JAPAN AIRLINES VS.
MICHAEL ASUNCION AND
JEANETTE ASUNCION
FACTS: Respondents Michael and Jeanette
Asuncion left Manila on board Japan Airlines’ (JAL)
Flight 742 bound for Los Angeles. Their itinerary
included a stopover in Narita and an overnight stay
at Hotel Nikko Narita.
Upon arrival at Narita, Mrs. Noriko Etou-Higuchi of
JAL endorsed their applications for shore pass and
directed them to the Japanese immigration
official. A shore pass is required of a foreigner
aboard a vessel or aircraft who desires to stay in the
neighborhood of the port of call for not more than
72 hours.
During their interview, the Japanese immigration
official noted that Michael appeared shorter than
his height as indicated in his passport. Because of
this inconsistency, respondents were denied shore
pass entries and were brought instead to the Narita
Airport Rest House where they were billeted
overnight.
The immigration official also handed Mrs. Higuchi a
Notice5 where it was stated that respondents were
to be “watched so as not to escape.” Mr. Atsushi
Takemoto of the International Service Center (ISC),
the agency tasked by Japan’s Immigration
Department to handle passengers who were denied
shore pass entries, brought respondents to the Narita
Airport Rest House where they stayed overnight until
their departure the following day for Los Angeles.
Respondents were charged US$400.00 each for their
accommodation, security service and meals.
Respondents filed a complaint for
damages claiming that JAL did not fully apprise
them of their travel requirements and that they were
rudely and forcibly detained at Narita Airport. JAL
denied the allegations of respondents. It maintained
that the refusal of the Japanese immigration
authorities to issue shore passes to respondents is an
act of state, which JAL cannot interfere with or
prevail upon. Consequently, it cannot impose upon
the immigration authorities that respondents be
billeted at Hotel Nikko instead of the airport
resthouse.
The trial court rendered its decision in favor of the
petitioners. The trial court dismissed JAL’s
counterclaim for litigation expenses, exemplary
damages and attorney’s fees. The Court of Appeals
affirmed in toto the decision of the trial court. Its
motion for reconsideration having been denied, JAL
now files the instant petition.
ISSUE: whether JAL is guilty of breach of contract?
HELD: No. Under Article 1755 of the Civil Code, a
common carrier such as JAL is bound to carry its
passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with due regard for all the
circumstances.
When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger has every
right to expect that he be transported on that flight
and on that date and it becomes the carrier’s
obligation to carry him and his luggage safely to the
agreed destination.10 If the passenger is not so
transported or if in the process of transporting he
dies or is injured, the carrier may be held liable for a
breach of contract of carriage.
JAL did not breach its contract of carriage with
respondents. It may be true that JAL has the duty to
inspect whether its passengers have the necessary
travel documents, however, such duty does not
extend to checking the veracity of every entry in
these documents. JAL could not vouch for the
authenticity of a passport and the correctness of the
entries therein. The power to admit or not an alien
into the country is a sovereign act which cannot be
interfered with even by JAL. This is not within the
ambit of the contract of carriage entered into by
JAL and herein respondents. As such, JAL should not
be faulted for the denial of respondents’ shore pass
applications.
Next, respondents claimed that petitioner breached
its contract of carriage when it failed to explain to
the immigration authorities that they had overnight
vouchers at the Hotel Nikko Narita. --- To reiterate,
JAL or any of its representatives have no authority to
interfere with or influence the immigration
authorities. The most that could be expected of JAL
is to endorse respondents’ applications, which Mrs.
Higuchi did immediately upon their arrival in Narita.
1
PHILIPPINE AIRLINES, INCORPORATED vs. COURT OF
APPEALS
FACTS: Private respondents spouses Manuel
S. Buncio and Aurora R. Buncio purchased from
petitioner Philippine Airlines, Incorporated, two
plane tickets for their two minor children, Deanna
R. Buncio, then 9 years of age, and Nikolai
R. Buncio, then 8 years old. Since Deanna and
Nikolai will travel as unaccompanied minors,
petitioner required private respondents to
accomplish, sign and submit to it an indemnity
bond. Private respondents complied with this
requirement.
Private respondents filed a complaint for damages
against petitioner before the RTC. Private
respondents alleged that Deanna and Nikolai were
not able to take their connecting flight from San
Francisco to Los Angeles as scheduled because the
required indemnity bond was lost on account of the
gross negligence and malevolent conduct of
petitioners personnel. As a consequence thereof,
Deanna and Nikolai were stranded in San
Francisco overnight, thereby exposing them to
grave danger. This dilemma caused Deanna,
Nikolai, Mrs. Regalado and private respondents to
suffer serious anxiety, mental anguish, wounded
feelings, and sleepless nights.

For the purchase of the said two plane tickets, In its answer to the complaint, petitioner admitted
petitioner agreed to transport Deanna and Nikolai that Deanna and Nikolai were not allowed to take
from Manila to San Francisco, California, through their connecting flight to Los Angeles and that they
one of its planes, Flight 106. Petitioner also agreed were stranded in San Francisco. Petitioner, however,
that upon the arrival of Deanna and Nikolai in San denied that the loss of the indemnity bond was
Francisco Airport, it would again transport the two caused by the gross negligence and malevolent
on that same day through a connecting flight conduct of its personnel. Petitioner averred that it
from San Francisco, California to Los always exercised the diligence of a good father of
Angeles, California, via another airline, United the family in the selection, supervision and control of
Airways 996. its employees. In addition, Deanna and Nikolai were
personally escorted by Strigl, and the latter exerted
Deanna and Nikolai arrived at the San efforts to make the connecting flight of Deanna and
Francisco Airport. However, the staff of United Nikolai to Los Angeles possible. Further, Deanna and
Airways 996 refused to take aboard Deanna and Nikolai were not left unattended from the time they
Nikolai for their connecting flight to Los Angeles were stranded in San Francisco until they boarded
because petitioners personnel in San Western Airlines for a connecting flight to Los
Francisco could not produce the indemnity bond Angeles. Petitioner asked the RTC to dismiss the
accomplished and submitted by private complaint based on the foregoing averments.
respondents. The said indemnity bond was lost by
petitioners personnel during the previous stop-over RTC: petitioner liable for damages for breach of
of Flight 106 in Honolulu, Hawaii. Deanna and Nikolai contract of carriage.
were then left stranded at the San
Francisco Airport. Subsequently, Mr. Edwin Strigl, CA: affirming in toto the RTC Decision
then the Lead Traffic Agent of petitioner in San
Francisco, California took Deanna and Nikolai to his ISSUE: When contract of carriages arises
residence in San Francisco where they stayed Duty of airline to inspect passenger’s travel
overnight. documents

Strigl took Deanna and Nikolai to San HELD: When an airline issues a ticket to a passenger,
Francisco Airport where the two boarded a Western confirmed for a particular flight on a certain date, a
Airlines plane bound for Los Angeles. Later that day, contract of carriage arises. The passenger has every
Deanna and Nikolai arrived at the Los right to expect that he be transported on that flight
Angeles Airport where they were met by and on that date, and it becomes the airline’s
Mrs. Regalado. Petitioners personnel had previously obligation to carry him and his luggage safely to the
informed Mrs. Regalado of the late arrival of agreed destination without delay. If the passenger is
Deanna and Nikolai. not so transported or if in the process of transporting,
he dies or is injured, the carrier may be held liable for
Private respondents, through their lawyer, sent a a breach of contract of carriage.
letter to petitioner demanding payment of 1 million
pesos as damages for the gross negligence and Private respondents and petitioner entered into a
inefficiency of its employees in transporting Deanna contract of air carriage when the former purchased
and Nikolai. Petitioner did not heed the demand. two plane tickets from the latter. Under this contract,
petitioner obliged itself
2
(1) to transport Deanna and Nikolai, as
unaccompanied minors, on 2 May 1980 from Manila
to San Francisco through one of its planes, Flight 106;
and
(2) upon the arrival of Deanna and Nikolai in San
Francisco Airport on 3 May 1980, to transport them
on that same day from San Francisco to Los
Angeles via a connecting flight on United Airways
996.
As it was, petitioner failed to transport Deanna and
Nikolai from San Francisco to Los Angeles on the day
of their arrival at San Francisco. The staff of United
Airways 996 refused to take aboard Deanna and
Nikolai for their connecting flight to Los Angeles
because petitioner’s personnel in San Francisco
could not produce the indemnity bond
accomplished and submitted by private
respondents. Thus, Deanna and Nikolai were
stranded in San Francisco and were forced to stay
there overnight. It was only on the following day that
Deanna and Nikolai were able to leave San
Francisco and arrive at Los Angeles via another
airline, Western Airlines. Clearly then, petitioner
breached its contract of carriage with private
respondents.
Evidently, petitioner was fully aware that Deanna
and Nikolai would travel as unaccompanied minors
and, therefore, should be specially taken care of
considering their tender age and delicate situation.
Petitioner also knew well that the indemnity bond
was required for Deanna and Nikolai to make a
connecting flight from San Francisco to Los Angeles,
and that it was its duty to produce the indemnity
bond to the staff of United Airways 996 so that
Deanna and Nikolai could board the connecting
flight. Yet, despite knowledge of the foregoing, it did
not exercise utmost care in handling the indemnity
bond resulting in its loss in Honolulu, Hawaii. This was
the proximate cause why Deanna and Nikolai were
not allowed to take the connecting flight and were
thus stranded overnight in San Francisco. Further,
petitioner discovered that the indemnity bond was
lost only when Flight 106 had already landed in San
Francisco Airport and when the staff of United
Airways 996 demanded the indemnity bond. This
only manifests that petitioner did not check or verify
if the indemnity bond was in its custody before
leaving Honolulu, Hawaii for San Francisco.
The foregoing circumstances reflect petitioner’s
utter lack of care for and inattention to the welfare
of Deanna and Nikolai as unaccompanied minor
passengers. They also indicate petitioner’s failure to
exercise even slight care and diligence in handling
the indemnity bond. Clearly, the negligence of
petitioner was so gross and reckless that it
amounted to bad faith.
It is worth emphasizing that petitioner, as a common
carrier, is bound by law to exercise extraordinary
diligence and utmost care in ensuring for the safety
and welfare of its passengers with due regard for all
the circumstances. The negligent acts of petitioner
signified more than inadvertence or inattention and
thus constituted a radical departure from the
extraordinary standard of care required of common
carriers.
Petitioner’s claim that it cannot be entirely blamed
for the loss of the indemnity bond because it gave
the indemnity bond to the immigration office of
Honolulu, Hawaii, as a matter of procedure during
the stop-over, and the said immigration office failed
to return the indemnity bond to petitioner’s
personnel before Flight 106 left Honolulu, Hawaii,
deserves scant consideration. It was petitioner’s
obligation to ensure that it had the indemnity bond
in its custody before leaving Honolulu, Hawaii for San
Francisco. Petitioner should have asked for the
indemnity bond from the immigration office during
the stop-over instead of partly blaming the said
office later on for the loss of the indemnity bond.
Petitioner’s insensitivity on this matter indicates that it
fell short of the extraordinary care that the law
requires of common carriers.
MALLARI VS. COURT OF APPEALS
FACTS: On 14 October 1987, at about 5:00 o’clock in
the morning, the passenger jeepney driven by
petitioner Alfredo Mallari, Jr. and owned by his co-
petitioner Alfredo Mallari, Sr. collided with the
delivery van of respondent Bulletin Publishing Corp.
(BULLETIN, for brevity) along the National Highway in
Barangay San Pablo, Dinalupihan, Bataan. Petitioner
Mallari, Jr. testified that he went to the left lane of
the highway and overtook a Fiera which had
stopped on the right lane. Before he passed by the
Fiera, he saw the van of respondent BULLETIN
coming from the opposite direction. It was driven by
one Felix Angeles. The sketch of the accident
showed that the collision occurred after Mallari, Jr.
overtook the Fiera while negotiating a curve in the
highway. The points of collision were the left rear
portion of the passenger jeepney and the left front
side of the delivery van of BULLETIN. The two (2) right
wheels of the delivery van were on the right
shoulder of the road and pieces of debris from the
accident were found scattered along the shoulder
of the road up to a certain portion of the lane
travelled by the passenger jeepney. The impact
caused the jeepney to turn around and fall on its left
side resulting in injuries to its passengers one of
3
whom was Israel Reyes who eventually died due to
the gravity of his injuries.
On 16 December 1987 Claudia G. Reyes, the
widow of Israel M. Reyes, filed a complaint for
damages with the Regional Trial Court of Olongapo
City against Alfredo Mallari, Sr. and Alfredo Mallari,
Jr., and also against BULLETIN, its driver Felix Angeles,
and the N.V. Netherlands Insurance Company. The
complaint alleged that the collision which resulted in
the death of Israel Reyes was caused by the fault
and negligence of both drivers of the passenger
jeepney and the Bulletin Isuzu delivery van. The
complaint also prayed that the defendants be
ordered jointly and severally to pay plaintiff
P1,006,777.40 in compensatory damages, P40,000.00
for hospital and medical expenses, P18,270.00 for
burial expenses plus such amounts as may be fixed
by the trial court for exemplary damages and
attorney’s fees.
The trial court found that the proximate cause of
the collision was the negligence of Felix Angeles,
driver of the Bulletin delivery van, considering the
fact that the left front portion of the delivery truck
driven by Felix Angeles hit and bumped the left rear
portion of the passenger jeepney driven by Alfredo
Mallari, Jr. Hence, the trial court ordered BULLETIN
and Felix Angeles to pay jointly and severally
Claudia G. Reyes, widow of the deceased victim,
the sums of P42,106.93 for medical expenses;
P8,600.00 for funeral and burial expenses;
P1,006,777.40 for loss of earning capacity; P50,000.00
for moral damages and P10,000.00 for attorney’s
fees. The trial court also ordered N.V. Netherlands
Insurance Company to indemnify Claudia G. Reyes
P12,000.00 as death indemnity and P2,500.00 for
funeral expenses which when paid should be
deducted from the liabilities of respondent BULLETIN
and its driver Felix Angeles to the plaintiff. It also
dismissed the complaint against the other
defendants Alfredo Mallari, Sr. and Alfredo Mallari,
Jr. CA reversed and ruled that the collision was
caused by the sole negligence of petitioner Alfredo
Mallari, Jr. who admitted that immediately before
the collision and after he rounded a curve on the
highway, he overtook a Fiera which had stopped on
his lane and that he had seen the van driven by
Angeles before overtaking the Fiera. The Court of
Appeals ordered petitioners Mallari, Jr. and Mallari,
Sr. to compensate Claudia G. Reyes P1,006,777.50
for loss of earning capacity, P50,000.00 as indemnity
for death and P10,000.00 for attorney’s fees. It
absolved from any liability respondent BULLETIN, Felix
Angeles and N.V. Netherlands Insurance Company.
Hence this petition.
ISSUE: Whether Mallaris be held liable
HELD: Yes. In the instant case, by his own admission,
petitioner Mallari, Jr. already saw that the BULLETIN
delivery van was coming from the opposite
direction and failing to consider the speed thereof
since it was still dark at 5:00 o’clock in the morning
mindlessly occupied the left lane and overtook two
(2) vehicles in front of it at a curve in the highway.
Clearly, the proximate cause of the collision resulting
in the death of Israel Reyes, a passenger of the
jeepney, was the sole negligence of the driver of
the passenger jeepney, petitioner Alfredo Mallari, Jr.,
who recklessly operated and drove his jeepney in a
lane where overtaking was not allowed by traffic
rules. Under Art. 2185 of the Civil Code, unless there
is proof to the contrary, it is presumed that a person
driving a motor vehicle has been negligent if at the
time of the mishap he was violating a traffic
regulation. As found by the appellate court,
petitioners failed to present satisfactory evidence to
overcome this legal presumption.
The rule is settled that a driver abandoning his
proper lane for the purpose of overtaking another
vehicle in an ordinary situation has the duty to see to
it that the road is clear and not to proceed if he
cannot do so in safety. When a motor vehicle is
approaching or rounding a curve, there is special
necessity for keeping to the right side of the road
and the driver does not have the right to drive on
the left hand side relying upon having time to turn to
the right if a car approaching from the opposite
direction comes into view.
.
The negligence and recklessness of the driver
of the passenger jeepney is binding against
petitioner Mallari, Sr., who admittedly was the owner
of the passenger jeepney engaged as a common
carrier, considering the fact that in an action based
on contract of carriage, the court need not make
an express finding of fault or negligence on the part
of the carrier in order to hold it responsible for the
payment of damages sought by the passenger.
Under Art. 1755 of the Civil Code, a common carrier
is bound to carry the passengers safely as far as
human care and foresight can provide using the
utmost diligence of very cautious persons with due
regard for all the circumstances. Moreover, under
Art. 1756 of the Civil Code, in case of death or
injuries to passengers, a common carrier is presumed
to have been at fault or to have acted negligently,
unless it proves that it observed extraordinary
diligence. Further, pursuant to Art. 1759 of the same
Code, it is liable for the death of or injuries to
passengers through the negligence or willful acts of
the former’s employees. This liability of the common
carrier does not cease upon proof that it exercised
all the diligence of a good father of a family in the
4
selection of its employees. Clearly, by the contract
of carriage, the carrier jeepney owned by Mallari, Sr.
assumed the express obligation to transport the
passengers to their destination safely and to observe
extraordinary diligence with due regard for all the
circumstances, and any injury or death that might
be suffered by its passengers is right away
attributable to the fault or negligence of the carrier.
REPUBLIC VS. LORENZO SHIPPING CORPORATION
FACTS: Republic of the Philippines, through the
Department of Health (DOH), and the Cooperative
for American Relief Everywhere, Inc. (CARE) signed
an agreement wherein CARE would acquire from
the United States government donations of non-fat
dried milk and other food products from January 1,
1987 to December 31, 1989. In turn, the Philippines
would transport and distribute the donated
commodities to the intended beneficiaries in the
country.
The government entered into a contract of carriage
of goods with petitioner National Trucking and
Forwarding Corporation (NTFC) and the latter
shipped 4,868 bags of non-fat dried milk through
respondent Lorenzo Shipping Corporation (LSC). The
consignee named in the bills of lading issued by the
respondent was Abdurahman Jama, petitioner’s
branch supervisor in Zamboanga City.
On reaching the port of Zamboanga City,
respondent’s agent, Efren Ruste Shipping Agency,
unloaded the 4,868 bags of non-fat dried milk and
delivered the goods to petitioner’s warehouse.
Before each delivery, the delivery checkers of Efren
Ruste Shipping Agency, requested Abdurahman to
surrender the original bills of lading, but the latter
merely presented certified true copies thereof. Upon
completion of each delivery, the checkers asked
Abdurahman to sign the delivery receipts. However,
at times when Abdurahman had to attend to other
business before a delivery was completed, he
instructed his subordinates to sign the delivery
receipts for him.
The petitioner allegedly did not receive the subject
goods. Thus, petitioner NTFC filed a formal claim for
non-delivery of the goods shipped through
respondent. In reply, the respondent explained that
the cargo had already been delivered to
Abdurahman. The petitioner then decided to
investigate the loss of the goods. But before the
investigation was over, Abdurahman resigned as
branch supervisor of petitioner.
Disbelieving respondent’s insistence that the goods
were delivered, the government through the DOH,
CARE, and NTFC as plaintiffs filed an action for
breach of contract of carriage, against respondent
as defendant, with the RTC of Manila.
After trial, the RTC resolved the case in favor of the
defendant. Petitioner appealed to the Court of
Appeals on the grounds that the lower court faulted
for not holding that respondent failed to deliver the
cargo, and that respondent failed to exercise the
extraordinary diligence required of common
carriers. The Court of Appeals found that the trial
court did not commit any error. It dismissed the
appeal, and affirmed the assailed decision in toto.
Hence, this petition.
ISSUE: Whether the respondent is negligent as
common carrier for the loss or deterioration of the
goods.
HELD:
We rule for respondent.
Article 1733 of the Civil Code demands that
a common carrier observe extraordinary diligence
over the goods transported by it. Extraordinary
diligence is that extreme measure of care and
caution which persons of unusual prudence and
circumspection use for securing and preserving their
own property or rights. This exacting standard
imposed on common carriers in a contract of
carriage of goods is intended to tilt the scales in
favor of the shipper who is at the mercy of the
common carrier once the goods have been lodged
for shipment. Hence, in case of loss of goods in
transit, the common carrier is presumed under the
law to have been at fault or negligent. However, the
presumption of fault or negligence, may be
overturned by competent evidence showing that
the common carrier has observed extraordinary
diligence over the goods.
In the instant case, we agree with the
court a quo that the respondent adequately proved
that it exercised extraordinary diligence. Although
the original bills of lading remained with petitioner,
respondent’s agents demanded from Abdurahman
the certified true copies of the bills of lading. They
also asked the latter and in his absence, his
designated subordinates, to sign the cargo delivery
receipts.
This practice, which respondent’s agents
testified to be their standard operating procedure,
finds support in Article 353 of the Code of
Commerce:
5
 ART. 353. . . .
After the contract has been complied
with, the bill of lading which the carrier
has issued shall be returned to him
and by virtue of the exchange of this
title with the thing transported, the
respective obligations and actions
shall be considered cancelled.
In case the consignee, upon receiving the
goods, cannot return the bill of lading subscribed by
the carrier, because of its loss or of any other cause,
he must give the latter a receipt for the goods
delivered, this receipt producing the same effects as
the return of the bill of lading. (Emphasis supplied)
Conformably with the aforecited provision,
the surrender of the original bill of lading is not a
condition precedent for a common carrier to be
discharged of its contractual obligation. If surrender
of the original bill of lading is not possible,
acknowledgment of the delivery by signing the
delivery receipt suffices. This is what respondent did.
SULPICIO LINES, INC. VS. FIRST LEPANTO-TAISHO
INSURANCE CORPORATION
FACTS: Taiyo Yuden Philippines, Inc. (owner of the
goods) and Delbros, Inc. (shipper) entered into a
contract, evidenced by Bill of Lading issued by the
latter in favor of the owner of the goods, for Delbros,
Inc. to transport a shipment of goods consisting of 3
wooden crates containing one hundred 136 cartons
of inductors and LC compound on board the V
Singapore V20 from Cebu City to Singapore in favor
of the consignee, Taiyo Yuden Singapore Pte, Ltd.
For the carriage of said shipment from Cebu City to
Manila, Delbros, Inc. engaged the services of the
vessel M/V Philippine Princess, owned and operated
by petitioner Sulpicio Lines, Inc. (carrier). The vessel
arrived at the North Harbor, Manila.
During the unloading of the shipment, one crate
containing for 42 cartons dropped from the cargo
hatch to the pier apron. The owner of the goods
examined the dropped cargo, and upon an
alleged finding that the contents of the crate were
no longer usable for their intended purpose, they
were rejected as a total loss and returned to Cebu
City.
The owner of the goods filed a claim with herein
petitioner-carrier for the recovery of the value of the
rejected cargo which was refused by the latter.
Thereafter, the owner of the goods sought payment
from respondent First Lepanto-Taisho Insurance
Corporation (insurer) under a marine insurance
policy issued to the former. Respondent-insurer paid
the claim less thirty-five percent (35%) salvage value
or P194,220.31.
The payment of the insurance claim of the owner of
the goods by the respondent-insurer subrogated the
latter to whatever right or legal action the owner of
the goods may have against Delbros, Inc. and
petitioner-carrier, Sulpicio Lines, Inc. Thus,
respondent-insurer then filed claims for
reimbursement from Delbros, Inc. and petitioner-
carrier Sulpicio Lines, Inc. which were subsequently
denied.
Respondent-insurer filed a suit for damages with the
trial court against Delbros, Inc. and herein petitioner-
carrier. Petitioner-carrier filed its Answer with
Counterclaim. Delbros, Inc. filed its Answer with
Counterclaim and Cross-claim, alleging that
assuming the contents of the crate in question were
truly in bad order, fault is with herein petitioner-
carrier which was responsible for the unloading of
the crates.
Petitioner-carrier filed its Answer to Delbros, Inc.’s
cross-claim asserting that it observed extraordinary
diligence in the handling, storage and general care
of the shipment and that subsequent inspection of
the shipment by the Manila Adjusters and Surveyors
Company showed that the contents of the third
crate that had fallen were found to be in apparent
sound condition, except that “2 cello bags each of
50 pieces ferri inductors No. LC FL 112270K-60 (c)
were unaccounted for and missing as per
packaging list.”
After hearing, the trial court dismissed the complaint
for damages as well as the counterclaim filed by
therein defendant Sulpicio Lines, Inc. and the cross-
claim filed by Delbros, Inc. on the grounds that
plaintiff has failed to prove its case.
The CA reversed the RTC decision and ordered
Delbros and Sulpicio Lines to pay, jointly
and severally, plaintiff-appellant the sum
of P194,220.31 representing actual damages, plus
legal interest counted from the filing of the
complaint until fully paid.
ISSUE: Whether or not, based on the evidence
presented during the trial, the owner of the goods,
6
respondent-insurer’s predecessor-in-interest, did
incur damages, and if so, whether or not petitioner-
carrier is liable for the same?
HELD: It cannot be denied that the shipment
sustained damage while in the custody of petitioner-
carrier. Petitioner-carrier contends that its liability, if
any, is only to the extent of the cargo damage or
loss and should not include the lack of fitness of the
shipment for transport to Singapore due to the
damaged packing. This is erroneous. Petitioner-
carrier seems to belabor under the misapprehension
that a distinction must be made between the cargo
packaging and the contents of the cargo.
According to it, damage to the packaging is not
tantamount to damage to the cargo. It must be
stressed that in the case at bar, the damage
sustained by the packaging of the cargo while in
petitioner-carrier’s custody resulted in its unfitness to
be transported to its consignee in Singapore. Such
failure to ship the cargo to its final destination
because of the ruined packaging, indeed, resulted
in damages on the part of the owner of the goods.
The falling of the crate during the unloading is
evidence of petitioner-carrier’s negligence in
handling the cargo. As a common carrier, it is
expected to observe extraordinary diligence in the
handling of goods placed in its possession for
transport. The standard of extraordinary diligence
imposed upon common carriers is considerably
more demanding than the standard of ordinary
diligence, i.e., the diligence of a vessel started discharging its cargoes using its winch
good paterfamilias established in respect of the
ordinary relations between members of society. A
common carrier is bound to transport its cargo and
its passengers safely “as far as human care and
foresight can provide, using the utmost
diligence of a very cautious person, with due regard
to all circumstances.” 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 the damage
to, or destruction of, the goods entrusted to it for
safe carriage and delivery. It requires common
carriers to render service with the greatest skill and
foresight and “to use all reasonable means to
ascertain the nature and characteristic of goods
tendered for shipment, and to exercise due care in
the handling and stowage, including such methods
as their nature requires.”
Thus, when the shipment suffered damages as it was
being unloaded, petitioner-carrier is presumed to
have been negligent in the handling of the
damaged cargo. Under Articles 1735 and 1752of
the Civil Code, common carriers are presumed to
have been at 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 loss, destruction or
deterioration of goods under Article 1735, the
common carrier must prove that they observed
extraordinary diligence as required in Article 1733 of
the Civil Code. Petitioner-carrier miserably failed to
adduce any shred of evidence of the required
extraordinary diligence to overcome the
presumption that it was negligent in transporting the
cargo.
PHILIPPINE CHARTER INSURANCE CORPORATION
vs. UNKNOWN OWNER OF THE VESSEL M/V
“NATIONAL HONOR,” NATIONAL SHIPPING
CORPORATION OF THE PHILIPPINES and
INTERNATIONAL CONTAINER SERVICES, INC.
FACTS:
Petitioner Philippine Charter Insurance Corporation
(PCIC) is the insurer of a shipment on board the
vessel M/V “National Honor,” represented in the
Philippines by its agent, National Shipping
Corporation of the Philippines (NSCP).
The M/V “National Honor” arrived at the Manila
International Container Terminal (MICT). The
International Container Terminal Services,
Incorporated (ICTSI) was furnished with a copy of
the crate cargo list and bill of lading, and it knew
the contents of the crate. The following day, the
crane. The crane was operated by Olegario Balsa, a
winchman from the ICTSI, exclusive arrastre operator
of MICT.
Denasto Dauz, Jr., the checker-inspector of the
NSCP, along with the crew and the surveyor of the
ICTSI, conducted an inspection of the cargo. They
inspected the hatches, checked the cargo and
found it in apparent good condition. Claudio
Cansino, the stevedore of the ICTSI, placed two sling
cables on each end of Crate No. 1. No sling cable
was fastened on the mid-portion of the crate. In
Dauz’s experience, this was a normal procedure. As
the crate was being hoisted from the vessel’s hatch,
the mid-portion of the wooden flooring suddenly
snapped in the air, about five feet high from the
vessel’s twin deck, sending all its contents crashing
down hard, resulting in extensive damage to the
shipment.
PCIC paid the damage, and as subrogee, filed a
case against M/V National Honor, NSCP and ICTSI.
Both RTC and CA dismissed the complaint.
7
ISSUE: Whether or not the presumption of
negligence is applicable in the instant case.
RULING: NO
Actions; Appeals; Only questions of law may be
entertained by the Supreme Court in a petition for
review on certiorari; Excep-tions.—The well-
entrenched rule in our jurisdiction is that only
questions of law may be entertained by this Court in
a petition for review on certiorari. This rule, however,
is not ironclad and admits certain exceptions, such
as when (1) the conclusion is grounded on
speculations, surmises or conjectures; (2) the
inference is manifestly mistaken, absurd or
impossible; (3) there is grave abuse of discretion; (4)
the judgment is based on a misapprehension of
facts; (5) the findings of fact are conflicting; (6) there
is no citation of specific evidence on which the
factual findings are based; (7) the findings of
absence of facts are contradicted by the presence
of evidence on record; (8) the findings of the Court
of Appeals are contrary to those of the trial court; (9)
the Court of Appeals manifestly overlooked certain
relevant and undisputed facts that, if properly
considered, would justify a different conclusion; (10)
the findings of the Court of Appeals are beyond the
issues of the case; and (11) such findings are
contrary to the admissions of both parties.
Common Carriers; Words and Phrases; 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 characteristics of goods tendered for shipment,
and to exercise due care in the handling and
stowage, including such methods as their nature
requires.—We agree with the contention of the
petitioner that 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, according to all
the circumstances of each case. The Court has
defined extraordinary diligence in the vigilance over
the goods as follows: 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.”
Same; When the goods shipped are either lost
or arrive in damaged condition, a presumption
arises against the carrier of its failure to observe that
diligence, and there need not be an express finding
of negligence to hold it liable; The enumeration in
Article 1734 of the New Civil Code which exempts
the common carrier for the loss or damage to the
cargo is a closed list.—The common carrier’s duty to
observe the requisite diligence in the shipment of
goods lasts from the time the articles are
surrendered to or unconditionally placed in the
possession of, and received by, the carrier for
transportation until delivered to, or until the lapse of
a reasonable time for their acceptance, by the
person entitled to receive them. When the goods
shipped are either lost or arrive in damaged
condition, a presumption arises against the carrier of
its failure to observe that diligence, and there need
not be an express finding of negligence to hold it
liable. To overcome the presumption of negligence
in the case of loss, destruction or deterioration of the
goods, the common carrier must prove that it
exercised extraordinary diligence. However, under
Article 1734 of the New Civil Code, the presumption
of negligence does not apply to any of the
following causes: 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. It bears stressing that
the enumeration in Article 1734 of the New Civil
Code which exempts the common carrier for the
loss or damage to the cargo is a closed list. To
exculpate itself from liability for the loss/damage to
the cargo under any of the causes, the common
carrier is burdened to prove any of the aforecited
causes claimed by it by a preponderance of
evidence. If the carrier succeeds, the burden of
evidence is shifted to the shipper to prove that the
carrier is negligent.
Same; Words and Phrases; “Defect” is the want
or absence of something necessary for
completeness or perfection, a lack or absence of
something essential to completeness, a deficiency
in something essential to the proper use for the
purpose for which a thing is to be used; “Inferior”
means of poor quality, mediocre, or second rate; A
thing may be of inferior quality but not necessarily
defective—“defectiveness” is not synonymous with
“inferiority.”—“Defect” is the want or absence of
8
something necessary for completeness or
perfection; a lack or absence of something essential
to completeness; a deficiency in something
essential to the proper use for the purpose for which
a thing is to be used. On the other hand, inferior
means of poor quality, mediocre, or second rate. A
thing may be of inferior quality but not necessarily
defective. In other words, “defectiveness” is not
synonymous with “inferiority.”
Same; Bills of Lading; The statement in the Bill of
Lading, that the shipment was in apparent good
condition, is sufficient to sustain a finding of absence
of defects in the merchandise, but such statement
will create a prima facie presumption only as to the
external condition and not to that not open to
inspection.—The petitioner failed to adduce any
evidence to counter that of respondent ICTSI. The
petitioner failed to rebut the testimony of Dauz, that
the crates were sealed and that the contents
thereof could not be seen from the outside. While it
is true that the crate contained machineries and
spare parts, it cannot thereby be concluded that
the respondents knew or should have known that
the middle wooden batten had a hole, or that it
was not strong enough to bear the weight of the
shipment. There is no showing in the Bill of Lading
that the shipment was in good order or condition
when the carrier received the cargo, or that the
three wooden battens under the flooring of the
cargo were not defective or insufficient or
inadequate. On the other hand, under Bill of Lading
No. NSGPBSML512565 issued by the respondent
NSCP and accepted by the petitioner, the latter
represented and warranted that the goods were
properly packed, and disclosed in writing the
“condition, nature, quality or characteristic that may
cause damage, injury or detriment to the goods.”
Absent any signs on the shipment requiring the
placement of a sling cable in the mid-portion of the
crate, the respondent ICTSI was not obliged to do
so. The statement in the Bill of Lading, that the
shipment was in apparent good condition, is
sufficient to sustain a finding of absence of defects
in the merchandise. Case law has it that such
statement will create a prima facie presumption
only as to the external condition and not to that not
open to inspection.
PRISCILLA L. TAN, petitioner, vs. NORTHWEST AIRLINES,
INC., respondent.
FACTS:
On May 31, 1994, Priscilla L. Tan and Connie Tan
boarded Northwest Airlines Flight 29 in Chicago,
U.S.A. bound for the Philippines, with a stop-over at
Detroit, U.S.A. They arrived at the Ninoy Aquino
International Airport (NAIA) on June 1, 1994 at about
10:40 in the evening.
Upon their arrival, petitioner and her companion
Connie Tan found that their baggages were missing.
They returned to the airport in the evening of the
following day and they were informed that their
baggages might still be in another plane in Tokyo,
Japan.
On June 3, 1994, they recovered their baggages
and discovered that some of its contents were
destroyed and soiled.
Claiming that they “suffered mental anguish,
sleepless nights and great damage” because of
Northwest’s failure to inform them in advance that
their baggages would not be loaded on the same
flight they boarded and because of their delayed
arrival, they demanded from Northwest Airlines
compensation for the damages they suffered. On
June 15, 1994 and June 22, 1994, petitioner sent
demand letters to Northwest Airlines, but the latter
did not respond. Hence, the filing of the case with
the regional trial court.
In its answer to the complaint, respondent
Northwest Airlines did not deny that the baggages
of petitioners were not loaded on Northwest Flight
29. Petitioner’s baggages could not be carried on
the same flight because of “weight and balance
restrictions.” However, the baggages were loaded
in another Northwest Airlines flight, which arrived in
the evening of June 2, 1994.
When petitioner received her baggages in
damaged condition, Northwest offered to either (1)
reimburse the cost or repair of the bags; or (2)
reimburse the cost for the purchase of new bags,
upon submission of receipts.
After due trial, on June 10, 1996, the trial court
rendered decision finding respondent Northwest
Airlines, Inc. liable for damages, as follows:
“WHEREFORE, judgment is hereby rendered ordering
the defendant to pay the plaintiff the following
amounts:
1. “1.P15,000.00, as actual damages;
2. “2.P100,000.00, as moral damages;
3. “3.P50,000.00, as exemplary damages;
4. “4.P30,000.00, as and for attorney’s fees and
5. “5.Costs.
Respondent Northwest Airlines, Inc. appealed from
the trial court’s decision to the Court of Appeals
contending that the court a quo erred in finding it
guilty of breach of contract of carriage and of willful
misconduct and awarded damages which had no
basis in fact or were otherwise excessive. On
appeal, CA deleted the award of moral and
exemplary damages and reducing the attorney’s
fees, specifically providing that:
ISSUE:
9
 Whether respondent is liable for moral and
exemplary damages for willful misconduct and
breach of the contract of air carriage.
HELD:
No. We agree with the Court of Appeals that
respondent was not guilty of willful misconduct. “For
willful misconduct to exist, there must be a showing
that the acts complained of were impelled by an
intention to violate the law, or were in persistent
disregard of one’s rights. It must be evidenced by a
flagrantly or shamefully wrong or improper
conduct.”
Contrary to petitioner’s contention, there was
nothing in the conduct of respondent which showed
that they were motivated by malice or bad faith in
loading her baggages on another plane. Due to
weight and balance restrictions, as a safety
measure, respondent airline had to transport the
baggages on a different flight, but with the same
expected date and time of arrival in the Philippines.
Bad faith does not simply connote bad
judgment or negligence, it imports a dishonest
purpose or some moral obliquity and conscious
doing of a wrong, a breach of known duty through
some motive or interest or ill-will that partakes of the
nature of fraud.” “Where in breaching the contract
of carriage the defendant airline is not shown to
have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable
consequences of the breach of obligation which
the parties had foreseen or could have reasonably
foreseen. In that case, such liability does not include
moral and exemplary damages.”
JAPAN AIRLINES VS. SIMANGAN
552 SCRA 341, G.R. NO. 170141 APRIL 22, 2008
FACTS: Jesus Simangan needed to go to the USA to
donate a kidney to his ailing cousin, Loreto
Simangan. He was issued an emergency U.S. visa by
the American Embassy in Manila. Then respondent
purchased a round trip plane ticket from petitioner
JAL. On July 29, 1992, the date of his flight,
respondent went to Ninoy Aquino International
Airport and after passing through said immigration
and security procedures, respondent was allowed
by JAL to enter its airplane. While inside the airplane,
JAL's airline crew suspected respondent of carrying
a falsified travel document and imputed that he
would only use the trip to the United States as a
pretext to stay and work in Japan. The stewardess
asked respondent to show his travel documents and
was ordered to stand up and leave the plane.
Respondent pleaded but his pleas were ignored.
The plane took off and he was left behind.
Respondent filed an action for damages
against JAL with the Regional Trial Court. He claimed
he was not able to donate his kidney to Loreto; and
that he suffered terrible embarrassment and mental
anguish. He prayed that he be awarded damages.
JAL denied the material allegations of the
complaint. It argued, among others, that its failure to
allow respondent to fly on his scheduled departure
was due to "a need for his travel documents to be
authenticated by the United States
Embassy" because no one from JAL's airport staff
had encountered a parole visa before. The RTC
rendered its decision in favor of the respondent. JAL
appealed to the CA contending that it is not guilty
of breach of contract of carriage, hence, not liable
for damages. The CA affirmed the decision of the
RTC. Hence, this petition.
ISSUE: Whether JAL is guilty of breach of contract of
carriage.
HELD: Yes, JAL is guilty of contract of carriage.
JAL did not allow respondent to fly. It
informed respondent that there was a need to first
check the authenticity of his travel documents with
the U.S. Embassy. As admitted by JAL, “the flight
could not wait for Mr. Simangan because it was
ready to depart.” Since JAL definitely declared that
the flight could not wait for respondent, it gave
respondent no choice but to be left behind. The
latter was unceremoniously bumped off despite his
protestations and valid travel documents and
notwithstanding his contract of carriage with JAL.
Damage had already been done when respondent
was offered to fly the next day on July 30, 1992. Said
offer did not cure JAL’s default.
Apart from the fact that respondent’s plane
ticket, boarding pass, travel authority and personal
articles already passed the rigid immigration and
security routines, JAL, as a common carrier, ought to
know the kind of valid travel documents respondent
carried. As provided in Article 1755 of the New Civil
Code: “A common carrier is bound to carry the
passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the
circumstances.” Thus, We find untenable JAL’s
defense of “verification of respondent’s documents”
in its breach of contract of carriage. It bears
repeating that the power to admit or not an alien
into the country is a sovereign act which cannot be
interfered with even by JAL.
In an action for breach of contract of
carriage, all that is required of plaintiff is to prove the
existence of such contract and its non-performance
by the carrier through the latter’s failure to carry the
passenger safely to his destination. Respondent has
complied with these twin requisites.
10