HOME INSURANCE COMPANY vs.

AMERICAN STEAMSHIP and LUZON STEVEDORING

G.R. No. L-25599 April 4, 1968

FACTS: Consorcio Pesquero del Peru of South America shipped freight pre-paid at Peru, jute
bags of Peruvian fish meal through SS Crowborough, covered by clean bills of lading. The
cargo, consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and insured by
Home Insurance Company arrived in Manila and was discharged into the lighters of Luzon
Stevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc.,
there were shortages causing the latter to lay claims against Luzon Stevedoring Corporation,
Home Insurance Company and the American Steamship Agencies (shipowner), owner and
operator of SS Crowborough.

Because the others denied liability, Home Insurance Company paid SMBI the insurance value of
the loss, as full settlement of the claim. Having been refused reimbursement by both the Luzon
Stevedoring Corporation and American Steamship Agencies, Home Insurance Company, as
subrogee to the consignee, filed against them before the CFI of Manila a complaint for recovery
of the payment paid with legal interest, plus attorneys fees.

In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods
in the same quantity and quality that it had received the same from the carrier.
The CFI, after trial, absolved Luzon Stevedoring Corporation, having found the latter to have
merely delivered what it received from the carrier in the same condition and quality, and ordered
American Steamship Agencies to pay Home Insurance Company the amount demanded with
legal interest plus attorneys fees.

Disagreeing with such judgment, American Steamship Agencies appealed directly to Us.

ISSUE: Is the stipulation in the charter party of the owners non-liability valid so as to absolve
the American Steamship Agencies from liability for loss?

HELD: The judgment appealed from is hereby reversed and appellant is absolved from liability
to plaintiff.

YES The bills of lading, covering the shipment of Peruvian fish meal provide at the back thereof
that the bills of lading shall be governed by and subject to the terms and conditions of the
charter party, if any, otherwise, the bills of lading prevail over all the agreements. On the bills are
stamped Freight prepaid as per charter party. Subject to all terms, conditions and exceptions of
charter party dated London, Dec. 13, 1962.

Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage
to the goods caused by personal want of due diligence on its part or its manager to make the
vessel in all respects seaworthy and to secure that she be properly manned, equipped and
supplied or by the personal act or default of the owner or its manager. Said paragraph, however,
exempts the owner of the vessel from any loss or damage or delay arising from any other
source, even from the neglect or fault of the captain or crew or some other person employed by
the owner on board, for whose acts the owner would ordinarily be liable except for said
paragraph..

The provisions of our Civil Code on common carriers were taken from Anglo-American law.
Under American jurisprudence, a common carrier undertaking to carry a special cargo or
chartered to a special person only, becomes a private carrier. As a private carrier, a stipulation
exempting the owner from liability for the negligence of its agent is not against public policy, and
is deemed valid.
Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be
applied where the carrier is not acting as such but as a private carrier. The stipulation in the
charter party absolving the owner from liability for loss due to the negligence of its agent would
be void only if the strict public policy governing common carriers is applied. Such policy has no
force where the public at large is not involved, as in the case of a ship totally chartered for the
use of a single party.

And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the
charterer, as shipper, is in fact and legal contemplation merely a receipt and a document of title
not a contract, for the contract is the charter party. The consignee may not claim ignorance of
said charter party because the bills of lading expressly referred to the same. Accordingly, the
consignees under the bills of lading must likewise abide by the terms of the charter party. And
as stated, recovery cannot be had thereunder, for loss or damage to the cargo, against the
shipowners, unless the same is due to personal acts or negligence of said owner or its
manager, as distinguished from its other agents or employees. In this case, no such personal
act or negligence has been proved.

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 [Link] Seven Brothers and South Sea Surety appealed.
The Court of Appeals affirmed the judgment except as to the liability of Seven [Link]
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.

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

Insurance Company of North America vs Manila Port Services 3 SCRA 553

Facts: A shipment from Tokyo bound to the Philippines containing welding machines, inured by
the plaintiff-appellee NorthAM, arrived at Manila, in transit from the port to the consignee a one
package was unaccounted for. The consignee filed for a loss and the plaintiff-appellee complied
and was subrogated, but when it filed claim for damages worth Php 1,600 the respondent-
appellant gave only Php 500 stating that a management contract between itself and the Bureau
of Customs limited its liability to the said amount.

The parties submitted the case for trial, and the trial court ruled in favor of the NorthAm stating
that NorthAm was not a party to the contract of Manila Port and the Bureau of Customs,
therefore their stipulations should not affect third parties. Manila Port appealed but the CA
forwarded the case to the SC on the grounds that the error assigned was a pure question of law.

Issue: Whether or not a Management agreement between Manila Port and the Bureau of
Customs regarding the limitation of liabilities was binding to 3rd parties.

Held: The SC reversed the TCs decsion

Reasoning: Citing jurisprudence of similar circumstances the court stated that upon using the
gate pass, delivery permit, and the services of the Manila Port Service, it became a party to the
contract in question.

Note: The only way to delimit the damages is to declare the proper price of the goods to be
transferred.

FIREMANS FUND INSURANCE CO vs METRO PORT SERVICES

FACTS: Vulcan Industrial and Mining Corporation imported from the United States several
machineries and equipment which were loaded on board the SIS Albert Maersk at the port of
Philadelphia, U.S.A., and transhipped for Manila through the vessel S/S Maersk Tempo.
The shipment arrived at the port of Manila on June 3, 1979 and was turned over complete and
in good order condition to the arrastre operator E. Razon Inc. (now Metro Port Service Inc. and
referred to as the ARRASTRE).
A tractor operator, named Danilo Librando and employed by the ARRASTRE, was ordered to
transfer the shipment to the Equipment Yard at Pier 3. While Librando was maneuvering the
tractor (owned and provided by Maersk Line) to the left, the cargo fell from the chassis and hit
one of the container vans of American President Lines. It was discovered that there were no
twist lock at the rear end of the chassis where the cargo was loaded.
An Insurance was claimed by Vulcan Industrial, in turn, the petitioner insurance company
demanded recovery from Maerks Line. The trial court ruled that Maerks and Metro Port be held
solidarily liable. On appeal by Metro Port, the Court of Appeals reversed, ruling that it is only
Maerks that is liable.

ISSUE: WON Maerks and Metro Port exercised the proper degree of diligence.
WON Maerks and Metro Port be held liable solidarity.
RULING: Maerks and Metro port did not exercise the proper diligence.
In general, the nature of the work of an arrastre operator covers the handling of cargoes at piers
and wharves. The ARRASTRE is required to provide cargo handling equipment which includes
among others trailers, chassis for containers. In some cases, however, the shipping line has its
own cargo handling equipment.

In this case, Maerks provide for the chassis and tractors and merely requested the arrastre
(Metro) to dispatch a tractor operator. ARRASTRE which had the sole discretion and prerogative
to hire and assign Librando to operate the tractor. It was also the ARRASTRE's sole decision to
detail and deploy Librando for the particular task from among its pool of tractor operators or
drivers. Since the ARRASTRE offered its drivers for the operation of tractors in the handling of
cargo and equipment, then the ARRASTRE should see to it that the drivers under its employ
must exercise due diligence in the performance of their work.

The testimonies are appreciated and the court held that Maerks is at fault in not providing twist
locks on the chassis and Metro is also at fault for Librandos negligence in not checking that the
cargo is securely loaded on the chassis.
Both the arrastre and the carrier are charged with and obligated to deliver the goods in good
condition to the consignee.

The legal relationship between the consignee and the arrastre operator is akin to that of a
depositor and warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]). The
relationship between the consignee and the common carrier is similar to that of the consignee
and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]).
Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and
to deliver them in good condition to the consignee, such responsibility also devolves upon the
CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with and obligated to
deliver the goods in good condition to the consignee.

Delgado Brothers, Inc. V. Home Insurance, Inc

G.R. No. L-16567 March 27, 1961

FACTS: February 17, 1955: Victor Bijou & Co. shipped at New York for Manila aboard the
vessel S.S. Leoville and consigned to the Judy Philippines, Inc. of Manila, a shipment of 1 case
Linen Handkerchiefs and 2 cases cotton piece goods, for which, the New York agent of said
vessel, the Barber Steamship Lines, Inc., issued Bill of Lading No. 119 shipment as insured with
Home Insurance, Inc. by the shipper and/or consignee

March 30, 1955: vessel arrived at the Port of Manila and delivered 1 case of Linen
Handkerchiefs in bad order, with a shortage of 503 yards of Linen Print Handkerchiefs, to the
prejudice, loss and damage of shipper and or consignee in the sum of P1,287.20 so they filed a
claim against Home Insurance Inc.
March 7, 1956: Home Insurance Inc. filed against contractor Delgado Brothers Inc.
Trial Court: dismissed the case in favor of Home based on its special defenses invoked in its
answer since no claim was filed within the 15-day period from the date of the arrival of the
goods before they could file a suit in the court of proper jurisdiction within 1 year from the date
of said arrival at the Port of Manila, it is completely relieved and released of any and all liability
for loss or damage under the law and in accordance with the pertinent provisions of the
management Contract with the Bureau of Customs, covering the operation of the Arrastre
Service for the Port of Manila; and that petitioner in no way acts as an agent of the carrying
vessel or of the importer or consignee

CA: reversed because of lack of jurisdiction it being a maritime contract should be handled by
the Municipal Court

ISSUE: W/N the case has prescribed according to maritime law (arrastre being a maritime case)

HELD: NO.
In case of controversy involving both maritime and nonmaritime subject matter,
where the principal matter involved belongs to the jurisdiction of a court of common law
or of equity, admiralty will not take cognizance of incidental maritime matters connected
therewith but will relegate the whole controversy to the appropriate tribunal
Both as to the nature of the functions and the place of their performance (upon
wharves and piers shipside), Brother's services are clearly not maritime but arrastre
services
they are no different from those of a depositary or warehouseman
To give admiralty jurisdiction over a contract as maritime, such contract must
relate to the trade and business of the sea; it must be essentially and fully maritime in its
character; it must provide for maritime services, maritime transactions, or maritime
casualties.
Delgado Brothers, Inc. has nothing to do with the loading or unloading of cargoes
to and from the ships. Its operation on and its responsibility for the merchandise and
goods begins from the time they are placed upon the wharves or piers or delivered along
sides of ships
Court of First Instance of Manila has jurisdiction in cases where suit is brought
directly against the carrier or shipowner.
Respondent cannot invoke the rule against multiplicity of suits, for the simple
reason that said rule has to be subservient to the superior requirement that the court
must have jurisdiction

Philippine Airlines v. Court of Appeals

106 SCRA 391

Facts: Samson is a licensed aviator employed by the Philippine Airlines. He was partnered with
another pilot Bustamante. Samson had complained on previous occasions to PAL that
Bustamante was slow in reacting and was having lapses of poor judgment during flights. PAL
however still allowed Bustamante to continue flying.

On a certain flight, Bustamante overshot the airfield while landing the plane at the Daet airport.
Samson tried to control the plane, but did not succeed. The plane crash-landed beyond the
runway into a mangrove. Samson hit his head on the windshield due to the impact of the crash.
He suffered head injuries such as brain concussions and wounds on his forehead. To make
matters worse, plaintiff was discharged from employment. Samson then filed an action for
damages against PAL.

Issue: Whether or not PAL is liable for damages.

Held: The Court held that PAL is liable for damages. There was gross negligence on the part of
PAL because despite the knowledge of Bustamantes condition the still allowed him to continue
flying. Bustamante had a tumor in his nasopharynx which affected his vision. As provided in
Articles 1732, 1733, and 1756 of the NCC, PAL being a common carrier should have exercised
extraordinary diligence in the supervision of their employees and utmost diligence in bringing
passengers to their destination.

The court affirmed the decision of the trial court in awaring damages. Private respondent is
entitled to P198,000.00 as unearned income or compulsory damages, P80,000.00 for moral
damages, P20,000 as attorneys fees and P5,000 as expenses for litigation. This claim of the
plaintiff for loss and impairment of earning capacity is based on the provision of Art. 2205, NCC.
Even from the standpoint of the petitioner that there is employer-employee relationship between
it and private respondent arising from the contract of employment, private respondent is still
entitled to moral damages in view of the finding of bad faith or malice, applying the provisions of
Art. 2220 of the NCC.

Compania Maritima vs. Allied Free Workers Union, et al.

77 SCRA 24 G.R. No. L-28999 May 24, 1977

Facts: 1952, Compania Maritima (CM) and Allied (union) entered into a contract whereby the
union agrees to perform arrastre (handling of cargo on the wharf) and stevedoring (handling of
cargoes in the holds of vessels) work for the consignees of the cargoes of vessels, for a period
of 1 month; CM has a right to revoke the contract if union failed to render proper service.

Shippers and consigners paid the union for arrastre work, but refused to pay the stevedoring.
CM refused to pay the stevedoring work also, because contract provides that it will be paid by
the shippers and consignees. Union requested CM to recognize it as SEBA but CM refused; CM
thru Teves (branch manager) terminated the contract; union filed charges of ULP.

CM entered the same contract with another association; union picketed the wharf and prevented
the new workers from performing their work; CM sued the union and its officers for the
rescission of contract and to enjoin union from interfering with the loading/unloading of cargo
and recovery of damages. Lower court ruled in CMs favor and awarded CM 450K as damages;
it held that the officers of the union are solidarily liable for this amount. Union appealed.
CM in its original complaint prayed that union and its officials be ordered to pay 450K actual
damages, consisting of: 15K for failure to load/unload cargo; 50K for unions inefficiency in
performing the work; 50K moral and exemplary damages; 178K+ and 62K+ for lost profit (due to
unions obstruction). CM hired 2 auditors to ascertain the losses. Reports of the 2 accountants
show that the aggregate amount of damage is 349K+.

Issue: WON the evidence presented by CM warrants the award of damages in its favor

Held: NO

On the basis of the reports of the two accountants, the damages, claimed by the complaint as a
matter of simple addition, does not reach the sum of P 450,000 fixed by the trial court. The
damages, shown in the accountants' reports and in the statement made by the consignees,
chief clerk (who did not testify) amount to P349,245.37
CM argues that the accountants' reports are admissible in evidence because of the rule that
"when the original consists of numerous accounts or other documents which cannot be
examined in court without great loss-of time and the fact sought to be established from them is
the general result of the whole", the original writings need not be produced. SC held that:
That rule cannot be applied in this case because the voluminous character of the
records, on which the accountants' reports were based, was not duly established.
It is also a requisite for the application of the rule that the records and accounts should
be made accessible to the adverse party so that the company may be tested on
cross-examination.
What applies to this case is the general rule "that an audit made by, or the testimony of,
a private auditor, is inadmissible in evidence as proof of the original records, books of
accounts, reports or the like"
That general rule cannot be relaxed in this case because the company failed to make a
preliminary showing as to the difficulty or impossibility attending the production
of the records in court and their examination and analysis as evidence by the court
A close scrutiny of the accountants' reports reveals their lack of probative value.
One of the accountant, Jayme, did not disclose the names of other "auditors" who
assisted him in making the examination of the consignees records.
He gave the impression that he was an independent accountant hired by the company to
make a "special investigation" when in truth he was a "personal friend" of Teves.
He stated that he attached to his report on the comparative statement of gross revenue
a certificate of the captain of the vessel Panay showing the delays in its dismissal in
Iligan City as indicated in its logbook. No such document was attached to Jayme's
report.
It would not be proper to allow Jayme's estimates as recoverable damages. They are not
supported by reliable evidence. The rule is that the auditor's summary should not include
his conclusions or inferences. His opinion is not evidence.
Jayme allegedly based his computations on the records of the company which were not
produced in court.
As to the other auditor Magante, he did not testify on his statement. Instead, accountant
Jayme, substituting for Magante, testified on that statement. Jayme said that he verified
the consignees records on which Magante based his statement.
 Statement by branch manager Teves that union is liable for 38K+ as depreciation of
forklifts, etc. used by union >>SC: The best evidence on the cost of the said equipment
would have been the sales invoices instead of the oral testimony of Teves. He did
not produce the sales invoices.
Records voluminous? NO, If the accountant Magante was able to summarize the contents of
those records in two days, they could not have been very voluminous. They should have been
offered in evidence.

Citadel Lines, Inc. v. Court of Appeals

184 SCRA 544

Facts: Citadel Lines, Inc., petitioner herein is the general agent of the vessel "Cardigan
Bay/Strait Enterprise" . Manila Wine Merchants, Inc. (Consignee) is the importer of the subject
shipment of Dunhill cigarettes from England. The said vessel loaded on board Filbrite cartons of
manufactured cigarettes called "Dunhill International Filter" and "Dunhill International Menthol".
The shipment arrived at the Port of Manila in a container. The said container was received by
Metro Port Service, Inc., respondent herein. Subsequently the container van, which contained
two shipments was stripped. One shipment was delivered and the other shipment containing
cigarettes was palletized. Due to lack of space at the Special Cargo Coral, the aforesaid
cigarettes were placed in two containers with two pallets with both containers duly padlocked
and sealed by the representative of the petitioner.

The next day, petitioners headchecker discovered that the container van of the cigarettes had a
different padlock and the seal was tampered with. This was reported to the Pier Superintendent
it was found that 90 cases of imported British manufactured cigarettes were missing. When the
Consignee found out that 90 cases were missing it filed a claim demanding the payment of the
market value of the missing cargo. Petitioner, in its reply letter, admitted the loss but alleged that
the same occurred at Pier 13, an area absolutely under the control of the arrastre (Metro Port
Service, Inc). Manila Wine Merchants filed a formal claim, with the arrastre and demanded
payment of the value of the goods but said claim was denied.

The lower court rendered a decision exonerating the arrastre of any liability on the ground that
the subject container van was not formally turned over to its custody, and held the petitioner
liable for the amount representing the market value of the lost shipment. On appeal the court of
Appeals affirmed the decision of the lower court but deleted the award of attorney's fees and
costs of suit. Hence this petition.

Issue: Whether the stipulation limiting the liability of the carrier contained in the bill of lading is
binding on the consignee.

Held: The Court held that the stipulation limiting the liability of the carrier is valid and binding
upon the consignee. It was expressly stipulated in the bill of lading that the carriers liability is
limited to $2.00 per kilo. It has been held in previous cases that a stipulation appearing in the bill
of lading limiting the liability of the carrier is binding, unless the owner or shipper declares a
higher value.
The consignee in this case did not declare a higher value and admits that the value of the goods
does not appear in the bill of lading. Therefore the stipulation in the bill of lading should be
applied. The contract had been freely agreed upon and the stipulation appears to be just and
reasonable. Therefore, the award of damages should be reduced and computed with regard to
the bill of lading.

Zulueta vs. Pan Am

Facts: Mr. Zulueta and his wife and child boarded a flight of Pan Am from Wake Island to the
Phil. Mr. Zulueta, however, had to relieve himself and thus looked for a secluded place in the
beach. As a result, he was delayed in boarding for some 20 or 30 minutes. While Mr. Zulueta
was reaching the ramp, the captain of the plane demonstrated an intemperate and arrogant
tone thereby impelling Mr. Zulueta to answer back. Thus, Mr. Zulueta was off-loaded. The airport
manager of then sent Mr. Zulueta a letter stating that his stay in Wake Island would be for a
minimum of one week during which he would be charged $13.30 per day.

Issue: WON Pan Am should be held liable.

Held: Yes. Mr. Zulueta was off-loaded to retaliate and punish him for the embarrassment and
loss of face thus suffered by defendants agent.
The Zuluetas had a contract of carriage with the defendant, as a common carrier, pursuant to
which the latter was bound, for a substantial monetary consideration paid by the former, not
merely to transport them to Manila, but, also, to do so with extraordinary diligence or utmost
diligence. The responsibility of the common carrier, under said contract, as regards the
passengers safety, is of such a nature, affecting as it does public interest, that it cannot be
dispensed with or even lessened by stipulation, by the posting of notices, by statements on
tickets, or otherwise.
In the present case, the defendant did not only fail to comply with its obligation to transport Mr.
Zulueta to Manila, but, also, acted in a manner calculated to humiliate him, to chastise him, to
make him suffer, to cause to him the greatest possible inconvenience.

With regard to DAMAGES

It is obvious, however, that in off-loading plaintiff at Wake Island, under the circumstances,
defendants agents had acted with malice aforethought and evident bad faith. If gross
negligence warrants the award of exemplary damages, with more reason is its imposition
justified when the act performed is deliberate, malicious and tainted with bad faith.
The rationale behind exemplary or corrective damages is, as the name implies, to provide an
example or correction for public good. Defendant having breached its contracts in bad faith, the
court, as stated earlier, may award exemplary damages in addition to moral damages

DE GILLACO ET AL v. MANILA RAILROAD COMPANY 97 PHIL 844, December 18, 1955

FACTS:Lieut. Gillaco, husband of plaintiff, was a passenger in the early morning train of MRR
from Calamba, Laguna to Manila, at about 7:30 a.m. When the train reached the Paco, Railroad
Station, a train guard (Devesa) of MRR assigned in the Manila-San Fernando, La Union Line,
was in the station waiting for the same train to take him to Tutuban Station, to report for duty
which was to start from 9.00 a.m. to 7:00 a.m. of the same day. Devesa, having a long standing
personal grudge with Gillaco, hot and killed the latter with a carbine furnished by respondent,
upon seeing him inside the train [Link] died. Devesa was convicted with homicide by
final judgement of the CA. Court of First Instance Awarded damages to the [Link] by
MRR no liability attaches to it as employer of the killer; that it is not responsible subsidiary ex
delicto, under Art. 103 of the Revised Penal Code, because the crime was not committed while
the slayer was in the actual performance of his ordinary duties and service; nor is it responsible
ex contractu, since the complaint did not aver sufficient facts to establish such liability, and no
negligence on appellant's party was [Link] below

Railroad company responsible on the ground that a contract of transportation implies protection
of the passengers against acts of personal violence by the agents or employees of the carrier

ISSUE: Whether or not MRR is liable for the damages for the death of Gillaco caused by
Devesa.

RULING: While a passenger is entitled to protection from personal violence by the Civil Code or
its agents or employees since the contract of transportation obligates the carrier to transport a
passenger safely to his destination, the responsibility of the Civil Code extends only to those
acts that the Civil Code could foresee or avoid through the exercise of the degree of care and
diligence required of it.

The Old Civil Code did not impose upon Civil Code the absolute liability for assaults of their
employees upon the passengers.[OCC:
It is sufficient to reiterate that the source of the defendant's legal liability is the contract of
carriage; that by entering into that contract he bound himself to carry the plaintiff safely and
securely to their destination; and that having failed to do sohe is liable in damages unless he
shows that the failure to fulfill his obligation was due to causes mentioned in article 1105 of the
Civil Code, which reads as follows:"No one shall be liable for events which could not be
foreseen or which, even if foreseen, were inevitable, with the exception of the cases in which
the law expressly provides otherwise and those in which the obligation itself imposes such
liability
The act of the guard was entirely unforeseeable by MRR which had no means to ascertain or
anticipate that the two would meet nor could it foresee every personal rancour that might exist
between its employees and its passengers. The shooting was a caso fortuito within the
definition of article 105 of the OCC and was both being unforeseeable and inevitable under the
circumstances. Hence, resulting breach of appellant's contract of safe carriage with the late
Thomas Gillaco was excused thereby.

The lower Court and the appellees both relied on the American authorities that particularly hold
carriers to be insurers of the safety of their passengers against willful assault and intentional ill
treatment on the part of their servants, it being immaterial that the act should be one of private
retribution on the part of the servant, impelled by personal malice toward the passenger
But as can be inferred from the previous jurisprudence of this Court , the Civil Code of 1889 did
not impose such absolute liability (Lasam vs. Smith, supra). The liability of a carrier as an
insurer was not recognized in this jurisdiction

When the crime took place, the guard had no duties to discharge. Devesa was therefore under
no obligation to safeguard the passenger of the Calamba-Manila train, where the deceased was
riding;and the killing of Gillaco was not done in line of duty. His position would be that of a
passenger also waiting transportation and not of an employee assigned to discharge duties that
the Railroad had assumed by its contract with the deceased. As a result, Devesa assault cannot
be deemed in law a breach of Gallico's contract of transportation by a servant or employee of
the carrier.

The only good reason for making the carrier responsible for the misconduct of the servant
perpetrated in his own interest, and not in that of his employer, or otherwise within the scope of
his employment, is that the servant is clothed with the delegated authority, and charge with the
duty by the carrier, to execute his undertaking with the passenger. And it cannot be said, we
think, that there is any such delegation to the employees at a station with reference to
passenger embarking at another or traveling on the train. Of course, we are speaking only of the
principle which holds a carrier responsible for wrong done to passenger by servants acting in
their own interest, and not in that of the employer. That principle is not the ordinary rule,
respondent superior, by which the employer is held responsible only for act or omissions of the
employee in the scope of his employment; but the only reason in our opinion for a broader
liability arises from the fact that the servant, in mistreating the passenger wholly for some
private purpose of his own, in the very act, violates the contractual obligation of the employer for
the performance of which he has put the employee in his place.

The reason does not exist where the employee who committed the assault was never in a
position in which it became his duty to his employer to represent him in discharging any duty of
the latter toward the passenger.
The Proposition that the carrier clothes every employee engaged in the transportation business
with the comprehensive duty of protecting every passenger with whom he may in any way come
in contact, and hereby makes himself liable for every assault committed by such servant,
without regard to the inquiry whether or not the passenger has come within the sphere of duty of
that servant as indicated by the employment, is regarded as not only not sustained by the
authorities, but as being unsound and oppressive both to the employer and the employee.

Judgment appealed from is reversed and the complaint ordered dismissed

Maranan vs. Perez G.R. No. L-22272

Facts: Rogelio Corachea, a passenger in a taxicab owned and operated by Pascual Perez, was
stabbed and killed by the driver, Simeon Valenzuela. Valenzuela was found guilty for homicide
by the Court of First Instance and was sentenced to suffer Imprisonment and to indemnify the
heirs of the deceased in the sum of P6000. While pending appeal, mother of deceased filed an
action in the Court of First Instance of Batangas to recover damages from Perez and
Valenzuela. Defendant Perez claimed that the death was a caso fortuito for which the carrier
was not liable. The court a quo, after trial, found for the plaintiff and awarded her P3,000 as
damages against defendant Perez. The claim against defendant Valenzuela was dismissed.
From this ruling, both plaintiff and defendant Perez appealed to this Court, the former asking for
more damages and the latter insisting on non-liability. Defendant-appellant relied solely on the
ruling enunciated in Gillaco vs. Manila Railroad Co. that the carrier is under no absolute liability
for assaults of its employees upon the passengers.

Issue: Whether or not Perez should be held liable for the death of the passenger?

Held: Yes. The basis of the carrier's liability for assaults on passengers committed by its drivers
rests on the principle that it is the carrier's implied duty to transport the passenger safely. As
between the carrier and the passenger, the former must bear the risk of wrongful acts or
negligence of the carrier's employees against passengers, since it, and not the passengers, has
power to select and remove them. Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers employees, although such
employees may have acted beyond the scope of their authority or in violation of the orders of
the common carriers. The liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and supervision of their
employees. (Art. 1759)

The attendant facts and controlling law of that case and the one at bar were very different. In the
Gillaco case, the passenger was killed outside the scope and the course of duty of the guilty
employee. The Gillaco case was decided under the provisions of the Civil Code of 1889 which,
unlike the present Civil Code, did not impose upon common carriers absolute liability for the
safety of passengers against willful assaults or negligent acts committed by their employees.
The death of the passenger in the Gillaco case was truly a fortuitous event which exempted the
carrier from liability. It is true that Art. 1105 of the old Civil Code on fortuitous events has been
substantially reproduced in Art. 1174 of the Civil Code of the Philippines but both articles clearly
remove from their exempting effect the case where the law expressly provides for liability in
spite of the occurrence of force majeure. The Civil Code provisions on the subject of Common
Carriers are new and were taken from Anglo-American Law. The basis of the carrier's liability for
assaults on passengers committed by its drivers rested either on the doctrine of respondent
superior or the principle that it was the carrier's implied duty to transport the passenger safely.
Under the second view, upheld by the majority and also by the later cases, it was enough that
the assault happens within the course of the employee's duty. It was no defense for the carrier
that the act was done in excess of authority or in disobedience of the carrier's orders. The
carrier's liability here was absolute in the sense that it practically secured the passengers from
assaults committed by its own employees.
 Vda. DE BATACLAN vs. MEDINA
FACTS: Medina is the owner and operator of a bus. This bus, on Sept. 13, 1952 around 2:00AM
somewhere in Imus, Cavite, crashed and fell into a ditch. Apparently, its front tire burst, zig-
zagged and turned turtle into the ditch. Bataclan was one of the 18 passengers. Most of the
passengers were able to get out, but Bataclan and 3 others were trapped. It appears that the
bus drivers and the passengers who already got out did not try to help Bataclan et al get out,
instead, about 10 of the locals in the area came to their aid, they were carrying a burning torch
for illumination, but then a fierce fire started and engulfed the bus and killed Bataclan et al. It
appears that there was a gas leak from the bus and it caught fire from the torch the would-be
rescuers were using.

The heirs of Bataclan sued Medina.

The trial court found that there was a breach of a contract of carriage where Medina undertook
to take Bataclan to his destination safely. The trial court also found that there was negligence on
the part of Medina since at the time of the blow-out, the bus was speeding. There is no question
that under the circumstances, the defendant carrier is liable. The only question is to what
degree. The trial court argued that Medina is only liable for the injuries suffered by Bataclan and
not by his death, the proximate cause of which was the fire, which was not caused by Medina.

ISSUE: Whether or not it was the negligence of Medina, owner of the bus company, which was
the proximate cause of the death of Bataclan.

HELD: Yes. In this case, the proximate cause of the death was the overturning of the bus,
because of the overturning, it leaked gas which is not unnatural or unexpected. The locals
coming to the aid of the trapped passengers was most likely because the driver and the
conductor went out looking for help. It is only natural that the would-be rescuers bring with them
a torch because it was 2:30AM and the place was unlit. The fire could also be attributed to the
bus driver and conductor because he should have known, from the circumstances, and because
he should have been able to smell gasoline and therefore he should have warned the rescuers
not to bring the torch. Said negligence on the part of the agents of the carrier come under the
codal provisions above-reproduced, particularly, Articles 1733, 1759 and 1763.

Proximate Cause that cause, which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury, and without which the result would not have
occurred. And more comprehensively, the proximate legal cause is that acting first and
producing the injury, either immediately or by setting other events in motion, all constituting a
natural and continuous chain of events, each having a close causal connection with its
immediate predecessor, the final event in the chain immediately effecting the injury as a natural
and probable result of the cause which first acted, under such circumstances that the person
responsible for the first event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an injury to some person
might probably result therefrom.
 Davilla vs PAL

Facts: Pedro Davilla Jr was a passenger of a plane owned and operated by PAL, the very same
plane crashed and killed all on board. Pedro Davilla Sr sued PAL for damages, the TC found
PAL was indeed responsible for the death of Jr.

PAL argues that they were not at fault and that they acted with extraordinary diligence showing
that the proper procedures were done accordingly and that the equipment was up to par with
industrial standards and that the accident was fortuitous and there was nothing PAL could have
done to prevent it. They also proposed that strong winds veer the aircraft off course and that
poor visibility probably led to the untimely demise of the passengers and crew.

Issues: W/N PAL was liable.

Held: Yes, under ART 1756 of the NCC, carriers are presumed to be at fault in accidents unless
strong proof of the contrary exists.

Court upheld trial courts judgement except exemplary damage as PAL was not grossly
negligent.

Son vs Cebu Autobus

Facts: Son was a passenger of Cebu Autobus who incurred an accident due to mechanical
failure. Son sustained injuries during the said accident and sued Cebu Autobus. The TC ruled in
favor of Son awarding damages. Cebu Autobus appealed directly to the SC arguing that they
were not negligent and that it was a fortuitous event that the drag spring malfunctioned.

Issues: W/N Cebu Autobus was liable for damage even without the fault of the driver and due to
the mechanical failure of the engine.

Held: Cebu Autobus was negligent due to the fact that as a common carrier they should ensure
the roadworthiness of their vehicles prior to travel. The fact that the drag spring broke and
malfunctioned was a clear sign the automobile was not properly maintained and inspected prior
to service making them liable.