, the customs broker for the consignee without any exception or notation of bad order of
shortlanding (Exhs. 1, 2 and 3 Vessel). If there was any suspicion or indication of irregularity or theft or
pilferage, plaintiff or consignee's representatives should have noted the same on the gate passes or insisted
that some form of protest form part of the documents concerning the shipment. Yet, no such step was taken.
The shipment appears to have been delivered to the customs broker in good order and condition and
complete save for the three cases noted as being apparently in bad order.
Consider further that the stripping of the subject container was done at the consignee's warehouse where,
according to plaintiff's surveyor, the loss of the seven cases was discovered. The evidence is not settled as
whether the defendants' representative were notified of, and were present at, the unsealing and opening of
the container in the bodega. Nor is the evidence clear how much time elapsed between the release of the
shipment from the pier and the stripping of the containers at consignee bodega. All these fail to discount the
possibility that the loss in question could have taken place after the container had left the pier. (pp. 20-
21, Rollo)
Verily, if any of the vans found in bad condition, or if any inspection of the goods was to be done in order to determine the
condition thereof, the same should have been done at the pierside, the pier warehouse, or at any time and place while the vans
were under the care and custody of the carrier or of the arrastre operator. Unfortunately for petitioner, even as one of the
three vans was inspected and stripped, the two other vans and the contents of the owner previously stripped were accepted
without exception as to any supposed bad order or condition by petitioner's own broker. To all appearances, therefore, the
shipment was accepted by petitioner in good order.
It logically follows that the case at bar presents no occasion for the necessity of discussing the diligence required of a carrier or
of the theory of prima facie liability of the carrier, for from all indications, the shipment did not suffer loss or damage while it
was under the care of the carrier, or of the arrastre operator, it must be added.
WHEREFORE, the petition is hereby DISMISSED and the decision of the Court of Appeals AFFIRMED, with costs against
petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6092 March 8, 1912
TAN CHIONG SIAN, plaintiff-appellee,
vs.
INCHAUSTI AND CO., defendant-appellant.
Haussermann, Cohn and Fisher for appellant.
O'Brien and DeWitt for appellee.
TORRES, J.:
This is an appeal through bill of exceptions, by counsel for the firm of Inchausti & Co., from a judgment rendered by the
Honorable A.S. Crossfield, judge.
On January 11, 1909, the Chinaman, Tan Chiong Sian or Tan Chinto, filed a written complaint, which was amended on the 28th
of the same month and again amended on October 27 of the same year, against the said firm, wherein he alleged, among other
things, as a cause of action: That, on or about November 25, 1908, the plaintiff delivered to the defendant 205 bundles or cases
of general merchandise belonging to him, which Inchausti & Co., upon receiving, bound themselves to deliver in the pueblo of
Catarman, Province of Samar, to the Chinaman, Ong Bieng Sip, and in consideration of the obligations contracted by the
defendant party, the plaintiff obligated himself to pay to the latter the sum of P250 Philippine currency, which payment should
be made upon the delivery of the said merchandise in the said pueblo Catarman; but that the defendant company neither
carried nor delivered the aforementioned merchandise to the said Ong Bieng Sip, in Catarman, but unjustly and negligently
failed to do so, with the result that the said merchandise was almost totally lost; that, had the defendant party complied well
and faithfully with its obligation, according to the agreement made, the merchandise concerned would have a value of P20,000
in the said pueblo of Catarman on the date when it should have been delivered there, wherefore the defendant party owed the
plaintiff the said sum of P20,000, which it had not paid him, or any part thereof, notwithstanding the many demands of the
plaintiff; therefore the latter prayed for judgment against the defendant for the said sum, together with legal interest thereon
from November 25, 1908, and the costs of the suit.
Counsel for the defendant company, in his answer, set forth, that he admitted the allegations of paragraphs 1 and 2 of the
complaint, amended for the second time, and denied those paragraphs 3, 4, 5, 6 and 7 of the same. As his first special defense,
he alleged that on or about November 28, 1908, his client, the said firm, received in Manila from Ong Bieng Sip 205 bundles,
bales, or cases of merchandise to be placed on board the steamerSorsogon, belonging to the defendant, for shipment to the
port of Gubat, Province of Sorsogon, to be in the said port transshipped into another of the defendant's vessels for
transportation to the port of Catarman, Samar, and delivered to the aforesaid Chinaman, Ong Bieng Sip; that the defendant
company, upon receiving the said merchandise from the latter, Ong Bieng Sip, and on its entering into a contract of maritime
transportation with him did not know and was not notified that the plaintiff, Tan Chiong Sian, had any interest whatever in the
said merchandise and had made with the plaintiff no contract relative to the transportation of such goods, for, on receiving the
latter from the said Ong Bieng Sip, for transportation, there were made out and delivered to him three bills of lading, Nos. 38,
39 and 76, which contained a list of the goods received and, printed on the back thereof were the terms of the maritime
transportation contract entered into by and between the plaintiff and the defendant company, copies of which bills of lading
and contract, marked as Exhibits A, B, and C, are of record, attached to and made an integral part of the said answer; that Ong
Bieng Sip accepted the said bills of lading and the contract extended on the backs thereof; that the merchandise mentioned
was put on board the steamerSorsogon and carried to the port of Gubat, Province of Sorsogon, where this vessel arrived on
November 28, 1908, on which date the lorcha Pilar, into which the said merchandise was to be transshipped for carriage to
Catarman, was not at Gubat, and therefore the goods had to be unloaded and stored in the defendant company's warehouses at
Gubat; that, on the 4th of December of the same year, the lorcha Pilar arrived at Gubat and, after the termination of certain
necessary work, the goods received from Chinaman, Ong Bieng Sip, were taken aboard the same, together with other
merchandise belonging to the defendant party, for the purpose of transportation to the port of Catarman; that, before the
said lorcha could leave for its destination, a strong wind arose which in the course of the day increased in force until, early in
the morning of the following day, the lorcha was dragged and driven, by the force of the storm, upon the shore, despite the
means employed by the crew to avoid the accident, and notwithstanding the five anchors that held the craft, which was thus
wrecked and completely destroyed and the merchandise with which it was laden, including the 205 bundles or packages taken
aboard for the said Chinaman, was scattered on the shore; that, on the occasion, the lorcha Pilar was in good condition,
provided with all the proper and necessary equipment and accessories and carried a crew of sufficient number in command of
a skillful patron or master, wherefore the wreck of the said craft was solely due to the irresistible force of the elements and of
the storm which drove it upon the shore; that the defendant company, with the greatest possible diligence, gathered up the
said shipwrecked goods that had been shipped by the Chinaman, Ong Bieng Sip, but, owing to the damage they had suffered, it
was impossible to preserve them, so, after having offered to deliver them to him, the defendant proceeded, in the presence of a
notary, to sell them at public auction and realized from the sale thereof P1,693.67, the reasonable value of the same in the
condition in which they were after they had been gathered up and salved from the wreck of the lorcha Pilar; that the expenses
occasioned by such salvage and sale of the said goods amounted to P151.35, which were paid by the defendant party; that the
latter offered to the Chinese shipper, the plaintiff, the amount realized from the sale of the said merchandise, less P151.35, the
amount of the expenses, and the sum of P250, the amount of the freight stipulated, and is still willing to pay such products of
the said sale to the aforementioned Ong Bieng Sip or to any other person who should establish his subrogation to the rights of
the Chinaman, Ong Bieng Sip, with respect to the said amount; that, as his client's second special defense, the defendant
company alleged that one of the conditions of the shipping contract executed between it and the Chinaman, Ong Bieng Sip,
relative to the transportation of the said merchandise, was that the said firm should not be held liable for more than P25 for
any bundle or package, unless the value of its contents should be stated in the bill of lading, and that the shipper, Chinaman,
Ong Bieng Sip, did not state in the bill of lading the value of any of the bundles or packages in which the goods shipped by him
were packed. Counsel for the defendant company, therefore, prayed the court to absolve his client from the complaint, with
costs against the plaintiff.
After the hearing of the case and the introduction of testimony by the parties, judgment was rendered, on March 18, 1910, in
favor of the plaintiff, Tan Chiong Sian or Tan Chinto, against the defendant Inchausti and Co., for the sum of P14,642.63, with
interest at the rate of 6 per cent per annum from January 11, 1909, and for the costs of the trial. The defendant party appealed
from this judgment.
This suit was brought for the purpose of collecting a certain sum which it is alleged the defendant firm owes the plaintiff for
losses and damages suffered by the latter as a result of the former's noncompliance with the terms of an agreement or contract
to transport certain merchandise by sea from this city to the pueblo of Catarman, Island of Samar, for the sum of P250.
The principal question to be determined is whether the defendant is liable for the loss of the merchandise and for failure to
deliver the same at the place of destination, or whether he is relieved from responsibility on the ground offorce majeure.
Article 1601 of the Civil Code prescribes:
Carriers of goods by land or by water shall be subject with regard to the keeping and preservation of the things
entrusted to them, to the same obligations as determined for innkeepers by articles 1783 and 1784.
The provisions of this article shall be understood without prejudice to what is prescribed by the Code of Commerce
with regard to transportation by sea and land.
Article 1602 reads:
Carriers are also liable for the loss of and damage to the things which they receive, unless they prove that the loss or
damage arose from a fortuitous event or force majeure.
The articles aforecited are as follows:
ART. 1783. The depositum of goods made by travelers in inns or hostelries shall also be considered a necessary one.
The keepers of inns and hostelries are liable for them as such bailees, provided that notice thereof may have been
given to them or to their employees, and that the travelers on their part take the precautions which said innkeepers or
their substitutes may have advised them concerning the care and vigilance of said goods.
ART. 1784. The liability referred to in the preceding article shall include damages to the goods of the travelers caused
the servants or employees of the keepers for inns or hostelries as well as by strangers, but not those arising from
robbery or which may be caused by any other case of force majeure.
Article 361 of the Code of Commerce provides:
Merchandise shall be transported at the risk and venture of the shipper, unless the contrary was expressly stipulated.
Therefore, all damages and impairment suffered by the goods in transportation, by reason of accident,force majeure,
or by virtue of the nature or defect of the articles, shall be for the account and risk of the shipper.
The proof of these accidents in incumbent on the carrier.
ART. 362. The carrier, however, shall be liable for the losses and damages arising from the causes mentioned in the
foregoing article if it is proved that they occurred on account of his negligence or because he did not take the
precautions usually adopted by careful persons, unless the shipper committed fraud in the bill of lading, stating that
the goods were of a class or quality different from what they really were.
If, notwithstanding the precaution referred to in this article, the goods transported run the risk of being lost on
account of the nature or by reason of an unavoidable accident, without there being time for the owners of the same to
dispose thereof, the carrier shall proceed to their sale, placing them for this purpose at the disposal of the judicial
authority or of the officials determined by special provisions.
ART. 363. With the exception of the cases prescribed in the second paragraph of article 361, the carrier shall be
obliged to deliver the goods transported in the same condition in which, according to the bill of lading, they were at
the time of their receipt, without any detriment or impairment, and should he not do so, he shall be obliged to pay the
value of the goods not delivered at the point where they should have been and at the time the delivery should have
taken place.
If part of the goods transported should be delivered the consignee may refuse to receive them, when he proves that he
can not make use thereof without the others.
On November 25, 1908, Inchausti & Co. received in Manila from the Chinaman, Ong Bieng Sip, 205 bundles, bales or cases of
goods to be conveyed by the steamer Sorsogon to the port of Gubat, Province of Sorsogon, where they were to be transshipped
to another vessel belonging to the defendant company and by the latter transported to the pueblo of Catarman, Island of
Samar, there to be delivered to the Chinese shipper with whom the defendant party made the shipping contract. To this end
three bills of lading were executed, Nos. 38, 39, and 76, copies of which, marked as Exhibits A, B, and C, are found on pages 13,
14, and 15 of the record.
The steamer Sorsogon, which carried the goods, arrived at the port of Gubat on the 28th of that month and as thelorcha Pilar,
to which the merchandise was to be transshipped for its transportation to Catarman, was not yet there, the cargo was
unloaded and stored in the defendant company's warehouses at that port.
Several days later, the lorcha just mentioned arrived at Gubat and, after the cargo it carried had been unloaded, the
merchandise belonging to the Chinaman, Ong Bieng Sip, together with other goods owned by the defendant Inchausti & Co.,
was taken aboard to be transported to Catarman; but on December 5, 1908, before the Pilarcould leave for its destination,
towed by the launch Texas, there arose and, as a result of the strong wind and heavy sea, the lorcha was driven upon the shore
and wrecked, and its cargo, including the Chinese shipper's 205 packages of goods, scattered on the beach. Laborers or
workmen of the defendant company, by its order, then proceeded to gather up the plaintiff's merchandise and, as it was
impossible to preserve it after it was salved from the wreck of the lorcha, it was sold at public auction before a notary for the
sum of P1,693.67.
The contract entered into between the Chinese shipper, Ong Bieng Sip, and the firm of Inchausti & Co., provided that
transportation should be furnished from Manila to Catarman, although the merchandise taken aboard the
steamer Sorsogon was to be transshipped at Gubat to another vessel which was to convey it from that port to Catarman; it was
not stipulated in the said contract that the Sorsogon should convey the goods to their final destination, nor that the vessel into
which they were to be transshipped, should be a steamer. The shipper, Ong Bieng Sip, therefore assented to these
arrangements and made no protest when his 205 packages of merchandise were unloaded from the ship and, on account of the
absence of the lorcha Pilar, stored in the warehouses at Gubat nor did he offer any objection to the lading of his merchandise
on to this lorcha as soon as it arrived and was prepared to receive cargo; moreover, he knew that to reach the port of Catarman
with promptness and dispatch, the lorcha had to be towed by some vessel like the launch Texas, which the defendant company
had been steadily using for similar operations in those waters.
Hence the shipper, Ong Bieng Sip, made no protest or objection to the methods adopted by the agents of the defendant for the
transportation of his gods to the port of their destination, and the record does not show that in Gubat the defendant possessed
any other means for the conveyance and transportation of merchandise, at least for Catarman, than the lorcha Pilar, towed by
said launch and exposed during its passage to all sorts of accidents and perils from the nature and seafaring qualities of
a lorcha, from the circumstances then present and the winds prevailing on the Pacific Ocean during the months of November
and December.
It is to be noted that a lorcha is not easily managed or steered when the traveling, for, out at sea, it can only be moved by wind
and sails; and along the coast near the shore and in the estuaries where it customarily travels, it can only move by poling. For
this reason, in order to arrive at the pueblo of Catarman with promptness and dispatch, the lorcha was usually towed by the
launch Texas.
The record does not show that, from the afternoon of the 4th of December, 1908, until the morning of the following day, the
5th, the patron or master of the lorcha which was anchored in the cove of Gubat, received any notice from the captain of the
steamer Ton Yek, also anchored near by, of the near approach of a storm. The said captain, Juan Domingo Alberdi, makes no
reference in his sworn testimony of having given any such notice to thepatron of the lorcha, nor did the latter, Mariano
Gadvilao, testify that he received such notice from the captain of the Ton Yek or from the person in charge of the Government
observatory. Gadvilao, the patron, testified that only between 10 and 11 o'clock of Saturday morning, the 5th of December, was
he informed by Inchausti & Co.'s agent in Gubat that a baguio was approaching; that thereupon, on account of the condition of
the sea, he dropped the four anchors that the lorcha had on board and immediately went ashore to get another anchor and a
new cable in order more securely to hold the boat in view of the predicted storm. This testimony was corroborated by the said
representative, Melchor Muoz. So the lorcha, when the storm broke upon it, was held fast by five anchors and was, as testified
by the defendant without contradiction or evidence to the contrary, well found and provided with all proper and necessary
equipment and had a sufficient crew for its management and preservation.
The patron of the lorcha testified specifically that at Gubat or in its immediate vicinity there is no port whatever adequate for
the shelter and refuge of vessels in cases of danger, and that, even though there were, on being advised between 10 and 11
o'clock of the morning of the 5th, of the approach of a storm from the eastern Pacific, it would have been impossible to spread
any sails or weigh anchor on the lorcha without being dragged or driven against the reefs by the force of the wind. As the craft
was not provided with steam or other motive power, it would not have been possible for it to change its anchorage, nor move
from the place where it lay, even several hours before the notice was received by its patron. A lorcha can not be compared with
a steamer which does not need the help or assistance of any other vessel in its movements.
Due importance must be given to the testimony of the weather observer, Antonio Rocha, that the notice received from the
Manila Observatory on the afternoon of December 4, with regard to a storm travelling from the east of the Pelew Islands
toward the northwest, was not made known to the people of Gubat and that he merely left a memorandum notice on the desk
of the station, intending to give explanations thereof to any person who should request them of him. So the notice of the storm
sent by the Manila Observatory was only known to the said observer, and he did not apprise the public of the approach of the
storm until he received another notice from Manila at 20 minutes past 8 o'clock on Saturday morning, December 5. Then he
made a public announcement and advised the authorities of the storm that was coming.
The patron of the lorcha Pilar is charged with gross negligence for not having endeavored to remove his craft to a safe place in
the Sabang River, about half a mile from where it was anchored.
In order to find out whether there was or was not such negligence on the part of the patron, it becomes necessary to
determine, first, whether the lorcha, on the morning of December 5, could be moved by its own power and without being
towed by any steamboat, since it had no steam engine of its own; second, whether the lorcha, on account of its draft and the
shallowness of the mouth of the said river, could have entered the latter before the storm broke.
The patron, Mariano Gadvilao, stated under oath that the weather during the night of December 4 was not threatening and he
did not believe there would be a storm; that he knew the Sabang River; and that the lorchaPilar, when loaded, could not enter
as there was not sufficient water in its channel; that, according to an official chart of the port of Gubat, the bar of the Sabang
River was covered by only a foot and a half of water at ordinary low tide and the lorcha Pilar, when loaded, drew 6 feet and a
half; that aside from the fact that the condition of the sea would not have permitted the lorcha to take shelter in the said river,
even could it have relied upon the assistance of a towboat, at half past 8 o'clock in the morning the tide was still low; there was
but little water in the river and still less over the bar.
It was proven by the said official chart of the port of Gubat, that the depth of water over the bar or entrance of the Sabang
River is only one foot and a half at ordinary low tide; that the rise and fall of the tide is about 4__ feet, the highest tide being at
2 o'clock in the afternoon of every day; and at that hour, on the 5th of December, the hurricane had already made its
appearance and the wind was blowing with all its fury and raising great waves.
The lorcha Pilar, loaded as it had been from the afternoon of December 4, even though it could have been moved by means of
poles, without being towed, evidently could not have entered the Sabang River on the morning of the 5th, when the wind
began to increase and the sea to become rough, on account of the low tide, the shallowness of the channel, and the boat's draft.
The facts stated in the foregoing paragraph were proved by the said chart which was exhibited in evidence and not rejected or
assailed by the plaintiff. They were also supported by the sworn testimony of the patron of thelorcha, unrebutted by any oral
evidence on the part of the plaintiff such as might disprove the certainty of the facts related, and, according to section 275 of
the Code of Civil Procedure, the natural phenomenon of the tides, mentioned in the official hydrographic map, Exhibit 7, which
is prima facie evidence on the subject, of the hours of its occurrence and of the conditions and circumstances of the port of
Gubat, shall be judicially recognized without the introduction of proof, unless the facts to the contrary be proven, which was
not done by the plaintiff, nor was it proven that between the hours of 10 and 11 o'clock of the morning of December 5, 1908,
there did not prevail a state of low tide in the port of Gubat.
The oral evidence adduced by the plaintiff with respect to the depth of the Sabang River, was unable to overcome that
introduced by the defendant, especially the said chart. According to section 320 of the Code of Civil Procedure, such a chart
is prima facie evidence of particulars of general notoriety and interest, such as the existence of shoals of varying depths in the
bar and mouth of the Sabang River and which obstruct the entrance into the same; the distance, length, and number of the said
shoals, with other details apparently well known to thepatron of the lorcha Pilar, to judge from his testimony.
Vessels of considerable draft, larger than the said lorcha, might have entered the Sabang River some seven or nine years
before, according to the testimony of the Chinaman, Antonio B. Yap Cunco, though he did not state whether they did so at high
tide; but, since 1901, or previous years, until 1908, changes may have taken place in the bed of the river, its mouth and its bar.
More shoals may have formed or those in existence may have increased in extent by the constant action of the sea. This is the
reason why the patron, Gadvilao, who was acquainted with the conditions of the port and cove of Gubat, positively declared
that the lorcha Pilar could not, on account of her draft, enter the Sabang River, on account of low water.
The patron of the lorcha, after stating (p.58) that at Gubat or in its vicinity there is no port that affords shelter, affirmed that it
was impossible to hoist the sails or weigh the anchors on the morning of the 5th of December, owing to the force of the wind
and because the boat would immediately have been dragged or driven upon the shoals; that furthermore the lorcha was
anchored in a channel some 300 brazas wide, but, notwithstanding this width, the Pilar was, for want of motive power, unable
to move without being exposed to be dashed against the coast by the strong wind and the heavy sea then prevailing. The
testimony of this witness was neither impugned nor offset by any evidence whatever; he was a patron of long years of service
and of much practice in seafaring, especially in the port of Gubat and its vicinity, who had commanded or been intrusted with
the command of other crafts similar to the lorcha Pilar and his testimony was absolutely uncontradicted.
The patron Gadvilao, being cognizant of the duties imposed upon him by rules 14 and 15 of article 612, and others, of the Code
of Commerce, remained with sailors, during the time the hurricane was raging, on board thelorcha from the morning of
December 5 until early the following morning, the 6th, without abandoning the boat, notwithstanding the imminent peril to
which he was exposed, and kept to his post until after the wreck and thelorcha had been dashed against the rocks. Then he
solicited help from the captain of the steamer Ton Yek, and, thanks to the relief afforded by a small boat sent by the latter
officer, Gadvilao with his crew succeeded in reaching land and immediately reported the occurrence to the representative of
Inchausti & Co. and to the public official from whom he obtained the document of protest, Exhibit 1. By such procedure, he
showed that, as a patron skilled in the exercise of his vocation, he performed the duties imposed by law in cases of shipwreck
brought about byforce majeure.
Treating of shipwrecks, article 840 of the Code of Commerce prescribes:
The losses and damages suffered by a vessel and her cargo by reason of shipwreck or standing shall be individually for
the account of the owners, the part of the wreck which may be saved belonging to them in the same proportion.
And Article 841 of the same code reads:
If the wreck or stranding should arise through the malice, negligence, or lack of skill of the captain, or because the
vessel put to sea insufficiently repaired and supplied, the owner or the freighters may demand indemnity of the
captain for the damages caused to the vessel or cargo by the accident, in accordance with the provisions contained in
articles 610, 612, 614, and 621.
The general rule established in the first of the foregoing articles is that the loss of the vessel and of its cargo, as the result of
shipwreck, shall fall upon the respective owners thereof, save for the exceptions specified in the second of the said articles.
These legal provisions are in harmony with those of articles 361 and 362 of the Code of Commerce, and are applicable
whenever it is proved that the loss of, or damage to, the goods was the result of a fortuitous event or offorce majeure; but the
carrier shall be liable for the loss or the damage arising from the causes aforementioned, if it shall have been proven that they
occurred through his own fault or negligence or by his failure to take the same precautions usually adopted by diligent and
careful persons.
In the contract made and entered into by and between the owner of the goods and the defendant, no term was fixed within
which the said merchandise should be delivered to the former at Catarman, nor was it proved that there was any delay in
loading the goods and transporting them to their destination. From the 28th of November, when the steamer Sorsogon arrived
at Gubat and landed the said goods belonging to Ong Bieng Sip to await thelorcha Pilar which was to convey them to Catarman,
as agreed upon, no vessel carrying merchandise made the voyage from Gubat to the said pueblo of the Island of Samar, and
with Ong Bieng Sip's merchandise there were also to be shipped goods belonging to the defendant company, which goods
were actually taken on board the saidlorcha and suffered the same damage as those belonging to the Chinaman. So that there
was no negligence, abandonment, or delay in the shipment of Ong Bieng Sip's merchandise, and all that was done by the
carrier, Inchausti & Co., was what it regularly and usually did in the transportation by sea from Manila to Catarman of all
classes of merchandise. No attempt has been made to prove that any course other than the foregoing was pursued by that firm
on this occasion; therefore the defendant party is not liable for the damage occasioned as a result of the wreck or stranding of
the lorcha Pilar because of the hurricane that overtook this craft while it was anchored in the port of Gubat, on December 5,
1908, ready to be conveyed to that of Catarman.
It is a fact not disputed, and admitted by the plaintiff, that the lorcha Pilar was stranded and wrecked on the coast of Gubat
during the night of the 5th or early in the morning of the 6th of December, 1908, as a result of a violent storm that came from
the Pacific Ocean, and, consequently, it is a proven fact that the loss or damage of the goods shipped on the said lorcha was due
to the force majeure which caused the wreck of the said craft.
According to the aforecited article 361 of the Code of Commerce, merchandise shall be transported at the risk and venture of
the shipper, unless the contrary be expressly stipulated. No such stipulation appears of record, therefore, all damages and
impairment suffered by the goods in transportation, by reason of accident, force majeure, or by virtue of the nature or defect of
the articles, are for the account and risk of the shipper.
A final clause of this same article adds that the burden of proof of these accidents is upon the carrier; the trial record fully
discloses that the loss and damage of the goods shipped by the Chinaman, Ong Bieng Sip, was due to the stranding and wreck
of the lorcha Pilar in the heavy storm or hurricane aforementioned; this the plaintiff did not deny, and admitted that it took
place between the afternoon of the 5th and early in the morning of the 6th of December, 1908, so it is evident that the
defendant is exempt from the obligation imposed by the law to prove the occurrence of the said storm, hurricane, or cyclone in
the port of Gubat, and, therefore, if said goods were lost or damaged and could not be delivered in Catarman, it was due to a
fortuitous event and a superior, irresistible natural force, or force majeure, which completely disabled the lorcha intended for
their transportation to the said port of the Island of Samar.
The record bears no proof that the said loss or damage caused by the stranding or wreck of the lorcha Pilar as a result of the
storm mentioned, occurred through carelessness or negligence on the part of the defendant company, its agents or
the patron of the said lorcha, or because they did not take the precautions usually adopted by careful and diligent persons, as
required by article 362 of the Code of Commerce; the defendant company, as well as its agents and the patron of the lorcha,
had a natural interest in preserving the craft and its own goods laden therein an interest equal to that of the Chinese
shipper in preserving his own which were on board the ship lorcha and, in fact, the defendant, his agents and the patron did
take the measures which they deemed necessary and proper in order to save the lorcha and its cargo from the impending
danger; accordingly, thepatron, as soon as he was informed that a storm was approaching, proceeded to clear the boat of all
gear which might offer resistance to the wind, dropped the four anchors he had, and even procured an extra anchor from the
land, together with a new cable, and cast it into the water, thereby adding, in so far as possible, to the stability and security of
the craft, in anticipation of what might occur, as presaged by the violence of the wind and the heavy sea; and Inchausti &
Company's agent furnished the articles requested by the patron of the lorcha for the purpose of preventing the loss of the boat;
thus did they all display all the diligence and care such as might have been employed by anyone in similar circumstances,
especially the patron who was responsible for the lorcha under his charge; nor is it possible to believe that the latter failed to
adopt all the measures that were necessary to save his own life and those of the crew and to free himself from the imminent
peril of shipwreck.
In view of the fact that the lorcha Pilar had no means of changing its anchorage, even supposing that there was a better one,
and was unable to accept help from any steamer that might have towed it to another point, as wherever it might have
anchored, it would continually have been exposed to the lashing of the waves and to the fury of the hurricane, for the port of
Gubat is a cove or open roadstead with no shelter whatever from the winds that sweep over it from the Pacific Ocean, and in
view of the circumstances that it was impossible for the saidlorcha, loaded as it then was, to have entered the Sabang River,
even though there had been a steamer to tow it, not only because of an insufficient depth of water in its channel, but also on
account of the very high bar at the entrance of the said river, it is incontrovertible that the stranding and wreck of
the lorcha Pilar was due to a fortuitous event or to force majeure and not to the fault and negligence of the defendant company
and its agents or of the patron, Mariano Gadvilao, inasmuch as the record discloses it to have been duly proved that the latter,
in difficult situation in which unfortunately the boat under his charge was placed, took all the precautions that any diligent
man should have taken whose duty it was to save the boat and its cargo, and, by the instinct of self-preservation, his own life
and those of the crew of the lorcha; therefore, considering the conduct of the patron of the lorcha and that of the defendant's
agent in Gubat, during the time of the occurrence of the disaster, the defendant company has not incurred any liability
whatever for the loss of the goods, the value of which is demanded by the plaintiff; it must, besides, be taken into account that
the defendant itself also lost goods of its own and the lorcha too.
From the moment that it is held that the loss of the said lorcha was due to force majeure, a fortuitous event, with no conclusive
proof or negligence or of the failure to take the precautions such as diligent and careful persons usually adopt to avoid the loss
of the boat and its cargo, it is neither just nor proper to attribute the loss or damage of the goods in question to any fault,
carelessness, or negligence on the part of the defendant company and its agents and, especially, the patron of the lorcha Pilar.
Moreover, it is to be noted that, subsequent to the wreck, the defendant company's agent took all the requisite measures for
the salvage of such of the goods as could be recovered after the accident, which he did with the knowledge of the shipper, Ong
Bieng Sip, and, in effecting their sale, he endeavored to secure all possible advantage to the Chinese shipper; in all these
proceedings, as shown by the record, he acted in obedience to the law.
From all the foregoing it is concluded that the defendant is not liable for the loss and damage of the goods shipped on
the lorcha Pilar by the Chinaman, Ong Bieng Sip, inasmuch as such loss and damage were the result of a fortuitous event
or force majeure, and there was no negligence or lack of care and diligence on the part of the defendant company or its agents.
Therefore, we hold it proper to reverse the judgment appealed from, and to absolve, as we hereby do, the defendant, Inchausti
& Co., without special findings as to costs.


EN BANC
[G.R. No. 13972. July 28, 1919.]
G. MARTINI, LTD., Plaintiff-Appellee, vs. MACONDRAY & CO. (INC.), Defendant-Appellant.
D E C I S I O N
STREET, J.:
In September of the year 1916, the Plaintiff G. Martini, Ltd., arranged with the Defendantcompany, as agents of the Eastern and
Australian Steamship Company, for the shipment of two hundred and nineteen cases or packages of chemical products from
Manila, Philippine Islands, to Kobe, Japan. The goods were embarked at Manila on the steamship Eastern, and were carried to
Kobe on the deck of that ship. Upon arrival at the port of destination it was found that the chemicals comprised in the
shipment had suffered damage from the effects of both fresh and salt water; and the present action was instituted by
the Plaintiff to recover the amount of the damage thereby occasioned. In the Court of First Instance judgment was rendered in
favor of the Plaintiffs for the sum of P34,997.56, with interest from March 24, 1917, and costs of the proceeding. From this
judgment the Defendant appealed.
That the damage was caused by water, either falling in the form of rain or splashing aboard by the action of wind and waves, is
unquestionable; and the contention of the Plaintiff is that it was the duty of the ships company to stow this cargo in the hold
and not to place it in an exposed position on the open deck. The defense is that by the contract of affreightment the cargo in
question was to be carried on deck at the shippers risk; and attention is directed to the fact that on the face of each bill of
lading is clearly stamped with a rubber stencil in conspicuous letters the words on deck at shippers risk. In this connection
the Defendantrelies upon paragraph 19 of the several bills of lading issued for transportation of this cargo, which reads as
follows:
19. Goods signed for on this bill of lading as carried on deck are entirely at shippers risk, whether carried on deck or
under hatches, and the steamer is not liable for any loss or damage from any cause whatever.
The Plaintiff insists that the agreement was that the cargo in question should be carried in the ordinary manner, that is, in the
ships hold, and that the Plaintiff never gave its consent for the goods to be carried on deck. The material facts bearing on this
controverted point appear to be these: On September 15, 1916, the Plaintiff applied to the Defendant for necessary space on
the steamship Eastern, and received a shipping order, which constituted authority for the ships officers to receive the cargo
aboard. One part of this document contained a form which, when signed by the mate, would constitute the mates receipt,
showing that the cargo had been taken on.
Ordinarily the shipper is supposed to produce the mates receipt to the agents of the ships company, who thereupon issue the
bill of lading to the shipper. When, however, the shipper, as not infrequently happens, desires to procure the bill of lading
before he obtains the mates receipt, it is customary for him to enter into a written obligation, binding himself, among other
things, to abide by the terms of the mates receipt. In the present instance the mates receipt did not come to the Plaintiffs
hand until Monday night, but as the Plaintiff was desirous of obtaining the bills of lading on the Saturday morning preceding in
order that he might negotiate them at the bank, a request was made for the delivery of the bills of lading on that day To
effectuate this, the Plaintiff was required to enter into the written obligation, calling itself a letter of guarantee, which was
introduced in evidence as Exhibit D-C. This document is of the date of September 16, 1916, and of the following tenor:
In consideration of your signing us clean B/L for the undermentioned cargo per above steamer to be shipped on or under
deck at ships option, for Kobe without production of the mates receipt, we hereby guarantee to hold you free from any
responsibility by your doing so, and for any expense should the whole or part of the cargo be shut out, or otherwise, and to
hand you said mates receipt as soon as it reaches us and to abide by all clauses and notations on the same.
In conformity with the purpose of this document the bills of lading were issued, and the negotiable copies were, upon the same
day, negotiated at the bank by the Plaintiff for 90 per cent of the invoice value of the goods. As already stated these bills of
lading contained on their face, conspicuously stenciled, the words on deck at shippers risks. The mates receipt, received by
the Plaintiff two days later also bore the notation on deck at shippers risk, written with pencil, and evidently by the officer
who took the cargo on board and signed the receipt.
The Plaintiff insists that it had at no time agreed for the cargo to be carried on deck; and G. Martini, manager of Martini &
Company, says that the first intimation he had of this was when, at about 4 p.m. on that Saturday afternoon, he examined the
nonnegotiable copies of the bills of lading, which had been retained by the house, and discovered the words on deck at
shippers risk stamped thereon. Martini says that upon seeing this, he at once called the attention of S. Codina thereto, the
latter being an employee of the house whose duty it was to attend to all shipments of merchandise and who in fact had entire
control of all matters relating to the shipping of this cargo. Codina pretends that up to the time when Martini directed his
attention to the fact, he himself was unaware that the cargo was being stowed on deck; and upon the discovery of this fact the
two gentlemen mentioned expressed mutual surprise and dissatisfaction. Martini says that he told Codina to protest at once to
Macondray & Company over the telephone, while Martini himself proceeded to endite a letter, which appears in evidence as
Exhibit D-T of the Defendant and is in its material part as follows:
MANILA, September 16, 1916.
MESSRS. MACONDRAY & Co.,
Manila,
DEAR SIRS: In re our shipment per steamship Eastern, we are very much surprised to see that the remark on deck at
shippers risk has been stamped on the bills of lading Nos. 8 to 23. . . . and although not believing that the same have actually
been shipped on deck we must hold you responsible for any consequence, loss, or damage deriving from your action should
they have been shipped as stated.
Yours faithfully,
G. MARTINI, LTD.
By S. CODINA.
This letter was followed by another of the same date and of substantially the same tenor but containing the following
additional statement:
It is the prevailing practice that, whenever a cargo is being carried on deck, shipowners or agents give advice of it to shippers
previous to shipment taking place, and obtain their consent to it. If we had been advised of it, shipment would not have been
effected by us. We regret very much this occurrence, but you will understand that in view of your having acted in this case on
your own responsibility, we shall have to hold you amenable for any consequences that may be caused from your action.
The first of these letters was forthwith dispatched by messenger, and upon receiving it, Macondray & Company called Codina
by telephone at about 4.30 p.m. and, referring to the communication just received, told him that Macondray & Company could
not accept the cargo for transportation otherwise than on deck and that if Martini & Company were dissatisfied, the cargo
could be discharged from the ship.
There is substantial conformity in the testimony of the two parties with respect to the time of the conversation by telephone
and the nature of the message which Macondray & Company intended to convey, though the witnesses differ as to some details
and in respect to what occurred immediately thereafter. Basa, who was in charge of the shipping department of Macondray &
Company and who conducted the conversation on the part of the latter, says that he told Codina that if Martini & Company was
unwilling for the cargo to be carried on deck that they could discharge it and further advised him that Macondray & Companys
empty boats were still at the ships side ready to receive the cargo. In reply Codina stated that Martini, the manager, was then
out and that he would answer in a few minutes, after communication with Martini. Within the course of half an hour Codina
called Basa up and said that as the cargo was already stowed on deck, Martini & Company were willing for it to be carried in
this way, and that their protest was a mere formality. Codina admits that he was informed by Basa that the cargo could not be
carried under the hatches, and that if Martini & Company were dissatisfied to have it carried on deck, they could discharge it.
He denies being told that it could be taken off in Macondray & Companys boats. Codina further states that when the
conversation was broken off for the purpose of enabling him to communicate with Martini, he consulted with the latter, and
was directed to say that Martini & Company did not consent for the cargo to be carried on deck and that it must be discharged.
Upon returning to the telephone, he found that the connection had been broken, and he says that he was thereafter unable to
get Macondray & Company by telephone during that afternoon, although he attempted to do so more than once.
In the light of all the evidence the conclusion seems clear enough that, although Martini & Company would have greatly
preferred for the cargo to be carried under the hatches, they nevertheless consented for it to go on deck. Codina, if attentive to
the interests of his house, must have known from the tenor of the guaranty to which his signature is affixed that
theDefendant had reserved the right to carry it on deck, and when the bills of lading were delivered to the Plaintiff they plainly
showed that the cargo would be so carried.
It must therefore be considered that the Plaintiff was duly affected with notice as to the manner in which the cargo was
shipped. No complaint, however, was made until after the bills of lading had been negotiated at the bank. When the manager of
Martini & Company first had his attention drawn to the fact that the cargo was being carried on deck, he called Codina to
account, and the latter found it to his interest to feign surprise and pretend that he had been deceived by Macondray &
Company. Even then there was time to stop the shipment, but Martini & Company failed to give the necessary instructions,
thereby manifesting acquiescence in the accomplished fact.
In a later letter of October 25, 1916, addressed to Macondray & Company, Martini, referring to the incident says: If previous
to the mailing of the documents, you had actually notified us by phone or otherwise that you could not accept our cargo in any
other way but on deck, we should have promptly given you instructions to leave it on the lighters and at our disposal.
From this it is inferable that one reason why the Plaintiff allowed the cargo to be carried away without being discharged, was
that the bills had been discounted and to stop the shipment would have entailed the necessity of refunding the money which
the bank had advanced, with the inconveniences incident thereto. Another reason apparently was that Martini discerned, or
thought he discerned the possibility of shifting the risk so as to make it fall upon the ships company.
With reference to the practicability of discharging the cargo in the late afternoon or evening of Saturday, September 16, before
the ship departed, as it did at 8 p.m. some evidence was introduced tending to show that in order to get the cargo off certain
formalities were necessary which could not be accomplished, as for instance, the return of the mates receipt (which had not
yet come to the Plaintiffs hands), the securing of a permit from the customs authorities, and the securing of an order of
discharge from the steamship company. In view of the fact that the Plaintiff did nothing whatever looking towards the
discharge of the cargo, not even so much as to notify Macondray & Company that the cargo must come off, the proof relative to
the practicability of discharge is inconclusive. If the Plaintiff had promptly informed Macondray & Company of their resolve to
have the cargo discharged, and the latter had nevertheless permitted the ship to sail without discharging it, there would have
been some ground for Plaintiffs contention that its consent had not been given for the goods to be carried on deck. Needless to
say we attach no weight to the statement of Codina that he was unable to get Macondray & Company by telephone in order to
communicate directions for the discharge of the cargo.
The evidence submitted in behalf of the Defendant shows that there was no space in the hold to take the cargo; and it was
therefore unnecessary to consider whether the chemicals to be shipped were of an explosive or inflammable character, such as
to require stowage on deck. By reason of the fact that the cargo had to be carried on deck at all events, if carried at all, the
guaranty Exhibit D-C was so drawn as to permit stowage either on or under deck at the ships option; and the attention of
Codina must have been drawn to this provision because Macondray & Company refused to issue the bills of lading upon a
guaranty signed by Codina upon another form (Exhibit R), which contained no such provision. The messenger between the
two establishments who was sent for the bills of lading accordingly had to make a second trip and go back for a letter of
guaranty signed upon the desired form. The pretense of Codina that he was deceived into signing a document different from
that which he supposed himself to be signing is wholly unsustained.
The result of the discussion is that Martini & Company must be held to have assented to the shipment of the cargo on deck and
that they are bound by the bills of lading in the form in which they were issued. The trial court in our opinion erred in holding
otherwise, and in particular by ignoring, or failing to give sufficient weight to the contract of guaranty.
Having determined that the Plaintiff consented to the shipment of the cargo on deck, we proceed to consider whether
the Defendant can be held liable for the damage which befell the cargo in question. It of course goes without saying that if a
clean bill of lading had been issued and the Plaintiff had not consented for the cargo to go on deck, the ships company would
have been liable for all damage which resulted from the carriage on deck. In the case of The Paragon (1 Ware, 326; 18 Fed. Cas.
No. 10708), decided in 1836 in one of the district courts of the United States, it appeared that cargo was shipped from Boston,
Massachusetts, to Portland, Maine, upon what is called a clean bill of lading, that is, one in the common form without any
memorandum in the margin or on its face showing that the goods are to be carried on deck. It was proved that the shipper had
not given his consent for carriage on deck. Nevertheless, the master stowed the goods on deck; and a storm having arisen, it
became necessary to jettison them. None of the cargo in the hold was lost. It was thus evident that although the cargo in
question was lost by peril of the sea, it would not have been lost except for the fact that it was being carried on deck. It was
held that the ship was liable. In the course of the opinion the following language was used:
It is contended that the goods, in this case, having been lost by the dangers of the seas, both the master and the vessel are
exempted from responsibility within the common exemption in bills of lading; and the goods having been thrown overboard
from necessity, and for the safety of the vessel and cargo, as well as the lives of the crew, that it presents a case for a general
average or contribution, upon the common principle that when a sacrifice is made for the benefit of all, that the loss shall be
shared by all. . . . In every contract of affreightment, losses by the dangers of the seas are excepted from the risks which the
master takes upon himself, whether the exception is expressed in the contract or not. The exception is made by the law, and
falls within the general principle that no one is responsible for fortuitous events and accidents of major force. Casus fortuitous
nemo praestat. But then the general law is subject to an exception, that when the inevitable accident is preceded by a fault of
the debtor or person bound without which it would not have happened, then he becomes responsible for it. (Pothier, des
Obligations, No. 542; Pret. a Usage, No. 57; Story, Bailm., c. 4, No. 241; In Majorious casibus si culpa ejus interveniat tenetur;
Dig. 44, 7, 1, s. 4.)
The master is responsible for the safe and proper stowage of the cargo, and there is no doubt that by the general maritime
law he is bound to secure the cargo safely under deck. . . . If the master carries goods on deck without the consent of the
shipper . . . he does it at his own risk. If they are damaged or lost in consequence of their being thus exposed, he cannot protect
himself from responsibility by showing that they were damaged or lost by the dangers of the seas. . . . When the shipper
consents to his goods being carried on deck, he takes the risk upon himself of these peculiar perils. . . . This is the doctrine of all
the authorities, ancient and modern.
Van Horn vs. Taylor (2 La. Ann., 587; 46 Am. Dec., 558), was a case where goods stowed on deck were lost in a collision. The
court found that the ship carrying these goods was not at fault, and that the shipper had notice of the fact that the cargo was
being carried on deck. It was held that the ship was not liable. Said the court:
It is said that the Plaintiffs goods were improperly stowed on deck; that the deck load only was thrown overboard by the
collision, the cargo in the hold not being injured. The goods were thus laden with the knowledge and implied approbation of
the Plaintiff. He was a passenger on board the steamer, and does not appear to have made any objection to the goods being
thus carried, though the collision occurred several days after the steamer commenced her voyage.
In the case of The Thomas P. Thorn (8 Ben., 3; 23 Fed., Cas. No. 13927), decided in the District Court in the State of New York, it
appeared that tobacco was received upon a canal boat, with the understanding that it was to be carried on deck, covered with
tarpaulins. Upon arrival at its destination it was found damaged by water, for the most part on the top, and evidently as a
consequence of rains. At the same time a quantity of malt stowed below deck on the same voyage was uninjured. In discussing
the question whether upon a contract to carry on deck, the vessel was liable for the wetting of the tobacco, the court said:
It is manifest that the injury to the tobacco arose simply from the fact that it was carried on deck. The malt, carried below,
although an article easily injured, received no damage, and the voyage was performed with usual care, and without disaster.
Indeed, there is evidence of a statement by the libelant, that tobacco must of necessity be injured by being carried on deck. But,
under a contract to carry upon deck, the risk of any damage resulting from the place of carriage rests upon the shipper, and,
without proof of negligence causing the damage, there can be no recovery. Here the evidence shows that all reasonable care
was taken of the tobacco during its transportation; that the manner of stowing and covering it was known to and assented to
by the shipper; and the inference is warranted that the injury arose, without fault of the carrier, from rain, to which
merchandise transported on deck must necessarily be in some degree exposed. Any loss arising from damaged thus
occasioned is to be borne by the shipper.
Lawrence vs. Minturn (17 How [U.S,], 100; 15 L ed., 58), was a case where goods stowed on deck with the consent of the
shipper were jettisoned during a storm at sea. In discussing whether this cargo was entitled to general average, the Supreme
Court of the United States said:
The maritime codes and writers have recognized the distinction between cargo placed on deck, with the consent of the
shipper, and cargo under deck.
There is not one of them which gives a recourse against the master, the vessel, or the owners, if the property lost had been
placed on deck with the consent of its owner, and they afford very high evidence of the general and appropriate usages, in this
particular, of merchants and shipowners.
So the courts of this country and England, and the writers on this subject, have treated the owner of goods on deck, with his
consent, as not having a claim on the master or owner of the ship in case of jettison. The received law, on the point, is
expressed by Chancellor Kent, with his usual precision, in 3 Com., 240: Nor is the carrier in that case (Jettison of deck load)
responsible to the owner, unless the goods were stowed on deck without the consent of the owner, or a general custom
binding him, and then he would be chargeable with the loss.
In Gould vs. Oliver (4 Bing., N. C., 132), decided in the English Court of Common Pleas in 1837, Tindal, C.J., said:
Where the loading on deck has taken place with the consent of the merchant, it is obvious that no remedy against the
shipowner or master for a wrongful loading of the goods on deck can exist. The foreign authorities are indeed express; on that
point. And the general rule of the English law, that no one can maintain an action for a wrong, where he has consented or
contributed to the act which occasioned his loss, leads to the same conclusion.
The foregoing authorities fully sustain the proposition that where the shipper consents to have his goods carried on deck he
takes the risks of any damage or loss sustained as a consequence of their being so carried. In the present case it is indisputable
that the goods were injured during the voyage and solely as a consequence of their being on deck, instead of in the ships hold.
The loss must therefore fall on the owner. And this would be true, under the authorities, even though paragraph 19 of the bills
of lading, quoted near the beginning of this opinion, had not been made a term of the contract.
It is undoubtedly true that, upon general principle, and momentarily ignoring paragraph 19 of these bills of lading, the ships
owner might be held liable for any damage directly resulting from a negligent failure to exercise the care properly incident to
the carriage of the merchandise on deck. For instance, if it had been improperly placed or secured, and had been swept
overboard as a proximate result of such lack of care, the ship would be liable, to the same extent as if the cargo had been
deliberately thrown over without justification. So, if it had been shown that, notwithstanding the stowage of these goods on
deck, the damage could have been prevented, by the exercise of proper skill and diligence in the discharge of the duties
incumbent on the ship, the owner might still be held.
To put the point concretely, let it be supposed that a custom had been proved among mariners to protect deck cargo from the
elements by putting a tarpaulin over it; or approaching still more to imaginable conditions in the present case, let it be
supposed that the persons charged with the duty of transporting this cargo, being cognizant of the probability of damage by
water, had negligently and without good reason failed to exercise reasonable care to protect it by covering it with tarpaulins.
In such case it could hardly be denied that the ships company should be held liable for such damage as might have been
avoided by the use of such precaution.
But it should be borne in mind in this connection that it is incumbent on the Plaintiff, if his cause of action is founded on
negligence of this character, to allege and prove that the damage suffered was due to failure of the persons in charge of the
cargo to use the diligence properly incident to carriage under these conditions.
In Clark vs. Barnwell (12 How. [U.S.], 272; 13 L. ed., 985), the Supreme Court distinguishes with great precision between the
situation where the burden of proof is upon the shipowner to prove that the loss resulted from an excepted peril and that
where the burden of proof is upon the owner of the cargo to prove that the loss was caused by negligence on the part of the
persons employed in the conveyance of the goods. The first two syllabi in Clark vs. Barnwell read as follows:
Where goods are shipped and the usual bill of lading given, promising to deliver them in good order, the dangers of the seas
excepted, and they are found to be damaged the onus probandi is upon the owners of the vessel, to show that the injury was
occasioned by one of the excepted causes.
But, although the injury may have been occasioned by one of the excepted causes, yet still the owners of the vessel are
responsible if the injury might have been avoided, by the exercise of reasonable skill and attention on the part of the persons
employed in the conveyance of the goods. But the onus probandi then becomes shifted upon the shipper, to show the
negligence.
The case just referred to was one where cotton thread, put up in boxes, had deteriorated during a lengthy voyage in a warm
climate, owing to dampness and humidity. In discussing the question of the responsibility of the ships owner, the court said:
Notwithstanding, therefore, the proof was clear that the damage was occasioned by the effect of the humidity and dampness
of the vessel, which is one of the dangers of navigation, it was competent for the libelants to show that the Respondents might
have prevented it by proper skill and diligence in the discharge of their duties; but no such evidence is found in the record. For
caught that appears every precaution was taken that is usual or customary, or known to shipmasters, to avoid the damage in
question. And hence we are obliged to conclude that it is to be attributed exclusively to the dampness of the atmosphere of the
vessel, without negligence or fault on the part of the master or owners.
Exactly the same words might be used as applicable to the facts of the present case; and as it is apparent that the damage here
was caused by rain and sea water the risk of which is inherently incident to carriage on deck the Defendant cannot be
held liable. It is not permissible for the court, in the absence of any allegation or proof of negligence, to attribute negligence to
the ships employees in the matter of protecting the goods from rains and storms. The complaint on the contrary clearly
indicates that the damage done was due to the mere fact of carriage on deck, no other fault or delinquency on the part of
anybody being alleged.
It will be observed that by the terms of paragraph 19 of the bills of lading, the ship is not to be held liable, in the case of goods
signed for as carried on deck, for any loss or damage from any cause whatever. We are not to be understood as holding that
this provision would have protected the ship from liability for the consequences of negligent acts, if negligence had been
alleged and proved. From the discussion in Manila Railroad Co. vs. Compania Transatlantica and Atlantic, Gulf & Pacific Co. (38
Phil. Rep., 875), it may be collected that the carrier would be held liable in such case, notwithstanding the exemption contained
in paragraph 19. But however that may be damages certainly cannot be recovered on the ground of negligence, even from a
carrier, where negligence is neither alleged nor proved.
The judgment appealed from is reversed and the Defendant is absolved from the complaint. No express pronouncement will be
made as to the costs of either instance. SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-69044 May 29, 1987
EASTERN SHIPPING LINES, INC., petitioner,
vs.
INTERMEDIATE APPELLATE COURT and DEVELOPMENT INSURANCE & SURETY CORPORATION,respondents.
No. 71478 May 29, 1987
EASTERN SHIPPING LINES, INC., petitioner,
vs.
THE NISSHIN FIRE AND MARINE INSURANCE CO., and DOWA FIRE & MARINE INSURANCE CO., LTD.,respondents.
MELENCIO-HERRERA, J.:
These two cases, both for the recovery of the value of cargo insurance, arose from the same incident, the sinking of the M/S
ASIATICA when it caught fire, resulting in the total loss of ship and cargo.
The basic facts are not in controversy:
In G.R. No. 69044, sometime in or prior to June, 1977, the M/S ASIATICA, a vessel operated by petitioner Eastern Shipping
Lines, Inc., (referred to hereinafter as Petitioner Carrier) loaded at Kobe, Japan for transportation to Manila, 5,000 pieces of
calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc., and 7 cases of
spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. Both sets of goods were insured against marine risk
for their stated value with respondent Development Insurance and Surety Corporation.
In G.R. No. 71478, during the same period, the same vessel took on board 128 cartons of garment fabrics and accessories, in
two (2) containers, consigned to Mariveles Apparel Corporation, and two cases of surveying instruments consigned to Aman
Enterprises and General Merchandise. The 128 cartons were insured for their stated value by respondent Nisshin Fire &
Marine Insurance Co., for US $46,583.00, and the 2 cases by respondent Dowa Fire & Marine Insurance Co., Ltd., for US
$11,385.00.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective
respondent Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated
unto the rights of the latter as the insured.
G.R. NO. 69044
On May 11, 1978, respondent Development Insurance & Surety Corporation (Development Insurance, for short), having been
subrogated unto the rights of the two insured companies, filed suit against petitioner Carrier for the recovery of the amounts it
had paid to the insured before the then Court of First instance of Manila, Branch XXX (Civil Case No. 6087).
Petitioner-Carrier denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event, hence, it is
not liable under the law.
On August 31, 1979, the Trial Court rendered judgment in favor of Development Insurance in the amounts of P256,039.00 and
P92,361.75, respectively, with legal interest, plus P35,000.00 as attorney's fees and costs. Petitioner Carrier took an appeal to
the then Court of Appeals which, on August 14, 1984, affirmed.
Petitioner Carrier is now before us on a Petition for Review on Certiorari.
G.R. NO. 71478
On June 16, 1978, respondents Nisshin Fire & Marine Insurance Co. NISSHIN for short), and Dowa Fire & Marine Insurance Co.,
Ltd. (DOWA, for brevity), as subrogees of the insured, filed suit against Petitioner Carrier for the recovery of the insured value
of the cargo lost with the then Court of First Instance of Manila, Branch 11 (Civil Case No. 116151), imputing unseaworthiness
of the ship and non-observance of extraordinary diligence by petitioner Carrier.
Petitioner Carrier denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting
circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established,
the burden of proving negligence of the vessel is shifted to the cargo shipper.
On September 15, 1980, the Trial Court rendered judgment in favor of NISSHIN and DOWA in the amounts of US $46,583.00
and US $11,385.00, respectively, with legal interest, plus attorney's fees of P5,000.00 and costs. On appeal by petitioner, the
then Court of Appeals on September 10, 1984, affirmed with modification the Trial Court's judgment by decreasing the amount
recoverable by DOWA to US $1,000.00 because of $500 per package limitation of liability under the COGSA.
Hence, this Petition for Review on certiorari by Petitioner Carrier.
Both Petitions were initially denied for lack of merit. G.R. No. 69044 on January 16, 1985 by the First Division, and G. R. No.
71478 on September 25, 1985 by the Second Division. Upon Petitioner Carrier's Motion for Reconsideration, however, G.R. No.
69044 was given due course on March 25, 1985, and the parties were required to submit their respective Memoranda, which
they have done.
On the other hand, in G.R. No. 71478, Petitioner Carrier sought reconsideration of the Resolution denying the Petition for
Review and moved for its consolidation with G.R. No. 69044, the lower-numbered case, which was then pending resolution
with the First Division. The same was granted; the Resolution of the Second Division of September 25, 1985 was set aside and
the Petition was given due course.
At the outset, we reject Petitioner Carrier's claim that it is not the operator of the M/S Asiatica but merely a charterer thereof.
We note that in G.R. No. 69044, Petitioner Carrier stated in its Petition:
There are about 22 cases of the "ASIATICA" pending in various courts where various plaintiffs are
represented by various counsel representing various consignees or insurance companies. The common
defendant in these cases is petitioner herein, being the operator of said vessel. ... 1
Petitioner Carrier should be held bound to said admission. As a general rule, the facts alleged in a party's pleading are deemed
admissions of that party and binding upon it.
2
And an admission in one pleading in one action may be received in evidence
against the pleader or his successor-in-interest on the trial of another action to which he is a party, in favor of a party to the
latter action.
3

The threshold issues in both cases are: (1) which law should govern the Civil Code provisions on Common carriers or the
Carriage of Goods by Sea Act? and (2) who has the burden of proof to show negligence of the carrier?
On the Law Applicable
The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their
loss, destruction or deterioration.
4
As the cargoes in question were transported from Japan to the Philippines, the liability of
Petitioner Carrier is governed primarily by the Civil Code.
5
However, in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of Commerce and by special laws.
6
Thus, the Carriage of Goods
by Sea Act, a special law, is suppletory to the provisions of the Civil Code.
7

On the Burden of Proof
Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over goods, according to all the circumstances of each case.
8
Common carriers are
responsible for the loss, destruction, or deterioration of the goods unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
xxx xxx xxx
9

Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase "natural disaster or
calamity. " However, we are of the opinion that fire may not be considered a natural disaster or calamity. This must be so as it
arises almost invariably from some act of man or by human means. 10 It does not fall within the category of an act of God
unless caused by lightning 11 or by other natural disaster or calamity. 12 It may even be caused by the actual fault or privity of
the carrier. 13
Article 1680 of the Civil Code, which considers fire as an extraordinary fortuitous event refers to leases of rural lands where a
reduction of the rent is allowed when more than one-half of the fruits have been lost due to such event, considering that the
law adopts a protection policy towards agriculture. 14
As the peril of the fire is not comprehended within the exception in Article 1734, supra, Article 1735 of the Civil Code provides
that all cases than those mention in Article 1734, the common carrier shall be presumed to have been at fault or to have acted
negligently, unless it proves that it has observed the extraordinary deligence required by law.
In this case, the respective Insurers. as subrogees of the cargo shippers, have proven that the transported goods have been
lost. Petitioner Carrier has also proved that the loss was caused by fire. The burden then is upon Petitioner Carrier to proved
that it has exercised the extraordinary diligence required by law. In this regard, the Trial Court, concurred in by the Appellate
Court, made the following Finding of fact:
The cargoes in question were, according to the witnesses defendant placed in hatches No, 2 and 3 cf the
vessel, Boatswain Ernesto Pastrana noticed that smoke was coming out from hatch No. 2 and hatch No. 3; that
where the smoke was noticed, the fire was already big; that the fire must have started twenty-four 24) our
the same was noticed; that carbon dioxide was ordered released and the crew was ordered to open the hatch
covers of No, 2 tor commencement of fire fighting by sea water: that all of these effort were not enough to
control the fire.
Pursuant to Article 1733, common carriers are bound to extraordinary diligence in the vigilance over the
goods. The evidence of the defendant did not show that extraordinary vigilance was observed by the vessel to
prevent the occurrence of fire at hatches numbers 2 and 3. Defendant's evidence did not likewise show he
amount of diligence made by the crew, on orders, in the care of the cargoes. What appears is that after the
cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage.
Consequently, the crew could not have even explain what could have caused the fire. The defendant, in the
Court's mind, failed to satisfactorily show that extraordinary vigilance and care had been made by the crew to
prevent the occurrence of the fire. The defendant, as a common carrier, is liable to the consignees for said lack
of deligence required of it under Article 1733 of the Civil Code. 15
Having failed to discharge the burden of proving that it had exercised the extraordinary diligence required by law, Petitioner
Carrier cannot escape liability for the loss of the cargo.
And even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the Civil Code, it is required
under Article 1739 of the same Code that the "natural disaster" must have been the "proximate and only cause of the loss," and
that the carrier has "exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the
disaster. " This Petitioner Carrier has also failed to establish satisfactorily.
Nor may Petitioner Carrier seek refuge from liability under the Carriage of Goods by Sea Act, It is provided therein that:
Sec. 4(2). Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from
(b) Fire, unless caused by the actual fault or privity of the carrier.
xxx xxx xxx
In this case, both the Trial Court and the Appellate Court, in effect, found, as a fact, that there was "actual fault" of the carrier
shown by "lack of diligence" in that "when the smoke was noticed, the fire was already big; that the fire must have started
twenty-four (24) hours before the same was noticed; " and that "after the cargoes were stored in the hatches, no regular
inspection was made as to their condition during the voyage." The foregoing suffices to show that the circumstances under
which the fire originated and spread are such as to show that Petitioner Carrier or its servants were negligent in connection
therewith. Consequently, the complete defense afforded by the COGSA when loss results from fire is unavailing to Petitioner
Carrier.
On the US $500 Per Package Limitation:
Petitioner Carrier avers that its liability if any, should not exceed US $500 per package as provided in section 4(5) of the
COGSA, which reads:
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount exceeding $500 per package lawful money of the
United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that
sum in other currency, unless the nature and value of such goods have been declared by the shipper before
shipment and inserted in bill of lading. This declaration if embodied in the bill of lading shall be prima facie
evidence, but all be conclusive on the carrier.
By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount
than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the
figure above named. In no event shall the carrier be Liable for more than the amount of damage actually
sustained.
xxx xxx xxx
Article 1749 of the New Civil Code also allows the limitations of liability in this wise:
Art. 1749. A stipulation that the common carrier's liability as limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is binding.
It is to be noted that the Civil Code does not of itself limit the liability of the common carrier to a fixed amount per package
although the Code expressly permits a stipulation limiting such liability. Thus, the COGSA which is suppletory to the provisions
of the Civil Code, steps in and supplements the Code by establishing a statutory provision limiting the carrier's liability in the
absence of a declaration of a higher value of the goods by the shipper in the bill of lading. The provisions of the Carriage of
Goods by.Sea Act on limited liability are as much a part of a bill of lading as though physically in it and as much a part thereof
as though placed therein by agreement of the parties. 16
In G.R. No. 69044, there is no stipulation in the respective Bills of Lading (Exhibits "C-2" and "I-3") 1 7 limiting the carrier's
liability for the loss or destruction of the goods. Nor is there a declaration of a higher value of the goods. Hence, Petitioner
Carrier's liability should not exceed US $500 per package, or its peso equivalent, at the time of payment of the value of the
goods lost, but in no case "more than the amount of damage actually sustained."
The actual total loss for the 5,000 pieces of calorized lance pipes was P256,039 (Exhibit "C"), which was exactly the amount of
the insurance coverage by Development Insurance (Exhibit "A"), and the amount affirmed to be paid by respondent Court. The
goods were shipped in 28 packages (Exhibit "C-2") Multiplying 28 packages by $500 would result in a product of $14,000
which, at the current exchange rate of P20.44 to US $1, would be P286,160, or "more than the amount of damage actually
sustained." Consequently, the aforestated amount of P256,039 should be upheld.
With respect to the seven (7) cases of spare parts (Exhibit "I-3"), their actual value was P92,361.75 (Exhibit "I"), which is
likewise the insured value of the cargo (Exhibit "H") and amount was affirmed to be paid by respondent Court. however,
multiplying seven (7) cases by $500 per package at the present prevailing rate of P20.44 to US $1 (US $3,500 x P20.44) would
yield P71,540 only, which is the amount that should be paid by Petitioner Carrier for those spare parts, and not P92,361.75.
In G.R. No. 71478, in so far as the two (2) cases of surveying instruments are concerned, the amount awarded to DOWA which
was already reduced to $1,000 by the Appellate Court following the statutory $500 liability per package, is in order.
In respect of the shipment of 128 cartons of garment fabrics in two (2) containers and insured with NISSHIN, the Appellate
Court also limited Petitioner Carrier's liability to $500 per package and affirmed the award of $46,583 to NISSHIN. it
multiplied 128 cartons (considered as COGSA packages) by $500 to arrive at the figure of $64,000, and explained that "since
this amount is more than the insured value of the goods, that is $46,583, the Trial Court was correct in awarding said amount
only for the 128 cartons, which amount is less than the maximum limitation of the carrier's liability."
We find no reversible error. The 128 cartons and not the two (2) containers should be considered as the shipping unit.
In Mitsui & Co., Ltd. vs. American Export Lines, Inc. 636 F 2d 807 (1981), the consignees of tin ingots and the shipper of floor
covering brought action against the vessel owner and operator to recover for loss of ingots and floor covering, which had been
shipped in vessel supplied containers. The U.S. District Court for the Southern District of New York rendered judgment for
the plaintiffs, and the defendant appealed. The United States Court of Appeals, Second Division, modified and affirmed holding
that:
When what would ordinarily be considered packages are shipped in a container supplied by the carrier and
the number of such units is disclosed in the shipping documents, each of those units and not the container
constitutes the "package" referred to in liability limitation provision of Carriage of Goods by Sea Act. Carriage
of Goods by Sea Act, 4(5), 46 U.S.C.A.& 1304(5).
Even if language and purposes of Carriage of Goods by Sea Act left doubt as to whether carrier-furnished
containers whose contents are disclosed should be treated as packages, the interest in securing international
uniformity would suggest that they should not be so treated. Carriage of Goods by Sea Act, 4(5), 46 U.S.C.A.
1304(5).
... After quoting the statement in Leather's Best, supra, 451 F 2d at 815, that treating a container as a package
is inconsistent with the congressional purpose of establishing a reasonable minimum level of liability, Judge
Beeks wrote, 414 F. Supp. at 907 (footnotes omitted):
Although this approach has not completely escaped criticism, there is, nonetheless, much to
commend it. It gives needed recognition to the responsibility of the courts to construe and
apply the statute as enacted, however great might be the temptation to "modernize" or
reconstitute it by artful judicial gloss. If COGSA's package limitation scheme suffers from
internal illness, Congress alone must undertake the surgery. There is, in this regard, obvious
wisdom in the Ninth Circuit's conclusion in Hartford that technological advancements,
whether or not forseeable by the COGSA promulgators, do not warrant a distortion or
artificial construction of the statutory term "package." A ruling that these large reusable
metal pieces of transport equipment qualify as COGSA packages at least where, as here,
they were carrier owned and supplied would amount to just such a distortion.
Certainly, if the individual crates or cartons prepared by the shipper and containing his
goods can rightly be considered "packages" standing by themselves, they do not suddenly
lose that character upon being stowed in a carrier's container. I would liken these containers
to detachable stowage compartments of the ship. They simply serve to divide the ship's
overall cargo stowage space into smaller, more serviceable loci. Shippers' packages are quite
literally "stowed" in the containers utilizing stevedoring practices and materials analogous
to those employed in traditional on board stowage.
In Yeramex International v. S.S. Tando,, 1977 A.M.C. 1807 (E.D. Va.) rev'd on other grounds, 595 F 2nd 943 (4
Cir. 1979), another district with many maritime cases followed Judge Beeks' reasoning in Matsushita and
similarly rejected the functional economics test. Judge Kellam held that when rolls of polyester goods are
packed into cardboard cartons which are then placed in containers, the cartons and not the containers are the
packages.
xxx xxx xxx
The case of Smithgreyhound v. M/V Eurygenes, 18 followed the Mitsui test:
Eurygenes concerned a shipment of stereo equipment packaged by the shipper into cartons which were then
placed by the shipper into a carrier- furnished container. The number of cartons was disclosed to the carrier in
the bill of lading. Eurygenes followed the Mitsui test and treated the cartons, not the container, as the COGSA
packages. However, Eurygenes indicated that a carrier could limit its liability to $500 per container if the bill
of lading failed to disclose the number of cartons or units within the container, or if the parties indicated, in
clear and unambiguous language, an agreement to treat the container as the package.
(Admiralty Litigation in Perpetuum: The Continuing Saga of Package Limitations and Third
World Delivery Problems by Chester D. Hooper & Keith L. Flicker, published in Fordham
International Law Journal, Vol. 6, 1982-83, Number 1) (Emphasis supplied)
In this case, the Bill of Lading (Exhibit "A") disclosed the following data:
2 Containers
(128) Cartons)
Men's Garments Fabrics and Accessories Freight Prepaid
Say: Two (2) Containers Only.
Considering, therefore, that the Bill of Lading clearly disclosed the contents of the containers, the number of cartons or units,
as well as the nature of the goods, and applying the ruling in the Mitsui and Eurygenes cases it is clear that the 128 cartons, not
the two (2) containers should be considered as the shipping unit subject to the $500 limitation of liability.
True, the evidence does not disclose whether the containers involved herein were carrier-furnished or not. Usually, however,
containers are provided by the carrier. 19 In this case, the probability is that they were so furnished for Petitioner Carrier was
at liberty to pack and carry the goods in containers if they were not so packed. Thus, at the dorsal side of the Bill of Lading
(Exhibit "A") appears the following stipulation in fine print:
11. (Use of Container) Where the goods receipt of which is acknowledged on the face of this Bill of Lading are
not already packed into container(s) at the time of receipt, the Carrier shall be at liberty to pack and carry
them in any type of container(s).
The foregoing would explain the use of the estimate "Say: Two (2) Containers Only" in the Bill of Lading, meaning that the
goods could probably fit in two (2) containers only. It cannot mean that the shipper had furnished the containers for if so,
"Two (2) Containers" appearing as the first entry would have sufficed. and if there is any ambiguity in the Bill of Lading, it is a
cardinal principle in the construction of contracts that the interpretation of obscure words or stipulations in a contract shall
not favor the party who caused the obscurity.
20
This applies with even greater force in a contract of adhesion where a contract
is already prepared and the other party merely adheres to it, like the Bill of Lading in this case, which is draw. up by the
carrier.
21

On Alleged Denial of Opportunity to Present Deposition of Its Witnesses: (in G.R. No. 69044 only)
Petitioner Carrier claims that the Trial Court did not give it sufficient time to take the depositions of its witnesses in Japan by
written interrogatories.
We do not agree. petitioner Carrier was given- full opportunity to present its evidence but it failed to do so. On this point, the
Trial Court found:
xxx xxx xxx
Indeed, since after November 6, 1978, to August 27, 1979, not to mention the time from June 27, 1978, when
its answer was prepared and filed in Court, until September 26, 1978, when the pre-trial conference was
conducted for the last time, the defendant had more than nine months to prepare its evidence. Its belated
notice to take deposition on written interrogatories of its witnesses in Japan, served upon the plaintiff on
August 25th, just two days before the hearing set for August 27th, knowing fully well that it was its
undertaking on July 11 the that the deposition of the witnesses would be dispensed with if by next time it had
not yet been obtained, only proves the lack of merit of the defendant's motion for postponement, for which
reason it deserves no sympathy from the Court in that regard. The defendant has told the Court since
February 16, 1979, that it was going to take the deposition of its witnesses in Japan. Why did it take until
August 25, 1979, or more than six months, to prepare its written interrogatories. Only the defendant itself is
to blame for its failure to adduce evidence in support of its defenses.
xxx xxx xxx
22

Petitioner Carrier was afforded ample time to present its side of the case.
23
It cannot complain now that it was denied due
process when the Trial Court rendered its Decision on the basis of the evidence adduced. What due process abhors is absolute
lack of opportunity to be heard.
24

On the Award of Attorney's Fees:
Petitioner Carrier questions the award of attorney's fees. In both cases, respondent Court affirmed the award by the Trial
Court of attorney's fees of P35,000.00 in favor of Development Insurance in G.R. No. 69044, and P5,000.00 in favor of NISSHIN
and DOWA in G.R. No. 71478.
Courts being vested with discretion in fixing the amount of attorney's fees, it is believed that the amount of P5,000.00 would
be more reasonable in G.R. No. 69044. The award of P5,000.00 in G.R. No. 71478 is affirmed.
WHEREFORE, 1) in G.R. No. 69044, the judgment is modified in that petitioner Eastern Shipping Lines shall pay the
Development Insurance and Surety Corporation the amount of P256,039 for the twenty-eight (28) packages of calorized lance
pipes, and P71,540 for the seven (7) cases of spare parts, with interest at the legal rate from the date of the filing of the
complaint on June 13, 1978, plus P5,000 as attorney's fees, and the costs.
2) In G.R.No.71478,the judgment is hereby affirmed.
SO ORDERED.



Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 94151 April 30, 1991
EASTERN SHIPPING LINES, INC., petitioner,
vs.
THE COURT OF APPEALS and THE FIRST NATIONWIDE ASSURANCE CORPORATION, respondents.
Jimenez, Dala & Zaragoza for petitioner.
Reloy Law Office for private respondent.
GANCAYCO, J.:p
The extent of the liability of the common carrier and its insurer for damage to the cargo upon its delivery to the arrastre
operator is the center of this controversy.
The findings of fact of the trial court which were adopted by the appellate court and which are not disputed are as follows:
On September 4, 1978, thirteen coils of uncoated 7-wire stress relieved wire strand for prestressed concrete
were shipped on board the vessel "Japri Venture," owned and operated by the defendant Eastern Shipping
Lines, Inc., at Kobe, Japan, for delivery to Stresstek Post-Tensioning Phils., Inc. in Manila, as evidenced by the
bill of lading, commercial invoice, packing list and commercial invoice marked Exhibits A, B, C, D; 3, 4, 5 and 6-
Razon which were insured by the plaintiff First Nationwide Assurance Corporation for P171,923 (Exhibit E).
On September 16, 1978, the carrying vessel arrived in Manila and discharged the cargo to the custody of the
defendant E. Razon, Inc. (Exhibits 1, 2, 3, 4 and 5-ESL), from whom the consignee's customs broker received it
for delivery to the consignee's warehouse.
On February 19, 1979, the plaintiff indemnified the consignee in the amount of P171,923.00 for damage and
loss to the insured cargo, whereupon the former was subrogated for the latter (Exhibit I).
The plaintiff now seeks to recover from the defendants what it has indemnified the consignee, less
P48,293.70, the salvage value of the cargo, or the total amount of P123,629.30.
It appears that while enroute from Kobe to Manila, the carrying vessel "encountered very rough seas and
stormy weather" for three days, more or less, which caused it to roll and pound heavily, moving its master to
execute a marine note of protest upon arrival at the port of Manila on September 15, 1978 (Exhibit 1-Razon);
that the coils wrapped in burlap cloth and cardboard paper were stored in the lower hold of the hatch of the
vessel which was flooded with water about one foot deep; that the water entered the hatch when the vessel
encountered heavy weather enroute to Manila (Exhibits G, 2, 2A, 2B-Razon); that upon request, a survey of
bad order cargo was conducted at the pier in the presence of the representatives of the consignee and the
defendant E. Razon, Inc. and it was found that seven coils were rusty on one side each (Exhibits F and 10-
Razon); that upon survey conducted at the consignee's warehouse it was found that the "wetting (of the
cargo) was caused by fresh water" that entered the hatch when the vessel encountered heavy weather
enroute to Manila (p. 3, Exhibit G); and that all thirteen coils were extremely rusty and totally unsuitable for
the intended purpose (p. 3, Exhibit G), (pp. 217-218, orig. rec.)
1

The complaint that was filed by the First Nationwide Assurance Corporation (insurer) against Eastern Shipping Lines, Inc. and
E. Razon, Inc., in the Regional Trial Court, Manila, was dismissed in a decision dated November 25, 1985. An appeal therefrom
was interposed by the insurer to the Court of Appeals wherein in due course a decision was rendered on April 27, 1990, the
dispositive part of which reads as follows:
WHEREFORE, the judgment appealed from is hereby SET ASIDE. The appellees are ordered to pay the
appellant the sum of P123,629.30, with legal rate of interest from July 24, 1979 until fully paid, Eastern
Shipping Lines, Inc. to assume 8/13 thereof, and E. Razon, Inc. to assume 5/13 thereof. No pronouncement as
to costs.
SO ORDERED.
2

Only Eastern Shipping Lines, Inc. filed this petition for review by certiorari based on the following assigned errors:
I. IT REFUSED TO CONSIDER THE COUNTER-ASSIGNMENT OF ERRORS OF PETITIONER AS CONTAINED IN
ITS BRIEF FOR THE DEFENDANT-APPELLEE EASTERN SHIPPING LINES, INC. AND WHICH ARE ONLY MEANT
TO SUSTAIN THE DECISION OF DISMISSAL OF THE TRIAL COURT;
II. AGAINST ITS OWN FINDINGS OF FACT THAT THE CARGO WAS DISCHARGED AND DELIVERED COMPLETE
UNTO THE CUSTODY OF THE ARRASTRE OPERATOR UNDER CLEAN TALLY SHEETS, IT NEVERTHELESS
ARBITRARILY CONCLUDED PETITIONER AS LIABLE FOR THE CLAIMED DAMAGES;
III. IT FAILED TO HOLD PETITIONER RELIEVED OF ANY LIABILITY OVER THE CARGO NOTWITHSTANDING
IT FOUND THAT THE SAME WAS DISCHARGED AND DELIVERED UNTO THE CUSTODY OF THE ARRASTRE
OPERATOR UNDER CLEAN TALLY SHEETS AND ERGO TO BE CONSIDERED GOOD ORDER CARGO WHEN
DELIVERED; and,
IV. IT ARBITRARILY AWARDED INTEREST AT THE LEGAL RATE TO COMMENCE FROM THE DATE OF THE
COMPLAINT IN VIOLATION OF THE DOCTRINAL RULE THAT IN CASE OF UNLIQUIDATED CLAIMS SUCH AS
THE CLAIM IN QUESTION, INTEREST SHOULD ONLY COMMENCE FROM THE DATE OF THE DECISION OF
THE TRIAL COURT.
3

Under the first assigned error, petitioner contends that the appellate court did not consider its counter-assignment of errors
which was only meant to sustain the decision of dismissal of the trial court. An examination of the questioned decision shows
that the appellate court did not consider the counter-assignment of errors of petitioner as it did not appeal the decision of the
trial court.
Nevertheless, when such counter-assignments are intended to sustain the judgment appealed from on other grounds, but not
to seek modification or reversal thereof, the appellate court should consider the same in the determination of the case but no
affirmative relief can be granted thereby other than what had been obtained from the lower court.
4
The contention of
petitioner on this aspect is, thus, well-taken.
Be that as it may, under the second and third assigned errors, petitioner claims it should not be held liable as the shipment was
discharged and delivered complete into the custody of the arrastre operator under clean tally sheets.
While it is true the cargo was delivered to the arrastre operator in apparent good order condition, it is also undisputed that
while en route from Kobe to Manila, the vessel encountered "very rough seas and stormy weather", the coils wrapped in burlap
cloth and cardboard paper were stored in the lower hatch of the vessel which was flooded with water about one foot deep;
that the water entered the hatch; that a survey of bad order cargo which was conducted in the pier in the presence of
representatives of the consignee and E. Razon, Inc., showed that seven coils were rusty on one side (Exhibits F and 10-Razon);
that a survey conducted at the consignee's warehouse also showed that the "wetting (of the cargo) was caused by fresh water"
that entered the hatch when the vessel encountered heavy rain en route to Manila (Exhibit G); and that all thirteen coils were
extremely rusty and totally unsuitable for the intended purpose.
5

Consequently, based on these facts, the appellate court made the following findings and conclusions:
Plainly, the heavy seas and rains referred to in the master's report were not caso fortuito, but normal
occurrences that an ocean-going vessel, particularly in the month of September which, in our area, is a month
of rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable.
These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a
voyage. That rain water (not sea water) found its way into the holds of theJupri Venture is a clear indication
that care and foresight did not attend the closing of the ship's hatches so that rain water would not find its
way into the cargo holds of the ship.
Moreover, under Article 1733 of the Civil Code, common carriers are bound to observe "extra-ordinary
vigilance over goods . . . .according to all circumstances of each case," and Article 1735 of the same Code
states, to wit:
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding
article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as required in article 1733.
Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the
part of the carrier applies; and the carrier must present evidence that it has observed the extraordinary
diligence required by Article 1733 of the Civil Code in order to escape liability for damage or destruction to
the goods that it had admittedly carried in this case. No such evidence exists of record. Thus, the carrier
cannot escape liability.
The Court agrees with and is bound by the foregoing findings of fact made by the appellate court. The presumption, therefore,
that the cargo was in apparent good condition when it was delivered by the vessel to the arrastre operator by the clean tally
sheets has been overturned and traversed. The evidence is clear to the effect that the damage to the cargo was suffered while
aboard petitioner's vessel.
The last assigned error is untenable. The interest due on the amount of the judgment should commence from the date of
judicial demand.
6

WHEREFORE, the petition is DISMISSED, with costs against petitioner.
SO ORDERED.



Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-31379 August 29, 1988
COMPAIA MARITIMA, petitioner,
vs.
COURT OF APPEALS and VICENTE CONCEPCION, respondents.
Rafael Dinglasan for petitioner.
Benjamin J. Molina for private respondent.
FERNAN, C.J.:
Petitioner Compaia Maritima seeks to set aside through this petition for review on certiorari the decision
1
of the Court of
Appeals dated December 5, 1965, adjudging petitioner liable to private respondent Vicente E. Concepcion for damages in the
amount of P24,652.97 with legal interest from the date said decision shall have become final, for petitioner's failure to deliver
safely private respondent's payloader, and for costs of suit. The payloader was declared abandoned in favor of petitioner.
The facts of the case are as follows:
Private respondent Vicente E. Concepcion, a civil engineer doing business under the name and style of Consolidated
Construction with office address at Room 412, Don Santiago Bldg., Taft Avenue, Manila, had a contract with the Civil
Aeronautics Administration (CAA) sometime in 1964 for the construction of the airport in Cagayan de Oro City Misamis
Oriental.
Being a Manila based contractor, Vicente E. Concepcion had to ship his construction equipment to Cagayan de Oro City.
Having shipped some of his equipment through petitioner and having settled the balance of P2,628.77 with respect to said
shipment, Concepcion negotiated anew with petitioner, thru its collector, Pacifico Fernandez, on August 28, 1964 for the
shipment to Cagayan de Oro City of one (1) unit payloader, four (4) units 6x6 Reo trucks and two (2) pieces of water tanks. He
was issued Bill of Lading 113 on the same date upon delivery of the equipment at the Manila North Harbor.
2

These equipment were loaded aboard the MV Cebu in its Voyage No. 316, which left Manila on August 30, 1964 and arrived at
Cagayan de Oro City in the afternoon of September 1, 1964. The Reo trucks and water tanks were safely unloaded within a few
hours after arrival, but while the payloader was about two (2) meters above the pier in the course of unloading, the swivel pin
of the heel block of the port block of Hatch No. 2 gave way, causing the payloader to fall.
3
The payloader was damaged and was
thereafter taken to petitioner's compound in Cagayan de Oro City.
On September 7, 1964, Consolidated Construction, thru Vicente E. Concepcion, wrote Compaia Maritima to demand a
replacement of the payloader which it was considering as a complete loss because of the extent of damage.
4
Consolidated
Construction likewise notified petitioner of its claim for damages. Unable to elicit response, the demand was repeated in a
letter dated October 2, 1964.
5

Meanwhile, petitioner shipped the payloader to Manila where it was weighed at the San Miguel Corporation. Finding that the
payloader weighed 7.5 tons and not 2.5 tons as declared in the B-111 of Lading, petitioner denied the claim for damages of
Consolidated Construction in its letter dated October 7, 1964, contending that had Vicente E. Concepcion declared the actual
weight of the payloader, damage to their ship as well as to his payloader could have been prevented.
6

To replace the damaged payloader, Consolidated Construction in the meantime bought a new one at P45,000.00 from
Bormaheco Inc. on December 3, 1964, and on July 6, 1965., Vicente E. Concepcion filed an action for damages against
petitioner with the then Court of First Instance of Manila, Branch VII, docketed as Civil Case No. 61551, seeking to recover
damages in the amount of P41,225.00 allegedly suffered for the period of 97 days that he was not able to employ a payloader
in the construction job at the rate of P450.00 a day; P34,000.00 representing the cost of the damaged payloader; Pl 1, 000. 00
representing the difference between the cost of the damaged payloader and that of the new payloader; P20,000.00
representing the losses suffered by him due to the diversion of funds to enable him to buy a new payloader; P10,000.00 as
attorney's fees; P5,000.00 as exemplary damages; and cost of the suit.
7

After trial, the then Court of First Instance of Manila, Branch VII, dismissed on April 24, 1968 the complaint with costs against
therein plaintiff, herein private respondent Vicente E. Concepcion, stating that the proximate cause of the fall of the payloader
was Vicente E. Concepcion's act or omission in having misrepresented the weight of the payloader as 2.5 tons instead of its
true weight of 7.5 tons, which underdeclaration was intended to defraud Compaia Maritima of the payment of the freight
charges and which likewise led the Chief Officer of the vessel to use the heel block of hatch No. 2 in unloading the payloader.
8

From the adverse decision against him, Vicente E. Concepcion appealed to the Court of Appeals which, on December 5, 1965
rendered a decision, the dispositive portion of which reads:
IN VIEW WHEREOF, judgment must have to be as it is hereby reversed; defendant is condemned to pay unto
plaintiff the sum in damages of P24,652.07 with legal interest from the date the present decision shall have
become final; the payloader is declared abandoned to defendant; costs against the latter.
9

Hence, the instant petition.
The principal issue in the instant case is whether or not the act of private respondent Vicente E. Concepcion in furnishing
petitioner Compaia Maritima with an inaccurate weight of 2.5 tons instead of the payloader's actual weight of 7.5 tons was
the proximate and only cause of the damage on the Oliver Payloader OC-12 when it fell while being unloaded by petitioner's
crew, as would absolutely exempt petitioner from liability for damages under paragraph 3 of Article 1734 of the Civil Code,
which provides:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the
same is due to any of the following causes only:
xxx xxx xxx
(3) Act or omission of the shipper or owner of the goods.
Petitioner claims absolute exemption under this provision upon the reasoning that private respondent's act of furnishing it
with an inaccurate weight of the payloader constitutes misrepresentation within the meaning of "act or omission of the
shipper or owner of the goods" under the above- quoted article. It likewise faults the respondent Court of Appeals for
reversing the decision of the trial court notwithstanding that said appellate court also found that by representing the weight of
the payloader to be only 2.5 tons, private respondent had led petitioner's officer to believe that the same was within the 5 tons
capacity of the heel block of Hatch No. 2. Petitioner would thus insist that the proximate and only cause of the damage to the
payloader was private respondent's alleged misrepresentation of the weight of the machinery in question; hence, any
resultant damage to it must be borne by private respondent Vicente E. Concepcion.
The general rule under Articles 1735 and 1752 of the Civil Code is that common carriers are presumed to have been at fault or
to have acted negligently in case the goods transported by them are lost, destroyed or had deteriorated. To overcome the
presumption of liability for the loss, destruction or deterioration of the goods under Article 1735, the common carriers must
prove that they observed extraordinary diligence as required in Article 1733 of the Civil Code. The responsibility of observing
extraordinary diligence in the vigilance over the goods is further expressed in Article 1734 of the same Code, the article
invoked by petitioner to avoid liability for damages.
Corollary is the rule that mere proof of delivery of the goods in good order to a common carrier, and of their arrival at the
place of destination in bad order, makes out prima facie case against the common carrier, so that if no explanation is given as
to how the loss, deterioration or destruction of the goods occurred, the common carrier must be held responsible.
10
Otherwise
stated, it is incumbent upon the common carrier to prove that the loss, deterioration or destruction was due to accident or
some other circumstances inconsistent with its liability.
In the instant case, We are not persuaded by the proferred explanation of petitioner alleged to be the proximate cause of the
fall of the payloader while it was being unloaded at the Cagayan de Oro City pier. Petitioner seems to have overlooked the
extraordinary diligence required of common carriers in the vigilance over the goods transported by them by virtue of the
nature of their business, which is impressed with a special public duty.
Thus, Article 1733 of the Civil Code provides:
Art. 1733. Common carriers, from the nature of their business and for reason of public policy, are bound to
observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735 and
1745, Nos. 5, 6 and 7, ...
The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and
to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for safe carriage and
delivery. It requires common carriers to render service with the greatest skill and foresight and "to use all reasonable means
to ascertain the nature and characteristic of goods tendered for shipment, and to exercise due care in the handling and
stowage including such methods as their nature requires."
11
Under Article 1736 of the Civil Code, the responsibility to observe
extraordinary diligence commences and lasts from the time the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has the right to receive them without prejudice to the provisions of Article 1738.
Where, as in the instant case, petitioner, upon the testimonies of its own crew, failed to take the necessary and adequate
precautions for avoiding damage to, or destruction of, the payloader entrusted to it for safe carriage and delivery to Cagayan
de Oro City, it cannot be reasonably concluded that the damage caused to the payloader was due to the alleged
misrepresentation of private respondent Concepcion as to the correct and accurate weight of the payloader. As found by the
respondent Court of Appeals, the fact is that petitioner used a 5-ton capacity lifting apparatus to lift and unload a visibly heavy
cargo like a payloader. Private respondent has, likewise, sufficiently established the laxity and carelessness of petitioner's
crew in their methods of ascertaining the weight of heavy cargoes offered for shipment before loading and unloading them, as
is customary among careful persons.
It must be noted that the weight submitted by private respondent Concepcion appearing at the left-hand portion of Exhibit
8
12
as an addendum to the original enumeration of equipment to be shipped was entered into the bill of lading by petitioner,
thru Pacifico Fernandez, a company collector, without seeing the equipment to be shipped.
13
Mr. Mariano Gupana, assistant
traffic manager of petitioner, confirmed in his testimony that the company never checked the information entered in the bill of
lading.
14
Worse, the weight of the payloader as entered in the bill of lading was assumed to be correct by Mr. Felix Pisang,
Chief Officer of MV Cebu.
15

The weights stated in a bill of lading are prima facie evidence of the amount received and the fact that the weighing was done
by another will not relieve the common carrier where it accepted such weight and entered it on the bill of lading.
16
Besides,
common carriers can protect themselves against mistakes in the bill of lading as to weight by exercising diligence before
issuing the same.
17

While petitioner has proven that private respondent Concepcion did furnish it with an inaccurate weight of the payloader,
petitioner is nonetheless liable, for the damage caused to the machinery could have been avoided by the exercise of reasonable
skill and attention on its part in overseeing the unloading of such a heavy equipment. And circumstances clearly show that the
fall of the payloader could have been avoided by petitioner's crew. Evidence on record sufficiently show that the crew of
petitioner had been negligent in the performance of its obligation by reason of their having failed to take the necessary
precaution under the circumstances which usage has established among careful persons, more particularly its Chief Officer,
Mr. Felix Pisang, who is tasked with the over-all supervision of loading and unloading heavy cargoes and upon whom rests the
burden of deciding as to what particular winch the unloading of the payloader should be undertaken.
18
While it was his duty
to determine the weight of heavy cargoes before accepting them. Mr. Felix Pisang took the bill of lading on its face value and
presumed the same to be correct by merely "seeing" it.
19
Acknowledging that there was a "jumbo" in the MV Cebu which has
the capacity of lifting 20 to 25 ton cargoes, Mr. Felix Pisang chose not to use it, because according to him, since the ordinary
boom has a capacity of 5 tons while the payloader was only 2.5 tons, he did not bother to use the "jumbo" anymore.
20

In that sense, therefore, private respondent's act of furnishing petitioner with an inaccurate weight of the payloader upon
being asked by petitioner's collector, cannot be used by said petitioner as an excuse to avoid liability for the damage caused, as
the same could have been avoided had petitioner utilized the "jumbo" lifting apparatus which has a capacity of lifting 20 to 25
tons of heavy cargoes. It is a fact known to the Chief Officer of MV Cebu that the payloader was loaded aboard the MV Cebu at
the Manila North Harbor on August 28, 1964 by means of a terminal crane.
21
Even if petitioner chose not to take the necessary
precaution to avoid damage by checking the correct weight of the payloader, extraordinary care and diligence compel the use
of the "jumbo" lifting apparatus as the most prudent course for petitioner.
While the act of private respondent in furnishing petitioner with an inaccurate weight of the payloader cannot successfully be
used as an excuse by petitioner to avoid liability to the damage thus caused, said act constitutes a contributory circumstance to
the damage caused on the payloader, which mitigates the liability for damages of petitioner in accordance with Article 1741 of
the Civil Code, to wit:
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods,
the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages,
which however, shall be equitably reduced.
We find equitable the conclusion of the Court of Appeals reducing the recoverable amount of damages by 20% or 1/5 of the
value of the payloader, which at the time the instant case arose, was valued at P34,000. 00, thereby reducing the recoverable
amount at 80% or 4/5 of P34,000.00 or the sum of P27,200.00. Considering that the freight charges for the entire cargoes
shipped by private respondent amounting to P2,318.40 remained unpaid.. the same would be deducted from the P27,000.00
plus an additional deduction of P228.63 representing the freight charges for the undeclared weight of 5 tons (difference
between 7.5 and 2.5 tons) leaving, therefore, a final recoverable amount of damages of P24,652.97 due to private respondent
Concepcion.
Notwithstanding the favorable judgment in his favor, private respondent assailed the Court of Appeals' decision insofar as it
limited the damages due him to only P24,652.97 and the cost of the suit. Invoking the provisions on damages under the Civil
Code, more particularly Articles 2200 and 2208, private respondent further seeks additional damages allegedly because the
construction project was delayed and that in spite of his demands, petitioner failed to take any steps to settle his valid, just and
demandable claim for damages.
We find private respondent's submission erroneous. It is well- settled that an appellee, who is not an appellant, may assign
errors in his brief where his purpose is to maintain the judgment on other grounds, but he may not do so if his purpose is to
have the judgment modified or reversed, for, in such case, he must appeal.
22
Since private respondent did not appeal from the
judgment insofar as it limited the award of damages due him, the reduction of 20% or 1/5 of the value of the payloader stands.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals is hereby AFFIRMED in all
respects with costs against petitioner. In view of the length of time this case has been pending, this decision is immediately
executory.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
DECISION
September 29, 1919
G.R. No. 14191
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff-appellant,
vs.
YNCHAUSTI & COMPANY, defendant-appellee.
Attorney-General Paredes for the appellant. Charles C. Cohn for the appellee.
JOHNSON, J.:
The purpose of this action was to recover the sum of P200 as damages to certain cargo of roofing tiles shipped by the plaintiff
from Manila to Iloilo on a vessel belonging to the defendant. The tiles were delivered by the defendant to the consignee of the
plaintiff at Iloilo. Upon delivery it was found that some of the tiles had been damaged; that the damage amounted to about
P200. Upon a submission of that question to the lower court a judgment was rendered against the plaintiff in favor of the
defendant, absolving the latter from all liability under the complaint.
There seems to be no dispute about the facts, except whether or not the tiles were broken by the negligence of the defendant.
The defendant denied that the tiles were broken by reason of its negligence. The defendant proved, and the plaintiff did not
attempt to dispute, that the roofing tiles in question were of a brittle and fragile nature; that they were delivered by the
plaintiff to the defendant in bundles of ten each, tied with bejuco [rattan], without any packing or protective covering. The
plaintiff did not even attempt to prove any negligence on the part of the defendant. On the hand, the defendant offered proof to
show that there was no negligence on its part, by showing that the tiles were loaded, stowed, and discharged by handlabor,
and not be mechanical devices which might have caused the breakage in question.
It appears from the record that the tiles in question were received by the defendant from the plaintiff, as representative on a
Government bill of lading known as "General Form No. 9-A," which was made out and submitted by a representative of the
Bureau of Supply to the defendant. (Exhibit A.) At the head of Exhibit A is found the following:
You are hereby authorized to receive, carry, and deliver the following described merchandise to treasurer of Iloilo at Iloilo in
accordance with the authorized and prescribed rates and classifications, and according to the laws of common carriers in force
on the date hereof, settlement and payment of charges to be made by Bureau of Supply. (Sgd.) T. R. SCHOON, Chief Division of
Supplies, Bureau of Supply.
On the said bill of lading we find the following, which was attempted thereon by the defendant:
The goods have been accepted for transportation subject to the conditions prescribed by the Insular Collector of Customs in
Philippine Marine Regulations, page 16, under the heading "Bill of Lading Conditions."
The lower court, in discussing the said bill of lading with the two conditions found thereon, reached the conclusion that the
plaintiff was bound by the terms of the bill of lading as issued by the defendant and not by the terms which the plaintiff
attempted to impose, - that is to say, that such merchandise was to be carried at owner's risk only; that there was no
presumption of negligence on the part of the defendant from the fact that the tiles were broken when received by the
consignee; and that since the plaintiff did not prove negligence on the part of the defendant, the former was not entitled to
recover damages from the latter. The lower court rendered judgment absolving the defendant from all liability under the
complaint.
The important questions presented by the appeal are: (a) Where the terms and conditions stamped by the defendant upon the
Government's bill of lading binding upon the plaintiff? (b) Was there a presumption of negligence on the part of the defendant?
The record shows that ever since the Government began to use the bill of lading, General Form No. 9-A, the shipowners had
always used the "stamp" in question; that in the present case the defendant placed said stamp upon the bill of lading before the
plaintiff shipped the tiles in question; that having shipped the goods under the said bill of lading, with the terms and
conditions of the carriage stamped thereon, the appellant must be deemed to have assented to the said terms and conditions
thereon stamped.
The appellant contends also that it was not bound by the terms and conditions inserted by the appellee, because (a) the
reference made by the appellee to the "Philippine Marine Regulations" prescribed by the Collector of Customs was vague; that
the appellee should have expressed the conditions fully and clearly on the face of the bill of lading; and (b) that the Insular
Collector of Customs had no authority to issue such regulations.
As to the first contention, it seems that the appellant fully knew the import and significance of the reference made in said
regulations. The appellant attempted to show that prior to the transaction in question the Government notified the defendant
and other shipowners that it would not be bound by the "stamp" that was placed by the shipowners on the Government's bill
of lading.
With reference to the contention of the appellant that the Collector of Customs had no authority to make such regulations, it
may be said in the present case that the binding effect of the conditions stamped on the bill of lading did not proceed from the
authority of the Collector of Customs but from the actual contract which the parties made in the present case. Each bill of
lading is a contract and the parties thereto are bound by its terms.
Findings as we do that the tiles in question were shipped at the owner's risk, under the law in this jurisdiction, the carrier is
only liable where the evidence shows that he was guilty of some negligence and that the damages claimed were the result of
such negligence. As was said above, the plaintiff offered no proof whatever to show negligence on the part of the defendant.
The plaintiff cites some American authorities to support its contention that the carrier is an absolute insurer of merchandise
shipped and that the proof of breakage or damage to goods shipped in the hands of the carrier makes out a prima facie case of
negligence against him, and that the burden of proof is thrown on him to show due care and diligence.
The law upon that question in this jurisdiction is found in articles 361 and 362 of the Commercial Code. Article 361 provides:
ART. 361. Merchandise shall be transported at the risk and venture of the shipper, if the contrary be not expressly stipulated.
Therefore, all damages and impairment, suffered by the goods in transportation by reason of accident, force majeure, or by
virtue of the nature or defect of the articles, shall be for the account and risk of the shipper.
The proof of these accidents is incumbent upon the carrier.
Article 362 provides:
ART. 362. The carrier, however, shall be liable for the losses and damages arising from the causes mentioned in the foregoing
article, if it be proved against him that they occurred on account of his negligence or because he did not take the precautions
usually adopted by careful persons, unless the shipper committed fraud in the bill of lading stating that the goods were of a
class or quality different from what they really were. . . .
Under the provisions of article 361 the defendant, in order to free itself from liability, was only obliged to prove that the
damages suffered by the goods were "by virtue of the nature or defect of the articles." Under the provisions of article 362 the
plaintiff, in order to hold the defendant liable, was obliged to prove that the damages to the goods by virtue of their nature,
occurred on account of its negligence or because the defendant did not take the precaution usually adopted by careful persons.
The defendant herein proved, and the plaintiff did not attempt to dispute, that the tiles in question were of a brittle and fragile
nature and that they were delivered by the plaintiff to the defendant without any packing or protective covering. The
defendant also offered proof to show that there was no negligence on its part, by showing that the tiles were loaded, stowed,
and discharged in a careful and diligent manner.
In this jurisdiction there is no presumption of negligence on the part of the carriers in case like the present. The plaintiff, not
having proved negligence on the part of the defendant, is not entitled to recover damages.
For the foregoing reasons, the judgment of the lower court is hereby affirmed, with costs. So ordered.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16629 January 31, 1962
SOUTHERN LINES, INC., petitioner,
vs.
COURT OF APPEALS and CITY OF ILOILO, respondents.
Jose Ma. Lopez Vito, Jr. for petitioner.
The City Fiscal for respondents.
DE LEON, J.:
This is a petition to review on certiorari the decision of the Court of Appeals in CA-G.R. No. 15579-R affirming that of the Court
of First Instance of Iloilo which sentenced petitioner Southern Lines, Inc. to pay respondent City of Iloilo the amount of
P4,931.41.
Sometime in 1948, the City of Iloilo requisitioned for rice from the National Rice and Corn Corporation (hereafter referred to
as NARIC) in Manila. On August 24 of the same year, NARIC, pursuant to the order, shipped 1,726 sacks of rice consigned to the
City of Iloilo on board the SS "General Wright" belonging to the Southern Lines, Inc. Each sack of rice weighed 75 kilos and the
entire shipment as indicated in the bill of lading had a total weight of 129,450 kilos. According to the bill of lading, the cost of
the shipment was P63,115.50 itemized and computed as follows: .
Unit Price per bag P36.25 P62,567.50
Handling at P0.13 per bag 224.38
Trucking at P2.50 per bag 323.62
T o t a l . . . . . .. . . . .

63,115.50
On September 3, 1948, the City of Iloilo received the shipment and paid the amount of P63,115.50. However, it was noted that
the foot of the bill of lading that the City of Iloilo 'Received the above mentioned merchandise apparently in same condition as
when shipped, save as noted below: actually received 1685 sacks with a gross weight of 116,131 kilos upon actual weighing.
Total shortage ascertained 13,319 kilos." The shortage was equivalent to 41 sacks of rice with a net weight of 13,319 kilos, the
proportionate value of which was P6,486.35.
On February 14, 1951 the City of Iloilo filed a complaint in the Court of First Instance of Iloilo against NARIC and the Southern
Lines, Inc. for the recovery of the amount of P6,486.35 representing the value of the shortage of the shipment of rice. After
trial, the lower court absolved NARIC from the complaint, but sentenced the Southern Lines, Inc. to pay the amount of
P4,931.41 which is the difference between the sum of P6,486.35 and P1,554.94 representing the latter's counterclaim for
handling and freight.
The Southern Lines, Inc. appealed to the Court of Appeals which affirmed the judgment of the trial court. Hence, this petition
for review.
The only question to be determined in this petition is whether or not the defendant-carrier, the herein petitioner, is liable for
the loss or shortage of the rice shipped.
Article 361 of the Code of Commerce provides: .
ART. 361. The merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been
expressly stipulated.
As a consequence, all the losses and deteriorations which the goods may suffer during the transportation by reason of
fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of the
shipper.1wph1.t
Proof of these accidents is incumbent upon the carrier.
Article 362 of the same Code provides: .
ART. 362. Nevertheless, the carrier shall be liable for the losses and damages resulting from the causes mentioned
in the preceding article if it is proved, as against him, that they arose through his negligence or by reason of his having
failed to take the precautions which usage his establisbed among careful persons, unless the shipper has committed
fraud in the bill of lading, representing the goods to be of a kind or quality different from what they really were.
If, notwithstanding the precautions referred to in this article, the goods transported run the risk of being lost, on
account of their nature or by reason of unavoidable accident, there being no time for their owners to dispose of them,
the carrier may proceed to sell them, placing them for this purpose at the disposal of the judicial authority or of the
officials designated by special provisions.
Under the provisions of Article 361, the defendant-carrier in order to free itself from liability, was only obliged to prove that
the damages suffered by the goods were "by virtue of the nature or defect of the articles." Under the provisions of Article 362,
the plaintiff, in order to hold the defendant liable, was obliged to prove that the damages to the goods by virtue of their nature,
occurred on account of its negligence or because the defendant did not take the precaution adopted by careful persons.
(Government v. Ynchausti & Co., 40 Phil. 219, 223).
Petitioner claims exemption from liability by contending that the shortage in the shipment of rice was due to such factors as
the shrinkage, leakage or spillage of the rice on account of the bad condition of the sacks at the time it received the same and
the negligence of the agents of respondent City of Iloilo in receiving the shipment. The contention is untenable, for, if the fact of
improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods
notwithstanding such condition, it is not relieved of liability for loss or injury resulting thereform. (9 Am Jur. 869.)
Furthermore, according to the Court of Appeals, "appellant (petitioner) itself frankly admitted that the strings that tied the
bags of rice were broken; some bags were with holes and plenty of rice were spilled inside the hull of the boat, and that the
personnel of the boat collected no less than 26 sacks of rice which they had distributed among themselves." This finding,
which is binding upon this Court, shows that the shortage resulted from the negligence of petitioner.
Invoking the provisions of Article 366 of the Code of Commerce and those of the bill of lading, petitioner further contends that
respondent is precluded from filing an action for damages on account of its failure to present a claim within 24 hours from
receipt of the shipment. It also cites the cases of Government v. Ynchausti & Co., 24 Phil. 315 and Triton Insurance Co. v. Jose, 33
Phil. 194, ruling to the effect that the requirement that the claim for damages must be made within 24 hours from delivery is a
condition precedent to the accrual of the right of action to recover damages. These two cases above-cited are not applicable to
the case at bar. In the first cited case, the plaintiff never presented any claim at all before filing the action. In the second case,
there was payment of the transportation charges which precludes the presentation of any claim against the carrier. (See
Article 366, Code of Commerce.) It is significant to note that in the American case of Hoye v. Pennsylvania Railroad Co., 13 Ann.
Case. 414, it has been said: .
... "It has been held that a stipulation in the contract of shipment requiring the owner of the goods to present a notice
of his claim to the carrier within a specified time after the goods have arrived at their destination is in the nature of a
condition precedent to the owner's right to enforce a recovery, that he must show in the first instance that be has
complied with the condition, or that the circumstances were such that to have complied with it would have required
him to do an unreasonable thing. The weight of authority, however, sustains the view that such a stipulation is more in
the nature of a limitation upon the owner's right to recovery, and that the burden of proof is accordingly on the carrier
to show that the limitation was reasonable and in proper form or within the time stated." (Hutchinson on Carrier, 3d
ed., par. 44) Emphasis supplied.
In the case at bar, the record shows that petitioner failed to plead this defense in its answer to respondent's complaint and,
therefore, the same is deemed waived (Section 10, Rule 9, Rules of Court), and cannot be raised for the first time at the trial or
on appeal. (Maxilom v. Tabotabo, 9 Phil. 390.) Moreover, as the Court of Appeals has said: .
... the records reveal that the appellee (respondent) filed the present action, within a reasonable time after the short
delivery in the shipment of the rice was made. It should be recalled that the present action is one for the refund of the
amount paid in excess, and not for damages or the recovery of the shortage; for admittedly the appellee (respondent)
had paid the entire value of the 1726 sacks of rice, subject to subsequent adjustment, as to shortages or losses. The bill
of lading does not at all limit the time for filing an action for the refund of money paid in excess.
WHEREFORE, the decision of the Court of Appeals is hereby affirmed in all respects and the petition for certioraridenied.
With costs against the petitioner.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-48757 May 30, 1988
MAURO GANZON, petitioner,
vs.
COURT OF APPEALS and GELACIO E. TUMAMBING, respondents.
Antonio B. Abinoja for petitioner.
Quijano, Arroyo & Padilla Law Office for respondents.
SARMIENTO, J.:
The private respondent instituted in the Court of First Instance of Manila
1
an action against the petitioner for damages based
on culpa contractual. The antecedent facts, as found by the respondent Court,
2
are undisputed:
On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons of scrap iron from
Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman" (Exhibit 1, Stipulation of Facts, Amended Record on
Appeal, p. 38). Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in three
feet of water (t.s.n., September 28, 1972, p. 31). On December 1, 1956, Gelacio Tumambing delivered the scrap iron to
defendant Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the
lighter under the captain's supervision. When about half of the scrap iron was already loaded (t.s.n., December 14, 1972, p. 20),
Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The latter resisted the
shakedown and after a heated argument between them, Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing
(t.s.n., March 19, 1971, p. 9; September 28, 1972, pp. 6-7).<re||an1w> The gunshot was not fatal but Tumambing had to be
taken to a hospital in Balanga, Bataan, for treatment (t.s.n., March 19, 1971, p. 13; September 28, 1972, p. 15).
After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio Rub, accompanied
by three policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron (t.s.n., June 16, 1972, pp. 8-9) where
the lighter was docked (t.s.n., September 28, 1972, p. 31). The rest was brought to the compound of NASSCO (Record on
Appeal, pp. 20-22). Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of
the scrap iron (Stipulation of Facts, Record on Appeal, p. 40; t.s.n., September 28, 1972, p. 10.)
On the basis of the above findings, the respondent Court rendered a decision, the dispositive portion of which states:
WHEREFORE, the decision appealed from is hereby reversed and set aside and a new one entered ordering
defendant-appellee Mauro Ganzon to pay plaintiff-appellant Gelacio E. Tumambimg the sum of P5,895.00 as
actual damages, the sum of P5,000.00 as exemplary damages, and the amount of P2,000.00 as attorney's fees.
Costs against defendant-appellee Ganzon.
3

In this petition for review on certiorari, the alleged errors in the decision of the Court of Appeals are:
I
THE COURT OF APPEALS FINDING THE HEREIN PETITIONER GUILTY OF BREACH OF THE CONTRACT OF TRANSPORTATION
AND IN IMPOSING A LIABILITY AGAINST HIM COMMENCING FROM THE TIME THE SCRAP WAS PLACED IN HIS CUSTODY
AND CONTROL HAVE NO BASIS IN FACT AND IN LAW.
II
THE APPELLATE COURT ERRED IN CONDEMNING THE PETITIONER FOR THE ACTS OF HIS EMPLOYEES IN DUMPING THE
SCRAP INTO THE SEA DESPITE THAT IT WAS ORDERED BY THE LOCAL GOVERNMENT OFFICIAL WITHOUT HIS
PARTICIPATION.
III
THE APPELLATE COURT FAILED TO CONSIDER THAT THE LOSS OF THE SCRAP WAS DUE TO A FORTUITOUS EVENT AND
THE PETITIONER IS THEREFORE NOT LIABLE FOR LOSSES AS A CONSEQUENCE THEREOF.
4

The petitioner, in his first assignment of error, insists that the scrap iron had not been unconditionally placed under his
custody and control to make him liable. However, he completely agrees with the respondent Court's finding that on December
1, 1956, the private respondent delivered the scraps to Captain Filomeno Niza for loading in the lighter "Batman," That the
petitioner, thru his employees, actually received the scraps is freely admitted. Significantly, there is not the slightest allegation
or showing of any condition, qualification, or restriction accompanying the delivery by the private respondent-shipper of the
scraps, or the receipt of the same by the petitioner. On the contrary, soon after the scraps were delivered to, and received by
the petitioner-common carrier, loading was commenced.
By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier, and
upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the
petitioner-carrier's extraordinary responsibility for the loss, destruction or deterioration of the goods commenced. Pursuant
to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the
consignee, or to the person who has a right to receive them.
5
The fact that part of the shipment had not been loaded on board
the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier,
albeit still unloaded.
The petitioner has failed to show that the loss of the scraps was due to any of the following causes enumerated in Article 1734
of the Civil Code, namely:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Hence, the petitioner is presumed to have been at fault or to have acted negligently.
6
By reason of this presumption, the court
is not even required to make an express finding of fault or negligence before it could hold the petitioner answerable for the
breach of the contract of carriage. Still, the petitioner could have been exempted from any liability had he been able to prove
that he observed extraordinary diligence in the vigilance over the goods in his custody, according to all the circumstances of
the case, or that the loss was due to an unforeseen event or to force majeure. As it was, there was hardly any attempt on the
part of the petitioner to prove that he exercised such extraordinary diligence.
It is in the second and third assignments of error where the petitioner maintains that he is exempt from any liability because
the loss of the scraps was due mainly to the intervention of the municipal officials of Mariveles which constitutes a caso
fortuito as defined in Article 1174 of the Civil Code.
7

We cannot sustain the theory of caso fortuito. In the courts below, the petitioner's defense was that the loss of the scraps was
due to an "order or act of competent public authority," and this contention was correctly passed upon by the Court of Appeals
which ruled that:
... In the second place, before the appellee Ganzon could be absolved from responsibility on the ground that he
was ordered by competent public authority to unload the scrap iron, it must be shown that Acting Mayor
Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was issued under legal
process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor
to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged
to the Municipality of Mariveles. What we have in the record is the stipulation of the parties that the cargo of
scrap iron was accilmillated by the appellant through separate purchases here and there from private
individuals (Record on Appeal, pp. 38-39). The fact remains that the order given by the acting mayor to dump
the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown the
appellant for P5,000.00. The order of the acting mayor did not constitute valid authority for appellee Mauro
Ganzon and his representatives to carry out.
Now the petitioner is changing his theory to caso fortuito. Such a change of theory on appeal we cannot, however, allow. In any
case, the intervention of the municipal officials was not In any case, of a character that would render impossible the fulfillment
by the carrier of its obligation. The petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron.
Moreover, there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation
as to completely overpower the will of the petitioner's employees. The mere difficulty in the fullfilment of the obligation is not
considered force majeure. We agree with the private respondent that the scraps could have been properly unloaded at the
shore or at the NASSCO compound, so that after the dispute with the local officials concerned was settled, the scraps could
then be delivered in accordance with the contract of carriage.
There is no incompatibility between the Civil Code provisions on common carriers and Articles 361
8
and 362
9
of the Code of
Commerce which were the basis for this Court's ruling in Government of the Philippine Islands vs. Ynchausti & Co.10 and
which the petitioner invokes in tills petition. For Art. 1735 of the Civil Code, conversely stated, means that the shipper will
suffer the losses and deterioration arising from the causes enumerated in Art. 1734; and in these instances, the burden of
proving that damages were caused by the fault or negligence of the carrier rests upon him. However, the carrier must first
establish that the loss or deterioration was occasioned by one of the excepted causes or was due to an unforeseen event or to
force majeure. Be that as it may, insofar as Art. 362 appears to require of the carrier only ordinary diligence, the same is
.deemed to have been modified by Art. 1733 of the Civil Code.
Finding the award of actual and exemplary damages to be proper, the same will not be disturbed by us. Besides, these were
not sufficiently controverted by the petitioner.
WHEREFORE, the petition is DENIED; the assailed decision of the Court of Appeals is hereby AFFIRMED. Costs against the
petitioner.
This decision is IMMEDIATELY EXECUTORY.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-50076 September 14, 1990
NORBERTO QUISUMBING, SR., and GUNTHER LOEFFLER petitioners,
vs.
COURT OF APPEALS and PHILIPPINE AIR LINES, INC., respondents.
N.J. Quisumbing & Associates for petitioners
Siguion Reyna, Montecillo & Ongsiako for private respondent.
NARVASA, J.:
Having met with no success in the Court of First Instance of Rizal and in the Court of Appeals, the petitioners are now in this
Court in a third and final attempt to recover from the Philippine Airlines, Inc. (hereafter, simply PAL) the value of jewelry,
other valuables and money taken from them by four (4) armed robbers on board one of the latter's airplanes while on a flight
from Mactan City to Manila, as well as moral and exemplary damages, attorney's fees and expenses of litigation.
The petitioners accept the correctness of the basic facts adopted by the Court of Appeals from the judgment of the Court of
First Instance, to wit:
1

1. . . . Norberto Quisumbing, Sr. and Gunther Leoffler were among the of ... (PAL's) Fokker 'Friendship' PIC-
536 plane in its flight of November 6,1968 which left Mactan City at about 7:30 in the evening with Manila for
its destination.
2. After the plane had taken off, Florencio O. Villarin, a Senior NBI Agent who was also a passenger of the said
plane, noticed a certain 'Zaldy,' a suspect in the killing of Judge Valdez, seated at the front seat near the door
leading to the cockpit of the plane. A check by Villarin with the passenger's ticket in the possession of flight
Stewardess Annie Bontigao, who was seated at the last seat right row, revealed that 'Zaldy' had used the
name 'Cardente,' one of his aliases known to Villarin. Villarin also came to know from the stewardess that
'Zaldy' had three companions on board the plane."
3. Villarin then scribbled a note addressed to the pilot of the plane requesting the latter to contact NBI duty
agents in Manila for the said agents to ask the Director of the NBI to send about six NBI agents to meet the
plane because the suspect in the killing of Judge Valdez was on board (Exh. 'G'). The said note was handed by
Villarin to the stewardess who in tum gave the same to the pilot.
4. After receiving the note, which was about 15 minutes after take off, the pilot of the plane, Capt. Luis
Bonnevie, Jr., came out of the cockpit and sat beside Villarin at the rear portion of the plane and explained
that he could not send the message because it would be heard by all ground aircraft stations. Villarin,
however, told the pilot of the danger of commission of violent acts on board the plane by the notorious 'Zaldy'
and his three companions.
5. While the pilot and Villarin were talking, 'Zaldy' and one of his companions walked to the rear and stood
behind them. Capt. Bonnevie then stood up and went back to the cockpit. 'Zaldy' and his companions returned
to their seats, but after a few minutes they moved back to the rear throwing ugly looks at Villarin who,
sensing danger, stood up and went back to his original seat across the aisle on the second to the last seat near
the window. 'Zaldy and his companion likewise went back to their respective seats in front.
6. Soon thereafter an exchange of gunshots ensued between Villarin and 'Zaldy' and the latter's companions.
'Zaldy' announced to the passengers and the pilots in the cockpit that it was a hold-up and ordered the pilot
not to send any SOS. The hold-uppers divested passengers of their belongings.
7. Specifically, ... Norberto Quisumbing, Sr. was divested of jewelries and cash in the total amount of
P18,650.00 out of which recoveries were made amounting to P4,550.00. . . Gunther Leoffler was divested of a
wrist watch, cash and a wallet in the total of P1,700.00. As a result of the incident ... Quisumbing, Sr.suffered
shock, because a gun had been pointed at him by one of the holduppers.
8. Upon landing at the Manila International Airport. 'Zaldy' and his three companions succeeded in escaping.
Demands were thereafter made on PAL by Quisumbing and Loeffler "to indemnify ... (them) on their aforesaid loss, but ... (PAL)
refused ... (averring that) it is not liable to (them) in law or in fact."
2

Contending that the "aforesaid loss is a result of breach of ... (PAL's) contractual obligation to carry ... (them) and their
belongings and effects to their Manila destination without loss or damage, and constitutes a serious dereliction of ... (PAL's)
legal duty to exercise extraordinary diligence in the vigilance over the same." , Quisumbing and Loeffler brought suit against
PAL in the Court of First Instance of Rizal, as stated in this opinion's opening paragraph, to recover the value of the property
lost by them to the robbers as well as moral and exemplary damages, attorney's fees and expenses of litigation.
3
The plaintiffs
declared that their suit was instituted "... pursuant to Civil Code articles 1754, 998, 2000 and 2001 and on the ground that in
relation to said Civil Code article 2001 the complained-of act of the armed robbers is not a force majeure, as the 'use of arms' or
'irresistible force' was not taken advantage of by said armed robbers in gaining entrance to defendant's ill-fated plane in
questions. And, with respect to said Civil Code article 1998, it is not essential that the lost effects and belongings of plaintiffs
were actually delivered to defendant's plane personnel or that the latter were notified thereof (De los Santos v. Tamn Khey,
[CA] 58 O.G. 7693)."
4

PAL filed answer denying liability, alleging inter alia that the robbery during the flight and after the aircraft was forcibly
landed at the Manila Airport did indeed constitute force majeure, and neither of the plaintiffs had notified PAL "or its crew or
employees that they were in possession of cash, German marks and valuable jewelries and watches" or surrendered said items
to "the crew or personnel on board the aircraft."
5

After trial, the Court of First Instance rendered judgment 'dismissing plaintiffs' complaint with costs against ... (them)."
6
The
Court opined that since the plaintiffs "did not notify defendant or its employees that they were in possession of the cash,
jewelries, and the wallet they are now claiming," the very provision of law invoked by them, Article 1998 of the Civil Code,
denies them any recourse against PAL. The Court also pointed out that-
... while it is true that the use of gems was not taken advantage of by the robbers in gaining entrance to
defendant's ill-fated plane, the armed robbery that took place constitutes force majeure for which defendant
is not liable because the robbers were able to gain entrance to the plane with the guns they used already in
their possession, which fact could not have been prevented nor avoided by the defendant since it was not
authorized to search its passengers for firearms and deadly weapons as shown in Exhibits '6', '7', '8,' and '8-
A.' As its robbery constitutes force majeure, defendant is not liable.
The plaintiffs appealed to the Court of Appeals.
7
The Court affirmed the trial court's judgment.
8
It rejected the argument that
"the use of arms or ... irresistible force" referred to in Article 2001 constitutes force majeure only if resorted to gain entry into
the airplane, and not if it attends "the robbery itself." The Court ruled that under the facts, "the highjacking-robbery was force
majeure," observing that
... hijackers do not board an airplane through a blatant display of firepower and violent fury. Firearms, hand-
grenades, dynamite, and explosives are introduced into the airplane surreptitiously and with the utmost
cunning and stealth, although there is an occasional use of innocent hostages who will be coldly murdered
unless a plane is given to the hijackers' complete disposal. The objective of modern-day hijackers is to display
the irresistible force amounting to force majeure only when it is most effective and that is when the jetliner is
winging its way at Himalayan altitudes and ill-advised heroics by either crew or passengers would send the
multi-million peso airplane and the priceless lives of all its occupants into certain death and destruction. ...
The Appellate Court also ruled that in light of the evidence PAL could not be faulted for want of diligence, particularly for
failing "to take positive measures to implement Civil Aeronautics Administration regulations prohibiting civilians from
carrying firearms on board aircrafts;" and that "the absence of coded transmissions, the amateurish behaviour of the pilot in
dealing with the NBI agent, the allegedly open cockpit door, and the failure to return to Mactan, in the light of the
circumstances of the case ..., were not negligent acts sufficient to overcome the force majeure nature of the armed robbery." In
fact, the Court went on to says,
9

... it is illusive to assume that had these precautions been taken, the hijacking or the robbery would not have
succeeded. The mandatory use of the most sophisticated electronic detection devices and magnetometers, the
imposition of severe penalties, the development of screening procedures, the compilation of hijacker
behavioural profiles, the assignment of sky marshals, and the weight of outraged world opinion may have
minimized hijackings but all these have proved ineffective against truly determined hijackers. World
experience shows that if a group of armed hijackers want to take over a plane in flight, they can elude the
latest combined government and airline industry measures. And as our own experience in Zamboanga City
illustrates, the use of force to overcome hijackers, results in the death and injury of innocent passengers and
crew members. We are not in the least bit suggesting that the Philippine Airlines should not do everything
humanly possible to protect passengers from hijackers' acts. We merely state that where the defendant has
faithfully complied with the requirements of government agencies and adhered to the established procedures
and precautions of the airline industry at any particular time, its failure to take certain steps that a passenger
in hindsight believes should have been taken is not the negligence or misconduct which mingles with force
majeure as an active and cooperative cause.
Under the circumstance of the instant case, the acts of the airline and its crew cannot be faulted as negligence.
The hijackers had already shown their willingness to kill. One passenger was in fact killed and another
survived gunshot wounds. The lives of the rest of the passengers and crew were more important than their
properties. Cooperation with the hijackers until they released their hostages at the runway end near the
South Superhighway was dictated by the circumstances.
Insisting that the evidence demonstrates negligence on the part of the PAL crew "occurring before and exposing them to
hijacking," Quisumbing and Loeffler have come up to this Court praying that the judgments of the trial Court and the Court of
Appeals be reversed and another rendered in their favor. Once again, the issue will be resolved against them.
A careful analysis of the record in relation to the memoranda and other pleadings of the parties, convinces this Court of the
correctness of the essential conclusion of both the trial and appellate courts that the evidence does indeed fail to prove any
want of diligence on the part of PAL, or that, more specifically, it had failed to comply with applicable regulations or
universally accepted and observed procedures to preclude hijacking; and that the particular acts singled out by the petitioners
as supposedly demonstrative of negligence were, in the light of the circumstances of the case, not in truth negligent acts
"sufficient to overcome the force majeure nature of the armed robbery." The Court quite agrees, too, with the Appellate
Tribunal's wry observation that PAL's "failure to take certain steps that a passenger in hindsight believes should have been
taken is not the negligence or misconduct which mingles with force majeure as an active and cooperative cause."
No success can therefore attend petitioners' appeal, not only because they wish to have a review and modification of factual
conclusions of the Court of Appeals, which established and uniformly observed axiom proscribes,
10
but also because those
factual conclusions have in this Court's view been correctly drawn from the proofs on record.
WHEREFORE, the petition is DENIED and the appealed Decision of the Court of Appeals is AFFIRMED, with costs against
petitioners.
SO ORDERED.