FISHER V YANGCO STEAMSHIP The traffic in dynamite, gunpowder and other explosives is vitally essential to the material and
c in dynamite, gunpowder and other explosives is vitally essential to the material and general
FACTS.
 Yangco Steamship Company is the owner of a large number of steam vessels, duly licensed to
engage in the coastwise trade of the Philippine Islands.
 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;"
 The 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.
 The Attorney-General of the Philippine Islands and the respondent prosecuting attorney of the city of
Manila intend to institute proceedings under the penal provisions of sections 4, 5, and 6 of Act No.
98 of the Philippine Commission against the company, its managers, agents and servants, to enforce
the requirements of the Acting Collector of Customs as to the acceptance of such explosives for
carriage;
ISSUES.
WON 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" from any and all shippers who may offer such explosives for
carriage can be held to be a lawful act.
DECISION.
No. Complaint dismissed unless amended.
RATIO:
The SC held that the provision of the Act which prescribes that, "No common carrier ... shall, under any
pretense whatsoever, fail or refuse to receive for carriage ... to carry any person or property offering for
carriage," is not to be construed in its literal sense and without regard to the context, so as to impose an
imperative duty on all common carriers to accept for carriage, and to carry all and any kind of freight
which may be offered for carriage without regard to the facilities which they may have at their disposal.
The mere fact that violent and destructive explosions can be obtained by the use of dynamite under certain
conditions would not be sufficient in itself to justify the refusal of a vessel, duly licensed as a common
carrier of merchandise, to accept it for carriage, if it can be proven that in the condition in which it is
offered for carriage there is no real danger to the carrier, nor reasonable ground to fear that his vessel or
those on board his vessel will be exposed to unnecessary and unreasonable risk in transporting it, having
in mind the nature of his business as a common carrier engaged in the coastwise trade in the Philippine
Islands, and his duty as a servant of the public engaged in a public employment. So also, if by the exercise
of due diligence and the taking of unreasonable precautions the danger of explosions can be practically
eliminated, the carrier would not be justified in subjecting the traffic in this commodity to prejudice or
discrimination by proof that there would be a possibility of danger from explosion when no such
precautions are taken.
welfare of the people of these Islands. If dynamite, gunpowder and other explosives are to continue in
general use throughout the
Philippines, they must be transported by water from port to port in the various islands which make up the
Archipelago. We are satisfied therefore that the refusal by a particular vessel, engaged as a common
carrier of merchandise in the coastwise trade of the Philippine Islands, to accept any or all of these
explosives for carriage would constitute a violation of the prohibitions against discriminations penalized
under the statute, unless it can be shown by affirmative evidence that there is so real and substantial a
danger of disaster necessarily involved in the carriage of any or all of these articles of merchandise as to
render such refusal a due or a necessary or a reasonable exercise of prudence and discretion on the part of
the ship owner.
The real question involved in these proceedings is 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" from any and all
shippers who may offer such explosives for carriage can be held to be a lawful act without regard to any
question as to the conditions under which such explosives are offered for carriage, or as to the suitableness
of the vessel for the transportation of such explosives, or as to the possibility that the refusal to accept such
articles of commerce in a particular case may have the effect
SALUDO V CA
FACTS
After the death of the plaintiff’s mother, Pomierski and Son Funeral Home of Chicago made
arrangements for the shipment of the remain of the deceased to the Philippines. On its to the Philippines,
the remains were switched in Mexico, for there were to bodies, and this ultimately caused the delay of its
(remains) arrival in the Philippines for one day. Petitioners relied on the Bill of Lading as evidence of
receipt of the remains, however, it has been found in the lower court that the Airway Bill was issued, not
as evidence of receipt of delivery of the cargo, but merely as a confirmation of the booking thus made for
the San Francisco-Manila flight. It was not until October 28, 1976 that PAL received physical delivery of
the body at San Francisco, as duly evidenced by the Manifest of the American Airline Freight System.
Thus, the respondent airlines are not liable for the delay for the remains have not yet been place in
exclusive possession, custody and control of the carrier – and that after
ISSUES & RATIO.
1. WON there was delivery of the cargo upon mere issuance of the Airway Bill. – NO.
A receipt is not essential to a complete delivery of goods to the carrier for transportation but, when
issued, is competent and prima facie, but not conclusive, evidence of delivery to the carrier. A bill of
lading, when properly executed and delivered to a shipper, is evidence that the carrier has received the
goods described therein for shipment. Except as modified by statute, it is a general rule as to the parties to
a contract of carriage of goods in connection with which a bill of lading is issued reciting that goods have
been received for transportation, that the recital being in essence a receipt alone, is not conclusive, but
may be explained, varied or contradicted by parol or other evidence.
The findings of the trial court, as favorable adopted by the CA, provides the present court the explanation
that sufficiently overcomes the presumption relied upon by the petitioner. The findings are as follows:
That on October 26, 1976 the cargo containing the casketed remains of Crispina Saludo was booked for
PAL Flight Number PR-107 leaving San Francisco for Manila on October 27, 1976, PAL Airway Bill No.
079-01180454 was issued, not as evidence of receipt of delivery of the cargo on October 26, 1976, but
merely as a confirmation of the booking thus made for the San Francisco-Manila flight scheduled on
October 27, 1976. Actually, it was not until October 28, 1976 that PAL received physical delivery of the
body at San Francisco, as duly evidenced by the Interline Freight Transfer Manifest of the American
Airline Freight System and signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.

Article 1736 of the Civil Code: extraordinary responsibility of the common carrier begins from the time
the goods are delivered to the carrier.
This responsibility remains in full force and effect even when they are temporarily unloaded or stored in
transit, unless the shipper or owner exercises the right of stoppage in transitu, and terminates only after the
lapse of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled
to receive them. And, there is delivery to the carrier when the goods are ready for and have been placed in
the exclusive possession, custody and control of the carrier for the purpose of their immediate
transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the
carrier, the liability of the common carrier commences eo instanti.
DECISION.
Petition denied. CA decision reversed.
MAERSK V CA
FACTS.
 Maersk Line is engaged in the transportation of goods by sea, doing business in the Philippines through
its general agent, Compania General de Tabacos de Filipinas.
 Efren Castillo is the proprietor of Ethegal Laboratories, a firm engaged in the manufacture of
pharmaceutical products.
 Castillo ordered from Eli Lilly, Inc 600,000 empty gelatin capsules for the manufacture of his
pharmaceutical products. The capsules were placed in 6 drums containing 100,000 capsules each.
 Through a memorandum of shipment, Eli Lilly informed Castillo that the gelatin capsules were already
shipped on board MV Anders Maerskline for shipment to the Philippines via Oakland California. The
memorandum specified that the date of arrival to be April 3, 1977.
 For unknown reasons, the cargo was misshipped and diverted to Richmond, Virginia then back again to
Oakland.
 The goods arrived in the Philippines on June 10, 1977, 2 months from the date specified in the
memo.As a consequence, Castillo refused to take delivery of the goods on account of its failure to
arrive on time.
 Castillo, alleging gross negligence and undue delay in the delivery of goods, filed an action for
rescission of contract with damages agqainst Maersk Line and Eli Lilly.
 Maersk Line: the shipment was transported in accordance with the covering bill of lading and that its
liability attaches only in case of loss, destruction, or deterioration of the goods.
 Eli Lilly: submitted a cross-claim alleging that the delay in the arrival of the goods was due solely to
the gross negligence of Maersk Line.
 Castillo later on moved for the dismissal of the complaint against Eli Lilly on the ground that the
evidence on record shows that the delay in the delivery was attributable solely to Maersk Line. TC
dismissed the complaint on Eli Lilly.
 TC: There was a breach in the performance of their obligation by Maersk Line consisting of their
negligence to ship the 6 drums of gelatin capsules which under Art 1170 of the NCC, they stood liable
for damages.
 CA: Affirmed lower court’s decision
ISSUES & RATIO.
2. W/N a cause of action against Maersk Line exists given that Eli Lilly’s cross-claim was dismissed
-YES
Originally, the complaint was filed againts Eli Lilly, as shipper-supplier, and Maersk Line, as carrier.
Maersk Line being an original party defendant upon whom the delayed shipment is imputed cannot claim
that the dismissal of the complaint against Eli Lilly inured to its benefit.
3. W/N Castillo is entitled to damages resulting from the delay in the delivery of the shipment in the
absence in the bill of lading of a stipulation on the period of delivery –YES
The bill of lading covering the subject shipment stated that the carrier does not undertake that the goods
shall arrive at the port of discharge or the place of delivery at any particular time or to meet any particular
market and that the carrier shall in no circumstances be liable for any direct, indirect or consequential loss
or damage casued by delay.
It is not disputed that the provision at the back of the bill of lading is a contract of adhesion. Generally,
contracts of adhesion are considered void since most of the provisions of these types are prepared and
drafted by only one party. However, it is not entirely prohibiteed as one who adheres to the contract is in
reality free to reject it in its entirety; if he adheres, he gives his consent.
However, in this case, the questioned provision in the bill of lading hs the effect of practically leaving the
date of arrival of the cargo on the sole determination and will of the carrier.
While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt delivery unless such common carriers previously assume
the obligation to deliver at a given date or time, delivery of shipment or cargo should be at least made
within a reasonable time.
In this case, the cargo was estimated to arrive in Manila on April 3, 1977. While there was no special
contract entered into by the parties indicating the date of arrival of the subject shipment, Castillo was well
aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself.
In this regard, there arises no need to execute another contract for the purpose as it would be unnecessary.
The court finds that a delay in the delivery of goods spanning a period of 2 months and 7 days falls way
beyond the realm of reasonableness.
DECISION.
Appealed decision is affirmed.
TAN CHIONG SAN V INCHAUSTI
Facts:
1. On November 25, 1908, Inchausti & Co. received in Manila from the Chinaman, Ong Bieng
Sip, (shipper) 205 bundles, bales or cases of goods to be conveyed by the steamer Sorsogon to
the port of Gubat, Sorsogon, where they were to be transshipped to another vessel belonging
to the defendant company and by the latter transported to the pueblo of Catarman, Samar.
2. From Samar, the goods to be delivered to the Chinese shipper with whom the defendant party
made the shipping contract.
3. To this end three bills of lading were executed, Nos. 38, 39, and 76.
4. The steamer Sorsogon, which carried the goods, arrived at the port of Gubat on the 28th of
November and as the lorcha Pilar, to which the merchandise was to be transshipped for its
transportation to Catarman, was not yet there, the cargo was unloaded and stored in the
defendant company's warehouses at that port.
5. Several days later, the lorcha just mentioned arrived at Gubat and, after the cargo it carried had
been unloaded, the merchandise belonging to the Chinaman, Ong Bieng Sip, together with
other goods owned by the defendant Inchausti & Co., was taken aboard to be transported to
Catarman.
6. On December 5, 1908, before the Pilar could leave for its destination, towed by the launch
Texas, there arose a storm coming from the Pacific, passed over Gubat and, as a result of the
strong wind and heavy sea, the lorcha was driven upon the shore and wrecked, and its cargo,
including the Chinese shipper's 205 packages of goods, scattered on the beach.
7. Laborers of the defendant company then proceeded to gather up the plaintiff's merchandise
and, as it was impossible to preserve it after it was salved from the wreck of the lorcha, it was
sold at public auction before a notary for the sum of P1,693.67.
8. Plaintiff Tan Chiong Sian or Tan Chinto, filed a written complaint, alleging that Inchausti
neither carried nor delivered his merchandise to Ong Bieng Sip, in Catarman, but unjustly and
negligently failed to do so, with the result that the said merchandise was almost totally lost, and
thus claimed the value of the merchandise which was P20,000, legal interest thereon from 25
November 1908, and the cost of the suit.
 9. After the hearing of the case and the introduction of testimony by the parties, judgment was
rendered, on 18 March 1910, in favor of Tan Chiong Sian or Tan Chinto, against Inchausti &
Co., for the sum of P14,642.63, with interest at the rate of 6% per annum from 11 January
1909, and for the costs of the trial. Inchausti & Co. appealed from the judgment.
Issue: WON the defendant is liable for the loss of the merchandise and for failure to deliver the
same at the place of destination
HELD: No. Company is not liable for the loss & damage since it was due to a fortuitous event & there
was no negligence / lack of care or diligence on the part of the company & its agents.
Contract between Ong Bieng Sip and Inchausti; Awareness of Ong Bieng Sip as to manner goods
are to be transported, no objection or protest was made:
1. The contract entered into between Ong (shipper) the firm of Inchausti & Co., provided that
transportation should be furnished from Manila to Catarman, although the merchandise taken
aboard the steamer Sorsogon was to be transshipped at Gubat to another vessel which was to
convey it from that port to Catarman; it was not stipulated in the said contract that the
Sorsogon should convey the goods to their final destination, nor that the vessel into which they
were to be transshipped, should be a steamer.
2. Ong assented to these arrangements and made no protest when his 205 packages of
merchandise were unloaded from the ship and, on account of the absence of the lorcha Pilar,
stored in the warehouses at Gubat nor did he offer any objection to the lading of his
merchandise on to this lorcha as soon as it arrived and was prepared to receive cargo.
3. He knew that to reach the port of Catarman with promptness and dispatch, the lorcha had to be
towed by some vessel like the launch Texas, which Inchausi had been steadily using for similar
operations in those waters.
4. Hence the shipper, Ong, made no protest or objection to the methods adopted by the agents of
Inchausti for the transportation of his goods to the port of their destination, and the record does
not show that in Gubat, Inchausti possessed any other means for the conveyance and
transportation of merchandise, at least for Catarman, than the lorcha Pilar, towed by the said
launch and exposed during its passage to all sorts of accidents and perils from the nature and
seafaring qualities of a lorcha, from the circumstances then present and the winds prevailing on
the Pacific Ocean during the months of November and December.
5. Lorcha not easily managed or steered: A lorcha is not easily managed or steered when
traveling, for, out at sea, it can only be moved by wind and sails; and along the coast near the
shore and in the estuaries where it customarily travels, it can only move by poling. For this
reason, in order to arrive at the pueblo of Catarman with promptness and dispatch, the lorcha
was usually towed by the launch Texas.
6. Notice of storm provided only at 10-11 a.m. of 5 December 1908. The record does not show
that, from the afternoon of 4 December 1908, until the morning of the following day, the 5th,
the patron or master of the lorcha which was anchored in the cove of Gubat, received any
notice from the captain of the steamer Ton Yek, also anchored near by, of the near approach of
a storm. Gadvilao, the patron, testified that only between 10 and 11 a.m. of 5 December, was
he informed by Inchausti & Co.’s agent in Gubat that a typhoon was approaching.
7. Lorcha provided with all proper and necessary equipment and has sufficient crew for its
management and preservation. On account of the condition of the sea, he dropped the 4
anchors that the lorcha had on board and immediately went ashore to get another anchor and a
new cable in order more securely to hold the boat in view of the predicted storm.
8. No port adequate for shelter and refuge of vessels in cases of danger in immediate
vicinity; Lorcha cannot be compared with steamer. The patron of the lorcha testified
specifically that at Gubat or in its immediate vicinity there is no port whatever adequate for the
shelter and refuge of vessels in cases of danger, and that, even though there were, on being
advised between 10 and 11 o’clock of the morning of the 5th, of the approach of a storm from
the eastern Pacific, it would have been impossible to spread any sails or weigh anchor on the
lorcha without being dragged or driven against the reefs by the force of the wind.
9. As the craft was not provided with steam or other motive power, it would not have been
possible for it to change its anchorage, nor move from the place where it lay, even several
hours before the notice was received by its patron. A lorcha can not be compared with a
steamer which does not need the help or assistance of any other vessel in its movements.
10. Even the People of Gubat are not aware of impending storm. According to the testimony
of weather observer, the notice of the storm sent by the Manila Observatory was only known
to the said observer, and he did not apprise the public of the approach of the storm until he
received another notice from Manila at 20 minutes past 8 o’clock on Saturday morning,
December 5. Then he made a public announcement and advised the authorities of the storm
that was coming.
11. The lorcha cannot take refuge in the Sabang River, half a mile from where it was
anchored. The official chart of the port of Gubat proves that the depth of water over the bar or
entrance of the Sabang River is only one foot and a half at ordinary low tide; The lorcha Pilar,
loaded as it had been from the afternoon of December 4, even though it could have been moved
by means of poles, without being towed, evidently could not have entered the Sabang River on
the morning of the 5th, when the wind began to increase and the sea to become rough, on
account of the low tide, the shallowness of the channel, and the boat’s draft.
12. The patron of lorcha cognizant of his duties. The patron Gadvilao, being cognizant of the
duties imposed upon him by rules 14 and 15 of article 612, and others, of the Code of
Commerce, remained with his sailors, during the time the hurricane was raging, on board the
lorcha from the morning of December 5 until early the following morning, the 6th, without
abandoning the boat, notwithstanding the imminent peril to which he was exposed, and kept to
his post until after the wreck and the lorcha had been dashed against the rocks. Then he
solicited help from the captain of the steamer Ton Yek, and, thanks to the relief afforded by a
small boat sent by the latter officer, Gadvilao with his crew succeeded in reaching land and
immediately reported the occurrence to the representative of Inchausti & Co. and to the public
official from whom he obtained the document of protest. By such procedure, he showed that, as
a patron skilled in the exercise of his vocation, he performed the duties imposed by law in
cases of shipwreck brought about by force majeure.
13. The general rule established in Article 840 is that the loss of the vessel and of its cargo, as the
result of shipwreck, shall fall upon the respective owners thereof, save for the exceptions
specified in the second of the said articles. These legal provisions are in harmony with those of
articles 361 and 362 of the Code of Commerce, and are applicable whenever it is proved that
the loss of, or damage to, the goods was the result of a fortuitous event or of force majeure; but
the carrier shall be liable for the loss or the damage arising from the causes aforementioned, if
it shall have been proven that they occurred through his own fault or negligence or by his
failure to take the same precautions usually adopted by diligent and careful persons.
14. There is no delay, negligence or abandonment in the shipment of Ong Bieng Sip’s
merchandise because in the contract made and entered into by and between the owner of the
goods and the defendant, no term was fixed within which the said merchandise should be
delivered to the former at Catarman, nor was it proved that there was any delay in loading the
goods and transporting them to their destination. From 28 November, when the steamer
Sorsogon arrived at Gubat and landed the said goods belonging to Ong Bieng Sip to await the
lorcha Pilar which was to convey them to Catarman, as agreed upon, no vessel carrying
merchandise made the voyage from Gubat to the said pueblo of the Island of Samar, and with
Ong Bieng Sip’s merchandise there were also to be shipped goods belonging to Inchausti,
which goods were actually taken on board the said lorcha and suffered the same damage as
those belonging to the Chinaman. So that there was no negligence, abandonment, or delay in
the shipment of Ong Bieng Sip’s merchandise, and all that was done by the carrier, Inchausti &
Co., was what it regularly and usually did in the transportation by sea from Manila to Catarman
of all classes of merchandise. No attempt has been made to prove that any course other than the
foregoing was pursued by that firm on this occasion.
15. According to article 361 of the Code of Commerce, merchandise shall be transported at the
risk and venture of the shipper, unless the contrary be expressly stipulated. No such stipulation
appears of record; therefore, all damages and impairment suffered by the goods in
transportation, by reason of accident, force majeure, or by virtue of the nature or defect of the
articles, are for the account and risk of the shipper.
16. A final clause of this same article adds that the burden of proof of these accidents is upon the
carrier. IN THIS CASE, the loss and damage of the goods shipped by the Ong, was due to the
stranding and wreck of the lorcha Pilar in the heavy storm or hurricane; this Tan Chiong Sian
 did not deny, and admitted that it took place between the afternoon of the 5th and early in the
morning of the 6th of December, 1908, so it is evident that Inchausti is exempt from the
obligation imposed by the law to prove the occurrence of the said storm, hurricane, or cyclone
in the port of Gubat, and, therefore, if the said goods were lost or damaged and could not be
delivered in Catarman, it was due to a fortuitous event and a superior, irresistible natural force,
or force majeure, which completely disabled the lorcha intended for their transportation to the
said port of the Island of Samar.
17. Inchausti took precautions usually adopted by careful and diligent persons, as required
by Article 362 of the Code of Commerce. Herein, Inchausti, his agents and the patron did
take the measures which they deemed necessary and proper in order to save the lorcha and its
cargo from the impending danger; accordingly, the patron, as soon as he was informed that a
storm was approaching, proceeded to clear the boat of all gear which might offer resistance to
the wind, dropped the four anchors he had, and even procured an extra anchor from the land,
together with a new cable, and cast it into the water, thereby adding, in so far as possible, to the
stability and security of the craft, in anticipation of what might occur, as presaged by the
violence of the wind and the heavy sea; and Inchausti & Company’s agent furnished the
articles requested by the patron of the lorcha for the purpose of preventing the loss of the boat;
thus did they all display all the diligence and care such as might have been employed by
anyone in similar circumstances, especially the patron who was responsible for the lorcha
under his charge; nor is it possible to believe that the latter failed to adopt all the measures that
were necessary to save his own life and those of the crew and to free himself from the
imminent peril of shipwreck.
18. Wreck of lorcha due to fortuitous event with no conclusive proof of negligence or of the
failure to take the precautions such as diligent and careful persons usually adopt to avoid the
loss of the boat and its cargo, it is neither just nor proper to attribute the loss or damage of the
goods in question to any fault, carelessness, or negligence on the part of Inchausti and its
agents and, especially, the patron of the lorcha Pilar.
19. Inchausti took all measures for he salvage of goods recoverable after the accident. Herein,
after wreck, Inchausti’s agent took all the requisite measures for the salvage of such of the
goods as could be recovered after the accident, which he did with the knowledge of the shipper,
Ong Bieng Sip, and, in effecting their sale, he endeavored to secure all possible advantage to
the Chinese shipper; in all these proceedings, he acted in obedience to the law.
Article 840 of the Code of Commerce: “The losses and damages suffered by a vessel and he cargo by
reason of shipwreck or stranding shall be individually for the account of the owners, the part of the wreck
which may be saved belonging to them in the same proportion.”
Article 841 of the Code of Commerce: “If the wreck or stranding should arise through the malice,
negligence, or lack of skill of the captain, or because the vessel put to sea insufficiently repaired and
supplied, the owner or the freighters may demand indemnity of the captain for the damages caused to the
vessel or cargo by the accident, in accordance with the provisions contained in articles 610, 612, 614 and
621.
MAGELLAN V CA
FACTS.
 Magellan Manufacturers Marketing Corporation (MAGELLAN) entered into a contract with Choju
Company of Yokohama, Japan (CHOJU) to export 136,000 anahaw fans. A letter of credit was
issued to MAGELLAN by CHOJU.
 Through its president, James Cu, MAGELLAN then contracted F.E. Zuellig (ZUELLIG), a shipping
agent, to ship the anahaw fans through Orient Overseas Container Lines, Inc., (ORIENT) specifying
that he needed an on-board bill of lading and that transhipment is not allowed under the letter of
credit.
 MAGELLAN paid ZUELLIG the freight charges and secured a copy of the bill of lading which was
presented to Allied Bank. The bank then credited the amount of US$23,220 covered by the letter of
credit to MAGELLAN’s account.
 However, when MAGELLAN’s president James Cu, went back to the bank, he was informed that
the payment was refused by the CHOJU allegedly because there was no on-board bill of lading, and
there was a transhipment of goods. As a result of the refusal of CHOJU to accept, the anahaw fans
were shipped back to Manila.
 ORIENT and ZUELLIG billed MAGELLAN for shipment and for demurrage in Japan. In a letter,
ORIENT and ZUELLIG gave MAGELLAN the option of paying the sum of P51,271 or to abandon
the anahaw fans for ORIENT and ZUELLIG to sell them at public auction to cover the cost of
shipment and demurrages. MAGELLAN opted to abandon the goods.
 However, ORIENT and ZUELLIG demanded for payment of P298,150 from MAGELLAN which
represents the freight charges from Japan to Manila, demurrage incurred in Japan and Manila, and
charges for stripping the container van of the anahaw fans.
 MAGELLAN filed a complaint praying that ORIENT and ZUELLIG be ordered to pay whatever
MAGELLAN was not able to earn from CHOJU or the) amount of P174,150.00.
 In its answer, ORIENT and ZUELLIG alleged that the bill of lading clearly shows that there will be
a transhipment and that MAGELLAN was well aware that MV Despatcher was only up to
Hongkong where the subject cargo will be transferred to another vessel for Japan.
 ORIENT filed a counterclaim praying that MAGELLAN be ordered to pay freight charges from
Japan to Manila and the demurrages in Japan and Manila amounting to P298,150.93.
 RTC: ruled in favor of ZUELLIG and ORIENT and dismissed the complaint of MAGELLAN on the
ground that MAGELLAN had given its consent to the contents of the bill of lading where it is
clearly indicated that there will be transhipment. (RTC said that MAGELLAN is liable to pay to
ZUELLIG and ORIENT the freight charges from Japan to Manila and demurrages since it was the
former which ordered the reshipment of the cargo from Japan to Manila.)
 CA: affirmed RTC’s finding that MAGELLAN agreed to the transhipment of the goods and
modified the finding that MAGELLAN’s liability of P298,150.93 is reduced to P52,102.45 which
represents the freight charges and demurrages incurred in Japan but not for the demurrages incurred
in Manila because ZUELLIG and ORIENT did not timely inform MAGELLAN that the goods were
already in Manila in addition to the fact that ZUELLIG and ORIENT had given MAGELLAN the
option of abandoning the goods for the demurrages.
ISSUES & RATIO.
WON there was transshipment. – YES
Transhipment, in maritime law, is defined as “the act of taking cargo out of one ship and loading it in
another,” or “the transfer of goods from the vessel stipulated in the contract of affreightment to another
vessel before the place of destination named in the contract has been reached,” or “the transfer for
further transportation from one ship or conveyance to another.” Clearly, either in its ordinary or its
strictly legal acceptation, there is transhipment whether or not the same person, firm or entity owns the
vessels. In other words, the fact of transhipment is not dependent upon the ownership of the
transporting ships or conveyances or in the change of carriers, as MAGELLAN seems to suggest, but
rather on the fact of actual physical transfer of cargo from one vessel to another. That there was
transhipment within this contemplation is the inescapable conclusion, as there unmistakably appears on
the face of the bill of lading the entry “Hong Kong” in the blank space labeled “Transhipment,” which
can only mean that transhipment actually took place.
WON MAGELLLAN is liable for demurrage charges. – NO
There is no dispute that ORIENT and ZUELLIG expressly and on their own volition granted
MAGELLAN an option with respect to the satisfaction of freightage and demurrage charges. Having
given such option, especially since it was accepted by MAGELLAN, ORIENT and ZUELLIG are
estopped from reneging thereon. MAGELLAN, on its part, was well within its right to exercise said
option.
DECISION.CA decision is AFFIRMED with MODIFICATION that MAGELLAN is absolved of any
liability and the award of P52,102.45 with legal interest granted by respondent court on private
respondents’ counterclaim is SET ASIDE, said counterclaim being hereby DISMISSED.
TRANS ASIA V CA
FACTS.
• Respondent Atty. Renato Arroyo, a public attorney, bought a ticket from herein petitioner for the voyage
of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City
• At around 5:30 in the evening, respondent boarded the M/V Asia Thailand vessel during which he
noticed that some repairs were being undertaken on the engine of the vessel. The vessel departed at around
11:00 in the evening with only one engine running.

• After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After
half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for
they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to their
request and thus the vessel headed back to Cebu City.

• In Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu
City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Petitioner, the
next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of
defendant.

• On account of this failure of defendant to transport him to the place of destination, respondent Arroyo
filed before the trial court “an action for damage arising from bad faith, breach of contract and from tort,
against petitioner. The trial court ruled only for breach of contract. The CA reversed and set aside said
decision on appeal.

ISSUES & RATIO. WON the failure of a common carrier to maintain in seaworthy condition its
vessel involved in a contract of carriage a breach of its duty. -YES

YES, there was, between the petitioner and private respondent a contract of carriage. Under Article 1733
of the Civil Code, the petitioner was bound to observed extraordinary diligence in ensuring the
safety of the private respondent and ensuring that the passenger is to be delivered to his destination.
That meant that the petitioner was pursuant to the Article 1755 off the said Code, bound to carry the
private respondent safely as far as human care and foresight could provide, using the utmost diligence of
very cautious persons, with due regard for all the circumstances. In this case, the Supreme Court is in full
accord with the Court of Appeals that the petitioner failed or discharged this obligation

 Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder
head of one of the vessel’s engines. But even before it could finish these repairs, it allowed the
vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even
the lone functioning engine was not in perfect condition as sometime after it had run its course, it
conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the
ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the
voyage began. For a vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with a sufficient number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a
clear breach of its duty prescribed in Article 1755 of the Civil Code.
 Where the common carrier fails to observe extraordinary diligence resulting in delay or
interruption of the voyage, it shall be liable for any pecuniary loss or loss of profits which the
passengers may suffer by reason thereof the cause of the delay or interruption was the petitioner’s
failure to observe extraordinary diligence. Article 698 must then be read together with Articles
2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. it means that the petitioner
is liable for any pecuniary loss or loss of profits which the private respondent may have suffered
by reason thereof. For the private respond such would be the loss of income if unable to report to
his office on the day he was supposed to arrive were it not for the delay. This, however, assumes
that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not.
 A common carrier, in allowing its unseaworthy vessel to leave the port of origin and undertake the
contracted voyage, with full awareness that it was exposed to perils of the sea, deliberately
disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith
and in a wanton and reckless manner, thus making it liable for moral and exemplary damages.

DECISION. WHEREFORE, the instant petition is DENIED and the challenged decision of the
Court of Appeals in CA-G.R. CV No. 39901 is AFFIRMED subject to the modification as to the award for
attorneys fees which is hereby SET ASIDE.