CASE TITLE: Sarkies Tours Phils. V.

IAC
KEYWORD: DAMAGES
PONENTE: ROMERO, J
DOCTRINE: Kinds of damages to be awarded

Facts:
On August 31, 1984, Fatima boarded petitioners bus from Manila to Legazpi. Her belongings consisting
of 3 bags were kept at the baggage compartment of the bus, but during the stopover in Daet, it was
discovered that only one remained. The others might have dropped along the way. Other passengers
suggested having the route traced, but the driver ignored it. Fatima immediately told the incident to
her mother, who went to petitioners office in Legazpi and later in Manila. Petitioner offered P1,000
for each bag, but she turned it down. Disappointed, she sought help from Philtranco bus drivers and
radio stations. One of the bags was recovered. She was told by petitioner that a team is looking for the
lost luggage. After nine months of fruitless waiting, respondents filed a case to recover the lost items,
as well as moral and exemplary damages, attorneys fees and expenses of litigation. The trial court
ruled in favor of respondents, which decision was affirmed with modification by the Court of Appeals
awarding P30,000.00 for the lost items and P30,000.00 for the transportation expenses, moral and
exemplary damages in the amount of P20,000.00 and P5,000.00, respectively.
PETITIONERS CONTENTIONS:
1) Fatima did not bring any piece of luggage with her, and even if she did, none was declared at
the start of the trip.
2) petitioner questions the award of actual damages to respondent
RESPONDENTS CONTENTION: Extraordinary diligence on the part of petitioner;
Issues:
(1) Whether petitioner is liable for the loss of the luggage
(2) Whether the damages sought should be recovered
RULING:
(1) The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of
the baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all
of the luggage was lost, to the prejudice of the paying passengers.

(2) There is no dispute that of the three pieces of luggage of Fatima, only one was recovered.
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.
Coastwise Lighterage Corporation v. CA

Facts: Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to
Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges.
The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise.
Upon reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown sunken object. The
forward buoyancy compartment was damaged, and water gushed in through a hole "two inches wide
and twenty-two inches long". As a consequence, the molasses at the cargo tanks were contaminated.
Pag-asa filed a claim against Philippine General Insurance Company, the insurer of its cargo. Philgen
paid P700,000 for the value of the molasses lost. Philgen then filed an action against Coastwise to
recover the money it paid, claiming to be subrogated to the claims which the consignee may have
against the carrier. Both the trial court and the Court of Appeals ruled against Coastwise.

Issues:
(1) Whether Coastwise was transformed into a private carrier by virtue of the contract it
entered into with Pag-asa, and whether it exercised the required degree of diligence
(2) Whether Philgen was subrogated into the rights of the consignee against the carrier
Held:
(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one
point to another, but the possession, command mid navigation of the vessels remained with petitioner
Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into
a private carrier, but remained a common carrier and was still liable as such. The law and jurisprudence
on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and
the subsequent arrival of the same goods at the place of destination in bad order makes for a prima
facie case against the carrier. It follows then that the presumption of negligence that attaches to
common carriers, once the goods it is sports are lost, destroyed or deteriorated, applies to the
petitioner. This presumption, which is overcome only by proof of the exercise of extraordinary
diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise
9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have exercised
extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of
the vessel which eventually met the fateful accident. It may also logically, follow that a person without
license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and
safe routes taken by seasoned and legally authorized ones. Had the patron been licensed he could be
presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the
sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach
of the contract of carriage, having failed to overcome the presumption of negligence with the loss and
destruction of goods it transported, by proof of its exercise of extraordinary diligence.
(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the
insured property is destroyed or damaged through the fault or negligence of a party other than the
assured, then the insurer, upon payment to the assured will be subrogated to the rights of the assured
to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by
the insurer to the assured operated as an equitable assignment to the former of all remedies which the
latter may have against the third party whose negligence or wrongful act caused the loss. The right of
subrogation is not dependent upon, nor does it grow out of, any private of contract or upon written
assignment of, claim. It accrues simply upon payment of the insurance claim by the insurer.
Macam v. CA

Facts: Benito Macam, doing business under name Ben-Mac Enterprises, shipped on board vessel Nen-
Jiang, owned and operated by respondent China Ocean Shipping Co. through local agent Wallem
Philippines Shipping Inc., 3,500 boxes of watermelon covered by Bill of Lading No. HKG 99012, and
1,611 boxes of fresh mangoes covered by Bill of Lading No. HKG 99013. The shipment was bound for
Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of Rowloon (GPC) as notify
party. Upon arrival in Hongkong, shipment was delivered by respondent WALLEM directly to GPC, not
to PAKISTAN BANK and without the required bill of lading having been surrendered. Subsequently, GPC
failed to pay PAKISTAN BANK, such that the latter, still in possession of original bill of lading, refused to
pay petitioner thru SOLIDBANK. Since SOLIDBANK already pre-paid the value of shipment, it demanded
payment from respondent WALLEM but was refused. MACAM constrained to return the amount paid
by SOLIDBANK and demanded payment from WALLEM but to no avail. WALLEM submitted in evidence
a telex dated 5 April 1989 as basis for delivering the cargoes to GPC without the bills of lading and bank
guarantee. The telex instructed delivery of various shipments to the respective consignees without
need of presenting the bill of lading and bank guarantee per the respective shippers request since for
prepaid shipt ofrt charges already fully paid. MACAM, however, argued that, assuming there was such
an instruction, the consignee referred to was PAKISTAN BANK and not GPC. The RTC ruled for MACAM
and ordered value of shipment. CA reversed RTCs decision.

Issue: Are the respondents liable to the petitioner for releasing the goods to GPC without the bills of
lading or bank guarantee?

Held: It is a standard maritime practice when immediate delivery is of the essence, for shipper to
request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of destination
without requiring presentation of bill of lading as that usually takes time. Thus, taking into account that
subject shipment consisted of perishable goods and SOLIDBANK pre-paid the full amount of value
thereof, it is not hard to believe the claim of respondent WALLEM that petitioner indeed requested the
release of the goods to GPC without presentation of the bills of lading and bank guarantee. To
implement the said telex instruction, the delivery of the shipment must be to GPC, the notify party or
real importer/buyer of the goods and not the PAKISTANI BANK since the latter can very well present
the original Bills of Lading in its possession. Likewise, if it were the PAKISTANI BANK to whom the
cargoes were to be strictly delivered, it will no longer be proper to require a bank guarantee as a
substitute for the Bill of Lading. To construe otherwise will render meaningless the telex instruction.
After all, the cargoes consist of perishable fresh fruits and immediate delivery thereof the
buyer/importer is essentially a factor to reckon with. We emphasize that the extraordinary
responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the
consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills
of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was
clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to
respondent WALLEM and in his complaint before the trial court. This premise draws us to conclude
that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other
than the consignee, the right to receive them was proper.
Samar Mining Co. v. Nordeutscher Lloyd

FACTS: The case arose from an importation made by Samar Mining Co. Inc. of 1 crate Optima welded
wedge wire sieves through the M/S Schwabenstein, a vessel owned by Nordeutscher Lloyd,
(represented in the Philippines by its agent, C.F. Sharp & Co., Inc.), which shipment is covered by Bill of
Lading No. 18 duly issued to consignee Samar Mining. Upon arrival of the vessel at the port of Manila,
the importation was unloaded and delivered in good order and condition to the bonded warehouse of
AMCYL. The goods were however never delivered to, nor received by, the consignee at the port of
destination Davao. When the letters of complaint sent to Nordeutscher Lloyd failed to elicit the
desired response, Samar Mining filed a formal claim for P1,691.93, the equivalent of $424.00 at the
prevailing rate of exchange at that time, against the former, but neither paid. Samar Mining filed a suit
to enforce payment. Nordeutscher Lloyd and CF Sharp & Co. brought in AMCYL as third party
defendant. The trial court rendered judgment in favor of Samar Mining, ordering Nordeutscher Lloyd,
et. al. to pay the amount of P1,691.93 plus attorneys fees and costs. However, the Court stated that
Nordeutscher Lloyd, et. al. may recoup whatever they may pay Samar Mining by enforcing the
judgment against third party defendant AMCYL, which had earlier been declared in default.
Nordeutscher Lloyd and C.F. Sharp & Co. appealed from said decision. Notes The following are the
pertinent ports, as provided in the bill of lading: Port of Loading: Bremen, Germany Port of discharge
from ship: Manila Port of destination/Port of discharge of the goods: Davao As plainly indicated on the
face of the bill, the vessel M/S Schwabenstein is to transport the goods only up to Manila. Thereafter,
the goods are to be transshipped by the carrier to the port of destination.
ISSUE: Whether or not a stipulation in the bill of lading exempting the carrier from liability for loss of
goods not in its actual custody (i.e., after their discharge from the ship) is valid.
HELD: It is clear that in discharging the goods from the ship at the port of Manila, and delivering the
same into the custody of AMCYL, the bonded warehouse, appellants were acting in full accord with the
contractual stipulations contained in Bill of Lading No. 18. The delivery of the goods to AMCYL was part
of appellants' duty to transship (meaning to transfer for further transportation from one ship or
conveyance to another) the goods from Manila to their port of destination-Davao. The extent of
appellant carrier's responsibility and/or liability in the transshipment of the goods in question are
spelled out and delineated under Section 1, paragraph 3 of Bill of Lading No. 18, to wit: the carrier
shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the goods
enter ship's tackle to be loaded or after the goods leave ship's tackle to be discharged, transshipped or
forwarded. Further, in Section 11 of the same bill, it was provided that this carrier, in making
arrangements for any transshipping or forwarding vessels or means of transportation not operated by
this carrier shall be considered solely the forwarding agent of the shipper and without any other
responsibility whatsoever even though the freight for the whole transport has been collected by him
Pending or during forwarding or transshipping the carrier may store the goods ashore or afloat solely
as agent of the shipper We find merits in Nordeutschers contention that they are not liable for the
loss of the subject goods by claiming that they have discharged the same in full and good condition
unto the custody of AMCYL at the port of discharge from ship Manila, and therefore, pursuant to
the aforequoted stipulation (Sec. 11) in the bill of lading, their responsibility for the cargo had
ceased.The validity of stipulations in bills of lading exempting the carrier from liability for loss or
damage to the goods when the same are not in its actual custody has been upheld by Us in PHOENIX
ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968), ruling that pursuant to the terms
of the Bill of Lading, appellee's responsibility as a common carrier ceased the moment the goods were
unloaded in Manila and in the matter of transshipment, appellee acted merely as an agent of the
shipper and consignee In the present case, by the authority of the above pronouncements, and in
conformity with the pertinent provisions of the Civil Code, Section 11 of Bill of Lading No. 18 and the
third paragraph of Section 1 thereof are valid stipulations between the parties insofar as they exempt
the carrier from liability for loss or damage to the goods while the same are not in the latter's actual
custody. Acareful perusal of the provisions of the New Civil Code on common carriers directs our
attention to Article 1736, which reads: The extraordinary responsibility of the common carrier 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. In relation to this, Article 1738 provides: the extraordinary liability of the common
carrier continues to be operative even during the time the goods are stored in a warehouse of the
carrier at the place of destination, until the consignee has been advised of the arrival of the goods and
has had reasonable opportunity thereafter to remove them or otherwise dispose of them. Art. 1738
finds no applicability to the instant case. The said article contemplates a situation where the goods had
already reached their place of destination and are stored in the warehouse of the carrier. The subject
goods were still awaiting transshipment to their port of destination, and were stored in the warehouse
of a third party when last seen and/or heard of. However, Article 1736 is applicable to the instant suit.
Under said article, the carrier may be relieved of the responsibility for loss or damage to the goods
upon actual or constructive delivery of the same by the carrier to the consignee, or to the person who
has a right to receive them. There is actual delivery in contracts for the transport of goods when
possession has been turned over to the consignee or to his duly authorized agent and a reasonable
time is given him to remove the goods. In the present case, there was actual delivery to the consignee
through its duly authorized agent, the carrier. Lastly, two undertakings are embodied in the bill of
lading: the transport of goods from Germany to Manila, and the transshipment of the same goods from
Manila to Davao, with Samar Mining acting as the agent of the consignee. The moment the subject
goods are discharged in Manila, Samar Minings personality changes from that of carrier to that of
agent of the consignee. Such being the case, there was, in effect, actual delivery of the goods from
appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant,
as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from
that point onwards. This is the full import of Article 1736. But even as agent of the consignee, the
appellant cannot be made answerable for the value of the missing goods. It is true that the
transshipment of the goods, which was the object of the agency, was not fully performed. However,
appellant had commenced said performance, the completion of which was aborted by circumstances
beyond its control. An agent who carries out the orders and instructions of the principal without being
guilty of negligence, deceit or fraud, cannot be held responsible for the failure of the principal to
accomplish the object of the agency.