Compania Maritima vs. Insurance Co.

of North America The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver, and if actually no goods are received there can be no such contract. The liability and responsibility of the carrier under a contract for the carriage of goods commence on their actual delivery to, or receipt by, the carrier or an authorized agent and delivery to a lighter in charge of a vessel for shipment on the vessel, where it is the custom to deliver in that way, is a good delivery and binds the vessel receiving the freight, the liability commencing at the time of delivery to the lighter and, similarly, where there is a contract to carry goods from one port to another, and they cannot be loaded directly on the vessel and lighters are sent by the vessel to bring the goods to it, the lighters are for the time its substitutes, so that the bill of landing is applicable to the goods as soon as they are placed on the lighters. Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper, then it can be said with certainty that the relation of shipper and carrier has been established. A bill of lading is not indispensable for the creation of a contract of carriage. The bill of lading is juridically a documentary proof of the stipulations and conditions agreed upon by both parties. The liability of the carrier as common carrier begins with the actual delivery of the goods for transportation, and not merely with the formal execution of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete delivery and acceptance. Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient to bind the carrier. FACTS: October, 1952: Macleod and Company of the Philippines (Macleod) contracted by telephone the services of the Compaia Maritima (CM), a shipping corporation, for: shipment of 2,645 bales of hemp from the Macleod's Sasa private pier at Davao City to Manila subsequent transhipment to Boston, Massachusetts, U.S.A. on board the S.S. Steel Navigator. This oral contract was later on confirmed by a formal and written booking issued by Macleod's branch office in Sasa and handcarried to CM's branch office in Davao in compliance with which the CM sent to Macleod's private wharf LCT Nos. 1023 and 1025 on which the loading of the hemp was completed on October 29, 1952. The 2 lighters were manned each by a patron and an assistant patron. The patrons of both barges issued the corresponding carrier's receipts and that issued by the patron of Barge No. 1025 reads in part: Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment at Manila onto S.S. Steel Navigator. FINAL DESTINATION: Boston. Early hours of October 30: LCT No. 1025 sank, resulting in the damage or loss of 1,162 bales of hemp loaded therein

Macleod promptly notified the carrier's main office in Manila and its branch in Davao advising it of its liability The damaged hemp was brought to Odell Plantation in Madaum, Davao, for cleaning, washing, reconditioning, and redrying. total loss adds up to P60,421.02 All abaca shipments of Macleod were insured with the Insurance Company of North America against all losses and damages Macleod filed a claim for the loss it suffered with the insurance company and was paid P64,018.55 subrogation agreement between Macleod and the insurance company wherein the Macleod assigned its rights over the insured and damaged cargo October 28, 1953.: failing to recover from the carrier P60,421.02 (amount supported by receipts), the insurance company instituted the present action CA affirmed RTC: ordering CM to pay the insurance co. ISSUE: W/N there was a contract of carriage bet. CM (carrier) and Macleod (shipper)

HELD: YES. Affirmed receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver, and if actually no goods are received there can be no such contract The liability and responsibility of the carrier under a contract for the carriage of goods commence on their actual delivery to, or receipt by, the carrier or an authorized agent. ... and delivery to a lighter in charge of a vessel for shipment on the vessel, where it is the custom to deliver in that way Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper, then it can be said with certainty that the relation of shipper and carrier has been established As regards the form of the contract of carriage it can be said that provided that there is a meeting of the minds and from such meeting arise rights and obligations, there should be no limitations as to form The bill of lading is not essential Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient to bind the carrier marine surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-tight conditions of various buoyancy compartments

SERVANDO vs. PHILIPPINE STEAM NAVIGATION CO.

Facts: Clara UY Bico and Amparo Servando loaded on board the Philippine Steam Navigation vessel, FS-176, for carriage from Manila to Pulupundan, Negros Occidental, cargoes of rice and colored paper as evidenced by the corresponding bills of lading issued by the carrier. 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 Customs. About 2:00 p.m. of the same day, said warehouse was razed by a fire of unknown origin, destroying Servandos cargoes.

Issue: Whether or not the stipulations in the bill of lading limiting the liability of carrier is valid.

Held: The court a quo held that the delivery of the shipment on question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. However, that in the bills of lading issued for the cargoes in question, parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation. Clause 14. Carrier shall not be responsible for loss or damage to shipments billed owners risk unless such damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage cause by force majeure, dangers or accidents of the sea or other waters; war; public enemies, xxx fire xxx. We sustain the validity of the above stipulation; there is nothing therein that is contrary to law, morals or public policy. Appellees would contend that the above stipulation does not bind them because it was printed in fine letters on the back of the bills of lading; and that they did not sign the same. This argument overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals. While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by t he provisions thereof. Such provisions have been held to be part of the contract of carriage and valid and binding upon the passenger regardless of the latters lack of knowledge or assent to the regulation. There is nothing in the record to show that appellant carrier in delay in the performance of its obligation nor that was the cause of the fire that broke out in the Customs warehouse in anyway attributable to the negligence of the appellant or its employees.

MAERSK LINE vs. COURT OF APPEALS

Facts: Private respondent(consignee) ordered from Eli Lilly. Inc.(shipper) 600,000 empty gelatin capsules for the manufacture of his pharmaceutical products. The Memorandum of Shipment provides that the shipper advised the consignee that the goods were already shipped on board the vessel of petitioner for shipment to the Philippines via Oakland, California. The specified date of arrival was April 3, 1977. For reasons unknown, said cargo of capsules were mishipped and diverted to Richmond, Virginia, USA and then transported back to Oakland, California. The goods finally arrived in the Philippines on June 10, 1977 or after two months from the date specified. The consignee refused to take delivery of the goods. Private respondent alleging gross negligence and undue delay in the delivery of the goods, filed an action for rescission of contract with damages against petitioner and shipper. Petitioner alleged that the goods were transported in accordance with the bill of lading(..the Carrier does not undertake that the go ods shall arrive at the port of discharge or the place of delivery at any particular time..) and that its liability under the la w attaches only in case of loss, destruction or deterioration of the goods as provided for in Article 1734 NCC. The shipper alleged that the mis-shipment was due solely to the gross negligence of petitioner. The RTC dismissed the complaint against the shipper and ruled in favor of the consignee. RTC ruled that the stipulation in the BOL is in the nature of contract of adhesion and therefore void. CA affirmed said decision, hence the present petition.

Issue: Whether or not respondent is entitled to damages resulting from delay in the delivery of the shipment in the absence in the bill of lading of a stipulation on the period of delivery.

Held: Yes. While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at least be made within a reasonable time. An examination of the subject bill of lading shows that the subject shipment was estimated to arrive in Manila on April 3, 1977. While there was no special contract entered into by the parties indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no need to execute another contract for the purpose as it would be a mere superfluity. In the case before us, we find that a delay in the delivery of the goods spanning a period of two months and seven days falls was beyond the realm of reasonableness. With respect to the ruling that contracts of adhesion are void, SC said that it was necessarily so and that it is a settled rule that bills of lading are contracts not entirely prohibited. Macam vs. CA The extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to receive them was proper. The real issue is whether respondents are liable to petitioner for releasing the goods to GPC without the bills of lading or bank guarantee. From the testimony of petitioner, we gather that he has been transacting with GPC as

buyer/importer for around two (2) or three (3) years already. When mangoes and watermelons are in season, his shipment to GPC using the facilities of respondents is twice or thrice a week. The goods are released to GPC. It has been the practice of petitioner to request the shipping lines to immediately release perishable cargoes such as watermelons and fresh mangoes through telephone calls by himself or his "people." In transactions covered by a letter of credit, bank guarantee is normally required by the shipping lines prior to releasing the goods. But for buyers using telegraphic transfers, petitioner dispenses with the bank guarantee because the goods are already fully paid. In his several years of business relationship with GPC and respondents, there was not a single instance when the bill of lading was first presented before the release of the cargoes.

Maersk Line vs. CA

While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at least be made within a reasonable time. While there was no special contract entered into by the parties indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no need to execute another contract for the purpose as it would be a mere superfluity. In the case before us, we find that a delay in the delivery of the goods spanning a period of two months and seven days falls was beyond the realm of reasonableness.

DELSAN TRANSPORT LINES, INC. vs. AMERICAN HOME ASSURANCE CORPORATION G.R. No. 149019 August 15, 2006 GARCIA, J. Facts: Delsan is a domestic corporation which owns and operates the vessel MT Larusan. On the other hand, respondent American Home Assurance Corporation (AHAC for brevity) is a foreign insurance company duly licensed to do business in the Philippines through its agent, the American-International Underwriters, Inc. (Phils.). It is engaged, among others, in insuring cargoes for transportation within the Philippines. Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l Automotive Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and delivery to the bulk depot in Bacolod City of Caltex Phils., Inc. (Caltex), pursuant to a Contract of Afreightment. The shipment was insured by respondent AHAC against all risks under Inland Floater Policy No. AH-IF641011549P and Marine Risk Note No. 34-5093-6. The shipment arrived in Bacolod City and immediately thereafter, unloading operations commenced. However, 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, which caused the diesel oil to spill into the sea. 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, AHAC paid Caltex the sum of P479,262.57 for spillage, pursuant to Marine Risk Note, and P1,939,575.37 for backflow of the diesel oil pursuant to Inland Floater Policy. AHAC, as Caltexs subrogee, instituted Civil Case No. 85 -29357 against Delsan for loss caused by the spillage. Issue: May Delsan be held liable for loss caused by the spillage of the diesel oil? Held: Yes. The court declared that Delsan, being a common carrier, should have exercised extraordinary diligence in the performance of its duties. 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. 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 subject to exceptions under Art. 1734. 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, actually or constructively, by the carrier to the consignee, or to a person who has the right to receive them. The discharging of oil products to Caltex Bulk Depot has not yet been finished, 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.

DSR-SENATOR vs. FEDERAL FACTS Berde Plants delivered 632 units of artificial trees to C.F. Sharp, the General Ship Agent of DSR-Senator Lines, a foreign shipping corporation, for transportation and delivery to the consignee, Al-Mohr International Group, in Riyadh, Saudi Arabia. C.F. Sharp issued International Bill of Lading for the cargo the port of discharge for the cargo was at the Khor Fakkan port and the port of delivery was Riyadh, Saudi Arabia, via Port Dammam. The cargo was loaded in M/S Arabian Senator. Federal Phoenix Assurance insured the cargo against all risks. On June 7, 1993, M/S Arabian Senator left the Manila South Harbor for Saudi Arabia with the cargo on board. When the vessel arrived in Khor Fakkan Port, the cargo was reloaded on board DSR-Senator Lines feeder vessel, M/V Kapitan Sakharov, bound for Port Dammam, Saudi Arabia. However, while in transit, the vessel and all its cargo caught fire. On July 5, 1993, DSR-Senator Lines informed Berde Plants that M/V Kapitan Sakharov with its cargo was gutted by fire and sank on or about July 4, 1993. On December 16, 1993, C.F. Sharp issued a certification to that effect Consequently, Federal Phoenix Assurance paid Berde Plants P941,429.61 corresponding to the amount of insurance for the cargo. In turn Berde Plants executed in its favor a Subrogation Receipt dated January 17, 1994. On February 8, 1994, Federal Phoenix Assurance sent a letter to C.F. Sharp demanding payment of P941,429.61 on the basis of the Subrogation Receipt. C.F. Sharp denied any liability on the ground that such liability was extinguished when the vessel carrying the cargo was gutted by fire. On March 11, 1994, Federal Phoenix Assurance filed with the RTC, Branch 16, Manila a complaint for damages against DSR-Senator Lines and C.F. Sharp, praying that the latter be ordered to pay actual damages of P941,429.61, compensatory damages of P100,000.00 and costs. ISSUE W/N DSR-Senator is liable YES RULING Under Article 1734, Fire is not one of those enumerated under the above provision which exempts a carrier from liability for loss or destruction of the cargo. Since the peril of fire is not comprehended within the exceptions in Article 1734, then the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law.

The natural disaster must have been the proximate and only cause of the loss, and that the carrier has exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. When the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. Respondent Federal Phoenix Assurance raised the presumption of negligence against petitioners. However, they failed to overcome it by sufficient proof of extraordinary diligence.

JAPAN AIRLINES vs. CA

Facts: Private respondents boarded the JAL flights to Manila with a stop over at Narita Japan at the airlines' expense. Upon arrival at Narita private respondents were billeted at Hotel Nikko Narita for the night. The next day, private respondents went to the airport to take their flight to Manila. However, due to the Mt. Pinatubo eruption rendered NAIA inaccessible to airline traffic. Hence, private respondents' trip to Manila was cancelled indefinitely. JAL then booked another flight fort the passengers and again answered for the hotel accommodations but still the succeeding flights were cancelled.

Issue: Whether or not JAL was obligated to answer for the accommodation expenses due to the force majeure.

Held: No, there is no question that when a party is unable to fulfill his obligation because of "force majeure," the general rule is that he cannot be held liable for damages for non-performance. Corollarily, when JAL was prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo eruption, whatever losses or damages in the form of hotel and meal expenses the stranded passengers incurred, cannot be charged to JAL. Yet it is undeniable that JAL assumed the hotel expenses of respondents for their unexpected overnight stay on June 15, 1991. It has been held that airline passengers must take such risks incident to the mode of travel. In this regard, adverse weather conditions or extreme climatic changes are some of the perils involved in air travel, the consequences of which the passenger must assume or expect. While JAL was no longer required to defray private respondents' living expenses during their stay in Narita on account of the fortuitous event, JAL had the duty to make the necessary arrangements to transport private respondents on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation to look after the comfort and convenience of its passengers when it declassified private respondents from "transit passengers" to "new passengers" as a result of which private respondents were obliged to make the necessary arrangements themselves for the next flight to Manila.

PLANTERS PRODUCTS, INC. vs. COURT OF APPEALS

Facts: PPI purchased from Mitsubishi metric tons of Urea fertilizer which the latter shipped aboard the cargo vessel owned by KKKK from US to La Union. Prior to its voyage, a time charter-party on the vessel was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan. Before loading the fertilizer aboard the vessel, they were all presumably inspected by the charterer's representative and found fit to take a load of urea. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with three layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire voyage. A private marine and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped. The survey report submitted revealed a shortage in the cargo and that a portion of the Urea fertilizer approximating was contaminated with dirt. PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for the cost of the shortage in the and the diminution in value of that portion contaminated with dirt. SSA explained that they did not respond to the consignee's claim because it was not a formal claim, and that they had nothing to do with the discharge of the shipment. PPI filed an action for damages. The defendant carrier argued that the strict public policy governing common carriers does not apply to them because they have become private carriers by reason of the provisions of the charter-party. RTC ruled in favor of plaintiff, stating that common carriers are presumed negligent, all that a shipper has to do in a suit to recover for loss or damage is to show receipt by the carrier of the goods and to delivery by it of less than what it received. After that, the burden of proving that the loss or damage was due to any of the causes which exempt him from liability is shifted to the carrier, common or private he may be. Even if the provisions of the charter-party are deemed valid, and the defendants considered private carriers, it was still incumbent upon them to prove that the shortage or contamination sustained by the cargo is attributable to the fault or negligence on the part of the shipper or consignee in the loading, stowing, trimming and discharge of the cargo. This they failed to do. CA reversed the decision, relying on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., it ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a common carrier by reason of the time charterer-party. Accordingly, the Civil Code provisions on common carriers which set forth a presumption of negligence do not find application in the case at bar.

Issue: 1) Whether a common carrier becomes a private carrier by reason of a charter-party. 2) Whether the shipowner was able to prove that he had exercised that degree of diligence required of him under the law.

Held: 1.) Not necessarily. It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued

to be under its direct supervision and control. Hardly then can the charterer be charged, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner. It is therefore 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, that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner 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. Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American Steamship Agencies, is misplaced for the reason that the meat of the controversy therein was the validity of a stipulation in the charterparty exempting the shipowners from liability for loss due to the negligence of its agent, and not the effects of a special charter on common carriers. At any rate, the rule in the United States that a ship chartered by a single shipper to carry special cargo is not a common carrier, does not find application in our jurisdiction, for we have observed that the growing concern for safety in the transportation of passengers and /or carriage of goods by sea requires a more exacting interpretation of admiralty laws, more particularly, the rules governing common carriers.

2.) Yes. In an action for recovery of damages against a common carrier on the goods shipped, the RTCs statement on the requirements of the law was reiterated. SC held that respondent carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption of negligence. It was shown during the trial that after 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 of serviceable 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 open without the use of the ships boom. Also shown, was that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside the hull of the vessel. SC agreed that the bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. Moreso, with a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can the charterer be charged, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner. It is therefore 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, that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner 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.
Tiu vs. Arriesgado G.R. No. 138060, September 1, 2004 Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked "Condor Hollow Blocks and General Merchandise" bearing plate number GBP-675 was loaded with firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the truck passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then parked along the right side of the national highway and removed the damaged tire to have it vulcanized at a nearby shop, about 700 meters away. Pedrano left his helper, Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed the latter to place a spare tire six fathoms away behind the stalled truck to serve as a warning for oncoming vehicles. The trucks tail lights were also left on. It was about 12:00 a.m., March 16, 1987. At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by Virgilio Te Laspias was cruising along the national highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come from Maya, Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa Pepito Arriesgado, who were seated at the right side of the bus, about three (3) or four (4) places from the front seat. As the bus was approaching the bridge, Laspias saw the stalled truck, which was then about 25 meters away. He applied the breaks and tried to swerve to the left to avoid hitting the truck. But it was too late; the bus rammed into the trucks left rear. The impact damaged the right side of the bus and left several passengers injured. Pedro Arriesgado lost consciousness and suffered a fracture in his right colles. His wife, Felisa, was brought to the Danao City Hospital. She was later transferred to the Southern Island Medical Center where she died shortly thereafter. Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage, damages and attorneys fees before the Regional Trial Court of Cebu City, Branch 20, against the petitioners, D Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspias on May 27, 1987. The respondent alleged that the passenger bus in question was cruising at a fast and high speed along the national road, and that petitioner Laspias did not take precautionary measures to avoid the accident. The petitioners, for their part, filed a Third-Party Complaint against the following: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tius insurer; respondent Benjamin Condor, the registered owner of the cargo truck; and respondent Sergio Pedrano, the driver of the truck. They alleged that petitioner Laspias was negotiating the uphill climb along the national

highway of Sitio Aggies, Poblacion, Compostela, in a moderate and normal speed. It was further alleged that the truck was parked in a slanted manner, its rear portion almost in the middle of the highway, and that no early warning device was displayed. Petitioner Laspias promptly applied the brakes and swerved to the left to avoid hitting the truck head-on, but despite his efforts to avoid damage to property and physical injuries on the passengers, the right side portion of the bus hit the cargo trucks left rear. HELD: The rules which common carriers should observe as to the safety of their passengers are set forth in the Civil Code, Articles 1733, 1755and 1756. It is undisputed that the respondent and his wife were not safely transported to the destination agreed upon. In actions for breach of contract, only the existence of such contract, and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination are the matters that need to be proved. This is because under the said contract of carriage, the petitioners assumed the express obligation to transport the respondent and his wife to their destination safely and to observe extraordinary diligence with due regard for all circumstances. Any injury suffered by the passengers in the course thereof is immediately attributable to the negligence of the carrier. Upon the happening of the accident, the presumption of negligence at once arises, and it becomes the duty of a common carrier to prove that he observed extraordinary diligence in the care of his passengers. It must be stressed that in requiring the highest possible degree of diligence from common carriers and in creating a presumption of negligence against them, the law compels them to curb the recklessness of their drivers. While evidence may be submitted to overcome such presumption of negligence, it must be shown that the carrier observed the required extraordinary diligence, which means that the carrier must show the utmost diligence of very cautious persons as far as human care and foresight can provide, or that the accident was caused by fortuitous event. As correctly found by the trial court, petitioner Tiu failed to conclusively rebut such presumption. The negligence of petitioner Laspias as driver of the passenger bus is, thus, binding against petitioner Tiu, as the owner of the passenger bus engaged as a common carrier.

CENTRAL SHIPPING COMPANY, INC., petitioner, vs. INSURANCE COMPANY OF NORTH AMERICA, respondent. G.R. No. 150751 September 20, 2004 121 SCRA 769 Facts: On July 25, 1990 at Puerto Princesa, Palawan, the petitioner received on board its vessel, the M/V Central Bohol, 376 pieces of Round Logs and undertook to transport said shipment to Manila for delivery to Alaska Lumber Co., Inc. The cargo is insured for P3, 000, 000.00 against total lost under respondents MarineCargo Policy. After loading the logs, the vessel starts its voyage. After few hours of the trip, the ship tilts 10 degrees to its side, due to the shifting of the logs in the hold. It continues to tilt causing the captain and the crew to abandon ship. The ship sank.

Respondent alleged that the loss is due to the negligence and fault of the captain. While petitioner contends that the happening is due to monsoons which is unforeseen or casa fortuito. Issue: Whether or not petitioner is liable for the loss of cargo? Held: From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common carriers are responsible; that is, unless they can prove that such loss, destruction or deterioration was brought about -- among others -- by "flood, storm, earthquake, lightning or other natural disaster or calamity." In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. The contention of the petitioner that the loss is due to casa fortuito exempting them from liability is untenable. Petitioner failed to show that such natural disaster or calamity was the proximate and only cause of the loss. Human agency must be entirely excluded from the cause of injury or loss. In other words, the damaging effects blamed on the event or phenomenon must not have been caused, contributed to, or worsened by the presence of human participation. The defense of fortuitous event or natural disaster cannot be successfully made when the injury could have been avoided by human precaution. The monsoon is not the proximate cause of the sinking but is due to the improper stowage of logs. The logs were not secured by cable wires, causing the logs to shift and later on the sinking the ship. This shows that they did not exercise extraordinary diligence, making them liable for such loss.

FGU INSURANCE vs. CA FACTS Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was engaged in the shipping business. It owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as common carriers. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it to move from one place to another. The D/B Lucio was towed by the M/T ANCO all the way from Mandaue City to San Jose, Antique. The vessels arrived at San Jose, Antique, at about one oclock in the afternoon of 30 September 1979. The tugboat M/T ANCO left the barge immediately after reaching San Jose, Antique. When the barge and tugboat arrived at San Jose, Antique, in the afternoon of 30 September 1979, the clouds over the area were dark and the waves were already big. The arrastre workers unloading the cargoes of SMC on board the D/B Lucio began to complain about their difficulty in unloading the cargoes. SMCs District Sales Supervisor, Fernando Macabuag, requested ANCOs representative to transfer the barge to a safer place beca use the vessel might not be able to withstand the big waves.

ANCOs representative did not heed the request because he was confident that the barge could withstand the waves. This, notwithstanding the fact that at that time, only the M/T ANCO was left at the wharf of San Jose, Antique, as all other vessels already left the wharf to seek shelter. With the waves growing bigger and bigger, only Ten Thousand Seven Hundred Ninety (10,790) cases of beer were discharged into the custody of the arrastre operator. At about ten to eleven oclock in the evening of 01 October 1979, the crew of D/B Lucio abandoned the vessel because the barges rope attached to the wharf was cut off by the big waves. At around midnight, the barge run aground and was broken and the cargoes of beer in the barge were swept away. As a result, ANCO failed to deliver to SMCs consignee Twenty -Nine Thousand Two Hundred Ten (29,210) cases of Pale Pilsen and Five Hundred Fifty (550) cases of Cerveza Negra. The value per case of Pale Pilsen was Forty-Five Pesos and Twenty Centavos (P45.20). The value of a case of Cerveza Negra was Forty-Seven Pesos and Ten Centavos (P47.10), hence, SMCs claim against ANCO amounted to One Million Three Hundred Forty -Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00). As a consequence of the incident, SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO for the amount of One Million Three Hundred Forty-Six Thousand One Hundred Ninety-Seven Pesos (P1,346,197.00) plus interest, litigation expenses and Twenty-Five Percent (25%) of the total claim as attorneys fees. ISSUE ANCO raised the defense that the breach was caused by a fortuitous event, thus it is exempted from liability. Is this contention correct? RULING No. In order for fortuitous event to be a valid defense for a common carrier, the event must be: 1. Unforeseeable , or if foreseeable it must be inevitable. 2. It must be the proximate and the only cause of the loss. 3. The common carrier must exercise due diligence to prevent or minimize the loss (before, during after the occurrence of the event). Caso fortuito or force majeure (which in law are identical insofar as they exempt an obligor from liability)[19] by definition, are extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though foreseen, were inevitable. It is therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. In this case, the calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact, the other vessels in the port of San Jose, Antique, managed to transfer to another place, a circumstance which prompted SMCs District Sales Supervisor to request that the D/B Lucio be likewise transferred, but to no avail. The D/B Lucio had no engine and could not maneuver by itself. Even if ANCOs representatives wanted to transfer it, they no longer had any means to do so as the tugboat M/T ANCO had already departed, leaving the barge to its own devices. The captain of the tugboat should have had the foresight not to leave the barge alone considering the pending storm. While the loss of the cargoes was admittedly caused by the typhoon Sisang, a natural disaster, ANCO could not escape liability to respondent SMC. The records clearly show the failure of petitioners representatives to exercise the extraordinary degree of diligence mandated by law. To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss. There must have been no contributory negligence on the part of the common carrier. As held in the case of Limpangco Sons v. Yangco Steamship Co.:

. . . To be exempt from liability because of an act of God, the tug must be free from any previous negligence or misconduct by which that loss or damage may have been occasioned. For, although the immediate or proximate cause of the loss in any given instance may have been what is termed an act of God, yet, if the tug unnecessarily exposed the two to such accident by any culpable act or omission of its own, it is not excused. Therefore, as correctly pointed out by the appellate court, there was blatant negligence on the part of M/T ANCOs crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of SMCs representatives to have the barge transferred to a safer place, as was done by the other vessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes.

LEA MER INDUSTRIES INC VS MALAYAN INSURANCE CO, INC. GR No. 161745, SEPTEMBER 30, 2005 FACTS: Ilian Silica Mining entered into a contract of carriage with the petitioner, Lea Mer Industries Inc. for the shipment of 900 metric tons of silica sand worth P565,000. The cargo was consigned to Vulcan Industrial and Mining Corporation and was to be shipped from Palawan to Manila. The silica sand was boarded to Judy VII, the vessel leased by Lea Mer. However, during the course of its voyage, the vessel sank which led to the loss of the cargo. Consequently, the respondent, as the insurer, paid Vulcan the value of the lost cargo. Malayan Insurance Co., Inc. then collected from the petitioner the amount it paid to Vulcan as reimbursement and as its exercise on the right of subrogation. Lea Mer refused to pay which led Malayan to institute a complaint with the RTC. The RTC dismissed the complaint stating that the loss was due to a fortuitous event, Typhoon Trining. Petitioner did not know that a typhoon was coming and that it has been cleared by the Philippine Coast Guard to travel from Palawan to Manila. The CA reversed the ruling of the trial court for the reason that said vessel was not seaworthy when it sailed to Manila. ISSUE: Whether or not the petitioner is liable for the loss of the cargo. HELD: CA reversed. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods, or both by land, water, or air when this service is offered to the public for compensation. Petitioner is clearly a common carrier, because it offers to the public its business of transporting goods through its vessels. Thus, the Court corrects the trial court's finding that petitioner became a private carrier when Vulcan chartered it. Charter parties are classified as contracts of demise (or bareboat) and affreightment, which are distinguished as follows: "Under the demise or bareboat charter of the vessel, the charterer will generally be considered as owner for the voyage or service stipulated. The charterer mans the vessel with his own people and becomes, in effect, the owner pro hac vice, subject to liability to others for damages caused by negligence. To create a demise, the owner of a vessel must completely and exclusively relinquish possession, command and navigation thereof to the charterer; anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all." The distinction is significant, because a demise or bareboat charter indicates a business undertaking that is private in character. Consequently, the rights and obligations of the parties to a contract of private carriage are governed principally by their stipulations, not by the law on common carriers. The Contract in the present case was one of affreightment, as shown by the fact that it was petitioner's crew that manned the tugboat M/V Ayalit and controlled the barge Judy VII. Common carriers are bound to observe extraordinary diligence in their vigilance over the goods and the

safety of the passengers they transport, as required by the nature of their business and for reasons of public policy. Extraordinary diligence requires rendering service with the greatest skill and foresight to avoid damage and destruction to the goods entrusted for carriage and delivery. Common carriers are presumed to have been at fault or to have acted negligently for loss or damage to the goods that they have transported. This presumption can be rebutted only by proof that they observed extraordinary diligence, or that the loss or damage was occasioned by any of the following causes: "(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; "(2) Act of the public enemy in war, whether international or civil; "(3) Act or omission of the shipper or owner of the goods; "(4) The character of the goods or defects in the packing or in the containers; "(5) Order or act of competent public authority."

Jurisprudence defines the elements of a "fortuitous event" as follows: (a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtors to comply with their obligations, must have been independent of human will; (b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal manner; and (d) the obligor must have been free from any participation in the aggravation of the resulting injury to the creditor. To excuse the common carrier fully of any liability, the fortuitous event must have been the proximate and only cause of the loss. Moreover, it should have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event. As required by the pertinent law, it was not enough for the common carrier to show that there was an unforeseen or unexpected occurrence. It had to show that it was free from any fault a fact it miserably failed to prove.

LOADSTAR SHIPPING CO., INC., v. CA Facts: On 19 November 1984, LOADSTAR received on board a) 705 bales of lawanit hardwood; b) 27 boxes and crates of tilewood assemblies and the others ;and c) 49 bundles of mouldings R & W (3) Apitong Bolidenized. On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with LOADSTAR which, however, ignored the same. MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking of the vessel was due to the fault and negligence of LOADSTAR and its employees. LOADSTAR denied any liability for the loss of the shipper's goods and claimed that sinking of its vessel was due to force majeure. LOADSTAR submits that the vessel was a private carrier because it was not issued certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only "one shipper, one consignee for a special cargo. Issues: (1) Is the M/V "Cherokee" a private or a common carrier? (2) Did LOADSTAR observe due and/or ordinary diligence in these premises. Held: Petition is dismissed: SC hold that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V"Cherokee" was a " general cargo carrier." 14 Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers. Under Article 1732 of the Civil Code the Civil Code defines "common carriers" in the following terms:

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public. On to the second assigned error, we find that the M/V "Cherokee" was not seaworthy when it embarked on its voyage on 19 November 1984. The vessel was not even sufficiently manned at the time. "For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty.

PHILIPPINE CHARTER INSURANCE CORPORATION VS. CHEMOIL LIGHTERAGE HITE GOLD CORPORATION G.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 sample s 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 o f 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.[27] 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.[31] 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.

DIAZ vs CA

Petitioner Agapita Diaz operated a common carrier, a Tamaraw FX taxi plying the route of Cagayan de Oro City to any point in Region 10. On July 20, 1996, petitioner's taxi, driven by one Arman Retes, was moving at an excessive speed when it rammed into the rear portion of a Hino cargo truck owned by private respondent Teodoro Lantoria and driven by private respondent Rogelio Francisco. As a result, nine passengers of the taxi died including Sherly Moneo.

On August 13, 1996, the heirs of Sherly Moneo 4 filed with the Regional Trial Court of Malaybalay City, Branch 10, 5 an action for breach of contract of carriage and damages 6 against petitioner and her driver, Arman Retes. On motion, 7 petitioner filed a third-party complaint against private respondents Teodorio Lantoria and Rogelio Francisco. 8 The pre-trial conference was initially set on July 11, 1998 but was reset to July 30, 1998 for petitioner and her counsel's failure to appear 9 despite due notice. Registry receipt number 04364 10 showed that notice had been sent to petitioner's counsel, Atty. Cipriano Lupeba. 11 On scheduled date, petitioner and her counsel again failed to appear, prompting the court to allow private respondents to present evidence ex parte.
aDECHI

More than seven months after the conclusion 12 of private respondents' ex parte presentation of evidence, petitioner filed a motion for leave to present evidence on her defense and third-party complaint. 13 The trial court denied this. 14 On October 29, 1999, the trial court rendered a decision holding petitioner and Arman Retes jointly and severally liable to pay private respondent heirs of Sherly Moneo P50,000 for her death, P50,000 as moral damages, P20,000 as exemplary damages and P20,000 as attorney's fees. 15 On appeal, the trial court's decision was affirmed by the Court of Appeals in the assailed May 30, 2001 decision. 16 The motion for reconsideration was denied. 17 Hence, this recourse. The issues raised by petitioner are: 1)whether or not the Court of Appeals committed grave abuse of discretion in affirming the trial court's decision denying petitioner's motion for leave to present evidence on her defense and third-party complaint, and 2)whether or not the Court of Appeals committed grave abuse of discretion in affirming the trial court's decision holding petitioner liable for breach of contract. The petition lacks merit.

First, Section 3, Rule 18 of the Rules of Court states that:

The notice of pre-trial shall be served on counsel, or on the party who has no counsel. The counsel served with such notice is charged with the duty of notifying the party represented by him.

Petitioner was represented by Atty. Cipriano Lupeba to whom the notice was sent. 18 It was incumbent on the latter to advise petitioner accordingly. His failure to do so constituted negligence which bound petitioner.
aEcHCD

Further, Sections 4 and 5 of Rule 18 read:

Sec. 4.Appearance of Parties. It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of the party may be excused only if a valid cause is shown therefore or if a representative shall appear in his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents. Sec. 5.Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for the dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure on the defendant shall be cause to allow the plaintiff to present his evidence ex parte and the court to render judgment on the basis thereof.

Consequently, it was no error for the trial court to allow private respondents to present their evidence ex parte when petitioner and her counsel failed to appear for the scheduled pre-trial conference.

Second, "a common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances." 19

In a contract of carriage, it is presumed that the common carrier is at fault or is negligent when a passenger dies or is injured. In fact, there is even no need for the court to make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence. 20 In the case at bar, petitioner, as common carrier, failed to establish sufficient evidence to rebut the presumption of negligence. The findings of the trial court, as affirmed by the Court of Appeals, showed that the accident which led to the death of Sherly Moneo was caused by the reckless speed and gross negligence

of petitioner's driver who demonstrated no regard for the safety of his passengers. 21 It was thus correct to hold petitioner guilty of breach of the contract of carriage.
CEIHcT

WHEREFORE, this petition is hereby DISMISSED.

Common carrier; liability. Common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case. In the event of loss, destruction, or deterioration of the insured goods, common carriers are responsible, unless they can prove that such loss, destruction, or deterioration was brought about by, among others, flood, storm, earthquake, lightning, or other natural disaster or calamity. In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they observed extraordinary diligence. Regional Container Lines (RCL) of Singapore and Shipping Agency vs. The Netherlands Insurance Co. (Philippines) Inc., G.R. No. 168151, September 4, 2009. Common carrier; liability. Petitioner, through its bus driver, failed to observe extraordinary diligence, and was, therefore, negligent in transporting the passengers of the bus safely to Gapan, Nueva Ecija on January 27, 1995, since the bus bumped a tree and a house, and caused physical injuries to respondent. Article 1759 of the Civil Code explicitly states that the common carrier is liable for the death or injury to passengers through the negligence or willful acts of its employees, and that such liability does not cease upon proof that the common carrier exercised all the diligence of a good father of a family in the selection and supervision of its employees. Hence, even if petitioner was able to prove that it exercised the diligence of a good father of the family in the selection and supervision of its bus driver, it is still liable to respondent for the physical injuries he sustained due to the vehicular accident. R Transport Corporation vs. Eduardo Pante, G.R. No. 162104, September 15, 2009. Common carrier; presumption of negligence. A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage.

In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods they transported. There is is sufficient evidence showing that the fluctuation of the temperature in the refrigerated container van, as recorded in the temperature chart, occurred after the cargo had been discharged from the vessel and was already under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the condenser fan which caused the fluctuation of the temperature in the refrigerated container was not damaged while the cargo was being unloaded from the ship. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier; RCL and EDSA Shipping failed to dispute this. Regional Container Lines (RCL) of Singapore and Shipping Agency vs. The Netherlands Insurance Co. (Philippines) Inc., G.R. No. 168151, September 4, 2009.
The carrier is liable when its personnel allowed a passenger to drive the vehicle causing it to collide with another vehicle resulting to the injuries suffered by the other passengers. (MRR vs. Ballesteros, 16 SCRA 641)

Bacarro vs. Castano (HR L-34597, 5 November 1982) First Division, Relova (J): 4 concur, 1 on leave Facts: In the afternoon of 1 April 1960, Gerundio B. Castano boarded a jeep as a paying passenger at Oroquieta bound for Jimenez, Misamis Occidental. It was then filled to capacity, with 12 passengers in all. The jeep was driven by Felario Montefalcon at around 40 kilometers per hour. While approaching Sumasap Bridge at the said speed, a cargo truck (owned by Te Tiong, alias Chinggim; and driven by Nicostrato Digal) coming from behind, blowing its horn to signal its intention to overtake the jeep. The jeep, without changing its speed, gave way by swerving to the right, such that both vehicles ran side by side for a distance of around 20 meters. Thereafter as the jeep was left behind, its driver was unable to return it to its former lane and instead it obliquely or diagonally ran down an inclined terrain towards the right until it fell into a ditch pinning down and crushing Castanos right leg in the process. Castano filed a case for damages against Rosita Bacarro, William Sevilla, and Felario Montefalcon. Defendants alleged that the jeepney was sideswiped by the overtaking cargo truck. After trial, the CFI of Misamis Oriental ordered Bacarro, et.al. to jointly and severally pay Castano the sum of (1) P973.10 for medical treatment and hospitalization; (2)P840.20 for loss of salary during treatment; and (3) P2,000.00 for partial permanent deformity, with costs against Bacarro, et.al. Appeal was taken by Bacarro, et. al. to the Court of Appeals, which, on 30 September 1971, affirmed that of

the trial court. Hence, the appeal by certiorari. The Supreme Court affirmed the decision of the Court of Appeals; with costs. 1. Contributory negligence of Montefalcon Herein, driver Montefalcon did not slacken his speed but instead continued to run the jeep at about 40 kilometers per hour even at the time the overtaking cargo truck was running side by side for about 20 meters and at which time he even shouted to the driver of the truck. Had Montefalcon slackened the speed of the jeep at the time the truck was overtaking it, instead of running side by side with the cargo truck, there would have been no contact and accident. He should have foreseen that at the speed he was running, the vehicles were getting nearer the bridge and as the road was getting narrower the truck would be too close to the jeep and would eventually sideswipe it. Otherwise stated, he should have slackened his jeep when he swerved it to the right to give way to the truck because the two vehicles could not cross the bridge at the same time. 2. Jeepney driver failed to exercise extraordinary diligence, human care, foresight and utmost diligence of a very cautious person ; Article 1763 The jeepney driver failed to exercise extraordinary diligence, human care, foresight and utmost diligence of a very cautious person, when the diligence required pursuant to Article 1763 of the Civil Code is only that of a good father of a family. Whether the proximate cause of the accident was the negligence of the driver of the truck, as alleged, is immaterial. As there was a contract of carriage between Castano and Bacarro, et. al., the Court of Appeals correctly applied Articles 1733, 1755 and 1766 of the Civil Code which require the exercise of extraordinary diligence on the part of Montefalcon. 3. Article 1733 NCC Article 1733 provides that Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. 4. Article 1755 NCC Article 1755 provides that A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. 5. Article 1766 NCC Article 1766 provides that In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. 6. Common carrier vested with public interest, required utmost diligence of very cautious persons; Presumption of fault

The hazards of modern transportation demand extraordinary diligence. A common carrier is vested with public interest. Under the new Civil Code, instead of being required to exercise mere ordinary diligence a common carrier is exhorted to carry the passengers safely as far as human care and foresight can provide using the utmost diligence of very cautious persons. (Article 1755). Once a passenger in the course of travel is injured, or does not reach his destination safely, the carrier and driver are presumed to be at fault. 7. Sideswiping of jeepney foreseeable, not fortuitous event The accident was not due to a fortuitous event. The alleged fortuitous event in the case, i.e. the sideswiping of the jeepney by the cargo truck, was something which could have been avoided considering the narrowness of Sumasap Bridge which was not wide enough to admit two vehicles. Herein, Montefalcon contributed to the occurrence of the mishap. Cangco vs. Manila Railroad; Culpa Contractual
On January 20, 1915, Cangco was riding the train of Manila Railroad Co (MRC). He was an employee of the latter and he was given a pass so that he could ride the train for free. When he was nearing his destination at about 7pm, he arose from his seat even though the train was not at full stop. When he was about to alight from the train (which was still slightly moving) he accidentally stepped on a sack of watermelons which he failed to notice due to the fact that it was dim. This caused him to lose his balance at the door and he fell and his arm was crushed by the train and he suffered other serious injuries. He was dragged a few meters more as the train slowed down. It was established that the employees of MRC were negligent in piling the sacks of watermelons. MRC raised as a defense the fact that Cangco was also negligent as he failed to exercise diligence in alighting from the train as he did not wait for it to stop. ISSUE: Whether or not Manila Railroad Co is liable for damages. HELD: Yes. Alighting from a moving train while it is slowing down is a common practice and a lot of people are doing so every day without suffering injury. Cangco has the vigor and agility of young manhood, and it was by no means so risky for him to get off while the train was yet moving as the same act would have been in an aged or feeble person. He was also ignorant of the fact that sacks of watermelons were there as there were no appropriate warnings and the place was dimly lit. But, if the master has not been guilty of any negligence whatever in the selection and direction of the servant, he is not liable for the acts of the latter, whatever done within the scope of his employment or not, if the damage done by the servant does not amount to a breach of the contract between the master and the person injured. The liability arising from extra-contractual culpa is always based upon a voluntary act or omission which, without willful intent, but by mere negligence or inattention, has caused damage to another. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act

which constitutes the source of an extra-contractual obligation had no contract existed between the parties. Manresa: Whether negligence occurs an incident in the course of the performance of a contractual undertaking or in itself the source of an extra-contractual undertaking obligation, its essential characteristics are identical. Vinculum Juris: (def) It means an obligation of law, or the right of the obligee to enforce a civil matter in a court of law.