Case Summary (G.R. No. 11318)
Petitioner and Respondent
- Plaintiff/Appellant: The Manila Railroad Company
- Defendant/Appellee: La Compania Trasatlantica de Barcelona
- Defendant/Appellant: The Atlantic, Gulf & Pacific Co.
Key Dates
- Arrival and attempted discharge of boilers: March 1914
- Judgment with interest from: May 11, 1914
- Decision rendered: October 26, 1918
Applicable Law
- 1889 Civil Code of the Philippines
• Article 1258 (contract to deliver goods in proper condition)
• Articles 1101–1104 (liability for non-performance and negligence)
• Article 1596 (liability for acts of agents)
• Article 1903 (limitation of liability in non-contractual negligence)
Facts
In March 1914, the steamship Alicante arrived in Manila carrying two locomotive boilers owned by the Manila Railroad Company. The vessel’s own gear was inadequate, so La Compania Trasatlantica engaged the Atlantic Company’s floating crane and operator, Leyden, to lift the boilers into a barge. On the first lift, an improperly adjusted sling and the boiler’s catching on the hatch imposed an excessive strain (estimated at fifteen tons), causing the sling cable to break and the boiler to fall. After repositioning the sling, a weakened derrick boom bolt failed on the second lift, and the boiler again fell. The boiler ultimately had to be returned to England for rebuilding. The Railroad Company’s proven damage amounted to ₱22,343.29.
Issues
- Whether the Steamship Company is liable to the Railroad Company for damage occurring during discharge.
- Whether the Atlantic Company is liable to the Steamship Company for amounts the Steamship Company must pay the Railroad Company.
- Whether the Atlantic Company is directly liable to the Railroad Company in the absence of privity of contract.
Liability of the Steamship Company
Under its contract to transport and deliver the boilers, the Steamship Company owed the Railroad Company the duty to convey and deliver safely and securely (Arts. 1258, 1103, 1104, Civil Code). Delegating the discharge to an independent contractor did not absolve it of liability. The carrier remained responsible for ensuring the boilers arrived in the same condition in which they were received. Accordingly, the Steamship Company is liable for the full extent of the Railroad Company’s damages.
Liability of the Atlantic Company to the Steamship Company
The Atlantic Company contracted to use due care in discharging the boilers but attempted to reserve liability for “any damage . . . from any cause whatsoever.” Customary correspondence showed that the exemption was intended to cover accidents from hidden defects in equipment or other unforeseeable events, not negligence. As a matter of law:
- Every service contract carries an implicit duty to exercise due care in performance (Art. 1596; Art. 1103, Civil Code).
- A contractor cannot contract away liability for its own negligence unless the exemption is expressed in clear, unequivocal terms—and even then, such clauses are construed strictly against the party seeking exemption.
The Atlantic Company’s clause did not clearly include negligence, and equity demands that its promise to use due care be given effect. Therefore, the Atlantic Company is liable to indemnify the Steamship Company for the Railroad Company’s damages.
Inapplicability of Article 1903
Article 1903, which excuses a person from liability if he has exercised “all the diligence of a good father of a family,” applies only to negligence arising independently of contractual obligations (culpa aquiliana). Leyden’s negligence in operating the crane occurred in the course of fulfilling a contractual duty and is governed by Articles 1101–1104, not Article 1903.
Contractual vs. Extra-Contractual Negligence
- Culpa contractual: breach of a duty created by contract; governs negligence in performance of agreed services (Arts. 1101, 1103, 1104).
- Culpa aquiliana: tort-based negligence creating obligations where none previously existed; governed in part by Article 1903.
Leyden’s negligence was contractual, so the Atlantic Company cannot invoke the protections of
Case Syllabus (G.R. No. 11318)
Facts of the Case
- In March 1914, SS Alicante of Compania Trasatlantica arrived in Manila carrying two locomotive boilers owned by The Manila Railroad Company.
- The ship’s own gear was inadequate to lift the heavy boilers; Compania Trasatlantica engaged The Atlantic, Gulf & Pacific Co. (“Atlantic Company”) as specialist contractor.
- Atlantic Company’s floating crane, under foreman Leyden, attempted two lifts:
• First lift—sling placed mid-length caused the boiler to hang nearly horizontal, one end caught under the hatch, sling cable parted under an extra 15-ton strain, and the boiler fell into the hold.
• Second lift—after repositioning the sling toward one end, a bolt at the head of the derrick boom failed (weakened by the first accident shock), and the boiler again fell. - Boiler was badly damaged, re-shipped to England for rebuilding, then returned. The Railroad Company’s loss (repairs, expenses, loss of use) totaled ₱22,343.29.
Procedural History
- The Manila Railroad Company sued Compania Trasatlantica for damages; Compania Trasatlantica impleaded Atlantic Company.
- Trial court held Atlantic Company liable to Railroad Company, absolved Compania Trasatlantica.
- Both Railroad Company (against Compania Trasatlantica) and Atlantic Company (against its liability) appealed to the Supreme Court.
Issues
- Whether Compania Trasatlantica, as carrier under the affreightment contract with Railroad Company, is liable for damage to cargo while discharging.
- Whether Atlantic Company is liable to Compania Trasatlantica for damages it must pay Railroad Company.
- Whether Atlantic Company can be sued directly by Railroad Company absent privity of contract.
Holding
- Compania Trasatlantica, under its transportation contract, is liable to Railroad Company for damage suffered during discharge.
- Atlantic Company is liable to Compania Trasatlantica for breach of its contracting duty to use due care