G.R. No. L-18965 October 30, 1964
30 representing
COMPAÑIA MARITIMA, petitioner,
vs.
INSURANCE COMPANY OF NORTH AMERICA, respondent.
Rafael Dinglasan for petitioner.
Ozaeta Gibbs & Ozaeta for respondent.
BAUTISTA ANGELO, J.:
Sometime in October, 1952, Macleod and Company of the Philippines contracted by
telephone the services of the Compañia Maritima, a shipping corporation, for the
shipment of 2,645 bales of hemp from the former's Sasa private pier at Davao City
to Manila and for their subsequent transhipment to Boston, Massachusetts, U.S.A.
on board the S.S. Steel Navigator. This oral contract was later on confirmed by a
formal and written booking issued by Macleod's branch office in Sasa and
handcarried to Compañia Maritima's branch office in Davao in compliance with
which the latter sent to Macleod's private wharf LCT Nos. 1023 and 1025 on which
the loading of the hemp was completed on October 29, 1952. These two lighters
were manned each by a patron and an assistant patron. The patrons of both barges
issued the corresponding carrier's receipts and that issued by the patron of Barge
No. 1025 reads in part:
Received in behalf of S.S. Bowline Knot in good order and condition from
MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment
at Manila onto S.S. Steel Navigator.
FINAL DESTINATION: Boston.
Thereafter, the two loaded barges left Macleod's wharf and proceeded to and
moored at the government's marginal wharf in the same place to await the arrival
of the S.S. Bowline Knot belonging to Compañia Maritima on which the hemp was
to be loaded. During the night of October 29, 1952, or at the early hours of October
30, LCT No. 1025 sank, resulting in the damage or loss of 1,162 bales of hemp
loaded therein. On October 30, 1952, Macleod promptly notified the carrier's main
office in Manila and its branch in Davao advising it of its liability. The damaged
hemp was brought to Odell Plantation in Madaum, Davao, for cleaning, washing,
reconditioning, and redrying. During the period from November 1-15, 1952, the
carrier's trucks and lighters hauled from Odell to Macleod at Sasa a total of 2,197.75
piculs of the reconditioned hemp out of the original cargo of 1,162 bales weighing
2,324 piculs which had a total value of 116,835.00. After reclassification, the value
of the reconditioned hemp was reduced to P84,887.28, or a loss in value of
P31,947.72. Adding to this last amount the sum of P8,863.
Macleod's expenses in checking, grading, rebating, and other fees for washing,
cleaning and redrying in the amount of P19.610.00, the total loss adds up to
P60,421.02.
All abaca shipments of Macleod, including the 1,162 bales loaded on the carrier's
LCT No. 1025, were insured with the Insurance Company of North America against
all losses and damages. In due time, Macleod filed a claim for the loss it suffered as
above stated with said insurance company, and after the same had been processed,
the sum of P64,018.55 was paid, which was noted down in a document which aside
from being a receipt of the amount paid, was a subrogation agreement between
Macleod and the insurance company wherein the former assigned to the latter its
rights over the insured and damaged cargo. Having failed to recover from the
carrier the sum of P60,421.02, which is the only amount supported by receipts, the
insurance company instituted the present action on October 28, 1953. After trial,
the court a quo rendered judgment ordering the carrier to pay the insurance
company the sum of P60,421.02, with legal interest thereon from the date of the
filing of the complaint until fully paid, and the costs. This judgment was affirmed by
the Court of Appeals on December 14, 1960. Hence, this petition for review.
The issues posed before us are: (1) Was there a contract of carriage between the
carrier and the shipper even if the loss occurred when the hemp was loaded on a
barge owned by the carrier which was loaded free of charge and was not actually
loaded on the S.S. Bowline Knot which would carry the hemp to Manila and no bill
of lading was issued therefore?; (2) Was the damage caused to the cargo or the
sinking of the barge where it was loaded due to a fortuitous event, storm or natural
disaster that would exempt the carrier from liability?; (3) Can respondent insurance
company sue the carrier under its insurance contract as assignee of Macleod in
spite of the fact that the liability of the carrier as insurer is not recognized in this
jurisdiction?; (4) Has the Court of Appeals erred in regarding Exhibit NNN-1 as an
implied admission by the carrier of the correctness and sufficiency of the shipper's
statement of accounts contrary to the burden of proof rule?; and (5) Can the
insurance company maintain this suit without proof of its personality to do so?
1. This issue should be answered in the affirmative. As found by the Court of
Appeals, Macleod and Company contracted by telephone the services of petitioner
to ship the hemp in question from the former's private pier at Sasa, Davao City, to
Manila, to be subsequently transhipped to Boston, Massachusetts, U.S.A., which
oral contract was later confirmed by a formal and written booking issued by the
shipper's branch office, Davao City, in virtue of which the carrier sent two of its
lighters to undertake the service. It also appears that the patrons of said lighters
were employees of the carrier with due authority to undertake the transportation
and to sign the documents that may be necessary therefor so much so that the
patron of LCT No. 1025 signed the receipt covering the cargo of hemp loaded
therein as follows: .
Received in behalf of S.S. Bowline Knot in good order and condition from
MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment
at Manila onto S.S. Steel Navigator.
FINAL DESTINATION: Boston.
The fact that the carrier sent its lighters free of charge to take the hemp from
Macleod's wharf at Sasa preparatory to its loading onto the ship Bowline Knot does
not in any way impair the contract of carriage already entered into between the
carrier and the shipper, for that preparatory step is but part and parcel of said
contract of carriage. The lighters were merely employed as the first step of the
voyage, but once that step was taken and the hemp delivered to the carrier's
employees, the rights and obligations of the parties attached thereby subjecting
them to the principles and usages of the maritime law. In other words, here we
have a complete contract of carriage the consummation of which has already
begun: the shipper delivering the cargo to the carrier, and the latter taking
possession thereof by placing it on a lighter manned by its authorized employees,
under which Macleod became entitled to the privilege secured to him by law for its
safe transportation and delivery, and the carrier to the full payment of its freight
upon completion of the voyage.
The receipt of goods by the carrier has been said to lie at the foundation of
the contract to carry and deliver, and if actually no goods are received
there can be no such contract. The liability and responsibility of the carrier
under a contract for the carriage of goods commence on their actual
delivery to, or receipt by, the carrier or an authorized agent. ... and delivery
to a lighter in charge of a vessel for shipment on the vessel, where it is the
custom to deliver in that way, is a good delivery and binds the vessel
receiving the freight, the liability commencing at the time of delivery to the
lighter. ... and, similarly, where there is a contract to carry goods from one
port to another, and they cannot be loaded directly on the vessel and
lighters are sent by the vessel to bring the goods to it, the lighters are for
the time its substitutes, so that the bill of landing is applicable to the goods
as soon as they are placed on the lighters. (80 C.J.S., p. 901, emphasis
supplied)
... The test as to whether the relation of shipper and carrier had been
established is, Had the control and possession of the cotton been
completely surrendered by the shipper to the railroad company?
Whenever the control and possession of goods passes to the carrier and
nothing remains to be done by the shipper, then it can be said with
certainty that the relation of shipper and carrier has been established.
Railroad Co. v. Murphy, 60 Ark. 333, 30 S.W. 419, 46 A. St. Rep. 202; Pine
Bluff & Arkansas River Ry. v. MaKenzie, 74 Ark. 100, 86 S.W. 834;
Matthews & Hood v. St. L., I.M. & S.R. Co., 123 Ark. 365, 185 S.W. 461,
L.R.A. 1916E, 1194. (W.F. Bogart & Co., et al. v. Wade, et al., 200 S.W. 148).
The claim that there can be no contract of affreightment because the hemp was not
actually loaded on the ship that was to take it from Davao City to Manila is of no
moment, for, as already stated, the delivery of the hemp to the carrier's lighter is in
line with the contract. In fact, the receipt signed by the patron of the lighter that
carried the hemp stated that he was receiving the cargo "in behalf of S.S. Bowline
Knot in good order and condition." On the other hand, the authorities are to the
effect that a bill of lading is not indispensable for the creation of a contract of
carriage.
Bill of lading not indispensable to contract of carriage. — As to the issuance
of a bill of lading, although article 350 of the Code of Commerce provides
that "the shipper as well as the carrier of merchandise or goods may
mutua-lly demand that a bill of lading is not indispensable. As regards the
form of the contract of carriage it can be said that provided that there is a
meeting of the minds and from such meeting arise rights and obligations,
there should be no limitations as to form." The bill of lading is not essential
to the contract, although it may become obligatory by reason of the
regulations of railroad companies, or as a condition imposed in the
contract by the agreement of the parties themselves. The bill of lading is
juridically a documentary proof of the stipulations and conditions agreed
upon by both parties. (Del Viso, pp. 314-315; Robles vs. Santos, 44 O.G.
2268). In other words, the Code does not demand, as necessary requisite
in the contract of transportation, the delivery of the bill of lading to the
shipper, but gives right to both the carrier and the shipper to mutually
demand of each other the delivery of said bill. (Sp. Sup. Ct. Decision, May
6, 1895). (Martin, Philippine Commercial Laws, Vol. II, Revised Edition, pp.
12-13)
The liability of the carrier as common carrier begins with the actual
delivery of the goods for transportation, and not merely with the formal
execution of a receipt or bill of lading; the issuance of a bill of lading is not
necessary to complete delivery and acceptance. Even where it is provided
by statute that liability commences with the issuance of the bill of lading,
actual delivery and acceptance are sufficient to bind the carrier. (13 C.J.S.,
p. 288)
2. Petitioner disclaims responsibility for the damage of the cargo in question
shielding itself behind the claim offorce majeure or storm which occurred on the
night of October 29, 1952. But the evidence fails to bear this out.
Rather, it shows that the mishap that caused the damage or loss was due, not
to force majeure, but to lack of adequate precautions or measures taken by the
carrier to prevent the loss as may be inferred from the following findings of the
Court of Appeals:
Aside from the fact that, as admitted by appellant's own witness, the ill-
fated barge had cracks on its bottom (pp. 18-19, t.s.n., Sept. 13, 1959)
which admitted sea water in the same manner as rain entered "thru tank
man-holes", according to the patron of LCT No. 1023 (exh. JJJ-4) —
conclusively showing that the barge was not seaworthy — it should be
noted that on the night of the nautical accident there was no storm, flood,
or other natural disaster or calamity. Certainly, winds of 11 miles per hour,
although stronger than the average 4.6 miles per hour then prevailing in
Davao on October 29, 1952 (exh. 5), cannot be classified as storm. For
according to Beaufort's wind scale, a storm has wind velocities of from 64
to 75 miles per hour; and by Philippine Weather Bureau standards winds
should have a velocity of from 55 to 74 miles per hour in order to be
classified as storm (Northern Assurance Co., Ltd. vs. Visayan Stevedore
Transportation Co., CA-G.R. No. 23167-R, March 12, 1959).
The Court of Appeals further added: "the report of R. J. del Pan & Co., Inc., marine
surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-tight conditions
of various buoyancy compartments' (exh. JJJ); and this report finds confirmation on
the above-mentioned admission of two witnesses for appellant concerning the
cracks of the lighter's bottom and the entrance of the rain water 'thru manholes'."
We are not prepared to dispute this finding of the Court of Appeals.
3. There can also be no doubt that the insurance company can recover from the
carrier as assignee of the owner of the cargo for the insurance amount it paid to the
latter under the insurance contract. And this is so because since the cargo that was
damaged was insured with respondent company and the latter paid the amount
represented by the loss, it is but fair that it be given the right to recover from the
party responsible for the loss. The instant case, therefore, is not one between the
insured and the insurer, but one between the shipper and the carrier, because the
insurance company merely stepped into the shoes of the shipper. And since the
shipper has a direct cause of action against the carrier on account of the damage of
the cargo, no valid reason is seen why such action cannot be asserted or availed of
by the insurance company as a subrogee of the shipper. Nor can the carrier set up
as a defense any defect in the insurance policy not only because it is not a privy to it
but also because it cannot avoid its liability to the shipper under the contract of
carriage which binds it to pay any loss that may be caused to the cargo involved
therein. Thus, we find fitting the following comments of the Court of Appeals:
It was not imperative and necessary for the trial court to pass upon the
question of whether or not the disputed abaca cargo was covered by
Marine Open Cargo Policy No. MK-134 isued by appellee. Appellant was
neither a party nor privy to this insurance contract, and therefore cannot
avail itself of any defect in the policy which may constitute a valid reason
for appellee, as the insurer, to reject the claim of Macleod, as the insured.
Anyway, whatever defect the policy contained, if any, is deemed to have
been waived by the subsequent payment of Macleod's claim by appellee.
Besides, appellant is herein sued in its capacity as a common carrier, and
appellee is suing as the assignee of the shipper pursuant to exhibit MM.
Since, as above demonstrated, appellant is liable to Macleod and Company
of the Philippines for the los or damage to the 1,162 bales of hemp after
these were received in good order and condition by the patron of
appellant's LCT No. 1025, it necessarily follows that appellant is likewise
liable to appellee who, as assignee of Macleod, merely stepped into the
shoes of and substi-tuted the latter in demanding from appellant the
payment for the loss and damage aforecited.
4. It should be recalled in connection with this issue that during the trial of this case
the carrier asked the lower court to order the production of the books of accounts
of the Odell Plantation containing the charges it made for the loss of the damaged
hemp for verification of its accountants, but later it desisted therefrom on the claim
that it finds their production no longer necessary. This desistance notwithstanding,
the shipper however pre-sented other documents to prove the damage it suffered
in connection with the cargo and on the strength thereof the court a quo ordered
the carrier to pay the sum of P60,421.02. And after the Court of Appeals affirmed
this award upon the theory that the desistance of the carrier from producing the
books of accounts of Odell Plantation implies an admission of the correctness of the
statements of accounts contained therein, petitioner now contends that the Court
of Appeals erred in basing the affirmance of the award on such erroneous
interpretation.
There is reason to believe that the act of petitioner in waiving its right to have the
books of accounts of Odell Plantation presented in court is tantamount to an
admission that the statements contained therein are correct and their verification
not necessary because its main defense here, as well as below, was that it is not
liable for the loss because there was no contract of carriage between it and the
shipper and the loss caused, if any, was due to a fortuitous event. Hence, under the
carrier's theory, the correctness of the account representing the loss was not so
material as would necessitate the presentation of the books in question. At any
rate, even if the books of accounts were not produced, the correctness of the
accounts cannot now be disputed for the same is supported by the original
documents on which the entries in said books were based which were presented by
the shipper as part of its evidence. And according to the Court of Appeals, these
documents alone sufficiently establish the award of P60,412.02 made in favor of
respondent.

5. Finally, with regard to the question concerning the personality of the insurance
company to maintain this action, we find the same of no importance, for the
attorney himself of the carrier admitted in open court that it is a foreign
corporation doing business in the Philippines with a personality to file the present
action.

WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, Makalintal,
Bengzon, J.P. and Zaldivar JJ., concur.
 G.R. No. L-9840 April 22, 1957
LU DO & LU YM CORPORATION, petitioner-defendant, vs. I. V.
BINAMIRA, respondent-plaintiff.
BAUTISTA ANGELO, J.: chanrobles virtual law library
On April 4, 1954, plaintiff filed an action in the Court of First Instance of Cebu
against defendant to recover the sum of P324.63 as value of certain missing
shipment, P150 as actual and compensatory damages, and P600 as moral and
pecuniary damages. After trial, the court rendered judgment ordering defendant to
pay plaintiff the sum of P216.84, with legal interest. On appeal, the Court of
Appeals affirmed the judgment, hence the present petition for
review.chanroblesvirtualawlibrary chanrobles virtual law library
On August 10, 1951, the Delta Photo Supply Company of New York shipped on
board the M/S "FERNSIDE" at New York, U.S.A., six cases of films and/or
photographic supplies consigned to the order of respondent I. V. Binamira. For this
shipment, Bill of Lading No. 29 was issued. The ship arrived at the port of Cebu on
September 23, 1951 and discharged her cargo on September 23, and 24, 1951,
including the shipment in question, placing it in the possession and custody of the
arrastre operator of said port, the Visayan Cebu Terminal Company,
Inc.chanroblesvirtualawlibrary chanrobles virtual law library
Petitioner, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to
unload its cargo. During the discharge, good order cargo was separated from the
bad order cargo on board the ship, and a separate list of bad order cargo was
prepared by Pascual Villamor, checker of the stevedoring company. All the cargo
unloaded was received at the pier by the Visayan Cebu Terminal Company Inc,
arrastre operator of the port. This terminal company had also its own checker,
Romeo Quijano, who also recorded and noted down the good cargo from the bad
one. The shipment in question, was not included in the report of bad order cargo of
both checkers, indicating that it was discharged from the, ship in good order and
condition.chanroblesvirtualawlibrary chanrobles virtual law library
On September 26, 1951, three days after the goods were unloaded from the ship,
respondent took delivery of his six cases of photographic supplies from the arrastre
operator. He discovered that the cases showed signs of pilferage and, consequently,
he hired marine surveyors, R. J. del Pan & Company, Inc., to examine them. The
surveyors examined the cases and made a physical count of their contents in the
presence of representatives of petitioner, respondent and the stevedoring
company. The surveyors examined the cases and made a physical count of their
contents in the presence of representatives of petitioner, respondent and the
stevedoring company. The finding of the surveyors showed that some films and
photographic supplies were missing valued at
P324.63.chanroblesvirtualawlibrary chanrobles virtual law library
It appears from the evidence that the six cases of films and photographic supplies
were discharged from the ship at the port of Cebu by the stevedoring company
hired by petitioner as agent of the carrier. All the unloaded cargo, including the
shipment in question, was received by the Visayan Cebu Terminal Company Inc., the
arrastre operator appointed by the Bureau of Customs. It also appears that during
the discharge, the cargo was checked both by the stevedoring company hired by
petitioner as well as by the arrastre operator of the port, and the shipment in
question, when discharged from the ship, was found to be in good order and
condition. But after it was delivered to respondent three days later, the same was
examined by a marine surveyor who found that some films and supplies were
missing valued at P324.63.chanroblesvirtualawlibrary chanrobles virtual law library
The question now to be considered is: Is the carrier responsible for the loss
considering that the same occurred after the shipment was discharged from the
ship and placed in the possession and custody of the customs
authorities? chanrobles virtual law library
The Court of Appeals found for the affirmative, making on this point the following
comment:
In this jurisdiction, a common carrier has the legal duty to deliver goods to
a consignee in the same condition in which it received them. Except where
the loss, destruction or deterioration of the merchandise was due to any of
the cases enumerated in Article 1734 of the new Civil Code, a carrier is
presumed to have been at fault and to have acted negligently, unless it
could prove that it observed extraordinary diligence in the care and
handling of the goods (Article 1735, supra). Such presumption and the
liability of the carrier attach until the goods are delivered actually or
constructively, to the consignee, or to the person who has a right to
receive them (Article 1736, supra), and we believe delivery to the customs
authorities is not the delivery contemplated by Article 1736, supra, in
connection with second paragraph of Article 1498, supra, because, in such
a case, the goods are then still in the hands of the Government and their
owner could not exercise dominion whatever over them until the duties
are paid. In the case at bar, the presumption against the carrier,
represented appellant as its agent, has not been successfully rebutted.
It is now contended that the Court of Appeals erred in its finding not only because it
made wrong interpretation of the law on the matter, but also because it ignored
the provisions of the bill of lading covering the shipment wherein it was stipulated (Paragraph 1, Exhibit "1")
that the responsibility of the carrier is limited only to losses that may occur while
the cargo is still under its custody and 2. . . . The responsibility of the Carrier in any capacity shall altogether cease
control.chanroblesvirtualawlibrary chanrobles virtual law library and the goods shall be considered to be delivered and at their own risk and
expense in every respect when taken into the custody of customs or other
We believe this contention is well taken. It is true that, as a rule, a common carrier authorities. The Carrier shall not be required to give any notification of
is responsible for the loss, destruction or deterioration of the goods it assumes to disposition of the goods. . . . (Emphasis ours.)
carry from one place to another unless the same is due to any to any of the causes
mentioned in Article 1734 on the new Civil Code, and that, if the goods are lost, (Paragraph 12, Exhibit "1")
destroyed or deteriorated, for causes other that those mentioned, the common
carrier is presumed to have been at fault or to have acted negligently, unless it 3. Any provisions herein to the contrary notwithstanding, goods may be . . .
proves that it has observed extraordinary diligence in their care (Article 1735, by Carrier at ship's tackle . . . and delivery beyond ship's tackle shall been
Idem.), and that this extraordinary liability lasts from the time the goods are placed tirely at the option of the Carrier and solely at the expense of the shipper
in the possession of the carrier until they are delivered to the consignee, or "to the or consignee.
person who has the right to receive them" (Article 1736, Idem.), but these
provisions only apply when the loss, destruction or deterioration takes place while
(Paragraph 22, Exhibit "1") chanrobles virtual law library
the goods are in the possession of the carrier, and not after it has lost control of
them. The reason is obvious. While the goods are in its possession, it is but fair that
It therefore appears clear that the carrier does not assume liability for any loss or
it exercise extraordinary diligence in protecting them from damage, and if loss
damage to the goods once they have been "taken into the custody of customs or
occurs, the law presumes that it was due to its fault or negligence. This is necessary
other authorities", or when they have been delivered at ship's tackle. These
to protect the interest the interest of the owner who is at its mercy. The situation
stipulations are clear. They have been adopted precisely to mitigate the
changes after the goods are delivered to the
responsibility of the carrier considering the present law on the matter, and we find
consignee.chanroblesvirtualawlibrary chanrobles virtual law library
nothing therein that is contrary to morals or public policy that may justify their
nullification. We are therefore persuaded to conclude that the carrier is not
While we agree with the Court of Appeals that while delivery of the cargo to the
responsible for the loss in question, it appearing that the same happened after the
consignee, or to the person who has a right to receive them", contemplated in
shipment had been delivered to the customs
Article 1736, because in such case the goods are still in the hands of the
authorities.chanroblesvirtualawlibrary chanrobles virtual law library
Government and the owner cannot exercise dominion over them, we believe
however that the parties may agree to limit the liability of the carrier considering
Wherefore, the decision appealed from is reversed, without pronouncement as to
that the goods have still to through the inspection of the customs authorities before
costs.chanroblesvirtualawlibrary chanrobles virtual law library
they are actually turned over to the consignee. This is a situation where we may say
that the carrier losses control of the goods because of a custom regulation and it is
unfair that it be made responsible for what may happen during the interregnum. Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, Reyes, J.B.L.
And this is precisely what was done by the parties herein. In the bill of lading that Endencia and Felix, JJ., concur.
was issued covering the shipment in question, both the carrier and the consignee
have stipulated to limit the responsibility of the carrier for the loss or damage that
may because to the goods before they are actually delivered by insert in therein the
following provisions:

1. . . . The Carrier shall not be liable in any capacity whatsoever for any
delay, nondelivery or misdelivery, or loss of or damage to the goods
occurring while the goods are not in the actual custody of the Carrier. . . .
(Emphasis ours.)
G.R. No. L-36481-2 October 23, 1982
AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees,
vs.
PHILIPPINE STEAM NAVIGATION CO., defendant-appellant.
Zoilo de la Cruz, Jr. & Associate for plaintiff-appellee Amparo Servando.
Benedicto, Sumbingco & Associate for appellee Clara Uy Bico.
Ross, Salcedo, del Rosario, Bito & Misa for defendant-appellant.
ESCOLIN, J.:
This appeal, originally brought to the Court of Appeals, seeks to set aside the
decision of the Court of First Instance of Negros Occidental in Civil Cases Nos. 7354
and 7428, declaring appellant Philippine Steam Navigation liable for damages for
the loss of the appellees' cargoes as a result of a fire which gutted the Bureau of
Customs' warehouse in Pulupandan, Negros Occidental.
The Court of Appeals certified the case to Us because only pure questions of law are
raised therein.
The facts culled from the pleadings and the stipulations submitted by the parties
are as follows:
On November 6, 1963, appellees Clara Uy Bico and Amparo Servando loaded on
board the appellant's vessel, FS-176, for carriage from Manila to Pulupandan,
Negros Occidental, the following cargoes, to wit:
Clara Uy Bico —
1,528 cavans of rice valued
at P40,907.50;
Amparo Servando —
44 cartons of colored paper,
toys and general merchandise valued at
P1,070.50;
1
as evidenced by the corresponding bills of lading issued by the appellant.
Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the
cargoes were discharged, complete and in good order, unto the warehouse of the
Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse
was razed by a fire of unknown origin, destroying appellees' cargoes. Before the
fire, however, appellee Uy Bico was able to take delivery of 907 cavans of
2
rice Appellees' claims for the value of said goods were rejected by the appellant.
On the bases of the foregoing facts, the lower court rendered a decision, the
decretal portion of which reads as follows:
WHEREFORE, judgment is rendered as follows:
1. In case No. 7354, the defendant is hereby ordered to pay the
plaintiff Amparo C. Servando the aggregate sum of P1,070.50 with
legal interest thereon from the date of the filing of the complaint
until fully paid, and to pay the costs.
2. In case No. 7428, the defendant is hereby ordered to pay to
plaintiff Clara Uy Bico the aggregate sum of P16,625.00 with legal
interest thereon from the date of the filing of the complaint until
fully paid, and to pay the costs.
Article 1736 of the Civil Code imposes upon common carriers the duty to observe
extraordinary diligence from the moment the goods are unconditionally placed in
their possession "until the same are delivered, actually or constructively, by the
carrier to the consignee or to the person who has a right to receive them, without
prejudice to the provisions of Article 1738. "
The court a quo held that the delivery of the shipment in question to the
warehouse of the Bureau of Customs is not the delivery contemplated by Article
1736; and since the burning of the warehouse occurred before actual or
constructive delivery of the goods to the appellees, the loss is chargeable against
the appellant.
It should be pointed out, however, that in the bills of lading issued for the cargoes
in question, the parties agreed to limit the responsibility of the carrier for the loss

or damage that may be caused to the shipment by inserting therein the following
stipulation:
Clause 14. Carrier shall not be responsible for loss or damage to
shipments billed 'owner's risk' unless such loss or damage is due
to negligence of carrier. Nor shall carrier be responsible for loss or
damage caused by force majeure, dangers or accidents of the sea
or other waters; war; public enemies; . . . fire . ...
We sustain the validity of the above stipulation; there is nothing therein that is
contrary to law, morals or public policy.
Appellees would contend that the above stipulation does not bind them because it
was printed in fine letters on the back-of the bills of lading; and that they did not
sign the same. This argument overlooks the pronouncement of this Court in Ong Yiu
3
vs. Court of Appeals, promulgated June 29, 1979, where the same issue was
resolved in this wise:
While it may be true that petitioner had not signed the plane
ticket (Exh. '12'), he is nevertheless bound by the provisions
thereof. 'Such provisions have been held to be a part of the
contract of carriage, and valid and binding upon the passenger
regardless of the latter's lack of knowledge or assent to the
regulation'. It is what is known as a contract of 'adhesion', in
regards which it has been said that contracts of adhesion wherein
one party imposes a ready made form of contract on the other, as
the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free
to reject it entirely; if he adheres, he gives his consent."
(Tolentino, Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice
J.B.L. Reyes, Lawyer's Journal, Jan. 31, 1951, p. 49).
Besides, the agreement contained in the above quoted Clause 14 is a mere iteration
of the basic principle of law written in Article 1 1 7 4 of the Civil Code:
Article 1174. Except in cases expressly specified by the law, or
when it is otherwise declared by stipulation, or when the nature
of the obligation requires the assumption of risk, no person shall
be responsible for those events which could not be foreseen, or
which, though foreseen, were inevitable.
Thus, where fortuitous event or force majeure is the immediate and proximate
cause of the loss, the obligor is exempt from liability for non-performance. The
4
Partidas, the antecedent of Article 1174 of the Civil Code, defines 'caso fortuito' as
'an event that takes place by accident and could not have been foreseen. Examples
of this are destruction of houses, unexpected fire, shipwreck, violence of robbers.'
In its dissertation of the phrase 'caso fortuito' the Enciclopedia Juridicada
5
Espanola says: "In a legal sense and, consequently, also in relation to contracts, a
'caso fortuito' presents the following essential characteristics: (1) the cause of the
unforeseen and unexpected occurrence, or of the failure of the debtor to comply
with his obligation, must be independent of the human will; (2) it must be
impossible to foresee the event which constitutes 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 a normal manner; and
(4) the obligor must be free from any participation in the aggravation of the injury
resulting to the creditor." In the case at bar, the burning of the customs warehouse
was an extraordinary event which happened independently of the will of the
appellant. The latter could not have foreseen the event.
There is nothing in the record to show that appellant carrier ,incurred in delay in
the performance of its obligation. It appears that appellant had not only notified
appellees of the arrival of their shipment, but had demanded that the same be
withdrawn. In fact, pursuant to such demand, appellee Uy Bico had taken delivery
of 907 cavans of rice before the burning of the warehouse.
Nor can the appellant or its employees be charged with negligence. The storage of
the goods in the Customs warehouse pending withdrawal thereof by the appellees
was undoubtedly made with their knowledge and consent. Since the warehouse
belonged to and was maintained by the government, it would be unfair to impute
negligence to the appellant, the latter having no control whatsoever over the same.
The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs.
6
Ossorio , where this Court held the defendant liable for damages arising from a fire
caused by the negligence of the defendant's employees while loading cases of
gasoline and petroleon products. But unlike in the said case, there is not a shred of
proof in the present case that the cause of the fire that broke out in the Custom's
warehouse was in any way attributable to the negligence of the appellant or its
employees. Under the circumstances, the appellant is plainly not responsible.
WHEREFORE, the judgment appealed from is hereby set aside. No costs.
SO ORDERED.
Makasiar (Chairman), Concepcion, Jr., Guerrero, Abad Santos and De Castro, JJ.,
concur.
G.R. No. 95536 March 23, 1992
ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G. SALUDO and
SATURNINO G. SALUDO, petitioners,
vs.
HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC., and PHILIPPINE
AIRLINES, INC., respondents.
REGALADO, J.:
Assailed in this petition for review on certiorari is the decision in CA-G.R. CV No.
1 reservations from UA to the TWA flight after she confirmed by
20951 of respondent Court of Appeals which affirmed the decision of the trial
2 phone that her mother's remains should be on that TWA flight.
court dismissing for lack of evidence herein petitioners' complaint in Civil Case No
R-2101 of the then Court of First Instance of Southern Leyte, Branch I.
The facts, as recounted by the court a quo and adopted by respondent court after
"considering the evidence on record," are as follows:
After the death of plaintiffs' mother, Crispina Galdo Saludo, in
Chicago Illinois, (on) October 23, 1976 (Exh. A), Pomierski and Son
Funeral Home of Chicago, made the necessary preparations and
arrangements for the shipment, of the remains from Chicago to
the Philippines. The funeral home had the remains embalmed
(Exb. D) and secured a permit for the disposition of dead human
body on October 25, 1976 (Exh. C), Philippine Vice Consul in
Chicago, Illinois, Bienvenido M. Llaneta, at 3:00 p.m. on October
26, 1976 at the Pomierski & Son Funeral Home, sealed the
shipping case containing a hermetically sealed casket that is
airtight and waterproof wherein was contained the remains of
Crispina Saludo Galdo (sic) (Exb. B). On the same date, October
26, 1976, Pomierski brought the remains to C.M.A.S. (Continental
Mortuary Air Services) at the airport (Chicago) which made the
necessary arrangements such as flights, transfers, etc.; C.M.A.S. is
a national service used by undertakers to throughout the nation
(U.S.A.), they furnish the air pouch which the casket is enclosed in,
and they see that the remains are taken to the proper air freight
terminal (Exh. 6-TWA). C.M.A.S. booked the shipment with PAL
thru the carrier's agent Air Care International, with Pomierski F.H.
as the shipper and Mario (Maria) Saludo as the consignee. PAL
Airway Bill No. 079-01180454 Ordinary was issued wherein the
requested routing was from Chicago to San Francisco on board
TWA Flight 131 of October 27, 1976 and from San Francisco to
Manila on board PAL Flight No. 107 of the same date, and from
Manila to Cebu on board PAL Flight 149 of October 29, 1976 (See
Exh. E., Also Exh. 1-PAL).
In the meantime, plaintiffs Maria Salvacion Saludo and Saturnino
Saludo, thru a travel agent, were booked with United Airlines
from Chicago to California, and with PAL from California to
Manila. She then went to the funeral director of Pomierski
Funeral Home who had her mother's remains and she told the
director that they were booked with United Airlines. But the
director told her that the remains were booked with TWA flight to
California. This upset her, and she and her brother had to change
They went to the airport and watched from the look-out area. She
saw no body being brought. So, she went to the TWA counter
again, and she was told there was no body on that flight.
Reluctantly, they took the TWA flight upon assurance of her
cousin, Ani Bantug, that he would look into the matter and inform
her about it on the plane or have it radioed to her. But no
confirmation from her cousin reached her that her mother was on
the West Coast.
Upon arrival at San Francisco at about 5:00 p.m., she went to the
TWA counter there to inquire about her mother's remains. She
was told they did not know anything about it.
She then called Pomierski that her mother's remains were not at
the West Coast terminal, and Pomierski immediately called
C.M.A.S., which in a matter of 10 minutes informed him that the
remains were on a plane to Mexico City, that there were two
bodies at the terminal, and somehow they were switched; he
relayed this information to Miss Saludo in California; later
C.M.A.S. called and told him they were sending the remains back
to California via Texas (see Exh. 6-TWA).
It-turned out that TWA had carried a shipment under PAL Airway
Bill No. 079-ORD-01180454 on TWA Flight 603 of October 27,
1976, a flight earlier than TWA Flight 131 of the same date. TWA
delivered or transferred the said shipment said to contain human
remains to PAL at 1400H or 2:00 p.m. of the same date, October
27, 1976 (Bee Exh. 1- TWA). "Due to a switch(ing) in Chicago", this
 shipment was withdrawn from PAL by CMAS at 1805H (or 6:05
p.m.) of the same date, October 27 (Exh. 3-PAL, see Exh. 3-a-PAL).
What transpired at the Chicago (A)irport is explained in a memo
or incident report by Pomierski (Exh. 6-TWA) to Pomierski's
lawyers who in turn referred to said' memo and enclosed it in
their (Pomierski's lawyers) answer dated July 18, 1981 to herein
plaintiff's counsel (See Exh. 5-TWA). In that memo or incident
report (Exh. 6-TWA), it is stated that the remains (of Crispina
Saludo) were taken to CMAS at the airport; that there were two
bodies at the (Chicago Airport) terminal, and somehow they were
switched, that the remains (of Crispina Saludo) were on a plane to
Mexico City; that CMAS is a national service used by undertakers
throughout the nation (U.S.A.), makes all the necessary
arrangements, such as flights, transfers, etc., and see(s) to it that
the remains are taken to the proper air freight terminal.
The following day October 28, 1976, the shipment or remains of
Crispina Saludo arrived (in) San Francisco from Mexico on board
American Airlines. This shipment was transferred to or received
by PAL at 1945H or 7:45 p.m. (Exh. 2-PAL, Exh. 2-a-PAL). This
casket bearing the remains of Crispina Saludo, which was
mistakenly sent to Mexico and was opened (there), was resealed
by Crispin F. Patagas for shipment to the Philippines (See Exh. B-
1). The shipment was immediately loaded on PAL flight for Manila
that same evening and arrived (in) Manila on October 30, 1976, a
3 10
day after its expected arrival on October 29, 1976.
4 11
In a letter dated December 15, 1976, petitioners' counsel informed private
respondent Trans World Airlines (TWA) of the misshipment and eventual delay in
the delivery of the cargo containing the remains of the late Crispin Saludo, and of
the discourtesy of its employees to petitioners Maria Salvacion Saludo and
Saturnino Saludo. In a separate letter on June 10, 1977 addressed to co-respondent
5 12
Philippine Airlines (PAL), petitioners stated that they were holding PAL liable for
said delay in delivery and would commence judicial action should no favorable
explanation be given.
6 in which there is a doubt or difference as to the truth or falsehood of the alleged
Both private respondents denied liability. Thus, a damage suit was filed by
petitioners before the then Court of First Instance, Branch III, Leyte, praying for the
award of actual damages of P50,000.00, moral damages of P1,000,000.00,
exemplary damages, attorney's fees and costs of suit.
As earlier stated, the court below absolved the two respondent airlines companies
of liability. The Court of Appeals affirmed the decision of the lower court in toto,
7
and in a subsequent resolution, denied herein petitioners' motion for
reconsideration for lack of merit.
In predictable disagreement and dissatisfaction with the conclusions reached by
respondent appellate court, petitioners now urge this Court to review the appealed
decision and to resolve whether or not (1) the delay in the delivery of the casketed
remains of petitioners' mother was due to the fault of respondent airline
companies, (2) the one-day delay in the delivery of the same constitutes contractual
breach as would entitle petitioners to damages, (3) damages are recoverable by
petitioners for the humiliating, arrogant and indifferent acts of the employees of
TWA and PAL, and (4) private respondents should be held liable for actual, moral
8
and exemplary damages, aside from attorney's fees and litigation expenses.
At the outset and in view of the spirited exchanges of the parties on this aspect, it is
to be stressed that only questions of law may be raised in a petition filed in this
9
Court to review on certiorari the decision of the Court of Appeals. This being so,
the factual findings of the Court of Appeals are final and conclusive and cannot be
reviewed by the Supreme Court. The rule, however, admits of established
exceptions, to wit: (a) where there is grave abuse of discretion; (b) when the finding
is grounded entirely on speculations, surmises or conjectures;(c) when the
inference made is manifestly-mistaken, absurd or impossible; (d) when the
judgment of the Court of Appeals was based on a misapprehension of facts; (e)
when the factual findings are conflicting; (f) when the Court of Appeals, in making
its findings, went beyond the issues of the case and the same are contrary to the
admissions of both appellant and appellee; (g) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties and which,
if properly considered, would justify a different conclusion; and (h) where the
findings of fact of the Court of Appeals are contrary to those of the trial court, or
are mere conclusions without citation of specific evidence, or where the facts of set
forth by the petitioner are not disputed by the respondent, or where the findings of
fact of the Court of Appeals are premised on the absence of evidence and are
contradicted by the evidence on record.
To distinguish, a question of law is one which involves a doubt or controversy on
what the law is on a certain state of facts; and, a question of fact, contrarily, is one
13
facts. One test, it has been held, is whether the appellate court can determine the
issue raised without reviewing or evaluating the evidence, in which case it is a
14
question of law, otherwise it will be a question of fact.
Respondent airline companies object to the present recourse of petitioners on the
15
ground that this petition raises only factual questions. Petitioners maintain
otherwise or, alternatively, they are of the position that, assuming that the petition
raises factual questions, the same are within the recognized exceptions to the
general rule as would render the petition cognizable and worthy of review by the
16
Court.
Since it is precisely the soundness of the inferences or conclusions that may be
drawn from the factual issues which are here being assayed, we find that the issues
raised in the instant petition indeed warrant a second look if this litigation is to
come to a reasonable denouement. A discussion seriatim of said issues will further
reveal that the sequence of the events involved is in effect disputed. Likewise to be
settled is whether or not the conclusions of the Court of Appeals subject of this
review indeed find evidentiary and legal support.
I. Petitioners fault respondent court for "not finding that private respondents failed
to exercise extraordinary diligence required by law which resulted in the switching
and/or misdelivery of the remains of Crispina Saludo to Mexico causing gross delay
17
in its shipment to the Philippines, and consequently, damages to petitioners."
Petitioner allege that private respondents received the casketed remains of
petitioners' mother on October 26, 1976, as evidenced by the issuance of PAL Air
18
Waybill No. 079-01180454 by Air Care International as carrier's agent; and from
said date, private respondents were charged with the responsibility to exercise
extraordinary diligence so much so that for the alleged switching of the caskets on
October 27, 1976, or one day after private respondents received the cargo, the
latter must necessarily be liable.
To support their assertion, petitioners rely on the jurisprudential dictum, both
under American and Philippine law, that "(t)he issuance of a bill of lading carries the
presumption that the goods were delivered to the carrier issuing the bill, for
immediate shipment, and it is nowhere questioned that a bill of lading is prima
facie evidence of the receipt of the goods by the carrier. . . . In the absence of
convincing testimony establishing mistake, recitals in the bill of lading showing that
the carrier received the goods for shipment on a specified date control (13 C.J.S.
19
235)."
A bill of lading is a written acknowledgment of the receipt of the goods and an
agreement to transport and deliver them at a specified place to a person named or
on his order. Such instrument may be called a shipping receipt, forwarder's receipt
20
and receipt for transportation. The designation, however, is immaterial. It has
been hold that freight tickets for bus companies as well as receipts for cargo
transported by all forms of transportation, whether by sea or land, fall within the
definition. Under the Tariff and Customs Code, a bill of lading includes airway bills
21
of lading. The two-fold character of a bill of lading is all too familiar; it is a receipt
as to the quantity and description of the goods shipped and a contract to transport
the goods to the consignee or other person therein designated, on the terms
22
specified in such instrument.
Logically, since a bill of lading acknowledges receipt of goods to be transported,
delivery of the goods to the carrier normally precedes the issuance of the bill; or, to
some extent, delivery of the goods and issuance of the bill are regarded in
23
commercial practice as simultaneous acts. However, except as may be prohibited
by law, there is nothing to prevent an inverse order of events, that is, the execution
of the bill of lading even prior to actual possession and control by the carrier of the
cargo to be transported. There is no law which requires that the delivery of the
goods for carriage and the issuance of the covering bill of lading must coincide in
point of time or, for that matter, that the former should precede the latter.
Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier
for transportation but, when issued, is competent and prima facie, but not
conclusive, evidence of delivery to the carrier. A bill of lading, when properly
executed and delivered to a shipper, is evidence that the carrier has received the
goods described therein for shipment. Except as modified by statute, it is a general
rule as to the parties to a contract of carriage of goods in connection with which a
bill of lading is issued reciting that goods have been received for transportation,
that the recital being in essence a receipt alone, is not conclusive, but may be
24
explained, varied or contradicted by parol or other evidence.
While we agree with petitioners' statement that "an airway bill estops the carrier
from denying receipt of goods of the quantity and quality described in the bill," a
further reading and a more faithful quotation of the authority cited would reveal
that "(a) bill of lading may contain constituent elements of estoppel and thus
become something more than a contract between the shipper and the carrier. . . .
(However), as between the shipper and the carrier, when no goods have been
delivered for shipment no recitals in the bill can estop the carrier from showing the
true facts . . . Between the consignor of goods and receiving carrier, recitals in a bill
of lading as to the goods shipped raise only a rebuttable presumption that such
goods were delivered for shipment. As between the consignor and a receiving
25
carrier, the fact must outweigh the recital." (Emphasis supplied)
For this reason, we must perforce allow explanation by private respondents why,
despite the issuance of the airway bill and the date thereof, they deny having
received the remains of Crispina Saludo on October 26, 1976 as alleged by
petitioners.
The findings of the trial court, as favorably adopted by the Court of Appeals and
which we have earner quoted, provide us with the explanation that sufficiently over
comes the presumption relied on by petitioners in insisting that the remains of their
mother were delivered to and received by private respondents on October 26,
1976. Thus —
. . . Philippine Vice Consul in Chicago, Illinois, Bienvenido M.
Llaneta, at 3:00 p.m. on October 26, 1976 at the Pomierski & Son
Funeral Home, sealed the shipping case containing a hermetically
sealed casket that is airtight and waterproof wherein was
contained the remains of Crispina Saludo Galdo (sic) (Exh. B). On
the same date October 26, 1976, Pomierski brought the remains
to C.M.A.S. (Continental Mortuary Air Services) at the airport
(Chicago) which made the necessary arrangements such as flights,
transfers, etc; C.M.A.S. is a national service used by undertakers
throughout the nation (U.S.A.), they furnish the air pouch which
the casket is enclosed in, and they see that the remains are taken
to the proper air freight terminal (Exh. G-TWA). C.M.A.S. booked
the shipment with PAL thru the carrier's agent Air Care
International, with Pomierski F.H. as the shipper and Mario
(Maria) Saludo as the consignee. PAL Airway Bill No. 079-
01180454 Ordinary was issued wherein the requested routing was
from Chicago to San Francisco on board TWA Flight-131 of
October 27;1976, and from San Francisco to Manila on board PAL
Flight No. 107 of the same date, and from Manila to Cebu on
board PAL Flight 149 of October 29, 1976 (See Exh. E, also Exh. 1-
26
PAL). (Emphasis ours.)
Moreover, we are persuaded to believe private respondent PAL's account as to
what transpired October 26, 1976:
. . . Pursuant thereto, on 26 October 1976, CMAS acting upon the
instruction of Pomierski, F.H., the shipper requested booking of the
casketed remains of Mrs. Cristina (sic) Saludo on board PAL's San
Francisco-Manila Flight No. PR 107 on October 27, 1976.
2. To signify acceptance and confirmation of said booking, PAL
issued to said Pomierski F.H., PAL Airway Bill No. 079-01180454
dated October 27, 1976 (sic, "10/26/76"). PAL confirmed the
booking and transporting of the shipment on board of its Flight PR
107 on October 27, 1976 on the basis of the representation of the
shipper and/or CMAS that the said cargo would arrive in San
Francisco from Chicago on board United Airlines Flight US 121 on
27
27 October 1976.
In other words, on October 26, 1976 the cargo containing the casketed remains of
Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco for
Manila on October 27, 1976, PAL Airway Bill No. 079-01180454 was issued, not as
evidence of receipt of delivery of the cargo on October 26, 1976, but merely as a
confirmation of the booking thus made for the San Francisco-Manila flight
scheduled on October 27, 1976. Actually, it was not until October 28, 1976 that PAL
received physical delivery of the body at San Francisco, as duly evidenced by the
Interline Freight Transfer Manifest of the American Airline Freight System and
28
signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary
responsibility of the common carrier begins from the time the goods are delivered
to the carrier. This responsibility remains in full force and effect even when they are
temporarily unloaded or stored in transit, unless the shipper or owner exercises the
29
right of stoppage in transitu, and terminates only after the lapse of a reasonable
time for the acceptance, of the goods by the consignee or such other person
30
entitled to receive them. And, there is delivery to the carrier when the goods are
ready for and have been placed in the exclusive possession, custody and control of
the carrier for the purpose of their immediate transportation and the carrier has
31
accepted them. Where such a delivery has thus been accepted by the carrier, the
32
liability of the common carrier commences eo instanti.
Hence, while we agree with petitioners that the extraordinary diligence statutorily
required to be observed by the carrier instantaneously commences upon delivery of
the goods thereto, for such duty to commence there must in fact have been
delivery of the cargo subject of the contract of carriage. Only when such fact of
delivery has been unequivocally established can the liability for loss, destruction or
deterioration of goods in the custody of the carrier, absent the excepting causes
under Article 1734, attach and the presumption of fault of the carrier under Article
1735 be invoked.
As already demonstrated, the facts in the case at bar belie the averment that there
was delivery of the cargo to the carrier on October 26, 1976. Rather, as earlier
explained, the body intended to be shipped as agreed upon was really placed in the
possession and control of PAL on October 28, 1976 and it was from that date that
private respondents became responsible for the agreed cargo under their
undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching
of caskets prior thereto which was not caused by them, and subsequent events
caused thereby, private respondents cannot be held liable.
Petitioners, proceeding on the premise that there was delivery of the cargo to
private respondents on October 26,1976 and that the latter's extraordinary
responsibility had by then become operative, insist on foisting the blame on private
respondents for the switching of the two caskets which occurred on October 27,
1976. It is argued that since there is no clear evidence establishing the fault
Continental Mortuary Air Services (CMAS) for the mix-up, private respondents are
presumably negligent pursuant to Article 1735 of the Civil Code and, for failure to
rebut such presumption, they must necessarily be held liable; or, assuming that
CMAS was at fault, the same does not absolve private respondents of liability
because whoever brought the cargo to the airport or loaded it on the plane did so
as agent of private respondents.
This contention is without merit. As pithily explained by the Court of Appeals:
The airway bill expressly provides that "Carrier certifies goods
described below were received for carriage", and said cargo was
"casketed human remains of Crispina Saludo," with "Maria Saludo
as Consignee; Pomierski F.H. as Shipper; Air Care International as
carrier's agent." On the face of the said airway bill, the specific
flight numbers, specific routes of shipment and dates of departure
and arrival were typewritten, to wit: Chicago TWA Flight 131/27
to San Francisco and from San Francisco by PAL 107 on, October
27, 1976 to Philippines and to Cebu via PAL Flight 149 on October
29, 1976. The airway bill also contains the following typewritten
words, as follows: all documents have been examined (sic).
Human remains of Crispina Saludo. Please return back (sic) first
available flight to SFO.
But, as it turned out and was discovered later the casketed human
remains which was issued PAL Airway Bill #079-1180454 was not
the remains of Crispina Saludo, the casket containing her remains
having been shipped to Mexico City.
However, it should be noted that, Pomierski F.H., the shipper of
Mrs. Saludo's remains, hired Continental Mortuary Services
(hereafter referred to as C.M.A.S.), which is engaged in the
business of transporting and forwarding human remains. Thus,
C.M.A.S. made all the necessary arrangements such as flights,
transfers, etc. — for shipment of the remains of Crispina Saludo.
The remains were taken on October 26th, 1976,
to C.M.A.S. at the airport. These people made all
the necessary arrangements, such as flights,
transfers, etc. This is a national service used by
undertakers throughout the nation. They
furnished the air pouch which the casket is
enclosed in, and they see that the remains are
taken to the proper air frieght terminal. I was
very surprised when Miss Saludo called me to
say that the remains were not at the west coast
terminal. I immediately called C.M.A.S. They
called me back in a matter of ten minutes to
inform me that the remains were on a plane to
Mexico City. The man said that there were two
bodies at the terminal, and somehow they were
switched. . . . (Exb. 6 — "TWA", which is the
memo or incident report enclosed in the
stationery of Walter Pomierski & Sons Ltd.)
Consequently, when the cargo was received from C.M.A.S. at the
Chicago airport terminal for shipment, which was supposed to
contain the remains of Crispina Saludo, Air Care International
and/or TWA, had no way of determining its actual contents, since
the casket was hermetically sealed by the Philippine Vice-Consul in
Chicago and in an air pouch of C.M.A.S., to the effect that Air Care
International and/or TWA had to rely on the information furnished
by the shipper regarding the cargo's content. Neither could Air
Care International and/or TWA open the casket for further
verification, since they were not only without authority to do so,
but even prohibited.
Thus, under said circumstances, no fault and/or negligence can be
attributed to PAL (even if Air Care International should be
considered as an agent of PAL) and/or TWA, the entire fault or
33
negligence being exclusively with C.M.A.S. (Emphasis supplied.)
It can correctly and logically be concluded, therefore, that the switching occurred
or, more accurately, was discovered on October 27, 1976; and based on the above
findings of the Court of appeals, it happened while the cargo was still with CMAS,
well before the same was place in the custody of private respondents.
34
Thus, while the Air Cargo Transfer Manifest of TWA of October 27, 1976 was
signed by Garry Marcial of PAL at 1400H, or 2:00 P.M., on the same date, thereby
indicating acknowledgment by PAL of the transfer to them by TWA of what was in
truth the erroneous cargo, said misshipped cargo was in fact withdrawn by CMAS
35
from PAL as shown by the notation on another copy of said manifest stating
"Received by CMAS — Due to switch in Chicago 10/27-1805H," the authenticity of MICHAEL GIOSSO:
which was never challenged. This shows that said misshipped cargo was in fact
withdrawn by CMAS from PAL and the correct shipment containing the body of Yes, I do.
Crispina Saludo was received by PAL only on October 28, 1976, at 1945H, or 7:45
36
P.M., per American Airlines Interline Freight Transfer Manifest No. AA204312. (Witness presenting a document)

Witness the deposition of TWA's ramp serviceman, Michael Giosso, on this matter: ATTY. JUAN COLLAS, JR.:

ATTY. JUAN COLLAS, JR.: For purposes of clarity, Exhibit I is designated as

Exhibit I-TWA.
On that date, do (sic) you have occasion to
handle or deal with the transfer of cargo from xxx xxx xxx
TWA Flight No. 603 to PAL San Francisco?
ATTY. JUAN COLLAS, JR.:
MICHAEL GIOSSO:
This Exhibit I-TWA, could you tell what it is, what
Yes, I did. it shows?

ATTY. JUAN COLLAS, JR.: MICHAEL GIOSSO:

What was your participation with the transfer of It shows transfer of manifest on 10-27-76 to PAL
the cargo? at 1400 and verified with two signatures as it
completed the transfer.
MICHAEL GIOSSO:
ATTY. JUAN COLLAS, JR.:
I manifested the freight on a transfer manifest
and physically moved it to PAL and concluded Very good,. Who was the PAL employee who
the transfer by signing it off. received the cargo?

ATTY. JUAN COLLAS, JR.: MICHAEL GIOSSO:

You brought it there yourself? The name is Garry Marcial."

37

MICHAEL GIOSSO: The deposition of Alberto A. Lim, PAL's cargo supervisor at San Francisco, as
deponent-witness for PAL, makes this further clarification:
Yes sir.
ATTY. CESAR P. MANALAYSAY:
ATTY. JUAN COLIAS, JR.:
You mentioned Airway Bill, Mr. Lim. I am
Do you have anything to show that PAL received showing to you a PAL Airway Bill Number
the cargo from TWA on October 27, 1976? 01180454 which for purposes of evidence, I
would like to request that the same be marked xxx xxx xxx
as evidence Exhibit I for PAL.
ALBERTO A. LIM:
xxx xxx xxx
The remains of Mrs. Cristina (sic) Saludo.
In what circumstances did you encounter Exhibit
I-PAL? ATTY. CESAR P. MANALAYSAY:

ALBERTO A. LIM: Is that the same body mentioned in this Airway

Bill?
If I recall correctly, I was queried by Manila, our
Manila office with regard to a certain complaint ALBERTO A. LIM:
that a consignee filed that this shipment did not
arrive on the day that the consignee expects the Yes.
shipment to arrive.
ATTY. CESAR P. MANALAYSAY:
ATTY CESAR P. MANALAYSAY:
What time did you receive said body on October
Okay. Now, upon receipt of that query from 28, 1976?
your Manila office, did you conduct any
investigation to pinpoint the possible causes of
ALBERTO A. LIM:
mishandling?
If I recall correctly, approximately 7:45 of
ALBERTO A. LIM:
October 28, 1976.

Yes.
ATTY. CESAR P. MANALAYSAY:

xxx xxx xxx

Do you have any proof with you to back the
statement?
ATTY. CESAR P. MANALAYSAY:
ALBERTO A. LIM:
What is the result of your investigation?
Yes. We have on our records a Transfer Manifest
ALBERTO A. LIM: from American Airlines Number 204312 showing
that we received a human remains shipment
In the course of my investigation, I found that belong to Mrs. Cristina (sic) Saludo or the
we received the body on October 28, 1976, from human remains of Mrs. Cristina (sic) Saludo.
American Airlines.
ATTY. CESAR P. MAIALAYSAY:
ATTY. CESAR P. MANALAYSAY:

What body are you referring to?

At this juncture, may I request that the Transfer
Manifest referred to by the witness be marked
as an evidence as Exhibit II-PAL.
xxx xxx xxx
Mr. Lim, yesterday your co-defendant TWA
presented as their Exhibit I evidence tending to
show that on October 27, 1976 at about 2:00 in
the, afternoon they delivered to you a cargo
bearing human remains. Could you go over this
Exhibit I and please give us your comments as to
that exhibit?
ATTY. ALBERTO C. MENDOZA:
That is a vague question. I would rather request
that counsel propound specific questions rather
than asking for comments on Exhibit I-TWA.
ATTY. CESAR P. MANALAYSAY:
In that case, I will reform my question. Could
you tell us whether TWA in fact delivered to you
the human remains as indicated in that Transfer
Manifest?
ALBERTO A. LIM:
Yes, they did.
ATTY. CESAR P. MANALAYSAY:
I noticed that the Transfer Manifest of TWA
marked as Exhibit I-TWA bears the same
numbers or the same entries as the Airway Bill
marked as Exhibit I-A PAL tending to show that
this is the human remains of Mrs Cristina (sic)
Saludo. Could you tell us whether this is true?
ALBERTO A. LIM:
It is true that we received human remains
shipment from TWA as indicated on this
Transfer Manifest. But in the course of
investigation, it was found out that the human
remains transferred to us is not the remains of
Mrs. Cristina (sic) Saludo this is the reason why
38
we did not board it on our flight.
Petitioners consider TWA's statement that "it had to rely on the information
furnished by the shipper" a lame excuse and that its failure to prove that its
personnel verified and identified the contents of the casket before loading the same
39
constituted negligence on the part of TWA.
We upbold the favorable consideration by the Court of Appeals of the following
findings of the trial court:
It was not (to) TWA, but to C.M.A.S. that the Pomierski & Son
Funeral Home delivered the casket containing the remains of
Crispina Saludo. TWA would have no knowledge therefore that
the remains of Crispina Saludo were not the ones inside the
casket that was being presented to it for shipment. TWA would
have to rely on there presentations of C.M.A.S. The casket was
hermetically sealed and also sealed by the Philippine Vice Consul
in Chicago. TWA or any airline for that matter would not have
opened such a sealed casket just for the purpose of ascertaining
whose body was inside and to make sure that the remains inside
were those of the particular person indicated to be by C.M.A.S.
TWA had to accept whatever information was being furnished by
the shipper or by the one presenting the casket for shipment. And
so as a matter of fact, TWA carried to San Francisco and
transferred to defendant PAL a shipment covered by or under PAL
Airway Bill No. 079-ORD-01180454, the airway bill for the
shipment of the casketed remains of Crispina Saludo. Only, it
turned out later, while the casket was already with PAL, that what
was inside the casket was not the body of Crispina Saludo so
much so that it had to be withdrawn by C.M.A.S. from PAL. The
body of Crispina Saludo had been shipped to Mexico. The casket
containing the remains of Crispina Saludo was transshipped from
Mexico and arrived in San Francisco the following day on board
American Airlines. It was immediately loaded by PAL on its flight
for Manila.
 The foregoing points at C.M.A.S., not defendant TWA much less
defendant PAL, as the ONE responsible for the switching or mix-
up of the two bodies at the Chicago Airport terminal, and started
a chain reaction of the misshipment of the body of Crispina
Saludo and a one-day delay in the delivery thereof to its
40
destination.
Verily, no amount of inspection by respondent airline companies could have
guarded against the switching that had already taken place. Or, granting that they
could have opened the casket to inspect its contents, private respondents had no
means of ascertaining whether the body therein contained was indeed that of
Crispina Saludo except, possibly, if the body was that of a male person and such fact
was visually apparent upon opening the casket. However, to repeat, private
respondents had no authority to unseal and open the same nor did they have any
reason or justification to resort thereto.
It is the right of the carrier to require good faith on the part of those persons who
deliver goods to be carried, or enter into contracts with it, and inasmuch as the
freight may depend on the value of the article to be carried, the carrier ordinarily
has the right to inquire as to its value. Ordinarily, too, it is the duty of the carrier to
make inquiry as to the general nature of the articles shipped and of their value
before it consents to carry them; and its failure to do so cannot defeat the shipper's
right to recovery of the full value of the package if lost, in the absence of showing of
fraud or deceit on the part of the shipper. In the absence of more definite
information, the carrier has a the right to accept shipper's marks as to the contents
of the package offered for transportation and is not bound to inquire particularly
about them in order to take advantage of a false classification and where a shipper
expressly represents the contents of a package to be of a designated character, it is
not the duty of the carrier to ask for a repetition of the statement nor disbelieve it
41
and open the box and see for itself. However, where a common carrier has
reasonable ground to suspect that the offered goods are of a dangerous or illegal
character, the carrier has the right to know the character of such goods and to insist
on an inspection, if reasonable and practical under the circumstances, as a
42
condition of receiving and transporting such goods.
It can safely be said then that a common carrier is entitled to fair representation of
the nature and value of the goods to be carried, with the concomitant right to rely
thereon, and further noting at this juncture that a carrier has no obligation to
43
inquire into the correctness or sufficiency of such information. The consequent
duty to conduct an inspection thereof arises in the event that there should be
reason to doubt the veracity of such representations. Therefore, to be subjected to
unusual search, other than the routinary inspection procedure customarily
undertaken, there must exist proof that would justify cause for apprehension that
the baggage is dangerous as to warrant exhaustive inspection, or even refusal to
accept carriage of the same; and it is the failure of the carrier to act accordingly in
44
the face of such proof that constitutes the basis of the common carrier's liability.
In the case at bar, private respondents had no reason whatsoever to doubt the
truth of the shipper's representations. The airway bill expressly providing that
"carrier certifies goods received below were received for carriage," and that the
cargo contained "casketed human remains of Crispina Saludo," was issued on the
basis of such representations. The reliance thereon by private respondents was
reasonable and, for so doing, they cannot be said to have acted negligently.
Likewise, no evidence was adduced to suggest even an iota of suspicion that the
cargo presented for transportation was anything other than what it was declared to
be, as would require more than routine inspection or call for the carrier to insist
that the same be opened for scrutiny of its contents per declaration.
Neither can private respondents be held accountable on the basis of petitioners'
preposterous proposition that whoever brought the cargo to the airport or loaded it
on the airplane did so as agent of private respondents, so that even if CMAS whose
services were engaged for the transit arrangements for the remains was indeed at
fault, the liability therefor would supposedly still be attributable to private
respondents.
While we agree that the actual participation of CMAS has been sufficiently and
correctly established, to hold that it acted as agent for private respondents would
be both an inaccurate appraisal and an unwarranted categorization of the legal
position it held in the entire transaction.
It bears repeating that CMAS was hired to handle all the necessary shipping
arrangements for the transportation of the human remains of Crispina Saludo to
Manila. Hence, it was to CMAS that the Pomierski & Son Funeral Home, as shipper,
brought the remains of petitioners' mother for shipment, with Maria Saludo as
consignee. Thereafter, CMAS booked the shipment with PAL through the carrier's
45
agent, Air Care International. With its aforestated functions, CMAS may
accordingly be classified as a forwarder which, by accepted commercial practice, is
regarded as an agent of the shipper and not of the carrier. As such, it merely
contracts for the transportation of goods by carriers, and has no interest in the
46
freight but receives compensation from the shipper as his agent.
At this point, it can be categorically stated that, as culled from the findings of both
the trial court and appellate courts, the entire chain of events which culminated in
the present controversy was not due to the fault or negligence of private
respondents. Rather, the facts of the case would point to CMAS as the culprit.
Equally telling of the more likely possibility of CMAS' liability is petitioners' letter to
and demanding an explanation from CMAS regarding the statement of private
respondents laying the blame on CMAS for the incident, portions of which, reading
as follows:
. . . we were informed that the unfortunate a mix-up occurred due
to your negligence. . . .
Likewise, the two airlines pinpoint the responsibility upon your
agents. Evidence were presented to prove that allegation.
On the face of this overwhelming evidence we could and should
have filed a case against you. . . .
47
clearly allude to CMAS as the party at fault. This is tantamount to an admission by
petitioners that they consider private respondents without fault, or is at the very
least indicative of the fact that petitioners entertained serious doubts as to whether
herein private respondents were responsible for the unfortunate turn of events.
Undeniably, petitioners' grief over the death of their mother was aggravated by the
unnecessary inconvenience and anxiety that attended their efforts to bring her
body home for a decent burial. This is unfortunate and calls for sincere
commiseration with petitioners. But, much as we would like to give them
consolation for their undeserved distress, we are barred by the inequity of allowing
recovery of the damages prayed for by them at the expense of private respondents
whose fault or negligence in the very acts imputed to them has not been
convincingly and legally demonstrated.
Neither are we prepared to delve into, much less definitively rule on, the possible
liability of CMAS as the evaluation and adjudication of the same is not what is
presently at issue here and is best deferred to another time and addressed to
another forum.
II. Petitioners further fault the Court of Appeals for ruling that there was no
contractual breach on the part of private respondents as would entitle petitioners
to damages.
Petitioners hold that respondent TWA, by agreeing to transport the remains of
petitioners' mother on its Flight 131 from Chicago to San Francisco on October 27,
1976, made itself a party to the contract of carriage and, therefore, was bound by
the terms of the issued airway bill. When TWA undertook to ship the remains on its
Flight 603, ten hours earlier than scheduled, it supposedly violated the express
agreement embodied in the airway bill. It was allegedly this breach of obligation
which compounded, if not directly caused, the switching of the caskets.
In addition, petitioners maintain that since there is no evidence as to who placed
the body on board Flight 603, or that CMAS actually put the cargo on that flight, or
that the two caskets at the Chicago airport were to be transported by the same
airline, or that they came from the same funeral home, or that both caskets were
received by CMAS, then the employees or agents of TWA presumably caused the
mix-up by loading the wrong casket on the plane. For said error, they contend, TWA
must necessarily be presumed negligent and this presumption of negligence stands
undisturbed unless rebutting evidence is presented to show that the switching or
misdelivery was due to circumstances that would exempt the carrier from liability.
Private respondent TWA professes otherwise. Having duly delivered or transferred
the cargo to its co-respondent PAL on October 27, 1976 at 2:00 P.M., as supported
by the TWA Transfer Manifest, TWA faithfully complied with its obligation under
the airway bill. Said faithful compliance was not affected by the fact that the
remains were shipped on an earlier flight as there was no fixed time for completion
of carriage stipulated on. Moreover, the carrier did not undertake to carry the cargo
aboard any specified aircraft, in view of the condition on the back of the airway bill
which provides:
CONDITIONS OF CONTRACT
xxx xxx xxx
It is agreed that no time is fixed for the completion of carriage
hereunder and that Carrier may without notice substitute
alternate carriers or aircraft. Carrier assumes no obligation to
carry the goods by any specified aircraft or over any particular
route or routes or to make connection at any point according to
any particular schedule, and Carrier is hereby authorized to select,
or deviate from the route or routes of shipment, notwithstanding
that the same may be stated on the face hereof. The shipper
48
guarantees payment of all charges and advances.
Hence, when respondent TWA shipped the body on earlier flight and on a different
aircraft, it was acting well within its rights. We find this argument tenable.
The contention that there was contractual breach on the part of private
respondents is founded on the postulation that there was ambiguity in the terms of
the airway bill, hence petitioners' insistence on the application of the rules on
interpretation of contracts and documents. We find no such ambiguity. The terms
are clear enough as to preclude the necessity to probe beyond the apparent
intendment of the contractual provisions.
The hornbook rule on interpretation of contracts consecrates the primacy of the
intention of the parties, the same having the force of law between them. When the
terms of the agreement are clear and explicit, that they do not justify an attempt to
read into any alleged intention of the parties, the terms are to be understood
49
literally just as they appear on the face of the contract. The various stipulations of
50
a contract shall be interpreted together and such a construction is to be adopted
51
as will give effect to all provisions thereof. A contract cannot be construed by
parts, but its clauses should be interpreted in relation to one another. The whole
contract must be interpreted or read together in order to arrive at its true meaning.
Certain stipulations cannot be segregated and then made to control; neither do
particular words or phrases necessarily determine the character of a contract. The
legal effect of the contract is not to be determined alone by any particular provision
disconnected from all others, but in the ruling intention of the parties as gathered
from all the language they have used and from their contemporaneous and
52
subsequent acts.
Turning to the terms of the contract at hand, as presented by PAL Air Waybill No.
079-01180454, respondent court approvingly quoted the trial court's disquisition on
the aforequoted condition appearing on the reverse side of the airway bill and its
disposition of this particular assigned error:
The foregoing stipulation fully answers plaintiffs' objections to the
one-day delay and the shipping of the remains in TWA Flight 603
instead of TWA Flight 131. Under the stipulation, parties agreed
that no time was fixed to complete the contract of carriage and
that the carrier may, without notice, substitute alternate carriers
or aircraft. The carrier did not assume the obligation to carry the
shipment on any specified aircraft.
xxx xxx xxx
Furthermore, contrary to the claim of plaintiffs-appellants, the
conditions of the Air Waybill are big enough to be read and
noticed. Also, the mere fact that the cargo in question was
shipped in TWA Flight 603, a flight earlier on the same day than
TWA Flight 131, did not in any way cause or add to the one-day
delay complained of and/or the switching or mix-up of the
53
bodies.
Indubitably, that private respondent can use substitute aircraft even without notice
and without the assumption of any obligation whatsoever to carry the goods on any
specified aircraft is clearly sanctioned by the contract of carriage as
specifically provided for under the conditions thereof.
Petitioners' invocation of the interpretative rule in the Rules of Court that written
54
words control printed words in documents, to bolster their assertion that the
typewritten provisions regarding the routing and flight schedule prevail over the
printed conditions, is tenuous. Said rule may be considered only when there is
inconsistency between the written and printed words of the contract.
As previously stated, we find no ambiguity in the contract subject of this case that
would call for the application of said rule. In any event, the contract
has provided for such a situation by explicitly stating that the above condition
remains effective "notwithstanding that the same (fixed time for completion of
carriage, specified aircraft, or any particular route or schedule) may be stated on
the face hereof." While petitioners hinge private respondents' culpability on the
fact that the carrier "certifies goods described below were received for carriage,"
they may have overlooked that the statement on the face of the airway bill properly
and completely reads —
Carrier certifies goods described below were received for
carriage subject to the Conditions on the reverse hereof the goods
then being in apparent good order and condition except as noted
55
hereon. (Emphasis ours.)
Private respondents further aptly observe that the carrier's certification regarding
receipt of the goods for carriage "was of a smaller print than the condition of the
Air Waybill, including Condition No. 5 — and thus if plaintiffs-appellants had
56
recognized the former, then with more reason they were aware of the latter.
In the same vein, it would also be incorrect to accede to the suggestion of
petitioners that the typewritten specifications of the flight, routes and dates of
departures and arrivals on the face of the airway bill constitute a special contract
which modifies the printed conditions at the back thereof. We reiterate that
typewritten provisions of the contract are to be read and understood subject to and
in view of the printed conditions, fully reconciling and giving effect to the manifest
intention of the parties to the agreement.
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
57
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
58
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 haveprovided 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
59
ordinary rules for the interpretation of contracts.
Echoing the findings of the trial court, the respondent court correctly declared that
— without dissent raises a presumption that all terms therein were brought to the
In a similar case of delayed delivery of air cargo under a very
similar stipulation contained in the airway bill which reads: "The
carrier does not obligate itself to carry the goods by any specified
aircraft or on a specified time. Said carrier being hereby
authorized to deviate from the route of the shipment without any
liability therefor", our Supreme Court ruled that common carriers
are not obligated by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt delivery, unless
such common carriers previously assume the obligation. Said
rights and obligations are created by a specific contract entered
into by the parties (Mendoza vs. PAL, 90 Phil. 836).
There is no showing by plaintiffs that such a special or specific
contract had been entered into between them and the defendant
airline companies.
And this special contract for prompt delivery should call the
attention of the carrier to the circumstances surrounding the case
and the approximate amount of damages to be suffered in case of
delay (See Mendoza vs. PAL, supra). There was no such contract
entered into in the instant case.
60
Also, the theory of petitioners that the specification of the flights and dates of
departure and arrivals constitute a special contract that could prevail over the
printed stipulations at the back of the airway bill is vacuous. To countenance such a
postulate would unduly burden the common carrier for that would have the effect
of unilaterally transforming every single bill of lading or trip ticket into a special
contract by the simple expedient of filling it up with the particulars of the flight, trip
or voyage, and thereby imposing upon the carrier duties and/or obligations which it
may not have been ready or willing to assume had it been timely, advised thereof.
Neither does the fact that the challenged condition No. 5 was printed at the back of
the airway bill militate against its binding effect on petitioners as parties to the
contract, for there were sufficient indications on the face of said bill that would
alert them to the presence of such additional condition to put them on their guard.
Ordinary prudence on the part of any person entering or contemplating to enter
into a contract would prompt even a cursory examination of any such conditions,
terms and/or stipulations.
There is a holding in most jurisdictions that the acceptance of a bill of lading
knowledge of the shipper and agreed to by him, and in the absence of fraud or
mistake, he is estopped from thereafter denying that he assented to such terms.
This rule applies with particular force where a shipper accepts a bill of lading with
full knowledge of its contents, and acceptance under such circumstances makes it a
binding contract. In order that any presumption of assent to a stipulation in a bill of
lading limiting the liability of a carrier may arise, it must appear that the clause
containing this exemption from liability plainly formed a part of the contract
contained in the bill of lading. A stipulation printed on the back of a receipt or bill of
lading or on papers attached to such receipt will be quite as effective as if printed
on its face, if it is shown that the consignor knew of its terms. Thus, where a shipper
accepts a receipt which states that its conditions are to be found on the back, such
receipt comes within the general rule, and the shipper is held to have accepted and
61
to be bound by the conditions there to be found.
Granting arguendo that Condition No. 5 partakes of the nature of a contract of
adhesion and as such must be construed strictly against the party who drafted the
same or gave rise to any ambiguity therein, it should be borne in mind that a
contract of adhesion may be struck down as void and unenforceable, for being
subversive of public policy, only when the weaker party is imposed upon in dealing
with the dominant bargaining party and is reduced to the alternative of taking it or
leaving it, completely deprived of the opportunity to bargain on equal
62 63
footing. However, Ong Yiu vs. Court of Appeals, et al instructs us that contracts
of adhesion are not entirely prohibited. The one who adheres to the contract is in
reality free to reject it entirely; if he adheres, be gives his consent. Accordingly,
petitioners, far from being the weaker party in this situation, duly signified their
presumed assent to all terms of the contract through their acceptance of the airway
bill and are consequently bound thereby. It cannot be gainsaid that petitioners'
were not without several choices as to carriers in Chicago with its numerous
airways and airliner servicing the same.
We wish to allay petitioners' apprehension that Condition No. 5 of the airway bill is
productive of mischief as it would validate delay in delivery, sanction violations of
contractual obligations with impunity or put a premium on breaches of contract.
Just because we have said that condition No. 5 of the airway bill is binding upon the
parties to and fully operative in this transaction, it does not mean, and let this serve
as fair warning to respondent carriers, that they can at all times whimsically seek
refuge from liability in the exculpatory sanctuary of said Condition No. 5 or
arbitrarily vary routes, flights and schedules to the prejudice of their customers.
This condition only serves to insulate the carrier from liability in those instances
when changes in routes, flights and schedules are clearly justified by the peculiar
circumstances of a particular case, or by general transportation practices, customs
and usages, or by contingencies or emergencies in aviation such as weather
turbulence, mechanical failure, requirements of national security and the like. And
even as it is conceded that specific routing and other navigational arrangements for
a trip, flight or voyage, or variations therein, generally lie within the discretion of
the carrier in the absence of specific routing instructions or directions by the
shipper, it is plainly incumbent upon the carrier to exercise its rights with due
deference to the rights, interests and convenience of its customers.
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
64
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
65
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.
We are further convinced that when TWA opted to ship the remains of Crispina
Saludo on an earlier flight, it did so in the exercise of sound discretion and with
reasonable prudence, as shown by the explanation of its counsel in his letter of
February 19, 1977 in response to petitioners' demand letter:
Investigation of TWA's handling of this matter reveals that
although the shipment was scheduled on TWA Flight 131 of
October 27, 1976, it was actually boarded on TWA Flight 603 of
the same day, approximately 10 hours earlier, in order to assure
that the shipment would be received in San Francisco in sufficient
time for transfer to PAL. This transfer was effected in San
Francisco at 2:00 P.M. on October 27, 1976.
66
Precisely, private respondent TWA knew of the urgency of the shipment by reason
of this notation on the lower portion of the airway bill: "All documents have been
certified. Human remains of Cristina (sic) Saludo. Please return bag first available
flight to SFO." Accordingly, TWA took it upon itself to carry the remains of Crispina
Saludo on an earlier flight, which we emphasize it could do under the terms of the
airway bill, to make sure that there would be enough time for loading said remains
on the transfer flight on board PAL.
III. Petitioners challenge the validity of respondent court's finding that private
respondents are not liable for tort on account of the humiliating, arrogant and
indifferent acts of their officers and personnel. They posit that since their mother's
remains were transported ten hours earlier than originally scheduled, there was no
reason for private respondents' personnel to disclaim knowledge of the arrival or
whereabouts of the same other than their sheer arrogance, indifference and
extreme insensitivity to the feelings of petitioners. Moreover, being passengers and
not merely consignors of goods, petitioners had the right to be treated with
courtesy, respect, kindness and due consideration.
In riposte, TWA claims that its employees have always dealt politely with all clients,
customers and the public in general. PAL, on the other hand, declares that in the
performance of its obligation to the riding public, other customers and clients, it has
always acted with justice, honesty, courtesy and good faith.
Respondent appellate court found merit in and reproduced the trial court's
refutation of this assigned error:
About the only evidence of plaintiffs that may have reference to
the manner with which the personnel of defendants treated the
two plaintiffs at the San Francisco Airport are the following
pertinent portions of Maria Saludo's testimony:
Q When you arrived there, what did you do, if
any?
A I immediately went to the TWA counter and I
inquired about whether my mother was there or
if' they knew anything about it.
Q What was the answer?
A They said they do not know. So, we waited.
Q About what time was that when you reached
San Francisco from Chicago?
A I think 5 o'clock. Somewhere around that in
the afternoon.
Q You made inquiry it was immediately
thereafter?
A Right after we got off the plane.
Q Up to what time did you stay in the airport to
wait until the TWA people could tell you the
whereabouts?
A Sorry, Sir, but the TWA did not tell us
anything. We stayed there until about 9 o'clock.
They have not heard anything about it. They did
not say anything.
Q Do you want to convey to the Court that from
5 up to 9 o'clock in the evening you yourself
went back to the TWA and they could not tell
you where the remains of your mother were?
A Yes sir.
Q And after nine o'clock, what did you do?
A I told my brother my Mom was supposed to
be on the Philippine Airlines flight. "Why don't"
we check with PAL instead to see if she was
there?" We tried to comfort each other. I told
him anyway that was a shortest flight from
Chicago to California. We will be with our
mother on this longer flight. So, we checked
with the PAL.
Q What did you find?
A We learned, Yes, my Mom would be on the
flight.
Q Who was that brother?
A Saturnino Saludo.
Q And did you find what was your flight from
San Francisco to the Philippines?
A I do not know the number. It was the evening
flight of the Philippine Airline(s) from San
Francisco to Manila.
Q You took that flight with your mother?
A We were scheduled to, Sir.
Q Now, you could not locate the remains of your
mother in San Francisco could you tell us what
did you feel?
A After we were told that my mother was not
there?
Q After you learned that your mother could not
fly with you from Chicago to California?
A Well, I was very upset. Of course, I wanted the
confirmation that my mother was in the West
Coast. The fliqht was about 5 hours from
Chicago to California. We waited anxiously all
that time on the plane. I wanted to be assured
about my mother's remains. But there was
nothing and we could not get any assurance
from anyone about it.
Q Your feeling when you reached San Francisco
and you could not find out from the TWA the
whereabouts of the remains, what did you feel?
A Something nobody would be able to describe
unless he experiences it himself. It is a kind of
panic. I think it's a feeling you are about to go
crazy. It is something I do not want to live
through again. (Inting, t.s.n., Aug. 9, 1983, pp.
14-18).
 The foregoing does not show any humiliating or arrogant manner
with which the personnel of both defendants treated the two
plaintiffs. Even their alleged indifference is not clearly established.
The initial answer of the TWA personnel at the counter that they
did not know anything about the remains, and later, their answer
that they have not heard anything about the remains, and the
inability of the TWA counter personnel to inform the two plaintiffs
of the whereabouts of the remains, cannot be said to be total or
complete indifference to the said plaintiffs. At any rate, it is any
rude or discourteous conduct, malfeasance or neglect, the use of
abusive or insulting language calculated to humiliate and shame
passenger or had faith by or on the part of the employees of the
carrier that gives the passenger an action for damages against the
carrier (Zulueta vs. Pan American World Airways, 43 SCRA 397; Air
France vs. Carrascoso, et al., 18 SCRA 155; Lopez, et al. vs. Pan
American World Airways, 16 SCRA 431; Northwest Airlines, Inc. vs.
Cuenca, 14 SCRA 1063), and none of the above is obtaining in the
67
instant case.
We stand by respondent court's findings on this point, but only to the extent where
it holds that the manner in which private respondent TWA's employees dealt with
petitioners was not grossly humiliating, arrogant or indifferent as would assume the
proportions of malice or bad faith and lay the basis for an award of the damages
claimed. It must however, be pointed out that the lamentable actuations of
respondent TWA's employees leave much to be desired, particularly so in the face
of petitioners' grief over the death of their mother, exacerbated by the tension and
anxiety wrought by the impasse and confusion over the failure to ascertain over an
appreciable period of time what happened to her remains.
Airline companies are hereby sternly admonished that it is their duty not only to
cursorily instruct but to strictly require their personnel to be more accommodating
towards customers, passengers and the general public. After all, common carriers
such as airline companies are in the business of rendering public service, which is
the primary reason for their enfranchisement and recognition in our law. Because
the passengers in a contract of carriage do not contract merely for transportation,
they have a right to be treated with kindness, respect, courtesy and
68
consideration. A contract to transport passengers is quite different in kind and
degree from any other contractual relation, and generates a relation attended with
public duty. The operation of a common carrier is a business affected with public
interest and must be directed to serve the comfort and convenience of
69
passengers. Passengers are human beings with human feelings and emotions;
they should not be treated as mere numbers or statistics for revenue.
The records reveal that petitioners, particularly Maria and Saturnino Saludo,
agonized for nearly five hours, over the possibility of losing their mother's mortal
remains, unattended to and without any assurance from the employees of TWA
that they were doing anything about the situation. This is not to say that petitioners
were to be regaled with extra special attention. They were, however, entitled to the
understanding and humane consideration called for by and commensurate with the
extraordinary diligence required of common carriers, and not the cold insensitivity
to their predicament. It is hard to believe that the airline's counter personnel were
totally helpless about the situation. Common sense would and should have dictated
that they exert a little extra effort in making a more extensive inquiry, by
themselves or through their superiors, rather than just shrug off the problem with a
callous and uncaring remark that they had no knowledge about it. With all the
modern communications equipment readily available to them, which could have
easily facilitated said inquiry and which are used as a matter of course by airline
companies in their daily operations, their apathetic stance while not legally
reprehensible is morally deplorable.
Losing a loved one, especially one's, parent, is a painful experience. Our culture
accords the tenderest human feelings toward and in reverence to the dead. That
the remains of the deceased were subsequently delivered, albeit belatedly, and
eventually laid in her final resting place is of little consolation. The imperviousness
displayed by the airline's personnel, even for just that fraction of time, was
especially condemnable particularly in the hour of bereavement of the family of
Crispina Saludo, intensified by anguish due to the uncertainty of the whereabouts
of their mother's remains. Hence, it is quite apparent that private respondents'
personnel were remiss in the observance of that genuine human concern and
professional attentiveness required and expected of them.
The foregoing observations, however, do not appear to be applicable or imputable
to respondent PAL or its employees. No attribution of discourtesy or indifference
has been made against PAL by petitioners and, in fact, petitioner Maria Saludo
testified that it was to PAL that they repaired after failing to receive proper
attention from TWA. It was from PAL that they received confirmation that their
mother's remains would be on the same flight to Manila with them.
We find the following substantiation on this particular episode from the deposition
of Alberto A. Lim, PAL's cargo supervisor earlier adverted to, regarding their
investigation of and the action taken on learning of petitioner's problem:
ATTY. ALBERTO C. MENDOZA:
Yes.
 Mr. Lim, what exactly was your procedure
adopted in your so called investigation?
ALBERTO A. LIM:
I called the lead agent on duty at that time and
requested for a copy of airway bill, transfer
manifest and other documents concerning the
shipment.
ATTY ALBERTO C. MENDOZA:
Then, what?
ALBERTO A. LIM:
They proceeded to analyze exactly where PAL
failed, if any, in forwarding the human remains
of Mrs. Cristina (sic) Saludo. And I found out that
there was not (sic) delay in shipping the remains
of Mrs. Saludo to Manila. Since we received the
body from American Airlines on 28 October at
7:45 and we expedited the shipment so that it
could have been loaded on our flight leaving at
9:00 in the evening or just barely one hour and
15 minutes prior to the departure of the aircraft.
That is so (sic) being the case, I reported to
70
Manila these circumstances.
The censurable conduct of TWA's employees cannot, however, be said to have
approximated the dimensions of fraud, malice or bad faith. It can be said to be
more of a lethargic reaction produced and engrained in some people by the
mechanically routine nature of their work and a racial or societal culture which
stultifies what would have been their accustomed human response to a human
need under a former and different ambience.
Nonetheless, the facts show that petitioners' right to be treated with due courtesy
in accordance with the degree of diligence required by law to be exercised by every
common carrier was violated by TWA and this entitles them, at least, to nominal
damages from TWA alone. Articles 2221 and 2222 of the Civil Code make it clear
that nominal damages are not intended for indemnification of loss suffered but for
the vindication or recognition of a right violated of invaded. They are recoverable
where some injury has been done but the amount of which the evidence fails to
show, the assessment of damages being left to the discretion of the court according
76
to the circumstances of the case. In the exercise of our discretion, we find an
award of P40,000.00 as nominal damages in favor of, petitioners to be a reasonable
amount under the circumstances of this case.
WHEREFORE, with the modification that an award of P40,000.00 as and by way of
nominal damages is hereby granted in favor of petitioners to be paid by respondent
Trans World Airlines, the appealed decision is AFFIRMED in all other respects.
SO ORDERED.

IV. Finally, petitioners insist, as a consequence of the delay in the shipment of their
mother's remains allegedly caused by wilful contractual breach, on their
entitlement to actual, moral and exemplary damages as well as attorney's fees,
litigation expenses, and legal interest.

The uniform decisional tenet in our jurisdiction bolds that moral damages may be
71
awarded for wilful or fraudulent breach of contract or when such breach is
72
attended by malice or bad faith. However, in the absence of strong and positive
73
evidence of fraud, malice or bad faith, said damages cannot be awarded. Neither
74 75
can there be an award of exemplary damages nor of attorney's fees as an item
of damages in the absence of proof that defendant acted with malice, fraud or bad
faith.
G.R. No. 125524 August 25, 1999
BENITO MACAM doing business under the name and style BEN-MAC
ENTERPRISES, petitioner,
vs.
COURT OF APPEALS, CHINA OCEAN SHIPPING CO., and/or WALLEM PHILIPPINES
SHIPPING, INC.,respondents.
BELLOSILLO, J.:
On 4 April 1989 petitioner Benito Macam, doing business under the name and
style Ben-Mac Enterprises, shipped on board the vessel Nen Jiang, owned and
operated by respondent China Ocean Shipping Co., through local agent respondent
Wallem Philippines Shipping, Inc. (hereinafter WALLEM), 3,500 boxes of
watermelons valued at US$5,950.00 covered by Bill of Lading No. HKG 99012 and
exported through Letter of Credit No. HK 1031/30 issued by National Bank of
Pakistan, Hongkong (hereinafter PAKISTAN BANK) and 1,611 boxes of fresh
mangoes with a value of US$14,273.46 covered by Bill of Lading No. HKG 99013 and
exported through Letter of Credit No. HK 1032/30 also issued by PAKISTAN BANK.
The Bills of Lading contained the following pertinent provision: "One of the Bills of
Lading must be surrendered duly endorsed in exchange for the goods or delivery
1
order. The shipment was bound for Hongkong with PAKISTAN BANK as consignee
and Great Prospect Company of Kowloon, Hongkong (hereinafter GPC) as notify
party.
On 6 April 1989, per letter of credit requirement, copies of the bills of lading and
commercial invoices were submitted to petitioner's depository bank, Consolidated
Banking Corporation (hereinafter SOLIDBANK), which paid petitioner in advance the
total value of the shipment of US$20,223.46.1âwphi1.nêt
Upon arrival in Hongkong, the shipment was delivered by respondent WALLEM
directly to GPC, not to PAKISTAN BANK, and without the required bill of lading
having been surrendered. Subsequently, GPC failed to pay PAKISTAN BANK such
that the latter, still in possession of the original bills of lading, refused to pay
petitioner through SOLIDBANK. Since SOLIDBANK already pre-paid petitioner the
value of the shipment, it demanded payment from respondent WALLEM through
five (5) letters but was refused. Petitioner was thus allegedly constrained to return
the amount involved to SOLIDBANK, then demanded payment from respondent
WALLEM in writing but to no avail.
On 25 September 1991 petitioner sought collection of the value of the shipment of
US$20,223.46 or its equivalent of P546,033.42 from respondents before the
Regional Trial Court of Manila, based on delivery of the shipment to GPC without
presentation of the bills of lading and bank guarantee.
Respondents contended that the shipment was delivered to GPC without
presentation of the bills of lading and bank guarantee per request of petitioner
himself because the shipment consisted of perishable goods. The telex dated 5 April
1989 conveying such request read —
AS PER SHPR'S REQUEST KINDLY ARRANGE DELIVERY OF A/M SHIPT TO
2
RESPECTIVE CNEES WITHOUT PRESENTATION OF OB/L and bank
guarantee since for prepaid shipt ofrt charges already fully paid our end . . .
3
.
Respondents explained that it is a standard maritime practice, when immediate
delivery is of the essence, for the shipper to request or instruct the carrier to deliver
the goods to the buyer upon arrival at the port of destination without requiring
presentation of the bill of lading as that usually takes time. As proof thereof,
respondents apprised the trial court that for the duration of their two-year business
relationship with petitioner concerning similar shipments to GPC deliveries were
4
effected without presentation of the bills of lading. Respondents advanced next
that the refusal of PAKISTAN BANK to pay the letters of credit to SOLIDBANK was
due to the latter's failure to submit a Certificate of Quantity and Quality.
Respondents counterclaimed for attorney's fees and costs of suit.
On 14 May 1993 the trial court ordered respondents to pay, jointly and severally,
the following amounts: (1) P546,033.42 plus legal interest from 6 April 1989 until
full payment; (2) P10,000.00 as attorney's fees; and, (3) the costs. The
5
counterclaims were dismissed for lack of merit. The trial court opined that
respondents breached the provision in the bill of lading requiring that "one of the
Bills of Lading must be surrendered duly endorsed in exchange for the goods or
delivery order," when they released the shipment to GPC without presentation of
the bills of lading and the bank guarantee that should have been issued by
PAKISTAN BANK in lieu of the bills of lading. The trial court added that the shipment
should not have been released to GPC at all since the instruction contained in the
telex was to arrange delivery to the respective consignees and not to any party. The
trial court observed that the only role of GPC in the transaction as notify party was
precisely to be notified of the arrival of the cargoes in Hongkong so it could in turn
duly advise the consignee.
Respondent Court of Appeals appreciated the evidence in a different manner.
According to it, as established by previous similar transactions between the parties,
shipped cargoes were sometimes actually delivered not to the consignee but to
6
notify party GPC without need of the bills of lading or bank guarantee. Moreover,
the bills of lading were viewed by respondent court to have been properly
superseded by the telex instruction and to implement the instruction, the delivery
of the shipment must be to GPC, the real importer/buyer of the goods as shown by
7
the export invoices, and not to PAKISTAN BANK since the latter could very well
present the bills of lading in its possession; likewise, if it were the PAKISTAN BANK
to which the cargoes were to be strictly delivered it would no longer be proper to
require a bank guarantee. Respondent court noted that besides, GPC was listed as a
consignee in the telex. It observed further that the demand letter of petitioner to
respondents never complained of misdelivery of goods. Lastly, respondent court
found that petitioner's claim of having reimbursed the amount involved to
SOLIDBANK was unsubstantiated. Thus, on 13 March 1996 respondent court set
aside the decision of the trial court and dismissed the complaint together with the
8 9
counterclaims. On 5 July 1996 reconsideration was denied.
Petitioner submits that the fact that the shipment was not delivered to the
consignee as stated in the bill of lading or to a party designated or named by the
consignee constitutes a misdelivery thereof. Moreover, petitioner argues that from
the text of the telex, assuming there was such an instruction, the delivery of the
shipment without the required bill of lading or bank guarantee should be made only
to the designated consignee, referring to PAKISTAN BANK.
We are not persuaded. The submission of petitioner that "the fact that the
shipment was not delivered to the consignee as stated in the Bill of Lading or to a
party designated or named by the consignee constitutes a misdelivery thereof" is a
deviation from his cause of action before the trial court. It is clear from the
allegation in his complaint that it does not deal with misdelivery of the cargoes but
of delivery to GPC without the required bills of lading and bank guarantee —
6. The goods arrived in Hongkong and were released by the defendant
Wallem directly to the buyer/notify party, Great Prospect Company and
not to the consignee, the National Bank of Pakistan, Hongkong, without
the required bills of lading and bank guarantee for the release of the
10
shipment issued by the consignee of the goods . . . .
Even going back to an event that transpired prior to the filing of the present case or
when petitioner wrote respondent WALLEM demanding payment of the value of
the cargoes, misdelivery of the cargoes did not come into the picture —
We are writing you on behalf of our client, Ben-Mac Enterprises who
informed us that Bills of Lading No. 99012 and 99013 with a total value of
US$20,223.46 were released to Great Prospect, Hongkong without the
necessary bank guarantee. We were further informed that the consignee
of the goods, National Bank of Pakistan, Hongkong, did not release or
endorse the original bills of lading. As a result thereof, neither the
consignee, National Bank of Pakistan, Hongkong, nor the importer, Great
11
Prospect Company, Hongkong, paid our client for the goods . . . .
At any rate, we shall dwell on petitioner's submission only as a prelude to our
discussion on the imputed liability of respondents concerning the shipped goods.
Article 1736 of the Civil Code provides —
Art. 1736. The extraordinary responsibility of the common carriers lasts
from the time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice to the provisions of
12
article 1738.
We emphasize that the extraordinary responsibility of the common carriers lasts
until actual or constructive delivery of the cargoes to the consignee or to the person
who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading
as consignee whereas GPC was the notify party. However, in the export invoices
GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such
in his demand letter to respondent WALLEM and in his complaint before the trial
court. This premise draws us to conclude that the delivery of the cargoes to GPC as
buyer/importer which, conformably with Art. 1736 had, other than the consignee,
14
the right to receive them was proper.
The real issue is whether respondents are liable to petitioner for releasing the
goods to GPC without the bills of lading or bank guarantee.
Respondents submitted in evidence a telex dated 5 April 1989 as basis for delivering
the cargoes to GPC without the bills of lading and bank guarantee. The telex
instructed delivery of various shipments to the respective consignees without need
of presenting the bill of lading and bank guarantee per the respective shipper's
request since "for prepaid shipt ofrt charges already fully paid." Petitioner was
named therein as shipper and GPC as consignee with respect to Bill of Lading Nos.
HKG 99012 and HKG 99013. Petitioner disputes the existence of such instruction
and claims that this evidence is self-serving.
From the testimony of petitioner, we gather that he has been transacting with GPC
as buyer/importer for around two (2) or three (3) years already. When mangoes
and watermelons are in season, his shipment to GPC using the facilities of
respondents is twice or thrice a week. The goods are released to GPC. It has been
the practice of petitioner to request the shipping lines to immediately release
perishable cargoes such as watermelons and fresh mangoes through telephone calls
by himself or his "people." In transactions covered by a letter of credit, bank
guarantee is normally required by the shipping lines prior to releasing the goods.
But for buyers using telegraphic transfers, petitioner dispenses with the bank
guarantee because the goods are already fully paid. In his several years of business
relationship with GPC and respondents, there was not a single instance when the
bill of lading was first presented before the release of the cargoes. He admitted the
existence of the telex of 3 July 1989 containing his request to deliver the shipment
15
to the consignee without presentation of the bill of lading but not the telex of 5
April 1989 because he could not remember having made such request.
Consider pertinent portions of petitioner's testimony —
Q: Now, it is also the practice of the shipper to allow the shipping lines to
release the perishable goods to the importer of goods without a Bill of
Lading or Bank guarantee?
A: No, it cannot be without the Bank Guarantee.
Atty. Hernandez:
Q: Can you tell us an instance when you will allow the release of the
perishable goods by the shipping lines to the importer without the Bank
guarantee and without the Bill of Lading?

Q: Are you aware of any document which would indicate or show that your A: As far as telegraphic transfer is concerned.
request to the defendant Wallem for the immediate release of your fresh
fruits, perishable goods, to Great Prospect without the presentation of the
Q: Can you explain (to) this Honorable Court what telegraphic transfer is?
original Bill of Lading?
A: Telegraphic transfer, it means advance payment that I am already fully
A: Yes, by telegraphic transfer, which means that it is fully paid. And I
paid . . . .
requested immediate release of the cargo because there was immediate
payment.
Q: Mr. Macam, with regard to Wallem and to Great Prospect, would you
know and can you recall that any of your shipment was released to Great
Q: And you are referring, therefore, to this copy Telex release that you
Prospect by Wallem through telegraphic transfer?
mentioned where your Company's name appears Ben-Mac?
A: I could not recall but there were so many instances sir.
Atty. Hernandez: Just for the record, Your Honor, the witness is
showing a Bill of Lading referring to SKG (sic) 93023 and 93026
Q: Mr. Witness, do you confirm before this Court that in previous
with Great Prospect Company.
shipments of your goods through Wallem, you requested Wallem to
release immediately your perishable goods to the buyer?
Atty. Ventura:
16
A: Yes, that is the request of the shippers of the perishable goods . . . .
Q: Is that the telegraphic transfer?
Q: Now, Mr. Macam, if you request the Shipping Lines for the release of
A: Yes, actually, all the shippers partially request for the immediate release
your goods immediately even without the presentation of OBL, how do
of the goods when they are perishable. I thought Wallem Shipping Lines is
you course it?
not neophyte in the business. As far as LC is concerned, Bank guarantee is
15
needed for the immediate release of the goods . . . . 17
A: Usually, I call up the Shipping Lines, sir . . . .
Q: Mr. Witness, you testified that if is the practice of the shipper of the
Q: You also testified you made this request through phone calls. Who of
perishable goods to ask the shipping lines to release immediately the
you talked whenever you made such phone call?
shipment. Is that correct?

A: Mostly I let my people to call, sir. (sic)

A: Yes, sir.
 Q: So everytime you made a shipment on perishable goods you let your party) to respective consignees without presentation of OB/L and bank
20
people to call? (sic) guarantee . . . .

A: Not everytime, sir.
Q: You did not make this request in writing?
A: No, sir. I think I have no written request with Wallem . . . .
18
Against petitioner's claim of "not remembering" having made a request for delivery
of subject cargoes to GPC without presentation of the bills of lading and bank
guarantee as reflected in the telex of 5 April 1989 are damaging disclosures in his
testimony. He declared that it was his practice to ask the shipping lines to
immediately release shipment of perishable goods through telephone calls by
himself or his "people." He no longer required presentation of a bill of lading nor of
a bank guarantee as a condition to releasing the goods in case he was already fully
paid. Thus, taking into account that subject shipment consisted of perishable goods
and SOLIDBANK pre-paid the full amount of the value thereof, it is not hard to
believe the claim of respondent WALLEM that petitioner indeed requested the
release of the goods to GPC without presentation of the bills of lading and bank
guarantee.
Apart from the foregoing obstacles to the success of petitioner's cause, petitioner
failed to substantiate his claim that he returned to SOLIDBANK the full amount of
the value of the cargoes. It is not far-fetched to entertain the notion, as did
respondent court, that he merely accommodated SOLIDBANK in order to recover
the cost of the shipped cargoes from respondents. We note that it was SOLIDBANK
which initially demanded payment from respondents through five (5) letters.
SOLIDBANK must have realized the absence of privity of contract between itself and
respondents. That is why petitioner conveniently took the cudgels for the bank.
In view of petitioner's utter failure to establish the liability of respondents over the
cargoes, no reversible error was committed by respondent court in ruling against
him.
WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals
of 13 March 1996 dismissing the complaint of petitioner Benito Macam and the
counterclaims of respondents China Ocean Shipping Co. and/or Wallem Philippines
Shipping, Inc., as well as its resolution of 5 July 1996 denying reconsideration, is
AFFIRMED.1âwphi1.nêt

The instruction in the telex of 5 April 1989 was "to deliver the shipment to SO ORDERED.
respective consignees." And so petitioner argues that, assuming there was such an
instruction, the consignee referred to was PAKISTAN BANK. We find the argument
too simplistic. Respondent court analyzed the telex in its entirety and correctly
arrived at the conclusion that the consignee referred to was not PAKISTAN BANK
but GPC —

There is no mistake that the originals of the two (2) subject Bills of Lading
are still in the possession of the Pakistani Bank. The appealed decision
affirms this fact. Conformably, to implement the said telex instruction, the
delivery of the shipment must be to GPC, the notify party or real
importer/buyer of the goods and not the Pakistani Bank since the latter
can very well present the original Bills of Lading in its possession. Likewise,
if it were the Pakistani Bank to whom the cargoes were to be strictly
delivered, it will no longer be proper to require a bank guarantee as a
substitute for the Bill of Lading. To construe otherwise will render
meaningless the telex instruction. After all, the cargoes consist of
perishable fresh fruits and immediate delivery thereof to the
buyer/importer is essentially a factor to reckon with. Besides, GPC is listed
as one among the several consignees in the telex (Exhibit 5-B) and the
instruction in the telex was to arrange delivery of A/M shipment (not any
G.R. No. L-48757 May 30, 1988
MAURO GANZON, petitioner,
vs.
COURT OF APPEALS and GELACIO E. TUMAMBING, respondents.
Antonio B. Abinoja for petitioner.
Quijano, Arroyo & Padilla Law Office for respondents.
SARMIENTO, J.:
1
The private respondent instituted in the Court of First Instance of Manila an action
against the petitioner for damages based on culpa contractual. The antecedent
2
facts, as found by the respondent Court, are undisputed:
On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B.
Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila
on board the lighter LCT "Batman" (Exhibit 1, Stipulation of Facts, Amended Record
on Appeal, p. 38). Pursuant to that agreement, Mauro B. Ganzon sent his lighter
"Batman" to Mariveles where it docked in three feet of water (t.s.n., September 28,
1972, p. 31). On December 1, 1956, Gelacio Tumambing delivered the scrap iron to
defendant Filomeno Niza, captain of the lighter, for loading which was actually
begun on the same date by the crew of the lighter under the captain's supervision.
When about half of the scrap iron was already loaded (t.s.n., December 14, 1972, p.
20), Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00
from Gelacio Tumambing. The latter resisted the shakedown and after a heated
argument between them, Mayor Jose Advincula drew his gun and fired at Gelacio
Tumambing (t.s.n., March 19, 1971, p. 9; September 28, 1972, pp. 6-
7).<äre||anº•1àw> The gunshot was not fatal but Tumambing had to be taken to a
hospital in Balanga, Bataan, for treatment (t.s.n., March 19, 1971, p. 13; September
28, 1972, p. 15).
After sometime, the loading of the scrap iron was resumed. But on December 4,
1956, Acting Mayor Basilio Rub, accompanied by three policemen, ordered captain
Filomeno Niza and his crew to dump the scrap iron (t.s.n., June 16, 1972, pp. 8-9)
where the lighter was docked (t.s.n., September 28, 1972, p. 31). The rest was
brought to the compound of NASSCO (Record on Appeal, pp. 20-22). Later on Acting
Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken
custody of the scrap iron (Stipulation of Facts, Record on Appeal, p. 40; t.s.n.,
September 28, 1972, p. 10.)
On the basis of the above findings, the respondent Court rendered a decision, the
dispositive portion of which states:
WHEREFORE, the decision appealed from is hereby reversed and
set aside and a new one entered ordering defendant-appellee
Mauro Ganzon to pay plaintiff-appellant Gelacio E. Tumambimg
the sum of P5,895.00 as actual damages, the sum of P5,000.00 as
exemplary damages, and the amount of P2,000.00 as attorney's
3
fees. Costs against defendant-appellee Ganzon.
In this petition for review on certiorari, the alleged errors in the decision of the
Court of Appeals are:
I
THE COURT OF APPEALS FINDING THE HEREIN PETITIONER GUILTY OF BREACH OF
THE CONTRACT OF TRANSPORTATION AND IN IMPOSING A LIABILITY AGAINST HIM
COMMENCING FROM THE TIME THE SCRAP WAS PLACED IN HIS CUSTODY AND
CONTROL HAVE NO BASIS IN FACT AND IN LAW.
II
THE APPELLATE COURT ERRED IN CONDEMNING THE PETITIONER FOR THE ACTS OF
HIS EMPLOYEES IN DUMPING THE SCRAP INTO THE SEA DESPITE THAT IT WAS
ORDERED BY THE LOCAL GOVERNMENT OFFICIAL WITHOUT HIS PARTICIPATION.
III
THE APPELLATE COURT FAILED TO CONSIDER THAT THE LOSS OF THE SCRAP WAS
DUE TO A FORTUITOUS EVENT AND THE PETITIONER IS THEREFORE NOT LIABLE FOR
4
LOSSES AS A CONSEQUENCE THEREOF.
The petitioner, in his first assignment of error, insists that the scrap iron had not
been unconditionally placed under his custody and control to make him liable.
However, he completely agrees with the respondent Court's finding that on
December 1, 1956, the private respondent delivered the scraps to Captain Filomeno
Niza for loading in the lighter "Batman," That the petitioner, thru his employees,
actually received the scraps is freely admitted. Significantly, there is not the
slightest allegation or showing of any condition, qualification, or restriction
accompanying the delivery by the private respondent-shipper of the scraps, or the
receipt of the same by the petitioner. On the contrary, soon after the scraps were
delivered to, and received by the petitioner-common carrier, loading was
commenced.
By the said act of delivery, the scraps were unconditionally placed in the possession
and control of the common carrier, and upon their receipt by the carrier for
transportation, the contract of carriage was deemed perfected. Consequently, the
petitioner-carrier's extraordinary responsibility for the loss, destruction or
deterioration of the goods commenced. Pursuant to Art. 1736, such extraordinary
responsibility would cease only upon the delivery, actual or constructive, by the
5
carrier to the consignee, or to the person who has a right to receive them. The fact
that part of the shipment had not been loaded on board the lighter did not impair
the said contract of transportation as the goods remained in the custody and
control of the carrier, albeit still unloaded.
The petitioner has failed to show that the loss of the scraps was due to any of the
following causes enumerated in Article 1734 of the Civil Code, namely:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Hence, the petitioner is presumed to have been at fault or to have acted
6
negligently. By reason of this presumption, the court is not even required to make
an express finding of fault or negligence before it could hold the petitioner
answerable for the breach of the contract of carriage. Still, the petitioner could
have been exempted from any liability had he been able to prove that he observed
extraordinary diligence in the vigilance over the goods in his custody, according to
all the circumstances of the case, or that the loss was due to an unforeseen event
or to force majeure. As it was, there was hardly any attempt on the part of the
petitioner to prove that he exercised such extraordinary diligence.
It is in the second and third assignments of error where the petitioner maintains
that he is exempt from any liability because the loss of the scraps was due mainly to
the intervention of the municipal officials of Mariveles which constitutes a caso
7
fortuito as defined in Article 1174 of the Civil Code.
We cannot sustain the theory of caso fortuito. In the courts below, the petitioner's
defense was that the loss of the scraps was due to an "order or act of competent
public authority," and this contention was correctly passed upon by the Court of
Appeals which ruled that:
... In the second place, before the appellee Ganzon could be
absolved from responsibility on the ground that he was ordered
by competent public authority to unload the scrap iron, it must be
shown that Acting Mayor Basilio Rub had the power to issue the
disputed order, or that it was lawful, or that it was issued under
legal process of authority. The appellee failed to establish this.
Indeed, no authority or power of the acting mayor to issue such
an order was given in evidence. Neither has it been shown that
the cargo of scrap iron belonged to the Municipality of Mariveles.
What we have in the record is the stipulation of the parties that
the cargo of scrap iron was accilmillated by the appellant through
separate purchases here and there from private individuals
(Record on Appeal, pp. 38-39). The fact remains that the order
given by the acting mayor to dump the scrap iron into the sea was
part of the pressure applied by Mayor Jose Advincula to
shakedown the appellant for P5,000.00. The order of the acting
mayor did not constitute valid authority for appellee Mauro
Ganzon and his representatives to carry out.
Now the petitioner is changing his theory to caso fortuito. Such a change of theory
on appeal we cannot, however, allow. In any case, the intervention of the municipal
officials was not In any case, of a character that would render impossible the
fulfillment by the carrier of its obligation. The petitioner was not duty bound to
obey the illegal order to dump into the sea the scrap iron. Moreover, there is
absence of sufficient proof that the issuance of the same order was attended with
such force or intimidation as to completely overpower the will of the petitioner's
employees. The mere difficulty in the fullfilment of the obligation is not
considered force majeure. We agree with the private respondent that the scraps
could have been properly unloaded at the shore or at the NASSCO compound, so
that after the dispute with the local officials concerned was settled, the scraps
could then be delivered in accordance with the contract of carriage.
There is no incompatibility between the Civil Code provisions on common carriers
8 9
and Articles 361 and 362 of the Code of Commerce which were the basis for this
Court's ruling in Government of the Philippine Islands vs. Ynchausti & Co.10 and
which the petitioner invokes in tills petition. For Art. 1735 of the Civil Code,
conversely stated, means that the shipper will suffer the losses and deterioration
arising from the causes enumerated in Art. 1734; and in these instances, the burden
of proving that damages were caused by the fault or negligence of the carrier rests
upon him. However, the carrier must first establish that the loss or deterioration
was occasioned by one of the excepted causes or was due to an unforeseen event
or to force majeure. Be that as it may, insofar as Art. 362 appears to require of the
carrier only ordinary diligence, the same is .deemed to have been modified by Art.
1733 of the Civil Code.

Finding the award of actual and exemplary damages to be proper, the same will not
be disturbed by us. Besides, these were not sufficiently controverted by the
petitioner.

WHEREFORE, the petition is DENIED; the assailed decision of the Court of Appeals is
hereby AFFIRMED. Costs against the petitioner.

This decision is IMMEDIATELY EXECUTORY.

Yap, C.J., Paras and Padilla, JJ., concur.