C.I.F. AND F.O.B.

MERELY MAKE RULES OF PRESUMPTION WHICH YIELD TO

PROOF OF CONTRARY INTENTION
BEHN, MEYER & CO., LTD. VS TEODORO YANGCO
FACTS: A memorandum of agreement was executed by duty authorized
representatives of the parties where a sale of 80 drums of caustic soda was agreed.
The merchandise was then shipped from New York to Manila. The contract itself
provided for c.i.f. Manila, Pagadero against delivery of documents.
The ship carrying the cargo was however detained at Penang where 71 drums were
removed. Yangco thus refused to accept the 9 remaining drums and Behn Meyers
offer to have the products substituted with other merchandise, which were different
from what was ordered.
Yangco then filed an action seeking for damagaes for alleged breach of contract.
ISSUE: WON petitioner should bear the burden of the loss of the merchandise.
HELD: YES.
Rule as to delivery of goods by a vendor via a common carrier: The
determination of the place of delivery always resolves itself into a question of act. If
the contract be silent as to the person or mode by which the goods are to be sent,
delivery by the vendor to a common carrier, in the usual and ordinary course of
business, transfers the property to the vendee.
When CFI is paid by the seller: The letters "c.i.f." found in British contracts stand
for cost, insurance, and freight. They signify that the price fixed covers not only
the cost of the goods, but the expense of freight and insurance to be paid
by the seller.
F.O.B. = seller bear all expenses until goods are delivered: In this case, in
addition to the letters "c.i.f.," has the word following, "Manila." In mercantile
contracts of American origin the letters "F.O.B." standing for the words "Free on
Board," are frequently used. It means, seller shall bear all expenses until the
goods are delivered where they are to be "F.O.B.".
According as to whether the goods are to be delivered "F.O.B." at the point of
shipment or at the point of destination determines the time when property passes.
However, both the terms "c.i.f." and "F.O.B." merely make rules of
presumption which yield to proof of contrary intention.
Delivery was to be made at Manila: Hence, the word Manila in conjunction with
the letters "c.i.f." must mean that the contract price, covering costs, insurance, and

freight, signifies that delivery was to made at Manila. If petitioner Behn Meyer has
seriously thought that the place of delivery was New York and not Manila, it would
not have gone to the trouble of making fruitless attempts to substitute goods for the
merchandise named in the contract, but would have permitted the entire loss of the
shipment to fall upon the defendant.
Behn Meyer failed to prove that it performed its part in the contract: It is
clear that the place of delivery was Manila and that Behn Meyer has not legally
excused default in delivery of the specified merchandise at that place. In resume,
we find that the plaintiff has not proved the performance on its part of the
conditions precedent in the contract. For breach of warranty, Yanco may demand
rescission of the contract of sale.
BINDING EFFECT NOTWITHSTANDING ITS CHARACTER AS A CONTRACT OF
ADHESION
AGUSTINO ONG YIU VS HON. COURT OF APPEALS AND PHILIPPINE
AIRLINES, INC.
FACTS: On august 26, 1967, Ong Yiu was a fare paying passenger of respondent
PAL from Mactan, Cebu to Butuan City wherein he was scheduled to attend a trial.
As a passenger, he checked in one piece of luggae, blue maleta for which he was
issued a claim ticket. Upon arrival at Butuan City, petitioner claimed his luggage but
it could not be found. PAL Butuan sent a message to PAL Cebu which in turn sent a
message to PAL Manila that same afternoon. PAL Manila advised PAL Cebu that the
luggage has been overcarried to Manila and that it would be forwarded to PAL Cebu
that same day. PAL Cebu then advised PAL Butuan that the luggage will be
forwarded the following day, on scheduled morning flight. This message was not
received by PAL Butuan as all the personnel had already gone for the day.
Meanwhile, Ong Yiu was worried about the missing luggage because it contained
vital documents needed for the trial the next day so he wired PAL Cebu demanding
delivery of his luggage before noon that next day or he would hold PAL liable for
damages based on gross negligence.
Early morning, petitioner went to the Butuan Airport to inquire about the luggage
but did not wait for the arrival of the morning flight at 10:00am. which carried his
luggage. A certain Dagorro, a driver of a colorum car, who also used to drive the
petitioner volunteered to take the luggage to the petitioner. He revelaed that the
documents were lost. Ong Yiu demanded from PAL Cebu actual and compensatory
damages as an incident of breach of contract of carriage.
The lower court found that PAL acted in bad faith and with malice. Both parties
appealed to CA. CA found PAL was guilty of simple negligence and ordered payment
to plaintiff P100.00 as the amount of baggage liability assumed by it under the
condition of carriage printed at the back of the ticket.

Hence this instant petition for review where petitioner argues that there is nothing
in the evidence to show that he had actually entered into a contract with PAL
limiting the latters liability for loss or delay of the baggage of its passengers and
that ART 1750 has not been complied with.
ISSUE: WON PAL is guilty of simple negligence only and not bad faith in the breach
of its contract of transportation with petitioner.
HELD: YES. PAL had not acted in bad faith. It exercised due diligence in looking for
petitioners luggage which had been miscarried. Had petitioner waited or caused
someone to wait at the airport for the arrival of the morning flight which carried his
luggage, he would have been able to retrieve his luggage sooner. In the absence of
a wrongful act or omission or fraud, the petitioner is not entitled to moral damages.
Neither is he entitled to exemplary damages absent any proof that the defendant
acted in a wanton, fraudulent, reckless manner.
The limited liability applies in this case. On the presumed negligence of PAL, its
liability for the loss however, is limited on the stipulation written on the back of the
plane ticket.
While it may be true that petitioner had not signed the plane ticket, he is
nevertheless bound by the provisions thereof. "Such provisions have been held to
be a part of the contract of carriage, and valid and binding upon the passenger
regardless of the latter's lack of knowledge or assent to the regulation". It is what
is known as a contract of "adhesion", in regards which it has been said
that contracts of adhesion wherein one party imposes a ready made form
of contract on the other, as the plane ticket in the case at bar, are
contracts not entirely prohibited. The one who adheres to the contract is
in reality free to reject it entirely; if he adheres, he gives his consent.
In previously decided cases, (Randolph v. American Airlines, and Rosenchein vs.
Trans World Airlines, Inc.), it was held that "a contract limiting liability upon an
agreed valuation does not offend against the policy of the law forbidding one from
contracting against his own negligence.
Considering, therefore, that petitioner had failed to declare a higher value
for his baggage, he cannot be permitted a recovery in excess of P100.00.
Besides, passengers are advised not to place valuable items inside their baggage
but "to avail of our V-cargo service. It is likewise to be noted that there is nothing in
the evidence to show the actual value of the goods allegedly lost by petitioner.
MAGELLAN MANUFACTURING MARKETING CORPORATION VS COURT OF
APPEALS, ORIENT OVERSEAS CONTAINER LINES AND F.E. ZUELLIG, INC.
FACTS: Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp.
(MMMC) 136,000 anahaw fans for $23,220. MMMC then contracted with F.E. Zuellig,
a shipping agent of Orient Overseas Container Lines, Inc., (OOCL) specifying that he
needed an on-board bill of lading and that transhipment is not allowed under the
letter of credit.

MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of
lading which was presented to Allied Bank. The bank then credited the amount of
US$23,220 covered by the letter of credit to MMMC.
When MMMC's President James Cu, went back to the bank later, he was informed
that the payment was refused by the buying for lack of bill of ladingand there was a
transhipment of goods. The anahaw fans were shipped back to Manila through
OOCL who are demanding from MMMC P246,043.43 (freight charges from Japan to
Manila, demurrage incurred in Japan and Manila from October 22, 1980 up to May
20, 1981 and charges for stripping the container van of the Anahaw fans on May 20,
1981)
MMMC abandoned the whole cargo and asked OOCL for damages. OOCL contended
that the bill of lading clearly shows that there will be a transhipment and that
petitioner was well aware that MV (Pacific) Despatcher was only up to Hongkong
where the subject cargo will be transferred to another vessel for Japan
RTC: favored OOCL and found that there was consent because the bill of
lading where it is clearly indicated that there will be transhipment. Further, MMMC
was the one who ordered the reshipment of the cargo from Japan to Manila.
CA: Affirmed the RTC decision with modification of excluding demurrage in Manila.
ISSUE: WON the bill of lading which reflected the transhipment against the letter of
credit is consented by MMMC.
HELD: YES. Transhipment is an act of taking cargo out of one ship and loading it in
another. In this case, the transfer of goods from the vessel stipulated in the
contract of affreightment to another vessel before the place of destination named
in the contract has been reached. Then, there was a transfer for
further transportation from one ship or conveyance to another.
The fact of transhipment is not dependent upon the ownership of the
transporting ships or conveyances or in the change of carriers, as the
petitioner seems to suggest, but rather on the fact of actual physical transfer
of cargo from one vessel to another.
It appears on the face of the bill of lading the entry "Hong Kong" in the blank space
labeled "Transhipment," which can only mean that transhipment actually took place.

A bill of lading, which, operates both as a receipt and as a contract is receipt for the
goods shipped and a contract to transport and deliver the same as therein
stipulated. It must contain the names the parties, which includes the consignee,
fixes the route, destination, and freight rates or charges, and stipulates the rights
and obligations assumed by the parties.
The law provides that the parties are bound by the terms and conditions specified in
the bill of lading, provided that these are not contrary to law, morals, good customs,
public order and public policy
As a general rule, the acceptance of the bill without dissent raises the
presumption that all the terms therein were brought to the knowledge of
the shipper and agreed to by him and, in the absence of fraud or mistake,
he is estopped from thereafter denying that he assented to such term.
In this case, there clearly appears on the face of the bill of lading under column
"PORT OF TRANSHIPMENT" an entry "HONGKONG.
An on board bill of lading is one in which it is stated that the goods have been
received on board the vessel which is to carry the goods, whereas a received for
shipment bill of lading is one in which it is stated that the goods have been received
for shipment with or without specifying the vessel by which the goods are to be
shipped. Received for shipment bills of lading are issued whenever conditions are
not normal and there is insufficiency of shipping space. It is, therefore,
understandable that a party to a maritime contract would require an on board bill of
lading because of its apparent guaranty of certainty of shipping as well as the
seaworthiness of the vessel which is to carry the goods.
The certification of Z.E. Zuellig, Inc. cannot qualify the bill of lading into an on board
bill of lading as required by the terms of the letter of credit issued in favor of
petitioner. Neither can petitioner escape hability by adverting to the bill of lading as
a contract of adhesion, thus warranting a more liberal consideration in its favor to
the extent of interpreting ambiguities against private respondents as allegedly
being the parties who gave rise thereto. The bill of lading is clear on its face. There
is no occasion to speak of ambiguities or obscurities whatsoever. All of its terms and
conditions are plainly worded and commonly understood by those in the business.
In sum, petitioner had full knowledge that the bill issued to it contained terms and
conditions clearly violative of the requirements of the letter of credit. Nonetheless,
perhaps in its eagerness to conclude the transaction with its Japanese buyer and in
a race to beat the expiry date of the letter of credit, petitioner took the risk of
accepting the bill of lading even if it did not conform with the indicated
specifications, possibly entertaining a glimmer of hope and imbued with a touch of

daring that such violations may be overlooked, if not disregarded, so long as the
cargo is delivered on time. Unfortunately, the risk did not pull through as hoped for.
Any violation of the terms and conditions of the letter of credit as would defeat its
right to collect the proceeds thereof was, therefore, entirely of the petitioner's
making for which it must bear the consequences.
CA judgment is thus affirmed with modifications as to the amount of award plus
legal interest.

PARTIES TO A CONTRACT OF TRANSPORTATION

SCHMITZ TRANSPORT & BROKERAGE CORPORATION VS TRANSPORT
VENTURE, INC. INDUSTRIAL INSURANCE COMPANY, LTD., AND BLACK SEA
SHIPPING AND DODWELL NOW INCHCAPE SHIPPING SERVICES
FACTS: Petitioner, who was in charge of securing requisite clearances, receive
cargoes from the shipside and deliver to the consignee Little Giant Steel Pipe
Corporation warehouse at Cainta, Rizal, hired the services of Transport Venture
Incorporation tugboat for the hot rolled steel sheets in coil. 37 out of 545 coils were
then unloaded to the barge by arrastre operator Ocean Terminal Services, Inc. but
there was no tugboat to pull the barge into the pier. Due to strong waves caused by
an approaching storm, the barge was abandoned. Later, the barge capsized
washing 37 coils into the sea. The consignee was executed a subrogation receipt by
Industrial Insurance after the formers filing of a formal claim. Industrial Insurance in
turn filed a complaint against both petitioner and respondent herein.
Trial court held that petitioner and respondent TVI are jointly and severally liable for
the subrogation. The CA affirmed the trial court decision, finding that the
defendants were common carriers for engaging in transport of goods and cargoes
over the seas as business and not as an isolated transaction.
ISSUE: WON petitioner is a common carrier.
HELD: YES. For the following reasons:
a) It undertook to transport the cargoes from the shipside of M/V Alexander
Saveliev to the consignees warehouse at Cainta, Rizal;
b) Testimony of its own Vice-President and General Manager Noel Aro that
part of the services it offers to its clients as a brokerage firm includes the
transportation of cargoes.
Art. 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public.
Petitioner and TVI are thus held solidarily liable for the loss of the cargoes. As for
Black Sea, its duty as a common carrier extended only from the time the goods
were surrendered or unconditionally placed in its possession and received for
transportation until they were delivered actually or constructively to consignee Little

Giant. But since Black Sea had constructively delivered the cargoes to Little Giant,
through petitioner, it had discharged its duty, as per Bill of Lading No. 2.
PARTIES:
Shipper: Black Sea Shipping Corporation
Carrier: Szhmitz Traasnport & Brokerage Corporation
Passenger: Cargo (Coils)
Consignee: Little Giant Steel Pipe Corporation
Arrastre: Ocean Terminal Services, Inc.
Insurer: Industrial Insurance Company, Ltd.
Side note: Proximate cause of loss was absence of tugboat. Not fortuitous event
(storm)

REAL PARTY-IN-INTEREST
BALIWAG TRANSIT, INC. VS COURT OF APPEALS AND SPS. SOTERO
CAILIPAN, JR. AND ZENAIDA LOPEZ AND GEORGE CAILIPAN.
FACTS: George was a paying passenger on a Baliwag bus who suffered multiple
serious physical injuries when he was thrown off said bus driven in a
careless and negligent manner by Leonardo Cruz, the bus driver, along Brgy.
Patubig, Marilao, Bulacan. As a result, he was confined in the hospital for treatment,
incurring medical expenses, which were borne by his parents.
Georges parents, Spouses Cailipan filed a complaint for damages arising from
breach of contract of carriage. Baliwag Transit alleged that the cause of the
injuries sustained by George was solely attributable to his own voluntary act
in that, without warning and provocation, he suddenly stood up from his seat
and headed for the door of the bus as if in a daze, opened it and jumped
off while said bus was in motion, in spite of the protestations by the driver
and without the knowledge of the conductor.
A third-Party Complaint against Fortune Insurance & Surety Company, Inc.,
on its third-party liability insurance in the amount of P50,000.00; Fortune
Insurance claimed limited liability, the coverage being subject to a Schedule
of Indemnities forming part of the insurance policy.
Fortune Insurance and Baliwag filed Motions to Dismiss the complaint filed against
them on the ground that George, in consideration of the sum of P8,020.50 had
executed a Release of Claims.
Sotero opposed the motion to dismiss; he testified that he is the father of George,
who at the time of the incident was a student, living with his parents and
totally dependent on them for their support; that the expenses for his
hospitalization were shouldered by his parents; and that they had not
signed the Release of Claims. RTC dismissed the complaint.
ISSUE: WON Release of Claims executed by George is valid.

HELD: Since the suit is one for breach of contract of carriage, the Release of Claims
executed by him, as the injured party, discharging Fortune Insurance and
Baliwag from any and al lliability is valid.
He was then of legal age, a graduating student of Agricultural Engineering,and had
the capacity to do acts with legal effect (Article 37 in relation to Article 402, Civil
Code). Thus, he could sue and be sued even without the assistance of his parents.
In addition, the contract of carriage was actually between George, as the
paying passenger, and Baliwag as the common carrier; since a contract
may be violated only by the parties thereto, as against each other, in
an action upon that contract, the real parties-in-interest must be the
parties to said contract.
Real party-in-interest-plaintiff: one who has a legal right;
Real party-in-interest-defendant: one who has a correlative legal obligation
whose act or omission violates the legal right of the former
In the absence of any contract of carriage between Baliwag and Georges parents,
the latter are not real parties-in-interest in an action for breach of that contract.
Finally, the release of claims thus have the effect of a compromise agreement since
it was entered into for the purpose of making a full and fi nal compromise
adjustment and settlement of the cause of action involved.
PERFECTION OF A CONTRACT OF TRANSPORTATION
MAURO GANZON VS COURT OF APPEALS AND GELACIO TUMAMBING
FACTS: Tumambing contracted the services of Ganzon to haul 305 tons of scrap
iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT
Batman. Pursuant to the agreement, Ganzon sent his lighter Batman to
Mariveles where it docked. Tumambing delivered the scrap iron to Filomeno Niza,
captain of the lighter, for loading. When about half of the scrap iron was already
loaded, Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded
P5,000.00 from Tumambing. Tumambing resisted the shakedown and after a heated
argument between them, Advincula drew his gun and fired at Tumambing, because
of which he sustained physical injuries. Acting Mayor Basilio Rub, accompanied by
three policemen, ordered captain Niza and his crew to dump the scrap iron where
the lighter was docked and the rest was brought to the compound of NASSCO. Rub
issued a receipt stating that the Municipality of Mariveles had taken custody of the
scrap iron.
ISSUE: WON Ganzon is guilty of breach of contract of transportation
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.
Ganzon has failed to show that the loss of the scraps was due to any of the causes
enumerated in Art. 1734; hence he is presumed to have been at fault or to have
acted negligently; he could have been exempted from any liability had he been able
to prove that he observed extraordinary diligence in the vigilance over the goods in
his custody, according to all the circumstances of the case, or that the loss was due
to an unforeseen event or to force majeure, but he failed to do so.
Ganzons defense was that the loss of the scraps was due to an order or act of
competent public authority must not be given merit because Ganzon was not duty
bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there
is absence of sufficient proof that the issuance of the same order was attended with
such force or intimidation as to completely overpower the will of the petitioners
employees; mere difficulty in the fulfillment of the obligation is not considered force
majeure.
KOREAN AIRLONES CO., LTD. VS COURT OF APPEALS AND JUANITO LAPUZ
AND JUANITO LAPUZ VS COURT OF APPEALS AND KOREAN AIRLINES, CO.,
LTD.
FACTS: Lapuz, an automative electrician was contracted for employment in Jeddah
Saudi Arabia for one year through Pan Pacific Overseas Recruiting Services, Inc. He
was supposed to leave on November 8, 1980 via Korean Airlines. Initially, he was
wait-listed and could only be accommodated if any one of the confirmed
passengers failed to show up before departure. When two of such passengers did
not appear, Lapuz and another person, Perico, were given the 2 unclaimed seats.
On the way to the plane for boarding however, a KAL officer barred him from taking
the flight. He later found that his ticket was cancelled by KAL. Because of this, he
was
unable
to
report
to
work
and
lost
his
employment.
KAL alleged that only one seat became available so pursuant to the earlier
agreement with Pan Pacific agent Jimmie Joseph, Perico who was one of the
supervisors of the hiring company, was to be given priority.
RTC ordered KAL to pay damages. On appeal, the CA affirmed said decision with
modifications as to the amount. Hence, the present petitions for review which have
been consolidated because of the identity of parties and similarities of issues.
ISSUE: WON KAL was guilty of breach of contract of carriage.
HELD: YES. The evidence presented by Lapuz shows that he had indeed checked
in at the departure counter, passed through customs and immigration, boarded the
shuttle bus and proceeded to the ramp of KAL's aircraft. In fact, his baggage had
already been loaded in KAL's aircraft, to be flown with him to Jeddah. The contract
of carriage between him and KAL had already been perfected when he was
summarily and insolently prevented from boarding the aircraft.

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN VS MARJORIE

NAVIDAD, HERIS OF THE LATE NICANOR NAVIDAD AND PRUDENT SECURITY
AGENCY
FACTS: Nicanor Navidad, then drunk, entered the EDSA LRT station after
purchasing a token (representing payment of the fare). While Navidad was
standing on the platform near the LRT tracks, Junelito Escartin, the security guard
assigned to the area approached him. A misunderstanding or an altercation
between the two apparently ensued that led to a fist fight. No evidence, however,
was adduced to indicate how the fight started or who, between the two, delivered
the first blow or how Navidad later fell on the LRT tracks.
At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train, and he was killed
instantaneously.
The widow of Nicanor, Marjorie Navidad, along with her children, filed a complaint
for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent for the death of her husband.
The trial court ruled in favor Navidads wife and against the defendants Prudent
Security and Junelito Escartin. LRTA and Rodolfo Roman were dismissed for lack of
merit. CA held LRTA and Roman liable, hence the petition.
ISSUE: WON there was a perfected contract of carriage between Navidad and LRTA.
HELD: YES. A contract of carriage was deemed created from the moment
Navidad paid the fare at the LRT station and entered the premises of the
latter. Thus, Navidad is entitled to all the rights and protection under a contractual
relation. LRTA and Roman must thus be held liable for the death of Navidad in failing
to exercise extraordinary diligence imposed upon a common carrier.
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 of exercising
utmost diligence in ensuring the safety of passengers.
A BILL OF LADING IS PRIMA FACIE PROOF OF ACTUAL RECEIPT OF GOODS
BY THE CARRIER AND MAY BE CONTRADICTED BY PAROL OR OTHER
EVIDENCE
ANICENTO SALUDO, JR. MARIA SALVACION SALUDO, LEOPOLDO SALUDO
AND SATURNINO SALUDO VS HON. COURT OF APPEALS, TRANS WORLD
AIRLINES, INC. AND PHILIPPINE AIRLINES, INC.
FACTS: Crispina Galdo Saludo, mother of the petitioners, died 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.
Pomierski brought the remains to Continental Mortuary Air Services (CMAS) at the
Chicago Airport which made the necessary arrangements such as flights, transfers,

etc. CMAS booked the shipment with PAL thru the carriers agent Air Care
International. PAL Airway Bill Ordinary was issued wherein the requested routing
was from Chicago to San Francisco on board Trans World Airline (TWA) and from San
Francisco to Manila on board PAL.
Salvacion (one of the petitioners), upon arrival at San Francisco, went to the TWA to
inquire about her mothers remains. But she was told they did not know anything
about it. She then called Pomierski that her mothers remains were not at the West
Coast terminal. Pomierski immediately called CMAS which informed that the
remains were on a plane to Mexico City, that there were two bodies at the terminal,
and somehow they were switched. CMAS called and told Pomierski that they were
sending the remains back to California via Texas.
Petitioners filed a complaint against TWA and PAL fir the misshipment and delay in
the delay of the cargo containing the remains of the late Crispina Saludo. Petitioners
alleged that private respondents received the casketed remains of Crispina on
October 26, 1976, as evidenced by the issuance of PAL Airway Bill by Air Care and
from said date, private respondents were charged with the responsibility to exercise
extraordinary diligence so much so that the alleged switching of the caskets on
October 27, 1976, or one day after the private respondents received the cargo, the
latter must necessarily be liable.
ISSUE: WON the contract was perfected thus making the carrier liable.
HELD: NO.
Ordinarily, a receipt (bill of lading) is not essential to a complete delivery of goods
to the carrier for transportation but, when issued, is competent and prima facie, but
not conclusive, evidence of delivery to the carrier. A bill of lading, when properly
executed and delivered to a shipper, is evidence that the carrier has
received the goods described therein for shipment. It is a general rule as to
the parties to a contract of carriage of goods in connection with which a bill of
lading is issued reciting that goods have been received for transportation, that the
recital being in essence a receipt alone, is not conclusive, but may be
explained, varied or contradicted by parol or other evidence.
Article 1736 provides that extraordinary responsibility of the common
carrier begins from the time the goods are delivered to the carrier. This
responsibility remains in full force and effect even when they are temporarily
unloaded or stored in transit, unless the shipper or owner exercises the right of
stoppage in transitu, and terminates only after the lapse of a reasonable time for
the acceptance, of the goods by the consignee or such other person entitled to
receive them. And, there is delivery to the carrier when the goods are ready
for and have been placed in the exclusive possession, custody and control
of the carrier for the purpose of their immediate transportation and the

carrier has accepted them. Where such a delivery has thus been accepted
by the carrier, the liability of the common carrier commences eo instanti.
Hence, while we agree with petitioners that the extraordinary diligence statutorily
required to be observed by the carrier instantaneously commences upon delivery of
the goods thereto, for such duty to commence there must in fact have been delivery
of the cargo subject of the contract of carriage. Only when such fact of delivery
has been unequivocally established can the liability for loss, destruction
or deterioration of goods in the custody of the carrier, absent the excepting
causes under Article 1734, attach and the presumption of fault of the carrier under
Article 1735 be invoked.
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.
SHIPOWNER ABSOLVED AND ARRASTRE OPERATOR HELD LIABLE AND
BOUND TO EXERCISE THE EXTRAORDINARY DILIGENCE AS A COMMON
CARRIER

SUMMA INSURANCE CORPORATION VS COURT OF APPEALS AND METRO

PORT SERVICE, INC.
FACTS: S/S Galleon Sapphire, a vessel owned by the National Galleon Shipping
Corporation arrived at Manila carrying a shipment consigned to the order of
Caterpillar Far East Ltd. With Semirara Coal Corporation as notify party. The
shipment was covered by marine insurance issued by petitioner Summa and a bill of
lading. It was discharged from the vessel to the custody of private respondent, the
exclusive arrastre operator at South Harbor.
When Semirara inspected the shipment at its port of destination Semirara Island,
it discovered that the bundle of PC8U blades included in the cargo was missing.
Semirara filed a complaint with RTC Manila against NGSC and private respondent for
collection of a sum of money, damages and attys fees.
The trial court absolved NGSC from any liability but found private respondent liable
to petitioner. On appeal, CA merely reduced the amount of private respondents
liability.
ISSUE: WON Metro Port should be liable for loss of the shipment in question.
HELD: YES. Petitioner was subrogated to the rights of the consignee.

The

relationship therefore between the consignee and the arrastre operator must be
examined. This relationship is much akin to that existing between the consignee or
owner of shipped goods and the common carrier, or that between a depositor and a
warehouseman.
In the performance of its obligations, an arrastre operator should observe the same
degree of diligence as that required of a common carrier and a warehouseman as
enunciated under Article 1733 and Section 3(b) of the Warehouse Receipts Law,
respectively.
Being the custodian of the goods discharged from a vessel, an arrastre operators
duty is to take good care of the goods and to turn them over to the party entitled to
their possession. In this case, it has been established that the shipment was lost
while in the custody of private respondent.
IRON BULK SHIPPING PHILIPPINES, CO., LTD. VS REMINGTON INDUSTRIAL
SALES CORPORATION
FACTS: Remington Industrial ordered 194 hot rolled steel sheets from
Wangs. Wangs forwarded the order to its supplier Burwill. The sheets were loaded
on MV Indian Reliance in Poland and shipped to the Philippines under a Bill of
Lading. Iron Bulk Shipping represented the charterer in the Philippines.
Upon discharge of the cargo, the sheets were found to be wet and with rust
extending to 50 to 60% of each sheet. No one honored the claims of loss and as
recourse, Remington filed an action for collection. Both lower and appellate courts
ruled in favor of Remington.
The charterers defense (Iron Bulk) was that the sheets were already rusty when
they were loaded on the ship. However, the Bill of Lading it issued was found to be a
clean bill of lading (i.e. it does not indicate any defect on the goods covered by it).
The sheets were found to be in a fair, usually accepted condition.
The suppliers defense (Wangs) was that Iron Bulk did not exercise extraordinary
diligence in shipping the sheets. The appellate court dismissed the case against
Wangs and now, only Iron Bulk raised the case on certiorari.
ISSUE: WON a bill of lading can be relied upon to indicate the cargo condition upon
loading.
HELD: YES. There is no merit to petitioner's contention that the Bill of Lading
covering the subject cargo cannot be relied upon to indicate the condition of the
cargo upon loading. It is settled that a bill of lading has a two-fold character. In
Phoenix Assurance Co., Ltd. vs. United States Lines, we held that: [A] bill of lading
operates both as a receipt and as a contract. It is a receipt for the goods shipped
and a contract to transport and deliver the same as therein stipulated. As a receipt,
it recites the date and place of shipment, describes the goods as to quantity,
weight, dimensions, identification marks and condition, quality and value. As a
contract, it names the contracting parties, which include the consignee, fixes the
route, destination, and freight rate or charges, and stipulates the rights and

obligations assumed by the parties. We find no error in the findings of the appellate
court that the questioned bill of lading is a clean bill of lading, i.e., it does not
indicate any defect in the goods covered by it, as shown by the notation, "CLEAN
ON BOARD" and "Shipped at the Port of Loading in apparent good condition on
board the vessel for carriage to Port of Discharge".
The fact that the issued bill of lading is pro forma is of no moment. If the bill of
lading is not truly reflective of the true condition of the cargo at the time of loading
to the effect that the said cargo was indeed in a damaged state, the carrier could
have refused to accept it, or at the least, made a marginal note in the bill of lading
indicating the true condition of the merchandise. But it did not. On the contrary, it
accepted the subject cargo and even agreed to the issuance of a clean bill of lading
without taking any exceptions with respect to the recitals contained therein. Since
the carrier failed to annotate in the bill of lading the alleged damaged condition of
the cargo when it was loaded, said carrier and the petitioner, as its representative,
are bound by the description appearing therein and they are now estopped from
denying the contents of the said bill.
Even granting, for the sake of argument, that the subject cargo was already in a
damaged condition at the time it was accepted for transportation, the carrier is not
relieved from its responsibility to exercise due care in handling the merchandise and
in employing the necessary precautions to prevent the cargo from further
deteriorating. Under Article 1742 of the Civil Code, even if the loss, destruction, or
deterioration of the goods should be caused, among others, by the character of the
goods, the common carrier must exercise due diligence to forestall or lessen the
loss.
Extraordinary responsibility lasts from the time of goods are unconditionally placed
in its possession until the same are delivered to the consignee, unless proven to
have been observed. Common carrier is presumed to have been at fault or to have
acted negligently.
PRIMARY FACTOR TO BE CONSIDERED IS THE EXISTENCE OF A REASONABLE
CAUSE AS WILL JUSTIFY THE PRESENCE OF THE VICTIM ON OR NEAR THE
PETITIONERS VESSEL
LA MALLORCA VS HON. COURT OF APPEALS, MARIANO BELTRAN, ET. AL.
Facts: Plaintiffs, husband and wife, together with their three minor daughters
(Milagros, 13 years old, Raquel, about 4 years old and Fe, 2 years old) boarded the
Pambusco at San Fernando Pampanga, bound for Anao, Mexico, Pampanga. Such
bus is owned and operated by the defendant.
They were carrying with them four pieces of baggage containing their personal
belonging. The conductor of the b us issued three tickets covering the full fares of
the plaintiff and their eldest child Milagros. No fare was charged on Raquel and Fe,
since both were below the height which fare is charged in accordance with plaintiffs
rules and regulations.
After about an hours trip, the bus reached Anao where it stopped to allow the
passengers bound therefore, among whom were the plaintiffs and their children to

get off. Mariano Beltran, carrying some of their baggage was the first to get down
the bus, followed by his wife and children. Mariano led his companion to a shaded
spot on the left pedestrian side of the road about four or five meters away from the
vehicle. Afterwards, he returned to the bus in controversy to get his paying, which
he had left behind, but in so doing, his daughter followed him unnoticed by his
father. While said Mariano Beltran was on he running board of the bus waiting for
the conductor to hand him his bayong which he left under one its seats near the
door, the bus, whose motor was not shut off while unloading suddenly started
moving forward, evidently to resume its trip, notwithstanding the fact that the
conductor was still attending to the baggage left behind by Mariano Beltran.
Incidentally, when the bus was again placed in a complete stop, it had traveled
about 10 meters from point where plaintiffs had gotten off.
Sensing the bus was again in motion; Mariano immediately jumped form the
running board without getting his bayong from conductor. He landed on the side of
the road almost board in front of the shaded place where he left his wife and his
children. At that time, he saw people beginning to gather around the body of a child
lying prostrate on the ground, her skull crushed, and without life. The child was
none other than his daughter Raquel, who was run over by the bus in which she
rode earlier together her parent. For the death of the said child, plaintiffs comment
the suit against the defendant to recover from the latter damages.
ISSUE: Whether or not the child was no longer the passenger of the bus involved in
the incident, and therefore, the contract of carriage was already terminated?
HELD: There can be no controversy that as far as the father is concerned, when he
returned to the bus for his bayong which was not unloaded, the relation of
passenger and carrier between him and the petitioner remained subsisting. The
relation of carrier and passenger does not necessarily cease where the latter, after
alighting from the car aids the carriers servant or employee in removing his
baggage from the car.
It is a rule that the relation of carrier and passenger does not cease the moment the
passenger alights from the carriers vehicle at a place selected by the carrier at the
point of destination but continues until the passenger has had a reasonable time or
a reasonable opportunity to leave the carriers premises.
The father returned to the bus to get one of his baggages, which was not unloaded
when they alighted from the bus. Raquel must have followed her father. However,
although the father was still on the running board of the bus awaiting for the
conductor to hand him the bag or bayong, the bus started to run, so that even he
had jumped down from the moving vehicle. It was that this instance that the child,
who must be near the bus, was run over and killed. In the circumstances, it cannot
be claimed that the carriers agent had exercised the utmost diligence of a very
cautious person required by Article 1755 of the Civil Code to be observed by a
common carrier in the discharge of its obligation to transport safely its passengers.
The driver, although stopping the bus, nevertheless did not put off the engine. He
started to run the bus even before the conductor gave him the signal to go and

while the latter was still unloading part of the baggage of the passengers Beltran
and family. The presence of the said passengers near the bus was not unreasonable
and they are, therefore, to be considered still as passengers of the carrier, entitled
to the protection under their contract of carriage.
ABOITIZ SHIPPING CORPORATION VS HON. COURT OF APPEALS, LUCILA
VIANA, SPS. ANTNIO VIANA AND GORGONIA VIANA AND PRIONEER
STEVEDORING CORPORATION
FACTS: Anacleto Viana was a passenger of M/V Antonia bound for Manila which was
owned by defendant Aboitiz. After the said vessel has landed, the Pioneer
Stevedoring Corp., as the arrastre operator, took over the exclusive control of the
cargoes loaded on it. One hour after the passengers had disembarked, Pioneer
Stevedoring started operation by unloading the cargoes using its crane. Viana who
had already disembarked remembered that some of his cargoes were still inside the
vessel. While pointing to the crew of the vessel the place where his cargoes were,
the crane hit him, pinning him between the side of the vessel and the crane, which
resulted to his death. Vianas wife filed a complaint for damages against Aboitiz for
breach of contract f carriage. Aboitiz, however filed a third party complaint against
Pioneer since it had control completely over the vessel during the incident.
Furthermore, petitioner contends that one hour has already elapsed from the time
Viana disembarked, thus he has already ceased to be a passenger.
ISSUE: WON Aboitiz is liable for death of Viana.
HELD: YES. The failure of Aboitiz to exercise extraordinary diligence for the safety
of its passengers makes Aboitiz liable. It has been recognized as a rule that the
relation of the carrier and passenger does not cease the moment the
passenger alights from the carriers vehicle, but continues until the
passenger has had a reasonable time or a reasonable opportunity to leave
the carriers premises. A reasonable time or a reasonable delay within this rule is
to be determined from all the circumstances. The primary factor to be
considered is the existence of a reasonable cause as will justify the
presence of the victim on or near the petitioners vessel. In the case at bar,
such justifiable cause exists because he had to come back for his cargo. Aboitiz has
failed to safeguard its passenger with extraordinary diligence in requiring or seeing
to it that precautionary measures were strictly and actually enforced to subserve
their purpose of preventing entry into a forbidden area.

BATANGAS LAGUNA TAYABAS BUS COMPANY & ARMANDO PON VS IAC,

HERIS OF PAZ VDA DE PAMFILO, HEIRS OF NORMA NERI AND BAYLON
SALES AND NENE VDA. DE ROSALES

FACTS: There was a collision between a BLTB bus driven by Armando Pon and
Superlines bus driven by Ruben Dasco. The said collision resulted in the death of 3
people and in several injuries to two more who are all passengers of the BLTB Bus.
The evidence shows that as the BLTB Bus was negotiating the bend of the highway,
it tried to overtake a Ford Fiera car just as the Superlines Bus was coming from the
opposite direction. Seeing the approaching Superlines bus, Armando Pon (driver of
the BLTB Bus) made a belated attempt to slacken the speed of his bus and tried to
return to his proper lane. It was an unsuccessful try as the two (2) buses collided
with each other.

The victims instituted separate cases against BLTB and Superlines together with
their respective drivers. Also, criminal cases against the drivers of the two buses
were filed. Defendants BLTB and Superlines, together with their drivers Pon and
Dasco, denied liability by claiming that they exercised due care and diligence and
shifted the fault, against each other.

The lower court exonerated defendants Superlines and its driver Dasco from liability
and attributed sole responsibility to defendants BLTB and its driver Pon, and ordered
them jointly and severally to pay damages to the plaintiffs. The Appellate Court
affirmed with slight modification.

ISSUE: WON the courts below erred in holding BLTB liable.

HELD: NO.

The Court ruled that the proximate cause of the collision resulting in the death of
three and injuries to two of the passengers of BLTB was the sole negligence of the
driver of the BLTB Bus, who recklessly operated and drove said bus in a lane where
overtaking is not not allowed by Traffic Rules and Regulations. Such negligence and
recklessness is binding against petitioner BLTB, more so when We consider the fact
that in an action based on a contract of carriage, the court need not make an
express finding of fault or negligence on the part of the carrier in order to hold it
responsible for the payment of the damages sought by the passenger. By the
contract of carriage, the carrier BLTB assumed the express obligation to transport
the passengers to their destination safely and to observe extraordinary diligence
with a due regard for all the circumstances, and any injury that might be suffered by

its passengers is right away attributable to the fault or negligence of the carrier
(Art. 1756).

The driver of the BLTB bus admitted in his cross-examination that the continuous
yellow line on the ascending bend of the highway signifies a NO OVERTAKING
ZONE. It is no surprise then that the driver of the Superlines bus was exonerated by
the lower court. He had a valid reason to presuppose that no one would overtake in
such a dangerous situation. These facts show the imprudence of the BLTB driver.

It is well settled that a driver abandoning his proper lane for the purpose of
overtaking another vehicle in ordinary situation has the duty to see that
the road is clear and not to proceed if he cannot do so in safety.
The said rule becomes more particularly applicable in this case when the overtaking
took place on an ascending curved highway divided into two lanes by a continuous
yellow line. Unless there is proof to the contrary, it is presumed that a person
driving a motor vehicle has been negligent if at the time of the mishap, he was
violating any traffic regulation.'

For his own negligence in recklessly driving the truck owned by his employer,
appellant Armando Pon is primarily liable (Article 2176, Civil Code). On the other
hand the liability of Pon's employer, appellant BLTB, is also primary, direct and
immediate in view of the fact that the death of or injuries to its passengers was
through the negligence of its employee, and such liability does not cease even upon
proof that BLTB had exercised all the diligence of a good father of a family in the
selection and supervision of its employees (Article 1759, Civil Code).

"The common carrier's liability for the death of or injuries to its passengers is based
on its contractual obligation to carry its passengers safely to their destination. That
obligation is so serious that the Civil Code requires "utmost diligence of very
cautious person (Article 1755, Civil Code). They are presumed to have been at
fault or to have acted negligently unless they prove that they have observed
extraordinary diligence (Article 1756, Civil Code). In the present case, the
appellants have failed to prove extraordinary diligence. Indeed, this legal
presumption was confirmed by the fact that the bus driver of BLTB was negligent. It
must follow that both the driver and the owner must answer for injuries or death to
its passengers.

ACCOMODATION PASSENGER

LOURDES LARA, ET. AL. VS BRIGIDO VALENCIA

FACTS: Lara was an inspector for the Bureau of Forestry. The defendant is engaged
in the business of exporting logs from his lumber concession in Cotabato. Lara went
to said concession upon instructions of his chief to classify the logs of defendant
which were about to be loaded on a ship anchored in the port of Parang. The work
of Lara lasted for six days during which he contracted malaria fever. On a later
date, Lara who then in a hurry to return to Davao asked defendant if he could if he
could take him in his pick-up as there was then no other means of transportation, to
which defendant agree, and in that same morning the pick-up left Parang bound for
Davao taking along six passengers, including Lara.

The pick-up has a front seat where the driver and two passengers can be
accommodated and the back has a steel flooring enclosed with a steel walling of 16
to 17 inches tall on the sides and with a 19 inches tall walling at the back. In the
middle Lara sat on a bag. Before leaving, Parang, defendant invited Lara to sit with
him on the front seat but Lara declined. It was their understanding that upon
reaching barrio Samoay, Cotabato, the passengers would alight and take a
passenger bus bound for Davao, but when they arrived at that place, only one
alighted and the other passengers requested defendant to allow them to ride with
him up to Davao because there was then no available bus that they could take in
going to that place. Defendant again accommodated the passengers.

When they continued their trip, the sitting arrangement of the passengers remained
the same, Lara being seated on a bag in the middle with his arms on a suitcase and
his head covered by a jacket. Upon reaching Km. 96, barrio Catidtuan, Lara
accidentally fell from the pick-up and as a result he suffered serious injuries.
Valencia stopped the pick-up to see what happened to Lara. He sought the help of
the residents of that place and applied water to Lara but to no avail. They brought
Lara to the nearest place where they could find a doctor and not having found any
they took him to St. Josephs clinic of Kidapwan. But when Lara arrived, he was
already dead. From there they proceeded to Davao City and immediately notified
the local authorities.

ISSUE: WON defendant is duty bound to exercise extraordinary diligence as

required of a common carrier.

HELD: NO. Defendant is only required to observe ordinary care, and is not
in duty bound to exercise extraordinary diligence.
It therefore appears that the deceased, as well his companions who rode in the pickup of defendant, were merely accommodation passengers who paid nothing for the
service and so they can be considered as invited guests within the meaning of the
law. As accommodation passengers or invited guests, defendant as owner and
driver of the pick-up owes to them merely the duty to exercise reasonable care so
that they may be transported safely to their destination. Thus, "The rule is
established by the weight of authority that the owner or operator of an automobile
owes the duty to an invited guest to exercise reasonable care in its operation, and
not unreasonably to expose him to danger and injury by increasing the hazard of
travel. This rule, as frequently stated by the courts, is that an owner of an
automobile owes a guest the duty to exercise ordinary or reasonable care to avoid
injuring him. Since one riding in an automobile is no less a guest because he asked
for the privilege of doing so, the same obligation of care is imposed upon the driver
as in the case of one expressly invited to ride" (5 Am. Jur., 626-627). Defendant,
therefore, is only required to observe ordinary care, and is not in duty bound to
exercise extraordinary diligence as required of a common carrier by our law (Articles
1755 and 1756, new Civil Code).