Professional Documents
Culture Documents
Transpo - Prelims Reviewer
Transpo - Prelims Reviewer
Laman officials or employees of the airline or other special injury Certainly, the compensation for the injury suffered by Dr.
sustained by the passenger. Pablo cannot under the circumstances be restricted to that
1. NCC – Civil Code Art 1732 – 1766 prescribed by the Warsaw Convention for delay in the
On the other hand, the Warsaw Convention has invariably
transport of baggage.
been held inapplicable, or as not restrictive of the carrier's
Common Carriers Introduction – Cases: liability, where there was satisfactory evidence of malice or
bad faith attributable to its officers and employees. 29 Thus, AMERICAN HOME ASSURANCE, COMPANY, petitioner,
an air carrier was sentenced to pay not only compensatory vs.
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT THE COURT OF APPEALS and NATIONAL MARINE
but also moral and exemplary damages, and attorney's fees,
and FELIPA E. PABLO, Respondents. G.R. No. 71929 CORPORATION and/or NATIONAL MARINE CORPORATION
for instance, where its employees rudely put a passenger
: December 4, 1990 (Manila), respondents. G.R. No. 94149 May 5, 1992
holding a first-class ticket in the tourist or economy
section, 30 or ousted a brown Asiatic from the plane to give
The Convention does not thus operate as an exclusive his seat to a white man, 31 or gave the seat of a passenger National Development Co. v. C.A. (164 SCRA 593 [1988];
enumeration of the instances of an airline's liability, or as an with a confirmed reservation to another, 32 or subjected a citing Eastern Shipping Lines, Inc. v. I.A.C., 150 SCRA 469, 470
absolute limit of the extent of that liability. Such a passenger to extremely rude, even barbaric treatment, as by [1987] --- "the law of the country to which the goods are to
proposition is not borne out by the language of the calling him a "monkey." 33 be transported persons the liability of the common carrier in
Convention, as this Court has now, and at an earlier time, case of their loss, destruction or deterioration." (Article 1753,
pointed out. 25 Moreover, slight reflection readily leads to In the case at bar, no bad faith or otherwise improper
Civil Code). Thus, for cargoes transported to the Philippines
the conclusion that it should be deemed a limit of liability conduct may be ascribed to the employees of petitioner
as in the case at bar, the liability of the carrier is governed
only in those cases where the cause of the death or injury to airline; and Dr. Pablo's luggage was eventually returned to
primarily by the Civil Code and in all matters not regulated
person, or destruction, loss or damage to property or delay her, belatedly, it is true, but without appreciable damage. The
by said Code, the rights and obligations of common carrier
in its transport is not attributable to or attended by any wilful fact is, nevertheless, that some special species of injury was
shall be governed by the Code of Commerce and by special
misconduct, bad faith, recklessness, or otherwise improper caused to Dr. Pablo because petitioner ALITALIA misplaced
laws (Article 1766, Civil Code).
conduct on the part of any official or employee for which the her baggage and failed to deliver it to her at the time
carrier is responsible, and there is otherwise no special or appointed — a breach of its contract of carriage, to be sure
extraordinary form of resulting injury. The Convention's — with the result that she was unable to read the paper and Under Article 1733 of the Civil Code, common carriers from
provisions, in short, do not "regulate or exclude liability for make the scientific presentation (consisting of slides, the nature of their business and for reasons of public policy
other breaches of contract by the carrier" 26 or misconduct autoradiograms or films, tables and tabulations) that she had are bound to observe extraordinary diligence in the vigilance
of its officers and employees, or for some particular or painstakingly labored over, at the prestigious international over the goods and for the safety of passengers transported
exceptional type of damage. Otherwise, "an air carrier would conference, to attend which she had traveled hundreds of by them according to all circumstances of each case. Thus,
be exempt from any liability for damages in the event of its miles, to her chagrin and embarrassment and the under Article 1735 of the same Code, in all cases other than
absolute refusal, in bad faith, to comply with a contract of disappointment and annoyance of the organizers. She felt, those mentioned in Article 1734 thereof, the common carrier
carriage, which is absurd." 27 Nor may it for a moment be not unreasonably, that the invitation for her to participate at shall be presumed to have been at fault or to have acted
supposed that if a member of the aircraft complement the conference, extended by the Joint FAO/IAEA Division of negligently, unless it proves that it has observed the
should inflict some physical injury on a passenger, or Atomic Energy in Food and Agriculture of the United extraordinary diligence required by law (Ibid., p. 595).
maliciously destroy or damage the latter's property, the Nations, was a singular honor not only to herself, but to the
Convention might successfully be pleaded as the sole gauge University of the Philippines and the country as well, an Common carriers cannot limit their liability for injury or loss
to determine the carrier's liability to the passenger. Neither opportunity to make some sort of impression among her of goods where such injury or loss was caused by its own
may the Convention be invoked to justify the disregard of colleagues in that field of scientific activity. The opportunity negligence. Otherwise stated, the law on averages under the
some extraordinary sort of damage resulting to a passenger to claim this honor or distinction was irretrievably lost to her Code of Commerce cannot be applied in determining liability
and preclude recovery therefor beyond the limits set by said because of Alitalia's breach of its contract. where there is negligence (Ibid., p. 606).
Convention. It is in this sense that the Convention has been Hence, it is but reasonable to conclude that the issue of
Apart from this, there can be no doubt that Dr. Pablo
applied, or ignored, depending on the peculiar facts negligence must first be addressed before the proper
underwent profound distress and anxiety, which gradually
presented by each case. provisions of the Code of Commerce on the extent of liability
turned to panic and finally despair, from the time she learned
may be applied.
In Pan American World Airways, Inc. v. I.A.C., 28 for example, that her suitcases were missing up to the time when, having
the Warsaw Convention was applied as regards the limitation gone to Rome, she finally realized that she would no longer
on the carrier's liability, there being a simple loss of baggage be able to take part in the conference. As she herself put it, Instead of presenting proof of the exercise of extraordinary
without any otherwise improper conduct on the part of the she "was really shocked and distraught and confused." diligence as required by law, National Marine Corporation
(NMC) filed its Motion to Dismiss dated August 7, 1989,
Page 1 of 47
hypothetically admitting the truth of the facts alleged in the diligence and precaution which the law requires a common business of carrying or transporting passengers or goods or
complaint to the effect that the loss or damage to the 122 carrier to exercise and to follow in order to avoid damage to both, by land, water, or air, for compensation, offering their
bales was due to the negligence or fault of NMC. Such being or destruction of the goods entrusted to it for safe carriage services to the public." It has been held that the true test of a
the case, it is evident that the Code of Commerce provisions and delivery. common carrier is the carriage of passengers or goods,
on averages cannot apply. It is to be noted that the Civil Code does not limit the liability provided it has space, for all who opt to avail themselves of
of the common carrier to a fixed amount per package. In all its transportation service for a fee.11 A carrier which does not
On the other hand, Article 1734 of the Civil Code provides matters not regulated by the Civil Code, the rights and qualify under the above test is deemed a private carrier.
that common carriers are responsible for loss, destruction or obligations of common carriers are governed by the Code of "Generally, private carriage is undertaken by special
deterioration of the goods, unless due to any of the causes Commerce and special laws. Thus, the COGSA supplements agreement and the carrier does not hold himself out to carry
enumerated therein. It is obvious that the case at bar does the Civil Code by establishing a provision limiting the goods for the general public. The most typical, although not
not fall under any of the exceptions. Thus, American Home carrier's liability in the absence of a shipper's declaration of a the only form of private carriage, is the charter party, a
Assurance Company is entitled to reimbursement of what it higher value in the bill of lading.30 Section 4(5) of the COGSA maritime contract by which the charterer, a party other than
paid to Mayleen Paper, Inc. as insurer. provides: the shipowner, obtains the use and service of all or some
(5) Neither the carrier nor the ship shall in any event be or part of a ship for a period of time or a voyage or voyages."12
become liable for any loss or damage to or in connection
UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., with the transportation of goods in an amount exceeding
PETITIONER, vs. COURT OF APPEALS AND PIONEER In the instant case, it is undisputed that VSI did not offer its
$500 per package of lawful money of the United States, or in services to the general public. As found by the Regional Trial
INSURANCE AND SURETY CORPORATION, RESPONDENTS. case of goods not shipped in packages, per customary
G.R. No. 166250 : July 26, 2010 Court, it carried passengers or goods only for those it chose
freight unit, or the equivalent of that sum in other currency, under a "special contract of charter party." 13 As correctly
unless the nature and value of such goods have been concluded by the Court of Appeals, the MV Vlasons I "was
A freight forwarder's liability is limited to damages arising declared by the shipper before shipment and inserted in the not a common but a private carrier."14Consequently, the
from its own negligence, including negligence in choosing bill of lading. This declaration, if embodied in the bill of rights and obligations of VSI and NSC, including their
the carrier; however, where the forwarder contracts to deliver lading, shall be prima facie evidence, but shall not be respective liability for damage to the cargo, are determined
goods to their destination instead of merely arranging for conclusive on the carrier. primarily by stipulations in their contract of private carriage
their transportation, it becomes liable as a common carrier or charter party.15 Recently, in Valenzuela Hardwood and
for loss or damage to goods. A freight forwarder assumes Industrial Supply, Inc., vs. Court of Appeals and Seven
the responsibility of a carrier, which actually executes the In the present case, the shipper did not declare a higher Brothers Shipping Corporation,16 the Court ruled:
transport, even though the forwarder does not carry the valuation of the goods to be shipped. Contrary to the CA's
merchandise itself. conclusion, the insertion of the words "L/C No. LC No. 1- . . . in a contract of private carriage, the parties may freely
187-008394/ NY 69867 covering shipment of raw materials stipulate their duties and obligations which perforce would
Undoubtedly, UTI is liable as a common carrier. Common for pharmaceutical Mfg. x x x" cannot be the basis of be binding on them. Unlike in a contract involving a common
carriers, as a general rule, are presumed to have been at fault petitioner's liability.31 Furthermore, the insertion of an carrier, private carriage does not involve the general public.
or negligent if the goods they transported deteriorated or invoice number does not in itself sufficiently and Hence, the stringent provisions of the Civil Code on common
got lost or destroyed. That is, unless they prove that they convincingly show that petitioner had knowledge of the carriers protecting the general public cannot justifiably be
exercised extraordinary diligence in transporting the goods. value of the cargo. applied to a ship transporting commercial goods as a private
In order to avoid responsibility for any loss or damage, carrier. Consequently, the public policy embodied therein is
therefore, they have the burden of proving that they NATIONAL STEEL CORPORATION, petitioner, vs. COURT OF not contravened by stipulations in a charter party that lessen
observed such diligence.27 Mere proof of delivery of the APPEALS AND VLASONS SHIPPING, INC., respondents. G.R. or remove the protection given by law in contracts involving
goods in good order to a common carrier and of their arrival No. 112287 December 12, 1997 common carriers.
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, loss, or At the outset, it is essential to establish whether VSI Because the MV Vlasons I was a private carrier, the
destruction of the goods happened, the transporter shall be contracted with NSC as a common carrier or as a private shipowner's obligations are governed by the foregoing
held responsible. carrier. The resolution of this preliminary question provisions of the Code of Commerce and not by the Civil
determines the law, standard of diligence and burden of Code which, as a general rule, places the prima facie
proof applicable to the present case. presumption of negligence on a common carrier. It is a
Petitioner failed to rebut the prima facie presumption of hornbook doctrine that:
negligence in the carriage of the subject shipment. Further,
petitioner failed to prove that it observed the extraordinary Article 1732 of the Civil Code defines a common carrier as
"persons, corporations, firms or associations engaged in the
Page 2 of 47
In an action against a private carrier for loss of, or injury to, one wherein the carriage is generally undertaken by special supplementary sum if the case so requires. In that case the
cargo, the burden is on the plaintiff to prove that the carrier agreement and it does not hold itself out to carry goods for carrier will be liable to pay a sum not exceeding the declared
was negligent or unseaworthy, and the fact that the goods the general public.28 A common carrier becomes a private sum, unless he proves that the sum is greater than the actual
were lost or damaged while in the carrier's custody does not carrier when it undertakes to carry a special cargo or value to the consignor at delivery.
put the burden of proof on the carrier. chartered to a special person only.29 For all intents and
purposes, therefore, Reputable operated as a private/special American jurisprudence provides that an air carrier is not
Since . . . a private carrier is not an insurer but undertakes carrier with regard to its contract of carriage with Wyeth. liable for the loss of baggage in an amount in excess of the
only to exercise due care in the protection of the goods limits specified in the tariff which was filed with the proper
committed to its care, the burden of proving negligence or a The extent of a private carrier’s obligation is dictated by the authorities, such tariff being binding, on the passenger
breach of that duty rests on plaintiff and proof of loss of, or stipulations of a contract it entered into, provided its regardless of the passenger's lack of knowledge thereof or
damage to, cargo while in the carrier's possession does not stipulations, clauses, terms and conditions are not contrary to assent thereto.20 This doctrine is recognized in this
cast on it the burden of proving proper care and diligence on law, morals, good customs, public order, or public policy. jurisdiction.21
its part or that the loss occurred from an excepted cause in "The Civil Code provisions on common carriers should not be
the contract or bill of lading. However, in discharging the applied where the carrier is not acting as such but as a Notwithstanding the foregoing, we have, nevertheless, ruled
burden of proof, plaintiff is entitled to the benefit of the private carrier. Public policy governing common carriers has against blind reliance on adhesion contracts where the facts
presumptions and inferences by which the law aids the bailor no force where the public at large is not involved."30 and circumstances justify that they should be disregarded.22
in an action against a bailee, and since the carrier is in a
better position to know the cause of the loss and that it was Thus, being a private carrier, the extent of Reputable’s
not one involving its liability, the law requires that it come In addition, we have held that benefits of limited liability are
liability is fully governed by the stipulations of the contract of subject to waiver such as when the air carrier failed to raise
forward with the information available to it, and its failure to carriage, one of which is that it shall be liable to Wyeth for
do so warrants an inference or presumption of its liability. timely objections during the trial when questions and
the loss of the goods/products due to any and all causes answers regarding the actual claims and damages sustained
However, such inferences and presumptions, while they may whatsoever, including theft, robbery and other force majeure
affect the burden of coming forward with evidence, do not by the passenger were asked.23
while the goods/products are in transit and until actual
alter the burden of proof which remains on plaintiff, and, delivery to Wyeth’s customers, salesmen and dealers.
where the carrier comes forward with evidence explaining Given the foregoing postulates, the inescapable conclusion is
the loss or damage, the burden of going forward with the that BA had waived the defense of limited liability when it
evidence is again on plaintiff. BRITISH AIRWAYS, petitioner, vs. COURT OF APPEALS, GOP allowed Mahtani to testify as to the actual damages he
MAHTANI, and PHILIPPINE AIRLINES, respondents. G.R. No. incurred due to the misplacement of his luggage, without
121824 January 29, 1998 any objection.
Where the action is based on the shipowner's warranty of
seaworthiness, the burden of proving a breach thereof and
that such breach was the proximate cause of the damage The nature of an airline's contract of carriage partakes of two Undeniably, for the loss of his luggage, Mahtani is entitled to
rests on plaintiff, and proof that the goods were lost or types, namely: a contract to deliver a cargo or merchandise damages from BA, in view of their contract of carriage. Yet,
damaged while in the carrier's possession does not cast on it to its destination and a contract to transport passengers to BA adamantly disclaimed its liability and instead imputed it
the burden of proving seaworthiness. . . . Where the contract their destination. A business intended to serve the traveling to PAL which the latter naturally denies. In other words, BA
of carriage exempts the carrier from liability for public primarily, it is imbued with public interest, hence, the and PAL are blaming each other for the incident.
unseaworthiness not discoverable by due diligence, the law governing common carriers imposes an exacting
carrier has the preliminary burden of proving the exercise of standard.14 Neglect or malfeasance by the carrier's
employees could predictably furnish bases for an action for Since the instant petition was based on breach of contract of
due diligence to make the vessel seaworthy. carriage, Mahtani can only sue BA alone, and not PAL, since
damages.
the latter was not a party to the contract. However, this is not
MALAYAN INSURANCE CO., INC., Petitioner, vs. PHILIPPINES to say that PAL is relieved from any liability due to any of its
FIRST INSURANCE CO., INC. and REPUTABLE FORWARDER Admittedly, in a contract of air carriage a declaration by the negligent acts.
SERVICES, INC., Respondents. G.R. No. 184300 July 11, 2012 passenger of a higher value is needed to recover a greater
amount. Article 22(1) of the Warsaw Convention,19 provides
as follows: (2) In the transportation of checked baggage and PEDRO DE GUZMAN, petitioner, vs. COURT OF APPEALS and
Under Article 1732 of the Civil Code, common carriers are goods, the liability of the carrier shall be limited to a sum of ERNESTO CENDANA, respondents. G.R. No. L-47822
persons, corporations, firms, or associations engaged in the 250 francs per kilogram, unless the consignor has made, at December 22, 1988
business of carrying or transporting passenger or goods, or time the package was handed over to the carrier, a special
both by land, water or air for compensation, offering their declaration of the value at delivery and has paid a
services to the public. On the other hand, a private carrier is
Page 3 of 47
Article 1732. Common carriers are persons, corporations, whether or not such carrier has also complied with the provided that they shall have complied with the rigorous
firms or associations engaged in the business of carrying or requirements of the applicable regulatory statute and standard of extraordinary diligence.
transporting passengers or goods or both, by land, water, or implementing regulations and has been granted a certificate
air for compensation, offering their services to the public. of public convenience or other franchise. To exempt private We, therefore, agree with the result reached by the Court of
respondent from the liabilities of a common carrier because Appeals that private respondent Cendana is not liable for the
The above article makes no distinction between one he has not secured the necessary certificate of public value of the undelivered merchandise which was lost because
whose principal business activity is the carrying of persons or convenience, would be offensive to sound public policy; that of an event entirely beyond private respondent's control.
goods or both, and one who does such carrying only as would be to reward private respondent precisely for failing to
an ancillary activity (in local Idiom as "a sideline"). Article comply with applicable statutory requirements. The business
of a common carrier impinges directly and intimately upon FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, vs.
1732 also carefully avoids making any distinction between a COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN,
person or enterprise offering transportation service on the safety and well being and property of those members of
the general community who happen to deal with such carrier. BATANGAS CITY and ADORACION C. ARELLANO, in her
a regular or scheduled basis and one offering such service on official capacity as City Treasurer of Batangas, respondents.
an occasional, episodic or unscheduled basis. Neither does The law imposes duties and liabilities upon common carriers
for the safety and protection of those who utilize their G.R. No. 125948 December 29, 1998
Article 1732 distinguish between a carrier offering its services
to the "general public," i.e., the general community or services and the law cannot allow a common carrier to
population, and one who offers services or solicits business render such duties and liabilities merely facultative by simply A "common carrier" may be defined, broadly, as one who
only from a narrow segment of the general population. We failing to obtain the necessary permits and authorizations. holds himself out to the public as engaged in the business of
think that Article 1733 deliberaom making such distinctions. transporting persons or property from place to place, for
Common carriers, "by the nature of their business and for compensation, offering his services to the public generally.
So understood, the concept of "common carrier" under reasons of public policy" 2 are held to a very high degree of
Article 1732 may be seen to coincide neatly with the notion care and diligence ("extraordinary diligence") in the carriage ***Petitioner is a grantee of a pipeline concession under
of "public service," under the Public Service Act of goods as well as of passengers. The specific import of Republic Act No. 387, as amended, to contract, install and
(Commonwealth Act No. 1416, as amended) which at least extraordinary diligence in the care of goods transported by a operate oil pipelines.
partially supplements the law on common carriers set forth in common carrier is, according to Article 1733, "further
the Civil Code. Under Section 13, paragraph (b) of the Public expressed in Articles 1734,1735 and 1745, numbers 5, 6 and Art. 1732 of the Civil Code defines a "common carrier" as
Service Act, "public service" includes: ... every person that 7" of the Civil Code. "any person, corporation, firm or association engaged in the
now or hereafter may own, operate, manage, or control in business of carrying or transporting passengers or goods or
the Philippines, for hire or compensation, with general or Specific requirements of the duty of extraordinary diligence both, by land, water, or air, for compensation, offering their
limited clientele, whether permanent, occasional or in the vigilance over the goods carried in the specific context services to the public."
accidental, and done for general business purposes, any of hijacking or armed robbery: Under Article 1745 (6) above,
common carrier, railroad, street railway, traction railway, a common carrier is held responsible — and will not be The test for determining whether a party is a common carrier
subway motor vehicle, either for freight or passenger, or allowed to divest or to diminish such responsibility — even of goods is: 1. He must be engaged in the business of
both, with or without fixed route and whatever may be its for acts of strangers like thieves or robbers, except where carrying goods for others as a public employment, and must
classification, freight or carrier service of any class, express such thieves or robbers in fact acted "with grave or hold himself out as ready to engage in the transportation of
service, steamboat, or steamship line, pontines, ferries and irresistible threat, violence or force." We believe and so hold goods for person generally as a business and not as a casual
water craft, engaged in the transportation of passengers or that the limits of the duty of extraordinary diligence in the occupation; 2. He must undertake to carry goods of the kind
freight or both, shipyard, marine repair shop, wharf or dock, vigilance over the goods carried are reached where the to which his business is confined; 3. He must undertake to
ice plant, goods are lost as a result of a robbery which is attended by carry by the method by which his business is conducted and
ice-refrigeration plant, canal, irrigation system, gas, electric "grave or irresistible threat, violence or force." over his established roads; and 4. The transportation must be
light, heat and power, water supply and power petroleum, for hire. 15
sewerage system, wire or wireless communications systems, In these circumstances, we hold that the occurrence of the
wire or wireless broadcasting stations and other similar loss must reasonably be regarded as quite beyond the Based on the above definitions and requirements, there is no
public services. ... (Emphasis supplied) control of the common carrier and properly regarded as a doubt that petitioner is a common carrier. It is engaged in
fortuitous event. It is necessary to recall that even common the business of transporting or carrying goods, i.e. petroleum
A certificate of public convenience is not a requisite for the carriers are not made absolute insurers against all risks of products, for hire as a public employment. It undertakes to
incurring of liability under the Civil Code provisions travel and of transport of goods, and are not held liable for carry for all persons indifferently, that is, to all persons who
governing common carriers. That liability arises the moment acts or events which cannot be foreseen or are inevitable, choose to employ its services, and transports the goods by
a person or firm acts as a common carrier, without regard to land and for compensation. The fact that petitioner has a
Page 4 of 47
limited clientele does not exclude it from the definition of a Under the Petroleum Act of the Philippines (Republic Act and one who does such carrying only as an ancillary activity.
common carrier. In De Guzman vs. Court of Appeals 16we 387), petitioner is considered a "common carrier." Thus, We also did not distinguish between a person or enterprise
ruled that: The above article (Art. 1732, Civil Code) makes no Article 86 thereof provides that: Art. 86. Pipe line offering transportation service on a regular or scheduled
distinction between one whose principal business activity is concessionaire as common carrier. — A pipe line shall have basis and one offering such service on an occasional,
the carrying of persons or goods or both, and one who does the preferential right to utilize installations for the episodic or unscheduled basis. Further, we ruled that Article
such carrying only as an ancillary activity (in local idiom, as a transportation of petroleum owned by him, but is obligated 1732 does not distinguish between a carrier offering its
"sideline"). Article 1732 . . . avoids making any distinction to utilize the remaining transportation capacity pro rata for services to the general public, and one who offers services or
between a person or enterprise offering transportation the transportation of such other petroleum as may be solicits business only from a narrow segment of the general
service on a regular or scheduled basis and one offering such offered by others for transport, and to charge without population.
service on an occasional, episodic or unscheduled basis. discrimination such rates as may have been approved by the
Neither does Article 1732 distinguish between a carrier Secretary of Agriculture and Natural Resources. In the case at bar, the principal business of the petitioner is
offering its services to the "general public," i.e., the general that of lighterage and drayage22 and it offers its barges to
community or population, and one who offers services or Republic Act 387 also regards petroleum operation as a the public for carrying or transporting goods by water for
solicits business only from a narrow segment of the general public utility. Pertinent portion of Article 7 thereof provides: compensation. Petitioner is clearly a common carrier. In De
population. We think that Article 1877 deliberately refrained that everything relating to the exploration for and Guzman, supra,23 we considered private respondent Ernesto
from making such distinctions. So understood, the concept exploitation of petroleum . . . and everything relating to the Cendaña to be a common carrier even if his principal
of "common carrier" under Article 1732 may be seen to manufacture, refining, storage, or transportation by special occupation was not the carriage of goods for others, but that
coincide neatly with the notion of "public service," under the methods of petroleum, is hereby declared to be a public of buying used bottles and scrap metal in Pangasinan and
Public Service Act (Commonwealth Act No. 1416, as utility. (Emphasis Supplied) selling these items in Manila.
amended) which at least partially supplements the law on
common carriers set forth in the Civil Code. Under Section
13, paragraph (b) of the Public Service Act, "public service" The Bureau of Internal Revenue likewise considers the We therefore hold that petitioner is a common carrier
includes: every person that now or hereafter may own, petitioner a "common carrier." In BIR Ruling No. 069-83, it whether its carrying of goods is done on an irregular rather
operate. manage, or control in the Philippines, for hire or declared: . . . since [petitioner] is a pipeline concessionaire than scheduled manner, and with an only limited clientele. A
compensation, with general or limited clientele, whether that is engaged only in transporting petroleum products, it is common carrier need not have fixed and publicly known
permanent, occasional or accidental, and done for general considered a common carrier under Republic Act No. 387 . . . routes. Neither does it have to maintain terminals or issue
business purposes, any common carrier, railroad, street . Such being the case, it is not subject to withholding tax tickets.
railway, traction railway, subway motor vehicle, either for prescribed by Revenue Regulations No. 13-78, as amended.
freight or passenger, or both, with or without fixed route and To be sure, petitioner fits the test of a common carrier as laid
whatever may be its classification, freight or carrier service of From the foregoing disquisition, there is no doubt that down in Bascos vs. Court of Appeals.24 The test to determine
any class, express service, steamboat, or steamship line, petitioner is a "common carrier" and, therefore, exempt from a common carrier is "whether the given undertaking is a part
pontines, ferries and water craft, engaged in the the business tax. of the business engaged in by the carrier which he has held
transportation of passengers or freight or both, shipyard, out to the general public as his occupation rather than the
marine repair shop, wharf or dock, ice plant, ice-refrigeration ASIA LIGHTERAGE AND SHIPPING, INC., petitioner, quantity or extent of the business transacted."25 In the case
plant, canal, irrigation system gas, electric light heat and vs. COURT OF APPEALS and PRUDENTIAL GUARANTEE AND at bar, the petitioner admitted that it is engaged in the
power, water supply andpower petroleum, sewerage system, ASSURANCE, INC., respondents. G.R. No. 147246 August 19, business of shipping and lighterage,26 offering its barges to
wire or wireless communications systems, wire or wireless 2003 the public, despite its limited clientele for carrying or
broadcasting stations and other similar public services. transporting goods by water for compensation.27
(Emphasis Supplied)
Article 1732 of the Civil Code defines common carriers as
persons, corporations, firms or associations engaged in the Common carriers are bound to observe extraordinary
As correctly pointed out by petitioner, the definition of business of carrying or transporting passengers or goods or diligence in the vigilance over the goods transported by
"common carriers" in the Civil Code makes no distinction as both, by land, water, or air, for compensation, offering their them.28 They are presumed to have been at fault or to have
to the means of transporting, as long as it is by land, water or services to the public. acted negligently if the goods are lost, destroyed or
air. It does not provide that the transportation of the deteriorated.29 To overcome the presumption of negligence
passengers or goods should be by motor vehicle. In fact, in in the case of loss, destruction or deterioration of the goods,
In De Guzman vs. Court of Appeals,21 we held that the the common carrier must prove that it exercised
the United States, oil pipe line operators are considered
definition of common carriers in Article 1732 of the Civil extraordinary diligence. There are, however, exceptions to
common carriers. 17
Code makes no distinction between one whose principal this rule. Article 1734 of the Civil Code enumerates the
business activity is the carrying of persons or goods or both,
Page 5 of 47
instances when the presumption of negligence does not Accordingly, the petitioner cannot invoke the occurrence of " x x x every person that now or hereafter may own, operate,
attach: the typhoon as force majeure to escape liability for the loss manage, or control in the Philippines, for hire or
sustained by the private respondent. Surely, meeting a compensation, with general or limited clientele, whether
Art. 1734. Common carriers are responsible for the loss, typhoon head-on falls short of due diligence required from a permanent, occasional or accidental, and done for general
destruction, or deterioration of the goods, unless the same is common carrier. More importantly, the officers/employees business purposes, any common carrier, railroad, street
due to any of the following causes only: themselves of petitioner admitted that when the towing bits railway, traction railway, subway motor vehicle, either for
of the vessel broke that caused its sinking and the total loss freight or passenger, or both, with or without fixed route and
of the cargo upon reaching the Pasig River, it was no longer whatever may be its classification, freight or carrier service of
(1) Flood, storm, earthquake, lightning, or other natural affected by the typhoon. The typhoon then is not the any class, express service, steamboat, or steamship line,
disaster or calamity; proximate cause of the loss of the cargo; a human factor, i.e., pontines, ferries and water craft, engaged in the
negligence had intervened. transportation of passengers or freight or both, shipyard,
(2) Act of the public enemy in war, whether international or marine repair shop, wharf or dock, ice plant, ice-refrigeration
civil; ESTRELLITA M. BASCOS, petitioners, vs. COURT OF APPEALS plant, canal, irrigation system, gas, electric light, heat and
and RODOLFO A. CIPRIANO, respondents. G.R. No. 101089. power, water supply and power petroleum, sewerage system,
(3) Act or omission of the shipper or owner of the goods; April 7, 1993 wire or wireless communications systems, wire or wireless
broadcasting stations and other similar public services. x x
x" 8
(4) The character of the goods or defects in the packing or in The Civil Code defines "common carriers" in the following
the containers; terms:
There is greater reason for holding petitioner to be a
common carrier because the transportation of goods is an
(5) Order or act of competent public authority. "Article 1732. Common carriers are persons, corporations, integral part of her business. To uphold petitioner's
firms or associations engaged in the business of carrying or contention would be to deprive those with whom she
In the case at bar, the barge completely sank after its towing transporting passengers or goods or both, by land, water, or contracts the protection which the law affords them
bits broke, resulting in the total loss of its cargo. Petitioner air for compensation, offering their services to the public." notwithstanding the fact that the obligation to carry goods
claims that this was caused by a typhoon, hence, it should for her customers, as already noted, is part and parcel of
not be held liable for the loss of the cargo. However, The above article makes no distinction between one petitioner's business.
petitioner failed to prove that the typhoon is the proximate whose principal business activity is the carrying of persons or
and only cause of the loss of the goods, and that it has goods or both, and one who does such carrying only as Art. 1733 of the Civil Code provides:
exercised due diligence before, during and after the an ancillary activity . . . Article 1732 also carefully avoids
occurrence of the typhoon to prevent or minimize the making any distinction between a person or enterprise
loss.30 The evidence show that, even before the towing bits of offering transportation service on a regular or scheduled Common carriers, from the nature of their business and for
the barge broke, it had already previously sustained damage basis and one offering such service on an occasional, reasons of public policy, are bound to observe extraordinary
when it hit a sunken object while docked at the Engineering episodic or unscheduled basis. Neither does Article 1732 diligence in the vigilance over the goods and for the safety of
Island. It even suffered a hole. Clearly, this could not be distinguish between a carrier offering its services to the the passengers transported by them, according to all the
solely attributed to the typhoon. The partly-submerged "general public," i.e., the general community or population, circumstances of each case. . . .
vessel was refloated but its hole was patched with only clay and one who offers services or solicits business only from a
and cement. The patch work was merely a provisional narrow segment of the general population. We think that In Compania Maritima v. Court of Appeals,9 the meaning of
remedy, not enough for the barge to sail safely. Thus, when Article 1732 deliberately refrained from making such "extraordinary diligence in the vigilance over goods" was
petitioner persisted to proceed with the voyage, it recklessly distinctions. explained thus:
exposed the cargo to further damage.
So understood, the concept of "common carrier" under The extraordinary diligence in the vigilance over the goods
Petitioner still headed to the consignee's wharf despite Article 1732 may be seen to coincide neatly with the notion tendered for shipment requires the common carrier to know
knowledge of an incoming typhoon. During the time that the of "public service," under the Public Service Act and to follow the required precaution for avoiding damage
barge was heading towards the consignee's wharf on (Commonwealth Act No. 1416, as amended) which at least to, or destruction of the goods entrusted to it for sale,
September 5, 1990, typhoon "Loleng" has already entered partially supplements the law on common carriers set forth in carriage and delivery. It requires common carriers to render
the Philippine area of responsibility. the Civil Code. Under Section 13, paragraph (b) of the Public service with the greatest skill and foresight and "to use all
Service Act, "public service" includes: reasonable means to ascertain the nature and characteristic
of goods tendered for shipment, and to exercise due care in
Page 6 of 47
the handling and stowage, including such methods as their nature of the obligation requires the assumption of risk, no It is settled that under a given set of facts, a customs broker
nature requires." person shall be responsible for those events which could not may be regarded as a common carrier. Thus, this Court,
be foreseen, or which though foreseen, were inevitable. in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of
Anent petitioner's insistence that the cargo could not have Appeals,44 held:
been damaged while in her custody as she immediately In order, to be considered a fortuitous event, however, (1)
delivered the containers to SMC's compound, suffice it to say the cause of the unforeseen and unexpected occurrence, or The appellate court did not err in finding petitioner, a
that to prove the exercise of extraordinary diligence, the failure of the debtor to comply with his obligation, must customs broker, to be also a common carrier, as defined
petitioner must do more than merely show the possibility be independent of human will; (2) it must be impossible to under Article 1732 of the Civil Code, to wit,
that some other party could be responsible for the damage. foresee the event which constitute the caso fortuito, or if it
It must prove that it used "all reasonable means to ascertain can be foreseen it must be impossible to avoid; (3) the Art. 1732. Common carriers are persons, corporations, firms
the nature and characteristic of goods tendered for occurrence must be such as to render it impossible for the or associations engaged in the business of carrying or
[transport] and that [it] exercise[d] due care in the handling debtor to fulfill his obligation in any manner; and (4) the transporting passengers or goods or both, by land, water, or
[thereof]." Petitioner failed to do this. obligor must be free from any participation in the air, for compensation, offering their services to the public.x x
aggravation of the injury resulting to the creditor.32 x
Nor is there basis to exempt petitioner from liability under
Art. 1734(4), which provides -- [T]he principle embodied in the act of God doctrine strictly Article 1732 does not distinguish between one whose
requires that the act must be occasioned solely by the principal business activity is the carrying of goods and one
Common carriers are responsible for the loss, destruction, or violence of nature. Human intervention is to be excluded who does such carrying only as an ancillary activity. The
deterioration of the goods, unless the same is due to any of from creating or entering into the cause of the mischief. contention, therefore, of petitioner that it is not a common
the following causes only: xxxx When the effect is found to be in part the result of the carrier but a customs broker whose principal function is to
participation of man, whether due to his active intervention prepare the correct customs declaration and proper shipping
or neglect or failure to act, the whole occurrence is then documents as required by law is bereft of merit. It suffices
(4) The character of the goods or defects in the packing or in humanized and removed from the rules applicable to the
the containers. xxxx that petitioner undertakes to deliver the goods for pecuniary
acts of God. consideration.45
For this provision to apply, the rule is that if the improper That no tugboat towed back the barge to the pier after the
packing or, in this case, the defect/s in the container, is/are And in Calvo v. UCPB General Insurance Co. Inc.,46 this Court
cargoes were completely loaded by 12:30 in the morning39 is, held that as the transportation of goods is an integral part of
known to the carrier or his employees or apparent upon however, a material fact which the appellate court failed to
ordinary observation, but he nevertheless accepts the same a customs broker, the customs broker is also a common
properly consider and appreciate40 — the proximate cause of carrier. For to declare otherwise "would be to deprive those
without protest or exception notwithstanding such condition, the loss of the cargoes. Had the barge been towed back
he is not relieved of liability for damage resulting with whom [it] contracts the protection which the law affords
promptly to the pier, the deteriorating sea conditions them notwithstanding the fact that the obligation to carry
therefrom.14 In this case, petitioner accepted the cargo notwithstanding, the loss could have been avoided. But the
without exception despite the apparent defects in some of goods for [its] customers, is part and parcel of petitioner’s
barge was left floating in open sea until big waves set in at business."47
the container vans. Hence, for failure of petitioner to prove 5:30 a.m., causing it to sink along with the cargoes.41 The loss
that she exercised extraordinary diligence in the carriage of thus falls outside the "act of God doctrine."
goods in this case or that she is exempt from liability, the As for petitioner, for it to be relieved of liability, it should,
presumption of negligence as provided under Art. following Article 173953 of the Civil Code, prove that it
173515 holds. petitioner is a common carrier. For it undertook to transport exercised due diligence to prevent or minimize the loss,
the cargoes from the shipside of "M/V Alexander Saveliev" to before, during and after the occurrence of the storm in order
the consignee’s warehouse at Cainta, Rizal. As the appellate that it may be exempted from liability for the loss of the
SCHMITZ TRANSPORT & BROKERAGE court put it, "as long as a person or corporation holds [itself]
CORPORATION, Petitioners, goods.
to the public for the purpose of transporting goods as [a]
vs. TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE business, [it] is already considered a common carrier
COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL regardless if [it] owns the vehicle to be used or has to hire While petitioner sent checkers54 and a supervisor55 on board
now INCHCAPE SHIPPING SERVICES, Respondents. G.R. No. one."42 That petitioner is a common carrier, the testimony of the vessel to counter-check the operations of TVI, it failed to
150255. April 22, 2005 its own Vice-President and General Manager Noel Aro that take all available and reasonable precautions to avoid the
part of the services it offers to its clients as a brokerage firm loss. After noting that TVI failed to arrange for the prompt
ART. 1174. Except in cases expressly specified by the law, or includes the transportation of cargoes reflects so. towage of the barge despite the deteriorating sea conditions,
when it is otherwise declared by stipulation, or when the
Page 7 of 47
it should have summoned the same or another tugboat to carriage and delivery. It requires common carriers to render individual or entity, cannot be considered a common carrier.
extend help, but it did not. service with the greatest skill and foresight and "to use all Common carriers are persons, corporations, firms or
reasonable means to ascertain the nature and characteristics associations engaged in the business of carrying or
A.F. SANCHEZ BROKERAGE INC., petitioners, vs. THE HON. of goods tendered for shipment, and to exercise due care in transporting passengers or goods or both, by land, water, or
COURT OF APPEALS and FGU INSURANCE the handling and stowage, including such methods as their air, for hire or compensation, offering their services to
CORPORATION, respondents. G.R. No. 147079 December 21, nature requires."48 the public,8 whether to the public in general or to a limited
2004 clientele in particular, but never on an exclusive basis.9 The
In the case at bar, it was established that petitioner received true test of a common carrier is the carriage of passengers or
the cargoes from the PSI warehouse in NAIA in good order goods, providing space for those who opt to avail
The appellate court did not err in finding petitioner, a themselves of its transportation service for a fee.10Given
customs broker, to be also a common carrier, as defined and condition;49 and that upon delivery by petitioner to
Hizon Laboratories Inc., some of the cargoes were found to accepted standards, GPS scarcely falls within the term
under Article 1732 of the Civil Code, to wit: Art. 1732. "common carrier."
Common carriers are persons, corporations, firms or be in bad order, as noted in the Delivery Receipt50 issued by
associations engaged in the business of carrying or petitioner, and as indicated in the Survey Report of Elite
transporting passengers or goods or both, by land, water, or Surveyors51 and the Destruction Report of Hizon ESTELA L. CRISOSTOMO, Petitioner, vs. The Court of Appeals
air, for compensation, offering their services to the public. Laboratories, Inc. and CARAVAN TRAVEL & TOURS INTERNATIONAL,
INC., Respondents. G.R. No. 138334 August 25, 2003
Anacleto F. Sanchez, Jr., the Manager and Principal Broker of While paragraph No. 4 of Article 173455 of the Civil Code
Sanchez Brokerage, himself testified that the services the firm exempts a common carrier from liability if the loss or By definition, a contract of carriage or transportation is one
offers include the delivery of goods to the warehouse of the damage is due to the character of the goods or defects in whereby a certain person or association of persons obligate
consignee or importer. the packing or in the containers, the rule is that if the themselves to transport persons, things, or news from one
improper packing is known to the carrier or his employees or place to another for a fixed price.9 Such person or association
is apparent upon ordinary observation, but he nevertheless of persons are regarded as carriers and are classified as
Article 1732 does not distinguish between one whose accepts the same without protest or exception private or special carriers and common or public carriers.10 A
principal business activity is the carrying of goods and one notwithstanding such condition, he is not relieved of liability common carrier is defined under Article 1732 of the Civil
who does such carrying only as an ancillary activity.44 The for the resulting damage.56 Code as persons, corporations, firms or associations engaged
contention, therefore, of petitioner that it is not a common in the business of carrying or transporting passengers or
carrier but a customs broker whose principal function is to goods or both, by land, water or air, for compensation,
prepare the correct customs declaration and proper shipping If the claim of petitioner that some of the cartons were
already damaged upon delivery to it were true, then it should offering their services to the public.
documents as required by law is bereft of merit. It suffices
that petitioner undertakes to deliver the goods for pecuniary naturally have received the cargo under protest or with
consideration. reservations duly noted on the receipt issued by PSI. But it Respondent did not undertake to transport petitioner from
made no such protest or reservation.57 one place to another since its covenant with its customers is
simply to make travel arrangements in their behalf.
In this light, petitioner as a common carrier is mandated to Respondent’s services as a travel agency include procuring
observe, under Article 173345 of the Civil Code, extraordinary Since petitioner received all the cargoes in good order and
condition at the time they were turned over by the PSI tickets and facilitating travel permits or visas as well as
diligence in the vigilance over the goods it transports booking customers for tours.
according to all the circumstances of each case. In the event warehouseman, and upon their delivery to Hizon
that the goods are lost, destroyed or deteriorated, it is Laboratories, Inc. a portion thereof was found to be in bad
presumed to have been at fault or to have acted order, it was incumbent on petitioner to prove that it While petitioner concededly bought her plane ticket through
negligently, unless it proves that it observed extraordinary exercised extraordinary diligence in the carriage of the the efforts of respondent company, this does not mean that
diligence.46 goods. It did not, however. Hence, its presumed negligence the latter ipso facto is a common carrier. At most,
under Article 1735 of the Civil Code remains unrebutted. respondent acted merely as an agent of the airline, with
whom petitioner ultimately contracted for her carriage to
The concept of "extra-ordinary diligence" was explained Europe. Respondent’s obligation to petitioner in this regard
in Compania Maritima v. Court of Appeals:47 FGU INSURANCE CORPORATION, petitioner, vs. G.P.
SARMIENTO TRUCKING CORPORATION and LAMBERT M. was simply to see to it that petitioner was properly booked
EROLES, respondents. G.R. No. 141910 August 6, 2002 with the airline for the appointed date and time. Her
The extraordinary diligence in the vigilance over the goods transport to the place of destination, meanwhile, pertained
tendered for shipment requires the common carrier to know directly to the airline.
and to follow the required precaution for avoiding damage GPS, being an exclusive contractor and hauler of Concepcion
to, or destruction of the goods entrusted to it for sale, Industries, Inc., rendering or offering its services to no other
Page 8 of 47
In contrast, the object of a contract of carriage is the provisions on common carriers of the Civil Code, the Public steamboat, or steamship line, pontines, ferries and water
transportation of passengers or goods. It is in this sense that Service Act,13 and other special laws relating to craft, engaged in the transportation of passengers or freight
the contract between the parties in this case was an ordinary transportation. A common carrier is required to observe or both, shipyard, marine repair shop, ice-refrigeration plant,
one for services and not one of carriage. For reasons of extraordinary diligence, and is presumed to be at fault or to canal, irrigation system, gas, electric light, heat and power,
public policy, a common carrier in a contract of carriage is have acted negligently in case of the loss of the effects of water supply and power petroleum, sewerage system, wire or
bound by law to carry passengers as far as human care and passengers, or the death or injuries to passengers.14 wireless communications systems, wire or wireless
foresight can provide using the utmost diligence of very broadcasting stations and other similar public services. x x
cautious persons and with due regard for all the In relation to common carriers, the Court defined public use x.17
circumstances.11 As earlier stated, however, respondent is not in the following terms in United States v. Tan Piaco,15viz:
a common carrier but a travel agency. It is thus not bound "Public use" is the same as "use by the public". The essential Given the breadth of the aforequoted characterization of a
under the law to observe extraordinary diligence in the feature of the public use is not confined to privileged common carrier, the Court has considered as common
performance of its obligation, as petitioner claims. individuals, but is open to the indefinite public. It is this carriers pipeline operators,18 custom brokers and
indefinite or unrestricted quality that gives it its public warehousemen,19 and barge operators20 even if they had
SPOUSES TEODORO1 and NANETTE PERENA, Petitioners, vs. character. In determining whether a use is public, we must limited clientèle.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, look not only to the character of the business to be done,
NATIONAL RAILWAYS, and the COURT OF but also to the proposed mode of doing it. If the use is As all the foregoing indicate, the true test for a common
APPEALS Respondents. G.R. No. 157917 August 29, 2012 merely optional with the owners, or the public benefit is carrier is not the quantity or extent of the business actually
merely incidental, it is not a public use, authorizing the transacted, or the number and character of the conveyances
We find no adequate cause to differ from the conclusions of exercise of the jurisdiction of the public utility commission. used in the activity, but whether the undertaking is a part of
the lower courts that the Pereñas operated as a common There must be, in general, a right which the law compels the the activity engaged in by the carrier that he has held out to
carrier; and that their standard of care was extraordinary owner to give to the general public. It is not enough that the the general public as his business or occupation. If the
diligence, not the ordinary diligence of a good father of a general prosperity of the public is promoted. Public use is undertaking is a single transaction, not a part of the general
family. Although in this jurisdiction the operator of a school not synonymous with public interest. The true criterion by business or occupation engaged in, as advertised and held
bus service has been usually regarded as a private which to judge the character of the use is whether the public out to the general public, the individual or the entity
carrier,9primarily because he only caters to some specific or may enjoy it by right or only by permission. rendering such service is a private, not a common, carrier.
privileged individuals, and his operation is neither open to The question must be determined by the character of the
the indefinite public nor for public use, the exact nature of In De Guzman v. Court of Appeals,16 the Court noted that business actually carried on by the carrier, not by any secret
the operation of a school bus service has not been finally Article 1732 of the Civil Code avoided any distinction intention or mental reservation it may entertain or assert
settled. This is the occasion to lay the matter to rest. between a person or an enterprise offering transportation on when charged with the duties and obligations that the law
a regular or an isolated basis; and has not distinguished a imposes.21
A carrier is a person or corporation who undertakes to carrier offering his services to the general public, that is, the
transport or convey goods or persons from one place to general community or population, from one offering his Applying these considerations to the case before us, there is
another, gratuitously or for hire. The carrier is classified either services only to a narrow segment of the general population. no question that the Pereñas as the operators of a school
as a private/special carrier or as a common/public carrier.10 A bus service were: (a) engaged in transporting passengers
private carrier is one who, without making the activity a Nonetheless, the concept of a common carrier embodied in generally as a business, not just as a casual occupation; (b)
vocation, or without holding himself or itself out to the Article 1732 of the Civil Code coincides neatly with the undertaking to carry passengers over established roads by
public as ready to act for all who may desire his or its notion of public service under the Public Service Act, which the method by which the business was conducted; and (c)
services, undertakes, by special agreement in a particular supplements the law on common carriers found in the Civil transporting students for a fee. Despite catering to a limited
instance only, to transport goods or persons from one place Code. Public service, according to Section 13, paragraph (b) clientèle, the Pereñas operated as a common carrier because
to another either gratuitously or for hire.11 The provisions on of the Public Service Act, includes: x x x every person that they held themselves out as a ready transportation
ordinary contracts of the Civil Code govern the contract of now or hereafter may own, operate, manage, or control in indiscriminately to the students of a particular school living
private carriage.The diligence required of a private carrier is the Philippines, for hire or compensation, with general or within or near where they operated the service and for a fee.
only ordinary, that is, the diligence of a good father of the limited clientèle, whether permanent or occasional, and done
family. In contrast, a common carrier is a person, corporation, for the general business purposes, any common carrier, The common carrier’s standard of care and vigilance as to
firm or association engaged in the business of carrying or railroad, street railway, traction railway, subway motor the safety of the passengers is defined by law. Given the
transporting passengers or goods or both, by land, water, or vehicle, either for freight or passenger, or both, with or nature of the business and for reasons of public policy, the
air, for compensation, offering such services to the without fixed route and whatever may be its classification, common carrier is bound "to observe extraordinary diligence
public.12 Contracts of common carriage are governed by the freight or carrier service of any class, express service, in the vigilance over the goods and for the safety of the
Page 9 of 47
passengers transported by them, according to all the his authority or even in violation of the orders of the The test by which to determine the existence of negligence
circumstances of each case."22 Article 1755 of the Civil Code common carrier.27 In this connection, the records showed in a particular case may be stated as follows: Did the
specifies that the common carrier should "carry the their driver’s actual negligence. There was a showing, to defendant in doing the alleged negligent act use that
passengers safely as far as human care and foresight can begin with, that their driver traversed the railroad tracks at a reasonable care and caution which an ordinarily prudent
provide, using the utmost diligence of very cautious persons, point at which the PNR did not permit motorists going into person would have used in the same situation? If not, then
with a due regard for all the circumstances." To successfully the Makati area to cross the railroad tracks. Although that he is guilty of negligence. The law here in effect adopts the
fend off liability in an action upon the death or injury to a point had been used by motorists as a shortcut into the standard supposed to be supplied by the imaginary conduct
passenger, the common carrier must prove his or its Makati area, that fact alone did not excuse their driver into of the discreet paterfamilias of the Roman law. The existence
observance of that extraordinary diligence; otherwise, the taking that route. On the other hand, with his familiarity with of negligence in a given case is not determined by reference
legal presumption that he or it was at fault or acted that shortcut, their driver was fully aware of the risks to his to the personal judgment of the actor in the situation before
negligently would stand.23 No device, whether by stipulation, passengers but he still disregarded the risks. Compounding him. The law considers what would be reckless, blameworthy,
posting of notices, statements on tickets, or otherwise, may his lack of care was that loud music was playing inside the or negligent in the man of ordinary intelligence and
dispense with or lessen the responsibility of the common air-conditioned van at the time of the accident. The loudness prudence and determines liability by that.
carrier as defined under Article 1755 of the Civil Code. 24 most probably reduced his ability to hear the warning horns
of the oncoming train to allow him to correctly appreciate The question as to what would constitute the conduct of a
And, secondly, the Pereñas have not presented any the lurking dangers on the railroad tracks. Also, he sought to prudent man in a given situation must of course be always
compelling defense or reason by which the Court might now overtake a passenger bus on the left side as both vehicles determined in the light of human experience and in view of
reverse the CA’s findings on their liability. On the contrary, an traversed the railroad tracks. In so doing, he lost his view of the facts involved in the particular case. Abstract speculation
examination of the records shows that the evidence fully the train that was then coming from the opposite side of the cannot here be of much value but this much can be
supported the findings of the CA. passenger bus, leading him to miscalculate his chances of profitably said: Reasonable men govern their conduct by the
beating the bus in their race, and of getting clear of the train. circumstances which are before them or known to them.
As a result, the bus avoided a collision with the train but the They are not, and are not supposed to be, omniscient of the
As earlier stated, the Pereñas, acting as a common carrier, van got slammed at its rear, causing the fatality. Lastly, he
were already presumed to be negligent at the time of the future. Hence they can be expected to take care only when
did not slow down or go to a full stop before traversing the there is something before them to suggest or warn of
accident because death had occurred to their railroad tracks despite knowing that his slackening of speed
passenger.25 The presumption of negligence, being a danger. Could a prudent man, in the case under
and going to a full stop were in observance of the right of consideration, foresee harm as a result of the course actually
presumption of law, laid the burden of evidence on their way at railroad tracks as defined by the traffic laws and
shoulders to establish that they had not been negligent.26 It pursued? If so, it was the duty of the actor to take
regulations.28He thereby violated a specific traffic regulation precautions to guard against that harm. Reasonable foresight
was the law no less that required them to prove their on right of way, by virtue of which he was immediately
observance of extraordinary diligence in seeing to the safe of harm, followed by the ignoring of the suggestion born of
presumed to be negligent.29 this prevision, is always necessary before negligence can be
and secure carriage of the passengers to their destination.
Until they did so in a credible manner, they stood to be held held to exist. Stated in these terms, the proper criterion for
legally responsible for the death of Aaron and thus to be The omissions of care on the part of the van driver determining the existence of negligence in a given case is
held liable for all the natural consequences of such death. constituted negligence,30 which, according to Layugan v. this: Conduct is said to be negligent when a prudent man in
Intermediate Appellate Court,31 is "the omission to do the position of the tortfeasor would have foreseen that an
something which a reasonable man, guided by those effect harmful to another was sufficiently probable to warrant
There is no question that the Pereñas did not overturn the considerations which ordinarily regulate the conduct of his foregoing the conduct or guarding against its
presumption of their negligence by credible evidence. Their human affairs, would do, or the doing of something which a consequences. (Emphasis supplied)
defense of having observed the diligence of a good father of prudent and reasonable man would not do,32 or as Judge
a family in the selection and supervision of their driver was Cooley defines it, ‘(t)he failure to observe for the protection
not legally sufficient. According to Article 1759 of the Civil Pursuant to the Picart v. Smith test of negligence, the
of the interests of another person, that degree of care, Pereñas’ driver was entirely negligent when he traversed the
Code, their liability as a common carrier did not cease upon precaution, and vigilance which the circumstances justly
proof that they exercised all the diligence of a good father of railroad tracks at a point not allowed for a motorist’s crossing
demand, whereby such other person suffers injury.’"33 despite being fully aware of the grave harm to be thereby
a family in the selection and supervision of their employee.
This was the reason why the RTC treated this defense of the caused to his passengers; and when he disregarded the
Pereñas as inappropriate in this action for breach of contract The test by which to determine the existence of negligence foresight of harm to his passengers by overtaking the bus on
of carriage. in a particular case has been aptly stated in the leading case the left side as to leave himself blind to the approach of the
of Picart v. Smith,34 thuswise: oncoming train that he knew was on the opposite side of the
bus.
The Pereñas were liable for the death of Aaron despite the
fact that their driver might have acted beyond the scope of
Page 10 of 47
Unrelenting, the Pereñas cite Phil. National Railways v. BROTHERS SHIPPING CORPORATION, respondents. G.R. No. defective condition of the car, vehicle, ship, airplane or other
Intermediate Appellate Court,35 where the Court held the 102316 June 30, 1997 equipment used in the contract of carriage.
PNR solely liable for the damages caused to a passenger bus
and its passengers when its train hit the rear end of the bus It should be noted at the outset that there is no dispute it is undisputed that private respondent had acted as
that was then traversing the railroad crossing. But the between the parties that the proximate cause of the sinking a private carrier in transporting petitioner's lauan logs. Thus,
circumstances of that case and this one share no similarities. of M/V Seven Ambassadors resulting in the loss of its cargo Article 1745 and other Civil Code provisions on common
In Philippine National Railways v. Intermediate Appellate was the "snapping of the iron chains and the subsequent carriers which were cited by petitioner may not be applied
Court, no evidence of contributory negligence was adduced rolling of the logs to the portside due to the negligence of unless expressly stipulated by the parties in their charter
against the owner of the bus. Instead, it was the owner of the the captain in stowing and securing the logs on board the party. 16
bus who proved the exercise of extraordinary diligence by vessel and not due to fortuitous event." 11 Likewise
preponderant evidence. Also, the records are replete with the undisputed is the status of Private Respondent Seven
showing of negligence on the part of both the Pereñas and In a contract of private carriage, the parties may validly
Brothers as a private carrier when it contracted to transport stipulate that responsibility for the cargo rests solely on the
the PNR. Another distinction is that the passenger bus in the cargo of Petitioner Valenzuela. Even the latter admits this
Philippine National Railways v. Intermediate Appellate Court charterer, exempting the shipowner from liability for loss of
in its petition. 12 or damage to the cargo caused even by the negligence of
was traversing the dedicated railroad crossing when it was
hit by the train, but the Pereñas’ school van traversed the the ship captain. Pursuant to Article 1306 17 of the Civil Code,
railroad tracks at a point not intended for that purpose. The trial court deemed the charter party stipulation void for such stipulation is valid because it is freely entered into by
being contrary to public policy, 13 citing Article 1745 of the the parties and the same is not contrary to law, morals, good
Civil Code which provides: Art. 1745. Any of the following or customs, public order, or public policy. Indeed, their contract
At any rate, the lower courts correctly held both the Pereñas similar stipulations shall be considered unreasonable, unjust of private carriage is not even a contract of adhesion. We
and the PNR "jointly and severally" liable for damages arising and contrary to public policy: stress that in a contract of private carriage, the parties may
from the death of Aaron. They had been impleaded in the freely stipulate their duties and obligations which perforce
same complaint as defendants against whom the Zarates had would be binding on them. Unlike in a contract involving a
the right to relief, whether jointly, severally, or in the (1) That the goods are transported at the risk of the owner or
shipper; common carrier, private carriage does not involve the
alternative, in respect to or arising out of the accident, and general public. Hence, the stringent provisions of the Civil
questions of fact and of law were common as to the Code on common carriers protecting the general public
Zarates.36 Although the basis of the right to relief of the (2) That the common carrier will not be liable for any loss, cannot justifiably be applied to a ship transporting
Zarates (i.e., breach of contract of carriage) against the destruction, or deterioration of the goods; commercial goods as a private carrier. Consequently, the
Pereñas was distinct from the basis of the Zarates’ right to public policy embodied therein is not contravened by
relief against the PNR (i.e., quasi-delict under Article 2176, (3) That the common carrier need not observe any diligence stipulations in a charter party that lessen or remove the
Civil Code), they nonetheless could be held jointly and in the custody of the goods; protection given by law in contracts involving common
severally liable by virtue of their respective negligence carriers.
combining to cause the death of Aaron. As to the PNR, the
(4) That the common carrier shall exercise a degree of
RTC rightly found the PNR also guilty of negligence despite
diligence less than that of a good father of a family, or of a The issue posed in this case and the arguments raised by
the school van of the Pereñas traversing the railroad tracks at
man of ordinary prudence in the vigilance over the movables petitioner are not novel; they were resolved long ago by this
a point not dedicated by the PNR as a railroad crossing for
transported; Court in Home Insurance Co. vs. American Steamship
pedestrians and motorists, because the PNR did not ensure
the safety of others through the placing of crossbars, signal Agencies, Inc. 18 In that case, the trial court similarly nullified
lights, warning signs, and other permanent safety barriers to (5) That the common carrier shall not be responsible for the a stipulation identical to that involved in the present case for
prevent vehicles or pedestrians from crossing there. The RTC acts or omissions of his or its employees; being contrary to public policy based on Article 1744 of the
observed that the fact that a crossing guard had been Civil Code and Article 587 of the Code of Commerce.
assigned to man that point from 7 a.m. to 5 p.m. was a good Consequently, the trial court held the shipowner liable for
(6) That the common carrier's liability for acts committed by
indicium that the PNR was aware of the risks to others as well damages resulting for the partial loss of the cargo. This Court
thieves, or of robbers who do not act with grave or
as the need to control the vehicular and other traffic there. reversed the trial court and laid down, through Mr. Justice
irresistible threat, violence or force, is dispensed with or
Verily, the Pereñas and the PNR were joint tortfeasors. Jose P. Bengzon, the following well-settled observation and
diminished;
doctrine:
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY (7) That the common carrier is not responsible for the loss,
INC., petitioner, vs. COURT OF APPEALS AND SEVEN The provisions of our Civil Code on common carriers were
destruction, or deterioration of goods on account of the
taken from Anglo-American law. Under American
jurisprudence, a common carrier undertaking to carry a
Page 11 of 47
special cargo or chartered to a special person only, becomes In Samar Mining Company, Inc. vs. Nordeutscher Lloyd (132 1. What law governs disputes involving
a private carrier. As a private carrier, a stipulation exempting SCRA 529), this Court ruled: The liability of the common transportation law?
the owner from liability for the negligence of its agent is not carrier for the loss, destruction or deterioration of goods a. SAUDI ARABIAN AIRLINES, petitioner, vs.
against public policy, and is deemed valid. transported from a foreign country to the Philippines is COURT OF APPEALS, MILAGROS P. MORADA
governed primarily by the New Civil Code. In all matters not and HON. RODOLFO A. ORTIZ, in his capacity
Such doctrine We find reasonable. The Civil Code provisions regulated by said Code, the rights and obligations of as Presiding Judge of Branch 89, Regional
on common carriers should not be applied where the carrier common carriers shall be governed by the Code of Trial Court of Quezon City, respondents.
is not acting as such but as a private carrier. The stipulation Commerce and by Special Laws. G.R. No. 122191 October 8, 1998
in the charter party absolving the owner from liability for loss
due to the negligence of its agent would be void if the strict The provisions of the New Civil Code on common carriers are Under the factual antecedents obtaining in this case, there is
public policy governing common carriers is applied. Such Articles 1733, 1735 and 1753 which provide: Art. 1733. no dispute that the interplay of events occurred in two states,
policy has no force where the public at large is not involved, Common carriers, from the nature of their business and for the Philippines and Saudi Arabia.
as in this case of a ship totally chartered for the used of a reasons of public policy, are bound to observe extraordinary
single party. 19(Emphasis supplied.) diligence in the vigilance over the goods and for the safety of As to the choice of applicable law, we note that choice-of-
the passengers transported by them, according to all the law problems seek to answer two important questions: (1)
Indeed, where the reason for the rule ceases, the rule itself circumstances of each case. What legal system should control a given situation where
does not apply. The general public enters into a contract of some of the significant facts occurred in two or more states;
transportation with common carriers without a hand or a Art. 1735. In all cases other than those mentioned in Nos. 1, and (2) to what extent should the chosen legal system
voice in the preparation thereof. The riding public merely 2, 3, 4 and 5 of the preceding article if the goods are lost, regulate the situation. 53
adheres to the contract; even if the public wants to, it cannot destroyed or deteriorated, common carriers are presumed to
submit its own stipulations for the approval of the common have been at fault or to have acted negligently, unless they Several theories have been propounded in order to identify
carrier. Thus, the law on common carriers extends its prove that they observed extraordinary diligence as required the legal system that should ultimately control. Although
protective mantle against one-sided stipulations inserted in in article 1733. ideally, all choice-of-law theories should intrinsically advance
tickets, invoices or other documents over which the riding both notions of justice and predictability, they do not always
public has no understanding or, worse, no choice. Compared Art. 1753. The law of the country to which the goods are to do so. The forum is then faced with the problem of deciding
to the general public, a charterer in a contract of private be transported shall govern the liability of the common which of these two important values should be stressed. 54
carriage is not similarly situated. It can — and in fact it carrier for their loss, destruction or deterioration.
usually does — enter into a free and voluntary agreement. In
practice, the parties in a contract of private carriage can Before a choice can be made, it is necessary for us to
stipulate the carrier's obligations and liabilities over the Since the passenger's destination in this case was the determine under what category a certain set of facts or rules
shipment which, in turn, determine the price or consideration Philippines, Philippine law governs the liability of the carrier fall. This process is known as "characterization", or the
of the charter. Thus, a charterer, in exchange for convenience for the loss of the passenger's luggage. "doctrine of qualification". It is the "process of deciding
and economy, may opt to set aside the protection of the law whether or not the facts relate to the kind of question
on common carriers. When the charterer decides to exercise In this case, the petitioner failed to overcome, not only the specified in a conflicts rule." 55The purpose of
this option, he takes a normal business risk. presumption, but more importantly, the private respondent's "characterization" is to enable the forum to select the proper
evidence, proving that the carrier's negligence was the law. 56
PHILIPPINE AIR LINES, petitioner, vs. HON. COURT OF proximate cause of the loss of his baggage. Furthermore,
APPEALS and ISIDRO CO, respondents. G.R. No. 92501 March petitioner acted in bad faith in faking a retrieval receipt to Our starting point of analysis here is not a legal relation, but
6, 1992 bail itself out of having to pay Co's claim. The Court of a factual situation, event, or operative fact. 57An essential
Appeals therefore did not err in disregarding the limits of element of conflict rules is the indication of a "test" or
liability under the Warsaw Convention. "connecting factor" or "point of contact". Choice-of-law rules
In Alitalia vs. IAC (192 SCRA 9, 18, citing Pan American World invariably consist of a factual relationship (such as property
Airways, Inc. vs. IAC 164 SCRA 268), the Warsaw Convention right, contract claim) and a connecting factor or point of
limiting the carrier's liability was applied because of a simple Common Carriers – Vigilance over the Goods
contact, such as the situs of the res, the place of celebration,
loss of baggage without any improper conduct on the part of the place of performance, or the place of wrongdoing. 58
the officials or employees of the airline, or other special NCC – Arts 1734 - 1754
injury sustained by the passengers. The petitioner therein did
not declare a higher value for his luggage, much less did he Note that one or more circumstances may be present to
pay an additional transportation charge. serve as the possible test for the determination of the
Page 12 of 47
applicable law. 59 These "test factors" or "points of contact" merely testify in an investigation of the charges she made tort liability 61 have been advanced to offer fresh judicial
or "connecting factors" could be any of the following: against the two SAUDIA crew members for the attack on her approaches to arrive at just results. In keeping abreast with
person while they were in Jakarta. As it turned out, she was the modern theories on tort liability, we find here an
(1) The nationality of a person, his domicile, his residence, his the one made to face trial for very serious charges, including occasion to apply the "State of the most significant
place of sojourn, or his origin; adultery and violation of Islamic laws and tradition. relationship" rule, which in our view should be appropriate to
apply now, given the factual context of this case.
(2) the seat of a legal or juridical person, such as a There is likewise logical basis on record for the claim that the
corporation; "handing over" or "turning over" of the person of private In applying said principle to determine the State which has
respondent to Jeddah officials, petitioner may have acted the most significant relationship, the following contacts are
beyond its duties as employer. Petitioner's purported act to be taken into account and evaluated according to their
(3) the situs of a thing, that is, the place where a thing is, or is contributed to and amplified or even proximately caused relative importance with respect to the particular issue: (a)
deemed to be situated. In particular, the lex situs is decisive additional humiliation, misery and suffering of private the place where the injury occurred; (b) the place where the
when real rights are involved; respondent. Petitioner thereby allegedly facilitated the arrest, conduct causing the injury occurred; (c) the domicile,
detention and prosecution of private respondent under the residence, nationality, place of incorporation and place of
(4) the place where an act has been done, the locus actus, guise of petitioner's authority as employer, taking advantage business of the parties, and (d) the place where the
such as the place where a contract has been made, a of the trust, confidence and faith she reposed upon it. As relationship, if any, between the parties is centered. 62
marriage celebrated, a will signed or a tort committed. The purportedly found by the Prince of Makkah, the alleged
lex loci actus is particularly important in contracts and torts; conviction and imprisonment of private respondent was As already discussed, there is basis for the claim that over-all
wrongful. But these capped the injury or harm allegedly injury occurred and lodged in the Philippines. There is
(5) the place where an act is intended to come into effect, inflicted upon her person and reputation, for which likewise no question that private respondent is a resident
e.g., the place of performance of contractual duties, or the petitioner could be liable as claimed, to provide Filipina national, working with petitioner, a resident foreign
place where a power of attorney is to be exercised; compensation or redress for the wrongs done, once duly corporation engaged here in the business of international air
proven. carriage. Thus, the "relationship" between the parties was
(6) the intention of the contracting parties as to the law that centered here, although it should be stressed that this suit is
should govern their agreement, thelex loci intentionis; Considering that the complaint in the court a quo is one not based on mere labor law violations. From the record, the
involving torts, the "connecting factor" or "point of contact" claim that the Philippines has the most significant contact
could be the place or places where the tortious conduct with the matter in this dispute, 63 raised by private
(7) the place where judicial or administrative proceedings are
or lex loci actus occurred. And applying the torts principle in respondent as plaintiff below against defendant (herein
instituted or done. The lex fori — the law of the forum — is
a conflicts case, we find that the Philippines could be said as petitioner), in our view, has been properly established.
particularly important because, as we have seen earlier,
a situs of the tort (the place where the alleged tortious
matters of "procedure" not going to the substance of the
conduct took place). This is because it is in the Philippines Prescinding from this premise that the Philippines is the situs
claim involved are governed by it; and because the lex
where petitioner allegedly deceived private respondent, a of the tort complained of and the place "having the most
fori applies whenever the content of the otherwise applicable
Filipina residing and working here. According to her, she had interest in the problem", we find, by way of recapitulation,
foreign law is excluded from application in a given case for
honestly believed that petitioner would, in the exercise of its that the Philippine law on tort liability should have
the reason that it falls under one of the exceptions to the
rights and in the performance of its duties, "act with justice, paramount application to and control in the resolution of the
applications of foreign law; and
give her due and observe honesty and good faith." Instead, legal issues arising out of this case. Further, we hold that the
petitioner failed to protect her, she claimed. That certain acts respondent Regional Trial Court has jurisdiction over the
(8) the flag of a ship, which in many cases is decisive of or parts of the injury allegedly occurred in another country is parties and the subject matter of the complaint; the
practically all legal relationships of the ship and of its master of no moment. For in our view what is important here is the appropriate venue is in Quezon City, which could properly
or owner as such. It also covers contractual relationships place where the over-all harm or the totality of the alleged apply Philippine law. Moreover, we find untenable
particularly contracts of affreightment. 60 (Emphasis ours.) injury to the person, reputation, social standing and human petitioner's insistence that "[s]ince private respondent
rights of complainant, had lodged, according to the plaintiff instituted this suit, she has the burden of pleading and
After a careful study of the pleadings on record, including below (herein private respondent). All told, it is not without proving the applicable Saudi law on the matter." 64As aptly
allegations in the Amended Complaint deemed admitted for basis to identify the Philippines as the situs of the alleged said by private respondent, she has "no obligation to plead
purposes of the motion to dismiss, we are convinced that tort. and prove the law of the Kingdom of Saudi Arabia since her
there is reasonable basis for private respondent's assertion cause of action is based on Articles 19 and 21" of the Civil
that although she was already working in Manila, petitioner Moreover, with the widespread criticism of the traditional Code of the Philippines. In her Amended Complaint and
brought her to Jeddah on the pretense that she would rule of lex loci delicti commissi, modern theories and rules on subsequent pleadings, she never alleged that Saudi law
Page 13 of 47
should govern this case. 65 And as correctly held by the "(3) Act or omission of the shipper or owner of the goods; petitioner had not been informed of the incoming typhoon,
respondent appellate court, "considering that it was the and that the Philippine Coast Guard had given it clearance to
petitioner who was invoking the applicability of the law of "(4) The character of the goods or defects in the packing or begin the voyage.33 On October 25, 1991, the date on which
Saudi Arabia, then the burden was on it [petitioner] to plead in the containers; the voyage commenced and the barge sank, Typhoon
and to establish what the law of Saudi Arabia is". Trining was allegedly far from Palawan, where the storm
warning was only "Signal No. 1."34
"(5) Order or act of competent public authority."28
2. What is the test for determining whether a party is
a common carrier of goods? The evidence presented by petitioner in support of its
Rule on Fortuitous Events defense of fortuitous event was sorely insufficient. As
-FPIC v. CA, GR No. 125948 Dec 29, 1998, supra required by the pertinent law, it was not enough for the
Article 1174 of the Civil Code provides that "no person shall common carrier to show that there was an unforeseen or
be responsible for a fortuitous event which could not be unexpected occurrence. It had to show that it was free from
foreseen, or which, though foreseen, was inevitable." Thus, if any fault -- a fact it miserably failed to prove.
3. What is the nature and basis of liability for the loss or damage was due to such an event, a common
common carrier? carrier is exempted from liability.
-Article 1733, NCC First, petitioner presented no evidence that it had attempted
to minimize or prevent the loss before, during or after the
4. What is extraordinary diligence? Jurisprudence defines the elements of a "fortuitous event" as alleged fortuitous event.35 Its witness, Joey A. Draper,
follows: (a) the cause of the unforeseen and unexpected testified that he could no longer remember whether anything
occurrence, or the failure of the debtors to comply with their had been done to minimize loss when water started entering
LEA MER INDUSTRIES, INC., Petitioners, vs. MALAYAN obligations, must have been independent of human will; (b) the barge.36
INSURANCE CO., INC., Respondent. G.R. No. 161745 the event that constituted the caso fortuito must have been
September 30, 2005 impossible to foresee or, if foreseeable, impossible to avoid; Second, the alleged fortuitous event was not the sole and
(c) the occurrence must have been such as to render it proximate cause of the loss. There is a preponderance of
Extraordinary Diligence Required impossible for the debtors to fulfill their obligation in a evidence that the barge was not seaworthy when it sailed for
normal manner; and (d) the obligor must have been free Manila.38 Respondent was able to prove that, in the hull of
Common carriers are bound to from any participation in the aggravation of the resulting the barge, there were holes that might have caused or
observe extraordinary diligence in their vigilance over the injury to the creditor.29 aggravated the sinking.39 Because the presumption of
goods and the safety of the passengers they transport, as negligence or fault applied to petitioner, it was incumbent
required by the nature of their business and for reasons of To excuse the common carrier fully of any liability, the upon it to show that there were no holes; or, if there were,
public policy.24Extraordinary diligence requires rendering fortuitous event must have been the proximate and only that they did not aggravate the sinking.
service with the greatest skill and foresight to avoid damage cause of the loss.30 Moreover, it should have exercised due
and destruction to the goods entrusted for carriage and diligence to prevent or minimize the loss before, during and Petitioner offered no evidence to rebut the existence of the
delivery.25 after the occurrence of the fortuitous event.31 holes. Its witness, Domingo A. Luna, testified that the barge
was in "tip-top" or excellent condition,40 but that he had not
Common carriers are presumed to have been at fault or to Loss in the Instant Case personally inspected it when it left Palawan.41
have acted negligently for loss or damage to the goods that
they have transported.26 This presumption can be rebutted There is no controversy regarding the loss of the cargo in the The submission of the Philippine Coast Guard’s Certificate of
only by proof that they observed extraordinary diligence, or present case. As the common carrier, petitioner bore the Inspection of Judy VII, dated July 31, 1991, did not
that the loss or damage was occasioned by any of the burden of proving that it had exercised extraordinary conclusively prove that the barge was seaworthy.42 The
following causes:27 diligence to avoid the loss, or that the loss had been regularity of the issuance of the Certificate is disputably
occasioned by a fortuitous event -- an exempting presumed.43 It could be contradicted by competent evidence,
"(1) Flood, storm, earthquake, lightning, or other natural circumstance. which respondent offered. Moreover, this evidence did not
disaster or calamity; necessarily take into account the actual condition of
It was precisely this circumstance that petitioner cited to the vessel at the time of the commencement of the voyage.44
"(2) Act of the public enemy in war, whether international or escape liability. Lea Mer claimed that the loss of the cargo
civil; was due to the bad weather condition brought about by
Typhoon Trining.32 Evidence was presented to show that
Page 14 of 47
ABOITIZ SHIPPING CORPORATION, petitioner, vs. The bill of lading issued by petitioner on July 31, 1993 vessel M/V Supercon Carrier I on August 1, 1993 and left
INSURANCE COMPANY OF NORTH AMERICA, respondent. contains the notation "grounded outside warehouse," Manila for Cebu City on August 2, 1993. x x x If the subject
G.R. No. 168402 August 6, 2008 suggesting that from July 26 to 31, the goods were kept cargo was not grounded outside prior to shipment to Cebu
outside the warehouse. And since evidence showed that rain City, appellee provided no explanation as to where said
We now discuss petitioner's liability for the damages fell over Manila during the same period, We can conclude cargo was stored from July 26, 1993 to July 31, 1993. What
sustained by the shipment. The rule as stated in Article 1735 that this was when the shipment sustained water damage. the records showed is that the subject cargo was stripped
of the Civil Code is that in cases where the goods are lost, from the container van of the shipper and transferred to the
destroyed or deteriorated, common carriers are presumed to To prove the exercise of extraordinary diligence, petitioner container on August 1, 1993 and finally loaded into the
have been at fault or to have acted negligently, unless they must do more than merely show the possibility that some appellee's vessel bound for Cebu City on August 2, 1993. The
prove that they observed extraordinary diligence required by other party could be responsible for the damage. It must Stuffing/Stripping Report (Exhibit "D") at the Manila port did
law.38 Extraordinary diligence is that extreme measure of care prove that it used "all reasonable means to ascertain the not indicate any such defect or damage, but when the
and caution which persons of unusual prudence and nature and characteristic of the goods tendered for transport container was stripped upon arrival in Cebu City port after
circumspection use for securing and preserving their own and that it exercised due care in handling being discharged from appellee's vessel, it was noted that
property rights.39 This standard is intended to grant favor to them.42 Extraordinary diligence must include safeguarding only one (1) slab was slightly broken at the bottom allegedly
the shipper who is at the mercy of the common carrier once the shipment from damage coming from natural elements hit by a forklift blade (Exhibit "F").43 (Emphasis added)
the goods have been entrusted to the latter for shipment.40 such as rainfall.
Petitioner is thus liable for the water damage sustained by
Here, the shipment delivered to the consignee sustained Aside from denying that the "grounded outside warehouse" the goods due to its failure to satisfactorily prove that it
water damage. We agree with the findings of the CA that notation referred not to the crate for shipment but only to exercised the extraordinary diligence required of common
petitioner failed to overturn this presumption: the carrier van, petitioner failed to mention where exactly the carriers.
goods were stored during the period in question. It failed to
x x x upon delivery of the cargo to the consignee Don Bosco show that the crate was properly stored indoors during the 5. What does the shipper or consignee have to show
Technical High School by a representative from Trabajo time when it exercised custody before shipment to Cebu. As in order to have a prima facie case against the
Arrastre, and the crates opened, it was discovered that the amply explained by the CA: carrier?
workbenches and work tools suffered damage due to
"wettage" although by then they were already physically On the other hand, the supplemental report submitted by -Article 1734
dry. Appellee carrier having failed to discharge the burden of the surveyor has confirmed that it was rainwater that seeped
proving that it exercised extraordinary diligence in the into the cargo based on official data from the PAGASA that THE YNCHAUSTI STEAMSHIP COMPANY, petitioner, vs. I. B.
vigilance over such goods it contracted for carriage, the there was, indeed, rainfall in the Port Area of Manila from DEXTER, as Auditor of the Philippine Islands, and C. E.
presumption of fault or negligence on its part from the time July 26 to 31, 1993. The Surveyor specifically noted that the UNSON, as Acting Purchasing Agent of the Philippine
the goods were unconditionally placed in its possession (July subject cargo was under the custody of appellee carrier from Islands, respondents. G.R. No. L-15652 December 14, 1920
26, 1993) up to the time the same were delivered to the the time it was delivered by the shipper on July 26, 1993 until
consignee (August 11, 1993), therefore stands. The it was stuffed inside Container No. ACCU-213798-4 on July
presumption that the carrier was at fault or that it acted 31, 1993. No other inevitable conclusion can be deduced In section 646 of the Administrative Code it is provided that
negligently was not overcome by any countervailing from the foregoing established facts that damage from when Government property is transmitted from one place to
evidence. x x x41 (Emphasis added) "wettage" suffered by the subject cargo was caused by the another by carrier, it shall be upon proper bill of lading, or
negligence of appellee carrier in grounding the shipment receipt, from such carrier, and it shall be the duty of the
outside causing rainwater to seep into the cargoes. consignee, or his representative, to make full notation of any
The shipment arrived in the port of Manila and was received evidence of loss, shortage, or damage, upon the bill of
by petitioner for carriage on July 26, 1993. On the same day, lading, or receipt, before accomplishing it. It is admitted by
it was stripped from the container van. Five days later, on Appellee's witness, Mr. Mayo tried to disavow any the petitioner in the agreed statement of facts that the
July 31, 1993, it was re-stuffed inside another container van. responsibility for causing "wettage" to the subject goods by consignee, at the time the oil was delivered, noted the loss in
On August 1, 1993, it was loaded onto another vessel bound claiming that the notation "GROUNDED OUTSIDE WHSE." the present case upon the two respective bills of lading. The
for Cebu. During the period between July 26 to 31, 1993, the actually refers to the container and not the contents thereof notation of these losses by the consignee, in obedience to
shipment was outside a container van and kept in storage by or the cargoes. And yet it presented no evidence to explain the precept of section 646 of the Administrative Code, is
petitioner. where did they place or store the subject goods from the competent evidence to show that the shortage in fact
time it accepted the same for shipment on July 26, 1993 up existed. As the petitioner admits that the oil was received by
to the time the goods were stripped or transferred from the it for carriage and inasmuch as the fact of loss is proved in
container van to another container and loaded into the
Page 15 of 47
the manner just stated, it results that there is a presumption common carrier must prove that it exercised extraordinary happened. The crew of the vessel should have exerted
that the petitioner was to blame for the loss; and it was diligence. There are, however, exceptions to this rule. Article utmost effort to immediately inform the shore tender that
incumbent upon the petitioner in order to entitle it to relief 1734 of the Civil Code enumerates the instances when the the port bow mooring line was severed.
in the case to rebut that presumption by proving, as is presumption of negligence does not attach:
alleged in the petition, that the loss was not due to any fault To be sure, Delsan, as the owner of the vessel, was obliged to
or negligence of the petitioner. Art. 1734. Common carriers are responsible for the loss, prove that the loss was caused by one of the excepted
destruction, or deterioration of the goods, unless the same is causes if it were to seek exemption from
The mere proof of delivery of goods in good order to a due to any of the following causes only: responsibility. 7 Unfortunately, it miserably failed to discharge
carrier, and of their arrival at the place of destination in bad this burden by the required quantum of proof.
order, makes out a prima facie case against the carrier, so 1) Flood storm, earthquake, lightning, or other natural
that if no explanation is given as to how the injury occurred, disaster or calamity; Delsan’s argument that it should not be held liable for the
the carrier must be held responsible. (4 R. C. L., p. 917.) It is loss of diesel oil due to backflow because the same had
incumbent upon the carrier to prove that the loss was due to already been actually and legally delivered to Caltex at the
accident or some other circumstance inconsistent with its 2) Act of the public enemy in war, whether international or
civil; time it entered the shore tank holds no water. It had been
liability. (Articles settled that the subject cargo was still in the custody of
361-363, Code of Commerce.) Indeed, if the Government of Delsan because the discharging thereof has not yet been
the Philippine Islands had instituted an action in a court of 3) Act or omission of the shipper or owner of the goods; finished when the backflow occurred. Since the discharging
law against the petitioner to recover the value of the oil lost of the cargo into the depot has not yet been completed at
while these consignments were in the court of 4) The character of the goods or defects in the packing or in the time of the spillage when the backflow occurred, there is
transportation, it would, upon the facts appearing before us, the containers; no reason to imply that there was actual delivery of the cargo
have been entitled to judgment. to the consignee. Delsan is straining the issue by insisting
5) Order or act of competent public authority. that when the diesel oil entered into the tank of Caltex on
From this it is apparent that the mandamus prayed for shore, there was legally, at that moment, a complete delivery
cannot be granted. It is a rule of universal application that a thereof to Caltex. To be sure, the extraordinary responsibility
Both the trial court and the CA uniformly ruled that Delsan
petition for extraordinary relief of the character here sought of common carrier lasts from the time the goods are
failed to prove its claim that there was a contributory
must show merit. That is, the petitioner's right to relief must unconditionally placed in the possession of, and received by,
negligence on the part of the owner of the goods – Caltex.
be clear. Such cannot be said to be the case where, as here, a the carrier for transportation until the same are delivered,
We see no reason to depart therefrom. As aptly pointed out
presumption of responsibility on the part of the petitioner actually or constructively, by the carrier to the consignee, or
by the CA, it had been established that the proximate cause
stands unrefuted upon the record. to a person who has the right to receive them. 8 The
of the spillage and backflow of the diesel oil was due to the
discharging of oil products to Caltex Bulk Depot has not yet
severance of the port bow mooring line of the vessel and the
We are of the opinion that, in the absence of proof showing been finished, Delsan still has the duty to guard and to
failure of the shore tender to close the storage tank gate
that the carrier was not at fault in respect to the matter preserve the cargo. The carrier still has in it the responsibility
valve even as a check on the drain cock showed that there
under discussion, the Insular Auditor was entitled to to guard and preserve the goods, a duty incident to its
was still a product on the pipeline. To the two courts below,
withhold, from the amount admittedly due to the petitioner having the goods transported.
the actuation of the gauger and the escort surveyor, both
for the freight charges, a sum sufficient to cover the value of personnel from the Caltex Bulk Depot, negates the allegation
the oil lost in transit. that Caltex was remiss in its duties. As we see it, the crew of To recapitulate, common carriers, from the nature of their
the vessel should have promptly informed the shore tender business and for reasons of public policy, are bound to
DELSAN TRANSPORT LINES, INC., Petitioner, vs. AMERICAN that the port mooring line was cut off. However, Delsan did observe extraordinary diligence in vigilance over the goods
HOME ASSURANCE CORPORATION, Respondent. G.R. No. not do so on the lame excuse that there was no available and for the safety of the passengers transported by them,
149019 August 15, 2006 banca. As it is, Delsan’s personnel signaled a "red light" according to all the circumstances of each case. 9 The mere
which was not a sufficient warning because such signal only proof of delivery of goods in good order to the carrier, and
meant that the pumping of diesel oil had been finished. their arrival in the place of destination in bad order, make
Common carriers are bound to observe extraordinary out a prima facie case against the carrier, so that if no
diligence in the vigilance over the goods transported by Neither did the blowing of whistle suffice considering the
distance of more than 2 kilometers between the vessel and explanation is given as to how the injury occurred, the carrier
them. They are presumed to have been at fault or to have must be held responsible. It is incumbent upon the carrier to
acted negligently if the goods are lost, destroyed or the Caltex Bulk Depot, aside from the fact that it was not the
agreed signal. Had the gauger and the escort surveyor from prove that the loss was due to accident or some other
deteriorated. 6 To overcome the presumption of negligence circumstances inconsistent with its liability.10
in case of loss, destruction or deterioration of the goods, the Caltex Bulk Depot not gone aboard the vessel to make
inquiries, the shore tender would have not known what really
Page 16 of 47
All told, Delsan, being a common carrier, should have one-half of the fruits have been lost due to such event, or to have acted negligently, unless it proves that it has
exercised extraordinary diligence in the performance of its considering that the law adopts a protective policy towards observed the extraordinary diligence required by law.
duties. Consequently, it is obliged to prove that the damage agriculture.
to its cargo was caused by one of the excepted causes if it Even if fire were to be considered a natural disaster within
were to seek exemption from responsibility. 11 Having failed "As the peril of fire is not comprehended within the the purview of Article 1734, it is required under Article
to do so, Delsan must bear the consequences. exceptions in Article 1734, supra, Article 1735 of the Civil 173910 of the same Code that the natural disaster must have
Code provides that in all cases other than those mentioned been the proximate and only cause of the loss, and that the
Exception: Article 1734 in Article 1734, the common carrier shall be presumed to carrier has exercised due diligence to prevent or minimize
have been at fault or to have acted negligently, unless it the loss before, during or after the occurrence of the disaster.
6. What are the effects when any of the five proves that it has observed the extraordinary diligence
exceptions in Art 1734 is present? required by law." We have held that a common carrier’s duty to observe the
- Need not prove extraordinary diligence. requisite diligence in the shipment of goods lasts from the
However, not autmomatically exempt--- Where loss of cargo results from the failure of the officers of time the articles are surrendered to or unconditionally placed
comply Art 1739. a vessel to inspect their ship frequently so as to discover the in the possession of, and received by, the carrier for
existence of cracked parts, that loss cannot be attributed to transportation until delivered to or until the lapse of a
7. Is fire a natural disaster? No. force majeure, but to the negligence of those officials.16 reasonable time for their acceptance by the person entitled
to receive them. When the goods shipped either are lost or
EDGAR COKALIONG SHIPPING LINES, The law provides that a common carrier is presumed to have arrive in damaged condition, a presumption arises against
INC., Petitioner, vs.UCPB GENERAL INSURANCE COMPANY, been negligent if it fails to prove that it exercised the carrier of its failure to observe that diligence, and there
INC., Respondent. G.R. No. 146018 June 25, 2003 extraordinary vigilance over the goods it transported. need not be an express finding of negligence to hold it
Ensuring the seaworthiness of the vessel is the first step in liable.11 1awphi1.néts
The uncontroverted findings of the Philippine Coast Guard exercising the required vigilance. Petitioner did not present
show that the M/V Tandag sank due to a fire, which resulted sufficient evidence showing what measures or acts it had Common carriers are obliged to observe extraordinary
from a crack in the auxiliary engine fuel oil service tank. Fuel undertaken to ensure the seaworthiness of the vessel. It diligence in the vigilance over the goods transported by
spurted out of the crack and dripped to the heating exhaust failed to show when the last inspection and care of the them. Accordingly, they are presumed to have been at fault
manifold, causing the ship to burst into flames. The crack was auxiliary engine fuel oil service tank was made, what the or to have acted negligently if the goods are lost, destroyed
located on the side of the fuel oil tank, which had a mere normal practice was for its maintenance, or some other or deteriorated. There are very few instances when the
two-inch gap from the engine room walling, thus precluding evidence to establish that it had exercised extraordinary presumption of negligence does not attach and these
constant inspection and care by the crew. diligence. It merely stated that constant inspection and care instances are enumerated in Article 1734. In those cases
were not possible, and that the last time the vessel was dry- where the presumption is applied, the common carrier must
docked was in November 1990. Necessarily, in accordance prove that it exercised extraordinary diligence in order to
Having originated from an unchecked crack in the fuel oil with Article 173517 of the Civil Code, we hold petitioner overcome the presumption.12
service tank, the fire could not have been caused by force responsible for the loss of the goods covered by Bills of
majeure. Broadly speaking, force majeure generally applies Lading Nos. 58 and 59.
to a natural accident, such as that caused by a lightning, an Respondent Federal Phoenix Assurance raised the
earthquake, a tempest or a public enemy.14 Hence, fire is not presumption of negligence against petitioners. However,
considered a natural disaster or calamity. In Eastern Shipping DSR-SENATOR LINES AND C.F. SHARP AND COMPANY, they failed to overcome it by sufficient proof of extraordinary
Lines, Inc. v. Intermediate Appellate Court,15 we explained: INC., petitioners, vs. FEDERAL PHOENIX ASSURANCE CO., diligence.
INC., respondent. G.R. No. 135377 October 7, 2003
"x x x. This must be so as it arises almost invariably from EASTERN SHIPPING LINES, INC., petitioner, vs.
some act of man or by human means. It does not fall within Fire is not one of those enumerated under the above INTERMEDIATE APPELLATE COURT and DEVELOPMENT
the category of an act of God unless caused by lighting or by provision which exempts a carrier from liability for loss or INSURANCE & SURETY CORPORATION, respondents. G.R.
other natural disaster or calamity. It may even be caused by destruction of the cargo. No. L-69044 May 29, 1987
the actual fault or privity of the carrier.
In Eastern Shipping Lines, Inc. vs. Intermediate Appellate we are of the opinion that fire may not be considered a
"Article 1680 of the Civil Code, which considers fire as an Court,9 we ruled that since the peril of fire is not natural disaster or calamity. This must be so as it arises
extraordinary fortuitous event refers to leases or rural lands comprehended within the exceptions in Article 1734, then almost invariably from some act of man or by human
where a reduction of the rent is allowed when more than the common carrier shall be presumed to have been at fault means. 10 It does not fall within the category of an act of
Page 17 of 47
God unless caused by lightning 11 or by other natural explain what could have caused the fire. The defendant, in 8. What if the loss, damage, or destruction is caused
disaster or calamity. 12 It may even be caused by the actual the Court's mind, failed to satisfactorily show that by a typhoon?
fault or privity of the carrier. 13 extraordinary vigilance and care had been made by the crew
to prevent the occurrence of the fire. The defendant, as a -Asia Lighterage v. CA, supra
Article 1680 of the Civil Code, which considers fire as an common carrier, is liable to the consignees for said lack of
extraordinary fortuitous event refers to leases of rural lands deligence required of it under Article 1733 of the Civil
Code. 15 CENTRAL SHIPPING COMPANY, INC., petitioner, vs.
where a reduction of the rent is allowed when more than INSURANCE COMPANY OF NORTH AMERICA, respondent.
one-half of the fruits have been lost due to such event, G.R. No. 150751 September 20, 2004
considering that the law adopts a protection policy towards Having failed to discharge the burden of proving that it had
agriculture. 14 exercised the extraordinary diligence required by law,
Petitioner Carrier cannot escape liability for the loss of the Liability for Lost Cargo
Page 19 of 47
they had fitted exactly in the hold from the port to the seas. They should then have taken extra precaution in capture by the enemies of the ship's flag. It follows that when
starboard side. stowing the logs in the hold, in consonance with their duty of the master of the Suevia decided to take refuge in the port
observing extraordinary diligence in safeguarding the goods. of Manila, he acted exclusively with a view to the protection
After carefully studying the records, we are inclined to But the carrier took a calculated risk in improperly securing of his vessel. There was no common danger to the ship and
believe that the logs did indeed shift, and that they had been the cargo. Having lost that risk, it cannot now escape cargo; and therefore it was not a case for a general average.
improperly loaded. responsibility for the loss. The point here in dispute has already been determined by
this court unfavorably to the contention of the appellant.
Second Issue: (Compagnie de Commerce et de Navigation D'Extreme
According to the boatswain’s testimony, the logs were piled Orient vs. Hamburg Amerika Packetfacht Actien Gesselschaft,
properly, and the entire shipment was lashed to the vessel by 36 Phil., 590.) The following provision contained in the York-
cable wire.33 The ship captain testified that out of the 376 Doctrine of Limited Liability Antwerp Rules, as we interpret it, is conclusive against the
pieces of round logs, around 360 had been loaded in the appellant's contention:
lower hold of the vessel and 16 on deck. The logs stored in The doctrine of limited liability under Article 587 of the Code
the lower hold were not secured by cable wire, because they of Commerce36 is not applicable to the present case. This rule
fitted exactly from floor to ceiling. However, while they were When a ship shall have entered a port of refuge . . . in
does not apply to situations in which the loss or the injury is consequence of accident, sacrifice, or other extraordinary
placed side by side, there were unavoidable clearances due to the concurrent negligence of the shipowner and the
between them owing to their round shape. Those loaded on circumstance which renders that necessary for the common
captain.37 It has already been established that the sinking of safety, the expense of entering such port shall be admitted
deck were lashed together several times across by cable wire, M/V Central Bohol had been caused by the fault or
which had a diameter of 60 millimeters, and were secured as general average. (York-Antwerp Rules, section 10.)
negligence of the ship captain and the crew, as shown by the
from starboard to port.34 improper stowage of the cargo of logs. "Closer supervision
on the part of the shipowner could have prevented this fatal Upon the question of the liability of the defendant company
It is obvious, as a matter of common sense, that the manner miscalculation."38 As such, the shipowner was equally for the expenses incident to the transhipment and
of stowage in the lower hold was not sufficient to secure the negligent. It cannot escape liability by virtue of the limited conveyance of the cargo to Vladivostock, it is noteworthy
logs in the event the ship should roll in heavy weather. liability rule. that the original bill of lading issued to the shipper in
Notably, they were of different lengths ranging from 3.7 to Baltimore contained the provision that the goods should be
12.7 meters.35 Being clearly prone to shifting, the round logs forwarded from Hamburn to Vladivostock at the steamer's
-Schmitz Transport v. TVI, supra expense and this term appeared not only in the paragraph
should not have been stowed with nothing to hold them
securely in place. Each pile of logs should have been lashed numbered 17 in the body of the bill of lading but also
together by cable wire, and the wire fastened to the side of - Art 1174 conspicuously printed in the shipping direction on the face
the hold. Considering the strong force of the wind and the of the instrument.
roll of the waves, the loose arrangement of the logs did not 9. Does an act of the public enemy in WAR relieve a
rule out the possibility of their shifting. By force of gravity, common carrier from liability? In the tenth paragraph of the General Rules contained in the
those on top of the pile would naturally roll towards the bill of lading which was issued at Hamburn upon account of
bottom of the ship. a. International Harvester v. Hamburg American Line the Suevia, for the forwarding of the cargo to Vladivostock,
GR No. L-11515 July 29, 1918 there is found the following provision:
The adjuster’s Report, which was heavily relied upon by
petitioner to strengthen its claim that the logs had not The two main questions raised by the appeal are, first X. If on account of quarantine, threatening quarantine, ice
shifted, stated that "the logs were still properly lashed by whether the cargo belonging to the plaintiff is liable to be blockade, war disturbances, strike, lockout, boycott, or
steel chains on deck." Parenthetically, this statement referred made to contribute, by way of general average, to the costs reason of a similar nature, the master is in doubt as to
only to those loaded on deck and did not mention anything and expenses incurred by reason of the internment of whether he can safely reach the port of destination, there
about the condition of those placed in the lower hold. Thus, the Suevia in the port of Manila, and, secondly, whether the discharge in the usual manner, or proceed thence on his
the finding of the surveyor that the logs were still intact defendant is liable for the expenses of transferring the cargo voyage unmolested he is at liberty to discharge the goods at
clearly pertained only to those lashed on deck. to another ship and transporting it to the port of destination. another place or harbour which he may consider safe,
whereby his obligations are fulfilled. . . . If the goods for any
The evidence indicated that strong southwest monsoons Upon the first question it is clear that the cargo in question is reason whatsoever cannot be discharged . . . at the port of
were common occurrences during the month of July. Thus, not liable to a general average. It is not claimed that this destination, the ship is at liberty to . . . forward them by some
the officers and crew of M/V Central Bohol should have agricultural machinery was contraband of war; and being other means to the port of destination, for ship's account but
reasonably anticipated heavy rains, strong winds and rough neutral goods, it was not liable to forfeiture in the event of not at ship's risk.
Page 20 of 47
Further on in the same bill of lading under the head "Special Furthermore, in the special condition to rule X, the defendant It must not be forgotten that the outbreak of the war
Clauses" is found an addendum to rule ten to the following company recognizes its responsibility with respect to the between Germany and Russia did not make the contract of
effect: forwarding of goods; and where it is said in paragraph X that affreightment absolutely illegal ass between the German
the master's obligation will be fulfilled by discharge in company and the American shipper. If war had broken out
Special — Condition to rule X. — The forwarding of through another port, it must be understood that reference is had to between Germany and the United States, and refuge had
goods to be effected as soon a possible, but the shipowner the obligations incident to the carriage of the goods on the been taken in some port in a neutral country, it might be said
not to be responsible for delay in the conveyance. The instant voyage. that this contract was dissolved on both sides, and a different
shipowner to have the liberty to store the goods at the question would thus have been presented; but even in that
expense and risk of the owner, shipper or consignee. The It should be remembered that stipulations, in a bill of lading case, it could not be successfully maintained that the German
shipowner further to be entitled to forward the goods by rail exempting a shipowner from the liability which would company was wholly absolved from every duty to the
from the port of discharge to the final place of destination, at ordinarily attach to him under the law are to be strictly shipper.
his expense, but at the risk of the owner, shipper or construed against him. (Cia. de Navigacion La
consignee. Flecha vs.Brauer, 168 u. Ss., 104.) This rule should be There is another aspect of the case which is highly pertinent
unhesitatingly applied in a case such as this where the bill of to the matter now under consideration. The freight was
It is now insisted for the appellant that inasmuch a war had lading under which the exemption is claimed was issued by prepaid by the shipper from Baltimore to destination, but has
broken out between Germany and Russia and the mater had the defendant company to itself. been only in part earned. The defendant company has
brought the cargo into a neutral harbor, all the obligations of broken the voyage by stopping at the intermediate port of
the company have been fulfilled. We think that this We find it stated in a well known treatise that where cargo Manila. Admitting that the defendant company is absolved
contention is untenable. The outbreak of the war between has been taken aboard a ship at a foreign port and war from the obligation to convey the cargo further on its course,
Germany and Russia undoubtedly absolved the defendant breaks out between the country to which the vessel belongs it is nevertheless clear that upon principles of equity the
company from so much of the contract of affreightment as and the country of the port of discharge, the neutral owner company should be bound to restore so much of the freight
required the defendant company to convey the goods to of the goods cannot complain of her not going to her a represents the unaccomplished portion of the voyage. If
Vladivostock upon the ship on which it was embarked; and destination. (Carver, Carriage of Goods by Sea, sec: 239.) The the freight had not been paid, the most that could be
no damages could be recovered by the plaintiff of the same learned author adds: claimed by the defendant would be an amount pro rata
defendant for its failure to convey the goods to the port of itineris peracti, as was conceded in the case of the Teutonia,
destination on that ship. But by the terms of the contract of to which reference has been already made; and now that the
Where goods have been loaded and partly carried on the freight has been prepaid, there is a clear obligation on the
affreightment the defendant company was bound to forward agreed voyage, though the exact performance of the
the cargo to Vladivostock at the steamer's expense, not part of the company to refund the excess, as money paid
contract may become legally impossible, it will not be upon a consideration that has partially failed.
necessarily by a steamer belonging to the defendant regarded as completely at an end, if it can by any reasonable
company; and it does not by any means follow that it is not construction be treated as still capable of being performed in
liable for the expense incurred by the owner in completing substance. Thus, where a Prussian vessel, carrying goods But it will be said that the contract to convey the cargo to
the unfinished portion of the voyage in another ship. under charter, had been ordered to discharge at Dunkirk, Hamburg and to forward it from there to Vladivostock was
and it became impossible for her to do so, because war an entirety, and that inasmuch as the defendant company is
It will be noted that under paragraph X of the bill of lading, broke out between France and Germany, it was held in the absolved from its obligation to proceed further with
quoted above, the master is given the election to discharge Privy Council, that the contract was not dissolved, and that performance, there can be no apportionment as between the
at another port, if war should interfere with the completion the shipowner might till hold the goods at Dover, where he voyage which has been accomplished and that which was yet
of the voyage to the port of destination. No such election had taken the ship, for the freight which would have been to be performed. The reply to this is that the break in the
has been made by the master. On the contrary, after arrival in payable under the charter-party had she been ordered to continuity of the voyage was a result of the voluntary act of
Manila, he refused to discharge the goods, and must be held that part. (The Teutonia (1872), L. R., 4 P. C., 171.) the master of the Suevia, adopted with a view to the
to have elected to retain them, leaving the obligations of the preservation of the ship; and it can not be permitted that the
contract intact, except in so far as they were modified, under defendant company should escape the consequences of that
In the case now before u we see no reason for holding that act, so far as necessary to effect an equitable adjustment of
the general principle of international law, by the fact that war the defendant company has been absolved by the outbreak
existed. So far was the master from electing to discharge the the rights of the owner of the cargo. There being no
of war from its contractual obligation to bear the expenses of evidence before us with respect to the amount of freight
goods in the port of Manila even on the demand of the forwarding the goods to Vladivostock, even thought it is
owner, that he proposed to hold the cargo until such time as which was prepaid, nor with respect to the proportion earned
immediately absolved from the duty to convey them on its and unearned, but only the fact that the owner paid out a
the Suevia might continue her voyage without fear of own ship.
molestation from her enemies. certain amount for transhipment to Vladivostock, it can be
Page 21 of 47
assumed that this amount approximately represents the b. Campagnie de Commerce v. Hamburg American confidently relied upon the French authorities at Saigon to
unearned portion of the freight. Line GR No. L-10986 March 31 1917 permit him to sail to his port of destination under alaissez-
passer or safe-conduct, which would have secured both the
We have not overlooked the provision in the original bill of it will readily be seen that the vital issue raised on this appeal vessel and her cargo from all danger of capture by any of the
lading which provides that freight paid in advance will not be is whether or not the master of the Sambia, when he fled belligerents. Counsel for the shipowner, on the contrary, urge
returned, goods lost or not lost. There is also a somewhat from the port of Saigon and took refuge in the port of that in the light of the developments of the present war, the
similar provision in the second bill of lading issued at Manila, had reasonable grounds to apprehend that his vessel master was fully justified in declining to leave his vessel in a
Hamburg. These provisions contemplate the special cae of was in danger of seizure or capture by the public enemies of situation in which it would be exposed to danger of seizure
the loss of the goods and can not be extended to the the flag under which he sailed. by the French authorities, should they refuse to be bound by
situation which arises when the ship for purposes of its own the alleged rule of international law laid down by opposing
protection abandons the enterprise. counsel. When the case was submitted we did not have at
If it was his duty to remain in the port of Saigon under the hand an authoritative report of the proceedings at the Hague
circumstances existing at the time when he completed the Conference touching the adoption of the sixth convention,
From what has been said it is apparent that the Court of First loading of the vessel, in the hope that he would be granted and we were not fully advised as to the final action taken by
Instance was correct not only in adjudging possession of the a laissez-passer or safe-conduct by the French authorities, it the world powers by way of ratification of, or adherence to
cargo to the plaintiff but also in imposing upon the is manifest that his flight subjected the ship and her owners its provisions. In the discussion of this branch of the case in
defendant company liability with respect to the amount to liability for the resultant damages suffered by the cargo. the consultation chamber, our lack of definite and
expended by the plaintiff in forwarding the goods to their authoritative information as to these matters resulted in such
destination. If, on the other hand, the master had reasonable ground to a division of opinion as to the respective rights of the parties,
believe that by remaining in the port of Saigon he would that it was at first impossible to secure a majority vote for the
The only other point raised by the bill of exceptions, which expose the vessel to a real, and not a merely imaginary final disposition of this, as well as some other important
we deem it necessary to notice, is based on a provision in the danger of seizure by the French authorities from which he cases submitted at the same time, involving claims
bill of lading to the effect that all disputes arising under the could secure her by taking refuge in the port of Manila, his amounting to nearly half a million pesos. Recently, however,
contract are, at the option of the defendant company, to be flight must be held to have been justified by the necessity our library was furnished with a copy of Stockton's "Outlines
decided according to German law and exclusively by the under which he was placed to elect that course which would of International Law" which briefly and as we think
Hamburg courts. From this it is argued that the Court of First secure the vessel from danger of seizure by a public enemy authoritatively sets forth what we now are all agreed would
Instance erred in assuming jurisdiction of the action and that of the country under whose flag she sailed; and the ship- appear to be the present status of public international law on
the case should have been decided in accordance with the owner must be held to be relieved from liability for the the subject of "days of grace" and "safe-conducts," which
principles of German law. deviation from the route prescribed in the charter party and may be granted merchant vessels of an enemy, lying in the
the resultant damages to the cargo, under the general ports of a belligerent at the commencement of hostilities.
It can not be admitted that a provision of this character has provisions of maritime law (Carver's Carriage of Goods by Admiral Stockton, a retired officer of the United States Navy,
the effect of ousting the jurisdiction of the court of the Sea, 5th Ed., sections 11 and 22), and the express provisions was the first delegate from the United States to the London
Philippine Islands in the matter now before it. An express of article 7 of the charter party which is as follows: Naval Conference in 1909, and his text-book, which went to
agreement tending to deprive a court of jurisdiction press soon after the outbreak of the war in Europe, contains
conferred on it by law is of no effect. (Molina vs. De la Riva, 6 The act of God, the king's enemies, arrests and restraints of the most recent statement of the doctrine by a recognized
Phil., 12.) Besides, whatever the effect of this provision, the princes, rulers and people, perils of the seas, barratry of the authority to which our attention has been invited.
benefit of it was waived when the defendant company master and crew, pirates, collisions, strandings, loss or
appeared and answered generally without objecting to the damage from fire on board, in hulk or craft, or on shore; and In Chapter XXIX of the "Outlines of International Law," which
jurisdiction of the court. act, neglect, default or error in judgment whatsoever of is devoted to the consideration of several "Open and
pilots, master, crew or other servant of the shipowners in the Unsettled Questions in Maritime Law," Admiral Stockton,
As regards the contention that the rights of the parties navigation of the steamer; and all and every the dangers and discussing the question of the allowance of days of grace at
should be determined in accordance with the law of accidents of the seas, canals and rivers, and of navigation of the outbreak of war says:
Germany, it is sufficient to say that when it is proposed to whatever nature or kind always mutually excepted.
invoke the law of a foreign country as supplying the proper The convention (VI) of the Hague conference of 1907
rules for the solution of a case, the existence of such law Counsel for the cargo owner insist that having in mind treating upon this subject was so unsatisfactory to the
must be pleaded and proved. Defendant has done neither. In accepted principles of public international law, the American delegation that they declined to sign it, and
such a case it is to be presumed that the law prevailing in the established practice of nations, and the express terms of the consequently it was not submitted to the United States
foreign country is the same as that which prevails in our own. Sixth Hague Convention (1907), the master should have Senate for ratification. The reason given for this procedure
Page 22 of 47
was "based on the ground that the convention is an case of states of Europe where quick mobilization maintains of His Majesty's protectorates, or in any state under His
unsatisfactory compromise between those who believe in the as a rule. Majesty's protection or in Cyprus.
existence of a right and those who refuse to recognize the
legal validity of the custom which has grown up in recent In an interesting article in The American Journal of 2. In the event of one of His Majesty's Principal Secretaries of
years." International Law, Vol. II, 1908, p. 266, the writer, Professor State being satisfied by information reaching him not later
James Brown Scott, after reviewing at some length the than midnight on Friday, the 7th day of August, 1914, that
The first article of this convention provides that when a history of the practice of granting days of grace and safe- the treatment accorded to British merchant ships and their
merchant ship of one of the belligerent powers is at the conducts which, he contended, should form a part of the law cargoes which at the date of the outbreak of hostilities were
commencement of hostilities in an enemy port, it of nations, concluded his discussion of the subject with the in the ports of the enemy or which subsequently entered
is desirable that it should be allowed to depart freely, either following observations: them is not less favorable than the treatment accorded to
immediately or after a sufficient term of grace, and to enemy merchant ships by article 3 to 7 of this order, he shall
proceed direct, after being furnished with a passport, to its It is therefore a source of regret that the Second Peace notify the Lords Commissioners of His Majesty's Treasury and
port of destination or such other port as shall be named by Conference refused to recognize it as a right but simply as a the Lords Commissioners of the Admiralty accordingly, and
it. privilege, a delai de faveur, which may be accorded or public notice thereof shall forthwith be given in the London
refused at the opinion of the belligerent, and that the Gazette, and article 3 to 8 of this order shall thereupon come
"The same applies in the case of a ship which left its last port privilege was unaccompanied by any recommendation of a into full force and effect.
of departure before the commencements of the war and period of time within which the privilege in question should
enters an enemy port in ignorance of hostilities." be accorded. . . . It may be said that the expression "it is 3. Subject to the provisions of this order enemy merchant
desirable" that the vessels should be allowed to depart freely ships which
As this is only a pious wish, it does not require any action of amounts in reality to a command, and that the practice of
favor or grace from any of the belligerents, and seizure in the future will recognize the custom as freely as it has done (i.) At the date of the outbreak of hostilities were in any port
port of any enemy vessel can be made immediately upon the in the past, thus establishing as a right what the conference in which this order applies; or
outbreak of war. The article is not as liberal as the practice modestly denominates a privilege. If such be the case the
has been in the past. opposition of Great Britain to the recognition of the right will
be as futile in practice as it was unreasonable at the (ii.) Cleared from their last port before the declaration of war,
conference. and after the outbreak of hostilities, enter a port to which
The policy of the United States in such matters was shown in this order applies, with no knowledge of the war:
the Spanish-American War in the rules laid down by the
President in his proclamation of April 26, 1898, the fourth The order in council of the British Government of the 6th of
August, 1914, providing for the granting of "days of grace," shall be allowed up till midnight (Greenwich mean time), on
article of which reads as follows: Friday, the 14th day of August, 1914, for loading or
which was substituted for a prior order in council of the 5th
of August, 1914, is as follows: unloading their cargoes and for departing from such port.
"ARTICLE 4. Spanish merchant vessels, in any ports or places
within the United States, shall be allowed till May 21, 1898 Provided that such vessels shall not be allowed to ship any
inclusive, for loading their cargoes and departing from such His Majesty being mindful, now that a state of war exists
between this country and Germany, of the recognition contraband of war, and any contraband of war already
ports or places; and such Spanish merchant vessels, if met at shipped on such vessels must be discharged.
sea, by any United States ship, shall be permitted to continue accorded to the practice of granting "days of grace" to
their voyage, if, on examination of their papers, it shall enemy merchant ships by the convention relative to the
appear that their cargoes were taken on board before the status of enemy merchant ship at the outbreak of hostilities, 4. Enemy merchant ships which cleared from their last port
expiration of the above term: Provided, That nothing herein signed at The Hague on the 18th of October, 1907, and before the declaration of war, and which with no knowledge
contained shall apply to Spanish vessels having on board any being desirous of lessening, so far as may be practicable, the of the war arrive at a port to which this order applies after
officer in the military or naval service of the enemy, or any injury caused by war to peaceful and unsuspecting the expiry of the time allowed by article 3 for loading or
coal (except such as may be necessary for their voyage), or commerce, is pleased, by and with the advice of His Privy unloading cargo and for departing, and are permitted to
any other article prohibited or contraband of war, or any Council, to order, and it is hereby ordered as follows: enter, may be required to depart either immediately, or
despatches of or to the Spanish Government." within such time as may be considered necessary by the
1. From and after the publication of this order no enemy customs officer of the port for the unloading of such cargo
merchant ship shall be allowed to depart, except in as they may be required or specially permitted to discharge.
This rule is an extremely liberal one and it is doubtful
whether it would be generally accepted, especially in the accordance with the provisions of this order, from any British
port or from any ports in any native state in India, or in any
Page 23 of 47
Provided that such vessels may, as a condition of being subsequently entered them, is, in his opinion, not less No undertaking is to be required from members of the crew
allowed to discharge cargo, be required to proceed to any favorable than that accorded to enemy merchant ships by who are of neutral nationality.
other specified British port, and shall there be allowed such articles 3 to 8 of this order, every enemy merchant ship
time for discharge as the customs officer of that port may which, on the outbreak of hostilities, was in any port to which Officers or members of the crew declining to give the
consider to be necessary. this order applies, and also every enemy merchant ship undertaking required by this article will be detained as
which cleared from its last port before the declaration of war, prisoners of war.
Provided also that, if any cargo on board such vessel is but which, with no knowledge of the war, enters a port to
contraband of war or is requisitioned under article 5 of this which this order applies, shall, together with the cargo on
board thereof, be liable to capture, and shall be brought And the Lords Commissioners of His Majesty's Treasury, the
order, she may be required before departure to discharge Lords Commissioners of the Admiralty, and each of His
such cargo within such time as the customs officer of the before the prize court forthwith for adjudication.
Majesty's Principal Secretaries of State, and all governors,
port may consider to be necessary; or she may be required to officers, and authorities whom it may concern are to give the
proceed, if necessary under escort, to any other of the ports 10. In the event of information reaching one of His Majesty's necessary directions herein as to them may respectfully
specified in article 1 of this order, and shall there discharge Principal Secretaries of State that British merchant ships appertain.
the contraband under the like conditions. which cleared from their last port before the declaration of
war, but are met with by the enemy at sea after the outbreak
of hostilities, are allowed to continue their voyage without NOTE. — The standard local time corresponding with the
5. His Majesty reserves the right recognized by the said Greenwich mean time mentioned in article 3 of the above
convention to requisition at any time subject to payment of interference with either the ship or the cargo, or after capture
are released with or without proceedings for adjudication in order in council as 8 a. m. on Saturday, the 15th day of
compensation enemy cargo on board any vessel to which August, 1914.
articles 3 and 4 of this order apply. the prize court, or are to be detained during the war or
requisitioned in lieu of condemnation as prize, he shall notify
the Lords Commissioners of the Admiralty accordingly, and The Decree of the President of France relating to German
6. The privileges accorded by articles 3 and 4 are not to shall publish a notification thereof in the London Gazette, vessels in French ports at the outbreak of war is as follows:
extend to cable ships, or to seagoing ships designed to carry and in that event, but not otherwise, enemy merchant ships
oil fuel, or to ships whose tonnage exceeds 5,000 tons gross, which cleared from their last port before the declaration of
or whose speed is 14 knots or over, regarding which the DECREE.
war, and are captured after the outbreak of hostilities and
entries in Lord's Register shall be conclusive for the purposes brought before the prize courts for adjudication, shall be
of this article. Such vessels will remain liable on adjudication ARTICLE 1. German commercial vessels which are now or
released or detained or requisitioned in such cases and upon
by the prize court to detention during the period of the war, have been in French ports since and including the 3d of
such terms as may be directed in the said notification in
or to requisition, in accordance, in either case, with the August, 1914, from 18.45 o'clock, or which enter the same
the London Gazette.
convention aforesaid. The said privileges will also not extend unaware of the outbreak of hostilities, shall be accorded,
to merchant ships which show by their build that they are from the date of the present decree, a delay of seven full
intended for conversion into warships, as such vessels are 11. Neutral cargo, other than contraband of war, on board an days within which to freely leave said ports and, after
outside the scope of the said convention, and are liable on enemy merchant ship which is not allowed to depart from a providing themselves with a safe-conduct gain their port of
adjudication by the prize court to condemnation as prize. port to which this order applies, shall be released. destination, or such other port as may be designated by the
naval authorities of the French port where they are, by some
7. Enemy merchant ships allowed to depart under articles 3 12. In accordance with the provisions of chapter III of the direct route.
and 4 will be provided with a pass indicating the port to convention relative to certain restrictions on the exercise of
which they are to proceed, and the route they are to follow. the right of capture in maritime war, signed at the Hague on In consequence of the reservation made by the German
the 18th day of October, 1907, an undertaking must, whether Government in articles 3 and 4, subarticle 2, of the Sixth
the merchant ship is allowed to depart or not, be given in Hague Convention of 1907, the benefit of the foregoing
8. A merchant ship which, after receipt of such a pass, does writing by each of the officers and members of the crew of
not follow the course indicated therein will be liable to provisions does not apply to German vessels that left their
such vessel, who is of enemy nationality, that he will not, last port of departure prior to August 3d, at 18.45 o'clock,
capture. after the conclusion of the voyage for which the pass is and which, unaware of the outbreak of hostilities, are
issued, engage while hostilities last in any service connected encountered on the high seas.
9. If no information reaches one of His Majesty's Principal with the operation of the war. If any such officer is of neutral
Secretaries of State by the day and hour aforementioned to nationality, an undertaking must be given in writing that he
the effect that the treatment accorded to British merchant ART. 2. All vessels of which the construction, armament, or
will not serve, after the conclusion of the voyage for which
ships and their cargoes which were in the ports of the enemy appearance indicate that they are susceptible of being
the pass is issued, on any enemy ship while hostilities last.
at the date of the outbreak of hostilities, or which
Page 24 of 47
transformed into vessels of war or of being utilized for some issued in "harmony with the present views of nations, and allowed the Russians one week, but the Russians allowed the
public service, shall not benefit by the provisions of article 1. sanctioned by their recent practice;" nor have we forgotten Japanese only two days. As to the present European War our
that the Supreme Court of the United States in the case sources of information are not absolutely authoritative, but it
In case such vessels are employed in the carriage of mails, of The Buena Ventura (175 U. S., 384; 44 Law. Ed., 206), which would appear that the English and Germans detained and
the Department of Posts shall see that all the mail bags and was decided at the October term, 1899, indicated that this seized each other's merchant vessels, and in some instances
parcels on board said boats shall be forwarded by the most proclamation was but a formal recognition of an established confiscated their cargoes, under circumstances which would
expeditious rout. practice of nations, which had been recognized as early as seem to indicate that one belligerent or the other, or both,
the Crimean War by England, France and Russia. But the very had wholly disregarded the pious wish of the sixth Hague
fact that there was so substantial a divergence of views convention. With reference to the other belligerents it is said
ART. 3. The Minister of Foreign Affairs, of the Navy, of Public among the conferees representing their respective that England and Austria-Hungary mutually granted ten days
Works, of Commerce, of Posts and Telegraphs, and of the governments at the second Hague Conference in 1907, with of grace; Germany and France, seven days; France and
Colonies, are hereby charged with the duty of carrying out regard to the existence and binding character of such a duty Austria, seven days; but that Great Britain and Turkey, and
the provisions of the present decree. under accepted rules of International Law, as to make it Great Britain and Bulgaria made no mutual allowance of
impossible for the conferees to agree upon a convention time, and that Italy without granting days of
Done in Paris, this 4th day of August, 1914. setting forth anything beyond "a pious wish" in the premises, grace captured all enemy vessels apparently intended for
quite conclusively demonstrates that, thereafter, at least, conversion into vessels of war, and sequestered the rest — a
(Sgd.) R. Poincare, President of the Republic. Gaston adherence to the practice by any belligerent could not be distinction without any very substantial difference.
Doumergue, Minister of Foreign Affairs. Victor Augagneur, demanded by virtue of any convention, tacit or express,
Minister of the Navy. Rene Renoult, Minister of Public Works. universally recognized by the members of the society of We conclude that under the circumstances surrounding the
Gaston Thomson, Minister of Commerce, Posts and nations; and that it may be expected only when the flight of the Sambia from the port of Saigon, her master had
Telegraphs. Maurice Raynaud, Minister of the Colonies. belligerent is convinced that the demand for adherence to no such assurances, under any well-settled and universally
the practice inspired by his own commercial and political accepted rule of public international law, as to the immunity
interests outweighs any advantage he can hope to gain by a of his vessel from seizure by the French authorities, as would
A critical examination of the terms of the convention itself,
refusal to recognize the practice as binding upon him. justify us in holding that it was his duty to remain in the port
having in mind the discussion which preceded its adoption,
satisfies us that at the outbreak of the present war, there was of Saigon in the hope that he would be allowed to sail for
no such general recognition of the duty of a belligerent to Professor Lawrence, an English authority, discussing the the port of destination designated in the contract of
grant "days of grace" and "safe-conducts" to enemy ships in practice in 1904 said: affreightment with a laissez-passer or safe-conduct which
his harbors, as would sustain a ruling that such alleged duty would secure the safety of his vessel and cargo en route.
was prescribed by any imperative and well settled rule of "Certainly it will be wise for British shipowners to read the
public international law, of such binding force that it was the signs of the times, and not calculate upon a continuance in It is true that soon after the outbreak of the war, the Republic
duty of the master of the Sambia to rely confidently upon a future of the indulgences which have been accorded in of France authorized and directed the grant of safe-conducts
compliance with its terms by the French authorities in recent years. . . ." And Professor Higgins, another English to enemy merchant vessels in its harbors, under certain
Saigon; and it seems clear from a reading of the British order authority, observed that "each state will determine for itself reasonable regulations and restrictions; so that it would
in council issued at the outbreak of the war, with its whether the desire to injure its enemy . . . will prevail over the appear that had the master of the Sambia awaited the
limitations, restrictions, and conditions imposed upon the fear of offending neutrals by causing a great dislocation in issuance of such a safe-conduct, he might have been
exercise of the privileges secured therein, that while that trade, in which some of them are sure to be interested." enabled to comply with the terms of his contract of
nation recognized the advantages to be anticipated from the affreightment. But until such action had been taken,
reciprocal adherence by all the belligerents to the practice in That the practice has been by no means uniform, and that the Sambiawas exposed to the risk of seizure in the event
that regard which had been developed in recent years, in a the tendency in recent years has been to limit, restrict and in that the French government should decline to conform to
more or less modified from, the order in council was not some cases, apparently, to disregard it altogether will appear the practice; and in the absence of any assurance in that
published in response to any imperative rule of public from a very summary review of its historical development. In regard upon which the master could confidently rely, his duty
international law to which that nation felt itself bound to the Crimean War(1854), England and France gave Russian to his owner and to his vessel's flag justified him in fleeing
subscribe. vessels six weeks for loading and departure. In the Prussian- from the danger of seizure in the port of an enemy to the
Austrian War of 1866, six weeks were allowed. In the war of absolute security of a neutral port.
We have not overlooked the fact that President McKinley's 1870 France granted a leave of thirty days. In the Spanish-
proclamation of April 26, 1898, providing for the immunity of American War (1898), Spain allowed American ships five Discussing the exception of "King's enemies," Carver says:
Spanish vessels in American ports at the outbreak of the days, and the United States allowed Spanish ships one
Spanish-American War, recited in its preamble that it was month. In the Russo-Japanese War (1904), the Japanese
Page 25 of 47
The next exception, that of "King's enemies," relates to acts take, Thus, where by the force of circumstances, a man has be secured, the duty clearly rests upon the master to make
done by states or peoples with which the sovereign may be the duty cast upon him of taking some action for another, such other advantageous disposition of the property of the
at war, at any time during the carriage of the goods. It does and under that obligation adopts a course which, to the shippers as circumstances will permit. (The
not include robbers on land; but has been said to include judgment of a wise and prudent man, is apparently the best Niagara vs. Cordes, 62 U. S., 7; Carver's Carriage of Goods by
pirates, or robbers on the high seas, as being enemies of all for the interest of the persons for whom he acts in a given Sea, 5th ed., pars. 294, 302, 305; Abbott (13th), p. 412;
nations. emergency, it may properly be said of the course so taken Shipton vs. Thornton, 9 A. & E., 314, 337; Matthews vs. Gibbs,
that it was in a mercantile sense necessary to take it. 30 L. J., Q. B., 55; Cf. Gibbs vs. Grey, 26 L. J., Ex., 286;
The shipowners is bound to be careful to avoid the acts of Shipton vs. Thornton, 9 A. & E., 314; Cannan vs. Meaburn, 1
such enemies; but where he has been so, he is not liable for There can be and there is no question as to the necessity, Bing., 243; Ang. Carr. s., 187; Cf. The Gratitudine, 3 C. Rob.,
losses occasioned by them. For example, for the destruction arising out of the presence of enemy cruisers on the high 240; The Hamburg, 32 L. J., Ad., 161; 33 L. J., Ad., 116;
or capture of the goods by enemies' cruisers; or for a delay seas which compelled the Sambia, once she had left the port Atwood vs. Selar, 3 Q. B. D., 342.)
where the master has properly put into a neutral port for of Saigon, to take refuge in the port of Manila and to stay
safety. The master is justified in putting in, and delaying, there indefinitely pending the outcome of the war. We The cargo of the Sambia being a perishable one, and it
where he has a reasonable apprehension of danger from conclude, therefore, that the deviation of the Sambia from having proved impracticable to secure prompt instructions
capture. the route prescribed in her charter party, and the subsequent from the shipper, the master was confronted with the
abandonment by the master of the voyage contemplated in necessity of electing the course he should pursue, to protect
xxx xxx xxx the contract of affreightment, must be held to have been the interests of the shipper whose property has been
justified by the necessity under which he was placed to elect intrusted to him under a contract of affreightment which he
that course which would remove and preserve the vessel found himself unable to execute upon his own vessel. He
An express exception of "King's enemies" relates, at least, to from danger of seizure by the public enemies of the flag elected, after taking the advice of a competent marine
the enemies of the state to which the carrier belongs. (Ang. under which she sailed; and that neither the vessel nor her surveyor, to sell the entire cargo under judicial authority, and
Carr. s., 200; Story, Bail. s., 526. But see per Byles, J., in owners are liable for the resultant damages suffered by the to that end followed substantially the proceedings prescribe
Russell vs. Niemann, (1864) 34 L. J., C. P. 10, at p. 14; Cf. owner of the cargo. in such cases in section II, chapter III of the Commercial
Morse vs. Slue [1671] 83 E. R., 453; Sir T. Ray. 220; 1 Vent. Code; and we are of opinion that not only is there nothing in
238. The exception "King's enemies," appears to have been the record which would sustain a finding that in so doing he
made, originally, because the bailee who had lost the goods Counsel for the cargo owner further contend that even if it
be held that the action of the master of the Sambia in fleeing failed to exercise a sound discretion in the performance of
by their acts was without a remedy against them. Southcote's the duty resting upon him to protect the interests of the
Case, 4 Co. Rep., 83 b; The Teutonia [1872] 42 L. J. Adm. 57; L. to a port of refuge and abandoning the prosecution of the
voyage contemplated in the contract of affreightment, was cargo owner, but that on the whole record it affirmatively
R., 4 P. C., 171; The San Roman [1872] 42 L. J. Adm. 46; L. R. 5 appears that this was the only course open to him under all
P. C., 301; Russell vs. Niemann, [1864] 34 L. J., C. P., 10.) justified or excused by the exigencies of war, it was his
imperative duty, nevertheless, to tranship the cargo on a the circumstances existing at the time when he adopted it.
neutral vessel to one of the ports of destination designated
The danger from which the master of the Sambia fled was a in the contract. No direct evidence appears to have been submitted by either
real and not merely an imaginary one as counsel for the party as to whether it would have been practicable to secure
shipper contends. Seizure at the hands of an "enemy of the a suitable vessel upon which to tranship the cargo. This may
King," though not inevitable, was a possible outcome of a We do not think that this contention is sustained by the
evidence of record. have been, and doubtless was, because the impracticability
failure to leave the port of Saigon; and we cannot say that of an attempt to tranship was tacitly conceded in the court
under the conditions existing at the time when the master below. But however this may be, it is clear that the record will
elected to flee from that port, there were no grounds for a Under ordinary circumstances, it may fairly be presumed in not sustain an affirmative finding that it was the duty of the
"reasonable apprehension of danger" from seizure by the the absence of instructions from a shipper whose goods are master of the Sambia to tranship his cargo rather than to sell
French authorities, and therefore no necessity for flight. As found aboard a vessel lying in a port of refuge, whose master it in the port of Manila. On the contrary, we think it
was said in the case of Australian Steam Nav. Co. vs. Morse has been compelled top abandon the attempt to transport sufficiently appears that in adopting the latter course he
(L. R., 4 P. C., 222): the cargo in his own vessel, that the shipper's interests will acted discreetly, prudently and with due regard for the
be consulted by forwarding his property to the port interests of the cargo owner.
The word "necessity," when applied to mercantile affairs, designated by him in the contract of affreightment; it would
where the judgment must in the nature of things be appear therefore that, when practicable, the master is bound
to act for the cargo owner in that way; but when the Our conclusions in this regard are deprived from
exercised, cannot, of course, mean an irresistible compelling considerations based upon the evidence of record, the
power. What is meant by it in such cases is the force of condition of the cargo is such as to render it inadvisable to
attempt to tranship, or if there is ground to believe that such admissions of counsel in argument, and matters of general
circumstances which determine the course a man ought to knowledge of which we are authorized to take judicial notice.
will be the case before suitable means of transhipment can
Page 26 of 47
On account of the unavoidable lack of ventilation while the arrival of the Sambia in Manila Bay, it must not be A shipowner, or shipmaster (if communication with the
the Sambia lay at anchor beneath the rays of a tropical sun, forgotten that the act of the "King's enemy" which justified shipowner is impossible), will be allowed a reasonable time in
her perishable cargo of rice and ricemeal began to heat soon and excused her flight from Saigon, necessitated, and which to decide what course he will adopt in such cases as
after she put into Manila Bay, a part of the cargo being therefore justified and excused the retention of the cargo those under discussion; time must be allowed to him to
rendered absolutely worthless by heating and through the aboard the vessel by the master for such time as might be ascertain the facts, and to balance the conflicting interests
inroads of weevils so that it had to be thrown overboard. reasonably necessary to ascertain the facts upon which he involved, of shipowner, cargo owner, underwriters on ship,
could intelligently decide upon the proper course to be cargo and freight. But once that time has elapsed, he is
Exhibit B which set out in full in the plaintiff's brief is a pursued thereafter; and that the deterioration of the cargo bound to act prompty according as he has elected either to
certificate dated the 7th of September, 1914, prepared by a set in as soon as the vessel came to anchor and adequate repair, or abandon the voyage, or tranship. If he delays, and
marine surveyor, who having been called upon to examine ventilation could not longer be provided. It follows that the owing to that delay a perishable cargo suffers damage, the
the cargo aboard the Sambia, reported that it "showed signs question which confronted him when the time had arrived shipowners will be liable for that damage; he cannot escape
of heating and of being infested with weevils" and for the making of his decision as to the disposition which that obligation by pleading the absence of definite
recommended, "in the interests of all concerned, that it be should be made of the cargo aboard his vessel was whether instructions from the owners of the cargo or their
discharged and disposed of as soon as possible" and that it the interests of the shipper would be consulted by the underwriters, since he has control of the cargo and is entitled
"be sold by 'private treaty' in preference to 'sale by auction,' transhipment of a perishable cargo of ricemeal that had to elect. (Idem, sec. 304.a)
owing to conditions in the local market." already begun to heat and to deteriorate, or by its sale on
the local market for the best price he could get — and we The other condition of the master's authority to sell is that
are of opinion that it sufficiently appears that under all the the owners of the cargo must have been communicated with
The risks of heavy and perhaps total loss, incident to an circumstances his duty was to sell rather than to tranship.
attempt to tranship this perishable cargo, were greatly and their instructions taken before selling, if practicable.
augmented by the possibility, and indeed the probability that Whether that was so must be judged having regard to all the
any vessel used for this purpose would be exposed to Counsel for the cargo owners further contend that the circumstances of the particular case. The master is not to
unusual and protracted delays, as a result of the abnormal shipowner should be held responsible, at all events, for the delay for instructions where delay would be clearly
conditions prevailing in the shipping trade after the outbreak deterioration in the value of the cargo, incident to its imprudent. But if there is a fair expectation of obtaining
of the war, of which we think we may properly take judicial detention on board the vessel from the date of its arrival in directions, either from the owners of the goods, or from
notice. Manila until it was sold. agents known by the master to have authority to deal with
the goods, within such a time as would not be imprudent,
But it is clear that the master could not be required to act on the master must make ever reasonable endeavor to get
And finally, it is a matter of common knowledge in this those directions; and his authority to sell does not arise until
jurisdiction that rice is not exported to Europe from the the very day of his arrival; or before he had a reasonable
opportunity to ascertain whether he could hope to carry out he has failed to get them.
Philippine Islands, and that freight vessels suitable for the
transportation of rice to Europe in bulk do not make a his contract and earn his freight; and that he should not be
practice of lying in Manila Bay, unless previous arrangements held responsible for a reasonable delay incident to an effort Should the master fail to seek for instructions when he might
have been made for their coming here under charter; so that to ascertain the wishes of the freighter, and upon failure to get them, or should he act against the instructions he
in the absence of any evidence to the contrary, we are secure prompt advices, to decide for himself as to the course receives, any sale or hypothecation of the cargo he may
satisfied that if the master of a German vessel, lying in Manila which he should adopt to secure the interests of the absent make under those circumstances is wrongful and void. (Idem,
Bay soon after the outbreak of the war, could, by any owner of the property aboard his vessel. sec. 299.)
possibility, have secured the services of such a vessel, he
could not reasonably have hoped to do so without the The master is entitled to delay for such a period as may, be It appears that two cablegrams were dispatched by the local
expenditure of considerable time in the effort. reasonable under the circumstance, before deciding on the agent of the shipowner and of the master, to the duly
course he will adopt. He may claim a fair opportunity of authorized representative of the cargo owners in Saigon, one
It has been suggested that the danger of loss and damage to carrying out the contract, and earning the freight, whether by on the very day of the arrival of the Sambia in Manila Bay.
this perishable cargo might have been averted had it been repairing or transhipping. Should the repair of the ship be (August 8, 1914) and other a week later, advising him of the
transhipped immediately upon the arrival of the Sambia in undertaken, it must be proceeded with diligently; and if so situation; that these cables were not delivered presumably
Manila Bay and before it began to heat at deteriorate in the done, the freighter will have not ground of complaint, because of the interruption of cable communications
hold of that vessel. although the consequent delay be a long one, unless, following the outbreak of war; that later, two letters were
indeed, the cargo is perishable, and likely to be injured by forwarded but remained unanswered until after the master
the delay. Where that is the case, it ought to be forwarded, had sought and secured judicial authority to sell the cargo —
But aside from any question as to the impracticability of or sold, or given up, as the case may be, without waiting for the answer when it was received being a flat refusal on the
securing a suitable vessel for that purpose immediately after repairs. (See Carver's Carriage by Sea, 5th ed., sec. 309.) part of the Saigon representative of the cargo owners to give
Page 27 of 47
any instructions or assume any responsibility; that on The contention that the court below was without jurisdiction freight is only payable on delivery, no part is earned until it is
September 4, 1914, the master of the Sambiahad a survey of the subject-matter by reason of the provision in the earned completely. So that whether the abandonment of the
made of the cargo, by a qualified marine surveyor, who charter party for the settlement of disputes by a reference to voyage be due to inability, or prevention of the ship, or to
reported that it "showed signs of heating and being infested arbitration in London, may be disposed of without extended the necessity of selling the goods, either to raise funds for
with weevils," and recommended that it be sold "in the discussion. This objection to the jurisdiction of the court the ship's repairs or their owner's interest, the shipowner
interests of all concerned;" that a copy of the marine appears for the first time in defendant's brief on appeal. In loses the whole freight.
surveyor's report was immediately mailed to the Saigon the court below defendant not only appeared and answered
representative of the cargo owners; that on September 10, without objecting to the court's jurisdiction, but sought On the other hand, if the cargo be accepted at the port of
1914, the master, not having been able to get into affirmative relief; and it is very clear that defendant cannot refuge under an agreement that delivery there shall be
communication with the cargo owners or their representative be permitted to submit the issues raised by the pleadings for treated as a performance by the shipowner of his contract; or
in Saigon, sought and secured judicial authority to sell the adjudication, without objection, and then, when unsuccessful, if the owner of the goods, by any act or default, prevents the
cargo; and that it was sold under judicial authority granted in assail the court's jurisdiction in reliance upon a stipulation in shipowner from carrying them on to their destination, the
accordance with the provisions of local law made and the charter party which the parties were at entire liberty to whole of the freight becomes at once payable.
provided in such cases. waive if they so desired. We do not stop therefore to rule
upon the contention of opposing counsel, that a contractual
stipulation, for a general arbitration cannot be invoked to Also sometimes the shipowner becomes entitled, by
It will be seen that thirty-three days elapsed from the date of agreement, on delivery at a port of refuge, to freight in
the arrival of the Sambia in Manila Bay, to the date of the oust our courts of their jurisdiction, under the doctrine
announced in the cases of Wahl and Wahl vs. Donaldson, proportion to the part of the voyage which has been
master's application for judicial authority to sell the cargo. accomplished. This subject will be discussed more fully
But having in mind the extraordinary and exceptional Sims & Co. (2 Phil. Rep., 301, 303), and Cordoba vs. Conde (2
Phil. Rep., 445, 447); and that this doctrine should be applied hereafter. Here it is enough to say that no agreement of this
conditions existing at that time as a result of the war, with its kind can arise, by implication, unless the cargo owner has
interruptions of mail and cable communications, its in the case at bar, notwithstanding the fact that the contract
was executed in England, in the absence of averment and consented to accept the goods under circumstances which
disruption of the markets throughout the world, its left him an option to have them carried on to their
development of questions as to whether food supplies proof that under the law of England compliance with, or an
offer to comply with such a stipulation constitutes a destination by the shipowner, in his own or some other
should or should not be declared contraband, and its vessel.
threatening aspects with relation to shipping and commercial condition precedent to the institution of judicial proceeding
enterprises of all kinds throughout the world, we are unable for the enforcement of the contract.
to say that the master devoted an unreasonable length of Where the vessel has been abandoned at sea by the master
time to the determination of the problem of the disposition The claim advanced on behalf of the shipowner for freights is and crew, without any intention of returning to her, the
of the cargo with which he was confronted after his arrival in wholly without merit. Under the terms of the contract of freighter is entitled to treat the contract as abandoned; so
Manila Bay. On the contrary, we are of opinion that he affreightment, the amount of the freight was made payable that if she be brought into port by salvors, he may claim the
proceeded with all reasonably dispatch, and did all that could on delivery of the cargo at the designated port of goods without becoming liable to pay freight.
be required of a prudent man to protect the interests of the destination. It is clear then, that under the terms of that
owner of the cargo aboard his vessel; so that any losses instrument freight never became payable. Carrying the cargo In The Cito, the Court of Appeal decided that the ship owner
which resulted from the detention of the cargo aboard from Saigon to Manila was not even a partial performance of had no claim for freight after the abandonment; but declined
the Sambia must be attributed to the act of the "enemies of a contract to carry it from Saigon to Europe; and even it if to say that that put an end to the contract of affreightment.
the king," which compelled the Sambia to flee to a port of could be treated as such, the shipowner would have no claim By the abandonment the shipowners gave the cargo owners
refuge, and made necessary the retention of the cargo for freight, in the absence of any agreement, express or a right to elect to treat the contract as at and end. "We do
aboard the vessel at anchor under a tropical sun, and without implied, to make payment for a partial performance of the not decided what would have been the result if, after the
proper ventilation, until it could be ascertained that the contract. ship had been brought in as it was by the salvors, and before
interests of the absent owner would be consulted by the sale the cargo owners had come ion and excercised their right to
of this perishable cargo in the local market. The citation from Carver (section 307) referred to in the the cargo, the shipowners had given bail for the ship and
decision of the trial court is as follows: cargo, and had carried the cargo on."
We come now to consider the various contentions of counsel
for the shipowner denying the right of the owners of the Should the master relinquish the attempt either to carry on The claim of the shipowner for general average cannot be
cargo to a judgment for al, or some specified part, of the the goods in his own ship or to send them to their sustained under the provisions of the York-Antwerp Rules of
proceeds of the sale of the rice. destination in another ship, he will thereby wholly abandon 1890, by reference to which, it was expressly stipulated in the
any claim for freight in respect to them, unless it has been charter party, all such questions should be settled, Rules X
made payable in advance, or irrespective of delivery. Where and XI, which treat of "Expenses at Port of Refuge, etc.," and
Page 28 of 47
"Wages and Maintenance of Crew in Port of Refuge, etc.," Such claims have their foundation in equity, and rest upon In the opinion just cited there will be found a general
provide for general average "When a ship shall have entered the doctrine that whatever is sacrificed for the common historical review of the authorities upon which the foregoing
a port or place of refuge, or shall have returned to her port benefit of the associated interests shall be made good by all conclusions were avowedly based, and we think we may
or place of loading, in consequence of accident, sacrifice, or the interests which are exposed to the common peril and properly close our discussion of this branch of the case at
other extraordinary circumstances which render that which were saved from the common danger by the sacrifice. bar, with the following extracts therefrom:
necessary for the common safety . . .;" and an examination of Much is deferred in such an emergency to the judgment and
the entire body of these rules discloses that general average decision of the master; but the authorities, everywhere, agree In the earliest case in this court, Mr. Justice Story, delivering
is never allowed thereunder unless the loss or damage that three things must concur in order to constitute a valid judgment, stated the leading limitations and contributions,
sought to be made good as general average has been claim for general average contribution: First, there must be a and recognized by all maritime nations, to justify a general
incurred for the "common safety." It is very clear that in common danger to which the ship, cargo and crew were all contribution, as follows: "First, that the ship and cargo should
fleeing from the port of Saigon and taking refuge in Manila exposed, and that danger must be imminent and apparently be placed in a common imminent peril; secondly, that there
Bay the master of the Sambia was not acting for the common inevitable, except by incurring a loss of a portion of the should be a voluntary sacrifice of property to avert that peril;
safety of the vessel and her cargo. The French cargo was associated interests to save the remainder. Second, there and, thirdly, that by the sacrifice the safety of the other
absolutely secure from danger of seizure or confiscation so must be the voluntary sacrifice of a part for the benefit of the property should be presently and successfully attained."
long as it remained in the port of Saigon, and there can be whole, as, for example, a voluntary jettison or casting away of Columbian Ins. Co. of Alexandria vs. Ashby and Stribling, 38
no question that the flight of the Sambia was a measure of some portion of the associated interests for the purpose of U. S., 330; 13 Pet., 331, 338 (10: 186, 190).
precaution adopted solely and exclusively for the avoiding the common peril, or a voluntary transfer of the
preservation of the vessel from danger of seizure or capture. common peril from the whole to a particular portion of those
interests. Third, the attempt so made to avoid the common In the next case which came before this court, Mr. Justice
peril to which all those interests were exposed must be to Grier, in delivering judgment defined these requisites,
Rule 18 of the York-Antwerp Rules is as follows: somewhat more fully, as follows: "In order to constitute a
some practical extent successful, for if nothing is saved there
cannot be any such contribution in any case. case of general average, three things must occur: 1st. a
Except as provided in the foregoing rules, the adjustment (Barnard vs. Adams, 10 How., 303; Patten vs. Darling, 1 Cliff., common danger, a danger in which ship, cargo and crew all
shall be drawn up in accordance with the law and practice 262; Pars. Ins., 278.) participate; a danger imminent and apparently inevitable,
that would have governed the adjustment had the contract except by voluntary incurring the loss of a portion of the
of affreightment not contained the clause to pay general whole to save the remainder. 2. There must be a voluntary
average according to these rules. In the case of Ralli vs. Troop (157 U. S., 418), Justice Gray, jettison, jactus, or casting away of some portion of the joint
delivering the opinion for the court said: concern for the purpose of avoiding this imminent
If then, any doubt could properly arise as to the meaning and peril, periculi imminentis evitandi causa, or, in other words, a
effect of the words "common safety" as used in this body of The result of the principles above stated, confirmed by the transfer of the peril from the whole to a particular portion of
rules, we would be justified in resolving it in accordance with authorities above referred to, may be summed up as follows: the whole. 3. This attempt to avoid the imminent peril must
settled principles of maritime law; and an examination of the be successful."
authorities discloses a substantial unanimity of opinion as to The law of general average is part of the maritime law, and
the general doctrine which provides that claims for not of the municipal law, and applies to maritime adventures xxx xxx xxx
contribution in general average must be supported by proof only.
that sacrifices on account of which such claims are submitted Mr. Justice Shee, in a note to Abbott on Shipping, after
were made to avert a common imminent peril, and that To constitute a general average loss, there must be a reviewing the statements of many continental writers upon
extraordinary expenses for which reimbursement is sought, voluntary sacrifice of part of the maritime adventure, for the the subject, concludes: "Upon the whole, it is impossible,
were incurred for the joint benefit of ship and cargo. purpose, and with the effect of saving the other parts of the consistently with the opinion of Lord Tenterden, and with the
adventure from an imminent peril impending over the whole. doctrine of all the writers on maritime law, whose opinions
The doctrine is discussed at length in numerous decisions of have not been warped by the exceptional legislation or
the Supreme Court of the United States, a number of which The interests so saved must be the sole object of the practice of the countries in which they have written, to
are cited in the court below, but for our purposes it will be sacrifice, and those interests only can be required to recognize a rule respecting ship's expenses more
sufficient to insert here a few extracts from two of the contribute to the loss. The safety of property not included in comprehensive than the following one: Expenses voluntarily
leading cases. the common adventure can neither be an object of the and successfully incurred, or the necessary consequences of
sacrifice, nor a ground of contribution. resolutions voluntarily and successfully taken, by a person in
In the cases of The Star of Hope vs. Annan (76 U. S., 203), charge of a sea adventure, for the safety of life, ship and
Justice Clifford, speaking for the court said: cargo, under the pressure of a danger of total loss or
destruction imminent and common to them, give, the ship
Page 29 of 47
being saved, a claim to general average contribution." Common carriers are responsible for the loss, destruction or completely agrees with the respondent Court's finding that
(Abbott on Shipping 11th ed., 537, note.) In Harrison vs. Bank deterioration of the goods, unless the same is due to any of on December 1, 1956, the private respondent delivered the
of Australasia, L. R. 7 Exch., 39, 48, that statement was quoted the following causes only: scraps to Captain Filomeno Niza for loading in the lighter
as laying down the true rule, although there was a difference "Batman," That the petitioner, thru his employees, actually
of opinion as to whether the facts of the case came within it. (1) Flood, storm, earthquake, lightning, or other received the scraps is freely admitted. Significantly, there is
(See also Robinson vs. Price, L. R. 2, Q. B. Div., 91, 04, 295.) natural disaster or calamity; not the slightest allegation or showing of any condition,
qualification, or restriction accompanying the delivery by the
10. What if there is contributory negligence on the private respondent-shipper of the scraps, or the receipt of
(2) Act of the public enemy in war, whether the same by the petitioner. On the contrary, soon after the
part of the shipper/owner/plaintiff? international or civil;
-Art 1741, 1742 scraps were delivered to, and received by the petitioner-
common carrier, loading was commenced.
(3) Act or omission of the shipper or owner of the
IRON BULK SHIPPING PHILIPPINES, CO., LTD., petitioner, vs. goods;
REMINGTON INDUSTRIAL SALES By the said act of delivery, the scraps were unconditionally
CORPORATION, respondent. G.R. No. 136960 December 8, placed in the possession and control of the common carrier,
2003 (4) The character of the goods or defects in the and upon their receipt by the carrier for transportation, the
packing or in the containers; contract of carriage was deemed perfected. Consequently,
the petitioner-carrier's extraordinary responsibility for the
Even granting, for the sake of argument, that the subject loss, destruction or deterioration of the goods commenced.
cargo was already in a damaged condition at the time it was (5) Order or act of competent public authority.
Pursuant to Art. 1736, such extraordinary responsibility
accepted for transportation, the carrier is not relieved from would cease only upon the delivery, actual or constructive,
its responsibility to exercise due care in handling the Except in the cases mentioned under Article 1734, if the
by the carrier to the consignee, or to the person who has a
merchandise and in employing the necessary precautions to goods are lost, destroyed or deteriorated, common carriers
right to receive them. 5 The fact that part of the shipment
prevent the cargo from further deteriorating. It is settled that are presumed to have been at fault or to have acted
had not been loaded on board the lighter did not impair the
the extraordinary diligence in the vigilance over the goods negligently, unless they prove that they observed
said contract of transportation as the goods remained in the
tendered for shipment requires the common carrier to know extraordinary diligence as required under the law.18 The Court
custody and control of the carrier, albeit still unloaded.
and to follow the required precaution for avoiding damage of Appeals did not err in finding that no competent evidence
to, or destruction of the goods entrusted to it for safe was presented to prove that the deterioration of the subject
carriage and delivery.15 It requires common carriers to render cargo was brought about by any of the causes enumerated The petitioner has failed to show that the loss of the scraps
service with the greatest skill and foresight and to use all under the aforequoted Article 1734 of the said Code. We was due to any of the following causes enumerated in Article
reasonable means to ascertain the nature and characteristic likewise agree with appellate court’s finding that the carrier 1734 of the Civil Code, namely:
of goods tendered for shipment, and to exercise due care in failed to present proof that it exercised extraordinary
the handling and stowage, including such methods as their diligence in its vigilance over the goods. The presumption (1) Flood, storm, earthquake, lightning, or other natural
nature requires.16 Under Article 1742 of the Civil Code, even if that the carrier was at fault or that it acted negligently was disaster or calamity;
the loss, destruction, or deterioration of the goods should be not overcome by any countervailing evidence.
caused, among others, by the character of the goods, the (2) Act of the public enemy in war, whether international or
common carrier must exercise due diligence to forestall or -AF Sanchez v. CA, supra civil;
lessen the loss. This extraordinary responsibility lasts from
the time the goods are unconditionally placed in the
11. Requisites to relieve a common carrier from (3) Act or omission of the shipper or owner of the goods;
possession of, and received by the carrier for transportation
liability from an Order or act of competent
until the same are delivered, actually or constructively, by the
authority. (4) The character of the goods or defects in the packing or in
carrier to the consignee, or to the person who has a right to
receive them.17 In the instant case, if the carrier indeed found the containers;
the steel sheets to have been covered by rust at the time that MAURO GANZON, petitioner, vs. COURT OF APPEALS and
it accepted the same for transportation, such finding should GELACIO E. TUMAMBING, respondents. G.R. No. L-48757 (5) Order or act of competent public authority.
have prompted it to apply additional safety measures to May 30, 1988
make sure that the cargo is protected from corrosion. This,
Hence, the petitioner is presumed to have been at fault or to
the carrier failed to do. The petitioner, in his first assignment of error, insists that the have acted negligently. 6 By reason of this presumption, the
scrap iron had not been unconditionally placed under his court is not even required to make an express finding of fault
Article 1734 of the Civil Code states that: custody and control to make him liable. However, he
Page 30 of 47
or negligence before it could hold the petitioner answerable impossible the fulfillment by the carrier of its obligation. The shipment incurred damage or losses while still in the care
for the breach of the contract of carriage. Still, the petitioner petitioner was not duty bound to obey the illegal order to and responsibility of Wallem and before it was turned over
could have been exempted from any liability had he been dump into the sea the scrap iron. Moreover, there is absence and delivered to the arrastre operator.
able to prove that he observed extraordinary diligence in the of sufficient proof that the issuance of the same order was
vigilance over the goods in his custody, according to all the attended with such force or intimidation as to completely The trial court, however, found through the testimony of Mr.
circumstances of the case, or that the loss was due to an overpower the will of the petitioner's employees. The mere Maximino Velasquez Talens, a cargo surveyor of Oceanica
unforeseen event or to force majeure. As it was, there was difficulty in the fullfilment of the obligation is not Cargo Marine Surveyors Corporation, that the losses and
hardly any attempt on the part of the petitioner to prove that considered force majeure. We agree with the private damage to the cargo were caused by the mishandling of the
he exercised such extraordinary diligence. respondent that the scraps could have been properly arrastre operator. Specifically, that the torn cargo bags
unloaded at the shore or at the NASSCO compound, so that resulted from the use of steel hooks/spikes in piling the
It is in the second and third assignments of error where the after the dispute with the local officials concerned was cargo bags to the pallet board and in pushing the bags by
petitioner maintains that he is exempt from any liability settled, the scraps could then be delivered in accordance the stevedores of the arrastre operator to the tug boats then
because the loss of the scraps was due mainly to the with the contract of carriage. to the ports.25 The appellate court affirmed the finding of
intervention of the municipal officials of Mariveles which mishandling in the discharge of cargo and it served as its
constitutes a caso fortuito as defined in Article 1174 of the There is no incompatibility between the Civil Code provisions basis for exculpating respondents from liability, rationalizing
Civil Code. 7 on common carriers and Articles 361 8 and 362 9 of the Code that with the fault of the arrastre operator in the unloading
of Commerce which were the basis for this Court's ruling in of the cargo established it should bear sole liability for the
We cannot sustain the theory of caso fortuito. In the courts Government of the Philippine Islands vs. Ynchausti & Co.10 cost of the damaged/lost cargo.
below, the petitioner's defense was that the loss of the and which the petitioner invokes in tills petition. For Art.
scraps was due to an "order or act of competent public 1735 of the Civil Code, conversely stated, means that the While it is established that damage or losses were incurred
authority," and this contention was correctly passed upon by shipper will suffer the losses and deterioration arising from by the shipment during the unloading, it is disputed who
the Court of Appeals which ruled that: the causes enumerated in Art. 1734; and in these instances, should be liable for the damage incurred at that point of
the burden of proving that damages were caused by the transport. To address this issue, the pertinent laws and
fault or negligence of the carrier rests upon him. However, jurisprudence are examined.
... In the second place, before the appellee Ganzon could be the carrier must first establish that the loss or deterioration
absolved from responsibility on the ground that he was was occasioned by one of the excepted causes or was due to
ordered by competent public authority to unload the scrap an unforeseen event or to force majeure. Be that as it may, Common carriers, from the nature of their business and for
iron, it must be shown that Acting Mayor Basilio Rub had the insofar as Art. 362 appears to require of the carrier only reasons of public policy, are bound to observe extraordinary
power to issue the disputed order, or that it was lawful, or ordinary diligence, the same is .deemed to have been diligence in the vigilance over the goods transported by
that it was issued under legal process of authority. The modified by Art. 1733 of the Civil Code. them.26 Subject to certain exceptions enumerated under
appellee failed to establish this. Indeed, no authority or Article 173427 of the Civil Code, common carriers are
power of the acting mayor to issue such an order was given responsible for the loss, destruction, or deterioration of the
in evidence. Neither has it been shown that the cargo of 12. Duration of Liability goods. The extraordinary responsibility of the common
scrap iron belonged to the Municipality of Mariveles. What carrier lasts from the time the goods are unconditionally
we have in the record is the stipulation of the parties that the a. PHILIPPINES FIRST INSURANCE CO., placed in the possession of, and received by the carrier for
cargo of scrap iron was accilmillated by the appellant INC., Petitioner, vs. WALLEM PHILS. SHIPPING, transportation until the same are delivered, actually or
through separate purchases here and there from private INC., UNKNOWN OWNER AND/OR UNKNOWN constructively, by the carrier to the consignee, or to the
individuals (Record on Appeal, pp. 38-39). The fact remains CHARTERER OF THE VESSEL M/S "OFFSHORE person who has a right to receive them.28
that the order given by the acting mayor to dump the scrap MASTER" AND "SHANGHAI FAREAST SHIP
iron into the sea was part of the pressure applied by Mayor BUSINESS COMPANY," Respondents. G.R. No. For marine vessels, Article 619 of the Code of Commerce
Jose Advincula to shakedown the appellant for P5,000.00. 165647 March 26, 2009 provides that the ship captain is liable for the cargo from the
The order of the acting mayor did not constitute valid time it is turned over to him at the dock or afloat alongside
authority for appellee Mauro Ganzon and his representatives It is undisputed that the shipment was damaged prior to its the vessel at the port of loading, until he delivers it on the
to carry out. receipt by the insured consignee. The damage to the shore or on the discharging wharf at the port of unloading,
shipment was documented by the turn-over survey23 and unless agreed otherwise. In Standard Oil Co. of New York v.
Now the petitioner is changing his theory to caso fortuito. Request for Bad Order Survey.24 The turn-over survey, in Lopez Castelo,29 the Court interpreted the ship captain’s
Such a change of theory on appeal we cannot, however, particular, expressly stipulates that 2,426 bags of the liability as ultimately that of the shipowner by regarding the
allow. In any case, the intervention of the municipal officials shipment were received by the arrastre operator in damaged captain as the representative of the ship owner.
was not In any case, of a character that would render condition. With these documents, petitioner insists that the
Page 31 of 47
Lastly, Section 2 of the COGSA provides that under every responsibility also devolves upon the CARRIER. Both the Moreover, the liability of Wallem is highlighted by Mr. Talen’s
contract of carriage of goods by sea, the carrier in relation to ARRASTRE and the CARRIER are therefore charged with and notes in the Bad Order Inspection, to wit:
the loading, handling, stowage, carriage, custody, care, and obligated to deliver the goods in good condition to the
discharge of such goods, shall be subject to the consignee.(Emphasis supplied) (Citations omitted) "The bad order torn bags, was due to stevedores[‘] utilizing
responsibilities and liabilities and entitled to the rights and steel hooks/spikes in piling the cargo to [the] pallet board at
immunities set forth in the Act.30 Section 3 (2) thereof then The liability of the arrastre operator was reiterated in Eastern the vessel’s cargo holds and at the pier designated area
states that among the carriers’ responsibilities are to properly Shipping Lines, Inc. v. Court of Appeals36 with the clarification before and after discharged that cause the bags to torn
and carefully load, handle, stow, carry, keep, care for, and that the arrastre operator and the carrier are not always and [sic]."44 (Emphasis supplied)
discharge the goods carried. necessarily solidarily liable as the facts of a case may vary the
rule. The records are replete with evidence which show that the
The above doctrines are in fact expressly incorporated in the damage to the bags happened before and after their
bill of lading between the shipper Shanghai Fareast Business Thus, in this case the appellate court is correct insofar as it discharge45 and it was caused by the stevedores of the
Co., and the consignee, to wit: ruled that an arrastre operator and a carrier may not be held arrastre operator who were then under the supervision of
solidarily liable at all times. But the precise question is which Wallem.1awphi1.net
4. PERIOD OF RESPONSIBILITY. The responsibility of the entity had custody of the shipment during its unloading from
carrier shall commence from the time when the goods are the vessel? It is settled in maritime law jurisprudence that cargoes while
loaded on board the vessel and shall cease when they are being unloaded generally remain under the custody of the
discharged from the vessel. The aforementioned Section 3(2) of the COGSA states that carrier. In the instant case, the damage or losses were
among the carriers’ responsibilities are to properly and incurred during the discharge of the shipment while under
The Carrier shall not be liable of loss of or damage to the carefully load, care for and discharge the goods carried. The the supervision of the carrier. Consequently, the carrier is
goods before loading and after discharging from the vessel, bill of lading covering the subject shipment likewise liable for the damage or losses caused to the shipment. As
howsoever such loss or damage arises.31 stipulates that the carrier’s liability for loss or damage to the the cost of the actual damage to the subject shipment has
goods ceases after its discharge from the vessel. Article 619 long been settled, the trial court’s finding of actual damages
On the other hand, the functions of an arrastre operator of the Code of Commerce holds a ship captain liable for the in the amount of ₱397,879.69 has to be sustained.
involve the handling of cargo deposited on the wharf or cargo from the time it is turned over to him until its delivery
between the establishment of the consignee or shipper and at the port of unloading. b. Article 1736, 1737, 1738
the ship's tackle.32 Being the custodian of the goods c. Eastern Shipping Lines v. CA GR No. 94712 July 12,
discharged from a vessel, an arrastre operator's duty is to In a case decided by a U.S. Circuit Court, Nichimen Company 1994
take good care of the goods and to turn them over to the v. M./V. Farland,37 it was ruled that like the duty of
party entitled to their possession.33 seaworthiness, the duty of care of the cargo is non- The common carrier's duty to observe the requisite
delegable,38 and the carrier is accordingly responsible for the diligence in the shipment of goods lasts from the time
Handling cargo is mainly the arrastre operator's principal acts of the master, the crew, the stevedore, and his other the articles are surrendered to or unconditionally placed
work so its drivers/operators or employees should observe agents. It has also been held that it is ordinarily the duty of in the possession of, and received by, the carrier for
the standards and measures necessary to prevent losses and the master of a vessel to unload the cargo and place it in transportation until delivered to, or until the lapse of a
damage to shipments under its custody.34 readiness for delivery to the consignee, and there is an reasonable time for their acceptance by, the person
implied obligation that this shall be accomplished with sound entitled to receive them (Arts. 1736-1738, Civil Code;
machinery, competent hands, and in such manner that no Ganzon vs. Court of Appeals, 161 SCRA 646; Kui Bai vs.
In Fireman’s Fund Insurance Co. v. Metro Port Service, unnecessary injury shall be done thereto.39 And the fact that
Inc.35 the Court explained the relationship and responsibility Dollar Steamship Lines, 52 Phil. 863). When the goods
a consignee is required to furnish persons to assist in shipped either are lost or arrive in damaged condition, a
of an arrastre operator to a consignee of a cargo, to quote: unloading a shipment may not relieve the carrier of its duty presumption arises against the carrier of its failure to
as to such unloading.40 observe that diligence, and there need not be an
The legal relationship between the consignee and the express finding of negligence to hold it liable (Art. 1735,
arrastre operator is akin to that of a depositor and The exercise of the carrier’s custody and responsibility over Civil Code; Philippine National Railways vs. Court of
warehouseman. The relationship between the consignee and the subject shipment during the unloading actually Appeals, 139 SCRA 87; Metro Port Service vs. Court of
the common carrier is similar to that of the consignee and transpired in the instant case during the unloading of the Appeals, 131 SCRA 365). There are, of course,
the arrastre operator. Since it is the duty of the ARRASTRE to shipment as testified by Mr. Talens, the cargo surveyor. exceptional cases when such presumption of fault is not
take good care of the goods that are in its custody and to observed but these cases, enumerated in Article
deliver them in good condition to the consignee, such
Page 32 of 47
17341 of the Civil Code, are exclusive, not one of which Boston, Massachusetts, U.S.A., which oral contract was later the vessel and lighters are sent by the vessel to bring the
can be applied to this case. confirmed by a formal and written booking issued by the goods to it, the lighters are for the time its substitutes, so
shipper's branch office, Davao City, in virtue of which the that the bill of landing is applicable to the goods as soon as
The question of charging both the carrier and the arrastre carrier sent two of its lighters to undertake the service. It also they are placed on the lighters. (80 C.J.S., p. 901, emphasis
operator with the obligation of properly delivering the goods appears that the patrons of said lighters were employees of supplied)
to the consignee has, too, been passed upon by the Court. the carrier with due authority to undertake the transportation
In Fireman's Fund Insurance vs. Metro Port Services (182 and to sign the documents that may be necessary therefor so ... The test as to whether the relation of shipper and carrier
SCRA 455), we have explained, in holding the carrier and the much so that the patron of LCT No. 1025 signed the receipt had been established is, Had the control and possession of
arrastre operator liable in solidum, thus: covering the cargo of hemp loaded therein as follows: . the cotton been completely surrendered by the shipper to
the railroad company? Whenever the control and possession
The legal relationship between the consignee and the Received in behalf of S.S. Bowline Knot in good order and of goods passes to the carrier and nothing remains to be
arrastre operator is akin to that of a depositor and condition from MACLEOD AND COMPANY OF PHILIPPINES, done by the shipper, then it can be said with certainty that
warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 Sasa Davao, for transhipment at Manila onto S.S. Steel the relation of shipper and carrier has been established.
[1967]. The relationship between the consignee and the Navigator. Railroad Co. v. Murphy, 60 Ark. 333, 30 S.W. 419, 46 A. St.
common carrier is similar to that of the consignee and the Rep. 202; Pine Bluff & Arkansas River Ry. v. MaKenzie, 74 Ark.
arrastre operator (Northern Motors, Inc. v. Prince Line, et al., FINAL DESTINATION: Boston. 100, 86 S.W. 834; Matthews & Hood v. St. L., I.M. & S.R. Co.,
107 Phil. 253 [1960]). Since it is the duty of the ARRASTRE to 123 Ark. 365, 185 S.W. 461, L.R.A. 1916E, 1194. (W.F. Bogart &
take good care of the goods that are in its custody and to Co., et al. v. Wade, et al., 200 S.W. 148).
The fact that the carrier sent its lighters free of charge to take
deliver them in good condition to the consignee, such the hemp from Macleod's wharf at Sasa preparatory to its
responsibility also devolves upon the CARRIER. Both the loading onto the ship Bowline Knot does not in any way The claim that there can be no contract of affreightment
ARRASTRE and the CARRIER are therefore charged with the impair the contract of carriage already entered into between because the hemp was not actually loaded on the ship that
obligation to deliver the goods in good condition to the the carrier and the shipper, for that preparatory step is but was to take it from Davao City to Manila is of no moment,
consignee. part and parcel of said contract of carriage. The lighters were for, as already stated, the delivery of the hemp to the
merely employed as the first step of the voyage, but once carrier's lighter is in line with the contract. In fact, the receipt
We do not, of course, imply by the above pronouncement that step was taken and the hemp delivered to the carrier's signed by the patron of the lighter that carried the hemp
that the arrastre operator and the customs broker are employees, the rights and obligations of the parties attached stated that he was receiving the cargo "in behalf of S.S.
themselves always and necessarily liable solidarily with the thereby subjecting them to the principles and usages of the Bowline Knot in good order and condition." On the other
carrier, or vice-versa, nor that attendant facts in a given case maritime law. In other words, here we have a complete hand, the authorities are to the effect that a bill of lading is
may not vary the rule. The instant petition has been brought contract of carriage the consummation of which has already not indispensable for the creation of a contract of carriage.
solely by Eastern Shipping Lines, which, being the carrier and begun: the shipper delivering the cargo to the carrier, and
not having been able to rebut the presumption of fault, is, in the latter taking possession thereof by placing it on a lighter Bill of lading not indispensable to contract of carriage. — As
any event, to be held liable in this particular case. A factual manned by its authorized employees, under which Macleod to the issuance of a bill of lading, although article 350 of the
finding of both the court a quo and the appellate court, we became entitled to the privilege secured to him by law for its Code of Commerce provides that "the shipper as well as the
take note, is that "there is sufficient evidence that the safe transportation and delivery, and the carrier to the full carrier of merchandise or goods may mutua-lly demand that
shipment sustained damage while in the successive payment of its freight upon completion of the voyage. a bill of lading is not indispensable. As regards the form of
possession of appellants" (the herein petitioner among the contract of carriage it can be said that provided that
them). Accordingly, the liability imposed on Eastern Shipping The receipt of goods by the carrier has been said to lie at the there is a meeting of the minds and from such meeting arise
Lines, Inc., the sole petitioner in this case, is inevitable foundation of the contract to carry and deliver, and if actually rights and obligations, there should be no limitations as to
regardless of whether there are others solidarily liable with it. no goods are received there can be no such contract. The form." The bill of lading is not essential to the contract,
liability and responsibility of the carrier under a contract for although it may become obligatory by reason of the
d. Compania Maritima v. Insurance Company of the carriage of goods commence on their actual delivery to, regulations of railroad companies, or as a condition imposed
North America GR No. L-18965 Oct 30, 1964 or receipt by, the carrier or an authorized agent. ... and in the contract by the agreement of the parties themselves.
delivery to a lighter in charge of a vessel for shipment on the The bill of lading is juridically a documentary proof of the
vessel, where it is the custom to deliver in that way, is a good stipulations and conditions agreed upon by both parties. (Del
As found by the Court of Appeals, Macleod and Company Viso, pp. 314-315; Robles vs. Santos, 44 O.G. 2268). In other
contracted by telephone the services of petitioner to ship the delivery and binds the vessel receiving the freight, the
liability commencing at the time of delivery to the lighter. ... words, the Code does not demand, as necessary requisite in
hemp in question from the former's private pier at Sasa, the contract of transportation, the delivery of the bill of
Davao City, to Manila, to be subsequently transhipped to and, similarly, where there is a contract to carry goods from
one port to another, and they cannot be loaded directly on lading to the shipper, but gives right to both the carrier and
Page 33 of 47
the shipper to mutually demand of each other the delivery of buoyancy compartments' (exh. JJJ); and this report finds demanding from appellant the payment for the loss and
said bill. (Sp. Sup. Ct. Decision, May 6, 1895). (Martin, confirmation on the above-mentioned admission of two damage aforecited.
Philippine Commercial Laws, Vol. II, Revised Edition, pp. 12- witnesses for appellant concerning the cracks of the lighter's
13) bottom and the entrance of the rain water 'thru manholes'." e. Lu Do v. Binamira GR No. L-9840 Apr 22, 1957
We are not prepared to dispute this finding of the Court of
The liability of the carrier as common carrier begins with the Appeals.
It is true that, as a rule, a common carrier is responsible for
actual delivery of the goods for transportation, and not the loss, destruction or deterioration of the goods it assumes
merely with the formal execution of a receipt or bill of lading; 3. There can also be no doubt that the insurance company to carry from one place to another unless the same is due to
the issuance of a bill of lading is not necessary to complete can recover from the carrier as assignee of the owner of the any to any of the causes mentioned in Article 1734 on the
delivery and acceptance. Even where it is provided by statute cargo for the insurance amount it paid to the latter under the new Civil Code, and that, if the goods are lost, destroyed or
that liability commences with the issuance of the bill of insurance contract. And this is so because since the cargo deteriorated, for causes other that those mentioned, the
lading, actual delivery and acceptance are sufficient to bind that was damaged was insured with respondent company common carrier is presumed to have been at fault or to have
the carrier. (13 C.J.S., p. 288) and the latter paid the amount represented by the loss, it is acted negligently, unless it proves that it has observed
but fair that it be given the right to recover from the party extraordinary diligence in their care (Article 1735, Idem.), and
2. Petitioner disclaims responsibility for the damage of the responsible for the loss. The instant case, therefore, is not that this extraordinary liability lasts from the time the goods
cargo in question shielding itself behind the claim of force one between the insured and the insurer, but one between are placed in the possession of the carrier until they are
majeure or storm which occurred on the night of October 29, the shipper and the carrier, because the insurance company delivered to the consignee, or "to the person who has the
1952. But the evidence fails to bear this out. merely stepped into the shoes of the shipper. And since the right to receive them" (Article 1736, Idem.), but these
shipper has a direct cause of action against the carrier on provisions only apply when the loss, destruction or
account of the damage of the cargo, no valid reason is seen deterioration takes place while the goods are in the
Rather, it shows that the mishap that caused the damage or why such action cannot be asserted or availed of by the
loss was due, not to force majeure, but to lack of adequate possession of the carrier, and not after it has lost control of
insurance company as a subrogee of the shipper. Nor can them. The reason is obvious. While the goods are in its
precautions or measures taken by the carrier to prevent the the carrier set up as a defense any defect in the insurance
loss as may be inferred from the following findings of the possession, it is but fair that it exercise extraordinary
policy not only because it is not a privy to it but also because diligence in protecting them from damage, and if loss occurs,
Court of Appeals: it cannot avoid its liability to the shipper under the contract the law presumes that it was due to its fault or negligence.
of carriage which binds it to pay any loss that may be caused This is necessary to protect the interest the interest of the
Aside from the fact that, as admitted by appellant's own to the cargo involved therein. Thus, we find fitting the owner who is at its mercy. The situation changes after the
witness, the ill-fated barge had cracks on its bottom (pp. 18- following comments of the Court of Appeals: goods are delivered to the consignee.
19, t.s.n., Sept. 13, 1959) which admitted sea water in the
same manner as rain entered "thru tank man-holes", It was not imperative and necessary for the trial court to pass
according to the patron of LCT No. 1023 (exh. JJJ-4) — While we agree with the Court of Appeals that while delivery
upon the question of whether or not the disputed abaca of the cargo to the consignee, or to the person who has a
conclusively showing that the barge was not seaworthy — it cargo was covered by Marine Open Cargo Policy No. MK-134
should be noted that on the night of the nautical accident right to receive them", contemplated in Article 1736, because
isued by appellee. Appellant was neither a party nor privy to in such case the goods are still in the hands of the
there was no storm, flood, or other natural disaster or this insurance contract, and therefore cannot avail itself of
calamity. Certainly, winds of 11 miles per hour, although Government and the owner cannot exercise dominion over
any defect in the policy which may constitute a valid reason them, we believe however that the parties may agree to limit
stronger than the average 4.6 miles per hour then prevailing for appellee, as the insurer, to reject the claim of Macleod, as
in Davao on October 29, 1952 (exh. 5), cannot be classified as the liability of the carrier considering that the goods have
the insured. Anyway, whatever defect the policy contained, if still to through the inspection of the customs authorities
storm. For according to Beaufort's wind scale, a storm has any, is deemed to have been waived by the subsequent
wind velocities of from 64 to 75 miles per hour; and by before they are actually turned over to the consignee. This is
payment of Macleod's claim by appellee. Besides, appellant a situation where we may say that the carrier losses control
Philippine Weather Bureau standards winds should have a is herein sued in its capacity as a common carrier, and
velocity of from 55 to 74 miles per hour in order to be of the goods because of a custom regulation and it is unfair
appellee is suing as the assignee of the shipper pursuant to that it be made responsible for what may happen during the
classified as storm (Northern Assurance Co., Ltd. vs. Visayan exhibit MM. Since, as above demonstrated, appellant is liable
Stevedore Transportation Co., CA-G.R. No. 23167-R, March interregnum. And this is precisely what was done by the
to Macleod and Company of the Philippines for the los or parties herein. In the bill of lading that was issued covering
12, 1959). damage to the 1,162 bales of hemp after these were received the shipment in question, both the carrier and the consignee
in good order and condition by the patron of appellant's LCT have stipulated to limit the responsibility of the carrier for
The Court of Appeals further added: "the report of R. J. del No. 1025, it necessarily follows that appellant is likewise the loss or damage that may because to the goods before
Pan & Co., Inc., marine surveyors, attributes the sinking of liable to appellee who, as assignee of Macleod, merely they are actually delivered by insert in therein the following
LCT No. 1025 to the 'non-water-tight conditions of various stepped into the shoes of and substi-tuted the latter in provisions:
Page 34 of 47
1. . . . The Carrier shall not be liable in any capacity person who has a right to receive them, without prejudice to p. 462, citing Mr. Justice J.B.L. Reyes, Lawyer's Journal, Jan.
whatsoever for any delay, nondelivery or misdelivery, or loss the provisions of Article 1738. " 31, 1951, p. 49).
of or damage to the goods occurring while the goods are
not in the actual custody of the Carrier. . . . (Emphasis ours.) The court a quo held that the delivery of the shipment in Besides, the agreement contained in the above quoted
question to the warehouse of the Bureau of Customs is not Clause 14 is a mere iteration of the basic principle of law
(Paragraph 1, Exhibit "1") the delivery contemplated by Article 1736; and since the written in Article 1 1 7 4 of the Civil Code:
burning of the warehouse occurred before actual or
2. . . . The responsibility of the Carrier in any capacity shall constructive delivery of the goods to the appellees, the loss Article 1174. Except in cases expressly specified by the law, or
altogether cease and the goods shall be considered to be is chargeable against the appellant. when it is otherwise declared by stipulation, or when the
delivered and at their own risk and expense in every nature of the obligation requires the assumption of risk, no
respect when taken into the custody of customs or other It should be pointed out, however, that in the bills of lading person shall be responsible for those events which could not
authorities. The Carrier shall not be required to give any issued for the cargoes in question, the parties agreed to limit be foreseen, or which, though foreseen, were inevitable.
notification of disposition of the goods. . . . (Emphasis ours.) the responsibility of the carrier for the loss or damage that
may be caused to the shipment by inserting therein the Thus, where fortuitous event or force majeure is the
(Paragraph 12, Exhibit "1") following stipulation: immediate and proximate cause of the loss, the obligor is
exempt from liability for non-performance. The Partidas, 4 the
3. Any provisions herein to the contrary notwithstanding, Clause 14. Carrier shall not be responsible for loss or damage antecedent of Article 1174 of the Civil Code, defines 'caso
goods may be . . . by Carrier at ship's tackle . . . and delivery to shipments billed 'owner's risk' unless such loss or damage fortuito' as 'an event that takes place by accident and could
beyond ship's tackle shall been tirely at the option of the is due to negligence of carrier. Nor shall carrier be not have been foreseen. Examples of this are destruction of
Carrier and solely at the expense of the shipper or consignee. responsible for loss or damage caused by force majeure, houses, unexpected fire, shipwreck, violence of robbers.'
dangers or accidents of the sea or other waters; war; public
enemies; . . . fire . ... In its dissertation of the phrase 'caso fortuito' the
(Paragraph 22, Exhibit "1")
Enciclopedia Juridicada Espanola 5 says: "In a legal sense and,
We sustain the validity of the above stipulation; there is consequently, also in relation to contracts, a 'caso fortuito'
It therefore appears clear that the carrier does not assume nothing therein that is contrary to law, morals or public presents the following essential characteristics: (1) the cause
liability for any loss or damage to the goods once they have policy. of the unforeseen and unexpected occurrence, or of the
been "taken into the custody of customs or other failure of the debtor to comply with his obligation, must be
authorities", or when they have been delivered at ship's independent of the human will; (2) it must be impossible to
tackle. These stipulations are clear. They have been adopted Appellees would contend that the above stipulation does not
bind them because it was printed in fine letters on the back- foresee the event which constitutes the 'caso fortuito', or if it
precisely to mitigate the responsibility of the carrier can be foreseen, it must be impossible to avoid; (3) the
considering the present law on the matter, and we find of the bills of lading; and that they did not sign the same.
This argument overlooks the pronouncement of this Court in occurrence must be such as to render it impossible for the
nothing therein that is contrary to morals or public policy debtor to fulfill his obligation in a normal manner; and (4) the
that may justify their nullification. We are therefore Ong Yiu vs. Court of Appeals, promulgated June 29,
1979, 3 where the same issue was resolved in this wise: obligor must be free from any participation in the
persuaded to conclude that the carrier is not responsible for aggravation of the injury resulting to the creditor." In the
the loss in question, it appearing that the same happened case at bar, the burning of the customs warehouse was an
after the shipment had been delivered to the customs While it may be true that petitioner had not signed the plane extraordinary event which happened independently of the
authorities. ticket (Exh. '12'), he is nevertheless bound by the provisions will of the appellant. The latter could not have foreseen the
thereof. 'Such provisions have been held to be a part of the event.
f. Servando v. Phil Steam Navigation Co. GR No. L- contract of carriage, and valid and binding upon the
36481-2 Oct 23, 1982 passenger regardless of the latter's lack of knowledge or
assent to the regulation'. It is what is known as a contract of There is nothing in the record to show that appellant carrier
'adhesion', in regards which it has been said that contracts of ,incurred in delay in the performance of its obligation. It
Article 1736 of the Civil Code imposes upon common carriers adhesion wherein one party imposes a ready made form of appears that appellant had not only notified appellees of the
the duty to observe extraordinary diligence from the contract on the other, as the plane ticket in the case at bar, arrival of their shipment, but had demanded that the same
moment the goods are unconditionally placed in their are contracts not entirely prohibited. The one who adheres to be withdrawn. In fact, pursuant to such demand, appellee Uy
possession "until the same are delivered, actually or the contract is in reality free to reject it entirely; if he adheres, Bico had taken delivery of 907 cavans of rice before the
constructively, by the carrier to the consignee or to the he gives his consent." (Tolentino, Civil Code, Vol. IV, 1962 Ed., burning of the warehouse.
Page 35 of 47
Nor can the appellant or its employees be charged with provided for the port of discharge from ship", vessels or means of transportation not operated by this
negligence. The storage of the goods in the Customs thus: têñ.£îhqw⣠carrier shall be considered solely the forwarding agent of the
warehouse pending withdrawal thereof by the appellees was shipper and without any other responsibility whatsoever
undoubtedly made with their knowledge and consent. Since if goods are to be transshipped at port of discharge, show even though the freight for the whole transport has been
the warehouse belonged to and was maintained by the destination under the column for "description of contents" 7 collected by him. ... Pending or during forwarding or
government, it would be unfair to impute negligence to the transshipping the carrier may store the goods ashore or
appellant, the latter having no control whatsoever over the afloat solely as agent of the shipper and at risk and expense
same. As instructed above, the following words appeared of the goods and the carrier shall not be liable for detention
typewritten under the column for "description of nor responsible for the acts, neglect, delay or failure to act of
contents": têñ.£îhqw⣠anyone to whom the goods are entrusted or delivered for
The lower court in its decision relied on the ruling laid down
in Yu Biao Sontua vs. Ossorio 6, where this Court held the storage, handling or any service incidental thereto (Emphasis
defendant liable for damages arising from a fire caused by PORT OF DISCHARGE OF GOODS: DAVAO supplied) 10
the negligence of the defendant's employees while loading FREIGHT PREPAID 8
cases of gasoline and petroleon products. But unlike in the Defendants-appellants now shirk liability for the loss of the
said case, there is not a shred of proof in the present case It is clear, then, that in discharging the goods from the ship subject goods by claiming that they have discharged the
that the cause of the fire that broke out in the Custom's at the port of Manila, and delivering the same into the same in full and good condition unto the custody of AMCYL
warehouse was in any way attributable to the negligence of custody of AMCYL, the bonded warehouse, appellants were at the port of discharge from ship — Manila, and therefore,
the appellant or its employees. Under the circumstances, the acting in full accord with the contractual stipulations pursuant to the aforequoted stipulation (Sec. 11) in the bill of
appellant is plainly not responsible. contained in Bill of Lading No. 18. The delivery of the goods lading, their responsibility for the cargo had ceased. 11
to AMCYL was part of appellants' duty to transship the
g. Samar Mining v. Nordeutscher Lloyd GR No. L- goods from Manila to their port of destination-Davao. The We find merit in appellants' stand. The validity of stipulations
28673 Oct 23, 1984 word "transship" means: têñ.£îhqw⣠in bills of lading exempting the carrier from liability for loss
or damage to the goods when the same are not in its actual
The issue at hand demands a close scrutiny of Bill of Lading to transfer for further transportation from one ship or custody has been upheld by Us in PHOENIX ASSURANCE
No. 18 and its various clauses and stipulations which should conveyance to another 9 CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968). Said
be examined in the light of pertinent legal provisions and case matches the present controversy not only as to the
settled jurisprudence. This undertaking is not only proper but The extent of appellant carrier's responsibility and/or liability material facts but more importantly, as to the stipulations
necessary as well because of the nature of the bill of lading in the transshipment of the goods in question are spelled out contained in the bill of lading concerned. As if to underline
which operates both as a receipt for the goods; and more and delineated under Section 1, paragraph 3 of Bill of Lading their awesome likeness, the goods in question in both cases
importantly, as a contract to transport and deliver the same No. 18, to wit: têñ.£îhqw⣠were destined for Davao, but were discharged from ship in
as stipulated therein. 2 Being a contract, it is the law between Manila, in accordance with their respective bills of lading.
the parties thereto 3 who are bound by its terms and The carrier shall not be liable in any capacity whatsoever for
conditions 4 provided that these are not contrary to law, any delay, loss or damage occurring before the goods enter The stipulations in the bill of lading in the PHOENIX case
morals, good customs, public order and public policy. 5 ship's tackle to be loaded or after the goods leave ship's which are substantially the same as the subject stipulations
tackle to be discharged, transshipped or forwarded ... before Us, provides: têñ.£îhqwâ£
Bill of Lading No. 18 sets forth in page 2 thereof 6 that one (Emphasis supplied)
(1) crate of Optima welded wedge wire sieves was received The carrier shall not be liable in any capacity whatsoever for
by the carrier NORDEUTSCHER LLOYD at the "port of and in Section 11 of the same Bill, which any loss or damage to the goods while the goods are not in
loading" which is Bremen, Germany, while the freight had provides: têñ.£îhqw⣠its actual custody. (Par. 2, last subpar.)
been prepaid up to the port of destination or the "port of
discharge of goods in this case, Davao, the carrier undertook xxx xxx xxx
Whenever the carrier or m aster may deem it advisable or in
to transport the goods in its vessel, M/S SCHWABENSTEIN
any case where the goods are placed at carrier's disposal at
only up to the "port of discharge from ship-Manila.
or consigned to a point where the ship does not expect to The carrier or master, in making arrangements with any
Thereafter, the goods were to be transshipped by the carrier
load or discharge, the carrier or master may, without notice, person for or in connection with all transshipping or
to the port of destination or "port of discharge of goods The
forward the whole or any part of the goods before or after forwarding of the goods or the use of any means of
stipulation is plainly indicated on the face of the bill which
loading at the original port of shipment, ... This carrier, in transportation or forwarding of goods not used or operated
contains the following phrase printed below the space
making arrangements for any transshipping or forwarding by the carrier, shall be considered solely the agent of the
Page 36 of 47
shipper and consignee and without any other responsibility Article 1738 referred to in the foregoing provision runs agent. Such being the case, there was, in effect, actual
whatsoever or for the cost thereof ... (Par. 16). 12 thus: têñ.£îhqw⣠delivery of the goods from appellant as carrier to the same
appellant as agent of the consignee. Upon such delivery, the
Finding the above stipulations not contrary to law, morals, Article 1738. The extraordinary liability of the common carrier appellant, as erstwhile carrier, ceases to be responsible for
good customs, public order or public policy, We sustained continues to be operative even during the time the goods any loss or damage that may befall the goods from that
their validity 13 Applying said stipulations as the law are stored in a warehouse of the carrier at the place of point onwards. This is the full import of Article 1736, as
between the parties in the aforecited case, the Court destination, until the consignee has been advised of the applied to the case before Us.
concluded that: têñ.£îhqw⣠arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them. But even as agent of the consignee, the appellant cannot be
... The short form Bill of Lading ( ) states in no uncertain made answerable for the value of the missing goods, It is
terms that the port of discharge of the cargo is Manila, but There is no doubt that Art. 1738 finds no applicability to the true that the transshipment of the goods, which was the
that the same was to be transshipped beyond the port of instant case. The said article contemplates a situation where object of the agency, was not fully performed. However,
discharge to Davao City. Pursuant to the terms of the long the goods had already reached their place of destination and appellant had commenced said performance, the completion
form Bill of Lading ( ), appellee's responsibility as a common are stored in the warehouse of the carrier. The subject goods of which was aborted by circumstances beyond its control.
carrier ceased the moment the goods were unloaded in were still awaiting transshipment to their port of destination, An agent who carries out the orders and instructions of the
Manila and in the matter of transshipment, appellee acted and were stored in the warehouse of a third party when last principal without being guilty of negligence, deceit or fraud,
merely as an agent of the shipper and consignee. ... seen and/or heard of. However, Article 1736 is applicable to cannot be held responsible for the failure of the principal to
(Emphasis supplied) 14 the instant suit. Under said article, the carrier may be relieved accomplish the object of the agency, 21This can be gleaned
of the responsibility for loss or damage to the goods upon from the following provisions of the New Civil Code on the
actual or constructive delivery of the same by the carrier to obligations of the agent: têñ.£îhqwâ£
Coming now to the case before Us, We hold, that by the
authority of the above pronouncements, and in conformity the consignee, or to the person who has a right to receive
with the pertinent provisions of the New Civil Code, Section them. In sales, actual delivery has been defined as the ceding Article 1884. The agent is bound by his acceptance to carry
11 of Bill of Lading No. 18 and the third paragraph of Section of corporeal possession by the seller, and the actual out the agency, and is liable for the damages which, through
1 thereof are valid stipulations between the parties insofar as apprehension of corporeal possession by the buyer or by his non-performance, the principal may suffer.
they exempt the carrier from liability for loss or damage to some person authorized by him to receive the goods as his
the goods while the same are not in the latter's actual representative for the purpose of custody or disposal. 17 By xxx xxx xxx
custody. the same token, there is actual delivery in contracts for the
transport of goods when possession has been turned over to
the consignee or to his duly authorized agent and a Article 1889. The agent shall be liable for damages if, there
The liability of the common carrier for the loss, destruction or reasonable time is given him to remove the goods. 18 The being a conflict between his interests and those of the
deterioration of goods transported from a foreign country to court a quo found that there was actual delivery to the principal, he should prefer his own.
the Philippines is governed primarily by the New Civil consignee through its duly authorized agent, the carrier.
Code. 15 In all matters not regulated by said Code, the rights Article 1892. The agent may appoint a substitute if the
and obligations of common carriers shall be governed by the principal has not prohibited him from doing so; but he shall
Code of Commerce and by special laws. 16 A careful perusal It becomes necessary at this point to dissect the complex
relationship that had developed between appellant and be responsible for the acts of the substitute:
of the provisions of the New Civil Code on common carriers
(Section 4, Title VIII, Book IV) directs our attention to Article appellee in the course of the transactions that gave birth to
1736 thereof, which reads: têñ.£îhqw⣠the present suit. Two undertakings appeared embodied (1) When he was not given the power to appoint one;
and/or provided for in the Bill of Lading 19 in question. The
first is FOR THE TRANSPORT OF GOODS from Bremen, (2) When he was given such power but without designating
Article 1736. The extraordinary responsibility of the common Germany to Manila. The second, THE TRANSSHIPMENT OF
carrier lasts from the time the goods are unconditionally the person and the person appointed was notoriously
THE SAME GOODS from Manila to Davao, with appellant incompetent or insolvent.
placed in the possession of, and received by the carrier for acting as agent of the consignee. 20 At the hiatus between
transportation until the same are delivered, actually or these two undertakings of appellant which is the moment
constructively, by the carrier to the consignee, or to the xxx xxx xxx
when the subject goods are discharged in Manila, its
person who has a right to receive them, without prejudice to personality changes from that of carrier to that of agent of
the provisions of article 1738. the consignee. Thus, the character of appellant's possession Article 1909. The agent is responsible not only for fraud, but
also changes, from possession in its own name as carrier, also for negligence which shall be judged with more or less
into possession in the name of consignee as the latter's
Page 37 of 47
rigor by the courts, according to whether the agency was or Even going back to an event that transpired prior to the filing Respondents submitted in evidence a telex dated 5 April
was not for a compensation. of the present case or when petitioner wrote respondent 1989 as basis for delivering the cargoes to GPC without the
WALLEM demanding payment of the value of the cargoes, bills of lading and bank guarantee. The telex instructed
The records fail to reveal proof of negligence, deceit or fraud misdelivery of the cargoes did not come into the picture — delivery of various shipments to the respective consignees
committed by appellant or by its representative in the without need of presenting the bill of lading and bank
Philippines. Neither is there any showing of notorious We are writing you on behalf of our client, Ben-Mac guarantee per the respective shipper's request since "for
incompetence or insolvency on the part of AMCYT, which Enterprises who informed us that Bills of Lading No. 99012 prepaid shipt ofrt charges already fully paid." Petitioner was
acted as appellant's substitute in storing the goods awaiting and 99013 with a total value of US$20,223.46 were released named therein as shipper and GPC as consignee with respect
transshipment. to Great Prospect, Hongkong without the necessary bank to Bill of Lading Nos. HKG 99012 and HKG 99013. Petitioner
guarantee. We were further informed that the consignee of disputes the existence of such instruction and claims that this
the goods, National Bank of Pakistan, Hongkong, did not evidence is self-serving.
The actions of appellant carrier and of its representative in
the Philippines being in full faith with the lawful stipulations release or endorse the original bills of lading. As a result
of Bill of Lading No. 18 and in conformity with the provisions thereof, neither the consignee, National Bank of Pakistan, From the testimony of petitioner, we gather that he has been
of the New Civil Code on common carriers, agency and Hongkong, nor the importer, Great Prospect Company, transacting with GPC as buyer/importer for around two (2) or
contracts, they incur no liability for the loss of the goods in Hongkong, paid our client for the goods . . . .11 three (3) years already. When mangoes and watermelons are
question. in season, his shipment to GPC using the facilities of
At any rate, we shall dwell on petitioner's submission only as respondents is twice or thrice a week. The goods are released
a prelude to our discussion on the imputed liability of to GPC. It has been the practice of petitioner to request the
h. Ganzon v. CA, supra shipping lines to immediately release perishable cargoes
i. Schmitz Transport v. TVI, supra respondents concerning the shipped goods. Article 1736 of
the Civil Code provides — such as watermelons and fresh mangoes through telephone
j. Macam v. CA GR No. 125524 Aug 25, 1999 calls by himself or his "people." In transactions covered by a
letter of credit, bank guarantee is normally required by the
Petitioner submits that the fact that the shipment was not Art. 1736. The extraordinary responsibility of the common shipping lines prior to releasing the goods. But for buyers
delivered to the consignee as stated in the bill of lading or to carriers lasts from the time the goods are unconditionally using telegraphic transfers, petitioner dispenses with the
a party designated or named by the consignee constitutes a placed in the possession of, and received by the carrier for bank guarantee because the goods are already fully paid. In
misdelivery thereof. Moreover, petitioner argues that from transportation until the same are delivered, actually or his several years of business relationship with GPC and
the text of the telex, assuming there was such an instruction, constructively, by the carrier to the consignee, or to the respondents, there was not a single instance when the bill of
the delivery of the shipment without the required bill of person who has a right to receive them, without prejudice to lading was first presented before the release of the cargoes.
lading or bank guarantee should be made only to the the provisions of article 1738.12 He admitted the existence of the telex of 3 July 1989
designated consignee, referring to PAKISTAN BANK. containing his request to deliver the shipment to the
We emphasize that the extraordinary responsibility of the consignee without presentation of the bill of lading15 but not
We are not persuaded. The submission of petitioner that "the common carriers lasts until actual or constructive delivery of the telex of 5 April 1989 because he could not remember
fact that the shipment was not delivered to the consignee as the cargoes to the consignee or to the person who has a having made such request.
stated in the Bill of Lading or to a party designated or named right to receive them. PAKISTAN BANK was indicated in the
by the consignee constitutes a misdelivery thereof" is a bills of lading as consignee whereas GPC was the notify Against petitioner's claim of "not remembering" having
deviation from his cause of action before the trial court. It is party. However, in the export invoices GPC was clearly named made a request for delivery of subject cargoes to GPC
clear from the allegation in his complaint that it does not as buyer/importer. Petitioner also referred to GPC as such in without presentation of the bills of lading and bank
deal with misdelivery of the cargoes but of delivery to GPC his demand letter to respondent WALLEM and in his guarantee as reflected in the telex of 5 April 1989 are
without the required bills of lading and bank guarantee — complaint before the trial court. This premise draws us to damaging disclosures in his testimony. He declared that it
conclude that the delivery of the cargoes to GPC as was his practice to ask the shipping lines to immediately
buyer/importer which, conformably with Art. 1736 had, other release shipment of perishable goods through telephone
6. The goods arrived in Hongkong and were released by the than the consignee, the right to receive them14 was proper.
defendant Wallem directly to the buyer/notify party, Great calls by himself or his "people." He no longer required
Prospect Company and not to the consignee, the National presentation of a bill of lading nor of a bank guarantee as a
Bank of Pakistan, Hongkong, without the required bills of The real issue is whether respondents are liable to petitioner condition to releasing the goods in case he was already fully
lading and bank guarantee for the release of the shipment for releasing the goods to GPC without the bills of lading or paid. Thus, taking into account that subject shipment
issued by the consignee of the goods . . . .10 bank guarantee. consisted of perishable goods and SOLIDBANK pre-paid the
full amount of the value thereof, it is not hard to believe the
claim of respondent WALLEM that petitioner indeed
Page 38 of 47
requested the release of the goods to GPC without 13. Validity of Stipulations and pay an additional charge therefor, the value shall be
presentation of the bills of lading and bank guarantee. conclusively deemed not to exceed P100.00 for each ticket.
a. Articles 1744, 1745
The instruction in the telex of 5 April 1989 was "to deliver the b. De Guzman v. CA, supra The appellant maintains that in view of the failure of the
shipment to respective consignees." And so petitioner argues c. Art 1748 appellee to declare a higher value for his luggage, and pay
that, assuming there was such an instruction, the consignee the freight on the basis of said declared value when he
referred to was PAKISTAN BANK. We find the argument too 14. Can the common carrier and the shipper/owner checked such luggage at the Zamboanga City airport,
simplistic. Respondent court analyzed the telex in its entirety enter into a stipulation to limit liability in case of pursuant to the abovequoted condition, appellee can not
and correctly arrived at the conclusion that the consignee LDD? Yes. Possible. demand payment from the appellant of an amount in excess
referred to was not PAKISTAN BANK but GPC — of P100.00.
Page 39 of 47
The liability of the appellant in the present case should be public policy, in accordance with which the obligations of the There is no dispute that PAL incurred in delay in the delivery
governed by the provisions of Articles 1734 and 1735 of the carrier to the public are settled. It cannot lawfully stipulate of petitioner's luggage. The question is the correctness of
New Civil Code, which We quote as follows: for exemption from liability, unless such exemption is just respondent Court's conclusion that there was no gross
and reasonable, and unless the contract is freely and fairly negligence on the part of PAL and that it had not acted
ART. 1734. Common carries are responsible for the loss, made. No contractual limitation is reasonable which is fraudulently or in bad faith as to entitle petitioner to an
destruction, or deterioration of the goods, unless the same is subversive of public policy. award of moral and exemplary damages.
due to any of the following causes only:
"Par. 195. 7. What Limitations of Liability Permissible. — a. From the facts of the case, we agree with respondent Court
(1) Flood, storm, earthquake, or other natural disaster or Negligence — (1) Rule in America — (a) In Absence of that PAL had not acted in bad faith. Bad faith means a breach
calamity; Organic or Statutory Provisions Regulating Subject — aa. of a known duty through some motive of interest or ill
Majority Rule. — In the absence of statute, it is settled by the will. 2 It was the duty of PAL to look for petitioner's luggage
weight of authority in the United States, that whatever which had been miscarried. PAL exerted due diligence in
(2) Act of the public enemy in war, whether international or limitations against its common-law liability are permissible to complying with such duty.
civil; a carrier, it cannot limit its liability for injury to or loss of
goods shipped, where such injury or loss is caused by its own As aptly stated by the appellate Court:
(3) Act or omission of the shipper or owner of the goods; negligence. This is the common law doctrine and it makes no
difference that there is no statutory prohibition against
contracts of this character. We do not find any evidence of bad faith in this. On the
(4) The character of the goods or defects in the packing or in contrary, We find that the defendant had exerted diligent
the containers; effort to locate plaintiff's baggage. The trial court saw
"Par. 196. bb. Considerations on which Rule Based. — The evidence of bad faith because PAL sent the telegraphic
(5) Order or act of competent public authority.1äwphï1.ñët rule, it is said, rests on considerations of public policy. The message to Mactan only at 3:00 o'clock that same afternoon,
undertaking is to carry the goods, and to relieve the shipper despite plaintiff's indignation for the non-arrival of his
from all liability for loss or damage arising from negligence baggage. The message was sent within less than one hour
ART. 1735. In all cases other than those mentioned in Nos. 1,
in performing its contract is to ignore the contract itself. The after plaintiff's luggage could not be located. Efforts had to
2, 3, 4 and 5 of the preceding article, if the goods are lost,
natural effect of a limitation of liability against negligence is be exerted to locate plaintiff's maleta. Then the Bancasi
destroyed or deteriorated, common carriers are presumed to
to induce want of care on the part of the carrier in the airport had to attend to other incoming passengers and to
have been at fault or to have acted negligently, unless they
performance of its duty. The shipper and the common carrier the outgoing passengers. Certainly, no evidence of bad faith
prove that they observed extraordinary diligence as required
are not on equal terms; the shipper must send his freight by can be inferred from these facts. Cebu office immediately
in Article 1733.
the common carrier, or not at all; he is therefore entirely at wired Manila inquiring about the missing baggage of the
the mercy of the carrier unless protected by the higher plaintiff. At 3:59 P.M., Manila station agent at the domestic
It having been clearly found by the trial court that the power of the law against being forced into contracts limiting airport wired Cebu that the baggage was over carried to
transistor radio and the camera of the appellee were lost as a the carrier's liability. Such contracts are wanting in the Manila. And this message was received in Cebu one minute
result of the negligence of the appellant as a common element of voluntary assent. thereafter, or at 4:00 P.M. The baggage was in fact sent back
carrier, the liability of the appellant is clear — it must pay the
to Cebu City that same afternoon. His Honor stated that the
appellee the value of those two articles.
"Par. 197. cc. Application and Extent of Rule — fact that the message was sent at 3:59 P.M. from Manila and
(aa) Negligence of Servants. — The rule prohibiting limitation completely relayed to Mactan at 4:00 P.M., or within one
In the case of Ysmael and Co. vs. Barreto, 51 Phil. 90, cited by of liability for negligence is often stated as a prohibition of minute, made the message appear spurious. This is a forced
the trial court in support of its decision, this Court had laid any contract relieving the carrier from loss or damage caused reasoning. A radio message of about 50 words can be
down the rule that the carrier can not limit its liability for by its own negligence or misfeasance, or that of its servants; completely transmitted in even less than one minute
injury to or loss of goods shipped where such injury or loss and it has been specifically decided in many cases that no depending upon atmospheric conditions. Even if the
was caused by its own negligence. contract limitation will relieve the carrier from responsibility message was sent from Manila or other distant places, the
for the negligence, unskillfulness, or carelessness of its message can be received within a minute. that is a scientific
Corpus Juris, volume 10, p. 154, says: employer." (Cited in Ysmael and Co. vs. Barreto, 51 Phil. 90, fact which cannot be questioned. 3
98, 99).
"Par. 194, 6. Reasonableness of Limitations. — The validity of Neither was the failure of PAL Cebu to reply to petitioner's
stipulations limiting the carrier's liability is to be determined c. Ong Yiu v. CA GR No. L-40597, June 29, 1979 rush telegram indicative of bad faith, The telegram (Exh. B)
by their reasonableness and their conformity to the sound was dispatched by petitioner at around 10:00 P.M. of August
26, 1967. The PAL supervisor at Mactan Airport was notified
Page 40 of 47
of it only in the morning of the following day. At that time passenger of PAL from Cebu to Butuan City and back, and of our V-cargo service " (Exh. "1"). I t is likewise to be noted
the luggage was already to be forwarded to Butuan City. he, being a lawyer and businessman, must be fully aware of that there is nothing in the evidence to show the actual value
There was no bad faith, therefore, in the assumption made these conditions. 4 of the goods allegedly lost by petitioner.
by said supervisor that the plane carrying the bag would
arrive at Butuan earlier than a reply telegram. Had petitioner We agree with the foregoing finding. The pertinent There is another matter involved, raised as an error by PAL —
waited or caused someone to wait at the Bancasi airport for Condition of Carriage printed at the back of the plane ticket the fact that on October 24, 1974 or two months after the
the arrival of the morning flight, he would have been able to reads: promulgation of the Decision of the appellate Court,
retrieve his luggage sooner. petitioner's widow filed a Motion for Substitution claiming
8. BAGGAGE LIABILITY ... The total liability of the Carrier for that petitioner died on January 6, 1974 and that she only
In the absence of a wrongful act or omission or of fraud or lost or damaged baggage of the passenger is LIMITED TO came to know of the adverse Decision on October 23, 1974
bad faith, petitioner is not entitled to moral damages. P100.00 for each ticket unless a passenger declares a higher when petitioner's law partner informed her that he received
valuation in excess of P100.00, but not in excess, however, of copy of the Decision on August 28, 1974. Attached to her
Art. 2217. Moral damages include physical suffering, mental a total valuation of P1,000.00 and additional charges are paid Motion was an Affidavit of petitioner's law partner reciting
anguish, fright, serious anxiety, besmirched reputation, pursuant to Carrier's tariffs. facts constitutive of excusable negligence. The appellate
wounded feelings, moral shock, social humiliation, and Court noting that all pleadings had been signed by petitioner
similar injury. Though incapable of pecuniary computation, himself allowed the widow "to take such steps as she or
There is no dispute that petitioner did not declare any higher counsel may deem necessary." She then filed a Motion for
moral damages may be recovered if they are the proximate value for his luggage, much less did he pay any additional
result of the defendant's wrongful act of omission. Reconsideration over the opposition of PAL which alleged
transportation charge. that the Court of Appeals Decision, promulgated on August
22, 1974, had already become final and executory since no
Art. 2220. Willful injury to property may be a legal ground for But petitioner argues that there is nothing in the evidence to appeal had been interposed therefrom within the
awarding moral damages if the court should find that, under show that he had actually entered into a contract with PAL reglementary period.
the circumstances, such damages are justly due. The same limiting the latter's liability for loss or delay of the baggage
rule applies to breaches of contract where the defendant of its passengers, and that Article 1750* of the Civil Code has
acted fraudulently or in bad faith. Under the circumstances, considering the demise of
not been complied with. petitioner himself, who acted as his own counsel, it is best
that technicality yields to the interests of substantial justice.
Petitioner is neither entitled to exemplary damages. In While it may be true that petitioner had not signed the plane Besides, in the 'last analysis, no serious prejudice has been
contracts, as provided for in Article 2232 of the Civil Code, ticket (Exh. "12"), he is nevertheless bound by the provisions caused respondent PAL.
exemplary damages can be granted if the defendant acted in thereof. "Such provisions have been held to be a part of the
a wanton, fraudulent, reckless, oppressive, or malevolent contract of carriage, and valid and binding upon the
manner, which has not been proven in this case. d. Pan Am v. IAC GR No. 70462 Aug 11, 1988
passenger regardless of the latter's lack of knowledge or
assent to the regulation". 5 It is what is known as a contract
Petitioner further contends that respondent Court committed of "adhesion", in regards which it has been said that 1. The respondent court erred as a matter of law in affirming
grave error when it limited PAL's carriage liability to the contracts of adhesion wherein one party imposes a ready the trial court's award of actual damages beyond the
amount of P100.00 as stipulated at the back of the ticket. In made form of contract on the other, as the plane ticket in the limitation of liability set forth in the Warsaw Convention and
this connection, respondent Court opined: case at bar, are contracts not entirely prohibited. The one the contract of carriage.
who adheres to the contract is in reality free to reject it
As a general proposition, the plaintiff's maleta having been entirely; if he adheres, he gives his consent. 6 And as held in 2. The respondent court erred as a matter of law in affirming
pilfered while in the custody of the defendant, it is presumed Randolph v. American Airlines, 103 Ohio App. 172, 144 N.E. the trial court's award of actual damages consisting of
that the defendant had been negligent. The liability, 2d 878; Rosenchein vs. Trans World Airlines, Inc., 349 S.W. 2d alleged lost profits in the face of this Court's ruling
however, of PAL for the loss, in accordance with the 483, "a contract limiting liability upon an agreed valuation concerning special or consequential damages as set forth
stipulation written on the back of the ticket, Exhibit 12, is does not offend against the policy of the law forbidding one in Mendoza v. Philippine Airlines [90 Phil. 836 (1952).]
limited to P100.00 per baggage, plaintiff not having declared from contracting against his own negligence.
a greater value, and not having called the attention of the The assigned errors shall be discussed seriatim
defendant on its true value and paid the tariff therefor. The Considering, therefore, that petitioner had failed to declare a
validity of this stipulation is not questioned by the plaintiff. higher value for his baggage, he cannot be permitted a 1. The airline ticket (Exh. "G') contains the following
They are printed in reasonably and fairly big letters, and are recovery in excess of P100.00.Besides, passengers are advised conditions:
easily readable. Moreover, plaintiff had been a frequent not to place valuable items inside their baggage but "to avail
Page 41 of 47
NOTICE approximately $9.07 per pound ($20.00 per kilo) for checked But petitioner argues that there is nothing in the evidence to
baggage and $400 per passenger for unchecked baggage: show that he had actually entered into a contract with PAL
If the passenger's journey involves an ultimate destination or (2) for travel wholly between U.S. points, to $750 per limiting the latter's liability for loss or delay of the baggage
stop in a country other than the country of departure the passenger on most carriers (a few have lower limits). Excess of its passengers, and that Article 1750 * of the Civil Code
Warsaw Convention may be applicable and the Convention valuation may not be declared on certain types of valuable has not been complied with.
governs and in most cases limits the liability of carriers for articles. Carriers assume no liability for fragile or perishable
death or personal injury and in respect of loss of or damage articles. Further information may be obtained from the While it may be true that petitioner had not signed the plane
to baggage. See also notice headed "Advice to International carrier. [Emphasis supplied.]. ticket (Exh. "12"), he is nevertheless bound by the provisions
Passengers on Limitation of Liability. thereof. "Such provisions have been held to be a part of the
On the basis of the foregoing stipulations printed at the back contract of carriage, and valid and binding upon the
CONDITIONS OF CONTRACT of the ticket, petitioner contends that its liability for the lost passenger regardless of the latter's lack of knowledge or
baggage of private respondent Pangan is limited to $600.00 assent to the regulation." [Tannebaum v. National Airline,
($20.00 x 30 kilos) as the latter did not declare a higher value Inc., 13 Misc. 2d 450,176 N.Y.S. 2d 400; Lichten v. Eastern
1. As used in this contract "ticket" means this passenger for his baggage and pay the corresponding additional Airlines, 87 Fed. Supp. 691; Migoski v. Eastern Air Lines, Inc.,
ticket and baggage check of which these conditions and the charges. Fla., 63 So. 2d 634.] It is what is known as a contract of
notices form part, "carriage" is equivalent to "transportation," "adhesion," in regards which it has been said that contracts
"carrier" means all air carriers that carry or undertake to carry of adhesion wherein one party imposes a ready made form
the passenger or his baggage hereunder or perform any To support this contention, petitioner cites the case of Ong
Yiu v. Court of Appeals [G.R. No. L-40597, June 29, 1979, 91 of contract on the other, as the plane ticket in the case at
other service incidental to such air carriage. "WARSAW bar, are contracts not entirely prohibited. The one who
CONVENTION" means the convention for the Unification of SCRA 223], where the Court sustained the validity of a
printed stipulation at the back of an airline ticket limiting the adheres to the contract is in reality free to reject it entirely; if
Certain Rules Relating to International Carriage by Air signed he adheres, he gives his consent,[Tolentino, Civil Code, Vol.
at Warsaw, 12th October 1929, or that Convention as liability of the carrier for lost baggage to a specified amount
and ruled that the carrier's liability was limited to said IV, 1962 ed., p. 462, citing Mr. Justice J.B.L. Reyes, Lawyer's
amended at The Hague, 28th September 1955, whichever Journal, Jan. 31, 1951, p. 49]. And as held in Randolph v.
may be applicable. amount since the passenger did not declare a higher value,
much less pay additional charges. American Airlines, 103 Ohio App. 172,144 N.E. 2d 878;
Rosenchein v. Trans World Airlines, Inc., 349 S.W. 2d 483.] "a
2. Carriage hereunder is subject to the rules and limitations contract limiting liability upon an agreed valuation does not
relating to liability established by the Warsaw Convention We find the ruling in Ong Yiu squarely applicable to the offend against the policy of the law forbidding one from
unless such carriage is not "international carriage" as defined instant case. In said case, the Court, through Justice Melencio contracting against his own negligence."
by that Convention. Herrera, stated:
The rule laid down in Mendoza v. Philippine Air Lines, Inc. [90
Petitioner argues that pursuant to those provisions, an air Phil. 836 (1952)] cannot be any clearer: As may be seen, that New York case is a stronger one than
"carrier is liable only" in the event of death of a passenger or the present case for the reason that the attention of the
injury suffered by him, or of destruction or loss of, or common carrier in said case was called to the nature of the
...Under Art.1107 of the Civil Code, a debtor in good faith like articles shipped, the purpose of shipment, and the desire to
damages to any checked baggage or any goods, or of delay the defendant herein, may be held liable only for damages
in the transportation by air of passengers, baggage or goods. rush the shipment, circumstances and facts absent in the
that were foreseen or might have been foreseen at the time present case. [Emphasis supplied.]
This pretense is not borne out by the language of said the contract of transportation was entered into. The trial
Articles. The same merely declare the carrier liable for court correctly found that the defendant company could not
damages in enumerated cases, if the conditions therein have foreseen the damages that would be suffered by Thus, applying the foregoing ruling to the facts of the instant
specified are present. Neither said provisions nor others in Mendoza upon failure to deliver the can of film on the 17th case, in the absence of a showing that petitioner's attention
the aforementioned Convention regulate or exclude liability of September, 1948 for the reason that the plans of Mendoza was called to the special circumstances requiring prompt
for other breaches of contract by the carrier. Under to exhibit that film during the town fiesta and his delivery of private respondent Pangan's luggages, petitioner
petitioner's theory, an air carrier would be exempt from any preparations, specially the announcement of said exhibition cannot be held liable for the cancellation of private
liability for damages in the event of its absolute refusal, in by posters and advertisement in the newspaper, were not respondents' contracts as it could not have foreseen such an
bad faith, to comply with a contract of carriage, which is called to the defendant's attention. eventuality when it accepted the luggages for transit.
absurd.
In our research for authorities we have found a case very The Court is unable to uphold the Intermediate Appellate
it prefaced this statement by explaining that: similar to the one under consideration. In the case of Court's disregard of the rule laid down in Mendoza and
Chapman vs. Fargo, L.R.A. (1918 F) p. 1049, the plaintiff in affirmance of the trial court's conclusion that petitioner is
...The case is now before us on petition for review by Troy, New York, delivered motion picture films to the liable for damages based on the finding that "[tlhe
certiorari, upon the ground that the lower court has erred: (1) defendant Fargo, an express company, consigned and to be undisputed fact is that the contracts of the plaintiffs for the
in holding that the Warsaw Convention of October 12, 1929, delivered to him in Utica. At the time of shipment the exhibition of the films in Guam and California were cancelled
relative to transportation by air is not in force in the attention of the express company was called to the fact that because of the loss of the two luggages in question." [Rollo,
Philippines: (2) in not holding that respondent has no cause the shipment involved motion picture films to be exhibited in p. 36] The evidence reveals that the proximate cause of the
of action; and (3) in awarding P20,000 as nominal damages. Utica, and that they should be sent to their destination, rush. cancellation of the contracts was private respondent
There was delay in their delivery and it was found that the Pangan's failure to deliver the promotional and advertising
plaintiff because of his failure to exhibit the film in Utica due materials on the dates agreed upon. For this petitioner
We deem it unnecessary to pass upon the First assignment cannot be held liable. Private respondent Pangan had not
of error because the same is the basis of the second to the delay suffered damages or loss of profits. But the
highest court in the State of New York refused to award him declared the value of the two luggages he had checked in
assignment of error, and the latter is devoid of merit, even if and paid additional charges. Neither was petitioner privy to
we assumed the former to be well taken. (Emphasis special damages. Said appellate court observed:
respondents' contracts nor was its attention called to the
supplied.) condition therein requiring delivery of the promotional and
But before defendant could be held to special damages, such advertising materials on or before a certain date.
as the present alleged loss of profits on account of delay or
Page 43 of 47
3. With the Court's holding that petitioner's liability is limited A reading of clauses 1 and 9 of the bill of lading here in in case of the loss by negligence of an interstate shipment to
to the amount stated in the ticket, the award of attorney's question, however, clearly shows that the present case falls less than the real value thereof, unless the shipper is given a
fees, which is grounded on the alleged unjustified refusal of within the third stipulation, to wit: That a clause in a bill of choice of rates, based on valuation."
petitioner to satisfy private respondent's just and valid claim, lading limiting the liability of the carrier to a certain amount
loses support and must be set aside. unless the shipper declares a higher value and pays a higher A limitation of liability based upon an agreed value to obtain
rate of freight, is valid and enforceable. This proposition is a lower rate does not conflict with any sound principle of
e. Arts 1747, 1752, 1751 supported by a uniform lien of decisions of the Supreme public policy; and it is not conformable to plain principles of
Court of the United States rendered both prior and justice that a shipper may understate value in order to
subsequent to the passage of the Harter Act, from the case reduce the rate and then recover a larger value in case of
f. Check-in Baggage [not in the personal custody of of Hart vs. Pennsylvania R. R. Co. (decided Nov. 24, 1884; 112
passenger] – Civil Code provisions on common carrier of loss. (Adams Express Co. vs.Croninger 226 U. S. 491, 492.) See
U. S., 331), to the case of the Union Pacific Ry. Co. vs. Burke also Reid vs. Farbo (130 C. C. A., 285); Jennings vs. Smith (45
goods. – Arts 1733-1753 (decided Feb. 28, 1921, Advance Opinions, 1920-1921, p. C. C. A., 249); George N. Pierce Co. vs. Wells, Fargo and Co.
318). (227 U. S., 278); Wells, Fargo & Co. vs. Neiman-Marcus Co.
g. Hand Carried – baggage [in the personal custody of (227 U. S., 469).
passenger or his employee] – Civil Code provisions In the case of Hart vs. Pennsylvania R. R. Co., supra, it was
concerning responsibility of hotel-keepers [Arts 1998 and held that "where a contract of carriage, signed by the
2000-2003] It seems clear from the foregoing authorities that the clauses
shipper, is fairly made with a railroad company, agreeing on (1 and 9) of the bill of lading here in question are not
a valuation of the property carried, with the rate of freight contrary to public order. Article 1255 of the Civil Code
H. E. HEACOCK COMPANY, plaintiff-appellant, vs. based on the condition that the carrier assumes liability only provides that "the contracting parties may establish any
MACONDRAY & COMPANY, INC., defendant-appellant. G.R. to the extent of the agreed valuation, even in case of loss or agreements, terms and conditions they may deem advisable,
No. L-16598 October 3, 1921 damage by the negligence of the carrier, the contract will be provided they are not contrary to law, morals or public
upheld as proper and lawful mode of securing a due order." Said clauses of the bill of lading are, therefore, valid
May a common carrier, by stipulations inserted in the bill of proportion between the amount for which the carrier may be and binding upon the parties thereto.
lading, limit its liability for the loss of or damage to the cargo responsible and the freight he receives, and protecting
to an agreed valuation of the latter? 1awph!l.net himself against extravagant and fanciful valuations."
II. The question presented by the appeal of the defendant is
whether clause 1 or clause 9 of the bill of lading here in
Three kinds of stipulations have often been made in a bill of In the case of Union Pacific Railway Co. vs. Burke, supra, the question is to be adopted as the measure of defendant's
lading. The first is one exempting the carrier from any and all court said: "In many cases, from the decision in liability. Clause 1 provides as follows:
liability for loss or damage occasioned by its own negligence. Hart vs. Pennsylvania R. R. Co. (112 U. S. 331; 28 L. ed., 717; 5
The second is one providing for an unqualified limitation of Sup. Ct. Rep., 151, decided in 1884), to Boston and M. R.
Co. vs. Piper (246 U. S., 439; 62 L. ed., 820; 38 Sup. Ct. Rep., 1. It is mutually agreed that the value of the goods receipted
such liability to an agreed valuation. And the third is one for above does not exceed $500 per freight ton, or, in
limiting the liability of the carrier to an agreed valuation 354; Ann. Cas. 1918 E, 469, decided in 1918), it has been
declared to be the settled Federal law that if a common proportion for any part of a ton, unless the value be
unless the shipper declares a higher value and pays a higher expressly stated herein and ad valorem freight paid thereon.
rate of freight. According to an almost uniform weight of carrier gives to a shipper the choice of two rates, the lower of
the conditioned upon his agreeing to a stipulated valuation Clause 9 provides:
authority, the first and second kinds of stipulations are
invalid as being contrary to public policy, but the third is of his property in case of loss, even by the carrier's
valid and enforceable. negligence, if the shipper makes such a choice, 9. Also, that in the even of claims for short delivery of, or
understandingly and freely, and names his valuation, he damage to, cargo being made, the carrier shall not be liable
cannot thereafter recover more than the value which he thus for more than the net invoice price plus freight and insurance
The authorities relied upon by the plaintiff-appellant (the less all charges saved, and any loss or damage for which the
places upon his property. As a matter of legal distinction,
Harter Act [Act of Congress of February 13, 1893]: Louisville carrier may be liable shall be adjusted pro rata on the said
estoppel is made the basis of this ruling, — that, having
Ry. Co. vs. Wynn, 88 Tenn., 320; and Galt vs. Adams Express basis.
accepted the benefit of the lower rate, in common honesty
Co., 4 McAr., 124; 48 Am. Rep., 742) support the proposition
the shipper may not repudiate the conditions on which it was
that the first and second stipulations in a bill of lading are
obtained, — but the rule and the effect of it are clearly The defendant-appellant contends that these two clauses, if
invalid which either exempt the carrier from liability for loss
established." construed together, mean that the shipper and the carrier
or damage occasioned by its negligence, or provide for an
unqualified limitation of such liability to an agreed valuation. stipulate and agree that the value of the goods receipted for
The syllabus of the same case reads as follows: "A carrier may does not exceed $500 per freight ton, but should the invoice
not, by a valuation agreement with a shipper, limit its liability value of the goods be less than $500 per freight ton, then
Page 44 of 47
the invoice value governs; that since in this case the invoice when, upon a claim made by the consignee of a motion made himself a party to the contract of transportation. The
value is more than $500 per freight ton, the latter valuation picture film shipped by air that he was never a party to the very citation made by appellant in his memorandum
should be adopted and that according to that valuation, the contract of transportation and was a complete stranger supports this view. Speaking of the possibility of a conflict
proportionate value of the clocks in question is only P76.36 thereto, it said: between the order of the shipper on the one hand and the
which the defendant is ready and willing to pay to the order of the consignee on the other, as when the shipper
plaintiff. But appellant now contends that he is not suing on a breach orders the shipping company to return or retain the goods
of contract but on a tort as provided for in Art. 1902 of the shipped while the consignee demands their delivery,
It will be noted, however, that whereas clause 1 contains only Civil Code. We are a little perplexed as to this new theory of Malagarriga in his book Codigo de Comercio Comentado,
an implied undertaking to settle in case of loss on the basis the appellant. First, he insists that the articles of the Code of Vol. 1, p. 400, citing a decision of the Argentina Court of
of not exceeding $500 per freight ton, clause 9 contains Commerce should be applied: that he invokes the provisions Appeals on commercial matters, cited by Tolentino in Vol. II
an express undertaking to settle on the basis of the net of aid Code governing the obligations of a common carrier of his book entitled "Commentaries and Jurisprudence on
invoice price plus freight and insurance less all charges to make prompt delivery of goods given to it under a the Commercial Laws of the Philippines" p. 209, says that the
saved. "Any loss or damage for which the carrier may be contract of transportation. Later, as already said, he says that right of the shipper to countermand the shipment terminates
liable shall be adjusted pro rata on the said basis," clause 9 he was never a party to the contract of transportation and when the consignee or legitimate holder of the bill of lading
expressly provides. It seems to us that there is an was a complete stranger to it, and that he is now suing on a appears with such big of lading before the carrier and makes
irreconcilable conflict between the two clauses with regard to tort or a violation of his rights as a stranger (culpa aquiliana) himself a party to the contract. Prior to that time he is a
the measure of defendant's liability. It is difficult to reconcile If he does not invoke the contract of carriage entered into stranger to the contract.
them without doing violence to the language used and with the defendant company, then he would hardly have any
reading exceptions and conditions into the undertaking leg to stand on. His right to prompt delivery of the can of Still another view of this phase of the case is that
contained in clause 9 that are not there. This being the case, film at the Phil. Air Port stems and is derived from the contemplated in Art. 1257, paragraph 2, of the old Civil Code
the bill of lading in question should be interpreted against contract of carriage under which contract, the PAL undertook (now Art, 1311, second paragraph) which reads thus:
the defendant carrier, which drew said contract. "A written to carry the can of film safely and to deliver it to him
contract should, in case of doubt, be interpreted against the promptly. Take away or ignore that contract and the Should the contract contain any stipulation in favor of a third
party who has drawn the contract." (6 R. C. L. 854.) It is a obligation to carry and to deliver and right to prompt person, he may demand its fulfillment provided he has given
well-known principle of construction that ambiguity or delivery disappear. Common carriers are not obligated by notice of his acceptance to the person bound before the
uncertainty in an agreement must be construed most law to carry and to deliver merchandise, and persons are not stipulation has been revoked.
strongly against the party causing it. (6 R. C. L., 855.) These vested with the right to prompt delivery, unless such
rules as applicable to contracts contained in bills of lading. common carriers previously assume the obligation. Said
"In construing a bill of lading given by the carrier for the safe rights and obligations are created by a specific contract Here, the contract of carriage between the LVN Pictures Inc.
transportation and delivery of goods shipped by a consignor, entered into by the parties. In the present case, the findings and the defendant carrier contains the stipulations of
the contract will be construed most strongly against the of the trial court which as already stated, are accepted by the delivery to Mendoza as consignee. His demand for the
carrier, and favorably to the consignor, in case of doubt in parties and which we must accept are to the effect that the delivery of the can of film to him at the Phil Air Port may be
any matter of construction." (Alabama, etc. R. R. LVN Pictures Inc. and Jose Mendoza on one side, and the regarded as a notice of his acceptance of the stipulation of
Co. vs. Thomas, 89 Ala., 294; 18 Am. St. Rep., 119.) defendant company on the other, entered into a contract of the delivery in his favor contained in the contract of carriage
transportation (p. 29, Rec. on Appeal). One interpretation of and delivery. In this case he also made himself a party to the
said finding is that the LVN Pictures Inc. through previous contract, or at least has come to court to enforce it. His cause
SEA-LAND SERVICE, INC., petitioner, vs. INTERMEDIATE of action must necessarily be founded on its breach.
APPELLATE COURT and PAULINO CUE, doing business under agreement with Mendoza acted as the latter's agent. When
the name and style of "SEN HIAP HING," respondents. G.R. he negotiated with the LVN Pictures Inc. to rent the film
No. 75118 August 31, 1987 "Himala ng Birhen" and show it during the Naga town fiesta, Since the liability of a common carrier for loss of or damage
he most probably authorized and enjoined the Picture to goods transported by it under a contract of carriage is
Company to ship the film for him on the PAL on September governed by the laws of the country of destination 12 and
To begin with, there is no question of the right, in principle, 17th. Another interpretation is that even if the LVN Pictures the goods in question were shipped from the United States
of a consignee in a bill of lading to recover from the carrier Inc. as consignor of its own initiative, and acting to the Philippines, the liability of petitioner Sea-Land to the
or shipper for loss of, or damage to, goods being independently of Mendoza for the time being, made respondent consignee is governed primarily by the Civil
transported under said bill ,although that document may Mendoza as consignee, a stranger to the contract if that is Code, and as ordained by the said Code, suppletorily, in all
have been — as in practice it oftentimes is — drawn up only possible, nevertheless when he, Mendoza appeared at the matters not determined thereby, by the Code of Commerce
by the consignor and the carrier without the intervention of Phil Air Port armed with the copy of the Air Way Bill (Exh. 1) and special laws. 13 One of these suppletory special laws is
the consignee. In Mendoza vs. Philippine Air Lines, Inc. 11 the demanding the delivery of the shipment to him, he thereby the Carriage of Goods by Sea Act, U.S. Public Act No. 521
Court delved at some length into the reasons behind this which was made applicable to all contracts for the carriage of
Page 45 of 47
goods by sea to and from Philippine ports in foreign trade by required and in such case if the actual value of the goods per cited Civil Code provisions. That said stipulation is just and
Commonwealth Act No. 65, approved on October 22, 1936. package or per customary freight unit shall exceed such reasonable is arguable from the fact that it echoes Art. 1750
Sec. 4(5) of said Act in part reads: declared value, the value shall nevertheless be deemed to be itself in providing a limit to liability only if a greater value is
declared value and the carrier's liability, if any, shall not not declared for the shipment in the bill of lading. To hold
(5) Neither the carrier nor the ship shall in any event be or exceed the declared value and any partial loss or damage otherwise would amount to questioning the justice and
become liable for any loss or damage to or in connection shall be adjusted pro rata on the basis of such declared fairness of that law itself, and this the private respondent
with the transportation of goods in an amount exceeding value. does not pretend to do. But over and above that
$500 per package lawful money of the United States, or in consideration, the lust and reasonable character of such
case of goods not shipped in packages, per customary Since, as already pointed out, Article 1766 of the Civil Code stipulation is implicit in it giving the shipper or owner the
freight unit, or the equivalent of that sum in other currency, expressly subjects the rights and obligations of common option of avoiding acrrual of liability limitation by the simple
unless the nature and value of such goods have been carriers to the provisions of the Code of Commerce and of and surely far from onerous expedient of declaring the
declared by the shipper before shipment and inserted in the special laws in matters not regulated by said (Civil) Code, the nature and value of the shipment in the bill of lading. And
bill of lading. This declaration, if embodied in the bill of Court fails to fathom the reason or justification for the since the shipper here has not been heard to complaint of
lading, shall be prima facie evidence, but shall not be Appellate Court's pronouncement in its appealed Decision having been "rushed," imposed upon or deceived in any
conclusive on the carrier. that the Carriage of Goods by Sea Act " ... has no application significant way into agreeing to ship the cargo under a bill of
whatsoever in this case. 15 Not only is there nothing in the lading carrying such a stipulation — in fact, it does not
Civil Code which absolutely prohibits agreements between appear that said party has been heard from at all insofar as
By agreement between the carrier, master, or agent of the this dispute is concerned — there is simply no ground for
carrier, and the shipper another maximum amount than that shipper and carrier limiting the latter's liability for loss of or
damage to cargo shipped under contracts of carriage; it is assuming that its agreement thereto was not as the law
mentioned in this paragraph may be fixed: Provided, That would require, freely and fairly sought and given.
such maximum shall not be less than the figure above also quite clear that said Code in fact has agreements of such
named. In no event shall the carrier be liable for more than character in contemplation in providing, in its Articles 1749
the amount of damage actually sustained. and 1750, that: The private respondent had no direct part or intervention in
the execution of the contract of carriage between the shipper
ART. 1749 A stipulation that the common carrier's liability is and the carrier as set forth in the bill of lading in question. As
xxx xxx xxx pointed out in Mendoza vs. PAL, supra, the right of a party in
limited to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater value, the same situation as respondent here, to recover for loss of
Clause 22, first paragraph, of the long form bill of lading is binding. a shipment consigned to him under a bill of lading drawn up
customarily issued by Sea-Land to its shipping clients 14 is a only by and between the shipper and the carrier, springs
virtual copy of the first paragraph of the foregoing provision. from either a relation of agency that may exist between him
It says: ART. 1750. A contract fixing the sum that may be recovered and the shipper or consignor, or his status as a stranger in
by the owner or shipper for the loss, destruction, or whose favor some stipulation is made in said contract, and
deterioration of the goods is valid, if it is reasonable and just who becomes a party thereto when he demands fulfillment
22. VALUATION. In the event of any loss, damage or delay to under the circumstances, and has been fairly and freely
or in connection with goods exceeding in actual value $500 of that stipulation, in this case the delivery of the goods or
agreed upon. cargo shipped. In neither capacity can he assert personally, in
per package, lawful money of the United States, or in case of
goods not shipped in packages, per customary freight unit, bar to any provision of the bill of lading, the alleged
the value of the goods shall be deemed to be $500 per Nothing contained in section 4(5) of the Carriage of Goods circumstance that fair and free agreement to such provision
package or per customary freight unit, as the case may be, by Sea Act already quoted is repugnant to or inconsistent was vitiated by its being in such fine print as to be hardly
and the carrier's liability, if any, shall be determined on the with any of the just-cited provisions of the Civil Code. Said readable. Parenthetically, it may be observed that in one
basis of a value of $500 per package or customary freight section merely gives more flesh and greater specificity to the comparatively recent case 16where this Court found that a
unit, unless the nature and a higher value shall be declared rather general terms of Article 1749 (without doing any similar package limitation clause was "(printed in the smallest
by the shipper in writing before shipment and inserted in this violence to the plain intent thereof) and of Article 1750, to type on the back of the bill of lading, it nonetheless ruled
Bill of Lading. give effect to just agreements limiting carriers' liability for that the consignee was bound thereby on the strength of
loss or damage which are freely and fairly entered into. authority holding that such provisions on liability limitation
are as much a part of a bill of lading as though physically in it
And in its second paragraph, the bill states:
It seems clear that even if said section 4(5) of the Carriage of and as though placed therein by agreement of the parties.
Goods by Sea Act did not exist, the validity and binding
If a value higher than $500 shag have been declared in effect of the liability limitation clause in the bill of lading here There can, therefore, be no doubt or equivocation about the
writing by the shipper upon delivery to the carrier and are nevertheless fully sustainable on the basis alone of the validity and enforceability of freely-agreed-upon stipulations
inserted in this bill of lading and extra freight paid, if
Page 46 of 47
in a contract of carriage or bill of lading limiting the liability his complaint before the Trial Court and appear only in the $23,256.00 for said shipment.24 All circumstances considered,
of the carrier to an agreed valuation unless the shipper long form of that document which, he claims. SeaLand it is just and fair that Sea-Land's dollar obligation be
declares a higher value and inserts it into said contract or bill. offered (as its Exhibit 2) as an unused blank form with no convertible at the same rate.
This pro position, moreover, rests upon an almost uniform entries or signatures therein. He, however, admitted in the
weight of authority. 17 Trial Court that several times in the past shipments had been
delivered to him through Sea-Land, 20 from which the
The issue of alleged deviation is also settled by Clause 13 of assumption may fairly follow that by the time of the
the bill of lading which expressly authorizes trans-shipment consignment now in question, he was already reasonably
of the goods at any point in the voyage in these terms: apprised of the usual terms covering contracts of carriage
with said petitioner.