Gatchalian vs.

Delim

FACTS: Petitioner Reynalda Gatchalian boarded, as a paying passenger, respondent’s “Thames” minibus at a
point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. while the bus was running, a snapping
sound” was suddenly heard at one part of the bus and, shortly thereafter, the vehicle bumped a cement flower pot
on the side of the road, went off the road, turned turtle and fell into a ditch. Several passengers, including
petitioner Gatchalian, were injured. They were promptly taken to Bethany Hospital at San Fernando, La Union, for
medical treatment. While injured passengers were confined in the hospital, Mrs. Adela Delim, wife of
respondent, visited them and later paid for their hospitalization and medical expenses. She also gave petitioner
P12.00 with which to pay her transportation expense in going home from the hospital. However, before Mrs. Delim
left, she had the injured passengers, including petitioner, sign an already prepared Joint Affidavit. Notwithstanding
this document, petitioner Gatchalian filed with the then Court of First Instance of La Union an action extra
contract to recover compensatory and moral damages (Facial scarring). In defense, respondent averred that the
vehicular mishap was due to force majeure, and that petitioner had already been paid and moreover had waived any
right to institute any action against him (private respondent) and his driver, when petitioner Gatchalian signed the
Joint Affidavit on 14 July 1973.The trial court dismissed the complaint upon the ground that when petitioner
Gatchalian signed the Joint Affidavit, she relinquished any right of action (whether criminal or civil) that she may
have had against respondent and the driver of the minibus. The Court of Appeals reversed the trial court’s
conclusion that there had been a valid waiver, but affirmed the dismissal of the case by denying petitioner’s claim
for damages.

ISSUE: Whether or not there was a valid waiver of petitioner’s cause of action upon the signing of the Joint
Affidavit.

HELD: NO .Because what is involved here is the liability of a common carrier for injuries sustained by passengers
in respect of whose safety a common carrier must exercise extraordinary diligence, we must construe any
such purported waiver most strictly against the common carrier. For a waiver to be valid and effective, it must not
be contrary to law, morals, public policy or good customs.5 To uphold a supposed waiver of any right to claim
damages by an injured passenger, under circumstances like those exhibited in this case, would be to dilute and
weaken the standard of extraordinary diligence exacted by the law from common carriers and hence to render that
standard unenforceable.6 We believe such a purported waiver is offensive to public policy.
Crisostomo v. CA
G.R. No. 138334, August 25, 2003, 409 SCRA 528

FACTS:

Petitioner contracted the services of respondent Caravan Travel and Tours International, Inc. to arrange and facilitate her
booking, ticketing and accommodation in a tour dubbed Jewels of Europe. Pursuant to said contract, the travel documents
and plane tickets were delivered to the petitioner who in turn gave the full payment for the package tour on June 12, 1991.
Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for the first
leg of her journey from Manila to Hongkong. To petitioner’s dismay, she discovered that the flight she was supposed to take
had already departed the previous day. She learned that her plane ticket was for the flight scheduled on June 14, 1991.
She thus called up Menor to complain. Subsequently, Menor prevailed upon petitioner to take another tour- the British
Pageant. Upon petitioner’s return from Europe, she demanded from respondent the reimbursement of the difference
between the sum she paid for Jewels of Europe and the amount she owed respondent for the British Pageant tour.

Petitioner filed a complaint against respondent for breach of contract of carriage and damages alleging that her failure to
join Jewels of Europe was due to respondent’s fault since it did not clearly indicate the departure date on the plane, failing
to observe the standard of care required of a common carrier when it informed her wrongly of the flight schedule. For its
part, respondent company, denied responsibility for petitioner’s failure to join the first tour, insisting that petitioner was
informed of the correct departure date, which was clearly and legibly printed on the plane ticket. The travel documents were
given to petitioner two days ahead of the scheduled trip. Respondent further contend that petitioner had only herself to
blame for missing the flight, as she did not bother to read or confirm her flight schedule as printed on the ticket.

ISSUE:

Whether or not Caravan Travel & Tours International Inc. is negligent in the fulfilment of its obligation to petitioner Crisostomo
thus granting to the petitioner the consequential damages due her as a result of breach of contract of carriage.

RULING:

Contention of petitioner has no merit. A contract of carriage or transportation is one whereby a certain person or association
of persons obligate themselves to transport persons, things, or news from one place to another for a fixed price. Such
person or association of persons are regarded as carriers and are classified as private or special carriers and common or
public carriers. Respondent is not an entity engaged in the business of transporting either passengers or goods and is
therefore, neither a private nor a common carrier. Respondent did not undertake to transport petitioner from one place to
another since its covenant with its customers is simply to make travel arrangements in their behalf. Respondent’s services
as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours.

The object of petitioner’s contractual relation with respondent is the service of arranging and facilitating petitioners booking,
ticketing and accommodation in the package tour. In contrast, the object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the contract between the parties in this case was an ordinary one for services
and not one of carriage. Since the contract between the parties is an ordinary one for services, the standard of care required
of respondent is that of a good father of a family under Article 1173 of the Civil Code. The evidence on record shows that
respondent exercised due diligence in performing its obligations under the contract and followed standard procedure in
rendering its services to petitioner. As correctly observed by the lower court, the plane ticket issued to petitioner clearly
reflected the departure date and time, contrary to petitioner’s contention. The travel documents, consisting of the tour
itinerary, vouchers and instructions, were likewise delivered to petitioner two days prior to the trip. Respondent also properly
booked petitioner for the tour, prepared the necessary documents and procured the plane tickets. It arranged petitioner’s
hotel accommodation as well as food, land transfers and sightseeing excursions, in accordance with its avowed undertaking.
The evidence on record shows that respondent company performed its duty diligently and did not commit any contractual
breach. Hence, petitioner cannot recover and must bear her own damage.
 MINDANAO TERMINAL AND BROKERAGE
SERVICE, INC.
- versus -
PHOENIX ASSURANCE COMPANY OF NEW
YORK/MCGEE & CO., INC
G.R. No. 162467 May 8, 2009
FACTS:

Del Monte Philippines, Inc. contracted petitioner Mindanao Terminal and Brokerage Service, Inc., a stevedoring
company, to load and stow a shipment of 146,288 cartons of fresh green Philippine bananas and
15,202 cartons of fresh pineapples belonging to Del Monte Fresh Produce International, Inc. into the cargo hold of
the vessel M/V Mistrau. The vessel was docked at the port Davao City and the goods were to be transported by it to
the port of Inchon, Korea in favor of consignee Taegu Industries, Inc. Del Monte Produce insured the shipment
under an "open cargo policy" with private respondent Phoenix Assurance Company of New York, a non-life
insurance company, and private respondent McGee & Co. Inc. (McGee), the underwriting manager/agent of Phoenix.
The vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It was then discovered upon
discharge that some of the cargo was in bad condition. The Marine Cargo Damage Surveyor of Incok Loss
and Average Adjuster of Korea, through its representative Byeong Yong Ahn (Byeong), surveyed the extent
of the damage of the shipment. In a survey report, it was stated that 16,069 cartons of the banana shipment
and 2,185 cartons of the pineapple shipment were so damaged that they no longer had commercial value. Mindanao
Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The vessel set sail from the port of Davao City and
arrived at the port of Inchon, Korea. It was then discovered upon discharge that some of the cargo was in bad
condition. Del Monte Produce filed a claim under the open cargo policy for the damages to its shipment. McGee’s
Marine Claims Insurance Adjuster evaluated the claim and recommended that payment in the amount of
$210,266.43 be made. Phoenix and McGee instituted an action for damages against Mindanao Terminal
After trial, the RTC held that the only participation of Mindanao Terminal was to load the cargoes on board the
M/V Mistrau under the direction and supervision of the ship’s officers, who would not have accepted the cargoes on
board the vessel and signed the foreman’s report unless they were properly arranged and tightly secured to
withstand voyage across the open seas. Accordingly, Mindanao Terminal cannot be held liable for
whatever happened to the cargoes after it had loaded and stowed them. Moreover, citing the survey report, it was
found by the RTC that the cargoes were damaged on account of a typhoon which M/V Mistrau had encountered during
the voyage. It was further held that Phoenix and McGee had no cause of action against Mindanao Terminal because
the latter, whose services were contracted by Del Monte, a distinct corporation from Del Monte Produce, had
no contract with the assured Del Monte Produce. The RTC dismissed the complaint and awarded the counterclaim of
Mindanao Terminal in the amount of P83,945.80 as actual damages and P100,000.00 as attorney’s fees.

ISSUE:

Whether or not Phoenix and McGee have a cause of action and whether Mindanao Terminal is liable for not having
exercised extraordinary diligence in the transport and storage of the cargo.

RULING:

No, in the present case, Mindanao Terminal, as a stevedore, was only charged with the loading and stowing of the
cargoes from the pier to the ship’s cargo hold; it was never the custodian of the shipment of Del Monte Produce.
A stevedore is not a common carrier for it does not transport goods or passengers; it is not
akin to a warehouseman for it does not store goods for profit. **Phoenix and McGee appealed to the Court of
Appeals. The appellate court reversed and set aside the decision The same court ordered Mindanao Terminal to pay
Phoenix and McGee "the total amount of $210,265.45 plus legal interest from the filing of the complaint until fully
paid and attorney’s fees of 20% of the claim." It sustained Phoenix’s and McGee’s argument that the damage in the
cargoes was the result of improper stowage by Mindanao Terminal. ** Mindanao Terminal filed a motion for
reconsideration, which the Court of Appeals denied in its 26 February 2004 resolution. Hence, the present petition for
review.
 Calalas v Court of Appeals & Eliza Sunga

Facts:

Private Respondent Eliza Saunga took a passenger jeepney owned and operated by Petitioner Vicente Calalas. As the jeepney
was already full, she was just given an “extension seat”, a wooden stool, at the rear end of the vehicle.

On the way, the jeepney stopped to let a passenger off. Since Sunga was seated at the rear end, she gave way to the outgoing
passenger. Just as she was doing so, an Isuzu Elf Truck driven by Igclerio Verena and owned by Francisco Salva, bumped to the
left rear end of the jeepney. This incident cause injury to Sunga.

She filed a complaint for damages against Calalas on the ground of breach of contract of carriage. On the other hand, Calalas
filed a third-party complaint against Salva, the owner of the truck.

The Regional Trial Court (RTC) found Salva guilty and absolved Calalas from liability holding that it was the truck owner who is
responsible for the accident based on quasi-delict.

However, on appeal to the Court of Appeals (CA), the appellate court reversed the RTC’s decision, on the ground that Sunga’s
cause of action was based on a breach of contract of carriage and not on quasi-delict.

Hence, this appeal from Calalas.

ISSUE: Whether or not the negligence of the truck driver as the proximate cause of the accident which negates petitioner’s
liability?

RULING:

No. First, the issue in this case is the liability under contract of carriage.

In this case, the petitioner failed to transport his passenger safely to his destination as a common carrier in violation of Arts. 1733
and 1755 of the New Civil Code.

Moreso, there is no basis that the ruling of the RTC binds Sunga. It is immaterial that the proximate cause of the collision was
the truck driver, because the doctrine of proximate cause applies only to cases of quasi-delict.

The doctrine of proximate cause is a device for imputing liability to a person where there is no relation between him and another
party. But in the case at bar, there is a pre-existing relation between petitioner and respondent in their contract of carriage.
Hence, upon happening of the accident, the presumption of negligence at once arose on Calalas’ part, which makes him liable.
 G.R. No. L-8937 November 29, 1957

OLEGARIO BRITO SY, plaintiff-appellee,

vs.
MALATE TAXI CAB & GARAGE, INC., defendant-appelant

FACTS:

On June 26, 1952, at Dewey Boulevard in front of the Selecta Restaurant, Olegario Brito Sy engaged a taxicab bearing
plate No. Taxi-1130, owned and operated by Malate Taxicab and Garage, Inc. and driven by Catalino Ermino, to take him
to his place of business at Dencia's Restaurant on the Escolta where he was the general manager. Upon reaching the Rizal
Monument he told the driver to turn to the right, but the latter did not heed him and instead countered that they better pass
along Katigbak Drive. At the intersection of Dewey Bolevard and Katigbak Drive, the taxi collided with an army wagon with
plate No. TPI-695 driven by Sgt. Jesus De quito, as a result of which Olegario Brito Sy was jarred, jammed and jolted. He
was taken to the Santa Isabel Hospital suffering from bruises and contusions as well as fractured right leg. Thereafter he
was transferred to the Gonzales Orthopedic Clinic and was accordingly operated on. He spent some P2,266.45 for medical
bills and hospitalization.

On September 30, 1952, Sy filed action against the Malate Taxicab & Garage, Inc., based upon a contract of carriage, to
recover the sums of P7,200 as actual or compensatory damages, P20,000 as moral damages, P15,000 as nominal and
exemplary damages, and P3,000 a attorney's fees. On October 2, 1952, a copy of the complaint was served on and received
by the defendant, but the latter filed its answer only on October 20, 1952, wherein it alleged that the collision subject of the
complaint was not due to the negligence of its driver but to that of Sgt. Jesus Dequito, the driver of the army wagon; and,
by way of counterclaim, sought to recover the sum of P1,000 as damages caused by the alleged malicious and frivolous
action filed against it.

ISSUE:

Whether or not the trial court erred in not deciding or making an express finding as to whether the defendant appellant
Malate Taxicab & Garage, Inc. was responsible for the collision, and hence, civilly responsible to the plaintiff-appellee.

RULING:

The court need not make an express finding of fault or negligence on the part of the defendant appellant in order to hold it
responsible to pay the damages sought for by the plaintiff, for the action initiated therefor is based on a contract of carriage
and not on tort. When plaintiff rode on defendant-appellant's taxicab, the latter assumed the express obligation to transport
him to his destination safely, and to observe extraordinary diligence with a due regard for all the circumstances, and any
injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier (Article
1756, supra). This is an exception to the general rule that negligence must be proved, and it was therefore incumbent upon
the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the new Civil
Code. It is noteworthy, however, that at the hearing in the lower court defendant-appellant failed to appear and has not
presented any evidence at all to overcome and overwhelm the presumption of negligence imposed upon it by law; hence,
there was no need for the lower court to make an express finding thereon in view of the provisions of the aforequoted Article
1756 of the new Civil Code.Wherefore, the decision of the lower court is hereby affirmed with cost against the appellant.
 JOSE PILAPIL vs. COURT OF APPEALS and ALATCO TRANSPORTATION COMPANY, INC.
(G.R. No. 52159, December 22, 1989)

FACTS:

Petitioner Pilapil, on board respondent’s bus was hit above his eye by a stone hurled by an unidentified bystander.
Respondent’s personnel lost no time in bringing him to a hospital, but eventually petitioner partially lost his left eye’s
vision and sustained a permanent scar.

Thus, Petitioner lodged an action for recovery of damages before the Court of First Instance of Camarines Sur which
the latter granted. On appeal, the Court of Appeals reversed said decision.

ISSUE:

Whether or not common carriers assume risks to passengers such as the stoning in this case?

HELD:

In consideration of the right granted to it by the public to engage in the business of transporting passengers and
goods, a common carrier does not give its consent to become an insurer of any and all risks to passengers and goods.
It merely undertakes to perform certain duties to the public as the law imposes, and holds itself liable for any breach
thereof.

While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers
and creates a presumption of negligence against them, it does not, however, make the carrier an insurer of the
absolute safety of its passengers.

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or
negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence
of a good father of a family could have prevented or stopped the act or omission.

Clearly under the above provision, a tort committed by a stranger which causes injury to a passenger does not accord
the latter a cause of action against the carrier. The negligence for which a common carrier is held responsible is the
negligent omission by the carrier's employees to prevent the tort from being committed when the same could have
been foreseen and prevented by them. Further, under the same provision, it is to be noted that when the violation of
the contract is due to the willful acts of strangers, as in the instant case, the degree of care essential to be exercised
by the common carrier for the protection of its passenger is only that of a good father of a family.
PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN OWNER OF THE
VESSEL M/V “NATIONAL HONOR,” NATIONAL SHIPPING CORPORATION OF THE
PHILIPPINES and INTERNATIONAL CONTAINER SERVICES, INC.
[G.R. No. 161833. July 8, 2005]

FACTS:
Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on
board the vessel M/V “National Honor,” represented in the Philippines by its agent, National
Shipping Corporation of the Philippines (NSCP).

The M/V “National Honor” arrived at the Manila International Container Terminal (MICT). The
International Container Terminal Services, Incorporated (ICTSI) was furnished with a copy
of the crate cargo list and bill of lading, and it knew the contents of the crate. The following
day, the vessel started discharging its cargoes using its winch crane. The crane was operated by Olegario Balsa,
a winchman from the ICTSI, exclusive arrastre operator of MICT.

Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor
of the ICTSI, conducted an inspection of the cargo. They inspected the hatches, checked the
cargo and found it in apparent good condition. Claudio Cansino, the stevedore of the ICTSI,
placed two sling cables on each end of Crate No. 1. No sling cable was fastened on the mid-
portion of the crate. In Dauz’s experience, this was a normal procedure. As the crate was
being hoisted from the vessel’s hatch, the mid-portion of the wooden flooring suddenly
snapped in the air, about five feet high from the vessel’s twin deck, sending all its contents
crashing down hard, resulting in extensive damage to the shipment.

PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP
and ICTSI. Both RTC and CA dismissed the complaint.

ISSUE:
Whether or not the presumption of negligence is applicable in the instant case.

HELD:

No. We agree with the contention of the petitioner that common carriers, from the nature of
their business and for reasons of public policy, are mandated to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case. he Court has defined extraordinary
diligence in the vigilance over the goods as follows:

The extraordinary diligence in the vigilance over the goods tendered for shipment requires
the common carrier to know and to follow the required precaution for avoiding damage to, or
destruction of the goods entrusted to it for sale, carriage and delivery. It requires common
carriers to render service with the greatest skill and foresight and “to use all reasonable
means to ascertain the nature and characteristic of goods tendered for shipment, and to
exercise due care in the handling and stowage, including such methods as their nature
requires.”
 BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES
TRANSPORT SERVICES, INC., petitioners, vs. PHILIPPINE FIRST INSURANCE
CO., INC

Facts:

CMC Trading A.G. shipped on board the MN ‘Anangel Sky’ at Hamburg, Germany 242 coils of various Prime Cold Rolled
Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN
Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4)
coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged state to
be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss.
Despite receipt of a formal demand, Phil. First insurance refused to submit to the consignee’s claim. Consequently,
Belgian Overseas paid the consignee P506,086.50, and was subrogated to the latter’s rights and causes of action
against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for recovery of the amount
paid by them, to the consignee as insured.
Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was
due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and accidents
of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods or their
representatives. In addition thereto, defendants-appellees argued that their liability, if there be any, should not exceed
the limitations of liability provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees
averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to
said shipment.”

Issue: Whether or not petitioners have overcome the presumption of negligence of a common carrier

Held:

No. Petitioners contend that the presumption of fault imposed on common carriers should not be applied on the basis
of the lone testimony offered by private respondent. The contention is untenable. Well-settled is the rule that common
carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence
and vigilance with respect to the safety of the goods and the passengers they transport. Thus, common carriers are
required to render service with the greatest skill and foresight and “to use all reasonable means to ascertain the
nature and characteristics of the goods tendered for shipment, and to exercise due care in the handling and stowage,
including such methods as their nature requires.” The extraordinary responsibility lasts from the time the goods are
unconditionally placed in the possession of and received for transportation by the carrier until they are delivered,
actually or constructively, to the consignee or to the person who has a right to receive them.
 G.R. No. 150751, September 20, 2004
Central Shipping Company, Inc.
vs Insurance Company of North America
Ponente: Panganiban

Facts:

July 25, 1990, Central Shipping received on board its vessel 276 pieces of round
logs and undertook to transport said shipment to Manila for delivery to Alaska
Lumber Co. The cargo was insured for P3m against total loss. While on voyage, the
vessel completely sank.

Insurance Company alleged that the total loss of the shipment was caused by the
fault and negligence of the petitioner. The consignee, Alaska presented a claim for
the value of the shipment against the petitioner but the latter failed and refused
to settle the claim, hence being the insurer, Insurance company paid and now seeks
to be subrogated by the shipping company.

The shipping company argues that the ship was seaworthy and properly manned, putting
defense that the proximate cause of the sinking vessel and the loss was a natural
disaster which could have not been foreseen. RTC was unconvinced and favoured the
insurance company.

CA affirmed the RTC finding that the south western monsoon encountered by the vessel
was not unforeseeable.

Issues:

(1) Whether the carrier is liable for the loss of the carg

Ruling:

Petition is devoid of merit.

(1) Liability for lost cargo: 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.

In the present case, petitioner has not given the Court sufficient cogent reasons
to disturb the conclusion of the CA that the weather encountered by the vessel was
not a storm as contemplated by Article 1734(1). Established is the fact that between
10:00 p.m. on July 25, 1990 and 1:25 a.m. on July 26, 1990, M/V Central Bohol
encountered a south western monsoon in the course of its voyage.
 Asian Terminals, Inc., Petitioner vs.

Simon Enterprises, Inc., Respondent

GR. No. 177116

FEB 27, 2013

Facts

Simon Enterprise Inc. (Simon) has entered into contract with Contiquincybunge Export Company (Contiquincybunge)
as its consignee of the shipped Soybean Meal. On October 25, 1995 and on November 25, 1995 Contiquincybunge
has made a shipment through M/V Sea Dream and M/V Tern respectively at the Port of Darrow, Louisiana, U.S.A. For
the first shipment, Contiquincybunge made a shipment of 6,825.144 metric tons of U.S. Soybean Meal which when
the M/V Sea Dream arrived at the Port of Manila the bulk of soybean meal was received by the Asian Terminals, Inc.
(ATI), for shipment to Simon. However, when it reached its receiver Simon, it was already short by 18.556 metric
tons. For the second shipment, Contiquincybunge made shipment, through M/V Tern, of 3,300.000 metric tons of U.S.
Soybean Meal in Bulk for delivery to Simon at the Port of Manila. The shipment was received by ATI again for delivery
to Simon. However, the shipped cargos were found lacking 199.863 metric tons.

Simon has filed an action for damages against the unknown owner of the vessels M/V Sea Dream and M/V Tern, its
local agent Inter-Asia Marine Transport, Inc., and petitioner ATI alleging that it suffered the losses through the fault
or negligence of the said defendants. The case of the unknown owner of the vessel M/V Sea Dream has been settled
in release and quitclaim and therefore has been stricken out of the case, leaving M/V Tern, its local agent Inter-Asia
Marine Transport, Inc., and petitioner ATI’s case remaining. The RTC has ruled that the defendants be solidarily liable
for the damages incurred by Simon.

Issue

Whether the appellate court erred in affirming the decision of the trial court holding petitioner ATI solidarily liable with
its co-defendants for the shortage incurred in the shipment of the goods to respondent.

Ruling

The petition for review on certiorari was granted to ATI. The SC agreed to ATI’s claim that the CA erred in affirming
the decision of the trial court holding petitioner ATI solidarily liable with its co-defendants for the shortage incurred in
the shipment of the goods to respondent. The CA misapprehended the following facts:

First, petitioner ATI is correct in arguing that the respondent failed to prove that the subject shipment suffered actual
shortage, as there was no competent evidence to prove that it actually weighed 3,300 metric tons at the port of origin.

Second, as correctly asserted by petitioner ATI, the shortage, if any, may have been due to the inherent nature of
the subject shipment or its packaging since the subject cargo was shipped in bulk and had a moisture content of
12.5%.

Third, SC agreed with the petitioner ATI that respondent has not proven any negligence on the part of the former.
Philippine Airlines v. Court of Appeals [G.R. No. L-49188.
January 30, 1990]
FACTS
Amelia Tan was found to have been wronged by Philippine Air Lines (PAL). She filed her complaint in 1967. After ten (10) years
of protracted litigation in the Court of First Instance and the Court of Appeals, Ms. Tan won her case. Almost twenty-two (22) years
later, Ms. Tan has not seen a centavo of what the courts have solemnly declared as rightfully hers. Through absolutely no fault of
her own, Ms. Tan has been deprived of what, technically, she should have been paid from the start, before 1967, without need of
her going to court to enforce her rights. And all because PAL did not issue the checks intended for her, in her name. Petitioner
PAL filed a petition for review on certiorari the decision of Court of Appeals dismissing the petition for certiorari against the order
of the Court of First Instance (CFI) which issued an alias writ of execution against them. Petitioner alleged that the payment in
check had already been effected to the absconding sheriff, satisfying the judgment.

ISSUE
Whether or not payment by check to the sheriff extinguished the judgment debt.

RULING

NO. The payment made by the petitioner to the absconding sheriff was not in cash or legal tender but in checks. The checks
were not payable to Amelia Tan or Able Printing Press but to the absconding sheriff.In the absence of an agreement, either
express or implied, payment means the discharge of a debt or obligation in money and unless the parties so agree, a debtor has
no rights, except at his own peril, to substitute something in lieu of cash as medium of payment of his debt. Strictly speaking, the
acceptance by the sheriff of the petitioner’s checks, in the case at bar, does not, per se, operate as a discharge of the judgment
debt. The check as a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does
not, by itself, operate as payment. A check, whether a manager’s check or ordinary cheek, is not legal tender, and an offer of a
check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor. Mere delivery
of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until
the payment by commercial document is actually realized (Art. 1249, Civil Code, par. 3).
 ULIAN SINGSON and RAMONA DEL CASTILLO vs. BANK OF THE PHILIPPINE ISLANDS and SANTIAGO
FREIXAS (Pres. Of BPI)G.R. No. L-24837. 29 June 1968.

Facts:

Appeal by plaintiffs from a decision of the CFI Mla dismissing their complaint against defendants.
On May 8, 1963, the Singsong commenced the present action against the Bank and its president, Freixas, for damages in
consequence of said illegal freezing of plaintiffs' account.
After appropriate proceedings, the CFI Mla rendered judgment dismissing the complaint upon the ground that plaintiffs cannot
recover from the defendants upon the basis of a quasi-delict, because the relation between the parties is contractual in nature.

Issue:

WON the existence of a contractual relation between the parties bar recovery of damages.

Ruling:

The judgment appealed from is reversed holding defendant BPI to pay to the plaintiffs nominal damages, and attorney's fees,
apart from the costs.
The SC have repeatedly held that the existence of a contract between the parties does not bar the commission of a tort by the one
against the order and the consequent recovery of damages therefore.
In view, of the facts obtaining in the case at bar, and considering, particularly, the circumstance, that the wrong done to the
plaintiff was remedied as soon as the President of the bank realized the mistake they had committed, the Court finds that an
award of nominal damages the amount of which need not be proven in the sum of P1,000, in addition to attorney's fees in the
sum of P500, would suffice to vindicate plaintiff's rights.
 AIR FRANCE V CARRASCOSO September 28, 1966 AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and
the HONORABLE COURT OF APPEALS, respondents.

FACTS:

Carrascoso, a civil engineer, was a first class passenger of Air France on his way to Rome for a
pilgrimage. From Manila to Bangkok, he traveled in ‘first class,’ but at Bangkok, the Manager of Air France
forced him to vacate his seat in favor of a ‘white man’ who had a ‘better right to the seat.’ Carrascoso filed
for moral damages, averring in his complaint the contract of carriage between Air France and himself. Air
France claims that to authorize an award for moral damages there must be an averment of fraud or bad
faith, upon which Carrascoso’s complaint is silent.

ISSUE:

o Whether or not Carrascoso is entitled to award for moral damages

HELD:

The foregoing substantially aver: First, That there was a contract to furnish plaintiff a first class passage
covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when
petitioner failed to furnish first class transportation at Bangkok; and Third, That there was bad faith when
petitioner’s employee compelled Carrascoso to leave his first class accommodation berth “after he was
already seated” and to take a seat in the tourist class, by reason of which he suffered inconvenience,
embarrassment and humiliation, thereby causing him mental anguish, serious anxiety, wounded feelings
and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad
faith in the complaint. But, the inference of bad faith is there; it may be drawn from the facts and
circumstances set forth therein. The contract was averred to establish the relation between the parties. But
the stress of the action is put on wrongful expulsion.
G.R. No. 108164 February 23, 1995
FAR EAST v CA

FACTS: Far East Bank and Trust Co. (FEBTC) issued a credit card to Luis Luna at its Pasig branch. Upon his request, the bank also
issued a supplemental card to Clarita S. Luna. When Clarita’s card was lost, he informed FEBTC. Later, Luis tendered a despedida
lunch at the Hotel Intercontinental Manila. To pay for the lunch, Luis presented his credit card. Unfortunately, it was dishonored
and he was forced to pay the bill in cash and felt embarrassed by this incident. Luis demanded the payment of damages from
FEBTC. Festejo, vice-president of FEBTC, expressed the bank’s apologies to Luis and explained that in cases when a card is reported
as lost, FEBTC undertakes necessary action to avert its unauthorized use such as tagging the card as hotlisted. Festejo also sent a
letter to the Manager of the restaurant to assure that the Lunas were “very valued clients” of FEBTC. Nevertheless, the Lunas filed
a complaint for damages. The trial court ordered FEBTC to pay the Lunas moral and exemplary damages and attorney’s fees. The
appellate court affirmed the ruling. Hence, this petition for review.
ISSUE: Whether FEBTC is liable for the said damages.
RULING: Spouses Luna are entitled only to nominal damages and not to moral and exemplary damages. The court explained that
in culpa contractual, moral damages may be recovered where the defendant is shown to have acted in bad faith or with malice in
the breach of the contract and that bad faith, in this context, includes gross, but not simple, negligence. Article 2219 states that,
“Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2)
Quasi-delicts causing physical injuries;
The Court found that the bank was remiss in indeed neglecting to personally inform Luis of his own card's cancellation, but there
was nothing to sufficiently indicate any deliberate intent on the part of FEBTC to cause harm to private respondents. Neither
could FEBTC's negligence in failing to give personal notice to Luis be considered so gross as to amount to malice or bad faith.
Fisher v. Yangco Steamship Co.
G.R. No. L-8095, 31 March 1915, 31 Phil 1

FACTS:

Plaintiff is a stockholder in the Yangco Steamship Company, the owner of a large number of steam vessels, duly licensed
to engage in the coastwise trade of the Philippine Islands; that on or about June 10, 1912, the directors of the company
adopted a resolution which was thereafter ratified and affirmed by the shareholders of the company, “expressly declaring
and providing that the classes of merchandise to be carried by the company in its business as a common carrier do not
include dynamite, powder or other explosives, and expressly prohibiting the officers, agents and servants of the company
from offering to carry, accepting for carriage said dynamite, powder or other explosives;”
Thereafter the respondent Acting Collector of Customs demanded and required of the company the acceptance and carriage
of such explosives; that he has refused and suspended the issuance of the necessary clearance documents of the vessels
of the company unless and until the company consents to accept such explosives for carriage

ISSUE:

Whether the refusal of the owners and officers of a steam vessel, duly licensed to engage in the coastwise trade of the
Philippine Islands and engaged in that trade as a common carrier, to accept for carriage “dynamite, powder or other
explosives” is a valid act.

RULING:

The traffic in dynamite gun powder and other explosive is vitally essential to the material and general welfare of the
inhabitants of this islands and it these products are to continue in general use throughout the Philippines they must be
transported from water to port to port in various island which make up the Archipelago.

It follows that a refusal by a particular vessel engage as a common carrier of merchandise in coastwise trade in the Philippine
Island to accept such explosives for carriage constitutes a violation. The prohibition against discrimination penalized under
the statute, unless it can be shown that there is so Real and substantial danger of disaster necessarily involved in the
courage of any or all of this article of merchandise as to render such refusal a due or unnecessary or a reasonable exercise
or prudence and discretion on the part of the ship owner
 Eastern Shipping vs CA
GR No. 97412, 12 July 1994
234 SCRA 78

FACTS
Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as insured with a marine policy.
Upon arrival in Manila unto the custody of metro Port Service, which excepted to one drum, said to be in bad order and which
damage was unknown the Mercantile Insurance Company. Allied Brokerage Corporation received the shipment from Metro, one
drum opened and without seal. Allied delivered the shipment to the consignee’s warehouse. The latter excepted to one drum
which contained spillages while the rest of the contents was adulterated/fake. As consequence of the loss, the insurance company
paid the consignee, so that it became subrogated to all the rights of action of consignee against the defendants Eastern Shipping,
Metro Port and Allied Brokerage. The insurance company filed before the trial court. The trial court ruled in favor of plaintiff an
ordered defendants to pay the former with present legal interest of 12% per annum from the date of the filing of the complaint. On
appeal by defendants, the appellate court denied the same and affirmed in toto the decision of the trial court.

ISSUE

Whether the payment of legal interest on the award for loss or damage is to be computed from the time the complaint is filed from
the date the decision appealed from is rendered.

RULING:
The Court held that it should be computed from the decision rendered by the court a quo. From the date the judgment is
made. Where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or EJ but when such certainty cannot be so reasonably established at the time the demand is made, the interest shll
begin to run only from the date of judgment of the court is made.
Facts: Petitioner New World International Development (Phils.), Inc. (New World) bought from DMT Corporation
(DMT) through its agent, Advatech Industries, Inc. (Advatech) three emergency generator sets worth
US$721,500.00. DMT shipped the generator sets by truck from Wisconsin, United States, to LEP Profit International,
Inc. (LEP Profit) in Chicago, Illinois. From there, the shipment went by train to Oakland, California, where it was
loaded on S/S California Luna V59, owned and operated by NYK Fil-Japan Shipping Corporation (NYK) for delivery to
petitioner New World in Manila. NYK issued a bill of lading, declaring that it received the goods in good condition. NYK
unloaded the shipment in Hong Kong and transshipped it to S/S ACX Ruby V/72 that it also owned and operated. On
its journey to Manila, however, ACX Ruby encountered typhoon Kadiang whose captain filed a sea protest on arrival
at the Manila South Harbor on October 5, 1993 respecting the loss and damage that the goods on board his vessel
suffered. Marina Port Services, Inc. (Marina), the Manila South Harbor arrastre or cargo-handling operator, received
the shipment on October 7, 1993. Upon inspection of the three container vans separately carrying the generator sets,
two vans bore signs of external damage while the third van appeared unscathed. The shipment remained at Pier 3s
Container Yard under Marinas care pending clearance from the Bureau of Customs. Eventually, on October 20, 1993
customs authorities allowed petitioners customs broker, Serbros Carrier Corporation (Serbros), to withdraw the
shipment and deliver the same to petitioner New Worlds job site in Makati City. An examination of the three generator
sets in the presence of petitioner New Worlds representatives, Federal Builders (the project contractor) and surveyors
of petitioner New Worlds insurer, SeaboardEastern Insurance Company (Seaboard), revealed that all three sets
suffered extensive damage and could no longer be repaired. For these reasons, New World demanded recompense
for its loss from respondents NYK, DMT, Advatech, LEP Profit, LEP International Philippines, Inc. (LEP), Marina, and
Serbros. While LEP and NYK acknowledged receipt of the demand, both denied liability for the loss.

Issue: Whether or not petitioner is entitled to the claim based from the insurance policy including interests in the
delay of the release of such claim.

Held: Yes. The marine open policy that Seaboard issued to New World was an all-risk policy. Such a policy insured
against all causes of conceivable loss or damage except when otherwise excluded or when the loss or damage was
due to fraud or intentional misconduct committed by the insured. The policy covered all losses during the voyage
whether or not arising from a marine peril.
 G.R. No. 94149 May 5, 1992

AMERICAN HOME ASSURANCE, COMPANY, petitioner,

vs.
THE COURT OF APPEALS and NATIONAL MARINE CORPORATION and/or NATIONAL MARINE CORPORATION
(Manila), respondents

FACTS:

American Home Assurance Co. and the National Marine Corporation (NMC) are foreign corporations licensed to do
business in the Philippines. On or about 19 June 1988, Cheng Hwa Pulp Corporation shipped 5,000 bales (1,000
ADMT) of bleached kraft pulp from Haulien, Taiwan on board “SS Kaunlaran”, which is owned and operated by
NMC. The said shipment was consigned to Mayleen Paper, Inc. of Manila, which insured the shipment with
American Home Assurance Co..

On 22 June 1988, the shipment arrived in Manila and was discharged into the custody of the Marina Port Services,
Inc., for eventual delivery to the consignee-assured.

However, upon delivery of the shipment to Mayleen Paper, Inc., it was found that 122 bales had either been damaged
or lost. The loss was calculated to be 4,360 kilograms with an estimated value of P61,263.41. Mayleen Paper, Inc.
then duly demanded indemnification from NMC for the damages and losses in the shipment but to no avail. Mayleen
Paper, Inc. sought recovery from American Home Assurance Co.. Upon demand and submission of proper
documentation, American Home Assurance paid Mayleen Paper, Inc. the adjusted amount of P31, 506.75 for the
damages/losses suffered by the shipment, hence, AHA was subrogated to the rights and interests of Mayleen Paper,
Inc.

AHA brought a suit against respondent NMC for the amount it paid Mayleen Paper, Inc.

The RTC rendered a decision dismissing the complaint, such decision was affirmed by the CA.

ISSUE:

Is American Home Assurance Company is entitled to reimbursement from NMC of what it paid to Mayleen Paper?

RULING:

YES.

The Supreme Court reversed the decisions of both the Court of Appeals and the Regional Trial Court of Manila,
Branch 41, appealed from; and ordered NMC to reimburse the subrogee, American Home Assurance, the amount of
P31,506.75.

Under Article 1733 of the 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 the goods and for the safety of passengers
transported by them according to all circumstances of each case. Thus, under Article 1735 of the same Code, in all
cases other than those mentioned in Article 1734 thereof, the common carrier shall be presumed to have been at fault
or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law.

Common carriers cannot limit their liability for injury or loss of goods where such injury or loss was caused by its
own negligence. Otherwise stated, the law on averages under the Code of Commerce cannot be applied in
determining liability where there is negligence.
MALAYAN INSURANCE CO., INC. vs. THE HON. COURT OF APPEALS 165 SCRA 536

FACTS:

Sio Choy insured his jeep with Malayan Insurance against 3rd party liability. One day the jeep, driven by an employee
of San Leon Rice Mill, figured in an accident with Pantranco Bus.
The passenger of the jeep, Vallejo, who was injured due to the accident, claimed damages from Sio Choy, Malayan
and Pantranco. Pantranco was held not liable.
Malayan insurance paid Vallejo and asked for reimbursement from San Leon as the latter driver caused the alleged
accident. The latter, however denied liability.
RTC ruled that Sio Choy, Malayan and San Leon are solidary liable, thus, the former is entitled to reimbursement.
CA said although jointly and severally liable, Malayan is not entitled to reimbursement.

ISSUES:
WON Sio Choy, Malayan and San Leon Rice Mill are solidary liable.

RULING:
Only respondents Sio Choy and San Leon Rice Mill, Inc, (to the exclusion of the petitioner) that are solidarily
liable to respondent Vallejos for the damages awarded to Vallejos.
Sio Choy and San Leon Rice Mill, Inc. are the principal tortfeasors who are primarily liable to respondent Vallejos. The
law states that the responsibility of two or more persons who are liable for a quasi-delict is solidarily. On the other
hand, the basis of petitioner's liability is its insurance contract with respondent Sio Choy.

While it is true that where the insurance contract provides for indemnity against liability to third persons, such third
persons can directly sue the insurer, 6 however, the direct liability of the insurer under indemnity contracts against
third party liability does not mean that the insurer can be held solidarily liable with the insured and/or the other parties
found at fault. The liability of the insurer is based on contract; that of the insured is based on tort.
In the case at bar, petitioner as insurer of Sio Choy, is liable to respondent Vallejos, but it cannot, as incorrectly held
by the trial court, be made "solidarily" liable with the two principal tortfeasors namely respondents Sio Choy and San
Leon Rice Mill, Inc. For if petitioner-insurer were solidarily liable with said two (2) respondents by reason of the
indemnity contract against third party liability-under which an insurer can be directly sued by a third party — this will
result in a violation of the principles underlying solidary obligation and insurance contracts.
PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. vs.
MGG MARINE SERVICES, INC. (G.R. No. 135645, March 8, 2002)

FACTS: On March 1, 1987, San Miguel Corporation insured several beer bottle cases with
petitioner Philippine American General Insurance Company. The cargo were loaded on
board the M/V Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao
del Sur.
After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel
left the port of Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The weather was
calm when the vessel started its voyage.

The following day, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point,
Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel
Corporation was lost.

Petitioner paid San Miguel Corporation the full amount of the cargo pursuant to the terms of
their insurance contract, and as subrogee filed with the Regional Trial Court (RTC) of
Makati City a case for collection against private respondents to recover the amount it paid.

Meanwhile, the Board of Marine Inquiry conducted its own investigation and found that the
cause of the sinking of the vessel was the existence of strong winds and enormous waves
in Surigao del Sur, a fortuitous event that could not have been for seen at the time the M/V
Peatheray Patrick-G left the port of Mandaue City. It was further held by the Board that said
fortuitous event was the proximate and only cause of the vessel's sinking.

ISSUE: Whether or not respondent MGG should be held liable.

HELD: No. [Common carriers, from the nature of their business and for reasons of public
policy, are mandated to observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them. Owing to this high degree of diligence
required of them, common carriers, as a general rule, are presumed to have been at fault
or negligent if the goods transported by them are lost, destroyed or if the same
deteriorated.