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G.R. No. 150751. September 20, 2004 CENTRAL SHIPPING COMPANY, INC., petitioner, vs.INS RANCE COMPANY O!NORTH AMERICA, respondent.

A "ommo# "$rr%er %& pre&'me( to be $t )$'*t or #e+*%+e#t. It & $** be *%$b*e )or t e *o&&, (e&tr'"t%o# or (eter%or$t%o# o) %t& "$r+o,'#*e&& %t "$# pro-e t $t t e &o*e $#( pro %m$te "$'&e o) &'" e-e#t %& o#e o) t e "$'&e& e#'mer$te( %# Art%"*e 17/4 o) t e C%-%*Co(e, or t $t %t e er"%&e( e tr$or(%#$r (%*%+e#"e to pre-e#t or m%#%m% e t e *o&&. In the present case, the weather conditionencountered by petitioners vessel was not a "storm" or a natural disaster comprehended in the law. Given the known weathercondition prevailing during the voyage, the manner of stowage employed by the carrier was insufficient to secure the cargo from therolling action of the sea. The carrier took a calculated risk in %mproper* &e"'r%#+the cargo . Having lost that risk, it cannot nowdisclaim any liability for the loss.

efore the !ourt is a etition for #eview $ under #ule %& of the #ules of !ourt, seeking to reverse and set aside the 'arch (), (**$+ecision ( of the ! in ! -G# ! /o. %01$&. The assailed +ecision disposed as follows2 "3H4#456#4, the decision of the #T!of 'akati !ity, ranch $%0 dated ugust %, $11% is hereby '6+I5I4+ in so far as the award of attorneys fees is +474T4+. Thedecision is 55I#'4+ in all other respects." ) The ! denied petitioners 'otion for #econsideration in its /ovember 8, (**$#esolution. %

T e !$"t&The factual antecedents, summari9ed by the trial court and adopted by the appellate court, are as follows2"6n :uly (&, $11* at uerto rincesa, alawan, the ;petitioner< received on board its vessel, the '= >!entral ohol, )8? pieces;of< hilippine pitong #ound 7ogs and undertook to transport said shipment to 'anila for delivery to laska 7umber !o., Inc. Thecargo was insured for ),***,***.** against total loss under ;respondents< 'arine !argo olicy /o. '! -**$8*. 6n :uly (&,$11*, upon completion of loading of the cargo, the vessel left alawan and commenced the voyage to 'anila. t about *$(& hourson :uly (?, $11*, while enroute to 'anila, the vessel listed about $* degrees starboard side, due to the shifting of logs in the hold.

t about *$(0 hours, after the listing of the vessel had increased to $& degrees, the ship captain ordered his men to abandon shipand at about *$)* hours of the same day the vessel completely sank. +ue to the sinking of the vessel, the cargo was totally lost.;#espondent< alleged that the total loss of the shipment was caused by the fault and negligence of the ;petitioner< and its captainand as direct conse@uence thereof the consignee suffered damage in the sum of ),***,***.**. The consignee, laska 7umber!o. Inc., presented a claim for the value of the shipment to the ;petitioner< but the latter failed and refused to settle the claim, hence;respondent

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"EvD 3hether or not the !ourt of ppeals erred in not giving credence to the factual finding of the oard of 'arine In@uiry E 'ID, anindependent government agency tasked to conduct in@uiries on maritime accidents."EviD 3hether or not the +octrine of 7imited 7iability is applicable to the case at bar."1

T e %&&'e& bo%* (o # to t o 16 et er t e "$rr%er %& *%$b*e )or t e *o&& o) t e "$r+o $#( 26 et er t e (o"tr%#e o) *%m%te(*%$b%*%t %& $pp*%"$b*e. These issues involve a determination of factual @uestions of whether the loss of the cargo was due to theoccurrence of a natural disasterA and if so, whether its sole and proBimate cause was such natural disaster or whether petitioner

was partly to blame for failing to eBercise due diligence in the prevention of that loss.

T e Co'rt8& R'*%#+

The etition is devoid of merit.!%r&t I&&'eLiability for Lost Cargo !rom t e #$t're o) t e%r b'&%#e&& $#( )or re$&o#& o) p'b*%" po*%" , "ommo# "$rr%er& $re bo'#( to ob&er-e e tr$or(%#$r(%*%+e#"e o-er t e +oo(& t e tr$#&port, $""or(%#+ to $** t e "%r"'m&t$#"e& o) e$" "$&e.$* In the event of loss, destruction ordeterioration of the insured goods, common carriers are responsibleA that is, unless they can prove that such loss, destruction ordeterioration was brought about -- among others -- by "flood, storm, earth@uake, lightning or other natural disaster or calamity."$$ Inall other cases not specified under rticle $8)% of the !ivil !ode, common carriers are presumed to have been at fault or to haveacted negligently, unless they prove that they observed eBtraordinary diligence. $(

In the present case, petitioner disclaims responsibility for the loss of the cargo by claiming the occurrence of a "storm" under rticle$8)%E$D. It attributes the sinking of its vessel solely to the weather condition between $*2** p.m. on :uly (&, $11* and $2(& a.m. on:uly (?, $11*.

t the outset, it must be stressed that only @uestions of law$)

may be raised in a petition for review on certiorari under #ule %& ofthe #ules of !ourt. uestions of fact are not proper subCects in this mode of appeal, $% for ";t

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>$%.T ung inyo pong natatandaanang mga pangyayari, maarimo bang isalaysay ang naganap na paglubog sa barkong '=!entral oholJ>F 6po, noong ika-(? ng :ulio $11* humigit kumulang alas $2(* ngumaga EdstD habang kami ay nagnanabegar patungong'aynila sa tapat ng !adlao Island at !auayan Island sakopng 4l /ido, alawan, inutusan akoni !aptain 4nri@uito !ahatol natingnan ko ang bodegaA nang ako ay nasa bodega, nakita ko ang loob nang bodega na maraming tubig at naririnig ko ang malakasna agos ng tubig-dagat na pumapasok sa loob ng bodega ng barkoA agad bumalik ako kay !aptain 4nri@uito !ahatol at sinabi koang malakas napagpasok ng tubig-dagat sa loob nang bodega ng barko na ito ay naka-tagilid humigit kumulang sa *(* degrees,nag-order si !aptain !ahatol na standby engine at tinawag ang lahat ng mga officials at mga crew nang maipon kaming lahat angbarko ay naka-tagilid at ito ay tuloy-tuloy ang pagtatagilid na ang ilan sa mga officials ay naka-hawak nasa barandilla ng barko atdi-nagtagal sumigaw nang /+6;/< FHI si !aptain !ahatol at kami ay nagkanya-kanyana ng talunan at languyan sa dagat na

malakas ang alon at nangako ay lumingon sa barko ito ay di ko na nakita." dditionally, ;petitioners< own witnesses, boatswain 4duardo iKas !astro and oiler 5rederick erena, are one in saying that thevessel encountered two weather disturbances, one at around $* oclock to $$ oclock in the evening and the other at around $(oclock midnight. oth disturbances were coupled with waves and heavy rains, yet, the vessel endured the first and not the second.3hyJ The reason is plain. The vessel felt the strain during the second onslaught because the logs in the bodega shifted and there

were already seawater that seeped inside." )*

The above conclusion is supported by the fact that the vessel proceeded through the first southwestern monsoon without anymishap, and that it began to list only during the second monsoon immediately after the logs had shifted and seawater had enteredthe hold. In the hold, the sloshing of tons of water back and forth had created pressures that eventually caused the ship to sink.Had the logs not shifted, the ship could have survived and reached at least the port of 4l /ido. In fact, there was another motorlaunch that had been buffeted by the same weather condition within the same area, yet it was able to arrive safely at 4l /ido. )$

In its nswer, petitioner categorically admitted the allegation of respondent in paragraph & of the latters !omplaint ";t!entral ohol listed about $* degrees starboardside, due to theshifting of logs in the hold." 5urther, petitioner averred that ";t

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Fan 'iguel !orporation entered into a Time !harter arty greement with :ulius 6uano, doing business under the name and style:. 6uano 'arine Fervices. Mnder the terms of the agreement, F'! chartered the '= +oKa #oberta owned by :ulius 6uano for aperiod of two years, from :une $, $101 to 'ay )$, $11$, for the purpose of transporting F'!s beverage products from its'andaue !ity plant to various points in isayas and 'indanao. ertinent portions of the Time !harter arty greement state2$. 63/4# ; i.e., 6uano< warrants ownership, title and interest over the vessel +6N #6 4#T and represents that on the datethe vessel is placed at !H #T4#4#s Fan 'iguel !orporation< disposal the following shall be the accurate or approBimatedescription of the particulars and capacities of the vessel and her e@uipment2BBB BBB BBB.(. That for and in consideration of the premises hereinafter stipulated, the 63/4# hereby lets, demises and the !H #T4#4#

hereby hires the use and service of the aforementioned vesselABBB BBB BBB.%. 63/4# warrants that the vessel is seaworthy and in proper, useful and operational condition and in the event that!H #T4#4# finds any defect in the vessel with regards to its working order, condition and function, !H #T4#4# shallimmediately notify 63/4# of this factABBB BBB BBB.1. There shall be no employer-employee relations between the 63/4# and=or its vessels crew on one hand and the!H #T4#4# on the other. The crew of the vessel shall continue to be under the employ, control and supervision of the 63/4#.!onse@uently, damage or loss that may be attributable to the crew, including loss of the vessel used shall continue to be theresponsibility of, and shall be borne, by the 63/4#A the 63/4# further covenants to hold the !H #T4#4# free from all claimsand liabilities arising out of the acts of the crew and the condition of the vesselA$*. The 63/4# shall undertake to pay all compensation of all the vessels crew, including the benefits, premia and protection inaccordance with the provisions of the /ew 7abor !ode and other applicable laws and decrees and the rules and regulationspromulgated by competent authorities as well as all of the FFF premium. Thus, it is understood that the crew of he vessel shall andalways remain the employees of the 63/4#A$$. The 63/4# shall be responsible to and shall indemnify the !H #T4#4# for damages and losses arising from theincompetence and=or negligence of, and=or the failure to observe the re@uired eBtra-ordinary diligence by the crew. It shall beautomatically liable to the !H #T4#4# for shortlanded shipment and wrong levels, the value of which shall be withheld from the63/4#s collectibles with the !H #T4#4#. However, in the case of wrong levels, !H #T4#4# shall immediately reimburse63/4# after the formers laboratory shall be able to determine that the bottles were never opened after it left the lantABBB BBB BBB.$6n /ovember $$, $11*, during the term of the charter, F'! issued sailing orders to the 'aster of the '/ +oKa #oberta, !aptainFabinianoInguito, instructing him as follows2$. Fail for 6pol, !agayan *&**H /ov. $(, $11*, or as soon as loading of 5GF is completed, with load2F44 I77 65 7 +I/G(. Lou are eBpected to arrive6pol *1**H /ov. $), $11*.). Lou are eBpected to depart 6pol *1**H /ov. $%, $11*, or as soon as loading of empties is completed, back to 'andaue.%. Lou are eBpected to arrive'andaue $)**H /ov. $&, $11*.&. In case you need cash advance, send your re@uest thru radio addressed to us for needed authority.?. 'aintain communications and keep us posted of your developments.8. 6bserve weather condition, eBercise utmost precautionary measures.

6/ 6L G4 /+ G66+ 7M! . (In accordance with the sailing orders, !aptain Inguito obtained the necessary sailing clearance from the hilippine !oast Guard. )7oading of the cargo on the '= +oKa #oberta was completed at 02)* p.m. of /ovember $$, $11*. However, the vessel did notleave 'andaue !ity until ?2** a.m. of the following day, /ovember $(, $11*.'eanwhile, at %2** a.m. of /ovember $(, $11*, typhoon #uping was spotted &8* kilometers east-southeast of orongan, Famar,moving west-northwest at (( kilometers per hour in the general direction of 4astern isayas. The typhoon had maBimum sustained

winds of (%* kilometers per hour near the center with gustiness of up to (0* kilometers per hour.%t 82** a.m., /ovember $(, $11*, one hour after the '= +oKa #oberta departed from 'andaue !ity and while it was abeam

!awit Island off !ebu, F'! #adio 6perator #ogelio . 'oreno contacted !aptain Inguito through the radio and advised him totake shelter. !aptain Inguito replied that they will proceed since the typhoon was far away from them, and that the winds were intheir favor.&

t (2** p.m., while the vessel was two kilometers abeam olCoon oint, 'oreno again communicated with !aptain Inguito and

advised him to take shelter. The captain responded that they can manage.?

Hearing this, 'oreno immediately tried to get in touch with #ico 6uano to tell him that !aptain Inguito did not heed their advice. However, #ico 6uano was out of his office, so 'orenoleft the message with the secretary. 8'oreno again contacted !aptain Inguito at %2** p.m. of /ovember $(, $11*. y then the vessel was already 1.& miles southeast of

alicasag Island heading towards Fulauan oint. The sky was cloudy with southwesterly winds and the sea was choppy. 0 'orenoreiterated the advice and pointed out that it will be difficult to take shelter after passing alicasag Island because they wereapproaching an open sea. Ftill, the captain refused to heed his advice. 1

t 02** p.m., the vessel was )0 miles southeast of alicasag Island. 3est-southwest winds were prevailing. t $*2** p.m., the '=+oKa #oberta was (& miles approaching Fulauan oint. $* 'oments later, power went out in 'orenos office and resumed at $$2%*p.m. He immediately made a series of calls to the '= +oKa #oberta but he failed to get in touch with anyone in the vessel. $$

t $2$& a.m., /ovember $), $11*, !aptain Inguito called 'oreno over the radio and re@uested him to contact #ico 6uano, son of:ulius 6uano, because they needed a helicopter to rescue them. The vessel was about (* miles west of Fulauan oint. $(Mpon being told by F'!s radio operator, #ico 6uano turned on his radio and read the distress signal from !aptain Ingiuto. 3henhe talked to the captain, the latter re@uested for a helicopter to rescue them. $) #ico 6uano talked to the !hief 4ngineer whoinformed him that they can no longer stop the water from coming into the vessel because the crew members were feeling di99yfrom the petroleum fumes.$%

t (2)* a.m. of /ovember $), $11*, the '= +oKa #oberta sank. 6ut of the (& officers and crew on board the vessel, only fivesurvived, namely, 5ernando ucod, #afael 'acairan, !henitoFugabo, #amil abayo and Gilbert Gon9aga. $&6n /ovember (%, $11*, shipowner :ulius 6uano, in lieu of the captain who perished in the sea tragedy, filed a 'arine rotest. $?

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The heirs of the deceased captain and crew, as well as the survivors, $8 of the ill-fated '= +oKa #oberta filed a complaint for tortagainst Fan 'iguel !orporation and :ulius 6uano, docketed as !ivil !ase /o. (%8(-7 of the #egional Trial !ourt of 7apu-7apu!ity, ranch (8. $0:ulius 6uano filed an answer with cross-claim, $1 alleging that the proBimate cause of the loss of the vessel and its officers and crew

was the fault and negligence of F'!, which had complete control and disposal of the vessel as charterer and which issued thesailing order for its departure despite being forewarned of the impending typhoon. Thus, he prayed that F'! indemnify him for thecost of the vessel and the unreali9ed rentals and earnings thereof.In its answer to the complaint$1 and answer to the cross-claim, (* F'! countered that it was 6uano who had the control, supervisionand responsibilities over the navigation of the vessel. This notwithstanding, and despite his knowledge of the incoming typhoon,6uano never bothered to initiate contact with his vessel. !ontrary to his allegation, F'! argued that the proBimate cause of the

sinking was 6uanos breach of his obligation to provide F'! with a seaworthy vessel duly manned by competent crew members.F'! interposed counterclaims against 6uano for the value of the cargo lost in the sea tragedy.fter trial, the court a quo rendered Cudgment finding that the proBimate cause of the loss of the '= +oKa #oberta was attributable

to F'!. Thus, it disposed of the case as follows23H4#456#4, #4'IF4F !6/FI+4#4+, Cudgment is hereby rendered2$. +eclaring defendant Fan 'iguel !orporation and its acts or omissions as having produced the proBimate cause which resulted inthe death of the crew members of '/ +oKa #oberta at past midnight of /ovember $(, $11* during the height of super typhoon"#uping" and as such said defendant is hereby ordered and sentenced to pay to the heirs of the deceased crew members thefollowing sum;s< plus $(O per annum from the filing of the !omplaint2

. 5or loss of life. . . . . . . &*,***.** each of the deceased crew members, namely2 FabinianoInguito 5elipe usa,bundioGalon, Isidro !eletaria, Henry !abigas, edro bayon, Fimeon sentista, /orman 7oon, 7eonardo resbitero, #enato

Fuscano, ntonio +u, George asilgo, Isagani+ayondonA. 5or loss of earnings based on life eBpectancy less 50% representing estimated living eBpenses eBcept for the apprentices as

they were presumed at the time of their deaths to be dependent on their parents2/ame Total loss of earnings$. Fabiniano, Inguito(sic) $,8%*,***( &*O B ),%0*,***D(. usa, 5elipe $,(**,*** E&*O B (,%**,***D). Galon, bundio 0(&,*** E&*O B $,?&*,***D%. !eletaria, Isidro ?**,*** E&*O B $,(**,***D&. !abigas, Henry 1)*,*** E&*O B $,0?*,***D?. bayon, edro ??*,*** E&*O B $,)(*,***D8. sentista, Fimeon &**,*** E&*O B $,***,***D0. 7oon, /orman &&*,*** E&*O B $,$**,***D1. resbitero, 7eonardo %?*,*** E&*O B 1(*,***D$*. Fuscano, #enato %?*,*** E&*O B 1(*,***D$$. +u, ntonio %0*,*** E&*O B 1?*,***D$(. asilgo, George $(*,*** E pprenticeD$). +ayondon, Isagani $(*,*** E+ittoD -------------------------------------------- Total2 0,?%&,***

vvvvvvvvvvvvvv!. )**,***.** for moral damages and (**,***.** for eBemplary damages for the heirs of each of the deceased crew membersof the '= +oKa #oberta named in the mended !omplaint including survivor Gilbert Gon9agaA+. To pay plaintiffs counsel attorneys fees in the sum of &**,***.**A(. Mnder the cross-claim of defendant, 6uano, Fan 'iguel !orporation is further ordered and sentenced to pay defendant cross-claimant 4ngr. :ulius !. 6uano the total sum of )(,01),)**.** plus $(O per annum from the filing of his crossclaim, broken down

as follows2$D 1.0 million for the value of the total loss of the vessel '= +oKa #obertaA(D $,0)),)**.** for unreali9ed rental earnings E ),???,?**.** less &*O for operating eBpenses and taBesD from /ovember $1,$11* to 'ay )$, $11$ as stipulated in the !harter arty greementA)D ($,***,***.** for unreali9ed earnings of '= +oKa #oberta based on the eBpected additional lifetime of the vessel estimatedat seven E8D years E%(,***,***.** less &*O for operating eBpenses and taBesDA%D (&*,***.** for and as attorneys fees and $*,***.** as eBpenses of litigationA). The counter-claims against plaintiffs and the cross-claim of defendant Fan 'iguel !orporation against defendant 4ngr. :ulius !.6uano are hereby dismissed for lack of merit.3ith costs against defendant Fan 'iguel !orporation.F6 6#+4#4+. ((

oth F'! and 6uano appealed to the !ourt of ppeals, docketed as ! -G.#. ! /o. %0(1?. F'! argued that as mere charterer,it did not have control of the vessel and that the proBimate cause of the loss of the vessel and its cargo was the negligence of theship captain. 5or his part, 6uano complained of the reduced damages awarded to him by the trial court.6n +ecember $*, $110, the !ourt of ppeals rendered the decision subCect of the instant petitions for review, to wit23H4#456#4, Cudgment is hereby rendered, modifying the decision appealed from, declaring defendant-appellants Fan 'iguel!orporation and :ulian !. 6uano Cointly and severally liable to plaintiffs-appellees, eBcept to the heirs of !apt. FabinianoInguito, forthe following reduced amounts2

. &*,***.** death indemnity Eloss of lifeD for each of the deceased officers and crew of '= +oKa #oberta.b. 7oss of earning for each of the deceased officers and crew, in the amount awarded by the trial court.

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c. $**,***.** moral damages and &*,***.** eBemplary damages for each deceased officer and crew members, includingGilbert Gon9aga.d. )**,***,** attorneys fees to plaintiffs-appellees.e. The counter-claims of defendants-appellants against plaintiffs-appellees are dismissed.f. The cross-claims of defendants-appellants F'! and :ulius 6uano against each other are likewise dismissed.g. !osts against defendants-appellants.F6 6#+4#4+. ()F'! and 6uano filed separate motions for reconsideration, which were denied by the !ourt of ppeals for lack of merit. (%

etitioner F'!, in G.#. /o. $%$8$?, raises the following arguments2I.

F'! !6M7+ /6T 4 T6#T54 F6# !6/FI+4#I/G TH4 M/+IF MT4+ 5 !T TH T2. F'! H F /6 74G 7 6# !6/T# !TM 7 +MTL T6 I/56#' 6M /6 6MT TH4 FITM TI6/ 65 TH4 4FF47.. 4 4/ 3ITH6MT FM!H +MTL, F'! /4 4#TH474FF 4P4#!IF4+ TH4 /4!4FF #L +4G#44 65 #M+4/!4 L

I/56#'I/G 6M /6 6MT I/GMIT6F #45MF 7 T6 T 4 FH47T4#.!. TH4 !6M#T 65 4 7F ITF475 56M/+ TH T TH4 #6PI' T4 ! MF4 65 TH4 76FF 65 TH4 4FF47 3 FI/GMIT6F 5 I7M#4 T6 H44+ F'!F + I!4 T6 T 4 FH47T4#, /+ I/GMIT6 3 F / 4' 76L44 65 6M /6 /+/6T 65 F'!.II.M/+4# TH4 !H #T4#, 6M /6 3 F #4F 6/FI 74 /+ M/+4#T66 T6 I/+4'/I5L F'! 56# 77 + ' G4F

#IFI/G 5#6' TH4 /4G7IG4/!4 65 HIF !#43, #TI!M7 #7L I/GMIT6. (&'eanwhile, petitioner 6uano, in G.#. /o. $%(*(&, anchors his petition on the following assignment of errors2First Error The !ourt of ppeals committed serious error of law and=or grave abuse of discretion in not finding that the !harter arty betweenF'! and 6uano is legally and in fact a demise charter, an issue raised by petitioner from the very start in the Trial !ourtSecond Error The !ourt of ppeals committed serious error of law and=or grave abuse of discretion in not finding that !apt. Inguito, master of theill-fated '= +oKa #oberta, was legally and in fact an agent=servant of F'! demise charterer as correctly characteri9ed by theTrial !ourtThird Error The !ourt of ppeals committed serious error of law and=or grave abuse of discretion in completely disregarding or suppressing thefindings of fact of the Trial !ourt on the issues of possession and control of '= +oKa #oberta by F'! and its actions relatingthereto as demise charterer=owner pro hac vice which led to the tragedy and in not declaring that said actions of F'! constitutedthe proBimate cause of the sinking and loss of the vessel and the death of most of its crew membersFourth Error The !ourt of ppeals committed serious error of law and=or grave abuse of discretion in finding 6uano at fault in the sinking of '=+oKa #oberta against the evidence on record which is largely undisputedFifth Error The !ourt of ppeals committed serious error of law and=or grave abuse of discretion insofar as it failed to find and declarerespondent F'!s tort or negligence as the proBimate cause which resulted in the sinking and total loss of '= +oKa #oberta as

well as the death of its officers and crew members and correspondingly in not awarding to petitioner 6uano the sums of money asawarded by the Trial !ourt in the dispositive part of its decision dated $* +ecember $110.Sixth Error In any event, the !ourt of ppeals committed serious error of law and=or grave abuse of discretion in not declaring and holdingpetitioner 6uano not liable for the claims of private respondents heirs of FabinianoInguito, et al. and F'! under the well-established principle in 'aritime 7aw that the owners liability sinks with the vessel. (?The two petitions were consolidated.In deciding the cases at bar, the !ourt of ppeals correctly resolved the issues with an initial discussion of the definition and kindsof charter parties. reliminarily, a charter party is a contract by virtue of which the owner or the agent of a vessel binds himself totransport merchandise or persons for a fiBed price. It has also been defined as a contract by virtue of which the owner or the agentof the vessel leases for a certain price the whole or a portion of the vessel for the transportation of goods or persons from one portto another. (8

charter party may either be a E$D bareboat or demise charter or E(D contract of affreightment. Mnder a demise or bareboat charter,the charterer mans the vessel with his own people and becomes, in effect, the owner of the ship for the voyage or service

stipulated, subCect to liability for damages caused by negligence.(0

In a contract of affreightment, on the other hand, the owner of the vessel leases part or all of its space to haul goods for others. It isa contract for special service to be rendered by the owner of the vessel. Mnder such contract the ship owner retains thepossession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in returnfor his payment of the charter hire.(1 6therwise put, a contract of affreightment is one by which the owner of a ship or other vessellets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration ofthe payment of freight.

contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fiBed period oftime, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charterer provides for the hire of thevessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ships store,pay for the wages of the master of the crew, and defray the eBpenses for the maintenance of the ship.If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, therights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of theship.)*3e concur with the findings of the !ourt of ppeals that the charter party in these cases was a contract of affreightment, contraryto petitioner 6uanos protestation that it was a demise charter, as shown by the following stipulations in the Time !harter arty

greement21. There shall be no employer-employee relations between the 63/4# and=or its vessels crew on one hand and the!H #T4#4# on the other. The crew of the vessel shall continue to be under the employ, control and supervision of the 63/4#.!onse@uently, damage or loss that may be attributable to the crew, including loss of the vessel used shall continue to be the

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responsibility of, and shall be borne, by the 63/4#A the 63/4# further covenants to hold the !H #T4#4# free from all claimsand liabilities arising out of the acts of the crew and the condition of the vesselA$*. The 63/4# shall undertake to pay all compensation of all the vessels crew, including the benefits, premia and protection inaccordance with the provisions of the /ew 7abor !ode and other applicable laws and decrees and the rules and regulationspromulgated by competent authorities as well as all of the FFF premium. Thus, it is understood that the crew of he vessel shall andalways remain the employees of the 63/4#A$$. The 63/4# shall be responsible to and shall indemnify the !H #T4#4# for damages and losses arising from theincompetence and=or, negligence of, and=or the failure to observe the re@uired eBtraordinary diligence by the crew. It shall beautomatically liable to the !H #T4#4# for shortlanded shipment and wrong levels, the value of which shall be withheld from the63/4#s collectibles with the !H #T4#4#. However, in the case of wrong levels, !H #T4#4# shall immediately reimburse

63/4# after the formers laboratory shall be able to determine that the bottles were never opened after it left the lantAIt appearing that 6uano was the employer of the captain and crew of the '= +oKa #oberta during the term of the charter, hetherefore had command and control over the vessel. His son, #ico 6uano, even testified that during the period that the vessel wasunder charter to F'!, the !aptain thereof had control of the navigation of all voyages. )$Mnder the foregoing definitions, as well as the clear terms of the !harter arty greement between the parties, the charterer, F'!,should be free from liability for any loss or damage sustained during the voyage,)( unless it be shown that the same was due to itsfault or negligence.The evidence does not show that F'! or its employees were amiss in their duties. The facts indubitably establish that F'!s#adio 6perator, #ogelio . 'oreno, who was tasked to monitor every shipment of its cargo, contacted !aptain Inguito as early as82** a.m., one hour after the '= +oKa #oberta departed from 'andaue, and advised him to take shelter from typhoon Ruping.This advice was reiterated at (2** p.m. t that point, 'oreno thought of calling 6uanos son, #ico, but failed to find him. t %2**p.m., 'oreno again advised !aptain Inguito to take shelter and stressed the danger of venturing into the open sea. The !aptaininsisted that he can handle the situation.That evening, 'oreno tried in vain to contact the captain. 7ater at $2$& a.m., !aptain Inguito himself radioed a distress signal andasked that the same be relayed to #ico 6uano.In contrast to the care eBercised by 'oreno, #ico 6uano tried to communicate with the captain only after receiving the F.6.F.message. /either 6uano nor his son was available during the entire time that the vessel set out and encountered foul weather.!onsidering that the charter was a contract of affreightment, the shipowner had the clear duty to ensure the safe carriage andarrival of goods transported on board its vessels. 'ore specifically, 6uano eBpressly warranted in the Time !harter arty that hisvessel was seaworthy.5or a vessel to be seaworthy, it must be ade@uately e@uipped for the voyage and manned with a sufficient number of competentofficers and crew. )) Feaworthiness is defined as the sufficiency of the vessel in materials, construction, e@uipment, officers, men,and outfit, for the trade or service in which it is employed.)% It includes the fitness of a ship for a particular voyage with reference toits physical and mechanical condition, the eBtent of its fuel and provisions supply, the @uality of its officers and crew, and itsadaptability for the time of voyage proposed.)&In the assailed decision, the !ourt of ppeals found that the proBimate cause of the sinking of the vessel was the negligence of!aptain FabinianoInguito, thus2It appears that the proBimate cause of the sinking of the vessel was the gross failure of the captain of the vessel to observe duecare and to heed F'!s advices to take shelter. Gilbert Gonsaga, !hief 4ngineer of +oKa #oberta, testified that the ship sank at(2)* in the early morning of /ovember $)th. 6n the other hand, from the time the vessel left the port of 'andaue at siB oclock inthe morning, 4Bh "$& F'!", 4Bh "$? F'!", 4Bh "$8 F'!" and 4Bh "$0 F'!" would show that !aptain FabinianoInguito was ableto contact the radio operator of F'!. He was fully apprised of typhoon "#uping" and its strength. +ue diligence dictates that at anytime before the vessel was in distress, he should have taken shelter in order to safeguard the vessel and its crew. Gonsagatestified that at 82** a.m. of /ovember $(, $11*, he was able to talk to the captain and in@uired from him what the message was ofthe radio operator of F'!. The captain answered that they would take shelter in Tagbilaran if the wind would grow stronger. utGonsaga was surprised when they did not take shelter and, instead, proceeded with the voyage.Gonsaga further testified that at 82** in the evening of /ovember $(, $11*, he went up to the office of the captain when the wind

was getting stronger and asked him, "3hat is this captain, the wind is already very strong and the waves are very big, what is themessage of F'!J" The captain plotted the position of the typhoon and said that the typhoon is still very far per the data suppliedby F'!.It is very clear that !aptain FabinianoInguito had sufficient time within which to secure his men and the vessel. ut he waited untilthe vessel was already in distress at $2$& in the early morning of /ovember $)m, $11* to seek help in saving his men and thevessel. In any event, !apt. Inguito had full control and responsibility, whether to follow a sailing order or to take shelter when

already at sea. In fact, there was an incident when a sailing order was issued by F'! to Inguito but he decided not to proceed withthe voyage because of a tropical storm. )?The foregoing factual conclusions are binding on us. Fettled is the rule that findings of fact of the !ourt of ppeals are conclusiveand are not reviewable by this !ourt, )8 unless the case falls under any of the recogni9ed eBceptions, such as2 E$D when theconclusion is a finding grounded entirely on speculation, surmises and conCecturesA E(D when the inference made is manifestlymistaken, absurd or impossibleA E)D where there is a grave abuse of discretionA E%D when the Cudgment is based on amisapprehension of factsA E&D when the findings of fact are conflictingA E?D when the !ourt of ppeals, in making its findings, wentbeyond the issues of the case and the same is contrary to the admissions of both appellant and appelleeA E8D when the findings arecontrary to those of the trial courtA E0D when the findings of fact are conclusions without citation of specific evidence on which theyare basedA E1D when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by therespondentsA and E$*D when the findings of fact of the !ourt of ppeals are premised on the supposed absence of evidence andcontradicted by the evidence on record. )0 /one of these eBceptions obtain in the case at bar.3e likewise agree with the !ourt of ppeals that 6uano is vicariously liable for the negligent acts of his employee, !aptain Inguito.Mnder rticles ($8? and ($0* of the !ivil !ode, owners and managers are responsible for damages caused by the negligence of aservant or an employee, the master or employer is presumed to be negligent either in the selection or in the supervision of thatemployee. This presumption may be overcome only by satisfactorily showing that the employer eBercised the care and thediligence of a good father of a family in the selection and the supervision of its employee.)16uano miserably failed to overcome the presumption of his negligence. He failed to present proof that he eBercised the duediligence of a onus paterfa!i"ias in the selection and supervision of the captain of the '= +oKa #oberta. Hence, he is vicariouslyliable for the loss of lives and property occasioned by the lack of care and negligence of his employee.

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However, we cannot sustain the appellate courts finding that F'! was likewise liable for the losses. The contention that it was theissuance of the sailing order by F'! which was the proBimate cause of the sinking is untenable. The fact that there was anapproaching typhoon is of no moment. It appears that on one previous occasion, F'! issued a sailing order to the captain of the'= +oKa #oberta, but the vessel cancelled its voyage due to typhoon. %* 7ikewise, it appears from the records that F'! issued thesailing order on /ovember $$, $11*, before typhoon "#uping" was first spotted at %2** a.m. of /ovember $(, $11*. %$!onse@uently, 6uano should answer for the loss of lives and damages suffered by the heirs of the officers and crew members whoperished on board the '= +oKa #oberta, eBcept !aptain FabinianoInguito. The award of damages granted by the !ourt of

ppeals is affirmed only against 6uano, who should also indemnify F'! for the cost of the lost cargo, in the total amount of$*,(80,&%(.%*.%(

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G.R. No. 10>@@@ ?'#e 20, 1@@>. PHILIPPINE HOME ASS RANCE CORPORATION, petitioner, vs.CO RT O! APPEALS $#( EASTERN SHIPPING LINES, INC., respondents. T e !$"t&4astern Fhipping 7ines, Inc. E4F7ID loaded on board FF 4astern 4Bplorer in obe, :apan, the following shipment for carriage to'anila and !ebu, freight pre-paid and in good order and condition, vi#2 EaD two E(D boBes internal combustion engine parts,consigned to 3illiam 7ines, Inc. under ill of 7ading /o. *%((0)A EbD ten El*D metric ton. E))% bagsD ammonium chloride, consignedto 6rcaQs !ompany under ill of 7ading /o. !4-I(A EcD two hundred E(**D bags Glue )**, consigned to an 6riental 'atch!ompany under ill of 7ading /o. !4-0A and EdD garments, consigned to +ing elayo under ills of 7ading /os. ' -8) and

' -8%.

3hile the vessel was off 6kinawa, :apan, a small flame was detected on the acetylene cylinder located in the accommodation areanear the engine room on the main deck level. s the crew was trying to eBtinguish the fire, the acetylene cylinder suddenlyeBploded sending a flash of flame throughout the accommodation area, thus causing death and severe inCuries to the crew andinstantly setting fire to the whole superstructure of the vessel. The incident forced the master and the crew to abandon the ship.

Thereafter, FF 4astern 4Bplorer was found to be a constructive total loss and its voyage was declared abandoned. Feveral hourslater, a tugboat under the control of 5ukuda Falvage !o. arrived near the vessel and commenced to tow the vessel for the port of/aha, :apan.

5ire fighting operations were again conducted at the said port. fter the fire was eBtinguished, the cargoes which were saved wereloaded to another vessel for delivery to their original ports of destination. 4F7I charged the consignees several amountscorresponding to additional freight and salvage charges, as follows2 EaD for the goods covered by ill of 7ading /o. *%((0), 4F7Icharged the consignee the sum of $,1(8.?&, representing salvage charges assessed against the goodsA EbD for the goods coveredby ill of 7ading /o. !4-$(, 4F7I charged the consignee the sum of (,10*.?% for additional freight and 0(?.$% for salvagecharges against the goodsA EcD for the goods covered by ill of 7ading /o. !4-0, 4F7I charged the consignee the sum of

),(1(.(? for additional freight and %,$)*.?0 for salvage charges against the goodsA and EdD for the goods under ills of 7ading/os. ' -8) and ' -8%, 4F7I charged the consignee the sum of 0,))8.*? for salvage charges against the goods.

The charges were all paid by hilippine Home ssurance !orporation E H !D under protest for and in behalf of the consignees.H !, as subrogee of the consignees, thereafter filed a complaint before the #egional Trial !ourt of 'anila, ranch )1, against

4F7I to recover the sum paid under protest on the ground that the same were actually damages directly brought about by the fault,negligence, illegal act and=or breach of contract of 4F7I.

In its answer, 4F7I contended that it eBercised the diligence re@uired by law in the handling, custody and carriage of the shipmentAthat the fire was caused by an unforeseen eventA that the additional freight charges are due and demandable pursuant to the ill of7adingA1 and that salvage charges are properly collectible under ct /o. (?$?, known as the Falvage 7aw.

R'*%#+ o) t e RTCThe trial court dismissed H !Qs complaint and ruled in favor of 4F7I ratiocinating thus2T e 'e&t%o# to be re&o*-e( %& et er or #ot t e )%re o# t e -e&&e* %" $& "$'&e( b t e e p*o&%o# o) $# $"et *e#e " *%#(er*o$(e( o# t e &$me $& t e )$'*t or #e+*%+e#"e o) t e (e)e#($#t.

4vidence has been presented that the FF "4astern 4Bplorer" was a seaworthy vessel E+eposition of :umpei 'aeda, 6ctober (),$10*, p. )D and before the ship loaded the cetylene !ylinder /o. /!3 08&, the same has been tested, checked and eBaminedand was certified to have complied with the re@uired safety measures and standards E+eposition of FenCei Hayashi, 6ctober (),$10*, pp. (-)D. 3hen the fire was detected by the crew, fire fighting operations was immediately conducted but due to theeBplosion 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 vessel rendering it a constructive total loss andincapable of pursuing its voyage to the hilippines was, therefore, not the fault or negligence of defendant but a natural disaster orcalamity which nobody would like to happen. The salvage operations conducted by 5ukuda Falvage !ompany E4Bhibits "%- " and"?- "D was perfectly a legal operation and charges made on the goods recovered were legitimate charges.

A"t No. 2>1>, ot er %&e B#o # $& t e S$*-$+e L$ , %& t '& $pp*%"$b*e to t e "$&e $t b$r.Fection $ of ct /o. (?$? states2Se" 1. < e# %# "$&e o) & %p re"B, t e -e&&e* or %t& "$r+o & $** be be o#( t e "o#tro* o) t e "re , or & $** $-e bee# $b$#(o#e(b t em, $#( p%"Be( 'p $#( "o#-e e( to $ &$)e p*$"e b ot er per&o#&, t e *$tter & $** be e#t%t*e( to $ re $r( )or t e &$*-$+e.

T o&e o, #ot be%#+ %#"*'(e( %# t e $bo-e p$r$+r$p , $&&%&t %# &$-%#+ $ -e&&e* or %t& "$r+o )rom & %p re"B, & $** be e#t%t*e( to*%Be re $r(.

In relation to the above provision, the Fupreme !ourt has ruled in 4rlanger R Galinger v. Fwedish 4ast siatic !o., 7td., )% hil.$80, that three elements are necessary to a valid salvage claim, namely E $6$ m$r%#e per%* b6 &er-%"e -o*'#t$r%* re#(ere( e##ot re '%re( $& $# e %&t%#+ ('t or )rom $ &pe"%$* "o#tr$"t $#( "6 &'""e&& %# o*e or %# p$rt, or t $t t e &er-%"e re#(ere("o#tr%b'te( to &'" &'""e&&.

The above elements are all present in the instant case. Falvage charges may thus be assessed on the cargoes saved from thevessel. s provided for in Fection $) of the Falvage 7aw, "The eBpenses of salvage, as well as the reward for salvage orassistance, shall be a charge on the things salvaged or their value." In 'anila #ailroad !o. v. 'acondray !o., )8 hil. &0), it wasalso held that "when a ship and its cargo are saved together, the salvage allowance should be charged against the ship and cargoin the proportion of their respective values, the same as in a case of general average . . ." Thus, the "compensation to be paid bythe owner of the cargo is in proportion to the value of the vessel and the value of the cargo saved." E tlantic Gulf and acific !o. v.Mchida isen aisha, %( hil. )($D.E'emorandum for +efendant, #ecords, pp. ($(-($)D.

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3ith respect to the additional freight charged by defendant from the consignees of the goods, the same are also validlydemandable. s provided by the !ivil !ode2Art. 1174. 4Bcept in cases eBpressly specified by law, or when it is otherwise declared by stipulation, or when the nature of theobligation re@uire the assumption of risk, no person shall be responsible for those events which could not be foreseen, or whichthough foreseen, were inevitable.

Art 12>>. The debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the fault of the obligor."

The burning of "4 FT4#/ 4P 76#4#" while off 6kinawa rendered it physically impossible for defendant to comply with its

obligation of delivering the goods to their port of destination pursuant to the contract of carriage. Mnder rticle $(?? of the !ivil!ode, the physical impossibility of the prestation eBtinguished defendantQs obligation..

It is but legal and e@uitable for the defendant therefore, to demand additional freight from the consignees for forwarding the goodsfrom /aha, :apan to 'anila and !ebu !ity on board another vessel, the "4 FT4#/ ' #F." This finds support under rticle 0%% ofthe !ode of !ommerce which provides as follows2Art. :44. captain who may have taken on board the goods saved from the wreck shall continue his course to the port ofdestinationA and on arrival should deposit the same, with Cudicial intervention at the disposal of their legitimate owners. . . .The owners of the cargo shall defray all the eBpenses of this arrival as well as the payment of the freight which, after taking intoconsideration the circumstances of the case, may be fiBed by agreement or by a Cudicial decision.

5urthermore, the terms and conditions of the ill of 7ading authori9e the imposition of additional freight charges in case of forcedinterruption or abandonment of the voyage. t the dorsal portion of the ills of 7ading issued to the consignees is this stipulation2$(. ll storage, transshipment, forwarding or other disposition of cargo at or from a port of distress or other place where there hasbeen a forced interruption or abandonment of the voyage shall be at the eBpense of the owner, shipper, consignee of the goods orthe holder of this bill of lading who shall be Cointly and severally liable for all freight charges and eBpenses of every kind

whatsoever, whether payable in advance or not that may be incurred by the cargo in addition to the ordinary freight, whether theservice be performed by the named carrying vessel or by carrierQs other vessels or by strangers. ll such eBpenses and chargesshall be due and payable day by day immediately when they are incurred.

The bill of lading is a contract and the parties are bound by its terms EGovQt of the hilippine Islands vs. Lnchausti and !o., %* hil.($1D. The provision @uoted is binding upon the consignee.

+efendant therefore, can validly re@uire payment of additional freight from the consignee. laintiff can not thus recover theadditional freight paid by the consignee to defendant. E'emorandum for +efendant, #ecord, pp. ($&-($?D. 2

R'*%#+ o) t e CA6n appeal to the !ourt of ppeals, respondent court affirmed the trial courtQs findings and conclusions, / hence, the present petitionfor review before this !ourt on the following errors2I. TH4 #4F 6/+4/T !6M#T 4##6/46MF7L +6 T4+ 3ITH #6 7 TH4 T#I 7 !6M#TQF 5I/+I/GF TH T TH4

M#/I/G 65 TH4 FF "4 FT4#/ 4P 76#4#", #4/+4#I/G 4T !6/FT#M!TI 4 T6T 7 76FF, IF / TM# 7 +IF FT4#6# ! 7 'ITL 3HI!H /6 6+L 36M7+ 7I 4 T6 H 4/, +4F IT4 4PIFTI/G :M#IF #M+4/!4 T6 TH4 !6/T# #L.II. TH4 #4F 6/+4/T !6M#T # IT# #I7L #M74+ TH T TH4 M#/I/G 65 TH4 FF "4 FT4#/ 4P 76#4#" 3 F /6TTH4 5 M7T /+ /4G7IG4/!4 65 #4F 6/+4/T 4 FT4#/ FHI I/G 7I/4F.III. TH4 #4F 6/+4/T !6M#T !6''ITT4+ G# 4 MF4 65 +IF!#4TI6/ I/ #M7I/G TH T +454/+ /T H +4P4#!IF4+ TH4 4PT# 6#+I/ #L +I7IG4/!4 I/ TH4 IGI7 /!4 6 4# TH4 G66+F F #4 MI#4+ L 7 3.I . TH4 #4F 6/+4/T !6M#T # IT# #I7L #M74+ TH T TH4 ' #I/4 /6T4 65 #6T4FT /+ FT T4'4/T 65 5 !TFIFFM4+ L TH4 4FF47QF ' FT4# #4 /6T H4 #F L +4F IT4 TH4 5 !T TH T TH4 4FF47QF ' FT4#, ! T.7I! L7I! L 3 F /6T #4F4/T4+ !6M#T, 3ITH6MT 4P 7 / TI6/ 3H TF64 4# 56# HIF /6/- #4F4/T TI6/,THMF, 4TITI6/4# 3 F +4 #I 4+ 65 ITF #IGHT T6 !#6FF- 4P 'I/4 TH4 MTH6# TH4#465.

. TH4 #4F 6/+4/T !6M#T 4##6/46MF7L +6 T4+ 3ITH #6 7 TH4 T#I 7 !6M#TQF !6/!7MFI6/ TH T TH44P 4/F4F 6# 4# G4F I/!M##4+ I/ F I/G TH4 ! #G6 !6/FTITMT4 G4/4# 7 4# G4.

I. TH4 #4F 6/+4/T !6M#T 4##6/46MF7L +6 T4+ TH4 T#I 7 !6M#TQF #M7I/G TH T 4TITI6/4# 3 F 7I 74

T6 #4F 6/+4/T ! ##I4# 56# ++ITI6/ 7 5#4IGHT /+ F 7 G4 !H #G4F.4

T e Co'rt8& R'*%#+It is @uite evident that the foregoing assignment of errors challenges the findings of fact and the appreciation of evidence made bythe trial court and later affirmed by respondent court. 3hile it is a well-settled rule that only @uestions of law may be raised in apetition for review under #ule %& of the #ules of !ourt, it is e@ually well-settled that the same admits of the following eBceptions,namely2 EaD when the conclusion is a finding grounded entirely on speculation, surmises or conCecturesA EbD when the inferencemade is manifestly mistaken, absurd or impossibleA EcD where there is a grave abuse of discretionA EdD when the Cudgment is basedon a misapprehension of factsA EeD when the findings of fact are conflictingA EfD when the !ourt of ppeals, in making its findings,

went beyond the issues of the case and the same is contrary to the admissions of both appellant and appelleeA EgD when thefindings of the !ourt of ppeals are contrary to those of the trial courtA EhD when the findings of fact are conclusions without citationof specific evidence on which they are basedA EiD when the facts set forth in the petition as well as in the petitionersQ main and replybriefs are not disputed by the respondentsA and ECD when the finding of fact of the !ourt of ppeals is premised on the supposedabsence of evidence and is contradicted by the evidence on record. 5 Thus, if there is a showing, as in the instant case, that the

findings complained of are totally devoid of support in the records, or that they are so glaringly erroneous as to constitute graveabuse of discretion, the same may be properly reviewed and evaluated by this !ourt.

It is worthy to note at the outset that the goods subCect of the present controversy were neither lost nor damaged in transit by thefire that ra9ed the carrier. In fact, the said goods were all delivered to the consignees, even if the transshipment took longer thannecessary. < $t %& $t %&&'e t ere)ore %& #ot et er or #ot t e "$rr%er %& *%$b*e )or t e *o&&, ($m$+e, or (eter%or$t%o# o) t e

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+oo(& tr$#&porte( b t em b't o, $mo#+ t e "$rr%er, "o#&%+#ee or %#&'rer o) t e +oo(&, %& *%$b*e )or t e $((%t%o#$* " $r+e&or e pe#&e& %#"'rre( b t e o #er o) t e & %p %# t e &$*-$+e oper$t%o#& $#( %# t e tr$#&& %pme#t o) t e +oo(& -%$ $ (%))ere#t"$rr%er.

In absolving respondent carrier of any liability, respondent !ourt of ppeals sustained the trial courtQs finding that the fire that guttedthe ship was a natural disaster or calamity. etitioner takes eBception to this conclusion and we agree. I# o'r 9'r%&pr'(e#"e, )%rem$ #ot be "o#&%(ere( $ #$t'r$* (%&$&ter or "$*$m%t &%#"e %t $*mo&t $* $ & $r%&e& )rom &ome $"t o) m$# or b 'm$# me$#&. It"$##ot be $# $"t o) Go( '#*e&& "$'&e( b *%+ t#%#+ or $ #$t'r$* (%&$&ter or "$&'$*t #ot $ttr%b't$b*e to 'm$# $+e#" . >

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

eBploded despite efforts to eBtinguish the fire. /either is there any doubt that the acetylene cylinder, obviously fully loaded, wasstored in the accommodation area near the engine room and not in a storage area considerably far, and in a safe distance, fromthe engine room. 'oreover, there was no showing, and none was alleged by the parties, that the fire was caused by a naturaldisaster or calamity not attributable to human agency. 6n the contrary, there is strong evidence indicating that the acetylenecylinder caught fire because of the fault and negligence of respondent 4F7I, its captain and its crew.

!%r&t, the acetylene cylinder which was fully loaded should not have been stored in the accommodation area near the engine room where the heat generated therefrom could cause the acetylene cylinder to eBplode by reason of spontaneous combustion.#espondent 4F7I should have easily foreseen that the acetylene cylinder, containing highly inflammable material was in realdanger of eBploding because it was stored in close proBimity to the engine room.

Se"o#(, respondent 4F7I should have known that by storing the acetylene cylinder in the accommodation area supposed to bereserved for passengers, it unnecessarily eBposed its passengers to grave danger and inCury. !urious passengers, ignorant of thedanger the tank might have on humans and property, could have handled the same or could have lighted and smoked cigarettes

while repairing in the accommodation area.T %r(, the fact that the acetylene cylinder was checked, tested and eBamined and subse@uently certified as having complied withthe safety measures and standards by @ualified eBperts 7 before it was loaded in the vessel only shows to a great eBtent thatnegligence was present in the handling of the acetylene cylinder after it was loaded and while it was on board the ship. Indeed, hadthe respondent and its agents not been negligent in storing the acetylene cylinder near the engine room, then the same would nothave leaked and eBploded during the voyage.

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

nent petitionerQs obCection to the admissibility of 4Bhibits "%QQ and QQ&", the Ftatement of 5acts and the 'arine /ote of rotest issuedby !aptain Tiburcio . 7icaylicay, we find the same impressed with merit because said documents are hearsay evidence. !apt.7icaylicay, 'aster of F.F. 4astern 4Bplorer who issued the said documents, was not presented in court to testify to the truth of thefacts he stated thereinA instead, respondent 4F7I presented :unpei 'aeda, its ranch 'anager in Tokyo and Lokohama, :apan,

who evidently had no personal knowledge of the facts stated in the documents at issue. It is clear from Fection )?, #ule $)* of the#ules of !ourt that any evidence, whether oral or documentary, is hearsay if its probative value is not based on the personalknowledge of the witness but on the knowledge of some other person not on the witness stand. !onse@uently, hearsay evidence,

whether obCected to or not, has no probative value unless the proponent can show that the evidence falls within the eBceptions tothe hearsay evidence rule. : It is eBcluded because the party against whom it is presented is deprived of his right and opportunity tocross-eBamine the persons to whom the statements or writings are attributed.

6n the issue of whether or not respondent court committed an error in concluding that the eBpenses incurred in saving the cargoare considered general average, we rule in the affirmative. A& $ r'*e, +e#er$* or +ro&& $-er$+e& %#"*'(e $** ($m$+e& $#(e pe#&e& %" $re (e*%ber$te* "$'&e( %# or(er to &$-e t e -e&&e*, %t& "$r+o, or bot $t t e &$me t%me, )rom $ re$* $#( B#o #r%&B@ 3hile the instant case may technically fall within the purview of the said provision, the formalities prescribed under rticles0$) 10 and 0$%11 of the !ode of !ommerce in order to incur the eBpenses and cause the damage corresponding to gross average

were not complied with. !onse@uently, respondent 4F7IQs claim for contribution from the consignees of the cargo at the time of theoccurrence of the average turns to naught.

rescinding from the foregoing premises, it indubitably follows that the cargo consignees cannot be made liable to respondentcarrier for additional freight and salvage charges. !onse@uently, respondent carrier must refund to herein petitioner the amount itpaid under protest for additional freight and salvage charges in behalf of the consignees.

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G.R. No. 11:0/0 ?$#'$r 15, 2004. PRO I=ENT INS RANCE CORP., petitioner, vs. HONORA3LE CO RT O! APPEALS $#(AD CAR SHIPPING CORP., respondents.

This is a petition for review under #ule %& of the #ules of !ourt assailing the +ecision of the !ourt of ppeals dated /ovember $&,$11%, which affirmed the appealed 6rders dated ugust $(, $11$ and 5ebruary %, $11( issued by the #egional Trial !ourt of'anila, ranch &$, in !ivil !ase /o. 1$-&?$?8.

T e !$"t&The pertinent facts as culled from the stipulation of facts submitted by the parties are as follows26n or about :une &, $101, the vessel ' "4duardo II" took and received on board at Fangi, Toledo !ity a shipment of )(,***

plastic woven bags of various fertili9er in good order and condition for transportation to !agayan de 6ro !ity. The subCect shipment was consigned to tlas 5ertili9er !orporation, and covered by ill of 7ading /o. *$ and 'arine Insurance olicy /o. !'I-($$=01-! . Mpon its arrival at General Fantos !ity on :une 8, $101, the vessel ' "4duardo II" was instructed by the consigneeQsrepresentative to proceed to +avao !ity and deliver the shipment to its +avao ranch in Tabigao.

6n :une $*, $101, the ' "4duardo II" arrived in +avao !ity where the subCect shipment was unloaded. In the process ofunloading the shipment, three bags of fertili9er fell overboard and (0$ bags were considered to be unrecovered spillages. ecauseof the mishandling of the cargo, it was determined that the consignee incurred actual damages in the amount of ?0,$1?.$?. s theclaims were not paid, petitioner rovident Insurance !orporation indemnified the consignee tlas 5ertili9er !orporation for itsdamages. Thereafter, petitioner, as subrogee of the consignee, filed on :une ), $11$ a complaint against respondent carrierseeking reimbursement for the value of the losses=damages to the cargo.

#espondent carrier moved to dismiss the complaint on the ground that the claim or demand by petitioner has been waived,abandoned or otherwise eBtinguished for failure of the consignee to comply with the re@uired claim for damages set forth in the firstsentence of Ftipulation /o. 8 of the bill of lading, the full teBt of which reads 8. ll claims for damages to the goods must be made to the carrier at the time of delivery to the consignee or his agent if thepackage or containers show eBterior sign of damage, otherwise to be made in writing to the carrier within twenty-four hours fromthe time of delivery. /otice of loss due to delay must be given in writing to the carrier within )* days from the time the goods wereready for delivery, or in case of non-delivery or misdelivery of shipment the written notice must be given within )* days after thearrival at the port of discharge of the vessels on which the goods were received in case of the failure of the vessel on which thegoods were shipped to arrived at the port of discharge, misdelivery must be presented in writing to the carrier within two monthsafter the arrival of the vessel of the port of discharge or in case of the failure of the vessel in which the goods were shipped to arriveat the port of discharge written claims shall be made within )* days of the time the vessel should have arrived. The giving of noticeand the filing of claims as above provided shall be conditions precedent to the securing of the right of actions against the carrier forlosses due to delay, non-delivery, or misdelivery. In the case of damage to goods, the filing of the suit based upon claims arisingfrom damage, delay, non-delivery or mis-delivery shall be instituted within one year from the date of the accrual of the right ofaction. 5ailure to institute Cudicial proceedings as herein provided shall constitute a waiver of the claim or right of action, and noagent nor employee of the carrier shall have authority to waive any of the provisions or re@uirements of this bill of lading. ny actionby the ship owner or its agents or attorneys in considering or dealing with claims where the provisions or re@uirements of this bill oflading have not been complied with shall not be considered a waiver of such re@uirements and they shall not be considered as waived eBcept by an eBpress waiver.$ EItalics FuppliedD

R'*%#+ o) t e RTCThe trial court, in an 6rder dated ugust $(, $11$, found the motion to dismiss well taken and accordingly, dismissed thecomplaint.( etitioner filed a motion for reconsideration which the trial court, in an 6rder dated 5ebruary %, $11(, denied. )

R'*%#+ o) t e CAggrieved by the lower courtQs decision, petitioner appealed to the !ourt of ppeals. 6n /ovember $&, $11%, the !ourt of ppeals

rendered the assailed decision which affirmed the lower courtQs 6rders dated ugust $(, $11$ and 5ebruary %, $11(. % Hence, thispetition raising the lone error that TH4 H6/6# 74 !6M#T 65 4 7F H F +4!I+4+ TH4 M4FTI6/ I/ IFFM4 /6T I/

!!6#+ /!4 3ITH TH4 M# 6F4 56# 3HI!H TH4 7 3 3 F 4FT 7IFH4+ /+ !6/T# #L T6 TH4 4PIFTI/G:M#IF #M+4/!4. &

In support of its petition, petitioner contends that it is unreasonable for the consignee tlas 5ertili9er !orporation to be re@uired toabide by the provisions of Ftipulation /o. 8 of the bill of lading. ccording to petitioner, since the place of delivery was remote andinaccessible, the consignee cannot be eBpected to have been able to immediately inform its main office and make the necessaryclaim for damages for the losses and unrecovered spillages in the subCect cargo. etitioner further argues that the contents of thebill of lading are printed in small letters that no one would bother to read them, as they are difficult to read.

5inally, petitioner avers that from :une $) to $0, $108, the vesselQs !hief 6fficer supervised the unloading of the shipment andthereafter signed a discharging report attesting to the fact of loss and unrecovered spillages on the cargo. Thus, petitioner arguesthat respondent carrierQs knowledge of the loss and spillages was substantial compliance with the notice of claim re@uired underFtipulation /o. 8 of the bill of lading.

T e Co'rt8& R'*%#+The petition is bereft of merit.

It is a fact admitted by both parties that the losses and damages were caused by the mishandling of the cargo by respondentcarrier. There is also no dispute that the consignee failed to strictly comply with Ftipulation /o. 8 of the ill of 7ading in not makingclaims for damages to the goods within the twenty-four hour period from the time of delivery, and that there was no eBterior sign ofdamage of the goods. Co#&e 'e#t* , t e o#* %&&'e *e)t to be re&o*-e( %& et er t e )$%*'re to m$Be t e prompt #ot%"e o) "*$%m$& re '%re( %& )$t$* to t e r%+ t o) pet%t%o#er to "*$%m %#(em#%)%"$t%o# )or ($m$+e&.

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$*%(%t o) t e St%p'*$t%o#T e b%** o) *$(%#+ (e)%#e& t e r%+ t& $#( *%$b%*%t%e& o) t e p$rt%e& %# re)ere#"e to t e "o#tr$"t o) "$rr%$+e. St%p'*$t%o#& t ere%# $ -$*%( $#( b%#(%#+ %# t e $b&e#"e o) $# & o %#+ t $t t e &$me $re "o#tr$r to *$ , mor$*&, "'&tom&, p'b*%" or(er $#( p'b*%"po*%" . < ere t e term& o) t e "o#tr$"t $re "*e$r $#( *e$-e #o (o'bt 'po# t e %#te#t%o# o) t e "o#tr$"t%#+ p$rt%e&, t e *%ter$*me$#%#+ o) t e &t%p'*$t%o#& & $** "o#tro*.

In light of the foregoing, there can be no @uestion about the validity and enforceability of Ftipulation /o. 8 in the bill of lading. Thetwenty-four hour re@uirement under the said stipulation is, by agreement of the contracting parties, asine qua non for the accrual ofthe right of action to recover damages against the carrier. The wisdom of this kind of proviso has been succinctly eBplained in$onsun i v. &ani"a 'ort Service , where it was held2C$rr%er& $#( (epo&%t$r%e& &omet%me& re '%re pre&e#t$t%o# o) "*$%m& %t %# $ & ort t%me $)ter (e*%-er $& $ "o#(%t%o# pre"e(e#t to t e%r *%$b%*%t )or *o&&e&. Fuch re@uirement is not an empty formalism. It has a definite purpose, i.e., to afford the carrier ordepositary a reasonable opportunity and facilities to check the validity of the claims while the facts are still fresh in the minds of thepersons who took part in the transaction and the document are still available. ?

!onsidering that a prompt demand was necessary to foreclose the possibility of fraud or mistake in ascertaining the validity ofclaims, there was a need for the consignee or its agent to observe the conditions provided for in Ftipulation /o. 8. Hence,petitionerQs insistence that respondent carrier had knowledge of the damage because one of respondent carrierQs officerssupervised the unloading operations and signed a discharging report, cannot be construed as sufficient compliance with theaforementioned proviso. The +ischarge #eport is not the notice referred to in Ftipulation /o. 8, hence, its accomplishment cannotbe considered substantial compliance of the re@uirement embodied therein. 'oreover, a reading of the first paragraph ofFtipulation /o. 8 will readily show that upon the consignee or its agent rests the obligation to make the necessary claim within theprescribed period and not merely rely on the supposed knowledge of the damages by the carrier.

etitioner also makes much of the fact that it had nothing to do with the preparation of the bill of lading. 3orse, according topetitioner, the bill of lading, particularly Ftipulation /o. 8, was printed in very small letters that no one would be minded to closelyeBamine the contents thereof and understand its legal implications.

3e are not persuaded. A b%** o) *$(%#+ %& %# t e #$t're o) $ "o#tr$"t o) $( e&%o#, (e)%#e( $& o#e ere o#e o) t e p$rt%e&%mpo&e& $ re$( ;m$(e )orm o) "o#tr$"t %" t e ot er p$rt m$ $""ept or re9e"t, b't %" t e *$tter "$##ot mo(%) . 6neparty prepares the stipulation in the contract, while the other party merely affiBes his signature or his "adhesion" thereto, giving noroom for negotiation and depriving the latter of the opportunity to bargain on e@ual footing. /evertheless, these types of contractshave been declared as binding as ordinary contracts, the reason being that the party who adheres to the contract is free to reCect itentirely. 8

fter it received the bill of lading without any obCection, consignee tlas 5ertili9er !orporation was presumed to have knowledge ofits contents and to have assented to the terms and conditions set forth therein. The pronouncement by this !ourt in &age""an&anufacturing &ar eting $orp. v. $ourt of ppea"s may be cited by analogy The holding in most Curisdictions has been that a shipper who receives a bill of lading without obCection after an opportunity toinspect it, and permits the carrier to act on it by proceeding with the shipment is presumed to have accepted it as correctly statingthe contract and to have assented to its terms. In other words, the acceptance of the i"" *ithout dissent raises the presu!ption thata"" the ter!s therein *ere rought to the no*"edge of the shipper and agreed to + hi! and, in the a sence of fraud or !ista e, heis estopped fro! thereafter den+ing that he assented to such ter!s .0 EItalics FuppliedD

In this regard, we also @uote with approval the lower courtQs view on the matter when it said2It is very clear that the ill of 7ading provides for the time or period within which a claim should be made or suit filed in !ourt.

laintiff or tlas 5ertili9er !orporation failed on this score. 'oreover, tlas 5ertili9er !orporation could not claim ignorance of thecontents of the ill of 7ading Cust because the printed letters are so small that they are hard to read or that the shipper did not signit for tlas 5ertili9er !orporation being a regular shipper and a big corporation. laintiff is presumed to know the contents thereof forthe reason that this is the very document E nneB " " of the complaintD where plaintiff relied its suit.1

3e are likewise not inclined to lend credence to petitionerQs allegation that the lack of communications facilities in the place ofdelivery prevented the consignee from making a prompt claim for recovery of damages as prescribed by Ftipulation /o. 8. It isindeed hard to believe that tlas 5ertili9er !orporation, being an established corporation and a regular shipper, would be so ineptas not to have the necessary facilities to at least monitor, in the form of communications e@uipment, the condition of its largeshipment involving )(,*** bags of fertili9er. s pointed out by the appellate court, at this day and age of advancedtelecommunications and modern transportation, even in the year $101, the time limitation provided for in Ftipulation /o. 8 are Custand reasonable.

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G.R. No. 1/>::: ?'#e 2@, 2005. PHILIPPINE CHARTER INS RANCE CORPORATION, petitioner, vs.CHEMOIL LIGHTERAGE CORPORATION, respondent.

efore Ms is a petition for review oncertiorari which assails the +ecision of the !ourt of ppeals $ in ! -G.#. ! /o. &?(*1, dated$0 +ecember $110. The +ecision reversed and set aside the decision of the #egional Trial !ourt E#T!D, ( ranch $?, !ity of'anila, which ordered herein respondent to pay the petitioners claim in the amount of &,***,***.** with legal interest from thedate of the filing of the complaint.

THE !ACTS

etitioner hilippine !harter Insurance !orporation is a domestic corporation engaged in the business of non-life insurance.#espondent !hemoil7ighterage !orporation is also a domestic corporation engaged in the transport of goods.6n (% :anuary $11$, Famkyung !hemical !ompany, 7td., based in Mlsan, Fouth orea, shipped ?(.*? metric tons of the li@uidchemical +I6!TL7 HTH 7 T4 E+6 D on board 'T "T !HI / " which was valued at MFS1*,(*$.&8 under ill of 7ading /o.M7F='/7-$ ) and another %)?.8* metric tons of +6 valued at MFS?)%,8(%.01 under ill of 7ading /o. M7F='/7-( % to the

hilippines. The consignee was lastic Group hils., Inc. E G D in 'anila.G insured the cargo with herein petitioner hilippine !harter Insurance !orporation against all risks. The insurance was under

'arine olicies /o. '#/-)*8($ & dated *? 5ebruary $11$ for )$,8&8,1?1.$1 and /o. '#/-)*8(( ? for %,&$%,00$.**. 'arine4ndorsement /o. (80? 8 dated $$ 'ay $11$ was attached and formed part of '#/-)*8($, amending the latters insured value to

(%,??8,%((.*), and reduced the premium accordingly.The ocean tanker 'T "T !HI / " unloaded the cargo to Tanker arge 7 -$*$$ of respondent !hemoil7ighterage !orporation,

which shall transport the same to +el an ridge in asig #iver. Tanker arge 7 -$*$$ would unload the cargo to tanker trucks,also owned by the respondent, and haul it by land to G s storage tanks in !alamba, 7aguna.Mpon inspection by G , the samples taken from the shipment showed discoloration from yellowish to amber, demonstrating that it

was damaged, as +6 is colorless and water clear. G then sent a letter to the petitioner dated $0 5ebruary $11$ 0 where itformally made an insurance claim for the loss it sustained due to the contamination.The petitioner re@uested an independent insurance adCuster, the GIT Insurance dCusters, Inc. EGITD, to conduct a uantity and!ondition Furvey of the shipment. 6n (( 5ebruary $11$, GIT issued a #eport ,1 part of which states2

s unloading progressed, it was observed on 5ebruary $%, $11$ that +6 samples taken were discolored from yellowish to amber.Inspection of cargo tanks showed manhole covers of ballast tanks ceilings loosely secured. 5urthermore, it was noted that therubber gaskets of the manhole covers of the ballast tanks re-acted to the chemical causing shrinkage thus, loosening the coversand cargo ingress to the rusty ballast tanks $*6n $) 'ay $11$, the petitioner paid G the amount of &,***,***.** $$ as full and final payment for the loss. G issued aFubrogation #eceipt to the petitioner.'eanwhile, on *) pril $11$, G paid the respondent the amount of )*$,1*1.&* as full payment for the latters services, asevidenced by 6fficial #eceipt /o. $(8%. $(6n $& :uly $11$, an action for damages was instituted by the petitioner-insurer against respondent-carrier before the #T!, ranch$?, !ity of 'anila, docketed as !ivil !ase /o. 1$-&81(). $) The petitioner prayed for actual damages in the amount of

&,***,***.**, attorneys fees in the amount of no less than $,***,***.**, and costs of suit.n nswer with !ompulsory !ounterclaim $% was filed by the respondent on *& Feptember $11$. The respondent admitted itundertook to transport the consignees shipment from 'T "T !HI / " to the +el an ridge, asig #iver, where it was

transferred to its tanker trucks for hauling to G s storage tanks in !alamba, 7aguna. The respondent alleged that before the+6 was loaded into its barge E7 -$*$$D, the surveyor=representative of G , dCustment Ftandard !orporation, inspected it andfound the same clean, dry, and fit for loading. The entire loading and unloading of the shipment were also done under the controland supervision of G s surveyor=representative. It was also mentioned by the respondent that the contract between it and GeBpressly stipulated that it shall be free from any and all claims arising from contamination, loss of cargo or part thereofA that theconsignee accepted the cargo without any protest or noticeA and that the cargo shall be insured by its owner sans recourse againstall risks. s subrogee, the petitioner was bound by this stipulation. s carrier, no fault and negligence can be attributed againstrespondent as it eBercised eBtraordinary diligence in handling the cargo.$&

fter due hearing, the trial court rendered a +ecision on *? :anuary $118, the dispositive portion of which reads23H4#456#4, #4'IF4F !6/FI+4#4+, Cudgment is hereby rendered in favor of plaintiff ordering defendant to pay plaintiffsclaim of &,***,***.** with legal interest from the date of the filing of the complaint. The counterclaims are +IF'IFF4+. $?

ggrieved by the trial courts decision, the respondent sought relief with the !ourt of ppeals where it alleged in the main that G

failed to file any notice, claim or protest within the period re@uired by rticle )?? of the !ode of !ommerce, which is a conditionprecedent to the accrual of a right of action against the carrier. $8 telephone call which was supposedly made by a certain lfred!han, an employee of G , to one of the ice residents of the respondent, informing the latter of the discoloration, is not thenotice re@uired by rticle )?? of the !ode of !ommerce. $06n $0 +ecember $110, the !ourt of ppeals promulgated its +ecision reversing the trial court, the dispositive portion of whichreads23H4#456#4, the decision appealed from is hereby RE ERSE= AN= SET ASI=E and a new one is entered dismissing thecomplaint.$1

petition for review oncertiorar i (* was filed by the petitioner with this !ourt, praying that the decision of the trial court be affirmed.fter the respondent filed its !omment ($ and the petitioner filed its #eply(( thereto, this !ourt issued a #esolution () on $0 ugust

$111, giving due course to the petition.FFIG/'4/T 65 4##6#F

The petitioner assigns as errors the following2ITH4 477 T4 !6M#T G# 47L 4##4+ I/ 5I/+I/G TH T TH4 /6TI!4 65 !7 I' 3 F /6T 5I74+ 3ITHI/ TH4#4 MI#4+ 4#I6+.IITH4 477 T4 !6M#T G# 47L 4##4+ I/ /6T H67+I/G TH T + ' G4 T6 TH4 ! #G6 3 F +M4 T6 TH4 5 M7T6# /4G7IG4/!4 65 #4F 6/+4/T !H4'6I7.III

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TH4 477 T4 !6M#T G# 47L 4##4+ I/ F4TTI/G FI+4 TH4 T#I 7 !6M#TF +4!IFI6/ /+ I/ +IF'IFFI/G TH4!6' 7 I/T. (%IFFM4FFynthesi9ed, the issues that must be addressed by this !ourt are2I3H4TH4# 6# /6T TH4 /6TI!4 65 !7 I' 3 F 5I74+ 3ITHI/ TH4 #4 MI#4+ 4#I6+. If the answer is in the affirmative,II3H4TH4# 6# /6T TH4 + ' G4 T6 TH4 ! #G6 3 F +M4 T6 TH4 5 M7T 6# /4G7IG4/!4 65 TH4 #4F 6/+4/T.TH4 !6M#TF #M7I/GF

rticle )?? of the !ode of !ommerce has profound application in the case at bar. This provision of law imparts2

rt. )??. 3ithin twenty-four hours following the receipt of the merchandise a claim may be made against the carrier on account ofdamage or average found upon opening the packages, provided that the indications of the damage or average giving rise to theclaim cannot be ascertained from the eBterior of said packages, in which case said claim shall only be admitted at the time of thereceipt of the packages.

fter the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall beadmitted against the carrier with regard to the condition in which the goods transported were delivered.

s to the first issue, the petitioner contends that the notice of contamination was given by lfredo !han, an employee of G , to's.4ncarnacion bastillas, ice resident for dministration and 6perations of the respondent, at the time of the delivery of thecargo, and therefore, within the re@uired period.(& This was done by telephone.The respondent, however, claims that the supposed notice given by G over the telephone was denied by 's. bastillas.

etween the testimonies of lfredo !han and 4ncarnacion bastillas, the latters testimony is purportedly more credible because it would be @uite unbelievable and contrary to business practice for lfredo !han to merely make a verbal notice of claim thatinvolves millions of pesos.(?6n this point, the !ourt of ppeals declared2. . . 3e are inclined to sustain the view that a telephone call made to defendant-company could constitute substantial compliance

with the re@uirement of notice considering that the notice was given to a responsible official, the ice- resident, who promptlyreplied that she will look into the matter. However, it must be pointed out that compliance with the period for filing notice is anessential part of the re@uirement,i.e.. immediately if the damage is apparent, or otherwise within twenty-four hours from receipt ofthe goods, the clear import being that prompt eBamination of the goods must be made to ascertain damage if this is notimmediately apparent. 3e have eBamined the evidence, and 3e are unable to find any proof of compliance with the re@uiredperiod, which is fatal to the accrual of the right of action against the carrier.(8The petitioner is of the view that there was an incongruity in the findings of facts of the trial court and the !ourt of ppeals, theformer allegedly holding that the period to file the notice had been complied with, while the latter held otherwise.3e do not agree. 6n the matter concerning the giving of the notice of claim as re@uired by rticle )?? of the !ode of !ommerce,the finding of fact of the !ourt of ppeals does not actually contradict the finding of fact of the trial court. oth courts held that,indeed, a telephone call was made by lfredo !han to 4ncarnacion bastillas, informing the latter of the contamination. However,nothing in the trial courts decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or

within a period of twenty-four hours from the time the goods were received. The !ourt of ppeals made the same finding. HavingeBamined the entire records of the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusionthat the notice of claim was timely relayed or filed.The allegation of the petitioner that not only the ice resident of the respondent was informed, but also its drivers, as testified by

lfredo !han, during the time that the delivery was actually being made, cannot be given great weight as no driver was presentedto the witness stand to prove this. art of the testimony of lfredo !han is revealing2

2 'r. 3itness, were you in your plant site at the time these various cargoes were deliveredJ

2 /o, sir.

2 Fo, do you have a first hand knowledge that your plant representative informed the driver of the alleged contaminationJ2 3hat do you mean by thatJ2 ersonal knowledge ;that< you yourself heard or saw them ;notify< the driverJ2 /o, sir .(0

5rom the preceding testimony, it is @uite palpable that the witness lfredo !han had no personal knowledge that the drivers of therespondent were informed of the contamination.

The re@uirement that a notice of claim should be filed within the period stated by rticle )?? of the !ode of !ommerce is not anempty or worthless proviso. In a case, we held2The obCect sought to be attained by the re@uirement of the submission of claims in pursuance of this article is to compel theconsignee of goods entrusted to a carrier to make prompt demand for settlement of alleged damages suffered by the goods whilein transport, so that the carrier will be enabled to verify all such claims at the time of delivery or within twenty-four hours thereafter,and if necessary fiB responsibility and secure evidence as to the nature and eBtent of the alleged damages to the goods while thematter is still fresh in the minds of the parties.(1In another case, we ruled, thus2'ore particularly, where the contract of shipment contains a reasonable re@uirement of giving notice of loss of or inCury to thegoods, the giving of such notice is a condition precedent to the action for loss or inCury or the right to enforce the carriers liability.Fuch re@uirement is not an empty formalism. The fundamental reason or purpose of such a stipulation is not to relieve the carrierfrom Cust liability, but reasonably to inform it that the shipment has been damaged and that it is charged with liability therefore, andto give it an opportunity to eBamine the nature and eBtent of the inCury. This protects the carrier by affording it an opportunity tomake an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulentclaims.)*

The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of aright of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillmentof the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementionedre@uirement is a reasonable condition precedentA it does not constitute a limitation of action.)$

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The second paragraph of rticle )?? of the !ode of !ommerce is also edifying. It is not only when the period to make a claim haselapsed that no claim whatsoever shall be admitted, as no claim may similarly be admitted after the transportation charges havebeen paid.In this case, there is no @uestion that the transportation charges have been paid, as admitted by the petitioner, and thecorresponding official receipt)( duly issued. ut the petitioner is of the view that the payment for services does not invalidate itsclaim. It contends that under the second paragraph of rticle )?? of the !ode of !ommerce, it is clear that if notice or protest hasbeen made prior to payment of services, claim against the bad order condition of the cargo is allowed.3e do not believe so. s discussed at length above, there is no evidence to confirm that the notice of claim was filed within theperiod provided for under rticle )?? of the !ode of !ommerce. etitioners contention proceeds from a false presupposition thatthe notice of claim was timely filed.

!onsidering that we have resolved the first issue in the negative, it is therefore unnecessary to make a resolution on the secondissue.

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damaged the passenger Ceepney of 5rancisco Hernande9 and caused physical inCuries to its passengers, namely, irgie !adavida,5iscal rtemio #eyes and 5rancisca !orona. )!onse@uently, respondents commenced an action % for damages against petitioners before the #egional Trial !ourt of atangas!ity, all