2004

Provident Insurance Corp. vs. CA, January 15, 2004

Facts:

The vessel MV “Eduardo II” took and received on board at Sangi, Toledo City a shipment of 32,000
plastic woven bags of various fertilizer for transportation to Cagayan de Oro City. The subject
shipment was consigned to Atlas Fertilizer Corporation.

Upon its arrival at General Santos City, the vessel was instructed by the consignee’s
representative to proceed to Davao City and deliver the shipment to its Davao Branch.

The vessel arrived in Davao City where the subject shipment was unloaded. In the process of
unloading the shipment, three bags of fertilizer fell overboard and 281 bags were considered to
be unrecovered spillages.

Petitioner Provident Insurance Corporation indemnified the consignee Atlas Fertilizer

Corporation for its damages. Thereafter, petitioner filed a complaint against respondent carrier
seeking reimbursement.

Respondent carrier moved to dismiss the complaint on the ground that the claim or demand by
petitioner has been waived, abandoned or otherwise extinguished for failure of the consignee to
comply with the required claim for damages set forth in the stipulation of the bill of lading.

The trial court found the motion to dismiss well taken and accordingly, dismissed the complaint.

The petitioner appealed to the Court of Appeals (CA). The CA rendered the assailed decision
which affirmed the lower court’s dismissal, hence this petition.

Issue:

Whether or not there was a failure to make the prompt notice of claim as required be fatal to the
right of petitioner to claim indemnification for damages.

Held:

The petition was DENIED

Carriage of Goods by Sea Act; Bill of Lading; The bill of lading defines the rights and liabilities of
the parties in reference to the contract of carriage.—The bill of lading defines the rights and
liabilities of the parties in reference to the contract of carriage. Stipulations therein are valid and
binding in the absence of any showing that the same are contrary to law, morals, customs, public
order and public policy. Where the terms of the contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of the stipulations shall control.
2004

Same; Same; A bill of lading is in the nature of a contract of adhesion; These types of contracts
have been declared as binding as ordinary contracts the reason being that the party who adheres
to the contract is free to reject it entirely.—A bill of lading is in the nature of a contract of
adhesion, defined as one where one of the parties imposes a ready-made form of contract which
the other party may accept or reject, but which the latter cannot modify. One party prepares the
stipulation in the contract, while the other party merely affixes his signature or his “adhesion”
thereto, giving no room for negotiation and depriving the latter of the opportunity to bargain on
equal footing. Nevertheless, these types of contracts have been declared as binding as ordinary
contracts, the reason being that the party who adheres to the contract is free to reject it entirely.
2004

Lorenzo Shipping Corp. vs. Chubb and Sons, Inc.

Facts:

On November 21, 1987, Mayer Steel Pipe Corporation of Binondo, Manila, loaded 581 bundles
of ERW black steel pipes worth US$137,912.844 on board the vessel M/V Lorcon IV, owned by
petitioner Lorenzo Shipping, for shipment to Davao City. Petitioner Lorenzo Shipping issued a
clean bill of lading designated as Bill of Lading No. T-35 for the account of the consignee,
Sumitomo Corporation of San Francisco, California, USA, which in turn, insured the goods with
respondent Chubb and Sons, Inc.

The M/V Lorcon IV arrived at the Sasa Wharf in Davao City on December 2, 1987. Respondent
Transmarine Carriers received the subject shipment which was discharged on December 4, 1987,
evidenced by Delivery Cargo Receipt No. 115090.7 It discovered seawater in the hatch of M/V
Lorcon IV, and found the steel pipes submerged in it. The consignee Sumitomo then hired the
services of R.J. Del Pan Surveyors to inspect the shipment prior to and subsequent to discharge.
Del Pan’s Survey Report8 dated December 4, 1987 showed that the subject shipment was no
longer in good condition, as in fact, the pipes were found with rust formation on top and/or at
the sides. Moreover, the surveyor noted that the cargo hold of the M/V Lorcon IV was flooded
with seawater, and the tank top was “rusty, thinning, and with several holes at different places.”
The rusty condition of the cargo was noted on the mate’s receipts and the checker of M/V Lorcon
IV signed his conforme thereon.

After the survey, respondent Gearbulk loaded the shipment on board its vessel M/V San Mateo
Victory, for carriage to the United States. It issued Bills of Lading Nos. DAV/OAK 1 to 7,10 covering
364 bundles of steel pipes to be discharged at Oakland, U.S.A., and Bills of Lading Nos. DAV/SEA
1 to 6,11 covering 217 bundles of steel pipes to be discharged at Vancouver, Washington, U.S.A.
All bills of lading were marked “ALL UNITS HEAVILY RUSTED.”

While the cargo was in transit from Davao City to the U.S.A., consignee Sumitomo sent a letter
of intent dated December 7, 1987, to petitioner Lorenzo Shipping, which the latter received on
December 9, 1987. Sumitomo informed petitioner Lorenzo Shipping that it will be filing a claim
based on the damaged cargo once such damage had been ascertained.

On January 17, 1988, M/V San Mateo Victory arrived at Oakland, California, U.S.A., where it
unloaded 364 bundles of the subject steel pipes. It then sailed to Vancouver, Washington on
January 23, 1988 where it unloaded the remaining 217 bundles. Toplis and Harding, Inc. of San
Franciso, California, surveyed the steel pipes, and also discovered the latter heavily rusted. When
the steel pipes were tested with a silver nitrate solution, Toplis and Harding found that they had
come in contact with salt water.
2004

Due to its heavily rusted condition, the consignee Sumitomo rejected the damaged steel pipes
and declared them unfit for the purpose they were intended.14 It then filed a marine insurance
claim with respondent Chubb and Sons, Inc. which the latter settled in the amount of
US$104,151.00.

On December 2, 1988, respondent Chubb and Sons, Inc. filed a complaint16 for collection of a
sum of money, docketed as Civil Case No. 88-47096, against respondents Lorenzo Shipping,
Gearbulk, and Transmarine. Respondent Chubb and Sons, Inc. alleged that it is not doing business
in the Philippines, and that it is suing under an isolated transaction.

On February 21, 1989, respondents Gearbulk and Transmarine filed their answer17 with
counterclaim and cross-claim against petitioner Lorenzo Shipping denying liability on the
following grounds: (a) respondent Chubb and Sons, Inc. has no capacity to sue before Philippine
courts; (b) the action should be dismissed on the ground of forum non conveniens; (c) damage
to the steel pipes was due to the inherent nature of the goods or to the insufficiency of packing
thereof; (d) damage to the steel pipes was not due to their fault or negligence; and, (e) the law
of the country of destination, U.S.A., governs the contract of carriage.

Petitioner Lorenzo Shipping filed its answer with counterclaim on February 28, 1989, and
amended it on May 24, 1989. It denied liability, alleging, among others: (a) that rust easily forms
on steel by mere exposure to air, moisture and other marine elements; (b) that it made a
disclaimer in the bill of lading; (c) that the goods were improperly packed; and, (d) prescription,
laches, and extinguishment of obligations and actions had set in.

The Regional Trial Court ruled in favor of the respondent Chubb and Sons, Inc., finding that
petitioner Lorenzo Shipping was negligent in the performance of its obligations as a carrier. The
Court of Appeals affirmed the decision of the Trial Court.

Issue:

Whether petitioner Lorenzo Shipping is negligent in carrying the subject cargo

Held:

Petitioner Lorenzo Shipping was negligent in its care and custody of the consignee’s goods.

The steel pipes, subject of this case, were in good condition when they were loaded at the port
of origin (Manila) on board petitioner Lorenzo Shipping’s M/V Lorcon IV en route to Davao City.
Petitioner Lorenzo Shipping issued clean bills of lading covering the subject shipment. A bill of
lading, aside from being a contract and a receipt, is also a symbol of the goods covered by it. A
bill of lading which has no notation of any defect or damage in the goods is called a “clean bill of
2004

lading.” A clean bill of lading constitutes prima facie evidence of the receipt by the carrier of the
goods as therein described.

The case law teaches us that mere proof of delivery of goods in good order to a carrier and the
subsequent arrival in damaged condition at the place of destination raises a prima facie case
against the carrier. In the case at bar, M/V Lorcon IV of petitioner Lorenzo Shipping received the
steel pipes in good order and condition, evidenced by the clean bills of lading it issued. When the
cargo was unloaded from petitioner Lorenzo Shipping’s vessel at the Sasa Wharf in Davao City,
the steel pipes were rusted all over.

Moreover, the twenty-four-hour period prescribed by Art. 366 of the Code of Commerce within
which claims must be presented does not begin to run until the consignee has received such
possession of the merchandise that he may exercise over it the ordinary control pertinent to
ownership. In other words, there must be delivery of the cargo by the carrier to the consignee at
the place of destination. In the case at bar, consignee Sumitomo has not received possession of
the cargo, and has not physically inspected the same at the time the shipment was discharged
from M/V Lorcon IV in Davao City.
2004

Hernandez vs. Dolor

Facts:

Boyet Dolor and Oscar Valmocina died as a result of a collision between an owner type jeep
driven by Dolor and a passenger type jeep driven by Juan Gonzales and owned by spouses
Hernandez. Respondents commenced an action for damages against petitioners Spouses
Hernandez and Gonzales before the RTC alleging that driver Juan Gonzales was guilty of
negligence and lack of care and that the Hernandez spouses were guilty of negligence in the
selection and supervision of their employees.

During the trial, the following were established:

1 The owner type jeep was travelling at a moderate

speed.
2. The passenger jeepney was travelling fast when it bumped into the owner type
jeep
3. Petitioner Gonzales obtained his professional driver’s license only 3 months
before the accident occurred
4. Spouses Hernandez leases the jeep to the driver on a daily basis.

Spouses Hernandez contending that they should not be impleaded in the case since they were
not in the jeep during the accident. They also claimed that there is no employer-employee
relationship that exist between them and Gonzales since they only lease the jeep to the latter.

The RTC rendered the decision in favor of the victims and held Spouses Hernandez solidarily
liable. The CA affirmed the decision but with a few modifications on the amount of the damages.

Issue:

1. WON Spouses Hernandez are solidarily liable with Gonzales.

2. Whether the Court of Appeals was correct in awarding temperate damages to private
respondents namely the Spouses Dolor, Spouses Valmocina and Spouses Panopio and to
Joseph Sandoval.

3. Whether the Court of Appeals was correct in increasing the award of moral damages to
respondents,
Spouses Dolor, Spouses Valmocina and Fred Panopio;
2004

Ruling:

1. Yes, Spouses Hernandez are solidarily liable with Gonzales.

The SC held that employer-employee relationship exists between the Hernandez spouses and
Julian Gonzales. Indeed to exempt from liability the owner of a public vehicle who operates it
under the “boundary system” on the ground that he is a mere lessor would be not only to abet
flagrant violations of the Public Service Law, but also to place the riding public at the mercy of
reckless and irresponsible drivers—reckless because the measure of their earnings depends
largely upon the number of trips they make and, hence, the speed at which they drive; and
irresponsible because most if not all of them are in no position to pay the damages they might
cause.

Under Art. 2180, an employer may be held solidary liable for the negligent act of his
employee.— While the above provisions of law do not expressly provide for solidary liability, the
same can be inferred from the wordings of the first paragraph of Article 2180 which states that
the obligation imposed by article 2176 is demandable not only for one’s own acts or omissions,
but also for those of persons for whom one is responsible. Moreover, Article 2180 should be read
with Article 2194 of the same Code, which categorically states that the responsibility of two or
more persons who are liable for quasi-delict is solidary. In other words, the liability of joint
tortfeasors is solidary. Verily, under Article 2180 of the Civil Code, an employer may be held
solidarily liable for the negligent act of his employee.

2. Yes. Temperate or moderate damages are damages which are more than nominal but less
than compensatory which may be recovered when the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of the case, be proved with
certainty. Temperate damages are awarded for those cases where, from the nature of the
case, definite proof of pecuniary loss cannot be offered, although the court is convinced
that there has been such loss. A judge should be empowered to calculate moderate
damages in such cases, rather than the plaintiff should suffer, without redress, from the
defendant’s wrongful act. The assessment of temperate damages is left to the sound
discretion of the court provided that such an award is reasonable under the
circumstances. These losses came in the form of the damage sustained by the owner type
jeep of the Dolor spouses; the internment and burial of Oscar Valmocina; the
hospitalization of Joseph Sandoval on account of the injuries he sustained from the
collision and the artificial leg and crutches that respondent Fred Panopio had to use
because of the amputation of his right leg. Further, we find that the amount of temperate
damages awarded to the respondents were reasonable under the circumstances.
2004

3. Yes. Under Article 2206, the “spouse, legitimate and illegitimate descendants and
ascendants of the deceased may demand moral damages for mental anguish for the
death of the deceased.” The reason for the grant of moral damages has been explained,
thus: . . . the award of moral damages is aimed at a restoration, within the limits possible,
of the spiritual status quo ante; and therefore, it must be proportionate to the suffering
inflicted. The intensity of the pain experienced by the relatives of the victim is
proportionate to the intensity of affection for him and bears no relation whatsoever with
the wealth or means of the offender. While it is true that there can be no exact or uniform
rule for measuring the value of a human life and the measure of damages cannot be
arrived at by a precise mathematical calculation, we hold that the Court of Appeals’ award
of moral damages of P100,000.00 each to the Spouses Dolor and Spouses Valmocina for
the death of their respective sons, Boyet Dolor and Oscar Valmocina, is in full accord with
prevailing jurisprudence.
2004

TIU v. ARRIESGADO
SUMMARY:
Pedrano was driving a truck owned by Candor when one of its rear tires exploded. He parked the
truck along the right side of the national highway and left to have the tire vulcanized. He told his
helper to keep watch over it and to place a spare tire behind the truck as warning device. The tail
lights were left on.

Tiu was the owner of a passenger bus driven by Laspinas. The driver saw the truck 25 meters
away. He applied the brakes and tried to swerve to avoid hitting the truck. But it was too late, so
the bus rammed into the truck, resulting in injuries to several passengers, including the
Arriesgado spouses. They were taken to the hospital, but the wife eventually died.

FACTS:
At about 10:00 p.m. of March 15, 1987, the cargo truck marked “Condor Hollow Blocks
and General Merchandise” bearing plate number GBP-675 was loaded with firewood in Bogo,
Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the
truck passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then parked
along the right side of the national highway and removed the damaged tire to have it vulcanized
at a nearby shop, about 700 meters away. Pedrano left his helper, Jose Mitante, Jr. to keep watch
over the stalled vehicle, and instructed the latter to place a spare tire six fathoms away behind
the stalled truck to serve as a warning for oncoming vehicles. The truck’s tail lights were also left
on. It was about 12:00 a.m., March 16, 1987.

At about 4:45 a.m., D’ Rough Riders passenger bus with plate number PBP-724 driven by
Virgilio Te Laspiñas was cruising along the national highway of Sitio Aggies, Poblacion,
Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come from Maya,
Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa
Pepito Arriesgado, who were seated at the right side of the bus, about three (3) or four (4) places
from the front seat. As the bus was approaching the bridge, Laspiñas saw the stalled truck, which
was then about 25 meters away. He applied the brakes and tried to swerve to the left to avoid
hitting the truck. But it was too late; the bus rammed into the truck’s left rear. The impact
damaged the right side of the bus and left several passengers injured. Pedro Arriesgadolost
consciousness and suffered a fracture in his right colles. His wife, Felisa, was brought to the Danao
City Hospital. She was later transferred to the Southern Island Medical Center where she died
shortly thereafter.

Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage,
damages and attorney’s fees before the Regional Trial Court of Cebu City, Branch 20, against the
petitioners, D’ Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspiñas on May
2004

27, 1987. The respondent alleged that the passenger bus in question was cruising at a fast and
high speed along the national road, and that petitioner Laspiñas did not take precautionary
measures to avoid the accident.

ISSUES:
1. WON LAS PINAS, THE BUS DRIVER, IS LIABLE
YES. In his testimony before the trial court, petitioner Laspiñas claimed that he was traversing
the twolane road at Compostela, Cebu at a speed of only forty (40) to fifty (50) kilometers per
hour before the incident occurred. He also admitted that he saw the truck which was parked in
an “oblique position” at about 25 meters before impact, and tried to avoid hitting it by swerving
to the left. However, even in the absence of expert evidence, the damage sustained by the truck
itself supports the finding of both the trial court and the appellate court, that the D’ Rough Rider
bus driven by petitioner Laspiñas was traveling at a fast pace. Since he saw the stalled truck at a
distance of 25 meters, petitioner Laspiñas had more than enough time to swerve to his left to
avoid hitting it; that is, if the speed of the bus was only 40 to 50 kilometers per hour as he claimed.
As found by the Court of Appeals, it is easier to believe that petitioner Laspiñas was driving at a
very fast speed, since at 4:45 a.m., the hour of the accident, there were no oncoming vehicles at
the opposite direction. Petitioner Laspiñas could have swerved to the left lane with proper
clearance, and, thus, could have avoided the truck. Instinct, at the very least, would have
prompted him to apply the breaks to avert the impending disaster which he must have foreseen
when he caught sight of the stalled truck.

A man must use common sense, and exercise due reflection in all his acts—it is his duty to be
cautious, careful and prudent, if not from instinct, then through fear of recurring punishment.
Under the said contract of carriage, the petitioners assumed the express obligation to transport
the respondent and his wife to their destination safely and to observe extraordinary diligence
with due regard for all circumstances. Any injury suffered by the passengers in the course thereof
is immediately attributable to the negligence of the carrier. Upon the happening of the accident,
the presumption of negligence at once arises, and it becomes the duty of a common carrier to
prove that he observed extraordinary diligence in the care of his passengers. It must be stressed
that in requiring the highest possible degree of diligence from common carriers and in creating a
presumption of negligence against them, the law compels them to curb the recklessness of their
drivers.

2. WON TIU, THE BUS OPERATOR, IS LIABLE

YES. It is such a firmly established principle, as to have virtually formed part of the law itself, that
the negligence of the employee gives rise to the presumption of negligence on the part of the
2004

employer. This is the presumed negligence in the selection and supervision of employee. The
theory of presumed negligence, in contrast with the American doctrine of respondeat superior,
where the negligence of the employee is conclusivelypresumed to be the negligence of the
employer, is clearly deducible from the last paragraph of Article 2180 of the Civil Code which
provides that the responsibility therein mentioned shall cease if the employers prove that they
observed all the diligence of a good father of a family to prevent damages.

3. WON CANDOR AND PEDRANO, THE TRUCK OWNER AND THE TRUCK DRIVER, ARE LIABLE

YES. The manner in which the truck was parked clearly endangered oncoming traffic on both
sides, considering that the tire blowout which stalled the truck in the first place occurred in the
wee hours of the morning. The Court can only now surmise that the unfortunate incident could
have been averted had respondent Condor, the owner of the truck, equipped the said vehicle
with lights, flares, or, at the very least, an early warning device. Hence, we cannot subscribe to
respondents Condor and Pedrano’s claim that they should be absolved from liability because, as
found by the trial and appellate courts, the proximate cause of the collision was the fast speed
at which petitioner Laspiñas drove the bus. To accept this proposition would be to come too close
to wiping out the fundamental principle of law that a man must respond for the foreseeable
consequences of his own negligent act or omission. Indeed, our law on quasi-delicts seeks to
reduce the risks and burdens of living in society and to allocate them among its members. To
accept this proposition would be to weaken the very bonds of society.

4. WON THE DOCTRINE OF LAST CLEAR CHANCE APPLIES IN THIS CASE

NO. Contrary to the petitioner’s contention, the principle of last clear chance is inapplicable in
the instant case, as it only applies in a suit between the owners and drivers of two colliding
vehicles. 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 and its
owner on the ground that the other driver was likewise guilty of negligence. The common law
notion of last clear chance permitted courts to grant recovery to a plaintiff who has also been
negligent provided that the defendant had the last clear chance to avoid the casualty and failed
to do so. Accordingly, it is difficult to see what role, if any, the common law of last clear chance
doctrine has to play in a jurisdiction where the common law concept of contributory negligence
as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article
2179 of the Civil Code. Thus, petitioner Tiu cannot escape liability for the death of
respondentArriesgado’s wife due to the negligence of petitioner Laspiñas, his employee, on this
score.
2004

5. WHAT IS THE EXTENT OF THE LIABILITY OF PPSI (THE INSURER)?

The nature of Compulsory Motor Vehicle Liability Insurance is such that it is primarily intended
to provide compensation for the death or bodily injuries suffered by innocent third parties or
passengers as a result of the negligent operation and use of motor vehicles. The victims and/or
their dependents are assured of immediate financial assistance, regardless of the financial
capacity of motor vehicle owners.

Although the victim may proceed directly against the insurer for indemnity, the third party
liability is only up to the extent of the insurance policy and those required by law. While it is true
that where the insurance contract provides for indemnity against liability to third persons, and
such persons can directly sue the insurer, the direct liability of the insurer under indemnity
contracts against third party liability does not mean that the insurer can be held liable in solidum
with the insured and/or the other parties found at fault. For the liability of the insurer is based
on contract; that of the insured carrier or vehicle owner is based on tort.

DAMAGES AWARDED:
Against TIU and PPSI
Actual Damages Php 13, 000
Indemnity for Death Php 50, 000
Moral Damages Php 50, 000
Exemplary Damages Php 50, 000
Against Candor
Actual Damages Php 26, 000
Indemnity for Death Php 50, 000
Moral Damages Php 50, 000
Exemplary Damages Php 50, 000
Attorney’s Fees Php 20, 000
2004

Central Shipping Company, Inc. vs. Insurance Company of North America

September 20, 2004

Facts:

At Puerto Princesa, Palawan, the petitioner received on board its vessel, the M/V ‘Central Bohol,’
376 pieces of Philippine Apitong Round Logs and undertook to transport said shipment to Manila
for delivery to Alaska Lumber Co., Inc.

The cargo was insured for P3,000,000.00 against total loss under respondent’s Marine Cargo
Policy.

While enroute to Manila, the vessel listed about 10 degrees starboardside, due to the shifting of
logs in the hold.

After the listing of the vessel had increased to 15 degrees, the ship captain ordered his men to
abandon ship and at of the same day the vessel completely sank. Due to the sinking of the vessel,
the cargo was totally lost.

Respondent alleged that the total loss of the shipment was caused by the fault and negligence of
the petitioner and its captain and as direct consequence thereof the consignee suffered damage.

The consignee, Alaska Lumber Co. Inc., presented a claim for the value of the shipment to the
petitioner but the latter failed and refused to settle the claim, hence respondent paid the said
claim and sought reimbursement against the petitioner.

Petitioner while admitting the sinking of the vessel, interposed the defense that the vessel was
fully manned, fully equipped and in all respects seaworthy; that all the logs were properly loaded
and secured; that the vessel’s master exercised due diligence to prevent or minimize the loss
before, during and after the occurrence of the storm.

It raised as its main defense that the proximate and only cause of the sinking of its vessel and the
loss of its cargo was a natural disaster, a tropical storm which neither petitioner nor the captain
of its vessel could have foreseen.

The trial and appellate courts ruled against the petitioner, hence, this petition.

Issues:

(1) Whether the carrier was liable for the loss of the cargo; and
(2) Whether the doctrine of limited liability was applicable.

Held:
2004

The Petition was DENIED.

Civil Law; Common Carriers; Negligence; Damages; Common carriers are bound to observe
extraordinary diligence over the goods they transport, according to all the circumstances of each
case; In all other cases not specified under Article 1734 of the Civil Code, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence.—From the nature of their business and for reasons of public policy,
common carriers are bound to observe extraordinary diligence over the goods they transport,
according to all the circumstances of each case. In the event of loss, destruction or deterioration
of the insured goods, common carriers are responsible; that is, unless they can prove that such
loss, destruction or deterioration was brought about—among others—by “flood, storm,
earthquake, lightning or other natural disaster or calamity.” In all other cases not specified under
Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed extraordinary diligence.

Same; Same; Same; Same; The defense of fortuitous event or natural disaster cannot be
successfully made when the injury could have been avoided by human precaution.—Even if the
weather encountered by the ship is to be deemed a natural disaster under Article 1739 of the
Civil Code, petitioner failed to show that such natural disaster or calamity was the proximate and
only cause of the loss. Human agency must be entirely excluded from the cause of injury or loss.
In other words, the damaging effects blamed on the event or phenomenon must not have been
caused, contributed to, or worsened by the presence of human participation. The defense of
fortuitous event or natural disaster cannot be successfully made when the injury could have been
avoided by human precaution.

Same; Same; Same; Same; Doctrine of Limited Liability; Doctrine does not apply to situations in
which the loss or the injury is due to the concurrent negligence of the shipowner and the
captain.—The doctrine of limited liability under Article 587 of the Code of Commerce is not
applicable to the present case. This rule does not apply to situations in which the loss or the injury
is due to the concurrent negligence of the ship-owner and the captain. It has already been
established that the sinking of M/V Central Bohol had been caused by the fault or negligence of
the ship captain and the crew, as shown by the improper stowage of the cargo of logs. “Closer
supervision on the part of the shipowner could have prevented this fatal miscalculation.” As such,
the shipowner was equally negligent. It cannot escape liability by virtue of the limited liability
rule.
2004

Victory Liner vs. Gammad

On March 14, 1996, his wife Marie Grace Pagulayan-Gammad,3 was on board an air-conditioned
Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the bus while
running at a high speed fell on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya,
which resulted in the death of Marie Grace and physical injuries to other passengers.

On May 14, 1996, respondent heirs of the deceased filed a complaint5 for damages arising from
culpa contractual against petitioner. In its answer,6 the petitioner claimed that the incident was
purely accidental and that it has always exercised extraordinary diligence in its 50 years of
operation.

At the pre-trial on May 6, 1997, petitioner did not want to admit the proposed stipulation that
the deceased was a passenger of the Victory Liner Bus which fell on the ravine and that she was
issued Passenger Ticket No. 977785. Respon dents, for their part, did not accept petitioner’s
proposal to pay P50,000.00.

After respondent Rosalito Gammad completed his direct testimony, cross-examination was
scheduled for November 17, 199713 but moved to December 8, 1997,14 because the parties and
the counsel failed to appear. On December 8, 1997, counsel of petitioner was absent despite due
notice and was deemed to have waived right to cross-examine respondent Rosalito.

The trial court issued an order considering the case submitted for decision for failure of petitioner
and counsel to appear. On November 6, 1998, the trial court rendered its decision in favor of
respondents and consequently affirmed by the Court of Appeals with modification.

Issue:

Whether petitioner should be held liable for breach of contract of carriage

Held:

Petitioner was correctly found liable for breach of contract of carriage.

A common carrier is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard to all the
circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or
was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court
need not even make an express finding of fault or negligence on the part of the common carrier.
This statutory presumption may only be overcome by evidence that the carrier exercised
extraordinary diligence.
2004

A.F. Sanchez Brokerage, Inc. vs. Court of Appeals

Facts:

A.F. Sanchez is engaged in a broker business wherein its main job is to calculate customs duty,
fees and charges as well as storage fees for the cargoes. Part also of the services being given by
A.F. Sanchez is the delivery of the Shipment of the consignee upon the instruction of the shipper.

Wyett engaged the services of A.F. Sanchez where the latter delivered the shipment to Hizon
laboratories upon instruction of Wyett. Upon inspection, it was found out that at least 44 cartons
containing contraceptives were in bad condition. Wyett claimed insurance from FGU. FGU
exercising its right of subrogation claims damages against A.F. Sanchez who delivered the
damaged goods. A.F. Sanchez contended that it is not a common carrier but a brokerage firm.

Issue:

WON A.F. Sanchez a Common Carrier

Ruling:

SC held that Art. 1732 of the Civil Code in defining common carrier does not distinguish whether
the activity is undertaken as principal activity or merely as an ancillary activity. In this case, while
it is true that A.F. Sanchez is principally engaged as a broker, it cannot be denied from the
evidence presented that part of the services it offers to its customers is the delivery of the goods
to their respective consignees.

A.F. Sanchez claimed that the proximate cause of the damage is improper packing. Under the
Civil Code, improper packing of the goods is an exonerating circumstance. But in this case, the SC
held that though the goods were improperly packed, since A.F. Sanchez knew of the condition
and yet it accepted the shipment without protest or reservation, the defense is deemed waived.
2004

MACONDRAY & CO. INC v. PROVIDENT INSURANCE CORP

FACTS:
On February 16, 1991, at Vancouver, B.C. Canada, CANPOTEX SHIPPING SERVICES LIMITED
INC., of Saskatoon, Saskatchewan, (hereinafter the SHIPPER), shipped and loaded on board the
vessel M/V ‘Trade Carrier’, 5000 metric tons of Standard Grade Muriate of Potash in bulk for
transportation to and delivery at the port of Sangi, Toledo City, Cebu, in favor of ATLAS FERTILIZER
CORPORATION, (hereinafter CONSIGNEE) covered by B/L Nos. VAN-SAN-1 for the 815.96 metric
tons and VAN-SAN-2 for the 4,184.04 metric tons. Subject shipments were insured with Provident
Insurance Corp. against all risks under and by virtue of an Open Marine Policy No. MOP-00143
and Certificate of Marine Insurance No. CMI-823-91.

When the shipment arrived, CONSIGNEE discovered that the shipment sustained losses/shortage
of 476.140 metric tons valued at One Million Six Hundred Fifty Seven Thousand Seven Hundred
Pesos and Ninety Five Centavos (P1,657,700.95), Philippine Currency. Provident paid losses.
Formal claims was then filed with Trade & Transport and Macondray. TRADE AND TRANSPORT
was the alleged operator of the vessel who transported the subject shipment while MACONDRAY
is the local representative of the SHIPPER. They refused and failed to settle the claims. Hence this
complaint.

ISSUES:
WON MACONDRAY IS LIABLE
YES. Although it is not an agent of Trade and Transport, petitioner can still be the ship agent of
the vessel M/V Trade Carrier.

Article 586 of the Code of Commerce states that a ship agent is “the person entrusted with
provisioning or representing the vessel in the port in which it may be found.” Hence, whether
acting as agent of the owner of the vessel or as agent of the charterer, petitioner will be
considered as the ship agent and may be held liable as such, as long as the latter is the one that
provisions or represents the vessel.

The trial court found that petitioner “was appointed as local agent of the vessel, which duty
includes arrangement for the entrance and clearance of the vessel.” Further, the CA found and
the evidence shows that petitioner represented the vessel. The latter prepared the Notice of
Readiness, the Statement of Facts, the Completion Notice, the Sailing Notice and Custom’s
Clearance. Petitioner’s employees were pre sent at Sangi, Toledo City, one day before the arrival
of the vessel, where they stayed until it departed. They were also present during the actual
2004

discharging of the cargo. Moreover, Mr. de la Cruz, the representative of petitioner, also
prepared for the needs of the vessel, like money, provision, water and fuel. These acts all point
to the conclusion that it was the entity that represented the vessel in the Port of Manila and was
the ship agent within the meaning and context of Article 586 of the Code of Commerce.

PETITION IS DENIED.