Mirasol v.

Dollar
Facts:
Amando Mirasol was the owner of two cases of books shipped by The Robert Dollar Co., steamship, President Garfield,
from New York, in good order. Upon arrival in Manila, Both cases were in bad order and damage condition.

Issues:
1. Whether Mirasol was bound by the liability limitation clause
2. Whether Dollar was liable for the damaged goods

Ruling:
1. No. Numerous jurisprudence was cited by the SC, stating that a liability limitation clause would be unreasonable
and in conflict with public policy.

2. Yes. From the time the shipment was boarded until it was delivered, the boxes were under the control and
supervision of Dollar. Having admitted that the boxes were damaged while in transit, and under its possession, the
burden of proof now shifts to prove that the damage was caused by reason of some fact, which exempts it from
liability. This fact was not proven by Dollar, which makes it liable for damages. The statement that it was destroyed
by seawater is not evidence that it was damaged by force majeure, or beyond the control of Dollar.

Eastern Shipping v. IAC

Facts:

This is a consolidation of three cases concerning the same instance filed by respondents Nisshin Fire and Marine
Insurance, Dowa Fire and Marine Insurance and Development Insurance and Surety Corp.

M/S ASIATICA, operated by petitioner Eastern Shipping loaded several articles that were insured by private
respondents. Enroute from Japan to Manila, the vessel caught fire and sank, resulting in the total loss of ship and
cargo. The respondent Insurers paid the corresponding marine insurance values to the concerned consignees and
were thus subrogated unto the rights of the latter as the insured.

Eastern denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting
circumstance under COGSA.

Issues:
1. Which law should govern – the Civil Code provisions on common carriers or COGSA?

Held:

1. Applicable law – the law of the country to which the goods are to be transported governs the liability of the
common carriers in case of their loss, destruction or deterioration. Hence, the Civil Code of the Philippines
must govern but in matters not regulated by the said Code, the Code of Commerce and COGSA (being a
special law) is suppletory to the provisions of the Code.
2. The civil code only exculpates a carrier if the loss is due to a fortuitous event. Fire may not be considered a
natural disaster or calamity. It does not fall within the category of an act of God unless caused by lighting or
by other natural disaster or calamity. As the peril is not comprehended within the exception, the common
carrier shall be presumed to have been at fault, unless it has proved that extraordinary diligence has been
observed. On the other hand, COGSA considers that the carriers are not liable for loss due to fire unless the
latter is at fault.
3. Both the TC and IAC found that there was ACTUAL FAULT of the carrier as shown by LACK OF DILIGENCE
based on the fact that when the smoke was noticed, the fire was already big and must have been existing for
24 hrs and that the no regular inspection was made as to the condition of the cargoes.
4. Other matters:
a. Liability of carrier was decreased to the set amount of COGSA to $500 per package
b. Attorney’s fees were decreased from35k to 5k for Development Insurance

DELSAN TRANSPORT vs. CA

FACTS

Caltex engaged into a contract of affreightment with the petitioner, Delsan Transport Lines, Inc.(Delsan), for a period
of one year whereby the said common carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan
Refinery to different parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun,
industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The shipment was insured
with private respondent, American Home Assurance Corporation (American Home)

The vessel sank in with it the entire cargo of fuel oil.

Subsequently, American Home paid Caltex representing the insured value of the cargo. Exercising its right to
subrogation under Article 2207 of the New Civil Code, the American Home demanded Delsan reimbursement.

Due to its failure to collect, American Home filed a complaint with the RTC . The trial court dismissed the complaint
against Delsan. It ruled that the vessel, MT Maysun, was seaworthy and that the incident was caused by unexpected
inclement weather condition or force majeure, thus exempting the common carrier from liability for the loss of its
cargo.

The CA reversed. It gave credence to the weather report issued by.

ISSUES

1. W/N the payment made by American Home to Caltex for the insured value of the lost cargo amounted to an
admission that the vessel was seaworthy, thus precluding any action for recovery against the petitioner. NO
2. W/N the non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for
lack of cause of action. NO

RULING

First Issue:

The payment made by American Home for the insured value of the lost cargo operates as waiver of its right to enforce
the term of the implied warranty against Caltex under the marine insurance policy. However, the same cannot be
validly interpreted as an automatic admission of the vessel’s seaworthiness by American Home as to foreclose
recourse against Delsan for any liability under its contractual obligation as a common carrier. The fact of payment
grants American Home subrogatory right which enables it to exercise legal remedies that would otherwise be available
to Caltex as owner of the lost cargo against Delsan, the common carrier.

From the nature of their business and for reasons of public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them,
according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods,
common carriers shall be responsible unless the same is brought about, among others, by flood, storm, earthquake,
lightning or other natural disaster or calamity. In all other cases, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove they observed
extraordinary diligence.

In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, Delsan attributes the
sinking of MT Maysun to fortuitous event or force majeure. Although the testimony of the captain and chief mate that
there were strong winds and waves 20 feet high was effectively rebutted and belied by the weather report of PAGASA.
Thus, as the CA correctly ruled, Delsan’s vessel, MT Maysun, sank with its entire cargo for the reason that it was not
seaworthy. There was no squall or bad weather or extremely poor sea condition in the vicinity where the said vessel
sank.

Second Issue:

It is the view of the SC that the presentation in evidence of the marine insurance policy is not indispensable in this
case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its
subrogatory right. The subrogation receipt, by itself, is sufficient to establish not only the relationship of American
Home as insurer and Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to
settle the insurance claim. The right of subrogation accrues simply upon payment by the insurance company of the
insurance claim.

Diaz v. CA
Facts:

Agapita Diaz operated a Tamaraw FX taxi plying the route of Cagayan de Oro City to any point in Region 10.
Petitioner’s taxi, driven by one Arman Retes, was moving at an excessive speed when it rammed into the rear portion
of a Hino cargo truck owned by Teodoro Lantoria and driven by private respondent Rogelio Francisco. As a result, nine
passengers of the taxi died including Sherly Moneño.

The heirs of Moneño filed with the RTC an action for breach of contract of carriage and damages against petitioner and
her driver. Petitioner filed a third-party complaint against private respondents Teodorio Lantoria and Rogelio
Francisco.
The pre-trial conference was initially set but was reset for petitioner and her counsel’s failure to appear despite due
notice. On scheduled date, petitioner and her counsel again failed to appear, prompting the court to allow private
respondents to present evidence ex parte.

More than seven months after the conclusion of private respondents’ ex parte presentation of evidence, petitioner filed
a motion for leave to present evidence on her defense and third-party complaint. The trial court denied this.

On October 29, 1999, the trial court rendered a decision holding petitioner and Arman Retes jointly and severally
liable to pay private respondent heirs of Sherly Moneño. The CA affirmed.

Issues:
1.) W/N the CA committed grave abuse of discretion in affirming the trial court’s decision denying petitioner’s motion
for leave to present evidence on her defense and third-party complaint

2) W/N the CA committed grave abuse of discretion in affirming the trial court’s decision holding petitioner liable for
breach of contract.

Held.
1.) No.Petitioner was represented by Atty. Cipriano Lupeba to whom the notice was sent. It was incumbent on the
latter to advise petitioner accordingly. His failure to do so constituted negligence which bound petitioner.
Consequently, it was no error for the trial court to allow private respondents to present their evidence ex parte when
petitioner and her counsel failed to appear for the scheduled pre-trial conference.

2.) No. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all the circumstances.
In a contract of carriage, it is presumed that the common carrier is at fault or is negligent when a passenger
dies or is injured. In fact, there is even no need for the court to make an express finding of fault or negligence on the
part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised
extraordinary diligence.
In the case at bar, petitioner, as common carrier, failed to establish sufficient evidence to rebut the
presumption of negligence. The findings of the trial court, as affirmed by the Court of Appeals, showed that the
accident which led to the death of Sherly Moneño was caused by the reckless speed and gross negligence of
petitioner’s driver who demonstrated no regard for the safety of his passengers. It was thus correct to hold petitioner
guilty of breach of the contract of carriage.

F.C. Fisher v. Yangco Steamship Co.

FACTS:

 Fisher is a stockholder in the Yangco Steamship Company. The directors of the company adopted a resolution
which was thereafter ratified and affirmed by the shareholders of the company, expressly declaring and
providing that the classes of merchandise to be carried by the company in its business as a common carrier do
not include dynamite, powder or other explosives, and expressly prohibiting the officers, agents and servants
of the company from offering to carry, accepting for carriage said dynamite, powder or other explosives.
 Then Acting Collector of Customs demanded and required of the company the acceptance and carriage of such
explosives. He has refused and suspended the issuance of the necessary clearance documents of the vessels
of the company unless and until the company consents to accept such explosives for carriage. Fisher was
advised that should the company decline to accept such explosives for carriage, the respondent Attorney-
General of the Philippine Islands and the respondent prosecuting attorney of the city of Manila intend to
institute proceedings under the penal provisions of sections 4, 5, and 6 of Act No. 98 of the Philippine
Commission against the company, its managers, agents and servants.
 Notwithstanding the demands of Fisher, the manager, agents and servants of the company decline and refuse
the carriage of such explosives.

ISSUE: WON the acts complained of had the effect of making or giving an unreasonable or unnecessary preference or
advantage to any person, locality or particular kind of traffic, or of subjecting any person, locality, or particular kind of
traffic to any undue or unreasonable prejudice or discrimination

HELD: No.

There may be some vessels engaged in business as common carriers of merchandise, which for lack of suitable deck
space or storage rooms might be justified in declining to carry kerosene oil, gasoline, and similar products, even when
offered for carriage securely packed in cases; and few vessels are equipped to transport those products in bulk. But in
any case of a refusal to carry such products which would subject any person, locality or the traffic in such products
would be necessary to hear evidence before making an affirmative finding that such prejudice or discrimination was or
was not unnecessary, undue or unreasonable. The making of such a finding would involve a consideration of the
suitability of the vessel for the transportation of such products; the reasonable possibility of danger or disaster
resulting from their transportation in the form and under the conditions in which they are offered for carriage; the
general nature of the business done by the carrier and, in a word, all the attendant circumstances which might affect
the question of the reasonable necessity for the refusal by the carrier to undertake the transportation of this class of
merchandise.

Saludo, Jr. v. Court of Appeals

207 SCRA 498

Facts:
Plaintiff herein together with Pomierski and Son Funeral Home of Chicago brought the remains of plaintiff’s
mother to Continental Mortuary Air Services which booked the shipment of the remains from Chicago to San Francisco
by Trans World Airways (TWA) and from San Francisco to Mania with Philippine Airlines (PAL). The remains were taken
to the Chicago Airport, but it turned out that there were 2 bodies in the said airport. Somehow the 2 bodies were
switched, and the remains of plaintiff’s mother was shipped to Mexico instead. The shipment was immediately loaded
on another PAL flight and it arrived the day after the expected arrival. Plaintiff filed a claim for damages in court. The
lower court absolved both airlines and upon appeal it was affirmed by the court.

Issue:
Whether or not the 2 airlines should be held liable for damages.

Held:
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and effect
even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of
stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the goods by the
consignee or such other person entitled to receive them. And, there is delivery to the carrier when the goods are
ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the
carrier, the liability of the common carrier commences eo instanti. Hence, while we agree with petitioners that the
extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of
the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the
contract of carriage. Only when such fact of delivery has been unequivocally established can the liability for loss,
destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734,
attach and the presumption of fault of the carrier under Article 1735 be invoked.

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

Maerskline v. Court of Appe als

222 SCRA 108

Facts:
Respondent herein is a firm engaged in the manufacture of pharmaceutical products. It ordered from Eli Lily,
Inc. of Puerto Rico empty gelatin capsules. Said capsules were placed in 6 drums containing 100 capsules each. The
drums were placed on board the M/V Anders Maeerskline. However the capsules were shipped to Virginia, USA instead
of the Philippines. The goods arrived in the Philippines 2 months after the original date of arrival, and respondent
herein refused to accept the goods due to its late arrival.
An action was filed by respondent to rescind the contract with Eli Lily, Inc. and Maersk together with a claim
for damages. The lower court dismissed the complaint against Eli Lily, Inc. and held Maersk to be liable for breach of
the contract of common carriage. On appeal, the court affirmed the lower court’s decision. Hence this appeal.

Issue:
Whether or not Maersk is liable for breach of contract of common carriage.

Held:
The Court held that Maersk is liable for the breach of contract of common carriage. Common carriers are not
obligated by law to carry and deliver merchandise promptly unless the common carrier previously assumes to deliver
the goods at a given date or time. However, such delivery should be made within a reasonable time.
 In this case, it appears in the bill of lading that the goods will arrive on April 3. There was no contract between
the parties in this case, however the petitioner was aware of the date of the expected arrival of the goods. The court
finds that the delay of the delivery was unreasonable. It was due to the negligence of the petitioner why the cargo
arrived so late. Petitioner did not even explain the reason for such delay. Therefore, petitioner herein is held liable for
the breach of contract.

Cebu Salvage Corp. vs. Phil. Home Assurance Co

On November 12, 1984, CSC & Maria Christina Chemicals Industries, Inc., (MCCII) entered into a voyage charter
wherein CSC was to load 800-1,100 metric tons of silica quartz on board the M/T Espiritu Santo at Ayungon, Negros
Occidental for transport to and discharge at Tagoloan, Misamis Oriental to consigned Ferrochrome Phil’s., Inc.
Pursuant to the contract, on December 23, 1984, CSC received & loaded 1,100 metric tons of silica quartz on board
the M/T Espiritu Santo which left Ayungon for Tagoloan the next day.
However, the shipment never reached its destination because the M/T Espiritu Santo sank in the afternoon of
December 24, 1984 off the beach of Opol, Misamis Oriental, resulting in the total loss of the cargo.
MCCII filed a claim for the loss of the shipment with its insurer, PHAC. PHAC paid the claim in the amount of P211,500
and was surrogated to MCCII’s rights. It thereafter filed a case in the RTC against CSC for reimbursement of the
amount it paid MCCII.
However, CSC claims no liability insisting that the agreement was merely a contract of hire wherein MCCII hired the
vessel from its owner, ALS Timber Enterprises. Not being the owner of the M/T Espiritu Santo, petitioner did not have
control over the vessel, it’s master & crew. Thus, it could not allegedly be held liable for the loss of the shipment
caused by the sinking of a ship it didn’t own.

ISSUES:
1. Whether there is a contract of carriage between CSC and MCCII.
2. Whether CSC is a common carrier despite not being the owner of the vessel it used.
3. Whether the bill of lading should prevail over the voyage charter as the contract of carriage between the parties.
4. Whether MCCII should be held liable for its own loss
5. Whether a carrier that enters into a contract of carriage is not liable to the charterer/shipper if it does not own the
vessel it chooses to use.

HELD:
1. Yes. The cargo was loaded on board the vessel; loss/non-delivery of the cargo was proven; and petitioner failed to
prove that it exercised extraordinary diligence to prevent such loss or that it was due to some casualty or force
majeure. The voyage charter here being a contract of affreightment, the carrier was answerable for the loss of the
goods received for transportation.
2. CSC was the one which contracted with MCCII for the transport of the cargo. It had control over what vessel it
would use. All throughout its dealings with MCCII, it represented itself as a common carrier. The fact that it did not
own the vessel it decided to use to consummate the contract of carriage did not negate its character & duties as a
common carrier. The MCCII could not be reasonably expected to inquire about the ownership of the vessels which
petitioner carrier offered to utilize. It is very difficult & often impossible for the general public to enforce its rights of
action under a contract of carriage if it should be required to know who the actual owner of the vehicle is. In this case,
the voyage charter itself denominated the petitioner as the “owner/operator” of the vessel.
3. No. The bill of lading was merely a receipt issued by ALS to evidence the fact that the goods had been received for
transportation. It was not signed by MCCII, as in fact it was simply signed by the supercargo of ALS. This is consistent
with the fact that MCCII did not contract directly with ALS. While it is true that a bill of lading may serve as the
contract of carriage between the parties, it cannot prevail over the express provision of the voyage charter that MCCII
and petitioner executed.
4. No. It deserves scant consideration that the voyage charter stipulated that cargo insurance was for the charterer’s
account. This meant that the charterer would take care of having the goods insured. It could not exculpate the carrier
from liability for the breach of its contract of carriage. The law prohibits it and condemns it as unjust & contrary to
public policy.
5. The idea proposed by CSC is preposterous & dangerous. MCCII never dealt with ALS and yet petitioner insists that
MCCII should sue ALS for reimbursement for its loss. Certainly, to permit a common carrier to escape its responsibility
for the goods it agreed to transport (by expedient of alleging non-ownership of the vessel it employed) would radically
derogate from the carrier’s duty of extraordinary diligence. It would also open the door to collusion between the
carrier & the supposed owner and to the possible shifting of liability from the carrier to one without any financial
capability to answer for the resulting damages.
Compania Maritima v. Insurance Co. of North America
12 SCRA 213

Facts:
Macleod & Co., contracted, first by telephone and later confirmed by a formal written booking issued by
Macleod & Co., the services of the petitioner Comapania Maritima for the shipment of bales of lamp from Davao to
Manila. Two lighters of the petitioners loaded the said cargo from Macleod’s wharf at Davao awaiting the arrival of
another vessel of the petitioner for reloading. One of the lighters sunk of which Macleod suffered a total of P64,018.
Respondent insurers of said cargo paid Macleod, and being subrogated to Macleod’s right, filed a claim to collect from
the petitioner the amount it paid to Macleod. Petitioner denied liability on the grounds that there was no bill of lading
issued thereby resulting to be non-existence of the contract; that the sinking was due to a fortuitous event and the
respondent has no personality.

Issue:
Whether or not there was a contract and whether or not there was a fortuitous event.

Held:
There was complete contract of carriage the consummation of which has already begun when the shipper
delivered the cargo to the carrier and the latter took possession of the same by placing it on a lighter manned by its
two authorized employers under which Macleod become entitled to the privilege of law. The responsibility of the
carrier commenced on the actual delivery and receipt by, the carrier or its authorized agent of the goods. The barges
or lighters were merely employed as the first step of the voyage. As to the issuance of the bill of lading, it is not
required or essential to the contract, although it may become obligatory by reason of regulations or as a condition
injured in the contract by the agreement of the parties themselves.

Servando v. Philippine Steam Navigation Co.

117 SCRA 832

Facts:
Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage from Manila
to Pulupandan, Negros Occidental cargoes of cavans of rice and cartons of colored paper which were evidenced by bills
of lading.
Upon arrival of the vessel at Pulupandan the cargoes were discharged, complete and in good order, unto the
warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed by a
fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take
delivery of 907 cavans of rice Appellees' claims for the value of said goods were rejected by the appellant.

Issue:
Whether or not carrier is liable for the loss of the cargo.

Held:
The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs
is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or
constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. Article 1736 of the
Civil Code imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are
unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to
the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. "
It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties
agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting
therein the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or
damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure,
dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ...

The Court sustains the validity of the above stipulation. There is nothing therein that is contrary to law, morals
or public policy. Therefore, the carrier is no longer liable for the loss of the goods.
Ganzon v. Court of Appeals
161 SCRA 646

Facts:
Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron. The contract was for the
petitioner to transport the scrap iron to Manila from Bataan. Tumambing delivered the scrap iron to Niza, captain of
the lighter LCT “Batman”, to board it on the same. The crew of the Batman started to load the iron, and when they
were about halfway through, Mayor Advincula arrived and demanded P5,000 from Tumambing. The latter resisted and
a heated argument started. Mayor Advincula drew his gun and fired at Tumambing. He was brought to the hospital for
treatment, lucky for him the wound was not fatal.
A few days after this incident, the loading of the scrap metal was resumed. However, the acting Mayor this
time went to the port where the Batman was docked. He was accompanied by 3 policemen and he ordered Captain
Niza to dump the scrap iron where the lighter was docked. What was left or the iron was confiscated by the Acting
Mayor and brought to NASSCO. A receipt was issued showing that the municipality had taken custody of the scraps or
iron.
Tumambing filed a case in order to recover damages for the loss that he sustained. The lower court rendered
a decision in favor of Ganzon. However, on appeal the Court of Appeals reversed the decision ordering Ganzon to pay
Tumambing P5,895 as actual damages, P5,000 for exemplary damages and attorney’s fees as well. Hence this petition
by Ganzon.

Issue:
Whether or not Ganzon is liable for the loss that Tumambing sustained.

Held:
The Court held that Ganzon is liable for the loss of Tumambing. The defense that the scraps of iron were not
unconditionally placed in his custody and control is untenable. Petitioner herein admits that the scraps of iron were
delivered to Captain Niza by Tumambing in order to load the same on the lighter Batman. The employees of Ganzon
received the scraps of iron on his behalf, therefore the scraps of metal were placed in his custody and control. Upon
the receipt of the scraps by the carrier in order transport the same, the contract of carriage was perfected. Upon
perfection of the contract, the exercise of extraordinary diligence in caring for the goods shall also commence to
begin.
Article 1738 of the NCC provides that the exercise of extraordinary diligence shall cease only upon delivery to
the consignee or to the person who has the right to receive the same. In this case, there was no delivery made to the
consignee, therefore the carrier should have exercised extraordinary diligence in taking care of the scraps of iron. It is
irrelevant that the scraps of iron were only partially loaded on the lighter. The scraps of iron were already under the
custody and control of the carrier, therefore he shall be liable for its loss.

Eastern Shipping Lines, Inc. vs. Court of Appeals

196 SCRA 570

Facts:
SS Eastern Comet, owned by defendant Eastern Shipping Lines was engaged in the business of shipment from Japan
to the Philippines. Through the SS Eastern Comet, two fiber drums of riboflavin were shipped from Yokohama to
Manila. The shipment was discharged upon arrival into the custody of defendant Metro Port Service, Inc. However, the
latter refused to one drum after claiming that such unwanted drum was in bad order. Defendant Allied Brokerage
Corporation received the shipment from Metro Port and detected that one drum was opened and without seal. The
goods were then delivered to the consignee’s warehouse. The latter noted that one drum contained spillages, while
the rest of the contents were adulterated. As a consequence of the damage Mercantile Insurance Company paid the
consignee under its marine policy insurance and instituted civil action against defendants as subrogee. The Court of
Appeals affirmed judgment holding the common carrier, arrastre operator, and customs brokers jointly and severally
liable.

Issue:
Whether Eastern Shipping Lines, Inc. can be held severally and jointly liable with Metro Port and Allied brokerage.

Held:
The Supreme Court held that Esatern Shipping Lines, Inc can be held liable. As what was already decided in
Fireman’s Fund Isurance, Co. vs Metro Port Service, Inc, the legal relationship between the consignee and the arrastre
operator is analogous to that of a depositor and a warehouseman. Further explained, the relationship between the
consignee and the common carrier is comparable to that of the consignee and the arrastre operator. Since it is the
duty of the Arrastre to take good care of the goods that are in its custody and to deliver them in good condition to the
consignee, such responsibility also devolves upon the carrier. The duty of the consignee to guard the goods and
shelter it from destruction or impairment is also shouldered by the common carrier. Both are therefore charged with
the obligation to deliver the goods in good condition to the consignee.
Macam v. Court of Appeals
313 SCRA 77

Facts:
Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company is the
consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as consignee and GPC
as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the carrier directly to GPC and not to
Pakistan Bank and without surrendering the bill of lading.

Issue:
Whether or not there was a valid delivery.
Held:
The extraordinary responsibility of common carriers last until actual or constructive delivery of the cargo to
the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party. However, in the export
invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as such in his demand letter to
respondent and his complaint before the court. This premise brings into conclusion that the deliveries of the cargo to
GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore, there was a valid delivery.

Republic vs Lorenzo

Facts: The government entered into a contract of carriage of goods with herein petitioner National Trucking and
Forwarding Corporation (NTFC). Thus, the latter shipped 4,868 bags of non-fat dried milk through herein respondent
Lorenzo Shipping Corporation (LSC) from September to December 1988. The consignee named in the bills of lading
issued by the respondent was AbdurahmanJama, petitioner’s branch supervisor in Zamboanga City.

On reaching the port of Zamboanga City, respondent’s agent, EfrenRuste Shipping Agency, unloaded the 4,868 bags
of non-fat dried milk and delivered the goods to petitioner’s warehouse. Before each delivery, Rogelio Rizada and
Ismael Zamora, both delivery checkers of EfrenRuste Shipping Agency, requested Abdurahman to surrender the
original bills of lading, but the latter merely presented certified true copies thereof. Upon completion of each delivery,
Rogelio and Ismael asked Abdurahman to sign the delivery receipts. However, at times when Abdurahman had to
attend to other business before a delivery was completed, he instructed his subordinates to sign the delivery receipts
for him.
Notwithstanding the precautions taken, the petitioner allegedly did not receive the subject goods. Thus, the
government and petitioner sued respondent for breach of contract of carriage.
Issue: Whether respondent is liable for breach of contract of carriage

Held: No. Article 1733 of the Civil Code demands that a common carrier observe extraordinary diligence over the
goods transported by it. Extraordinary diligence is that extreme measure of care and caution which persons of unusual
prudence and circumspection use for securing and preserving their own property or rights. This exacting standard
imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who
is at the mercy of the common carrier once the goods have been lodged for shipment. Hence, in case of loss of goods
in transit, the common carrier is presumed under the law to have been at fault or negligent. However, the
presumption of fault or negligence, may be overturned by competent evidence showing that the common carrier has
observed extraordinary diligence over the goods.

In the instant case, we agree with the court a quo that the respondent adequately proved that it exercised
extraordinary diligence. Although the original bills of lading remained with petitioner, respondent’s agents demanded
from Abdurahman the certified true copies of the bills of lading. They also asked the latter and in his absence, his
designated subordinates, to sign the cargo delivery receipts.

This practice, which respondent’s agents testified to be their standard operating procedure, finds support in Article
353 of the Code of Commerce:

After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and
by virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be
considered cancelled, ….

In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of
its loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the
same effects as the return of the bill of lading. (Emphasis supplied)

Conformably with the aforecited provision, the surrender of the original bill of lading is not a condition precedent for a
common carrier to be discharged of its contractual obligation. If surrender of the original bill of lading is not possible,
acknowledgment of the delivery by signing the delivery receipt suffices. This is what respondent did.
REGIONAL CHARTER LINES OF SG et al vs THE NETHERLANDS INSURANCE Co.

FACTS:
Parties:Regional Charter Lines
–
DEFENDANT, Carrier, based in SGEDSA Shipping Agency
–
Agent of RCLNetherlands Insurance
–
insured the goods shipped, paid claims, subrogated RCLTemic Telefunken Microelectronices (Temic)
–
ConsigneeU Freight
–
forwarding agent based in SG contracted services of Eagle LinesEagle Lines
–
tasked by U Freight to transport cargo, contracted services of RCL (as a ship owner)- Epoxy Molding Compound (the
merchandise) was to be shipped from SG to Manila.- The merchandise is temperature sensitive thus it is refrigerated
in transit at O degrees Celsius.- Unloaded from the ship in good condition, refrigerator was working well.- However,
goods were damaged because temperature in the ref fluctuated to 33 degree Callegedly because of burnt condenser
more of the ref container - Temic claimed from Netherlands, Netherlands paid the insurance claim- Netherlands filed a
complaint for subrogation of insurance settlement against RCL- RCL and agent EDSA Shipping denied any negligence
in the shipment, and that there is no validsubrogation
ISSUE/S:
W/N RCL and EDSA Shipping is liable as CC under the theory of presumption of negligence?
HELD:
YES. SC held CC is presumed to have been negligent if it fails to prove that it exercised extraordinaryvigilance over
the goods it transported. When the goods shipped are either lost or arrived in damagedcondition, a presumption
arises against the carrier of its failure to observe that diligence, and there neednot be an express finding of negligence
to hold it liable.RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by
lawover the goods they transported. Indeed, there is sufficient evidence showing that the fluctuation of
thetemperature in the refrigerated container van, as recorded in the temperature chart, occurred after thecargo had
been discharged from the vessel and was already under the custody of the arrastre operator,ICTSI. This evidence,
however, does not disprove that the condenser fan
–
which caused the fluctuationof the temperature in the refrigerated container
–
was not damaged while the cargo was being unloadedfrom the ship. It is settled in maritime law jurisprudence that
cargoes while being unloaded generallyremain under the custody of the carrier;RCL and EDSA Shipping failed to
dispute this.
–
BURDEN OFPROOF HAS SHIFTED TO THE SHIPPER

Eastern Shipping Lines vs. IAC

150 SCRA 463

Facts:
In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe, Japan for Manila:
(1) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills
Co., Inc.,
(2) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.

Both sets of goods were insured for their value with Development Insurance and Surety Corporation.

In GR 71478, the same vessel took on board :

1. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation
2. two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for US$46,583.00. The 2 cases
by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for Kobe, Japan, to Manila, the vessel caught
fire and sank, resulting in the total loss of ship and cargo. The respective Insurers paid the corresponding marine
insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured.
Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous
event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of Development Insurance in
the amounts of P256,039.00 and P92,361.75, respectively, with legal interest, plus P35,000.00 as attorney’s fees and
costs. Eastern Shipping took an appeal to the then Court of Appeals which, on 14 August 1984, affirmed the decision
of the trial court. Eastern Shipping filed a petition for review on certiorari.
Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the recovery of the
insured value of the cargo lost imputing unseaworthiness of the ship and non-observance of extraordinary diligence by
Eastern Shipping. Eastern Shipping denied liability on the principal grounds that the fire which caused the sinking of
the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that
when the loss of fire is established, the burden of proving negligence of the vessel is shifted to the cargo shipper. Trial
Court rendered judgment in favor of Nisshin and Dowa. CA affirmed decision. Hence this petition on certiorari.

Issue:
Whether or not the carrier exercised extraordinary diligence.

Held:
Eastern Shipping shall pay the Development Insurance the amount of P256,039 for the 28 packages of calorized lance
pipes, and P71,540 for the 7 cases of spare parts, with interest at the legal rate from the date of the filing of the
Complaint on 13 June 1978, plus P5,000 as attorney’s fees, and the costs. The Court, on the other hand, in GR
71478, affirmed the judgment.
The evidence of the defendant did not show that extraordinary diligence was observed by the vessel to
prevent the occurrence of fire at hatches nos. 2 and 3. Defendant’s evidence did not likewise show the amount of
diligence made by the crew, on orders, in the care of the cargoes. What appears is that after the cargoes were stored
in the hatches, no regular inspection was made as to their condition during the voyage. The complete defense
afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping. The Carriage of Goods by Sea Act
(COGSA), a special law, is merely suppletory to the provisions of the Civil Code The fire may not be considered a
natural disaster or calamity, as it arises almost invariably from some act of man or by human means. It does not fall
within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even
be caused by the actual fault or privity of the carrier.

Eastern Shipping Lines, Inc. vs. Court of Appeals

196 SCRA 570

Facts:
SS Eastern Comet, owned by defendant Eastern Shipping Lines was engaged in the business of shipment from Japan
to the Philippines. Through the SS Eastern Comet, two fiber drums of riboflavin were shipped from Yokohama to
Manila. The shipment was discharged upon arrival into the custody of defendant Metro Port Service, Inc. However, the
latter refused to one drum after claiming that such unwanted drum was in bad order. Defendant Allied Brokerage
Corporation received the shipment from Metro Port and detected that one drum was opened and without seal. The
goods were then delivered to the consignee’s warehouse. The latter noted that one drum contained spillages, while
the rest of the contents were adulterated. As a consequence of the damage Mercantile Insurance Company paid the
consignee under its marine policy insurance and instituted civil action against defendants as subrogee. The Court of
Appeals affirmed judgment holding the common carrier, arrastre operator, and customs brokers jointly and severally
liable.

Issue:
Whether Eastern Shipping Lines, Inc. can be held severally and jointly liable with Metro Port and Allied brokerage.

Held:
The Supreme Court held that Esatern Shipping Lines, Inc can be held liable. As what was already decided in
Fireman’s Fund Isurance, Co. vs Metro Port Service, Inc, the legal relationship between the consignee and the arrastre
operator is analogous to that of a depositor and a warehouseman. Further explained, the relationship between the
consignee and the common carrier is comparable to that of the consignee and the arrastre operator. Since it is the
duty of the Arrastre to take good care of the goods that are in its custody and to deliver them in good condition to the
consignee, such responsibility also devolves upon the carrier. The duty of the consignee to guard the goods and
shelter it from destruction or impairment is also shouldered by the common carrier. Both are therefore charged with
the obligation to deliver the goods in good condition to the consignee.

DELSAN TRANSPORT vs. CA

FACTS

Caltex engaged into a contract of affreightment with the petitioner, Delsan Transport Lines, Inc.(Delsan), for a period
of one year whereby the said common carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan
Refinery to different parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun,
2,277.314 kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The
shipment was insured with private respondent, American Home Assurance Corporation (American Home)
The vessel sank in the early morning of August 15, 1986 near Panay Gulf in the Visayas taking with it the entire cargo
of fuel oil.

Subsequently, American Home paid Caltex the sum of Php 5,096,635.57 representing the insured value of the cargo.
Exercising its right to subrogation under Article 2207 of the New Civil Code, the American Home demanded the Delsan
the same amount it paid to Caltex.

Due to its failure to collect from Delsan despite prior demand, American Home filed a complaint with the RTC of
Makati for collection of a sum of money.

The trial court dismissed the complaint against Delsan. It ruled that the vessel, MT Maysun, was seaworthy and that
the incident was caused by unexpected inclement weather condition or force majeure, thus exempting the common
carrier from liability for the loss of its cargo.

The CA reversed. It gave credence to the weather report issued by PAGASA which stated that the waves were only .7
to 2 meters in height in the vicinity of the Panay Gulf at the day the ship sank, in contrast to the claim of the crew of
the ship that the waves were 20 feet high.

Delsan contends the following

1. Delsan theorized that when the American Home paid Caltex the value of its lost cargo, the act of American
Home is equivalent to a tacit recognition that the ill-fated vessel was seaworthy; otherwise, American Home was not
legally liable to Caltex due to the latter’s breach of implied warranty under the marine insurance policy that the vessel
was seaworthy.
2. Delsan avers that although chief officer had merely a 2nd officer’s license, he was qualified to act as the
vessel’s chief officer. In fact, all the crew and officers of MTT Maysun were exonerated in the administrative
investigation.

ISSUES

1. W/N the payment made by American Home to Caltex for the insured value of the lost cargo amounted to an
admission that the vessel was seaworthy, thus precluding any action for recovery against the petitioner. NO
2. W/N the non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for
lack of cause of action. NO

RULING

First Issue:

The payment made by American Home for the insured value of the lost cargo operates as waiver of its right to enforce
the term of the implied warranty against Caltex under the marine insurance policy. However, the same cannot be
validly interpreted as an automatic admission of the vessel’s seaworthiness by American Home as to foreclose
recourse against Delsan for any liability under its contractual obligation as a common carrier. The fact of payment
grants American Home subrogatory right which enables it to exercise legal remedies that would otherwise be available
to Caltex as owner of the lost cargo against Delsan, the common carrier.

From the nature of their business and for reasons of public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them,
according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods,
common carriers shall be responsible unless the same is brought about, among others, by flood, storm, earthquake,
lightning or other natural disaster or calamity. In all other cases, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove they observed
extraordinary diligence.

In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, Delsan attributes the
sinking of MT Maysun to fortuitous event or force majeure. Although the testimony of the captain and chief mate that
there were strong winds and waves 20 feet high was effectively rebutted and belied by the weather report of PAGASA.
Thus, as the CA correctly ruled, Delsan’s vessel, MT Maysun, sank with its entire cargo for the reason that it was not
seaworthy. There was no squall or bad weather or extremely poor sea condition in the vicinity where the said vessel
sank.

Additionally, the exoneration of MT Maysun’s officers and crew merely concern their respective administrative
liabilities. It does not in any way operate to absolve Delsan the common carrier from its civil liability arising from its
failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts
or omissions of its employees, the determination of which properly belongs to the courts. In the case at bar, Delsan is
liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the
presumption of fault or negligence as common carrier occasioned by the unexplained sinking of its vessel, MT Maysun,
while in transit.

Second Issue:

It is the view of the SC that the presentation in evidence of the marine insurance policy is not indispensable in this
case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its
subrogatory right. The subrogation receipt, by itself, is sufficient to establish not only the relationship of American
Home as insurer and Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to
settle the insurance claim. The right of subrogation accrues simply upon payment by the insurance company of the
insurance claim.

ALEJANDRO ARADA, doing business under the name and style "SOUTH NEGROSENTERPRISES",

petitioner,vs.HONORABLE COURT OF APPEALS,

respondents.Facts:Alejandro Arada was the proprietor and operator of the firm South Negros

Enterprises engaged in the business of small scale shipping as a common carrier. On 24 March1982, Arada entered
into a contract with San Miguel Corporation (SMC) to safely transport
cargoes of the latter to Mandaue City using one of Arada’s vessels, M/L Maya.
On the same dayit applied for a clearance with the Philippine Coast Guard for M/L but due to a typhoon, it wasdenied
clearance. M/L Maya was given clearance on the next day as there was no storm and thesea was calm. Hence, said
vessel left for Mandaue City. While it was navigating towards Cebu, atyphoon developed and hit the vessel; as a result
the vessel sank with whatever was left of itscargoes. The crew was rescued by a passing pump boat. A marine protest
was filed by thecaptain and on the basis of such marine protest; the Board of Marine Inquiry conducted a hearingof
the sinking of M/L Maya wherein SMC was duly represented. Said Board made it findingsand recommendation
absolving the owner/operator, officers and crew of M/L Maya from any
administrative liability. The Board’s report containing its
findings and recommendation was thenforwarded to the headquarters of the Philippine Coast Guard for appropriate
action. On the basisof such report, the Commandant of the Philippine Coast Guard rendered a decisionexonerating the
owner/operator officers and crew of the ill-fated vessel from any administrativeliability on account of said
incident.SMC then filed an action for the recovery of the value of the cargoes anchored in breachof contract of
carriage. The trial court held that there was no showing of negligence on the partof the defendant nor did it fail to
observe diligence over the cargoes and that the sinking was dueto a fortuitous event. The CA decided otherwise,
hence this petition.

Issue:Whether or not petitioner is liable for the loss of the cargoes

Held:Petitioner contends that it was only a private carrier so it need not exercise extraordinary
diligence over the care of the respondent’s cargoes and that and that the factual findings of the
Board of Marine Inquiry are binding and conclusive on the court.
The SC ruled that that petitioner’s vessel is a common carrier and should have exerci
sedextraordinary diligence in the vigilance over the ensuring of safety of the cargoes transported byit. In order that it
may be exempted from responsibility due to fortuitous events, it must provethat the fortuitous event is the proximate
cause and only cause of the loss or destruction of goodsand the common carrier must have exercised due diligence to
prevent or minimize the lossbefore, during and after the occurrence of the fortuitous event. Such was not observed by
thecommon carrier, the captain knew that there was a typhoon before it departed, it was givenclearance on the
departure day but the captain should have checked where the typhoon washeaded, neither did the captain of the
vessel monitor and record the weather conditions everydayas required by Art, 612 of the Code of Commerce. It was
also found that the crew were unlicensed. The carrier is therefore liable for the damages it caused to the respondents
as itfailed to observe due diligence.As to the Board decision, it only exonerated the petitioner and the crew and
officers of the M/V Maya from administrative liability which is not equal to the exoneration of the
petitioner’s liability as a common carrier for his failure to observe extraordinary diligence in the
vigilance over the goods it was transporting and for the negligent acts or commissions of hisemployees. Such is the
function of the Court, not the Special Board of Marine Inquiry
Phil.American Gen. Ins. Co., Inc. vs. MCG Marine Services, Inc

FACTS: On March 1, 1987, San Miguel Corporation insured several beer bottle cases with petitioner Philippine
American General Insurance Company. The cargo were loaded on board the M/V Peatheray Patrick-G to be
transported from Mandaue City to Bislig, Surigao del Sur.
After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel left the port of Mandaue
City for Bislig, Surigao del Sur on March 2, 1987. The weather was calm when the vessel started its voyage.

The following day, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a
consequence thereof, the cargo belonging to San Miguel Corporation was lost.

Petitioner paid San Miguel Corporation the full amount of the cargo pursuant to the terms of their insurance contract,
and as subrogee filed with the Regional Trial Court (RTC) of Makati City a case for collection against private
respondents to recover the amount it paid.

Meanwhile, the Board of Marine Inquiry conducted its own investigation and found that the cause of the sinking of the
vessel was the existence of strong winds and enormous waves in Surigao del Sur, a fortuitous event that could not
have been for seen at the time the M/V Peatheray Patrick-G left the port of Mandaue City. It was further held by the
Board that said fortuitous event was the proximate and only cause of the vessel's sinking.

ISSUE: Whether or not respondent MGG should be held liable.

HELD: No. [Common carriers, from the nature of their business and for reasons of public policy, are mandated to
observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by
them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to
have been at fault or negligent if the goods transported by them are lost, destroyed or if the same deteriorated.

However, this presumption of fault or negligence does not arise in the cases enumerated under Article 1734 of the
Civil Code:
Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any
of the following causes only:(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;(2) Act of the
public enemy in war, whether international or civil;(3) Act or omission of the shipper or owner of the goods;(4) The
character of the goods or defects in the packing or in the containers;(5) Order or act of competent public authority.]

In order that a common carrier may be absolved from liability where the loss, destruction or deterioration of the
goods is due to a natural disaster or calamity, it must further be shown that the such natural disaster or calamity was
the proximate and only cause of the loss; there must be "an entire exclusion of human agency from the cause of the
injury of the loss."Moreover, even in cases where a natural disaster is the proximate and only cause of the loss, a
common carrier is still required to exercise due diligence to prevent or minimize loss before, during and after the
occurrence of the natural disaster, for it to be exempt from liability under the law for the loss of the goods. If a
common carrier fails to exercise due diligence--or that ordinary care which the circumstances of the particular case
demand -- to preserve and protect the goods carried by it on the occasion of a natural disaster, it will be deemed to
have been negligent, and the loss will not be considered as having been due to a natural disaster under Article 1734
(1).

[In the case at bar, the issues may be narrowed down to whether the loss of the cargo was due to the occurrence of a
natural disaster, and if so, whether such natural disaster was the sole and proximate cause of the loss or whether
private respondents were partly to blame for failing to exercise due diligence to prevent the loss of the cargo.

The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk, said vessel encountered strong winds
and huge waves ranging from six to ten feet in height. The vessel listed at the port side and eventually sunk at Cawit
Point, Cortes, Surigao del Sur.

The Court of Appeals, citing the decision of the Board of Marine Inquiry in the administrative case against the vessel's
crew (BMI--646-87), found that the loss of the cargo was due solely to the existence of a fortuitous event, particularly
the presence of strong winds and huge waves at Cortes, Surigao del Sur on March 3, 1987:]
Alberta Yobido and Cresencio Yobido v. CA, Leny Tumboy, Ardee Tumboy and Jasmin Tumboy
G.R. No. 113003 October 17, 1997
Romero, J.

FACTS:
 Spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin, boarded a Yobido Liner bus
bound for Davao City. Along the trip, the left front tire of the bus exploded. The bus fell into a ravine around 3 ft. from
the road and struck a tree. The incident resulted in the death of Tito and physical injuries to other passengers.
 Factual backdrop based on testimony of Leny: the winding road the bus traversed was not cemented and was
wet due to the rain; it was rough with crushed rocks. The bus which was full of passengers had cargoes on top. Since
it was running fast, (at a speed of 50-60kph based on another witness’ testimony) she cautioned the driver to slow
down but he merely stared at her through the mirror.
 A complaint for breach of contract of carriage was filed by Leny and her children against Alberta Yobido, the
owner of the bus, and Cresencio Yobido, its driver; Yobidos raised the affirmative defense of caso fortuito; they also
filed a third-party complaint against Philippine Phoenix Surety and Insurance, Inc.
 Upon a finding that the third party defendant was not liable under the insurance contract, the lower court
dismissed the third party complaint.

ISSUE: WON the tire blowout was a caso fortuito as to exempt Yobidos from liability

HELD: No.
 tire blowout - mechanical defect of the conveyance or a fault in its equipment which was easily discoverable if
the bus had been subjected to a more thorough or rigid check-up before it took to the road
 when a passenger boards a common carrier, he takes the risks incidental to the mode of travel he has taken.
After all, a carrier is not an insurer of the safety of its passengers and is not bound absolutely and at all events to
carry them safely and without injury. However, when a passenger is injured or dies while travelling, the law presumes
that the common carrier is negligent. (see Art. 1756)
 Art. 1755 provides that a common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the
circumstances. In culpa contractual, once a passenger dies or is injured, the carrier is presumed to have been at fault
or to have acted negligently. This disputable presumption may only be overcome by evidence that the carrier had
observed extraordinary diligence as prescribed by Arts. 1733, 1755 and 1756 or that the death or injury of the
passenger was due to a fortuitous event.
 characteristics of fortuitous event: a) the cause of the unforeseen and unexpected occurrence, or the failure of
the debtor to comply with his obligations, must be independent of human will; b) it must be impossible to foresee the
event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid; c) the occurrence
must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and d) the obligor
must be free from any participation in the aggravation of the injury resulting to the creditor
 Art 1174: no person shall be responsible for a fortuitous event which could not be foreseen, or which, though
foreseen, was inevitable
 the explosion of the new tire may not be considered a fortuitous event; there are human factors involved in
the situation; the fact that the tire was new did not imply that it was entirely free from manufacturing defects or that
it was properly mounted on the vehicle

PAL vs CA

This petition for review in certiorari seeks to annul and set aside the decision of the then Intermediate Appellant Court
affirming the decision of the then Court of first Instance declaring PAL liable for damages

Private respondent filed a complaint for damages for breach of contract of carriage. While on flight and just about
fifteen (15) minutes before landing at Ozamiz City, the pilot received a radio message that the airport was closed due
to heavy rains and inclement weather and that he should proceed to Cotabato City instead.

Upon arrival at Cotabato City, the PAL Station Agent informed the passengers of their options to return to Cebu on
flight 560 of the same day and then to Ozamiz City on 4 August 1975, or take the next flight to Cebu the following
day, or remain at Cotabato and take the next available flight to Ozamiz City on 5 August 1975.

Private respondent chose to return to Cebu but was not accommodated because he checked-in as passenger No. 9 on
Flight 477. He insisted on being given priority over the confirmed passengers in the accommodation, but the Station
Agent refused private respondent's demand explaining that the latter's predicament was not due to PAL's own doing
but to be a force majeure.

Private respondent tried to stop the departure of Flight 560 as his personal belongings, including a package containing
a camera which a certain Miwa from Japan asked him to deliver to Mrs. Fe Obid of Gingoog City, were still on board.
His plea fell on deaf ears. PAL then issued to private respondent a free ticket to Iligan city, which the latter received
under protest. 5 Private respondent was left at the airport and could not even hitch a ride in the Ford Fiera loaded
with PAL personnel. 6 PAL neither provided private respondent with transportation from the airport to the city proper
nor food and accommodation for his stay in Cotabato City

His personal effects including the camera, which were valued at P2,000.00 were no longer recovered.

Respondent alleged that there was simply no more seat for private respondent on Flight 560 since there were only six
(6) seats available and the priority of accommodation on Flight 560 was based on the check-in sequence in Cebu

RTC judgment is hereby rendered in favor of the plaintiff and against the defendant Philippine AirLines, Inc. ordering
the latter to pay. CA affirmed

Held:
An assiduous examination of the records yields no valid reason for reversal of the judgment on appeal; only a
modification of its disposition

PAL did not seem to mind the introduction of evidence which focused on its alleged negligence in caring for its
stranded passengers. Well-settled is the rule in evidence that the protest or objection against the admission of
evidence should be presented at the time the evidence is offered, and that the proper time to make protest or
objection to the admissibility of evidence is when the question is presented to the witness or at the time the answer
thereto is given. There being no objection, such evidence becomes property of the case and all the parties are
amenable to any favorable or unfavorable effects resulting from the evidence.

Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such
occurrence did not terminate PAL's contract with its passengers. Hence, PAL necessarily would still have to exercise
extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have
reached their final destination