YNCHAUSTI STEAMSHIP CO. V.

DEXTER
Facts:
 The Government employed Ynchausti, a common carrier, for the transportation of 30 cases of White
Rose mineral oil and 96 cases of “Cock” Brand mineral oil on board the steamship Venus, which
would journey from Manila to Aparri.
 The carrier received the goods, and to evidence the contract of transportation, the parties duly
executed and delivered a bill of lading.
 The bill of lading stipulated that the carrier received the supplies in apparent good condition,
obligating itself to carry said supplies to the place agreed upon, in accordance with the authorized
and prescribed rates and classifications, and subject to the law of common carriers in force on the
date of the shipment, and to the conditions prescribed by the Insular Collector of Customs in
Philippine Marine Regulations.
 Upon delivery, the consignee claimed that one case of White Rose and one case of “Cock” were
delivered empty. The consignee noted these claims on the bill of lading.
 The Insular Purchasing Agent notified Ynchausti that:
o The Insular Auditor had investigated the matter and decided that the leakages of the 2 cases
were due to the carrier’s negligence, and
o He had authorized the deduction of P22.53 from the amount due to the carrier—an amount
equivalent to the estimated value of the goods lost.
 Ynchausti protested and demanded payment of the full amount due them. The Insular Auditor
refused the same and tendered a warrant only for the reduced sum of P60.26.
 Ynchausti filed this case (a petition for a writ of mandamus) to compel the Government to pay the
full amount of P82.79.
 Ynchausti alleges that the shortages were due to causes unknown to it, and that there was no fault
or negligence on their part or on the part of any of their agents or servants.

Issue: Who bears the loss?

Ruling: Ynchausti bears the loss.

Competent evidence was provided to show that the shortage existed.

 Under Sec. 646 of the Administrative Code, it is the duty of the consignee to make a full notation of
any loss, evidence or damage on the bill of lading. The consignee did exactly what was required by
the law.

Presumption that Ynchausti is to blame for the loss.

 Ynchausti admits that it received the oil, and the fact of loss was proved in the proper manner.

Doctrine: the presumption of negligence / liability

 General rule: mere proof of delivery of goods in good order to a carrier, and proof of their arrival at
the place of destination in bad order, makes a prima facie case against the carrier.
o Exception: if there is an explanation given. The carrier must prove the loss is due to
accident or some other circumstance inconsistent with its liability.

Dispositive: The Insular Auditor is entitled to withhold the amount equivalent to the value of the lost oil.
MIRASOL V. DOLLAR

Facts:
 Mirasol is the owner and consignee of two cases of books, shipped in good order and condition at
New York, U.S.A., on board the Robert Dollar Company's steamship President Garfield, for
transport and delivery to Mirasol in the City of Manila.
 The two cases arrived in Manila in bad order and damaged condition, resulting in the total loss of
one case and a partial loss of the other.
 Mirasol filed claims but Dollar Company has refused and neglected to pay, reasoning that the
damage "was caused by sea water."
 Mirasol alleges that he never entered into any contract with Dollar Company limiting the latter's
liability as a common carrier. When the other case was found, Mirasol filed a claim for the real
damage of the books in the sum of $375.
 Dollar Company raises the following defenses:
o The steamship President Garfield was seaworthy and properly manned, equipped and
supplied, and fit for the voyage;
o The damage to Mirasol's merchandise, if any, was not caused through their negligence, "but
that such damage, if any, resulted from faults or errors in navigation or in the management of
said vessel";
o In the bill of lading issued by the Dollar Co., it was agreed in writing that Dollar Co. should
not be "held liable for any loss of, or damage to, any of said merchandise resulting from any
of the following causes, to wit: Acts of God, perils of the sea or other waters," and that
Mirasol's damage, if any, was caused by "Acts of God" or "perils of the sea";
o The bill of lading stated that in no case shall it be held liable "for or in respect to said
merchandise or property beyond the sum of two hundred and fifty dollars for any piece,
package or any article not enclosed in a package, unless a higher value is stated herein and
ad valorem freight paid or assessed thereon";
 And that Mirasol had written Dollar Co. a letter saying: “I wish to file claim of damage
to the meager maximum value that your bills of lading will indemnify me, that is $250
as per condition 13.”
o The damage, if any, was caused by "sea water," and that the bill of lading exempts Dollar
Co. from liability for that cause, as damage by "sea water" is a shipper's risk.
 The lower court ruled in favor of Mirasol, awarding him P2,080.

Ruling: Mirasol wins!

On the limitation of carrier’s liability

 There is no claim or pretense that Mirasol signed the bill of lading or that he knew of his contents at
the time that it was issued. In that situation he was not legally bound by the clause that purports to
limit Dollar Co.'s liability.

On the carrier’s duty, liability and the burden of proof to be exempted from liability
 Shippers who are forced to ship goods on a ship have some legal rights, and when goods are
delivered on board ship in good order and condition, and the shipowner delivers them to the shipper
in bad order and condition, it then devolves upon the shipowner to both allege and prove that the
goods were damaged by the reason of some fact which legally exempts him from liability; otherwise,
the shipper would be left without any redress, no matter what may have caused the damage.
 Dollar Co. having received the two boxes in good condition, its legal duty was to deliver them to
Mirasol in the same condition in which it received them. From the time of their delivery to Dollar Co.
in New York until they are delivered to Mirasol in Manila, the boxes were under the control and
supervision of the carrier and beyond the control of Mirasol.
 Dollar Co. having admitted that the boxes were damaged while in transit and in its possession, the
burden of proof then shifted, and it devolved upon the carrier to both allege and prove that the
damage was caused by reason of some fact which exempted it from liability. As to how the boxes
were damaged, when or where, was a matter peculiarly and exclusively within the knowledge of the
carrier.
The fact that the cases were damaged by "sea water," standing alone and within itself, is not evidence that
they were damaged by force majeure or for a cause beyond the carrier's control. The carrier must prove
that the cases were damaged by “sea water,” as per Art. 361 of the Code of Commerce.
Standard Vacuum Oil Company v. Luzon Stevedoring Co., Inc.
G.R. No. L-5203 April 18, 1956

FACTS:
Defendant's barge No. L-522 was laden with gasoline belonging to the plaintiff to be transported
from Manila to the Port of Iloilo. Defendant's tugboat "Snapper" picked up the barge outside the breakwater.
The barge was placed behind the tugboat, it being connected to the latter by a tow rope. Behind the barge,
three other barges were likewise placed. The weather was good when on that day the tugboat with its tow
started on its voyage. The weather remained good on February 3, 1947. About 3:00 AM on February 4, the
engine of the tugboat came to a dead stop. The engineer found out that the trouble was due to a broken
idler. A message was then sent to the defendant's radio station in Manila informing its official of the engine
trouble. The master of the Snapper attempted to cast anchor but the water areas around Elefante Island
were so deep. In the afternoon, the weather become worse and due to the rough condition of the sea the
anchor chains of the Snapper' and the four barges broke. They were drifted and were dashed against the
rocks. A hole was opened in the hull of the Snapper', which ultimately caused it to sink, while the barge No.
L-522 was so badly damaged that the gasoline it had on board leaked out. Defendant failed to transport the
gasoline so plaintiff brought an action with CFI Manila to recover damages. Defendant pleaded that its
failure to deliver was due to fortuitous event or caused by circumstances beyond its control and not to its
fault or negligence or that of any of its employees. The court found that the disaster was the result of an
unavoidable accident and the loss of the gasoline was due to a fortuitous event hence it dismissed the
case.

ISSUE:
W/N defendant exercised extraordinary diligence and that the accident was due to force majeure.

HELD:
NO. While the breaking of the idler may be due to an accident, or to something unexpected, the
cause of the disaster which resulted in the loss of the gasoline can only be attributed to the negligence or
lack of precaution to avert it on the part of defendant. Defendant had enough time to effectuate the rescue if
it had only a competent tug for the purpose because the weather was good from 3:00 o'clock a.m. to 12:00
o'clock noon of February 4, 1947 and it was only in the afternoon that the wind began to blow with some
intensity,1 but failed to do so because of that shortcoming. The loss of the gasoline certainly cannot be said
to be due to force majeure or unforeseen event but to the failure of defendant to extend adequate and
proper help. Considering these circumstances, the Court persuaded to conclude that defendant has failed
to established that it is exempt from liability under the law. Defendant is hereby ordered to pay to plaintiff
the sum of P75,578.50, with legal interest from the date of the filing of the complaint, with costs.
II. DEGREE OF DILIGENCE REQUIRED
FIREMAN’S FUND INSURANCE CO vs METRO PORT SERVICES
FACTS:
Vulcan Industrial and Mining Corporation imported from the United States several machineries and
equipment which were loaded on board the SIS Albert Maersk at the port of Philadelphia, U.S.A., and
transhipped for Manila through the vessel S/S Maersk Tempo.
The shipment arrived at the port of Manila on June 3, 1979 and was turned over complete and in good
order condition to the arrastre operator E. Razon Inc. (now Metro Port Service Inc. and referred to as the
ARRASTRE).
A tractor operator, named Danilo Librando and employed by the ARRASTRE, was ordered to transfer the
shipment to the Equipment Yard at Pier 3. While Librando was maneuvering the tractor (owned and
provided by Maersk Line) to the left, the cargo fell from the chassis and hit one of the container vans of
American President Lines. It was discovered that there were no twist lock at the rear end of the chassis
where the cargo was loaded.
An Insurance was claimed by Vulcan Industrial, in turn, the petitioner insurance company demanded
recovery from Maerks Line. The trial court ruled that Maerks and Metro Port be held solidarily liable. On
appeal by Metro Port, the Court of Appeals reversed, ruling that it is only Maerks that is liable.
ISSUE:
WON Maerks and Metro Port exercised the proper degree of diligence.
WON Maerks and Metro Port be held liable solidarity.

RULING:
Maerks and Metro port did not exercise the proper diligence.
In general, the nature of the work of an arrastre operator covers the handling of cargoes at piers and
wharves. The ARRASTRE is required to provide cargo handling equipment which includes among others
trailers, chassis for containers. In some cases, however, the shipping line has its own cargo handling
equipment.
In this case, Maerks provide for the chassis and tractors and merely requested the arrastre (Metro) to
dispatch a tractor operator. ARRASTRE which had the sole discretion and prerogative to hire and assign
Librando to operate the tractor. It was also the ARRASTRE's sole decision to detail and deploy Librando for
the particular task from among its pool of tractor operators or drivers. Since the ARRASTRE offered its
drivers for the operation of tractors in the handling of cargo and equipment, then the ARRASTRE should
see to it that the drivers under its employ must exercise due diligence in the performance of their work.
The testimonies are appreciated and the court held that Maerks is at fault in not providing twist locks on the
chassis and Metro is also at fault for Librando’s negligence in not checking that the cargo is securely loaded
on the chassis.
Both the arrastre and the carrier are charged with and obligated to deliver the goods in good condition to
the consignee.
The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and
warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]). The relationship between the
consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern
Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). Since it is the duty of the ARRASTRE to take good
care of the goods that are in its custody and to deliver them in good condition to the consignee, such
responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore
charged with and obligated to deliver the goods in good condition to the consignee.
ABOITIZ SHIPPING V. CA (G.R. NO. 84458)
Facts:

Anacleto Viana boarded the vessel M/V Antonia owned by petitioner Aboitiz Shipping Corp at the port at
San Jose, Occidental Mindoro, bound for Manila. The vessel arrived at Pier 4, North Harbor, Manila and
was taken over by Pioneer Stevedoring for the latter to unload the cargoes from the said vessel pursuant to
their Memorandum of Agreement. An hour after the passengers and Viana had disembarked the vessel the
crane operator began its unloading operation. While the crane was being operated, Viana who had already
disembarked the vessel remembered that some of his cargoes were still loaded there. He went back and
while he was pointing to the crew where his cargoes were, the crane hit him pinning him between the side
of the vessel and the crane resulting to his death. A complaint for damages was filed against petitioner for
breach of contract of carriage. Petitioner contends that Viana ceased to be a passenger when he
disembarked the vessel and that consequently his presence there was no longer reasonable. CA affirmed
the trial court’s order holding Aboitiz liable. Hence the petition.

Issue:

Whether or not petitioner is still responsible as a carrier to Viana after the latter had already disembarked
the vessel.

Ruling: YES.

The rule is that the relation of carrier and passenger continues until the passenger has been landed at the
port of destination and has left the vessel owner’s dock or premises. Once created, the relationship will not
ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carrier’s
conveyance or had a reasonable opportunity to leave the carrier’s premises. All persons who remain on the
premises a reasonable time after leaving the conveyance are to be deemed passengers, and what is a
reasonable time or a reasonable delay within this rule is to be determined from all the circumstances, and
includes a reasonable time to see after his baggage and prepare for his departure. The carrier-passenger
relationship is not terminated merely by the fact that the person transported has been carried to his
destination if, for example, such person remains in the carrier’s premises to claim his baggage.

The primary factor to be considered is the existence of a reasonable cause as will justify the presence of
the victim on or near the petitioner’s vessel. We believe there exists such a justifiable cause. When the
accident occurred, the victim was in the act of unloading his cargoes, which he had every right to do, from
petitioner’s vessel. As earlier stated, a carrier is duty bound not only to bring its passengers safely to their
destination but also to afford them a reasonable time to claim their baggage.

Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a passenger of
said carrier at the time of his tragic death.
BANKERS & MANUFACTURERS ASSURANCE NOTES:
CORP. vs. CA, F. E. ZUELLIG & CO., INC. and E. - There is no prima facie liability of the carrier when
RAZON, INC. [G.R. No. 80256; October 2, 1992] shipment did not suffer loss or damage while it was
TOPIC: Common Carriers under the care of the carrier or of the arrastre operator.
PONENTE: Melo
FACTS:
- 108 cases of copper tubings were imported by Ali Trading Company, which were insured by petitioner and arrived in
Manila on board the vessel S/S "Oriental Ambassador" on November 4, 1978, and turned over to respondent E. Razon, the
Manila arrastre operator upon discharge at the waterfront. The carrying vessel is represented in the Philippines by its agent,
the other respondent, F. E. Zuellig and Co., Inc. Upon inspection by the importer, the shipment was allegedly found to have
sustained loses by way of theft and pilferage for which petitioner, as insurer, compensated the importer.
- Hence, petitioner, in subrogation of the importer-consignee and on the basis of what it asserts had been already
established, that a portion of the shipment was lost through theft and pilferage, filed for recovery of what it paid its insured.
It alleged that the burden of proof of proving a case of non-liability shifted to private respondents, one of whom, the
carrier, being obligated to exercise extraordinary diligence in the transport and care of the shipment.
- RTC OF MANILA: dismissed.
- CA: RTC affirmed. Hence, this petition for review on certiorari.
ISSUE: WON the carrier is liable for the loss goods allegedly due to theft and pilferage?

HELD: NO. Court dismissed the petition. Ruling of the CA is affirmed.

RATIO:
- Records show that the shipment involved was "containerized", thus, the goods under this arrangement are stuffed, packed,
and loaded by the shipper at a place of his choice, usually his own warehouse, in the absence of the carrier. The container is
sealed by the shipper and thereafter picked up by the carrier and the recital of the bill of lading for goods ordinarily would
declare "Said to Contain", "Shipper’s Load and Count", "Full Container Load", and the amount or quantity of goods in the
container in a particular package is only prima facie evidence of the amount or quantity which may be overthrown by parol
evidence. A shipment under this arrangement is not inspected or inventoried by the carrier whose duty is only to
transport and deliver the containers in the same condition as when the carrier received and accepted the containers
for transport.
- In this case, the copper tubings were placed in 3 containers. When it arrived in Manila, the shipment was discharge in
apparent good order and condition and from the pier’s docking apron, then were shifted to the container yard of Pier 3 for
safekeeping. 3 weeks later, one of the container vans, which contain 19 cases of the cargo, was "stripped" in the presence
of petitioner’s surveyors, and three cases were found to be in bad order. The 19 cases of the van stripped were then kept
inside Warehouse No. 3 of Pier 3 pending delivery. However, those three cases found in bad order are not the cases for
which the claim was presented, for although those appeared to be in bad order, the contents remained good and intact.
- The two other container vans were not moved from the container yard and they were not stripped. The cargo was released
to the care of the consignee’s authorized customs broker, the RGS Customs Brokerage. The broker, accepted the shipment
without exception as to bad order and caused the delivery of the vans to the consignee’s warehouse in Makati. It was at that
place, when the contents of the two containers were removed and inspected, that petitioner’s surveyors reported, that the
shipment was short of seven cases.
- Court agrees with RTC and CA observation that if there was any suspicion or indication of irregularity or theft or
pilferage, plaintiff’s or consignee’s representatives should have noted the same on the gate passes or insisted that some
form of protest form part of the documents concerning the shipment but no such step was taken. The shipment appears to
have been delivered to the customs broker in good order and condition and complete save for the three cases noted as being
apparently in bad order.
- Furthermore, the stripping was done at the consignee’s warehouse where, according to plaintiff’s surveyor, the loss of the
seven cases was discovered. The evidence is not settled as whether the defendants’ representatives were notified of, and
were present at, the unsealing and opening of the containers in the bodega. Nor is the evidence clear how much time
elapsed between the release of the shipment from the pier and the stripping of the containers at consignee’s bodega. All
these fail to discount the possibility that the loss in question could have taken place after the containers had left the pier.
- Hence, if any of the vans were found in bad condition, or if any inspection of the goods was to be done in order to
determine the condition thereof, the same should have been done at pierside, the pier warehouse, or at any time and place
while the vans were under the care and custody of the carrier or of the arrastre operator. To all appearances, therefore, the
shipment was accepted by petitioner in good order.
Summa Insurance vs. CA GR. No. 84680

Facts:
S/S "Galleon Sapphire", a vessel owned by the National Galleon Shipping Corporation (NGSC), arrived at
Pier 3, South Harbor, Manila, carrying a shipment consigned to the order of Caterpillar Far East Ltd. with
Semirara Coal Corporation (Semirara) as "notify party". The shipment, including a bundle of PC 8 U blades,
was covered by marine issued by petitioner and Bill of Lading. The shipment was discharged from the
vessel to the custody of private respondent, formerly known as E. Razon, Inc., the exclusive arrastre
operator at the South Harbor. Accordingly, three good-order cargo receipts were issued by NGSC, duly
signed by the ship's checker and a representative of private respondent.The forwarder, Sterling
International Brokerage Corporation, withdrew the shipment from the pier and loaded it on the barge
"Semirara 8104". The barge arrived at its port of destination, Semirara Island, on Upon inspection,
Semirara discovered that the bundle of PC8U blades was missing at its warehouse.Private respondent
issued a short-landed certificate-stating that the bundle of PC8U blades was already missing when it
received the shipment from the NGSC vessel. Semirara then filed with petitioner, private respondent and
NGSC its claim for P280,969.68, the alleged value of the lost bundle. Petitioner paid Semirara the invoice
value of the lost shipment. Semirara thereafter executed a release of claim and subrogation receipt.
Consequently, petitioner filed its claims with NGSC and private respondent but it was unsuccessful.
Petitioner then filed a complaint against NGSC and private respondent for collection of a sum of money,
damages and attorney's fees. The trial court rendered a decision absolving NGSC from any liability but
finding private respondent liable to petitioner. On appeal, the Court of Appeals modified the decision of the
trial court and reduced private respondent's liability.
Issue:
1. Whether or not the private respondent legally liable for the loss of the shipment in question?
2. What is the extent of its liability
Ruling:
1. Yes, SC finds the Respondent liable for the loss. Petitioner was subrogated to the rights of the
consignee. The relationship between the petitioner and the respondent is akin to that existing between the
consignee or owner of shipped goods and the common carrier, or that between a depositor and a
warehouseman. In the performance of its obligations, an arrastre operator should observe the same degree
of diligence as that required of a common carrier and a warehouseman as enunciated under Article 1733 of
the Civil Code and Section 3(8) of the Warehouse Receipts Law, respectively. Being the custodian of the
goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn
them over to the party entitled to their possession.
2. In the performance of its job, an arrastre operator is bound by the management contract it had
executed with the Bureau of Customs. However, a management contract, which is a sort of a stipulation
pour autrui within the meaning of Article 1311 of the Civil Code, is also binding on a consignee because it is
incorporated in the gate pass and delivery receipt which must be presented by the consignee before
delivery can be effected to .The insurer, as successor-in-interest of the consignee, is likewise bound by the
management contract. Indeed, upon taking delivery of the cargo, a consignee (and necessarily its
successor-in-interest) tacitly accepts the provisions of the management contract, including those which are
intended to limit the liability of one of the contracting parties, the arrastre operator.
SARKIES TOURS PHILIPPINES, INC., v. CA, DR. ELINO G. FORTADES, MARISOL A. FORTADES and
FATIMA MINERVA A. FORTADES
G.R. No. 108897 October 2, 1997

CASE:
Fatima boarded petitioner's bus bringing 3 pieces of luggage with her. Her brother helped her load them on
the bus compartment. During a stopover at Daet, it was discovered that only one bag remained in the open
compartment. Private respondents asked assistance from the radio stations and from Philtranco bus drivers
who plied the same route. They were able to recover one of Fatima's bags. After a few weeks, private
respondents formally demanded from petitioner. In its letter, petitioner tacitly admitted its liability by
apologizing and assuring respondents that efforts were being made to recover the lost items. Months later,
respondents filed a case to recover the value of the remaining lost items claiming that the loss was due to
petitioner's failure to observe extraordinary diligence in the care of Fatima's luggage and that petitioner
dealt with them in bad faith from the start. Petitioner denied liability on the ground that Fatima allegedly did
not declare any excess baggage upon boarding its bus.

W/N petitioner, as a common carrier, is responsible for the loss.

YES. Under the Civil Code, "(c)ommon carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods… transported by them,"
and this liability "lasts from the time the goods are unconditionally placed in the possession of, and received
by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to…the
person who has a right to receive them," unless the loss is due to any of the excepted causes under Article
1734 thereof. 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. Further, where the common carrier
accepted its passenger's baggage for transportation and even had it placed in the vehicle by its own
employee, its failure to collect the freight charge is the common carrier's own lookout; it is responsible for
the consequent loss of the baggage. In this case, petitioner’s employee even helped Fatima and her
brother load the luggages in the bus' baggage compartment, without asking that they be weighed, declared,
receipted or paid for.

FACTS:
• Fatima boarded petitioner's De Luxe Bus in Manila on her way to Legazpi City. Her brother Raul
helped her load 3 pieces of luggage containing all of her optometry review books, materials and equipment,
trial lenses, trial contact lenses, passport and visa, her mother’s U.S. green card, among other important
documents and personal belongings. Her belongings were kept in the baggage compartment of the bus,
but during a stopover at Daet, it was discovered that only one bag remained in the open compartment. The
others, including Fatima's things, were missing and might have dropped along the way. Some of the
passengers suggested retracing the route of the bus to try to recover the lost items, but the driver ignored
them and proceeded to Legazpi City.
• Fatima immediately reported the loss to petitioner through her mother. Petitioner, however, merely
offered her P1k for each piece of luggage lost, which she turned down.
• After returning to Bicol, private respondents asked assistance from the radio stations and from
Philtranco bus drivers who plied the same route. They were able to recover one of Fatima's bags.
• After a few weeks, private respondents formally demanded satisfaction of their complaint from
petitioner.
• In a letter, petitioner apologized for the delay and said that "(a) team has been sent out to Bicol for
the purpose of recovering or at least getting the full detail" of the incident.
• After more than 9 months of fruitless waiting, respondents decided to file a case to recover the
value of the remaining lost items, as well as moral and exemplary damages, attorney's fees and expenses
of litigation. They claimed that the loss was due to petitioner's failure to observe extraordinary diligence in
the care of Fatima's luggage and that petitioner dealt with them in bad faith from the start. Petitioner, on the
other hand, disowned any liability for the loss on the ground that Fatima allegedly did not declare any
excess baggage upon boarding its bus.

ISSUE:
Whether or not petitioner, as a common carrier, is responsible for the loss.

HELD & RATIO:

YES.
• Under the Civil Code, "(c)ommon carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over the goods . . . transported
by them," and this liability "lasts from the time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the same are delivered, actually or constructively, by the
carrier to . . . the person who has a right to receive them," unless the loss is due to any of the excepted
causes under Article 1734 thereof.
• 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 luggages were lost, to the prejudice of the paying passengers.
• Where the common carrier accepted its passenger's baggage for transportation and even had it
placed in the vehicle by its own employee, its failure to collect the freight charge is the common carrier's
own lookout. It is responsible for the consequent loss of the baggage.
o In the instant case, petitioner’s employee even helped Fatima and her brother load the luggages in
the bus' baggage compartment, without asking that they be weighed, declared, receipted or paid for.
Belgian Overseas Chartering and Shipping vs Philippine First Insurance Co. Inc.
DOCTRINE – Common carrier should observe the precaution to avoid damage or destruction of the goods
entrusted to it for safe carriage and delivery.
FACTS:
CMC Trading A.G. shipped on board the M/V ‘Anangel Sky’ at Germany 242 coils of various Prime Cold
Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. M/V
Anangel Sky arrived at the Manila Port. Subsequently, it discharged subject cargo. 4 coils were found to be
in bad order. Finding the 4 coils in their damaged state to be unfit for the intended purpose, the consignee
Philippine Steel Trading Corporation (PSTC) declared the same as total loss. Despite receipt of a formal
demand, Belgian Overseas Chartering and Shipping NV ( BOCSNV ) and Jardine Davies Transport
Services Inc. (JDTSI) refused to submit to the consignee’s claim. Consequently, PFIC paid the consignee
506, 086.50 and was subrogated to the latter’s rights and causes of action against BOCSNV and JDTSI.
PFIC instituted a complaint for recovery of the amount paid by them, to the consignee as insured. RTC
rendered judgment dismissing the complaint as well as the defendant’s counterclaim.
On appeal. CA reversed and set aside the decision of the Trial Court and ordered BOCSNV and JDTSI
jointly and severally pay PFIC actual damages representing the value of damaged cargo, attorney’s fees
and cost of suit.
ISSUE:
Whether petitioners have overcome the presumption of negligence of a common carrier.
HELD:
No. The words “metal envelopes rust strained and slightly dented” were noted on the Bill of Lading;
however, there is no showing that BOCSNV and JDTSI exercised due diligence to forestall or lessen the
loss. Having been in the service for several years, the master of the vessel should have known at the
outset that metal envelopes in the said state would eventually deteriorate when not properly stored while in
the transit. Equipped with the proper knowledge of the nature of steel sheets in coils and of the proper way
of transporting them, the master of the vessel and his crew should have undertake precautionary measures
to avoid possible deterioration of the cargo. But none of these measures was taken. Having failed to
discharge the burden of proving that they have exercised the extraordinary diligence required by law,
BOCSNV and JDTSI cannot now escape liability for the damage to the 4 coils.
Herein, (1) as stated in the bill of lading BOCSNV and JDTSI received the subject shipment in good order
and condition in Germany; (2) prior to the unloading of the cargo, an inspection report prepared and signed
by representative of both parties showed the steel bonds, the metal envelopes rust-strained and heavily
buckled and the contents thereof exposed and rust; (3) Bad order tally sheet stated that the 4 coils were In
bad order and condition; (4) certificate of analysis stated that based on the sample submitted and tested,
the steel sheets found in bad order were wet with fresh water and (5) BOCSNV and JDTSI in their letter
addressed to the Philippine Steel Coating Inc., they admitted that they were aware of the condition of the 4
coil found in bad order and condition. All these conclusively prove the fact of shipment in good order and
condition and the consequent damage to the 4 coild while in the possession of the petitioner, who notably
failed to explain why.
DISPOSITIVE PORTION: WHEREFORE, the Petition is partly granted and the assailed Decision
MODIFIED. Petitioners liability is reduced to US$2,000 plus interest at the legal rate of six percent from the
time of the filing of the Complaint on July 25, 1991 until the finality of this Decision, and 12 percent
thereafter until fully paid. No pronouncement as to costs.
SO ORDERED.
ABOITIZ SHIPPING CORPORATION, vs. INSURANCE COMPANY OF
NORTH AMERICA,
G.R. No. 168402 August 6, 2008

Facts:
1. MSAS Cargo International Limited and/or Associated and/or Subsidiary Companies (MSAS)
procured a marine insurance policy from respondent ICNA UK Limited of London and the insurance was for
a transshipment of certain wooden work tools and workbenches purchased for the consignee Science
Teaching Improvement Project (STIP), Ecotech Center, Sudlon Lahug, Cebu City, Philippines.
2. When the cargo reached Manila, it was received by petitioner Aboitiz Shipping Corporation (Aboitiz)
through its duly authorized booking representative, Aboitiz Transport System and the bill of lading issued by
Aboitiz contained the notation grounded outside warehouse.
3. The shipment arrived in Cebu City and discharged onto a receiving apron of the Cebu International
Port and it was then brought to the Cebu Bonded Warehousing Corporation pending clearance from the
Customs authorities where petitioner’s checker noted that the crates were slightly broken or cracked at the
bottom.
4. Subsequently, then Claims Head of petitioner, received a telephone call from Bernhard Willig, the
representative of consignee who received the shipment, informing him that the cargo sustained water
damage.
5. ICNA paid the amount of P280,176.92 to consignee and ICNA formally advised Aboitiz of the claim
and subrogation receipt executed in its favor but despite follow-ups, no reply was received from Aboitiz.

Issues:
1. Is respondent ICNA the real party-in-interest that possesses the right of subrogation to claim
reimbursement from petitioner Aboitiz?
2. Was there a timely filing of the notice of claim as required under Article 366 of the Code of
Commerce?
3. If so, can petitioner be held liable on the claim for damages?

Ruling:
1. Yes, payment by the insurer to the assured operates as an equitable assignment of all remedies the
assured may have against the third party who caused the damage. Subrogation is not dependent upon, nor
does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon
payment of the insurance claim by the insurer. Upon payment to the consignee of indemnity for damage to
the insured goods, ICNAs entitlement to subrogation equipped it with a cause of action against petitioner in
case of a contractual breach or negligence.
2. Yes, provisions specifying a time to give notice of damage to common carriers are ordinarily to be
given a reasonable and practical, rather than a strict construction. The call to petitioner was made two days
from delivery, a reasonable period considering that the goods could not have corroded instantly overnight
such that it could only have sustained the damage during transit. Moreover, petitioner was able to
immediately inspect the damage while the matter was still fresh. In so doing, the main objective of the
prescribed time period was fulfilled. Thus, there was substantial compliance with the notice requirement in
this case
3. Yes, The rule as stated in Article 1735 of the Civil Code is that in cases where 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 required by law. Petitioner is
thus liable for the water damage sustained by the goods due to its failure to satisfactorily prove that it
exercised the extraordinary diligence required of common carriers.
REGIONAL CONTAINER LINES (RCL) OF SINGAPORE vs. THE NETHERLANDS INSURANCE CO.
(PHILIPPINES), INC.
G.R. No. 168151; September 4, 2009
BRION, J.:
RCL is a foreign corporation based in Singapore. It does business in the Philippines through its agent,
EDSA Shipping, a domestic corporation organized and existing under Philippine laws.
Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands Insurance) is likewise a
domestic corporation engaged in the marine underwriting business.
FACTS: 405 cartons of Epoxy molding compound were consigned to be shipped from Singapore to Manila
for TEMIC. U-Freight Singapore contracted Pacific Eagle to transport cargo. It was stored in its refrigerated
container as cargo is highly presihable. The temperature was 0º Celsius. Pacific Eagle loaded it to M/V
Piya Bhum owned by RCL which the former had a slot charter agreement with. RCL issued Bill of Lading in
favor of Pacific Eagle. Netherlands Insurance issued a Marine Open Policy to insure cargo in favor of Temic
to cover loss/damages. Upon arrival at Manila, the cargoes were surveyed and it was found to be at the
constant required temperature for several ldays. But later on, it was found out that the temperature
changed when the cargo had already been unloaded, to 33º Celsius. Surveyor believed the fluctuation
was caused by the burnt condenser fan motor of the refrigerated container. Temic received the shipment
and found it to be damaged. Temic filed a claim for cargo loss against Netherlands Insurance, with
supporting claims documents. The Netherlands Insurance paid Temic the sum ofP1,036,497.00 under the
terms of the Marine Open Policy. Temic then executed a loss and subrogation receipt in favor of
Netherlands Insurance.
Seven months from delivery of the cargo - Netherlands Insurance filed a complaint for subrogation of
insurance settlement with the Regional Trial Court, RCL and TMS Ship Agencies (TMS) thought to be the
local agent of M/V Piya, EDSA Shipping, Eagle Liner Shipping Agencies, U-Freight Singapore, and U-
Ocean (Phils.), Inc. (U-Ocean). RCL and EDSA Shipping filed motion to dismiss based on demurer to
evidence. They attributed negligence to their co-defendants, that fluctuation of temperature occurred after
cargo has been discharged from vessel but in the reefer van and that Netherlands is not party in interest
hence has no cause of action. RTC found RCL and EDSA Shipping not liable but this was reversed by CA
and barred them from presenting evidence since they filed for demurer.
Defense of RCL and EDSA Shipping:
1. They attributed any negligence that may have caused the loss of the shipment to their co- defendants.
a. They contend that the cause of the damage to the cargo was the “fluctuation of the temperature in the
reefer van,” which fluctuation occurred after the cargo had already been discharged from the vessel; no
fluctuation, they point out, arose when the cargo was still on board M/V Piya Bhum.
b. As the cause of the damage to the cargo occurred after the same was already discharged from the
vessel and was under the custody of the arrastre operator (International Container Terminal Services, Inc.
or ICTSI), RCL and EDSA Shipping posit that the presumption of negligence provided in Article 1735 of
the Civil Code should not apply. What applies in this case is Article 1734, particularly paragraphs 3
and 4 thereof, which exempts the carrier from liability for loss or damage to the cargo when it is caused
either by an act or omission of the shipper or by the character of the goods or defects in the packing or in
the containers.
2. They likewise asserted that no valid subrogation exists, as the payment made by Netherlands Insurance
to the consignee was invalid.
RCL and EDSA Shipping, in their motion to dismiss based on demurrer to evidence:
1. Netherlands Insurance had failed to prove any valid subrogation,
2. Netherlands Insurance had failed to establish that any negligence on their part or that the loss was
sustained while the cargo was in their custody.
RTC ruled:
1. There was valid subrogation.
2. The defendants could not be held liable for the loss or damage, as their respective liabilities ended at
the time of the discharge of the cargo from the ship at the Port of Manila.
Netherlands Insurance seasonably appealed the order of dismissal to the CA.
CA ruled:
1. Against EDSA Shipping Agency and RCL. They were held liable for the damages/ reimbursement.
2. The CA dismissed Netherland Insurances complaint against the other defendants after finding that the
claim had already been barred by prescription
3. They are deemed to have waived their right to present evidence, and the presumption of
negligence must stand.
ISSUE: Whether the CA correctly held RCL and EDSA Shipping liable as common carriers under the theory
of presumption of negligence.
RULING: Yes CA is correct. RCL and EDSA Shipping failed to satisfy this standard of evidence and in
fact offered no evidence at all on this point; a reversal of a dismissal based on a demurrer to evidence
bars the defendant from presenting evidence supporting its allegations. The CA correctly ruled that
they are deemed to have waived their right to present evidence, and the presumption of negligence
must stand. It is for this reason as well that the court finds RCL and EDSA Shipping’s claim that the loss or
damage to the cargo was caused by a defect in the packing or in the containers.
The present case is governed by the following provisions of the Civil Code:
ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound
to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735,
and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set
forth in articles1755 and 1756.
ART. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
2) Act of the public enemy in war, whether international or civil;
3) Act of 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.
ART. 1735. In all cases other that 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 by
article 1733.
ART. 1736. 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
sane 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 articles 1738.
ART. 1738. 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. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or of the containers, the common carrier must
exercise due diligence to forestall or lessen the loss.
Rules for the liability of a common carrier for lost or damaged cargo as follows: (Central Shipping Company,
Inc. v. Insurance Company of North America)
(1) Common carriers are bound to observe extraordinary diligence over the goods they transport, according
to all the circumstances of each case;
(2) In the event of loss, destruction, or deterioration of the insured goods, common carriers are responsible,
unless they can prove that such loss, destruction, or deterioration was brought about by, among others,
flood, storm, earthquake, lightning, or other natural disaster or calamity; and
(3) In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to
have been at fault or to have acted negligently, unless they observed extraordinary diligence.
Arguments of RCL and EDSA Shipping are not meritorious.
A common carrier is presumed to have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived
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, the common carrier must establish by adequate
proof that it exercised extraordinary diligence over the goods. It must do more than merely show that
some other party could be responsible for the damage.
In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree
of diligence required by law over the goods they transported. Indeed, there is sufficient
evidence showing that the fluctuation of the temperature in the refrigerated container van, as recorded in
the temperature chart, occurred after the cargo had been discharged from the vessel and was already
under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the
condenser fan – which caused the fluctuation of the temperature in the refrigerated container – was not
damaged while the cargo was being unloaded from the ship. It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain under the custody of the carrier; RCL and EDSA
Shipping failed to dispute this.

RCL and EDSA Shipping could have offered evidence before the trial court to show that the damage to the
condenser fan did not occur: (1) while the cargo was in transit; (2) while they were in the act of discharging
it from the vessel; or (3) while they were delivering it actually or constructively to the consignee.
They could have presented proof to show that they exercised extraordinary care and diligence in the
handling of the goods, but they opted to file a demurrer to evidence. As the order granting their demurrer
was reversed on appeal, the CA correctly ruled that they are deemed to have waived their right to
present evidence, and the presumption of negligence must stand.
It is for this reason as well that we find RCL and EDSA Shipping’s claim that the loss or damage to the
cargo was caused by a defect in the packing or in the containers. 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 causes in Article 1734 of the Civil Code 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. RCL
and EDSA Shipping, however, failed to satisfy this standard of evidence and in fact offered no evidence
at all on this point; a reversal of a dismissal based on a demurrer to evidence bars the defendant from
presenting evidence supporting its allegations.
GR 182208; OCT. 14, 2015
G.V. FLORIDA TRANSPORT, INC., Petitioner, v. HEIRS OF ROMEO L. BATTUNG, JR., REPRESENTED
BY ROMEO BATTUNG, SR., Respondents.
Nature and Effects of Obligation: Negligence
Facts: Respondents alleged that in the evening of March 22, 2003, Battung boarded petitioner's bus bound
for Manila. Battung then got shot at his head. The bus conductor, Daraoay, notified Duplio, the driver, of the
incident and thereafter, brought Romeo to the hospital, but the latter was pronounced dead on arrival.
Hence, respondents filed a complaint on July 15, 2008 for damages based on a breach of contract of
carriage against petitioner, Duplio, and Baraoay, contending that as a common carrier, petitioner and its
employees are bound to observe extraordinary diligence in ensuring the safety of passengers; and in case
of injuries and/or death on the part of a passenger, they are presumed to be at fault and, thus, responsible
therefor. Petitioner however, maintained that they had exercised the extraordinary diligence required by law
from common carriers. In this relation, they claimed that a common carrier is not an absolute insurer of its
passengers and that Battung's death should be properly deemed a fortuitous event.
The RTC ruled in respondents' favor, finding that petitioner, et al. were unable to rebut the presumed
liability of common carriers in case of injuries/death to its passengers due to their failure to show that they
implemented the proper security measures to prevent passengers from carrying deadly weapons inside the
bus which, in this case, resulted in the killing of Battung. Such was affirmed by the CA.

Issue: Whether or not the petitioner should be held liable for damages to respondent arising from culpa
contractual.

Held: No. The law exacts from common carriers the highest degree of diligence in ensuring the safety of its
passengers. In case of death of or injuries to passengers, common carriers are presumed to have been at
fault or to have acted negligently. Notwithstanding, however, the law does not make the common carrier an
insurer of the absolute safety of its passengers. Being a mere presumption, the aforementioned is
rebuttable by proof that the common carrier had exercised extraordinary diligence as required by law in the
performance of its contractual obligation, or that the injury suffered by the passenger was solely due to a
fortuitous event. Thus, it is imperative to show that the injury or death to the passenger/s arose from the
negligence of the common carrier and/or its employees in providing safe transport to its passengers.
In this case, Battung's death was neither caused by any defect in the means of transport or in the method
of transporting, or to the negligent or willful acts of petitioner's employees. Instead, the case involves the
death of Battung wholly caused by the surreptitious act of a co-passenger who, after consummating such
crime, hurriedly alighted from the vehicle.
Moreover, while Article 1763 of the Civil Code states that “a common carrier is responsible for injuries
suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if
the common carrier's employees through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission," no danger was shown to exist in this case so as to impel
petitioner or its employees to implement heightened security measures to ensure the safety of its
passengers. There was also no showing that during the course of the trip, Battung's killer made suspicious
actions which would have forewarned petitioner's employees of the need to conduct thorough checks on
him or any of the passengers. Common carriers should be given sufficient leeway in assuming that the
passengers they take in will not bring anything that would prove dangerous to himself, as well as his co-
passengers, unless there is something that will indicate that a more stringent inspection should be made.
In this case, records reveal that both Duplio and Daraoay observed nothing which would rouse their
suspicion that the men were armed or were to carry out an unlawful activity. With no such indication, there
was no need for them to conduct a more stringent search (i.e., bodily search) on the aforesaid men. By all
accounts, therefore, it cannot be concluded that petitioner or any of its employees failed to employ the
diligence of a good father of a family.