G.R. No.

114167 July 12, 1995 The RTC awarded the amount prayed for by
PhilGen. On Coastwise Lighterage's appeal to the
COASTWISE LIGHTERAGE Court of Appeals, the award was affirmed.
CORPORATION, petitioner,
vs. Hence, this petition.
COURT OF APPEALS and the PHILIPPINE
GENERAL INSURANCE COMPANY, respondents. There are two main issues to be resolved herein.
First, whether or not petitioner Coastwise
RESOLUTION Lighterage was transformed into a private carrier,
by virtue of the contract of affreightment which it
entered into with the consignee, Pag-asa Sales,
Inc. Corollarily, if it were in fact transformed into
FRANCISCO, R., J.: a private carrier, did it exercise the ordinary
diligence to which a private carrier is in turn
bound? Second, whether or not the insurer was
This is a petition for review of a Decision subrogated into the rights of the consignee
rendered by the Court of Appeals, dated against the carrier, upon payment by the insurer
December 17, 1993, affirming Branch 35 of the of the value of the consignee's goods lost while on
Regional Trial Court, Manila in holding that board one of the carrier's vessels.
herein petitioner is liable to pay herein private
respondent the amount of P700,000.00, plus
legal interest thereon, another sum of On the first issue, petitioner contends that the
P100,000.00 as attorney's fees and the cost of RTC and the Court of Appeals erred in finding
the suit. that it was a common carrier. It stresses the fact
that it contracted with Pag-asa Sales, Inc. to
transport the shipment of molasses from Negros
The factual background of this case is as follows: Oriental to Manila and refers to this contract as a
"charter agreement". It then proceeds to cite the
Pag-asa Sales, Inc. entered into a contract to case of Home Insurance Company vs. American
transport molasses from the province of Negros Steamship Agencies, Inc.2 wherein this Court
to Manila with Coastwise Lighterage Corporation held: ". . . a common carrier undertaking to carry
(Coastwise for brevity), using the latter's dumb a special cargo or chartered to a special person
barges. The barges were towed in tandem by the only becomes a private carrier."
tugboat MT Marica, which is likewise owned by
Coastwise. Petitioner's reliance on the aforementioned case
is misplaced. In its entirety, the conclusions of
Upon reaching Manila Bay, while approaching the court are as follows:
Pier 18, one of the barges, "Coastwise 9", struck
an unknown sunken object. The forward Accordingly, the charter party
buoyancy compartment was damaged, and water contract is one of affreightment
gushed in through a hole "two inches wide and over the whole vessel, rather than
twenty-two inches long"1 As a consequence, the a demise. As such, the liability of
molasses at the cargo tanks were contaminated the shipowner for acts or
and rendered unfit for the use it was intended. negligence of its captain and crew,
This prompted the consignee, Pag-asa Sales, Inc. would remain in the absence of
to reject the shipment of molasses as a total loss. stipulation.3
Thereafter, Pag-asa Sales, Inc. filed a formal
claim with the insurer of its lost cargo, herein
private respondent, Philippine General Insurance The distinction between the two kinds of charter
Company (PhilGen, for short) and against the parties (i.e. bareboat or demise and contract of
carrier, herein petitioner, Coastwise Lighterage. affreightment) is more clearly set out in the case
Coastwise Lighterage denied the claim and it was of Puromines, Inc. vs. Court of Appeals,4 wherein
PhilGen which paid the consignee, Pag-asa Sales, we ruled:
Inc., the amount of P700,000.00, representing
the value of the damaged cargo of molasses. Under the demise or bareboat
charter of the vessel, the charterer
In turn, PhilGen then filed an action against will generally be regarded as the
Coastwise Lighterage before the Regional Trial owner for the voyage or service
Court of Manila, seeking to recover the amount of stipulated. The charterer mans the
P700,000.00 which it paid to Pag-asa Sales, Inc. vessel with his own people and
for the latter's lost cargo. PhilGen now claims to becomes the owner pro hac vice,
be subrogated to all the contractual rights and subject to liability to others for
claims which the consignee may have against the damages caused by negligence. To
carrier, which is presumed to have violated the create a demise, the owner of a
contract of carriage. vessel must completely and
exclusively relinquish possession,
 command and navigation thereof The records show that the damage to the barge
to the charterer, anything short of which carried the cargo of molasses was caused
such a complete transfer is a by its hitting an unknown sunken object as it
contract of affreightment (time or was heading for Pier 18. The object turned out to
voyage charter party) or not a be a submerged derelict vessel. Petitioner
charter party at all. contends that this navigational hazard was the
efficient cause of the accident. Further it asserts
On the other hand a contract of that the fact that the Philippine Coastguard "has
affreightment is one in which the not exerted any effort to prepare a chart to
owner of the vessel leases part or indicate the location of sunken derelicts within
all of its space to haul goods for Manila North Harbor to avoid navigational
others. It is a contract for special accidents"6 effectively contributed to the
service to be rendered by the happening of this mishap. Thus, being unaware
owner of the vessel and under of the hidden danger that lies in its path, it
such contract the general owner became impossible for the petitioner to avoid the
retains the possession, command same. Nothing could have prevented the event,
and navigation of the ship, the making it beyond the pale of even the exercise of
charterer or freighter merely extraordinary diligence.
having use of the space in the
vessel in return for his payment of However, petitioner's assertion is belied by the
the charter hire. . . . . evidence on record where it appeared that far
from having rendered service with the greatest
. . . . An owner who retains skill and utmost foresight, and being free from
possession of the ship though the fault, the carrier was culpably remiss in the
hold is the property of the observance of its duties.
charterer, remains liable as carrier
and must answer for any breach of Jesus R. Constantino, the patron of the vessel
duty as to the care, loading and "Coastwise 9" admitted that he was not licensed.
unloading of the cargo. . . . The Code of Commerce, which subsidiarily
governs common carriers (which are primarily
Although a charter party may transform a governed by the provisions of the Civil Code)
common carrier into a private one, the same provides:
however is not true in a contract of affreightment
on account of the aforementioned distinctions Art. 609. — Captains, masters, or
between the two. patrons of vessels must be
Filipinos, have legal capacity to
Petitioner admits that the contract it entered into contract in accordance with this
with the consignee was one of affreightment. 5 We code, and prove the skill capacity
agree. Pag-asa Sales, Inc. only leased three of and qualifications necessary to
petitioner's vessels, in order to carry cargo from command and direct the vessel, as
one point to another, but the possession, established by marine and
command and navigation of the vessels remained navigation laws, ordinances or
with petitioner Coastwise Lighterage. regulations, and must not be
disqualified according to the same
Pursuant therefore to the ruling in the for the discharge of the duties of
aforecited Puromines case, Coastwise Lighterage, the position. . . .
by the contract of affreightment, was not
converted into a private carrier, but remained a Clearly, petitioner Coastwise Lighterage's
common carrier and was still liable as such. embarking on a voyage with an unlicensed
patron violates this rule. It cannot safely claim to
The law and jurisprudence on common carriers have exercised extraordinary diligence, by placing
both hold that the mere proof of delivery of goods a person whose navigational skills are
in good order to a carrier and the subsequent questionable, at the helm of the vessel which
arrival of the same goods at the place of eventually met the fateful accident. It may also
destination in bad order makes for a  prima logically, follow that a person without license to
facie  case against the carrier. navigate, lacks not just the skill to do so, but
also the utmost familiarity with the usual and
safe routes taken by seasoned and legally
It follows then that the presumption of negligence authorized ones. Had the patron been licensed,
that attaches to common carriers, once the goods he could be presumed to have both the skill and
it transports are lost, destroyed or deteriorated, the knowledge that would have prevented the
applies to the petitioner. This presumption, vessel's hitting the sunken derelict ship that lay
which is overcome only by proof of the exercise of on their way to Pier 18.
extraordinary diligence, remained unrebutted in
this case.
As a common carrier, petitioner is liable for payment of the insurance claim by
breach of the contract of carriage, having failed to the insurer.
overcome the presumption of negligence with the
loss and destruction of goods it transported, by Undoubtedly, upon payment by respondent
proof of its exercise of extraordinary diligence. insurer PhilGen of the amount of P700,000.00 to
Pag-asa Sales, Inc., the consignee of the cargo of
On the issue of subrogation, which petitioner molasses totally damaged while being
contends as inapplicable in this case, we once transported by petitioner Coastwise Lighterage,
more rule against the petitioner. We have already the former was subrogated into all the rights
found petitioner liable for breach of the contract which Pag-asa Sales, Inc. may have had against
of carriage it entered into with Pag-asa Sales, Inc. the carrier, herein petitioner Coastwise
However, for the damage sustained by the loss of Lighterage.
the cargo which petitioner-carrier was
transporting, it was not the carrier which paid WHEREFORE, premises considered, this petition
the value thereof to Pag-asa Sales, Inc. but the is DENIED and the appealed decision affirming
latter's insurer, herein private respondent the order of Branch 35 of the Regional Trial
PhilGen. Court of Manila for petitioner Coastwise
Lighterage to pay respondent Philippine General
Article 2207 of the Civil Code is explicit on this Insurance Company the "principal amount of
point: P700,000.00 plus interest thereon at the legal
rate computed from March 29, 1989, the date the
Art. 2207. If the plaintiffs property complaint was filed until fully paid and another
has been insured, and he has sum of P100,000.00 as attorney's fees and
received indemnity from the costs"10 is likewise hereby AFFIRMED
insurance company for the injury
or loss arising out of the wrong or SO ORDERED.
breach of contract complained of,
the insurance company shall be G.R. No. 150403             January 25, 2007
subrogated to the rights of the
insured against the wrongdoer or CEBU SALVAGE CORPORATION, Petitioner,
the person who violated the vs.
contract. . . . PHILIPPINE HOME ASSURANCE
CORPORATION, Respondent.
This legal provision containing the equitable
principle of subrogation has been applied in a DECISION
long line of cases including Compania Maritima v.
Insurance Company of North America;7 Fireman's
CORONA, J.:
Fund Insurance Company v. Jamilla & Company,
Inc.,8 and Pan Malayan Insurance Corporation v.
Court of Appeals,9 wherein this Court explained: May a carrier be held liable for the loss of cargo
resulting from the sinking of a ship it does not
own?
Article 2207 of the Civil Code is
founded on the well-settled
principle of subrogation. If the This is the issue presented for the Court’s
insured property is destroyed or resolution in this petition for review on
damaged through the fault or certiorari1 assailing the March 16, 2001
negligence of a party other than decision2 and September 17, 2001 resolution3 of
the assured, then the insurer, the Court of Appeals (CA) in CA-G.R. CV No.
upon payment to the assured will 40473 which in turn affirmed the December 27,
be subrogated to the rights of the 1989 decision4 of the Regional Trial Court (RTC),
assured to recover from the Branch 145, Makati, Metro Manila.5
wrongdoer to the extent that the
insurer has been obligated to The pertinent facts follow.
pay. Payment by the insurer to the
assured operated as an equitable On November 12, 1984, petitioner Cebu Salvage
assignment to the former of all Corporation (as carrier) and Maria Cristina
remedies which the latter may Chemicals Industries, Inc. [MCCII] (as charterer)
have against the third party whose entered into a voyage charter6 wherein petitioner
negligence or wrongful act caused was to load 800 to 1,100 metric tons of silica
the loss. The right of subrogation quartz on board the M/T Espiritu Santo 7 at
is not dependent upon, nor does it Ayungon, Negros Occidental for transport to and
grow out of, any privity of contract discharge at Tagoloan, Misamis Oriental to
or upon written assignment of consignee Ferrochrome Phils., Inc.8
claim. It accrues simply upon
Pursuant to the contract, on December 23, 1984, agreed upon in the voyage charter) since these
petitioner received and loaded 1,100 metric tons vessels had broken down.20
of silica quartz on board the M/T Espiritu Santo
which left Ayungon for Tagoloan the next There is no dispute that petitioner was a common
day.9 The shipment never reached its destination, carrier. At the time of the loss of the cargo, it was
however, because the M/T Espiritu Santo sank in engaged in the business of carrying and
the afternoon of December 24, 1984 off the beach transporting goods by water, for compensation,
of Opol, Misamis Oriental, resulting in the total and offered its services to the public.21
loss of the cargo.10
From the nature of their business and for
MCCII filed a claim for the loss of the shipment reasons of public policy, common carriers are
with its insurer, respondent Philippine Home bound to observe extraordinary diligence over the
Assurance Corporation.11 Respondent paid the goods they transport according to the
claim in the amount of P211,500 and was circumstances of each case.22 In the event of loss
subrogated to the rights of MCCII.12 Thereafter, it of the goods, common carriers are responsible,
filed a case in the RTC 13 against petitioner for unless they can prove that this was brought
reimbursement of the amount it paid MCCII. about by the causes specified in Article 1734 of
the Civil Code.23 In all other cases, common
After trial, the RTC rendered judgment in favor of carriers are presumed to be at fault or to have
respondent. It ordered petitioner to pay acted negligently, unless they prove that they
respondent P211,500 plus legal interest, observed extraordinary diligence.24
attorney’s fees equivalent to 25% of the award
and costs of suit. Petitioner was the one which contracted with
MCCII for the transport of the cargo. It had
On appeal, the CA affirmed the decision of the control over what vessel it would use. All
RTC. Hence, this petition. throughout its dealings with MCCII, it
represented itself as a common carrier. The fact
Petitioner and MCCII entered into a "voyage that it did not own the vessel it decided to use to
charter," also known as a contract of consummate the contract of carriage did not
affreightment wherein the ship was leased for a negate its character and duties as a common
single voyage for the conveyance of goods, in carrier. The MCCII (respondent’s subrogor) could
consideration of the payment of freight. 14 Under a not be reasonably expected to inquire about the
voyage charter, the shipowner retains the ownership of the vessels which petitioner carrier
possession, command and navigation of the ship, offered to utilize. As a practical matter, it is very
the charterer or freighter merely having use of difficult and often impossible for the general
the space in the vessel in return for his payment public to enforce its rights of action under a
of freight.15 An owner who retains possession of contract of carriage if it should be required to
the ship remains liable as carrier and must know who the actual owner of the vessel is. 25 In
answer for loss or non-delivery of the goods fact, in this case, the voyage charter itself
received for transportation.16 denominated petitioner as the "owner/operator"
of the vessel.26
Petitioner argues that the CA erred when it
affirmed the RTC finding that the voyage charter Petitioner next contends that if there was a
it entered into with MCCII was a contract of contract of carriage, then it was between MCCII
carriage.17 It insists that the agreement was and ALS as evidenced by the bill of lading ALS
merely a contract of hire wherein MCCII hired the issued.27
vessel from its owner, ALS Timber Enterprises
(ALS).18 Not being the owner of the M/T Espiritu Again, we disagree.
Santo, petitioner did not have control and
supervision over the vessel, its master and The bill of lading was merely a receipt issued by
crew.19 Thus, it could not be held liable for the ALS to evidence the fact that the goods had been
loss of the shipment caused by the sinking of a received for transportation. It was not signed by
ship it did not own. MCCII, as in fact it was simply signed by the
supercargo of ALS.28 This is consistent with the
We disagree. fact that MCCII did not contract directly with
ALS. While it is true that a bill of lading may
Based on the agreement signed by the parties serve as the contract of carriage between the
and the testimony of petitioner’s operations parties,29 it cannot prevail over the express
manager, it is clear that it was a contract of provision of the voyage charter that MCCII and
carriage petitioner signed with MCCII. It actively petitioner executed:
negotiated and solicited MCCII’s account, offered
its services to ship the silica quartz and proposed [I]n cases where a Bill of Lading has been issued
to utilize the M/T Espiritu Santo in lieu of the by a carrier covering goods shipped aboard a
M/T Seebees or the M/T Shirley (as previously vessel under a charter party, and the charterer is
also the holder of the bill of lading, "the bill of ABOITIZ SHIPPING CORPORATION, petitioner,
lading operates as the receipt for the goods, and vs.
as document of title passing the property of the HON. COURT OF APPEALS, ELEVENTH
goods, but not as varying the contract between DIVISION, LUCILA C. VIANA, SPS. ANTONIO
the charterer and the shipowner." The Bill of VIANA and GORGONIA VIANA, and PIONEER
Lading becomes, therefore, only a receipt and not STEVEDORING CORPORATION, respondents.
the contract of carriage in a charter of the entire
vessel, for the contract is the Charter Party, and Herenio E. Martinez for petitioner.
is the law between the parties who are bound by
its terms and condition provided that these are M.R. Villaluz Law Office for private respondent.
not contrary to law, morals, good customs, public
order and public policy. 30

Finally, petitioner asserts that MCCII should be

REGALADO, J.:
held liable for its own loss since the voyage
charter stipulated that cargo insurance was for
the charterer’s account.31 This deserves scant In this appeal by certiorari, petitioner Aboitiz
consideration. This simply meant that the Shipping Corporation seeks a review of the
charterer would take care of having the goods decision 1 of respondent Court of Appeals, dated
insured. It could not exculpate the carrier from July 29, 1988, the decretal portion of which
liability for the breach of its contract of carriage. reads:
The law, in fact, prohibits it and condemns it as
unjust and contrary to public policy.32 WHEREFORE, the judgment
appealed from as modified by the
To summarize, a contract of carriage of goods order of October 27, 1982, is
was shown to exist; the cargo was loaded on hereby affirmed with the
board the vessel; loss or non-delivery of the cargo modification that appellant Aboitiz
was proven; and petitioner failed to prove that it Shipping is hereby ordered to pay
exercised extraordinary diligence to prevent such plaintiff-appellees the amount of
loss or that it was due to some casualty or force P30,000.00 for the death of
majeure. The voyage charter here being a Anacleto Viana; actual damages of
contract of affreightment, the carrier was P9,800.00; P150,000.00 for
answerable for the loss of the goods received for unearned income; P7,200.00 as
transportation.33 support for deceased's parents;
P20,000.00 as moral damages;
P10,000.00 as attorney's fees; and
The idea proposed by petitioner is not only
to pay the costs.
preposterous, it is also dangerous. It says that a
carrier that enters into a contract of carriage is
not liable to the charterer or shipper if it does not The undisputed facts of the case, as found by the
own the vessel it chooses to use. MCCII never court a quo and adopted by respondent court, are
dealt with ALS and yet petitioner insists that as follows: .
MCCII should sue ALS for reimbursement for its
loss. Certainly, to permit a common carrier to The evidence disclosed that on
escape its responsibility for the goods it agreed to May 11, 1975, Anacleto Viana
transport (by the expedient of alleging non- boarded the vessel M/V Antonia,
ownership of the vessel it employed) would owned by defendant, at the port at
radically derogate from the carrier's duty of San Jose, Occidental Mindoro,
extraordinary diligence. It would also open the bound for Manila, having
door to collusion between the carrier and the purchased a ticket (No. 117392) in
supposed owner and to the possible shifting of the sum of P23.10 (Exh. 'B'). On
liability from the carrier to one without any May 12, 1975, said vessel arrived
financial capability to answer for the resulting at Pier 4, North Harbor, Manila,
damages.34 and the passengers therein
disembarked, a gangplank having
WHEREFORE, the petition is hereby DENIED. been provided connecting the side
of the vessel to the pier. Instead of
using said gangplank Anacleto
Costs against petitioner.
Viana disembarked on the third
deck which was on the level with
SO ORDERED. the pier. After said vessel had
landed, the Pioneer Stevedoring
G.R. No. 84458 November 6, 1989 Corporation took over the
exclusive control of the cargoes
loaded on said vessel pursuant to
the Memorandum of Agreement Private respondents Vianas filed a complaint 3 for
dated July 26, 1975 (Exh. '2') damages against petitioner corporation (Aboitiz,
between the third party defendant for brevity) for breach of contract of carriage.
Pioneer Stevedoring Corporation
and defendant Aboitiz Shipping In its answer. 4 Aboitiz denied responsibility
Corporation. contending that at the time of the accident, the
vessel was completely under the control of
The crane owned by the third respondent Pioneer Stevedoring Corporation
party defendant and operated by (Pioneer, for short) as the exclusive stevedoring
its crane operator Alejo Figueroa contractor of Aboitiz, which handled the
was placed alongside the vessel unloading of cargoes from the vessel of Aboitiz. It
and one (1) hour after the is also averred that since the crane operator was
passengers of said vessel had not an employee of Aboitiz, the latter cannot be
disembarked, it started operation held liable under the fellow-servant rule.
by unloading the cargoes from
said vessel. While the crane was Thereafter, Aboitiz, as third-party plaintiff, filed a
being operated, Anacleto Viana third-party complaint 5 against Pioneer imputing
who had already disembarked liability thereto for Anacleto Viana's death as
from said vessel obviously having been allegedly caused by the negligence of
remembering that some of his the crane operator who was an employee of
cargoes were still loaded in the Pioneer under its exclusive control and
vessel, went back to the vessel, supervision.
and it was while he was pointing
to the crew of the said vessel to Pioneer, in its answer to the third-party
the place where his cargoes were complaint, 6 raised the defenses that Aboitiz had
loaded that the crane hit him, no cause of action against Pioneer considering
pinning him between the side of that Aboitiz is being sued by the Vianas for
the vessel and the crane. He was breach of contract of carriage to which Pioneer is
thereafter brought to the hospital not a party; that Pioneer had observed the
where he later expired three (3) diligence of a good father of a family both in the
days thereafter, on May 15, 1975, selection and supervision of its employees as well
the cause of his death according to as in the prevention of damage or injury to
the Death Certificate (Exh. "C") anyone including the victim Anacleto Viana; that
being "hypostatic pneumonia Anacleto Viana's gross negligence was the direct
secondary to traumatic fracture of and proximate cause of his death; and that the
the pubic bone lacerating the filing of the third-party complaint was premature
urinary bladder" (See also Exh. by reason of the pendency of the criminal case for
"B"). For his hospitalization, homicide through reckless imprudence filed
medical, burial and other against the crane operator, Alejo Figueroa.
miscellaneous expenses,
Anacleto's wife, herein plaintiff,
In a decision rendered on April 17, 1980 by the
spent a total of P9,800.00
trial court, 7 Aboitiz was ordered to pay the
(Exhibits "E", "E-1", to "E-5").
Vianas for damages incurred, and Pioneer was
Anacleto Viana who was only forty
ordered to reimburse Aboitiz for whatever
(40) years old when he met said
amount the latter paid the Vianas. The
fateful accident (Exh. 'E') was in
dispositive portion of said decision provides:
good health. His average annual
income as a farmer or a farm
supervisor was 400 cavans of WHEREFORE, judgment is hereby
palay annually. His parents, rendered in favor of the plantiffs:
herein plaintiffs Antonio and
Gorgonia Viana, prior to his death (1) ordering defendant Aboitiz
had been recipient of twenty (20) Shipping Corporation to pay to
cavans of palay as support or plaintiffs the sum of P12,000.00
P120.00 monthly. Because of for the death of Anacleto Viana
Anacleto's death, plaintiffs P9,800.00 as actual damages;
suffered mental anguish and P533,200.00 value of the 10,664
extreme worry or moral damages. cavans of palay computed at
For the filing of the instant case, P50.00 per cavan; P10,000.00 as
they had to hire a lawyer for an attorney's fees; F 5,000.00, value
agreed fee of ten thousand of the 100 cavans of palay as
(P10,000.00) pesos. 2 support for five (5) years for
deceased (sic) parents, herein
plaintiffs Antonio and Gorgonia
Viana computed at P50.00 per
 cavan; P7,200.00 as support for five years pursuant to Art. 2206,
deceased's parents computed at Par. 2, of the Civil Code;
P120.00 a month for five years P20,000.00 as moral damages,
pursuant to Art. 2206, Par. 2, of and costs; and
the Civil Code; P20,000.00 as
moral damages, and costs; and (2) Absolving third-party defendant
Pioneer Stevedoring Corporation
(2) ordering the third party for (sic) any liability for the death
defendant Pioneer Stevedoring of Anacleto Viana the passenger of
Corporation to reimburse M/V Antonia owned by defendant
defendant and third party plaintiff third party plaintiff Aboitiz
Aboitiz Shipping Corporation the Shipping Corporation it appearing
said amounts that it is ordered to that the negligence of its crane
pay to herein plaintiffs. operator has not been established
therein.
Both Aboitiz and Pioneer filed separate motions
for reconsideration wherein they similarly raised Not satisfied with the modified judgment of the
the trial court's failure to declare that Anacleto trial court, Aboitiz appealed the same to
Viana acted with gross negligence despite the respondent Court of Appeals which affirmed the
overwhelming evidence presented in support findings of of the trial court except as to the
thereof. In addition, Aboitiz alleged, in opposition amount of damages awarded to the Vianas.
to Pioneer's motion, that under the memorandum
of agreement the liability of Pioneer as contractor Hence, this petition wherein petitioner Aboitiz
is automatic for any damages or losses postulates that respondent court erred:
whatsoever occasioned by and arising from the
operation of its arrastre and stevedoring service. (A) In holding that the doctrine
laid down by this honorable Court
In an order dated October 27, 1982, 8 the trial in La Mallorca vs. Court of
court absolved Pioneer from liability for failure of Appeals, et al. (17 SCRA 739, July
the Vianas and Aboitiz to preponderantly 27, 1966) is applicable to the case
establish a case of negligence against the crane in the face of the undisputable fact
operator which the court a quo ruled is never that the factual situation under
presumed, aside from the fact that the the La Mallorca case is radically
memorandum of agreement supposedly refers different from the facts obtaining
only to Pioneer's liability in case of loss or in this case;
damage to goods handled by it but not in the
case of personal injuries, and, finally that Aboitiz (B) In holding petitioner liable for
cannot properly invoke the fellow-servant rule damages in the face of the finding
simply because its liability stems from a breach of the court a quo and confirmed
of contract of carriage. The dispositive portion of by the Honorable respondent court
said order reads: of Appeals that the deceased,
Anacleto Viana was guilty of
WHEREFORE, judgment is hereby contributory negligence, which, We
modified insofar as third party respectfully submit contributory
defendant Pioneer Stevedoring negligence was the proximate
Corporation is concerned rendered cause of his death; specifically the
in favor of the plaintiffs-,: honorable respondent Court of
Appeals failed to apply Art. 1762
(1) Ordering defendant Aboitiz of the New Civil Code;
Shipping Corporation to pay the
plaintiffs the sum of P12,000.00 (C) In the alternative assuming the
for the death of Anacleto Viana; holding of the Honorable
P9,000.00 (sic) as actual damages; respondent Court of Appears that
P533,200.00 value of the 10,664 petitioner may be legally
cavans of palay computed at condemned to pay damages to the
P50.00 per cavan; P10,000.00 as private respondents we
attorney's fees; P5,000.00 value of respectfully submit that it
the 100 cavans of palay as support committed a reversible error when
for five (5) years for deceased's it dismissed petitioner's third
parents, herein plaintiffs Antonio party complaint against private
and Gorgonia Viana,computed at respondent Pioneer Stevedoring
P50.00 per cavan; P7,200.00 as Corporation instead of compelling
support for deceased's parents the latter to reimburse the
computed at P120.00 a month for petitioner for whatever damages it
 may be compelled to pay to the circumstances. Thus, a person
private respondents Vianas. 9 who, after alighting from a train,
walks along the station platform is
At threshold, it is to be observed that both the considered still a passenger. So
trial court and respondent Court of Appeals also, where a passenger has
found the victim Anacleto Viana guilty of alighted at his destination and is
contributory negligence, but holding that it was proceeding by the usual way to
the negligence of Aboitiz in prematurely turning leave the company's premises, but
over the vessel to the arrastre operator for the before actually doing so is halted
unloading of cargoes which was the direct, by the report that his brother, a
immediate and proximate cause of the victim's fellow passenger, has been shot,
death. and he in good faith and without
intent of engaging in the difficulty,
I. Petitioner contends that since one (1) hour had returns to relieve his brother, he is
already elapsed from the time Anacleto Viana deemed reasonably and
disembarked from the vessel and that he was necessarily delayed and thus
given more than ample opportunity to unload his continues to be a passenger
cargoes prior to the operation of the crane, his entitled as such to the protection
presence on the vessel was no longer reasonable of the railroad company and its
e and he consequently ceased to be a passenger. agents.
Corollarily, it insists that the doctrine in La
Mallorca vs. Court of Appeals, et al. 10 is not In the present case, the father
applicable to the case at bar. returned to the bus to get one of
his baggages which was not
The rule is that the relation of carrier and unloaded when they alighted from
passenger continues until the passenger has the bus. Racquel, the child that
been landed at the port of destination and has she was, must have followed the
left the vessel owner's dock or premises. 11 Once father. However, although the
created, the relationship will not ordinarily father was still on the running
terminate until the passenger has, after reaching board of the bus waiting for the
his destination, safely alighted from the carrier's conductor to hand him the bag
conveyance or had a reasonable opportunity to or bayong, the bus started to run,
leave the carrier's premises. All persons who so that even he (the father) had to
remain on the premises a reasonable time after jump down from the moving
leaving the conveyance are to be deemed vehicle. It was at this instance that
passengers, and what is a reasonable time or a the child, who must be near the
reasonable delay within this rule is to be bus, was run over and killed. In
determined from all the circumstances, and the circumstances, it cannot be
includes a reasonable time to see after his claimed that the carrier's agent
baggage and prepare for his departure. 12 The had exercised the 'utmost
carrier-passenger relationship is not terminated diligence' of a 'very cautious
merely by the fact that the person transported person' required by Article 1755 of
has been carried to his destination if, for the Civil Code to be observed by a
example, such person remains in the carrier's common carrier in the discharge of
premises to claim his baggage.13 its obligation to transport safely its
passengers. ... The presence of
said passengers near the bus was
It was in accordance with this rationale that the not unreasonable and they are,
doctrine in the aforesaid case of La Mallorca was therefore, to be considered still as
enunciated, to wit: passengers of the carrier, entitled
to the protection under their
It has been recognized as a rule contract of carriage. 14
that the relation of carrier and
passenger does not cease at the It is apparent from the foregoing that what
moment the passenger alights prompted the Court to rule as it did in said case
from the carrier's vehicle at a place is the fact of the passenger's reasonable presence
selected by the carrier at the point within the carrier's premises. That
of destination, but continues until reasonableness of time should be made to
the passenger has had a depend on the attending circumstances of the
reasonable time or a reasonable case, such as the kind of common carrier, the
opportunity to leave the carrier's nature of its business, the customs of the place,
premises. And, what is a and so forth, and therefore precludes a
reasonable time or a reasonable consideration of the time element per se without
delay within this rule is to be taking into account such other factors. It is thus
determined from all the of no moment whether in the cited case of La
Mallorca there was no appreciable interregnum II. Under the law, common carriers are, from the
for the passenger therein to leave the carrier's nature of their business and for reasons of public
premises whereas in the case at bar, an interval policy, bound to observe extraordinary diligence
of one (1) hour had elapsed before the victim met in the vigilance over the goods and for the safety
the accident. The primary factor to be considered of the passengers transported by them, according
is the existence of a reasonable cause as will to all the circumstances of each case. 15 More
justify the presence of the victim on or near the particularly, a common carrier is bound to carry
petitioner's vessel. We believe there exists such a the passengers safely as far as human care and
justifiable cause. foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for all
It is of common knowledge that, by the very the circumstances. 16 Thus, where a passenger
nature of petitioner's business as a shipper, the dies or is injured, the common carrier is
passengers of vessels are allotted a longer period presumed to have been at fault or to have acted
of time to disembark from the ship than other negligently. 17 This gives rise to an action for
common carriers such as a passenger bus. With breach of contract of carriage where all that is
respect to the bulk of cargoes and the number of required of plaintiff is to prove the existence of
passengers it can load, such vessels are capable the contract of carriage and its non-performance
of accommodating a bigger volume of both as by the carrier, that is, the failure of the carrier to
compared to the capacity of a regular commuter carry the passenger safely to his
bus. Consequently, a ship passenger will need at destination, 18 which, in the instant case,
least an hour as is the usual practice, to necessarily includes its failure to safeguard its
disembark from the vessel and claim his baggage passenger with extraordinary diligence while
whereas a bus passenger can easily get off the such relation subsists.
bus and retrieve his luggage in a very short
period of time. Verily, petitioner cannot The presumption is, therefore, established by law
categorically claim, through the bare expedient of that in case of a passenger's death or injury the
comparing the period of time entailed in getting operator of the vessel was at fault or negligent,
the passenger's cargoes, that the ruling in La having failed to exercise extraordinary diligence,
Mallorca is inapplicable to the case at bar. On the and it is incumbent upon it to rebut the same.
contrary, if we are to apply the doctrine This is in consonance with the avowed policy of
enunciated therein to the instant petition, we the State to afford full protection to the
cannot in reason doubt that the victim Anacleto passengers of common carriers which can be
Viana was still a passenger at the time of the carried out only by imposing a stringent
incident. When the accident occurred, the victim statutory obligation upon the latter.
was in the act of unloading his cargoes, which he Concomitantly, this Court has likewise adopted a
had every right to do, from petitioner's vessel. As rigid posture in the application of the law by
earlier stated, a carrier is duty bound not only to exacting the highest degree of care and diligence
bring its passengers safely to their destination from common carriers, bearing utmost in mind
but also to afford them a reasonable time to the welfare of the passengers who often become
claim their baggage. hapless victims of indifferent and profit-oriented
carriers. We cannot in reason deny that
It is not definitely shown that one (1) hour prior petitioner failed to rebut the presumption against
to the incident, the victim had already it. Under the facts obtaining in the present case,
disembarked from the vessel. Petitioner failed to it cannot be gainsaid that petitioner had
prove this. What is clear to us is that at the time inadequately complied with the required degree
the victim was taking his cargoes, the vessel had of diligence to prevent the accident from
already docked an hour earlier. In consonance happening.
with common shipping procedure as to the
minimum time of one (1) hour allowed for the As found by the Court of Appeals, the evidence
passengers to disembark, it may be presumed does not show that there was a cordon of drums
that the victim had just gotten off the vessel around the perimeter of the crane, as claimed by
when he went to retrieve his baggage. Yet, even if petitioner. It also adverted to the fact that the
he had already disembarked an hour earlier, his alleged presence of visible warning signs in the
presence in petitioner's premises was not without vicinity was disputable and not indubitably
cause. The victim had to claim his baggage which established. Thus, we are not inclined to accept
was possible only one (1) hour after the vessel petitioner's explanation that the victim and other
arrived since it was admittedly standard passengers were sufficiently warned that merely
procedure in the case of petitioner's vessels that venturing into the area in question was fraught
the unloading operations shall start only after with serious peril. Definitely, even assuming the
that time. Consequently, under the foregoing existence of the supposed cordon of drums
circumstances, the victim Anacleto Viana is still loosely placed around the unloading area and the
deemed a passenger of said carrier at the time of guard's admonitions against entry therein, these
his tragic death. were at most insufficient precautions which pale
into insignificance if considered vis-a-vis the
gravity of the danger to which the deceased was
exposed. There is no showing that petitioner was SO ORDERED.
extraordinarily diligent in requiring or seeing to it
that said precautionary measures were strictly G.R. No. 80256 October 2, 1992
and actually enforced to subserve their purpose
of preventing entry into the forbidden area. By no BANKERS & MANUFACTURERS ASSURANCE
stretch of liberal evaluation can such perfunctory CORP., petitioner,
acts approximate the "utmost diligence of very vs.
cautious persons" to be exercised "as far as COURT OS APPEALS, F. E. ZUELLIG & CO.,
human care and foresight can provide" which is INC. and E. RAZON, INC., respondents.
required by law of common carriers with respect
to their passengers.

While the victim was admittedly contributorily

MELO, J.:
negligent, still petitioner's aforesaid failure to
exercise extraordinary diligence was the
proximate and direct cause of, because it could After the Court of Appeals in CA-G.R. CV No.
definitely have prevented, the former's death. 08226 (July 8, 1987, Kapunan, Puno (P),
Moreover, in paragraph 5.6 of its petition, at Marigomen, JJ.) affirmed the dismissal by
bar, 19 petitioner has expressly conceded the Branch XVI of the Regional Trial Court of Manila
factual finding of respondent Court of Appeals of petitioner's complaint for recovery of the
that petitioner did not present sufficient evidence amount it had paid its insured concerning the
in support of its submission that the deceased loss of a portion of a shipment, petitioner has
Anacleto Viana was guilty of gross negligence. interposed the instant petition for review
Petitioner cannot now be heard to claim on certiorari.
otherwise.
Petitioner presents the following bare operative
No excepting circumstance being present, we are facts: 108 cases of copper tubings were imported
likewise bound by respondent court's declaration by Ali Trading Company. The tubings were
that there was no negligence on the part of insured by petitioner and arrived in Manila on
Pioneer Stevedoring Corporation, a confirmation board and vessel S/S "Oriental Ambassador" on
of the trial court's finding to that effect, hence November 4, 1978, and turned over the private
our conformity to Pioneer's being absolved of any respondent E. Razon, the Manila arrastre
liability. operator upon discharge at the waterfront. The
carrying vessel is represented in the Philippines
by its agent, the other private respondent, F. E.
As correctly observed by both courts, Aboitiz
Zuellig and Co., Inc., Upon inspection by the
joined Pioneer in proving the alleged gross
importer, the shipment was allegedly found to
negligence of the victim, hence its present
have sustained loses by way of theft and pilferage
contention that the death of the passenger was
for which petitioner, as insurer, compensated the
due to the negligence of the crane operator
importer in the amount of P31,014.00.
cannot be sustained both on grounds, of estoppel
and for lack of evidence on its present theory.
Even in its answer filed in the court below it Petitioner, in subrogation of the importer-
readily alleged that Pioneer had taken the consignee and on the basis of what it asserts had
necessary safeguards insofar as its unloading been already established — that a portion of that
operations were concerned, a fact which appears shipment was lost through theft and pilferage —
to have been accepted by the plaintiff therein by forthwith concludes that the burden of proof of
not impleading Pioneer as a defendant, and proving a case of non-liability shifted to private
likewise inceptively by Aboitiz by filing its third- respondents, one of whom, the carrier, being
party complaint only after ten (10) months from obligated to exercise extraordinary diligence in
the institution of the suit against it. the transport and care of the shipment. The
Parenthetically, Pioneer is not within the ambit of implication of petitioner's statement is that
the rule on extraordinary diligence required of, private respondents have not shown why they are
and the corresponding presumption of negligence not liable. The premises of the argument of
foisted on, common carriers like Aboitiz. This, of petitioner may be well-taken but the conclusions
course, does not detract from what we have said are not borne out or supported by the record.
that no negligence can be imputed to Pioneer
but, that on the contrary, the failure of Aboitiz to It must be underscored that the shipment
exercise extraordinary diligence for the safety of involved in the case at bar was "containerized".
its passenger is the rationale for our finding on The goods under this arrangement are stuffed,
its liability. packed, and loaded by the shipper at a place of
his choice, usually his own warehouse, in the
WHEREFORE, the petition is DENIED and the absence of the carrier. The container is sealed by
judgment appealed from is hereby AFFIRMED in the shipper and thereafter picked up by the
toto. carrier. Consequently, the recital of the bill of
lading for goods thus transported ordinarily or indication of irregularity or theft
would declare "Said to Contain", "Shipper's Load or pilferage, plaintiff or consignee's
and Count", "Full Container Load", and the representatives should have noted
amount or quantity of goods in the container in a the same on the gate passes or
particular package is only prima facie evidence insisted that some form of protest
of the amount or quantity which may be form part of the documents
overthrown by parol evidence. concerning the shipment. Yet, no
such step was taken. The
A shipment under this arrangement is not shipment appears to have been
inspected or inventoried by the carrier whose delivered to the customs broker in
duty is only to transport and deliver the good order and condition and
containers in the same condition as when the complete save for the three cases
carrier received and accepted the containers for noted as being apparently in bad
transport. In the case at bar, the copper tubings order.
were placed in three containers. Upon arrival in
Manila on November 4, 1978, the shipment was Consider further that the stripping
discharged in apparent good order and condition of the subject container was done
and from the pier's docking apron, the containers at the consignee's warehouse
were shifted to the container yard of Pier 3 for where, according to plaintiff's
safekeeping. Three weeks later, one of the surveyor, the loss of the seven
container vans, said to contain 19 cases of the cases was discovered. The
cargo, was "stripped" in the presence of evidence is not settled as whether
petitioner's surveyors, and three cases were the defendants' representative
found to be in bad order. The 19 cases of the van were notified of, and were present
stripped were then kept inside Warehouse No. 3 at, the unsealing and opening of
of Pier 3 pending delivery. It should be stressed the container in the bodega. Nor is
at this point, that the three cases found in bad the evidence clear how much time
order are not the cases for which the claim below elapsed between the release of the
was presented, for although the three cases shipment from the pier and the
appeared to be in bad order, the contents stripping of the containers at
remained good and intact. consignee bodega. All these fail to
discount the possibility that the
The two other container vans were not moved loss in question could have taken
from the container yard and they place after the container had left
were not stripped. On December 8, 1978, the the pier. (pp. 20-21, Rollo)
cargo was released to the care of the consignee's
authorized customs broker, the RGS Customs Verily, if any of the vans found in bad condition,
Brokerage. The broker, accepting the shipment or if any inspection of the goods was to be done
without exception as to bad order, caused the in order to determine the condition thereof, the
delivery of the vans to the consignee's warehouse same should have been done at the pierside, the
in Makati. It was at that place, when the contents pier warehouse, or at any time and place while
of the two containers were removed and the vans were under the care and custody of the
inspected, that petitioner's surveyors reported, carrier or of the arrastre operator. Unfortunately
that checked against the packing list, the for petitioner, even as one of the three vans was
shipment in Container No. OOLU2552969 was inspected and stripped, the two other vans and
short of seven cases (see p. 18, Rollo). the contents of the owner previously stripped
were accepted without exception as to any
Under the prevailing circumstances, it is supposed bad order or condition by petitioner's
therefore, not surprising why the Court of own broker. To all appearances, therefore, the
Appeals in sustaining the trial court, simply shipment was accepted by petitioner in good
quoted the latter, thus: order.

It must be also considered that the It logically follows that the case at bar presents
subject container was not stripped no occasion for the necessity of discussing the
of its content at the pier zone. The diligence required of a carrier or of the theory
two unstripped containers of prima facie liability of the carrier, for from all
(together with the 19 cases indications, the shipment did not suffer loss or
removed from the stripped third damage while it was under the care of the carrier,
container) were delivered to, and or of the arrastre operator, it must be added.
received by, the customs broker
for the consignee without any WHEREFORE, the petition is hereby DISMISSED
exception or notation of bad order and the decision of the Court of Appeals
of shortlanding (Exhs. 1, 2 and 3 AFFIRMED, with costs against petitioner.
Vessel). If there was any suspicion
SO ORDERED.