Planters Products, Inc. v. CA, Soriamont Steamship Agencies and Kyosei KisenKabushiki KaishaG.R. No. 101503 September 15, 1993Bellossillo, J.FACTS: PlantersProducts-purchasedfromMitsubishiInterlCorp.9.3KmetrictonsofUrea(fertilizer), 46% ofwhich the latter shipped in bulk aboard the cargo vessel M/V Sun Plum owned by Kyosei KisenKabushiki Kaisha (KKKK) timecharter-partyonthevesselM/VSunPlumpursuanttotheUniformGeneral Charter was entered into between Mitsubishi as shipper/charterer and KKKK as ship-owner beforeloadingthe fertilizeraboardthe vessel theywere inspectedbythecharterers representative and foundfit After the Urea fertilizer was loaded in bulk by stevedores (somebody whose job is to load and unload ships) hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin, and then tied with steel bonds. The hatches remained closed andtightly sealed throughout the entire voyage. port area waswindy, certain portions ofthe route tothe warehouse weresandyand the weather was variable, raining occasionally while the discharge was in progress survey report revealed a shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18M/T was contaminated with sand, rustand dirt Planters Products sent a claimletter to Soriamont Steamship Agencies, theresident agent of thecarrier, for damages

ISSUES:1. WON a common carrier becomes a private carrier by reason of a charter-party; 2. in the negative, WON the ship-owner was able to prove that he had exercised that degree of diligence required of him under the lawHELD:1. Yes. charter-partycontract by which an entire ship, or some principal part thereof, is let by the owner to another person fora specified time oruse;contract of affreightment by which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight 2 types ofcharter-party:a. contract of affreightment involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; may either be:i) Time charter-vessel is leased to the charterer for a fixed period of time; or ii) Voyage charter- ship is leased for a single voyageb. charter by demise or bareboat charterWhole vessel is let to thechartererwith a transfer to him of its entire command and possession and consequent control over its navigation, including the master and thecrew, who are hisservantsInbothtypes,thecharter-partyprovidesforthehireofvesselonly,eitherforadeterminate period of time or for a single or consecutive voyage, the ship-owner to supply the ships stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship. Common or public carrier see Art. 1732; extends tocarriers either by land, air or waterwhichholdthemselvesoutasreadytoengageincarryinggoodsortransportingpassengersorbothfor compensationasapublicemploymentandnotasacasualoccupation distinction between a common or public carrier and a private or special carrier lies in the character of the business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for fee, the person orcorporation offering such service is aprivate carrier common carrier - should observe extraordinary diligence in the vigilance over the goods they carry; in case of loss, destruction or deterioration of the goods,it is presumed to beat fault or to have acted negligently, and the burden ofproving otherwise rests on it private carrier - exercise of ordinary diligence in the carriage of goodswill suffice; no such presumption applies toprivate carriers

Only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concernedWhen Planters Products chartered the vessel M/V Sun Plum, the ship captain, its officers and compliment were under the employ of the ship-owner and therefore continued to be under its direct supervision and control. As stranger to the crew and to the ship, Planters Products did not have the duty of caring for its cargo as it did not have control of the means in doing so.2. Yes. Before the fertilizer was loaded, the 4 hatches of the vessel were cleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ships holds, the steel pontoon hatches were closed and sealed with iron lids, then covered with 3 layers ofserviceable tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to openwithout the use of theships boom. the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo into the sea orseepage of water inside the hull of the vessel

stevedoresunloadedthecargounderthewatchfuleyesoftheshipmateswhowereoverseeing the whole operation onrotation basis

Urea also contains 46% nitrogen and is highly soluble in water. However, during storage, nitrogen and ammonia do not normally evaporate even on a long voyage, provided that the temperature inside the hull doesnot exceed 80degrees centigrade.

dissipation of quantities of fertilizer, or its deterioration in value, is caused either by an extremely high temperature in its place ofstorage, or when it comes in contact withwater

probability of the cargo being damaged or getting mixed or contaminated with foreignparticleswasmadegreaterbythefactthatthefertilizerwastransportedinbulk,thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of equipment used in transporting and hauling it risk the shipper or the owner of the goods has to face

Coastwise Lighterage Corporation v. CAFacts:Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in through a hole "two inches wide and twenty-two inches long". As a consequence, the molasses at the cargo tanks were contaminated. Pag-asa filed a claim against Philippine General Insurance Company, the insurer of its cargo. Philgen paid P700,000 for the value of the molasses lost.

Philgen then filed an action against Coastwise to recover the money it paid, claiming to be subrogated to the claims which the consignee may have against the carrier. Both the trial court and the Court of Appeals ruled against Coastwise.

Issues:(1) Whether Coastwise was transformed into a private carrier by virtue of the contract it entered into with Pag-asa, and whether it exercised the required degree of diligence(2) Whether Philgen was subrogated into the rights of the consignee against the carrier

Held:(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession, command mid navigation of the vessels remained with petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was not converted into a private carrier, but remained a common carrier and was still liable as such. The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. It follows then that the presumption of negligence that attaches to common carriers, once the goods it is sports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence.

(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any private of contract or upon written assignment of, claim. It accrues simply upon payment of the insurance claim by the insurer.

CASE DIGEST (Transportation Law): Valenzuela Hardwood vs. CA(GR 102316, 30 June 1997)FACTS:Valenzuela Hardwood and Industrial Supply, Inc. (VHIS) entered into an agreement with the Seven Brothers whereby the latter undertook to load on board its vessel M/V Seven Ambassador the formers lauan round logs numbering 940 at the port of Maconacon, Isabela for shipment to Manila. VHIS insured the logs against loss and/or damage with South Sea Surety and Insurance Co.

The said vessel sank resulting in the loss of VHIS insured logs. VHIS demanded from South Sea Surety the payment of the proceeds of the policy but the latter denied liability under the policy for non-payment of premium. VHIS likewise filed a formal claim with Seven Brothers for the value of the lost logs but the latter denied the claim.

The RTC ruled in favor of the petitioner.Both Seven Brothers and South Sea Surety appealed. The Court of Appeals affirmed the judgment except as to the liability of Seven Brothers.South Sea Surety and VHIS filed separate petitions for review before the Supreme Court. In a Resolution dated 2 June 1995, the Supreme Court denied the petition of South Sea Surety. The present decision concerns itself to the petition for review filed by VHIS.

ISSUE:Is a stipulation in a charter party that the (o)wners shall not be responsible for loss, split, short-landing, breakages and any kind of damages to the cargo valid?

HELD:Yes. Xxx [I]t is undisputed that private respondent had acted as a private carrier in transporting petitioners lauan logs. Thus, Article 1745 and other Civil Code provisions on common carriers which were cited by petitioner may not be applied unless expressly stipulated by the parties in their charter party.

In a contract of private carriage, the parties may validly stipulate that responsibility for the cargo rests solely on the charterer, exempting the shipowner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law, morals, good customs, public order, or public policy. Indeed, their contract of private carriage is not even a contract of adhesion. We stress that in a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers.

x x x

The general public enters into a contract of transportation with common carriers without a hand or a voice in the preparation thereof. The riding public merely adheres to the contract; even if the public wants to, it cannot submit its own stipulations for the approval of the common carrier. Thus, the law on common carriers extends its protective mantle against one-sided stipulations inserted in tickets, invoices or other documents over which the riding public has no understanding or, worse, no choice. Compared to the general public, a charterer in a contract of private carriage is not similarly situated. It can -- and in fact it usually does -- enter into a free and voluntary agreement. In practice, the parties in a contract of private carriage can stipulate the carriers obligations and liabilities over the shipment which, in turn, determine the price or consideration of the charter. Thus, a charterer, in exchange for convenience and economy, may opt to set aside the protection of the law on common carriers. When the charterer decides to exercise this option, he takes a normal business risk.

Caltex [Philippines], Inc. vs. Sulpicio Lines, Inc.Facts:On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex, collided in the open sea with passenger ship MV Doa Paz, causing the death of all but 25 of the latters passengers. Among those who died were Sebastian Canezal and his daughter Corazon Canezal. On March 22, 1988, the board of marine inquiry found that Vector Shipping Corporation was at fault. On February 13, 1989, Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife and mother respectively, filed with the Regional Trial Court of Manila a complaint for damages arising from breach of contract of carriage against Sulpicio Lines. Sulpicio filed a third-party complaint against Vector and Caltex. The trial court dismissed the complaint against Caltex, but the Court of Appeals included the same in the liability. Hence, Caltex filed this petition.

Issue:Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a passenger ship?Held:First: The charterer has no liability for damages under Philippine Maritime laws.Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter.A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment is one by which the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ships store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.Second: MT Vector is a common carrierThe charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyage charter, which retains the character of the vessel as a common carrier. It is imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code.The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness.

Third: Is Caltex liable for damages under the Civil Code?The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in "public service." The relationship between the parties in this case is governed by special laws. Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common carriers, are not expected to inquire into the vessels seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is concerned. Such a practice would be an absurdity in a business where time is always of the essence. Considering the nature of transportation business, passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation.BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT SERVICES, INC., petitioners, vs. PHILIPPINE FIRST INSURANCE CO., INC. Respondents.DOCTRINE: Proof of the delivery of goods in good order to a common carrier and of their arrival in bad order at their destination constitutes prima facie fault or negligence on the part of the carrier. If no adequate explanation is given as to how the loss, the destruction or the deterioration of the goods happened, the carrier shall be held liable therefor. Shipper: CMC Trading A.G. Carrier: BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V.Subject: coils of various Prime Cold Rolled Steel sheets Consignee: Philippine Steel Trading Corporation Insurer: PHILIPPINE FIRST INSURANCE CO., INC.

FACTS: Goods found to be in bad order. Belgian refused to pay. Thus, Phil First did. 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. RTC dismissed. CA ruled that Belgian liable. Failed to overcome presumption of negligence. Belgian inadequately proven petitioners' claim that the loss or the deterioration of the goods was due to pre-shipment damage. ISSUES: Whether petitioners have overcome the presumption of negligence of a common carrier

RULING: No. A review of the records and more so by the evidence showsFirst, as stated in the Bill of Lading, petitioners received the subject shipment in good order and condition in Hamburg, Germany.Second, prior to the unloading of the cargo, an Inspection Report prepared and signed by representatives of both parties showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and the contents thereof exposed and rusty.Third, Bad Order Tally Sheet No. 154979 issued by Jardine Davies Transport Services, Inc., stated that the four coils were in bad order and condition. Normally, a request for a bad order survey is made in case there is an apparent or a presumed loss or damage.Fourth, the Certificate of Analysis stated that, based on the sample submitted and tested, the steel sheets found in bad order were wet with fresh water.Fifth, petitioners -- in a letter addressed to the Philippine Steel Coating Corporation and dated October 12, 1990 -- admitted that they were aware of the condition of the four coils found in bad order and condition. Further, petitioners failed to prove that they observed the extraordinary diligence and precaution which the law requires a common carrier to know and to follow to avoid damage to or destruction of the goods entrusted to it for safe carriage and delivery. True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of Lading; however, there is no showing that petitioners exercised due diligence to forestall or lessen the loss. The master of the vessel should have known at the outset that metal envelopes in the said state would eventually deteriorate when not properly stored while in transit. The master of the vessel and his crew should have undertaken precautionary measures to avoid possible deterioration of the cargo. But none of these measures was taken. In their attempt to escape liability, petitioners further contend that they are exempted from liability under Article 1734(4) of the Civil Code. They cite the notation "metal envelopes rust stained and slightly dented" printed on the Bill of Lading as evidence that the character of the goods or defect in the packing or the containers was the proximate cause of the damage From the evidence on record, it cannot be reasonably concluded that the damage to the four coils was due to the condition noted on the Bill of Lading. The aforecited exception refers to cases when goods are lost or damaged while in transit as a result of the natural decay of perishable goods or the fermentation or evaporation of substances liable therefor, the necessary and natural wear of goods in transport, defects in packages in which they are shipped, or the natural propensities of animals. None of these is present in the instant case. Further, even if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once it accepts the goods notwithstanding such condition. May 2nd at 3rd issue pa pero di ko naisama. Notice of loss. Dapat within 3 days dawsiya nag file, 1yr prescription if there was an inspection. Limited liability. No stipulation in the bill of lading, Letter of credit attached to the bill of lading does not count.

FGU Insurance Corp. v. CAFacts:On April 21, 1987, a car owned by private respondent FILCAR Transport Inc., rented to and driven by Dahl-Jensen, a Danish tourist, swerved into the right and hit the car owned by Lydia Soriano and driven by Benjamin Jacildone. Dahl-Jensen did not possess a Philippine drivers license. Petitioner, as the insurer of Sorianos car, paid the latter P25, 382.20 and, by way of subrogation, sued FILCAR, Dahl-Jensen, and Fortune Insurance Corporation, FILCARs insurer, for quasi-delict. The trial court dismissed the petition for failure to substantiate the claim for subrogation. The Court of Appeals affirmed the decision, but on the ground that only Dahl-Jensens negligence was proven, not that of FILCAR. Hence, this instant petition.Issues:(1)Whether an action based on quasi-delict will prosper against a rent-a-car company and, consequently, its insurer for fault or negligence of the car lessee in driving the rented vehicle(2) Whether the ruling in MYC-Agro-Industrial Corporation v. Vda. de Caldo is applicable in the case at barHeld:(1) We find no reversible error committed by respondent court in upholding the dismissal of petitioner's complaint. The pertinent provision is Art. 2176 of the Civil Code which states: "Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict. . . . ". To sustain a claim based thereon, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of the defendant; and, (c) connection of cause and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff. We agree with respondent court that petitioner failed to prove the existence of the second requisite,i.e., fault or negligence of defendant FILCAR, because only the fault or negligence of Dahl-Jensen was sufficiently established, not that of FILCAR. It should be noted that the damage caused on the vehicle of Soriano was brought about by the circumstance that Dahl-Jensen swerved to the right while the vehicle that he was driving was at the center lane. It is plain that the negligence was solely attributable to Dahl-Jensen thus making the damage suffered by the other vehicle his personal liability. Respondent FILCAR did not have any participation therein. Respondent FILCAR being engaged in a rent-a-car business was only the owner of the car leased to Dahl-Jensen. As such, there was novinculum jurisbetween them as employer and employee. Respondent FILCAR cannot in any way be responsible for the negligent act of Dahl-Jensen, the former not being an employer of the latter.(2) Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a misapprehension of our ruling therein. In that case, the negligent and reckless operation of the truck owned by Petitioner Corporation caused injuries to several persons and damage to property. Intending to exculpate itself from liability, the corporation raised the defense that at the time of the collision it had no more control over the vehicle as it was leased to another; and, that the driver was not its employee but of the lessee. The trial court was not persuaded as it found that the true nature of the alleged lease contract was nothing more than a disguise effected by the corporation to relieve itself of the burdens and responsibilities of an employer. We upheld this finding and affirmed the declaration of joint and several liability of the corporation with its driver.Topic: Extraordinary diligence

Case: SULPICIO LINES, INC.,petitioner, vs.FIRST LEPANTO-TAISHO INSURANCE CORPORATION,respondent.

G.R. No. 140349. June 29, 2005

FACTS: Taiyo Yuden Philippines, Inc. (owner of the goods) and Delbros, Inc. (shipper) entered into a contract, evidenced by Bill of Lading issued by the latter in favor of the owner of the goods, for Delbros, Inc. to transport a shipment of goods consisting of 3 wooden crates containing 136 cartons of inductors and LC compound on board the V Singapore V20 from Cebu City to Singapore in favor of the consignee, Taiyo Yuden Singapore Pte, Ltd.For the carriage of said shipment from Cebu City to Manila, Delbros, Inc. engaged the services of the vessel M/V Philippine Princess, owned and operated by petitioner Sulpicio Lines, Inc. (carrier). During the unloading of the shipment, one crate containing 42 cartons dropped from the cargo hatch to the pier apron. The owner of the goods examined the dropped cargo, and upon an alleged finding that the contents of the crate were no longer usable for their intended purpose, they were rejected as a total loss and returned to Cebu City.

The owner of the goods filed a claim with herein petitioner-carrier for the recovery of the value of the rejected cargo which was refused by the latter. Thereafter, the owner of the goods sought payment from respondent First Lepanto-Taisho Insurance Corporation (insurer) under a marine insurance policy issued to the former. Respondent-insurer paid the claim less thirty-five percent (35%) salvage value or P194, 220.31.

The payment of the insurance claim of the owner of the goods by the respondent-insurer subrogated the latter to whatever right or legal action the owner of the goods may have against Delbros, Inc. and petitioner-carrier, Sulpicio Lines, Inc. Thus, respondent-insurer then filed claims for reimbursement from Delbros, Inc. and petitioner-carrier Sulpicio Lines, Inc. which were subsequently denied.

In 1992, respondent-insurer filed a suit for damages with the trial court against Delbros, Inc. and herein petitioner-carrier.

Delbros, Inc. filed on 15 April 1993 its Answer with Counterclaim and Cross-claim, alleging that assuming the contents of the crate in question were truly in bad order, fault is with herein petitioner-carrier which was responsible for the unloading of the crates.

Petitioner-carrier filed its Answer to Delbros, Inc.s cross-claim asserting that it observed extraordinary diligence in the handling, storage and general care of the shipment and that subsequent inspection of the shipment by the Manila Adjusters and Surveyors Company showed that the contents of the third crate that had fallen were found to be in apparent sound condition, except that 2 cello bags each of 50 pieces ferri inductors No. LC FL 112270K-60 (c) were unaccounted for and missing as per packaging list.

After hearing, the trial court dismissed the complaint for damages as well as the counterclaim filed by therein defendant Sulpicio Lines, Inc. and the cross-claim filed by Delbros, Inc on the grounds that plaintiff has failed to prove its case.

The CA reversed the RTC decision and ordered Delbros and Sulpicio Lines to pay, jointly and severally, plaintiff-appellant the sum of P194,220.31 representing actual damages, plus legal interest counted from the filing of the complaint until fully paid. ISSUE: whether or not, based on the evidence presented during the trial, the owner of the goods, respondent-insurers predecessor-in-interest, did incur damages, and if so, whether or not petitioner-carrier is liable for the same

RULING:

It cannot be denied that the shipment sustained damage while in the custody of petitioner-carrier. It is not disputed that one of the 3 crates did fall from the cargo hatch to the pier apron while petitioner-carrier was unloading the cargo from its vessel. Neither is it impugned that upon inspection, it was found that 2 cartons were torn on the side and the top flaps were open and that 2 cello bags, each of 50 pieces ferri inductors, were missing from the cargo.

Petitioner-carrier contends that its liability, if any, is only to the extent of the cargo damage or loss and should not include the lack of fitness of the shipment for transport to Singapore due to the damaged packing. This is erroneous. Petitioner-carrier seems to belabor under the misapprehension that a distinction must be made between the cargo packaging and the contents of the cargo. According to it, damage to the packaging is not tantamount to damage to the cargo. It must be stressed that in the case at bar, the damage sustained by the packaging of the cargo while in petitioner-carriers custody resulted in its unfitness to be transported to its consignee in Singapore. Such failure to ship the cargo to its final destination because of the ruined packaging, indeed, resulted in damages on the part of the owner of the goods.

The falling of the crate during the unloading is evidence of petitioner-carriers negligence in handling the cargo. As a common carrier, it is expected to observe extraordinary diligence in the handling of goods placed in its possession for transport.[12]The standard of extraordinary diligence imposed upon common carriers is considerably more demanding than the standard of ordinary diligence,i.e., the diligence of a goodpaterfamiliasestablished in respect of the ordinary relations between members of society.[13]A common carrier is bound to transport its cargo and its passengers safely "as far as human care and foresight can provide, using theutmost diligenceofa very cautious person,with due regard to all circumstances.[14]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 the damage to, or destruction of, the goods entrusted to it for safe carriage and delivery.[15]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.[16]

Thus, when the shipment suffered damages as it was being unloaded, petitioner-carrier is presumed to have been negligent in the handling of the damaged cargo. Under Articles 1735[17]and 1752[18]of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently in case the goods transported by them are lost, destroyed or had deteriorated. To overcome the presumption of liability for loss, destruction or deterioration of goods under Article 1735, the common carrier must prove that they observed extraordinary diligence as required in Article 1733[19]of the Civil Code.[20]

Petitioner-carrier miserably failed to adduce any shred of evidence of the required extraordinary diligence to overcome the presumption that it was negligent in transporting the cargo.Coming now to the issue of the extent of petitioner-carriers liability, it is undisputed that respondent-insurer paid the owner of the goods under the insurance policy the amount of P194,220.31 for the alleged damages the latter has incurred. Neither is there dispute as to the fact that Delbros, Inc. paid P194,220.31 to respondent-insurer in satisfaction of the whole amount of the judgment rendered by the Court of Appeals. The question then is: To what extent is Sulpicio Lines, Inc., as common carrier, liable for the damages suffered by the owner of the goods?

Upon respondent-insurers payment of the alleged amount of loss suffered by the insured (the owner of the goods), the insurer is entitled to be subrogatedpro tantoto any right of action which the insured may have against the common carrier whose negligence or wrongful act caused the loss.[21]Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities.[22]The rights to which the subrogee succeeds are the same as, but not greater than, those of the person for whom he is substituted, that is, he cannot acquire any claim, security or remedy the subrogor did not have.[23]In other words, a subrogee cannot succeed to a right not possessed by the subrogor.[24]A subrogee in effect steps into the shoes of the insured and can recover only if the insured likewise could have recovered.[25]

As found by the Court of Appeals, there was damage suffered by the goods which consisted in the destruction of one wooden crate and the tearing of two (2) cardboard boxes therein which rendered them unfit to be sent to Singapore.[26]The falling of the crate was negligence on the part of Sulpicio Lines, Inc. for which it cannot exculpate itself from liability because it failed to prove that it exercised extraordinary diligence.[27]

Hence, we uphold the ruling of the appellate court that herein petitioner-carrier is liable to pay the amount paid by respondent-insurer for the damages sustained by the owner of the goods.

As stated in the manifestation filed by Delbros, Inc., however, respondent-insurer had already been paid the full amount granted by the Court of Appeals, hence, it will be tantamount to unjust enrichment for respondent-insurer to again recover damages from herein petitioner-carrier.

With respect to Delbros, Inc.s prayer contained in its manifestation that, in case the decision in the instant case be adverse to petitioner-carrier, a pronouncement as to the matter of reimbursement, indemnification or contribution in favor of Delbros, Inc. be included in the decision, this Court will not pass upon said issue since Delbros, Inc. has no personality before this Court, it not being a party to the instant case. Notwithstanding, this shall not bar any action Delbros, Inc. may institute against petitioner-carrier Sulpicio Lines, Inc. with respect to the damages the latter is liable to pay.

WHEREFORE, premises considered, the assailed Decision of the Court of Appeals dated 26 May 1999 and its Resolution dated 13 October 1999 are hereby AFFIRMED. No costs.

SO ORDERED.

G.R. No. 149019, 15 August 2006DELSAN TRANSPORT LINES INC. petitionerAMERICAN HOME ASSURANCE CORPORATION, respondent

FACTS: Carrier Delsan Transport Lines Inc. Shipper Caltex Philippines Insurer American Home Assurance Corporation Delsan Transport was hired by Caltex to transport its cargo of diesel oil from Bataan Refinery Corporation to the bulk depot in Bacolod City through a Contract of Affreightment. Upon the arrival of MT Larusan which carried the cargo in its destination, unloading operations commenced. Thereafter the discharging had to be stopped on account of the discovery that the port bow mooring of the vessel was intentionally cut or stolen by unknown persons.Because there was nothing holding it, the vessel drifted westward, dragged and stretched the flexible rubber hose attached to the riser, broke the elbow into pieces, severed completely the rubber hose connected to the tanker from the main delivery line at sea bed level and ultimately caused the diesel oil to spill into the sea.Unaware of what happened, the shore tender, thinking that the vessel would, at any time, resume pumping, did not shut the storage tank gate valve. As all the gate valves remained open, the diesel oil that was earlier discharged from the vessel into the shore tank backflowed.In short, there was spillage and backflow of the diesel cargo. As a result of spillage and backflow of diesel oil, Caltex sought recovery of the loss from Delsan, but the latter refused to pay.As insurer, AHACpaidCaltex the sum ofP479,262.57 for spillage, pursuant to Marine Risk Note No. 34-5093-6, andP1,939,575.37 for backflow of the diesel oil pursuant to Inland Floater Policy No. AH-1F64-1011549P. AHiAC as subrogee asked Delsan to compensate it for the amount paid, but to no avail, AHAc instituted an action against Delsan. RTC ruled in favor of AHAC nad held Delsan liable for the loss of the cargo due to its negligence as a common carrier CA affirmed RTC - Delsan failed to exercise the extraordinary diligence of a good father of a family in the handling of its cargo. Applying Article 1736[4]of the Civil Code, the CA ruled that since the discharging of the diesel oil into Caltex bulk depot had not been completed at the time the losses occurred, there was no reason to imply that there was actual delivery of the cargo to Caltex, the consignee

ISSUE: W/N petitioner should be held liable for both spillage and backflow that caused the loss of the cargo.

HELD:YES. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them.They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated.[6]To overcome the presumption of negligence in case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence.There are, however, exceptions to this rule found in Article 1734 of the NCC.In the case at bar, it had been established that the proximate causeof the spillage and backflow of the diesel oil was due to the severance of the port bow mooring line of the vessel and the failure of the shore tender to close the storage tank gate valve even as a check on the drain cock showed that there was still a product on the pipeline. The crew of the vessel should have promptly informed the shore tender that the port mooring line was cut off. However, Delsan did not do so on the lame excuse that there was no availablebanca. The crew of the vessel should have exerted utmost effort to immediately inform the shore tender that the port bow mooring line was severed.To be sure, Delsan, as the owner of the vessel, was obliged to prove that the loss was caused by one of the excepted causes if it were to seek exemption from responsibility.[7]Unfortunately, it miserably failed to discharge this burden by the required quantum of proof.Delsansargumentthatitshouldnotbeheldliablefor the loss ofdieseloilduetobackflowbecause the same had already been actuallyandlegallydelivered to Caltex at the time it entered the shore tankholds no water. It had been settled that the subject cargo was still in the custody of Delsan because the discharging thereof has not yet been finished when the backflow occurred.Since the discharging of the cargo intothedepothasnotyetbeen completed at the time of the spillage whenthebackflowoccurred,thereisnoreasontoimplythat there was actual delivery of the cargo to the consignee.Delsan is straining the issue by insisting that when the diesel oil entered into the tank of Caltex on shore, there was legally, at that moment, a complete delivery thereof to Caltex.Tobesure, the extraordinary responsibility of common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered,actuallyorconstructively,bythecarrier to the consignee, or to a personwhohastheright to receive them.[8]The discharging of oil products toCaltexBulkDepothasnotyetbeenfinished,Delsan still has the duty to guard and to preserve the cargo.The carrier still has in it the responsibility to guard and preserve the goods, a duty incident to its having the goods transported.Hence, having not overturned the presumption of negligence, it is but right and proper to held petitioner liable for the loss of the cargo.

Calalas v. CAFacts:Private respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was already full, Calalas gave Sunga an stool at the back of the door at the rear end of the vehicle. Along the way, the jeepney stopped to let a passenger off. Sunga stepped down to give way when an Isuzu truck owned by Francisco Salva and driven by Iglecerio Verena bumped the jeepney. As a result, Sunga was injured. Sunga filed a complaint against Calalas for violation of contract of carriage. Calalas filed a third party complaint against Salva. The trial court held Salva liable and absolved Calalas, taking cognisance of another civil case for quasi-delict wherein Salva and Verena were held liable to Calalas. The Court of Appeals reversed the decision and found Calalas liable to Sunga for violation of contract of carriage.Issues:(1) Whether the decision in the case for quasi delict between Calalas on one hand and Salva and Verena on the other hand, is res judicata to the issue in this case(2) Whether Calalas exercised the extraordinary diligence required in the contract of carriage(3) Whether moral damages should be awardedHeld:(1)The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle ofres judicatadoes not apply. Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. Thefirst, quasi-delict, also known asculpa aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. Thesecond, breach of contract orculpa contractual, is premised upon the negligence in the performance of a contractual obligation. Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created.(2) We do not think so.First, the jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle.Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating capacity of the jeepney. The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting passengers. We find it hard to give serious thought to petitioner's contention that Sunga's taking an "extension seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioner's contention that the jeepney being bumped while it was improperly parked constitutescaso fortuito. Acaso fortuitois an event which could not be foreseen, or which, though foreseen, was inevitable. This requires that the following requirements be present: (a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor did not take part in causing the injury to the creditor.Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the highway.(3) As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220. In this case, there is no legal basis for awarding moral damages since there was no factual finding by the appellate court that petitioner acted in bad faith in the performance of the contract of carriage.

Philippine Air Lines vs. Court of AppealsGR 120262, 17 July 1997)

FACTS:

On 23 October 1988, Leovigildo A. Pantejo, then City Fiscal of Surigao City, boarded a PAL plane in Manila and disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City. However, due to typhoon Osang, the connecting flight to Surigao City was cancelled. To accommodate the needs of its stranded passengers, PAL initially gave out cash assistance of P 100.00 and, the next day, P200.00, for their expected stay of 2 days in Cebu. Pantejo requested instead that he be billeted in a hotel at the PALs expense because he did not have cash with him at that time, but PAL refused. Thus, Pantejo was forced to seek and accept the generosity of a co-passenger, an engineer named Andoni Dumlao, and he shared a room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon reaching Surigao. On 25 October 1988 when the flight for Surigao was resumed, Pantejo came to know that the hotel expenses of his co-passengers, one Superintendent Ernesto Gonzales and a certain Mrs. Gloria Rocha, an Auditor of the Philippine National Bank, were reimbursed by PAL. At this point, Pantejo informed Oscar Jereza, PALs Manager for Departure Services at Mactan Airport and who was in charge of cancelled flights, that he was going to sue the airline for discriminating against him. It was only then that Jereza offered to pay Pantejo P300.00 which, due to the ordeal and anguish he had undergone, the latter declined.

Pantejo filed a suit for damages against PAL with the RTC of Surigao City which, after trial, rendered judgment, ordering PAL to pay Pantejo P300.00 for actual damages, P150,000.00 as moral damages, P100,000.00 as exemplary damages, P15,000.00 as attorneys fees, and 6% interest from the time of the filing of the complaint until said amounts shall have been fully paid, plus costs of suit.

On appeal, the appellate court affirmed the decision of the court a quo, but with the exclusion of the award of attorneys fees and litigation expenses.

The Supreme Court affirmed the challenged judgment of Court of Appeals, subject to the modification regarding the computation of the 6% legal rate of interest on the monetary awards granted therein to Pantejo.

ISSUE:

Whether petitioner airlines acted in bad faith when it failed and refused to provide hotel accommodations for respondent Pantejo or to reimburse him for hotel expenses incurred by reason of the cancellation of its connecting flight to Surigao City due to force majeur.

HELD:A contract to transport passengers is quite different in kind and degree from any other contractual relation, and this is because of the relation which an air carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carriers employees naturally could give ground for an action for damages.

The discriminatory act of PAL against Pantejo ineludibly makes the former liable for moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code. As held in Alitalia Airways vs. CA, et al., such inattention to and lack of care by the airline for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of moral damages.

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

The interest of 6% imposed by the court should be computed from the date of rendition of judgment and not from the filing of the complaint.

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

PHILIPPINE CHARTER INSURANCE CORPORATION VS. CHEMOIL LIGHTERAGE HITE GOLD CORPORATIONG.R. No. 136888. June 29, 2005

Facts: Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of non-life insurance. Respondent Chemoil Lighterage Corporation is also a domestic corporation engaged in the transport of goods. On 24 January 1991, Samkyung Chemical Company, Ltd., based in South Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT TACHIBANA which was valued at US$90,201.57 and another 436.70 metric tons of DOP valued at US$634,724.89 to the Philippines. The consignee was Plastic Group Phils., Inc. in Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all risks. The insurance was under Marine Policies No. MRN-30721[5]dated 06 February 1991. Marine Endorsement No. 2786[7]dated 11 May 1991 was attached and formed part of MRN-30721, amending the latters insured value to P24,667,422.03, and reduced the premium accordingly. The ocean tanker MT TACHIBANA unloaded the cargo to the tanker barge, which shall transport the same to Del Pan Bridge in Pasig River and haul it by land to PGPs storage tanks in Calamba, Laguna. Upon inspection by PGP, the samples taken from the shipment showed discoloration demonstrating that it was damaged. PGP then sent a letter where it formally made an insurance claim for the loss it sustained.Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and Condition Survey of the shipment which issued a report stating that DOP samples taken were discolored. Inspection of cargo tanks showed manhole covers of ballast tanks ceilings loosely secured and that the rubber gaskets of the manhole covers of the ballast tanks re-acted to the chemical causing shrinkage thus, loosening the covers and cargo ingress. Petitioner paid PGP the full and final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent the as full payment for the latters services.On 15 July 1991, an action for damages was instituted by the petitioner-insurer against respondent-carrier before the RTC, Br.16, City of Manila. Respondent filed an answer which admitted that it undertook to transport the shipment, but alleged that before the DOP was loaded into its barge, the representative of PGP, Adjustment Standard Corporation, inspected it and found the same clean, dry, and fit for loading, thus accepted the cargo without any protest or notice. As carrier, no fault and negligence can be attributed against respondent as it exercised extraordinary diligence in handling the cargo. After due hearing, the trial court rendered a Decision in favor of plaintiff. On appeal, the Court of Appeals promulgated its Decision reversing the trial court. A petition for review on certiorar[ was filed by the petitioner with this Court.

Issues: 1. Whether or not the Notice of Claim was filed within the required period.

2. Whether or not the damage to the cargo was due to the fault or negligence of the respondent.

Held: Article 366 of the Code of Commerce has profound application in the case at bar, which provides that; Within twenty-four hours following the receipt of the merchandise a claim may be made against the carrier on account of damage or average found upon opening the packages, provided that the indications of the damage or average giving rise to the claim cannot be ascertained from the exterior of said packages, in which case said claim shall only be admitted at the time of the receipt of the packages. After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.As to the first issue, the petitioner contends that the notice of contamination was given by PGP employee, to Ms. Abastillas, at the time of the delivery of the cargo, and therefore, within the required period. The respondent, however, claims that the supposed notice given by PGP over the telephone was denied by Ms. Abastillas. The Court of Appeals declared: that a telephone call made to defendant-company could constitute substantial compliance with the requirement of notice. However, it must be pointed out that compliance with the period for filing notice is an essential part of the requirement, i.e.. Immediately if the damage is apparent, or otherwise within twenty-four hours from receipt of the goods, the clear import being that prompt examination of the goods must be made to ascertain damage if this is not immediately apparent. We have examined the evidence, and we are unable to find any proof of compliance with the required period, which is fatal to the accrual of the right of action against the carrier. Nothing in the trial courts decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or within a period of twenty-four hours from the time the goods were received. The Court of Appeals made the same finding. Having examined the entire records of the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusion that the notice of claim was timely relayed or filed.The requirement that a notice of claim should be filed within the period stated by Article 366 of the Code of Commerce is not an empty or worthless proviso.The object sought to be attained by the requirement of the submission of claims in pursuance of this article is to compel the consignee of goods entrusted to a carrier to make prompt demand for settlement of alleged damages suffered by the goods while in transport, so that the carrier will be enabled to verify all such claims at the time of delivery or within twenty-four hours thereafter, and if necessary fix responsibility and secure evidence as to the nature and extent of the alleged damages to the goods while the matter is still fresh in the minds of the parties.The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable condition precedent; it does not constitute a limitation of action. We do not believe so. As discussed at length above, there is no evidence to confirm that the notice of claim was filed within the period provided for under Article 366 of the Code of Commerce. Petitioners contention proceeds from a false presupposition that the notice of claim was timely filed.Considering that we have resolved the first issue in the negative, it is therefore unnecessary to make a resolution on the second issue.

LARRY ESTACION, Petitioner, vs. NOE BERNARDO, thru and his guardian ad litem ARLIE BERNARDO, CECILIA BANDOQUILLO and GEMINIANO QUINQUILLERA, Respondents.G.R. No. 144723 February 27, 2006Facts: Noe Bernardo was a passenger of jeepney driven by Geminiano Quinquillera , owned by respondent Cecilia Bandoquillo, Noe hung or stood on the left rear carrier of the vehicle. The jeepney stopped by the right shoulder of the road to pick up passengers. Suddenly, an Isuzu cargo truck, owned by petitioner and driven by Gerosano, which was traveling in the same direction, hit the rear end portion of the Fiera, the cargo truck smashed respondent Noe against the Fiera crushing his legs and feet which made him fall to the ground. Noe was brought to the Silliman University Medical Center where his lower left leg was amputated. Noe, through his guardian ad litem Arlie Bernardo, filed with the RTC of Dumaguete City a complaint for damages arising from quasi delict against the registered owner of the cargo truck and his driver Gerosano. And he prayed for actual damages, loss of income, moral and exemplary damages, attorneys fees, litigation expenses and costs of suit. Owner of the truck and driver Gerosano filed an answer denying the allegations in the complaint. They filed a third party complaint against respondents Bandoquillo and Quinquillera, as owner and driver of the Fiera. The reckless imprudence of the respondent driver was the proximate cause of the accident. Respondents Bandoquillo and Quinquillera filed their answer to the third party complaint asking for the dismissal of the third party complaint and for payment of attorneys fees.Driver Gerosano was charged criminally for reckless imprudence resulting to multiple physical injuries with damage to property before the MCTC of Negros Oriental. MCTC finding him guilty of the crime charged and was sentenced him and to pay the costs. RTC rendered its judgment in the civil case ordering defendants Gerosano and Estacion, to pay plaintiff, jointly or solidarily to the actual damages, moral damages, attorneys fee and the litigation expenses. Petitioner appealed to the CA. CA rendered the assailed decision which affirmed in toto the decision of the trial court. Petitioners motion for reconsideration was denied. Hence, the herein petition for review.

Issues: (1) Whether the Court of Appeals erred in not finding that Larry Estacion exercised a due diligence as of a good father of the family to prevent damage despite the abundance of evidence to that effect;(2) Whether the court of appeals erred in not holding that Larry Estacion exercised due diligence in the selection and supervision of his employee and in maintaining his cargo truck roadworthy and in good condition(3) Whether the court of appeals erred in exonerating respondents Cecilia Bandoquillio and Geminiano Quinquillera.

Held: (1) The court held that petitioner failed to overcome the presumption of negligence thus he is liable for the negligence of his driver Gerosano; the respondents failed to prove it otherwise. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also for those of persons for whom one is responsible.(2) There was also no proof that he exercised diligence in maintaining his cargo truck roadworthy and in good operating condition. While petitioners mechanic driver testified that he made a routine check up on October 15, 1982, one day before the mishap happened, and found the truck operational, there was no record of such inspection. (3) Modification for the ruling of the Court of Appeals that respondents Bandoquillo and Quinquillera are liable for the negligent act of their driver. The judgment was ordering defendants Gerosano and Estacion, as well as third party defendants Bandoquillo and Quinquillera, to pay plaintiff, jointly and solidarily, the award of damages, since there was contributory negligence on the part of respondent Noe, petitioners liability should be mitigated in accordance with Article 2179.

Eastern Shipping Lines, Inc. v. CA and The First Nationwide Assurance Corp.G.R. No. 97412 July 12, 1994Vitug, J.

FACTS: 13 coils of uncoated 7-wire stress relieved wire strand for pre-stressed concrete were shipped on board a vessel owned and operated by Eastern Shipping Lines at Kobe, Japan, for delivery to Stresstek Post-Tensioning Phils., Inc. in Manila while en route from Kobe to Manila, the carrying vessel encountered very rough seas and stormy weather; the coils wrapped in burlap cloth and cardboard paper were stored in the lower hold of the hatch of the vessel which was flooded with water; the water entered the hatch when the vessel encountered heavy weather en route to Manila; upon request, a survey of bad order cargo was conducted at the pier in the presence of the representatives of the consignee and E. Razon, Inc. and it was found that 7 coils were rusty on one side each; upon survey conducted at the consignees warehouse it was found that the wetting of the cargo was caused by fresh water that entered the hatch when the vessel encountered heavy weather; all 13 coils were extremely rusty and totally unsuitable for the intended purpose The First Nationwide Assurance Corp. indemnified the consignee in the amount of P171,923.00 for damage and loss to the insured cargo

ISSUE: WON Eastern Shipping Lines is liable

HELD: Yes. under Art. 1733, common carriers are bound to observe extra-ordinary vigilance over goods according to all circumstances of each case Art. 1735: In all cases other than those mentioned in Art. 1734, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the part of the carrier applies; and the carrier must present evidence that it has observed the extraordinary diligence required by Article 1733 of the Civil Code in order to escape liability for damage or destruction to the goods that it had admittedly carried in this case. But no evidence was presented; hence, the carrier cannot escape liability.

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. - versus -PHOENIX ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., INC G.R. No. 162467 May 8, 2009Tinga, J.:

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 of 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. McGees 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 TerminalAfter 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 ships officers, who would not have accepted the cargoes on board the vessel and signed the foremans 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 attorneys 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 ships 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 attorneys fees of 20% of the claim." It sustained Phoenixs and McGees 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.