TRANSPORTATION LAW DOCTRINES

MAERSK LINES vs CA

The heavy seas and rains referred to in the master's report were not caso fortuito, but normal occurrences that an ocean-going vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a voyage. That rain water (not sea water) found its way into the holds of the Jupri Venture is a clear indication that care and foresight did not attend the closing of the ship's hatches so that rain water would not find its way into the cargo holds of the ship. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733. Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the part of the carrier applies; and the carrier must present evidence that it has observed the extraordinary diligence required by Article 1733 of the Civil Code in order to escape liability for damage or destruction to the goods that it had admittedly carried in this case. No such evidence exists of record. Thus, the carrier cannot escape liability. The presumption, therefore, that the cargo was in apparent good condition when it was delivered by the vessel to the arrastre operator by the clean tally sheets has been overturned and traversed. The evidence is clear to the effect that the damage to the cargo was suffered while aboard petitioner's vessel.

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.

FGU INSURANCE vs CA

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

The Civil Code provides under Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. To be exempt from liability because of an act of God, the tug must be free from any previous negligence or misconduct by which that loss or damage may have been occasioned. there was blatant negligence on the part of M/T ANCO’s crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of SMC’s representatives to have the barge transferred to a safer place, as was done by the othervessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes.

DSR-SENATOR vs FEDERAL

Fire is not one of those enumerated under Article 1734 which exempts a carrier from liability for loss or destruction of the cargo. Common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law. Petitioners failed to overcome it by sufficient proof of extraordinary diligence. Even if fire were to be considered a natural disaster within the purview of Article 1734, it is required under Article 1739 of the same Code that the natural disaster must have been the proximate and only cause of the loss, and that the carrier has exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster

PHILMAGEN vs CA

In this case, there was indeed delay. 40 days had lapsed. (More than enough time to unload the cargoes) However, neither parties could be faulted for such delay. Delay was not due to negligence but to several factors. The cargo having been lost due to typhoon "Saling", and the delay incurred in its unloading not being due to negligence, private respondent is exempt from liability for the loss of the cargo, pursuant to Article 1740 of the Civil Code. Moreover, the records also show that before, during and after the occurrence of typhoon "Saling", private respondent through its shipmaster exercised due negligence to prevent or minimize the loss of the cargo. (Refer to the facts) The diligence exercised by the shipmaster further supports the exemption of private respondent from liability for the loss of the cargo, in accordance with Article 1739 of the Civil Code.

BELGIAN OVERSEAS CHARTERING vs PHILIPPINE FIRST INSURANCE

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.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.

COKALIONG vs UCPB GENERAL INSURANCE

The uncontroverted findings of the Philippine Coast Guard show that the M/V Tandag sank due to a fire, which resulted from a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of the crack and dripped to the heating exhaust manifold, causing the ship to burst into flames. The crack was located on the side of the fuel oil tank, which had a mere two-inch gap from the engine room walling, thus precluding constant inspection and care by the crew. Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure. May refer to Eastern Shipping Lines, Inc. v. Intermediate Appellate Court. A stipulation that limits liability is valid as long as it is not against public policy. Art. 1749. A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.’ ‘Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely and fairly agreed upon.’In this case, the stipulation limiting petitioner’s liability is not contrary to public policy. In fact, its just and reasonable character is evident. The shippers/consignees may recover the full value of the goods by the simple expedient of declaring the true value of the shipment in the Bill of Lading. Other than the payment of a higher freight, there was nothing to stop them from placing the actual value of the goods therein. In fact, they committed fraud against the common carrier by deliberately undervaluing the goods in their Bill of Lading, thus depriving the carrier of its proper and just transport fare. It is well to point out that, for assuming a higher risk (the alleged actual value of the goods) the insurance company was paid the correct higher premium by Feliciana Legaspi; while petitioner was paid a fee lower than what it was entitled to for transporting the goods that had been deliberately undervalued by the shippers in the Bill of Lading. Between the two of them, the insurer should bear the loss in excess of the value declared in the Bills of Lading.

SARKIES TOUR vs CA

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 to the person who has a right to receive them, unless the loss is due to any of the excepted causes under Art. 1734. The cause of the loss was Sarkies Tours’ 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.

VALENZUELA HARDWOOD vs CA

Private respondent had acted as a private carrier in transporting petitioner’s lauan logs. Thus, Article 1745 and other Civil Code provisions on common carriers which were cited by petitioner may not be applied unless expressly stipulated by the parties in their charter party. In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo rests solely on the charterer, exempting the ship-owner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law, morals, good customs, public order, or public policy. Indeed, their contract of private carriage is not even a contract of adhesion. We stress that in a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers. The general public enters into a contract of transportation with common carriers without a hand or a voice in the preparation thereof. The riding public merely adheres to the contract; even if the public wants to, it cannot submit its own stipulations for the approval of the common carrier. Thus, the law on common carriers extends its protective mantle against one-sided stipulations inserted in tickets, invoices or other documents over which the riding public has no understanding or, worse, no choice. Compared to the general public, a charterer in a contract of private carriage is not similarly situated. It can -- and in fact it usually does -- enter into a free and voluntary agreement. In practice, the parties in a contract of private carriage can stipulate the carrier’s obligations and liabilities over the shipment which, in turn, determine the price or consideration of the charter. Thus, a charterer, in exchange for convenience and economy, may opt to set aside the protection of the law on common carriers. When the charterer decides to exercise this option, he takes a normal business risk.

YOBIDO vs CA

The explosion of the tire is not in itself a fortuitous event. The cause of the blow-out, if due to a factory defect, improper mounting, excessive tire pressure, is not an unavoidable event. On the other hand, there may have been adverse conditions on the road that were unforeseeable and/or inevitable, which could make the blow-out a caso fortuito. The fact that the cause of the blow-out was not known does not relieve the carrier of liability. There are human factors involved in the situation. The fact that the tire was new did not imply that it was entirely free from manufacturing defects or that it was properly

mounted on the vehicle. Neither may the fact that the tire bought and used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it could not explode within five days’ use. Be that as it may, it is settled that an accident caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito that would exempt the carrier from liability for damages. A common carrier may not be absolved from liability in case of force majeure or fortuitous event alone. The common carrier must still prove that it was not negligent in causing the death or injury resulting from an accident. Having failed to discharge its duty to overthrow the presumption of negligence with clear and convincing evidence, petitioners are hereby held liable for damages

III. DEFENSES AND CONDITIONS

CENTRAL SHIPPING vs INSURANCE COMPANY

A common carrier is presumed to be at fault or negligent. It shall be liable for the loss, destruction or deterioration of its cargo, unless it can prove that the sole and proximate cause of such event is one of the causes enumerated in Article 1734 of the Civil Code, or that it exercised extraordinary diligence to prevent or minimize the loss. In the present case, the weather condition encountered by petitioner’s vessel was not a “storm” or a natural disaster comprehended in the law. Given the known weather condition prevailing during the voyage, the manner of stowage employed by the carrier was insufficient to secure the cargo from the rolling action of the sea. The carrier took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now disclaim any liability for the loss.

Human agency must be entirely excluded from the cause of injury or loss. In other words, the damaging effects blamed on the event or phenomenon must not have been caused, contributed to, or worsened by the presence of human participation. The defense of fortuitous event or natural disaster cannot be successfully made when the injury could have been avoided by human precaution. According to the boatswain’s testimony, the logs were piled properly, and the entire shipment was lashed to the vessel by cable wire. The ship captain testified that out of the 376 pieces of round logs, around 360 had been loaded in the lower hold of the vessel and 16 on deck. The logs stored in the lower hold were not secured by cable wire, because they fitted exactly from floor to ceiling. However, while they were placed side by side, there were unavoidable clearances between them owing to their round shape. Those loaded on deck were lashed together several times across by cable wire, which had a diameter of 60 millimeters, and were secured from starboard to port. The doctrine of limited liability under Article 587 of the Code of Commerce is not applicable to the present case. This rule does not apply to situations in which the loss or the injury is due to the concurrent negligence of the shipowner and the captain

EVERRETT STEAMSHIP vs CA

The controlling provisions for the issue of this case would be 1749 and 1750 of the Civil Code. The shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. The trial court’s ratiocination that private respondent could not have “fairly and freely” agreed to the limited liability clause in the bill of

lading because the said conditions were printed in small letters does not make the bill of lading invalid. In Ong Yiu vs CA the court said that “ contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. A contract limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against his own negligence. The shipper, Maruman Trading, we assume, has been extensively engaged in the trading business. It cannot be said to be ignorant of the business transactions it entered into involving the shipment of its goods to its customers. The shipper could not have known, or should know the stipulations in the bill of lading and there it should have declared a higher valuation of the goods shipped. The consignee can still be bound by the contract. private respondent (Hernandez) formally claimed reimbursement for the missing goods from petitioner and subsequently filed a case against the latter based on the very same bill of lading, it (private respondent) accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it.

CRUZ vs SUN HOLIDAYS

"The Civil Code defines "common carriers" in the following terms: Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public." "The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions. Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly considered ancillary thereto. The constancy of respondent’s ferry services in its resort operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public. That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be imprudent to suppose that it provides said services at a loss. The Court is aware of the practice of beach resort operators offering tour packages to factor the transportation fee in arriving at the tour package price. That guests who opt not to avail of respondent’s ferry services pay the same amount is likewise inconsequential. These guests may only be deemed to have overpaid.

SOUHTERN LINES vs CA

The SC held that the contention of Southern Lines with respect to the improper packing is untenable. Under Art. 361 of the Code of Commerce, the carrier, in order to free itself from liability, was only obliged to prove that the damages suffered by the goods were “by virtue of the nature or defect of the articles.” Under Art. 362, the plaintiff, in order to hold the defendant liable, was obliged to prove that the damages to the goods is by virtue of their nature, occurred on account of its negligence or because the defendant did not take the precaution adopted by careful persons. It held that if the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom. - NO. The SC noted that Southern Lines failed to plead this defense in its answer to City of Iloilo’s complaint and, therefore, the same is deemed waived and cannot be raised for the first time. The SC also cited the finding of the CA that City of Iloilo filed the action within a reasonable time; that the action is one for the refund of the amount paid in excess, and not for damages or the recovery of shortage; the bill of lading does not at all limit the time for the filing of action for the refund of money paid in excess.

IV. DURATION OF RESPONSIBILITY

SULPICIO vs FIRST LEPANTO

It cannot be denied that the shipment sustained damage while in the custody of petitioner-carrier. It is not disputed that one of the 3 crates did fall from the cargo hatch to the pier apron while petitioner-carrier was unloading the cargo from its vessel. Neither is it impugned that upon inspection, it was found that 2 cartons were torn on the side and the top flaps were open and that 2 cello bags, each of 50 pieces ferri inductors, were missing from the cargo. Petitioner-carrier contends that its liability, if any, is only to the extent of the cargo damage or loss and should not include the lack of fitness of the shipment for transport to Singapore due to the damaged packing. This is erroneous. Petitioner-carrier seems to be labor under the misapprehension that a distinction must be made between the cargo packaging and the contents of the cargo. According to it, damage to the packaging is not tantamount to damage to the cargo. It must be stressed that in the case at bar, the damage sustained by the packaging of the cargo while in petitioner-carrier’s custody resulted in its unfitness to be transported to its consignee in Singapore. Such failure to ship the cargo to its final destination because of the ruined packaging, indeed, resulted in damages on the part of the owner of the goods. The falling of the crate during the unloading is evidence of petitioner-carrier’s negligence in handling the cargo. As a common carrier, it is expected to observe extraordinary diligence in the handling of goods placed in its possession for transport. The standard of extraordinary diligence imposed upon common carriers is considerably more demanding than the standard of ordinary diligence, i.e., the diligence of a good paterfamilias established in respect of the ordinary relations between members of society. A common carrier is bound to transport its cargo and its passengers safely "as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard to all circumstances.

COASTWISE LIGHTERAGE vs CA

Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession, command mid navigation of the vessels remained with petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into a private carrier, but remained a common carrier and was still liable as such. The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. It follows then that the presumption of negligence that attaches to common carriers, once the goods it is sports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence.

PHILIPPINE FIRST INSURANCE vs WALLEM FIRST SHIPPING

Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them. For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New York v. Lopez Castelo, the Court interpreted the ship captains liability as ultimately that of the shipowner by regarding the captain as the representative of the ship owner. Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among the carriers responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. The Carrier shall not be liable of loss of or damage to the goods before loading and after discharging from the vessel, howsoever such loss or damage arises.On the other hand, the functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship's tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn

them over to the party entitled to their possession. Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or employees should observe the standards and measures necessary to prevent losses and damage to shipments under its custody.

SAMAR MINING vs NORDEUTSCHER LLOYD

In discharging the goods from the ship at the port of Manila, and delivering the same into the custody of AMCYL, the bonded warehouse, appellants were acting in full accord with the contractual stipulations contained in Bill of Lading No. 18. The delivery of the goods to AMCYL was part of appellants' duty to trans ship (meaning to transfer for further transportation from one ship or conveyance to another) the goods from Manila to their port of destination-Davao. The extent of appellant carrier's responsibility and/or liability in the trans shipment of the goods in question are spelled out and delineated under Section 1, paragraph 3 of Bill of Lading No. 18, to wit: “the carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the goods enter ship's tackle to be loaded or after the goods leave ship's tackle to be discharged, trans shipped or forwarded”. Further, in Section 11 of the same bill, it was provided that “this carrier, in making arrangements for any trans shipping or forwarding vessels or means of transportation not operated by this carrier shall be considered solely the forwarding agent of the shipper and without any other responsibility whatsoever even though the freight for the whole transport has beenc ollected by him… Pending or during forwarding or trans shipping the carrier may store the goods ashore or afloat solely as agent of the shipper…” We find merits in Nordeutscher’s contention that they are not liable for the loss of the subject goods by claiming that they have discharged the same in full and good condition unto the custody of AMCYL at the port of discharge from ship - Manila, and therefore, pursuant to the aforequoted stipulation (Sec. 11) in the bill of lading, their responsibility for the cargo had ceased. Under the New Civil Code on common carriers directs our attention to Article 1736, which reads: “The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738.” In relation to this, Article 1738 provides: “the extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.”

GANZON vs CA

There is no dispute that the scrap iron was already delivered to Ganzon’s carrier and received by Captain Niza and the crew. By the said act of delivery, the scrap iron was already deemed to be unconditionally placed in the possession and control of the common carrier and upon their receipt, the contract of carriage was deemed perfected. Consequently, petitioner-carrier’s extraordinary responsibility for the loss or deterioration of the goods commenced. According to Art 1736 of the NCC, such responsibility will only cease upon the actual or constructive delivery to the consignee or any person who has a right to receive the goods. However, in this case, the same is not true since the scrap iron remained

in the custody and control of the carrier, albeit still unloaded. Ganzon may be exempt from liability if the loss of the scrap iron was due to any of the causes enumerated under Art. 1734 of the NCC. However, Ganzon was not able to prove the same. The SC cannot sustain Ganzon’s claim that the cause of the loss was a caso fortuito considering that in the courts below, his defense was that the loss of the scrap iron was due to an “order or act of a competent public authority”. Such change in theory on appeal cannot be allowed. In any case, the intervention of the municipal officials is not of such character as would render the fulfilment of Ganzon’s obligation impossible. According to the SC, the scrap iron could have still been delivered in accordance with the contract of carriage after the dispute has been settled.

SALUDO vs CA

A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to transport and deliver them at a specified place to a person named or on his order. According to foreign and local jurisprudence, "the issuance of a bill of lading carries the presumption that the goods were delivered to the carrier issuing the bill, for immediate shipment, and it is nowhere questioned that a bill of lading is prima facie evidence of the receipt of the goods by the carrier. . . . In the absence of convincing testimony establishing mistake, recitals in the bill of lading showing that the carrier received the goods for shipment on a specified date controls. However, except as may be prohibited by law, there is nothing to prevent an inverse order of events, that is, the execution of the bill of lading even prior to actual possession and control by the carrier of the cargo to be transported. There is no law which requires that the delivery of the goods for carriage and the issuance of the covering bill of lading must coincide in point of time or, for that matter, that the former should precede the latter. As between the shipper and the carrier, when no goods have been delivered for shipment no recitals in the bill can estop the carrier from showing the true facts . . . Between the consignor of goods and receiving carrier, recitals in a bill of lading as to the goods shipped raise only a rebuttable presumption that such goods were delivered for shipment. As between the consignor and a receiving carrier, the fact must outweigh the recital."

MACAM vs CA

It is a standard maritime practice when immediate delivery is of the essence, for shipper to request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of destination without requiring presentation of bill of lading as that usually takes time. Thus, taking into account that subject shipment consisted of perishable goods and SOLIDBANK pre-paid the full amount of value thereof, it is not hard to believe the claim of respondent WALLEM that petitioner indeed requested the release of the goods to GPC without presentation of the bills of lading and bank guarantee. To implement the said telex instruction, the delivery of the shipment must be to GPC, the notify party or real importer/buyer of the goods and not the PAKISTANI BANK since the latter can very well present the original Bills of Lading in its possession. Likewise, if it were the PAKISTANI BANK to whom the cargoes were to be strictly delivered, it will no longer be proper to require a bank guarantee as a substitute for the Bill of Lading. To construe otherwise will render meaningless the telex instruction. After all, the cargoes consist of perishable fresh fruits and immediate delivery thereof the buyer/importer is essentially a factor to reckon with. We emphasize that the extraordinary responsibility of the common carriers 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 the notify 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.

V. STIPULATION LIMITING LIABILITY

PAL vs CA

For having allowed Bustamante to fly as a First Officer on January 8, 1951, defendant is guilty of gross negligence and therefore should be made liable for the resulting accident. (Even) assuming that the pilot was not sick or that the tumor did not affect the pilot in managing the plane, the evidence shows that overshooting of the runway and crash-landing at the mangrove was caused by the pilot for which acts the defendant must answer for damages caused thereby. And for the negligence of defendant’s employee, it is liable. At least, the law presumes the employer negligent imposing upon it the burden of proving that it exercised the diligence of a good father of a family in the supervision of its employees. As defined in Art. 1732, NCC, petitioner is a common carrier. The law is clear in requiring a common carrier to exercise the highest degree of care in the discharge of its duty and business of carriage and transportation under Art. 1733, 1755 and 1756, NCC. The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the members of the crew or the complement operating the carrier, the airplane in the case at bar. And this must be so for any omission, lapse or neglect thereof will certainly result to the damage, prejudice, nay injuries and even death to all aboard the plane, passengers and crew members alike.

CATHAY PACIFIC vs CA

Cathay failed to deliver his luggage at the designated place and time, it being the obligation of a common carrier to carry its passengers and their luggage safely to their destination, which includes the duty not to delay their transportation. It was not even aware that the luggage was left behind until its attention was called by the Hongkong Customs authorities. It also refused to deliver the luggage at his hotel and required him to pick it up with an official of the Philippine Embassy. The Cathay employees were also discourteous, rude, and insulting. He was simply advised to buy anything he wanted with only $20.00 which was certainly not enough to purchase comfortable clothing appropriate for an executive conference. Cathay’s agents only replied, "What can we do, the baggage is missing. I cannot do anything . . . Anyhow, you can buy anything you need, charged to Cathay Pacific." Further, Cathay contends that the extent of its liability should be limited absolutely to that set forth in the Warsaw Convention. The said treaty does not operate as an exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable for damages in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and other pertinent laws. It

does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if wilfull misconduct on the part of the carrier's employees is found or established, as in this case.

TRANS ASIA SHIPPING vs CA

Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the vessel’s engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code.

SWEET LINE vs TEVEZ

Condition No. 14 is a contract of adhesion (drafted only by one party (corporation), and is sought to be accepted or adhered by the other party who cannot change the same and who are thus made to adhere thereto on the take it or leave it basis). The validity and enforceability of a contract of adhesion will have to be determined by the peculiar circumstances and the nature of the conditions or terms sought to be enforced. Condition No. 14 is void and unenforceable: 1. It is not just and fair to bind passengers to the terms of conditions printed at the back of the tickets; 2. It subverts the public policy on transfer of venue of proceedings, since it will prejudice rights and interests of innumerable passengers located in different places of the country who will have to file suits against petitioner only in Cebu City. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice.

VI. AMOUNT OF LIABILITY

YSMAEL vs BARRETTO

The goods in question were shipped from Manila on October 25, 1922, to be delivered to Salomon Sharuff in Surigao, plaintiff’s original complaint was filed on April 17, 1923, or a little less than 6 months after the shipment was made. The action was brought with a “reasonable time.” It is true that both the plaintiff and the defendants are residents of Manila, but it is also true that Surigao where the goods in question were to be delivered is one of the most distant places from Manila. In the very nature of the things, plaintiff would not want to commence its action until such time as it had made a full and careful investigation of all of the material facts and even the law of the case, so as to determine whether

or not defendants were liable for its loss. The validity of the stipulations limiting carrier’s liability is to be determined by their reasonableness and their conformity to the sound public policy. It cannot lawfully stipulate for exemption from liability, unless such exemption is just and reasonable, and unless the contract is freely and fairly made. The evidence shows that 164 cases were shipped, and that the value of each case was very near P2,500. In this situation, the limit of defendants’ liability for each case of silk for loss or damage from any cause or for any reason would put it in the power of the defendants to have taken the whole cargo of 164 cases of silk at a valuation of P300 for each case, or less that 1/8 of its actual value. If that rule should be sustained, no silk would ever be shipped from one island to another in the Philippines. Such limitation of value is unconscionable and void as against public policy.

SHEWARAM vs PAL

Article 1750 of the NCC provides that the pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is required, however, that the contract must be “reasonable and just under the circumstances and has been fairly agreed upon.” In the case at bar, the requirements have not been met. It cannot be said that the appellee had actually entered into a contract with the appellant, embodying the conditions as printed at the back of the ticket stub that was issued by the appellant to the appellee. The fact that those conditions are printed at the back of the tickets stub in letters so small that they are hard to read would not warrant the presumption that the appellee was aware of those conditions such that he had fairly and freely agreed to those conditions. The liability of the appellant should be governed by the provisions of Article 1734 and 1735 of the NCC. It having been clearly found by the trial court that the transistor radio and the camera of the appellee were lost as a result of the negligence of the appellant as a common carrier, the liability of the appellant is clear- it must pay the appellee the value of those articles

ONG YIU vs PAL

PAL did not act in bad faith means a breach of a known duty though some motive of interest or ill will. It was the duty of PAL to look for petitioner’s luggage which had been miscarried. PAL exerted due diligence in complying with such duty. In the absence of a wrongful act or omission or fraud or bad faith, petitioner is not entitled to moral damages. Petitioner is neither entitled to exemplary damages. It can be granted if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, which has not been proven in this case. Petitioner further contends that respondent court committed grave error when it limited PAL’s carriage liability to the amount of P100 as stipulated at the back of the ticket; and that there is nothing in the evidence to show that he actually entered into a contract with PAL limiting the latter’s liability for the loss or delay of the baggage of its passengers. While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by the provisions thereof. Such provisions have been held to be part of the contract of carriage and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation. It is what is known as contract of adhesion wherein one party imposes a readymade form of contract on the other. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent

SEALAND SERVICES vs IAC

The stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the justness and fairness of the law itself, and this the private respondent does not pretend to do. But over and above that consideration, the just and reasonable character of such stipulation is implicit in it giving the shipper or owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient of declaring the nature and value of the shipment in the bill of lading. There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for loss of, or damage to, goods being transported under said bill, although that document may have been drawn up only by the consignor and the carrier without the intervention of the consignee. Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage so governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65.

CITADEL LINES vs CA

A stipulation limiting the liability of the carrier to the value of goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Further, a contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon. The Consignee itself admits in its memorandum that the value of goods shipped does not appear in the bills of lading. Hence, the stipulation on the carrier’s limited liability applies.

Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. If the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extra ordinary diligence as required in Article 1733 of the Civil Code. The duty of the consignee is to prove merely that the goods were lost. Thereafter, the burden is shifted to the carrier to prove that it has exercised the extraordinary diligence required by law. And, its extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has the right to receive them.

Considering, therefore, that the subject shipment was lost while it was still in the custody of the CARRIER, and considering further that it failed to prove that the loss was occasioned by an excepted cause, the inescapable conclusion is that the CARRIER was negligent and should be held liable.

VII. PASSENGER’S BAGGAGE

QUISIMBING vs CA

Hijackers do not board an airplane through blatant display of firepower. Firearms and grenades are brought to the plane surreptitiously. The use of the most sophisticated electronic detection devices may have minimized hijacking but still ineffective against truly determined hijackers. The evidence fail to prove any want of diligence on the part of PAL or it had failed to comply with the applicable regulations or universally accepted and observed procedures to preclude highjacking; and the particular act singled out by the petitioners is not negligent acts sufficient to overcome the force majeure nature of armed robbery.

PANAM VS RAPARADAS

The Notice and paragraph 2 of the “Conditions of Contract” (which provides that carriage is subject to rules and limitations established by the Warsaw Convention) should be sufficient notice showing the applicability of the Warsaw limitation. It is not required under the Warsaw Convention that there be a detailed notice of baggage liability limitation in the passenger ticket. Contracts of adhesion, such as the one involved here, are not entirely prohibited, unless there are facts and circumstances showing its one-sided nature. This does not obtain here. Passengers are 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. Had Mr. Rapadas not wavered in his decision to register his luggage, he could have had enough time to disclose the true worth of the articles in it and pay the extra charges or remove them from the checked-in-luggage. Unless the contents are declared, it will always be the word of a passenger against that of the airline. If the loss of life or property is caused by the gross negligence or arbitrary acts of the airline or the contents of the lost luggage are proved by satisfactory evidence other than the self-serving declarations of one party, the Court will not hesitate to disregard the fine print in a contract of adhesion. Otherwise, the contract would have to be enforced, as it is the only reasonable basis to arrive at a just award.

BRITISH AIRWAYS vs CA

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 travelling 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. Admittedly, in a contract of air carriage a declaration by the passenger of a higher value is needed to recover a greater amount. 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. Given the foregoing postulates, the inescapable conclusion is that BA had waived the defense of limited liability when itallowed Mahtani to testify as to the actual damages he incurred due to the misplacement of his

luggage, without anyobjection. Indeed, it is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse party to be inadmissible for any reason, the latter has the right to object. However, such right is a mere privilege which can be waived. Necessarily, the objection must be made at the earliest opportunity, lest silence when there is opportunity to speak may operate as a waiver of objections. BA has precisely failed in this regard. To compound matters for BA, its counsel failed, not only to interpose a timely objection, but even conducted his own cross-examination as well.