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01 - Fabre v. CA (1996)**
Facts:
Petitioners Engracio Fabre Jr. And his wife are owners and operator of a bus engaged in transporting school
children to and from St. Scholastica College, Manila. The bus service operates only within Metro Manila. The Fabre’s
employ a driver for the bus, Porfirio Cabil. Cabil was hired in 1981 after a two week assessment.
Private respondent Word for the World Christian Fellowship Inc. (WWCF) contracted the services of Petitioners
to transport 33 members of its Young Adults Ministry from Manila to La Union. The group left Manila at around8pm
instead of the planned 5pm due to late arrival of some of the passengers.
Cabil was assigned to be the driver for the trip. It was the first time Cabil was to drive to La Union. A bridge
along the usual way toward La Union was blocked so Cabil had to take the alternate road. at around 11pm, the road was
dark and it was raining. Cabil was driving at around 50kph when the usual speed for that road was 20kph. Cabil failed to
see a curve ahead causing the bus to hit a wall and crash on its left side. This accident injured several passengers including
private respondent Antonio causing her to be paralyzed waist down.
Issue:
1. W/N Cabil was negligent?
2. WN Petitioner spouses are liable for quasi delict making them guilty of breach of contract of carriage.
Held/Ratio:
1. YES. The road was dark and slippery due to the rain yet Cabil drove at 50kph when the normal speed for that road
was 20kph. Having driven the road for the first time, unfamiliar with the road, and driving the way he did, Cabil
was negligent.
2. YES. Art 2176 and 2180 raises a presumption of negligence on the part of the employees of the driver. Petitioners
miserably failed to rebut the presumption. Exerting ordinary diligence in hiring Cabil was not sufficient to
exonerate them from liability. As contractors/common carriers, extraordinary diligence is required in transporting
their passenger/goods to their destination. Being a common carrier is not required for petitioners to exert
extraordinary diligence. It is sufficient that a contract of carriage was entered into to impose upon petitioners the
obligation to observe extraordinary diligence.
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.”
Contrary to Calvo’s assertion, the Survey Report indicates that when the shipper transferred the cargo to the
arrastre operator, they were covered by clean Equipment Interchange Reports (EIRs) and, when Calvo’s
employees withdrew the cargo from the arrastre operator, they did so without exception or protest either with
regard to the condition of the container vans or their contents.
Thus, the shipment was received in good order and condition but was delivered to the consignee damaged.
Whenever the thing is lost or damaged in the possession of the obligor, it shall be presumed that the loss or
damage was due to his fault, unless there is proof to the contrary. No proof was proffered by Calvo to rebut this
legal presumption.
With regard to the contention that the cargo could not have been damaged while in petitioner’s custody as she
immediately delivered the containers to SMC’s compound, suffice it to say that to prove the exercise of
extraordinary diligence, petitioner must do more than merely show the possibility that some other party could be
responsible for the damage. It must prove that it used “all reasonable means to ascertain the nature and
characteristic of goods tendered for transport and that it exercised due care in the handling thereof.” Petitioner
failed to do this.
Nor is there basis to exempt Calvo from liability under Article 1734 (4). For this provision to apply, the rule is
that if the improper packing or, in this case, the defect/s in the container, is/are known to the carrier or his
employees or apparent upon ordinary observation, but he nevertheless accepts the same without protest or
exception notwithstanding such condition, he is not relieved of liability for damage resulting therefrom. In this
case, Calvo accepted the cargo without exception despite the apparent defects in some of the container vans.
Hence, for failure to prove that she exercised extraordinary diligence in the carriage of goods in this case or that
she is exempt from liability, the presumption of negligence as provided under Art. 1735 holds.
03 - Guzman v. CA (1988)**
Doctrine:
• One may be regarded as a common carrier even if the service is only ancillary to another business activity;
occasional, episodic, or unscheduled; and only directed to a narrow segment of the general population.
Facts:
Ernesto Cendanya is a junk dealer from Pangasinan. He bought used bottles and scrap metal which he will then
bring to Manila for resale. He uses TWO (2) six-wheeler trucks which he himself owned for hauling the material to
Manila.
Then, on the return trip from Manila to Pangasinan, Cendanya would always load his two trucks with cargo which
various merchants wanted to be delivered to different establishments in Pangasinan. For that service, Cendanya charged
freight rates which were commonly lower than regular commercial rates.
One of his clients for the freight service was Pedro De Guzman who owns Liberty Filled Milk. One time, De
Guzman loaded 150 cartons of filled milk in one of the trucks, which Cendanya himself drove, and another 600 cartons in
the second truck, driven by an employee of Cendanya. These cartons of milk were to be delivered to De Guzman’s
warehouse in Pangasinan.
Unfortunately, somewhere in Paniqui, Tarlac, on the way to Pangasinan, five armed men held up the second truck
with 600 cartons of milk, and took away the truck and all the cargo and kidnapped the driver for seven days.
De Guzman sued Cendanya for damages and for the value of the undelivered goods (the 600 cartons of milk).
Issues:
1. W/N Cendanya is a common carrier
2. W/N Cendanya is liable to De Guzman
Held/Ratio:
1. Yes. First, Article 1732 Civil Code 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”).
Second, it 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.
Third, 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.
Fourth, that the fee charged by Cendanya to the freight service clients frequently fell below commercial freight
rates is not relevant, too.
A Certificate of Public Convenience or any other franchise is also irrelevant in determining one as a common
carrier. Doing so is contrary to public policy.
Also, the concept of “common carrier” under Article 1732 may be seen to coincide neatly with the notion of
“public service,” under the Public Service Act, which similarly makes no distinctions in the elements of a
common carrier in the Civil Code.
2. No. Even if Cendanya is a common carrier, he is not liable for the value of the undelivered goods and damages
because the circumstance surrounding the loss of the goods is covered by Article 1745 Paragraph 6 which says
that the common carrier’s liability for acts committed by thieves, or of robbers who do not act with grave or
irresistible threat, violence, or force, is dispensed with or diminished.
The Court noted that a criminal case for robbery in band was already filed in connection with the hijacking
incident, and the records of that case showed that indeed, the loss of the goods was attended by “grave or
irresistible threat, violence, or force.”
The occurrence of the loss of the 600 cartons of milk must reasonably be regarded as quite beyond the control of
the common carrier and properly regarded as a fortuitous event.
04 - Bascos v. CA (1993)*
Facts:
Rodolfo Cipriano of Cipriano Trading Enterprises (CIPTRADE) entered into a hauling contract with Jibfair
Shipping Agency Corporation. Based on the agreement, CIPTRADE bound itself to haul Jibfair’s tons of soya bean meal
from Manila to the warehouse of Purefoods Corporation in Laguna. CIPTRADE subcontracted with Estrellita Bascos,
owner of A.M. Bascos Trucking, to transport the sacks of soya bean meal. However, Bascos failed to deliver the said
cargo. Thus, CIPTRADE paid Jibfair the amount of lost goods and sought reimbursement from Bascos. Cipriano filed a
complaint for sum of money and damages with writ of preliminary attachment for breach of a contract of carriage. Bascos,
in her answer, asserted that there was no contract of carriage since CIPTRADE only leased her cargo truck. She also said
that the truck carrying the cargo was hijacked and the incident was immediately reported to CIPTRADE. She also argued
that since hijacking is a force majeure, she is already exculpated from any liability to CIPTRADE.
The trial court ruled that Bascos Trucking was a common carrier and ordered Bascos to pay actual damages to
Cipriano. This decision was affirmed by the Court of Appeals. Since the truck driver and the helper are employees of
Bascos Trucking and that the control of the cargo was placed in its care, both courts considered these as indicators that
Bascos Trucking is a common carrier. Bascos then filed a petition for review on certiorari with the Supreme Court.
Issues:
1. W/N A.M. Bascos Trucking is a common carrier
2. W/N Bascos is liable to pay CIPTRADE for the loss of the cargo
Held/Ratio:
1. YES. Bascos contends that the contract was only for the lease of the truck so it cannot be considered as common
carrier. She argues that she was not catering to the general public. She offers her trucks only to a few customers
who have cargo to move. The Court ruled that Article 1732 which defines a common carrier does not make a
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.
2. YES. Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported
by them. They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed, or
deteriorated.
In this case, Bascos alleged that the hijacking is a force majeure which exculpated her from liability for the loss of
the cargo. To exculpate the carrier from liability arising from hijacking, it must be proven that the robbers or the
hijackers acted with grave or irresistible threat, violence, or force — as provided in Article 1745 of the Civil
Code:
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, violence, or force, is dispensed with or diminished;”
Thus, 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. The Court ruled that Bascos was still liable for
the loss since the affidavits she presented were not enough to establish grave and irresistible force.
land and does not provide that the transportation should be by motor vehicle. The Court reminded the parties that
in the US, oil pipeline operators are considered common carriers.
08 - Schmitz v. Transport Venture (2005)**
Facts:
Petitioner Shmitz Transport, together with Black Sea Shipping Corp. and Transport Venture, were held solidarily
liable for the loss of 37 hot rolled steel sheets in coil that were washed overboard a barge.
SYTCO shipped from Russia on board MV Alexander Savaliev (owned by Black Sea) 545 hot rolled steel sheets
in coil. The cargoes were to be discharged in Manila, in favor of consignee, Little Giant Steel Pipe Corporation (Little
Giant) who was insured against all risks by Industrial Insurance Co. Upon the vessel’s arrival in Manila, it was assigned a
place of berth outside breakwater at the Manila South Harbor.
Shmitz Transport was consigned to secure the requisite clearance, to receive the cargoes from shipside, and to
deliver them to Little Giant’s warehouse in Rizal. It in turn engaged the service of Transport Venture to send a barge and
tugboat at shipside.
The arrastre operator commenced to unload 37 of the 545 coils from the vessel unto the barge. However, no
tugboat pulled the barge back to the pier. Due to the approaching storm, which caused strong waves, the crew abandoned
the barge and transferred to the vessel. The barge eventually capsized and the 37 coils were lost.
Little Giant thus filed a complaint against Industrial Insurance, which paid for the former’s loss, who then
executed a subrogation receipt in favor of the latter. The insurance company then commenced a complaint against
Schmitz Transport, Transport Venture, and Black Sea before the RTC of Manila for the recovery of the amount it paid to
Little Giant (plus adjustment fees, attorney’s fees, and litigation expenses).
Issues:
1. W/N the loss of the cargoes was due to a fortuitous event,1 independent of any act of negligence on the part of
petitioner Schmitz Transport, Black Sea, and Transport Venture
2. If there was negligence, whether the liability for the loss may attach to them.
Held/Ratio:
1. NO. The proximate cause of the loss was due to the fact that the barge was left floating in open sea until the big
waves set in, causing it to sink along with the cargoes. Had the barge been towed back promptly to the pier, the
deteriorating sea conditions notwithstanding, the loss could have been avoided.
2. YES, Schmitz Transport and Transport Venture are SOLIDARILY LIABLE.
Contrary to the petitioner’s contention that it was not a common carrier, the SC affirming the appellate court’s
decision, found it to be so. It undertook to transport the cargoes from shipside to the consignee’s warehouse in
Cainta. The petitioner’s own VP/GM in his testimony stated that part of the services of the firm as a brokerage
firm includes the transportation of cargoes. It is settled that under a given set of facts, a customs broker may be
regarded as a common carrier.
Furthermore, Article 1732 does not distinguish between one whose principal business activity is the carrying of
goods and one who does such carrying only as an ancillary activity. It suffices that petitioner undertakes to deliver
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1. Requisites - fortuitous event:
(1) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligation, must be
independent of human will;
(2) it must be impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen it must be impossible to avoid;
(3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in any manner; and
(4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor.
ALS2014B Page 10 of 159
TRANSPO DIGESTS ALS2014B ATTY. ABAÑO
travel papers were delivered to Crisostomo, it became incumbent upon her to take ordinary care of her concerns.
This undoubtedly would require that she at least read the documents in order to assure herself of the important
details regarding the trip.
11 - BA Finance v. CA (1992)
Doctrine:
• 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.
Facts:
Rogelio Villar y Amare was found guilty beyond reasonable doubt of reckless imprudence resulting in triple
homicide with multiple physical injuries with damage to property. 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 v. Gutierrez. 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.
Issue:
1. W/N petitioner can be held responsible to the victim albeit the truck was leased to Rock Component Philippines
when the incident occurred.
Held/Ratio:
1. Yes. 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.
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. 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.
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.
The ... findings of the Oroquieta Court became as conclusive upon the company and its driver by
their acquiescence and silence. ... Returning to Exhibit “O,” supra (Decision, Civil Case No.
3156, CFI, Branch III, Oroquieta City), the Court hastens to add: Said exhibit has not been
objected to nor commented upon by the defendants Company and Enerio, through their counsel[.]
This being the case, petitioners were aware that Exhibit “O” had formed part of the records of the case and would
thereby be considered by the trial court in its decision. Furthermore, upon perusal of Exhibit “O,” there is no
showing of any irregularity but rather a logical discussion of the case and the evidence presented before the court.
The lower court did not merely “adopt by reference” the findings of fact of the Oroquieta court, but used it in its
discourse to obtain the conclusions pronounced in its decision.
13 - Benedicto v. IAC and Greenhills Wood (1990)* (registered owner liable; sawn lumbers)
Doctrines:
• 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.
• 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;
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.
• 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.
Facts:
Private respondent Greenhills Wood Industries Company, Inc. (“Greenhills”), a lumber manufacturing firm with
business address at Dagupan City, 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. To effect its first delivery, private
respondent’s resident manager, 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.
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 aboard the cargo truck. This was evidenced by two invoices.
On 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 Greenhills filed a criminal case against driver Licuden for estafa. Greenhills also filed
against petitioner Benedicto a civil case for recovery of the value of the lost sawn lumber plus damages before the RTC of
Dagupan City. As to the civil case, the trial court ruled that Licuden was Benedicto’s employee. IAC affirmed in toto.
This is a petition for review to set aside the IAC ruling.
Benedicto 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 Benedicto, 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.
Issues:
1. W/N Benedicto, being the registered owner of the carrier, should be held liable for the value of the underlivered
or lost sawn lumber.
Held/Ratio:
1. YES. 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.
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.
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.
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. 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.
This presumption may be overcome only by proof of extraordinary diligence on the part of the carrier. 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.
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). 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. 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.
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 xx xx xx 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 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.
reason that it was not seaworthy. There was no squall or bad weather or extremely poor sea condition in
the vicinity when the said vessel sank.
The CA also correctly opined that the ship captain and chief mate, respectively, of the said vessel, could not be
expected to testify against the interest of their employer, Delsan Transport. (common carrier)
Neither may petitioner escape liability by presenting in evidence certificates that tend to show that at the time of
dry-docking and inspection by the Philippine Coast Guard, the vessel MT Maysun, was fit for voyage. These
pieces of evidence do not necessarily take into account the actual condition of the vessel at the time of the
commencement of the voyage.
Additionally, the exoneration of MT Maysun’s officers and crew by the Board of Marine Inquiry merely
concerns their respective administrative liabilities. It does not in any way operate to absolve the petitioner
common carrier from its civil liability arising from its failure to observe extraordinary diligence in the
vigilance over the goods it was transporting and for the negligent acts or omissions of its employees, the
determination of which properly belongs to the courts. In the case at bar, Delsan is liable for the insured value
of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the presumption of fault or
negligence as common carrier occasioned by the unexplained sinking of its vessel, MT Maysun, while in transit.
2. NO. The presentation in evidence of the marine insurance policy is not indispensable in this case before the
insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory
right. The subrogation receipt, by itself, is sufficient to establish not only the relationship of AHAC as insurer and
Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the
insurance claim. The right of subrogation accrues simply upon payment by the insurance company of the
insurance claim.
The presentation of the insurance policy was only necessary in the case of Home Insurance Corporation v. CA (a
case cited by Delsan) because the shipment therein (hydraulic engines) passed through several stages with
different parties involved in each stage.
The finding of fact of the CA does not contradict the finding of fact of the trial court. Both courts held that a
telephone call was made by Chan to Abastillas, informing the latter of the contamination. However, nothing in the
trial court’s decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately
or within a period of twenty-four hours from the time the goods were received. The CA made the same finding.
Having examined the entire records of the case, we cannot find a shred of evidence that will precisely and
ultimately point to the conclusion that the notice of claim was timely relayed or filed.
The allegation of the petitioner that not only the Vice President of the respondent was informed, but also its
drivers, as testified by Alfredo Chan, during the time that the delivery was actually being made, cannot be given
great weight as no driver was presented to the witness stand to prove this. Also, the witness Alfredo Chan had no
personal knowledge that the drivers of the respondent were informed of the contamination.
The second paragraph of Article 366 of the Code of Commerce is also edifying. It is not only when the period to
make a claim has elapsed that no claim whatsoever shall be admitted, as no claim may similarly be admitted after
the transportation charges have been paid. In this case, there is no question that the transportation charges have
been paid, as admitted by the petitioner, and the corresponding official receipt duly issued. But the petitioner is of
the view that the payment for services does not invalidate its claim. It contends that under the second paragraph of
Article 366, it is clear that if notice or protest has been made prior to payment of services, claim against the bad
order condition of the cargo is allowed.
affreightment”, wherein the the boat remains under the ship owner’s control, and the charterer merely asks that his
goods be transported from one place to another. The former would be an example of a contract of private carriage.
The latter is an example of a contract of common carriage.)
The SC held that the factual findings of the CA would show that PKS shipping had engaged in the business of
carrying good for other for a fee, even though for a limited clientele only. It did not matter whether the company
had carried the goods merely as an ancillary activity, or whether they served only certain customers; it was still a
common carrier.
2. However, the court still absolved PKS from liability. Art. 1733 of the New Civil Code requires common carriers
to exercise extraordinary diligence over the carriage of goods, and they are presumed negligent in case of loss,
deterioration or destruction; however, under Art. 1734 (1), common carriers are exempt from liability if the same
was due to “fire, storm, earthquake, lightning, or other natural disaster or calamity.” The evidence showed that
there was nothing that the boat or the tugboat could have done to stop the waves from sinking the Limar I.
Thus, even though the SC disagreed with the CA and held that PKS is a common carrier, the SC affirmed the
decision of the RTC and the CA holding it free from liability for the loss of the cement.
immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted
by the carrier, the liability of the common carrier commences eo instanti.
While extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon
delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo
subject of the contract of carriage. Only when such fact of delivery has been unequivocally established can
the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting
causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be
invoked.
There was no delivery of the cargo to the carrier on October 26, 1976. The body intended to be shipped as agreed
upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that date that
private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill. So, for
the switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby,
private respondents cannot be held liable.
The oft-repeated rule regarding a carrier’s liability for delay is that in the absence of a special contract, a carrier is
not an insurer against delay in transportation of goods. When a common carrier undertakes to convey goods,
the law implies a contract that they shall be delivered at destination within a reasonable time, in the
absence, of any agreement as to the time of delivery. But where a carrier has made an express contract to
transport and deliver property within a specified time, it is bound to fulfill its contract and is liable for any
delay, no matter from what cause it may have arisen. This result logically follows from the well-settled rule
that where the law creates a duty or charge, and the party is disabled from performing it without any default in
himself, and has no remedy over, then the law will excuse him, but where the party by his own contract creates a
duty or charge upon himself, he is bound to make it good notwithstanding any accident or delay by inevitable
necessity because he might have provided against it by contract. Whether or not there has been such an
undertaking on the part of the carrier to be determined from the circumstances surrounding the case and by
application of the ordinary rules for the interpretation of contracts.
A common carrier undertaking to transport property has the implicit duty to carry and deliver it within reasonable
time, absent any particular stipulation regarding time of delivery, and to guard against delay. In case of any
unreasonable delay, the carrier shall be liable for damages immediately and proximately resulting from such
neglect of duty. As found by the trial court, the delay in the delivery of the remains of Crispina Saludo,
undeniable and regrettable as it was, cannot be attributed to the fault, negligence or malice of private
respondents, a conclusion concurred in by respondent court and which we are not inclined to disturb.
At fault: CMAS (but not at issue so not delved into by the court)
The SC also said that while petitioner alleges that the cylinder liners were to be used for dry dock repair and
maintenance of its M/V Dadiangas Express, the record is bereft of any indication that respondent was aware of
such fact. The failure of petitioner to notify respondent of said date is fatal to its claim that time was of the
essence in the subject contracts of sale. If time was really of the essence, they should have stated the same in the
said purchase orders, and not merely relied on the quotation issued by the appellant considering the lapse of time
between the quotation issued by the appellant and the purchase orders of the appellee.
As an aside, “[e]ven where time is of the essence, a breach of the contract in that respect by one of the parties may
be waived by the other party’s subsequently treating the contract as still in force.” Petitioner’s receipt of the
cylinder liners when they were delivered to its warehouse clearly indicates that it considered the contract of sale to
be still subsisting up to that time. Had the contract of sale been cancelled already as claimed by petitioner, it no
longer had any business receiving the cylinder liners. By accepting the cylinder liners when these were delivered
to its warehouse, petitioner indisputably waived the claimed delay in the delivery of said items.
2. NO. There having been no failure on the part of the respondent to perform its obligation, the power to rescind the
contract is unavailing to the petitioner. In addition, the act of a party in treating a contract as cancelled or resolved
on account of infractions by the other contracting party must be made known to the other.Petitioner never
informed respondent of its intention to rescind the contract of sale.
25 - Coastwise Lighterage Corporation v. Court of Appeals and Philippine General Insurance Company
(1995)**
Facts:
Pag-asa Sales, Inc. entered into a contract to transport molasses from Negros to Manila with Coastwise Lighterage
Corporation. For this purpose, Coastwise’s barges were used. These barges were towed by a tugboat likewise owned by
Coastwise. As the barges approached Pier 18 along Manila Bay where it was set to unload the cargo, one of the barges
struck an unknown sunken object which resulted in a hole 2-inches wide and 20-inches long. As a consequence, water
gushed through and contaminated the molasses, rendering the entire shipment unfit for use.
Pag-asa Sales rejected the shipment as a total loss and thereafter filed a claim with its insurer Philippine General
Insurance (PhilGen) and Coastwise. PhilGen paid Pag-asa the amount of Php700,000.00 representing the value of the
damaged cargo. Coastwise, on the other hand, denied the claim.
Subsequently, PhilGen filed a claim against Coastwise before the RTC of Manila, seeking to recover the amount
it paid Pag-asa. The action was grounded upon PhilGen’s right to be subrograted to all the contractual rights and claims of
the Pag-asa as consignee against Coastwise as carrier. RTC ruled in favor of PhilGen. The CA affirmed. Hence, this
petition.
Issues:
1. W/N Coastwise should be treated as a private carrier for the purposes of the contract entered into with
Pag-asa
2. W/N PhilGen was subrograted into the rights of Pag-asa against Coastwise upon payment
Held/Ratio:
1. No. Coastwise claims that the contract it entered into with Pag-asa was a charter agreement. Upon this premise,
Coastwise hoped to shield itself from liability by citing Home Insurance Company v. American Steamship
Agencies wherein the Court decreed that a common carrier undertaking to carry special cargo or chartered to a
special person only should be treated for such purposes as a private carrier.
However, the nature of the contract entered into by the parties reveals that it is not a mere charter agreement
wherein the owner of the vessel relinquishes complete possession, command and navigation to the charterer.
Rather, it is a contract of affreightment, wherein the owner of the vessel merely leases part or all of its space
to haul goods for others. The possession, command and navigation of the vessels remained with Coastwise.
Thus, the contract entered into by the parties did not convert Coastwise from a common carrier to a private one.
As a consequence, the presumption of negligence that attaches to common carriers once the goods it transports are
lost, destroyed applies to Coastwise. This presumption, which is overcome only by proof of the exercise of
extraordinary diligence, remained unrebutted in this case. While records seem to show that the collision, which
caused damage to the cargo, was an unavoidable occurrence that should free Coastwise from liability, this is
overcome by the fact that the patron of the vessel was not licensed and therefore did not have the skill necessary
to exert the required degree of diligence called for by the circumstances.
*Note: This case is assigned under “Duration of Responsibility”. Perhaps Atty. Abaño intends to point out that
Coastwise is liable for failing to exert extraordinary responsibility at the time of the collision as required by
Article 1736. Since the mishap took place before Coastwise was able to deliver the cargo to Pag-asa, the
responsibility to exert extraordinary diligence had yet to be discharged.
2. Yes. PhilGen’s right to be subrograted into the rights of Pag-asa is explicitly provided under Article 2207 of the
Civil Code:
If the plaintiffs property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the
insurance company shall be subrogated to the rights of the insured against the wrongdoer or the
person who violated the contract.
ALS2014B Page 36 of 159
TRANSPO DIGESTS ALS2014B ATTY. ABAÑO
Undoubtedly, upon payment by respondent insurer PhilGen of the amount of P700,000.00 to Pag-asa, the
consignee of the cargo of molasses totally damaged while being transported by Coastwise Lighterage, the former
was subrogated into all the rights which Pag-asa may have had against the carrier, herein petitioner Coastwise.
the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right
to receive them.
For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo
from the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he
delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. (The ship
captain’s liability is ultimately that of the shipowner by regarding the captain as the representative of the ship
owner.)
Section 3 (2) of the COGSA states that among the carriers’ responsibilities are to properly and carefully load,
handle, stow, carry, keep, care for, and discharge the goods carried.
Also, the Bill of Lading between the shipper and consignee provides that the responsibility of the carrier shall
commence from the time when the goods are loaded on board the vessel and shall cease when they are discharged
from the vessel, and that the Carrier shall not be liable of loss of or damage to the goods before loading and after
discharging from the vessel, howsoever such loss or damage arises.
On the other hand, the functions of an arrastre operator involve the handling of cargo deposited on the wharf or
between the establishment of the consignee or shipper and the ship’s tackle. Being the custodian of the goods
discharged from a vessel, an arrastre operator’s duty is to take good care of the goods and to turn them over to the
party entitled to their possession.
Handling cargo is mainly the arrastre operator’s principal work so its drivers/operators or employees should
observe the standards and measures necessary to prevent losses and damage to shipments under its custody.
Thus, both the ARRASTRE and the CARRIER are charged with and obligated to deliver the goods in good
condition to the consignee. But the liability of the arrastre operator and the carrier are not always solidary as the
facts of a case may vary the rule.
It was found in the testimony of Mr. Talens that the stevedores, and head checker were under the supervision of
master of the vessel at the time of unloading/discharging of the shipment. Moreover, the liability of Wallem is
highlighted by Mr. Talen’s notes in the Bad Order Inspection, that the bad order torn bags, was due to
stevedores[‘] utilizing steel hooks/spikes in piling the cargo to [the] pallet board at the vessel’s cargo holds and at
the pier designated area before and after discharged that cause the bags to torn [sic].”
Evidence shows that the damage to the bags happened before and after their discharge and it was caused by the
stevedores of the arrastre operator who were then under the supervision of Wallem.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody
of the carrier. In the instant case, the damage or losses were incurred during the discharge of the shipment while
under the supervision of the carrier. Consequently, the carrier is liable for the damage or losses caused to the
shipment.
is a contract of adhesion and therefore it should not automatically exempt Maersk Line from any liability due to
delay.
The oft-repeated rule regarding a carrier’s liability for delay is that in the absence of a special contract, a
carrier is not an insurer against delay in transportation of goods. When a common carrier undertakes to
convey goods, the law implies a contract that they shall be delivered at destination within a reasonable
time, in the absence, of any agreement as to the time of delivery. But where a carrier has made an express
contract to transport and deliver properly within a specified time, it is bound to fulfill its contract and is
liable for any delay, no matter from what cause it may have arisen.
In the case at hand, there was no special contract entered into between the parties regarding the date of arrival of
the subject shipment. But an examination of the bill of lading shows that the subject shipment was estimated to
arrive in Manila on April 3, 1977. Therefore, even in the absence of a special contract, Maersk Line was liable
for the delay since it was aware of the specific date when the goods were expected to arrive, as indicated in
the bill of lading itself. The Court also stated that the delay in the delivery (2 months and 7 days) was beyond
the realm of reasonableness.
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.
Moreover, a common carrier’s duty to observe the requisite diligence in the shipment of goods lasts from the time
the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for
transportation until delivered to or until the lapse of a reasonable time for their acceptance by the person entitled
to receive them. When the goods shipped either are lost or arrive in damaged condition, a presumption arises
against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to
it liable.
33 - Philamgen v. CA (1993)*
Facts:
This case deals with the liability, if any, of a shipowner for loss of cargo due to its failure to observe the
extraordinary diligence required by Art. 1733 of the Civil Code as well as the right of the insurer to be subrogated to the
rights of the insured upon payment of the insurance claim.
FELMAN Shipping lines (FELMAN) was the owner of the ship MV Asilda which took into its cargo 7,500 cases
of coca-cola bottles owned by Coca Cola Bottlers Inc. from Zamboanga to its consignee in Cebu (Coca-Cola Bottlers
Philippines Inc.Cebu). The cargo was insured by petitioner Philippine American General Insurance Co., Inc.
(PHILAMGEN) under a Marine policy. A day after the ship left the port of Zamboanga, it capsized and sank together
with all its cargo. Consignee demanded payment of damages from FELMAN, however the shipowner denied liability,
hence it claimed from PHILMAGEN. PHILMAGEN thereafter subrogated unto the rights of consignee and claimed from
FELMAN arguing that the vessel was unseaworthy when it left the port and that it was improperly manned. FELMAN
disclaimed liability hence PHILAMGEN sued the shipowner for sum of money and damages.
FELMAN filed a motion to dismiss based on the affirmative defense that no right of subrogation in favor of
PHILAMGEN was transmitted by the shipper, and that, in any event, FELMAN had abandoned all its rights, interests and
ownership over ”MV Asilda” together with her freight and appurtenances for the purpose of limiting and extinguishing its
liability under Art. 587 of the Code of Commerce. The trial court found for FELMAN. PHILMAGEN appealed to the CA,
the CA set aside the dismissal and remanded the case to the lower court for trial on the merits. FELMAN filed a petition
for certiorari with the SC but it was subsequently denied.
The trial court again ruled judgment in favor of FELMAN arguing that the ship was seaworthy when it left the
port of Zamboanga as confirmed by certificates issued by the Philippine Coast Guard and the shipowner’s surveyor
attesting to its seaworthiness. Thus the loss of the vessel and its entire shipment could only be attributed to either a
fortuitous event, in which case, no liability should attach unless there was a stipulation to the contrary, or to the
negligence of the captain and his crew, in which case, Art. 587 of the Code of Commerce should apply. The lower court
further ruled that assuming ”MV Asilda” was unseaworthy, still PHILAMGEN could not recover from FELMAN since
the assured had breached its implied warranty on the vessel’s seaworthiness. Resultantly, the payment made by
PHILAMGEN to the assured was an undue, wrong and mistaken payment. Since it was not legally owing, it did not give
PHILAMGEN the right of subrogation so as to permit it to bring an action in court as a subrogee.
PHILMAGEN appealed to the CA, the CA found for petitioner ruling that the ship was unseaworthy for being
top- heavy as 2,500 cases of Coca-Cola softdrink bottles were improperly stowed on deck. That while the vessel
possessed the necessary Coast Guard certification indicating its seaworthiness with respect to the structure of the ship
itself, it was not seaworthy with respect to the cargo. Nonetheless, the appellate court denied the claim of PHILAMGEN
on the ground that the assured’s implied warranty of seaworthiness was not complied with. PHILAMGEN was not
properly subrogated to the rights and interests of the shipper. Furthermore, respondent court held that the filing of notice
of abandonment had absolved the shipowner/agent from liability under the limited liability rule.
Issues:
1. W/N the ship was seaworthy when it left the port
2. W/N the limited liability under Art. 587 of the Code of Commerce should apply (issue relevant to topic)
3. W/N PHILAMGEN was properly subrogated to the rights and legal actions which the shipper had against
FELMAN
Held/Ratio:
1. No, the SC found this ruling based on the joint statement executed by its captain and the chief mate of its vessel as
regards the amount of cargo it stowed on its deck. Furthermore, as stated by the captain, at around four o’clock in
the morning of 7 July 1983 he was awakened by the officer on duty to inform him that the vessel had hit a floating
log and that after a few minutes, caused problems to the ship’s engine. Later, the Elite Adjusters Inc submitted a
report regarding the sinking of MV Asilda which stated that the cause was due to the hole on the ship caused by
the log it earlier hit.
2. Art. 587 of the Code of Commerce is NOT applicable to the case at bar. The ship agent is liable for the negligent
acts of the captain in the care of goods loaded on the vessel. This liability however can be limited through
abandonment of the vessel, its equipment and freightage as provided in Art. 587. Nonetheless, there are
exceptional circumstances wherein the ship agent could still be held answerable despite the abandonment,
as where the loss or injury was due to the fault of the shipowner and the captain. The international rule is to
the effect that the right of abandonment of vessels, as a legal limitation of a shipowner’s liability, does not apply
to cases where the injury or average was occasioned by the shipowner’s own fault. It must be stressed at this point
that Art. 587 speaks only of situations where the fault or negligence is committed solely by the captain. Where the
shipowner is likewise to be blamed, Art. 587 will not apply, and such situation will be covered by the provisions
of the Civil Code on common carrier.
It was already established at the outset that the sinking of ”MV Asilda” was due to its unseaworthiness even at the
time of its departure from the port of Zamboanga. It was top-heavy as an excessive amount of cargo was loaded
on deck. Closer supervision on the part of the shipowner could have prevented this fatal miscalculation. As
such, FELMAN was equally negligent. It cannot therefore escape liability through the expedient of filing a notice
of abandonment of the vessel by virtue of Art. 587 of the Code of Commerce.
Under Art 1733 of the Civil Code, “(c)ommon 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 x x x x” In the event of loss of
goods, common carriers are presumed to have acted negligently. FELMAN, the shipowner, was not able to rebut
this presumption.
3. Due to the established facts that the vessel was unseaworthy with reference to the cargo it is therefore ruled that
there was breach of warranty of seaworthiness that rendered the assured not entitled to the payment of is claim
under the policy. Hence, when PHILAMGEN paid the claim of the bottling firm there was in effect a “voluntary
payment” and no right of subrogation accrued in its favor. In other words, when PHILAMGEN paid it did so at its
own risk.
Held/ Ratio:
1. YES. Common carriers are bound to observe extraordinary diligence over the goods they transport, according to
all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods,
common carriers are responsible; that is, unless they can prove that such loss, destruction or deterioration
was brought about by “flood, storm, earthquake, lightning or other natural disaster or calamity.” In all
other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they observed extraordinary diligence.
Here, Central disclaims responsibility for the loss of the cargo by claiming the occurrence of a “storm”. It
attributes the sinking of its vessel solely to the weather condition. It must be noted that in the Note of Marine
Protest, which the captain of the vessel issued under oath, stated that he and his crew encountered a southwestern
monsoons. Even Central admitted in its Answer that the sinking of M/V Central Bohol had been caused by the
strong southwest monsoon. Having made such factual representation, it cannot now be allowed to retreat
and claim that the southwestern monsoon was a “storm.” Moreover, Rosa S. Barba, weather specialist of the
Philippine Atmospheric Geophysical and Astronomical Services Administration (PAGASA), testified that a
thunderstorm might occur in the midst of a southwest monsoon. According to her, one did occurred the time of
the sinking of the vessel.
However, it would not be sufficient to categorize the weather condition at the time as a “storm” within the
absolutory causes enumerated in the law. Significantly, no typhoon was observed within the Philippine area
of responsibility during that period. According to PAGASA, a storm has a wind force of 48 to 55 knots,
equivalent to 55 to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second mate of the vessel stated that
the wind was blowing around force 7 to 8 on the Beaufort Scale. Consequently, the strong winds accompanying
the southwestern monsoon could not be classified as a “storm.”
Assuming the weather encountered by the ship is to be considered a natural disaster under Article 1739, Central
failed to show that such natural disaster or calamity was the proximate and only cause of the loss. Human
agency must be entirely excluded from the cause of injury or loss. In other words, the damaging effects blamed
on the event or phenomenon must not have been caused, contributed to, or worsened by the presence of
human participation. If a common carrier fails to exercise due diligence to prevent or minimize the loss before,
during and after the occurrence of the natural disaster, the carrier shall be deemed to have been negligent.
Further, the loss of the vessel could have been caused by the shifting of the logs in the hold. Such shifting
could been due only to improper stowage. During the second monsoon, the master ‘felt’ that the logs in the hold
shifted, prompting him to order second mate to look at the bodega. He found that there was seawater in the
bodega. The sloshing of tons of water back and forth had created pressures that eventually caused the ship to sink.
Had the logs not shifted, the ship could have survived and reached at least the port of El Nido. Being clearly prone
to shifting, the round logs should not have been stowed with nothing to hold them securely in place. Each pile of
logs should have been lashed together by cable wire, and the wire fastened to the side of the hold. Considering the
strong force of the wind and the roll of the waves, the loose arrangement of the logs did not rule out the possibility
of their shifting. By force of gravity, those on top of the pile would naturally roll towards the bottom of the ship.
The evidence indicated that strong southwest monsoons were common occurrences during the month of July.
Thus, the officers and crew of M/V Central Bohol should have reasonably anticipated heavy rains, strong
winds and rough seas. They should then have taken extra precaution in stowing the logs in the hold, in
consonance with their duty of observing extraordinary diligence in safeguarding the goods. But the carrier
took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now escape
responsibility for the loss.
2. NO. This rule does not apply to situations in which the loss or the injury is due to the concurrent negligence of the
ship owner and the captain. It has already been established that the sinking of M/V Central Bohol had been caused
by the fault or negligence of the ship captain and the crew, as shown by the improper stowage of the cargo of
logs.
To fully free a common carrier from any liability, the fortuitous event must have been the proximate and only
cause of the loss. And it should have exercised due diligence to prevent or minimize the loss before, during and after the
occurrence of the fortuitous event.
Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned M/B Coco
Beach III. As reflected above, however, the occurrence of squalls was expected under the weather condition of September
11, 2000. Moreover, evidence shows that M/B Coco Beach III suffered engine trouble before it capsized and sank. The
incident was, therefore, not completely free from human intervention.
Note: Many issues (Common Carrier, Fortuitous Event, Indeminity for Death with life expectancy and net earning,
exemplary damages)
38 - PAL v. CA (1992)**
Facts:
This is a petition for review of the CA decision which awarded damages and attorney’s fees to Isidro Co for the
loss of his checked-in baggage as a passenger of PAL.
On April 17, 1985, Co and his wife and son arrived at the MIA from San Francisco. Upon checking the baggage
retrieval area, he found out that one of his bags was missing. He then informed employee Willy Guevarra, and the latter
filled up the printed form acknowledging the missing property. The lost luggage was a Samsonite suitcase measuring
about 62 inches in length, worth about US$200 and containing various personal effects of Co. Co, on several occasions,
called PAL’s office to pursue his complaint about his missing luggage but to no avail. Thus, Co, through his lawyer, wrote
a demand letter to PAL. The manager replied that they were still not able to locate the baggage despite careful search.
PAL never found the luggage nor paid its corresponding value. Thus, Co filed the present complaint. The RTC of Pasay
found PAL liable, CA affirmed the decision in toto.
Issues:
1. W/N CA erred 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 based on weight
Held/Ratio:
1. The court found no merit in that contention. According to jurisprudence, the liability oof 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 on common carriers can be found in Articles 1733, 1735 and 17532. 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, PAL failed to overcome, not only the presumption, but more importantly, Co’s evidence, proving that
the carrier’s negligence was the proximate cause of the loss of his baggage. Furthermore, PAL acted in bad faith
in faking a retrieval receipt to bail itself out of having to pay Co’s claim.
About the Warsaw Convention:
As stated in the Cathay Pacific case, although the Warsaw Convention has the force and effect of law in this
country, being a treaty commitment assumed by the Philippine government, said convention does not operate as an
exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute
limit of the extent of that liability. The Warsaw Convention declares the carrier liable in the enumerated cases and under
certain limitations. However, it must not be construed to preclude the operation of the Civil Code and pertinent laws. It
does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under
the contract of carriage, especially if willful misconduct on the part of the carrier’s employees is found or established.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2. 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.
ALS2014B Page 55 of 159
TRANSPO DIGESTS ALS2014B ATTY. ABAÑO
40 - Cathay Pacific v. CA & Alcantara (1993)* ($20.00 as “inconvenience money”, “What can we do?”)
Doctrines:
• Cathay breached its contract of carriage with private respondent when it failed to deliver his luggage at the
designated place and time, it being the obligation of a common carrier to carry its passengers and their luggage
safely to their destination, which includes the duty not to delay their transportation, and the evidence shows that
petitioner acted fraudulently or in bad faith.
• Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the
mishap results in death of a passenger, or where the carrier is guilty of fraud or bad faith. Where in breaching the
contract of carriage the defendant airline is not shown to have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable consequences of the breach of obligation which the parties had
foreseen or could have reasonably foreseen.
• However, respondent Alcantara is not entitled to temperate damages, contrary to the ruling of the court a quo, in
the absence of any showing that he sustained some pecuniary loss.
• As We have repeatedly held, although the Warsaw Convention has the force and effect of law in this country,
being a treaty commitment assumed by the Philippine government, said convention does not operate as an
exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an
absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable for damages in the
enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the
Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages
for violating the rights of its passengers under the contract of carriage, especially if wilfull misconduct on the part
of the carrier’s employees is found or established, which is clearly the case before Us.
Facts:
On 19 October 1975, Tomas L. Alcantara was a first class passenger of petitioner Cathay Pacific Airways, Ltd.
(CATHAY for brevity) from Manila to Hongkong and onward from Hongkong to Jakarta for a conference with the
Director General of Trade of Indonesia, Alcantara being the EVP and GM of Iligan Cement Corporation, Chairman of the
Export Committee of the Philippine Cement Corporation, and representative of the Cement Industry Authority and the
Philippine Cement Corporation. He checked in his luggage which contained not only his clothing and articles for personal
use but also papers and documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When he inquired about his
luggage from CATHAY’s representative in Jakarta, he was told that his luggage was left behind in Hongkong. For this,
Alcantara was offered $20.00 as “inconvenience money” to buy his immediate personal needs until the luggage could be
delivered to him.
His luggage finally reached Jakarta more than twenty four (24) hours after his arrival. However, it was not
delivered to him at his hotel but was required by petitioner to be picked up by an official of the Philippine Embassy.
On 1 March 1976, respondent filed his complaint against CATHAY with the CFI of Lanao del Norte praying for
temperate, moral and exemplary damages, plus attorney’s fees.
CATHAY argues that although it failed to transport respondent Alcantara’s luggage on time, the one-day delay
was not made in bad faith so as to justify moral, exemplary and temperate damages. CATHAY also contends that the
extent of its liability for breach of contract should be limited absolutely to that set forth in the Warsaw Convention.
Issues:
1. W/N CATHAY is liable for moral, exemplary and temperate damages as well as attorney’s fees
2. W/N the Warsaw Convention applies
Held/Ratio:
1. YES. SC ruled that CATHAY was in bad faith. All pieces of luggage on board the first aircraft bound for Jakarta
were unloaded and transferred to the second aircraft which departed an hour and a half later. Yet, as the CA noted,
CATHAY was not even aware that it left behind Alcantara’s luggage until its attention was called by the
Hongkong Customs authorities.
Also, the language and conduct of petitioner’s representative towards respondent Alcantara was discourteous or
arbitrary to justify the grant of moral damages. The CATHAY representative was not only indifferent and
impatient; he was also rude and insulting. He simply advised Alcantara to buy anything he wanted. But even that
was not sincere because the representative knew that the passenger was limited only to $20.00 which, certainly,
was not enough to purchase comfortable clothings appropriate for an executive conference. Considering that
Alcantara was not only a revenue passenger but even paid for a first class airline accommodation and
accompanied at the time by the Commercial Attache of the Philippine Embassy who was assisting him in his
problem, CATHAY or its agents should have been more courteous and accommodating to private respondent,
instead of giving him a curt reply, “What can we do, the baggage is missing. I cannot do anything . . . Anyhow,
you can buy anything you need, charged to Cathay Pacific.”
However, respondent Alcantara is not entitled to temperate damages, contrary to the ruling of the court a quo, in
the absence of any showing that he sustained some pecuniary loss. It cannot be gainsaid that respondent’s luggage
was ultimately delivered to him without serious or appreciable damage.
2. NO. For, the Warsaw Convention itself provides in Art. 25 that —
(1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or
limit his liability, if the damage is caused by his wilfull misconduct or by such default on his part as, in
accordance with the law of the court to which the case is submitted, is considered to be equivalent to
wilfull misconduct.”
(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused
under the same circumstances by any agent of the carrier acting within the scope of his employment.
43 - Calalas v. CA (2000)**
Doctrine:
• In quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas
in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact
that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination.
• In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed
to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as
defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of
proof.
Facts:
Petitioner Calalas is the owner and operator of a passenger jeepney which took as passenger one Eliza Sunga who
was a first year student majoring in Physical Education in Siliman University. As the jeepney was already full at that time,
Sunga was made to sit on an “extension seat” which was a wooden stool placed at the rear portion of the jeepney. As one
passenger was going to alight, Sunga gave way; however, an Isuzu truck driven by Iglecerio Verena and owned by
Francisco Salva bumped the jeepney. As a result, Sunga was confined from Aug. 23 to Sept. 7, 1989 and was made to
undergo surgeries due to the accident. As attested by her attending physician, she would remain on a cast for a period of
three months and would have to ambulate in crutches during said period. Because of this, Sunga filed for complaint for
damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence
required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the
owner of the Isuzu truck.
LC: Absolved Calalas from liability and held Salva liable holding that it was the driver of the Isuzu truck who
was responsible for the accident. It took cognizance of another case filed by Calalas against Salva and Verena, for quasi-
delict,which held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney.
CA: Reversed decision holding that Sunga’s cause of action was based on a contract of carriage, not quasi-delict,
and that the common carrier failed to exercise the diligence required under the Civil Code. Dismissed third-party
complaint and made Calalas liable to Sunga.
Petitioner contends that the ruling in the other civil case holding that the negligence of Verena was the proximate
cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an insurer of the
safety of its passengers. He contends that the bumping of the jeepney by the truck owned by Salva was a caso fortuito.
Petitioner further assails the award of moral damages to Sunga on the ground that it is not supported by evidence.
Issue:
1. W/N Sunga is bound by the ruling in the other case cited by Calalas and therefore absolving the latter of his
liability under the contract of carriage
Held/Ratio:
1. No. The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of
the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle
of res judicata does not apply.
The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the
damage caused to petitioner’s jeepney. On the other hand, the issue in this case is whether petitioner is liable on
his contract of carriage. The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as
its source the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised upon
the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the
action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract
and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his
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destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers
are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary
diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier
the burden of proof.
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and his driver
Verena liable for the damage to petitioner’s jeepney, should be binding on Sunga. It is immaterial that the
proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The
doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of
contract. The doctrine is a device for imputing liability to a person where there is no relation between him and
another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing
contractual relation between the parties, it is the parties themselves who create the obligation, and the
function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are
concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common
carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury
to passengers.
In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it became
the duty of petitioner to prove that he had to observe extraordinary diligence in the care of his passengers. This
petitioner failed to rebut this based on the following facts:
1. The jeepney was not properly parked, its rear portion being exposed about two meters from the broad
shoulders of the highway, and facing the middle of the highway in a diagonal angle in violation of the
Land Transportation and Traffic Code.
2. Petitioner’s driver took in more passengers than the allowed seating capacity of the jeepney, again in
violation of §32(a) of the same law.
The fact that Sunga was seated in an “extension seat” placed her in a peril greater than that to which the other
passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence
imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in
transporting passengers.
We find it hard to give serious thought to petitioner’s contention that Sunga’s taking an “extension seat”
amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the
tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of
drowning by boarding an overloaded ferry.
started” and “was still in slow motion” at the point where the victim had boarded and was on its platform. It is not
negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is moving slowly. An
ordinarily prudent person would have made the attempt board the moving conveyance under the same or similar
circumstances. The fact that passengers board and alight from slowly moving vehicle is a matter of common
experience both the driver and conductor in this case could not have been unaware of such an ordinary practice.
Here, Pedrito, by stepping and standing on the platform of the bus, is already considered a passenger and is
entitled all the rights and protection pertaining to such a contractual relation. Hence, it has been held that the duty
which the carrier passengers owes to its patrons extends to persons boarding cars as well as to those alighting
therefrom.
Common carriers, from the nature of their business and reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers transported by the according to all the circumstances of
each case. A common carrier is bound to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence very cautious persons, with a due regard for all the circumstances.
48 - La Mallorca v. CA (1966)
Facts:
Plaintiffs husband and wife, together with their minor children, boarded a La Mallorca bus. Upon arrival at their
destination, plaintiffs and their children alighted from the bus and the father led them to a shaded spot about 5 meters from
the vehicle. The father returned to the bus to get a piece of baggage which was not unloaded. He was followed by her
daughter Raquel. While the father was still on the running board awaiting for the conductor to give his baggage, the bus
started to run so that the father had to jump. Raquel, who was near the bus, was run over and killed.
Lower court rendered judgment for the plaintiff which was affirmed by CA, holding La Mallorca liable for quasi-
delict and ordering it to pay P6,000 plus P400. La Mallorco contended that when the child was killed, she was no longer a
passenger and therefore the contract of carriage terminated.
Issue:
1. Whether or not the contractual obligation between the parties ceases the moment the passenger alighted form the
vehicle.
Held/Ratio:
1. On the question whether the liability of the carrier, as to the child who was already led a place 5 meters from the
bus under the contract of carrier, still persists, we rule in the affirmative. It is a recognized rules that the relation
between carrier and passengers does not cease at the moment the passenger alights from the carrier’s premises, to
be determined from the circumstancees. In this case, there was no utmost diligence.Firstly, the driver, although
stopping the bus, did not put off the engine. Secondly, he started to run the bus even before the bus conductor
gave him the signal and while the latter was unloading cargo. Here, the presence of said passenger near the bus
was not unreasonable and the duration of responsibility still exists. Averment of quasi-delict is permissible under
the Rules of Court, although incompatible with the contract of carriage. The Rules of Court allows the plaintiffs to
allege causes of action in the alternative, be they compatible with each other or not (Sec. 2, Rule 1). Even
assuming arguendo that the contract of carriage has already terminated, herein petitioner can be held liable for the
negligence of its driver pursuant to Art. 2180 of NCC. Decision MODIFIED. Only question raised in the briefs
can be passed upon, and as plaintiffs did not appeals the award of P3,000.00 the increase by the CA of the award
to P6,000.00 cannot be sustained.
persons, with a due regard for all the circumstances. Thus, where a passenger dies or is injured, the common
carrier is presumed to have been at fault or to have acted negligently. This gives rise to an action for breach of
contract of carriage where all that is required of plaintiff is to prove the existence of the contract of carriage and
its non-performance by the carrier, that is, the failure of the carrier to carry the passenger safely to his destination,
which, in the instant case, necessarily includes its failure to safeguard its passenger with extraordinary diligence
while such relation subsists.
2. No. The indemnity for death caused by a quasi-delict used to be pegged at P3,000 based on Art. 2205 of the Civil
Code. However, the amount has been gradually increased through the years because of the declining value of our
currency. At present, prevailing jurisprudence fixes the amount at P50,000.
3. No. The court has consistently computed the loss of earning capacity based on the life expectancy of the deceased
and not that of the heir. The award for loss of earning capacity is based on two factors: (1) the number of years on
which the computation of damages is based and (2) the rate at which the loss sustained by the heirs is fixed.
or that the accident was due to adverse road conditions. Therefore, it was not a fortuitous event since the cause
was not independent of human will. The accident was caused either through the negligence of the driver or
because of mechanical defects in the tire.
2. YES. The passenger is entitled to recover damages from a carrier for an injury resulting from a defect in
an appliance purchased from the manufacturer, whenever it appears that the defect would have been
discovered by the carrier if it had exercised the degree of care which was incumbent upon it, with regard to
inspection and application of necessary tests. This is because the passenger has no choice or control over the
carrier’s selection and use of equipment. Having no privity whatever with the manufacturer or vendor of the
defective equipment, the passenger has no remedy against him, while the carrier usually has. It is but logical,
therefore, that the carrier, while not an insurer of the safety of his passengers, should nevertheless be held to
answer for the flaws of his equipment if such flaws were at all discoverable.
The Court also held that there was no reason to disturb the findings of facts of the City Court. It was proven that
Juntilla had a lacerated wound on his right arm and thigh, and on his back. And he also discovered that his Omega
wrist watch was lost. His entitlement to damages was proven.
Even if petitioner did not sign the plane ticket, he is still bound by its provisions considering that these are held to
be a part of the contract of carriage and valid and binding regardless of the passengers’ lack of knowledge or
assent to the regulation. This is a contract of adhesion wherein one party imposes a ready-made form of contract
on another. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his
consent. And as held in Randolph v. American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein v.
Trans World Airlines, Inc., 349 S.W. 2d 483, “a contract limiting liability upon an agreed valuation does not
offend against the policy of the law forbidding one from contracting against his own negligence.”
2. YES but only nominal damages and not moral and exemplary. The Savellanos failed to prove bad faith on the part
of Northwest. Their allegation that they were bumped off for Japanese passengers was unsubstantiated. With
regard to the lost luggage, it was found that no timely notice of the loss was given to Northwest, which could have
justified an award of damages.
To justify the award of nominal damages the Court said, “In the present case, we must consider that petitioners
suffered the inconvenience of having to wake up early after a bad night and having to miss breakfast; as well as
the fact that they were business class passengers. They paid more for better service; thus, rushing them and
making them miss their small comforts was not a trivial thing. We also consider their social and official status.
Victorino Savellano was a former mayor, regional trial court judge, and chairman of the Commission on
Elections. Virginia B. Savellano was the president of five rural banks, and Deogracias Savellano was then the
incumbent vice governor of Ilocos Sur. Hence, it will be proper to grant one hundred fifty thousand pesos
(P150,000) as nominal damages to each of them, in order to vindicate and recognize their right to be notified and
consulted before their contracted stopping place was changed.”
Omissions by ordinary passengers may be condoned but more is expected of members of the bar who cannot
feign ignorance of such limitations and restrictions. An award of moral and exemplary damages cannot be
sustained under the circumstances, but Air France has to refund the unused coupons in the Air France ticket to the
Morales.
61 - Bayasen v. CA (1981)**
Facts:
On the morning of August 15, 1963, Saturnino Bayasen, the Rural Health Physician in Sagada, Mountain
Province, went to barrio Ambasing to visit a patient. Two nurses from the Saint Theodore’s Hospital in Sagada, viz.,
Elena Awichen and Dolores Balcita, rode with him in the jeep assigned for the use of the Rural Health Unit as they had
requested for a ride to Ambasing. Later, at Ambasing, the girls, who wanted to gather flowers, again asked if they could
ride with him up to a certain place on the way to barrio Suyo which he intended to visit anyway. Dr. Bayasen again
allowed them to ride, Elena sitting herself between him and Dolores. On the way, at barrio Langtiw, the jeep went over a
precipice. About 8 feet below the road, it was blocked by a pine tree. The three were thrown out of the jeep. Elena was
found lying in a creek further below. Among other injuries, she suffered a skull fracture which caused her death.
The CFI found Bayasen guilty of Homicide Thru Reckless Imprudence. CA affirmed. Both courts ruled so on the
ground that the petitioner was negligent in driving at an unreasonable speed. Bayasen contends that the rulings were
contrary to the evidence presented by him.
Issue:
1. W/N Bayasen was not negligent and thus entitled to acquittal
Held/Ratio:
1. Yes, Bayasen was not negligent and is entitled to acquittal. The evidence presented by Bayasen were:
a. Dolores Balcita, the surviving passenger, testified that Bayasen was driving moderately; that there was no
ongoing conversation which could have distracted Bayasen and that he was not under the influence of
alcohol; and she did not notice anything wrong with the jeep and that the road was moist and wet and the
weather fair.
b. Bayasen himself testified that he noticed the rear wheel skidded and as a precautionary measure, he was
directing the jeep to the side of the mountain when Elena suddenly held the steering wheel and he felt her
foot step on the accelerator – which caused the jeep to swerve. Dolores provides a negative testimony,
which we all know from evidence is weaker than a positive one.
c. Then mayor of Sagada who found the jeep after the accident also testified that it was on second gear –
meaning Bayasen was not going fast.
It is obvious that the proximate cause of the tragedy was the skidding of the rear wheels of the jeep and not the
“unreasonable speed” of Bayasen because there is no evidence on record to prove or support the finding that the
petitioner was driving at “an unreasonable speed”.
It is a well-known physical tact that cars may skid on greasy or slippery roads, as in the instant case, without fault
on account of the manner of handling the car. Skidding means partial or complete loss of control of the car under
circumstances not necessarily implying negligence. It may occur without fault.
No negligence as a matter of law can, therefore, be charged to Bayasen. In fact, the moment he felt that the rear
wheels of the jeep skidded, he promptly drove it to the left hand side of the road, parallel to the slope of the
mountain, because as he said, he wanted to play safe and avoid the embankment.
Under the particular circumstances of the instant case, the Bayasen, who skidded could not be regarded as
negligent, the skidding being an unforeseen event, so that the petitioner had a valid excuse for his departure from
his regular course. The negligence of the petitioner not having been sufficiently established, his guilt of the crime
charged has not been proven beyond reasonable doubt. He is, therefore, entitled to acquittal.
roadworthiness and safety of the bus, coupled with the driver’s refusal or neglect to stop the mini-bus after
he had heard once again the “snapping sound” and the cry of alarm from one of the passengers, constituted
wanton disregard of the physical safety of the passengers, and hence gross negligence on the part of
respondent and his driver.
Diosdado Bravo, that the necessary precautions would be taken, petitioner did nothing to protect the safety of its
passengers.
Had petitioner and its employees been vigilant they would not have failed to see that the malefactors had a large
quantity of gasoline with them. Under the circumstances, simple precautionary measures to protect the safety of
passengers, such as frisking passengers and inspecting their baggages, preferably with non-intrusive gadgets such
as metal detectors, before allowing them on board could have been employed without violating the passenger’s
constitutional rights. As this Court intimated in Gacal v. Philippine Air Lines, Inc., a common carrier can be held
liable for failing to prevent a hijacking by frisking passengers and inspecting their baggages.
From the foregoing, it is evident that petitioner’s employees failed to prevent the attack on one of petitioner’s
buses because they did not exercise the diligence of a good father of a family. Hence, petitioner should be held
liable for the death of Atty. Caorong.
It is clear that the cases of Pilapil and De Guzman do not apply to the present case. Art. 1755 of the Civil Code
provides that “a common carrier is bound to carry the passengers as far as human care and foresight can provide,
using the utmost diligence of very cautious person, with due regard for all the circumstances.” Thus, we held in
Pilapil and De Guzman that the respondents therein were not negligent in failing to take special precautions
against threats to the safety of passengers which could not be foreseen, such as tortious or criminal acts of third
persons. In the present case, this factor of unforeseeablility (the second requisite for an event to be considered
force majeure) is lacking. As already stated, despite the report of PC agent Generalao that the Maranaos were
planning to burn some of petitioner’s buses and the assurance of petitioner’s operations manager (Diosdado
Bravo) that the necessary precautions would be taken, nothing was really done by petitioner to protect the safety
of passengers.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3. A combination of letters and numbers issued by an airline to a travel agency when the airline confirms the travel agency’s
booking. Industry practice prohibits a travel agency from using the record locator number of another travel agency.
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66 - Singson v. CA (1997)**
Facts:
Singson and his cousin Tiongson bought two round-trip, open-dated, same route tickets for their US vacation
from Cathay Pacific. The tickets were in the form of booklets with 6 coupons each. The coupons were chronologically
arranged as follows: (1) MNL – HKG, (2) HKG – San Francisco, (3) San Francisco – LAX, (4) LAX – San Francisco, (5)
San Francisco – HKG, (6) HKG – MNL. The procedure was that Cathay Pacific attendants would tear the coupon
corresponding to that leg of the flight that is to be undertaken by the passenger. Singson and Tiongson arrived at LA and
spent their vacation. Three weeks later (June 30), they thought of going home and arranged a flight in the LA office of
Cathay. Tiongson successfully booked a flight but Singson was not as lucky. Apparently, his booklet lacked Coupon no.
5 (SanFo – HKG). What was instead on his booklet was coupon No. 3 (SanFo – LAX) which should have already
been removed from the booklet when that leg was undertaken. It was only in July 6 that Cathay was able to fly him out of
the US, despite his original booking request to be flown out in July 1.
Singson filed an action for damages against Cathay in the RTC of Vigan, alleging that the flight cost him very
urgent business engagements. Cathay allegedly shrugged of his request and even instructed him to go to San Francisco
by himself to inquire about his tickets or to just buy a new one subject to refund if they find out that his original ticket
was still actually valid. Cathay denied these allegations and interposed as its defense that there was no contract of
carriage because his ticket was “open-dated” meaning he was not booked for a specific flight, and consequently,
Cathay’s refusal to immediately book him was not a breach of contract. Cathay also alleged that they were not
negligent in booking him since it was because of the time difference between LA and Hong Kong that they were not able
to verify whether the ticket was still outstanding, and it was only after 24 hours that they received a reply from the Hong
Kong office. Unfortunately, when they received the reply, it was already a Saturday, and that the succeeding Monday was
a legal holiday (July 4 – US Independence).
The RTC ruled in favor of Singson awarding him actual, moral, and exemplary damages as well as attorney’s
fees. The CA reversed the RTC decision and found that there was no gross negligence amounting to bad faith or fraud and
deleted the award for moral and exemplary damages. According to the CA, Singson had no automatic right to fly on the
date he chose because his ticket was open dated, therefore, there was no breach of contract.
Issues:
1. W/N there was a contract of carriage
2. W/N there was a breach of such contract
3. W/N the award of moral/exemplary damages was proper
Held/Ratio:
1. YES. The round trip ticket issued by the carrier to the passenger was a complete written contract by and
between the carrier and the passenger. It had all the elements of a complete written contract: (a) the consent of
the contracting parties manifested by the fact that the passenger agreed to be transported by the carrier to and
from Los Angeles via San Francisco and Hongkong back to the Philippines, and the carrier’s acceptance to bring
him to his destination and then back home; (b) cause or consideration, which was the fare paid by the passenger
as stated in his ticket; and, (c) object, which was the transportation of the passenger from the place of
departure to the place of destination and back, which are also stated in his ticket. Only the performance of said
contract was left to be done. Moreover, the ticketing agent also testified that indeed, Singson was booked for a
flight. The problem only occurred when he revalidated Singson’s ticket and found that a coupon was lost.
2. YES. Cathay was the one responsible for the lost coupon. There can be two assumptions which may be derived
from the loss of the coupon (1) that it was mistakenly torn by the Cathay ground agent, or (2) that the agents of
Cathay really failed to issue said coupon. Regardless, it was Cathay’s negligence which was the proximate
cause of the loss. Had Cathay’s agents been diligent in double checking the coupons they were supposed to
detach from the passengers’ tickets, there would have been no reason for Cathay not to confirm petitioner’s
booking.
3. YES. Moral damages in a contract of carriage are given only when bad faith or fraud is present. However, there
are times when gross negligence could amount to bad faith, such as in this case. First, the coupon was lost due
to Cathay’s negligence. Second, the Court found it absurd that his companion Tiongson was able to fly but
Singson was not just because his tickets had to be verified. Third, the Court found that the delay in verification
was inexcusable since it should not have taken the HKG office 24-hrs to verify to the LA office whether the lost
coupon was already used since they had all the available equipments (fax, telephone etc.). The Court however
reduced the award of moral and exemplary damages because the one awarded by the RTC was too high.
Petitioner avers that Respondent Borja died nine years after the incident and, hence, his life expectancy of 80
years should yield to the reality that he was only 59 when he actually died.
Respondent Borja’s demise earlier than the estimated life span is of no moment. For purposes of determining loss
of earning capacity, life expectancy remains at 80. Otherwise, the computation of loss of earning capacity will
never become final, being always subject to the eventuality of the victim’s death. The computation should not
change even if Borja lived beyond 80 years. Fair is fair.
V. RECOVERABLE DAMAGES
Phil. First Insurance v. Wallem First Shipping (2009) (see Digest #26)
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with
Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common carrier.
Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In addition:
...
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the
deceased.
The omission from Article 2206 (3) of the brothers and sisters of the deceased passenger reveals the legislative
intent to exclude them from the recovery of moral damages for mental anguish by reason of the death of the
deceased. Inclusio unius est exclusio alterius. The solemn power and duty of the courts to interpret and apply the
law do not include the power to correct the law by reading into it what is not written therein. Thus, the CA erred
in awarding moral damages to the respondents.
To be entitled to moral damages, the respondents must have a right based upon law. It is true that under Article
1003 of the Civil Code they succeeded to the entire estate of the late Dr. Curso in the absence of the latter’s
descendants, ascendants, illegitimate children, and surviving spouse. However, they were not included among the
persons entitled to recover moral damages, as enumerated in Article 2219 of the Civil Code.
Therefore, the petition for review on certiorari is granted, and the award made to the respondents in the decision
dated September 16, 2002 of the Court of Appeals of moral damages amounting to P100,000.00 was deleted and
set aside.
2. A business intended to serve the travelling public primarily, a contract of carriage is imbued with public interest.
Article 1735 of the Civil Code provides that in case of lost or damaged goods, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
required by Article 1733. All that the aggrieved party has to prove is the existence of the contract and the fact of
its non-performance by the carrier.
It is not disputed that the checked-in luggage was not found upon arrival at his destination and was not returned to
him until about two years later. Upon receipt of the said luggage, Gillego did not anymore press on his claim for
actual damages and neither did he adduce evidence of the actual amount of loss and damage incurred by such
delayed delivery of his luggage. Consequently, the trial court proceeded to determine only the propriety of his
claim for moral and exemplary damages, and attorney’s fees.
In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately
injurious or the one responsible acted fraudulently or with malice or bad faith. Bad faith should be established by
clear and convincing evidence.
After a careful review by the court, it found that Air France is liable for moral damages. Reyes, the station
manager, testified that upon receiving the letter-complaint of respondent’s counsel, she immediately began
working on the Property Irregularity Report from their computerized data. Also, based on her testimony, a PIR
was given to Gillego, but Gillego alleges that the copy was not given to him despite repeated calls.
The alleged entries in the PIR deserve little consideration as these have not been properly identified or
authenticated by the airline station representative in Budapest. Furthermore, the court cannot accept the
convenient excuse given by Air France that Gillego should be faulted in allegedly not giving his hotel address and
telephone number. And even assuming arguendo that his Philippine address and contact number were the only
details respondent had provided for the PIR, still there was no explanation as to why Air France never
communicated with Gillego concerning his lost baggage long after respondent had already returned to
the Philippines.
While Gillego failed to cite any act of discourtesy, discrimination, or rudeness by Air France’s employees, this
did not make his loss and moral suffering insignificant and less deserving of compensation. In repeatedly ignoring
Gillego’s inquiries, Air France’s employees exhibited an indifferent attitude without due regard for the
inconvenience and anxiety he experienced after realizing that his luggage was missing.
But the court did not agree in the amount of the award (award reduced).
liners when they were delivered to its warehouse on 20 April 1990 clearly indicates that it considered the contract
of sale to be still subsisting up to that time. Indeed, had the contract of sale been cancelled already as claimed by
Lorenzo Shipping, it no longer had any business receiving the cylinder liners even if said receipt was “subject to
verification.” By accepting the cylinder liners when these were delivered to its warehouse, Lorenzo Shipping
indisputably waived the claimed delay in the delivery of said items.
76 - Philamgen v. CA (1993)*
Facts:
In 1983, Coca Cola in Zamboanga loaded 7.500 cases of bottled softdrinks on board M/V Asilda, a vessel owned
by Felman Shipping, to be transported to Cebu. All 7,500 cases of Coke 1.5 Liter bottles were loaded on the deck. The
goods were insured by Coke with Philamgen under a marine policy. MV Asilda left Zamboanga in fine weather at 8:00pm
one day, only to sink somewhere in Zamboanga del Norte at 8:45am the next day, bringing down her entire cargo with her
including her bottles.
Issues:
1. W/N M/V Asilda was seaworthy.
2. W/N Felman Shipping is liable.
Held/Ratio:
1. No. M/V Asilda was unseaworthy when it left the port of Zamboanga. The vessel was top-heavy which is to say
that while the vessel may not have been overloaded, yet the distribution or stowage of the cargo on board was
done in such a manner that the vessel was unstable and unseaworthy for that particular voyage.
Moreover, M/V Asilda was designed as a fishing vessel only.
2. Yes. It is settled that the ship agent is liable for the negligent acts of the captain in the care of goods loaded on the
vessel. This liability however can be limited through abandonment of the vessel, its equipment and freightage as
provided in Art. 587 of the Code of Commerce. It must be stressed at this point that Art. 587 speaks only of
situations where the fault or negligence is committed solely by the captain. Where the shipowner is likewise
to be blamed, Art. 587 will not apply, and such situation will be covered by the provisions of the Civil Code
on common carrier.
Closer supervision on the part of the shipowner could have prevented this fatal miscalculation. As such, Felman
was equally negligent. It cannot therefore escape liability through the expedient of filing a notice of abandonment
of the vessel by virtue of Art. 587 of the Code of Commerce.
Then, under Art 1733 of the Civil Code, common carriers are required to exercise extraordinary diligence. In the
event of loss of goods, common carriers are presumed to have acted negligently. Felman, the shipowner, was not
able to rebut this presumption.
to the French Governor at Saigon and asked for a pass or safe-conduct to the port of Manila, but the said Governor refused
to issue such pass or safe conduct for the reason that he had not been officially notified of said declaration of war, and
thereupon plaintiff’s agent at Saigon procured from the proper authorities the necessary clearance papers for the said
steamship and its bill of health for the port of Manila, which the said master and said representative decided was the
nearest safe and neutral port of refuge, and thereupon the said master sailed the said steamship to the said port of Manila
where he arrived with said steamship on the 8th day of August, 1914, where he, with said steamship, has been obliged to
remain continuously since, because of the conditions of war existing which render the said steamship and cargo subject to
seizure anywhere outside of a neutral or German port by any hostile nation with which the Empire of Germany is at war.
Counsel for the cargo owner Compagnie insist that having in mind accepted principles of public international law,
the established practice of nations, and the express terms of the Sixth Hague Convention (1907), the master should have
confidently relied upon the French authorities at Saigon to permit him to sail to his port of destination under a laissez-
passer or safe-conduct, which would have secured both the vessel and her cargo from all danger of capture by any of the
belligerents. Counsel for the shipowner Hamburg Amerika, on the contrary, urge that in the light of the developments of
the present war, the master was fully justified in declining to leave his vessel in a situation in which it would be exposed
to danger of seizure by the French authorities, should they refuse to be bound by the alleged rule of international law laid
down by opposing counsel.
Issues:
1. W/N the master of the Sambia, when he fled from the port of Saigon and took refuge in the port of Manila, had
reasonable grounds to apprehend that his vessel was in danger of seizure or capture by the public enemies of the
flag under which he sailed.
2. W/N, even if it be held that the action of the master of the Sambia in fleeing to a port of refuge and abandoning
the prosecution of the voyage contemplated in the contract of affreightment, was justified or excused by the
exigencies of war, it was his imperative duty, nevertheless, to tranship the cargo on a neutral vessel to one of the
ports of destination designated in the contract.
3. W/N the shipowner should be held responsible, at all events, for the deterioration in the value of the cargo,
incident to its detention on board the vessel from the date of its arrival in Manila until it was sold.
4. W/N the Court acquired jurisdiction over the subject matter of the case considering that there is a contractual
stipulation for general arbitration. [Not related to transpo; properly a Conflicts of Law issue.]
Held/Ratio:
1. YES. A critical examination of the terms of the convention itself, having in mind the discussion which preceded
its adoption, satisfies us that at the outbreak of the present war, there was no such general recognition of the duty
of a belligerent to grant “days of grace” and “safe-conducts” to enemy ships in his harbors, as would sustain a
ruling that such alleged duty was prescribed by any imperative and well settled rule of public international law, of
such binding force that it was the duty of the master of the Sambia to rely confidently upon a compliance with its
terms by the French authorities in Saigon; and it seems clear from a reading of the British order in council issued
at the outbreak of the war, with its limitations, restrictions, and conditions imposed upon the exercise of the
privileges secured therein, that while that nation recognized the advantages to be anticipated from the reciprocal
adherence by all the belligerents to the practice in that regard which had been developed in recent years, in a more
or less modified from, the order in council was not published in response to any imperative rule of public
international law to which that nation felt itself bound to subscribe.
We conclude that under the circumstances surrounding the flight of the Sambia from the port of Saigon, her
master had no such assurances, under any well-settled and universally accepted rule of public international law, as
to the immunity of his vessel from seizure by the French authorities, as would justify us in holding that it was his
duty to remain in the port of Saigon in the hope that he would be allowed to sail for the port of destination
designated in the contract of affreightment with a laissez-passer or safe-conduct which would secure the safety of
his vessel and cargo en route.
It is true that soon after the outbreak of the war, the Republic of France authorized and directed the grant of safe-
conducts to enemy merchant vessels in its harbors, under certain reasonable regulations and restrictions; so that it
would appear that had the master of the Sambia awaited the issuance of such a safe-conduct, he might have been
enabled to comply with the terms of his contract of affreightment. But until such action had been taken, the
Sambia was exposed to the risk of seizure in the event that the French government should decline to conform to
the practice; and in the absence of any assurance in that regard upon which the master could confidently rely, his
duty to his owner and to his vessel’s flag justified him in fleeing from the danger of seizure in the port of an
enemy to the absolute security of a neutral port.
The danger from which the master of the Sambia fled was a real and not merely an imaginary one as counsel for
the shipper contends. Seizure at the hands of an “enemy of the King,” though not inevitable, was a possible
outcome of a failure to leave the port of Saigon; and we cannot say that under the conditions existing at the time
when the master elected to flee from that port, there were no grounds for a “reasonable apprehension of danger”
from seizure by the French authorities, and therefore no necessity for flight.
Thus, neither the vessel nor her owners are liable for the resultant damages suffered by the owner of the cargo.
2. NO. The cargo of the Sambia being a perishable one, and it having proved impracticable to secure prompt
instructions from the shipper, the master was confronted with the necessity of electing the course he should
pursue, to protect the interests of the shipper whose property has been entrusted to him under a contract of
affreightment which he found himself unable to execute upon his own vessel. He elected, after taking the advice
of a competent marine surveyor, to sell the entire cargo under judicial authority, and to that end followed
substantially the proceedings prescribed in such cases in section II, chapter III of the Commercial Code; and we
are of opinion that not only is there nothing in the record which would sustain a finding that in so doing he failed
to exercise a sound discretion in the performance of the duty resting upon him to protect the interests of the cargo
owner, but that on the whole record it affirmatively appears that this was the only course open to him under all the
circumstances existing at the time when he adopted it.
Exhibit B which set out in full in the plaintiff’s brief is a certificate dated the 7th of September, 1914, prepared by
a marine surveyor, who having been called upon to examine the cargo aboard the Sambia, reported that it
“showed signs of heating and of being infested with weevils” and recommended, “in the interests of all
concerned, that it be discharged and disposed of as soon as possible” and that it “be sold by ‘private treaty’ in
preference to ‘sale by auction,’ owing to conditions in the local market.” We are of the opinion that it
sufficiently appears that under all the circumstances his duty was to sell rather than to tranship.
3. NO. It is clear that the master could not be required to act on the very day of his arrival; or before he had a
reasonable opportunity to ascertain whether he could hope to carry out his contract and earn his freight; and that
he should not be held responsible for a reasonable delay incident to an effort to ascertain the wishes of the
freighter, and upon failure to secure prompt advices, to decide for himself as to the course which he should adopt
to secure the interests of the absent owner of the property aboard his vessel.
It appears that two cablegrams were dispatched by the local agent of the shipowner and of the master, to the duly
authorized representative of the cargo owners in Saigon, one on the very day of the arrival of the Sambia in
Manila Bay. (August 8, 1914) and other a week later, advising him of the situation; that these cables were not
delivered presumably because of the interruption of cable communications following the outbreak of war; that
later, two letters were forwarded but remained unanswered until after the master had sought and secured judicial
authority to sell the cargo — the answer when it was received being a flat refusal on the part of the Saigon
representative of the cargo owners to give any instructions or assume any responsibility.
We are of the opinion that he proceeded with all reasonable dispatch, and did all that could be required of a
prudent man to protect the interests of the owner of the cargo aboard his vessel; so that any losses which resulted
from the detention of the cargo aboard the Sambia must be attributed to the act of the “enemies of the king,”
which compelled the Sambia to flee to a port of refuge, and made necessary the retention of the cargo aboard the
vessel at anchor under a tropical sun, and without proper ventilation, until it could be ascertained that the interests
of the absent owner would be consulted by the sale of this perishable cargo in the local market.
Furthermore, under the terms of the contract of affreightment, the amount of the freight was made payable
on delivery of the cargo at the designated port of destination. It is clear then, that under the terms of that
instrument, freight never became payable. Carrying the cargo from Saigon to Manila was not even a partial
performance of a contract to carry it from Saigon to Europe; and even it if could be treated as such, the shipowner
would have no claim for freight, in the absence of any agreement, express or implied, to make payment for a
partial performance of the contract.
4. YES. This objection to the jurisdiction of the court appears for the first time in defendant’s brief on appeal. In the
court below defendant not only appeared and answered without objecting to the court’s jurisdiction, but sought
affirmative relief; and it is very clear that defendant cannot be permitted to submit the issues raised by the
pleadings for adjudication, without objection, and then, when unsuccessful, assail the court’s jurisdiction in
reliance upon a stipulation in the charter party which the parties were at entire liberty to waive if they so desired.
We do not stop therefore to rule upon the contention of opposing counsel, that a contractual stipulation, for a
general arbitration cannot be invoked to oust our courts of their jurisdiction.
[Other issues on general average in insurance were discussed and omitted in this digest. Search for the keyword “York-
Antwerp Rules” if you would like to read about it. The rule basically states that “claims for contribution in general
average must be supported by proof that sacrifices on account of which such claims are submitted were made to avert a
common imminent peril, and that extraordinary expenses for which reimbursement is sought, were incurred for the joint
benefit of ship and cargo.”]
Separate Opinions, MALCOLM, M., dissenting:
I dissent. I must confess that my mind fails to follow the three majority decisions in their discussion of
“reasonable” or “due diligence” and other interrelated questions.
nature and extent of the injury. This protects the carrier by affording it an opportunity to make an investigation
of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent
claims
In this case, PCIC admits that PGP settled all the transportation charges charged by Chemoil. Further, it claims
that the settlement of such charges does not bar its claim for reimbursement in the form of actual damages,
arguing that the second paragraph of Art. 366 makes it clear that if notice or protest has been made prior to the
payment of services, the claim should still be allowed.
PCIC contends that the notice of contamination was given by PGP’s employee (Chan) to Abastillas, the VP for
operations of Chemoil at the time of the delivery of the cargo. Such notice was given through a phone call made
by Chan to Abastillas. Both the trial court and the CA affirm that such phone call was made. However, both
courts failed to make a definitive finding as to whether the notice of contamination was timely relayed due
to lack of evidence presented. Hence, in the absence of evidence to confirm that the notice of claim was timely
filed, PCIC’s claim for reimbursement against Chemoil must fail.
2. Rendered moot.
The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent
to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee
must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can
accrue in favor of the former.
The object sought to be attained by the requirement of the submission of claims in pursuance of this article is to
compel the consignee of goods entrusted to a carrier to make prompt demand for settlement of alleged damages
suffered by the goods while in transport, so that the carrier will be enabled to verify all such claims at the time of
delivery or within twenty-four hours thereafter, and if necessary fix responsibility and secure evidence as to the
nature and extent of the alleged damages to the goods while the matter is still fresh in the minds of the parties.
The SC upheld the CA and exonerated ChemOil.
Mayo B. Perez. Immediately, Perez was able to investigate the claims himself and he confirmed that the goods
were, indeed, already corroded.
Provisions specifying a time to give notice of damage to common carriers are ordinarily to be given a reasonable
and practical, rather than a strict, construction. We give due consideration to the fact that the final destination of
the damaged cargo was a school institution where authorities are bound by rules and regulations governing their
actions. Understandably, when the goods were delivered, the necessary clearance had to be made before the
package was opened. Upon opening and discovery of the damaged condition of the goods, a report to this effect
had to pass through the proper channels before it could be finalized and endorsed by the institution to the claims
department of the shipping company.
The call to petitioner was made two days from delivery, a reasonable period considering that the goods could
not have corroded instantly overnight such that it could only have sustained the damage during transit. Moreover,
petitioner was able to immediately inspect the damage while the matter was still fresh. In so doing, the main
objective of the prescribed time period was fulfilled. Thus, there was substantial compliance with the notice
requirement in this case.
3. YES. The bill of lading issued by petitioner on July 31, 1993 contains the notation “grounded outside
warehouse,” suggesting that from July 26 to 31, the goods were kept outside the warehouse. And since evidence
showed that rain fell over Manila during the same period, We can conclude that this was when the shipment
sustained water damage.
To prove the exercise of extraordinary diligence, petitioner must do more than merely show the possibility that
some other party could be responsible for the damage. It must prove that it used “all reasonable means to ascertain
the nature and characteristic of the goods tendered for transport and that it exercised due care in handling them.” It
failed to show that it should be exempted from liability.
Article 366 of the Commercial Code is limited to cases of claims for damages to goods
actually turned over by the carrier and received by the consignee, whether those damages be
apparent from an examination of the packages in which the goods are delivered, or of such
character that the nature and extend of the damage is not apparent until the packages are opened
and the contents examined. Clearly it has no application in cases wherein the goods entrusted to
the carrier are not delivered by the carrier to the consignee. In such cases there can be no question
of a claim for damages suffered by the goods while in transport, since the claim for damages
arises exclusively out of the failure to make delivery. . . .
We are of opinion, however, that the necessity for making the claim in accordance with that
article did not arise if, as it is alleged, these 1,022 packages, of sugar were recovered from the
wreck by the plaintiff, himself, in an effort, by his own activities, to save his property from total
loss. The measures to be taken under the terms of Article 367 of the Code when the parties are
unable to arrive at an amicable settlement of claims for damages set up in accordance with Article
366, quite clearly indicate that the necessity for the presentation of claims under this article arises
only in those cases wherein the carrier makes delivery and the consignee receives the goods in
pursuance of the terms of the contract.
It is true that in the instant case there is some disagreement as to whether the salvage of the portion of the cargo
that was saved was due to the efforts of the carrier itself or to the combined efforts of the latter and the shipper as
a result of which the salvaged cargo was placed in possession of the shipper who sold it and deducted its proceeds
from the liability of the carrier. But this discrepancy would seem to be immaterial because the law as well as the
contract contemplates delivery of the cargo to the consignee at its port of destination in order that the benefit of
the law may be availed of.
The Court ordered Choa Joy to pay New Zealand the sum of P5,196.20, with legal interest thereon from the filing
of the complaint.
93 - Lufthansa v. CA (1994)**
Facts:
Tirso Antiporda was an associate director of Central Bank of the Phil and a consultant of ADB, World Bank and
the UNDP. He was contracted by SGV to be its financial specialist for a project in Africa. In a letter addressed to
Antiporda from SGV, he would render his services to Malawi Bank as an independent contractor for which he would be
paid $9,167 for a 50-day period.
Lufthansa through SGV issued a ticket for Antiporda’s confirmed flights to Africa. Antiporda took the Lufthansa
flight to Singapore from where he proceeded to Bombay on board the same airline. He arrived in Bombay as scheduled
waited at the transit area for his connecting flight to Nairobi which was, per schedule given him by Lufthansa, to leave
Bombay in the morning of that day.
Gerald Matias, Lufthansa’s traffic officer, informed him that his seat in Air Kenya Flight 203 to Nairobi had been
given to a very important person of Bombay who was attending a religious function in Nairobi. Antiporda protested
stressing that he had an importante professional engagement in Malawi. However, Air Kenya 203 left without him on
board.
Antiporda arrived in Malawi after 2 days. Antiporday wrote to the General Manager of Lufthansa in Manila
demanding Php 1-M in damages.
Lufthansa allege that its liability to any passenger is limited to occurrences in its own line. Thus, its liability to
him is limited to the extent that it had transported him from Manila to Singapore and from singapore to Bombay; that
therefrom, responsibility for the performance of the contract of carriage is assumed by the succeeding carriers tasked to
transport him for the remaining leg of his trip because at that stage, its contract of carriage with Antiporda ceases, with
Lufthansa acting, no longer as the principal in the contract of carriage, but merely as a ticket-issuing agent for the other
carriers.
Issue:
1. W/N Lufthansa German Airlines which issued a confirmed Lufthansa ticket to private respondent Antiporda
covering a five-leg trip aboard different airlines should be held liable for damages occasioned by the “bumping-
off” of Antiporda by Air Kenya, one of the airlines contracted to carry him to a particular destination of the five-
leg trip.
Held/Ratio:
1. Yes, Lufthansa Airlines should be held liable for damages. Antiporda was issued a confirmed Lufthansa ticket all
throughout the five-leg trip. The fourth paragraph of the “Conditions of Contract” stipulated in the ticket
indubitably showed that the contract of carriage was considered as one of continuous air transportation from
Manila to Blantyre, Malawi, thus:
4. x x x carriage to be performed hereunder by several successive carriers is regarded as a single
operation.
In light of the stipulations expressly specified in the ticket defining the true nature of its contract of carriage with
Antiporda, Lufthansa cannot claim that its liability thereon ceased at Bombay Airport and thence, shifted to the
various carriers that assumed the the actual task of transporting Antiporda.
Lufthansa is clearly the principal in the contract of carriage with Antiporda and remains to be so, regardless of
those instances when actual carriage was to be performed by various carriers. The issuance of a confirmed ticket
serves as proof that Lufthansa, in effect guaranteed that the successive carriers, such as Air Kenya would honor
his ticket; assure him of a space therein and transport him on a particular segment of his trip.
Moral Damages:
Bad faith attended the performance of the contract of carriage, for even while Antiporda was in Bombay,
Representatives of Lufthansa already tried to evade liability by claiming that the contract of carriage between
Lufthansa and Antiporda ceased at Bombay airport, in disregard of the fact that Antiporda was holding a
Lufthansa ticket for the entire five-leg trip.
Exemplary Damages:
Lufthansa, through its representatives in Bombay, acted in a reckless and malevolent manner in dealing with
Antiporda. Antiporda was stranded in the Bombay Airport for 32 hours. When he insisted on taking his scheduled
flight to Nairobi, Gerard Matias got angry and threw the ticket and passport on plaintiff’s lap and was ordered to
go to the basement with his heavy luggages for no reason at all. Antiporda requested accommodation but Matias
ignored it and just left. Plaintiff had to stay in the transit area and could not sleep for fear that his luggages might
be lost. Everytime he went to the toilet, he had to drag with him his luggages. Lufthansa displayed utter lack of
concern of its obligation to the Antiporda and left him alone in his misery at the Bombay airport.”
the revised schedule. As both PAL and Espiritu are solidarily liable, PAL can demand reimbursement from
Espiritu what they paid the plaintiff.
delivery. Since Santiago Lighterage did not deliver a seaworthy vessel, it failed to perform its obligation
to Pelaez under the agreement.
b. What is SEAWORTHINESS?
Seaworthiness is a relative term. After the accident, M/V Christine Gay was still able to make voyages
within the Philippines. However, such subsequent voyages in the Philippines do not prove the vessel’s
seaworthiness to withstand a voyage to South Korea.
To be seaworthy, a vessel “must have that degree of fitness which an ordinary, careful and prudent owner
would require his vessel to have at the commencement of her voyage, having regard to all the probable
circumstances of it.” Thus the degree of seaworthiness varies in relation to the contemplated voyage.
Crossing the Atlantic calls for stronger equipment than sailing across the Visayan Sea. It is essential
to consider that once the necessary degree of seaworthiness has been ascertained, this obligation is an
absolute one, i.e. the undertaking is that the vessel actually is seaworthy. It is no excuse that the
shipowner took every possible precaution to make her so, if in fact he failed.
In examining what is meant by seaworthiness we must bear in mind the dual nature of the carrier’s
obligations under a contract of affreightment. To satisfy these duties the vessel must (a) be efficient as an
instrument of transport and (b) as a storehouse for her cargo, or is cargoworthy.
Seaworthiness
if the vessel’s hull, tackle and machinery if the vessel is sufficiently strong and equipped to carry the
are in a state of good repair particular kind of cargo which she has contracted to carry
if she is sufficiently provided with fuel and and her cargo must be so loaded that it is safe for her to
ballast proceed on her voyage
A mere right given to the charterer to inspect the vessel before loading and to satisfy himself that she was
fit for the contracted cargo does not free the shipowner from his obligation to provide a cargoworthy ship.
c. Even if Santiago Lighterage was able to present a lot of certifications as to the seaworthiness of the ship,
issued by the proper government authorities, these documents are only prima facie evidence of
seaworthiness. The testimonies and reports of the ship’s captain and engineer are more convincing.
Examples of their findings were
1. The hull on deck line around the accommodations found [to have] plenty [of] holes and heavily rusted.
Seawater entered crew quarters with the possibility to the engine when sea shipping on deck.
Recommended for welding with doubler while loading chromite.
2. Water tight doors with no rubbers to prevent seawater and butterflies/locks not moving.
Reconditioned/greased while loading but no available watertight door rubbers to use.
3. No hatch battens to secure hatch covers/tarpaulins, so seawater cannot enter into the hold.
4. Atop the bridge, Captain’s and Chief Mates’ cabin are leaking when raining.
5. Found plenty of holes at the bow. Vessel not strong or capable to encounter big waves, boisterous winds
and other meteorological elements in high seas, not seaworthy.
6. Ladder steps going up to the bridge are missing and rotten. The Pilot nearly fell down
ALS2014B Page 136 of 159
TRANSPO DIGESTS ALS2014B ATTY. ABAÑO
As ship agent, it may be held civilly liable in certain instances. Macondray does not dispute the liabilities of the
ship agent for the loss/shortage of 476.140 metric tons of the cargo. Hence, the SC just affirmed the CA’s
decision that Macondray, as ship agent, is liable to Provident for the losses sustained by the subject shipment.
2. Yes. Macondray claims that it picked up the February 28, 2002 Decision of the CA on May 14, 2002, after
receiving the postal notice the day before. It further attributes gross negligence to its previous counsel for not
informing the CA of his change of address. It thus contends that notice of the assailed Decision given to the
previous counsel cannot be considered as notice to petitioner. The SC ruled that the CA’s decision had become
final and unappealable since service of the said Decision was made on Macondray’s counsels of record on March
6, 2002. That copy of the Decision was, however, returned to the sender for the reason that the addressee had
moved out. If counsel moves to another address without informing the court, such omission or neglect is
inexcusable and will not stay the finality of the decision. The court cannot be expected to take judicial notice of
the new address of a lawyer who has moved or to ascertain on its own whether or not the counsel of record has
been changed and who the new counsel could possibly be or where he probably resides or holds office. The
negligence of counsel binds the client.
Aboitiz v. New India (2005) (see Digest #99)
Held/ Ratio:
1. YES. Common carriers are bound to observe extraordinary diligence over the goods they transport, according to
all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods,
common carriers are responsible; that is, unless they can prove that such loss, destruction or deterioration
was brought about by “flood, storm, earthquake, lightning or other natural disaster or calamity.” In all
other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they observed extraordinary diligence.
Here, Central disclaims responsibility for the loss of the cargo by claiming the occurrence of a “storm”. It
attributes the sinking of its vessel solely to the weather condition. It must be noted that in the Note of Marine
Protest, which the captain of the vessel issued under oath, stated that he and his crew encountered a southwestern
monsoons. Even Central admitted in its Answer that the sinking of M/V Central Bohol had been caused by the
strong southwest monsoon. Having made such factual representation, it cannot now be allowed to retreat
and claim that the southwestern monsoon was a “storm.” Moreover, Rosa S. Barba, weather specialist of the
Philippine Atmospheric Geophysical and Astronomical Services Administration (PAGASA), testified that a
thunderstorm might occur in the midst of a southwest monsoon. According to her, one did occurred the time of
the sinking of the vessel.
However, it would not be sufficient to categorize the weather condition at the time as a “storm” within the
absolutory causes enumerated in the law. Significantly, no typhoon was observed within the Philippine area
of responsibility during that period. According to PAGASA, a storm has a wind force of 48 to 55 knots,
equivalent to 55 to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second mate of the vessel stated that
the wind was blowing around force 7 to 8 on the Beaufort Scale. Consequently, the strong winds accompanying
the southwestern monsoon could not be classified as a “storm.”
Assuming the weather encountered by the ship is to be considered a natural disaster under Article 1739, Central
failed to show that such natural disaster or calamity was the proximate and only cause of the loss. Human
agency must be entirely excluded from the cause of injury or loss. In other words, the damaging effects blamed
on the event or phenomenon must not have been caused, contributed to, or worsened by the presence of
human participation. If a common carrier fails to exercise due diligence to prevent or minimize the loss before,
during and after the occurrence of the natural disaster, the carrier shall be deemed to have been negligent.
Further, the loss of the vessel could have been caused by the shifting of the logs in the hold. Such shifting
could been due only to improper stowage. During the second monsoon, the master ‘felt’ that the logs in the hold
shifted, prompting him to order second mate to look at the bodega. He found that there was seawater in the
bodega. The sloshing of tons of water back and forth had created pressures that eventually caused the ship to sink.
Had the logs not shifted, the ship could have survived and reached at least the port of El Nido. Being clearly prone
to shifting, the round logs should not have been stowed with nothing to hold them securely in place. Each pile of
logs should have been lashed together by cable wire, and the wire fastened to the side of the hold. Considering the
strong force of the wind and the roll of the waves, the loose arrangement of the logs did not rule out the possibility
of their shifting. By force of gravity, those on top of the pile would naturally roll towards the bottom of the ship.
The evidence indicated that strong southwest monsoons were common occurrences during the month of July.
Thus, the officers and crew of M/V Central Bohol should have reasonably anticipated heavy rains, strong
winds and rough seas. They should then have taken extra precaution in stowing the logs in the hold, in
consonance with their duty of observing extraordinary diligence in safeguarding the goods. But the carrier
took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now escape
responsibility for the loss.
2. NO. This rule does not apply to situations in which the loss or the injury is due to the concurrent negligence of the
ship owner and the captain. It has already been established that the sinking of M/V Central Bohol had been caused
by the fault or negligence of the ship captain and the crew, as shown by the improper stowage of the cargo of
logs.
allowing the ship to carry more passengers than it was allowed to carry. Negros is, therefore, clearly liable for
damages to the full extent.
belie this contention. The Weather Bureau is now equipped with modern apparatus which enable it to
detect any incoming atmospheric disturbances.
2. The CA held that the captain was negligent in overloading the ship (with dump truck, 3 Toyota cars, steel
bars, 6,000 cases of beer and 241 more passengers). However, Compania shared in his negligence. A
closer supervision by Compania could have prevented the overloading of the ship. Moreover, Compania
allowed the ship to leave Manila later that its schedule. The departure was delayed for 4 hours. Maritima
could not account for the delay because it neither checked from the captain the reasons behind the delay
nor sent its representative to inquire into the cause of such delay. If it had made the ship leave earlier, the
encounter with the typhoon could have been avoided.
3. While the ship was seaworthy and had lifesaving equipment, Compania failed to show evidence that it
had installed a radar which could have allowed the vessel to navigate safely for shelter during a storm.
Consequently, the vessel was left at the mercy of “Welming” in the open sea because although it was
already in the vicinity of the Aklan river, it was unable to enter the mouth of Aklan river to get into New
Washington, Aklan due to the darkness and the Floripon lighthouse at the entrance of Aklan river was not
functioning our could not be seen at all.
Since the foregoing shows the lack of extraordinary diligence and the negligence of Compania Maritima, it is
liable for damages.
liabilities of the (herein petitioners) do not end upon the expiration of the contracted period as (petitioners
are) duty bound to repatriate the seaman to the point of hire to effectively terminate the contract of
employment.”
The instant case should be distinguished from the case of Mabuhay, where the deceased, Romulo Sentina, had
been in a state of intoxication, then ran amuck and inflicted injury upon another person, so that the latter in his
own defense fought back and in the process killed Sentina. Previous to said incident, there was no proof of mental
disorder on the part of Sentina. The cause of Sentina’s death is categorized as a deliberate and willful act on his
own life directly attributable to him. But seaman Pineda was not similarly situated.
Incidentally, petitioners conjecture that the deceased could have been on drugs when he assaulted the policeman.
If this had been the case, the Thai police and the Philippine Embassy in Bangkok would most certainly have made
mention thereof in their respective reports. But they did not do so.
3. Yes. Petitioners further argue that the cause of Pineda’s death “is not one of the occupational diseases listed by
law”, and that in the case of De Jesus vs. Employees’ Compensation Commission, this Court held that “x x x for
the sickness and the resulting disability or death to be compensable, the sickness must be the result of an
occupational disease listed under Annex ‘A’ of the Rules (the Amended Rules on Employees’ Compensation)
with the conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting the disease is
increased by the working conditions.”
Petitioner’s reliance on De Jesus is misplaced, as the death and burial benefits being claimed in this case are not
payable by the Employees’ Compensation Commission and chargeable against the State Insurance Fund. These
claims arose from the responsibility of the foreign employer together with the local agency for the safety of the
employee during his repatriation and until his arrival in this country, i.e., the point of hire. Though the termination
of the employment contract was duly effected in Dubai, still, the responsibility of the foreign employer to see to it
that Pineda was duly repatriated to the point of hiring subsisted. The uncaring attitude displayed by petitioners
who, knowing fully well that its employee had been suffering from some mental disorder, nevertheless still
allowed him to travel home alone, is appalling to say the least. Such attitude harks back to another time when the
landed gentry practically owned the serfs, and disposed of them when the latter had grown old, sick or otherwise
lost their usefulness.
and consider the same, passengers of inter-island vessels do not have the same chance, since their alleged
adhesion is presumed only from the fact that they purchased the passage tickets.
Public policy is “that principle of the law which holds that no subject or citizen can lawfully do that which has a
tendency to be injurious to the public or against the public good.” Under this principle “freedom of contract or
private dealing is restricted by law for the good of the public.” Herein, Condition 14, if enforced, will be
subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger claimants
outside of Cebu City, thus placing Sweet Line at a decided advantage over said persons, who may have perfectly
legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary
to public policy — to make the courts accessible to all who may have need of their services.
116 - Remigio v. NLRC, CF Sharp, and New Commodore Cruise Line (2006)**
Facts:
In November 1997, Remigio entered into an employment contract with CF Sharp (agent) and New Commodore
(principal). The contract provided that the terms and conditions of the standard employment contract as approved by
DOLE and POEA were to be strictly observed. Under the contract, Remigio was to work as a musician (drummer) in a
vessel owned by New Commodore for 10 months. Remigio subsequently passed the medical exam and started work. In
March 1998, while the vessel was docked in Mexico, Remigio went ashore to attend to some personal matters. However,
while walking, he felt severe chest pain. He returned to the vessel and had himself checked up in the infirmary. He was
brought to and confined for 7 days in a Mexican hospital. He rejoined the vessel after he went out of confinement.
When the vessel arrived in Louisiana, he was brought to a hospital. After an examination revealed several
blockages in his arteries, Remigio underwent a triple coronary artery bypass operation. With the cardiologist finding him
“not fit for sea duty,” Remigio was sent back to Manila in April 1998. A month after arriving, Remigio sent a formal
demand to CF Sharp for payment of unpaid wages, sickness allowance, and permanent total disability benefits. This
demand was refused. He presented a letter from the company-designated physician to CF Sharp’s manager, stating “he
was unfit from April 27, 1998 to June 25, 1998” and “he can return to work as a piano player in 8 to 10 months.”
Remigio proceeded to file a complaint seeking permanent total disability benefits ($60K) and damages. CF Sharp
offered a settlement for $40K, but Remigio stood fast. No settlement was reached. The Labor Arbiter rendered a decision
granting Remigio sickness allowance, but not permanent total disability benefits, noting that (1) a heart bypass is not in
the “schedule of disability;” and (2) even assuming that it was, no medical report was presented to show permanent or
total disability.
The NLRC affirmed the decision of the Labor Arbiter. The CA also did the same, stating that there is no
substantial evidence to prove that the heart ailment incurred by Remigio during the term of his employment resulted to his
disability.
Issues:
1. W/N the heart ailment suffered by Remigio during the term of the contract is compensable under the 1996 POEA
SEC even if there is no proof of work-connection.
2. W/N the concept of permanent total disability under the Labor Code applies to a case of a seafarer’s claim for
disability benefits under the 1996 POEA SEC.
3. W/N Remigio is entitled to permanent total disability benefits.
Held/Ratio:
1. Yes. “Disability” is generally defined as “loss or impairment of a physical or mental function resulting from
injury or sickness.” Clearly, “disability” is not synonymous with “sickness” or “illness,” the former being a
potential effect of the latter. The schedule in Section 30 of the POEA SEC is a Schedule of Disability or
Impediment for Injuries Suffered and Diseases or Illness Contracted. It is not a list of compensable sicknesses.
Unlike the 2000 POEA SEC, nowhere in the 1996 POEA SEC is there a list of “Occupational Diseases.”
The unqualified phrase “during the term” in Section 20(B) of the 1996 POEA SEC covers all injury or illness
occurring in the lifetime of the contract. The injury or illness need not be shown to be work-related. Note that the
claims arose from the stipulations of the standard format contract entered into between the seafarer and the agent,
which was required to be adopted and used by all parties to the employment of any Filipino seaman on board any
ocean-going vessel. His claims are not rooted from the provisions of the New Labor Code as amended.
Significantly, under the contract, compensability of the death or illness of seamen need not be dependent upon
whether it is work connected or not. Therefore, proof that the working conditions increased the risk of contracting
a disease or illness, is not required to entitle a seaman who dies during the term thereof by reason of such disease
or illness, of the benefits stipulated thereunder which are separate and distinct from, and in addition to whatever
benefits which the seaman is entitled to under Philippine laws.
2. Yes. The standard employment contract for seafarers was formulated by the POEA to “secure the best terms and
conditions of employment of Filipino contract workers and ensure compliance therewith” and to “promote and
protect the well-being of Filipino workers overseas.” Citing numerous cases, the Court held that “disability should
not be understood more on its medical significance but on the loss of earning capacity. Permanent total disability
means disablement of an employee to earn wages in the same kind of work, or work of similar nature that he was
trained for or accustomed to perform, or any kind of work, which a person of his mentality and attainment could
do. It does not mean absolute helplessness.”
3. Yes. A total disability does not require that the employee be absolutely disabled, or totally paralyzed. What is
necessary is that the injury must be such that the employee cannot pursue her usual work and earn therefrom. On
the other hand, a total disability is considered permanent if it lasts continuously for more than 120 days.
Permanent disability is inability of a worker to perform his job for more than 120 days, regardless of whether or
not he loses the use of any part of his body.
The facts clearly prove that Remigio was unfit to work as drummer for at least 11-13 months – from the onset of
his ailment in March 1998 to 8-10 months after June 1998. This, by itself, already constitutes permanent total
disability. What is more, the agent and the principal were well aware that petitioner was working for them as a
drummer, as proven by the communication of respondent principal to respondent agency referring to petitioner as
“drummer with our enchanted isle quartet.” Thus, the certification that Remigio may go back specifically as a
piano or guitar player means that the likelihood of Remigio returning to his usual work as a drummer was
practically nil. From this, it is pristine clear that Remigio’s disability is total and permanent.