EVERETT STEAMSHIP CORPORATION, petitioner vs.
(or weaker party) from deceptive schemes contained in
COURT OF APPEALS and HERNANDEZ TRADING CO.
INC., respondents. G.R. No. 122494 October 8,
1998
Lessons Applicable: Contracting Parties (Transportation)
FACTS:
Hernandez Trading Co., Inc. (Hernandez) imported 3 crates
of bus spare parts (MARCO C/No. 12, MARCO C/No. 13
and MARCO C/No. 14), from Maruman Trading Company,
Ltd. (Maruman), a foreign corporation based in Japan.
The crates (covered by Bill of Lading No. NGO53MN) were
shipped on board “ADELFAEVERETTE,” a vessel owned by
Everett Orient Lines. Upon arrival at the port of Manila, it
was discovered that the crate marked MARCO C/No. 14 was
missing Hernandez made a formal claim for Y1,552,500.00,
as shown in an Invoice No. MTM-941, dated November 14,
1991.
Everett Streamship Corp. offered to pay only Y100,000.00
the maximum amount stipulated under Clause 18 of the
covering bill of lading.
Hernandez rejected the offer and thereafter instituted a suit
for collection.
Trial Court: in favor of Hernandez.
CA: Affirmed but deleted the award of attorney’s fees.
ISSUE:
1. W/N the limited liability clause in the Bill of Lading is
valid
2. W/N Hernandez as consignee, who is not a signatory to
the bill of lading is bound by the stipulations thereof
RULING:
1. YES. A stipulation in the bill of lading limiting the
common carrier’s liability for loss or destruction of
a cargo to a certain sum, unless the shipper or
owner declares a greater value, is sanctioned by
law, particularly Articles 1749 and 1750 of the Civil
Code which provide:
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.
Maruman Trading, had the option to declare a higher
valuation if the value of its cargo was higher than the
limited liability of the carrier. Considering that the shipper
did not declare a higher valuation, it had itself to blame for
not complying with the stipulations.
The trial court’s ratiocination that private respondent could
not have “fairly and freely” agreed to the limited liability
clause in the bill of lading because the said conditions were
printed in small letters does not make the bill of lading
invalid.
Contracts of adhesion are valid and binding.
Greater vigilance, however, is required of the courts when
dealing with contracts of adhesion in that the said contracts
must be carefully scrutinized “in order to shield the unwary
ready-made covenant
Article 24 of the Civil Code which mandates that “(i)n all
contractual, property or other relations, when one of the
parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness,
tender age or other handicap, the courts must be vigilant
for his protection.
Maruman Trading, we assume, has been extensively
engaged in the trading business. It can not be said to be
ignorant of the business transactions it entered into
involving the shipment of its goods to its customers. The
shipper could not have known, or should know the
stipulations in the bill of lading and there it should have
declared a higher valuation of the goods shipped.
Moreover, Maruman Trading has not been heard to
complain that it has been deceived or rushed into agreeing
to ship the cargo in petitioner’s vessel. In fact, it was not
even impleaded in this case.
2. YES. The right of a party in the same situation as
Hernandez, to recover for loss of a shipment consigned to
him under a bill of lading drawn up only by and between
the shipper and the carrier, springs from either a relation of
agency that may exist between him and the shipper or
consignor, or his status as stranger in whose favor some
stipulation is made in said contract, and who becomes a
party thereto when he demands fulfillment of that
stipulation, in this case the delivery of the goods or cargo
shipped.
When Hernandez formally claimed reimbursement for the
missing goods from Everett and subsequently filed a case
against the it based on the very same bill of lading, it
accepted the provisions of the contract and thereby made
itself a party thereto, or at least has come to court to
enforce it.
The commercial Invoice No. MTM-941 does not in itself
sufficiently and convincingly show that Everett has
knowledge of the value of the cargo as contended by
Hernandez
MOF COMPANY, INC., Petitioner vs. SHIN YANG
BROKERAGE CORPORATION Respondent. G.R. No.
172822
FACTS:
Halla shipped to Manila secondhand cars and other articles
on board the vessel Hanjin Busan.

The bill of lading was prepared by the carrier Hanjin where
Shin Yang was named as the consignee and indicated that
payment was on a "Freight Collect" basis (meaning the
consignee/receiver of the goods would be the one to pay
for the freight and other charges).

When the shipment arrived in Manila MOF, Hanjin’s
exclusive general
agent in the Philippines, demanded the payment from Shin
Yang.

Shin Yang refused to pay the freight and other charges.
Shin Yang is saying that it is not the ultimate consignee but
merely the consolidator/forwarder.

Shin Yang contends that the fact that its name was
mentioned as the consignee of the cargoes did not make it
automatically liable for the freightage because it never
benefited from the shipment.

It never claimed or accepted the goods, it was not the
shipper’s agent, it was not aware of its designation as
consignee and the original bill of lading was never endorsed
to it.
ISSUE:
Whether a consignee, who is not a signatory to the bill of
lading, is bound by the stipulations thereof? YES.
Whether Shin Yang, who was not an agent of the shipper
and who did not make any demand for the fulfillment of the
stipulations of the bill of lading drawn in its favor, is liable to
pay the corresponding freight and handling charges?NO.
RULING:
While it is true that a bill of lading serves two (2) functions:
first, it is a receipt for the goods shipped; second, it is a
contract by which three parties, namely, the shipper, the
carrier and the consignee who undertake specific
responsibilities and assume stipulated obligations.
The bill of lading is oftentimes drawn up by the
shipper/consignor and the carrier without the intervention
of the consignee. However, the latter can be bound by the
stipulations of the bill of lading when a) there is a relation
of agency between the shipper or consignor and the
consignee or b) when the consignee demands fulfillment of
the stipulation of the bill of lading which was drawn up in its
favor.
In sum, a consignee, although not a signatory to the
contract of carriage between the shipper and the carrier,
becomes a party to the contract by reason of either a) the
relationship of agency between the consignee and the
shipper/ consignor; b) the unequivocal acceptance of the
bill of lading delivered to the consignee, with full knowledge
of its contents or c) availment of the stipulation pour autrui,
i.e., when the consignee, a third person, demands before
the carrier the fulfillment of the stipulation made by the
consignor/shipper in the consignee’s favor, specifically the
delivery of the goods/cargoes shipped.
In the instant case, Shin Yang consistently denied in all of
its pleadings that it authorized Halla Trading, Co. to ship the
goods on its behalf; or that it got hold of the bill of lading
covering the shipment or that it demanded the release of
the cargo. Basic is the rule in evidence that the burden of
proof lies upon him who asserts it, not upon him who
denies, since, by the nature of things, he who denies a fact
cannot produce any proof of it. Thus, MOF has the burden
to controvert all these denials, it being insistent that Shin
Yang asserted itself as the consignee and the one that
caused the shipment of the goods to the Philippines.
In civil cases, the party having the burden of proof must
establish his case by preponderance of evidence, which
means evidence which is of greater weight, or more
convincing than that which is offered in opposition to it.
Here, MOF failed to meet the required quantum of proof.
Other than presenting the bill of lading, which, at most,
proves that the carrier acknowledged receipt of the subject
cargo from the shipper and that the consignee named is to
shoulder the freightage, MOF has not adduced any other
credible evidence to strengthen its cause of action. It did
not even present any witness in support of its allegation
that it was Shin Yang which furnished all the details
indicated in the bill of lading and that Shin Yang consented
to shoulder the shipment costs. There is also nothing in the
records which would indicate that Shin Yang was an agent
of Halla Trading Co. or that it exercised any act that would
bind it as a named consignee. Thus, the CA correctly
dismissed the suit for failure of petitioner to establish its
cause against respondent.
DANGWA TRANSPORTATION CO., INC. and
THEODORE LARDIZABAL y MALECDAN, petitioners
vs. COURT OF APPEALS, INOCENCIA CUDIAMAT,
EMILIA CUDIAMAT BANDOY, FERNANDO CUDLAMAT,
MARRIETA CUDIAMAT, NORMA CUDIAMAT, DANTE
CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA
CUDIAMAT, all Heirs of the late Pedrito Cudiamat
represented by Inocencia Cudiamat, respondents.
GR. No. 95582 October 7, 1991
Lessons Applicable: Actionable Document (Transportation)
Laws Applicable: Art. 1733, Art. 1755.
FACTS:
May 13, 1985: Theodore M. Lardizabal was driving a
passenger bus belonging to Dangwa Transportation Co. Inc.
(Dangwa). The bus was at full stop bet. Bunkhouses 53 and
54 when Pedro alighted.
Pedro Cudiamat fell from the platform of the bus when it
suddenly accelerated forward. Pedro was ran over by the
rear right tires of the vehicle.
Theodore first brought his other passengers and cargo to
their respective destinations before bringing Pedro to
Lepanto Hospital where he expired. Private respondents
filed a complaint for damages against Dangwa for the death
of Pedro Cudiamat.
Dangwa: observed and continued to observe the
extraordinary diligence required in the operation of the co.
and the supervision of the employees even as they are not
absolute insurers of the public at large.
RTC: in favour of Dangwa holding Pedrito as negligent and
his negligence was the cause of his death but still ordered
to pay in equity P 10,000 to the heirs of Pedrito.
CA: reversed and ordered to pay Pedrito indemnity, moral
damages, actual and compensatory damages and cost of
the suit.
ISSUE:
Whether or not Dangwa should be held liable for the
negligence of its driver Theodore.
RULING:
YES. CA affirmed.
A public utility once it stops, is in effect making a
continuous offer to bus riders (EVEN when moving as long
as it is still slow in motion).
Duty of the driver: do NOT make acts that would have the
effect of increasing peril to a passenger while he is
attempting to board the same.
Premature acceleration of the bus in this case = breach of
duty.
Stepping and standing on the platform of the bus is already
considered a passenger and is entitled all the rights and
protection pertaining to such a contractual relation.
Duty extends to boarding and alighting.
GR: By contract of carriage, the carrier assumes the express
obligation to transport the passenger to his destination
safely and observe extraordinary diligence with a due
regard for all the circumstances, and any injury that might
be suffered by the passenger is right away attributable to
the fault or negligence of the carrier.
EX: carrier to prove that it has exercised extraordinary
diligence as prescribed in Art. 1733 and 1755 of the Civil
Code.
Failure to immediately bring Pedrito to the hospital despite
his serious condition = patent and incontrovertible proof of
their negligence.
Hospital was in Bunk 56.
1st proceeded to Bunk 70 to allow a passenger (who later
called the family of Pedrito on his own will) to alight and
deliver a refrigerator
In tort, actual damages is based on net earnings.
KOREAN AIRLINES CO., LTD., petitioner vs. COURT
OF APPEALS and JUANITO C. LAPUZ, respondents.
G.R. No. 114061 August 3, 1994
JUANITO C. LAPUZ, petitioner vs. COURT OF
APPEALS and KOREAN AIRLINES CO., LTD.,
respondents.
G.R. No. 113842 August 3, 1994
Lessons Applicable: Actionable Document (Transportation)
FACTS:
1980: Juanito C. Lapuz, an automotive electrician, was
contracted for employment in Jeddah, Saudi Arabia, for a
period of 1 year through Pan Pacific Overseas Recruiting
Services, Inc. Lapuz was supposed to leave on November 8,
1980, via Korean Airlines.
Initially, he was "wait-listed," (accommodated if any of the
confirmed passengers failed to show up). When 2
passengers did not appear, Lapuz and another person by
the name of Perico were given the seats.
Lapuz: he was allowed to check in with 1 suitcase and 1
shoulder bag at the check-in counter of KAL. He passed
through the customs and immigration sections for routine
check-up and was cleared for departure as Passenger No.
157 of KAL Flight No. KE 903. Together with the other
passengers, he rode in the shuttle bus and proceeded to
the ramp of the KAL aircraft for boarding. However, when
he was at the third or fourth rung of the stairs, a KAL officer
pointed to him and shouted "Down! Down!" He was thus
barred from taking the flight. When he later asked for
another booking, his ticket was canceled by KAL.
Consequently, he was unable to report for his work in Saudi
Arabia within the stipulated 2-week period and so lost his
employment.
KAL: Pan Pacific Recruiting Services Inc. coordinated with
KAL for the departure of 30 contract workers, of whom only
21 were confirmed and 9 were wait-listed passengers. The
agent of Pan Pacific, Jimmie Joseph, after being informed
that there was a possibility of having one or two seats
becoming available, gave priority to Perico, who was one of
the supervisors of the hiring company in Saudi Arabia. The
other seat was won through lottery by Lapuz. However,
only one seat became available and so, pursuant to the
earlier agreement that Perico was to be given priority, he
alone was allowed to board.
RTC: KAL to pay Lapuz.
CA: Affirmed with modifications - the amount of actual
damages and compensatory damages is reduced to P60K
and P100,000.00 moral and exemplary damages, at 6%
interest per annum from the date of the filing of the
Complaint until fully paid.
ISSUE:
Whether of not there was a contract of carriage
RULING:
YES. Affirmed.
The status of Lapuz as standby passenger was changed to
that of a confirmed passenger when his name was entered
in the passenger manifest of KAL for its Flight No. KE 903.
His clearance through immigration and customs clearly
shows that he had indeed been confirmed as a passenger of
KAL in that flight. his baggage had already been loaded in
KAL's aircraft, to be flown with him to Jeddah. KAL thus
committed a breach of the contract of carriage between
them when it failed to bring Lapuz to his destination.
Contract to transport passengers is different in kind and
degree from any other contractual relation.
The contract of air carriage generates a relation attended
with a public duty. Passengers have the right to be treated
by the carrier's employees with kindness, respect, courtesy
and due consideration. They are entitled to be protected
against personal misconduct, injurious language, indignities
and abuses from such employees.
Any discourteous conduct on the part of these employees
toward a passenger gives the latter an action for damages
against the carrier. The breach of contract was aggravated
in this case when, instead of courteously informing Lapuz of
his being a "wait-listed" passenger, a KAL officer rudely
shouted "Down! Down!" while pointing at him, thus causing
him embarrassment and public humiliation.
Korean Air Lines acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner when it "bumped off"
plaintiff-appellant on November 8, 1980, and in addition
treated him rudely and arrogantly as a "patay gutom na
contract worker fighting Korean Air Lines," which clearly
shows malice and bad faith, thus entitling plaintiff-appellant
to moral damages.amount.
Awarded should not be palpably and scandalously
excessive.
A perusal of the plaintiff-appellant's contract of employment
shows that the effectivity of the contract is for only one
year, renewable every year for five years. Although plaintiff-
appellant intends to renew his contract, such renewal will
still be subject to his foreign employer. Plaintiff-appellant
had not yet started working with his foreign employer,
hence, there can be no basis as to whether his contract will
be renewed by his foreign employer or not. Thus, the
damages representing the loss of earnings of plaintiff-
appellant in the renewal of the contract of employment is at
most speculative.
CA did not err in sustaining the trial court's dismissal of
KAL's counterclaim against Pan Pacific Overseas Recruiting
Services Inc., whose responsibility ended with the
confirmation by KAL of Lapuz as its passenger in its Flight
No. 903.

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO
ROMAN, petitioners vs. MARJORIE NAVIDAD, Heirs
of the Late NICANOR NAVIDAD & PRUDENT
SECURITY AGENCY, respondents. G.R. No. 145804
February 6, 2003
Lessons Applicable: Actionable Document (transportation)
Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763
FACTS:
October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad
(Nicanor) entered the EDSA LRT station after purchasing a
“token”.
While Nicanor was standing at the platform near the LRT
tracks, the guard Junelito Escartin approached him. Due to
misunderstanding, they had a fist fight.
Nicanor fell on the tracks and killed instantaneously upon
being hit by a moving train operated by Rodolfo Roman.
December 8, 1994: The widow of Nicanor, along with her
children, filed a complaint for damages against Escartin,
Roman, LRTA, Metro Transit Org. Inc. and Prudent (agency
of security guards) for the death of her husband.
LRTA and Roman filed a counter-claim against Nicanor and
a cross-claim against Escartin and Prudent.
Prudent: denied liability – averred that it had exercised due
diligence in the selection and surpervision of its security
guards. LRTA and Roman: presented evidence.
Prudent and Escartin: demurrer contending that Navidad
had failed to prove that Escartin was negligent in his
assigned task. RTC: In favour of widow and against Prudent
and Escartin, complaint against LRT and Roman were
dismissed for lack of merit.
CA: reversed by exonerating Prudent and held LRTA and
Roman liable
ISSUE:
Whether or not LRTA and Roman should be liable according
to the contract of carriage.
RULING:
NO. Affirmed with Modification: (a) nominal damages is
DELETED (CANNOT co-exist w/ compensatory damages) (b)
Roman is absolved.
Law and jurisprudence dictate that a common carrier, both
from the nature of its business and for reasons of public
policy, is burdened with the duty off exercising utmost
diligence in ensuring the safety of passengers.
Civil Code:
Art. 1755. 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.
Art. 1756. In case of death or injuries to passengers,
common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed in articles
1733 and 1755.
Art. 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or wilful acts
of the former’s employees, although such employees may
have acted beyond the scope of their authority or in
violation of the orders of the common carriers
This liability of the common carriers does NOT cease upon
proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their
employees.
Art. 1763. A common carrier is responsible for injuries
suffered by a passenger on account of the wilful acts or
negligence of other passengers or of strangers, if the
common carrier’s employees through the exercise of the
diligence of a good father of a family could have prevented
or stopped the act or omission.
Carriers presumed to be at fault or been negligent and by
simple proof of injury, the passenger is relieaved of the duty
to still establish the fault or negligence of the carrier or of
its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to
force majeure.
Where it hires its own employees or avail itself of the
services of an outsider or an independent firm to undertake
the task, the common carrier is NOT relieved of its
responsibilities under the contract of carriage.
GR: Prudent can be liable only for tort under Art. 2176 and
related provisions in conjunction with Art. 2180 of the Civil
Code. (Tort may arise even under a contract, where tort
[quasi-delict liability] is that which breaches the contract)
EX: If employer’s liability is negligence or fault on the part
of the employee, employer can be made liable on the basis
of the presumption juris tantum that the employer failed to
exercise diligentissimi patris families in the selection and
supervision of its employees.
EX to the EX: Upon showing due diligence in the selection
and supervision of the employee.
Factual finding of the CA: NO link bet. Prudent and the
death of Nicanor for the reason that the negligence of
Escartin was NOT proven.
NO showing that Roman himself is guilty of any culpable act
or omission, he must also be absolved from liability.
Contractual tie bet. LRT and Nicanor is NOT itself a juridical
relation bet. Nicanor and Roman. Roman can be liable only
for his own fault or negligence.
PEDRO DE GUZMAN, petitioner vs. COURT OF
APPEALS and ERNESTO CENDANA, respondents. G.R.
No. L-4782 December 22, 1988
FACTS:
Respondent Ernesto Cendana was a junk dealer. He buys
scrap materials and brings those that he gathered to Manila
for resale using 2 six-wheeler trucks. On the return trip to
Pangasinan, respondent would load his vehicle with cargo
which various merchants wanted delivered, charging fee
lower than the commercial rates. Sometime in November
1970, petitioner Pedro de Guzman contracted with
respondent for the delivery of 750 cartons of Liberty Milk.
On December 1, 1970, respondent loaded the cargo. Only
150 boxes were delivered to petitioner because the truck
carrying the boxes was hijacked along the way. Petitioner
commenced an action claiming the value of the lost
merchandise. Petitioner argues that respondent, being a
common carrier, is bound to exercise extraordinary
diligence, which it failed to do. Private respondent denied
that he was a common carrier, and so he could not be held
liable for force majeure. The trial court ruled against the
respondent, but such was reversed by the Court of Appeals.
ISSUE:
(1) Whether or not private respondent is a common carrier.
(2) Whether private respondent is liable for the loss of the
goods.

RULING:
(1) Article 1732 makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity. Article 1732
also carefully avoids making any distinction
between a person or enterprise offering
transportation service on a regular or scheduled
basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither
does Article 1732 distinguish between a carrier
offering its services to the "general public," i.e.,
the general community or population, and one who
offers services or solicits business only from a
narrow segment of the general population.

It appears to the Court that private respondent is properly

characterized as a common carrier even though he merely
"back-hauled" goods for other merchants from Manila to
Pangasinan, although such backhauling was done on a
periodic or occasional rather than regular or scheduled
manner, and even though private respondent's principal
occupation was not the carriage of goods for others. There
is no dispute that private respondent charged his customers
a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here. A certificate of
public convenience is not a requisite for the incurring of
liability under the Civil Code provisions governing common
carriers.

(2) Article 1734 establishes the general rule that common

carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the
same is due to any of the following causes only:

a. Flood, storm, earthquake, lightning, or other natural

disaster or calamity;
b. Act of the public enemy in war, whether international or
civil;
c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in
the containers; and
e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any
of the five (5) categories of exempting causes listed in
Article 1734. Private respondent as common carrier is
presumed to have been at fault or to have acted
negligently. This presumption, however, may be overthrown
by proof of extraordinary diligence on the part of private
respondent. We believe and so hold that the limits of the
duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a
result of a robbery which is attended by "grave or
irresistible threat, violence or force." we hold that the
occurrence of the loss must reasonably be regarded as
quite beyond the control of the common carrier and
properly regarded as a fortuitous event. It is necessary to
recall that even common carriers are not made absolute
insurers against all risks of travel and of transport of goods,
and are not held liable for acts or events which cannot be
foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary
diligence.