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1. ESTRELLITA M. BASCOS, petitioners, vs. COURT OF APPEALS and RODOLFO A.
CIPRIANO, respondents.
G.R. No. 101089
April 7, 1993
CAMPOS, JR., J p

TOPIC: Common carriers generally presumed to have been at fault or to have acted
negligently

NOTE: This is a petition for review on certiorari of the decision ** of the Court of Appeals
in "RODOLFO A. CIPRIANO, doing business under the name CIPRIANO TRADING
ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M. BASCOS, doing business under the
name of BASCOS TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216, the
dispositive portion of which is quoted hereunder:

"PREMISES considered, We find no reversible error in the decision appealed from, which is
hereby affirmed in toto. Costs against appellant."

FACTS:

1. Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short)

entered into a hauling contract with Jibfair Shipping Agency Corporation, the former
bound itself to haul the latter's 2,000 m/tons of soya bean meal from Magallanes
Drive, Del Pan, Manila to the warehouse of Purefoods Corporation in Calamba,
Laguna.
2. To carry out its obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted
with Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya
bean meal worth P156,404.00 from the Manila Port Area to Calamba, Laguna at the
rate of P50.00 per metric ton.
3. Petitioner failed to deliver the said cargo. As a consequence of that failure, Cipriano
paid Jibfair Shipping Agency the amount of the lost goods in accordance with the
contract.
4. Cipriano demanded reimbursement from petitioner but the latter refused to pay, and
eventually, Cipriano filed a complaint for a sum of money and damages with writ of
preliminary attachment for breach of a contract of carriage. The prayer for a Writ of
Preliminary Attachment was supported by an affidavit which contained the following
allegations, and was granted by the trial court on February 17, 1987:
5. Petitioner interposed the following defenses:
a. that there was no contract of carriage since CIPTRADE leased her cargo
truck to load the cargo from Manila Port Area to Laguna;
b. that CIPTRADE was liable to petitioner in the amount of P11,000.00 for
loading the cargo;
c. that the truck carrying the cargo was hijacked along Canonigo St., Paco,
Manila on the night of October 21, 1988;
d. that the hijacking was immediately reported to CIPTRADE and that petitioner
and the police exerted all efforts to locate the hijacked properties;
e. that after preliminary investigation, an information for robbery and carnapping
were filed against Jose Opriano, et al.;
f. and that hijacking, being a force majeure, exculpated petitioner from any
liability to CIPTRADE.
6. The trial court rendered a decision in favor of the plaintiff - Cipriano and against the
defendant, ordering the latter to pay the former, Php156,404.00 for actual damages,
attorney’s fees, and the cost of the suit.
 7. Petitioner appealed to the Court of Appeals but respondent Court affirmed the trial
court's judgment.
8. Consequently, petitioner filed this petition where she makes the following assignment
of errors; to wit:
a. The respondent court erred in holding that the contractual relationship
between petitioner and private respondent was carriage of goods and not
lease of cargo truck.
b. Granting, that the finding of the respondent coutt that the contract of carriage
of goods is correct, nevertheless, it erred in finding petitioner liable thereunder
because the loss of the cargo was due to force majeure.
c. Respondent court erred in affirming the finding of the trial court that the
petitioners motion to dissolve/lift the writ of preliminary attachment has been
rendered moot and academic by the decision of the merits of the case.

ISSUES:

1. Whether or not the petitioner is a common carrier? (YES)

2. Whether or not the hijacking referred to is a force majeure? (NO)

RULING:

1. YES. The Court of Appeals, in holding that petitioner was a common carrier,
found that she admitted in her answer that she did business under the name
A.M. Bascos Trucking and that said admission dispensed with the presentation
by private respondent, Rodolfo Cipriano, of proofs that petitioner was a
common carrier.

Moreover, both courts appreciated the following pieces of evidence as indicators that
petitioner was a common carrier: the fact that the truck driver of petitioner, Maximo
Sanglay, received the cargo consisting of 400 bags of soya bean meal as evidenced
by a cargo receipt signed by Maximo Sanglay; the fact that the truck helper, Juanito
Morden, was also an employee of petitioner; and the fact that control of the cargo
was placed in petitioner's care.

In disputing the conclusion of the trial and appellate courts that petitioner was
a common carrier, she alleged in this petition that the contract between her and
Rodolfo A. Cipriano, representing CIPTRADE, was lease of the truck. She cited
as evidence certain affidavits which referred to the contract as "lease". These
affidavits were made by Jesus Bascos and by petitioner herself. She also stated
that: she was not catering to the general public. Thus, in her answer to the
amended complaint, she said that she does business under the same style of
A.M. Bascos Trucking, offering her trucks for lease to those who have cargo to
move, not to the general public but to a few customers only in view of the fact
that it is only a small business.

Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or
firm, or association engaged in the business of carrying or transporting passengers
or goods or both, by land, water or air, for compensation, offering their services to the
public." The test to determine a common carrier is "whether the given undertaking is
a part of the business engaged in by the carrier which he has held out to the general
public as his occupation rather than the quantity or extent of the business
transacted."

In this case, petitioner herself has made the admission that she was in the
trucking business, offering her trucks to those with cargo to move. Judicial
admissions are conclusive and no evidence is required to prove the same.
NOTES:

- Regarding the first contention, the holding of the Court in De Guzman vs. Court of
Appeals 14 is instructive. In referring to Article 1732 of the Civil Code, it held thus:

"The above article makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such carrying
only as an ancillary activity (in local idiom, as a "sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from
a narrow segment of the general population. We think that Article 1732 deliberately
refrained from making such distinctions."

- Regarding the affidavits presented by petitioner to the court, both the trial and
appellate courts have dismissed them as self-serving and petitioner contests the
conclusion. Yet, granting that the said evidence were not self-serving, the same
were not sufficient to prove that the contract was one of lease. It must be
understood that a contract is what the law defines it to be and not what it is called by
the contracting parties. Furthermore, petitioner presented no other proof of the
existence of the contract of lease. He who alleges a fact has the burden of
proving it.

2. NO. We affirm the holding of the respondent court that the loss of the goods
was not due to force majeure. Common carriers are obliged to observe
extraordinary diligence in the vigilance over the goods transported by them.
Accordingly, they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. There are very few
instances when the presumption of negligence does not attach and these instances
are enumerated in Article 1734. In those cases where the presumption is applied,
the common carrier must prove that it exercised extraordinary diligence in order to
overcome the presumption.

In this case, petitioner alleged that hijacking constituted force majeure which
exculpated her from liability for the loss of the cargo. In De Guzman vs. Court
of Appeals, the Court held that hijacking, not being included in the provisions
of Article 1734, must be dealt with under the provisions of Article 1735 and
thus, the common carrier is presumed to have been at fault or negligent. To
exculpate the carrier from liability arising from hijacking, he must prove that
the robbers or the hijackers acted with grave or irresistible threat, violence, or
force. This is in accordance with Article 1745 of the Civil Code.

NOTES:

- Article 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
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.
- Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violences or force, is
dispensed with or diminished;"
- In the same case, the Supreme Court also held that: "Under Article 1745 (6) above,
a common carrier is held responsible — and will not be allowed to divest or to
diminish such responsibility — even for acts of strangers like thieves or
robbers except where such thieves or robbers in fact acted with grave or
irresistible threat, violence or force. We believe and so hold that the limits of
the duty of extraordinary diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery which is attended by
"grave or irresistible threat, violence or force."
- To establish grave and irresistible force, petitioner presented her accusatory
affidavit, Jesus Bascos' affidavit, and Juanito Morden's 24 "Salaysay".
However, both the trial court and the Court of Appeals have concluded that
these affidavits were not enough to overcome the presumption. It was not a
first-hand account.

DISPOSITIVE PORTION:

The presumption of negligence was raised against petitioner. It was petitioner's burden to
overcome it. Thus, contrary to her assertion, private respondent need not introduce any
evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary
diligence made the presumption conclusive against her.

Having affirmed the findings of the respondent Court on the substantial issues involved, We
find no reason to disturb the conclusion that the motion to lift/dissolve the writ of preliminary
attachment has been rendered moot and academic by the decision on the merits.

In the light of the foregoing analysis, it is Our opinion that the petitioner's claim cannot be
sustained. The petition is DISMISSED and the decision of the Court of Appeals is hereby
AFFIRMED.
2. JOSE PILAPIL, petitioner, vs. HON. COURT OF APPEALS and ALATCO
TRANSPORTATION COMPANY, INC., respondents.
G.R. No. 52159
December 22, 1989
Padilla, J.

Topic on Syllabus:
Presumption of fault or negligence of common carrier rebuttable

Facts:

Petitioner-plaintiff Jose Pilapil, a paying passenger, boarded respondent-defendant's bus

bearing No. 409 at San Nicolas, Iriga City on 16 September 1971 at about 6:00 P.M. While
said bus No. 409 was in due course negotiating the distance between Iriga City and Naga
City, upon reaching the vicinity of the cemetery of the Municipality of Baao, Camarines Sur,
on the way to Naga City, an unidentified man, a bystander along said national highway,
hurled a stone at the left side of the bus, which hit petitioner above his left eye. Private
respondent's personnel lost no time in bringing the petitioner to the provincial hospital in
Naga City where he was confined and treated.

Considering that the sight of his left eye was impaired, the petitioner was taken to Dr.
Malabanan of Iriga City where he was treated for another week. Since there was no
improvement in his left eye's vision, the petitioner went to V. Luna Hospital, Quezon City
where he was treated by Dr. Capulong. Despite the treatment accorded to him by Dr.
Capulong, petitioner, partially lost his left eye's vision and sustained a permanent scar above
the left eye.

RTC ruled in favor of the petitioner, instructing respondent to pay the following cost: actual
and material damages-10,000.00, moral and exemplary damages-5,000.00, medical
expenses-300.00, attorney’s fee-1,000.00. (all in Philippines peso)

CA reversed the ruling of the RTC. Hence, the present petition.

Issue:

Whether the respondent common carrier failed to rebut the presumption of negligence
against it by proof on its part that it exercised extraordinary diligence for the safety of its
passengers. (NO)

Supreme Court Ruling:

No, in consideration of the right granted to it by the public to engage in the business of
transporting passengers and goods, a common carrier does not give its consent to become
an insurer of any and all risks to passengers and goods. It merely undertakes to perform
certain duties to the public as the law imposes and holds itself liable for any breach thereof.

Article 1756 of the Civil Code, in creating a presumption of fault or negligence on the part of
the common carrier when its passenger is injured, merely relieves the latter, for the time
being, from introducing evidence to fasten the negligence on the former, because the
presumption stands in the place of evidence.
Being a mere presumption, however, the same 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.

The presumption of fault or negligence against the carrier is only a disputable presumption. It
gives in where contrary facts are established proving either that the carrier had exercised the
degree of diligence required by law or the injury suffered by the passenger was due to a
fortuitous event.

In the instant case, the injury sustained by the petitioner was in no way due to any defect in
the means of transport or in the method of transporting or to the negligent or willful acts of
private respondent's employees, and therefore involving no issue of negligence in its duty to
provide safe and suitable cars as well as competent employees, with the injury arising wholly
from causes created by strangers over which the carrier had no control or even knowledge
or could not have prevented, the presumption is rebutted and the carrier is not and
ought not to be held liable. To rule otherwise would make the common carrier the insurer
of the absolute safety of its passengers which is not the intention of the lawmakers.

As a general rule, common carriers are bound to exercise extraordinary diligence in the safe
transport of their passengers, it would seem that this is not the standard by which its liability
is to be determined when intervening acts of strangers is to be determined directly cause the
injury, while the contract of carriage Article 1763 governs:

Article 1763. 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.

Clearly under the above provision, a tort committed by a stranger which causes injury to a
passenger does not accord the latter a cause of action against the carrier. The negligence
for which a common carrier is held responsible is the negligent omission by the carrier's
employees to prevent the tort from being committed when the same could have been
foreseen and prevented by them. Further, under the same provision, it is to be noted that
when the violation of the contract is due to the willful acts of strangers, as in the instant case,
the degree of care essential to be exercised by the common carrier for the protection of its
passenger is only that of a good father of a family.

Dispositive portion:

WHEREFORE, the judgment appealed from is hereby AFFIRMED.

3. Philippine American General Insurance Co, Inc. v. MGG Marine Services, Inc.
G.R. No. 135645
March 8, 2002

Facts:

● San Miguel Corporation insured several beer bottle cases with an aggregate value of
P5,836,222.80 with petitioner Philippine American General Insurance Company. The
cargo were loaded on board the M/V Peatheray Patrick-G to be transported from
Mandaue City to Bislig, Surigao del Sur.

● The following day, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit
Point, Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to
San Miguel Corporation was lost.

● Mr. Eduardo Sayo, a surveyor from the Manila Adjusters and Surveyors Co., stated
that the vessel was structurally sound and that he did not see any damage or crack
thereon. He concluded that the proximate cause of the listing and subsequent sinking
of the vessel was the shifting of ballast water from starboard to portside.

● Petitioner as subrogee of San Miguel Corporation filed with the Regional Trial Court
(RTC) of Makati City a case for collection against private respondents to recover the
amount it paid to San Miguel Corporation for the loss of the latter's cargo.

● The Board of Marine Inquiry conducted its own investigation. It found that the cause
of the sinking of the vessel was the existence of strong winds and enormous waves
in Surigao del Sur. It was further held by the Board that said fortuitous event was the
proximate and only cause of the vessel's sinking.

● The RTC promulgated its Decision finding private respondents solidarily liable for the
loss of San Miguel Corporation's cargo.

● Private respondents appealed the trial court's decision to the Court of Appeals. The
appellate court reversed the ruling of the RTC. It held that private respondents could
not be held liable because said loss occurred as a consequence of a fortuitous event,
and that such fortuitous event was the proximate and only cause of the loss.

Issue:

WON private respondents cannot be held liable for the loss of San Miguel Corporation's
cargo. (YES)

Ruling:

Common carriers, from the nature of their business and for reasons of public policy, are
mandated to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them. Owing to this high degree of diligence
required of them, common carriers, as a general rule, are presumed to have been at fault or
negligent if the goods transported by them are lost, destroyed or if the same deteriorated.
However, this presumption of fault or negligence does not arise in the cases enumerated
under Article 1734 of the Civil Code:

Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(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.

In order that a common carrier may be absolved from liability where the loss, destruction or
deterioration of the goods is due to a natural disaster or calamity, it must further be shown
that the such natural disaster or calamity was the proximate and only cause of the loss;
there must be "an entire exclusion of human agency from the cause of the injury of the loss."

In the case at bar, it was adequately shown that before the M/V Peatheray Patrick-G left the
port of Mandaue City, the Captain confirmed with the Coast Guard that the weather condition
would permit the safe travel of the vessel to Bislig, Surigao del Sur. Thus, he could not be
expected to have foreseen the unfavorable weather condition that awaited the vessel in
Cortes, Surigao del Sur. It was the presence of the strong winds and enormous waves which
caused the vessel to list, keel over, and consequently lose the cargo contained therein.

Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur was
shown to be the proximate and only cause of the sinking of the M/V Peatheray Patrick-G and
the loss of the cargo belonging to San Miguel Corporation, private respondents cannot be
held liable for the said loss.

WHEREFORE, the assailed Decision of the Court of Appeals is hereby AFFIRMED and the
petition is hereby DENIED.
4. MAURO GANZON, petitioner,
vs.
COURT OF APPEALS and GELACIO E. TUMAMBING, respondents.
G.R. No. L-48757 May 30, 1988

Topic: Exceptions to the application of presumption of fault or negligence

FACTS
On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to
haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter
LCT "Batman"
On December 1, 1956, Gelacio Tumambing delivered the scrap iron to defendant Filomeno
Niza, captain of the lighter, for loading which was actually begun on the same date by the
crew of the lighter under the captain's supervision.
When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles,
Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The latter resisted the
shakedown and after a heated argument between them, Mayor Jose Advincula drew his gun
and fired at Gelacio Tumambing. The gunshot was not fatal but Tumambing had to be taken
to a hospital in Balanga, Bataan, for treatment.
After sometime, the loading of the scrap iron was resumed. But on December 4, 1956,
Acting Mayor Basilio Rub, accompanied by three policemen, ordered captain Filomeno Niza
and his crew to dump the scrap iron where the lighter was docked. The rest was brought to
the compound of NASSCO.
Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had
taken custody of the scrap iron.
On the basis of the above findings, the respondent Court rendered a decision, the dispositive
portion of which states:
WHEREFORE, the decision appealed from is hereby reversed and set aside and a
new one entered ordering defendant-appellee Mauro Ganzon to pay plaintiff-appellant
Gelacio E. Tumambimg the sum of P5,895.00 as actual damages, the sum of P5,000.00
as exemplary damages, and the amount of P2,000.00 as attorney's fees. Costs against
defendant-appellee Ganzon.

Petitioner maintains that he is exempt from any liability because the loss of the scraps was
due mainly to the intervention of the municipal officials of Mariveles which constitutes a caso
fortuito as defined in Article 1174 of the Civil Code.

ISSUE
WHETHER OR NOT THE LOSS OF THE SCRAP WAS DUE TO A FORTUITOUS EVENT
(NO) AND THE PETITIONER IS THEREFORE NOT LIABLE FOR LOSSES AS A
CONSEQUENCE THEREOF (LIABLE)

RULING
The petitioner has failed to show that the loss of the scraps was due to any of the following
causes enumerated in Article 1734 of the Civil Code, namely:
(1) Flood, storm, earthquake, lightning, or other 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.

Hence, the petitioner is presumed to have been at fault or to have acted negligently. By
reason of this presumption, the court is not even required to make an express finding of fault
or negligence before it could hold the petitioner answerable for the breach of the contract of
carriage. Still, the petitioner could have been exempted from any liability had he been able to
prove that he observed extraordinary diligence in the vigilance over the goods in his custody,
according to all the circumstances of the case, or that the loss was due to an unforeseen
event or to force majeure. As it was, there was hardly any attempt on the part of the
petitioner to prove that he exercised such extraordinary diligence.
We cannot sustain the theory of caso fortuito.
In any case, the intervention of the municipal officials was not In any case, of a character
that would render impossible the fulfillment by the carrier of its obligation. The petitioner was
not duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there
is absence of sufficient proof that the issuance of the same order was attended with such
force or intimidation as to completely overpower the will of the petitioner's employees. The
mere difficulty in the fullfilment of the obligation is not considered force majeure. We agree
with the private respondent that the scraps could have been properly unloaded at the shore
or at the NASSCO compound, so that after the dispute with the local officials concerned was
settled, the scraps could then be delivered in accordance with the contract of carriage.

WHEREFORE, the petition is DENIED; the assailed decision of the Court of Appeals is
hereby AFFIRMED. Costs against the petitioner.

Notes:
Was the contract of carriage deemed perfected? (Yes)
The petitioner, in his first assignment of error, insists that the scrap iron had not been
unconditionally placed under his custody and control to make him liable. However, he
completely agrees with the respondent Court's finding that on December 1, 1956, the private
respondent delivered the scraps to Captain Filomeno Niza for loading in the lighter
"Batman," That the petitioner, thru his employees, actually received the scraps is freely
admitted. Significantly, there is not the slightest allegation or showing of any condition,
qualification, or restriction accompanying the delivery by the private respondent-shipper of
the scraps, or the receipt of the same by the petitioner. On the contrary, soon after the
scraps were delivered to, and received by the petitioner-common carrier, loading was
commenced.
By the said act of delivery, the scraps were unconditionally placed in the possession and
control of the common carrier, and upon their receipt by the carrier for transportation, the
contract of carriage was deemed perfected. Consequently, the petitioner-carrier's
extraordinary responsibility for the loss, destruction or deterioration of the goods
commenced. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon
the delivery, actual or constructive, by the carrier to the consignee, or to the person who has
a right to receive them. The fact that part of the shipment had not been loaded on board the
lighter did not impair the said contract of transportation as the goods remained in the custody
and control of the carrier, albeit still unloaded.
5. Southern Lines v. CA
G.R. No. L‐16629.
Jan. 31, 1962
Digested by: Cathyrine Jabagat

Topic: Exceptions to the application of presumption of fault or negligence

FACTS:
The City of Iloilo requisitioned rice from the National Rice and Corn Corporation (NARIC) in
Manila.
NARIC, pursuant to the order, shipped 1,726 sacks of rice consigned to the City of Iloilo on
board the SS “General Wright” belonging to the Southern Lines, Inc.
Each sack of rice weighed 75 kilos and the entire shipment as indicated in the bill of
lading had a total weight of 129,450 kilo.
The City of Iloilo received the shipment and paid the total charged amount. However, it was
discovered in the bill of lading that there was a shortage equivalent to 41 sacks of rice.
P63,115.50 was the cost of the shipment. However, it actually received 1685 sacks
with a gross weight of 116,131 kilos upon actual weighing. Total shortage ascertained
13,319 kilos. The shortage was equivalent to 41 sacks of rice with a net weight of
13,319 kilos, the proportionate value of which was P6,486.35.
The City of Iloilo filed a complaint against NARIC and the Southern Lines, Inc. for the
recovery of the amount representing the value of the shortage of the shipment of rice.
The lower court absolved NARIC, but held Southern Lines, Inc. liable to pay the shortage.
CA affirmed the trial court’s decision, hence, this petition.
Petitioner claims exemption from liability by contending that the shortage in the shipment of
rice was due to such factors as the shrinkage, leakage or spillage of the rice on account of
the bad condition of the sacks at the time it received the same and the negligence of the
agents of respondent City of Iloilo in receiving the shipment.
ISSUE:
W/N Southern Lines is liable for the loss or shortage of the rice shipped.
RULING:
YES. Under the provisions of Article 361, the defendant-carrier in order to free itself from
liability was only obliged to prove that the damages suffered by the goods were “by virtue of
the nature or defect of the articles.” Under the provisions of Article 362, the plaintiff, in order
to hold the defendant liable, was obliged to prove that the damages to the goods by virtue of
their nature, occurred on account of its negligence or because the defendant did not take the
precaution adopted by careful persons.
The contention of petitioner Southern Lines, Inc. is untenable, for, if the fact of improper
packing is known to the carrier or his servants, or apparent upon ordinary observation, but
it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or
injury resulting therefrom.
Petitioner itself frankly admitted that the strings that tied the bags of rice were broken; some
bags were with holes and plenty of rice were spilled inside the hull of the boat, and that the
personnel of the boat collected no less than 26 sacks of rice which they had distributed
among themselves. This finding, which is binding upon this Court, shows that the shortage
resulted from the negligence of petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby affirmed in all respects and
the petition for certiorari denied. With costs against the petitioner
6. Tabacalera Insurance Co. v. North Front Shipping Services, Inc., G.R. No. 119197.
May 16, 1997; 272 SCRA 527

Digested by: Lamoste

FACTS:
On 2 August 1990, Sacks of corn grains were shipped on board North Front 777, a vessel
owned by North Front Shipping Services, Inc.(North Front) The cargo was consigned to
Republic Flour Mills Corporation(Republic Flour) in Manila and insured by TABACALERA
INSURANCE CO., Prudential Guarantee & Assurance, Inc., and New Zealand Insurance
Co., Ltd (Petitioners) . The vessel was inspected prior to actual loading by representatives of
the shipper and was found fit to carry the merchandise. The cargo was covered with
tarpaulins and wooden boards. The hatches were sealed and could only be opened by
representatives of Republic Flour.
The vessel left Cagayan de Oro City on 2 August 1990 and arrived in Manila on the 16th of
August. Republic Flour was advised of its arrival but it did not immediately commence the
unloading operations. There were days when unloading had to be stopped due to variable
weather conditions and sometimes for no apparent reason at all. When the cargo was
eventually unloaded there was a shortage of 26.333 metric tons and the remaining
merchandise was already moldy, rancid and deteriorating.
Precision Analytical Services, Inc., was hired to examine the corn grains and determine the
cause of deterioration. A Certificate of Analysis was issued indicating that the corn grains
had 18.56% moisture content and the wetting was due to contact with salt water. The mold
growth was only incipient and not sufficient to make the corn grains toxic and unfit for
consumption. Republic Flour Mills Corporation rejected the entire cargo and formally
demanded from North Front, payment for the damages suffered by it. The demands however
were unheeded.
By virtue of the payment made by the insurance companies they were subrogated to the
rights of Republic Flour and lodged a complaint for damages against North Front claiming
that the loss was exclusively attributable to the fault and negligence of the carrier. The
Marine Cargo Adjusters hired by the insurance companies conducted a survey and found
cracks in the bodega of the barge and heavy concentration of molds on the tarpaulins and
wooden boards. They did not notice any seals in the hatches. The tarpaulins were not brand
new as there were patches on them, contrary to the claim of North Front, thus making it
possible for water to seep in.
North Front Shipping Services, Inc., averred in refutation that it could not be made culpable
for the loss and deterioration of the cargo as it was never negligent. Captain Solomon
Villanueva, master of the vessel, reiterated that the barge was inspected prior to the actual
loading and was found adequate and seaworthy.
The trial court dismissed the complaint and ruled that the contract entered into between
North Front Shipping Services, Inc., and Republic Flour Mills Corporation was a
charter-party agreement. As such, only ordinary diligence in the care of goods was required.
On the other hand, the Court of Appeals ruled that as a common carrier required to observe
a higher degree of diligence North Front 777 satisfactorily complied with all the requirements
hence was issued a Permit to Sail after proper inspection.
ISSUE:
Whether or not a charter-party agreement between Petitioner and Respondent requires
extraordinary diligence in contrast to the ruling of the lower Courts. (YES)
RULING:
The charter-party agreement between North Front Shipping Services, Inc., and Republic
Flour Mills Corporation did not in any way convert the common carrier into a private carrier.

A "charter-party" is defined as a contract by which an entire ship, or some principal

part thereof, is let by the owner to another person for a specified time or use; a
contract of affreightment by which the owner of a ship or other vessel lets the whole
or a part of her to a merchant or other person for the conveyance of goods, on a
particular voyage, in consideration of the payment of freight . . . Contract of
affreightment may either be time charter, wherein the vessel is leased to the charterer
for a fixed period of time, or voyage charter, wherein the ship is leased for a single
voyage. In both cases, the charter-party provides for the hire of the vessel only, either
for a determinate period of time or for a single or consecutive voyage, the ship owner
to supply the ship's store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.

Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of
the Civil Code. The definition extends to carriers either by land, air or water which
hold themselves out as ready to engage in carrying goods or transporting
passengers or both for compensation as a public employment and not as a casual
occupation . . .

It is therefore imperative that a public carrier shall remain as such, notwithstanding

the charter of the whole or portion of a vessel by one or more persons, provided the
charter is limited to the shin only, as in the case of a time-charter or voyage-charter

North Front Shipping Services, Inc., is a corporation engaged in the business of transporting
cargo and offers its services indiscriminately to the public. It is without doubt a common
carrier. As such it is required to observe extraordinary diligence in its vigilance over the
goods it transports.
7. SWEET LINES, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS,
MICAELA B. QUINTOS, FR. JOSE BACATAN, S.J., MARCIANO CABRAS and ANDREA
VELOSO, respondents.
G.R. No. L-46340
April 28, 1983

TOPIC – ACCIDENTS DUE TO MECHANICAL DEFECTS OF CARRIER, NOT

FORTUITOUS EVENTS

Digested by: Matthew Matienzo

FACTS:

Private respondents Micaela Quintos, Fr. Jose Bacatan, Marciano Cabras and Andrea
Veloso purchased first- class tickets from petitioner Sweet Lines, Inc. at the latter's office in
Cebu City. They were to board petitioner's vessel, M/V Sweet Grace, bound for Catbalogan,
Western Samar.

Instead of departing at the scheduled hour of about midnight on July 8, 1972, the vessel set
sail at 3:00 A.M. the next day only to be towed back to Cebu due to engine trouble, arriving
there at about 4:00 P.M. on the same day. Repairs having been accomplished, the vessel
lifted anchor again on July 10, 1972, at around 8:00 A.M.

Instead of docking at Catbalogan, which was the first port of call, the vessel proceeded direct
to Tacloban at around 9:00 P.M. of July 10, 1972. Private respondents had no recourse but
to disembark and board a ferryboat to Catbalogan.

Hence, this suit for damages for breach of contract of carriage which the Trial Court, affirmed
by respondent Appellate Court.

ISSUE:

WHETHER OR NOT THE ENGINE TROUBLE THAT HAPPENED IN THE VESSEL CAN
BE CONSIDERED AS A FORTUITOUS EVENT

RULING:

No, the Court held that the engine trouble is not a fortuitous event which would
exempt the Captain and the Sweetlines, Inc from paying indemnity and damages.

ART. 614. A captain who, having agreed to make a voyage, fails to fulfill his
undertaking, without being prevented by fortuitous event or force majeure, shall
indemnify all the losses which his failure may cause, without prejudice to criminal
penalties which may be proper.
 ART. 698. In case of interruption of a voyage already begun, the passengers shall
only be obliged to pay the fare in proportion to the distance covered, without right to
recover damages if the interruption is due to fortuitous event or force majeure, but
with a right to indemnity, if the interruption should have been caused by the
captain exclusively. If the interruption should be caused by the disability of the
vessel, and the passenger should agree to wait for her repairs, he may not be
required to pay any increased fare of passage, but his living expenses during the
delay shall be for his own account.

The crucial factor then is the existence of a fortuitous event or force majeure. Without it,
the right to damages and indemnity exists against a captain who fails to fulfill his undertaking
or where the interruption has been caused by the captain exclusively.

As found by both Courts below, there was no fortuitous event or force majeure which
prevented the vessel from fulfilling its undertaking of taking private respondents to
Catbalogan. Mechanical defects in the carrier are not considered a caso fortuito that
exempts the carrier from responsibility

In the second place, even granting that the engine failure was a fortuitous event, it
accounted only for the delay in departure. When the vessel finally left the port of Cebu on
July 10, 1972, there was no longer any force majeure that justified by-passing a port of call.
The vessel was completely repaired the following day after it was towed back to Cebu.

Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract
where the defendant acted fraudulently or in bad faith. Both the Trial Court and the Appellate
Court found that there was bad faith on the part of petitioner in that:

(1) Defendants-appellants did not give notice to plaintiffs- appellees as to the change
of schedule of the vessel;

(2) Knowing fully well that it would take no less than fifteen hours to effect the repairs
of the damaged engine, defendants-appellants instead made announcement of
assurance that the vessel would leave within a short period of time, and when
plaintiffs-appellees wanted to leave the port and gave up the trip,
defendants-appellants' employees would come and say, 'we are leaving, already.'

(3) Defendants-appellants did not offer to refund plaintiffs-appellees' tickets nor

provide them with transportation from Tacloban City to Catbalogan.

DISPOSITION:

ACCORDINGLY, the judgment appealed from is hereby modified in that petitioner is hereby
sentenced to indemnify private respondents in the sum of P3,000.00 each, without interest,
plus P1,250.00, each, by way of attorney's fees and litigation expenses. Costs against
petitioner.
NOTES:

BAD FAITH means a breach of a known duty through some motive or interest or ill will.
Self-enrichment or fraternal interest, and not personal ill will may have been the motive, but it
is malice nevertheless.
8. Juntilla v. Fontanar
G.R. No. L‐45637
May 31, 1985
N. Mora

TOPIC: Accidents due to mechanical defects of carrier not fortuitous events

Facts:

Herein plaintiff , Roberto Juntilla, was a passenger of the public utility jeepney on course
from Danao City to Cebu City. The jeepney was driven by defendant Berfol Camoro and
registered under the franchise of Clemente Fontanar. When the jeepney reached Mandaue
City, the right rear tire exploded causing the vehicle to turn turtle. In the process, the plaintiff
who was sitting at the front seat was thrown out of the vehicle. Plaintiff suffered a lacerated
wound on his right palm aside from the injuries he suffered on his left arm, right thigh, and on
his back.While on his way to the hospital, he realized that he also lost his OMEGA wrist
watch as a result of the accident.

So Juntilla filed a civil case for breach of contract with damages against the defendants. The
defendants argued that they cannot answer the losses incurred by the petitioner because the
accident was beyond their control because the tire that exploded was actually newly bought
and was slightly used at the time it blew up.

The City Court of Cebu ruled in favor of the petitioner. However, upon appeal of the
defendants, the Court of First Instance of Cebu reversed the ruling of the City Court on the
ground that the accident in question was due to a fortuitous event. The motion for
reconsideration by the petitioner was denied by the court of first instance. Hence, this
petition.

Issue:
Whether or not the tire blow-out is a fortuitous event?

Held:

The Supreme Court ruled in the negative. It mentioned the essential characteristics of a caso
fortuito or fortuitous event:

1. The cause of the unforeseen and unexpected occurrence, or of the failure of the
debtor to comply with his obligation, must be independent of the human will.
2. It must be impossible to foresee the event which constitutes the caso fortuito, or if
it can be foreseen, it must be impossible to avoid.
3. The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner.
4. The obligor (debtor) must be free from any participation in the aggravation of the
injury resulting to the creditor.
In this case, the elements of caso fortuito are lacking because as correctly found by the
lower courts, even though the tire was newly bought, the passenger jeepney was running
very fast and it was actually overloaded at the time of the accident. The court also said that
the sudden blowing-up of the tire could have been cause by too much pressure because the
jeepney was overloaded and speeding at the time of the accident. The source of a common
carriers legal liability is the contract of carriage, and by entering this contract, the common
carrier is bound to carry its passengers with extraordinary diligence, which in this case, the
defendant also failed to meet such obligation.

Hence, the decision of the Court of First Instance was reversed and set aside.
9.VICENTE VERGARA, petitioner, vs. THE COURT OF APPEALS and AMADEO
AZARCON, respondents.

G.R. No. 77679

September 30, 1987

Topic: Quasi-Delict

Digested by: NACP

FACTS: An action for damages based on quasi-delict (Art. 2176 of the Civil Code) was filed
by private respondent against petitioner. The action arose from a vehicular accident that
occurred on 5 August 1979 in Gapan, Nueva Ecija, when Martin Belmonte, while driving a
cargo truck belonging to petitioner, rammed "head-on" the store-residence of the private
respondent, causing damages thereto which were inventoried and assessed at P53,024.22.

In his answer to the complaint, the petitioner alleged principally: "that his driver Martin
Belmonte operated said cargo truck in a very diligent (and) careful manner; that the steering
wheel refused to respond to his effort and as a result of a blown-out tire and despite
application of his brakes, the said cargo truck hit the store-residence of plaintiff (private
respondent) and that the said accident was an act of God for which he cannot be held liable.

The trial court rendered judgment in favor of private respondent.

Upon appeal to the Court of Appeals, the latter court affirmed in toto the decision of the trial
court, which ordered Petitioner to pay, jointly and severally with Travellers Insurance and
Surety Corporation, to the private, respondent the following: (a) P53,024.22 as actual
damages; (b) P10,000.00 as moral damages; (c) P10,000.00 as exemplary damages; and
(d) the sum of P5,000.00 for attorney's fees and the costs.

On the third party complaint, the insurance company was sentenced to pay to the petitioner
the following: (a) P50,000.00 for third party liability under its comprehensive accident
insurance policy; and (b) P3,000.00 for and as attorney's fees.

ISSUE: Whether the petitioner in this case is negligent?

RULING: Yes. Petitioner's contention that the respondent court erred in finding him guilty of
fault or negligence is not tenable.

It was established by competent evidence that the requisites of a quasi-delict are present in
the case at bar. These requisites are: (1) damages to the plaintiff; (2) negligence, by act or
omission, of which defendant, or some person for whose acts he must respond, was guilty;
and (3) the connection of cause and effect between such negligence and the damages.

It is undisputed that private respondent suffered damages as a result of an act or omission of

petitioner.

According to the driver of the cargo truck, he applied the brakes but the latter did not work
due to mechanical defect. Contrary to the claim of the petitioner, a mishap caused by
defective brakes can not be consideration as fortuitous in character. Certainly, the defects
were curable and the accident preventable.

Furthermore, the petitioner failed to adduce any evidence to overcome the disputable
presumption of negligence on his part in the selection and supervision of his driver.

Based on the foregoing finding by the respondent Court that there was negligence on the
part of the petitioner, the petitioner's contention that the respondent court erred in awarding
private respondent actual, moral and exemplary damages as well as attorney's fees and
costs, is untenable.

ACCORDINGLY, the petition is DENIED.

10 THE SPOUSES BERNABE AFRICA and SOLEDAD C. AFRICA, and the HEIRS OF
DOMINGA ONG, petitioners-appellants, vs.CALTEX (PHIL.), INC., MATEO BOQUIREN
and THE COURT OF APPEALS, respondents-appellees.

G.R. No. L-12986

March 31, 1966

Topic: Fire not considered as a natural disaster or calamity

Facts:

The action is for damages under Articles 1902 and 1903 of the old Civil Code. It appears that
in the afternoon of March 18, 1948 a fire broke out at the Caltex service station at the corner
of Antipolo street and Rizal Avenue, Manila. It started while gasoline was being hosed from a
tank truck into the underground storage, right at the opening of the receiving tank where the
nozzle of the hose was inserted.

The fire spread to and burned several neighboring houses, including the personal properties
and effects inside them. Their owners, among them petitioners here, sued respondents
Caltex (Phil.), Inc. and Mateo Boquiren, the first as alleged owner of the station and the
second as its agent in charge of operation. Negligence on the part of both of them was
attributed as the cause of the fire.

The trial court and the Court of Appeals found that petitioners failed to prove negligence and
that respondents had exercised due care in the premises and with respect to the supervision
of their employees.

Certain reports on the fire prepared by the Manila Police and Fire Departments and by a
certain Captain Tinio of the Armed Forces of the Philippines were submitted as evidence:

Police Department Report:

While Leandro Flores was transferring gasoline from a tank truck, into the underground tank
of the Caltex Gasoline Station, an unknown Filipino lighted a cigarette and threw the burning
match stick near the main valve of the said underground tank.

Fire Department Report:

Complainants furnished a copy of a photograph taken during the fire. It appears in this
picture that there are in the premises a coca-cola cooler and a rack which according to
information gathered in the neighborhood contained cigarettes and matches, installed
between the gasoline pumps and the underground tanks.

Issue:

1. Whether or not, without proof as to the cause and origin of the fire, the doctrine of
res ipsa loquitur should apply so as to presume negligence on the part of appellees.

2. Whether or not fire is not considered as a natural disaster or calamity

Ruling:

Yes, the doctrine applies.

Gasoline is a highly combustible material, in the storage and sale of which extreme care
must be taken. On the other hand, fire is not considered a fortuitous event, as it arises
almost invariably from some act of man.

The principle enunciated in the aforequoted case applies with equal force here. The gasoline
station, with all its appliances, equipment and employees, was under the control of
appellees. A fire occurred therein and spread to and burned the neighboring houses. The
persons who knew or could have known how the fire started were appellees and their
employees, but they gave no explanation thereof whatsoever. It is a fair and reasonable
inference that the incident happened because of want of care.

Flores was the driver of the gasoline tank wagon who, alone and without assistance, was
transferring the contents thereof into the underground storage when the fire broke out. He
said: "Before loading the underground tank there were no people, but while the loading was
going on, there were people who went to drink coca-cola (at the coca-cola stand) which is
about a meter from the hole leading to the underground tank." He added that when the tank
was almost filled he went to the tank truck to close the valve, and while he had his back
turned to the "manhole" he, heard someone shout "fire."

Even then the fire possibly would not have spread to the neighboring houses were it not for
another negligent omission on the part of defendants, namely, their failure to provide a
concrete wall high enough to prevent the flames from leaping over it. As it was the concrete
wall was only 2-1/2 meters high, and beyond that height it consisted merely of galvanized
iron sheets, which would predictably crumple and melt when subjected to intense heat.

"The intention of an unforeseen and unexpected cause, is not sufficient to relieve a

wrongdoer from consequences of negligence, if such negligence directly and
proximately cooperates with the independent cause in the resulting injury."
11. Servando v. Philippine Steam Navigation Co.
G.R. No. L‐36481‐2,
Oct. 23, 1982
Topic: Extraordinary Diligence in Common Carriers
Digested by: Mikko Solis

CARGO FROM MANILA TO PULUPANDAN

On November 6, 1963, appellees Clara Uy Bico and Amparo Servando loaded on board the
appellant's vessel, FS-176, for carriage from Manila to Pulupandan, Negros Occidental, the
following cargoes:

Clara Uy Bico: 1,528 cavans of rice valued at P40,907.50;

Amparo Servando: 44 cartons of colored paper, toys and general merchandise valued at
P1,070.50; as evidenced by the corresponding bills of lading issued by the appellant.

CARGOES DISCHARGED UNTO BUREAU OF CUSTOMS WAREHOUSE

Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the cargoes
were discharged, complete and in good order, unto the warehouse of the Bureau of
Customs.

BICO DELIVERED 907 CAVANS

Appellee Uy Bico was able to take delivery of 907 cavans of rice 2 Appellees' claims for the
value of said goods were rejected by the appellant.

WAREHOUSE RAZED BY FIRE

At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of
unknown origin, destroying appellees' cargoes.

RTC (FORMERLY KNOWN AS CFI) RULED THAT APPELLANT IS LIABLE FOR

DAMAGES
Court of First Instance of Negros Occidental in Civil Cases Nos. 7354 and 7428, declaring
appellant Philippine Steam Navigation liable for damages for the loss of the appellees'
cargoes as a result of a fire that gutted the Bureau of Customs' warehouse in Pulupandan,
Negros Occidental.

ISSUE
Whether or not the loss is chargeable to the appellant. (YES)

RULING
The answer is in the affirmative.

COMMON CARRIERS - EXTRAORDINARY DILIGENCE

The Supreme Court cited Article 1736 of the Civil Code, which imposes upon common
carriers the duty to observe extraordinary diligence from the moment the goods are
unconditionally placed in their possession "until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person who has a right to receive
them, without prejudice to the provisions of Article 1738. "

DELIVERY TO THE WAREHOUSE OF BOC NOT UNDER ART. 1736

The court a quo held that the delivery of the shipment in question to the warehouse of the
Bureau of Customs is not the delivery contemplated by Article 1736.

LOSS IS CHARGEABLE TO THE APPELLANT

Since the burning of the warehouse occurred before the actual or constructive delivery of
the goods to the appellees, the loss is chargeable against the appellant.

STIPULATION OF THE PARTIES TO LIMIT CARRIER RESPONSIBILITY

It should be pointed out, however, that in the bills of lading issued for the cargoes in
question, the parties agreed to limit the responsibility of the carrier for the loss or
damage that may be caused to the shipment by inserting therein the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's
risk' unless such loss or damage is due to negligence of the carrier. Nor shall the carrier be
responsible for loss or damage caused by force majeure, dangers or accidents of the sea or
other waters; war; public enemies; AND FIRE.

IS THE STIPULATION VALID?

The Supreme Court sustains the validity of the above stipulation; there is nothing therein that
is contrary to law, morals, or public policy.

The agreement contained in the above-quoted Clause 14 is a mere iteration of the basic
principle of the law written in Article 1174 of the Civil Code:
Article 1174. Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the assumption
of risk, no person shall be responsible for those events which could not be foreseen,
or which, though foreseen, were inevitable.

There is nothing in the record to show that appellant carrier ,incurred in delay in the
performance of its obligation.

APPELLEE DELIVERED 907 CAVANS BEFORE THE WAREHOUSE WAS BURNED

It appears that appellant had not only notified appellees of the arrival of their shipment, but
had demanded that the same be withdrawn. In fact, pursuant to such demand, appellee Uy
Bico had taken delivery of 907 cavans of rice before the burning of the warehouse.

Nor can the appellant or its employees be charged with negligence. The storage of the
goods in the Customs warehouse pending withdrawal thereof by the appellees was
undoubtedly made with their knowledge and consent. Since the warehouse belonged to and
was maintained by the government, it would be unfair to impute negligence to the appellant,
the latter having no control whatsoever over the same.

WHEREFORE, the judgment appealed from is hereby set aside. No costs.

12. JUAN F. NAKPIL & SONS, and JUAN F. NAKPIL, petitioners, vs. THE COURT OF
APPEALS, UNITED CONSTRUCTION COMPANY, INC., JUAN J. CARLOS, and the
PHILIPPINE BAR ASSOCIATION, respondents.
G.R. No. L-47851
October 3, 1986
PARAS, J.

Digested by: Servienrey Taño

Topic: Typhoon or storm deemed a fortuitous event; exception

FACTS:

1. The plaintiff, Philippine Bar Association, a civic-non-profit association, incorporated

under the Corporation Law, decided to construct an office building on its 840 square
meters lot located at the corner of Aduana and Arzobispo Streets, Intramuros, Manila.
The construction was undertaken by the United Construction, Inc. on an "administration"
basis, on the suggestion of Juan J. Carlos, the president and general manager of said
corporation. The proposal was approved by plaintiff's board of directors and signed by its
president Roman Ozaeta, a third-party defendant in this case. The plans and
specifications for the building were prepared by the other third-party defendants Juan F.
Nakpil & Sons. The building was completed in June, 1966.

2. In the early morning of August 2, 1968 an unusually strong earthquake hit Manila and
its environs and the building in question sustained major damage. The front columns of
the building buckled, causing the building to tilt forward dangerously. The tenants
vacated the building in view of its precarious condition. As a temporary remedial
measure, the building was shored up by United Construction, Inc. at the cost of
P13,661.28.

3. On November 29, 1968, the plaintiff commenced this action for the recovery of
damages arising from the partial collapse of the building against United Construction,
Inc. and its President and General Manager Juan J. Carlos as defendants. Plaintiff
alleges that the collapse of the building was accused by defects in the construction, the
failure of the contractors to follow plans and specifications and violations by the
defendants of the terms of the contract.

4. Defendants in turn filed a third-party complaint against the architects who prepared
the plans and specifications, alleging in essence that the collapse of the building was due
to the defects in the said plans and specifications. Roman Ozaeta, the then president of
the plaintiff Bar Association was included as a third-party defendant for damages for
having included Juan J. Carlos, President of the United Construction Co., Inc. as party
defendant.

5. Upon the issues being joined, a pre-trial was conducted on March 7, 1969, during
which among others, the parties agreed to refer the technical issues involved in the case
to a Commissioner. Mr. Andres O. Hizon, who was ultimately appointed by the trial court.

6. After the protracted hearings, the Commissioner eventually submitted his report on
September 25, 1970 with the findings that while the damage sustained by the PBA
building was caused directly by the August 2, 1968 earthquake whose magnitude was
estimated at 7.3 they were also caused by the defects in the plans and specifications
 prepared by the third-party defendants' architects, deviations from said plans and
specifications by the defendant contractors and failure of the latter to observe the
requisite workmanship in the construction of the building and of the contractors,
architects and even the owners to exercise the requisite degree of supervision in the
construction of subject building.

7. The trial court agreed with the findings of the Commissioner except as to the holding
that the owner is charged with full nine supervision of the construction. The Court sees
no legal or contractual basis for such conclusion. (Record on Appeal, pp. 309-328; Ibid).

8. Thus, on September 21, 1971, the lower court rendered the assailed decision which
was modified by the Intermediate Appellate Court on November 28, 1977.

9. All the parties herein appealed from the decision of the Intermediate Appellate Court.
Hence, these petitions.

10. On May 11, 1978, the United Architects of the Philippines, the Association of Civil
Engineers, and the Philippine Institute of Architects filed with the Court a motion to
intervene as amicus curiae. They proposed to present a position paper on the liability of
architects when a building collapses and to submit likewise a critical analysis with
computations on the divergent views on the design and plans as submitted by the
experts procured by the parties. The motion having been granted, the amicus curiae
were granted a period of 60 days within which to submit their position.

11. The amicus curiae gave the opinion that the plans and specifications of the Nakpils
were not defective. But the Commissioner, when asked by Us to comment, reiterated his
conclusion that the defects in the plans and specifications indeed existed.

ISSUE:

Whether or not an act of God-an unusually strong earthquake-which caused the failure of the
building, exempts from liability, parties who are otherwise liable because of their negligence.
(NO)

RULING:

The applicable law governing the rights and liabilities of the parties herein is Article 1723 of
the New Civil Code, which provides:

Art. 1723. The engineer or architect who drew up the plans and specifications for a building
is liable for damages if within fifteen years from the completion of the structure the same
should collapse by reason of a defect in those plans and specifications, or due to the defects
in the ground. The contractor is likewise responsible for the damage if the edifice fags within
the same period on account of defects in the construction or the use of materials of inferior
quality furnished by him, or due to any violation of the terms of the contract. If the engineer
or architect supervises the construction, he shall be solidarily liable with the contractor.

Acceptance of the building, after completion, does not imply waiver of any of the causes of
action by reason of any defect mentioned in the preceding paragraph.

The action must be brought within ten years following the collapse of the building.
There is no dispute that the earthquake of August 2, 1968 is a fortuitous event or an act of
God.

To exempt the obligor from liability under Article 1174 of the Civil Code, for a breach of an
obligation due to an "act of God," the following must concur:
(a) the cause of the breach of the obligation must be independent of the will of the debtor;
(b) the event must be either unforseeable or unavoidable;
(c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a
normal manner; and
(d) the debtor must be free from any participation in, or aggravation of the injury to the
creditor. (Vasquez v. Court of Appeals, 138 SCRA 553; Estrada v. Consolacion, 71 SCRA
423; Austria v. Court of Appeals, 39 SCRA 527; Republic of the Phil. v. Luzon Stevedoring
Corp., 21 SCRA 279; Lasam v. Smith, 45 Phil. 657).

Thus, if upon the happening of a fortuitous event or an act of God, there concurs a
corresponding fraud, negligence, delay or violation or contravention in any manner of the
tenor of the obligation as provided for in Article 1170 of the Civil Code, which results in loss
or damage, the obligor cannot escape liability.
The negligence of the defendant and the third-party defendants petitioners was established
beyond dispute both in the lower court and in the Intermediate Appellate Court. Defendant
United Construction Co., Inc. was found to have made substantial deviations from the plans
and specifications, and to have failed to observe the requisite workmanship in the
construction as well as to exercise the requisite degree of supervision; while the third-party
defendants were found to have inadequacies or defects in the plans and specifications
prepared by them. As correctly assessed by both courts, the defects in the construction and
in the plans and specifications were the proximate causes that rendered the PBA building
unable to withstand the earthquake of August 2, 1968. For this reason the defendant and
third-party defendants cannot claim exemption from liability. (Decision, Court of Appeals, pp.
30-31).

We quote with approval the following from the erudite decision penned by Justice Hugo E.
Gutierrez (now an Associate Justice of the Supreme Court) while still an Associate Justice of
the Court of Appeals:

There is no question that an earthquake and other forces of nature such as cyclones,
drought, floods, lightning, and perils of the sea are acts of God. It does not necessarily
follow, however, that specific losses and suffering resulting from the occurrence of these
natural force are also acts of God. We are not convinced on the basis of the evidence on
record that from the thousands of structures in Manila, God singled out the blameless PBA
building in Intramuros and around six or seven other buildings in various parts of the city for
collapse or severe damage and that God alone was responsible for the damages and losses
thus suffered.

The record is replete with evidence of defects and deficiencies in the designs and plans,
defective construction, poor workmanship, deviation from plans and specifications and other
imperfections. These deficiencies are attributable to negligent men and not to a perfect God.

It is well settled that the findings of facts of the Court of Appeals are conclusive on the
parties and on this court (cases cited in Tolentino vs. de Jesus, 56 SCRA 67; Cesar vs.
Sandiganbayan, January 17, 1985, 134 SCRA 105, 121), unless
(1) the conclusion is a finding grounded entirely on speculation, surmise and conjectures;
(2) the inference made is manifestly mistaken;
(3) there is grave abuse of discretion;
(4) the judgment is based on misapprehension of facts;
(5) the findings of fact are conflicting;
(6) the Court of Appeals went beyond the issues of the case and its findings are contrary to
the admissions of both appellant and appellees (Ramos vs. Pepsi-Cola Bottling Co.,
February 8, 1967, 19 SCRA 289, 291-292; Roque vs. Buan, Oct. 31, 1967, 21 SCRA 648,
651);
(7) the findings of facts of the Court of Appeals are contrary to those of the trial court;
(8) said findings of facts are conclusions without citation of specific evidence on which they
are based;
(9) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not
disputed by the respondents (Garcia vs. CA, June 30, 1970, 33 SCRA 622; Alsua-Bett vs.
Court of Appeals, July 30, 1979, 92 SCRA 322, 366);
(10) the finding of fact of the Court of Appeals is premised on the supposed absence of
evidence and is contradicted by evidence on record (Salazar vs. Gutierrez, May 29, 1970, 33
SCRA 243, 247; Cited in G.R. No. 66497-98, Sacay v. Sandiganbayan, July 10, 1986).

It is evident that the case at bar does not fall under any of the exceptions above-mentioned.
On the contrary, the records show that the lower court spared no effort in arriving at the
correct appreciation of facts by the referral of technical issues to a Commissioner chosen by
the parties whose findings and conclusions remained convincingly unrebutted by the
intervenors/amicus curiae who were allowed to intervene in the Supreme Court.

Again, the Court concurs in the findings of the Commissioner on these issues and fails to
find any sufficient cause to disregard or modify the same. As found by the Commissioner,
the "deviations made by the defendants from the plans and specifications caused indirectly
the damage sustained and that those deviations not only added but also aggravated the
damage caused by the defects in the plans and specifications prepared by third-party
defendants. (Rollo, Vol. I, pp. 128-142)

The afore-mentioned facts clearly indicate the wanton negligence of both the defendant and
the third-party defendants in effecting the plans, designs, specifications, and construction of
the PBA building and We hold such negligence as equivalent to bad faith in the performance
of their respective tasks.

As already discussed, the destruction was not purely an act of God. Truth to tell hundreds of
ancient buildings in the vicinity were hardly affected by the earthquake. Only one thing spells
out the fatal difference; gross negligence and evident bad faith, without which the damage
would not have occurred.

WHEREFORE, the decision appealed from is hereby MODIFIED and considering the special
and environmental circumstances of this case, We deem it reasonable to render a decision
imposing, as We do hereby impose, upon the defendant and the third-party defendants (with
the exception of Roman Ozaeta) a solidary (Art. 1723, Civil Code, Supra, p. 10) indemnity in
favor of the Philippine Bar Association of FIVE MILLION (P5,000,000.00) Pesos to cover all
damages (with the exception of attorney's fees) occasioned by the loss of the building
(including interest charges and lost rentals) and an additional ONE HUNDRED THOUSAND
(P100,000.00) Pesos as and for attorney's fees, the total sum being payable upon the finality
of this decision. Upon failure to pay on such finality, twelve (12%) per cent interest per
annum shall be imposed upon afore-mentioned amounts from finality until paid. Solidary
costs against the defendant and third-party defendants (except Roman Ozaeta).

SO ORDERED.

ADDITIONAL NOTES:

Ø An act of God has been defined as an accident, due directly and exclusively to natural
causes without human intervention, which by no amount of foresight, pains or care,
reasonably to have been expected, could have been prevented. (1 Corpus Juris 1174).

Ø The Commissioner also found merit in the allegations of the defendants as to the
physical evidence before and after the earthquake showing the inadequacy of design, to
wit:

Physical evidence before the earthquake providing (sic) inadequacy of design;

1. inadequate design was the cause of the failure of the building.

2. Sun-baffles on the two sides and in front of the building;

a. Increase the inertia forces that move the building laterally toward the Manila Fire
Department.

b. Create another stiffness imbalance.

3. The embedded 4" diameter cast iron down spout on all exterior columns reduces the
cross-sectional area of each of the columns and the strength thereof.

4. Two front corners, A7 and D7 columns were very much less reinforced.

Physical Evidence After the Earthquake, Proving Inadequacy of design;

1. Column A7 suffered the severest fracture and maximum sagging. Also D7.

2. There are more damages in the front part of the building than towards the rear, not only in
columns but also in slabs.

3. Building leaned and sagged more on the front part of the building.

4. Floors showed maximum sagging on the sides and toward the front corner parts of the
building.

5. There was a lateral displacement of the building of about 8", Maximum sagging occurs at
the column A7 where the floor is lower by 80 cm. than the highest slab level.

6. Slab at the corner column D7 sagged by 38 cm.

Ø The omission or lack of spirals and ties at the bottom and/or at the top of some of the
ground floor columns contributed greatly to the collapse of the PBA building since it is at
these points where the greater part of the failure occurred. The liability for the cutting of
the spirals in column A5, ground floor, in the considered opinion of the Commissioner
rests on the shoulders of the defendants and the loss of strength in this column
contributed to the damage which occurred.
13. BATANGAS LAGUNA TAYABAS BUS COMPANY VS. INTERMEDIATE APPELLATE
COURT

G.R. Nos. 74387-90

November 14, 1988

Digested by: KJapz

Topic: Force Majeure / Fortuitous Event

FACTS:

1. Bus No. 1046 of Batangas Laguna Tayabas Bus (BLTB) collided with bus No. 404 of
Superlines Transportation Company (Superlines) at a highway in Quezon, resulting in the
death of Aniceto Rosales, Francisco Pamfilo, and Romero Neri, and in several injuries to
Nena Rosales (wife of Anecito) and Baylon Sales, all passengers of BLTB Bus No. 1046.

2. Evidence showed that BLTB Bus No. 1046 tried to overtake a Ford car in a curve part
of the highway (the two lanes were separated by a continuous yellow strip, meaning,
no-overtake zone), when Superlines Bus No. 404 was coming from the opposite direction.

3. The BLTB bus driver attempted to return to his proper lane, but failed to do so, and the
two buses collided with each other.

4. The surviving heirs of the deceased passengers instituted separate cases against
BLTB and Superlines and their drivers, praying for damages.

5. The trial court said that only BLTB and its driver are liable for the incident.

6. Petitioner contended that a common carrier is not an absolute insurer against all risks
of travel and are not liable for acts or accidents which cannot be foreseen or are inevitable.

ISSUE:

WON BLTB and its driver are liable for the accident, even if such accident cannot be
foreseen. (YES)

RULING:

Petitioner’s defense of force majeure/fortuitous event is unmeritorious. They had totally failed
to point out any factual basis for their defense of force majeure in the light of the undisputed
fact that the cause of the collision was the sole negligence and recklessness of the BLTB
bus driver.

For the defense of force majeure or act of God to prosper, the accident must be due to
natural causes and exclusively without human intervention.
The proximate cause of the collision resulting in death of three and injuries to two of
passengers of BLTB bus was the sole negligence of the BLTB bus driver, who recklessly
operated and drive said bus in a lane where overtaking is not allowed by Traffic Rules and
Regulations.
14. Ma. Lourdes Valenzuela vs. CA, Richard Li, and Alexander Commercial, Inc.
G.R. No. 115024 | February 7, 1996
Digested by: Papa Rex
Topic: Not related to fortuitous event (may be the exception thereto)

FACTS:

At around 2:00 in the morning of June 24, 1990, plaintiff Ma. Lourdes Valenzuela was driving
a blue Mitsubishi lancer from her restaurant at Marcos highway to her home. While traveling
along Aurora Blvd., she noticed something wrong with her tires; she stopped at a lighted
place where there were people, to verify whether she had a flat tire and to solicit help if
needed. Having been told by the people present that her rear right tire was flat and that she
cannot reach her home in that car’s condition, she parked along the sidewalk, about 1½ feet
away, put on her emergency lights, alighted from the car, and went to the rear to open the
trunk.

She was standing at the left side of the rear of her car pointing to the tools to a man who will
help her fix the tire when she was suddenly bumped by a 1987 Mitsubishi Lancer driven by
defendant Richard Li and registered in the name of defendant Alexander Commercial, Inc.
Because of the impact, plaintiff was thrown against the windshield of the car of the
defendant, which was destroyed, and then fell to the ground. She was pulled out from under
defendant’s car. Plaintiff’s left leg was severed up to the middle of her thigh, with only some
skin and sucle connected to the rest of the body. She was brought to the UERM Medical
Memorial Center where she was found to have a “traumatic amputation, leg, left up to distal
thigh (above knee).” She was confined in the hospital for twenty (20) days and was
eventually fitted with an artificial leg.

ISSUES:
1. Whether or not Li was negligent. (YES)
2. Whether or not Valenzuela was contributorily negligent. (NO)
3. Whether or not Alexander Commercial, Inc., Li's employer is also liable. (YES)

RULING:

1.) Yes, Li was negligent.

Under Article 2176 of the Civil Code on Quasi-delicts, whoever by act or omission causes
damage to another, there being fault or *negligence, is obliged to pay for the damage done.

Here, a witness testified that Li’s car was being driven at a “very fast” speed, racing towards
the general direction of Araneta Avenue. He also saw the car hit Valenzuela, hurtling her
against the windshield of the defendant’s Mitsubishi Lancer, from where she eventually fell
under the defendant’s car. Moreover the witness declared that he observed Valenzuela’s car
parked parallel and very near the sidewalk, contrary to Li’s allegation that Valenzuela’s car
was close to the center of the right lane.

*Negligence is the failure to observe the degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury.
2.) No. The Court held that Valenzuela was not negligent applying the emergency rule.

Under the “emergency rule,” an individual who suddenly finds himself in a situation of
danger and is required to act without much time to consider the best means that may be
adopted to avoid the impending danger, is not guilty of negligence if he fails to undertake
what subsequently and upon reflection may appear to be a better solution, unless the
emergency was brought by his own negligence.

Here, Valenzuela did exercise the standard reasonably dictated by the emergency and could
not be considered to have contributed to the unfortunate circumstances which eventually led
to the amputation of one of her lower extremities. The emergency which led her to park her
car on a sidewalk in Aurora Boulevard was not of her own making, and it was evident that
she had taken all reasonable precautions. Obviously, the only negligence ascribable was the
negligence of Li on the night of the accident.

3.) Yes, Alexander Commercial, Inc. is liable based on the principle of pater familias
(not respondeat superior - the master is liable for the acts of the servant).

Under the principle of pater familias, the liability ultimately falls under the employer, for his
failure to exercise the diligence of a good father of a family in the selection and supervision
of his employees.

In this case, Alexander Commercial, Inc. has not demonstrated, to the Court’s satisfaction,
that it exercised the care and diligence of a good father of the family in entrusting its
company car to Richard Li. No allegations were made as to whether or not the company took
the steps necessary to determine or ascertain the driving proficiency and history of Li, to
whom it gave full and unlimited use of a company car. Not having been able to overcome the
burden of demonstrating that it should be absolved of liability for entrusting its company car
to Li, said company, based on the principle of bonus pater familias, ought to be jointly and
severally liable with the former for the injuries sustained by Ma. Lourdes Valenzuela during
the accident.

Li was an Assistant Manager of Alexander Commercial, Inc. He admitted that his functions
as Assistant Manager did not require him to scrupulously keep normal office hours as he
was required quite often to perform work outside the office, visiting prospective buyers and
contacting and meeting with company clients. These meetings, clearly, were not strictly
confined to routine hours because, as a managerial employee tasked with the job of
representing his company with its clients, meetings with clients were both social as well as
work-related functions. The service car assigned to Li by Alexander Commercial, Inc.
therefore enabled both Li – as well as the corporation – to put up the front of a highly
successful entity, increasing the latter’s goodwill before its clientele. It also facilitated
meeting between Li and its clients by providing the former with a convenient mode of travel.

Disposition: The Supreme Court modified the decision of CA and reinstated the decision of
the RTC, where it held that private defendants:
1. Richard Li was guilty of gross negligence and was liable for damages under Art. 2176
of the Civil Code on Quasi-delicts as well as his employer,
2. Alexander Commercial, Inc. which was also jointly and severally liable for damages
pursuant to Art. 2180 of the Civil Code on Quasi-delicts.
15. ALEJANDRO ARADA, doing business under the name and style “SOUTH NEGROS
ENTERPRISES”, petitioner, vs. HONORABLE COURT OF APPEALS, SAN MIGUEL
CORPORATION, respondents.

G.R. No. 98243. July 1, 1992

TOPIC: Typhoon or storm deemed a fortuitous event; exception

FACTS:

Petitioner Alejandro Arada is the proprietor and operator of the firm South Negros
Enterprises. It is engaged in the business of small scale shipping as a common carrier,
servicing the hauling of cargoes of different corporations and companies with the five (5)
vessels it was operating.

Petitioner entered into a contract with private respondent to safely transport as a common
carrier, cargoes of the latter from San Carlos City, Negros Occidental to Mandaue City using
one of petitioner’s vessels, M/L Maya. (The cargoes of private respondent consisted of 9,824
cases of beer empties valued at P176,824.80).

On March 24, 1982, petitioner thru its crew master, Mr. Vivencio Babao, applied for a
clearance with the Philippine Coast Guard for M/L Maya to leave the port of San Carlos City
but due to a typhoon, it was denied clearance.

On March 25, 1982 M/L Maya was given clearance as there was no storm and the sea was
calm. While it was navigating towards Cebu, a typhoon developed and said vessel was
buffeted on all its sides by big waves.

The vessel sank with whatever was left of its cargoes. The crew was rescued by a passing
pump boat and was brought to Calanggaman Island. They were later brought to Palompon,
Leyte, where Vivencio Babao filed a marine protest.

The Board of Marine Inquiry recommended that the owner/operator, officers and crew of
M/L Maya be exonerated or absolved from any administrative liability on account of the
incident. The Commandant of the Philippine Coast Guard also rendered a decision
exonerating the owner/operator officers and crew of the ill-fated M/L Maya from any
administrative liability.

Private respondent filed a complaint in the RTC for the recovery of the value of the cargoes
anchored on breach of contract of carriage. However, it was dismissed.

The CA reversed the decision of the RTC. It ruled that “in view of his failure to observe
extraordinary diligence over the cargo in question and his negligence previous to the sinking
of the carrying vessel, the appellee is liable to the appellant for the value of the lost cargo.
Hence, the present recourse.

ISSUE: Whether or not petitioner is exempted from liability for the value of the lost cargoes
in view of the calamity (typhoon)? (NO)

RULING:
A common carrier, both from the nature of its business and for insistent reasons of
public policy is burdened by law with the duty of exercising extraordinary diligence
not only in ensuring the safety of passengers but in caring for the goods transported by it.
The loss or destruction or deterioration of goods turned over to the common carrier for the
conveyance to a designated destination raises instantly a presumption of fault or negligence
on the part of the carrier, save only where such loss, destruction or damage arises from
extreme circumstances such as a natural disaster or calamity.

In order that the common carrier may be exempted from responsibility, the natural
disaster must have been the proximate and only cause of the loss. However, the
common carrier must exercise due diligence to prevent or minimize the loss before,
during and after the occurrence of flood, storm or other natural disaster in order that the
common carrier may be exempted from liability for the destruction or deterioration of the
goods (Article 1739, New Civil Code).

In the instant case, petitioner failed to observe the extraordinary diligence over the
cargo in question and he or the master in his employ was negligent previous to the sinking of
the carrying vessel. It will be noted that Vivencio Babao knew of the impending typhoon on
March 24, 1982 when the Philippine Coast Guard denied M/L Maya the issuance of a
clearance to sail. Less than 24 hours elapsed since the time of the denial of said clearance
and the time a clearance to sail was finally issued on March 25, 1982. Records will show that
Babao did not ascertain where the typhoon was headed by the use of his vessel’s barometer
and radio. Neither did the captain of the vessel monitor and record the weather conditions
everyday as required by Art. 612 of the Code of Commerce. Had he done so while
navigating for 31 hours, he could have anticipated the strong winds and big waves and taken
shelter.

A common carrier is obliged to observe extraordinary diligence and the failure of

Babao to ascertain the direction of the storm and the weather condition of the path
they would be traversing, constitute lack of foresight and minimum vigilance over its
cargoes taking into account the surrounding circumstances of the case.

Furthermore, the records show that the crew of M/L Maya did not have the required
qualifications provided for in P.D. No. 97 or the Philippine Merchant Marine Officers Law, all
of whom were unlicensed. While it is true that they were given special permit to man the
vessel, such permit was issued at the risk and responsibility of the owner.

Finally, petitioner claims that the factual findings of the Special Board of Marine Inquiry
exonerating the owner/operator, crew officers of the ill-fated vessel M/L Maya from any
administrative liability is binding on the court. In rejecting petitioner’s claim, respondent court
was correct in ruling that “such exoneration was but with respect to the administrative liability
of the “owner/operator, officers and crew of the ill-fated” vessel. It could not have meant
exoneration of appellee from liability as a common carrier for his failure to observe
extraordinary diligence in the vigilance over the goods it was transporting and for the
negligent acts or omissions of his employees. Such is the function of the Court, not the
Special Board of Marine Inquiry.”

PREMISES CONSIDERED, the appealed decision is AFFIRMED. SO ORDERED.

16. ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G. SALUDO
and SATURNINO G. SALUDO vs HON. COURT OF APPEALS, TRANS WORLD
AIRLINES, INC., and PHILIPPINE AIRLINES, INC

G.R. No. 95536

Date of Case: March 23, 1992

FACTS:
1. Crispina Saludo died in Chicago Illinois, on October 23, 1976. In order to ship the
remains of Crispina from Chicago to Philippines, Pomierski and Son Funeral
Home of Chicago made the necessary preparations and arrangements for the
said shipment, to wit:
· Embalmed the remains
· Secured a permit for the disposition of dead human body on October 25, 1976
· On Ocotber 26, 1976, the Philippine Vice Consul in Chicago, Illinois, Bienvenido
M. Llaneta, sealed the shipping case containing a hermetically sealed casket
that is airtight and waterproof wherein was contained the remains of Crispina
Saludo Galdo
· On that same date, Pomierski brought the remains to C.M.A.S. (Continental
Mortuary Air Services) at the airport (Chicago) which made the necessary
arrangements such as flights, transfers, etc.

Note: C.M.A.S. is a national service used by undertakers to throughout the nation

(U.S.A.), they furnish the air pouch which the casket is enclosed in, and they see that
the remains are taken to the proper air freight terminal.

2. C.M.A.S. booked the shipment with PAL thru the carrier's agent Air Care
International, with Pomierski F.H. as the shipper and Mario (Maria) Saludo as
the consignee.

PAL Airway Bill No. 079-01180454 Ordinary was issued with the following requested
routing:

1. Chicago to San Francisco: Trans World Airline (TWA) Flight 131 on October
27, 1976
2. San Francisco to Manila: PAL Flight No. 107 of the same date
3. Manila to Cebu on board PAL Flight 149 on October 29, 1976

3. Plaintiffs Maria Salvacion Saludo and Saturnino Saludo, thru a travel agent, were
booked with United Airlines from Chicago to California, and with PAL from
California to Manila. However, after being informed by Pomierski Funeral Home
that the remains of their mother Crispina were booked with TWA flight to
California, they changed their reservations to the same flight which is that of their
mother’s.

4. Plaintiff went to the airport and watched from the look-out area. However, she
saw no body being brought. So, she went to the TWA counter and she was told
there was no body on that flight. Reluctantly, they took the TWA flight.
 5. Maria Saludo called Pomierski that her mother's remains were not at the West
Coast terminal, and Pomierski immediately called C.M.A.S., which informed him
that the remains were on a plane to Mexico City, that there were two bodies at the
terminal, and somehow they were switched. That they will be sending the
remains back to California via Texas.

6. It-turned out that TWA had carried a shipment under PAL Airway Bill No.
079-ORD-01180454 on TWA Flight 603 of October 27, 1976, a flight earlier
than TWA Flight 131 of the same date. TWA delivered or transferred the said
shipment said to contain human remains to PAL at 1400H or 2:00 p.m. of the
same date, October 27, 1976 (Bee Exh. 1- TWA). "Due to a switch(ing) in
Chicago", this shipment was withdrawn from PAL by CMAS at 1805H (or 6:05
p.m.) of the same date, October 27.

7. The following day October 28, 1976, the remains of Crispina Saludo arrived in
San Francisco from Mexico on board American Airlines. This shipment was
transferred to or received by PAL at 1945H or 7:45 p.m. This casket bearing
the remains of Crispina Saludo, which was mistakenly sent to Mexico and was
opened (there), was resealed by Crispin F. Patagas for shipment to the
Philippines. The shipment was immediately loaded on PAL flight for Manila that
same evening and arrived in Manila on October 30, 1976, a day after its
expected arrival on October 29, 1976.

8. In a letter addressed to Trans World Airlines (TWA) petitioners' counsel

informed private respondent of the misshipment and eventual delay in the
delivery of the cargo. They also sent a letter addressed to PAL holding PAL liable
for said delay in delivery and would commence judicial action should no favorable
explanation be given.

9. Both respondents denied liability. Thus, a damage suit was filed by petitioners
before the then Court of First Instance, Branch III, Leyte, praying for the award of
actual damages of P50,000.00, moral damages of P1,000,000.00, exemplary
damages, attorney's fees and costs of suit.

10. The lower court absolved both airlines and upon appeal it was affirmed by the
CA. Thus, this instant petition.

ISSUE:

1. Whether private respondents are liable for damages for the delay in the delivery
of the remains of Crispina Saludo. (NO)

RULING:

No, private respondents TWA and PAL are not liable for damages for the delay in the
delivery of the remains of Crispina Saludo. The delay was attributable to the switching of the
two caskets. The switching of the two caskets occurred prior to the receipt of the cargo by
the private respondents.
 CMAS classified as forwarder, is an agent of the shipper and not of the carrier. While
the actual participation of CMAS has been sufficiently and correctly established, to hold that
it acted as agent for TWA and PAL would be both an inaccurate appraisal and an
unwarranted categorization of the legal position it held in the entire transaction. Court cannot
grant damages at expense of TWA and PAL.

In addition, Article 1736 of the Civil Code that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. This
responsibility remains in full force and effect even when they are temporarily unloaded or
stored in transit, unless the shipper or owner exercises the right of stoppageintransitu,and
terminates only after the lapse of a reasonable time for the acceptance, of the goods by the
consignee or such other person entitled to receive them. And, there is delivery to the carrier
when the goods are ready for and have been placed in the exclusive possession, custody
and control of the carrier for the purpose of their immediate transportation and the carrier
has accepted them. Where such a delivery has thus been accepted by the carrier, the
liability of the common carrier commences eoinstanti.

In this case, the body intended to be shipped as agreed upon was really placed in the
possession and control of PAL on October 28, 1976 and it was from that date that private
respondents became responsible for the agreed cargo under their undertakings in PAL
Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which
was not caused by them, and subsequent events caused thereby, private respondents
cannot be held liable.

In relation to the issuance of the bill of lading

A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to
transport and deliver them at a specified place to a person named or on his order. Such
instrument may be called a shipping receipt, forwarder's receipt and receipt for
transportation.

Logically, since a bill of lading acknowledges receipt of goods to be transported, delivery of

the goods to the carrier normally precedes the issuance of the bill; or, to some extent,
delivery of the goods and issuance of the bill are regarded in commercial practice as
simultaneous acts. 23 However, except as may be prohibited by law, there is nothing to
prevent an inverse order of events, that is, the execution of the bill of lading even
prior to actual possession and control by the carrier of the cargo to be transported.
There is no law which requires that the delivery of the goods for carriage and the issuance of
the covering bill of lading must coincide in point of time or, for that matter, that the former
should precede the latter.

On October 26, 1976 the cargo containing the casketed remains of Crispina Saludo was
booked for PAL Flight Number PR-107 leaving San Francisco for Manila on October 27,
1976, PAL Airway Bill No. 079-01180454 was issued, not as evidence of receipt of
delivery of the cargo on October 26, 1976, but merely as a confirmation of the booking
thus made for the San Francisco-Manila flight scheduled on October 27, 1976. Actually, it
was not until October 28, 1976 that PAL received physical delivery of the body at San
Francisco, as duly evidenced by the Interline Freight Transfer Manifest of the American
Airline Freight System and signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said
date.

(The Airway bill was issued not as evidence of receipt of delivery of cargo but as a mere
confirmation of the booking made for the flight scheduled on October 27 from San Francisco
to Manila)

DISPOSITIVE PORTION:

WHEREFORE, with the modification that an award of P40,000.00 as and by way of nominal
damages is hereby granted in favor of petitioners to be paid by respondent Trans World
Airlines, the appealed decision is AFFIRMED in all other respects.
17. F.C. FISHER, plaintiff,

vs.

YANGCO STEAMSHIP COMPANY, J.S. STANLEY, as Acting Collector of Customs of

the Philippine Islands, IGNACIO VILLAMOR, as Attorney-General of the Philippine
Islands, and W.H. BISHOP, as prosecuting attorney of the city of Manila, respondents.

G.R. No. L-8095 March 31, 1915

TOPIC: Grounds for refusal by common carrier to carry certain goods must be reasonable

FACTS:

Plaintiff FC Fisher was a stockholder in the Yangco Steamship Company, the owner of a
large number of steam vessels, duly licensed to engage in the coastwise trade of the
Philippine Islands.

The directors of the company adopted a resolution which was thereafter ratified and affirmed
by the shareholders of the company, "expressly declaring and providing that the classes of
merchandise to be carried by the company in its business as a common carrier do not
include dynamite, powder or other explosives, and expressly prohibiting the officers, agents
and servants of the company from offering to carry, accepting for carriage said dynamite,
powder or other explosives.

Respondent JS Stanley, Acting Collector of Customs demanded and required the company
the acceptance and carriage of such explosives otherwise, the issuance of necessary
clearance documents of the vessel of the company will be suspended.

The plaintiff is advised and believes that should the company decline to accept such
explosives for carriage, Ignacio Villamor, Attorney- General of the Philippine Islands and
prosecuting attorney of the city of Manila intend to prosecute proceedings under the penal
provisions of sections 4, 5, and 6 of Act No. 98 of the Philippine Commission against
the company, its managers, agents and servants and to enforce the requirements of the
Acting Collector of Customs as to the acceptance of such explosives for carriage.

Despite the demands of the plaintiff to the company, the latter declined and refused to cease
the carriage of such explosives. Petitioner filed a complaint but respondents demurred,
which was granted, on the ground that the complaint does not set forth facts sufficient to
constitute a cause of action.

ISSUE:

Whether or not the refusal of the Yangco Steamship Compnay to accept for carriage
“dynamite, powder, or other explosives” from any and all shippers who may offer such
explosives can be held to be a lawful act (NO)

RULING:

No. The mere fact that violent and destructive explosions can be obtained by the use of
dynamite under certain conditions would not be sufficient in itself to justify the refusal of a
vessel, duly licensed as a common carrier of merchandise, to accept it for carriage, if it can
be proven that in the condition in which it is offered for carriage there is no real danger to the
carrier, nor reasonable ground to fear that his vessel or those on board his vessel will be
exposed to unnecessary and unreasonable risk in transporting it, having in mind the nature
of his business as a common carrier engaged in the coastwise trade in the Philippine
Islands, and his duty as a servant of the public engaged in a public employment. So also, if
by the exercise of due diligence and the taking of unreasonable precautions the danger of
explosions can be practically eliminated, the carrier would not be justified in subjecting the
traffic in this commodity to prejudice or discrimination by proof that there would be a
possibility of danger from explosion when no such precautions are taken.

The traffic in dynamite, gunpowder and other explosives is vitally essential to the material
and general welfare of the people of these Islands. If dynamite, gunpowder and other
explosives are to continue in general use throughout the Philippines, they must be
transported by water from port to port in the various islands which make up the Archipelago.
We are satisfied therefore that the refusal by a particular vessel, engaged as a common
carrier of merchandise in the coastwise trade of the Philippine Islands, to accept any or all of
these explosives for carriage would constitute a violation of the prohibitions against
discriminations penalized under the statute, unless it can be shown by affirmative evidence
that there is so real and substantial a danger of disaster necessarily involved in the carriage
of any or all of these articles of merchandise as to render such refusal a due or a necessary
or a reasonable exercise of prudence and discretion on the part of the shipowner.

Common carriers exercise a sort of public office, and have duties to perform in which the
public is interested. Their business is, therefore, affected with a public interest, and is subject
of public regulation. Such business holds such a peculiar relation to the public interest that
there is superinduced upon it the right of public regulation. When private property is "affected
with a public interest it ceases to be juris privati only." Property becomes clothed with a
public interest when used in a manner to make it of public consequence and affect the
community at large.

"When, therefore, one devotes his property to a use in which the public has an interest, he,
in effect, grants to the public an interest in that use, and must submit to be controlled by the
public for the common good, to the extent of the interest he has thus created. He may
withdraw his grant by discontinuing the use, but so long as he maintains the use he must
submit to control."

Common carriers in this jurisdiction cannot lawfully decline to accept a particular class of
goods for carriage, to the prejudice of the traffic in those goods, unless it appears that for
some sufficient reason the discrimination against the traffic in such goods is reasonable and
necessary. Mere whim or prejudice will not suffice. The grounds for the discrimination must
be substantial ones, such as will justify the courts in holding the discrimination to have been
reasonable and necessary under all circumstances of the case.
18. COMPAÑIA MARITIMA, petitioner, vs. COURT OF APPEALS and VICENTE
CONCEPCION, respondents.

G.R. No. L-31379

August 29, 1988
Digested by: Dianne Ybañez
TOPIC: Presumption of negligence of common carriers; how overcome

FACTS:
1. Private respondent Vicente Concepcion had a business called Consolidated
Construction in Manila. He had a contract with the Civil Aeronautics Administration (CAA) in
1964 for the construction of the airport in Cagayan de Oro City.
2. Concepcion had to ship his construction equipment from Manila to Cagayan de Oro
through petitioner Compania Maritima. After settling his balance of P2,628.77, Concepcion
again negotiated for the shipment of one (1) unit payloader, four (4) units 6x6 Reo trucks and
two (2) pieces of water tanks. He was issued Bill of Lading 113 on the same date upon
delivery of the equipment at the Manila North Harbor.
3. The abovesaid materials were loaded in the MV Cebu (Voyage No. 316) which left on
August 30, 1964 and arrived at CDO on September 1, 1964. The Reo trucks and water tanks
were unloaded safely. However, while the payloader was about 2 meters above the pier in
the course of unloading, the swivel pin of the heel block of the port block of Hatch No. 2 gave
way, causing the payloader to fall. The payloader was damaged and was thereafter taken to
petitioner's compound in Cagayan de Oro City.
4. Consolidated Construction thru Concepcion demanded a replacement of the
payloader because of the extent of damage. Meanwhile, petitioner shipped the payloader to
Manila to be weighed. It showed that the payloader weighed 7.5 tons and not 2.5 tons as
declared in the B-111 of Lading. So they denied the claim for damages.
5. Concepcion bought a new payloader in the meantime. Later on, he filed an action for
damages seeking to recover damages allegedly suffered from the lack of a payloader to use
in his business and for the already damaged payloader, and other damages.
6. The court of first instance dismissed the case because the proximate cause of the fall
of the payloader was Concepcion's misrepresentation of the weight of the payloader as 2.5
tons instead of its true weight of 7.5 tons, which was intended to defraud Compañia Maritima
of the payment of the freight charges and which likewise led the Chief Officer of the vessel to
use the heel block of hatch No. 2 in unloading the payloader. Upon appeal, the previous
judgment was reversed and damages were ordered to be given to Concepcion. Hence, the
present petition for review on certiorari.

ISSUE:
Whether or not Concepcion’s act of furnishing an inaccurate weight of the payloader
exempts petitioner from liability for damages under paragraph 3 of Article 1734 of the Civil
Code. (NO)
RULING:
Article 1734 provides that:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only:
xxx xxx xxx
(3) Act or omission of the shipper or owner of the goods.
The general rule under Articles 1735 and 1752 of the Civil Code is that common
carriers are presumed to have been at fault or to have acted negligently in case the goods
transported by them are lost, destroyed or had deteriorated. To overcome the presumption
of liability for the loss, destruction or deterioration of the goods, the common carriers
must prove that they observed extraordinary diligence as required in *Article 1733 of
the Civil Code. In other words, it is incumbent upon the common carrier to prove that the
loss, deterioration or destruction was due to accident or some other circumstances
inconsistent with its liability.
In the present case, petitioner seemed to overlook the extraordinary diligence
required of common carriers in the vigilance over the goods transported by them by virtue of
the nature of their business. The extraordinary diligence 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.
Private respondent Concepcion entered the weight into the bill of lading thru Pacifico
Fernandez, the company collector of MV Cebu, without seeing the equipment to be shipped.
The weight was also assumed to be correct by Chief Officer Felix Pisang of MV Cebu.
Pisang was in charge of the overall supervision of the loading and unloading of heavy
cargoes and tasked to determine the weight of cargoes before accepting them. He
presumed the weight to be correct by merely “seeing” the payloader. He knew that there was
a “jumbo” that had a capacity of lifting 20-25 tons but he did not mind to use it. It was
sufficiently established that petitioner was lax and careless in ascertaining the weight of
heavy cargoes. But even if petitioner chose not to take the necessary precaution to avoid
damage by checking the correct weight of the payloader, extraordinary care and diligence
compel the use of the "jumbo" lifting apparatus as the most prudent course for petitioner.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of
Appeals is hereby AFFIRMED in all respects with costs against petitioner. In view of the
length of time this case has been pending, this decision is immediately executory.

NOTES:
• * Article 1733 of the Civil Code provides:
Art. 1733. Common carriers, from the nature of their business and for reason of public policy,
are bound to observe extraordinary 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.
xxx
• The act of private respondent of furnishing an inaccurate weight constitutes a
contributory circumstance to the damage caused on the payloader, which mitigates the
liability for damages of petitioner.
• Under Article 1736 of the Civil Code, the responsibility to observe extraordinary
diligence commences and lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to the person who has the right
to receive them without prejudice to the provisions of Article 1738.
19. CESAR L. ISAAC, plaintiff-appellant , vs. A. L. AMMEN TRANSPORTATION CO.,
INC., defendant-appellee.

GR NO. L-9671

DATE OF CASE: August 23, 1957

DIGEST BY: ZALAVARRIA, ZAO

Topic: Principles on the liability of a common carrier

FACTS:

A. L. Ammen Transportation Co., Inc. (defendant), is a corporation engaged in the

business of tansporting passengers by land for compensation in the Bicol Province (Legaspi
City, Albay with Naga City, Camarines Sur).

On May 31, 1951, plaintiff ISAAC boarded Bus No. 31, operated by defendant, as a
paying passenger from Ligao, Albay to Pili, Camarines Sur. Before reaching its destination,
the bus collided with a pick-up truck coming from the opposite direction, which resulted in
plaintiff’s left arm being completely severed (severed portion fell inside the bus).

Plaintiff was rushed to a hospital in Camarines Sur wherein he was given a blood
transfusion to save his life. He was then transferred to a hospital in Albay wherein he
underwent treatment for 3 months. He was once again moved to the Orthopedic Hospital
where he was operated on and stayed there for 2 months.

Plaintiff then brought this action for damages, alleging that the collision which
resulted in the loss of his left arm was mainly due to the gross incompetence and
recklessness of the driver of the bus, thus defendant incurred culpa contractual arising from
its non-compliance with its obligation to transport plaintiff safely to his destination.

Defendant set up the special defense that injury suffered by the plaintiff was due
entirely to the fault or negligence of the driver of the pick-up that collided with the bus and to
the contributory negligence on plaintiff himself. The accident was one which the defendant
could not foresee or, though foreseen, was inevitable.

RTC ruled in favor of the defendant, citing that the driver of the bus did everything he
could do to avoid the pick-up but he was not able to avoid the same. RTC dismissed the
complaint. Hence, this appeal from said decision.

ISSUE:

1. WON defendant observed extraordinary diligence or the utmost diligence of every

cautious person, having due regard for all circumstances, in avoiding the collision which
resulted in the injury caused to the plaintiff? (YES) – syllabus issue

2. WON Isaac is guilty of contributory negligence, thus it militates against his claim?
(YES)
RULING:

Appellant, citing several cases in the Philippines, seems to imply that once the
contract of carriage is established and there is proof that the same was broken by failure of
the carrier to transport the passenger safely to his destination, the liability of the former
attaches.

On the other hand, appellee-defendant claims that the decisions of this Court in the cases
cited show that the liability of the carrier was predicated not upon mere breach of its contract
of carriage but upon the finding that its negligence was found to be the direct or proximate
cause of the injury complained of. Appellee further contends that "if there is no negligence
on the part of the common carrier but that the accident resulting in injuries is due to causes
which are inevitable and which could not have been avoided or anticipated notwithstanding
the exercise of that high degree of care and skill which the carrier is bound to exercise for
the safety of his passengers", neither the common carrier nor the driver is liable therefor.

ISSUE 1. PRINCIPLES GOVERNING LIABILITY OF COMMON CARRIER.

Evidence show that Bus No. 31, immediately prior to the collision, was running at a
moderate speed because it had just stopped at the school zone of Albay. The pick-up car
was at full speed and was running outside of its proper lane. The driver of the bus, upon
seeing the manner in which the pick-up was then running, swerved the bus to the very
extreme right of the road until its front and rear wheels have gone over the pile of stones or
gravel situated on the rampart of the road. And notwithstanding all these efforts, the rear left
side of the bus was hit by the pick-up car.

While the position taken by appellant appeals more to the sense of caution that one should
observe in a given situation to avoid an accident or mishap, such however can not always be
expected from one who is placed suddenly in a predicament where he is not given enough
time to take the proper course of action as he should under ordinary circumstances. One
who is placed in such a predicament cannot exercise such coolness or accuracy of
judgment as is required of him under ordinary circumstances and he cannot therefore
be expected to observe the same judgment, care and precaution as in the latter.

The Court further held that "where a carrier's employee is confronted with a sudden
emergency, the fact that he is obliged to act quickly and without a chance for deliberation
must be taken into account, and he is not held to the same degree of care that he would
otherwise be required to exercise in the absence of such emergency but must
exercise only such care as any ordinary prudent person would exercise under like
circumstances and conditions, and the failure on his part to exercise the best
judgment the case renders possible does not establishlack of care and skill on his
part which renders the company, liable."

ISSE 2. CONTRIBUTORY NEGLIGENCE OF PASSENGER MILITATES AGAINST HIS

CLAIM
 A circumstance which militates against the stand of appellant is the fact borne out by
the evidence that when he boarded the bus in question, he seated himself on the left side
thereof resting his left arm on the window sill but with his left elbow outside the window, this
being his position in the bus when the collision took place. It is for this reason that the
collision resulted in the severance of said left arm from the body of appellant thus doing him
a great damage. It is therefore apparent that appellant is guilty of contributory negligence.

It is true that such contributory negligence cannot relieve appellee of its liability but
will only entitle it to a reduction of the amount of damage caused (Article 1762, new
Civil Code), but this is a circumstance which further militates against the position taken by
appellant in this case.
"It is the prevailing rule that it is negligence per se for a passenger on a railroad
voluntarily or inadvertently to protrude his arm, hand, elbow, or any other part of his
body through the window of a moving car beyond the outer edge of the window or
outer surface of the car, so as to come in contact with objects or obstacles near the
track, and that no recovery can be had for an injury which but for such negligence
would not have been sustained. . . ." (10 C. J. 1139).
"Plaintiff (passenger) while riding on an interurban car, to flick the ashes from his
cigar, thrust his hand over the guard rail a sufficient distance beyond the side line of
the car to bring it in contact with the trunk of a tree standing beside the track; the
force of the blow breaking his wrist. Held, that he was guilty of contributory
negligence as a matter of law." (Malakia vs. Rhode Island Co., 89 A., 337.)

Wherefore, the decision appealed from is AFFIRMED, with costs against appellant.

!NOTE!
The following are the principles governing the liability of a common carrier:
(1) the liability of a carrier is contractual and arises upon breach of its obligation.
There is a breach if it fails to exert extraordinary diligence according to all the
circumstances of each case; (2) a carrier is obliged to carry its passenger with
the utmost diligence of a very cautious person, having due regard for all
circumstances; (3) a carrier is presumed to be at fault or to have acted negligently
in case of death of, or injury to, passengers, it being its duty to prove that it exercised
extraordinary diligence; and (4) the carrier is not an insurer against all risks of travel.

20. Philippines First Insurance Co., Inc. v. Wallem Phils. Shipping, Inc., Unknown
Owner And/Or Unknown Charterer Of The Vessel M/S "Offshore Master" And
"Shanghai Fareast Ship Business Company"
G.R. No. 165647. March 26, 2009
Digested by: Marga
TOPIC: PERIODS WHEN THE LIABILITY OF A COMMON CARRIER BEGINS AND
CEASES

FACTS:
On or about 2 October 1995, Anhui Chemicals Import & Export Corporation [located in
China] loaded on board M/S Offshore Master (vessel) a shipment consisting of 10,000 bags
of sodium sulphate anhydrous 99 PCT Min. (shipment), complete and in good order for
transportation to and delivery at the port of Manila for L.G. Atkimson Import-Export, Inc.
(consignee), covered by a Clean Bill of Lading. It reflects the gross weight of the total cargo
at 500,200 kilograms.

The Owner and/or Charterer of the vessel is unknown while the shipper of the shipment is
Shanghai Fareast Ship Business Company. Both are foreign firms doing business in the
Philippines, thru their local ship agent, respondent Wallem Philippines Shipping, Inc.
(Wallem).

On or about 16 October 1995, the shipment arrived at the port of Manila on board the vessel
from which it was subsequently discharged. It was disclosed during the discharge of the
shipment from the carrier that 2,426 poly bags were in bad order and condition as evidenced
by the Turn Over Survey of Bad Order Cargoes (turn-over survey) of Asian Terminals, Inc.
(arrastre operator).

It was then delivered from the pier to the consignee's warehouse in Quezon City, while the
final inspection was conducted jointly by the consignee's representative and the cargo
surveyor (Mr. Talens).During the unloading and upon inspection, it was discovered that
63,065 kgs of the shipment had sustained unrecovered spillages, while 58,235 kgs had been
exposed and contaminated, resulting in losses due to depreciation and downgrading.

The consignee filed a formal claim with Wallem for the value of the damaged shipment, to no
avail. Since the shipment was insured by petitioner Philippines First Insurance Co., Inc.
against all risks in the amount of P2,470,213.50, the consignee filed a formal claim with the
petitioner for the damage and losses sustained by the shipment.

After evaluating the documents, the petitioner found the claim to be compensable under the
marine insurance policy and paid the sum of P397,879.69 and the latter signed a
subrogation receipt. Petitioner, in the exercise of its right of subrogation, sent a demand
letter to Wallem for the recovery of the amount paid. However, Wallem did not settle nor
respond to the claim. Petitioner then instituted an action before the RTC against respondents
for the recovery of P397,879.69 plus actual damages, legal interest, and attorney’s fees.

RTC Ruling: In favor of petitioner. It attributed the damage and losses sustained by the
shipment to the arrastre operator's mishandling of the discharge of the shipment.

Citing Eastern Shipping Lines, Inc. v. Court of Appeals, the RTC held the shipping company
and the arrastre operator solidarily liable since both the arrastre operator and the carrier are
charged with and obligated to deliver the goods in good order condition to the consignee.

CA Ruling: Reversed and set aside the RTC's decision. There is no solidary liability
between the carrier and the arrastre operator because it was clearly established by the court
that it was due to the mishandling by the arrastre operator in the discharge of the shipment.
The instant case falls under an exception recognized in Eastern Shipping Lines. Hence, the
arrastre operator was held solely liable to the consignee.

ISSUES: (only 1 and 2 are relevant to the topic)

1. Whether or not the Court of Appeals erred in not holding that as a common carrier, the
carrier's duties extend to the obligation to safely discharge the cargo from the vessel
(YES);
2. Whether or not the carrier should be held liable for the cost of the damaged shipment
(YES);
3. Whether or not Wallem's failure to answer the extrajudicial demand by petitioner for the
cost of the lost/damaged shipment is an implied admission of the former's liability for said
goods (NO);
4. Whether or not the courts below erred in giving credence to the testimony of Mr. Talens.
(NO)

RULING:

TN: It is beyond question that the respondent's vessel is a common carrier. Thus, the
standards for determining the existence or absence of the respondent's liability will be
gauged on the degree of diligence required of a common carrier. Moreover, as the shipment
was an exercise of international trade, the provisions of the Carriage of Goods by Sea Act
(COGSA), together with the Civil Code and the Code of Commerce, shall apply.

1st & 2nd issues: will be resolved concurrently since they are interrelated. (both YES)

[Basically, the loss was caused by the mishandling of the arrastre operator during the
discharge/unloading and before it was delivered to the consignee. Specifically, the torn cargo
bags resulted from the use of steel hooks/spikes in piling the cargo bags to the pallet board
and in pushing the bags by the stevedores of the arrastre operator to the tug boats and then
to the ports. Based on the testimony of Mr. Talens, the arrastre operator was under the
supervision of Wallem but most importantly, as provided by jurisprudence and doctrines
below, while the cargoes are still unloading, it generally remains under the custody of the
carrier. Hence, Wallem is the one liable.]

It is undisputed that the shipment was damaged prior to its receipt by the insured consignee.
The damage to the shipment was documented by the turn-over survey and Request for Bad
Order Survey.

With these documents, the petitioner insists that the shipment incurred damage or losses
while still in the care and responsibility of Wallem and before it was turned over and
delivered to the arrastre operator. However, RTC found the testimony of Mr. Talens that the
loss was caused by the mishandling of the arrastre operator. Specifically, the torn cargo
bags resulted from the use of steel hooks/spikes in piling the cargo bags to the pallet board
and in pushing the bags by the stevedores of the arrastre operator to the tug boats and then
to the ports. This mishandling was affirmed by the CA which was the basis for declaring the
arrastre operator solely liable for the damage.

While it is established that damage or losses were incurred by the shipment during the
unloading, it is disputed who should be liable for the damage incurred at that point of
transport.

Common carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over the goods transported by
them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code (see
notes 1), common carriers are responsible for the loss, destruction, or deterioration of the
goods. The extraordinary responsibility of the common carrier lasts from the time the goods
are unconditionally placed in the possession of, and received by the carrier for transportation
until the same are delivered, actually or constructively, by the carrier to the consignee, or to
the person who has a right to receive them.

For marine vessels, Article 619 of the Code of Commerce holds a ship captain liable for the
cargo from the time it is turned over to him until its delivery at the port of unloading unless
agreed otherwise. Lastly. Section 3 (2) thereof then states that among the carriers'
responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and
discharge the goods carried.

In this case, the above doctrines are in fact expressly incorporated in the bill of lading
between the shipper Shanghai Fareast Business Co., and the consignee.

On the other hand, the functions of an arrastre operator involve the handling of cargo
deposited on the wharf or between the establishment of the consignee or shipper and the
ship's tackle. 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 so its drivers/operators or employees should observe the standards and
measures necessary to prevent losses and damage to shipments under its custody.

In Fireman's Fund Insurance Co. v. Metro Port Service, Inc. the Court ruled that both the
ARRASTRE and the CARRIER are therefore charged with and obligated to deliver the
goods in good condition to the consignee. The liability of the arrastre operator was reiterated
in Eastern Shipping Lines, Inc. v. Court of Appeals, with the clarification that the arrastre
operator and the carrier are not always and necessarily solidarily liable as the facts of a case
may vary the rule. Thus, in this case, the appellate court is correct insofar as it ruled that an
arrastre operator and a carrier may not be held solidarily liable at all times.

In a case decided by a U.S. Circuit Court, Nichimen Company v. M./V. Farland, it was ruled
that like the duty of seaworthiness, the duty of care of the cargo is non-delegable, and the
carrier is accordingly responsible for the acts of the master, the crew, the stevedore, and his
other agents. It has also been held that it is ordinarily the duty of the master of a vessel to
unload the cargo and place it in readiness for delivery to the consignee, and there is an
implied obligation that this shall be accomplished with sound machinery, competent hands,
and in such manner that no unnecessary injury shall be done thereto. And the fact that a
consignee is required to furnish persons to assist in unloading a shipment may not relieve
the carrier of its duty as to such unloading.

The records are replete with evidence that show that the damage to the bags happened
before and after their discharge and it was caused by the stevedores of the arrastre operator
who were then under the supervision of Wallem based on the testimony of Mr. Talens.

It is settled in maritime law jurisprudence that cargoes while being unloaded generally
remain under the custody of the carrier. In the instant case, the damage or losses were
incurred during the discharge of the shipment while under the supervision of the carrier.
Consequently, the carrier is liable for the damage or losses caused to the shipment.

3rd issue: NO. A man cannot make evidence for himself by writing a letter containing the
statements that he wishes to prove. A failure to answer such adverse assertions in the
absence of further circumstances making an answer requisite or natural has no effect as an
admission.
4th issue: NO. Unless the trial judge plainly overlooked certain facts of substance and value
which, if considered, might affect the result of the case, his assessment of credibility must be
respected

DISPOSITION: WHEREFORE, the petition is GRANTED. The Decision of the Court of

Appeals dated 22 June 2004 and its Resolution dated 11 October 2004 are REVERSED and
SET ASIDE. Wallem is ordered to pay petitioner.

NOTES:

1. Article 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 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.
21. LUDO & LU YM CORPORATION, petitioner-defendant, vs. I. V. BINAMIRA,
respondent-plaintiff.

G.R. No. L-9840

April 22, 1957
Topic: Parties may agree to relieve carrier from liability while goods are in custom’s custody
FACTS:

1. Delta Photo Supply Company of New York shipped on board the M/S "FERNSIDE" at New
York, U.S.A., six cases of films and/or photographic supplies consigned to the order of
respondent I. V. Binamira.

2. For this shipment, Bill of Lading No. 29 was issued. The ship arrived at the port of Cebu
and discharged her cargo including the shipment in question, placing it in the possession
and custody of the arrastre operator of said port, the Visayan Cebu Terminal Company, Inc.

3. Petitioner, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to unload its
cargo. During the discharge, good order cargo was separated from the bad order cargo on
board the ship, and a separate list of bad order cargo was prepared by Pascual Villamor,
checker of the stevedoring company.

4. All the cargo unloaded was received at the pier by the Visayan Cebu Terminal Company
Inc, arrastre operator of the port, appointed by the Bureau of Customs. This terminal
company had also its own checker, Romeo Quijano, who also recorded and noted down the
good cargo from the bad one. The shipment in question, was not included in the report of
bad order cargo of both checkers, indicating that it was discharged from the ship in good
order and condition.

5. Three days after the goods were unloaded from the ship, respondent took delivery of his
six cases of photographic supplies from the arrastre operator. He discovered that the cases
showed signs of pilferage and, consequently, he hired marine surveyors, R. J. del Pan &
Company, Inc., to examine them. The surveyors examined the cases and made a physical
count of their contents in the presence of representatives of petitioner, respondent and the
stevedoring company. The surveyors examined the cases and made a physical count of their
contents in the presence of representatives of petitioner, respondent and the stevedoring
company. The finding of the surveyors showed that some films and photographic supplies
were missing valued at P324.63.

6. The Court of Appeals commented that the common carrier has the legal duty to deliver
goods to a consignee in the same condition in which it received them. Except where the
loss, destruction or deterioration of the merchandise was due to any of the cases
enumerated in Article 1734 of the new Civil Code, a carrier is presumed to have been at fault
and to have acted negligently, unless it could prove that it observed extraordinary diligence
in the care and handling of the goods. Such presumption and the liability of the carrier attach
until the goods are delivered actually or constructively, to the consignee, or to the person
who has a right to receive them, and they believe delivery to the customs authorities is not
the delivery contemplated by Article 1736 of the Civil Code.

ISSUE:
Whether the carrier is responsible for the loss considering that the same occurred after the
shipment was discharged from the ship and placed in the possession and custody of the
customs authorities.

RULING:

No, the carrier is not responsible for the loss of the shipment in question.

The Court of Appeals erred in its finding not only because it made wrong interpretation of the
law on the matter, but also because it ignored the provisions of the bill of lading covering the
shipment wherein it was stipulated that the responsibility of the carrier is limited only to
losses that may occur while the cargo is still under its custody and control.

The contention is well taken. It is true that, as a rule, a common carrier is responsible for the
loss, destruction or deterioration of the goods it assumes to carry from one place to another
unless the same is due to any to any of the causes mentioned in Article 1734 on the new
Civil Code, and that, if the goods are lost, destroyed or deteriorated, for causes other that
those mentioned, the common carrier is presumed to have been at fault or to have acted
negligently, unless it proves that it has observed extraordinary diligence in their care (Article
1735), and that this extraordinary liability lasts from the time the goods are placed in the
possession of the carrier until they are delivered to the consignee, or "to the person who has
the right to receive them" (Article 1736), but these provisions only apply when the loss,
destruction or deterioration takes place while the goods are in the possession of the carrier,
and not after it has lost control of them. The reason is obvious. While the goods are in its
possession, it is but fair that it exercise extraordinary diligence in protecting them from
damage, and if loss occurs, the law presumes that it was due to its fault or negligence. This
is necessary to protect the interest of the owner who is at its mercy. The situation changes
after the goods are delivered to the consignee.

The SC agree with the Court of Appeals that while delivery of the cargo to the consignee, or
to the person who has a right to receive them", contemplated in Article 1736, because in
such case the goods are still in the hands of the Government and the owner cannot exercise
dominion over them. They believe however that the parties may agree to limit the liability of
the carrier considering that the goods have still to through the inspection of the customs
authorities before they are actually turned over to the consignee. This is a situation where
we may say that the carrier losses control of the goods because of a custom regulation and
it is unfair that it be made responsible for what may happen during the interregnum. And this
is precisely what was done by the parties herein. In the bill of lading that was issued
covering the shipment in question, both the carrier and the consignee have stipulated to limit
the responsibility of the carrier for the loss or damage that may because to the goods before
they are actually delivered by insert in therein the following provisions:

1. The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or
misdelivery, or loss of or damage to the goods occurring while the goods are not in the
actual custody of the Carrier.

2. The responsibility of the Carrier in any capacity shall altogether cease and the goods
shall be considered to be delivered and at their own risk and expense in every respect when
taken into the custody of customs or other authorities. The Carrier shall not be required to
give any notification of disposition of the goods.
3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at
ship's tackle . . . and delivery beyond ship's tackle shall be entirely at the option of the
Carrier and solely at the expense of the shipper or consignee.

It therefore appears clear that the carrier does not assume liability for any loss or damage to
the goods once they have been "taken into the custody of customs or other authorities", or
when they have been delivered at ship's tackle. These stipulations are clear. They have
been adopted precisely to mitigate the responsibility of the carrier considering the present
law on the matter, and we find nothing therein that is contrary to morals or public policy that
may justify their nullification. We are therefore persuaded to conclude that the carrier is not
responsible for the loss in question, it appearing that the same happened after the shipment
had been delivered to the customs authorities.

Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

22. Caltex [Philippines], Inc. v. Sulpicio Lines, Inc.

G.R. No. 131166
Sept. 30, 1999
Digested by: Veth Alido
Topic: Implied warranty of seaworthiness of ships as common carriers

Summary (Facts):
On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex,
collided in the open sea with passenger ship MV Doña Paz, causing the death of all but 25
of the latter’s passengers. Among those who died were Sebastian Canezal and his daughter
Corazon Canezal. On March 22, 1988, the board of marine inquiry found that Vector
Shipping Corporation was at fault. On February 13, 1989, Teresita Cañezal and Sotera E.
Cañezal, Sebastian Cañezal’s wife and mother respectively, filed with the Regional Trial
Court of Manila a complaint for damages arising from breach of contract of carriage against
Sulpicio Lines. Sulpicio filed a third-party complaint against Vector and Caltex. The trial court
dismissed the complaint against Caltex, but the Court of Appeals included the same in the
liability. Hence, Caltex filed this petition.

Facts:

On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m.,
enroute to Masbate, loaded with 8,800 barrels of petroleum products shipped by petitioner
Caltex. MT Vector is a tramping motor tanker owned and operated by Vector Shipping
Corporation, engaged in the business of transporting fuel products such as gasoline,
kerosene, diesel and crude oil. During that particular voyage, the MT Vector carried on board
gasoline and other oil products owned by Caltex by virtue of a charter contract between
them. On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doña Paz left the
port of Tacloban headed for Manila with a complement of 59 crew members including the
master and his officers, and passengers totaling 1,493 as indicated in the Coast Guard
Clearance. The MV Doña Paz is a passenger and cargo vessel owned and operated by
Sulpicio Lines, Inc. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/
Tacloban/ Manila, making trips twice a week.

At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within
the vicinity of Dumali Point between Marinduque and Oriental Mindoro. All the crewmembers
of MV Doña Paz died, while the two survivors from MT Vector claimed that they were
sleeping at the time of the incident. The MV Doña Paz carried an estimated 4,000
passengers; many indeed, were not in the passenger manifest. Only 24 survived the tragedy
after having been rescued from the burning waters by vessels that responded to distress
calls. Among those who perished were public school teacher Sebastian Cañezal (47 years
old) and his daughter Corazon Cañezal (11 years old), both unmanifested passengers but
proved to be on board the vessel. On March 22, 1988, the board of marine inquiry in BMI
Case No. 653-87 after investigation found that the MT Vector, its registered operator
Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at
fault and responsible for its collision with MV Doña Paz.

On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife
and mother respectively, filed with the Regional Trial Court, Branch 8, Manila, a complaint for
“Damages Arising from Breach of Contract of Carriage” against Sulpicio Lines, Inc.
(hereafter Sulpicio). Sulpicio, in turn, filed a third party complaint against Francisco Soriano,
Vector Shipping Corporation and Caltex (Philippines), Inc. Sulpicio alleged that Caltex
chartered MT Vector with gross and evident bad faith knowing fully well that MT Vector was
improperly manned, ill-equipped, unseaworthy and a hazard to safe navigation; as a result, it
rammed against MV Doña Paz in the open sea setting MT Vector’s highly flammable cargo
ablaze.

Issue:

WON THE CHARTERER/SHIPPER IS LIABLE FOR BREACH OF WARRANTY OF

SEAWORTHINESS.

Ruling:

NO. Petitioner and Vector entered into a contract of affreightment, also known as a voyage
charter.

A charter party is a contract by which an entire ship, or some principal part thereof, is let by
the owner to another person for a specified time or use; a contract of affreightment is one by
which the owner of a ship or other vessel lets the whole or part of her to a merchant or other
person for the conveyance of goods, on a particular voyage, in consideration of the payment
of freight.

A contract of affreightment may be either time charter, wherein the leased vessel is leased to
the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a
single voyage. In both cases, the charter-party provides for the hire of the vessel only, either
for a determinate period of time or for a single or consecutive voyage, the ship owner to
supply the ship’s store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.
Under a demise or bareboat charter on the other hand, the charterer mans the vessel with
his own people and becomes, in effect, the owner for the voyage or service stipulated,
subject to liability for damages caused by negligence. prLL

If the charter is a contract of affreightment, which leaves the general owner in possession of
the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the
owner. The charterer is free from liability to third persons in respect of the ship.

MT Vector is a common carrier

Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3)
voyage charter. Does a charter party agreement turn the common carrier into a private one?
We need to answer this question in order to shed light on the responsibilities of the parties.

In this case, the charter party agreement did not convert the common carrier into a private
carrier. The parties entered into a voyage charter, which retains the character of the vessel
as a common carrier.

Under the Carriage of Goods by Sea Act:

SECTION 3. (1) The carrier shall be bound before and at the beginning of the voyage to
exercise due diligence to —

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship; xxx xxx xxx

Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a
vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure of a common carrier to maintain
in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code.

The provisions owed their conception to the nature of the business of common carriers. This
business is impressed with a special public duty. The public must of necessity rely on the
care and skill of common carriers in the vigilance over the goods and safety of the
passengers, especially because with the modern development of science and invention,
transportation has become more rapid, more complicated and somehow more hazardous.
For these reasons, a passenger or a shipper of goods is under no obligation to conduct an
inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its
seaworthiness.

Whether Caltex is liable for damages under the Civil Code.

Caltex and Vector Shipping Corporation had been doing business since 1985, or for about
two years before the tragic incident occurred in 1987. Past services rendered showed no
reason for Caltex to observe a higher degree of diligence.

Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was
seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness. All
things considered, we find no legal basis to hold petitioner liable for damages.
As Vector Shipping Corporation did not appeal from the Court of Appeals’ decision, we limit
our ruling to the liability of Caltex alone. However, we maintain the Court of Appeals’ ruling
insofar as Vector is concerned.

DISPOSITION: WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the
decision of the Court of Appeals in CA-G.R. CV No. 39626, promulgated on April 15, 1997,
insofar as it held Caltex liable under the third party complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. the damages the latter is adjudged to pay plaintiffs-appellees.
The Court AFFIRMS the decision of the Court of Appeals insofar as it orders Sulpicio Lines,
Inc. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal damages as set forth
therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano
are held liable to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages,
attorneys' fees and costs the latter is adjudged to pay plaintiffs-appellees in the case.No
costs in this instance. SO ORDERED.

NOTES:
Second: MT Vector is a common carrier
The charter party agreement did not convert the common carrier into a private carrier. The
parties entered into a voyage charter, which retains the character of the vessel as a common
carrier. It is imperative that a public carrier shall remain as such, notwithstanding the charter
of the whole or portion of a vessel by one or more persons, provided the charter is limited to
the ship only, as in the case of a time-charter or voyage charter. It is only when the charter
includes both the vessel and its crew, as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and
control of the ship, although her holds may, for the moment, be the property of the charterer.
A common carrier is a person or corporation whose regular business is to carry passengers
or property for all persons who may choose to employ and to remunerate him. 16 MT Vector
fits the definition of a common carrier under Article 1732 of the Civil Code.
The public must of necessity rely on the care and skill of common carriers in the vigilance
over the goods and safety of the passengers, especially because with the modern
development of science and invention, transportation has become more rapid, more
complicated and somehow more hazardous. For these reasons, a passenger or a shipper of
goods is under no obligation to conduct an inspection of the ship and its crew, the carrier
being obliged by law to impliedly warrant its seaworthiness.

Third: Is Caltex liable for damages under the Civil Code?

The charterer of a vessel has no obligation before transporting its cargo to ensure that the
vessel it chartered complied with all legal requirements. The duty rests upon the common
carrier simply for being engaged in "public service." The relationship between the parties in
this case is governed by special laws. Because of the implied warranty of seaworthiness,
shippers of goods, when transacting with common carriers, are not expected to inquire into
the vessel’s seaworthiness, genuineness of its licenses and compliance with all maritime
laws. To demand more from shippers and hold them liable in case of failure exhibits nothing
but the futility of our maritime laws insofar as the protection of the public in general is
concerned. Such a practice would be an absurdity in a business where time is always of the
essence. Considering the nature of transportation business, passengers and shippers alike
customarily presume that common carriers possess all the legal requisites in its operation.
23. LARA VS. VALENCIA
G.R. No. L-9907 June 30, 1958
TOPIC: PERSONS NOT DEEMED PASSENGERS

Case is an appeal for an action for damages for the death of one Demetrio Lara, Sr.
allegedly caused by the negligent act of defendant. The court ruled in favor of plaintiff and
ordered defendant to pay 14,000 (P10,000 as moral damages; P3,000 as exemplary
damages; and P1,000 as attorney's fees, in addition to the costs of action). Both parties
appealed to this Court because the damages claimed in the complaint exceed the sum of
P50,000.

FACTS:
● Demetrio Lara, Sr. was an inspector of the Bureau of Forestry stationed in Davao
when he was ordered by his chief to classify the logs at defendant’s concession in
Cotabato which were about to be loaded on a ship anchored in the port of Parang.
● The work of Lara of lasted for six days during which he contracted malaria fever. Due
to getting sick he had the desire to return immediately to Davao so he asked
defendant if he could take him in his pick-up as there was then no other means of
transportation, to which defendant agreed, and in that same morning the pick-up left
Parang bound for Davao taking along six passengers, including Lara.
● It was their understanding that upon reaching barrio Samoay, Cotabato, the
passengers were to alight and take a bus bound for Davao, but when they arrived at
that place, only Bernardo alighted, and the other passengers requested defendant to
allow them to ride with him up to Davao because there was then no available bus
that they could take in going to that place. Defendant again accommodated the
passengers.
● However, upon reaching Km. 96, barrio Catidtuan, Lara accidentally fell from the
pick-up and as a result he suffered serious injuries.
● They brought Lara to the nearest place where they could find a doctor and not having
found any, they took him to St. Joseph's Clinic of Kidapawan. But when Lara arrived,
he was already dead.
● It should also be noted that Defendant merely accommodated them and did not
charge them any fee for the service.

ISSUE:
1. WON Lara Sr. was a “passenger” (NO) (most relevant to the topic assigned)
2. WON defendant failed to observe ordinary care or diligence in transporting the
deceased from Parang to Davao (NO) (main issue of the case)

RULING:
Issue #1: Passenger or not? (NOT)
Definition of Passenger:
Passenger – one who travels in a public conveyance by virtue of contract, express or
implied, with the carrier as to the payment of fare or that which is accepted as an
equivalent thereof.

Defendant merely accommodated them and did not charge them any fee for the service
when he drove them from the concession to the bus terminal. It was also their
understanding that upon reaching barrio Samoay, the passengers would alight and
transfer to a bus that regularly makes the trip to Davao but unfortunately there was none
available at the time and so the same passengers, including Lara, again requested the
defendant to drive them to Davao. Defendant again accommodated them and upon
reaching Km. 96, Lara accidentally fell suffering fatal injuries.
It appears that the deceased, as well his companions who rode in the pick-up of defendant,
were merely accommodation passengers who paid nothing for the service and so they
can be considered as invited guests within the meaning of the law.

Issue #2: Defendant did not fail to observe ordinary care or diligence and thus, should be
exempt from liability.

As accommodation passengers or invited guests, defendant as owner and driver of the

pick-up is only required to observe ordinary care and is not in duty bound to exercise
extraordinary diligence as required of a common carrier by our law.

The trial court found not enough evidence to show that defendant has failed to take the
precaution necessary to conduct his passengers safely to their place of destination for there
is nothing there to indicate that defendant has acted with negligence or without taking the
precaution that an ordinary prudent man would have taken under similar circumstances.
● Defendant was not duty bound to take the deceased in his own pick-up to Davao
because from Parang to Cotabato there was a line of transportation that regularly
makes trips for the public, and if defendant agreed to take the deceased in his own
car, it was only to accommodate him considering his feverish condition and his
request that he be so accommodated.
● The passengers who rode in the pick-up of defendant took their respective seats at
their own choice and not upon indication of defendant with the particularity that
defendant invited the deceased to sit with him in the front seat but which invitation
the deceased declined.
● The allegation that the pick-up truck is running at more than 40 kilometers per hour is
also not supported by the evidence. This is a mere surmise made by the trial court
considering the time the pick-up left barrio Samoay and the time the accident
occured in relation to the distance covered by the pick-up. And even if this is correct,
still we say that such speed is not unreasonable considering that they were traveling
on a national road and the traffic then was not heavy.

All the circumstances therefore clearly indicate that defendant had done what a
reasonable prudent man would have done under the circumstances. Thus, the court
concluded that the accident occurred not due to the negligence of defendant but to
circumstances beyond his control and so he should be exempt from liability.

Wherefore, the decision appealed from is reversed, without pronouncement as to costs.

Notes: Just in case he asks about the pick-up truck and the arrangement of the passenger
seats

The pick-up has a front seat where the driver and two passengers can be accommodated,
and the back has a steel flooring enclosed with a steel walling of 16 to 17 inches tall on the
sides and with a 19 inches tall walling at the back. Before leaving Parang, the sitting
arrangement was as follows: defendant was at the wheel and seated with him in the front
seat were Mrs. Valencia and Nicanor Quinain; on the back of the pick-up were two
improvised benches placed on each side and seated on the right bench were Ricardo
Alojipan and Antonio Lagahit, and on the left one Bernardo and Pastor Geronimo. A person
by the name of Leoning was seated on a box located on the left side while in the middle Lara
sat on a bag.
24. Sabena Belgian World Airlines vs CA

G.R. No. 104685

March 14, 1996
BABS
Defenses of a common carrier in the carriage of goods (1734 NCC)
FACTS:
● Plaintiff was a passenger on board flight SN 284 of defendant airline originating from
Casablanca to Brussels, Belgium on her way back to Manila
● Plaintiff checked in her luggage which contained her valuables, namely: jewelries
valued at $2,350.00; clothes $1,500.00; shoes/bag $150; accessories $75; luggage
itself $10.00; or a total of $4,265.00.
● She stayed overnight in Brussels and her luggage was left on board Flight SN 284.
● "Plaintiff arrived at Manila International Airport on September 2, 1987 and
immediately submitted her Tag No. 71423 to facilitate the release of her luggage but
the luggage was missing.
● She promptly accomplished and filed a Property Irregularity Report.
● "On September 15, 1987, she filed her formal complaint with the office of Ferge
Massed, defendant's Local Manager.
● On September 30, 1987, she was furnished copies of defendant's telexes with an
information that the Brussel's Office of defendant found the luggage and that they
have broken the locks for identification.
● Plaintiff was assured by the defendant that the luggage will be shipped to Manila on
October 27, 1987. But unfortunately plaintiff was informed that the luggage was lost
for the second time.
● "Plaintiff demanded from the defendant the money value of the luggage and its
contents amounting to $4,265.00 or its exchange value, but defendant refused to
settle the claim.
RTC: ordered the petitioner Airlines to pay private respondent.
CA: affirmed the decision in toto.
PETITIONER: Petitioner airline company, in contending that the alleged negligence of
private respondent should be considered the primary cause for the loss of her luggage,
avers that, despite her awareness that the flight ticket had been confirmed only for
Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be
confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that
private respondent, being a seasoned international traveler, must have likewise been familiar
with the standard provisions contained in her flight ticket that items of value are required to
be hand-carried by the passenger pursuant to Section 5(c), Article IX, of the General
Conditions of Carriage, signed at Warsaw, Poland as amended by the Hague Protocol.
ISSUE: WHETHER petitioner should be held liable against private respondent.
RULING: Yes.
PRESUMPTION OF FAULT ARISES UPON BREACH OR NON-FULFILLMENT OF THE
PRESTATION.
When the source of an obligation is derived from a contract, the mere breach or
non-fulfillment of the prestation gives rise to the presumption of fault on the part of the
obligor.

COMMON CARRIERS; BOUND TO OBSERVE EXTRAORDINARY CARE IN THE

VIGILANCE OVER THE GOODS
This rule is no different in the case of common carriers in the carriage of goods which,
indeed are bound to observe not just the due diligence of a good father of a family but that of
"extraordinary" care in the vigilance over the goods, and this is pursuant to article 1733 of
the NCC (see notes no. 1 for art. 1733)
"The only exceptions to the foregoing extraordinary responsibility of the common carrier is
when the loss, destruction, or deterioration of the goods is due to any of the following causes
provided under art. 1734 (see notes #2).
PETITIONER’S DEFENSE: THE TORT DOCTRINE OF PROXIMATE CAUSE
Petitioner is not thus entirely off track when it has likewise raised in its defense the tort
doctrine of proximate cause. Unfortunately for petitioner, however, the doctrine cannot, in
this particular instance, support its case. Proximate cause is that which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces injury and
without which the result would not have occurred.
In other words, the final event in the chain immediately affecting the injury as a natural and
probable result of the cause which first acted under such circumstances that the person
responsible for the first event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an injury to some
person might probably result therefrom."

COMMON CARRIERS; LOSS OF PASSENGER'S BAGGAGE NOT ONLY ONCE BUT

TWICE CONSTITUTES GROSS NEGLIGENCE
Here, it remained undisputed that private respondent's luggage was lost while it was in the
custody of petitioner. It was supposed to arrive on the same flight that private respondent
took in returning to Manila on 02 September 1987. When she discovered that the luggage
was missing, she promptly accomplished and filed a Property Irregularity Report. She
followed up her claim on 14 September 1987, and filed, on the following day, a formal
letter-complaint with petitioner. She felt relieved when, on 23 October 1987, she was advised
that her luggage had finally been found, with its contents intact when examined, and that she
could expect it to arrive on 27 October 1987. She then waited anxiously only to be told later
that her luggage had been lost for the second time.
Hence, the lower courts did not err in finding petitioner ultimately guilty of "gross negligence"
in the handling of private respondent's luggage.
DISPOSITIVE
WHEREFORE, the decision appealed from is AFFIRMED. Costs against petitioner.

_________
NOTES:
1. Art. 1733 of the [Civil] Code provides that from the very nature of their business and
by reason of public policy, common carriers are bound to observe extraordinary
diligence in the vigilance over the goods transported by them.
2. Art. 1374:
"(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.'
25. Honrion Lasam, et. al. vs Frank Smith, Jr. | G.R. No. 19495 | February 2, 1924
Assigned: Bonifacio

Topic: Caso fortuito defined; characteristics, exempting circumstance

FACTS:
1. Defendant was from San Fernando, La Union and engaged in the business of
carrying passengers for hire from one point to another in the Province of La Union
and the surrounding provinces.
2. On February 27, 1918, he undertook to convey plaintiffs from San Fernando to
Currimao, Ilocos Norte, in a Ford automobile.
3. On leaving SF, it was operated by a licensed chauffeur. At San Juan, the chauffeur
allowed his assistant to drive the car, who had a driver’s license needed more
experience in driving.
4. After the crossing of the Abra River in Tagudin, according to witnesses, defects
developed in the steering gear so as to make accurate steering impossible, and after
zigzagging for a distance of about half a kilometer, the car left the road and went to a
steep embankment. The automobile was overturned and the plaintiffs pinned down
under it.
5. Plaintiff Mr. Lasam had contusions and a dislocated rib, but his wife, Joaquina
Sanchez, received serious injuries - compound fracture of one of the bones in her left
wrist & nervous breakdown.
6. The complaint alleges, among other things, that the accident was due to defects in
the automobile, and incompetence and negligence of the chaffeur.
7. Defendant maintains that there was no defect in the steering gear before/after the
accident and says that the zigzagging was due to the driver's excessive rate of
speed.
8. The trial court held that the cause of action of the plaintiffs rests on the defendant’s
breach of contract and carriage and that the breach was not due to fortuitous events.
The trial court rendered a judgment in favor of the plaintiffs for the sum of P1,254.10.
9. Both the plaintiffs and the defendant appeal. The former maintains that the damages
awarded are insufficient while the latter denies all liability for any damages.

ISSUE:
1. Whether defendant is liable to the injuries caused to the plaintiffs (YES)
2. Whether the breach of contract was due to a fortuitous event (NO)
3. Whether the plaintiffs were entitled to P7,832.80 instead of P1,254.10 (NO)

RULING:
1. YES, the source of the defendant’s legal liability is the contract of carriage; the by
entering into that contract he bound himself to carry the plaintiffs safely and securely
to their destination; and that having failed to do so he is liable in damages unless he
shows that the failure to fulfill his obligation was due to causes mentioned in article
1105 of the Civil Code, which reads as follows: "No one shall be liable for events
which could not be foreseen or which, even if foreseen, were inevitable, with the
exception of the cases in which the law expressly provides otherwise and those in
which the obligation itself imposes such liability."

2. NO. These authorities (as explained below) agree that some extraordinary
circumstance independent of the will of the obligor, or of his employees, is an
essential element of a caso fortuito. Turning to the present case, it is at once
apparent that the elements are lacking. It is not suggested that the accident in
question was due to an act of God or to adverse road conditions which could not
have been foreseen. As far as the record shows, the accident was caused either by
 defects in the automobile or else through the negligence of its driver. That is not a
caso fortuito.

The Spanish authorities regard the language employed as an effort to define the term
caso fortuito and hold that the two expressions are synonymous - “events which
cannot be foreseen and which having been foreseen, are inevitable.”

The antecedent to article 1105 is found in Law 11, Title 33, Partida 7, which defines
caso fortuito as an event that takes place by accident and could not have been
foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck,
violence of robbers.

Escriche defines caso fortuito as "an unexpected event such as floods, torrents,
shipwrecks, conflagrations, lightning, compulsion, insurrections, destruction of
buildings by unforeseen accidents and other occurrences of a similar nature."

Enciclopedia Juridica Española says: " In a legal sense and, consequently, also in
relation to contracts, a caso fortuito presents the following essential characteristics:
(1) The cause of the unforeseen and unexpected occurrence, or of the failure of the
debtor to comply with his obligation, must be independent of the human will.
(2) It must be impossible to foresee the event which constitutes the caso fortuito, or if
it can be foreseen, it must be impossible to avoid.
(3) The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner. And
(4) the obligor (debtor) must be free from any participation in the aggravation of the
injury resulting to the creditor."

3. There can be no doubt that the expenses incurred by the plaintiffs as a result of the
accident greatly exceeded the amount of the damages awarded. But bearing in mind
that in determining the extent of the liability for losses or damages resulting from
negligence in the fulfillment of a contractual obligation, the courts have " a
discretionary power to moderate the liability according to the circumstances" we do
not think that the evidence is such as to justify us in interfering with the discretion of
the court below in this respect.
27. Annie Tan vs Great Harvest | G.R. No. 220400 | March 20, 2019.

Topic: Extraordinary Diligence; in contrast with the case of #16 De Guzman

Gabunar
FACTS:
· Great Harvest (respondent) hired Tan (petitioner) to transport 430 bags of soya beans
worth P230,000.00 from Tacoma in Port Area, Manila to Selecta Feeds in Camarin,
Novaliches, Quezon City.
· The bags of soya beans were loaded into Tan’s hauling truck. Her employee,
Cabugatan, then delivered the goods to Selecta Feeds.
· At Selecta Feeds, however, the shipment was rejected. Upon learning of the rejection,
Great Harvest instructed Cabugatan to deliver and unload the soya beans at its
warehouse in Malabon. Yet, the truck and its shipment never reached Great Harvest’s
warehouse.
· Great Harvest asked Tan about the missing delivery. At first, Tan assured Great
Harvest that she would verify the whereabouts of its shipment, but after a series of
follow-ups, she eventually admitted that she could not locate both her truck and Great
Harvest’s goods.
· She reported her missing truck to the Western Police District Anti-Carnapping Unit and
the National Bureau of Investigation. Then, her missing truck had been found in Cavite.
However, the truck had been cannibalized and had no cargo in it.
· Tan filed a Complaint against Cabugatan and Rody Karamihan (Karamihan), whom
she accused of conspiring with each other to steal the shipment entrusted to her. An
Information for theft was filed against Karamihan, while Cabugatan was charged with
qualified theft.
· Great Harvest, through counsel, sent Tan a several letters demanding full payment for
the missing bags of soya beans. But, to no avail. Great Harvest filed a Complaint for sum
of money against Tan.
TAN’s Contention:
1. Contends that she is not liable for the loss of the soya beans and points out that
the agreement with respondent Great Harvest was to deliver them to Selecta Feeds,
an obligation with which she complied. She claims that what happened after that was
beyond her control. When Selecta Feeds rejected the soya beans and respondent
directed Cabugatan to deliver the goods to its warehouse, respondent superseded
her previous instruction to Cabugatan to return the goods to Tacoma, the loading
point. Hence, she was no longer required to exercise the extraordinary diligence
demanded of her as a common carrier.
2. Opines that she is not liable for the value of the lost soya beans since the truck
hijacking was a fortuitous event and because “the carrier is not an insurer against all
risks of travel.
(SKIP NALA RULING OF RTC AND CA)
RTC: granted Great Harvest’s Complaint for sum of money. It found that Tan entered
into a verbal contract of hauling with Great Harvest, and held her responsible for her
driver’s failure to deliver the soya beans to Great Harvest.
CA:
 1. found that the parties’ standard business practice when the recipient would
reject the cargo was to deliver it to Great Harvest’s warehouse. Thus, contrary
to Tan’s claim, there was no deviation from the original destination.
2. also held that the cargo loss was due to Tan’s failure to exercise the
extraordinary level of diligence required of her as a common carrier, as she
did not provide security for the cargo or take out insurance on it
ISSUE:
1. Whether the hijacking incident is a fortuitous event [No]
2. Whether Tan is Liable [Yes]
RULING:
1. Nothing in the records shows that any of the exceptions mentioned in Article 1734 caused
the loss of the soya beans. Petitioner failed to deliver the soya beans to respondent because
her driver absconded with them.

DE GUZMAN vs CA Tan vs Great Harvest

the common carrier was absolved of liability the loss of the soya beans here was not
because the goods were stolen by robbers attended by grave or irresistible threat,
who used “grave or irresistible threat, violence, or force.
violence[,] or force”to hijack the goods.

2. Tan is a common carrier obligated to exercise extraordinary diligence over the goods
entrusted to her. Her responsibility began from the time she received the soya beans from
respondent’s broker and would only cease after she has delivered them to the consignee or
any person with the right to receive them.
Petitioner’s failure to exercise extraordinary diligence when she neglected vetting her driver
or providing security for the cargo and failing to take out insurance on the shipment’s value.
Besides, as the records would show, appellant did not observe extra-ordinary (sic) diligence
in the conduct of her business as a common carrier.
In breach of their agreement, appellant did not provide security while the goods were in
transit and she also did not pay for the insurance coverage of said goods. These measures
could have prevented the hi-jacking (sic) or could have ensured the payment of the damages
sustained by the appellee.
WHEREFORE, the Petition is DENIED. Petitioner Annie Tan is directed to pay respondent
Great Harvest Enterprises, Inc. the sum of Two Hundred Thirty Thousand Pesos
(P230,000.00) with interest at the rate of twelve percent (12%) per annum from June 2, 1994
until June 30, 2013, and at the rate of six percent (6%) per annum from July 1, 2013 until its
full satisfaction. She is further directed to pay Fifty Thousand Pesos (P50,000.00) as
attorney’s fees and the costs of suit.
28. FORTUNE EXPRESS, INC., v. CA, PAULIE U.CAORONG, and minor children
YASSER KING CAORONG, ROSE HEINNI and PRINCE ALEXANDER, all surnamed
CAORONG, and represented by their mother PAULIE U. CAORONG, GR NO 119756,
MARCH 18, 1999

Topic: Defenses in Carriage of Passenger caused by third persons

Facts:

1) On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in

Kauswagan, Lanao del Norte, resulting in the death of several passengers of the jeepney,
including two Maranaos. Crisanto Generalao, a volunteer field agent of the Constabulary
Regional Security Unit No. X found that the owner of the jeepney was a Maranao residing in
Delabayan, Lanao del Norte and that certain Maranaos were planning to take revenge on
the petitioner by burning some of its buses.

2) Three days thereafter, another one of the petitioner's bus wherein Atty. Caorong was
boarded and seized by the Maranaos. They shot the driver, and they started pouring
gasoline on the bus. However, Atty. Caorong returned to the bus to retrieve something from
the overhead rack. At that time, one of the armed men was pouring gasoline on the head of
the driver. Cabatuan, who had meantime regained consciousness, heard Atty. Caorong
pleading with the armed men to spare the driver as he was innocent of any wrongdoing and
was only trying to make a living.

3) Atty. Caorong was hit. Then the bus was set on fire, and he was rushed to the hospital but
he died.

Issue: Whether or not the petitioner should be held liable in view of the Maranao’s acts.
(YES)

RTC: Dismissed the complaint.

Providing buses with security guards due to known information of revenge -- Not
required

Private respondent’s position is that the defendant should have provided its buses with
security guards. Does the law require common carriers to install security guards in its buses
for the protection and safety of its passengers? Is the failure to post guards on omission of
the duty to "exercise the diligence of a good father of the family" which could have prevented
the killing of Atty. Caorong? To our mind, the diligence demanded by law does not include
the posting of security guard in buses. It is an obligation that properly belongs to the State.
Besides, will the presence of one or two security guards suffice to deter a determined
assault of the lawless and thus prevent the injury complained of? Maybe so, but again,
perhaps not. In other words, the presence of a security guard is not a guarantee that the
killing of Atty. Caorong would have been definitely avoided.

Accordingly, the failure of defendant to accord faith and credit to the report of Mr. Generalao
(volunteer field agent of the Constabulary Regional Security Unit No. X – who determined
the planned revenge of the Maranaos against the petitioner) and the fact that it did not
provide security to its buses cannot, in the light of the circumstances, be characterized as
negligence.
Finally, the evidence clearly shows that the assailants did not have the least intention of the
harming any of the passengers.

CA: Reversed the RTC’s Decision.

Frisking (Pangapkap in laymans term) of passengers enough to exercise the required

diligence

Appellee's argument that there is no law requiring it to provide guards on its buses and that
the safety of citizens is the duty of the government, is not well taken. To be sure, appellee is
not expected to assign security guards on all its buses; if at all, it has the duty to post guards
only on its buses plying predominantly Maranaos areas. As discussed in the next preceding
paragraph, least appellee could have done in response to the report was to adopt a system
of verification such as the frisking of passengers boarding at its buses. Nothing, and no
repeat, nothing at all, was done by defendant-appellee to protect its innocent passengers
from the danger arising from the "Maranao threats."

Ruling:

It is evident herein that the petitioner did not exercise extraordinary diligence. Despite
warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning
to take revenge on the petitioner by burning some of its buses and the assurance of
petitioner’s operation manager, Diosdado Bravo, that the necessary precautions would be
taken, petitioner did nothing to protect the safety of its passengers.

Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered
by a passenger on account of wilfull acts of other passengers, if the employees of the
common carrier could have prevented the act through the exercise of the diligence of a good
father of a family. In the present case, it is clear that because of the negligence of
petitioner's employees, the seizure of the bus by Mananggolo (Maranao) and his men
was made possible.

Such is not a fortuitous event where: (1) the cause of the breach of the obligation must be
independent of the human will; (2) the event must be either unforeseeable or unavoidable;
(3) the occurrence must be such as to render it impossible for the debtor to fulfill the
obligation in a normal manner; and (4) the obligor must be free of participation in, or
aggravation of, the injury to the creditor. However, since they already had the report of the
PC that there were plans to burn the buses, the said even cannot be unforeseen.

From the foregoing, it is evident that petitioner's employees failed to prevent the attack on
one of petitioner's buses because they did not exercise the diligence of a good father of a
family. Hence, the petitioner should be held liable for the death of Atty. Caorong.

Notes: might be asked by atty

Deceased not Guilty of Contributory Negligence

The petitioner contends that Atty. Caorong was guilty of contributory negligence in returning
to the bus to retrieve something. But Atty. Caorong did not act recklessly. The armed men
actually allowed Atty. Caorong to retrieve something from the bus. What apparently angered
them was his attempt to help the driver of the bus by pleading for his life. He was playing the
role of the good Samaritan. Certainly, this act cannot considered an act of negligence, let
alone recklessness.