G.R. No. L-36481-2 October 23, 1982

Lessons Applicable:Contract of Adhesion (Transportation)Laws Applicable:Article 1736,Article 1174FACTS:Clara Uy Bico (1,528 cavans of rice worthP40,907.50)and Amparo Servando (44 cartons of colored papertoys and general merchandise worth P1,070.50)loaded on boardPhilippine Steam Navigation Co.'svessel, FS-176for carriage from Manila to Pulupandan, Negros OccidentalBill of Lading: Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ...Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs2 pm: warehouse was razed by fireBefore the fire,907 cavans of rice were delivered by Uy Bico Uy Bico and Servando filed a claim for the value but was rejected by Philippine SteamCFI: favored UY Bico and Sercando delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736ISSUE:

W/N Philippine Steam should not be liable because of the stipulation in the bill of lading exempting it fromfortuitousevent

HELD: YES.set aside Agreement was in iteration of Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. 'caso fortuito' presents the following essential characteristics: (1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor." In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event. nothing in the record to show that appellant carrier ,incurred in delay in the performance of its obligation

Maersk Line vs. CA (GR 94761, 17 May 1993)Third Division, Bidin (J): 4 concurFacts:Maersk Line is engaged in the transportation of goods by sea, doing business in the Philippinesthrough its general agent Compania General de Tabacos de Filipinas. Efren Castillo, on the other hand, is theproprietor of Ethegal Laboratories, a firm engaged in the manufacture of pharmaceutical products. On 12 November 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico through the latters agent in thePhilippines, Elanco Products, 600,000 empty gelatin capsules for the manufacture of his pharmaceuticalproducts. The capsules were placed in 6 drums of 100,000 capsules each valued at US $1,668.71. Through aMemorandum of Shipment, the shipper Eli Lilly, Inc. of Puerto Rico advised Castillo as consignee that the600,000 empty gelatin capsules in 6 drums of 100,000 capsules each, were already shipped on board MVAnders Maerskline under Voyage 7703 for shipment to the Philippines via Oakland, California. In saidMemorandum, shipper Eli Lilly, Inc. specified the date of arrival to be 3 April 1977. For reasons unknown,said cargo of capsules were misshipped and diverted to Richmond, Virginia, USA and then transported backto Oakland, California. The goods finally arrived in the Philippines on 10 June 1977 or after 2 months fromthe date specified in the memorandum. As a consequence, Castillo as consignee refused to take delivery of thegoods on account of its failure to arrive on time.Castillo, alleging gross negligence and undue delay in the delivery of the goods, filed an action before the trialcourt for rescission of contract with damages against Maersk Line and Eli Lilly, Inc. as defendants. Later,Castillo moved for the dismissal of the complaint against Eli Lilly on the ground that the evidence on recordshows that the delay in the delivery of the shipment was attributable solely to Maersk Line. Acting on saidmotion, the trial court dismissed the complaint against Eli Lilly; and correspondingly, the latter withdrew itscross-claim against Maersk Line in a joint motion dated 3 December 1979. After trial, the trial court renderedjudgment dated 8 January 1982 in favor of Castillo, ordered Maersk Line, through its agent CompaniaGeneral de Tabacos de Filipinas, to pay Castillo the amount of P369,000.00 as unrealized profit; P200,000.00as moral damages; P10,000.00 as exemplary damages; P11,680.97 as cost of credit line; and P50,000.00, asattorneys fees and to pay the costs of suit. The court also held that sums due to Castillo will bear the legalrate of interest until they are fully paid from the time the case was filed.On appeal, the appellate court rendered its decision dated 1 August 1990 affirming with modifications thelower courts decision; ordering Maersk Line to pay Castillo (1) compensatory damages of P11,680.97 at 6%annual interest from filing of the complaint until fully paid, (2) moral damages of P50,000.00, (3) exemplarydamages of P20,000,00, (3) attorneys fees, per appearance fees, and litigation expenses of P30,000.00, (4)30% of the total damages awarded except item (3) above, and the costs of suit.The Supreme Court affirmed the appealed decision, with the modification regarding the deletion of item 4 ofthe appellate courts decision.1.Dismissal of Eli Lilly cross-claim against Maersk Line did not dismiss original complaintagainst itThe complaint was filed originally against Eli Lilly, Inc. as shipper-supplier and Maersk Line ascarrier. Maersk Line, being an original party defendant upon whom the delayed shipment is imputed, cannotclaim that the dismissal of the complaint against Eli Lilly, Inc. inured to its benefit. Hence, the appellate courterred in declaring that the trial court based Maersk Lines liability on the cross-claim of Eli Lilly. As borne outby the record, the trial court anchored its decision on Maersk Lines delay or negligence to deliver the 6drums of gelatin capsules within a reasonable time on the basis of which Maersk Line was held liable fordamages under Article 1170 of the New Civil Code which provides that those who in the performance of theirobligations are guilty of fraud, negligence, or delay and those who in any manner contravene the tenorthereof, are liable for damages.2.Content of bills of ladingThe bill of lading covering the subject shipment among others, reads (6) GENERAL (1) TheCarrier does not undertake that the Goods shall arrive at the port of discharge or the place of delivery at anyparticular time or to meet any particular market or use and save as is provided in clause 4 the Carrier shall inno circumstances be liable for any direct, indirect or consequential loss or damage caused by delay. If theCarrier should nevertheless be held legally liable for any such direct or indirect or consequential loss or Haystacks (Berne Guerrero)damage caused by delay, such liability shall in no event exceed the freight paid for the transport covered bythis Bill of Lading. This provision in the bill of lading has the effect of practically leaving the date of arrivalof the subject shipment on the sole determination and will of the carrier.3.Contract of adhesion generally void, but not entirely prohibitedThe provision at the back of the bill of lading, in fine print, is a contract of adhesion. Generally,contracts of adhesion are considered void since almost all the provisions of these types of contracts areprepared and drafted only by one party, usually the carrier. The only participation left of the other party insuch a contract is the affixing of his signature thereto, hence the term adhesion. Nonetheless, settled is therule that bills of lading are contracts not entirely prohibited. One who adheres to the contract is in reality freeto reject it in its entirety; if he adheres, he gives his consent.4. Nature of bill of lading; Magellan Manufacturing Marketing Corp.v. CAIt is a long standing jurisprudential rule that a bill of lading operates both as a receipt and as acontract. It is a receipt for the goods shipped and a contract to transport and deliver the same as thereinstipulated. As a contract, it names the parties, which includes the consignee, fixes the route, destination, andfreight rates or charges, and stipulates the rights and obligations assumed by the parties. Being a contract, it isthe law between the parties who are bound by its terms and conditions provided that these are not contrary tolaw, morals, good customs, public order and public policy. A bill of lading usually becomes effective upon itsdelivery to and acceptance by the shipper. It is presumed that the stipulations of the bill were, in the absenceof fraud, concealment or improper conduct, known to the shipper, and he is generally bound by his acceptancewhether he reads the bill or not

Mauro Ganzon v. CA and Gelacio TumambingG.R. No. L-48757 May 30, 1988Sarmiento, J.FACTS:

Tumambing contracted the services of Ganzon to haul 305 tons of scrap iron fromMariveles, Bataan, to the port of Manila on board the lighter LCT Batman; pursuant tothe agreement, Ganzon sent his lighter Batman to Mariveles where it docked;Tumambing delivered the scrap iron to Filomeno Niza, captain of the lighter, for loading;when about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles,Bataan, arrived and demanded P5,000.00 from Tumambing (note: extortion); Tumambingresisted the shakedown and after a heated argument between them, Advincula drew hisgun and fired at Tumambing, because of which he sustained physical injuriesActing Mayor Basilio Rub, accompanied by three policemen, ordered captain Niza and hiscrew to dump the scrap iron where the lighter was docked; the rest was brought to thecompound of NASSCO; Rub issued a receipt stating that the Municipality of Mariveles hadtaken custody of the scrap iron

ISSUES:WON Ganzon is guilty of breach of contract of transportation

HELD:Yes. the scraps were unconditionally placed in the possession and control of the commoncarrier owned by Ganzon, and upon their receipt by the carrier for transportation, thecontract of carriage was deemed perfected; hence, Ganzons extraordinary responsibilityfor the loss, destruction or deterioration of the goods commenced; pursuant to Art. 1736,such extraordinary responsibility would cease only upon the delivery, actual orconstructive, by the carrier to the consignee, or to the person who has a right to receivethem; the fact that part of the shipment had not been loaded on board the lighter did notimpair the said contract of transportation as the goods remained in the custody andcontrol of the carrier, albeit still unloadedGanzon has failed to show that the loss of the scraps was due to any of the causesenumerated in Art. 1734; hence he is presumed to have been at fault or to have actednegligently; he could have been exempted from any liability had he been able to provethat he observed extraordinary diligence in the vigilance over the goods in his custody,according to all the circumstances of the case, or that the loss was due to an unforeseenevent or to force majeure, but he failed to do sotheory of caso fortuito not applicableGanzons defense was that the loss of the scraps was due to an order or act of competentpublic authority

Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron;moreover, there is absence of sufficient proof that the issuance of the same order wasattended with such force or intimidation as to completely overpower the will of thepetitioners employees; mere difficulty in the fulfillment of the obligation is not consideredforce majeure

Loadstar Shipping Co. v. CA and The Manila Insurance Co., Inc.G.R. No. 131621 September 28, 1999Davide, Jr., C.J.FACTS:

Loadstar received on board its M/V Cherokee certain goods for shipment.

On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with itscargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consigneemade a claim with LOADSTAR which, however, ignored the same. As the insurer, MIC tothe insured in full settlement of its claim, and the latter executed a subrogation receipttherefor.

MIC filed a complaint against Loadstar and Prudential Guarantee & Assurance, Inc. (insurerof the vessel), alleging that the sinking of the vessel was due to the fault and negligence ofLOADSTAR and its employees. According to said complaint, the vessel was not seaworthybecause it was undermanned on the day of the voyage. If it had been seaworthy, it couldhave withstood the natural and inevitable action of the sea on 20 November 1984, whenthe condition of the sea was moderate.

ISSUES:1. WON M/V Cherokee a private or a common carrier; 2. WON Loadstar observeddue and/or ordinary diligence in these premises

HELD:1. Yes. It is not necessary that the carrier be issued a certificate of public convenience, andthis public character is not altered by the fact that the carriage of the goods in questionwas periodic, occasional, episodic or unscheduled.See Art. 1732 and ruling in de Guzman v. CA, supra.2. No. M/V Cherokee was not seaworthy when it embarked on its voyage. The vessel wasnot even sufficiently manned at the time. For a vessel to be seaworthy, it must beadequately equipped for the voyage and manned with a sufficient number of competentofficers and crew. The failure of a common carrier to maintain in seaworthy condition itsvessel involved in a contract of carriage is a clear breach of its duty prescribed in Art. 1755of the Civil Code.

Pedro de Guzman v. Court of AppealsG.R. No. L-47822, December 22, 1988PARTIES:Pedro de Guzman, petitionerCourt of Appeals and Ernesto Cendana, respondents

BRIEF STATEMENT OF THE CASE:Breach of the contract to carryExtraordinary diligence needed over common carriers

BRIEF STATEMENT OF THE FACTS:Ernesto Cendana was engaged in buying up used bottles and scrap metal inPangasinan. Upon gathering sufficient quantities of such scrap material, respondentwould bring such material to Manila for resale. He utilized (2) two six-wheeler truckswhich he owned for the purpose. Upon returning to Pangasinan, he would load hisvehicle with cargo belonging to different merchants to different establishments inPangasisnan which respondents charged a freight fee for. Sometime in November 1970,herein petitioner Pedro de Guzman, a merchant and dealer of General Milk CompanyInc. in Pangasinan contracted with respondent for hauling 750 cartons of milk.Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted byhijackers along Marcos Highway. Hence, petitioners commenced an action againstprivate respondent. In his defense, respondent argued that he cannot be held liable dueto force majuere, and that he is not a common carrier and hence is not required toexercise extraordinary diligence. On appeal before the Court of Appeals, Cendana urgedthat the trial court had erred in considering him a common carrier; in finding that hehad habitually offered trucking services to the public; in not exempting him from liabilityon the ground of force majeure; and in ordering him to pay damages and attorneysfees. The Court of Appeals reversed the judgment of the trial court and held thatCendana had been engaged in transporting return loads of freight as a casualoccupation a sideline to his scrap iron business and not as a common carrier. DeGuzman came to the Supreme Court by way of a Petition for Review.

ISSUES:1. Is respondent a common carrier?2. Is the respondent liable for the loss of the cartons of milk due to force majeure?

ARGUMENTS:1. Herein respondent is considered as a common carrier.Article 1732 of the New Civil Code avoids any distinction between one whose principalbusiness activity is the carrying of persons or goods or both and one who does suchcarrying only as an ancillary activity. It also avoids a distinction between a person orenterprise offering transportation services on a regular or scheduled basis and oneoffering such services on an occasional, episodic, and unscheduled basis.2. Respondent is not liable for the value of the undelivered merchandise.Article 1734 of the Civil Code- The general rule is established by the article thatcommon carriers are responsible for the loss, destruction or deterioration of the goodswhich they carry, unless the same is due to any of the following causes only:a. Flood, storm, earthquake, lightning or other natural disasters;b. Act of the public enemy, whether international or civil;c. Act or omission of the shipper or owner of the goods;d. Character of the goods or defects in the packing;e. Order or act of competent public authority.Applying the above article, we note firstly that the specific cause alleged in the instantcase the hijacking of the carrier's truck does not fall within any of the five (5)categories of exempting causes listed in Article 1734. It would follow; therefore, that thehijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735,in other words, the private respondent as common carrier is presumed to have been atfault or to have acted negligently. This presumption, however, may be overthrown byproof of extraordinary diligence on the part of private respondent.Article 1745: Any of the following or similar stipulations shall be consideredunreasonable, unjust and contrary to public policy: xxx xxx xxx(5) that the common carrier shall not be responsible for theacts or omissions of his or its employees;(6) that the common carrier's liability for acts committed bythieves, or of r obbers who do notact withgraveorirresistible threat, violence or force, is dispensed with ordiminished; and(7) that the common carrier shall not responsible for theloss, destruction or deterioration of goods on account of thedefective condition of the car vehicle, ship, airplane or otherequipment used in the contract of carriage. (Emphasissupplied)Under Article 1745 (6) above, a common carrier is held responsible and will not beallowed to divest or to diminish such responsibility even for acts of strangers likethieves or robbers,exceptwhere such thieves or robbers in fact acted "with grave orirresistible threat, violence or force." We believe and so hold that the limits of the dutyof extraordinary diligence in the vigilance over the goods carried are reached where thegoods are lost as a result of a robbery which is attended by "grave or irresistible threat,violence or force."The decision of the trial court shows that the armed men who held up the second truckowned by private respondent acted with grave, if not irresistible, threat, violence orforce, which is an exception of the general rule of Article 1745 (6).RULING:The Petition for Review on certiorari is hereby DENIED and the Decision of the Court ofAppeals dated 3 August 1977 is AFFIRMED.The occurrence of the loss must reasonably be regarded as quite beyond the control ofthe common carrier and properly regarded as a fortuitous event. It is necessary to recallthat even common carriers are not made absolute insurers against all risks of travel andof transport of goods, and are not held liable for acts or events which cannot beforeseen or are inevitable, provided that they shall have complied with the rigorousstandard of extraordinary diligence.We, therefore, agree with the result reached by the Court of Appeals that privaterespondent Cendana is not liable for the value of the undelivered merchandise whichwas lost because of an event entirely beyond private respondent's control.

Estrelita Bascos v. CA and Rodolfo CiprianoG.R. No. 101089 April 7, 1993Campos, Jr., J.

FACTS:Cipriano, representing Cipriano Trading Enterprise (CIPTRADE) entered into a haulingcontract with Jibfair Shipping Agency Corporation whereby the former bound itself to haulthe latters 2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to thewarehouse of Purefoods Corporation in Calamba, Laguna. To carry out its obligation,CIPTRADE subcontracted with Bascos to transport and to deliver 400 sacks of soya beanmeal worth P156,404.00 from the Manila Port Area to Calamba, Laguna at the rate ofP50.00 per metric ton. Petitioner failed to deliver the said cargo. As a consequence of thatfailure, Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordancewith the contract which stated that: CIPTRADE shall be held liable and answerable for anyloss in bags due to theft, hijacking and non-delivery or damages to the cargo duringtransport at market value.Cipriano filed a complaint for a sum of money and damages with writ of preliminaryattachment for breach of a contract of carriageBascos answer to the complaint: truck carrying the cargo was hijacked along CanonigoSt., Paco, Manila; that hijacking, being a force majeure, exculpated her from any liability toCIPTRADE; and that the contract they entered into was a mere lease of the truckISSUES:1. was petitioner a common carrier?; 2. was the hijacking referred to a forcemajeure?

HELD:1. Yes. See Art. 1732. (the article makes no distinction between onewhose principal business activity is the carrying of persons or goods or both, and one whodoes such carrying only as an ancillary activity; no distinction between a person orenterprise offering transportation service on a regular or scheduled basis and one offeringsuch service on an occasional, episodic or unscheduled basis; no distinction between acarrier offering its services to the general public and one who offers services or solicitsbusiness only from a narrow segment of the general population)the test to determine a common carrier is whether the given undertaking is a part of thebusiness engaged in by the carrier which he has held out to the general public as hisoccupation rather than the quantity or extent of the business transactedBasco herself has made the admission that she was in the trucking business under thename of A.M. Bascos Trucking, offering her trucks to those with cargo to move (hence sheis a common carrier)their contract was not one of lease: a contract is what the law defines it to be and not whatit is called by the contracting parties; furthermore, petitioner presented no other proof ofthe existence of the contract of lease

2. Yes. Common carriers are obliged to observe extraordinary diligence in the vigilanceover the goods transported by them; they are presumed to have been at fault or to haveacted negligently if the goods are lost, destroyed or deteriorated; in those cases where thepresumption of negligence is applied, the common carrier must prove that it exercisedextraordinary diligence in order to overcome the presumption.In this case, hijacking, not being included in the provisions of Article 1734, must be dealtwith under the provisions of Article 1735 and thus, the common carrier is presumed tohave been at fault or negligent. To exculpate the carrier from liability arising fromhijacking, he must prove that the robbers or the hijackers acted with grave or irresistiblethreat, violence, or force. This is in accordance with Article 1745 of the Civil Code whichprovides: Any of the following or similar stipulations shall be considered unreasonable,unjust and contrary to public policy: x x x (6) That the common carriers liability for actscommitted by thieves, or of robbers who do not act with grave or irresistible threat,violence or force, is dispensed with or diminished.Under Article 1745 (6) above, a common carrier is held responsible and will not beallowed to divest or to diminish such responsibility even for acts of strangers likethieves or robbers except where such thieves or robbers in fact acted with grave orirresistible threat, violence or force. We believe and so hold that the limits of the duty ofextraordinary diligence in the vigilance over the goods carried are reached where thegoods are lost as a result of a robbery which is attended by grave or irresistible threat,violence or force.

Everett Steamship Corporation vs. CAG.R. No.122494, October 8, 1998

PARTIES:Everett Steamship Corporation, petitionerCourt of Appeals and Hernandez Trading Co. Inc., respondentsBRIEF STATEMENT OF THE CASE:Validity of the Bill of lading in a contract of carriage

BRIEF STATEMENT OF THE FACTS:Private respondent imported 3 crates of bus spare parts marked as MARCO C/No. 12,MARCO C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading Company,Ltd. (Maruman Trading), a foreign corporation based in Inazawa, Aichi, Japan. The crateswere shipped from Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vesselowned by petitioner's principal, Everett Orient Lines. Upon arrival at the port of Manila,it was discovered that the crate marked MARCO C/No. 14 was missing. Privaterespondent claim upon petitioner for the value of the lost cargo amounting to OneMillion Five Hundred Fifty Two Thousand Five Hundred (Y1, 552,500.00) Yen, theamount shown in an Invoice No. MTM-941, dated November 14, 1991. However,petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximumamount stipulated under Clause 18 of the covering bill of lading which limits the liabilityof petitioner. Private respondent rejected the offer and thereafter instituted a suit forcollection. The trial court rendered a decision in favour of the private respondents andthis was affirmed by the Court of Appeals. Thus, this instant petition.

ISSUES:1.Is the petitioner liable for the actual value and not the maximum valuerecoverable under the bill of lading?2.Is private respondent, as consignee, who is not a signatory to the bill of ladingbound by the stipulations thereof?

ARGUMENTS:1.The Petitioner is only liable for the maximum value recoverable under the bill oflading.Clause 18 of the covering bill of lading:18. All claims for which the carrier may be liable shall be adjusted andsettled on the basis of the shipper's net invoice cost plus freight andinsurance premiums, if paid, and in no event shall the carrier be liable forany loss of possible profits or any consequential loss.The carrier shall not be liable for any loss of or any damage to or in anyconnection with, goods in an amount exceeding One Hundred thousandYen in Japanese Currency (Y100,000.00) or its equivalent in any othercurrency per package or customary freight unit (whichever is least)unlessthe value of the goods higher than this amount is declared in writing bythe shipper before receipt of the goods by the carrier and inserted in theBill of Lading and extra freight is paid as required. (Emphasis supplied)Pertinent provisions that is applicable as to this case:Art. 1749. A stipulation that the common carrier's liability is limited to the value of thegoods appearing in the bill of lading, unless the shipper or owner declares a greatervalue, is binding.Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper forthe loss, destruction, or deterioration of the goods is valid, if it is reasonable and justunder the circumstances, and has been freely and fairly agreed upon.Pursuant to the afore-quoted provisions of law, it is required that the stipulation limitingthe common carrier's liability for loss must be "reasonable and just under thecircumstances, and has been freely and fairly agreed upon."The above stipulations are reasonable and just. In the bill of lading, the carrier made itclear that its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman Trading, had the option to declare a higher valuation ifthe value of its cargo was higher than the limited liability of the carrier. Considering thatthe shipper did not declare a higher valuation, it had itself to blame for not complyingwith the stipulations.2.Private Respondents are still bound by the stipulations of the bill of ladingInit was held that evenif the consignee was not a signatory to the contract of carriage between the shipper andthe carrier, the consignee can still be bound by the contract.

RULING:The decision of the Court of Appeals is hereby REVERSED and SET ASIDE.In fine, the liability of petitioner for the loss of the cargo is limited to One HundredThousand (Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading..