1.

) LU DO & LU YM CORPORATION vs BINAMIRAFACTS: Parties:Delta Photo Supply Company of NY - Supplier Lu Do and Lu Ym Corp Petitioners-DEFENDANT, Agent of Common Carrier Binamira Respondent, consigneeCebu Stevedoring Company Stevedore, tasked to unload cargoVisayan Cebu Terminal Company Inc arrastre operator of the port, appointed by the Bureau of CustomsMerchandise (photo supplies) shipped on board M/S Fernside at NY USA to be sent to Cebu- During discharge in Cebu, the stevedore separated the good and bad cargo- All cargo was received at the pier by the arrastre, double checked by both arrastre and terminalcompany- Merchandise was not in the list of bad cargo so therefore, it was received in good condition- Consignee discovers that the goods had signs of pilfirage upon delivery, surveyors assessmissing supplies at P324. ISSUE/S: Is the carrier responsible for the loss considering that it occurred after the shipment was DISCHARGEDfrom the ship and placed in the possession and custody of customs authority? HELD: CA decision reversed, carrier is NOT LIABLE. CA made the wrong interpretation of the law and ignoredstipulations in the Bill of Lading regarding limitation of lia bility while cargo is still under the carriers custody and control ONLY. There are very clear stipulations in the Bill of Lading quoted in the decision.- A common carrier is responsible for the loss, destruction or deterioration of the goods it assumes tocarry from one place to another unless the same is due to any to any of the causes mentioned in Article1734 on the new Civil Code, and that, if the goods are lost, destroyed or deteriorated, for causes other that those mentioned, the common carrier is presumed to have been at fault or to have acted negligently,unless it proves that it has observed extraordinary diligence in their care (Article 1735) and that thisextraordinary liability lasts from the time the goods are placed in the possession of the carrier until theyare delivered to the consignee, or "to the person who has the right to receive them" (Article 1736), butthese provisions only apply when the loss, destruction or deterioration

takes place while thegoods are in the possession of the carrier, and not after it has lost control of them. The reason isobvious. While the goods are in its possession, it is but fair that it exercise extraordinary diligence inprotecting them from damage, and if loss occurs, the law presumes that it was due to its fault or negligence. This is necessary to protect the interest the interest of the owner who is at its mercy. The situation changes after the goods are delivered to the consignee 2.) Servando vs. Philippine Steam Navigation Co. (117 SCRA 832) Facts: Bico and Servando loaded on board the FS-176 the following cargoes: 1.528 cavans of rice and 44 cartons of colored paper, toys and general merchandise. Upon the arrival of the vessel, the cargoes were discharged, complete and in good order to the warehouse of the Bureau of Customs. At 2:00 pm of the same day, a fire of unknown reasons razed the warehouse. Before the fire, Bico was able to take delivery of 907 cavans of rice. The petitioners are now claiming for the value of the destroyed goods from the common carrier. The Trial Court ordered the respondent to pay the plaintiffs the amount of their lost goods on the basis that the delivery of the shipment to the warehouse is not the delivery contemplated by Article 1736 of the New Civil Code, since the loss occurred before actual or constructive delivery. The petitioners argued that the stipulation in the bills of lading does not bind them because they did not sign the same. The stipulation states that the carrier shall not be responsible for loss unless such loss was due to the carriers negligence. Neither shall it be liable for loss due to fortuitous events such as dangers of the sea and war. Issue: Whether or not the carrier should be held liable for the destruction of the goods Held: No. There is nothing on record to show that the carrier incurred in delay in the performance of its obligation. Since the carrier even notified the plaintiffs of the arrival of their shipments and had demanded that they be withdrawn. The carrier also cannot be charged with negligence since the storage of the goods was in the Customs warehouse and was undoubtedly made with their knowledge and consent. Since the warehouse belonged and maintained by the Government, it would be unfair to impute negligence to the appellant since it has no control over the same. Servando vs. Philippine Steam Navigation Co. Lessons Applicable: Contract of Adhesion (Transportation) Laws Applicable: Article 1736, Article 1174 FACTS:

Clara Uy Bico (1,528 cavans of rice worth P40,907.50) and Amparo Servando (44 cartons of colored paper toys and general merchandise worth P1,070.50) loaded on board Philippine Steam Navigation Co.'s vessel, FS-176 for carriage from Manila to Pulupandan, Negros Occidental Bill of Lading: Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ... Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs 2 pm: warehouse was razed by fire Before the fire, 907 cavans of rice were delivered by Uy Bico Uy Bico and Servando filed a claim for the value but was rejected by Philippine Steam CFI: favored UY Bico and Servando delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736 ISSUE: W/N Philippine Steam should not be liable because of the stipulation in the bill of lading exempting it from fortuitous event HELD: YES. set aside Agreement was in iteration of Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. 'caso fortuito' presents the following essential characteristics: (1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor." In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event.

nothing in the record to show that appellant carrier ,incurred in delay in the performance of its obligation 3.) Samar Mining Co., Inc. v. Nordeutscher Lloyd and C.F. Sharp & Co., Inc. G.R. No. L-28673 October 23, 1984 Cuevas, J. FACTS: Samar Mining Co. imported 1 crate Optima welded wedge wire sieves through a vesselowned by Nordeutscher Lloyd (port of loading: Germany) Upon arrival of its vessel at the port of Manila, the importation was unloaded and deliveredin good order and condition to the bonded warehouse of AMCYL; the goods were, however,never delivered to, nor received by, the consignee at the port of destination Davao. ISSUE: WON the appellants are liable for the loss of the good under the bill of ladingcovering the subject shipment HELD: No. bill of lading - operates both as a receipt for the goods and as a contract to transport anddeliver the same as stipulated therein in discharging the goods from the ship at the port of Manila, and delivering the same intothe custody of AMCYL, the bonded warehouse, appellants were acting in full accord withthe contractual stipulations contained in the bill of lading; the delivery of the goods toAMCYL was part of appellants duty to transship the goods from Manila to their port of destination-Davao transship - to transfer for further transportation from one ship or conveyance to another

Sec. 1, par. 3 of Bill of Lading No. 18 provides: The carrier shall not be liable in anycapacity whatsoever for any delay, loss or damage occurring before the goods enter shipstackle to be loaded or after the goods leave ships tackle to be discharged, transshipped orforwarded. Sec. 11 also provides: Whenever the carrier or m aster may deem it advisable or in anycase where the goods are placed at carriers disposal at or consigned to a point where theship does not expect to load or discharge, the carrier or master may, without notice,forward the whole or any part of the goods before or after loading at the original port of shipment, ... This carrier, in making arrangements for any transshipping or forwardingvessels or means of transportation not operated by this carrier shall be considered solelythe forwarding agent of the shipper and without any other responsibility whatsoever eventhough the freight for the whole transport has been collected by him. ... Pending or duringforwarding or transshipping the carrier may store the goods ashore or afloat solely asagent of the shipper and at risk and expense of the goods and the carrier shall not beliable for detention nor responsible for the acts, neglect, delay or failure to act of anyoneto whom the goods are entrusted or delivered for storage, handling or any serviceincidental thereto. The aforequoted are valid stipulations between the parties insofar as they exempt thecarrier from liability for loss or damage to the goods while the same are not in the lattersactual custody. Art. 1738 is not applicable it contemplates a situation where the goods had alreadyreached their place of destination and are stored in the warehouse of the carrier. Thesubject goods were still awaiting transshipment to their port of destination, and werestored in the warehouse of a third party when last seen and/or heard of. Art. 1736 applicable; it provides that the carrier may be relieved of the responsibility forloss or damage to the goods upon actual or constructive delivery of the same by thecarrier to the consignee, or to the person who has a right to receive them actual delivery the ceding of corporeal possession by the seller, and the actualapprehension of corporeal possession by the buyer or by some person authorized by himto receive the goods as his representative for the purpose of custody or disposal

 there is actual delivery in contracts for the transport of goods when possession has beenturned over to the consignee or to his duly authorized agent and a reasonable time isgiven him to remove the goods there was actual delivery to the consignee through its duly authorized agent, the carrier two undertakings of Nordeutscher Lloyd according to the Bill of Lading: 1. for the transportof goods from Germany to Manila; 2. transshipment of the same foods from Manila toDavao in between these undertakings, Nordeutscher Lloyds personality changes from that of carrier to that of agent of the consignee; the character of appellants possession alsochanges, from possession in its own name as carrier, into possession in the name of consignee as the latters agent in effect, there was actual delivery of the goods from appellant as carrier to the sameappellant as agent of the consignee. Upon such delivery, the appellant, as erstwhilecarrier, ceases to be responsible for any loss or damage that may befall the goods fromthat point onwards. An agent who carries out the orders and instructions of the principal without being guilty of negligence, deceit or fraud, cannot be held responsible for the failure of the principal toaccomplish the object of the agency. (see Art. 1889)

4.) GANZON vs.COURT OF APPEALS and GELACIO E. TUMAMBING (G.R. No. L-48757, May 30, 1988) FACTS: On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman. Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in three feet of water. Gelacio Tumambing delivered the scrap iron to defendant

Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under the captain's supervision. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The latter resisted the shakedown and after a heated argument between them, Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing who sustained injuries. After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio Rub, accompanied by three policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked. The rest was brought to the compound of NASSCO. Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron. Tumabing sued Ganzon; the latter alleged that the goods have not been unconditionally placed under his custody and control to make him liable. The trial court dismissed the case but on appeal, respondent Court rendered a decision reversing the decision of the trial court and ordering Ganzon to pay damages. ISSUE: Whether or not a contract of carriage has been perfected. HELD: Yes. By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier, and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the petitioner-carrier's extraordinary responsibility for the loss, destruction or deterioration of the goods commenced. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded. Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron was accumulated by the appellant through separate purchases here and there from private individuals. The fact remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown Tumambing for P5,000.00. The order of the acting mayor did not constitute valid authority for Ganzon and his representatives to carry out.

5.) TABACALERA INSURANCE CO., PRUDENTIAL GUARANTEE & ASSURANCE, INC., and NEW ZEALAND INSURANCE CO., LTD. vs. NORTH FRONT SHIPPING SERVICES, INC., and COURT OF APPEALS [G.R. No. 119197. May 16, 1997] FACTS: Petitioners are insurers of a shipment of sacks of corn grains consigned to Republic Flour Mills Corporation in Manila. The cargo was shipped by North Front Shipping Services, Inc. The consignee was advised of its arrival but the unloading was delayed for six days for unknown reason, and the merchandise was already moldy, rancid and deteriorating. The moisture content and the wetting was due to contact with salt water but the mold growth was only incipient and not sufficient to make the corn grains toxic and unfit for consumption. In fact the mold growth could still be arrested by drying. However, Republic Flour rejected the entire cargo which therefore forced the petitioners to pay the former. Now, as subrogees, they lodged a complaint for damages against respondents claiming that the loss was exclusively attributable to the fault and negligence of the carrier. The Marine Cargo Adjusters hired by the insurance companies conducted a survey and found cracks in the bodega of the barge and heavy concentration of molds on the tarpaulins and wooden boards. They did not notice any seals in the hatches. The tarpaulins were not brand new as there were patches on them, contrary to the claim of North Front Shipping Services, Inc., thus making it possible for water to seep in. They also discovered that the bulkhead of the barge was rusty. The trial court dismissed the complaint and ruled that the contract entered into between North Front Shipping Services, Inc., and Republic Flour Mills Corporation was a charter-party agreement. As such, only ordinary diligence in the care of goods was required. On the other hand, the Court of Appeals ruled that as a common carrier required to observe a higher degree of diligence North Front 777 satisfactorily complied with all the requirements hence was issued a Permit to Sail after proper inspection. ISSUE: Whether or not a charter-party agreement between P and R requires extraordinary diligence. HELD: Yes. The charter-party agreement between North Front Shipping Services, Inc., and Republic Flour Mills Corporation did not in any way convert the common carrier into a private carrier. xxx North Front Shipping Services, Inc., is a corporation engaged in the business of transporting cargo and offers its services indiscriminately to the public. It is

without doubt a common carrier. As such it is required to observe extraordinary diligence in its vigilance over the goods it transports. When goods placed in its care are lost or damaged, the carrier is presumed to have been at fault or to have acted negligently. North Front Shipping Services, Inc., therefore has the burden of proving that it observed extraordinary diligence in order to avoid responsibility for the lost cargo. However, we cannot attribute the destruction, loss or deterioration of the cargo solely to the carrier. We find the consignee Republic Flour Mills Corporation guilty of contributory negligence. It was seasonably notified of the arrival of the barge but did not immediately start the unloading operations. No explanation was proffered by the consignee as to why there was a delay of six (6) days. Had the unloading been commenced immediately the loss could have been completely avoided or at least minimized. As testified to by the chemist who analyzed the corn samples, the mold growth was only at its incipient stage and could still be arrested by drying. The corn grains were not yet toxic or unfit for consumption. 6.) PHILIPPINE AIRLINES, INC. vs. COURT OF APPEALS, DR. JOSEFINO MIRANDA and LUISA MIRANDA G.R. No. 119641 May 17, 1996 FACTS: Private respondent spouses went to the United States of America. For their trip back to the country, they obtained confirmed bookings from PAL for a flight from San Francisco to Manila via Honolulu on June 21, 1988; then from Manila to Cebu on June 24, 1988; and finally from Cebu to Surigao also on June 24, 1988. On June 21, 1988, private respondents boarded the flight in San Francisco with five pieces of baggage. After a stopover at Honolulu, and upon arrival in Manila on June 23, 1988, they were told by the PAL personnel that all their baggage were off-loaded at Honolulu due to weight limitations. As a result, private respondents missed their connecting flight from Manila to Cebu City, since they had to wait for their baggage which arrived the following day, June 24, 1988, after their connecting flight had left. They also missed their other connecting flight from Cebu City to Surigao City. On June 25, 1988, they departed for Cebu City and therefrom for Surigao City. On the way to Surigao City, their flight had to return to Mactan Airport due to some mechanical problem. The passengers were then booked for the afternoon flight to Surigao City. However, said flight was also canceled. Since there were no more flights for Surigao City that day, private respondents asked to be billeted at the Cebu Plaza Hotel. But they were told by PAL employees that they could not be accommodated at said hotel because it was fully booked. However, when Dr. Miranda called the hotel, he was informed that he and his wife could be accommodated there. By the time private respondents were ready to go to the hotel, the shuttle bus had already left. PAL offered them P150.00. Dr. Miranda asked for P150.00 more as they could not be accommodated in just one taxi, also for tipping money for hotel boys. PAL refused the said request. Thus, Dr. Miranda

decided that he would not avail of the amenities offered by PAL. When private respondents tried to retrieve their baggage, they were told this time that the same were loaded on another earlier flight to Surigao City. Private respondents were finally able to leave to Surigao City only on June 26, 1988. Thereafter, they instituted an action for damages which, after trial as well as on appeal, was decided in their favor. ISSUE: Whether or not PAL is liable... HELD: YES. A contract of air carriage generates a relation attended with a public duty and any discourteous conduct on the part of a carrier's employee toward a passenger gives the latter an action for damages and, more so, where there is bad faith. In the present case, the trial court and the Court of Appeals ruled that there was breach of contract committed in bad faith by petitioner airline. The private respondents had a confirmed booking on a PAL flight from San Francisco to Manila. Therefore they were entitled to an assured passage not only for themselves but for their baggage as well. It was shown that the private respondents baggage were properly loaded and stowed in the plane when it left San Francisco for Honolulu. The off-loading by PAL of their baggage to give way to other passengers or cargo was an arbitrary and oppressive act which clearly amounted to a breach of contract committed in bad faith and with malice. The situation was aggravated by the poor treatment of the Mirandas by the PAL employees during the stopover at Mactan Airport in Cebu; the denial of petitioner's personnel to the Miranda spouses' request to be billeted at the Cebu Plaza Hotel by saying that it was fully booked, which was disproven by the fact that Dr. Miranda was able to arrange for accommodations thereat; and, the PAL employees' negligent act of sending off the baggage of private respondents to Surigao City, while they were still in Cebu, without any explanation for this gross oversight. It is PAL's duty to provide assistance to private respondents and any other passenger similarly inconvenienced due to delay in the completion of the transport and the receipt of their baggage. Therefore, its unilateral and voluntary act of providing cash assistance is deemed part of its obligation as an air carrier. Likewise, arrangements for and verification of requested hotel accommodations for private respondents could and should have been done by PAL employees themselves. 7.) [G.R. No. 119706. March 14, 1996] PHILIPPINE AIRLINES, INC., Petitioner vs. COURT OF APPEALS and GILDA C. MEJIA, respondents. FACTS:

Plaintiff, Gilda C. Mejia, shipped thru defendant, Philippine Airlines, one (1) unit microwave oven, fromSan Francisco, U.S.A. to Manila, Philippines. Upon arrival, however, of said article in Manila, Philippines,plaintiff discovered that its front glass door was broken and the damage rendered it unserviceable.Demands both oral and written were made by plaintiff against the defendant for the reimbursement of the value of the damaged microwave oven, and transportation charges paid by plaintiff to defendantcompany.Plaintiff filed the instant action for damages against defendant in the lower court. Defendant Airlines alleged inter alia, by way of special and affirmative defenses, that the court has no jurisdiction over thecase; that plaintiff has no valid cause of action against defendant since it acted only in good faith and incompliance with the requirements of the law, regulations, conventions and contractual commitments;and that defendant had always exercised the required diligence in the selection, hiring and supervision of its employees.Petitioner airlines argues that the legal principle enunciated in Fieldmens Insurance does not apply to thepresent case because the provisions of the contract involved here are neither ambiguous nor obscure. The trial court justified its award of actual, moral and exemplary damages, and attorneys fees in favor of private respondent that since the plaintiffs baggage destination was the Philippines, Philippine lawgoverns the liability of the defendant for damages for the microwave oven. And that, plaintiff hasestablished that defendant acted in bad faith when it denied the formers claim on the ground that the formal claim was filed beyond the period as provided in the Air Waybill when actually, Concepcion DioThe court finds that the petitioner acted in bad faith in denying private respondents claim, which wasaffirmed by the Court of Appeals. Hence this appeal for Certiorari.,sister of plaintiff has immediately filed the formal claim upon discovery of the damage. ISSUE: WON the air waybill should be strictly construed against petitioner.WON PAL acted in bad faith justifying the grant for damages. RULING: NO. SC held that there can be no further question as to the validity of the terms of the air waybill, even if the same constitutes a contract of adhesion. Whether or not the provisions thereof particularly on thelimited liability of the carrier are binding on private respondent in this instance must be determined from the facts and circumstances involved vis-a-vis the nature of the provisions sought to be enforced, taking care that equity and fair play should characterize the transaction under review. However, it should beborne in mind that a contract of adhesion may be struck down as void and unenforceable, for beingsubversive of public policy, only when the weaker party is imposed upon in dealing with the dominantbargaining party and is reduced to the alternative of taking it or leaving it, completely deprived of theopportunity to bargain on equal footing.Just because we have said that Condition No. 5 of the airway bill is binding upon the parties to and fullyoperative in this transaction, it does not mean, and let this serve as fair

warning to respondent carriers,that they can at all times whimsically seek refuge from liability in the exculpatory sanctuary of said Condition No. 5. We find nothing objectionable about the lower courts reliance upon the FieldmensInsurance case, the principles wherein squarely apply to the present petition. The parallelism between the aforementioned case and this one is readily apparent for, just as in the instant case, it is the binding effect of the provisions in a contract of adhesion (an insurance policy in Fieldmens Insurance) that is put to test. YES .It will be noted that petitioner never denied that the damage to the microwave oven was sustained while the same was in its custody. The possibility that said damage was due to causes beyond the controlof PAL has effectively been ruled out since the entire process in handling of the cargo was done almost exclusively by, and with the intervention or, at the very least, under the direct supervision of a responsible PAL personnel. The acceptance in due course by PAL of private respondents cargo as packed and its advice against theneed for declaration of its actual value operated as an assurance to private respondent that in fact therewas no need for such a declaration. Petitioner can hardly be faulted for relying on the representations of PALs own personnel.There was glaringly no attempt what so ever on the part of petitioner to explain the cause of the damageto the oven which constitutes gross carelessness or negligence which by itself justifies the present award of damages. The unprofessional indifference of PALs personnel despite full and actual knowledge of the damage to private respondents cargo, just to be exculpated from liability on pure technicality and bureaucratic subterfuge, smacks of willful misconduct and insensitivity to a passengers plight tantamount to bad faith and renders unquestionable petitioners liability for damages.The assailed judgment of respondent Court of Appeals is AFFIRMED