Early hours of October 30: LCT No.
1025 sank,
Transportation Case Digest:
OBLIGATION OF THE PARTIES AND DEFENSES
Common carrier
CIA Maritima V. Insurance Co. Of North America
G.R. No. L-18965 October 30, 1964
Lessons Applicable: Actionable Document
FACTS:
October, 1952: Macleod and Company of the
Philippines (Macleod) contracted by telephone
the services of the Compaia Maritima (CM), a
shipping corporation, for:
shipment of 2,645 bales of hemp from
the Macleod's Sasa private pier at Davao City to
Manila
subsequent transhipment to Boston,
Massachusetts, U.S.A. on board the S.S. Steel
Navigator.
This oral contract was later on confirmed by a
formal and written booking issued by Macleod's
branch office in Sasa and handcarried to CM's
branch office in Davao in compliance with which
the CM sent to Macleod's private wharf LCT Nos.
1023 and 1025 on which the loading of the hemp
was completed on October 29, 1952.
The 2 lighters were manned each by a
patron and an assistant patron.
The patrons of both barges
issued the corresponding carrier's receipts and
that issued by the patron of Barge No. 1025 reads
in part:
Received in behalf of
S.S. Bowline Knot in good order and condition
from MACLEOD AND COMPANY OF PHILIPPINES,
Sasa Davao, for transhipment at Manila onto S.S.
Steel Navigator.
FINAL DESTINATION:
Boston.
resulting in the damage or loss of 1,162 bales of
hemp loaded therein
Macleod promptly notified the
carrier's main office in Manila and its branch in
Davao advising it of its liability
The damaged hemp was brought to Odell
Plantation in Madaum, Davao, for cleaning,
washing, reconditioning, and redrying.
total loss adds up to P60,421.02
All abaca shipments of Macleod were insured
with the Insurance Company of North America
against all losses and damages
Macleod filed a claim for the loss it suffered
with the insurance company and was paid
P64,018.55
subrogation agreement between
Macleod and the insurance company wherein the
Macleod assigned its rights over the insured and
damaged cargo
October 28, 1953.: failing to recover from the
carrier P60,421.02 (amount supported by
receipts), the insurance company instituted the
present action
CA affirmed RTC: ordering CM to pay the
insurance co.
ISSUE: W/N there was a contract of carriage bet. CM
(carrier) and Macleod (shipper)
HELD: YES. Affirmed
receipt of goods by the carrier has been said
to lie at the foundation of the contract to carry
and deliver, and if actually no goods are received
there can be no such contract
The liability and responsibility of the
carrier under a contract for the carriage of goods
commence on their actual delivery to, or receipt
by, the carrier or an authorized agent. ... and
delivery to a lighter in charge of a vessel for
shipment on the vessel, where it is the custom to
deliver in that way
Whenever the control and possession
of goods passes to the carrier and nothing
remains to be done by the shipper, then it can be
 said with certainty that the relation of shipper and
carrier has been established
As regards the form of the contract of carriage
it can be said that provided that there is a
meeting of the minds and from such meeting
arise rights and obligations, there should be no
limitations as to form
The bill of lading is not essential
Even where it is provided by statute that
liability commences with the issuance of the bill
of lading, actual delivery and acceptance are
sufficient to bind the carrier
marine surveyors, attributes the sinking of LCT
No. 1025 to the 'non-water-tight conditions of
various buoyancy compartments
Transportation Case Digest: Servando V. Philippine
Steam Navigation Co. (1982)
G.R. No. L-36481-2 October 23, 1982
Lessons Applicable: Contract of Adhesion
(Transportation)
Laws Applicable: Article 1736, Article 1174
FACTS:
Clara Uy Bico (1,528 cavans of rice
worth P40,907.50) and Amparo Servando (44
cartons of colored paper toys and general
merchandise worth P1,070.50) loaded on
board Philippine Steam Navigation Co.'s vessel,
FS-176 for carriage from Manila to Pulupandan,
Negros Occidental
Bill of Lading:
Clause 14. Carrier shall not be
responsible for loss or damage to shipments billed
'owner's risk' unless such loss or damage is due to
negligence of carrier. Nor shall carrier be
responsible for loss or damage caused by force
majeure, dangers or accidents of the sea or other
waters; war; public enemies; . . . fire . ...
Upon arrival of the vessel at Pulupandan, in
the morning of November 18, 1963, the cargoes
were discharged, complete and in good order,
unto the warehouse of the Bureau of Customs
2 pm: warehouse was razed by fire
Before the fire, 907 cavans of rice were
delivered by Uy Bico
Uy Bico and Servando filed a claim for the
value but was rejected by Philippine Steam
CFI: favored UY Bico and Sercando
delivery of the shipment in question
to the warehouse of the Bureau of Customs is not
the delivery contemplated by Article 1736
ISSUE: W/N Philippine Steam should not be liable
because of the stipulation in the bill of lading
exempting it from fortuitous event
HELD: YES. set aside
Agreement was in iteration of
Article 1174. Except in cases expressly
specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no
person shall be responsible for those events
which could not be foreseen, or which, though
foreseen, were inevitable.
'caso fortuito' presents the following essential
characteristics: (1) the cause of the unforeseen
and unexpected occurrence, or of the failure of
the debtor to comply with his obligation, must be
independent of the human will; (2) it must be
impossible to foresee the event which constitutes
the 'caso fortuito', or if it can be foreseen, it must
be impossible to avoid; (3) the occurrence must
be such as to render it impossible for the debtor
to fulfill his obligation in a normal manner; and (4)
the obligor must be free from any participation in
the aggravation of the injury resulting to the
creditor." In the case at bar, the burning of the
customs warehouse was an extraordinary event
which happened independently of the will of the
appellant. The latter could not have foreseen the
event.
 nothing in the record to show that appellant
carrier ,incurred in delay in the performance of its
obligation
Servando vs. Philippine Steam Navigation Co.
Transportation Laws
inShare
Facts:
1. Clara UyBico and AmparoServando loaded on
board a vessel of Philippine Steam Navigation Co. for
carriage from Manila to Negros Occidental 1,528
cavans of rice and 44 cartons of colored paper, toys
and general merchandise.
2. The contract of carriage of cargo was evidenced
by a Bill of Lading (B/L). There was a stipulation
limiting the responsibility of the carrier for loss or
damage that may be caused to the shipment
a. carrier shall not be responsible for loss or
damage to shipments billed owners risk unless such
loss or damage is due to the negligence of the carrier.
Nor shall the carrier be responsible for loss or
damage caused by force majeure, dangers or
accidents of the sea, war, public enemies, fire.
3. Upon arrival of the vessel at its destination, the
cargoes were discharged in good condition and placed
inside the warehouse of the Bureau of Customs.
4. UyBico was able to take delivery of 907 cavans of
rice.
5. Unfortunately, the warehouse was razed by fire of
unknown origin later that same day destroying the
remaining cargoes.
6. UyBico and Servando filed a claim for the value of
the goods against the carrier.
7. The lower court ruled in their favor. It held that
the delivery of the shipment to the warehouse is not
the delivery contemplated by Art. 1736 of the CC. And
since the burning of the warehouse occurred prior to
the actual or constructive delivery of the goods, the
loss is chargeable against the vessel.
Issue:Whether or not the carrier is liable for the loss
of the goods.
Held:No.
1. Article 1736 of the CC imposes upon common
carriers the duty to observe extraordinary diligence
from the moment the goods are unconditionally
placed in their possession "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 1738. The court a quo held that the delivery of
the shipment in question to the warehouse of the
Bureau of Customs is not the delivery contemplated
by Article 1736; and since the burning of the
warehouse occurred before actual or constructive
delivery of the goods to the appellees, the loss is
chargeable against the appellant.
2. It should be pointed out, however, that in the bills
of lading issued for the cargoes in question, the
parties agreed to limit the responsibility of the carrier.
The stipulation is valid not being contrary to law,
morals or public policy.
3. The petitioners however, contend that the
stipulation does not bind them since it was printed at
the back of the B/L and that they did not sign the
same. However, as the Court held in OngYiu vs. CA,
while it may be true that a passenger had not signed
the plane ticket, he is nevertheless bound by the
provisions thereof. Such provisions have been held to
be a part of the contract of carriage, and valid and
binding upon the passenger regardless of the latter's
lack of knowledge or assent to the regulation.
4. Also, where fortuitous event is the immediate and
proximate cause of the loss, the obligor is exempt
from liability for non-performance.In the case at bar,
the burning of the customs warehouse was an
extraordinary event which happened independently of
the will of the appellant. The latter could not have
foreseen the event.
5. There is nothing in the record to show that the
carrier incurred in delay in the performance of its
obligation. It appears that it had not only notified
UyBico and Servando of the arrival of their shipment,
but had demanded that the same be withdrawn. In
fact, pursuant to such demand, UyBico had taken
delivery of 907 cavans of rice before the burning of
the warehouse.
6. Nor can the carrier or its employees be charged
with negligence. The storage of the goods in the
Customs warehouse pending withdrawal thereof by
UyBico and Servando was undoubtedly made with
their knowledge and consent. Since the warehouse
belonged to and was maintained by the government,
it would be unfair to impute negligence to the carrier,
the latter having no control whatsoever over the
same.
DELSAN TRANSPORT LINES, INC vs. AMERICAN HOME
ASSURANCE CORPORATION
G.R. No. 149019, August 15, 2006
FACTS:
Delsan is a domestic corporation which owns and
operates the vessel MT Larusan. On the other hand,
respondent American Home Assurance Corporation
(AHAC for brevity) is a foreign insurance company
duly. It is engaged, among others, in insuring cargoes
for transportation within the Philippines. Unloading
operations commenced, discharging of the diesel oil.
The discharging had to be stopped on account of the
discovery that the port bow mooring of the vessel was
intentionally cut or stolen by unknown persons.
Because there was nothing holding it, the vessel
drifted westward, ultimately caused the diesel oil to
spill into the sea. As a result of spillage and backflow
of diesel oil, Caltex sought recovery of the loss from
Delsan, but the latter refused to pay. As insurer, AHAC
paid Caltex. AHAC, as Caltexs subrogee, instituted from the port of Kobe, Japan, 197 metal
Civil Case against Delsan. caused by the spillage. It
likewise prayed that it be indemnified for damages
suffered Delsan insists that the rule on contributory
negligence against Caltex, the shipper-owner of the
cargo, and the diesel oil was already completely
delivered to Caltex.
ISSUE: W.O.N. Delsan is liable based on Article 1734
of the NCC and W.O.N. the rule on contributory
negligence should be applied against Caltex.
HELD: Petition is DENIED
. CA is affirmed. Art. 1734. Common carriers are
responsible for the loss, destruction, or deterioration
of the goods, unless the same is due to any of the
following causes only: 1) Flood storm, earthquake,
lightning, or other natural disaster or calamity; 2) Act
of the public enemy in war, whether international or
civil; 3) Act or omission of the shipper or owner of the
goods; 4) The character of the goods or defects in the
packing or in the containers; 5) Order or act of
competent public authority. Delsan failed to prove its
claim that there was a contributory negligence on the
part of the owner of the goods Caltex. Dlesan, as Westwind is not liable, since the discharging of the
the owner of the vessel, was obliged to prove that the
loss was caused by one of the excepted causes if it
were to seek exemption from responsibility. 7
Unfortunately, it miserably failed to discharge this
burden by the required quantum of proof. Delsans merely facilitated the release and delivery of the
argument that it should not be held liable for the loss
of diesel oil due to backflow because the same had
already been actually and legally delivered to Caltex at
the time it entered the shore tank holds no water. It
had been settled that the subject cargo was still in the
custody of Delsan because the discharging thereof has
not yet been finished.
WESTWIND SHIPPING CORPORATION v.
UCPB GENERAL INSURANCE CO., INC. and ASIAN
TERMINALS INC
ORIENT FREIGHT INTERNATIONAL INC. v.
UCPB GENERAL INSURANCE CO., INC. and ASIAN
TERMINALS INC.
G.R. No. 200314, G.R. No. 200289, November 25,
2013 THIRD DIVISION PERALTA, J.
Common carriers, from the nature of their business
and for reasons of public policy, are bound to observe
extraordinary diligence in vigilance over the goods
and for the safety of the passengers transported by
them, according to all the circumstances of each case.
FACTS: Kinsho-Mataichi Corporation shipped
containers/skids of tin-free steel for delivery to the
consignee, San Miguel Corporation The shipment was
loaded and received clean on board M/V Golden
Harvest Voyage No. 66, a vessel owned and operated
by Westwind Shipping Corporation. SMC insured the
cargoes against all risks with UCPB General Insurance
Co., Inc.
The shipment arrived in Manila and was
discharged in the custody of the arrastre operator,
Asian Terminals, Inc. During the unloading operation
six containers/skids sustained dents and punctures
from the forklift used by the stevedores of Ocean
Terminal Services, Inc. in centering and shuttling the
containers/skids. Orient Freight International, Inc., the
customs broker of SMC, withdrew from ATI the 197
containers/skids and delivered the same at SMCs
warehouse. It was discovered upon discharge that
additional nine containers/skids were also damaged
due to the forklift operations; thus, making the total
number of 15 containers/skids in bad order.
SMC filed complaints. The RTC opined that
cargoes were done by ATI personnel using forklifts. It
likewise absolved OFII from any liability, reasoning
that it never undertook the operation of the forklifts
which caused the dents and punctures, and that it
shipment as the customs broker and representative of
SMC. On appeal by UCPB, the CA reversed and set
aside the trial court. It concluded that the common
carrier, not the arrastre operator, is responsible during
the unloading of the cargoes and is still bound to
exercise extraordinary diligence at the time. The CA
also considered that OFII is liable, agreeing with
UCPBs contention that OFII is a common carrier
bound to observe extraordinary diligence and is
presumed to be at fault or have acted negligently for
such damage.
ISSUE: Whether Westwind and OFII are liable to
exercise extraordinary diligence
RULING: YES. 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 transported by them. The
extraordinary responsibility of the common carrier
lasts from the time the goods are unconditionally
placed in the possession of, and received by the
carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive
them.
In this case, since the discharging of the
containers/skids, which were covered by only one bill
of lading, had not yet been completed at the time the
damage occurred, there is no reason to imply that
there was already delivery, actual or constructive, of
the cargoes to ATI.
The mere proof of delivery of goods in good
order to the carrier, and their arrival in the place of
destination in bad order, make out a prima facie case
against the carrier, so that if no explanation is given as
to how the injury occurred, the carrier must be held
responsible. It is incumbent upon the carrier to prove
that the loss was due to accident or some other
circumstances inconsistent with its liability. 18
The contention of OFII is likewise untenable. A
customs broker has been regarded as a common
carrier because transportation of goods is an integral
part of its business. Article 1732 does not distinguish
between one whose principal business activity is the
carrying of goods and one who does such carrying
only as an ancillary activity. The contention, therefore,
of petitioner that it is not a common carrier but a
customs broker whose principal function is to prepare
the correct customs declaration and proper shipping
documents as required by law is bereft of merit. It
suffices that petitioner undertakes to deliver the
goods for pecuniary consideration. As the
transportation of goods is an integral part of a
customs broker, the customs broker is also a common
carrier. For to declare otherwise "would be to deprive
those with whom [it] contracts the protection which
the law affords them notwithstanding the fact that the
obligation to carry goods for [its] customers, is part
and parcel of petitioners business."21
Nedlloyd Lijnen Bv Rotterdam & East Asiatic vs. Glow
Laks Enterprises (GR 156330)
The Facts
Petitioner Nedlloyd Lijnen B.V. Rotterdam
(Nedlloyd) is a foreign corporation engaged in the
business of carrying goods by sea, whose vessels
regularly call at the port of Manila. It is doing business
in the Philippines thru its local ship agent, co-
petitioner East Asiatic Co., Ltd. (East Asiatic).
Respondent Glow Laks Enterprises, Ltd., is
likewise a foreign corporation organized and existing
under the laws of Hong Kong. It is not licensed to do,
and it is not doing business in, the Philippines.
On or about September 1987, respondent
loaded on board of M/S Scandutch, garments in
complete and in good order for pre-carriage to the
port of Hong Kong, and were transferred to M/S
Amethyst for final carriage to Colon, Free Zone,
Panama.
Both vessels, M/S Scandutch and M/S
Amethyst, are owned by Nedlloyd represented in the
Phlippines by its agent, East Asiatic. The goods which
were valued at US$53,640.00 was agreed to be
released to the consignee, Pierre Kasem,
International, S.A., upon presentation of the original
copies of the covering bills of lading.
Upon arrival of the vessel at the Port of Colon
on 23 October 1987, petitioners purportedly notified
the consignee of the arrival of the shipments, and its
custody was turned over to the National Ports
Authority in accordance with the laws, customs
regulations and practice of trade in Panama.
By an unfortunate turn of events, however,
unauthorized persons managed to forge the covering
bills of lading and on the basis of the falsified
documents, the ports authority released the goods.
Petitioners filed a civil case before the RTC in
Manila holding the respondents liable for the
misdelivery of the goods and seeking for the recovery
of the amount of US$53,640.00, including the legal
interest from the date of the first demand.
DEFENSE:
Petitioners asserted in their Answer
that they were never remiss in their
 obligation as a common carrier and
the goods were discharged in good
order and condition into the custody
of the National Ports Authority of
Panama in accordance with the
Panamanian law.
They averred that they cannot be
faulted for the release of the goods to
unauthorized persons, their
extraordinary responsibility as a
common carrier having ceased at the
time the possession of the goods
were turned over to the possession of
the port authorities.
RTC RULING:
Dismissed the complaint but granted
petitioners counterclaims. In effect,
respondent was directed to pay petitioners
the amount of P120,000.00 as indemnification
for the litigation expenses.
RTC ruled that Panama law was duly proven
during the trial and pursuant to the said
statute, carriers of goods destined to any
Panama port of entry have to discharge their
loads into the custody of Panama Ports
Authority to make effective government
collection of port dues, customs duties and
taxes.
The subsequent withdrawal effected by
unauthorized persons on the strength of
falsified bills of lading does not constitute
misdelivery arising from the fault of the
common carrier. The decretal part of the RTC
Decision reads:
Judgment is rendered for [petitioners] and against
[Respondent], ordering the dismissal of the complaint
and ordering the latter to pay [petitioners] the
amount of ONE HUNDRED TWENTY THOUSAND PESOS
(P120,000.00) on their counterclaims.
CA RULING:
The Court of Appeals reversed the findings of
the RTC and held that foreign laws were not
proven in the manner provided by Section 24,
Rule 132 of the Revised Rules of Court, and
therefore, it cannot be given full faith and
credit.
For failure to prove the foreign law and
custom, it is presumed that foreign laws are
the same as our local or domestic or internal
law under the doctrine of processual
presumption.
Under the New Civil Code, the discharge of
the goods into the custody of the ports
authority therefore does not relieve the
common carrier from liability because the
extraordinary responsibility of the common
carriers lasts until actual or constructive
delivery of the cargoes to the consignee or to
the person who has the right to receive them.
Absent any proof that the notify party or the
consignee was informed of the arrival of the
goods, the appellate court held that the
extraordinary responsibility of common
carriers remains.
Accordingly, the Court of Appeals directed
petitioners to pay respondent the value of the
misdelivered goods in the amount of
US$53,640.00.
The Issues
Dissatisfied with the foregoing disquisition,
petitioners impugned the adverse Court of Appeals
Decision before the Court on the following grounds:
I.
Is there a need to prove Panamanian Laws just
because they had been judicially admitted; therefore
since it was admitted by in the course of the
proceeding, it does not require a proof?
II.
Were the laws of Panama proven by presenting the
[GACETA] OFFICIAL OF REPUBLICA DE PANAMA NO.
17.596 where the applicable Panamanian Laws were
officially published and by testimony of expert
witnesses?
III.
Will the CA ruling be conceded even if there was
failure of proof, the legal questions presented should
be resolved favorable because the carrier discharged
its duty whether the Panamanian Law or under the
Philippine Law?
The Courts Ruling
Petition is bereft of merit.
Rationale 1:
Foreign laws do not prove themselves in our
jurisdiction and our courts are not authorized to take
judicial notice of them. Like any other fact, they must
be alleged and proved.
To prove a foreign law, the party invoking it
must present a copy thereof and comply with Sections
24 and 25 of Rule 132 of the Revised Rules of Court
which read:
SEC. 24. Proof of official
record. The record of public
documents referred to in paragraph
(a) of Section 19, when admissible for
any purpose, may be evidenced by an
official publication thereof or by a
copy attested by the officer having the
legal custody of the record, or by his
deputy, and accompanied, if the
record is not kept in the Philippines,
with a certificate that such officer has
the custody. If the office in which the
record is kept is in a foreign country,
the certificate may be made by a
secretary of the embassy or legation,
consul general, consul, vice-consul, or
consular agent or by any officer in
the foreign service of the Philippines
stationed in the foreign country in
which the record is kept, and
authenticated by the seal of his
office.
SEC. 25. What attestation of
copy must state. Whenever a copy
of a document or record is attested
for the purpose of the evidence, the
attestation must state, in substance,
that the copy is a correct copy of the
original, or a specific part thereof, as
the case may be. The attestation must
be under the official seal of the
attesting officer, if there be any, or if
he be the clerk of a court having a seal, under
the seal of such court.
For a copy of a foreign public document to be
admissible, the following requisites are mandatory:
(1) it must be attested by the officer having
legal custody of the records or by his deputy; and
(2) it must be accompanied by a certificate by
a secretary of the embassy or legation, consul general,
consul, vice -consular or consular agent or foreign
service officer, and with the seal of his office.
Such official publication or copy must be
accompanied, if the record is not kept in the
Philippines, with a certificate that the attesting officer
has the legal custody thereof. 16 The certificate may be
issued by any of the authorized Philippine embassy or
consular officials stationed in the foreign country in
which the record is kept, and authenticated by the
seal of his office. The attestation must state, in
substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be,
and must be under the official seal of the attesting
officer.
Rationale #2:
a) Contrary to the contention of the petitioners,
the Panamanian laws, particularly Law 42 and
its Implementing Order No. 7, were not duly
proven in accordance with Rules of Evidence
and as such, it cannot govern the rights and
obligations of the parties in the case at bar.
While a photocopy of the Gaceta Official of
the Republica de Panama No. 17.596, the Spanish
text of Law 42 which is the foreign statute relied
upon by the court a quo to relieve the common
carrier from liability, was presented as evidence
during the trial of the case below, the same however
was not accompanied by the required attestation
and certification.
b) Deposition of Mr. Enrique Cajigas, a maritime
law practitioner in the Republic of Panama,
before the Philippine Consulate in Panama, is
not the certificate contemplated by law. At
best, the deposition can be considered as an
opinion of an expert witness who possess the
required special knowledge on the
Panamanian laws but could not be recognized
as proof of a foreign law, the deponent not
being the custodian of the statute who can
guarantee the genuineness of the document
from a foreign country. (Section 24, Rule 132
of the Revised Rules of Court)
Exceptions to the Rule:
Willamete Iron and Steel Works v. Muzzal for
instance, we allowed the foreign law to be established
on the basis of the testimony in open court during the
trial in the Philippines of an attorney-at-law in San
Francisco, California, who quoted the particular
foreign law sought to be established.
Private international law: A foreign law must
be properly pleaded and proved as a fact. In the
absence of pleading and proof, the laws of the foreign
country or state will be presumed to be the same as
our local or domestic law. This is known as processual
presumption.
While the foreign law was properly pleaded in
the case at bar, it was, however, proven not in the
manner provided by Section 24, Rule 132 of the
Revised Rules of Court. The decision of the RTC, which
proceeds from a disregard of specific rules cannot be
recognized.
Rationale #3:
Whether or not, petitioners are liable for the
misdelivery of goods under Philippine laws.
Under the New Civil Code, common carriers,
from the nature of their business and for
reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over
goods, according to the circumstances of each
case.
Common carriers are responsible for loss,
destruction or deterioration of the goods
unless the same is due to flood, storm,
earthquake or other natural disaster or
calamity.24 Extraordinary diligence is that
extreme care and caution which persons of
unusual prudence and circumspection use for
securing or preserving their own property or
rights.
This expecting standard imposed on common
carriers in contract of carrier of goods is
intended to tilt the scales in favor of the
shipper who is at the mercy of the common
carrier once the goods have been lodged for
the shipment.
Hence, in case of loss of goods in transit, the
common carrier is presumed under the law to
have been in fault or negligent.
PETITIONER:
As a common carrier, they are bound to
observe extraordinary diligence in the care and
custody of the goods in their possession, they insist
that they cannot be held liable for the loss of the
shipments, their extraordinary responsibility having
ceased at the time the goods were discharged into the
custody of the customs arrastre operator, who in turn
took complete responsibility over the care, storage
and delivery of the cargoes.
RESPONDENT:
Submits that the fact that the shipments were
not delivered to the consignee as stated in the bill of
lading or to the party designated or named by the
consignee, constitutes misdelivery thereof, and under
the law it is presumed that the common carrier is at
fault or negligent if the goods they transported, as in
this case, fell into the hands of persons who have no
right to receive them.
SC sustain the position of the respondent.
Article 1736 and Article 1738 are the
provisions in the New Civil Code which define the
period when the common carrier is required to
exercise diligence lasts, viz:
Article 1736. The
extraordinary responsibility of the
common carrier lasts from the time
the goods are unconditionally placed
in the possession of, and received by
the carrier for transportation until the
same are delivered, actually or
constructively, by the carrier to the
consignee, or to the person who has a
right to receive them, without
prejudice to the provisions of article
1738.
Article 1738. The
extraordinary liability of the common
carrier continues to be operative even
during the time the goods are stored
in a warehouse of the carrier at the
place of destination, until the
consignee has been advised of the
arrival of the goods and has had
reasonable opportunity thereafter to
remove them or otherwise dispose of
them.
Explicit is the rule under Article 1736 of the Civil Code
that the extraordinary responsibility of the common
carrier begins from the time the goods are delivered
to the carrier.29 This responsibility remains in full force
and effect even when they are temporarily unloaded
or stored in transit, unless the shipper or owner
exercises the right of stoppage in transitu, and
terminates only after the lapse of a reasonable time
for the acceptance, of the goods by the consignee or
such other person entitled to receive them. 30
It was further provided in the same statute
that the carrier may be relieved from the
responsibility for loss or damage to the goods upon
actual or constructive delivery of the same by the
carrier to the consignee or to the person who has the
right to receive them.31 In sales, actual delivery has
been defined as the ceding of the corporeal
possession by the seller, and the actual apprehension
of the corporeal possession by the buyer or by some
person authorized by him to receive the goods as his
representative for the purpose of custody or disposal.
By the same token, there is actual delivery in
contracts for the transport of goods when possession
has been turned over to the consignee or to his duly
authorized agent and a reasonable time is given him
to remove the goods.
In this case, there is no dispute that the
custody of the goods was never turned over to the
consignee or his agents but was lost into the hands of
unauthorized persons who secured possession thereof
on the strength of falsified documents. The loss or the
misdelivery of the goods in the instant case gave rise
to the presumption that the common carrier is at fault
or negligent.
A common carrier is presumed to have been
negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported.
When the goods shipped are either lost or arrived in
damaged condition, a presumption arises against the
carrier of its failure to observe that diligence, and
there need not be an express finding of negligence to
hold it liable. To overcome the presumption of
negligence, the common carrier must establish by
adequate proof that it exercised extraordinary
diligence over the goods. It must do more than
merely show that some other party could be
responsible for the damage.
The contract of carriage remains in full force
and effect even after the delivery of the goods to the
port authorities; the only delivery that releases it from
their obligation to observe extraordinary care is the
delivery to the consignee or his agents. Even more
telling of petitioners continuing liability for the goods
transported to the fact that the original bills of lading
up to this time, remains in the possession of the notify
party or consignee. Explicit on this point is the
provision of Article 353 of the Code of Commerce
which provides:
Article 353. The legal
evidence of the contract between the
shipper and the carrier shall be the
bills of lading.
After the contract has been
complied with, the bill of lading
which the carrier has issued shall be
returned to him, and by virtue of the
exchange of this title with the thing
transported, the respective
obligations and actions shall be
considered cancelled, unless in the
same act the claim which the parties
may wish to reserve be reduced to
writing, with the exception of that
provided for in Article 366.
In case the consignee, upon
receiving the goods, cannot return the
bill of lading subscribed by the carrier,
because of its loss or of any other
cause, he must give the latter a
receipt for the goods delivered, this
receipt producing the same effects as
the return of the bill of lading.
Absence bill of lading, there must be, at the
very least, an acknowledgement of the delivery by
signing the delivery receipt, if surrender of the original
of the bill of lading is not possible, otherwise the
contract of carriage still subsists and petitioners could
be held liable for the breach thereof.
Petitioners could have offered evidence
before the trial court to show that they exercised the
highest degree of care and caution even after the
goods was turned over to the custom authorities, by
promptly notifying the consignee of its arrival in
order to afford them ample opportunity to remove
the cargoes from the port of discharge.
Petitioners are held liable for the misdelivery
of the goods. Petitioners failed to rebut the prima
facie presumption of negligence.
The petition was denied. CA is AFFIRMED.
DUTY TO EXERCIE EXTRAODINARY DILIGENCE
Kapalaran Bus Line v. Coronado
FACTS:
On August, 1982, the jeepney driven by Lope Grajera was
coming from Laguna on its way to Sta. Cruz. As it reached
the intersection where there is a traffic sign yield, it
stopped an cautiously treated the intersection as a Thru
Stop street, which it is not.
The Kapalaran Bus Line was on its way from Sta. Cruz,
Laguna driven by its driver, Virgilio Llamoso, on its way
towards Manila. As the KBL neared the intersection,
Llamoso inquired from his conductor if they could still
accommodate passengers and learning that they were
already full, he decided to bypass Pila and instead, to
proceed along the national highway. Virgilio admitted that
there was another vehicle ahead of him.
The general rule is that the vehicle on the national highway
has the right of way as against a feeder road. Another
general rule is that a vehicle coming from the right has the
right of way voer the vehicle coming from the left.The
general rules on right of way may be invoked only if both
the vehicles approach the intersection at almost the same
time. In the case at bar, both roads are national roads. Also,
the KBL Bus was still far from the intersection when the
jeepney reached the same. As testified by Atty. Conrado
Manicad, he stopped at the intersection to give way to the
jeepney driven by Grajera. However, there was a collision
between the jeepney and the bus. The KBL bus ignored the
stopped vehicles and the other vehicles behind Atty.
Manicad and overtook both vehicles at the intersection
therefore causing the accident.
Kapalaran filed a suit against the owner of the jeepney and
its driver. However, it lost the case. Furthermore, the Court
did not hold as liable the driver of the bus.
ISSUE: Whether or not KBL is accountable, considering the
driver of the bus was not held liable by the Courts.
HELD: Yes, Kapalaran is liable. The driver violated certain
general rules, and provisions in the Land Transportation and
Traffice Code. Hence, he can be presumed negligent. The
patent and gross negligence on the part of Kapalarans
driver raised the legal presumption that Kapalaran as
employer was guilty of negligene either in the selection or
supervision of its bus drivers. Where the employer is held
liable for damages, it has of course a right of recourse
against its own negligent employee. If petitioner Kapalaran
was interested in maintaining its right of recourse against or
reimbursement from its own driver, it should have appealed
from that portion of the trial courts decision which had
failed to hold the bus driver accountable for damages. The
liability of employer under Article 2180 of the Civil Code is
direct and immediate; it is not conditioned upon prior
recourse against the negligent on its own part.
The law requires Kapalaran as common carrier to exercise
extraordinary diligence in carrying and transporting their
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. In
requiring the highest possible degree of diligence from
common carriers and creating a presumption of negligence
against them, the law compels them to curb the
recklessness of their drivers. The law seeks to stop and
prevent the slaughter and maiming of people (whether
passengers or not) and the destruction of property
(whether freight or not) on our highways by buses, the very
size and powere of which seem ofen to inflame the minds
of their drivers.
KAPALARAN BUS LINE vs. CORONADO
(G.R. No. 85331; August 25, 1989)
Legal Issue:
Whether or not KAPALARAN
BUS LINE (KBL) is liable for damages
from the collision.
Facts of the Case:
The jeepney driven by Lope Grajera was
then coming from Pila, Laguna and traversing the
an old highway towards Sta. Cruz collided with a
KBL bus driven by its regular driver Virgilio
Llamoso. As testified to by Atty. Conrado L.
Manicad who was driving a Mustang car coming
from the direction of Sta. Cruz and proceeding
towards the direction of Manila, he stopped at the
intersection to give way to the jeepney driven by
Grajera. The sketch marked very clearly that the
jeepney had already traversed the intersection
when it met the KBL bus head-on. It is also
obvious that the point of impact was on the right
lane of the highway which is the lane properly
belonging to the jeepney. Judging from the
testimony of Atty. Conrado L. Manicad and the
sketch (Exhibit 'E'), the sequence of events shows
that the first vehicle to arrive at the intersection
was the jeepney. Seeing that the road was clear,
the jeepney which had stopped at the intersection
began to move forward, and for his part, Atty.
Manicad stopped his car at the intersection to give
way to the jeepney. The KBL bus had no more
room within which to stop without slamming into
the rear of the vehicle behind the car of Atty.
Manicad. The KBL driver chose to gamble on
proceeding on its way, unfortunately, the jeepney
driven by Grajera, which had the right-of-way,
was about to cross the center of the highway and
was directly on the path of the KBL bus. The
impact indicates that the KBL bus was travelling
at a fast rate of speed because, after the collision,
it did not stop; it travelled for another 50 meters
and stopped only when it hit an electric post.
Ruling of the Court:
YES. KBL is liable for the damages in the
collision.
Reason behind the Ruling:
The patent and gross negligence on the part
of the petitioner Kapalaran's driver raised the legal
presumption that Kapalaran as employer was guilty of
negligence either in the selection or in the supervision
of its bus driver, where the employer is held liable for
damages; it has of course a right of recourse against
its own negligent employee. The liability of the
employer under Article 2180 of the Civil Code is direct
and immediate; it is not conditioned upon prior
recourse against the negligent employee and a prior
showing of the insolvency of such employee. So far as
the record shows, petitioner Kapalaran was unable to
rebut the presumption of negligence on its own part.
The award of moral damages against petitioner
Kapalaran is not only entirely in order; it is also quite
modest consideirng Dionisio Shinyo's death during the
pendency of this petition, a death hastened by, if not
directly due to, the grievous injuries sustained by him
in the violent collision.
Juntilla vs Fontanar Case Digest
(136 SCRA 624)
Facts: Herein plaintiff was a passenger of the public
utility jeepney on course from Danao City to Cebu
City. The jeepney was driven by driven by defendant
Berfol Camoro and registered under the franchise of
Clemente Fontanar. When the jeepney reached
Mandaue City, the right rear tire exploded causing
the vehicle to turn turtle. In the process, the plaintiff
who was sitting at the front seat was thrown out of
the vehicle. Plaintiff suffered a lacerated wound on
his right palm aside from the injuries he suffered on
his left arm, right thigh, and on his back.
Plaintiff filed a case for breach of contract with
damages before the City Court of Cebu City.
Defendants, in their answer, alleged that the tire
blow out was beyond their control, taking into
account that the tire that exploded was newly
bought and was only slightly used at the time it blew
up.
Issue: Whether or not the tire blow-out is a
fortuitous event?
Held: No. In the case at bar, the cause of the
unforeseen and unexpected occurrence was not
independent of the human will. The accident was
caused either through the negligence of the driver or
because of mechanical defects in the tire. Common
carriers should teach drivers not to overload their
vehicles, not to exceed safe and legal speed limits,
and to know the correct measures to take when a
tire blows up thus insuring the safety of passengers
at all tines.
JUNTILLA V FONTANAR
136 SCRA 624
GUITERREZ JR; May 31, 1985
NATURE
Petition to review the decision of CFI of Cebu
FACTS
- Petitioner Roberto Juntilla was sitting a the front seat of a jeepney (driven by one
Berfol Camoro, registered under the franchise of Clemente Fontanar, but actually
owned by Fernando Banzon) when its right rear tire exploded causing it to turn
turtle. Plaintiff was thrown out of the vehicle and lost consciousness upon landing
on the ground. When he came back to his senses, he found that he had a lacerated
wound on his right palm, injuries on his left arm, right thigh and on his back and
also found this Omega wrist watch was lost. He went to Danao city and upon
arrival there he entered the City Hospital to attend to his injuries and asked his
father-in-law to go to site of the accident to look for his watch but the watch was
nowhere to be found.
- Petitioner then filed a civil case for breach of contract with damages before the
City Court of Cebu against Fontanar, Banzon, and Camoro, who filed their answer,
alleging that the accident was beyond their control taking into account that the tire
that exploded was newly bought and slightly used at the time it blew up.
- City Court rendered judgment in favor of petitioner. The respondents then
appealed to the CFI of Cebu, which reversed the judgment upon a finding that the
accident in question was due to a fortuitous event. Petitioners MFR was denied,
hence this appeal.
ISSUES
1. WON the CFI erred in absolving the carrier from any liability upon a finding that
the tire blow out is a fortuitous event
2. WON the accident was due to a fortuitous event
- Relative to the contingency of mechanical defects, we held in Necesito, et al. v.
Paras, et al, that: The preponderance of authority is in favor of the doctrine that a
passenger is entitled to recover damages from a carrier for an injury resulting from
a defect in an appliance purchased from a manufacturer, whenever it appears that
the defect would have been discovered by the carrier if it had exercised the degree
of care which under the circumstances was incumbent upon it. with regard to
inspection and application of the necessary tests. For the purposes of this doctrine,
the manufacturer is considered as being in law the agent or servant of the carrier,
as far as regards the work of constructing the appliance. According to this theory,
the good repute of the manufacturer will not relieve the carrier from liability.
- It is sufficient to reiterate that the source of a common carrier's legal liability is the
contract of carriage, and by entering into the said contract, it binds itself to carry the
passengers safely as far as human care and foresight can provide, using the
utmost diligence of a very cautious person, with a due regard for all the
circumstances. The records show that this obligation was not met by the
respondents.
Disposition Decision appealed from is REVERSED and SET ASIDE. Decision of
City Court is REINSTATED

HELD

1. YES Doctrine:
- The CFI relied on the ruling of the CA in Rodriguez v Red Line Transportation Co.,
that a tire blow-out does not constitute negligence unless the tire was already old When a carrier fails to
and should not have been used at all. This conclusion is based on a
misapprehension of overall facts. In La Mallorca and Pampanga Bus Co. v De
Jesus, et al, We held that, not only are the rulings of the CA in Rodriguez v Red establish any caso
Line Trans. Co. not binding on this Court but they were also based on
considerations quite different from those that obtain in the case at bar. In the case
at bar, there are specific acts of negligence on the part of the respondents. The
fortuito, the
records show that the passenger jeepney turned turtle and jumped into a ditch
immediately after its right rear tire exploded. The evidence shows that the presumption by law of
passenger jeepney was running at a very fast speed before the accident. We agree
with the observation of the petitioner that a public utility jeep running at a regular
and safe speed will not jump into a ditch when its right rear tire blows up. There is
fault or negligence on
also evidence to show that the passenger jeepney was overloaded at the time of
the accident. The petitioner stated that there were 3 passengers in the front seat the part of the carrier
and 14 in the rear.

- While it may be true that the tire that blew-up was still good because the grooves applies.
of the tire were still visible, this fact alone does not make the explosion of the tire a
fortuitous event. No evidence was presented to show that the accident was due to
adverse road conditions or that precautions were taken by the jeepney driver to
compensate for any conditions liable to cause accidents. The sudden blowing-up,
therefore, could have been caused by too much air pressure injected into the tire
coupled by the fact that the jeepney was overloaded and speeding at the time of the
Facts:
accident.

2. NO
- 13 coils of uncoated 7-wire stress
Ratio A caso fortuito (fortuitous event) presents the following essential relived wire strand for prestressed
characteristics:
concrete were shipped on board the
1. The cause of the unforeseen and unexpected occurrence, or of the failure of the
debtor to comply with his obligation, must be independent of the human will
vessel Japri Venture (owned by Easter
Shipping Lines) for delivery to Stresstek
2. It must be impossible to foresee the even which constitutes the caso fortuito, or if
it can be foreseen, it must be impossible to avoid Post-Tensioning Phils. in Manila. The
cargo was insured by First Nationwide
3. The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner Assurance Corporation (FNAC).
4. The obligor (debtor) must be free from any participation in the aggravation of the - The vessel arrived in Manila and
injury resulting to the creditor discharged the cargo to the custody of
Reasoning E.Razon Inc., from whom the consignees
- In the case at bar, the cause of the unforeseen and unexpected occurrence was
customs broker received it for delivery to
not independent of the human will. The accident was caused either through the the consignees warehouse.
negligence of the driver or because of mechanical defects in the tire. Common
carriers should teach their drivers not to overload their vehicles not to exceed safe - It appears that while en route to
and legal speed limits and to know the correct measures to take when a tire blows Manila, the vessel encountered very rough
up thus insuring the safety of passengers at all times.
seas and stormy weather and the cargo
stored in the lower hatch of the vessel
was flooded with water about one foot
deep. That upon survey, it was found that
several coils were rusty on one side and
that the wetting of the cargo was caused
by fresh water that entered the hatch
when the vessel encountered heavy
weather.
- FNAC paid Stresstek about Php 172K
for damage and loss to the insured cargo.
- Being subrogated to the rights of
Stresstek, FNAC now seeks o recover
from Eastern what it has indemnified
Stresstek less the salvage value of the
goods, or the total of about Php 124K.
- The RTC ordered for the dismissal of
the case.
Upon appeal, the CA held that Eastern is
liable to FNAC.
Issue:
Whether Easter should be held liable even
if it claims that the shipment was
discharged and delivered complete into
the custody of the arrastre operator under
clean tally sheets.
Held:
- YES. In arriving at the decision, the SC
agreed with the CA on its findings and
conclusions.
- The heavy seas and rains referred to in
the masters report were not caso
fortuito, but normal occurrences that an
ocean going vessel, particularly in the
month of September which, in our area, is
a month of rains and heavy seas would
encounter as a matter of routine. They are
not unforeseen nor unforeseeable. These
are conditions that ocean-going vessels
would encounter and provide for, in the
ordinary course of voyage.
- The rain water (not sea water) found
its way into Japri Venture is a clear
indication that care and foresight did not
attend the closing of the ships hatches
so that rain water would not find its way
into the cargo,
- Since Easter has failed to establish
any caso fortuito, the presumption of fault
or negligence on the part of the carrier
applies; and the carrier must present
evidence that it has observed the
extraordinary diligence required in Art.
1733 to escape liability.
The SC held that the presumption that the
cargo was in apparent good condition
when it was delivered by the vessel to the
arrastre operation by the clean tally
sheets has been overturned. The evidence
is clear to the effect that the damage to
the cargo was suffered while aboard
petitioners vessel.
Eastern Shipping Lines Inc. v. IAC, 150 SCRA 463
Doctrine:
When a carrier fails to establish any caso fortuito,
the presumption by law of fault or negligence on
the part of the carrier applies.
FACTS:
Carrier Eastern Shipping Lines Inc
Shipper/Consignee Stresstek Post Tensioning
Philippines Inc
Insurer - First Nationwide Assurance Corporation
Arrastre Operator E. Razon Inc. (not significant)
Eastern Shipping Lines Inc shipped uncoated 7-
wire stress relieved wire strand for prestressed
concretewere shipped on board the vessel "Japri
Venture,". Upon arrival at the port of Manila, it
discharged thecargo to the custody of the
defendant E. Razon, Inc. from whom the
consignee's customs brokerreceived it for delivery
to the consignee's warehouse. First Nationwide
Assurance, indemnified theconsignee in the
amount of P171,923.00 for damage and loss to
the insured cargo, whereupon theformer was
subrogated for the latter. The insurer now seeks
to recover from the defendants what ithas
indemnified the consignee. The petitioner
protested alleging that it should not be hel liable
to
answer for damages for the event that caused the
rusting of the goods was due to the
encounteredvery rough seas and stormy
weather classified as force majeure, hence
relieving them of any liability.
Aggrieved, respondent filed a case against
petitioner.
RTC dismissed the case
CA set aside RTCs decision and ordered
petitioner to pay respondent
ISSUE:
W/N petitioner was negligent and should be held
liable for the payment of damages.
HELD:
YES. Plainly, the heavy seas and rains
referred to in the master's report were not
caso fortuito, but normal occurrences that an
ocean-going vessel, particularly in the month of
September which, in our area, is a month of rains
and heavy seas would encounter as a matter of
routine. They are not unforeseen nor
unforeseeable. These are conditions that ocean-
going vessels would encounter and provide for, in
the ordinary course of a voyage. That rain water
(not sea water) found its way into the holds of the
Jupri Venture is a clear indication that care and
foresight did not attend the closing of the ship's
hatches so that rainwater would not find its way
into the cargo holds of the ship.
Moreover, under Article 1733 of the Civil
Code, common carriers are bound to observe
"extra-ordinary vigilance over goods . . .
.according to all circumstances of each case,"
and Article 1735 of the same Code states, to wit:
Art. 1735. In all cases other than those
mentioned in Nos. 1, 2, 3, 4, and 5 of the
preceding article, if the goods are lost, destroyed
or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed
extraordinary diligence as required in article 1733.
Since the carrier has failed to establish
any caso fortuito, the presumption by law of fault
or negligence on the part of the carrier applies;
and the carrier must present evidence that it has
observed the extraordinary diligence required by
Article 1733 of the Civil Code in order to escape
liability for damage or destruction to the goods
that it had admittedly carried in this case. No such
evidence exists of record. Thus, the carrier
cannot escape liability.
The presumption, therefore, that the cargo
was in apparent good condition when it was
delivered by the vessel to the arrastre operator by
the clean tally sheets has been overturned and
traversed. The evidence is clear to the effect that
the damage to
Republic vs. Lorenzo Shipping Lines
G.R. No. 153563. February 07, 2005
Facts: The Republic of the Philippines signed an
agreement through the Department of Health and
the Cooperative for American Relief Everywhere,
Inc. (CARE) wherein it would acquire from the US
government donations of Non-Fat Dried Milk and
other food products. In turn, the Philippines will
transport and distribute the donated to the intended
beneficiaries of the country. As a result, it entered
into a contract of carriage of goods with the herein
respondent. The latter shipped 4,868 bags of non-
fat dried milk from Sept-Dec 1988. The consignee
named in the bills was Abdurahman Jama,
petitioners branch supervisor in Zamboanga City.
Upon reaching the port of Zamboanga, respondents
agent, Efren Ruste Shipping Agency unloaded the
said milks. Before each delivery, Rogelio Rizada
and Ismael Zamora both delivery checkers of Efren
Ruste requested Abdurahman to surrender the
originals of the Bill of Lading. However, the
petitioner alleged that they did not receive anything
and they filed a claim against the herein respondent.
The petitioner contended that the respondents failed
to exercise extraordinary diligence.
Issue: Whether the respondents failed to exercise
extraordinary diligence required by law?
Held: The surrender of the Bill of Lading is not a
condition precedent for a common carrier to be
discharged of its contractual obligation. If the
surrender is not possible, acknowledgment of the
delivery by signing the receipt suffices. The herein
respondent did not even bother to prevent the
resignation of abdurhaman Jama to be utilized as a
witness.
Victory Liner v. Race | Chico-Nazario, J.
Keywords: Injured bus driver illegally dismissed;
Prescription: 4 years from the accrual of the cause of
action
FACTS:
Pablo M. Race was employed by Victory Liner,
Inc. as a bus driver for the Alaiminos,
Pangasinan Cubao, Quezon City evening
route.
24 August 1994: Races bus figured in an
accident, wherein Race suffered a fractured
leg, for which he was confined in the hospital
until 10 October 1994.
10 November 1994: Race was confined again
for further treatment for another month.
Victory Liner shouldered all of Races medical
expenses for both instances.
January 1998: Race reported for work, but
was informed that he was considered
resigned, and was offered consideration of
P50,000.00, which he rejected.
Before Christmas 1998: Victory Liner
reiterated that he was regarded as resigned,
this time, offering him P100,000.00, which he
again rejected.
30 June 1999: Race sent a letter to Victory
Liner demanding employment-related money
claims; no response from Victory Liner.
1 September 1999: Race filed a complaint
before the Labor Arbiter for:
o Unfair labor practice;
o Illegal dismissal;
o Underpayment of wages;
o Nonpayment of overtime and holiday
premium, service incentive leave pay,
vacation and sick leave benefits, 13th
month pay;
o Excessive deduction of withholding
tax and SSS premium; and
o Moral and exemplary damages and
attorneys fees.
LABOR ARBITER: Dismissed; stating that the
prescriptive period for filing a case for illegal
dismissal had elapsedconsidered dismissed
on 24 November 1994.
NLRC: Reversed Labor Arbiter; cause of action
accrued in January 1998, when Race reported
for work but was rejected; Also stated that
Victory Liner failed to accord Race due process
in terminating his employment.
ISSUE/HELD:
[1] WoN the cause of action for illegal dismissal had
prescribed.NO. Cause of action accrued January
1998.
[2] WoN Race was illegally dismissed, thus entitled to
reinstatement with full back wages and other
benefits.YES. But separation pay in lieu of
reinstatement.
RATIO:
[1] Prescription
Victory Liner insists that Race already
abandoned his work and ceased to be its
employee since November 1994.
o Among other arguments, under the 4-
fold test of employer-employee
relationship: Victory claimed that it no
longer paid Race wages nor exercised
control over him since November
1994.
o If reckoning period is counted from
when the written demand was made
by Race, the 4-year prescriptive
period would be indeterminate,
contrary to the spirit of the law.
In illegal dismissal cases, the employee
concerned is given a period of four years from
the time of his dismissal within which to
 institute a complaint.
o Art. 1146 [CC] Actions based upon an
injury to the rights of the plaintiff
must be brought within four years.
o Employment is a property right
within the protection of a
constitutional guarantee of dues
process of law.
o Therefore, when one is arbitrarily and
unjustly deprived of his job or means
of livelihood, the action instituted to
contest the legality of ones dismissal
from employment constitutes, an
action predicated "upon an injury to
the rights of the plaintiff."
The four-year prescriptive period shall
commence to run only upon the accrual of a
cause of action of the workerthe time the
employment of the worker was unjustly
terminated.
Race was not unjustly terminated on 10
November 1994
o At that time, still confined for further
treatment of his fractured left leg.
o He must be considered as merely on
sick leave
Neither could be deemed as illegally
dismissed from work upon his release in
December 1994 up to December 1997.
o Race still reported for work to the
petitioner and was granted sick and
disability leave by Victory Liner for
that period.
Race must be considered as unjustly
terminated in January 1998 since this was the
first time he was informed by the Victory Liner
that he was deemed resigned from his work.
Consequently, Races filing of complaint for
illegal dismissal on 1 September 1999 was
well within the four-year prescriptive period.
It must also be noted that from 10 November
1994 up to December 1997, Victory Liner
never formally informed the respondent of
the fact of his dismissal
Moveover, Race did not abandon his work for
lack of the 2 factors that constitute
abandonment:
o Failure to report for work or absence
without valid or justifiable reason;
and
o A clear intention to sever employer-
employee relationship.
Similarly, the employer-employee relationship
between the petitioner and respondent
cannot be deemed to have been extinguished
on 10 November 1994,.
o Race reported for work to the
petitioner after his release from the
hospital in December 1994.
o He was also granted a 120-day sick
leave and disability leave
o And also availed himself of the
services of the Victory Liners
physician on two occasions after his
release
o Victory Liner failed to establish the
fact that Race ceased to be its
employee on 10 November 1994,
except for its flimsy reason that the
sick leave, disability leave and
physician consultations were given to
the respondent as mere
accommodations for a former
employee.
[2.a.] Illegal dismissal
The Labor Code mandates that before an
employer may legally dismiss an employee
from the service, the requirement of
substantial and procedural due process must
be complied with.
Substantial due processthe grounds for
termination of employment must be based on
just or authorized causes.
o Although abandonment of work is
within the scope of the just causes for
termination (under gross and habitual
neglect by the emlployee of his
duties), the court found that there
was not abandonment on the part of
Race.
The records also failed to show that the said
charges were proven and that respondent was
duly informed and heard with regard to the
accusations.
And as Victory Liner is the employer, it is its
burdened to prove just cause for terminating
the employment of respondent with clear and
convincing evidence, and that Victory Liner
failed to discharge this burden, we hold that
respondent was dismissed without just cause
by the petitioner.
[2.b.] Reinstatement
Race was willing to be hired as a dispatcher or
conductor, and was no longer requesting to
be reinstated as a driver since he cannot drive
anymore due to his leg injury.
Even assuming that Race was willing,
reinstatement would still be unwarranted.
 o Since Victory Liner is a common
carrier, and is obliged to exercise
extra-ordinary diligence in
transporting its passengers, it would
be a violation of this diligence to
reinstate an incapacitated driver.
o An employer may not be compelled
to continue to employ such persons
whose continuance in the service will
patently be inimical to his interests.
Therefore, in lieu of reinstatement, payment
to respondent of separation pay equivalent to
one month pay for every year of service.
TO WHOM THE DUTY IS OWED
CASE DIGEST (Transportation Law): PAL.
vs. C.A.
Philippine Air Lines vs. Court of Appeals
GR 120262, 17 July 1997)
FACTS:
On 23 October 1988, Leovigildo A. Pantejo, then
City Fiscal of Surigao City, boarded a PAL plane
in Manila and disembarked in Cebu City where he
was supposed to take his connecting flight to
Surigao City. However, due to typhoon Osang,
the connecting flight to Surigao City was
cancelled. To accommodate the needs of its
stranded passengers, PAL initially gave out cash
assistance of P 100.00 and, the next day,
P200.00, for their expected stay of 2 days in
Cebu. Pantejo requested instead that he be
billeted in a hotel at the PALs expense because
he did not have cash with him at that time, but
PAL refused. Thus, Pantejo was forced to seek
and accept the generosity of a co-passenger, an
engineer named Andoni Dumlao, and he shared a
room with the latter at Sky View Hotel with the
promise to pay his share of the expenses upon
reaching Surigao. On 25 October 1988 when the
flight for Surigao was resumed, Pantejo came to
know that the hotel expenses of his co-
passengers, one Superintendent Ernesto
Gonzales and a certain Mrs. Gloria Rocha, an
Auditor of the Philippine National Bank, were
reimbursed by PAL. At this point, Pantejo
informed Oscar Jereza, PALs Manager for
Departure Services at Mactan Airport and who
was in charge of cancelled flights, that he was
going to sue the airline for discriminating against
him. It was only then that Jereza offered to pay
Pantejo P300.00 which, due to the ordeal and
anguish he had undergone, the latter declined.
Pantejo filed a suit for damages against PAL with
the RTC of Surigao City which, after trial,
rendered judgment, ordering PAL to pay Pantejo
P300.00 for actual damages, P150,000.00 as
moral damages, P100,000.00 as exemplary
damages, P15,000.00 as attorneys fees, and 6%
interest from the time of the filing of the complaint
until said amounts shall have been fully paid, plus
costs of suit.
On appeal, the appellate court affirmed the
decision of the court a quo, but with the exclusion
of the award of attorneys fees and litigation
expenses.
The Supreme Court affirmed the challenged
judgment of Court of Appeals, subject to the
modification regarding the computation of the 6%
legal rate of interest on the monetary awards
granted therein to Pantejo.
ISSUE:
Whether petitioner airlines acted in bad faith
when it failed and refused to provide hotel
accommodations for respondent Pantejo or to
reimburse him for hotel expenses incurred by
reason of the cancellation of its connecting flight
to Surigao City due to force majeur.
HELD:
A contract to transport passengers is quite
different in kind and degree from any other
contractual relation, and this is because of the
relation which an air carrier sustains with the
public. Its business is mainly with the travelling
public. It invites people to avail of the comforts
and advantages it offers. The contract of air
carriage, therefore, generates a relation attended
with a public duty. Neglect or malfeasance of the
carriers employees naturally could give ground
for an action for damages.
The discriminatory act of PAL against Pantejo
ineludibly makes the former liable for moral
damages under Article 21 in relation to Article
2219 (10) of the Civil Code. As held in Alitalia
Airways vs. CA, et al., such inattention to and lack
of care by the airline for the interest of its
passengers who are entitled to its utmost
consideration, particularly as to their
convenience, amount to bad faith which entitles
the passenger to the award of moral damages.

Moral damages are emphatically not intended to

enrich a plaintiff at the expense of the defendant.
They are awarded only to allow the former to
obtain means, diversion, or amusements that will
serve to alleviate the moral suffering he has
undergone due to the defendants culpable action
and must, perforce, be proportional to the
suffering inflicted. However, substantial damages
do not translate into excessive damages. Herein,
except for attorneys fees and costs of suit, it will
be noted that the Courts of Appeals affirmed point
by point the factual findings of the lower court
upon which the award of damages had been
based.

The interest of 6% imposed by the court should

be computed from the date of rendition of
judgment and not from the filing of the complaint.

The rule has been laid down in Eastern Shipping

Lines, Inc. vs. Court of Appeals, et. al. that when
an obligation, not constituting a loan or
forbearance of money, is breached, an interest on
the amount of damages awarded may be
imposed at the discretion of the court at the rate
of 6% per annum. No interest, however, shall be
adjudged on unliquidated claims or damages
except when or until the demand can be
established with reasonable certainty.
Accordingly, where the demand is established
with reasonable certainty, the interest shall begin
to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when
such certainty cannot be so reasonably
established at the time the demand is made, the
interest shall begin to run only from the date the
judgment of the court is made (at which time the
quantification of damages may be deemed to
have been reasonably ascertained). The actual
base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
This is because at the time of the filling of the
complaint, the amount of the damages to which
Pantejo may be entitled remains unliquidated and
not known, until it is definitely ascertained,
assessed and determined by the court, and only
after the presentation of proof thereon.