Transportation Law (Atty. Ampil) Case Digests

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TRANSPORTATION LAW | ATTY. AMPIL
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Mendoza v. PAL
FACTS:
- Mendoza was the owner of the Cita Theater located in the
City of Naga, Camarines Sur, where he used to exhibit
movie pictures booked from movie producers or film owners
in Manila.
- To take advantage of the yearly town fiesta at Naga, he
decided to exhibit a film which would fit the occasion. On
Aug 1948, he contracted with LVN pictures, Inc. (movie
producer in MNL) for him to show during the town fiesta the
Tagalog film entitled “Himala ng Birhen” or Miracle of the
Virgin.
- He made extensive preparations; he had 2K posters printed
and later distributed not only in the City of Naga but also in
the neighboring towns. He also advertised in a weekly of
general circulation in the province. The posters and
advertisement stated that the film would be shown in the Cita
theater on the 17th and 18th of September, corresponding to
the eve and day of the fiesta itself.
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LVN Pictures Inc. delivered to the defendant Philippine
Airlines (PAL) a can containing the film "Himala ng Birhen"
consigned to the Cita Theater. This can of films was loaded
on flight 113 of PAL.

-

For reasons not explained by PAL, but which would appear
to be the fault of its employees or agents, this can of film
was not unloaded at Pili Air Port and it was brought back to
Manila.

-

Mendoza who had completed all arrangements for the
exhibition of the film, went to the Air Port and inquired from
the defendant's station master there about the can of film.
Said station master could not explain why the film was not
unloaded and sent several radiograms to his principal in

Manila making inquiries and asking that the film be sent to
Naga immediately.
-

After investigation and search in the Manila office, the film
was finally located the following day (Sept 18) and then
shipped to the Pili Air Port on Sept 20.

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Mendoza received it and exhibited the film but he had
missed his opportunity to realize a large profit as he
expected for the people after the fiesta had already left for
their towns.

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Mendoza brought this action against the PAL. After trial, the
lower court found that because of his failure to exhibit the
film "Himala ng Birhen" during the town fiesta, Mendoza
suffered damages or rather failed to earn profits in the
amount of P3K but finding the PAL not liable for said
damages, dismissed the complaint.

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PAL claimed that under paragraph 6 of the Way Bill printed
on the back thereof, there was no obligation on its part to
carry the film in question on any specified time, it could not
be held accountable for the delay of about three days.
RTC found that although the defendant was not obligated to
load the film on any specified plane or on any particular day,
once said can film was loaded and shipped on one of its
planes making trip to Camarines, then it assumed the
obligation to unload it at its point of destination and deliver it
to the consignee, and its unexplained failure to comply with
this duty constituted negligence. It however found that fraud
was not involved and that defendant was debtor in GF.
RTC held that not because plaintiff failed to realize profits in
the sum of P3K due to the negligence of the defendant,
should the latter be made to reimburse him said sum.
Applying provisions of Art. 1107 of the Civil Code which

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provides that losses and those foreseen, or which might
have been foreseen, at the time of constituting the
obligation, and which are a necessary consequence of
the failure to perform it, the trial court held that
inasmuch as these damages suffered by Mendoza were
not foreseen or could not have been foreseen at the time
that the defendant accepted the can of film for shipment,
for the reason that neither the shipper LVN Pictures Inc.
nor the consignee Mendoza had called its attention to
the special circumstances attending the shipment and
the showing of the film during the town fiesta of Naga,
plaintiff may not recover the damages sought.
-

Counsel for appellant insists that the articles of the Code of
Commerce rather than those of the Civil Code should have
been applied in deciding this case for the reason that the
shipment of the can of film is an act of commerce. It argued
that although the contract of transportation was not by land
or waterways as defined in said Art. 349, nevertheless, air
transportation being analogous to land and water
transportation, should be considered as included,
especially in view of the second paragraph of Art. 2 of
the same Code which says that transactions covered by
the Code of Commerce and all others of analogous
character shall be deemed acts of commerce. The trial
court, however, disagreed to this contention and opined that
air transportation not being expressly covered by the Code
of Commerce, cannot be governed by its provisions.

ISSUE:
- W/N PAL is a common carrier?
- W/N PAL is liable for the late delivery of goods to consignee
Mendoza?

RULING:
1) YES. The obvious reason for its non-inclusion in the Code of
Commerce was that at the time of its promulgation, transportation by
air on a commercial basis was not yet known. In the United Sates
where air transportation has reached its highest development, an
airline company engaged in the transportation business is regarded
as a common carrier. There can be no doubt, under the general law
of common carriers, that those air lines and aircraft owners engaged
in the passenger service on regular schedules on definite routes,
who solicit the patronage of the traveling public, advertise schedules
for routes, time of leaving, and rates of fare, and make the usual
stipulation as to baggage, are common carriers by air.
2) NO. Under Art. 1107 of the Civil Code, a debtor in good faith like
the defendant herein, may be held liable only for damages that were
foreseen or might have been foreseen at the time the contract of the
transportation was entered into. The trial court correctly found that
the defendant company could not have foreseen the damages that
would be suffered by Mendoza upon failure to deliver the can of film
on the 17th of September, 1948 for the reason that the plans of
Mendoza to exhibit that film during the town fiesta and his
preparations, specially the announcement of said exhibition by
posters and advertisement in the newspaper, were not called to the
defendant's attention.
Common carriers are not obligated by law to carry and to deliver
merchandise, and persons are not vested with the right of 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.

Maritime Co. v. CA
FACTS:
- Rizal Surety was the insurer of 800 packages of PVC
compound loaded on the SS Doña Nati (owned by National

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Development Company whereas the petitioner Martime Co
was its agent) at Yokohama and consigned to the Acme
Electrical Manufacturing Company.
NDC had appointed petitioner Maritime as its agent to
manage and operate 3 vessels owned by it, including the
SS Doña Nati for and in its behalf and account, and for a
determinate period or payment of all guarantees made by
Maritime Co for account of the vessels (ship agent under
COC)
The subject goods were never delivered to the consignee so
that Rizal as insurer paid consignee the sum of P38K.
The cause of the non-delivery of the goods, from the
evidence presented by NDC and Martime Co. is that the
SS Doña Nati was rammed by M/V Yasushima Maru,
causing damage to the hull of the SS Doña Nati and the
resultant flooding of the holds damaged beyond repair the
goods of the consignee in question.
Rizal Surety & Insurance Co. sued both defendants for the
recovery of the sum of money paid by it as insurer for the
value of the goods lost in transit on board SS Doña Nati.
RTC dismissed the complaint and held that under the Code
of Commerce, it would be the vessel at fault in this collision
that would be responsible for the damage to the cargo. And
the evidence of both Defendants, which has not been
rebutted, is that the M/V Yasushima Maru was at fault in the
collision, so that the cause of action of plaintiff should be
directed to the owners of the negligent vessel. However, as
Plaintiff has brought this action in good faith, attorney's fees
are not recoverable.
Rizal Surety elevated the case to the CA. CA set aside
RTC’s judgment and ordered NDC and Maritime Co. to pay
jointly and severally to Rizal Surety the sum of P38,758.50
with legal rate of interest from the filing of the complaint.

ISSUE: W/N NDC and Maritime Co are liable to petitioner?
RULING:

YES. Under the established facts, and in accordance with Article
1734 above mentioned, petitioner Maritime Co. and NDC, as
"common carriers," are liable to Acme for "the loss, destruction or
deterioration of the goods," and may be relieved of responsibility if
the loss, etc., is due to any of the following causes only:
1. Flood, storm, earthquakes, 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.'

Since none of the specified absolutory causes is present, the
carrier's liability is clear. The petitioner's other claim that the loss of
the goods was due entirely to the fault of the Japanese vessel,
Yasushima Maru, which rammed into the Doña Nati cannot be
sustained. CA found, as a fact, after a review and study of the
evidence, that the Doña Nati "did not exercise even due
diligence to avoid the collision.' Having failed to exercise
extraordinary diligence to avoid any loss of life and property, as
commanded by law, not having in fact exercised "even due
diligence to avoid the collision,' it must be held responsible for
the loss of the goods in question. Besides, as remarked by the
Court of Appeals, "the principal cause of action is not derived from a

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maritime collision, but rather, from a contract of carriage, as
evidenced by the bill of lading."

De Guzman v. CA and Cendana
FACTS:
- Respondent Ernesto Cendana, a junk dealer, was engaged
in buying up used bottles and scrap metal in Pangasinan
which he would bring to Manila for resale. He utilized two (2)
six-wheeler trucks which he owned for hauling the material to
Manila.
- On the return trip to Pangasinan, respondent would load his
vehicles with cargo which various merchants wanted
delivered to differing establishments in Pangasinan. For that
service, respondent charged freight rates which were
commonly lower than regular commercial rates.
- Sometime in November 1970, petitioner Pedro de Guzman a
merchant and authorized dealer of General Milk Company
(Philippines), Inc. in Urdaneta, Pangasinan, contracted with
respondent for the hauling of 750 cartons of Liberty filled
milk from a warehouse of General Milk in Makati, Rizal,
to petitioner's establishment in Urdaneta on or before 4
December 1970.
-

-

Accordingly, respondent loaded in Makati the merchandise
on to his trucks: 150 cartons were loaded on a truck driven
by respondent himself, while 600 cartons were placed on
board the other truck which was driven by Manuel Estrada,
respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to
petitioner. The other 600 boxes never reached petitioner,
since the truck which carried these boxes was hijacked
somewhere along the MacArthur Highway in Paniqui,

Tarlac, by armed men who took with them the truck, its
driver, his helper and the cargo.
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De Guzman commenced action against Cendena in the CFI
of Pangasinan, demanding payment of P 22,150
representing the claimed value of the lost merchandise, plus
damages and attorney's fees. Petitioner argued that private
respondent, being a common carrier, and having failed to
exercise the extraordinary diligence required of him by the
law, should be held liable for the value of the undelivered
goods.

-

Cendena denied that he was a common carrier and argued
that he could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.

-

RTC found private respondent to be a common carrier and
held him liable for the value of the undelivered goods as well
as P4K as damages and P 2K as attorney's fees.

-

CA reversed the judgment of the trial court and held that
respondent had been engaged in transporting return loads of
freight "as a casual occupation — a sideline to his scrap iron
business" and not as a common carrier.

ISSUE/S:
- W/N Cendena may, under the facts presented, be properly
characterized as a common carrier?
- W/N Cendena, assuming it is a common carrier, may be held
liable for the loss of goods?
RULING:
1. YES. It appears to the Court that private respondent is properly
characterized as a common carrier even though he merely "back-

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hauled" goods for other merchants from Manila to Pangasinan,
although such back-hauling was done on a periodic or
occasional rather than regular or scheduled manner, and even
though private respondent's principal occupation was not the
carriage of goods for others. There is no dispute that private
respondent charged his customers a fee for hauling their goods; that
fee frequently fell below commercial freight rates is not relevant here.
A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person or
firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the
applicable regulatory statute and implementing regulations and
has been granted a certificate of public convenience or other
franchise. To exempt private respondent from the liabilities of a
common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound
public policy; that would be to reward private respondent
precisely for failing to comply with applicable statutory
requirements.
2. NO. The specific cause alleged in the instant case — the hijacking
of the carrier's truck — does not fall within any of the five (5)
categories of exempting causes listed in Article 1734. It would follow,
therefore, that the hijacking of the carrier's vehicle must be dealt with
under the provisions of Article 1735, in other words, that the private
respondent as common carrier is presumed to have been at fault or
to have acted negligently. This presumption, however, may be
overthrown by proof of extraordinary diligence on the part of private
respondent.
The duty of extraordinary diligence in the vigilance over goods is,
under Article 1733, given additional specification not only by Articles
1734 and 1735 but also by Article 1745, numbers 4, 5 and 6.

Under Article 1745 (6) above, a common carrier is held responsible
—and will not be allowed to divest or to diminish such responsibility
— even for acts of strangers like thieves or robbers, except where
such thieves or robbers in fact acted "with grave or irresistible
threat, violence or force."
The limits of the duty of extraordinary diligence in the vigilance over
the goods carried are reached where the goods are lost as a result of
a robbery which is attended by "grave or irresistible threat, violence
or force."
In the instant case, armed men held up the second truck owned by
private respondent which carried petitioner's cargo. The record
shows that the accused were charged with willfully and unlawfully
taking and carrying away with them the second truck, driven by
Manuel Estrada and loaded with the 600 cartons of Liberty filled
milk destined for delivery at petitioner's store in Urdaneta,
Pangasinan. The decision of the trial court shows that the accused
acted with grave, if not irresistible, threat, violence or force. Three (3)
of the five (5) hold-uppers were armed with firearms. The robbers not
only took away the truck and its cargo but also kidnapped the driver
and his helper, detaining them for several days and later releasing
them in another province (in Zambales). The hijacked truck was
subsequently found by the police in Quezon City. CFI convicted all
the accused of robbery, though not of robbery in band.
Thus, the occurrence of the loss must reasonably be regarded as
quite beyond the control of the common carrier and properly
regarded as a fortuitous event. It is necessary to recall that even
common carriers are not made absolute insurers against all
risks of travel and of transport of goods, and are not held liable

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for acts or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the rigorous
standard of extraordinary diligence.

Bascos v. CA
FACTS:
- Rodolfo Cipriano representing CIPTRADE entered into a
hauling contract with Jibfair Shipping Agency Corporation
whereby CIPTRADE bound itself to haul the latter's 2,000
m/tons of soya bean meal from Magallanes Drive, Del Pan,
Manila to the warehouse of Purefoods Corporation in
Calamba, Laguna.
- To carry out its obligation, CIPTRADE, through Rodolfo
Cipriano, subcontracted with Estrellita Bascos (petitioner) to
transport and to deliver 400 sacks of soya bean meal worth
P156,404 from the Manila Port Area to Calamba, Laguna at
the rate of P50/metric ton.
- Petitioner Bascos failed to deliver the said cargo. As a
consequence of that failure, Cipriano paid Jibfair Shipping
Agency the amount of the lost goods in accordance with the
contract which stated that: “CIPTRADE shall be held liable
and answerable for any loss in bags due to theft, hijacking
and non-delivery or damages to the cargo during transport at
market value”
- Cipriano demanded reimbursement from Bascos but the
latter refused to pay. Eventually, Cipriano filed a complaint
for a sum of money and damages with writ of preliminary
attachment for breach of a contract of carriage.
- RTC rendered a decision in favor of CIPTRADE. CA
affirmed.

ISSUE/S:
-

Was petitioner a common carrier? YES

-

Was the hijacking referred to a force majeure? NO

RULING:
1) Article 1732 of the Civil Code defines a common carrier as "(a)
person, corporation or firm, or association engaged in the business
of carrying or transporting passengers or goods or both, by land,
water or air, for compensation, offering their services to the public."
The test to determine a common carrier is "whether the given
undertaking is a part of the business engaged in by the carrier
which he has held out to the general public as his occupation
rather than the quantity or extent of the business transacted." In
this case, petitioner herself has made the admission that she was in
the trucking business, offering her trucks to those with cargo to
move. Judicial admissions are conclusive and no evidence is
required to prove the same.
2) Common carriers are obliged to observe extraordinary diligence in
the vigilance over the goods transported by them. Accordingly, they
are presumed to have been at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated. There are very few
instances when the presumption of negligence does not attach and
these instances are enumerated in Article 1734. In those cases
where the presumption is applied, the common carrier must prove
that it exercised extraordinary diligence in order to overcome the
presumption.
To exculpate the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave or irresistible
threat, violence, or force by virtue of Art. 1745 (6).
Both the trial court and the Court of Appeals have concluded that the
affidavits presented by petitioner were not enough to overcome the
presumption. Petitioner's affidavit about the hijacking was based on
what had been told her by Juanito Morden. It was not a first-hand
account. The affidavit of Jesus Bascos did not dwell on how the
hijacking took place. Moreover, while the affidavit of Juanito Morden,
the truck helper in the hijacked truck, was presented as evidence in

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court, he himself was a witness as could be gleaned from the
contents of the petition. Affidavits are not considered the best
evidence if the affiants are available as witnesses. The subsequent
filing of the information for carnapping and robbery against the
accused named in said affidavits did not necessarily mean that the
contents of the affidavits were true because they were yet to be
determined in the trial of the criminal cases.
The presumption of negligence was raised against petitioner. It was
petitioner's burden to overcome it. Thus, contrary to her assertion,
private respondent need not introduce any evidence to prove her
negligence. Her own failure to adduce sufficient proof of
extraordinary diligence made the presumption conclusive against
her.
First Philippine Industrial Corp v. CA
FACTS:
- Petitioner is a grantee of a pipeline concession under RA No.
387, as amended, to contract, install and operate oil
pipelines. The original pipeline concession was granted in
1967 and renewed by the Energy Regulatory Board in 1992.
- Petitioner applied for a mayor's permit with the Office of the
Mayor of Batangas City. However, before the mayor's permit
could be issued, the respondent City Treasurer required
petitioner to pay a local tax based on its gross receipts for
the fiscal year 1993 pursuant to the Local Government
Code .The respondent City Treasurer assessed a business
tax on the petitioner based on the gross receipts for products
pumped at GPS-1 for the fiscal year 1993. In order not to
hamper its operations, petitioner paid the tax under protest
for the first quarter of 1993.
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Petitioner filed a letter-protest addressed to the respondent
City Treasurer which asserts the fact that FPIC is a pipeline

operator granted with a government concession under the
Petroleum Act and as such, is exempt from paying tax on
gross receipts under Sec. 133(h) of the LGC. It also asserted
that transportation contractors are not included in the
enumeration of contractors under Sec. 131(e) of the LGC,
thus, the authority to impose tax "on contractors and other
independent contractors" under this provision does not
include
- Respondent City Treasurer denied the protest contending
that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption
under Section 133 (j) of the Local Government Code.
- Petitioner filed with the RTC of Batangas City a complaint for
tax refund with prayer for writ of preliminary injunction
against respondents City of Batangas and Adoracion
Arellano in her capacity as City Treasurer.
- Respondents argued that petitioner cannot be exempt from
taxes under Section 133 (j) of the Local Government Code
as said exemption applies only to "transportation contractors
and persons engaged in the transportation by hire and
common carriers by air, land and water." They assert that
pipelines are not included in the term "common carrier"
which refers solely to ordinary carriers such as trucks, trains,
ships and the like and that the term "common carrier" under
the said code pertains to the mode or manner by which a
product is delivered to its destination.
- RTC dismissed the complaint and ruled that FIPC is not a
common carrier but a special carrier extending its services
and facilities to a single specific customer under a special
contract.
- CA affirmed RTC’s Decision.
ISSUE: W/N petitioner – an oil pipeline owner – is a common carrier?
RULING:

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YES. A "common carrier" may be defined, broadly, as one who holds
himself out to the public as engaged in the business of transporting
persons or property from place to place, for compensation, offering
his services to the public generally.

public employment. It undertakes to carry for all persons indifferently,
that is, to all persons who choose to employ its services, and
transports the goods by land and for compensation. The fact that
petitioner has a limited clientele does not exclude it from the
definition of a common carrier.

Art. 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public."

As correctly pointed out by petitioner, the definition of "common
carriers" in the Civil Code makes no distinction as to the means of
transporting, as long as it is by land, water or air. It does not provide
that the transportation of the passengers or goods should be by
motor vehicle. In fact, in the United States, oil pipe line operators are
considered common carriers.

The test for determining whether a party is a common carrier of
goods is:
1. He must be engaged in the business of carrying goods for
others as a public employment, and must hold himself out as
ready to engage in the transportation of goods for person
generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his
business is confined;
3. He must undertake to carry by the method by which his
business is conducted and over his established roads; and
4. The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt
that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as a

Under the Petroleum Act of the Philippines (RA 387), petitioner is
considered a "common carrier." Thus, Article 86 thereof provides
that:
Art. 86. Pipe line concessionaire as common carrier. — A
pipe line shall have the preferential right to utilize
installations for the transportation of petroleum owned by
him, but is obligated to utilize the remaining transportation
capacity pro rata for the transportation of such other
petroleum as may be offered by others for transport, and to
charge without discrimination such rates as may have been
approved by the Secretary of Agriculture and Natural
Resources.
Republic Act 387 also regards petroleum operation as a public utility.
Pertinent portion of Article 7 thereof provides:
that everything relating to the exploration for and
exploitation of petroleum . . . and everything relating to
the manufacture, refining, storage, or transportation by
special methods of petroleum, is hereby declared to be
a public utility.
The Bureau of Internal Revenue likewise considers the petitioner a
"common carrier." In BIR Ruling No. 069-83, it declared:

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. . . since [petitioner] is a pipeline concessionaire that is
engaged only in transporting petroleum products, it is
considered a common carrier under Republic Act No. 387
. . . . Such being the case, it is not subject to withholding
tax prescribed by Revenue Regulations No. 13-78, as
amended.

From the foregoing disquisition, there is no doubt that petitioner is a
"common carrier" and, therefore, exempt from the business tax as
provided for in Section 133 (j), of the Local Government Code, to wit:

Sec. 133.Common Limitations on the Taxing Powers of
Local Government Units. — Unless otherwise provided
herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of
the following:
xxx
(j) Taxes on the gross receipts of transportation contractors
and persons engaged in the transportation of passengers or
freight by hire and common carriers by air, land or water,
except as provided in this Code.
Calvo v. UCPB Gen Insurance
FACTS:
- Virgines Calvo is the owner of Transorient Container
Terminal Services, Inc (TCTSI), a sole proprietorship
customs broker. Calvo entered into a contract with San
Miguel Corporation (SMC) for the transfer of 114 reels of
semi-chemical fluting paper and 124 reels of kraft liner board

from the Port Area in Manila to SMC's warehouse at the
Tabacalera Compound, Romualdez St., Ermita, Manila. The
cargo was insured by respondent UCPB General Insurance
Co., Inc.
-

On July 14, 1990, the shipment in question, contained in 30
metal vans, arrived in Manila on board "M/V Hayakawa
Maru" and, after 24 hours, were unloaded from the vessel to
the custody of the arrastre operator, Manila Port Services,
Inc.

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From July 23 to July 25, 1990, petitioner, pursuant to her
contract with SMC, withdrew the cargo from the arrastre
operator and delivered it to SMC's warehouse in Ermita,
Manila.

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On July 25, 1990, the goods were inspected by Marine
Cargo Surveyors, who found that 15 reels of the semichemical fluting paper were "wet/stained/torn" and 3
reels of kraft liner board were likewise torn. The damage
was placed at P93,112.

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SMC collected payment from respondent UCPB under its
insurance contract for the aforementioned amount.

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As subrogee of SMC, UCPB brought suit against petitioner
in the RTC which rendered judgment finding petitioner Calvo
liable to respondent for the damage to the shipment. It held
that defendant by reason of the nature of [her] business
should have devised ways and means in order to prevent the
damage to the cargoes which it is under obligation to take
custody of and to forthwith deliver to the consignee. It held
that Calvo did not present any evidence on what precaution
she performed to prevent the said incident, hence the

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presumption is that the moment the defendant accepts the
cargo she shall perform such extraordinary diligence
because of the nature of the cargo.
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the passengers transported by them, according to all the
circumstances of each case. . . .

CA affirmed RTC’s decision.
Petitioner contends that contrary to the findings of the trial
court and the CA, she is not a common carrier but a private
carrier because, as a customs broker and warehouseman,
she does not indiscriminately hold her services out to the
public, but only offers the same to select parties with whom
she may contract in the conduct of her business.

ISSUE: W/N petitioner is a common carrier and is thus liable to
respondent? YES
RULING:
There is greater reason for holding petitioner to be a common carrier
because the transportation of goods is an integral part of her
business. To uphold petitioner's contention would be to deprive those
with whom she contracts the protection which the law affords them
notwithstanding the fact that the obligation to carry goods for her
customers, as already noted, is part and parcel of petitioner's
business.

In the case at bar, petitioner denies liability for the damage to the
cargo. She claims that the "spoilage or wettage" took place while the
goods were in the custody of either the carrying vessel "M/V
Hayakawa Maru," which transported the cargo to Manila, or the
arrastre operator, to whom the goods were unloaded and who
allegedly kept them in open air for nine days from July
notwithstanding the fact that some of the containers were deformed,
cracked or otherwise damaged.
Contrary to petitioner's assertion, the Survey Report of the Marine
Cargo Surveyors indicates that when the shipper transferred the
cargo in question to the arrastre operator, these were covered by
clean Equipment Interchange Report (EIR) and, when petitioner's
employees withdrew the cargo from the arrastre operator, they did so
without exception or protest either with regard to the condition of
container vans or their contents.
To put it simply, Calvo received the shipment in good order and
condition and delivered the same to the consignee damaged. CA can
only conclude that the damages to the cargo occurred while it was in
the possession of the defendant-appellant. Whenever the thing is
lost (or damaged) in the possession of the debtor (or obligor), it
shall be presumed that the loss (or damage) was due to his
fault, unless there is proof to the contrary. No proof was
proffered to rebut this legal presumption and the presumption
of negligence attached to a common carrier in case of loss or
damage to the goods.

Now, as to petitioner's liability, Art. 1733 of the Civil Code provides:
Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of

Anent petitioner's insistence that the cargo could not have been
damaged while in her custody as she immediately delivered the
containers to SMC's compound, suffice it to say that to prove the
exercise of extraordinary diligence, petitioner must do more than

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merely show the possibility that some other party could be
responsible for the damage. It must prove that it used "all reasonable
means to ascertain the nature and characteristic of goods tendered
for transport and that it exercised due care in the handling thereof.
Petitioner failed to do this.

-

Nor is there basis to exempt provision to apply petitioner from liability
under Art. 1734(4) because the rule is that if the improper packing or,
in this case, the defect/s in the container, is/are known to the carrier
or his employees or apparent upon ordinary observation, but he
nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for
damage resulting therefrom.14 In this case, petitioner accepted the
cargo without exception despite the apparent defects in some of the
container vans. Hence, for failure of petitioner to prove that she
exercised extraordinary diligence in the carriage of goods in this
case or that she is exempt from liability, the presumption of
negligence as provided under Art. 1735.

Home Insurance Co. v. American Steamship Agencies
FACTS:
- "Consorcio Pesquero del Peru of South America" shipped
freight pre-paid at Chimbate, Peru, 21,740 jute bags of
Peruvian fish meal through SS Crowborough on January 17,
1963. The cargo, consigned to SMC and insured by Home
Insurance Company for $202,505, arrived in Manila on

March 7, 1963 and was discharged into the lighters of Luzon
Stevedoring Company.
When the cargo was delivered to consignee San Miguel
Brewery Inc/SMC there were shortages amounting to
P12,033.85, causing SMC to lay claims against Luzon
Stevedoring Corporation, Home Insurance Company and
the American Steamship Agencies, owner and operator
of SS Crowborough.
Because the others denied liability, Home Insurance
Company paid the consignee P14,870.71 — the
insurance value of the loss, as full settlement of the
claim.

-

Having been refused reimbursement by both the Luzon
Stevedoring Corporation and American Steamship Agencies,
Home Insurance Company, as subrogee to the consignee,
filed against them before the CFI a complaint for recovery of
P14,870.71 with legal interest, plus attorney's fees.

-

In answer, Luzon Stevedoring Corporation alleged that it
delivered with due diligence the goods in the same quantity
and quality that it had received the same from the carrier.

-

American Steamship Agencies OTOH, denied liability by
alleging that under the provisions of the Charter party
referred to in the bills of lading, the charterer, not the
shipowner, was responsible for any loss or damage of the
cargo. Furthermore, it claimed to have exercised due
diligence in stowing the goods and that as a mere forwarding
agent, it was not responsible for losses or damages to the
cargo.

-

CFI absolved Luzon Stevedoring Corporation, having found
the latter to have merely delivered what it received from the

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carrier in the same condition and quality, and ordered
American Steamship Agencies to pay plaintiff. It held that the
non-liability claim of American Steamship Agencies under
the charter party contract is not tenable because Article 587
of the Code of Commerce makes the ship agent also civilly
liable for damages in favor of third persons due to the
conduct of the captain of the carrier; the stipulation in the
charter party contract exempting the owner from liability is
against public policy under Article 1744 of the Civil Code; In
case of loss, destruction or deterioration of goods, common
carriers are presumed at fault or negligent under Article 1735
of the Civil Code unless they prove extraordinary diligence,
and they cannot by contract exempt themselves from liability
resulting from their negligence or that of their servants; and
when goods are delivered to the carrier in good order and
the same are in bad order at the place of destination, the
carrier is prima facie liable.

ISSUE: Is the stipulation in the charter party of the owner's nonliability valid so as to absolve the American Steamship Agencies from
liability for loss? NO

the liability of the shipowner for acts or negligence of its captain and
crew, would remain in the absence of stipulation.

Section 2, paragraph 2 of the charter party, provides that the owner
is liable for loss or damage to the goods caused by personal want of
due diligence on its part or its manager to make the vessel in all
respects seaworthy and to secure that she be properly manned,
equipped and supplied or by the personal act or default of the owner
or its manager. Said paragraph, however, exempts the owner of the
vessel from any loss or damage or delay arising from any other
source, even from the neglect or fault of the captain or crew or some
other person employed by the owner on board, for whose acts the
owner would ordinarily be liable except for said paragraph.

The provisions of our Civil Code on common carriers were taken
from Anglo-American law. Under American jurisprudence, a common
carrier undertaking to carry a special cargo or chartered to a special
person only, becomes a private carrier. As a private carrier, a
stipulation exempting the owner from liability for the negligence of its
agent is not against public policy, and is deemed valid.

RULING:
A perusal of the charter party referred to shows that while the
possession and control of the ship were not entirely transferred to
the charterer, the vessel was chartered to its full and complete
capacity. Furthermore, the, charter had the option to go north or
south or vice-versa, loading, stowing and discharging at its risk and
expense. Accordingly, the charter party contract is one of
affreightment over the whole vessel rather than a demise. As such,

The Civil Code provisions on common carriers should not be applied
where the carrier is not acting as such but as a private carrier. The
stipulation in the charter party absolving the owner from liability for
loss due to the negligence of its agent would be void only if the strict
public policy governing common carriers is applied. Such policy has

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no force where the public at large is not involved, as in the case of a
ship totally chartered for the use of a single party.

-

And furthermore, in a charter of the entire vessel, the bill of lading
issued by the master to the charterer, as shipper, is in fact and legal
contemplation merely a receipt and a document of title not a
contract, for the contract is the charter party. The consignee may not
claim ignorance of said charter party because the bills of lading
expressly referred to the same. Accordingly, the consignees under
the bills of lading must likewise abide by the terms of the charter
party. And as stated, recovery cannot be had thereunder, for loss or
damage to the cargo, against the shipowners, unless the same is
due to personal acts or negligence of said owner or its manager, as
distinguished from its other agents or employees. In this case, no
such personal act or negligence has been proved.

-

-

Valenzuela Hardwood and Industrial Supply v. CA
FACTS:
- Valenzuela Hardwood and Industrial Supply, Inc. (VHIS)
entered into an agreement with the defendant Seven
Brothers (Shipping Corporation) whereby the latter
undertook to load on board its vessel M/V Seven
Ambassador the VHIS’ lauan round logs numbering 940 at
the port of Maconacon, Isabela for shipment to Manila.
- VIHS insured the logs against loss and/or damage with
defendant South Sea Surety and Insurance Co., Inc. for P2M
and the latter issued its Marine Cargo Insurance Policy No.

-

In the meantime, the said vessel M/V Seven Ambassador
sank on Jan 25 resulting in the loss of the plaintiff's insured
logs.
A check for P5625 to cover payment of the premium and
documentary stamps due on the policy was tendered due to
the insurer but was not accepted. Instead, the South Sea
Surety and Insurance Co., Inc. cancelled the insurance
policy it issued as of the date of the inception for nonpayment of the premium due in accordance with Section 77
of the Insurance Code.
Plaintiff demanded from defendant South Sea Surety and
Insurance Co., Inc. the payment of the proceeds of the policy
but the latter denied liability under the policy. Plaintiff likewise
filed a formal claim with defendant Seven Brothers Shipping
Corporation for the value of the lost logs but the latter denied
the claim.
RTC rendered judgment in favor of plaintiff and against
defendants. The trial court deemed the charter party
stipulation exempting owners from liability for loss or any
type of breakage void for being contrary to public
policy, citing Article 1745 of the Civil Code.
Both defendants shipping corporation and the surety
company appealed.
CA affirmed in part the RTC judgment by sustaining the
liability of South Sea Surety and Insurance Company but
modified it by holding that Seven Brothers Shipping
Corporation ("Seven Brothers") was not liable for the lost
cargo. It upheld the stipulation in the charter party that the
ship owner would be exempted from liability in case of loss.
It also held that the RTC erred in applying the provisions of
the Civil Code on common carriers to establish the liability of
the shipping corporation. The provisions on common carriers
should not be applied where the carrier is not acting as such
but as a private carrier. The shipping corporation should not
therefore be held liable for the loss of the logs.
It should be noted at the outset that there is no dispute
between the parties that the proximate cause of the sinking
of M/V Seven Ambassadors resulting in the loss of its cargo

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was the "snapping of the iron chains and the subsequent
rolling of the logs to the portside due to the negligence
of the captain in stowing and securing the logs on board
the vessel and not due to fortuitous event."
ISSUE:
- Whether the stipulation in the subject charter party
exempting owners for loss, split, short-landing, breakages
and any kind of damages to the cargo valid?
- Whether defendants shipping corporation and the surety
company are liable to the plaintiff for the latter's lost logs?
RULING:
1. YES. It is undisputed that private respondent had acted as
a private carrier in transporting petitioner's lauan logs. Thus, Article
1745 and other Civil Code provisions on common carriers which
were cited by petitioner may not be applied unless expressly
stipulated by the parties in their charter party.
In a contract of private carriage, the parties may validly stipulate that
responsibility for the cargo rests solely on the charterer, exempting
the shipowner from liability for loss of or damage to the cargo caused
even by the negligence of the ship captain. Pursuant to Article
1306 of the Civil Code, such stipulation is valid because it is freely
entered into by the parties and the same is not contrary to law,
morals, good customs, public order, or public policy. Indeed, their
contract of private carriage is not even a contract of adhesion. In a
contract of private carriage, the parties may freely stipulate their
duties and obligations which perforce would be binding on them.
Unlike in a contract involving a common carrier, private carriage does
not involve the general public. Hence, the stringent provisions of the
Civil Code on common carriers protecting the general public cannot
justifiably be applied to a ship transporting commercial goods as a
private carrier. Consequently, the public policy embodied therein is
not contravened by stipulations in a charter party that lessen or
remove the protection given by law in contracts involving common
carriers.

The general public enters into a contract of transportation with
common carriers without a hand or a voice in the preparation thereof.
The riding public merely adheres to the contract; even if the public
wants to, it cannot submit its own stipulations for the approval of the
common carrier. Thus, the law on common carriers extends its
protective mantle against one-sided stipulations inserted in tickets,
invoices or other documents over which the riding public has no
understanding or, worse, no choice. Compared to the general
public, a charterer in a contract of private carriage is not
similarly situated. It can — and in fact it usually does — enter
into a free and voluntary agreement. In practice, the parties in a
contract of private carriage can stipulate the carrier's
obligations and liabilities over the shipment which, in turn,
determine the price or consideration of the charter.

2. YES. In view of the above disquisition upholding the validity of the
questioned charter party stipulation and holding that petitioner may
not recover from private respondent, the present issue is moot and
academic. It suffices to state that the Resolution of this Court dated
June 2, 1995 affirming the liability of South Sea does not, by itself,
necessarily preclude the petitioner from proceeding against private
respondent. An aggrieved party may still recover the deficiency for
the person causing the loss in the event the amount paid by the
insurance company does not fully cover the loss by virtue of Article
2207 of the Civil Code.

National Steel Corp. v. CA and Vlasons Shipping Inc.
FACTS:
- The MV Vlasons I is a vessel which renders tramping service
and, as such, does not transport cargo or shipment for the
general public. Its services are available only to specific
persons who enter into a special contract of charter party

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-

-

with its owner. It is undisputed that the ship is a private
carrier. And it is in the capacity that its owner, Vlasons
Shipping, Inc., entered into a contract of affreightment or
contract of voyage charter hire with National Steel
Corporation.
Plaintiff National Steel Corporation (NSC) as Charterer and
defendant Vlasons Shipping, Inc. (VSI) as Owner, entered
into a Contract of Voyage Charter Hire whereby NSC hired
VSI's vessel, the MV "VLASONS I" to make one (1) voyage
to load steel products at Iligan City and discharge them at
North Harbor, Manila.
The parties stipulated in their contract that the terms and
conditions of the NONYOZAI Charter Party shall form part of
their terms. The terms "F.I.O.S.T." (Freight In and Out
including Stevedoring and Trading) which is used in the
shipping business is a standard provision in said Charter
Party means that the handling, loading and unloading of
the cargoes are the responsibility of the Charterer. Under
Paragraph 5 of the NANYOZAI Charter Party, it states,
"Charterers to load, stow and discharge the cargo free of
risk and expenses to owners.

-

It also stipulated that the owners shall not be liable for loss of
or damage of the cargo arising or resulting from:
unseaworthiness unless caused by want of due diligence on
the part of the owners to make the vessel seaworthy, and to
secure that the vessel is properly manned, equipped and
supplied and to make the holds and all other parts of the
vessel in which cargo is carried, fit and safe for its reception,
carriage and preservation xxx

-

In accordance with the Contract of Voyage Charter Hire, the
MV "VLASONS I" loaded at plaintiffs pier at Iligan City, the
NSC's shipment of 1,677 skids of tinplates and 92 packages

of hot rolled sheets for carriage to Manila. The shipment was
placed in the 3 hatches of the ship.
-

The vessel arrived with the cargo at North Harbor, Manila.
The following day, when the vessel's 3 hatches
containing the shipment were opened by plaintiff's
agents, nearly all the skids of tinplates and hot rolled
sheets were allegedly found to be wet and rusty.

-

The cargo was discharged and unloaded by stevedores
hired by the Charterer. Unloading was completed after
incurring a delay of 11 days due to the heavy rain which
interrupted the unloading operations.

-

MASCO (surveyor hired by the NSC) made a report of its
ocular inspection conducted on the cargo, both while it was
still on board the vessel and later at the NDC warehouse
where the cargo was taken and stored. It found wetting and
rusting of the packages of hot rolled sheets and metal covers
of the tinplates; that tarpaulin hatch covers were noted torn
at various extents; that container/metal casings of the skids
were rusting all over. MASCO ventured the opinion that
"rusting of the tinplates was caused by contact with
SEA WATER sustained while still on board the vessel as
a consequence of the heavy weather and rough seas
encountered while en route to destination”. It was also
reported that MASCO's surveyors drew at random samples
of bad order packing materials of the tinplates and delivered
the same to the M.I.T. Testing Laboratories for analysis
which affirmed MASCO’s finding.

-

On the basis of the aforesaid report, NSC filed with the
defendant its claim for damages suffered due to the

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downgrading of the damaged tinplates in the amount of
P941K.
-

-

-

Plaintiff formally demanded payment of said claim but
defendant VSI refused and failed to pay. In its complaint, it
claimed that it sustained losses as a result of the act, neglect
and default of the master and crew in the management of
the vessel as well as the want of due diligence on the part of
the defendant to make the vessel seaworthy and to make
the holds and all other parts of the vessel in which the cargo
was carried, fit and safe for its reception, carriage and
preservation — all in violation of defendant's undertaking
under their Contract of Voyage Charter Hire.
Defendant denied liability for the alleged damage claiming
that the MV "VLASONS I" was seaworthy in all respects for
the carriage of plaintiff's cargo and that said vessel was not a
"common carrier" inasmuch as she was under voyage
charter contract with the plaintiff as charterer under the
charter party.
RTC ruled in favor of defendant. It held that The MV
"VLASONS I" is a vessel of Philippine registry engaged in
the tramping service and is available for hire only under
special contracts of charter party as in this particular case. It
further held that defendant cannot be held liable for it
pursuant to Article 1734 of the Civil Case which exempts the
carrier from responsibility for loss or damage arising from the
"character of the goods . . ." All the 1,769 skids of the
tinplates could not have been damaged by water as claimed
by plaintiff but because of its own “sweating”; and that due to
the fact the vessel encountered rough seas and bad weather

on which account the master filed a Marine Protest can be
invoked as a defense of force majeure.
-

CA modified the decision of the RTC by reducing the
demurrage and deleting attorneys fees and expenses.

ISSUE:
- W/N VSI is a private/common carrier? PRIVATE
- W/N defendant may be held liable on account of the damage
of the cargo owned by plaintiff? NO
RULING:
In the instant case, it is undisputed that VSI did not offer its services
to the general public. As found by the RTC, it carried passengers or
goods only for those it chose under a "special contract of charter
party." The MV Vlasons I "was not a common but a private carrier.
Consequently, the rights and obligations of VSI and NSC, including
their respective liability for damage to the cargo, are determined
primarily by stipulations in their contract of private carriage or charter
party.
It is clear from the parties' Contract of Voyage Charter Hire that VSI
"shall not be responsible for losses except on proven willful
negligence of the officers of the vessel." The NANYOZAI Charter
Party, which was incorporated in the parties' contract of
transportation further provided that the shipowner shall not be liable
for loss of or a damage to the cargo arising or resulting from
unseaworthiness, unless the same was caused by its lack of due
diligence to make the vessel seaworthy or to ensure that the same
was "properly manned, equipped and supplied," and to "make the
holds and all other parts of the vessel in which cargo was carried, fit
and safe for its reception, carriage and preservation."
Because the MV Vlasons I was a private carrier, the shipowner's
obligations are governed by the foregoing provisions of the Code of
Commerce and not by the Civil Code which, as a general rule,
places the prima facie presumption of negligence on a common
carrier. It is a hornbook doctrine that: “In an action against a private

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carrier for loss of, or injury to, cargo, the burden is on the plaintiff to
prove that the carrier was negligent or unseaworthy, and the fact that
the goods were lost or damaged while in the carrier's custody does
not put the burden of proof on the carrier.”
Indicators of VSI’s due diligence:
a) It was drylocked and inspected by the Philippine Coast Guard
before it proceeded to Iligan City for its voyage to Manila under the
contract of voyage charter hire. The vessel's voyage from Iligan to
Manila was the vessel's first voyage after drydocking. The Philippine
Coast Guard Station in Cebu cleared it as seaworthy, fitted and
equipped; it met all requirements for trading as cargo vessel.
b) The records sufficiently support VSI's contention that the ship
used the old tarpaulin, only in addition to the new one used primarily
to make the ship's hatches watertight.
c) Despite encountering rough weather twice, the new tarpaulin did
not give way and the ship's hatches and cargo holds remained
waterproof.
Indeed, NSC failed to discharge its burden to show negligence on
the part of the officers and the crew of MV Vlasons I. On the contrary,
the records reveal that it was the stevedores of NSC who were
negligent in unloading the cargo from the ship. The stevedores
employed only a tent-like material to cover the hatches when strong
rains occasioned by a passing typhoon disrupted the unloading of
the cargo. This tent-like covering, however, was clearly inadequate
for keeping rain and seawater away from the hatches of the ship.
The charter party is a normal commercial contract and its stipulations
are agreed upon in consideration of many factors, not the least of
which is the transport price which is determined not only by the
actual costs but also by the risks and burdens assumed by the
shipper in regard to possible loss or damage to the cargo. In
recognition of such factors, the parties even stipulated that the
shipper should insure the cargo to protect itself from the risks it
undertook under the charter party. That NSC failed or neglected to
protect itself with such insurance should not adversely affect VSI,
which had nothing to do with such failure or neglect.

FGU Insurance v. GP Sarmiento Trucking and Lambert Eroles
FACTS:
- G.P. Sarmiento Trucking Corporation (GPS) undertook to
deliver 30 units of Condura S.D. white refrigerators aboard
one of its Isuzu trucks, driven by Lambert Eroles, from the
plant site of Concepcion Industries, Inc., along South
Superhighway in Alabang, Metro Manila, to the Central
Luzon Appliances in Dagupan City. While the truck was
traversing the north diversion road along McArthur
highway in Barangay Anupol, Bamban, Tarlac, it collided
with an unidentified truck, causing it to fall into a deep
canal, resulting in damage to the cargoes.
- FGU Insurance Corporation (FGU), an insurer of the
shipment, paid to Concepcion Industries, Inc., the value of
the covered cargoes in the sum of P204,450.
- FGU, in turn, being the subrogee of the rights and interests
of Concepcion Industries, Inc., sought reimbursement of the
amount it had paid to the latter from GPS.
- Since the trucking company failed to heed the claim, FGU
filed a complaint for damages and breach of contract of
carriage against GPS and its driver Lambert Eroles with the
RTC.
- Respondents asserted that GPS was the exclusive hauler
only of Concepcion Industries, Inc., since 1988, and it was
not so engaged in business as a common carrier.
Respondents further claimed that the cause of damage was
purely accidental. GPS instead of submitting evidence, filed
with leave of court a motion to dismiss the complaint by way
of demurrer to evidence on the ground that petitioner had
failed to prove that it was a common carrier.
- RTC granted the motion to dismiss. FGU appealed. CA
rejected such appeal and ruled in favor of petitioner.
ISSUE:
- W/N GPS may be considered as a common carrier as
defined under the law and existing jurisprudence? NO

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-

W/N GPS may be presumed to have been negligent when
the goods it undertook to transport safely were subsequently
damaged while in its custody? YES

RULING:
GPS, being an exclusive contractor and hauler of Concepcion
Industries, Inc., rendering or offering its services to no other
individual or entity, cannot be considered a common carrier.
Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for hire or compensation,
offering their services to the public, whether to the public in general
or to a limited clientele in particular, but never on an exclusive basis.
The true test of a common carrier is the carriage of passengers or
goods, providing space for those who opt to avail themselves of its
transportation service for a fee. Given accepted standards, GPS
scarcely falls within the term "common carrier."
The above conclusion nothwithstanding, GPS cannot escape
from liability. In culpa contractual, upon which the action of
petitioner rests as being the subrogee of Concepcion Industries, Inc.,
the mere proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief. The
law, recognizing the obligatory force of contracts, will not permit a
party to be set free from liability for any kind of misperformance of
the contractual undertaking or a contravention of the tenor thereof. A
breach upon the contract confers upon the injured party a valid
cause for recovering that which may have been lost or suffered.

Respondent trucking corporation recognizes the existence of a
contract of carriage between it and petitioner’s assured, and admits
that the cargoes it has assumed to deliver have been lost or
damaged while in its custody. In such a situation, a default on, or
failure of compliance with, the obligation – in this case, the delivery

of the goods in its custody to the place of destination - gives rise to a
presumption of lack of care and corresponding liability on the part of
the contractual obligor the burden being on him to establish
otherwise. GPS has failed to do so.

Respondent driver, on the other hand, without concrete proof of his
negligence or fault, may not himself be ordered to pay petitioner. The
driver, not being a party to the contract of carriage between
petitioner’s principal and defendant, may not be held liable under the
agreement. A contract can only bind the parties who have entered
into it or their successors who have assumed their personality or
their juridical position.Consonantly with the axiom res inter alios acta
aliis neque nocet prodest, such contract can neither favor nor
prejudice a third person. Petitioner’s civil action against the driver
can only be based on culpa aquiliana, which, unlike culpa
contractual, would require the claimant for damages to prove
negligence or fault on the part of the defendant.

Loadstar Shipping Co. v. CA and Manila Insurance Co.
FACTS:
- LOADSTAR received on board its M/V "Cherokee" the
following goods for shipment: a) 705 bales of lawanit
hardwood; b) 27 boxes and crates of tilewood assemblies
and the others; and c) 49 bundles of mouldings R & W (d)
Apitong Bolidenized.
- The goods, amounting to P6M were insured for the same
amount with respondent MIC against various risks including
"TOTAL LOSS BY TOTAL OF THE LOSS THE VESSEL."

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The vessel, in turn, was insured by Prudential Guarantee &
Assurance, Inc. (hereafter PGAI) for P4 million.
-

On its way to Manila from the port of Nasipit, Agusan del
Norte, the vessel, along with its cargo, sank off
Limasawa Island.

-

As a result of the total loss of its shipment, the consignee
made a claim with LOADSTAR which, however, ignored the
same.

-

As the insurer, MIC paid P6M to the insured in full settlement
of its claim, and the latter executed a subrogation receipt
therefor.

-

MIC filed a complaint against LOADSTAR and PGAI,
alleging that the sinking of the vessel was due to the fault
and negligence of LOADSTAR and its employees. It also
prayed that PGAI be ordered to pay the insurance proceeds
from the loss the vessel directly to MIC, said amount to be
deducted from MIC's claim from LOADSTAR.

-

LOADSTAR denied any liability for the loss of the shipper's
goods and claimed that sinking of its vessel was due to force
majeure. PGAI, on the other hand, averred that MIC had no
cause of action against it, LOADSTAR being the party
insured. In any event, PGAI was later dropped as a party
defendant after it paid the insurance proceeds to
LOADSTAR.

-

RTC rendered judgment in favor of MIC, prompting
LOADSTAR to elevate the matter to the court of Appeals,

which, however, agreed with the trial court and affirmed its
decision in toto.
-

LOADSTAR submits that the vessel was a private carrier
because it was not issued a certificate of public
convenience, it did not have a regular trip or schedule nor a
fixed route, and there was only one shipper, one consignee
for a special cargo.

ISSUE: W/N LOADSTAR is a private/common carrier?
RULING:
LOADSTAR is a common carrier. It is not necessary that the carrier
be issued a certificate of public convenience, and this public
character is not altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or unscheduled.

In support of its position, LOADSTAR relied on the 1968 case
of Home Insurance Co. v. American Steamship Agencies, Inc.,
where this Court held that a common carrier transporting special
cargo or chartering the vessel to a special person becomes a private
carrier that is not subject to the provisions of the Civil Code. Any
stipulation in the charter party absolving the owner from liability for
loss due to the negligence of its agent is void only if the strict policy
governing common carriers is upheld. Such policy has no force
where the public at is not involved, as in the case of a ship totally
chartered for the use of a single party. LOADSTAR also
cited Valenzuela Hardwood and Industrial Supply, Inc. v. Court of
Appeals and National Steel Corp. v. Court of Appeals, both of which
upheld the Home Insurance doctrine.

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These cases invoked by LOADSTAR are not applicable in the
case at bar for the simple reason that the factual settings are
different. The records do not disclose that the M/V "Cherokee," on
the date in question, undertook to carry a special cargo or was
chartered to a special person only. There was no charter party. The
bills of lading failed to show any special arrangement, but only a
general provision to the effect that the M/V"Cherokee" was a
"general cargo carrier." Further, the bare fact that the vessel was
carrying a particular type of cargo for one shipper, which appears to
be purely coincidental, is not reason enough to convert the vessel
from a common to a private carrier, especially where, as in this case,
it was shown that the vessel was also carrying passengers.

Under the facts and circumstances obtaining in this case,
LOADSTAR fits the definition of a common carrier under Article
1732 of the Civil Code. The SC upheld the doctrine enshrined in De
Guzman v. Court of Appeals, where the Court juxtaposed the
statutory definition of "common carriers" with the peculiar
circumstances of that case. Art. 1732 makes no distinction between
one whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only
as ancillary activity. Article 1732 also carefully avoids making any
distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither
does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and
one who offers services or solicits business only from a
narrow segment of the general population.

A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person or
firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the
applicable regulatory statute and implementing regulations and
has been granted a certificate of public convenience or other
franchise.

As regards the issue of seaworthiness of M/V Cherokee, the Court
found that the subject vessel was not seaworthy when it embarked
on its voyage on 19 November 1984. The vessel was not even
sufficiently manned at the time. "For a vessel to be seaworthy, it must
be adequately equipped for the voyage and manned with a sufficient
number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a
contract of carriage is a clear breach of its duty prescribed in Article
1755 of the Civil Code."
Arada v. CA
FACTS:
- Petitioner Alejandro Arada is the proprietor and operator of
the firm South Negros Enterprises which has been
organized and established for more than 10 years. It is
engaged in the business of small scale shipping as a
common carrier, servicing the hauling of cargoes of different
corporations and companies with the 5 vessels it was
operating.
- On March 24, 1982, petitioner entered into a contract with
private respondent to safely transport as a common carrier,
cargoes of the latter from San Carlos City, Negros
Occidental to Mandaue City using one of petitioner's vessels,
M/L Maya. The cargoes of private respondent San Miguel

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-

-

-

-

-

-

-

Corporation consisted of 9,824 cases of beer empties valued
at P176,824.80.
Petitioner thru its crew master, Mr. Vivencio Babao, applied
for a clearance with the Philippine Coast Guard for M/L Maya
to leave the port of San Carlos City, but due to a typhoon, it
was denied clearance.
The next day, M/L Maya was given clearance as there was
no storm and the sea was calm. Hence, said vessel left for
Mandaue City. While it was navigating towards Cebu, a
typhoon developed and said vessel was buffeted on all
its sides by big waves. Its rudder was destroyed and it
drifted for sixteen (16) hours although its engine was
running.
At about 4:00 a.m., the vessel sank with whatever was left of
its cargoes. The crew was rescued by a passing pump boat
and was brought to Calanggaman Island. Later in the
afternoon, they were brought to Palompon, Leyte, where
Vivencio Babao filed a marine protest.
On the basis of such marine protest, the Board of Marine
Inquiry recommended that the owner/operator, officers and
crew of M/L Maya be exonerated or absolved from any
administrative liability on account of this incident.
The Board's report containing its findings and
recommendation was then forwarded to the headquarters of
the Philippine Coast Guard for appropriate action. On the
basis of such report, the Commandant of the Philippine
Coast Guard rendered a decision exonerating the
owner/operator officers and crew of the ill-fated M/L Maya
from any administrative liability on account of said incident.
SMC filed a complaint in the RTC its first cause of action
being for the recovery of the value of the cargoes anchored
on breach of contract of carriage. RTC dismissed the
plaintiff’s claim on the basis of its first cause of action.
SMC appealed to the CA. CA reversed the decision and
Arada was ordered to pay unto the appellant SMC. It ruled
that "in view of his failure to observe extraordinary diligence
over the cargo in question and his negligence previous to the

sinking of the carrying vessel, as above shown, the appellee
is liable to the appellant for the value of the lost cargo
ISSUE: Whether or not petitioner is liable for the value of the lost
cargoes? YES
RULING:
There is no doubt that petitioner was exercising its function as a
common carrier when it entered into a contract with private
respondent to carry and transport the latter's cargoes.
A common carrier, both from the nature of its business and for
insistent reasons of public policy is burdened by law with the duty of
exercising extraordinary diligence not only in ensuring the safety of
passengers, but in caring for the goods transported by it. The loss or
destruction or deterioration of goods turned over to the common
carrier for the conveyance to a designated destination raises
instantly a presumption of fault or negligence on the part of the
carrier, save only where such loss, destruction or damage arises
from extreme circumstances such as a natural disaster or calamity.
In order that the common carrier may be exempted from
responsibility,
the
natural
disaster
must
have
been
the proximate and only cause of the loss. However, the common
carrier must exercise due diligence to prevent or minimize the loss
before, during and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may be exempted
from liability for the destruction or deterioration of the goods (Article
1739, New Civil Code).
In the instant case, the appellate court was correct in finding that
petitioner failed to observe the extraordinary diligence over the cargo
in question and he or the master in his employ was negligent
previous to the sinking of the carrying vessel. Respondent court's
conclusion as to the negligence of petitioner is supported by
evidence. It will be noted that Vivencio Babao knew of the impending
typhoon when the Philippine Coast Guard denied M/L Maya the
issuance of a clearance to sail. Less than 24 hours elapsed since the

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time of the denial of said clearance and the time a clearance to sail
was finally issued.
A common carrier is obliged to observe extraordinary diligence and
the failure of Babao to ascertain the direction of the storm and the
weather condition of the path they would be traversing, constitute
lack of foresight and minimum vigilance over its cargoes taking into
account the surrounding circumstances of the case.
Furthermore, the records show that the crew of M/L Maya did not
have the required qualifications provided for in P.D. No. 97 or the
Philippine Merchant Marine Officers Law, all of whom were
unlicensed. While it is true that they were given special permit to
man the vessel, such permit was issued at the risk and responsibility
of the owner.
Finally, petitioner claims that the factual findings of the Special Board
of Marine Inquiry exonerating the owner/operator, crew officers of the
ill-fated vessel M/L Maya from any administrative liability is binding
on the court.
In rejecting petitioner's claim, respondent court was correct in ruling
that "such exoneration was but with respect to the administrative
liability of the owner/operator, officers and crew of the ill-fated"
vessel. It could not have meant exoneration of appellee from liability
as a common carrier for his failure to observe extraordinary diligence
in the vigilance over the goods it was transporting and for the
negligent acts or omissions of his employees. Such is the function of
the Court, not the Special Board of Marine Inquiry."
Eastern Shipping Lines v. CA and First Nationwide Assurance Co.
FACTS:
- On September 4, 1978, 13 coils of uncoated 7-wire stress
relieved wire strand for prestressed concrete were shipped
on board the vessel "Japri Venture," owned and
operated by the defendant Eastern Shipping Lines, Inc.,
at Kobe, Japan, for delivery to Stresstek Post-Tensioning
Phils., Inc. in Manila, and 6-Razon which were insured by

the plaintiff First Nationwide Assurance Corporation for
P171,923.
The carrying vessel arrived in Manila and discharged the
cargo to the custody of the defendant E. Razon, Inc. from
whom the consignee's customs broker received it for delivery
to the consignee's warehouse.

-

Plaintiff indemnified the consignee in the amount of
P171,923.00 for damage and loss to the insured cargo,
whereupon the former was subrogated for the latter.

-

The plaintiff now seeks to recover from the defendants what
it has indemnified the consignee, less P48,293.70, the
salvage value of the cargo, or the total amount of
P123,629.30.

-

It appears that while enroute from Kobe to Manila, the
carrying vessel "encountered very rough seas and
stormy weather" for three days, more or less, which
caused it to roll and pound heavily, moving its master to
execute a marine note of protest upon arrival at the port
of Manila; that the coils wrapped in burlap cloth and
cardboard paper were stored in the lower hold of the
hatch of the vessel which was flooded with water about
one foot deep; that the water entered the hatch when the
vessel encountered heavy weather enroute to Manila; that
upon request, a survey of bad order cargo was conducted at
the pier in the presence of the representatives of the
consignee and the defendant E. Razon, Inc. and it was
found that seven coils were rusty on one side each; that
upon survey conducted at the consignee's warehouse it was
found that the "wetting (of the cargo) was caused by fresh
water" that entered the hatch when the vessel encountered
heavy weather enroute to Manila; and that all thirteen coils

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TRANSPORTATION LAW | ATTY. AMPIL
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JDCTR – DLSU LAW
were extremely rusty and totally unsuitable for the intended
purpose.
-

The complaint that was filed by the First Nationwide
Assurance Corporation (insurer) against Eastern Shipping
Lines, Inc. and E. Razon, Inc., in the RTC was dismissed in
a decision.

-

An appeal therefrom was interposed by the insurer to the CA
which ordered Eastern Shipping and E. Razon to pay the
insurer as subrogee of the Stresstek.

ISSUE: W/N defendants are liable to plaintiff insurer-subrogee? YES
RULING:
The heavy seas and rains referred to in the master's report were
not caso fortuito, but normal occurrences that an ocean-going
vessel, particularly in the month of September which, in our area, is a
month of rains and heavy seas would encounter as a matter of
routine. They are neither unforeseen nor unforeseeable. These are
conditions that ocean-going vessels would encounter and provide
for, in the ordinary course of a voyage. That rain water (not sea
water) found its way into the holds of the Jupri Venture is a clear
indication that care and foresight did not attend the closing of the
ship's hatches so that rain water would not find its way into the cargo
holds of the ship.

that it had admittedly carried in this case. No such evidence exists of
record. Thus, the carrier cannot escape liability.
The Court agrees with and is bound by the foregoing findings of fact
made by the appellate court. The presumption, therefore, that the
cargo was in apparent good condition when it was delivered by the
vessel to the arrastre operator by the clean tally sheets has been
overturned and traversed. The evidence is clear to the effect that the
damage to the cargo was suffered while aboard petitioner's vessel.

Delsan Transport Lines v. CA and American Home Assurance Corp.
FACTS:
- Caltex Philippines entered into a contract of affreightment
with the petitioner, Delsan Transport Lines, Inc., for a period
of one year whereby the said common carrier agreed to
transport Caltex’s industrial fuel oil from the BatangasBataan Refinery to different parts of the country.
- Under the contract, petitioner took on board its vessel, MT
Maysun 2,277.314 kiloliters of industrial fuel oil of Caltex to
be delivered to the Caltex Oil Terminal in Zamboanga City.
The shipment was insured with the private respondent,
American Home Assurance Corporation.
- MT Maysum set sail from Batangas for Zamboanga City.
Unfortunately, the vessel sank near Panay Gulf in the
Visayas taking with it the entire cargo of fuel oil.
-

AHAC paid Caltex the sum of P5,096,635.67 representing
the insured value of the lost cargo. Exercising its right of
subrogation under Article 2207 of the New Civil Code, the
private respondent demanded of the petitioner the same
amount it paid to Caltex.

-

AHAC then filed a complaint with the RTC for collection of a
sum of money. RTC rendered a decision dismissing the
complaint against herein petitioner. RTC found that the

Moreover, under Article 1733 of the Civil Code, common carriers are
bound to observe "extra-ordinary vigilance over goods according to
all circumstances of each case”.
Since the carrier has failed to establish any caso fortuito, the
presumption by law of fault or negligence on the part of the carrier
applies; and the carrier must present evidence that it has observed
the extraordinary diligence required by Article 1733 of the Civil Code
in order to escape liability for damage or destruction to the goods

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TRANSPORTATION LAW | ATTY. AMPIL
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JDCTR – DLSU LAW
vessel, MT Maysum, was seaworthy to undertake the
voyage as determined by the Philippine Coast Guard per
Survey Certificate Report upon inspection during its annual
dry-docking and that the incident was caused by unexpected
inclement weather condition or force majeure, thus
exempting the common carrier (herein petitioner) from
liability for the loss of its cargo.
-

-

CA reversed. It gave credence to the weather report issued
by the PAGASA which showed that from 2:00 o’clock to 8:oo
o’clock in the morning on August 16, 1986, the wind speed
remained at 10 to 20 knots per hour while the waves
measured from .7 to two (2) meters in height only in the
vicinity of the Panay Gulf where the subject vessel sank, in
contrast to herein petitioner’s allegation that the waves were
twenty (20) feet high. In the absence of any explanation as to
what may have caused the sinking of the vessel coupled
with the finding that the same was improperly manned, the
appellate court ruled that the petitioner is liable on its
obligation as common carrier to herein private respondent
insurance company as subrogee of Caltex.
Petitioner Delsan Transport Lines, Inc. invokes the provision
of Section 113 of the Insurance Code which states that in
every marine insurance upon a ship or freight, or freightage,
or upon any thing which is the subject of marine insurance
there is an implied warranty by the shipper that the ship is
seaworthy. Consequently, the insurer will not be liable to the
assured for any loss under the policy in case the vessel
would later on be found as not seaworthy at the inception of
the insurance. It theorized that when private respondent paid
Caltex the value of its lost cargo, the act of the private
respondent is equivalent to a tacit recognition that the illfated vessel was seaworthy. It further avers that private

respondent failed, for unknown reason, to present in
evidence during the trial of the instant case the subject
marine cargo insurance policy it entered into with Caltex. By
virtue of the doctrine laid down in the case of Home
Insurance Corporation vs. CA, the failure of the private
respondent to present the insurance policy in evidence is
allegedly fatal to its claim inasmuch as there is no way to
determine the rights of the parties thereto.

ISSUE/S:
-

Whether or not the payment made by the private respondent
to Caltex for the insured value of the lost cargo amounted to
an admission that the vessel was seaworthy, thus precluding
any action for recovery against the petitioner? NO

-

Whether or not the non-presentation of the marine insurance
policy bars the complaint for recovery of sum of money for
lack of cause of action. NO

RULING:
The payment made by the private respondent for the insured value
of the lost cargo operates as waiver of its (private respondent) right
to enforce the term of the implied warranty against Caltex under the
marine insurance policy. However, the same cannot be validly
interpreted as an automatic admission of the vessel’s seaworthiness
by the private respondent as to foreclose recourse against the
petitioner for any liability under its contractual obligation as a
common carrier. The fact of payment grants the private
respondent subrogatory right which enables it to exercise legal
remedies that would otherwise be available to Caltex as owner

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TRANSPORTATION LAW | ATTY. AMPIL
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of the lost cargo against the petitioner common carrier under
Art. 2207 of the Civil Code.

Consequently, the payment made by the private respondent (insurer)
to Caltex (assured) operates as an equitable assignment to the
former of all the remedies which the latter may have against the
petitioner.

From the nature of their business and for reasons of public policy,
common carriers are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of passengers
transported by them, according to all the circumstance of each
case. In the event of loss, destruction or deterioration of the insured
goods, common carriers shall be responsible unless the same is
brought about, among others, by flood, storm, earthquake, lightning
or other natural disaster or calamity. In all other cases, if the goods
are lost, destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence.
Petitioner attributes the sinking of MT Maysun to fortuitous even
or force majeure. This tale of strong winds and big waves by the said
officers of the petitioner however, was effectively rebutted and belied
by the weather report from the PAGASA which the Court believed to
of greater merit. Therefore, petitioner’s vessel, MT Maysun, sank
with its entire cargo for the reason that it was not seaworthy. There
was no squall or bad weather or extremely poor sea condition in the
vicinity when the said vessel sank.
Anent the second issue, the SC held that the presentation in
evidence of the marine insurance policy is not indispensable in this
case before the insurer may recover from the common carrier the
insured value of the lost cargo in the exercise of its subrogatory right.
The subrogation receipt, by itself, is sufficient to establish not only

the relationship of herein private respondent as insurer and Caltex,
as the assured shipper of the lost cargo of industrial fuel oil, but also
the amount paid to settle the insurance claim. The right of
subrogation accrues simply upon payment by the insurance
company of the insurance claim.
Bankers and Manufacturers Assurance Corp v. CA, F.E. Zuellig & Co.
Inc. and E. Razon
FACTS:
- There were 108 cases of copper tubings that were imported
by Ali Trading Company.
- The tubings were insured by petitioner and arrived in Manila
on board and vessel S/S "Oriental Ambassador" and turned
over the private respondent E. Razon, the Manila arrastre
operator upon discharge at the waterfront.
- The carrying vessel is represented in the Philippines by its
agent, the other private respondent, F. E. Zuellig and Co.,
Inc.,
- Upon inspection by the importer, the shipment was
allegedly found to have sustained losses by way of theft
and pilferage for which petitioner, as insurer,
compensated the importer in the amount of P31,014.00.
- Petitioner, in subrogation of the importer-consignee and on
the basis of what it asserts had been already established —
that a portion of that shipment was lost through theft and
pilferage — forthwith concludes that the burden of proof of
proving a case of non-liability shifted to private respondents,
one of whom, the carrier, being obligated to exercise
extraordinary diligence in the transport and care of the
shipment.
- It must be underscored that the shipment involved in the
case at bar was "containerized". The goods under this
arrangement are stuffed, packed, and loaded by the shipper
at a place of his choice, usually his own warehouse, in the
absence of the carrier. The container is sealed by the
shipper and thereafter picked up by the carrier.

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TRANSPORTATION LAW | ATTY. AMPIL
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-

-

-

-

-

A shipment under this arrangement is not inspected nor
inventoried by the carrier whose duty is only to transport and
deliver the containers in the same condition as when the
carrier received and accepted the containers for transport.
Upon arrival in Manila, the shipment was discharged in
apparent good order and condition and from the pier's
docking apron, the containers were shifted to the container
yard of Pier 3 for safekeeping. Three weeks later, one of
the container vans, said to contain 19 cases of the
cargo, was "stripped" in the presence of petitioner's
surveyors, and three cases were found to be in bad
order. It should be stressed at this point, that the three
cases found in bad order are not the cases for which the
claim below was presented, for although the three cases
appeared to be in bad order, the contents remained good
and intact.
The two other container vans were not moved from the
container yard and they were not stripped. On December 8,
1978, the cargo was released to the care of the consignee's
authorized customs broker, the RGS Customs Brokerage.
The broker, accepting the shipment without exception as to
bad order, caused the delivery of the vans to the consignee's
warehouse in Makati. It was at that place, when the contents
of the two containers were removed and inspected, that
petitioner's surveyors reported, that checked against the
packing list, the shipment was short of seven cases.
RTC then dismissed petitioner’s complaint for recovery of
the amount it had paid its insured concerning the loss of a
portion of a shipment. CA affirmed the dismissal

ISSUE: W/N the owner of the vessel should be held liable for the lost
goods? NO

RULING:
The CA correctly found that the subject container was not stripped of
its content at the pier zone. The two unstripped containers (together

with the 19 cases removed from the stripped third container) were
delivered to, and received by, the customs broker for the consignee
without any exception or notation of bad order of shortlanding. If
there was any suspicion or indication of irregularity or theft or
pilferage, plaintiff or consignee's representatives should have noted
the same on the gate passes or insisted that some form of protest
form part of the documents concerning the shipment. Yet, no such
step was taken. The shipment appears to have been delivered to the
customs broker in good order and condition and complete save for
the three cases noted as being apparently in bad order.

Verily, if any of the vans found in bad condition, or if any inspection of
the goods was to be done in order to determine the condition thereof,
the same should have been done at the pierside, the pier
warehouse, or at any time and place while the vans were under the
care and custody of the carrier or of the arrastre operator.
Unfortunately for petitioner, even as one of the three vans was
inspected and stripped, the two other vans and the contents of the
owner previously stripped were accepted without exception as to any
supposed bad order or condition by petitioner's own broker. To all
appearances, therefore, the shipment was accepted by petitioner in
good order.

It logically follows that the case at bar presents no occasion for the
necessity of discussing the diligence required of a carrier or of the
theory of prima facie liability of the carrier, for from all indications, the
shipment did not suffer loss or damage while it was under the care of
the carrier, or of the arrastre operator.

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-

Sarkies Tours Phils v. CA
FACTS:
- On August 31, 1984, Fatima boarded petitioner's De Luxe
Bus No. 5 in Manila on her way to Legazpi City. Her brother
Raul helped her load three pieces of luggage containing all
of her optometry review books, materials and equipment,
trial lenses, trial contact lenses, passport and visa, as well as
her mother Marisol's U.S. immigration (green) card, among
other important documents and personal belongings.
- Her belongings were kept in the baggage compartment
of the bus, but during a stopover at Daet, it was
discovered that only one bag remained in the open
compartment. The others, including Fatima's things,
were missing and might have dropped along the way.
Some of the passengers suggested retracing the route
of the bus to try to recover the lost items, but the driver
ignored them and proceeded to Legazpi City.
- Fatima immediately reported the loss to her mother who, in
turn, went to Sarkies Tours’ office in Legazpi City and later at
its head office in Manila. Petitioner, however, merely offered
her P1K (this was yr 1997) for each piece of luggage lost,
which she turned down.
- After returning to Bicol, respondents asked assistance from
the radio stations and even from Philtranco bus drivers who
plied the same route on August 31st. The effort paid off when
one of Fatima's bags was recovered. Marisol further reported
the incident to the NBI field office in Legazpi City and to the
local police.
- Eventually respondents,
through
counsel,
formally
demanded satisfaction of their complaint from petitioner.
- In a letter dated October 1, 1984, Sarkies Tours apologized
for the delay and said that "a team has been sent out to Bicol
for the purpose of recovering or at least getting the full
detail" of the incident.

-

After more than nine months of fruitless waiting, respondents
decided to file the case below to recover the value of the
remaining lost items, as well as moral and exemplary
damages, attorney's fees and expenses of litigation. They
claimed that the loss was due to petitioner's failure to
observe extraordinary diligence in the care of Fatima's
luggage and that petitioner dealt with them in bad faith from
the start. Petitioner, on the other hand, disowned any liability
for the loss on the ground that Fatima allegedly did not
declare any excess baggage upon boarding its bus.
RTC ordered Sarkies Tours to pay respondents P30K for
value of lost belongings, P90K for transpo expenses,
attorneys fees, damages, litigation expenses.
CA affirmed but deleted award for damages.
Petitioner claims that Fatima did not bring any piece of
luggage with her, and even if she did, none was declared at
the start of the trip.

ISSUE: W/N petitioner is liable for the loss of the personal
belongings of its passenger (respondent)? YES
RULING:
Under the Civil Code, "common carriers, from the nature of their
business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods transported by
them," and this liability "lasts from the time the goods are
unconditionally placed in the possession of, and received by the
carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the person who has a right to receive
them," unless the loss is due to any of the excepted causes under
Article 1734 thereof.

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The cause of the loss in the case at bar was petitioner's negligence
in not ensuring that the doors of the baggage compartment of its bus
were securely fastened. As a result of this lack of care, almost all of
the luggage was lost, to the prejudice of the paying passengers. As
the Court of Appeals correctly observed:

. . . . Where the common carrier accepted its passenger's
baggage for transportation and even had it placed in the
vehicle by its own employee, its failure to collect the freight
charge is the common carrier's own lookout. It is responsible
for the consequent loss of the baggage. In the instant case,
defendant appellant's employee even helped Fatima Minerva
Fortades and her brother load the luggages/baggages in the
bus' baggage compartment, without asking that they be
weighed, declared, receipted or paid for.

Keep v. Chan Gioco
FACTS:
- Plaintiff, upon a contract for its transportation by boat from
the port of Luna, LU to the port of San Fernando, LU,
delivered to defendants 120 cavanes of rice in consideration
of the sum of twenty-five centavos per cavan. Allegedly
because of defedant’s negligence, carelessness, and lack of
due precaution in the management of the boat on which it
was being transported, as result of which the boat sank as
she entered the port of San Fernando, on the night of the 8th
of April, 1907.
- Plaintiff lodged a complaint unto the CFI of LU which
rendered a decision favorable to him.

-

Defendant appealed. He denied having entered into the
transportation contract, as allegedly by the plaintiffs, and the
testimony introduced by plaintiffs and defendants as to the
execution of the contract with this defendant is, as stated by
the trial court in its decision, contradictory in the extreme; in
our opinion, however, the weight of the evidence sustains
the finding of the trial judge that plaintiffs succeeded in
establishing the transportation contract set out in the
complaint, and the delivery of the rice to the defendant Leon
Chan Gioco and his codefendant, Anastasio Atregenio, the
latter being the patron or captain of the boat on which the
rice was loaded, employed as such by Leon Chan Gioco.

-

Counsel for Leon Chan contends that the loss of the rice
was due to the sinking of the boat on which it was loaded, as
a result of a strong wind which struck her as she was
entering the port of San Fernando; and that appellants
should not be held responsible therefor, the loss having
resulted from an act of God ( fuerza mayor) or an
unavoidable accident (caso fortuíto), and without blame
upon their part.

ISSUE: W/N defendant is liable for the loss of goods owned by
plaintiff? YES
RULING:
The evidence in support of Leon Chan’s claim that the loss of the rice
was the result of an act of God or an unavoidable accident is not
satisfactorily established; and, as appears from an examination of
the above-cited article of the code, the burden of proof in this regard
rested upon the defendants.

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The SC gave credence to the testimony of the Weather Bureau
stationed at San Fernando, which was introduced by the plaintiffs,
that, while there may have been a strong wind moving on the
night in question, there was no such heavy wind or violent
storm blowing as would unavoidably swamp a boat manned by
a capable crew, commanded by a careful navigator, and
properly equipped for sailing the high seas.

It not having been otherwise expressly stipulated, it is to be
presumed that the owner of the boat, Leon Chan Gioco, when he
contracted to transport the rice in question over the high seas,
obligated himself to furnish a boat suitable for the work which he
undertook to perform, and a capable crew to man her and the mere
fact that a strong wind was blowing when the boat changed its
course is not in itself sufficient to excuse her owners for losses
incurred as a result of so poor an execution of this maneuver as
to result in sinking her.

In the absence of proof of such a violent storm or such an
exceptionally high sea that, despite the proper equipment of the boat
and the exercise of due skill and diligence by the patron and crew,
those in charge of the boat were overpowered by the force of the
elements, the Court will not hold that the sinking of the boat can
justly be said to have been the result of an act of God or of an
unavoidable accident; the blowing of strong winds must always be
anticipated by men who go down into the sea in ships, and in the
absence of evidence of some unusual intervening cause, we must

hold that the exercise of due diligence in the performance of their
duty by the patron and the members of his crew, had they been
reasonably expert as seafaring men, could have and would have
avoided the accident which actually occurred, provided the boat was
suited to the work required of her.

Phil American Gen Insurance. v. MCG Marine Services
FACTS:
- San Miguel Corporation insured several beer bottle cases
with an aggregate value of almost P6M with petitioner
Philippine American General Insurance Company.
- The cargo were loaded on board the M/V Peatheray PatrickG to be transported from Mandaue City to Bislig, Surigao del
Sur.
- After having been cleared by the Coast Guard Station in
Cebu the previous day, the vessel left the port of Mandaue
City for Bislig, Surigao del Sur. The weather was calm when
the vessel started its voyage.
-

The following day, M/V Peatheray Patrick-G listed and
subsequently sunk off Cawit Point, Cortes, Surigao del
Sur. As a consequence thereof, the cargo belonging to
San Miguel Corporation was lost.

-

Subsequently, San Miguel Corporation claimed the amount
of its loss from petitioner.

-

The Surveyor’s report stated that the vessel was structurally
sound and that he did not see any damage or crack thereon.
He concluded that the proximate cause of the listing and
subsequent sinking of the vessel was the shifting of ballast
water from starboard to portside. The said shifting of ballast

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water allegedly affected the stability of the M/V Peatheray
Patrick-G.
-

Petitioner paid SMC the full amount of P5,836,222.80
pursuant to the terms of their insurance contract.

-

Petitioner as subrogee of SMC filed with the Regional Trial
Court (RTC) of Makati City a case for collection against
private respondents to recover the amount it paid to San
Miguel Corporation for the loss of the latter's cargo.

-

Meanwhile, the Board of Marine Inquiry conducted its own
investigation of the sinking of the M/V Peatheray Patrick-G to
determine whether or not the captain and crew of the vessel
should be held responsible for the incident.

-

The Board rendered its decision exonerating the captain and
crew of the ill-fated vessel for any administrative liability. It
found that the cause of the sinking of the vessel was the
existence of strong winds and enormous waves in Surigao
del Sur, a fortuitous event that could not have been for seen
at the time the M/V Peatheray Patrick-G left the port of
Mandaue City. It was further held by the Board that said
fortuitous event was the proximate and only cause of the
vessel's sinking.

-

-

RTC found private respondents solidarily liable for the loss of
SMC’s cargo and ordering them to pay petitioner the full
amount of the lost cargo plus legal interest, attorney's fees
and costs of suit.
Private respondents appealed. CA reversed. It held that
private respondents could not be held liable for the loss of

San Miguel Corporation's cargo because said loss occurred
as a consequence of a fortuitous event, and that such
fortuitous event was the proximate and only cause of the
loss
ISSUE: Whether the loss of the cargo was due to the occurrence of a
natural disaster, and if so, whether such natural disaster was the sole
and proximate cause of the loss or whether private respondents
were partly to blame for failing to exercise due diligence to prevent
the loss of the cargo?
RULING:
The findings of the Board of Marine Inquiry indicate that the
attendance of strong winds and huge waves while the M/V
Peatheray Patrick-G was sailing through Cortes, Surigao del Norte
on March 3, 1987 was indeed fortuitous. A fortuitous event has been
defined as one which could not be foreseen, or which though
foreseen, is inevitable. An event is considered fortuitous if the
following elements concur:

(a) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply with his
obligations, must be independent of human will; (b) 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; (c) the occurrence must be such as to
render it impossible for the debtor to fulfill his obligation in a
normal manner; and (d) the obligor must be free from any
participation in the aggravation of the injury resulting to the
creditor.
In the case at bar, it was adequately shown that before the M/V
Peatheray Patrick-G left the port of Mandaue City, the Captain
confirmed with the Coast Guard that the weather condition would
permit the safe travel of the vessel to Bislig, Surigao del Sur. Thus,
he could not be expected to have foreseen the unfavorable weather

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condition that awaited the vessel in Cortes, Surigao del Sur. It was
the presence of the strong winds and enormous waves which caused
the vessel to list, keel over, and consequently lose the cargo
contained therein. The appellate court likewise found that there was
no negligence on the part of the crew of the M/V Peatheray Patrick-G
following the decision of the Board of Marine Inquiry.
It was also proven through sufficient evidence that "LCT Peatheray
Patrick-G" was considered seaworthy vessel at the time she
undertook that fateful voyage on March 2, 1987. The vessel was
propelled with 3 diesel engines, it had 3 propellers each which were
operating satisfactorily and that it was granted SOLAS clearance by
the Phil Coast Guard to depart from Mandawe City for Bislig, Surigao
del Sur.
Although the Board of Marine Inquiry ruled only on the administrative
liability of the captain and crew of the M/V Peatheray Patrick-G, it
had to conduct a thorough investigation of the circumstances
surrounding the sinking of the vessel and the loss of its cargo in
order to determine their responsibility, if any. The results of its
investigation as embodied in its decision on the administrative case
clearly indicate that the loss of the cargo was due solely to the
attendance of strong winds and huge waves which caused the
vessel accumulate water, tilt to the port side and to eventually keel
over. There was thus no error on the part of the Court of Appeals in
relying on the factual findings of the Board of Marine Inquiry, for such
factual findings, being supported by substantial evidence are
persuasive, considering that said administrative body is an expert in
matters concerning marine casualties.
Since the presence of strong winds and enormous waves at Cortes,
Surigao del Sur on March 3, 1987 was shown to be the proximate
and only cause of the sinking of the M/V Peatheray Patrick-G and

the loss of the cargo belonging to San Miguel Corporation, private
respondents cannot be held liable for the said loss.

Phil American Gen Insurance v. CA and Transpacific Towage Inc.
FACTS:
- Davao Union Marketing Corporation of Davao City
shipped on board the vessel M/V "Crazy Horse" operated
by the Transpacific Towage, Inc. cargo consisting of 9,750
sheets of union brand GI sheets with a declared value of
P1M and 86,860 bags of union Pozzolan and union Portland
Cement with a declared value of P4.3M.
- The cargo was consigned to the Bicol Union Center of
Pasacao, Camarines Sur, with a certain Pedro Olivan as the
"Notify-Party."
- The cargo was insured by the Philippine American General
Insurance Co., Inc., for the amount of P3,440,000.00.
-

The vessel M/V "Crazy Horse" arrived at the port of
Pasacao, Camarines Sur.

-

Upon arrival the shipmaster notified the consignee's "NotifyParty" that the vessel was already to discharge the cargo.
The discharging could not be affected immediately and
continuously because of certain reasons. First, the buoys
were installed only on September 11, 1985; second, the
discharge permit was secured by the consignee only on
September 13, 1985; third a wooden catwalk had to be
installed and extension of the wharf had to be made, which
was completed only on September 26, 1985; fourth, the
discharging was not continuous because there were
intermittent rains and the stevedores supplied by the
consignee did not work during the town fiesta.

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-

A super typhoon code named "Saling" entered the Philippine
area of responsibility and was felt in the eastern coast of the
country. The discharging of the cargo had to be suspended
at 11:40 A.M. on October 17, 1985 due to the heavy
downpour, strong winds, and turbulent sea. To prevent
damage to the cargo all hatches of the vessel were closed
and secured.

-

He was, however, unable to get any assistance. The
shipmaster reported the incident to the Philippine Coast
Guard but inspite the presence of three (3) coast guards,
nothing could be done about the pilferage done on the
vessel and its cargo. Almost the whole barrio and because
there were so many of them the crew and the guards were
helpless to stop the pilferage and looting.

-

At the time the discharging of the cargo was suspended, a
total of 59,625 bags of cement and 26 crates of GI sheets
had already been discharged.

-

As a result of the incident the cargo of cement was damaged
while the GI sheets were looted and nothing was left of the
undischarged pieces.

-

In further preparation for the typhoon the vessel was loaded
with 22 tons of fresh water and 3,000 liters of fuel. The
shipmaster ordered the vessel to be moved about 300
meters seaward in order that it would not hit the cat walk or
the wooden bridge or the wharf, or the rocks. The vessel was
ready for any maneuver that may have to be made.

-

The total number of cement bags damaged and/or lost was
26,424 costing P1,056,960.00 while there were 4,000 pieces
of the GI sheets unrecovered, the cost of which was
P454,250.00.

-

The Philippine American General Insurance Co., Inc. paid
the shipper Davao Union Marketing Corporation the sum of
P1,511,210.00.

-

Thereafter, the said insurer made demands upon the
Transpacific Towage, Inc. for the payment of said amount as
subrogee of the insured, claiming that the loss of the cargo
was directly and exclusively brought about by the fault and
negligence of the shipmaster and the crew of M/V "Crazy
Horse". Because the latter refused to pay the amount of
P1,511,210.00 demanded, the Philippine American General
Insurance Co., Inc. filed the present complaint.

-

RTC found that although the immediate cause of the loss
may have been due to an act of God, the defendant carrier
had exposed the property to the accident. The court also

-

-

It was at about 5:20 A.M. of October 18, 1985 when the
shipmaster ordered the maneuvering of the vessel but it
could not be steered on account of the strong winds and
rough seas. The vessel's lines snapped, causing her to be
dragged against the rocks, and the anchor chain stopper
gave way. The vessel sustained holes in the engine room
and there was a power failure in the vessel. Water started to
fill the engine room and at about 6:15 A.M. the engine broke
down.
The shipmaster had no choice but to order the ship to be
abandoned. He told the crew to secure the vessel while he
went to the Municipal Mayor of Pasacao to request for police
assistance to prevent pilferage of the vessel and its cargo.

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found plaintiff guilty of contributory negligence and mitigated
the plaintiff's claim to three-fourths (3/4) of its value.
-

CA reversed the decision of the trial court and ruled instead
that private respondent, as a common carrier, is not
responsible for the loss of the insured cargo involved in the
case at bar, as said loss was due solely to a fortituous event.

ISSUE: W/N respondent as a common carrier is liable for the loss of
the cargo due to a fortuitous event? NO
RULING: CA Decision AFFIRMED.
It is not disputed that private respondent is a common carrier as
defined in Article 1732 of the Civil Code. The following facts are also
not contested: (1) that the cargo-carrying vessel was wrecked and
partially sank on 18 October 1985 due to typhoon "Saling"; (2) that
typhoon "Saling" was a fortuitous event; and (3) that at the time said
vessel sank, the remaining undischarged cargo, consisting of 26,424
cement bags and 4,000 pieces of G.I. sheets, were still on board the
vessel.

The appellate court in exempting private respondent from liability
applied Article 1739 of the Civil Code which provides as follows:

In order that the common carrier may be exempted
from responsibility, the natural disaster must have
been the proximate and only cause of the loss.
However, the common carrier must exercise due
diligence to prevent or minimize loss before, during
and after the occurrence of flood, storm, or other
natural disaster in order that the common carrier

may be exempted from liability for the loss,
destruction, or deterioration of the goods.

The appellate court correctly ruled that the loss of cargo in the
present case was due solely to typhoon "Saling" and that private
respondent had shown that it had observed due diligence before,
during and after the occurrence of "Saling"; hence, it should not be
liable under Article 1739.

Considering the disputed fact that there really was delay in
completing the unloading of the goods from the vessel, the Court
believes that the real issue at bar centers on the application of Article
1740 of the Civil Code. In short, the principal question, in determining
which of the parties in the present case should bear the loss of the
goods, is whether the delay involved in the unloading of the goods is
deemed negligently incurred in, so as not to free private respondent
from liability, notwithstanding the fact that the ultimate cause of the
loss of the goods was the sinking of the vessel brought about by
typhoon "Saling."

While it is true that there was indeed delay in discharging the
cargo from the vessel, neither of the parties herein could be
faulted for such delay, for the same (delay) was due not to
negligence, but to several factors. The cargo having been lost
due to typhoon "Saling", and the delay incurred in its unloading
not being due to negligence, private respondent is exempt from

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liability for the loss of the cargo, pursuant to Article 1740 of the
Civil Code.

"Anders Maerskline" for shipment to the Philippines via
Oakland, California.
-

For reasons unknown, said cargo of capsules were
mishipped and diverted to Richmond, Virginia, USA and then
transported back Oakland, Califorilia. The goods finally
arrived in the Philippines after two (2) months from the date
specified in the memorandum. As a consequence, private
respondent as consignee refused to take delivery of the
goods on account of its failure to arrive on time.

-

Private respondent alleging gross negligence and undue
delay in the delivery of the goods, filed an action before the
RTC for rescission of contract with damages against
petitioner and Eli Lilly, Inc. as defendants.

-

Denying that it committed breach of contract, petitioner
alleged in its that answer that the subject shipment was
transported in accordance with the provisions of the covering
bill of lading and that its liability under the law on
transportation of good attaches only in case of loss,
destruction or deterioration of the goods as provided for in
Article 1734 of Civil Code.

-

Defendant Eli Lilly, Inc., on the other hand, alleged that the
delay in the arrival of the the subject merchandise was due
solely to the gross negligence of petitioner Maersk Line.

-

PR moved for the dismissal of the complaint against Eli Lilly,
Inc. on the ground that the evidence on record shows that
the delay in the delivery of the shipment was attributable
solely to petitioner.

The diligence exercised by the shipmaster further supports the
exemption of private respondent from liability for the loss of the
cargo, in accordance with Article 1739 of the Civil Code.

Maersk Line v. CA and Efren Castillo
FACTS:
-

Petitioner Maersk Line is engaged in the transportation of
goods by sea, doing business in the Philippines through its
general agent Compania General de Tabacos de Filipinas.

-

Private respondent Efren Castillo, on the other hand, is the
proprietor of Ethegal Laboratories, a firm engaged in the
manufacture of pharmaceutical products.

-

Private respondent ordered from Eli Lilly. Inc. of Puerto Rico
through its (Eli Lilly, Inc.'s) agent in the Philippines, Elanco
Products, 600,000 empty gelatin capsules for the
manufacture of his pharmaceutical products. The capsules
were placed in six (6) drums of 100,000 capsules each
valued at US $1,668.71.

-

Through a Memorandum of Shipment, the shipper Eli Lilly,
Inc. of Puerto Rico advised private respondent as consignee
that the 600,000 empty gelatin capsules in six (6) drums of
100,000 capsules each, were already shipped on board MV

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-

RTC dismissed the complaint against Eli Lilly, Inc.

-

After trial held between respondent and petitioner, RTC
rendered judgment in favor of respondent Castillo and held
that there was a breach in the performance of their obligation
by the defendant Maersk Line consisting of their negligence
to ship the 6 drums of empty Gelatin Capsules.CA affirmed
the RTC’s decision with slight modifications.

-

Petitioner maintains that it cannot be held liable for damages
for the alleged delay in the delivery of the 600K empty
gelatine capsules since it acted in GF and there was no
special contract under which the carrier undertook to deliver
the shipment on or before a specific date.

ISSUE: Whether or not respondent Castillo is entitled to damages
resulting from delay in the delivery of the shipment in the absence in
the bill of lading of a stipulation on the period of delivery? YES

on Article 1170 of the New Civil Code and not under the law on
Admiralty.

The bill of lading covering the subject shipment among others, reads:
6. GENERAL
(1) The Carrier does not undertake that the goods shall arive at
the port of discharge or the place of delivery at any particular time
or to meet any particular market or use and save as is provided in
clause 4 the Carrier shall in no circumstances be liable for any
direct, indirect or consequential loss or damage caused by delay.
If the Carrier should nevertheless be held legally liable for any
such direct or indirect or consequential loss or damage caused by
delay, such liability shall in no event exceed the freight paid for
the transport covered by this Bill of Lading.

It is not disputed that the aforequoted provision at the back of the bill
of lading, in fine print, is a contract of adhesion. Generally, contracts
of adhesion are considered void since almost all the provisions of
these types of contracts are prepared and drafted only by one party,
usually the carrier. The only participation left of the other party in
such a contract is the affixing of his signature thereto, hence the term
"Adhesion"

RULING:
Both the trial court and CA found petitioner liable for damages for the
delay in the delivery of goods, reliance was made on the rule that
contracts of adhesion are void. Added to this, the lower court stated
that the exemption against liability for delay is against public policy
and is thus, void. Besides, private respondent's action is anchored

A bill of lading usually becomes effective upon its delivery to and
acceptance by the shipper. It is presumed that the stipulations of the
bill were, in the absence of fraud, concealment or improper conduct,
known to the shipper, and he is generally bound by his acceptance
whether he reads the bill or not. However, the aforequoted ruling
applies only if such contracts will not create an absurd situation as in

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the case at bar. The questioned provision in the subject bill of lading
has the effect of practically leaving the date of arrival of the subject
shipment on the sole determination and will of the carrier.

While it is true 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 to deliver at a given date or
time, delivery of shipment or cargo should at least be made within a
reasonable time.

The oft-repeated rule regarding a carrier's liability for delay is that in
the absence of a special contract, a carrier is not an insurer against
delay in transportation of goods. When a common carrier undertakes
to convey goods, the law implies a contract that they shall be
delivered at destination within a reasonable time, in the absence, of
any agreement as to the time of delivery. But where a carrier has
made an express contract to transport and deliver properly within a
specified time, it is bound to fulfil its contract and is liable for any
delay, no matter from what cause it may have arisen. surrounding the
case and by application of the ordinary rules for the interpretation of
contracts.

While there was no special contract entered into by the parties
indicating the date of arrival of the subject shipment, petitioner
nevertheless, was very well aware of the specific date when the
goods were expected to arrive as indicated in the bill of lading itself.

In this regard, there arises no need to execute another contract for
the purpose as it would be a mere superfluity.

In the case before us, we find that a delay in the delivery of the
goods spanning a period of two (2) months and seven (7) days falls
was beyond the realm of reasonableness. Described as gelatin
capsules for use in pharmaceutical products, subject shipment was
delivered to, and left in, the possession and custody of petitionercarrier for transport to Manila via Oakland, California. But through
petitioner's negligence was mishipped to Richmond, Virginia.
Petitioner's insitence that it cannot be held liable for the delay finds
no merit.

Compania Maritima v. CA and Vicente Concepcion
FACTS:
- Private respondent Vicente E. Concepcion, a civil engineer
doing business under the name and style of Consolidated
Construction, had a contract with the Civil Aeronautics
Administration (CAA) sometime in 1964 for the construction
of the airport in Cagayan de Oro City Misamis Oriental.
- Vicente E. Concepcion had to ship his construction
equipment to Cagayan de Oro City. Having shipped some of
his equipment through petitioner and having settled the
balance of P2,628.77 with respect to said shipment,
Concepcion negotiated anew with petitioner, thru its
collector, Pacifico Fernandez, on August 28, 1964 for the
shipment to Cagayan de Oro City of one (1) unit payloader,
four (4) units 6x6 Reo trucks and two (2) pieces of water
tanks.
- These equipment were loaded aboard the MV Cebu. The
Reo trucks and water tanks were safely unloaded within a
few hours after arrival, but while the payloader was about

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-

-

-

-

two (2) meters above the pier in the course of unloading,
the swivel pin of the heel block of the port block of
Hatch No. 2 gave way, causing the payloader to fall. The
payloader was damaged and was thereafter taken to
petitioner's compound in Cagayan de Oro City.
Consolidated Construction, thru Vicente E. Concepcion,
wrote Compañia Maritima to demand a replacement of the
payloader which it was considering as a complete loss
because of the extent of damage. Consolidated Construction
likewise notified petitioner of its claim for damages.
Meanwhile, petitioner shipped the payloader to Manila where
it was weighed at the San Miguel Corporation. Finding that
the payloader weighed 7.5 tons and not 2.5 tons as declared
in the B-111 of Lading, petitioner denied the claim for
damages of Consolidated Construction contending that had
Vicente E. Concepcion declared the actual weight of the
payloader, damage to their ship as well as to his payloader
could have been prevented.
To replace the damaged payloader, Consolidated
Construction in the meantime bought a new one at P45K
from Bormaheco Inc.
Vicente E. Concepcion filed an action for damages against
petitioner with the then CFI of Manila, seeking to recover
damages and other expenses.
CFI dismissed the complaint with costs against therein
plaintiff, herein private respondent Vicente E. Concepcion,
stating that the proximate cause of the fall of the
payloader was Vicente E. Concepcion's act or omission
in having misrepresented the weight of the payloader as
2.5 tons instead of its true weight of 7.5 tons, which
underdeclaration was intended to defraud Compañia
Maritima of the payment of the freight charges and which
likewise led the Chief Officer of the vessel to use the heel
block of hatch No. 2 in unloading the payloader.
CA reversed and rendered judgment in favor of Vicente
Concepcion.

ISSUE: Whether or not the act of private respondent Vicente E.
Concepcion in furnishing petitioner Compañia Maritima with an
inaccurate weight of 2.5 tons instead of the payloader's actual weight
of 7.5 tons was the proximate and only cause of the damage on the
Oliver Payloader OC-12 when it fell while being unloaded by
petitioner's crew, as would absolutely exempt petitioner from liability
for damages under paragraph 3 of Article 1734 of the Civil Code?
NO
RULING:
The extraordinary diligence in the vigilance over the goods tendered
for shipment requires the common carrier to know and to follow the
required precaution for avoiding damage to, or destruction of the
goods entrusted to it for sale, carriage and delivery. It requires
common carriers to render service with the greatest skill and
foresight and "to use all reasonable means to ascertain the nature
and characteristic of goods tendered for shipment, and to exercise
due care in the handling and stowage, including such methods as
their nature requires." Under Article 1736 of the Civil Code, the
responsibility to observe extraordinary diligence commences and
lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has the right to receive them without
prejudice to the provisions of Article 1738.
Where, as in the instant case, petitioner, upon the testimonies of its
own crew, failed to take the necessary and adequate precautions for
avoiding damage to, or destruction of, the payloader entrusted to it
for safe carriage and delivery to Cagayan de Oro City, it cannot be
reasonably concluded that the damage caused to the payloader was
due to the alleged misrepresentation of private respondent
Concepcion as to the correct and accurate weight of the payloader.
As found by the respondent Court of Appeals, the fact is that
petitioner used a 5-ton capacity lifting apparatus to lift and unload a
visibly heavy cargo like a payloader. Private respondent has,
likewise, sufficiently established the laxity and carelessness of
petitioner's crew in their methods of ascertaining the weight of heavy

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cargoes offered for shipment before loading and unloading them, as
is customary among careful persons.

Private respondent's act of furnishing petitioner with an inaccurate
weight of the payloader upon being asked by petitioner's collector,
cannot be used by said petitioner as an excuse to avoid liability for
the damage caused, as the same could have been avoided had
petitioner utilized the "jumbo" lifting apparatus which has a capacity
of lifting 20 to 25 tons of heavy cargoes.
While the act of private respondent in furnishing petitioner with an
inaccurate weight of the payloader cannot successfully be used as
an excuse by petitioner to avoid liability to the damage thus caused,
said act constitutes a contributory circumstance to the damage
caused on the payloader, which mitigates the liability for damages of
petitioner in accordance with Article 1741 of the Civil Code,
Southern Lines, Inc. v. CA
FACTS:
- Sometime in 1948, the City of Iloilo requested for rice from
the National Rice and Corn Corporation (hereafter referred
to as NARIC) in Manila.
- NARIC, pursuant to the order, shipped 1,726 sacks of rice
consigned to the City of Iloilo on board the SS "General
Wright" belonging to the Southern Lines, Inc. Each sack of
rice weighed 75 kilos and the entire shipment as indicated in
the bill of lading had a total weight of 129,450 kilos.
According to the bill of lading, the cost of the shipment was
P63,115.50.
- The City of Iloilo received the shipment and paid the amount
of P63,115.50. However, it was noted that the foot of the bill
of lading that there was shortage was equivalent to 41
sacks of rice with a net weight of 13,319 kilos, the
proportionate value of which was P6,486.35.

-

-

The City of Iloilo filed a complaint in the Court of First
Instance of Iloilo against NARIC and the Southern Lines, Inc.
for the recovery of the amount of P6,486.35 representing the
value of the shortage of the shipment of rice.
After trial, the lower court absolved NARIC from the
complaint, but sentenced the Southern Lines, Inc. to pay.
The Southern Lines, Inc. appealed to the Court of Appeals
which affirmed the judgment of the trial court. Hence, this
petition for review.

ISSUE: Whether or not the defendant-carrier, the herein petitioner, is
liable for the loss or shortage of the rice shipped? YES
RULING:
Under the provisions of Article 361 of the Code of Commerce, the
defendant-carrier in order to free itself from liability, was only obliged
to prove that the damages suffered by the goods were "by virtue of
the nature or defect of the articles." Under the provisions of Article
362, the plaintiff, in order to hold the defendant liable, was obliged to
prove that the damages to the goods by virtue of their nature,
occurred on account of its negligence or because the defendant did
not take the precaution adopted by careful persons.
Petitioner claims exemption from liability by contending that the
shortage in the shipment of rice was due to such factors as the
shrinkage, leakage or spillage of the rice on account of the bad
condition of the sacks at the time it received the same and the
negligence of the agents of respondent City of Iloilo in receiving the
shipment. The contention is untenable, for, if the fact of improper
packing is known to the carrier or his servants, or apparent
upon ordinary observation, but it accepts the goods
notwithstanding such condition, it is not relieved of liability for
loss or injury resulting thereform.
Furthermore, according to the Court of Appeals, "appellant
(petitioner) itself frankly admitted that the strings that tied the bags of
rice were broken; some bags were with holes and plenty of rice were
spilled inside the hull of the boat, and that the personnel of the boat

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collected no less than 26 sacks of rice which they had distributed
among themselves." This finding, which is binding upon this
Court, shows that the shortage resulted from the negligence of
petitioner.

Ganzon v. CA and Gelacio Tumambing
FACTS:
- 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"
- Pursuant to that agreement, Mauro B. Ganzon sent his
lighter "Batman" to Mariveles where it docked in three feet of
water.
- 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, 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. The gunshot was
not fatal but Tumambing had to be taken to a hospital in
Balanga, Bataan, for treatment.
- After sometime, the loading of the scrap iron was resumed.
Several months after, Acting Mayor Basilio Rub,
accompanied by three policemen, ordered captain Filomeno
Niza and his crew to dump the scrap iron where the lighter
was docked. The rest was brought to the compound of
NASSCO. Later on Acting Mayor Rub issued a receipt
stating that the Municipality of Mariveles had taken custody
of the scrap iron.
- Tumambing instituted in the CFI an action against petitioner
for damages based on culpa contractual. CFI rendered

-

judgment in favor of Ganzon. Tumambing appealed. CA
reversed.
Petitioner maintains that he is exempt from any liability
because the loss of the scraps was due mainly to the
intervention of the municipal officials of Mariveles which
constitutes a caso fortuito as defined in Article 1174(5) of the
Civil Code.

ISSUE: W/N petitioner is exempt from liability by virtue of Art. 1174(5)
in the light of the circumstances mentioned in the case? NO
RULING:
SC cited CA’s ruling 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. Ganzon has 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 from private individuals.

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.

The intervention of the municipal officials was not in any case, of a
character that would render impossible the fulfilment 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

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attended with such force or intimidation as to completely overpower
the will of the petitioner's employees. The mere difficulty in the
fulfilment of the obligation is not considered force majeure. 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.

done under legal process or authority so that petitioner should be
freed from responsibility.

Dissent (Melencio-Herrera, J.): Petitioner cannot be held liable in
damages for the loss and destruction of the scrap iron. The loss of
said cargo was due to an excepted cause an 'order or act of
competent public authority" (Article 1734[5], Civil Code).

The loading of the scrap iron on the lighter had to be suspended
because of Municipal Mayor Jose Advincula's intervention, who was
a "competent public authority." Petitioner had no control over the
situation as, in fact, Tumambing himself, the owner of the cargo, was
impotent to stop the "act' of said official and even suffered a gunshot
wound on the occasion.

Through the "order" or "act" of "competent public authority,"
therefore, the performance of a contractual obligation was rendered
impossible. The scrap iron that was dumped into the sea was
"destroyed" while the rest of the cargo was "seized." The seizure is
evidenced by the receipt issues by Acting Mayor Rub stating that the
Municipality of Mariveles had taken custody of the scrap iron.
Apparently, therefore, the seizure and destruction of the goods was

Cangco v. Manila Railroad Co.
WHO WON: Cangco
DOCTRINE: The test by which to determine whether the passenger
has been guilty of negligence in attempting to alight from a moving
railway train, is that of ordinary or reasonable care. It is to be
considered whether an ordinarily prudent person, of the age, sex and
condition of the passenger, would have acted as the passenger
acted under the circumstances disclosed by the evidence. This care

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has been defined to be, not the care which may or should be used by
the prudence man generally, but the care which a man of ordinary
prudence would use under similar circumstances to avoid injury.
FACTS:
- Jose Cangco was in the employment of Manila Railroad Co.
(MRC) in the capacity of clerk, with a monthly wage of P25.
He lived in the pueblo of San Mateo, in the province of Rizal,
which is located upon the line of the defendant MRC; and in
coming daily by train to the company’s office in the city of
Manila where he worked, he used a pass for free.
- On Jan 1915, Cangco arose from his seat in the secondclass car where he was riding and, as he was on his way to
exit through the door, he seized the guardrail with his right
hand for support and took his position upon the steps of the
coach.
- On the side of the train where passengers alight at the San
Mateo station there is a cement platform which begins to rise
with a moderate gradient some distance away from MRC’s
office. As the train slowed down, another passenger (Emilio
Zuniga) alighted safely at the point where the platform
begins to rise from the level of the ground. When the train
proceeded a little farther, Jose Cangco stepped off but
one/both of his feet came in contact with a sack of
watermelons with the result that his feet slipped from
under him and he fell violently on the platform. His body
at once rolled from the platform and was drawn under
the moving car, where his right arm was badly crushed
and lacerated. It appears that after the plaintiff alighted
from the train the car moved forward about 6m before it
came to a full stop. Note that the accident occurred
between 7-8pm and the railroad station was dimly lit.
- Cangco was drawn under the car in an unconscious
condition, and it appeared that the injuries he sustained were
very serious. He was then brought to the hospital where his
arm had to be amputated. The result of the first operation
was unsatisfactory and so Cangco was then carried to
another hospital and the arm was again amputated. It

-

appears in evidence that he spent P790.25 for medic/surg
fees.
Cangco filed a civil suit in the CFI to recover damages on the
ground of the negligence of the servants/employees of MRC
in placing the sacks of [water]melon upon the platform.
CFI ruled in favor of MRC. It drew its conclusion from the fact
that Cangco himself had failed to use due caution in alighting
from the coach and is thus precluded from recovering, albeit
MRC was guilty of negligence.

ISSUE: W/N plaintiff is guilty of contributory negligence so as to
preclude him from recovering from defendant common carrier? NO
RULING:
The conduct of the plaintiff in undertaking to alight while the train was
yet slightly under way was not characterized by imprudence and that
therefore he was not guilty of contributory negligence.
The test by which to determine whether the passenger has been
guilty of negligence in attempting to alight from a moving railway
train, is that of ordinary or reasonable care. It is to be considered
whether an ordinarily prudent person, of the age, sex and condition
of the passenger, would have acted as the passenger acted under
the circumstances disclosed by the evidence. This care has been
defined to be, not the care which may or should be used by the
prudence man generally, but the care which a man of ordinary
prudence would use under similar circumstances to avoid injury.
It may be admitted that had plaintiff waited until the train had come to
a full stop before alighting, the particular injury suffered by him could
not have occurred. Defendant contends that it is negligence per se
for a passenger to alight from a moving train. The SC, however, is of
the opinion that this proposition is contrary to the experience of
everyday life. In the case at bar, the train was barely moving when
plaintiff alighted, as shown by the fact that it came to a stop within
6m from the place where he stepped from it. Thousands of people
alight under these conditions and sustain no injury where the
company has kept its platform free from dangerous obstructions.

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MRC was bound by reason of its public duty as a public carrier to
afford its passengers facilities for safe egress from its train, Cangco
had a right to assume, in the absence of some circumstance to warn
him to the contrary, that the platform was clear. There was failure on
the part of the common carrier to place the pile of sacks adequately
so that their presence would be revealed to alighting passengers in
such a dimly lit place.
Lasam v. Smith
WHO WON: Lasam spouses
DOCTRINE:
Elements of FE/Casa Fortuito:
- 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.
- It must be impossible to foresee the event which constitutes
the casa fortuito, or if it can be foreseen, it must be
impossible to avoid.
- The occurrence must be such as to render it impossible for
the debtor to fulfill his obligation in a normal manner.
- The obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.
FACTS:
- On Feb 1918, Frank Smith – owner of a public garage in San
Fernando, LU engaged in the business of carrying
passengers for hire from one point to another in LU and
other provinces – undertook to convey Honorio Lasam and
his wife from San Fernando to Ilocos Norte in a Ford
automobile.
- On leaving San Fernando, the automobile was operated by a
licensed chauffeur, but after having reached the town of San
Juan, the chauffeur allowed his assistant, Remigio Bueno, to
drive the car.
- Bueno held no driver’s license but had some experience in
driving, and with the exception of some slight engine trouble,
the car functioned well UNTIL after the crossing of Abra

-

-

-

River in Tagudin, when defects developed in the steering
gear so as to make accurate steering impossible, and after
zigzagging for a distance of about half a kilometer, the car
left the road and went down a steep embankment.
In going over the bank of the road, the automobile was
overturned and the plaintiffs pinned down under it. Mr.
Lasama sustained a few contusions and a dislocated rib
while his wife Joaquina sustained a compound fracture of a
bone in her wrist.
A year after the aforesaid event, spouses Lasam filed a civil
suit against defendant on the ground that the accident was
due to the defects in the automobile as well as to the
incompetence and negligence of the chauffeur, and that the
liability of the defendant is governed by art. 1903 of the old
CC (tort).
Trial court held that the cause of action rests on defendant’s
breach of the CoC and that consequently, arts. 1101-1107
apply. It also held that the breach of contract was not due to
FE and so defendant is liable for damages.

ISSUE: W/N defendant common carrier is liable for plaintiffs’
injuries? YES
RULING:
Elements of FE/Casa Fortuito were first laid down by the SC to
substantiate its decision namely:
- 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.
- It must be impossible to foresee the event which constitutes
the casa fortuito, or if it can be foreseen, it must be
impossible to avoid.
- The occurrence must be such as to render it impossible for
the debtor to fulfill his obligation in a normal manner.
- The obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.

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As will be seen, the essential element in casa fortuito is that an
extraordinary circumstance independent of the will of the
obligor, or his employees has caused injury to the plaintiff. The
Court is of the view that such element is lacking. It is not suggested
that the accident in question was due to an act of God or to adverse
road conditions which could not have been foreseen. As far as the
records shows, the accident was caused either by the defects in the
automobile or else through the negligence of its driver. This is not
casa fortuito.
A carrier of passengers is not an absolute insurer against all the
risks of travel from which the passenger may protect himself by
exercising ordinary care and diligence. But such is not the
present case since the passengers has no means of avoiding
the danger/escaping the injury.
La Mallorca v. De Jesus
WHO WON: De Jesus and Tolentino
DOCTRINE: To exempt a common carrier from liability for death or
physical injuries to passengers upon the ground of force
majeure, the carrier must clearly show not only that the efficient
cause of the casualty was entirely independent of the human will, but
also that it was impossible to avoid. Any participation by the common
carrier in the occurrence of the injury will defeat the defense of force
majeure.
FACTS:
- Lolita De Jesus, 20 yr old daughter of respondent Valentin
De Jesus and wife of Manolo Tolentino, died from a head-on
collision between La Mallorca and Pampanga Bus Co’s
(LaMallorca-Pambusco) bus, on which she was a passenger
and freight truck traveling in the opposite direction. The
immediate cause of the collision was the fact that the driver
of the bus lost control of the wheel when its left front tire
suddenly exploded.
- De Jesus and Tolentino filed a civil suit with the trial court
which sentenced LaMallorca-Pambusco to pay plaintiffs
damages (inclusive of moral damages).

-

Petitioner now filed an appeal by certiorari with the CA
alleging that a tire blow-out is a FE and gives rise to no
liability for negligence.

ISSUE: W/N the common carrier must be exonerated from liability
due to the occurrence of a fortuitous event by way of a tire blow-out?
NO
RULING:
To exempt a common carrier from liability for death or physical
injuries to passengers upon the ground of force majeure, the
carrier must clearly show not only that the efficient cause of the
casualty was entirely independent of the human will, but also
that it was impossible to avoid. Any participation by the common
carrier in the occurrence of the injury will defeat the defense of force
majeure. (This was actually cited in Gatchalian v. DeLim but such doctrine applies
very well in this case. Also there was not much principle enunciated here and so I just
chose to cite this one)

In the case at bar, the Court found that the cause of blow-out was
known. The inner tube of the left front tire, according to petitioner’s
own evidence and as found by the CA “was pressed between the
inner circle of the left wheel and the rim which has slipped out of the
wheel.” This was a mechanical defect of the conveyance or a
fault in its equipment which was easily discoverable if the bus
had been subjected to a more thorough, or rigid check-up
before it took to the road that morning. Moreover, both the trial
court and CA found as a fact that the bus was running quite fast
immediately before the accident. Considering that the tire which
exploded was not new – petitioner describes it as not so very worn
out – the plea of casa fortuito cannot be entertained.
Moral damages are recoverable by reason of the death of a
passenger caused by the breach of CoC by virtue of Art. 1764 in rel
to Art. 2206.
Gatchalian v. Delim
WHO WON: Gatchalian

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DOCTRINE:
- For a waiver to be valid and effective, it must not be contrary
to law, morals, public policy, or good customs. To uphold a
supposed waiver of any right to claim damages by an injured
passenger, under circumstances like those exhibited in this
case, would be to dilute and weaken the standard of
extraordinary diligence exacted by the law from common
carriers and hence to render that standard unenforceable.
The purported waiver is offensive to public policy.
- A common carrier is bound to carry its passengers safely" as
far as human care and foresight can provide, using
the utmost diligence of a very cautious person, with due
regard to all the circumstances". In case of death or injuries
to passengers, a statutory presumption arises that the
common carrier was at fault or had acted negligently "unless
it proves that it had observed extraordinary diligence as
prescribed in Articles 1733 and 1755."
- To exempt a common carrier from liability for death or
physical injuries to passengers upon the ground of force
majeure, the carrier must clearly show not only that the
efficient cause of the casualty was entirely independent of
the human will, but also that it was impossible to avoid. Any
participation by the common carrier in the occurrence of the
injury will defeat the defense of force majeure.

-

-

-

FACTS:
- Petitioner Reynalda Gatcalian boarded, as paying
passenger, respondent’s “Thames” mini bus at a point in San
Eugenio, LU bound for Bauang, LU. On the way, while the
bus was running along the highway in Barrio Payocpoc,
Bauang, Union, “a snapping sound” was suddenly heard at
one part of the bus and, shortly thereafter, the vehicle
bumped a cement flower pot on the side of the road, went off
the road, turned turtle and fell into a ditch.

-

-

Several passengers, including Gatchalian, were injured and
were promptly brought to a hospital. Upon medical
examination, petitioner was found to have sustained physical
injuries on the leg, arm and forehead.
Passengers were confined in the hospital, Mrs. Adela Delim,
wife of respondent, visited them and later paid for their
hospitalization and medical expenses. She also gave
petitioner P12with which to pay her transportation expense
in going home from the hospital. However, before Mrs. Delim
left, she had the injured passengers, including petitioner,
sign an already prepared Joint Affidavit which stated, among
other things that plaintiffs are “no longer interested to file a
complaint, criminal or civil against the said driver and owner
of the said Thames, because it was an accident” and that the
said driver and owner has already helped them.
Notwithstanding such document, Gatchalian filed with the
CFI an action extra contractu to recover compensatory and
moral damages. She alleged in the complaint that her
injuries sustained from the vehicular mishap had left her with
a conspicuous white scar on the forehead, generating
mental suffering and an inferiority complex on her part; and
that as a result, she had to retire in seclusion and stay away
from her friends. She also alleged that the scar diminished
her facial beauty and deprived her of opportunities for
employment.
Respondent averred that the vehicular mishap was due
to force majeure, and that petitioner had already been paid
and moreover had waived any right to institute any action
against him (private respondent) and his driver, when
petitioner Gatchalian signed the Joint Affidavit.
CFI dismissed the complaint upon the ground that when
petitioner Gatchalian signed the Joint Affidavit, she
relinquished any right of action (whether criminal or civil) that
she may have had against respondent and the driver of the
mini-bus.
On appeal, CA reversed the TC’s conclusion that there had
been a valid waiver, but affirmed the dismissal of the case by
denying petitioner’s claim for damages.

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TRANSPORTATION LAW | ATTY. AMPIL
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ISSUE/S:
1. W/N a waiver relinquishing the rights to file a civil/criminal suit
against a common carrier is valid? NO
2. W/N defendant common carrier is liable to plaintiff? YES
RULING:
1. A waiver, to be valid and effective, must in the first place be
couched in clear and unequivocal terms which leave no doubt as to
the intention of a person to give up a right or benefit which legally
pertains to him. A waiver may not casually be attributed to a person
when the terms thereof do not explicitly and clearly evidence an
intent to abandon a right vested in such person.
The terms of the Joint Affidavit in the instant case cannot be
regarded as a waiver cast in "clear and unequivocal" terms.
Moreover, the circumstances under which the Joint Affidavit was
signed by petitioner Gatchalian need to be considered. Petitioner
testified that she was still reeling from the effects of the vehicular
accident, having been in the hospital for only three days, when the
purported waiver in the form of the Joint Affidavit was presented to
her for signing; that while reading the same, she experienced
dizziness but that, seeing the other passengers who had also
suffered injuries sign the document, she too signed without bothering
to read the Joint Affidavit in its entirety. Considering these
circumstances there appears substantial doubt whether petitioner
understood fully the import of the Joint Affidavit (prepared by or at the
instance of private respondent) she signed and whether she actually
intended thereby to waive any right of action against private
respondent.
Since what is involved here is the liability of a common carrier
for injuries sustained by passengers in respect of whose safety
a common carrier must exercise extraordinary diligence, any
waiver limiting its liability must be construed strictly against it.
For a waiver to be valid and effective, it must not be contrary to
law, morals, public policy, or good customs. To uphold a
supposed waiver of any right to claim damages by an injured
passenger, under circumstances like those exhibited in this
case, would be to dilute and weaken the standard of

extraordinary diligence exacted by the law from common
carriers and hence to render that standard unenforceable. The
purported waiver is offensive to public policy.
2. A common carrier is bound to carry its passengers safely" as far
as human care and foresight can provide, using the utmost diligence
of a very cautious person, with due regard to all the
circumstances". In case of death or injuries to passengers, a
statutory presumption arises that the common carrier was at fault or
had acted negligently "unless it proves that it had observed
extraordinary diligence as prescribed in Articles 1733 and 1755." In
fact, because of this statutory presumption, it has been held that a
court need not even make an express finding of fault or negligence
on the part of the common carrier in order to hold it liable. To
overcome this presumption, the common carrier must show to the
court that it had exercised extraordinary diligence to prevent the
injuries. The standard of extraordinary diligence imposed upon
common carriers is considerably more demanding than the standard
of ordinary diligence, i.e., the diligence of a good pater
familias established in respect of the ordinary relations between
members of society.
In the case at bar, there is no evidence showing that respondent had
exercised the extraordinary diligence required by law. Respondent
did not even attempt, during the trial, to prove that he had indeed
exercised the requisite extraordinary diligence. Respondent did try to
exculpate himself from liability by alleging that the mishap was the
result of force majeure. But allegation is not proof and here again,
respondent utterly failed to substantiate his defense of force
majeure. To exempt a common carrier from liability for death or
physical injuries to passengers upon the ground of force
majeure, the carrier must clearly show not only that the efficient
cause of the casualty was entirely independent of the human will, but
also that it was impossible to avoid. Any participation by the common
carrier in the occurrence of the injury will defeat the defense of force
majeure.
Moreover, the record yields affirmative evidence of fault or
negligence on the part of respondent common carrier. The driver did

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not stop to check if anything had gone wrong with the bus despite
the fact that one of the passengers had already apprised him of the
“snapping sound”. This could only mean that the bus had not been
checked physically or mechanically to determine what was causing
the "snapping sound" which had occurred so frequently that the
driver had gotten accustomed to it.
Roque v. Buan
WHO WON: Roque
DOCTRINE: Negligence on the part of the common carrier is
presumed where, as in the present case, the passenger suffers
injuries. In case of death or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently,
unless they proved that they observed extraordinary diligence as
prescribed in Articles 1733 and 1755.
FACTS:
- On Feb 1955, Antonio Roque was a paying passenger of
Philippine Rabbit Bus Lines (PRBL) operated by defendants.
The bus left Manila for Angeles, Pampanga driven by
Celestino Soliman, an employee of operator. When the bus
was over the Sulipan bridge at Apalit, Pampanga, it met a
cargo truck coming from the opposite direction. To avoid
colliding with the truck, the driver swerved the bus to the
right, which however, sideswiped the railing of the bridge. So
violent was the impact, that the two iron grills of a window of
the bus were detached, dangling thereat, and the rear right
portion of the bus was dented inward. Roque was seated by
the side of the window where the iron grills were detached
with his right arm resting on the sill of the frame of the
window. Roque then suffered several injuries e.g. abrasion,
fracture, lacerated wounds, etc.
- Roque then filed a civil suit against Bienvenido Buan and
Natividad Paras, co-administrators of the Estate of the
deceased spouses Florencio and Rizalina – the owners of
PRBL, in the CFI for alleged breach of CoC, resulting from a
traffic accident which occurred at Sulipan Bridge.

-

To avoid liability, the thesis of the defense is that plaintiff’s
arm was injured because he extended it outside the window,
and struck it against the railing of the bridge.
CFI ruled in favor of Roque and ordered defendants to pay
plaintiff.
CA reversed and held that the plaintiff's arm was injured
because — "he must have extended his right elbow beyond
or outside the grills of the window of the bus."

ISSUE: W/N common carrier PRBL is liable to plaintiff? YES
RULING:
Negligence on the part of the common carrier is presumed where, as
in the present case, the passenger suffers injuries. In case of death
or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they proved that
they observed extraordinary diligence as prescribed in Articles 1733
and 1755.
When the action is based on a contract of carriage and not of tort,
the court need not make an express finding of fault or negligence on
the part of the carrier in order to hold it responsible to any damages
sought for by the plaintiff. For the carrier by accepting the passenger
assumes express obligation to transport him to his destination safely,
and to observe extraordinary diligence with due regard for all the
circumstances, and any injury that may be suffered: by the
passenger is right away attributable to the fault or negligence of the
carrier. This is an exception to the general rule that negligence must
be proved and it is incumbent upon the carrier to prove that it
exercised extraordinary diligence as prescribed in NCC 1733&1755.
In the case at bar, the physical fact that the bus suffered damage to
the extent as shown by plaintiff's evidence, is proof that that portion
of the bus came into violent contact with some protruding hard object
on the railing capable of producing such damage. The SC is
persuaded to believe, as found by the trial court, that the violent
contact of the bus with the railing was what caused the damage to
the bus. The SC has also accorded more credence to the evidence

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of the plaintiff that the bus was running at an unreasonable speed
when it approached and crossed the bridge.
The negligence of the defendants in the case at bar, rests on
something more solid than a legal presumption. The accident
occurred because of want of care and prudence on the part of bus
driver. As the defendants failed to prove their observance of
extraordinary diligence in discharging their obligation unto plaintiff,
their liability as public utility operator is beyond question.
Brinas v. People
WHO WON: Juanito Gesmundo
DOCTRINE: The proximate cause of the injury is not necessarily the
immediate cause of, or the cause nearest in time to, the injury. It is
only when the causes are independent of each other that the nearest
is to be charged with the disaster. So long as there is a natural, direct
and continuous sequence between the negligent act and the injury
that it can reasonably be said that but for the act the injury could not
have occurred, such negligent act is the proximate cause of the
injury, and whoever is responsible therefore is liable for damages
resulting therefrom. One who negligently creates a dangerous
condition cannot escape liability for the natural and probable
consequences thereof, although the act of a third person, or an act of
God for which he is not responsible intervenes to precipitate the loss.
FACTS:
- On Jan 1957, Juanito Gesmundo bought a train ticket at the
railroad station in Tagkayawan, Quezon for his 55-year old
mother Martina Bool and his 3-year old daughter Emelita
Gesmundo who were bound for Barrio Lusacan, Tiaong.
- At about 2pm that day, the train left Tagkawayan with the old
woman and her granddaughter among the passengers. At
Hondagua, the train's complement were relieved, with
Victor Millan taking over as engineman, Clemente Briñas
as conductor, and Hermogenes Buencamino as
assistant conductor.
- Upon approaching Barrio Lagalag in Tiaong, the train slowed
down and the conductor shouted 'Lusacan', 'Lusacan'.

-

Thereupon, the old woman walked towards the left front door
facing the direction of Tiaong, carrying the child. When the
two were near the door, the train suddenly picked up speed.
As a result the two stumbled and they were seen no more. It
took 3 mins more before the train stopped at the next barrio,
Lusacan, and the victims were not among the passengers
who disembarked thereat. The next morning, the dead
bodies of the old woman and the child were seen in the
railroad tracks by the police.
CFI of Quezon convicted defendant-appellant Clemente
Briñas for double homicide thru reckless imprudence but
acquitted Buencamino and Millan OTG of reasonable doubt.
Apart from imprisonment for violation of Art. 305 in rel to Art.
249 of the RPC, the lower court ordered Briñas to indemnify
the heirs of the deceased. As to the responsibility of the
Manila Railroad Company, the court held that it shall be the
subject of a separate proceeding. CA affirmed.
Petitioner argues that it was negligence per se for Martina
Bool to go to the door of the coach while the train was still in
motion and that it was this negligence that was the
proximate cause of their deaths?

ISSUE: W/N Brinas’ premature announcement of the train’s stop was
the proximate cause of Bool and Gesmundo’s death? YES
RULING:
The proximate cause of the injury is not necessarily the immediate
cause of, or the cause nearest in time to, the injury. It is only when
the causes are independent of each other that the nearest is to be
charged with the disaster. So long as there is a natural, direct and
continuous sequence between the negligent act and the injury that it
can reasonably be said that but for the act the injury could not have
occurred, such negligent act is the proximate cause of the injury, and
whoever is responsible therefore is liable for damages resulting
therefrom. One who negligently creates a dangerous condition
cannot escape liability for the natural and probable consequences
thereof, although the act of a third person, or an act of God for which
he is not responsible intervenes to precipitate the loss.

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It was negligence on the conductor's part to announce the next flag
stop when said stop was still a full three minutes ahead. As the
respondent CA correctly observed, "the appellant's announcement
was premature and erroneous. That the announcement was
premature and erroneous is shown by the fact that immediately after
the train slowed down, it unexpectedly accelerated to full speed.
Petitioner-appellant failed to show any reason why the train suddenly
resumed its regular speed. The announcement was made while the
train was still in Barrio Lagalag.
The proximate cause of the death of the victims was the premature
and erroneous announcement of petitioner' appellant Briñas. This
announcement prompted the victims to stand and proceed to the
nearest exit. Without said announcement, the victims would have
been safely seated in their respective seats when the train jerked as
it picked up speed. The connection between the premature and
erroneous announcement of petitioner-appellant and the deaths of
the victims is direct and natural, unbroken by any intervening efficient
causes.
Mallari v. CA and Bulletin Publishing Corp.
WHO WON: Bulletin
DOCTRINE: In an action based on contract of carriage, the court
need not make an express finding of fault or negligence on the part
of the carrier in order to hold it responsible for the payment of
damages sought by the passenger. Under Art. 1755 of the Civil
Code, a common carrier is bound to carry the passengers safely as
far as human care and foresight can provide using the utmost
diligence of very cautious persons with due regard for all the
circumstances. Moreover, under Art. 1756 of the Civil Code, in case
of death or injuries to passengers, a common carrier is presumed to
have been at fault or to have acted negligently, unless it proves that it
observed extraordinary diligence. Further, pursuant to Art. 1759 of
the same Code, it is liable for the death of or injuries to passengers
through the negligence or willful acts of the former’s employees. This
liability of the common carrier does not cease upon proof that it
exercised all the diligence of a good father of a family in the selection
of its employees.

FACTS:
- On Oct 1987, the passenger jeepney driven by petitioner
Alfredo Mallari Jr. and owned by his co-petitioner Alfredo
Mallari Sr. collided with the delivery van of respondent
Bulletin Publishing Corp. (Bulletin) along the National
Highway in Barangay San Pablo, Dinalupihan, Bataan.
- The collision occurred after Mallari Jr. overtook the Fiera
while negotiating a curve in the highway. The points of
collision were the left rear portion of the passenger jeepney
and the left front side of the delivery van of Bulletin. The two
right wheels of the delivery van were on the right shoulder of
the road and pieces of debris from the accident were found
scattered along the shoulder of the road up to a certain
portion of the lane travelled by the passenger jeepney. The
impact caused the jeepney to turn around and fall on its left
side resulting in injuries to its passengers one of whom was
Israel Reyes who eventually died due to the gravity of his
injuries.
- Claudia G. Reyes, the widow of Israel M. Reyes, filed a
complaint for damages with the RTC against Alfredo Mallari
Sr. and Alfredo Mallari Jr., and also against Bulletin, its driver
Felix Angeles, and the N.V. Netherlands Insurance
Company. RTC found that the proximate cause of the
collision was the negligence of Felix Angeles, driver of the
Bulletin delivery van, considering the fact that the left front
portion of the delivery truck driven by Felix Angeles hit and
bumped the left rear portion of the passenger jeepney driven
by Alfredo Mallari Jr.
- CA modified the decision of the RTC and found no
negligence on the part of Angeles and Bulletin (his
employer). It ruled that the collision was caused by the sole
negligence of petitioner Alfredo Mallari Jr. who admitted that
immediately before the collision and after he rounded a
curve on the highway, he overtook a Fiera which had
stopped on his lane and that he had seen the van driven by
Angeles before overtaking the Fiera. CA ordered the Mallaris
to compensate Reyes and absolved respondent Bulletin.

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ISSUE: Who among the two carriers in a collision is liable to the
injuries sustained by the plaintiff’s husband? Mallaris

liability of the common carrier does not cease upon proof that it
exercised all the diligence of a good father of a family in the
selection of its employees.

RULING:
The SC found that the proximate cause of the collision resulting in
the death of Israel Reyes, a passenger of the jeepney, was the sole
negligence of the driver of the passenger jeepney, petitioner Alfredo
Mallari Jr., who recklessly operated and drove his jeepney in a lane
where overtaking was not allowed by traffic rules. Under Art. 2185
of the Civil Code, unless there is proof to the contrary, it is
presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap he was violating a traffic
regulation. As found by the appellate court, petitioners failed to
present satisfactory evidence to overcome this legal
presumption.

Clearly, by the contract of carriage, the carrier jeepney owned by
Mallari Sr. assumed the express obligation to transport the
passengers to their destination safely and to observe extraordinary
diligence with due regard for all the circumstances, and any injury or
death that might be suffered by its passengers is right away
attributable to the fault or negligence of the carrier.

The negligence and recklessness of the driver of the passenger
jeepney is binding against petitioner Mallari Sr., who was the owner
of the passenger jeepney engaged as a common carrier, considering
the fact that in an action based on contract of carriage, the court
need not make an express finding of fault or negligence on the
part of the carrier in order to hold it responsible for the payment
of damages sought by the passenger. Under Art. 1755 of the
Civil Code, a common carrier is bound to carry the passengers
safely as far as human care and foresight can provide using the
utmost diligence of very cautious persons with due regard for
all the circumstances. Moreover, under Art. 1756 of the Civil
Code, in case of death or injuries to passengers, a common
carrier is presumed to have been at fault or to have acted
negligently, unless it proves that it observed extraordinary
diligence. Further, pursuant to Art. 1759 of the same Code, it is
liable for the death of or injuries to passengers through the
negligence or willful acts of the former’s employees. This

Del Prado v. Manila Electric Co.
WHO WON: Del Prado

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DOCTRINE: As a general rule, there is no obligation on the part of a
street railway company to stop its cars to let on intending passengers
at other points than those appointed for stoppage. Nevertheless,
although the motorman of this car was not bound to stop to let the
plaintiff on, it was his duty to do act that would have the effect of
increasing the plaintiff's peril while he was attempting to board the
car. The premature acceleration of the car was, in our opinion, a
breach of this duty.
The relation between a carrier of passengers for hire and its patrons
is of a contractual nature; and in failure on the part of the carrier to
use due care in carrying its passengers safely is a breach of duty
(culpa contractual) under articles 1101, 1103 and 1104 of the Civil
Code. Furthermore, the duty that the carrier of passengers owes to
its patrons extends to persons boarding the cars as well as to those
alighting therefrom.
FACTS:
- Manila Electric Company (MEC) is engaged in operating
street cars in the City for the conveyance of passengers;
- On Nov 1925, Teodorico Florenciano, as MEC’s
motorman, was in charge of car No. 74 running from
east to west on R. Hidalgo Street.
- After the car had stopped at its appointed place for taking on
and letting off passengers, just east of the intersection, it
resumed its course at a moderate speed under the guidance
of the motorman.
- Del Prado, upon approaching the car, raised his hand as an
indication to the motorman of his desire to board the car, in
response to which the motorman eased up a little, without
stopping.
- Del Prado then seized, with his hand, the front
perpendicular handspot and at the same time placing
his left foot upon the platform. However, before the Del
Prado’s position had become secure, and even before his
raised right foot had reached the flatform, the motorman
applied the power, with the result that the car gave a slight
lurch forward. This sudden impulse to the car caused the

-

plaintiff's foot to slip, and his hand was jerked loose
from the handpost, He therefore fell to the ground, and
his right foot was caught and crushed by the moving
car. The next day the member had to be amputated in
the hospital.
Del Prado filed a civil suit against MEC with the CFI of
Manila to recover damages. CFI awarded to Del Prado the
sum of P10K as damages. Defendant MEC appealed.
The motorman stated at the trial that he did not see the
plaintiff attempting to board the car; that he did not
accelerate the speed of the car as claimed by the plaintiff's
witnesses; and that he in fact knew nothing of the incident
until after the plaintiff had been hurt and someone called to
him to stop.

ISSUE/S:
1. W/N common carrier MEC is liable to plaintiff Del Prado? YES
2. W/N Del Prado is guilty of contributory negligence? YES
RULING:
1. As a general rule, there is no obligation on the part of a street
railway company to stop its cars to let on intending passengers
at other points than those appointed for stoppage.
Nevertheless, although the motorman of this car was not bound
to stop to let the plaintiff on, it was his duty to do act that would
have the effect of increasing the plaintiff's peril while he was
attempting to board the car. The premature acceleration of the
car was, in our opinion, a breach of this duty.
The relation between a carrier of passengers for hire and its
patrons is of a contractual nature; and in failure on the part of
the carrier to use due care in carrying its passengers safely is a
breach of duty (culpa contractual) under articles 1101, 1103 and
1104 of the Civil Code. Furthermore, the duty that the carrier of
passengers owes to its patrons extends to persons boarding
the cars as well as to those alighting therefrom.
The distinction between these two kinds of negligence (culpa
contractual and culpa aquiliana) is important in this jurisdiction, for

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the reason that where liability arises from a mere tort (culpa
aquiliana), not involving a breach of positive obligation, an employer,
or master, may exculpate himself, under the last paragraph of article
1903 of the Civil Code, by providing that he had exercised due
diligence to prevent the damage; whereas this defense is not
available if the liability of the master arises from a breach of
contractual duty (culpa contractual). Another practical difference
between liability for negligence arising under 1902 of the Civil Code
and liability arising from negligence in the performance of a positive
duty, under article 1101 and related provisions of the Civil Code, is
that, in dealing with the latter form of negligence, the court is given a
discretion to mitigate liability according to the circumstances of the
case (art 1103). No such general discretion is given by the Code in
dealing with liability arising under article 1902 (tort).
2. As to the contributory negligence of the plaintiff, the Court applied
the ruling in Rakes vs. Atlantic, Gulf and Pacific Co., where it was
considered as a mitigating circumstance under article 1103 of the
Civil Code. It is obvious that the plaintiff's negligence in attempting to
board the moving car was not the proximate cause of the injury. The
direct and proximate cause of the injury was the act of
appellant's motorman in putting on the power prematurely. A
person boarding a moving car must be taken to assume the risk
of injury from boarding the car under the conditions open to his
view, but he cannot fairly be held to assume the risk that the
motorman, having the situation in view, will increase his peril by
accelerating the speed of the car before he is planted safely on
the platform. The rule here applicable seems to be analogous to the
doctrine of "the last clear chance." In accordance with this doctrine,
the contributory negligence of the party injured will not defeat the
action if it be shown that the defendant might, by the exercise of
reasonable care and prudence, have avoided the consequences of
the negligence of the injured party. The negligence of the plaintiff
was, however, contributory to the accident and must be considered
as a mitigating circumstance.
Aboitiz Shipping v. CA
WHO WON: Vianas

DOCTRINE: All persons who remain on the premises a reasonable
time after leaving the conveyance are to be deemed passengers,
and what is a reasonable time or a reasonable delay within this rule
is to be determined from all the circumstances, and includes a
reasonable time to see after his baggage and prepare for his
departure. The carrier-passenger relationship is not terminated
merely by the fact that the person transported has been carried to his
destination if, for example, such person remains in the carrier's
premises to claim his baggage
FACTS:
- On May 11, 1975, Anacleto Viana boarded the vessel M/V
Antonia owned by defendant Aboitiz Shipping Corp
(Aboitiz), at the port at San Jose, Occidental Mindoro, bound
for Manila, having purchased a a ticket in the sum of P23.10.
- A day after, said vessel arrived at Pier 4, North Harbor,
Manila, and the passengers therein disembarked, a
gangplank having been provided connecting the side of the
vessel to the pier. Instead of using said gangplank
Anacleto Viana disembarked on the third deck which
was on the level with the pier. After said vessel had
landed, the Pioneer Stevedoring Corporation (Pioneer)
took over the exclusive control of the cargoes loaded on said
vessel pursuant to the Memorandum of Agreement (MOA)
between the third-party defendant Pioneer and defendant
Aboitiz.
- The crane owned by Pioneer and operated by its crane
operator Alejo Figueroa was placed alongside the vessel
and one (1) hour after the passengers of said vessel had
disembarked, it started operation by unloading the cargoes
from said vessel. While the crane was being operated,
Anacleto Viana who had already disembarked from said
vessel obviously remembering that some of his cargoes
were still loaded in the vessel, went back to the vessel, and
it was while he was pointing to the crew of the said
vessel to the place where his cargoes were loaded that
the crane hit him, pinning him between the side of the
vessel and the crane.

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-

-

-

-

-

Anacleto was thereafter brought to the hospital where he
later died 3 days after. The cause of his deathbeing
"hypostatic pneumonia secondary to traumatic fracture
of the pubic bone lacerating the urinary bladder".
Private respondent Vianas filed a complaint for damages
against Aboitiz for breach of CoC.
Aboitiz denied responsibility contending that at the time of
the accident, the vessel was completely under the control of
Pioneer as the exclusive stevedoring contractor of Aboitiz,
which handled the unloading of cargoes from the vessel of
Aboitiz. It is also averred that since the crane operator was
not an employee of Aboitiz, the latter cannot be held liable
under the fellow-servant rule. Thereafter, Aboitiz filed a thirdparty complaint against Pioneer.
Pioneer averred, among among other things, that Aboitiz had
no cause of action against Pioneer considering that Aboitiz is
being sued by the Vianas for breach of contract of carriage
to which Pioneer is not a party and that Pioneer had
observed the diligence of a good father of a family both in
the selection and supervision of its employees as well as in
the prevention of damage or injury to anyone including the
victim Anacleto Viana.
RTC ruled in favor of Vianas and ordered Aboitiz to pay the
Vianas for damages incurred and Pioneer was ordered to
reimburse Aboitiz for whatever amount the latter has paid the
Vianas.
Both Aboitiz and Pioneer filed separate MRs wherein they
raised that Anacleto acted with gross negligence.
RTC absolved Pioneer from liability for failure of the Vianas
and Aboitiz to establish a case of negligence against the
crane operator which is never presumed aside from the fact
that the MOA refers only to Pioneer's liability in case of loss
or damage to goods handled by it but not in the case of
personal injuries, and, finally that Aboitiz cannot properly
invoke the fellow-servant rule simply because its liability
stems from a breach of contract of carriage. CA affirmed.

ISSUE: W/N common carrier Aboitiz is liable for the death of Viana
resulting from the accidental fall of the crane towards him? YES
RULING:
The rule is that the relation of carrier and passenger continues until
the passenger has been landed at the port of destination and has left
the vessel owner's dock or premises. Once created, the relationship
will not ordinarily terminate until the passenger has, after reaching
his destination, safely alighted from the carrier's conveyance or had
a reasonable opportunity to leave the carrier's premises. All persons
who remain on the premises a reasonable time after leaving the
conveyance are to be deemed passengers, and what is a
reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances, and includes a
reasonable time to see after his baggage and prepare for his
departure. The carrier-passenger relationship is not terminated
merely by the fact that the person transported has been carried
to his destination if, for example, such person remains in the
carrier's premises to claim his baggage
In the case at bar, the SC ruled that there was justifiable cause for
the presence of Anacleto on or near the petitioner’s vessel an hour
after the petitioner disembarked from the vessel. It is of common
knowledge that, by the very nature of petitioner's business as a
shipper, the passengers of vessels are allotted a longer period of
time to disembark from the ship than other common carriers such as
a passenger bus. With respect to the bulk of cargoes and the
number of passengers it can load, such vessels are capable of
accommodating a bigger volume of both as compared to the capacity
of a regular commuter bus. Consequently, a ship passenger will
need at least an hour as is the usual practice, to disembark from
the vessel and claim his baggage whereas a bus passenger can
easily get off the bus and retrieve his luggage in a very short
period of time. When the accident occurred, the victim was in
the act of unloading his cargoes, which he had every right to
do, from petitioner's vessel. As earlier stated, a carrier is duty
bound not only to bring its passengers safely to their
destination but also to afford them a reasonable time to claim
their baggage.

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While the victim was admittedly contributorily negligent, still Aboitiz’s
failure to exercise extraordinary diligence was the proximate and
direct cause of, because it could definitely have prevented, the
former's death.
The Court also held that there was no negligence on the part of
Pioneer, a confirmation of the trial court's finding to that effect,
hence, it is absolved from liability.
Bachelor Express Inc. v. CA
WHO WON: Heirs of (passengers) Beter and Rautraut
DOCTRINE: In order that a common carrier may be absolved from
liability in case of force majeure, it is not enough that the accident
was caused by force majeure. The common carrier must still prove
that it was not negligent in causing the injuries resulting from such
accident.
FACTS:
- On Aug 1980, a bus owned by Bachelor Express, Inc. (BEI)
and driven by Cresencio Rivera came from Davao City on its
way to Cagayan de Oro City passing Butuan City.
- While at Tabon-Tabon, Butuan City, the bus picked up a
passenger and about 15 mins later, a passenger at the rear
portion suddenly stabbed a PC soldier which caused
commotion and panic among the passengers.
- When the bus stopped, passengers Ornominio Beter and
Narcisa Rautraut were found lying down the road, the former
already dead as a result of head injuries and the latter also
suffering from severe injuries which caused her death later.
- The passenger assailant alighted from the bus and ran
toward the bushes but was killed by the police. Thereafter,
the heirs of Ornominio Beter and Narcisa Rautraut, private
respondents herein the parents of Beter and Rautraut.

RTC dismissed the complaint. Upon appeal, the decision
was reversed and set aside. CA found BEI and Rivera
solidarily liable to pay the private respondents herein.

ISSUE:
1. What was the proximate cause of the whole incident?
2. Whether or not the petitioner’ common carrier observed
extraordinary diligence to safeguard the lives of its passengers? NO
RULING:
1. Petitioner, in order to overcome the presumption of
fault/negligence under the law, states that the vehicular incident
resulting in the death of the passengers Beter and Rautraut was
caused by force majeure/casa fortuito.
The following essential characteristics of casa fortuito are: (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 (debtor) must be free from any participation in the
aggravation of the injury resulting to the creditor.
The running amuck of the passenger was the proximate cause
of the incident as it triggered off a commotion and panic among
passengers started running to the sole exit shoving each other
resulting in the falling off the passengers Beter and Rautraut
causing them fatal injuries. The sudden act of the passenger
who stabbed another passenger in the bus is within context of
force majeure.
However, in order that a common carrier may be absolved from
liability in case of force majeure, it is not enough that the
accident was caused by force majeure. The common carrier
must still prove that it was not negligent in causing the injuries
resulting from such accident.

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2. There is nothing in the record to support the conclusion that the
solitary door of the bus was locked as to prevent the passengers
from passing through. Leonila Cullano (witness) clearly stated that
the conductor opened the door when the passengers were shouting
that the bus stop while they were in a state of panic. Sergia Beter
categorically stated that she actually saw her son fall from the bus as
the door was forced open by the force of the onrushing passengers.
Moreover, the records show that the bus was running at a speed of
48-65 km/hour, the speed of the bus scarcely be considered slow
considering that according to Collango (conductor) himself, the bus
had just come from a full stop after picking a passenger and that the
bus was still on its second or third gear.
Therefore, the negligence of the common carrier, through its
employees, consisted of the lack of extraordinary diligence required
of common carriers, in exercising vigilance and utmost care of the
safety of its passengers, exemplified by the driver's belated stop and
the reckless opening of the doors of the bus while the same was
travelling at an appreciably fast speed. At the same time, the
common carrier itself acknowledged, through its administrative
officer, Benjamin Granada, that the bus was commissioned to travel
and take on passengers and the public at large, while equipped with
only a solitary door for a bus its size and loading capacity, in
contravention of rules and regulations provided for under the Land
Transportation and Traffic Code

Maranan v. Perez
WHO WON: Maranan
DOCTRINE: By virtue of Art. 1759 of the Civil Code, common
carriers are liable for the death of or injuries to passengers through
the negligence or willful acts of the former's employees, although
such employees may have acted beyond the scope of their authority
or in violation of the orders of the common carriers. Accordingly, it is
the carrier's strict obligation to select its drivers and similar
employees with due regard not only to their technical competence
and physical ability, but also, no less important, to their total

personality, including their patterns of behavior, moral fibers, and
social attitude.
FACTS:
- On October 1960, Rogelio Corachea, a passenger in a
taxicab owned and operated by Pascual Perez was stabbed
and killed by the driver, Simeon Valenzuela.
- Valenzuela was convicted of homicide by the CFI of
Batangas.
- While appeal was pending in the CA, Antonia Maranan
(victim’s mother), filed an action in the CFI of Batangas to
recover damages from Perez and Valenzuela for the death of
her son.
Defendants asserted that the deceased was killed in selfdefense, since he first assaulted the driver by stabbing him
from behind. Defendant Perez further claimed that the death
was a caso fortuito for which the carrier was not liable.
- CFI found for Antonia and awarded her damages against
Perez. The claim against Valenzuela was dismissed. CA
affirmed the judgment of conviction.
ISSUE: W/N common carrier Perez is liable for the act of his
employee against its passenger? YES
RULING:
By virtue of Art. 1759 of the Civil Code, common carriers are
liable for the death of or injuries to passengers through the
negligence or willful acts of the former's employees, although
such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
Three very cogent reasons underlie this rule as explained in Texas
Midland R.R. v. Monroe and Haver v. Central Railroad Co.: (1) the
special undertaking of the carrier requires that it furnish its
passenger that full measure of protection afforded by the exercise of
the high degree of care prescribed by the law, inter alia from violence
and insults at the hands of strangers and other passengers, but
above all, from the acts of the carrier's own servants charged with

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the passenger's safety; (2) said liability of the carrier for the servant's
violation of duty to passengers, is the result of the formers confiding
in the servant's hands the performance of his contract to safely
transport the passenger, delegating therewith the duty of protecting
the passenger with the utmost care prescribed by law; and (3) as
between the carrier and the passenger, the former must bear the risk
of wrongful acts or negligence of the carrier's employees against
passengers, since it, and not the passengers, has power to select
and remove them.
Accordingly, it is the carrier's strict obligation to select its
drivers and similar employees with due regard not only to their
technical competence and physical ability, but also, no less
important, to their total personality, including their patterns of
behavior, moral fibers, and social attitude.
Applying this stringent norm to the facts in this case, therefore, the
lower court rightly adjudged the defendant carrier liable pursuant to
Art. 1759 of the Civil Code. The dismissal of the claim against the
defendant driver was also correct. Plaintiff's action was predicated on
breach of contract of carriage and the cab driver was not a party
thereto. His civil liability is covered in the criminal case wherein he
was convicted by final judgment.
PAL v. NLRC
WHO WON: PAL – its application for clearance to terminate Gempis
was approved.
DOCTRINE: The business of petitioner Philippine Airlines is such
that whenever a passenger dies or is injured the presumption is, it is
at fault notwithstanding the fact that it has exercised due diligence of
a good father of a family in the selection and supervision of its
employees. Thus, extraordinary measures and diligence should be
exercised by it for the safety of its passengers and their belongings.
Needless to state, a pilot must be sober all the time for he may be
called upon to fly a plane even before his regular scheduled hours,
otherwise so many lives will be in danger if he is drunk. It would be
unjust for an employer like herein petitioner PAL to be compelled to

continue with the employment of a person whose continuance in the
service is obviously inimical to its interest.
FACTS:
- On November 1980, private respondent, Salvador Gempis, a
YS-11 pilot of PAL with the rank of captain, filed with the
Ministry of Labor, NCR, a complaint against PAL for illegal
suspension and dismissal.
- The next day, PAL filed with the same office an application
for clearance to terminate the employment of Gempis on the
grounds of (1) serious misconduct and (2) violation of the
liquor ban and company policies.
- The charge of petitioners against Gempis was "serious
misconduct (abuse of authority)" for forcing First Officers
A. Barcebal and J. Ranches to drink on February 27, 1980,
at 10:30 in the evening at the coffee shop of the Triton Hotel
at Cebu, six (6) bottles of beer each, within thirty
minutes. Unable to consume the bottles of beer within the
time limit set by Gempis, the two pilots were ordered to
stand erect and were hit on the stomach by Gempis. The
petition alleged that "the incident occurred with the full
knowledge of private respondent that the 2 affected co-pilots
have flight duties the next day with initial assignments as
early as 7:10 am and as late as 12:00 pm.
- Labor Arbiter Dogelio denied PAL’s application for clearance
to terminate complainant’s services, the penalty of six
months demotion being sufficient. He has also ordered PAL
to reinstate Gempis in his position as YS-11 Captain, with
backwages for six months. NLRC affirmed.
ISSUE: W/N Gempis’ act of compelling his subordinates to drink
alcohol the night before the latter’s flight constitutes extraordinary
measures and diligence for the safety of its would-be passengers?
NO
RULING:
The business of petitioner Philippine Airlines is such that whenever a
passenger dies or is injured the presumption is, it is at fault

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notwithstanding the fact that it has exercised due diligence of a good
father of a family in the selection and supervision of its employees.
Thus, extraordinary measures and diligence should be exercised by
it for the safety of its passengers and their belongings. Needless to
state, a pilot must be sober all the time for he may be called upon to
fly a plane even before his regular scheduled hours, otherwise so
many lives will be in danger if he is drunk. It would be unjust for an
employer like herein petitioner PAL to be compelled to continue with
the employment of a person whose continuance in the service is
obviously inimical to its interest.

-

After receiving the note, 15 mins after take-off, Capt. Luis
Bonnevie, Jr., came out of the cockpit and sat beside Villarin
at the rear portion of the plane and explained that he could
not send the message because it would be heard by all
ground aircraft stations. Villarin, however, told the pilot of the
danger of commission of violent acts on board the plane by
the notorious 'Zaldy' and his three companions.

-

While the pilot and Villarin were talking, 'Zaldy' and one of
his companions walked to the rear and stood behind them.
'Zaldy' and his three (3) companions returned to their seats,
but after a few minutes they moved back to the rear throwing
ugly looks at Villarin.
Soon thereafter an exchange of gunshots ensued between
Villarin and 'Zaldy' and the latter's companions. 'Zaldy'
announced to the passengers and the pilots in the cockpit
that it was a hold-up and ordered the pilot not to send any
SOS. The hold-uppers divested passengers of their
belongings. Specifically, Norberto Quisumbing, Sr. was
divested of [pieces of jewelry] and cash in the total amount
of P18,650 out of which recoveries were made amounting to
P4,550. On the other hand, Gunther Leoffler was divested of
a wrist watch, cash and a wallet in the total of P1,700 As a
result of the incident, Quisumbing, Sr. suffered shock,
because a gun had been pointed at him by one of the
holduppers.
Upon landing at the Manila International Airport. 'Zaldy' and
his three companions succeeded in escaping.
Quisumbing and Loeffler brought suit against PAL in the CFI,
to recover the value of the property lost by them to the
robbers as well as moral and exemplary damages, attorney's
fees and expenses of litigation. The plaintiffs declared that
their suit was instituted pursuant to Civil Code articles 1754,
998, 2000 and 2001 and on the ground that in relation to
said Civil Code article 2001 the complained-of act of the
armed robbers is not a force majeure, as the 'use of arms' or
'irresistible force' was not taken advantage of by said armed

Quisumbing v. CA
WHO WON: PAL
DOCTRINE: Where the [common carrier] has faithfully complied with
the requirements of government agencies and adhered to the
established procedures and precautions of the airline industry at any
particular time, its failure to take certain steps that a passenger in
hindsight believes should have been taken is not the negligence or
misconduct which mingles with force majeure as an active and
cooperative cause.
FACTS:
- Norberto Quisumbing, Sr. and Gunther Leoffler were among
the of PAL’s Fokker 'Friendship' PIC-536 plane in its flight
of November 6, 1968 which left Mactan City at about 7:30 in
the evening with Manila for its destination.
- After the plane had taken off, Florencio O. Villarin, a Senior
NBI Agent who was also a passenger of the said plane,
noticed a certain 'Zaldy,' a suspect in the killing of Judge
Valdez, seated at the front seat near the door leading to
the cockpit of the plane.
- Villarin then scribbled a note addressed to the pilot of the
plane requesting the latter to contact NBI duty agents in
Manila for the said agents to ask the Director of the NBI to
send about six NBI agents to meet the plane because the
suspect in the killing of Judge Valdez was on board

-

-

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-

-

robbers in gaining entrance to defendant's ill-fated plane in
question.
PAL denied liability alleging that the robbery during the flight
and after the aircraft was forcibly landed at the Manila Airport
did indeed constitute force majeure, and neither of the
plaintiffs had notified PAL "or its crew or employees that they
were in possession of cash, German marks and valuable
[pieces of jewelry] and watches" or surrendered said items to
"the crew or personnel on board the aircraft."
CFI rendered judgment 'dismissing plaintiffs' complaint. It
upheld PAL’s contention. Plaintiffs appealed to the CA.
CA affirmed CFI. It rejected the argument that "the use of
arms or irresistible force" referred to in Article 2001
constitutes force majeure only if resorted to gain entry into
the airplane, and not if it attends "the robbery itself.” It also
ruled that PAL could not be faulted for want of diligence,
particularly for failing "to take positive measures to
implement Civil Aeronautics Administration regulations
prohibiting civilians from carrying firearms on board
aircrafts;" and that "the absence of coded transmissions, the
amateurish behaviour of the pilot in dealing with the NBI
agent, the allegedly open cockpit door, and the failure to
return to Mactan, in the light of the circumstances of the
case were not negligent acts sufficient to overcome the force
majeure nature of the armed robbery.

ISSUE: W/N common carrier PAL is liable to plaintiffs? NO
RULING:
The Supreme Court is convinced of the correctness of the essential
conclusion of both the trial and appellate courts that the evidence
does indeed fail to prove any want of diligence on the part of
PAL, or that, more specifically, it had failed to comply with
applicable regulations or universally accepted and observed
procedures to preclude hijacking; and that the particular acts
singled out by the petitioners as supposedly demonstrative of
negligence were, in the light of the circumstances of the case,
not in truth negligent acts "sufficient to overcome the force
majeure nature of the armed robbery."

Where the defendant has faithfully complied with the
requirements of government agencies and adhered to the
established procedures and precautions of the airline industry
at any particular time, its failure to take certain steps that a
passenger in hindsight believes should have been taken is not
the negligence or misconduct which mingles with force majeure
as an active and cooperative cause. Under the circumstance of
the instant case, the acts of the airline and its crew cannot be faulted
as negligence. The hijackers had already shown their willingness to
kill. One passenger was in fact killed and another survived gunshot
wounds. The lives of the rest of the passengers and crew were more
important than their properties. Cooperation with the hijackers until
they released their hostages at the runway end near the South
Superhighway was dictated by the circumstances.
Fabre, Jr. v. CA
WHO WON: Private respondents (Amyline Antonio, WWCF, etc.)
DOCTRINE: Due diligence in selection of employees is not satisfied
by finding that the applicant possessed a professional driver’s
license. The employer should also examine the applicant for his
qualifications, experience and record of service. Due diligence in
supervision, on the other hand, requires the formulation of rules and
regulations for the guidance of employees and the issuance of
proper instructions as well as actual implementation and monitoring
of consistent compliance with the rules.
FACTS:
-

Petitioners Engracio Fabre, Jr. and his wife were owners of a
1982 model Mazda minibus. They used the bus principally in
connection with a bus service for school children which
they operated in Manila.

-

The couple had a driver, Porfirio J. Cabil, whom they hired in
1981, after trying him out for two weeks. His job was to

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take school children to and from the St. Scholastica’s
College in Malate, Manila.
-

Private respondent Word for the World Christian Fellowship
Inc. (WWCF) arranged with petitioners for the transportation
of 33 members of its Young Adults Ministry from Manila to La
Union and back in consideration of which private respondent
paid petitioners the amount of P3K.

-

The group was scheduled to leave at 5PM. However, as
several members of the party were late, the bus did not
leave the Tropical Hut at the corner of Ortigas Avenue and
EDSA until 8PM. Petitioner Porfirio Cabil drove the minibus.

-

The usual route to Caba, La Union was through Carmen,
Pangasinan. Petitioner Cabil, who was unfamiliar with the
area (it being his first trip to La Union), was forced to
take a detour through the town of Ba-ay in Lingayen,
Pangasinan. At 11:30PM, he came upon a sharp curve
on the highway, running on a south to east
direction/“siete.” The road was slippery because it was
raining, causing the bus, which was running at the
speed of 50 kilometers per hour, to skid to the left road
shoulder. The bus hit the left traffic steel brace and sign
along the road and rammed the fence of one Jesus
Escano, then turned over and landed on its left side,
coming to a full stop only after a series of impacts. The
bus came to rest off the road. A coconut tree which it
had hit fell on it and smashed its front portion.

-

Several passengers were injured. Private respondent
Amyline Antonio was thrown on the floor of the bus and
pinned down by a wooden seat which came off after

being unscrewed. It took three persons to safely remove
her from this position. She was in great pain and could not
move.
-

The Lingayen police investigated the incident the next day
and subsequently filed a criminal complaint against the
driver, Porfirio Cabil. The case was later filed with the RTC
Lingayen.

-

Amyline Antonio, who was seriously injured, brought this
case in the RTC Makati. As a result of the accident, she is
now suffering from paraplegia and is permanently paralyzed
from the waist down. During the trial she described the
operations she underwent and adduced evidence regarding
the cost of her treatment and therapy.

-

RTC gave judgment for private respondents ordering
petitioners Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil
pursuant to articles 2176 and 2180 to pay the respondents
jointly and severally. CA affirmed.

ISSUE: W/N common carrier Fabres were
accordingly, liable to private respondents? YES

negligent,

and

RULING:
Pursuant to Arts. 2176 and 2180 of the Civil Code, Cabil’s negligence
gave rise to the presumption that his employers, the Fabres, were
themselves negligent in the selection and supervision of their
employee.
The finding that Cabil drove his bus negligently, while his employer,
the Fabres, who owned the bus, failed to exercise the diligence of a
good father of the family in the selection and supervision of their
employee is fully supported by the evidence on record. Indeed, it

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was admitted by Cabil that on the night in question, it was raining,
and, as a consequence, the road was slippery, and it was dark which
according to him, was the reason for his failure to see that there lay a
sharp curve ahead. However, it is undisputed that Cabil drove his
bus at the speed of 50 kilometers per hour and only slowed down
when he noticed the curve some 15 to 30 meters ahead. By then it
was too late for him to avoid falling off the road. Given the conditions
of the road and considering that the trip was Cabil’s first one outside
of Manila, Cabil should have driven his vehicle at a moderate
speed.
Due diligence in selection of employees is not satisfied by finding
that the applicant possessed a professional driver’s license. The
employer should also examine the applicant for his qualifications,
experience and record of service. Due diligence in supervision, on
the other hand, requires the formulation of rules and regulations for
the guidance of employees and the issuance of proper instructions
as well as actual implementation and monitoring of consistent
compliance with the rules.
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La
Union, apparently did not consider the fact that Cabil had been
driving for school children only, from their homes to the St.
Scholastica’s College in Metro Manila.They had hired him only after
a two-week apprenticeship. They had tested him for certain matters,
such as whether he could remember the names of the children he
would be taking to school, which were irrelevant to his qualification to
drive on a long distance travel, especially considering that the trip to
La Union was his first. The existence of hiring procedures and
supervisory policies cannot be casually invoked to overturn the
presumption of negligence on the part of an employer.
As common carriers, the Fabres were bound to exercise
“extraordinary diligence” for the safe transportation of the
passengers to their destination. This duty of care is not excused by
proof that they exercised the diligence of a good father of the family
in the selection and supervision of their employee.

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-

Cariaga v. LTB
WHO WON: Cariaga
DOCTRINE:
- The income of the plaintiff which he could have earned if he
should he finish his course and pass the board exams must
be deemed to be within the natural and probable
consequences of the breach –along with medical, hospital
and other expenses– because they could have reasonably
been foreseen by the parties at the time the plaintiff boarded
the bus owned and operated by the common carrier.
- Moral damages may only be awarded upon showing of any
of the instances enumerated under Art. 2219 of the New Civil
Code or upon showing of bad faith or fraud under Art. 2220
of the same Code.
- Attorney’s fees may only be recovered upon showing of any
of the instances enumerated under Art. 2208 of the New Civil
Code.
FACTS:
- At about 1PM on June 18, 1952, a passenger bus of the
Laguna Tayabas Bus Co. (LTB) driven by Alfredo Moncada,
left for Lilio, Laguna, with Edgardo Cariaga, a fourth-year
medical student of the University of Santo Tomas, as
one of its passengers.
- As the bus reached that part of the poblacion of Bay,
Laguna, where the national highway crossed a railroad track,
it bumped against the engine of a train then passing by
with such terrific force that the first six wheels of the
train were derailed, the engine and the front part of the
body of the bus was wrecked, the driver of the bus died
instantly, while many of its passengers, Edgardo among
them, were severely injured.

-

-

-

-

Edgardo was first confined at the San Pablo City Hospital
(June 18) and then brought next to the De los Santos Clinic
(June 20), Quezon City. He again left such clinic to be
transferred to the University of Santo Tomas Hospital (Oct
14-Nov 15) where he stayed for a relatively longer period.
On this last date he was taken back to the De los Santos
Clinic (Jan 15). He was unconscious during the first 35
days after the accident. Dr. Gustilo removed the
fractured bones which lacerated the right frontal lobe of
his brain and at the UST Hospital, Dr. Gustilo performed
another operation to cover a big hole on the right frontal
part of the head with a tantalum plate.
LTB paid the sum of P16,964.45 for all the hospital,
medical and miscellaneous expenses incurred from
June 18, 1952 - April, 1953. From January 15, 1953 - April
1953, Edgardo stayed in a private house in Quezon, City, the
LTB having agreed to give him a subsistence allowance of
P10 daily during his period of recovery, having spent in this
connection the total sum of P775.30 in addition to the
amount already referred to.
Edgardo filed a civil suit against LTB and the Manila Railroad
Co. the total sum of P312,000 as actual, compensatory,
moral and exemplary damages, and for his parents, the
sum of P18,000 in the same concepts.
LTB disclaimed liability claiming that the accident was due to
the negligence of its co-defendant Manila Railroad Co., for
not providing a crossing bar at the point where the national
highway crossed the railway track, and for the reason filed
the corresponding cross-claim against the latter company to
recover the total sum of P18,194.75 representing the
expenses paid to Edgardo.
Manila Railroad Co, in turn, denied liability upon the
complaint and cross-claim alleging that it was reckless
negligence of the bus driver that caused the accident.
The lower court held that it was the negligence of the bus
driver that caused the accident and, as a result,
rendered judgment sentencing the LTB to pay Edgardo
Cariaga the sum of P10,490 as compensatory damages,

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-

-

with interest at the legal rate from the filing of the
complaint, and dismissing the cross-claim against the
Manila Railroad Company. From this decision the
Cariagas and the LTB appealed.
Cariagas claim that the TC erred in awarding only P10,490
as compensatory damages to Edgardo; in not awarding
them actual and moral damages, and in not sentencing LTB
to pay attorney’s fees.
LTB's contends that the TC should have held that the
collision was due to the fault of both the locomotive driver
and the bus driver and erred, as a consequence, in not
holding the Manila Railroad Company liable upon the crossclaim filed against it. LTB also avers that the driver of the
train locomotive, like the bus driver, violated the law, first, in
sounding the whistle only when the collision was about to
take place instead of at a distance at least 300 meters from
the crossing, and second, in not ringing the locomotive bell
at all.

ISSUE/S:
1. W/N Manila Railroad Company should also be held liable in the
collision? NO
2. W/N the award of compensatory damages to Eduardo is
inadequate considering the nature and the after effects of the
physical injuries suffered by him? YES
3. W/N Edgardo Cariaga is entitled to moral damages and
attorney’s fees? NO
RULING:
1. The Supreme Court quoted the lower court’s finding regarding
LTB’s contention on Manila Railroad Company’s alleged liability to
wit: “While the train was approximately 300 meters from the
crossing, the engineer sounded two long and two short whistles and
upon reaching a point about 100 meters from the highway, he
sounded a long whistle which lasted up to the time the train was
about to cross it. The bus proceeded on its way without slackening
its speed and it bumped against the train engine, causing the first six
wheels of the latter to be derailed…”

Moreover, LTB’s charge against Manila Railroad Company of its
contributory negligence due to an alleged violation of section 91 of
Art. 1459 of MRR’s chapter by its failure to ring the bell was not
satisfactorily proven. Consequently, the burden of proof on the part of
LTB was not discharged.
2. According to Edgardo’s neurosurgeon Dr. Romeo Gustilo, it
appears that, as a result of the injuries suffered by him, his right
forehead was fractured necessitating the removal of practically
all of the right frontal lobe of his brain. From the testimony of Dr.
Jose A. Fernandez, a psychiatrist, it may be gathered that, because
of the physical injuries suffered by Edgardo, his mentality has been
so reduced that he can no longer finish his studies as a medical
student; that he has become completely misfit for any kind of
work; that he can hardly walk around without someone helping
him, and has to use a brace on his left leg and feet. Thus, as a
result of the physical injuries suffered by Edgardo Cariaga, he
is now in a helpless condition, virtually an invalid, both
physically and mentally.
The SC is of the opinion that the income which Edgardo Cariaga
could have earned if he should finish the medical course and
pass the corresponding board examinations must be deemed to
be within the natural and probable consequences of the breach –
along with medical, hospital and other expenses totaling
P17,719.75– because they could have reasonably been foreseen by
the parties at the time he boarded the bus owned and operated by
the LTB. At that time he was already a fourth-year student in
medicine in a reputable university.
As regards the income that he could possibly earn as a medical
practitioner, it appears that, according to Dr. Amado Doria, a witness
for the LTB, the amount of P300 could easily be expected as the
minimum monthly income of Edgardo had he finished his studies.
Upon consideration of all the facts mentioned heretofore this
Court is of the opinion, and so holds, that the compensatory
damages awarded to Edgardo Cariaga should be increased to
P25,000.

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3. Plaintiffs' claim for moral damages cannot be granted. Article
2219 of the Civil Code enumerates the instances when moral
damages may be covered and the case under consideration
does not fall under any one of them. The present action cannot
come under paragraph 2 of said article because it is not one of
quasi-delict because of the pre-existing contractual relation
between the Laguna Tayabas Bus Company and Edgardo
Cariaga. Neither could defendant Laguna Tayabas Bus
Company be held liable to pay moral damages to Edgardo
Cariaga under Article 2220 of the Civil Code on account of
breach of its contract of carriage because said defendant did
not act fraudulently or in bad faith in connection therewith.
Defendant Laguna Tayabas Bus Company had exercised due
diligence in the selection and supervision of its employees like the
drivers of its buses in connection with the discharge of their duties
and so it must be considered an obligor in good faith.
The plaintiff Edgardo Cariaga is also not entitled to recover for
attorney's fees, because this case does not fall under any of the
instances enumerated in Article 2208 of the Civil Code.
Defendant has not committed in connection with this case any
"criminal offense resulting in physical injuries". The present complaint
is not based either on a "quasi-delict causing physical injuries” nor
“any criminal offense resulting in physical injuries” –
LTB’s driver herein being the one who committed the offense is
already dead from the collision.
To reiterate, the sum of P2,000 awarded as moral damages by
the trial court has to be eliminated, for under the law it is not a
compensation awardable in a case like the one at bar. The claim
made by said spouses for actual and compensatory damages is
likewise without merits since the present action is based upon a
breach of contract of carriage to which said spouses were not a
party, and neither can they premise their claim upon the
negligence or quasi-delict of the LTB simply because they were
not themselves injured as a result of the collision between the
LTB bus and train owned by the Manila Railroad Company.

Davila v. PAL
WHO WON: Davila
DOCTRINE:
- According to Article 2206, paragraph (1), of the Civil Code,
"the defendant shall be liable for the loss of the earning
capacity of the deceased and indemnity shall be paid to the
heirs of the latter." This Article, while referring to "damages
for death caused by crime or quasi-delict," is expressly made
applicable by Article 1764 "to the death of a passenger
caused by the breach of contract by a common carrier.
- The formula to compute damages for Davila’s death is this:
his life expectancy (2/3 x [80-age of death]) x net income
(gross income-expense)
- According to Article 2206, in relation to Article 1764, of the
Civil Code, the parents of the deceased are entitled to moral
damages for their mental anguish.
- According to Article 2232 of the Civil Code, in contracts and
quasi-contracts the court may award exemplary damages if
the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.
FACTS:
- The case arose from the tragic crash of a passenger plane
of the defendant which took the lives of all its crew and
passengers. The plane was a DC-3 type of aircraft,
manufactured in 1942 and acquired by the defendant in
1948. It had flown almost 18,000 hours at the time of its
ill-fated flight. Despite its age, however, it had been certified
as airworthy by the Civil Aeronautics Administration.
- On November 23, 1960, at 5:30PM, it took off from the
Manduriao Airport, Iloilo, on its way to Manila, with 33 people
on board, including the plane's complement. It did not reach
its destination, but crashed at Mt. Baco, Mindoro, one hour
and fifteen minutes after take-off. A massive search was
undertaken by the defendant and by other parties as soon as
it was realized that the plane's arrival in Manila was overdue.

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-

-

The plaintiffs, parents of Pedro T. Davila, Jr., who was one of
the passengers, had no definite news of what had happened
to their son, getting what information they could only from
conflicting newspaper reports, until they received, on
December 19, 1960, a letter of condolence from the
defendant's president Andres Soriano, informing them that
their son had died in the crash. And it was only on December
29 that his body was recovered and taken back to Iloilo.
Plaintiffs Spouses Davila filed a civil suit against PAL with the
CFI which ruled in their favor. CFI ordered PAL to pay the ff:
(1) Pedro Davila’s death – 6K; (2) Loss of earning capacity –
60K; (3) moral damages – 10K; (4) exemplary damages –
10K; (5) actual damages – 5K; (6) attorney’s fees – 10K;
TOTAL=P101,000.

ISSUE: W/N PAL is liable for violation of its contract of carriage and if
so, for how much?
RULING:
What is undisputed is that the pilot did not follow the route (IloiloRomblon-Manila) prescribed for his flight, at least between Romblon
and Manila. Since up to that point over Romblon, where he was
supposed to intersect airway "Amber I" the weather was clear, the
most reasonable conclusion is that his failure to do so was
intentional, and that he probably wanted to fly on a straight line to
Manila. It was a violation of air-craft traffic rules to which, under the
circumstances, the accident may be directly attributable. In any case,
absent a satisfactory explanation on the part of the defendant as to
how and why the accident occurred, the presumption is that it was at
fault, under Article 1756 of the Civil Code.
The trial court fixed the indemnity for his death in the amount of
P6,000. Pursuant to current jurisprudence on the point it should
be increased to P12,000.
According to Article 2206, paragraph (1), of the Civil Code, "the
defendant shall be liable for the loss of the earning capacity of
the deceased and indemnity shall be paid to the heirs of the
latter." This Article, while referring to "damages for death caused by

crime or quasi-delict," is expressly made applicable by Article 1764
"to the death of a passenger caused by the breach of contract by a
common carrier."
The deceased, Pedro Davila, Jr., was single and 30 years of age
when he died. At that age one's normal life expectancy is 33-1/3
years, according to the formula (2/3 x [80-30]) adopted by this
Court in the case of Villa Rey Transit, Inc. vs. Court of Appeals
on the basis of the American Expectancy Table of Mortality or
the Actuarial of Combined Experience Table of Mortality.
However, although the deceased was in relatively good health,
his medical history shows that he had complained of and been
treated for such ailments as backaches, chest pains and
occasional feelings of tiredness. It is reasonable to make an
allowance for these circumstances and consider, for purposes
of this case, a reduction of his life expectancy to 25 years.
Considering the fact that the deceased was getting his income
from three (3) different sources, namely from managing a radio
station, from law practice and from farming, the expenses
incidental to the generation of such income were necessarily
more than if he had only one source. Together with his living
expenses, a deduction of P600.00 a month, or P7,200.00 a year,
leaving a net yearly income of P7,800.00. This amount,
multiplied by 25 years, or P195,000 is the amount which should
be awarded to the plaintiffs in this particular respect. In short,
the formula to compute damages for Davila’s death is this: his
life expectancy (2/3 x [80-age of death]) x net income (gross
income-expense).
Actual losses sustained consist of the following, as found by the trial
court: "Rolex Watch — P600.00; pistol — P300.00; Burial Expenses
— P600.00; and cost of cemetery lot and mausoleum - P3,500.00."
According to Article 2206, in relation to Article 1764, of the Civil
Code, the parents of the deceased are entitled to moral
damages for their mental anguish. The SC affirmed the P10,000
award by the trial court in this concept considering the long period of
uncertainty and suffering the plaintiffs underwent from November 23,

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when the plane crash occurred, to December 19, when they received
a letter from the defendant's president confirming the death of their
son, and again to the following December 29, when his body was
finally recovered and taken back to them.

-

However, the award of P10,000.00 as exemplary damages should be
eliminated. According to Article 2232 of the Civil Code, in
contracts and quasi-contracts the court may award exemplary
damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner. The failure of the
defendant here to exercise extraordinary diligence, as required by
law, does not amount to anyone of the circumstances contemplated
in the said provision. The Court has likewise affirmed the trial
court’s award of P10,000 for attorney’s fees. The total of the
different items above enumerated is P232,000.

-

De Lima v. LTB
WHO WON: De Lima et al
DOCTRINE:
As a general rule, a party who does not appeal from the decision
may not obtain any affirmative relief from the appellate court other
than what he has obtained from the lower court, if any, whose
decision is brought up on appeal. By way of exception, the claim for
legal interest and increase in the indemnity may be entertained in
spite of the failure of the claimants to appeal the judgment, as
warranted by the circumstances, pursuant to Art. 2210 of the Civil
Code which provides that “interest may, in the discretion of the court,
be allowed upon damages awarded for breach of contract.”
FACTS:
- This present action arose from a collision between a
passenger bus of the Laguna Tayabas Bus Co. (LTB) and a
delivery truck of the Seven-up Bottling Co. of the Philippines
resulting in the death of Petra de la Cruz and serious
physical injuries of Eladia de Lima and Nemesio Flores,
all passengers of the LTB bus.

-

-

-

Three civil suits were filed against herein respondents which
were consolidated for trial before the Court of First Instance
of Laguna. Said court rendered judgment in their favor and
ordered defendants to pay jointly and severally De Lima,
Requijos, De la Cruz and Flores.
De Lima and Requijos filed a MR of the decision seeking
an award of legal interest on the amounts adjudged in
their favor from the date of the said decision but their
motion was not acted upon by the lower court. Only the
said defendants appealed to the CA.
In the motion of petitioners filed with the CA, they sought for
an immediate decision of the case with a prayer for the
granting of legal interest from the date of the decision of the
court a quo and for the increase to P12,000 of the civil
indemnity of P3,000.00 awarded for the death of Petra de la
Cruz.
CA denied the MR holding that since the plaintiffs did not
appeal from the failure of the lower court to award interest on
the damages and that the court on its own discretion
awarded such interest in view of Art. 2210 of the Civil Code,
the effectivity of the interest should not be rolled back to the
time the decision of the court a quo was rendered.
De Lima et al now filed a petition for review on certiorari of
the decision of the CA affirming the decision of the lower
court with modification to including an award of legal
interest on the amounts adjudged in favor of petitioners
from the date of the decision of the CA to the time of
actual payment.

ISSUE/S:
1. W/N legal interest on damages should be awarded from the date
of the trial court’s decision? YES
2. W/N the indemnity for the death of Petra de la Cruz should be
increased? YES
RULING:
1. It is true that the rule is well-settled that a party cannot impugn the
correctness of a judgment not appealed from by him, and while he

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may make counter assignment of errors, he can do so only to sustain
the judgment on other grounds but not to seek modification or
reversal thereof, for in such case he must appeal. A party who does
not appeal from the decision may not obtain any affirmative relief
from the appellate court other than what he has obtained from the
lower court, if any, whose decision is brought up on appeal.
However, respondents failed to note that the legal interest was
awarded by the Appellate Court in its discretion based on
equitable grounds which is duly sanctioned by Art. 2210 of the
Civil Code which provides — “Interest may, in the discretion of
the court, be allowed upon damages awarded for breach of
contract.”
The Supreme Court in this case, was inclined to adopt a liberal
stance as it has done in previous decisions where it has held
that litigations should, as much as possible be decided on their
merits and not on technicality. Noteworthy is the fact that
petitioners are litigating as paupers. Although they may not
have appealed, they had filed their motion for reconsideration
with the court a quo which unfortunately did not act on it. By
reason of their indigence, they failed to appeal but petitioners
De Lima and Requijo had filed their manifestation making
reference to the law and jurisprudence upon which they base
their prayer for relief while petitioner Flores filed his brief.
Pleadings as well as remedial laws should be construed liberally in
order that the litigants may have ample opportunity to pursue their
respective claims and that a possible denial of substantial justice due
to legal technicalities may be avoided.
Where under the circumstances of this case, the heirs of the
victim in the traffic accident chose not to appeal in the hope
that the transportation company will pay the damages awarded
by the lower court but unfortunately said company still
appealed to the Court of Appeals, which step was obviously
dilatory and oppressive of the rights of the said claimants: that
the case had been pending in court for about 30 years from the
date of the accident in 1958 so that as an exception to the
general rule aforestated, the said heirs who did not appeal the

judgment, should be afforded equitable relief by the courts as it
must be vigilant for their protection. The claim for legal interest
and increase in the indemnity should be entertained in spite of
the failure of the claimants to appeal the judgment.
Thus, as an exception to the ruling of the CA as to the date when the
legal interest should commence to run, the legal interest of six
percent (6) on the amounts adjudged in favor of petitioners
should start from the time of the rendition of the trial court's
decision on December 27, 1963 instead of January 31, 1972, the
promulgation of the decision of the Court of Appeals.
2. Civil indemnity for the death of Petra de la Cruz was properly
awarded by virtue of Art. 1764 in relation to Art. 2206 of the Civil
Code of the Philippines which allows a minimum indemnity of P3,000
for the death of a passenger caused by the breach of contract by a
common carrier. In accordance with prevailing jurisprudence the
indemnity of P3,000 should be increased to P30,000.00 and not
P12,000 as prayed for by petitioner.
If the transportation company had only accepted the judgment of the
trial court and paid its just awards instead of appealing the same to
the Court of Appeals, no further delay would have been occasioned
on the simple issue of interest and indemnity. To mitigate the impact
of such a great delay in this case the Court found ample justification
in the aforesaid award for interest and indemnity.

Marchan v. Mendoza
WHO WON: Mendoza
DOCTRINE:

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-

-

-

-

Exemplary damages may be imposed by way of example or
correction only in addition, among others, to compensatory
damages, but that they cannot be recovered as a matter of
right, their determination depending upon the discretion of
the court.
The amount of exemplary damages need not be proved,
because its determination depends upon the amount of
compensatory damages that may be awarded to the
claimant.
The amount of exemplary damages need not also be
alleged, and the reason is obvious because it is merely
incidental or dependent upon what the court may award as
compensatory damages.
The amount of exemplary damages need not be pleaded in
the complaint because the same cannot be predetermined.
One can merely ask that it be determined by the court if in
the use of its discretion the same is warranted by the
evidence, and this is just what the respondents have done.

FACTS:
- On Feb 1954, around 9PM, a passenger bus operated by
the Philippine Rabbit Bus Lines (PRBL) and driven by
Silverio Marchan fell into a ditch somewhere in Barrio
Malanday, Polo, Bulacan, while travelling on its way to
Manila. The said bus was traveling at a high rate of speed
without due regard to the safety of the passengers. So much
so that one of the passengers had to call the attention of
Marchan who was then at the steering wheel of said bus to
lessen the speed or to slow down, but then Marchan did not
heed the request of said passenger; neither did he slacken
his speed. On the contrary, Marchan even increased his
speed while approaching a six-by-six truck which was
then parked ahead, apparently for the purpose of
passing the said parked truck and to avoid collision with
the incoming vehicle from the opposite direction.
However, when he veered his truck to resume position
over the right lane, the rear tires of said truck skidded

-

-

-

-

-

because of his high rate of speed, thereby causing said
truck to fall into a ditch.
As a result of which Arsenio Mendoza, his wife and child,
who were then inside the bus as passengers were thrown
out to the ground resulting in their multiple injuries.
Arsenio Mendoza suffered the most serious injuries
which damaged his vertebrae causing the paralysis of
his lower extremities which up to the time when the case
was tried he continued to suffer. The physician who
attended and treated plaintiff Arsenio Mendoza opined that
he may never walk again.
Consequently the driver of said bus Silverio Marchan was
prosecuted for serious, less serious and slight physical
injuries through reckless imprudence before the Justice
of the Peace Court of Polo Bulacan, and thereafter convicted
as charged which judgment of conviction was subsequently
affirmed by the CFI of same province.
Plaintiffs Arsenio, his wife and child sought to recover
damages against Marchan (driver) and from Bienvenido
Buan and Natividad Paras (administrator of the estate of
Florencio Buan – owner of PRBL) on the basis of a breach of
CoC for failure of defendants operator and driver to safely
convey them to their destination and also on account of
Marchan’s criminal negligence resulting to plaintiff’s multiple
damages.
RTC found for the plaintiffs and awarded the amount of
P40K as compensatory damages and attorney’s fees.
CA found that there was negligence on the part of the
defendants.CA affirmed the award of compensatory
damages modifying the appealed lower court decision by
holding petitioners to pay the amount of P30K as exemplary
damages and sustaining the award of attorney's fees in the
amount of P5K.
Petitioners sought the reversal of the CA Decision imputing
error on the appellate court for finding an implied contract of
carriage by the petitioner bus firm and respondent.
Petitioners also argue that CA is without jurisdiction to
adjudicate exemplary damages since there was no

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allegation nor prayer, nor proof, nor counterclaim of error for
the same by the respondents.

his limbs, being condemned for the remainder of his life to be a
paralytic, in effect leading a maimed, well-nigh useless existence.

ISSUE/S:
1. W/N there was a CoC between petitioners and respondent and if
there was breach? YES
2. W/N the awarding of damages by the CA was proper? YES

As to the finding of liability for exemplary damages, it is to be
observed however, that in the complaint, plaintiffs "prayed for such
other and further relief as this Court may deem just and
equitable”. Suffice it to state that when plaintiffs prayed in their
complaint for such other relief and remedies that may be availed of
under the premises, in effect, therefore, the court is called upon the
exercise and use its discretion whether the imposition of punitive or
exemplary damages even though not expressly prayed or pleaded in
the plaintiffs' complaint.

RULING:
1. It is undisputed by the evidence on record that Silverio Marchan
was then at the steering wheel of the vehicle of the defendant
transportation company. At that moment, the riding public is not
expected to inquire from time to time before they board the
passenger bus whether or not the driver who is at the steering wheel
of said bus was authorized to drive said vehicle or that said driver is
acting within the scope of his authority and observing the existing
rules and regulations required of him by the management. To hold
otherwise would in effect render the aforequoted provision of law
(Article 1759) ineffective." It is clear from the above Civil Code
provision that common carriers cannot escape liability "for the
death of or injuries to passengers through the negligence and
willful acts of the former's employees, although such
employees may have acted beyond the scope of their authority
or in violation of the orders.
2. The amount of P40,000 awarded as compensatory damages is
quite reasonable and fair, considering that plaintiff Arsenio Mendoza
had suffered paralysis on the lower extremities, which will
incapacitate him to engage in his customary occupation
throughout the remaining years of his life, especially so that
Mendoza was only 26 years old when he met an accident and
taking the average span of life of a Filipino, he may be expected to
live for 30 years more; and bearing in mind the earning capacity of
Arsenio Mendoza who before the happening of this accident derived
an income of almost P100/month from the business of his fatherin-law as Assistant Supervisor of the small fairs and his income
of P100/month which he derived as a professional boxer.
Considering that respondent Arsenio Mendoza was only in his middle
twenties when, thru the negligence of petitioners, he lost the use of

It appears that exemplary damages may be imposed by way of
example or correction only in addition, among others, to
compensatory damages, but that they cannot be recovered as a
matter of right, their determination depending upon the
discretion of the court. It further appears that the amount of
exemplary damages need not be proved, because its determination
depends upon the amount of compensatory damages that may be
awarded to the claimant. If the amount of exemplary damages
need not be proved, it need not also be alleged, and the reason
is obvious because it is merely incidental or dependent upon
what the court may award as compensatory damages. Unless
and until this premise is determined and established, what may be
claimed as exemplary damages would amount to a mere surmise or
speculation. It follows as a necessary consequence that the
amount of exemplary damages need not be pleaded in the
complaint because the same cannot be predetermined. One can
merely ask that it be determined by the court if in the use of its
discretion the same is warranted by the evidence, and this is
just what the respondents have done.
THUS, the Decision of the CA is affirmed. Petitioners are liable
for the sum of P40K (compensatory), P30K (exemplary) and P5K
as attorney’s fees all with interest at the legal rate.
China Airlines v. IAC

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WHO WON: Osorio (as regards to the finding of the breach on the
part of air carrier); China Airlines (as regards to the amount)
DOCTRINE:
- Moral damages are recoverable in a damage suit predicated
upon a breach of contract of carriage only where [1] the
mishap results in the death of a passenger and [2] it is
proved that the carrier was guilty of fraud or bad faith, even if
death does not result.
- The award of exemplary damages must be had only upon
showing that the carrier committed breach of contract of
carriage in a wanton, fraudulent, reckless, oppressive or
malevolent manner.
FACTS:
- On April 14, 1980, after a four-day delay caused by an
engine malfunction, private respondent Claudia B. Osorio
boarded petitioner China Airlines Ltd’s (CAL) Manila
Flight for Taipei. Said flight, as originally scheduled, was to
bring Osorio and nine (9) other passengers to Taipei in
time for petitioner airline's flight for Los Angeles (LAX).
- As this schedule had been rendered impossible by the delay,
it was agreed, prior to their departure from Manila that
Osorio and the nine (9) other passengers similarly
situated would spend the night in Taipei at petitioner's
expense and would be brought the following day to San
Francisco (SF), U.S.A., where they would be furnished
an immediate flight connection to LAX.
-

This arrangement went well until Osorio and her copassengers arrived in SF, U.S.A. the next day at around 1:31
p.m., SF local time. No instructions having been received
regarding them by petitioner's SF Office due to the delay
in the transmission of the telex messages from Manila,
Osorio and her co-passengers were asked to deplane
and wait while contact with Manila was being made. This,

however, could not be done immediately because of the time
difference between the 2 places.
-

Later, when it appeared that Osrio and her co-passengers
might have to spend the night in San Francisco, they asked
that they be provided food and overnight accommodations
as transit passengers, but were refused by petitioner's
passenger service agent, Dennis Cheng. Apparently pissed
by this refusal, in addition to the information that their
luggages were not unloaded, Osorio and some of her
fellow passengers angrily left petitioner's SF Office
without leaving a contact address. Thus, when word from
Manila came at 6:45PM authorizing the issuance of tickets
for LAX to Osorio and her companions, the latter could not
be informed thereof.

-

It was only on the following day (April 16), after spending the
night at YMCA (cost her $5) that Osorio learned through her
companions Atty. Laud and Mrs. Sim that her ticket for LAX
and luggage were ready for pick-up any time.
Notwithstanding, Osorio preferred to pick up her luggage on
April 17 and fly to LAX with a Western Airlines ticket which
she purchased for $56. Osorio spent the night at Mrs Sim’s
friend’s house for free but was obliged to buy groceries for
the hostess.
Osorio filed before the CFI a complaint for damages for
breach of CoC against CAL. CFI found for CAL. It absolved
petitioner airline from any liability except for the sum of
P1248 as reimbursement for the $100 spent by Osorio as an
involuntary rerouted passenger in SF and the $56 for her
Western Airlines ticket.
IAC reversed. It found a breach of CoC and ordered CAL to
pay Osorio in addition to the actual damages, moral and
exemplary damages in the amount of P100K and P20K,
respectively plus P5K attorney’s fees.

-

-

-

ISSUE:

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-

Did the failure of China Airlines to arrange for Osorio’s
immediate flight to LAX constitute palpable breach of CoC?
NO
Was the treatment of CAL by petitioner’s agent in SF
characterized by malice or bad faith?

RULING:
1. It was upon CAL’s traffic agent Mrs. Diana Lim's assurance of an
immediate flight connection from San Francisco that Osorio agreed
to be re-routed to San Francisco. Due, however, to the delay in the
receipt of the telex messages regarding Osorio’s status and the
arrangements to be made for her, the promised immediate flight
connection was not reaped.
Verily, petitioner airlines committed a breach of contract in
failing to secure an immediate flight connection for private
Osorio. Under Article 1755 of the Civil Code, petitioner, as a
common carrier, is duty bound to "carry passengers safely as
far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with due regard for all the
circumstances." The reliance of petitioner on the subject telex
communications falls short of the utmost diligence of a very
cautious person expected of it, thereby rendering it liable for its
failure to abide by the promised immediate connection.
However, the Court found that the breach of contract committed
by CAL was NOT attended by gross negligence, or wanton
disregard of the rights of Osorio as a passenger. Telex was the
established mode of communication between petitioner's
Manila and San Francisco offices. Contact by telephone was not
a practice due to the time difference between the two places.
Thus, while petitioner may have been remiss in its total reliance upon
the telex communications and therefore considered negligent in view
of the degree of diligence required of it as a common carrier, such
negligence cannot under the obtaining circumstances be said
to be so gross as to amount to bad faith.
2. The Court is also convinced that CAL’s personnel were NOT
motivated by ill will or malice in their dealings with Osorio, “let along

the well-known custom and policy of Chinese businessmen and
employees of being courteous and attentive to customers.”
CAL’s refusal to accede to Osorio’s demands for a flight connection
to LAX and/or food and hotel accommodations was due primarily to
lack of information or knowledge upon which to act upon and not
from a deliberate intent to ignore Osorio’s rights as a passenger.
They cannot be faulted for wanting to verify with Manila private
respondent's status before acting upon her request as tickets for Los
Angeles cannot be used in going to San Francisco, and possession
of a ticket with Los Angeles as destination was not an indication that
one was a transit or an involuntarily re-routed passenger.
Ultimately, the breach of contract under consideration having
been incurred in good faith, petitioner airlines is liable for
damages which are the natural and probable consequences of
said breach and which the parties have foreseen at the time the
obligation was constituted. These damages consist of the actual
damages awarded by the trial court to Osorio.
With respect to moral damages, the rule is that the same are
recoverable in a damage suit predicated upon a breach of
contract of carriage only where [1] the mishap results in the
death of a passenger and [2] it is proved that the carrier was
guilty of fraud or bad faith, even if death does not result. As the
present case does not fall under either of the cited instances,
the award of moral damages was DISALLOWED.
The award of exemplary damages was likewise DELETED, as it
has not been shown that petitioner, in committing the breach of
contract of carriage, acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.

The award of attorney's fees is justified under Article 2208(2) of
the Civil Code which states that the same may be recovered
when the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to
protect his interest. The amount of P6K awarded by respondent

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court should be increased to P10K considering that the case has
reached the SC.

Tan v. Northwest Airlines v. CA
WHO WON: Northwest Airlines (carrier)

they were informed that their baggage might still be in
another plane in Tokyo, Japan. Few days after, they
recovered their baggage and discovered that some of its
contents were destroyed and soiled.
-

Claiming that they suffered mental anguish, sleepless
nights and great damage because of Northwest's failure
to inform them in advance that their baggage would not
be loaded on the same flight they boarded and because
of their delayed arrival, they demanded from Northwest
Airlines compensation for the damages they suffered.

-

Northwest Airlines averred that petitioner’s baggage could
not be carried on the same flight because of "weight and
balance restrictions” and that when petitioner received her
baggage in damaged condition, Northwest offered to either
(1) reimburse the cost or repair of the bags; or (2) reimburse
the cost for the purchase of new bags, upon submission of
receipts.

-

RTC found for petitioner and held Northwest liable for
damages (actual, compensatory, moral, exemplary plus
AFees).

-

Northwest appealed contending that the lower court erred in
finding it guilty of breach of CoC and of wilful misconduct
and awarded damages which had no basis and were
excessive. CA partially granted the appeal by deleting the
award of moral and exemplary damages and reducing the
AFees.

DOCTRINE:
Bad faith does not simply connote bad judgment or negligence, it
imports a dishonest purpose or some moral obliquity and conscious
doing of a wrong, a breach of known duty through some motive or
interest or ill-will that partakes of the nature of fraud.

Where in breaching the contract of carriage the defendant airline is
not shown to have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable consequences of the
breach of obligation which the parties had foreseen or could have
reasonably foreseen. In that case, such liability does not include
moral and exemplary damages.

FACTS:
- On May 31, 1994, Priscilla L. Tan and Connie Tan boarded
Northwest Airlines in Chicago, U. S. A. bound for the
Philippines, with a stop-over at Detroit, U. S. A. They arrived
at the Ninoy Aquino International Airport (NAIA) the next day
at about 10:40PM.
-

Upon their arrival, petitioner and her companion Connie Tan
found that pieces of their baggage were missing. They
returned to the airport in the evening of the following day and

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ISSUE: W/N Northwest is liable for moral and exemplary damages
for willful misconduct and breach of CoC? NO
RULING:
Northwest is NOT guilty of willful misconduct. For willful misconduct
to exist there must be a showing that the acts complained of were
impelled by an intention to violate the law, or were in persistent
disregard of one's rights. It must be evidenced by a flagrantly or
shamefully wrong or improper conduct.

Contrary to petitioner's contention, there was nothing in the conduct
of respondent which showed that they were motivated by malice or
bad faith in loading her baggage on another plane. Due to weight
and balance restrictions, as a safety measure, respondent
airline had to transport the baggage on a different flight, but
with the same expected date and time of arrival in the
Philippines. ‘To ensure the safety of each flight, Northwest's
personnel determine every flight's compliance with "weight and
balance restrictions." They check the factors like weight of the
aircraft used for the flight gas input, passenger and crew load,
baggage weight, all in relation to the wind factor anticipated on the
flight. If there is an overload, i.e., a perceived safety risk, the
aircraft's load will be reduced by off-loading cargo, which will then be
placed on the next available flight.

It is admitted that respondent failed to deliver petitioner's luggages
on time. However, there was no showing of malice in such failure. By
its concern for safety, respondent had to ship the baggage in another
flight with the same date of arrival.

Bad faith does not simply connote bad judgment or negligence,
it imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of known duty through
some motive or interest or ill-will that partakes of the nature of
fraud.

Where in breaching the contract of carriage the defendant
airline is not shown to have acted fraudulently or in bad faith,
liability for damages is limited to the natural and probable
consequences of the breach of obligation which the parties had
foreseen or could have reasonably foreseen. In that case, such
liability does not include moral and exemplary damages.

Petition DENIED. CA Decision affirmed deleting however the award
of attorney’s fees.

Trans World Airlines v. CA
WHO WON: Vinluan

DOCTRINE: The social standing of plaintiff in the community may be
considered by the Court in awarding moral and exemplary damages
for injuries sustained from a carrier’s breach of CoC.

FACTS:

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-

-

Rogelio A. Vinluan is a practicing lawyer who had to travel
in April, 1979 to several cities in Europe and the U.S. to
attend to some matters involving several clients. He entered
into a contract for air carriage for valuable consideration with
Japan Airlines first class from Manila to Tokyo, Moscow,
Paris, Hamburg, Zurich, New York, Los Angeles,
Honolulu and back to Manila thru the same airline and other
airlines it represents for which he was issued the
corresponding first class tickets for the entire trip.
While in Paris, he went to the office of Trans World Airlines
(TWA) and confirmed a reservation for first class
accommodation on board from New York to San Francisco
which was scheduled to depart on April 20, 1979.

-

On April 20, 1979, at around 8AM, Vinluan reconfirmed his
reservation for first class accommodation on board with its
New York office. He was advised that his reservation was
confirmed. He was even requested to indicate his seat
preference.

-

On the schedule date of his departure, Vinluan presented his
ticket for check-in at the counter of TWA at JFK International
Airport at about 9AM the scheduled time of the departure
being 11AM. He was informed that there was no first
class seat available for him on the flight. He asked for an
explanation but TWA employees on duty declined to
give any reason. When he began to protest, one of the
TWA employees, a certain Mr. Braam, rudely threatened
him with the words "Don't argue with me, I have a very
bad temper."

-

To be able to keep his schedule, Vinluan was compelled to
take the economy seat offered to him and he was issued a
refund application" as he was downgraded from first class to
economy class. While waiting for his flight, Vinluan also

noticed that other passengers who were white Caucasians
and who had checked-in later than him were given
preference in some first class seats which became available
due to "no show" passengers.
-

-

-

Vinluan filed an action for damages against the TWA in the
CFI alleging breach of CoC and bad faith. CFI found for
plaintiff and ordered defendant carrier to pay damages
(actual- difference in fare between first class and economy,
moral damages, exemplary and attorney’s fees). CA affirmed
but modified interest and reduced AFees.
Petitioner contends that because of maintenance problems
of the aircraft on the day of the flight, said flight was
cancelled and a special flight was organized to operate.
Vinluan’s flight was to have utilized a (Lockheed 101) plane
with 34 first class seats, but instead, a smaller plane
(Boeing 707) with only 16 first class seats was substituted
for use. Hence, passengers who had first class
reservations had to be accommodated on a first-come,
first-served basis. An announcement was allegedly
made to all passengers in the entire terminal of the
airport advising them to get boarding cards for the flight
to San Francisco.
On the other hand, Vinluan asserts that he did not hear such
announcement at the terminal and that he was among the
early passengers to present his ticket for check-in only to be
informed that there was no first class seat available for him
and that he had to be downgraded.

ISSUE: W/N defendant carrier is liable for breach of CoC and if so,
how much?

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RULING:
The Court found that the discrimination shown by petitioner in
accommodating Caucasians in their first-class seats is obvious and
the humiliation to which Vinluan was subjected is undeniable.
Consequently, the award of moral and exemplary damages by the
respondent court is in order.

Indeed, Vinluan had shown that the alleged switch of planes
was because there were only 138 confirmed economy class
passengers who could very well be accommodated in the
smaller plane and not because of maintenance problems.

this case and the social standing of private respondent in the
community, he is entitled to the award of moral and exemplary
damages. However, the moral damages should be reduced to P300K
and the exemplary damages should be reduced to P200K. This
award should be reasonably sufficient to indemnify private
respondent for the humiliation and embarrassment that he suffered
and to serve as an example to discourage the repetition of similar
oppressive and discriminatory acts.

Zalamea v. CA
WHO WON: Zalameas
DOCTRINE:
Overbooking amounts to bad faith, entitling the passengers
concerned to an award of moral damages

Petitioner sacrificed the comfort of its first class passengers
including private respondent Vinluan for the sake of economy.
Such inattention and lack of care for the interest of its
passengers who are entitled to its utmost consideration,
particularly as to their convenience, amount to bad faith which
entitles the passenger to the award of moral damages. More so
in this case where instead of courteously informing private
respondent of his being downgraded under the circumstances,
he was angrily rebuffed by an employee of petitioner.

At the time of this unfortunate incident, Vinluan was a practicing
lawyer, a senior partner of a big law firm in Manila. He was a
director of several companies and was active in civic and social
organizations in the Philippines. Considering the circumstances of

FACTS:
-

Spouses Cesar C. Zalamea and Suthira Zalamea, and their
daughter, Liana Zalamea, purchased 3 airline tickets from
the Manila agent of respondent TransWorld Airlines, Inc.
(TWA) for a flight from New York to Los Angeles on June 6,
1984. The tickets of petitioners-spouses were purchased
at a discount of 75% while that of their daughter was a
full fare ticket. All three tickets represented confirmed
reservations.

-

While in NYC, petitioners received notice of the
reconfirmation of their reservations for said flight. On the
appointed date, however, petitioners checked in at 10AM
an hour earlier than the scheduled flight at 11AM but
were placed on the wait-list because the number of

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passengers who had checked in before them had
already taken all the seats available on the flight.
-

Liana Zalamea appeared as the No. 13 on the wait-list
while the spouses Zalamea were listed as "No. 34, showing
a party of two." Out of the 42 names on the wait list, the
first 22 names were eventually allowed to board the
flight to Los Angeles, including petitioner Cesar
Zalamea. The two others, on the other hand, at No. 34,
were not able to fly.

-

As it were, those holding full-fare tickets were given first
priority among the wait-listed passengers. Mr. Zalamea,
who was holding the full-fare ticket of his daughter, was
allowed to board the plane; while his wife and daughter, who
presented the discounted tickets, were denied boarding.
According to Mr. Zalamea, it was only later when he
discovered the he was holding his daughter's full-fare ticket.

-

Even in the next TWA flight to LAX, Mrs. Zalamea and her
daughter could not be accommodated because it was fully
booked. Thus, they were constrained to book another flight
and purchased two tickets from American Airlines which cost
them $918.
The Zalameas filed an action for damages based on breach
of CoC before the RTC. RTC ruled in favor of petitioners. On
appeal, CA held that moral damages are recoverable in a
damage suit predicated upon breach of CoC only when there
is fraud or bad faith. Since it is a matter of record that
overbooking of flights is a common and accepted practice of
airlines in the US and is specifically allowed under the Code
of Federal Regulations by the Civil Aeronautics Board, no
fraud nor bad faith could be imputed on TWA. CA then
modified the lower court’s decision insofar as the award of
moral and exemplary damages was deleted.

-

ISSUE: W/N there was fraud or bad faith on the part of defendant
carrier so as to hold them liable for damages? YES
RULING:
The U.S. law or regulation allegedly authorizing overbooking has
never been proved. Foreign laws do not prove themselves nor can
the courts take judicial notice of them. Like any other fact, they must
be alleged and proved. Written law may be evidenced by an official
publication thereof or by a copy attested by the officer having the
legal custody of the record, or by his deputy, and accompanied with a
certificate that such officer has custody. Respondent TWA relied
solely on the statement of its customer service agent that the
Code of Federal Regulations of the Civil Aeronautics Board
allows overbooking. Aside from said statement, no official
publication of said code was presented as evidence. Thus,
respondent court's finding that overbooking is specifically
allowed by the US Code of Federal Regulations has no basis in
fact.

Even if the claimed U.S. Code of Federal Regulations does exist, the
same is not applicable to the case at bar in accordance with the
principle of lex loci contractus which require that the law of the
place where the airline ticket was issued should be applied by
the court where the passengers are residents and nationals of
the forum and the ticket is issued in such State by the
defendant airline. Since the tickets were sold and issued in the
Philippines, the applicable law in this case would be Philippine law.

Existing jurisprudence explicitly states that overbooking
amounts to bad faith, entitling the passengers concerned to an
award of moral damages. Even on the assumption that
overbooking is allowed, TWA is still guilty of bad faith in not

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informing its passengers beforehand that it could breach the
contract of carriage even if they have confirmed tickets if there
was overbooking.TWA should have incorporated stipulations on
overbooking on the tickets issued or to properly inform its
passengers about these policies so that the latter would be prepared
for such eventuality or would have the choice to ride with another
airline.

Moreover, respondent TWA was also guilty of not informing its
passengers of its alleged policy of giving less priority to
discounted tickets. While the petitioners had checked in at the
same time, and held confirmed tickets, yet, only one of them was
allowed to board the plane ten minutes before departure time
because the full-fare ticket he was holding was given priority over
discounted tickets. The other two petitioners were left behind.

It is respondent TWA's position that the practice of overbooking and
the airline system of boarding priorities are reasonable policies,
which when implemented do not amount to bad faith. But the issue
raised in this case is NOT the reasonableness of said policies
but whether or not said policies were incorporated or deemed
written on petitioners' contracts of carriage. Respondent TWA
failed to show that there are provisions to that effect. Neither did it
present any argument of substance to show that petitioners were
duly apprised of the overbooked condition of the flight or that there is
a hierarchy of boarding priorities in booking passengers. The failure
of respondent TWA to so inform them when it could easily have
done so thereby enabling respondent to hold on to them as
passengers up to the last minute amounts to bad faith.
Evidently, respondent TWA placed its self-interest over the
rights of petitioners under their contracts of carriage. Such
conscious disregard of petitioners' rights makes respondent

TWA liable for moral damages. To deter breach of contracts by
respondent TWA in similar fashion in the future, the Court
adjudged respondent TWA liable for exemplary damages, as
well.
Petitioners also assail the respondent court's decision not to require
the refund of Liana Zalamea's ticket because the ticket was used by
her father. HOWEVER, petitioners had not shown with certainty that
the act of respondent TWA in allowing Mr. Zalamea to use the ticket
of her daughter was due to inadvertence or deliberate act.
Petitioners had also failed to establish that they did not accede to
said agreement. The logical conclusion, therefore, is that both
petitioners and respondent TWA agreed, albeit impliedly, to the
course of action taken.
CA erred, however, in not ordering the refund of the American
Airlines tickets purchased and used by petitioners Suthira and Liana.
The evidence shows that petitioners Suthira and Liana were
constrained to take the American Airlines flight to Los Angeles not
because they "opted not to use their TWA tickets on another TWA
flight" but because respondent TWA could not accommodate them
either on the next TWA flight which was also fully booked. The
purchase of the American Airlines tickets by petitioners Suthira
and Liana was the consequence of respondent TWA's
unjustifiable breach of its contracts of carriage with petitioners.
In accordance with Article 2201, New Civil Code, respondent
TWA should, therefore, be responsible for all damages which
may be reasonably attributed to the non-performance of its
obligation. Thus, instead of simply being refunded for the cost of the
unused TWA tickets, petitioners should be awarded the actual cost of
their flight from New York to Los Angeles.
The award to petitioners of attorney's fees is also justified
under Article 2208(2) of the Civil Code which allows recovery
when the defendant's act or omission has compelled plaintiff to
litigate or to incur expenses to protect his interest. An award of
P50,000.00 moral damages and another P50,000.00 exemplary
damages would suffice under the circumstances obtaining in the
instant case.

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which will entitle the latter to an award of exemplary
damages – to set an example to others – and attorney’s
fees.

ISSUE: W/N defendant-employer is liable for exemplary damages to
plaintiff? NO
Munsayac v. De Lara
WHO WON: De Lara
DOCTRINE: A principal or master can be held liable for exemplary or
punitive damages based upon the wrongful act of his agent or
servant only where he participated in the doing of such wrongful act
or has previously authorized or subsequently ratified it with full
knowledge of the facts.
FACTS:
- Munsayac, while riding as a passenger on a jeepney owned
and operated by Benedicta Lara (defendant) and driven by
its hired chauffer at an excessive speed, unmindful of the
fact that the road was under repair and heedless of the
passengers' pleas that he go more slowly, sustained
extensive injuries from an accident she encountered from
riding the said carrier.
-

Munsayac then filed a civil suit against Benedicta de Lara
and the driver. The trial Judge found the driver recklessly
negligent and awarded compensatory damages for actual
expenses incurred and loss of income, P1K as exemplary
damages and P500 as attorney's fees. On these last two
items (exemplary and AFees) the defendant appealed to the
CA, which affirmed the lower court’s order. CA held that the
defendant has failed, or even refused to placate the
sufferings of plaintiff, necessitating the filing of a civil action

RULING:
The Civil Code provides that "exemplary or corrective damages are
imposed, by way of example or correction for the public good" (Art
2229); and that in contracts "the Court may award exemplary
damages if the defendant acted in wanton, fraudulent, reckless,
oppressive or malevolent manner" (Art. 2232).

De Lara points out that the act referred to in Article 2232 must
be one which is coexistent with and characterizes the breach of
the contract on which the suit is based, and not one which is
subsequent to such breach and therefore has no causal relation
thereto, such as the herein defendant's failure to placate
(pacify) the sufferings of the plaintiff.

A principal or master can be held liable for exemplary or
punitive damages based upon the wrongful act of his agent or
servant only where he participated in the doing of such
wrongful act or has previously authorized or subsequently
ratified it with full knowledge of the facts. Reasons given for this
rule are that since damages are penal in character, the motive

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authorizing their infliction will not be imputed by presumption to the
principal when the act is committed by an agent or servant, and that
since they are awarded not by way of compensation, but as a
warning to others, they can only be awarded against one who has
participated in the offense, and the principal therefore cannot be held
liable for them merely by reason of wanton, oppressive or malicious
intent on the part of the agent (15 Art. Jur. 730).

It is difficult to conceive how the defendant in a breach of
contract case could be held to have acted in a wanton,
fraudulent, reckless, oppressive or violent manner within the
meaning of Article 2232 for something he did or did not do after
the breach, which had no causal connection therewith. The law
does not contemplate a vicarious liability on his part: the breach is
his as party to the contract, and so if he is to be held liable at all for
exemplary damages by reason of the wrongful act of his agent, it
must be shown that he had previously authorized or knowingly
ratified it thereafter, in effect making him a co-participant. In the
instant case, there is nothing to show previous authority or
subsequent ratification by De Lara insofar as the recklessness
of the driver was concerned. The mere statement that the
defendant failed, even refused, to placate the suffering of the plaintiff,
necessitating the filing of the action, is a futile basis to warrant the
conclusion that the defendant approved of the wrongful act of his
servant with full knowledge of the facts.

Sulpicio Lines v. Domingo Curso
WHO WON: Sulpicio Lines

DOCTRINE: Moral damages may be recovered in an action upon
breach of contract of carriage only when: (a) where death of a
passenger results, or (b) it is proved that the carrier was guilty of
fraud and bad faith, even if death does not result. Article 2206 of the
Civil Code entitles the descendants, ascendants, illegitimate
children, and surviving spouse of the deceased passenger to
demand moral damages for mental anguish by reason of the death
of the deceased.

FACTS:
-

On October 23, 1988, Dr.Curso boarded at the port of Manila
the MV Doña Marilyn, an inter-island vessel owned and
operated by petitioner Sulpicio Lines, Inc., bound for
Tacloban City.

-

Unfortunately, the MV Doña Marilyn sank in the afternoon of
October 24, 1988 while at sea due to the inclement sea and
weather conditions brought about by Typhoon Unsang. The
body of Dr.Curso was not recovered, along with hundreds of
other passengers of the ill-fated vessel.

-

At the time of his death, Dr.Curso was 48 years old, and
employed as a resident physician at the Naval District
Hospital in Naval, Biliran. He had a basic monthly salary
of P3,940 and would have retired from government service
by December 20, 2004 at the age of 65.

-

Respondents (surviving bros and sis of Dr. Curso) sued
petitioner in the RTC to claim damages based on breach of
CoC by sea, averring that petitioner had acted negligently in
transporting Dr. Curso and the other passengers. They

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stated, among others, that their parents had predeceased
Dr. Curso, who died single and without issue and that, as
such, they were Dr.Curso’s surviving heirs and successors in
interest entitled to recover moral and other damages.
-

-

RTC dismissed the complaint due to the following reasons:
(1) the sinking of the vessel was due to force majeure; (2)
the officers of the MV Doña Marilyn had acted with the
diligence required of a common carrier; (3) the sinking of the
vessel and the death of its passengers, including Dr.Curso,
could not have been avoided; (4) there was no basis to
consider the MV Doña Marilyn not seaworthy at the time of
the voyage; (5) the findings of the Special Board of Marine
Inquiry (SBMI) constituted to investigate the disaster
absolved the petitioner, its officers, and crew of any
negligence and administrative liability; and (6) the
respondents failed to prove their claim for damages.
CA reversed RTC’s ruling. It found inadequate proof to show
that Sulpicio Lines, Inc., or its officers and crew, had
exercised the required degree of diligence to acquit the
Sulpicio Lines of liability since (1) the court finds inadequate
explanation why the officers of the M.V. Doña Marilyn had
not apprised themselves of the weather reports on the
approach of typhoon "Unsang" which had the power of
a signal no. 3 cyclone, bearing upon the general
direction of the path of the M.V. Doña Marilyn; (2) there
was no account of the acts and decision of the crew of the illfated ship. It does not appear what occurred during that time,
or what weather reports were received and acted upon by
the ship captain; (3) the fitness of the ship for the voyage is
of doubtful character since at the first sign of bad weather,
the ship’s hydraulic system failed and had to be repaired
mid-voyage, making the vessel a virtual derelict amidst a

raging storm at sea. CA ordered Sulpicio Lines to pay
plaintiff heirs of Dr.Curso indemnity for the latter’s death, loss
of earning capacity, moral damages and costs of suit.
-

Sulpicio appealed the said decision due to CA’s decision to
award the surviving brothers and sisters of the late Dr.
Cenon moral damages among others.

ISSUE: Are the surviving brothers and sisters of a passenger of a
vessel that sinks during a voyage entitled to recover moral damages
from the vessel owner as common carrier? NO
RULING:

As a general rule, moral damages are not recoverable in actions for
damages predicated on a breach of contract, unless there is fraud or
bad faith. As an exception, moral damages may be awarded in case
of breach of contract of carriage that results in the death of a
passenger, in accordance with Article 1764, in relation to Article 2206
(3), of the Civil Code, which provide:

Article 1764. Damages in cases comprised in this Section
shall be awarded in accordance with Title XVIII of this Book,
concerning Damages. Article 2206 shall also apply to the
death of a passenger caused by the breach of contract by a
common carrier.

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Article 2206. The amount of damages for death caused by a
crime or quasi-delict shall be at least three thousand pesos,
even though there may have been mitigating circumstances.
In addition:
xxx
(3) The spouse, legitimate and illegitimate descendants and
ascendants of the deceased may demand moral damages
for mental anguish by reason of the death of the deceased.

Verily, the omission from Article 2206 (3) of the brothers and
sisters of the deceased passenger reveals the legislative intent
to exclude them from the recovery of moral damages for mental
anguish by reason of the death of the deceased. Thus, the CA
erred in awarding moral damages to the respondents.

Essentially, the purpose of moral damages is indemnity or reparation,
that is, to enable the injured party to obtain the means, diversions, or
amusements that will serve to alleviate the moral suffering he has
undergone by reason of the tragic event. According to Villanueva v.
Salvador, the conditions for awarding moral damages are: (a)
there must be an injury, whether physical, mental, or psychological,
clearly substantiated by the claimant; (b) there must be a culpable
act or omission factually established; (c) the wrongful act or omission
of the defendant must be the proximate cause of the injury sustained
by the claimant; and (d) the award of damages is predicated on any
of the cases stated in Article 2219 of the Civil Code.

To be entitled to moral damages, the respondents must have a right
based upon law. It is true that under Article 1003 of the Civil Code
they succeeded to the entire estate of the late Dr.Curso in the
absence of the latter’s descendants, ascendants, illegitimate
children, and surviving spouse. However, they were not included
among the persons entitled to recover moral damages, as
enumerated in Article 2219 of the Civil Code. Article 2219
circumscribes the instances in which moral damages may be
awarded. The said provision does not include succession in the
collateral line as a source of the right to recover moral
damages.

In fine, moral damages may be recovered in an action upon
breach of contract of carriage only when: (a) where death of a
passenger results, or (b) it is proved that the carrier was guilty
of fraud and bad faith, even if death does not result. Article 2206
of the Civil Code entitles the descendants, ascendants,
illegitimate children, and surviving spouse of the deceased
passenger to demand moral damages for mental anguish by
reason of the death of the deceased.

KLM v. CA

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WHO WON: Respondents Mendoza
DOCTRINE:
- Article 30 of the Warsaw Convention has no application in
the case at bar which involves, not an accident or delay, but
a willful misconduct on the part of KLM’s agent, the Aer
Lingus.
- As the airline which issued those tickets with the knowledge
that the respondents would be flown on the various legs of
their journey by different air carriers, KLM was chargeable
with the duty and responsibility of specifically informing the
respondents of conditions prescribed in their tickets or, in the
very least, to ascertain that the respondents read them
before they accepted their passage tickets.
FACTS:
- Sometime in 1965, respondents Consuelo Mendoza and
Rufino Mendoza approached Tirso Reyes, manager of a
branch of the Philippine Travel Bureau (a travel agency
AND an agent for international air carriers which are
members of the IATA of which both the KLM Royal Dutch
Airlines and the Aer Lingus are members) for
consultations about a world tour which they were
intending to make with their daughter and a niece.
- Reyes submitted to them, after preliminary discussions, a
tentative itinerary which prescribed a trip of 35 legs; the
respondents would fly on different airlines. Three segments
of the trip, the longest, would be via KLM.
- The respondents decided on the Barcelona-Lourdes route
with knowledge that only one airline, Aer Lingus, serviced it.
- After two weeks, respondents approved the itinerary
prepared for them and asked Reyes to make the necessary
plane reservations. Reyes went to the KLM, for which the
respondents had expressed preference.
- KLM thereafter secured seat reservations for the
respondents and their two companions from the carriers
which would ferry them throughout their trip, with the
exception of Aer Lingus.

-

-

-

-

-

When the respondents left the Philippines (without their
young wards who had enplaned much earlier), they were
issued KLM tickets for their entire trip. However, their coupon
for the Aer Lingus portion was marked "RQ" which
meant "on request".
After sightseeing in American/European cities with their two
young companions, respondents arrived in Frankfurt
Germany where they went to a KLM office and obtained a
confirmation from Aer Lingus of seat reservations on
flight 861. After a roundabout route in London, Paris and
Lisbon, they (foursome) all took wing to Barcelona or their
trip to Lourdes, France.
The respondents and wards went to Barcelona airport to
take their plane which arrived at 4 ‘o clock. At the airport,
the manager of Aer Lingus directed the respondents to
check in. They did so as instructed and were accepted for
passage. However, although their daughter and niece were
allowed to take the plane, the respondents were offloaded on orders of the Aer Lingus manager who
shoved them aside with the aid of a policeman and who
shouted at them, "Conos! Ignorantes Filipinos!"
Mrs. Mendoza later called up the manager of Aer Lingus and
requested that they provide her and her husband the means
to get to Lourdes, but the request was DENIED. A stranger,
advised them to take a train, which the two did, despite
the third class accommodations and lack of food
service. They reached Lourdes the following morning.
During the train trip the respondents had to suffer draft
winds as they wore only minimum clothing, their
luggage having gone ahead with the Aer Lingus plane.
They spent $50 for that train trip; their plane passage
was worth $43.35.
Respondents filed a complaint for damages with the CFI
referring to KLM as the principal of Aer Lingus arising from
breach of contract of carriage and for the humiliating
treatment received by them at the hands of the Aer Lingus
manager in Barcelona. CFI awarded damages to the
respondents. Both parties appealed to the CA.

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-

KLM sought complete exoneration. Respondents prayed for
an increase in the award of damages.

ISSUE/S:
1. W/N Art. 30 of the Warsaw Convention (WC) is applicable to the
case? NO
2. W/N KLM’s liability for the tortuous conduct of Aer Lingus is limited
based on the stipulation printed on respondents’ tickets expressly
limiting KLM’s liability for damages? NO
3. W/N respondents entered into a series of independent contracts
with several carriers which took them on various segments of the trip
and KLM – as a mere travel agency – should not be held liable for
breach in any of those contracts? NO
RULING:
1. The applicability insisted upon by the KLM of article 30 of the
Warsaw Convention cannot be sustained. That article presupposes
the occurrence of either an accident or a delay, neither of which
took place at the Barcelona airport. In the case at bar, Aer
Lingus, through its manager in Barcelona, refused to transport
the respondents to their planned and contracted destination.
Article 30 of the Warsaw Convention has no application in the
case at bar which involves, not an accident or delay, but a willful
misconduct on the part of KLM’s agent, the Aer Lingus.
(Pointed out by the respondent although it wasn’t mentioned if the
Court upheld respondents’ contention): Article 25 of the WC is
applicable in the case at bar viz:
ART. 25. (1) The carrier shall not be entitled to avail himself
of the provisions of this convention which exclude or limit his
liability, if the damage is caused by his willful misconduct or
by such default on his part as, in accordance with the law of
the court to which the case is submitted, is considered to be
equivalent to willful misconduct.
(2) Similarly, the carrier shall not be entitled to avail himself
of the said provisions, if the damage is caused under the
same circumstances by any agent of the carrier acting within
the scope of his employment.

2. As noted by the CA, the condition provided at the back of
respondents’ tickets was printed in letters so small that one
would have to use a magnifying glass to read the words. It would
be unfair to charge the respondents with automatic knowledge or
notice of the said condition so as to preclude any doubt that it was
fairly and freely agreed upon by the respondents when they
accepted the passage tickets issued to them by KLM. As the airline
which issued those tickets with the knowledge that the
respondents would be flown on the various legs of their journey
by different air carriers, the KLM was chargeable with the duty
and responsibility of specifically informing the respondents of
conditions prescribed in their tickets or, in the very least, to
ascertain that the respondents read them before they accepted
their passage tickets. KLM unilaterally assumed the role of a mere
ticket-issuing agent for other airlines and limited its liability only to
untoward occurrences on its own lines.
3. The respondents dealt exclusively with the KLM which issued
them tickets for their entire trip and which in effect guaranteed
to them that they would have sure space in Aer Lingus flight
861. The respondents, under that assurance of the internationally
prestigious KLM, naturally had the right to expect that their tickets
would be honored by Aer Lingus to which the KLM had indorsed and
in effect guaranteed the performance of its principal engagement to
carry out the respondents' scheduled itinerary previously and
mutually agreed upon between the parties. The breach of that
guarantee was aggravated by the discourteous and highly
arbitrary conduct of an official of the Aer Lingus which the KLM
had engaged to transport the respondents on the BarcelonaLourdes segment of their itinerary.

Alitalia v. IAC
WHO WON: Dra. Pablo
DOCTRINE:

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-

-

Under the Warsaw Convention, an air carrier is made liable
for damages for: 1) the death, wounding or other bodily
injury of a passenger if the accident causing it took place on
board the aircraft or in the course of its operations of
embarking or disembarking; 2) the destruction or loss of, or
damage to, any registered luggage or goods, if the
occurrence causing it took place during the carriage by air;"
and 3) delay in the transportation by air of passengers,
luggage or goods. In these cases, it is provided in the
Convention that the "action for damages, however, founded,
can only be brought subject to conditions and limits set out"
therein.
(DOCTRINE in Cathay Pacific Case but applicable to this
case as well) Although the Warsaw Convention has the
force and effect of law in this country, being a treaty
commitment assumed by the Philippine government, said
convention does not operate as an exclusive enumeration of
the instances for declaring a carrier liable for breach of
contract of carriage or as an absolute limit of the extent of
that liability. The Warsaw Convention declares the carrier
liable for damages in the enumerated cases and under
certain limitations. However, it must not be construed to
preclude the operation of the Civil Code and other pertinent
laws. It does not regulate, much less exempt, the carrier
from liability for damages for violating the rights of its
passengers under the contract of carriage, especially if willful
misconduct on the part of the carrier's employees is found or
established.

FACTS:
- Dr. Felipa Pablo — an associate professor in the
University of the Philippines and a research grantee of
the Philippine Atomic Energy Agency — was invited to
take part at a meeting of the Department of Research and
Isotopes of the Joint FAO-IAEA Division of Atomic
Energy in Food and Agriculture of the United Nations in
Ispra, Italy. She was invited in view of her specialized
knowledge in "foreign substances in food and the
agriculture environment." She accepted the invitation, and

-

-

-

-

-

was then scheduled by the organizers, to read a paper on
"The
Fate
of
Radioactive
Fusion
Products
Contaminating
Vegetable
Crops."
The
program
announced that she would be the second speaker on the
first day of the meeting. To fulfill this engagement, Dr.
Pablo booked passage on petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting in
accordance with the itinerary and time table set for her by
ALITALIA. She was however told by the ALITALIA
personnel there at Milan that her luggage was "delayed
inasmuch as the same was in one of the succeeding
flights from Rome to Milan."
Dra. Pablo’s luggage consisted of two (2) suitcases: (1)
contained her clothing and other personal items; (2) her
scientific papers, slides and other research material. But the
other flights arriving from Rome did not have her baggage on
board.
She went to Rome to try to locate her bags herself. There,
she inquired about her suitcases in the domestic and
international airports, and filled out the forms prescribed
by ALITALIA for people in her predicament. However, her
baggage could not be found. Completely distraught and
discouraged, she returned to Manila without attending
the meeting in Ispra, Italy.
Dra. Pablo's suitcases were in fact located and
forwarded to Ispra, Italy, but only on the day after her
scheduled appearance and participation at the U.N.
meeting there. Of course Dr. Pablo was no longer there to
accept delivery; she was already on her way home to
Manila. And for some reason or other, the suitcases were
not actually restored to Prof. Pablo by ALITALIA until
eleven (11) months later, and four (4) months after
institution of her action.
She then demanded that ALITALIA make reparation for the
damages thus suffered by her. ALITALIA offered her "free
airline tickets to compensate her for any alleged damages."
She rejected the offer, and forthwith commenced a civil
action against the carrier.

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CFI rendered judgment in Dr. Pablo's favor. IAC not only
affirmed the Trial Court's decision but also increased the
award of nominal damages payable by ALITALIA to P40K.

ISSUE: W/N the Warsaw Convention should be applied to limit
ALITALIA’s liability? NO
RULING:
Under the Warsaw Convention, an air carrier is made liable for
damages for: 1) the death, wounding or other bodily injury of a
passenger if the accident causing it took place on board the aircraft
or in the course of its operations of embarking or disembarking; 2)
the destruction or loss of, or damage to, any registered luggage or
goods, if the occurrence causing it took place during the carriage by
air;" and 3) delay in the transportation by air of passengers, luggage
or goods. In these cases, it is provided in the Convention that the
"action for damages, however, founded, can only be brought subject
to conditions and limits set out" therein.
The Convention also purports to limit the liability of the carriers
in the following manner:
1. In the carriage of passengers the liability of the carrier for each
passenger is limited to the sum of 250,000 francs. Nevertheless, by special
contract, the carrier and the passenger may agree to a higher limit of
liability; 2. a) In the carriage of registered baggage and of cargo, the liability
of the carrier is limited to a sum of 250 francs per kilogram, unless the
passenger or consignor has made, at the time when the package was
handed over to the carrier, a special declaration of interest in delivery at
destination and has paid a supplementary sum if the case so requires. In
that case the carrier will be liable to pay a sum not exceeding the declared
sum, unless he proves that sum is greater than the actual value to the
consignor at delivery; b) In the case of loss, damage or delay of part of
registered baggage or cargo, or of any object contained therein, the
weight to be taken into consideration in determining the amount to
which the carrier's liability is limited shall be only the total weight of
the package or packages concerned. Nevertheless, when the loss,
damage or delay of a part of the registered baggage or cargo, or of an
object contained therein, affects the value of other packages covered
by the same baggage check or the same air way bill, the total weight of
such package or packages shall also be taken into consideration in
determining the limit of liability; 3. As regards objects of which the
passenger takes charge himself the liability of the carrier is limited to 5000

francs per passenger. 4. The limits prescribed shall not prevent the court
from awarding, in accordance with its own law, in addition, the whole or part
of the court costs and of the other expenses of litigation incurred by the
plaintiff. The foregoing provision shall not apply if the amount of the
damages awarded, excluding court costs and other expenses of the
litigation, does not exceed the sum which the carrier has offered in writing to
the plaintiff within a period of six months from the date of the occurrence
causing the damage, or before the commencement of the action, if that is
later.

The Warsaw Convention however denies to the carrier availment "of
the provisions which exclude or limit his liability, if the damage is
caused by his willful misconduct or by such default on his part as, in
accordance with the law of the court seized of the case, is
considered to be equivalent to willful misconduct," or "if the damage
is similarly caused by any agent of the carrier acting within the scope
of his employment.
In the case at bar, no bad faith or otherwise improper conduct
may be ascribed to the employees of petitioner airline; and Dr.
Pablo's luggage was eventually returned to her, belatedly, it is
true, but without appreciable damage.
NEVERTHELESS, some special species of injury was caused to
Dr. Pablo because petitioner ALITALIA misplaced her baggage
and failed to deliver it to her at the time appointed — a breach of
its contract of carriage — with the result that she was unable to
read the paper and make the scientific presentation (consisting
of slides, autoradiograms or films, tables and tabulations) that
she had painstakingly labored over, at the prestigious
international conference, to attend which she had traveled
hundreds of miles, to her chagrin and embarrassment and the
disappointment and annoyance of the organizers. She felt, not
unreasonably, that the invitation for her to participate at the
conference, extended by the Joint FAO/IAEA Division of Atomic
Energy in Food and Agriculture of the United Nations, was a
singular honor not only to herself, but to the University of the
Philippines and the country as well, an opportunity to make
some sort of impression among her colleagues in that field of
scientific activity. The opportunity to claim this honor or

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distinction was irretrievably lost to her because of Alitalia's
breach of its contract.
Apart from this, there can be no doubt that Dr. Pablo underwent
profound distress and anxiety, which gradually turned to panic and
finally despair.
Certainly, the compensation for the injury suffered by Dr. Pablo
CANNOT under the circumstances be restricted to that
prescribed by the Warsaw Convention for delay in the transport
of baggage.
She is not, of course, entitled to be compensated for loss or
damage to her luggage. As already mentioned, her baggage was
ultimately delivered to her in Manila, tardily but safely. She is
however entitled to nominal damages — which, as the law says, is
adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated and
recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered — and the SC agreed that the CA correctly set the
amount thereof at P40K.
Lhuillier v. British Airways
WHO WON: British Airways
DOCTRINE:
- Under Article 28(1) of the Warsaw Convention, the plaintiff
may bring the action for damages before –
1. The court where the carrier is domiciled;
2. The court where the carrier has its principal place of
business;
3. The court where the carrier has an establishment by which
the contract has been made; or
4. The court of the place of destination.
- Jurisdiction is a power introduced for the public good, on
account of the necessity of dispensing justice. (Justice Del
Castillo’s take away)

FACTS:
- Petitioner Edna Diago Lhuillier took British Airways’ flight
from London, United Kingdom to Rome, Italy. Once on
board, she allegedly requested Julian Halliday (Halliday),
one of the respondent’s flight attendants, to assist her in
placing her hand-carried luggage in the overhead bin.
However, Halliday allegedly refused to help and assist her,
and even sarcastically remarked that "If I were to help all
300 passengers in this flight, I would have a broken
back!"
- Petitioner further alleged that when the plane was about to
land in Rome, Italy, another flight attendant, Nickolas
Kerrigan (Kerrigan), singled her out from among all the
passengers in the business class section to lecture on
plane safety. Allegedly, Kerrigan made her appear to the
other passengers to be ignorant, uneducated, stupid, and
in need of lecturing on the safety rules and regulations
of the plane. Affronted, petitioner assured Kerrigan that she
knew the plane’s safety regulations being a frequent traveler.
Thereupon, Kerrigan allegedly thrust his face a mere few
centimeters away from that of the petitioner and menacingly
told her that "We don’t like your attitude."
- Upon arrival in Rome, petitioner complained to
respondent’s ground manager and demanded an
apology. However, the latter declared that the flight
stewards were "only doing their job."
- Thus, petitioner filed a complaint before the RTC of Makati
for damages praying that respondent be ordered to pay P5M
as moral damages, P2M as nominal damages, P1M as
exemplary damages, P300K as attorney’s fees, P200K as
litigation expenses, and cost of the suit.
- Summons, together with a copy of the complaint, was served
on the respondent through Violeta Echevarria, General
Manager of Euro-Philippine Airline Services, Inc.
- Respondent by way of special appearance through
counsel, filed a Motion to Dismiss on grounds of lack of
jurisdiction over the case and over the person of the
respondent. Respondent alleged that only the courts of

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London, United Kingdom or Rome, Italy, have
jurisdiction over the complaint for damages pursuant to
the Warsaw Convention, Article 28(1). Likewise, it was
alleged that the case must be dismissed OTG of lack of
jurisdiction because the summons was erroneously
served on Euro-Philippine Airline Services which is not
its resident agent in the PI.
- RTC issued an order requiring petitioner to file her
comment/opposition on the MTD. Instead of doing so,
petitioner filed an Urgent Ex-Parte Motion to Admit Formal
Amendment to the Complaint and Issuance of Alias
Summon. She alleged that upon verification with the SEC,
she found that the resident agent of respondent in the PI
is Alonzo Q. Ancheta.
- RTC of Makati City granted respondents’ MTD.
ISSUE/S:
1. W/N Philippine Court’s have jurisdiction over a tortuous conduct
committed against a Filipino citizen and resident by airline personnel
of a foreign carrier travelling beyond the territorial limit of any foreign
country and is thus outside the ambit of the WC? NO
2. W/N respondent air carrier of passengers in filing its MTD may be
deemed as having in fact and law submitted itself to the jurisdiction
of the lower court? NO
RULING:
1. The Warsaw Convention is a treaty commitment voluntarily
assumed by the Philippine government and, as such, has the force
and effect of law in this country. The Warsaw Convention applies
because the air travel, where the alleged tortuous conduct occurred,
was between the United Kingdom and Italy, which are both
signatories to the Warsaw Convention.
Article 1 of the Warsaw Convention provides:
1. This Convention applies to all international carriage of persons, luggage
or goods performed by aircraft for reward. It applies equally to gratuitous
carriage by aircraft performed by an air transport undertaking.
2. For the purposes of this Convention the expression "international
carriage" means any carriage in which, according to the contract made by
the parties, the place of departure and the place of destination, whether or
not there be a break in the carriage or a transhipment, are situated either

within the territories of two High Contracting Parties, or within the territory of
a single High Contracting Party, if there is an agreed stopping place within a
territory subject to the sovereignty, suzerainty, mandate or authority of
another Power, even though that Power is not a party to this Convention. A
carriage without such an agreed stopping place between territories subject
to the sovereignty, suzerainty, mandate or authority of the same High
Contracting Party is not deemed to be international for the purposes of this
Convention.

Thus, when the place of departure and the place of destination
in a contract of carriage are situated within the territories of two
High Contracting Parties, said carriage is deemed an
"international carriage". The High Contracting Parties referred
to herein were the signatories to the Warsaw Convention and
those which subsequently adhered to it.
In the case at bench, petitioner’s place of departure was London,
United Kingdom while her place of destination was Rome, Italy. Both
the United Kingdom and Italy signed and ratified the Warsaw
Convention. As such, the transport of the petitioner is deemed to be
an "international carriage" within the contemplation of the Warsaw
Convention. Since the Warsaw Convention applies in the instant
case, then the jurisdiction over the subject matter of the action is
governed by the provisions of the Warsaw Convention.
Under Article 28(1) of the Warsaw Convention, the plaintiff may
bring the action for damages before –
1. The court where the carrier is domiciled;
2. The court where the carrier has its principal place of
business;
3. The court where the carrier has an establishment by which
the contract has been made; or
4. The court of the place of destination.
In this case, it is not disputed that respondent is a British
corporation domiciled in London, United Kingdom with London
as its principal place of business. Hence, under the first and
second jurisdictional rules, the petitioner may bring her case
before the courts of London in the United Kingdom. In the
passenger ticket and baggage check presented by both the
petitioner and respondent, it appears that the ticket was issued

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in Rome, Italy. Consequently, under the third jurisdictional rule,
the petitioner has the option to bring her case before the courts
of Rome in Italy. Finally, both the petitioner and respondent aver
that the place of destination is Rome, Italy, which is properly
designated given the routing presented in the said passenger
ticket and baggage check. Accordingly, petitioner may bring her
action before the courts of Rome, Italy. Thus, the RTC of Makati
correctly ruled that it DOES NOT have jurisdiction over the case filed
by petitioner.
The SC has also cited various cases showing that tortuous conduct
as ground for petitioner’s complaint is within the purview of
Warsaw Convention. It is thus settled that allegations of tortious
conduct committed against an airline passenger during the course of
the international carriage do not bring the case outside the ambit of
the Warsaw Convention.
2. Respondent, in seeking remedies from the trial court through
special appearance of counsel, is not deemed to have voluntarily
submitted itself to the jurisdiction of the trial court. Sec. 20, Rule 14
of the Revised Rules of Civil Procedure clearly provides that the
defendant’s voluntary appearance in the action shall be equivalent to
service of summons. The inclusion in a motion to dismiss of other
grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance. Thus, a
defendant who files a motion to dismiss, assailing the jurisdiction of
the court over his person, together with other grounds raised therein,
is not deemed to have appeared voluntarily before the court. What
the rule on voluntary appearance – the first sentence of the abovequoted rule – means is that the voluntary appearance of the
defendant in court is without qualification, in which case he is
deemed to have waived his defense of lack of jurisdiction over his
person due to improper service of summons.
Cathay Pacific Airways, Ltd. V. CA
WHO WON: Tomas Alcantara
DOCTRINE:

Although the Warsaw Convention has the force and effect of law in
this country, being a treaty commitment assumed by the Philippine
government, said convention does not operate as an exclusive
enumeration of the instances for declaring a carrier liable for breach
of contract of carriage or as an absolute limit of the extent of that
liability. The Warsaw Convention declares the carrier liable for
damages in the enumerated cases and under certain limitations.
However, it must not be construed to preclude the operation of the
Civil Code and other pertinent laws. It does not regulate, much less
exempt, the carrier from liability for damages for violating the rights
of its passengers under the contract of carriage, especially if willful
misconduct on the part of the carrier's employees is found or
established.
FACTS:
- On 19 October 1975, respondent Tomas L. Alcantara was a
first class passenger of petitioner Cathay Pacific
Airways, Ltd. (CATHAY) on its flight from Manila to
Hongkong and onward from Hongkong to Jakarta on another
flight. The purpose of his trip was to attend the following
day, a conference with the Director General of Trade of
Indonesia, Alcantara being the Executive Vice-President
and General Manager of Iligan Cement Corporation,
Chairman of the Export Committee of the Philippine
Cement Corporation, and representative of the Cement
Industry Authority and the Philippine Cement
Corporation.
- Alcantara checked in his luggage which contained not only
his clothing and articles for personal use but also papers and
documents he needed for the conference.
- Upon his arrival in Jakarta, respondent discovered that
his luggage was missing. When he inquired about his
luggage from CATHAY's representative in Jakarta,
Alcantara was told that his luggage was left behind in
Hongkong. For this, respondent Alcantara was offered
$20.00 as "inconvenience money" to buy his immediate
personal needs until the luggage could be delivered to him.

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His luggage finally reached Jakarta more than twenty four
(24) hours after his arrival. However, it was not delivered
to him at his hotel but was required by petitioner to be
picked up by an official of the Philippine Embassy.
Alcantara filed a complaint against CATHAY with the CFI
praying for damages.
CFI ordered CATHAY to pay Alcantara moral, temperate,
exemplary and attorney’s fees. Both parties appealed to the
CA. CATHAY assailed the conclusion of the trial court that it
was accountable for breach of contract and questioned the
non-application by the court of the Warsaw Convention
as well as the excessive damages awarded on the basis of
its finding that respondent Alcantara was rudely treated by
petitioner's employees during the time that his luggage could
not be found. For his part, respondent Alcantara assigned as
error the failure of the trial court to grant the full amount of
damages sought in his complaint. CA rendered its decision
affirming the findings of fact of the trial court but modifying its
award by increasing the moral damages to P80K exemplary
damages to P20K and temperate or moderate damages to
P10K.

ISSUE/S:
1. W/N the award of damages was proper? YES save for the award
of temperate damages.
2. W/N the Warsaw Convention is applicable to the present case?
NO
RULING:
1. Both the trial court and the appellate court found that CATHAY
was grossly negligent and reckless when it failed to deliver the
luggage of petitioner at the appointed place and time. CATHAY
alleges that as a result of mechanical trouble, all pieces of luggage
on board the first aircraft bound for Jakarta were unloaded and
transferred to the second aircraft which departed an hour and a half
later. Yet, as the CA noted, petitioner was not even aware that it
left behind private respondent's luggage until its attention was
called by the Hongkong Customs authorities. More, bad faith or
otherwise improper conduct may be attributed to the employees

of petitioner. While the mere failure of CATHAY to deliver
respondent's luggage at the agreed place and time did not ipso
facto amount to willful misconduct since the luggage was
eventually delivered to private respondent, albeit belatedly, the
Court is persuaded that the employees of CATHAY acted in bad
faith.
Where in breaching the contract of carriage the defendant
airline is not shown to have acted fraudulently or in bad faith,
liability for damages is limited to the natural and probable
consequences of the breach of obligation which the parties had
foreseen or could have reasonably foreseen. In that case, such
liability does not include moral and exemplary damages.
Conversely, if the defendant airline is shown to have acted
fraudulently or in bad faith, the award of moral and exemplary
damages is proper.
However, respondent Alcantara is not entitled to temperate
damages, contrary to the ruling of the court a quo, in the absence of
any showing that he sustained some pecuniary loss. t cannot be
gainsaid that respondent's luggage was ultimately delivered to him
without serious or appreciable damage.
2. Although the Warsaw Convention has the force and effect of
law in this country, being a treaty commitment assumed by the
Philippine government, said convention does not operate as an
exclusive enumeration of the instances for declaring a carrier
liable for breach of contract of carriage or as an absolute limit
of the extent of that liability. The Warsaw Convention declares
the carrier liable for damages in the enumerated cases and
under certain limitations. However, it must not be construed to
preclude the operation of the Civil Code and other pertinent
laws. It does not regulate, much less exempt, the carrier from
liability for damages for violating the rights of its passengers
under the contract of carriage, especially if willful misconduct
on the part of the carrier's employees is found or established,
which is what was manifested in the instant case.

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For, the Warsaw Convention itself provides in Art. 25 that —(1)
The carrier shall not be entitled to avail himself of the
provisions of this convention which exclude or limit his liability,
if the damage is caused by his willful misconduct or by such
default on his part as, in accordance with the law of the court to
which the case is submitted, is considered to be equivalent to
willful misconduct; (2) Similarly the carrier shall not be entitled
to avail himself of the said provisions, if the damage is caused
under the same circumstances by any agent of the carrier
acting within the scope of his employment;
When petitioner airline misplaced respondent's luggage and failed to
deliver it to its passenger at the appointed place and time, some
special species of injury must have been caused to him. For sure,
the latter underwent profound distress and anxiety, and the fear of
losing the opportunity to fulfill the purpose of his trip. In fact, for want
of appropriate clothings for the occasion brought about by the delay
of the arrival of his luggage, to his embarrassment and consternation
respondent Alcantara had to seek postponement of his pre-arranged
conference with the Director General of Trade of the host country.
In one case, this Court observed that a traveller would naturally
suffer mental anguish, anxiety and shock when he finds that his
luggage did not travel with him and he finds himself in a foreign land
without any article of clothing other than what he has on. Thus,
respondent is entitled to moral and exemplary damages
United Airlines v. Uy
WHO WON: Uy
DOCTRINE:
Article 29 of the Warsaw Convention provides: (1) The right to
damages shall be extinguished if an action is not brought within two
(2) years, reckoned from the date of arrival at the destination, or from
the date on which the aircraft ought to have arrived, or from the date
on which the transportation stopped; (2) The method of calculating
the period of limitation shall be determined by the law of the court to
which the case is submitted.

Within our jurisdiction, the Court has held that the Warsaw
Convention can be applied, or ignored, depending on the peculiar
facts presented by each case. Thus, we have ruled that the
Convention's provisions do not regulate or exclude liability for other
breaches of contract by the carrier or misconduct of its officers and
employees, or for some particular or exceptional type of damage.
Neither may the Convention be invoked to justify the disregard of
some extraordinary sort of damage resulting to a passenger and
preclude recovery therefor beyond the limits set by said Convention.
Likewise, the Convention does not preclude the operation of the Civil
Code and other pertinent laws. It does not regulate, much less
exempt, the carrier from liability for damages for violating the rights
of its passengers under the contract of carriage, especially if willful
misconduct on the part of the carrier's employees is found or
established.
FACTS:
- On 13 October 1989 respondent Willie J. Uy, a revenue
passenger on United Airlines Flight No. 819 for the San
Francisco — Manila route, checked in together with his
luggage one piece of which was found to be overweight
at the airline counter.
- To his utter humiliation, an employee of petitioner rebuked
him saying that he should have known the maximum weight
allowance to be 70 kgs. per bag and that he should have
packed his things accordingly. Then, in a loud voice in
front of the milling crowd, she told respondent to repack
his things and transfer some of them from the
overweight luggage to the lighter ones.
- The airline then billed him overweight charges which he
offered to pay with a miscellaneous charge order or an
airline pre-paid credit. However, the airline's employee,
and later its airport supervisor, adamantly refused to
honor the MCO pointing out that there were conflicting
figures listed on it. Despite the explanation from
respondent that the last figure written on the MCO
represented his balance, petitioner's employees did not
accommodate him. Faced with the prospect of leaving

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without his luggage, respondent paid the overweight
charges with his American Express credit card.
Upon arrival in Manila, he discovered that one of his
bags had been slashed and its contents stolen. He
particularized his losses to be around US $5,310.00.
In a letter dated 16 October 1989 respondent bewailed
the insult, embarrassment and humiliating treatment he
suffered in the hands of United Airlines employees,
notified petitioner of his loss and requested
reimbursement thereof. Petitioner United Airlines, through
Central Baggage Specialist Joan Kroll, did not refute any of
respondent's allegations and mailed a check representing
the payment of his loss based on the maximum liability of US
$9.70 per pound. Respondent, thinking the amount to be
grossly inadequate to compensate him for his losses, as
well as for the indignities he was subjected to, sent two
(2) more letters to petitioner airline, one dated 4 January
1990 through a certain Atty. Pesigan, and another dated
28 October 1991 through Atty. Ramon U. Ampil
demanding an out-of-court settlement of P1M. Petitioner
United Airlines did NOT accede to his demands.
Consequently, on 9 June 1992 respondent filed a complaint
for damages against United Airlines alleging that he was a
person of good station, sitting in the board of directors of
several top 500 corporations and holding senior executive
positions for such similar firms; that petitioner airline
accorded him ill and shabby treatment to his extreme
embarrassment and humiliation; and, as such he should be
paid moral damages of at least P1M exemplary damages of
at least P500K plus attorney's fees of at least P50K.
Similarly, he requested reimbursement for his stolen
luggage.
United Airlines moved to dismiss the complaint on the
ground that respondent's cause of action had prescribed,
invoking Art. 29 of the Warsaw Convention. On the other
hand, respondent noted that according to Philippine laws the
prescription of actions is interrupted “when they are filed
before the court, when there is a written extrajudicial

-

demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor.”
TC ordered dismissal of the action holding that the language
of Art. 29 is clear that the action must be brought within two
(2) years from the date of arrival at the destination. On the
applicability of the Warsaw Convention, the appellate court
ruled that the Warsaw Convention did not preclude the
operation of the Civil Code and other pertinent laws.
Respondent's failure to file his complaint within the two (2)year limitation provided in the Warsaw Convention did not
bar his action since he could still hold petitioner liable for
breach of other provisions of the Civil Code which prescribe
a different period or procedure for instituting an action.

ISSUE:
1. W/N the notice of appeal to the appellate court was timely filed?
YES
2. W/N Art. 29 of the Warsaw Convention should apply to the case at
bar? NO
RULING:
1. Respondent filed his notice of appeal two (2) days later than the
prescribed period. Although his counsel failed to give the reason for
the delay, we are inclined to give due course to his appeal due to the
unique and peculiar facts of the case and the serious question of law
it poses. In the now almost trite but still good principle, technicality,
when it deserts its proper office as an aid to justice and
becomes its great hindrance and chief enemy, deserves scant
consideration.
Moreover, the Court also took note of the fact that while respondent
filed his complaint more than two (2) years later (beyond the period
of limitation prescribed by the Warsaw Convention for filing a claim
for damages), it is obvious that respondent was forestalled from
immediately filing an action because petitioner airline gave him
the runaround, answering his letters but not giving in to his
demands. True, respondent should have already filed an action at
the first instance when his claims were denied by petitioner but the

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same could only be due to his desire to make an out-of-court
settlement for which he cannot be faulted. Hence, despite the
express mandate of Art. 29 of the Warsaw Convention that an
action for damages should be filed within two (2) years from the
arrival at the place of destination, such rule shall not be applied
in the instant case because of the delaying tactics employed by
petitioner airline itself. Thus, private respondent's second cause
of action cannot be considered as time-barred under Art. 29 of
the Warsaw Convention.

him extreme embarrassment and social humiliation; and, (b) the
slashing of his luggage and the loss of his personal effects
amounting to US $5,310.00.
While his second cause of action — an action for damages arising
from theft or damage to property or goods — is well within the
bounds of the Warsaw Convention, his first cause of action — an
action for damages arising from the misconduct of the airline
employees and the violation of respondent's rights as passenger —
clearly is not.

2. Article 29 of the Warsaw Convention provides: (1) The right to
damages shall be extinguished if an action is not brought within
two (2) years, reckoned from the date of arrival at the
destination, or from the date on which the aircraft ought to have
arrived, or from the date on which the transportation stopped;
(2) The method of calculating the period of limitation shall be
determined by the law of the court to which the case is
submitted.

Consequently, insofar as the first cause of action is concerned,
respondent's failure to file his complaint within the two (2)-year
limitation of the Warsaw Convention does not bar his action since
petitioner airline may still be held liable for breach of other provisions
of the Civil Code which prescribe a different period or procedure for
instituting the action, specifically, Art. 1146 thereof which prescribes
four (4) years for filing an action based on torts.

Within our jurisdiction, the Court has held that the Warsaw
Convention can be applied, or ignored, depending on the
peculiar facts presented by each case. Thus, we have ruled that
the Convention's provisions do not regulate or exclude liability
for other breaches of contract by the carrier or misconduct of
its officers and employees, or for some particular or exceptional
type of damage. Neither may the Convention be invoked to
justify the disregard of some extraordinary sort of damage
resulting to a passenger and preclude recovery therefor beyond
the limits set by said Convention. Likewise, the Convention
does not preclude the operation of the Civil Code and other
pertinent laws. It does not regulate, much less exempt, the
carrier from liability for damages for violating the rights of its
passengers under the contract of carriage, especially if willful
misconduct on the part of the carrier's employees is found or
established.
Respondent's complaint reveals that he is suing on two (2) causes of
action: (a) the shabby and humiliating treatment he received from
petitioner's employees at the San Francisco Airport which caused

Lufthansa German Airlines v. CA
WHO WON: Tirso Antiporda
DOCTRINE:
Sections (1) and (2), Article 30 of the Warsaw Convention provide:
(1). In the case of transportation to be performed by various
successive carriers and falling within the definition set out in the third
paragraph of Article I, each carrier who accepts passengers,
baggage, or goods shall be subject to the rules set out in the
convention, and shall be deemed to be one of the contracting parties
to the contract of transportation insofar as the contract deals with
that part of the transportation which is performed under his
supervision;
(2) In the case of transportation of this nature, the passenger or his
representative can take action only against the carrier who

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performed the transportation, during which the accident or the delay
occurred, save in the case where, by express agreement, the first
carrier has assumed liability for the whole journey.

-

Bumping-off, which is the refusal to transport passengers with
confirmed reservation to their planned and contracted destinations,
totally forecloses said passengers' right to be transported, whereas
delay merely postpones for a time being the enforcement of such
right.
Consequently, Section 2, Article 30 of the Warsaw Convention which
does not contemplate the instance of "bumping-off" but merely of
simple delay, cannot provide a handy excuse for Lufthansa as to
exculpate it from any liability to Antiporda.
FACTS:
- Tirso V. Antiporda, Sr. was an associate director of the
Central Bank of the Philippines and a registered
consultant of the Asian Development Bank, the World
Bank and the UNDP. He was, contracted by Sycip, Gorres,
Velayo & Co. (SGV) to be the institutional financial specialist
for the agricultural credit institution project of the Investment
and Development Bank of Malawi in Africa.
- According to the letter addressed to Antiporda from J.F.
Singson of SGV, he would render his services to the Malawi
bank as an independent contractor for which he would
be paid US$9,167 for a 50-day period commencing
sometime in September 1984. For the engagement,
Antiporda would be provided one round-trip economy
ticket from Manila to Blantyre and back with a maximum
travel time of four days per round-trip and, in addition, a
travel allowance of $50 per day, a travel insurance
coverage of P100,000 and major hospitalization with
AFIA and an accident insurance coverage of P150,000.
- On September 17, 1984, Lufthansa, through SGV, issued a
ticket for Antiporda's confirmed flights to Malawi, Africa. The
ticket particularized his itinerary as follows: (1) Manila to
Singapore; (2) Singapore to Bombay; (3) Bombay to

-

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Nairobi; (4) Nairobi to Lilongwe; (5) Lilongwe to Blantyre =
TOTAL OF 5 LEGS.
Thus, on the date of his flight, Antiporda took the Lufthansa
flight to Singapore from where he proceeded to Bombay on
board the same airline. He arrived in Bombay as
scheduled and waited at the transit area of the airport
for his connecting flight to Nairobi which was, per
schedule given him by Lufthansa, to leave Bombay in
the morning of September 26, 1984. Finding no
representative of Lufthansa waiting for him at the gate,
Antiporda asked the duty officer of Air India how he could get
in touch with Lufthansa. He was told to call up Lufthansa
which informed him that somebody would attend to him
shortly. Ten minutes later, Gerard Matias, Lufthansa's
traffic officer, arrived, asked for Antiporda's ticket and
told him to just sit down and wait. Matias returned with
one Leslie Benent, duty officer of Lufthansa, who
informed Antiporda that his seat in Air Kenya Flight 203
to Nairobi had been given to a very important person of
Bombay who was attending a religious function in
Nairobi.
Antiporda protested, stressing that he had an important
professional engagement in Blantyre, Malawi in the
afternoon of September 26, 1984. He requested that the
situation be remedied but Air Kenya Flight 203 left for Nairobi
without him on board. Stranded in Bombay, Antiporda was
booked for Nairobi via Addis Ababa only the next day.
He finally arrived in Blantyre at 9:00 o'clock in the
evening of Sept.28 more than a couple of days late for
his appointment with people from the institution he was
to work with in Malawi.
Consequently, Antiporda's counsel wrote the general
manager of Lufthansa in Manila demanding P1M in
damages for the airline's "malicious, wanton, disregard of the
contract of carriage." In reply, Lufthansa general manager
Hagen Keilich assured Antiporda that the matter would be
investigated.

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Apparently getting no positive action from Lufthansa,
Antiporda filed with the RTC a complaint against Lufthansa.
Lufthansa admits the issuance and validity of Antiporda’s
ticket issued by it. However, it denies its obligation to
transport the plaintiff to his point of destination at Blantyre,
Malawi, Africa. Defendant claims that it was obligated to
transport the plaintiff only up to Bombay, India.
RTC held that Lufthansa cannot limit its liability as a mere
ticket issuing agent for other airlines and only to untoward
occurrences on its own line based on an express stipulation
in the Condition of Contracts of the ticket it issued. It also
added that under the pool arrangement of the International
Air Transport Association (IATA), of which Lufthansa and Air
Kenya are members, member airlines are agents of each
other in the issuance of tickets and, therefore, in accordance
with Ortigas v. Lufthansa, an airline company is considered
bound by the mistakes committed by another member of
IATA which, in behalf of the former, had confirmed a
passenger's reservation for accommodation.
Lufthansa elevated the matter to the CA. Lufthansa invoked
Section 2, Article 30 of the Warsaw Convention which
expressly stipulates that in cases where the transportation of
passengers or goods is performed by various successive
carriers, the passenger can take action only against the
carrier which performed the transportation, during which the
accident or delay occurred. However, CA affirmed trial
court’s decision. It ruled that although the contract of
carriage was to be performed by several air carriers, the
same is to be treated as a single operation conducted by
Lufthansa because Antiporda dealt exclusively with it
which issued him a Lufthansa ticket for the entire trip.

ISSUE/S:
1. W/N there was an exclusive contract of carriage between
Antiporda and Lufthansa such that the nature of such contract if a
continuous carriage from MNL to AFRICA? YES.
2. W/N Sec. 2 Article 30 of the Warsaw Convention is applicable to
the case at bar? NO.

RULING:
1. Antiporda was issued a confirmed Lufthansa ticket all throughout
the five-leg trip. The fourth paragraph of the "Conditions of Contract"
stipulated in the ticket indubitably showed that the contract of
carriage was considered as one of continuous air transportation from
Manila to Blantyre, Malawi, thus: “…carriage to be performed
hereunder by several successive carriers is regarded as a
single operation.” From the ticket, therefore, it is indubitably clear
that it was the duty and responsibility of the defendant Lufthansa to
transport the plaintiff from Manila to Blantyre, on a trip of five legs.
The posture taken by the defendant that it was Air Kenya's, not
Lufthansa's, liability to transport plaintiff from Bombay to Malawi, is
unacceptable. The plaintiff dealt exclusively with the defendant
Lufthansa which issued to him the ticket for his entire trip and which
in effect guaranteed to the plaintiff that he would have sure space in
Air Kenya's flight to Nairobi. Plaintiff, under that assurance of the
defendant, naturally, had the right to expect that his ticket would be
honored by Air Kenya, to which, in the legal sense, Lufthansa had
endorsed and in effect guaranteed the performance of its principal
engagement to carry out plaintiff's scheduled itinerary previously and
mutually agreed upon by the parties. Defendant itself admitted that
the flight from Manila, Singapore, Bombay, Nairobi, Lilongwe,
Blantyre, Malawi, were all confirmed with the stamped letters "OK"
thereon. The contract of air transportation was exclusively between
the plaintiff Antiporda and the defendant Lufthansa, the latter merely
endorsing its performance to Air Kenya, as its subcontractor or
agent.
In light of the stipulations expressly specified in the ticket defining the
true nature of its contract of carriage with Antiporda, Lufthansa
cannot claim that its liability thereon ceased at Bombay Airport
and thence, shifted to the various carriers that assumed the
actual task of transporting said private respondent. In the very
nature of their contract, Lufthansa is clearly the principal in the
contract of carriage with Antiporda and remains to be so,
regardless of those instances when actual carriage was to be
performed by various carriers. The issuance of a confirmed

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Lufthansa ticket in favor of Antiporda covering his entire fiveleg trip abroad successive carriers concretely attests to this.

moral and exemplary damages, including attorney's fees in favor of
Antiporda.

This also serves as proof that Lufthansa, in effect guaranteed that
the successive carriers, such as Air Kenya would honor his ticket;
assure him of a space therein and transport him on a particular
segment of his trip.
2. Sections (1) and (2), Article 30 of the Warsaw Convention provide:
Art. 30 (1). In the case of transportation to be performed by various
successive carriers and falling within the definition set out in the third
paragraph of Article I, each carrier who accepts passengers,
baggage, or goods shall be subject to the rules set out in the
convention, and shall be deemed to be one of the contracting parties
to the contract of transportation insofar as the contract deals with
that part of the transportation which is performed under his
supervision; (2) In the case of transportation of this nature, the
passenger or his representative can take action only against the
carrier who performed the transportation during which the
accident or the delay occurred, save in the case where, by
express agreement, the first carrier has assumed liability for the
whole journey.
Lufthansa prays this court to take heed of jurisprudence in the United
States where the term "delay" was interpreted to include "bumpingoff" or failure to carry a passenger with a confirmed reservation.
Bumping-off, which is the refusal to transport passengers with
confirmed reservation to their planned and contracted
destinations, totally forecloses said passengers' right to be
transported, whereas delay merely postpones for a time being
the enforcement of such right.
Consequently, Section 2, Article 30 of the Warsaw Convention
which does not contemplate the instance of "bumping-off" but
merely of simple delay, cannot provide a handy excuse for
Lufthansa as to exculpate it from any liability to Antiporda. The
payment of damages is, thus, deemed warranted by this Court. The
SC does not find any reversible error in the lower court's award of

Yu Con v. Ipil
WHO WON: Yu Con
DOCTRINE:
- The old Code of Commerce absolved the shipowner from
liability for the negligence of the captain and its crew but, in
the light of the principles of modern law, this doctrine on the
non-liability of the shipowner for the unlawful acts, crimes or
quasi crimes, committed by the captain and the crew can no
longer be maintained in its absolute and categorical terms.
- It is well and good that ship owners be not held criminally
liable for such crimes or quasi crimes; but he cannot be
excused from liability for the damage and harm which, in
consequence of those acts, may be suffered by the third
parties who contracted with the captain, in his double
capacity of agent and subordinate of the shipowner himself.
- In maritime commerce, the shippers and passengers in
making contracts with the captain do so through the
confidence they have in the shipowner who appointed him;
they presume that the owner made a most careful

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investigation before appointing him, and, above all, they
themselves are unable to make such an investigation, and
even though they should do so, they could not obtain
complete security, inasmuch as the shipowner can,
whenever he sees fit, appoint another captain instead.

-

FACTS:
- Yu Con (plaintiff), a merchant and a resident of the town of
San Nicolas, Cebu, engaged in the sale of cloth and
domestic articles and having a share in a shop situated in
the town of Catmon had several times CHARTERED from
the defendant Narciso Lauron, a banca named Maria
belonging to the latter, of which Glicerio Ipil was master
and Justo Solamo, supercargo, for the transportation of
certain merchandise and some money to and from the said
town and the port of Cebu.
- On or about the 17th of October, 1911, Yu Con chartered the
said banca from the defendant Lauron for the transportation
of various merchandise from the port of Cebu to Catmon, at
the price of P45 for the round trip, which merchandise was
loaded on board the said craft which was then at anchor in
front of one of the graded fills of the wharf of said port.
- The following day, Yu Con delivered to the other two
defendants, Ipil, and Solamo, master and supercargo,
respectively, of the afore-named banca, the sum of P450,
which was in a trunk belonging to the plaintiff and was
taken charge of by said two defendants, who received
this money from the plaintiff, for the purpose of its
delivery to the latter's shop in Catmon for the purchase
of corn in this town.
- While the money was still in said truck abroad the vessel, on
the night of the said Oct 18 the time scheduled for the
departure of the Maria from the port of Cebu, said master
and said supercargo transferred the P450 from the
plaintiff's trunk, where it was, to theirs, which was in a
stateroom of the banca, from which stateroom both the
trunk and the money disappeared during that same

-

-

night, and that the investigations, made to ascertain their
whereabouts, produced no result.
Yu Con brought a civil action to recover from Ipil, Lauron and
Solamo, jointly and severally, the sum of P450, which had
been delivered by Yu Con to Ipil and Solamo.
It was proven by the affidavits executed by the master,
supercargo and the four cabin boys before the provincial
fiscal that they all knew of the existence of the money in the
trunk inside the stateroom and witnessed its removal to said
trunk from the plaintiff’s. Ipil also testified that he slept
outside the stateroom that night the sum of money was
stolen but a cabin-boy named Gabriel slept inside. The latter,
however was not presented in court to be examined. Finally,
the master and the supercargo also gave no satisfactory
explanation in regard to the disappearance of the trunk and
the money therein contained, from the stateroom in which
the trunk was, nor as to who stole or might have stolen it. Ipil
merely testified that they did to know who the robbers were,
for, when the robbery was committed, they were sound
asleep, as they were tired, and that he believed that the
guard Simeon also fell asleep because he, too, was tired
Yu Con based his action on the charge that the
disappearance of said sum was due to the abandonment,
negligence, or voluntary breach, on the part of the
defendants, of the duty they had in respect to the safekeeping of the aforementioned sum.
Defendants pleaded by way of special defense that the
plaintiff, at his own expense and under his exclusive
responsibility, chartered the said banca, for a fixed period
and price, and that, through the misfortune, negligence, or
abandonment of Yu Con himself the loss complained of
occurred, while said banca was at anchor in the port of
Cebu, and was caused by theft committed by unknown
thieves. They further alleged that said defendant Lauron
(banca owner) merely placed his craft at the disposal of Yu
Con for the price and period agreed upon, and did not go
with it on its voyage.

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The trial court held that the sole cause of the disappearance
of the money from the said banca was the negligence of the
master (Ipil) and the supercargo (Solamo) and that
defendant Lauron was responsible for that negligence, as
owner of the banca pursuant to articles 589, 587 and 618 of
the Code of Commerce, Yu Con therefore being entitled to
recover the amount lost.

ISSUE: W/N Defendants are liable for the loss of plaintiff’s sum of
money placed in the banca? YES
RULING:
It is therefore beyond all doubt that the loss of the money occurred
through the manifest fault and negligence of Ipil and Solamo, for
not only did they fail to take the necessary precautions in order that
the stateroom containing the trunk in which they kept the money
should be properly guarded by members of the crew and put in such
condition that it would be impossible to steal the trunk from it or that
persons not belonging to vessel might force an entrance into the
stateroom from the outside but also they did not expressly station
some person inside the stateroom for the guarding and safe-keeping
of the trunk.
All of these circumstances, together with that of its having been
impossible to know who took the trunk and the money, make the
conduct of Ipil, Solamo, and the other crew members eminently
suspicious and prevent our holding that the disappearance or loss of
the money was due to a fortuitous event, to force majeure, or that it
was an occurrence which could not have been foreseen, or which, if
foreseen, was inevitable.

Ipil and Solamo were depositaries of the sum in question and,
having failed to exercise the diligence required by the nature of
the obligation of safe-keeping assumed by them and by the
circumstances of the time and the place, it is evident that they
are liable for its loss or misplacement and must restore it.

With respect to Lauron, he is also liable in accordance with the
provisions of the Code of Commerce in force because, as the
proprietor and owner of the vessel who executed a contract of
carriage with Yu Con, there occurred the loss, theft, or robbery
of the P450 that belonged to Yu Con through the negligence of
Ipil and Solamo and which theft does not appear to have been
committed by a person not belonging to the craft.

The old Code of Commerce absolved the shipowner from liability for
the negligence of the captain and its crew but, in the light of the
principles of modern law, this doctrine on the non-liability of the
shipowner for the unlawful acts, crimes or quasi crimes, committed
by the captain and the crew can no longer be maintained in its
absolute and categorical terms.
It is well and good that ship owners be not held criminally liable for
such crimes or quasi crimes; but he cannot be excused from liability
for the damage and harm which, in consequence of those acts, may
be suffered by the third parties who contracted with the captain, in
his double capacity of agent and subordinate of the shipowner
himself.

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In maritime commerce, the shippers and passengers in making
contracts with the captain do so through the confidence they have in
the shipowner who appointed him; they presume that the owner
made a most careful investigation before appointing him, and, above
all, they themselves are unable to make such an investigation, and
even though they should do so, they could not obtain complete
security, inasmuch as the shipowner can, whenever he sees fit,
appoint another captain instead. Thus, it is only proper that the
shipowner should be made liable.

Yu Biao Sontua v. Ossorio
WHO WON: Sontua
DOCTRINE:
- Where the vessel is one of freight, a public concern or public
utility, its owner or agent is liable for the tortious acts of his
agents (arts. 587, 613, and 618, Code of Commerce; and
arts. 1902, 1903, 1908, Civil Code). This principle has been
repeatedly upheld in various decisions of this court.
- The general liability of a vessel owner extends to losses by
fire arising from other than a natural or other excepted
cause, whether occurring on the ship accidentally, or
communicated from another vessel, or from the shore; and
the fact that fire produces the motive power of a boat does
not affect the case. Such losses are not within the
exceptions either of act of God, or peril of the sea, except by
local custom, unless proximately caused by one of these
events. In jurisdictions where the civil law obtains, however,
it has been held that if property on a steamboat is destroyed
by fire, the owners of the boat are not responsible, if it was
being navigated with proper diligence, although the accident
occurred at night. The common law liability extends even to
loss by fires caused entirely by spontaneous combustion of
the cargo, without any negligence on the part of master or
crew.

FACTS:
- On March 12, 1920, there were loaded in the motor boat
Alfonso 2,000 cases of petroleum and 8,473 cases of
gasoline, of which 5,000 cases of gasoline and 2,000 of
petroleum were placed in the hold of said motor boat, and
the balance on deck. Said loading was done without
permission from the customs authorities. Said cases were
loaded by means of straps supporting 10 or 12 cases at a
time. Said cases were placed in the hold of the ship, which
is 14ft from the boiler of the main engine and 4ft from the
boiler of the smaller engine.
- On the evening of March 13, the smaller engine was in
operation preparatory to the departure of the motor boat
which, at the time, was getting ready to leave. A fire in said
motor boat burst out with an explosion followed by a violent
expulsion of gasoline and petroleum.
- Due to the proximity of the motor boat to a steamer Y.
Sontua owned by plaintiff, the magnitude of the fire and
the inflammability of the material that served as fuel, the
fire spread to the said steamer and so rapidly that it was
impossible for the crew of the Y. Sontua, and so rapidly that
it was impossible for the crew of the said steamer to check
its progress.
- Thus, plaintiff brought a civil action to recover from
defendant (owner and agent of the subject motor boat)
damages to her deck amounting to P67,400. Defendant
alleges, as a special defense, that he has taken no part
either directly or indirectly in the acts alleged in the complaint
and that if plaintiff sustained damages, they are not
imputable to the negligence of his agents, employees or
mandatories.
- Trial court sentenced the defendant to pay plaintiff the
abovementioned sum with legal interest.
ISSUE:
- W/N defendant is liable to plaintiff? YES

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W/N defendant is liable for the negligence of his agents and
employees? YES

RULING:
(1) Expert testimony introduced by Sontua shows the explosion and
fire, which caused the damages, are imputable to the negligence of
the persons having charge of Alfonso at that time. It was shown that:
o Due to the manner by which the cases were loaded (by
means of straps), the cases would receive violent bumps
resulting in damage to the cans and consequent leakage.
o The gases formed by the volatilization are apt to accumulate
in a compartment (hold of a ship) without sufficient
ventilation.
o This accumulation will cause the gases to ignite upon
coming in contact with a spark or upon temperature being
sufficiently raised (smaller engine was in operation).
Under these circumstances, the Court held that the fire which caused
the damages for which the plaintiff seeks redress was the inevitable
effect of the explosion and fire which occurred in the motor boat and
that this explosion and fire was imputable to the negligence of the
persons having charge at that time of said motor boat and under
whose direction the loading of the aforesaid cases of petroleum and
gasoline had been performed.

other excepted cause, whether occurring on the ship accidentally, or
communicated from another vessel, or from the shore; and the fact
that fire produces the motive power of a boat does not affect the
case. Such losses are not within the exceptions either of act of God,
or peril of the sea, except by local custom, unless proximately
caused by one of these events. In jurisdictions where the civil law
obtains, however, it has been held that if property on a steamboat is
destroyed by fire, the owners of the boat are not responsible, if it was
being navigated with proper diligence, although the accident
occurred at night. The common law liability extends even to loss by
fires caused entirely by spontaneous combustion of the cargo,
without any negligence on the part of master or crew.
With regard to the allegation that the obligations enumerated in
article 612 of our Code of Commerce are inherent in the master,
such inherent duties do not limit to the latter the civil liability arising
from their nonfulfillment, but while the master is responsible to the
ship agent, the ship agent, in turn, is responsible to third persons, as
is clearly provided in article 618 of said Code, in which express
mention is made, is subsections 5 and 7, of the duties enumerated in
the said article 612.
Chua Yek Hong v. IAC, Guno and Olit
WHO WON: Guno and Olit

(2) It is proven that the agents and employees, through whose
negligence the explosion and fire in question occurred, were agents,
employees, and mandatories of the defendant. Where the vessel is
one of freight, a public concern or public utility, its owner or agent is
liable for the tortious acts of his agents (arts. 587, 613, and 618,
Code of Commerce; and arts. 1902, 1903, 1908, Civil Code). This
principle has been repeatedly upheld in various decisions of this
court.

DOCTRINE:
The doctrine of limited liability gives the ship agent’s or owner’s right
of abandonment of the vessel and earned freight and such
abandonment provides the cessation of the responsibility of the ship
agent/owner. In other words, the ship agent/owner’s liability is
merely co-extensive with his interest in the vessel that a total loss
thereof results in its extinction, “no vessel, no liability.”

In American law, principles similar to those in force in the Philippines
and contained in the Code of Commerce abovecited, are prevailing:
Vessel owner's liability in general. — The general liability of a vessel
owner extends to losses by fire arising from other than a natural or

FACTS:
- Chua Yek Hong is a duly licensed copra dealer based at
Puerto Galera, Oriental Mindoro, while Guno and Olit are the
owners of the vessel M/V Luzviminda I, a common carrier

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-

engaged in coastwise trade from the different ports of
Oriental Mindoro to the Port of Manila.
Chua Yek loaded 1,000 sacks of copra, valued at
P101,227.40, on board the vessel "M/V Luzviminda I" for
shipment from Puerta Galera, Oriental Mindoro, to Manila.
Said cargo, however, did not reach Manila because
somewhere between Cape Santiago and Calatagan,
Batangas, the vessel capsized and sank with all its
cargo.
On 30 March 1979, petitioner instituted before the then Court
of First Instance of Oriental Mindoro, a Complaint for
damages based on breach of contract of carriage against
private respondents.
Respondents averred that even assuming that the alleged
cargo was truly loaded aboard their vessel, their liability had
been extinguished by reason of the total loss of said vessel.
Trial court held in favor of Chua Yek by ordering
respondents, jointly and severally, to pay plaintiff the sum of
P101,227.40 representing the value of the cargo which was
lost while in the custody of respondents. CA reversed. It
applied Art. 587 of the Code of Commerce and the doctrine
in Yangco v. Laserna (73 Phil. 330 [1941]) and held that
private respondents' liability, as ship owners, for the loss of
the cargo is merely co-extensive with their interest in the
vessel such that a total loss thereof results in its extinction.

ISSUE: W/N CA has erred in applying the doctrine of limited liability
under Art. 587 of the Code of Commerce as expounded in Yangco v.
Laserna? NO
RULING:
Article 587 of the Code of Commerce provides: The ship agents shall
be civilly liable for the indemnities in favor of third persons which may
arise from the conduct of the captain in the care of the goods which
he loaded on the vessel; but he may exempt himself therefrom by
abandoning the vessel with all the equipment and the freight it may
have earned during the voyage.

Said article is the source of the doctrine of limited liability, which
gives the ship agent’s or owner’s right of abandonment of the vessel
and earned freight and such abandonment provides the cessation of
the responsibility of the ship agent/owner. In other words, the ship
agent/owner’s liability is merely co-extensive with his interest in the
vessel that a total loss thereof results in its extinction, “no vessel, no
liability.”
RATIO of this doctrine *in case sir asks*
To offset against innumerable hazards and perils and to encourage
ship building and maritime commerce, it was deemed necessary to
confine the liability of the owner or agent arising from the operation
of a ship to the vessel, equipment, and freight, or insurance, if any.
Without the principle of limited liability, a ship owner and investor in
maritime commerce would run the risk of being ruined by the bad
faith or negligence of his captain, and the apprehension of this would
be fatal to the interest of navigation." (Yangco vs. Lasema)
The limited liability rule, however provides for exceptions: (1) where
the injury or death to a passenger is due either to the fault of the ship
owner, or to the concurring negligence of the ship owner and the
captain (2) where the vessel is insured; and (3) in workmen's
compensation claims. In this case, there is nothing in the records to
show that the loss of the cargo was due to the fault of the private
respondent as ship owners, or to their concurrent negligence with the
captain of the vessel and there was no showing that the vessel was
insured.
Also, the provisions of the Civil Code on common carriers do not
apply in this case since the circumstances of the case are not within
those that can be regulated by such law, specifically there were no
provisions regulating liability of the ship owners or agent in the event
of total loss/destruction of the vessel, and so the Code of Commerce
and other special laws shall apply.
In sum, it is held that the respondents are freed from their liabilities
applying the limited liability rule for having totally lost the vessel and
none of the exceptions apply to them, the liability for the loss of the
cargo of the copra must be deemed extinguished.

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Phil-Am General Insurance v. CA
WHO WON: Phil-Am Gen
DOCTRINE:
Art. 587 of the Code of Commerce is NOT applicable to the case at
bar. Simply put, the ship agent is liable for the negligent acts of the
captain in the care of goods loaded on the vessel. This liability
however can be limited through abandonment of the vessel, its
equipment and freightage as provided in Art. 587. Nonetheless,
there are exceptional circumstances wherein the ship agent could
still be held answerable despite the abandonment, as where the loss
or injury was due to the fault of the shipowner and the captain. The
international rule is to the effect that the right of abandonment of
vessels, as a legal limitation of a shipowner’s liability, does not apply
to cases where the injury or average was occasioned by the
shipowner’s own fault. It must be stressed at this point that Art. 587
speaks only of situations where the fault or negligence is committed
solely by the captain. Where the shipowner is likewise to be blamed,
Art. 587 will not apply, and such situation will be covered by the
provisions of the Civil Code on common carrier.
FACTS:
- On July 6, 1983, Coca-Cola Bottlers Philippines, Inc.,
loaded on board “MV Asilda,” a vessel owned and operated
by respondent Felman Shipping Lines (FELMAN), 7,500
cases of 1-liter Coca-Cola softdrink bottles to be transported
from Zamboanga City to Cebu City for consignee
Coca-Cola Bottlers Philippines, Inc., Cebu. The
shipment was insured with petitioner Philippine American
General Insurance Co., Inc. (PHILAMGEN).
“MV Asilda” left the port of Zamboanga in fine weather at
eight o’clock in the evening of the same day. At around
8:45AM, July 7, the vessel sank in the waters of
Zamboanga del Norte bringing down her entire cargo
with her including the subject 7,500 cases of 1-liter
Coca-Cola softdrink bottles.
- On 15 July 1983 the consignee Coca-Cola Bottlers

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Philippines, Inc., Cebu plant, filed a claim with respondent
FELMAN for recovery of damages it sustained as a result of
the loss of its softdrink bottles that sank with “MV Asilda.”
FELMAN denied the claim thus prompting the consignee to
file an insurance claim with PHILAMGEN which paid its
claim of P755,250.
Claiming its right of subrogation PHILAMGEN sought
recourse against respondent FELMAN which disclaimed any
liability for the loss. Consequently, PHILAMGEN sued the
shipowner for sum of money and damages.
In its complaint PHILAMGEN alleged that the sinking and
total loss of “MV Asilda” and its cargo were due to the
vessel’s unseaworthiness as she was put to sea in an
unstable condition. It further alleged that the vessel was
improperly manned and that its officers were grossly
negligent in failing to take appropriate measures to proceed
to a nearby port or beach after the vessel started to list.
FELMAN filed a MTD based on the affirmative defense that
no right of subrogation in favor of PHILAMGEN was
transmitted by the shipper, and that, in any event, FELMAN
had abandoned all its rights, interests and ownership over
“MV Asilda” together with her freight and appurtenances for
the purpose of limiting and extinguishing its liability under
Art. 587 of the Code of Commerce.
The trial court dismissed the complaint of PHILAMGEN. On
appeal the Court of Appeals set aside the dismissal and
remanded the case to the lower court for trial on the merits.
FELMAN filed a petition for certiorari with the SC which was
subsequently denied.
The trial court rendered judgment in favor of FELMAN. It
ruled that “MV Asilda” was seaworthy when it left the port of
Zamboanga as confirmed by certificates issued by the
Philippine Coast Guard and the shipowner’s surveyor
attesting to its seaworthiness. Thus the loss of the vessel
and its entire shipment could only be attributed to either a
fortuitous event, in which case, no liability should attach
unless there was a stipulation to the contrary, or to the
negligence of the captain and his crew, in which case, Art.

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587 of the Code of Commerce should apply. Moreover,
assuming “MV Asilda” was unseaworthy, still PHILAMGEN
could not recover from FELMAN since the assured (CocaCola Bottlers Philippines, Inc.) had breached its implied
warranty on the vessel’s seaworthiness. Resultantly, the
payment made by PHILAMGEN to the assured was an
undue, wrong and mistaken payment.
PHILAMGEN appealed the decision to the CA. CA rendered
judgment finding “MV Asilda” unseaworthy for being topheavy as 2,500 cases of Coca-Cola softdrink bottles were
improperly stowed on deck. In other words, while the vessel
possessed the necessary Coast Guard certification
indicating its seaworthiness with respect to the structure of
the ship itself, it was not seaworthy with respect to the
cargo. Nonetheless, said court denied the claim of
PHILAMGEN on the ground that the assured’s implied
warranty of seaworthiness was not complied with.
Perfunctorily, PHILAMGEN was not properly subrogated to
the rights and interests of the shipper. Furthermore,
respondent court held that the filing of notice of
abandonment had absolved the shipowner/agent from
liability under the limited liability rule.

undetermined quantity of empty boxes for fresh eggs. They
loaded the empty boxes for eggs and about 500 cases of Coca-Cola
bottles on deck. The ship captain stated that around 4AM of 7 July
he was awakened by the officer on duty to inform him that the vessel
had hit a floating log. At that time he noticed that the weather had
deteriorated with strong southeast winds inducing big waves. After
thirty minutes he observed that the vessel was listing slightly to
starboard and would not correct itself despite the heavy rolling and
pitching. He then ordered his crew to shift the cargo from starboard
to portside until the vessel was balanced. At about 7AM, the master
of the vessel stopped the engine because the vessel was listing
dangerously to portside. He ordered his crew to shift the cargo back
to starboard. The shifting of cargo took about an hour after which he
rang the engine room to resume full speed. After an hour and a half,
the vessel suddenly listed to portside and before the captain could
decide on his next move, some of the cargo on deck were
thrown overboard and seawater entered the engine room and
cargo holds of the vessel. At that instance, the master of the
vessel ordered his crew to abandon ship. Shortly thereafter,
“MV Asilda”
capsized and sank.
He ascribed the
sinking to the entry of seawater through a hole in the hull
caused by the vessel’s collision with a partially submerged log.

ISSUES:
(1) W/N “MV Asilda” was seaworthy when it left the port of
Zamboanga? YES
(2) W/N the limited liability under Art. 587 of the Code of
Commerce should apply? NO
(3) W/N PHILAMGEN was properly subrogated to the rights and
legal actions which the shipper had against FELMAN, the
shipowner? YES

The Elite Adjusters, Inc., submitted a report regarding the sinking of
“MV Asilda” which was given credence both by the CA and the SC
finding that the vessel was top-heavy which is to say that while the
vessel may not have been overloaded, yet the distribution or
stowage of the cargo on board was done in such a manner that the
vessel was in top-heavy condition at the time of her departure and
which condition rendered her unstable and unseaworthy for that
particular voyage. It is also to be noted that the subject vessel was
designed as a fishing vessel and it was not designed to carry a
substantial amount or quantity of cargo on deck. Therefore, the
report strongly asserted that had her cargo been confined to those
that could have been accommodated under deck, her stability would
not have been affected and the vessel would not have been in any
danger of capsizing, even given the prevailing weather conditions at
that time of sinking.

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RULING:
(1) “MV Asilda” was unseaworthy when it left the port of
Zamboanga. In a joint statement, the captain as well as the chief
mate of the vessel confirmed that the weather was fine when they
left the port of Zamboanga. According to them, the vessel was
carrying 7,500 cases of 1-liter Coca-Cola softdrink bottles, 300
sacks of seaweeds, 200 empty CO2 cylinders and an

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But from the moment that the vessel was utilized to load heavy cargo
on its deck, the vessel was rendered unseaworthy for the purpose of
carrying the type of cargo because the weight of the deck cargo so
decreased the vessel’s metacentric height as to cause it to become
unstable. Thus, the Court held that the proximate cause of the
sinking of the M/V “Asilda” was her condition of
unseaworthiness arising from her having been top-heavy
when she departed from the Port of Zamboanga. Her having
capsized and eventually sunk was bound to happen and was
therefore in the category of an inevitable occurrence.
(2) Art. 587 of the Code of Commerce is NOT applicable to the
case at bar. Simply put, the ship agent is liable for the negligent
acts of the captain in the care of goods loaded on the vessel.
This liability however can be limited through abandonment of
the vessel, its equipment and freightage as provided in Art. 587.
Nonetheless,
there
are
exceptional
circumstances
wherein the ship agent could still be held answerable despite
the abandonment, as where the loss or injury was due to the
fault of the shipowner and the captain. The international rule is
to the effect that the right of abandonment of vessels, as a legal
limitation of a shipowner’s liability, does not apply to cases
where the injury or average was occasioned by the shipowner’s
own fault. It must be stressed at this point that Art. 587 speaks
only of situations where the fault or negligence is committed
solely by the captain. Where the shipowner is likewise to be
blamed, Art. 587 will not apply, and such situation will be
covered by the provisions of the Civil Code on common carrier.
It was already established at the outset that the sinking of “MV
Asilda” was due to its unseaworthiness even at the time of its
departure from the port of Zamboanga. It was top-heavy as an
excessive amount of cargo was loaded on deck. Closer
supervision on the part of the shipowner could have prevented
this fatal miscalculation. As such, FELMAN was equally
negligent. It cannot therefore escape liability through the
expedient of filing a notice of abandonment of the vessel by
virtue of Art. 587 of the Code of Commerce. FELMAN, the
shipowner, was likewise not able to rebut the presumption of

negligence as stated in Art. 1733 of the NCC.
(3) The marine policy issued by PHILAMGEN to the Coca-Cola
bottling firm in at least two (2) instances has dispensed with the
usual warranty of worthiness. Paragraph 15 of the Marine Open
Policy reads “(t)he liberties as per Contract of Affreightment the
presence of the Negligence Clause and/or Latent Defect Clause in
the Bill of Lading and/or Charter Party and/or Contract of
Affreightment as between the Assured and the Company shall not
prejudice the insurance. The seaworthiness of the vessel as
between the Assured and the Assurers is hereby admitted.” The
same clause is present in par. 8 of the Institute Cargo Clauses
(F.P.A.) of the policy which states “(t)he seaworthiness of the vessel
as between the Assured and Underwriters in hereby admitted x x x x"
The result of the admission of seaworthiness by the assurer
PHILAMGEN may mean one or two things: (a) that the warranty of
the seaworthiness is to be taken as fulfilled; or, (b) that the risk of
unseaworthiness is assumed by the insurance company. The
insertion of such waiver clauses in cargo policies is in recognition of
the realistic fact that cargo owners cannot control the state of the
vessel. Thus it can be said that with such categorical waiver,
PHILAMGEN has accepted the risk of unseaworthiness so that if the
ship should sink by unseaworthiness, as what occurred in this case,
PHILAMGEN is liable.
PHILAMGEN’s action against FELMAN is squarely sanctioned by
Art. 2207 of the Civil Code. Payment by the assurer to the assured
operates as an equitable assignment to the assurer of all the
remedies which the assured may have against the third party
whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of any
privity of contract or upon payment by the insurance company of
the insurance claim. It accrues simply upon payment by the
insurance company of the insurance claim.
Wing Kee Compradoring Co v. The Bark “Monongahela,” Victor S.
Fox & Co. Inc., owner of the bark Monongahela, The Admiral Line,
and C.G. Lothigius

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WHO WON: Wing Kee Compradoring Co
DOCTRINE: An agent is understood the person entrusted with the
provisioning of a vessel, or who represents her in the port in which
she happens to be.
FACTS:
- Beginning with March 16 - August 16, 1921, various supplies
were furnished the Bark Monongahela by Wing Kee
Compradoring Company.
- Most of the bills for these goods are made out against
the “Admiral Line, S.S. Monongahela.” All are
considered by the master and the first steward.
- The first requisitions (formal order claiming the use of
property or materials) for the supplies are on forms headed
"The Admiral Line." Then follows Manila, the date, and the
name, "Wing Kee Compradoring Co." Next is the order,
reading: "Please deliver to S. S. Monongahela now lying
at Bay, the following goods and send bills to the Admiral
Line". After this goods are named. At the foot is found,
"United States Shipping Board Emergency Fleet
Corporation," although these words are erased in a few of
the requisitions, "The Admiral Line (Pacific Steamship
Co.) Operating Agents. By J. J. Armstrong." On the side
of the requisitions in red ink is the following: "Note: This
requisition must be receipted by either Chief Officer,
Chief Steward or Chief Engineer and returned to the
Admiral Line, with six copies of invoice immediately
after delivery of goods."
- After May 4, 1921, the requisitions seem to have been made
out by the steward and the master. The Court deduced
from a reading of the documents that the Admiral Line
was the operating agent for Monongahela, and was
responsible as such until the agency was terminated.
- In the Manila Daily Bulletin for August 2, 1921, appeared the
following: "Notice — Bark Monongahela — The undersigned
hereby give notice that they are not responsible in any
manner whatsoever for any indebtedness incurred by the

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Bark Monongahela, its Master and/or Crew — The Admiral
Line." (Admiral Line tried to excuse itself from any liability
incurred by Monongahela/Master/Crew by posting this
notice)
The trial judge found as a fact that on or before August 4,
1921, the Admiral Line had ceased to act as agent for the
Monongahela. Nevertheless, supplies were furnished the
Monongahela after these dates by the plaintiff.
Wing Kee Compradoing Co now seeks to recover from the
defendants (Bark Monongahela, Admiral Line – agent, C.G.
Lothiguis – captain and Victor S. Fox & Co. Inc. or the United
States Shipping Board Emergency Fleet Corporation owners of the boat), principally the Admiral Line as agent for
the Bark Monongahela, the sum of P17,675 w/ interest and
costs, on account of goods, wares, and merchandise sold
and delivered by Wing Kee Compradoring to the defendants
for the use of the crew of the Bark Monongahela.

ISSUE: W/N Admiral Line – an agent of the Bark Monongahela – is
liable to the plaintiff? YES
RULING:
Article 586, Section 1 of Title 2 of the Code of Commerce "Owners of
Vessels and Their Agents” provides: The owner of a vessel and the
agent shall be civilly liable for the acts of the captain and for the
obligations contracted by the latter to repair, equip, and
provision the vessel, provided the creditor proves that the
amount claimed was invested therein.
By agent is understood the person intrusted with the
provisioning of a vessel, or who represents her in the port in
which she happens to be.
The civil law, in this respect, is not at all dissimilar to the common
law. By the general law of the United States, as well as of England
and of Europe, it has been held, that when the agents buy in their
own names, but really for the account of their principal, the
seller has an option to look to either for payment, unless (1) he
trusted the agent exclusively; or (2) by the usage and

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understanding of the business the agent only is held; or (3)
unless the special circumstances of the case show that only the
agent was intended to be bound and the seller knew it or was
chargeable with knowledge of it.
It is first to be noted that the [Wing Kee Compradoring Co] has not
followed out its allegation that it has a claim against the Bark
Monongahela, and might not have prospered any way, considering
the rather dubious doctrine announced in the case of Health vs.
Steamer San Nicolas. Not only this, but [Wing Kee Compradoring
Co] has made no effort to bring the owner of the bark into the
case and has pushed with no enthusiasm its case against the
captain of the boat. What apparently the plaintiff wants is for the
Admiral Line, as the agent for the Bark Monongahela, to pay the
claim, leaving the latter to reimburse itself, if sees fit, from the
owners.
On the other hand, [Admiral Line] avers that as the agency has
ceased, action cannot be brought against it. The Court said that
this is a rather far-fetched argument, for, pursued to its logical
conclusion, every agent for a vessel could thus avoid
responsibility pursuant to article 568 of the Code of Commerce,
by giving up its agency when threatened with suit to enforce the
obligations of third parties. Moreover, the bills were presented
when the Admiral Line was yet the agent.
Thus, the Court held that the Admiral Line, as agent for the Bark
Monongahela, is liable to the plaintiff for supplies furnished the
Monongahela between March 16, 1921 and August 2, 1921, but is
not responsible for supplies furnished after that date. The
mathematical additions show that the debt of the Admiral Line to the
plaintiff amounts to P16,526.29.
Switzerland General Insurance Co. Ltd. v. Hon. Ramirez, Oyama
Lines, Citadel Lines and Mabuhay Brokerage Inc.
WHO WON: SGIC
DOCTRINE:
- Respondent agent in the instant case cannot be considered
as a "mere agent" under the civil law on agency as

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distinguished from a ship agent, within the context of the
Code of Commerce. A ship agent, according to Article 586 of
the Code of Commerce, is the person entrusted with the
provisioning of a vessel or who represents her in the port in
which she happens to be."
The Code of Commerce provides, among others, that the
ship agent shall also be liable for the indemnities in favor of
third persons which arise from the conduct of the captain in
the care of the goods which the vessel carried; but he may
exempt himself therefrom by abandoning the vessel with all
her equipments and the freightage he may have earned
during the voyage. (Article 587).

FACTS:
- On December 21, 1974, 60,000 bags of Urea Nitrogen were
shipped from Niihama Japan, on board the S/S St. Lourdes,
claimed to be owned and operated by defendant Citadel
Lines, Inc. The goods were consigned to Borden
International Phils., Inc. (BIP), and insured by Switzerland
General Insurance Co (SGIC) for the sum of P9M against
all risks.
- The shipment was discharged from the vessel S/S St.
Lourdes shipside into lighters owned by Mabuhay Brokerage
Company, Inc., but when the same was subsequently
delivered to and received by the consignee, it was found to
have sustained losses and/or damage amounting to P38K.
- The amount was then paid by SGIC to BIP, by virtue of which
payment it became subrogated to the rights of the latter.
- SGIC made demands against Oyama Shipping Co. (Oyama
Lines), Citadel Lines and/or Mabuhay Brokerage Co. Inc.
(MBC) but no payment was made and, uncertain in whose
custody the goods were damaged, impleaded the private
respondents as alternative defendants to determine their
respective liability.
- On December 24, 1975, SGIC thru its agent, F. E. Zuellig
Inc., filed an admiralty case against Oyama Lines, Citadel
and/or Mabuhay Brokerage Co., Inc (MBC).

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Citadel Lines alleged that it was merely a civil agent in the
Philippines for the Japanese firm Oyama Lines, which was
the charterer of the vessel S/S St. Lourdes, said vessel
being owned by Companies Martime de Brios, Sociedad
Anonima, a Panamanian Corporation. Citadel also alleged
that the principal agency relationship between Oyama Lines
and Citadel Lines was terminated on Aug 21, 1975 when the
Tokyo District Court declared and decreed the insolvency of
the said Oyama Lines. Defendant Citadel Lines argues that it
“has always acted as an agent of a disclosed principal and,
therefore, Citadel is without any liability at all” in connection
with SGIC’s claim.
By way of cross-claim, Citadel Lines alleged that that the
loss/damaged to the cargo took place while the latter was
being delivered to the consignee thereof by the Mabuhay
Brokerage, Inc. and said corporation should be held liable
therefor, as well as for all damages suffered and expenses
incurred by Citadel Lines as a result of the filing of the suit.
Citadel likewise interposed a counterclaim for damages
against SGIC.
Oyama Lines alleged that it had ceased to be represented in
the Philippines upon the declaration of its insolvency by the
Tokyo Court; that it was a mere charterer of the S/S "St.
Lourdes" which is owned by Companies Maritime de Brios,
Sociedad Anonima a Panamanian corporation; that due to its
insolvency, the case as against it should be dismissed, the
remedy for SGIC is to file its claim before the insolvency
court in Tokyo, Japan. Further, it imputed the loss or damage
to the shipment to the shipper, Sumitomo Shoji Kaisha, Ltd.
for failing to provide seaworthy packages for the goods,
and/or the Mabuhay Brokerage for failure to exercise utmost
diligence after it took possession of the cargo from the
vessel S/S "St. Lourdes".
Finally, it was averred that SGIC’s reinsurer had already paid
its claim and, hence, said reinsurer is the real party to the
action, and that assuming Oyama Lines to be liable, its
liability is limited to the amount of the loss in relation to the

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total amount of the freight of the goods, which if computed,
would be a much lower amount.
The trial court ruled in favor of SGIC as against Oyama
Lines but absolved Citadel Lines and MBC from liability.
SGIC filed a MR insofar as it absolves Citadel Lines Inc and
MB from liability but said MR was denied.

ISSUE: W/N respondent Citadel Lines Inc., the local agent of a
foreign ocean going vessel, the S/S St. Lourdes, may be held
primarily liable for the loss/damage found to have been sustained by
subject shipment while on board and/or still in the custody of the said
vessel? YES
RULING:
Considering the relationship of the parties, respondent Citadel Lines,
Inc. cannot be considered as a "mere agent" under the civil law on
agency as distinguished from a ship agent, within the context of the
Code of Commerce.
In Yu Biao Sontua & Co. v. Ossorio, for example, it was held that the
doctrines having reference to the relations between principal and
agent cannot be applied in the case of ship agents and ship owners.
For this reason, Citadel Lines cannot validly claim that the court a
quo made a finding of fact which is conclusive upon this Court. A ship
agent, according to Article 586 of the Code of Commerce, is the
person entrusted with the provisioning of a vessel or who represents
her in the port in which she happens to be."
It is not disputed by Citadel Lines that it is the local representative in
the Philippines of the Oyama Shipping Co., Ltd. and, as alleged by
petitioner, upon arrival of the vessel S/S "St. Lourdes" in Manila, it
took charge of the unloading of the cargo and issued cargo receipts
(or tally sheets) in its own name, for the purpose of evidencing
discharge of cargoes and the conditions thereof from the vessel to
the arrastre operators and/or unto barges/lighters, and that claims
against the vessel S/S "St. Lourdes" for losses/damages sustained
by shipments were in fact filed and processed by respondent Citadel
Lines, Inc.

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Thus, Citadel Lines is the entity that represents the vessel in the port
of Manila and hence is a ship agent within the meaning and context
of Art. 586 of the Code of Commerce.

the vessel, in whose custody the goods were lost or damaged, are
exempt from liability therefrom and that the damage was caused by
factors and circumstances exempting them from liability.

The Code of Commerce provides, among others, that the ship agent
shall also be liable for the indemnities in favor of third persons which
arise from the conduct of the captain in the care of the goods which
the vessel carried; but he may exempt himself therefrom by
abandoning the vessel with all her equipments and the freightage he
may have earned during the voyage. (Article 587).

The insolvency of Oyama Lines has no bearing on the instant case
insofar as the liability of Citadel Lines, Inc. is concerned. The law
does does not make the liability of the ship agent dependent upon
the solvency or insolvency of the ship owner.

In addition, Article 618 of the same Code states:
Art. 618. The captain shall be civilly liable to the ship agent and the latter to the third
persons who may have made contracts with the former —
1. For all the damages suffered by the vessel and its cargo by reason of want of skill
or negligence on his part. If a misdemeanor or crime has been committed he shall be
liable in accordance with the Penal Code.
2. For all the thefts and robberies committed by the crew, reserving his right of action
against the guilty parties.
3. For the losses, fines, and confiscations imposed on account of violation. of the laws
and regulations of customs, police, health, and navigation
4. For the losses and damages caused by mutinies on board the vessel or by reason
of faults committed by the crew in the service and defense of the same, if he does not
prove Chat, he made full use of his authority to prevent or avoid them.
5. For those arising by reason of a misuse of powers and non-fulfillment of the duties
which pertain to him in accordance with Articles 610 and 612.
6. For those arising by reason of his going out of his course or taking a course which,
in the opinion of the officers of the vessel, at a meeting attended by the shippers or
super
cargoes who may be on board, he should not have taken without sufficient cause.
No exception whatsoever shall exempt him from his obligation.
7. For those arising by reason of his voluntarily entering a port other than his
destination, with the exception of the cases or without the formalities referred to in
Article 612.
8. For those arising by reason of the non-observance of the provisions contained in
the regulations for lights and maneuvers for the purpose of preventing collisions.

It appearing that the Citadel Lines is the ship agent for the vessel
S/S "St. Lourdes" at the port of Manila, it is, therefore, liable to the
petitioner, solidarily with its principal, Oyama Shipping Co., Ltd., in an
amount representing the value of the goods lost and or damaged,
amounting to P38,698.94, which was likewise the amount paid by
petitioner, as insurer, to the insured consignee As found by the court
a quo, there has been no proof presented to show that the officers of

Tabacalera Insurance Co., Prudential Guarantee & Assurance Inc.
and New Zealand Insurance Co. Ltd. v. North Front Shipping
Services Inc.
WHO WON: Petitioner insurance companies
DOCTRINE:
- It is therefore imperative that a public carrier shall remain as
such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is
limited to the ship only, as in the case of a time-charter or
voyage-charter.
- The extraordinary diligence in the vigilance over the goods
tendered for shipment requires the common carrier to know
and to follow the required precaution for avoiding damage to,
or destruction of the goods entrusted to it for safe carriage
and delivery. It requires common carriers to render service
with the greatest skill and foresight and "to use all
reasonable means to ascertain the nature and
characteristics of goods tendered for shipment, and to
exercise due care in the handling and stowage, including
such methods as their nature requires".
FACTS:
- On 2 August 1990, 20,234 sacks of corn grains valued at
P3,500,640 were shipped on board North Front 777, a
vessel owned by North Front Shipping Services, Inc.
(NFSI). The cargo was consigned to Republic Flour Mills
Corporation (RFMC) in Manila and insured with the herein
mentioned insurance companies.

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The vessel was inspected prior to actual loading by
representatives of the shipper and was found fit to carry the
merchandise. The cargo was covered with tarpaulins and
wooden boards. The hatches were sealed and could only be
opened by representatives of Republic Flour Mills
Corporation.
The vessel left Cagayan de Oro City on 2 August 1990 and
arrived at Manila on 16 August 1990. Republic Flour Mills
Corporation was advised of its arrival but it did not
immediately commence the unloading operations. There
were days when unloading had to be stopped due to variable
weather conditions and sometimes for no apparent reason at
all.
When the cargo was eventually unloaded there was a
shortage of 26.333 metric tons. The remaining
merchandise
was
already moldy, rancid and
deteriorating.
The unloading operations were completed on 5 September
1990 or twenty (20) days after the arrival of the barge at the
wharf of Republic Flour Mills Corporation in Pasig City.
A Certificate of Analysis by a surveyor was issued indicating
that the corn grains had 18.56% moisture content and the
wetting was due to contact with salt water. The mold growth
was only incipient and not sufficient to make the corn grains
toxic and unfit for consumption. In fact, the mold growth
could still be arrested by drying.
RFMC rejected the entire cargo and formally demanded from
NFSI payment for damage suffered by it. The damages were
unheeded. The insurance companies were obliged to pay
RFMC P2M.
Insurance companies were then subrogated to the rights of
RFMC. Thus, they filed a complaint for damages against
NFSI claiming that the loss was exclusively attributable to
the fault and negligence of the carrier.
The Marine Cargo Adjusters hired by the insurance
companies conducted a survey and found cracks in the
bodega of the barge and heavy concentration of molds
on the tarpaulins and wooden boards. They did not notice

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any seals in the hatches. The tarpaulins were not brand
new as there were patches on them, contrary to the claim of
North Front Shipping Services, Inc., thus making it possible
for water to seep in. They also discovered that the bulkhead
of the barge was rusty.
NFSI averred that it could not be made culpable for the loss
and deterioration of the cargo as it was never negligent.
Captain Solomon Villanueva, master of the vessel, reiterated
that the barge was inspected prior to the actual loading and
was found adequate and seaworthy. In addition, they were
issued a permit to sail by the Coast Guard. The tarpaulins
were doubled and brand new and the hatches were properly
sealed. They did not encounter big waves hence it was not
possible for water to seep in. He further averred that the corn
grains were farm wet and not properly dried when loaded.
RTC dismissed the complaint and ruled that the contract
entered into between NFSI and RFMC was a charter-party
agreement and as such, only ordinary diligence in the care
of goods was required of NFSI. The inspection of the barge
by the shipper and the representatives of the shipping
company before actual loading, coupled with the Permit to
Sail issued by the Coast Guard, sufficed to meet the degree
of diligence required of the carrier.
CA ruled that as a common carrier required to observe a
higher degree of diligence North Front 777 satisfactorily
complied with all the requirements hence was issued a
Permit to Sail after proper inspection. Consequently, the
complaint was dismissed and the motion for reconsideration
rejected.

ISSUE: W/N NFSI is liable? YES
RULING:
The charter-party agreement between North Front Shipping
Services, Inc., and Republic Flour Mills Corporation did not in any
way convert the common carrier into a private carrier.
A "charter-party" is defined as a contract by which an entire ship, or
some principal part thereof, is let by the owner to another person for

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a specified time or use; a contract of affreightment by which the
owner of a ship or other vessel lets the whole or a part of her to a
merchant or other person for the conveyance of goods, on a
particular voyage, in consideration of the payment of freight. Upon
the other hand, the term "common or public carrier" is defined in Art.
1732 of the Civil Code. The definition extends to carriers either by
land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation
as a public employment and not as a casual occupation . . .
It is therefore imperative that a public carrier shall remain as
such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited
to the ship only, as in the case of a time-charter or voyagecharter.
NFSI is a corporation engaged in the business of transporting cargo
and offers its services indiscriminately to the public. It is without
doubt a common carrier. As such it is required to observe
extraordinary diligence in its vigilance over the goods it transports.
When goods placed in its care are lost or damaged, the carrier is
presumed to have been at fault or to have acted negligently. NFSI
therefore has the burden of proving that it observed extraordinary
diligence in order to avoid responsibility for the lost cargo. NFSI
proved that the vessel was inspected prior to actual loading by
representatives of the shipper and was found fit to take a load of
corn grains.
They were also issued Permit to Sail by the Coast Guard. The
master of the vessel testified that the corn grains were farm wet
when loaded. However, this testimony was disproved by the
clean bill of lading issued by North Front Shipping Services,
Inc., which did not contain a notation that the corn grains were
wet and improperly dried. Having been in the service since
1968, the master of the vessel would have known at the outset
that corn grains that were farm wet and not properly dried
would eventually deteriorate when stored in sealed and hot
compartments as in hatches of a ship. Equipped with this
knowledge, the master of the vessel and his crew should have

undertaken precautionary measures to avoid or lessen the
cargo's possible deterioration as they were presumed
knowledgeable about the nature of such cargo. But none of
such measures was taken.
The extraordinary diligence in the vigilance over the goods
tendered for shipment requires the common carrier to know and
to follow the required precaution for avoiding damage to, or
destruction of the goods entrusted to it for safe carriage and
delivery. It requires common carriers to render service with the
greatest skill and foresight and "to use all reasonable means to
ascertain the nature and characteristics of goods tendered for
shipment, and to exercise due care in the handling and
stowage, including such methods as their nature requires".
In fine, the SC found that the carrier failed to observe the required
extraordinary diligence in the vigilance over the goods placed in its
care. The proofs presented by NFSI were insufficient to rebut
the prima facie presumption of private respondent's negligence.
However, the SC also found that the consignee Republic Flour Mills
Corporation guilty of contributory negligence. It was seasonably
notified of the arrival of the barge but did not immediately start the
unloading operations. No explanation was proffered by the
consignee as to why there was a delay of six (6) days. Had the
unloading been commenced immediately the loss could have been
completely avoided or at least minimized. As testified to by the
chemist who analyzed the corn samples, the mold growth was only
at its incipient stage and could still be arrested by drying. The corn
grains were not yet toxic or unfit for consumption. For its contributory
negligence, Republic Flour Mills Corporation should share at least
40% of the loss.
Philippine Home Assurance Corporation v. CA and Eastern Shipping
Lines, Inc.
WHO WON: PHAC

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DOCTRINE:
- Fire may not be considered a natural disaster or calamity
since it almost always arises from some act of man or by
human means. It cannot be an act of God unless caused by
lightning or a natural disaster or casualty not attributable to
human agency.
- As a rule, general or gross averages include all damages
and expenses which are deliberately caused in order to save
the vessel, its cargo, or both at the same time, from a real
and known risk. While the instant case may technically fall
within the purview of the said provision, the formalities
prescribed under Articles 813 and 814 of the Code of
Commerce in order to incur the expenses and cause the
damage corresponding to gross average were not complied
with.
FACTS:
- Eastern Shipping Lines, Inc. (ESLI) loaded on board SS
Eastern Explorer in Kobe, Japan, the following shipment for
carriage to Manila and Cebu, freight pre-paid and in good
order and condition, viz: (a) 2 boxes internal combustion
engine parts, consigned to William Lines, Inc.; (b) 10 metric
ton. (334 bags) ammonium chloride, consigned to Orca's
Company; (c) 200 bags Glue 300, consigned to Pan
Oriental Match Company; and (d) garments, consigned to
Ding Velayo.
- While the vessel was off Okinawa, Japan, a small flame
was detected on the acetylene cylinder located in the
accommodation area near the engine room on the main
deck level.
- As the crew was trying to extinguish the fire, the acetylene
cylinder suddenly exploded sending a flash of flame
throughout the accommodation area, thus causing
death and severe injuries to the crew and instantly
setting fire to the whole superstructure of the vessel.
The incident forced the master and the crew to abandon
the ship.

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Thereafter, SS Eastern Explorer was found to be a
constructive total loss and its voyage was declared
abandoned.
Several hours later, a tugboat under the control of Fukuda
Salvage Co. arrived near the vessel and commenced to tow
the vessel for the port of Naha, Japan.
Fire fighting operations were again conducted at the said
port. After the fire was extinguished, the cargoes which were
saved were loaded to another vessel for delivery to their
original ports of destination. ESLI charged the consignees
several amounts corresponding to additional freight and
salvage charges.
The charges were ALL PAID by Philippine Home
Assurance Company (PHAC) under protest for and in
behalf of the consignees.
PHAC, as subrogee of the consignees, filed a complaint
before the RTC against ESLI to recover the sum paid under
protest OTG that the same were actually damages brought
about by the fault, negligence, illegal act and/or breach of
contract of ESLI.
RTC dismissed PHAC’s complaint and ruled in favor of ESLI.
The RTC held that Sec. 1 of Act No. 2616 (Salvage Law)
applies in the case at bar. Act No. 2616, otherwise known as
the Salvage Law, is thus applicable to the case at bar to wit:
“Sec 1. When in case of shipwreck, the vessel or its cargo
shall be beyond the control of the crew, or shall have been
abandoned by them, and picked up and conveyed to a safe
place by other persons, the latter shall be entitled to a
reward for the salvage. Those who, not being included in the
above paragraph, assist in saving a vessel or its cargo from
shipwreck, shall be entitled to like reward.” Thus, the
"compensation to be paid by the owner of the cargo is in
proportion to the value of the vessel and the value of the
cargo saved."
The burning of "EASTERN EXPLORER" while off Okinawa
rendered it physically impossible for defendant to comply
with its obligation of delivering the goods to their port of
destination pursuant to the contract of carriage. Under Article

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1266 of the Civil Code, the physical impossibility of the
prestation extinguished defendant's obligation. It is but legal
and equitable for ESLI therefore, to demand additional
freight from the consignees for forwarding the goods
from Naha, Japan to Manila and Cebu City on board
another vessel, the "EASTERN MARS” by virtue of Art.
844 of the Code of Commerce.
On appeal, CA affirmed the trial court’s ruling.

ISSUE:
(1) Who, among the carrier, consignee or insurer of the goods, is
liable for the additional charges or expenses incurred by the owner of
the ship in the salvage operations and in the transshipment of the
goods via a different carrier? ESLI
(2) W/N respondent court committee an error in concluding the
expenses incurred in saving the cargo are considered general
average? YES
RULING:
(1) It is worthy to note at the outset that the goods subject of the
present controversy were neither lost nor damaged in transit by the
fire that razed the carrier. In fact, the said goods were all delivered to
the consignees, even if the transshipment took longer than
necessary.
It is erroneous for the respondent Court to say that fire is considered
a natural calamity. Fire may not be considered a natural disaster
or calamity since it almost always arises from some act of man
or by human means. It cannot be an act of God unless caused
by lightning or a natural disaster or casualty not attributable to
human agency.
In the case at bar, it is not disputed that a small flame was detected
on the acetylene cylinder and that by reason thereof, the same
exploded despite efforts to extinguish the fire. Neither is there any
doubt that the acetylene cylinder, obviously fully loaded, was stored
in the accommodation area near the engine room and not in a
storage area considerably far, and in a safe distance, from the
engine room. Moreover, there was no showing, and none was

alleged by the parties, that the fire was caused by a natural disaster
or calamity not attributable to human agency. On the contrary, there
is strong evidence indicating that the acetylene cylinder caught
fire because of the fault and negligence of respondent ESLI, its
captain and its crew through the ff. instances:
 The acetylene cylinder which was fully loaded should not
have been stored in the accommodation area near the
engine room where the heat generated therefrom could
cause the acetylene cylinder to explode by reason of
spontaneous combustion. Respondent ESLI should have
easily foreseen that the acetylene cylinder, containing highly
inflammable material was in real danger of exploding
because it was stored in close proximity to the engine room.
 ESLI should have known that by storing the acetylene
cylinder in the accommodation area supposed to be
reserved for passengers, it unnecessarily exposed its
passengers to grave danger and injury. Curious passengers,
ignorant of the danger the tank might have on humans and
property could have handled the same or could have lighted
and smoked cigarettes while repairing in the accommodation
area.
 The fact that the acetylene cylinder was checked, tested and
examined and subsequently certified as having complied
with the safety measures and standards by qualified experts
before it was loaded in the vessel only shows to a great
extent that negligence was present in the handling of the
acetylene cylinder after it was loaded and while it was on
board the ship. Indeed, had the respondent and its agents
not been negligent in storing the acetylene cylinder near the
engine room, the same would not have leaked and exploded
during the voyage.
(2) As a rule, general or gross averages include all damages and
expenses which are deliberately caused in order to save the vessel,
its cargo, or both at the same time, from a real and known risk. While
the instant case may technically fall within the purview of the said
provision, the formalities prescribed under Articles 813 and 814 of
the Code of Commerce in order to incur the expenses and cause the

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damage corresponding to gross average were not complied with.
Consequently, respondent ESLI's claim for contribution from the
consignees of the cargo at the time of the occurrence of the average
turns to naught. Thus, it indubitably follows that the cargo
consignees cannot be made liable to respondent carrier for
additional freight and salvage charges. Consequently,
respondent carrier must refund to herein petitioner the amount
it paid under protest for additional freight and salvage charges
in behalf of the consignees.
Manila Steamship v. Abdulhaman
WHO WON: Insa Abdulhaman
DOCTRINE:
- In fact, it is a general principle, well established maritime law
and custom, that shipowners and ship agents are civilly
liable for the acts of the captain (Code of Commerce, Article
586) and for the indemnities due the third persons (Article
587) yso that injured parties may immediately look for
reimbursement to the owner of the ship, it being universally
recognized that the ship master or captain is primarily the
representative of the owner. This direct liability, moderated
and limited by the owner’s right of abandonment of the
vessel and earned freight (Article 587), has been declared to
exist, not only in case of breached contracts, but also in
cases of tortious negligence.
- Due diligence of a bonus paterfamilias (in the selection and
vigilance of the officers) cannot exempt the shipowner from
any liability for their faults for the greater protection of injured
parties.
- The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a
shipowner’s liability, does not apply to cases where the injury
or the average is due to shipowner’s own fault.
FACTS:

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From 7-8PM of May 4, 1948, the M/L “Consuelo V”, laden
with cargoes and passengers left the port of Zamboanga
City bound for Siokon under the command of Faustino
Macrohon. She was then towing a kumpit, named “Sta.
Maria Bay”. The weather was good and fair. Among her
passengers were the Plaintiff Insa Abdulhaman, his wife
Carimla Mora and their five children. Abdulhaman and his
wife paid their fare before the voyage started.
On that same night the M/S “Bowline Knot” was navigating
from Maribojoc towards Zamboanga.
Between 9:30-10PM, the dark clouds bloated with rain
began to fall and the gushing strong wind began to blow
steadily harder, lashing the waves into a choppy and roaring
sea. Such weather lasted for about an hour and then it
became fair although it was showering and the visibility was
good enough.
When some of the passengers of the M/L “Consuelo V”
were then sleeping and some were lying down awake, all of
a sudden they felt the shocking collision of the M/L
“Consuelo V” and a big motorship, which later on was
identified as the M/V “Bowline Knot”.
Because the M/L “Consuelo V” capsized, her crew and
passengers, before realizing what had happened, found
themselves swimming and floating on the crest of the waves
and as a result of which 9 passengers were dead and
missing and all the cargoes carried on said boat, including
those of the Plaintiff , were also lost.
Among the dead passengers found were Maria, Amlasa,
Bidoaya and Bidalla, all surnamed Inasa, while the body of
the child Abdula Inasa of 6 years of age was never
recovered. Before the collision, none of the passengers
were warned or informed of the impending danger as the
collision was so sudden and unexpected. All those rescued
at sea were brought by the M/V “Bowline Knot” to
Zamboanga City.
Insa Abdulhaman filed a civil suit against the Manila
Steamship Co., owner of the M/S “Bowline Knot”, and Lim
Hong To, owner of the M/L “Consuelo V”, to recover

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damages for the death of his five children and loss of
personal properties on board the M/L “Consuelo V” as a
result of a maritime collision between said vessel and the
M/S “Bowline Knot” on May 4, 1948, a few kilometers distant
from San Ramon Beach, Zamboanga City.
CA affirmed the findings of the Board of Marine Inquiry, that
the commanding officer of the colliding vehicles had both
been negligent in operating their respective vessels. It held
the owners of both vessels solidarily liable to Abdulhaman
for the damages caused to him by the collision, under Article
827 of the Code of Commerce but exempted Defendant Lim
Hong To from liability by reason of the sinking and total
loss of his vessel, the M/L “Consuelo V”, while the
other Defendant, the Manila Steamship Co., owner of the
M/S “Bowline Knot”, was ordered to pay all of Plaintiff’s
damages in the amount of P20,784.
Petitioner Manila Steamship Co. pleads that it is exempt
from any liability to Plaintiff under Article 1903 of the Civil
Code because it had exercised the diligence of a good father
of a family in the selection of its employees, particularly Third
Mate Simplicio Ilagan, the officer in command of its vessels,
the M/S “Bowline Knot”, at the time of the collision.

collision between two vessels imputable to both of them, each vessel
shall suffer her own damage and both shall be solidarily liable for the
damages occasioned to their cargoes. The characteristic language
of the law in making the “vessels” solidarily liable for the
damages due to the maritime collision emphasizes the direct
nature of the responsibilities on account of the collision
incurred by the shipowner under maritime law, as distinguished
from the civil law and mercantile law in general. This direct
responsibility is recognized in Article 618 of the Code of Commerce
under which the captain shall be civilly liable to the ship agent, and
the latter is the one liable to third persons.
In fact, it is a general principle, well established maritime law
and custom, that shipowners and ship agents are civilly liable
for the acts of the captain (Code of Commerce, Article 586) and
for the indemnities due the third persons (Article 587) yso that
injured parties may immediately look for reimbursement to the
owner of the ship, it being universally recognized that the ship
master or captain is primarily the representative of the owner.
This direct liability, moderated and limited by the owner’s right
of abandonment of the vessel and earned freight (Article 587),
has been declared to exist, not only in case of breached
contracts, but also in cases of tortious negligence.

ISSUE:
(1) W/N Manila Steamship Co is exempt from liability to Abdulhaman
bec it had exercised ordinary diligence in the selection of its
employees under Art. 1903 of the NCC? NO
(2) W/N Manila Steamship Co. is liable for the negligence of his
agents and employees? YES
(3) W/N Lim Hong To (owner of M/L “Consuelo”) is exempt from
liability in view of the total loss of his vessel that sank as a result of
the collision? NO

(2) It is proven that the agents and employees, through whose
negligence the explosion and fire in question occurred, were agents,
employees and mandatories of Manila Steamship Co. Where the
vessel is one of freight, a public concern or public utility, its owner or
agents is liable for the tortious acts of his agents (Articles 587, 613,
and 618 Code of Commerce; and Article 1902, 1903, 1908, Civil
Code). This principle has been repeatedly upheld in various
decisions of this court.

RULING:
(1) While it is true that Abdulhaman’s action against Manila
Steamship Co is based on a tort or quasi-delict, the tort in question is
NOT a civil tort under the Civil Code but a maritime tort resulting in
a collision at sea, governed by Articles 826-939 of the Code of
Commerce. Under Article 827 of the Code of Commerce, in case of

It is easy to see that to admit the defense of due diligence of a
bonus paterfamilias (in the selection and vigilance of the
officers and crew) as exempting the shipowner from any liability
for their faults, would render nugatory the solidary liability
established by Article 827 of the Code of Commerce for the
greater protection of injured parties. Shipowners would be able

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to escape liability in practically every case, considering that the
qualifications and licensing of ship masters and officers are
determined by the State, and that vigilance is practically
impossible to exercise over officers and crew of vessels at sea.
(3) It is to be noted that both the master and the engineer of the
motor launch “Consuelo V” were not duly licensed as such. In
applying for permission to operate, despite the lack of properly
trained and experienced, crew, Lim Hong To gave the Court the
reason “that the income derived from the vessel is insufficient to pay
licensed officers who demand high salaries”, and expressly declared,
“that in case of any accident, damage or loss, I shall assume full risk
and responsibility for all the consequences thereof.”
By operating with an unlicensed master, Lim Hong To deliberately
increased the risk to which the passengers and shippers of cargo
aboard the “Consuelo V” would be subjected. In his desire to reap
greater benefits in the maritime trade, Lim Hong To willfully
augmented the dangers and hazards to his vessel’s unwary
passengers, who would normally assume that the launch officers
possessed the necessary skill and experience to evade the perils of

the sea. Hence, the liability of said Respondent cannot be the
identical to that of a shipowner who bears in mind the safety of the
passengers and cargo by employing duly licensed officers.
The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner’s
liability, does not apply to cases where the injury or the average
is due to shipowner’s own fault.
THUS, the SC held that Manila Steamship Co. is directly and
primarily responsible in tort for the injuries caused to Abdulhaman
through the negligence of the crews of both vessels. And that Lim
Hong having caused the same to sail without licensed officers, is
liable for the injuries caused by the collision over and beyond the
value of said launch. And both vessels being at fault, the liability of
Lim Hong To and Manila Steamship Co to Abdulhaman is in solidum
as prescribed in Art. 827 of the Code of Commerce.