Pedro De Guzman vs CA and Ernesto Cendana (1988)

FACTS:
- Respondent Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan. 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.
-Petitioner Pedro de Guzman contracted with respondent for the hauling of 750 cartons of Liberty filled milk
from a warehouse of General Milk in Makati, Rizal, to petitioner's establishment in Urdaneta.
- December 1, 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, respondent's driver and employee.
-Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached
petitioner, since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in
Paniqui, Tarlac, by armed men who took with them the truck, its driver, his helper and the cargo.
-On 6 January 1971, petitioner commenced action against private respondent demanding payment value of the
lost merchandise, plus damages and attorney's fees. Petitioner argued that private respondent, being a common
carrier, and having failed to exercise the extraordinary diligence required of him by the law, should be held
liable for the value of the undelivered goods.
-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 force majeure.
CFI: Respondent Cendena is a common carrier and held liable for the value of the underlivered goods plus
damages and attys fees.
CA: reversed the judgment and held that the Cendena 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.
ISSUES/HELD:
1. WON Cendena is a common carrier
- YES
Art 1732 makes no distinction between one whose principal business activity is the carrying of persons
or goods or both, and one who does such carrying only as an ancillary activity (in local Idiom as "a sideline").
- 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
respondent's principal occupation was not the carriage of goods for others. There is no dispute that private

respondent charged his customers a fee for hauling their goods; that fee frequently fell below commercial
freight rates is not relevant here.

2. WON a Certificate of Convenience is a requisite for incurring liability as a common carrier

- NO
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 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.
3. WON Cendena is liable for the value of the undelivered merchandise which was lost because of the
robbery/highjacking incident
No
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 petitioner's
cargo. The record shows that an information for robbery in band was 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 petitioner's store in Urdaneta, Pangasinan.
The decision of the trial court shows that the accused acted with grave, if not irresistible, threat, violence or
force. Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only took away the truck
and its cargo but also kidnapped the driver and his helper, detaining them for several days and later releasing
them in another province (in Zambales). The hijacked truck was subsequently found by the police in Quezon
City. The Court of First Instance convicted all 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.

Mauro Ganzon vs. CA and Gelacio Tumambing

FACTS:
- On November 28, 1956, Tumambing contracted the services of Ganzon to haul 305 tons of scrap iron from
Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman"
- Pursuant to that agreement, Ganzon sent his lighter "Batman" to Mariveles where it docked in 3 feet of water .
On December 1, 1956, Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of the lighter,
for loading which was actually begun on the same date by the crew of the lighter under the captain's
supervision.
- When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan, arrived
and demanded P5,000.00 from Tumambing. The latter resisted the shakedown and after a heated argument
between them, Mayor Jose Advincula drew his gun and fired at Tumambing. The gunshot was not fatal but
Tumambing had to be taken to a hospital in Balanga, Bataan, for treatment.
-After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio
Rub, accompanied by 3 policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron where
the lighter was docked. The rest was brought to the compound of NASSCO. Later on Acting Mayor Rub issued
a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron.
Tumambing filed an action for damages based on culpa contractual against Petitioner Ganzon before the CFI of
Manila.
CA: reversed the findings of the CFI and ordered Ganzon to pay Tumambing actual, exemplary damages and
attys fees.
ISSUES/RULING:
1. WON the extraordinary liability attached even if the scrap iron had not been loaded all at once
YES
The petitioner, insists that the scrap iron had not been unconditionally placed under his custody and
control to make him liable. However, he completely agrees that the private respondent delivered the scraps to
Captain Filomeno Niza for loading in the lighter "Batman," That the petitioner, thru his employees, actually

received the scraps is freely admitted. Significantly, there is not the slightest allegation or showing of any
condition, qualification, or restriction accompanying the delivery by the private respondent-shipper of the
scraps, or the receipt of the same by the petitioner. On the contrary, soon after the scraps were delivered to, and
received by the petitioner-common carrier, loading was commenced.
By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common
carrier, and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected.
Consequently, the petitioner-carrier's extraordinary responsibility for the loss, destruction or deterioration of the
goods commenced.
Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or
constructive, by the carrier to the consignee, or to the person who has a right to receive them. 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.
2. WON the petitioner is exempt from liability due to the order of the Mayor to dump the scrap iron
NO
The intervention of the municipal officials was not In any case, of a character that would render
impossible the fulfillment by the carrier of its obligation. The petitioner was not duty bound to obey the illegal
order to dump into the sea the scrap iron. Moreover, there is absence of sufficient proof that the issuance of the
same order was attended with such force or intimidation as to completely overpower the will of the petitioner's
employees.
The mere difficulty in the 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.

Compania Maritima vs. CA and Vicente Concepcion (1988)

FACTS:
- Private respondent Vicente E. Concepcion, a civil engineer doing business under the name and style of
Consolidated Construction located in Taft Avenue, Manila, had a contract with the Civil Aeronautics
Administration (CAA) sometime in 1964 for the construction of the airport in CDO Misamis Oriental.
-Being a Manila based contractor, Vicente E. Concepcion had to ship his construction equipment to CDO.
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 for
the shipment to CDO of 1 unit payloader,4 units 6x6 Reo trucks and 2 pcs.of water tanks.
-He was issued Bill of Lading 113 on the same date upon delivery of the equipment at the Manila North
Harbor.
-These equipment were loaded aboard the MV Cebu and arrived at CDO City in the afternoon of September 1,
1964.
-The Reo trucks and water tanks were safely unloaded within a few hours after arrival, but while the payloader
was about two (2) meters above the pier in the course of unloading, the swivel pin of the heel block of the port
block of Hatch No. 2 gave way, causing the payloader to fall. The payloader was damaged and was thereafter
taken to petitioner's compound in Cagayan de Oro City.
-On September 7, 1964, Consolidated Construction, thru Vicente E. Concepcion, wrote Compaia Maritima to
demand a replacement of the payloader which it was considering as a complete loss because of the extent of
damage. Consolidated Construction likewise notified petitioner of its claim for damages.
-Petitioner denied the claim for damages of Consolidated Construction in contending that had Vicente E.
Concepcion declared the actual weight of the payloader, damage to their ship as well as to his payloader could
have been prevented.

- Vicente E. Concepcion filed an action for damages against petitioner with the then CFI of Manila.
CFI: dismissed the complaint. proximate cause of the fall of the payloader was Concepcion's act or omission in
having misrepresented the weight of the payloader as 2.5 tons instead of its true weight of 7.5 tons, which
underdeclaration was intended to defraud Compaia Maritima of the payment of the freight charges and which
likewise led the Chief Officer of the vessel to use the heel block of hatch No. 2 in unloading the payloader
CA: reversed

ISSUE: WON the act of private respondent Concepcion in furnishing petitioner Compaia Maritima with an
inaccurate weight of 2.5 tons instead of the payloader's actual weight of 7.5 tons was the proximate and only
cause of the damage on the Oliver Payloader OC-12 when it fell while being unloaded by petitioner's crew, as
would absolutely exempt petitioner from liability for damages under paragraph 3 of Article 1734

HELD:
- NO
Par 3 art. 1734 of the Civil Code provides:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following causes only:
xxx xxx xxx
(3) Act or omission of the shipper or owner of the goods.

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 CDO 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.
Where, as in the instant case, petitioner, upon the testimonies of its own crew, failed to take the necessary and
adequate precautions for avoiding damage to, or destruction of, the payloader entrusted to it for safe carriage
and delivery to Cagayan de Oro City, it cannot be reasonably concluded that the damage caused to the payloader
was due to the alleged misrepresentation of private respondent Concepcion as to the correct and accurate weight
of the payloader.
As found by the respondent Court of Appeals, the fact is that petitioner used a 5-ton capacity lifting apparatus to
lift and unload a visibly heavy cargo like a payloader. Private respondent has, likewise, sufficiently established
the laxity and carelessness of petitioner's crew in their methods of ascertaining the weight of heavy cargoes
offered for shipment before loading and unloading them, as is customary among careful persons

While the act of private respondent in furnishing petitioner with an inaccurate weight of the payloader cannot
successfully be used as an excuse by petitioner to avoid liability to the damage thus caused, said act constitutes
a contributory circumstance to the damage caused on the payloader, which mitigates the liability for damages of
petitioner in accordance with Article 1741 of the Civil Code.

Eastern Shipping Lines vs. IAC and Development Insurance & Surety Corp
Eastern shipping lines vs. The Nisshin Fire and Marine Insurance co and Dowa Fire & Marine Insurance
FACTS:
Eastern shipping lines loaded on its vessel M/S ASIATICA 5,000 pcs of calorized lance pipes in 28
packages valued P256,039.00 consigned to Philippine Blooming Mills Co., Inc., and 7 cases of spare parts
valued at P92,361.75, consigned to Central Textile Mills, Inc. Both sets of goods were insured against marine
risk for their stated value with respondent Development Insurance and Surety Corporation. To be transported to
Kobe, Japan.
At the same time, Petitioner also loaded on the same vessel128 cartons of garment fabrics and
accessories, in two (2) containers, consigned to Mariveles Apparel Corporation, and two cases of surveying
instruments consigned to Aman Enterprises and General Merchandise. The 128 cartons were insured for their
stated value by respondent Nisshin Fire & Marine Insurance Co., for US $46,583.00, and the 2 cases by
respondent Dowa Fire & Marine Insurance Co., Ltd., for US $11,385.00.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and
cargo. The respective respondent Insurers paid the corresponding marine insurance values to the consignees
concerned and were thus subrogated unto the rights of the latter as the insured.
G.R. NO. 69044- Development Insurance filed a suit against Petitioner for the recovery of the amounts it had
paid to the insured. Petitioner denies liability on the ground that the loss was due to an extraordinary fortuitous
event.
CFI: rendered judgment in favor of Development Insurance
G.R. NO. 71478 Nisshin Fire and Dowa also filed a suit to recover the amounts paid. The trial court ruled in
their favor.

ISSUES:
1. Which law should govern, the civil code provisions on common carriers or COGSA
2. Who has the burden of proof to show negligence of the carrier
HELD:
1. The law of the country to which the goods are to be transported governs the liability of the common
carrier in case of their loss, destruction or deterioration.
-as the cargoes in question were transported from Japan to the Philippines, the liability of Petitioner Carrier is
governed primarily by the Civil Code.
-However, in all matters not regulated by said Code, the rights and obligations of common carrier shall be
governed by the Code of Commerce and by special laws. Thus, the Carriage of Goods by Sea Act, a special law,
is suppletory to the provisions of the Civil Code
2. Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over goods, according to all the circumstances of each
case.
Common carriers are responsible for the loss, destruction, or deterioration of the goods unless the same is due to
any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
xxx xxx xxx 9
Art 1736. 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 Art. 1733.
Having failed to discharge the burden of proving that it had exercised the extraordinary diligence required by
law, Petitioner Carrier cannot escape liability for the loss of the cargo.
And even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the Civil Code,
it is required under Article 1739 of the same Code that the "natural disaster" must have been the "proximate and
only cause of the loss," and that the carrier has "exercised due diligence to prevent or minimize the loss before,
during or after the occurrence of the disaster. " This Petitioner Carrier has also failed to establish satisfactorily.
Both the Trial Court and the Appellate Court, in effect, found, as a fact, that there was "actual fault" of the
carrier shown by "lack of diligence" in that "when the smoke was noticed, the fire was already big; that the fire
must have started twenty-four (24) hours before the same was noticed; " and that "after the cargoes were stored
in the hatches, no regular inspection was made as to their condition during the voyage." The foregoing suffices
to show that the circumstances under which the fire originated and spread are such as to show that Petitioner
Carrier or its servants were negligent in connection therewith. Consequently, the complete defense afforded by
the COGSA when loss results from fire is unavailing to Petitioner Carrier.

Compania Maritima vs. Insurance Co. of North America (1964)

FACTS:
Macleod and Company of the Philippines contracted by telephone the services of Compania Maritima, a
shipping corporation for the shipment of 2.645 bales of hemp from its Sasas private pier in Davao City to
Manila and for the subsequent transshipment to Boston, Massachusetts, USA. On board the SS Steel Navigator.
This oral contract was later on confirmed by a formal and written booking issued by Macleod's branch
office in Sasa and handcarried to Compaia Maritima's branch office in Davao
The hemp had been loaded on 2 lighters of Compania Maritime. The patrons of both barges issued the
corresponding carriers receipts.
Thereafter the 2 barges left Macleods wharf and proceeded to and moored at the government's marginal
wharf in the same place to await the arrival of the S.S. Bowline Knot belonging to Compaia Maritima on
which the hemp was to be loaded.
During the night of October 29, 1952, or at the early hours of October 30, LCT No. 1025 sank, resulting
in the damage or loss of 1,162 bales of hemp loaded therein.
Macleod promptly notified the carriers main office in Manila and its branch office in Davao advising it
of its liability.
The damaged hemp was brought to Odell Plantation in Madaum, Davao, for cleaning, washing,
reconditioning, and redrying.
Adding the amount of the reconditioned hemp, the total loss adds up to P60,421.02. All abaca shipments
of Macleod, including the 1,162 bales loaded on the carrier's LCT No. 1025, were insured with the Insurance
Company of North America against all losses and damages.

By subrogation, respondent Insurance company now seeks to recover from the petitioner.
ISSUES:
1. Was there a contract of carriage between the carrier and the shipper even if the loss occurred when the
hemp was loaded on a barge owned by the carrier which was loaded free of charge and was not actually
loaded on the S.S. Bowline Knot which would carry the hemp to Manila and no bill of lading was issued
therefore? YES
2. Was the loss due to force majeure? - No
HELD:
1. The fact that the carrier sent its lighters free of charge to take the hemp from Macleod's wharf at Sasa
preparatory to its loading onto the ship Bowline Knot does not in any way impair the contract of carriage
already entered into between the carrier and the shipper, for that preparatory step is but part and parcel of said
contract of carriage.
The lighters were merely employed as the first step of the voyage, but once that step was taken and the
hemp delivered to the carrier's employees, the rights and obligations of the parties attached thereby subjecting
them to the principles and usages of the maritime law. In other words, here we have a complete contract of
carriage the consummation of which has already begun: the shipper delivering the cargo to the carrier, and the
latter taking possession thereof by placing it on a lighter manned by its authorized employees, under which
Macleod became entitled to the privilege secured to him by law for its safe transportation and delivery, and the
carrier to the full payment of its freight upon completion of the voyage.
The liability of the carrier as common carrier begins with the actual delivery of the goods for
transportation, and not merely with the formal execution of a receipt or bill of lading; the issuance of a bill of
lading is not necessary to complete delivery and acceptance. Even where it is provided by statute that liability
commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient to bind the
carrier.
2. the mishap that caused the damage or loss was due, not to force majeure, but to lack of adequate precautions
or measures taken by the carrier to prevent the loss- ill-fated barge had cracks on its bottom, which admitted sea
water in the same manner as rain entered "thru tank man-holes", according to the patron conclusively
showing that the barge was not seaworthy it should be noted that on the night of the nautical accident there
was no storm, flood, or other natural disaster or calamity. Certainly, winds of 11 miles per hour, although
stronger than the average 4.6 miles per hour then prevailing in Davao on that day, cannot be classified as storm.

Elite Shirt Factory vs. Hon. Cornejo, Compania Maritima and the Philippine Steam Navigation Co. Inc.
FACTS:
- Elite Shirt Factory, Inc. delivered to respondent Compaia Maritima for shipment to designated consignees
several cartons of merchandise.
-While such cargo was stored in the bodega of respondent Compaia Maritima and before they could be
delivered to the consignees, a fire broke out, as a result of which appellant allegedly suffered damages in the
amount of P2,124.00.
-Petitioner-appellant filed with the City Court of Manila a complaint against Compaia Maritima for the
reimbursement of said amount of P2,124.00 as actual damages.
-A motion to dismiss said complaint was filed by Compaia Maritima on the ground that the city court does not
have jurisdiction over said case, the same being in the nature of maritime and admiralty, and within the
jurisdiction of courts of first instance.
-Said motion to dismiss was denied by the city court for lack of merit, after which Compaia Maritima filed an
answer to the complaint impleading respondent-appellee Philippine Steam Navigation Co., Inc., as third party
defendant on the ground, among others, that the fire which gutted the warehouse of Compaia Maritima and
destroyed the goods stored therein started from the section occupied by the third-party defendant and caused by
the latter's negligence
-An ex parte judgment was rendered against Compania Maritima. After an unsuccessful motion for
reconsideration, a petition for certiorari with preliminary injunction was filed by appellant with the Court of
First Instance of Manila.
ISSUE: WON Compania Maritima is still liable as a common carrier even if the goods had been
transferred to its bodega in Negros Occidental

HELD:

YES

The reason being that the warehouse in which the cargo was deposited at the time it was burned was owned by
the carrier.
The ruling in the cases of Macondray & Co., Inc. vs. Delgado Bros., G.R. No. L-13116, April 28, 1960,
and Delgado Bros. vs. Home Insurance Company, G.R. No. L-15567, March, 1961, cited by the petitioner, to
the effect that from the moment the goods are discharged in the port of destination, the liability of the same
receiving the goods and keeping them until they are delivered to their designated consignees is that merely of a
depositary, is not applicable to the present case for the simple reason that in those two cases the shipments were
delivered by the carrier to the Customs Arrastre Service, the arrastre operator of the Port of Manila.
While the ruling in said cases insofar as it states that the liability of the carrier ceases upon the discharge of the
goods in the port of destination is correct, the same cannot be correctly applied to the present case inasmuch as
the goods in question were delivered not to another party but to the warehouse in Pulupandan, Negros
Occidental, owned by the carrier, Compaia Maritima, which undertook the delivery of said goods to the
corresponding consignees by virtue of a maritime contract. Unfortunately, the said cargo was burned before the
Compaia Maritima could comply with its maritime obligation to deliver the same to the consignees.
Kuipai & Co. vs. Dollar Steamship Line (1929)
FACTS:
-Plaintiff is a limited mercantile partnership with its central office at 446 Nueva, Manila. Defendant is a foreign
corporation licensed to do business in the Philippine Islands and engaged in the operation of ocean ships.
- Plaintiff alleges that about April 12, 1927, Mee Hing Chan of Hongkong shipped and delivered to the
defendant in HongKong on board its ship President Taft, goods, wares and merchandise in good order and
condition, consigned to the plaintiff.
-That the defendant company received and accepted said merchandise, for which issued the corresponding bill
of lading, and agreed to deliver it to plaintiff in Manila.
-That the defendant failed and neglected to deliver two cases of the goods. That the plaintiff has paid all freight
charges to the defendant. That it has repeatedly demanded the delivery of the merchandise, and that it has never
been delivered. That as shown by the records of the Manila Terminal Company of Manila, the two packages or
cases lost or missing were never landed in Manila from the President Taft. That through such loss and failure to
deliver, plaintiff has been damaged in the sum of P11,734.15, which is the net invoice value of the goods, plus
freight and profit, for which demands has been made and payment refused, and plaintiff prays for a
corresponding judgment, with interest from April 14, 1927, and costs.
-the defendant contends that it has delivered and tendered to the plaintiff in Manila the six identical cases which
were delivered on board the defendant's ship in Hongkong, but that plaintiff accepted and took delivery of only
4, and refused and refuses to accept delivery of the other 2
-Trial court: ruled in favor of the defendant
ISSUE:

WON the defendant delivered to the plaintiff in Manila the 6 identical boxes or cases which were
delivered on board its ship in Hongkong.

HELD:

YES

The trial court who saw and heard the witnesses testify in a well written opinion found of all the material
facts for the defendant. It is conceded that six boxes or cases consigned to the plaintiff were delivered to the
defendant in Hongkong to be shipped to Manila. It is also conceded that at the time of delivery, the boxes were
measured as to their width, length and depth, and that the boxes which the defendant delivered and tendered to
the plaintiff are each exact in their respective measurements with those which the defendant received on board
of its ship in Hongkong, and the trial court found as a fact that the six boxes were originally marked "K. P.,"
ART. 1602, CIVIL CODE. Carrier are also liable for the loss of the damage to the things which they receive,
unless they prove that the loss or damages arose from a fortuitous event or force majeure.
The court is convinced that the original marking on these two Exhibits 1 and 2, formerly read KP, 3 and 4 and
that they were changed, altered and added to so as to now read RB 13 and 14, except, as previously observed,
that the numeral 1 is omitted on one side of each of said cases.
(note: It is a matter of common knowledge that there is no port of call between Hongkong and Manila)
The evidence for the plaintiff shows that the six boxes were placed in hold No. 9 of the ship in Hongkong, and
that upon its arrival in Manila, six boxes of the same cubical contents were taken out of the same hold. Hence, it
must follow that, in the very nature of things, the contents of two of those boxes could not be taken out and
replaced with Chinese cigarette papers after the defendant's ship left Hongkong and while in transmit to Manila,
and that the short change artist must have appeared on the scene in Hongkong.
Much more could be said, but suffice it to say that the findings of the lower court are well sustained by the
evidence, and that we are clearly of the opinion that the six cases placed on board the defendant's ship in
Hongkong, considered to plaintiff, were actually tendered and delivered to the plaintiff in Manila in the same
condition as when received, and with the identical contents which they had in them when placed in Hold No. 9
abroad the defendant's ship in Hongkong.

Maersk Line vs CA and Efren V. Castillo doing business under the name and style of Ethegal Laboratories
FACTS:
Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business in the
Philippines through its general agent Compania General de Tabacos de Filipinas.
Private respondent Efren Castillo, on the other hand, is the proprietor of Ethegal Laboratories, a firm
engaged in the manutacture of pharmaceutical products.
On November 12, 1976, private respondent ordered from Eli Lilly. Inc. of Puerto Rico through its agent
in the Philippines, Elanco Products, 600,000 empty gelatin capsules for the manufacture of his pharmaceutical
products. The capsules were placed in six (6) drums of 100,000 capsules each valued at US $1,668.71.
Through a Memorandum of Shipment, the shipper Eli Lilly, Inc. of Puerto Rico advised private
respondent as consignee that the 600,000 empty gelatin capsules in six (6) drums of 100,000 capsules each,
were already shipped on board MV "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 back Oakland, Califorilia.
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 that answer that the subject
shipment was transported in accordance with the provisions of the covering bill of lading and that its liability
under the law on transportation of good attaches only in case of loss, destruction or deterioration of the goods as
provided for in Article 1734 of Civil Code.
Defendant Eli Lilly, Inc., on the other hand, filed its answer with compulsory and cross-claim. In its
cross-claim, it alleged that the delay in the arrival of the 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.
Trial Court: dismissed the complaint against Eli Lilly Inc. and held that there was a breach in the performance
of the obligation of Maersk Line consisting of its negligence in shipping the 6 drums of empty gelatin capsules.
CA: affirmed this.

ISSUE:

WON Maersk Line is guilty of delay

HELD:

YES

Art 1740. If the common carrier negligently incurs delay in transporting the goods, a natural disaster
shall not free such carrier from responsibility.
An examination of the subject bill of lading 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 was beyond the realm of reasonableness.
Described as gelatin capsules for use in pharmaceutical products, subject shipment was delivered to, and
left in, the possession and custody of petitioner-carrier for transport to Manila via Oakland, California. But
through petitioner's negligence was mishipped to Richmond, Virginia. Petitioner's insistence that it cannot be
held liable for the delay finds no merit.
Petitioner never even bothered to explain the course for the delay, i.e. more than two (2) months, in the
delivery of 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 if
therefore proper in this case.
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.

Southern Lines vs. CA and City of Iloilo (1962)

FACTS:
Sometime in 1948, the City of Iloilo requisitioned for rice from the National Rice and Corn Corporation
(hereafter referred to as NARIC) in Manil..
On August 24 of the same year, NARIC, pursuant to the order, shipped 1,726 sacks of rice consigned to
the City of Iloilo on board the SS "General Wright" belonging to the Southern Lines, Inc. Each sack of rice
weighed 75 kilos and the entire shipment as indicated in the bill of lading had a total weight of 129,450 kilos.
According to the bill of lading, the cost of the shipment was P63,115.50.
On September 3, 1948, the City of Iloilo received the shipment and paid the amount of P63,115.50.
However, it was noted that the foot of the bill of lading that the City of Iloilo 'Received the above
mentioned merchandise apparently in same condition as when shipped, save as noted below: actually received
1685 sacks with a gross weight of 116,131 kilos upon actual weighing. Total shortage ascertained 13,319 kilos."
The shortage was equivalent to 41 sacks of rice with a net weight of 13,319 kilos, the proportionate value of
which was P6,486.35.
On February 14, 1951 the City of Iloilo filed a complaint in the Court of First Instance of Iloilo against
NARIC and the Southern Lines, Inc. for the recovery of the amount of P6,486.35 representing the value of the
shortage of the shipment of rice.
After trial, the lower court absolved NARIC from the complaint, but sentenced the Southern Lines, Inc.
to pay the amount of P4,931.41 which is the difference between the sum of P6,486.35 and P1,554.94
representing the latter's counterclaim for handling and freight.
ISSUE:

WON the herein petitioner is liable for the loss or shortage of the rice shipped

HELD:

YES

Art. 1742. In the event of loss, destruction or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packaging or of the containers, the common carrier must
exercise due diligence to forestall or lessen the loss.
Petitioner claims exemption from liability by contending that the shortage in the shipment of rice was
due to such factors as the shrinkage, leakage or spillage of the rice on account of the bad condition of the sacks
at the time it received the same and the negligence of the agents of respondent City of Iloilo in receiving the
shipment. The contention is untenable, for, if the fact of improper packing is known to the carrier or his
servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is
not relieved of liability for loss or injury resulting thereform.
Furthermore, according to the Court of Appeals, "appellant (petitioner) itself frankly admitted that the
strings that tied the bags of rice were broken; some bags were with holes and plenty of rice were spilled inside
the hull of the boat, and that the personnel of the boat 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.

Loadstar Shipping Co., Inc. vs. CA and The Manila Insurance Co. Inc. (1999)
FACTS:
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 the others ;and
c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.
On 20 November 1984, on its way to Manila from the port of Nasipit, Agusan del Norte, the vessel,
along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made
a claim with LOADSTAR which, however, ignored the same. As the insurer, MIC paid 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 vessel was due to the fault and negligence of LOADSTAR and its employees. It also prayed that PGAI be
ordered to pay the insurance proceeds from the loss the vessel directly to MIC, said amount to be deducted from
MIC's claim from LOADSTAR.
In its answer, LOADSTAR denied any liability for the loss of the shipper's goods and claimed that
sinking of its vessel was due to force majeure. PGAI, on the other hand, averred that MIC had no cause of
action against it, LOADSTAR being the party insured. In any event, PGAI was later dropped as a party
defendant after it paid the insurance proceeds to LOADSTAR.
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.
ISSUES/RULING:

1. Is the M/V "Cherokee" a private or a common carrier?

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 character is not altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or unscheduled.
Under the facts and circumstances obtaining in this case, LOADSTAR fits the definition of a common
carrier under Article 1732 of the Civil Code.
Art 1732 makes no distinction between one whose principal business activity is the carrying of persons
or goods or both, and one who does such carrying only as ancillary activity (in local idiom, as "a sideline.
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.
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 eventhough
private respondent's principal occupation was not the carriage of goods for others. There is no dispute that
private respondent charged his customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here.
2. Did LOADSTAR observe due and/or ordinary diligence in these premises.
NO. 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 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."
3. Main issue: WON the agreement limiting Loadstars liability is valid
NO. 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 "owner's risk," LOADSTAR was
not liable for any loss or damage to the same.
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.
Three kinds of stipulations have often been made in a bill of lading:
1. The first one exempting the carrier from any and all liability for loss or damage occasioned by its own
negligence;
2. The second is one providing for an unqualified limitation of such liability to an agreed valuation; and
3. 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 enforceable
The cases relied on by LOADSTAR involved a limitation on the carrier's 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
carrier's 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 "owner's risk." Such
stipulation is obviously null and void for being contrary to public policy.
(side issue:claim has not yet prescribed. 1 year period COGSA applies)

Alberta Yobido vs. CA , Leny Tumboy, Ardee Tumboy and Jasmin Tumboy (1997)
FACTS:
On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin,
bearded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for Davao City.
Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus exploded. The bus
fell into a ravine around three (3) feet from the road and struck a tree. The incident resulted in the death of 28year-old Tito Tumboy and physical injuries to other passengers.
On November 21, 1988, a complaint for breach of contract of carriage, damages and attorney's fees was
filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio Yobido, its driver,
before the RTC of Davao City.
When the defendants therein filed their answer to the complaint, they raised the affirmative defense
of caso fortuito. They also filed a third-party complaint against Philippine Phoenix Surety and Insurance, Inc.
Upon a finding that the third party defendant was not liable under the insurance contract, the lower court
dismissed the third party complaint. No amicable settlement having been arrived at by the parties, trial on the
merits ensued.
The plaintiffs asserted that violation of the contract of carriage between them and the defendants was
brought about by the driver's failure to exercise the diligence required of the carrier in transporting passengers
safely to their place of destination.
According to Leny Tumboy, the bus left Mangagoy at 3:00 o'clock in the afternoon. The winding road it
traversed was not cemented and was wet due to the rain; it was rough with crushed rocks. The bus which was
full of passengers had cargoes on top. Since it was "running fast," she cautioned the driver to slow down but he

merely stared at her through the mirror. At around 3:30 p.m., in Trento, she heard something explode and
immediately, the bus fell into a ravine.
The defendant tried to establish that the accident was due to a fortuitious event. That the 42-seater bus
was not full and had only 32 passengers and that the bus was running slow because of the zigzag road. That the
tire was new, as it was purchased only 5 days before the incident.
The lower court dismissed the action for lack of merit. Held that the tire blowout was a caso fortuito.
CA: reversed this decision and held that the explosion of the tire is not in itself a fortuitious event.It is the
burden of the defendants to prove that the cause of the blow-out was a fortuitous event. It is not incumbent upon
the plaintiff to prove that the cause of the blow-out is not caso-fortuito.
ISSUE:

WON the tire blowout was a fortuitous event

HELD:

NO

Fortuitous event is possessed of the following characteristics:

(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 obliger must be free from any participation in the aggravation of the injury resulting to the
creditor.
The explosion of the new tire may not be considered a fortuitous event. There are human factors
involved in the situation. The fact that the tire was new did not imply that it was entirely free from
manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that the tire bought
and used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it could not explode
within five days' use.
Moreover, a common carrier may not be absolved from liability in case of force majeure or fortuitous
event alone. The common carrier must still prove that it was not negligent in causing the death or injury
resulting from an accident.
However, they failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she
cautioned the driver to slow down. These contradictory facts must, therefore, be resolved in favor of liability in
view of the presumption of negligence of the carrier in the law. Coupled with this is the established condition of
the road rough, winding and wet due to the rain. It was incumbent upon the defense to establish that it took
precautionary measures considering partially dangerous condition of the road.
Having failed to discharge its duty to overthrow the presumption of negligence with clear and
convincing evidence, petitioners are hereby held liable for damages.
Additional notes:

 Moral damages are generally not recoverable in culpa contractual except when bad faith had been
proven. However, the same damages may be recovered when breach of contract of carriage results in the
death of a passenger - as in this case.

Exemplary damages, awarded by way of example or correction for the public good when moral damages
are awarded, may likewise be recovered in contractual obligations if the defendant acted in wanton,
fraudulent, reckless, oppressive, or malevolent manner.
Article 1764 in relation to Article 2206 of the Civil Code prescribes the amount of at least three thousand pesos
as damages for the death of a passenger. Under prevailing jurisprudence, the award of damages under Article
2206 has been increased to fifty thousand pesos (P50,000.00).

Eastern & Australian Steamship Company Ltd vs. Great American Insurance Company and CFI Manila
FACTS:
On December 10, 1971, the Jackson and Spring (Sydney) Pty. Ltd. shipped from Sydney, Australia, one
(1) case of impellers for warman pump on board the SS "Chitral," a vessel owned and operated in the
Philippines by Eastern & Australian Steamship Co., Ltd., thru its agent F.E. Zuellig, Inc. under Bill of Lading
No. 31, for delivery to Manila, Philippines in favor of consignee Benguet Consolidated, Inc.
The shipment was insured with Great American Insurance, Co. for P35,921.81 against all risks.
On December 22, 1971 the SS "Chitral" arrived in Manila but failed to discharge the shipment or any
part thereof. Demand was made on herein petitioners for the delivery of said shipment, but having failed to
make delivery, a claim was presented against them for the value of the shipment. Petitioners, likewise, failed to
make good the claim. As a consequence of the loss of the shipment, private respondent Great American
Insurance Co. was compelled to pay the consignee P 35,921,81.
As subrogee, said private respondent filed a complaint dated Nov. 20, 1972 against herein petitioners for
recovery of the said amount with legal interest and attorney's fees.
In the answer dated Nov. 27, 1972 petitioners alleged that their liability for the loss of the shipment is
only limited to L100 Sterling or its peso equivalent of P1,544.40 as per stipulation in the Bill of Lading and that
even before the filing of the complaint, petitioners have signified their willingness to pay the claim up to their
limit of liability as stipulated in the Bill of Lading.
The Court a quo found that under Section 4 (5) of the COGSA, the carrier and the shipper may, in the
absence of a declaration in the Bill of Lading of the value of the goods shipped, fix a maximum liability of the
shipper for the cargo lost or damages, but such maximum shall not be less than $500.00 per package.

Consequently, the agreement for a maximum liability of only L100 Sterling contained in Clause 17 of the Bill
of Lading was declared void for being contrary to law and as adverted to above, petitioners were held liable.
ISSUE: WON the petitioner's liability is limited to L100 Sterling or its peso equivalent of P1,544.40 as
stipulated in Clause 17 of the Bill of Lading or whether petitioner's liability should be $500 or its peso
equivalent in the sum of P3,217.50 pursuant to Sec. 4 (5) of the Carriage of Goods by Sea Act.
HELD:

the amount specified in the contract of carriage

There is no inconsistency between Section 4 (5) of the Carriage of Goods by Sea Act and Clause 17 of
the Bill of Lading. The first part of the provision of Section 4 (5) of the Carriage of Goods by Sea Act limits the
melee, amount that may be recovered by the shipper in the absence of an agreement as to the nature and value
of goods shipped. Said provision does not prescribe the minimum and hence, it could be any amount which is
below $500.00. Clause 17 of the questioned Bill of Lading also provides the melee, for which the carrier is
liable. It prescribes that the carrier may only be held liable for an amount not more than L100 Sterling which is
below the melee, limit required in the Carriage of Goods by Sea Act.
Art. 1749 A stipulation that the common carrier's liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner declares a greater value, is binding
The right of the carrier to limit its liability has been recognized not only in Our jurisdiction but also in
American jurisprudence:
A stipulation in a contract of carriage that the carrier will not be liable beyond a specified amount unless
the shipper declares the goods to have a greater value is generally deemed to be valid and will operate to
limit the carrier's liability, even if the loss or damage results from the carrier's negligence.
Pursuant to such provision, where the shipper is silent as to the value of his goods, the carrier's liability
for loss or damage thereto is limited to the amount specified in the contract of carriage and where the shipper
states the value of his goods, the carrier's liability for loss or damage thereto is limited to that amount.
Under a stipulation such as this, it is the duty of the shipper to disclose, rather than the carrier's to demand the
true value of the goods and silence on the part of the shipper will be sufficient to limit recovery in case of loss to
the amount stated in the contract of carriage.

H&E Heacock Company vs. Macondray & Company Inc. (1921)

FACTS:
(1) On or about the 5th day of June, 1919, the plaintiff caused to be delivered on board of steamship Bolton
Castle, then in the harbor of New York, 4 cases of merchandise one of which contained twelve (12) 8-day
Edmond clocks properly boxed and marked for transportation to Manila, and paid freight on said clocks from
New York to Manila in advance
The said steamship arrived in the port of Manila on or about the Sept 10, 1919, consigned to the defendant
herein as agent & representative of said vessel in said port. Neither the master of said vessel nor the defendant
herein, as its agent, delivered to the plaintiff the aforesaid twelve 8-day Edmond clocks, although demand was
made upon them for their delivery.
(2) The invoice value of the said twelve 8-day Edmond clocks in the city of New York was P22 and the market
value of the same in the City of Manila at the time when they should have been delivered to the plaintiff was
P420.
(3) The bill of lading issued and delivered to the plaintiff by the master of the said steamship Bolton Castle
contained, among others, the following clauses:
1. It is mutually agreed that the value of the goods receipted for above does not exceed $500 per freight
ton, or, in proportion for any part of a ton, unless the value be expressly stated herein and ad valorem
freight paid thereon.
9. Also, that in the event of claims for short delivery of, or damage to, cargo being made, the carrier shall
not be liable for more than the net invoice price plus freight and insurance less all charges saved, and
any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis.

(4) The case containing the aforesaid twelve 8-day Edmond clocks measured 3 cubic feet, and the freight
ton value thereof was $1,480, U. S. currency.
(5) No greater value than $500, U. S. currency, per freight ton was declared by the plaintiff on the
aforesaid clocks, and no ad valorem freight was paid thereon.
(6) On or about October 9, 1919, the defendant tendered to the plaintiff P76.36, the proportionate freight
ton value of the aforesaid twelve 8-day Edmond clocks, in payment of plaintiff's claim, which tender
plaintiff rejected.
An action was instituted before the CFI of Manila to recover P240 plus interest.
CFI: in accordance with clause 9, ordered the defendant to pay P226.02 (invoice value plus freight and
insurance with legal interest from date of payment)

ISSUES/RULING:
*1. WON a common carrier may by stipulations inserted in the bill of lading limit his liability for loss of
or damage to the cargo to an agreed valuation of the latter
-YES (recall: 3 kinds of stipulations have often been made in a bill of lading:
1. The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own
negligence.
2. The second is one providing for an unqualified limitation of such liability to an agreed valuation.
3. 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 enforceable.
A reading of clauses 1 and 9 of the bill of lading here in question, however, clearly shows that the
present case falls within the third stipulation
Article 1255 of the Civil Code provides that "the contracting parties may establish any agreements,
terms and conditions they may deem advisable, provided they are not contrary to law, morals or public order."
Said clauses of the bill of lading are, therefore, valid and binding upon the parties thereto.
2. WON clause 1 or 9 of the bill of lading in question is to be applied as the measure of defendants
liability.

It will be noted, however, that whereas clause 1 contains only an implied undertaking to settle in case of
loss on the basis of not exceeding $500 per freight ton
Clause 9 contains an express undertaking to settle on the basis of the net invoice price plus freight and
insurance less all charges saved.
"Any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis,"
clause 9 expressly provides
It seems to us that there is an irreconcilable conflict between the two clauses with regard to the measure
of defendant's liability. It is difficult to reconcile them without doing violence to the language used and reading
exceptions and conditions into the undertaking contained in clause 9 that are not there.
This being the case, the bill of lading in question should be interpreted against the defendant carrier,
which drew said contract. "A written contract should, in case of doubt, be interpreted against the party who has
drawn the contract."
It is a well-known principle of construction that ambiguity or uncertainty in an agreement must be
construed most strongly against the party causing it.
These rules as applicable to contracts contained in bills of lading. "In construing a bill of lading given by the
carrier for the safe transportation and delivery of goods shipped by a consignor, the contract will be construed
most strongly against the carrier, and favorably to the consignor, in case of doubt in any matter of construction.