JETHRO

Eastern Shipping v. Court of Appeals

G.R. No. 94151 April 30, 1991

EASTERN SHIPPING LINES, INC., petitioner,
vs.
THE COURT OF APPEALS and THE FIRST NATIONWIDE ASSURANCE CORPORATION, respondents.

FACTS:
 Carrier – Eastern Shipping Lines Inc
 Shipper/Consignee – Stresstek Post Tensioning Philippines Inc
 Insurer - First Nationwide Assurance Corporation
 Arrastre Operator – E. Razon Inc. (not significant)
 Eastern Shipping Lines Inc shipped uncoated 7-wire stress relieved wire strand for prestressed concrete
were shipped on board the vessel "Japri Venture,". Upon arrival at the port of Manila, it discharged the
cargo to the custody of the defendant E. Razon, Inc. from whom the consignee's customs broker received it
for delivery to the consignee's warehouse. First Nationwide Assurance, indemnified the consignee in the
amount of P171,923.00 for damage and loss to the insured cargo, whereupon the former was subrogated
for the latter. The insurer now seeks to recover from the defendants what it has indemnified the consignee.
The petitioner protested alleging that it should not be hel liable to answer for damages for the event that
caused the rusting of the goods was due to the “encountered very rough seas and stormy weather”
classified as force majeure, hence relieving them of any liability. Aggrieved, respondent filed a case against
petitioner.
 RTC – dismissed the case
 CA – set aside RTC’s decision and ordered petitioner to pay respondent

ISSUE:
W/N petitioner was negligent and should be held liable for the payment of damages.

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

G.R. No. 127897 November 15, 2001

FACTS:

Carrier – Delsan Transport Lines Inc. Shipper –

Caltex Philippine

Insurer – American Home Assurance Corporation

Caltex entered into a contract with Delsan Transport Lines to transport its petroleum goods from Batangas–Bataan
Refinery to Zamboanga City. The shipment was insured by private respondentAmerican Home
Assurance Corp. MT Maysum set sail from Batangas for Zamboanga City. Unfortunately, the vessel sank in the early
morning of August 16, 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil. Subsequently,
private respondent paid Caltex the sum of(P5,096,635.67) representing the insured value of the lost cargo. Exercising
its right of subrogation, the private respondent demanded of the petitioner the same amount it paid to Caltex. Delsan
failed to pay its obligation the American Home Assurance Corp. Hence, the latter institutes an action to recover the
amount paid. The regional trial court ruled in favor of petitioner stating that MT Maysum, was seaworthy as certified by
Philippine Coastguard and the incident was caused by unexpected inclement weather condition or force majeure. I the
court of appeals, it reversed the trial court’s decision by giving credence to the weather report issued by the PAG-ASA
that the sea was calm during the voyage.

ISSUE:

W/N petitioner should be held liable for damages.

RULING:

YES. 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 circumstance 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 that they observed extraordinary diligence. The tale of strong winds and big waves by the
said officers of the petitioner however, was effectively rebutted and belied by the weather report from the
PAGASA, showing that from 2:00 o’clock to 8:00 o’clock in the morning on August 16, 1986, the wind speed
remained at ten (10) to twenty (20) knots per hour while the height of the waves ranged from .7 to two (2)
meters in the vicinity of Cuyo East Pass and Panay Gulf where the subject vessel sank. Thus, as the appellate
court correctly ruled, petitioner’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 when the said
vessel sank. Thus not having overturned the evidence presented, (that it observed extraordinary diligence) the
presumption of negligence stands, and therefore it is but right and proper to rule that petitioner should be held
liable for damages
 Philippine Charter Insurance Corp. v. Unknown Owner of Vessel M/V “National Honor”, National
Shipping Corp. and International Container Services, Inc.

[G.R. No. 161833. July 8, 2005]

PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner,

vs
UNKNOWN OWNER OF THE VESSEL M/V “NATIONAL HONOR,”
NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES and
INTERNATIONAL CONTAINER SERVICES, INC., respondents.

FACTS:
 Carrier - National Shipping Corporation of the Philippines (NSCP)
 Consignee - Blue Mono International Company, Incorporated (BMICI)
 Insurer - Philippine Charter Insurance Corporation (PCIC)
 Arrastre Operator - International Container Terminal Services, Incorporated (ICTSI)
 On November 5, 1995, J. Trading Co. Ltd. of Seoul, Korea, loaded a shipment of four units of parts
and accessories in the port of Pusan, Korea, on board the vessel M/V “National
Honor,” represented in the Philippines by its agent, National Shipping Corporation of the
Philippines (NSCP). The goods were to be delivered to the ultimate consignee Blue Mono
International Company, Incorporated (BMICI). The shipment was contained in two wooden
crates, namely, Crate No. 1 and Crate No. 2, complete and in good order condition. There were no
markings on the outer portion of the crates except the name of the consignee.[7]
 Crate No. 1 measured 24 cubic meters and weighed 3,620 kgs. On the flooring of the
wooden crates were three wooden battens placed side by side to support the weight of the
cargo.
 Crate No. 2, on the other hand, measured 10 cubic meters and weighed 2,060 kgs.
 It was insured for P2,547,270.00 with the Philippine Charter Insurance Corporation (PCIC).
Upon arrival, the International Container Terminal Services, Incorporated (ICTSI) was
furnished with a copy of the crate cargo list and bill of lading, and it knew the contents of the
crate.[11] The following day, the vessel started discharging its cargoes using its winch
crane. Claudio Cansino, the stevedore of the ICTSI, placed two sling cables on each end of Crate No.
1.[15] No sling cable was fastened on the mid-portion of the crate. In Dauz’s experience, this was a
normal procedure.[16] As the crate was being hoisted from the vessel’s hatch, the mid-portion of the
wooden flooring suddenly snapped in the air, about five feet high from the vessel’s twin deck,
sending all its contents crashing down hard,[17]resulting in extensive damage to the shipment.
BMICI’s customs broker, JRM Incorporated, took delivery of the cargo in such damaged
condition.[18] Upon receipt of the damaged shipment, BMICI found that the same could no longer
be used for the intended purpose. ]BMICI subsequently filed separate claims against the
NSCP,[20] the ICTSI,[21] and its insurer, the PCIC,[22] for US$61,500.00. When the other companies
denied liability, PCIC paid the claim and was issued a Subrogation Receipt [23] for P1,740,634.50.
On March 22, 1995, PCIC, as subrogee, filed with the RTC of Manila, Branch 35, a Complaint for
Damages[24] against the “Unknown owner of the vessel M/V National Honor,” NSCP and ICTSI, as
defendants. PCIC alleged that the loss was due to the fault and negligence of the defendants.
 RTC - rendered judgment for PCIC and ordered the complaint dismissed.
 The loss was due to the internal defect and weakness of the materials used in the
fabrication of the crates. The middle wooden batten had a hole (bukong-bukong).
 CA – affirmed in toto the RTC’s decision
  The loss of the shipment was due to an excepted cause – “[t]he character of the goods or
defects in the packing or in the containers” and the failure of the shipper to indicate
signs to notify the stevedores that extra care should be employed in handling the
shipment.

ISSUE:
W/N respondents should be held liable for the damage of the goods.

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, according to all the circumstances of each case.The extraordinary
diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and
to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for
sale, carriage and delivery. It requires common carriers to render service with the greatest skill and
foresight and “to use all reasonable means to ascertain the nature and characteristic of goods tendered
for shipment, and to exercise due care in the handling and stowage, including such methods as their
nature requires.”[42]
The common carrier’s duty to observe the requisite diligence in the shipment of goods lasts from the
time the articles are surrendered to or unconditionally placed in the possession of, and received by, the
carrier for transportation until delivered to, or until the lapse of a reasonable time for their acceptance,
by the person entitled to receive them.[43] When the goods shipped are either lost or arrive in damaged
condition, a presumption arises against the carrier of its failure to observe that diligence, and there need
not be an express finding of negligence to hold it liable.[44] To overcome the presumption of negligence in
the case of loss, destruction or deterioration of the goods, the common carrier must prove that it
exercised extraordinary diligence.[45]
However, under Article 1734 of the New Civil Code, the presumption of negligence does not apply to
any of the following causes:
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.
“Defect” is the want or absence of something necessary for completeness or perfection; a lack or
absence of something essential to completeness; a deficiency in something essential to the proper use for
the purpose for which a thing is to be used.[48] On the other hand, inferior means of poor quality,
mediocre, or second rate.[49] A thing may be of inferior quality but not necessarily defective. In other
words, “defectiveness” is not synonymous with “inferiority.”
In the present case, the trial court declared that based on the record, the loss of the shipment was
caused by the negligence of the petitioner as the shipper:
The case at bar falls under one of the exceptions mentioned in Article 1734 of the Civil Code, particularly
number (4) thereof, i.e., the character of the goods or defects in the packing or in the containers. The trial
court found that the breakage of the crate was not due to the fault or negligence of ICTSI, but to the
inherent defect and weakness of the materials used in the fabrication of the said crate.
It appears that the wooden batten used as support for the flooring was not made of good materials, which
caused the middle portion thereof to give way when it was lifted. The shipper also failed to indicate signs
to notify the stevedores that extra care should be employed in handling the shipment.
The petitioner failed to rebut the evidence of respondent, that the crates were sealed and that the
contents thereof could not be seen from the outside.[52] While it is true that the crate contained
machineries and spare parts, it cannot thereby be concluded that the respondents knew or should have
known that the middle wooden batten had a hole, or that it was not strong enough to bear the weight of
the shipment.

Lorenzo Shipping v. BJ Marthel

(ewan ko bakit to sinali ni sir eh mas marunong pa si ate Jackie, yung binigay niyang Lorenzo case, pang-
transpo talaga, ito pang-oblicon!!! Wag niyo to masyadong damdamin na case )

G.R. No. 145483 November 19, 2004

LORENZO SHIPPING CORP., petitioner,
vs.
BJ MARTHEL INTERNATIONAL, INC., respondent.
FACTS
 Petitioner Lorenzo Shipping Corporation is a domestic corporation engaged in coastwise shipping.
Respondent BJ Marthel International, Inc. is an importer and distributor of different brands of
engines and spare parts.
 Respondent supplied petitioner with spare parts for the latter's marine engines. According to the
quotation it sent, deliveries of such items are “within 2 months after receipt of firm order.”
Petitioner thereafter issued to respondent Purchase Order No. 13839 for the procurement of one
set of cylinder liner, valued at P477,000, to be used for M/V Dadiangas Express. The purchase
order was co-signed by Jose Go, Jr., petitioner's vice-president, and Henry Pajarillo, respondent’s
sales manager.
 Instead of paying the 25% down payment (indicated in the purchase order) for the first cylinder
liner, petitioner issued in favor of respondent ten postdated checks. The checks were supposed to
represent the full payment of the aforementioned cylinder liner.
 Subsequently, petitioner issued Purchase Order No. 14011, for another unit of cylinder liner. This
purchase order stated the term of payment to be "25% upon delivery, balance payable in 5 bi-
monthly equal installments." Like the first purchase order, the second purchase order did not state
the date of the cylinder liner's delivery.
 On 26 January 1990, respondent deposited petitioner's check that was postdated 18 January 1990,
however, the same was dishonored by the drawee bank due to insufficiency of funds. The
remaining nine postdated checks were eventually returned by respondent to petitioner.
 Petitioner claimed that it replaced said check with a good one, the proceeds of which were applied
to its other obligation to respondent. For its part, respondent insisted that it returned said
postdated check to petitioner.
 On 20 April 1990, Pajarillo delivered the two cylinder liners at petitioner's warehouse in Manila.
The sales invoices evidencing the delivery of the cylinder liners both contain the notation "subject
to verification" under which the signature of petitioner's warehouseman, appeared.
 Respondent sent a Statement of Account and respondent's vice-president sent a demand letter
dated to petitioner requiring the latter to pay. Petitioner sent the former a letter offering to pay
only P150,000 for the cylinder liners. In said letter, petitioner claimed that as the cylinder liners
were delivered late and due to the scrapping of the M/V Dadiangas Express, it (petitioner) would
have to sell the cylinder liners in Singapore and pay the balance from the proceeds of said sale.
 Respondent filed an action for sum of money and damages before the RTC. Prior to the filing of a
responsive pleading, respondent filed an amended complaint with preliminary attachment. The
amendments also pertained to the issuance by petitioner of the postdated checks and the amounts
of damages claimed.
 RTC - granted respondent's prayer for the issuance of a preliminary attachment. Petitioner filed an
Urgent Ex-Parte Motion to Discharge Writ of Attachment attaching thereto a counter-bond which
the RTC allowed.
  Petitioner afterwards filed its Answer alleging therein that time was of the essence in the delivery
of the cylinder liners and that the delivery on 20 April 1990 of said items was late as respondent
committed to deliver said items "within two (2) months after receipt of firm order."
 Respondent filed a Second Amended Complaint with Preliminary Attachment which dealt solely
with the number of postdated checks issued by petitioner as full payment for the first cylinder
liner it ordered from respondent. (In the first amended complaint, only nine postdated checks
were involved, in its second amended complaint, there were ten postdated checks).
 Petitioner filed a Motion alleging therein that the cylinder liners run the risk of obsolescence and
deterioration to the prejudice of the parties to this case. Thus, petitioner prayed that it be allowed
to sell the cylinder liners at the best possible price and to place the proceeds of said sale in escrow.
This motion was granted.
 The RTC dismissed the complaint which ordered the plaintiff to pay P50,000.00 to the defendant.
It held respondent bound to the quotation it submitted to petitioner particularly with respect to
the terms of payment and delivery of the cylinder liners. It also declared that respondent had
agreed to the cancellation of the contract of sale when it returned the postdated checks issued by
petitioner.
 CA - reversed the decision of the RTC.

ISSUES
1. Whether or not respondent incurred delay in performing its obligation under the contract of sale -
NO
2. Whether or not said contract was validly rescinded by petitioner. –NO

HELD:
Petitioner maintains that its obligation to pay fully the purchase price was extinguished because
the adverted contract was validly terminated due to respondent's failure to deliver within the two-month
period. The threshold question, then, is: Was there late delivery of the subjects of the contract of sale to
justify petitioner to disregard the terms of the contract considering that time was of the essence thereof?
In determining whether time is of the essence in a contract, the ultimate criterion is the actual or
apparent intention of the parties and before time may be so regarded by a court, there must be a
sufficient manifestation, either in the contract itself or the surrounding circumstances of that intention.
Petitioner insists that although its purchase orders did not specify the dates when the cylinder liners
were supposed to be delivered, nevertheless, respondent should abide by the term of delivery appearing
on the quotation it submitted to petitioner. Petitioner theorizes that the quotation embodied the offer
from respondent while the purchase order represented its (petitioner's) acceptance of the proposed
terms of the contract of sale. Thus, petitioner is of the view that these two documents "cannot be taken
separately as if there were two distinct contracts." We do not agree.
While this Court recognizes the principle that contracts are respected as the law between the
contracting parties, this principle is tempered by the rule that the intention of the parties is primordial
and "once the intention of the parties has been ascertained, that element is deemed as an integral part of
the contract as though it has been originally expressed in unequivocal terms."
In the present case, we cannot subscribe to the position of petitioner that the documents, by
themselves, embody the terms of the sale of the cylinder liners. One can easily glean the significant
differences in the terms as stated in the formal quotation and Purchase Order No. 13839 with regard to
the due date of the down payment for the first cylinder liner and the date of its delivery as well as
Purchase Order No. 14011 with respect to the date of delivery of the second cylinder liner. While the
quotation provided by respondent evidently stated that the cylinder liners were supposed to be delivered
within two months from receipt of the firm order of petitioner and that the 25% down payment was due
upon the cylinder liners' delivery, the purchase orders prepared by petitioner clearly omitted these
significant items. The petitioner's Purchase Order No. 13839 made no mention at all of the due dates of
delivery of the first cylinder liner and of the payment of 25% down payment. Its Purchase Order No.
14011 likewise did not indicate the due date of delivery of the second cylinder liner.
In the instant case, the formal quotation provided by respondent represented the negotiation
phase of the subject contract of sale between the parties. As of that time, the parties had not yet reached
an agreement as regards the terms and conditions of the contract of sale of the cylinder liners. Petitioner
could very well have ignored the offer or tendered a counter-offer to respondent while the latter could
have, withdrawn or modified the same. The parties were at liberty to discuss the provisions of the
contract of sale prior to its perfection. In this connection, we turn to the testimonies of Pajarillo and
Kanaan, Jr., that the terms of the offer were, indeed, renegotiated prior to the issuance of Purchase Order
No. 13839
The law implies, however, that if no time is fixed, delivery shall be made within a reasonable time,
in the absence of anything to show that an immediate delivery intended.
We also find significant the fact that while petitioner alleges that the cylinder liners were to be
used for dry dock repair and maintenance of its M/V Dadiangas Express between the later part of
December 1989 to early January 1990, the record is bereft of any indication that respondent was aware
of such fact. The failure of petitioner to notify respondent of said date is fatal to its claim that time was of
the essence in the subject contracts of sale.
Finally, the ten postdated checks issued in November 1989 by petitioner and received by the
respondent as full payment of the purchase price of the first cylinder liner supposed to be delivered on 02
January 1990 fail to impress. It is not an indication of failure to honor a commitment on the part of the
respondent. The earliest maturity date of the checks was 18 January 1990. As delivery of said checks
could produce the effect of payment only when they have been cashed, respondent's obligation to deliver
the first cylinder liner could not have arisen as early as 02 January 1990 as claimed by petitioner since by
that time, petitioner had yet to fulfill its undertaking to fully pay for the value of the first cylinder liner. As
explained by respondent, it proceeded with the placement of the order for the cylinder liners with its
principal in Japan solely on the basis of its previously harmonious business relationship with petitioner.
in the subject contracts, time was not of the essence. The delivery of the cylinder liners on 20 April
1990 was made within a reasonable period of time considering that respondent had to place the order for
the cylinder liners with its principal in Japan and that the latter was, at that time, beset by heavy volume
of work.

There having been no failure on the part of the respondent to perform its obligation, the power to
rescind the contract is unavailing to the petitioner.

Saludo v. Court of Appeals

G.R. No. 95536 March 23, 1992

ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G. SALUDO and SATURNINO G.
SALUDO, petitioners,
vs.
HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC., and PHILIPPINE AIRLINES,
INC., respondents.

FACTS:
 Shipper - Pomierski and Son Funeral Home
 Consignee – Maria Saludo
 Carrier - Transworld Airlines (TWA) Chicago – San Francisco, and Philippine Airlines (PAL)- San
Francisco – Manila
  After the death of petitioner's mother, Crispina Galdo Saludo, in Chicago Illinois, Pomierski and
Son Funeral Home of Chicago, made the necessary preparations and arrangements for the
shipment, of the remains from Chicago to the Philippines. Philippine Vice Consul in Chicago,
Illinois, Bienvenido M. Llaneta, at the Pomierski & Son Funeral Home, sealed the shipping case
containing a hermetically sealed casket that is airtight and waterproof wherein was contained the
remains of Crispina Saludo Galdo). On the same date, October 26, 1976, Pomierski brought the
remains to C.M.A.S. (Continental Mortuary Air Services) at the airport (Chicago) which made the
necessary arrangements such as flights, transfers, etc.; C.M.A.S. is a national service used by
undertakers to throughout the nation (U.S.A.). C.M.A.S. booked the shipment with PAL thru the
carrier's agent Air Care International, with Pomierski F.H. as the shipper and Mario (Maria)
Saludo as the consignee. The requested routing was from Chicago to San Francisco on board TWA
Flight 131 of October 27, 1976 and from San Francisco to Manila on board PAL Flight No. 107 of
the same date, and from Manila to Cebu on board PAL Flight 149 of October 29, 1976. Maria
Saludo upon arriving at San Francisco Airport, she then called Pomierski that her mother's
remains were not at the West Coast terminal, and Pomierski immediately called C.M.A.S., which in
a matter of 10 minutes informed him that the remains were on a plane to Mexico City, that there
were two bodies at the terminal, and somehow they were switched. The following day October 28,
1976, the shipment or remains of Crispina Saludo arrived (in) San Francisco from Mexico on
board American Airlines. This shipment was transferred to or received by PAL at 1945H or 7:45
p.m. (Exh. 2-PAL, Exh. 2-a-PAL). This casket bearing the remains of Crispina Saludo, which was
mistakenly sent to Mexico and was opened (there), was resealed by Crispin F. Patagas for
shipment to the Philippines (See Exh. B-1). The shipment was immediately loaded on PAL flight
for Manila that same evening and arrived (in) Manila on October 30, 1976, a day after its
expected arrival on October 29, 1976. Aggrieved by the incident, the petitioners instituted an
action against respondents and were asked to pay for damages.
 Petitioner allege that private respondents received the casketed remains of petitioners' mother
on October 26, 1976, as evidenced by the issuance of PAL Air Waybill No. 079-01180454 18 by Air
Care International as carrier's agent; and from said date, private respondents were charged with
the responsibility to exercise extraordinary diligence so much so that for the alleged switching of
the caskets on October 27, 1976, or one day after private respondents received the cargo, the
latter must necessarily be liable.
 RTC - absolved the two respondent airlines companies of liability.
 CA - affirmed the decision of the lower court in toto, and in a subsequent resolution, 7 denied
herein petitioners' motion for reconsideration for lack of merit.

ISSUE
W/N the delay in the delivery of the casketed remains of petitioners' mother was due to the fault of
respondent airline companies,

HELD:
NO. A bill of lading is a written acknowledgment of the receipt of the goods and an agreement
to transport and deliver them at a specified place to a person named or on his order. According to
foreign and local jurisprudence, "the issuance of a bill of lading carries the presumption that the goods
were delivered to the carrier issuing the bill, for immediate shipment, and it is nowhere questioned that a
bill of lading is prima facie evidence of the receipt of the goods by the carrier. . . . In the absence of
convincing testimony establishing mistake, recitals in the bill of lading showing that the carrier received
the goods for shipment on a specified date controls.
However, except as may be prohibited by law, there is nothing to prevent an inverse order of
events, that is, the execution of the bill of lading even prior to actual possession and control by the carrier
of the cargo to be transported. There is no law which requires that the delivery of the goods for carriage
and the issuance of the covering bill of lading must coincide in point of time or, for that matter, that the
former should precede the latter.
As between the shipper and the carrier, when no goods have been delivered for shipment no recitals
in the bill can estop the carrier from showing the true facts . . . Between the consignor of goods and receiving
carrier, recitals in a bill of lading as to the goods shipped raise only a rebuttable presumption that such
goods were delivered for shipment. As between the consignor and a receiving carrier, the fact must outweigh
the recital."
In the case at bar, it was on October 26, 1976 the cargo containing the casketed remains of
Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco for Manila on October
27, 1976, PAL Airway Bill No. 079-01180454 was issued, not as evidence of receipt of delivery of the
cargo on October 26, 1976, but merely as a confirmation of the booking thus made for the San Francisco-
Manila flight scheduled on October 27, 1976. Actually, it was not until October 28, 1976 that PAL received
physical delivery of the body at San Francisco.
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. This responsibility remains
in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper
or owner exercises the right of stoppagein transitu, 29 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. 30 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. 31 Where such a delivery has thus been accepted by the carrier, the
liability of the common carrier commences eo instanti.
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.

Sealoader Shipping Corporation vs Grand Cement Manufacturing Corp.

G.R. No. 167363 December 15, 2010

SEALOADER SHIPPING CORPORATION, Petitioner,
vs.
GRAND CEMENT MANUFACTURING CORPORATION, JOYCE LAUNCH & TUG CO., INC., ROMULO
DIANTAN & JOHNNY PONCE, Respondents.
G.R. No. 177466
TAIHEIYO CEMENT PHILIPPINES, INC. (Formerly Grand Cement Manufacturing
Corporation), Petitioner,
vs.
SEALOADER SHIPPING CORPORATION, JOYCE LAUNCH & TUG CO., INC., ROMULO DIANTAN &
JOHNNY PONCE, Respondents.

FACTS:
 Carrier - Sealoader Shipping Corporation
 Shipper - Grand Cement Manufacturing Corp.
 Sealoader executed a Time Charter Party Aggrement with Joyce Launch for the chartering of MT
Viper in order to tow its unpropelled barges for a minimum of 15 days. Sealoder entered into a
contract with Grand Cement for the loading of cement clinkers and the delivery thereof to Manila.
 On March 31, 1994, Sealoder’s barge arrived at the wharf of Grand Cement tugged by MT Viper. It
was not immediately loaded as the employees of Grand Cement were loaded another vessel. On
April 4, typhoon Bising struck Cebu area. The barge was still docked at the wharf of Grand Cement.
As it became stronger, MT Viper tried to tow the barge away but it was unsuccessful because the
towing line connecting the vessels snapped since the mooring lines was not cast off, which is the
ultimate cause. Hence, the barge rammed the wharf causing significant damage. Grand Cement
filed a complaint for damages (P2.4M) since Sealoader ignored its demands. They allege that
Sealoader was negligent when it ignored its employee’s advice to move the vessels after it had
received weather updates. Sealoader filed a motion to dismiss on the ground that Joyce Launch is
the one liable since it was the owner of MT Viper, who’s employees were manning the vessel.
Sealoader filed a cross-claim against Joyce Launch. Joyce maintains that the damages were due to
force majeure and faulted Grand Cement’s employees for abandoning the wharf leaving them
helpless and for not warning them early on.
 Sealoader contends that Grand Cement had the last clear chance to prevent the damage to the
latter’s wharf. Had Grand Cement cast off the mooring lines attached to the D/B Toploader early
on, the barge could have been towed away from the wharf and the damage thereto could have
been avoided.
 RTC – in favor of Grand Cement holding the two companies liable since there was complete
disregard of the storm signal, the captain of the vessel was not present and the vessel was not
equipped with a radio or any navigational facility, which is mandatory. Joyce launch did not appeal.
 CA - affirmed the decision but on MR, it partly reversed its decision finding Grand Cement to be
guilty of contributory negligence since it was found that it was still loading the other vessel at the
last minute just before the storm hit, hence Sealoder’svessel did not move. Damages were reduced
to 50%. Hence, petition for review to SC.

ISSUE
W/N Sealoader should be held liable for the damages incurred by Grand Cement.

HELD;
YES. The doctrine of last clear chance states that where both parties are negligent but the
negligent act of one is appreciably later than that of the other, or where it is impossible to determine
whose fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss but
failed to do so, is chargeable with the loss. Stated differently, the antecedent negligence of plaintiff does
not preclude him from recovering damages caused by the supervening negligence of defendant, who had
the last fair chance to prevent the impending harm by the exercise of due diligence.
Negligence on the part of Sealoader – PROVEN. After a thorough review of the records of this case,
the Court finds that Sealoader was indeed guilty of negligence in the conduct of its affairs during the
incident in question on the following grounds:
 Lack of a radio or any navigational communication facility aboard the D/B Toploader.
 manifest laxity of the crew of the D/B Toploader in monitoring the weather. Despite the apparent
difficulty in receiving weather bulletins from the head office of Sealoader, the evidence on record
suggests that the crew of the D/B Toploader failed to keep a watchful eye on the prevailing
weather conditions.
Unmistakably, the crew of the D/B Toploader and the M/T Viper were caught unawares and unprepared
when Typhoon Bising struck their vicinity. Sealoader cannot pass to Grand Cement the responsibility of
casting off the mooring lines connecting the D/B Toploader to the wharf. The people at the wharf could
not just cast off the mooring lines without any instructions from the crew of the D/B Toploader and the
M/T Viper. As the D/B Toploader was without an engine, casting off the mooring lines prematurely might
send the barge adrift or even run the risk of the barge hitting the wharf sure enough. Thus, Sealoader
should have taken the initiative to cast off the mooring lines early on or, at the very least, requested the
crew at the wharf to undertake the same. In failing to do so, Sealoader was manifestly negligent.
Article 2179 of the Civil Code defines the concept of contributory negligence as follows:
Art. 2179. When the plaintiff’s own negligence was the immediate and proximate cause of
his injury, he cannot recover damages. But if his negligence was only contributory, the immediate
and proximate cause of the injury being the defendant’s lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be awarded.
Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to
the harm he has suffered, which falls below the standard to which he is required to conform for his own
protection.76
Negligence on the part of Grand Cement – NOT PROVEN. Grand Cement was not guilty of negligent
acts, which contributed to the damage that was incurred on its wharf. The Court holds that Sealoader had
the responsibility to inform itself of the prevailing weather conditions in the areas where its vessel was
set to sail. Sealoader cannot merely rely on other vessels for weather updates and warnings on
approaching storms, as what apparently happened in this case. Common sense and reason dictates this.
To do so would be to gamble with the safety of its own vessel, putting the lives of its crew under the
mercy of the sea, as well as running the risk of causing damage to the property of third parties for which
it would necessarily be liable.Be that as it may, the records of the instant case reveal that Grand Cement
timely informed the D/B Toploader of the impending typhoon.
Therefore the doctrine of Last Clear Chance clearly does not apply in the instant case and it is but
right and proper to hold sealoader liable for the damages incurred by Grand Cement.
 Delsan Transport v. American Home

G.R. No. 149019, 15 August 2006

DELSAN TRANSPORT LINES INC. petitioner
AMERICAN HOME ASSURANCE CORPORATION, respondent

FACTS:
 Carrier – Delsan Transport Lines Inc.
 Shipper – Caltex Philippines
 Insurer – American Home Assurance Corporation
 Delsan Transport was hired by Caltex to transport its cargo of diesel oil from Bataan Refinery
Corporation to the bulk depot in Bacolod City through a Contract of Affreightment. Upon the
arrival of MT Larusan which carried the cargo in its destination, unloading operations commenced.
Thereafter the discharging had to be stopped on account of the discovery that the port bow
mooring of the vessel was intentionally cut or stolen by unknown persons. Because there was
nothing holding it, the vessel drifted westward, dragged and stretched the flexible rubber hose
attached to the riser, broke the elbow into pieces, severed completely the rubber hose connected
to the tanker from the main delivery line at sea bed level and ultimately caused the diesel oil to
spill into the sea. Unaware of what happened, the shore tender, thinking that the vessel would, at
any time, resume pumping, did not shut the storage tank gate valve. As all the gate valves
remained open, the diesel oil that was earlier discharged from the vessel into the shore tank
backflowed. In short, there was spillage and backflow of the diesel cargo. As a result of spillage
and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the latter refused to
pay. As insurer, AHAC paid Caltex the sum of P479,262.57 for spillage, pursuant to Marine Risk
Note No. 34-5093-6, and P1,939,575.37 for backflow of the diesel oil pursuant to Inland Floater
Policy No. AH-1F64-1011549P. AHiAC as subrogee asked Delsan to compensate it for the amount
paid, but to no avail, AHAc instituted an action against Delsan.
 RTC – ruled in favor of AHAC nad held Delsan liable for the loss of the cargo due to its negligence
as a common carrier
 CA – affirmed RTC - Delsan failed to exercise the extraordinary diligence of a good father of a
family in the handling of its cargo. Applying Article 1736[4] of the Civil Code, the CA ruled that
since the discharging of the diesel oil into Caltex bulk depot had not been completed at the time
the losses occurred, there was no reason to imply that there was actual delivery of the cargo to
Caltex, the consignee

ISSUE:
W/N petitioner should be held liable for both spillage and backflow that caused the loss of the
cargo.

HELD:
YES. Common carriers are bound to observe extraordinary diligence in the vigilance over the
goods transported by them. They are presumed to have been at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated.[6] To overcome the presumption of negligence in case of loss,
destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary
diligence. There are, however, exceptions to this rule found in Article 1734 of the NCC.
In the case at bar, it had been established that the proximate cause of the spillage and backflow of
the diesel oil was due to the severance of the port bow mooring line of the vessel and the failure of the
shore tender to close the storage tank gate valve even as a check on the drain cock showed that there was
still a product on the pipeline. The crew of the vessel should have promptly informed the shore tender
that the port mooring line was cut off. However, Delsan did not do so on the lame excuse that there was
no available banca. The crew of the vessel should have exerted utmost effort to immediately inform the
shore tender that the port bow mooring line was severed.
To be sure, Delsan, as the owner of the vessel, was obliged to prove that the loss was caused by one
of the excepted causes if it were to seek exemption from responsibility.[7] Unfortunately, it miserably
failed to discharge this burden by the required quantum of proof.
Delsan’s argument that it should not be held liable for the loss
of diesel oil due to backflow because the same had already been actually and legally delivered to
Caltex at the time it entered the shore tank holds no water. It had been settled that the subject cargo was
still in the custody of Delsan because the discharging thereof has not yet been finished when the backflow
occurred. Since the discharging of the cargo into the depot has not yet been completed at the time of
the spillage when the backflow occurred, there is no reason to imply that there was actual delivery
of the cargo to the consignee. Delsan is straining the issue by insisting that when the diesel oil entered
into the tank of Caltex on shore, there was legally, at that moment, a complete delivery thereof to
Caltex. To be sure, the extraordinary responsibility of common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by, the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the consignee, or to a
person who has the right to receive them. The
[8] discharging of oil products
to Caltex Bulk Depot has not yet been finished, Delsan still has the duty to guard and to preserve the
cargo. The carrier still has in it the responsibility to guard and preserve the goods, a duty incident to its
having the goods transported.
Hence, having not overturned the presumption of negligence, it is but right and proper to held
petitioner liable for the loss of the cargo.

Delsan Transport Lines v. CA

G.R. No. 127897 November 15, 2001

DELSAN TRANSPORT LINES, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and AMERICAN HOME ASSURANCE CORPORATION, respondents.

FACTS;
 Carrier – Delsan Transport Lines Inc.
 Shipper – Caltex Philippines
 Insurer – American Home Assurance Corporation
 Caltex entered into a contract with Delsan Transport Lines to transport ots petroleum goods from
its Batangas – Bataan Refinery to Zamboanga City. The shipment was insured by private
respondent American Home Assurance Corp. MT Maysum set sail from Batangas for Zamboanga
City. Unfortunately, the vessel sank in the early morning of August 16, 1986 near Panay Gulf in the
Visayas taking with it the entire cargo of fuel oil. Subsequently, private respondent paid Caltex the
sum of (P5,096,635.67) representing the insured value of the lost cargo. Exercising its right of
subrogation, the private respondent demanded of the petitioner the same amount it paid to Caltex.
Delsan failed to pay its obligation the American Home Assurance Corp. Hence, the latter institutes
an action to recover the amount paid.
 RTC - ruled in favor of petitioner with the following reasons:
 MT Maysum, was seaworthy as certified by Philippine Coastguard
  the incident was caused by unexpected inclement weather condition or force majeure.
 CS – reversed trial court’s decision on the following reasons:
 gave credence to the weather report issued by the PAG-ASA that the sea was calm during
the voyage

ISSUE:
W/N petitioner should be held liable for damages.

HELD;
YES. 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 circumstance of each case. 11 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. 12 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 that they observed extraordinary diligence.
The tale of strong winds and big waves by the said officers of the petitioner however, was
effectively rebutted and belied by the weather report15 from the PAGASA, showing that from 2:00 o’clock
to 8:00 o’clock in the morning on August 16, 1986, the wind speed remained at ten (10) to twenty (20)
knots per hour while the height of the waves ranged from .7 to two (2) meters in the vicinity of Cuyo East
Pass and Panay Gulf where the subject vessel sank. Thus, as the appellate court correctly ruled,
petitioner’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 when the said vessel sank.
Thus not having overturned the evidence presented, (that it observed extraordinary diligence) the
presumption of negligence stands, and therefore it is but right and proper to rule that petitioner should
be held liable for damages.

Maersk Lines v. Court of Appeals

G.R. No. 94761 May 17, 1993

MAERSK LINE, petitioner,
vs.
COURT OF APPEALS AND EFREN V. CASTILLO, doing business under the name and style of Ethegal
Laboratories, respondents.

FACTS:
 Maersk Lines – Carrier; petitioner
 Eli Lilly Inc. – Shipper
 Efren Castillo – consignee; proprietor of Ethegal Laboratories; private respondent
 Private respondent ordered from Eli Lilly. Inc. of Puerto Rico through its (Eli Lilly, Inc.'s) agent in
the Philippines, Elanco Products, 600,000 empty gelatin capsules for the manufacture of his
pharmaceutical products. The goods were shipped via MV Anders Maerskline with a specified
date of arrival to be April 3, 1977. For reasons unknown, said cargo of capsules were
mishipped and diverted to Richmond, Virginia, USA and then transported back Oakland,
Califorilia. The goods finally arrived in the Philippines on June 10, 1977 or after two (2)
months from the date specified in the memorandum. As a consequence, private respondent
as consignee refused to take delivery of the goods on account of its failure to arrive on time.
Private respondent alleging gross negligence and undue delay in the delivery of the goods, filed an
action before the court a quo for rescission of contract with damages against petitioner and Eli
 Lilly, Inc. The issues having been joined, private respondent moved for the dismissal of the
complaint against Eli Lilly, Inc.on the ground that the evidence on record shows that the delay in
the delivery of the shipment was attributable solely to petitioner. The lower court ruled in favor of
private respondent which was affirmed with some modification by the CA.

ISSUE:
W/N petitioner was negligent and should be held liable for damages.

HELD:
YES. While it is true that common carriers are not obligated by law to carry and to deliver
merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers
previously assume the obligation to deliver at a given date or time, delivery of shipment or cargo should
at least be made within a reasonable time.
An examination of the subject bill of lading shows that the subject shipment was estimated to
arrive in Manila on April 3, 1977. While there was no special contract entered into by the parties
indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the
specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard,
there arises no need to execute another contract for the purpose as it would be a mere superfluity.
In the case before us, we find that a delay in the delivery of the goods spanning a period of two (2)
months and seven (7) days falls was beyond the realm of reasonableness. Described as gelatin capsules
for use in pharmaceutical products, subject shipment was delivered to, and left in, the possession and
custody of petitioner-carrier for transport to Manila via Oakland, California. But through petitioner's
negligence was mishipped to Richmond, Virginia. Petitioner's insitence that it cannot be held liable for
the delay finds no merit.

FGU INSURANCE CORPORATION, Petitioners, vs.

THE COURT OF APPEALS, SAN MIGUEL CORPORATION, and ESTATE OF ANG GUI, represented by
LUCIO, JULIAN, and JAIME, all surnamed ANG, and CO TO, Respondents.

CHICO-NAZARIO, J.:

FACTS:
Carrier: ANCO (Anco Enterprises Company) Owned M/T ANCO tugboat and D/B Lucio barge (had no
engine of its own)
Shipper: San Miguel Corporation. Cases are to be delivered in Iloilo and Antique.

Upon arrival at San Jose, Antique, M/T ANCO tugboat left D/B Lucio barge. Moreover, the clouds were
dark and the waves are big. SMC’s District Sales Supervisor requested ANCO’s representative to transfer
the barge to a safer place because the vessel might not be able to withstand the big waves. ANCO’s
representative did not heed because he was confident that the barge could withstand the waves. All other
vessels left the wharf to seek shelter. Due to the waves not all the cases of beer were discharged into the
custody of the arrastre operator.

The crew of D/B Lucio abandoned the vessel because the barge’s rope attached to the wharf was cut off
by the big waves. The barge run aground and was broken and the cargoes of beer were swept away.

SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO.
(Important facts ung blue)

OPTIONAL!!! Di namannatouchsa ruling ng Court. Pero for more kabidahanala Ms. Andres, GO! 
///Claim of ANCO: There is an agreement with SMC that ANCO would not be liable for any loses or
damages by reason of fortuitous event. The cases were lost by reason of a storm, a fortuitous event.
Moreover, an agreement that SMC shall insure the cargoes in order to recover indemnity in case of loss.
Cases were insured with FGU Insurance Corporation. Subsequently, ANCO filed a Third-Party Complaint
against FGU.

Claim of FGU: The alleged loss of the cargoes covered by the said insurance policy cannot be attributed
directly or indirectly to any risks insured. ANCO and SMC failed to exercise ordinary diligence or the
diligence of a good father of the family in the care and supervision of the cargoes insured to prevent its
loss and/ or destruction.

RTC: Indeed lost to fortuitous event, there was failure on ANCO’s part, through their representatives, to
observe the degree of diligence required that would exonerate them from liability. Moreover, it is the
sense of this Court that the risk insured against was the cause of the loss. FGU shall bear 53% of the loss.

CA affirmed in toto.///

ISSUES:
1. W/N ANCO should be liable and the negligence of the crewmembers was the proximate cause
2. W/N FGU is liable

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

The Civil Code provides:

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy are bound
to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.

Such extraordinary diligence in vigilance over the goods is further expressed in Articles 1734, 1735, and
1745 Nos. 5, 6, and 7 . . .

Art. 1734. 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.

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural
disaster must have been the proximate and only cause of the loss.

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

2. One of the purposes for taking out insurance is to protect the insured against the consequences of
his own negligence and that of his agents. But loss has occurred due to causes which could not
have been prevented by the insured, despite the exercise of due diligence. When evidence show
that the insured’s negligence or recklessness is so gross as to be sufficient to constitute a willful
act, the insurer must be exonerated. The blatant negligence of ANCO’s employees is of such gross
character that it amounts to a wrongful act which must exonerate FGU from liability under the
insurance contract.

SUPER SHORT VERSION. 2 boats owned by ANCO. Boat 1- no engine. Hired by SMC. Upon arrival boat 2
left. Storm. Boat 1 damaged including cargoes. W/N liable although storm is fortuitous. Yes. There is
negligence when boat 2 left knowing there is a storm and when refused to heed to the request to move on
a safer place. Additional langung liability ni FGU. Actually may res judicata pa pero wag na un haha.

DSR-SENATOR LINES AND C.F. SHARP AND COMPANY, INC., petitioners, vs.
FEDERAL PHOENIX ASSURANCE CO., INC., respondent.

SANDOVAL-GUTIERREZ, J.:

FACTS:
Shipper: Berde Plants, Inc.
Subject: 632 units of artificial trees
Carrier: C.F. Sharp and Company, Inc.- General Ship Agent of DSR-Senator Lines
Consignee: Al-Mohr International Group in Riyadh, Saudi Arabia
Insurer: Federal Phoenix Assurance

Vessel from Manila arrived in KhorFakkan Port and was reloaded on board DSR-Senator Lines’ feeder
vessel bound for Port Dammam, Saudia Arabia. While in transit, the vessel and its cargo caught fire.
Federal paid Berde. Federal demanded payment from CF Sharp but denied liability due to the fire.

Federal Phoenix filed a complaint in RTC. RTC rendered decision in favor of Federal. CA affirmed.

ISSUE: W/N CF Sharp is liable despite the fire

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

SHORTER VERSION: YAN NA UN! Basta may fire! And fire is not included in the enumeration.

PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., petitioner, vs.

COURT OF APPEALS and TRANSPACIFIC TOWAGE, INC., respondents.

PADILLA, J.:

FACTS:
Shipper: Davao Union Marketing Corporation
Subject: 9,750 sheets of union brand GI sheets andunion Pozzolan and union Portland Cement Carrier:
Transpacific Towage, Inc.- M/V Crazy Horse
Insurer: Philippine American General Insurance Co., Inc.

M/V Crazy Horse arrived on September 7, 1985 as scheduled in the port of Camarines Sur. The shipmaster
notified the consignee's "Notify-Party" that the vessel was already (sic) to discharge the cargo. The
discharging could not be affected immediately and continuously because of certain reasons.
(Pasadahanniyolang to, bakabiglatanunginni Sir kasi covered to sa ruling) First, the buoys were installed
only on 11 September 1985; second, the consignee secured the discharge permit only on 13 September
1985; third, a wooden catwalk had to be installed and the extension of the wharf had to be made, which
was completed only on 16 September 1985; fourth, there were intermittent rains and the stevedores
supplied by the consignee did not work during the town fiesta of the Virgin of Penafrancia, hence, the
unloading was not continuous.

On October 16, 1985, a super typhoon came. The discharging of the cargo had to be suspended due to the
heavy downpour, strong winds, and turbulent sea. Not all cargoes was discharged.

Important facts that would determine the presence of negligence later:

(1) at 5:20 a.m. of 18 October 1985, as typhoon "Saling" continued to batter the Pasacao area, the
shipmaster tried to maneuver the vessel amidst strong winds and rough seas;

(2) when water started to enter the engine room and later the engine broke down, the shipmaster
ordered the ship to be abandoned, but he sought police assistance to prevent pilferage of the vessel and
its cargo;

(3) after the vessel broke into two (2) parts and sank partially, the shipmaster reported the incident to
the Philippine Coast Guard, but unfortunately, despite the presence of three (3) coast guards, nothing
could be done to stop the pilferage as almost the entire barrio folk came to loot the vessel and its cargo,
including the G.I. sheets.

Philippine American General Insurance Co., Inc. paid the shipper. But carrier refused to pay insurer upon
demand. Insurer filed a complaint. (The usual) The lower court found that although the immediate cause
of the loss may have been due to an act of God, the defendant carrier had exposed the property to the
accident.
CA reversed. It was solely a fortuitous event.

ISSUE: Whether the delay involved in the unloading of the goods is deemed negligently incurred in, so as
not to free private respondent from liability

RULING: NO. There was indeed delay. 40 days had lapsed. (More than enough time to unload the cargoes)
However, neither parties could be faulted for such delay. Delay was not due to negligence but to several
factors.

The cargo having been lost due to typhoon "Saling", and the delay incurred in its unloading not being due
to negligence, private respondent is exempt from liability for the loss of the cargo, pursuant to Article
1740 of the Civil Code.

Moreover, the records also show that before, during and after the occurrence of typhoon "Saling", private
respondent through its shipmaster exercised due negligence to prevent or minimize the loss of the cargo.
(Refer to the facts) The diligence exercised by the shipmaster further supports the exemption of private
respondent from liability for the loss of the cargo, in accordance with Article 1739 of the Civil Code.

SHORTER VERSION: Arrived. Delay in unloading. Typhoon. Shipmaster prepared. Vessel broke. Cargoes
lost. Delay not negligence of parties. Shipmaster exercised diligence to prevent or minimize loss.

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES,
INC., petitioners,
vs.
PHILIPPINE FIRST INSURANCE CO., INC., respondents.

PANGANIBAN, J.:

DOCTRINE: Proof of the delivery of goods in good order to a common carrier and of their arrival in bad
order at their destination constitutes prima facie fault or negligence on the part of the carrier. If no
adequate explanation is given as to how the loss, the destruction or the deterioration of the goods
happened, the carrier shall be held liable therefor.

FACTS:
Shipper: CMC Trading A.G.
Carrier: BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V.
Subject: coils of various Prime Cold Rolled Steel sheets
Consignee: Philippine Steel Trading Corporation
Insurer: PHILIPPINE FIRST INSURANCE CO., INC.

Goods found to be in bad order. Belgian refused to pay. Thus, Phil First did. Impugning the propriety of
the suit against them, defendants-appellees imputed that the damage and/or loss was due to pre-
shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents of
the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their
representatives.
RTC dismissed. CA ruled that Belgian liable. Failed to overcome presumption of negligence. Belgian
inadequately proven petitioners' claim that the loss or the deterioration of the goods was due to pre-
shipment damage.

ISSUES: Whether petitioners have overcome the presumption of negligence of a common carrier

RULING:

No. A review of the records and more so by the evidence shows

First, as stated in the Bill of Lading, petitioners received the subject shipment in good order and condition
in Hamburg, Germany.

Second, prior to the unloading of the cargo, an Inspection Report prepared and signed by representatives
of both parties showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and
the contents thereof exposed and rusty.

Third, Bad Order Tally Sheet No. 154979 issued by Jardine Davies Transport Services, Inc., stated that the
four coils were in bad order and condition. Normally, a request for a bad order survey is made in case
there is an apparent or a presumed loss or damage.

Fourth, the Certificate of Analysis stated that, based on the sample submitted and tested, the steel sheets
found in bad order were wet with fresh water.

Fifth, petitioners -- in a letter addressed to the Philippine Steel Coating Corporation and dated October 12,
1990 -- admitted that they were aware of the condition of the four coils found in bad order and condition.

Further, petitioners failed to prove that they observed the extraordinary diligence and precaution which
the law requires a common carrier to know and to follow to avoid damage to or destruction of the goods
entrusted to it for safe carriage and delivery.

True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of Lading;
however, there is no showing that petitioners exercised due diligence to forestall or lessen the loss. The
master of the vessel should have known at the outset that metal envelopes in the said state would
eventually deteriorate when not properly stored while in transit.The master of the vessel and his crew
should have undertaken precautionary measures to avoid possible deterioration of the cargo. But none of
these measures was taken.

In their attempt to escape liability, petitioners further contend that they are exempted from liability
under Article 1734(4) of the Civil Code. They cite the notation "metal envelopes rust stained and slightly
dented" printed on the Bill of Lading as evidence that the character of the goods or defect in the packing
or the containers was the proximate cause of the damage

From the evidence on record, it cannot be reasonably concluded that the damage to the four coils was due
to the condition noted on the Bill of Lading.Theaforecitedexception refers to cases when goods are lost or
damaged while in transit as a result of the natural decay of perishable goods or the fermentation or
evaporation of substances liable therefor, the necessary and natural wear of goods in transport, defects in
packages in which they are shipped, or the natural propensities of animals. None of these is present in the
instant case.
Further, even if the fact of improper packing was known to the carrier or its crew or was apparent upon
ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once it accepts
the goods notwithstanding such condition.

May 2nd at 3rd issue pa pero di konasinama. Notice of loss. Dapat within 3 days dawsiyanagfile, 1 yr
prescription if there was an inspection. Limited liability. No stipulation in the bill of lading, Letter of
credit attached to the bill of lading does not count.

EDGAR COKALIONG SHIPPING LINES, INC., petitioner, vs.

UCPB GENERAL INSURANCE COMPANY, INC., respondent.

PANGANIBAN, J.:

DOCTRINE: The liability of a common carrier for the loss of goods may, by stipulation in the bill of lading,
be limited to the value declared by the shipper. On the other hand, the liability of the insurer is
determined by the actual value covered by the insurance policy and the insurance premiums paid
therefor, and not necessarily by the value declared in the bill of lading.

FACTS:

Shipper: ZosimaMercardo, Nestor Amelia

Carrier: EDGAR COKALIONG SHIPPING LINES, INC.
Vessel: M/V Tandag
Insurer: UCPB General Insurance Co. Inc. (Feliciana Legaspi insured the cargoes)
Event: FIRE

Edgar did not pay UCPB. UCPB filed a complaint. RTC absolved Edgar of any liability. CA affirmed.

ISSUE: 1. W/N Edgar is liable

2. What is the basis of liability? Amount in the bill of lading or actual amount?

RULING:

1. Yes. The uncontroverted findings of the Philippine Coast Guard show that the M/V Tandag sank due to
a fire, which resulted from a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of the
crack and dripped to the heating exhaust manifold, causing the ship to burst into flames. The crack was
located on the side of the fuel oil tank, which had a mere two-inch gap from the engine room walling, thus
precluding constant inspection and care by the crew.

Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been
caused by force majeure. May refer to Eastern Shipping Lines, Inc. v. Intermediate Appellate Court.

A stipulation that limits liability is valid as long as it is not against public policy.

Art. 1749. A stipulation that the common carrier’s liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner declares a greater value, is binding.’

‘Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and
has been freely and fairly agreed upon.’

2. Bill of lading. The bill of lading subject of the present controversy specifically provides, among others:

’18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the
shipper’s net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier
be liable for any loss of possible profits or any consequential loss.

‘The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an
amount exceeding One Hundred Thousand Yen in Japanese Currency (¥100,000.00) or its equivalent in
any other currency per package or customary freight unit (whichever is least) unless the value of the
goods higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier
and inserted in the Bill of Lading and extra freight is paid as required.’

In the present case, the stipulation limiting petitioner’s liability is not contrary to public policy. In fact, its
just and reasonable character is evident. The shippers/consignees may recover the full value of the goods
by the simple expedient of declaring the true value of the shipment in the Bill of Lading. Other than the
payment of a higher freight, there was nothing to stop them from placing the actual value of the goods
therein. In fact, they committed fraud against the common carrier by deliberately undervaluing the goods
in their Bill of Lading, thus depriving the carrier of its proper and just transport fare.

It is well to point out that, for assuming a higher risk (the alleged actual value of the goods) the insurance
company was paid the correct higher premium by Feliciana Legaspi; while petitioner was paid a fee
lower than what it was entitled to for transporting the goods that had been deliberately undervalued by
the shippers in the Bill of Lading. Between the two of them, the insurer should bear the loss in excess of
the value declared in the Bills of Lading.
CASE TITLE: Sarkies Tours Phils. V. IAC
KEYWORD: DAMAGES
PONENTE: ROMERO, J
DOCTRINE: Kinds of damages to be awarded

Facts:
On August 31, 1984, Fatima boarded petitioner’s bus from Manila to Legazpi. Her belongings consisting of
3 bags were kept at the baggage compartment of the bus, but during the stopover in Daet, it was
discovered that only one remained. The others might have dropped along the way. Other passengers
suggested having the route traced, but the driver ignored it. Fatima immediately told the incident to her
mother, who went to petitioner’s office in Legazpi and later in Manila. Petitioner offered P1,000 for each
bag, but she turned it down. Disapointed, she sought help from Philtranco bus drivers and radio stations.
One of the bags was recovered. She was told by petitioner that a team is looking for the lost luggage. After
nine months of fruitless waiting, respondents filed a case to recover the lost items, as well as moral and
exemplary damages, attorney’s fees and expenses of litigation. The trial court ruled in favor of
respondents, which decision was affirmed with modification by the Court of Appeals awarding
P30,000.00 for the lost items and P30,000.00 for the transportation expenses, moral and exemplary
damages in the amount of P20,000.00 and P5,000.00, respectively.
PETITIONERS CONTENTIONS:
1) Fatima did not bring any piece of luggage with her, and even if she did, none was declared at the
start of the trip.
2) petitioner questions the award of actual damages to respondent
RESPONDENT’S CONTENTION: Extraordinary diligence on the part of petitioner;
Issues:
(1) Whether petitioner is liable for the loss of the luggage
(2) Whether the damages sought should be recovered
RULING:
(1) The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of
the baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all of
the luggage was lost, to the prejudice of the paying passengers.

(2) There is no dispute that of the three pieces of luggage of Fatima, only one was recovered.
Respondents had to shuttle between Bicol and Manila in their efforts to be compensated for the loss.
During the trial, Fatima and Marisol had to travel from the United States just to be able to testify.
Expenses were also incurred in reconstituting their lost documents. Under these circumstances, the Court
agrees with the Court of Appeals in awarding P30,000.00 for the lost items and P30,000.00 for the
transportation expenses, but disagrees with the deletion of the award of moral and exemplary damages
which, in view of the foregoing proven facts, with negligence and bad faith on the fault of petitioner
having been duly established, should be granted to respondents in the amount of P20,000.00 and
P5,000.00, respectively.
Valenzuela Hardwood and Industrial Supply vs. CA
FACTS: On January 16, 1984 plaintiff Valenzuela Hardwood and Industrial Supply Inc. entered into an
agreement with the defendant Seven Brothers whereby the latter undertook to load on board its vessel
the formers lavan round logs. On January 20, 1984 plaintiff insured the loss and/or damages with
defendant South Sea Surety and insured company for 2 million pesos on January 24, 1984, plaintiff gave
the check in payment of the premium on the insurance policy. In the meantime, the said vessel sank on
January 25, 1984 resulting in the loss of the plaintiff’s insured logs. Plaintiff demanded payment of the
proceeds and lost claim for the value of the lost logs to insurance company and Seven Brothers Shipping
Corporation respectively to which both of them denied liability.
After due hearing, the RTC rendered judgment in favor of plaintiff. Both defendants appealed. The CA
affirmed in part the RTC judgment by sustaining liability of South Sea Surety but modified it by holding
that the Seven Brothers was not liable for the lost of the cargo. The CA held that the stipulation in the
character party that the ship owner would be exempted from liability in case of loss or even for
negligence of its agent is valid.

ISSUE: Whether or not patrimonial rights may be waived.

HELD: As a general rule, patrimonial rights may be waived. In the case at bar, the waiver of petitioner per
contractual stipulation and that it is solely responsible for any damage to the cargo, thereby exempting
the private carrier from any responsibility for loss or damage thereto. The Supreme Court cited Article 6
of the Civil Code which states that rights may be waived unless the waiver is contrary to law, public order,
public policy, morals or good customs or prejudicial to a person of a right recognized by law.
YOBIDO vs. CA and TUMBOY
G.R. No. 113003 October 17, 199
Facts:
Spouses Tito and LenyTumboy and their minor children boarded at Mangagoy, Surigaodel Sur a Yobido
Liner bus bound for Davao City. Along Picop Road in, the left front tire of the bus exploded. The bus fell into a
ravine and struck a tree. The incident resulted in the death of Tito Tumboy and physical injuries to other
passengers.
The winding road 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. Leny testified that it was running fast and she cautioned the driver to
slow down but he merely stared at her through the mirror.
However, Salce, the bus conductor, testified that the bus was running speed for only 50-60 kmh. The left
front tire that exploded was a brand new Goodyear tire that he mounted on the bus only 5 days before the incident.
She stated that all driver applicants in Yobido Liner underwent actual driving tests before they were employed.
The defendant is invoking that the tire blowout was a casofortuito.
Issues:
1. WON the tire blowout was purely casofotuito? NO
2. WON the defendant bus liner is liable for damages resulting from the death of Tito? YES
Held:
1. The explosion of the tire is not in itself a fortuitous event. The cause of the blow-out, if due to a factory
defect, improper mounting, excessive tire pressure, is not an unavoidable event. On the other hand, there may have
been adverse conditions on the road that were unforeseeable and/or inevitable, which could make the blow-out a
casofortuito. The fact that the cause of the blow-out was not known does not relieve the carrier of liability.
There are human factors involved in the situation. The fact that the tire was new did not imply that it was
entirely free from manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that
the tire bought and used in the vehicle is of a brand name noted for quality, resulting in the conclusion that it could
not explode within five days’ use. Be that as it may, it is settled that an accident caused either by defects in the
automobile or through the negligence of its driver is not a casofortuito that would exempt the carrier from liability
for damages.
2. A common carrier may not be absolved from liability in case of force majeure or fortuitous event alone. The
common carrier must still prove that it was not negligent in causing the death or injury resulting from an accident.
Having failed to discharge its duty to overthrow the presumption of negligence with clear and convincing evidence,
petitioners are hereby held liable for damages.
Moral damages are generally not recoverable in culpa contractual except when bad faith had been proven.
However, the same damages may be recovered when breach of contract of carriage results in the death of a
passenger. Because petitioners failed to exercise the extraordinary diligence required of a common carrier, which
resulted in the death of Tito Tumboy, it is deemed to have acted recklessly (Article 1756).