Ampil Transpo Week 2

PHILIPPINE REPORTS ANNOTATED VOLUME 90
2/1/16, 8:35 PM
[No. L-3678. February 29, 1952]

JOSE
MENDOZA,
plaintiff
and
appellant,
vs.
PHILIPPINE AIR LINES, INC., defendant and appellee.
1. CARRIER;
AVIATION;
CONTRACT
OF
TRANSPORTATION BY AIR, COMMERCIAL.A contract
of transportation by air may be regarded as commercial.
The reason is that the transportation company is a common
carrier; besides, air transportation is clearly
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VOL. 90, FEBRUARY 29, 1952
837
Mendoza vs. Philippine Air Lines, Inc.

similar or analogous to land and water transportation. 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.
2. ID.; ID.; CARRIER BY AIR CRAFT.The principles which
govern oarriers by other means, such as by railroad or
motor bus, govern carriers by aircraft. (64 Am. Jur. 33).
3. ID.;
DAMAGES;
UNFORSEEN
DAMAGES.The
defendant company can not be held liable for damages
where it could not have forseen the damages that would be
suffered by the plaintiff upon failure to deliver the can of
film for reason that the plans of the plaintiff to exhibit that
film during the town fiesta and his preparation, specially
the announcement of said exhibition by poster and
advertisement in the newspapers were not called to the
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defendant's attention.
4. ID.; RIGHT TO PROMPT DELIVERY.Common carriers
are not obligated by law to carry and to deliver
merchandise, and persons are not vested with the right to
prompt delivery, unless such common carriers previously
assume the obligation. Said righta and obligations are
created by a specific contract entered into by the parties.
5. ID.; SHIPPING; WHEN CONSIGNEE BECOMES PARTY
TO THE CONTRACT.The right of the shipper to
countermand the shipment terminates when the consignee
or legitimate holder of the bill of lading appears with such
bill of lading before the carrier and makes himself a party to
the contract. Prior to that time, the consignee is stranger to
the contract.
6. ID.; CONTRACT; CONSIGNEE BECOMES A PARTY TO
THE CONTRACT.Where the contract of carriage between
the consignor and the defendant carrier contains the
stipulations of delivery to the consignee, the latter's demand
for the delivery of the can of film to him at the provincial
airport may be regarded as a notice of his acceptance of the
stipulation of the delivery to him contained in the
fulfillment of the contract of carriage and delivery. In this
case he also made himself a party to the contract, or at least
has come to court to enforce it. His cause of action must
necessarily be founded on its breach.
7. ID.; DAMAGES; PROMPT DELIVERY;Where failure to
exhibit films on a certain day wcmld spell substantial
damages or considerable loss of profits, including waste of
efforts on preparations and expense incurred in
advertisements, exhibitors, for their security, may either get
hold of the films well ahead of the time of exhibition in
order to rnake allowances for any hitch in the delivery, or
else enter into a special contract or make a suitable
arrangement with the common carrier for the prompt
838
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838
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PHILIPPINE REPORTS ANNOTATED

delivery of the fihns, calling the attention of the carrier to
the circumstances surrounding the case and the
approximate amount of damages to be auffered in case of
delay.
APPEAL from a judgment of the Court of First Instance of

Camarines Sur. Leuterio, J.
The facts are stated in the opinion of the Court.
Manuel O. Chan, Reyes and Dy-Liaco for appellant.
Daniel Me. Gomez and Emigdio Tanjuatco for appellee.
MONTEMAYOR, J.:
The present appeal by plaintiff Jose Mendoza from the
decision of the Court of First Instance of Camarines Sur,
has come directly to this Tribunal for the reason that both
parties, appellant and appellee, accepted the findings of
fact made by the trial court and here raise only questions of
law. On our part, we must also accept said findings of fact
of the lower court.
In the year 1948, appellant Jose 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. The fiesta or
town holiday of the City of Naga, held on September 17 and
18, yearly, was usually attended by a great many people,
mostly from the Bicol region, especially since the Patron
Saint Virgin of Pena Francia was believed by many to be
miraculous. -As a good businessman, appellant, taking
advantage of these circumstances, decided to exhibit a film
which would fit the occasion and have a special attraction
and significance to the people attending said fiesta. A
month before the holiday, that is to say, August 1948, he
contracted with the LVN pictures Inc., a movie producer in
Manila 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 two thousand
posters printed and later distributed not only in the City of
Naga but also in the neighboring towns. He also advertised
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in a weekly of general circulation in the province. The

posters and advertisement stated that the
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839

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.
In pursuance of the agreement between the LVN
Pictures Inc. and Mendoza, the former on September 17th,
1948, delivered to the defendant Philippine Airlines (PAL)
whose planes carried passengers and cargo and made
regular trips from Manila to the Pili Air Port near Naga,
Camarines Sur, a can containing the film "Himala ng
Birhen" consigned to the Cita Theater. For this shipment
the defendant issued its Air Way Bill No. 317133 marked
Exhibit "1". This can of films was loaded on flight 113 of the
defendant, the plane arriving at the Air Port at Pili a little
after four o'clock in the afternoon of the same day,
September 17th. For reasons not explained by the
defendant, 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 beginning in the evening of September 17th, to
exploit the presence of the big crowd that came to attend
the town fiesta, 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 hia principal in
Manila making inquiries and asking that the film be sent
to Naga inunediately. After investigation and search in the
Manila office, the film was finally located the following day,
September 18th, and then shipped to the Pili Air Port on
September 20th. Mendoza received it and exhibited the
film but he had missed his opportunity to realize a large
profit as he expected for the people aftcr the fiesta had
already left for their towns. To recoup his losses, Mendoza
brought this action against the PAL. After trial, the lower
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court found that because of his failure to exhibit the film

"Himala ng Birhen" during the town fiesta, Mendoza
suffered damages or rather
840
840

failed to earn profits in the amount of P3,000.00, but

finding the PAL not liable for said damages, dismissed the
complaint.
To avoid liability, defendant-appellee, called the
attention of the trial court to the terms and conditions of
paragraph 6 of the Way Bill printed on the back thereof,
which paragraph reads as follows:
"6. The Carrier does not obligate itself to carry the Goods by any
specified aircraft or on a specified time. Said Carrier being hereby
authorized to deviate from the route of the shipment without any
liability therefor."
It claimed that since 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. The
trial court, however, found and held that although the
defendant was not obligated to load the film on any
specified plane or on any particular day, once said can of
film was loaded and shipped on one of its planes making
the 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 the defendant was a debtor in
good faith.
The trial court presided over by Judge Jose N. Leuterio
in a well-considered decision citing authorities, particularly
the case of Daywalt vs. Corporacion de PP. Agustinos
Recoletos, 39 Phil. 587, held that not because plaintiff
failed to realize profits in the sum of P3,000.00 due to the
negligence of the defendant, should the latter be made to
reimburse him said sum. Applying the provisions of Art.
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1107 of the Civil Code which provides that losses and

damages for which a debtor in good faith is liable are 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
841
841

at the time that the def endant accepted the can of film f or
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 Cade
should have been applied in deciding this case for the
reason that the shipment of the can of film is an act of
commerce; that the contract of transportation in this case
should be considered commercial under Art. 349 of the
Code of Commerce because it not only involves
merchandise or an object of commerce but also the
transportation company, the defendant herein, was a
common carrier, that is to say, customarily engaged in
transportation for the public, and 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 shalt 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.
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We believe that whether or not transportation by air

should be regarded as a commercial contract under Art.
349, would be immaterial in the present case, as will be
explained later. Without making a definite ruling on the
civil or commercial nature of transportation by air, it being
unnecessary, we are inclined to believe and to hold that a
contract of transportation by air may be regarded as
commercial. The reason is that at least in the present case
the transportation company (PAL) is a common
842
842

Mendoza vs. Philippine Air Lines, Ine.
carrier; besides, air transportation is clearly similar or

analogous to land and water transportation. 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
States where air transportation has reached its highest
development, an airline company engaged in the
transportation business is regarded as a common carrier.
"The principles which govern carriers by other means, such as by
railroad or motor bus, govern carriers by aircraft." 6 Am. Jur.,
Aviation, Sec. 56, p. 33.
"When Aircraft Operator is Common Carrier.That aircraft and
the industry of carriage by aircraft are new is no reason why one in
fact employing aircraft as common-carrier vehicles should not be
classified as a cominon carriei- and charged with liability as such.
There can be no doubt, under the general law of common carriers,
that those air lines and aircraft ownei-s engaged in the passenger
service on regular schedules on definite routes, who solicit the
patronage of the traveling public, advertise schedules for routes,
times of leaving, and 1'ates of fare, and rnake the usual stipulation
as to baggage, are common carriers by air. A flying scrvice company
which, according to its printed advertising, will take anyone
anywhere at any tiine, though not operating on regular routes or
schedules, and basing its charges not on the number of passengers,
but on the operating cost of the plane per mile, has been held to be a
common carrier. It is not necessary, in orcler to make one carrying
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passengers by aircraft a common carrier of passengers that the

passengers be carried from one point to another; the status and the
liability as a common carrier may exist notwithstanding the
passenger's ticket issued by an airplane carrier of passengers for
hire contains a statement that it is not a common cavrier, etc., or a
stipulation that it is to be held only for its proven negligence. But
an airplane owner cannot be classed as a common carrier of
passengers unless he undertakes, for hire, to carry all persons who
apply for passage indiscriminately as long as there is room and no
legal excuse for refusing. * * *" 6 Am. Jur., Aviation, Sec. 58, pp. 3435.
"The rules governing the business of a common carrier by airship
or flying machine may be readily assimilated to those applied to
other common carriers." 2 C.J. S., 1951, Cumulative Pocket Part,
Acriol Navigation, Scc. 38, p. 99.
"The test of whether one is a common carrier by air is whether hc
holcls out that hc will carry for hire, so long as he has room,
843
843

goods of everyone bringing goods to him for carriage, not whether
he is carrying as a public employment or whether he carries to a
fixed place." (Ibid., Sec. 39, p. 99.
Appellant contends that Art. 358 of the Code of Commerce

should govern the award of damages in his favor. Said
article provides that if there is no period fixed for the
delivery of the goods, the carrier shall be bound to forward
them in the first shipment of the same or similar
merchandise which he may make to the point of delivery,
and that upon failure to do so, the damages caused by the
delay should be suffered by the carrier. This is a general
provision for ordinary damages and is no different from the
provisions of the Civil Code, particularly Art. 1101 thereof,
providing for the payment of damages caused by the
negligence or delay in the fulfillment of one's obligation.
Even applying the provisions of the Code of Commerce, as
already stated, the pertinent provisions regarding damages
only treats of ordinary damages or damages in general, not
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special damages like those suffered by the plaintiff herein.

Article 2 of the Code of Commerce provides that
commercial transactions are to be governed by the
provisions of the Code of Commerce, but in the absence of
applicable provisions, they will be governed by the usages
of commerce generally observed in each place; and in
default of both, by those of the Civil Law. So that assuming
that the present case involved a cornmercial transaction,
still inasmuch as the special damages herein claimed finds
no applicable provision in the Code of Commerce, neither
has it been shown that there are any commercial usages
applicable thereto, then in the last analysis, the rules of the
civil law would have to come into play. 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 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
844
844

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.
In our research for authorities we have found a case
very similar to the one under consideration. In the case of
Chapman vs. Fargo, L.R.A. (1918 F) p. 1049, the plaintiff m
Troy, New Yark, delivered motion picture films to the
defendant Fargo, an express company, consigned and to be
delivered to him in Utica. At the time of shipment the
attention of the express company was called to the fact that
the shipment involved motion picture films to be exhibited
in Utica, and that they should be sent to their destination,
rush. There was delay in their delivery and it was found
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that the plaintiff because of his failure to exhibit the film in

Utica due to the delay suffered damages or loss of profits.
But the highest court in the State of New York refused to
award him special damages. Said appellate court observed:
"But before defendant could be held to special damages, such as the
present alleged loss of profits on account of clelay or failure of
delivery, it must have appeared that he had notice at the time of
delivery to him of the particular circumstances attending the
shipment, and which probably would lead to such special loss if he
defaulted. Or, as the rule has been stated in another form, in order
to impose on the defaulting party further liability than for damages
naturally and directly, i.e., in the ordinary course of things, arising
from a breach of contract, such unusual or extraordinary damages
must have been brought within the contemplation of the parties as
the probable result of a breach at the time of or prior to contracting.
Generally, notice then of any special circumstances which will show
that the damages to be anticipated from a breach would be
enhanced has been held sufflcient for this effect."
As may be seen, that New York case is a stronger one than

the present case for the reason that the attention of the
common carrier in said case was called to the nature
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845

of the articles shipped, the purpose of shipment, and the
desire to rush the shipment, circumstances and facts
absent in the present case.
But appellant now contends that he is not suing on a
breach of contract but on a tort as provided for in Art. 1902
of the Civil Code. We are a little perplexed as lo this new
theory of the appellant. First, he insists that the articles of
the Code of Commerce should be applied; that he invokes
the provisions of said Code governing the obligations of a
common carrier to make prompt delivery of goods given to
it under a contract of transportation. Later, as already said,
he says that he was never a party to the contract of
transportation and was a complete stranger to it, and that
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he is now suing on a tort or a violation of his rights as a

stranger (culpa aquiliana). If he does not invoke the
contract of carriage entered into with the defendant
company, then he would hardly have any leg to stand on.
His right to prompt delivery of the can of film at the Pili
Air Port stems and is derived from the contract of carriage
under which contract, the PAL undertook to carry the can
of film safely and to deliver it to him promptly. Take away
or ignore that contract and the obligation to carry and to
deliver and the right to prompt delivery disappear.
Common carriers are not obligated by law to carry and to
deliver merchandise, and persons are not vested with the
right to prompt delivery, unless such common carriers
previously assume the obligation. Said rights and
obligations are created by a specific contract entered into
by the parties. In the present case, the findings of the trial
court which as already stated, are accepted by the parties
and which we must accept are to the effect that tho LVN
Pictures Inc. and Jose Mendoza on one sicle, and the
defendant company on the other, entered into a contract of
transportation. (p. 29, Rec. on Appeal). One interpretation
of said finding is that the LVN Pictures Inc. through
previous agreement with Mendoza acted as
846
846

the latter's agent. When he negotiated with the LVN

Pictures Inc. to rent the film "Himala ng Birhen" and show
it during the Naga town fiesta, he most probably
authorized and enjoined the Picture Company to ship the
film for him on the PAL on September 17th. Another
interpretation is that even if the LVN Pictures Inc. as
consignor of its own initiative, and acting independently of
Mendoza for the time being, made Mendoza as consignee, a
stranger to the contract if that is possible, nevertheless
when he, Mendoza, appeared at the Pili Air Port armed
with the copy of the Air Way Bill (Exh. 1) demanding the
delivery of the shipment to him, he thereby made himself a
party to the contract of transportation. The very citation
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made by appellant in his memorandum supports this view.

Speaking of the possibility of a coriflict between the order
of the shipper on the one hand and the order of the
consignee on the other, as when the shipper orders the
shipping company to return or retain the goods shipped
while the consignee demands their delivery, Malagarriga in
his book Codigo de Comercio Comentado, Vol. I, p. 400,
citing a decision of Argentina Court of Appeals on
commercial matters, cited by Tolentino in Vol. II of his book
entitled "Commentaries and Jurisprudence on the
Commercial Laws of the Philippines" p. 209, says that the
right of the shipper to countermand the shipment
terminates when the consignee or legitimate holder of the
bill of lading appears with such bill of lading before the
carrier and makes himself a party to the contract. Prior to
that time, he is stranger to the contract.
Still another view of this phase of the case is that
contemplated in Art. 1257, paragraph 2, of the old Civil
Code which reads thus:
"Should the contract contain any stipulation in favor of a third
person, he may demand its fulfillment, provided he has given notice
of his acceptance to the person bound before the stipulation has
been revoked."
Here, the contract of carriage between the LVN Pictures

Inc. and the defendant carrier contains the stipulations
847
847
Davao Stevedores Mutual Benefit Assn. vs. Compaia

Maritima, et al.
of delivery to Mendoza as consignee. His demand for the
delivery of the can of film to him at the Pili Air Port may be
regarded as a notice of his acceptance of the stipulation of
the delivery in his favor contained in the contract of
carriage, such demand being one for the fulfillment of the
contract of carriage and delivery. In this case he also made
himself a party to the contract, or at least has come to court
to enforce it. His cause of action must necessarily be
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founded on its breach.

One can readily sympathize with the appellant herein
for his loss of profits which he expected to realize. But he
overlooked the legal angle. In situations like the present
where failure to exhibit films on a certain day would spell
substantial damages or considerable loss of profits,
including waste of efforts on preparations and expenses
incurred in advertisements, exhibitors, for their securily,
may either get hold of the fllms well ahead of the time of
exhibition in order to make allowance for any hitch in the
delivery, or else enter into a special contract or make a
suitable arrangement with the common carrier for tho
prompt delivery of the films, calling the attention of the
carrier to the circumstances surrounding the case and the
approximate amount of damages to be suffered in case of
delay.
Finding no reversible error in the decision appealed
from, the same is hereby affirmed. No pronouncement as to
costs. So ordered.
Pars, C. J., Feria, Bengzon, Padilla, Reyes, Jugo and
Bautista Angelo, JJ., concur.
PARAS, C. J.:
I certify that Mr. Justice Tuason voted for the affirmance.
Judgment affirmed.
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SUPREME COURT REPORTS ANNOTATED VOLUME 171
2/1/16, 8:45 PM
VOL. 171, MARCH 8, 1989
61
Maritime Company of the Phils. vs. Court of Appeals

*
G.R. No. 47004. March 8, 1989.
MARITIME COMPANY OF THE PHILIPPINES,

petitioner, vs. COURT OF APPEALS and RIZAL SURETY
& INSURANCE CO., respondents.
Civil Law; Carriage of Goods by Sea Act; Ship Agent; Facts
established preponderantly demonstrate the character of Maritime
Co. as ship agent under the Code of Commerce.The evidence
establishes that NDC had appointed petitioner Maritime Co. as its
agent to manage and operate three vessels owned by it, including
the SS Doa Nati, for and in its behalf and account, and for a
determinable period (i.e., until full reimbursement of all moneys
advanced and/or full relief from or payment of all guarantees made
by Maritime Co. for account of the vessels). Under their written
agreement, Maritime Co. was bound to provision and virtual the
SS Doa Nati and the other two vessels, and to render a complete
report of the operations of the vessels within 60 days after
conclusion of each voyage; it was also authorized to appoint subagents at any ports or places that it might deem necessary,
remaining however responsible to the shipowner (NDC) for the
timely and satisfactory performance of said sub-agents. These facts
preponderantly demonstrate the character of Maritime Co. as ship
agent under the Code of Commerce, a ship agent, according to that
Code, being the person entrusted with provisioning or representing
the vessel in the port in which it may be found.
Same; Same; Same; Same; Claim that Maritime Co. is not the
ship agent of NDC in Japan belied by the bill of lading.Maritime
Co. however insists that it was not the ship agent of NDC in Japan
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FIRST DIVISION.
62
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SUPREME COURT REPORTS ANNOTATED

but the Fuji Asano Co., Ltd., which supplied her with provisions,
and represented her therein and which issued the bill of lading for
the owner NDC. The claim is belied by the bill of lading referred to.
Same; Same; Same; Same; Same; Contention that Acme
Electrical Manufacturing, Manila is not the consignee of the goods
described in the bill of lading unacceptable.___Equally unacceptable
is the contention that Acme Electrical Manufacturing, Manila,
was not the consignee of the goods described in the bill of lading
and therefore, payment to it for the loss of said goods did not
operate to make Rizal Surety its subrogee. The contention is in the
first place belied by the bill of lading which states that if the goods
are consigned to the Shippers Order___and the bill is so consigned:
to the order of China Banking Corporation, Manila, or
assigns___the Acme Electrical Manufacturing, Manila, shall be
notified. This shows, in the context of the other documents
hereafter adverted to, that Acme was the importer and China
Banking Corporation the financing agency. The contention is also
confuted by the Commercial Invoice of the shipper which recites
that it was by order and for account of Messrs. Acme Electrical
Manufacturing, Manila that the 800 bags of PVC compound were
shipped from Yokohama to Manila. It is also disproved by the fact
that it was Acme that insured the goods with Rizal Surety and the
latter did insure them on the strength of the formers Marine Risk
Note, long before the goods were lost at sea, and it was Acme, thru
its broker, that claimed the proceeds for the loss. The contention is
finally discredited by Maritime Co.s own certification which states
that the 800 packages PVC Compound xx xx consigned to Acme
Electrical Manufacturing was carried away to sea as a result of the
accident and same was unrecovered xx.
Same; Same; The provision of the Carriage of Goods by Sea Act
are merely suppletory to Articles 1753 and 1756 of the Civil
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Code.___Now, according to the Court of Appeals, Acmes rights are to

be determined by the Civil Code, not the Code of Commerce. This
conclusion derives from Article 1753 of the Civil Code to the effect
that it is the law of the country to which the goods are to be
transported (which) shall govern the liability of the common carrier
for their loss, destruction or deterioration. It is only in matters not
regulated by xx (the Civil) Code, according to Article 1766, that
the rights and obligations of common carriers shall be governed by
the Code of Commerce and by special laws. Since there are indeed
specific provisions regulating the matter of such liability in the
Civil Code, these being embodied in Article 1734, as well as
prescribing the period of prescription of
63
VOL. 171, MARCH 8, 1989
63

actions, it follows that the Code of Commerce, or the Carriage of
Goods by Sea Act, has no relevancy in the determination of the
carriers liability in the instant case. In American President Lines v.
Klepper, for instance, we ruled that in view of said Articles 1753 and
1756, the provisions of the Carriage of Goods by Sea Act are merely
suppletory to the Civil Code.
PETITION to review the judgment of the Court of Appeals.

Gopengco, J.
Rafael Dinglasan for petitioner.
Carlos, Ibarra & Valdez for private respondent.
NARVASA, J.:
In the Court of First Instance of Manila, Rizal Surety &
Insurance Co. (hereafter, simply Rizal Surety) sued the
National Development Company (NDC) and Maritime Co.
of the Philippines (hereafter simply Maritime Co.) for the
recovery of a sum of money paid by it as insurer for the
value of goods lost
in transit on board vessel known as the
1
SS Doa Nati. After due proceedings and trial, the
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complainant was dismissed with costs against plaintiff.

The Trial Courts judgment was founded upon the following
findings and conclusions, to wit:
1. Rizal Surety was the insurer of 800 packages of

PVC compound loaded on the SS Doa Nati at
Yokohama and consigned to the Acme Electrical
Manufacturing Company.
2. The SS Doa Nati was owned by the National
Development Company whereas the Maritime
Company of the Philippines was its Agent. This
appears indubitably in the Bill of Lading. Exhibit
D.
3. The goods were never delivered to the consignee
(Acme Electrical, etc., supra) so that xx (Rizal) as
Insurer, paid xx (said) consignee the sum of
P38,758.50.
_________________
1
The suit was docketed as Civil Case No. 60601 and was assigned to
Branch XIV presided over by Hon. Judge Jesus de Veyra.

2
Judgment, February 16, 1968, Rollo, p. 47-Rec. on App., pp. 50-52.

64
64

4. The cause of the non-delivery of the goods, from
the evidence presented by both Defendants is that
in Nagoya Bay, while the SS Doa Nati was being
piloted by a Japanese pilot, the SS Doa Nati was
rammed by M/V Yasushima Maru, causing damage
to the hull of the SS Doa Nati and the resultant
flooding of the holds damaged beyond repair the
goods of the consignee in question.
5. There is no doubt that under our 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,
Page 4 of 11
2/1/16, 8:45 PM
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, attorneys fees are not recoverable.
3
Rizal Surety elevated the case to the Court of Appeals.

That Court
found merit in its appeal. It thus rendered
4
judgment, setting aside that of the Trial Court and
ordering defendants-appellees (NDC and Maritime Co.)
jointly and severally to pay jointly and severally to
plaintiff-appellant (Rizal Surety) the sum of P38,758.505
with legal rate of interest from the filing of the complaint.
This judgment of the Appellate Tribunal was in turn
appealed by Maritime Company. To that Court Maritime
Co. attributes the following errors, in a bid to have its
judgment reversed by this Court, viz:
1) holding that it was a ship agent under the Code of
Commerce instead of merely an agent under the
Civil Code;
2) not holding that under the Bill of Lading sued
upon, Rizal Surety had no cause of action against
either impleaded defendant;
3) not holding that the collision between the SS Doa
Nati and the MV Yasushima Maruwhich caused
the loss of the insured goodswas due solely to the
fault or negligence of the complement of the
Yasushima Maru, as well as the character of the
goods them_______________
3
Its appeal was docketed as CA-G.R. No. 42168-R.
Rollo, pp. 19-31.
Ponente was Gopengco, J., with whom concurred Melencio-Herrera
and Ericta, JJ.

65
VOL. 171, MARCH 8, 1989

65
Page 5 of 11
2/1/16, 8:45 PM

selves and the defect in their packing; and
4) not holding that Rizal Suretys cause of action was
barred by prescription as well as Stipulation No. 19
of the Bill of Lading.
The evidence establishes that NDC had appointed
petitioner Maritime Co., as its agent to manage and
operate three vessels owned by it, including the SS Doa
Nati, for and in its behalf and account, and for a
determinable period (i.e., until full reimbursement of all
moneys advanced and/or full relief from or payment of all
guarantees made by Maritime Co. for account of the
vessels). Under their written agreement, Maritime Co. was
bound to provision and victual the SS Doa Nati and the
other two vessels, and to render a complete report of the
operations of the vessels within 60 days after conclusion of
each voyage; it was also authorized to appoint sub-agents
at any ports or places that it might deem necessary,
remaining however responsible to the shipowner (NDC) for
the timely and satisfactory performance of said sub-agents.
These facts preponderantly demonstrate the character of
Maritime Co. as ship agent under the Code of Commerce, a
ship agent, accordingly to that Code, being the person
entrusted with provisioning or representing
the vessel in
6
the port in which it may be found.
Maritime Co. however insists that it was not the ship
agent of NDC in Japan but the Fuji Asano Co., Ltd., which
supplied her with provisions, and represented her therein
and which issued the bill of lading for the owner NDC.
The
7
claim is belied by the bill of lading referred to. The
letterhead of the bill of lading is in two (2) parts, and is
printed in the following manner:
PHILIPPINE NATIONAL LINES
NATIONAL DEVELOPMENT COMPANY
MARITIME COMPANY OF THE PHILIPPINES
AGENT
_______________
Page 6 of 11
2/1/16, 8:45 PM
6 ART. 586, Code of Commerce; see Switzerland General Insurance
Co., Ltd. v. Ramirez, 96 SCRA 297 [1980].

7
Exhs. D and D-1; folio of exhibits, pp. 5-6.

66
66

PHILIPPINES-HONGKONG-JAPAN-U.S. PACIFIC
COAST-GULF PORTS
HONGKONG-COSMOS DEVELOPMENT COMPANY
*JAPAN-FUJI ASANO KAIUN CO, LTD.
*U.S.A.-NORTH AMERICAN MARITIME AGENCIES
As will be observed, in what may be described as the main

letterhead, Maritime Co. is indicated as Agent for the (1)
Philippines, (2) Hongkong, (3) Japan, and the (4) U.S.
Pacific Coast-Gulf Ports. Underneath this main letterhead
is a sort of secondary sub-head: Hongkong-Cosmos
Development Company; Japan-Fuji Asano Kaiun Co., Ltd.,
U.S.A-North American Maritime Agencies. The necessary
connotation is that the firms thus named are sub-agents or
secondary representatives of Maritime Co., Fuji Asano
Kaiun Co., Ltd., particularly, being the representative of
NDC and Maritime Co. in Japan, as distinguished from the
Maritime Co., which is described as AGENT not only in
Japan but also in other places: the Philippines, Hongkong,
U.S. Pacific Coast, and the Gulf Ports. Moreover, the bill
shows on its face that it was issued FOR THE MASTER by
Maritime Company of the Philippines, Agent.
Equally unacceptable is the contention that Acme
Electrical Manufacturing, Manila, was not the consignee
of the goods described in the bill of lading and therefore,
payment to it for the loss of said goods did not operate to
make Rizal Surety its subrogee. The contention is in the
first place belied by the bill of lading which states that if
the goods are consigned to the Shippers Orderand the
bill is so consigned: to the order of China Banking
Corporation, Manila, or assignsthe Acme Electrical
Manufacturing, Manila, shall be notified. This shows, in
the context of the other documents hereafter adverted to,
Page 7 of 11
2/1/16, 8:45 PM
that Acme was the importer and China Banking

Corporation the financing agency. The contention 8is also
confuted by the Commercial Invoice of the shipper which
recites that it was by order and for account of Messrs.
Acme Electrical Manufacturing, Manila that the 800 bags
of PVC compound were
_______________
8
Exh. E; folio of exhibits, p. 7.

67
VOL. 171, MARCH 8, 1989
67

shipped from Yokohama to Manila. It is also disaproved by
the fact that it was Acme that insured the
goods with Rizal
9
Surety and the latter did insure
them on the strength of
10
the formers Marine Risk Note, long before the goods were
lost at sea, and it was Acme,11 thru its broker, that claimed
the proceeds for the loss. The contention is finally
discredited by Maritime Co.s own certification which states
that the 800 packages of PVC Compound xx xx consigned
to Acme Electrical Manufacturing was carried away to sea
12
as a result of the accident and same was unrecovered xx.
There is thus no question of the entitlement of Acme
Electrical Manufacturing to the proceeds of the insurance
against loss of the goods in question, nor about the fact that
it did receive such proceeds from the Rizal Surety, as
insurer, which made payment upon due ascertainment of
the actuality of the loss. The legal effect is inescapable.
Rizal Surety was subrogated to Acmes rights against the
shipowner
and the ship agent arising from the loss of the
13
goods.
Now, according to the Court of Appeals, Acmes rights
are to be determined by the Civil Code, not the Code of
Commerce. This conclusion derives from Article 1753 of the
Civil Code to the effect that it is the law of the country to
which the goods are to be transported (which) shall govern
the liability of the common carrier for their loss,
destruction or deterioration. It is only in matters not
Page 8 of 11
2/1/16, 8:45 PM
regulated by x x (the Civil) Code, according to Article

1766, that the rights and obligations of common carriers
shall be governed by the Code of Commerce and by special
laws. Since there are indeed specific provisions regulating
the matter of such liability in the Civil Code, these being
embodied in Article 1734, as well as prescribing the period
of prescription of actions, it follows that the Code of
Commerce, or the Carriage of Goods by Sea Act, has no
rele______________
9
Exh. H; folio of exhibits, p. 10.
10
Exh. B; folio of exhibits, p. 3.
11
Exh. C; folio of exhibits, p. 4.
12
Exh. G; folio of exhibits, p. 9.
13
ART. 2207, Civil Code; Manila Mahogany Mfg. Corp. v. C.A., G.R.
No. 52756, Oct. 12, 1987.

68
68

vancy in the determination of the carriers liability in14 the

instant case. In American President Lines v. Klepper, for
instance, we ruled that in view of said Articles 1753 and
1756, the provisions of the Carriage of Goods by Sea Act
are merely suppletory to the Civil Code.
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 15if 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;
Page 9 of 11
2/1/16, 8:45 PM
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
carriers liability is palpable.
The petitioners other claim that the loss of the goods
was due entirely to the fault of the Japanese vessel,
Yasushima Maru, which rammed into the Doa Nati,
cannot be sustained. The Appellate Tribunal found, as a
fact, after a review and study of the evidence, that the
Doa Nati did not exercise even due diligence to avoid the
collision. In line with the familiar axiom that factual
conclusions of the Court of Appeals are conclusive and may
not be reviewed, the petitioners attempt to shift the blame
to the Japanese vessel is futile. 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
______________
14
110 Phil. 243, 248; see also Eastern Shipping Lines, Inc. v. IAC, 150
SCRA 463, 470; cf, Yangco v. Laserna, 73 Phil. 330, 341.

15
Emphasis supplied.
69
VOL. 171, MARCH 8, 1989
69
People vs. Wagas

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
maritime collision, but rather, from a contract of carriage,
as evidenced by the bill of lading.
WHEREFORE, the Decision of the Court of Appeals
subject of the petition for review is AFFIRMED, with costs
against petitioner.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ.,
concur.
Page 10 of 11
2/1/16, 8:45 PM
Decision affirmed.
Note.A shipper may be held liable for freightage on
bills of lading signed by another person where the shipper
appears as shipper or consignee, bills of lading where
persons other than the former (herein defendant) appear as
shipper, and bills of lading not signed by the shipper where
the testimonial evidence shows that goods shipped actually
belong to him as shipper. (Compania Maritima vs. Limson,
141 SCRA 407).
o0o
Page 11 of 11
SUPREME COURT REPORTS ANOTATED VOLUME 168
612
2/1/16, 8:46 PM

De Guzman vs. Court of Appeals
*
No. L-47822. December 22, 1988.
PEDRO DE GUZMAN, petitioner, vs. COURT

APPEALS and ERNESTO CENDAA, respondents.
OF
Common Carriers; Definition of; Art. 1732 of the Civil Code

makes no distinctions between a person or enterprise offering
transportation service on a regular or scheduled basis and such
service on an occasional, episodic or unscheduled basis.The Civil
Code defines common carriers in the following terms: Article
1732. Common carriers are persons, corporations, firms, or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public. The above article makes no
distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as a sideline).
Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the general public, i.e.,
the general community or population, and one who offers services or
solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from
making such distinctions.
________________
*
THIRD DIVISION.
http://central.com.ph/sfsreader/session/000001529cdec79ae00ee51e003600fb002c009e/p/AQP695/?username=Guest
Page 1 of 14
2/1/16, 8:46 PM
613
VOL. 168, DECEMBER 22, 1988
613

Same; Same; Same; The concept of common carrier under Art.
1732 coincides with the notion of Public Service under the Public
Service Act (CA No. 1416).So understood, the concept of common
carrier under Article 1732 may be seen to coincide neatly with the
notion of public service, under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, public
service includes: x x x every person that now or hereafter may
own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent,
occasional or accidental, and done for general business purposes,
any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both, with
or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine
repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply
and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations
and other similar public services. x x x.
Same; Same; Same; Same; A certificate of public convenience is
not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers.The Court of Appeals
referred to the fact that private respondent held no certificate of
public convenience, and concluded he was not a common carrier.
This is palpable error. 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
Page 2 of 14
2/1/16, 8:46 PM
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. The
business of a common carrier impinges directly and intimately upon
the safety and well being and property of those members of the
general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety
and protection of those who utilize their
614
614

services and the law cannot allow a common carrier to render such
duties and liabilities merely facultative by simply failing to obtain
the necessary permits and authorizations.
Same; Same; Same; Liability of common carriers in case of loss,
destruction or deterioration or destruction of goods they carry;
Extraordinary diligence, required; Exceptions.Common carriers,
by the nature of their business and for reasons of public policy, are
held to a very high degree of care and diligence (extraordinary
diligence) in the carriage of goods as well as of passengers. The
specific import of extraordinary diligence in the care of goods
transported by a common carrier is, according to Article 1733,
further expressed in Articles 1734, 1735 and 1745, numbers 5, 6
and 7 of the Civil Code. Article 1734 establishes the general rule
that common carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, unless the same is due
to any of the following causes only: (1) Flood, storm, earthquake,
lightning, or other natural disaster or calamity; (2) Act of the public
enemy in war, whether international or civil; (3) Act or omission of
the shipper or owner of the goods; (4) The character of the goods or
defects in the packing or in the containers; and (5) Order or act of
competent public authority. It is important to point out that the
above list of causes of loss, destruction or deterioration which
Page 3 of 14
2/1/16, 8:46 PM
exempt the common carrier for responsibility therefor, is a closed

list. Causes falling outside the foregoing list, even if they appear to
constitute a species of force majeure, fall within the scope of Article
1735.
Same; Same; Same; Same; Same; The hijacking of the carriers
truck does not fall within any of the five (5) categories of exempting
causes in Art. 1734.Applying the above-quoted Articles 1734 and
1735, we note firstly that the specific cause alleged in the instant
casethe hijacking of the carriers truckdoes 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 carriers 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.
Same; Same; Same; Same; Same; Under Art. 1745(6), a
common carrier is held responsible even for acts of strangers like
thieves or robbers except where such thieves or robbers acted with
grave or irresistible threat, violence or force.As noted earlier, the
duty of ex615
615

traordinary 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. Article 1745
provides in relevant part: Any of the following or similar
stipulations shall be considered unreasonable, unjust and contrary
to public policy: xxx xxx xxx (5) that the common carrier shall not
be responsible for the acts or omissions of his or its employees; (6)
that the common carriers liability for acts committed by thieves, or
of robbers who do not act with grave or irresistible threat, violence or
force, is dispensed with or diminished; and (7) that the common
carrier shall not responsible for the loss, destruction or
Page 4 of 14
2/1/16, 8:46 PM
deterioration of goods on account of the defective condition of the

car, vehicle, ship, airplane or other equipment used in the contract
of carriage. Under Article 1745 (6) above, a common carrier is held
responsible and will not be allowed to divest or to diminish such
responsibilityeven for acts of strangers like thieves or robbers,
except where such thieves or robbers in fact acted with grave or
irresistible threat, violence or force. We believe and so hold that
the limits of the duty of extraordinary diligence in the vigilance
over the goods carried are reached where the goods are lost as a
result of a robbery which is attended by grave or irresistible threat,
violence or force.
Same; Same; Same; Same; Same; Common carriers are not
made absolute insurers against all risks of travel and of transport of
goods and are not liable for fortuitous events; Case at bar.In these
circumstances, we hold that 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 for acts or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the rigorous standard
of extraordinary diligence. We, therefore, agree with the result
reached by the Court of Appeals that private respondent Cendaa is
not liable for the value of the undelivered merchandise which was
lost because of an event entirely beyond private respondents
control.
PETITION for certiorari to review the decision of the Court

of Appeals.
Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.
616
616

FELICIANO, J.:
Page 5 of 14
2/1/16, 8:46 PM
Respondent Ernesto Cendaa, a junk dealer, was engaged

in buying up used bottles and scrap metal in Pangasinan.
Upon gathering sufficient quantities of such scrap
material, respondent would bring such material 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 petitioners establishment in Urdaneta on
or before 4 December 1970. Accordingly, on 1 December
1970, 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,
respondents 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.
On 6 January 1971, petitioner commenced action
against private respondent in the Court of First Instance of
Pangasinan, demanding payment of P22,150.00, the
claimed value of the lost merchandise, plus damages and
attorneys 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.
In his Answer, private respondent 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
617
Page 6 of 14
2/1/16, 8:46 PM
617

force majeure.
On 10
December 1975, the trial court rendered a
1
Decision finding private respondent to be a common
carrier and holding him liable for the value of the
undelivered goods (P22,150.00) as well as for P4,000.00 as
damages and P2,000.00 as attorneys fees.
On appeal before the Court of Appeals, respondent
urged that the trial court had erred in considering him a
common carrier; in finding that he had habitually offered
trucking services to the public; in not exempting him from
liability on the ground of force majeure; and in ordering
him to pay damages and attorneys fees.
The Court of Appeals 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.
Petitioner came to this Court by way of a Petition for
Review assigning as errors the following conclusions of the
Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondents truck was force
majeure; and
3. that respondent was not liable for the value of the
undelivered cargo. (Rollo, p. 111)
We consider first the issue of whether or not private
respondent Ernesto Cendaa may, under the facts earlier
set forth, be properly characterized as a common carrier.
The Civil Code defines common carriers in the following
terms:
Article 1732. Common carriers are persons, corporations, firms or
offering their services to the public.
The above article makes no distinction between one whose

Page 7 of 14
2/1/16, 8:46 PM
principal business activity is the carrying of persons or

goods or both, and one who does such carrying only as an
ancillary activity (in local idiom, as a sideline). Article
1732 also
_______________
1
Rollo, p. 14.
618
618

carefully avoids making any distinction between a person

or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its
services to the general public, i.e., the general community
or population, and one who offers services or solicits
business only from a narrow segment of the general
population. We think that Article 1733 deliberately
refrained from making such distinctions.
So understood, the concept of common carrier under
Article 1732 may be seen to coincide neatly with the notion
of public service, under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth
in the Civil Code. Under Section 13, paragraph (b) of the
Public Service Act, public service includes:
x x x every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation,
with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common
carrier, railroad, street railway, traction railway, subway motor
vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf
Page 8 of 14
2/1/16, 8:46 PM
or dock, ice plant, ice-refrigeration plant, canal, irrigation system,

gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications
systems, wire or wireless broadcasting stations and other similar
public services. x x x. (Italics supplied)
It appears to the Court that private respondent is properly

characterized as a common carrier even though he merely
back-hauled goods for other merchants from Manila to
Pangasinan, although such backhauling was done on a
periodic or occasional rather than regular or scheduled
manner, and even though private respondents 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;
619
619

that that fee frequently fell below commercial freight rates
is not relevant here.
The Court of Appeals referred to the fact that private
respondent held no certificate of public convenience, and
concluded he was not a common carrier. This is palpable
error. 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. The business of a common carrier impinges
directly and intimately upon the safety and well being and
property of those members of the general community who
Page 9 of 14
2/1/16, 8:46 PM
happen to deal with such carrier. The law imposes duties

and liabilities upon common carriers for the safety and
protection of those who utilize their services and the law
cannot allow a common carrier to render such duties and
liabilities merely facultative by simply failing to obtain the
necessary permits and authorizations.
We turn then to the liability of private respondent as a
common carrier.
Common carriers, by the
nature of their business and
2
for reasons of public policy, are held to a very high degree
of care and diligence (extraordinary diligence) in the
carriage of goods as well as of passengers. The specific
import of extraordinary diligence in the care of goods
transported by a common carrier is, according to Article
1733, further expressed in Articles 1734, 1735 and 1745,
numbers 5, 6 and 7 of the Civil Code.
_______________
2
Article 1733, Civil Code.

620
620

Article 1734 establishes the general rule that common

carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, unless the
same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other
(2) Act of the public enemy in war, whether
(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; and
(5) Order or act of competent public authority.
It is important to point out that the above list of causes of
Page 10 of 14
2/1/16, 8:46 PM
loss, destruction or deterioration which exempt the

common carrier for responsibility therefor, is a closed list.
Causes falling outside the foregoing list, even if they
appear to constitute a species of force majeure, fall within
the scope of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5
of the preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or
to have acted negligently, unless they prove that they observed
extraordinary diligence as required in Article 1733. (Italics
supplied)
Applying the above-quoted Articles 1734 and 1735, we note

firstly that the specific cause alleged in the instant case
the hijacking of the carriers truckdoes 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 carriers 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.
Petitioner insists that private respondent had not
observed extraordinary diligence in the care of petitioners
goods. Petitioner argues that in the circumstances of this
case, private respondent should have hired a security
guard presumably to
621
621

ride with the truck carrying the 600 cartons of Liberty
filled milk. We do not believe, however, that in the instant
case, the standard of extraordinary diligence required
private respondent to retain a security guard to ride with
the truck and to engage brigands in a firefight at the risk of
his own life and the lives of the driver and his helper.
The precise issue that we address here relates to the
Page 11 of 14
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specific requirements of the duty of extraordinary diligence

in the vigilance over the goods carried in the specific
context of hijacking or armed robbery.
As noted earlier, 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, Article 1745
provides in relevant part:
Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
xxx
xxx
xxx
(5) that the common carrier shall not be responsible for the acts
or omissions of his or its employees;
(6) that the common carriers liability for acts committed by
thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or
diminished; and
(7) that the common carrier shall not responsible for the loss,
destruction or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage. (Italics
supplied)
Under Article 1745 (6) above, a common carrier is held

responsibleand will not be allowed to divest or to
diminish such responsibilityeven for acts of strangers
like thieves or robbers, except where such thieves or
robbers in fact acted with grave or irresistible threat,
violence or force. We believe and so hold that the limits of
the duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a
result of a robbery which is attended by grave or
irresistible threat, violence or force.
In the instant case, armed men held up the second truck
owned by private respondent which carried petitioners
cargo. The record shows that an information for robbery in
band was
622
622
Page 12 of 14
2/1/16, 8:46 PM

filed in the Court of First Instance of Tarlac, Branch 2, in
Criminal Case No. 198 entitled People of the Philippines v.
Felipe Boncorno, Napoleon Presno, Armando Mesina,
Oscar Oria and one John Doe. There, 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 petitioners store in Urdaneta,
Pangasinan. The decision of the trial court shows that the
accused 3acted 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. The Court
of First Instance convicted 4all the accused of robbery,
though not of robbery in band.
In these circumstances, we hold that 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 for
acts or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the rigorous
standard of extraordinary diligence.
We, therefore, agree with the result reached by the
Court of Appeals that private respondent Cendaa is not
liable for the value of the undelivered merchandise which
was lost because of an event entirely beyond private
respondents control.
ACCORDINGLY, the Petition for Review on Certiorari is
hereby DENIED and the Decision of the Court of Appeals
dated 3 August 1977 is AFFIRMED. No pronouncement as
to costs.
_______________
3
Rollo, p. 22.
Page 13 of 14
2/1/16, 8:46 PM
The evidence of the prosecution did not show that more than three
(3) of the five (5) hold-uppers were armed. Thus, the existence of a band
within the technical meaning of Article 306 of the Revised Penal Code,
was not affirmatively proved by the prosecution.
623
623
Valenzuela vs. Court of Appeals

SO ORDERED.
Fernan (C.J.), Gutierrez, Jr., Bidin and Corts, JJ.,
concur.
Petition denied. Decision affirmed.
Notes.Right of reimbursement of company held liable
for damages against the owner/operator of ferry boat for
actual negligence for drawing passengers. (Sarkies Tours
Phils, Inc. vs. IAC, 124 SCRA 588.)
The owner of a vessel is liable in damages arising from
the act of its captain in by-passing a pre-scheduled port of
call. (Sweet Lines vs. Court of Appeals, 121 SCRA 769.)
o0o
Page 14 of 14
318
2/1/16, 11:33 PM

Bascos vs. Court of Appeals
*
G.R. No. 101089. April 7, 1993.
ESTRELLITA M. BASCOS, petitioner, vs. COURT OF

APPEALS and RODOLFO A. CIPRIANO, respondents.
Civil Law; Common Carriers defined.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.
Same; Same; No distinction between person offering service on
regular basis and one offering service on occasional basis.But
petitioner argues that there was only a contract of lease because
they offer their services only to a select group of people and because
the private respondents, plaintiffs in the lower court, did not object
to the presentation of affidavits by petitioner where the transaction
was referred to as a lease contract. Regarding the first contention,
the holding of the Court in De Guzman vs. Court of Appeals is
instructive. In referring to Article 1732 of the Civil Code, it held
thus: The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity
(in local idiom, as a sideline). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering
http://central.com.ph/sfsreader/session/000001529d77b3a9e8cc4e86003600fb002c009e/p/APV718/?username=Guest
Page 1 of 13
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transportation service on a regular or scheduled basis and one

offering such service on an occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier
offering its services to the general public, i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We
think that Article 1732 deliberately refrained from making such
distinctions.
Same; Same; Obligation of carrier to observe extraordinary
diligence; Presumption of negligence.Common carriers are obliged
to
_______________
*
SECOND DIVISION.
319
VOL. 221, APRIL 7, 1993
319

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.
Same; Same; Same; Liability arising from hijacking.To
exculpate the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in accordance with
Article 1745 of the Civil Code which provides: Art. 1745. Any of the
following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy: x x x x x x (6) That the common
carriers liability for acts committed by thieves, or of robbers who do
not act with grave or irresistible threat, violence or force, is
Page 2 of 13
2/1/16, 11:33 PM
dispensed with or diminished.
PETITION for review on certiorari of the decision of the

Court of Appeals.
Modesto S. Bascos for petitioner.
Pelaez, Adriano & Gregorio for private respondent.
CAMPOS, JR., J.:
**
This is a petition for review on certiorari of the decision of

the Court of Appeals in RODOLFO A. CIPRIANO, doing
business under the name CIPRIANO TRADING
ENTERPRISES, plaintiff-appellee, vs. ESTRELLITA M.
BASCOS, doing business under the name of BASCOS
TRUCKING, defendant-appellant, C.A.-G.R. CV No.
25216, the dispositive portion of which is quoted
hereunder:
_______________
**
July 17, 1991; penned by Associate Justice Nicolas P. Lapea, Jr.,
and concurred in by Associate Justices Ricardo L. Pronove, Jr., and

Consuelo V. Santiago.
320
320

PREMISES considered, We find no reversible error in the decision

appealed from, which is hereby affirmed in toto. Costs against
1
appellant.
The facts, as gathered by this Court, are as follows:

Rodolfo A. Cipriano representing Cipriano Trading
Enterprise
(CIPTRADE for short) entered into a hauling
2
contract with Jibfair Shipping Agency Corporation
whereby the former bound itself to haul the latters 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,
Page 3 of 13
2/1/16, 11:33 PM
through Rodolfo Cipriano, subcontracted with Estrellita

Bascos (petitioner) to transport and to deliver 400 sacks of
soya bean meal worth P156,404.00 from the Manila Port
Area to Calamba, Laguna at the rate of P50.00 per metric
ton. Petitioner failed to deliver the said cargo. As a
consequence of that failure, Cipriano paid Jibfair Shipping
Agency the amount of the lost goods in accordance with the
contract which stated that:
1. CIPTRADE shall be held liable and answerable for any loss in
bags due to theft, hijacking and non-delivery or damages to the
3
cargo during transport at market value. x x x
Cipriano demanded reimbursement from petitioner but the

latter refused to pay. Eventually, Cipriano filed a complaint
for a sum of4 money and damages with writ of preliminary
attachment for breach of a contract of carriage. The prayer
for a Writ
of Preliminary Attachment was supported by an
5
affidavit which contained the following allegations:
4. That this action is one of those specifically
mentioned in Sec. 1, Rule 57 of the Rules of Court,
whereby a writ of preliminary
_______________
1
Rollo, p. 59.
Annex K of Memorandum for Petitioner; Rollo, p. 229.
Ibid.
Civil Case No. 49965, Regional Trial Court, Quezon City, Branch 83.
Annex L of Memorandum for Petitioner; Rollo, p. 230.

321
VOL. 221, APRIL 7, 1993
321

attachment may lawfully issue, namely:
(e) in an action against a party who has removed or
disposed of his property, or is about to do so, with
intent to defraud his creditors;
Page 4 of 13
2/1/16, 11:33 PM
5. That there is no sufficient security for the claim

sought to be enforced by the present action;
6. That the amount due to the plaintiff in the aboveentitled case is above all legal counterclaims;
The trial court granted the writ of preliminary attachment
on February 17, 1987.
In her answer, petitioner interposed the following
defenses: that there was no contract of carriage since
CIPTRADE leased her cargo truck to load the cargo from
Manila Port Area to Laguna; that CIPTRADE was liable to
petitioner in the amount of P11,000.00 for loading the
cargo; that the truck carrying the cargo was hijacked along
Canonigo St., Paco, Manila on the night of October 21,
1988; that the hijacking was immediately reported to
CIPTRADE and that petitioner and the police exerted all
efforts to locate the hijacked properties; that after
preliminary investigation, an information for robbery and
carnapping were filed against Jose Opriano, et al; and that
hijacking, being a force majeure, exculpated petitioner from
any liability to CIPTRADE.
***
After trial, the trial court rendered a decision the
dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiff
and against defendant ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND
FOUR HUNDRED FOUR PESOS (P156,404.00) as an (sic)
for actual damages with legal interest of 12% per cent per
annum to be counted from December 4, 1986 until fully
paid;
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as
and for attorneys fees; and
3. The costs of the suit.
_______________
***
Civil Case No. 49965, October 12, 1989, Penned by Judge Reynaldo
Roura.
322
Page 5 of 13
322
2/1/16, 11:33 PM

The Urgent Motion To Dissolve/Lift preliminary Attachment

dated March 10, 1987 filed by defendant is DENIED for being moot
and academic.
6
SO ORDERED.
Petitioner appealed to the Court of Appeals but respondent

Court affirmed the trial courts judgment.
Consequently, petitioner filed this petition where she
makes the following assignment of errors; to wit:
I. THE RESPONDENT COURT ERRED IN
HOLDING
THAT
THE
CONTRACTUAL
RELATIONSHIP BETWEEN PETITIONER AND
PRIVATE RESPONDENT WAS CARRIAGE OF
GOODS AND NOT LEASE OF CARGO TRUCK.
II. GRANTING, EX GRATIA ARGUMENTI, THAT
THE FINDING OF THE RESPONDENT COURT
THAT THE CONTRACTUAL RELATIONSHIP
BETWEEN
PETITIONER
AND
PRIVATE
RESPONDENT WAS CARRIAGE OF GOODS IS
CORRECT, NEVERTHELESS, IT ERRED IN
FINDING PETITIONER LIABLE THEREUNDER
BECAUSE THE LOSS OF THE CARGO WAS DUE
TO FORCE MAJEURE, NAMELY, HIJACKING.
III. THE RESPONDENT COURT ERRED IN
AFFIRMING THE FINDING OF THE TRIAL
COURT THAT PETITIONERS MOTION TO
DISSOLVE/LIFT THE WRIT OF PRELIMINARY
ATTACHMENT HAS BEEN RENDERED MOOT
AND ACADEMIC BY THE
DECISION OF THE
7
MERITS OF THE CASE.
The petition presents the following issues for resolution: (1)
was petitioner a common carrier?; and (2) was the
hijacking referred to a force majeure?
The Court of Appeals, in holding that petitioner was a
common carrier, found that she admitted in her answer
that she did business under the name A.M. Bascos
Trucking and that said admission dispensed with the
Page 6 of 13
2/1/16, 11:33 PM
presentation by private respondent, Rodolfo Cipriano, of

proofs that petitioner was a common carrier. The
respondent Court also adopted in toto the trial
_______________
6
Rollo, p. 217.
Rollo, p. 16.
323
VOL. 221, APRIL 7, 1993
323

courts decision that petitioner was a common carrier.
Moreover, both courts appreciated the following pieces of
evidence as indicators that petitioner was a common
carrier: the fact that the truck driver of petitioner, Maximo
Sanglay, received the cargo consisting of 400 bags of soya
bean meal as evidenced by a cargo receipt signed by
Maximo Sanglay; the fact that the truck helper, Juanito
Morden, was also an employee of petitioner; and the fact
that control of the cargo was placed in petitioners care.
In disputing the conclusion of the trial and appellate
courts that petitioner was a common carrier, she alleged in
this petition that the contract between her and Rodolfo A.
Cipriano, representing CIPTRADE, was lease of the truck.
She cited as evidence certain affidavits which referred to
the contract 8as lease. These affidavits were
made by
9
Jesus Bascos and by petitioner herself. She further
averred that Jesus Bascos confirmed in his testimony
his
10
statement that the contract was a lease contract. She also
stated that she was not catering to the general public.
Thus, in her answer to the amended complaint, she said
that she does business under the same style of A.M. Bascos
Trucking, offering her trucks for lease to those who have
cargo to move, not to the general public but to a few
customers11 only in view of the fact that it is only a small
business.
We agree with the respondent Court in its finding that
petitioner is a common carrier.
Article 1732 of the Civil Code defines a common carrier
Page 7 of 13
2/1/16, 11:33 PM
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
_______________
Petition, pp. 12-13; Rollo, pp. 20-21; Annex G of Memorandum for
Petitioner; Rollo, p. 225.

9
Petition, pp. 13-14; Rollo, pp. 21-22.
10
Ibid.; Rollo, p. 21; Annex E of Memorandum for Petitioner; Rollo,
p. 222.
11
Court of Appeals Decision, p. 5; Rollo, p. 55.

324
324

12
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
13
same.
But petitioner argues that there was only a contract of
lease because they offer their services only to a select group
of people and because the private respondents, plaintiffs in
the lower court, did not object to the presentation of
affidavits by petitioner where the transaction was referred
to as a lease contract.
Regarding the first contention, the 14
holding of the Court
in De Guzman vs. Court of Appeals is instructive. In
referring to Article 1732 of the Civil Code, it held thus:
Page 8 of 13
2/1/16, 11:33 PM

distinctions.
Regarding the affidavits presented by petitioner to the

court, both the trial and appellate courts have dismissed
them as self-serving and petitioner contests the conclusion.
We are bound by the appellate courts factual conclusions.
Yet, granting that the said evidence were not self-serving,
the same were not sufficient to prove that the contract was
one of lease. It must be understood that a contract is what
the law defines it 15
to be and not what it is called by the
contracting parties. Furthermore, petitioner pre_______________
12
4 AGBAYANI, COMMENTARIES AND JURISPRUDENCE ON
THE COMMERCIAL LAWS OF THE PHILIPPINES, 5 (1987).

13
Solivio vs. Court of Appeals, 182 SCRA 119 (1990).
14
168 SCRA 612 (1988).
15
Schmid and Oberly, Inc. vs. RJL Martinez Fishing Corp., 166 SCRA
493 (1988).
325
VOL. 221, APRIL 7, 1993
325

sented no other proof of the existence of the contract16of
lease. He who alleges a fact has the burden of proving it.
Likewise, We affirm the holding of the respondent court
that the loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary
diligence
in the vigilance over the goods transported by
17
them. Accordingly, they are presumed to have been at
fault or to have acted negligently if the goods are lost,
Page 9 of 13
2/1/16, 11:33 PM
18
destroyed or deteriorated. There are very few instances

when the presumption of negligence does not attach
and
19
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.
_______________
16
Imperial Vitory Shipping Agency vs. NLRC, 200 SCRA 178 (1991).
17
Art. 1733. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence

in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extraordinary diligence in vigilance over the goods is further
expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the passengers is further set
forth in articles 1755 and 1756.
18
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4,
and 5 of the preceding article, if the goods are lost, destroyed or

deteriorated, common carriers are presumed to have been at fault or to
have
acted
negligently,
unless
they
prove
that
they
observed
extraordinary diligence as required in article 1733.

19
Art. 1734. Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same is due to any

of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(4) The character of the goods or defects in the packing or in the
containers;
326
326

In this case, petitioner alleged that hijacking constituted

Page 10 of 13
2/1/16, 11:33 PM
force majeure which exculpated her from liability for

the
20
loss of the cargo. In De Guzman vs. Court of Appeals, the
Court held that hijacking, not being included in the
provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate
the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in accordance
with Article 1745 of the Civil Code which provides:
Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy:
xxx xxx
(6) That the common carriers liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished;
21
In the same case, the Supreme Court also held that:

Under Article 1745 (6) above, a common carrier is held responsible
and will not be allowed to divest or to diminish such
responsibilityeven for acts of strangers like thieves or robbers,
except where such thieves or robbers in fact acted with grave or
irresistible threat, violence or force. We believe and so hold that
the limits of the duty of extraordinary diligence in the vigilance
over the goods carried are reached where the goods are lost as a
result of a robbery which is attended by grave or irresistible threat,
violence or force.
To establish grave and irresistible 22 force, petitioner

presented23 her accusatory affidavit,
Jesus Baseos
24
affidavit, and Juanito Mordens Salaysay. However,
both the trial court and the Court of Appeals have
concluded that these affidavits were not
_______________
20
Supra, note 14.
21
Ibid., p. 621.
22
Annex G of Memorandum for Petitioner; Rollo, p. 225; and Juanito
Mordens affidavit Annex H of Memorandum for Petitioner; Rollo, p.

226.
23
Annex E of Memorandum for Petitioner; Rollo, p. 222.
Page 11 of 13
24
2/1/16, 11:33 PM
Annex H of Memorandum for Petitioner; Rollo, p. 226.

327
VOL. 221, APRIL 7, 1993
327

enough to overcome the presumption. Petitioners affidavit
about the hijacking was based on what had been told her
by Juanito Morden. It was not a first-hand account. While
it had been admitted in court for lack of objection on the
part of private respondent, the respondent Court had
discretion in assigning weight to such evidence. We are
bound by the conclusion of the appellate court. In a petition
for review on certiorari, We are not to determine the
probative value of evidence but to resolve questions of law.
Secondly, the affidavit of Jesus Bascos did not dwell on how
the hijacking took place. Thirdly, while the affidavit of
Juanito Morden, the truck helper in the hijacked truck,
was presented as evidence in court, he himself was a
witness as could be gleaned from the contents of the
petition. Affidavits are not considered the
best evidence if
25
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 petitioners burden to overcome it. Thus,
contrary to her assertion, private respondent need not
introduce any evidence to prove her negligence. Her own
failure to adduce sufficient proof of extraordinary diligence
made the presumption conclusive against her.
Having affirmed the findings of the respondent Court on
the substantial issues involved, We find no reason to
disturb the conclusion that the motion to lift/dissolve the
writ of preliminary attachment has been rendered moot
and academic by the decision on the merits.
In the light of the foregoing analysis, it is Our opinion
that the petitioners claim cannot be sustained. The
petition is DISMISSED and the decision of the Court of
Page 12 of 13
2/1/16, 11:33 PM
Appeals is hereby AFFIRMED.

SO ORDERED.
Narvasa (C.J., Chairman), Padilla, Regalado and
Nocon,
_______________
25
Ayco vs. Fernandez, 195 SCRA 328 (1991).

328
328

Candido vs. Macapagal
JJ., concur.
Petition dismissed. Decision affirmed.
Note.In culpa contractual, the moment a passenger
dies or is injured, the carrier is presumed to have been at
fault or to have acted negligently, and this disputable
presumption may only be overcome by evidence that it had
observed extra-ordinary diligence or that the death or
injury of the passenger was due to a fortuitous event
(Philippine Rabbit Bus Lines, Inc. vs. Intermediate
Appellate Court, 189 SCRA 158).
o0o
Page 13 of 13
2/1/16, 11:32 PM
661
First Philippine Industrial Corporation vs. Court of

Appeals
*
G.R. No. 125948. December 29, 1998.
FIRST PHILIPPINE INDUSTRIAL CORPORATION,

petitioner, vs. COURT OF APPEALS, HONORABLE
PATERNO
V.
TAC-AN,
BATANGAS
CITY
and
ADORACION C. ARELLANO, in her official capacity as
City Treasurer of Batangas, respondents.
Contracts; Common Carriers; A common carrier is 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.There is
merit in the petition. 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. Article
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.
Same; Same; Test for determining whether a party is a common
carrier of goods.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.
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Same; Same; The fact that petitioner has a limited clientele does
not exclude it from the definition of a common carrier.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
public employment. It undertakes to carry for all persons
indifferently, that is, to all persons who choose to employ its
services, and
___________
*
SECOND DIVISION.
662
662

First Philippine Industrial Corporation vs. Court of Appeals
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.
Same; Same; Words and Phrases; 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.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.
Same; Same; Taxation; Legislative intent in excluding from the
taxing power of the local government unit the imposition of business
tax against common carriers is to prevent a duplication of the socalled common carriers tax.It is clear that the legislative intent
in excluding from the taxing power of the local government unit the
imposition of business tax against common carriers is to prevent a
duplication of the so-called common carriers tax. Petitioner is
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already paying three (3%) percent common carriers tax on its gross
sales/earnings under the National Internal Revenue Code. To tax
petitioner again on its gross receipts in its transportation of
petroleum business would defeat the purpose of the Local
Government Code.
PETITION for review on certiorari of a decision of the

Court of Appeals.
Quiason, Makalintal, Barot, Torres & Ibarra for
petitioner.
Teodulfo A. Deguito for respondents.
MARTINEZ, J.:
This petition for review on certiorari assails the Decision of
the Court of Appeals dated November 29, 1995, in CA-G.R.
SP No. 36801, affirming the decision of the Regional Trial
Court
663
663

Appeals
of Batangas City, Branch 84, in Civil Case No. 4293, which
dismissed petitioners complaint for a business tax refund
imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under
Republic Act No. 387, as amended, to contract, install and
operate oil pipelines.
The original pipeline concession was
1
granted in 1967
and renewed by the Energy Regulatory
2
Board in 1992.
Sometime in January 1995, petitioner applied for a
mayors permit with the Office of the Mayor of Batangas
City. However, before the mayors permit could be issued,
the respondent City Treasurer required petitioner to pay a
local tax based on its gross receipts for the3 fiscal year 1993
pursuant to the Local Government Code. The respondent
City Treasurer assessed a business tax on the petitioner
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amounting to P956,076.04 payable in four installments

based on the gross receipts for products pumped at GPS-1
for the fiscal year 1993 which amounted to
P181,681,151.00. In order not to hamper its operations,
petitioner paid the tax under protest in the amount of
P239,019.01 for the first quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest
addressed to the respondent City Treasurer, the pertinent
portion of which reads:
___________
1
Rollo, pp. 90-94.
Decision of the Energy Regulatory Board in ERB Case No. 92-94,
renewing the Pipeline Concession of petitioner First Philippine

Industrial Corporation, formerly known as Meralco Securities Industrial
Corporation, (Rollo, pp. 95-100).
3
Sec. 143. Tax on Business. The municipality may impose taxes on the
following business:
xxx
xxx
xxx
(e) On contractors and other independent contractors, in accordance

with the following schedule:
With gross receipts for the
calendar year in the amount of:
Amount of Tax Per Annum
xxx
xxx
P2,000,000.00 or more
at a rate not exceeding fifty percent

(50%) of one percent (1%)
664
664

Appeals
Please note that our Company (FPIC) is a pipeline operator with a

government concession granted under the Petroleum Act. It is
engaged in the business of transporting petroleum products from
the Batangas refineries, via pipeline, to Sucat and JTF Pandacan
Terminals. As such, our Company is exempt from paying tax on
gross receipts under Section 133 of the Local Government Code of
1991 x x x x
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Moreover, Transportation contractors are not included in the

enumeration of contractors under Section 131, Paragraph (h) of the
Local Government Code. Therefore, the authority to impose tax on
contractors and other independent contractors under Section 143,
Paragraph (e) of the Local Government Code does not include the
power to levy on transportation contractors.
The imposition and assessment cannot be categorized as a mere
fee authorized under Section 147 of the Local Government Code.
The said section limits the imposition of fees and charges on
business to such amounts as may be commensurate to the cost of
regulation, inspection, and licensing. Hence, assuming arguendo
that FPIC is liable for the license fee, the imposition thereof based
on gross receipts is violative of the aforecited provision. The amount
of P956,076.04 (P239,019.01 per quarter) is not commensurate to
the cost of regulation, inspection and licensing. The fee is already a
4
revenue raising measure, and not a mere regulatory imposition.
On March 8, 1994, the 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
5
Code.
On June 15, 1994, petitioner filed with
the Regional
6
Trial Court 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. In its complaint, petitioner
alleged, inter alia, that: (1) the imposition and collection of
the business tax on its gross receipts violates Section 133 of
the Local Govern___________
4
Letter Protest dated January 20, 1994, Rollo, pp. 110-111.
Letter of respondent City Treasurer, Rollo, p. 112.
Complaint, Annex C, Rollo, pp. 51-56.

665
665

Appeals
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ment Code; (2) the authority of cities to impose and collect

a tax on the gross receipts of contractors and independent
contractors under Sec. 141 (e) and 151 does not include the
authority to collect such taxes on transportation
contractors for, as defined under Sec. 131 (h), the term
contractors excludes transportation contractors; and, (3)
the City Treasurer illegally and erroneously imposed and
collected the said
tax, thus meriting the immediate refund
7
of the tax paid.
Traversing the complaint, the 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. Respondents 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. Respondents further posit that the term common
carrier under the said code pertains to the mode 8or
manner by which a product is delivered to its destination.
On October 3, 1994, the trial court rendered a decision
dismissing the complaint, ruling in this wise:
x x x Plaintiff is either a contractor or other independent
contractor.
x x x the exemption to tax claimed by the plaintiff has become
unclear. It is a rule that tax exemptions are to be strictly construed
against the taxpayer, taxes being the lifeblood of the government.
Exemption may therefore be granted only by clear and unequivocal
provisions of law.
Plaintiff claims that it is a grantee of a pipeline concession
under Republic Act 387, (Exhibit A) whose concession was lately
renewed by the Energy Regulatory Board (Exhibit B). Yet neither
said law nor the deed of concession grant any tax exemption upon
the plaintiff.
__________
7
Rollo, pp. 51-57.
Answer, Annex J, Rollo, pp. 122-127.

666
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Appeals
Even the Local Government Code imposes a tax on franchise

holders under Sec. 137 of the Local Tax Code. Such being the
situation obtained in this case (exemption being unclear and
equivocal) resort to distinctions or other considerations may be of
help:
1. That the exemption granted under Sec. 133 (j) encompasses
only common carriers so as not to overburden the riding
public or commuters with taxes. Plaintiff is not a common
carrier, but a special carrier extending its services and
facilities to a single specific or special customer under a
special contract.
2. The Local Tax Code of 1992 was basically enacted to give
more and effective local autonomy to local governments
than the previous enactments, to make them economically
and financially viable to serve the people and discharge
their functions with a concomitant obligation to accept
certain devolution of powers, x x x So, consistent with this
policy even franchise grantees are taxed (Sec. 137) and
contractors are also taxed under Sec. 143 (e) and 151 of the
9
Code.
Petitioner assailed the aforesaid decision before this Court

via a petition for review. On February 27, 1995, we referred
the case to the respondent10 Court of Appeals for
consideration and adjudication. On November
29, 1995,
11
the respondent court rendered a decision affirming the
trial courts dismissal of petitioners complaint. Petitioners
12
motion for reconsideration was denied on July 18, 1996.
Hence, this petition. At first, the petition was denied due
13
course in a Resolution dated November 11, 1996.
Petitioner
___________
9
RTC Decision, Rollo, pp. 58-62.
10
Rollo, p. 84.
11
CA-G.R. SP No. 36801; Penned by Justice Jose C. De la Rama and
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concurred in by Justice Jaime M. Lantin and Justice Eduardo G.

Montenegro; Rollo, pp. 33-47.
12
13
Rollo, p. 49.
Resolution dated November 11, 1996 excerpts of which are
hereunder quoted:
The petition is unmeritorious.
667
667

Appeals
moved for a reconsideration
which was granted by this
14
Court in a Resolution of January 22, 1997. Thus, the
petition was reinstated.
Petitioner claims that the respondent Court of Appeals
erred in holding that (1) the petitioner is not a common car___________
As correctly ruled by respondent appellate court, petitioner is not a common
carrier as it is not offering its services to the public.
Art. 1732 of the Civil Code defines Common Carriers as: persons,
corporations, firms 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.
We sustain the view that petitioner is a special carrier. Based on the facts
on hand, it appears that petitioner is not offering its services to the public.
We agree with the findings of the appellate court that the claim for
exemption from taxation must be strictly construed against the taxpayer. The
present understanding of the concept of common carriers does not include
carriers of petroleum using pipelines. It is highly unconventional to say that
the business of transporting petroleum through pipelines involves common
carrier business. The Local Government Code intended to give exemptions
from local taxation to common carriers transporting goods and passengers
through moving vehicles or vessels and not through pipelines. The term
common carrier under Section 133 (j) of the Local Government Code must be
given its simple and ordinary or generally accepted meaning which would
definitely not include operators of pipelines.
14
G.R. No. 125948 (First Philippine Industrial Corporation vs. Court
Page 8 of 15
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of Appeals, et al.)Considering the grounds of the motion for

reconsideration, dated December 23, 1996, filed by counsel for petitioner,
of the resolution of November 11, 1996 which denied the petition for
review on certiorari, the Court Resolved:
(a) to GRANT the motion for reconsideration and to REINSTATE the
petition; and
(b) to require respondent to COMMENT on the petition, within ten (10)
days from notice.
668
668

Appeals
rier or a transportation contractor, and (2) the exemption

sought for by petitioner is not clear under the law.
There is merit in the petition.
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.
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,
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
15
4. The transportation must be for hire.
Based on the above definitions and requirements, there is

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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 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
___________
15
Agbayani, Commercial Laws of the Phil., 1983 Ed., Vol. 4, p. 5.

669
669

Appeals
common carrier. In De Guzman vs. Court of Appeals
ruled that:
16
we
The above article (Art. 1732, Civil Code) makes no distinction

between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an
ancillary activity (in local idiom, as a sideline). Article 1732 x x x
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
distinctions.
So understood, the concept of common carrier under Article
1732 may be seen to coincide neatly with the notion of public
service, under the Public Service Act (Commonwealth Act No. 1416,
as amended) which at least partially supplements the law on
common carriers set forth in the Civil Code. Under Section 13,
paragraph (b) of the Public Service Act, public service includes:
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every person that now or hereafter may own, operate, manage, or control
in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for
general business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or passenger, or
both, with or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair
shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation
system gas, electric light heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems,
wire or wireless broadcasting stations and other similar public services.
(Italics supplied)
____________
16
168 SCRA 617-618 [1988].

670
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Appeals
Also, respondents argument that the term common carrier as used in Section 133 (j) of the Local Government
Code refers only to common carriers transporting goods
and passengers through moving vehicles or vessels either
by land, sea or water, is erroneous.
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
17
common carriers.
Under the Petroleum Act of the Philippines (Republic
Act 387), petitioner is considered a common carrier. Thus,
Article 86 thereof provides that:
Art. 86. Pipe line concessionaire as common carrier.A pipe line
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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 x x x and everything relating to the manufacture,
refining, storage, or transportation by special methods of petroleum,
is hereby declared to be a public utility. (Italics Supplied)
The Bureau of Internal Revenue likewise considers the

petitioner a common carrier. In BIR Ruling No. 069-83, it
declared:
____________
17 Giffin v. Pipe Lines, 172 Pa. 580, 33 Alt. 578; Producer Transp. Co.
v. Railroad Commission, 241 US 228, 64 L ed 239, 40 S Ct 131.

671
671

Appeals
x x x 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 x x x. 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:
Page 12 of 15
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Section 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
xxx
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.
The deliberations conducted in the House of

Representatives on the Local Government Code of 1991 are
illuminating:
MR. AQUINO (A.). Thank you, Mr. Speaker.
Mr. Speaker, we would like to proceed to page 95, line 1. It
states: SEC. 121 [now Sec. 131]. Common Limitations on the
Taxing Powers of Local Government Units. x x x
MR. AQUINO (A.). Thank you, Mr. Speaker.
Still on page 95, subparagraph 5, on taxes on the business of
transportation. This appears to be one of those being deemed to be
exempted from the taxing powers of the local government units.
May we know the reason why the transportation business is being
excluded from the taxing powers of the local government units?
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in
Section 121 (now Sec. 131), line 16, paragraph 5. It states that local
government units may not impose taxes on the business of
transportation, except as otherwise provided in this code.
Now, Mr. Speaker, if the Gentleman would care to go to page 98
of Book II, one can see there that provinces have the power to
672
672

First Philippine Industrial Corporation vs. Court of Appeals
impose a tax on business enjoying a franchise at the rate of not

more than one-half of 1 percent of the gross annual receipts. So,
transportation contractors who are enjoying a franchise would be
subject to tax by the province. That is the exception, Mr. Speaker.
What we want to guard against here, Mr. Speaker, is the
imposition of taxes by local government units on the carrier business.
Local government units may impose taxes on top of what is already
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being imposed by the National Internal Revenue Code which is the

so-called common carriers tax. We do not want a duplication of
this tax, so we just provided for an exception under Section 125 [now
Sec. 137] that a province may impose this tax at a specific rate.
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker.
18
xxx
It is clear that the legislative intent in excluding from the

taxing power of the local government unit the imposition of
business tax against common carriers is to prevent a
duplication of the so-called common carriers tax.
Petitioner is already paying three (3%) percent common
carriers tax on its gross 19sales/earnings under the National
Internal Revenue Code. To tax petitioner again on its
gross receipts in its transportation of petroleum business
would defeat the purpose of the Local Government Code.
WHEREFORE, the petition is hereby GRANTED. The
decision of the respondent Court of Appeals dated
November 29, 1995 in CA-G.R. SP No. 36801 is
REVERSED and SET ASIDE.
SO ORDERED.
Bellosillo (Chairman), Puno and Mendoza, JJ.,
concur.
Petition granted, judgment reversed and set aside.
___________
18
Journal and Record of the House of Representatives, Fourth Regular
Session, Volume 2, pp. 87-89, September 6, 1990; Italics Ours.

19
Annex D of Petition, Rollo, pp. 101-109.

673
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Appeals
Notes.It has been held that the true test of a common
carrier is the carriage of passengers or goods, provided it
has space, for all who opt to avail themselves, its
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transportation service for a fee. (National Steel Corporation

vs. Court of Appeals, 283 SCRA 45 [1997])
The rights and obligations of a private carrier and a
shipper, including their respective liability for damage to
the cargo, are determined primarily by stipulations in their
contract of private carriage or charter party. (Id.)
o0o
674
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Calvo vs. UCPB General Insurance Co., Inc.
*
G.R. No. 148496. March 19, 2002.
VIRGINES CALVO doing business under the name and

style
TRANSORIENT
CONTAINER
TERMINAL
SERVICES, INC., petitioner, vs. UCPB GENERAL
INSURANCE CO., INC. (formerly Allied Guarantee Ins.
Co, Inc.), respondent.
Common Carriers; Customs Brokers; A customs broker is a
common carrierthe concept of common carrier under Article 1732
of the Civil Code may be seen to coincide nearly with the notion of
public service, under the Public Service Act (Commonwealth Act
No. 1416) which at least partially supplements the law on common
carriers set forth in the Civil Code.Petitioner contends that
contrary to the findings of the trial court and the Court of Appeals,
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.
The contention has no merit. In De Guzman v. Court of Appeals, the
Court dismissed a similar contention and held the party to be a
common carrier, thusThe Civil Code defines common carriers in
the following terms: Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land,
water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity . . . Article 1732
also carefully avoids making any distinction between a person
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______________
*
SECOND DIVISION.
511
VOL. 379, MARCH 19, 2002
511

or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the general public, i.e.,
the general community or population, and one who offers services or
solicits business only from a narrow segment of the general
population. We think that Article 1732 deliberately refrained from
making such distinctions. So understood, the concept of common
carrier under Article 1732 may be seen to coincide neatly with the
notion of public service, under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in the Civil Code.
Same; Same; There is greater reason for holding a person who is
a customs broker to be a common carrier because the transportation
of goods is an integral part of her business.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 petitioners 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 petitioners
business.
Same; Same; Words and Phrases; Extraordinary Diligence,
Explained; Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances
of such case.As to petitioners liability, Art. 1733 of the Civil Code
provides: Common carriers, from the nature of their business and
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for reasons of public policy, are bound to observe extraordinary

passengers transported by them, according to all the circumstances
of each case. . . . In Compania Maritima v. Court of Appeals, the
meaning of extraordinary diligence in the vigilance over goods was
explained thus: 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.
512
512

Same; Same; To prove the exercise of extraordinary diligence, a

customs broker must do more than merely show the possibility that
some other party could be responsible for the damage.Anent
petitioners insistence that the cargo could not have been damaged
while in her custody as she immediately delivered the containers to
SMCs compound, suffice it to say that to prove the exercise of
extraordinary diligence, petitioner must do more than merely show
the possibility that some other party could be responsible for the
damage. It must prove that it used all reasonable means to
ascertain the nature and characteristic of goods tendered for
[transport] and that [it] exercise[d] due care in the handling
[thereof]. Petitioner failed to do this.
Same; Same; If the improper packing or the defects in the
container 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.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
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without protest or exception notwithstanding such condition, he is

not relieved of liability for damage resulting therefrom. 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 holds.

Court of Appeals.
Montilla Law Office for petitioner.
Leano and Leano Law Office for respondent.
MENDOZA, J.:
1
This is a petition for review of the decision, dated May

31,
2
2001, of the Court of Appeals, affirming the decision of the
Regional
______________
1
Per Justice Presbitero J. Velasco, Jr., and concurred in by Justices
Bienvenido L. Reyes and Juan Q. Enriquez, Jr.

2
Per Judge Oscar Pimentel.

513
VOL. 379, MARCH 19, 2002
513

Trial Court, Makati City, Branch 148, which ordered
petitioner to pay respondent, as subrogee, the amount of
P93,112.00 with legal interest, representing the value of
damaged cargo handled by petitioner, 25% thereof as
attorneys fees, and the cost of the suit.
The facts are as follows:
Petitioner Virgines Calvo is the owner of Transorient
Container Terminal Services, Inc. (TCTSI), a sole
proprietorship customs broker. At the time material to this
case, petitioner entered into a contract with San Miguel
Corporation (SMC) for the transfer of 114 reels of semihttp://central.com.ph/sfsreader/session/000001529d79a13e9e2d8574003600fb002c009e/p/APC034/?username=Guest
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chemical fluting paper and 124 reels of kraft liner board

from the Port Area in Manila to SMCs 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. 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 SMCs
warehouse in Ermita, Manila. On July 25, 1990, the goods
were inspected by Marine Cargo Surveyors, who found that
15 reels of the semi-chemical fluting paper were
wet/stained/torn and 3 reels of kraft liner board were
likewise torn. The damage was placed at P93,112.00.
SMC collected payment from respondent UCPB under
its insurance contract for the aforementioned amount. In
turn, respondent, as subrogee of SMC, brought suit against
petitioner in the Regional Trial Court, Branch 148, Makati
City, which, on December 20, 1995, rendered judgment
finding petitioner liable to respondent for the damage to
the shipment.
The trial court held:
It cannot be denied . . . that the subject cargoes sustained damage
while in the custody of defendants. Evidence such as the Warehouse
Entry Slip (Exh. E), the Damage Report (Exh. F) with entries
appearing therein, classified as TED and TSN, which the claims
processor, Ms. Agrifina De Luna, claimed to be tearrage at the end
and tearrage at the middle of the subject damaged cargoes
respectively, coupled with the Marine Cargo Survey Report (Exh.
H - H-4-A) confirms the fact of the
514
514

damaged condition of the subject cargoes. The surveyor[s] report

(Exh. H-4-A) in particular, which provides among others that:
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. . . we opine that damages sustained by shipment is

attributable to improper handling in transit presumably whilst in
the custody of the broker . . . .
is a finding which cannot be traversed and overturned.
The evidence adduced by the defendants is not enough to sustain
[her] defense that [she is] are not liable. 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. Defendant did not present any evidence on what
precaution [she] performed to prevent [the] said incident, hence the
presumption is that the moment the defendant accepts the cargo
[she] shall perform such extraordinary diligence because of the
nature of the cargo.
....
Generally speaking under Article 1735 of the Civil Code, if the
goods are proved to have been lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they have observed the
extraordinary diligence required by law. The burden of the plaintiff,
therefore, is to prove merely that the goods he transported have
been lost, destroyed or deteriorated. Thereafter, the burden is
shifted to the carrier to prove that he has exercised the
extraordinary diligence required by law. Thus, it has been held that
the mere proof of delivery of goods in good order to a carrier, and of
their arrival at the place of destination in bad order, makes out a
prima facie case against the carrier, so that if no explanation is
given as to how the injury occurred, the carrier must be held
responsible. It is incumbent upon the carrier to prove that the loss
was due to accident or some other circumstances inconsistent with
its liability. (cited in Commercial Laws of the Philippines by
Agbayani, p. 31, Vol. IV, 1989 Ed.)
Defendant, being a customs broker, warehouseman and at the
same time a common carrier is supposed [to] exercise [the]
extraordinary diligence required by law, hence the extraordinary
responsibility 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
3
has the right to receive the same.
Page 6 of 15
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______________
3
RTC Decision, pp. 3-5; Rollo, pp. 31-33.

515
VOL. 379, MARCH 19, 2002
515

Accordingly, the trial court ordered petitioner to pay the
following amounts
1. The sum of P93,112.00 plus interest;
2. 25% thereof as lawyers fee;
4
3. Costs of suit.
The decision was affirmed by the Court of Appeals on

appeal. Hence this petition for review on certiorari.
Petitioner contends that:
I. THE COURT OF APPEALS COMMITTED
SERIOUS AND REVERSIBLE ERROR [IN]
DECIDING THE CASE NOT ON THE EVIDENCE
PRESENTED BUT ON PURE SURMISES,
SPECULATIONS AND MANIFESTLY MISTAKEN
INFERENCE.
II. THE COURT OF APPEALS COMMITTED
SERIOUS AND REVERSIBLE ERROR IN
CLASSIFYING
THE
PETITIONER
AS
A
COMMON CARRIER AND NOT AS PRIVATE OR
SPECIAL CARRIER WHO DID
NOT HOLD ITS
5
SERVICES TO THE PUBLIC.
It will be convenient to deal with these contentions in the
inverse order, for if petitioner is not a common carrier,
although both the trial court and the Court of Appeals held
otherwise, then she is indeed not liable beyond what
ordinary diligence in the vigilance
over the goods
6
transported by her, would require. Consequently, any
damage to the cargo she agrees to transport cannot be
presumed to have been due to her fault or negligence.
Petitioner contends that contrary to the findings of the
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trial court and the Court of Appeals, 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.
______________
4
Id., p. 6; id., p. 34.
Petition, p. 5, Rollo, p. 13.
Planters Products, Inc. v. Court of Appeals, 226 SCRA 476 (1993).

516
516

The contention
has no merit. In De Guzman v. Court of
7
Appeals, the Court dismissed a similar contention and
held the party to be a common carrier, thus
The Civil Code defines common carriers in the
following terms:
The above article makes no distinction between one whose principal

business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity . . . 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
distinctions.
So understood, the concept of common carrier under Article
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1732 may be seen to coincide neatly with the notion of public

service, under the Public Service Act (Commonwealth Act No.
1416, as amended) which at least partially supplements the law on
common carriers set forth in the Civil Code. Under Section 13,
paragraph (b) of the Public Service Act, public service includes:
x x x every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and done
for general business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged
in the transportation of passengers or freight or both, shipyard, marine
repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and
power petroleum, sewerage
______________
7
168 SCRA 612 (1988).
517
VOL. 379, MARCH 19, 2002
517

system, wire or wireless communications systems, wire or wireless
broadcasting stations and other similar public services. x x x
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 petitioners
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
petitioners business.
Now, as to petitioners liability, Art. 1733 of the Civil
Code provides:
Common carriers, from the nature of their business and for reasons
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of public policy, are bound to observe extraordinary diligence in the

vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each
case. . . .
9
In Compania Maritima v. Court of Appeals, the meaning of

extraordinary diligence in the vigilance over goods was
explained thus:
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.
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 14 to July
______________
8
Id., pp. 617-618 (italics in the original).
164 SCRA 685, 692 (1988).

518
518

23, 1998 notwithstanding the fact that some of the

containers were deformed, cracked, or otherwise damaged,
as noted in the Marine Survey Report (Exh. H), to wit:
rain gutter deformed/cracked
MAXU-
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2062880
ICSU363461-3
left side rubber gasket on door

distorted/partly loose
PERU204209-4
with pinholes on roof panel right portion
TOLU213674-3
wood flooring we[t] and/or with signs of

water soaked
MAXU201406-0
with dent/crack on roof panel
ICSU412105-0
rubber gasket on left

side/door panel partly
10
detached loosened.
In addition, petitioner claims that Marine Cargo Surveyor

Ernesto Tolentino testified that he has no personal
knowledge on whether the container vans were first stored
in petitioners warehouse prior to their delivery to the
consignee. She likewise claims that after withdrawing the
container vans from the arrastre operator, her driver,
Ricardo Nazarro, immediately delivered the cargo to SMCs
warehouse in Ermita, Manila, which is a mere thirtyminute drive from the Port Area where the cargo came
from. Thus, the damage to the cargo 11could not have taken
place while these were in her custody.
Contrary to petitioners assertion, the Survey Report
(Exh. H) 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 petitioners 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. The Survey
Report pertinently reads
Details of Discharge:
Shipment, provided with our protective supervision was noted
discharged ex vessel to dock of Pier #13 South Harbor, Manila on 14
July
______________
10
CA Decision, p. 5; Rollo, p. 25.
Page 11 of 15
11
2/1/16, 11:37 PM
Petition, pp. 6-9; Rollo, pp. 14-17.
519
VOL. 379, MARCH 19, 2002
519

1990, containerized onto 30 x 20 secure metal vans, covered by
clean EIRs. Except for slight dents and paint scratches on side and
roof panels, these containers were deemed to have [been] received in
good condition.
....
Transfer/Delivery:
On July 23, 1990, shipment housed onto 30 x 20 cargo containers
was [withdrawn] by Transorient Container Services, Inc. . . . without
exception.
[The cargo] was finally delivered to the consignees storage
warehouse located at Tabacalera Compound, Romualdez Street,
12
Ermita, Manila from July 23/25, 1990.
As found by the Court of Appeals:

From the [Survey Report], it [is] clear that the shipment was
discharged from the vessel to the arrastre, Marina Port Services
Inc., in good order and condition as evidenced by clean Equipment
Interchange Reports (EIRs). Had there been any damage to the
shipment, there would have been a report to that effect made by the
arrastre operator. The cargoes were withdrawn by the defendantappellant from the arrastre still in good order and condition as the
same were received by the former without exception, that is, without
any report of damage or loss. Surely, if the container vans were
deformed, cracked, distorted or dented, the defendant-appellant
would report it immediately to the consignee or make an exception
on the delivery receipt or note the same in the Warehouse Entry
Slip (WES). None of these took place. To put it simply, the
defendantappellant received the shipment in good order and
condition and delivered the same to the consignee damaged. We can
only conclude that the damages to the cargo occurred while it was
in the possession of the defendantappellant. 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
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there is proof to the contrary. No proof was proffered to rebut this

legal presumption and the presumption of negligence attached to a
13
common carrier in case of loss or damage to the goods.
Anent petitioners insistence that the cargo could not have

been damaged while in her custody as she immediately
delivered the
______________
12
CA Decision, p. 6; Rollo, p. 26 (emphasis in the original).
13
Id., pp. 6-7; id., pp. 26-27 (emphasis in the original).

520
520

containers to SMCs compound, suffice it to say that to

prove the exercise of extraordinary diligence, petitioner
must do more than merely show the possibility that some
other party could be responsible for the damage. It must
prove that it used all reasonable means to ascertain the
nature and characteristic of goods tendered for [transport]
and that [it] exercise[d] due care in the handling [thereof].
Petitioner failed to do this.
Nor is there basis to exempt petitioner from liability
under Art. 1734(4), which provides
Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the
following causes only:
....
(4) The character of the goods or defects in the packing or in the
containers.
....
For this provision to apply, the rule is that if the improper

packing or, in this case, the defect/s in the container, is/are
known to the carrier or his employees or apparent upon
ordinary observation, but he nevertheless accepts the same
without protest or exception notwithstanding such
condition, he is not relieved of liability for damage
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14
resulting therefrom. 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
15
Art. 1735 holds.
______________
14
See 5-A AMBROSIO PADILLA, CIVIL CODE ANNOTATED 472
(6th ed., 1990), citing Southern Lines, Inc. v. Court of Appeals and City of
Iloilo, 114 Phil. 198; 4 SCRA 258 (1962).
15
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4
and 5 of [Art. 1734], if the goods are lost, destroyed or deteriorated,

common carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary diligence
as required in Article 1733.
521
VOL. 379, MARCH 20, 2002
521
Court Administrator vs. Abdullahi

WHEREFORE, the decision of the Court of Appeals, dated
May 31, 2001, is AFFIRMED.
SO ORDERED.
Bellosillo (Chairman), Quisumbing, Buena and De
Leon, Jr., JJ., concur.
Judgment affirmed.
Notes.The arrastre operator and the customs broker
need not themselves always and necessarily be liable
solidarily with the carrier, or vice-versa, nor that attendant
facts in a given case may not vary the rule. (Eastern
Shipping Lines, Inc. vs. Court of Appeals, 234 SCRA 78
[1994])
A customs broker is not required to go beyond the
documents presented to him in filing an entry on the basis
of such documents. (Remigio vs. Sandiganbayan, 374 SCRA
Page 14 of 15
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114, [2002])
o0o
Page 15 of 15
24
2/1/16, 8:49 PM
Home Insurance Co. vs. American Steamship Agencies,

Inc.
No. L-25599. April 4, 1968.
HOME INSURANCE COMPANY, plaintiff-appellee, vs.
AMERICAN STEAMSHIP AGENCIES, INC. and LUZON
STEVEDORING
CORPORATION,
defendants,
AMERICAN STEAMSHIP AGENCIES, INC., defendantappellant.
Code of Commerce; Charter party; Civil Code on common
carriers does not apply to charter party.The Civil Code provisions
on common carriers should not apply where the common carrier is
not acting as such but as a private carrier. 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 valid.
Same; Same, Stipulation on absolving owner from liability for
loss due to negligence of its agent is valid.The stipulation in the
charter party absolving the owner from liability for loss due to the
negligence of its agent would be void only if the strict public policy
governing common carriers is applied. Such policy has no force
where the public at large is not involved, as in the case of a ship
totally chartered for the use of a single party. The stipulation
exempting the owner from liability for the negligence of its agent is
not against public policy and is deemed valid.
Civil Code; Common carriers; Origin of provisions.The
provisions of our Civil Code on common carriers were taken from
Anglo-American law.
Code of Commerce; Bill of lading; Nature; Not the contract in a
charter party.In a charter of the entire vessel, the bill of lading
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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.

Manila.
William H. Quasha & Associates for plaintiffappellee.
Ross, Selph, Salcedo & Associates for defendantappellant.
25
VOL. 23, APRIL 4, 1968
25

Inc.
BENGZON, J.P., J.:
Consorcio Pesquero del Peru of South America shipped
freight pre-paid at Chimbate, Peru, 21,740 jute bags of
Peruvian f ish meal through. SS Crowborough, covered by
clean bills of lading Numbers 1 and 2, both dated January
17, 1963. The cargo, consigned to San Miguel Brewery, Inc.,
now San Miguel Corporation, and insured by Home
Insurance Company for $202,505, arrived in Manila on
March 7, 1963 and was discharged into the lighters of
Luzon Stevedoring Company. When the cargo was
delivered to consignee San Miguel Brewery, Inc., there
were shortages amounting to P12,033.85, causing the latter
to lay claims against Luzon Stevedoring Corporation, Home
Insurance Company and the American Steamship
Agencies, owner and operator of SS Crowborough.
Because the others denied liability, Home Insurance
Company paid the consignee P14,870.71the insurance
value of the loss, as full settlement of the claim. Having
been refused reimbursement by both the Luzon
Stevedoring Corporation and American Steamship
Agencies, Home Insurance Company, as subrogee to the
consignee, filed against them on March 6, 1964 before the
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2/1/16, 8:49 PM
Court of First Instance of Manila a complaint for recovery

of P14,870.71 with legal interest, plus attorneys 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 f rom
the carrier. It also claimed that plaintiffs claim had
prescribed under Article 366 of the Code of Commerce
stating that the claim must be made within 24 hours from
receipt of the cargo.
American Steamship Agencies denied liability by
alleging that under the provisions of the Charter party
referred to in the bills of lading, the charterer, not the
shipowner, was responsible for any loss or damage of the
cargo. Furthermore, it claimed to have exercised due
diligence in stowing the goods and that as a mere
forwarding agent, it was not responsible for losses or
damages to the cargo.
On November 17, 1965, the Court of First Instance, after
trial, absolved Luzon Stevedoring Corporation, having
found the latter to have merely delivered what it received
from
26
26

Inc.
the carrier in the same condition and quality, and ordered
American Steamship Agencies to pay plaintiff P1 4,870.71
with legal interest plus P1,000 attorneys fees. Said court
cited the following grounds:
(a) The non-liability claim of American Steamship
Agencies under the charter party contract is not
tenable because Article 587 of the Code of
Commerce makes the ship agent also civilly liable
for damages in favor of third persons due to the
conduct of the captain of the carrier;
(b) The stipulation in the charter party contract
exempting the owner from liability is against public
policy under Article 1744 of the Civil Code;
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(c) In case of loss, destruction or deterioration of goods,

common carriers are presumed at fault or negligent
under Article 1735 of the Civil Code unless they
prove extraordinary diligence, and they cannot by
contract exempt themselves from liability resulting
from their negligence or that of their servants; and
(d) When goods are delivered to the carrier in good
order and the same are in bad order at the place of
destination, the carrier is prima facie liable.
Disagreeing with such judgment, American Steamship
Agencies appealed directly to Us. The appeal brings forth
for determination this legal issue: Is the stipulation in the
charter party of the owners non-liability valid so as to
absolve the American Steamship Agencies from liability for
loss?
1
The bills of lading, covering the shipment of Peruvian
fish meal provide at the back thereof that the bills of lading
shall be governed by and subject to the terms and
conditions of the charter party, if any, otherwise,
the bills of
2
lading prevail over all the agreements. On the face of the
bills are stamped Freight prepaid as per charter party.
Subject to all terms, conditions and exceptions of charter
party dated London, Dec. 13, 1962.
3
A perusal of the charter party referred to shows that
while the possession and control of the ship were not en______________
1
Exhibits 1 & 2.
No. 26 of the bills of lading.
Exhibit 3, page 78 of the records.

27
VOL. 23, APRIL 4, 1968
27

Inc.
4
tirely transferred to the charterer, the vessel was

chartered to its full and complete capacity (Exh. 3).
Furthermore, the charter had the option to go north or
Page 4 of 8
2/1/16, 8:49 PM
south or vice-versa,
loading, stowing and discharging at its
6
risk and expense. Accordingly, the charter party contract is
one of affreightment over the whole vessel rather than a
demise. As such, the liability of the shipowner for acts or
negligence of its captain and crew, would remain in the
absence of stipulation.
Section 2, paragraph 2 of the charter party, provides
that the owner is liable for loss or damage to the goods
caused by personal want of due diligence on its part or its
manager to make the vessel in all respects seaworthy and
to secure that she be properly manned, equipped and
supplied or by the personal act or default of the owner or
its manager. Said paragraph, however, exempts the owner
of the vessel from any loss or damage or delay arising from
any other source, even from the neglect or fault of the
captain or crew or some other person employed by the
owner on board, for whose acts the owner would ordinarily
be liable except for said paragraph.
Regarding the stipulation, the Court of First Instance
declared the contract as contrary to Article 587 of the Code
of Commerce making the ship agent civilly liable for
indemnities suffered by third persons arising from acts or
omissions of the captain in the care of the goods and Article
1744 of the Civil Code under which a stipulation between
the common carrier and the shipper or owner limiting the
liability of the former for loss or destruction of the goods to
a degree less than extraordinary diligence is valid provided
it be reasonable, just and not contrary to public policy. The
release from liability in this case was held unreasonable
and contrary to the public policy on common carriers.
The provisions of our Civil Code on common carriers
_______________
4
Owner shoulders payment for overtime work of officers and crew
(Clauses 17 & 29), duties and taxes on vessel (Clause 14), and rigging,
opening and closing of hatches .at owners time and expense (Clause 41).
5
Clause 1, paragraph 2 of contract.
Clause 18 of contract.
28
Page 5 of 8
28
2/1/16, 8:49 PM

Inc.
7
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
8
a private carrier. As a private carrier, a stipulation
exempting the owner from liability
for the negligence of its
9
agent is not against public policy, and is deemed valid.
Such doctrine We find reasonable. The Civil Code
provisions on common carriers should not be applied where
the carrier is not acting as such but as a private carrier.
The stipulation in the charter party absolving the owner
from liability for loss due to the negligence of its agent
would be void only if the strict public policy governing
common carriers is applied. Such policy has no force where
the public at large is not involved, as in the case of a ship
totally chartered for the use of a single party.
And furthermore, in a charter of the entire vessel, the
bill of lading issued by the master to the charterer, as
shipper, is in fact and legal contemplation merely a receipt
and a document
of title not a contract, for the contract is
10
the 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.
WHEREFORE, the judgment appealed from is hereby
reversed and appellant is absolved from liability to
plaintiff. No costs. So ordered.
Reyes, J.B.L., Actg. C.J., Makalintal, Zaldivar,
Sanchez, Castro, Angeles and Fernando, JJ., concur.
______________
Page 6 of 8
Maranan v. Perez, L-22272, June 26, 1967.
80 C.J.S., pp. 692693.
The Crowe, 294 Fed. 506; The Fri, 154. 333.
10
2/1/16, 8:49 PM
The Crowe, The Fri, supra.

29
VOL. 23, APRIL 15, 1968
29
Tijam vs. Sibonghanoy

Dizon, J., did not take part.
Concepcion, C.J., is on leave.
Judgment reversed.
Notes.The policy considerations underlying the
prohibition of any stipulation exempting a carrier from
liability for damage or injury arising from its own or its
agents negligence have been stated as follows:
The undertaking is to carry the goods, and to relieve the carrier
from all liability for loss or damage arising from negligence in
performing its contract is to ignore the contract itself. The natural
effect of a limitation of liability against negligence is to induce want
of care on the part of the carrier in the performance of its duty. The
shipper and the carrier are not on equal terms; the shipper must
send his freight by the common carrier, or not at all; he is therefore
entirely at the mercy of the carrier unless protected by the higher
power of the law against being forced into contracts limiting the
carriers liability. Such contracts are wanting in the elements of
voluntary assent. (Ysmael & Co. vs. Barreto, 51 Phil. 90, citing 10
C.J. 154 and cited in Shewaram vs. PAL, L-20099, July 7, 1966, 17
SCRA 606).
It is submitted that these policy considerations apply with

equal force whether the common carrier acts as such or as
a private carrier by undertaking to carry a special cargo or
chartering its vessel or vehicle only to a special person.
This is particularly true in ocean trade. The shipper has no
choice as to the means of transportation and is entirely at
the mercy of the carrier. Besides, the provisions of Article
587 of the Code of Commerce, which is unrepealed,
militates against the application of the American rule
Page 7 of 8
2/1/16, 8:49 PM
permitting limitation of liability for negligence in case the

common carrier acts as a private carrier. For said Article of
the Code of Commerce does not distinguish between
common and private carriers. And under Article 6 of the
Civil Code, a right may not be waived, by stipulation or
otherwise, if the waiver is contrary to law.
_______________
Page 8 of 8
642
2/1/16, 11:40 PM

Valenzuela Hardwood and Industrial Supply, Inc.
vs. Court of Appeals
*
G.R. No. 102316. June 30, 1997.
VALENZUELA
HARDWOOD
AND
INDUSTRIAL
SUPPLY, INC., petitioner, vs. COURT OF APPEALS AND
SEVEN
BROTHERS
SHIPPING
CORPORATION,
respondents.
Civil Law; Obligations and Contracts; Commercial Law;
Charter Law; As a private carrier, Article 1745 and other Civil Code
provisions on common carriers may not be applied unless expressly
stipulated by the parties in their charter party.The Court is not
persuaded. As adverted to earlier, it is undisputed that private
respondent had acted as a private carrier in transporting
petitioners 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.
Commercial Law; Charter Law; 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 common carrier, private carriage does not involve the
general public.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. We stress that in a contract of private
http://central.com.ph/sfsreader/session/000001529d7ce91b0d3e4dae003600fb002c009e/p/AQQ921/?username=Guest
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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.
________________
*
THIRD DIVISION.
643
VOL. 274, JUNE 30, 1997
643

Same; Same; 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.The issue posed in this case
and the arguments raised by petitioner are not novel; they were
resolved long ago by this Court in Home Insurance Co. vs. American
Steamship Agencies, Inc. In that case, the trial court similarly
nullified a stipulation identical to that involved in the present case
for being contrary to public policy based on Article 1744 of the Civil
Code and Article 587 of the Code of Commerce. Consequently, the
trial court held the shipowner liable for damages resulting from the
partial loss of the cargo. This Court reversed the trial court and laid
down, through Mr. Justice Jose P. Bengzon, the following wellsettled observation and doctrine: 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. Such doctrine We find
Page 2 of 24
2/1/16, 11:40 PM
reasonable. The Civil Code provisions on common carriers should

not be applied where the carrier is not acting as such but as a
private carrier. The stipulation in the charter party absolving the
owner from liability for loss due to the negligence of its agent would
be void only if the strict public policy governing common carriers is
applied. Such policy has no force where the public at large is not
involved, as in this case of a ship totally chartered for the use of a
single party. (Italics supplied.)
Same; Same; A charterer, in exchange for convenience and
economy, may opt to set aside the protection of the law on common
carriers. When the charterer decides to exercise this option, he takes
a normal business risk.Indeed, where the reason for the rule
ceases, the rule itself does not apply. 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 canand in
fact it usually doesenter into a free and voluntary agreement. In
practice, the parties in a contract of private carriage can stipulate
the carriers
644
644

obligations and liabilities over the shipment which, in turn,

determine the price or consideration of the charter. Thus, a
charterer, in exchange for convenience and economy, may opt to set
aside the protection of the law on common carriers. When the
charterer decides to exercise this option, he takes a normal business
risk.
Page 3 of 24
2/1/16, 11:40 PM
Same; Same; In the case of a private carrier, a stipulation

exempting the owner from liability even for the negligence of its
agent is valid.The naked assertion of petitioner that the
American rule enunciated in Home Insurance is not the rule in the
Philippines deserves scant consideration. The Court there
categorically held that said rule was reasonable and proceeded to
apply it in the resolution of that case. Petitioner miserably failed to
show such circumstances or arguments which would necessitate a
departure from a well-settled rule. Consequently, our ruling in said
case remains a binding judicial precedent based on the doctrine of
stare decisis and Article 8 of the Civil Code which provides that
(j)udicial decisions applying or interpreting the laws or the
Constitution shall form part of the legal system of the Philippines.
In fine, the respondent appellate court aptly stated that [in the
case of] a private carrier, a stipulation exempting the owner from
liability even for the negligence of its agent is valid.
Same; Same; As a general rule, patrimonial rights may be
waived as opposed to rights to personality and family rights which
may not be made the subject of waiver.Article 6 of the Civil Code
provides that (r)ights may be waived, unless the waiver is contrary
to law, public order, public policy, morals, or good customs, or
prejudicial to a person with a right recognized by law. As a general
rule, patrimonial rights may be waived as opposed to rights to
personality and family rights which may not be made the subject of
waiver. Being patently and undoubtedly patrimonial, petitioners
right conferred under said articles may be waived. This, the
petitioner did by acceding to the contractual stipulation that it is
solely responsible for any damage to the cargo, thereby exempting
the private carrier from any responsibility for loss or damage
thereto. Furthermore, as discussed above, the contract of private
carriage binds petitioner and private respondent alone; it is not
imbued with public policy considerations for the general public or
third persons are not affected thereby.
Same; Same; Damages; An aggrieved party may still recover the
deficiency from the person causing the loss in the event the amount
645
Page 4 of 24
VOL. 274, JUNE 30, 1997
2/1/16, 11:40 PM
645

paid by the insurance company does not fully cover the loss.In its
memorandum, Seven Brothers argues that petitioner has no cause
of action against it because this Court has earlier affirmed the
liability of South Sea for the loss suffered by petitioner. Private
respondent submits that petitioner is not legally entitled to collect
twice for a single loss. 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 from the person causing the loss in
the event the amount paid by the insurance company does not fully
cover the loss. Article 2207 of the Civil Code provides: ART. 2207.
If the plaintiff s property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising
out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the
wrongdoer or the person who has violated the contract. If the
amount paid by the insurance company does not fully cover the
injury or loss, the aggrieved party shall be entitled to recover the
deficiency from the person causing the loss or injury.

Court of Appeals.
Alejandro P. Ruiz, Jr. for petitioner.
Lorenzo G. Parungao for private respondent.
PANGANIBAN, J.:
Is a stipulation in a charter party that the (o)wners shall
not be responsible for loss, split, short-landing,
breakages
1
and any kind of damages to the cargo valid? This is the
main question raised in this petition for review assailing
the Decihttp://central.com.ph/sfsreader/session/000001529d7ce91b0d3e4dae003600fb002c009e/p/AQQ921/?username=Guest
Page 5 of 24
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________________
1
Charter Party, p. 2; Record of the Regional Trial Court, p. 202.

646
646

2
sion of Respondent Court of Appeals in CA-G.R. No. CV20156 promulgated on October 15, 1991. The Court of
Appeals modified the judgment of the Regional Trial Court
of Valenzuela, Metro Manila, Branch 171, the dispositive
WHEREFORE, Judgment is hereby rendered ordering South Sea
Surety and Insurance Co., Inc. to pay plaintiff the sum of TWO
MILLION PESOS (P2,000,000.00) representing the value of the
policy on the lost logs with legal interest thereon from the date of
demand on February 2, 1984 until the amount is fully paid or in the
alternative, defendant Seven Brothers Shipping Corporation to pay
plaintiff the amount of TWO MILLION PESOS (P2,000,000.00)
representing the value of lost logs plus legal interest from the date
of demand on April 24, 1984 until full payment thereof; the
reasonable attorneys fees in the amount equivalent to five (5)
percent of the amount of the claim and the costs of the suit.
Plaintiff is hereby ordered to pay defendant Seven Brothers
Shipping Corporation the sum of TWO HUNDRED THIRTY
THOUSAND PESOS (P230,000.00) representing the balance of the
stipulated freight charges.
Defendant South Sea Surety and Insurance Companys
counterclaim is hereby dismissed.
In its assailed Decision, Respondent Court of Appeals held:

WHEREFORE, the appealed judgment is hereby AFFIRMED
except in so far (sic) as the liability of the Seven Brothers Shipping
Corporation to the plaintiff is concerned which is hereby
3
REVERSED and SET ASIDE.
The Facts
Page 6 of 24
2/1/16, 11:40 PM
The factual antecedents of this case as narrated in the

Court of Appeals Decision are as follows:
________________
2
Seventeenth Division, composed of J. Fernando A. Santiago, ponente,
and JJ. Pedro A. Ramirez, Chairman, and Fermin A. Martin, Jr.,

concurring.
3
Rollo, p. 24.
647
VOL. 274, JUNE 30, 1997
647

It appears that on 16 January 1984, plaintiff (Valenzuela
Hardwood and Industrial Supply, Inc.) 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 formers lauan round logs numbering 940 at the
port of Maconacon, Isabela for shipment to Manila.
On 20 January 1984, plaintiff insured the logs against loss
and/or damage with defendant South Sea Surety and Insurance Co.,
Inc. for P2,000,000.00 and the latter issued its Marine Cargo
Insurance Policy No. 84/24229 for P2,000,000.00 on said date.
On 24 January 1984, the plaintiff gave the check in payment of
the premium on the insurance policy to Mr. Victorio Chua. In the
meantime, the said vessel M/V Seven Ambassador sank on 25
January 1984 resulting in the loss of the plaintiff s insured logs.
On 30 January 1984, a check for P5,625.00 (Exh. E) 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 non-payment of
the premium due in accordance with Section 77 of the Insurance
Code.
On 2 February 1984, 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
Page 7 of 24
2/1/16, 11:40 PM
Shipping Corporation for the value of the lost logs but the latter
denied the claim.
After due hearing and trial, the court a quo rendered judgment
in favor of plaintiff and against defendants. Both defendants
shipping corporation and the surety company appealed.
Defendant-appellant Seven Brothers Shipping Corporation
impute (sic) to the court a quo the following assignment of errors, to
wit:
A. The lower court erred in holding that the proximate

cause of the sinking of the vessel Seven
Ambassadors, was not due to fortuitous event but to
the negligence of the captain in stowing and
securing the logs on board, causing the iron chains
to snap and the logs to roll to the portside.
B. The lower court erred in declaring that the nonliability clause of the Seven Brothers Shipping
Corporation from logs (sic) of the cargo stipulated in
the charter party is
648
648

void for being contrary to public policy invoking
Article 1745 of the New Civil Code.
C. The lower court erred in holding defendantappellant Seven Brothers Shipping Corporation
liable in the alternative and ordering/directing it to
pay plaintiff-appellee the amount of two million
(P2,000,000.00) pesos representing the value of the
logs plus legal interest from date of demand until
fully paid.
D. The lower court erred in ordering defendantappellant Seven Brothers Shipping Corporation to
pay appellee reasonable attorneys fees in the
amount equivalent to 5% of the amount of the claim
and the costs of the suit.
E. The lower court erred in not awarding defendant-
Page 8 of 24
2/1/16, 11:40 PM
appellant Seven Brothers Corporation its counterclaim for attorneys fees.

F. The lower court erred in not dismissing the
complaint against Seven Brothers Shipping
Corporation.
Defendant-appellant South Sea Surety and Insurance Co., Inc.
assigns the following errors:
A. The trial court erred in holding that Victorio Chua

was an agent of defendant-appellant South Sea
Surety and Insurance Company, Inc. and likewise
erred in not holding that he was the representative
of the insurance broker Columbia Insurance
Brokers, Ltd.
B. The trial court erred in holding that Victorio Chua
received
compensation/commission
on
the
premiums paid on the policies issued by the
defendant-appellant South Sea Surety and
Insurance Company, Inc.
C. The trial court erred in not applying Section 77 of
the Insurance Code.
D. The trial court erred in disregarding the receipt of
payment clause attached to and forming part of the
Marine Cargo Insurance Policy No. 84/24229.
E. The trial court in disregarding the statement of
account or bill stating the amount of premium and
documentary stamps to be paid on the policy by the
plaintiff-appellee.
F. The trial court erred in disregarding the
indorsement of cancellation of the policy due to nonpayment of premium and documentary stamps.
649
VOL. 274, JUNE 30, 1997
649

G. The trial court erred in ordering defendanthttp://central.com.ph/sfsreader/session/000001529d7ce91b0d3e4dae003600fb002c009e/p/AQQ921/?username=Guest
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appellant South Sea Surety and Insurance

Company,
Inc.
to
pay
plaintiff-appellee
P2,000,000.00 representing value of the policy with
legal interest from 2 February 1984 until the
amount is fully paid.
H. The trial court erred in not awarding to the
defendant-appellant the attorneys fees alleged and
proven in its counterclaim.
The primary issue to be resolved before us is whether defendants
shipping corporation and the surety company are liable to the
4
plaintiff for the latters lost logs.
The Court of Appeals affirmed in part the RTC judgment

by sustaining the liability of South Sea Surety and
Insurance Company (South Sea), but modified it by
holding that Seven Brothers Shipping Corporation
(Seven
5
Brothers) was not liable for the lost cargo. In modifying
the RTC judgment, the respondent appellate court
ratiocinated thus:
It appears that there is a stipulation in the charter party that the
ship owner would be exempted from liability in case of loss. The
court a quo 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.
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 even for the negligence of its agent is valid (Home
Insurance Company, Inc. vs. American Steamship Agencies, Inc., 23
SCRA 24).
The shipping corporation should not therefore be held liable for
6
the loss of the logs.
South Sea and herein Petitioner Valenzuela Hardwood and

Industrial Supply, Inc. (Valenzuela) filed separate
petitions
________________
Page 10 of 24
Decision of the Court of Appeals, pp. 1-4; rollo, pp. 19-22.
Ibid., p. 6; rollo, p. 24.
2/1/16, 11:40 PM
650
650

for review before this Court. In a Resolution dated June

2,
7
1995, this Court denied the petition of South Sea. There
the Court found no reason to reverse the factual findings of
the trial court and the Court of Appeals that Chua was
indeed an authorized agent of South Sea when he received
Valenzuelas premium payment for the marine cargo
8
insurance policy which was thus binding on the insurer.
The Court is now called upon to resolve the petition for
review filed by Valenzuela assailing the CA Decision which
exempted Seven Brothers from any liability for the lost
cargo.
The Issue
Petitioner Valenzuelas arguments revolve around a single
issue: whether or not respondent Court (of Appeals)
committed a reversible error in upholding the validity of
the stipulation in the charter party executed between the
petitioner and the private respondent exempting the latter
from liability for the loss of petitioners logs arising
from
9
the negligence of its (Seven Brothers) captain.
The Courts Ruling
The petition is not meritorious.
Validity of Stipulation is Lis Mota
The charter party between the petitioner and private
respondent stipulated that the (o)wners shall not be
responsible for loss, split, shortlanding, breakages and any
Page 11 of 24
2/1/16, 11:40 PM
10
kind of damages to the cargo. The validity of this

stipulation is the lis mota of this case.
_______________
South Sea Surety and Insurance Company, Inc. vs. Hon. Court of
Appeals and Valenzuela Hardwood and Industrial Supply, Inc., G.R. No.
102253, p. 4, June 2, 1995.
8
Ibid., pp. 5-7.
Memorandum for Petitioner, p. 5; rollo, p. 47.
10
Charter Party of January 16, 1984; Petitioners Memorandum, p. 2;
rollo, p. 62. See first, second, and third versions of charter party in
Record of the Regional Trial Court, pp. 201-206.
651
VOL. 274, JUNE 30, 1997
651

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
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
11
vessel and not due to fortuitous event. Likewise
undisputed is the status of Private Respondent Seven
Brothers as a private carrier when it contracted to
transport the cargo of Petitioner
Valenzuela. Even the
12
latter admits this in its petition.
The trial court deemed the charter
party stipulation void
13
for being contrary to public policy, citing Article 1745 of
the Civil Code which provides:
Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or
shipper;
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
Page 12 of 24
2/1/16, 11:40 PM
(3) That the common carrier need not observe any diligence in
the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence
less than that of a good father of a family, or of a man of
ordinary prudence in the vigilance over the movables
transported;
(5) That the common carrier shall not be responsible for the
acts or omissions of his or its employees;
(6) That the common carriers liability for acts committed by
thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or
diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective
________________
11
Decision of the Regional Trial Court, p. 17; Record of the Regional Trial
Court, p. 383.
12
Petition, p. 13; rollo, p. 14.
13
Decision of the Regional Trial Court, p. 17; Record of the Regional Trial
Court, p. 383.
652
652

condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
Petitioner Valenzuela adds that the stipulation is void for

being contrary
to Articles 586 and 587 of the Code of
14
Commerce and Articles 1170 and 1173 of the Civil Code.
Citing Article
1306 and paragraph 1, Article 1409 of the
15
Civil Code,
petitioner further contends that said
stipulation gives no duty or obligation to the private
respondent to observe the diligence of a good father of a
family in the custody and transportation of the cargo.
The Court is not persuaded. As adverted to earlier, it is
Page 13 of 24
2/1/16, 11:40 PM
undisputed that private respondent had acted as a private

carrier in transporting petitioners lauan logs. Thus, Article
1745 and other Civil Code provisions on common carriers
which were cited by petitioner may not be applied unless
16
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
________________
14
Petition, p. 2, rollo, p. 9. The Code of Commerce provides:
Art. 586. The shipowner and the ship 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 creditors prove that the amount claimed was
invested therein.
Art. 587. The ship agent shall also be civilly liable for the indemnities in
favor of third persons which arise from the conduct of the captain in the
vigilance over the goods which the vessel carried; but he may exempt himself
therefrom by abandoning the vessel with all her equipments and the freight he
may have earned during the voyage.
15
16
See Hernandez, Eduardo F. and Peasales, Antero A., Philippine
Admiralty and Maritime Law, p. 250, (1987).

653
VOL. 274, JUNE 30, 1997
653

17
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. We stress that 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
Page 14 of 24
2/1/16, 11:40 PM
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 issue posed in this case and the arguments raised
by petitioner are not novel; they were resolved long ago by
this Court in Home
Insurance Co. vs. American Steamship
18
Agencies, Inc.
In that case, the trial court similarly
nullified a stipulation identical to that involved in the
present case for being contrary to public policy based on
Article 1744 of the Civil Code and Article 587 of the Code of
Commerce. Consequently, the trial court held the
shipowner liable for damages resulting from the partial
loss of the cargo. This Court reversed the trial court and
laid down, through Mr. Justice Jose P. Bengzon, the
following well-settled observation and doctrine:
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
_______________
17
Art. 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order, or public policy. See
also, Section 10, Article III, Constitution; People vs. Pomar, 46 Phil. 440, 449,
(1924).
18
23 SCRA 24, April 4, 1968.
654
654

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.
Page 15 of 24
2/1/16, 11:40 PM
Such doctrine We find reasonable. The Civil Code provisions on

common carriers should not be applied where the carrier is not
acting as such but as a private carrier. The stipulation in the charter
party absolving the owner from liability for loss due to the negligence
of its agent would be void only if the strict public policy governing
common carriers is applied. Such policy has no force where the
public at large is not involved, as in this case of a ship totally
19
chartered for the use of a single party. (Italics supplied.)
Indeed, where the reason for the rule ceases, the rule itself
does not apply. 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 canand in
fact it usually doesenter into a free and voluntary
agreement. In practice, the parties in a contract of private
carriage can stipulate the carriers obligations and
liabilities over the shipment which, in turn, determine the
price or consideration of the charter. Thus, a charterer, in
exchange for convenience and economy, may opt to set
aside the protection of the law on common carriers. When
the charterer decides to exercise this option, he takes a
normal business risk.
Petitioner contends that the rule in Home Insurance is
not applicable to the present case because it covers only a
stipulation exempting a private carrier from liability for
the negligence of his agent, but it does not apply to a
stipulation ex________________
19
Ibid., pp. 27-28.

655
VOL. 274, JUNE 30, 1997
655
Page 16 of 24
2/1/16, 11:40 PM

empting a private carrier like private respondent from the
negligence of his
employee or servant which is the situation
20
in this case. This contention of petitioner is bereft of
merit, for it raises a distinction without any substantive
difference. The case of Home Insurance specifically dealt
with the liability of the21 shipowner for acts or negligence of
its captain and crew and a charter party stipulation
which 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
22
paragraph. Undoubtedly, Home Insurance is applicable to
the case at bar.
The naked assertion of petitioner that the American rule
enunciated 23in Home Insurance is not the rule in the
Philippines deserves scant consideration. The Court there
categorically held that said rule was reasonable and
proceeded to apply it in the resolution of that case.
Petitioner miserably failed to show such circumstances or
arguments which would necessitate a departure from a
well-settled rule. Consequently, our ruling in said case
remains a binding judicial precedent based on the doctrine
of stare decisis and Article 8 of the Civil Code which
provides that (j)udicial decisions applying or interpreting
the laws or the Constitution shall form part of the legal
system of the Philippines.
In fine, the respondent appellate court aptly stated that
[in the case of] a private carrier, a stipulation exempting
the owner
from liability even for the negligence of its agent
24
is valid.
_______________
20
Petitioners Memorandum, p. 12; rollo, p. 57.
21
Home Insurance Co. vs. American Steamship Agencies, Inc., supra,
p. 27.
22
Ibid.
23
Petitioners Memorandum, pp. 8-9; rollo, pp. 50-51.
Page 17 of 24
24
2/1/16, 11:40 PM
Decision, p. 4; rollo, p. 22.

656
656

Other Arguments
On the basis of the foregoing alone, the present petition
may already be denied; the Court, however, will discuss the
other arguments of petitioner for the benefit and
satisfaction of all concerned.
Articles 586 and 587, Code of Commerce
Petitioner Valenzuela insists that the charter party
stipulation is contrary to Articles 586 and 587 of the Code
of Commerce which confer on petitioner the right to recover
damages from the shipowner
and ship agent for the acts or
25
conduct of the captain. We are not persuaded. Whatever
rights petitioner may have under the aforementioned
statutory provisions were waived when it entered into the
charter party. Article 6 of the Civil Code provides that
(r)ights may be waived, unless the waiver is contrary to
law, public order, public policy, morals, or good customs, or
prejudicial to a person with a right recognized by law. As a
general rule, patrimonial rights may be waived as opposed
to rights to personality and family rights which may not be
made the subject of
_________________
25
Art. 586. The shipowner and the ship 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 ship agent is understood the person intrusted with the provisioning of a
vessel, or who represents her in port in which she may be found.
Page 18 of 24
2/1/16, 11:40 PM
Art. 587. The ship agent shall also be civilly liable for the indemnities in
favor of third persons which arise from the conduct of the captain in the
vigilance over the goods which the vessel carried; but he may exempt himself
therefrom by abandoning the vessel with all her equipment and the freight he
may have earned during the voyage.
657
VOL. 274, JUNE 30, 1997
657

26
waiver. Being patently and undoubtedly patrimonial,

petitioners right conferred under said articles may be
waived. This, the petitioner did by acceding to the
contractual stipulation that it is solely responsible for any
damage to the cargo, thereby exempting the private carrier
from any responsibility for loss or damage thereto.
Furthermore, as discussed above, the contract of private
carriage binds petitioner and private respondent alone; it is
not imbued with public policy considerations for the
general public or third persons are not affected thereby.
Articles 1170 and 1173, Civil Code
Petitioner likewise argues that the stipulation subject of
this controversy is void for27 being contrary to Articles 1170
and 1173 of the Civil Code which read:
Art. 1170. Those who in the performance of their obligations are
guilty of fraud, negligence, or delay, and those who in any manner
contravene the tenor thereof, are liable for damages.
Art. 1173. The fault or negligence of the obligor consists in the
omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of
the time and of the place. When negligence shows bad faith, the
provisions of Articles 1171 and 2201, shall apply.
If the law does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a family
shall be required.
The Court notes that the foregoing articles are applicable

only to the obligor or the one with an obligation to perform.
Page 19 of 24
2/1/16, 11:40 PM
In the instant case, Private Respondent Seven Brothers is

not an obligor in respect of the cargo, for this obligation to
bear the loss was shifted to petitioner by virtue of the
charter party. This shifting of responsibility, as earlier
observed, is not void.
_______________
26
Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil
Code of the Philippines, p. 29, Volume I, (1990).

27

658
658

The provisions cited by petitioner are, therefore,

inapplicable to the present case.
Moreover, the factual milieu of this case does not justify
the application of the second paragraph of Article 1173 of
the Civil Code which prescribes the standard of diligence to
be observed in the event the law or the contract is silent. In
28
the instant case, Article 362 of the Code of Commerce
provides the standard of ordinary diligence for the carriage
of goods by a carrier. The standard of diligence under this
statutory provision may, however, be modified in a contract
of private carriage as the petitioner and private respondent
had done in their charter party.
Cases Cited by Petitioner Inapplicable
29
Petitioner cites Shewaram vs. Philippine Airlines, Inc.

which, in turn, quoted
Juan Ysmael & Co. vs. Gabino
30
Barreto & Co.
and argues that the public policy
considerations
stated
there
vis--vis
contractual
stipulations limiting the31carriers liability be applied with
equal force to this case. It also
cites Manila Railroad Co.
32
vs. Compaia Transatlantica and
________________
Page 20 of 24
28
2/1/16, 11:40 PM
Art. 362. Nevertheless, the carrier shall be liable for the losses and
damages resulting from causes mentioned in the preceding article if it is

proved, as against him, that they arose through his negligence or by
reason of his having failed to take the precautions which usage has
established among careful persons, unless the shipper has committed
fraud in the bill of lading, representing the goods to be of a kind or
quality different from what they really were.
If notwithstanding the precautions referred to in this article, the
goods transported run the risk of being lost, on account of their nature or
by reason of unavoidable accident, there being no time for their owners to
dispose of them, the carrier may proceed to sell them, placing them for
the purpose at the disposal of the judicial authority or of the officials
designated by special provisions.
29
17 SCRA 606, July 7, 1966.
30
51 Phil. 90, (1927).
31
Petitioners Memorandum, pp. 9-10; rollo, pp. 51-52.
32
38 Phil. 875 (1918).

659
VOL. 274, JUNE 30, 1997
659

contends that stipulations exempting a party from liability
for damages due to negligence should not be
countenanced and should be33 strictly construed against
the party claiming its benefit. We disagree.
The cases of Shewaram and Ysmael both involve a
common carrier; thus, they necessarily justify the
application of such policy considerations and concomitantly
stricter rules. As already discussed above, the public policy
considerations behind the rigorous treatment of common
carriers are absent in the case of private carriers. Hence,
the stringent laws applicable to common carriers are not
applied to private carriers. The case of Manila Railroad is
also inapplicable because the action for damages there does
not involve a contract for transportation. Furthermore, the
defendant therein made a promise to use due care in the
lifting operations and, consequently, it was bound by its
undertaking; besides, the exemption was intended to cover
accidents due to hidden defects in the apparatus or other
Page 21 of 24
2/1/16, 11:40 PM
unforseeable occurrences not caused by its personal

negligence. This promise was thus construed to make
sense together
with the stipulation against liability for
34
damages. In the present case, we stress that the private
respondent made no such promise. The agreement of the
parties to exempt the shipowner from responsibility for any
damage to the cargo and place responsibility over the same
to petitioner is the lone stipulation considered now by this
Court.
Finally, petitioner points
to Standard Oil Co. of New
35
York vs. Lopez Costelo, Walter36 A. Smith & Co. vs.
Cadwallader Gibson
Lumber Co., N. T. Hashim and Co.
37
vs. Rocha 38and Co., Ohta Development Co. vs. Steamship
Pompey and
________________
33
Petitioners Memorandum, p. 13, rollo, p. 55.
34
Manila Railroad vs. Compaia Transatlantica, supra, pp. 886-887.
35
42 Phil. 256 (1921).
36
55 Phil. 517 (1930).
37
18 Phil. 315 (1911).
38
49 Phil. 117 (1926).

660
660

39
Limpangco Sons vs. Yangco Steamship Co. in support of

its contention
that the shipowner be held liable for
40
damages. These however are not on all fours with the
present case because they do not involve a similar factual
milieu or an identical stipulation in the charter party
expressly exempting the shipowner from responsibility for
any damage to the cargo.
Effect of the South Sea Resolution
In its memorandum, Seven Brothers argues that petitioner
Page 22 of 24
2/1/16, 11:40 PM
has no cause of action against it because this Court has

earlier affirmed the liability of South Sea for the loss
suffered by petitioner. Private respondent submits that
petitioner
is not legally entitled to collect twice for a single
41
loss. 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
42
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 from the person causing the
loss in the event the amount paid by the insurance
company does not fully cover the loss. Article 2207 of the
Civil Code provides:
ART. 2207. If the plaintiff s property has been insured, and he has
received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the
contract. If the amount paid by the insurance company does not
fully cover the injury or loss, the aggrieved party shall be entitled to
recover the deficiency from the person causing the loss or injury.
________________
39
34 Phil. 597 (1916).
40
41
Memorandum For Private Respondent, p. 8; rollo, p. 68.
42
Supra.
661
VOL. 274, JUNE 30, 1997
661

WHEREFORE, premises considered, the petition is hereby
DENIED for its utter failure to show any reversible error
on the part of Respondent Court. The assailed Decision is
Page 23 of 24
2/1/16, 11:40 PM
AFFIRMED.
SO ORDERED.
Narvasa (C.J., Chairman), Davide, Jr., Melo and
Francisco, JJ., concur.
Petition denied, judgment affirmed.
Note.Contracts which are the private laws of the
contracting parties, should be fulfilled according to the
literal sense of their stipulations, if their terms are clear
and leave no room for doubt as to the intention of the
contracting parties. (Salvatierra vs. Court of Appeals, 261
SCRA 45 [1995])
o0o
662
Page 24 of 24
2/2/16, 12:19 AM
45
National Steel Corporation vs. Court of Appeals

*
G.R. No. 112287. December 12, 1997.
NATIONAL STEEL CORPORATION, petitioner, vs.

COURT OF APPEALS AND VLASONS SHIPPING, INC.,
respondents.
*
G.R. No. 112350. December 12, 1997.
VLASONS SHIPPING, INC., petitioner, vs. COURT OF

APPEALS AND NATIONAL STEEL CORPORATION,
respondents.
Common Carriers; Private Carriers; Ships and Shipping; It has
been held that the true test of a common carrier is the carriage of
passengers or goods, provided it has space, for all who opt to avail
themselves of its transportation service for a fee.Article 1732 of the
Civil Code defines a common carrier as persons, corporations, firms
or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public. It has been held
that the true test of a common carrier is the carriage of passengers
or goods,
_______________
*
THIRD DIVISION.
46
http://central.com.ph/sfsreader/session/000001529da1c4c879d8d079003600fb002c009e/p/AQR239/?username=Guest
Page 1 of 42
46
2/2/16, 12:19 AM

provided it has space, for all who opt to avail themselves of its
transportation service for a fee. A carrier which does not qualify
under the above test is deemed a private carrier. Generally, private
carriage is undertaken by special agreement and the carrier does
not hold himself out to carry goods for the general public. The most
typical, although not the only form of private carriage, is the
charter party, a maritime contract by which the charterer, a party
other than the shipowner, obtains the use and service of all or some
part of a ship for a period of time or a voyage or voyages.
Same; Same; Same; The rights and obligations of a private
carrier and a shipper, including their respective liability for damage
to the cargo, are determined primarily by stipulations in their
contract of private carriage or charter party.In the instant case, it
is undisputed that VSI did not offer its services to the general
public. As found by the Regional Trial Court, it carried passengers
or goods only for those it chose under a special contract of charter
party. As correctly concluded by the Court of Appeals, 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.
Same; Same; Same; Evidence; Burden of Proof; Code of
Commerce; In an action against a private 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 carriers custody does not put the
burden of proof on the carrier.This view finds further support in
the Code of Commerce which pertinently provides: Art. 361.
Merchandise shall be transported at the risk and venture of the
shipper, if the contrary has not been expressly stipulated. Therefore,
the damage and impairment suffered by the goods during the
transportation, due to fortuitous event, force majeure, or the nature
and inherent defect of the things, shall be for the account and risk
of the shipper. The burden of proof of these accidents is on the
carrier. Art. 362. The carrier, however, shall be liable for damages
Page 2 of 42
2/2/16, 12:19 AM
arising from the cause mentioned in the preceding article if proofs

against him show that they occurred on account of his negligence or
his omission to take the precautions usually adopted by careful
persons, unless the shipper committed fraud in the bill of lading,
making him to believe that the goods were of a class or quality
different from what they really
47
47

were. Because the MV Vlasons I was a private carrier, the
shipowners 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 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 carriers
custody does not put the burden of proof on the carrier.
Same; Same; Same; Where the factual findings of both the trial
court and the Court of Appeals coincide, the same are binding on the
Supreme Court.These questions of fact were threshed out and
decided by the trial court, which had the firsthand opportunity to
hear the parties conflicting claims and to carefully weigh their
respective evidence. The findings of the trial court were
subsequently affirmed by the Court of Appeals. Where the factual
findings of both the trial court and the Court of Appeals coincide,
the same are binding on this Court. We stress that, subject to some
exceptional instances, only questions of lawnot questions of fact
may be raised before this Court in a petition for review under Rule
45 of the Rules of Court.
Same; Same; Same; Only questions of lawnot questions of fact
may be raised before the Supreme Court in a petition for review
under Rule 45 of the Rules of Court; Exceptions.Fuentes v. Court of
Appeals, G.R. No. 109849, pp. 6-8, February 26, 1997, per
Panganiban, J., enumerated the following instances: (1) When the
Page 3 of 42
2/2/16, 12:19 AM
factual findings of the Court of Appeals and the trial court are
contradicttory; (2) When the conclusion is a finding grounded
entirely on speculation, surmises, or conjectures; (3) When the
inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible; (4) When there is a
grave abuse of discretion in the appreciation of facts; (5) When the
appellate court, in making its findings, went beyond the issues of
the case, and such findings are contrary to the admissions of both
appellant and appellee; (6) When the judgment of the Court of
Appeals is premised on a misapprehension of facts; (7) When the
Court of Appeals failed to notice certain relevant facts which, if
properly considered, would justify a different conclusion; (8) When
the findings of fact are themselves conflicting; (9) When the findings
of fact are conclusions without citation of the specific evidence on
which they are based; and
48
48

(10) When the findings of fact of the Court of Appeals are premised
on the absence of evidence but such findings are contradicted by the
evidence on record.
Same; Same; Same; Stevedoring Service; A Stevedore company
engaged in discharging cargo has the duty to load the cargo in a
prudent manner, and it is liable for injury to, or loss of, cargo caused
by its negligence and where the officers and members and crew of the
vessel do nothing and have no responsibility in the discharge of
cargo by stevedores the vessel is not liable for loss of, or damage to,
the cargo caused by the negligence of the stevedores.The fact that
NSC actually accepted and proceeded to remove the cargo from the
ship during unfavorable weather will not make VSI liable for any
damage caused thereby. In passing, it may be noted that the NSC
may seek indemnification, subject to the laws on prescription, from
the stevedoring company at fault in the discharge operations. A
stevedore company engaged in discharging cargo x x x has the duty
to load the cargo x x x in a prudent manner, and it is liable for
injury to, or loss of, cargo caused by its negligence x x x and where
Page 4 of 42
2/2/16, 12:19 AM
the officers and members and crew of the vessel do nothing and
have no responsibility in the discharge of cargo by stevedores x x x
the vessel is not liable for loss of, or damage to, the cargo caused by
the negligence of the stevedores x x x as in the instant case.
Evidence; Hearsay Rule; Entries in official records made in the
performance of a duty by a public officer of the Philippines, or by a
person in the performance of a duty specially enjoined by law, are
prima facie evidence of the facts therein stated.We find, however,
that Exhibit 11 is admissible under a well-settled exception to the
hearsay rule per Section 44 of Rule 130 of the Rules of Court, which
provides that (e)ntries in official records made in the performance
of a duty by a public officer of the Philippines, or by a person in the
performance of a duty specially enjoined by law, are prima facie
evidence of the facts therein stated. Exhibit 11 is an original
certificate of the Philippine Coast Guard in Cebu issued by
Lieutenant Junior Grade Noli C. Flores to the effect that the vessel
VLASONS I was drylocked x x x and PCG Inspectors were sent on
board for inspection x x x. After completion of drydocking and duly
inspected by PCG Inspectors, the vessel VLASONS I, a cargo
vessel, is in seaworthy condition, meets all requirements, fitted and
equipped for trading as a cargo vessel, was cleared by the
Philippine Coast Guard
49
49

and sailed for Cebu Port on July 10, 1974. (sic) NSCs claim,
therefore, is obviously misleading and erroneous.
Ships and Shipping; Words and Phrases; Demurrage and
Laytime, Explained.The Court defined demurrage in its strict
sense as the compensation provided for in the contract of
affreightment for the detention of the vessel beyond the laytime or
that period of time agreed on for loading and unloading of cargo. It
is given to compensate the shipowner for the nonuse of the vessel.
On the other hand, the following is well-settled: Laytime runs
according to the particular clause of the charter party. x x x If
Page 5 of 42
2/2/16, 12:19 AM
laytime is expressed in running days, this means days when the

ship would be run continuously, and holidays are not expected. A
qualification of weather permitting excepts only those days when
bad weather reasonably prevents the work contemplated.
Same; Same; Same; Where laytime is qualified as WWDSHINC
or weather, working days Sundays and holidays, the running of
laytime is made subject to the weather, and would cease to run in the
event unfavorable weather interferes with the unloading of cargo.
In this case, the contract of voyage charter hire provided for a
four-day laytime; it also qualified laytime as WWDSHINC or
weather, working days Sundays and holidays included. The running
of laytime was thus made subject to the weather, and would cease to
run in the event unfavorable weather interfered with the unloading
of cargo. Consequently, NSC may not be held liable for demurrage
as the four-day laytime allowed it did not lapse, having been tolled
by unfavorable weather condition in view of the WWDSHINC
qualification agreed upon by the parties. Clearly, it was error for the
trial court and the Court of Appeals to have found and affirmed
respectively that NSC incurred eleven days of delay in unloading
the cargo. The trial court arrived at this erroneous finding by
subtracting from the twelve days, specifically August 13, 1974 to
August 24, 1974, the only day of unloading unhampered by
unfavorable weather or rain, which was August 22, 1974. Based on
our previous discussion, such finding is a reversible error. As
mentioned, the respondent appellate court also erred in ruling that
NSC was liable to VSI for demurrage, even if it reduced the amount
by half.
Attorneys Fees; The mere fact that a party was compelled to
litigate to protect its rights will not justify an award of attorneys
fees under Article 2208 of the Civil Code when no sufficient showing
of
50
50

bad faith would be reflected in the other partys persistence in a case

Page 6 of 42
2/2/16, 12:19 AM
other than an erroneous conviction of the righteousness of his cause.

VSI assigns as error of law the Court of Appeals deletion of the
award of attorneys fees. We disagree. While VSI was compelled to
litigate to protect its rights, such fact by itself will not justify an
award of attorneys fees under Article 2208 of the Civil Code when
x x x no sufficient showing of bad faith would be reflected in a
partys persistence in a case other than an erroneous conviction of
the righteousness of his cause x x x. Moreover, attorneys fees may
not be awarded to a party for the reason alone that the judgment
rendered was favorable to the latter, as this is tantamount to
imposing a premium on ones right to litigate or seek judicial
redress of legitimate grievances.
PETITIONS for review of a decision of the Court of

Appeals.
Napoleon J. Poblador, Victoria G. De los Reyes &
Heraldo A. Dacayo, Jr. for National Steel Corporation.
Del Rosario & Del Rosario for Vlasons Shipping, Inc.
PANGANIBAN, J.:
The Court finds occasion to apply the rules on the
seaworthiness of a private carrier, its owners responsibility
for damage to the cargo and its liability for demurrage and
attorneys fees. The Court also reiterates the well-known
rule that findings of facts of trial courts, when affirmed by
the Court of Appeals, are binding on this Court.
The Case
Before us are two separate petitions for review filed by
National Steel Corporation (NSC) and Vlasons Shipping,
Inc. (VSI), both of which assail the August 12, 1993
Decision of the
51
51
Page 7 of 42
2/2/16, 12:19 AM
Court of Appeals. The Court of Appeals modified the

decision of the Regional Trial Court of Pasig, Metro Manila,
Branch 163 in Civil Case No. 23317. The RTC disposed as
follows:
WHEREFORE, judgment is hereby rendered in favor of defendant
and against the plaintiff dismissing the complaint with cost against
plaintiff, and ordering plaintiff to pay the defendant on the
counterclaim as follows:
1. The sum of P75,000.00 as unpaid freight and P88,000.00 as
demurrage with interest at the legal rate on both amounts
from April 7, 1976 until the same shall have been fully paid;
2. Attorneys fees and expenses of litigation in the sum of
P100,000.00; and
3. Cost of suit.
2
SO ORDERED.
On the other hand, the Court of Appeals ruled:

WHEREFORE, premises considered, the decision appealed from is
modified by reducing the award for demurrage to P44,000.00 and
deleting the award for attorneys fees and expenses of litigation.
Except as thus modified, the decision is AFFIRMED. There is no
pronouncement as to costs.
3
SO ORDERED.
The 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 per_______________
1
Fifth Division, composed of J. Eduardo G. Montenegro, ponente; and
JJ. Justo P. Torres (who was later named a member of this Court), and
Fidel P. Purisima, 5th division chairman, concurring.
2
Decision of the Regional Trial Court, p. 5; records, p. 455. Penned by
Judge Eduardo C. Abaya.

Page 8 of 42
2/2/16, 12:19 AM
Decision of the Court of Appeals, p. 18; rollo (G.R. No. 112287), p. 63.
52
52

sons who enter into a special contract of charter party with

its owner. It is undisputed that the ship is a private carrier.
And it is in this capacity that its owner, Vlasons Shipping,
Inc., entered into a contract of affreightment or contract of
voyage charter hire with National Steel Corporation.
The facts as found by Respondent Court of Appeals are
as follows:
(1) On July 17, 1974, plaintiff National Steel Corporation (NSC) as
Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner,
entered into a Contract of Voyage Charter Hire (Exhibit B; also
Exhibit 1) whereby NSC hired VSIs vessel, the MV VLASONS I to
make one (1) voyage to load steel products at Iligan City and
discharge them at North Harbor, Manila, under the following terms
and conditions, viz.:
1. x x
xx
x x.
2. Cargo: Full cargo of steel products of not less than 2,500

MT, 10% more or less at Masters option.
3. x x
xx
x x.
4. Freight/Payment: P30.00/metric ton, FIOST basis. Payment

upon presentation of Bill of Lading within fifteen (15) days.
5. Laydays/Cancelling: July 26, 1974/Aug. 5, 1974.
6. Loading/Discharging Rate: 750 tons per WWDSHINC.
(Weather Working Day of 24 consecutive hours, Sundays
and Holidays Included).
7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.
8. x x
xx
x x.
9. Cargo Insurance: Charterers and/or Shippers must insure

the cargoes. Shipowners not responsible for losses/damages
except on proven willful negligence of the officers of the
vessel.
10. Other terms: (a) All terms/conditions of NONYAZAI C/P
[sic] or other internationally recognized Charter Party
Page 9 of 42
2/2/16, 12:19 AM
Agreement shall form part of this Contract.

xxx
xxx
x x x
The terms F.I.O.S.T. which is used in the shipping business is a
standard provision in the NANYOZAI Charter Party which stands
for Freight In and Out including Stevedoring and Trading, which
53
53

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. x x x (Italics
supplied).
Under paragraph 10 thereof, it is provided that (o)wners shall,
before and at the beginning of the voyage, exercise due diligence to
make the vessel seaworthy and 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. 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; x x x; perils, dangers and accidents of the
sea or other navigable waters; x x x; wastage in bulk or weight or
any other loss or damage arising from inherent defect, quality or
vice of the cargo; insufficiency of packing; x x x; latent defects not
discoverable by due diligence; any other cause arising without the
actual fault or privity of Owners or without the fault of the agents
or servants of owners.
Paragraph 12 of said NANYOZAI Charter Party also provides
that (o)wners shall not be responsible for split, chafing and/or any
damage unless caused by the negligence or default of the master
and crew.
(2) On August 6, 7 and 8, 1974, in accordance with the Contract
of Voyage Charter Hire, the MV VLASONS I loaded at plaintiff s
pier at Iligan City, the NSCs shipment of 1,677 skids of tinplates
Page 10 of 42
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and 92 packages of hot rolled sheets or a total of 1,769 packages

with a total weight of about 2,481.19 metric tons for carriage to
Manila. The shipment was placed in the three (3) hatches of the
ship. Chief Mate Gonzalo Sabando, acting as agent of the vessel[,]
acknowledged receipt of the cargo on board and signed the
corresponding bill of lading, B.L.P.P. No. 0233 (Exhibit D) on
August 8, 1974.
(3) The vessel arrived with the cargo at Pier 12, North Harbor,
Manila, on August 12, 1974. The following day, August 13, 1974,
when the vessels three (3) hatches containing the shipment were
opened by plaintiff s agents, nearly all the skids of tinplates
54
54

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 only on August 24, 1974 after
incurring a delay of eleven (11) days due to the heavy rain which
interrupted the unloading operations. (Exhibit E)
(4) To determine the nature and extent of the wetting and
rusting, NSC called for a survey of the shipment by the Manila
Adjusters and Surveyors Company (MASCO). In a letter to the NSC
dated March 17, 1975 (Exhibit G), MASCO 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 in Pureza St., Sta.
Mesa, Manila where the cargo was taken and stored. MASCO
reported that 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 (Exhibit F). It was also reported that
MASCOs 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. On August 31, 1974, the M.I.T.
Testing Laboratories issued Report No. 1770 (Exhibit I) which in
part, states, The analysis of bad order samples of packing materials
Page 11 of 42
2/2/16, 12:19 AM
x x x shows that wetting was caused by contact with SEA WATER.

(5) On September 6, 1974, on the basis of the aforesaid Report
No. 1770, plaintiff filed with the defendant its claim for damages
suffered due to the downgrading of the damaged tinplates in the
amount of P941,145.18. Then on October 3, 1974, plaintiff formally
demanded payment of said claim but defendant VSI refused and
failed to pay. Plaintiff filed its complaint against defendant on April
21, 1976 which was docketed as Civil Case No. 23317, CFI, Rizal.
(6) In its complaint, plaintiff claimed that it sustained losses in
the aforesaid amount of P941,145.18 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 preservationall in violation of defendants
undertaking under their Contract of Voyage Charter Hire.
55
55

(7) In its answer, 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; 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;
that in the course of the voyage from Iligan City to Manila, the MV
VLASONS I encountered very rough seas, strong winds and
adverse weather condition, causing strong winds and big waves to
continuously pound against the vessel and seawater to overflow on
its deck and hatch covers; that under the Contract of Voyage
Charter Hire, defendant shall not be responsible for losses/damages
except on proven willful negligence of the officers of the vessel, that
the officers of said MV VLASONS I exercised due diligence and
proper seamanship and were not willfully negligent; that
furthermore the Voyage Charter Party provides that loading and
discharging of the cargo was on FIOST terms which means that the
vessel was free of risk and expense in connection with the loading
and discharging of the cargo; that the damage, if any, was due to
the inherent defect, quality or vice of the cargo or to the insufficient
packing thereof or to latent defect of the cargo not discoverable by
Page 12 of 42
2/2/16, 12:19 AM
due diligence or to any other cause arising without the actual fault
or privity of defendant and without the fault of the agents or
servants of defendant; consequently, defendant is not liable; that
the stevedores of plaintiff who discharged the cargo in Manila were
negligent and did not exercise due care in the discharge of the
cargo; and that the cargo was exposed to rain seawater spray while
on the pier or in transit from the pier to plaintiff s warehouse after
discharge from the vessel; and that plaintiff s claim was highly
speculative and grossly exaggerated and that the small stain marks
or sweat marks on the edges of the tinplates were magnified and
considered total loss of the cargo. Finally, defendant claimed that it
had complied with all its duties and obligations under the Voyage
Charter Hire Contract and had no responsibility whatsoever to
plaintiff. In turn, it alleged the following counterclaim:
(a) That despite the full and proper performance by defendant
of its obligations under the Voyage Charter Hire Contract,
plaintiff failed and refused to pay the agreed charter hire of
P75,000.00 despite demands made by defendant;
(b) That under their Voyage Charter Hire Contract, plaintiff
had agreed to pay defendant the sum of P8,000.00 per day
for demurrage. The vessel was on demurrer for eleven (11)
days in Manila waiting for plaintiff to discharge its cargo
from
56
56

the vessel. Thus, plaintiff was liable to pay defendant
demurrage in the total amount of P88,000.00.
(c) For filing a clearly unfounded civil action against
defendant, plaintiff should be ordered to pay defendant
attorneys fees and all expenses of litigation in the amount
of not less than P100,000.00.
(8) From the evidence presented by both parties, the trial court
came out with the following findings which were set forth in its
decision:
(a) The MV VLASONS I is a vessel of Philippine registry
Page 13 of 42
2/2/16, 12:19 AM
engaged in the tramping service and is available for hire

only under special contracts of charter party as in this
particular case.
(b) That for purposes of the voyage covered by the Contract of
Voyage Charter Hire (Exh. 1), the MV VLASONS I was
covered by the required seaworthiness certificates including
the Certification of Classification issued by an international
classification society, the NIPPON KAIJI KYOKAI (Exh.
4); Coastwise License from the Board of Transportation
(Exh. 5); International Loadline Certificate from the
Philippine Coast Guard (Exh. 6); Cargo Ship Safety
Equipment Certificate also from the Philippine Coast Guard
(Exh. 7); Ship Radio Station License (Exh. 8); Certificate
of Inspection by the Philippine Coast Guard (Exh. 12); and
Certificate of Approval for Conversion issued by the Bureau
of Customs (Exh. 9). That being a vessel engaged in both
overseas and coastwise trade, the MV VLASONS I has a
higher degree of seaworthiness and safety.
(c) Before it proceeded to Iligan City to perform the voyage
called for by the Contract of Voyage Charter Hire, the MV
VLASONS I underwent drydocking in Cebu and was
thoroughly inspected by the Philippine Coast Guard. In fact,
subject voyage was the vessels first voyage after the
drydocking. The evidence shows that the MV VLASONS I
was seaworthy and properly manned, equipped and
supplied when it undertook the voyage. It had all the
required certificates of seaworthiness.
(d) The cargo/shipment was securely stowed in three (3)
hatches of the ship. The hatch openings were covered by
hatchboards which were in turn covered by two or double
tar
57
57

paulins. The hatch covers were water tight. Furthermore,
under the hatchboards were steel beams to give support.
(e) The claim of the plaintiff that defendant violated the
contract of carriage is not supported by evidence. The
Page 14 of 42
2/2/16, 12:19 AM
provisions of the Civil Code on common carriers pursuant to

which there exists a presumption of negligence in case of
loss or damage to the cargo are not applicable. As to the
damage to the tinplates which was allegedly due to the
wetting and rusting thereof, there is unrebutted testimony
of witness Vicente Angliongto that tinplates sweat by
themselves when packed even without being in contract
(sic) with water from outside especially when the weather is
bad or raining. The rust caused by sweat or moisture on the
tinplates may be considered as a loss or damage but then,
defendant cannot be held liable for it pursuant to Article
1743 of the Civil Case which exempts the carrier from
responsibility for loss or damage arising from the character
of the goods x x x. All the 1,769 skids of the tinplates could
not have been damaged by water as claimed by plaintiff. It
was shown as claimed by plaintiff that the tinplates
themselves were wrapped in kraft paper lining and
corrugated cardboards could not be affected by water from
outside.
(f) The stevedores hired by the plaintiff to discharge the cargo
of tinplates were negligent in not closing the hatch openings
of the MV VLASONS I when rains occurred during the
discharging of the cargo thus allowing rainwater to enter
the hatches. It was proven that the stevedores merely set up
temporary tents to cover the hatch openings in case of rain
so that it would be easy for them to resume work when the
rains stopped by just removing the tent or canvas. Because
of this improper covering of the hatches by the stevedores
during the discharging and unloading operations which
were interrupted by rains, rainwater drifted into the cargo
through the hatch openings. Pursuant to paragraph 5 of the
NANYOSAI [sic] Charter Party which was expressly made
part of the Contract of Voyage Charter Hire, the loading,
stowing and discharging of the cargo is the sole
responsibility of the plaintiff charterer and defendant
carrier has no liability for whatever damage may occur or
maybe [sic] caused to the cargo in the process.
(g) It was also established that the vessel encountered rough
seas and bad weather while en route from Iligan City to
Manila causing sea water to splash on the ships deck on ac
58
Page 15 of 42
58
2/2/16, 12:19 AM

count of which the master of the vessel (Mr. Antonio C.
Dumlao) filed a Marine Protest on August 13, 1974 (Exh.
15) which can be invoked by defendant as a force majeure
that would exempt the defendant from liability.
(h) Plaintiff did not comply with the requirement prescribed in
paragraph 9 of the Voyage Charter Hire contract that it was
to insure the cargo because it did not. Had plaintiff
complied with the requirement, then it could have recovered
its loss or damage from the insurer. Plaintiff also violated
the charter party contract when it loaded not only steel
products, i.e. steel bars, angular bars and the like but also
tinplates and hot rolled sheets which are high grade cargo
commanding a higher freight. Thus plaintiff was able to
ship high grade cargo at a lower freight rate.
(i) As regards defendants counterclaim, the contract of voyage
charter hire under paragraph 4 thereof, fixed the freight at
P30.00 per metric ton payable to defendant carrier upon
presentation of the bill of lading within fifteen (15) days.
Plaintiff has not paid the total freight due of P75,000.00
despite demands. The evidence also showed that the
plaintiff was required and bound under paragraph 7 of the
same Voyage Charter Hire contract to pay demurrage of
P8,000.00 per day of delay in the unloading of the cargoes.
The delay amounted to eleven (11) days thereby making
plaintiff liable to pay defendant for demurrage in the
amount of P88,000.00.
Appealing the RTC decision to the Court of Appeals, NSC

alleged six errors:
I
The trial court erred in finding that the MV VLASONS I was
seaworthy, properly manned, equipped and supplied, and that there
is no proof of willful negligence of the vessels officers.
II
The trial court erred in finding that the rusting of NSCs
tinplates was due to the inherent nature or character of the goods
Page 16 of 42
2/2/16, 12:19 AM
and not due to contact with seawater.

59
59

III
The trial court erred in finding that the stevedores hired by NSC
were negligent in the unloading of NSCs shipment.
IV
The trial court erred in exempting VSI from liability on the
ground of force majeure.
V
The trial court erred in finding that NSC violated the contract of
voyage charter hire.
VI
The trial court erred in ordering NSC to pay freight, demurrage
4
and attorneys fees, to VSI.
As earlier stated, the Court of Appeals modified the

decision of the trial court by reducing the demurrage from
P88,000.00 to P44,000.00 and deleting the award of
attorneys fees and expenses of litigation. NSC and VSI5
filed separate motions for reconsideration. In a Resolution
dated October 20, 1993, the appellate court denied both
motions. Undaunted, NSC and VSI filed their respective
petitions for review before this Court. On motion of VSI,
the Court ordered6 on February 14, 1994 the consolidation
of these petitions.
The Issues
7
In its petition and memorandum,

following questions of law and fact:
NSC raises the
Page 17 of 42
2/2/16, 12:19 AM
_______________
4
Ibid., p. 10; rollo (G.R. No. 112287), p. 55.
Rollo (G.R. No. 112350), pp. 72-74.
This case was deemed submitted for resolution upon receipt by this
Court of VSIs memorandum on September 9, 1997.

7
Pp. 12-13; rollo (G.R. No. 112287), pp. 19-20.
P. 8.
60
60

Questions of Law
1. Whether or not a charterer of a vessel is liable for
demurrage due to cargo unloading delays caused by weather
interruption;
2. Whether or not the alleged seaworthiness certificates
(Exhibits 3, 4, 5, 6, 7, 8, 9, 11 and 12) were
admissible in evidence and constituted evidence of the
vessels seaworthiness at the beginning of the voyages; and
3. Whether or not a charterers failure to insure its cargo
exempts the shipowner from liability for cargo damage.
Questions of Fact
1. Whether or not the vessel was seaworthy and cargo-worthy;
2. Whether or not vessels officers and crew were negligent in
handling and caring for NSCs cargo;
3. Whether or not NSCs cargo of tinplates did sweat during
the voyage and, hence, rusted on their own; and
4. Whether or not NSCs stevedores were negligent and caused
the wetting[/]rusting of NSCs tinplates.
9
In its separate petition, VSI submits for the consideration

of this Court the following alleged errors of the CA:
A. The respondent Court of Appeals committed an
error of law in reducing the award of demurrage
from P88,000.00 to P44,000.00.
Page 18 of 42
2/2/16, 12:19 AM
B. The respondent Court of Appeals committed an

error of law in deleting the award of P100,000 for
attorneys fees and expenses of litigation.
Amplifying the foregoing,
VSI raises the following issues in
10
its memorandum:
_______________
9
Petition of VSI, p. 10; rollo (G.R. No. 112350), p. 41.
10
VSIs Memorandum, p. 7.
61
61

I. Whether or not the provisions of the Civil Code of
the Philippines on common carriers pursuant to
which there exist[s] a presumption of negligence
against the common carrier in case of loss or
damage to the cargo are applicable to a private
carrier.
II. Whether or not the terms and conditions of the
Contract of Voyage Charter Hire, including the
Nanyozai Charter, are valid and binding on both
contracting parties.
The foregoing issues raised by the parties will be discussed
under the following headings:
1. Questions of Fact
2. Effect of NSCs Failure to Insure the Cargo
3. Admissibility of Certificates Proving Seaworthiness
4. Demurrage and Attorneys Fees.
The Courts Ruling

The Court affirms the assailed Decision of the Court of
Appeals, except in respect of the demurrage.
Page 19 of 42
2/2/16, 12:19 AM
Preliminary Matter: Common Carrier or Private

Carrier?
At the outset, it is essential to establish whether VSI
contracted with NSC as a common carrier or as a private
carrier. The resolution of this preliminary question
determines the law, standard of diligence and burden of
proof applicable to the present case.
as persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation,
offering their services to the public. It has been held that
the true test of a common carrier is the carriage of
passengers or goods, provided it has space, for all who opt
11
to avail themselves of its transportation service for a fee.
A carrier which does not
_______________
11
Mendoza vs. Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952),
per Montemayor, J. and United States vs. Quinajon and

62
62

qualify under the above test is deemed a private carrier.

Generally, private carriage is undertaken by special
agreement and the carrier does not hold himself out to
carry goods for the general public. The most typical,
although not the only form of private carriage, is the
charter party, a maritime contract by which the charterer,
a party other than the shipowner, obtains the use and
service of all or some
part of a ship for a period of time or a
12
voyage or voyages.
In the instant case, it is undisputed that VSI did not
offer its services to the general public. As found by the
Regional Trial Court, it carried passengers or goods only for
13
those it chose under a special contract of charter party.
Page 20 of 42
2/2/16, 12:19 AM
As correctly concluded by the Court of Appeals, the MV

14
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
15
of private carriage or charter party.
Recently, in
Valenzuela Hardwood and Industrial Supply, Inc., vs.
Court of 16Appeals and Seven Brothers Shipping
Corporation, the Court ruled:
x x x 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 com_______________
Quitorio, 31 Phil. 189, 196-197 (1915), per Johnson, J. See also
Tolentino, Commentaries and Jurisprudence on the Civil Code of the
Philippines, Vol. V, p. 297 (1992), and Hernandez and Peasales,
Philippine Admiralty and Maritime Law, pp. 238-241 (1987).
12
Hernandez and Peasales, p. 243; citing Schoenbaum &
Yiannopoulos, p. 364.
13
Decision of the Regional Trial Court, p. 2; records, p. 452.
14
Decision of the Court of Appeals, p. 11; rollo (G.R. No. 112287), p.
56.
15
Maritime Agencies & Services, Inc. vs. Court of Appeals, 187 SCRA
346, 351, July 12, 1990, per Cruz, J.

16
G.R. No. 102316, June 30, 1997, per Panganiban, J.

63
63

mercial 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
17
involving common carriers.
Page 21 of 42
2/2/16, 12:19 AM
Extent of VSIs Responsibility and Liability Over NSCs

Cargo
It is clear from the parties Contract of Voyage Charter
Hire, dated July 17, 1974, 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 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
18
preservation.
The NANYOZAI Charter Party also
provided that [o]wners shall not be responsible for split,
chafing and/or any damage unless
caused by the negligence
19
or default of the master or crew.
Burden of Proof
In view of the aforementioned contractual stipulations,
NSC must prove that the damage to its shipment was
caused by VSIs willful negligence or failure to exercise due
diligence in making MV Vlasons I seaworthy and fit for
holding, carrying and safekeeping the cargo. Ineluctably,
the burden of proof was placed on NSC by the parties
agreement.
_______________
17
18
Ibid., pp. 11-12.

See No. 10, par. 2, NANYOZAI Charter Party, p. 42, Folder of
Exhibits No. 2.
19
See No. 12, NANYOZAI Charter Party, p. 42, Folder of Exhibits No.
2.
64
64

Page 22 of 42
2/2/16, 12:19 AM
This view finds further support in the Code of Commerce

which pertinently provides:
Art. 361. Merchandise shall be transported at the risk and venture
of the shipper, if the contrary has not been expressly stipulated.
Therefore, the damage and impairment suffered by the goods
during the transportation, due to fortuitous event, force majeure, or
the nature and inherent defect of the things, shall be for the
account and risk of the shipper.
The burden of proof of these accidents is on the carrier.
Art. 362. The carrier, however, shall be liable for damages
arising from the cause mentioned in the preceding article if proofs
against him show that they occurred on account of his negligence or
his omission to take the precautions usually adopted by careful
persons, unless the shipper committed fraud in the bill of lading,
making him to believe that the goods were of a class or quality
different from what they really were.
Because the MV Vlasons I was a private carrier, the

shipowners 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 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 carriers custody does not put the burden of proof on
the carrier.
Since x x x a private carrier is not an insurer but undertakes
only to exercise due care in the protection of the goods committed to
its care, the burden of proving negligence or a breach of that duty
rests on plaintiff and proof of loss of, or damage to, cargo while in
the carriers possession does not cast on it the burden of proving
proper care and diligence on its part or that the loss occurred from
an excepted cause in the contract or bill of lading. However, in
discharging the burden of proof, plaintiff is entitled to the benefit of
the presumptions and inferences by which the law aids the bailor in
an
65
Page 23 of 42
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65

action against a bailee, and since the carrier is in a better position
to know the cause of the loss and that it was not one involving its
liability, the law requires that it come forward with the information
available to it, and its failure to do so warrants an inference or
presumption of its liability. However, such inferences and
presumptions, while they may affect the burden of coming forward
with evidence, do not alter the burden of proof which remains on
plaintiff, and, where the carrier comes forward with evidence
explaining the loss or damage, the burden of going forward with the
evidence is again on plaintiff.
Where the action is based on the shipowners warranty of
seaworthiness, the burden of proving a breach thereof and that such
breach was the proximate cause of the damage rests on plaintiff,
and proof that the goods were lost or damaged while in the carriers
possession does not cast on it the burden of proving seaworthiness.
x x x Where the contract of carriage exempts the carrier from
liability for unseaworthiness not discoverable by due diligence, the
carrier has the preliminary burden of proving the exercise of due
20
diligence to make the vessel seaworthy.
In the instant case, the Court of Appeals correctly found

that NSC has not taken the correct position in relation to
the question of who has the burden of proof. Thus, in its
brief (pp. 10-11), after citing Clause 10 and Clause 12 of the
NANYOZAI Charter Party (incidentally plaintiffappellants [NSCs] interpretation of Clause 12 is not even
correct), it argues that a careful examination of the
evidence will show that VSI miserably failed to comply
with any of these obligations
as if defendant-appellee [VSI]
21
had the burden of proof.
First Issue: Questions of Fact
Based on the foregoing, the determination of the following
factual questions is manifestly relevant: (1) whether VSI
exercised due diligence in making MV Vlasons I seaworthy
for the intended purpose under the charter party; (2)
whether the
Page 24 of 42
2/2/16, 12:19 AM
_______________
20
80 C.J.S., pp. 1044-1045.
21
62.
66
66

damage to the cargo should be attributed to the willful

negligence of the officers and crew of the vessel or of the
stevedores hired by NSC; and (3) whether the rusting of
the tinplates was caused by its own sweat or by contact
with seawater.
These questions of fact were threshed out and decided
by the trial court, which had the firsthand opportunity to
hear the parties conflicting claims and to carefully weigh
their respective evidence. The findings of the trial court
were subsequently affirmed by the Court of Appeals. Where
the factual findings of both the trial court and the Court
of
22
Appeals coincide, the same are binding on this Court.
We
23
stress that, subject to some exceptional instances, only
questions of law
_______________
22
See First Philippine International Bank vs. Court of Appeals, 252
SCRA 259, 309, January 24, 1996, per Panganiban, J.

23
Fuentes vs. Court of Appeals, G.R. No. 109849, pp. 6-8, February 26,
1997, per Panganiban, J., enumerated the following instances:

(1) When the factual findings of the Court of Appeals and the trial
court are contradictory;
(2) When the conclusion is a finding grounded entirely on
speculation, surmises, or conjectures;
(3) When the inference made by the Court of Appeals from its
findings of fact is manifestly mistaken, absurd, or impossible;
(4) When there is a grave abuse of discretion in the appreciation of
facts;
(5) When the appellate court, in making its findings, went beyond
Page 25 of 42
2/2/16, 12:19 AM
the issues of the case, and such findings are contrary to the
admissions of both appellant and appellee;
(6) When the judgment of the Court of Appeals is premised on a
misapprehension of facts;
(7) When the Court of Appeals failed to notice certain relevant facts
which, if properly considered, would justify a different conclusion;
(8) When the findings of fact are themselves conflicting;
(9) When the findings of fact are conclusions without citation of the
specific evidence on which they are based; and
67
67

not questions of factmay be raised before this Court in a
petition for review under Rule 45 of the Rules of Court.
After a thorough review of the case at bar, we find no
reason to disturb the lower courts factual findings, as
indeed NSC has not successfully proven the application of
any of the aforecited exceptions.
Was MV Vlasons I Seaworthy?
In any event, the records reveal that VSI exercised due
diligence to make the ship seaworthy and fit for the
carriage of NSCs cargo of steel and tinplates. This is shown
by the fact that it was drydocked and inspected by the
Philippine Coast Guard before it proceeded to Iligan City
for its voyage
to Manila under the contract of voyage
24
charter hire. The vessels voyage from Iligan to Manila
was the vessels first voyage after drydocking. The
Philippine Coast Guard Station in Cebu cleared it as
seaworthy, fitted and equipped;
it met all requirements for
25
trading as cargo vessel. The Court of Appeals itself
sustained the conclusion of the trial court that MV Vlasons
I was seaworthy. We find no reason to modify or reverse
this finding of both the trial and the appellate courts.
Who Were Negligent:
Seamen or Stevedores?
As noted earlier, the NSC had the burden of proving that
Page 26 of 42
2/2/16, 12:19 AM
the damage to the cargo was caused by the negligence of

the officers and the crew of MV Vlasons I in making their
vessel seaworthy and fit for the carriage of tinplates. NSC
failed to discharge this burden.
_______________
(10) When the findings of fact of the Court of Appeals are premised on
the absence of evidence but such findings are contradicted by the
evidence on record.
24
Certificate of Inspection of the Philippine Coast Guard Exhibit 11.
25
Comment of Vlasons Shipping Inc., p. 11; rollo (G.R. No. 112287), p.
250.
68
68

Before us, NSC relies heavily on its claim that MV Vlasons

I had used an old and torn tarpaulin or canvas to cover the
hatches through which the cargo was loaded into the cargo
hold of the ship. It faults the Court of Appeals for failing
to
26
consider such claim as an uncontroverted fact and
denies that MV Vlasons I was equipped with new canvas
covers in tandem with
the old ones as indicated in the
27
Marine Protest x x x. We disagree.
The records sufficiently support VSIs contention that
the ship used the old tarpaulin, only in addition to the new
one used primarily to make the ships hatches watertight.
The foregoing are clear from the marine protest of the
master of the MV Vlasons I, Antonio C. Dumlao, and the
deposition of the ships boatswain, Jose Pascua. The salient
portions of said marine protest read:
x x x That the M/V VLASONS I departed Iligan City on or about
0730 hours of August 8, 1974, loaded with approximately 2,487.9
tons of steel plates and tin plates consigned to National Steel
Corporation; that before departure, the vessel was rigged, fully
equipped and cleared by the authorities; that on or about August 9,
1974, while in the vicinity of the western part of Negros and Panay,
Page 27 of 42
2/2/16, 12:19 AM
we encountered very rough seas and strong winds and Manila office
was advised by telegram of the adverse weather conditions
encountered; that in the morning of August 10, 1974, the weather
condition changed to worse and strong winds and big waves
continued pounding the vessel at her port side causing sea water to
overflow on deck andhatch (sic) covers and which caused the first
layer of the canvass covering to give way while the new canvass
covering still holding on;
That the weather condition improved when we reached Dumali
Point protected by Mindoro; that we re-secured the canvass
covering back to position; that in the afternoon of August 10, 1974,
while entering Maricaban Passage, we were again exposed to
moderate seas and heavy rains; that while approaching Fortune
Island, we encountered again rough seas, strong winds and big
waves which
_______________
26
Petition of NSC, p. 24; rollo (G.R. No. 112287), p. 31.
27
Memorandum of VSI, p. 22.

69
69

caused the same canvass to give way and leaving the new canvass
holding on;
28
xxx
xxx
x x x
And the relevant portions of Jose Pascuas deposition are as

follows:
q What is the purpose of the canvas cover?
a
So that the cargo would not be soaked with water.
And will you describe how the canvas cover was

secured on the hatch opening?
WITNESS
a
It was placed flat on top of the hatch cover, with a little

canvas flowing over the sides and we place[d] a flat bar
over the canvas on the side of the hatches and then we
Page 28 of 42
2/2/16, 12:19 AM
place[d] a stopper so that the canvas could not be

removed.
ATTY. DEL ROSARIO
q
And will you tell us the size of the hatch opening? The
length and the width of the hatch opening.
Forty-five feet by thirty-five feet, sir.

xxx
xxx
xxx
How was the canvas supported in the middle of the

hatch opening?
There is a hatch board.
ATTY. DEL ROSARIO

q
What is the hatch board made of?
It is made of wood, with a handle.
And aside from the hatch board, is there any other

material there to cover the hatch?
There is a beam supporting the hatch board.
What is this beam made of?
It is made of steel, sir.
Is the beam that was placed in the hatch opening

covering the whole hatch opening?
_______________
28
Marine Protest, Record of Exhibits Folder No. 2, p. 55.

70
70

a No, sir.
q How many hatch beams were there placed across the
opening.
a There are five beams in one hatch opening.
ATTY. DEL ROSARIO
Page 29 of 42
2/2/16, 12:19 AM
q And on top of the beams you said there is a hatch board.

How many pieces of wood are put on top?
a Plenty, sir, because there are several pieces on top of the
hatch beam.
q And is there a space between the hatch boards?
a There is none, sir.
q They are tight together?
a Yes, sir.
q How tight?
a Very tight, sir.
q Now, on top of the hatch boards, according to you, is the
canvas cover. How many canvas covers?
29
a Two, sir.
That due diligence was exercised by the officers and the

crew of the MV Vlasons I was further demonstrated by the
fact that, despite encountering rough weather twice, the
new tarpaulin did not give way and the ships hatches and
cargo holds remained waterproof. As aptly stated by the
Court of Appeals, x x x we find no reason not to sustain
the conclusion of the lower court based on overwhelming
evidence, that the MV VLASONS I was seaworthy when it
undertook the voyage on August 8, 1974 carrying on board
thereof plaintiff-appellants shipment of 1,677 skids of
tinplates and 92 packages of hot rolled sheets or a total of
1,769 packages from NSCs pier in Iligan City arriving
safely at North
Harbor, Port Area, Manila, on August 12,
30
1974; x x x.
_______________
29
TSN, pp. 13-16, November 28, 1977.
30
57.
71
71

Page 30 of 42
2/2/16, 12:19 AM
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. Vicente Angliongto, an officer of VSI, testified thus:
ATTY. ZAMORA:
Q Now, during your testimony on November 5, 1979, you
stated on August 14 you went on board the vessel upon
notice from the National Steel Corporation in order to
conduct the inspection of the cargo. During the course
of the investigation, did you chance to see the
discharging operation?
WITNESS:
A Yes, sir, upon my arrival at the vessel, I saw some of the
tinplates already discharged on the pier but majority of
the tinplates were inside the hall, all the hatches were
opened.
Q In connection with these cargoes which were unloaded,
where is the place.
A At the Pier.
Q What was used to protect the same from weather?
ATTY. LOPEZ:
We object, your Honor, this question was already asked.
This particular matter. . . the transcript of stenographic
notes shows the same was covered in the direct
examination.
ATTY. ZAMORA:
Precisely, your Honor, we would like to go on detail, this
is the serious part of the testimony.
COURT:
All right, witness may answer.
Page 31 of 42
2/2/16, 12:19 AM
72
72

ATTY. LOPEZ:
Q What was used in order to protect the cargo from the
weather?
A A base of canvas was used as cover on top of the
tinplates, and tents were built at the opening of the
hatches.
Q You also stated that the hatches were already opened
and that there were tents constructed at the opening of
the hatches to protect the cargo from the rain. Now, will
you describe [to] the Court the tents constructed.
A The tents are just a base of canvas which look like a
tent of an Indian camp raise[d] high at the middle with
the whole side separated down to the hatch, the size of
the hatch and it is soaks [sic] at the middle because of
those weather and this can be used only to temporarily
protect the cargo from getting wet by rains.
Q Now, is this procedure adopted by the stevedores of
covering tents proper?
A No, sir, at the time they were discharging the cargo,
there was a typhoon passing by and the hatch tent was
not good enough to hold all of it to prevent the water
soaking through the canvas and enter the cargo.
Q In the course of your inspection, Mr. Anglingto [sic], did
you see in fact the water enter and soak into the canvas
and tinplates.
A Yes, sir, the second time I went there, I saw it.
Q As owner of the vessel, did you not advise the National
Steel Corporation [of] the procedure adopted by its
stevedores in discharging the cargo particularly in this
tent covering of the hatches?
A Yes, sir, I did the first time I saw it, I called the
attention of the stevedores but the stevedores did not
mind at all, so, I called the attention of the
representative of the National Steel but nothing was
Page 32 of 42
done, just the same. Finally, I wrote a letter to them.
2/2/16, 12:19 AM
31
NSC attempts to discredit the testimony of Angliongto by

questioning his failure to complain immediately about the
_______________
31
TSN, pp. 7-8, September 1, 1980.

73
73

stevedores negligence on the first day of unloading,
pointing out that
he wrote his letter to petitioner only
32
seven days later. The Court is not persuaded. Angliongtos
candid answer in his aforequoted testimony satisfactorily
explained the delay. Seven days lapsed because he first
called the attention of the stevedores, then the NSCs
representative, about the negligent and defective procedure
adopted in unloading the cargo. This series of actions
constitutes a reasonable response in accord with common
sense and ordinary human experience. Vicente Angliongto
could not be blamed for calling the stevedores attention
first and then the NSCs representative on location before
formally informing NSC of the negligence he had observed,
because he was not responsible for the stevedores or the
unloading operations. In fact, he was merely expressing
concern for NSC which was ultimately responsible for the
stevedores it had hired and the performance of their task to
unload the cargo.
We see no reason to reverse the trial and the appellate
courts findings and conclusions on this point, viz:
In the THIRD assigned error, [NSC] claims that the trial court
erred in finding that the stevedores hired by NSC were negligent in
the unloading of NSCs shipment. We do not think so. Such
negligence according to the trial court is evident in the stevedores
hired by [NSC], not closing the hatch of MV VLASONS I when
rains occurred during the discharging of the cargo thus allowing
rain water and seawater spray to enter the hatches and to drift to
Page 33 of 42
2/2/16, 12:19 AM
and fall on the cargo. It was proven that the stevedores merely set
up temporary tents or canvas to cover the hatch openings when it
rained during the unloading operations so that it would be easier
for them to resume work after the rains stopped by just removing
said tents or canvass. It has also been shown that on August 20,
1974, VSI President Vicente Angliongto wrote [NSC] calling
attention to the manner the stevedores hired by [NSC] were
discharging the cargo on rainy days and the improper closing of the
hatches which allowed continuous heavy rain water to leak through
and drip to the tinplates covers and [Vicente Angliongto] also
suggesting that due to four (4) days continuous rains with strong
winds that the hatches
_______________
32
Memorandum of NSC, p. 32.

74
74

be totally closed down and covered with canvas and the hatch tents
lowered. (Exh. 13). This letter was received by [NSC] on 22 August
1974 while discharging operations were still going on (Exhibit 1333
A).
The fact that NSC actually accepted and proceeded to

remove the cargo from the ship during unfavorable weather
will not make VSI liable for any damage caused thereby. In
passing, it may be noted that the NSC may seek
indemnification, subject to the laws on prescription, from
the stevedoring company at fault in the discharge
operations. A stevedore company engaged in discharging
cargo x x x has the duty to load the cargo x x x in a prudent
manner, and it is liable for injury to, or loss of, cargo caused
by its negligence x x x and where the officers and members
and crew of the vessel do nothing and have no
responsibility in the discharge of cargo by stevedores x x x
the vessel is not liable for loss of, or damage to,34 the cargo
caused by the negligence of the stevedores x x x as in the
instant case.
Page 34 of 42
2/2/16, 12:19 AM
Do Tinplates Sweat?
The trial court relied on the testimony of Vicente
Angliongto in finding that x x x tinplates sweat by
themselves when packed even without being in contact
with water from outside
especially when the weather is bad
35
or raining x x x. The Court of Appeals affirmed the trial
courts finding.
A discussion of this issue appears inconsequential and
unnecessary. As previously discussed, the damage to the
tinplates was occasioned not by airborne moisture but by
contact with rain and seawater which the stevedores
negligently allowed to seep in during the unloading.
_______________
33
59.
34
80 C.J.S. 1018.
35
Decision of the Regional Trial Court, p. 3; record, p. 453.

75
75
Second Issue: Effect of NSCs Failure to Insure the

Cargo
The obligation of NSC to insure the cargo stipulated in the
Contract of Voyage Charter Hire is totally separate and
distinct from the contractual or statutory responsibility
that may be incurred by VSI for damage to the cargo
caused by the willful negligence of the officers and the crew
of MV Vlasons I. Clearly, therefore, NSCs failure to insure
the cargo will not affect its right, as owner and real party
in interest, to file an action against VSI for damages caused
by the latters willful negligence. We do not find anything
in the charter party that would make the liability of VSI for
damage to the cargo contingent on or affected in any
manner by NSCs obtaining an insurance over the cargo.
Page 35 of 42
2/2/16, 12:19 AM
Third Issue: Admissibility of Certificates Proving

Seaworthiness
NSCs contention that MV Vlasons I was not seaworthy is
anchored on the alleged inadmissibility of the certificates of
seaworthiness offered in evidence by VSI. The said
certificates include the following:
1. Certificate of Inspection of the Philippine Coast
Guard at Cebu
2. Certificate of Inspection from the Philippine Coast
Guard
3. International Load Line Certificate from the
Philippine Coast Guard
4. Coastwise License from the Board of Transportation
5. Certificate of Approval
for Conversion issued by the
36
Bureau of Customs
_______________
36
Comment of VSI, pp. 11-14; rollo (G.R. No. 112287), pp. 250-253.
76
76

NSC argues that the certificates are hearsay for not having
been presented in accordance with the Rules of Court. It
points out that Exhibits 3, 4 and 11 allegedly are not
written records or acts of public officers; while Exhibits 5,
6, 7, 8, 9, 11 and 12 are not evidenced by official
publications or certified true copies as required
by
37
Sections 25 and 26, Rule 132, of the Rules of Court.
After a careful examination of these exhibits, the Court
rules that Exhibits 3, 4, 5, 6, 7, 8, 9 and 12 are
inadmissible, for they have not been properly offered as
evidence. Exhibits 3 and 4 are certificates issued by private
parties, but they have not been proven by one who saw the
writing executed, or by evidence of the genuineness of the
Page 36 of 42
2/2/16, 12:19 AM
handwriting of the maker, or by a subscribing witness.

Exhibits 5, 6, 7, 8, 9, and 12 are photocopies, but their
admission under the best evidence rule have not been
demonstrated.
We find, however, that Exhibit 11 is admissible under a
well-settled exception to the hearsay rule per Section 44 of
Rule 130 of the Rules of Court, which provides that
(e)ntries in official records made in the performance of a
duty by a public officer of the Philippines, or by a person in
the performance of a duty specially enjoined by38law, are
prima facie evidence of the facts therein stated. Exhibit
11 is an original certificate of the Philippine Coast Guard
in Cebu issued by Lieutenant Junior Grade Noli C. Flores
to the effect that the vessel VLASONS I was drylocked x
x x and PCG Inspectors were sent on board for inspection x
x x. After completion of drydocking and duly inspected by
PCG Inspectors, the vessel VLASONS I, a cargo vessel, is
in seaworthy condition, meets all requirements, fitted and
equipped for trading as a cargo vessel, was cleared by the
Philippine Coast Guard and sailed for Cebu Port on July
10, 1974. (sic) NSCs claim, therefore, is obviously
misleading and erroneous.
_______________
37
Memorandum of NSC, p. 14. See also Petition of NSC, pp. 17-18;
rollo (G.R. No. 112287), pp. 24-25.

38
See also Harverton Shipping Ltd. vs. NLRC, 135 SCRA 685, April
15, 1985, per Melencio-Herrera, J.

77
77

At any rate, it should be stressed that that NSC has the
burden of proving that MV Vlasons I was not seaworthy. As
observed earlier, the vessel was a private carrier and, as
such, it did not have the obligation of a common carrier to
show that it was seaworthy. Indeed, NSC glaringly failed to
discharge its duty of proving the willful negligence of VSI
in making the ship seaworthy resulting in damage to its
Page 37 of 42
2/2/16, 12:19 AM
cargo. Assailing the genuineness of the certificate of

seaworthiness is not sufficient proof that the vessel was not
seaworthy.
Fourth Issue: Demurrage and Attorneys Fees
The contract of voyage charter hire provides inter alia:
x x x
xxx
xxx
2. Cargo: Full cargo of steel products of not less than 2,500 MT,
10% more or less at Masters option.
xxx
xxx
xxx
6. Loading/Discharging Rate: 750 tons per WWDSHINC.
39
7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.
The Court defined demurrage in its strict sense as the

compensation provided for in the contract of affreightment
for the detention of the vessel beyond the laytime or that
period40 of time agreed on for loading and unloading of
cargo. It is given to compensate the shipowner for the
nonuse of the vessel. On the other hand, the following is
well-settled:
Laytime runs according to the particular clause of the charter
party. x x x If laytime is expressed in running days, this means
days when the ship would be run continuously, and holidays are not
expected. A qualification of weather permitting excepts only those
_______________
39
Contract of Voyage Charter Hire, p. 1; Record Folder No. 2, p. 39.
40
Magellan Mftg. Marketing Corp. vs. Court of Appeals, 201 SCRA
102, 119, August 22, 1991, per Regalado, J.

78
78

days when bad

41
contemplated.
weather
reasonably
prevents
the
work
Page 38 of 42
2/2/16, 12:19 AM
In this case, the contract of voyage charter hire provided

for a four-day laytime; it also qualified laytime as
WWDSHINC or 42weather, working days Sundays and
holidays included. The running of laytime was thus made
subject to the weather, and would cease to run in the event
unfavorable
weather interfered with the unloading of
43
cargo. Consequently, NSC may not be held liable for
demurrage as the four-day laytime allowed it did not lapse,
having been tolled by unfavorable weather condition in
view of the WWDSHINC qualification agreed upon by the
parties. Clearly, it was error for the trial court and the
Court of Appeals to have found and affirmed respectively
that NSC incurred eleven days of delay in unloading the
cargo. The trial court arrived at this erroneous finding by
subtracting from the twelve days, specifically August 13,
1974 to August 24, 1974, the only day of unloading
unhampered by unfavorable weather or rain, which was
August 22, 1974. Based on our previous discussion, such
finding is a reversible error. As mentioned, the respondent
appellate court also erred in ruling that NSC was liable to
VSI for demurrage, even if it reduced the amount by half.
Attorneys Fees
VSI assigns as error of law the Court of Appeals deletion of
the award of attorneys fees. We disagree. While VSI was
compelled to litigate to protect its rights, such fact by itself
will not justify an award of attorneys fees under Article
2208 of the Civil Code when x x x no sufficient showing of
bad
_______________
41
Ibid.
42
Memorandum of NSC, p. 10. See also Comment of NSC, p. 3; rollo
(G.R. No. 112350), p. 82.

43
The Statement of Facts of Unloading (Record, pp. 49-52) shows that
throughout the time of unloading from August 13, 1974 to August 24,
1974, it was only on August 22, 1974 that there was no heavy rain.
79
Page 39 of 42
2/2/16, 12:19 AM
79

faith would be reflected in a partys persistence in a case
other than an erroneous
conviction of the righteousness of
44
his cause x x x. Moreover, attorneys fees may not be
awarded to a party for the reason alone that the judgment
rendered was favorable to the latter, as this is tantamount
to imposing a premium on ones right 45to litigate or seek
judicial redress of legitimate grievances.
Epilogue
At bottom, this appeal really hinges on a factual issue:
when, how and who caused the damage to the cargo?
Ranged against NSC are two formidable truths. First, both
lower courts found that such damage was brought about
during the unloading process when rain and seawater
seeped through the cargo due to the fault or negligence of
the stevedores employed by it. Basic is the rule that factual
findings of the trial court, when affirmed by the Court of
Appeals, are binding on the Supreme Court. Although
there are settled exceptions, NSC has not satisfactorily
shown that this case is one of them. Second, the agreement
between the partiesthe Contract of Voyage Charter Hire
placed the burden of proof for such loss or damage upon
the shipper, not upon the shipowner. Such stipulation,
while disadvantageous to NSC, is valid because the parties
entered into a contract of private charter, not one of
common carriage. Basic too is the doctrine that courts
cannot relieve a party from the effects of a private contract
freely entered into, on the ground that it is allegedly onesided or unfair to the plaintiff. 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
_______________
44
Servicewide Specialists, Incorporated vs. Court of Appeals, 256
Page 40 of 42
2/2/16, 12:19 AM
SCRA 649, 655, May 8, 1996, per Romero, J.; citing Gonzales vs. National
Housing Corporation, et al., 94 SCRA 786, December 18, 1979.
45
Ibid., p. 656.
80
80

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.
WHEREFORE, premises considered, the instant
consolidated petitions are hereby DENIED. The questioned
Decision of the Court of Appeals is AFFIRMED with the
MODIFICATION that the demurrage awarded to VSI is
deleted. No pronouncement as to costs.
SO ORDERED.
Narvasa (C.J., Chairman), Romero, Melo and
Francisco, JJ., concur.
Consolidated petitions denied;
affirmed with modification.
Questioned
decision
Note.A common carrier is liable as such to a stevedore

who was hired by a shipper to help load cargo, even if such
stevedore was not himself a passenger. (Sulpicio Lines, Inc.
o0o
81
Page 41 of 42
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Page 42 of 42
312
2/1/16, 11:45 PM
FGU Insurance Corporation vs. G.P. Sarmiento Trucking

Corporation
*
G.R. No. 141910. August 6, 2002.
FGU INSURANCE CORPORATION, petitioner, vs. G.P.

SARMIENTO
TRUCKING
CORPORATION
and
LAMBERT M. EROLES, respondents.
Transportation; Common Carriers; A trucking company which
is an exclusive contractor and hauler of another company, rendering
or offering its services to no other individual or entity, cannot be
considered a common carrier.On the first issue, the Court finds
the conclusion of the trial court and the Court of Appeals to be
amply justified. GPS, being an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or
_______________
*
FIRST DIVISION.
313
VOL. 386, AUGUST 6, 2002
313

Corporation
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
http://central.com.ph/sfsreader/session/000001529d81399aa6d009af003600fb002c009e/p/ASM101/?username=Guest
Page 1 of 15
2/1/16, 11:45 PM
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.
Same; Contracts; Breach of Contracts; In culpa contractual, the
mere proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief;
Indeed, agreements can accomplish little, either for their makers or
for society, unless they are made the basis for actionthe effect of
every infraction is to create a new duty, that is, to make recompense
to the one who has been injured by the failure of another to observe
his contractual obligation unless he can show extenuating
circumstances, like proof of his exercise of due diligence or of the
attendance of fortuitous event, to excuse him from his ensuing
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. The
remedy serves to preserve the interests of the promisee that may
include his expectation interest, which is his interest in having
the benefit of his bargain by being put in as good a position as he
would have been in had the contract been performed, or his
reliance interest, which is his interest in being reimbursed for loss
caused by reliance on the contract by being put in as good a position
as he would have been in had the contract not been made; or his
restitution interest, which is his interest in having restored to him
any benefit that he has conferred on the other party. Indeed,
agreements can accomplish little, either for their makers or for
society, unless they are made the basis for action. The effect of every
infraction is to create a new duty, that is, to make recompense to
the one who has been injured unless he can show extenuating
circumstances, like proof of his exercise of due diligence (normally
that of the diligence of a good father of a family or, exceptionally by
Page 2 of 15
2/1/16, 11:45 PM
stipulation or by law such as in the case of common carriers, that of

extraordinary diligence) or of the attendance of fortuitous event, to
excuse him from his ensuing liability.
314
314

Corporation
Same; Same; Same; Quasi-Delicts; Torts; The driver, not being a

party to the contract of carriage, may not be held liable under the
agreementaction against him can only be based on culpa
aquiliana, which, unlike culpa contractual, would require the
claimant for damages to prove negligence or fault on his part.
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
petitioners 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. Petitioners 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.
Same; Same; Same; Same; Same; Res Ipsa Loquitur; Requisites;
Words and Phrases; Res ipsa loquitur is not a rule of substantive
law and, as such, it does not create an independent ground of
liabilityinstead, it is regarded as a mode of proof, and relieves the
plaintiff of the burden of producing specific proof of negligence.A
word in passing. Res ipsa loquitur, a doctrine being invoked by
petitioner, holds a defendant liable where the thing which caused
the injury complained of is shown to be under the latters
management and the accident is such that, in the ordinary course of
things, cannot be expected to happen if those who have its
management or control use proper care. It affords reasonable
evidence, in the absence of explanation by the defendant, that the
accident arose from want of care. It is not a rule of substantive law
and, as such, it does not create an independent ground of liability.
Page 3 of 15
2/1/16, 11:45 PM
Instead, it is regarded as a mode of proof, or a mere procedural

convenience since it furnishes a substitute for, and relieves the
plaintiff of, the burden of producing specific proof of negligence. The
maxim simply places on the defendant the burden of going forward
with the proof.Resort to the doctrine, however, may be allowed only
when (a) the event is of a kind which does not ordinarily occur in
the absence of negligence; (b) other responsible causes, including
the conduct of the plaintiff and third persons, are sufficiently
eliminated by the evidence; and (c) the indicated negligence is
within the scope of the defendants duty to the plaintiff. Thus, it is
not applicable when an unexplained accident may be attributable to
one of several causes, for some of which the defendant could not be
responsible.
315
VOL. 386, AUGUST 6, 2002
315

Corporation
Same; Same; Same; Same; Same; Same; While res ipsa loquitur
generally finds relevance whether or not a contractual relationship
exists between the plaintiff and the defendantfor the inference of
negligence arises from the circumstances and nature of the
occurrence and not from the nature of the relation of the partiesthe
requirement that responsible causes other than those due to
defendants conduct must first be eliminated, for the doctrine to
apply, should be understood as being confined only to cases of pure
(non-contractual) tort since obviously the presumption of negligence
in culpa contractual immediately attaches by a failure of the
covenant or its tenor.Res ipsa loquitur generally finds relevance
whether or not a contractual relationship exists between the
plaintiff and the defendant, for the inference of negligence arises
from the circumstances and nature of the occurrence and not from
the nature of the relation of the parties. Nevertheless, the
requirement that responsible causes other than those due to
defendants conduct must first be eliminated, for the doctrine to
apply, should be understood as being confined only to cases of pure
(non-contractual) tort since obviously the presumption of negligence
in culpa contractual, as previously so pointed out, immediately
attaches by a failure of the covenant or its tenor. In the case of the
Page 4 of 15
2/1/16, 11:45 PM
truck driver, whose liability in a civil action is predicated on culpa

acquiliana, while he admittedly can be said to have been in control
and management of the vehicle which figured in the accident, it is
not equally shown, however, that the accident could have been
exclusively due to his negligence, a matter that can allow, forthwith,
res ipsa loquitur to work against him.
Actions; Pleadings and Practice; Demurrer to Evidence; If a
demurrer to evidence is granted but on appeal the order of dismissal
is reversed, the movant shall be deemed to have waived the right to
present evidence.If a demurrer to evidence is granted but on
appeal the order of dismissal is reversed, the movant shall be
deemed to have waived the right to present evidence. Thus,
respondent corporation may no longer offer proof to establish that it
has exercised due care in transporting the cargoes of the assured so
as to still warrant a remand of the case to the trial court.
PETITION for certiorari of a decision of the Court of

Appeals.
Dollete, Blanco, Ejercito and Associates for petitioner.
Marbibi & Associates Law Office for private
respondents.
316
316

Corporation
VITUG, J.:
G.P. Sarmiento Trucking Corporation (GPS) undertook to
deliver on 18 June 1994 thirty (30) units of Condura S.D.
white refrigerators aboard one of its Isuzu truck, 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
Page 5 of 15
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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 P204,450.00. 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
Regional Trial Court, Branch 66, of Makati City. In its
answer, 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.
The issues having thus been joined, FGU presented its
evidence, establishing the extent of damage to the cargoes
and the amount it had paid to the assured. GPS, instead of
submitting its 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.
1
The trial court, in its order of 30 April 1996, granted the
motion to dismiss, explaining thusly:
Under Section 1 of Rule 131 of the Rules of Court, it is provided
that Each party must prove his own affirmative allegation, x x x.
_______________
1
Rollo, p. 14.
317
VOL. 386, AUGUST 6, 2002
317

Corporation
In the instant case, plaintiff did not present any single evidence
that would prove that defendant is a common carrier.
x x x
xxx
xxx
Page 6 of 15
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Accordingly, the application of the law on common carriers is

not warranted and the presumption of fault or negligence on the
part of a common carrier in case of loss, damage or deterioration of
goods during transport under 1735 of the Civil Code is not availing.
Thus, the laws governing the contract between the owner of the
cargo to whom the plaintiff was subrogated and the owner of the
vehicle which transports the cargo are the laws on obligation and
contract of the Civil Code as well as the law on quasi delicts.
Under the law on obligation and contract, negligence or fault is
not presumed. The law on quasi delict provides for some
presumption of negligence but only upon the attendance of some
circumstances. Thus, Article 2185 provides:
Art. 2185. 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 any traffic regulation.
Evidence for the plaintiff shows no proof that defendant was

violating any traffic regulation. Hence, the presumption of
negligence is not obtaining.
Considering that plaintiff failed to adduce evidence that
defendant is a common carrier and defendants driver was the one
negligent, defendant cannot be made liable for the damages of the
2
subject cargoes.
The subsequent
motion for reconsideration having been
3
denied, plaintiff interposed an appeal to the Court of
Appeals, contending that the trial court had erred (a) in
holding that the appellee corporation was not a common
carrier defined under the law and existing jurisprudence;
and (b) in dismissing the complaint on a demurrer to
evidence.
The Court of Appeals rejected the appeal of petitioner
and ruled in favor of GPS.
The appellate court, in its
4
decision of 10 June 1999, discoursed, among other things,
that
_______________
2
Rollo, pp. 14-15.
Rollo, p. 17.
Rollo, p. 20.
318
Page 7 of 15
318
2/1/16, 11:45 PM

Corporation
x x x in order for the presumption of negligence provided for under
the law governing common carrier (Article 1735, Civil Code) to
arise, the appellant must first prove that the appellee is a common
carrier. Should the appellant fail to prove that the appellee is a
common carrier, the presumption would not arise; consequently, the
appellant would have to prove that the carrier was negligent.
x x x
xxx
xxx
Because it is the appellant who insists that the appellees can
still be considered as a common carrier, despite its limited
clientele, (assuming it was really a common carrier), it follows that
it (appellant) has the burden of proving the same. It (plaintiffappellant) must establish his case by a preponderance of evidence,
which means that the evidence as a whole adduced by one side is
superior to that of the other. (Summa Insurance Corporation vs.
Court of Appeals, 243 SCRA 175). This, unfortunately, the appellant
failed to dohence, the dismissal of the plaintiffs complaint by the
trial court is justified.
x x x
xxx
xxx
Based on the foregoing disquisitions and considering the
circumstances that the appellee trucking corporation has been its
exclusive contractor, hauler since 1970, defendant has no choice but
to comply with the directive of its principal, the inevitable
conclusion is that the appellee is a private carrier.
x x x
xxx
xxx
x x x the lower court correctly ruled that the application of the
law on common carriers is not warranted and the presumption of
fault or negligence on the part of a common carrier in case of loss,
damage or deterioration of good[s] during transport under [article]
1735 of the Civil Code is not availing. x x x.
Finally, We advert to the long established rule that conclusions
and findings of fact of a trial court are entitled to great weight on
appeal and should not be disturbed unless for strong and valid
5
reasons.
Petitioners
motion for reconsideration
was likewise
6
7
denied; hence, the instant petition, raising the following
issues:
Page 8 of 15
2/1/16, 11:45 PM
_______________
5
Rollo, pp. 24-28.
Rollo, p. 32.
Rollo, p. 3.
319
VOL. 386, AUGUST 6, 2002
319

Corporation
I
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A
COMMON CARRIER AS DEFINED UNDER THE LAW AND
EXISTING JURISPRUDENCE.
II
WHETHER RESPONDENT GPS, EITHER AS A COMMON
CARRIER OR A PRIVATE CARRIER, MAY BE PRESUMED TO
HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK
TO TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED
WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.
III
WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS
APPLICABLE IN THE INSTANT CASE.
On the first issue, the Court finds the conclusion of the

trial court and the Court of Appeals to be amply justified.
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 8hire or compensation,
offering their services to the public, whether to the public
in general or to a limited
clientele in particular, but never
9
on an exclusive basis. The true test of a common carrier is
the carriage of passengers or goods, providing space for
Page 9 of 15
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those who opt to

avail themselves of its transportation
10
service for a fee. Given accepted standards, GPS scarcely
falls within the term common carrier.
The above conclusion nothwithstanding, GPS cannot
escape from liability.
_______________
8
Sec. 13 [b], Public Service Act as amended; see also Guzman vs.
Court of Appeals, G.R. L-47822, 22 December 1988, 168 SCRA 612.

10
National Steel Corporation vs. Court of Appeals, 283 SCRA 45
(1997).
320
320

Corporation
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 11 justify, prima facie, a
corresponding right of relief.
The law, recognizing the
12
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
13
thereof. A breach upon the contract confers upon the
injured party a valid cause for recovering that which may
have been lost or suffered. The remedy serves to preserve
the interests of the promisee that may include his
expectation interest, which is his interest in having the
benefit of his bargain by being put in as good a position as
he would have been in had the contract been performed, or
his reliance interest, which is his interest in being
reimbursed for loss caused by reliance on the contract by
being put in as good a position as he would have been in
had the contract not been made; or his restitution
interest, which is his interest in having restored to him
14
any benefit that he has conferred on the other party.
Indeed, agreements can accomplish little, either for their
Page 10 of 15
2/1/16, 11:45 PM
makers15 or for society, unless they are made the basis for
action. The effect of every infraction is to create a new
duty, that
is, to make recompense to the one who has been
16
injured unless he can show extenuating circumstances,
like proof of his exercise of due diligence (normally that of
the diligence of a good father of a family or, exceptionally
by stipulation or by law such as in the case of common
carriers, that of extraordinary diligence) or of the
attendance of fortuitous event, to excuse him from his
ensuing liability.
Respondent trucking corporation recognizes the
existence of a contract of carriage between it and
petitioners assured, and ad_______________
11
Calalas vs. Court of Appeals, 332 SCRA 356 (2000); Sabena Belgian
World Airlines vs. Court of Appeals, 255 SCRA 38 (1996).

12
See Articles 1159, 1308, 1315, 1356, Civil Code.
13
Anson on Contracts, 1939, p. 424; 17A Am Jur 2d, p. 728 citing
Parks vs. Parks, 187 P2d 145.

14
Restatement, Second, Contracts, 344.
15
Fuller and Purdue, The Reliance Interest in Contract Damages, 46
Yale L.J. 61 (1936).

16
Richardson on Contracts, 1951, p. 309.

321
VOL. 386, AUGUST 6, 2002
321

Corporation
mits 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 obligationin
this case, the delivery of the goods in its custody to the
place of destinationgives 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
Page 11 of 15
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to pay petitioner. The driver, not-being a party to the

contract of carriage between petitioners 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 who17have 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. Petitioners civil
action against the driver can only be based on culpa
aquiliana, which, unlike culpa contractual, would require
the claimant for damages18 to prove negligence or fault on
the part of the defendant.
A word in passing. Res ipsa loquitur, a doctrine being
invoked by petitioner, holds a defendant liable where the
thing which caused the injury complained of is shown to be
under the latters management and the accident is such
that, in the ordinary course of things, cannot be expected to
happen if those who have its management or control use
proper care. It affords reasonable evidence, in the absence
of explanation by 19the defendant, that the accident arose
from want of care. It is not a rule of substantive law and,
as such, it does not create an independent ground of
liability. Instead, it is regarded as a mode of proof, or a
mere procedural convenience since it furnishes a substitute
for, and relieves the plaintiff of, the burden of producing
specific proof of negligence. The maxim simply places on
the defendant the burden of going forward with the
_______________
17
18
Calalas vs. Court of Appeals, supra; See Article 2176, Civil Code.
19
Africa vs. Caltex (Phils.) Inc., 16 SCRA 448 (1966); Layugan vs.
Intermediate Appellate Court, 167 SCRA 376 (1988).

322
322

Corporation
20
proof.
Resort to the doctrine, however, may be allowed
Page 12 of 15
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only when (a) the event is of a kind which does not

ordinarily occur in the absence of negligence; (b) other
responsible causes, including the conduct of the plaintiff
and third persons, are sufficiently eliminated by the
evidence; and (c) the indicated negligence is21 within the
scope of the defendants duty to the plaintiff. Thus, it is
not applicable when an unexplained accident may be
attributable to one of several causes,
for some of which the
22
defendant could not be responsible.
Res ipsa loquitur generally finds relevance whether or
not a contractual relationship exists between the plaintiff
and the defendant, for the inference of negligence arises
from the circumstances and nature of the occurrence and
23
not from the nature of the relation of the parties.
Nevertheless, the requirement that responsible causes
other than those due to defendants conduct must first be
eliminated, for the doctrine to apply, should be understood
as being confined only to cases of pure (non-contractual)
tort since obviously the presumption of negligence in culpa
contractual, as previously so pointed out, immediately
attaches by a failure of the covenant or its tenor. In the
case of the truck driver, whose liability in a civil action is
predicated on culpa acquiliana, while he admittedly can be
said to have been in control and management of the vehicle
which figured in the accident, it is not equally shown,
however, that the accident could have been exclusively due
to his negligence, a matter that can allow, forthwith, res
ipsa loquitur to work against him.
If a demurrer to evidence is granted but on appeal the
order of dismissal is reversed, the movant shall be24deemed
to have waived the right to present evidence. Thus,
respondent corporation may no longer offer proof to
establish that it has exercised due care in
_______________
20
Ramos vs. Court of Appeals, 321 SCRA 600 (1999).
21
Sangco, Torts and Damages V.1, 1993, p. 29, citing 58 Am Jur 2d,
pp. 56-58. See Ramos vs. Court of Appeals, supra.

22
Words and Phrases Vol. 37, p. 483.
23
57B Am Jur 2d, p. 496.
24
Section 1, Rule 35, Rules of Court; Section 1, Rule 33, 1997 Rules of
Page 13 of 15
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Civil Procedure.
323
VOL. 386, AUGUST 6, 2002
323

Corporation
transporting the cargoes of the assured so as to still
warrant a remand of the case to the trial court.
WHEREFORE, the order, dated 30 April 1996, of the
Regional Trial Court, Branch 66, of Makati City, and the
decision, dated 10 June 1999, of the Court of Appeals, are
AFFIRMED only insofar as respondent Lambert M. Eroles
is concerned, but said assailed order of the trial court and
decision of the appellate court are REVERSED as regards
G.P. Sarmiento Trucking Corporation which, instead, is
hereby ordered to pay FGU Insurance Corporation the
value of the damaged and lost cargoes in the amount of
P204,450.00. No costs.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Kapunan, YnaresSantiago and Austria-Martinez, JJ., concur.
Judgment affirmed in part and reversed in part.
Notes.While common carriers are required to observe
extraordinary diligence and are presumed at fault, no such
presumption applies to private carriers. (Planters Products,
Inc. vs. Court of Appeals, 226 SCRA 476 [1993])
In quasi-delict, the negligence or fault should be clearly
established because it is the basis of the action, whereas in
breach of contract, the action can be prosecuted merely by
proving the existence of the contract and the fact that the
obligor, in this case the common carrier, failed to transport
his passenger safely to his destination. (Calalas vs. Court of
Appeals, 332 SCRA 356 [2000])
The standard of extraordinary diligence is peculiar to
common carriers. (Reyes vs. Sisters of Mercy Hospital, 341
SCRA 760 [2000])
Page 14 of 15
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o0o
324
Page 15 of 15
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VOL. 315, SEPTEMBER 28, 1999
339
Loadstar Shipping Co., Inc. vs. Court of Appeals

*
G.R. No. 131621. September 28, 1999.
LOADSTAR SHIPPING CO., INC., petitioner, vs. COURT

OF APPEALS and THE MANILA INSURANCE CO., INC.,
respondents.
Contracts; Common Carriers; Damages; The law imposes duties
and liabilities upon common carriers for the safety and protection of
those who utilize their services and the law cannot allow a common
carrier to render such duties and liabilities merely facultative by
simply failing to obtain the necessary permits and authorizations.
The Court of Appeals referred to the fact that private respondent
held no certificate of public convenience, and concluded he was not
a common carrier. This is palpable error. 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
requirements. The business of a common carrier impinges directly
and intimately upon the safety and well being and property of those
members of the general community who happen to deal with such
carrier. The law imposes duties and liabilities upon common
carriers for the safety and protection of those who utilize their
http://central.com.ph/sfsreader/session/000001529d83a7c7e1ee567c003600fb002c009e/p/APT519/?username=Guest
Page 1 of 16
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Same; Same; Same; 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.Moving on to the second
assigned error, we find that the M/V Cherokee was not seaworthy
when it embarked on its voyage on 19 November 1984. The vessel
_______________
*
FIRST DIVISION.
340
340

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.
Same; Same; Same; Since it was remiss in the performance of
its duties, LOADSTAR cannot hide behind the limited liability
doctrine to escape responsibility for the loss of the vessel and its
cargo.Neither do we agree with LOADSTARs argument that the
limited liability theory should be applied in this case. The doctrine
of limited liability does not apply where there was negligence on the
part of the vessel owner or agent. LOADSTAR was at fault or
negligent in not maintaining a seaworthy vessel and in having
allowed its vessel to sail despite knowledge of an approaching
typhoon. In any event, it did not sink because of any storm that
may be deemed as force majeure, inasmuch as the wind condition in
the area where it sank was determined to be moderate. Since it was
remiss in the performance of its duties, LOADSTAR cannot hide
behind the limited liability doctrine to escape responsibility for
the loss of the vessel and its cargo.
Page 2 of 16
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Same; Same; Same; A stipulation reducing the one-year period

for filing the action for recovery is null and void and must be struck
down.Neither is there merit to the contention that the claim in
this case was barred by prescription. MICs cause of action had not
yet prescribed at the time it was concerned. Inasmuch as neither
the Civil Code nor the Code of Commerce states a specific
prescriptive period on the matter, the Carriage of Goods by Sea Act
(COGSA)which provides for a one-year period of limitation on
claims for loss of, or damage to, cargoes sustained during transit
may be applied suppletorily to the case at bar. This one-year
prescriptive period also applies to the insurer of the goods. In this
case, the period for filing the action for recovery has not yet elapsed.
Moreover, a stipulation reducing the one-year period is null and
void; it must, accordingly, be struck down.

Court of Appeals.
341
341

King, Capuchino, Tan & Associates for petitioner.
Zapa Law Office for private respondent.
DAVIDE, JR., C.J.:
Petitioner Loadstar Shipping Co., Inc. (hereafter
LOADSTAR), in this petition for review on certiorari under
Rule 45 of the 1997 Rules of Civil Procedure, seeks to
reverse and
set aside the following: (a) the 30 January 1997
1
decision of the Court of Appeals in CA-G.R. CV No.
36401,
2
which affirmed the decision of 4 October 1991 of the
Regional Trial Court of Manila, Branch 16, in Civil Case
No. 85-29110, ordering LOADSTAR to pay private
respondent Manila Insurance Co. (hereafter MIC) the
amount of P6,067,178, with legal interest from the filing of
the complaint until fully paid, P8,000 as attorneys fees,
and the costs of the suit; and (b) its resolution of 19
Page 3 of 16
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November 1997, denying LOADSTARs motion for

reconsideration of said decision.
The facts are undisputed.
On 19 November 1984, LOADSTAR received on board its
M/V Cherokee (hereafter, the vessel) the following goods
for shipment:
a) 705 bales of lawanit hardwood;
b) 27 boxes and crates of tilewood assemblies and
others; and
c) 49 bundles of mouldings R & W (3) Apitong
Bolidenized.
The goods, amounting to P6,067,178, were insured for the
same amount with MIC against various risks including
TOTAL LOSS BY TOTAL LOSS OF THE VESSEL. The
vessel, in turn, was insured by Prudential Guarantee &
Assurance, Inc. (hereafter PGAI) for P4 million. On 20
November 1984, on its way to Manila from the port of
Nasipit,
______________
1
Rollo, 58.
Ibid., 58-59.
Id., 72.
342
342

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 P6,075,000 to the insured in full settlement of its
claim, and the latter executed a subrogation receipt
therefor.
On 4 February 1985, MIC filed a complaint against
LOADSTAR and PGAI, alleging that the sinking of the
Page 4 of 16
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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 of the vessel
directly to MIC, said amount to be deducted from MICs
claim from LOADSTAR.
In its answer, LOADSTAR denied any liability for the
loss of the shippers goods and claimed that the 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.
As stated at the outset, the court a quo 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.
In dismissing LOADSTARs appeal, the appellate court
made the following observations:
1) LOADSTAR cannot be considered a private carrier
on the sole ground that there was a single shipper
on that fateful voyage. The court noted that the
charter of the vessel was limited to the 4ship, but
LOADSTAR retained control over its crew.
2) As a common carrier, it is the Code of Commerce,
not the Civil Code, which should be applied in
determining the rights and liabilities of the parties.
3) The vessel was not seaworthy because it was
undermanned on the day of the voyage. If it had
been seaworthy, it could
______________
4
Citing Planters Products, Inc. v. Court of Appeals, 226 SCRA 476
[1993].
343
343
Page 5 of 16
2/1/16, 11:47 PM
have withstood the natural and inevitable action of

the sea on 20 November 1984, when the condition
of the sea was moderate. The vessel sank, not
because of force majeure, but because it was not
seaworthy. LOADSTARS allegation that the
sinking was probably due to the convergence of the
winds, as stated by a PAG-ASA expert, was not
duly proven at the trial. The limited liability rule,
therefore, is not applicable considering that, in this
case, there was an actual
finding of negligence on
5
the part of the carrier.
4) Between MIC and LOADSTAR, the provisions of
the Bill of Lading do not apply because said
provisions bind only the shipper/consignee and the
carrier. When MIC paid the shipper for the goods
insured, it was subrogated to the
latters rights as
6
against the carrier, LOADSTAR.
5) There was a clear breach of the contract of carriage
when the shippers goods never reached their
destination. LOADSTARs defense of diligence of a
good father of a family in the training and
selection of its crew is unavailing because this is
not a proper or complete defense in culpa
contractual.
6) Art. 361 (of the Code of Commerce) has been
judicially construed to mean that when goods are
delivered on board a ship in good order and
condition, and the shipowner delivers them to the
shipper in bad order and condition, it then devolves
upon the shipowner to both allege and prove that
the goods were damaged by reason of some fact
which legally exempts him from liability.
Transportation of the merchandise at the risk and
venture of the shipper means that the latter bears
the risk of loss or deterioration of his goods arising
from fortuitous events, force majeure, or the
inherent nature and defects of the goods, but not
those caused by the presumed negligence
or fault of
7
the carrier, unless otherwise proved.
The errors assigned by LOADSTAR boil down to a
Page 6 of 16
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determination of the following issues:

______________
Citing Aboitiz Shipping Corp. v. General Accident Fire and Life
Assurance Corp., Ltd., 217 SCRA 359 [1993].

6
Citing Firemans Fund Insurance Co. v. Jamila & Co., Inc., 70 SCRA
323 [1976].
7
Rollo, 18.
344
344

(1) Is the M/V Cherokee a private or a common
carrier?
(2) Did LOADSTAR observe due and/or ordinary
diligence in these premises?
Regarding the first issue, 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.
In refutation, MIC argues that the issue as to the
classification of the M/V Cherokee was not timely raised
below; hence, it is barred by estoppel. While it is true that
the vessel had on board only the cargo of wood products for
delivery to one consignee, it was also carrying passengers
as part of its regular business. Moreover, the bills of lading
in this case made no mention of any charter party but only
a statement that the vessel was a general cargo carrier.
Neither was there any special arrangement between
LOADSTAR and the shipper regarding the shipment of the
cargo. The singular fact that the vessel was carrying a
particular type of cargo for one shipper is not sufficient to
convert the vessel into a private carrier.
As regards the second error, LOADSTAR argues that as
a private carrier, it cannot be presumed to have been
negligent, 8and the burden of proving otherwise devolved
upon MIC.
Page 7 of 16
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LOADSTAR also maintains that the vessel was

seaworthy. Before the fateful voyage on 19 November 1984,
the vessel was allegedly dry docked at Keppel Philippines
Shipyard and was duly inspected by the maritime safety
engineers of the Philippine Coast Guard, who certified that
the ship was fit to undertake a voyage. Its crew at the time
was experienced, licensed and unquestionably competent.
With all these precautions, there could be no other
conclusion except that LOADSTAR exercised the diligence
of a good father of a family in ensuring the vessels
seaworthiness.
_______________
8
Citing National Steel Corporation v. Court of Appeals, 283 SCRA 45
[1997].
345
345

LOADSTAR further claims that it was not responsible for
the loss of the cargo, such loss being due to force majeure. It
points out that when the vessel left Nasipit, Agusan del
Norte, on 19 November 1984, the weather was fine until
the next day when the vessel sank due to strong waves.
MICs witness, Graceli Tapel, fully established the
existence of two typhoons, WELFRING and YOLING,
inside the Philippine area of responsibility. In fact, on 20
November 1984, signal no. 1 was declared over Eastern
Visayas, which includes Limasawa Island. Tapel also
testified that the convergence of winds brought about by
these two typhoons strengthened wind velocity in the area,
naturally producing strong waves and winds, in turn,
causing the vessel to list and eventually sink.
LOADSTAR goes on to argue that, being a private
carrier, any agreement limiting its liability, such as what
transpired in this case, is valid. Since the cargo was being
shipped at owners risk, LOADSTAR was not liable for
any loss or damage to the same. Therefore, the Court of
Appeals erred in holding that the provisions of the bills of
Page 8 of 16
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lading apply only to the shipper and the carrier, and not to
the insurer of the goods, which conclusion runs counter to
the Supreme Courts ruling in the case of St. Paul Fire
&
9
Marine Insurance Co. v. Macondray & Co., Inc., and
National Union Fire Insurance
Company of Pittsburg v.
10
Stolt-Nielsen Phils., Inc.
Finally, LOADSTAR avers that MICs claim had already
prescribed, the case having been instituted beyond the
period stated in the bills of lading for instituting the same
suits based upon claims arising from shortage, damage,
or non-delivery of shipment shall be instituted within sixty
days from the accrual of the right of action. The vessel sank
on 20 November 1984; yet, the case for recovery was filed
only on 4 February 1985.
MIC, on the other hand, claims that LOADSTAR was
liable, notwithstanding that the loss of the cargo was due
to
______________
9
70 SCRA 122 [1976].
10
184 SCRA 682 [1990].

346
346

force majeure, because the same concurred with

LOADSTARs fault or negligence.
Secondly, LOADSTAR did not raise the issue of
prescription in the court below; hence, the same must be
deemed waived.
Thirdly, the limited liability theory is not applicable in
the case at bar because LOADSTAR was at fault or
negligent, and because it failed to maintain a seaworthy
vessel. Authorizing the voyage notwithstanding its
knowledge of a typhoon is tantamount to negligence.
We find no merit in this petition.
Anent the first assigned error, we hold that LOADSTAR
is a common carrier. It is not necessary that the carrier be
issued a certificate of public convenience, and this public
Page 9 of 16
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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 Home11 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 large is not involved,
as in the case of a ship totally chartered for the use of a
single party. LOADSTAR also cited Valenzuela Hardwood
12
and Industrial Supply, Inc. v. Court of13 Appeals and
National Steel Corp. v. Court of Appeals, both of which
upheld the Home Insurance doctrine.
These cases invoked by LOADSTAR are not applicable
in the case at bar for simple reason that the factual
settings are different. The records do not disclose that the
M/V Chero_______________
11
23 SCRA 24 [1968].
12
274 SCRA 642 [1997].
13
Supra note 8.
347
347

kee, 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
14
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
Page 10 of 16
2/1/16, 11:47 PM
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. In the case of De
15
Guzman v. Court of Appeals, the Court juxtaposed the
statutory definition of common carriers with the peculiar
circumstances of that case, viz.:
The Civil Code defines common carriers in the following terms:

community or popu______________
14
A general ship carrying goods for hire, whether employed in internal, in
coasting, or in foreign commerce is a common carrier. (Baer, Senior & Co.s

Successors v. La Compania Maritima, 6 Phil. 215, 217-218, quoting Liverpool
Steamship Co. v. Phoenix Ins. Co., 129 U.S. 397, 437), cited in 3 TEODORICO
C. MARTIN, PHILIPPINE COMMERCIAL LAWS 118 (Rev. Ed. 1989).
15
168 SCRA 612, 617-619 [1988].
348
348

lation, and one who offers services or solicits business only from a
Page 11 of 16
2/1/16, 11:47 PM
narrow segment of the general population. We think that Article

1733 deliberately refrained from making such distinctions.
xxx
It appears to the Court that private respondent is properly
characterized as a common carrier even though he merely backhauled goods for other merchants from Manila to Pangasinan,
although such backhauling was done on a periodic or occasional
rather than regular or scheduled manner, and even though private
respondents 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 that fee frequently fell
below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent
held no certificate of public convenience, and concluded he was not
a common carrier. This is palpable error. 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
requirements. The business of a common carrier impinges directly
and intimately upon the safety and well being and property of those
members of the general community who happen to deal with such
carrier. The law imposes duties and liabilities upon common
carriers for the safety and protection of those who utilize their
Moving on to the second assigned error, we find that the

M/V Cherokee 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 failhttp://central.com.ph/sfsreader/session/000001529d83a7c7e1ee567c003600fb002c009e/p/APT519/?username=Guest
Page 12 of 16
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349
349

ure of a common carrier to maintain in seaworthy condition
its vessel involved in a contract of carriage is a clear breach
16
of its duty prescribed in Article 1755 of the Civil Code.
Neither do we agree with LOADSTARs argument that
the limited liability theory should be applied in this case.
The doctrine of limited liability does not apply where there
17
was negligence on the part of the vessel owner or agent.
LOADSTAR was at fault or negligent in not maintaining a
seaworthy vessel and in having allowed its vessel to sail
despite knowledge of an approaching typhoon. In any
event, it did not sink because of any storm that may be
deemed as force majeure, inasmuch as the wind condition
in the area where it sank was determined to be moderate.
Since it was remiss in the performance of its duties,
LOADSTAR cannot hide behind the limited liability
doctrine to escape responsibility for the loss of the vessel
and its cargo.
LOADSTAR also claims that the Court of Appeals erred
in holding it liable for the loss of the goods, in utter
disregard of this Courts pronouncements in18St. Paul Fire &
Marine Ins. Co. v. Macondray & Co., Inc., and 19
National
Union Fire Insurance v. Stolt-Nielsen Phils., Inc. It was
ruled in these two cases that after paying the claim of the
insured for damages under the insurance policy, the
insurer is subrogated merely to the rights of the assured,
that is, it can recover only the amount that may, in turn, be
recovered by the latter. Since the right of the assured in
case of loss or damage to the goods
_______________
16
Trans-Asia Shipping Lines, Inc. v. Court of Appeals, 254 SCRA 260,
272-273 [1996], citing Chan Keep v. Chan Gioco, 14 Phil. 5.

17
See JOSE C. VITUG, PANDECT OF COMMERCIAL LAW AND
JURISPRUDENCE, 311-313 (3rd ed. 1997) (hereinafter VITUG). Also,

Aboitiz Shipping Corporation v. General Accident Fire and Life
Page 13 of 16
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Assurance Corporation, Ltd., 217 SCRA 359 [1993]; American Home

Assurance, Co. v. CA, 208 SCRA 343 [1992], citing National Development
Co. v. Court of Appeals, 164 SCRA 593 [1988]; Heirs of Amparo de los
Santos v. Court of Appeals, 186 SCRA 649 [1990].
18
70 SCRA 122 [1976].
19
184 SCRA 682 [1990].

350
350

is limited or restricted by the provisions in the bills of

lading, a suit by the insurer as subrogee is necessarily
subject to the same limitations and restrictions. We do not
agree. In the first place, the cases relied on by LOADSTAR
involved a limitation on the carriers liability to an amount
fixed in the bill of lading which the parties may enter into,
provided that the same was freely and fairly agreed upon
(Articles 1749-1750). On the other hand, the stipulation in
the case at bar effectively reduces the common carriers
liability for the loss or destruction of the goods to a degree
less than extraordinary (Articles 1744 and 1745), that is,
the carrier is not liable for any loss or damage to shipments
made at owners risk. Such stipulation is obviously
null
20
and void for being contrary to public policy. It has been
said:
Three kinds of stipulations have often been made in a bill of lading.
The first is one exempting the carrier from any and all liability for
loss or damage occasioned by its own negligence. The second is one
providing for an unqualified limitation of such liability to an agreed
valuation. And the third is one limiting the liability of the carrier to
an agreed valuation unless the shipper declares a higher value and
pays a higher rate of freight. According to an almost uniform weight
of authority, the first and second kinds of stipulations are invalid as
being contrary to public policy, but the third is valid and
21
enforceable.
Since the stipulation in question is null and void, it follows

that when MIC paid the shipper, it was subrogated to all
the rights which the latter has against the common carrier,
Page 14 of 16
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LOADSTAR.
Neither is there merit to the contention that the claim in
this case was barred by prescription. MICs cause of action
______________
20
The stipulations on the limitations on the common carriers liability,
subject matter of Articles 1749-1750 and Articles 1744-1745 of the New

Civil Code are not to be confused with each other. (See VITUG 244).
21
3 MARTIN, 96-97, citing H.E. Heacock Co. v. Macondray & Co., Inc.,
42 Phil. 205. See Arts. 1744 and 1745 of the New Civil Code.
351
351

had not yet prescribed at the time it was concerned.
Inasmuch as neither the Civil Code nor the Code of
Commerce states a specific prescriptive period on the
matter, the Carriage of Goods by Sea Act (COGSA)which
provides for a one-year period of limitation on claims for
loss of, or damage to, cargoes sustained during transit
may be applied suppletorily to the case at bar. This oneyear prescriptive
period also applies to the insurer of the
22
goods. In this case, the period for filing the action for
recovery has not yet elapsed. Moreover, a stipulation
23
reducing the one-year period is null and void; it must,
accordingly, be struck down.
WHEREFORE, the instant petition is DENIED and the
challenged decision of 30 January 1997 of the Court of
Appeals in CA-G.R. CV No. 36401 is AFFIRMED. Costs
against petitioner.
SO ORDERED.
Puno, Kapunan, Pardo and Ynares-Santiago, JJ.,
concur.
Petition denied; Challenged decision affirmed.
Note.In the event of loss of goods, common carriers
are presumed to have acted negligently. (Philippine
Page 15 of 16
2/1/16, 11:47 PM
American General Insurance Co., Inc. vs. Court of Appeals,

273 SCRA 262 [1997])
o0o
______________
22
VITUG, 220-222, 224, 256 and 334, citing Filipino Merchants
Insurance Co., Inc. v. Alejandro, 145 SCRA 42 (1986); see also 3 MARTIN
302, 307 and Sec. 3. (6) of the Carriage of Goods by Sea Act, which
provides, inter alia.
Sec. 3. (6) x x x.
In any event the carrier and the ship shall be discharged from all
liability in respect of the loss or damage unless suit is brought within one
year after delivery of the goods or the date when the goods should have
been delivered . . .
23
VITUG, 334, citing Elser, Inc. v. Court of Appeals, 96 Phil. 264.

352
Page 16 of 16
624
2/1/16, 11:51 PM

Arada vs. Court of Appeals
*
G.R. No. 98243. July 1, 1992.
ALEJANDRO ARADA, doing business under the name and

style SOUTH NEGROS ENTERPRISES, petitioner, vs.
HONORABLE COURT OF APPEALS, SAN MIGUEL
CORPORATION, respondents.
Common Carriers; Words & Phrases; Common carriers
defined.Common carriers are persons, corporations, firms or
passengers or goods or both, by land, water or air, for compensation
offering their services to the public (Art. 1732 of the New Civil
Code).
Same; Common carriers required to exercise extraordinary
diligence.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
x x x.
Same; Natural disaster must be the proximate and only cause of
loss to exempt carrier from liability.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
http://central.com.ph/sfsreader/session/000001529d881a565519e43b003600fb002c009e/p/APW929/?username=Guest
Page 1 of 13
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________________
*
SECOND DIVISION.
625
VOL. 210, JULY 1, 1992
625

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).
Same; Failure of ship captain to ascertain beforehand direction
of reported storm and weather conditions along his route constitutes
negligent lack of foresight.Respondent courts conclusion as to the
negligence of petitioner is supported by evidence. It will be noted
that Vivencio Babao knew of the impending typhoon on March 24,
1982 when the Philippine Coast Guard denied M/L Maya the
issuance of a clearance to sail. Less than 24 hours elapsed since the
time of the denial of said clearance and the time a clearance to sail
was finally issued on March 25, 1982. Records will show that Babao
did not ascertain where the typhoon was headed by the use of his
vessels barometer and radio (Rollo, p. 142). Neither did the captain
of the vessel monitor and record the weather conditions everyday as
required by Art. 612 of the Code of Commerce (Rollo, pp. 142-143).
Had he done so while navigating for 31 hours, he could have
anticipated the strong winds and big waves and taken shelter
(Rollo, pp. 36; 145).
Same; Vessel owner negligent for hiring unlicensed crew even if
they have special coast guard permits.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.
Same; Maritime Law; Exoneration of vessel by Special Board of
Marine Inquiry affects only its administrative liability.In rejecting
Page 2 of 13
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petitioners 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.

Court of Appeals. Ramirez, J.
626
626

Vicente R. Acsay for petitioner.

PARAS, J.:
This is a petition for review on **certiorari which seeks to
annul and set aside the decision of the Court of Appeals
dated April 8, 1991 in CA-G.R. CV No. 20597 entitled San
Miguel Corporation v. Alejandro Arada, doing business
under the name and style South Negros Enterprises,
reversing the decision of the RTC, Seventh Judicial Region,
Branch XII, Cebu City, ordering petitioner to pay the
private respondent the amount of P172,284.80 representing
the value of the cargo lost on board the ill-fated, M/L Maya
with interest thereon at the legal rate from the date of the
filing of the complaint on March 25, 1983 until fully paid,
and the costs.
The undisputed facts of the case are as follows:
Alejandro Arada, herein petitioner, is the proprietor and
operator of the firm South Negros Enterprises which has
been organized and established for more than ten (10)
years. It is engaged in the business of small scale shipping
as a common carrier, servicing the hauling of cargoes of
different corporations and companies with the five (5)
Page 3 of 13
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vessels it was operating (Rollo, p. 121).

On March 24, 1982, petitioner entered into a contract
with private respondent to safely transport as a common
carrier, cargoes of the latter from San Carlos City, Negros
Occidental to Mandaue City using one of petitioners
vessels, M/L Maya. The cargoes of private respondent
consisted of 9,824 cases of beer empties valued at
P176,824.80, were itemized as follows:
NO. OF CASES
CARGO
VALUE
7,515 CS
PPW STENIE MTS
P136,773.00
1,542 CS
PLW GRANDE MTS
23,438.40
58 CS
G.E. PLASTIC MTS
1,276.00
24 CS
PLP MTS
456.00
________________
**
Penned by Associate Justice Pedro A. Ramirez and concurred in by
Associate Justices Fernando A. Santiago and Fermin A. Martin, Jr.

627
VOL. 210, JULY 1, 1992
627

NO. OF
CASES
CARGO
VALUE
37 CS
CS WOODEN MTS
673.40
8 CS
LAGERLITE PLASTIC MTS
128.00
640 CS
9,824 CS
STENEI PLASTIC MTS
14,080.00
P176,824.80
On March 24, 1982, petitioner thru its crew master, Mr.

Vivencio Babao, applied for a clearance with the Philippine
Coast Guard for M/L Maya to leave the port of San Carlos
City but due to a typhoon, it was denied clearance by SNI
Antonio Prestado PN who was then assigned at San Carlos
City Coast Guard Detachment (Rollo, p. 122).
On March 25, 1982 M/L Maya was given clearance as
Page 4 of 13
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there was no storm and the sea was calm. Hence, said
vessel left for Mandaue City. While it was navigating
towards Cebu, a typhoon developed and said vessel was
buffeted on all its sides by big waves. Its rudder was
destroyed and it drifted for sixteen (16) hours although its
engine was running.
On March 27, 1982 at about 4:00 a.m., the vessel sank
with whatever was left of its cargoes. The crew was rescued
by a passing pump boat and was brought to Calanggaman
Island. Later in the afternoon, they were brought to
Palompon, Leyte, where Vivencio Babao filed a marine
protest (Rollo, p. 10).
On the basis of such marine protest, the Board of
Marine Inquiry conducted a hearing of the sinking of M/L
Maya wherein private respondent was duly represented.
Said Board made its findings and recommendation dated
November 7, 1983, the dispositive portion of which reads
as:
WHEREFORE, premises considered, this Board recommends as it
is hereby recommended that the owner/operator, officers and crew
of M/L Maya be exonerated or absolved from any administrative
liability on account of this incident (Exh. 1).
The Boards report containing its findings and

recommendation was then forwarded to the headquarters
of the Philippine Coast Guard for appropriate action. On
the basis of such report, the Commandant of the Philippine
Coast Guard rendered a decision dated December 21, 1984
in SBMI Adm. Case No. 88-82 exonerating the
owner/operator officers and crew of the ill-fated
628
628

M/L Maya from any administrative liability on account of

said incident (Exh. 2).
On March 25, 1983, private respondent filed a complaint
in the Regional Trial Court its first cause of action being for
the recovery of the value of the cargoes anchored on breach
Page 5 of 13
2/1/16, 11:51 PM
of contract of carriage. After due hearing, said court

rendered a decision dated July 18, 1988, the dispositive
portion of which reads
WHEREFORE, judgment is hereby rendered as follows:
(1) With respect to the first cause of action, claim of plaintiff is
hereby dismissed;
(2) Under the second cause of action, defendant must pay
plaintiff the sum of P2,000.00;
(3) In the third cause of action, the defendant must pay
plaintiff the sum of P2,849.20;
(4) Since the plaintiff has withheld the payment of P12,997.47
due the defendant, the plaintiff should deduct the amount of
P4,849.20 from the P12,997.47 and the balance of P8,148.27
must be paid to the defendant; and
(5) Defendants counterclaim not having been substantiated by
evidence is likewise dismissed. NO COSTS. (Orig. Record,
pp. 193-195).
Thereafter, private respondent appealed said decision to

the Court of Appeals claiming that the trial court erred in
(1) holding that nothing was shown that the defendant,

or any of his employees who manned the M/L Maya
was negligent in any way nor did they fail to
observe extraordinary diligence over the cargoes of
the plaintiff; and
(2) holding that the sinking of said vessel was caused
by the storm, consequently, dismissing the claim of
plaintiff in its first cause of action for breach of
contract of carriage of goods (Rollo, pp. 33-34;
Decision, pp. 3-4).
In its decision promulgated on April 8, 1991, the Court of
Appeals reversed the decision of the court a quo, the
dispositive portion and the dispositive part of its decision
reads as:
WHEREFORE, that part of the judgment appealed from is
REVERSED and the appellee Alejandro Arada, doing business by
the
Page 6 of 13
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629
VOL. 210, JULY 1, 1992
629

name and style, South Negros Enterprises, ordered (sic) to pay
unto the appellant San Miguel Corporation the amount of
P176,824.80 representing the value of the cargo lost on board the
ill-fated vessel, M/L Maya, with interest thereon at the legal rate
from date of the filing of the complaint on March 25, 1983, until
fully paid, and the costs. (Rollo, p. 37)
The Court of Appeals ruled that in view of his failure to

observe extraordinary diligence over the cargo in question
and his negligence previous to the sinking of the carrying
vessel, as above shown, the appellee is liable to the
appellant for the value of the lost cargo.
Hence, the present recourse.
On November 20, 1991, this Court gave due course to
the petition.
The pivotal issue to be resolved is whether or not
petitioner is liable for the value of the lost cargoes.
Petitioner contends that it was not in the exercise of its
function as a common carrier when it entered into a
contract with private respondent, but was then acting as a
private carrier not bound by the requirement of
extraordinary diligence (Rollo, p. 15) and that the factual
findings of the Board of Marine Inquiry and the Special
Board of Marine Inquiry are binding and conclusive on the
Court (Rollo, pp. 16-17).
Private respondent counters that M/L Maya was in the
exercise of its function as a common carrier and its failure
to observe the extraordinary diligence required of it in the
vigilance over their cargoes makes petitioner liable for the
value of said cargoes.
The petition is devoid of merit.
Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water or
air, for compensation offering their services to the public
(Art. 1732 of the New Civil Code).
In the case at bar, there is no doubt that petitioner was
Page 7 of 13
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exercising its function as a common carrier when it entered

into a contract with private respondent to carry and
transport the latters cargoes. This fact is best supported by
the admission of petitioners son, Mr. Eric Arada, who
testified as the officer-in630
630

charge for operations of South Negros Enterprises in Cebu

City. In substance his testimony on January 14, 1985 is as
follows:
Q How many vessels are you operating?
A There were all in all around five (5).
Q And you were entering to service hauling of cargoes to
different companies, is that correct?
A Yes, sir.
Q In one word, the South Negros Enterprises is engaged
in the business of common carriers, is that correct?
A Yes, sir.
Q And in fact, at the time of the hauling of the San
Miguel Beer, it was also in the same category as a
common carrier?
A Yes, sir.
(TSN, pp. 3-4, Jan. 29, 1985)
A common carrier, both from the nature of its business and
for insistent reasons of public policy is burdened by law
with the duty of exercising extraordinary diligence not only
in ensuring the safety of passengers but in caring for the
goods transported by it. The loss or destruction or
deterioration of goods turned over to the common carrier
for the conveyance to a designated destination raises
instantly a presumption of fault or negligence on the part
of the carrier, save only where such loss, destruction or
damage arises from extreme circumstances such as a
Page 8 of 13
2/1/16, 11:51 PM
natural disaster or calamity x x x (Benedicto v. IAC, G.R.

No. 70876, July 19, 1990, 187 SCRA 547) (Italics supplied).
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. In substance, the decision reads:
631
VOL. 210, JULY 1, 1992
631

x x x VIVENCIO BABAO, the master of the carrying vessel, knew
that there was a typhoon coming before his departure but did not
check where it was.
xxx
If only for the fact that he was first denied clearance to depart
on March 24, 1982, obviously because of a typhoon coming, Babao,
as master of the vessel, should have verified first where the typhoon
was before departing on March 25, 1982. True, the sea was calm at
departure time. But that might be the calm before the storm.
Prudence dictates that he should have ascertained first where the
storm was before departing as it might be on his path. (Rollo, pp.
35-36)
Respondent courts conclusion as to the negligence of

petitioner is supported by evidence. It will be noted that
Vivencio Babao knew of the impending typhoon on March
24, 1982 when the Philippine Coast Guard denied M/L
Maya the issuance of a clearance to sail. Less than 24
hours elapsed since the time of the denial of said clearance
and the time a clearance to sail was finally issued on
March 25, 1982. Records will show that Babao did not
Page 9 of 13
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ascertain where the typhoon was headed by the use of his

vessels barometer and radio (Rollo, p. 142). Neither did the
captain of the vessel monitor and record the weather
conditions everyday as required by Art. 612 of the Code of
Commerce (Rollo, pp. 142-143). Had he done so while
navigating for 31 hours, he could have anticipated the
strong winds and big waves and taken shelter (Rollo, pp.
36; 145). His testimony on May 4, 1982 is as follows:
Q Did you not check on your own where the typhoon was?
A No, sir. (TSN, May 4, 1982, pp. 58-59)
Noteworthy is the fact that as per official records of the
Climatological Division of the Philippine Atmospheric,
Geophysical and Astronomical Services Administration
(PAG-ASA for brevity) issued by its Chief of Climatological
Division, Primitivo G. Ballan, Jr. as to the weather and sea
conditions that prevailed in the vicinity of Catmon, Cebu
during the period March 25-27, 1982, the sea conditions on
March 25, 1982 were slight to rough and the weather
conditions then prevailing during those times were cloudy
skies with rainshowers and the small waves
632
632

grew larger and larger, to wit:

SPEED WAVE HT.
SEA
KNOTS (METERS) CONDITIONS
WEATHER
March 25
8 AM
15
1-2
2 PM
20-25
2.0-3.0
8 PM
30
3.7
slight
cloudy skies w/
rainshowers
moderate
rough
overcast skies
to rough w/
some rains
sea heaps up
white foam
Page 10 of 13
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from breaking
waves begin to
be blown in
streaks along
the direction of
the wind;
Spindrift
begins
2 AM
30
3.7
rough
sea heaps up
white foam
from breaking
waves begin to
be blown in
streaks along
the direction of
the wind;
Spindrift
begins
(Exh.
3)
A common carrier is obliged to observe extraordinary
diligence and the failure of Babao to ascertain the direction
of the storm and the weather condition of the path they
would be traversing, constitute lack of foresight and
minimum vigilance over its cargoes taking into account the
surrounding circumstances of the case.
While the goods are in the possession of the carrier, it is
but fair that it exercises extraordinary diligence in
protecting them from loss or damage, and if loss occurs, the
law presumes that it was due to the carriers fault or
negligence; that is necessary to protect the interest of the
shipper which is at the mercy of the
633
VOL. 210, JULY 1, 1992
633

carrier (Art. 1756, Civil Code, Aboitiz Shipping Corporation
v. Court of Appeals, G.R. No. 89757, Aug. 6, 1990, 188
SCRA 387).
Page 11 of 13
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Furthermore, the records show that the crew of M/L

Maya did not have the required qualifications provided for
in P.D. No. 97 or the Philippine Merchant Marine Officers
Law, all of whom were unlicensed. While it is true that they
were given special permit to man the vessel, such permit
was issued at the risk and responsibility of the owner.
(Rollo, p. 36).
Finally, petitioner claims that the factual findings of the
Special Board of Marine Inquiry exonerating the
owner/operator, crew officers of the ill-fated vessel M/L
Maya from any administrative liability is binding on the
court.
In rejecting petitioners claim, respondent court was
correct in ruling that such exoneration was but with
respect
to
the
administrative
liability
of
the
owner/operator, officers and crew of the ill-fated vessel. It
could not have meant exoneration of appellee from liability
as a common carrier for his failure to observe extraordinary
diligence in the vigilance over the goods it was transporting
and for the negligent acts or omissions of his employees.
Such is the function of the Court, not the Special Board of
Marine Inquiry. (Rollo, p. 37, Annex A, p. 7)
The Philippine Merchant Marine Rules and Regulations
particularly Chapter XVI thereof entitled Marine
Investigation and Suspension and Revocation Proceedings
prescribes the Rules governing maritime casualties or
accidents, the rules and procedures in administrative
investigation of all maritime cases within the jurisdiction
or cognizance of the Philippine Coast Guard and the
grounds
for
suspension
and
revocation
of
licenses/certificates of marine officers and seamen (1601
SCOPE); clearly, limiting the jurisdiction of the Board of
Marine Inquiry and Special Board of Marine Inquiry to the
administrative aspect of marine casualties in so far as it
involves the shipowners and officers.
PREMISES CONSIDERED, the appealed decision is
AFFIRMED.
SO ORDERED.
Narvasa (C.J., Chairman), Regalado and Nocon,
JJ., concur.
634
Page 12 of 13
634
2/1/16, 11:51 PM

People vs. Pletado
Padilla, J., No part in view of interests in private

respondent.
Decision affirmed.
Note.Common carriers are bound to observe extraordinary vigilance over goods xxx according to all
circumstances of each case (Eastern Shipping Lines, Inc.
vs. Court of Appeals, 196 SCRA 570).
o0o
Page 13 of 13
570
2/1/16, 11:52 PM

Eastern Shipping Lines, Inc. vs. Court of Appeals
*
G.R. No. 94151. April 30, 1991.
EASTERN SHIPPING LINES, INC., petitioner, vs. THE

COURT OF APPEALS and THE FIRST NATIONWIDE
ASSURANCE CORPORATION, respondents.
Commercial Laws; Carriage of Goods by Sea Act; Carriers;
Damages; Common carriers are bound to observe extra-ordinary
vigilance over goods x x x according to all circumstances of each
case.Moreover, under Article 1733 of the Civil Code, common
carriers are bound to observe extra-ordinary vigilance over goods xx
xx xx according to all circumstances of each case, and Article 1735
of the same Code states, to wit: ART. 1735. In all cases other than
those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if
the goods are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as required in
article 1733.
Same; Same; Same; Same.A common carrier is required to
exercise the highest degree of care in the discharge of its business.
_______________
*
FIRST DIVISION.
571
VOL. 196, APRIL 30, 1991
571
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Same; Same; Same; Same; Carrier who failed to establish any

caso fortuito, the presumption by law of fault or negligence on the
part of the carrier applies.Since the carrier has failed to establish
any caso fortuito, the presumption by law of fault or negligence on
the part of the carrier applies; and the carrier must present
evidence that it has observed the extraordinary diligence required
by Article 1733 of the Civil Code in order to escape liability for
damage or destruction to the goods that it had admittedly carried in
this case. No such evidence exists of record. Thus, the carrier
cannot escape liability.

of Appeals.
Jimenez, Dala & Zaragoza for petitioner.
Reloy Law Officefor private respondent.
GANCAYCO, J.:
The extent of the liability of the common carrier and its
insurer for damage to the cargo upon its delivery to the
arrastre operator is the center of this controversy.
The findings of fact of the trial court which were adopted
by the appellate court and which are not disputed are as
follows:
On September 4, 1978, thirteen coils of uncoated 7-wire stress
relieved wire strand for prestressed concrete were shipped on board
the vessel Japri Venture, owned and operated by the defendant
Eastern Shipping Lines, Inc., at Kobe, Japan, for delivery to
Stresstek Post-Tensioning Phils., Inc. in Manila, as evidenced by
the bill of lading, commercial invoice, packing list and commercial
invoice marked Exhibits A, B, C, D; 3, 4, 5 and 6-Razon which were
insured by the plaintiff First Nationwide Assurance Corporation for
P171,923 (Exhibit E).
On September 16, 1978, the carrying vessel arrived in Manila
and discharged the cargo to the custody of the defendant E. Razon,
Inc. (Exhibits 1, 2, 3, 4 and 5-ESL), from whom the consignees
customs broker received it for delivery to the consignees warehouse.
On February 19, 1979, the plaintiff indemnified the consignee in
the amount of P171,923.00 for damage and loss to the insured
cargo, whereupon the former was subrogated for the latter (Exhibit
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2/1/16, 11:52 PM
I).
The plaintiff now seeks to recover from the defendants what it
has indemnified the consignee, less P48,293.70, the salvage value of
572
572

the cargo, or the total amount of P123,629.30.

It appears that while enroute from Kobe to Manila, the carrying
vessel encountered very rough seas and stormy weather for three
days, more or less, which caused it to roll and pound heavily,
moving its master to execute a marine note of protest upon arrival
at the port of Manila on September 15, 1978 (Exhibit 1-Razon); that
the coils wrapped in burlap cloth and cardboard paper were stored
in the lower hold of the hatch of the vessel which was flooded with
water about one foot deep; that the water entered the hatch when
the vessel encountered heavy weather enroute to Manila (Exhibits
G, 2, 2A, 2B-Razon); that upon request, a survey of bad order cargo
was conducted at the pier in the presence of the representatives of
the consignee and the defendant E. Razon, Inc. and it was found
that seven coils were rusty on one side each (Exhibits F and 10Razon); that upon survey conducted at the consignees warehouse it
was found that the wetting (of the cargo) was caused by fresh
water that entered the hatch when the vessel encountered heavy
weather enroute to Manila (p. 3, Exhibit G); and that all thirteen
coils were extremely rusty and totally unsuitable for the intended
purpose (p. 3, Exhibit G), (pp. 217-218, orig. rec.)1
The complaint that was filed by the First Nationwide

Assurance Corporation (insurer) against Eastern Shipping
Lines, Inc. and E. Razon, Inc., in the Regional Trial Court,
Manila, was dismissed in a decision dated November 25,
1985. An appeal therefrom was interposed by the insurer to
the Court of Appeals wherein in due course a decision was
rendered on April 27, 1990, the dispositive part of which
reads as follows:
WHEREFORE, the judgment appealed from is hereby SET ASIDE.
The appellees are ordered to pay the appellant the sum of
P123,629.30, with legal rate of interest from July 24, 1979 until
Page 3 of 8
2/1/16, 11:52 PM
fully paid, Eastern Shipping Lines, Inc. to assume 8/13 thereof, and
E. Razon, Inc. to assume 5/13 thereof. No pronouncement as to
costs.
2
SO ORDERED.
Only Eastern Shipping Lines, Inc. filed this petition for

review by certiorari based on the following assigned errors:
_______________
1
Pages 43 to 44, Rollo.
Page 53, Rollo.

573
VOL. 196, APRIL 30, 1991
573

I. IT REFUSED TO CONSIDER THE COUNTERASSIGNMENT OF ERRORS OF PETITIONER AS
CONTAINED IN ITS BRIEF FOR THE DEFENDANTAPPELLEE EASTERN SHIPPING LINES, INC. AND
WHICH ARE ONLY MEANT TO SUSTAIN THE
DECISION OF DISMISSAL OF THE TRIAL COURT;
II. AGAINST ITS OWN FINDINGS OF FACT THAT THE
CARGO
WAS
DISCHARGED
AND
DELIVERED
COMPLETE UNTO THE CUSTODY OF THE ARRASTRE
OPERATOR UNDER CLEAN TALLY SHEETS, IT
NEVERTHELESS
ARBITRARILY
CONCLUDED
PETITIONER AS LIABLE FOR THE CLAIMED
DAMAGES;
III. IT FAILED TO HOLD PETITIONER RELIEVED OF ANY
LIABILITY OVER THE CARGO NOTWITHSTANDING IT
FOUND THAT THE SAME WAS DISCHARGED AND
DELIVERED UNTO THE CUSTODY OF THE ARRASTRE
OPERATOR UNDER CLEAN TALLY SHEETS AND ERGO
TO BE CONSIDERED GOOD ORDER CARGO WHEN
DELIVERED; and,
IV. IT ARBITRARILY AWARDED INTEREST AT THE LEGAL
RATE TO COMMENCE FROM THE DATE OF THE
COMPLAINT IN VIOLATION OF THE DOCTRINAL
Page 4 of 8
2/1/16, 11:52 PM
RULE THAT IN CASE OF UN-LIQUIDATED CLAIMS

SUCH AS THE CLAIM IN QUESTION, INTEREST
SHOULD ONLY COMMENCE FROM THE DATE OF THE
3
DECISION OF THE TRIAL COURT.
Under the first assigned error, petitioner contends that the

appellate court did not consider its counter-assignment of
errors which was only meant to sustain the decision of
dismissal of the trial court. An examination of the
questioned decision shows that the appellate court did not
consider the counter-assignment of errors of petitioner as it
did not appeal the decision of the trial court.
Nevertheless, when such counter-assignments are
intended to sustain the judgment appealed from on other
grounds, but not to seek modification or reversal thereof,
the appellate court should consider the same in the
determination of the case but no affirmative relief can be
granted thereby4 other than what had been obtained from
the lower court. The contention of petitioner on this aspect
is, thus, well-taken.
Be that as it may, under the second and third assigned
errors,
_______________
3
Page 9, Rollo.
De Lima vs. Laguna Tayabas Co., 160 SCRA 70 (1988).

574
574

petitioner claims it should not be held liable as the

shipment was discharged and delivered complete into the
custody of the arrastre operator under clean tally sheets.
While it is true the cargo was delivered to the arrastre
operator in apparent good order condition, it is also
undisputed that while en route from Kobe to Manila, the
vessel encountered very rough seas and stormy weather,
the coils wrapped in burlap cloth and cardboard paper were
stored in the lower hatch of the vessel which was flooded
Page 5 of 8
2/1/16, 11:52 PM
with water about one foot deep; that the water entered the
hatch; that a survey of bad order cargo which was
conducted in the pier in the presence of representatives of
the consignee and E. Razon, Inc., showed that seven coils
were rusty on one side (Exhibits F and 10-Razon); that a
survey conducted at the consignees warehouse also showed
that the wetting (of the cargo) was caused by fresh water
that entered the hatch when the vessel encountered heavy
rain en route to Manila (Exhibit G); and that all thirteen
coils were extremely
rusty and totally unsuitable for the
5
intended purpose.
Consequently, based on these facts, the appellate court
made the following findings and conclusions:
Plainly, the heavy seas and rains referred to in the masters report
were not caso fortuito, but normal occurrences that an ocean-going
vessel, particularly in the month of September which, in our area, is
a month of rains and heavy seas would encounter as a matter of
routine. They are not unforeseen nor unforeseeable. These are
conditions that ocean-going vessels would encounter and provide
for, in the ordinary course of a voyage. That rain water (not sea
water) found its way into the holds of the Jupri Venture is a clear
indication that care and foresight did not attend the closing of the
ships hatches so that rain water would not find its way into the
cargo holds of the ship.
Moreover, under Article 1733 of the Civil Code, common carriers
are bound to observe extra-ordinary vigilance over goods xx xx xx
according to all circumstances of each case, and Article 1735 of the
same Code states, to wit:
ART. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and
5 of the preceding article, if the goods are lost,
_______________
5
Exhibit G; pages 217 to 218, Original Record.
575
VOL. 196, APRIL 30, 1991
575

destroyed or deteriorated, common carriers are presumed to have been at
Page 6 of 8
2/1/16, 11:52 PM
fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as required in article 1733.
Since the carrier has failed to establish any caso fortuito, the
presumption by law of fault or negligence on the part of the carrier
applies; and the carrier must present evidence that it has observed
the extraordinary diligence required by Article 1733 of the Civil
Code in order to escape liability for damage or destruction to the
goods that it had admittedly carried in this case. No such evidence
exists of record. Thus, the carrier cannot escape liability.
The Court agrees with and is bound by the foregoing

findings of fact made by the appellate court. The
presumption, therefore, that the cargo was in apparent
good condition when it was delivered by the vessel to the
arrastre operator by the clean tally sheets has been
overturned and traversed. The evidence is clear to the
effect that the damage to the cargo was suffered while
aboard petitioners vessel.
The last assigned error is untenable. The interest due on
the amount of the judgment
should commence from the
6
date of judicial demand.
WHEREFORE, the petition is DISMISSED, with costs
against petitioner.
SO ORDERED.
Narvasa (Chairman), Cruz, Grio-Aquino and
Medialdea, JJ., concur.
Petition dismissed.
Note.Carrier is liable over goods discharged by it in
bad order condition, and of the arrastre operator for goods
damaged under its custody. (Metro Port Service, Inc. vs.
Court of Appeals, 131 SCRA 365.)
o0o
_______________
6
Articles 2212 and 2213 of the Civil Code.

576
Page 7 of 8
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Page 8 of 8
24
2/1/16, 11:54 PM

Delsan Transport Lines, Inc. vs. Court of Appeals
*
G.R. No. 127897. November 15, 2001.
DELSAN
TRANSPORT
LINES,
INC.,
petitioner,
vs.THEHON. COURT OF APPEALS and AMERICAN
HOME ASSURANCE CORPORATION, respondents.
Insurance; Marine Insurance; Common Carriers; While the
payment by the insurer for the insured value of the lost cargo
operates as a waiver of the insurers right to enforce the term of the
implied warranty against the assured under the marine insurance
policy, the same cannot be validly interpreted as an automatic
admission of the vessels seaworthiness by the insurer as to foreclose
recourse against the common carrier for any liability under the
contractual obligation as such common carrier.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 vessels 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 of the lost cargo against
the petitioner common carrier.
Same; Same; Same; Subrogation; Equity; The right of
subrogation has its roots in equityit is designed to promote and to
accomplish justice and is the mode which equity adopts to compel
the ultimate payment of a debt by one who in justice and good
conscience ought to pay.The right of subrogation has its roots in
equity. It is designed to promote and to accomplish justice and is the
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mode which equity adopts to compel the ultimate payment of a debt

by one who in justice and good conscience ought to pay. It is not
dependent upon, nor does it grow out of, any privity of contract or
upon written assignment of claim. It accrues simply upon payment
by the insurance company of the insurance claim. 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.
______________
*
SECOND DIVISION.
25
VOL. 369, NOVEMBER 15, 2001
25
Same; Same; Same; 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, and 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.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
circumstances 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.
Same; Same; Same; Certificates tending to show that at the time
of dry-docking and inspection by the Philippine Coast Guard, the
vessel was fit for voyage do not necessarily take into account the
Page 2 of 15
2/1/16, 11:54 PM
actual condition of the vessel at the time of the commencement of the

voyage.Neither may petitioner escape liability by presenting in
evidence certificates that tend to show that at the time of drydocking and inspection by the Philippine Coast Guard, the vessel
MT Maysun, was fit for voyage. These pieces of evidence do not
necessarily take into account the actual condition of the vessel at
the time of the commencement of the voyage. As correctly observed
by the Court of Appeals: At the time of dry-docking and inspection,
the ship may have appeared fit. The certificates issued, however, do
not negate the presumption of unseaworthiness triggered by an
unexplained sinking. Of certificates issued in this regard,
authorities are likewise clear as to their probative value, (thus):
Seaworthiness relates to a vessels actual condition. Neither the
granting of classification or the issuance of certificates establishes
seaworthiness. (2-A Benedict on Admiralty, 7-3, Sec. 62) And also:
Authorities are clear that diligence in securing certificates of
seaworthiness does not satisfy the vessel owners obligation. Also
securing the approval of the shipper of the cargo, or his surveyor, of
the condition of the vessel or her stowage does not establish due
diligence if the vessel was in fact unseaworthy, for the cargo owner
has no obligation in relation to seaworthiness.
Same; Same; Same; Exoneration of the vessels officers and crew
by the Board of Marine Inquiry merely concerns their respective
administrative liabilitiesit does not in any way operate to absolve
the common car26
26

rier from its civil liability arising from its failure to observe
extraordinary diligence in the vigilance over the goods it was
transporting and for the negligent acts or omissions of its employees,
the determination of which properly belongs to the courts.
Additionally, the exoneration of MT Maysuns officers and crew by
the Board of Marine Inquiry merely concerns their respective
administrative liabilities. It does not in any way operate to absolve
the petitioner common carrier from its civil liability arising from its
Page 3 of 15
2/1/16, 11:54 PM
failure to observe extraordinary diligence in the vigilance over the

goods it was transporting and for the negligent acts or omissions of
its employees, the determination of which properly belongs to the
courts. In the case at bar, petitioner is liable for the insured value of
the lost cargo of industrial fuel oil belonging to Caltex for its failure
to rebut the presumption of fault or negligence as common carrier
occasioned by the unexplained sinking of its vessel, MT Maysun,
while in transit.
Same; Same; Same; Subrogation; Evidence; Presentation in
evidence of the marine insurance policy is not indispensable before
the insurer may recover from the common carrier the insured value
of the lost cargo in the exercise of its subrogatory rightthe
subrogatory receipt, by itself, is sufficient to establish not only the
relationship of the insurer and the assured shipper of the lost cargo,
but also the amount paid to settle the insurance claim.Anent the
second issue, it is our view and so hold 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.

Court of Appeals.
V.E. Del Rosario & Partners for petitioner.
Linsangan, Linsangan & Linsangan Law Offices for
private respondent.
27
27

DE LEON, JR., J.:
Before us is a petition for review on certiorari of the
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2/1/16, 11:54 PM
Decision of the Court of Appeals in CA-G.R. CV No. 39836

promulgated on June 17, 1996, reversing the decision of the
Regional Trial Court of Makati City, Branch 137, ordering
petitioner to pay private respondent the sum of Five
Million Ninety-Six Thousand Six Hundred Thirty-Five
Pesos and Fifty-Seven
Centavos (P5,096,635.57) and costs
2
and the Resolution dated January 21, 1997 which denied
the subsequent motion for reconsideration.
The facts show that Caltex Philippines (Caltex for
brevity) 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
Caltexs industrial fuel oil from the Batangas-Bataan
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.
On August 14, 1986, MT Maysun set sail from Batangas
for Zamboanga City. Unfortunately, the vessel sank in the
early morning of August 16, 1986 near Panay Gulf in the
Visayas taking with it the entire cargo of fuel oil.
Subsequently, private respondent paid Caltex the sum of
Five Million Ninety-Six Thousand Six Hundred Thirty-Five
Pesos
and
Fifty-Seven
Centavos
(P5,096,635.57)
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.
Due to its failure to collect from the petitioner despite
prior demand, private respondent filed a complaint with
the Regional Trial Court of Makati City, Branch 137, for
collection of a sum of money.
______________
1
Penned by Associate Justice Hilarion L. Aquino and concurred in by
Associate Justices Jainal D. Rasul and Hector L. Hofilea. Annex A.

Rollo, pp. 43-49.
2
Rollo, pp. 55-59.

28
Page 5 of 15
28
2/1/16, 11:54 PM

After the trial and upon analyzing the evidence adduced,

the trial court rendered a decision on November 29, 1990
dismissing the complaint against herein petitioner without
pronouncement as to cost. The trial court found that the
vessel, MT Maysun, was seaworthy to undertake the
voyage as determined by the Philippine Coast Guard per
Survey Certificate Report No. M5-016-MH 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
3
petitioner) from liability for the loss of its cargo.
The decision of the trial court, however, was reversed, on
appeal, by the Court of Appeals. The appellate court gave
credence to the weather report issued by the Philippine
Atmospheric, Geophysical and Astronomical Services
Administration (PAGASA for brevity) which showed that
from 2:00 oclock to 8:00 oclock 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 petitioners
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 4the
petitioner is liable on its obligation as common carrier to
herein private respondent insurance company as subrogee
of Caltex. The subsequent motion for reconsideration of
herein petitioner was denied by the appellate court.
Petitioner raised the following
assignments of error in
5
support of the instant petition, to wit:
I
THE COURT OF APPEALS ERRED IN REVERSING THE
DECISION OF THE REGIONAL TRIAL COURT.
______________
Page 6 of 15
Annex F. Rollo, pp. 64-79.
SeeNoteNo.1.
Rollo, pp. 18-41.
2/1/16, 11:54 PM
29
29

II
THE COURT OF APPEALS ERRED AND WAS NOT JUSTIFIED
IN REBUTTING THE LEGAL PRESUMPTION THAT THE
VESSEL MT MAYSUN WAS SEAWORTHY.
III
THE COURT OF APPEALS ERRED IN NOT APPLYING THE
DOCTRINE OF THE SUPREME COURT IN THE CASE OF
HOME INSURANCE CORPORATION V. COURT OF APPEALS.
Petitioner Delsan Transport Lines, Inc. invokes the

provision of Section 113 of the Insurance Code of the
Philippines, 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; otherwise, private respondent
was not legally liable to Caltex due to the latters breach of
implied warranty under the marine insurance policy that
the vessel was seaworthy.
The petitioner also alleges that the Court of Appeals
erred in ruling that MT Maysun was not seaworthy on the
ground that the marine officer who served as the chief
mate of the vessel, Francisco Berina, was allegedly not
qualified. Under Section 116 of the Insurance Code of the
Philippines, the implied warranty of seaworthiness of the
Page 7 of 15
2/1/16, 11:54 PM
vessel, which the private respondent admitted as having

been fulfilled by its payment of the insurance proceeds to
Caltex of its lost cargo, extends to the vessels complement.
Besides, petitioner avers that although Berina had merely
a 2nd officers license, he was qualified to act as the vessels
chief officer under Chapter IV (403), Category III(a)(3)(ii)
(aa) of the Philippine Merchant Marine Rules and
Regulations. In fact, all the crew and officers of MT
Maysun were exonerated in the administrative in30
30

vestigation conducted
by the Board of Marine Inquiry after
6
the subject accident.
In any event, petitioner 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 7down 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.
Hence, the legal issues posed before the Court are:
I
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.
II
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.
We rule in the negative on both issues.

The payment made by the private respondent for the
Page 8 of 15
2/1/16, 11:54 PM
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 vessels
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
______________
6
Exhibits 11-11-J inclusive.
225 SCRA 411 (1993).

31
31

owner 8of the lost cargo against the petitioner common
carrier. Article 2207 of the New Civil Code provides that:
Art. 2207. If the plaintiff s property has been insured, and he has
received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the
contract. If the amount paid by the insurance company does not
fully cover the injury or loss, the aggrieved party shall be entitled to
recover the deficiency from the person causing the loss or injury.
The right of subrogation has its roots in equity. It is

designed to promote and to accomplish justice and is the
mode which equity adopts to compel the ultimate payment
of a 9debt by one who in justice and good conscience ought to
pay. It is not dependent upon, nor does it grow out of, any
privity of contract or upon written assignment of claim. It
accrues simply upon 10payment by the insurance company of
the insurance claim. Consequently, the payment made by
Page 9 of 15
2/1/16, 11:54 PM
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
11
to all the circumstances of each case. In the event of loss,
destruction or deterioration of the insured goods, common
carriers shall be responsible unless the same
______________
Cebu Shipyard and Engineering Works, Inc. v. William Lines, Inc.,
306 SCRA 762, 778 (1999).

9
Philippine American General Insurance Co., Inc. v. Court of Appeals,
273 SCRA 262, 275 (1997) citing Boney, Insurance Commissioner v.

Central Mutual Ins. Co. of Chicago, 197 S.E. 122.
10
Pan Malayan Insurance Corporation v. Court of Appeals, 184 SCRA
54, 58 (1990) citing Compania Maritima v. Insurance Company of North

America, G.R. No. L-18965, October 30, 1964, 12 SCRA 213; Firemans
Fund Insurance Company v. Jamilla and Co., Inc., G.R. No. L-27427,
April 7, 1976, 70 SCRA 323.
11
Article 1733, New Civil Code.

32
32

is brought about, among others, by flood, storm,

earthquake,
lightning or other natural disaster or
12
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
13
that they observed extraordinary diligence.
In order to escape liability for the loss of its cargo of
industrial fuel oil belonging to Caltex, petitioner attributes
the sinking of MT Maysun to fortuitous event or force
majeure. From the testimonies of Jaime Jarabe and
Francisco Berina, captain and chief mate, respectively of
the ill-fated vessel, it appears that a sudden and
Page 10 of 15
2/1/16, 11:54 PM
unexpected change of weather condition occurred in the

early morning of August 16, 1986; that at around 3:15
oclock in the morning a squall (unos) carrying strong
winds with an approximate velocity of 30 knots per hour
and big waves averaging eighteen (18) to twenty (20) feet
high, repeatedly buffeted MT Maysun causing14it to tilt,
take in water and eventually sink with its cargo. This tale
of strong winds and big waves by the said officers of the
petitioner however, was
effectively rebutted and belied by
15
the weather report from the Philippine Atmospheric,
Geophysical and Astronomical Services Administration
(PAGASA), the independent government agency charged
with monitoring weather and sea conditions, showing that
from 2:00 oclock to 8:00 oclock in the morning on August
16, 1986, the wind speed remained at ten (10) to twenty
(20) knots per hour while the height of the waves ranged
from .7 to two (2) meters in the vicinity of Cuyo East Pass
and Panay Gulf where the subject vessel sank. Thus, as the
appellate court correctly ruled, petitioners 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.
______________
12
Article 1734, New Civil Code.
13
Article 1735, New Civil Code; Benedicto v. Intermediate Appellate
Court, 187 SCRA 547, 554 (1990).

14
T.S.N. dated April 25, 1988, p. 19; T.S.N. dated May 9, 1988, pp. 21-
24; T.S.N. dated August 1, 1988, p. 32; T.S.N. dated August 15, 1988, pp.
16-17.
15
Exhibit Y.
33
33

The appellate court also correctly opined that the
petitioners witnesses, Jaime Jarabe and Francisco Berina,
ship captain and chief mate, respectively, of the said vessel,
Page 11 of 15
2/1/16, 11:54 PM
could not be expected to testify against the interest of their

employer, the herein petitioner common carrier.
Neither may petitioner
escape liability by presenting in
16
evidence certificates that tend to show that at the time of
dry-docking and inspection by the Philippine Coast Guard,
the vessel MT Maysun, was fit for voyage. These pieces of
evidence do not necessarily take into account the actual
condition of the vessel at the time of the commencement of
the voyage. As correctly observed by the Court of Appeals:
At the time of dry-docking and inspection, the ship may have
appeared fit. The certificates issued, however, do not negate the
presumption of unseaworthiness triggered by an unexplained
sinking. Of certificates issued in this regard, authorities are
likewise clear as to their probative value, (thus):
Seaworthiness relates to a vessels actual condition. Neither the granting
of classification or the issuance of certificates establishes seaworthiness.
(2-A Benedict on Admiralty, 7-3, Sec. 62) And also:
Authorities are clear that diligence in securing certificates of
seaworthiness does not satisfy the vessel owners obligation. Also
securing the approval of the shipper of the cargo, or his surveyor, of the
condition of the vessel or her stowage does not establish due diligence if
the vessel was in fact unseaworthy, for the cargo owner has no obligation
17
in relation to seaworthiness. (Ibid.)
Additionally, the exoneration of MT Maysuns officers and

crew by the Board of Marine Inquiry merely concerns their
respective administrative liabilities. It does not in any way
operate to absolve the petitioner common carrier from its
civil liability arising from its failure to observe
extraordinary diligence in the vigilance over the goods it
was transporting and for the negligent acts or omissions of
its employees, the determination of which properly belongs
______________
16
Exhibits 1; 2; 3; 5 with submarkings.
17
Annex A, Rollo, pp. 46-47.

34
34
Page 12 of 15
2/1/16, 11:54 PM

18
to the courts. In the case at bar, petitioner is liable for the

insured value of the lost cargo of industrial fuel oil
belonging to Caltex for its failure to rebut
the presumption
19
of fault or negligence as common carrier occasioned by the
unexplained sinking of its vessel, MT Maysun, while in
transit.
Anent the second issue, it is our view and so hold 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
20
claim.
The presentation of the insurance policy was necessary
21
in the case of Home Insurance Corporation v. CA (a case
cited by petitioner) because the shipment therein
(hydraulic engines) passed through several stages with
different parties involved in each stage. First, from the
shipper to the port of departure; second, from the port of
departure to the M/S Oriental Statesman; third, from the
M/S Oriental Statesman to the M/S Pacific Conveyor;
fourth, from the M/S Pacific Conveyor to the port of arrival;
fifth, from the port of arrival to the arrastre operator; sixth,
from the arrastre operator to the hauler, Mabuhay
Brokerage Co., Inc. (private respondent therein); and lastly,
from the hauler to the consignee. We emphasized in that
case that in the absence of proof of stipulations to the
contrary, the hauler can be liable only for any damage that
occurred from the time it received the cargo until it finally
delivered it to the consignee. Ordinarily, it cannot be held
responsible for the handling of the cargo before it actually
received it. The insurance contract, which was not
presented in evidence in that case would have indicated the
scope of the insurers liability, if any,
Page 13 of 15
2/1/16, 11:54 PM
______________
18
Arada v. Court of Appeals, 210 SCRA 624, 633 (1992).
19
SeeNoteNo.13.
20
SeeNoteNo.10.
21
Supra, p. 415.
35
35

since no evidence was adduced indicating at what stage in
the handling process the damage to the cargo was
sustained.
Hence, our ruling on the presentation of the insurance
policy in the said case of Home Insurance Corporation is
not applicable to the case at bar. In contrast, there is no
doubt that the cargo of industrial fuel oil belonging to
Caltex, in the case at bar, was lost while on board
petitioners vessel, MT Maysun, which sank while in
transit in the vicinity of Panay Gulf and Cuyo East Pass in
the early morning of August 16, 1986.
WHEREFORE, the instant petition is DENIED. The
Decision dated June 17, 1996 of the Court of Appeals in
CA-G.R. CV No. 39836 is AFFIRMED. Costs against the
petitioner.
SO ORDERED.
Bellosillo (Chairman), Mendoza, Quisumbing and
Buena, JJ., concur.
Notes.In every marine insurance policy the assured
impliedly warrants to the assurer that the vessel is
seaworthy and such warranty is as much a term of the
contract as if expressly written on the face of the policy; It
becomes the obligation of the cargo owner to look for a
reliable common carrier which keeps its vessels in
seaworthy condition. (Philippine American General
Insurance Company, Inc. vs. Court of Appeals, 273 SCRA
262 [1997])
Page 14 of 15
2/1/16, 11:54 PM
A bank which pays off the debt of the shipowner to a

repair facility becomes the transferee of all the rights of
said facility as against the shipowner, including the
maritime lien over the vessel. (Philippine National Bank
o0o
36
Page 15 of 15
2/1/16, 11:55 PM
VOL. 214, OCTOBER 2, 1992
433
Bankers & Manufacturers Assurance Corporation vs.

Court of Appeals
*
G.R. No. 80256. October 2, 1992.
BANKERS & MANUFACTURERS ASSURANCE CORP.,

petitioner, vs. COURT OF APPEALS, F.E. ZUELLIG &
CO., INC. and E. RAZON, INC., respondents.
Civil Law; Common Carrier; 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.It
logically follows that the case at bar presents no occasion for the
necessity of discussing the diligence required of a carrier or of the
theory of prima facie liability of the carrier, for from all indications,
the shipment did not suffer loss or damage while it was under the
care of the carrier, or of the arrastre operator, it must be added.

Court
_______________
*
THIRD DIVISION.
434
434

Court of Appeals
of Appeals.
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Dollete, Blanco, Ejercito and Associates for petitioner.

MELO, J.:
After the Court of Appeals in CA-G.R. CV No. 08226 (July
8, 1987, Kapunan, Puno (P), Marigomen, JJ.) affirmed the
dismissal by Branch XVI of the Regional Trial Court of
Manila of petitioners complaint for recovery of the amount
it had paid its insured concerning the loss of a portion of a
shipment, petitioner has interposed the instant petition for
review on certiorari.
Petitioner presents the following bare operative facts:
108 cases of copper tubings were imported by Ali Trading
Company. The tubings were insured by petitioner and
arrived in Manila on board the vessel S/S Oriental
Ambassador on November 4, 1978, and turned over to
private respondent E. Razon, the Manila arrastre operator
upon discharge at the waterfront. The carrying vessel is
represented in the Philippines by its agent, the other
private respondent, F.E. Zuellig and Co., Inc. Upon
inspection by the importer, the shipment was allegedly
found to have sustained loses by way of theft and pilferage
for which petitioner, as insurer, compensated the importer
in the amount of P31,014.00.
Petitioner, in subrogation of the importer-consignee and
on the basis of what it asserts had been already established
that a portion of the shipment was lost through theft and
pilferageforthwith concludes that the burden of proof of
proving a case of non-liability shifted to private
respondents, one of whom, the carrier, being obligated to
exercise extraordinary diligence in the transport and care
of the shipment. The implication of petitioners statement
is that private respondents have not shown why they are
not liable. The premises of the argument of petitioner may
be well-taken but the conclusions are not borne out or
supported by the record.
It must be underscored that the shipment involved in
the case at bar was containerized. The goods under this
arrange435

435
Page 2 of 6
2/1/16, 11:55 PM

Court of Appeals
ment are stuffed, packed, and loaded by the shipper at a
place of his choice, usually his own warehouse, in the
absence of the carrier. The container is sealed by the
shipper and thereafter picked up by the carrier.
Consequently, the recital of the bill of lading for goods thus
transported ordinarily would declare Said to Contain,
Shippers Load and Count, Full Container Load, and
the amount or quantity of goods in the container in a
particular package is only prima facie evidence of the
amount or quantity which may be overthrown by parol
evidence.
A shipment under this arrangement is not inspected or
inventoried by the carrier whose duty is only to transport
and deliver the containers in the same condition as when
the carrier received and accepted the containers for
transport. In the case at bar, the copper tubings were
placed in three containers. Upon arrival in Manila on
November 4, 1978, the shipment was discharged in
apparent good order and condition and from the piers
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 petitioners surveyors, and
three cases were found to be in bad order. The 19 cases of
the van stripped were then kept inside Warehouse No. 3 of
Pier 3 pending delivery. It should be stressed at this point,
that the three cases found in bad order are not the cases for
which the claim below was presented, for although the
three cases appeared to be in bad order, the contents
remained good and intact.
The two other container vans were not moved from the
container yard and they were not stripped. On December 8,
1978, the cargo was released to the care of the consignees
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 consignees
warehouse in Makati. It was at that place, when the
contents of the two containers were removed and inspected,
that petitioners surveyors reported, that checked against
Page 3 of 6
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the packing list, the shipment in Container No.

OOLU2559269 was short of seven cases (see p. 18, Rollo).
Under the prevailing circumstances, it is, therefore, not
sur436
436

Court of Appeals
prising why the Court of Appeals in sustaining the trial
court, simply quoted the latter, thus:
It must be also considered that the subject container was not
stripped of its contents 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 or shortlanding (Exhs. 1, 2 and 3-Vessel). If there was any
suspicion or indication of irregularity or theft or pilferage, plaintiff s
or consignees representatives should have noted the same on the
gate passes or insisted that some form of protest form part of the
documents concerning the shipment. Yet, no such step was taken.
The shipment appears to have been delivered to the customs broker
in good order and condition and complete save for the three cases
noted as being apparently in bad order.
Consider further that the stripping of the subject container was
done at the consignees warehouse where, according to plaintiff s
surveyor, the loss of the seven cases was discovered. The evidence is
not settled as whether the defendants representatives were notified
of, and were present at, the unsealing and opening of the containers
in the bodega. Nor is the evidence clear how much time elapsed
between the release of the shipment from the pier and the stripping
of the containers at consignees bodega. All these fail to discount the
possibility that the loss in question could have taken place after the
containers had left the pier. (pp. 20-21, Rollo)
Verily, if any of the vans were 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 pierside, the pier warehouse, or at any time and
Page 4 of 6
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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 were not similarly gone over.
Rather, these two vans and the contents of the one
previously stripped were accepted without exception as to
any supposed bad order or condition by petitioners 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
437
437
Baguioro vs. Basa, Jr.

or of the theory of prima facie liability of the carrier, for
from all indications, the shipment did not suffer loss or
damage while it was under the care of the carrier, or of the
arrastre operator, it must be added.
WHEREFORE, the petition is hereby DISMISSED and
the decision of the Court of Appeals AFFIRMED, with costs
against petitioner.
SO ORDERED.
Bidin, Davide, Jr. and Romero, JJ., concur.
Gutierrez, Jr., J., (Chairman), On leave
Petition dismissed; decision affirmed.
Note.Loss or destruction of goods turned over to the
common carrier for conveyance raises instantly a
presumption of fault or negligence on the part of the carrier
(Benedicto vs. Intermediate Appellate Court, 187 SCRA
547).
o0o
Page 5 of 6
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Page 6 of 6
58
2/1/16, 11:56 PM
Sarkies Tours Philippines, Inc. vs. Court of Appeals (10th

Division
*
G.R. No. 108897. October 2, 1997.
SARKIES TOURS PHILIPPINES, INC., petitioner, vs.

HONORABLE
COURT
OF
APPEALS
(TENTH
DIVISION), DR. ELINO G. FORTADES, MARISOL A.
FORTADES and FATIMA MINERVA A. FORTADES,
respondents.
Common Carriers; Damages; 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.Petitioners receipt of Fatimas personal luggage having
been thus established, it must now be determined if, as a common
carrier, it is responsible for their loss. Under the Civil Code,
(c)ommon carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods x x x 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 x x x the person who has a right to
receive them, unless the loss is due to any of the excepted causes
under Article 1734 thereof.
Same; Same; Moral damages and exemplary damages are due
where the negligence and bad faith of a common carrier has been
duly established.Petitioner questions the award of actual
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damages to respondents. On this point, we likewise agree with the

trial and
________________
*
THIRD DIVISION.
59
59
Sarkies Tours Philippines, Inc. vs. Court of Appeals (10th Division)

appellate courts conclusions. There is no dispute that of the three
pieces of luggage of Fatima, only one was recovered. The other two
contained optometry books, materials, equipment, as well as vital
documents and personal belongings. Respondents had to shuttle
between Bicol and Manila in their efforts to be compensated for the
loss. During the trial, Fatima and Marisol had to travel from the
United States just to be able to testify. Expenses were also incurred
in reconstituting their lost documents. Under these circumstances,
the Court agrees with the Court of Appeals in awarding P30,000.00
for the lost items and P30,000.00 for the transportation expenses,
but disagrees with the deletion of the award of moral and
exemplary damages which, in view of the foregoing proven facts,
with negligence and bad faith on the fault of petitioner having been
duly established, should be granted to respondents in the amount of
P20,000.00 and P5,000.00, respectively.

Court of Appeals.
Cruz, Durian, Agabin & Alday for petitioner.
Jose B. Ramos for private respondents.
ROMERO, J.:
This petition for review is seeking the reversal of the
decision of the Court of Appeals in CA-G.R. CV No. 18979
Page 2 of 9
2/1/16, 11:56 PM
promulgated on January 13, 1993, as well as its resolution

of February 19, 1993, denying petitioners motion for
reconsideration for being a mere rehash of the arguments
raised in the appellants brief.
The case arose from a damage suit filed by private
respondents Elino, Marisol, and Fatima Minerva, all
surnamed Fortades, against petitioner for breach of
contract of carriage allegedly attended by bad faith.
On August 31, 1984, Fatima boarded petitioners 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
60
60

Division
mother Marisols 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 Fatimas 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 petitioners office in Legazpi City and
later at its head office in Manila. Petitioner, however,
merely offered her P1,000.00 for each piece of luggage lost,
which she turned down. After returning to Bicol,
disappointed but not defeated, mother and daughter 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 Fatimas bags was
recovered. Marisol further reported the incident to the
National Bureau of Investigations field office in Legazpi
Page 3 of 9
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City and to the local police.

On September 20, 1984, respondents, through counsel,
formally demanded satisfaction of their complaint from
petitioner. In a letter dated October 1, 1984, the latter
apologized for the delay and said that (a) team has been
sent out to Bicol for the
purpose of recovering or at least
1
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, attorneys fees and expenses of
litigation. They claimed that the loss was due to
petitioners failure to observe extraordinary diligence in the
care of Fatimas 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.
_____________
1
Rollo, p. 63.
61
61

Division)
On June 15, 1988, after trial on the merits, the court a quo
adjudged the case in favor of respondents, viz.:
PREMISES CONSIDERED, judgment is hereby rendered in favor
of the plaintiffs (herein respondents) and against the herein
defendant Sarkies Tours Philippines, Inc., ordering the latter to pay
to the former the following sums of money, to wit:
1. The sum of P30,000.00 equivalent to the value of the
personal belongings of plaintiff Fatima Minerva Fortades,
etc. less the value of one luggage recovered;
2. The sum of P90,000.00 for the transportation expenses, as
well as moral damages;
Page 4 of 9
2/1/16, 11:56 PM
3. The sum of P10,000.00 by way of exemplary damages;

4. The sum of P5,000.00 as attorneys fees; and
5. The sum of P5,000.00 as litigation expenses or a total of One
Hundred Forty Thousand (P140,000.00) Pesos. to be paid by
herein defendant Sarkies Tours Philippines, Inc. to the
herein plaintiffs within 30 days from receipt of this
Decision.
SO ORDERED.
On appeal, the appellate court affirmed the trial courts

judgment, but deleted the award of moral and exemplary
damages. Thus,
WHEREFORE, premises considered, except as above modified,
fixing the award for transportation expenses at P30,000.00 and the
deletion of the award for moral and exemplary damages, the
decision appealed from is AFFIRMED, with costs against
defendant-appellant.
SO ORDERED.
Its motion for reconsideration was likewise rejected by the

Court of Appeals, so petitioner elevated its case to this
Court for a review.
After a careful scrutiny of the records of this case, we
are convinced that the trial and appellate courts resolved
the issues judiciously based on the evidence at hand.
62
62

Division
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. The documentary and testimonial
evidence presented at the trial, however, established that
Fatima indeed boarded petitioners De Luxe Bus No. 5 in
the evening of August 31, 1984, and she brought three2
pieces of luggage with her, as testified by her brother Raul,
who helped her pack her things and load them on said bus.
Page 5 of 9
2/1/16, 11:56 PM
One of the bags was even recovered by a Philtranco bus

driver. In its letter dated October 1, 1984, petitioner tacitly
admitted its liability by apologizing to respondents and
assuring them that efforts were being made to recover the
lost items.
The records also reveal that respondents went to great
lengths just to salvage their loss. The incident was reported
to the police, the NBI, and the regional and head offices of
petitioner. Marisol even sought the assistance of Philtranco
bus drivers and the radio stations. To expedite the
replacement of her mothers lost U.S. immigration3
documents, Fatima also had to execute an affidavit of loss.
Clearly, they would not have gone through all that trouble
in pursuit of a fancied loss.
Fatima was not the only one who lost her luggage.
Apparently, other passengers had suffered a similar fate:
Dr. Lita Samarista testified that petitioner offered
her
4
P1,000.00 for her lost baggage and she accepted it; Carleen
Carullo-Magno lost her chemical engineering review
materials, while her 5 brother lost abaca products he was
transporting to Bicol.
Petitioners receipt of Fatimas personal luggage having
been thus established, it must now be determined if, as a
common carrier, it is responsible for their loss. Under the
Civil Code, (c)ommon carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods x x x
_____________
2
TSN, August 4, 1986, pp. 29, 34, 40-41, 54, 57, 70.
Exhibit E.
TSN, August 4, 1986, p. 83.
TSN, February 5, 1988, pp. 8, 14-16.

63
63

Division)
Page 6 of 9
2/1/16, 11:56 PM
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
carrier7 to x x x the person who has a right to receive
them, unless the loss is due
to any of the excepted causes
8
under Article 1734 thereof.
The cause of the loss in the case at bar was petitioners
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:
x x x. Where the common carrier accepted its passengers 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
carriers own lookout. It is responsible for the consequent loss of the
baggage. In the instant case, defendant appellants 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 (TSN,
August 4, 1986, pp. 29, 34, 54, 57, 70; December 23, 1987, p. 35).
Neither was this required of the other passengers (TSN, August 4,
1986, p. 104; February 5, 1988, p. 13).
Finally, petitioner questions the award of actual damages

to respondents. On this point, we likewise agree with the
trial and appellate courts conclusions. There is no dispute
that of the three pieces of luggage of Fatima, only one was
recovered. The other two contained optometry books,
materials, equipment, as well as vital documents and
personal belongings.
______________
6
Article 1733.
Article 1736.
Such as (1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity; (2) Act of the public enemy in war, whether

international or civil; (3) Act or omission of the shipper or owner of the
goods; (4) The character of the goods or defects in the packing or in the
containers; (5) Order or act of competent public authority.
Page 7 of 9
2/1/16, 11:56 PM
64
64

Division
Respondents had to shuttle between Bicol and Manila in
their efforts to be compensated for the loss. During the
trial, Fatima and Marisol had to travel from the United
States just to be able to testify. Expenses were also
incurred in reconstituting their lost documents. Under
these circumstances, the Court agrees with the Court of
Appeals in awarding P30,000.00 for the lost items and
P30,000.00 for the transportation expenses, but disagrees
with the deletion of the award of moral and exemplary
damages which, in view of the foregoing proven facts, with
negligence and bad faith on the fault of petitioner having
been duly established, should be granted to respondents in
the amount of P20,000.00 and P5,000.00, respectively.
WHEREFORE, the assailed decision of the Court of
Appeals dated January 13, 1993, and its resolution dated
February 19, 1993, are hereby AFFIRMED with the
MODIFICATION that petitioner is ordered to pay
respondents an additional P20,000.00 as moral damages
and P5,000.00 as exemplary damages. Costs against
petitioner.
SO ORDERED.
Narvasa (C.J., Chairman), Melo, Francisco and
Panganiban, JJ., concur.
Judgment affirmed with modification.
Notes.Inattention to and lack of care for the interests
of its passengers who are entitled to its utmost
consideration, particularly as to their convenience, amount
to bad faith which entitles the passenger to an award of
moral damages. (Philippine Airlines, Inc. vs. Court of
Appeals, 257 SCRA 33 [1996])
In a contract of carriage, it is presumed that the
common carrier was at fault or was negligent when a
passenger dies or is injured. (Baliwag Transit, Inc. vs.
Page 8 of 9
2/1/16, 11:56 PM
Court of Appeals, 256 SCRA 746 [1996]).

o0o
65
Page 9 of 9
2/1/16, 11:57 PM
[No. 4378. August 18, 1909.]

CHAN KEEP ET AL., plaintiffs and appellees, vs. LEON
CHAN GIOCO ET AL., defendants and appellants.
1. SHIPS AND SHIPPING; CONTRACT; TRANSPORTATION
OF MERCHANDISE.When not otherwise expressly
stipulated, it will be presumed that the owner of a boat who
contracts to transport merchandise therein over the high
seas, obligates himself to furnish a boat suitable for the
work which he undertakes to perform and a capable crew to
man her.
2. ID.; ID.; ID.; Loss OF MERCHANDISE; "FORCE
MAJEURE."The mere fact that a strong wind was
blowing when a boat carrying merchandise for hire on the
high seas changes its course will not sustain a finding that
losses incurred as a result of the sinking of the boat during
the execution of this maneuver are attributable to
unavoidable accident (caso fortuto) or to an act of God
(fuerza mayor).

La Union. Moir, J.
The facts are stated in the opinion of the court.
Anacleto Diaz y Carbonell, for appellants.
J. Courtney Hixson, for appellees.
CARSON, J.:
This is an appeal taken by the defendant, Leon Chan Gioco,
from a judgment of the Court of First Instance of the
Province of La Union in favor of the plaintiffs in an action
to recover the value of 120 cavanes of rice, which plaintiffs
claim to have delivered to defendants upon a contract for
its transportation by boat (parao) from the port of Luna, in
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the Province of La Union, to the port of San Fernando, in

the same province, in consideration of the sum of twentyfive centavos per cavan; the rice, as it is alleged, having
been lost through the negligence, carelessness, and lack of
due precaution taken by the defendants in the
management of the boat on which it was being transported,
as a result of which the boat sank as she
6

Chan Keep vs. Chan Gioco.
entered the port of San Fernando, on the night of the 8th of

April, 1907.
Leon Chan Gioco denied having entered into the
transportation contract, as alleged 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 011 which the rice was loaded, employed as such
by Leon Chan Gioco.
Counsel for appellants 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 fortuto), and without blame
upon their part.
In support of this contention, they cite article 1602 of the
Civil Code, which is as follows:
"Carriers (by land or sea) are also responsible for losses
and damages of the articles intrusted to them, unless they
prove that the loss or damage was the result of unavoidable
accident (caso fortuto) or an act of God (fuerza mayor)."
Page 2 of 5
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We do not think, however, that the evidence in support

of appellants' claim that the loss of the rice was the result
of an act of God or an unavoidable accident is 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.
The only evidence in support of this contention is the
testimony of the captain and one of the members of the
crew, from which it appears that about 10 o'clock at night,
7
VOL. 14, AUGUST 18, 1909.

when the boat laden with rice arrived in front of the buoy
just outside the harbor or port of San Fernando, the wind
was blowing strong (fuerte) ; that while changing the course
to enter the harbor, the wind blew the boat over on one side
so that she shipped so much water that the crew were
compelled to strike sail, cast anchor, and escape to shore by
swimming with the aid of the oars; and that, having been
abandoned in that condition, the running of the tide aided
the wind in throwing the boat still further upon one side,
and swamped her.
Neither of these witnesses pretend that at the time
when the disaster occurred there was a storm raging or
that the seas were running dangerously high, and we are
satisfied from their testimony, read together with the
testimony of the agent 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 f or 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 (In the matter of the "Caledonia,"
Page 3 of 5
2/1/16, 11:57 PM
157 U. S., 124; The "Edwin I. Morrison," 153 U. S., 199) ;

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, we do not
8

think that the sinking of the boat can justly be said to have
been the result of an act of God or of an unvoidable
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.
We would not be understood as holding that ships and
boats are not sometimes lost as a result of unavoidable
accident or an act of God when storms are not raging and
even when the sea is comparatively calm. Instances of such
losses are of frequent occurrence. Losses resulting from an
accident caused by a sudden and unexpected gust of wind
have under some circumstances been held to be
attributable to.an act of God (11 111., 519; 95 Penn., 287);
and the books contain many instances of losses attributed
to an act of God or inevitable accident, other than those
resulting f from the action of storms and high seas, but it
will be found that in all such cases the evidence introduced
at the trial sustains a finding that the loss was due to
exceptional circumstances or conditions, beyond the control
of those who would otherwise be responsible f or the loss,
Page 4 of 5
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notwithstanding the exercise of due diligence, foresight,

pains and care to avoid it; and, as has been said, mere proof
that a strong wind is blowing when a properly manned and
equipped sailing boat tacks its course is not sufficient to
sustain such a finding.
The judgment appealed from should be and is hereby
affirmed, with the costs against the appellants.
Arellano, C. J., Torres, Johnson, and Moreland, JJ.,
concur.
Judgment affirmed.
9
VOL. 14, AUGUST 18, 1909.
Manuel vs. Wigett.
Page 5 of 5
650
2/1/16, 11:59 PM
Philippine American General Insurance Co., Inc. vs. MGG

Marine Services, Inc.
G.R. No. 135645. March 8, 2002.
THE PHILIPPINE AMERICAN GENERAL INSURANCE

CO., INC., petitioner, vs. MGG MARINE SERVICES, INC.
and DOROTEO GAERLAN, respondents.
Common Carriers; Owing to the high degree of diligence
required of them, common carriers, as a general rule, are presumed
to have been at fault or negligent if the goods transported by them
are lost, destroyed or if the same deteriorated.Common carriers,
from the nature of their business and for reasons of public policy,
are mandated to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by
them. Owing to this high degree of diligence required of them,
common carriers, as a general rule, are presumed to have been at
fault or negligent if the goods transported by them are lost,
destroyed or if the same deteriorated.
______________
*
FIRST DIVISION.
651
VOL. 378, MARCH 8, 2002
651
Philippine American General Insurance Co., Inc. vs. MGG Marine

Services, Inc.
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Same; In order that a common carrier may be absolved from

liability where the loss, destruction or deterioration of the goods is
due to a natural disaster or calamity, it must further be shown that
such natural disaster or calamity was the proximate and only cause
of the loss; Even in cases where a natural disaster is the proximate
and only cause of the loss, a common carrier is still required to
exercise due diligence to prevent or minimize loss before, during and
after the occurrence of the natural disaster, for it to be exempt from
liability under the law for the loss of the goods.In order that a
common carrier may be absolved from liability where the loss,
destruction or deterioration of the goods is due to a natural disaster
or calamity, it must further be shown that such natural disaster or
calamity was the proximate and only cause of the loss; there must
be an entire exclusion of human agency from the cause of the
injury or the loss. Moreover, even in cases where a natural disaster
is the proximate and only cause of the loss, a common carrier is still
required to exercise due diligence to prevent or minimize loss
before, during and after the occurrence of the natural disaster, for it
to be exempt from liability under the law for the loss of the goods. If
a common carrier fails to exercise due diligenceor that ordinary
care which the circumstances of the particular case demandto
preserve and protect the goods carried by it on the occasion of a
natural disaster, it will be deemed to have been negligent, and the
loss will not be considered as having been due to a natural disaster
under Article 1734(1).
Same; Words and Phrases; A fortuitous event has been defined
as one which could not be foreseen, or which though foreseen, is
inevitable.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: x x x (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. x x x
Page 2 of 14
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Same; Ships and Shipping; Administrative Law; Board of

Marine Inquiry; The Court of Appeals did not commit any error in
relying on the factual findings of the Board of Marine Inquiry,
considering that said administrative body is an expert in matters
concerning marine casualties.Although the Board of Marine
Inquiry ruled only on the administra652
652

Services, Inc.
tive liability of the captain and crew of the M/V Peatheray PatrickG, 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
to 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.

Court of Appeals.
Leao & Leao Law Office for petitioner.
Virgilio Y. Morales for private respondents.
KAPUNAN, J.:
This petition for review seeks the reversal of the Decision,
dated September 23,1 1998, of the Court of Appeals in CAG.R. CV No. 43915, which absolved private respondents
MCG Marine Services, Inc. and Doroteo Gaerlan of any
Page 3 of 14
2/1/16, 11:59 PM
liability regarding the loss of the cargo belonging to San

Miguel Corporation due to the sinking of the M/V
Peatheray Patrick-G owned by Gaerlan with MCG Marine
Services, Inc. as agent.
On March 1, 1987, San Miguel Corporation insured
several beer bottle cases with an aggregate value of
P5,836,222.80 with petitioner
Philippine American General
2
Insurance Company. The
______________
1
The Philippine American General Insurance Co., Plaintiff-Appellee
vs. MCG Marine Services and Doroteo Gaerlan, Defendants-Appellants.

2
The terms and conditions of the contract of insurance are set forth in
Marine Risk Note No. 0322788 issued by petitioner in favor of San

Miguel Corporation.
653
VOL. 378, MARCH 8, 2002
653

cargo were loaded on board the M/V Peatheray Patrick-G 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 on March 2, 1987. The
weather was calm when the vessel started its voyage.
The following day, March 3, 1987, 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.
Upon petitioners request, on March 18, 1987, Mr.
Eduardo Sayo, a surveyor from the Manila Adjusters and
Surveyors Co., went to Taganauan Island, Cortes, Surigao
del Sur where the vessel was cast ashore, to investigate the
circumstances surrounding the loss of the cargo. In his
report, Mr. Sayo stated that the vessel was structurally
Page 4 of 14
2/1/16, 11:59 PM
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 water allegedly affected the stability of the M/V
Peatheray Patrick-G.
Thereafter, petitioner paid San Miguel Corporation the
full amount of P5,836,222.80 pursuant to the terms of their
insurance contract.
On November 3, 1987, petitioner as subrogee of San
Miguel Corporation 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 latters 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 3the vessel should be held responsible for the
incident. On May 11, 1989, the Board
______________
3
The administrative case against the vessels crew was docketed as
case No. BMI-646-87.

654
654

rendered its decision exonerating the captain and crew of
the illfated 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 forseen 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 vessels
sinking.
On April 15, 1993, the RTC of Makati City, Branch 134,
promulgated its Decision finding private respondents
Page 5 of 14
2/1/16, 11:59 PM
solidarity liable for the loss of San Miguel Corporations

cargo and ordering them to pay petitioner the full amount
of the lost cargo
plus legal interest, attorneys fees and
4
costs of suit.
Private respondents appealed the trial courts decision to
the Court of Appeals. On September 23, 1998, the appellate
court issued the assailed Decision, which reversed the
ruling of the RTC. It held that private respondents could
not be held liable for the loss of San Miguel Corporations
cargo because said loss occurred as a consequence of a
fortuitous event, and that such fortuitous
event was the
5
proximate and only cause of the loss.
Petitioner thus filed the present petition, contending
that:
(A)
IN REVERSING AND SETTING ASIDE THE DECISION OF RTC
BR. 134 OF MAKATI CITY ON THE BASIS OF THE FINDINGS
OF THE BOARD OF MARINE INQUIRY, APPELLATE COURT
DECIDED THE CASE AT BAR NOT IN ACCORD WITH LAW OR
WITH THE APPLICABLE DECISIONS OF THE HONORABLE
COURT;
(B)
IN REVERSING THE TRIAL COURTS DECISION, THE
APPELLATE COURT GRAVELY ERRED IN CONTRADICTING
AND IN DISTURBING THE FINDINGS OF THE FORMER;
______________
4
Decision dated April 15, 1993 of the Regional Trial Court of Makati
City, Branch 134, in Civil Case No. 18197, pp. 3-4; Rollo, pp. 31-32.
5
Decision of the Court of Appeals, pp. 4-8, Id., at 24-28.

655
VOL. 378, MARCH 8, 2002
655

(C)
Page 6 of 14
2/1/16, 11:59 PM
THE APPELLATE COURT GRAVELY ERRED IN REVERSING

THE DECISION OF THE TRIAL COURT AND IN DISMISSING
6
THE COMPLAINT.
Common carriers, from the nature of their business and for

reasons of public policy, are mandated to observe
extraordinary diligence in the vigilance over the goods and7
for the safety of the passengers transported by them.
Owing to this high degree of diligence required of them,
common carriers, as a general rule, are presumed to have
been at fault or negligent if the goods transported
by them
8
are lost, destroyed or if the same deteriorated.
However, this presumption of fault or negligence does
not arise in the cases enumerated under Article 1734 of the
Civil Code:
Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the
following causes only:
(1) Flood, storm, earthquake, lightning or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether international or
civil;
(4) The character of the goods or defects in the packing or in
the containers;
In order that a common carrier may be absolved from

liability where the loss, destruction or deterioration of the
goods is due to a natural disaster or calamity, it must
further be shown that such natural disaster 9 or calamity
was the proximate and only cause of the loss; there must
be an entire exclusion10 of human agency from the cause of
the injury or the loss.
______________
6
Petition, Id., at 8-9.
Article 1733, par. 1, Civil Code.
Articles 1734 and 1735, Civil Code.
Page 7 of 14
10
TOLENTINO,
2/1/16, 11:59 PM
CIVIL
CODE
OF
THE
PHILIPPINES
ANNOTATED 299 (1992 ed.).

656
656

Moreover, even in cases where a natural disaster is the
proximate and only cause of the loss, a common carrier is
still required to exercise due diligence to prevent or
minimize loss before, during and after the occurrence of the
natural disaster, for it to be exempt
from liability under the
11
law for the loss of the goods. If a common carrier fails to
exercise due diligenceor that ordinary care
which the
12
circumstances of the particular case demand to preserve
and protect the goods carried by it on the occasion of a
natural disaster, it will be deemed to have been negligent,
and the loss will not be considered as having been due to a
natural disaster under Article 1734(1).
In the case at bar, the issues may be narrowed down to
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.
The parties do not dispute that on the day the M/V
Peatheray Patrick-G sunk, said vessel encountered strong
winds and huge waves ranging from six to ten feet in
height. The vessel listed at the port side and eventually
sunk at Cawit Point, Cortes, Surigao del Sur.
The Court of Appeals, citing the decision of the Board of
Marine Inquiry in the administrative case against the
vessels crew (BMI646-87), found that the loss of the
cargo was due solely to the existence of a fortuitous event,
particularly the presence of strong winds and huge waves
at Cortes, Surigao del Sur on March 3, 1987:
xxx
III. WHAT WAS THE PROXIMATE CAUSE OF SINKING?
Evidence shows that when LCT Peatheray Patrick-G left the
Page 8 of 14
2/1/16, 11:59 PM
port of Mandawe, Cebu for Bislig, Surigao del Sur on March 2,

1987, the Cap______________
11
Article 1739, Civil Code; Yobido vs. Court of Appeals, 281 SCRA 1(1997).
12
See Compania Maritama vs. Insurance Company of North America, 12
SCRA 213 (1964).
657
VOL. 378, MARCH 8, 2002
657

Services, Inc.
tain had observed the fair atmospheric condition of the area of the
pier and confirmed this good weather condition with the Coast
Guard Detachment of Mandawe City. However, on March 3, 1987 at
about 10:00 oclock in the evening, when the vessel had already
passed Surigao Strait, the vessel started to experience waves as
high as 6 to 7 feet and that the Northeasterly wind was blowing at
about five (5) knot velocity. At about 11:00 oclock P.M. when the
vessel was already about 4.5 miles off Cawit Point, Cortes, Surigao
del Sur, the vessel was discovered to be listing 15 degrees to port
side and that the strength of the wind had increased to 15 knots
and the waves were about ten (10) feet high [Ramilo, TSN 10-27-87,
p. 32). Immediately thereafter, emergency measures were taken by
the crew. The officers had suspected that a leak or crack might had
developed at the bottom hull particularly below one or two of the
empty wing tanks at port side serving as buoyancy tanks resulting
in ingress of sea water in the tanks was confirmed when the
Captain ordered to use the cargo pump. The suction valves to the
said tanks of port side were opened in order to suck or draw out any
amount of water that entered into the tanks. The suction pressure
of the pump had drawn out sea water in large quantity indicating
therefore, that a leak or crack had developed in the hull as the
vessel was continuously batted and pounded by the huge waves.
Bailing out of the water through the pump was done continuously
in an effort of the crew to prevent the vessel from sinking. But then
efforts were in vain. The vessel still continued to list even more
despite the continuous pumping and discharging of sea water from
the wing tanks indicating that the amount of the ingress of sea
Page 9 of 14
2/1/16, 11:59 PM
water was greater in volume than that was being discharged by the
pump. Considering therefore, the location of the suspected source of
the ingress of sea water which was a crack or hole at the bottom
hull below the buoyancy tanks port side which was not acessible
(sic) for the crew to check or control the flow of sea water into the
said tank. The accumulation of sea water aggravated by the
continuous pounding, rolling and pitching of the vessel against huge
waves and strong northeasterly wind, the Captain then had no
13
other recourse except to order abandonship to save their lives.
The presence of a crack in the ill-fated vessel through

which water seeped in was confirmed by the Greutzman
Divers who were commissioned by the private respondents
to conduct an underwater survey and inspection of the
vessel to determine the cause and circumstances of its
sinking. In its report, Greutzman Divers
______________
13
Decision of the Court of Appeals, pp. 6-7, Rollo, pp. 26-27.

658
658

stated that along the port side platings, a small 14hole and
two separate cracks were found at about midship.
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
15
be foreseen, or which though foreseen, is inevitable. An
event is considered fortuitous if the following elements
concur:
x x x (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
Page 10 of 14
2/1/16, 11:59 PM
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
16
creditor. x x x
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 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, citing the following
portion of the decision of the Board of Marine Inquiry:
I. WAS LCT PEATHERAY PATRICK-G SEAWORTHY WHEN SHE
LEFT THE PORT OF MANDAWE, CEBU AND AT THE TIME OF
SINKING?
______________
14
Report, Exhibit 1, Records, p. 134; see also Exhibit 1-B, Records,
p. 136.
15
16
Yobido vs. Court of Appeals, supra, at 9.

659
VOL. 378, MARCH 8, 2002
659

Evidence clearly shows that the vessel was propelled with three (3)
diesel engines of 250 BHP each or a total of 750 BHP. It had three
(3) propellers which were operating satisfactorily from the time the
vessel left the port of Mandawe up to the time when the hull on the
double bottom tank was heavily floaded (sic) by uncontrollable
Page 11 of 14
2/1/16, 11:59 PM
entry of sea water resulting in the stoppage of engines. The vessel

was also equipped with operating generator pumps for emergency
cases. This equipment was also operating satisfactorily up to the
time when the engine room was heavily floaded (sic) with sea water.
Further, the vessel had undergone emergency drydocking and
repair before the accident occurred (sic) on November 9, 1986 at
Trigon Shipyard, San Fernando, Cebu as shown by the billing for
the Drydocking and Repair and certificate of Inspection No. 2588-86
issued by the Philippine coast Guard on December 5, 1986 which
expired on November 8, 1987.
LCT Peatheray Patrick-G was skippered by Mr. Manuel P.
Ramilo, competent and experienced licensed Major Patron who had
been in command of the vessel for more than three (3) years from
July 1984 up to the time of sinking March 3, 1987. His Chief Mate
Mr. Mariano Alalin also a licensed Major Patron had been the Chief
Mate of LCT Peatheray Patrick-G for one year and three months
at the time of the accident. Further Chief Mate Alalin had
commanded a tanker vessel named M/T Mercedes of MGM
Corporation for almost two (2) years from 1983-1985 (Alalin TSN-413-88 pp. 32-33).
That the vessel was granted SOLAS clearance by the Philippine
Coast Guard on March 1, 1987 to depart from Mandawe City for
Bislig, Surigao del Sur as evidenced by a certification issued to D.C.
Gaerlan Oil Products by Coast Guard Station Cebu dated December
23, 1987.
Based on the foregoing circumstances, LCT Peatheray Patrick-G
should be considered seaworthy vessel at the time she undertook that
fateful voyage on March 2, 1987.
To be seaworthy, a vessel must not only be staunch and fit in the
hull for the voyage to be undertaken but also must be properly
equipped and for that purpose there is a duty upon the owner to
provide a competent master and a crew adequate in number and
competent for their duty and equal in disposition and seamanship
to the ordinary in that calling. (Ralph 299 F-52, 1924 AMC 942).
(American President 2td v. Ren Fen Fed 629. AMC 1723 LCA 9 CAL
17
1924).
______________
17
Id., at 4-6; Id., at 24-26.

660
Page 12 of 14
660
2/1/16, 11:59 PM

Overloading was also eliminated as a possible cause of the
sinking of the vessel, as the evidence showed that its
freeboard clearance was substantially
greater than the
18
authorized freeboard clearance.
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 to 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 administrative19 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.
WHEREFORE, the assailed Decision of the Court of
Appeals is hereby AFFIRMED and the petition is hereby
DENIED.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Puno and YnaresSantiago, JJ., concur.
Notes.The rules on extraordinary responsibility of
common carriers remain basically unchanged even when
Page 13 of 14
2/1/16, 11:59 PM
the contract is
______________
18
Id., at 6; Id., at 26.
19
See Vasquez vs. Court of Appeals, 138 SCRA 553, 559 (1985).
661
VOL. 378, MARCH 8, 2002
661
People vs. Boquila

breached by tort although noncontradictory principles on
quasidelict may then be assimilated as also forming part of
the governing law. (Sabena Belgian World Airlines vs.
Court of Appeals, 255 SCRA 38 [1996])
Marine insurance developed as an all-risk coverage,
using the phrase perils of the sea to encompass the wide
and varied range of risks that were covered. (Malayan
Insurance Corporation vs. Court of Appeals, 270 SCRA 242
[1997])
o0o
Page 14 of 14
2/2/16, 12:00 AM
VOL. 222, MAY 17, 1993
155
Philippine American General Insurance Company, Inc. vs.

Court of Appeals
*
G.R. No. 101426. May 17, 1993.
PHILIPPINE AMERICAN GENERAL INSURANCE

COMPANY, INC., petitioner, vs. COURT OF APPEALS and
TRANSPACIFIC TOWAGE, INC., respondents.
Carriage of Goods by Sea; Ships and Shipping; Damages;
Where delay in unloading of cargo not due to negligence of carrier it
cannot be held liable for damages.The Court of Appeals
summarized the reasons which adversely affected the completion of
the unloading of the cargo from the time the vessel arrived at the
Pasacao area on 7 September 1985, namely: first, the buoys were
installed only on 11
_______________
*
SECOND DIVISION.
156
156
Philippine American General Insurance Company, Inc. vs. Court of

Appeals
September 1985; second, the consignee secured the discharge
permit only on 13 September 1985; third, a wooden catwalk had to
be installed and the extension of the wharf had to be made, which
http://central.com.ph/sfsreader/session/000001529d90499756d25dc6003600fb002c009e/p/AQD840/?username=Guest
Page 1 of 14
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was completed only on 16 September 1985; fourth, there were

intermittent rains and the stevedores supplied by the consignee did
not work during the town fiesta of the Virgin of Peafrancia, hence,
the unloading was not continuous.
Same; Same; Same; Same.While it is true that there was
indeed delay in discharging the cargo from the vessel, we agree with
the Court of Appeals that neither of the parties herein could be
faulted for such delay, for the same (delay) was due not to
negligence, but to several factors earlier discussed. 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 liability for the loss of the cargo, pursuant to Article
1740 of the Civil Code.
Same; Same; Same; Diligence shown by shipmaster to protect
cargo from typhoon and pilferages exempts carrier from damages.
The records also show that before, during and after the occurrence
of typhoon Saling, private respondent through its shipmaster
exercised due diligence to prevent or minimize the loss of the cargo,
as shown by the following facts: (1) at 5:20 a.m. of 18 October 1985,
as typhoon Saling continued to batter the Pasacao area, the
shipmaster tried to maneuver the vessel amidst strong winds and
rough seas; (2) when water started to enter the engine room and
later the engine broke down, the shipmaster ordered the ship to be
abandoned, but he sought police assistance to prevent pilferage of
the vessel and its cargo; (3) after the vessel broke into two (2) parts
and sank partially, the shipmaster reported the incident to the
Philippine Coast Guard, but unfortunately, despite the presence of
three (3) coast guards, nothing could be done to stop the pilferage as
almost the entire barrio folk came to loot the vessel and its cargo,
including the G.I. sheets.
Same; Same; Same; Judgment; Administrative Law; Res
judicata doctrine does not apply to courts where prior decision was
done by Board of Marine Inquiry.The resolution of the present
case is not barred by the judgment of the Board of Marine Inquiry.
One of the requisites of the principle of res judicata is that there
must be, among other things, identity of subject matters and causes
of action between a first and second case in order that the judgment
in the prior case may bar that in the subsequent case. The cause of
action in the marine protest was to enforce the administrative
Page 2 of 14
2/2/16, 12:00 AM
liability of the shipmaster/captain of M/V

157
VOL. 222, MAY 17, 1993
157

Appeals
Crazy Horse, its officers and crew for the wreckage and sinking of
the subject vessel. On the other hand, the cause of action at bar is to
enforce the civil liability of private respondent, a common carrier,
for its failure to unload the subject cargo within a period of time
considered unreasonably long by the petitioner. While it may be
true that the Court is bound to accord great weight to factual
findings of the Board, we hold that the protest filed before it and
the present case assert different causes of action and seek different
reliefs.

Court of Appeals.
Linsangan Law Office for petitioner.
Misa, Castro & Associates for private respondent.
PADILLA, J.:
In this petition for review on certiorari, Philippine
American General** Insurance Company, Incorporated
assails the decision of the Court of Appeals, dated 31 July
1991, rendered in CA-G.R. CV. No. 21252, which reversed
and set aside the 1decision of the Regional Trial Court of
Manila, Branch 16 and entered a new one dismissing the
petitioners complaint which sought to collect the sum of
P1,511,210.00 from the private respondent.
2
The facts of the case, as found by the Court of Appeals,
are as follows:
On September 4, 1985 the 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
Page 3 of 14
2/2/16, 12:00 AM
union brand GI sheets with a declared value of P1,086,750.00 and

86,860 bags of union Pozzolan and union Portland Cement with a
declared value of P4,300,000.00. The cargo was consigned to the
Bicol Union Center of Pasacao, Camarines Sur, with a certain Pedro
Olivan
_______________
**
Penned by Mme. Justice Salome A. Montoya with the concurrence of
Justices Eduardo R. Bengzon and Celso L. Magsino.

1
Rollo, p. 4.
Ibid, pp. 49-51.
158
158

Appeals
as the Notify-Party.
The cargo was insured by the Philippine American General
Insurance Co., Inc. under Marine Note No. 023408 covering 86,000.
of Union Pozzolan and Portland cement for the amount of
P3,440.000.00.
The vessel M/V Crazy Horse arrived on September 7, 1985 as
scheduled at the port of Pasacao, Camarines Sur. Upon arrival the
shipmaster notified the consignees Notify-Party that the vessel
was already (sic) to discharge the cargo. The discharging, could not
be effected 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. (Italics ours)
On October 16, 1985, a super typhoon code named Saling
entered the Philippine area of responsibility and was felt in the
eastern coast of the country on October 17, 1985. It had a strength
of 240 KPH and Pasacao was placed under Storm Signal No. 3. 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
Page 4 of 14
2/2/16, 12:00 AM
turbulent sea. To prevent damage to the cargo all hatches of the

vessel were closed and secured. (Italics ours)
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.
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 catwalk or the wooden bridge or the wharf,
or the rocks. The vessel was ready for any maneuver that may have
to be made.
According to the shipmaster who was plotting the typhoons path
in a chart, the radius was so wide that there was no way the
typhoon could be evaded. From 8:00 P.M. of October 17, 1985 to 8:00
P.M. of October 18, 1985 the typhoon raged in the area. 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 vessels 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.
159
VOL. 222, MAY 17, 1993
159

Court of Appeals
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. He was, however,
unable to get any assistance. When he returned to the vessel he
found that it was being continuously pounded by the strong sea
waves against the rocks. This caused the vessel to break into two (2)
parts and to sink partially. 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 came to loot the vessel
and its cargo and because there were so many of them the crew and
the guards were helpless to stop the pilferage and looting. As a
Page 5 of 14
2/2/16, 12:00 AM
result of the incident the cargo of cement was damaged while the GI
sheets were looted and nothing was left of the undischarged pieces.
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.
Because the cargo was insured by it 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.
The lower court 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 found the
plaintiff guilty of contributory negligence and mitigated the
plaintiff s claim to three-fourths (3/4) of its value. Thus the lower
court, in its Decision, ordered the defendant:
1) To pay plaintiff the mitigated amount of P1,133,408.00 plus
12% legal interest per annum computed from the date of the
filing of herein complaint on May 15, 1986, until fully paid;
2) To pay P8,000.00 as attorneys fees; and
3) To pay costs of suit.SO ORDERED.
In its now assailed decision, respondent Court of Appeals

160
160

Court of Appeals
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 fortuitous event.
Petitioner in the present petition contends that
respondent appellate court erred in not holding private
Page 6 of 14
2/2/16, 12:00 AM
respondent liable for the loss of the said insured cargo.

We affirm the decision of the Court of Appeals.
It is not disputed that private respondent is a common
3
carrier as defined in Article 1732 of the Civil Code. The
following facts are also not contested: (1) that the cargocarrying 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.
However, the Court notes the fact that as of 17 October
1985, the time when the Pasacao area was placed under
storm signal No. 3 due to Saling, the unloading of the
cargo from the vessel was still unfinished, notwithstanding
the lapse of forty (40) days from the time the vessel arrived
in Pasacao on 7 September 1985, or the lapse of thirty-four
(34) days from the time actual discharge of the cargo
commenced on 13 September 1985.
In the opinion of the trial court, this lapse of thirty four
(34) days with private respondent not having completed the
unloading of the goods, is tantamount to unreasonable
delay, which delay exposed the unloaded cargo to accident.
The trial court held private respondent liable for the loss of
goods under Article 1740 of the Civil Code which provides
that if the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free the
carrier from responsibility.
On the other hand, the appellate court ruled out any
negligence committed by private respondent and held that
the delay
_______________
3
ART. 1732. Common carriers are persons, corporations, firms or

passengers or goods or both, by land, water, or air, for compensation,
161
VOL. 222, MAY 17, 1993
161
Page 7 of 14
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Court of Appeals
in fully unloading the cargo from the vessel was
occasioned by causes that may not be attributed solely to
human factors, among which were the natural conditions of
the port where the M/V Crazy Horse had docked,
the
4
customs of the place and the weather conditions.
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 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 undisputed 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.
Indeed, from the time the vessel arrived at port Pasacao
on 7 September 1985 up to 17 October 1985 when the
Pasacao area was placed under storm signal No. 3 due to
typhoon Saling, forty (40) days had passed. Under normal
conditions, a period of forty (40) days is undoubtedly more
than enough time within
Page 8 of 14
2/2/16, 12:00 AM
_______________
4
Ibid, p. 53.
162
162

Court of Appeals
which the unloading of the cargo (given its nature) from the
vessel could be completed. Hence, the question boils down
further to which party should be faulted for this delay.
Private respondent argues that its duty to unload ceased
on 7 September 1985 when the shipmaster notified the
consignees Notify-Party that the vessel was ready to
discharge the cargo. On the other hand, petitioner contends
that the duty to unload the cargo from the vessel continued
to remain with private respondent. Respondent appellate
court, however, ruled that the question as to which party
had the task to discharge the cargo is actually immaterial
under the circumstances, as the delay could not be
attributed to any of the parties, but to several causes such
as the natural conditions of the Pasacao port, the customs
of the place and the weather conditions obtaining at the
time. The appellate court made the following observations:
x x x
xxx
To our mind whichever of the parties had the obligation to
unload the cargo is not material. For, analyzing the causes for the
delay in such unloading, we find that such delay was not due to the
negligence of any party but was occasioned by causes that may not
be attributed solely to human factors, among which were the
natural conditions of the port where the M/V Crazy Horse had
docked, the customs of the place, and the weather conditions.
The wharf where the vessel had to dock was shallow and rocky,
hence it had to drop anchor some distance away in a private port.
Buoys had to be constructed in order that the vessel may be
properly moored. After the buoys were installed a wooden stage had
to be constructed so that the stevedores could reach the vessel. For
this they needed a floating crane which was not immediately
available. The barges that were to load the cargo from the vessel
Page 9 of 14
2/2/16, 12:00 AM
could not go near the wharf because of the shallow and rocky
condition. A catwalk had to be installed between the barge and the
wharf. This necessitated the dismantling of the wooden stage
previously installed.
Apart from these preparations and constructions that had to be
made, the weather was not cooperative. Even before the typhoon
struck there were intermittent rains, hence the unloading was not
continuous. The actual unloading started on September 13, 1985
and could have been finished in 4 or 5 days but because of the rains
it was delayed. Another factor that caused further delay was the
fact that the fiesta of the Virgin of Peafrancia was celebrated and
for the length of time that the celebrations were held, the
stevedores who were from the place
163
VOL. 222, MAY 17, 1993
163

Appeals
refused to work.
5
xxx
x x x.
The Court of Appeals summarized the reasons which

adversely affected the completion of the unloading of the
cargo from the time the vessel arrived at the Pasacao area
on 7 September 1985, namely: first, the buoys were
installed only on 11 September 1985; second, the consignee
secured the discharge permit only on 13 September 1985;
third, a wooden catwalk had to be installed and the
extension of the wharf had to be made, which was
completed only on 16 September 1985; fourth, there were
intermittent rains and the stevedores supplied by the
consignee did not work during the town fiesta of the Virgin
of Peafrancia, hence, the unloading was not continuous.
We respect the above-mentioned factual findings of the
appellate court as to the natural conditions of the port of
Pasacao where the vessel was docked, and several other
factors which harshly affected the completion of the
discharge of the cargo, as these 6 findings of fact are
substantially supported by evidence.
While it is true that there was indeed delay in
Page 10 of 14
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discharging the cargo from the vessel, we agree with the

Court of Appeals that neither of the parties herein could be
faulted for such delay, for the same (delay) was due not to
negligence, but to several factors earlier discussed. 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 liability for the loss of
the cargo, pursuant to Article 1740 of the Civil Code.
The records also show that before, during and after the
occurrence of typhoon Saling, private respondent through
its shipmaster exercised due diligence to prevent or
minimize the loss of the cargo, as shown by the following
facts: (1) at 5:20 a.m. of 18 October 1985, as typhoon
Saling continued to batter the Pasacao area, the
shipmaster tried to maneuver the vessel amidst strong
winds and rough seas; (2) when water started to enter the
_______________
5
Rollo, pp. 53-54.
Republic vs. Intermediate Appellate Court, G.R. No. 70594, 10
October 1986 144 SCRA 705.

164
164

Court of Appeals
engine room and later the engine broke down, the
shipmaster ordered the ship to be abandoned, but he
sought police assistance to prevent pilferage of the vessel
and its cargo; (3) after the vessel broke into two (2) parts
and sank partially, the shipmaster reported the incident to
the Philippine Coast Guard, but unfortunately, despite the
presence of three (3) coast guards, nothing could be done to
stop the pilferage as almost the entire barrio folk came to
loot the vessel and its cargo, including the G.I. sheets.
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.
Page 11 of 14
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Although we find private respondent free from liability

for the loss of the cargo, we disagree with its contention
that the doctrine of res judicata applies in the case of bar,
because the Board of Marine Inquiry rendered a decision
dated 11 April 1988 (acting on the marine protest filed on
19 October 1985 by the shipmaster of M/V Crazy Horse)
holding that said shipmaster was not guilty of negligence
as the proximate cause of the grounding and subsequent
wreckage of M/V Crazy Horse, hence, recommending that
the captain, his officers and crew be absolved from any7
administrative liability arising out of the subject incident.
The resolution of the present case is not barred by the
judgment of the Board of Marine Inquiry. One of the
requisites of the principle of res judicata is that there must
be, among other things, identity of subject matters and
causes of action between a first and second case in order
that the judgment
in the prior case may bar that in the
8
subsequent case.
The cause of action in the marine protest was to enforce
the administrative liability of the shipmaster/captain of
M/V Crazy Horse, its officers and crew for the wreckage
and sinking of the subject vessel. On the other hand, the
cause of action at bar is to enforce the civil liability of
private respondent, a common carrier, for its failure to
unload the subject cargo within a period of time considered
unreasonably long by the petitioner. While it
_______________
7
Rollo, p. 142.
Delfin vs. Inciong, G.R. No. 50661, 10 December 1990, 192 SCRA
151.
165
VOL. 222, MAY 17, 1993
165

Court of Appeals
may be true that the Court is bound
to accord great weight
9
to factual findings of the Board, we hold that the protest
filed before it and the present case assert different causes
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of action and seek different reliefs.

All told, we find private respondent not legally liable for
the loss of the insured cargo involved in the present case.
WHEREFORE, the petition is DENIED. The appealed
decision of the Court of Appeals, dated 31 July 1991,
rendered in CA-G.R. CV No. 21252, is hereby AFFIRMED.
SO ORDERED.
Narvasa (C.J., Chairman), Regalado and Nocon,
JJ., concur.
Notes.As the petitioner prima facie received all the
shipments in the sealed containers, it has the burden to
rebut the conclusion that it received them without any
shortage (Reyma Brokerage, Inc. vs. Philippine Home
Assurance Corp., 202 SCRA 564).
Transhipment of freight without legal excuse however
competent and safe the vessel into which the transfer was
made is a violation of contract and subjects the carrier to
liability if freight is lost due to a cause otherwise excepted
(Magellan Manufacturing and Marketing Corp. vs. Court of
Appeals, 201 SCRA 102).
o0o
_______________
9
Vasquez vs. Court of Appeals, G.R. No. 42926. September 13, 1985,
138 SCRA 553.

166
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Page 14 of 14
108
2/2/16, 12:03 AM

Maersk Line vs. Court of Appeals
*
G.R. No. 94761. May 17, 1993.
MAERSK LINE, petitioner, vs. COURT OF APPEALS AND

EFREN V. CASTILLO, doing business under the name and
style of Ethegal Laboratories, respondents.
Civil Procedure; Dismissal of Actions; The dismissal of the
complaint in favor of one of the defendants resulting to the
dismissal, likewise, of cross-claim against the other, does not inure to
the benefit of the latter, being an original party defendant.
Reacting to the foregoing declaration, petitioner submits that
since its liability is predicated on the cross-claim filed by its codefendant Eli Lilly, Inc. which cross-claim has been dismissed, the
original complaint against it should likewise be dismissed. We
disagree. It should be recalled that the complaint was filed
originally against Eli Lilly, Inc. as shipper-supplier and petitioner
as carrier. Petitioner being an original party defendant upon whom
the delayed shipment is imputed cannot claim that the dismissal of
the complaint against Eli Lilly, Inc. inured to its benefit.
Civil Law; Common Carriers; In the absence of an undertaking
by a common carrier to deliver at a given date or time, delivery of
shipment or cargo should at least be made within a reasonable time.
While it is
_____________
*
THIRD DIVISION.
109
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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 (Mendoza v.
Philippine Air Lines, Inc., 90 Phil. 836 [1952]), delivery of shipment
or cargo should at least be made within a reasonable time.
Same; Same; A delay in delivery of gelatin capsules for use in
pharmaceutical products for a period of two (2) months and seven (7)
days considered beyond the realm of reasonableness; Case at bar.
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
way 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
petitioners negligence was mishipped to Richmond, Virginia.
Petitioners insistence that it cannot be held liable for the delay
finds no merit.
Same; Same; Damages; Failure of the petitioner to explain cause
of delay in the delivery of subject shipment makes it liable for breach
of contract of carriage through gross negligence amounting to bad
faith, entitling respondents recovery of moral damages.In the case
before us, we find that the only evidence presented by petitioner
was the testimony of Mr. Rolando Ramirez, a claims manager of its
agent Compania General de Tabacos de Filipinas, who merely
testified on Exhs. 1 to 5 (AC-GR CV No. 10340, p. 2) and nothing
else. Petitioner never even bothered to explain the cause for the
delay, i.e. more than two (2) months, in the delivery of the subject
shipment. Under the circumstances of the case, we hold that
petitioner is liable for breach of contract of carriage through gross
negligence amounting to bad faith. Thus, the award of moral
damages is therefore proper in this case.
Same; Same; Same; The unexplained mishipment of the subject
goods committed by the common carrier constitutes gross
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carelessness or negligence amounting to wanton misconduct which

justifies an award of exemplary damages to the aggrieved party.In
line with this pronouncement, we hold that exemplary damages
may be awarded to the private respondent. In contracts, exemplary
damages may be awarded if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner. There was
gross negligence on the part of the petitioner in mishipping the
subject goods destined for Manila but was inexplicably shipped to
Richmond, Virginia, U.S.A. Gross carelessness or negligence
constitutes wanton misconduct, hence, exemplary dam110
110

ages may be awarded to the aggrieved party (Radio

Communications of the Phils., Inc. v. Court of Appeals, 195 SCRA
147 [1991])
Same; Same; Same; Attorneys fees are recoverable since
petitioner acted with gross negligence amounting to bad faith.
Although attorneys fees are generally not recoverable, a party can
be held liable for such if exemplary damages are awarded (Article
2208, New Civil Code). In the case at bar, we hold that private
respondent is entitled to reasonable attorneys fees since petitioner
acted with gross negligence amounting to bad faith.
PETITION for review of the decision of the Court of

Appeals.
Bito, Lozada, Ortega & Castillo for petitioner.
Humberto A. Jambora for private respondent.
BIDIN, J.:
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.
Page 3 of 15
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Private respondent Efren Castillo, on the other hand, is

the proprietor of Ethegal Laboratories, a firm engaged in
the manufacture of pharmaceutical products.
On November 12, 1976, 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 (Exh. B; AC GR
CV No. 10340, Folder of Exhibits, pp. 5-6), 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 Anders Maerskline under Voyage No. 7703 for
shipment to the Philippines via Oakland, California. In
said Memorandum, shipper Eli Lilly, Inc. specified the date
of arrival to be April 3, 1977.
For reasons unknown, said cargo of capsules were
mishipped and diverted to Richmond, Virginia, USA and
then transported
111
VOL. 222, MAY 17, 1993
111

back to Oakland, California. The goods finally arrived in
the Philippines on June 10, 1977 or 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
court a quo 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 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 goods attaches only in case of loss,
Page 4 of 15
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destruction or deterioration of the goods as provided for in

Article 1734 of the Civil Code (Rollo, p. 16).
Defendant Eli Lilly, Inc., on the other hand, filed its
answer with compulsory counterclaim and cross-claim. In
its cross-claim, it alleged that the delay in the arrival of the
subject merchandise was due solely to the gross negligence
of petitioner Maersk Line.
The issues having been joined, private respondent
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.
Acting on private respondents motion, the trial court
dismissed the complaint against Eli Lilly, Inc.
Correspondingly, the latter withdrew its cross-claim
against petitioner in a joint motion dated December 3,
1979.
After trial held between respondent and petitioner, the
court a quo rendered judgment dated January 8, 1982 in
favor of respondent Castillo, the dispositive portion of
which reads:
IN VIEW OF THE FOREGOING, this Court believe (sic) and so
hold (sic) 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 which
under their own memorandum shipment would arrive in the
Philippines on April 3, 1977 which under Art. 1170 of the New Civil
Code, they stood liable for damages.
Considering that the only evidence presented by the defendant
Maersk line thru its agent the Compania de Tabacos de Filipinas is
the testimony of Rolando Ramirez who testified on Exhs. 1 to 5
which this
112
112

Court believe (sic) did not change the findings of this Court in its
decision rendered on September 4, 1980, this Court hereby renders
judgment in favor of the plaintiff Efren Castillo as against the
Page 5 of 15
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defendant Maersk Line thru its agent, the COMPANIA GENERAL

DE TABACOS DE FILIPINAS and ordering:
(a) Defendant to pay the plaintiff Efren V. Castillo the amount of
THREE
HUNDRED
SIXTY
NINE
THOUSAND
PESOS,
(P369,000.00) as unrealized profit;

(b) Defendant to pay plaintiff the sum of TWO HUNDRED
THOUSAND PESOS (P200,000.00), as moral damages;
(c) Defendant to pay plaintiff the sum of TEN THOUSAND PESOS
(P10,000.00) as exemplary damages;
(d) Defendant to pay plaintiff the sum of ELEVEN THOUSAND SIX
HUNDRED EIGHTY PESOS AND NINETY SEVEN CENTAVOS
(P11,680.97) as cost of credit line; and
(e) Defendant to pay plaintiff the sum of FIFTY THOUSAND
PESOS (P50,000.00), as attorneys fees and to pay the costs of
suit. That the above sums due to the plaintiff will bear the legal
rate of interest until they are fully paid from the time the case
was filed.
SO ORDERED. (AC-GR CV No. 10340, Rollo, p. 15)
On appeal, respondent court rendered its decision dated

August 1, 1990 affirming with modifications the lower
courts decision as follows:
WHEREFORE, the decision appealed from is affirmed with a
modification, and, as modified, the judgment in this case should
read as follows:
Judgment is hereby rendered ordering defendant-appellant
Maersk Line to pay plaintiff-appellee (1) compensatory damages of
P11,680.97 at 6% annual interest from filing of the complaint until
fully paid, (2) moral damages of P50,000.00, (3) exemplary damages
of P20,000.00 (3) attorneys fees, per appearance fees, and litigation
expenses of P30,000.00, (4) 30% of the total damages awarded
except item (3) above, and the costs of suit.
SO ORDERED. (Rollo, p. 50)
In its Memorandum, petitioner submits the following

issues for resolution of the court:
I
Whether or not the respondent Court of Appeals committed an
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VOL. 222, MAY 17, 1993
113

error when it ruled that a defendants cross-claim against a codefendant survives or subsists even after the dismissal of the
complaint against defendant-crossclaimant.
II
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.
III
Whether or not the respondent appellate court erred in
awarding actual, moral and exemplary damages and attorneys fees
despite the absence of factual findings and/or legal bases in the text
of the decision as support for such awards.
IV
Whether or not the respondent Court of Appeals committed an
error when it rendered an ambiguous and unexplained award in the
dispositive portion of the decision which is not supported by the
body or the text of the decision. (Rollo, pp. 94-95).
With regard to the first issue raised by petitioner on

whether or not a defendants cross-claim against codefendant (petitioner herein) survives or subsists even
after the dismissal of the complaint against defendantcross-claimant (petitioner herein), we rule in the negative.
Apparently this issue was raised by reason of the
declaration made by respondent court in its questioned
decision, as follows:
Re the first assigned error: What should be rescinded in this case is
not the Memorandum of Shipment but the contract between
appellee and defendant Eli Lilly (embodied in three documents,
namely: Exhs. A, A-1 and A-2) whereby the former agreed to buy
and the latter to sell those six drums of gelatin capsules. It is by
virtue of the cross-claim by appellant Eli Lilly against defendant
Page 7 of 15
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Maersk Line for the latters gross negligence in diverting the

shipment thus causing the delay and damage to appellee that the
trial court found appellant Maersk Line liable. x x x
xxx
114
114

Re the fourth assigned error: Appellant Maersk Lines insistence

that appellee has no cause of action against it and appellant Eli
Lilly because the shipment was delivered in good order and
condition, and the bill of lading in question contains stipulations,
exceptions and conditions printed on its reverse side that limit
appellant Maersk Lines liability only to the loss, destruction or
deterioration, indeed, this issue of lack of cause of action has
already been considered in our foregoing discussion on the second
assigned error, and our resolution here is still that appellee has a
cause of action against appellant Eli Lilly. Since the latter had filed
a cross-claim against appellant Maersk Line, the trial court
committed no error, therefore, in holding the latter appellant
ultimately liable to appellee. (Rollo, pp. 47-50; Italics supplied)
Reacting to the foregoing declaration, petitioner submits

that since its liability is predicated on the cross-claim filed
by its co-defendant Eli Lilly, Inc. which cross-claim has
been dismissed, the original complaint against it should
likewise be dismissed. We disagree. It should be recalled
that the complaint was filed originally against Eli Lilly,
Inc. as shipper-supplier and petitioner as carrier. Petitioner
being an original party defendant upon whom the delayed
shipment is imputed cannot claim that the dismissal of the
complaint against Eli Lilly, Inc. inured to its benefit.
Respondent court, therefore, erred in declaring that the
trial court based petitioners liability on the cross-claim of
Eli Lilly, Inc. As borne out by the record, the trial court
anchored its decision on petitioners delay or negligence to
deliver the six (6) drums of gelatin capsules within a
reasonable time on the basis of which petitioner was held
liable for damages under Article 1170 of the New Civil
Code which provides that those who in the performance of
Page 8 of 15
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their obligations are guilty of fraud, negligence, or delay

and those who in any manner contravene the tenor thereof,
are liable for damages.
Nonetheless, petitioner maintains that it cannot be held
liable for damages for the alleged delay in the delivery of
the 600,000 empty gelatin capsules since it acted in good
faith and there was no special contract under which the
carrier undertook to deliver the shipment on or before a
specific date (Rollo, p. 103).
On the other hand, private respondent claims that
during the period before the specified date of arrival of the
goods, he had
115
VOL. 222, MAY 17, 1993
115

made several commitments and contracts with his
customers for the production of drugs, all of which were
cancelled due to the delayed arrival of the subject
shipment. Private respondent further claimed that the
provision in fine print at the back of the bill of lading
issued by petitioner is void, it being a contract of adhesion.
Therefore, petitioner can be held liable for the damages
suffered by private respondent for the cancellation of the
contracts he entered into.
We have carefully reviewed the decisions of respondent
court and the trial court and both of them show that, in
finding 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
respondents action is anchored on Article 1170 of the New
Civil Code and not under the law on Admiralty (AC-GR CV
No. 10340, Rollo, p. 14).
The bill of lading covering the subject shipment among
others, reads:
6. GENERAL
(1) The Carrier does not undertake that the Goods shall arrive
Page 9 of 15
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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. (Exh. 1-A; AC-G.R.
CV No. 10340, Folder of Exhibits, p. 41)
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
(Sweet Lines v. Teves, 83 SCRA 361 [1978]). The only
participation left of the other party in such a contract is the
affixing of his signature thereto, hence the term adhesion
(BPI Credit Corporation v. Court of Appeals, 204 SCRA 601
[1991]; Angeles v. Calasanz, 135 SCRA 323 [1985]).
116
116

Nonetheless, settled is the rule that bills of lading are

contracts not entirely prohibited (Ong Yiu v. Court of
Appeals, et al., 91 SCRA 223 [1979]; Servando, et al. v.
Philippine Steam Navigation Co., 117 SCRA 832 [1982]).
One who adheres to the contract is in reality free to reject
it in its entirety; if he adheres, he gives his consent
(Magellan Manufacturing Marketing Corporation v. Court
of Appeals, et al., 201 SCRA 102 [1991]). In Magellan,
(supra), we ruled:
It is a long standing jurisprudential rule that a bill of lading
operates both as a receipt and as a contract. It is a receipt for the
goods shipped and a contract to transport and deliver the same as
therein stipulated. As a contract, it names the parties, which
includes the consignee, fixes the route, destination, and freight
rates or charges, and stipulates the rights and obligations assumed
Page 10 of 15
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by the parties. Being a contract, it is the law between the parties

who are beund by its terms and conditions provided that these are
not contrary to law, morals, good customs, public order and public
policy. 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. (Italics supplied)
However, the aforequoted ruling applies only if such

contracts will not create an absurd situation as in 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 (Mendoza v. Philippine Air
Lines, Inc., 90 Phil. 836 [1952]), delivery of shipment or
cargo should at least be made within a reasonable time.
In Saludo, Jr. v. Court of Appeals (207 SCRA 498 [1992])
this Court held:
The oft-repeated rule regarding a carriers 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
117
VOL. 222, MAY 17, 1993
117

undertakes to convey goods, the law implies a contract that they
shall be delivered at destination within a reasonable time, in the
absence, of any agreement as to the time of delivery. But where a
carrier has made an express contract to transport and deliver
property within a specified time, it is bound to fulfill its contract
and is liable for any delay, no matter from what cause it may have
arisen. This result logically follows from the well-settled rule that
where the law creates a duty or charge, and the party is disabled
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from performing it without any default in himself, and has no

remedy over, then the law will excuse him, but where the party by
his own contract creates a duty or charge upon himself, he is bound
to make it good notwithstanding any accident or delay by inevitable
necessity because he might have provided against it by contract.
Whether or not there has been such an undertaking on the part of
the carrier is to be determined from the circumstances surrounding
the case and by application of the ordinary rules for the
interpretation of contracts.
An examination of the subject bill of lading (Exh. 1; AC

GR CV No. 10340, Folder of Exhibits, p. 41) shows that the
subject shipment was estimated to arrive in Manila on
April 3, 1977. 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 way 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 petitioner-carrier for transport to
Manila via Oakland, California. But through petitioners
negligence was mishipped to Richmond, Virginia.
Petitioners insistence that it cannot be held liable for the
delay finds no merit.
Petitioner maintains that the award of actual, moral
and exemplary damages and attorneys fees are not valid
since there are no factual findings or legal bases stated in
the text of the trial courts decision to support the award
thereof.
Indeed, it is settled that actual and compensatory
damages require substantial proof (Capco v. Macasaet, 189
SCRA 561 [1990]. In the case at bar, private respondent
was able to suffi118
118
Page 12 of 15
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ciently prove through an invoice (Exh. A-1), certification
from the issuer of the letter of credit (Exh. A-2) and the
Memorandum of Shipment (Exh. B), the amount he paid
as costs of the credit line for the subject goods. Therefore,
respondent court acted correctly in affirming the award of
eleven thousand six hundred eighty pesos and ninety seven
centavos (P11,680.97) as costs of said credit line.
As to the propriety of the award of moral damages,
Article 2220 of the Civil Code provides that moral damages
may be awarded in breaches of contract where the
defendant acted fraudulently or in bad faith (Pan
American World Airways v. Intermediate Appellate Court,
186 SCRA 687 [1990]).
In the case before us, we find that the only evidence
presented by petitioner was the testimony of Mr. Rolando
Ramirez, a claims manager of its agent Compania General
de Tabacos de Filipinas, who merely testified on Exhs. 1 to
5 (AC-GR CV No. 10340, p. 2) and nothing else. Petitioner
never even bothered to explain the cause for the delay, i.e.
more than two (2) months, in the delivery of the subject
shipment. Under the circumstances of the case, we hold
that petitioner is liable for breach of contract of carriage
through gross negligence amounting to bad faith. Thus, the
award of moral damages is therefore proper in this case.
In line with this pronouncement, we hold that
exemplary damages may be awarded to the private
respondent. In contracts, exemplary damages may be
awarded if the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner. There was gross
negligence on the part of the petitioner in mishipping the
subject goods destined for Manila but was inexplicably
shipped to Richmond, Virginia, U.S.A. Gross carelessness
or negligence constitutes wanton misconduct, hence,
exemplary damages may be awarded to the aggrieved party
(Radio Communications of the Phils., Inc. v. Court of
Appeals, 195 SCRA 147 [1991]).
Although attorneys fees are generally not recoverable, a
party can be held liable for such if exemplary damages are
awarded (Article 2208, New Civil Code). In the case at bar,
we hold that private respondent is entitled to reasonable
Page 13 of 15
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attorneys fees since petitioner acted with gross negligence

amounting to bad faith.
However, we find item 4 in the dispositive portion of
respondent courts decision which awarded thirty (30)
percent of the
119
VOL. 222, MAY 17, 1993
119
People vs. Yumang

total damages awarded except item 3 regarding attorneys
fees and litigation expenses in favor of private respondent,
to be unconscionable, the same should be deleted.
WHEREFORE, with the modification regarding the
deletion of item 4 of respondent courts decision, the
appealed decision is hereby AFFIRMED in all other
respects.
SO ORDERED.
Feliciano, Davide, Jr., Romero and Melo, JJ.,
concur.
Decision affirmed with modification.
Note.The acceptance of the bill without dissent raises
the presumption that all the terms therein were brought to
the knowledge of the shipper and agreed to by him and in
the absence of fraud or mistake, he is estopped from
thereafter denying that he assented to such terms
(Magellan Manufacturing Marketing Corporation vs. Court
of Appeals, 201 SCRA 102).
o0o
Page 14 of 15
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Page 15 of 15
2/2/16, 12:05 AM
VOL. 164, AUGUST 29, 1988
685
Compania Maritima vs. Court of Appeals

No. L-31379. August 29, 1988.
COMPANIA MARITIMA, petitioner, vs. COURT OF

APPEALS and VICENTE CONCEPCION, respondents.
Civil Law; Common Carriers; Presumption of liability of
common carriers in case the goods transported by them are lost,
destroyed or had deteriorated.The general rule under Articles
1735 and 1752 of the Civil Code is that common carriers are
presumed to have been at fault or to have acted negligently in case
the goods transported by
_______________
*
THIRD DIVISION.
686
686

them are lost, destroyed or had deteriorated. To overcome the

presumption of liability for the loss, destruction or deterioration of
the goods under Article 1735, the common carriers must prove that
they observed extraordinary diligence as required in Article 1733 of
the Civil Code. The responsibility of observing extraordinary
diligence in the vigilance over the goods is further expressed in
Article 1734 of the same Code, the article invoked by petitioner to
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avoid liability for damages.

Same; Same; Same; It is incumbent upon the common carrier to
prove that the loss, deterioration or destruction was due to accident
inconsistent with its liability.Corollary is the rule that mere proof
of delivery of the goods in good order to a common carrier, and of
their arrival at the place of destination in bad order, makes out
prima facie case against the common carrier, so that if no
explanation is given as to how the loss, deterioration or destruction
of the goods occurred, the common carrier must be held responsible.
Otherwise stated, it is incumbent upon the common carrier to prove
that the loss, deterioration or destruction was due to accident or
some other circumstances inconsistent with its liability.
Same; Same; Same; Same; Petitioner seems to have overlooked
the extraordinary diligence required of common carriers in the
vigilance over the goods transported by them.In the instant case,
We are not persuaded by the proferred explanation of petitioner
alleged to be the proximate cause of the fall of the payloader while
it was being unloaded at the Cagayan de Oro City pier. Petitioner
seems to have overlooked the extraordinary diligence required of
common carriers in the vigilance over the goods transported by
them by virtue of the nature of their business, which is impressed
with a special public duty.
Same; Same; Same; Same; Same; Duration of the responsibility
of common carriers to observe extraordinary diligence.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.
Same; Same; Same; Same; Same; Same; It cannot be reasonably
concluded that the damage caused to the payloader was due to the
687
VOL. 164, AUGUST 29, 1988
687
Page 2 of 14
2/2/16, 12:05 AM
alleged misrepresentation of private respondent conception as to the

correct and accurate weight of the payloader.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
petitioners crew in their methods of ascertaining the weight of
heavy cargoes offered for shipment before loading and unloading
them, as is customary among careful persons.

of Appeals. Gatmaitan, J.
Rafael Dinglasan for petitioner.
Benjamin J. Molina for private respondent.
FERNAN, C.J.:
Petitioner Compaia Maritima seeks to set aside through
1
this petition for review on certiorari the decision of the
Court of Appeals dated December 5, 1965, adjudging
petitioner liable to private respondent Vicente E.
Concepcion for damages in the amount of P24,652.97 with
legal interest from the date said decision shall have become
final, for petitioners failure to deliver safely private
respondents payloader, and for costs of suit. The payloader
was declared abandoned in favor of petitioner.
The facts of the case are as follows:
Private respondent Vicente E. Concepcion, a civil
engineer doing business under the name and style of
Consolidated Construction with office address at Room 412,
Don Santiago Bldg., Taft Avenue, Manila, had a contract
with the Civil
_______________
Page 3 of 14
2/2/16, 12:05 AM
Penned by Justice Magno S. Gatmaitan and concurred in by Justices
Julio Villamor and Ruperto G. Martin.

688
688

Aeronautics Administration (CAA) sometime in 1964 for

the construction of the airport in Cagayan de Oro City,
Misamis Oriental.
Being a Manila-based contractor, Vicente E. Concepcion
had to ship his construction equipment to Cagayan de Oro
City. Having shipped some of his equipment through
petitioner and having settled the balance of P2,628.77 with
respect to said shipment, Concepcion negotiated anew with
petitioner, thru its collector, Pacifico Fernandez, on August
28, 1964 for the shipment to Cagayan de Oro City of one (1)
unit payloader, four (4) units 6x6 Reo trucks and two (2)
pieces of water tanks. He was issued Bill of Lading 113 on
the same date upon2 delivery of the equipment at the
Manila North Harbor.
These equipment were loaded aboard the MV Cebu in its
Voyage No. 316, which left Manila on August 30, 1964 and
arrived at Cagayan de Oro City in the afternoon of
September 1, 1964. The Reo trucks and water tanks were
safely unloaded within a few hours after arrival, but while
the payloader was about two (2) meters above the pier in
the course of unloading, the swivel pin of the heel block of
the port block of3 Hatch No. 2 gave way, causing the
payloader to fall. The payloader was damaged and was
thereafter taken to petitioners compound in Cagayan de
Oro City.
On September 7, 1964, Consolidated Construction, thru
Vicente E. Concepcion, wrote Compaia Maritima to
demand a replacement of the payloader which it was
considering
as a complete loss because of the extent of
4
damage. Consolidated Construction likewise notified
petitioner of its claim for damages. Unable to elicit
response, the demand
was repeated in a letter dated
5
October 2, 1964.
Meanwhile, petitioner shipped the payloader to Manila
Page 4 of 14
2/2/16, 12:05 AM
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 Bill of Lading, petitioner denied the
claim for damages of Consolidated Construction in its letter
dated October 7, 1964,
_______________
2
Exhibit A, p. 1, Records.
Exhibit 4, p. 25, Records.
Exhibit D, p. 4, Records.
Exhibit E, p. 5, Records.
689
VOL. 164, AUGUST 29, 1988
689

contending that had Vicente E. Concepcion declared the
actual weight of the payloader, damage to their6 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
P45,000.00 from Bormaheco, Inc. on December 3, 1964, and
on July 6, 1965, Vicente E. Concepcion filed an action for
damages against petitioner with the then Court of First
Instance of Manila, Branch VII, docketed as Civil Case No.
61551, seeking to recover damages in the amount of
P41,225.00 allegedly suffered for the period of 97 days that
he was not able to employ a payloader in the construction
job at the rate of P450.00 a day; P34,000.00 representing
the cost of the damaged payloader; P11,000.00 representing
the difference between the cost of the damaged payloader
and that of the new payloader; P20,000.00 representing the
losses suffered by him due to the diversion of funds to
enable him to buy a new payloader; P10,000.00 as
attorneys fees;
P5,000.00 as exemplary damages; and cost
7
of the suit.
After trial, the then Court of First Instance of Manila,
Branch VII, dismissed on April 24, 1968 the complaint with
costs against therein plaintiff, herein private respondent
Vicente E. Concepcion, stating that the proximate cause of
Page 5 of 14
2/2/16, 12:05 AM
the fall of the payloader was Vicente E. Concepcions act or

omission in having misrepresented the weight of the
payloader as 2.5 tons instead of its true weight of 7.5 tons,
which underdeclaration was intended to defraud Compaia
Maritima of the payment of the freight charges and which
likewise led the Chief Officer of the vessel to use
the heel
8
block of hatch No. 2 in unloading the payloader.
From the adverse decision against him, Vicente E.
Concepcion appealed to the Court of Appeals which, on
December 5, 1965 rendered a decision, the dispositive
IN VIEW WHEREOF, judgment must have to be as it is hereby
reversed; defendant is condemned to pay unto plaintiff the sum in
_______________
6
Exhibit F, p. 7, Records.
pp. 1-7, Record on Appeal, p. 28, Rollo.
pp. 34-47, Ibid.
690
690

damages of P24,652.07 with legal interest from the date the present
decision shall have become final; the payloader is declared
9
abandoned to defendant; costs against the latter.
Hence, the instant petition.

The principal issue in the instant case is whether or not
the act of private respondent Vicente E. Concepcion in
furnishing petitioner Compaia Maritima with an
inaccurate weight of 2.5 tons instead of the payloaders
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 petitioners crew, as would
absolutely exempt petitioner from liability for damages
under paragraph 3 of Article 1734 of the Civil Code, which
provides:
Art. 1734. Common carriers are responsible for the loss,
Page 6 of 14
2/2/16, 12:05 AM
destruction, or deterioration of the goods, unless the same is due to

any of the following causes only:
xxx xxx xxx
(3) Act or omission of the shipper or owner of the goods.
Petitioner claims absolute exemption under this provision

upon the reasoning that private respondents act of
furnishing it with an inaccurate weight of the payloader
constitutes misrepresentation within the meaning of act or
omission of the shipper or owner of the goods under the
above-quoted article. It likewise faults the respondent
Court of Appeals for reversing the decision of the trial court
notwithstanding that said appellate court also found that
by representing the weight of the payloader to be only 2.5
tons, private respondent had led petitioners officer to
believe that the same was within the 5-ton capacity of the
heel block of Hatch No. 2. Petitioner would thus insist that
the proximate and only cause of the damage to the
payloader
was
private
respondents
alleged
misrepresentation of the weight of the machinery in
question; hence, any resultant damage to it must be borne
by private respondent Vicente E. Concepcion.
The general rule under Articles 1735 and 1752 of the
Civil Code is that common carriers are presumed to have
been at
_______________
9
pp. 25-26, Rollo.

691
VOL. 164, AUGUST 29, 1988
691

fault or to have acted negligently in case the goods
transported by them are lost, destroyed or had
deteriorated. To overcome the presumption of liability for
the loss, destruction or deterioration of the goods under
Article 1735, the common carriers must prove that they
observed extraordinary diligence as required in Article
1733 of the Civil Code. The responsibility of observing
Page 7 of 14
2/2/16, 12:05 AM
extraordinary diligence in the vigilance over the goods is

further expressed in Article 1734 of the same Code, the
article invoked by petitioner to avoid liability for damages.
Corollary is the rule that mere proof of delivery of the
goods in good order to a common carrier, and of their
arrival at the place of destination in bad order, makes out
prima facie case against the common carrier, so that if no
explanation is given as to how the loss, deterioration or
destruction of the goods
occurred, the common carrier must
10
be held responsible. Otherwise stated, it is incumbent
upon the common carrier to prove that the loss,
deterioration or destruction was due to accident or some
other circumstances inconsistent with its liability.
In the instant case, We are not persuaded by the
proferred explanation of petitioner alleged to be the
proximate cause of the fall of the payloader while it was
being unloaded at the Cagayan de Oro City pier. Petitioner
seems to have overlooked the extraordinary diligence
required of common carriers in the vigilance over the goods
transported by them by virtue of the nature of their
business, which is impressed with a special public duty.
Thus, Article 1733 of the Civil Code provides:
Art. 1733. Common carriers, from the nature of their business and
for reason of public policy, are bound to observe extraordinary
passengers transported by them according to all the circumstances
of each case.
Such extraordinary diligence in the vigilance over the goods is
futher expressed in Articles 1734, 1735 and 1745, Nos. 5, 6 and 7, x
x x
_______________
10
Mirasol vs. Robert Dollar Co., 53 Phil. 129; Ynchausti Steamship
Co. vs. Dexter and Unson, 41 Phil. 289.

692
692

Page 8 of 14
2/2/16, 12:05 AM
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 reasonble means to ascertain the nature and
characteristic of goods tendered for shipment, and to
exercise due care in the handling and stowage,
including
11
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 petitioners crew in their methods of
ascertaining the weight of heavy cargoes offered for
shipment before loading and unloading them, as is
customary among careful persons.
It must be noted that the weight submitted by private
respondent 12
Concepcion appearing at the left-hand portion
of Exhibit 8 as an addendum to the original enumeration
of equipment to be shipped was entered into the bill of
lading by
_______________
Page 9 of 14
11
2/2/16, 12:05 AM
The Ensley City DC, Ma; 71 F. Suppl. 444, citing Schnell vs. The
Vallescura, 293 U.S. 296, 55 Set. 194, 79 L. Ed. 373; The Nichiyo Maru, 4
Cri, 89 F. 2d 539; Bank Line v. Porter, 4 Cir., 25 F. 2d 843.
12
p. 36, Records.
693
VOL. 164, AUGUST 29, 1988
693

petitioner, thru Pacifico Fernandez, a company
collector,
13
without seeing the equipment to be shipped. Mr. Mariano
Gupana, assistant traffic manager of petitioner, confirmed
in his testimony that the company never14 checked the
information entered in the bill of lading. Worse, the
weight of the payloader as entered in the bill of lading was
assumed to
be correct by Mr. Felix Pisang, Chief Officer of
15
MV Cebu.
The weights stated in a bill of lading are prima facie
evidence of the amount received and the fact that the
weighing was done by another will not relieve the common
carrier where it16accepted such weight and entered it on the
bill of lading. Besides, common carriers can protect
themselves against mistakes in the bill of lading as
to
17
weight by exercising diligence before issuing the same.
While petitioner has proven that private respondent
Concepcion did furnish it with an inaccurate weight of the
pay-loader, petitioner is nonetheless liable, for the damage
caused to the machinery could have been avoided by the
exercise of reasonable skill and attention on its part in
overseeing the unloading of such a heavy equipment. And
circumstances clearly show that the fall of the payloader
could have been avoided by petitioners crew. Evidence on
record sufficiently show that the crew of petitioner had
been negligent in the performance of its obligation by
reason of their having failed to take the necessary
precaution under the circumstances which usage has
established among careful persons, more particularly its
Chief Officer, Mr. Felix Pisang, who is tasked with the overall supervision of loading and unloading heavy cargoes and
upon whom rests the burden of deciding as to what
particular winch the unloading of the payloader should be
Page 10 of 14
2/2/16, 12:05 AM
18
under-taken. While it was his duty to determine the

weight of heavy cargoes before accepting them. Mr. Felix
Pisang took the bill of lading on its face value and
presumed the same to be correct by
_______________
13
TSN, December 16, 1966, pp. 111-113.
14
TSN, January 19, 1967, pp. 119-120.
15
TSN, September 29, 1968, pp. 84-85.
16
Baker vs. H. Dittinger Roller Mills, Co., Tex. Civ. Appl. 203 SW 798.
17
Ibid.
18
TSN, September 29, 1966, p. 57.

694
694

19
merely seeing it. Acknowledging that there was a

jumbo in the MV Cebu which has the capacity of lifting
20 to 25 ton cargoes, Mr. Felix Pisang chose not to use it,
because according to him, since the ordinary boom has a
capacity of 5 tons while the payloader was 20only 2.5 tons, he
did not bother to use the jumbo anymore.
In that sense, therefore, private respondents act of
furnishing petitioner with an inaccurate weight of the
payloader upon being asked by petitioners collector, cannot
be used by said petitioner as an excuse to avoid liability for
the damage caused, as the same could have been avoided
had petitioner utilized the jumbo lifting apparatus which
has a capacity of lifting 20 to 25 tons of heavy cargoes. It is
a fact known to the Chief Officer of MV Cebu that the
payloader was loaded aboard the MV Cebu at the Manila
North 21Harbor on August 28, 1964 by means of a terminal
crane. Even if petitioner chose not to take the necessary
precaution to avoid damage by checking the correct weight
of the payloader, extraordinary care and diligence compel
the use of the jumbo lifting apparatus as the most
prudent course for petitioner.
While the act of private respondent in furnishing
Page 11 of 14
2/2/16, 12:05 AM
petitioner with an inaccurate weight of the payloader

cannot successfully be used as an excuse by petitioner to
avoid liability to the damage thus caused, said act
constitutes a contributory circumstance to the damage
caused on the payloader, which mitigates the liability for
damages of petitioner in accordance with Article 1741 of
the Civil Code, to wit:
Art. 1741. If the shipper or owner merely contributed to the loss,
destruction or deterioration of the goods, the proximate cause
thereof being the negligence of the common carrier, the latter shall
be liable in damages, which however, shall be equitably reduced.
We find equitable the conclusion of the Court of Appeals

reducing the recoverable amount of damages by 20% or 1/5
of the value of the payloader, which at the time the instant
case arose, was valued at P34,000.00, thereby reducing the
recover_______________
19
p. 80, Ibid.
20
p. 78, Ibid.
21
p. Ibid.
695
VOL. 164, AUGUST 29, 1988
695

able amount at 80% or 4/5 of P34,000.00 or the sum of
P27,200.00. Considering that the freight charges for the
entire cargoes shipped by private respondent amounting to
P2,318.40 remained unpaid, the same would be deducted
from the P27,000.00 plus an additional deduction of
P228.63 representing the freight charges for the
undeclared weight of 5 tons (difference between 7.5 and 2.5
tons) leaving, therefore, a final recoverable amount of
damages of P24,652.97 due to private respondent
Concepcion.
Notwithstanding the favorable judgment in his favor,
private respondent assailed the Court of Appeals decision
Page 12 of 14
2/2/16, 12:05 AM
insofar as it limited the damages due him to only

P24,652.97 and the cost of the suit. Invoking the provisions
on damages under the Civil Code, more particularly
Articles 2200 and 2208, private respondent further seeks
additional damages allegedly because the construction
project was delayed and that in spite of his demands,
petitioner failed to take any steps to settle his valid, just
and demandable claim for damages.
We find private respondents submission erroneous. It is
well-settled that an appellee, who is not an appellant, may
assign errors in his brief where his purpose is to maintain
the judgment on other grounds, but he may not do so if his
purpose is to have the judgment
modified or reversed, for,
22
in such case, he must appeal. Since private respondent
did not appeal from the judgment insofar as it limited the
award of damages due him, the reduction of 20% or 1/5 of
the value of the payloader stands.
WHEREFORE, in view of the foregoing, the petition is
DENIED. The decision of the Court of Appeals is hereby
AFFIRMED in all respects with costs against petitioner. In
view of the length of time this case has been pending, this
decision is immediately executory.
Gutierrez, Jr., Feliciano, Bidin and Corts, JJ.,
concur.
_______________
22
Gorospe, et al. vs. Peaflorida, et al., 101 Phil. 886, citing Pineda &
Ampil Mfg. Co., et al. vs. Arsenio Bartolome, et al., 95 Phil. 930; Saenz v.
Mitchell, 60 Phil. 69; Mendoza v. Mendiola, 53 Phil. 267.
696
696

People vs. Tapeno
Note.A common carrier is presumed at fault in the

absence of a satisfactory explanation on how the air plane
crash occurred. (Vda. de Abeto vs. Phil. Air Lines, Inc., 115
Page 13 of 14
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SCRA 489.)
o0o
Page 14 of 14
258
2/2/16, 12:07 AM

Southern Lines, Inc. vs. Court of Appeals
No. L-16629. January 31, 1962.
SOUTHERN LINES, INC., petitioner, vs. COURT OF

APPEALS and CITY OF ILOILO, respondents.
259
VOL. 4, JANUARY 31, 1962
259

Common carriers; Liability for damages to goods; Articles 361
and 362 of the Code of Commerce.Under 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. (Government vs. Ynchausti & Co., 40 Phil. 219,
223).
Same; Same; Carrier not relieved from liability if improper
packing of goods was apparent.If the fa ct proper 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
therefrom. (9 Am. Jur. 869).
PETITION for review by certiorari of a decision of the

Court of Appeals.
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Jose Ma. Lopez Vito, Jr. for petitioner.
The City Fiscal for respondents.
DE LEON, J.:
This is a petition to review on certiorari the decision of the
Court of Appeals in CA-G.R. No. 15579-R affirming that of
the Court of First Instance of Iloilo which sentenced
petitioner Southern Lines, Inc. to pay respondent City of
Iloilo the amount of P4,931.41.
Sometime in 1948, the City of Iloilo requisitioned for rice
from the National Rice and Corn Corporation (hereafter
referred to as NARIC) in Manila. On August 24 of the same
year, NARIC, pursuant to the order, shipped 1,726 sacks of
rice consigned to the City of Iloilo on board the SS "General
Wright" belonging to the Southern Lines, Inc. Each sack of
rice weighed 75 kilos and the entire shipment as indicated
in the bill of lading had a total weight of 129,450 kilos.
According to the bill of lading, the cost of the shipment was
P63,1 15.50 itemized and computed as follows:
Unit Price per bag
P62,567.50
P36.25.................................................................................
Handling at P0.13 per
bag.................................................................................
224.38
Trucking at P2.50 per

bag.................................................................................
323.62
To t a 1.........
P63,115.50
260
260

On September 3, 1948, the City of Iloilo received the

shipment and paid the amount of P63,115.50. However, it
was noted at the foot of the bill of lading that the City of
Iloilo 'Received the above mentioned merchandise
apparently in same condition as when shipped, save as
noted below: actually received 1685 sacks with a gross
Page 2 of 6
2/2/16, 12:07 AM
weight of 116,131 kilos upon actual weighing. Total

shortage ascertained 13,319 kilos." The shortage was
equivalent to 41 sacks of rice with a net weight of 13,319
kilos, the proportionate value of which was P6,486.35.
On February 14, 1951 the City of Iloilo filed a complaint
in the Court of First Instance of Iloilo against NARIC and
the Southern Lines, Inc. for the recovery of the amount of
P6,486.35 representing the value of the shortage of the
shipment of rice. After trial, the lower court absolved
NARIC from the complaint, but sentenced the Southern
Lines, Inc. to pay the amount of P4,931.41 which is the
difference between the sum of P6,486.35 and P1,554.94
representing the latter's counterclaim for handling and
freight
The Southern Lines, Inc. appealed to the Court of
Appeals which affirmed the judgment of the trial court.
Hence, this petition for review.
The only question to be determined in this petition is
whether or not the defendant-carrier, the herein petitioner,
is liable for the loss or shortage of the rice shipped.
Article 361 of the Code of Commerce provides:
"ART. 361.The merchandise shall be transported at the risk and
venture of the shipper, if the contrary has not been expressly
stipulated.
As a consequence, all the losses and deteriorations which the
goods may suffer during the transportation by reason of fortuitous
event, force majeure, or the inherent nature and defect of the goods,
shall be for the account and risk of the shipper.
Proof of these accidents is incumben t up on the carrier."
Article 362 of the same Code provides:

"ART. 362.Nevertheless, the carrier shall be liable for the losses
and damages resulting from the causes mentioned in the preceding
a rticle if it is proved, as against him, that they arose through his
negligence or by reason of his having failed to take the precautions
which usage has established among
261
261

Page 3 of 6
2/2/16, 12:07 AM
careful persons, unless the shipper has committed fraud in the bill
of lading, representing the goods to be of a kind or quality different
from what they really were.
If, notwithstanding the precautions referred to in this article, the
goods transported run the risk of being lost, on account of their
nature or by reason of unavoidable accident, there being no time for
their owners to dispose of them, the carrier may proceed to sell
them, placing them for this purpose a'; the disposal of the judicial
authority or of the officials designated by special provisions."
Under the provisions of Article 361, the defendant-carrier

in order to free itself from liability, was only obliged to
prove that the damages suffered by the goods were "by
virtue of the nature or defect of the articles." Under the
provisions of Article 362, the plaintiff, in order to hold the
defendant liable, was obliged to prove that the damages to
the goods by virtue of their nature, occurred on account of
its negligence or because the defendant did not take the
precaution adopted by careful persons. (Government v.
Ynchausti & Co., 40 Phil. 219, 223).
Petitioner claims exemption from liability by contending
that the shortage in the shipment of rice was due to such
factors as the shrinkage, leakage or spillage of the rice on
account of the bad condition of the sacks at the time it
received the same and the negligence of the agents of
respondent City of Iloilo in receiving the shipment. The
contention is untenable, for, if the fact of improper packing
is known to the carrier or his servants, or apparent upon
ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability
for loss or injury resulting thereform. (9 Am Jur. 869.)
Furthermore, according to the Court of Appeals, "appellant
(petitioner) itself frankly admitted that the strings that
tied the bags of rice were broken; some bags were with
holes and plenty of rice were spilled inside the hull of the
boat, and that the personnel of the boat collected no less
than 26 sacks of rice which they had distributed among
themselves." This finding, which is binding upon this
Court, shows that the shortage resulted from the
negligence of petitioner.
Invoking the provisions of Article 366 of the Code of
Commerce and those of the bill of lading, petitioner furhttp://central.com.ph/sfsreader/session/000001529d95d57780fe76ee003600fb002c009e/p/AQB845/?username=Guest
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262
262

ther contends that respondent is precluded from filing an

action for damages on account of its failure to present a
claim within 24 hours from receipt of the shipment. It also
cites the cases of Government v. Ynchausti & Co., 24 Phil.
315 and Triton Insurance Co. v. Jose, 33 Phil. 194, ruling to
the effect that the requirement that the claim for damages
must be made within 24 hours from delivery is a condition
precedent to the accrual of the right of action to recover
damages. These two cases above-cited are not applicable to
the case at bar. In the first cited case, the plaintiff never
presented any claim at all before filing the action. In the
second case, there was payment of the transportation
charges which precludes the presentation of any claim
against the carrier. (See Article 366, Code of Commerce.) It
is significant to note that in the American case of Hoye v.
Pennsylvania Railroad Co., 13 Ann. Case. 414, it has been
said:
"x x x 'It has been held that a stipulation in the contract of
shipment requiring the owner of the goods to present a notice of his
claim to the carrier within a specified time after the goods have
arrived at their destination is in the nature of a condition precedent
to the owner's right to enforce a recovery, that he must show in the
first instance that he has complied with the condition, or that the
circumstances were such that to have complied with it would have
required him to do an unreasonable thing. The weight of authority,
however, sustains the view that such a stipulation is more in the
nature of a limitation upon the owner's right to recovery, and that
the burden of proof is accordingly on the carrier to show that the
limitation teas reasonable and in proper form or within the time
stated.' (Hutchinson on Carrier, 3d ed., par. 44)" Italics supplied.
In the case at bar, the record shows that petitioner failed to

plead this defense in its answer to respondent's complaint
and, therefore, the same is deemed waived (Section 10,
Rule 9, Rules of Court), and cannot be raised for the first
time at the trial or on appeal. (Maxilom v. Tabotabo, 9 Phil.
Page 5 of 6
2/2/16, 12:07 AM
390.) Moreover, as the Court of Appeals has said:

"x x x the records reveal that the appellee (respondent) filed the
present action, within a reasonable time after the short delivery in
the shipment of the rice was made. It should be recalled that the
present action is one for the refund of the amount paid in excess,
and not for damages or the recovery of
263
263
Palanca vs. Commissioner of Internal Revenue

the shortage; for admittedly the appellee (respondent) had paid the
entire value of the 1726 sacks of rice, subject to subsequent
adjustment, as to shortages or losses. The bill of lading does not at
all limit the time for filing an action for the refund of money paid in
excess."
WHEREFORE, the decision of the Court of Appeals is

hereby affirmed in all respects and the petition for
certiorari denied.
With costs against the petitioner.
Padilla, Labrador, Concepcion, Reyes, J.B.L.,
Barrera, and Dizon, JJ., concur.
Bengzon, C.J., Bautista Angelo and Paredes, JJ.,
did not take part.
Decision affirmed.
____________
Page 6 of 6
646
2/2/16, 12:07 AM

Ganzon vs. Court of Appeals
*
No. L-48757. May 30, 1988.
MAURO GANZON, petitioner, vs. COURT OF APPEALS

and GELACIO E. TUMAMBING, respondents.
Civil Law; Obligations; Contracts; Common Carriers; Perfection
of contract of carriage; Extraordinary responsibility of carrier for
loss, destruction or deterioration of the goods, when it commences
and ceases.By the said act of delivery, the scraps were
unconditionally placed in the possession and control of the common
carrier, and upon their receipt by the carrier for transportation, the
contract of carriage was deemed perfected. Consequently, the
petitioner-carriers extraordinary responsibility for the loss,
destruction, or deterioration of the goods commenced, Pursuant to
Art. 1736, such extraordinary responsibility would cease only upon
the delivery, actual or constructive, by the carrier to the consignee,
or to the person who has a right to receive
_______________
*
SECOND DIVISION.
647
VOL. 161, MAY 30, 1988
647

them. The fact that part of the shipment had not been loaded on
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board the lighter did not impair the said contract of transportation
as the goods remained in the custody and control of the carrier,
albeit still unloaded.
Same; Same; Same; Failure of petitioner to show that the loss of
the goods was due to causes under Art. 1734 of the Civil Code.The
petitioner has failed to show that the loss of the scraps was due to
any of the following causes enumerated in Article 1734 of the Civil
Code.
Same; Same; Same; Same; Presumption that petitioner acted
negligently for his failure to show that the loss of the goods was due
to causes under Art. 1734 of the Civil Code; Effect of the
presumption; Failure of petitioner to prove the exercise of
extraordinary diligence.Hence, the petitioner is presumed to have
been at fault or to have acted negligently. By reason of this
presumption, the court is not even required to make an express
finding of fault or negligence before it could hold the petitioner
answerable for the breach. of the contract of carriage, Still, the
petitioner could have been exempted from any liability had he been
able to prove that he observed extraordinary diligence in the
vigilance over the goods in his custody, according to all the
circumstances of the case, or that the loss was due to an unforeseen
event or to force majeure. As it was, there was hardly any attempt
on the part of the petitioner to prove that he exercised such
extraordinary diligence.
Same; Same; Same; Same; Loss of the scraps not due to caso
fortuito.We cannot sustain the theory of caso fortuito. In the
courts below, the petitioners defense was that the loss of the scraps
was due to an order or act of competent public authority, and this
contention was correctly passed upon by the Court of Appeals.
Same; Same; Same; Same; Change of theory on appeal, not
allowed; Intervention of municipal officials, not of a character that
would render impossible the fulfillment by the carrier of its
obligations.Now the petitioner is changing his theory to caso
fortuito. Such a change of theory on appeal we cannot, however,
allow. In any case, the intervention of the municipal officials was
not of a character that would render impossible the fulfillment by
the carrier of its obligation. The petitioner was not duty bound to
obey the illegal order to dump into the sea the scrap iron. Moreover,
Page 2 of 12
2/2/16, 12:07 AM
there is absence of sufficient proof that the issuance of the same

order was attended with such force or intimidation as to completely
overpower the will of the petitioners employees. The mere difficulty
in the fulfillment of the obligation is not considered force majeure.
We agree with the private respondent
648
648

Ganzon us. Court of Appeals
that the scraps could have been properly unloaded at the shore or at
the NASSCO compound, so that after the dispute with the local
officials concerned was settled, the scraps could then be delivered in
accordance with the contract of carriage.
Same; Same; Same; Absence of incompatibility between the
provisions on common carriers and of the Code of Commerce;
Articles 1734 and 1735 of the Civil Code, interpreted; Requirement
for the exercise of carrier of ordinary diligence, deemed modified by
Art. 1733 of the Civil Code.There is no incompatibility between
the Civil Code provisions on common carriers and Articles 361 and
362 of the Code of Commerce which were the basis for this Courts
ruling in Government of the Philippine Islands vs. Ynchausti & Co.
and which the petitioner invokes in this petition. For Art. 1735 of
the Civil Code, conversely stated, means that the shipper will suffer
the losses and deterioration arising from the causes enumerated in
Art. 1734; and in these instances, the burden of proving that
damages were caused by the fault or negligence of the carrier rests
upon him. However, the carrier must first establish that the loss or
deterioration was occasioned by one of the excepted causes or was
due to an unforeseen event or to force majeure. Be that as it may,
insofar as Art. 362 appears to require of the carrier only ordinary
diligence, the same is deemed to have been modified by Art. 1733 of
the Civil Code.
Same; Same; Same; Damages; Award of actual and exemplary
damages, proper, as they were not sufficiently controverted.Finding
the award of actual and exemplary damages to be proper, the same
will not be disturbed by us. Besides, these were not sufficiently
Page 3 of 12
2/2/16, 12:07 AM
controverted by the petitioner.

of Appeals. Pascual, J.
Antonio B. Abinoja for petitioner.
Quijano, Arroyo & Padilla Law Office for
respondents.
SARMIENTO, J.:
The private respondent
instituted in the Court of First
1
Instance of Manila an action against the petitioner for
damages based on culpa contractual.
The antecedent facts,
2
as found by the respondent Court, are undisputed:
_______________
1
Presided by Judge Jesus P. Morfe.
Pascual, Chairman, ponente; Agrava and Climaco, JJ., concurring.

649
VOL. 161, MAY 30, 1988
649

On November 28, 1956, Gelacio Tumambing contracted the services
of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles,
Bataan, to the port of Manila on board the lighter LCT Batman
(Exhibit 1, Stipulation of Facts, Amended Record on Appeal, p. 38).
Pursuant to this agreement, Mauro B. Ganzon sent his lighter
Batman to Mariveles where it docked in three feet of water (t.s.n.,
September 28, 1972, p. 31). On December 1, 1956, Gelacio
Tumambing delivered the scrap iron to defendant Filomeno Niza,
captain of the lighter, for loading which was actually begun on the
same date by the crew of the lighter under the captains
supervision. When about half of the scrap iron was already loaded
(t.s.n., December 14, 1972, p. 20), Mayor Jose Advincula of
Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio
Tumambing. The latter resisted the shakedown and after a heated
argument between them, Mayor Jose Advincula drew his gun and
fired at Gelacio Tumambing (t.s.n., March 19, 1971, p. 9; September
Page 4 of 12
2/2/16, 12:07 AM
28, 1972, pp. 67). The gunshot was not fatal but Tumambing had
to be taken to a hospital in Balanga, Bataan, for treatment (t.s.n.,
March 19, 1971, p. 13; September 28, 1972, p. 15).
After sometime, the loading of the scrap iron was resumed. But
on December 4, 1956, Acting Mayor Basilio Rub, accompanied by
three policemen, ordered captain Filomeno Niza and his crew to
dump the scrap iron (t.s.n., June 16, 1972, pp. 89) where the
lighter was docked (t.s.n., September 28, 1972, p. 31). The rest was
brought to the compound of NASSCO (Record on Appeal, pp. 20
22). Later on Acting Mayor Rub issued a receipt stating that the
Municipality of Mariveles had taken custody of the scrap iron
(Stipulation of Facts, Record on Appeal, p. 40; t.s.n., September 28,
1972, p. 10.)
On the basis of the above findings, the respondent Court

rendered a decision, the dispositive portion of which states:
WHEREFORE, the decision appealed from is hereby reversed and
set aside and a new one entered ordering defendant-appellee Mauro
Ganzon to pay plaintiff-appellant Gelacio E. Tumambing the sum of
P5,895.00 as actual damages, the sum of P5,000.00 as exemplary
damages, and the amount of P2,000.00 as attorneys fees. Costs
3
against defendant-appellee Ganzon.
In this petition for review on certiorari, the alleged errors

in the decision of the Court of Appeals are:
_______________
3
Decision, 9; Rollo 19.

650
650

Ganzon vs, Court of Appeals
I
THE COURT OF APPEALS FINDING THE HEREIN

PETITIONER GUILTY OF BREACH OF THE CONTRACT OF
TRANSPORTATION AND IN IMPOSING A LIABILITY AGAINST
HIM COMMENCING FROM THE TIME THE SCRAP WAS
PLACED IN HIS CUSTODY AND CONTROL HAVE NO BASIS IN
Page 5 of 12
2/2/16, 12:07 AM
FACT AND IN LAW.

II
THE APPELLATE COURT ERRED IN CONDEMNING THE
PETITIONER FOR THE ACTS OF HIS EMPLOYEES IN
DUMPING THE SCRAP INTO THE SEA DESPITE THAT IT WAS
ORDERED BY THE LOCAL GOVERNMENT OFFICIAL
WITHOUT HIS PARTICIPATION.
III
THE APPELLATE COURT FAILED TO CONSIDER THAT THE
LOSS OF THE SCRAP WAS DUE TO A FORTUITOUS EVENT
AND THE PETITIONER IS THEREFORE NOT LIABLE FOR ANY
4
LOSSES AS A CONSEQUENCE THEREOF.
The petitioner, in his first assignment of error, insists that

the scrap iron had not been unconditionally placed under
his custody and control to make- him liable. However, he
completely agrees with the respondent Courts finding that
on December 1, 1956, the private respondent delivered the
scraps to Captain Filomeno Niza for loading in the lighter
Batman. That the petitioner, thru his employees, actually
received the scraps is freely admitted. Significantly, there
is not the slightest allegation or showing of any condition,
qualification, or restriction accompanying the delivery by
the private respondent-shipper of the scraps, or the receipt
of the same by the petitioner. On the contrary, soon after
the scraps were delivered to and received by the petitionercommon carrier, loading was commenced.
By the said act of delivery, the scraps were
unconditionally placed in the possession and control of the
common carrier, and upon their receipt by the carrier for
transportation, the contract of carriage was deemed
perfected.
Consequently,
the
petitioner-carriers
extraordinary responsibility for the loss, de_______________
4
Petitioners Brief, 3, 7, 9; Rollo, 41.

651
Page 6 of 12
VOL. 161, MAY 30, 1988
2/2/16, 12:07 AM
651

struction, or deterioration of the goods commenced,
Pursuant to Art. 1736, such extraordinary responsibility
would cease only upon the delivery, actual or constructive,
by the carrier to the consignee,
or to the person who has a
5
right to receive them. The fact that part of the shipment
had not been loaded on board the lighter did not impair the
said contract of transportation as the goods remained in
the custody and control of the carrier, albeit still unloaded.
The petitioner has failed to show that the loss of the
scraps was due to any of the following causes enumerated
in Article 1734 of the Civil Code, namely:
(1) Flood, storm, earthquake, lightning, or other
(2) Act of the public enemy in war, whether
(4) The character of the goods or defects in the packing
or in the containers;
Hence, the petitioner is presumed
to have been at fault or
6
to have acted negligently. By reason of this presumption,
the court is not even required to make an express finding of
fault or negligence before it could hold the petitioner
answerable for the breach of the contract of carriage. Still,
the petitioner could have been exempted from any liability
had he been able to prove that he observed extraordinary
diligence in the vigilance
_______________
5
Article 1736, Civil Code of the Philippines:
Art. 1736. The extraordinary responsibility of the common carriers lasts from
the time the goods are unconditionally placed in the possession of, and received
by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right
to receive them. without prejudice to the provisions of article 1738.
Page 7 of 12
2/2/16, 12:07 AM
Article 1735, supra.
Art. 1735. In all cases other than those inentioned in Nos. 1, 2, 3, 4, and 5 of
the preceding article, if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as required in Article
1733.
652
652

Ganzon vs, Court of Appeals
over the goods in his custody, according to all the

circumstances or the case, or that the loss was due to an
unforseen event or to force majeure, As it was, there was
hardly any attempt on the part of the petitioner to prove
that he exercised such extraordinary diligence.
It is in the second and third assignments of error where
the petitioner maintains that he is exempt from any
liability because the loss of the scraps was due mainly to
the intervention of the municipal officials of Mariveles
which constitutes7 a caso fortuito as defined in Article 1174
of the Civil Code.
We cannot sustain the theory of caso fortuito. In the
courts below, the petitioners defense was that the loss of
the scraps was due to an order or act of competent public
authority, and this contention was correctly passed upon
by the Court of Appeals which ruled that:
x x x In the second place, before the appellee Ganzon could be
absolved from responsibility on the ground that he was ordered by
competent public authority to unload the scrap iron, it must be
shown that Acting Mayor Basilio Rub had the power to issue the
disputed order, or that it was lawful, or that it was issued under
legal process of authority. The appellee failed to establish this.
Indeed, no authority or power of the acting mayor to issue such an
order was given in evidence. Neither has it been shown that the
cargo of scrap iron belonged to the Municipality of Mariveles. What
we have in the record is the stipulation of the parties that the cargo
of scrap iron was accumulated by the appellant through separate
purchases here and there from private individuals (Record on
Page 8 of 12
Appeal, pp. 3839). The fact remains that the order given by
acting mayor to dump the scrap iron into the sea was part of
pressure applied by Mayor Jose Advincula to shakedown
appellant for P5,000.00. The order of the acting mayor did
constitute valid authority for appellee Mauro Ganzon and
representatives to carry out.
2/2/16, 12:07 AM
the
the
the
not
his
Now the petitioner is changing his theory to caso fortuito.

Such a change of theory on appeal we cannot, however,
allow.
_______________
7
Art. 1174, supra:
Art, 1174, Except in cases expressly specified by the law, or when it is

otherwise declared by stipulation, or when the nature of the obligation requires
the assumption of risk, no person shall be responsible for those events which
could not be foreseen, or which though foreseen, were inevitable.
653
VOL. 161, MAY 30, 1988
653

In any case, the intervention of the municipal officials was
not of a character that would render impossible the
fulfillment by the carrier of its obligation. The petitioner
was not duty bound to obey the illegal order to dump into
the sea the scrap iron. Moreover, there is absence of
sufficient proof that the issuance of the same order was
attended with such force or intimidation as to completely
overpower the will of the petitioners employees. The mere
difficulty in the fulfillment of the obligation is not
considered force majeure. We agree with the private
respondent that the scraps could have been properly
unloaded at the shore or at the NASSCO compound, so that
after the dispute with the local officials concerned was
settled, the scraps could then be delivered in accordance
with the contract of carriage.
There is no incompatibility between the Civil
Code9
8
provisions on common carriers and Articles 361 and 362
Page 9 of 12
2/2/16, 12:07 AM
of the Code of
_______________
8
Article 361, Code of Commerce:
Art. 361. The merchandise shall be transported at the risk and venture of the
shipper, if the contrary has not been expressly stipulated.
As a consequence, all the losses and deterioration which the goods may
suffer during the transportation by reason of fortuitous event, force majeure, or
the inherent nature and defect of the goods, shall be for the account and risk of
the shipper. Proof of these accidents is incumbent upon the carrier.
9
Article 362, Code of Commerce:
Art. 362. Nevertheless, the carrier shall be liable for the losses and damages
resulting from the causes mentioned in the preceding article if it is proved, as
against him, that they arose through his negligence or by reason of his having
failed to take the precautions which usage has established among careful
persons, unless the shipper has committed fraud in the bill of lading,
representing the goods to be of a kind or quality different from what they really
were.
If, notwithstanding the precautions referred to in this article, the goods
transported run the risk of being lost, on account of their nature or by reason of
unavoidable accident, there being no time for their owners to dispose of them,
the carrier may proceed to sell them, placing them for this purpose at the
disposal of the judicial authority or of the officials designated by special
provisions.
654
654

Commerce which were the basis for this Courts ruling

in
10
Government of the Philippine vs. Ynchausti & Co. which
the petitioner invokes in this petition. For Art. 1735 of the
Civil Code, conversely stated, means that the shipper will
suffer the losses and deterioration arising from the causes
enumerated in Art. 1734; and in these instances, the
burden of proving that damages were caused by the fault or
negligence of the carrier rests upon him. However, the
carrier must first establish that the loss or deterioration
Page 10 of 12
2/2/16, 12:07 AM
was occasioned by one of the excepted causes or was due to

an unforeseen event or to force majeure. Be that as it may,
insofar as Art. 362 appears to require of the carrier only
ordinary diligence, the same is deemed to have been
modified by Art. 1733 of the Civil Code.
Finding the award of actual and exemplary damages to
be proper, the same will not be disturbed by us. Besides,
these were not sufficiently controverted by the petitioner.
WHEREFORE, the petition is DENIED; the assailed
decision of the Court of Appeals is hereby AFFIRMED.
Costs against the petitioner,
This decision is IMMEDIATELY EXECUTORY.
Yap (C.J.), Paras and Padilla, JJ., concur.
Melencio-Herrera, J., with dissent attached.
MELENCIO-HERRERA, J., dissenting:
I am constrained to dissent.
It is my view that petitioner can not be held liable in
damages for the loss and destruction of the scrap iron. The
loss of said cargo was due to an excepted causean 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 Advinculas
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.
When loading was resumed, this time it was Acting
Mayor Basilio Rub, accompanied by three policemen, who
ordered the
_______________
10
No. 14191, September 29,1919, 40 Phil. 219.

655
VOL. 161, MAY 30, 1988
655
CLLC E.G. Gochangco Workers Union vs. NLRC

Page 11 of 12
2/2/16, 12:07 AM
dumping of the scrap iron into the sea right where the
lighter was docked in three feet of water. Again, could the
captain of the lighter and his crew have defied said order?
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 issued 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 done under legal process or authority so that
petitioner should be freed from responsibility.
Art. 1743. If through order of public authority the goods are seized
or destroyed, the common carrier is not responsible, provided said
public authority had power to issue the order.

Note.Carrier is liable over goods discharged by it in
bad order condition, and of the arrastre operator for goods
damaged under its custody. (Metro Port Service, Inc. vs.
Court of Appeals, 131 SCRA 365).
o0o
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PHILIPPINE REPORTS ANNOTATED VOLUME 90

[No. L-3678. February 29, 1952]

VOL. 90, FEBRUARY 29, 1952

Mendoza vs. Philippine Air Lines, Inc.

PHILIPPINE REPORTS ANNOTATED VOLUME 90

PHILIPPINE REPORTS ANNOTATED VOLUME 90

PHILIPPINE REPORTS ANNOTATED

APPEAL from a judgment of the Court of First Instance of

PHILIPPINE REPORTS ANNOTATED VOLUME 90

in a weekly of general circulation in the province. The

VOL. 90, FEBRUARY 29, 1952

Mendoza vs. Philippine Air Lines, Inc.

PHILIPPINE REPORTS ANNOTATED VOLUME 90

court found that because of his failure to exhibit the film

PHILIPPINE REPORTS ANNOTATED

failed to earn profits in the amount of P3,000.00, but

It claimed that since there was no obligation on its part to

PHILIPPINE REPORTS ANNOTATED VOLUME 90

1107 of the Civil Code which provides that losses and

VOL. 90, FEBRUARY 29, 1952

Mendoza vs. Philippine Air Lines, Inc.

PHILIPPINE REPORTS ANNOTATED VOLUME 90

We believe that whether or not transportation by air

PHILIPPINE REPORTS ANNOTATED

carrier; besides, air transportation is clearly similar or

PHILIPPINE REPORTS ANNOTATED VOLUME 90

passengers by aircraft a common carrier of passengers that the

VOL. 90, FEBRUARY 29, 1952

Mendoza vs. Philippine Air Lines, Inc.

Appellant contends that Art. 358 of the Code of Commerce

PHILIPPINE REPORTS ANNOTATED VOLUME 90

special damages like those suffered by the plaintiff herein.

PHILIPPINE REPORTS ANNOTATED

the can of film on the 17th of September, 1948 for the

PHILIPPINE REPORTS ANNOTATED VOLUME 90

that the plaintiff because of his failure to exhibit the film in

As may be seen, that New York case is a stronger one than

VOL. 90, FEBRUARY 29, 1952

Mendoza vs. Philippine Air Lines, Inc.

PHILIPPINE REPORTS ANNOTATED VOLUME 90

he is now suing on a tort or a violation of his rights as a

PHILIPPINE REPORTS ANNOTATED

the latter's agent. When he negotiated with the LVN

PHILIPPINE REPORTS ANNOTATED VOLUME 90

made by appellant in his memorandum supports this view.

Here, the contract of carriage between the LVN Pictures

VOL. 90, FEBRUARY 29, 1952

Davao Stevedores Mutual Benefit Assn. vs. Compaia

PHILIPPINE REPORTS ANNOTATED VOLUME 90

founded on its breach.

Copyright 2016 Central Book Supply, Inc. All rights reserved.

SUPREME COURT REPORTS ANNOTATED VOLUME 171

VOL. 171, MARCH 8, 1989

Maritime Company of the Phils. vs. Court of Appeals

G.R. No. 47004. March 8, 1989.

MARITIME COMPANY OF THE PHILIPPINES,

SUPREME COURT REPORTS ANNOTATED VOLUME 171

SUPREME COURT REPORTS ANNOTATED

SUPREME COURT REPORTS ANNOTATED VOLUME 171

Code.___Now, according to the Court of Appeals, Acmes rights are to

VOL. 171, MARCH 8, 1989

Maritime Company of the Phils. vs. Court of Appeals

PETITION to review the judgment of the Court of Appeals.

SUPREME COURT REPORTS ANNOTATED VOLUME 171