Professional Documents
Culture Documents
LAW
REVIEWER
ATTY. LUCERO DE
GRANO
for compensation, offering their services to the public. (Art. 1732, Civil
Code).
- One that holds itself out as ready to engage in the transportation of goods
for hire as a public employment and not as a casual occupation. (De Guzman
vs. Court of Appeals, No. L-47822, December 22, 1988)
B. CHARACTERISTICS OF A COMMON CARRIER
Art. 1732 of the Civil Code avoids any distinction between one whose
principal business is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (sideline).
Article 1732 does not distinguish between a carrier offering its services
to the general public, that is the general community or population, and
one who offers services or solicits business only from a narrow
segment of the general population.
The Civil Code does not provide that the transportation should be by
motor vehicle.
Undertakes to carry for all people indifferently and thus is liable for
refusal without sufficient reason (Lastimoso vs. Doliente, 3 SCRA ,
[1961]);
unloaded the cargo pursuant to the terms and conditions of the charter-party.
The hatches remained open throughout the duration of the discharge.
Upon arrival at petitioners warehouse a survey conducted over the
cargo revealed a shortage and the most of the fertilizer was contaminated
with dirt. As such, Planters filed an action for damages. The defendant argued
that the public policy governing common carriers do not apply to them
because they have become private carriers by reason of the provisions of the
charter-party.
Issue: Whether or not the charter-party contract between the ship owner and
the charterer transforms a common carrier into a private carrier?
Held: A charter party may either her be time charter wherein the vessel is
leased to the charterer, wherein the ship is leased to the charterer for a fixed
period of time or voyage charter, wherein the ship is leased for a single
voyage. In both cases, the charter party provides for the hire of the vessel
only, either for a determinate time or for a single or consecutive voyage.
It is therefor imperative that such common carrier shall remain as such,
notwithstanding the charter of the whole or part of the vessel by one or more
persons, provided the charter is limited to the ship only, as in the case of a
time-charter or voyage-charter. It is only when the charter includes both ship
and its crew as in bareboat or demise that it becomes a private carrier.
Undoubtedly, a shipowner in a time or voyage charter retains in possession
and control of the ship, although her holds may be the property of the
charterer.
3. CALVO V. UCPB GENERAL INSURANCE (G.R. NO. 148496 MARCH 19,
2002)
Facts: Petitioner Virgines Calvo, owner of Transorient Container Terminal
Services, Inc. (TCTSI), and a custom broker, entered into a contract with San
Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical
fluting paper and 124 reels of kraft liner board from the port area to the
Tabacalera Compound, Ermita, Manila.
The cargo was insured by
respondent UCPB General Insurance Co., Inc.
On July 14, 1990, contained in 30 metal vans, arrived in Manila on
board M/V Hayakawa Maru. After 24 hours, they were unloaded from
vessel to the custody of the arrastre operator, Manila Port Services, Inc.
From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC,
withdrew the cargo from the arrastre operator and delivered it to SMCs
warehouse in Manila. On July 25, the goods were inspected by Marine Cargo
Surveyors, reported that 15 reels of the semi-chemical fluting paper were
wet/stained/torn and 3 reels of kraft liner board were also torn. The
damages cost P93,112.00.
SMC collected the said amount from respondent UCPB under its
insurance contract. Respondent on the other hand, as a subrogee of SMC,
brought a suit against petitioner in RTC, Makati City. On December 20, 1995,
the RTC rendered judgment finding petitioner liable for the damage to the
shipment. The decision was affirmed by the CA.
Issue: Whether or not Calvo is a common carrier?
Held: In this case the contention of the petitioner, that he is not a common
carrier but a private carrier, has no merit.
and severally to the plaintiffs. The Court of Appeals affirmed the decision of
the trial court.
Issue: Whether the spouses Fabre are common carriers?
Held: Petition was denied. Spouses Fabre are common carriers.
The Supreme Court held that this case actually involves a contract of
carriage. Petitioners, the Fabres, did not have to be engaged in the business
of public transportation for the provisions of the Civil Code on common
carriers to apply to them. As this Court has held: 10 Art. 1732, Common
carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land,
water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity (in local idiom, as "a sideline").
Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1732 deliberately refrained from making such
distinctions.
5. TATAD VS. GARCIA (241 SCRA 334, GR. NO. 114222. APRIL 6, 1995)
Facts: DOTC planned to construct a light railway transit line along Edsa.
EDSA LRT Corporation, Ltd., a foreign corporation was awarded the contract
to build, lease and transfer the said light railway.
The said award was questioned by the petitioners on the basis that a
foreign corporation cannot own the EDSA LRT III, a public utility as it violates
the Constitution.
Issue: Whether or not an owner and lessor of the facilities used by a public
utility constitute a public utility?
Held: EDSA LRT Corporation, Ltd. Is admittedly a foreign corporation duly
incorporated and existing under the laws of Hong Kong. However, there is no
dispute that once the EDSA LRT III is constructed, the private respondent, as
lessor, will turn it over to DOTC as lessee, for the latter to operate the system
and pay rentals for the said use.
What private respondent owns are the rail tracks, rolling stocks, rail
stations, terminals and the power plant, not a public utility. While a franchise
is needed to operate these facilities to serve the public, they do not
themselves constitute a public utility. What constitutes a public utility in not
their ownership but their use to serve the public.
The Constitution, in no uncertain terms, requires a franchise for the
operation of a public utility. However, it does not require a franchise before
one can own the facilities needed to operate a public utility so long as it does
not operate them to serve the public. In law, there is a clear distinction
between the operation of a public utility and the ownership of the facilities
and the equipment used to serve the public.
6. FISHER VS. YANGCO STEAMSHIP (31 PHIL 1)
for its project to operate a ferryboat service from Matnog, Sorsogon and Allen,
Samar that will provide service to company buses and freight trucks that have
to cross San Bernardo Strait. In a reply of April 29,1981 PANTRANCO was
informed by MARINA that it cannot give due course to the request.
PANTRANCO nevertheless acquired the vessel MN "Black Double" on
May 27, 1981 for P3 Million pesos. It wrote the Chairman of the Board of
Transportation (BOT) through its counsel, that it proposes to operate a ferry
service to carry its passenger buses and freight trucks between Allen and
Matnog in connection with its trips to Tacloban City. PANTRANCO claims that
it can operate a ferry service in connection with its franchise for bus operation
in the highway from Pasay City to Tacloban City "for the purpose of continuing
the highway, which is interrupted by a small body of water, the said proposed
ferry operation is merely a necessary and incidental service to its main
service and obligation of transporting its passengers from Pasay City to
Tacloban City. Such being the case there is no need to obtain a separate
certificate for public convenience to operate a ferry service between Allen and
Matnog to cater exclusively to its passenger buses and freight trucks.
Without awaiting action on its request PANTRANCO started to operate
said ferry service. Acting Chairman Jose C. Campos, Jr. of BOT ordered
PANTRANCO not to operate its vessel until the application for hearing on Oct.
1, 1981. In another order BOT enjoined PANTRANCO from operating the MN
"Black Double" otherwise it will be cited to show cause why its CPC should
not be suspended or the pending application denied.
Epitacio San Pablo (now represented by his heirs) and Cardinal
Shipping Corporation who are franchise holders of the ferry service in this
area interposed their opposition. They claim they adequately service the
PANTRANCO by ferrying its buses, trucks and passengers. BOT then asked
the legal opinion from the Minister of Justice whether or not a bus company
with an existing CPC between Pasay City and Tacloban City may still be
required to secure another certificate in order to operate a ferry service
between two terminals of a small body of water. On October 20, 1981 then
Minister of Justice Ricardo Puno rendered an opinion to the effect that there
is no need for bus operators to secure a separate CPC to operate a ferryboat
service.
Thus on October 23, 1981 the BOT rendered its decision holding that
the ferryboat service is part of its CPC to operate from Pasay to Samar/Leyte
by amending PANTRANCO's CPC so as to reflect the same.
Cardinal Shipping Corporation and the heirs of San Pablo filed
separate motions for reconsideration of said decision and San Pablo filed a
supplemental motion for reconsideration that were denied by the BOT on July
21, 1981. Hence, San Pablo filed the herein petition for review on certiorari
with prayer for preliminary injunction seeking the revocation of said decision,
and pending consideration of the petition the issuance of a restraining order
or preliminary injunction against the operation by PANTRANCO of said ferry
service
Issue: Whether or not the ferry boat is a common carrier?
Held: Considering the environmental circumstances of the case, the
conveyance of passengers, trucks and cargo from Matnog to Allen is certainly
not a ferryboat service but a coastwise or interisland shipping service. Under
no circumstance can the sea between Matnog and Allen be considered a
continuation of the highway. While a ferryboat service has been considered
as a continuation of the highway when crossing rivers or even lakes, which
are small body of waters separating the land, however, when as in this case
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the two terminals, Matnog and Allen are separated by an open sea it can not
be considered as a continuation of the highway.
The contention of private respondent PANTRANCO that its ferry
service operation is as a private carrier, not as a common carrier for its
exclusive use in the ferrying of its passenger buses and cargo trucks is
absurd. PANTRANCO does not deny that it charges its passengers
separately from the charges for the bus trips and issues separate tickets
whenever they board the MN "Black Double" that crosses Matnog to Allen.
Nevertheless, considering that the authority granted to PANTRANCO is to
operate a private ferry, it can still assert that it cannot be held to account as a
common carrier towards its passengers and cargo. Such an anomalous
situation that will jeopardize the safety and interests of its passengers and the
cargo owners cannot be allowed.
Thus the Court holds that the water transport service between Matnog
and Allen is not a ferryboat service but a coastwise or interisland shipping
service. Before private respondent may be issued a franchise or CPC for the
operation of the said service as a common carrier, it must comply with the
usual requirements of filing an application, payment of the fees, publication,
adducing evidence at a hearing and affording the oppositors the opportunity
to be heard, among others, as provided by law.
E. DISTINCTIONS BETWEEN
CARRIER
Common Carrier
As to passengers
Holds himself out for all
indiscriminately.
COMMON
CARRIER AND
PRIVATE
Private Carrier
people Contracts with particular individuals
or groups only.
As to required diligence
Requires extraordinary diligence.
As to state regulation
Subject to regulation.
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3.
B. Land Transportation
a.
Common Carriers
Private Carriers
Object merchandise
Code of Commerce primary law
Civil Code suppletory law
C. Air Transportation
Domestic Transportation
1.
2.
Civil Code
Code of Commerce
International
Transportation
Warsaw
Convention
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VS.
INTERMEDIATE APPELLATE
Facts: Sometime in or prior to June 1977, the M/S Asiatica, a vessel operated
by petitioner Eastern Shipping Lines Inc., loaded at Kobe, Japan for
transportation to Manila loaded 5,000 pieces of calorized pipes valued at
P256,039.00 which was consigned to Philippine Blooming Mills Co, Inc. and
7 cases of spare parts valued at P92, 361.75 consigned to Central Textile
Mills. Both sets of goods were inured against marine risk for their stated value
with respondent Development Insurance and Surety Corp.
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17
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not being registered. The City Court rendered judgment in favor of Teja
Marketing, dismissing the counterclaim, and ordered Nale to pay Teja
Marketing On appeal to the Court of First Instance of Camarines Sur, the
decision was affirmed in toto. Nale filed a petition for review with the
Intermediate Appellate Court. On 18 July 1983, the appellate court set aside
the decision under review on the basis of doctrine of "pari delicto," and
accordingly, dismissed the complaint of Teja Marketing, as well as the
counterclaim of Nale; without pronouncements as to costs. Hence, the
petition for review was filed by Teja Marketing and/or Angel Jaucian.
Issue: Whether the defendant can recover damages against the plaintiff?
Held: Unquestionably, the parties herein operated under an arrangement,
commonly known as the "kabit system" whereby a person who has been
granted a certificate of public convenience allows another person who owns
motor vehicles to operate under such franchise for a fee. A certificate of public
convenience is a special privilege conferred by the government. Abuse of this
privilege by the grantees thereof cannot be countenanced.
The "kabit system" has been identified as one of the root causes of the
prevalence of graft and corruption in the government transportation offices.
Although not out rightly penalized as a criminal offense, the kabit system is
invariably recognized as being contrary to public policy and, therefore, void
and in existent under Article 1409 of the Civil Code. It is a fundamental
principle that the court will not aid either party to enforce an illegal contract,
but will leave both where it finds then. Upon this premise it would be error to
accord the parties relief from their predicament.
3. BOUNDARY SYSTEM
Case/s:
MAGBOO V. BERNARDO 7 SCRA 952
Facts: Urbano and Emilia Magboo are the parents of Cesar Magboo, a child
of 8 years old, who lived with them and was under their custody until his
death on 24 October 1956 when he was killed in a motor vehicle accident, the
fatal vehicle being a passenger jeepney owned by Delfin Bernardo. At the
time of the accident, said passenger jeepney was driven by Conrado Roque.
The contract between Roque and Bernardo was that Roque was to pay to
Bernardo the sum of P8.00, which he paid to Bernardo, for privilege of driving
the jeepney, it being their agreement that whatever earnings Roque could
make out of the use of the jeepney in transporting passengers from one point
to another in the City of Manila would belong entirely to Roque. As a
consequence of the accident and as a result of the death of Cesar Magboo in
said accident, Roque was prosecuted for homicide thru reckless imprudence
before the CFI Manila. Roque was sentenced to 6 months of arresto mayor,
with the accessory penalties of the law; to indemnify the heirs of the
deceased in, with subsidiary imprisonment in case of insolvency, and to pay
the costs. Pursuant to said judgment Roque served his sentence but he was
not able to pay the indemnity because he was insolvent. An action was filed
by the spouses Magboo against Bernardo is for enforcement of his subsidiary
liability. The trial court ordered Bernardo to pay the. Bernardo appealed to the
Court of Appeals, which certified the case to the Supreme Court on the
ground that only questions of law are involved.
Issue: Whether or not an employer-employee relationship between the
jeepney operator and the driver?
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does not oblige. The captain of the plane, when asked to intervene, refused
to do so.
Issue: Whether or not there was bad faith on the part of Air France, petitioner,
entitling Rafael Carrascoso, respondent for moral and exemplary damages as
against the petitioner?
Held: The court held in favor of the respondent, Carrascoso.
The responsibility of an employer for the tortious act of its employees
need not be essayed. It is well settled in law. For the willful malevolent act of
petitioner's manager, petitioner, his employer, must answer.
A contract to transport passengers is quite different in kind and degree
from any other contractual relation. And this, because of the relation which an
air-carrier sustains with the public. Its business is mainly with the traveling
public. It invites people to avail of the comforts and advantages it offers. The
contract of air carriage, therefore, generates a relation attended with a public
duty. Neglect or malfeasance of the carrier's employees, naturally, could give
ground for an action for damages.
Passengers do not contract merely for transportation. They have a
right to be treated by the carrier's employees with kindness, respect, courtesy
and due consideration. They are entitled to be protected against personal
misconduct, injurious language, indignities and abuses from such employees.
So it is that any rule or discourteous conduct on the part of employees
towards a passenger gives the latter an action for damages against the
carrier.
The court held that the judgment of the Court of Appeals does not
suffer from reversible error. CA decision affirmed.
3. TIU VS. ARRIESGADO G.R. NO. 138060, SEPTEMBER 1, 2004
Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked
"Condor Hollow Blocks and General Merchandise" bearing plate number
GBP-675 was loaded with firewood in Bogo, Cebu and left for Cebu City.
Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the truck
passed over a bridge, one of its rear tires exploded. The driver, Sergio
Pedrano, then parked along the right side of the national highway and
removed the damaged tire to have it vulcanized at a nearby shop, about 700
meters away. Pedrano left his helper, Jose Mitante, Jr. to keep watch over the
stalled vehicle, and instructed the latter to place a spare tire six fathoms away
behind the stalled truck to serve as a warning for oncoming vehicles. The
trucks tail lights were also left on. It was about 12:00 a.m., March 16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number
PBP-724 driven by Virgilio Te Laspias was cruising along the national
highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus
was also bound for Cebu City, and had come from Maya, Daanbantayan,
Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and
Felisa Pepito Arriesgado, who were seated at the right side of the bus, about
three (3) or four (4) places from the front seat.
As the bus was approaching the bridge, Laspias saw the stalled truck,
which was then about 25 meters away. He applied the breaks and tried to
swerve to the left to avoid hitting the truck. But it was too late; the bus
rammed into the trucks left rear. The impact damaged the right side of the bus
and left several passengers injured. Pedro Arriesgado lost consciousness and
suffered a fracture in his right colles. His wife, Felisa, was brought to the
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Danao City Hospital. She was later transferred to the Southern Island Medical
Center where she died shortly thereafter.
Respondent Pedro A. Arriesgado then filed a complaint for breach of
contract of carriage, damages and attorneys fees before the Regional Trial
Court of Cebu City, Branch 20, against the petitioners, D Rough Riders bus
operator William Tiu and his driver, Virgilio Te Laspias on May 27, 1987. The
respondent alleged that the passenger bus in question was cruising at a fast
and high speed along the national road, and that petitioner Laspias did not
take precautionary measures to avoid the accident.
The petitioners, for their part, filed a Third-Party Complaint against the
following: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII),
petitioner Tius insurer; respondent Benjamin Condor, the registered owner of
the cargo truck; and respondent Sergio Pedrano, the driver of the truck. They
alleged that petitioner Laspias was negotiating the uphill climb along the
national highway of Sitio Aggies, Poblacion, Compostela, in a moderate and
normal speed. It was further alleged that the truck was parked in a slanted
manner, its rear portion almost in the middle of the highway, and that no early
warning device was displayed. Petitioner Laspias promptly applied the
brakes and swerved to the left to avoid hitting the truck head-on, but despite
his efforts to avoid damage to property and physical injuries on the
passengers, the right side portion of the bus hit the cargo trucks left rear.
HELD: The rules which common carriers should observe as to the safety of their
passengers are set forth in the Civil Code, Articles 1733, 1755and 1756. It is
undisputed that the respondent and his wife were not safely transported to the
destination agreed upon. In actions for breach of contract, only the existence of such
contract, and the fact that the obligor, in this case the common carrier, failed to
transport his passenger safely to his destination are the matters that need to be proved.
This is because under the said contract of carriage, the petitioners assumed the
express obligation to transport the respondent and his wife to their destination safely
and to observe extraordinary diligence with due regard for all circumstances. Any
injury suffered by the passengers in the course thereof is immediately attributable to
the negligence of the carrier. Upon the happening of the accident, the presumption of
negligence at once arises, and it becomes the duty of a common carrier to prove that
he observed extraordinary diligence in the care of his passengers. It must be stressed
that in requiring the highest possible degree of diligence from common carriers and in
creating a presumption of negligence against them, the law compels them to curb the
recklessness of their drivers. While evidence may be submitted to overcome such
presumption of negligence, it must be shown that the carrier observed the required
extraordinary diligence, which means that the carrier must show the utmost diligence
of very cautious persons as far as human care and foresight can provide, or that the
accident was caused by fortuitous event. As correctly found by the trial court,
petitioner Tiu failed to conclusively rebut such presumption. The negligence of
petitioner Laspias as driver of the passenger bus is, thus, binding against petitioner
Tiu, as the owner of the passenger bus engaged as a common carrier.
B. EXTRAORDINARY DILIGENCE
REQUIREMENT OF EXTRAORDINARY DILIGENCE
Common Carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence on the vigilance
over goods and for the safety of the passengers transported by them
according to all the circumstances of each case. (Art. 1733, Civil Code)
Coverage
1.
2.
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24
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The common carrier shall be liable even if the shipper or owner merely
contributed to the loss, destruction or deterioration of the goods, the
proximate cause thereof being the negligence of the common carrier,
the latter shall be liable in damages, which, however, shall be equitably
reduced. (Art. 1741, Civil Code)
The rule is that if the improper packing is known to the carrier or his
employee or is apparent upon ordinary observation, but he
nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for the
resulting damage. (A.F. Sanchez Brokerage Inc. vs. C.A., 447
SCRA 427, [2004])
Said public authority must have the power to issue the order (Article
1743, Civil Code). Consequently, where the officer acts without legal
process, the common carrier will be held liable. (Ganzon v. CA 161,
SCRA 646 [1988])
Cases:
REPUBLIC VS. LORENZO SHIPPING LINES (7 FEBRUARY 2005)
Facts: The Republic of the Philippines signed an agreement through the
Department of Health and the Cooperative for American Relief Everywhere,
26
not have been caused, contributed to, or worsened by the presence of human
participation. The defense of fortuitous event or natural disaster cannot be
successfully made when the injury could have been avoided by human
precaution.
The monsoon is not the proximate cause of the sinking but is due to
the improper stowage of logs. The logs were not secured by cable wires,
causing the logs to shift and later on the sinking the ship. This shows that
they did not exercise extraordinary diligence, making them liable for such
loss.
SWEET LINES INC, VS. CA (121 SCRA 769)
Facts: Herein private respondents purchased first-class tickets from petitioner
at the latters office in Cebu City. They were to board M/V Sweet Grace bound
for Catbalogan, Western Samar. Instead of departing at the scheduled hour of
about midnight on July 8, 1972, the vessel set sail at 3:00 am of July 9, 1972
only to be towed back to Cebu due to engine trouble, arriving there on the
same day at about 4:00 pm. The vessel lifted anchor again on July 10, 1972
at around 8:00 am. Instead of docking at Catbalogan (the first port of call), the
vessel proceeded direct to Tacloban. Private respondents had no recourse
but to disembark and board a ferry boat to Catbalogan. Hence, the suit for
breach of contract of carriage.
Issue: Whether or not the mechanical defect constitutes a fortuitous event
which would exempt the carrier from liability.
Held: No. As found by the trial court and the Court of Appeals, there was no
fortuitous event or force majeure which prevented the vessel from fulfilling its
undertaking of taking the private respondents to Catbalogan. In the first place,
mechanical defects in the carrier are not considered a caso fortuito that
exempts the carrier from responsibility. In the second place, even granting
arguendo that the engine failure was a fortuitous event, it accounted on for
the delay of departure. When the vessel finally left the port, there was no
longer any force majeure that justified by-passing a port of call.
EASTERN SHIPPING LINES VS. CA 234 SCRA 7
Facts: On December 4, 1981, two fiber drums of riboflavin were shipped from
Yokohama, Japan for delivery vessel "SS EASTERN COMET" owned by
defendant Eastern Shipping Lines under a bill of lading. The shipment was
insured under plaintiff's Marine Insurance Policy. Upon arrival of the shipment
in Manila on December 12, 1981, it was discharged unto the custody of
defendant Metro Port Service, Inc. The latter excepted to one drum, said to
be in bad order, which damage was unknown to plaintiff.
On January 7, 1982 defendant Allied Brokerage Corporation received
the shipment from defendant Metro Port Service, Inc., one drum opened and
without seal. On January 8 and 14, 1982, defendant Allied Brokerage
Corporation made deliveries of the shipment to the consignee's warehouse.
The latter excepted to one drum which contained spillages, while the rest of
the contents was adulterated/fake.
Plaintiff contended that due to the losses/damage sustained by said
drum, the consignee suffered losses totaling P19, 032.95, due to the fault and
negligence of defendants. Claims were presented against defendants who
failed and refused to pay the same. As a consequence of the losses
sustained, plaintiff was compelled to pay the consignee P19, 032.95 under
the aforestated marine insurance policy, so that it became subrogated to all
the rights of action of said consignee against defendants.
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the bus was again placed in a complete stop, it had traveled about 10 meters
from point where plaintiffs had gotten off.
Sensing the bus was again in motion; Mariano immediately jumped
form the running board without getting his bayong from conductor. He landed
on the side of the road almost board in front of the shaded place where he left
his wife and his children. At that time, he saw people beginning to gather
around the body of a child lying prostrate on the ground, her skull crushed,
and without life. The child was none other than his daughter Raquel, who was
run over by the bus in which she rode earlier together her parent.
For the death of the said child, plaintiffs comment the suit against the
defendant to recover from the latter damages.
Issue: Whether or not the child was no longer the passenger of the bus
involved in the incident, and therefore, the contract of carriage was already
terminated?
Held: There can be no controversy that as far as the father is concerned,
when he returned to the bus for his bayong which was not unloaded, the
relation of passenger and carrier between him and the petitioner remained
subsisting. The relation of carrier and passenger does not necessarily cease
where the latter, after alighting from the car aids the carriers servant or
employee in removing his baggage from the car.
It is a rule that the relation of carrier and passenger does not cease the
moment the passenger alights from the carriers vehicle at a place selected
by the carrier at the point of destination but continues until the passenger has
had a reasonable time or a reasonable opportunity to leave the carriers
premises.
The father returned to the bus to get one of his baggages which was
not unloaded when they alighted from the bus. Raquel must have followed
her father. However, although the father was still on the running board of the
bus awaiting for the conductor to hand him the bag or bayong, the bus started
to run, so that even he had jumped down from the moving vehicle. It was that
this instance that the child, who must be near the bus, was run over and
killed. In the circumstances, it cannot be claimed that the carriers agent had
exercised the utmost diligence of a very cautious person required by
Article 1755 of the Civil Code to be observed by a common carrier in the
discharge of its obligation to transport safely its passengers. The driver,
although stopping the bus, nevertheless did not put off the engine. He started
to run the bus even before the conductor gave him the signal to go and while
the latter was still unloading part of the baggage of the passengers Beltran
and family. The presence of the said passengers near the bus was not
unreasonable and they are, therefore, to be considered still as passengers of
the carrier, entitled to the protection under their contract of carriage.
ABOITIZ SHIPPING CORP. VS. CA (179 SCRA 95)
Facts: On May 11, 1975, Anacleto Viana boarded M/|V Antonio from
Occidental Mindoro bound for Manila. Upon arrival on May 12, 1975, the
passengers therein disembarked through a gangplank connecting the vessel
to the pier. Viana, instead of disembarking through the gangplank,
disembarked through the third deck, which was at the same level with the
pier. An hour after the passengers disembarked, Pioneer stevedoring started
to operate in unloading the cargo from the ship. Viana then went back,
remembering some of his cargoes left at the vessel. At that time, while he was
pointing at the crew of the vessel to where his cargoes were loaded, the
crane hit him, pinning him between the crane and the side of the vessel. He
30
was brought to the hospital where he died 3 days after (May 15). The parents
of Anacleto filed a complaint against Aboitiz for breach of contract of carriage.
The trial court ruled in favor of the plaintiffs. Then both Aboitiz and
Pioneer filed a motion for reconsideration, upon which the trial court issued an
order absolving Pioneer from liability but not Aboitiz. On appeal, CA affirmed
the trial court ruling. Hence, this petition.
Issue: Whether or not Viana is still considered a passenger at the time of the
incident?
Held: Yes. The La Mallorca case is applicable in the case at bar.
The rule is that the relation of carrier and passenger continues until the
passenger has been landed at the port of destination and has left the vessel
owners dock or premises. Once created, the relationship will not ordinarily
terminate until the passenger has, after reaching his destination, safely
alighted from the carriers conveyance or had a reasonable opportunity to
leave the carriers premises. All persons who remain on the premises a
reasonable time after leaving the conveyance are to be deemed passengers,
and what is a reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances, and includes a reasonable time to see
after his baggage and prepare for his departure. The carrier-passenger
relationship is not terminated merely by the fact that the person transported
has been carried to his destination if, for example, such person remains in the
carriers premises to claim his baggage.
The reasonableness of the time should be made to depend on the
attending circumstances of the case, such as the kind of common carrier, the
nature of its business, the customs of the place, and so forth, and therefore
precludes a consideration of the time element per se without taking into
account such other factors.
Where a passenger dies or is injured, the common carrier is presumed
to have been at fault or to have acted negligently. This gives rise to an action
for breach of contract where all that is required of plaintiff is to prove the
existence of the contract of carriage and its non-performance by the carrier,
that is, the failure of the carrier to carry the passenger safely to his
destination, which, in the instant case, necessarily includes its failure to
safeguard its passenger with extraordinary diligence while such relation
subsists.
BRINAS VS. PEOPLE (125 SCRA 687)
Facts: In the afternoon of January 6, 1957, Juanito Gesmundo bought a train
ticket at the railroad station in Tagkawayan, Quezon for his 55-year old
mother Martina Bool and his 3-year old daughter Emelita Gesmundo. The two
were bound for Lusacan in Tiaong, Quezon.
They boarded the train of Manila Railroad Company at about 2pm.
Upon approaching Barrio Lagalag at 8pm, the train slowed down and the
conductor, accused-appellant, Clemente Brinas, shouted Lusacan, Lusacan!
The old woman walked towards the train exit carrying the child with
one hand and holding her baggage with the other. When they were near the
door, the train suddenly picked up speed. The old woman and the child
stumbled from the train causing them to fall down the tracks and were hit by
an oncoming train, causing their instant death.
31
GACAL VS. PAL (183 SCRA 189, G.R. NO. 55300 MARCH 16, 1990)
Facts: Plaintiffs Franklin Gacal, his wife and three others were passengers of
PAL plane at Davao Airport for a flight to Manila, not knowing that the flight,
were Commander Zapata with other members of Moro National Liberation
Front. They were armed with grenades and pistols. After take off, the
members of MNLF announced a hijacking and directed the pilot to fly directly
to Libya, later to Sabah. They were, however, forced to land in Zamboanga
airport for refueling, because the plane did not have enough fuel to make
direct flight to Sabah. When the plane began to taxi at the runaway of
Zamboanga airport, it was met by two armored cars of the military.
An armored car subsequently bumped the stairs leading inside the
plane. That commenced the battle between the military and the hijackers,
which led ultimately to the liberation of the planes surviving crew and
passengers with the final score of ten passengers and three hijackers dead.
Issue: Whether or not hijacking is a case fortuito or force majeure, which
would exempt an aircraft from liability for, damages to its passengers and
personal belongings that were lost during the incident?
Held: In order to constitute a caso fortuito that would exempt from liability
under Art 1174 of the civil code, it is necessary that the following elements
must occur: (a) the cause of the breach of obligation must be independent of
human will; (b) the event must be unforeseeable or unavoidable; (c) the event
must be such as to render it impossible for the debtor to fulfill his obligation in
a normal manner; (d) the debtor must be free from any participation in or
aggravation of the injury to the creditor.
32
Consolidated then filed an action for damages against petitioner with the
Court of First Instance of Manila. The Court of First Instance dismissed the
complaint stating that the proximate cause of the fall of the payloader which
caused its damage was the act or omission of Vicente Concepcion for
misrepresenting the weight of the payloader as 2.5 tons instead of its true
weight of 7.5 tons. On appeal, the Court of Appeals, reversed the decision of
the Court of First Instance and ordered the plaintiff to pay Concepcion
damages. Hence this petition.
Issue: Whether or not the act of respondent Concepcion of misdeclaring the
true weight of the payloader the proximate and only cause of the damage of
the payloader?
Held: No, Compania Maritima is liable for the damage to the payloader. The
General rule under Articles 1735 and 1752 of the Civil Code is that common
carriers are presumed to be at fault or to have acted negligently in case the
goods transported by them are lost, destroyed, or had deteriorated. To
overcome the presumption of liability for the loss destruction or deterioration
common carriers must prove that they have exercised extraordinary diligence
as required by Article 1733 of the Civil Code.
Extraordinary Diligence in the vigilance over the goods tendered for
shipment requires the common carrier to know and follow the required
precaution fro avoiding damage or destruction of the goods entrusted to it for
safe carriage and delivery. It requires common carriers to render service with
the greatest skill and foresight and to use all reasonable means to ascertain
the nature and characteristics of goods tendered for shipment and to exercise
due care in the handling and stowage including such methods as their nature
requires.
The Supreme Court further held that the weight in a bill of lading are
prima facie evidence of the amount received and the fact that the weighing
was done by another will not relieve the common carrier where it accepted
such weight and entered it in on the bill of lading. The common carrier can
protect themselves against mistakes in the bill of lading as to weight by
exercising extraordinary diligence before issuing such.
SERVANDO VS. PHILIPPINE STEAM NAVIGATION CO.(117 SCRA 832)
Facts: Bico and Servando loaded on board the FS-176 the following cargoes:
1.528 cavans of rice and 44 cartons of colored paper, toys and general
merchandise. Upon the arrival of the vessel, the cargoes were discharged,
complete and in good order to the warehouse of the Bureau of Customs. At
2:00 pm of the same day, a fire of unknown reasons razed the warehouse.
Before the fire, Bico was able to take delivery of 907 cavans of rice. The
petitioners are now claiming for the value of the destroyed goods from the
common carrier.
The Trial Court ordered the respondent to pay the plaintiffs the amount
of their lost goods on the basis that the delivery of the shipment to the
warehouse is not the delivery contemplated by Article 1736 of the New Civil
Code, since the loss occurred before actual or constructive delivery. The
petitioners argued that the stipulation in the bills of lading does not bind them
because they did not sign the same. The stipulation states that the carrier
shall not be responsible for loss unless such loss was due to the carriers
negligence. Neither shall it be liable for loss due to fortuitous events such as
dangers of the sea and war.
Issue: Whether or not the carrier should be held liable for the destruction of
the goods
34
Held: No. There is nothing on record to show that the carrier incurred in
delay in the performance of its obligation. Since the carrier even notified the
plaintiffs of the arrival of their shipments and had demanded that they be
withdrawn.
The carrier also cannot be charged with negligence since the storage
of the goods was in the Customs warehouse and was undoubtedly made with
their knowledge and consent. Since the warehouse belonged and maintained
by the Government, it would be unfair to impute negligence to the appellant
since it has no control over the same.
DSR SENATOR LINES VS. FEDERAL PHOENIX 7 OCTOBER 2003
Facts: Berde plants, Inc. delivered 632 units of artificial trees to C.F. Sharp
and Company, Inc., the General Sip Agent of DSR- Senator Lines, a foreign
shipping corporation, for transportation and delivery to the consignee, Al-Mohr
International Group, in Riyadh, Saudi Arabia. Sharp issued an international
bill of landing for the cargo, with a stipulation that the port of discharge for the
cargo was at the Khor Fakkan port and the port of delivery was Riyadh, Saudi
Arabia.
On June 7, 1993, the vessel left Manila for Saudi Arabia with the cargo
on board. When the vessel arrived in Khor Fakkan Port, the cargo was
reloaded on board DSR-Senator Lines feeder vessel, however while in transit,
the vessel and all its cargo caught fire.
Consequently, Federal Phoenix Assurance paid Berde Plants
corresponding to the amount of the insurance for the cargo. In turn, Berde
Plants executed in its favor a Subrogation Receipt.
Federal Phoenix demanding payment on the basis of the subrogation
receipt. C.f. Sharp denied any liability that such liability was extinguished
when the vessel carrying the cargo was gutted by fire. Thus, Federal Phoenix
filed a complaint for damages against DSR-Senator Lines and C.F, Sharp.
Issue: Whether or not there was a breach of contract of carriage.
Held: Fire is not one of those enumerated under Article 1734 of the Civil
Code to wit,
Art. 1734, Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following
causes only:
1. Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
2. Act of the public enemy in war, whether international civil;
3. Act or omission of the shipper or the owner of the goods;
4. The character of the goods or defects in the packing or in the
containers;
5. Order or act of competent public authority.
6. Common carriers are obliged to observe extraordinary diligence in the
vigilance over the goods transported by them. Accordingly, they are
presumed to have been at fault or to have acted negligently of the
goods are lost, destroyed or deteriorated. In those cases where the
presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the
presumption.
35
36
The court finds no justification for the relief prayed for by the petitioner.
He has failed to show that the findings of the respondent court are not based
on substantial evidence or that it conclusions are contrary to law and
applicable jurisprudence.
VASQUEZ VS. COURT OF APPEALS (138 SCRA 553)
Facts: MV Pioneer Cebu left the port of Manila and bounded for Cebu. Its
officers were aware of the upcoming typhoon Klaring that is already building
up somewhere in Mindanao. There being no typhoon signals on their route,
they proceeded with their voyage. When they reached the island of Romblon,
the captain decided not to seek shelter since the weather was still good. They
continued their journey until the vessel reached the island of Tanguingui,
while passing through the island the weather suddenly changed and heavy
rains fell. Fearing that they might hit Chocolate island due to zero visibility, the
captain ordered to reverse course the vessel so that they could weather out
the typhoon by facing the strong winds and waves. Unfortunately, the vessel
struck a reef near Malapascua Island, it sustained a leak and eventually sunk.
The parents of the passengers who were lost due to that incident filed
an action against Filipinas Pioneer Lines for damages. The defendant
pleaded force majeure but the Trial Court ruled in favor of the plaintiff. On
appeal to the Court of Appeals, it reversed the decision of the lower stating
that the incident was a force majeure and absolved the defendants from
liability.
Issue: Whether of not Filipinas Pioneer Lines is liable for damages and
presumed to be at fault for the death of its passenger?
Held: The Supreme Court held the Filipinas Pioneer Lines failed to observe
that extraordinary diligence required of them by law for the safety of the
passengers transported by them with due regard for all necessary
circumstance and unnecessarily exposed the vessel to tragic mishap. Despite
knowledge of the fact that there was a typhoon, they still proceeded with their
voyage relying only on the forecast that the typhoon would weaken upon
crossing the island of Samar. The defense of caso fortuito is untenable. To
constitute caso fortuito to exempt a person from liability it necessary that the
event must be independent from human will, the occurrence must render it
impossible for the debtor to fulfill his obligation in a normal manner, the
obligor must be free from any participation or aggravation to the injury of the
creditor. Filipina Pioneer Lines failed to overcome that presumption o fault or
negligence that arises in cases of death or injuries to passengers.
GATCHALIAN V DELIM AND CA 203 SCRA 126
Facts: Gatchalian boarded the respondents Thames minibus at San
Eugenio, Aringay, La Union bound of the same province. On the way, a
snapping sound was suddenly heard at one part of the bus and shortly
thereafter, the vehicle bumped a cement flower pot on the side of the road,
went off the road and fell into a ditch. Several passengers including the
petitioner was injured. They were taken into an hospital for treatment. While
there, private respondents wife Adela Delim visited and paid for the
expenses, hospitalization and transportation fees. However, before she left,
she had the injured passengers including the petitioner sign an already
prepared Joint Affidavit constituting a waiver of any future complaint.
However, notwithstanding this document, petitioner filed an action Ex
Contractu to recover compensatory and Actual Damages. Private respondent
denied liability on the ground that it was an accident and the Joint which
constitutes as a waiver. The trial court dismissed the complaint based on the
waiver and the CA affirmed.
37
Issue: Whether or not the private respondent has successfully proved that he
exercised extraordinary diligence.
Held: The court held that they failed to prove extraordinary diligence. After a
snapping sound was suddenly heard at one part of the bus, the driver didnt
even bother to stop and look f anything had gone wrong with the bus. With
regard to the waiver, it must to be valid and effective, couched in clear and
unequivocal terms which leave no doubt as to the intention of the person to
give up a right or benefit which legally pertains to him. In this case, such
waiver is not clear and unequivocal. When petitioner signed the waiver, she
was reeling from the effects of the accident and while reading the paper, she
experienced dizziness but upon seeing other passengers sign the document,
she too signed which bothering to read to its entirety. There appears
substantial doubt whether the petitioner fully understood the joint affidavit.
JUNTILLA VS FONTANAR (136 SCRA 624)
Facts: Herein plaintiff was a passenger of the public utility jeepney on course
from Danao City to Cebu City. The jeepney was driven by driven by defendant
Berfol Camoro and registered under the franchise of Clemente Fontanar.
When the jeepney reached Mandaue City, the right rear tire exploded causing
the vehicle to turn turtle. In the process, the plaintiff who was sitting at the
front seat was thrown out of the vehicle. Plaintiff suffered a lacerated wound
on his right palm aside from the injuries he suffered on his left arm, right thigh,
and on his back.
Plaintiff filed a case for breach of contract with damages before the
City Court of Cebu City. Defendants, in their answer, alleged that the tire blow
out was beyond their control, taking into account that the tire that exploded
was newly bought and was only slightly used at the time it blew up.
Issue: Whether or not the tire blow-out is a fortuitous event?
Held: No. In the case at bar, the cause of the unforeseen and unexpected
occurrence was not independent of the human will. The accident was caused
either through the negligence of the driver or because of mechanical defects
in the tire. Common carriers should teach drivers not to overload their
vehicles, not to exceed safe and legal speed limits, and to know the correct
measures to take when a tire blows up thus insuring the safety of passengers
at all tines.
NECESSITO VS. PARAS (104 PHIL 75)
Facts: On January\y 28, 1954, Severina Garces and her one year old son,
Precillano Necesito boarded passenger auto truck bus of the Philippine
Rabbit Bus Lines at Agno, Pangasinan.
After the bus entered a wooden bridge, the front wheels swerved to the
right. The driver lost control, and after the wrecking the bridge wooden rails,
the truck fell on its right side into a creek where water was breast deep. The
mother, Severina was drowned and the son Precillano was injured.
Issue: Whether or nor the carrier is liable for manufacturing defect of the
steering knuckle?
Held: It is clear that the carrier is not an insurer of the passengers safety. His
liability rest upon negligence, that his failure to exercise utmost degree of
diligence that the law requires.
38
The passenger has neither choice nor control over the carrier in the
selection and use of the equipment and the appliances in use by the carrier.
Having no privity whatever with the manufacturer or vendor of the defective
equipment, the passenger has no remedy against him, while carrier usually
has. It is but logical, therefore, that the carrier, while not an insurer of the
safety of his passengers, should nevertheless be held to answer for flaws of
his equipment if such cause were at all discoverable.
C. DEFENSE/S
Cases :
EASTERN SHIPPING LINES INC.
COURT (150 SCRA 463)
VS.
INTERMEDIATE APPELLATE
Facts: Sometime in or prior to June 1977, the M/S Asiatica, a vessel operated
by petitioner Eastern Shipping Lines Inc., loaded at Kobe, Japan for
transportation to Manila loaded 5,000 pieces of calorized pipes valued at
P256,039.00 which was consigned to Philippine Blooming Mills Co, Inc. and
7 cases of spare parts valued at P92, 361.75 consigned to Central Textile
Mills. Both sets of goods were inured against marine risk for their stated value
with respondent Development Insurance and Surety Corp.
In the same vessel, 2 containers of garment fabrics were also loaded
which was consigned to Mariveles Apparel Corp worth $46,583. The said
cargoes were consigned to Nisshin Fire and Marine Insurance. Another
cargo loaded to the vessel was the surveying instruments consigned to Aman
Enterprises and General Merchandise and insured against respondent Dowa
Fire & Marine Insurance for $1,385.00.
On the way to Manila, M/S Asiatica caught fire and sank. This resulted
to the loss of the ship and its cargoes. The respective Insurers paid the
corresponding marine insurance values and were thus subrogated to the
rights of the insured.
The insurers filed a suit against the petitioner carrier for recovery of the
amounts paid to the insured. However, petitioner contends that it is not liable
on the ground that the loss was due to an extraordinary fortuitous event.
Issues:
1. Whether the Civil Code provisions on Common Carriers or the Carriage of
the Goods by Sea Act will govern the case at bar?
2. Whether or not the common carrier has the burden of proof to show its
compliance with the diligence required by law, which is extraordinary
diligence?
Held:
1. The law of the country to which the goods are to be transported governs
the liability of the common carrier in case of their loss, destruction or
deterioration. The liability of petitioner is governed primarily by the Civil Code
however, in all matters not regulated by the Civil Code, the Code of
Commerce and Special Laws will govern with respect to the rights and
obligations of the carrier. Therefore COGSA is suppletory to the provisions of
the Civil Code.
2. YES. The Common Carrier has the burden to prove that it exercised
extraordinary diligence required by law. The Court is of the opinion that fire
may not be considered a natural disaster or calamity. This must be so as it
39
almost arises invariably from some act of man or by human means. It does
not fall within the category of an act of God unless caused by lightning or by
other natural disaster or calamity. However, petitioner failed to discharge the
burden of proving that it had exercised the extraordinary diligence required by
law and therefore cannot escape liability for the loss of the cargo.
GANZON VS. CA (161 SCRA 646)
Facts: Gelacio Tumambing contracted the services of Mauro B. Ganzon to
haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on
board the lighter LCT "Batman." Pursuant to this agreement, Mauro B.
Ganzon sent his lighter "Batman" to Mariveles where it docked in 3 feet of
water. Then, Gelacio Tumambing delivered the scrap iron to Filomeno Niza,
captain of the lighter, for loading which was actually begun on the same date
by the crew of the lighter under the captain's supervision. When about half of
the scrap iron was already loaded, Mayor Jose Advincula of Mariveles,
Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The
latter resisted the shakedown and after a heated argument between them,
Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing. The
gunshot was not fatal but Tumambing had to be taken to a hospital in
Balanga, Bataan, for treatment. After sometime, the loading of the scrap iron
was resumed. But on 4 December 1956, Acting Mayor Basilio Rub,
accompanied by 3 policemen, ordered captain Filomeno Niza and his crew to
dump the scrap iron where the lighter was docked. The rest was brought to
the compound of NASSCO. Later on Acting Mayor Rub issued a receipt
stating that the Municipality of Mariveles had taken custody of the scrap iron.
Tumambing instituted with CFI Manila an action against Ganzon for
damages based on culpa contractual. The trial court rendered a decision
absolving Ganzon from liability. On appeal, however, the appellate court
reversed and set aside the decision appealed. Hence, the petition for review
on certiorari.
Held: Now the petitioner is changing his theory to caso fortuito. Such a
change of theory on appeal we cannot, however, allow. In any case, the
intervention of the municipal officials was not In any case, of a character that
would render impossible the fulfillment by the carrier of its obligation. The
petitioner was not duty bound to obey the illegal order to dump into the sea
the scrap iron. Moreover, there is absence of sufficient proof that the issuance
of the same order was attended with such force or intimidation as to
completely overpower the will of the petitioner's employees. The mere
difficulty in the fullfilment of the obligation is not considered force majeure. We
agree with the private respondent that the scraps could have been properly
unloaded at the shore or at the NASSCO compound, so that after the dispute
with the local officials concerned was settled, the scraps could then be
delivered
in
accordance
with
the
contract
of
carriage.
D. DURATION OF RESPONSIBILITY OR LIABILITY OF COMMON
CARRIERS
A. IN CASE OF GOODS
START: From the time that the goods are delivered to the common carrier.
(Article 1736, Civil Code. Cia Maritima vs. Insurance Co. of America)
TERMINATION: When the goods are delivered, actively or constructively, by
the carrier to the consignee/person who has the right to receive them, or the
consignee/person who has the right to receive them has been informed of the
arrival of the goods and the consignee had reasonable time to remove such.
(Article 1736 and 1738, Civil Code)
40
The liability remains in full force and effect even when they are
temporarily unloaded or stored in transit unless the shipper or owner made
use of the right of stoppage in transitu. (Article 1737, Civil Code)
WHEN RIGHT OF STOPPAGE IN TRANSITU IS EXERCISED:
It is the right of the unpaid seller who has parted with his goods to stop
its delivery while in transit when the buyer of the goods is or turns insolvent.
(Article 1530, Civil Code)
The common carrier who holds the goods becomes the warehouseman
or ordinary bailee and the contract is terminated when such right is exercised.
Requisites:
1. Unpaid seller (Article 1525, Civil Code);
2. Goods must be in transit (Article 1531, Civil Code);
3. The seller must either actually take possession of the goods sold or
give notice of his claim to the carrier or other person in possession
(Article 1532 [1], Civil Code);
4. The seller must surrender the negotiable document of title, if any,
issued by the carrier or bailee (Article 1532[2], Civil Code);
5. The seller must bear the expenses of delivery of the goods after the
exercise of the right (Article 1532[2], Civil Code); and
6. The buyer is in a state of insolvency or becomes insolvent.
B. IN CASE OF PASSENGERS
START: The carrier is bound to exercise utmost diligence with respect to
passengers the moment the person who purchases the ticket (or a token)
from the carrier presents himself at the proper place and in a proper manner
to be transported. Such person must have bona fide intention to use the
facilities of the carrier, possess sufficient fare with which to pay for his
passage, and present himself to the carrier for the transportation in the
manner provided. (Vda. De Nueca v. Manila Railroad Company, CA, G.R. No.
31731, January 30, 1968)
It is the duty of carriers of passengers to stop their conveyances for a
reasonable length of time in order to afford passengers an opportunity to
board and enter, and they are liable for injuries suffered by boarding
passengers resulting from the sudden starting up or jerking of their
conveyances (Dangwa Transportation Co., Inc. vs. CA, 202 SCRA [1991])
TERMINATION: Until the passenger has, after reaching his destination,
safely alighted from the carriers conveyance or had a reasonable opportunity
to leave the carriers premises. (La Mallorca v. CA, 17 SCRA 739 [1966])
A person by stepping and standing on the platform of a bus, is already
considered a passenger and is entitled to all rights and protection pertaining
to such conventional relation (I.d.).
E. RULES ON PASSENGERS BAGGAGE
1. Baggage in the custody of the passengers or their employee:
That baggage, while in transit will be considered as necessary deposits. The
common carrier shall be responsible for the baggage as depositaries,
provided that notice was given to them or its employees and the passengers
took the necessary precautions which the carrier has advised them relative
to the care and vigilance of their baggage.
2. Baggage not in personal custody, but in that of a Carrier
Carrier who has in its custody the baggage of a passenger to be carried like any other goods is
required to observe extraordinary diligence. In case of loss or damage, the carrier is presumed
41
negligent. As to the other baggage, the rules in Article 1998 and 2000 to 2003 of the Civil Code
concerning the responsibility of hotel-keepers shall be applicable. (Art.1733-1735, Civil Code)
Case/s
QUISUMBING VS. CA
Facts: Norberto Quisumbing, Sr. and Gunther Leoffler were among the of ...
(PAL's) Fokker 'Friendship' PIC-536 plane in its flight of November 6, 1968
which left Mactan City at about 7:30 in the evening with Manila for its
destination.
After the plane had taken off, Florencio O. Villarin, a Senior NBI Agent
who was also a passenger of the said plane, noticed a certain 'Zaldy,' a
suspect in the killing of Judge Valdez, seated at the front seat near the door
leading to the cockpit of the plane. A check by Villarin with the passenger's
ticket in the possession of flight Stewardess Annie Bontigao, who was seated
at the last seat right row, revealed that 'Zaldy' had used the name 'Cardente,'
one of his aliases known to Villarin. Villarin also came to know from the
stewardess that 'Zaldy' had three companions on board the plane."
Villarin then scribbled a note addressed to the pilot of the plane
requesting the latter to contact NBI duty agents in Manila for the said agents
to ask the Director of the NBI to send about six NBI agents to meet the plane
because the suspect in the killing of Judge Valdez was on board (Exh. 'G').
The said note was handed by Villarin to the stewardess who in turn gave the
same to the pilot.
After receiving the note, which was about 15 minutes after take off, the
pilot of the plane, Capt. Luis Bonnevie, Jr., came out of the cockpit and sat
beside Villarin at the rear portion of the plane and explained that he could not
send the message because it would be heard by all ground aircraft stations.
Villarin, however, told the pilot of the danger of commission of violent acts on
board the plane by the notorious 'Zaldy' and his three companions.
While the pilot and Villarin were talking, 'Zaldy' and one of his
companions walked to the rear and stood behind them. Capt. Bonnevie then
stood up and went back to the cockpit. 'Zaldy' and his companions returned to
their seats, but after a few minutes they moved back to the rear throwing ugly
looks at Villarin who, sensing danger, stood up and went back to his original
seat across the aisle on the second to the last seat near the window. 'Zaldy
and his companion likewise went back to their respective seats in front.
Soon thereafter an exchange of gunshots ensued between Villarin
and 'Zaldy' and the latter's companions. 'Zaldy' announced to the passengers
and the pilots in the cockpit that it was a hold-up and ordered the pilot not to
send any SOS. The hold-uppers divested passengers of their belongings.
Issue: Whether or not Pal is liable for damages against the passengers for
loss caused by the robbers on board?
Held: It is illusive to assume that had these precautions been taken, the
hijacking or the robbery would not have succeeded. The mandatory use of the
most sophisticated electronic detection devices and magnetometers, the
imposition of severe penalties, the development of screening procedures, the
compilation of hijacker behavioral profiles, the assignment of sky marshals,
and the weight of outraged world opinion may have minimized hijackings but
all these have proved ineffective against truly determined hijackers. World
experience shows that if a group of armed hijackers want to take over a plane
in flight, they can elude the latest combined government and airline industry
measures. And as our own experience in Zamboanga City illustrates, the use
of force to overcome hijackers, results in the death and injury of innocent
42
passengers and crew members. We are not in the least bit suggesting that
the Philippine Airlines should not do everything humanly possible to protect
passengers from hijackers' acts. We merely state that where the defendant
has faithfully complied with the requirements of government agencies and
adhered to the established procedures and precautions of the airline industry
at any particular time, its failure to take certain steps that a passenger in
hindsight believes should have been taken is not the negligence or
misconduct which mingles with force majeure as an active and cooperative
cause.
BRITISH AIRWAYS VS. CA (285 SCRA 450)
Facts: On April 16, 1989, Mahtani is on his way to Bombay, India from
Manila. His trip was Manila-Hong Kong via PAL and then Hong Kong-India
via British Airways. Prior to his departure, he checked in two pieces of
luggage containing his clothing and other personal effects, confident that the
same would be transferred to his BA flight.
Unfortunately, when he arrived in India, he discovered that his luggage
was missing.
The RTC awarded Mahtani damages which was affirmed by CA.
Issue: Whether or not in a contract of air carriage a declaration by the
passenger is needed to recover a greater amount?
Held: American jurisprudence provides that an air carrier is not liable for the
loss of baggage in an amount in excess of the limits specified in the tariff
which was filed with the proper authorities, such tariff being binding on the
passenger regardless of the passengers lack of knowledge thereof or assent
thereto. This doctrine is recognized in this jurisdiction.
The inescapable conclusion that BA had waived the defense of limited
liability when it allowed Mahtani to testify as to the actual damages he
incurred due to misplacement of his luggage, without any objection.
It is a well-settled doctrine that where the proponent offers evidence
deemed by counsel of the adverse party to be inadmissible for any reason,
the latter has the right to object. However, such right is a mere privilege
which can be waived. Necessarily, the objection must be made at the earliest
opportunity, in case of silence when there is opportunity to speak may operate
as a waiver of objections.
F.LIABILITY OF SUCCESSIVE AIR CARRIERS
KLM ROYAL DUTCH AIRLINES VS CA (65 SCRA 237)
Facts: Spouses Mendoza approached Mr. Reyes, the branch manager of
Philippine Travel Bureau, for consultation about a world tour which they were
intending to make with their daughter and niece. Three segments of the trip,
the longest, was via KLM. Respondents decided that one of the routes they
will take was a Barcelona-Lourdes route with knowledge that only one airline,
Aer Lingus, served it. Reyes made the necessary reservations. To this, KLM
secured seat reservations for the Mendozas and their companions from the
carriers which would ferry them throughout their trip, which the exception of
Aer Lingus. When the Mendozas left the Philippines, they were issued KLM
tickets for the entire trip. However, their coupon for Aer Lingus was marked
on request.
When they were in Germany, they went to the KLM office and obtained
a confirmation from Aer Lingus. At the airport in Barcelona, the Mendozas and
43
plaintiffs rights and his dignity as a human being and as a Filipino, who may
not be discriminated against with impunity, as found by the court below what
worsened the situation of Ortigas was that Lufthansa succeeded in keeping
him as its passenger by assuring him that he would be given first class
accommodation at Cairo, the next station, the proper arrangements therefore
having been made already, when in truth such was not the case. Although
molested and embarrassed to the point that he had to take nitroglycerine pills
to ward off a possible heart attack, Ortigas hardly had any choice, since his
luggage was already in the plane. To his disappointment, when the plane
reached Cairo, he was told by Lufthansa office there that no word at all had
been received from Rome and they had no space for him in first class. Worse,
similar false representations were made to him at Dharham and Calcutta. It
was only at Bangkok where for the first time. Ortigas was at last informed that
he could have a first class seat in the leg of the flight, from Bangkok to Hong
Kong. This Ortigas rejected, if only to make patent his displeasure and
indignation at being so inconsiderately treated in the earlier part of his
journey. In the light of all foregoing, there can be no doubt as to the right of
Ortigas to damages, both moral and exemplary. Precedents we have
consistently adhere to so dictate.
CHINA AIRLINES VS. CHIOK (23 JULY 2003)
Facts: Daniel Chiok purchased from China Airlines a passenger ticket for air
transportation covering Manila-Taipei-Hong Kong-Manila. The said ticket was
exclusively endorsable to PAL.
Before Chiok his trip, the trips covered by the ticket were prescheduled and confirmed by the former. When petitioner arrived in Taipei, he
went to CAL to confirm his Hong Kong- Manila trip on board PAL. The CAL
office attached a yellow sticker indicating the status was OK.
When Chiok reached Hong Kong, he then went to PAL office to confirm
his flight back to Manila. The PAL also confirmed the status of his ticket and
attached a ticket indicating a status OK. Chiok proceeded to Hong Kong
airport for his trip to Manila. However, upon reaching the PAL counter, he was
told that the flight to Manila was cancelled due to typhoon. He was informed
that all confirmed flight ticket holders of PAL were automatically booked for
the next flight the following day.
The next day, Chiok was not able to board the plane because his name
did not appear on the computer as passenger for the said flight to Manila.
Issue: Whether or not CAL is liable for damages?
Held: The contract of air transportation between the petitioner and
respondent, with the former endorsing PAL the segment of Chioks journey.
Such contract of carriage has been treated in this jurisprudence as a single
operation pursuant to Warsaw Convention, to which the Philippines is a party.
In the instant case, PAL as the carrying agent of CAL, the latter cannot
evade liability to respondent, Chiok, even though it may have been only a
ticket issuer for Hong Kong- Manila sector.
III.
CODE
OF
COMMERCE
PROVISIONS
ON
OVERLAND
TRANSPORTATION (*Unless otherwise indicated, reference is to Code of
Commerce)
ARTS. 349 379, CODE OF COMMERCE
BILL OF LADING
45
However, the carrier cannot limit its liability for injury to, or loss of,
goods shipped where such injury or loss was caused by its own
negligence.
o
46
TIME OF DELIVERY
Stipulated in Contract/Bill
of Lading
Carrier is bound to fulfill the
contract and is liable for any
delay; no matter from what
cause it may have arisen.
No stipulation
1.
2.
47
Effects of delay:
1. Merely suspends and generally does not terminate the contract of
carriage.
2. Carrier remains duty bound to exercise extraordinary diligence.
3. Natural disaster shall not free the carrier from responsibility (Art.1740,
Civil Code)
4. If delay is without just cause, the contract limiting the common carriers
liability cannot be availed of in case of loss or deterioration of the goods
(Art.1747, Civil Code)
C. Duty to exercise extraordinary diligence
o Inquiry may be made as to the nature of passengers baggage, but
beyond this constitutional boundaries are already in danger of being
transgressed. (Nocum vs. Laguna Tayabas Bus Co., 30 SCRA 68)[this
doctrine is not applicable to aircrafts because of Section 8 of AntiHijacking Law (RA 6235)]
RIGHT OF CONSIGNEE TO ABANDON GOODS
Instances:
1. Partial non-delivery, where the goods are useless without the others (Art.
363, Code of Commerce);
2. Goods are rendered useless for sale or consumption for the purposes for
which they are properly destined (Art. 365, Code of Commerce); and
3. In case of delay through the fault of the carrier (Art. 371, Code of
Commerce).
NOTICE OF DAMAGE
Requisites for Applicability:
1. Domestic/inter-island/coastwise transportation
2. Land/water/air transportation
3. Carriage of goods
4. Goods shipped are damaged (Art. 366, Code of Commerce)
Rules:
a. Patent damage: shipper must file a claim against the carrier immediately
upon delivery (it may be oral or written)
b. Latent damage: shipper should file a claim against the carrier within 24
hours from delivery.
o These rules do not apply to misdelivery of goods. (Roldan vs. Lim
Ponzo)
o The filing of notice of claim is a condition precedent for recovery.
Purpose of Notice: To inform the carrier that the shipment has been
damaged, and it is charged with liability therefore, and to give it an
opportunity to make an investigation and fix responsibility while the matter is
fresh.
Prescriptive Period
Not provided by Article 366. Thus, in such absence, Civil Code rules on
prescription apply.
If despite the notice of claim, the carrier refuses to pay, action must be
filed in court.
1. If no bill of lading was issued: within 6 years
2. If bill of lading was issued: within 10 years.
COMBINED CARRIER AGREEMENT
General Rule: In case of a contract of transportation of several legs, each
carrier is responsible for its particular leg in the contract. (Art. 373, Code of
Commerce)
48
The filing of claim under either (a) or (b) is a condition precedent for
recovery.
If the claim is filed, but the carrier refuses to pay, enforce carriers
liability in court by filing a case:
1. Within six (6) years, if no bill of lading has been issued; or
2. Within ten (1) years, if a bill of lading has been issued.
Written demand within twenty-four (24) hours is necessary only when the
package does not show exterior signs of damage but when there are exterior
signs of damage, a verbal claim made immediately is sufficient compliance
with law. (Mapaso Goldfields v. Compania Maritima [CA], 2 OG 307)
49
50
3. Freightage; and
4. Insurance proceeds. (Chua v. IAC, 166 SCRA 183[1988])
Exceptions: When not applicable;
1. The voyage is not maritime, but only in river, bay or gulf.
2. In case of expense for equipping, repairing or provisioning of the vessel.
3. In case the vessel is not common but a special carrier.
4. In case the vessel would totally sink or get lost by reason of the ship
owner or ship agents fault.
5. When the injury to or death of a passenger is due either to the fault of the
ship owner and the captain.
6. When the vessel is insured (to the extent of the insurance proceeds); or
7. In workmens compensation claims. (Yangco v. Laserna 73 Phil. 330)
The limited liability doctrine applies not only to the goods but also in
all cases like death or injury to passengers. (Heirs of Amparo Delos
Santos vs. CA, 186 SCRA 649)
If the vessel is not entirely lost, the hypothecary nature will not apply,
unless the shipowner or the ship agent abandons the vessel.
When Applicable:
1. Civil liability for indemnities in favor of third persons which arise from
the conduct of the captain in the care of the goods which the vessel
carried. (Art. 587, Code of Commerce)
2. Civil liability arising from collisions. (Art. 837, Code of Commerce)
3. Unpaid wages of the captain and the crew if the vessel and its cargo
are totally lost by reason of capture or shipwreck. (Art. 643, Code of
Commerce)
Rules on Principle of Limited Liability of the Shipowner and Ship Agent
o Where the shipowner or ship agent validly exercised his right of
abandonment of the vessel with all her equipment and the freightage
earned during the voyage, the abandonment amounts to an offer to the
injured party of the value of the vessel, of her equipment, and the freight
money earned during the voyage. (Phil. Shipping Co. v. Garcia-Vergara
96 Phil 201)
o
This is not to say, however, that the limited liability rule is without
exceptions, namely: (1) where the injury or death to a passenger is due
either to the fault of the shipowner, or to the concurring negligence of the
shipowner and the captain. (Phil. Am. Gen. Insurance Co., Inc. v. CA, 273
SCRA 649,271 [1997]); (2) where the vessel is insured; and (3) in
workmens compensation claims. (Monarch Insurance Co., Inc. v. CA,
333 SCRA 71 [2000])
Contrary to the theory that the limited liability rule has been rendered
obsolete by the advances in modern technology, which considerably
lessen the risks involved in maritime trade, this Court continues to apply
51
the said rule in appropriate cases. (Monarch Insurance Co., Inc. v. CA,
333 SCRA 71 [2000])
ABANDONMENT
Abandonment of the vessel is necessary to limit the liability of the
shipowner. The only instance were abandonment is dispensed with is when
the vessel is entirely lost (Luzon Stevedoring vs. CA 156 SCRA 169[1987]).
Satisfaction of Claims Under the Limited Liability
1.
All claims should be collated before they can be satisfied from what
remains of the insurance proceeds and freightage at the time of the loss;
2.
No claimant should be given preference over the others.
Execution of judgment in earlier completed cases, even those already final
and executory, must be stayed pending completion of all cases caused by
the subject sinking. (Aboitiz Shipping v. Gen. Accident Fire and Life
Insurance, 217 SCRA 359 [1993])
Abandonment; Who May Exercise
1. Shipowner
2. Ship agent
52
Not a mere agent under civil law; he is solidarily liable with the ship owner.
53
1. Filipino citizen;
2. Legal capacity to contract;
3. Must have passed the required physical and mental examinations required
for licensing him as such. (Art. 609, Code of Commerce)
Inherent powers of Captains:
1. Appoint crew in the absence of ship agent;
2. Command the crew and direct the vessel to its port of destination;
3. Impose correctional punishment on those who, while on board vessel, fail
to comply with his orders or are wanting in discipline;
4. Make contracts for the charter of vessel in the absence of ship agent.
5. Supply, equip, and provision the vessel; and
6. Order repair of vessel to enable it to continue its voyage. (Art. 610, Code
of Commerce)
Duties of Captains:
1. Bring on board the proper certificate and documents and a copy of the
Code of Commerce;
2. Keep a Log Book, Accounting Book and Freight Book;
3. Examine the ship before the voyage;
4. Stay on board during the loading and unloading of the cargo;
5. Be on deck while leaving or entering the port;
6. Protest arrivals under stress and in case of shipwreck;
7. Follow instructions of and render an accounting to the ship agent;
8. Leave the vessel last in case of wreck;
9. Hold in custody properties left by deceased passengers and crew
members;
10. Comply with the requirements of customs, health, etc. at the port of arrival;
11. Observe rules to avoid collision;
12. Demand a pilot while entering or leaving a port. (Art. 612, Code of
Commerce)
No liability for the following:
1. Damages caused to the vessel or to the cargo by force majeure;
2. Obligations contracted for the repair, equipment, and provisioning of the
vessel unless he has expressly bound himself personally or has signed a
bill of exchange or promissory note in his name. (Art. 620, Code of
Commerce)
Solidary Liabilities of the Ship Agent/Shipowner for Acts Done by the
Captain towards Passengers and Cargoes
1. Damages to vessel and to cargo due to lack of skill and negligence;
2. Thefts and robberies of the crew;
3. Losses and fines for violation of laws;
4. Damages due to mutinies;
5. Damages due to misuse of power;
6. For deviations;
7. For arrivals under stress;
8. Damages due to non-observance of marine regulations. (Art. 618, CoC)
OFFICERS AND CREW
1. Sailing Mate/First Mate
2. Second Mate
3. Engineers
4. Crew
No liability under the following circumstances:
1. If, before beginning voyage, captain attempts to change it, or a naval war
with the power to which the vessel was destined occurs;
54
55
Liability of Pilot
General Rule: On compulsory pilotage grounds, the Harbor Pilot is
responsible for damage to a vessel or to life or property due to his negligence.
Exceptions:
1. Accident caused by force majeure or natural calamity provided the pilot
exercised prudence and extra diligence to prevent or minimize damages.
2. Countermand or overrule by the master of the vessel in which case the
registered owner of the vessel is liable. (Sec.11, Art.III Philippine Ports
Authority Administrative Order 03-85)
DESERTION
An act by which a seaman deserts and abandons a ship or vessel before
the expiration of his term of duty without leave and without intention to return.
(Singa Ship Management Phils. v. NLRC 276 SCRA 201[1997])
CAUSES OF REVOCATION OF VOYAGE
1. War or interdiction of commerce;
2. Blockade;
3. Prohibition to receive cargo at destination;
4. Embargo;
5. Inability of the vessel to navigate. (Art. 640, Code of Commerce)
Terms:
1. Interdiction of Commerce A governmental prohibition of commercial
intercourse intended to bring about an entire cessation for the time being
of all trade whatever.
2. Blockade A sort of circumvallation of a place by which all foreign
connection and correspondence is, as far as human power can effect it, to
be cut off.
3. Embargo A proclamation or order of a state, usually issued in time of
war or threatened hostilities, prohibiting the departure of ships or goods
from some or all the ports of such state until further order.
Vessels
LOPEZ VS. DURUELO 52 PHIL 229
Facts: On February 10, 1927, plaintiff Augusto Lopez was desirous of
embarking upon the interisland steamer San Jacinto in order to go to Cebu,
the plaintiff embarked at the landing in the motorboat Jison which was
engaged in conveying passengers and luggage back and forth from the
landing to the boats at anchor.
As the motorboat approached San Jacinto in a perfectly quiet sea, it
came too near to the stern of the ship, and as the propeller of the ship had not
yet ceased to turn, the blades of the propeller strucked the motorboat and
sank it at once. As it sank, the plaintiff was thrown into the water against the
propeller, and the revolving blades inflicted various injuries upon him. The
plaintiff was hospitalized. He filed a complaint seeking to recover damages
from the defendant. The defendant however alleged that the complaint does
not have a right of action, a demurrer was submitted directed to the fact that
the complaint does not allege that the protest had been presented by the
plaintiff, within twenty-four hours after the occurrence to the competent
authority at the port where the accident occurred as provided for Article 835 of
56
Issue: Whether or not in order to claim limited liability under Article 837 of the
Code of Commerce, it is necessary that the owner abandon the vessel
Held: Yes, abandonment is necessary to claim the limited liability wherein it
shall be limited to the value of the vessel with all the appurtenances and
freightage earned in the voyage. However, if the injury was due to the ship
owners fault, the ship owner may not avail of his right to avail of limited
liability by abandoning the vessel.
The real nature of the liability of the ship owner or agent is embodied in
the Code of Commerce. Articles 587, 590 and 837 are intended to limit the
liability of the ship owner, provided that the owner or agent abandons the
vessel. Although Article 837 does not specifically provide that in case of
collision there should be abandonment, to enjoy such limited liability, said
article is a mere amplification of the provisions of Articles 587 and 590 which
makes it a mere superfluity.
The exception to this rule in Article 837 is when the vessel is totally lost
in which case there is no vessel to abandon, thus abandonment is not
required. Because of such loss, the liability of the owner or agent is
extinguished. However, they are still personally liable for claims under the
Workmens Compensation Act and for repairs on the vessel prior to its loss.
In case of illegal or tortious acts of the captain, the liability of the owner
and agent is subsidiary. In such cases, the owner or agent may avail of
Article 837 by abandoning the vessel. But if the injury is caused by the
owners fault as where he engages the services of an inexperienced captain
or engineer, he cannot avail of the provisions of Article 837 by abandoning the
vessel. He is personally liable for such damages.
In this case, the Court held that the petitioner is a t fault and since he
did not abandon the vessel, he cannot invoke the benefit of Article 837 to limit
his liability to the value of the vessel, all appurtenances and freightage earned
during the voyage.
YANGCO VS. LASERNA (73 PHIL 330)
Facts: On the afternoon of May 26, 1927, the steamer SS Negros left the port
of Romblon on its return trip to Manila. Typhoon signal no. 2 was then up and
in fact, the passengers duly advised the captain before sailing. The boat was
overloaded. After 2 hours of sailing, the boat encountered strong winds and
rough seas between the islands of Banton and Simara. While in the act of
maneuvering, the vessel was caught sidewise by a big wave which caused it
to capsize and sink. Many of the passengers died on the mishap. Civil actions
were instituted in the CFI of Capiz, the petitioner sought to abandon the
vessel to the plaintiffs in three cases.
Issue: Whether the shipowner or agent is liable for damages for the
consequent death of its passengers notwithstanding the total loss of the
vessel?
Held: The petitioner is absolved from all complaints.
Under Article 587 the ship agent shall also be civilly liable for
indemnities in favor of third persons which arise from the conduct of the
captain in the vigilance over the goods which the vessels carried; BUT he
may exempt himself therefrom by abandoning the vessel with all her
equipment and the freight he may have earned during the voyage.
58
Court reversed judgment and absolved private respondent from any liability.
Hence, this Petition for Review on Certiorari.
Issue: Whether the shipowners liability is extinguished despite of the loss of
the ship?
Held: With respect for the private respondents submission that the total loss
of the vessel extinguished its liability pursuant to Article 587 of the Code of
Commerce as construed in Yangco vs. Laserna, 73 Phil. 330 (1941), suffice it
to state that even in the cited case, it was held that the liability of the
shipowner is limited to the value of the vessel or to the insurance thereon,
Despite the total loss of the vessel therefore, its insurance answers for the
damages that the shipowners agent may be held liable for by reason of the
death of its passengers. Judgment of the CFI reinstated.
acts and omissions, and that the employer need not be guilty of neglect or
fault, in order that responsibility may attach to him and that shipowner was
liable to pay compensation provided for in the Workmen's Compensation Act,
notwithstanding the fact that the motorboat was totally lost.
Doctrine of Limited Liability, Art. 587
ABOITIZ SHIPPING VS. GENERAL ACCIDENT FIRE AND LIFE (GR NO.
100446 JANUARY 21, 1993)
Facts: Petitioner is a corporation engaged in the business of maritime trade
as a carrier. As such, it owned and operated the M/V P/ ABOITIZ, a common
carrier that sank on voyage from Hong Kong to Manila. Private respondent
GAFLAC is a foreign insurance company pursuing its remedy as a subrogee
of several cargo consignees whose respective cargo sank with the said
vessel and for which it has priory paid. The sinking of vessel gave rise to
filling of suit to recover the lost cargo either by shippers, their successors-ininterest, or the cargo insurers like GAFLAC as subrogees. The sinking was
initially investigated by the Board of Marine Inquiry, which found that such
sinking was due to fortuitous event.
Issue: Whether or not the doctrine of limited liability is applicable to the case?
Held: The real an hypothecary nature of maritime law simple means that the
liability of the carrier in connection with losses related to maritime contracts is
confined to the vessel, which is hypothecated for such obligations or which
stands as the guaranty for their settlement. It has its origin by reason of the
conditions and risks attending maritime trade in its earliest years when such
trade was replete with innumerable and unknown hazards since vessels had
to go through largely uncharted waters to ply their trade. Thus, the liability of
the vessel owner and agent arising form the operation of such vessel were
confined to the vessel itself, its equipment, freight and insurance, if any, which
limitation served to induce capitalist into effectively wagering their resources
against consideration of the large attainable in the trade.
AMERICAN HOME ASSURANCE VS. CA (208 SCRA 343)
Facts: On or about June 19, 1998, Cheng Hwa Pulp Corp. shipped 5,000
bales of bleached kraft pulp from Haulien, Taiwan on board SS Kaunlaran
(owned by National Marine Corporation). The shipment was consigned to
Mayleen Paper, Inc. which insured the same with American Home Assurance
Co. On June 22, 1998, the shipment arrived in manila and was discharged
onto the custody of the Marina Port Services, Inc. However, upon delivery to
Mayleen Paper Inc., it was found that 122 bales had either been damaged or
lost with the value of P61, 263.41.
Mayleen Paper Inc, duly demanded indemnification from NMC but was
not heeded. Mayleen then sought recovery from American Home Assurance,
the insurer, which was adjusted to P31, 506.75. As subrogee, American Home
then filed a suit against NMC for the recovery of the said amount. NMC filed a
motion to dismiss on the ground that there was no cause of action based on
Art 848 of the Code of Commerce which provides that claims for averages
shall not be admitted if they do not exceed 5% of the interest which the
claimant may have in the vessel or in the cargo if it be gross average and 1%
of the goods damaged if particular average, deducting in both cases the
expenses of appraisal, unless there is an agreement to the contrary. NMC
contended that based on the allegations of the complaint, the loss sustained
in the case was P35, 506.75 which is only .18% of P17.420.000.00, the total
value of the cargo.
61
The trial court dismissed the case for lack of cause of action. American
Home then filed a petition for certiorari with the Court of Appeals which later
dismissed as constituting plain errors of law. Hence, this petition.
Issue: Whether or not the law on averages applies when there is negligence?
Held: NO. Common carriers cannot limit their liability for injury or loss of
goods where such injury or loss was caused by its own negligence. Otherwise
stated, the law on averages under the Code of Commerce cannot be applied
in determining liability where there is negligence. It is reasonable to conclude
that the issue of negligence must first be addressed before the proper
provisions of the Code of Commerce on the extent of liability may be applied.
Instead of presenting proof of the exercise of extraordinary diligence as
requires by law, NMC filed its motion to dismiss, hypothetically admitting the
truth of the facts alleged in the complaint to the effect that the loss or damage
to the 122 bales was due to the negligence or fault of NMC.
PHILIPPINE HOME ASSURANCE VS. CA (257 SCRA 468)
Facts: Eastern Shipping Lines, Inc. (ESLI) loaded on board SS Eastern
Explorer in Kobe, Japan, a shipment for carriage to Manila and Cebu freight
prepaid and in good order and condition. While the vessel is off Okinawa,
Japan, a small flame was detected on the acetylene cylinder located in the
main deck level. As the crew was trying to extinguish the fire, the acetylene
cylinder suddenly exploded sending a flash of flame throughout the
accommodation area, thus causing death and severe injuries to the crew and
instantly setting fire to the whole superstructure of the vessel. The incident
forces the master and the crew to abandon the ship. Thereafter, SS Eastern
Explorer was found to be constructive total loss and its voyage was declared
abandoned. Several hours later, a tugboat under the control of Fukuda
Salvage Co. arrived near the vessel and commenced to tow the vessel for the
port of Naha, Japan.
After the fire was extinguished, the cargoes which were saved were
loaded to another vessel for delivery for their original of port of destination.
ESLI charged the consignees several amounts corresponding to additional
freight and salvage charges. The charges were all paid by Philippine Home
Assurance Corporation (PHAC) under protest for and in behalf of the
consignees. PHAC, as subrogee of the consignees, thereafter filed a
complaint before the Regional Trial Court of Manila, Branch 39, against ESLI
to recover the sum paid under protest on the ground that the same were
actually damages directly brought about by the fault, negligence, illegal act
and/or breach of contract of ESLI.
In its answer, ESLI contended that it exercised the diligence required
by law in the handling, custody and carriage of the shipment; that the fire was
caused by unforeseen event; that the additional freight charges are due and
demandable pursuant to the Bill of Lading, and that salvage charges are
properly collectible under Act. No. 2616, known as the Salvage Law.
The trial court dismissed the PHACs complaint and ruled in favor of
ESLI. The court said that the Supreme Court has ruled in Erlanger and
Galinger vs. Swedish East Asiatic Co., Ltd., 34 Phil. 178, that three elements
are (1) a marine peril (2) service voluntary rendered when not required as an
existing duty or from a special contract and (3) success in whole or in part, or
that the service rendered contributed to such success. The court said that the
above elements are all present in the instant case. Salvage charges may thus
be assessed on the cargoes saved from the vessel. As provided for in Section
13 of the Salvage Law, The expenses of salvage, as well as the reward for
62
63
2. Jetsam goods which are cast into the sea, and there sink and remain
under water;
3. Floatsam or Flotsam goods which float upon the sea when cast
overboard;
4. Ligan or Lagan goods cast into the sea tied to a buoy, so that they may
be found again by the owners (Diaz, Notes on Transportation Law, p.173).
Persons Who Have No Right to a Reward for Salvage:
1.
Crew of the vessel saved;
2.
Person who commenced Salvage in spite of opposition of the Captain
or his representative;
3.
In accordance with Sec. 3 of the Salvage Law, a person who fails to
deliver a salvaged vessel or cargo to the Collector of Customs.
DERELICT
A ship or her cargo which is abandoned and deserted at sea by those who
are in charge of it, without any hope of recovering it, or without any intention
of returning to it.
Rules on Salvage Reward
1. The reward is fixed by the RTC judge in the absence of agreement or
where the latter is excessive. (Sec. 9, Act No. 2616)
2. The reward should constitute a sufficient compensation for the outlay and
effort of the salvors and should be liberal enough to offer an inducement to
others to render services in similar emergencies in the future.
3. If sold (no claim being made within 3 months from publication), the
proceeds, after deducting expenses and the salvage claim, shall go to the
owner; if the latter does not claim it within 3 years, 50% of the said
proceeds shall go to the salvors, who shall divide it equitably, and the
other half to the government. (Secs. 11-12, Act. No 2616)
4. If a vessel is the salvor, the reward shall be distributed as follows:
a. 50% to the shipowner;
b. 25% to the captain; and
c. 25% to the officers and crew in proportion to their salaries. (Sec. 13,
Act No. 2616)
5. Expenses incurred in the salvage must be shown to be necessary and
reasonable in amount before they will be allowed to the salvors.
CONTRACT OF TOWAGE
A contract whereby one vessel, usually motorized, pulls another, whether
loaded or not with merchandise, from one place to another, for a
compensation. It is a contract for services rather than a contract of carriage.
BARRIOS VS. GO THONG & CO. (7 SCRA 535)
Facts: Honorio Barrios was the captain and master of the MV Henry I
operated by William Lines, Inc. which plied the route from Cebu to Davao
City. On its voyage on May 1, 1958 the MV Henry I intercepted an SOS
signal from the MV Don Alfredo owned and operated by Go Thong & Co.
Responding to the SOS, Henry I approached the Don Alfredo and found out
that the Don Alfredo was suffering from engine failure. After agreeing to
assist the disabled ship, the crew of Henry I attached tow lines and
proceeded to tow the Don Alfredo heading towards the port of Dumaguete
City. The following morning, they encountered a sister ship of Don Alfredo,
the MV Lux. Upon the request of the captain of the Don Alfredo, the crew of
the Henry I released the towlines and continued on their voyage.
After the incident, Barrios as captain of MV Henry I claimed entitlement
to compensation under the salvage law which was opposed by Go Thong and
Co. who claimed that what occurred was only mere towage.
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Bareboat Or Demise
The charterer provides crew, food and fuel. The charterer is liable as if he
were the owner, except when the cause arises from the unworthiness of
the vessel. The shipowner leases to the charterer the whole vessel,
transferring to the latter the entire command, possession and consequent
control over the vessels navigation, including the master and the crew,
who thereby become the charters servants. It transforms a common
carrier into a private carrier.
though the transportation is domestic, subject to the extent that any term
of the bill of lading is repugnant to the COGSA or applicable law, then to
the extent thereof the provision of the bill of lading is void.
Rights and Obligations in a Charter Party
A.
1.
2.
3.
4.
5.
6.
7.
B.
1.
2.
3.
4.
5.
At Shipowners Request:
1. If the extra lay days terminate without the cargo being placed
alongside the vessel;
2. Sale by the owner of the vessel before loading the charterer.
C.
Fortuitous causes:
1.
2.
3.
4.
5.
War;
Blockade;
Prohibition to receive cargo;
Embargo; and
Inability of the vessel to navigate.
The consignee and the shipper who accepts a bill of lading even
without signing are bound by the terms and conditions thereof. (Keng
Hua Paper Products v. CA 286 SCRA 257[1998])
Acceptance of the consignee is implied if he claims reimbursement for
missing goods and files a case based on the bill of lading. (Belgian
Overseas Chartering v. Phil. First Insurance, 383 SCRA 23 [2002])
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4.
5.
6.
7.
The parties to a loan, whether ordinary or maritime, may agree on any rate
of interest (CB Circular 905); provided the same is not contrary to law,
morals, good customs, public order or public policy (Art. 1306, Civil Code)
AVERAGE
An extraordinary or accidental expense incurred during the voyage in
order to preserve the cargo, vessel or both, and all damages or
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Where both vessel and cargo are saved, it is general average; where
only the vessel or only the cargo is saved, it is particular average.
o
Jettisoned goods are not res nullius nor deemed abandoned within
the meaning of civil law so as to be the object of occupation by
salvage.
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Domestic
Deck cargo is allowed
With shippers consent
General average
Without shippers consent
Captain is liable
International
Deck cargo is not allowed
Particular average
Captain is liable
B.
In such arrival the captain must file a protest which is merely a disclaimer.
COLLISION
The impact of two moving vessels.
Zones of Time in the Collision of Vessels:
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1st zone all time up to the moment when risk of collision begins;
2nd zone time between moment when risk of collision begins and the
moment it becomes a practical certainty; and
c. 3rd zone time when collision has become a practicable certainty to
the point of actual impact.
a.
b.
Each vessel must bear its own loss, but as to the other damages,
the passenger and cargoes, they shall be both solidarily liable. (Art.
827, CoC)
3. Vessel at fault not known
Each vessel must bear its own loss, but both shall be solidarily
liable for losses and damages on the cargoes. (Art. 828, CoC)
Doctrine of Inscrutable Fault
In case of collision where it cannot be determined which between the
two vessels was at fault, both vessels bear their respective damage,
but both should be solidarily liable for damage to the cargo of both
vessels.
4. Third vessel at fault
The third vessel will be liable for all the losses and damages. (Art.
831, Code of Commerce)
5. Fortuitous event/force majeure
No liability. Each party shall bear its own loss. However, due
diligence must be exercised by the carrier to lessen the damages
before, during, and after the impact (Art. 830, Code of
Commerce).
The doctrine of res ipsa loquitur applies in case a moving vessel
strikes a stationary object, such as a bridge post, dock, or navigational
aid. (Far Eastern Shipping v. CA, 297 SCRA 301; Luzon Stevedoring
vs. CA, 156 SCRA 169)
MARITIME PROTEST
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Excuses for not filing protest: 1) where the interested person is not on
board the vessel; and 2) on collision time, need not be protested. (Art.
836, Code of Commerce)
SHIPWRECK
It is the loss of the vessel at sea as a consequence of its grounding, or
running against an object in sea or on the coast. It occurs when the vessel
sustains injuries due to a marine peril rendering her incapable of
navigation.
If the wreck was due to malice, negligence or lack of skill of the captain, or
because the vessel put to sea was insufficiently repaired and equipped;
the owner of the vessel may demand indemnity from said captain. (Art.
841, Code of Commerce)
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The trial court found for the plaintiff, holding South Sea and Seven
Brothers liable for the loss. On appeal, the Court of Appeals affirmed in part
the decision of the trial court. The Court of Appeals affirmed the liability of
South Sea Surety and Assurance but exonerated Seven Brothers, stating that
the latter is a private carrier therefore the provisions on common carriers is
not applicable to their contract. Hence the present appeal.
Issue: Whether or not respondent Court of Appeals committed a reversible
error in upholding the validity of the stipulation in the charter party executed
between petitioner and Seven Brothers exempting the latter from liability of
loss arising from the negligence of its captain.
Held: The decision of the Court of appeals is correct. The contract between
petitioner and Seven Brothers is one of Private Carriage hence the provisions
on common carriage do not apply. In a contract of private carriage parties are
free to stipulate that the responsibility for the cargo rests solely in the
charterer, such stipulations are valid because they are freely entered into by
the parties and the same is not contrary to law, morals, good custom, public
order or public policy.
SWEET LINES VS. CA (121 SCRA 769)
Facts: Herein private respondents purchased first-class tickets from petitioner
at the latters office in Cebu City. They were to board M/V Sweet Grace bound
for Catbalogan, Western Samar. Instead of departing at the scheduled hour of
about midnight on July 8, 1972, the vessel set sail at 3:00 am of July 9, 1972
only to be towed back to Cebu due to engine trouble, arriving there on the
same day at about 4:00 pm. The vessel lifted anchor again on July 10, 1972
at around 8:00 am. Instead of docking at Catbalogan (the first port of call), the
vessel proceeded direct to Tacloban. Private respondents had no recourse
but to disembark and board a ferry boat to Catbalogan. Hence, the suit for
breach of contract of carriage.
Issue: Whether or not the mechanical defect constitutes a fortuitous event
which would exempt the carrier from liability?
Held: No. As found by the trial court and the Court of Appeals, there was no
fortuitous event or force majeure which prevented the vessel from fulfilling its
undertaking of taking the private respondents to Catbalogan. In the first place,
mechanical defects in the carrier are not considered a caso fortuito that
exempts the carrier from responsibility. In the second place, even granting
arguendo that the engine failure was a fortuitous event, it accounted on for
the delay of departure. When the vessel finally left the port, there was no
longer any force majeure that justified by-passing a port of call.
TRANS-ASIA SHIPPING VS. CA (254 SCRA 260)
Facts: Plaintiff (herein private respondent Atty. Renato Arroyo) bought a ticket
from herein petitioner for the voyage of M/V Asia Thailand Vessel to Cagayan
de Oro from Cebu City. Arroyo boarded the vessel in the evening of
November 12, 1991 at around 5:30. At that instance, plaintiff noticed that
some repair works were being undertaken on the evening of the vessel. The
vessel departed at around 11:00 in the evening with only one engine running.
After an hour of slow voyage, vessel stopped near Kawit Island and
dropped its anchor threat. After an hour of stillness, some passenger
demanded that they should be allowed to return to Cebu City for they were no
longer willing to continue their voyage to Cagayan de Oro City. The captain
acceded to their request and thus the vessel headed back to Cebu City. At
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Cebu City, the plaintiff together with the other passengers who requested to
be brought back to Cebu City was allowed to disembark. Thereafter, the
vessel proceeded to Cagayan de Oro City. Plaintiff, the next day boarded the
M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of
the defendant.
On account of this failure of defendant to transport him to the place pf
destination on November 12, 1991, plaintiff filed before the trial court a
complaint for damages against the defendant.
Issue: Whether or not the failure of a common carrier to maintain in
seaworthy condition its vessel involved in a contract of carriage a breach of its
duty?
Held: Undoubtedly, there was, between the petitioner and private respondent
a contract of carriage. Under Article 1733 of the Civil Code, the petitioner was
bound to observed extraordinary diligence in ensuring the safety of the private
respondent. That meant that the petitioner was pursuant to the Article 1755 off
the said Code, bound to carry the private respondent safely as far as human
care and foresight could provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances. In this case, the Supreme
Court is in full accord with the Court of Appeals that the petitioner failed or
discharged this obligation.
Before commencing the contact of voyage, the petitioner undertook
some repairs on the cylinder head of one of the vessels engines. But even
before it could finish these repairs it allowed the vessel to leave the port of
origin on only one functioning engine, instead of two. Moreover, even the lone
functioning engine was not in perfect condition at sometime after it had run its
course, in conked out. Which cause the vessel to stop and remain adrift at
sea, thus in order to prevent the ship from capsizing, it had to drop anchor.
Plainly, the vessel was unseaworthy even before the voyage begun. For the
vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with the sufficient number of competent officers and crew. The
Failure of the common carrier to maintain in seaworthy condition its vessel
involved in a contract of carriage is a clear breach of its duty prescribed in
Article 1755 of the Civil Code.
Carriage of Goods by Sea Act (Commonwealth Act. No. 65; Public Act
No. 521, 74th US Congress)
Domestic Trade: Civil Code and Code of Commerce applies.
Foreign Trade: COGSA applies.
The Civil Code and the Code of Commerce is suppletory to COGSA in the
carriage of goods from foreign ports to the Philippines.
The law of the country to which the goods are to be transported shall
govern the liability of the common carrier for loss, destruction or
deterioration of the goods. (Art 1753, NCC)
The Civil Code is the primary law on goods that are being shipped from a
foreign port to the Philippines. However, COGSA remains to be a
suppletory law for international shipping.
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3.
Under the COGSA, suits for loss or damage to the cargo should be
brought within one year after:
1. Delivery of the goods; or
2. The date when goods should have been delivered.
The one-year period shall run from delivery of the last package and is not
suspended by extrajudicial demand. Reasons:
1. Matters affecting transportation of goods by sea should be decided at
the shortest time possible.
2. The Civil Code does not apply to a special law like COGSA.
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The rule applies in cases of collision, but it starts not from the date of
collision, but when the goods should have been delivered had the cargoes
been saved.
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one side of the ship for the purpose of loading until it passes through the
other side for discharging. There are two tackles involved in the operation;
one for loading, the other for unloading.
ANG VS. AMERICAN STEAMSHIP AGENCIES (19 SCRA 631)
Facts: Yau Yue Commercial Bank of Hongkong agreed to sell 140 packages
of galvanized steel durzinc sheets to Herminio Teves for $32,458.26. Said
agreement was subject to the following terms: the purchase price should be
covered by a bank draft which should be paid by Teves in exchange for the
delivery to him of the bill of lading to be deposited with honking and Shanghai
Bank of Manila; that Teves would present said bill of lading to carriers agent,
American Steamship Agencies which would then issue the permit to deliver
imported articles to be presented to the Bureau of customs to obtain the
release of the articles.
Yau Yue shipped the articles aboard S.S. Tensai Maru owned by
Nissho Shipping Co., of which the American Shipping is the agent in the
Philippines.
When the Articles arrived in manila, Honkong Shanghais Bank notified
Teves of the arrival of the goods and requested for the payment of the
demand draft. Teves, however, failed to pay the demand draft. So, the bank
returned the bill of lading and the demand draft to Yau Yue which endorsed
the bill of lading to Domingo Ang.
Despite his non-payment, Teves was able to obtain a bank guarantee
in favor of the American Steamship Agencies, the carriers agent. Thus, Teves
succeeded in securing a permit to deliver imported articles from the
carriers agent, which he presented to the Bureau of Customs, that released
the said articles to him.
Subsequently, Domingo Ang claimed the articles from American
Steamship, by presenting the indorsed bill of lading, but he was informed that
it had delivered the articles to Teves. Ang filed a complaint in the Court of First
Instance of Manila against American shipping agencies, for having wrongfully
delivered the goods.
The American Steamship filed for a motion to dismiss, citing the
carriage of Goods by Sea Act, section 3 paragraph 4, which states: in any
event, the carrier and the ship shall be discharged from all liability in respect
to loss or damage unless suit is brought within one year, after delivery of
goods or the date when the goods should have been delivered.
Thus, the lower court dismissed the action, on the ground of
prescription.
Issue: Whether or not the Carriage of Goods by Sea Act Section 3,
Paragraph 4, applies to the case at bar?
Held: The provision of the law speaks of loss or damage. But there was no
damage caused to the goods which were delivered intact to Herminio Teves.
As defined by the Civil Code and as applied to section 3, paragraph 4,
of the Carriage of Goods by sea Act, loss contemplates a situation where no
delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared that their existence is
unknown or they cannot be recovered. It does not include a situation where
there was indeed delivery, but delivery to the wrong person.
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Facts: On august 26, 1967, Ong Yiu was a fare paying passenger of
respondent PAL from Mactan, Cebu to Butuan City wherein he was scheduled
to attend a trial. As a passenger, he checked in one piece of luggae, blue
maleta for which he was issued a claim ticket. Upon arrival at Butuan City,
petitioner claimed his luggage but it could not be found. PAL Butuan sent a
message to PAL Cebu which in turn sent a message to PAL Manila that same
afternoon. PAL Manila advised PAL Cebu that the luggage has been
overcarried to Manila and that it would be forwarded to PAL Cebu that same
day. PAL Cebu then advised PAL Butuan that the luggage will be forwarded
the following day, on scheduled morning flight. This message was not
received by PAL Butuan as all the personnel had already gone for the day.
Meanwhile, Ong Yiu was worried about the missing luggage because it
contained vital documents needed for the trial the next day so he wired PAL
Cebu demanding delivery of his luggage before noon that next day or he
would hold PAL liable for damages based on gross negligence. Early
morning, petitioner went to the Butuan Airport to inquire about the luggage but
did not wait for the arrival of the morning flight at 10:00am. which carried his
luggage. A certain Dagorro, a driver of a colorum car, who also used to drive
the petitioner volunteered to take the luggage to the petitioner. He revelaed
that the documents were lost. Ong Yiu demanded from PAL Cebu actual and
compensatory damages as an incident of breach of contract of carriage.
Issue: Whether or not PAL is guilty of only simple negligence and not gross
negligence?
Whether the doctrine of limited liability doctrine applies in the instant
case?
Held: PAL had not acted in bad faith. It exercised due diligence in looking for
petitioners luggage which had been miscarried. Had petitioner waited or
caused someone to wait at the airport for the arrival of the morning flight
which carried his luggage, he would have been able to retrieve his luggage
sooner. In the absence of a wrongful act or omission or fraud, the petitioner is
not entitled to moral damages. Neither is he entitled to exemplary damages
absent any proof that the defendant acted in a wanton, fraudulent, reckless
manner.
The limited liability applies in this case. On the presumed negligence of
PAL, its liability for the loss however, is limited on the stipulation written on the
back of the plane
Ticket which is P100 per baggage. The petitioner not having declared a
greater value and not having called the attention of PAL on its true value and
paid the tariff therefore. The stipulation is printed in reasonably and fairly big
letters and is easily readable. Moreso, petitioner had been a frequent
passenger of PAL from Cebu to Butuan City and back and he being a lawyer
and a businessman, must be fully aware of these conditions.
V. PUBLIC SERVICE ACT (COMMONWEALTH ACT NO. 146)
PUBLIC SERVICE
- Includes every person that now or hereafter may own, operate, manage or
control in the Philippines for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier or public utility, ice plants, power and
water supplies, communication and similar public services. (Sec. 13b, CA
146)
The Public Service Commission created under the Public Service Law has
already been abolished under P.D. No. 1 and other issuances. It has been
replaced by the following government agencies: LTO; LTFRB; ATO; BOE;
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A foreigner can own a public utility. The right to operate a public utility
may exist independently and separately from the ownership of the
facilities thereof. One can own facilities without operating them as
utility, or conversely, one may operate a public utility without owning
the facilities used to serve the public.
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not when another operator, even a new one, has made the offer to serve the
new line or increase the service on said line. The rule of preference protects
only those who are vigilant, in meeting the needs of the traveling public.
PROTECTION OF INVESTMENT RULE
The Law aims to protect not only the public, but the operations as well.
It is the governments duty to protect the investment of the operators of public
utilities from unfair, unjustified and ruinous competition.
PRIOR APPLICANT RULE
Presupposes a situation when two interested persons apply for a
certificate to operate a public utility in the same community over which no
person has as yet granted any certificate. If it turns out, after the hearing, that
the circumstances between the two applicants are more or less equal, then
the applicant who applied ahead of the other, will be granted the certificate.
REGISTERED OWNER RULE
The registered owner of a certificate of public convenience is liable to the
public for the injuries or damages suffered by third persons caused by the
operation of said vehicle, even though the same had been transferred to a
third person.
The registered owner is not allowed to escape responsibility by proving that a
third person is the actual and real owner
Reason: It would be easy for him, by collusion with others or otherwise, to
transfer the responsibility to an indefinite person, or to one who possesses no
property with which to respond financially for the damage or injury done.
(Erezo, et al. vs. Jepte 102 Phil 103]
A registered owner is the lawful operator insofar as the public and third
persons are concerned; consequently, it is directly and primarily responsible
for the consequences of its operation. In contemplation of law, the
owner/operator of record is the employer of the driver, the actual operator and
employer being considered as merely its agent. The same principle applies
even if the registered owner of any vehicle does not use it for public service,
(Equitable Leasing Corp vs. Suyom, 388 SCRA 445 [2002]], or otherwise
stated, to privately-owned vehicles.
RATE-FIXING POWER
The rate to be fixed must be just, founded upon conditions which are fair and
reasonable to both the owner and the public.
One which yields to the carrier a fair return upon the value of the
property employed in performing the service; and
One which is fair to the public for the service rendered.
Exceptions to Kabit system:
When neither of the parties to the pernicious kabit system is being held
liable for damages.
When the case arose from the negligence of another vehicle in using
the public road to whom no representation or misrepresentation as
regards the ownership and operation of passenger jeepney was made
When the riding public was not bothered or inconvenienced at the very
least by the illegal arrangement. (Lim vs. CA, 373 SCRA 394)
The policy, which prohibits the Kabit System, may also be applied to vessels
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franchise to operate from Congress. The Chief Hearing Officer denied the
opposition and the CAB approved the issuance of the TOP for a period of 3
months. The opposition for the TOP was likewise denied. The CAB justified
its assumption of jurisdiction over Grand Airs application on the basis of
Republic Act 776 which gives it the specific power to issue any TOP or
Certificate of Public Convenience and Necessity.
Issue: Whether or not the CAB can issue a Certificate of Public Convenience
and Necessity or TOP even though the prospective operator does not have a
legislative franchise?
Held: Yes, as mentioned by the CAB, it is duly authorized to do so under
Republic Act 776 and a legislative franchise is not necessary before it may do
so, since Congress has delegated the authority to authorize the operation of
domestic air transport services to the CAB, an administrative agency. The
delegation of such authority is not without limits since Congress had set
specific standard and limitations on how such authority should be exercised.
Public convenience and necessity exists when the proposed facility will
meet a reasonable want of the public and supply a need which the existing
facilities do not adequately afford.
Thus, the Board should be allowed to continue hearing the application,
since it has jurisdiction over it provided that the applicant meets all the
requirements of the law.
TATAD VS. GARCIA (243 SCRA 436, GR. NO. 114222. APRIL 6, 1995)
Facts: DOTC planned to construct a light railway transit line along Edsa.
EDSA LRT Corporation, Ltd., a foreign corporation was awarded the contract
to build, lease and transfer the said light railway.
The said award was questioned by the petitioners on the basis that a foreign
corporation cannot own the EDSA LRT III, a public utility as it violates the
Constitution.
Issue: Whether or not an owner and lessor of the facilities used by a public
utility constitute a public utility?
Held: EDSA LRT Corporation, Ltd. Is admittedly a foreign corporation duly
incorporated and existing under the laws of Hong Kong. However, there is no
dispute that once the EDSA LRT III is constructed, the private respondent, as
lessor, will turn it over to DOTC as lessee, for the latter to operate the system
and pay rentals for the said use.
What private respondent owns are the rail tracks, rolling stocks, rail
stations, terminals and the power plant, not a public utility. While a franchise
is needed to operate these facilities to serve the public, they do not
themselves constitute a public utility. What constitutes a public utility in not
their ownership but their use to serve the public.
The Constitution, in no uncertain terms, requires a franchise for the
operation of a public utility. However, it does not require a franchise before
one can own the facilities needed to operate a public utility so long as it does
not operate them to serve the public. In law, there is a clear distinction
between the operation of a public utility and the ownership of the facilities
and the equipment used to serve the public.
ALBANO VS. REYES (175 SCRA 264)
Facts: On April 20, 1987, the PPA ( Philippine Ports Authority ) Board
adopted its Resolution No. 850 directing PPA management to prepare the
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