G.R. No. 121833              October 17, 2008 Respondent Malayan Insurance Company, Inc.

Respondent Malayan Insurance Company, Inc. (Malayan) filed five separate actions against
several defendants for the collection of the amounts of the cargoes allegedly paid by Malayan
ABOITIZ SHIPPING CORPORATION, petitioners, under various marine cargo policies2 issued to the insurance claimants. The five civil cases,
vs. namely, Civil Cases No. 138761, No. 139083, No. 138762, No. R-81-526 and No. 138879,
COURT OF APPEALS, MALAYAN INSURANCE COMPANY, INC., COMPAGNIE were consolidated and heard before the Regional Trial Court (RTC) of Manila, Branch 54.
MARITIME DES CHARGEURS REUNIS, and F.E. ZUELLIG (M), INC., respondents.
The defendants in Civil Case No. 138761 and in Civil Case No. 139083 were Malayan
x-----------------------------------------x International Shipping Corporation, a foreign corporation based in Malaysia, its local ship
agent, Litonjua Merchant Shipping Agency (Litonjua), and Aboitiz. The defendants in Civil
Case No. 138762 were Compagnie Maritime des Chargeurs Reunis (CMCR), its local ship
G.R. No. 130752              October 17, 2008 agent, F.E. Zuellig (M), Inc. (Zuellig), and Aboitiz. Malayan also filed Civil Case No. R-81-
526 only against CMCR and Zuellig. Thus, defendants CMCR and Zuellig filed a third-party
ABOITIZ SHIPPING CORPORATION, petitioners, complaint against Aboitiz. In the fifth complaint docketed as Civil Case No. 138879, only
vs. Aboitiz was impleaded as defendant.
COURT OF APPEALS, THE HON. JUDGE REMEGIO E. ZARI, in his capacity as
Presiding Judge of the RTC, Branch 20; ASIA TRADERS INSURANCE The shipments were supported by their respective bills of lading and insured separately by
CORPORATION, and ALLIED GUARANTEE INSURANCE Malayan against the risk of loss or damage. In the five consolidated cases, Malayan sought the
CORPORATION, respondents. recovery of amounts totaling ₱639,862.02.

x-----------------------------------------x Aboitiz raised the defenses of lack of jurisdiction, lack of cause of action and prescription. It
also claimed that M/V P. Aboitiz was seaworthy, that it exercised extraordinary diligence and
G.R. No. 137801              October 17, 2008 that the loss was caused by a fortuitous event.

ABOITIZ SHIPPING CORPORATION, petitioners, After trial on the merits, the RTC of Manila rendered a Decision dated 27 November 1989,
vs. adjudging Aboitiz liable on the money claims. The decretal portion reads:
EQUITABLE INSURANCE CORPORATION, respondents.
WHEREFORE, judgment is hereby rendered as follows:
DECISION
1. In Civil Case No. 138072 (R-81-526-CV), the defendants are adjudged liable and ordered to
TINGA, J.: pay to the plaintiffs jointly and severally the amount of ₱128,896.79; the third-party defendant
Aboitiz is adjudged liable to reimburse and ordered to pay the defendants or whosoever of
Before this Court are three consolidated Rule 45 petitions all involving the issue of whether them paid the plaintiff up to the said amount;
the real and hypothecary doctrine may be invoked by the shipowner in relation to the loss of
cargoes occasioned by the sinking of M/V P. Aboitiz on 31 October 1980. The petitions filed 2. In Civil Case No. 138761, Aboitiz is adjudged liable and ordered to pay plaintiff the amount
by Aboitiz Shipping Corporation (Aboitiz) commonly seek the computation of its liability in of One Hundred Sixty Three-Thousand Seven Hundred Thirteen Pesos and Thirty-Eight
accordance with the Court’s pronouncement in Aboitiz Shipping Corporation v. General Centavos (₱163,713.38).
Accident Fire and Life Assurance Corporation, Ltd.1 (hereafter referred to as "the
1993 GAFLAC case"). 3. In Civil Case No. 138762, defendant Aboitiz is adjudged liable and ordered to pay plaintiff
the sum of Seventy Three Thousand Five Hundred Sixty-Nine Pesos and Ninety-Four
The three petitions stemmed from some of the several suits filed against Aboitiz before Centavos (₱73,569.94); and Sixty-Four Thousand Seven Hundred Four Pesos and Seventy-
different regional trial courts by shippers or their successors-in-interest for the recovery of the Seven Centavos (₱64,704.77);
monetary value of the cargoes lost, or by the insurers for the reimbursement of whatever they
paid. The trial courts awarded to various claimants the amounts of ₱639,862.02, ₱646,926.30, 4. In Civil Case No. 139083, defendant Aboitiz is adjudged liable and ordered to pay plaintiff
and ₱87,633.81 in G.R. Nos. 121833, 130752 and 137801, respectively. the amount of One Hundred Fifty-Six Thousand Two Hundred Eighty-Seven Pesos and Sixty-
Four Centavos (₱156,287.64);
ANTECEDENTS

G.R. No. 121833

In Civil Case No. 138879, defendant Aboitiz is adjudged liable and ordered to pay plaintiff the Respondents Asia Traders Insurance Corporation (Asia Traders) and Allied Guarantee
amount of Fifty-Two Thousand Six Hundred Eighty-Nine Pesos and Fifty Centavos Insurance Corporation (Allied) filed separate actions for damages against Aboitiz to recover
(₱52,689.50). by way of subrogation the value of the cargoes insured by them and lost in the sinking of the
vessel M/V P. Aboitiz. The two actions were consolidated and heard before the RTC of
All the aforesaid award shall bear interest at the legal rate from the filing of the respective Manila, Branch 20.
complaints. Considering that there is no clear showing that the cases fall under Article 2208,
Nos. 4 and 5, of the Civil Code, and in consonance with the basic rule that there be no penalty Aboitiz reiterated the defense of force majeure. The trial court rendered a decision11 on 25
(in terms of attorney’s fees) imposed on the right to litigate, no damages by way of attorney’s April 1990 ordering Aboitiz to pay damages in the amount of ₱646,926.30. Aboitiz sought
fees are awarded; however, costs of the party/parties to whom judgment awards are made shall reconsideration, arguing that the trial court should have considered the findings of the Board
be made by the party ordered to pay the said judgment awards. of Marine Inquiry that the sinking of the M/V P. Aboitiz was caused by a typhoon and should
have applied the real and hypothecary doctrine in limiting the monetary award in favor of the
SO ORDERED.3 claimants. The trial court denied Aboitiz’s motion for reconsideration.

Aboitiz, CMCR and Zuellig appealed the RTC decision to the Court of Appeals. The appeal Aboitiz elevated the case to the Court of Appeals. While the appeal was pending, this Court
was docketed as CA-G.R. SP No. 35975-CV. During the pendency of the appeal, the Court promulgated the decision in the 1993 GAFLAC case. The Court of Appeals subsequently
promulgated the decision in the 1993 GAFLAC case. rendered a decision on 30 May 1994, affirming the RTC decision.12

On 31 March 1995, the Court of Appeals (Ninth Division) affirmed the RTC decision. It Aboitiz appealed the Court of Appeals decision to this Court.13 In a Resolution dated 20
disregarded Aboitiz’s argument that the sinking of the vessel was caused by a force majeure, September 1995,14 the Court denied the petition for raising factual issues and for failure to
in view of this Court’s finding in a related case, Aboitiz Shipping Corporation v. Court of show that the Court of Appeals committed any reversible error. Aboitiz’s motion for
Appeals, et al. (the 1990 GAFLAC case).4 In said case, this Court affirmed the Court of reconsideration was also denied in a Resolution dated 22 November 1995.15
Appeals’ finding that the sinking of M/V P. Aboitiz was caused by the negligence of its
officers and crew. It is one of the numerous collection suits against Aboitiz, which eventually The 22 November 1995 Resolution became final and executory. On 26 February 1996, Asia
reached this Court in connection with the sinking of M/V P. Aboitiz. Traders and Allied filed a motion for execution before the RTC of Manila, Branch 20. Aboitiz
opposed the motion. On 16 August 1996, the trial court granted the motion and issued a writ of
As to the computation of Aboitiz’s liability, the Court of Appeals again based its ruling on the execution.
1990 GAFLAC case that Aboitiz’s liability should be based on the declared value of the
shipment in consonance with the exceptional rule under Section 4(5)5 of the Carriage of Goods Alleging that it had no other speedy, just or adequate remedy to prevent the execution of the
by Sea Act. judgment, Aboitiz filed with the Court of Appeals a petition for certiorari and prohibition with
an urgent prayer for preliminary injunction and/or temporary restraining order docketed as
Aboitiz moved for reconsideration6 to no avail. Hence, it filed this petition for review on CA-G.R. SP No. 41696.16 The petition was mainly anchored on this Court’s ruling in the
certiorari docketed as G.R. No. 121833.7 The instant petition is based on the following 1993 GAFLAC case.
grounds:
On 8 August 1997, the Court of Appeals (Special Seventeenth Division) rendered the assailed
THE COURT OF APPEALS SHOULD HAVE LIMITED THE RECOVERABLE AMOUNT decision dismissing the petition.17 Based on the trial court’s finding that Aboitiz was actually
FROM ASC TO THAT AMOUNT STIPULATED IN THE BILL OF LADING. negligent in ensuring the seaworthiness of M/V P. Aboitiz, the appellate court held that the real
and hypothecary doctrine enunciated in the 1993 GAFLAC case may not be applied in the
case.
IN THE ALTERNATIVE, THE COURT OF APPEALS SHOULD HAVE FOUND THAT
THE TOTAL LIABILITY OF ASC IS LIMITED TO THE VALUE OF THE VESSEL OR
THE INSURANCE PROCEEDS THEREOF.8 In view of the denial of its motion for reconsideration,18 Aboitiz filed before this Court the
instant petition for review on certiorari docketed as G.R. No. 130752.19 The petition attributes
the following errors to the Court of Appeals:
On 4 December 1995, the Court issued a Resolution9 denying the petition. Aboitiz moved for
reconsideration, arguing that the limited liability doctrine enunciated in the
1993 GAFLAC case should be applied in the computation of its liability. In the THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THE LOWER
Resolution10 dated 6 March 1996, the Court granted the motion and ordered the reinstatement COURT HAD MADE AN EXPRESS FINDING OF THE ACTUAL NEGLIGENCE OF
of the petition and the filing of a comment. ABOITIZ IN THE SINKING OF THE M/V P. ABOITIZ THEREBY DEPRIVING ABOITIZ
OF THE BENEFIT OF THE DOCTRINE OF THE REAL AND HYPOTHECARY NATURE
OF MARITIME LAW.20
G.R. No. 130752
THE COURT OF APPEALS ERRED IN NOT GIVING WEIGHT TO THE GAFLAC CASE on this Court’s Resolution dated 4 December 1995 in G.R. No. 121833, which affirmed the
DECIDED BY THE HONORABLE COURT WHICH SUPPORTS THE APPLICABILITY trial court’s finding of negligence on the part of the vessel’s captain. Likewise, respondent in
OF THE REAL AND HYPOTHECARY NATURE OF MARITIME LAW IN THE G.R. No. 137801 relies on the finding of the trial court, as affirmed by the appellate court, that
PRESENT CASE.21 Aboitiz was guilty of negligence.

G.R. No. 137801 Respondents in G.R No. 130752 argue that this Court had already affirmed in toto the
appellate court’s finding that the vessel was not seaworthy and that Aboitiz failed to exercise
On 27 February 1981, Equitable Insurance Corporation (Equitable) filed an action for damages extraordinary diligence in the handling of the cargoes. This being the law of the case, Aboitiz
against Aboitiz to recover by way of subrogation the value of the cargoes insured by Equitable should not be entitled to the limited liability rule as far as this petition is concerned,
that were lost in the sinking of M/V P. Aboitiz.22 The complaint, which was docketed as Civil respondents contend.
Case No. 138395, was later amended to implead Seatrain Pacific Services S.A. and Citadel
Lines, Inc. as party defendants.23 The complaint against the latter defendants was subsequently RULING of the COURT
dismissed upon motion in view of the amicable settlement reached by the parties.
These consolidated petitions are just among the many others elevated to this Court involving
On 7 September 1989, the RTC of Manila, Branch 7, rendered judgment24 ordering Aboitiz to Aboitiz’s liability to shippers and insurers as a result of the sinking of its vessel, M/V P.
pay Equitable the amount of ₱87,633.81, plus legal interest and attorney’s fees.25 It found that Aboitiz, on 31 October 1980 in the South China Sea. One of those petitions is the 1993
Aboitiz was guilty of contributory negligence and, therefore, liable for the loss. GAFLAC case, docketed as G.R. No. 100446.31

In its appeal, docketed as CA-G.R. CV No. 43458, Aboitiz invoked the doctrine of limited The 1993 GAFLAC case was an offshoot of an earlier final and executory judgment in the
liability and claimed that the typhoon was the proximate cause of the loss. On 27 November 1990 GAFLAC case, where the General Accident Fire and Life Assurance Corporation, Ltd.
1998, the Court of Appeals rendered a decision, affirming the RTC decision.26 (GAFLAC), as judgment obligee therein, sought the execution of the monetary award against
Aboitiz. The trial court granted GAFLAC’s prayer for execution of the full judgment award.
The Court of Appeals (Fifteenth Division) ruled that the loss of the cargoes and the sinking of The appellate court dismissed Aboitiz’s petition to nullify the order of execution, prompting
the vessel were due to its unseaworthiness and the failure of the crew to exercise extraordinary Aboitiz to file a petition with this Court.
diligence. Said findings were anchored on the 1990 GAFLAC case and on this Court’s
resolution dated November 13, 1989 in G.R. No. 88159, dismissing Aboitiz’s petition and In the 1993 GAFLAC case, Aboitiz argued that the real and hypothecary doctrine warranted
affirming the findings of the appellate court on the vessel’s unseaworthiness and the crew’s the immediate stay of execution of judgment to prevent the impairment of the other creditors’
negligence. shares. Invoking the rule on the law of the case, private respondent therein countered that the
1990 GAFLAC case had already settled the extent of Aboitiz’s liability.
Its motion for reconsideration27 having been denied,28 Aboitiz filed before this Court a petition
for review on certiorari, docketed as G.R. No. 137801,29 raising this sole issue, to wit: Following the doctrine of limited liability, however, the Court declared in the
1993 GAFLAC case that claims against Aboitiz arising from the sinking of M/V P.
WHETHER OR NOT THE DOCTRINE OF REAL AND HYPOTHECARY NATURE OF Aboitiz should be limited only to the extent of the value of the vessel. Thus, the Court held that
MARITIME LAW (ALSO KNOWN AS THE "LIMITED LIABILITY RULE") APPLIES.30 the execution of judgments in cases already resolved with finality must be stayed pending the
resolution of all the other similar claims arising from the sinking of M/V P. Aboitiz.
Considering that the claims against Aboitiz had reached more than 100, the Court found it
ISSUES necessary to collate all these claims before their payment from the insurance proceeds of the
vessel and its pending freightage. As a result, the Court exhorted the trial courts before whom
The principal issue common to all three petitions is whether Aboitiz can avail limited liability similar cases remained pending to proceed with trial and adjudicate these claims so that the
on the basis of the real and hypothecary doctrine of maritime law. Corollary to this issue is the pro-rated share of each claim could be determined after all the cases shall have been decided.32
determination of actual negligence on the part of Aboitiz.
In the 1993 GAFLAC case, the Court applied the limited liability rule in favor of Aboitiz based
These consolidated petitions similarly posit that Aboitiz’s liability to respondents should be on the trial court’s finding therein that Aboitiz was not negligent. The Court explained, thus:
limited to the value of the insurance proceeds of the lost vessel plus pending freightage and
not correspond to the full insurable value of the cargoes paid by respondents, based on the x x x In the few instances when the matter was considered by this Court, we have been
Court’s ruling in the 1993 GAFLAC case. consistent in this jurisdiction in holding that the only time the Limited Liability Rule does not
apply is when there is an actual finding of negligence on the part of the vessel owner or agent
Respondents in G.R. No. 121833 counter that the limited liability rule should not be applied x x x. The pivotal question, thus, is whether there is finding of such negligence on the part of
because there was a finding of negligence in the care of the goods on the part of Aboitiz based the owner in the instant case.
A careful reading of the decision rendered by the trial court in Civil Case No. 144425 as well shipowner may be held liable for injuries to passengers notwithstanding the exclusively real
as the entirety of the records in the instant case will show that there has been no actual and hypothecary nature of maritime law if fault can be attributed to the shipowner.39
finding of negligence on the part of petitioner. x x x
As can be gleaned from the foregoing disquisition in the 1993 GAFLAC case, the Court
The same is true of the decision of this Court in G.R. No. 89757 affirming the decision of the applied the doctrine of limited liability in view of the absence of an express finding that
Court of Appeals in CA-G.R. CV No. 10609 since both decisions did not make any new and Aboitiz’s negligence was the direct cause of the sinking of the vessel. The circumstances in
additional finding of fact. Both merely affirmed the factual findings of the trial court, adding the 1993 GAFLAC case, however, are not obtaining in the instant petitions.
that the cause of the sinking of the vessel was because of unseaworthiness due to the failure of
the crew and the master to exercise extraordinary diligence. Indeed, there appears to have been A perusal of the decisions of the courts below in all three petitions reveals that there is a
no evidence presented sufficient to form a conclusion that petitioner shipowner itself was categorical finding of negligence on the part of Aboitiz. For instance, in G.R. No. 121833, the
negligent, and no tribunal, including this Court, will add or subtract to such evidence to justify RTC therein expressly stated that the captain of M/V P. Aboitiz was negligent in failing to take
a conclusion to the contrary.33 (Citations entitled) (Emphasis supplied) a course of action that would prevent the vessel from sailing into the typhoon. In G.R. No.
130752, the RTC concluded that Aboitiz failed to show that it had exercised the required
The ruling in the 1993 GAFLAC case cited the real and hypothecary doctrine in maritime law extraordinary diligence in steering the vessel before, during and after the storm. In G.R. No.
that the shipowner or agent’s liability is merely co-extensive with his interest in the vessel 137801, the RTC categorically stated that the sinking of M/V P. Aboitiz was attributable to the
such that a total loss thereof results in its extinction. "No vessel, no liability" expresses in a negligence or fault of Aboitiz. In all instances, the Court of Appeals affirmed the factual
nutshell the limited liability rule.34 findings of the trial courts.

In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 and 837 under The finding of actual fault on the part of Aboitiz is central to the issue of its liability to the
Book III of the Code of Commerce, thus: respondents. Aboitiz’s contention, that with the sinking of M/V P. Aboitiz, its liability to the
cargo shippers and shippers should be limited only to the insurance proceeds of the vessel
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons absent any finding of fault on the part of Aboitiz, is not supported by the record. Thus, Aboitiz
which may arise from the conduct of the captain in the care of the goods which he loaded on is not entitled to the limited liability rule and is, therefore, liable for the value of the lost
the vessel; but he may exempt himself therefrom by abandoning the vessel with all her cargoes as so duly alleged and proven during trial.
equipment and the freight it may have earned during the voyage.
Events have supervened during the pendency of the instant petitions. On two other occasions,
Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of their interests the Court ruled on separate petitions involving monetary claims against Aboitiz as a result of
in the common fund for the results of the acts of the captain referred to in Art. 587. the 1980 sinking

Each co-owner may exempt himself from this liability by the abandonment, before a notary, of of the vessel M/V P. Aboitiz. One of them is the consolidated petitions of Monarch Ins. Co.,
the part of the vessel belonging to him. Inc v. Court of Appeals,40 Allied Guarantee Insurance Company v. Court of
Appeals41 and Equitable Insurance Corporation v. Court of Appeals42 (hereafter collectively
referred to as Monarch Insurance) promulgated on 08 June 2000. This time, the petitioners
Art. 837. The civil liability incurred by shipowners in the case prescribed in this section, shall consisted of claimants against Aboitiz because either the execution of the judgment awarding
be understood as limited to the value of the vessel with all its appurtenances and freightage full indemnification of their claims was stayed or set aside or the lower courts awarded
served during the voyage. damages only to the extent of the claimants’ proportionate share in the insurance proceeds of
the vessel.
These articles precisely intend to limit the liability of the shipowner or agent to the value of
the vessel, its appurtenances and freightage earned in the voyage, provided that the owner or In Monarch Insurance, the Court deemed it fit to settle once and for all this factual issue by
agent abandons the vessel.35 When the vessel is totally lost in which case there is no vessel to declaring that the sinking of M/V P. Aboitiz was caused by the concurrence of the
abandon, abandonment is not required. Because of such total loss the liability of the shipowner unseaworthiness of the vessel and the negligence of both Aboitiz and the vessel’s crew and
or agent for damages is extinguished.36 However, despite the total loss of the vessel, its master and not because of force majeure. Notwithstanding this finding, the Court did not
insurance answers for the damages for which a shipowner or agent may be held liable.37 reverse but reiterated instead the pronouncement in GAFLAC to the effect that the claimants
be treated as "creditors in an insolvent corporation whose assets are not enough to satisfy the
Nonetheless, there are exceptional circumstances wherein the ship agent could still be held totality of claims against it."43 The Court explained that the peculiar circumstances warranted
answerable despite the abandonment of the vessel, as where the loss or injury was due to the that procedural rules of evidence be set aside to prevent frustrating the just claims of
fault of the shipowner and the captain. The international rule is to the effect that the right of shippers/insurers. Thus, the Court in Monarch Insurance ordered Aboitiz to institute the
abandonment of vessels, as a legal limitation of a shipowner’s liability, does not apply to cases necessary limitation and distribution action before the proper RTC and to deposit with the said
where the injury or average was occasioned by the shipowner’s own fault.38 Likewise, the court the insurance proceeds of and the freightage earned by the ill-fated ship.
However, on 02 May 2006, the Court rendered a decision in Aboitiz Shipping Corporation v.
New India Assurance Company, Ltd.44 (New India), reiterating the well-settled principle that
the exception to the limited liability doctrine applies when the damage is due to the fault of the
shipowner or to the concurrent negligence of the shipowner and the captain. Where the
shipowner fails to overcome the presumption of negligence, the doctrine of limited liability
cannot be applied.45 In New India, the Court clarified that the earlier pronouncement
in Monarch Insurance was not an abandonment of the doctrine of limited liability and that the
circumstances therein still made the doctrine applicable.46

In New India, the Court declared that Aboitiz failed to discharge its burden of showing that it
exercised extraordinary diligence in the transport of the goods it had on board in order to
invoke the limited liability doctrine. Thus, the Court rejected Aboitiz’s argument that the
award of damages to respondent therein should be limited to its pro rata share in the insurance
proceeds from the sinking of M/V P. Aboitiz.

The instant petitions provide another occasion for the Court to reiterate the well-settled
doctrine of the real and hypothecary nature of maritime law. As a general rule, a ship owner’s
liability is merely co-extensive with his interest in the vessel, except where actual fault is
attributable to the shipowner. Thus, as an exception to the limited

liability doctrine, a shipowner or ship agent may be held liable for damages when the sinking
of the vessel is attributable to the actual fault or negligence of the shipowner or its failure to
ensure the seaworthiness of the vessel. The instant petitions cannot be spared from the
application of the exception to the doctrine of limited liability in view of the unanimous
findings of the courts below that both Aboitiz and the crew failed to ensure the seaworthiness
of the M/V P. Aboitiz.

WHEREFORE, the petitions in G.R. Nos. 121833, 130752 and 137801 are DENIED. The
decisions of the Court of Appeals in CA-G.R. SP No. 35975-CV, CA-G.R. SP No. 41696 and
CA-G.R. CV No. 43458 are hereby AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. L-20761             July 27, 1966 Sensing that the bus was again in motion, Mariano Beltran immediately jumped
from the running board without getting his bayong from the conductor. He landed on
LA MALLORCA, petitioner, the side of the road almost in front of the shaded place where he left his wife and
vs. children. At that precise time, he saw people beginning to gather around the body of
HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents. a child lying prostrate on the ground, her skull crushed, and without life. The child
was none other than his daughter Raquel, who was run over by the bus in which she
rode earlier together with her parents.
G. E. Yabut, R. Monterey and M.C. Lagman for petitioner.
Ahmed Garcia for respondents.
For the death of their said child, the plaintiffs commenced the present suit against
the defendant seeking to recover from the latter an aggregate amount of P16,000 to
BARRERA, J.: cover moral damages and actual damages sustained as a result thereof and attorney's
fees. After trial on the merits, the court below rendered the judgment in question.
La Mallorca seeks the review of the decision of the Court of Appeals in CA-G.R. No. 23267-
R, holding it liable for quasi-delict and ordering it to pay to respondents Mariano Beltran, et On the basis of these facts, the trial court found defendant liable for breach of contract of
al., P6,000.00 for the death of his minor daughter Raquel Beltran, plus P400.00 as actual carriage and sentenced it to pay P3,000.00 for the death of the child and P400.00 as
damages. compensatory damages representing burial expenses and costs.

The facts of the case as found by the Court of Appeals, briefly are: On appeal to the Court of Appeals, La Mallorca claimed that there could not be a breach of
contract in the case, for the reason that when the child met her death, she was no longer a
On December 20, 1953, at about noontime, plaintiffs, husband and wife, together passenger of the bus involved in the incident and, therefore, the contract of carriage had
with their minor daughters, namely, Milagros, 13 years old, Raquel, about 4½ years already terminated. Although the Court of Appeals sustained this theory, it nevertheless found
old, and Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearing plate the defendant-appellant guilty of quasi-delict and held the latter liable for damages, for the
TPU No. 757 (1953 Pampanga), owned and operated by the defendant, at San negligence of its driver, in accordance with Article 2180 of the Civil Code. And, the Court of
Fernando, Pampanga, bound for Anao, Mexico, Pampanga. At the time, they were Appeals did not only find the petitioner liable, but increased the damages awarded the
carrying with them four pieces of baggages containing their personal belonging. The plaintiffs-appellees to P6,000.00, instead of P3,000.00 granted by the trial court.
conductor of the bus, who happened to be a half-brother of plaintiff Mariano
Beltran, issued three tickets (Exhs. A, B, & C) covering the full fares of the plaintiff In its brief before us, La Mallorca contends that the Court of Appeals erred (1) in holding it
and their eldest child, Milagros. No fare was charged on Raquel and Fe, since both liable for quasi-delict, considering that respondents complaint was one for breach of contract,
were below the height at which fare is charged in accordance with the appellant's and (2) in raising the award of damages from P3,000.00 to P6,000.00 although respondents did
rules and regulations. not appeal from the decision of the lower court.

After about an hour's trip, the bus reached Anao whereat it stopped to allow the Under the facts as found by the Court of Appeals, we have to sustain the judgement holding
passengers bound therefor, among whom were the plaintiffs and their children to get petitioner liable for damages for the death of the child, Raquel Beltran. It may be pointed out
off. With respect to the group of the plaintiffs, Mariano Beltran, then carrying some that although it is true that respondent Mariano Beltran, his wife, and their children (including
of their baggages, was the first to get down the bus, followed by his wife and his the deceased child) had alighted from the bus at a place designated for disembarking or
children. Mariano led his companions to a shaded spot on the left pedestrians side of unloading of passengers, it was also established that the father had to return to the vehicle
the road about four or five meters away from the vehicle. Afterwards, he returned to (which was still at a stop) to get one of his bags or bayong that was left under one of the seats
the bus in controversy to get his other bayong, which he had left behind, but in so of the bus. There can be no controversy that as far as the father is concerned, when he returned
doing, his daughter Raquel followed him, unnoticed by her father. While said to the bus for his bayong which was not unloaded, the relation of passenger and carrier
Mariano Beltran was on the running board of the bus waiting for the conductor to between him and the petitioner remained subsisting. For, the relation of carrier and passenger
hand him his bayong which he left under one of its seats near the door, the bus, does not necessarily cease where the latter, after alighting from the car, aids the carrier's
whose motor was not shut off while unloading, suddenly started moving forward, servant or employee in removing his baggage from the car.1 The issue to be determined here is
evidently to resume its trip, notwithstanding the fact that the conductor has not given whether as to the child, who was already led by the father to a place about 5 meters away from
the driver the customary signal to start, since said conductor was still attending to the bus, the liability of the carrier for her safety under the contract of carriage also persisted.
the baggage left behind by Mariano Beltran. Incidentally, when the bus was again
placed into a complete stop, it had travelled about ten meters from the point where
the plaintiffs had gotten off. It has been recognized as a rule that the relation of carrier and passenger does not cease at the
moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the
point of destination, but continues until the passenger has had a reasonable time or a
reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a this presumption, as the Court of Appeals found, petitioner had failed to overcome.
reasonable delay within this rule is to be determined from all the circumstances. Thus, a Consequently, petitioner must be adjudged peculiarily liable for the death of the child Raquel
person who, after alighting from a train, walks along the station platform is considered still a Beltran.
passenger.2 So also, where a passenger has alighted at his destination and is proceeding by the
usual way to leave the company's premises, but before actually doing so is halted by the report The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of Appeals,
that his brother, a fellow passenger, has been shot, and he in good faith and without intent of however, cannot be sustained. Generally, the appellate court can only pass upon and consider
engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and questions or issues raised and argued in appellant's brief. Plaintiffs did not appeal from that
necessarily delayed and thus continues to be a passenger entitled as such to the protection of portion of the judgment of the trial court awarding them on P3,000.00 damages for the death
the railroad and company and its agents.3 of their daughter. Neither does it appear that, as appellees in the Court of Appeals, plaintiffs
have pointed out in their brief the inadequacy of the award, or that the inclusion of the figure
In the present case, the father returned to the bus to get one of his baggages which was not P3,000.00 was merely a clerical error, in order that the matter may be treated as an exception
unloaded when they alighted from the bus. Raquel, the child that she was, must have followed to the general rule.5 Herein petitioner's contention, therefore, that the Court of Appeals
the father. However, although the father was still on the running board of the bus awaiting for committed error in raising the amount of the award for damages is, evidently,
the conductor to hand him the bag or bayong, the bus started to run, so that even he (the father) meritorious.1äwphï1.ñët
had to jump down from the moving vehicle. It was at this instance that the child, who must be
near the bus, was run over and killed. In the circumstances, it cannot be claimed that the Wherefore, the decision of the Court of Appeals is hereby modified by sentencing, the
carrier's agent had exercised the "utmost diligence" of a "very cautions person" required by petitioner to pay to the respondents Mariano Beltran, et al., the sum of P3,000.00 for the death
Article 1755 of the Civil Code to be observed by a common carrier in the discharge of its of the child, Raquel Beltran, and the amount of P400.00 as actual damages. No costs in this
obligation to transport safely its passengers. In the first place, the driver, although stopping the instance. So ordered.
bus, nevertheless did not put off the engine. Secondly, he started to run the bus even before the
bus conductor gave him the signal to go and while the latter was still unloading part of the
baggages of the passengers Mariano Beltran and family. The presence of said passengers near
the bus was not unreasonable and they are, therefore, to be considered still as passengers of the
carrier, entitled to the protection under their contract of carriage.

But even assuming arguendo that the contract of carriage has already terminated, herein
petitioner can be held liable for the negligence of its driver, as ruled by the Court of Appeals,
pursuant to Article 2180 of the Civil Code. Paragraph 7 of the complaint, which reads —

That aside from the aforesaid breach of contract, the death of Raquel Beltran,
plaintiffs' daughter, was caused by the negligence and want of exercise of the utmost
diligence of a very cautious person on the part of the defendants and their agent,
necessary to transport plaintiffs and their daughter safely as far as human care and
foresight can provide in the operation of their vehicle.

is clearly an allegation for quasi-delict. The inclusion of this averment for quasi-delict, while

incompatible with the other claim under the contract of carriage, is permissible under Section
2 of Rule 8 of the New Rules of Court, which allows a plaintiff to allege causes of action in
the alternative, be they compatible with each other or not, to the end that the real matter in
controversy may be resolved and determined.4

The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim was
predicated when it was alleged in the complaint that "the death of Raquel Beltran, plaintiffs'
daughter, was caused by the negligence and want of exercise of the utmost diligence of a very
cautious person on the part of the defendants and their agent." This allegation was also proved
when it was established during the trial that the driver, even before receiving the proper signal
from the conductor, and while there were still persons on the running board of the bus and
near it, started to run off the vehicle. The presentation of proof of the negligence of its
employee gave rise to the presumption that the defendant employer did not exercise the
diligence of a good father of the family in the selection and supervision of its employees. And
 [G.R. No. L-5203.  April 18, 1956.] gasoline it had on board leaked out; chan roblesvirtualawlibraryand that the ‘Tamban’ arrived
at the place after the gasoline had already leaked out.”
STANDARD VACUUM OIL COMPANY, Plaintiff-Appellant, vs. LUZON
STEVEDORING CO., INC., Defendant-Appellee. Defendant is a private stevedoring company engaged in transporting local products, including
gasoline in bulk and has a fleet of about 140 tugboats and about 90 per cent of its business is
  devoted to transportation. Though it is engaged in a limited contract of carriage in the sense
DECISION that it chooses its customers and is not opened to the public, nevertheless, the continuity of its
operations in this kind of business have earned for it the level of a public utility. The contract
BAUTISTA ANGELO, J.: between the Plaintiff and Defendant comes therefore under the provisions of the Code of
Plaintiff entered into a contract with Defendant to transport between the ports of Manila and Commerce. The pertinent law is article 361 which provides:chanroblesvirtuallawlibrary
Nin Bay, Sagay, Iloilo, 2,916.44 barrels of bulk gasoline belonging to Plaintiff. The gasoline “ART. 361.  The merchandise shall be transported at the risk and venture of the shipper, if the
was delivered in accordance with the contract but Defendant failed to transport it to its place contrary was not expressly stipulated.
of destination and so Plaintiff brought this action in the Court of First Instance of Manila to
recover the sum of P75,578.60 as damages. “Therefore, all damages and impairment suffered by the goods during the transportation, by
reason of accident, force majeure, or by virtue of the nature or defect of the articles, shall be
Defendant, in its answer, pleaded that its failure to deliver the gasoline was due to fortuitous for the account and risk of the shipper.
event or caused by circumstances beyond its control and not to its fault or negligence or that of
any of its employees. The court, after receiving the evidence, rendered decision finding that “The proof of these accidents is incumbent on the carrier.”
the disaster that had befallen the tugboat was the result of an unavoidable accident and the loss It therefore appears that whenever merchandise is transported on the sea by virtue of a contract
of the gasoline was due to a fortuitous event which was beyond the control of Defendant and, entered into between the shipper and the carrier, the merchandise is deemed transported at the
consequently, dismissed the case with costs against the Plaintiff. risk and venture of the shipper, if the contrary is not stipulated, and all damages suffered by
The facts as found by the trial court are:chanroblesvirtuallawlibrary “that pursuant to an the merchandise during the transportation by reason of accident or force majeure shall be for
agreement had between the parties, Defendant’s barge No. L-522 was laden with gasoline the account and risk of the shipper, but the proof of these accidents is incumbent on the carrier.
belonging to the Plaintiff to be transported from Manila to the Port of Iloilo; chan Implementing this provision, our Supreme Court has held that all a shipper has to prove in
roblesvirtualawlibrarythat early in the morning of February 2, 1947, Defendant’s tugboat connection with sea carriage is delivery of the merchandise in good condition and its non-
“Snapper’ picked up the barge outside the breakwater; chan roblesvirtualawlibrarythat the delivery at the place of destination in order that the burden of proof may shift to the carrier to
barge was placed behind the tugboat, it being connected to the latter by a tow rope ten inches prove any of the accidents above adverted to. Thus, it was held that “Shippers who are forced
in circumference; chan roblesvirtualawlibrarythat behind the barge, three other barges were to ship goods on an ocean liner or any other ship have some legal rights, and when goods are
likewise placed, one laden with some cargo while the other two containing hardly any cargo at delivered on board a ship in good order and condition, and the shipowner delivers them to the
all; chan roblesvirtualawlibrarythat the weather was good when on that day the tugboat with shipper in bad order and condition, it then devolves upon the shipowner to both allege and
its tow started on its voyage; chan roblesvirtualawlibrarythat the weather remained good on prove that the goods were damaged by reason of some fact which legally exempts him from
February 3, 1947, when it passed Santiago Point in Batangas; chan roblesvirtualawlibrarythat liability” (Mirasol vs. Robert Dollar Co., 53 Phil., 129).
at about 3:chanroblesvirtuallawlibrary00 o’clock in the morning of February 4, 1947, the  
engine of the tugboat came to a dead stop; chan roblesvirtualawlibrarythat the engineer on
board the tugboat found out that the trouble was due to a broken idler; chan The issue to be determined is:chanroblesvirtuallawlibrary Has Defendant proven that its
roblesvirtualawlibrarythat a message was then sent to the Defendant’s radio station in Manila failure to deliver the gasoline to its place of destination is due to accident or force majeure or
informing its officials of the engine trouble; chan roblesvirtualawlibrarythat upon the receipt to a cause beyond its control? This would require an analysis of the facts and circumstances
of the message the Defendant called up several shipping companies in Manila to find out if surrounding the transportation of said gasoline.
they had any vessels in the vicinity where the “Snapper’ had stalled but said companies replied
in the negative; chan roblesvirtualawlibrarythat thereupon the Defendant radioed its tugboat It appears that the tugboat “Snapper” was acquired by Defendant from the Foreign Liquidation
‘Tamban’ which was docked at Batangas, ordering it to proceed to the place where the Commission. It was a surplus property. It was a deep-sea tugboat that had been in the service
‘Snapper’ was; chan roblesvirtualawlibrarythat at about 6:chanroblesvirtuallawlibrary00 of the United States Armed Forces prior to its purchase by the Luzon Stevedoring Co. The
o’clock in the same morning of February 4, 1947, the master of the ‘Snapper’ attempted to tugboat was put into operation without first submitting it to an overhaul in a dry-dock. It also
cast anchor but the water areas around Elefante Island were so deep that the anchor did not appears that this tugboat had previously made several trips and each time it had to obtain a
touch bottom; chan roblesvirtualawlibrarythat in the afternoon of the same day the weather special permit from the Bureau of Customs because it had never been dry-docked and did not
become worse as the wind increased in intensity and the waves were likewise increased in size have complete equipment to be able to obtain a permanent permit. The special permits that
and force; chan roblesvirtualawlibrarythat due to the rough condition of the sea the anchor were issued by said Bureau specifically state that they were issued “pending submission of
chains of the ‘Snapper’ and the four barges broke one by one and as a consequence thereof plans and load line certificate, including test and final inspection of equipment.” It further
they were drifted and were finally dashed against the rocks off Banton Island; chan appears that, when the tugboat was inspected by the Bureau of Customs on October 18, 1946,
roblesvirtualawlibrarythat on striking the rocks a hole was opened in the hull of the ‘Snapper’, it found it to be inadequately equipped and so the Bureau required Defendant to provide it
which ultimately caused it to sink, while the barge No. L-522 was so badly damaged that the with the requisite equipment but it was never able to complete it. The fact that the tugboat was
a surplus property, has not been dry-docked, and was not provided with the requisite Let us now come to the efforts exerted by Defendant in extending help to the tugboat when it
equipment to make it seaworthy, shows that Defendant did not use reasonable diligence in was notified of the breakage of the idler. The evidence shows that the idler was broken at
putting the tugboat in such a condition as would make its use safe for operation. It is true, about 3:chanibrary00 o’clock in the morning of February 4, 1947. Within a few minutes, a
as Defendant contends, that there were then no dry-dock facilities in the Philippines, but this message was sent to Defendant by radio informing it of the engine trouble. The weather was
does not mean that they could not be obtained elsewhere. It being a surplus property, a dry- good at the time and the sea was smooth, and remained good until 12:cbrary00 o’clock noon
dock inspection was a must to put the tugboat in a sea going condition. It may also be true, as when the wind started to blow. According to Defendant, since it received the message, it
contended, that the deficiency in the equipment was due to the fact that no such equipment called up different shipping lines in Manila asking them if they had any vessel in the vicinity
was available at the time, but this did not justify Defendant in putting such tugboat in business where the “Snapper” stalled but, unfortunately, none was available at the time, and as its tug
even if unequipped merely to make a profit. Nor could the fact that the tugboat was given a “Tamban” was then docked in Batangas, Batangas, which was nearest to the place, it radioed
special permit by the Bureau of Customs to make the trip relieve Defendant from liability. said tug to go to the aid of the “Snapper”. Accordingly, the tug “Tamban” set sail from
Batangas for the rescue only to return to secure a map of the vicinity where the “Snapper” had
“Where owner buys old tug, licensed coastwise, and equips it for ocean going, it is negligence stalled, which entailed a delay of two hours. In the meantime, the captain of the “Snapper”
to send tug out without knowing something of her stability and especially without stability attempted to cast anchor. The water areas off Elefante Island were deep and the anchor would
test, where history and performance with respect to crankiness and tenderness are matters of not touch bottom. Then the sea became rough and the waves increased in size and force and
official record. Sabine Towing Co. vs. Brennan, C. C. A. Tex., 72 F 2d 490, certiorari denied notwithstanding the efforts of the crew to prevent the tug from drifting away, the force of the
55 S. Ct. 141, 293 U. S. 611, 79 L. Ed. 701, rehearing denied 55 S. Ct. 212, 293 U. S. 632, 79 wind and the violence of the waves dashed the tug and the barges against the rocks. The tug
L. Ed. 717.” (80 C.J. S. 803 Endnote:chanroblesvirtuallawlibrary) developed a hole in her hull and sank. The barge carrying the gasoline was so badly damaged
There are other circumstances which show the lack of precaution and diligence taken that the gasoline leaked out. The tug “Tamban” was finally able to locate the “Snapper” but it
by Defendant to make the travel of the tugboat safe. One is the failure to carry on board the was too late.
necessary spare parts. When the idler was broken, the engineer of the tugboat examined it for The foregoing acts only serve to emphasize that the efforts made by Defendant fall short of
the first time and it was only then that he found that there were no spare parts to use except a that diligence and precaution that are demanded by the situation to save the tugboat and the
worn out spare driving chain. And the necessity of carrying such spare parts was emphasized barge it was towing from disaster for it appears that more than twenty-four hours had elapsed
by the very Defendant’s witness, Mr. Depree, who said that in vessels motored by diesel before the tug “Tamban” showed up to extend help. The delay was caused not so much
engines it is necessary always to carry spare chains, ball bearings and chain drives. And this because of the lack of available ships in the vicinity where the “Snapper” stalled but
was not done. because Defendant did not have in readiness any tugboat sufficient in tonnage and equipment
“A tug engaged to tow a barge is liable for damage to the cargo of the barge caused by faulty to attend to the rescue. The tug “Tamban” that was ordered to extend help was fully
equipment of the tug. The Raleigh, D. C. Md. 50 F. Supp. 961.” inadequate for that purpose. It was a small vessel that was authorized to operate only within
(80 C.J. S. Endnote:chanroblesvirtuallawlibrary.) Manila Bay and did not even have any map of the Visayan Islands. A public utility that is
engaged in sea transportation even for a limited service with a fleet of 140 tugboats should
Another circumstance refers to the deficiency or incompetence in the man power of the have a competent tug to rush for towing or repairs in the event of untoward happening
tugboat. According to law, a tugboat of the tonnage and powers of one like the “Snapper” is overseas. If Defendant had only such a tug ready for such an emergency, this disaster would
required to have a complement composed of one first mate, one second mate, one third mate, not have happened. Defendant could have avoided sending a poorly equipped tug which, as it
one chief engineer, one second engineer, and one third engineer, (section 1203, Revised is to be expected, failed to do job.
Administrative Code), but when the trip in question was undertaken, it was only manned by
one master, who was merely licensed as a bay, river, and lake patron, one second mate, who While the breaking of the idler may be due to an accident, or to something unexpected, the
was licensed as a third mate, one chief engineer who was licensed as third motor engineer, one cause of the disaster which resulted in the loss of the gasoline can only be attributed to the
assistant engineer, who was licensed as a bay, river, and lake motor engineer, and one second negligence or lack of precaution to avert it on the part of Defendant. Defendant had enough
assistant engineer, who was unlicensed. The employment of this crew to perform functions time to effectuate the rescue if it had only a competent tug for the purpose because the weather
beyond its competence and qualifications is not only risky but against the law and if a mishap was good from 3:chanroblesvirtuallawlibrary00 o’clock a.m. to
is caused, as in this case, one cannot but surmise that such incompetence has something to do 12:chanroblesvirtuallawlibrary00 o’clock noon of February 4, 1947 and it was only in the
with the mishap. The fact that the tugboat had undertaken several trips before with practically afternoon that the wind began to blow with some intensity, 1 but failed to do so because of that
the same crew without any untoward consequence, cannot furnish any justification for shortcoming. The loss of the gasoline certainly cannot be said to be due to force majeure or
continuing in its employ a deficient or incompetent personnel contrary to law and the unforeseen event but to the failure of Defendant to extend adequate and proper help.
regulations of the Bureau of Customs. Considering these circumstances, and those we have discussed elsewhere, we are persuaded to
conclude that Defendant has failed to establish that it is exempt from liability under the law.
“(1)  Generally, seaworthiness is that strength, durability and engineering skill made a part of a
ship’s construction and continued maintenance, together with a competent and sufficient crew, Wherefore, the decision appealed from is reversed. Defendant is hereby ordered to pay
which would withstand the vicissitudes and dangers of the elements which might reasonably to Plaintiff the sum of P75,578.50, with legal interest from the date of the filing of the
be expected or encountered during her voyage without loss or damage to her particular cargo. complaint, with costs.
The Cleveco, D. C. Ohio, 59 F. Supp. 71, 78, affirmed, C. C. A., 154 F. 2d 606.” (80 C.J. S.
997, Endnote:chanroblesvirtuallawlibrary.)
G.R. No. 114167 July 12, 1995 There are two main issues to be resolved herein. First, whether or not petitioner Coastwise
Lighterage was transformed into a private carrier, by virtue of the contract of affreightment
COASTWISE LIGHTERAGE CORPORATION, petitioner, which it entered into with the consignee, Pag-asa Sales, Inc. Corollarily, if it were in fact
vs. transformed into a private carrier, did it exercise the ordinary diligence to which a private
COURT OF APPEALS and the PHILIPPINE GENERAL INSURANCE carrier is in turn bound? Second, whether or not the insurer was subrogated into the rights of
COMPANY, respondents. the consignee against the carrier, upon payment by the insurer of the value of the consignee's
goods lost while on board one of the carrier's vessels.
RESOLUTION
On the first issue, petitioner contends that the RTC and the Court of Appeals erred in finding
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 Oriental to Manila and refers to this contract
as a "charter agreement". It then proceeds to cite the case of Home Insurance Company vs.
FRANCISCO, R., J.: American Steamship Agencies, Inc.2 wherein this Court held: ". . . a common carrier
undertaking to carry a special cargo or chartered to a special person only becomes a private
This is a petition for review of a Decision rendered by the Court of Appeals, dated December carrier."
17, 1993, affirming Branch 35 of the Regional Trial Court, Manila in holding that herein
petitioner is liable to pay herein private respondent the amount of P700,000.00, plus legal Petitioner's reliance on the aforementioned case is misplaced. In its entirety, the conclusions of
interest thereon, another sum of P100,000.00 as attorney's fees and the cost of the suit. the court are as follows:

The factual background of this case is as follows: Accordingly, the charter party contract is one of affreightment over the
whole vessel, rather than a demise. As such, the liability of the shipowner
Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to for acts or negligence of its captain and crew, would remain in the absence
Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb of stipulation.3
barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned
by Coastwise. The distinction between the two kinds of charter parties (i.e. bareboat or demise and contract
of affreightment) is more clearly set out in the case of Puromines, Inc. vs. Court of
Upon reaching Manila Bay, while approaching Pier 18, one of the barges, "Coastwise 9", Appeals,4 wherein we ruled:
struck an unknown sunken object. The forward buoyancy compartment was damaged, and
water gushed in through a hole "two inches wide and twenty-two inches long"1 As a Under the demise or bareboat charter of the vessel, the charterer will
consequence, the molasses at the cargo tanks were contaminated and rendered unfit for the use generally be regarded as the owner for the voyage or service stipulated.
it was intended. This prompted the consignee, Pag-asa Sales, Inc. to reject the shipment of The charterer mans the vessel with his own people and becomes the
molasses as a total loss. Thereafter, Pag-asa Sales, Inc. filed a formal claim with the insurer of owner pro hac vice, subject to liability to others for damages caused by
its lost cargo, herein private respondent, Philippine General Insurance Company (PhilGen, for negligence. To create a demise, the owner of a vessel must completely and
short) and against the carrier, herein petitioner, Coastwise Lighterage. Coastwise Lighterage exclusively relinquish possession, command and navigation thereof to the
denied the claim and it was PhilGen which paid the consignee, Pag-asa Sales, Inc., the amount charterer, anything short of such a complete transfer is a contract of
of P700,000.00, representing the value of the damaged cargo of molasses. affreightment (time or voyage charter party) or not a charter party at all.

In turn, PhilGen then filed an action against Coastwise Lighterage before the Regional Trial On the other hand a contract of affreightment is one in which the owner of
Court of Manila, seeking to recover the amount of P700,000.00 which it paid to Pag-asa Sales, the vessel leases part or all of its space to haul goods for others. It is a
Inc. for the latter's lost cargo. PhilGen now claims to be subrogated to all the contractual rights contract for special service to be rendered by the owner of the vessel and
and claims which the consignee may have against the carrier, which is presumed to have under such contract the general owner retains the possession, command
violated the contract of carriage. and navigation of the ship, the charterer or freighter merely having use of
the space in the vessel in return for his payment of the charter hire. . . . .
The RTC awarded the amount prayed for by PhilGen. On Coastwise Lighterage's appeal to the
Court of Appeals, the award was affirmed. . . . . An owner who retains possession of the ship though the hold is the
property of the charterer, remains liable as carrier and must answer for any
Hence, this petition. breach of duty as to the care, loading and unloading of the cargo. . . .
Although a charter party may transform a common carrier into a private one, the same person whose navigational skills are questionable, at the helm of the vessel which eventually
however is not true in a contract of affreightment on account of the aforementioned met the fateful accident. It may also logically, follow that a person without license to navigate,
distinctions between the two. lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes
taken by seasoned and legally authorized ones. Had the patron been licensed, he could be
Petitioner admits that the contract it entered into with the consignee was one of presumed to have both the skill and the knowledge that would have prevented the vessel's
affreightment.5 We agree. Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order hitting the sunken derelict ship that lay on their way to Pier 18.
to carry cargo from one point to another, but the possession, command and navigation of the
vessels remained with petitioner Coastwise Lighterage. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to
overcome the presumption of negligence with the loss and destruction of goods it transported,
Pursuant therefore to the ruling in the aforecited Puromines case, Coastwise Lighterage, by the by proof of its exercise of extraordinary diligence.
contract of affreightment, was not converted into a private carrier, but remained a common
carrier and was still liable as such. On the issue of subrogation, which petitioner contends as inapplicable in this case, we once
more rule against the petitioner. We have already found petitioner liable for breach of the
The law and jurisprudence on common carriers both hold that the mere proof of delivery of contract of carriage it entered into with Pag-asa Sales, Inc. However, for the damage sustained
goods in good order to a carrier and the subsequent arrival of the same goods at the place of by the loss of the cargo which petitioner-carrier was transporting, it was not the carrier which
destination in bad order makes for a prima facie case against the carrier. paid the value thereof to Pag-asa Sales, Inc. but the latter's insurer, herein private respondent
PhilGen.
It follows then that the presumption of negligence that attaches to common carriers, once the
goods it transports are lost, destroyed or deteriorated, applies to the petitioner. This Article 2207 of the Civil Code is explicit on this point:
presumption, which is overcome only by proof of the exercise of extraordinary diligence,
remained unrebutted in this case. Art. 2207. If the plaintiffs property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of
The records show that the damage to the barge which carried the cargo of molasses was caused the wrong or breach of contract complained of, the insurance company
by its hitting an unknown sunken object as it was heading for Pier 18. The object turned out to shall be subrogated to the rights of the insured against the wrongdoer or
be a submerged derelict vessel. Petitioner contends that this navigational hazard was the the person who violated the contract. . . .
efficient cause of the accident. Further it asserts that the fact that the Philippine Coastguard
"has not exerted any effort to prepare a chart to indicate the location of sunken derelicts within This legal provision containing the equitable principle of subrogation has been applied in a
Manila North Harbor to avoid navigational accidents"6 effectively contributed to the long line of cases including Compania Maritima v. Insurance Company of North
happening of this mishap. Thus, being unaware of the hidden danger that lies in its path, it America;7 Fireman's Fund Insurance Company v. Jamilla & Company, Inc.,8 and Pan
became impossible for the petitioner to avoid the same. Nothing could have prevented the Malayan Insurance Corporation v. Court of Appeals,9 wherein this Court explained:
event, making it beyond the pale of even the exercise of extraordinary diligence.
Article 2207 of the Civil Code is founded on the well-settled principle of
However, petitioner's assertion is belied by the evidence on record where it appeared that far subrogation. If the insured property is destroyed or damaged through the
from having rendered service with the greatest skill and utmost foresight, and being free from fault or negligence of a party other than the assured, then the insurer, upon
fault, the carrier was culpably remiss in the observance of its duties. payment to the assured will be subrogated to the rights of the assured to
recover from the wrongdoer to the extent that the insurer has been
Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. obligated to pay. Payment by the insurer to the assured operated as an
The Code of Commerce, which subsidiarily governs common carriers (which are primarily equitable assignment to the former of all remedies which the latter may
governed by the provisions of the Civil Code) provides: have against the third party whose negligence or wrongful act caused the
loss. The right of subrogation is not dependent upon, nor does it grow out
of, any privity of contract or upon written assignment of claim. It accrues
Art. 609. — Captains, masters, or patrons of vessels must be Filipinos, simply upon payment of the insurance claim by the insurer.
have legal capacity to contract in accordance with this code, and prove the
skill capacity and qualifications necessary to command and direct the
vessel, as established by marine and navigation laws, ordinances or Undoubtedly, upon payment by respondent insurer PhilGen of the amount of P700,000.00 to
regulations, and must not be disqualified according to the same for the Pag-asa Sales, Inc., the consignee of the cargo of molasses totally damaged while being
discharge of the duties of the position. . . . transported by petitioner Coastwise Lighterage, the former was subrogated into all the rights
which Pag-asa Sales, Inc. may have had against the carrier, herein petitioner Coastwise
Lighterage.
Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron
violates this rule. It cannot safely claim to have exercised extraordinary diligence, by placing a
WHEREFORE, premises considered, this petition is DENIED and the appealed decision
affirming the order of Branch 35 of the Regional Trial Court of Manila for petitioner
Coastwise Lighterage to pay respondent Philippine General Insurance Company the "principal
amount of P700,000.00 plus interest thereon at the legal rate computed from March 29, 1989,
the date the complaint was filed until fully paid and another sum of P100,000.00 as attorney's
fees and costs"10 is likewise hereby AFFIRMED

SO ORDERED.
G.R. No. 106999 June 20, 1996 PHAC, as subrogee of the consignees, thereafter filed a complaint before the Regional Trial
Court of Manila, Branch 39, against ESLI to recover the sum paid under protest on the ground
PHILIPPINE HOME ASSURANCE CORPORATION, petitioner, that the same were actually damages directly brought about by the fault, negligence, illegal act
vs. and/or breach of contract of ESLI.
COURT OF APPEALS and EASTERN SHIPPING LINES, INC., respondents.
In its answer, ESLI contended that it exercised the diligence required by law in the handling,
  custody and carriage of the shipment; that the fire was caused by an unforeseen event; that the
additional freight charges are due and demandable pursuant to the Bill of Lading; 1 and that
salvage charges are properly collectible under Act No. 2616, known as the Salvage Law.
KAPUNAN, J.:p
The trial court dismissed PHAC's complaint and ruled in favor of ESLI ratiocinating thus:
Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern Explorer in Kobe, Japan, the
following shipment for carriage to Manila and Cebu, freight pre-paid and in good order and
condition, viz: (a) two (2) boxes internal combustion engine parts, consigned to William Lines, The question to be resolved is whether or not the fire on the vessel which
Inc. under Bill of Lading No. 042283; (b) ten (l0) metric ton. (334 bags) ammonium chloride, was caused by the explosion of an acetylene cylinder loaded on the same
consigned to Orca's Company under Bill of Lading No. KCE-I2; (c) two hundred (200) bags was the fault or negligence of the defendant.
Glue 300, consigned to Pan Oriental Match Company under Bill of Lading No. KCE-8; and
(d) garments, consigned to Ding Velayo under Bills of Lading Nos. KMA-73 and KMA-74. Evidence has been presented that the SS "Eastern Explorer" was a
seaworthy vessel (Deposition of Jumpei Maeda, October 23, 1980, p. 3)
While the vessel was off Okinawa, Japan, a small flame was detected on the acetylene cylinder and before the ship loaded the Acetylene Cylinder No. NCW 875, the
located in the accommodation area near the engine room on the main deck level. As the crew same has been tested, checked and examined and was certified to have
was trying to extinguish the fire, the acetylene cylinder suddenly exploded sending a flash of complied with the required safety measures and standards (Deposition of
flame throughout the accommodation area, thus causing death and severe injuries to the crew Senjei Hayashi, October 23, 1980, pp. 2-3). When the fire was detected by
and instantly setting fire to the whole superstructure of the vessel. The incident forced the the crew, fire fighting operations was immediately conducted but due to
master and the crew to abandon the ship. the explosion of the acetylene cylinder, the crew were unable to contain
the fire and had to abandon the ship to save their lives and were saved
from drowning by passing vessels in the vicinity. The burning of the
Thereafter, SS Eastern Explorer was found to be a constructive total loss and its voyage was vessel rendering it a constructive total loss and incapable of pursuing its
declared abandoned. voyage to the Philippines was, therefore, not the fault or negligence of
defendant but a natural disaster or calamity which nobody would like to
Several hours later, a tugboat under the control of Fukuda Salvage Co. arrived near the vessel happen. The salvage operations conducted by Fukuda Salvage Company
and commenced to tow the vessel for the port of Naha, Japan. (Exhibits "4-A" and "6-A") was perfectly a legal operation and charges
made on the goods recovered were legitimate charges.
Fire fighting operations were again conducted at the said port. After the fire was extinguished,
the cargoes which were saved were loaded to another vessel for delivery to their original ports Act No. 2616, otherwise known as the Salvage Law, is
of destination. ESLI charged the consignees several amounts corresponding to additional thus applicable to the case at bar. Section 1 of Act No.
freight and salvage charges, as follows: (a) for the goods covered by Bill of Lading No. 2616 states:
042283, ESLI charged the consignee the sum of P1,927.65, representing salvage charges
assessed against the goods; (b) for the goods covered by Bill of Lading No. KCE-12, ESLI Sec 1. When in case of shipwreck,
charged the consignee the sum of P2,980.64 for additional freight and P826.14 for salvage the vessel or its cargo shall be
charges against the goods; (c) for the goods covered by Bill of Lading No. KCE-8, ESLI beyond the control of the crew, or
charged the consignee the sum of P3,292.26 for additional freight and P4,130.68 for salvage shall have been abandoned by
charges against the goods; and them, and picked up and conveyed
(d) for the goods under Bills of Lading Nos. KMA-73 and KMA-74, ESLI charged the to a safe place by other persons,
consignee the sum of P8,337.06 for salvage charges against the goods. the latter shall be entitled to a
reward for the salvage.
The charges were all paid by Philippine Home Assurance Corporation (PHAC) under protest
for and in behalf of the consignees. Those who, not being included in
the above paragraph, assist in
 saving a vessel or its cargo from delivering the goods to their port of destination pursuant to the contract of
shipwreck, shall be entitled to like carriage. Under Article 1266 of the Civil Code, the physical impossibility
reward. of the prestation extinguished defendant's obligation..

In relation to the above provision, the Supreme Court It is but legal and equitable for the defendant therefore, to demand
has ruled in Erlanger & Galinger v. Swedish East additional freight from the consignees for forwarding the goods from
Asiatic Co., Ltd., 34 Phil. 178, that three elements are Naha, Japan to Manila and Cebu City on board another vessel, the
necessary to a valid salvage claim, namely (a)a marine "EASTERN MARS." This finds support under Article 844 of the Code of
peril (b) service voluntarily rendered when not Commerce which provides as follows:
required as an existing duty or from a special contract
and (c) success in whole or in part, or that the service Art. 844. A captain who may have taken on board the
rendered contributed to such success. goods saved from the wreck shall continue his course
to the port of destination; and on arrival should deposit
The above elements are all present in the instant case. the same, with judicial intervention at the disposal of
Salvage charges may thus be assessed on the cargoes their legitimate owners. . . .
saved from the vessel. As provided for in Section 13
of the Salvage Law, "The expenses of salvage, as well The owners of the cargo shall defray all the expenses
as the reward for salvage or assistance, shall be a of this arrival as well as the payment of the freight
charge on the things salvaged or their value." In which, after taking into consideration the
Manila Railroad Co. v. Macondray Co., 37 Phil. 583, circumstances of the case, may be fixed by agreement
it was also held that "when a ship and its cargo are or by a judicial decision.
saved together, the salvage allowance should be
charged against the ship and cargo in the proportion of
their respective values, the same as in a case of general Furthermore, the terms and conditions of the Bill of Lading authorize the
average . . ." Thus, the "compensation to be paid by imposition of additional freight charges in case of forced interruption or
the owner of the cargo is in proportion to the value of abandonment of the voyage. At the dorsal portion of the Bills of Lading
the vessel and the value of the cargo saved." (Atlantic issued to the consignees is this stipulation:
Gulf and Pacific Co. v. Uchida Kisen Kaisha, 42 Phil.
321). (Memorandum for Defendant, Records, pp. 212- 12. All storage, transshipment, forwarding or other
213). disposition of cargo at or from a port of distress or
other place where there has been a forced interruption
With respect to the additional freight charged by defendant from the or abandonment of the voyage shall be at the expense
consignees of the goods, the same are also validly demandable. of the owner, shipper, consignee of the goods or the
holder of this bill of lading who shall be jointly and
severally liable for all freight charges and expenses of
As provided by the Civil Code: every kind whatsoever, whether payable in advance or
not that may be incurred by the cargo in addition to the
Art. 1174. Except in cases expressly specified by law, ordinary freight, whether the service be performed by
or when it is otherwise declared by stipulation, or the named carrying vessel or by carrier's other vessels
when the nature of the obligation require the or by strangers. All such expenses and charges shall be
assumption of risk, no person shall be responsible for due and payable day by day immediately when they
those events which could not be foreseen, or which are incurred.
though foreseen, were inevitable.
The bill of lading is a contract and the parties are bound by its terms (Gov't
Art 1266. The debtor in obligations to do shall also be of the Philippine Islands vs. Ynchausti and Co., 40 Phil. 219). The
released when the prestation becomes legally or provision quoted is binding upon the consignee.
physically impossible without the fault of the obligor."
Defendant therefore, can validly require payment of additional freight
The burning of "EASTERN EXPLORER" while off Okinawa rendered it from the consignee. Plaintiff can not thus recover the additional freight
physically impossible for defendant to comply with its obligation of
 paid by the consignee to defendant. (Memorandum for Defendant, Record, based on a misapprehension of facts; (e) when the findings of fact are conflicting; (f) when the
pp. 215-216).2 Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (g) when the findings of the Court
On appeal to the Court of Appeals, respondent court affirmed the trial court's findings and of Appeals are contrary to those of the trial court; (h) when the findings of fact are conclusions
conclusions, 3 hence, the present petition for review before this Court on the following errors: without citation of specific evidence on which they are based;
(i) when the facts set forth in the petition as well as in the petitioners' main and reply briefs are
not disputed by the respondents; and (j) when the finding of fact of the Court of Appeals is
I. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH premised on the supposed absence of evidence and is contradicted by the evidence on
APPROVAL THE TRIAL COURT'S FINDINGS THAT THE BURNING record. 5 Thus, if there is a showing, as in the instant case, that the findings complained of are
OF THE SS "EASTERN EXPLORER", RENDERING ET A totally devoid of support in the records, or that they are so glaringly erroneous as to constitute
CONSTRUCTIVE TOTAL LOSS, IS A NATURAL DISASTER OR grave abuse of discretion, the same may be properly reviewed and evaluated by this Court.
CALAMITY WHICH NOBODY WOULD LIKE TO HAPPEN,
DESPITE EXISTING JURISPRUDENCE TO THE CONTRARY.
It is worthy to note at the outset that the goods subject of the present controversy were neither
lost nor damaged in transit by the fire that razed the carrier. In fact, the said goods were all
II. THE RESPONDENT COURT ARBITRARILY RULED THAT THE delivered to the consignees, even if the transshipment took longer than necessary. What is at
BURNING OF THE SS "EASTERN EXPLORER" WAS NOT THE issue therefore is not whether or not the carrier is liable for the loss, damage, or deterioration
FAULT AND NEGLIGENCE OF RESPONDENT EASTERN SHIPPING of the goods transported by them but who, among the carrier, consignee or insurer of the
LINES. goods, is liable for the additional charges or expenses incurred by the owner of the ship in the
salvage operations and in the transshipment of the goods via a different carrier.
III. THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT DEFENDANT HAD EXERCISED In absolving respondent carrier of any liability, respondent Court of Appeals sustained the trial
THE EXTRAORDINARY DILIGENCE IN THE VIGILANCE OVER court's finding that the fire that gutted the ship was a natural disaster or calamity. Petitioner
THE GOODS AS REQUIRED BY LAW. takes exception to this conclusion and we agree.

IV. THE RESPONDENT COURT ARBITRARILY RULED THAT THE In our jurisprudence, fire may not be considered a natural disaster or calamity since it almost
MARINE NOTE OF PROTEST AND STATEMENT OF FACTS always arises from some act of man or by human means.
ISSUED BY THE VESSEL'S MASTER ARE NOT HEARSAY
DESPITE THE FACT THAT THE VESSEL'S MASTER, CAPT.
LICAYLICAY WAS NOT PRESENTED COURT, WITHOUT It cannot be an act of God unless caused by lightning or a natural disaster or casualty not
EXPLANATION WHATSOEVER FOR HIS NON-PRESENTATION, attributable to human agency. 6
THUS, PETITIONER WAS DEPRIVED OF ITS RIGHT TO CROSS-
EXAMINE THE AUTHOR THEREOF. In the case at bar, it is not disputed that a small flame was detected on the acetylene cylinder
and that by reason thereof, the same exploded despite efforts to extinguish the fire. Neither is
V. THE RESPONDENT COURT ERRONEOUSLY ADOPTED WITH there any doubt that the acetylene cylinder, obviously fully loaded, was stored in the
APPROVAL THE TRIAL COURT'S CONCLUSION THAT THE accommodation area near the engine room and not in a storage area considerably far, and in a
EXPENSES OR AVERAGES INCURRED IN SAVING THE CARGO safe distance, from the engine room. Moreover, there was no showing, and none was alleged
CONSTITUTE GENERAL AVERAGE. by the parties, that the fire was caused by a natural disaster or calamity not attributable to
human agency. On the contrary, there is strong evidence indicating that the acetylene cylinder
caught fire because of the fault and negligence of respondent ESLI, its captain and its crew.
VI. THE RESPONDENT COURT ERRONEOUSLY ADOPTED THE
TRIAL COURT'S RULING THAT PETITIONER WAS LIABLE TO
RESPONDENT CARRIER FOR ADDITIONAL FREIGHT AND First, the acetylene cylinder which was fully loaded should not have been stored in the
SALVAGE CHARGES. 4 accommodation area near the engine room where the heat generated therefrom could cause the
acetylene cylinder to explode by reason of spontaneous combustion. Respondent ESLI should
have easily foreseen that the acetylene cylinder, containing highly inflammable material was
It is quite evident that the foregoing assignment of errors challenges the findings of fact and in real danger of exploding because it was stored in close proximity to the engine room.
the appreciation of evidence made by the trial court and later affirmed by respondent court.
While it is a well-settled rule that only questions of law may be raised in a petition for review
under Rule 45 of the Rules of Court, it is equally well-settled that the same admits of the Second, respondent ESLI should have known that by storing the acetylene cylinder in the
following exceptions, namely: (a) when the conclusion is a finding grounded entirely on accommodation area supposed to be reserved for passengers, it unnecessarily exposed its
speculation, surmises or conjectures; (b) when the inference made is manifestly mistaken, passengers to grave danger and injury. Curious passengers, ignorant of the danger the tank
absurd or impossible; (c) where there is a grave abuse of discretion; (d) when the judgment is
might have on humans and property, could have handled the same or could have lighted and SO ORDERED.
smoked cigarettes while repairing in the accommodation area.

Third, the fact that the acetylene cylinder was checked, tested and examined and subsequently
certified as having complied with the safety measures and standards by qualified
experts 7 before it was loaded in the vessel only shows to a great extent that negligence was
present in the handling of the acetylene cylinder after it was loaded and while it was on board
the ship. Indeed, had the respondent and its agents not been negligent in storing the acetylene
cylinder near the engine room, then the same would not have leaked and exploded during the
voyage.

Verily, there is no merit in the finding of the trial court to which respondent court erroneously
agreed that the fire was not the fault or negligence of respondent but a natural disaster or
calamity. The records are simply wanting in this regard.

Anent petitioner's objection to the admissibility of Exhibits "4'' and ''5", the Statement of Facts
and the Marine Note of Protest issued by Captain Tiburcio A. Licaylicay, we find the same
impressed with merit because said documents are hearsay evidence. Capt. Licaylicay, Master
of S.S. Eastern Explorer who issued the said documents, was not presented in court to testify
to the truth of the facts he stated therein; instead, respondent ESLI presented Junpei Maeda, its
Branch Manager in Tokyo and Yokohama, Japan, who evidently had no personal knowledge
of the facts stated in the documents at issue. It is clear from Section 36, Rule 130 of the Rules
of Court that any evidence, whether oral or documentary, is hearsay if its probative value is
not based on the personal knowledge of the witness but on the knowledge of some other
person not on the witness stand. Consequently, hearsay evidence, whether objected to or not,
has no probative value unless the proponent can show that the evidence falls within the
exceptions to the hearsay evidence rule. 8 It is excluded because the party against whom it is
presented is deprived of his right and opportunity to cross-examine the persons to whom the
statements or writings are attributed.

On the issue of whether or not respondent court committed an error in concluding that the
expenses incurred in saving the cargo are considered general average, we rule in the
affirmative. As a rule, general or gross averages include all damages and expenses which are
deliberately caused in order to save the vessel, its cargo, or both at the same time, from a real
and known risk 9 While the instant case may technically fall within the purview of the said
provision, the formalities prescribed under Articles 813 10 and 814 11 of the Code of Commerce
in order to incur the expenses and cause the damage corresponding to gross average were not
complied with. Consequently, respondent ESLI's claim for contribution from the consignees of
the cargo at the time of the occurrence of the average turns to naught.

Prescinding from the foregoing premises, it indubitably follows that the cargo consignees
cannot be made liable to respondent carrier for additional freight and salvage charges.
Consequently, respondent carrier must refund to herein petitioner the amount it paid under
protest for additional freight and salvage charges in behalf of the consignees.

WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE.
Respondent Eastern Shipping Lines, Inc. is ORDERED to return to petitioner Philippine
Home Assurance Corporation the amount it paid under protest in behalf of the consignees
herein.
G.R. No. 143133           June 5, 2002 "On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at
Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES transportation to Manila consigned to the Philippine Steel Trading Corporation. On
TRANSPORT SERVICES, INC., petitioners, July 28, 1990, M/V Anangel Sky arrived at the port of Manila and, within the
vs. subsequent days, discharged the subject cargo. Four (4) coils were found to be in
PHILIPPINE FIRST INSURANCE CO., INC., respondents. bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in their damaged
state to be unfit for the intended purpose, the consignee Philippine Steel Trading
Corporation declared the same as total loss.1âwphi1.nêt
PANGANIBAN, J.:
"Despite receipt of a formal demand, defendants-appellees refused to submit to the
Proof of the delivery of goods in good order to a common carrier and of their arrival in bad consignee's claim. Consequently, plaintiff-appellant paid the consignee five hundred
order at their destination constitutes prima facie fault or negligence on the part of the carrier. If six thousand eighty six & 50/100 pesos (P506,086.50), and was subrogated to the
no adequate explanation is given as to how the loss, the destruction or the deterioration of the latter's rights and causes of action against defendants-appellees. Subsequently,
goods happened, the carrier shall be held liable therefor. plaintiff-appellant instituted this complaint for recovery of the amount paid by them,
to the consignee as insured.
Statement of the Case
"Impugning the propriety of the suit against them, defendants-appellees imputed that
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the July 15, the damage and/or loss was due to pre-shipment damage, to the inherent nature, vice
1998 Decision1 and the May 2, 2000 Resolution2 of the Court of Appeals3 (CA) in CA-GR CV or defect of the goods, or to perils, danger and accidents of the sea, or to
No. 53571. The decretal portion of the Decision reads as follows: insufficiency of packing thereof, or to the act or omission of the shipper of the goods
or their representatives. In addition thereto, defendants-appellees argued that their
"WHEREFORE, in the light of the foregoing disquisition, the decision appealed liability, if there be any, should not exceed the limitations of liability provided for in
from is hereby REVERSED and SET ASIDE. Defendants-appellees are ORDERED the bill of lading and other pertinent laws. Finally, defendants-appellees averred that,
to jointly and severally pay plaintiffs-appellants the following: in any event, they exercised due diligence and foresight required by law to prevent
any damage/loss to said shipment."6

'1) FOUR Hundred Fifty One Thousand Twenty-Seven Pesos and 32/100
(P451,027.32) as actual damages, representing the value of the damaged Ruling of the Trial Court
cargo, plus interest at the legal rate from the time of filing of the complaint
on July 25, 1991, until fully paid; The RTC dismissed the Complaint because respondent had failed to prove its claims with the
quantum of proof required by law.7
'2) Attorney's fees amounting to 20% of the claim; and
It likewise debunked petitioners' counterclaim, because respondent's suit was not manifestly
'3) Costs of suit.'" 4 frivolous or primarily intended to harass them.8

The assailed Resolution denied petitioner's Motion for Reconsideration. Ruling of the Court of Appeals

The CA reversed the Decision of the Regional Trial Court (RTC) of Makati City (Branch In reversing the trial court, the CA ruled that petitioners were liable for the loss or the damage
134), which had disposed as follows: of the goods shipped, because they had failed to overcome the presumption of negligence
imposed on common carriers.

"WHEREFORE, in view of the foregoing, judgment is hereby rendered, dismissing

the complaint, as well as defendant's counterclaim."5 The CA further held as inadequately proven petitioners' claim that the loss or the deterioration
of the goods was due to pre-shipment damage.9 It likewise opined that the notation "metal
envelopes rust stained and slightly dented" placed on the Bill of Lading had not been the
The Facts proximate cause of the damage to the four (4) coils.10

The factual antecedents of the case are summarized by the Court of Appeals in this wise: As to the extent of petitioners' liability, the CA held that the package limitation under COGSA
was not applicable, because the words "L/C No. 90/02447" indicated that a higher valuation of
the cargo had been declared by the shipper. The CA, however, affirmed the award of attorney's Proof of Negligence
fees.
Petitioners contend that the presumption of fault imposed on common carriers should not be
Hence, this Petition.11 applied on the basis of the lone testimony offered by private respondent. The contention is
untenable.
Issues
Well-settled is the rule that common carriers, from the nature of their business and for reasons
In their Memorandum, petitioners raise the following issues for the Court's consideration: of public policy, are bound to observe extraordinary diligence and vigilance with respect to
the safety of the goods and the passengers they transport.13 Thus, common carriers are required
to render service with the greatest skill and foresight and "to use all reason[a]ble means to
I ascertain the nature and characteristics of the goods tendered for shipment, and to exercise due
care in the handling and stowage, including such methods as their nature requires."14 The
"Whether or not plaintiff by presenting only one witness who has never seen the extraordinary responsibility lasts from the time the goods are unconditionally placed in the
subject shipment and whose testimony is purely hearsay is sufficient to pave the possession of and received for transportation by the carrier until they are delivered, actually or
way for the applicability of Article 1735 of the Civil Code; constructively, to the consignee or to the person who has a right to receive them.15

II This strict requirement is justified by the fact that, without a hand or a voice in the preparation
of such contract, the riding public enters into a contract of transportation with common
"Whether or not the consignee/plaintiff filed the required notice of loss within the carriers.16 Even if it wants to, it cannot submit its own stipulations for their approval.17 Hence,
time required by law; it merely adheres to the agreement prepared by them.

III Owing to this high degree of diligence required of them, common carriers, as a general rule,
are presumed to have been at fault or negligent if the goods they transported deteriorated or
got lost or destroyed.18 That is, unless they prove that they exercised extraordinary diligence in
"Whether or not a notation in the bill of lading at the time of loading is sufficient to transporting the goods.19 In order to avoid responsibility for any loss or damage, therefore,
show pre-shipment damage and to exempt herein defendants from liability; they have the burden of proving that they observed such diligence.20

IV However, the presumption of fault or negligence will not arise21 if the loss is due to any of the
following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity;
"Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of (2) an act of the public enemy in war, whether international or civil; (3) an act or omission of
COGSA is applicable to the case at bar."12 the shipper or owner of the goods; (4) the character of the goods or defects in the packing or
the container; or (5) an order or act of competent public authority.22 This is a closed list. If the
cause of destruction, loss or deterioration is other than the enumerated circumstances, then the
In sum, the issues boil down to three:
carrier is liable therefor.23

1. Whether petitioners have overcome the presumption of negligence of a common

Corollary to the foregoing, mere proof of delivery of the goods in good order to a common
carrier
carrier and of their arrival in bad order at their destination constitutes a prima facie case of
fault or negligence against the carrier. If no adequate explanation is given as to how the
2. Whether the notice of loss was timely filed deterioration, the loss or the destruction of the goods happened, the transporter shall be held
responsible.24
3. Whether the package limitation of liability is applicable
That petitioners failed to rebut the prima facie presumption of negligence is revealed in the
This Court's Ruling case at bar by a review of the records and more so by the evidence adduced by respondent.25

The Petition is partly meritorious. First, as stated in the Bill of Lading, petitioners received the subject shipment in good order
and condition in Hamburg, Germany.26
First Issue:
Second, prior to the unloading of the cargo, an Inspection Report27 prepared and signed by x x x           x x x           x x x
representatives of both parties showed the steel bands broken, the metal envelopes rust-stained
and heavily buckled, and the contents thereof exposed and rusty. Q.       Based on your inspection since you were also present at that time, will you
inform this Honorable Court the condition or the appearance of the bad order
Third, Bad Order Tally Sheet No. 15497928 issued by Jardine Davies Transport Services, Inc., cargoes that were unloaded from the MV/ANANGEL SKY?
stated that the four coils were in bad order and condition. Normally, a request for a bad order
survey is made in case there is an apparent or a presumed loss or damage.29 ATTY. MACAMAY:

Fourth, the Certificate of Analysis30 stated that, based on the sample submitted and tested, the Objection, Your Honor, I think the document itself reflects the condition
steel sheets found in bad order were wet with fresh water. of the cold steel sheets and the best evidence is the document itself, Your
Honor that shows the condition of the steel sheets.
Fifth, petitioners -- in a letter31 addressed to the Philippine Steel Coating Corporation and
dated October 12, 1990 -- admitted that they were aware of the condition of the four coils COURT:
found in bad order and condition.
Let the witness answer.
These facts were confirmed by Ruperto Esmerio, head checker of BM Santos Checkers
Agency. Pertinent portions of his testimony are reproduce hereunder:
A.       The scrap of the cargoes is broken already and the rope is loosen and the
cargoes are dent on the sides."32
"Q.       Mr. Esmerio, you mentioned that you are a Head Checker. Will you inform
the Honorable Court with what company you are connected?
All these conclusively prove the fact of shipment in good order and condition and the
consequent damage to the four coils while in the possession of petitioner,33 who notably failed
A.       BM Santos Checkers Agency, sir. to explain why.34

Q.       How is BM Santos checkers Agency related or connected with defendant Further, petitioners failed to prove that they observed the extraordinary diligence and
Jardine Davies Transport Services? precaution which the law requires a common carrier to know and to follow to avoid damage to
or destruction of the goods entrusted to it for safe carriage and delivery.35
A.       It is the company who contracts the checkers, sir.
True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of
Q.       You mentioned that you are a Head Checker, will you inform this Honorable Lading; however, there is no showing that petitioners exercised due diligence to forestall or
Court your duties and responsibilities? lessen the loss.36 Having been in the service for several years, the master of the vessel should
have known at the outset that metal envelopes in the said state would eventually deteriorate
A.       I am the representative of BM Santos on board the vessel, sir, to supervise the when not properly stored while in transit.37 Equipped with the proper knowledge of the nature
discharge of cargoes. of steel sheets in coils and of the proper way of transporting them, the master of the vessel and
his crew should have undertaken precautionary measures to avoid possible deterioration of the
cargo. But none of these measures was taken.38 Having failed to discharge the burden of
x x x           x x x           x x x proving that they have exercised the extraordinary diligence required by law, petitioners
cannot escape liability for the damage to the four coils.39
Q.       On or about August 1, 1990, were you still connected or employed with BM
Santos as a Head Checker? In their attempt to escape liability, petitioners further contend that they are exempted from
liability under Article 1734(4) of the Civil Code. They cite the notation "metal envelopes rust
A.       Yes, sir. stained and slightly dented" printed on the Bill of Lading as evidence that the character of the
goods or defect in the packing or the containers was the proximate cause of the damage. We
Q.       And, on or about that date, do you recall having attended the discharging and are not convinced.
inspection of cold steel sheets in coil on board the MV/AN ANGEL SKY?
From the evidence on record, it cannot be reasonably concluded that the damage to the four
A.       Yes, sir, I was there. coils was due to the condition noted on the Bill of Lading.40 The aforecited exception refers to
cases when goods are lost or damaged while in transit as a result of the natural decay of
perishable goods or the fermentation or evaporation of substances liable therefor, the
necessary and natural wear of goods in transport, defects in packages in which they are Assuming arguendo they are liable for respondent's claims, petitioners contend that their
shipped, or the natural propensities of animals.41 None of these is present in the instant case. liability should be limited to US$500 per package as provided in the Bill of Lading and by
Section 4(5)52 of COGSA.53
Further, even if the fact of improper packing was known to the carrier or its crew or was
apparent upon ordinary observation, it is not relieved of liability for loss or injury resulting On the other hand, respondent argues that Section 4(5) of COGSA is inapplicable, because the
therefrom, once it accepts the goods notwithstanding such condition.42 Thus, petitioners have value of the subject shipment was declared by petitioners beforehand, as evidenced by the
not successfully proven the application of any of the aforecited exceptions in the present reference to and the insertion of the Letter of Credit or "L/C No. 90/02447" in the said Bill of
case.43 Lading.54

Second Issue: A bill of lading serves two functions. First, it is a receipt for the goods shipped.53 Second, it is
a contract by which three parties -- namely, the shipper, the carrier, and the consignee --
Notice of Loss undertake specific responsibilities and assume stipulated obligations.56 In a nutshell, the
acceptance of the bill of lading by the shipper and the consignee, with full knowledge of its
contents, gives rise to the presumption that it constituted a perfected and binding contract.57
Petitioners claim that pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea
Act44 (COGSA), respondent should have filed its Notice of Loss within three days from
delivery. They assert that the cargo was discharged on July 31, 1990, but that respondent filed Further, a stipulation in the bill of lading limiting to a certain sum the common carrier's
its Notice of Claim only on September 18, 1990.45 liability for loss or destruction of a cargo -- unless the shipper or owner declares a greater
value58 -- is sanctioned by law.59 There are, however, two conditions to be satisfied: (1) the
contract is reasonable and just under the circumstances, and (2) it has been fairly and freely
We are not persuaded. First, the above-cited provision of COGSA provides that the notice of agreed upon by the parties.60 The rationale for this rule is to bind the shippers by their
claim need not be given if the state of the goods, at the time of their receipt, has been the agreement to the value (maximum valuation) of their goods.61
subject of a joint inspection or survey. As stated earlier, prior to unloading the cargo, an
Inspection Report46 as to the condition of the goods was prepared and signed by
representatives of both parties.47 It is to be noted, however, that the Civil Code does not limit the liability of the common carrier
to a fixed amount per package.62 In all matters not regulated by the Civil Code, the right and
the obligations of common carriers shall be governed by the Code of Commerce and special
Second, as stated in the same provision, a failure to file a notice of claim within three days will laws.63 Thus, the COGSA, which is suppletory to the provisions of the Civil Code,
not bar recovery if it is nonetheless filed within one year.48 This one-year prescriptive period supplements the latter by establishing a statutory provision limiting the carrier's liability in the
also applies to the shipper, the consignee, the insurer of the goods or any legal holder of the absence of a shipper's declaration of a higher value in the bill of lading.64 The provisions on
bill of lading.49 limited liability are as much a part of the bill of lading as though physically in it and as though
placed there by agreement of the parties.65
In Loadstar Shipping Co., Inc, v. Court of Appeals,50 we ruled that a claim is not barred by
prescription as long as the one-year period has not lapsed. Thus, in the words of the ponente, In the case before us, there was no stipulation in the Bill of Lading66 limiting the carrier's
Chief Justice Hilario G. Davide Jr.: liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This
fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for
"Inasmuch as the neither the Civil Code nor the Code of Commerce states a specific petitioners' liability.
prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA)--
which provides for a one-year period of limitation on claims for loss of, or damage First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit
to, cargoes sustained during transit--may be applied suppletorily to the case at bar." obtained by the shipper for the importation of steel sheets did not effect a declaration of the
value of the goods as required by the bill.67 That notation was made only for the convenience
In the present case, the cargo was discharged on July 31, 1990, while the Complaint51 was filed of the shipper and the bank processing the Letter of Credit.68
by respondent on July 25, 1991, within the one-year prescriptive period.
Second, in Keng Hua Paper Products v. Court of Appeals,69 we held that a bill of lading was
Third Issue: separate from the Other Letter of Credit arrangements. We ruled thus:

Package Limitation "(T)he contract of carriage, as stipulated in the bill of lading in the present case,
must be treated independently of the contract of sale between the seller and the
buyer, and the contract of issuance of a letter of credit between the amount of goods
described in the commercial invoice in the contract of sale and the amount allowed
in the letter of credit will not affect the validity and enforceability of the contract of
 carriage as embodied in the bill of lading. As the bank cannot be expected to look
beyond the documents presented to it by the seller pursuant to the letter of credit,
neither can the carrier be expected to go beyond the representations of the shipper in
the bill of lading and to verify their accuracy vis-à-vis the commercial invoice and
the letter of credit. Thus, the discrepancy between the amount of goods indicated in
the invoice and the amount in the bill of lading cannot negate petitioner's obligation
to private respondent arising from the contract of transportation."70

In the light of the foregoing, petitioners' liability should be computed based on US$500 per
package and not on the per metric ton price declared in the Letter of Credit.71 In Eastern
Shipping Lines, Inc. v. Intermediate Appellate Court,72 we explained the meaning of packages:

"When what would ordinarily be considered packages are shipped in a container

supplied by the carrier and the number of such units is disclosed in the shipping
documents, each of those units and not the container constitutes the 'package'
referred to in the liability limitation provision of Carriage of Goods by Sea Act."

Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of Lading
clearly disclosed the contents of the containers, the number of units, as well as the nature of
the steel sheets, the four damaged coils should be considered as the shipping unit subject to the
US$500 limitation.1âwphi1.nêt

WHEREFORE, the Petition is partly granted and the assailed Decision MODIFIED.

Petitioners' liability is reduced to US$2,000 plus interest at the legal rate of six percent from
the time of the filing of the Complaint on July 25, 1991 until the finality of this Decision, and
12 percent thereafter until fully paid. No pronouncement as to costs.

SO ORDERED.
G.R. No. L-8095             March 31, 1915 require the company to accept such explosives for carriage notwithstanding the above
mentioned resolution of the directors and stockholders of the company, and that if the Act
F.C. FISHER, plaintiff, does in fact require the company to carry such explosives it is to that extent unconstitutional
vs. and void; that notwithstanding this belief of complainant as to the true meaning of the Act, the
YANGCO STEAMSHIP COMPANY, J.S. STANLEY, as Acting Collector of Customs of questions involved cannot be raised by the refusal of the company or its agents to comply with
the Philippine Islands, IGNACIO VILLAMOR, as Attorney-General of the Philippine the demands of the Acting Collector of Customs, without the risk of irreparable loss and
Islands, and W.H. BISHOP, as prosecuting attorney of the city of Manila, respondents. damage resulting from his refusal to facilitate the documentation of the company's vessels, and
without assuming the company to test the questions involved by refusing to accept such
explosives for carriage.
Haussermann, Cohn and Fisher for plaintiff.
Office of the Solicitor-General Harvey for respondents.
The prayer of the complaint is as follows:
CARSON, J.:
Wherefore your petitioner prays to this honorable court as follows:
The real question involved in these proceedings is whether the refusal of the owners and
officers of a steam vessel, duly licensed to engage in the coastwise trade of the Philippine First. That to the due hearing of the above entitled action be issued a writ of
Islands and engaged in that trade as a common carrier, to accept for carriage "dynamite, prohibition perpetually restraining the respondent Yangco Steamship Company, its
powder or other explosives" from any and all shippers who may offer such explosives for appraisers, agents, servants or other representatives from accepting to carry and from
carriage can be held to be a lawful act without regard to any question as to the conditions carrying, in steamers of said company dynamite, powder or other explosive
under which such explosives are offered to carriage, or as to the suitableness of the vessel for substance, in accordance with the resolution of the board of directors and of the
the transportation of such explosives, or as to the possibility that the refusal to accept such shareholders of said company.
articles of commerce in a particular case may have the effect of subjecting any person or
locality or the traffic in such explosives to an undue, unreasonable or unnecessary prejudice or Second. That a writ of prohibition be issued perpetually enjoining the respondent
discrimination. J.S. Stanley as Acting Collector of Customs of the Philippine Islands, his successors,
deputies, servants or other representatives, from obligating the said Yangco
Summarized briefly, the complaint alleges that plaintiff is a stockholder in the Yangco Steamship Company, by any means whatever, to carry dynamite, powder or other
Steamship Company, the owner of a large number of steam vessels, duly licensed to engage in explosive substance.
the coastwise trade of the Philippine Islands; that on or about June 10, 1912, the directors of
the company adopted a resolution which was thereafter ratified and affirmed by the Third. That a writ of prohibition be issued perpetually enjoining the respondent
shareholders of the company, "expressly declaring and providing that the classes of Ignacio Villamor as Attorney-General of the Philippine Islands, and W.H. Bishop as
merchandise to be carried by the company in its business as a common carrier do not include prosecuting attorney of the city of Manila, their deputies representatives or
dynamite, powder or other explosives, and expressly prohibiting the officers, agents and employees, from accusing the said Yangco Steamship Company, its officers, agents
servants of the company from offering to carry, accepting for carriage said dynamite, powder or servants, of the violation of Act No. 98 by reason of the failure or omission of the
or other explosives;" that thereafter the respondent Acting Collector of Customs demanded said company to accept for carriage out to carry dynamite powder or other
and required of the company the acceptance and carriage of such explosives; that he has explosive.
refused and suspended the issuance of the necessary clearance documents of the vessels of the
company unless and until the company consents to accept such explosives for carriage; that Fourth. That the petitioner be granted such other remedy as may be meet and proper.
plaintiff is advised and believes that should the company decline to accept such explosives for
carriage, the respondent Attorney-General of the Philippine Islands and the respondent
prosecuting attorney of the city of Manila intend to institute proceedings under the penal To this complaint the respondents demurred, and we are of opinion that the demurrer must be
provisions of sections 4, 5, and 6 of Act No. 98 of the Philippine Commission against the sustained, on the ground that the complaint does not set forth facts sufficient to constitute a
company, its managers, agents and servants, to enforce the requirements of the Acting cause of action.
Collector of Customs as to the acceptance of such explosives for carriage; that notwithstanding
the demands of the plaintiff stockholder, the manager, agents and servants of the company It will readily be seen that plaintiff seeks in these proceedings to enjoin the steamship
decline and refuse to cease the carriage of such explosives, on the ground that by reason of the company from accepting for carriage on any of its vessels, dynamite, powder or other
severity of the penalties with which they are threatened upon failure to carry such explosives, explosives, under any conditions whatsoever; to prohibit the Collector of Customs and the
they cannot subject themselves to "the ruinous consequences which would inevitably result" prosecuting officers of the government from all attempts to compel the company to accept
from failure on their part to obey the demands and requirements of the Acting Collector of such explosives for carriage on any of its vessels under any conditions whatsoever; and to
Customs as to the acceptance for carriage of explosives; that plaintiff believes that the Acting prohibit these officials from any attempt to invoke the penal provisions of Act No. 98, in any
Collector of Customs erroneously construes the provisions of Act No. 98 in holding that they case of a refusal by the company or its officers so to do; and this without regard to the
conditions as to safety and so forth under which such explosives are offered for carriage, and money of the United States, or by imprisonment not exceeding two years, or both,
without regard also to any question as to the suitableness for the transportation of such within the discretion of the court.
explosives of the particular vessel upon which the shipper offers them for carriage; and further
without regard to any question as to whether such conduct on the part of the steamship The validity of this Act has been questioned on various grounds, and it is vigorously
company and its officers involves in any instance an undue, unnecessary or unreasonable contended that in so far as it imposes any obligation on a common carrier to accept for
discrimination to the prejudice of any person, locality or particular kind of traffic. carriage merchandise of a class which he makes no public profession to carry, or which he has
expressly or impliedly announced his intention to decline to accept for carriage from all
There are no allegations in the complaint that for some special and sufficient reasons all or shippers alike, it is ultra vires, unconstitutional and void.
indeed any of the company's vessels are unsuitable for the business of transporting explosives;
or that shippers have declined or will in future decline to comply with such reasonable We may dismiss without extended discussion any argument or contention as to the invalidity
regulations and to take such reasonable precautions as may be necessary and proper to secure of the statute based on alleged absurdities inherent in its provisions or on alleged unreasonable
the safety of the vessels of the company in transporting such explosives. Indeed the contention or impossible requirements which may be read into it by a strained construction of its terms.
of petitioner is that a common carrier in the Philippine Islands may decline to accept for
carriage any shipment of merchandise of a class which it expressly or impliedly declines to
accept from all shippers alike, because as he contends "the duty of a common carrier to carry We agree with counsel for petitioner that the provision of the Act which prescribes that, "No
for all who offer arises from the public profession he has made, and limited by it." common carrier ... shall, under any pretense whatsoever, fail or refuse to receive for carriage ...
to carry any person or property offering for carriage," is not to be construed in its literal sense
and without regard to the context, so as to impose an imperative duty on all common carriers
In support of this contention counsel cites for a number of English and American authorities, to accept for carriage, and to carry all and any kind of freight which may be offered for
discussing and applying the doctrine of the common law with reference to common carriers. carriage without regard to the facilities which they may have at their disposal. The legislator
But it is unnecessary now to decide whether, in the absence of statute, the principles on which could not have intended and did not intend to prescribe that a common carrier running
the American and English cases were decided would be applicable in this jurisdiction. The passenger automobiles for hire must transport coal in his machines; nor that the owner of a
duties and liabilities of common carriers in this jurisdiction are defined and fully set forth in tank steamer, expressly constructed in small watertight compartments for the carriage of crude
Act No. 98 of the Philippine Commission, and until and unless that statute be declared invalid oil must accept common carrier must accept and carry contraband articles, such as opium,
or unconstitutional, we are bound by its provisions. morphine, cocaine, or the like, the mere possession of which is declared to be a criminal
offense; nor that common carriers must accept eggs offered for transportation in paper parcels
Sections 2, 3 and 4 of the Act are as follows: or any merchandise whatever do defectively packed as to entail upon the company
unreasonable and unnecessary care or risks.
SEC. 2. It shall be unlawful for any common carrier engaged in the transportation of
passengers or property as above set forth to make or give any unnecessary or Read in connection with its context this, as well as all the other mandatory and prohibitory
unreasonable preference or advantage to any particular person, company, firm, provisions of the statute, was clearly intended merely to forbid failures or refusals to receive
corporation or locality, or any particular kind of traffic in any respect whatsoever, or persons or property for carriage involving any "unnecessary or unreasonable preference or
to subject any particular person, company, firm, corporation or locality, or any advantage to any particular person, company, firm, corporation, or locality, or any particular
particular kind of traffic, to undue or unreasonable prejudice or discrimination kind of traffic in any respect whatsoever," or which would "subject any particular person,
whatsoever, and such unjust preference or discrimination is also hereby prohibited company, firm, corporation or locality, or any particular kind of traffic to any undue or
and declared to be unlawful. unreasonable prejudice or discrimination whatsoever."

SEC. 3. No common carrier engaged in the carriage of passengers or property as The question, then, of construing and applying the statute, in cases of alleged violations of its
aforesaid shall, under any pretense whatsoever, fail or refuse to receive for carriage, provisions, always involves a consideration as to whether the acts complained of had the effect
and as promptly as it is able to do so without discrimination, to carry any person or of making or giving an "unreasonable or unnecessary preference or advantage" to any person,
property offering for carriage, and in the order in which such persons or property are locality or particular kind of traffic, or of subjecting any person, locality, or particular kind of
offered for carriage, nor shall any such common carrier enter into any arrangement, traffic to any undue or unreasonable prejudice or discrimination. It is very clear therefore that
contract or agreement with any other person or corporation whereby the latter is the language of the statute itself refutes any contention as to its invalidity based on the alleged
given an exclusive or preferential or monopolize the carriage any class or kind of unreasonableness of its mandatory or prohibitory provisions.
property to the exclusion or partial exclusion of any other person or persons, and the
entering into any such arrangement, contract or agreement, under any form or So also we may dismiss without much discussion the contentions as to the invalidity of the
pretense whatsoever, is hereby prohibited and declared to be unlawful. statute, which are based on the alleged excessive severity of the penalties prescribed for
violation of its provisions. Upon general principles it is peculiarly and exclusively within the
SEC. 4. Any willful violation of the provisions of this Act by any common carrier province of the legislator to prescribe the pains and penalties which may be imposed upon
engaged in the transportation of passengers or property as hereinbefore set forth is persons convicted of violations of the laws in force within his territorial jurisdiction. With the
hereby declared to be punishable by a fine not exceeding five thousand dollars exercise of his discretion in this regard where it is alleged that excessive fines or cruel and
unusual punishments have been prescribed, and even in such cases the courts will not presume We hold, therefore, that the provisions of the acts relating to the enforcement of the
to interfere in the absence of the clearest and most convincing argument and proof in support rates, either for freight or passengers, by imposing such enormous fines and possible
of such contentions. (Weems vs. United States, 217 U.S., 349; U.S. vs. Pico, 18 Phil. Rep., imprisonment as a result of an unsuccessful effort to test the validity of the laws
386.) We need hardly add that there is no ground upon which to rest a contention that the themselves, are unconstitutional on their face, without regard to the question of the
penalties prescribed in the statute under consideration are either excessive or cruel and insufficiency of those rates. (Ex parte Young, 209 U.S., 123 147, 148.)
unusual, in the sense in which these terms are used in the organic legislation in force in the
Philippine Islands. An examination of the general provisions of our statute, of the circumstances under which it
was enacted, the mischief which it sought to remedy and of the nature of the penalties
But it is contended that on account of the penalties prescribed the statute should be held prescribed for violations of its terms convinces us that, unlike the statutes under consideration
invalid upon the principles announced in Ex parte Young (209 U.S., 123, 147, 148); in the above cited cases, its enactment involved no attempt to prevent common carriers "from
Cotting vs. Goddard (183 U.S., 79, 102); Mercantile Trust Co. vs. Texas Co. (51 Fed., 529); resorting to the courts to test the validity of the legislation;" no "effort to prevent any inquiry"
Louisville Ry. vs. McCord (103 Fed., 216); Cons. Gas Co. vs. Mayer (416 Fed., 150). We are as to its validity. It imposes no arbitrary obligation upon the company to do or to refrain from
satisfied however that the reasoning of those cases is not applicable to the statute under doing anything. It makes no attempt to compel such carriers to do business at a fixed or
consideration. The principles announced in those decisions are fairly indicated in the following arbitrarily designated rate, at the risk of separate criminal prosecutions for every demand of a
citations found in petitioner's brief: higher or a different rate. Its penalties can be imposed only upon proof of "unreasonable,"
"unnecessary" and "unjust" discriminations, and range from a maximum which is certainly not
But when the legislature, in an effort to prevent any inquiry of the validity of a particular excessive for willful, deliberate and contumacious violations of its provisions by a great and
statute, so burdens any challenge thereof in the courts that the party affected is necessarily powerful corporation, to a minimum which may be a merely nominal fine. With so wide a
constrained to submit rather than take the chances of the penalties imposed, then it becomes a range of discretion for a contention on the part of any common carrier that it or its officers are
serious question whether the party is not deprived of the equal protection of the laws. "intimidated from resorting to the courts to test the validity" of the provisions of the statute
(Cotting vs. Goddard, 183 U. S., 79, 102.) prohibiting such "unreasonable," "unnecessary" and "unjust" discriminations, or to test in any
particular case whether a given course of conduct does in fact involve such discrimination. We
will presume, for the purpose of declaring the statute invalid, that there is so real a danger that
It may therefore be said that when the penalties for disobedience are by fines so the Courts of First Instance and this court on appeal will abuse the discretion thus conferred
enormous and imprisonment so severe as to intimidate the company and its officers upon us, as to intimidate any common carrier, acting in good faith, from resorting to the courts
from resorting to the courts to test the validity of the legislation, the result is the to test the validity of the statute. Legislative enactments, penalizing unreasonable
same as if the law in terms prohibited the company from seeking judicial discriminations, unreasonable restraints of trade, and unreasonable conduct in various forms of
construction of laws which deeply affect its rights. human activity are so familiar and have been so frequently sustained in the courts, as to render
extended discussion unnecessary to refute any contention as to the invalidity of the statute
It is urged that there is no principle upon which to base the claim that a person is under consideration, merely it imposes upon the carrier the obligation of adopting one of
entitled to disobey a statute at least once, for the purpose of testing its validity, various courses of conduct open to it, at the risk of incurring a prescribed penalty in the event
without subjecting himself to the penalties for disobedience provided by the statute that the course of conduct actually adopted by it should be held to have involved an
in case it is valid. This is not an accurate statement of the case. Ordinarily a law unreasonable, unnecessary or unjust discrimination. Applying the test announced in Ex
creating offenses in the nature of misdemeanors or felonies relates to a subject over parte Young, supra, it will be seen that the validity of the Act does not depend upon "the
which the jurisdiction of the legislature is complete in any event. In the case, existence of a fact which can be determined only after investigation of a very complicated and
however, of the establishment of certain rates without any hearing, the validity of technical character," and that "the jurisdiction of the legislature" over the subject with which
such rates necessarily depends upon whether they are high enough to permit at least the statute deals "is complete in any event." There can be no real question as to the plenary
some return upon the investment (how much it is not now necessary to state), and an power of the legislature to prohibit and to penalize the making of undue, unreasonable and
inquiry as to that fact is a proper subject of judicial investigation. If it turns out that unjust discriminations by common carriers to the prejudice of any person, locality or particular
the rates are too low for that purpose, then they are illegal. Now, to impose upon a kind of traffic. (See Munn vs. Illinois, 94 U.S., 113, and other cases hereinafter cited in support
party interested the burden of obtaining a judicial decision of such a question (no of this proposition.)
prior hearing having been given) only upon the condition that, if unsuccessful, he
must suffer imprisonment and pay fines, as provided in these acts, is, in effect, to Counsel for petitioner contends also that the statute, if construed so as to deny the right of the
close up all approaches to the courts, and thus prevent any hearing upon the question steamship company to elect at will whether or not it will engage in a particular business, such
whether the rates as provided by the acts are not too low, and therefore invalid. The as that of carrying explosives, is unconstitutional "because it is a confiscation of property, a
distinction is obvious between a case where the validity of the act depends upon the taking of the carrier's property without due process of law," and because it deprives him of his
existence of a fact which can be determined only after investigation of a very liberty by compelling him to engage in business against his will. The argument continues as
complicated and technical character, and the ordinary case of a statute upon a subject follows:
requiring no such investigation, and over which the jurisdiction of the legislature is
complete in any event.
To require of a carrier, as a condition to his continuing in said business, that he must
carry anything and every thing is to render useless the facilities he may have for the
 carriage of certain lines of freight. It would be almost as complete a confiscation of passengers' lives and limbs by carrying freight only. If his vehicles require expensive
such facilities as if the same were destroyed. Their value as a means of livelihood pneumatic tires, unsuitable for freight transportation, ha may nevertheless carry passengers.
would be utterly taken away. The law is a prohibition to him to continue in business; The only limitation upon his action that it is competent for the governing authority to impose
the alternative is to get out or to go into some other business — the same alternative is to require him to treat all alike. His limitations must apply to all, and they must be
as was offered in the case of the Chicago & N.W. Ry. vs. Dey (35 Fed. Rep., 866, established limitations. He cannot refuse to carry a case of red jusi on the ground that he has
880), and which was there commented on as follows: carried for others only jusi that he was green, or blue, or black. But he can refuse to carry
red jusi, if he has publicly professed such a limitation upon his business and held himself out
"Whatever of force there may be in such arguments, as applied to mere as unwilling to carry the same for anyone."
personal property capable of removal and use elsewhere, or in other
business, it is wholly without force as against railroad corporations, so To this it is sufficient answer to say that there is nothing in the statute which would deprive
large a proportion of whose investment is in the soil and fixtures any person of his liberty "by requiring him to engage in business against his will." The
appertaining thereto, which cannot be removed. For a government, prohibitions of the statute against undue, unnecessary or unreasonable regulations which the
whether that government be a single sovereign or one of the majority, to legislator has seen fit to prescribe for the conduct of the business in which the carrier is
say to an individual who has invested his means in so laudable an engaged of his own free will and accord. In so far as the self-imposed limitations by the carrier
enterprise as the construction of a railroad, one which tends so much to the upon the business conducted by him, in the various examples given by counsel, do not involve
wealth and prosperity of the community, that, if he finds that the rates an unreasonable or unnecessary discrimination the statute would not control his action in any
imposed will cause him to do business at a loss, he may quit business, and wise whatever. It operates only in cases involving such unreasonable or unnecessary
abandon that road, is the very irony of despotism. Apples of Sodom were preferences or discriminations. Thus in the hypothetical case suggested by the petitioner, a
fruit of joy in comparison. Reading, as I do, in the preamble of the Federal carrier engaged in the carriage of green, blue or black jusi, and duly equipped therefor would
Constitution, that it was ordained to "establish justice," I can never believe manifestly be guilty of "giving an unnecessary and unreasonable preference to a particular
that it is within the property of an individual invested in and used for a kind of traffic" and of subjecting to "an undue and reasonable prejudice a particular kind of
purpose in which even the Argus eyes of the police power can see nothing traffic," should he decline to carry red jusi, to the prejudice of a particular shipper or of those
injurious to public morals, public health, or the general welfare. I read also engaged in the manufacture of that kind of jusi, basing his refusal on the ground of "mere
in the first section of the bill of rights of this state that "all men are by whim or caprice" or of mere personal convenience. So a public carrier of passengers would not
nature free and equal, and have certain inalienable rights, among which are be permitted under this statute to absolve himself from liability for a refusal to carry a
those of enjoying and defending life and liberty, acquiring, possessing, and Chinaman, a Spaniard, an American, a Filipino, or a mestizo by proof that from "mere whim
protecting property, and pursuing and obtaining safety and happiness;" and or caprice or personal scruple," or to suit his own convenience, or in the hope of increasing his
I know that, while that remains as the supreme law of the state, no business and thus making larger profits, he had publicly announced his intention not to carry
legislature can directly or indirectly lay its withering or destroying hand on one or other of these classes of passengers.
a single dollar invested in the legitimate business of transportation."
(Chicago & N.W. Ry. vs. Dey, 35 Fed. Rep., 866, 880.) The nature of the business of a common carrier as a public employment is such that it is
clearly within the power of the state to impose such just and reasonable regulations thereon in
It is manifest, however, that this contention is directed against a construction of the statute, the interest of the public as the legislator may deem proper. Of course such regulations must
which, as we have said, is not warranted by its terms. As we have already indicated, the statute not have the effect of depriving an owner of his property without due process of law, nor of
does not "require of a carrier, as a condition to his continuing in said business, that he must confiscating or appropriating private property without just compensation, nor of limiting or
carry anything and everything," and thereby "render useless the facilities he may have for the prescribing irrevocably vested rights or privileges lawfully acquired under a charter or
carriage of certain lines of freight." It merely forbids failures or refusals to receive persons or franchise. But aside from such constitutional limitations, the determination of the nature and
property for carriage which have the effect of giving an "unreasonable or unnecessary extent of the regulations which should be prescribed rests in the hands of the legislator.
preference or advantage" to any person, locality or particular kind of traffic, or of subjecting
any person, locality or particular kind of traffic to any undue or unreasonable prejudice or Common carriers exercise a sort of public office, and have duties to perform in which the
discrimination. public is interested. Their business is, therefore, affected with a public interest, and is subject
of public regulation. (New Jersey Steam Nav. Co. vs. Merchants Bank, 6 How., 344, 382;
Counsel expressly admits that the statute, "as a prohibition against discrimination is a fair, Munn vs. Illinois, 94 U.S., 113, 130.) Indeed, this right of regulation is so far beyond question
reasonable and valid exercise of government," and that "it is necessary and proper that such that it is well settled that the power of the state to exercise legislative control over railroad
discrimination be prohibited and prevented," but he contends that "on the other hand there is companies and other carriers "in all respects necessary to protect the public against danger,
no reasonable warrant nor valid excuse for depriving a person of his liberty by requiring him injustice and oppression" may be exercised through boards of commissioners. (New York etc.
to engage in business against his will. If he has a rolling boat, unsuitable and unprofitable for R. Co. vs. Bristol, 151 U.S., 556, 571; Connecticut etc. R. Co. vs. Woodruff, 153 U.S., 689.)
passenger trade, he may devote it to lumber carrying. To prohibit him from using it unless it is
fitted out with doctors and stewards and staterooms to carry passengers would be an invalid Regulations limiting of passengers the number of passengers that may be carried in a
confiscation of this property. A carrier may limit his business to the branches thereof that suit particular vehicle or steam vessel, or forbidding the loading of a vessel beyond a certain point,
his convenience. If his wagon be old, or the route dangerous, he may avoid liability for loss of
or prescribing the number and qualifications of the personnel in the employ of a common observed in passing that these common law rules are themselves regulations controlling,
carrier, or forbidding unjust discrimination as to rates, all tend to limit and restrict his liberty limiting and prescribing the conditions under which common carriers were permitted to
and to control to some degree the free exercise of his discretion in the conduct of his business. conduct their business. (Munn vs. Illinois, 94 U. S., 113, 133.)
But since the Granger cases were decided by the Supreme Court of the United States no one
questions the power of the legislator to prescribe such reasonable regulations upon property It was found, in the course of time, that the correction of abuses which had grown up with the
clothed with a public interest as he may deem expedient or necessary to protect the public enormously increasing business of common carriers necessitated the adoption of statutory
against danger, injustice or oppression. (Munn vs. Illinois, 94 U.S., 113, 130; Chicago etc. R. regulations controlling the business of common carriers, and imposing severe and drastic
Co. vs. Cutts, 94 U.S., 155; Budd vs. New York, 143 U.S., 517; Cotting vs. Goddard, 183 U.S., penalties for violations of their terms. In England, the Railway Clauses Consolidation Act was
79.) The right to enter the public employment as a common carrier and to offer one's services enacted in 1845, the Railway and Canal Traffic Act in 1854, and since the passage of those
to the public for hire does not carry with it the right to conduct that business as one pleases, Acts much additional legislation has been adopted tending to limit and control the conduct of
without regard to the interest of the public and free from such reasonable and just regulations their business by common carriers. In the United States, the business of common carriers has
as may be prescribed for the protection of the public from the reckless or careless indifference been subjected to a great variety of statutory regulations. Among others Congress enacted
of the carrier as to the public welfare and for the prevention of unjust and unreasonable "The Interstate Commerce Act" (1887) and its amendments, and the Elkins Act as amended
discrimination of any kind whatsoever in the performance of the carrier's duties as a servant of (1906); and most if not all of the States of the Union have adopted similar legislation
the public. regulating the business of common carriers within their respective jurisdictions. Unending
litigation has arisen under these statutes and their amendments, but nowhere has the right of
Business of certain kinds, including the business of a common carrier, holds such a peculiar the state to prescribe just and reasonable regulations controlling and limiting the conduct of
relation to the public interest that there is superinduced upon it the right of public regulation. the business of common carriers in the public interest and for the general welfare been
(Budd vs. New York, 143 U.S., 517, 533.) When private property is "affected with a public successfully challenged, though of course there has been wide divergence of opinion as to the
interest it ceases to be juris privati only." Property becomes clothed with a public interest reasonableness, the validity and legality of many of the regulations actually adopted.
when used in a manner to make it of public consequence and affect the community at large.
"When, therefore, one devotes his property to a use in which the public has an interest, he, in The power of the Philippine legislator to prohibit and to penalize all and any unnecessary or
effect, grants to the public an interest in that use, and must submit to be controlled by the unreasonable discriminations by common carriers may be maintained upon the same reasoning
public for the common good, to the extent of the interest he has thus created. He may which justified the enactment by the Parliament of England and the Congress of the United
withdraw his grant by discontinuing the use, but so long as he maintains the use he must States of the above mentioned statutes prohibiting and penalizing the granting of certain
submit to control." (Munn vs. Illinois, 94 U.S., 113; Georgia R. & Bkg. Co. vs. Smith, 128 preferences and discriminations in those countries. As we have said before, we find nothing
U.S., 174; Budd vs. New York, 143 U.S., 517; Louisville etc. Ry. Co. vs. Kentucky, 161 U.S., confiscatory or unreasonable in the conditions imposed in the Philippine statute upon the
677, 695.) business of common carriers. Correctly construed they do not force him to engage in any
business his will or to make use of his facilities in a manner or for a purpose for which they
Of course this power to regulate is not a power to destroy, and limitation is not the equivalent are not reasonably adapted. It is only when he offers his facilities as a common carrier to the
of confiscation. Under pretense of regulating fares and freight the state can not require a public for hire, that the statute steps in and prescribes that he must treat all alike, that he may
railroad corporation to carry persons or property without reward. Nor can it do that which in not pick and choose which customer he will serve, and, specifically, that he shall not make any
law amounts to a taking of private property for public use without just compensation, or undue or unreasonable preferences or discriminations whatsoever to the prejudice not only of
without due process of law. (Chicago etc. R. Co. vs. Minnesota, 134 U.S., 418; Minneapolis any person or locality but also of any particular kind of traffic.
Eastern R. Co. vs. Minnesota, 134 U.S., 467.) But the judiciary ought not to interfere with
regulations established and palpably unreasonable as to make their enforcement equivalent to The legislator having enacted a regulation prohibiting common carriers from giving
the taking of property for public use without such compensation as under all the circumstances unnecessary or unreasonable preferences or advantages to any particular kind of traffic or
is just both to the owner and to the public, that is, judicial interference should never occur subjecting any particular kind of traffic to any undue or unreasonable prejudice or
unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights of discrimination whatsoever, it is clear that whatever may have been the rule at the common
property under the guise of regulations as to compel the court to say that the regulation in law, common carriers in this jurisdiction cannot lawfully decline to accept a particular class of
question will have the effect to deny just compensation for private property taken for the goods for carriage, to the prejudice of the traffic in those goods, unless it appears that for some
public use. (Chicago etc. R. Co. vs. Wellman, 143 U.S., 339; Smyth vs. Ames, 169 U.S., 466, sufficient reason the discrimination against the traffic in such goods is reasonable and
524; Henderson Bridge Co. vs. Henderson City, 173 U.S., 592, 614.) necessary. Mere whim or prejudice will not suffice. The grounds for the discrimination must
be substantial ones, such as will justify the courts in holding the discrimination to have been
Under the common law of England it was early recognized that common carriers owe to the reasonable and necessary under all circumstances of the case.
public the duty of carrying indifferently for all who may employ them, and in the order in
which application is made, and without discrimination as to terms. True, they were allowed to The prayer of the petition in the case at bar cannot be granted unless we hold that the refusal of
restrict their business so as to exclude particular classes of goods, but as to the kinds of the defendant steamship company to accept for carriage on any of its vessels "dynamite,
property which the carrier was in the habit of carrying in the prosecution of his business he gunpowder or other explosives" would in no instance involve a violation of the provisions of
was bound to serve all customers alike (State vs. Cincinnati etc. R. Co., 47 Ohio St., 130, 134, this statute. There can be little doubt, however, that cases may and will arise wherein the
138; Louisville etc. Ry. Co. vs. Quezon City Coal Co., 13 Ky. L. Rep., 832); and it is to be
refusal of a vessel "engaged in the coastwise trade of the Philippine Islands as a common matches, solely on the ground of the dangers incident to the explosive quality of this class of
carrier" to accept such explosives for carriage would subject some person, company, firm or merchandise, would not subject the traffic in matches to an unnecessary, undue or
corporation, or locality, or particular kind of traffic to a certain prejudice or discrimination. unreasonable prejudice and discrimination without proof that for some special reason the
Indeed it cannot be doubted that the refusal of a "steamship company, the owner of a large particular vessel is not fitted to carry articles of that nature. There may be and doubtless are
number of vessels" engaged in that trade to receive for carriage any such explosives on any of some vessels engaged in business as common carriers of merchandise, which for lack of
its vessels would subject the traffic in such explosives to a manifest prejudice and suitable deck space or storage rooms might be justified in declining to carry kerosene oil,
discrimination. The only question to be determined therefore is whether such prejudice or gasoline, and similar products, even when offered for carriage securely packed in cases; and
discrimination might in any case prove to be undue, unnecessary or unreasonable. few vessels are equipped to transport those products in bulk. But in any case of a refusal to
carry such products which would subject any person, locality or the traffic in such products
This of course is, in each case, a question of fact, and we are of the opinion that the facts would be necessary to hear evidence before making an affirmative finding that such prejudice
alleged in the complaint are not sufficient to sustain a finding in favor of the contentions of the or discrimination was or was not unnecessary, undue or unreasonable. The making of such a
petitioner. It is not alleged in the complaint that "dynamite, gunpowder and other explosives" finding would involve a consideration of the suitability of the vessel for the transportation of
can in no event be transported with reasonable safety on board steam vessels engaged in the such products ; the reasonable possibility of danger or disaster resulting from their
business of common carriers. It is not alleged that all, or indeed any of the defendant transportation in the form and under the conditions in which they are offered for carriage; the
steamship company's vessels are unsuited for the carriage of such explosives. It is not alleged general nature of the business done by the carrier and, in a word, all the attendant
that the nature of the business in which the steamship company is engaged is such as to circumstances which might affect the question of the reasonable necessity for the refusal by
preclude a finding that a refusal to accept such explosives on any of its vessels would subject the carrier to undertake the transportation of this class of merchandise.
the traffic in such explosives to an undue and unreasonable prejudice and discrimination.
But it is contended that whatever the rule may be as to other explosives, the exceptional power
Plaintiff's contention in this regard is as follows: and violence of dynamite and gunpowder in explosion will always furnish the owner of a
vessel with a reasonable excuse for his failure or refusal to accept them for carriage or to carry
them on board his boat. We think however that even as to dynamite and gunpowder we would
In the present case, the respondent company has expressly and publicly renounced not be justified in making such a holding unaided by evidence sustaining the proposition that
the carriage of explosives, and expressly excluded the same terms from the business these articles can never be carried with reasonable safety on any vessel engaged in the
it conducts. This in itself were sufficient, even though such exclusion of explosives business of a common carrier. It is said that dynamite is so erratic an uncontrollable in its
were based on no other ground than the mere whim, caprice or personal scruple of action that it is impossible to assert that it can be handled with safety in any given case. On the
the carrier. It is unnecessary, however, to indulge in academic discussion of a moot other hand it is contended that while this may be true of some kinds of dynamite, it is a fact
question, for the decision not a carry explosives rests on substantial grounds which that dynamite can be and is manufactured so as to eliminate any real danger from explosion
are self-evident. during transportation. These are of course questions of fact upon which we are not qualified to
pass judgment without the assistance of expert witnesses who have made special studies as to
We think however that the answer to the question whether such a refusal to carry explosives the chemical composition and reactions of the different kinds of dynamite, or attained a
involves an unnecessary or unreasonable preference or advantage to any person, locality or thorough knowledge of its properties as a result of wide experience in its manufacture and
particular kind of traffic or subjects any person, locality or particular to traffic to an undue or transportation.
unreasonable prejudice and discrimination is by no means "self-evident," and that it is a
question of fact to be determined by the particular circumstances of each case. As we construe the Philippine statute, the mere fact that violent and destructive explosions can
be obtained by the use of dynamite under certain conditions would not be sufficient in itself to
The words "dynamite, powder or other explosives" are broad enough to include matches, and justify the refusal of a vessel, duly licensed as a common carrier of merchandise, to accept it
other articles of like nature, and may fairly be held to include also kerosene oil, gasoline and for carriage, if it can be proven that in the condition in which it is offered for carriage there is
similar products of a highly inflammable and explosive character. Many of these articles of no real danger to the carrier, nor reasonable ground to fear that his vessel or those on board his
merchandise are in the nature of necessities in any country open to modern progress and vessel will be exposed to unnecessary and unreasonable risk in transporting it, having in mind
advancement. We are not fully advised as to the methods of transportation by which they are the nature of his business as a common carrier engaged in the coastwise trade in the Philippine
made commercially available throughout the world, but certain it is that dynamite, gunpowder, Islands, and his duty as a servant of the public engaged in a public employment. So also, if by
matches, kerosene oil and gasoline are transported on many vessels sailing the high seas. the exercise of due diligence and the taking of unreasonable precautions the danger of
Indeed it is a matter of common knowledge that common carriers throughout the world explosions can be practically eliminated, the carrier would not be justified in subjecting the
transport enormous quantities of these explosives, on both land and sea, and there can be little traffic in this commodity to prejudice or discrimination by proof that there would be a
doubt that a general refusal of the common carriers in any country to accept such explosives possibility of danger from explosion when no such precautions are taken.
for carriage would involve many persons, firms and enterprises in utter ruin, and would
disastrously affect the interests of the public and the general welfare of the community. The traffic in dynamite, gunpowder and other explosives is vitally essential to the material and
general welfare of the people of these Islands. If dynamite, gunpowder and other explosives
It would be going to far to say that a refusal by a steam vessel engaged in the business of are to continue in general use throughout the Philippines, they must be transported by water
transporting general merchandise as a common carrier to accept for carriage a shipment of from port to port in the various islands which make up the Archipelago. We are satisfied
therefore that the refusal by a particular vessel, engaged as a common carrier of merchandise CARSON, J.:
in the coastwise trade of the Philippine Islands, to accept any or all of these explosives for
carriage would constitute a violation of the prohibitions against discriminations penalized This case is again before us upon a demurrer interposed by the respondent officials of the
under the statute, unless it can be shown by affirmative evidence that there is so real and Philippine Government to an amended complaint filed after publication of our decision
substantial a danger of disaster necessarily involved in the carriage of any or all of these sustaining the demurrer to the original complaint.
articles of merchandise as to render such refusal a due or a necessary or a reasonable exercise
of prudence and discretion on the part of the shipowner.
In our former opinion, entered November 5, 1914, we sustained the demurrer on the ground
that the original complaint did not set forth facts sufficient to constitute a cause of action. In
The complaint in the case at bar lacking the necessary allegations under this ruling, the that decision we held that the statute (Act No. 98) the validity of which was attacked by
demurrer must be sustained on the ground that the facts alleged do not constitute a cause of counsel por plaintiff was, when rightly construed, a valid and constitutional enactment, and
action. ruled:

A number of interesting questions of procedure are raised and discussed in the briefs of That whatever may have been the rule at the common law, common carriers in this jurisdiction
counsel. As to all of these questions we expressly reserve our opinion, believing as we do that cannot lawfully decline to accept a particular class in those goods, unless it appears that for
in sustaining the demurrer on the grounds indicated in this opinion we are able to dispose of some sufficient reason the discrimination against the traffic in such goods is reasonable and
the real issue involved in the proceedings without entering upon the discussion of the nice necessary. Mere prejudice or whim will not suffice. The grounds of the discrimination must be
questions which it might have been necessary to pass upon had it appeared that the facts substantial ones, such as will justify the courts in holding the discrimination to have been
alleged in the complaint constitute a cause of action. reasonable and necessary under all the circumstances of the case.

We think, however, that we should not finally dispose of the case without indicating that since xxx      xxx      xxx
the institution of these proceedings the enactment of Acts No. 2307 and No. 2362 (creating a
Board of Public Utility Commissioners and for other purposes) may have materially modified
the right to institute and maintain such proceedings in this jurisdiction. But the demurrer The traffic in dynamite, gunpowder and other explosives is vitally essential to the
having been formallly submitted for judgment before the enactment of these statutes, counsel material and general welfare of the people of these Islands. If dynamite, gunpowder
have not been heard in this connection. We therefore refrain from any comment upon any and other explosives are to continue in general use throughout the Philippines, they
questions which might be raised as to whether or not there may be another adequate and must be transported by water from port to port in the various islands which make up
appropriate remedy for the alleged wrong set forth in the complaint. Our disposition of the the Archipelago. We are satisfied therefore that the refusal by a particular vessel,
question raised by the demurrer renders that unnecessary at this time, though it may not be engaged as a common carrier of merchandise in the coastwise trade of the Philippine
improper to observe that a careful examination of those acts confirms us in the holding upon Islands, to accept any or all of these explosives for carriage would constitute a
which we base our ruling on this demurrer, that is to say "That whatever may have been the violation of the prohibitions against discriminations penalized under the statue,
rule at the common law, common carriers in this jurisdiction cannot lawfully decline to accept unless it can be shown by affirmative evidence that there is so real and substantial a
a particular class of goods for carriage, to the prejudice of the traffic in those goods, unless it danger of disaster necessarily involved in the carriage of any or all of these articles
appears that for some sufficient reason the discrimination against the traffic in such goods is of merchandise as to render such refusal a due or a necessary or a reasonable
reasonable and necessary. Mere prejudice or whim will not suffice. The grounds of the exercise of prudence and discretion on the part of the ship owner.
discrimination must be substantial ones, such as will justify the courts in holding the
discrimination to have been reasonable and necessary under all the circumstances of the case." Resting our judgment on these rulings we held that the allegations of the complaint, which in
substance alleged merely that the respondent officials were coercing the respondent steamship
Unless an amended complaint be filed in the meantime, let judgment be entered ten days company to carry explosives upon some of their vessels, under authority of, and in reliance
hereafter sustaining the demurrer and dismissing the complaint with costs against the upon the provisions of the Act, did not set forth facts constituting a cause of action; or in other
complainant, and twenty days thereafter let the record be filed in the archives of original words, that the allegations of the complaint even if true, would sustain a finding that the
actions in this court. So ordered. respondent officials were acting "without or in excess of their jurisdiction" and lawful
authority in the premises.
Arellano, C.J., and Trent, J., concur.
Torres and Johnson, JJ., concur in the result. The amended complaint filed on November 14, 1914, is substantially identical with the
original complaint, except that it charges the respondent officials, as of the date of the
amended complaint, with the unlawful exercise of the authority or intent to exercise unlawful
authority which should be restrained, and substitutes the names of the officers now holding the
offices of Collector of Customs, Attorney-General and prosecuting attorney for those of the
officials holding those offices at the date of the filing of the original complaint; and except
DECISION OF MARCH 31, 1915. further that it adds the following allegations:
 That each and every one of the vessels of the defendant company is dedicated and public profession he has made, and is limited by it;" that under this doctrine the respondent
devoted to the carriage of passengers between various ports in the Philippine Islands, steamship company might lawfully decline to accept for carriage "dynamite, powder or other
and each of said vessels, on all of said voyages between the said ports, usually and explosives," without regard to any question as to the conditions under which such explosives
ordinarily does carry a large number of such passengers. are offered for carriage, or as to the suitableness of its vessels for the transportation of such
explosives, or as to the possibility that the refusal to accept such articles of commerce in a
That dynamite, powder, and other explosives are dangerous commodities that cannot particular case might have the effect of subjecting any person, locality or the traffic in such
be handled and transported in the manner and from in which ordinary commodities explosives to an undue, unreasonable or unnecessary prejudice or discrimination: and in line
are handled and transported. That no degree of care, preparation and special with these contentions counsel boldly asserted that Act No. 98 of the Philippine Commission
arrangement in the handling and transportation of dynamite, powder and other is invalid and unconstitutional in so far as it announces a contrary doctrine or lays down a
explosives will wholly eliminate the risk and danger of grave peril and loss different rule. The pleader who drew up the original complaint appears to have studiously
therefrom, and that the highest possible degree of care, preparation of said avoided the inclusion in that complaint of any allegation which might raise any other question.
commodities is only capable of reducing the degree of said danger and peril. That In doing so he was strictly within his rights, and having in mind the object sought to be
each and every one of the vessels of the defendant company is wholly without attained, the original complaint is a model of skillful pleading, well calculated to secure the
special means for the handling, carriage, or transportation of dynamite, powder and end in view, that is to say, a judgment on the precise legal issue which the pleader desired to
other explosives and such special means therefor which would appreciably and raise as to the construction and validity of the statute, which would put an end to the
materially reduce the danger and peril therefrom cannot be installed in said vessels controversy, if that issue were decided in his favor.
without a costs and expense unto said company that is unreasonable and prohibitive.
Had the contentions of plaintiff as to the unconstitutionality of the statute been well founded, a
As we read them, the allegations of the original complaint were intended to raise and did in writ of prohibition from this court would have furnished an effective and appropriate remedy
fact raise, upon demurrer, a single question which, if ruled upon favorably to the contention of for the alleged wrong. The issue presented by the pleadings on the original complaint,
plaintiff, would, doubtless, have put an end to this litigation and to the dispute between the involving a question as to the validity of a statute and affecting, as it did, the shipping and
plaintiff stockholder of the steamship company and the officials of the Philippine Government public interests of the whole Islands, and submitting be complicated question or series of
out of which it has arisen. questions of fact, was of such a nature that this court could not properly deny the right of the
plaintiff to invoke its jurisdiction in original proceedings. We deemed it our duty therefore to
resolve the real issue raised by the demurrer, and since we are of opinion that the contentions
In their brief, counsel for plaintiff, in discussing their right to maintain an action for a writ of of counsel for plaintiff were not well founded, and since a ruling to that effect necessarily
prohibition, relied upon the authority of Ex parte Young (209 U. S. [123] 163, 165), and resulted in an order sustaining the demurrer, we did not deem it necessary or profitable to
asserted that: consider questions of practice or procedure which it might have been necessary to decide
under a contrary ruling as to the principal question raised by the pleadings; nor did we stop to
Upon the authority, therefore, of Ex parte Young, supra, the merits of the question consider whether the "subject matter involved" in the controversy might properly be submitted
pending between petitioner and respondents in this action is duly presented to this to the Board of Public Utility Commissioners, because upon the authority of Ex parte Young
court by the complaint of petitioner and general demurrer of respondents thereto. (supra) we are satisfied as to the jurisdiction and competency of this court to deal with the real
That question, in plain terms, is as follows: issues raised by the pleadings on the original complaint, and because, furthermore, the Act of
the Philippine Legislature creating the Board of Public Utility Commissioners could not
Is the respondent Yangco Steamship Company legally required to accept for carriage deprive this court of jurisdiction already invoked in prohibition proceedings instituted for the
and carry "any person or property offering for carriage?" purpose of restraining the respondent official as of the Government from the alleged unlawful
exercise of authority under color of an invalid and without jurisdiction in the premises.

"The petitioner contends that the respondent company is a common carrier of only
such articles of freight as they profess to carry and hold themselves out as carrying;" The amended complaint, however, presents for adjudication in original prohibition
and in discussing the legal capacity of plaintiff to maintain this action, counsel in proceedings in this court questions of a wholly different character from those submitted in the
their printed brief asserted that "here we have no address to the court to determine original complaint.
whether a minority or a majority shall prevail in the corporate affairs; here we ask
plainly and unmistakably who shall fix the limits of the corporate business — the In so far as it reiterates the allegation s of the former complaint to the effect that the
shareholders and directors of the corporation, or certain officials of the government respondent officials are unlawfully coercing the steamship company by virtue and under color
armed with an unconstitutional statute? of the provisions of an invalid or unconstitutional statute, it is manifest, of course, that the
amended complaint is no less subject to criticism than was the original complaint. If, therefore,
Counsel for plaintiff contended that under the guaranties of the Philippine Bill of Rights a the action can be maintained upon its allegations that those officials are coercing the company
common carrier in the Philippine Islands may arbitrarily decline to accept for carriage any to carry explosives on vessels which, as a matter of fact, are not suitably equipped for that
shipment or merchandise of a class which it expressly or impliedly declines to accept from all purpose, and which from the nature of the business in which they are engaged should not be
shippers alike; that "the duty of a common carrier to carry for all who offer arises from the required to carry explosives.
It will readily be seen, under our former opinion, that these allegations raise no question as to making of findings touching controverted facts, which, as a rule, can be done so much better in
the validity or constitutionality of any statute; that the real question which plaintiff seeks to the first instance by a trial court than an appellate court organized as is ours.
submit to this court in original prohibition proceedings is whether the respondent officials of
the Government are correctly exercising the discretion and authority with which they have Spelling on Injunctions and Other Extraordinary Remedies (vol. 2, p. 1493), in discussing the
been clothed; and that his contention in the amended complaint is not, as it was in the original cases in which the appellate courts in the United States permit their original jurisdiction to be
complaint, that these officials are acting without authority and in reliance upon an invalid and invoked where that jurisdiction is concurrent with that of some inferior court, says:
unconstitutional statute, but rather that they are exercising their authority improvidently,
unwisely or mistakenly.
Of the plan of concurrent jurisdiction West Virginia may be taken as an illustration.
The Supreme Court of Appeals of that State has concurrent original jurisdiction with
Under the provisions of sections 226 and 516 of the Code of Civil Procedure jurisdiction in the circuit courts in cases of prohibition, but by a rule adopted by the former court it
prohibition proceedings is conferred upon the courts when the complaint alleges "the will not take such original jurisdiction unless reasons appear therefor.
proceedings of any inferior tribunal, corporation, board, or person, whether exercising
functions judicial or ministerial, were without or in excess of the jurisdiction of such tribunal,
corporation, board or person." It is manifest therefore that the allegations of the amended We deemed it proper to assume jurisdiction to adjudicate and decide the issues raised by the
complaint, even if true, will not sustain the issuance of a writ of prohibition without further rulings on the original complaint, involving as they did a question as to the validity of a public
amendment unless they be construed to in effect a charge that the respondent officials are statute of vital interest to shippers and shipowners generally as also to the public at large,
abusing the discretion conferred upon them in the exercise of their authority in such manner presenting for determination no difficult or complicated questions of fact: but we are satisfied
that the acts complained of should be held to be without or in excess of their jurisdiction. that we should decline to take jurisdiction of the matters relied upon in the amended complaint
in support of plaintiff's prayer for the writ.
It may well be doubted whether the doctrine of the case Ex parte Young (supra), relied upon
by the plaintiff in his argument be invoked in support of a right of action predicated upon such The question of the construction and validity of the statute having been disposed of in our
premises; so also, since the acts complained of in the amended complaint are alleged to have ruling on the demurrer to the original complaint, it must be apparent that of the allegations of
been done at a date subsequent to the enactment of the statutes creating the Board of Public the amended complaint are sufficient to maintain the plaintiff's action for a writ of prohibition,
Utility Commissioners, it may well be doubted whether the courts should entertain prohibition a question as to which we expressly reserve our opinion, the action should be brought in one
proceedings seeking to restrain alleged abuses of discretion on the part of officers and officials of the Courts of First Instance.
of the Government, and of public service corporations with regard to the rules under which
such corporations are operated, until and unless redress for the alleged wrong has been sought Twenty days hereafter let the complaint de dismissed at the costs of the plaintiff, unless in the
at the hands of the Board. meantime it is amended so as to disclose a right upon the part of the plaintiff to invoke the
original jurisdiction of this court without first proceeding in one of the Courts of First
We do not deem it expedient or necessary, however, to consider or decide any of these Instance. So ordered.
questions at this time, because we are of opinion that we should not permit our original
jurisdiction to be set in motion upon the allegations of the amended complaint.

It is true that this court is clothed with original jurisdiction in prohibition proceedings (sec.
516, Act No. 190). But this jurisdiction is concurrent with the original jurisdiction of the
various Courts of First Instance throughout the Islands, except in cases where the writ runs to
restrain those courts themselves, when of course it is exclusive; and we are satisfied that it
could have been the intention of the legislator to require this court to assume original
jurisdiction in all cases wherein the plaintiff elects to invoke it. Such a practice might result in
overwhelming this court with the duty of entertaining and deciding original proceedings which
from their nature could much better be adjudicated in the trial courts; and in unnecessarily
diverting the time and attention of the court from its important appellate functions to the
settlement of controversies of no especial interest to the public at large, in the course of which
it might become necessary to take testimony and to make findings touching complicated and
hotly contested issues of fact.

We are of opinion and so hold that unless special reasons appear therefor, this court should
decline to permit its original jurisdiction to be invoked in prohibition proceedings, and this
especially when the adjudication of the issues raised involves the taking of evidence and the