Estrelita Bascos v.

CA and Rodolfo Cipriano

G.R. No. 101089 April 7, 1993
Campos, Jr., J.
FACTS:

Cipriano, representing Cipriano Trading Enterprise (CIPTRADE) entered into a haulingco

ntract with Jibfair Shipping Agency Corporation whereby the former bound itself to haulthe latters
2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to thewarehouse
of Purefoods Corporation in Calamba, Laguna. To carry out its obligation,CIPTRADE
subcontracted with Bascos to transport and to deliver 400 sacks of soya beanmeal worth
P156,404.00 from the Manila Port Area to Calamba, Laguna at the rate of P50.00 per
metric ton. Petitioner failed to deliver the said cargo. As a consequence of thatfailure, Cipriano paid
Jibfair Shipping Agency the amount of the lost goods in accordancewith the contract which stated
that: CIPTRADE shall be held liable and answerable for anyl o s s i n b a g s d u e t o t h e f t ,
h i j a c k i n g a n d n o n - d e l i v e r y o r d a m a g e s t o t h e c a r g o d u r i n g transport at market value.

Cipriano filed a complaint for a sum of money and damages

w i t h w r i t o f p r e l i m i n a r y attachment for breach of a contract of carriage

Bascos answer to the complaint: truck carrying the cargo was hijacked along
CanonigoSt., Paco, Manila; that hijacking, being a force majeure, exculpated her from any liability
toCIPTRADE; and that the contract they entered into was a mere lease of the truck
ISSUES:
1. was petitioner a common carrier?; 2. was
t h e h i j a c k i n g r e f e r r e d t o a f o r c e majeure?
HELD:
1. Yes. See Art. 1732. (the article makes no distinction bet
w e e n o n e whose principal business activity is the carrying of persons or goods or both, and one
whod o e s s u c h c a r r y i n g o n l y a s a n a n c i l l a r y a c t i v i t y ; n o d i s t i n c t i o n b e t w e
e n a p e r s o n o r enterprise offering transportation service on a regular or scheduled basis and
one offeringsuch service on an occasional, episodic
or unscheduled basis; no distinction between acarrier offering its services to the general
public and one who offers services or solicitsbusiness only from a narrow segment of
the general population)

the test to determine a common carrier is whether the given undertaking is a part of thebusiness
engaged in by the carrier which he has held out to the general public as hisoccupation
rather than the quantity or extent of the business transacted

Basco herself has made the admission that she was in the trucking business under
thename of A.M. Bascos Trucking, offering her trucks to those with cargo to move (hence sheis a
common carrier)

their contract was not one of lease: a contract is what the law defines it to be and not whatit is called
by the contracting parties; furthermore, petitioner presented no other proof of the existence of the
contract of lease

2. Yes. Common carriers are obliged to observe extraordinary diligence in the

vigilanceover the goods transported by them; they are presumed to have been at fault or to
haveacted negligently if the goods are lost, destroyed or deteriorated; in those cases where
thepresumption of negligence is applied, the common carrier must prove that it
exercisedextraordinary diligence in order to overcome the presumption.

In this case, hijacking, not being included in the provisions of Article 1734, must be dealtwith under
the provisions of Article 1735 and thus, the common carrier is presumed
toh a v e b e e n a t f a u l t o r n e g l i g e n t . T o e x c u l p a t e t h e c a r r i e r f r o m l i a b i l i t y a r i s i n g
f r o m hijacking, he must prove that the robbers or the hijackers acted with grave or irresistiblethreat,
violence, or force. This is in accordance with Article 1745 of the Civil Code whichprovides: Any of the
following or similar stipulations shall be considered unreasonable,unjust and contrary to public policy:
x x x (6) That the common carriers liability for acts

committed by thieves, or of robbers who

d o n o t a c t w i t h g r a v e o r i r r e s i s t i b l e t h r e a t , violence or force, is dispensed with or
diminished.

Under Article 1745 (6) above, a common carrier is held responsible and will not
bea l l o w e d t o d i v e s t
or to diminish such responsibility even for acts of strangers likethieves or ro
b b e r s e x c e p t w h e r e s u c h t h i e v e s o r r o b b e r s i n f a c t a c t e d w i t h g r a v e o r 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 thegoods are lost as a
result of a robbery which is attended by grave or irresistible threat,violence or force.

NATIONAL STEEL CORPORATION v. COURT OF APPEALS

G.R. No. 112287 December 12, 1997
Panganiban, J.

Doctrine:
The stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably
be applied to a private carrier.

Facts:
Plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner,
entered into a Contract of Voyage Charter Hire whereby NSC hired VSIs vessel, the MV Vlasons I to make one
voyage to load steel products at Iligan City and discharge them at North Harbor, Manila. The handling, loading
and unloading of the cargoes were the responsibility of the Charterer.

The skids of tinplates and hot rolled sheets shipped were allegedly found to be wet and rusty. Plaintiff, alleging
negligence, filed a claim for damages against the defendant who denied liability claiming that the MV Vlasons I
was seaworthy in all respects for the carriage of plaintiffs cargo; that said vessel was not a common carrier
inasmuch as she was under voyage charter contract with the plaintiff as charterer under the charter party;
that in the course its voyage, the vessel encountered very rough seas.

Issue:
Whether or not the provisions of the Civil Code on common carriers pursuant to which there exists a
presumption of negligence against the common carrier in case of loss or damage to the cargo are applicable to
a private carrier.

Held:
No. In a contract of private carriage, the parties may freely stipulate their duties and obligations which
perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not
involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the
general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier.

It has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has
space, for all who opt to avail themselves of its transportation service for a fee [Mendoza vs. Philippine
Airlines, Inc., 90 Phil. 836, 842-843 (1952)]. A carrier which does not qualify under the above test is deemed a
private carrier. Generally, private carriage is undertaken by special agreement and the carrier does not hold
himself out to carry goods for the general public.

Because the MV Vlasons I was a private carrier, the ship owners obligations are governed by the foregoing
provisions of the Code of Commerce and not by the Civil Code which, as a general rule, places the prima facie
presumption of negligence on a common carrier.

Calvo vs UCPB General Insurance Co.

FACTS:
Virgines Calvo, owner of Transorient Container Terminal Services Inc

a sole proprietorship customs broker

Contract with San Miguel Corporation

transfer of 114 reels of semi-chemical fluting paper and 124 reels

of Kraft liner board from Manila Port Area to SMCs warehouse in Tabacalera Compound, Romuladez St.,
Ermita, Manila

Cargo insured with UCPB General Insurance Co.

July 14, 1990

shipment contained in 30 metal vans on board MV Hayakawa Maru arrived in Manila

July 15

unloaded to the custody of the arrastre operator

Manila Port Services Inc

July 23

July 25

withdrew cargo and delivered according to the contract

July 25

cargo inspected by Marine Cargo Surveyors
o

15 reels of semi-chemical fluting paper wet/stained/torn

o

3 reels of kraft liner boars were torn

o

Damage cost: Php 93,112

SMC collected from UCPB

December 20 - UCPB, as subvrogee of SMC, brought a suit against TCTSI in Makati RTC Brancg 148

Makati RTC: it has been held that the mere proof of delivery of goods in good order to a carrier, and of their
arrival at the place of destination in bad order, makes out a prima facie case against the carrier, so that if no
explanation is given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon
the carrier to prove that the loss was due to accident or some other circumstances inconsistent with its
liability.
o

Pay Php 93
,112 + 25% as lawyers fee + cost of suit

Calvo: Not a common carrier but a private carrier because, as a customs broker and warehouseman, she does
not indiscriminately hold her services out to the public but only offers the same to select parties with whom
she may contract in the conduct of her business.

CA affirmed RTC decision.

ISSUE:
WON she is a common carrier?
HELD:
Yes
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

There is greater reason for holding petitioner to be a common carrier because the transportation of goods
is an integral part of her business. To uphold petitioners contention would be to deprive
those with whom she contracts the protection which the law affords them notwithstanding the fact that the
obligation to carry goods for her customers, as already noted, is part and parcel of petitioners business.

When Calvo's employees withdrew the cargo from the arrastre operator, they did so without exception or
protest either with regard to the condition of container vans or their contents

Calvo must do more than merely show the possibility that some other party could be responsible for the
damage. It must prove that it used "all reasonable means to ascertain the nature and characteristic of goods
tendered for transport and that it exercised due care in the handling For 1734(4) to apply, the rule is that if the
improper packaging or, in this case, the defects in the container, is/are known to the carrier or his employees
or apparent upon ordinary obserobservation he nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for damage resulting therefrom.

HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON
STEVEDORING CORPORATION

MARCH 26, 2011 ~ VBDIAZ

HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON
STEVEDORING CORPORATION
G.R. No. L-25599
April 4, 1968
FACTS: Consorcio Pesquero del Peru of South America shipped freight pre-paid at Peru, jute bags of
Peruvian fish meal through SS Crowborough, covered by clean bills of lading. The cargo, consigned to San
Miguel Brewery, Inc., now San Miguel Corporation, and insured by Home Insurance Company arrived in
Manila and was discharged into the lighters of Luzon Stevedoring Company. When the cargo was delivered to
consignee San Miguel Brewery Inc., there were shortages causing the latter to lay claims against Luzon
Stevedoring Corporation, Home Insurance Company and the American Steamship Agencies (shipowner), owner
and operator of SS Crowborough.
Because the others denied liability, Home Insurance Company paid SMBI the insurance value of the loss, as full
settlement of the claim. Having been refused reimbursement by both the Luzon Stevedoring Corporation and
American Steamship Agencies, Home Insurance Company, as subrogee to the consignee, filed against them
before the CFI of Manila a complaint for recovery of the payment paid with legal interest, plus attorneys fees.

In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the same
quantity and quality that it had received the same from the carrier.

The CFI, after trial, absolved Luzon Stevedoring Corporation, having found the latter to have merely delivered
what it received from the carrier in the same condition and quality, and ordered American Steamship Agencies
to pay Home Insurance Company the amount demanded with legal interest plus attorneys fees.

Disagreeing with such judgment, American Steamship Agencies appealed directly to Us.

ISSUE: Is the stipulation in the charter party of the owners non-liability valid so as to absolve the American
Steamship Agencies from liability for loss?
HELD: The judgment appealed from is hereby reversed and appellant is absolved from liability to plaintiff.
YES

The bills of lading, covering the shipment of Peruvian fish meal provide at the back thereof that the bills of
lading shall be governed by and subject to the terms and conditions of the charter party, if any, otherwise, the
bills of lading prevail over all the agreements. On the bills are stamped Freight prepaid as per charter party.
Subject to all terms, conditions and exceptions of charter party dated London, Dec. 13, 1962.

Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods
caused by personal want of due diligence on its part or its manager to make the vessel in all respects
seaworthy and to secure that she be properly manned, equipped and supplied or by the personal act or default
of the owner or its manager. Said paragraph, however, exempts the owner of the vessel from any loss or
damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some
other person employed by the owner on board, for whose acts the owner would ordinarily be liable except for
said paragraph..
The provisions of our Civil Code on common carriers were taken from Anglo-American law. Under American
jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special person
only, becomes a private carrier. As a private carrier, a stipulation exempting the owner from liability for the
negligence of its agent is not against public policy, and is deemed valid.
Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where
the carrier is not acting as such but as a private carrier. The stipulation in the charter party absolving the owner
from liability for loss due to the negligence of its agent would be void only if the strict public policy governing
common carriers is applied. Such policy has no force where the public at large is not involved, as in the case of
a ship totally chartered for the use of a single party.

And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as
shipper, is in fact and legal contemplation merely a receipt and a document of title not a contract, for the
contract is the charter party. The consignee may not claim ignorance of said charter party because the bills of
lading expressly referred to the same. Accordingly, the consignees under the bills of lading must likewise abide
by the terms of the charter party. And as stated, recovery cannot be had thereunder, for loss or damage to the
cargo, against the shipowners, unless the same is due to personal acts or negligence of said owner or its
manager, as distinguished from its other agents or employees. In this case, no such personal act or negligence
has been proved.

Jose Cangco vs Manila Railroad Co.

On January 20, 1915, Cangco was riding the train of Manila Railroad Co (MRC). He was an employee of the latter
and he was given a pass so that he could ride the train for free. When he was nearing his destination at about
7pm, he arose from his seat even though the train was not at full stop. When he was about to alight from the
train (which was still slightly moving) he accidentally stepped on a sack of watermelons which he failed to
notice due to the fact that it was dim. This caused him to lose his balance at the door and he fell and his arm
was crushed by the train and he suffered other serious injuries. He was dragged a few meters more as the train
slowed down.
It was established that the employees of MRC were negligent in piling the sacks of watermelons. MRC raised
as a defense the fact that Cangco was also negligent as he failed to exercise diligence in alighting from the train
as he did not wait for it to stop.
ISSUE: Whether or not Manila Railroad Co is liable for damages.
HELD: Yes. Alighting from a moving train while it is slowing down is a common practice and a lot of people are
doing so every day without suffering injury. Cangco has the vigor and agility of young manhood, and it was by
no means so risky for him to get off while the train was yet moving as the same act would have been in an aged
or feeble person. He was also ignorant of the fact that sacks of watermelons were there as there were no
appropriate warnings and the place was dimly lit.
The Court also elucidated on the distinction between the liability of employers under Article 2180 and their
liability for breach of contract [of carriage]:
NOTES: But, if the master has not been guilty of any negligence whatever in the selection and direction of the
servant, he is not liable for the acts of the latter, whatever done within the scope of his employment or not, if
the damage done by the servant does not amount to a breach of the contract between the master and the
person injured.
The liability arising from extra-contractual culpa is always based upon a voluntary act or omission which,
without willful intent, but by mere negligence or inattention, has caused damage to another.
These two fields, figuratively speaking, concentric; that is to say, the mere fact that a person is bound to
another by contract does not relieve him from extra-contractual liability to such person. When such a
contractual relation exists the obligor may break the contract under such conditions that the same act which
constitutes the source of an extra-contractual obligation had no contract existed between the parties.
Manresa: Whether negligence occurs an incident in the course of the performance of a contractual undertaking
or in itself the source of an extra-contractual undertaking obligation, its essential characteristics are identical.
Vinculum Juris: (def) It means an obligation of law, or the right of the obligee to enforce a civil matter in a
court of law.

Medina vs. Cresencia

Facts:
A passenger jeepney driven by Brigido Avorque smashed into a Meralco post resulting in the death
of Vicente Medina, one of its passengers. Guillermo Cresencia is the registered owner of the
jeepney as well as the registered operator. On the other hand, Rosario Avorque, after the jeepney
having been repeatedly sold from one buyer after another, is its current absolute owner as well as
the employer of driver Brigido.
Issue:
(1) Who should be held liable for the death of Medina the registered owner or the absolute
owner?
(2) WON Rosario Avorque has a subsidiary liability under the RPC for damages arising from her
drivers criminal act.
Held:
(1) The registered owner.
The requires the approval of the Public Service Commission in order that a franchise, or any
privilege pertaining thereto, may be sold or leased without infringing the certificate issued to the
grantee x x x As the sale of the jeepney was admittedly without the approval of the Public Service
Commission, Guillermo Cresencia, who is the registered owner and operator thereof, continued to
be liable to the Commission and the public for the consequences incident to its operation.
(2) No, she has no subsidiary liability.

Medinas action for damages is independent of the criminal case filed against Brigido Avorque, and
based, not on the employers subsidiary liability under the Revised Penal Code, but on a breach of
the carriers contractual obligation to carry his passengers safely to their destination (culpa
contractual). And it is also for this reason that there is no need of first proving the insolvency of
the driver Brigido Avorque before damages can be recovered from the carrier, for in culpa
contractual, the liability of the carrier is not merely subsidiary or secondary, but direct and
immediate (Articles 1755, 1756, and 1759, New Civil Code).

Saludo v. Court of Appeals

G.R. No. 95536 March 23, 1992 ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G. SALUDO
and SATURNINO G. SALUDO,
petitioners, vs.
HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC., and PHILIPPINE AIRLINES, INC.,
respondents.
FACTS:

Shipper - Pomierski and Son Funeral Home

Consignee

Maria Saludo
Carrier - Transworld Airlines (TWA) Chicago

San Francisco, and Philippine Airlines (PAL)- San Francisco

Manila
After the death of petitioner's mother, Crispina Galdo Saludo, in Chicago Illinois, Pomierski and Son Funeral
Home of Chicago, made the necessary preparations and arrangements for the shipment, of the remains from
Chicago to the Philippines. Philippine Vice Consul in Chicago, Illinois, Bienvenido M. Llaneta, at the Pomierski &
Son Funeral Home, sealed the shipping case containing a hermetically sealed casket that is airtight and
waterproof wherein was contained the remains of Crispina Saludo Galdo). On the same date, October 26,
1976, 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.; C.M.A.S. is a national service used by
undertakers to throughout the nation (U.S.A.). 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. The
requested routing was from Chicago to San Francisco on board TWA Flight 131 of October 27, 1976 and from
San Francisco to Manila on board PAL Flight No. 107 of the same date, and from Manila to Cebu on board PAL
Flight 149 of October 29, 1976. Maria Saludo upon arriving at San Francisco Airport, she then called Pomierski
that her mother's remains were not at the West Coast terminal, and Pomierski immediately called C.M.A.S.,
which in a matter of 10 minutes 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. The following day October 28, 1976, the
shipment or 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. (Exh. 2-PAL, Exh. 2-a-PAL). 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 (See Exh. B-1). 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.

Aggrieved by the incident, the petitioners instituted an action against respondents and were asked to pay for
damages.

Petitioner allege that private respondents received the casketed remains of petitioners' mother on October
26, 1976, as evidenced by the issuance of PAL Air Waybill No. 079-01180454
18

by Air Care International as carrier's agent; and from said date, private respondents were charged with the
responsibility to exercise extraordinary diligence so much so that for the alleged switching of the caskets on
October 27, 1976, or one day after private respondents received the cargo, the latter must necessarily be
liable.

RTC - absolved the two respondent airlines companies of liability.

CA - affirmed the decision of the lower court

in toto
, and in a subsequent resolution,
7

denied herein petitioners' motion for reconsideration for lack of merit.

ISSUE
W/N the delay in the delivery of the casketed remains of petitioners' mother was due to the fault of
respondent airline companies,
HELD:
NO. 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
. According to foreign and local jurisprudence, "the issuance of a bill of lading carries the presumption that the
goods were delivered to the carrier issuing the bill, for immediate shipment, and it is nowhere questioned that
a bill of lading is
prima facie
evidence of the receipt of the goods by the carrier. . . . In the absence of convincing testimony
establishing mistake, recitals in the bill of lading showing that the carrier received the goods for shipment on a
specified date controls. 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. As between the shipper and the carrier,
when no goods have been delivered for shipment no recitals in the bill can estop the carrier from showing the
true facts . . . Between the consignor of goods and receiving carrier, recitals in a bill of lading as to the goods
shipped raise only a rebuttable presumption that such goods were delivered for shipment. As between the
consignor and a receiving carrier, the fact must outweigh the recital."
In the case at bar, it was 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. Explicit is the rule under 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 stoppage
in transitu,

29

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.
30

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.
31

Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences
eo instanti
. As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo
to the carrier on October 26, 1976. Rather, as earlier explained, 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.

MAERSK LINE vs. CAG.R. No. 94761, May 17, 1993

FACTS:
Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business in the Philippines
through its generalagent, Compania de Tabacos de Filipinas, while private respondentEfren Castillo is the
proprietor of Ethegal Laboratories, a firmengaged in the manufacture of pharmaceutical products.

On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico 600,000 empty gelatin capsules for the
manufacture of his pharmaceutical products. The capsules were placed in 6 drums of 100,000 capsules each
valued at US$1,668.71. Shipper Eli Lilly,Inc.advised Castillo through a Memorandum of Shipment that the
products were already shipped on board MV Anders Maerskline
for shipment to the Philippines via Oakland, California. In saidMemorandum, shipper Eli Lilly, Inc. specified the
date of arrival to be April 3, 1977.However, for unknown reasons, said cargoes of capsuleswere mis-shipped
and diverted to Richmond, Virginia, USA and thentransported back to Oakland, California, USA and with the
goodsfinally arriving in the Philippines on June 10, 1977 or after two (2)months from the date specified in the
memorandum. ConsigneeCastillo refused to take delivery of the goods on account of its failureto arrive on
time, and filed an action for rescission of contract withdamages against Maersk Line and Eli Lilly alleging gross
negligenceand undue delay.Denying that it committed breach of contract, petitioner alleged in its answer that
the subject shipment was transported inaccordance with the provisions of the NCC covering bill of ladingand
that its liability under the law on transportation of good attachesonly in case of loss, destruction or
deterioration of the goods as provided for in Article 1734 of Civil Code
.
For its part, Eli Lilly inits cross claim argued that the delay was due solely to the negligenceof Maersk Line.The
Trial Court dismissed the complaint against Eli Lillyand the latter withdrew cross claim but TC still held Maersk
liableand CA affirmed with modifications.
ISSUES:
1.

W/N a cause of action exists against Maersk Line giventhat there was a dismissal of the complaint against
EliLilly? Yes, but not under the cross claim rather becauseMaersk was an original party.2.

W/N Castillo is entitled to damages resulting from delayin the delivery of the shipment?

Yes.

RULING:
The complaint was filed originally against Eli Lilly, Inc.as shipper-supplier and petitioner as carrier. Petitioner
Maersk Line being an original party defendant upon whom the delayed shipment isimputed cannot claim that
the dismissal of the complaint against EliLiily inured to its benefit.It is not disputed that the aforequoted
provision at the back of the bill of lading, in fine print, is a contract of adhesion. Generally,contracts of
adhesion are considered void since almost all the provisions of these types of contracts are prepared and
drafted only by
one party, usually the carrier.
The only participation left of theother party in such a contract is the affixing of his signature the
reto,hence the term "Adhesion".
Nonetheless, settled is the rule that bills of lading arecontracts not entirely prohibited. One who adheres to
the contract isin reality free to reject it in its entirety; if he adheres, he gives hisconsent (Magellan
Manufacturing Marketing Corporation v. Court of Appeals, et al., 201 SCRA 102 [1991]).In
Magellan
,(
supra
), we ruled: It is a long standing
jurisprudential rule that a bill of lading operates both as a receipt andas contract to transport and deliver the
same a therein stipulated. As acontract, it names the parties, which includes the consignee, fixes theroute,
destination, and freight rates or charges, and stipulates therights and obligations assumed by the parties.
Being a contract, it isthe law between the parties who are bound by its terms andconditions provided that
these are not contrary to law, morals, goodcustoms, public order and public policy. A bill of lading usually
becomes effective upon its delivery to and acceptance by the shipper.
It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or improper
conduct, known to the shipper, and he is generally bound by his acceptance whether he reads the bill or not
.However, the aforequoted ruling applies only if suchcontracts will not create an absurd situation as in the
case at bar. Thequestioned provision in the subject bill of lading has the effect of practically leaving the date
of arrival of the subject shipment on thesole determination and will of the carrier.Petitioner contends as well
that it cannot be held liable because there was no special contract under which the carrier undertook to
deliver the shipment on or before a specific date andthat the Bill of Lading provides
that The Carrier does not undertake
that the Goods shall arrive at port of discharge or the place of del
ivery at any particular time.
While it is true that common carriers are not obligated bylaw to carry and to deliver merchandise, and
persons are not vestedwith the right to prompt delivery, unless such common carriers previously assume the
obligation to deliver at a given date or time,delivery of shipment or cargo should at least be made within
areasonable time.While there was no special contract entered into by the parties indicating the date of arrival
of the subject shipment, petitioner nevertheless, was very well aware of the specific date whenthe goods
were expected to arrive as indicated in the bill of ladingitself. In this regard, there arises no need to execute
another contractfor the purpose as it would be a mere superfluity. In the case beforeus, we find that a delay in
the delivery of the goods spanning a periodof two months and seven days falls was beyond the realm of
reasonableness.This Court held Maersk Line liable for delay in the deliveryof goods. An examination of the
subject bill of lading that the subjectshipment was estimated to arrive in Manila on April 3, 1977. Whilethere
was no special contract entered into by the parties indicatingthe date of arrival, petitioner nevertheless, was
very well aware of thespecific date when the goods expected to arrives as indicated in the bill lading.There
was delay in the delivery of the goods, spanning a period of 2 months and 7 days falls way beyond the realm of
reasonableness. Petitioner never even bothered to explain the causefor delay of more than 2 months in the
delivery of the goods.
Therefore, Maersk Line is liable for breach of contract carriageamounting to bad faith

In the case before us, we find that a delay in the delivery of the goods spanning a period of two (2) months
and seven (7) days falls was beyond the realm of reasonableness. Described as gelatin capsules for use in
pharmaceutical products, subject shipment was delivered to, and left in, the possession and custody of
petitioner-carrier for transport to Manila via Oakland, California. But through petitioner's negligence was
mishipped to Richmond, Virginia. Petitioner's insitence that it cannot be held liable for the delay finds no
merit.
GRACE
FGU INSURANCE CORPORATION, Petitioners, vs. THE COURT OF APPEALS, SAN MIGUEL CORPORATION, and
ESTATE OF ANG GUI, represented by LUCIO, JULIAN, and JAIME, all surnamed ANG, and CO TO, Respondents.
CHICO-NAZARIO,
J
.:
FACTS:
Carrier: ANCO (Anco Enterprises Company) Owned M/T ANCO tugboat and D/B Lucio barge (had no engine of
its own) Shipper: San Miguel Corporation. Cases are to be delivered in Iloilo and Antique. Upon arrival at San
Jose, Antique, M/T ANCO tugboat left D/B Lucio barge. Moreover, the clouds were dark
and the waves are big. SMCs District Sales Supervisor requested ANCOs representative to transfer the barge
to a safer place because the vessel might
not be able to withstand the big waves. ANCOs representative did
not heed because he was confident that the barge could withstand the waves. All other vessels left the wharf
to seek shelter. Due to the waves not all the cases of beer were discharged into the custody of the arrastre
operator.
The crew of D/B Lucio abandoned the vessel because the barges rope attached to the wharf was cut off by
the big waves. The barge run aground and was broken and the cargoes of beer were swept away. SMC filed a
complaint for Breach of Contract of Carriage and Damages against ANCO. (Important facts ung blue)
OPTIONAL!!! Di namannatouchsa ruling ng Court. Pero for more kabidahanala Ms. Andres, GO!

///Claim of ANCO: There is an agreement with SMC that ANCO would not be liable for any loses or damages
by reason of fortuitous event. The cases were lost by reason of a storm, a fortuitous event. Moreover, an
agreement that SMC shall insure the cargoes in order to recover indemnity in case of loss. Cases were insured
with FGU Insurance Corporation. Subsequently, ANCO filed a Third-Party Complaint against FGU. Claim of FGU:
The alleged loss of the cargoes covered by the said insurance policy cannot be attributed directly or indirectly
to any risks insured. ANCO and SMC failed to exercise ordinary diligence or the diligence of a good father of
the family in the care and supervision of the cargoes insured to prevent its loss and/ or destruction.
RTC: Indeed lost to fortuitous event, there was failure on ANCOs part, through
their representatives, to observe the degree of diligence required that would exonerate them from liability.
Moreover, it is the sense of this Court that the risk insured against was the cause of the loss. FGU shall bear
53% of the loss. CA affirmed in toto.///

ISSUES: 1.

W/N ANCO should be liable and the negligence of the crewmembers was the proximate cause 2.

W/N FGU is liable RULING: 1.

Question of fact. Findings of fact by the trial court are entitled to great weight on appeal and should not be
disturbed unless for strong and cogent reasons. But the Court finds that since it is the duty of the defendant to
exercise and observe extraordinary diligence in the vigilance over the cargo of the plaintiff, the patron or
captain of M/T ANCO, representing the defendant could have placed D/B Lucio in a very safe location before
they left knowing or sensing at that time the coming of a typhoon. The presence of big waves and dark clouds
could have warned the patron or captain of M/T ANCO to insure the safety of D/B Lucio including its cargo.
D/B Lucio being a barge, without its engine, as the patron or captain of M/T ANCO knew, could not possibly
maneuver by itself. Had the patron or captain of M/T ANCO, the representative of the defendants observed
extraordinary diligence in placing the D/B Lucio in a safe place, the loss to the cargo of the plaintiff could not
have occurred. In short, therefore, defendants through their representatives, failed to observe the degree of
diligence required of them under the provision of Art. 1733 of the Civil Code of the Philippines.

The Civil Code provides:

Art. 1733
. Common carriers, from the nature of their business and for reasons of public policy are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case. Such extraordinary diligence in vigilance over the goods
is further expressed in Articles 1734, 1735, and 1745 Nos. 5, 6, and 7 . . .
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.
Art. 1739
.
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
. To be exempt from liability because of an act of God, the tug must be free from any previous negligence or
misconduct by which that loss or damage may have been occasioned. there was blatant
negligence on the part of M/T ANCOs crewmembers, first in leaving the engine
-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to
heed the request
of SMCs representatives to have the barge transferred to a safer place, as was done by the other
vessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes. 2.

One of the purposes for taking out insurance is to protect the insured against the consequences of his own
negligence and that of his agents. But loss has occurred due to causes which could not have been prevented
by the insured, despite the exercise of due diligence. When evidence show that the in
sureds negligence or recklessness is so gross as to be sufficient to constitute a willful act, the insurer must be
exonerated. The blatant negligence of ANCOs employees is of such gross character that it
amounts to a wrongful act which must exonerate FGU from liability under the insurance contract.

SUPER SHORT VERSION. 2 boats owned by ANCO. Boat 1- no engine. Hired by SMC. Upon arrival boat 2 left.
Storm. Boat 1 damaged including cargoes. W/N liable although storm is fortuitous. Yes. There is negligence
when boat 2 left knowing there is a storm and when refused to heed to the request to move on a safer place.
Additional langung liability ni FGU. Actually may res judicata pa pero wag na un haha

EVERETT STEAMSHIP vs. CA FACTS

Hernandez trading company imported three crates of bus spare parts marked as Marco 12, Marco 13, Marco
14 from its supplier Maruman trading company. Said crates were shipped from Japan to Manila on noard the
vessel owned by Everette Orient Lines. Upon arrival in Manila, it was discovered that Marco 14 was missing.
Hernandez makes a formal claim to Everette in an amount of 1 mill ++ Yen, which is the amount of the cargo
lost. However, Everett offers an amount of 100k because it is the amount that was stipulated in its Bill of
Lading

Hernandez files a case at the RTC of Caloocan, RTC rules1 in favor of Hernandez holding Everett liable for the
amount of !mill ++ Yen.
THE CA affirmed the RTCs ruling and made an additional observation that since Hernandez is not a privy to
the contract in the bill of lading ( the contract was entered by Everett and Maruman trading [shipper]), and so
the 100k limit stipulated will not bind Hernandez making Everett liable for the full amount of 1mill ++ Yen.
ISSUE
1.

Is Everett liable for the full amount or the amount that was stipulated in the contract?-
what was stipulated in the contract

2.

Is Hernandez a privy to the contract which says that Petitioner is liable only for 100k?
Yes RULING
1.

Controlling provisions for this issue would be 1749 and 1750 of the Civil Code. 2 In
Sea Land Service, Inc. vs Intermediate Appellate Court
That said stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself in providing
a limit to liability only if a greater value is not declared for the shipment in the bill of lading. To hold otherwise
would amount to questioning the justness and fairness of the law itself, and this the private respondent does
not pretend to do. But over and above that consideration, the just and reasonable character of such
stipulation is implicit in it giving the shipper or owner the option of avoiding accrual of liability limitation by
the simple and surely far from onerous expedient of declaring the nature and value of the shipment in the bill
of lading The clause of the contract goes:
The carrier shall not be liable for any loss of or any damage to or in any connection with, goods
in an amount exceeding One Hundred Thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in
any other currency per package or customary freight unit (whichever is least) unless the value of the goods
higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier and
inserted in the Bill of Lading and extra freight is paid as required.
(Emphasis supplied) The shipper, Maruman Trading,
had the option to declare a higher valuation if the value of its cargo was
1
Art. 1750
. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and
freely agreed
upon.

It is required, however, that the contract must be reasonable and just under the circumstances and has been
fairly and freel
y agreed upon.XXX the Court is of the view that the requirements of said article have not been met. The fact
that those conditions are printed at the back of the bill of lading in letters so small that they are hard to read
would not warrant the presumption that the plaintiff or its supplier was aware of these
conditions such that he had fairly and freely agreed to these conditions. It can not be said that the plaintiff
had actual
ly entered into a contract with the defendant, embodying the conditions as printed at the back of the bill of
lading that was
issued by the defendant to plaintiff.
2
ART. 1749. A stipulation that the common carriers liability is limited to the value of the goods appearing in
the bill of
lading,
unless the shipper or owner declares a greater value, is binding.

ART. 1750.
A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or
deterioration of
the goods is valid, if it is reasonable and just under the circumstances, and has been freely and fairly agreed
upon.

higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation,
it had itself to blame for not complying with the stipulations.
The trial courts ratiocination that private respondent could not have fairly and freely agreed to the
limited liability clause in the bill of lading because the said conditions were printed in small letters does not
make the bill of lading invalid. In Ong Yiu VS. CA the court said that
contracts of adhesion wherein one party imposes a ready
-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited A contract limiting liability upon an agreed valuation does not offend against the policy of the law
forbidding one from contracting against his own negligence The shipper, Maruman Trading, we assume, has
been extensively engaged in the trading business. It can not be said to be ignorant of the business transactions
it entered into involving the shipment of its goods to its customers. The shipper could not have known, or
should know the stipulations in the bill of lading and there it should have declared a higher valuation of the
goods shipped. Moreover, Maruman Trading has not been heard to complain that it has been deceived or
rushed into agreeing t
o ship the cargo in petitioners vessel.
2.

Even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier. The
consignee can still be bound by the contract. private respondent (Hernandez) formally claimed reimbursement
for the missing goods from petitioner and subsequently filed a case against the latter based on the very same
bill of lading, it (private respondent) accepted the provisions of the contract and thereby made itself a party
thereto, or at least has come to court to enforce it. Thus, private respondent
cannot now reject or disregard the carriers limited liability stipulation in the bill of lading. In other words,
private respondent is bound by the whole stipulations in the bill of lading and must respect the same.

CASE TITLE: Sarkies Tours Phils. V. IAC KEYWORD: DAMAGES PONENTE: ROMERO, J DOCTRINE: Kinds of
damages to be awarded Facts:
On August 31, 1984, Fatima boarded petitioners bus from Manila to Legazpi. Her belongings consisting of 3
bags were kept at the baggage compartment of the bus, but during the stopover in Daet, it was discovered
that only one remained. The others might have dropped along the way. Other passengers suggested having
the route traced, but the driver ignored it. Fatima immediately told the incident to her mother, who went to
petitioners office in Legazpi and later in Manila. Petitioner offered P1,000 for each bag, but she turned it
down. Disapointed, she sought help from Philtranco bus drivers and radio stations. One of the bags was
recovered. She was told by petitioner that a team is looking for the lost luggage. After nine months of fruitless
waiting, respondents filed a case to recover the lost items, as well as moral and exemplary damages,
attorneys fees and expenses of litigation. The trial
court ruled in favor of respondents, which decision was affirmed with modification by the Court of Appeals
awarding P30,000.00 for the lost items and P30,000.00 for the transportation expenses, moral and exemplary
damages in the amount of P20,000.00 and P5,000.00, respectively. PETITIONERS CONTENTIONS: 1) Fatima did
not bring any piece of luggage with her, and even if she did, none was declared at the start of the trip. 2)
petitioner questions the award of actual damages to respondent
RESPONDENTS CONTENT
ION: Extraordinary diligence on the part of petitioner; Issues: (1) Whether petitioner is liable for the loss of the
luggage (2) Whether the damages sought should be recovered RULING: (1) The cause of the loss in the case at
bar was petitioner's negligence in not ensuring that the doors of the baggage compartment of its bus were
securely fastened. As a result of this lack of care, almost all of the luggage was lost, to the prejudice of the
paying passengers. (2) There is no dispute that of the three pieces of luggage of Fatima, only one was
recovered. Respondents had to shuttle between Bicol and Manila in their efforts to be compensated for the
loss. During the trial, Fatima and Marisol had to travel from the United States just to be able to testify.
Expenses were also incurred in reconstituting their lost documents. Under these circumstances, the Court
agrees with the Court of Appeals in awarding P30,000.00 for the lost items and P30,000.00 for the
transportation expenses, but disagrees with the deletion of the award of moral and exemplary damages
which, in view of the foregoing proven facts, with negligence and bad faith on the fault of petitioner having
been duly established, should be granted to respondents in the amount of P20,000.00 and P5,000.00,
respectively.