1. MAERSK LINE VS COURT OF APPEALS

FACTS: Maersk Line is engaged in the transportation of goods by sea, doing business in the

Philippines through its general agent Compania General de Tabacos de Filipinas. Private

respondent Efren Castillo is the proprietor of Ethegal Laboratories, a firm engaged in the

manufacture of pharmaceutical products. On November 12, 1976, private respondent ordered

from Eli Lilly. Inc. of Puerto Rico through its agent in the Philippines, Elanco Products, 600,000

empty gelatin capsules for the manufacture of his pharmaceutical products. The capsules were

placed in six (6) drums of 100,000 capsules each valued at US $1,668.71. The 600,000 empty

gelatin capsules in six drums were already shipped on board MV "Anders Maerskline" for

shipment to the Philippines via Oakland, California. Shipper Eli Lilly, Inc. specified the date of

arrival to be April 3, 1977. Said cargo of capsules were mishipped and diverted to Richmond,

Virginia, USA and then transported back Oakland, Califorilia. The goods finally arrived in the

Philippines on June 10, 1977 or after two (2) months from the date specified in the

memorandum. As a consequence, private respondent as consignee refused to take delivery of

the goods on account of its failure to arrive on time. Private respondent alleging gross

negligence and undue delay in the delivery of the goods, filed an action before the trial for

rescission of contract with damages against petitioner and Eli Lilly, Inc. as defendants. Denying

that it committed breach of contract, petitioner alleged in its that answer that the subject

shipment was transported in accordance with the provisions of the covering bill of lading and

that its liability under the law on transportation of good attaches only in case of loss,

destruction or deterioration of the goods as provided for in Article 1734 of Civil Code.

Defendant Eli Lilly, Inc., alleged that the delay in the arrival of the the subject merchandise was

due solely to the gross negligence of petitioner Maersk Line. The trial court ruled in favor of

private respondent. The Court of Appeals affirmed it with modifications.

(Note: The bill of lading covering the subject shipment among others, reads: 6. GENERAL (1) The

Carrier does not undertake that the goods shall arive at the port of discharge or the place of

delivery at any particular time or to meet any particular market or use and save as is provided in

clause 4 the Carrier shall in no circumstances be liable for any direct, indirect or consequential

loss or damage caused by delay. If the Carrier should nevertheless be held legally liable for any

such direct or indirect or consequential loss or damage caused by delay, such liability shall in no

event exceed the freight paid for the transport covered by this Bill of Lading. (Exh. "1-A"; AC-G.R.

CV No. 10340, Folder of Exhibits, p. 41))

ISSUE: Whether or not respondent Castillo is entitled to damages resulting from delay in the

delivery of the shipment in the absence in the bill of lading of a stipulation on the period of

delivery.

HELD: Yes. It is not disputed that the aforequoted provision at the back of the bill of lading, in

fine print, is a contract of adhesion. Generally, contracts of adhesion are considered void since

almost all the provisions of these types of contracts are prepared and drafted only by one party,

usually the carrier. The only participation left of the other party in such a contract is the affixing

of his signature thereto, hence the term "Adhesion". Nonetheless, settled is the rule that bills of

lading are contracts not entirely prohibited. One who adheres to the contract is in reality free

to reject it in its entirety; if he adheres, he gives his consent. However, the aforequoted ruling

applies only if such contracts will not create an absurd situation as in the case at bar. The

questioned provision in the subject bill of lading has the effect of practically leaving the date of

arrival of the subject shipment on the sole determination and will of the carrier. While it is true

that common carriers are not obligated by law to carry and to deliver merchandise, and persons

are not vested with the right to prompt delivery, unless such common carriers previously

assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at

least be made within a reasonable time. An examination of the subject bill of lading shows that

the subject shipment was estimated to arrive in Manila on April 3, 1977. While there was no

special contract entered into by the parties indicating the date of arrival of the subject

shipment, petitioner nevertheless, was very well aware of the specific date when the goods

were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no

need to execute another contract for the purpose as it would be a mere superfluity. In the case

before us, we find that a delay in the delivery of the goods spanning a period of two (2) months

and seven (7) days falls was beyond the realm of reasonableness. Described as gelatin capsules

for use in pharmaceutical products, subject shipment was delivered to, and left in, the

possession and custody of petitioner-carrier for transport to Manila via Oakland, California. But

through petitioner's negligence was mishipped to Richmond, Virginia. Petitioner's insitence that

it cannot be held liable for the delay finds no merit.

2. MAGELLAN MANUFACTURING MARKETING CORPORATIONvs.COURT OF APPEALS,

ORIENT OVERSEAS CONTAINER LINES and F.E. ZUELLIG, INC

G.R. No. 95529 August 22, 1991

FACTS: On May 20, 1980, Magellan Manufacturers Marketing Corp. (MMMC) entered into a

contract with Choju Co. of Yokohama, Japan to export 136,000 anahaw fans for and in

consideration of $23,220.00. As payment thereof, a letter of credit was issued to plaintiff

MMMC by the buyer. Through its president, James Cu, MMMC then contracted F.E. Zuellig, a

shipping agent, through its solicitor, one Mr. King, to ship the anahaw fans through the other

appellee, Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an on-board

bill of lading and that transhipment is not allowed under the letter of credit (Exh. B-1). On June

30, 1980, appellant MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of

lading which was presented to Allied Bank. The bank then credited the amount of US$23,220.00

covered by the letter of credit to appellant's account. However, when appellant's president

James Cu, went back to the bank later, he was informed that the payment was refused by the

buyer allegedly because there was no on-board bill of lading, and there was a transhipment of

goods. As a result of the refusal of the buyer to accept, upon appellant's request, the anahaw

fans were shipped back to Manila by appellees, for which the latter demanded from appellant

payment of P246,043.43. Appellant abandoned the whole cargo and asked appellees for

damages.

In their Partial Stipulation of Facts, the parties admitted that a shipment of 1,047 cartons of

136,000 pieces of Anahaw Fans contained in 1 x 40 and 1 x 20 containers was loaded at Manila

on board the MV 'Pacific Despatcher' freight prepaid, and duly covered by Bill of Lading No.

MNYK201T dated June 27, 1980 issued by OOCL; that the shipment was delivered at the port of

discharge on July 19, 1980, but was subsequently returned to Manila after the consignee

refused to accept/pay the same.

TC: MMMMC cannot seek damages as it agreed to a transshipment of the goods and is liable

for demurrages amounting to P298k incurred in Japan and Manila.

CA: MMMMC cannot seek damages as it agreed to a transshipment of the goods and is liable

for demurrages amounting to P52k incurred in Japan. While the goods arrived in Manila in

October 1980, appellant was notified of said arrival only in March 1981. No explanation was

given for the delay in notifying appellant.

ISSUE: WON MMMMC should be liable for P52k when it exercised its option of

Abandonment.

HELD: No. Private respondents belatedly informed petitioner of the arrival of its goods

in Manila and that if it wished to take delivery of the cargo it would have to pay P52k, but with

the last paragraph thereof stating as follows:

“Please can you advise within 15 days of receipt of this letter whether you intend to take

delivery of this shipment, as alternatively we will have to take legal proceedings in order

to have the cargo auctioned to recover the costs involved, as well as free the container

which are (sic) urgently required for export cargoes.“

Clearly, therefore, private respondents unequivocally offered petitioner the option of paying the shipping and demurrage charges in order to take delivery of the goods or of abandoning the same so that private respondents could sell them at public auction and thereafter apply the proceeds in payment of the shipping and other charges.

Responding thereto, in a letter dated April 3, 1981, petitioner seasonably communicated its decision to abandon to the goods in favor of private respondents with the specific instruction that any excess of the proceeds over the legal costs and charges be turned over to petitioner. Receipt of said letter was acknowledged by private respondents, as revealed by the testimony of Edwin Mabazza, a claim officer of F.E. Zuellig, Inc., on cross-examination. 42

Despite petitioner's exercise of the option to abandon the cargo, however, private respondents sent a demand letter on June 22, 1981 43 insisting that petitioner should pay the entire amount of P298,150.93 and, in another letter dated Apiril 30, 1981, 44 they stated that they win not

accept the abandonment of the goods and demanded that the outstanding account be settled. The testimony of said Edwin Mabazza definitely admits and bears this out. 45

Now, there is no dispute that private respondents expressly and on their own volition granted petitioner an option with respect to the satisfaction of freightage and demurrage charges. Having given such option, especially since it was accepted by petitioner, private respondents are estopped from reneging thereon. Petitioner, on its part, was well within its right to exercise said option. Private respondents, in giving the option, and petitioner, in exercising that option, are concluded by their respective actions. To allow either of them to unilaterally back out on the offer and on the exercise of the option would be to countenance abuse of rights as an order of the day, doing violence to the long entrenched principle of mutuality of contracts.

It will be remembered that in overland transportation, an unreasonable delay in the delivery of

transported goods is sufficient ground for the abandonment of goods. By analogy, this can also

apply to maritime transportation. Further, with much more reason can petitioner in the instant

case properly abandon the goods, not only because of the unreasonable delay in its delivery but

because of the option which was categorically granted to and exercised by it as a means of

settling its liability for the cost and expenses of reshipment. And, said choice having been duly

communicated, the same is binding upon the parties on legal and equitable considerations of

estoppel.

3. TRANS-ASIA SHIPPING LINES VS COURT OF APPEALS

FACTS: Private respondent Atty. Renato Arroyo, a public attorney, boarded the M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991. Atty. Arroyo noticed that some repair works were being undertaken on the engine of the vessel which departed at around 11:00 in the evening with only one (1) engine running. After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to their request and thus the vessel headed back to Cebu City. At Cebu City, Atty. Arroyo and the other passengers who requested to be brought back to Cebu City were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Atty. Arroyo, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant. Atty. Arroyo filed before the trial court a complaint for damages against petitioner for its failure to transport him to the place of destination on November 12, 1991. ISSUE: WON petitioner incurred in delay.

HELD: NO. As to the rights and duties of the parties strictly arising out of such delay, the Civil Code is silent. However, as correctly pointed out by the petitioner, Article 698 of the Code of Commerce specifically provides for such a situation. It reads:

In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account.

This article applies suppletorily pursuant to Article 1766 of the Civil Code.

Of course, this does not suffice for a resolution of the case at bench for, as earlier

stated, the cause of the delay or interruption was the petitioner’s failure to observe extraordinary diligence. Article 698 must then be read together with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. So read, it means that the petitioner is liable for any pecuniary loss or loss of profits which the private respondent may have suffered by reason thereof. For the private respondent, such would be the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not. As he and some passengers resolved not to complete the voyage, the vessel had to return to its port of origin and allow them to disembark. The private respondent then took the petitioner’s other vessel the following day, using the ticket he had purchased for the previous day’s voyage. Any further delay then in the private respondent’s arrival at the port of destination was caused by his decision to disembark. Had he remained on the first vessel, he would have reached his destination at noon of 13 November 1991, thus been able to report to his office in the afternoon. He, therefore, would have lost only the salary for half of a day. But actual or compensatory damages must be proved, which the private respondent failed to do. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused. ------------------------------------------------------------------------------------------------------------------------------- TRIAL COURT: FOR TRANS-ASIA. WHEREFORE, it not appearing from the evidence that plaintiff (ATTY. ARROYO) was left in the Port of Cebu because of the fault, negligence, malice or wanton attitude of defendant’s(TRANS-ASIA) employees, the complaint is DISMISSED. Evaluation of the evidence of the parties tended to show nothing that defendant committed fraud. As early as 3:00 p.m. of November 12, 1991, defendant did not hide the fact

that the cylinder head cracked. Plaintiff even saw during its repair. If he had doubts as to the vessel’s capacity to sail, he had time yet to take another boat. The ticket could be returned to defendant and corresponding cash [would] be returned to him.

Neither could negligence, bad faith or malice on the part of defendant be inferred from the evidence of the parties. When the boat arrived at [the] Port of Cebu after it returned from Kawit Island, there was an announcement that passengers who would like to disembark were given ten (10) minutes only to do so. By this announcement, it could be inferred that the boat will [sic] proceed to Cagayan de Oro City. If plaintiff entertained doubts, he should have asked a member of the crew of the boat or better still, the captain of the boat. But as admitted by him, he was of the impression only that the boat will not proceed to Cagayan de Oro that evening so he disembarked. He was instead, the ones [sic] negligent. Had he been prudent, with the announcement that those who will disembark were given ten minutes only, he should have lingered a little by staying in his cot and inquired whether the boat will proceed to Cagayan de Oro City or not. Defendant cannot be expected to be telling [sic] the reasons to each passenger. Announcement by microphone was enough. The court is inclined to believe that the story of defendant that the boat returned to the Port of Cebu because of the request of the passengers in view of the waves. That it did not return because of the defective engines as shown by the fact that fifteen (15) minutes after the boat docked [at] the Port of Cebu and those who wanted to proceed to Cagayan de Oro disembarked, it left for Cagayan de Oro City. The defendant got nothing when the boat returned to Cebu to let those who did not want to proceed to Cagayan de Oro City including plaintiff disembarked. On the contrary, this would mean its loss instead because it will have to refund their tickets or they will use it the next trip without paying anymore. It is hard therefore, to imagine how defendant by leaving plaintiff in Cebu could have acted in bad faith, negligently, want only and with malice. If plaintiff, therefore, was not able to [m]ake the trip that night of November 12, 1991, it was not because defendant maliciously did it to exclude him [from] the trip. If he was left, it was because of his fault or negligence. COURT OF APPEALS: Reversed Trial Court’s decision by applying Article 1755 in relation to Articles 2201, 2208, 2217, and 2232 of the Civil Code and, accordingly, awarded compensatory, moral, and exemplary damages. It did not, however, allow the grant of damages for the delay in the performance of the petitioner’s obligation as the requirement of demand set forth in Article 1169 of the Civil Code had not been met by the private respondent. As to the second assigned error, we find that plaintiff-appellant is entitled to the award of moral and exemplary damages for the breach committed by defendant-appellee. As discussed, defendant-appellee in sailing to Cagayan de Oro City with only one engine and with full knowledge of the true condition of the vessel, acted in bad faith with malice, in

complete disregard for the safety of the passengers and only for its own personal advancement/interest

5. BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES, INC., vs. PHILIPPINE FIRST INSURANCE CO., INC. FACTS: On June 13, 1990, CMC Trading A.G. shipped on board the MN ‘Anangel Sky’ at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss. Despite receipt of a formal demand, defendants-appellees refused to submit to the consignee’s claim. Consequently, plaintiff-appellant paid the consignee five hundred six thousand eighty six & 50/100 pesos (P506,086.50), and was subrogated to the latter’s rights and causes of action against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount paid by them, to the consignee as insured. Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition thereto, defendants-appellees argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees

averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to said shipment. ISSUE: Whether or not the petitioner have overcome the presumption of negligence of a common carrier. HELD: RTC: The RTC dismissed the Complaint because respondent had failed to prove its claims with the quantum of proof required by law. It likewise debunked petitioners’ counterclaim, because respondent’s suit was not manifestly frivolous or primarily intended to harass them. CA: The CA ruled that petitioners were liable for the loss or the damage of the goods shipped, because they had failed to overcome the presumption of negligence imposed on common carriers. SC: Well-settled is the rule that common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport. Thus, common carriers are required to render service with the greatest skill and foresight and “to use all reasonable means to ascertain the nature and characteristics of the goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.” The extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of and received for transportation by the carrier until they are delivered, actually or constructively, to the consignee or to the person who has a right to receive them. This strict requirement is justified by the fact that, without a hand or a voice in the preparation of such contract, the riding public enters into a contract of transportation with common carriers. Even if it wants to, it cannot submit its own stipulations for their approval. Hence, it merely adheres to the agreement prepared by them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such diligence. However, the presumption of fault or negligence will not arise if the loss is due to any of the following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) an act of the public enemy in war, whether international or civil; (3) an act or omission of the shipper or owner of the goods; (4) the character of the goods or defects in the packing or the container; or (5) an order or act of competent public authority. This is a closed list. If the cause of destruction, loss or deterioration is other than the enumerated circumstances, then the carrier is liable therefor. Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration, the loss or the destruction of the goods happened, the transporter

shall be held responsible. That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a review of the records and more so by the evidence adduced by respondent. First, as stated in the Bill of Lading, petitioners received the subject shipment in good order and condition in Hamburg, Germany. Second, prior to the unloading of the cargo, an Inspection Report prepared and signed by representatives of both parties showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and the contents thereof exposed and rusty. Third, Bad Order Tally Sheet No. 154979 issued by Jardine Davies Transport Services, Inc., stated that the four coils were in bad order and condition. Normally, a request for a bad order survey is made in case there is an apparent or a presumed loss or damage. Fourth, the Certificate of Analysis stated that, based on the sample submitted and tested, the steel sheets found in bad order were wet with fresh water. Fifth, petitioners in a letter addressed to the Philippine Steel Coating Corporation and dated October 12, 1990 -- admitted that they were aware of the condition of the four coils found in bad order and condition.

5. Tabacalera Insurance Co., Prudential Guarantee & Assurance, Inc., and New Zealand Insurance Co., Ltd. vs. North Front Shipping Services, Inc., and Court of Appeals G.R. No. 119197 May 16, 1997 Facts: Private respondent North Front is a corporation engaged in the business of transporting cargo and offers its services indiscriminately to the public. Its vessel, North Front 777, shipped sacks of corn grains consigned to Republic Flour Mills Corporation (Republic) and insured by petitioner insurance companies under a charter party agreement, evidenced by Bill of Lading No. 1. Prior loading, the vessel was found fit to carry merchandise, and was issued a permit to sail by the Coast Guard. The cargo was covered with tarpaulins and woodern boards, and the hatches were sealed. From Cagayan de Oro, it took 14 days for the vessel to arrive in Manila. After Republic was informed about the arrival of the vessel, the unloading operation of the cargo did not immediately commence. There were days that unloading was stopped due to the weather, and sometimes for no apparent reason at all. Eventually, it was discovered that there was shortage. Precision Analytical Services, Inc., hired to examine the corn grains, found that the deterioration was caused by wetting from salt water. With this, Republic rejected the entire cargo, and demanded from North Front payment for damages it suffered. When its demand

was left unheeded, petitioners were obligated to pay. Subrogated of Republic’s rights, petitioners sued North Front for damages. North Front argued that the corn grains were farm wet and not properly dried when loaded. The trial court ruled in favor of North Front, contending that since the contract entered into by North Front and Republic was a charter party agreement, the degree of care required of the vessel was only ordinary negligence, and that North Front satisfactorily complied with such. On appeal, respondent court affirmed the trial court’s decision. Hence, petitioners filed this petition for review. Issue: Is North Front liable? Ruling: Yes. The charter party agreement did not convert the common carrier North Front into a private carrier. As a common carrier, it is required to observe extraordinary diligence in its vigilance over the goods it transports. In accordance with Article 1735 of the Civil Code, when goods placed in its care are lost or damaged, the carrier is presumed to have been at fault or to have acted negligently. The carrier, therefore, has the burden of proving that it observed extraordinary diligence to avoid responsibility for the lost cargo. Extraordinary diligence requires the common carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for safe carriage and delivery, with greatest skill and foresight. Mere proof of delivery of goods in good order to a common carrier, and of their arrival at the place of destination in bad order, makes a prima facie case against the common carrier, so that if no explanation is given as to how the loss, deterioration or destruction of the goods occurred, the common carrier must be held responsible. In the case at bar, the master of North Front 777 should have known at the outset that corn grains that were farm wet and not properly dried would eventually deteriorate when stored in sealed compartments, and, therefore, should have take precautionary measures to avoid or lessen the cargo’s possible deterioration as they were presumed knowledgeable about the nature of such cargo. With insufficient proofs presented to rebuff the presumption, North Front failed to observe the required extraordinary diligence in the vigilance over the corn grains in its care. Hence, it is liable. However, Republic is also guilty of contributory negligence, for failure to start unloading operations in due time, and should therefore share 40% of the loss. Appealed decision is reversed.

6. GR No L-28692, July 30, 1982

ABETO vs PAL

Facts: 5:30PM of Nov 23, 1960, Judge QuiricoAbeto boarded PAL’s plane in Mandurria Airport in Iloilo City

to Manila. The plane did not reach its destination, and was reported missing the next day. After three

weeks, it was ascertained that it crashed at Mt. Baco, Mindoro. All the passengers were killed.PAL would

not hear demands for settlement of damages, the heirs of Abeto were compelled to file a case.PAL tried

to prove that the crash was beyond pilot’s control. The plane was airworthy as shown by a certificate

from the Civil Aeronautics Administration (CAA). There was navigational error but no negligence. The

deviation from the usual route was because of bad weather between Mt. Baco and Romblon. The plane

crash was a fortuitous event.

Issue: Whether or not PAL is liable for violation of its contract of carriage.

Trial Court:The Pilot was negligent.

Findings: The Pilot disobeyed by not following the route prescribed by the CAA. PAL failed to perform a

pre-flight test. PAL allowed a student Officer on training. Pilot failed to report his position over Romblon –

a compulsory reporting point.

PAL did not exercise extraordinary diligence.

Appeal to the Supreme Court:

SC cited provisions: 1733, 1755, 1756, 1757

The prescribed route was Iloilo-Romblon-Manila denominated as Amber 1 but the plane did not take such

because it was 30 miles west when it crashed in Mt. Baco. This is in violation of air traffic rules.

At any rate, in the absence of a satisfactory explanation by PAL as to how the accident occurred, the

presumption is it is at fault.

By the contract of carriage, the carrier assumes the express obligation to transport the passenger to his

destination safely and to observe extraordinary diligence with a due regard for all the circumstances, and

any injury that might be suffered by the passenger is right away attributable to the fault or negligence of

the carrier (Art. 1756, New Civil Code). This is an exception to the general rule that negligence must be

proved.

PAL to pay damages.

7. G.R. Nos. 74387-90 November 14, 1988 BATANGAS LAGUNA TAYABAS BUS COMPANY & ARMANDO PON, petitioners, vs. INTERMEDIATE APPELLATE COURT, THE HEIRS OF PAZ VDA. DE PAMFILO, THE HEIRS OF NORMA NERI, and BAYLON SALES and NENA VDA. DE ROSALES, respondents. Ponente: J. Paras Facts: The collision between Batangas Laguna Tayabas Bus Company (BLTB) driven by Armando Pon and Sperlines Transportation Company driven by Ruben Dasco took place at an ascending curve in the highway of Barangay Isabong, Tayabas, Quezon. Such collision resulted in the death of Aniceto Rosales, Francisco Pamfilo and Romeo Neri and in several injuries to Nena Rosales (wife of Anecito) and Baylon Sales, all passengers of BLTB. The evidence shows that as BLTB was negotiating the bend of the highway, it tried to overtake a Ford Fiera car just as Superlines was coming from the opposite direction. Seeing thus, Armando Pon (BLTB) made a belated attempt to slacken the speed of his bus and tried to return to his proper lane. It was an unsuccessful try as the two buses collided with each other.

BLTB and Superlines, together with their drivers Pon and Dasco, denied liability by claiming that they exercised due care and diligence and shifted the fault, against each other. The lower court exonerated Superlines and its driver from liability and attributed sole responsibility to BLTB and its driver, and ordered them jointly and severally to pay damages. The appellate court affirmed with modification the judgment. Hence, this Petition to Review by Certiorari. Issue: Whether or not the lower courts erred in holding BLTB and its driver liable. Decision: No, the SC found no reversible error. Ratio: The Court ruled that the proximate cause of the collision was the sole negligence of the driver of the BLTB Bus, who recklessly operated and drove said bus in a lane where overtaking is not allowed by Traffic Rules and Regulations. In an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible for the payment of the damages sought by the passenger. By the contract of carriage, the carrier (BLTB) assumed the express obligation to transport the passengers to their destination safely and to observe extraordinary diligence with a due regard for all the circumstances. Any injury that might be suffered by its passengers is right away presumed to be attributable to the fault or negligence of the carrier. A reading of the respondent court's decision shows that it anchored petitioners' liability both in culpa contractual and culpa aquiliana. The driver of the BLTB bus admitted in his cross-examination that the continuous yellow line on the ascending bend of the highway signifies a NO OVERTAKING ZONE . It is It is no surprise then that the driver of the Superlines bus was exonerated by the lower court because he had a valid reason to presuppose that no one would overtake in such a dangerous situation. These facts show the imprudence of the BLTB driver. It is well settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in ordinary situation has the duty to see that the road is clear and not to proceed if he cannot do so in safety . This rule becomes more particularly applicable in this case when the overtaking took place on an ascending curved highway divided into two lanes by a continuous yellow line. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. Thus, for his own negligence in recklessly driving the truck owned by his employer, appellant Armando Pon is primarily liable (Article 2176, Civil Code). On the other hand, the liability of Pon's employer, BLTB, is also primary, direct and immediate in view of the fact that the death of or injuries to its passengers was through the negligence of its employee, and such liability does not cease even upon proof that BLTB had exercised all the diligence of a good father of a family in the selection and supervision of its employees (Article 1759, Civil Code).

8. Saludo v. CA G.R. No. 95536, March 23, 1992 FACTS: After the death of petitioners’ mother, Crispina Galdo Saludo, in Chicago, Illinois, Pomierski and Son Funeral Home of Chicago made the necessary preparations and arrangements for the shipment of the remains from Chicago to the Philippines. The funeral home secured a permit for the disposition of the dead human body, and the Philippine Vice Consul in Chicago, on October 26, 1976 sealed the shipping case containing a hermetically sealed casket wherein was contained the remains of Crispina Saludo. On the same date, Pomierski brought the remains to C.M.A.S. (Continental Mortuary Air Services) at the airport which made the necessary arrangements such as flights, transfers, etc. C.M.A.S. furnished the air pouch which the casket is enclosed in, and they see that the remains are taken to the proper air freight terminal. C.M.A.S. booked the shipment with PAL, with Pomierski F.H. as the shipper and Mario (Maria) Saludo as the consignee. PAL Airway Bill No. 079-01180454 Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board TWA (Trans World Airlines)Flight 131 of October 27, 1976 and from San Francisco to Manila on board PAL Flight No. 107 of the same date, and from Manila to Cebu on board PAL Flight 149 of October 29, 1976.

Upon arrival at San Francisco, petitioner went to the TWA counter there to inquire

about her mother's remains. She was told they did not know anything about it.

It turned out that there were two bodies at the Chicago Airport terminal, and somehow they were switched, that the remains of Crispina Saludo were on a plane to Mexico City. The following day, October 28, 1976, the shipment or remains of Crispina Saludo arrived in San Francisco from Mexico on board American Airlines. This shipment was transferred to or received by PAL at 7:45 p.m. This casket bearing the remains of Crispina Saludo was immediately loaded on PAL flight for Manila that same evening and arrived in Manila on October 30, 1976, a day after its expected arrival on October 29, 1976.

A damage suit was then filed by petitioners against TWA and PAL before the then Court of First Instance praying for the award of actual damages, moral damages, exemplary damages, attorney's fees and costs of suit. The court absolved the two respondent airline companies of liability. The Court of Appeals affirmed the decision of the lower court in toto, and in a subsequent resolution, denied herein petitioners' motion for reconsideration for lack of merit.

Petitioners fault respondent court for "not finding that private respondents failed to exercise extraordinary diligence required by law which resulted in the switching and/or misdelivery of the remains of Crispina Saludo to Mexico causing gross delay in its shipment to the Philippines, and consequently, damages to petitioners." Petitioners allege that private respondents received the casketed remains of petitioners' mother on October 26, 1976, as evidenced by the issuance of PAL Air Waybill No. 079-01180454 by Air Care International as carrier's agent; and from said date, private respondents were charged with the responsibility to exercise extraordinary diligence so much so that for the alleged switching of the caskets, the latter must necessarily be liable. ISSUE:

When are the goods deemed delivered to the carrier, so as to hold the latter liable for the failure to exercise the extraordinary diligence in the carriage of goods? HELD:

Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier for transportation but, when issued, is competent and prima facie, but not conclusive, evidence of delivery to the carrier.

The trial court found that on October 26, 1976 the cargo containing the casketed remains of Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco for Manila on October 27, 1976, PAL Airway Bill No. 079-01180454 was issued, not as evidence of receipt of delivery of the cargo on October 26, 1976, but merely as a confirmation of the booking thus made for the San Francisco-Manila flight scheduled on October 27, 1976. Actually, it was not until October 28, 1976 that PAL received physical delivery of the body at San

Francisco, as duly evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.

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

Hence, while we agree with petitioners that the extraordinary diligence statutorily

required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked.

As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on October 26, 1976. Rather, the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby, private respondents cannot be held liable.

At this point, it can be categorically stated that, as culled from the findings of both the trial court and appellate courts, the entire chain of events which culminated in the present controversy was not due to the fault or negligence of private respondents. Rather, the facts of the case would point to CMAS as the culprit.

9. MACAM vs. COURT OF APPEALS

Facts: Petitioner Benito Macam shipped on board the vessel Nen Jiang, through local agent

respondent Wallem Philippines Shipping, Inc. watermelons valued at US$5,950.00 and fresh

mangoes valued at US$14,273.46. The shipment was bound for Hongkong with Pakistan Bank

as consignee and Great Prospect Company of Kowloon, Hongkong as notify party. Petitioner’s

depository bank. Consolidated Banking Corporation(SOLIDBANK) paid petitioner in advance the

total value of the shipment of US$20,223.46.

Upon arrival in Hongkong, the shipment was delivered by respondent WALLEM directly

to GPC, not to Pakistan Bank, and without the required bill of lading having been surrendered.

Subsequently, GPC failed to pay Pakistan Bank such that the latter, still in possession of the

original bills of lading, refused to pay petitioner through SOLIDBANK. Since SOLIDBANK already

pre-paid petitioner the value of the shipment, it demanded payment from respondent WALLEM

but was refused. Petitioner returned the amount involved to SOLIDBANK, and then demanded

payment from respondent WALLEM in writing but to no avail.Hence petitioner sought

collection of the value of the shipment if US$20,223.46 from respondents before the RTC of

Manila, bases on delivery of the shipment to GPC without presentation of the bills of lading and

bank guarantee.

Issue: Whether or not respondents are liable to petitioner for releasing the goods to GPC

without the bills of lading or bank guarantee?

Held: Under Art. 1736 of the Civil Code, the extraordinary responsibility of the common

carrier lasts until actual or constructive delivery of the cargoes to the consignee or to the

person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading as

consignee whereas GPC was notifying party. However, in the export invoices GPC was clearly

named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to

respondent WALLEM and in his complaint before the trial court. This premise draws us to

conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably with

Art. 1736 had, other than the consignee, the right to receive them was proper.The real issue is

whether respondents are liable to petitioner for releasing the goods to GPC without the bills of

lading or bank guarantee.From the testimony of petitioner, we gather that he has been

transacting with GPC as buyer/importer for around 2 to 3 years already. When mangoes and

watermelons are in season, his shipment to GPC using the facilities of respondents is twice or

thrice a week. The goods are released to GPC. It has been the practice of petitioner to request

the shipping lines to immediately release perishable cargoes such as watermelons and fresh

mangoes through telephone calls by himself or his “people.” In transactions covered by a letter

of credit, bank guarantee is normally required by the shipping lines prior to releasing the goods.

But for buyers using telegraphic transfers, petitioner dispenses with the bank guarantee

because the goods are already fully paid. In his several years of business relationship with GPC

and respondents, there was not a single instance when the bill of lading was first presented

before the release of the cargoes.

10. LU DO vs. I. V. BINAMIRA,

G.R. No. L-9840 April 22, 1957

FACTS: On August 10, 1951, the Delta Photo Supply Company of New York shipped on

board the M/S "FERNSIDE" at New York, U.S.A., six cases of films and/or photographic supplies

consigned to the order of respondent I. V. Binamira. For this shipment, Bill of Lading No. 29 was

issued. The ship arrived at the port of Cebu on September 23, 1951 and discharged her cargo on

September 23, and 24, 1951, including the shipment in question, placing it in the possession

and custody of the arrastre operator of said port, the Visayan Cebu Terminal Company, Inc.

Petitioner, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to unload its

cargo. During the discharge, good order cargo was separated from the bad order cargo on

board the ship, and a separate list of bad order cargo was prepared by Pascual Villamor,

checker of the stevedoring company. All the cargo unloaded was received at the pier by the

Visayan Cebu Terminal Company Inc, arrastre operator of the port. This terminal company had

also its own checker, Romeo Quijano, who also recorded and noted down the good cargo from

the bad one. The shipment in question, was not included in the report of bad order cargo of

both checkers, indicating that it was discharged from the, ship in good order and condition.

On September 26, 1951, three days after the goods were unloaded from the ship, respondent

took delivery of his six cases of photographic supplies from the arrastre operator. He discovered

that the cases showed signs of pilferage and, consequently, he hired marine surveyors, R. J. del

Pan & Company, Inc., to examine them. The surveyors examined the cases and made a physical

count of their contents in the presence of representatives of petitioner, respondent and the

stevedoring company. The findings of the surveyors showed that some films and photographic

supplies were missing valued at P324.63. It appears from the evidence that the six cases of films

and photographic supplies were discharged from the ship at the port of Cebu by the

stevedoring company hired by petitioner as agent of the carrier. All the unloaded cargo,

including the shipment in question, was received by the Visayan Cebu Terminal Company Inc.,

the arrastre operator appointed by the Bureau of Customs. It also appears that during the

discharge, the cargo was checked both by the stevedoring company hired by petitioner as well

as by the arrastre operator of the port, and the shipment in question, when discharged from

the ship, was found to be in good order and condition. But after it was delivered to respondent

three days later, the same was examined by a marine surveyor who found that some films and

supplies were missing valued at P324.63.

ISSUE: Is the carrier responsible for the loss considering that the same occurred after

the shipment was discharged from the ship and placed in the possession and custody of the

customs authorities?

HELD: The trial court rendered judgment in favor of the plaintiff ordering defendant to

pay former the sum of P216.84, with legal interest. On appeal, the Court of Appeals affirmed

the judgment contending that a common carrier has the legal duty to deliver goods to a

consignee in the same condition in which it received them. Except where the loss, destruction

or deterioration of the merchandise was due to any of the cases enumerated in Article 1734 of

the new Civil Code, a carrier is presumed to have been at fault and to have acted negligently,

unless it could prove that it observed extraordinary diligence in the care and handling of the

goods (Article 1735, supra). Such presumption and the liability of the carrier attach until the

goods are delivered actually or constructively, to the consignee, or to the person who has a

right to receive them (Article 1736, supra), and we believe delivery to the customs authorities is

not the delivery contemplated by Article 1736, supra, in connection with second paragraph of

Article 1498, supra, because, in such a case, the goods are then still in the hands of the

Government and their owner could not exercise dominion whatever over them until the duties

are paid. In the case at bar, the presumption against the carrier, represented appellant as its

agent, has not been successfully rebutted.

SC disagrees. While Court of Appeals is correct that while delivery of the cargo to the consignee,

or to the person who has a right to receive them", contemplated in Article 1736, because in

such case the goods are still in the hands of the Government and the owner cannot exercise

dominion over them, we believe however that the parties may agree to limit the liability of the

carrier considering that the goods have still to through the inspection of the customs

authorities before they are actually turned over to the consignee. This is a situation where we

may say that the carrier losses control of the goods because of a custom regulation and it is

unfair that it be made responsible for what may happen during the interregnum. And this is

precisely what was done by the parties herein. In the bill of lading that was issued covering the

shipment in question, both the carrier and the consignee have stipulated to limit the

responsibility of the carrier for the loss or damage that may because to the goods before they

are actually delivered by insert in therein the following provisions:

1. . . . The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or

misdelivery, or loss of or damage to the goods occurring while the goods are not in the actual

custody of the Carrier. . . . (Emphasis ours.)

(Paragraph 1, Exhibit "1")

2. . . . The responsibility of the Carrier in any capacity shall altogether cease and the goods shall

be considered to be delivered and at their own risk and expense in every respect when taken

into the custody of customs or other authorities. The Carrier shall not be required to give any

notification of disposition of the goods. . . . (Emphasis ours.)

(Paragraph 12, Exhibit "1")

3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at ship's

tackle . . . and delivery beyond ship's tackle shall been tirely at the option of the Carrier and

solely at the expense of the shipper or consignee.

(Paragraph 22, Exhibit "1")

It therefore appears clear that the carrier does not assume liability for any loss or damage to

the goods once they have been "taken into the custody of customs or other authorities", or

when they have been delivered at ship's tackle. These stipulations are clear. They have been

adopted precisely to mitigate the responsibility of the carrier considering the present law on

the matter, and we find nothing therein that is contrary to morals or public policy that may

justify their nullification. We are therefore persuaded to conclude that the carrier is not

responsible for the loss in question, it appearing that the same happened after the shipment

had been delivered to the customs authorities.Wherefore, the decision appealed from is reversed,

without pronouncement as to costs.

NATIONAL TRUCKING AND FORWARDING CORPORATION vs. LORENZO SHIPPING CORPORATION

G.R. No. 153563 February 07, 2005

FACTS:

On June 5, 1987, the Republic of the Philippines, through the Department of Health (DOH), and the

Cooperative for American Relief Everywhere, Inc. (CARE) signed an agreement wherein CARE would

acquire from the United States government donations of non-fat dried milk and other food products

from January 1, 1987 to December 31, 1989. The government then entered into a contract of carriage of

goods with herein petitioner National Trucking and Forwarding Corporation (NTFC). Thus, the latter

hired respondent Lorenzo Shipping Corporation (LSC) to ship 4,868 bags of non-fat dried milk from

September to December 1988. The consignee named in the bills of lading issued by the respondent was

Abdurahman Jama, petitioner’s branch supervisor in Zamboanga City.

On reaching the port of Zamboanga City, respondent’s agent, Efren Ruste Shipping Agency, unloaded

the 4,868 bags of non-fat dried milk and delivered the goods to petitioner’s warehouse. Before each

delivery, Rogelio Rizada and Ismael Zamora, both delivery checkers of Efren Ruste Shipping Agency,

requested Abdurahman to surrender the original bills of lading, but the latter merely presented certified

true copies thereof. Upon completion of each delivery, Rogelio and Ismael asked Abdurahman to sign

the delivery receipts. However, at times when Abdurahman had to attend to other business before a

delivery was completed, he instructed his subordinates to sign the delivery receipts for him.

Notwithstanding the precautions taken, the petitioner allegedly did not receive the subject goods. Thus,

in a letter dated March 11, 1989, petitioner NTFC filed a formal claim for non-delivery of the goods

shipped through respondent. In return, LSC explained and insisted that the goods had already been

delivered. Petitioner then filed an action for breach of contract of carriage against respondent before

the RTC of Manila.

The RTC ruled in favor of the respondent. On appeal, the CA affirmed the RTC’s decision in toto. Thus

the case was further brought before the SC for review alleging that LSC must be presumed negligent as a

common carrier.

ISSUE: Is the legal presumption of negligence overturned?

HELD:

Yes. Article 1733 of the Civil Code demands that a common carrier observe extraordinary diligence over

the goods transported by it. Extraordinary diligence is that extreme measure of care and caution which

persons of unusual prudence and circumspection use for securing and preserving their own property or

rights. This exacting standard imposed on common carriers in a contract of carriage of goods is intended

to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have

been lodged for shipment. Hence, in case of loss of goods in transit, the common carrier is presumed

under the law to have been at fault or negligent. However, the presumption of fault or negligence, may

be overturned by competent evidence showing that the common carrier has observed extraordinary

diligence over the goods.

The Court held that LSC adequately proved that it exercised extraordinary diligence. Article 353 of the

Code of Commerce provides that: In case the consignee, upon receiving the goods, cannot return the bill

of lading subscribed by the carrier, because of its loss or of any other cause, he must give the latter a

receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading.

Therefore, the surrender of the original bill of lading is not a condition precedent for a common carrier

to be discharged of its contractual obligation. If surrender of the original bill of lading is not possible,

acknowledgment of the delivery by signing the delivery receipt suffices. This is what respondent did.

Furthermore, even though some of the delivery receipts were not personally signed by Abdurahman but

by his authorized subordinates only, it is still considered as sufficient and substantially complies with the

requirements.

Case 12

LRTA vs. NAVIDAD

[G.R. No. 145804. February 6, 2003]

(LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners, vs. MARJORIE NAVIDAD, Heirs of the

Late NICANOR NAVIDAD & PRUDENT SECURITY AGENCY, respondents.

FACTS: On 14 October 1993, about 7:30 in the evening, Nicanor Navidad, then drunk, entered the EDSA

LRT station after purchasing a “token” (representing payment of the fare). While Navidad was standing

on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to the area

approached Navidad. A misunderstanding or an altercation between the two apparently ensued that led

to a fist fight. No evidence, however, was adduced to indicate how the fight started or who, between

the two, delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment that

Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in. Navidad was struck by

the moving train, and he was killed instantaneously. Thus, widow of Nicanor along with her children,

filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit

Organization, Inc. (Metro Transit), and Prudent (Security Agency) for the death of her husband.

The Court of Appeals promulgated the assailed decision exonerating Prudent from any liability for the

death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and severally liable. Hence,

this petition.

ISSUES: (1) Whether or not there was a breach of contract of carriage to hold LRTA liable for the death

of Navidad.

(2) Whether or not Prudent should also be held liable for the act of its employee Junelito Escartin.

HELD: (1) Yes. The appellate court ratiocinated that while the deceased might not have then as yet

boarded the train, a contract of carriage theretofore had already existed when the victim entered the

place where passengers were supposed to be after paying the fare and getting the corresponding token

therefor. Law and jurisprudence dictate that a common carrier, both from the nature of its business and

for reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the

safety of passengers. The law requires common carriers to carry passengers safely using the utmost

diligence of very cautious persons with due regard for all circumstances. Such duty of a common carrier

to provide safety to its passengers so obligates it not only during the course of the trip but for so long as

the passengers are within its premises and where they ought to be in pursuance to the contract of

carriage.

(2) No. The Court concluded by the factual finding of the Court of Appeals that “there is nothing to link

(Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee, Escartin,

has not been duly proven x x x.”

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any

culpable act or omission, he must also be absolved from liability. Needless to say, the contractual tie

between the LRT and Navidad is not itself a juridical relation between the latter and Roman; thus,

Roman can be made liable only for his own fault or negligence.

Case 13

Dangwa Transportation Co., Inc. vs Court of Appeals

FACTS:

On May 13, 1985, private respondents filed a complaint for damages against petitioners for the death of

Pedrito Cudiamat as a result of a vehicular accident which occurred on March 25, 1985 at Marivic, Sapid,

Mankayan, Benguet.

It was alleged that on said date, while petitioner Theodore M. Lardizabal was driving a passenger bus

belonging to petitioner corporation (Dangwa Transportation Co.), it ran over its passenger, Pedrito

Cudiamat. However, instead of bringing Pedrito immediately to the nearest hospital, the said driver, in

utter bad faith and without regard to the welfare of the victim, first brought his other passengers and

cargo (refrigerator) to their respective destinations before bringing said victim to the Lepanto Hospital

where he expired.

It was alleged that it was the victim's own carelessness and negligence which gave rise to the subject

incident.

The lower court, declared that the victim was negligent and made the following findings:

This Court is satisfied that Pedrito Cudiamat was negligent in trying to board a moving vehicle, especially

with one of his hands holding an umbrella. And, without having given the driver or the conductor any

indication that he wishes to board the bus. But defendants can also be found wanting of the necessary

diligence. In this connection, it is safe to assume that when the deceased Cudiamat attempted to board

defendants' bus, the vehicle's door was open instead of being closed. This should be so, for it is hard to

believe that one would even attempt to board a vehicle in motion if the door of said vehicle is closed.

Here lies the defendant's lack of diligence. Under such circumstances, equity demands that there must

be something given to the heirs of the victim to assuage their feelings. This, also considering that

initially, defendant common carrier had made overtures to amicably settle the case. It did offer a certain

monetary consideration to the victim's heirs. 7

The Court of Appeals arrived at a different opinion, declaring that:

From the testimony of appellees'own witness in the person of Vitaliano Safarita, it is evident that the

subject bus was at full stop when the victim Pedrito Cudiamat boarded the same as it was precisely on

this instance where a certain Miss Abenoja alighted from the bus. Moreover, contrary to the assertion of

the appellees, the victim did indicate his intention to board the bus as can be seen from the testimony

of the said witness when he declared that Pedrito Cudiamat was no longer walking and made a sign to

board the bus when the latter was still at a distance from him. It was at the instance when Pedrito

Cudiamat was closing his umbrella at the platform of the bus when the latter made a sudden jerk

movement (as) the driver commenced to accelerate the bus.

ISSUE: W/N the respondent court erred in reversing the decision of the trial court in finding the said

petitioners negligent and liable for the damages claimed?

HELD: NO, The foregoing testimonies show that the place of the accident and the place where one of

the passengers alighted were both between Bunkhouses 53 and 54, hence the finding of the Court of

Appeals that the bus was at full stop when the victim boarded the same is correct. They further confirm

the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward

and was run over by the rear right tires of the vehicle, as shown by the physical evidence on where he

was thereafter found in relation to the bus when it stopped. Under such circumstances, it cannot be said

that the deceased was guilty of negligence. XXX When the bus is not in motion there is no necessity for a

person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is

in effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver and the

conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to a

passenger while he was attempting to board the same. The premature acceleration of the bus in this

case was a breach of such duty

Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be

considered negligent under the circumstances. As clearly explained in the testimony of the aforestated

witness for petitioners, Virginia Abalos, the bus had "just started" and "was still in slow motion" at the

point where the victim had boarded and was on its platform.

It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is

moving slowly. An ordinarily prudent person would have made the attempt board the moving

conveyance under the same or similar circumstances. The fact that passengers board and alight from

slowly moving vehicle is a matter of common experience both the driver and conductor in this case

could not have been unaware of such an ordinary practice. The victim herein, by stepping and standing

on the platform of the bus, is already considered a passenger and is entitled all the rights and protection

pertaining to such a contractual relation. Hence, it has been held that the duty which the carrier

passengers owe to its patrons extends to persons boarding cars as well as to those alighting there from.

Case 14

LA MALLORCA v.CA

FACTS:

On December 20, 1953, at about noontime, plaintiffs, husband and wife, together with their minor

daughters boarded the Pambusco Bus No. 352, owned and operated by the defendant, at San Fernando,

Pampanga, bound for Anao, Mexico, Pampanga. After about an hour's trip, the bus reached Anao

whereat it stopped to allow the passengers bound therefore, among whom were the plaintiffs and their

children to get off. Mariano led his companions to a shaded spot on the left pedestrians side of the road

about four or five meters away from the vehicle. Afterwards, he returned to the bus in controversy to

get his other bayong, which he had left behind, but in so doing, his daughter Raquel followed him,

unnoticed by her father. While said Mariano Beltran was on the running board of the bus waiting for the

conductor to hand him his bayong which he left under one of its seats near the door, the bus suddenly

started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor has

not given the driver the customary signal to start, since said conductor was still attending to the baggage

left behind by Mariano Beltran. Incidentally, when the bus was again placed into a complete stop, it had

travelled about ten meters from the point where the plaintiffs had gotten off. Raquel was run over by

the bus in which she rode earlier together with her parents. For the death of their said child, the

plaintiffs commenced the present suit against the defendant.

The trial court found defendant liable for breach of contract of carriage. On appeal to the Court of

Appeals, La Mallorca claimed that there could not be a breach of contract in the case, for the reason

that when the child met her death, she was no longer a passenger of the bus involved in the incident

and, therefore, the contract of carriage had already terminated. Although the Court of Appeals

sustained this theory, it nevertheless found the defendant-appellant guilty of quasi-delict and held the

latter liable for damages, for the negligence of its driver.

ISSUE: WON La Mallorca is liable

HELD: Yes. It has been recognized as a rule that the relation of carrier and passenger does not cease at

the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the

point of destination, but continues until the passenger has had a reasonable time or a reasonable

opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within

this rule is to be determined from all the circumstances.

In the present case, the father returned to the bus to get one of his baggages which was not unloaded

when they alighted from the bus. Raquel, the child that she was, must have followed the father.

However, although the father was still on the running board of the bus awaiting for the conductor to

hand him the bag or bayong, the bus started to run, so that even he (the father) had to jump down from

the moving vehicle. It was at this instance that the child, who must be near the bus, was run over and

killed. In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost

diligence" of a "very cautions person" required by Article 1755 of the Civil Code to be observed by a

common carrier in the discharge of its obligation to transport safely its passengers. In the first place, the

driver, although stopping the bus, nevertheless did not put off the engine. Secondly, he started to run

the bus even before the bus conductor gave him the signal to go and while the latter was still unloading

part of the baggages of the passengers Mariano Beltran and family. The presence of said passengers

near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the

carrier, entitled to the protection under their contract of carriage.

Case 15

Aboitiz Shipping Corp. vs. CA 179 SCRA 95 (GR 84458, 6 November 1989)

Facts:On 11 May 1975, Anacleto Viana boarded the vessel M/V Antonia, owned by Aboitiz Shipping

Corp., at the port at San Jose, Occidental Mindoro, bound for Manila, having purchased a ticket (117392)

in the sum of P23.10. On 12 May 1975, said vessel arrived at Pier 4, North Harbor, Manila, and the

passengers therein disembarked, a gangplank having been provided connecting the side of the vessel to

the pier. Instead of using said gangplank, Viana disembarked on the third deck which was on the level

with the pier. After said vessel had landed, the Pioneer Stevedoring Corporation took over the exclusive

control of the cargoes loaded on said vessel pursuant to the Memorandum of Agreement dated 26 July

1975 between the Pioneer Stevedoring Corporation and Aboitiz. The crane owned by Pioneer and

operated by its crane operator Alejo Figueroa was placed alongside the vessel and 1 hour after the

passengers of said vessel had disembarked, it started operation by unloading the cargoes from said

vessel. While the crane was being operated, Viana who had already disembarked from said vessel

obviously remembering that some of his cargoes were still loaded in the vessel, went back to the vessel,

and it was while he was pointing to the crew of the said vessel to the place where his cargoes were

loaded that the crane hit him, pinning him between the side of the vessel and the crane. He was

thereafter brought to the hospital where he later expired 3 days thereafter, on 15 May 1975, the cause

of his death according to the Death Certificate being “hypostatic pneumonia secondary to traumatic

fracture of the pubic bone lacerating then urinary bladder.” For his hospitalization, medical, burial and

other miscellaneous expenses, Anacleto’s wife, Lucila C. Viana, spent a total of P9,800.00. Anacleto

Viana was only 40 years old and was in good health when he died. His average annual income as a

farmer or a farm supervisor was 400 cavans of palay annually. His parents, Antonio and Gorgonia Viana,

had been recipient of 20 cavans of palay as support or P120.00 monthly. Because of Anacleto’s death,

the deceased’s parents and spouse suffered mental anguish and extreme worry or moral damages. For

the filing of the case, they had to hire a lawyer for an agreed fee of P10,000.00. The Vianas filed a

complaint for damages against Aboitiz for breach of contract of carriage. Aboitiz, on the other hand,

filed a third-party complaint against Pioneer. Aboitiz denied responsibility contending that at the time of

the accident, the vessel was completely under the control of respondent Pioneer Stevedoring

Corporation as the exclusive stevedoring contractor of Aboitiz, which handled the unloading of cargoes

from the vessel of Aboitiz.

Trial Court Ruling: Aboitiz was ordered to pay the Vianas for damages incurred (the sum of P12,000.00

for the death of Anacleto Viana; P9,800.00 as actual damages; P533,200.00 value of the 10,664 cavans

of palay computed at P50.00 per cavan; P10,000.00 as attorney’s fees; P5,000.00, value of the 100

cavans of palay as support for 5 years for deceased’s parents, Antonio and Gorgonia Viana computed at

P50.00 per cavan; P7,200.00 as support for deceased’s parents computed at P120.00 a month for 5

years pursuant to Article 2206 [2] of the Civil Code; P20,000.00 as moral damages, and costs), and

Pioneer was ordered to reimburse Aboitiz for whatever amount the latter paid the Vianas. The trial

court, in deciding the motion for reconsideration absolved Pioneer from liability for failure

of the Vianas and Aboitiz to preponderantly establish a case of negligence against the crane operator.

The court thus ordered Aboitiz to pay the Vianas the damages incurred.

CA Ruling: Affirmed the findings of the trial court except as to the amount of damages awarded to the

Vianas. The Court therein ordered Aboitiz to pay the Vianas the amount of P30,000.00 for the death of

Anacleto Viana; actual damages of P9,800.00; P160,000.00 for unearned income; P7,200.00 as support

for deceased’s parents;-P20,000.00 as moral damages; P10,000.00 as attorney’s fees; and to pay the

costs. Hence, the appeal by certiorari.

Issue: Whether or not Aboitiz is negligent and is thus liable for Vianas’ death.

Held: Yes. The victim Anacleto Viana was admittedly contributorily negligent, but it was the negligence

of Aboitiz in prematurely turning over the vessel to the arrastre operator for the unloading of cargoes

which was the direct, immediate and proximate cause of the victim's death. The rule is that the relation

of carrier and passenger continues until the passenger has been landed at the port of destination and

has left the vessel owner's dock or premises. Once created, the relationship will not ordinarily terminate

until the passenger has, after reaching his destination, safely alighted from the carrier's conveyance or

had a reasonable opportunity to leave the carrier's premises. All persons who remain on the premises a

reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable

time or a reasonable delay within this rule is to be determined from all the circumstances, and includes

a reasonable time to see after his baggage and prepare for his departure. The carrier-passenger

relationship is not terminated merely by the fact that the person transported has been carried to his

destination if, for example, such person remains in the carrier's premises to claim his baggage. It is

apparent from the foregoing that what prompted the Court to rule as it did in said case is the fact of the

passenger's reasonable presence within the carrier's premises. That reasonableness of time should be

made to depend on the attending circumstances of the case, such as the kind of common carrier, the

nature of its business, the customs of the place, and so forth, and therefore precludes a consideration of

the time element per se without taking into account such other factors. It is thus of no moment whether

in the cited case of La Mallorca there was no appreciable interregnum for the passenger therein to leave

the carrier's premises whereas in the case at bar, an interval of one (1) hour had elapsed before the

victim met the accident. The primary factor to be considered is the existence of a reasonable cause as

will justify the presence of the victim on or near the petitioner's vessel. We believe there exists such a

justifiable cause. It is of common knowledge that, by the very nature of petitioner's business as a

shipper, the passengers of vessels are allotted a longer period of time to disembark from the ship than

other common carriers such as a passenger bus. With respect to the bulk of cargoes and the number of

passengers it can load, such vessels are capable of accommodating a bigger volume of both as compared

to the capacity of a regular commuter bus. Consequently, a ship passenger will need at least an hour as

is the usual practice, to disembark from the vessel and claim his baggage whereas a bus passenger can

easily get off the bus and retrieve his luggage in a very short period of time. Verily, petitioner cannot

categorically claim, through the bare expedient of comparing the period of time entailed in getting the

passenger's cargoes, that the ruling in La Mallorca is inapplicable to the case at bar. On the contrary, if

we are to apply the doctrine enunciated therein to the instant petition, we cannot in reason doubt that

the victim Anacleto Viana was still a passenger at the time of the incident. When the accident occurred,

the victim was in the act of unloading his cargoes, which he had every right to do, from petitioner's

vessel. As earlier stated, a carrier is duty bound not only to bring its passengers safely to their

destination but also to afford them a reasonable time to claim their baggage.

Case 16

SCHMITZ TRANSPORT & BROKERAGE CORPORATION vs. TRANSPORT VENTURE, INC., INDUSTRIAL

INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now INCHCAPE SHIPPING

SERVICES

G.R. No. 150255. April 22, 2005

Facts: On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on

board M/V “Alexander Saveliev” (a vessel of Russian registry and owned by Black Sea) 545 hot rolled

steel sheets in coil.

The cargoes, which were to be discharged at the port of Manila in favor of the consignee, Little Giant

Steel Pipe Corporation (Little Giant), were insured against all risks with Industrial Insurance Company

Ltd. (Industrial Insurance) under Marine Policy No. M-91-3747-TIS.

The vessel arrived at the port of Manila on October 24, 1991 and the Philippine Ports Authority (PPA)

assigned it a place of berth at the outside breakwater at the Manila South Harbor.

Schmitz Transport, whose services the consignee engaged to secure the requisite clearances, to receive

the cargoes from the shipside, and to deliver them to its (the consignee’s) warehouse at Cainta, Rizal, in

turn engaged the services of TVI to send a barge and tugboat at shipside.

On October 26, 1991, around 4:30 p.m., TVI’s tugboat “Lailani” towed the barge “Erika V” to shipside.

By 7:00 p.m. also of October 26, 1991, the tugboat, after positioning the barge alongside the vessel, left

and returned to the port terminal. At 9:00 p.m., arrastre operator Ocean Terminal Services Inc.

commenced to unload 37 of the 545 coils from the vessel unto the barge.

By 12:30 a.m. of October 27, 1991 during which the weather condition had become inclement due to an

approaching storm, the unloading unto the barge of the 37 coils was accomplished. No tugboat pulled

the barge back to the pier, however.

At around 5:30 a.m. of October 27, 1991, due to strong waves, the crew of the barge abandoned it and

transferred to the vessel. The barge pitched and rolled with the waves and eventually capsized, washing

the 37 coils into the sea. At 7:00 a.m., a tugboat finally arrived to pull the already empty and damaged

barge back to the pier.

Earnest efforts on the part of both the consignee Little Giant and Industrial Insurance to recover the lost

cargoes proved futile.

Little Giant thus filed a formal claim against Industrial Insurance which paid it the amount of

P5,246,113.11. Little Giant thereupon executed a subrogation receipt in favor of Industrial Insurance.

Industrial Insurance later filed a complaint against Schmitz Transport, TVI, and Black Sea through its

representative Inchcape (the defendants) before the RTC of Manila, for the recovery of the amount it

paid to Little Giant plus adjustment fees, attorney’s fees, and litigation expenses.

Industrial Insurance faulted the defendants for undertaking the unloading of the cargoes while typhoon

signal No. 1 was raised in Metro Manila.

By Decision of November 24, 1997, Branch 21 of the RTC held all the defendants negligent for unloading

the cargoes outside of the breakwater notwithstanding the storm signal.

To the trial court’s decision, the defendants Schmitz Transport and TVI filed a joint motion for

reconsideration.

By resolution of February 4, 1998, the trial court denied the motion for reconsideration.

All the defendants appealed to the Court of Appeals which, by decision of June 27, 2001, affirmed in

toto the decision of the trial court, it finding that all the defendants were common carriers — Black Sea

and TVI for engaging in the transport of goods and cargoes over the seas as a regular business and not as

an isolated transaction, and Schmitz Transport for entering into a contract with Little Giant to transport

the cargoes from ship to port for a fee.

In holding all the defendants solidarily liable, the appellate court ruled that “each one was essential such

that without each other’s contributory negligence the incident would not have happened and so much

so that the person principally liable cannot be distinguished with sufficient accuracy.”

In discrediting the defense of fortuitous event, the appellate court held that “although defendants

obviously had nothing to do with the force of nature, they however had control of where to anchor the

vessel, where discharge will take place and even when the discharging will commence.”

The defendants’ respective motions for reconsideration having been denied by Resolution of September

28, 2001, Schmitz Transport (hereinafter referred to as petitioner) filed the present petition against TVI,

Industrial Insurance and Black Sea.

Petitioner asserts that in chartering the barge and tugboat of TVI, it was acting for its principal,

consignee Little Giant, hence, the transportation contract was by and between Little Giant and TVI.

By Resolution of January 23, 2002, herein respondents Industrial Insurance, Black Sea, and TVI were

required to file their respective Comments.

By its Comment, Black Sea argued that the cargoes were received by the consignee through petitioner in

good order, hence, it cannot be faulted, it having had no control and supervision thereover.

For its part, TVI maintained that it acted as a passive party as it merely received the cargoes and

transferred them unto the barge upon the instruction of petitioner.

Issue: Whether the loss of the cargoes was due to a fortuitous event, independent of any act of

negligence on the part of petitioner, Black Sea and TVI

Held: When a fortuitous event occurs, Article 1174 of the Civil Code absolves any party from any and all

liability arising therefrom:

ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation,

or when the nature of the obligation requires the assumption of risk, no person shall be responsible for

those events which could not be foreseen, or which though foreseen, were inevitable.

In order, to be considered a fortuitous event, however, (1) the cause of the unforeseen and unexpected

occurrence, or the failure of the debtor to comply with his obligation, must be independent of human

will; (2) it must be impossible to foresee the event which constitute the caso fortuito, or if it can be

foreseen it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for

the debtor to fulfill his obligation in any manner; and (4) the obligor must be free from any participation

in the aggravation of the injury resulting to the creditor.

[T]he principle embodied in the act of God doctrine strictly requires that the act must be occasioned

solely by the violence of nature. Human intervention is to be excluded from creating or entering into the

cause of the mischief. When the effect is found to be in part the result of the participation of man,

whether due to his active intervention or neglect or failure to act, the whole occurrence is then

humanized and removed from the rules applicable to the acts of God.

From a review of the records of the case, there is no indication that there was greater risk in loading the

cargoes outside the breakwater. As the defendants proffered, the weather on October 26, 1991

remained normal with moderate sea condition such that port operations continued and proceeded

normally.

The weather data report, furnished and verified by the Chief of the Climate Data Section of PAG-ASA and

marked as a common exhibit of the parties, states that while typhoon signal No. 1 was hoisted over

Metro Manila on October 23-31, 1991, the sea condition at the port of Manila at 5:00 p.m. - 11:00 p.m.

of October 26, 1991 was moderate. It cannot, therefore, be said that the defendants were negligent in

not unloading the cargoes upon the barge on October 26, 1991 inside the breakwater.

That no tugboat towed back the barge to the pier after the cargoes were completely loaded by 12:30 in

the morning is, however, a material fact which the appellate court failed to properly consider and

appreciate— the proximate cause of the loss of the cargoes. Had the barge been towed back promptly

to the pier, the deteriorating sea conditions notwithstanding, the loss could have been avoided. But the

barge was left floating in open sea until big waves set in at 5:30 a.m., causing it to sink along with the

cargoes. The loss thus falls outside the “act of God doctrine.”

Case 17

YOBIDO v. CA

Facts: On April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee and

Jasmin, boarded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for Davao City. Along Picop

Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus exploded. The bus fell into a

ravine around three (3) feet from the road and struck a tree. The incident resulted in the death of 28-

year-old Tito Tumboy and physical injuries to other passengers.

On November 21, 1988, a complaint for breach of contract of carriage, damages and attorney’s fees was

filed by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio Yobido, its

driver, before the Regional Trial Court of Davao City. When the defendants therein filed their answer to

the complaint, they raised the affirmative defense of caso fortuito.

The plaintiffs asserted that violation of the contract of carriage between them and the defendants was

brought about by the driver’s failure to exercise the diligence required of the carrier in transporting

passengers safely to their place of destination. According to Leny Tumboy, the bus left Mangagoy at 3:00

o’clock in the afternoon. The winding road it traversed was not cemented and was wet due to the rain; it

was rough with crushed rocks. The bus, which was full of passengers, had cargoes on top. Since it was

“running fast,” she cautioned the driver to slow down but he merely stared at her through the mirror. At

around 3:30 p.m., in Trento, she heard something explode and immediately, the bus fell into a ravine.

Defendants denied the allegations that the bus was full and asserted that there were only 32

passengers. They also alleged that the bus was not running at a speed over 60 k/h and that “it was going

slow because of the zigzag road.” The conductor affirmed that the front left tire, the one which

exploded, was only bought and installed five days prior the incident and that the Yobido secretary

personally monitored its installation. Defendants also stated that all driver applicants in Yobido Liner

underwent actual driving tests before they were employed. Defendant Cresencio Yobido underwent

such test and submitted his professional driver’s license and clearances from the barangay, the fiscal

and the police.

Trial Court: Dismissed. The incident was a case of a fortuitous event – the cause of the explosion of the

tire being unidentified. The tire blowout was “a caso fortuito which is completely an extraordinary

circumstance independent of the will” of the defendants who should be relieved of “whatever liability

the plaintiffs may have suffered by reason of the explosion pursuant to Article 1174 of the Civil Code.”

Court of Appeals: Reversed TC’s decision – pointing out the presumption of negligence on the part of the

common carrier. “Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge

defendants’ burden.”

Issue: WON the explosion of a newly installed tire was a valid defense exempting Yobido from liability

Held: The SC affirmed the CA’s decision and ruled in the negative. Although the cause of the explosion of

the tire remains unsolved, the defendants were not able to overthrow the presumption of negligence

with clear and convincing evidence. They failed to rebut the testimony of Leny Tumboy that the bus was

running so fast that she cautioned the driver to slow down. These contradictory facts must, therefore,

be resolved in favor of liability in view of the presumption of negligence of the carrier in the law.

Coupled with this is the established condition of the road – rough, winding and wet due to the rain. It

was incumbent upon the defense to establish that it took precautionary measures considering partially

dangerous condition of the road. As stated above, proof that the tire was new and of good quality is not

sufficient proof that it was not negligent. Petitioners should have shown that it undertook extraordinary

diligence in the care of its carrier, such as conducting daily routinary check-ups of the vehicle’s parts.

Case 18

GACAL VS PHILIPPINE AIRLINES INC

FACTS:

Franklin G. Gacal and his wife, Bonifacio S. Anislag and his wife, and the late Elma de Guzman, were then

passengers boarding defendant's airplane at Davao Airport for a flight to Manila, not knowing that on

the same flight, members of the Moro National Liberation Front (MNLF), were their co-passengers,

three (3) armed with grenades, two (2) with .45 caliber pistols, and one with a .22 caliber pistol. Ten (10)

minutes after take off at about 2:30 in the afternoon, the hijackers brandishing their respective firearms

announced the hijacking of the aircraft and directed its pilot to fly to Libya. With the pilot explaining to

them especially to its leader, Commander Zapata, of the inherent fuel limitations of the plane and that

they are not rated for international flights, the hijackers directed the pilot to fly to Sabah. With the same

explanation, they relented and directed the aircraft to land at Zamboanga Airport, Zamboanga City for

refueling. An encounter ensue between members of the military and the hijackers which causes serious

injuries to Mrs. Gacal and Mrs. Anislag and death to Elma de Guzman. Hence, an action for damages was

instituted.

Respondent denied liability invoking caso fortuito

RTC: dismissed the complaint finding that all the damages sustained in the premises were attributed to

force majeure.

Direct appeal to the SC

ISSUE: Whether or not the respondent can be held liable for damages caused by the hijackers.

HELD:

The source of a common carrier's legal liability is the contract of carriage, and by entering into said

contract, it binds itself to carry the passengers safely as far as human care and foresight can provide.

There is breach of this obligation if it fails to exert extraordinary diligence according to all the

circumstances of the case in exercise of the utmost diligence of a very cautious person

It is the duty of a common carrier to overcome the presumption of negligence and it must be shown that

the carrier had observed the required extraordinary diligence of a very cautious person as far as human

care and foresight can provide or that the accident was caused by a fortuitous event. Thus, as ruled by

this Court, no person shall be responsible for those "events which could not be foreseen or which

though foreseen were inevitable. (Article 1174, Civil Code).

In order to constitute a caso fortuito or force majeure that would exempt a person from liability under

Article 1174 of the Civil Code, it is necessary that the following elements must concur: (a) the cause of

the breach of the obligation must be independent of the human will (the will of the debtor or the

obligor); (b) the event must be either unforeseeable or unavoidable; (c) the event must be such as to

render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must

be free from any participation in, or aggravation of the injury to the creditor. Caso fortuito or force

majeure, by definition, are extraordinary events not foreseeable or avoidable, events that could not be

foreseen, or which, though foreseen, are inevitable. It is, therefore, not enough that the event should

not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to

foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the

same.

Applying the above guidelines to the case at bar, the failure to transport petitioners safely from Davao

to Manila was due to the skyjacking incident staged by six (6) passengers of the same plane, all members

of the Moro National Liberation Front (MNLF), without any connection with private respondent, hence,

independent of the will of either the PAL or of its passengers.

Under normal circumstances, PAL might have foreseen the skyjacking incident which could have been

avoided had there been a more thorough frisking of passengers and inspection of baggages as

authorized by R.A. No. 6235. But the incident in question occurred during Martial Law where there was

a military take-over of airport security including the frisking of passengers and the inspection of their

luggage preparatory to boarding domestic and international flights.

Otherwise stated, these events rendered it impossible for PAL to perform its obligations in a nominal

manner and obviously it cannot be faulted with negligence in the performance of duty taken over by the

Armed Forces of the Philippines to the exclusion of the former.

Finally, there is no dispute that the fourth element has also been satisfied. Consequently the existence

of force majeure has been established exempting respondent PAL from the payment of damages to its

passengers who suffered death or injuries in their persons and for loss of their baggages.

Case 19

Case 20

MAURO GANZON vs. COURT OF APPEALS and GELACIO E. TUMAMBING

G.R. No. L-48757 May 30, 1988

SARMIENTO, J.:

Facts

On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305

tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman".

Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in

three feet of water. On December 1, 1956, Gelacio Tumambing delivered the scrap iron to defendant

Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew

of the lighter under the captain's supervision. When about half of the scrap iron was already loaded,

Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing.

The latter resisted the shakedown and after a heated argument between them, Mayor Jose Advincula

drew his gun and fired at Gelacio Tumambing. The gunshot was not fatal but Tumambing had to be

taken to a hospital in Balanga, Bataan, for treatment.

After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor

Basilio Rub, accompanied by three policemen, ordered captain Filomeno Niza and his crew to dump the

scrap iron where the lighter was docked. The rest was brought to the compound of NASSCO. Later on

Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the

scrap iron.

Tumambing instituted in the Court of First Instance of Manila an action against Ganzon for damages

based on culpa contractual where it held that no indemnity has to be made in favor of the scrap owner.

The Court of Appeals, however, reversed the decision and ordered Mauro Ganzon to pay Tumambimg

the sum of P5,895.00 as actual damages, the sum of P5,000.00 as exemplary damages, and the amount

of P2,000.00 as attorney's fees.

Issue

Whether or not THE APPELLATE COURT ERRED IN CONDEMNING Ganzon FOR THE ACTS OF HIS

EMPLOYEES IN DUMPING THE SCRAP INTO THE SEA DESPITE THAT IT WAS ORDERED BY THE LOCAL

GOVERNMENT OFFICIAL

Ruling

Ganzon's defense was that the loss of the scraps was due to an "order or act of competent public

authority," and this contention was correctly passed upon by the Court of Appeals which ruled that

before the appellee Ganzon could be absolved from responsibility on the ground that he was ordered by

competent public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub

had the power to issue the disputed order, or that it was lawful, or that it was issued under legal process

of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor to

issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron

belonged to the Municipality of Mariveles but instead on record is the stipulation of the parties that the

cargo of scrap iron was accilmillated by the appellant through separate purchases here and there from

private individuals. The fact remains that the order given by the acting mayor to dump the scrap iron

into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown the appellant for

P5,000.00. The order of the acting mayor did not constitute valid authority for appellee Mauro Ganzon

and his representatives to carry out.

In any case, the intervention of the municipal officials was not In any case, of a character that would

render impossible the fulfillment by the carrier of its obligation. The petitioner was not duty bound to

obey the illegal order to dump into the sea the scrap iron. Moreover, there is absence of sufficient proof

that the issuance of the same order was attended with such force or intimidation as to completely

overpower the will of the petitioner's employees. The mere difficulty in the fullfilment of the obligation

is not considered force majeure. We agree with the private respondent that the scraps could have been

properly unloaded at the shore or at the NASSCO compound, so that after the dispute with the local

officials concerned was settled, the scraps could then be delivered in accordance with the contract of

carriage.

The petition is DENIED; the assailed decision of the Court of Appeals is hereby AFFIRMED.

22. CORNELIA GILLACO VS. MANILA RAILROAD CO. Facts:

One morning, Lieut. Tomas Gillaco, husband of the plaintiff, was a passenger in the early morning train of the MRC from Calamba, Laguna to Manila. When the train reached the Paco Railroad station, Emilio Devesa, a train guard of the MRC assigned in the Manila-San Fernando, La Union Line, happened to be in said station waiting for the same train which would take him to Tutuban Station, where he was going to report for duty. Devesa happened to have a long standing personal grudge against Tomas Gillaco, same dating back during the Japanese occupation. Because of this, Devesa shot Gillaco with the carbine furnished to him by the MRC for his use as guard, upon seeing him inside the train coach. Tomas Gillaco died as a result of the would which he sustained from the shot fired by Devesa.

RTC - ManilaRailroad was ordered to pay 4,000 damages to the widow and children of Tomas Gillaco.

Issue: Whether or not MRC, bein the employer of Devesa, should be held liable for Tomas Gillaco's death. Held: NO. The responsibility of the carrier to protect its passenger from personal violence by its agents or employees, extends only to those that the carrier could foresee or avoid through the exercise of the degree of car and diligence required of it. The act of guard Devesa in shooting passenger Gillaco (because of a personal grudge nurtured against the latter since the Japanese occupation) was entirely unforeseeable by the Manila Railroad Co. The latter had no means to ascertain or anticipate that the two would meet, nor could it reasonably foresee every personal rancor that might exist between each one of its many employees and any one of the thousands of eventual passengers riding in its trains. The shooting in question was therefore "caso fortuito" within the definition of article 105 of the old Civil Code, being both unforeseeable and inevitable under the given circumstances; and pursuant to established doctrine, the resulting breach of appellant's contract of safe carriage with the late Tomas Gillaco was excused thereby. Another very important consideration that must be borne in mind is that, when the crime

took place, Devesa had no duties to discharge in connection with the transportation of

the deceased from Calamba to Manila. In fact, his tour of duty was to start at 9:00 a.m.,

two hours after the commission of the crime. Devesa was therefore under no obligation

to safeguard the passenger of the Calamba-Manila train, where the deceased was

riding; and the killing of Gillaco was not done in line of duty. The position of Devesa at

the time was that of another would be passenger, a stranger also awaiting

transportation, and not that of an employee assigned to discharge any of the duties that

the Railroad had assumed by its contra ct with the deceased. As a result, Devesa's

assault cannot be deemed in law a breach of Gillaco's contract of transportation by a

servant or employee of the carrier

24. JOSE PILAPIL VS CA AND ALATCO TRANSPORTATION CO. INC.

FACTS: At around 6pm of September 16, 1971, Jose Pilapil borded Bus no.409 of

Alatco Transportation at San Nicolas,Iriga City. En route to Naga City, upon reching the

cemetery of Baao, Camrines Sur, an unidentified man, (a bystander) along the national

highway hurled a stone at the left side of the bus, which hit Jose Pilapil above his left

eye. Alatco’s personnel immediately brought Pilalpil to the Provincial Hospital in Naga

City.

Since his left eyesight was impaired, he was also brought to Dr. Malabanan in Iriga City

( he was treated for 1week but there was no improvement). He was also brought to Dr.

Capulong in V.Luna Hospital in Quezon city but despite treatments, petitioner lost

partially his left eye’s vision and sustained a permanent scar above the eye.

Pilapil filed an action for recovery for damages before the CFI of Camarines sur, Br.I.

CFI ruled in favor of Pilapil and Alatco to pay

a. PHP 10,000 – actual damages b. PHP 5,000 – moral and exemplary damages c. PHP 300 – medical

d. PHP 1,000 - atty fees e. costs

CA: (Alatco appealed ) Reversed and set aside CFI

ISSUE :WoN Alatco failed to rebut the presumption of negligence against it by proof on

its part that it exercised extraordinary diligence for the safety of its passengers.

HELD : No. ( verbatim ruling of SC )

First, as stated earlier, the presumption of fault or negligence against the carrier is only a disputable presumption. It gives in where contrary facts are established proving either that the carrier had exercised the degree of diligence required by law or the injury suffered by the passenger was due to a fortuitous event. Where, as in the instant case, the injury sustained by the petitioner was in no way due to any defect in the means of transport or in the method of transporting or to the negligent or willful acts of private respondent's employees, and therefore involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees, with the injury arising wholly from causes created by strangers over which the carrier had no control or even knowledge or could not have prevented, the presumption is rebutted and the carrier is not and ought not to be held liable. To rule otherwise would make the common carrier the insurer of the absolute safety of its passengers which is not the intention of the lawmakers.

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

“Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. “

Clearly under the above provision, a tort committed by a stranger which causes

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

25. FORTUNE EXPRESS, INC. v. COURT OF APPEALS, PAULIE U.CAORONG, and

minor children YASSER KING CAORONG, ROSE HEINNI and PRINCE

ALEXANDER, all surnamed CAORONG, and represented by their mother PAULIE

U. CAORONG

G.R. No. 119756 March 18, 1999

FACTS:

- Petitioner is a bus company in northern Mindanao. Private respondent Paulie Caorong is the widow of Atty. Caorong, while private respondents Yasser King, Rose Heinni, and Prince Alexander are their minor children.

- On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in Kauswagan, Lanao del Norte, resulting in the death of several passengers of the jeepney, including two Maranaos.

- He found that the owner of the jeepney was a Maranao residing in Delabayan, Lanao del Norte and that certain Maranaos were planning to take revenge on the petitioner by burning some of its buses.

- The leader of the Maranaos, identified as one Bashier Mananggolo, ordered the driver, Godofredo Cabatuan, to stop the bus on the side of the highway. Mananggolo then shot Cabatuan on the arm, which caused him to slump on the steering wheel. The one of the companions of Mananggolo started pouring gasoline inside the bus, as the other held the passenger at bay with a handgun. Mananggolo then ordered the passenger to get off the bus. The passengers, including Atty. Caorong, stepped out of the bus and went behind the bushes in a field some distance from the highway.

- Atty. Caorong returned to the bus to retrieve something from the overhead rack. at that time, one of the armed men was pouring gasoline on the head of the driver. Cabatuan, who had meantime regained consciousness, heard Atty. Caorong pleading with the armed men to spare the driver as he was innocent of any wrong doing and was only trying to make a living.

- During this exchange between Atty. Caorong and the assailants, Cabatuan climbed out of the left window of the bus and crawled to the canal on the opposite side of the highway. He heard shots from inside the bus. Larry de la Cruz, one of the passengers, saw that Atty. Caorong was hit. Then the bus was set on fire. Some of the passengers were able to pull Atty. Caorong out of the burning bus and rush him to the Mercy Community Hospital in Iligan City, but he died while undergoing operation

- The private respondents brought this suit for breach of contract of carriage - Decision:

o Iligan Trial Court: case was dismissed Reason: Plaintiff’s position is that defendant should have provided

its buses with security guards. Does the law require common carriers to install security guards in its buses for the protection and safety of its passengers? Is the failure to post guards on omission of the duty to "exercise the diligence of a good father of the family" which could have prevented the killing of Atty. Caorong? To our mind, the diligence demanded by law does not include the posting of security guard in buses. It is an obligation that properly belongs to the State.

o CA: in favor of Caorong and heirs Reasons:

nothing concrete whatsoever was taken by appellee or its employees to prevent the execution of the threat.

If frisking was resorted to, even temporarily, . . . . appellee might be legally excused from liability.

o Hence, this appeal before the SC

ISSUES:

1. Whether or not the case at bar is a fortuitous event and hence, common carrier absolved from liability. NO.

2. Whether or not there is a contributory negligence on the part of the deceased Atty. Caorong. NONE.

RULING:

1. Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a passenger on account of willful acts of other passengers, if the employees of the common carrier could have prevented the act through the exercise of the diligence of a good father of a family. In the present case, it is

clear that because of the negligence of petitioner's employees, the seizure of the bus by Mananggolo and his men was made possible.

- Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take revenge on the petitioner by burning some of its buses and the assurance of petitioner's operation manager, Diosdado Bravo, that the necessary precautions would be taken, petitioner did nothing to protect the safety of its passengers.

- Had petitioner and its employees been vigilant they would not have failed to see that the malefactors had a large quantity of gasoline with them. Under the circumstances, simple precautionary measures to protect the safety of passengers, such as frisking passengers and inspecting their baggage, preferably with non-intrusive gadgets such as metal detectors, before allowing them on board could have been employed without violating the passenger's constitutional rights.

- Art. 1174 of the Civil Code defines a fortuitous event as an occurrence which could not be foreseen, is inevitable. In Yobido v. Court of Appeals, 7 we held that to 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 event must be either unforeseeable or unavoidable; (3) the occurrence must be render it impossible for the debtor to fulfill the obligation in a normal manner; and (4) the obligor must be free of participation in, or aggravation of, the injury to the creditor. The absence of any of the requisites mentioned above would prevent the obligor from being excused from liability.

- Thus, in Vasquez v. Court of Appeals, it was held that the common carrier was liable for its failure to take the necessary precautions against an approaching typhoon, of which it was warned, resulting in the loss of the lives of several passengers.

o Despite the report of PC agent Generalao that the Maranaos were going to attack its buses, petitioner took no steps to safeguard the lives and properties of its passengers. The seizure of the bus of the petitioner was foreseeable and, therefore, was not a fortuitous event which would exempt petitioner from liability.

2. Atty. Caorong did not act recklessly. It should be pointed out that the intended targets of the violence were petitioners and its employees, not its passengers. The assailant's motive was to retaliate for the loss of life of two Maranaos as a result of the collision between petitioner's bus and the jeepney in which the two Maranaos were riding. Mananggolo, the leader of the group which had hijacked the bus, ordered the passengers to get off the bus as they intended to burn it and its driver. What apparently angered them was his attempt to help the driver of the bus by pleading for his life. He was playing the role of the good Samaritan. Certainly, this act cannot considered an act of negligence, let alone recklessness

26. NORBERTO QUISUMBING, SR., and GUNTHER LOEFFLER petitioners, vs.

COURT OF APPEALS and PHILIPPINE AIR LINES, INC., respondents.

G.R. No. L-50076 September 14, 1990

Facts:

Norberto Quisumbing Sr. and Gunther Leoffler were among the passengers of

PAL’s plane from Mactan City Cebu to Manila. There was an exchange of gunshot

between a Senior NBI agent Villarin and the four armed hijackers one of which was

“Zaldy” who is a suspect in the killing of Judge Valdez. Zaldy then announced to the

passengers and the pilots that it was a hijacked and ordered the pilot not to send any

SOS. The robbers divested the passengers of their belongings including Quisumbing

who was divested with his jewelries and cash amounting to P18,650.00 and Leoffler

with his watch, wallet and cash amounting to P1,700. Quisumbing suffered a shock for a

gun had been pointed at him by one of the hold uppers. The four hijackers succeeded in

their escape upon arrival at Manila.

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

obligation to carry them and their belongings and effects to their Manila destination

without loss or damage, and constitutes a serious dereliction of PAL's legal duty to

exercise extraordinary diligence in the vigilance over the same, Quisumbing and

Loeffler brought suit against PAL to recover the value of the property lost by them to the

robbers as well as moral and exemplary damages.

The CFI dismissed the complaint and the CA affirmed the CFI’s decision. Hence

the instant petition. The plaintiffs declared that their suit was instituted "... pursuant to

Civil Code articles 1754, 998, 2000 and 2001 and on the ground that in relation to said

Civil Code article 2001 the complained-of act of the armed robbers is not a force

majeure, as the 'use of arms' or 'irresistible force' was not taken advantage of by said

armed robbers in gaining entrance to defendant's ill-fated plane in questions. And, with

respect to said Civil Code article 1998, it is not essential that the lost effects and

belongings of plaintiffs were actually delivered to defendant's plane personnel or that

the latter were notified thereof.

Issue:

1) Whether or not hijacking-robbery was force majeure. 2) Whether or not PAL was negligent and liable for breach of contract of

carriage.

Held:

1) Yes. The Court ruled that under the facts, "the high jacking-robbery was

force majeure", observing that: hijackers do not board an airplane

through a blatant display of firepower and violent fury. Firearms, hand-

grenades, dynamite, and explosives are introduced into the airplane

surreptitiously and with the utmost cunning and stealth, although there

is an occasional use of innocent hostages who will be coldly murdered

unless a plane is given to the hijackers' complete disposal.

2) No. PAL was not negligent so as to overcome the force majeure nature

of the hi-jacking. Hijackers do not board an airplane through a blatant

display of firepower and violent fury. Firearms and grenades are

brought to the plane surreptitiously. PAL could not have been faulted for

want of diligence, particularly for failing to take positive measures to

implement Civil Aeronautics Administration regulations prohibiting

civilians from carrying firearms on board the plane. The use of the most

sophisticated electronic detection devices may have minimized

hijacking but still ineffective against truly determining hijackers.

The correctness of the essential conclusion of both the trial and appellate

courts that the evidence does indeed fail to prove any want of diligence on the

part of PAL, or that, more specifically, it had failed to comply with applicable

regulations or universally accepted and observed procedures to preclude

hijacking; and that the particular acts singled out by the petitioners as

supposedly demonstrative of negligence were, in the light of the

circumstances of the case, not in truth negligent acts "sufficient to

overcome the force majeure nature of the armed robbery." The Court

quite agrees, too, with the Appellate Tribunal's wry observation that PAL's

"failure to take certain steps that a passenger in hindsight believes should

have been taken is not the negligence or misconduct which mingles with force

majeure as an active and cooperative cause."

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

27. PANAM VS RAPADAS

Facts:

On January 16, 1975, Jose Rapadas held passenger ticket and baggage claim

check for PanAm’s flight No. 841 with the route from Guam to Manila .While standing in

line to board the flight at the Guam airport, Rapadas was ordered by PanAm's hand

carry control agent to check-in his Samsonite attache case. Private respondent

Rapadas protested pointing to the fact that other passengers were permitted to hand

carry bulkier baggage. He stepped out of the line only to go back again at the end of it

to try if he can get through without having to register his attache case. However, the

same man in charge of hand carry control did not fail to notice him and ordered him

again to register his baggage. For fear that he would miss the plane if he insisted and

argued on personally taking the valise with him, he acceded to checking it in. He then

gave his attache case to his brother who happened to be around and who checked it in

for him, but without declaring its contents or the value of its contents. Upon arriving in

Manila, Rapadas claimed and was given all his checked-in baggages except the attache

case. He sent his son, Jorge Rapadas to request for the search of the missing luggage.

PanAm exerted efforts to locate the luggage through the Pan American World Airways-

Manila International Airport (PAN AM-MIA) Baggage Service but they were not able to

locate the attache case. Rapadas then received a letter from the PanAm's counsel

offering to settle the claim for the sum of $160.00 representing the PanAm's alleged limit

of liability for loss or damage to a passenger's personal property under the contract of

carriage between Rapadas and PanAm. Refusing to accept this kind of settlement,

Rapadas filed the instant action for damages. The lower court ruled in favor of Rapadas

after finding no stipulation giving notice to the baggage liability limitation. On appeal, the

Court of Appeals affirmed the trial court decision. Hence, this petition.

Issue: W/N Rapadas was bound by the terms of the passenger ticket declaring the

limitations of PanAm’s liability.

Held:

Yes. The Warsaw Convention governs the availment of the liability limitations

where the baggage check is combined with or incorporated in the passenger ticket. In

the case at bar, the baggage check is combined with the passenger ticket in one

document of carriage. The passenger ticket complies with Article 3, which provides: (c)

a notice to the effect that, if the passenger's journey involves an ultimate destination or

stop in a country other than the country of departure, the Warsaw Convention may be

applicable and that the Convention governs and in most cases limits the liability of

carriers for death or personal injury and in respect of loss of or damage to baggage.

The provisions in the plane ticket are sufficient to govern the limitations of liabilities of

the airline for loss of luggage. The passenger, upon contracting with the airline and

receiving the plane ticket, was expected to be vigilant insofar as his luggage is

concerned. If the passenger fails to adduce evidence to overcome the stipulations, he

cannot avoid the application of the liability limitations.

The facts show that the private respondent actually refused to register the attache case

and chose to take it with him despite having been ordered by the PANAM agent to

check it in. In attempting to avoid registering the luggage by going back to the line,

private respondent manifested a disregard of airline rules on allowable handcarried

baggages. Prudence of a reasonably careful person also dictates that cash and jewelry

should be removed from checked-in-luggage and placed in one's pockets or in a

handcarried Manila-paper or plastic envelope.

The alleged lack of enough time for him to make a declaration of a higher value and to

pay the corresponding supplementary charges cannot justify his failure to comply with

the requirement that will exclude the application of limited liability.

28. BRITISH AIRWAYS VS CA

Facts:

Mahtani decided to visit his relatives in Bombay, India. In anticipation of his visit,

he obtained the services of a certain Mr. Gumar to prepare his travel plans. The latter,

in turn, purchased a ticket from BA. Since BA had no direct flights from Manila to

Bombay, Mahtani had to take a flight to Hongkong via PAL, and upon arrival in

Hongkong he had to take a connecting flight to Bombay on board BA.

Prior to his departure, Mahtani checked in at the PAL counter in Manila his two

pieces of luggage containing his clothings and personal effects, confident that upon

reaching Hongkong, the same would be transferred to the BA flight bound for Bombay.

Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage

was missing and that upon inquiry from the BA representatives, he was told that the

same might have been diverted to London.

Mahtani filed a case in court. BA alleges that Mahtani did not have a cause of

action against it and filed a third party complaint against PAL alleging that the reason for

the non-transfer of the luggage was due to the latter’s late arrival. The trial court and the

CA ruled in favor of Mahtani.

Issue: Whether or not Mahtani is entitled to damages and if the damages awarded by

the trial court and CA is without basis and if PAL is also liable.

Held:

Yes. BA is liable. The nature of an airline's contract of carriage partakes of two

types, namely: a contract to deliver a cargo or merchandise to its destination and a

contract to transport passengers to their destination. A business intended to serve the

traveling public primarily, it is imbued with public interest, hence, the law governing

common carriers imposes an exacting standard. Neglect or malfeasance by the carrier's

employees could predictably furnish bases for an action for damages.

It is indubitable that his luggage never arrived in Bombay on time. Therefore, as

in a number of cases we have assessed the airlines' culpability in the form of damages

for breach of contract involving misplaced luggage.

In a contract of air carriage a declaration by the passenger of a higher value is

needed to recover a greater amount as provided in Article 22(1) of the Warsaw

Convention. However, we have held that benefits of limited liability are subject to waiver

such as when the air carrier failed to raise timely objections during the trial when

questions and answers regarding the actual claims and damages sustained by the

passenger were asked.

It is apparent that the contract of carriage was between Mahtani and BA.

However, PAL, acting as an agent of another carrier, is also liable for its own negligent

acts or omission in the performance of its duties.

30. SARKIES TOURS PHILIPPINES, INC. vs. HONORABLE COURT OF APPEALS

(TENTH DIVISION), DR. ELINO G. FORTADES, MARISOL A. FORTADES and

FATIMA A. FORTADES.

Facts:

On August 31, 1984, Fatima boarded petitioner’s De Luxe Bus No. 5 in Manila on

her way to Legazpi City. Her brother helped her load three pieces of luggage containing

all of her optometry review books, materials and equipment, lenses, passport and visa,

as well as her mother’s U.S. immigration (green) card, and other important documents

and personal belongings. Her belongings were kept in the baggage compartment of the

bus, but during a stopover at Daet, it was discovered that all but one bag remained in

the open compartment. The others, including Fatima’s things, were missing and could

have dropped along the way. Some of the passengers suggested retracing the route to

try to recover the lost items, but the driver ignored them and proceeded to Legazpi City.

Private respondents reported the incident to the office of the petitioner. The latter,

however, merely offered them P1,000.00 for each piece of luggage lost, which they

turned down. They asked assistance from the radio stations and even from Philtranco

bus drivers who plied the same route on August 31st. One of Fatima’s bags was

recovered. They also reported the incident to the NBI in Legazpi City, and to the local

police.

On September 20, 1984, respondents, through counsel, formally demanded

satisfaction of their complaint from petitioner. The latter apologized for the delay and

said that they sent out a team to recover or get detail of the incident.

After more than nine months of waiting, respondents decided to file the case.

They claimed that the loss was due Sarkies non-observance of extraordinary diligence

in the care of the luggage and dealt with them in bad faith from the start. Sarkies,

disowned any liability for the loss on the ground that Fatima allegedly did not declare

any excess baggage upon boarding its bus.

The trial court ruled in favor of Fatima. It ordered Sarkies to pay Fatima value of

the personal belongings, transportation expenses, as well as moral damages,

exemplary damages, attorneys and litigation fees. On appeal, the appellate court

affirmed the trial court’s judgment, but deleted the award of moral and exemplary

damages.

Issue: whether or not the common carrier is responsible for the loss.

Held: Yes. The common carrier is responsible for the loss. Under the Civil Code,

“Common carriers, from the nature of their business and for reasons of public policy, are

bound to observe extraordinary diligence in the vigilance over the goods transported by

them,” and this liability “lasts from the time the goods are unconditionally placed in the

possession of, and received by the carrier for transportation until the same are

delivered, actually or constructively, by the carrier for transportation until the same are

delivered, actually or constructively, by the carrier to the person who has a right to

receive them,” unless the loss is due to any of the excepted causes under Article 1734

thereof.

The cause of the loss in the case at bar was petitioner’s negligence in not ensuring

that the doors of the baggage compartment of its bus were securely fastened. As a

result of this lack of care, almost all of the luggage was lost, to the prejudice of the

paying passengers.