1. GANZON vs.

CA

Facts:
In 1965, PR Tumambing contracted the services of P Ganzon to haul 305 tons of
scrap iron from Mariveles, Bataan on board the latters lighter.

Pursuant to their agreement, PR delivered the scrap iron to the captain for loading.

When half of the scrap iron was loaded, Mayor Advincula demanded P5,000.00 from
PR which the latter refused to give, prompting the Mayor to draw his gun and shoot
at him.
The gunshot was not fatal but he had to be taken to a hospital.

Thereafter, the loading of the scrap iron was resumed. The Acting Mayor,
accompanied by three policemen, ordered the captain and his crew to dump the
scrap iron, with the rest brought to Nassco Compound.

A receipt was issued stating that the Municipality of Mariveles had taken custody of
the scrap iron.

Issue:

Whether or not petitioner is guilty of breach of contract of transportation and in

imposing a liability against him commencing from the time the scrap iron
was placed in his custody and control have no basis in fact and in law.

Held:

Yes, P is guilty of breach of the contract of transportation. 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- carriers extraordinary responsibility for the loss,

destruction or deterioration of the goods commenced. Pursuant to Article 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 headed 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.

The Court ruled that the petition is DENIED.

COMPANIA MARITIMA vs. INSURANCE CO. OF NORTH

AMERICA

Facts:
Macleod and Co. contracted, first by telephone and later confirmed by a formal
written booking issued by Macleod and Co. the services of the P Campania Maritime
for the shipment of bales of hemp from Davao to Manila.
Two lighters of the P loaded said cargofrom Macleods wharf at Davao awaiting the
arrival of another vessel of the petitioner for loading.
One of the lighters sunk which Macleod suffered damage P54, 018.55.

P denied the liability on the grounds that there was no bill of lading issued thereby
resulting to the non-existence of carriage contract, that the sinking was due to a
fortuitous event and that the respondent has no personality.

Issue:
Whether or not there is a perfected contract of carriage.

Held:
There was a complete contract of carriage the consummation of which has already
begun when the shipper delivered the cargo to the carrier and the latter took
possession of the same by placing it on a lighter manned by its authorized
employees, under which Macleod became entitled to the privilege secured to him by
law.
The responsibility of the carrier commenced on the actual delivery to, or receipt by,
the carrier or its authorized agent, of the goods. The barges or lighters were merely
employed as the first step of the voyage.

As to the issuance of a bill of lading, although Art. 350 of the Code of Commerce
provides that the shipper as well as the carrier may mutually demand that a bill of
lading be issued, it is not indispensable.

As regards to the form of the contract of carriage, it can be said that provided there
is a meeting of the minds and from such meeting arise rights and obligations, there
should be no limitations as to form.

A bill of lading is not essential to the contract, although it may become obligatory by
reason of the regulations or as a condition imposed in the contract by the agreement
of the parties themselves.

The Code of Commerce does not demand as a necessary requisite in the contract of
transportation, the delivery of a bill of lading to the shipper, but gives the
right to both the shipper and carrier to mutually demand of each other the delivery
of the said bill. Judgment against petitioner is affirmed.
BRITISH AIRWAYS vs. COURT OF APPEALS

Facts:

Mahtani obtained the services of a certain Mr. Gemar to prepare his travel plan to
Bombay, India.
Mr. Gemar purchased a ticket from British Airways, however since it had no ticket
flights from Manila to Bombay, Mahtani had to take a connecting flight to Bombay.

Prior to his departure, Mahtani checked in the PAL counter in Manila his two pieces of
luggage containing his clothing and personal effects, confident that upon reaching
Hong
Kong, the same would be transferred to the BA flight bound for Bombay.
Unfortunately, when Mahtani arrived in Bombay, he discovered that his luggage was
missing and that upon inquiry from the BA representatives, he was told that the
same might have been diverted to London.
After plaintiff waited for his luggage for one week, BA finally advised him to file a
claim.

Mahtani filed his complaint for damages. BA filed a third-party complaint against
PAL alleging that the reason for the non-transfer of the luggage was due to the
latter's late arrival in Hongkong, thus leaving hardly any time for the bound for
Bombay.

RTC rendered its decision in favor of Mahtani, which CA affirmed, hence the instant
petition.
BA alleged that there should have been no separate award for the luggage and the
contents thereof since Mahtani failed to declare a separate higher valuation for the
luggage and therefore, its liability is limited, at most, only to the amount stated in
the ticket.

Issue:
Whether or not BA is liable for the compensatory damages.

Held:

Yes. The contract of transportation was exclusively between Mahtani and BA.
The latter merely endorsing the Manila to Hong Kong log of the formers journey to
PAL, as its subcontractor or agent.
Conditions of contacts was one of continuous air transportation from Manila to
Bombay.

The Court of Appeals should have been cognizant of the well-settled rule that an
agent is also responsible for any negligence in the performance of its function and is
liable for damages which the principal may suffer by reason of its negligent act.

The third-party complaint was therefore reinstated. Since the instant petition was
based on breach of contract of carriage,
Mahtani can only sue BA and not PAL, since the latter was not a party in the contract.

The contention of BA with respect to limited liability was overruled although it is

recognized in the Philippines, stating that BA had waived the defense of limited
liability when it allowed Mahtani to testify as to the actual damages he incurred due
to the misplacement of his luggage, without any objection.
 PAN AMERICAN WORLD AIRWAYS, INC. vs. RAPADAS

Facts:
PR held Passenger Ticket and Baggage Claim Check for petitioner's Flight with the
route from Guam to Manila.
While standing in line to board the flight at the Guam airport, Rapadas was ordered
by
P's handcarry control agent to check-in his Samsonite attache case.
Rapadas protested pointing to the fact that other co-passengers were permitted to
handcarry bulkier baggages.

He stepped out of the line only to go back again at the end of it to try if he can get
through without having to register his attache case.
However, the same man in charge of handcarry control did not fail to notice him and
ordered him again to register his baggage.

For fear that he would miss the plane if he insisted and argued on personally taking
the
valise with him, he acceded to checking it in.
He then gave his attache case to his brother who happened to be around and who
checked it in for him, but without declaring its contents or the value of its contents.

Upon arriving in Manila Rapadas claimed and was given all his checked-in baggages
except the attache case.
He sent his son, Jorge Rapadas to request for the search of the missing luggage.
The petitioner exerted efforts to locate the luggage through the Pan American World
Airways- Manila International Airport (PAN AM-MIA) Baggage
Service.
Rapadas received a letter from the petitioner's counsel offering to settle the claim for
the sum of $160.00 representing the petitioner's alleged limit of liability for loss or
damage to a passenger's personal property under the contract of carriage between
Rapadas and PAN AM.
Refusing to accept this kind of settlement, Rapadas filed the instant action for
damages. The lower court ruled in favor of Rapadas after finding no stipulation

QUISUMBING, SR. vs. COURT OF APPEALS

Facts:

Norberto Quisumbing Sr. and Gunther Leoffler were among the passengers of PALs
plane from Mactan City Cebu to Manila.
There was an exchange of gunshot between a Senior NBI agent Villarin and the four
armed hijackers one of which was Zaldy who is a suspect in the killing of Judge
Valdez.

Zaldy then announced to the passengers and the pilots that it was a hijacked and
ordered the pilot not to send any SOS. The robbers divested the passengers of their
belongings including Quisumbing who was divested with his jewelries and cash
amounting to P18,650.00 and Leoffler with wallet and cash amounting to P1,700.
Quisumbing suffered a shock for a gun had been pointed at him by one of the hold
uppers.
The four hijackers succeeded in their escape upon arrival at Manila.

Contending that the "aforesaid loss is a result of breach of PAL's contractual

obligation to carry them and their belongings and effects to their Manila destination
without loss or damage, and constitutes a serious dereliction of PAL's legal duty to
exercise extraordinary diligence in the vigilance over the same, Quisumbing and
Loeffler brought suit against PAL to recover the value of the property lost by them to
the robbers as well as moral and exemplary damages.

The CFI dismissed the complaint and the CA affirmed the CFIs decision.
Hence the instant petition. The plaintiffs declared that their suit was instituted "...
pursuant to Civil Code articles 1754, 998, 2000 and 2001 and on the ground that in
relation to said Civil Code article 2001 the complained-of act of the armed robbers is
not a force majeure, as the 'use of arms' or 'irresistible force' was not taken
advantage of by said armed robbers in gaining entrance to defendant's ill-fated
plane in questions.
And, with respect to said Civil Code article 1998, it is not essential that the lost
effects and belongings of plaintiffs were actually delivered to defendant's plane
personnel or that the latter were
notified thereof.

Issue:
1) Whether or not hijacking-robbery was force
majeure.
2) Whether or not PAL was negligent to
overcome the hi-jacking-robbery.
Held: 1) Yes. The Court ruled that under the facts, "the highjacking-robbery was force
majeure," observing that: hijackers do not board an airplane through a blatant
display of firepower and violent fury.

Firearms, handgrenades, dynamite, and explosives are introduced into the airplane
surreptitiously and with the utmost cunning and stealth, although there is an
occasional use of innocent hostages who will be coldly murdered unless a plane is
given to the hijackers' complete disposal.

2) No, PAL was not negligent so as to overcome the force majeure nature of the hi-
jacking. Hijackers do not board an airplane through a blatant display of firepower and
violent fury.

Firearms and grenades are brought to the plane surreptitiously. PAL could not have
been faulted for want of diligence, particularly for failing to take positive measures to
implement Civil Aeronautics Administration regulations prohibiting civilians from
carrying firearms on board the plane.

The use of the most sophisticated electronic detection devices may have minimized
hijacking but still ineffective against truly determining hijackers.

The petition is denied and appealed decision of CA is affirmed.

Servando v. Philippine Steam Navigation Co.

117 SCRA 832

Facts:
Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176,
for carriage from Manila to Pulupandan, Negros Occidental cargoes of cavans of rice
and cartons of colored paper which were evidenced by bills of lading.

Upon arrival of the vessel at Pulupandan the cargoes were discharged, complete and
in good
order, unto the warehouse of the Bureau of Customs. At about 2:00 in the afternoon
of the same day, said warehouse was razed by a fire of unknown origin, destroying
appellees' cargoes.

Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of
rice Appellees' claims for the value of said goods were rejected by the appellant.

Issue:
Whether or not carrier is liable for the loss of the cargo.

Held:

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

Article 1736 of the Civil Code 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. "

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 carrier. Nor shall carrier be
responsible for
loss or damage caused by force majeure, dangers or accidents of the sea or other
waters; war;
public enemies; . . . fire . ...

The Court sustains the validity of the above stipulation. There is nothing therein that
is contrary to
law, morals or public policy. Therefore, the carrier is no longer liable for the loss of
the goods.
 Ganzon v. Court of Appeals

161 SCRA 646

Facts:
Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron.
The contract
was for the petitioner to transport the scrap iron to Manila from Bataan. Tumambing
delivered the scrap iron to Niza, captain of the lighter LCT Batman, to board it on
the same.
The crew of the Batman started to load the iron, and when they were about halfway
through, Mayor Advincula arrived and demanded P5,000 from Tumambing.

The latter resisted and a heated argument started. Mayor Advincula drew his gun
and fired at Tumambing. He was brought to the hospital for treatment, lucky for him
the wound was
not fatal.A few days after this incident, the loading of the scrap metal was resumed.
However, the acting Mayor this time went to the port where the Batman was docked.
He was accompanied by 3 policemen and he ordered Captain Niza to dump the scrap
iron where the lighter was docked.

What was left or the iron was confiscated by the Acting Mayor and brought to
NASSCO. A receipt was issued showing that the municipality had taken custody of
the scraps or iron.

Tumambing filed a case in order to recover damages for the loss that he sustained.
The lower
court rendered a decision in favor of Ganzon. However, on appeal the Court of
Appeals reversed the decision ordering Ganzon to pay Tumambing P5,895 as actual
damages, P5,000 for exemplary damages and attorneys fees as well. Hence this
petition by Ganzon.

Issue:
Whether or not Ganzon is liable for the loss that Tumambing sustained.

Held:

The Court held that Ganzon is liable for the loss of Tumambing. The defense that the
scraps of
iron were not unconditionally placed in his custody and control is untenable.
Petitioner herein admits that the scraps of iron were delivered to Captain Niza by
Tumambing in order to load the same on the lighter Batman.
 The employees of Ganzon received the scraps of iron on his behalf, therefore the
scraps of
metal were placed in his custody and control. Upon the receipt of the scraps by the
carrier in order transport the same, the contract of carriage was perfected. Upon
perfection of the contract, the exercise of extraordinary diligence in caring for the
goods shall also commence to begin.

Article 1738 of the NCC provides that the exercise of extraordinary diligence shall
cease only
upon delivery to the consignee or to the person who has the right to receive the
same. In this case, there was no delivery made to the consignee, therefore the
carrier should have exercised extraordinary diligence in taking care of the scraps of
iron. It is irrelevant that the scraps of iron were only partially loaded on the lighter.

The scraps of iron were already under the custody and control of the carrier,
therefore he shall be liable for its loss.

Compania Maritima v. Insurance Co. of North America

12 SCRA 213

Facts:

Macleod & Co., contracted, first by telephone and later confirmed by a formal written
booking
issued by Macleod & Co., the services of the petitioner Comapania Maritima for the
shipment of bales of lamp from Davao to Manila. Two lighters of the petitioners
loaded the said cargo from Macleods wharf at Davao awaiting the arrival of another
vessel of the petitioner for reloading. One of the lighters sunk of which Macleod
suffered a total of P64,018.
Respondent insurers of said cargo paid Macleod, and being subrogated to Macleods
right, filed a claim to collect from the petitioner the amount it paid to Macleod.

Petitioner denied liability on the grounds that there was no bill of lading issued
thereby resulting to be non-existence of the contract; that the sinking was due to a
fortuitous event and the respondent has no personality.

Issue:
Whether or not there was a contract and whether or not there was a fortuitous
event.

Held:
There was complete contract of carriage the consummation of which has already
begun when the shipper delivered the cargo to the carrier and the latter took
possession of the same by placing it on a lighter manned by its two authorized
employers under which Macleod become entitled to the privilege of law.
The responsibility of the carrier commenced on the actual delivery and receipt by,
the carrier or its authorized agent of the goods. The barges or lighters were merely
employed as the first step of the voyage.
 As to the issuance of the bill of lading, it is not required or essential to the contract,
although it
may become obligatory by reason of regulations or as a condition injured in the
contract by the
agreement of the parties themselves.

British Airways v. Court of Appeals

G.R. No. 121824

Facts:
On April 6, 1989, Mahtani decided to visit his relative in Bombay, India. In
anticipation of his visit,
he obtained the services of a certain Mr. Gemar to prepare his travel plan. Since
british Airways had no ticket flights from Manila to Bombay, Maktani had to take a
connecting flight to Bombay on board British Airways.

Prior to his departure, Maktani checked in the PAL counter in Manila his two pieces of
luggage
containing his clothing and personal effects, confident that upon reaching Hong
Kong, the same would be transferred to the BA flight bound for Bombay

Unfortunately, when Maktani arrived in Bombay, he discovered that his luggage was
missing and that upon inquiry from the BA representatives, he was told that the
same might have been diverted to London.

After plaintiff waiting for his luggage for one week, BA finally advised him to file a
claim accomplishing the property.

Issue:
Whether or not defendant BA is liable for compulsory damages and attorneys fee, as
well as the
dismissal of its third party complaint against PAL
Held:

The contract of transportation was exclusively between Maktani and BA. The latter
merely
endorsing the Manila to Hong Kong log of the formers journey to PAL, as its
subcontractor or agent.

Conditions of contacts was one of continuous air transportation from Manila to

Bombay. The Court of Appeals should have been cognizant of the well-settled rule
that an agent is also responsible for any negligence in the performance of its
function and is liable for damages which the principal may suffer by reason of its
negligent act.

Since the instant petition was based on breach of contract of carriage, Maktani can
only sue BA and not PAL, since the latter was not a party in the contract.

Quisumbing Sr. vs. Court of Appeals

189 SCRA 605

Facts:
Norberto Quisumbing and Gunther Loeffler were passengers of PALs Fokker
Friendship plane
flying from Macatan City bound to Manila. A senior NBI agent, Florencio O. Villarin, a
senior NBI agent and also one of the passengers of the said plane, saw a certain
Zaldy boarded on the same flight.

Zaldy was a suspect for the killing of a Judge Valdez. Villarin sent a note to the
Captain of the plane requesting that they contact the NBI director to send agents on
their point of destination because of the presence of Zaldy.

However, Captain Luis Bonnevie came out of the cockpit and informed Villarin the he
could not send the message because it would be heard by all ground aircraft
stations. Villarin advised the Captain of the danger having Zaldy and his companions
onboard.
 Consequently, gunshots ensued between Zaldys group and Villarin. Zaldy
announced a hold-up and obtained the belongings of the passengers. Zaldy and his
companions successfully escaped upon landing in Manila. Petitioners now demand
from PAL indemnity for their lost belongings.

The petitioners contended that PAL is liable for breach of contract of carriage, for not
transporting them and their belongings at the point of destination without loss or
damage. As a defense, PAL interposed that the incident was force majeure.

Issue:
Whether PAL can be held liable for the loss of petitioners belongings due to the hi-
jacking?

Held:

The Supreme Court held that PAL cannot be held liable for the loss of property.
Where the
defendants has faithfully complied with the requirements of government agencies
and adhered to the established procedures and precautions of the airline industry
and particular time, its failure to take certain steps that a passenger in hindsight
believes should have been done is not the negligence or misconduct which mingles
with force majeure as an active and cooperative cause.

It was proven that PAL cannot be faulted with negligence. Hence, there was no
breach of contract of carriage because there was no clear evidence that PAL acted in
bad faith in their obligation to transport the passengers and their properties at the
point of destination.

The mandatory use of the most sophisticated electronic devices may have minimized
hijackings but all these have proved ineffective against truly determined highjackers.

Such incident which occurred was indeed force majeure.

Pan American World Airways vs. Rapadas

G.R. No. 60673

Facts:
Private respondent Jose Rapadas held passenger ticket and baggage claim check for
petitioners
flight No. 841 with the route from Guam to Manila.

While standing inline to board the flight at the Guam Airport, Rapadas was ordered
by petitioners hand carry control agent to check-in his samsonite attach case.
 Rapadas protested pointing to the fact that other co-pasengers were permitted to
hand carry
baggage.
He stepped out of the line only to go back again at the end of it to try of he can get
through without having to register his attach case.

However, the same man in charge of had carry control did not fail to notice him and
ordered him again to register his baggage. Upon arriving in Manila on the same day,
Rapadas claimed and was given all his checked in baggage except the attach case.

Issue:
Whether or not a passenger is bound by the terms of a passenger under the Warsaw
convention,
shall apply in case of loss, damage or destruction to a registered luggage of a
passenger
.
Held:

After a review of the various arguments of the appointing parties, the court found
sufficient basis
under the particular facts of the case for the availment of the liability limitations
under the Warsaw Convention.

There is no dispute and the courts below admit that there was such a notice
appearing on
page 2 of the airline ticket stating that the Warsaw Convention governs in case of
death or injury of passengers or of loss, damage or destructionto a passengers
luggage.

Art. 22(4) of the Warsaw Convention does not preclude an award of attorneys fees.
That provision states that the limits of liability prescribed in the instrument shall not
prevent the court from awarding in accordance with its own law, in addition, the
whole or part of the court costs and other expenses of litigation incurred by the
plaintiff.

Necesito v. Paras
104 PHIL 75
66

Facts:

A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus
Line. While
entering a wooden bridge, its front wheels swerved to the right, the driver lost
control and the truck fell into a breast-deep creek.

The mother drowned and the son sustained injuries. These cases involve action ex
contractu against the owner of PRBL filed by the son and heirs of the mother.

Lower Court dismissed the actions, holding that the accident was a fortuitous event.

Issue:
Whether or not the accident was considered a fortuitous event.

Held:

While the carrier is not an insurer of the safety of the passenger, it should
nevertheless be held to answer for the flaws of its equipment it such defects were
discoverable.

In this connection, the

manufacturer of the defective appliance is considered in law the agent of the carrier,
and the good repute of the manufacturer will not relieve the carrier from liability.

The rationale of the carriers liability is the fact that the passenger has no privity with
the manufacturer of the defective equipment; hence he has no remedy against him,
while the carrier has.

We find that the defect could be detected.

The periodical, usual inspection of the steering knuckle did not measure up to the
utmost diligence of a very cautious person as far as human care and foresight can
provide and therefore the knuckles failure can not be considered a fortuitous event
that exempts the carrier from responsibility.
Judgment REVERSED, PRBL to pay indemnity.
Gatchalian v. Delim
203 SCRA 126
Facts:
Reynalda Gatchalian boarded a minibus owned and operated by respondent herein.
She boarded the bus at La Union and it was bound for Bauang. While the bus was
running, one of the passengers noticed a snapping sound.

She was alarmed and asked the driver about it, he then replied that it was normal.
Subsequently, the minibus hit a flower pot on the side of the road which caused the
bus to turn
turtle and it fell into a ditch. Several passengers were injured in the accident.
Gatchalian suffered injuries on her leg, arm and face specifically the forehead.

The injured passengers were brought to the hospital for treatment of their injuries.
While the
passengers were confined in the hospital, Mrs. Delim, wife of the respondent visited
them and paid for the medical expenses of the victims. Before leaving the hospital,
she made the injured passengers sign a prepared affidavit which stated that they
were no longer interested in filing a complaint whether criminal or civil against the
driver and owner of the minibus. Gatchalian also signed the said document.

Subsequently, Gatchalian filed a complaint for damages even though she had
already signed the
affidavit prepared by Mrs. Delim. The lower court dismissed the complaint of
Gatchalian and held that there was a valid waiver of the right to file a complaint. The
Court of Appeals reversed the decision that there was a valid waiver but denied
petitioners claim for damages. Hence this petition.

Issue: Whether or not Gatchalian is entitled to the award of damages in lieu of the
injuries that she suffered.

Held:
The Court held that there was no valid waiver and that Gatchalian is entitled to the
award of
damages. A waiver, in order to be valid, must be couched in clear and equivocal
terms which leave no doubt as to the intention of relinquishing a right that is legally
his or hers. A waiver must not be contrary to law, morals, public policy or good
customs. The waiver in this case is not valid because the terms in the affidavit did
not clearly state the intention of giving up the right to file a complaint.

The words no longer interested do not manifestly show such intention. Also, such
waiver is against public policy because it would weaken the standard of utmost
diligence required of common carriers in bringing their passengers safely to their
destination.

It was established through evidence that the common carrier is guilty of negligence.
The reply of
the driver when asked about the snapping sound is sufficient proof to indicate that
such sound had been there for a while and that the common carrier did not look after
the roadworthiness of the vehicle to assure the safety of the passengers.
There was gross negligence on the part of the driver because there was wanton
disregard for the passengers safety when he did not stop the minibus after hearing
the snapping sound and the remark of one of the passengers.

Therefore the petitioner in this case is entitled to receive actual or compensatory

damages which
include 15,000 pesos for the cost of plastic surgery to remove the scar on
Gatchalians face.

Ortigas, Jr. v. Lufthansa

64 SCRA 610

Facts:

Petitioner is booked on a first class accommodation in defendants airline from Rome

to Manila.
The booking was confirmed by its airlines office.

The airline employee upong seeing his Filipino

nationality disallowed his boarding and the seat was given to a Belgian.

Petitioner has a heart ailment and is advised by physician to take only frst class
accommodations.

He was promised to be transferred to first class on all succeeding layovers from Cairo
to Hongkong to no avail. Damages was filed.
Trial court awarded Moral and Exemplary damages.

Issue:
Whether or not defendant is liable for damages.

Held:

Yes. Inattenton and lack of care on the carrier rsulting in the failure of the passenger
to be
accommodated in a class availed of and contracted amounts to bad faith and fraud.

Furthermore, the preference to a Belgian passenger is also a wanton disregard of his

right from discrimination.

The successive false representations of transferring him to first class is an act of

malice and bad faith. This entitles petitioner to moral damages in accordance to
Articlec 2220. Moral damages is increased to Php15,000 and Exemplary damages to
Php100,000.
SERVANDO vs. PHILIPPINE STEAM NAVIGATION
CO.
FACTS:
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. 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 carrier. Nor shall
carrier be responsible for loss or damage caused by force majeure, dangers or
accidents of the sea or other waters; war; public enemies; . . . fire . ...

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.

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

Before the fire, however, 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

SC RULING
We sustain the validity of the above stipulation; there is nothing therein that is
contrary to law, morals or public policy.

Besides, the agreement contained in the above quoted Clause 14 is a mere iteration
of the basic principle of law written in Article 1 1 7 4 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.

Thus, where fortuitous event or force majeure is the immediate and proximate cause
of the loss, the obligor is exempt from liability for non-performance.
The Partidas, 4 the antecedent of Article 1174 of the Civil Code, 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.'
In its dissertation of the phrase 'caso fortuito' the Enciclopedia Juridicada Espanola 5
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 must be free from any participation in the aggravation of the injury
resulting to the creditor."

In the case at bar, the burning of the customs warehouse was an extraordinary event
which happened independently of the will of the appellant.
The latter could not have foreseen the event.

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

The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs.
Ossorio 6, where this Court held the defendant liable for damages arising from a fire
caused by the negligence of the defendant's employees while loading cases of
gasoline and petroleon products. But unlike in the said case, there is
not a shred of proof in the present case that the cause of the fire that broke out in
the Custom's warehouse was in any way attributable to the negligence of the
appellant or its employees. Under the circumstances, the appellant is plainly not
responsible

DSR-SENATOR LINES AND C.F. SHARP ANDCOMPANY, INC. vs. FEDERAL

PHOENIX ASSURANCE CO., INC.
G.R. No. 135377. October 7, 2003

Facts:
Berde Plants, Inc. (Berde Plants) delivered 632 units of artificial trees to C.F. Sharp
and Company, Inc. (C.F. Sharp, for transportation and delivery to the
consignee. The cargo was loaded in M/S "Arabian Senator."

Federal Phoenix Assurance Company, Inc. (Federal Phoenix Assurance) insured the
cargo against all risks in the amount of P941,429.61. M/S "Arabian Senator" left the
Manila South Harbor for Saudi Arabia with the cargo on board.

When the vessel arrived in Khor Fakkan Port, the cargo was reloaded on
board DSR-Senator Lines' feeder vessel, bound for Port Dammam, Saudi Arabia.

However, while in transit, the vessel and all its cargo caught fire.
Consequently, Federal Phoenix Assurance paid Berde Plants P941,429.61
corresponding to the amount of insurance for the cargo. In turn Berde Plants
executed in its favor a "Subrogation Receipt"

Thus, Federal Phoenix Assurance filed a complaint for damages

against DSR-Senator Lines and C.F. Sharp

RTC rendered a Decision in favor of Federal Phoenix

Assurance
On appeal, the Court of Appeals rendered a Decision affirming the RTC Decision

Issue:
WON the liability was extinguished when the vessel
carrying the cargo was gutted by fire

Ruling:
Article 1734 of the Civil Code provides:
"Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following causes
only:
(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." Fire is not one of those enumerated
under the above provision which exempts a carrier from liability for loss or
destruction of the cargo.

Even if fire were to be considered a natural disaster

within the purview of Article 1734, it is required under

Article 1739 of the same Code that the natural disaster must have been the
proximate and only cause of the loss, and that the carrier has exercised due
diligence to prevent or minimize the loss before, during
or after the occurrence of the disaster.

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 1739.

In those cases where the presumption is applied, the common carrier must prove
that it exercised extraordinary diligence in order to overcome
the presumption.

Respondent Federal Phoenix Assurance raised the presumption of negligence

against petitioners.

However, they failed to overcome it by sufficient proof of extraordinary diligence.

Petition is DENIED