Kuwait Airways Corporation vs. Tokio Marine and Fire Insurance Co., Ltd. and Tokio Marine Malayan Insurance Co., Inc.

A claimant must first prove that the goods were damaged while in the carrier’s custody before the presumption of carrier negligence under Article 1735 or the doctrine of res ipsa loquitur can operate; unauthenticated documentary evidence of damage is insufficient, and the burden of proving injury never shifts to the carrier unless such injury is established by competent evidence.

Fujitsu Europe Limited engaged O’Grady Air Services, a UK‑based freight forwarder, to transport 10 pallets of disk drives from Slough, Berkshire, UK to the consignee Fujitsu Computer Products Corporation of the Philippines in Laguna. The shipment was insured with Tokio Marine and Fire Insurance Co., Ltd. (Japan) under an open policy; Tokio Marine Malayan Insurance Co., Inc., its Philippine affiliate, acted as settling agent. The goods were loaded onto Kuwait Airways Corporation’s aircraft at London Heathrow and arrived at Ninoy Aquino International Airport on January 9, 2003. The consignee later asserted that some crates were damaged and filed a claim, which the insurer paid. The insurer, having been subrogated to the consignee’s rights, sued the carrier for the indemnity amount.

• The Shipment and Insurance: On January 6, 2003, Fujitsu Europe Limited engaged O’Grady Air Services to ship 10 pallets of disk drives from Slough, Berkshire, UK to the consignee Fujitsu Computer Products Corporation of the Philippines at Carmelray Industrial Park, Laguna. The declared value was US$158,163.00, and the cargo was insured under Tokio Marine and Fire Insurance Co., Ltd. Open Policy No. 01Q11368N.
• Carriage and Arrival: The pallets were loaded onto Kuwait Airways Corporation’s aircraft at London Heathrow on flights KU104/08 and KU411/09. The shipment arrived at Ninoy Aquino International Airport on January 9, 2003. The cargo was subsequently transported by Japan Cargo Forwarder and Brokerage Corporation to Laguna and received by the consignee on January 18, 2003.
• Alleged Damage: A photocopy of MIASCOR Storage and Delivery Receipt No. 251294 dated January 10, 2003 noted that one crate had a hole on the side and another was dented. The consignee’s on‑site supervisor sent a preliminary claim letter to the carrier on February 28, 2003. A formal claim for US$55,602.00 was made on February 8, 2003, but was not acted upon.
• Survey and Indemnity: Tokio Marine Malayan Insurance Co., Inc. hired Toplis Marine Philippines, Inc. to survey the alleged damage. Surveyor Henry Barcena inspected the cargo on January 27, 2003 — 18 days after arrival — at the consignee’s premises. He observed 32 cartons that were “deformed/pressed in varying degrees” but reported that the disk drives “appeared [in] good order.” Barcena relied on photocopies of the MIASCOR and Japan Cargo delivery receipts and, together with his supervisor, later issued a Certificate of Survey stating that the denting “may have been caused by the rigor of voyage and/or rough handling.” Based on this survey, the insurer paid the consignee US$61,400.70. A Subrogation Receipt dated September 22, 2003 transferred all rights to Tokio Marine and Fire Insurance Co., Ltd.
• Suit and Defenses: The insurer‑subrogees filed a complaint for damages. Kuwait Airways Corporation admitted it was a common carrier and that the goods were loaded and unloaded from its aircraft, but denied all other allegations. It invoked the affirmative defense of extraordinary diligence and asserted that the plaintiffs were not real parties‑in‑interest. The carrier also counterclaimed for moral and exemplary damages, arguing the suit was baseless and besmirched its reputation.

• Inadmissibility of Evidence: Petitioner contended that the MIASCOR Storage and Delivery Receipt and the Japan Cargo Delivery Receipt were inadmissible secondary evidence — mere unauthenticated photocopies — and therefore had no probative value.
• Non‑Applicability of Res Ipsa Loquitur: Petitioner argued that without competent proof of damage to the cargo, the doctrine of res ipsa loquitur had no application and it could not be presumed negligent.
• Limitation of Liability: Assuming arguendo that liability attached, petitioner maintained that the terms of the Airway Bill, in relation to Article 22(2) of the Warsaw Convention, limited its liability to US$20.00 per kilogram of damaged goods.

• Admission Through Negative Pregnant: Respondents argued that petitioner’s Answer, which denied the allegation of damage “for lack of knowledge or information” while admitting the cargo was unloaded, constituted a negative pregnant and was effectively an admission that the cargo sustained damage.
• Sufficiency of Evidence of Damage: Respondents maintained that the delivery receipts, together with the consignee’s Quality Control Department testing that recommended rejection due to abnormal shock or impact, adequately proved that the goods were damaged.
• Applicability of Res Ipsa Loquitur: Respondents contended that the cargo was under petitioner’s exclusive control when the damage occurred, and all requisites for the doctrine were satisfied, thus shifting the burden to petitioner to disprove negligence.

• Admissibility and Probative Value: Whether the photocopies of the MIASCOR Storage and Delivery Receipt and the Japan Cargo Delivery Receipt are admissible and constitute adequate proof of damage to the goods.
• Res Ipsa Loquitur: Whether the doctrine of res ipsa loquitur may be applied so as to presume Kuwait Airways Corporation’s negligence.
• Limitation of Liability: Whether petitioner’s liability, if any, may be limited in accordance with the Warsaw Convention.

• Admissibility and Probative Value: The photocopied delivery receipts were not authenticated as required by Section 20 of Rule 132 for private documents; none of the respondents’ witnesses testified to seeing the receipts or the damage notations being executed or written. Consequently, the photocopies were held inadmissible and possessed no evidentiary value. Neither could the annotations be treated as entries in the course of business under Section 43, Rule 130 (1997 Rules of Evidence) because the foundational requisites — the identity of the person who made the annotation, that person’s competence, the time of the annotation, and the reason for the maker’s unavailability — were not established. The surveyor’s testimony merely parroted the contents of the inadmissible documents and was equally insignificant. The respondents’ belated, unsubstantiated reference to quality‑control testing was disregarded as it was neither formally offered nor supported by testimony.
• Res Ipsa Loquitur: The doctrine was incorrectly applied by the Court of Appeals. The first requisite — that an accident or injury of a kind that does not ordinarily occur without negligence actually took place — was not satisfied because the respondents failed to prove by competent evidence that the goods were damaged at all, much less while under the carrier’s exclusive control. Under Article 1735 of the Civil Code, a common carrier is presumed to have been at fault only once the loss, destruction, or deterioration of the goods is established. The burden of proving damage never shifts unless the claimant discharges the initial burden of proving the injury. Since no injury was proven, the carrier was not required to present evidence of extraordinary diligence.
• Limitation of Liability: In light of the finding that no liability attached, the issue of whether the Warsaw Convention limited the carrier’s liability was not reached.

• Res Ipsa Loquitur (Requisites): The doctrine permits an inference of negligence when the following requisites concur: (a) the accident is of a kind that ordinarily does not occur in the absence of someone’s negligence; (b) it is caused by an instrumentality within the exclusive control of the defendant; and (c) the possibility of contributing conduct by the plaintiff is eliminated. The claimant must first prove the occurrence of an injury or accident; without such proof, the doctrine does not apply. (BJDC Construction v. Lanuzo, 730 Phil. 240)
• Common Carrier’s Presumption of Negligence — Prior Proof of Damage Required: Under Article 1735 in relation to Article 1733 of the Civil Code, a common carrier is presumed to have been at fault or to have acted negligently if the goods are lost, destroyed, or deteriorated. The presumption arises only after the claimant has proven the fact of loss or damage; until then the carrier has no burden to prove extraordinary diligence. (Unitrans International Forwarders, Inc. v. Insurance Company of North America, G.R. No. 203865, March 13, 2019)
• Admissibility of Private Documents: A private document is not admissible unless its due execution and authenticity are proved by: (a) anyone who saw the document executed or written; (b) evidence of the genuineness of the handwriting of the maker; or (c) other evidence showing due execution and authenticity. (Section 20, Rule 132, Rules of Court)
• Entries in the Course of Business (Old Rule) / Records of Regularly Conducted Business Activity (2019 Rules): Under the former rule, the following must be established: (1) the entrant is dead, outside the country, or unable to testify; (2) the entries were made at or near the time of the transaction; (3) the entrant had personal knowledge; (4) the entries were made in a professional capacity or in the performance of duty; and (5) the entries were made in the ordinary or regular course of business. A photocopy of a document whose provenance is uncertain cannot satisfy these requisites. (Canque v. Court of Appeals, 365 Phil. 124)

• “Res ipsa loquitur is a Latin phrase that literally means ‘the thing or the transaction speaks for itself.’ It is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation.”
• “Article 1735 of the Code, however, does not free the plaintiff of its burden to prove the damage or loss. It is only when the damage or loss is undisputed that the presumption of negligence on the part of the common carrier arises. Consequently, the carrier will not have the burden to prove extraordinary diligence.”
• “A ruling to the contrary would make carriers susceptible to spurious claims of negligence in the transport of goods merely on the basis of a photocopy of an annotation, the provenance of which is uncertain.”

• BJDC Construction v. Lanuzo, 730 Phil. 240 (2014) — Controlling precedent that sets out the three requisites for res ipsa loquitur; relied upon to hold that the doctrine could not apply absent proof of injury.
• Canque v. Court of Appeals, 365 Phil. 124 (1999) — Controlling precedent enumerating the five requisites for the admissibility of entries in the course of business; applied to reject the delivery receipt annotations.
• Unitrans International Forwarders, Inc. v. Insurance Company of North America, G.R. No. 203865, March 13, 2019 — Controlling precedent establishing that the presumption of carrier negligence under Article 1735 operates only after damage or loss is proven; followed to reinforce the ruling.
• Sps. Miano v. Manila Electric Company, 800 Phil. 118 (2016) — Followed for the exception to the general rule in Rule 45 petitions that only questions of law are reviewable, applied because the RTC and CA had discordant factual findings.

• Article 1735, Civil Code — The provision presumes a common carrier was at fault when the goods are lost, destroyed, or deteriorated; it was interpreted to require the claimant to first prove such loss or damage before the presumption arises.
• Section 20, Rule 132, Rules of Court — Prescribes the modes of authenticating private documents; applied to exclude the photocopied delivery receipts.
• Section 43, Rule 130, 1997 Rules of Evidence (now Section 45, Rule 130, 2019 Rules) — Governs admissibility of entries in the course of business; the requisites were not met because the identity and competence of the annotator were never proved.
• Section 4 and 5, Rule 130, Rules of Court — Cover the Original Document Rule and secondary evidence; even a duplicate must be properly authenticated, which respondents failed to do.

Justices Leonen, Inting (designated additional member), Zalameda, and Dimaampao concurred.