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-April 26, 1988, spouses Tito and Leny Tumboy and their minor children named Ardee
and Jasmin, boarded at Mangagoy, Surigao del Sur, a Yobido Liner bus bound for
Davao City.
-Along Picop Road in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus
exploded. The bus fell into a ravine around three (3) feet from the road and struck a
-resulted in the death of 28-year-old Tito Tumboy and physical injuries to other
-a complaint for breach of contract of carriage, damages and attorneys fees was filed
by Leny and her children against Alberta Yobido, the owner of the bus, and Cresencio
Yobido, its driver, before the Regional Trial Court of Davao City.

-defendants: affirmative defense of caso fortuito.

-They also filed a third-party complaint against Philippine Phoenix Surety and
Insurance, Inc. who answered with a counterclaim. It was not held liable under the
insurance contract, the lower court dismissed the third party complaint.
-Tumboy: violation of the COC was caused by the drivers failure to exercise the
diligence required of the carrier in transporting passengers safely to their place of
-According to Leny Tumboy, the bus left Mangagoy 3PM. The winding road it
traversed was not cemented and was wet due to the rain; it was rough with crushed
rocks. The bus which was full of passengers had cargoes on top. Since it was running
fast, she cautioned the driver to slow down but he merely stared at her through the
mirror. At around 3:30 p.m., in Trento, she heard something explode and immediately,
the bus fell into a ravine.
-defendants: accident was due to a fortuitous event.

Abundio Salce, who was the bus conductor testified that the 42-seater
bus was not full as there were only 32 passengers, such that he
himself managed to get a seat.
bus was running at a speed of 60 to 50 and that it was going slow
because of the zigzag road.

He affirmed that the left front tire that exploded was a brand new tire
that he mounted on the bus only five (5) days before the incident.

all driver applicants in Yobido Liner underwent actual driving tests

before they were employed. Defendant Cresencio Yobido underwent
such test and submitted his professional drivers license and clearances
from the barangay, the fiscal and the police.

-Lower Court dismissed the action for lack of merit. the cause of the explosion
remains a mystery until at present. the tire blowout was a caso fortuito which is
completely an extraordinary circumstance independent of the will of the defendants
-the plaintiffs appealed to the Court of Appeals. They ascribed to the lower court the
following errors: (a) finding that the tire blowout was a caso fortuito; (b) failing to hold
that the defendants did not exercise utmost and/or extraordinary diligence required of
carriers under Article 1755 of the Civil Code, and (c) deciding the case contrary to the
ruling in Juntilla v. Fontanar,[5] and Necesito v. Paras.[6]
-CA: reversed the decision of the lower court. the explosion of the tire is not in itself a
fortuitous event. The cause of the blow-out, if due to a factory defect, improper
mounting, excessive tire pressure, is not an unavoidable event. The fact that the
cause of the blow-out was not known does not relieve the carrier of liability. Owing to
the statutory presumption of negligence against the carrier and its obligation to
exercise the utmost diligence of very cautious persons to carry the passenger safely
as far as human care and foresight can provide, it is the burden of the defendants to
prove that the cause of the blow-out was a fortuitous event
Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge
defendants burden.
-Yobido filed a motion for reconsideration of said decision which was denied.

ISSUE: Whether or not the tire blowout that caused the death of Tito Tumboy was
a caso fortuito. .
-The Court did re-examine the facts and evidence in this case because the lower
court and the Court of Appeals arrived at diverse factual findings. [8] However, upon
such re-examination, we found no reason to overturn the findings and conclusions of
the Court of Appeals.
-SC: when a passenger boards a common carrier, he takes the risks incidental to the
mode of travel he has taken. After all, a carrier is not an insurer of the safety of its
passengers and is not bound absolutely and at all events to carry them safely and
without injury.

-However, when a passenger is injured or dies while travelling, the law presumes that
the common carrier is negligent. Thus, the Civil Code provides:
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.
Article 1755 provides that (a) common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
-once a passenger dies or is injured, the carrier is presumed to have been at fault or
to have acted negligently. This disputable presumption may only be overcome by
evidence that:

the carrier had observed extraordinary diligence

or that the death or injury of the passenger was due to a fortuitous


-petitioners contention that they should be exempt from liability because the tire
blowout was no more than a fortuitous event that could not have been foreseen, must

-Neither may the fact that the tire bought and used in the vehicle is of a brand name
noted for quality, resulting in the conclusion that it could not explode within five days
-it is settled that an accident caused either by defects in the automobile or through the
negligence of its driver is not a caso fortuito that would exempt the carrier from liability
for damages.[15]
-Moreover, a common carrier may not be absolved from liability in case of force
majeure or fortuitous event alone. The common carrier must still prove that it was not
negligent in causing the death or injury resulting from an accident.[16]
-petitioners proved through the bus conductor, Salce, that the bus was running at 6050 kilometers per hour only or within the prescribed lawful speed limit. However, they
failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she
cautioned the driver to slow down. These contradictory facts must, therefore, be
resolved in favor of liability in view of the presumption of negligence of the carrier in
the law.
-It was incumbent upon the defense to establish that it took precautionary measures
considering partially dangerous condition of the road. As stated above, proof that the
tire was new and of good quality is not sufficient proof that it
was not negligent. Petitioners should have shown that it undertook extraordinary
diligence in the care of its carrier, such as conducting daily routinary check-ups of the
vehicles parts.

-A fortuitous event is possessed of the following characteristics:

(a) must be independent of human will;

-Having failed to discharge its duty to overthrow the presumption of negligence with
clear and convincing evidence, petitioners are hereby held liable for damages.

(b) it must be unforeseeable or if can be forseen, must be inevitable

(c) the occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner;
(d) the obligor must be free from any participation in the aggravation of the injury
resulting to the creditor.[13]
-As Article 1174 provides, no person shall be responsible for a fortuitous event which
could not be foreseen, or which, though foreseen, was inevitable. In other words,
there must be an entire exclusion of human agency from the cause of injury or loss.[14]
-At the case at bar, the explosion of the new tire may not be considered a fortuitous
event. The fact that the tire was new did not imply that it was entirely free from
manufacturing defects or that it was properly mounted on the vehicle.


-After the death of Crispina Saludo in Chicago Illinois, Pomierski and Son Funeral
Home of Chicago, made the necessary preparations and arrangements for the
shipment, of the remains from Chicago to the Philippines.
-The funeral home had the remains embalmed and secured a permit for the
disposition of dead human body on October 25, 1976, Philippine Vice Consul in
Chicago, Illinois, Bienvenido M. Llaneta, at 3:00 p.m. on October 26, 1976 at the
Pomierski & Son Funeral Home, sealed the shipping case containing a hermetically
sealed casket that is airtight and waterproof wherein was contained the remains of
Crispina Saludo.

-Pomierski brought the remains to C.M.A.S. (Continental Mortuary Air Services) at the
airport (Chicago) which made the necessary arrangements such as flights, transfers,
-C.M.A.S. booked the shipment with PAL thru Air Care International, with Pomierski
F.H. as the shipper and Mario (Maria) Saludo as the consignee.

-In the memo or incident report of Pomierski, it is stated that the remains (of Crispina
Saludo) were taken to CMAS at the airport; that there were two bodies at the
(Chicago Airport) terminal, and somehow they were switched, that the remains (of
Crispina Saludo) were on a plane to Mexico City.
-The following day October 28, 1976, remains of Crispina Saludo arrived in San
Francisco from Mexico on board American Airlines.

-PAL Airway Bill No. 079-01180454 Ordinary was issued

-This shipment was transferred to or received by PAL at 7:45 p.m
-routing: Chicago to San Francisco on board TransWorld Airlines Flight 131 of
October 27, 1976 and from San Francisco to Manila on board PAL Flight No. 107 of
the same date, and from Manila to Cebu on board PAL Flight 149 of October 29, 1976

-This casket bearing the remains of Crispina Saludo, which was mistakenly sent to
Mexico and was opened (there), was resealed by Crispin F. Patagas for shipment to
the Philippines.

-Maria Salvacion and Saturnino Saludo, thru a travel agent, were booked with United
Airlines from Chicago to California, and with PAL from California to Manila. She
informed the funeral director of Pomierski that they were booked with United Airlines.
But the director told her that the remains were booked with TWA flight to California.

-The shipment was immediately loaded on PAL flight for Manila that same evening
and arrived (in) Manila on October 30, 1976, a day after its expected arrival on
October 29, 1976. 3

-This upset her, and she and her brother had to change reservations from UA to the
TWA flight after she confirmed by phone that her mother's remains should be on that
TWA flight.

-petitioners' counsel informed private respondent Trans World Airlines (TWA) of the
misshipment and eventual delay in the delivery of the cargo and of the discourtesy of
its employees to petitioners Maria Salvacion Saludo and Saturnino Saludo.

-At the airport, they watched from the look-out area. She saw no body being brought.
So, she went to the TWA counter again, and she was told there was no body on that

-In a separate letter on June 10, 1977 addressed to co-respondent Philippine Airlines
(PAL), 5 petitioners stated that they were holding PAL liable for said delay in delivery
and would commence judicial action should no favorable explanation be given.

-Reluctantly, they took the TWA flight upon assurance of her cousin, Ani Bantug, that
he would look into the matter and inform her about it on the plane. But no
confirmation reached her.

-Both private respondents denied liability. Thus, a damage suit 6 was filed by
petitioners before the then Court of First Instance Leyte.

-Upon arrival at San Francisco at about 5:00 p.m., she went to the TWA counter there
to inquire about her mother's remains. She was told they did not know anything about
She then called Pomierski that her mother's remains were not at the West Coast
terminal, and Pomierski immediately called C.M.A.S., which informed them that the
remains were on a plane to Mexico City because there were two bodies at the
terminal, and somehow they were switched. they were sending the remains back to
California via Texas

-It-turned out that TWA had carried a shipment under PAL Airway Bill No. 079-ORD01180454 on TWA Flight 603 of October 27, 1976, a flight earlier than TWA Flight 131
of the same date. TWA delivered or transferred the said shipment said to contain
human remains to PAL at 2:00 p.m. of the same date, October 27, 1976. Due to a
switch(ing) in Chicago, this shipment was withdrawn from PAL by CMAS at 6:05 p.m.
of the same date, October 27.

- CFI LEYTE: absolved the two respondent airlines companies of liability which the
CA affirmed in toto.
(1) the delay in the delivery of the casketed was due to the fault of respondent airline
(2) the one-day delay in the delivery of the same constitutes contractual breach as
would entitle petitioners to damages
-Petitioners fault respondent court for "not finding that private respondents failed to
exercise extraordinary diligence required by law which resulted in the switching and/or
misdelivery of the remains of Crispina Saludo to Mexico causing gross delay in its
shipment to the Philippines, and consequently, damages to petitioners."
Petitioner allege that private respondents received the casketed remains of
petitioners' mother on October 26, 1976, as evidenced by the issuance of PAL Air

Waybill No. 079-01180454, and from said date, private respondents were charged
with the responsibility to exercise extraordinary diligence so much so that for the
alleged switching of the caskets on October 27, 1976, or one day after private
respondents received the cargo, the latter must necessarily be liable.
"(t)he issuance of a bill of lading carries the presumption that the goods were
delivered to the carrier issuing the bill, for immediate shipment, and it is nowhere
questioned that a bill of lading is prima facie evidence of the receipt of the goods by
the carrier. . . .
A bill of lading is a written acknowledgment of the receipt of the goods and an
agreement to transport and deliver them at a specified place to a person named or on
his order.
-delivery of the goods to the carrier normally precedes the issuance of the bill; or, to
some extent, delivery of the goods and issuance of the bill are regarded in
commercial practice as simultaneous acts.
-However, except as may be prohibited by law, there is nothing to prevent an inverse
order of events, that is, the execution of the bill of lading even prior to actual
possession and control by the carrier of the cargo to be transported.
-Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier for
transportation but, when issued, is competent and prima facie,evidence of delivery to
the carrier but not conclusive (rebuttable) as it may be explained, varied or
contradicted by parol or other evidence.
-PAL Airway Bill No. 079-01180454 was issued, not as evidence of receipt of delivery
of the cargo on October 26, 1976, but merely as a confirmation of the booking thus
made for the San Francisco-Manila flight scheduled on October 27, 1976. Actually, it
was not until October 28, 1976 that PAL received physical delivery of the body at San
-Article 1736 of the Civil Code that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered to the carrier. This responsibility
remains in full force and effect even when they are temporarily unloaded or stored in
transit, unless the shipper or owner exercises the right of stoppage in transitu,

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.
-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.

-In the case at bar, 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
-the switching of caskets prior thereto which was not caused by them, and
subsequent events caused thereby, private respondents cannot be held liable.
Petitioners: It is argued that since there is no clear evidence establishing the fault
Continental Mortuary Air Services (CMAS) for the mix-up, private respondents are
presumably negligent pursuant to Article 1735 of the Civil Code and, for failure to
rebut such presumption, they must necessarily be held liable; or, assuming that
CMAS was at fault, the same does not absolve private respondents of liability
because whoever brought the cargo to the airport or loaded it on the plane did so as
agent of private respondents.
This contention is without merit.
-when the cargo was received from C.M.A.S. at the Chicago airport terminal for
shipment, Air Care International and/or TWA, had no way of determining its actual
contents, since the casket was hermetically sealed by the Philippine Vice-Consul in
Chicago and in an air pouch of C.M.A.S., to the effect that Air Care International
and/or TWA had to rely on the information furnished by the shipper regarding the
cargo's content
-Thus, under said circumstances, no fault and/or negligence can be attributed to PAL
(even if Air Care International should be considered as an agent of PAL) and/or TWA,
the entire fault or negligence being exclusively with C.M.A.S.
It can correctly and logically be concluded, therefore, that the switching occurred or,
more accurately, was discovered on October 27, 1976, it happened while the cargo
was still with CMAS, before the same was place in the custody of private
-Thus, while the Air Cargo Transfer Manifest of TWA of October 27, 1976 34 was
signed by Garry Marcial of PAL at 1400H, or 2:00 P.M., on the same date, thereby
indicating acknowledgment by PAL of the transfer to them by TWA of what was in
truth the erroneous cargo, said misshipped cargo was in fact withdrawn by CMAS
from PAL and the correct shipment containing the body of Crispina Saludo was
received by PAL only on October 28, 1976, at 1945H, or 7:45 P.M.,
-TWA or any airline for that matter would not have opened such a sealed casket just
for the purpose of ascertaining whose body was inside and to make sure that the
remains inside were those of the particular person indicated to be by C.M.A.S. TWA
had to accept whatever information was being furnished by the shipper or by the one
presenting the casket for shipment.
-And so as a matter of fact, TWA carried to San Francisco and transferred to
defendant PAL a shipment covered by or under PAL Airway Bill No. 079-ORD01180454. Only, it turned out later, while the casket was already with PAL, that what

was inside the casket was not the body of Crispina Saludo so much so that it had to
be withdrawn by C.M.A.S. from PAL.
-The body of Crispina Saludo had been shipped to Mexico. The casket containing the
remains of Crispina Saludo was transshipped from Mexico and arrived in San
Francisco the following day on board American Airlines. It was immediately loaded by
PAL on its flight for Manila.
-CMAS was the ONE responsible for the switching or mix-up of the two bodies at the
Chicago Airport terminal, and started a chain reaction of the misshipment of the body
of Crispina Saludo and a one-day delay in the delivery thereof to its destination. 40
-no amount of inspection by respondent airline companies could have guarded
against the switching that had already taken place.
-it is the duty of the carrier to make inquiry as to the general nature of the articles
shipped and of their value before it consents to carry them; it is not bound to inquire
particularly about them in order to take advantage of a false classification and where
a shipper expressly represents the contents of a package to be of a designated
character, it is not the duty of the carrier to ask for a repetition of the statement nor
disbelieve it and open the box and see for itself. 41
-However, where a common carrier has reasonable ground to suspect that the offered
goods are of a dangerous or illegal character, the carrier has the right to know the
character of such goods and to insist on an inspection, if reasonable and practical
under the circumstances, as a condition of receiving and transporting such goods. 42
-It can safely be said then that a common carrier is entitled to fair representation of
the nature and value of the goods to be carried, with the concomitant right to rely
thereon, and further noting at this juncture that a carrier has no obligation to inquire
into the correctness or sufficiency of such information.
-In the case at bar, private respondents had no reason whatsoever to doubt the truth
of the shipper's representations. The reliance thereon by private respondents was
reasonable and, for so doing, they cannot be said to have acted negligently. Likewise,
no evidence was adduced to suggest even an iota of suspicion that the cargo
presented for transportation was anything other than what it was declared to be.
While we agree that the actual participation of CMAS has been sufficiently and
correctly established, to hold that it acted as agent for private respondents would be
both an inaccurate appraisal and an unwarranted categorization of the legal position it
held in the entire transaction.
It bears repeating that CMAS was hired to handle all the necessary shipping
arrangements for the transportation of the human remains of Crispina Saludo to
Manila. , CMAS may accordingly be classified as a forwarder which, by accepted
commercial practice, is regarded as an agent of the shipper and not of the carrier.
As such, it merely contracts for the transportation of goods by carriers, and has no
interest in the freight but receives compensation from the shipper as his agent. 46

-the entire chain of events which culminated in the present controversy was not due
to the fault or negligence of private respondents. Rather, the facts of the case would
point to CMAS as the culprit.
The contention that there was contractual breach on the part of private respondents is
founded on the postulation that there was ambiguity in the terms of the airway bill,
hence petitioners' insistence on the application of the rules on interpretation of
contracts and documents. We find no such ambiguity. The terms are clear enough as
to preclude the necessity to probe beyond the apparent intendment of the contractual
The hornbook rule on interpretation of contracts consecrates the primacy of the
intention of the parties, the same having the force of law between them. When the
terms of the agreement are clear and explicit, that they do not justify an attempt to
read into any alleged intention of the parties, the terms are to be understood literally
just as they appear on the face of the contract. 49
Turning to the terms of the contract at hand, as presented by PAL Air Waybill No. 07901180454, respondent court approvingly quoted the trial court's disquisition on the
aforequoted condition appearing on the reverse side of the airway bill and its
disposition of this particular assigned error:
The foregoing stipulation fully answers plaintiffs' objections to the
one-day delay and the shipping of the remains in TWA Flight 603
instead of TWA Flight 131. Under the stipulation, parties agreed that
no time was fixed to complete the contract of carriage and that the
carrier may, without notice, substitute alternate carriers or aircraft.
The carrier did not assume the obligation to carry the shipment on
any specified aircraft.
xxx xxx xxx
Furthermore, contrary to the claim of plaintiffs-appellants, the
conditions of the Air Waybill are big enough to be read and noticed.
Also, the mere fact that the cargo in question was shipped in TWA
Flight 603, a flight earlier on the same day than TWA Flight 131, did
not in any way cause or add to the one-day delay complained of
and/or the switching or mix-up of the bodies. 53
As previously stated, we find no ambiguity in the contract subject of this case that
would call for the application of said rule. In any event, the contract has provided for
such a situation by explicitly stating that the above condition remains effective
"notwithstanding that the same (fixed time for completion of carriage, specified
aircraft, or any particular route or schedule) may be stated on the face hereof." While
petitioners hinge private respondents' culpability on the fact that the carrier "certifies
goods described below were received for carriage," they may have overlooked that
the statement on the face of the airway bill properly and completely reads

Carrier certifies goods described below were received for

carriage subject to the Conditions on the reverse hereof the goods
then being in apparent good order and condition except as noted
hereon. 55(Emphasis ours.)
Private respondents further aptly observe that the carrier's certification regarding
receipt of the goods for carriage "was of a smaller print than the condition of the Air
Waybill, including Condition No. 5 and thus if plaintiffs-appellants had recognized
the former, then with more reason they were aware of the latter. 56
In the same vein, it would also be incorrect to accede to the suggestion of petitioners
that the typewritten specifications of the flight, routes and dates of departures and
arrivals on the face of the airway bill constitute a special contract which modifies the
printed conditions at the back thereof. We reiterate that typewritten provisions of the
contract are to be read and understood subject to and in view of the printed
conditions, fully reconciling and giving effect to the manifest intention of the parties to
the agreement.
The oft-repeated rule regarding a carrier's liability for delay is that in the
absence of a special contract, a carrier is not an insurer against delay in
transportation of goods. When a common carrier undertakes to convey goods,
the law implies a contract that they shall be delivered at destination within a
reasonable time, in the absence, of any agreement as to the time of
delivery. 57 But where a carrier has made an express contract to transport and
deliver property within a specified time, it is bound to fulfill its contract and is
liable for any delay, no matter from what cause it may have arisen. 58
This result logically follows from the well-settled rule that where the law creates a duty
or charge, and the party is disabled from performing it without any default in himself,
and has no remedy over, then the law will excuse him, but where the party by his own
contract creates a duty or charge upon himself, he is bound to make it good
notwithstanding any accident or delay by inevitable necessity because he might
have provided against it by contract. Whether or not there has been such an
undertaking on the part of the carrier to be determined from the circumstances
surrounding the case and by application of the ordinary rules for the interpretation of
contracts. 59
-common carriers are not obligated by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt delivery, unless such common carriers
previously assume the obligation. Said rights and obligations are created by a specific
contract entered into by the parties.
There is no showing by plaintiffs that such a special or specific contract had been
entered into between them and the defendant airline companies.
-the acceptance of a bill of lading without dissent raises a presumption that all 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 terms. This rule applies with particular force where a shipper accepts a bill of

lading with full knowledge of its contents, and acceptance under such circumstances
makes it a binding contract.
=In order that any presumption of assent to a stipulation in a bill of lading limiting the
liability of a carrier may arise, it must appear that the clause containing this exemption
from liability plainly formed a part of the contract contained in the bill of lading. A
stipulation printed on the back of a receipt or bill of lading or on papers attached to
such receipt will be quite as effective as if printed on its face, if it is shown that the
consignor knew of its terms. Thus, where a shipper accepts a receipt which states
that its conditions are to be found on the back, such receipt comes within the general
rule, and the shipper is held to have accepted and to be bound by the conditions
there to be found. 61
-Granting arguendo that Condition No. 5 partakes of the nature of a contract of
adhesion and as such must be construed strictly against the party who drafted the
same or gave rise to any ambiguity therein, it should be borne in mind that a contract
of adhesion may be struck down as void and unenforceable, for being subversive of
public policy, only when the weaker party is imposed upon in dealing with the
dominant bargaining party and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing. The one who
adheres to the contract is in reality free to reject it entirely; if he adheres, be gives his
consent. Accordingly, petitioners, far from being the weaker party in this situation, duly
signified their presumed assent to all terms of the contract through their acceptance
of the airway bill and are consequently bound thereby. It cannot be gainsaid that
petitioners' were not without several choices as to carriers in Chicago with its
numerous airways and airliner servicing the same.
=A common carrier undertaking to transport property has the implicit duty to carry and
deliver it within reasonable time, absent any particular stipulation regarding time of
delivery, and to guard against delay. In case of any unreasonable delay, the carrier
shall be liable for damages immediately and proximately resulting from such neglect
of duty. 64 As found by the trial court, the delay in the delivery of the remains of
Crispina Saludo, undeniable and regrettable as it was, cannot be attributed to the
fault, negligence or malice of private respondents
=We are further convinced that when TWA opted to ship the remains of Crispina
Saludo on an earlier flight, it did so in the exercise of sound discretion and with
reasonable prudence, in order to assure that the shipment would be received in San
Francisco in sufficient time for transfer to PAL.
Precisely, private respondent TWA knew of the urgency of the shipment by reason of
this notation on the lower portion of the airway bill: "All documents have been
certified. Human remains of Cristina (sic) Saludo. Please return bag first available
flight to SFO."



Macam allegedly constrained to return the amount involved to SOLIDBANK,

then demanded payment from respondent WALLEM in writing but to no

Ben Mac sought collection of the value of the shipment of US$20,223.46 or

its equivalent of P546,033.42 from respondents before the Regional Trial
Court of Manila, based on delivery of the shipment to GPC without
presentation of the bills of lading and bank guarantee.

Respondents contended that the shipment was delivered to GPC without

presentation of the bills of lading and bank guarantee per request of
petitioner himself because the shipment consisted of perishable goods. As a
standard maritime practice, when immediate delivery is of the essence, for
the shipper to request or instruct the carrier to deliver the goods to the buyer
upon arrival at the port of destination without requiring presentation of the bill
of lading as that usually takes time.

for the duration of their two-year business relationship with petitioner

concerning similar shipments to GPC deliveries were effected without
presentation of the bills of lading.[4] Respondents advanced next that the
refusal of PAKISTAN BANK to pay the letters of credit to SOLIDBANK was
due to the latter's failure to submit a Certificate of Quantity and
Quality. Respondents counterclaimed for attorneys fees and costs of suit.

RTC: trial court ordered respondents to pay the petitioner, jointly and
severally holding that respondents breached the provision in the bill of lading
requiring that "one of the Bills of Lading must be surrendered duly endorsed
in exchange for the goods or delivery order,"

The trial court added that the shipment should not have been released to
GPC at all since the instruction contained in the telex was to arrange delivery
to the respective consignees and not to any party. The trial court observed
that the only role of GPC in the transaction as notify party was precisely to
be notified of the arrival of the cargoes in Hongkong so it could in turn duly
advise the consignee.

Court of Appeals ruled otherwise by reason of previous similar transactions

between the parties, shipped cargoes were sometimes actually delivered not
to the consignee but to notify party GPC without need of the bills of lading or
bank guarantee.[6]Moreover, the bills of lading were viewed by respondent
court to have been properly superseded by the telex. GPC was listed as a
consignee in the telex. It observed further that the demand letter of petitioner
to respondents never complained of misdelivery of goods. Lastly, respondent
court found that petitioners claim of having reimbursed the amount involved
to SOLIDBANK was unsubstantiated.


On 4 April 1989 petitioner Benito Macam, doing business under the name
and style Ben-Mac Enterprises, shipped on board the vessel Nen Jiang,
owned and operated by respondent China Ocean Shipping Co., through
local agent respondent Wallem Philippines

3,500 boxes of watermelons valued at $5,950.00 covered by Bill of

Lading No. HKG 99012 and exported through Letter of Credit No.
HK 1031/30 issued by National Bank of Pakistan, Hongkong
(hereinafter PAKISTAN BANK)
1,611 boxes of fresh mangoes with a value of $14,273.46 covered
by Bill of Lading No. HKG 99013 and exported through Letter of
Credit No. HK 1032/30 also issued by PAKISTAN BANK.

The Bills of Lading contained the following pertinent provision: "One of the
Bills of Lading must be surrendered duly endorsed in exchange for the goods
or delivery order.

The shipment was bound for Hongkong with PAKISTAN BANK as consignee
and Great Prospect Company of Kowloon, Hongkong (hereinafter GPC) as
notify party.

On 6 April 1989, per letter of credit requirement, copies of the bills of lading
and commercial invoices were submitted to petitioner's depository bank,
Consolidated Banking Corporation (hereinafter SOLIDBANK), which paid
petitioner in advance the total value of the shipment of US$20,223.46.

shipment was delivered by respondent WALLEM directly to GPC, not to

PAKISTAN BANK, and without the required bill of lading having been

GPC failed to pay PAKISTAN BANK such that the latter, still in possession of
the original bills of lading, refused to pay petitioner through
SOLIDBANK. Since SOLIDBANK already pre-paid petitioner the value of the
shipment, it demanded payment from respondent WALLEM through five (5)
letters but was refused.

Petitioner: that the shipment was not delivered to the consignee as stated in
the bill of lading or to a party designated or named by the consignee
constitutes a misdelivery thereof.

In his several years of business relationship with GPC and respondents,

there was not a single instance when the bill of lading was first presented
before the release of the cargoes.

Moreover, petitioner argues that from the text of the telex, assuming there
was such an instruction, the delivery of the shipment without the required bill
of lading or bank guarantee should be made only to the designated
consignee, referring to PAKISTAN BANK.

He declared that it was his practice to ask the shipping lines to immediately
release shipment of perishable goods through telephone calls by himself or
his people. He no longer required presentation of a bill of lading nor of a
bank guarantee as a condition to releasing the goods in case he was already
fully paid.

SUPREME COURT: It is clear from the allegation in his complaint that

petitioner does not deal with misdelivery of the cargoes but of delivery to
GPC without the required bills of lading and bank guarantee

Art. 1736. The extraordinary responsibility of the common carriers lasts from
the time the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice to the provisions of article

Thus, taking into account that subject shipment consisted of perishable

goods and SOLIDBANK pre-paid the full amount of the value thereof, it is not
hard to believe the claim of respondent WALLEM that petitioner indeed
requested the release of the goods to GPC without presentation of the bills
of lading and bank guarantee.

Analysis of the telex in its entirety arrives at the conclusion that the
consignee referred to was not PAKISTAN BANK but GPC

to implement the said telex instruction, the delivery of the shipment must be
to GPC, the notify party or real importer/buyer of the goods and not the
Pakistani Bank since the latter can very well present the original Bills of
Lading in its possession. Likewise, if it were the Pakistani Bank to whom the
cargoes were to be strictly delivered, it will no longer be proper to require a
bank guarantee as a substitute for the Bill of Lading. To construe otherwise
will render meaningless the telex instruction.

petitioner failed to substantiate his claim that he returned to SOLIDBANK

the full amount of the value of the cargoes. It is not far-fetched to entertain
the notion, that he merely accommodated SOLIDBANK in order to recover
the cost of the shipped cargoes from respondents. We note that it was
SOLIDBANK which initially demanded payment from respondents through
five (5) letters. SOLIDBANK must have realized the absence of privity of
contract between itself and respondents. That is why petitioner conveniently
took the cudgels for the bank.

Petition denied.

extraordinary responsibility of the common carriers lasts until actual or

constructive delivery of the cargoes to the consignee or to the person who
has a right to receive them.

PAKISTAN BANK was indicated in the bills of lading as consignee whereas

GPC was the notify party. However, in the export invoices GPC was clearly
named as buyer/importer. GPC as buyer/importer which, conformably with
Art. 1736 had, other than the consignee, had the right to receive them.


whether respondents are liable to petitioner for releasing

the goods to GPC without the bills of lading or bank

IS GPC considered a consignee?

petitioner has been transacting with GPC as buyer/importer for around two
(2) or three (3) years already for twice or thrice a week. It has been the
practice of petitioner to request the shipping lines to immediately release
perishable cargoes such as watermelons and fresh mangoes through
telephone calls by himself or his people.
In transactions covered by a letter of credit, bank guarantee is normally
required by the shipping lines prior to releasing the goods. But in telegraphic
transfers, petitioner dispenses with the bank guarantee because the goods
are already fully paid.

SEA-LAND SERVICE, INC., petitioner,

under the name and style of "SEN HIAP HING," respondents.

The main issue here is whether or not the consignee of seaborne freight is bound
by stipulations in the covering bill of lading limiting to a fixed amount the liability of
the carrier for loss or damage to the cargo where its value is not declared in the

January 8, 1981, Sea-Land Service, Inc. (Sea-Land), a foreign shipping and

forwarding company licensed to do business in the Philippines, received from
Seaborne Trading Company in Oakland, California a shipment consigned to Sen
Hiap Hing the business name used by Paulino Cue in the wholesale and retail
trade located on Borromeo and Plaridel Streets, Cebu City.

The shipper not having declared the value of the shipment, no value was indicated
in the bill of lading.

Based on volume measurements Sea-land charged the shipper the total amount
of US$209.28

The shipment was loaded on board the MS Patriot, a vessel owned and operated
by Sea-Land, for discharge at the Port Of Cebu.

The shipment arrived in Manila on February 12, 1981, and there discharged in
Container No. 310996 into the custody of the arrastre contractor and the customs
and port authorities. 3

Sometime between February 13 and 16, 1981, after the shipment had been
transferred, along with other cargoes in South Harbor, Manila, awaiting transshipment to Cebu, it was stolen by pilferers and has never been recovered. 4

Paulino Cue made formal claim upon Sea-Land for the value of the lost shipment
allegedly amounting to P179,643.48. 5 Sea-Land offered to settle for
US$4,000.00, or its then Philippine peso equivalent of P30,600.00. asserting that
said amount represented its maximum liability for the loss of the shipment under
the package limitation clause in the covering bill of lading.

Cue rejected the offer and thereafter brought suit for damages against Sea-Land
in the then Court of First Instance of Cebu, Branch X. 7

CFI rendered judgment in favor of Cue, sentencing Sea-Land to pay him

P186,048.00 representing the Philippine currency value of the lost cargo,
P55,814.00 for unrealized profit with one (1%) percent monthly interest from the
filing of the complaint until fully paid, P25,000.00 for attorney's fees and P2,000.00
as litigation expenses. 8

CA however affirmed the decision of the Trial Court xxx in all its parts.

To begin with, there is no question of the right, in principle, of a consignee in a bill

of lading to recover from the carrier or shipper for loss of, or damage to, goods
being transported under said bill ,although that document may have been as in
practice it oftentimes is drawn up only by the consignor and the carrier without
the intervention of the consignee. In Mendoza vs. Philippine Air Lines, Inc. 11 the
Court delved at some length into the reasons behind this when, upon a claim
made by the consignee of a motion picture film shipped by air that he was never a
party to the contract of transportation and was a complete stranger thereto, it said:

Since the liability of a common carrier for loss of or damage to goods transported by it
under a contract of carriage is governed by the laws of the country of destination and
the goods in question were shipped from the United States to the Philippines, the
liability of petitioner Sea-Land to the respondent consignee is governed primarily by
the Civil Code, suppletorily by the Code of Commerce and special lawssuch as
Carriage of Goods by Sea Act, U.S. Public Act No. 521 which was made applicable to
all contracts for the carriage of goods by sea to and from Philippine ports in foreign
trade by Commonwealth Act No. 65, approved on October 22, 1936. Sec. 4(5) of
said Act in part reads:
(5) Neither the carrier nor the ship shall in any event be or become
liable for any loss or damage to or in connection with the
transportation of goods in an amount exceeding $500 per package
lawful money of the United States, or in case of goods not shipped
in packages, per customary freight unit, or the equivalent of that
sum in other currency, unless the nature and value of such goods
have been declared by the shipper before shipment and inserted in
the bill of lading. This declaration, if embodied in the bill of lading,
shall be prima facie evidence, but shall not be conclusive on the
By agreement between the carrier, master, or agent of the carrier,
and the shipper another maximum amount than that mentioned in
this paragraph may be fixed: Provided, That such maximum shall
not be less than the figure above named. In no event shall the
carrier be liable for more than the amount of damage actually
xxx xxx xxx
Clause 22, first paragraph, of the long form bill of lading customarily issued by SeaLand to its shipping clients states the same. And in its second paragraph, the bill
if the actual value of the goods per package or per customary
freight unit shall exceed such declared value, the value shall
nevertheless be deemed to be declared value and the carrier's
liability, if any, shall not exceed the declared value and any partial

loss or damage shall be adjusted pro rata on the basis of such

declared value.
Article 1766 of the Civil Code expressly subjects the rights and obligations of common
carriers to the provisions of the Code of Commerce and of special laws in matters not
regulated by said (Civil) Code
Nothing in the NCC prohibits agreements between shipper and carrier limiting the
latter's liability for loss of or damage to cargo shipped under contracts of carriage; it is
also quite clear that said Code in fact has agreements of such character in
contemplation in providing, in its Articles 1749 and 1750, that:
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 fairly and freely agreed upon.
Nothing contained in section 4(5) of the Carriage of Goods by Sea Act already quoted
is repugnant to or inconsistent with any of the just-cited provisions of the Civil Code.
even if said section 4(5) of the Carriage of Goods by Sea Act did not exist, the validity
and binding effect of the liability limitation clause in the bill of lading here are
nevertheless fully sustainable on the basis alone of the cited Civil Code provisions.
That said stipulation is just and reasonable is arguable from the fact that it echoes Art.
1750 itself in providing a limit to liability only if a greater value is not declared for the
shipment in the bill of lading.

fair and free agreement to such provision was vitiated by its being in such fine print as
to be hardly readable.
-no doubt or equivocation about the validity and enforceability of freely-agreed-upon
stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to
an agreed valuation unless the shipper declares a higher value and inserts it into said
contract or bill.
-The issue of alleged deviation is also settled by Clause 13 of the bill of lading which
expressly authorizes trans-shipment of the goods at any point in the voyage in these
master, in the exercise of its or his discretion and although
transshipment or forwarding of the goods may not have been
contemplated or provided for herein, may at port of discharge or
any other place whatsoever transship or forward the goods or any
part thereof by any means at the risk and expense of the goods and
at any time, whether before or after loading on the ship named
herein and by any route, whether within or outside the scope of the
voyage or beyond the port of discharge or destination of the goods
and without notice to the shipper or consignee. The carrier or
master may delay such transshipping or forwarding for any reason,
including but not limited to awaiting a vessel or other means of
transportation whether by the carrier or others.
-Need not to offer any other justification for offloading the shipment in question in
Manila for transshipment to Cebu City, the port of destination stipulated in the bill of

The just and reasonable character of such stipulation is implicit in it giving the shipper
or owner the option of avoiding acrrual of liability limitation by the simple and surely
far from onerous expedient of declaring the nature and value of the shipment in the
bill of lading.

Sealand only directly serves the Port of Manila from abroad in the usual course of
voyage of its carriers, hence its maintenance of arrangements with a local forwarder.
Aboitiz and Company, for delivery of its imported cargo to the agreed final point of
destination within the Philippines, such arrangements not being prohibited, but in fact
recognized, by law. 18

And since the shipper here has not been heard to complaint of having been "rushed,"
imposed upon or deceived in any significant way into agreeing to ship the cargo
under a bill of lading carrying such a stipulation, there is simply no ground for
assuming that its agreement thereto was not as the law would require, freely and
fairly sought and given.

Cue admitted that several times in the past shipments had been delivered to him
through Sea-Land, 20 from which the assumption may fairly follow that by the time of
the consignment now in question, he was already reasonably apprised of the usual
terms covering contracts of carriage with said petitioner.

- the right of a party 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 a 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. In neither capacity can he assert
personally, in bar to any provision of the bill of lading, the alleged circumstance that

- provisions of the Carriage of Goods by Sea Act on package limitation [sec 4(5) of
the Act hereinabove referred to] are as much a part of a bill of lading as though
actually placed therein by agreement of the parties. 21
-Cue by making claim for loss on the basis of the bill of lading, to all intents and
purposes accepted said bill. Having done so, he becomes bound by all stipulations
contained therein whether on the front or the back thereof. cannot elude its provisions
simply because they prejudice him and take advantage of those that are beneficial.

-the fact that respondent shipped his goods on board the ship of petitioner and paid
the corresponding freight thereon shows that he impliedly accepted the bill of lading
which was issued in connection with the shipment, and so it may be said that the
same is finding upon him as if it had been actually signed by him or by any other
person in his behalf.
-as early as on April 22, 1981, Sea-Land had offered to settle his claim for
US$4,000.00, the limit of said carrier's liability for loss of the shipment under the bill of
lading. all that is justly due said respondent. Sea-Land, which offered that amount in
good faith as early as six years ago, should, not be made to pay at the current
conversion rate of the dollar to the peso, it is just and fair that Sea-Land's dollar
obligation be convertible at the same rate which is 1$ to P8.
-Thus, bill of lading limiting Sea-Land's liability for loss of or damage to the shipment
covered by said bill to US$500.00 per package is held valid and binding on private
respondent. Since shipment consisted of eight (8) cartons or packages, for the loss of
which Sea-Land is therefore liable in the aggregate amount of US$4,000.00/
P32,000.00, at the conversion rate of P8.00 to $1.00.

-One morning, Citadels headchecker discovered that container van with 4 pallets of
cigarettes had a different padlock and the seal was tampered with.
-It was reported to Jose G. Sibucao, Pier Superintendent, Pier 13, and upon
verification, it was found that 90 cases of imported British manufactured cigarettes
were missing.
-it was revealed that the cargo in question was not formally turned over to the
ARRASTRE by the CARRIER but was kept inside container van which was padlocked
and sealed by the representatives of the CARRIER without any participation of the
-Manila Wine filed a formal claim with the CARRIER, demanding the payment of
P315,000.00 representing the market value of the missing cargoes.
-The CARRIER admitted the loss but alleged that the same occurred at Pier 13, an
area absolutely under the control of the ARRASTRE.
-CONSIGNEE filed a formal claim, with the ARRASTRE, demanding payment of the
value of the goods but said claim was denied.


Petitioner Citadel Lines, Inc. is the general agent of the vessel "Cardigan Bay/Strait
Enterprise," while respondent Manila Wine Merchants, Inc. is the importer of the
subject shipment of Dunhill cigarettes from England.

-Lower court: exonerating the ARRASTRE of any liability on the ground that the
subject container van was not formally turned over to its custody, and adjudging the
CARRIER liable.
-CA: affirmed Lower court

-March 17, 1979, the vessel "Cardigan Bay/Strait Enterprise" loaded on board at
Southampton, England, for carriage to Manila, 180 Filbrite cartons of mixed British
manufactured cigarettes called "Dunhill International Filter" and "Dunhill
International Menthol," as evidenced by Bill of Lading No. 70621374 2 and Bill of
Lading No. 70608680 3 of the Ben Line Containers Ltd.
-The shipment arrived at the Port of Manila Pier 13, on April 18, 1979 in container van
No. BENU 204850-9. And was received by E. Razon, Inc. as ARRASTRE.
-On April 30, 1979, the container van, which contained two shipments was stripped.
One shipment was delivered and the other shipment consisting of the imported British
manufactured cigarettes was palletized.
-Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were placed
in two containers with two pallets in, the original container, and four pallets in another
container. both containers duly padlocked and sealed by the representative of the

-Whether the loss occurred while the cargo in question was in the custody of E.
Razon, Inc. or of Citadel Lines, Inc; and
-Whether the stipulation limiting the liability of the carrier contained in the bill of lading
is binding on the consignee.
- the subject cargo which was placed in a container van, padlocked and sealed by the
representative of the CARRIER which was still in its possession and control when the
loss occurred, there having been no formal turnover of the cargo to the ARRASTRE
because of the lack for space
-The CARRIER is now estopped from claiming otherwise.
-Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them, according to all the circumstances
of each case. If the goods are lost, destroyed or deteriorated, common carriers are

presumed to have been at fault or to have acted negligently, unless they prove that
they observed extra ordinary diligence as required in Article 1733 of the Civil Code.
-The duty of the consignee is to prove merely that the goods were lost. Thereafter, the
burden is shifted to the carrier to prove that it has exercised the extraordinary
diligence required by law. extraordinary responsibility lasts from the time the goods
are unconditionally placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or constructively, by the carrier to
the consignee or to the person who has the right to receive them.
-in this case, shipment was lost while it was still in the custody of herein petitioner
CARRIER, and it failed to prove that the loss was occasioned by an excepted cause,
the inescapable conclusion is that the CARRIER was negligent and should be held
liable therefor.
-however, find the award of damages in the amount of P312,800.00 for the value of
the goods lost, based on the alleged market value thereof, to be erroneous.
-under Clause 6 of the aforementioned bills of lading issued by the CARRIER that its
liability is limited to $2.00 per kilo. a stipulation limiting the liability of the carrier to the
value of the goods appearing in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
-Further, 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 fairly and freely agreed upon. 15
- the value of the goods shipped does not appear in the bills of lading.16Hence, the
stipulation on the carrier's limited liability applies. it is just and reasonable under the
circumstances and have been fairly and freely

-covered by Bill of Lading No. NGO53MN.

-Upon arrival at the port of Manila, it was discovered that the crate marked
MARCO C/No. 14 was missing.
-Hernandez Trading made a formal claim upon petitioner for the value of the lost
cargo amounting to 1,552,500.00 Yen.
-However, petitioner offered to pay only 100,000.00 Yen, the maximum amount
stipulated under of the covering bill of lading which limits the liability of petitioner.
-respondent rejected the offer and instituted a suit for collection against
petitioner before the Regional Trial Court of Caloocan City.
-RTC: rendered judgment[2] in favor of private Hernandez ordering Everette to
pay: (a) Y1,552,500.00; (b) Y20,000.00 or its peso because of admission of loss and
its failure to overcome the presumption of negligence and fault,
the Court is of the view that the requirements of said article 1750 have not
been met. The fact that those conditions are printed at the back of the bill of
lading in letters so small that they are hard to read would not warrant the
presumption that the plaintiff or its supplier was aware of these conditions
such that he had fairly and freely agreed to these conditions.
-CA affirmed the trial courts findings with the additional observation that private
respondent can not be bound by the terms and conditions of the bill of lading because
it was not privy to the contract of carriage.

-Since 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at $2.00
per kilo the CARRIER's liability amounts to only US$4,467.60.

Even assuming arguendo that the shipper Maruman Trading Co., Ltd.
accepted the terms of the bill of lading when it delivered the cargo to the
appellant, still it does not necessarily follow that Hernandez Trading
Company as consignee is bound thereby considering that the latter was
never privy to the shipping contract.


Never having entered into a contract ,Hernandez should therefore not be

bound by any of the terms and conditions in the bill of lading and may
recover the full value of the shipment lost.



-Hernandez Trading imported three crates of bus spare parts marked as

MARCO 12,13 and 14 from its supplier, Maruman Trading Company, Ltd. (Maruman
Trading), a foreign corporation based in Inazawa, Aichi, Japan.
-The crates were shipped from Nagoya, Japan to Manila on board ADELFA
EVERETTE, a vessel owned by petitioners principal, Everett Orient Lines.

1) Is the consent of the consignee to the terms and conditions of the bill of
lading is necessary to make such stipulations binding upon it;
(2) Does the carriers limited package liability as stipulated in the bill of lading
apply in the instant case;

(3) Can the private respondent fully recover the full alleged value of its lost
-SC: ART. 1749. A stipulation that the common carriers 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.
-The bill of lading subject of the present controversy specifically provides, among
The carrier shall not be liable for any loss of or any damage to or in any
connection with, goods in an amount exceeding One Hundred Thousand
Yen in Japanese Currency (Y100,000.00) or its equivalent in any other
currency per package or customary freight unit (whichever is least) unless
the value of the goods higher than this amount is declared in writing by the
shipper before receipt of the goods by the carrier and inserted in the Bill of
Lading and extra freight is paid as required. (Emphasis supplied)
The above stipulations are, to our mind, reasonable and just. In the bill of lading,
the carrier made it clear that its liability would only be up to One Hundred Thousand
(Y100,000.00) Yen. However, the shipper, 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 contention that the 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 not invalid per se and
contracts of adhesion wherein one party imposes a ready-made form of
contract on the other x x x 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. The stipulations in contracts of adhesion are
valid and binding.
-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.

-The shipper, Maruman Trading, we assume, has been extensively engaged in

the trading business. It can not be said to be ignorant of the business transactions
and should know the stipulations in the bill of lading and there it should have declared
a higher valuation of the goods shipped.
-even if the consignee was not a signatory to the contract of carriage between
the shipper and the carrier, the consignee can still be bound by the contract.
-right of a party in the same situation as respondent here, 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.
-a similar package limitation clause was printed in the smallest type
on the back of the bill of lading, it nonetheless ruled that the
consignee was bound thereby on the strength of authority holding
that such provisions on liability limitation are as much a part of a bill
of lading as though physically in it and as though placed therein by
agreement of the parties.
-When Hernandez formally claimed reimbursement for the missing goods from
petitioner and subsequently filed a case against the latter based on the very same bill
of lading, it (private respondent) accepted the provisions of the contract and thereby
made itself a party thereto, or at least has come to court to enforce it.[9]
-Thus, private respondent cannot now reject or disregard the carriers limited liability
stipulation in the bill of lading. He is now bound by the whole stipulations in the bill of
lading and must respect the same.
- To defeat the carriers limited liability, of the bill of lading requires that the
shipper should have declared in writing a higher valuation of its goods before
receipt thereof by the carrier and insert the said declaration in the bill of lading,
with the extra freight paid.
-These requirements in the bill of lading were never complied with by the
shipper, hence, the liability of the carrier under the limited liability clause stands.
-the liability of petitioner for the loss of the cargo is limited to One Hundred
Thousand (Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading.
SWEET LINES, INC., petitioner,
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII,

Private respondents Atty. Leovigildo Tandog and Rogelio Tiro, a contractor by

professions, bought tickets Nos. 0011736 and 011737 for Voyage 90 on December
31, 1971 at the branch office of Sweet Lines, a shipping company transporting
inter-island passengers and cargoes, at Cagayan de Oro City.
Respondents were to board petitioner's vessel, "Sweet Hope" bound for Tagbilaran
City but Upon learning that the vessel was not proceeding to Bohol, since many
passengers were bound for Surigao, private respondents per advice, went to the
branch office for proper relocation to M/S "Sweet Town".
Because the said vessel was already filled to capacity, they were forced to agree "to
hide at the cargo section to avoid inspection of the officers of the Philippine
Private respondents alleged that:
1) they were, during the trip," "exposed to the scorching heat of the sun and the dust
coming from the ship's cargo of corn grits,"
2) and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not
honored and they were constrained to pay for other tickets.
- private respondents sued petitioner for damages and for breach of contract of
carriage before CFI of Misamis Oriental. 2
-Petitioner moved to dismiss the complaint on the ground of improper venue. This
motion was premised on the condition printed at the back of the tickets, i.e., Condition
No. 14, which reads:
14. It is hereby agreed and understood that any and all actions
arising out of the conditions and provisions of this ticket,
irrespective of where it is issued, shall be filed in the competent
courts in the City of Cebu. 3
The motion was denied by the trial court.
-Hence, this instant petition for prohibition for preliminary injunction, 'alleging
that the respondent judge has departed from the accepted and usual course of
judicial preoceeding" and "had acted without or in excess or in error of his jurisdicton
or in gross abuse of discretion. 6
ISSUE: Is Condition No. 14 printed at the back of the petitioner's passage tickets
purchased by private respondents, which limits the venue of actions arising from the
contract of carriage to the Court of First Instance of Cebu, valid and enforceable
-Petitioner contends that Condition No. 14 is valid and enforceable, since private
respondents acceded to it when they purchased passage tickets at its Cagayan de
Oro branch office and took its vessel M/S "Sweet Town" for passage to Tagbilaran,

-private respondents claim that Condition No. 14 is not valid, that the same is not an
essential element of the contract of carriage, being in itself a different agreement
which requires the mutual consent of the parties to it; that they had no say in its
preparation, the existence of which they could not refuse, hence, they had no choice
but to pay for the tickets and to avail of petitioner's shipping facilities out of necessity;
-There is no question that there was a valid contract of carriage entered into by
petitioner and private respondents and that the passage tickets, upon which the latter
based their complaint, are the best evidence thereof. All the essential elements of a
valid contract, i.e., consent, cause or consideration and object, are present.
-"Condition No. 14" which is in issue in this case printed at the back of the passage
tickets, these are commonly known as "contracts of adhesion," the validity and/or
enforceability of which will have to be determined by the peculiar circumstances
obtaining in each case and the nature of the conditions or terms sought to be
-private respondents, who cannot change the same and who are thus made to adhere
thereto on the "take it or leave it" basis certain guidelines in the determination of
their validity and/or enforceability have been formulated
-greater strictness and vigilance on the part of the courts of justice with a view to
protecting the weaker party from abuses and imposition, and prevent their becoming
traps for the unwary.
In 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 and other
handicap, the courts must be vigilant for his protection. 19
SC: We find and hold that Condition No. 14 printed at the back of the passage
tickets should be held as void and unenforceable for the following reasons:
1) First, it is not just and fair to bind passengers to the terms of the conditions printed
at the back of the passage tickets,
2) second, Condition No. 14 subverts the public policy on transfer of venue of
proceedings of this nature, since the same will prejudice rights and interests of
innumerable passengers who will have to file suits against petitioner only in the City
of Cebu.
Under these circumstances, it is hardly just and proper to expect the passengers to
examine their tickets received from crowded/congested counters, more often than not
during rush hours
it should be noted that Condition No. 14 was prepared solely by the petitioner,
respondents had no say in its preparation. Neither did the latter have the opportunity
to take the into account prior to the purchase of their tickets. their alleged adhesion is
presumed only from the fact that they purchased the tickets.

It should also be stressed that shipping companies are franchise holders of

certificates of public convenience and therefore, posses a virtual monopoly over the
business of transporting passengers between the ports covered by their franchise.
may thus dictate their terms of passage, leaving passengers with no choice but to buy
their tickets and avail of their vessels and facilities.

prove that they observed extraordinary diligence as prescribed in articles

1733 and 1755.
According to Severino Andaya, a witness for the plaintiff, a man with a box
went up the baggage compartment of the bus where he already was and
said box was placed under the seat. They left Azcarraga at about 11:30 in
the morning and when the explosion occurred, he was thrown out. PC
investigation report states that thirty seven (37) passengers were injured
(Exhibits "O" and "2").

the bulk of those who board these inter-island vested come from the low-income
groups and are less literate, and who have little or no choice but to avail of petitioner's
- Condition No. 14 is subversive of public policy on transfers of venue of actions. For,
although venue may be changed or transferred from one province to another by
agreement of the parties in writing t to Rule 4, Section 3, of the Rules of Court, such
an agreement will not be held valid where it practically negates the action of the
claimants, such as the private respondents herein. The philosophy underlying the
provisions on transfer of venue of actions is the convenience of the plaintiffs as well
as his witnesses and to promote 21 the ends of justice.

The bus conductor, Sancho Mendoza, testified that the box belonged to a
passenger whose name he does not know and who told him that it contained
miscellaneous items and clothes. He helped the owner in loading the
baggage which weighed about twelve (12) kilos and because of company
regulation, he charged him for it twenty-five centavos (P0.25). From its
appearance there was no indication at all that the contents were explosives
or firecrackers. Neither did he open the box because he just relied on the
word of the owner.

HERMINIO L. NOCUM, plaintiff-appellee,

vs. LAGUNA TAYABAS BUS COMPANY, defendant-appellant.

There is no question that Bus No. 120 was road worthy when it left its
Manila Terminal for Lucena that morning of December 5, 1960. The
injuries suffered by the plaintiff were not due to mechanical defects but
to the explosion of firecrackers inside the bus which was loaded by a

Nocum who was a passenger in Laguna Tayabas Bus Company Bus No. 120 then
making a trip within the barrio of Dita, Municipality of Bay, Laguna, was injured as a
consequence of the explosion of firecrackers, contained in a box, loaded in said bus
and declared to its conductor as containing clothes and miscellaneous items by a copassenger.

... Turning to the present case, it is quite clear that extraordinary or utmost
diligence of a very cautious person was not observed by the defendant
company. The service manual, exhibits "3" and "3-A," prohibits the
employees to allow explosives, such as dynamite and firecrackers to be
transported on its buses. To implement this particular rule for 'the safety of
passengers, it was therefore incumbent upon the employees of the company
to make the proper inspection of all the baggages which are carried by the

CFI sentenced Laguna Tayabas to pay Nocum damages because it did not observe
EOD of a very cautious man as required by the NCC.
ART. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further
expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the passengers is further set forth in
articles 1755 and 1756.
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 of or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently, unless they

before the box containing the firecrackers were allowed to be loaded in the bus by the
conductor, inquiry was made with the passenger carrying the same as to what was in
Article 1733 is not as unbending as His Honor has held, for it reasonably qualifies the
extraordinary diligence required of common carriers for the safety of the passengers
transported by them to be "according to all the circumstances of each case." In fact,
Article 1755 repeats this same qualification: "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 due regard for all the circumstances."

it must be considered that while it is true the passengers of appellant's bus should not
be made to suffer for something over which they had no control,1 fairness demands
that in measuring a common carrier's duty towards its passengers, allowance must be
given to the reliance that should be reposed on the sense of responsibility of all the
passengers in regard to their common safety.
It is to be presumed that a passenger will not take with him anything dangerous to
the lives and limbs of his co-passengers, not to speak of his own. Not to be lightly
considered must be the right to privacy to which each passenger is entitled. He
cannot be subjected to any unusual search, when he protests the innocuousness of
his baggage and nothing appears to indicate the contrary, as in the case at bar.
-In other words, inquiry may be verbally made as to the nature of a passenger's
baggage when such is not outwardly perceptible,
- Of course, when there are sufficient indications that the representations of the
passenger regarding the nature of his baggage may not be true, in the interest of the
common safety of all, the assistance of the police authorities may be solicited, not
necessarily to force the passenger to open his baggage, but to conduct the needed
investigation consistent with the rules of propriety and, above all, the constitutional
rights of the passenger

(PNOC)and as a result, the M/V Don Juan sank. Several of her passengers perished
in the sea tragedy.
- Bodies of the four members of private respondents families were never found.
Private respondents filed a complaint in RTC Manila, against the Negros
Navigation, the Philippine National Oil Company (PNOC), and the PNOC Shipping
and Transport Corporation (PNOC/STC), seeking damages for the death of Ardita de
la Victoria Miranda, 48, Rosario V. Miranda, 19, Ramon V. Miranda, Jr., 16, and
Elfreda de la Victoria, 26.
-Petitioner, however, denied that the four relatives of private respondents
actually boarded the vessel as shown by the fact that their bodies were never
-Petitioner further averred that the Don Juan was seaworthy and manned by a
full and competent crew, and that the collision was entirely due to the fault of the crew
of the M/T Tacloban City.
- PNOC and petitioner Negros Navigation Co., Inc. entered into a compromise
agreement whereby petitioner assumed full responsibility for the payment and
satisfaction of all claims arising out of or in connection with the collision and releasing
the PNOC and the PNOC/STC from any liability to it. .
-RTC: ordered defendants to pay the plaintiffs damages

Explosive or Dangerous Contents. A carrier is ordinarily not liable for

injuries to passengers from fires or explosions caused by articles brought
into its conveyances by other passengers, in the absence of any evidence
that the carrier, through its employees, was aware of the nature of the article
or had any reason to anticipate danger therefrom.
- Since We hold that appellant has succeeded in rebutting the presumption of
negligence by showing that it has exercised extraordinary diligence for the safety of
its passengers, "according to the circumstances of the (each) case", We deem it
unnecessary to rule whether or not there was any fortuitous event in this case.
NEGROS NAVIGATION CO., INC., petitioner, vs.
LA VICTORIA, respondents.
-In April of 1980, private respondent Ramon Miranda purchased from the Negros
Navigation Co., Inc. four special cabin tickets (#74411, 74412, 74413 and 74414) for
his wife, daughter, son and niece who were going to Bacolod City to attend a family
-Voyage No. 457-A of the M/V Don Juan, leaving Manila at 1:00 p.m. on April 22,
1980.The ship sailed from the port of Manila on schedule.
-At about 10:30PM, the Don Juan collided off the Tablas Strait in Mindoro, with
the M/T Tacloban City, an oil tanker owned by the Philippine National Oil Company

-CA affirmed RTC with modifcations

-Hence this petition, raising the following issues:
whether the members of private respondents families were actually
passengers of the Don Juan;
whether the petitioner is negligent and failed to exercise EOD?
Petitioner contends that the purchase of the tickets does not necessarily mean
that the alleged victims actually took the trip. Petitioner asserts that it is common
knowledge that passengers purchase tickets in advance but do not actually use
SC: This contention is without merit. Private respondent Ramon Miranda
testified that he personally took his family and his niece to the vessel on the day of
the voyage and stayed with them on the ship until it was time for it to leave. There is
no reason he should claim members of his family to have perished in the accident just
to maintain an action.
Petitioners only proof is that the bodies of the supposed victims were not among
those recovered from the site of the mishap. But so were the bodies of the other
passengers reported missing not recovered.
Private respondent Mirandas testimony was corroborated by Edgardo
Ramirez. Ramirez was a seminarian and one of the survivors of the collision. He
testified that he saw Mrs. Miranda and Elfreda de la Victoria on the ship and that he
talked with them. He knew Mrs. Miranda who was his teacher in the grade school. He
also knew Elfreda who was his childhood friend and townmate

- although the proximate cause of the mishap was the negligence of the crew of
the M/T Tacloban City, the crew of the Don Juan was equally negligent as it found
that the latters master, Capt. Rogelio Santisteban, was playing mahjong at the time of
collision, and the officer on watch, Senior Third Mate Rogelio De Vera, admitted that
he failed to call the attention of Santisteban to the imminent danger facing them. This
Court found that Capt. Santisteban and the crew of the M/V Don Juan failed to take
steps to prevent the collision or at least delay the sinking of the ship and
supervise the abandoning of the ship.
In addition, the Court found that the Don Juan was overloaded. number of
persons allowed on the ship was 864, of whom 810 are passengers, but there were
actually 1,004 on board the vessel when it sank, 140 persons more than the
maximum number that could be safely carried by it.
Taking these circumstances together, and the fact that the M/V Don Juan, as the
faster and better-equipped vessel, could have avoided a collision with the PNOC
tanker, this Court held that even if the Tacloban City had been at fault for failing to
observe an internationally-recognized rule of navigation, the Don Juan was guilty of
contributory negligence.
The grossness of the negligence of the Don Juan is underscored when one considers
the foregoing circumstances :
Firstly, the Don Juan was more than twice as fast as the Tacloban City.
Secondly, the Don Juan carried the full complement of officers and crew members
specified for a passenger vessel of her class.
Thirdly, the Don Juan was equipped with radar which was functioning that night.
Fourthly, the Don Juans officer on-watch had sighted the Tacloban City on his radar
screen while the latter was still four (4) nautical miles away.
Don Juan, had it taken seriously its duty of extraordinary diligence, could have easily
avoided the collision with the Tacloban City. Indeed, the Don Juan might well have
avoided the collision even if it had exercised ordinary diligence merely.
In the petition at bar, the Don Juan having sighted the Tacloban City when it was still a
long way off was negligent in failing to take early preventive action and in allowing the
two (2) vessels to come to such close quarters as to render the collision inevitable
We conclude that Capt. Santisteban and Negros Navigation are properly held liable
for gross negligence in connection with the collision of the Don Juan and Tacloban
City and the sinking of the Don Juan leading to the death of hundreds of
passengers. . . .[5]
In Mecenas, this Court found petitioner guilty of negligence in (1) allowing or
tolerating the ship captain and crew members in playing mahjong during the voyage,
(2) in failing to maintain the vessel seaworthy and (3) in allowing the ship to carry
more passengers than it was allowed to carry.Petitioner is, therefore, clearly liable for
damages to the full extent.
KOREAN AIRLINES CO., LTD., petitioner,
vs. COURT OF APPEALS and JUANITO C. LAPUZ, respondents.

-Juanito C. Lapuz, an automotive electrician, was contracted for employment in

Jeddah, Saudi Arabia, for a period of one 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," which meant that he could only be accommodated if any of the
confirmed passengers failed to show up at the airport before departure. When two of
such passengers did not appear, Lapuz and another person by the name of Perico
were given the two unclaimed seats.
-he was allowed to check in with one suitcase and one 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 alleged that 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 MANILA held KAL liable for damages. CA affirmed with modification.
-ISSUES: Whether or not Lapuz was a passenger and the petitioner committed a
breach of COC?
-HELD: 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.

-KAL thus committed a breach of the contract of carriage between them when it failed
to bring Lapuz to his destination.

-Generalao went to see Diosdado Bravo, operations manager of petitioner, at its

main office in Cagayan de Oro City. Bravo assured him that the necessary
precautions to insure the safety of lives and property would be taken.[1]

-This Court has held that a contract to transport passengers is different in kind and
degree from any other contractual relation. 3 The business of the carrier is mainly with
the traveling public. It invites people to avail themselves of the comforts and
advantages it offers. 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. 4 So it is that any discourteous conduct on the part of these employees
toward a passenger gives the latter an action for damages against the carrier.

- 6:45 P.M. on November 22, 1989, three armed Maranaos who pretended to be
passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on its way
to Iligan City. Among the passengers of the bus was Atty. Caorong.

-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.
-KAL argues that "the evidence of confirmation of a chance passenger status is not
through the entry of the name of a chance passenger in the passenger manifest nor
the clearance from the Commission on Immigration and Deportation, because they
are merely means of facilitating the boarding of a chance passenger in case his
status is confirmed." We are not persuaded.
- 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 leader of the Maranaos, identified as one Bashier Mananggolo, ordered

the driver, Godofredo Cabatuan, to stop the bus on the side of the
highway. Mananggolo then shot Cabatuan on the arm, which caused him to slump on
the steering wheel.
-Then one of the companions of Mananggolo started pouring gasoline inside
the bus, as the other held the passengers at bay with a handgun.
-Mananggolo then ordered the passengers to get off the bus. The passengers
went behind the bushes in a field some distance from the highway.[2]
- Atty. Caorong returned to the bus to retrieve something from the overhead
rack. At that time, one of the armed men was pouring gasoline on the head of the
-Cabatuan, who had meantime regained consciousness, heard Atty. Caorong
pleading with the armed men to spare the driver as he was innocent of any wrong
doing and was only trying to make a living.
-The armed men were, however, adamant. During this exchange, Cabatuan
climbed out of the left window of the bus and crawled to the canal on the opposite
side of the highway.

-The contract of carriage between him and KAL had already been perfected when he
was summarily and insolently prevented from boarding the aircraft.

-He heard shots from inside the bus. Larry de la Cruz, one of the passengers,
saw that Atty. Caorong was hit. Then the bus was set on fire. Some of the passengers
were able to pull Atty. Caorong out of the burning bus and rush him to the Mercy
Community Hospital in Iligan City, but he died while undergoing operation.

FORTUNE EXPRESS, INC., petitioner,

-The private respondents brought this suit for breach of contract of carriage in
the Regional Trial Court Iligan City.


surnamed CAORONG, and represented by their mother PAULIE U.
CAORONG, respondents.
Fortune Express Inc. is a bus company in Northern Mindanao. Private
respondent Paulie Caorong is the widow of Atty. Caorong, while private respondents
Yasser King, Rose Heinni, and Prince Alexander are their minor children.
-November 18, 1989, a bus of petitioner figured in an accident with a jeepney in
Kauswagan, Lanao del Norte, resulting in the death of several passengers of the
jeepney, including two Maranaos.
-It was found out that the owner of the jeepney was a Maranao residing in
Delabayan, Lanao del Norte and that certain Maranaos were planning to take
revenge on the petitioner by burning some of its buses.

-RTC dismissed the complaint. The fact that Fortune Express, through Operations
Manager Diosdado Bravo, was informed of the rumors that the Moslems intended to
take revenge by burning five buses of defendant is established. despite this
information, they take proper precautions. . .
-But the diligence demanded by law does not include the posting of security guards in
buses. It is an obligation that properly belongs to the State. In other words, the
presence of a security guard is not a guarantee that the killing of Atty. Caorong would
have been definitely avoided.

- evidence clearly shows that the assailants did not have the least intention of
harming any of the passengers. They ordered all the passengers to alight and set fire
on the bus only after all the passengers were out of danger. The death of Atty.
Caorong was an unexpected and unforseen occurrence over which defendant had no
-His death was solely due to the willful acts of the lawless which defendant could
neither prevent nor stop.
-CA reversed the ruling. nothing concrete whatsoever was taken by appellee or its
employees to prevent the execution of the threat despite the information given to
them. never adopted even a single safety measure for the protection of its paying
passengers. Like frisking passengers particularly. On hindsight, the handguns and
especially the gallon of gasoline used by the felons all of which were brought inside
the bus would have been discovered, thus preventing the burning of the bus and the
fatal shooting of the victim.
-the least appellee could have done in response to the report was to adopt a system
of verification such as frisking of passengers boarding its buses. Nothing, and to
repeat, nothing at all, was done by defendant-appellee to protect its innocent
passengers from the danger arising from the Maranao threats. Hence, appellee must
be adjudged liable.

From the foregoing, it is evident that petitioners employees failed to prevent the
attack on one of petitioners buses because they did not exercise the diligence of a
good father of a family. Hence, petitioner should be held liable for the death of Atty.
Art. 1174 of the Civil Code defines a fortuitous even as an occurrence which
could not be foreseen or which though foreseen, is inevitable.

- to be considered as force majeure, it is necessary that: (1) the cause of the

breach of the obligation must be independent of the human will; (2) the event must be
either unforeseeable or unavoidable; (3) the occurrence must be such as to render it
impossible for the debtor to fulfill the obligation in a normal manner; and (4) the
obligor must be free of participation in, or aggravation of, the injury to the creditor.
The absence of any of the requisites mentioned above would prevent the
obligor from being excused from liability.
-the present case, this factor of unforeseeablility is lacking. As already stated,
despite the report of PC agent Generalao that the Maranaos were planning to burn
some of petitioners buses and the assurance of petitioners operations manager
(Diosdado Bravo) that the necessary precautions would be taken, nothing was really
done by petitioner to protect the safety of passengers.

Third. Deceased not Guilty of Contributory Negligence


Art. 1763 of the Civil Code provides that a common carrier is responsible
for injuries suffered by a passenger on account of the wilful acts of other
passengers, if the employees of the common carrier could have prevented the
act the exercise of the diligence of a good father of a family.
Despite warning by the Philippine Constabulary at Cagayan de Oro that the
Maranaos were planning to take revenge on the petitioner by burning some of its
buses and the assurance of petitioners operation manager, Diosdado Bravo, that the
necessary precautions would be taken, petitioner did nothing to protect the safety of
its passengers.
Had petitioner and its employees been vigilant they would not have failed to see
that the malefactors had a large quantity of gasoline with them. Under the
circumstances, simple precautionary measures to protect the safety of passengers,
such as frisking passengers and inspecting their baggages, preferably with nonintrusive gadgets such as metal detectors, before allowing them on board could have
been employed without violating the passengers constitutional rights.

-Atty. Caorong did not act recklessly. It should be pointed out that the intended targets
of the violence were petitioner and its employees, not its passengers.
.-Mananggolo, the leader of the group which had hijacked the bus, ordered the
passengers to get off the bus as they intended to burn it and its driver. The armed
men actually allowed Atty. Caorong to retrieve something from the bus. What
apparently angered them was his attempt to help the driver of the bus by pleading for
his life. He was playing the role of the good Samaritan. Certainly, this act cannot
be considered an act of negligence, let alone recklessness.
WHEREFORE, the decision, dated July 29, 1994, of the Court of Appeals is


PASCUA, ET AL., respondents.
-About 11:00 o'clock in the morning on December 24, 1966, Catalina Pascua,
Caridad Pascua, Adelaida Estomo, Erlinda Meriales, Mercedes Lorenzo,
Alejandro Morales and Zenaida Parejas boarded the jeepney owned by spouses
Isidro Mangune and Guillerma Carreon and driven by Tranquilino Manalo at Dau,
Mabalacat, Pampanga bound for Carmen, Rosales, Pangasinan to spend Christmas
at their respective homes.

-Although they usually ride in buses, they had to ride in a jeepney that day because
the buses were full. Their contract with Manalo was for them to pay P24.00 for the

-RTC held That defendants Isidro Mangune, Guillerma Carreon and Tranquilino
Manalo thru their negligence, breached contract of carriage with their passengers the
plaintiffs' and/or their heirs,

-After a brief stopover at Moncada, Tarlac for refreshment, the jeepney proceeded
towards Carmen, Rosales, Pangasinan.

-this Court renders judgment against the said defendants Filriters Guaranty Insurance
Co., jointly and severally with said defendants (Mangune and Carreon) to pay the
plaintiffs the amount-

-Upon reaching San Manuel, Tarlac, the right rear wheel of the jeepney was
detached, so it was running in an unbalanced position.

-IAC reversed the above-quoted decision by finding delos Reyes negligent, the
dispositive portion of which reads

-Manalo stepped on the brake, as a result of which, the jeepney which was then
running on the eastern lane (its right of way) made a U-turn, invading and eventually
stopping on the western lane of the

-ISSUE: Who is liable for the death and physical injuries suffered by the passengers
of the jeepney?

-Almost at the time when the jeepney made a sudden U-turn and encroached on the
western lane of the highway as claimed by Rabbit and DRIVER TOMAS delos Reyes,
or after stopping for a couple of minutes as claimed by Mangune, Carreon and
Manalo, the bus bumped from behind the right rear portion of the jeepney.

The respondent applies primarily (1) the doctrine of last clear chance, (2) the
presumption that drivers who bump the rear of another vehicle guilty and the cause of
the accident unless contradicted by other evidence, and (3) the substantial factor test
concluded that delos Reyes was negligent.

-As a result of the collision, three passengers of the jeepney (Catalina Pascua,
Erlinda Meriales and Adelaida Estomo) died while the other jeepney passengers
sustained physical injuries.

-SUPREME COURT: "[t]he principle about "the last clear" chance, would call for
application in a suit between the owners and drivers of the two colliding

- there were no vehicles following the jeepney, neither were there oncoming vehicles
except the bus. The weather condition of that day was fair.

-It does not arise where a passenger demands responsibility from the carrier to
enforce its contractual obligations. For it would be inequitable to exempt the negligent
driver of the jeepney and its owners on the ground that the other driver was likewise
guilty of negligence

- the police filed with the MTC in San Manuel,Tarlac a criminal complaint against the
two drivers for Multiple Homicide.
-At the preliminary investigation, a probable cause was found with respect to the case
of Manalo, thus, his case was elevated to the Court of First Instance. However, finding
no sufficiency of evidence as regards the case of delos Reyes, the Court dismissed it.
-Manalo was convicted and sentenced to suffer imprisonment.
-Complaints for recovery of damages were then filed before the Court of First
Instance of Pangasinan.
-In all three cases, spouses Mangune and Carreon, Manalo, Rabbit and delos Reyes
were all impleaded as defendants. Plaintiffs anchored their suits against spouses
Mangune and Carreon and Manalo on their contractual liability.
-As against Rabbit and delos Reyes, plaintiffs based their suits on their culpability for
a quasi-delict. Filriters Guaranty Assurance Corporation, Inc. was also impleaded as
additional defendant in Civil Case No. 1136 only.

-On the presumption that drivers who bump the rear of another vehicle guilty and the
cause of the accident, unless contradicted by other evidence. the undisputed fact is
that the U-turn made by the jeepney was abrupt hence, delos Reyes could not have
anticipated the sudden U-turn executed by Manalo. the presumption was rebutted by
this piece of evidence.
-With regard to the substantial factor test
. . . It is the rule under the substantial factor test that if the actor's
conduct is a substantial factor in bringing about harm to another,
the fact that the actor neither foresaw nor should have foreseen the
extent of the harm or the manner in which it occurred does not
prevent him from being liable
-It cannot be said that the bus was travelling at a fast speed when the accident
occurred because the speed of 80 to 90 kilometers per hour, assuming such
calculation to be correct, is yet within the speed limit allowed in highways.
-We cannot even fault delos Reyes for not having avoided the collision. Delos Reyes
admitted that he was running more or less 50 kilometers per hour at the time of the

accident. Using this speed, delos Reyes covered the distance of 45 meters in 3.24
seconds. he had little time to react to the situation. To require delos Reyes to avoid
the collision is to ask too much from him.
-SC: We find that the proximate cause of the accident was the negligence of Manalo
and spouses Mangune and Carreon. They all failed to exercise the precautions that
are needed precisely pro hac vice.
In culpa contractual, the moment a passenger dies or is injured, the carrier is
presumed to have been at fault or to have acted negligently, and this disputable
presumption may only be overcome by evidence that he had observed extra-ordinary
diligence as prescribed in Articles 1733, 1755 and 1756 of the New Civil Code 2 or
that the death or injury of the passenger was due to a fortuitous event 3
The negligence of Manalo was proven during the trial.
In any event, "[i]n an action for damages against the carrier for his failure to
safely carry his passenger to his destination, an accident caused either by
defects in the automobile or through the negligence of its driver, is not
a caso fortuito which would avoid the carriers liability for damages.
The trial court was therefore right in finding that Manalo and spouses Mangune and
Carreon were negligent.
-The driver cannot be held jointly and severally liable with the carrier in case of
breach of the contract of carriage. Firstly, the contract of carriage is between the
carrier and the passenger, and in the event of contractual liability, the carrier is
exclusively responsible therefore to the passenger, even if such breach be due to the
negligence of his driver.
ACCORDINGLY, the petition is hereby GRANTED. The decision of the Intermediate
Appellate Court dated July 29, 1983 and its resolution dated November 28, 1983 are
SET ASIDE. The decision of the Court of First Instance dated December 27, 1978 is
LOURDES J. LARA, ET AL., plaintiffs-appellants,
vs. BRIGIDO R. VALENCIA, defendant-appellant.
This is an action for damages brought by Lara against Valencia in the CFI of Davao
for the death Demetrio Lara, Sr. allegedly caused by the negligent act of defendant.
Defendant, on the other hand, disputes the finding of the court a quo that the oath of
Demetrio Lara, Sr. was due to the negligence of defendant.
The deceased was an inspector of the Bureau of Forestry stationed in Davao with an
annual salary of P1,800. 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 Lara of lasted for six days during which he contracted malaria fever. In the
morning of January 9, 1954, Lara who then in a hurry to return to Davao asked
defendant if he could take him in his pick-up as there was then no other means of
transportation, to which defendant agreed, and in that same morning the pick-up left
Parang bound for Davao taking along six passengers, including Lara.
-Before leaving Parang, the sitting arrangement was as follows: Valencia was at the
wheel and seated with him in the front seat were Mrs. Valencia and Nicanor Quinain;
on the back of the pick-up were two improvised benches placed on each side, and
seated on the right bench were Ricardo Alojipan and Antonio Lagahit, and on the left
one Bernardo and Pastor Geronimo. A person by the name of Leoning was seated on
a box located on the left side while 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 were to alight and take a bus bound for Davao, but when
they arrived at that place, only Bernardo 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.
-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. Joseph's Clinic of Kidapawan. But when Lara arrived
he was already dead.
-An investigation was made regarding the circumstances surrounding the death of
Lara but no criminal action was taken against defendant.
-It should be noted that the deceased went to the lumber concession of defendant in
Parang, Cotabato upon instructions of his chief in order to classify the logs of
defendant which were then ready to be exported and to be loaded on a ship anchored
in the port of Parang.
-It took Lara six days to do his work during which he contracted malaria fever and for
that reason he evinced a desire to return immediately to Davao. At that time, there
was no available bus that could take him back to Davao and so he requested the
defendant if he could take him in his own pick-up.
-Defendant merely accommodated them and did not charge them any fee for the
service. It was also their understanding that upon reaching barrio Samoay, the
passengers would alight and transfer to a bus that regularly makes the trip to Davao

but unfortunately there was none available at the time and so the same passengers,
including Lara, again requested the defendant to drive them to Davao.
The deceased and their companions 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.

Indeed, the law provides that "A passenger must observe the diligence of a good
father of a family to avoid injury to himself" (Article 1761, new Civil Code), which
means that if the injury to the passenger has been proximately caused by his own
negligence, the carrier cannot be held liable.
Thus, accident occurred not due to the negligence of defendant but to circumstances
beyond his control and so he should be exempt from liability.

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
Japan Airlines V. Asuncion (G.R No. 161730, January 28,2005) 449 SCRA 544
-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"
- 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).
ISSUE: Did Defendant fail to observe ordinary care or diligence in transporting the
deceased from Parang to Davao on the date in question?
-It should be noted that Lara went to the lumber concession of defendant in answer to
a call of duty which he was bound to perform because of the requirement of his office
and he contracted the malaria fever in the course of the performance of that duty.
-It should also be noted that defendant was not in duty bound to take the deceased in
his own pick-up to Davao because from Parang to Cotabato there was a line of
transportation that regularly makes trips for the public, and if defendant agreed to take
the deceased in his own car, it was only to accommodate him considering his feverish
condition and his request that he be so accommodated.
-It should also be noted that the passengers who rode in the pick-up of defendant
took their respective seats therein at their own choice and not upon indication of
defendant with the particularity that defendant invited the deceased to sit with him in
the front seat but which invitation the deceased declined.
- All the circumstances therefore clearly indicate that defendant had done what a
reasonable prudent man would have done under the circumstances.
-There is every reason to believe that the unfortunate happening was only due to an
unforeseen accident accused by the fact that at the time the deceased was half
asleep and must have fallen from the pick-up when it ran into some stones causing it
to jerk considering that the road was then bumpy, rough and full of stones.
- We may rather attribute the incident to lack of care on the part of the deceased
considering that the pick-up was open and he was then in a crouching position.

This petition for review seeks to reverse and set aside the October 9, 2002 decision of
the Court of Appeals and its January 12, 2004 resolution, which affirmed in toto the
June 10, 1997 decision of the Regional Trial Court of Makati City, Branch 61 in Civil
Case No. 92-3635.
On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board
Japan Airlines (JAL) Flight 742 bound for Los Angeles. Their itinerary included a stopover in Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs.
Noriko Etou-Higuchi of JAL endorsed their applications for shore pass and directed
them to the Japanese immigration official. A shore pass is required of a foreigner
aboard a vessel or aircraft who desires to stay in the neighborhood of the port of call
for not more than 72 hours.
During their interview, the Japanese immigration official noted that Michael appeared
shorter than his height as indicated in his passport. Because of this inconsistency,
respondents were denied shore pass entries and were brought instead to the Narita
Airport Rest House where they were billeted overnight.

Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by
Japans Immigration Department to handle passengers who were denied shore pass
entries, brought respondents to the Narita Airport Rest House where they stayed
overnight until their departure the following day for Los Angeles. Respondents were
charged US$400.00 each for their accommodation, security service and meals
On December 12, 1992, respondents filed a complaint for damages claiming that JAL
did not fully apprise them of their travel requirements and that they were rudely and
forcibly detained at Narita Airport.
Issue: Whether or not JAL is liable of breach of contract of carriage.

Side Issues:
Whether or not JAL is liable for moral, exemplary damages,
Whether or not the plaintiff is liable for attorneys fee and cost of suit incurred (JAL

Neither should JAL be held liable to reimburse respondents the amount of

US$800.00. It has been sufficiently proven that the amount pertained to ISC, an
agency separate and distinct from JAL, in payment for the accommodations provided
to respondents. The payments did not in any manner accrue to the benefit of JAL.

The court finds that JAL did not breach its contract of carriage with respondents. It
may be true that JAL has the duty to inspect whether its passengers have the
necessary travel documents, however, such duty does not extend to checking the
veracity of every entry in these documents. JAL could not vouch for the authenticity of
a passport and the correctness of the entries therein. The power to admit or not an
alien into the country is a sovereign act which cannot be interfered with even by JAL.
This is not within the ambit of the contract of carriage entered into by JAL and herein
respondents. As such, JAL should not be faulted for the denial of respondents shore
pass applications.

However, we find that the Court of Appeals correctly dismissed JALs counterclaim for
litigation expenses, exemplary damages and attorneys fees. The action was filed by
respondents in utmost good faith and not manifestly frivolous. Respondents honestly
believed that JAL breached its contract. A persons right to litigate should not be
penalized by holding him liable for damages. This is especially true when the filing of
the case is to enforce what he believes to be his rightful claim against another
although found to be erroneous.[

In the Respondents claim that petitioner breached its contract of carriage when it
failed to explain to the immigration authorities that they had overnight vouchers at the
Hotel Nikko Narita. They imputed that JAL did not exhaust all means to prevent the
denial of their shore pass entry applications. JAL or any of its representatives have no
authority to interfere with or influence the immigration authorities. The most that could
be expected of JAL is to endorse respondents applications, which Mrs. Higuchi did
immediately upon their arrival in Narita.

WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED.

The October 9, 2002 decision of the Court of Appeals and its January 12, 2004
resolution in CA-G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the
finding of breach on the part of petitioner and the award of damages, attorneys fees
and costs of the suit in favor of respondents is concerned. Accordingly, there being no
breach of contract on the part of petitioner, the award of actual, moral and exemplary
damages, as well as attorneys fees and costs of the suit in favor of respondents
Michael and Jeanette Asuncion, is DELETED for lack of basis. However, the dismissal
for lack of merit of petitioners counterclaim for litigation expenses, exemplary
damages and attorneys fees, is SUSTAINED. No pronouncement as to costs.

Moral damages may be recovered in cases where one willfully causes injury to
property, or in cases of breach of contract where the other party acts fraudulently or in
bad faith. Exemplary damages are imposed by way of example or correction for the
public good, when the party to a contract acts in wanton, fraudulent, oppressive or
malevolent manner. Attorneys fees are allowed when exemplary damages are
awarded and when the party to a suit is compelled to incur expenses to protect his
interest.[17] There being no breach of contract nor proof that JAL acted in wanton,
fraudulent or malevolent manner, there is no basis for the award of any form of