Title: PHILIPPINE AIRLINES, INC.

,
petitioner, vs. COURT OF APPEALS and <Ruling>
GILDA C. MEJIA, respondents.
Although the airway bill is binding between
the parties, the liability of Pal is not limited on
<Facts> the provisions of the airway bill. While the
Warsaw Convention is law in the Philippines,
This is definitely not a case of first impression. the Philippines being a signatory thereto, it
The incident, which eventuated in the present does not operate as an exclusive enumeration
controversy, is a drama of common of the instances when a carrier shall be liable
contentious occurrence between passengers for breach of contract or as an absolute limit of
and carriers whenever loss is sustained by the the extent of liability nor does it preclude the
former. Withal, the exposition of the factual operation of the Civil Code or other pertinent
ambience and the legal precepts in this laws.
adjudication may hopefully channel the
assertiveness of passengers and the Also, the willful misconduct and insensitivity
intransigence of carriers into the realization of the officers of PAL in not attempting to
that at times a bad extrajudicial compromise explain the damage despite due demand and
could be better than a good judicial victory. the unexplained delay in acting on her claim
amounted to bad faith and renders
Assailed in this petition for review is the unquestionable its liability for damages
decision of respondent Court of Appeals in
CA-G.R. CV No. 42744 1 which affirmed the Adhesion contract is one that is not negotiated
decision of the lower court 2 finding petitioner by the parties having been drafted by the
Philippine Air Lines, Inc. (PAL) liable as dominant party and usually embodied in a
follows: standardized form. It is called a contract of
adhesion because the participation of 1 party is
limited to affixing her signature.
ACCORDINGLY, judgment is hereby
rendered ordering defendant Philippine Air
Lines, Inc., to pay plaintiff Gilda C. Mejia: Coastwise Lighterage Corporation v. CA

Facts:
(1) P30, 000.00 by way of actual damages of
the microwave oven; Pag-asa Sales Inc. entered into a contract to
transport molasses from the province of
(2) P10, 000.00 by way of moral damages; Negros to Manila with Coastwise Lighterage
Corporation (Coastwise for brevity), using the
(3) P20, 000.00 by way of exemplary latter's dumb barges. The barges were towed in
damages; tandem by the tugboat MT Marica, which is
likewise owned by Coastwise. Upon reaching
(4) P10, 000.00 as attorney's fee; Manila Bay, one of the barges, "Coastwise 9",
struck an unknown sunken object. The forward
buoyancy compartment was damaged, and
All in addition to the costs of the suit.
water gushed in through a hole "two inches
wide and twenty-two inches long". As a
Defendant's counterclaim is hereby dismissed consequence, the molasses at the cargo tanks
for lack of merit. were contaminated. Pag-asa filed a claim
against Philippine General Insurance
Mejia shipped through PAL 1 microwave oven Company, the insurer of its cargo. Philgen paid
from San Francisco to Manila. Upon arrival, P700,000 for the value of the molasses lost.
she discovered that the front glass door was
broken and the oven could not be used. Mejia Philgen then filed an action against Coastwise
filed action against PAL. PAL denied liability to recover the money it paid, claiming to be
and alleged that it acted in conformity with the subrogated to the claims which the consignee
Warsaw Convention may have against the carrier. Both the trial
court and the Court of Appeals ruled against
<Issues> Coastwise.

Whether or not the air waybill should be Issues:

strictly construed against petitioner?
(1) Whether Coastwise was transformed into a the rights of the assured to recover from the
private carrier by virtue of the contract it wrongdoer to the extent that the insurer has
entered into with Pag-asa, and whether it been obligated to pay. Payment by the insurer
exercised the required degree of diligence to the assured operated as an equitable
assignment to the former of all remedies which
(2) Whether Philgen was subrogated into the the latter may have against the third party
rights of the consignee against the carrier whose negligence or wrongful act caused the
loss. The right of subrogation is not dependent
Held: upon, nor does it grow out of, any private of
contract or upon written assignment of, claim.
(1) Pag-asa Sales, Inc. only leased three of It accrues simply upon payment of the
petitioner's vessels, in order to carry cargo insurance claim by the insurer.
from one point to another, but the possession,
command mid navigation of the vessels UNSWORTH TRANSPORT
remained with petitioner Coastwise INTERNATIONAL V. CA
Lighterage. Coastwise Lighterage, by the
contract of affreightment, was not converted Facts: On August 31, 1992, the shipper Sylvex
into a private carrier, but remained a common Purchasing Corporation delivered to UTI a
carrier and was still liable as such. The law and shipment of 27 drums of various raw materials
jurisprudence on common carriers both hold for pharmaceutical manufacturing, consisting
that the mere proof of delivery of goods in of: 1) 3 drums (of) extracts, flavoring liquid,
good order to a carrier and the subsequent flammable liquid x x x banana flavoring; 2) 2
arrival of the same goods at the place of drums (of) flammable liquids x x x turpentine
destination in bad order makes for a prima oil; 2 pallets. STC: 40 bags dried yeast; and 3)
facie case against the carrier. It follows then 20 drums (of) Vitabs: Vitamin B Complex
that the presumption of negligence that Extract.[4] UTI issued Bill of Lading No.
attaches to common carriers, once the goods it C320/C15991-2,[5] covering the aforesaid
is sports are lost, destroyed or deteriorated, shipment. The subject shipment was insured
applies to the petitioner. This presumption, with private respondent Pioneer Insurance and
which is overcome only by proof of the Surety Corporation in favor of Unilab against
exercise of extraordinary diligence, remained all risks in the amount of P1,779,664.77 under
unrebutted in this case. Jesus R. Constantino, and by virtue of Marine Risk Note Number
the patron of the vessel "Coastwise 9" MC RM UL 0627 92[6] and Open Cargo
admitted that he was not licensed. Coastwise Policy No. HO-022-RIU.[7]
Lighterage cannot safely claim to have On the same day that the bill of lading was
exercised extraordinary diligence, by placing a issued, the shipment was loaded in a sealed
person whose navigational skills are 1x40 container van, with no. APLU-982012,
questionable, at the helm of the vessel which boarded on APLs vessel M/V Pres. Jackson,
eventually met the fateful accident. It may also Voyage 42, and transshipped to APLs M/V
logically, follow that a person without license Pres. Taft[8] for delivery to petitioner in favor
to navigate, lacks not just the skill to do so, but of the consignee United Laboratories, Inc.
also the utmost familiarity with the usual and (Unilab).
safe routes taken by seasoned and legally On September 30, 1992, the shipment arrived
authorized ones. Had the patron been licensed at the port of Manila. On October 6, 1992,
he could be presumed to have both the skill petitioner received the said shipment in its
and the knowledge that would have prevented warehouse after it stamped the Permit to
the vessel's hitting the sunken derelict ship that Deliver Imported Goods[9] procured by the
lay on their way to Pier 18. As a common Champs Customs Brokerage.[10] Three days
carrier, petitioner is liable for breach of the thereafter, or on October 9, 1992, Oceanica
contract of carriage, having failed to overcome Cargo Marine Surveyors Corporation
the presumption of negligence with the loss (OCMSC) conducted a stripping survey of the
and destruction of goods it transported, by shipment located in petitioners warehouse.
proof of its exercise of extraordinary diligence. On October 15, 1992, the arrastre Jardine
Davies Transport Services, Inc. (Jardine)
(2) Article 2207 of the Civil Code is founded issued Gate Pass No. 7614[12] which stated
on the well-settled principle of subrogation. If that 22 drums[13] Raw Materials for
the insured property is destroyed or damaged Pharmaceutical Mfg. were loaded on a truck
through the fault or negligence of a party other with Plate No. PCK-434 facilitated by Champs
than the assured, then the insurer, upon for delivery to Unilabs warehouse. The
payment to the assured will be subrogated to materials were noted to be complete and in
good order in the gate pass.[14] On the same forwarder does not carry the merchandise
day, the shipment arrived in Unilabs itself.[24]
warehouse and was immediately surveyed by It is undisputed that UTI issued a bill of lading
an independent surveyor. in favor of Unilab. Pursuant thereto, petitioner
On October 23 and 28, 1992, the same undertook to transport, ship, and deliver the 27
independent surveyor conducted final drums of raw materials for pharmaceutical
inspection surveys which yielded the same manufacturing to the consignee.
results. Consequently, Unilabs quality control A bill of lading is a written acknowledgement
representative rejected one paper bag of the receipt of goods and an agreement to
containing dried yeast and one steel drum transport and to deliver them at a specified
containing Vitamin B Complex as unfit for the place to a person named or on his or her
intended purpose.[16] order.[25] It operates both as a receipt and as a
On November 7, 1992, Unilab filed a formal contract. It is a receipt for the goods shipped
claim[17] for the damage against private and a contract to transport and
respondent and UTI. On November 20, 1992, deliver the same as therein stipulated. As a
UTI denied liability on the basis of the gate receipt, it recites the date and place of
pass issued by Jardine that the goods were in shipment, describes the goods as to quantity,
complete and good condition; while private weight, dimensions, identification marks,
respondent paid the claimed amount on March condition, quality, and value. As a contract, it
23, 1993. By virtue of the Loss and names the contracting parties, which include
Subrogation Receipt[18] issued by Unilab in the consignee; fixes the route, destination, and
favor of private respondent, the latter filed a freight rate or charges; and stipulates the rights
complaint for Damages against APL, UTI and and obligations assumed by the parties.[26]
petitioner with the RTC of Makati.[19]The Undoubtedly, UTI is liable as a common
case was docketed as Civil Case No. 93-3473 carrier. Common carriers, as a general rule, are
and was raffled to Branch 134. presumed to have been at fault or negligent if
The RTC decided in favor of private the goods they transported deteriorated or got
respondent and against APL, UTI and lost or destroyed. That is, unless they prove
petitioner. On appeal, the CA affirmed the that they exercised extraordinary diligence in
RTC decision on April 29, 2004. The CA transporting the goods. In order to avoid
rejected UTIs defense that it was merely a responsibility for any loss or damage,
forwarder, declaring instead that it was a therefore, they have the burden of proving that
common carrier. they observed such diligence.[27] Mere proof
Issues: WON petitioner is a common carrier. of delivery of the goods in good order to a
Ruling: Admittedly, petitioner is a freight common carrier and of their arrival in bad
forwarder. The term freight forwarder" refers order at their destination constitutes a prima
to a firm holding itself out to the general facie case of fault or negligence against the
public (other than as a pipeline, rail, motor, or carrier. If no adequate explanation is given as
water carrier) to provide transportation of to how the deterioration, loss, or destruction of
property for compensation and, in the ordinary the goods happened, the transporter shall be
course of its business, (1) to held responsible.
assemble and consolidate, or to provide for
assembling and consolidating, shipments, and
to perform or provide for break-bulk and PHILIPPINES FIRST INSURANCE
distribution operations of the shipments; (2) to
assume responsibility for the transportation of CO., INC., Petitioner, v. WALLEM
goods from the place of receipt to the place of PHILS. SHIPPING, INC.,
destination; and (3) to use for any part of the UNKNOWN OWNER AND/OR
transportation a carrier subject to the federal UNKNOWN CHARTERER OF
law pertaining to common carriers.[23] THE VESSEL M/S "OFFSHORE
A freight forwarders liability is limited to
damages arising from its own negligence, MASTER" AND "SHANGHAI
including negligence in choosing the carrier; FAREAST SHIP BUSINESS
however, where the forwarder contracts to COMPANY," Respondents.
deliver goods to their destination instead of
merely arranging for their transportation, it
becomes liable as a common carrier for loss or
damage to goods. A freight forwarder assumes
the responsibility of a carrier, which actually Before us is a Rule 45 petition1 which
executes the transport, even though the seeks the reversal of the Decision2 and
Resolution3 of the Court of Appeals in Cargoes (turn-over survey) of the
CA-G.R. No. 61885. The Court of arrastre operator, Asian Terminals, Inc.
Appeals reversed the Decision4 of the (arrastre operator).8 The bad state of
Regional Trial Court (RTC) of Manila, the bags is also evinced by the arrastre
Branch 55 in Civil Case No. 96-80298, operator's Request for Bad Order
dismissing the complaint for sum of Survey.9
money.

Asia Star Freight Services, Inc.

The facts of the case follow.5 undertook the delivery of the subject
shipment from the pier to the
consignee's warehouse in Quezon
City,10 while the final inspection was
On or about 2 October 1995, Anhui conducted jointly by the consignee's
Chemicals Import & Export representative and the cargo surveyor.
Corporation loaded on board M/S During the unloading, it was found and
Offshore Master a shipment consisting noted that the bags had been
of 10,000 bags of sodium sulphate discharged in damaged and bad order
anhydrous 99 PCT Min. (shipment), condition. Upon inspection, it was
complete and in good order for discovered that 63,065.00 kilograms of
transportation to and delivery at the the shipment had sustained
port of Manila for consignee, L.G. unrecovered spillages, while 58,235.00
Atkimson Import-Export, Inc. kilograms had been exposed and
(consignee), covered by a Clean Bill of contaminated, resulting in losses due to
Lading. The Bill of Lading reflects the depreciation and downgrading.11
gross weight of the total cargo at
500,200 kilograms.6 The Owner
and/or Charterer of M/V Offshore
Master is unknown while the shipper On 29 April 1996, the consignee filed
of the shipment is Shanghai Fareast a formal claim with Wallem for the
Ship Business Company. Both are value of the damaged shipment, to no
foreign firms doing business in the avail. Since the shipment was insured
Philippines, thru its local ship agent, with petitioner Philippines First
respondent Wallem Philippines Insurance Co., Inc. against all risks in
Shipping, Inc. (Wallem).7 the amount of P2,470,213.50,12 the
consignee filed a formal claim13 with
petitioner for the damage and losses
sustained by the shipment. After
On or about 16 October 1995, the evaluating the invoices, the turn-over
shipment arrived at the port of Manila survey, the bad order certificate and
on board the vessel M/S Offshore other documents,14 petitioner found
Master from which it was subsequently the claim to be in order and
discharged. It was disclosed during the compensable under the marine
discharge of the shipment from the insurance policy. Consequently,
carrier that 2,426 poly bags (bags) petitioner paid the consignee the sum
were in bad order and condition, of P397,879.69 and the latter signed a
having sustained various degrees of subrogation receipt.
spillages and losses. This is evidenced
by the Turn Over Survey of Bad Order
Petitioner, in the exercise of its right of
subrogation, sent a demand letter to
Wallem for the recovery of the amount The Court of Appeals reversed and set
paid by petitioner to the consignee. aside the RTC's decision.18 According
However, despite receipt of the letter, to the appellate court, there is no
Wallem did not settle nor even send a solidary liability between the carrier
response to petitioner's claim.15 and the arrastre operator because it was
clearly established by the court a quo
that the damage and losses of the
shipment were attributed to the
Consequently, petitioner instituted an mishandling by the arrastre operator in
action before the RTC for damages the discharge of the shipment. The
against respondents for the recovery of appellate court ruled that the instant
P397,879.69 representing the actual case falls under an exception
damages suffered by petitioner plus recognized in Eastern
legal interest thereon computed from
the time of the filing of the complaint
until fully paid and attorney's fees
equivalent to 25% of the principal Shipping Lines.19 Hence, the arrastre
claim plus costs of suit. operator was held solely liable to the
consignee.

In a decision16 dated 3 November

1998, the RTC ordered respondents to Petitioner raises the following issues:
pay petitioner P397,879.69 with 6%
interest plus attorney's fees and costs
of the suit. It attributed the damage and
losses sustained by the shipment to the 1. Whether or not the Court of
arrastre operator's mishandling in the Appeals erred in not holding that as a
discharge of the shipment. Citing common carrier, the carrier's duties
Eastern Shipping Lines, Inc. v. Court extend to the obligation to safely
of Appeals,17 the RTC held the discharge the cargo from the vessel;
shipping company and the arrastre
operator solidarily liable since both the
arrastre operator and the carrier are
charged with and obligated to deliver 2. Whether or not the carrier should
the goods in good order condition to be held liable for the cost of the
the consignee. It also ruled that the damaged shipment;
ship functioned as a common carrier
and was obliged to observe the degree
of care required of a common carrier in
handling cargoes. Further, it held that a 3. Whether or not Wallem's failure
notice of loss or damage in writing is to answer the extra judicial demand by
not required in this case because said petitioner for the cost of the
goods already underwent a joint lost/damaged shipment is an implied
inspection or survey at the time of admission of the former's liability for
receipt thereof by the consignee, which said goods;
dispensed with the notice requirement.
 4. Whether or not the courts below The trial court, however, found
erred in giving credence to the through the testimony of Mr.
testimony of Mr. Talens. Maximino Velasquez Talens, a cargo
surveyor of Oceanica Cargo Marine
Surveyors Corporation, that the losses
and damage to the cargo were caused
It is beyond question that respondent's by the mishandling of the arrastre
vessel is a common carrier.20 Thus, operator. Specifically, that the torn
the standards for determining the cargo bags resulted from the use of
existence or absence of the steel hooks/spikes in piling the cargo
respondent's liability will be gauged on bags to the pallet board and in pushing
the degree of diligence required of a the bags by the stevedores of the
common carrier. Moreover, as the arrastre operator to the tug boats then
shipment was an exercise of to the ports.25 The appellate court
international trade, the provisions of affirmed the finding of mishandling in
the Carriage of Goods the discharge of cargo and it served as
its basis for exculpating respondents
from liability, rationalizing that with
the fault of the arrastre operator in the
by Sea Act21 (COGSA), together with unloading of the cargo established it
the Civil Code and the Code of should bear sole liability for the cost of
Commerce, shall apply.22 the damaged/lost cargo.

The first and second issues raised in While it is established that damage or
the petition will be resolved losses were incurred by the shipment
concurrently since they are during the unloading, it is disputed
interrelated. who should be liable for the damage
incurred at that point of transport. To
address this issue, the pertinent laws
and jurisprudence are examined.
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- Common carriers, from the nature of
over survey23 and Request for Bad their business and for reasons of public
Order Survey.24 The turn-over survey, policy, are bound to observe
in particular, expressly stipulates that extraordinary diligence in the vigilance
2,426 bags of the shipment were over the goods transported by them.26
received by the arrastre operator in Subject to certain exceptions
damaged condition. With these enumerated under Article 173427 of
documents, petitioner insists that the the Civil Code, common carriers are
shipment incurred damage or losses responsible for the loss, destruction, or
while still in the care and responsibility deterioration of the goods. The
of Wallem and before it was turned extraordinary responsibility of the
over and delivered to the arrastre common carrier lasts from the time the
operator. goods are unconditionally placed in the
possession of, and received by the
carrier for transportation until the same
are delivered, actually or 4. PERIOD OF RESPONSIBILITY.
constructively, by the carrier to the The responsibility of the carrier shall
consignee, or to the person who has a commence from the time when the
right to receive them.28 goods are loaded on board the vessel
and shall cease when they are
discharged from the vessel.

For marine vessels, Article 619 of the

Code of Commerce provides that the
ship captain is liable for the cargo from The Carrier shall not be liable of loss
the time it is turned over to him at the of or damage to the goods before
dock or afloat alongside the vessel at loading and after discharging from the
the port of loading, until he delivers it vessel, howsoever such loss or damage
on the shore or on the discharging arises.31
wharf at the port of unloading, unless
agreed otherwise. In Standard Oil Co.
of New York v. Lopez Castelo,29 the
Court interpreted the ship captain's On the other hand, the functions of an
liability as ultimately that of the arrastre operator involve the handling
shipowner by regarding the captain as of cargo deposited on the wharf or
the representative of the ship owner. between the establishment of the
consignee or shipper and the ship's
tackle.32 Being the custodian of the
goods discharged from a vessel, an
Lastly, Section 2 of the COGSA arrastre operator's duty is to take good
provides that under every contract of care of the goods and to turn them over
carriage of goods by sea, the carrier in to the party entitled to their
relation to the loading, handling, possession.33
stowage, carriage, custody, care, and
discharge of such goods, shall be
subject to the responsibilities and
liabilities and entitled to the rights and Handling cargo is mainly the arrastre
immunities set forth in the Act.30 operator's principal work so its
Section 3 (2) thereof then states that drivers/operators or employees should
among the carriers' responsibilities are observe the standards and measures
to properly and carefully load, handle, necessary to prevent losses and
stow, carry, keep, care for, and damage to shipments under its
discharge the goods carried. custody.34

The above doctrines are in fact In Fireman's Fund Insurance Co. v.

expressly incorporated in the bill of Metro Port Service, Inc.35 the Court
lading between the shipper Shanghai explained the relationship and
Fareast Business Co., and the responsibility of an arrastre operator to
consignee, to wit: a consignee of a cargo, to quote:
The legal relationship between the goods ceases after its discharge from
consignee and the arrastre operator is the vessel. Article 619 of the Code of
akin to that of a depositor and Commerce holds a ship captain liable
warehouseman. The relationship for the cargo from the time it is turned
between the consignee and the over to him until its delivery at the port
common carrier is similar to that of the of unloading.
consignee and the arrastre operator.
Since it is the duty of the ARRASTRE
to take good care of the goods that are
in its custody and to deliver them in In a case decided by a U.S. Circuit
good condition to the consignee, such Court, Nichimen Company v. M./V.
responsibility also devolves upon the Farland,37 it was ruled that like the
CARRIER. Both the ARRASTRE and duty of seaworthiness, the duty of care
the CARRIER are therefore charged of the cargo is non-delegable,38 and
with and obligated to deliver the goods the carrier is accordingly responsible
in good condition to the for the acts of the master, the crew, the
consignee.(Emphasis supplied) stevedore, and his other agents. It has
(Citations omitted) also been held that it is ordinarily the
chanroblesvirtuallawlibrary 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
The liability of the arrastre operator accomplished with sound machinery,
was reiterated in Eastern Shipping competent hands, and in such manner
Lines, Inc. v. Court of Appeals36 with that no unnecessary injury shall be
the clarification that the arrastre done thereto.39 And the fact that a
operator and the carrier are not always consignee is required to furnish
and necessarily solidarily liable as the persons to assist in unloading a
facts of a case may vary the rule. shipment may not relieve the carrier of
its duty as to such unloading.40

Thus, in this case the appellate court is

correct insofar as it ruled that an The exercise of the carrier's custody
arrastre operator and a carrier may not and responsibility over the subject
be held solidarily liable at all times. shipment during the unloading actually
But the precise question is which entity transpired in the instant case during the
had custody of the shipment during its unloading of the shipment as testified
unloading from the vessel?cralawred by Mr. Talens, the cargo surveyor, to
quote:

The aforementioned Section 3(2) of

the COGSA states that among the Atty. Repol:
carriers' responsibilities are to properly
and carefully load, care for and
discharge the goods carried. The bill of
lading covering the subject shipment - Do you agree with me that Wallem
likewise stipulates that the carrier's Philippines is a shipping
liability for loss or damage to the [company]?cralawred
 A Yes, sir. Q He did not send the stevedores to
what manner in the discharging of the
cargo from the vessel?cralawred

Q And, who hired the services of the

stevedores?cralawred
A And head checker po and siyang
nagpapatakbo ng trabaho sa loob ng
barko, sir.42
A The checker of the vessel of
Wallem, sir.41

xxx

xxx

Q Is he [the head checker] an

employee of the company?cralawred
Q Mr. Witness, during the
discharging operation of this cargo,
where was the master of the
vessel?cralawred A He is a contractor/checker of
Wallem Philippines, sir.43

A On board the vessel, supervising,

sir. Moreover, the liability of Wallem is
highlighted by Mr. Talen's notes in the
Bad Order Inspection, to wit:

Q And, observed the discharging

operation?cralawred
"The bad order torn bags, was due to
stevedores['] utilizing steel
hooks/spikes in piling the cargo to
A Yes, sir. [the] pallet board at the vessel's cargo
holds and at the pier designated area
before and after discharged that cause
the bags to torn [sic]."44 (Emphasis
Q And, what did the master of the supplied)cralawlibrary
vessel do when the cargo was being
unloaded from the vessel?cralawred

The records are replete with evidence

which show that the damage to the
A He would report to the head bags happened before and after their
checker, sir. discharge45 and it was caused by the
stevedores of the arrastre operator who
were then under the supervision of
Wallem.ςηαñrοblεš νιrâ€
υαl lαω lιbrαrÿ Contrary to petitioner's stance on the
third issue, Wallem's failure to respond
to its demand letter does not constitute
an implied admission of liability. To
It is settled in maritime law borrow the words of Mr. Justice Oliver
jurisprudence that cargoes while being Wendell Holmes, thus:
unloaded generally remain under the
custody of the carrier. In the instant
case, the damage or losses were
incurred during the discharge of the A man cannot make evidence for
shipment while under the supervision himself by writing a letter containing
of the carrier. Consequently, the carrier the statements that he wishes to prove.
is liable for the damage or losses He does not make the letter evidence
caused to the shipment. As the cost of by sending it to the party against
the actual damage to the subject whom he wishes to prove the facts
shipment has long been settled, the [stated therein]. He no more can
trial court's finding of actual damages impose a duty to answer a charge than
in the amount of P397,879.69 has to be he can impose a duty to pay by sending
sustained. goods. Therefore a failure to answer
such adverse assertions in the absence
of further circumstances making an
answer requisite or natural has no
On the credibility of Mr. Talens which effect as an admission.47
is the fourth issue, the general rule in
assessing credibility of witnesses is
well-settled:
With respect to the attorney's fees, it is
evident that petitioner was compelled
to litigate this matter to protect its
x x x the trial court's evaluation as to interest. The RTC's award of
the credibility of witnesses is viewed P20,000.00 as attorney's fees is
as correct and entitled to the highest reasonable.
respect because it is more competent to
so conclude, having had the
opportunity to observe the witnesses'
demeanor and deportment on the stand, WHEREFORE, the petition is
and the manner in which they gave GRANTED. The Decision of the Court
their testimonies. The trial judge of Appeals dated 22 June 2004 and its
therefore can better determine if such Resolution dated 11 October 2004 are
witnesses were telling the truth, being REVERSED and SET ASIDE. Wallem
in the ideal position to weigh is ordered to pay petitioner the sum of
conflicting testimonies. Therefore, P397,879.69, with interest thereon at
unless the trial judge plainly 6% per annum from the filing of the
overlooked certain facts of substance complaint on 7 October 1996 until the
and value which, if considered, might judgment becomes final and executory.
affect the result of the case, his Thereafter, an interest rate of 12% per
assessment on credibility must be annum shall be imposed.48
respected.46 Respondents are also ordered to pay
petitioner the amount of P20,000.00 loss and damage that the goods on
for and as attorney's fees, together with board his
the costs of the suit. vessel suffered.
Marina Port Services, Inc. (Marina),
the Manila South Harborarrastre or
cargo-handling
SO ORDERED. operator, received the shipment
and upon inspection of the three
container vans
separately carrying the generator
sets, two vans bore signs of
NEW WORLD INTERNATIONAL
external damage while
VS. NYK-FILJAPAN SHIPPING
the third van appeared unscathed.
CORP.
An examination of the three
G.R. No. 171468, Aug. 24, 2011,
generator sets in the
Abad, J.:p, 3rd Division
presence of petitioner New World‟s
representatives, Federal Builders
FACTS: Petitioner New World
(the project
International Development (Phils.),
contractor) and surveyors of
Inc. (New World)
petitioner New World‟s insurer,
bought from DMT Corporation
Seaboard–Eastern
(DMT) through its agent, Advatech
Insurance Company (Seaboard),
Industries, Inc.
revealed that all three sets suffered
(Advatech) three emergency
extensive damage
generator sets worth
and could no longer be repaired.
US$721,500.00.DMT shipped the
For these reasons, New World
generator sets by truck from
demanded recompense
Wisconsin, United States, to LEP
for its loss from respondents NYK,
Profit International, Inc.
DMT, Advatech, LEP Profit, LEP
(LEP Profit) in Chicago, Illinois.
International
From there, the shipment went by
Philippines, Inc. (LEP), Marina, and
train to Oakland,
Serbros. While LEP and NYK
California, where it was loaded on
acknowledged receipt
S/S California Luna V59, owned
of the demand, both denied liability
and operated by
for the loss. Since Seaboard
NYK Fil-Japan Shipping
covered the goods with
Corporation (NYK) for delivery to
a marine insurance policy,
petitioner New World in
petitioner New World sent it a
Manila. NYK issued a bill of lading,
formal claim. Seaboard
declaring that it received the goods
required petitioner New World to
in good
submit to it an itemized list of the
condition.NYK unloaded the
damaged units,
shipment in Hong Kong and
parts, and accessories, with
transshipped it to S/S ACX
corresponding values, for the
Ruby V/72 that it also owned and
processing of the claim. But
operated. On its journey to Manila,
petitioner New World did not submit
however, ACX
what was required of it, insisting
Ruby encountered typhoon
that the insurance
Kadiang whose captain filed a sea
policy did not include the
protest on arrival at the
submission of such a list in
Manila South Harbor respecting the
connection with an insurance the vessel‟s voyage from Hong
claim. Reacting to this, Seaboard Kong to Manila and that it was her
refused to process the claim. negligence in
Thus,petitioner New continuing with that journey despite
World filed an action for specific the adverse condition which
performance and damages against caused petitioner New
all the respondents World‟s loss.That the loss was
before the Regional Trial Court occasioned by a typhoon, an
(RTC) of Makati City. The RTC exempting cause under
rendered a decision Article 1734 of the Civil Code, does
absolving the various respondents not automatically relieve the
from liability with the exception of common carrier of
NYK. The RTC liability. The latter had the burden
found that the generator sets were of proving that the typhoon was the
damaged during transit while in the proximate and
care of NYK‟s only cause of loss and that it
vessel, ACX Ruby.The RTC ruled, exercised due diligence to prevent
however, that petitioner New World or minimize such loss
filed its claim before, during, and after the
against the vessel owner NYK disastrous typhoon. As found by
beyond the one year provided the RTC and the CA, NYK
under the Carriage of failed to discharge this burden.
Goods by Sea Act (COGSA).On
appeal, the Court of Appeals (CA)
rendered judgment NEW ZEALAND INSURANCE
affirming the RTC‟s rulings except CO., LTD., plaintiff-appellant,
with respect to Seaboard‟s liability. vs.
The CA rendered ADRIANO CHOA JOY, ETC.,
an amended decision, reversing defendant-appellee.
itself as regards the claim against
Seaboard. This is an action for the recovery of the
Petitioner New World asserts that sum of P5,196.20 with legal interest
the roles of respondents DMT, thereon from the date of the filing of
Advatech, LEP, LEP the complaint.
Profit, Marina and Serbros in
handling and transporting its On May 20, 1950, the ship "Jupiter",
shipment from Wisconsin to on her voyage No. 149, received on
Manila collectively resulted in the board at Carangian, Samar, in good
damage to the same, rendering order and condition, 107 bundles of
such first class loose weight hemp weighing
respondentssolidarily liable with 8,273 kilos, of 130.80 piculs, valued at
NYK, the vessel owner. P6,736.20, from Lee Teh & Co., Inc.,
ISSUE: W/N the carrier, NYK, is for transportation and delivery to
liable for the damage. Manila, under a bill of lading issued by
HELD: Yes.Consequently, the the carrier to the shipper. The ship was
Court will not disturb the finding of owned by Adriano Choa Joy, doing
the RTC, affirmed by business under the name of South Sea
the CA, that the generator sets Shipping Line, while the cargo was
were totally damaged during the shipped by the branch office of Lee
typhoon which beset Teh & Co., Inc. at Carangian, Samar,
for transportation and delivery to its Appellant poses in this appeal the
main office at Manila. following issue: "Whether Lee Teh &
Co., Inc, of Manila, as consignee, or
The cargo failed to arrive in Manila Lee Teh & Co., Inc. of Catarman,
because the vessel ran aground while Samar, as consignor, should have filed
entering the Laoang Bay, Samar, on its claim for damages to the cargo with
May 20, 1950, due to the negligence of the shipping company, herein
its captain, Jose Molina, who, in the defendant, within twenty four hours
investigation conducted by the Marine from the date the said cargo was
Board of Inquiry, was found negligent salvaged by the consignor, in
of his duties and was suspended from accordance with Article 366 of the
office for a period of three months. Of Code of Commerce for this action to
the cargo, only 7,590 kilos, or 120 prosper, or that neither the said
piculs of hemp, were saved and consignee nor the said consignor was
because of their damaged condition, under the obligation to file the said
they were sold for the sum of P2,040, claim within the said period, as they
the consignor having spent P500 for are not bound by the provisions of
their salvage, thereby causing Lee Teh Article 366 of the Code of
& Co., Inc. losses in the sum of Commerce."
P5,196.20.
Article 366 of the Code of Commerce,
The cargo was insured by the New which was applied by the court,
Zealand Insurance Co., Ltd., and provides:
because of the damage caused to said
cargo while in transit, the losses were Within twenty-four hours
paid by said company to the shipper. following the receipt of the
The carrier having refused to merchandise, the claim against
reimburse these damages despite the carrier for damage or
demands made to that effect, the average which may be found
insurance company, as subrogee of the therein upon opening the
shipper instituted the present action packages, may be made,
before the Court of First Instance of provided that the indications of
Manila. the damage or average which
gives rise to the claim cannot
After the parties had presented their be ascertained from the outside
evidence, the court found that, while part of such packages, in which
the shipper had suffered damages case the claim shall be admitted
because of the inability of the carrier to only at the time of receipt.
transport the cargo as agreed upon,
however, the liability of the carrier did After the periods mentioned
not attach because of the failure of the have elapsed, or the
shipper or of the consignee to file its transportation charges have
claim for damages within 24 hours been paid, no claim shall be
from receipt of the cargo as required admitted against the carrier
by law. Consequently, the court with regard to the condition in
dismissed the case, with costs against which the goods transported
the plaintiff. Plaintiff brought this case were delivered.
on appeal directly to this Court.
It would appear from the above that in
order that the condition therein
provided may be demanded there lorcha. And of the total cargo of 2,244
should be a consignment of goods, packages of sugar, only 1,022 were
through a common carrier, by a saved in damaged condition through
consignor in one place to a consignee the efforts made by the shipper.
in another place. And said article Because plaintiff failed to comply with
provides that the claim for damages the requirement of article 366 of the
must be made "within twenty-four Code of Commerce, the lower court
hours following the receipt of the found for defendant and dismissed the
merchandise" by the consignee from case. But this Court held that said
the carrier. In other words, there must article "is limited to cases of claims for
be delivery of the merchandise by the damages to goods actually received by
carrier to the consignee at the place of the consignee; it has no application in
destination. In the instant case, the cases wherein the goods entrusted to
consignor is the branch office of Lee the carrier are not delivered to the
Teh & Co., Inc., at Catarman, Samar, consignee by the carrier in pursuance
which placed the cargo on board the of the terms of the carriage contract."
ship Jupiter, and the consignee, its Elaborating on this point, this Court
main office at Manila. The lower court commented:
found that the cargo never reached
Manila, its destination, nor was it ever Article 366 of the Commercial
delivered to the consignee, the office Code is limited to cases of
of the shipper in Manila, because the claims for damages to goods
ship ran aground upon entering Laoang actually turned over by the
Bay, Samar on the same day of the carrier and received by the
shipment. Such being the case, it consignee, whether those
follows that the aforesaid article 366 damages be apparent from an
does not have application because the examination of the packages in
cargo was never received by the which the goods are delivered,
consignee. Moreover, under the bill of or of such character that the
lading issued by the carrier (Exhibit nature and extend of the
C), it was the letter's undertaking to damage is not apparent until
bring the cargo to its destination— the packages are opened and
Manila,—and deliver it to consignee, the contents examined. Clearly
which undertaking was never complied it has no application in cases
with. The carrier, therefore, breached wherein the goods entrusted to
its contract, and, as such, it forfeited its the carrier are not delivered by
right to invoke in its favor the the carrier to the consignee. In
conditions required by article 366. such cases there can be no
question of a claim for
One case parallel to the present is damages suffered by the goods
Roldan vs. Lim Ponzo & Co., 37 Phil., while in transport, since the
285. In that case, plaintiff sought to claim for damages arises
recover damages for failure of exclusively out of the failure to
defendant to transport 2,244 packages make delivery. . . .
of sugar from plaintiff's hacienda to
Iloilo. It was proven that the cargo did We are of opinion, however,
not reach its destination because the that the necessity for making
lorcha carrying it was wrecked in the the claim in accordance with
river Jalaud through the negligence that article did not arise if, as it
and lack of skill of the master of the is alleged, these 1,022
 packages, of sugar were party under the law are different.
recovered from the wreck by Moreover, even if the consignor and
the plaintiff, himself, in an the consignee be considered as one and
effort, by his own activities, to the same party, still the carrier cannot
save his property from total disclaim responsibility under its
loss. The measures to be taken contract for the simple reason that it
under the terms of Article 367 failed to comply with its obligation to
of the Code when the parties bring the cargo to its destination. This
are unable to arrive at an breach alone justifies its liability under
amicable settlement of claims the carriage contract.
for damages set up in
accordance with Article 366, Wherefore, the decision appealed from
quite clearly indicate that the is hereby reversed, and another one
necessity for the presentation of will be entered ordering the defendant
claims under this article arises to pay the plaintiff the sum of
only in those cases wherein the P5,196.20, with legal interest thereon
carrier makes delivery and the from the filing of the complaint, with
consignee receives the goods in costs against appellee.
pursuance of the terms of the
contract. Mater Steel Pipe vs. CA

It is true that in the instant case there is

some disagreement as to whether the FACTS:
salvage of the portion of the cargo that
was saved was due to the efforts of the Hong Kong Government Supplies
carrier itself or to the combined efforts Department contracted Mayer Steel
of the latter and the shipper as a result Pipe Corporation to manufacture and
of which the salvaged cargo was supply various steel pipes and fittings.
placed in possession of the shipper Prior to the shipping, Mayer insured
who sold it and deducted its proceeds these pipes and fittings against all risks
from the liability of the carrier. But with South Sea Surety and Insurance
this discrepancy, in our opinion, would Co., Inc. and Charter Insurance Corp.,
seem to be immaterial because the law with Industrial Inspection Inc.
as well as the contract contemplates appointed as third-party inspector.
delivery of the cargo to the consignee
at its port of destination in order that After examining the pipes and fittings,
the benefit of the law may be availed Industrial Inspection certified that they
of. The liability of the carrier must be are in good order condition. However,
determined in the light of the carriage when the goods reached Hong Kong, it
contract, and since that contract calls was discovered that a substantial
for reciprocal obligations, the carrier portion thereof was damaged.
cannot demand fulfillment of its part
from the shipper or consignee unless it The trial court found in favor of the
first complies with its own obligation. insured. However, when the case was
(Article 1100, old Civil Code.) The elevated to the CA, it set aside the
fact that the consignor is but the decision of the trial court and
branch office of the company that dismissed the complaint on the ground
shipped the goods, and the consignee of prescription. It held that the action
is the main office at Manila, is of no was barred under Sec. 3(6) of the
moment, because the duties of each Carriage of Goods by Sea Act
(COGSA) since it was filed only on RIZAL SURETY vs.
April 17, 1986, more than two years MACONDRAY
from the time the goods were unloaded
from the vessel. Plaintiff, Rizal Surety & Insurance
Company seeks the reversal of a
ISSUE: decision of the Court of First Instance
of Manila dismissing the complaint
 Whether or not the action is herein, with costs.
barred by prescription
Plaintiff seeks to recover from
defendant, Macondray Co., Inc., as
HELD: authorized agent, in Manila, of Barber
Steamship Line, Inc., which operates
Sec. 3(6) of the COGSA states that the the vessel "SS Tai Ping," the sum of
carrier and the ship shall be discharged P2,020.00, representing the maximum
from all liability for loss or damage to value recoverable under the
the goods if no suit is filed within one corresponding bill of lading of some
year after delivery of the goods or the machinery parts shipped, on board said
date when they should have been vessel, at New York, and consigned to
delivered. Under this provision, only Edwardson Manufacturing
the carrier’s liability is extinguished if Corporation, in Manila, but not
no suit is brought within one year. But discharged by the vessel in Manila, in
the liability of the insurer is not view of which the plaintiff had to pay,
extinguished because the insurer’s pursuant to its contract of insurance
liability is based not on the contract of with the consignee, the value of said
carriage but on the contract of effects to the latter.
insurance.
In its answer, the defendant set up the
An insurance contract is a contract defense of prescription which the
whereby one party, for a consideration lower court sustained. Hence, the
known as the premium, agrees to dismissal of the complaint, which has
indemnify another for loss or damage been appealed directly to this Court.
which he may suffer from a specified
peril. An “all risks” insurance policy Defendant's plea is predicated upon
covers all kinds of loss other than Section 3, Title I, of the Carriage of
those due to willful and fraudulent act Goods by Sea Act, the penultimate
of the insured. Thus, when private paragraph of subparagraph 6 of which
respondents issued the “all risks” reads:
policies to Mayer, they bound
themselves to indemnify the latter in "In any event the carrier and the ship
case of loss or damage to the goods shall be discharged from all liability in
insured. Such obligation prescribes in respect to loss or damages unless suit
ten years, in accordance with Article is brought within one year after
1144 of the New Civil Code. delivery of the goods or the date when
the goods should have been delivered:
Provided, That if a notice of loss or
damage, either apparent or concealed,
is not given as provided for in this
section, that fact shall not affect or
prejudice the right of the shipper to
bring suit within one year after the would be due to its own omission, if
delivery of the goods or the date when undertook to make the delivery by
the goods should have been delivered." itself, or to the omission of its agent, if
the carrier entrusted the custody of the
The only question submitted for our goods and/or its delivery to a third
determination is whether the period of party.
prescription in the foregoing provision
is controlling in the case at bar, Again, our statute of limitations of
considering the conditions obtaining action cannot be applied to the present
therein. case because the corresponding bill of
lading which is the contract and,
Plaintiff maintains the negative view, hence, the law between the parties
upon the theory that the above-quoted expressly stipulates that it is "subject
provision cannot apply when the to the Provisions of the Carriage by
shipment in question has not been Sea Act of the U. S. of America,
discharged from the carrying vessel, as approved April 16, 1936 which shall
in the case at bar. In such event, it be deemed to be incorporated" therein.
claims, our general statute of limi-
tations of action should apply. The lower court held, and, correctly,
that, inasmuch as "SS Tai Ping"
We find no merit in this contention. arrived at the Port of Manila on
The aforementioned provision November 2, 1962 and left it on
contemplates not only the case of November 4, 1962, it was on the latter
damage, but also, that of loss. It goes date that the carrier had the last
without saying that there could be no opportunity to deliver the goods; that
possible charge of goods lost during the period of one year within which the
the voyage and before reaching the carrier could be sued commence to
destination. Then again, said run, therefore, from November 5, 1962
provision, likewise, anticipates two (2 and expired on November 4, 1963; and
other possibilities, viz.: 1) that that said period has expired before this
delivery has been made, in which case action was commenced on February
the action should be brought "within 10, 1964.
one year after delivery of the goods;"
or 2) that no delivery has taken place, WHEREFORE, the decision appealed
in which event said period should be from should as it is hereby, affirmed,
computed from "the date when goods with costs against plaintiff-appellant.
should have been delivered." In the
latter contingency, the cause of such UNION CARBIDE PHILIPPINES,
non-delivery that is to say, whether the INC. (formerly National Carbon
goods have been discharged from the Philippines, Inc.), plaintiff-
vessel or not is immaterial. If the appellant,
goods have not been discharged from vs.
the vessel, the non-delivery is MANILA RAILROAD CO.,
imputable to the carrier. So would it substituted by the PHILIPPINE
be, if the goods had been unloaded NATIONAL RAILWAYS, MANILA
from the vessel, but not delivered to PORT SERVICE and AMERICAN
the consignee. Indeed, in such case of STEAMSHIP AGENCIES, INC.,
discharge of the goods from the vessel, defendants- appellees.
the carrier would still be liable for non-
delivery of goods, because the same
Solicitor General Antonio P. equivalent to P7,402.78 (Annex I of
Barredo and Solicitor Stipulation of Facts).
Buenaventura J. Guerrero for
appellants. The consignee, through the
customs broker, filed on January 3,
Salcedo, Del Rosario, Bito & Misa 1962 with the Manila Port Service,
for appellee. as arrastre operator, and the
American Steamship Agencies,
Inc., as agent of the carrier, a
provisional claim advising them that
AQUINO, J.: the shipment in question was
"shorthanded, short delivered
This is an admiralty and arrastre and/or landed in bad order"
case. On December 18, 1961 the (Annexes E and F of Stipulation of
vessel Daishin Maru arrived in Facts).
Manila with a cargo of 1,000 bags
of synthetic resin consigned to Formal claims dated June 11, 1962
General Base Metals, Inc. which were made by the consignee with
later sold the cargo to Union the arrastre operator and the agent
Carbide Philippines, Inc. of the carrier (Annexes I and I-1 of
Stipulation of Facts The claims
On the following day, December were reiterated by the consignee's
19, that cargo was delivered to the lawyer in his letters dated
Manila Port Service in good order September 26, 1962 which were
and condition except for twenty- received by the carrier's agent and
five bags which were in bad order the arrastre operator on October 4,
(Par. IV and Annexes C to C-25 of 1962 (Annexes J and J-1 of
Stipulation of Facts). Stipulation of Facts).

On January 20 and February 6 and As the claims were not paid, Union
8, 1962 eight hundred ninety-eight Carbide Philippines, Inc. filed a
(898) bags of resin (out of the complaint on December 21, 1962 in
1,000 bags) were delivered by the the Court of First Instance of
customs broker to the consignee. Manila against the Manila Railroad
One hundred two bags were Company, the Manila Port Service
missing. The contents of twenty- and the American Steamship
five bags were damaged or pilfered Agencies, Inc. for the recovery of
while they were in the custody of damages amounting to P7,402.78
the arrastre operator (Par. XII and as the value of the undelivered 102
Annexes D and H of Stipulation of bags of resin and the damaged 50
Facts All in all fifty bags out of the bags plus legal rate of interest from
898 bags were damaged (Annex D- the filing of the complaint and
5). P1,000 as attorney's fees.

The 152 bags of resin (102 missing Union Carbide's complaint was a
and 50 damaged) were valued at double-barrelled action or a joinder
$12.65 a bag or a total value of of two causes of action. One was
$1,992.80, which amount at the an action in admiralty under the
prevailing rate of exchange of Carriage of Goods by Sea Act
P3.85 to the American dollar, is against the carrier's agent for the
recovery of P1,217.56 as the value fact and of law, That Appellate
of twenty-five bags of resin which Court elevated the case to this
were damaged before they were Court because in its opinion the
landed (Annex C-25). appeal raises only the legal issue
of prescription (Resolution of May
The other was an action under the 10, 1967 in CA-G. R. No. 33743-
management contract between the R).
Bureau of Customs and the Manila
Port Service, a subsidiary of the Union Carbide contends that the
Manila Railroad Company, for the trial court erred (1) in finding that its
recovery of P6,185.22 as the value action was barred by the statute of
of the undelivered 102 bags of limitations and (2) in not holding
resin and twenty-five bags, the that the carrier and the arrastre
contents of which were damaged or operator were liable for the value of
pilfered while in the custody of the the undelivered and damaged
arrastre operator. cargo.

The case was submitted for Claim against the carrier's agent.-
decision on the basis of a There is no question that, as shown
stipulation of facts. The trial court in in the twenty-five tally sheets, 975
its decision of January 15, 1964 bags of resin were delivered by the
dismissed the case as to the carrier in good order to the arrastre
carrier's agent on the ground that operator and that only twenty-five
the action had already prescribed (25) bags were damaged while in
because it was not "brought within the carrier's custody (Annexes C to
one year after delivery of the C-25 and K-1 of Stipulation of
goods", as contemplated in section Facts).
3(6) of the Carriage of Goods by
Sea Act. The one-year period was The one-year period within which
counted from December 19, 1961 the consignee should sue the
when the cargo was delivered to carrier is computed from "the
the arrastre operator. As above delivery of the goods or the date
stated, the action was brought on when the goods should have been
December 21, 196'2 or two days delivered". The Carriage of Goods
late, according to the trial court's by Sea Act provides:
reckoning (Civil Case No. 52562).
RESPONSIBILITIES
With respect to the consignee's AND LIABILITIES
claim against the arrastre operator,
the trial court found that the SEC. 3. xxx xxx xxx
provisional claim was filed within
the fifteen-day period fixed in (6) Unless notice of
paragraph 15 of the arrastre loss or damage and
contract. Yet, in spite of that the general nature of
finding, the trial court dismissed the such loss or damage
action against the arrastre operator be given in writing to
(p. 65, Record on Appeal). the carrier or hi agent
at the port of
Union Carbide appealed to the discharge before or at
Court of Appeals on questions of the time of the
removal of the goods apparent or
into the custody of the concealed, is not
person entitled to given as provided for
delivery thereof under in this section, that
the contract of fact shall not affect or
carriage, such prejudice the right of
removal shall be the shipper to bring
prima facie evidence suit within one year
of the delivery by the after the delivery of
carrier of the goods the goods or the date
as described in the when the goods
bill of lading. If the should have been
loss or damage is not delivered.
apparent, the notice
must be given within In the case of any
three days of the actual or
delivery. apprehended loss or
damage the carrier
Said notice of loss or and the receiver shall
damage may be give all reasonable
endorsed upon the facilities to each other
receipt for the goods for inspecting and
given by the person tallying the goods.
taking delivery (Commonwealth Act
thereof. No. 65, adopting U.S.
Public Act No. 521 of
The notice in writing April 16,1936).
need not be given if
the state of the goods What is the meaning of "delivery" in
has at the time of section 3(6) of the Carriage of
their receipt been the Goods by Sea Act The trial court
subject of joint survey construed delivery as referring to
or inspection. the discharge or landing of the
cargo.
In any event the
carrier and the ship Union Carbide contends that
shall be discharged "delivery" does not mean the
from all liability in discharge of goods or the delivery
respect of loss or thereof to the arrastre operator but
damage unless suit is the actual delivery of the goods to
brought within one the consignee by the customs
year after delivery of broker.
the goods or the date
when the goods The carrier contends that delivery
should have been means discharge from the vessel
delivered: into the custody of the customs
arrastre operator because under
Provided, That if a sections 1201 and 1206 of the
notice of loss or Tariff and Customs Code
damage, either merchandise cannot be directly
delivered by the carrier to the notwithstanding. In
consignee but should first pass any case, the
through the customhouse at a port Carrier's liability is to
of entry for the collection of cease as soon as the
customs duties. goods are lifted from
ship's deck or leave
The carrier cites the following the ship's tackle, any
provisions of the bill of lading to custom of the port to
support its contention: the contrary
notwithstanding.
9. Delivery. The Consignees to pay
Carrier retains the charges for sorting
option of delivery at and stocking the
all times from ship's goods on wharf or in
side or from craft, shed.
hulk, custom house,
warehouse, wharf or If the consignees fail
quay at the risk of the to take delivery of
shippers, consignees their goods
or owners of the immediately the ship
goods, and all is ready to discharge
expenses incurred by them, the Carrier
delivery otherwise shall be at liberty to
than from ship's side land and warehouse
shall be borne by the or discharge the said
shippers, consignee goods into hulk or
or owners of the craft, or at any other
goods. place at the risk and
expense of the
11. Discharge of shippers, consignees
Goods. The goods or owners of the
may be discharge goods without notice.
without notice, as
soon as the ship is 15. Notice of Claim.
ready to unload, Any claim for loss of
continuously day and or damage to the
night, Sundays and goods must be
holidays included, on preferred in writing to
to wharf or quay or the Carrier's Agents
into warehouse, or at the place of
into hulk, lazaretto or delivery within 3 days
craft or on any other after the ship's
place and be stored discharge thereof,
there at the risk and and before the goods
expense of the are removed from the
shippers, consignees quay or ship's " or
or owners of the place of discharge,
goods, any custom of and in the event of
the port to the such claim not being
contrary preferred as above
 specified, the claim all ports of entry and
shall be deemed as in the exercise of its
waived, and the functions it is hereby
Carrier shall be authorized to acquire,
discharged therefrom. take over, operate
and superintend such
Suit for the recovery plants and facilities as
of loss or damage may be necessary for
shall not in any event the receiving,
be maintainable handling, custody and
against the Carrier or delivery of articles,
the ship unless and the convenience
instituted within one and comfort of
year after the delivery passengers and the
of the written notice handling of baggage,
above specified. The as well as to acquire
amount of claim shall fire protection
be restricted to the equipment for use in
Cash Value of the the piers:
goods at the place
and time of original Provided, That
shipment plus all whenever in his
charges actually paid judgment the
thereon, and all receiving, handling,
claims for either custody and delivery
partial or total loss or of articles can be
damage shall be carried on by private
entertained and parties with greater
adjusted upon this efficiency, the
basis of value. Commissioner may,
(Annex B). after public bidding
and subject to the
In this connection, it is pertinent to approval of the
state that the Tarifff and Customs department head,
Code allows the delivery of contract with any
imported merchandise to the private party for the
arrastre operator: service of receiving,
handling, custody and
SEC. 1213. Receiving delivery of articles,
Handling Custody and in such event, the
and Delivery of contract may include
Articles. — The the sale or lease of
Bureau of Customs government-owned
shall have "elusive equipment and
supervision and facilities used in such
control over the service.
receiving, handling,
custody and delivery The sensible and practical
of articles on the interpretation is that delivery within
wharves and piers at the meaning of section 3(6) of the
Carriage of Goods by Sea Law Under the facts of this case, we
means delivery to the arrastre held that the one-year period was
operator. That delivery is correctly reckoned by the trial court
evidenced by tally sheets which from December 19, 1961, when, as
show whether the goods were agreed upon by the parties and as
landed in good order or in bad shown in the tally sheets, the cargo
order, a fact which the consignee was discharged from the carrying
or shipper can easily ascertain vessel and delivered to the Manila
through the customs broker. Port Service. That one-year period
expired on December 19, 1962.
To use as basis for computing the Inasmuch as the action was filed
one-year period the delivery to the on December 21, 1962, it was
consignee would be unrealistic and barred by the statute of limitations.
might generate confusion between
the loss or damage sustained by Defendant American Steamship
the goods while in the carrier's Agencies, Inc., as agent of the
custody and the loss or damage carrier, has no more liability to the
caused to the goods while in the consignee's assignee, Union
arrastre operator's possession. Carbide Philippines, Inc., in
connection with the damaged
Apparently, section 3(6) adheres to twenty-five bags of resin.
the common-law rule that the duty
imposed water carriers was merely Prescription was duly pleaded by
to transport from wharf to wharf the said defendant in its answer
and that the carrier was not bound and motion to dismiss. That
to deliver the goods at the defense was correctly entertained
warehouse of the consignee (Tan by trial court.
Hi vs. United States, 94 Fed. Supp.
432,435). Claim against the arrastre operator.
— The liability of the arrastre
In the Tan Hi case, it was held that contractor has a factual and legal
a requirement of Philippine law that basis different from that of the
all cargo unloaded at Manila be carrier's. The management contract
delivered to the consignee through between the Manila Port Service
the arrastre operator acting as and the Bureau of Customs
customs' agent was not provides:
unreasonable. The common-law
requirements as to the proper 15. ... ; in any event
delivery of goods by water carrier the CONTRACTOR
apply only when customs hall be relieved and
regulations at the port of released of any and
destination do not otherwise all responsibility or
provide. The delivery must be in liability for loss,
accordance with the usages of the damage, misdelivery,
port in order that such delivery and/or non-delivery of
would discharge the carrier of goods, unless suit in
responsibility. (Notes 50 and 51, 80 the court of proper
C.J.S. 922; 58 C. J. 372 note 24. jurisdiction is brought
See 70 Am. Jur 2nd 613, note 19). within a period of one
(1) year from the date
 of the discharge of or on the fifteenth day following
the goods, or from the December 19, 1961, the date of the
date when the claim discharge of the last package from
for the value of such the carrying vessel. That claim was
goods have been never formally rejected or denied
rejected or denied by by the Manila Port Service.
the CONTRACTOR,
provided that such Having complied with the condition
claim shall have been precedent for the filing of a claim
filed with the within the fifteen- day period, Union
CONTRACTOR Carbide could file the court action
within fifteen (15) within one year, either from
days from the date of December 19, 1961 or from
discharge of the last December 19, 1962. This second
package from the date is regarded as the expiration
carrying vessel. ... of the period within which the
(Annex A of Manila Port Service should have
Stipulation of Facts acted on the claim (Philippine
Education Co., Inc. vs. Manila Port
Under the foregoing contractual Service, L-24091, 21 SCRA, 174,
provisions, the action against the 178).
arrastre operator to enforce liability
for loss of the cargo or damage In other words, the claimant or
thereto should be filed within one consignee has a two-year
year from the date of the discharge prescriptive period, counted from
of the goods or from the date when the date of the discharge of the
the claim for the value of such goods, within which to file the
goods has been rejected or denied action in the event that the arrastre
by the arrastre operator. contractor, as in this case, has not
rejected nor admitted liability
However, before such action can (Continental Insurance Company
be filed a condition precedent vs. Manila Port Service, supra.
should be complied with and that Philippine Education Company vs.
is, that a claim (provisional or final) Manila Port Service, L-23444,
shall have been previously filed October 29, 1971, 42 SCRA 31).
with the arrastre operator within
fifteen days from the date of the Since the action in this case
discharge of the last package from against the arrastre operator was
the carrying vessel (Continental filed on December 21, 1962, or
Insurance Company vs. Manila within the two-year period expiring
Port Service, L-22208, March on December 19, 1963, that action
30,1966,16 SCRA 425). was filed on time. The trial court
erred in dismissing the action
In this case, the consignee's against the Manila Port Service and
customs broker filed with the its principal, the Manila Railroad
Manila Port Service as provisional Company.
claim advising the latter that the
cargo was "short, short delivered As shown in the statement of facts,
and/or landed in bad order". That the arrastre operator is responsible
claim was filed on January 3, 1962 for the value of 102 bags of resin
which were not delivered, and Yau Yae comerical Bank LTD of
twenty-five bags, which were Hongkong represented by Yau Yae
damaged, or a total of one hundred agreed to sell 140 packsges of
twenty-seven bags valued at galvanized steel dursink sheets to one
P6,185.22. Herminio G Teves. Said agreement
was subject to the terms and
The arrastre operator should pay arrangements.
attorney's fees to the plaintiff for
not having satisfied its plainly valid, Pursuant to said terms and
just and demandable claim (Art. arrangements, Yau Yae through Tokyo
2208, Civil Code). We fix the boeki LTD of Tokyo Japan, shipped
attorney's fees and the litigation the articles at Yakata, Japan and later
expenses in the sum of one to Manila which was processed by
thousand pesos. American Staemship Agencies INC. in
which under a shipping agreement or
WHEREFORE, the trial court's bill of lading it consigned to order of
judgment is affirmed insofar as it the shipper with Mr Teves.
dismissed plaintiff-appellant's claim
against defendant American On May 9, 1961 the article arrived in
Steamship Agencies, Inc. on the manila, and under the bill of lading of
ground of prescription. the arrival of the goods and requested
payments of the demand draft
The trial court's decision is representing the purchased price of the
reversed insofar as it dismissed article, however, Mr Teves did not pay
plaintiff's claim against the Manila the demand draft to Hongkong and
Railroad Company, as arrastre Shanghai bank where it was to be
operator. The Philippine National processed the payments. Prompting the
Railways, as the successor of the bank to make corresponding protest
Manila Railroad Company (See. and the bank likewise returned the bill
22, Republic Act No. 4156), is of lading and demand draft to Yau Yae
hereby ordered to pay plaintiff which later endorsed the bill of lading
Union Carbide Philippines, Inc. the to Domingo Ang.
sum of P6,185.22, as the value of
the 127 bags of resin (102 bags Meanwhile, despite his non-payments
missing and 25 bags damaged), of the purchase price of the articles.
with legal rate of interest from the Teves was able to obtain a bank
filing of the complaint on December guaranty in favor of American
21, 1962 up to the date of payment, Steamship agencies INC. as carriers
Plus P1,000 as attorney's fees and agent to the effect that he would
litigation expenses, and the costs. surrender the negotiable bill of lading
duly endorsed by Yau Yae on the
SO ORDERED. strength of this guaranty. Teves
succeded in securing a permit to
Domingo Ang vs. American deliver imported goods from the
carriers agent, which he presented to
Steamship agencies inc.
Bureau of customs which in turn
release to him the articles covered by
Articles 17 & 18
the bill of lading.
FACTS:
Subsequently, Domingo Ang claimed The defendant further contented that
for the articles from the American the action of the plaintiff-appellant
steamship agencies Inc. by presenting even allowing a reasonable time from
the indorsed bill of lading, but he was the date of delivery on May 9, 1961,
informed by the latter that the articled still initiated his action on October 30,
he claimed was already delivered to 1963 which beyond the prescribed
Mr. Teves. period of One (1) year under the
preceding paragraph.
ISSUE:
The court rendered it decision
Whether or not the American dismissing the complaint of the
Steamship Agencies Inc. punishable plaintiff, appellant for the ground of
under carriage of goods by Sea act for prescription, however the provision
misdelivery of goods? involved in this case as mentioned
earlier speaks ”loss or damage” despite
HELD: that the plaintiff filed motion for
reconsideration and it has been denied
When the delivery of articles carried by the lower court, afterwards, the
by the herein defendant-appellee plaintiff directly appealed to the higher
(American steamship agencies Inc) on court for the matter that; has plaintiff-
May 9, 1961 to Herminio Teves but appellant cause of action prescribed
supposedly to Mr Domingo Ang under section 3(6) paragraph 4 of the
,plaintiff-appellant and upon knowing carriage of goods by sea act?
by the plaintiff-appellant that the
articles intended to him was The court ruled that, the word” loss or
misdelivered to other person, he filed damage “as speaks to the provision in
in court of first instance of Manila on this case was not transpired because
October 30, 1963 against American only the misdelivery of goods occurred
Steamship agencies Inc for allegedly to the defendant, and upon admitted by
wrongful delivery of goods belonging the defendant in motion to dismissed
to him. that the articles belongs for Mr. Ang
has been misdelivered to Mr. Teves.
The defendant-appellee filed motion to
dismissed with the contention that the Therefore it clearly shows that the
ground of the plaitiff’s caused of defendant violates the provision of
action is prescribed under the carriage civil code of the Philppines particular
of goods by sea act particular section in Article 1144, which provides; the
3(6) paragraph 4, which provides that; following actions must be brought
within ten (10) years from the time the
“In any event, the carrier and the ship right of the action accrues, paragraph
shall be discharge from (1) upon a written contract and Article
1146, the following action must be
all liability in respect to loss or damage instituted within four(4) years,
unless suit is brought within paragraph (2) quasi delict, wherein it
supplies the deficiency provided in
one year, after delivery of the goods or article 18 of the same code. To read”
date when the goods should in matters which are governed by the
code of commerce and special laws,
have been delivered” their deficiency shall be supplied by
the provision of this code.”
Wherefore, suits predicated not upon condition from MACLEOD AND
loss or damage but misdelivery of COMPANY OF PHILIPPINES, Sasa
goods that so, the defendant was not Davao, for transhipment at Manila
held liable for carriage of goods by onto S.S. Steel Navigator.
sea act and the court hereby reversed
the dismissal order afterwards FINAL DESTINATION:
remanded to the lower court for further Boston.
proceedings.
Early hours of October 30: LCT No.
CIA Maritima v. Insurance Co. of 1025 sank, resulting in the damage or
North America (1964) loss of 1,162 bales of hemp loaded
therein
FACTS:
Macleod promptly notified the
carrier's main office in Manila and its
branch in Davao advising it of its
October, 1952: Macleod and liability
Company of the Philippines (Macleod)
contracted by telephone the services of The damaged hemp was brought to
the Compañia Maritima (CM), a Odell Plantation in Madaum, Davao,
shipping corporation, for: for cleaning, washing, reconditioning,
and redrying.
shipment of 2,645 bales of hemp
from the Macleod's Sasa private pier at total loss adds up to P60,421.02
Davao City to Manila
All abaca shipments of Macleod
subsequent transhipment to were insured with the Insurance
Boston, Massachusetts, U.S.A. on Company of North America against all
board the S.S. Steel Navigator. losses and damages

This oral contract was later on Macleod filed a claim for the loss it
confirmed by a formal and written suffered with the insurance company
booking issued by Macleod's branch and was paid P64,018.55
office in Sasa and handcarried to CM's
branch office in Davao in compliance subrogation agreement between
with which the CM sent to Macleod's Macleod and the insurance company
private wharf LCT Nos. 1023 and wherein the Macleod assigned its
1025 on which the loading of the hemp rights over the insured and damaged
was completed on October 29, 1952. cargo

The 2 lighters were manned each October 28, 1953.: failing to recover
by a patron and an assistant patron. from the carrier P60,421.02 (amount
supported by receipts), the insurance
The patrons of both barges company instituted the present action
issued the corresponding carrier's
receipts and that issued by the patron CA affirmed RTC: ordering CM to
of Barge No. 1025 reads in part: pay the insurance co.

Received in behalf of S.S.

Bowline Knot in good order and
ISSUE: W/N there was a contract of Filipino Merchants Insurance v CA
carriage bet. CM (carrier) and Macleod G.R. No. 85141 November 28, 1989
(shipper)
J. Regalado
HELD: YES. Affirmed

receipt of goods by the carrier has

been said to lie at the foundation of the Facts:
contract to carry and deliver, and if
actually no goods are received there Choa insured 600 tons of fishmeal for
can be no such contract the sum of P267,653.59 from
Bangkok, Thailand to Manila against
The liability and responsibility of all risks under warehouse to warehouse
the carrier under a contract for the terms. What was imported in the SS
carriage of goods commence on their Bougainville was 59.940 metric tons at
actual delivery to, or receipt by, the $395.42 a ton. The cargo was unloaded
carrier or an authorized agent. ... and from the ship and 227 bags were found
delivery to a lighter in charge of a to be in bad condition by the arrastre.
vessel for shipment on the vessel,
where it is the custom to deliver in that Choa made a formal claim against the
way defendant Filipino Merchants
Insurance Company for P51,568.62 He
Whenever the control and also presented a claim against the ship,
possession of goods passes to the but the defendant Filipino Merchants
carrier and nothing remains to be done Insurance Company refused to pay the
by the shipper, then it can be said with claim. The plaintiff brought an action
certainty that the relation of shipper against the company and presented a
and carrier has been established third party complaint against the vessel
and the arrastre contractor.
As regards the form of the contract
of carriage it can be said that provided The court below, after trial on the
that there is a meeting of the minds and merits, rendered judgment in favor of
from such meeting arise rights and private respondent, for the sum of
obligations, there should be no P51,568.62 with interest at legal rate.
limitations as to form
The common carrier, Compagnie, was
The bill of lading is not essential ordered to pay as a joint debtor.

Even where it is provided by statute On appeal, the respondent court

that liability commences with the affirmed the decision of the lower
issuance of the bill of lading, actual court insofar as the award on the
delivery and acceptance are sufficient complaint is concerned and modified
to bind the carrier the same with regard to the
adjudication of the third-party
Marine surveyors, attributes the complaint. A motion for
sinking of LCT No. 1025 to the 'non- reconsideration of the aforesaid
water-tight conditions of various decision was denied. The AC made
buoyancy compartments Filipino Merchants pay but absolved
the common carrier, Compagnie.
Hence this petition.
 The very nature of the term "all risks"
must be given a broad and
Issues: comprehensive meaning as covering
any loss other than a willful and
1. WON the "all risks" clause of the fraudulent act of the insured. This is
marine insurance policy held the pursuant to the very purpose of an "all
petitioner liable to the private risks" insurance to give protection to
respondent for the partial loss of the the insured in those cases where
cargo, notwithstanding the clear difficulties of logical explanation or
absence of proof of some fortuitous some mystery surround the loss or
event, casualty, or accidental cause to damage to property.
which the loss is attributable.
Institute Cargo Clauses extends to all
2. WON The Court of damages/losses suffered by the insured
Appeals erred in not holding that the cargo except (a) loss or damage or
private respondent had no insurable expense proximately caused by delay,
interest in the subject cargo, hence, the and (b) loss or damage or expense
marine insurance policy taken out by proximately caused by the inherent
private respondent is null and void. vice or nature of the subject matter
insured.

Generally, the burden of proof is upon

Held: No. No. Petition denied. the insured to show that a loss arose
from a covered peril, but under an "all
risks" policy the burden is not on the
insured to prove the precise cause of
Ratio: loss or damage for which it seeks
compensation. The insured under an
1. The "all risks clause" of the Institute "all risks insurance policy" has the
Cargo Clauses read as follows: initial burden of proving that the cargo
was in good condition when the policy
“5. This insurance is against all risks of attached and that the cargo was
loss or damage to the subject-matter damaged when unloaded from the
insured but shall in no case be deemed vessel. The burden then shifts to the
to extend to cover loss, damage, or insurer to show the exception to the
expense proximately caused by delay coverage. This creates a special type of
or inherent vice or nature of the insurance which extends coverage to
subject-matter insured. Claims risks not usually contemplated and
recoverable hereunder shall be payable avoids putting upon the insured the
irrespective of percentage.“ burden of establishing that the loss was
due to the peril falling within the
An "all risks policy" should be read policy's coverage; the insurer can
literally as meaning all risks avoid coverage upon demonstrating
whatsoever and covering all losses by that a specific provision expressly
an accidental cause of any kind. excludes the loss from coverage.
“Accident” is construed by the courts
in their ordinary and common Under an 'all risks' policy, it was
acceptance. sufficient to show that there was
damage occasioned by some accidental
cause of any kind, and there is no
necessity to point to any particular DOLE PHILIPPINES, INC. v
cause. MARITIME COMPANY OF THE
PHILIPPINES
2. Section 13 of the Insurance Code- Facts:
anyone has an insurable interest in
property who derives a benefit from its The cargo subject of the instant case
existence or would suffer loss from its was discharged in Dadiangas unto the
destruction custody of the consignee, Dole
Philippines. The corresponding claim
Insurable interest in property may for the damages sustained by the cargo
consist in (a) an existing interest; (b) was filed by the plaintiff with the
an inchoate interest founded on an defendant, Maritime Company on May
existing interest; or (c) an expectancy, 4, 1972.
coupled with an existing interest in that
out of which the expectancy arises. On June 11, 1973 the plaintiff filed a
complaint in the CFI Manila
Choa, as vendee/consignee of the embodying 3 causes of action
goods in transit, has such existing involving 3 separate and different
interest as may be the subject of a valid shipments. The third cause of action
contract of insurance. His interest over therein involved the cargo now subject
the goods is based on the perfected of this present litigation.
contract of sale. The perfected contract
of sale between him and the shipper of On December 11, 1974, Judge Serafin
the goods operates to vest in him an Cuevas issued an Order dismissing the
equitable title even before delivery or first two causes of action. The third
before conditions have been cause of action which covered the
performed. cargo subject of this case now was
likewise dismissed but without
Further, Article 1523 of the Civil Code prejudice as it was not covered by the
provides that where, in pursuance of a settlement. Because of the dismissal of
contract of sale, the seller is authorized the complaint with respect to the third
or required to send the goods to the cause of action, DOLE instituted this
buyer, delivery of the goods to a present complaint on January 6, 1975.
carrier, for the purpose of transmission
to the buyer is deemed to be a delivery Maritime filed an answer pleading
of the goods to the buyer. The Court inter alia the affirmative defense of
has heretofore ruled that the delivery prescription under the provisions of the
of the goods on board the carrying Carriage of Goods by Sea Act. The
vessels partake of the nature of actual Trial Court granted the motion,
delivery since, from that time, the scheduling the preliminary hearing on
foreign buyers assumed the risks of April 27, 1977. The record before the
loss of the goods and paid the Court does not show whether or not
insurance premium covering them. that hearing was held, but under date
of May 6, 1977, Maritime filed a
formal motion to dismiss invoking
once more the ground of prescription.

The Trial Court, after due

consideration, resolved the matter in
favor of Maritime and dismissed the 1155, it operated to toll prescription
complaint. also in actions under the Carriage of
Goods by Sea Act.
Issue:
Whether or not Article 1155 of the These arguments might merit weightier
Civil Code applies in lieu of the consideration were it not for the fact
COGSA. that the question has already received a
definitive answer, adverse to the
Held: position taken by Dole, in The Yek
No. Article 1155 of the Civil Code Tong Lin Fire & Marine Insurance
provides that the prescription of Co., Ltd. vs. American President
actions is interrupted by the making of Lines, Inc.
an extrajudicial written demand by the
creditor 2. Dole argues that it was error for the
court not to have considered the action
Section 3, paragraph 6 of the COGSA of plaintiff-appellant suspended by the
provides that: extrajudicial demand which took place,
according to defendant's own motion
the carrier and the ship shall be to dismiss on August 22, 1952.
discharged from all liability in respect
of loss or damage unless suit is Court noticed that while plaintiff
brought within one year after delivery avoids stating any date when the goods
of the goods or the date when the arrived in Manila, it relies upon the
goods should have been delivered; allegation made in the motion to
Provided, That, if a notice of loss or dismiss that a protest was filed on
damage, either apparent or conceded, August 22, 1952 — which goes to
is not given as provided for in this show that plaintiff-appellant's counsel
section, that fact shall not affect or has not been laying the facts squarely
prejudice the right of the shipper to before the court for the consideration
bring suit within one year after the of the merits of the case. We have
delivery of the goods or the date already decided that in a case governed
when.the goods should have been by the Carriage of Goods by Sea Act,
delivered. the general provisions of the Code of
Civil Procedure on prescription should
1. Dole argues that since the provisions not be made to apply. (Chua Kuy vs.
of the Civil Code are, by express Everett Steamship Corp., G.R. No. L-
mandate of said Code, suppletory of 5554, May 27, 1953.) We hold that in
deficiencies in the Code of Commerce such a case the general provisions of
and special laws in matters governed the new Civil Code (Art. 1155) cannot
by the latter and there being a patent be made to apply, as such application
deficiency with respect to the tolling of would have the effect of extending the
the prescriptive period provided for in one-year period of prescription fixed in
the Carriage of Goods by Sea Act, the law. It is desirable that matters
prescription under said Act is subject affecting transportation of goods by
to the provisions of Article 1155 of the sea be decided in as short a time as
Civil Code on tolling. Since Dole's possible; the application of the
claim for loss or damage was filed on provisions of Article 1155 of the new
May 4, 1972 amounted to a written Civil Code would unnecessarily extend
extrajudicial demand which would toll the period and permit delays in the
or interrupt prescription under Article settlement of questions affecting
transportation, contrary to the clear did not arrive in France until the "off
intent and purpose of the law. season" in that country. The remaining
half was allegedly charged to the
Under Dole's theory, when its claim account of private respondent which in
was received by Maritime, the one- turn demanded payment from
year prescriptive period was petitioner through its agent.
interrupted and began to run anew
from May 4, 1972, affording Dole Issue:
another period of one year counted
from that date within which to institute Whether or not private respondent's
action on its claim for damage. action is for "loss or damage" to goods
Unfortunately, Dole let the new period shipped, within the meaning of the
lapse without filing action. It instituted Carriage of Goods by Sea Act
Civil Case No. 91043 only on June 11, (COGSA).
1973, more than one month after that
period has expired and its right of Ruling:
action had prescribed.
No. The suit is not for "loss or
damage" to goods contemplated in
§3(6), the question of prescription of
MITSUI VS. CA, 287 SCRA 366 action is governed not by the COGSA
but by Art. 1144 of the Civil Code
Facts: which provides for a prescriptive
period of ten years. As defined in the
Petitioner Mitsui O.S.K. Lines Ltd. is a Civil Code and as applied to Section
foreign corporation represented in the 3(6), paragraph 4 of the Carriage of
Philippines by its agent, Magsaysay Goods by Sea Act, "loss" contemplates
Agencies. It entered into a contract of merely a situation where no delivery at
carriage through Meister Transport, all was made by the shipper of the
Inc., an international freight forwarder, goods because the same had perished,
with private respondent Lavine gone out of commerce, or disappeared
Loungewear Manufacturing in such a way that their existence is
Corporation to transport goods of the unknown or they cannot be recovered.
latter from Manila to Le Havre,
France. There would be some merit in
appellant's insistence that the damages
Petitioner undertook to deliver the suffered by him as a result of the delay
goods to France 28 days from initial in the shipment of his cargo are not
loading. On July 24, 1991, petitioner's covered by the prescriptive provision
vessel loaded private respondent's of the Carriage of Goods by Sea Act
container van for carriage at the said above referred to, if such damages
port of origin. were due, not to the deterioration and
decay of the goods while in transit, but
However, in Kaoshiung, Taiwan the to other causes independent of the
goods were not transshipped condition of the cargo upon arrival,
immediately, with the result that the like a drop in their market value.
shipment arrived in Le Havre only on
November 14, 1991. The consignee
allegedly paid only half the value of
the said goods on the ground that they
WALLEM PHILIPPINES when the goods should have been
SHIPPING, INC., Petitioner vs. S.R. delivered.
FARMS, INC., Respondent, G.R.
No. 161849, July 9, 2010 There is no dispute that the vessel
carrying the shipment arrived at the
Facts: On March 25, 1992, Continental Port of Manila on April 11, 1992 and
Enterprises, Ltd. loaded on board the that the cargo was completely
vessel M/V “Hui Yang,” a shipment of discharged therefrom on April 15,
Indian Soya Bean Meal weighing 1992. However, respondent erred in
1,100 metric tons, for transportation arguing that the complaint for
and delivery from India to Manila, damages, insofar as the petitioner is
with SR Farms as consignee. The concerned, was filed on March 11,
vessel is owned and operated by Conti- 1993.
Feed, with petitioner Wallem as its
ship agent. In the instant case, petitioner was only
impleaded in the amended Complaint
On April 11, 1992, the said vessel, of June 7, 1993, or one (1) year, one
M/V “Hui Yang” arrived at the port of (1) month and twenty-three (23) days
Manila and was discharged and from April 15, 1992, the date when the
transferred into the custody of the subject cargo was fully unloaded from
receiving barges. Upon checking the the vessel. The filing of an amended
cargo, a shortage in the shipment of pleading does not retroact to the date
80.467 metric tons was found. of the filing of the original; the statute
Petitioner then filed a Complaint for of limitation runs until the submission
damages against Conti-Feed and on of the amendment. Hence, reckoned
June 7, 1993, respondent filed an from April 15, 1992, the one-year
Amended Complaint impleading prescriptive period had already lapsed.
herein petitioner as defendant.
H.E. Heacock Co. vs. Macondray
Petitioner denied the allegations of
respondent claiming, among others, Three kinds of stipulations have often
that respondent’s claim is already been made in a bill of lading. The first
barred by laches and/or prescription. is one exempting the carrier from any
RTC dismissed the petition. The CA and all liability for loss or damage
reversed the decision of the RTC. occasioned by its own negligence. The
Hence, this petition. second is one providing for an
unqualified limitation of such liability
Issue: Whether or not the claim against to an agreed valuation. And the third is
petitioner was timely filed. one limiting the liability of the carrier
to an agreed valuation unless the
Held: NO. Under Section 3 (6) of the shipper declares a higher value and
COGSA, notice of loss or damages pays a higher rate of freight.
must be filed within three days of According to an almost uniform
delivery. Admittedly, respondent did weight of authority, the first and
not comply with this provision. Under second kinds of stipulations are invalid
the same provision, however, a failure as being contrary to public policy, but
to file a notice of claim within three the third is valid and enforceable.
days will not bar recovery if a suit is
nonetheless filed within one year from
delivery of the goods or from the date
If a common carrier gives to a shipper November 14, 1991.
the choice of two rates and if the However,petitioner offered to pay only
shipper makes such a choice, One Hundred Thousand (Y100,000.00)
understandingly and freely, and names Yen, the maximum amount stipulated
his valuation, he cannot thereafter under Clause 18 of the covering bill of
recover more than the value which he lading which limits the liability of
thus places upon his property. A petitioner. Private respondent rejected
limitation of liability based upon an the offer and thereafter instituted a suit
agreed value does not conflict with any for collection. The trial court rendered
sound principle of public policy; and it a decision in favour of the private
is not conformable to plain principles respondents and this was affirmed by
of justice that a shipper may understate the Court of Appeals. Thus, this instant
value in order to reduce the rate and petition.
then recover a larger value in case of
loss.

ISSUE

Everett Steamship Corporation vs.

Court of Appeals
Is private respondent, as consignee,
March 12, 2016 who is not a signatory to the bill of
lading bound by the stipulations
thereof?

FACTS

HELD

Private respondent imported 3 crates of

bus spare parts marked as MARCO
C/No. 12,MARCO C/No. 13 and Yes. The consignee who is not a
MARCO C/No. 14, from its supplier, signatory to the contract of carriage
Maruman Trading Company,Ltd. between the shipper and the carrier, the
(Maruman Trading), a foreign consignee can still be bound by the
corporation based in Inazawa, Aichi, contract.
Japan. The crates were shipped from
Nagoya, Japan to Manila on board
“ADELFAEVERETTE,” a vessel
owned by petitioner’s principal, The next issue to be resolved is
Everett Orient Lines. Upon arrival at whether or not private respondent, as
the port of Manila, it was discovered consignee, who is not a signatory to
that the crate marked MARCO C/No. the bill of lading is bound by the
14 was missing. Privaterespondent stipulations thereof. Again, in Sea-land
claim upon petitioner for the value of Service, Inc. vs. Intermediate
the lost cargo amounting to One Appellate Court (Supra), we held that
Million Five Hundred Fifty Two even in the consignee between the
Thousand Five Hundred (Y1, shipper and the carrier, the consignee
552,500.00) Yen, theamount shown in can still be bound by the contract.
an Invoice No. MTM-941, dated Speaking through Mr. Chief Justice
Narvasa, we ruled: “To begin with, in 3 pieces of baggage, a suitcase and 2
there is no question of the right, in the other pieces. One of the suitcases were
principle, of a consignee in a bill of mistagged by the defendant and as a
lading to recover from the carrier or result the said suitcase did not arrive
shipper for loss of, or damage to goods with him in Manila. Among his things
being transported under the said bill, in the suitcase was a Rollflex camera
although that document may have and Transistor Radio 7. His baggage
been-as in practice it oftentimes is- was later on returned but the camera
drawn up only by the consignor and and radio were missing. He demanded
the carrier without the intervention of indemnity for his loss from PAL. The
the consignee. latter offered to pay P100 for his loss
but Shewaram. Defendant herein
claimed that the PAL ticket, on the
reverse side, stated in fine print that if
When private respondent formally the value of baggage is not stated, and
claimed reimbursement for the missing the baggage is lost, the maximum
goods from petitioner and liability of PAL is P100.00. If value in
subsequently filed a case against the excess of P100.00 is stated, PAL will
latter based on the very same bill of charge extra because PAL is being
lading, it (private respondent) accepted held liable for an amount exceeding
the provisions of the contract and P100.00. Shewaram rejected the offer
thereby made itself a party thereto, or and demanded full payment of P800.00
at least has come to court to enforce it. for the amount of the things he lost.
Thus private respondent cannot now PAL refused to do so.
reject or disregard the carrier’s limited
liability stipulation in the bill of lading.
In other words, private respondents is
bound by the whole stipulations in the ISSUE:
bill of lading and must respect the
same.

Whether the stipulation limiting the

liability of PAL shall apply in the case
Shewaram v. Philippine Airlines, at bar.
Inc.

HELD:
G.R. No. L-20099, 7 July 1966, 17
SCRA 606

The Court held that PAL is liable for

the loss of the petitioner herein. The
FACTS: stipulation in at the back of the ticket
shall not be binding against the
petitioner. Article 1750 of the NCC
provides that the pecuniary liability of
Shewaram, petitioner herein, is a a common carrier may, by contract, be
Hindu from Davao. He boarded a PAL limited to a fixed amount. It is
plane for a trip to Manila. He checked required, however, that the contract
must be “reasonable and just under the needed for the trial the next day so he
circumstances and has been fairly and wired PAL Cebu demanding delivery
freely agreed upon.” In this case, the of his luggage before noon that next
court believes that the requirements of day or he would hold PAL liable for
said article have not been met. It damages based on gross negligence.
cannot be said that the petitioner had Early morning, petitioner went to the
actually entered into a contract with Butuan Airport to inquire about the
the PAL, embodying the conditions as luggage but did not wait for the arrival
printed at the back of the ticket stub of the morning flight at 10:00am.
that was to the petitioner. The fact that which carried his luggage. A certain
those conditions are printed at the back Dagorro, a driver of a colorum car,
of the ticket stub in letters so small that who also used to drive the petitioner
they are hard to read would not volunteered to take the luggage to the
warrant the presumption that the petitioner. He revelaed that the
petitioner was aware of those documents were lost. Ong Yiu
conditions such that he had “fairly and demanded from PAL Cebu actual and
freely agreed” to those conditions. compensatory damages as an incident
of breach of contract of carriage.
Ong Yiu v. Court of Appeals

G.R. No. L-40597, 29 June 1979, 91

SCRA 223 ISSUES:

FACTS:

On august 26, 1967, Ong Yiu was a 1. Whether or not PAL is guilty of
fare paying passenger of respondent only simple negligence and not gross
PAL from Mactan, Cebu to Butuan negligence?
City wherein he was scheduled to
attend a trial. As a passenger, he 2. Whether the doctrine of limited
checked in one piece of luggae, blue liability doctrine applies in the instant
maleta for which he was issued a claim case?
ticket. Upon arrival at Butuan City,
petitioner claimed his luggage but it
could not be found. PAL Butuan sent a
message to PAL Cebu which in turn HELD:
sent a message to PAL Manila that
same afternoon. PAL Manila advised
PAL Cebu that the luggage has been
over carried to Manila and that it 1. PAL had not acted in bad faith. It
would be forwarded to PAL Cebu that exercised due diligence in looking for
same day. PAL Cebu then advised petitioner’s luggage which had been
PAL Butuan that the luggage will be miscarried. Had petitioner waited or
forwarded the following day, on caused someone to wait at the airport
scheduled morning flight. This for the arrival of the morning flight
message was not received by PAL which carried his luggage, he would
Butuan as all the personnel had already have been able to retrieve his luggage
gone for the day. Meanwhile, Ong Yiu sooner. In the absence of a wrongful
was worried about the missing luggage act or omission or fraud, the petitioner
because it contained vital documents is not entitled to moral damages.
Neither is he entitled to exemplary Philippines, they were issued KLM
damages absent any proof that the tickets for the entire trip. However,
defendant acted in a wanton, their coupon for Aer Lingus was
fraudulent, reckless manner. marked “on request”.

2. The limited liability applies in this When they were in Germany, they
case. On the presumed negligence of went to the KLM office and obtained a
PAL, its liability for the loss however, confirmation from Aer Lingus. At the
is limited on the stipulation written on airport in Barcelona, the Mendozas and
the back of the plane ticket which is their companions checked in for their
P100 per baggage. The petitioner not flight to Lourdes. However, although
having declared a greater value and not their daughter and niece were allowed
having called the attention of PAL on to take the flight, the spouses
its true value and paid the tariff Mendozas were off loaded on orders of
therefore. The stipulation is printed in the Aer Lingus manager, who
reasonably and fairly big letters and is brusquely shoved them aside and
easily readable. Moreso, petitioner had shouted at them. So the spouses
been a frequent passenger of PAL from Mendozas took a train ride to Lourdes
Cebu to Butuan City and back and he instead.
being a lawyer and a businessman,
must be fully aware of these
conditions.
Thus, they filed a complaint for
KLM Royal Dutch Airlines vs Court damages against KLM for breach of
of Appeals contract of carriage. The trial court
decided in favor of the Mendozas. On
(65 SCRA 237) appeal, the CA affirmed the decision.
Hence, KLM brings this petition to the
Supreme Court. KLM cites Art 30 of
the Warsaw Convention, which states:
Facts: Spouses Mendoza approached the passenger or his representatives
Mr. Reyes, the branch manager of can take action only against the carrier
Philippine Travel Bureau, for who performed the transportation
consultation about a world tour which during which the accident or delay
they were intending to make with their occurred. Also, KLM avers that the
daughter and niece. Three segments of front cover of each ticket reads: that
the trip, the longest, was via KLM. liability of the carrier for damages
Respondents decided that one of the shall be limited to occurrences on its
routes they will take was a Barcelona- own line.
Lourdes route with knowledge that
only one airline, Aer Lingus, served it.
Reyes made the necessary
reservations. To this, KLM secured Issue: Whether or not KLM is liable
seat reservations for the Mendoza’s for breach of contract of carriage?
and their companions from the carriers
which would ferry them throughout
their trip, which the exception of Aer
Lingus. When the Mendoza’s left the
Held: The applicability of Art. 30 of "A", were imported by Atlas
the Warsaw Convention cannot be Consolidated Mining and
sustained. The article presupposes the Development Corporation and were
occurrence of delay or accident. What loaded by the shipper, Ansor
is manifest here is that the Aer Lingus Corporation of New York on board the
refused to transport the spouses S/S "Toledo" at the port of New York
Mendozas to their planned and for delivery to Atlas at Cebu City via
contracted destination. Manila. The freight up to Cebu City
was paid in advance. The American
Insurance Company insured the
cargoes against damage up to Cebu
As the airline which issued the tickets, City for $5,700.00 in favor of the
KLM was chargeable with the duty consignee. The S/S "Toledo"
and responsibility of specifically discharged them at the port of Manila
informing the spouses of the on October 17, 1962. For their
conditions prescribed in their tickets or transshipment to Cebu City they were
to ascertain that the spouses read them loaded on board the M/S "Bohol".
before they accepted their passage Upon the vessel's arrival in Cebu City
tickets. on November 12, 1962, the cargoes
were discharged and delivered to the
consignee minus one skid of truck
parts which was not loaded on the M/S
The Supreme Court held that KLM "Bohol". The missing cargo was
cannot be merely assumed as a ticket- valued at $482.96 CIF Cebu,
issuing agent for other airlines and equivalent at that time to P1,889.58.
limit its liability to untoward In view of its loss, the consignee filed
occurrences on its own line. the corresponding claim with herein
appellant who disclaimed liability
therefore alleging that the cargoes had
been discharged in full at the port of
The court found, that the passage Manila. Appellant, at all times
tickets provide that the carriage to be material to this case, was the agent in
performed therein by several the Philippines of the S/S "Toledo", a
successive carriers is to be regarded as common carrier in foreign trade
a “single operation”. between the United States and
Philippine ports.

AMERICAN INSURANCE vs.

MACONDRAY A claim for the insured value of the
missing cargo amounting to P2,087.20
The following facts were the subject of plus the sum of P87.30 as expenses of
a stipulation submitted by the parties to survey was filed with appellee under
the trial court: the covering insurance policy and the
same was duly paid, thereby acquiring,
by subrogation, the rights of the
consignee. Thereafter the
On or about September 12, 1962, corresponding action was filed in the
certain cargoes, covered by the bill of lower court to recover from appellant
lading now in the record as Exhibit
what appellee had paid to the THE LOWER COURT ERRED IN
consignee. NOT HOLDING THAT PLAINTIFF-
APPELLEE HAS NO CAUSE OF
ACTION AGAINST DEFENDANT-
APPELLANT.
Appellant's defenses below were
firstly, that it was not liable upon the
complaint because the cargoes covered
by the bill of lading Exhibit "A" had II
been fully discharged at the port of
Manila from the S/S "Toledo";
secondly, that its liability, if any, does
not exceed P500.00; thirdly, that the THE LOWER COURT ERRED IN
court had no jurisdiction over the case NOT FINDING THAT
because the amount involved is only DEFENDANT-APPELLANT IS NOT
the sum of P1,889.58; fourthly, that the THE REAL PARTY-IN-INTEREST -
loss, if any, occurred while the cargo AND THAT THE ACTION SHOULD
was in the custody of the Manila Port HAVE BEEN BROUGHT AGAINST
Service and, through the latter's THE SHIPPER.
negligence, and finally, that the latter
was not in any manner its agent in the
receiving, handling and custody of the
cargoes discharged at the port of III
Manila.

THE LOWER COURT ERRED IN

Upon the issues thus joined, the case TAKING COGNIZANCE OF THE
was tried and thereafter the lower court CASE AT BAR AND IN NOT
rendered the appealed judgment DISMISSING IT FOR LACK OF
sentencing appellant to pay appellee JURISDICTION.
the amount of P1,889.58, with interest
at the legal rate from October 14, 1963
when the complaint was filed, until full
payment, and to pay the costs. IV

Not satisfied with the above judgment, THE LOWER COURT ERRED IN
Macondray & Co., Inc. interposed the FINDING DEFENDANT-
present appeal claiming that the lower APPELLANT LIABLE AND IN
court committed the following errors: SENTENCING IT TO PAY
PLAINTIFF-APPELLEE THE
AMOUNT OF P1,889.58 WITH
INTEREST, AT THE LEGAL RATE,
"I FROM OCTOBER 14, 1963, UNTIL
FULLY PAID AND TO PAY THE
COSTS OF SUIT."
The third assignment of error wherein Invoking the provisions of paragraph
appellant raises the question of the 11 of the bill of lading, appellant
lower court's alleged lack of advances the theory (second
jurisdiction is without merit. assignment of error) that appellee's
action should have been directed not
against it but against the shipper,
Ansor Corporation of New York, the
True the case involved only the sum of latter being allegedly the real party
P1,889.58, but it is also true that defendant-in-interest.
appellee's action against appellant is
one involving admiralty jurisdiction,
the exercise of which pertains
originally and exclusively to Courts of Appellant is correct in saying that
First Instance. actions must be prosecuted not only in
the name of the real party-in-interest
but also against the real party-in-
interest. It is in error, however, in
In support of the first assignment of contending that it is not liable for the
error, appellant relies on the provisions loss of the skid of truck parts
of paragraph 22 of the bill of lading to mentioned heretofore. If the fact were
the effect that the carrying vessel, her that said cargo was loaded and
owner and agent, are not liable for loss thereafter lost on board the M/S
or damage occurring after the "Bohol" or upon its discharge at the
discharge of the goods. Appellant's port of Cebu City, We would agree
contention rests entirely upon the that appellant is not liable. It was
erroneous assumption that the carrying stipulated in this case, however, that
vessel had discharged all the goods the said skid of truck parts was not
covered by the bill of lading Exhibit loaded at all on board the M/S
"A" in accordance with its obligation. "Bohol." In accepting the same on
Under the Carriage Contract covering board the S/S "Toledo" at the port of
the cargoes in question, it was the duty New York for shipment to Cebu City,
of the carrying vessel to discharge via the port of Manila, it became
them at the port of Cebu City, via the precisely appellant's duty to see to it
port of Manila. It is clear, therefore, that it was loaded in Manila on board
that the discharge effected at the latter the M/S "Bohol" or any other vessel,
port did not terminate the carrying for the port of Cebu City. Not having
vessel's responsibility which included complied with this duty, its liability for
the transshipment of the cargoes from the loss is unavoidable.
the port of Manila to the port of Cebu
City. While it complied with its
obligation with respect to most of the
cargoes covered by the bill of lading On the other hand, the shipper
Exhibit "A", it failed to do so in complied with its part of the
relation to the one skid of truck parts transaction by delivering the lost cargo
which, according to the stipulation of to the S/S "Toledo" at the port of New
facts, was not loaded on board the M/S York; thereafter paragraph 11 of the
"Bohol". In truth and in fact, the same bill of lading operated to make
has never been found. appellant the shipper's forwarding
agent whose duty precisely was to
have the cargo, upon arrival at the port
of Manila, transshipped to the port of MMMC paid F.E. Zuellig the freight
Cebu City. charges and secured a copy of the bill
of lading which was presented to
Allied Bank. The bank then credited
the amount of US$23,220 covered by
Moreover, appellant admits in its brief the letter of credit to MMMC
that, as a general rule, under the
provisions of the Code of Commerce, When MMMC's President James
the consignee of a cargo carried by a Cu, went back to the bank later, he was
vessel has a cause of action against the informed that the payment was refused
latter's agent for the undelivered cargo by the buying for lack of bill of lading
or any portion thereof. This being the and there was a transhipment of goods
case, it is its duty to compensate
appellee for the loss suffered. The anahaw fans were shipped back
to Manila through OOCL who are
demanding from MMMC P246,043.43
(freight charges from Japan to Manila,
The fourth assignment of error is demurrage incurred in Japan and
merely a corollary of the previous Manila from October 22, 1980 up to
three and requires no further May 20, 1981 and charges for
discussion. stripping the container van of the
Anahaw fans on May 20, 1981)

MMMC abandoned the whole cargo

WHEREFORE, the decision appealed and asked OOCL for damages
from being in accordance with law, the
same is hereby affirmed. OOCL: bill of lading clearly
shows that there will be a transhipment
and that petitioner was well aware that
MV (Pacific) Despatcher was only up
Transportation Case Digest: to Hongkong where the subject cargo
Magellan Mfg. Marketing Corp. v. will be transferred to another vessel for
CA supra (1991) Japan

G.R. No. 95529 August 22, 1991 RTC: favored OOCL:

FACTS: consented because the bill of

lading where it is clearly indicated that
there will be transhipment

Choju Co., Ltd purchased from MMMC was the one who ordered
Magellan Manufacturers Marketing the reshipment of the cargo from Japan
Corp. (MMMC) 136,000 anahaw fans to Manila
for $23,220 MMMC contracted with
F.E. Zuellig, a shipping agent of Orient CA: Affirmed with modification of
Overseas Container Lines, Inc., excluding demurrage in Manila
(OOCL) specifying that he needed an
on-board bill of lading and that
transhipment is not allowed under the
letter of credit
ISSUE: W/N the bill of lading which names the parties, which
reflected the transhipment against the includes the consignee, fixes the route,
letter of credit is consented by MMMC destination, and freight rates or
charges, and stipulates the rights and
obligations assumed by the parties

HELD: YES. CA Affirmed with law between the parties who

modification are bound by its terms and conditions
provided that these are not contrary to
law, morals, good customs, public
order and public policy
Transhipment
GR: acceptance of the bill without
act of taking cargo out of one ship dissent raises the presumption that all
and loading it in another the terms therein were brought to the
knowledge of the shipper and agreed to
the transfer of goods from the by him and, in the absence of fraud or
vessel stipulated in the contract of mistake, he is estopped from thereafter
affreightment to another vessel before denying that he assented to such term
the place of destination named in the
contract has been reached There clearly appears on the face of
the bill of lading under column "PORT
transfer for further transportation OF TRANSHIPMENT" an entry
from one ship or conveyance to "HONGKONG'
another
On board bill of lading vs. received
the fact of transhipment is not for shipment bill of lading:
dependent upon the ownership of the
transporting ships or conveyances or in on board bill of lading
the change of carriers, as the petitioner
seems to suggest, but rather on the fact stated that the goods have been
of actual physical transfer of cargo received on board the vessel which is
from one vessel to another to carry the goods

appears on the face of the bill of received for shipment bill of

lading the entry "Hong Kong" in the lading
blank space labeled "Transhipment,"
which can only mean that transhipment stated that the goods have been
actually took place received for shipment with or without
specifying the vessel by which the
bill of lading goods are to be shipped

operates both as a receipt and as a issued whenever conditions are

contract not normal and there is insufficiency of
shipping space
receipt for the goods shipped
certification of F.E. Zuellig, Inc.
contract to transport and deliver cannot qualify the bill of lading, as
the same as therein stipulated originally issued, into an on board bill
of lading as required by the terms of
the letter of credit issued in favor of and was loaded at Antwerp, Belgium,
petitioner - it is a received for in
shipment bill of lading
good order condition on board the “S/S
issued only on July 19, 1980, way Dingalan Bay”, owned and operated by
beyond the expiry date of June 30, Universal Shipping Lines,
1980 specified in the letter of credit for
the presentation of an on board bill of Inc. (CARRIER) and consigned to
lading UNION in Manila. The shipment was
covered by a Marine Risk Note
Demurrage
issued by Charter Insurance Co.
compensation provided for in the (INSURER) for P212,738.17 against
contract of affreightment for the all risks. The CARRIER arrived in
detention of the vessel beyond the time
agreed on for loading and unloading Manila on 22 June 1973 and arrastre
services were handled by E. Razon,
claim for damages for failure to Inc. (ARRASTRE), now called
accept delivery
Metro Port Service, Inc. Out of the
before it could be charged for 4,000 bags, 1,050 bags were received
demurrage charges it should have been by the consignee UNION in bad
notified of the arrival of the goods first
order condition. As a consequence of
Since abandon option was the damage and loss, the INSURER
communicated, the same is binding paid UNION the sum of
upon the parties on legal and equitable
considerations of estoppel P35,709.11 in full settlement of the
claim, and the INSURER became the
Metro Port Services vs. CA (GR L- subrogee of all of UNION’s rights
57582, 24 August 1984)
to recover from the parties concerned.
First Division, Melencio-Herrera (J): 5
concur On 1 July 1974, the INSURER sued
for damages with the then CFI Manila
Facts: Sometime in April 1973, Union against the CARRIER and the
Sales Marketing Corporation (UNION)
ordered from Union Carbide ARRASTRE in the amount of
P35,709.11, in addition to exemplary
of Antwerp, Belgium, 99,540 damages and attorney’s fees. In its
kilograms of Low Density
Polyethylene, valued at US $.245 per Decision, the Trial Court ordered (1)
kilogram or a the Universal Shipping Lines, Inc., to
pay Charter Insurance Co. the
total purchase price of US $24,417.30,
at the conversion rate of P6.848 to a amount of P12,285.94 plus 12%
US Dollar. The shipment was interest per annum from July 1, 1974
until full payment thereof; (2) E.
packed in 4,000 bags of 25 net Razon
kilograms, more or less, for each bag,
Inc. to pay Charter Insurance Co. the exceptions, which the Court finds
amount of P9,763.94 plus 12% interest present in the case at bar in that the
per annum from July 1, 1974 appellate court’s findings of facts are

Transportation Law, 2004 ( 15 contrary to those of the Trial Court and

)Haystacks (Berne Guerrero) are contradicted by the evidence on
record.
until full payment thereof; (3) both
Universal Shipping and E. Razon to 2. Appellate Court’s ruling disregards
pay the costs; and (4) both Universal evidence of the CARRIER and
ARRASTRE that 619 bags
Shipping and E. Razon to pay Charter
Insurance, in solidum, P2,000.00 as were discharged in bad order condition
attorney’s fees.
In absolving the CARRIER, the
On appeal by the CARRIER and appellate court completely disregards
ARRASTRE, the then Court of the evidence of the CARRIER
Appeals, on 23 March 1981, absolved
the and the ARRASTRE that 619 bags
were discharged by the CARRIER to
CARRIER of any and all liability and the ARRASTRE in bad order
held the ARRASTRE solely liable.
Reconsideration filed by the condition, as evidenced by the original
and duplicate copies of the Cargo
ARRASTRE was denied by the Receipts issued by the CARRIER to
Appellate Court.
the ARRASTRE and signed by their
The Supreme Court reversed and set respective representatives. The
aside the appealed judgment of Court condition of the 619 bags before the
of Appeals, and reinstated that of
turnover to the ARRASTRE from the
the CFI Manila, Branch XI; without CARRIER was loss or spoilage of up
costs. to 50%, as reflected in the Survey

1. Only questions of law may be raised of Bad Order Cargoes, signed by the
in a Petition for Review on Certiorari, CARRIER and ARRASTRE
exceptions representatives. Accordingly, the Trial

Ordinarily, in a Petition for Review on Court held the CARRIER liable only
Certiorari, only questions of law may for the value of a total of 443 bags, as
be raised. The Court has this is the “evidence of the

held in a number of cases that findings plaintiff” (INSURER), at 16.8209

of fact by the Court of Appeals are, in kilograms per bag, less than the actual
general, conclusive on the weight of 25 kilograms net per bag

Supreme Court when supported by the due to some recovery of spoilage, or a

evidence on record. The rule is not total liability of P12,285.94. Since 619
absolute, however, and allows of bags were discharged from the
CARRIER already in bad order SYLLABUS
condition, it follows that the remaining
431 bags were damaged while in the

ARRASTRE’s custody for which it

should be held liable.
1. COMMERCIAL LAW;
3. ARRASTRE’s liability fixed to 351 ARRASTRE; MANAGEMENT
bags, as INSURER failed to appeal CONTRACT; PROVISIONAL
award CLAIM WHICH DID NOT SPECIFY
THE VALUE OF THE LOSS OF THE
However, since the Trial Court GOODS; EFFECT ON RIGHT TO
computed the liability of the RECOVER LOSS. — It is definitely
ARRASTRE at 351 bags, settled by this Court that upon facts
parallel to the present an action
notwithstanding the ARRASTRE’s commenced by appellee Fireman’s
admission that “80 bags were not Fund Insurance Company against
included in the bad order cargo appellants in the court a quo to recover
the loss of 15 bales of crude natural
certificate,” and the INSURER did not rubber which appellants failed to
appeal said award by the Trial Court in deliver to the consignee thereof, the
its desire to have the case so-called "provisional claim" without
any statement of the marks, number of
terminated soonest, the INSURER may packages; contents, nor their value, is a
not, in this appeal, have the judgment sufficient compliance with the
modified. The liability of the provisions of Section 15 of the
Management Contract.
ARRASTRE for P9,763.94 fixed by
the Trial Court is thus in order.

FIREMAN’S FUND INSURANCE 2. ID.; ID.; ID.; ID.; FORM OF

COMPANY, Plaintiff-Appellee, v. PROVISIONAL CLAIM IN
MANILA RAILROAD COMPANY INSTANT CASE SUFFICIENT. — It
and its Subsidiary MANILA PORT is not pretended by appellants (arrastre
SERVICE, Defendants-Appellants. operators) that in the form the
provisional claim was presented said
claim did not contain sufficient
information to permit them to identify
Paul Santoromana for Plaintiff- the goods involved and to determine
Appellee. the facts relative to said claim. Very
aptly, the trial court pointed out that
the said provisional claim "is a
sufficient notice or warning to the
D. F . Macaranas and Antonio G. arrastre operators, and affords him the
Holgado, for Defendants-Appellants. opportunity to check up the claim for
loss. To require the consignee to state
in detail the description, nature, and
value of the goods missing, or short
delivered, would require consignee to
do the impossible as it is a matter of
public knowledge that before the Service to said consignee thereof who,
goods are released by the Bureau of within 15 days from the discharge of
Customs, more than 15 days elapsed the last bale or package of the goods
from the time that they are delivered to from the above-named carrying vessel,
the arrastre service." filed with said appellant a "provisional
claim" concerning 15 of the total of 26
bales undelivered. 1 About three
months later, or on July 23, 1962, the
said consignee then presented a
"formal claim" particularly indicating
DECISION the quantity, marks, counter-marks and
value of its lost merchandise.

Appellee Fireman’s Fund Insurance

BARREDO, J.: Company, insurer of the goods, was
obliged to pay the value of the lost
merchandise, and was thereby
subrogated to the rights of said
consignee. It then commenced action
against appellants in the court a quo to
Appeal by the Manila Railroad recover the loss, along with claims for
Company and its subsidiary, Manila damages and attorney’s fees. Upon
Port Service, from the decision of the joining of issues, the parties entered
Court of First Instance of Manila in its into a stipulation of facts containing
Civil Case No. 53510, holding them the circumstances already set forth
liable to pay appellee Fireman’s Fund above, on the basis of which, the court,
Insurance Company the sum of on December 24, 1964, issued the
P3,000.52 — the invoice value of 15 decision appealed from; and as earlier
bales of crude natural rubber which stated, the Manila Railroad and its
appellants failed to deliver to the subsidiary, Manila Port Service,
consignee thereof. interposed the present appeal.

In a nutshell, the antecedent facts are The lone law question posed for
as follows: On March 25, 1962, the SS resolution is: whether or not the so
"ZEELAND" arrived at the port of called "provisional claim." . . without
Manila. On the same date, it unloaded any statement of the marks, number of
unto the custody of the Manila Port packages, contents, nor their value 2 . .
Service, subsidiary of the arrastre . is a sufficient compliance with the
operators Manila Railroad Company, provisions of Section 15 of the
858 bales of crude natural rubber Management Contract providing as
shipped under four (4) separate follows:jgc:chanrobles.com.ph
invoices from the ports of Swettenham
and Singapore, consigned to B.F.
Goodrich (Phil.), Inc. Of the shipment,
only 832 bales were thereafter ". . . in any event the CONTRACTOR
delivered by appellant Manila Port shall be released of any and all
responsibility for loss, damage, "Such a theory is manifestly untenable,
misdelivery, and/or non-delivery of for: (1) it assumes that the claim must
goods, unless suit in the court of state the value of said goods, which the
proper jurisdiction is brought within a above-quoted paragraph 15 does not
period of one (1) year from the date of require; and (2) a provisional claim
the discharge of the goods, or from the may be sufficient, even if the value of
date when the claim for value of such the goods involved were not stated
goods have been rejected or denied by therein, if it describes said goods
the CONTRACTOR, provided that sufficiently to permit its identification
such claim shall have been filed with by the operator and the determination
the CONTRACTOR within fifteen by the latter of the facts relevant
(15) days from the date of discharge of thereto, such as the name of the
the last package from the carrying carrying vessel, its date of arrival, the
vessel . . ."cralaw virtua1aw library corresponding bill of lading or other
shipping documents in which the value
of the goods is set forth, etc., ‘while
the facts are still fresh in the minds of
No elaborate discussion is necessary to the persons who took part in the
show that the instant appeal cannot transaction and while the pertinent
prosper. It is definitely settled by this documents are still available.’ 4
Court that upon facts parallel to the
present, the so-called provisional claim
is a sufficient compliance with the
provisions of the Management "Thus, in Domestic Insurance Co. v.
Contract above-quoted. Suffice it to Manila Railroad Co. (L- 24066,
quote here, for purposes of emphasis, August 30, 1967), We explicitly
the holding of this Court in one of the declared that’.. The circumstances that
latest of these precedents: 3 the provisional claim did not specify
the value of the loss’ does not detract
from the fact that said claim ‘still
substantially fulfills the requirements
"It thus appears that the provisional of the contract aforementioned (State
claims in connection with each one of Bonding & Insurance Co. v. Manila
these seven shipments were filed Port Service, supra), and is not a
within 15 days from the discharge of defense against the claim of the
the last package. Defendants maintain, consignee for recovery after it shall
however, that inasmuch as said period have ascertained later its actual loss or
had expired before the filing of the damage.’ . . ."cralaw virtua1aw library
formal claims, plaintiff should be
deemed barred from recovering the
corresponding indemnity. This
pretense is predicated upon the theory It is not pretended by appellants that in
that the aforementioned provisional the form the provisional claim was
claims are not claims ‘for the value’ of presented said claim did not contain
the goods lost, damaged or not sufficient information to permit them
delivered to the plaintiff. to identify the goods involved and to
determine the facts relative to said
claim. Very aptly, the trial court
pointed out that the said provisional
claim "is a sufficient notice or warning
to the defendants, and affords him the On or about 2 October 1995, Anhui
opportunity to check up the claim for Chemicals Import & Export
loss. To require the consignee to state Corporation loaded on board M/S
in detail the description, nature, and Offshore Master a shipment consisting
value of the goods missing, or short of 10,000 bags of sodium sulphate
delivered, would require consignee to anhydrous 99 PCT Min. (shipment),
do the impossible as it is a matter of complete and in good order for
public knowledge that before the transportation to and delivery at the
goods are released by the Bureau of port of Manila for consignee, L.G.
Customs, more than 15 days elapsed Atkimson Import-Export, Inc.
from the time that they are delivered to (consignee), covered by a Clean Bill of
the arrastre service."cralaw virtua1aw Lading. The Bill of Lading reflects the
library gross weight of the total cargo at
500,200 kilograms.6 The Owner
and/or Charterer of M/V Offshore
Master is unknown while the shipper
WHEREFORE, the instant appeal is of the shipment is Shanghai Fareast
dismissed, with costs against Ship Business Company. Both are
appellants. foreign firms doing business in the
Philippines, thru its local ship agent,
respondent Wallem Philippines
Shipping, Inc. (Wallem).7
PHILIPPINES FIRST INSURANCE
CO., INC., Petitioner, v. WALLEM
PHILS. SHIPPING, INC.,
UNKNOWN OWNER AND/OR On or about 16 October 1995, the
UNKNOWN CHARTERER OF shipment arrived at the port of Manila
THE VESSEL M/S "OFFSHORE on board the vessel M/S Offshore
MASTER" AND "SHANGHAI Master from which it was subsequently
FAREAST SHIP BUSINESS discharged. It was disclosed during the
COMPANY," Respondents. discharge of the shipment from the
carrier that 2,426 poly bags (bags)
were in bad order and condition,
having sustained various degrees of
Before us is a Rule 45 petition1 which spillages and losses. This is evidenced
seeks the reversal of the Decision2 and by the Turn Over Survey of Bad Order
Resolution3 of the Court of Appeals in Cargoes (turn-over survey) of the
CA-G.R. No. 61885. The Court of arrastre operator, Asian Terminals, Inc.
Appeals reversed the Decision4 of the (arrastre operator).8 The bad state of
Regional Trial Court (RTC) of Manila, the bags is also evinced by the arrastre
Branch 55 in Civil Case No. 96-80298, operator's Request for Bad Order
dismissing the complaint for sum of Survey.9
money.

Asia Star Freight Services, Inc.

The facts of the case follow.5 undertook the delivery of the subject
shipment from the pier to the
consignee's warehouse in Quezon
City,10 while the final inspection was
conducted jointly by the consignee's P397,879.69 representing the actual
representative and the cargo surveyor. damages suffered by petitioner plus
During the unloading, it was found and legal interest thereon computed from
noted that the bags had been the time of the filing of the complaint
discharged in damaged and bad order until fully paid and attorney's fees
condition. Upon inspection, it was equivalent to 25% of the principal
discovered that 63,065.00 kilograms of claim plus costs of suit.
the shipment had sustained
unrecovered spillages, while 58,235.00
kilograms had been exposed and
contaminated, resulting in losses due to In a decision16 dated 3 November
depreciation and downgrading.11 1998, the RTC ordered respondents to
pay petitioner P397,879.69 with 6%
interest plus attorney's fees and costs
of the suit. It attributed the damage and
On 29 April 1996, the consignee filed losses sustained by the shipment to the
a formal claim with Wallem for the arrastre operator's mishandling in the
value of the damaged shipment, to no discharge of the shipment. Citing
avail. Since the shipment was insured Eastern Shipping Lines, Inc. v. Court
with petitioner Philippines First of Appeals,17 the RTC held the
Insurance Co., Inc. against all risks in shipping company and the arrastre
the amount of P2,470,213.50,12 the operator solidarily liable since both the
consignee filed a formal claim13 with arrastre operator and the carrier are
petitioner for the damage and losses charged with and obligated to deliver
sustained by the shipment. After the goods in good order condition to
evaluating the invoices, the turn-over the consignee. It also ruled that the
survey, the bad order certificate and ship functioned as a common carrier
other documents,14 petitioner found and was obliged to observe the degree
the claim to be in order and of care required of a common carrier in
compensable under the marine handling cargoes. Further, it held that a
insurance policy. Consequently, notice of loss or damage in writing is
petitioner paid the consignee the sum not required in this case because said
of P397,879.69 and the latter signed a goods already underwent a joint
subrogation receipt. inspection or survey at the time of
receipt thereof by the consignee, which
dispensed with the notice requirement.

Petitioner, in the exercise of its right of

subrogation, sent a demand letter to
Wallem for the recovery of the amount The Court of Appeals reversed and set
paid by petitioner to the consignee. aside the RTC's decision.18 According
However, despite receipt of the letter, to the appellate court, there is no
Wallem did not settle nor even send a solidary liability between the carrier
response to petitioner's claim.15 and the arrastre operator because it was
clearly established by the court a quo
that the damage and losses of the
shipment were attributed to the
Consequently, petitioner instituted an mishandling by the arrastre operator in
action before the RTC for damages the discharge of the shipment. The
against respondents for the recovery of appellate court ruled that the instant
case falls under an exception common carrier. Moreover, as the
recognized in Eastern shipment was an exercise of
international trade, the provisions of
the Carriage of Goods

Shipping Lines.19 Hence, the arrastre

operator was held solely liable to the
consignee. by Sea Act21 (COGSA), together with
the Civil Code and the Code of
Commerce, shall apply.22

Petitioner raises the following issues:

The first and second issues raised in

the petition will be resolved
1. Whether or not the Court of concurrently since they are
Appeals erred in not holding that as a interrelated.
common carrier, the carrier's duties
extend to the obligation to safely
discharge the cargo from the vessel;
It is undisputed that the shipment was
damaged prior to its receipt by the
insured consignee. The damage to the
2. Whether or not the carrier should shipment was documented by the turn-
be held liable for the cost of the over survey23 and Request for Bad
damaged shipment; Order Survey.24 The turn-over survey,
in particular, expressly stipulates that
2,426 bags of the shipment were
received by the arrastre operator in
3. Whether or not Wallem's failure damaged condition. With these
to answer the extra judicial demand by documents, petitioner insists that the
petitioner for the cost of the shipment incurred damage or losses
lost/damaged shipment is an implied while still in the care and responsibility
admission of the former's liability for of Wallem and before it was turned
said goods; over and delivered to the arrastre
operator.

4. Whether or not the courts below

erred in giving credence to the The trial court, however, found
testimony of Mr. Talens. through the testimony of Mr.
Maximino Velasquez Talens, a cargo
surveyor of Oceanica Cargo Marine
Surveyors Corporation, that the losses
It is beyond question that respondent's and damage to the cargo were caused
vessel is a common carrier.20 Thus, by the mishandling of the arrastre
the standards for determining the operator. Specifically, that the torn
existence or absence of the cargo bags resulted from the use of
respondent's liability will be gauged on steel hooks/spikes in piling the cargo
the degree of diligence required of a bags to the pallet board and in pushing
the bags by the stevedores of the dock or afloat alongside the vessel at
arrastre operator to the tug boats then the port of loading, until he delivers it
to the ports.25 The appellate court on the shore or on the discharging
affirmed the finding of mishandling in wharf at the port of unloading, unless
the discharge of cargo and it served as agreed otherwise. In Standard Oil Co.
its basis for exculpating respondents of New York v. Lopez Castelo,29 the
from liability, rationalizing that with Court interpreted the ship captain's
the fault of the arrastre operator in the liability as ultimately that of the
unloading of the cargo established it shipowner by regarding the captain as
should bear sole liability for the cost of the representative of the ship owner.
the damaged/lost cargo.

Lastly, Section 2 of the COGSA

While it is established that damage or provides that under every contract of
losses were incurred by the shipment carriage of goods by sea, the carrier in
during the unloading, it is disputed relation to the loading, handling,
who should be liable for the damage stowage, carriage, custody, care, and
incurred at that point of transport. To discharge of such goods, shall be
address this issue, the pertinent laws subject to the responsibilities and
and jurisprudence are examined. liabilities and entitled to the rights and
immunities set forth in the Act.30
Section 3 (2) thereof then states that
among the carriers' responsibilities are
Common carriers, from the nature of to properly and carefully load, handle,
their business and for reasons of public stow, carry, keep, care for, and
policy, are bound to observe discharge the goods carried.
extraordinary diligence in the vigilance
over the goods transported by them.26
Subject to certain exceptions
enumerated under Article 173427 of The above doctrines are in fact
the Civil Code, common carriers are expressly incorporated in the bill of
responsible for the loss, destruction, or lading between the shipper Shanghai
deterioration of the goods. The Fareast Business Co., and the
extraordinary responsibility of the consignee, to wit:
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 4. PERIOD OF RESPONSIBILITY.
are delivered, actually or The responsibility of the carrier shall
constructively, by the carrier to the commence from the time when the
consignee, or to the person who has a goods are loaded on board the vessel
right to receive them.28 and shall cease when they are
discharged from the vessel.

For marine vessels, Article 619 of the

Code of Commerce provides that the The Carrier shall not be liable of loss
ship captain is liable for the cargo from of or damage to the goods before
the time it is turned over to him at the loading and after discharging from the
vessel, howsoever such loss or damage the CARRIER are therefore charged
arises.31 with and obligated to deliver the goods
in good condition to the
consignee.(Emphasis supplied)
(Citations omitted)
On the other hand, the functions of an chanroblesvirtuallawlibrary
arrastre operator involve the handling
of cargo deposited on the wharf or
between the establishment of the
consignee or shipper and the ship's The liability of the arrastre operator
tackle.32 Being the custodian of the was reiterated in Eastern Shipping
goods discharged from a vessel, an Lines, Inc. v. Court of Appeals36 with
arrastre operator's duty is to take good the clarification that the arrastre
care of the goods and to turn them over operator and the carrier are not always
to the party entitled to their and necessarily solidarily liable as the
possession.33 facts of a case may vary the rule.

Handling cargo is mainly the arrastre Thus, in this case the appellate court is
operator's principal work so its correct insofar as it ruled that an
drivers/operators or employees should arrastre operator and a carrier may not
observe the standards and measures be held solidarily liable at all times.
necessary to prevent losses and But the precise question is which entity
damage to shipments under its had custody of the shipment during its
custody.34 unloading from the vessel?cralawred

In Fireman's Fund Insurance Co. v. The aforementioned Section 3(2) of

Metro Port Service, Inc.35 the Court the COGSA states that among the
explained the relationship and carriers' responsibilities are to properly
responsibility of an arrastre operator to and carefully load, care for and
a consignee of a cargo, to quote: discharge the goods carried. The bill of
lading covering the subject shipment
likewise stipulates that the carrier's
liability for loss or damage to the
The legal relationship between the goods ceases after its discharge from
consignee and the arrastre operator is the vessel. Article 619 of the Code of
akin to that of a depositor and Commerce holds a ship captain liable
warehouseman. The relationship for the cargo from the time it is turned
between the consignee and the over to him until its delivery at the port
common carrier is similar to that of the of unloading.
consignee and the arrastre operator.
Since it is the duty of the ARRASTRE
to take good care of the goods that are
in its custody and to deliver them in In a case decided by a U.S. Circuit
good condition to the consignee, such Court, Nichimen Company v. M./V.
responsibility also devolves upon the Farland,37 it was ruled that like the
CARRIER. Both the ARRASTRE and duty of seaworthiness, the duty of care
of the cargo is non-delegable,38 and A The checker of the vessel of
the carrier is accordingly responsible Wallem, sir.41
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 xxx
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, Q Mr. Witness, during the
competent hands, and in such manner discharging operation of this cargo,
that no unnecessary injury shall be where was the master of the
done thereto.39 And the fact that a vessel?cralawred
consignee is required to furnish
persons to assist in unloading a
shipment may not relieve the carrier of
its duty as to such unloading.40 A On board the vessel, supervising,
sir.

The exercise of the carrier's custody

and responsibility over the subject Q And, observed the discharging
shipment during the unloading actually operation?cralawred
transpired in the instant case during the
unloading of the shipment as testified
by Mr. Talens, the cargo surveyor, to
quote: A Yes, sir.

Atty. Repol: Q And, what did the master of the

vessel do when the cargo was being
unloaded from the vessel?cralawred

- Do you agree with me that Wallem

Philippines is a shipping
[company]?cralawred A He would report to the head
checker, sir.

A Yes, sir.
Q He did not send the stevedores to
what manner in the discharging of the
cargo from the vessel?cralawred
Q And, who hired the services of the
stevedores?cralawred

A And head checker po and siyang

nagpapatakbo ng trabaho sa loob ng
barko, sir.42
 shipment while under the supervision
of the carrier. Consequently, the carrier
xxx is liable for the damage or losses
caused to the shipment. As the cost of
the actual damage to the subject
shipment has long been settled, the
Q Is he [the head checker] an trial court's finding of actual damages
employee of the company?cralawred in the amount of P397,879.69 has to be
sustained.

A He is a contractor/checker of
Wallem Philippines, sir.43 On the credibility of Mr. Talens which
is the fourth issue, the general rule in
assessing credibility of witnesses is
well-settled:
Moreover, the liability of Wallem is
highlighted by Mr. Talen's notes in the
Bad Order Inspection, to wit:
x x x the trial court's evaluation as to
the credibility of witnesses is viewed
as correct and entitled to the highest
"The bad order torn bags, was due to respect because it is more competent to
stevedores['] utilizing steel so conclude, having had the
hooks/spikes in piling the cargo to opportunity to observe the witnesses'
[the] pallet board at the vessel's cargo demeanor and deportment on the stand,
holds and at the pier designated area and the manner in which they gave
before and after discharged that cause their testimonies. The trial judge
the bags to torn [sic]."44 (Emphasis therefore can better determine if such
supplied)cralawlibrary witnesses were telling the truth, being
in the ideal position to weigh
conflicting testimonies. Therefore,
unless the trial judge plainly
The records are replete with evidence overlooked certain facts of substance
which show that the damage to the and value which, if considered, might
bags happened before and after their affect the result of the case, his
discharge45 and it was caused by the assessment on credibility must be
stevedores of the arrastre operator who respected.46
were then under the supervision of
Wallem.ςηαñrοblεš νιrâ€
υαl lαω lιbrαrÿ
Contrary to petitioner's stance on the
third issue, Wallem's failure to respond
to its demand letter does not constitute
It is settled in maritime law an implied admission of liability. To
jurisprudence that cargoes while being borrow the words of Mr. Justice Oliver
unloaded generally remain under the Wendell Holmes, thus:
custody of the carrier. In the instant
case, the damage or losses were
incurred during the discharge of the
A man cannot make evidence for Eastern Shipping vs CA
himself by writing a letter containing
the statements that he wishes to prove. GR No. 97412, 12 July 1994
He does not make the letter evidence
by sending it to the party against FACTS
whom he wishes to prove the facts
[stated therein]. He no more can Two fiber drums were shipped
impose a duty to answer a charge than owned by Eastern Shipping from
he can impose a duty to pay by sending Japan. The shipment as insured with a
goods. Therefore a failure to answer marine policy. Upon arrival in Manila
such adverse assertions in the absence unto the custody of metro Port Service,
of further circumstances making an which excepted to one drum, said to be
answer requisite or natural has no in bad order and which damage was
effect as an admission.47 unknown the Mercantile Insurance
Company. Allied Brokerage
Corporation received the shipment
from Metro, one drum opened and
With respect to the attorney's fees, it is without seal. Allied delivered the
evident that petitioner was compelled shipment to the consignee’s
to litigate this matter to protect its warehouse. The latter excepted to one
interest. The RTC's award of drum which contained spillages while
P20,000.00 as attorney's fees is the rest of the contents was
reasonable. adulterated/fake. As consequence of
the loss, the insurance company paid
the consignee, so that it became
subrogated to all the rights of action of
WHEREFORE, the petition is consignee against the defendants
GRANTED. The Decision of the Court Eastern Shipping, Metro Port and
of Appeals dated 22 June 2004 and its Allied Brokerage. The insurance
Resolution dated 11 October 2004 are company filed before the trial court.
REVERSED and SET ASIDE. Wallem The trial court ruled in favor of
is ordered to pay petitioner the sum of plaintiff an ordered defendants to pay
P397,879.69, with interest thereon at the former with present legal interest
6% per annum from the filing of the of 12% per annum from the date of the
complaint on 7 October 1996 until the filing of the complaint. On appeal by
judgment becomes final and executory. defendants, the appellate court denied
Thereafter, an interest rate of 12% per the same and affirmed in toto the
annum shall be imposed.48 decision of the trial court.
Respondents are also ordered to pay
petitioner the amount of P20,000.00
for and as attorney's fees, together with
the costs of the suit. ISSUE

(1) Whether the applicable rate of

legal interest is 12% or 6%.
SO ORDERED.

(2) Whether the payment of legal

interest on the award for loss or
damage is to be computed from the SUMMA INSURANCE
time the complaint is filed from the CORPORATION, petitioner, vs.
date the decision appealed from is COURT OF APPEALS and
rendered. METRO PORT SERVICE, INC.,
respondents.
HELD
FACTS:
(1) The Court held that the legal
interest is 6% computed from the ISSUE: Is an arrastre operator legally
decision of the court a quo. When an liable for the loss of a shipment in its
obligation, not constituting a loan or custody? If so, what is the extent of its
forbearance of money, is breached, an liability? The issues brought by the
interest on the amount of damaes parties could be stated as follows: (1)
awarded may be imposed at the Is the private respondent legally liable
discretion of the court at the rate of 6% for the loss of the shipment in
per annum. No interest shall be question? (2) If so, what is the extent
adjudged on unliquidated claims or of its liability?
damages except when or until the
demand can be established with RULING:
reasonable certainty.
ID.; EXTENT OF LIABILITY OF
When the judgment of the court ARRASTRE OPERATOR;
awarding a sum of money becomes MANAGEMENT CONTRACT;
final and executor, the rate of legal SINCE PETITIONER FAILED TO
interest shall be 12% per annum from CONVINCE THE COURT THAT
such finality until satisfaction, this THE REQUIREMENT OF THE
interim period being deemed to be by MANAGEMENT CONTRACT HAS
then an equivalent to a forbearance of BEEN COMPLIED WITH, THE
money. ARRASTRE OPERATOR WAS NOT
LIABLE FOR THE ACTUAL
The interest due shall be 12% PA to be INVOICE VALUE OF THE LOST
computed fro default, J or EJD. SHIPMENT. - In the performance of
its job, an arrastre operator is bound by
(2) From the date the judgment the management contract it had
is made. Where the demand is executed with the Bureau of Customs.
established with reasonable certainty, However, a management contract,
the interest shall begin to run from the which is a sort of a stipulation pour
time the claim is made judicially or EJ autrui within the meaning of Article
but when such certainty cannot be so 1311 of the Civil Code, is also binding
reasonably established at the time the on a consignee because it is
demand is made, the interest shll begin incorporated in the gate pass and
to run only from the date of judgment delivery receipt which must be
of the court is made. presented by the consignee before
delivery can be effected to it. The
(3) The Court held that it should be insurer, as successor-in-interest of the
computed from the decision rendered consignee, is likewise bound by the
by the court a quo. management contract. Indeed, upon
taking delivery of the cargo, a
consignee (and necessarily its
successor-in-interest) tacitly accepts
the provisions of the management private respondent through the
contract, including those which are documents the latter had processed,
intended to limit the liability of one of petitioner does not categorically state
the contracting parties, the arrastre that among the submitted documents
operator. Section 1, Article VI of the were the pro forma invoice value and
Management Contract between private the certified packing list. Neither does
respondent and the Bureau of Customs petitioner pretend that these two
provides: 1. Responsibility and documents were prerequisites to the
Liability for Losses and Damages - issuance of a permit to deliver or were
The CONTRACTOR shall, at its own attachments thereto. Even the permit to
expense handle all merchandise in the deliver, upon which petitioner anchors
piers and other designated places and its arguments, may not be considered
at its own expense perform all work by the Court because it was not
undertaken by it hereunder diligently identified and formally offered in
and in a skillful workmanlike and evidence. All told, petitioner failed to
efficient manner; that the convince the Court that the
CONTRACTOR shall be solely requirement of the management
responsible as an independent contract had been complied with to
CONTRACTOR, and hereby agrees to entitle it to recover the actual invoice
accept liability and to promptly pay to value of the lost shipment.
the steamship company, consignee,
consignor or other interested party or INTERNATIONAL CONTAINER
parties for the loss, damage, or non- TERMINAL SERVICES, INC. vs.
delivery of cargoes to the extent of the PRUDENTIAL GUARANTEE &
actual invoice value of each package ASSURANCE CO., INC. G.R. No.
which in no case shall be more than 134514, December 8, 1999
Three Thousand Five Hundred Pesos
(P3,500. 00) for each package unless
the value of the importation is
otherwise specified or manifested or Facts: Mother vessel Tao He loaded
communicated in writing together with and received on board in San
the invoice value and supported by a Francisco, California, a shipment of
certified packing list to the five lots of canned foodstuff complete
CONTRACTOR by the interested and in good order and condition for
party or parties before the discharge of transport to Manila in favor of Duel
the goods, as well as all damage that Food Enterprises (consignee) under
may be suffered on account of loss, “shipper’s load and count”.
damage, or destruction of any
merchandise while in custody or under The shipment arrived at the port of
the control of the CONTRACTOR in Manila and discharged by the vessel
any pier, shed, warehouse, facility or MS Wei He in favor of ICTSI for
other designated place under the safekeeping. The brokerage withdrew
supervision of the BUREAU, x x x In the shipment and delivered the same to
this case, no evidence was offered by the consignee. An inspection there
petitioner proving the amount of revealed that 161 cartoons were
arrastre fees paid to private respondent missing valued at P85,984.40.
so as to put the latter on notice of the Consignee learned of such shortage on
value of the cargo. While petitioner June 4, 1990. It filed claim for loss on
alleged that prior to the loss of the October 2, 1990. Claim for
package, its value had been relayed to indemnification of the loss having
been denied by ICTSI and the The legal relationship between the
brokerage, consignee sought payment arrastre and consignee is akin to that
from Prudential (insurer) under the between a warehouseman and a
marine cargo policy. depositor. As to both the nature of the
functions and the place of their
The appellate court found ICTSI performance, arrastre operator’s
negligent in its duty to exercise due services are clearly not maritime in
diligence over the shipment. It also character.
ruled that the filing of a claim
depended on the issuance of a 2) Yes. In order to hold the arrastre
certificate of loss by ICTSI based on operator liable for lost or damaged
the liability clause printed on the back goods, the claimant should file with
of the arrastre and wharfage receipt. the operator a claim for the value of
Since ICTSI did not issue such a said goods “within the 15-day period
certificate despite being informed of from the date of discharge of the last
the shortage, the 15-day period given package from the carrying vessel.” The
to the consignee for filing a formal filing within the period is in the nature
claim never began. Prudential, of a prescriptive period for bringing an
therefore can hold the ICTSI liable for action and is a condition precedent to
the shortage. holding the arrastre operator liable. In
an endeavor to promote fairness,
Issues: equity and justness, however, a long
line of cases has held that the 15-day
1) Was ICTSI negligent in its duty to period for filing claims should be
exercise due diligence over the counted from the date the consignee
shipment? learns of the loss, damage or
misdelivery of goods.
2) Did the consignee fail to file a
formal claim within the period stated In the case at bar, the consignee had all
on the dorsal side of the arrastre and the time to make a formal claim from
wharfage receipt? the day it discovered the shortage in
the shipment, which was June 4, 1990,
Held: 1) No. The consigned goods as shown by the records. By the time
were shipped under “shipper’s load the claim for the loss was filed on
and count”. This means that the October 2, 1990, four months had
shipper was solely responsible for the already elapsed from the date of
loading of the container, while the delivery. In any event, within 15 days
carrier was oblivious to the contents of from the time the loss was discovered,
the shipment. Protection against the consignee could have filed a
pilferage of the shipment was the provisional claim, which would have
consignee’s lookout. The arrastre constituted substantial compliance
operator was not required to verify the with the rule. Its failure to do so
contents of the container received and relieved the arrastre operator of any
to compare them with those declared liability for the non-delivery of the
by the shipper because as earlier goods. The rationale between the time
stated, the cargo was at the shipper’s limit is that, without it, a consignee
load and count. The arrastre operator could too easily concoct or fabricate
was expected to deliver to the claims and deprive the arrastre
consignee only the container received operator of the best opportunity to
from the carrier. prove immediately their veracity.
British Airways v. Court of Appeals

G.R. No. 121824, 29 January 1998,

285 SCRA 450

FACTS:

On April 16, 1989, Mahtani is on his

way to Bombay, India from Manila.
His trip was Manila-Hong Kong via
PAL and then Hong Kong-India via
British Airways. Prior to his departure,
he checked in two pieces of luggage
containing his clothing and other
personal effects, confident that the
same would be transferred to his BA
flight. Unfortunately, when he arrived
in India, he discovered that his luggage
was missing.

The RTC awarded Mahtani damages

which was affirmed by CA.

ISSUE:

Whether or not in a contract of air

carriage a declaration by the passenger
is needed to recover a greater amount?

RULING:

American jurisprudence provides that

an air carrier is not liable for the loss
of baggage in an amount in excess of
the limits specified in the tariff which
was filed with the proper authorities,
such tariff being binding on the recovered. He received under protest a
passenger regardless of the passenger’s free ticket to Iligan. PAL did not
lack of knowledge thereof or assent provide him with transportation from
thereto. This doctrine is recognized in the airport to the city proper nor food
this jurisdiction. and accommodation for his stay in
Cotabato. The next day, he purchased a
The inescapable conclusion that BA ticket to Iligan, informing PAL he
had waived the defense of limited would not use the free ticket because
liability when it allowed Mahtani to he was filing a case against it.
testify as to the actual damages he
incurred due to misplacement of his RTC ordered PAL to pay. CA
luggage, without any objection. affirmed.

It is a well-settled doctrine that where ISSUE:

the proponent offers evidence deemed
by counsel of the adverse party to be Whether PAL is liable.
inadmissible for any reason, the latter
has the right to object. However, such RULING:
right is a mere privilege which can be
waived. Necessarily, the objection PAL did not rebut the evidence
must be made at the earliest alleging its negligence in caring for its
opportunity, in case of silence when stranded passengers. The contract of
there is opportunity to speak may air carriage is a peculiar one. Being
operate as a waiver of objections. imbued with public interest, the law
requires common carriers to carry the
passengers safely as far as human care
and foresight can provide, using the
PAL vs. CA & Zapatos utmost diligence of every cautious
persons, with due regard for all
G.R. No. L-82619, September 15, circumstances.
1993
Undisputably, PAL's diversion of its
FACTS: flight due to inclement weather was a
fortuitous event. Nonetheless, such
Zapatos filed a complaint for damages occurrence did not terminate PAL's
for breach of contract of carriage contract with its passengers. Being in
against PAL. He took a flight from the business of air carriage and the sole
Cebu-Ozamiz. 15 minutes before one to operate in the country, PAL is
landing at Ozamiz, the pilot received a deemed equipped to deal with
radio message that the airport was situations as in the case at bar.
closed due to heavy rains and
inclement weather and that he should What we said in one case once again
proceed to Cotabato City instead. must be stressed, ., the relation of
carrier and passenger continues until
He was not given accommodation to the latter has been landed at the port of
the flight back to Cebu and the flight destination and has left the carrier's
the next day to Ozamiz. His premises. Hence, PAL necessarily
belongings (including camera worth would still have to
2k) were still on board when the plane
flew back to Cebu and were no longer
exercise extraordinary diligence in -Upon arrival at Narita, Japan private
respondents were billeted at Hotel Nikko
safeguarding the comfort, Narita for the night. The next day, private
convenience and safety of its stranded respondents, on the final leg of their journey,
passengers until they have reached went to the airport to take their flight to
Manila.
their final destination. On this score,
PAL grossly failed considering -However, due to the Mt. Pinatubo eruption,
the then ongoing battle between unrelenting ashfall blanketed (NAIA),
government forces and Muslim rebels rendering it inaccessible to airline traffic.
Hence, private respondents' trip to Manila
in Cotabato City and the fact that the was cancelled indefinitely.
private respondent was a stranger to
the place. -To accommodate the needs of its stranded
passengers, JAL rebooked all the Manila-
bound passengers on flight No. 741 due to
Since part of the failure to comply with depart on June 16, 1991 and also paid for
the obligation of common carrier to the hotel expenses for their unexpected
deliver its passengers safely to their overnight stay. However, flight to Manila was
again cancelled due to NAIA's indefinite
destination lay in the defendant's closure. JAL no longer covered respondents’
failure to provide comfort and expenses during their stay in Narita.
convenience to its stranded passengers
using extraordinary diligence, the -Private respondents commenced an action
for damages against JAL. To support their
cause of nonfulfillment is not solely claim, private respondents asserted that JAL
and exclusively due to fortuitous event, failed to live up to its duty to provide care
but due to something which and comfort to its stranded passengers when
it refused to pay for their hotel and
defendant airline could have accommodation expenses at Narita, Japan.
prevented, defendant becomes liable to In other words, they insisted that JAL was
obligated to shoulder their expenses as long
plaintiff. as they were still stranded in Narita. On the
other hand, JAL denied this allegation and
Admittedly, private respondent's averred that airline passengers have no
vested right to these amenities in case a
insistence on being given priority flight is cancelled due to "force majeure."
in accommodation was unreasonable
considering the fortuitous event and Issue:
that there was a sequence to be
observed in the booking, in the order (1) WON JAL is liable for their expenses in
Narita Japan – NO
the passengers checked in at their port
of origin. His intransigence in fact was (2) WON JAL is liable – YES, in so far as
the main cause for his having to stay at transporting them back to Manila
the airport longer than was necessary.
(moral damages is reduced)
Held:

Accordingly, there is no question that when a

JAPAN AIRLINES VS CA party is unable to fulfill his obligation
because of "force majeure," the general rule
Facts: is that he cannot be held liable for damages
for non-performance. Corollarily, when JAL
-Jose Miranda et al boarded JAL flight No. JL was prevented from resuming its flight to
001 California bound for Manila. As an Manila due to the effects of Mt. Pinatubo
incentive for travelling on the said airline, eruption, whatever losses or damages in the
both flights were to make an overnight form of hotel and meal expenses the
stopover at Narita, Japan, at the airlines' stranded passengers incurred, cannot be
expense, thereafter proceeding to Manila the charged to JAL. Yet it is undeniable that JAL
following day. assumed the hotel expenses of respondents
for their unexpected overnight stay on June
15, 1991.
 It has been held that airline passengers must as passengers up to the last minute amounts to
take such risks incident to the mode of bad faith. Evidently, respondent TWA placed its
travel. In this regard, adverse weather self-interest over the rights of petitioners under
conditions or extreme climatic changes are their contracts of carriage. Such conscious
some of the perils involved in air travel, the disregard of petitioners’ rights makes respondent
consequences of which the passenger must TWA liable for moral
assume or expect.
Tan v. Northwest Airlines
While JAL was no longer required to defray
private respondents' living expenses during
their stay in Narita on account of the Facts:
fortuitous event, JAL had the duty to make
the necessary arrangements to transport
On May 31, 1994, Priscilla Tan and
private respondents on the first available
connecting flight to Manila. Petitioner JAL Connie Tan boarded a Northwest
reneged on its obligation to look after the Airlines plane in Chicago bound to the
comfort and convenience of its passengers
when it declassified private respondents from
Philippines with a stop-over at Detroit.
"transit passengers" to "new passengers" as Upon their arrival, they found out that
a result of which private respondents were their baggage was missing. On June 3,
obliged to make the necessary arrangements
themselves for the next flight to Manila.
they recovered the baggage and
discovered that some were destroyed
Sps Zalamea vs. CA & TWA and soiled. They filed an action for
damages, claiming that they suffered
Facts: mental anguish, sleepless nights and
great damage. Northwest offered to
Sps Zalamea and their daughter purchased 3
airline tickets from TWA from its Manila agent reimburse the cost of repairs of the
for a flight to New York to LA. Two tickets were bags or purchase price of new bags.
purchased at a discounted rate of 75% while one
was purchased in its full value. All three tickets
The trial court awarded actual, moral
were confirmed and reconfirmed. However, of and exemplary damages, and also
the appointed date, they were placed on the attorney’s fees. The Court of Appeals
wait-list because the number of passengers who
had checked in before them had already taken partially affirmed the decision by
all of the seats. Those having full fare tickets deleting moral and exemplary
were given priority among those in the wait-list.
Thus, Cesar Zalamea was able to board such
damages. Hence, Tan filed this instant
flight because he was holding the full fare ticket. petition.
Trial court awarded the Zalameas moral
damages, among others, based on breach of
contract of carriage. The CA, however, reversed Issue:
this, holding that moral damages are recoverable
in a damage suit predicated upon a breach of
contract of carriage only where there is fraud or
Whether respondent Airline is liable
bad faith. Since it is a matter of record that for moral and exemplary damages for
overbooking of flights is a common and accepted willful misconduct and breach of
practice of airlines in the United States, no fraud
nor bad faith could be imputed on respondent contract of carriage
TransWorld Airlines.
Held:
Issue: Whether or not said policies (that
overbooking of flights is a common and accepted
practice in the US, thus does not amount to bad We agree with the Court of Appeals
faith) were incorporated or deemed written on that respondent was not guilty of
petitioners’ contracts of carriage.
willful misconduct. "For willful
Held: misconduct to exist there must be a
showing that the acts complained of
No. were impelled by an intention to
violate the law, or were in persistent
TWA failed to show that there are provisions to disregard of one's rights. It must be
that effect. The failure of respondent TWA to so
inform them when it could easily have done so evidenced by a flagrantly or
thereby enabling respondent to hold on to them shamefully wrong or improper
conduct." Contrary to petitioner's necessary precautions to insure the
contention, there was nothing in the safety of lives and property would be
conduct of respondent which showed taken.
that they were motivated by malice or
bad faith in loading her baggages on Several days later, Atty. Caorong was
another plane. Due to weight and on board a bus to Iligan when three
balance restrictions, as a safety Maranaos went on board the vehicle.
measure, respondent airline had to The leader of the group ordered the
transport the baggages on a different passengers to leave the bus. Atty.
flight, but with the same expected date Caorong later went back to get
and time of arrival in the Philippines. It something when he saw that the
is admitted that respondent failed to Maranaos were already pouring
deliver petitioner's luggages on time. gasoline on the bus and on the driver.
However, there was no showing of Atty. Caorong pleaded for the life of
malice in such failure. By its concern the driver, after which the driver
for safety, respondent had to ship the jumped out of the vehicle.Caorong was
baggages in another flight with the shot to death as a result.
same date of arrival.
RTC dismissed the complaint stating
that Fortune was not negligent.
Fortune Express, Disregarding the suggestion
ofproviding its buses with security
Inc. v. Court of guards is not an omission of
petitioner’s duty. The evidence showed
Appeals that the assailants did not intend to
harm the passengers. The death of
G.R. No. 119756, 18 November 1999, Atty. Caorong was an unexpected and
305 SCRA 15 unforeseen occurrence
beyondpetitioner’s control.
FACTS:
CA REVERSED RTC’s ruling:Fortune
On November 18, 1989, a bus of is negligent. Despite the tip to
petitioner figured in an accident with a Manager Bravo of the devious plan by
jeepney in Kauswagan, Lanao del several Maranaos, management did not
Norte, resulting in the death of several do not take any safety precautions at
passengers of the jeepney, including all.One available safeguard that could
two Maranaos. Crisanto Generalao, a have absolved Fortunefrom liability
volunteer field agent of the was frisking of incoming passengers
Constabulary Regional Security Unit, en route to dangerous areas and bag
conducted an investigation of the inspection at the terminals, which
accident. He found that the owner of Fortune failed to do. The frisking
the jeepney was a Maranao residing in system is not novel insensitive and
Delabayan, Lanao del Norte and that dangerous places. Many companies
certain Maranaos were planning to adopt this measure. Fortune did
take revenge on the petitioner by “absolutely nothing”
burning some of its buses. Generalao
went to see Diosdado Bravo, ISSUE:
operations manager of petitioner, and
informed him about the plot of the 1. W/N Petitioner is liable for the death
Maranaos. Bravo assured him that the of Atty. Caorong by failing
totakenecessary precautions to ensure event must be either unforeseeable or
the safety of its passengers; unavoidable; (3) the occurence must be
2. W/N the attack by the Maranaos render it impossible for the debtor to
constituted causo fortuito? fulfill the obligation in a normal
manner; and (4) the obligor must be
RULING: free of participation in, or aggravation
of, the injury to the creditor. The
1. Petitioner is liable. absence of any of the requisites
Article 1763 holds common carriers mentioned above would prevent the
liable for the injuries to passengers obligor from being excused from
caused by the wilful act of other liability.
passengers, if its employees failed to
exercise the diligence of a good father Thus, in Vasquez v. Court of Appeals,
in preventing the act. it was held that the common carrier
• Despite the warning by the was liable for its failure to take the
constabulary officer, petitioner did necessary precautions against an
nothing to protect the safety of its approaching typhoon, of which it was
passengers. If petitioner took the warned, resulting in the loss of the
necessary precautions, they would lives of several passengers. The event
have discovered the weapons and the was forseeable, and, thus, the second
large quantity of gasoline the requisite mentioned above was not
malefactors carried with them. A fulfilled. This ruling applies by
common carrier is liable for failing to analogy to the present case. Despite
prevent hijacking by frisking the report of PC agent Generalao that
passengers and inspecting baggages. the Maranaos were going to attack its
• Petitioner is solely liable for Atty. buses, petitioner took no steps to
Caorong’s death. There was no safeguard the lives and properties of its
contributory negligence on the part of passengers. The seizure of the bus of
the victim, since all he did was the petitioner was foreseeable and,
pleading for the life of the driver. His therefore, was not a fortuitous event
heroic effort was neither an act of which would exempt petitioner from
negligence or recklessness. liabilty.
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, petitioner should
be held liable for the death of Atty.
Caorong.

2. Seizure of Petitioner’s Bus is not a

Case of Force Majeure
Art. 1174 of the Civil Code defines a
fortuitous event as an occurence which
could not be foreseen, is inevitable. To
be considered as force majeure, it is
necessary that (1) the cause of the
breach of the obligation must be
independent of the human will; (2) the