A. What Is A "Common Carrier"?: December 22, 1988)

TRANSPORTATION LAW 1
A. WHAT IS A COMMON CARRIER? - 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. (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, !88" B. CHARACTERISTICS OF A COMMON CARRIER Art. 173 of the !ivil !ode 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#. $t also avoids a 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. Article 173 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. A person or entity is a common carrier even if he did not secure a !ertificate of Public !onvenience %he !ivil !ode ma&es no distinction as to the means of transporting, as long as it is by land, water or air. %he !ivil !ode does not provide that the transportation should be by motor vehicle. A person or entity may be a common carrier even if he has no fi'ed publicly &nown route, maintains no terminals, and issues no tic&ets. (nderta&es to carry for all people indifferently and thus is liable for refusal without sufficient reason (Last#moso vs. Dol#ente, $ %C&A , ' !( )"* !annot lawfully decline to accept a particular class of goods for carriage to the pre)udice of the traffic in these goods* +o monopoly is favored (+atan,as -rans. vs. .rlanes, /2 01#l. 4//"* Provides public convenience.
C. TESTS WHETHER A PARTY IS A COMMON CARRIER OF GOODS: $t must be engaged in the business of carrying goods for others as a public employment and must hold itself out as ready to engage in the transportation of goods generally as a business and not as a casual occupation* $t must underta&e to carry goods of the &ind to which its business is confined* $t must underta&e to carry by the method by which his business is conducted and over its established roads* and %he transportation must be for hire. (2#rst 01#l#pp#ne 3n4ustr#al Corp. v. CA, $55 %C&A (( , ' !!8" Test whether a party is a common carrier FIRST PHILIPPINE INDUSTRIAL CORP. VS. COURT OF APPEALS (101 SCRA 661 1!!"# F$%&': Petitioner is a grantee of a pipeline concession under ,.A. +o. 3-7, as amended, a contract, install and operate oil pipelines. %he original pipeline concession was granted in 1./7 and renewed by the 0nergy ,egulatory 1oard in 1.. . 2ometime in 3anuary 1..4, petitioner applied for a mayor5s permit with the Office of the 6ayor of 1atangas !ity. 7owever, before the mayor5s permit could be issued, the respondent !ity %reasurer re8uired petitioner to pay a local ta' based on its gross receipts for the fiscal year 1..3 pursuant to the 9ocal :overnment !ode. %he respondent !ity %reasure assessed a business ta' on the petitioner amounting to P.4/,;7/.;< payable in four installments based on the gross receipts for products pumped at :P2-1 for the fiscal year 1..3 which amounted to P1-1,/-1,141.;;. in order not to hamper its operations, petitioner paid the ta' under protest in the amount of P 3., ;1..;1 for the first 8uarter of 1..3. On 3une 14, 1..<, petitioner filed with the ,%! of 1atangas !ity a complaint for ta' refund with prayer for writ of preliminary in)unction against respondents !ity of 1atangas and Adoracion Arellano in her capacity as !ity %reasurer. $n its complaint, petitioner alleged, inter alia, that= "1# the imposition and collection of the business ta' on its gross receipts violates 2ec. 133 of the 9ocal :overnment !ode* " # the authority of cities to impose and collect a ta' on the gross receipts of >contractors and independent contractors? under 2ec. 1<1"e# and 141 does not include the authority to collect such ta'es on transportation contractors for, as defined under 2ec. 131"h#, the term >contractors? e'cludes transportation contactors* and "3# the !ity %reasurer illegally and erroneously imposed and collected the said ta', thus meriting the immediate refund of the ta' paid. %raversing the complaint, the respondents argued that petitioner cannot be e'empt from ta'es under 2ec. 133 "3# of the 9ocal :overnment !ode as said e'emption applied only to >transportation contractors and persons engaged in the transportation by hire and common carriers by air land and water.? ,espondents assert that pipelines are not included in the term >common carrier? which refers solely to ordinary carriers as truc&s, trains, ships and the li&e. ,espondents further posit that the term >common carrier? under the said !ode pertains to the mode or manner by which a product is delivered to its destination.
I''(): @hether or not the petitioner is a common carrier so that in the affirmative, he is not liable to pay the carriers ta' under the 9ocal :overnment !ode of 1..1A H)*+: Petitioner is a common carrier. A >common carrier? may be defined, broadly, as one who holds himself out to the public as engaged in the business of transporting persons or property from place to place, for compensation, offering his services to the public generally. Article 173 of the !ivil !ode defines a >common carrier? as >any person, corporation, firm or association 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. %he test for determining whether a party is a common carrier of goods is= 1. 7e must be engaged in the carrying of goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods or persons generally as a business and not as a casual occupation. . 7e must underta&e to carry goods of the &ind to which his business is confined* 3. 7e must underta&e to carry by the method by which his business is conducted and over his established roads* and <. %he transportation must be for hire. D. C$')': 1. DE GU,MAN VS. COURT OF APPEALS (16" SCRA 61-# F$%&': !endena was a )un& dealer and was engaged in buying used bottles and scrap materials in Pangasinan and brought these to 6anila for resale. 7e used two /-wheeler truc&s. On the return trip to Pangasinan, he would load his vehicles with cargo which various merchants wanted delivered to Pangasinan. Bor that service, he charged freight lower than regular rates. :eneral 6il& !o. contacted with him for the hauling of 74; cartons of mil&. On the way to Pangasinan, one of the truc&s was hi)ac&ed by armed men who too& with them the truc& and its cargo and &idnapped the driver and his helper. Only 14; cartons of mil& were delivered. %he 6il& !o. sued to claim the value of the lost merchandise based on an alleged contract of carriage. !endena denied that he was a common carrier and contended that he could not be liable for the loss it was due to force ma)eure. %he trial court ruled that he was a common carrier. %he !A reversed. I''(): @hether or not !endena is a common carrierA H)*+: Ces, !endena is properly characteriDed as a common carrier even though he merely bac&hauled goods for other merchants, and even if it was done on a periodic basis rather than on a regular basis, and even if his principal occupation was not the carriage of goods. Article 173 ma&es 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. $t also avoids ma&ing a distinction between a person or enterprise offering transportation services on a regular or scheduled basis and one offering service on an occasional, episodic or unscheduled basis. +either does it ma&e a distinction between a carrier offering its services to the general public and one who offers services or solicits business only from a narrow segment of population. -. PLANTERS PORDUCTS VS. CA (--6 SCRA#
F$%&': Planters Product $nc. purchased from 6itsubishi international corporation metric tons of (rea fertiliDer, which the latter shipped aboard the cargo vessel 6EF 2un Plum owned by private respondent Gyosei Gisen Gabushi&i Gaisha. Prior to its voyage, a time charter-party on the vessel respondent entered into between 6itsubishi as shipperEcharterer and GGGG as ship owner, in %o&yo, 3apan. 1efore loading the fertiliDer aboard the vessel, "<# of her holds were presumably inspected by the charterer5s representative and found fit to ta&e a load of urea in bul&. After the (rea fertiliDer was loaded in bul& by stevedores hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids. (pon arrival of vessel at port, the petitioner unloaded the cargo pursuant to the terms and conditions of the charter-party. %he hatches remained open throughout the duration of the discharge. (pon arrival at petitioner5s warehouse a survey conducted over the cargo revealed a shortage and the most of the fertiliDer was contaminated with dirt. As such, Planters filed an action for damages. %he 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. I''()= @hether or not the charter-party contract between the ship owner and the charterer transforms a common carrier into a private carrierA H)*+: 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 fi'ed period of time or voyage charter, wherein the ship is leased for a single voyage. $n 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. $t 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. $t is only when the charter includes both ship and its crew as in bareboat or demise that it becomes a private carrier. (ndoubtedly, a shipowner in a time or voyage charter retains in possession and control of the ship, although her holds may be the property of the charterer.
.. CALVO V. UCPB GENERAL INSURANCE (G.R. NO. 1/"/!6 MARCH 1! -00-# F$%&': Petitioner Firgines !alvo, owner of %ransorient !ontainer %erminal 2ervices, $nc. "%!%2$#, and a custom bro&er, entered into a contract with 2an 6iguel !orporation "26!# for the transfer of 11< reels of semi-chemical fluting paper and 1 < reels of &raft liner board from the port area to the %abacalera !ompound, 0rmita, 6anila. %he cargo was insured by respondent (!P1 :eneral $nsurance !o., $nc. On 3uly 1<, 1..;, contained in 3; metal vans, arrived in 6anila on board >6EF 7aya&awa 6aru?. After < hours, they were unloaded from vessel to the custody of the arrastre operator, 6anila Port 2ervices, $nc. Brom 3uly 3 to 4, 1..;, petitioner, pursuant to her contract with 26!, withdrew the cargo from the arrastre operator and delivered it to 26!5s warehouse in 6anila. On 3uly 4, the goods were inspected by 6arine !argo 2urveyors, reported that 14 reels of the semi-chemical fluting paper were >wetEstainedEtorn? and 3 reels of &raft liner board were also torn. %he damages cost P.3,11 .;;.
26! collected the said amount from respondent (!P1 under its insurance contract. ,espondent on the other hand, as a subrogee of 26!, brought a suit against petitioner in ,%!, 6a&ati !ity. On Hecember ;, 1..4, the ,%! rendered )udgment finding petitioner liable for the damage to the shipment. %he decision was affirmed by the !A. I''(): @hether or not !alvo is a common carrierA H)*+: $n this case the contention of the petitioner, that he is not a common carrier but a private carrier, has no merit. Article 173 ma&es 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 ancillary activity. Article 173 also carefully avoids ma&ing any distinction between a person or enterprise offering transportation service on a re,ular or sc1e4ule4 bas#s and one offering such service on an occas#onal, ep#so4#c or unsc1e4ule4 bas#s. +either does Article 173 distinguish between a carrier offering its services to the I,eneral publ#c,I i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. @e thin& that Article 1733 deliberately refrained from ma&ing such distinction. "He :uDman v. !A, /- 2!,A /1 # %e concept of >common carrier? under Article 173 coincide with the notion of >public service?, under the Public 2ervice Act which partially supplements the law on common carrier. (nder 2ection 13, paragraph "b# of the Public 2ervice Act, it includes= > ' ' ' every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, 6#t1 ,eneral or l#m#te4 cl#entele, 61et1er permanent, occas#onal or acc#4ental, an4 4one for ,eneral bus#ness purposes, an7 common carr#er, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fi'ed route and whatever may be its classification, freight or carrier service of any class, e'press service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or doc&, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services. ' ' '? /. FABRE VS. CA (-0! SCRA /-6 G.R. NO. 1111-1 2ULY -6 1!!6# F$%&': Petitioners 0ngracio Babre, 3r. and his wife were owners of a 6aDda minibus. %hey used the bus principally in connection with a bus service for school children which they operated in 6anila. $t was driven by Porfirio !abil. On +ovember , 1.-< private respondent @ord for the @orld !hristian Bellowship $nc. "@@!B# arranged with the petitioners for the transportation of 33 members of its Coung Adults 6inistry from 6anila to 9a (nion and bac& in consideration of which private respondent paid petitioners the amount of P3,;;;.;;. %he usual route to !aba, 9a (nion was through !armen, Pangasinan. 7owever, the bridge at !armen was under repair, so that petitioner !abil, who was unfamiliar with the area "it being his first trip to 9a (nion#, was forced to ta&e a detour through the town of 1a-ay in 9ingayen, Pangasinan. At 11=3; that night, petitioner !abil came upon a sharp curve on the highway. %he road was slippery
because it was raining, causing the bus, which was running at the speed of 4; &ilometers per hour, to s&id to the left road shoulder. %he bus hit the left traffic steel brace and sign along the road and rammed the fence of one 3esus 0scano, then turned over and landed on its left side, coming to a full stop only after a series of impacts. %he bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its front portion. 1ecause of the mishap, several passengers were in)ured particularly Amyline Antonio. !riminal complaint was filed against the driver and the spouses were also made )ointly liable. 2pouses Babre on the other hand contended that they are not liable since they are not a common carrier. %he ,%! of 6a&ati ruled in favor of the plaintiff and the defendants were ordered to pay )ointly and severally to the plaintiffs. %he !ourt of Appeals affirmed the decision of the trial court. I''(): @hether the spouses Babre are common carriersA H)*+: Petition was denied. 2pouses Babre are common carriers. %he 2upreme !ourt held that this case actually involves a contract of carriage. Petitioners, the Babres, did not have to be engaged in the business of public transportation for the provisions of the !ivil !ode on common carriers to apply to them. As this !ourt has held= 1; Art. 173 , !ommon 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. %he above article ma&es 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 Ia sidelineI#. Article 173 also carefully avoids ma&ing 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. +either does Article 173 distinguish between a carrier offering its services to the Igeneral public,I i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. @e thin& that Article 173 deliberately refrained from ma&ing such distinctions. 0. TATAD VS. GARCIA (-/1 SCRA ../ GR. NO. 11/---. APRIL 6 1!!0# F$%&': HO%! planned to construct a light railway transit line along 0dsa. 0H2A 9,% !orporation, 9td., a foreign corporation was awarded the contract to build, lease and transfer the said light railway. %he said award was 8uestioned by the petitioners on the basis that a foreign corporation cannot own the 0H2A 9,% $$$, a public utility as it violates the !onstitution. I''(): @hether or not an owner and lessor of the facilities used by a public utility constitute a public utilityA H)*+: 0H2A 9,% !orporation, 9td. $s admittedly a foreign corporation >duly incorporated and e'isting under the laws of 7ong Gong?. 7owever, there is no dispute that once the 0H2A 9,% $$$ is constructed, the private respondent, as lessor, will turn it over to HO%! as lessee, for the latter to operate the system and pay rentals for the said use. @hat private respondent owns are the rail trac&s, rolling stoc&s, rail stations, terminals and the power plant, not a public utility. @hile a franchise is needed to operate these facilities to serve the public, they do not themselves constitute a public utility. @hat constitutes a public utility in not their ownership but their use to serve the public.
%he !onstitution, in no uncertain terms, re8uires a franchise for the operation of a public utility. 7owever, it does not re8uire 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. $n law, there is a clear distinction between the >operation? of a public utility and the ownership of the facilities and the e8uipment used to serve the public. 6. FISHER VS. YANGCO STEAMSHIP (.1 PHIL 1# F$%&'= %he complained alleges that plaintiff is a stoc&holder in Cangco 2teamship !ompany, the owner of the large steam vessels, duly licensed to engage in the coastwise trade of the Philippine $sland* that on or about 3une 1;, 1.1 , the directors of the company, adopted a resolution which was thereafter ratified and affirmed by the stoc&holders of the company >e'pressly declaring and providing that the classes of merchandise to be carried by the company in its business as common carrier do not include dynamite, powder or other e'plosives, and e'pressly prohibiting the officers, agents an d servants of the company from offering to carry, accepting for carriage or carrying said dynamite, powder or other e'plosives.? I''(): @hether the refusal of the owner and officer of a steam vessel, to accept for carriage dynamite, powder or other e'plosives for carriage can be held to be a lawful actA H)*+: %he traffic in dynamite gun powder and other e'plosive is vitally essential to the material and general welfare of the inhabitants of this islands and it these products are to continue in general use throughout the Philippines they must be transported from water to port to port in various island which ma&e up the Archipelago. $t follows that a refusal by a particular vessel engage as a common carrier of merchandise in coastwise trade in the Philippine $sland to accept such e'plosives for carriage constitutes a violation. %he prohibition against discrimination penaliDed under the statute, unless it can be shown that there is so ,eal and substantial danger of disaster necessarily involved in the courage of any or all of this article of merchandise as to render such refusal a due or unnecessary or a reasonable e'ercise or prudence and discreation on the part of the ship owner. 1. LOADSTAR SHIPPING VS. CA (.10 SCRA ..! 1!!!# F$%&': On +ovember 1., 1.-<, loadstar received on board its 6EF >!hero&ee? bales of lawanit hardwood, tilewood and Apitong 1olideniDed for shipment. %he goods, amounting to P/,;/7, 17-. @ere insured for the same amount with the 6anila $nsurance !ompany against various ris&s including >%otal 9oss by %otal 9oss of the Fessel?. On +ovember ;, 1.-<, on its way to 6anila from the port of +asipit, Agusan Hel +orte, the vessel, along with its cargo, san& off 9imasawa $sland. As a result of the total loss of its shipment, the consignee made a claim with loadstar which, however, ignored the same. As the insurer, 6$! paid to the insured in full settlement of its claim, and the latter e'ecuted a subrogation receipt therefor. 6$! thereafter filed a complaint against loadstar alleging that the sin&ing of the vessel was due to fault and negligence of loadstar and its employees. $n its answer, 9oadstar denied any liability for the loss of the shipper5s goods and claimed that the sin&ing of its vessel was due to force ma)eure. %he court a 8uo rendered )udgment in favor of 6$!., prompting loadstar to elevate the matter to the !ourt of Appeals, which however, agreed with
the trial court and affirmed its decision in toto. On appeal, loadstar maintained that the vessel was a private carrier because it was not issued a !ertificate of Public !onvenience, it did not have a regular trip or schedule nor a fi'ed route, and there was only >one shipper, one consignee for a special crago?. I''(): @hether or not 6EF !hero&ee was a private carrier so as to e'empt it from the provisions covering !ommon !arrierA H)*+: 9oadstar is a common carrier. %he !ourt held that 9OAH2%A, is a common carrier. $t is not necessary that the carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in 8uestion was periodic, occasional, episodic or unscheduled. Burther, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely co-incidental* it is no reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers. Article 173 also carefully avoids ma&ing any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. +either does Article 173 distinguish between a carrier offering its services to the Igeneral public,I i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. ". FIRST PHILIPPINES INDUSTRIAL CORP. VS. CA (.00 SCRA 661# F$%&': Petitioner is a grantee of a pipeline concession under ,.A. +o. 3-7, as amended, a contract, install and operate oil pipelines. %he original pipeline concession was granted in 1./7 and renewed by the 0nergy ,egulatory 1oard in 1.. . 2ometime in 3anuary 1..4, petitioner applied for a mayor5s permit with the Office of the 6ayor of 1atangas !ity. 7owever, before the mayor5s permit could be issued, the respondent !ity %reasurer re8uired petitioner to pay a local ta' based on its gross receipts for the fiscal year 1..3 pursuant to the 9ocal :overnment !ode. %he respondent !ity %reasure assessed a business ta' on the petitioner amounting to P.4/,;7/.;< payable in four installments based on the gross receipts for products pumped at :P2-1 for the fiscal year 1..3 which amounted to P1-1,/-1,141.;;. $n order not to hamper its operations, petitioner paid the ta' but under protest in the amount of P 3., ;1..;1 for the first 8uarter of 1..3. On 3une 14, 1..<, petitioner filed with the ,%! of 1atangas !ity a complaint for ta' refund with prayer for writ of preliminary in)unction against respondents !ity of 1atangas and Adoracion Arellano in her capacity as !ity %reasurer. %raversing the complaint, the respondents argued that petitioner cannot be e'empt from ta'es under 2ec. 133"3# of the 9ocal :overnment !ode as said e'emption applied only to >transportation contractors and persons engaged in the transportation by hire and common carriers by air land and water.? ,espondents assert that pipelines are not included in the term >common carrier? which refers solely to ordinary carriers as truc&s, trains, ships and the li&e. ,espondents further posit that the term >common carrier? under the said !ode pertains to the mode or manner by which a product is delivered to its destination.
I''(): @hether the petitioner, an oil pipeline operator is a common carrier, and therefore e'empted from paying local ta'esA H)*+: Ces. Petitioner is a common carrier. Article 173 of the !ivil !ode defines a >common carrier? as >any person, corporation, firm or association 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. A >common carrier? may be defined, broadly, as one who holds himself out to the public as engaged in the business of transporting persons or property from place to place, for compensation, offering his services to the public generally. %he test for determining whether a party is a common carrier of goods is= 1. 7e must be engaged in the carrying of goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods or persons generally as a business and not as a casual occupation* .7e must underta&e to carry goods of the &ind to which his business is confined* 3. 7e must underta&e to carry by the method by which his business is conducted and over his established roads* and <. %he transportation must be for hire. 1ased on the above definition and re8uirements, there is no doubt that the petitioner is a common carrier. !. HOME INSURANCE VS. AMEARICAN STEAMSHIP (-. SCRA -/# F$%&': %he !onsorcio Pes8uero del Peru of 2outh America shipped )ute bags of Peruvian fishmeal through 22 !rowborough, consigned to 2an 6iguel 1rewery, $nc. %he cargo, which was insured by 7ome $nsurance !ompany, arrived at the port of 6anila and was discharged to the lighters of the 9uDon 2tevedoring !orporation. @hen the same was delivered to the consignee, there were shortages amounting to P 1 , ;33.-4, prompting the latter to pay against 9uDon 2tevedoring !o. 1ecause the others denied liability, 7ome $nsurance paid 2an 6iguel the insurance value loss. %his cost was brought by the former to recover indemnity from 9uDon 2tevedoring and the ship owner. 9uDon 2tevedoring raised the defense that it deliver with due diligence in the same from the carrier. 6e'ican 2teamship Agencies denied liability on the ground that the charter party referred to in the bills of lading, the charter, not the ship owner, was responsible for any loss or damage of the cargo. Burthermore, it claimed to have e'ercised due diligence in stowing the goods and as a mere forwarding agent, it was not responsible for losses or damages to the cargo. I''(): @hether or not the stipulation in the charter party to owner5s non-liability was valid as to absolve the American 2teamship from liability lossA H)*+: %he !ivil !ode provision on common carriers should not be applied where the carrier is not acting as such but as a private carrier. %he stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent is void only if the strict public policy governing common carriers is applied. 2uch policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party. 10. SAN PABLO VS. PANTRANCO (10. SCRA 1!!#
F$%&': %he Pantranco 2outh 0'press, $nc., hereinafter referred to as PA+%,A+!O is a domestic corporation engaged in the land transportation business with P(1 service for passengers and freight and various certificates for public conveniences "!P!# to operate passenger buses from 6etro 6anila to 1icol ,egion and 0astern 2amar. On 6arch 7,1.-; PA+%,A+!O through its counsel wrote to 6aritime $ndustry Authority "6A,$+A# re8uesting authority to leaseEpurchase a vessel named 6+ I1lac& HoubleI Ito be used for its pro)ect to operate a ferryboat service from 6atnog, 2orsogon and Allen, 2amar that will provide service to company buses and freight truc&s that have to cross 2an 1ernardo 2trait. $n a reply of April .,1.-1 PA+%,A+!O was informed by 6A,$+A that it cannot give due course to the re8uest. PA+%,A+!O nevertheless ac8uired the vessel 6+ I1lac& HoubleI on 6ay 7, 1.-1 for P3 6illion pesos. $t wrote the !hairman of the 1oard of %ransportation "1O%# through its counsel, that it proposes to operate a ferry service to carry its passenger buses and freight truc&s between Allen and 6atnog in connection with its trips to %acloban !ity. PA+%,A+!O claims that it can operate a ferry service in connection with its franchise for bus operation in the highway from Pasay !ity to %acloban !ity Ifor 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 !ity to %acloban !ity. 2uch being the case there is no need to obtain a separate certificate for public convenience to operate a ferry service between Allen and 6atnog to cater e'clusively to its passenger buses and freight truc&s. @ithout awaiting action on its re8uest PA+%,A+!O started to operate said ferry service. Acting !hairman 3ose !. !ampos, 3r. of 1O% ordered PA+%,A+!O not to operate its vessel until the application for hearing on Oct. 1, 1.-1. $n another order 1O% en)oined PA+%,A+!O from operating the 6+ I1lac& HoubleI otherwise it will be cited to show cause why its !P! should not be suspended or the pending application denied. 0pitacio 2an Pablo "now represented by his heirs# and !ardinal 2hipping !orporation who are franchise holders of the ferry service in this area interposed their opposition. %hey claim they ade8uately service the PA+%,A+!O by ferrying its buses, truc&s and passengers. 1O% then as&ed the legal opinion from the 6inister of 3ustice whether or not a bus company with an e'isting !P! between Pasay !ity and %acloban !ity may still be re8uired to secure another certificate in order to operate a ferry service between two terminals of a small body of water. On October ;, 1.-1 then 6inister of 3ustice ,icardo Puno rendered an opinion to the effect that there is no need for bus operators to secure a separate !P! to operate a ferryboat service. %hus on October 3, 1.-1 the 1O% rendered its decision holding that the ferryboat service is part of its !P! to operate from Pasay to 2amarE9eyte by amending PA+%,A+!OJs !P! so as to reflect the same. !ardinal 2hipping !orporation and the heirs of 2an Pablo filed separate motions for reconsideration of said decision and 2an Pablo filed a supplemental motion for reconsideration that were denied by the 1O% on 3uly 1, 1.-1. 7ence, 2an Pablo filed the herein petition for review on certiorari with prayer for preliminary in)unction see&ing the revocation of said decision, and pending consideration of the petition the issuance of a restraining order or preliminary in)unction against the operation by PA+%,A+!O of said ferry service I''(): @hether or not the ferry boat is a common carrierA
H)*+: !onsidering the environmental circumstances of the case, the conveyance of passengers, truc&s and cargo from 6atnog to Allen is certainly not a ferryboat service but a coastwise or interisland shipping service. (nder no circumstance can the sea between 6atnog and Allen be considered a continuation of the highway. @hile a ferryboat service has been considered as a continuation of the highway when crossing rivers or even la&es, which are small body of waters separating the land, however, when as in this case the two terminals, 6atnog and Allen are separated by an open sea it can not be considered as a continuation of the highway. %he contention of private respondent PA+%,A+!O that its ferry service operation is as a private carrier, not as a common carrier for its e'clusive use in the ferrying of its passenger buses and cargo truc&s is absurd. PA+%,A+!O does not deny that it charges its passengers separately from the charges for the bus trips and issues separate tic&ets whenever they board the 6+ I1lac& HoubleI that crosses 6atnog to Allen. +evertheless, considering that the authority granted to PA+%,A+!O 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. 2uch an anomalous situation that will )eopardiDe the safety and interests of its passengers and the cargo owners cannot be allowed. %hus the !ourt holds that the water transport service between 6atnog and Allen is not a ferryboat service but a coastwise or interisland shipping service. 1efore private respondent may be issued a franchise or !P! for the operation of the said service as a common carrier, it must comply with the usual re8uirements 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 COMMON CARRIER AND PRIVATE CARRIER C34435 C$667)6 As to passengers 7olds himself out for all indiscriminately. As to re !ired diligence ,e8uires e'traordinary diligence. As to state reg!lation 2ub)ect to regulation. P678$&) C$667)6 people !ontracts with particular individuals or groups only. ,e8uires only ordinary diligence. +ot sub)ect to regulation.
As to stip!lation on limiting lia"ility Parties may not agree on limiting the Parties may agree on limiting the carrier5s liability e'cept when provided carrier5s liability, prov#4e4 not by law. contrary to law, morals or good customs. #res!mption as to fa!lt and negligence Presumption of fault or negligence +o fault or negligence is presumed. applies. As to laws applica"le on damages 9aw on common carriers. 9aw on obligations and contracts. F. GOVERNING9 APPLICABLE LAW A. T6$5':36&$&735 ;< S)$
1.
C3$'&=7') > !ivil !ode "Arts.173 -17//# K primary law > !ode of !ommerce K suppletory law $ote% !arriage of :oods by 2ea Act K inapplicable even if the parties e'pressly provide for it. > > > C$667$?) @634 F36)7?5 P36&' T3 PA7*7::75) P36&' !ivil !ode K primary law !ode of !ommerce K all matters not regulated by the !ivil !ode. !arriage of :oods by 2ea Act "!O:2A# K suppletory to the !ivil !ode.
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C$667$?) @634 PA7*7::75) P36&' T3 F36)7?5 P36&'B laws of the country to which the goods are to be transported.
B. L$5+ T6$5':36&$&735 $. C34435 C$667)6' > !ivil !ode (Arts.1732&17'') K primary law > !ode of !ommerce K suppletory law ;. P678$&) C$667)6' Ob)ect merchandise > !ode of !ommerce K primary law > !ivil !ode K suppletory law D34)'&7% T6$5':36&$&735

C. A76 T6$5':36&$&735
1.
!ivil !ode !ode of !ommerce I5&)65$&735$* T6$5':36&$&735 K @arsaw !onvention @hile the @arsaw !onvention has the force of law in the Philippines, it does not have an e'clusive enumeration of a carrier5s liability for contractual breach or absolute limit of liability. $t does not preclude the operation of the !ivil !ode and other laws. %he liability of the carrier for the loss, destruction or deterioration of goods transported to the Philippines from a foreign country, is primarily governed by the !ivil !ode not by the @arsaw !onvention which applies only to simple loss of baggage.
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TA)6) I' I5&)65$&735$* T6$5':36&$&735 WA)5: 1. %he place of departure and the place of destination are within the territories of two high contracting parties, regardless of whether or not there was a brea& in the transportation or transshipment. . %he place of departure and the place of destination are within the territory of a single contracting party if there is an agreed stopping place within a territory sub)ect to the sovereignty, mandate or authority of another power, even though the power is not a party to the convention. (8apa v. CA, 27/ %C&A ' !!7)" H7?A C35&6$%&75? P$6&7)' > 2ignatories to the @arsaw !onvention and those which subse8uently adhered to it. $n +ational Hevelopment !o. vs. !A ( (4 %C&A /!$". >%he law of the country to which the goods are to be transported governs the liability of the common carrier in case of loss, destruction or
deterioration "Art. 1743, +!!# LLL %he liability of the carrier is governed primarily by the !ivil !ode and in all matters not regulated by the said !ode, the rights and obligations of common carriers shall be governed by the code of !ommence and by special laws (Art. 7(( NCC". 7ence, the !O:2A Ea special law is merely supppletory to the provisions of the !ivil !ode?. %he >place of destinations? whose law shall be deemed to be the governing law in so far as the liability of common carrier is concerned refers to the place of >ultimate destination? not an agreed stopping place. %his is particularly true in so far as the warsaw convention used the term to determine the country where the suit against the international carrier should be filled. (%antos 333 vs. Nort19est .r#ent A#rl#nes, 2 5 %C&A 2/( C$')': SAMAR MINING CO. INC. VS. NORDEUTSCHER LLOYD (1.- SCRA 0-!# F$%&': 2amar 6ining imported 1 crate optima welded wire "amounting to around (2H < < or PhP 1,7;;# from :ermany, which was shipped on a vessel owned by +ordeutscher 9loyd "6E2 2chwabenstein#. %he shipment was unloaded in 6anila into a barge for transshipment to Havao and temporarily stored in a bonded warehouse owned by A6!C9. %he goods never reached Havao and were never delivered to or received by the consignee, 2amar 6ining !o. !B$ ruled in favor of 2amar 6ining holding +ordeutscher 9loyd liable. 7owever, defendants may recoup whatever they may pay 2amar 6ining by enforcing the )udgment against third party defendant A6!C9. I''(): @hether +ordeustscher 9loyd is liable for the loss of the goods as common carrierA H)*+: +o. At the time of the loss of the goods, the character of possession of +ordeutscher 9loyd shifted from common carrier to agent of 2amar 6ining !o. %he 1ill of 9ading is serves both as a receipt of goods and is li&ewise the contract to transport and deliver the same as stipulated. $t is a contract and is therefore the law between the parties. %he 1ill of 9ading in 8uestion stipulated that +ordeutscher 9loyd only undertoo& to transport the goods in its vessel only up to the port of discharge from ship, which is 6anila. %he 1ill of 9ading further stipulated that the goods were to be transshipped by the carrier from 6anila to the port of destination K Havao. 1y unloading the shipment in 6anila and delivering the goods to the warehouse of A6!C9, the appellant was acting within the contractual stipulations contained in the 1ill of 9ading. Article 173/ of the !ivil !ode relives the carrier of responsibility over the shipment as soon as the carrier ma&es actual or constructive delivery of the goods to the consignee or to the person who has a right to receive them. (nder the !ivil !ode provisions governing Agency, an agent can only be held liable in cases where his acts are attended by fraud, negligence, deceit or if there is a conflict of interest between him and the principal. (nder the same law an agent is li&ewise liable if he appoints a substitute when he was not given the power to appoint one or otherwise appoints one that is notoriously incompetent or insolvent. %hese facts were not proven in the record. EASTERN SHIPPING LINES INC. VS. INTERMEDIATE APPELLATE COURT (100 SCRA /6.# F$%&': 2ometime in or prior to 3une 1.77, the 6E2 Asiatica, a vessel operated by petitioner 0astern 2hipping 9ines $nc., loaded at Gobe, 3apan for transportation to 6anila loaded 4,;;; pieces of
caloriDed pipes valued at P 4/,;3..;; which was consigned to Philippine 1looming 6ills !o, $nc. and 7 cases of spare parts valued at P. , 3/1.74 consigned to !entral %e'tile 6ills. 1oth sets of goods were inured against marine ris& for their stated value with respondent Hevelopment $nsurance and 2urety !orp. $n the same vessel, containers of garment fabrics were also loaded which was consigned to 6ariveles Apparel !orp worth M</,4-3. %he said cargoes were consigned to +isshin Bire and 6arine $nsurance. Another cargo loaded to the vessel was the surveying instruments consigned to Aman 0nterprises and :eneral 6erchandise and insured against respondent Howa Bire N 6arine $nsurance for M1,3-4.;;. On the way to 6anila, 6E2 Asiatica caught fire and san&. %his resulted to the loss of the ship and its cargoes. %he respective $nsurers paid the corresponding marine insurance values and were thus subrogated to the rights of the insured. %he insurers filed a suit against the petitioner carrier for recovery of the amounts paid to the insured. 7owever, petitioner contends that it is not liable on the ground that the loss was due to an e'traordinary fortuitous event. I''(): @hether the !ivil !ode provisions on !ommon !arriers or the !arriage of the :oods by 2ea Act will govern the case at barA H)*+: %he law of the country to which the goods are to be transported governs the liability of common carrier in case of their loss, destruction or deterioration. %he liability of petitioner is governed primarily by the !ivil !ode however, in all matters not regulated by the !ivil !ode, the !ode of !ommerce and 2pecial 9aws will govern with respect to the rights and obligations of the carrier. %herefore !O:2A is suppletory to the provisions of the !ivil !ode. G. GOVERNMENT REGULATION C$')9' CMU LABOR CENTER VS. GARCIA (-.! SCRA ."6# F$%&'= On 3une /,1..;, 2ecretary of HO%!, Oscar 6. Orbos issued memorandum circular +o. .;3.4 to then 9%B,1, !hairman ,emedios A.2. Bernando allowing provincial buses operators to charge passengers within a range of 14O above and 14O below, the 9%B,1 official rate for a period of one "1# year. On Hecember 4, 1..; private respondent P1OAP filed an application for fare rate increase to P;.;-4 and again it was reduced to P;.;/4 per &ilometer rate. %he application was opposed by the Philippine !onsumer Boundation $nc. that the proposed rate were e'orbitant and unreasonable and that the application contained no allegation on the rate o return on Hecember 1<, 1..;. Public respondent 9%B,1 granted the fare rate increase on 6arch 1/, 1..<. Petitioner G6( filed a petition before the 9%B,1 opposing the upward ad)ustment of bus fares, it was dismissed for lac& of merit, hence this petition. I''(): @hether or not the Provincial 1us Operators has the power to reduce and increase fare rated based on the circular order issued by the 9%B,1A H)*+: 2upreme !ourt held that the authority given by the 9%B,1 to the provincial bus operators to set a fare range over and above the authoriDed e'isting fare is illegal and invalid as it is tantamount to an undue delegation of legislative authority, >Potestas delegata non delegari protest? what has been
delegated further delegation of such power would indeed constitute a negation of the duty in violation of the trust reposed in the delegate inandated to discharged it directly. Burthermore rate fi'ing or ma&ing is a delicate and sensitive government function that re8uires de'terity of )udgment and sound discretion with the settle goal at arriving at a )ust and reasonable rate acceptable to both public utility and the public. 1. REGISTERED OWNER RULE GELISAN VS. ALDAY (10/ SCRA .""# F$%&': 1ienvenido :elisan and ,oberto 0spiritu entered into a contract where the former hired the truc& of :elisan for the purpose of transporting goods at the price of P1-.;;. $t is also agreed that 0spiritu shall bear and pay all losses and damages attending the carriage of the goods to be hauled by him. 1enito Alday, a truc&ing operator, had a contract to haul the fertiliDers of the Atlas BertiliDer !orporation from Pier <, +orth 7arbor, to its @arehouse in 6andaluyong. Alday met 0spiritu at the gate of Pier < and the latter offered the use of his truc& with the driver and helper at . centavos per bag of fertiliDer. %he offer was accepted by plaintiff Alday and he instructed his chec&er !elso 7enson to let ,oberto 0spiritu haul the fertiliDer. 0spiritu made two hauls of ;; bags of fertiliDer per trip. %he fertiliDer was delivered to the driver and helper of 0spiritu with the necessary way bill receipts, 0'hibits A and 1. 0spiritu, however, did not deliver the fertiliDer to the Atlas BertiliDer bodega at 6andaluyong. 2ubse8uently, plaintiff Alday saw the truc& in 8uestion on 2to. !risto 2t. and he notified the 6anila Police Hepartment, and it was impounded by the police. $t was claimed by 1ienvenido :elisan. As a result of the impounding of the truc& according to :elisan and that for the release of the truc& he paid the premium of P3;; to the surety company. 1enito Alday was compelled to pay the value of the <;; bags of fertiliDer, in the amount of P4,3.7.33, to Atlas BertiliDer !orporation so that, on 1 Bebruary 1./ , he "Alday# filed a complaint against ,oberto 0spiritu and 1ienvenido :elisan with the !B$ 6anila 1ienvenido :elisan, upon the other hand, claimed that he had no contractual relations with the plaintiff 1enito Alday. I''(): @hether :elisan being a registered owner is responsible for damagesA H)*+: %he !ourt has invariably held in several decisions that the registered owner of a public service vehicle is responsible for damages that may arise from conse8uences incident to its operation or that may be caused to any of the passengers therein. %he claim of the petitioner that he is not able in view of the lease contract e'ecuted by and between him and ,oberto 0spiritu which e'empts him from liability to third persons, cannot be sustained because it appears that the lease contract, adverted to, had not been approved by the Public 2ervice !ommission. $t is settled in our )urisprudence that if the property covered by a franchise is transferred or leased to another without obtaining the re8uisite approval, the transfer is not binding upon the public and third persons. 1ienvenido :elisan, the registered owner, is not however without recourse. 7e has a right to be indemnified by ,oberto 0spiritu for the amount that he may be re8uired to pay as damages for the in)ury caused to 1enito Alday, since the lease contract in 8uestion, although not effective against the public for not having been approved by the Public 2ervice !ommission, is valid and binding between the contracting parties.
BENEDICTO VS.CA (1"1 SCRA 0/1# F$%&': Private respondent :reenhills @ood $ndustries !ompany, $nc. a lumber manufacturing firm in Hagupan !ity, operates a sawmill in 6addela, Puirino. $n 6ay 1.-;, private respondent bound himself to sell and deliver to 1luestar 6ahogony, $nc. 1;;,;;; board feet of sawn lumber with the understanding that the initial delivery would be made on 14 6ay 1.-;. %o effect its first delivery, private respondent5s resident manager in 6addela, Hominador !ruD, contracted Firgilio 9icuden, the driver of a cargo truc& to transport its sawn lumber to the consignee 1lue 2tar in FalenDuela, 1ulacan. %his cargo truc& was registered in the name of petitioner 6a. 9uis 1enedicto, the proprietor of 6acoven %ruc&ing, business enterprise engaged in hauling freight, with the main office in 1.B. 7omes, ParaQa8ue. On 14 6ay 1.-;, !ruD in the presence and with the consent of driver 9icuden, supervised the loading of 7,/.; board feet of sawn lumber with invoice value of P1/, .1-.;; aboard the cargo truc&. %he cargo never reached 1lue 2tar. I''(): @hether the registered owner is liable even though the vehicle have been transferred to another personA H)*+: 2upreme !ourt held that the prevailing rule on common carrier ma&es the registered owner liable for conse8uences flowing from the operations of the common carrier, even though the specific vehicle involve may already have been transferred to another person. %his doctrine rest upon the principle that in dealing with the vehicles registered under the Public 2ervice 9aw, the public has the right to assume that the registered owner is the actual or lawful owner thereof. %he prevailing doctrine on common carriers ma&es the registered owner liable for conse8uences flowing from the operations of the carrier, even though the specific vehicle involved may already have been transferred to another person. %his doctrine rests upon the principle that in dealing with vehicles registered under the Public 2ervice 9aw, the public has the right to assume that the registered owner is the actual or lawful owner thereof. $t would be very difficult and often impossible as a practical matter, for members of the general public to enforce the rights of action that they may have for in)uries inflicted by the vehicles being negligently operated if they should be re8uired to prove who the actual owner is. %he registered owner is not allowed to deny liability by proving the identity of the alleged transferee. %hus, contrary to petitioner5s claim, private respondent is not re8uired to go beyond the vehicle5s certificate of registration to ascertain the owner of the carrier. !learly, to permit a common carrier to escape its responsibility for the passengers or goods transported by its proving a prior sale of the vehicle or means of transportation to an alleged vendee would be to attenuate drastically the carrier5s duty of e'traordinary diligence. -. CABIT SYSTEM C$')9': SANTOS VS. SIBUG (10/ SCRA 0-0# F$%&': Petitioner Adolfo 2antos was the owner of a passenger )eep, but he had no certificate of public conveyance for the operation of the vehicle as a public passenger )eep. 2antos then transferred his )eep to the name of Fidad so that it could be operated under the latter5s certificate of public
convenience. $n other words, 2antos became what is &nown as &abit operator. Fidad e'ecuted a retransfer document presumably to be registered it and when it was decided that the passenger )eep of 2antos was to be withdrawn from &abit arrangement. On the accident date, Abraham 2ibug was bumped by the said passenger )eep. I''(): @hether the Fidad is liable being the registered owner of the )eepneyA H)*+: As the )eep in 8uestion was registered in the name of Fidad, the government or any person affected by the representation that said vehicle is registered under the name of the particular person had the right to rely on his declaration of his ownership and registration. And the registered owner or any other person for that matter cannot be permitted to repudiate said declaration with the ob)ective of proving that the said registered vehicle is owned by another person and not by the registered owner. 2antos, as the &abit, should not be allowed to defeat the levy in his vehicle and to avoid his responsibility as a &abit owner for he had led the public to believe that the vehicle belongs to Fidad. %his is one way of curbing the pernicious &abit system that facilitates the commissions of fraud against the traveling public. LITA ENTERPRISES VS. IAC (1-! SCRA /6/# F$%&': 2pouses +icasio Ocampo and Brancisca :arcia "private respondents# purchased in installment from the Helta 6otor 2ales !orporation five "4# %oyota !orona 2tandard cars to be used as ta'i. 2ince they had no franchise to operate ta'icabs, they contracted with petitioner 9ita 0nterprise, $nc., through its representative 6anuel !oncordia, for the use of the latter5s certificate of public convenience for a consideration of P1, ;;;.;; and a monthly rental of P ;;.;;Eta'icab unit. Bor the agreement to ta&e effect, the cars were registered in the name of 9ita 0nterprises, $nc. %he possession, however, remains with spouses Ocampo and :arcia who operated and maintained the same under Acme %a'i, petitioner5s trade name. A year later, one of the ta'icabs, driven by their employee, 0meterio 6artin, collided with a motorcycle. (nfortunately the driver of the motorcycle, Blorante :alveD died from the in)uries it sustained. !riminal case was filed against 0meterio 6artin, while a civil case was filed by the heir of the victim against 9ita 0nterprises. $n the decision of the lower court 9ita 0nterprises was held liable for damages for the amount of P 4, ;;;.;; and P7, ;;;.;; for attorney5s fees. A writ of e'ecution for the decision followed, levied and were sold to a public auction. of the cars of the respondent5s spouses were
On 6arch 1.73, respondent Ocampo decided to register his ta'icabs in his own name. %he manager of petitioner refused to give him the registration papers. %hus, ma&ing spouses file a complaint against petitioner. $n the decision, 9ita 0nterprise was ordered to return the three certificate of registration not levied in the prior case. Petitioner now prays that private respondent be held liable to pay the amount they have given to the heir of :alveD.
I''(): @hether or not petitioner can recover from private respondent, &nowing they are in an arrangement &nown as >&abit system?. H)*+: >Gabit system? is defined as, when a person who has been granted a certificate of convenience allows another person who owns a motor vehicle to operate under such franchise for a fee. %his system is not penaliDed as a criminal offense but is recogniDed as one that is against public policy* therefore it is void and ine'istent. $t is fundamental that the court will not aid either of the party to enforce an illegal contract, but will leave them both where it finds them. (pon this premise, it was flagrant error on the part of both trial and appellate courts to have accorded the parties relief from their predicament. 2pecifically Article 1<1 states that= >$f the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed= >when the fault, is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other5s underta&ing.? %he principle of #n par# 4el#cto is evident in this case. >the proposition is universal that no action arises, in e8uity or at law, from an illegal contract* no suit can be maintained for its specific performance, or to recover the property agreed to sold or delivered, or damages for its property agreed to be sold or delivered, or damages for its violation.? %he parties in this case are in pari delicto, therefore no affirmative relief can be granted to them. TE2A MARCETING V. IAC (1/" SCRA ./1# F$%&': Pedro +ale bought from %e)a 6ar&eting a motorcycle with complete accessories and a sidecar. A chattel mortgage was constituted as a security for the payment of the balance of the purchase price. %he records of the 9and %ransportation !ommission show that the motorcycle sold to the defendant was first mortgaged to the %e)a 6ar&eting by Angel 3aucian though the %e)a 6ar&eting and Angel 3aucian are one and the same, because it was made to appear that way only as the defendant had no franchise of his own and he attached the unit to the plaintiffJs 6!7 9ine. %he agreement also of the parties here was for the plaintiff to underta&e the yearly registration of the motorcycle with the 9and %ransportation !ommission. %he plaintiff, however failed to register the motorcycle on that year on the ground that the defendant failed to comply with some re8uirements such as the payment of the insurance premiums and the bringing of the motorcycle to the 9%! for stenciling, the plaintiff said that the defendant was hiding the motorcycle from him. 9astly, the plaintiff also e'plained that though the ownership of the motorcycle was already transferred to the defendant, the vehicle was still mortgaged with the consent of the defendant to the ,ural 1an& of !amaligan for the reason that all motorcycle purchased from the plaintiff on credit was rediscounted with the ban&. %e)a 6ar&eting made demands for the payment of the motorcycle but )ust the same +ale failed to comply, thus forcing %e)a 6ar&eting to consult a lawyer and file an action for damage before the !ity !ourt of +aga in the amount of P4</. 1 for attorneyJs fees and P1;;.;; for e'penses of litigation. %e)a 6ar&eting also claimed that as of ; Bebruary 1.7-, the total account of +ale was already P , 731, ;4 as shown in a statement of account* includes not only the balance of P1, 7;;.;; but an additional 1 O interest per annum on the said balance from / 3anuary 1.7/ to 7 Bebruary 1.7-* a O service charge* and P4</. 1 representing attorneyJs fees. On his part, +ale did not dispute the sale and the outstanding balance of P1,7;;.;; still payable to %e)a 6ar&eting* but contends that because of this failure of %e)a 6ar&eting to comply with his obligation to register the
motorcycle, +ale suffered damages when he failed to claim any insurance indemnity which would amount to no less than P14,;;;.;; for the more than times that the motorcycle figured in accidents aside from the loss of the daily income of P14.;; as boundary fee beginning October 1.7/ when the motorcycle was impounded by the 9%! for not being registered. %he !ity !ourt rendered )udgment in favor of %e)a 6ar&eting, dismissing the counterclaim, and ordered +ale to pay %e)a 6ar&eting On appeal to the !ourt of Birst $nstance of !amarines 2ur, the decision was affirmed in toto. +ale filed a petition for review with the $ntermediate Appellate !ourt. On 1- 3uly 1.-3, the appellate court set aside the decision under review on the basis of doctrine of Ipari delicto,I and accordingly, dismissed the complaint of %e)a 6ar&eting, as well as the counterclaim of +ale* without pronouncements as to costs. 7ence, the petition for review was filed by %e)a 6ar&eting andEor Angel 3aucian. I''(): @hether the defendant can recover damages against the plaintiffA H)*+: (n8uestionably, the parties herein operated under an arrangement, commonly &nown as the I&abit systemI 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. %he I&abit systemI 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 penaliDed as a criminal offense, the &abit system is invariably recogniDed as being contrary to public policy and, therefore, void and in e'istent under Article 1<;. of the !ivil !ode. $t is a fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave both where it finds then. (pon this premise it would be error to accord the parties relief from their predicament. .. BOUNDARY SYSTEM C$')9': MAGBOO V. BERNARDO 1 SCRA !0Facts% (rbano and 0milia 6agboo are the parents of !esar 6agboo, a child of - years old, who lived with them and was under their custody until his death on < October 1.4/ when he was &illed in a motor vehicle accident, the fatal vehicle being a passenger )eepney owned by Helfin 1ernardo. At the time of the accident, said passenger )eepney was driven by !onrado ,o8ue. %he contract between ,o8ue and 1ernardo was that ,o8ue was to pay to 1ernardo the sum of P-.;;, which he paid to 1ernardo, for privilege of driving the )eepney, it being their agreement that whatever earnings ,o8ue could ma&e out of the use of the )eepney in transporting passengers from one point to another in the !ity of 6anila would belong entirely to ,o8ue. As a conse8uence of the accident and as a result of the death of !esar 6agboo in said accident, ,o8ue was prosecuted for homicide thru rec&less imprudence before the !B$ 6anila. ,o8ue was sentenced to / 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 )udgment ,o8ue served his sentence but he was not able to pay the indemnity because he was insolvent. An action was filed by the spouses 6agboo against 1ernardo is for enforcement of his subsidiary liability. %he trial court ordered 1ernardo to pay the. 1ernardo appealed to the !ourt of Appeals, which certified the case to the 2upreme !ourt on the ground that only 8uestions of law are involved.
I''(): @hether or not an employer-employee relationship between the )eepney operator and the driverA H)*+: An employer-employee relationship e'ists between a )eepney owner and a driver under a boundary system arrangement. %he features which characteriDe the boundary system - namely the fact that the driver does not receive a fi'ed wage but gets only the e'cess of the amount of fares collected by him over the amount he pays to the )eep-owner, and the gasoline consumed by the )eep is for the amount of the driver - are not sufficient to withdraw the relationship between them from that of employee and employer. !onse8uently, the )eepney owner is subsidiary liable as employer in accordance with Art.1;3, ,evised Penal !ode. II. CONTRACTUAL EFFECTS A. CAUSE OF ACTION 1. FABRE VS. CA -0! SCRA /-6 (G.R. NO. 1111-1 2ULY -6 1!!6# F$%&': Petitioner and his wife were owners of a minibus. %hey used the bus principally in connection with a bus service for school children which they operated in 6anila and was driven by Porfirio !abil. 7is )ob was to ta&e school children to and from the school. 2ometime during +ovember private respondent @@!B arranged with petitioners for the transportation of 33 members of its ministry form 6anila to 9a (nion and bac& in consideration of which private respondent shall pay petitioners the stipulated amount. On the day of the trip, several members of the ministry came in late, hence, the departure was delayed. On the may to 9a (nion, the minibus caught an accident causing damages and in)ury to several passengers particularly Amyline Antonio. Apparently, the driver was unable to see a sharp curve ahead of time for him to be able to avoid the mishap. A criminal complaint was them filed against the driver, while defendant spouses were also made )ointly liable. I''(): @hether or not defendant spouses failed to e'ercise diligence of a good father of the familyA H)*+: !ourt ruled that defendant spouses were negligent in the e'ercise of their duties as owners of the minibus for it was clearly established by evidence that said vehicle was not properly chec& if it was fit for the long trip. 6oreover, defendants were also negligent in the selection and supervision of their employee, particularly, the driver, who was only used to driving short distances. -. AIR FRANCE VS CARRASCOSO (1" SCRA 100# F$%&': Plaintiff, a civil engineer, was a member of a group of <- Bilipino pilgrims that left 6anila for 9ourdes on 6arch 3;, 1.4-. On 6arch -, 1.4-, the defendant, Air Brance, through its authoriDed agent, Philippine Air 9ines, $nc., issued to plaintiff a Ifirst classI round trip airplane tic&et from 6anila to ,ome. Brom 6anila to 1ang&o&, plaintiff traveled in Ifirst classI, but at 1ang&o&, the 6anager of the defendant airline forced plaintiff to vacate the Ifirst classI seat that he was occupying because, in the words of the witness 0rnesto :. !uento, there was a Iwhite manI, who, the 6anager alleged, had a Ibetter rightI to the seat. @hen as&ed to vacate his Ifirst classI seat, the plaintiff, as was to be e'pected, refused, and told defendantJs 6anager that his seat would be ta&en over his dead body* a commotion ensued, and, according to said 0rnesto :. !uento, Imany of the Bilipino passengers got nervous in the tourist class* when they found out that 6r. !arrascoso was having a hot discussion with the white man RmanagerS, they came all across to 6r. !arrascoso and pacified 6r. !arrascoso to give his seat to the white manI and plaintiff reluctantly gave his Ifirst classI seat in the plane after being threatened
that he will be thrown out of the plane if he does not oblige. %he captain of the plane, when as&ed to intervene, refused to do so. I''(): @hether or not there was bad faith on the part of Air Brance, petitioner, entitling ,afael !arrascoso, respondent for moral and e'emplary damages as against the petitionerA H)*+: %he court held in favor of the respondent, !arrascoso. %he responsibility of an employer for the tortious act of its employees need not be essayed. $t is well settled in law. Bor the willful malevolent act of petitionerJs manager, petitioner, his employer, must answer. A contract to transport passengers is 8uite different in &ind and degree from any other contractual relation. And this, because of the relation which an air-carrier sustains with the public. $ts business is mainly with the traveling public. $t invites people to avail of the comforts and advantages it offers. %he contract of air carriage, therefore, generates a relation attended with a public duty. +eglect or malfeasance of the carrierJs employees, naturally, could give ground for an action for damages. Passengers do not contract merely for transportation. %hey have a right to be treated by the carrierJs employees with &indness, respect, courtesy and due consideration. %hey are entitled to be protected against personal misconduct, in)urious language, indignities and abuses from such employees. 2o it is that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. %he court held that the )udgment of the !ourt of Appeals does not suffer from reversible error. !A decision affirmed. .. TIU VS. ARRIESGADO G.R. NO. 1."060 SEPTEMBER 1 -00/ F$%&': At about 1;=;; p.m. of 6arch 14, 1.-7, the cargo truc& mar&ed I!ondor 7ollow 1loc&s and :eneral 6erchandiseI bearing plate number :1P-/74 was loaded with firewood in 1ogo, !ebu and left for !ebu !ity. (pon reaching 2itio Aggies, Poblacion, !ompostela, !ebu, )ust as the truc& passed over a bridge, one of its rear tires e'ploded. %he driver, 2ergio Pedrano, then par&ed along the right side of the national highway and removed the damaged tire to have it vulcaniDed at a nearby shop, about 7;; meters away. Pedrano left his helper, 3ose 6itante, 3r. to &eep watch over the stalled vehicle, and instructed the latter to place a spare tire si' fathoms away behind the stalled truc& to serve as a warning for oncoming vehicles. %he truc&s tail lights were also left on. $t was about 1 =;; a.m., 6arch 1/, 1.-7. At about <=<4 a.m., H ,ough ,iders passenger bus with plate number P1P-7 < driven by Firgilio %e 9aspiQas was cruising along the national highway of 2itio Aggies, Poblacion, !ompostela, !ebu. %he passenger bus was also bound for !ebu !ity, and had come from 6aya, Haanbantayan, !ebu. Among its passengers were the 2pouses Pedro A. Arriesgado and Belisa Pepito Arriesgado, who were seated at the right side of the bus, about three "3# or four "<# places from the front seat. As the bus was approaching the bridge, 9aspiQas saw the stalled truc&, which was then about 4 meters away. 7e applied the brea&s and tried to swerve to the left to avoid hitting the truc&. 1ut it was too late* the bus rammed into the truc&s left rear. %he impact damaged the right side of the bus and left several passengers in)ured. Pedro Arriesgado lost consciousness and suffered a fracture in his
right colles. 7is wife, Belisa, was brought to the Hanao !ity 7ospital. 2he was later transferred to the 2outhern $sland 6edical !enter where she died shortly thereafter. ,espondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage, damages and attorneys fees before the ,egional %rial !ourt of !ebu !ity, 1ranch ;, against the petitioners, H ,ough ,iders bus operator @illiam %iu and his driver, Firgilio %e 9aspiQas on 6ay 7, 1.-7. %he respondent alleged that the passenger bus in 8uestion was cruising at a fast and high speed along the national road, and that petitioner 9aspiQas did not ta&e precautionary measures to avoid the accident. %he petitioners, for their part, filed a %hird-Party !omplaint against the following= respondent Philippine Phoeni' 2urety and $nsurance, $nc. "PP2$$#, petitioner %iu5s insurer* respondent 1en)amin !ondor, the registered owner of the cargo truc&* and respondent 2ergio Pedrano, the driver of the truc&. %hey alleged that petitioner 9aspiQas was negotiating the uphill climb along the national highway of 2itio Aggies, Poblacion, !ompostela, in a moderate and normal speed. $t was further alleged that the truc& was par&ed in a slanted manner, its rear portion almost in the middle of the highway, and that no early warning device was displayed. Petitioner 9aspiQas promptly applied the bra&es and swerved to the left to avoid hitting the truc& head-on, but despite his efforts to avoid damage to property and physical in)uries on the passengers, the right side portion of the bus hit the cargo truc&5s left rear. HELD: %he rules which common carriers should observe as to the safety of their passengers are set forth in the !ivil !ode, Articles 1733, 1744and 174/. $t is undisputed that the respondent and his wife were not safely transported to the destination agreed upon. $n actions for breach of contract, only the e'istence 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. %his is because under the said contract of carriage, the petitioners assumed the e'press obligation to transport the respondent and his wife to their destination safely and to observe e'traordinary diligence with due regard for all circumstances. Any in)ury suffered by the passengers in the course thereof is immediately attributable to the negligence of the carrier. (pon 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 e'traordinary diligence in the care of his passengers. $t must be stressed that in re8uiring 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 rec&lessness of their drivers. @hile evidence may be submitted to overcome such presumption of negligence, it must be shown that the carrier observed the re8uired e'traordinary 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 %iu failed to conclusively rebut such presumption. %he negligence of petitioner 9aspiQas as driver of the passenger bus is, thus, binding against petitioner %iu, as the owner of the passenger bus engaged as a common carrier. B. EDTRAORDINARY DILIGENCE REEUIREMENT OF EDTRAORDINARY DILIGENCE !ommon !arriers, from the nature of their business and for reasons of public policy, are bound to observe e'traordinary 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. 7$$, C#v#l Co4e" C38)6$?)
1. Figilance over goods (Arts. 7$4- 7/4" . 2afety of passengers (Arts. 7//- 7($" P$'')5?)6 B A person who has entered into a contract of carriage, e'press or implied, with the carrier. %hey are entitled to e'traordinary diligence from the common carrier. P)6'35' N3& C35'7+)6)+ A' P$'')5?)6' 1. One who has not yet boarded any part of a vehicle regardless of whether or not he has purchased a tic&et* . One who remains on a carrier for an unreasonable length of time after he has been afforded every safe opportunity to alight* 3. One who has boarded by fraud, stealth, or deceit* <. One who attempts to board a moving vehicle, although he has a tic&et, unless the attempt be with the &nowledge and consent of the carrier* 4. One who boarded a wrong vehicle, has been properly informed of such fact, and on alighting, is in)ured by the carrier* or /. One who rides any part of the vehicle which is unsuitable or dangerous or which he &nows is not designed or intended for passengers. RULES ON PRESUMPTION OF NEGLIGENCE: A. (n the Carriage of )oods% > $n case of loss, destruction and deterioration of goods, common carriers are presumed to be at fault or have acted negligently, unless they prove that they e'ercise e'traordinary diligence. > $n the transport of goods, mere proof of delivery of goods in good order to a carrier and the subse8uent arrival of the same goods at the place of destination in bad order ma&es for a prima facie case against the carrier. *. (n the Carriage of #assengers% > $n case of death or in)ury to passengers, common carriers are presumed to be at fault or have acted negligently, unless they prove that they e'ercise e'traordinary diligence. .(Art. 7//,NCC" > %he court need not ma&e an e'press finding of fault or negligence of common carriers. %he law imposes upon common carriers strict liability, as long as it is shown that there e'ists a relationship between the passenger and the common carrier and that in)ury or death too& place during the e'istence of the contract. > %he common carrier is not an absolute insurer against all possible ris&s of transportation or travel. (0#lap#l vs. CA et al, 85 %C&A /4(" +octrine of #ro,imate Ca!se K is +O% applicable to contract of carriage %he in)ured passenger or owner of goods need not prove causation to establish his case. %he presumption arises upon the happening of the accident. (Calalas v. CA, $8$ %C&A, '2552)" DEFENSES OF COMMON CARRIERS )eneral -!le% !ommon carriers are responsible for the loss, destruction or deterioration of the goods. .,ceptions% %he same is due to any of the following causes only= a. Blood, storm, earth8ua&e, lightning or other natural disaster or calamity* b. Act of public enemy in war, whether international or civil* c. Act or omission of the shipper or the owner of the goods*
d. %he character of the goods or defects in the pac&ing or in the containers* e. Order or act of competent authority. (Art. 7$4, C#v#l Co4e" %he above enumeration is )F%*('78). $f not one of those enumerated is present, the carrier is liable. (+el,#an C1arter#n, an4 %1#pp#n,, N.:. v. 01#l. 2#rst 3nsurance Co.,3nc., $8$ %C&A, 2552" %he e'ceptions in Art 173< must be proven whether the presumption of negligence applies. !ommon carriers are bound to observe e'traordinary diligence in the vigilance over the goods transported by them. %hey are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. %o overcome the presumption of negligence in case of loss, destruction or deterioration of the goods, the common carrier must prove that it e'ercised e'traordinary diligence. %here are, however, e'ceptions to this rule. Article 173< of the !ivil !ode enumerates the instance when the presumption of negligence does not attach. (Delsan v. -rans. Amer#can ;ome 3nsurance, Au,ust /, 255("
$. C$'3 F36&(7&3 9 F36%) M$G)(6) -e !isites% a. 6ust be the pro'imate and only cause of the loss* b. 0vent independent of human will* c. Occurrence ma&es it impossible for debtor to fulfill the obligation in a normal manner* d. Obligor must be free of participation in, or aggravation of, the in)ury to the debtor* and e. $mpossible to foresee or impossible to avoid. o Bire is not considered a natural disaster or calamity as it arises almost invariably from some act of man or by human means unless caused by lightning or by natural disaster or calamity. $t may even be caused by the actual fault or privity of the common carrier. (<astern %1#pp#n, L#nes 3nc. vs. 3AC, /5 %C&A 4(!, ' !87)" o 6echanical defects are not force ma)eure if the same was discoverable by regular and ade8uate inspections. (A=u#no -. > ;ernan4o, Notes an4 Cases on t1e La6 on -ransportat#on an4 0ubl#c ?t#l#t#es, , &.0. 2554 e4. p. 25- 22" B. A%& 3@ G3+ -e !isites% 1. %he common carrier must have e'ercised e'traordinary diligence before, during and after the time of the accident* . %he event must be unforeseen or even if it can be foreseen, it cannot be avoided* 3. %here must have been no undue delay on the part of the common carrier* <. %he pro'imate cause must not be committed by the common carrier.
Bortuitous event must be established to be the pro'imate cause of the loss. (As#a L#,1tera,e an4 %1#pp#n,, 3nc. v. CA, et al., 45! %C&A, '255$)"
EF)4:&735 &3 L7$;7*7&< F634 N$&(6$* D7'$'&)6' 36 C$*$47&7)': 1. %he natural disaster must have been the pro'imate cause of the loss. . $t must have been the cause of the loss. 3. %he common carrier must have e'ercised due diligence to prevent or minimiDe the damage or loss before, during and after the natural disaster.
<. C.
%he common carrier has not negligently incurred delay in transporting the goods.
A%&' 3@ P(;*7% E5)4< I5 W$6 -e !isites% 1. %he act of the public enemy must have been the pro'imate and only cause of the loss* and . %he common carrier must have e'ercised due diligence to prevent or minimiDe the loss before, during or after the act causing the loss, deterioration or destruction of the goods (Art. 7$!, C#v#l Co4e"
D. A%& 36 O47''735 3@ &A) SA7::)6 36 O=5)6 3@ G33+' 1. %he act or omission of the shipperEowner must have been the sole and pro'imate cause of the loss. %his is an absolute defense. . !ontributory +egligence= partial defense. (Art. 74 , C#v#l Co4e " D3%&675) 3@ C35&67;(&36< N)?*7?)5%) Bailure of a person who has been e'posed to in)ury by the fault or negligence of another, to use such degree of care for his safety and protection as ordinarily prudent men would use under the circumstances. (&a@es v. Atlant#c, Gulf an4 0ac#f#c Co., 7 01#l. $/! ' !57)"
%he common carrier shall be liable even if the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the pro'imate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which, however, shall be e8uitably reduced. (Art. 74 , C#v#l Co4e"
E. CA$6$%&)6 3@ &A) G33+' 36 D)@)%&' 75 &A) P$%H75? 36 75 &A) C35&$75)6 > %hat the loss, destruction or deterioration was caused by the character of the goods or the faulty pac&ing or containers. > 0ven if the damage should be caused by the inherent defectEcharacter of the goods, the common carrier must e'ercise due diligence to forestall or lessen the loss. (Art. 742, C#v#l Co4e" o %he rule is that if the improper pac&ing is &nown to the carrier or his employee or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or e'ception notwithstanding such condition, he is not relieved of liability for the resulting damage. (A.2. %anc1ez +ro@era,e 3nc. vs. C.A., 447 %C&A 427, '2554)" E. O6+)6 36 A%& 3@ P(;*7% A(&A367&< > %he common carrier is not ipso facto relieved from liability due to the loss, destruction or deterioration of goods caused by public authority. -e !isites% > %he common carrier must prove that the public authority has the power to issue the order for the seiDure or destruction of the goods. > %he common carrier must e'ercise e'traordinary diligence to prevent or minimiDe the loss, destruction or deterioration of he goods at the time of the accident.
o
2aid public authority must have the power to issue the order (Article 17/3, Civil Code). !onse8uently, where the officer acts without legal process, the common carrier will be held liable. (Ganzon v. CA ( , %C&A (4( ' !88)"
C$')': REPUBLIC VS. LOREN,O SHIPPING LINES (1 FEBRUARY -000# F$%&': %he ,epublic of the Philippines signed an agreement through the Hepartment of 7ealth and the !ooperative for American ,elief 0verywhere, $nc. "!A,0# wherein it would ac8uire from the (2 government donations of +on-Bat Hried 6il& and other food products. $n turn, the Philippines will transport and distribute the donated to the intended beneficiaries of the country. As a result, it entered into a contract of carriage of goods with the herein respondent. %he latter shipped <,-/- bags of nonfat dried mil& from 2ept-Hec 1.--. %he consignee named in the bills was Abdurahman 3ama, petitioner5s branch supervisor in Tamboanga !ity. (pon reaching the port of Tamboanga, respondent5s agent, 0fren ,uste 2hipping Agency unloaded the said mil&s. 1efore each delivery, ,ogelio ,iDada and $smael Tamora both delivery chec&ers of 0fren ,uste re8uested Abdurahman to surrender the originals of the 1ill of 9ading. 7owever, the petitioner alleged that they did not receive anything and they filed a claim against the herein respondent. %he petitioner contended that the respondents failed to e'ercise e'traordinary diligence. I''(): @hether the respondents failed to e'ercise e'traordinary diligence re8uired by lawA H)*+ %he surrender of the 1ill of 9ading is not a condition precedent for a common carrier to be discharged of its contractual obligation. $f the surrender is not possible, ac&nowledgment of the delivery by signing the receipt suffices. %he herein respondent did not even bother to prevent the resignation of abdurhaman 3ama to be utiliDed as a witness. CENTRAL SHIPPING CO. VS. INSURANCE CO. (SEPTEMBER -0 -00 1-1 SCRA 16!# F$%&': On 3uly 4, 1..; at Puerto Princesa, Palawan, the petitioner received on board its vessel, the 6EF !entral 1ohol, 37/ pieces of ,ound 9ogs and undertoo& to transport said shipment to 6anila for delivery to Alas&a 9umber !o., $nc. %he cargo is insured for P3, ;;;, ;;;.;; against total lost under respondents 6arine!argo Policy. After loading the logs, the vessel starts its voyage. After few hours of the trip, the ship tilts 1; degrees to its side, due to the shifting of the logs in the hold. $t continues to tilt causing the captain and the crew to abandon ship. %he ship san&. ,espondent alleged that the loss is due to the negligence and fault of the captain. @hile petitioner contends that the happening is due to monsoons which is unforeseen or casa fortuito. I''()= @hether or not petitioner is liable for the loss of cargoA H)*+: Brom the nature of their business and for reasons of public policy, common carriers are bound to observe e'traordinary diligence over the goods they transport, according to all the circumstances of each case. $n the event of loss, destruction or deterioration of the insured goods, common carriers are responsible* that is, unless they can prove that such loss, destruction or deterioration was brought about -- among others -- by Iflood, storm, earth8ua&e, lightning or other natural disaster or calamity.I $n all other cases not specified under Article 173< of the !ivil !ode, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed e'traordinary diligence. %he contention of the petitioner that the loss is due to casa fortuito e'empting them from liability is untenable. Petitioner failed to show that such natural disaster or calamity was the
pro'imate and only cause of the loss. 7uman agency must be entirely e'cluded from the cause of in)ury or loss. $n other words, the damaging effects blamed on the event or phenomenon must not have been caused, contributed to, or worsened by the presence of human participation. %he defense of fortuitous event or natural disaster cannot be successfully made when the in)ury could have been avoided by human precaution. %he monsoon is not the pro'imate cause of the sin&ing but is due to the improper stowage of logs. %he logs were not secured by cable wires, causing the logs to shift and later on the sin&ing the ship. %his shows that they did not e'ercise e'traordinary diligence, ma&ing them liable for such loss. SWEET LINES INC VS. CA (1-1 SCRA 16!# F$%&': 7erein private respondents purchased first-class tic&ets from petitioner at the latter5s office in !ebu !ity. %hey were to board 6EF 2weet :race bound for !atbalogan, @estern 2amar. $nstead of departing at the scheduled hour of about midnight on 3uly -, 1.7 , the vessel set sail at 3=;; am of 3uly ., 1.7 only to be towed bac& to !ebu due to engine trouble, arriving there on the same day at about <=;; pm. %he vessel lifted anchor again on 3uly 1;, 1.7 at around -=;; am. $nstead of doc&ing at !atbalogan "the first port of call#, the vessel proceeded direct to %acloban. Private respondents had no recourse but to disembar& and board a ferry boat to !atbalogan. 7ence, the suit for breach of contract of carriage. I''(): @hether or not the mechanical defect constitutes a fortuitous event which would e'empt the carrier from liability. H)*+: +o. As found by the trial court and the !ourt of Appeals, there was no fortuitous event or force ma)eure which prevented the vessel from fulfilling its underta&ing of ta&ing the private respondents to !atbalogan. $n the first place, mechanical defects in the carrier are not considered a caso fortuito that e'empts the carrier from responsibility. $n the second place, even granting arguendo that the engine failure was a fortuitous event, it accounted on for the delay of departure. @hen the vessel finally left the port, there was no longer any force ma)eure that )ustified by-passing a port of call. EASTERN SHIPPING LINES VS. CA -./ SCRA 1 F$%&': On Hecember <, 1.-1, two fiber drums of riboflavin were shipped from Co&ohama, 3apan for delivery vessel I22 0A2%0,+ !O60%I owned by defendant 0astern 2hipping 9ines under a bill of lading. %he shipment was insured under plaintiffJs 6arine $nsurance Policy. (pon arrival of the shipment in 6anila on Hecember 1 , 1.-1, it was discharged unto the custody of defendant 6etro Port 2ervice, $nc. %he latter e'cepted to one drum, said to be in bad order, which damage was un&nown to plaintiff. On 3anuary 7, 1.- defendant Allied 1ro&erage !orporation received the shipment from defendant 6etro Port 2ervice, $nc., one drum opened and without seal. On 3anuary - and 1<, 1.- , defendant Allied 1ro&erage !orporation made deliveries of the shipment to the consigneeJs warehouse. %he latter e'cepted to one drum which contained spillages, while the rest of the contents was adulteratedEfa&e. Plaintiff contended that due to the lossesEdamage sustained by said drum, the consignee suffered losses totaling P1., ;3 ..4, due to the fault and negligence of defendants. !laims were presented against defendants who failed and refused to pay the same. As a conse8uence of the losses sustained, plaintiff was compelled to pay the consignee P1., ;3 ..4 under the aforestated
marine insurance policy, so that it became subrogated to all the rights of action of said consignee against defendants. I''(): @hether or not a claim for damage sustained on a shipment of goods can be a solidary or )oint and several, liability of the common carrier, the arrastre operator and the customs bro&erA H)*+: %he common carrierJs duty to observe the re8uisite diligence in the shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for transportation until delivered to, or until the lapse of a reasonable time for their acceptance by, the person entitled to receive them "Arts. 173/-173-, !ivil !ode#. @hen the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an e'press finding of negligence to hold it liable "Art. 1734, !ivil !ode#. %here are, of course, e'ceptional cases when such presumption of fault is not observed but these cases, enumerated in Article 173< of the !ivil !ode, are e'clusive, not one of which can be applied to this case. As to %he 8uestion of charging both the carrier and the arrastre operator with the obligation of properly delivering the goods to the consignee, the legal relationship between the consignee and the arrastre operator is a&in to that of a depositor and warehouseman while the relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator. 2ince it is the duty of the arrastre to ta&e good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the carrier. 1oth the arrastre and the carrier are therefore charged with the obligation to deliver the goods in good condition to the consignee. A factual finding of both the 2upreme !ourt and the appellate court was that there was sufficient evidence that the shipment sustained damage while in the successive possession of appellants. Accordingly, the liability imposed on 0astern 2hipping 9ines, $nc., the sole petitioner in this case, is inevitable regardless of whether there are others solidarily liable with it. LA MALLORCA VS. CA (G.R. NO. LB-0161 -1 2ULY 1!66 11 SCRA 1.!# F$%&': Plaintiffs, husband and wife, together with their three minor daughters "6ilagros, 13 years old, ,a8uel, about < years old and Be, years old# boarded the Pambusco at 2an Bernando Pampanga, bound for Anao, 6e'ico, Pampanga. 2uch bus is owned and operated by the defendant. %hey were carrying with them four pieces of baggage containing their personal belonging. %he conductor of the b us issued three tic&ets covering the full fares of the plaintiff and their eldest child 6ilagros. +o fare was charged on ,a8uel and Be, since both were below the height which fare is charged in accordance with plaintiff5s rules and regulations. After about an hour5s trip, the bus reached Anao where it stopped to allow the passengers bound therefore, among whom were the plaintiffs and their children to get off. 6ariano 1eltran, carrying some of their baggage was the first to get down the bus, followed by his wife and children. 6ariano led his companion to a shaded spot on the left pedestrian side of the road about four or five meters away from the vehicle. Afterwards, he returned to the bus in controversy to get his paying, which he had left behind, but in so doing, his daughter followed him unnoticed by his father. @hile said 6ariano 1eltran was on he running board of the bus waiting for the conductor to hand him his bayong which he left under one its seats near the door, the bus, whose motor was not shut off while unloading suddenly started moving forward, evidently to resume its trip, notwithstanding the fact that the conductor was still attending to the baggage left behind by 6ariano 1eltran. $ncidentally, when the
bus was again placed in a complete stop, it had traveled about 1; meters from point where plaintiffs had gotten off. 2ensing the bus was again in motion* 6ariano immediately )umped form the running board without getting his bayong from conductor. 7e 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 s&ull crushed, and without life. %he child was none other than his daughter ,a8uel, who was run over by the bus in which she rode earlier together her parent. Bor the death of the said child, plaintiffs comment the suit against the defendant to recover from the latter damages. I''(): @hether or not the child was no longer the passenger of the bus involved in the incident, and therefore, the contract of carriage was already terminatedA H)*+: %here 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. %he relation of carrier and passenger does not necessarily cease where the latter, after alighting from the car aids the carrier5s servant or employee in removing his baggage from the car. $t is a rule that the relation of carrier and passenger does not cease the moment the passenger alights from the carrier5s 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 carrier5s premises. %he father returned to the bus to get one of his baggages which was not unloaded when they alighted from the bus. ,a8uel must have followed her father. 7owever, 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 )umped down from the moving vehicle. $t was that this instance that the child, who must be near the bus, was run over and &illed. $n the circumstances, it cannot be claimed that the carrier5s agent had e'ercised the >utmost diligence? of a >very cautious person? re8uired by Article 1744 of the !ivil !ode to be observed by a common carrier in the discharge of its obligation to transport safely its passengers. %he driver, although stopping the bus, nevertheless did not put off the engine. 7e started to run the bus even before the conductor gave him the signal to go and while the latter was still unloading part of the baggage of the passengers 1eltran and family. %he presence of the said passengers near the bus was not unreasonable and they are, therefore, to be considered still as passengers of the carrier, entitled to the protection under their contract of carriage. ABOITI, SHIPPING CORP. VS. CA (11! SCRA !0# F$%&': On 6ay 11, 1.74, Anacleto Fiana boarded 6EUF Antonio from Occidental 6indoro bound for 6anila. (pon arrival on 6ay 1 , 1.74, the passengers therein disembar&ed through a gangplan& connecting the vessel to the pier. Fiana, instead of disembar&ing through the gangplan&, disembar&ed through the third dec&, which was at the same level with the pier. An hour after the passengers disembar&ed, Pioneer stevedoring started to operate in unloading the cargo from the ship. Fiana then went bac&, 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. 7e was brought to the hospital where he died 3
days after "6ay 14#. %he parents of Anacleto filed a complaint against AboitiD for breach of contract of carriage. %he trial court ruled in favor of the plaintiffs. %hen both AboitiD and Pioneer filed a motion for reconsideration, upon which the trial court issued an order absolving Pioneer from liability but not AboitiD. On appeal, !A affirmed the trial court ruling. 7ence, this petition. I''(): @hether or not Fiana is still considered a passenger at the time of the incidentA H)*+: Ces. %he 9a 6allorca case is applicable in the case at bar. %he 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 owner5s doc& or premises. Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carrier5s conveyance or had a reasonable opportunity to leave the carrier5s 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. %he carrier-passenger relationship is not terminated merely by the fact that the person transported has been carried to his destination if, for e'ample, such person remains in the carrier5s premises to claim his baggage. %he reasonableness of the time should be made to depend on the attending circumstances of the case, such as the &ind 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 ta&ing into account such other factors. @here a passenger dies or is in)ured, the common carrier is presumed to have been at fault or to have acted negligently. %his gives rise to an action for breach of contract where all that is re8uired of plaintiff is to prove the e'istence 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 e'traordinary diligence while such relation subsists. BRINAS VS. PEOPLE (1-0 SCRA 6"1# F$%&': $n the afternoon of 3anuary /, 1.47, 3uanito :esmundo bought a train tic&et at the railroad station in %ag&awayan, PueDon for his 44-year old mother 6artina 1ool and his 3-year old daughter 0melita :esmundo. %he two were bound for 9usacan in %iaong, PueDon. %hey boarded the train of 6anila ,ailroad !ompany at about pm. (pon approaching 1arrio 9agalag at -pm, the train slowed down and the conductor, accused-appellant, !lemente 1rinas, shouted >9usacan, 9usacanV? %he old woman wal&ed towards the train e'it carrying the child with one hand and holding her baggage with the other. @hen they were near the door, the train suddenly pic&ed up speed. %he old woman and the child stumbled from the train causing them to fall down the trac&s and were hit by an oncoming train, causing their instant death.
A criminal information was filed against Fictor 6ilan, the driver, 7ermogenes 1uencamino, the assistant conductor and !lemente 1rinas for Houble 7omicide thru ,ec&less $mprudence. 1ut the lower court ac8uitted 6ilan and 1uencamino. On appeal to the !A, respondent !A affirmed the decision. I''(): @hether or not the !A erred in ruling the accused-appellant was negligentA H)*+: %here was no error in the factual findings of the respondent court and in the conclusion drawn from the findings. $t is a matter of common &nowledge and e'perience about common carriers li&e trains and buses that before reaching a station or flagstop they slow down and the conductor announces the name of the place. $t is also a matter of common e'perience that as the train or bus slac&ens its speed, some passengers usually stand and proceed to the nearest e'it, ready to disembar& as the train or bus comes to a full stop. %his is especially true of a train because passengers feel that if the train resumes its run before they are able to disembar&* there is no way to stop it as a bus may be stopped. %he appellant was negligent because his announcement was premature and erroneous, for it too& a full 3 minutes more before the ne't barrio of 9usacan was reached. %he premature announcement prompted the two victims to stand and proceed to the nearest e'it. @ithout said announcement, the victims would have been safely seated in their respective seats when the train )er&ed and pic&ed up speed. %he pro'imate cause of the death of the victims was the premature and erroneous announcement of petitioner-appellant. GACAL VS. PAL (1". SCRA 1"! G.R. NO. 00.00 MARCH 16 1!!0# F$%&': Plaintiffs Bran&lin :acal, his wife and three others were passengers of PA9 plane at Havao Airport for a flight to 6anila, not &nowing that the flight, were !ommander Tapata with other members of 6oro +ational 9iberation Bront. %hey were armed with grenades and pistols. After ta&e off, the members of 6+9B announced a hi)ac&ing and directed the pilot to fly directly to 9ibya, later to 2abah. %hey were, however, forced to land in Tamboanga airport for refueling, because the plane did not have enough fuel to ma&e direct flight to 2abah. @hen the plane began to ta'i at the runaway of Tamboanga airport, it was met by two armored cars of the military. An armored car subse8uently bumped the stairs leading inside the plane. %hat commenced the battle between the military and the hi)ac&ers, which led ultimately to the liberation of the plane5s surviving crew and passengers with the final score of ten passengers and three hi)ac&ers dead. I''(): @hether or not hi)ac&ing is a case fortuito or force ma)eure, which would e'empt an aircraft from liability for, damages to its passengers and personal belongings that were lost during the incidentA H)*+: $n order to constitute a caso fortuito that would e'empt from liability under Art 117< of the civil code, it is necessary that the following elements must occur= "a# the cause of the breach of obligation must be independent of human will* "b# the event must be unforeseeable or unavoidable* "c# the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner* "d# the debtor must be free from any participation in or aggravation of the in)ury to the creditor.
Applying the above guidelines, the failure to transport the petitioners safely from Havao to 6anila was due to the s&y)ac&ing incident staged buy the 6+9B without connection to the private respondent, hence, independent of will of PA9 or its passengers. %he events rendered it impossible for PA9 to perform its obligation in a normal manner and it cannot be faulted for negligence on the duty performed by the military. %he e'istence of force ma)eure has been established thus e'empting PA9 from payment of damages. PILAPIL VS. CA 1"0 SCRA 0/6 F$%&': On 2eptember 1/, 1.71, 3ose Pilapil boarded defendant5s bus bearing +o. <;. at 2an +icolas, $riga !ity at about /=;;P6. (pon reaching the vicinity of the cemetery of the 6unicipality of 1aao, !amarines 2ur, on the way to +aga !ity !ity, an unidentified man " a bystander# hurled a stone at the left side of the bus, which apparently hit petitioner above his left eye. 7e was then immediately brought by private respondent5s personnel to the provincial hospital in +aga !ity. I''(): @hether or not the nature of the business of a transportation company re8uires the assumption of certain ris&s and the stro&ing of the bus by a bystander resulting in in)ury to petitionerpassenger is one such ris& from which the common carrier may not e'empt itself from liabilityA H)*+: %he 2upreme !ourt held that while the law re8uires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them, it does not however, ma&e the carrier an insurer of absolute safety of its passengers. A tort, committed by a stranger which causes an in)ury to a passenger does not accord the latter a cause of action against the carrier. %he negligence for which a common carrier is responsible is the negligent omission by the carrier5s employees to prevent the tort from being committed when the same could have been foreseen and prevented by them. Burther, it is to be noted that when the violation of the contract is due to the willful acts of strangers, as in the instant case, the degree of care essential to be e'ercised by the common carrier for the protection of its passenger is only that of a good father of the family. COMPANIA MARITIMA VS COURT OF APPEALS AND VICENTE CONCEPCION (16- SCRA 6"0# F$%&': Ficente !oncepcion is doing business under the name of !onsolidated !onstruction. 1eing a 6anila based contractor, !oncepcion had to ship his construction e8uipment to !agayan de Oro. On August -, 1./<, !oncepcion shipped 1 unit pay loader, < units of /'/ ,oe truc&s, and pieces of water tan&s. %he aforementioned e8uipment was loaded aboard the 6F !ebu, which left 6anila on August 3;, 1./< and arrived at !agayan de Oro on 2eptember 1, 1./<. %he ,eo truc&s and water tan&s were safely unloaded however the pay loader suffered damage while being unloaded. %he damaged pay loader was ta&en to the petitioner5s compound in !agayan de Oro. !onsolidated !onstruction thru Ficente !oncepcion wrote !ompania 6aritima to demand a replacement of the bro&en pay loader and also as&ed for damages. (nable to get a response, !oncepcion sent another demand letter. Petitioner meanwhile, sent the damaged payloader to 6anila, it was weighed at 2an 6iguel !orporation, where it was found that the payloader actually weighed 7.4 tons and not .4 tons as declared in its bill of lading. Hue to this, petitioner denied the claim for damages of !onsolidated !onstruction. !onsolidated then filed an action for damages against petitioner with the !ourt of Birst $nstance of 6anila. %he !ourt of Birst $nstance dismissed the complaint stating that the pro'imate cause of the fall of the payloader which caused its damage was the act or omission of Ficente !oncepcion for misrepresenting the weight of the payloader as .4 tons
instead of its true weight of 7.4 tons. On appeal, the !ourt of Appeals, reversed the decision of the !ourt of Birst $nstance and ordered the plaintiff to pay !oncepcion damages. 7ence this petition. I''(): @hether or not the act of respondent !oncepcion of misdeclaring the true weight of the payloader the pro'imate and only cause of the damage of the payloaderA H)*+: +o, !ompania 6aritima is liable for the damage to the payloader. %he :eneral rule under Articles 1734 and 174 of the !ivil !ode 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. %o overcome the presumption of liability for the loss destruction or deterioration common carriers must prove that they have e'ercised e'traordinary diligence as re8uired by Article 1733 of the !ivil !ode. 0'traordinary Hiligence in the vigilance over the goods tendered for shipment re8uires the common carrier to &now and follow the re8uired precaution fro avoiding damage or destruction of the goods entrusted to it for safe carriage and delivery. $t re8uires common carriers to render service with the greatest s&ill and foresight and to use all reasonable means to ascertain the nature and characteristics of goods tendered for shipment and to e'ercise due care in the handling and stowage including such methods as their nature re8uires. %he 2upreme !ourt further held that the weight in a bill of lading are prima facie evidence of the amount received and the fact that the weighing was done by another will not relieve the common carrier where it accepted such weight and entered it in on the bill of lading. %he common carrier can protect themselves against mista&es in the bill of lading as to weight by e'ercising e'traordinary diligence before issuing such. SERVANDO VS. PHILIPPINE STEAM NAVIGATION CO.(111 SCRA ".-# F$%&': 1ico and 2ervando loaded on board the B2-17/ the following cargoes= 1.4 - cavans of rice and << cartons of colored paper, toys and general merchandise. (pon the arrival of the vessel, the cargoes were discharged, complete and in good order to the warehouse of the 1ureau of !ustoms. At =;; pm of the same day, a fire of un&nown reasons raDed the warehouse. 1efore the fire, 1ico was able to ta&e delivery of .;7 cavans of rice. %he petitioners are now claiming for the value of the destroyed goods from the common carrier. %he %rial !ourt 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 173/ of the +ew !ivil !ode, since the loss occurred before actual or constructive delivery. %he petitioners argued that the stipulation in the bills of lading does not bind them because they did not sign the same. %he stipulation states that the carrier shall not be responsible for loss unless such loss was due to the carrier5s negligence. +either shall it be liable for loss due to fortuitous events such as dangers of the sea and war. I''(): @hether or not the carrier should be held liable for the destruction of the goods H)*+: +o. %here is nothing on record to show that the carrier incurred in delay in the performance of its obligation. 2ince the carrier even notified the plaintiffs of the arrival of their shipments and had demanded that they be withdrawn.
%he carrier also cannot be charged with negligence since the storage of the goods was in the !ustoms warehouse and was undoubtedly made with their &nowledge and consent. 2ince the warehouse belonged and maintained by the :overnment, it would be unfair to impute negligence to the appellant since it has no control over the same. DSR SENATOR LINES VS. FEDERAL PHOENID 1 OCTOBER -00. F$%&': 1erde plants, $nc. delivered /3 units of artificial trees to !.B. 2harp and !ompany, $nc., the :eneral 2ip Agent of H2,- 2enator 9ines, a foreign shipping corporation, for transportation and delivery to the consignee, Al-6ohr $nternational :roup, in ,iyadh, 2audi Arabia. 2harp issued an international bill of landing for the cargo, with a stipulation that the port of discharge for the cargo was at the Ghor Ba&&an port and the port of delivery was ,iyadh, 2audi Arabia. On 3une 7, 1..3, the vessel left 6anila for 2audi Arabia with the cargo on board. @hen the vessel arrived in Ghor Ba&&an Port, the cargo was reloaded on board H2,-2enator 9ines feeder vessel, however while in transit, the vessel and all its cargo caught fire. !onse8uently, Bederal Phoeni' Assurance paid 1erde Plants corresponding to the amount of the insurance for the cargo. $n turn, 1erde Plants e'ecuted in its favor a >2ubrogation ,eceipt.? Bederal Phoeni' demanding payment on the basis of the subrogation receipt. !.f. 2harp denied any liability that such liability was e'tinguished when the vessel carrying the cargo was gutted by fire. %hus, Bederal Phoeni' filed a complaint for damages against H2,-2enator 9ines and !.B, 2harp. I''(): @hether or not there was a breach of contract of carriage. H)*+: Bire is not one of those enumerated under Article 173< of the !ivil !ode to wit, Art. 173<, !ommon 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. . 3. <. 4. /. Blood, storm, earth8ua&e, lightning, or other natural disaster or calamity* Act of the public enemy in war, whether international civil* Act or omission of the shipper or the owner of the goods* %he character of the goods or defects in the pac&ing or in the containers* Order or act of competent public authority. !ommon carriers are obliged to observe e'traordinary 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. $n those cases where the presumption is applied, the common carrier must prove that it e'ercised e'traordinary diligence in order to overcome the presumption.
SARREAL VS. 2APAN AIRLINES (111 SCRA ".-# F$%&': On 2eptember 1<, 1.7., the petitioner purchased in 1ang&o& from private respondent 3apan Air 9ines "3A9# tic&et no. 131-<<< -417-3/-, having various foreign destinations from 1ang&o& and bac& to 1ang&o&.
On or about 3une 3, 1.-;, he was in 9os Angeles, (2A with his business representative Atty. Pol %iglao, and 9uis 0spada, the bo'ing manager of @orld Blyweight 1o'ing !hampion 7ilario Tapata. %hey were negotiating a possible match between the latter and the winner of the I +etrnoi Forasing - 1rigildo !aQadaI main event fight which was scheduled on 3uly <, 1.-; in 6anila. %his agreement was to be confirmed by the petitioner through overseas call in 6anila on or before 3uly , 1.-;. %he petitioner then flew from 9os Angeles to %o&yo arriving thereat on 3une /, 1.-;. At the +arita Airport Office, the petitioner in8uired if there was a 3A9 flight from 1ang&o& to 6anila on 3uly , 1.-;. 7e e'plained to a lady employee of 3A9 that he had a very important business in 6anila on 3uly , 1.-;. 7e also told her that if he could not ta&e a flight from 1ang&o& to 6anila on that date, he would not be going to 1ang&o& anymore. %he 3A9 lady employee loo&ed into her scheduled boo& put a stamp on the petitionerJs tic&et and told him not to worry because she has endorsed his 3A9 tic&et to %hai $nternational leaving 1ang&o& on 3uly , 1.-; for 6anila. ,elying on the assurance of the lady employee, the petitioner then proceeded to 1ang&o&. 7owever, in the morning of 3uly , 1.-;, when the petitioner was about to board the said %hai $nternational, he was not allowed to board the said plane through it had available seats because he was told that his tic&et was not endorsable. 2ince the petitioner failed to reach 6anila by 3uly , 1.-;, 0spada cancelled his transaction with the petitioner and decided to have the champion fight in 3apan instead. %his led the petitioner to file an action for damages with the ,egional %rail !ourt ",%! #, Pasay !ity against private respondent 3A9 premised on the breach of contract of carriage. I''(): @hether or not the assurance of an airline employee, not evidenced by any hard proof, is sufficient as an assurance of a passenger securing his seatA H)*+: %he petitioner is said to be a well-traveled person who average two long trips to 0urope and two trips to 1ang&o& every month since 1.<4. 7e claims to have used practically all the airlines but mostly Philippine Airlines whenever he travels abroad in connection with his occupation as international bo'ing matchma&er and manager of world-champion bo'ers. !ertainly, a man of such stature was aware of the restrictions carried by his tic&et and the usual procedure that goes with traveling. %he petitioner ought to &now that it was still necessary to verify first from %hai $nternational if they would honor the endorsement of his 3A9 tic&et or confirm with the airline if he had a seat in the 3uly flight. %he court finds no )ustification for the relief prayed for by the petitioner. 7e has failed to show that the findings of the respondent court are not based on substantial evidence or that it conclusions are contrary to law and applicable )urisprudence. VASEUE, VS. COURT OF APPEALS (1." SCRA 00.#
F$%&': 6F Pioneer !ebu left the port of 6anila and bounded for !ebu. $ts officers were aware of the upcoming typhoon Glaring that is already building up somewhere in 6indanao. %here being no typhoon signals on their route, they proceeded with their voyage. @hen they reached the island of ,omblon, the captain decided not to see& shelter since the weather was still good. %hey continued their )ourney until the vessel reached the island of %anguingui, while passing through the island the weather suddenly changed and heavy rains fell. Bearing that they might hit !hocolate island due to Dero visibility, the captain ordered to reverse course the vessel so that they could weather out the typhoon by facing the strong winds and waves. (nfortunately, the vessel struc& a reef near 6alapascua $sland, it sustained a lea& and eventually sun&. %he parents of the passengers who were lost due to that incident filed an action against Bilipinas Pioneer 9ines for damages. %he defendant pleaded force ma)eure but the %rial !ourt ruled in favor of the plaintiff. On appeal to the !ourt of Appeals, it reversed the decision of the lower stating that the incident was a force ma)eure and absolved the defendants from liability. I''(): @hether of not Bilipinas Pioneer 9ines is liable for damages and presumed to be at fault for the death of its passengerA H)*+: %he 2upreme !ourt held the Bilipinas Pioneer 9ines failed to observe that e'traordinary diligence re8uired of them by law for the safety of the passengers transported by them with due regard for all necessary circumstance and unnecessarily e'posed the vessel to tragic mishap. Hespite &nowledge of the fact that there was a typhoon, they still proceeded with their voyage relying only on the forecast that the typhoon would wea&en upon crossing the island of 2amar. %he defense of caso fortuito is untenable. %o constitute caso fortuito to e'empt a person from liability it necessary that the event must be independent from human will, the occurrence must render it impossible for the debtor to fulfill his obligation in a normal manner, the obligor must be free from any participation or aggravation to the in)ury of the creditor. Bilipina Pioneer 9ines failed to overcome that presumption o fault or negligence that arises in cases of death or in)uries to passengers. GATCHALIAN V DELIM AND CA -0. SCRA 1-6 F$%&': :atchalian boarded the respondent5s >%hames? minibus at 2an 0ugenio, Aringay, 9a (nion 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. 2everal passengers including the petitioner was in)ured. %hey were ta&en into an hospital for treatment. @hile there, private respondent5s wife Adela Helim visited and paid for the e'penses, hospitaliDation and transportation fees. 7owever, before she left, she had the in)ured passengers including the petitioner sign an already prepared 3oint Affidavit constituting a waiver of any future complaint. 7owever, notwithstanding this document, petitioner filed an action 0' !ontractu to recover compensatory and Actual Hamages. Private respondent denied liability on the ground that it was an accident and the 3oint which constitutes as a waiver. %he trial court dismissed the complaint based on the waiver and the !A affirmed. I''(): @hether or not the private respondent has successfully proved that he e'ercised e'traordinary diligence. H)*+= %he court held that they failed to prove e'traordinary diligence. After a snapping sound was suddenly heard at one part of the bus, the driver didn5t even bother to stop and loo& f anything had gone wrong with the bus. @ith regard to the waiver, it must to be valid and effective, couched in clear and une8uivocal terms which leave no doubt as to the intention of the person to give up a right or benefit which legally pertains to him. $n this case, such waiver is not clear and une8uivocal. @hen
petitioner signed the waiver, she was reeling from the effects of the accident and while reading the paper, she e'perienced diDDiness but upon seeing other passengers sign the document, she too signed which bothering to read to its entirety. %here appears substantial doubt whether the petitioner fully understood the )oint affidavit. 2UNTILLA VS FONTANAR (1.6 SCRA 6-/# F$%&': 7erein plaintiff was a passenger of the public utility )eepney on course from Hanao !ity to !ebu !ity. %he )eepney was driven by driven by defendant 1erfol !amoro and registered under the franchise of !lemente Bontanar. @hen the )eepney reached 6andaue !ity, the right rear tire e'ploded causing the vehicle to turn turtle. $n 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 in)uries he suffered on his left arm, right thigh, and on his bac&. Plaintiff filed a case for breach of contract with damages before the !ity !ourt of !ebu !ity. Hefendants, in their answer, alleged that the tire blow out was beyond their control, ta&ing into account that the tire that e'ploded was newly bought and was only slightly used at the time it blew up. I''(): @hether or not the tire blow-out is a fortuitous eventA H)*+: +o. $n the case at bar, the cause of the unforeseen and une'pected occurrence was not independent of the human will. %he accident was caused either through the negligence of the driver or because of mechanical defects in the tire. !ommon carriers should teach drivers not to overload their vehicles, not to e'ceed safe and legal speed limits, and to &now the correct measures to ta&e when a tire blows up thus insuring the safety of passengers at all tines. NECESSITO VS. PARAS (10/ PHIL 10# F$%&': On 3anuaryWy -, 1.4<, 2everina :arces and her one year old son, Precillano +ecesito boarded passenger auto truc& bus of the Philippine ,abbit 1us 9ines at Agno, Pangasinan. After the bus entered a wooden bridge, the front wheels swerved to the right. %he driver lost control, and after the wrec&ing the bridge wooden rails, the truc& fell on its right side into a cree& where water was breast deep. %he mother, 2everina was drowned and the son Precillano was in)ured. I''(): @hether or nor the carrier is liable for manufacturing defect of the steering &nuc&leA H)*+: $t is clear that the carrier is not an insurer of the passenger5s safety. 7is liability rest upon negligence, that his failure to e'ercise utmost degree of diligence that the law re8uires. %he passenger has neither choice nor control over the carrier in the selection and use of the e8uipment and the appliances in use by the carrier. 7aving no privity whatever with the manufacturer or vendor of the defective e8uipment, the passenger has no remedy against him, while carrier usually has. $t is but logical, therefore, that the carrier, while not an insurer of the safety of his passengers, should nevertheless be held to answer for flaws of his e8uipment if such cause were at all discoverable. C. DEFENSE9S
C$')' : EASTERN SHIPPING LINES INC. VS. INTERMEDIATE APPELLATE COURT (100 SCRA /6.# F$%&': 2ometime in or prior to 3une 1.77, the 6E2 Asiatica, a vessel operated by petitioner 0astern 2hipping 9ines $nc., loaded at Gobe, 3apan for transportation to 6anila loaded 4,;;; pieces of caloriDed pipes valued at P 4/,;3..;; which was consigned to Philippine 1looming 6ills !o, $nc. and 7 cases of spare parts valued at P. , 3/1.74 consigned to !entral %e'tile 6ills. 1oth sets of goods were inured against marine ris& for their stated value with respondent Hevelopment $nsurance and 2urety !orp. $n the same vessel, containers of garment fabrics were also loaded which was consigned to 6ariveles Apparel !orp worth M</,4-3. %he said cargoes were consigned to +isshin Bire and 6arine $nsurance. Another cargo loaded to the vessel was the surveying instruments consigned to Aman 0nterprises and :eneral 6erchandise and insured against respondent Howa Bire N 6arine $nsurance for M1,3-4.;;. On the way to 6anila, 6E2 Asiatica caught fire and san&. %his resulted to the loss of the ship and its cargoes. %he respective $nsurers paid the corresponding marine insurance values and were thus subrogated to the rights of the insured. %he insurers filed a suit against the petitioner carrier for recovery of the amounts paid to the insured. 7owever, petitioner contends that it is not liable on the ground that the loss was due to an e'traordinary fortuitous event. I''()': 1. @hether the !ivil !ode provisions on !ommon !arriers or the !arriage of the :oods by 2ea Act will govern the case at barA . @hether or not the common carrier has the burden of proof to show its compliance with the diligence re8uired by law, which is e'traordinary diligenceA H)*+: 1. %he 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. %he liability of petitioner is governed primarily by the !ivil !ode however, in all matters not regulated by the !ivil !ode, the !ode of !ommerce and 2pecial 9aws will govern with respect to the rights and obligations of the carrier. %herefore !O:2A is suppletory to the provisions of the !ivil !ode. . C02. %he !ommon !arrier has the burden to prove that it e'ercised e'traordinary diligence re8uired by law. %he !ourt is of the opinion that fire may not be considered a natural disaster or calamity. %his must be so as it almost arises invariably from some act of man or by human means. $t does not fall within the category of an act of :od unless caused by lightning or by other natural disaster or calamity. 7owever, petitioner failed to discharge the burden of proving that it had e'ercised the e'traordinary diligence re8uired by law and therefore cannot escape liability for the loss of the cargo. GAN,ON VS. CA (161 SCRA 6/6# F$%&': :elacio %umambing contracted the services of 6auro 1. :anDon to haul 3;4 tons of scrap iron from 6ariveles, 1ataan, to the port of 6anila on board the lighter 9!% I1atman.I Pursuant to this
agreement, 6auro 1. :anDon sent his lighter I1atmanI to 6ariveles where it doc&ed in 3 feet of water. %hen, :elacio %umambing delivered the scrap iron to Bilomeno +iDa, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under the captainJs supervision. @hen about half of the scrap iron was already loaded, 6ayor 3ose Advincula of 6ariveles, 1ataan, arrived and demanded P4,;;;.;; from :elacio %umambing. %he latter resisted the sha&edown and after a heated argument between them, 6ayor 3ose Advincula drew his gun and fired at :elacio %umambing. %he gunshot was not fatal but %umambing had to be ta&en to a hospital in 1alanga, 1ataan, for treatment. After sometime, the loading of the scrap iron was resumed. 1ut on < Hecember 1.4/, Acting 6ayor 1asilio ,ub, accompanied by 3 policemen, ordered captain Bilomeno +iDa and his crew to dump the scrap iron where the lighter was doc&ed. %he rest was brought to the compound of +A22!O. 9ater on Acting 6ayor ,ub issued a receipt stating that the 6unicipality of 6ariveles had ta&en custody of the scrap iron. %umambing instituted with !B$ 6anila an action against :anDon for damages based on culpa contractual. %he trial court rendered a decision absolving :anDon from liability. On appeal, however, the appellate court reversed and set aside the decision appealed. 7ence, the petition for review on certiorari. H)*+: +ow the petitioner is changing his theory to caso fortuito. 2uch a change of theory on appeal we cannot, however, allow. $n any case, the intervention of the municipal officials was not $n any case, of a character that would render impossible the fulfillment by the carrier of its obligation. %he petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron. 6oreover, there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation as to completely overpower the will of the petitionerJs employees. %he mere difficulty in the fullfilment of the obligation is not considered force ma)eure. @e agree with the private respondent that the scraps could have been properly unloaded at the shore or at the +A22!O compound, so that after the dispute with the local officials concerned was settled, the scraps could then be delivered in accordance with the contract of carriage. D. DURATION OF RESPONSIBILITY OR LIABILITY OF COMMON CARRIERS A. IN CASE OF GOODS START: Brom the time that the goods are delivered to the common carrier. " Article 173', Civil Code. Cia 0aritima vs. (ns!rance Co. of America # TERMINATION: @hen the goods are delivered, actively or constructively, by the carrier to the consigneeEperson who has the right to receive them, or the consigneeEperson who has the right to receive them has been informed of the arrival of the goods and the consignee had reasonable time to remove such. "Article 173' and 1731, Civil Code# %he liability remains in full force and effect even when they are temporarily unloaded or stored in transit unless the shipper or owner made use of the 67?A& 3@ '&3::$?) 75 &6$5'7&( . (Art#cle 7$7, C#v#l Co4e" WHEN RIGHT OF STOPPAGE IN TRANSITU IS EDERCISED: $t 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. (Art#cle /$5, C#v#l Co4e" %he common carrier who holds the goods becomes the warehouseman or ordinary bailee and the contract is terminated when such right is e'ercised.
-e !isites% 1. (npaid seller "Art#cle /2/, C#v#l Co4e#* . :oods must be in transit "Art#cle /$ , C#v#l Co4e#* 3. %he seller must either actually ta&e possession of the goods sold or give notice of his claim to the carrier or other person in possession "Art#cle /$2 ' ), C#v#l Co4e#* <. %he seller must surrender the negotiable document of title, if any, issued by the carrier or bailee "Art#cle /$2'2), C#v#l Co4e#* 4. %he seller must bear the e'penses of delivery of the goods after the e'ercise of the right "Art#cle /$2'2), C#v#l Co4e#* and /. %he buyer is in a state of insolvency or becomes insolvent. B. IN CASE OF PASSENGERS START: %he carrier is bound to e'ercise utmost diligence with respect to passengers the moment the person who purchases the tic&et "or a to&en# from the carrier presents himself at the proper place and in a proper manner to be transported. 2uch person must have bona f#4e 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. (:4a. De Nueca v. 8an#la &a#lroa4 Compan7, CA, G.&. No. $ 7$ , Aanuar7 $5, !(8# $t is the duty of carriers of passengers to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for in)uries suffered by boarding passengers resulting from the sudden starting up or )er&ing of their conveyances (Dan,6a -ransportat#on Co., 3nc. vs. CA, 252 %C&A ' !! )" TERMINATION: (ntil the passenger has, after reaching his destination, safely alighted from the carrier5s conveyance or had a reasonable opportunity to leave the carrier5s premises. " La 8allorca v. CA, 7 %C&A 7$! ' !(()# 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 (3.4.". E. RULES ON PASSENGERIS BAGGAGE 1. *aggage in the c!stody of the passengers or their employee% %hat baggage, while in transit will be considered as necessary deposits. %he common carrier shall be responsible for the baggage as depositaries, provided that notice was given to them or its employees and the passengers too& the necessary precautions which the carrier has advised them relative to the care and vigilance of their baggage. 2. *aggage not in personal c!stody, "!t in that of a Carrier !arrier who has in its custody the baggage of a passenger to be carried li&e any other goods is re8uired to observe e'traordinary diligence. $n case of loss or damage, the carrier is presumed negligent. As to the other baggage, the rules in Article 1..- and ;;; to ;;3 of the !ivil !ode concerning the responsibility of hotel-&eepers shall be applicable. (Art. 7$$- 7$/, C#v#l Co4e"
C$')9'
EUISUMBING VS. CA F$%&': +orberto Puisumbing, 2r. and :unther 9eoffler were among the of ... "PA9Js# Bo&&er JBriendshipJ P$!-43/ plane in its flight of +ovember /, 1./- which left 6actan !ity at about 7=3; in the evening with 6anila for its destination. After the plane had ta&en off, Blorencio O. Fillarin, a 2enior +1$ Agent who was also a passenger of the said plane, noticed a certain JTaldy,J a suspect in the &illing of 3udge FaldeD, seated at the front seat near the door leading to the coc&pit of the plane. A chec& by Fillarin with the passengerJs tic&et in the possession of flight 2tewardess Annie 1ontigao, who was seated at the last seat right row, revealed that JTaldyJ had used the name J!ardente,J one of his aliases &nown to Fillarin. Fillarin also came to &now from the stewardess that JTaldyJ had three companions on board the plane.I Fillarin then scribbled a note addressed to the pilot of the plane re8uesting the latter to contact +1$ duty agents in 6anila for the said agents to as& the Hirector of the +1$ to send about si' +1$ agents to meet the plane because the suspect in the &illing of 3udge FaldeD was on board "0'h. J:J#. %he said note was handed by Fillarin to the stewardess who in turn gave the same to the pilot. After receiving the note, which was about 14 minutes after ta&e off, the pilot of the plane, !apt. 9uis 1onnevie, 3r., came out of the coc&pit and sat beside Fillarin at the rear portion of the plane and e'plained that he could not send the message because it would be heard by all ground aircraft stations. Fillarin, however, told the pilot of the danger of commission of violent acts on board the plane by the notorious JTaldyJ and his three companions. @hile the pilot and Fillarin were tal&ing, JTaldyJ and one of his companions wal&ed to the rear and stood behind them. !apt. 1onnevie then stood up and went bac& to the coc&pit. JTaldyJ and his companions returned to their seats, but after a few minutes they moved bac& to the rear throwing ugly loo&s at Fillarin who, sensing danger, stood up and went bac& to his original seat across the aisle on the second to the last seat near the window. JTaldy and his companion li&ewise went bac& to their respective seats in front. 2oon thereafter an e'change of gunshots ensued between Fillarin and JTaldyJ and the latterJs companions. JTaldyJ announced to the passengers and the pilots in the coc&pit that it was a hold-up and ordered the pilot not to send any 2O2. %he hold-uppers divested passengers of their belongings. I''(): @hether or not Pal is liable for damages against the passengers for loss caused by the robbers on boardA H)*+: $t is illusive to assume that had these precautions been ta&en, the hi)ac&ing or the robbery would not have succeeded. %he mandatory use of the most sophisticated electronic detection devices and magnetometers, the imposition of severe penalties, the development of screening procedures, the compilation of hi)ac&er behavioral profiles, the assignment of s&y marshals, and the weight of outraged world opinion may have minimiDed hi)ac&ings but all these have proved ineffective against truly determined hi)ac&ers. @orld e'perience shows that if a group of armed hi)ac&ers want to ta&e over a plane in flight, they can elude the latest combined government and airline industry measures. And as our own e'perience in Tamboanga !ity illustrates, the use of force to overcome hi)ac&ers, results in the death and in)ury of innocent passengers and crew members. @e are not in the least bit suggesting that the Philippine Airlines should not do everything humanly possible to protect passengers from hi)ac&ersJ acts. @e merely state that where the defendant has faithfully complied
with the re8uirements of government agencies and adhered to the established procedures and precautions of the airline industry at any particular time, its failure to ta&e certain steps that a passenger in hindsight believes should have been ta&en is not the negligence or misconduct which mingles with force ma)eure as an active and cooperative cause. BRITISH AIRWAYS VS. CA (-"0 SCRA /00# F$%&': On April 1/, 1.-., 6ahtani is on his way to 1ombay, $ndia from 6anila. 7is trip was 6anila7ong Gong via PA9 and then 7ong Gong-$ndia via 1ritish Airways. Prior to his departure, he chec&ed in two pieces of luggage containing his clothing and other personal effects, confident that the same would be transferred to his 1A flight. (nfortunately, when he arrived in $ndia, he discovered that his luggage was missing. %he ,%! awarded 6ahtani damages which was affirmed by !A. I''(): @hether or not in a contract of air carriage a declaration by the passenger is needed to recover a greater amountA H)*+: American )urisprudence provides that an air carrier is not liable for the loss of baggage in an amount in e'cess of the limits specified in the tariff which was filed with the proper authorities, such tariff being binding on the passenger regardless of the passenger5s lac& of &nowledge thereof or assent thereto. %his doctrine is recogniDed in this )urisdiction. %he inescapable conclusion that 1A had waived the defense of limited liability when it allowed 6ahtani to testify as to the actual damages he incurred due to misplacement of his luggage, without any ob)ection. $t 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 ob)ect. 7owever, such right is a mere privilege which can be waived. +ecessarily, the ob)ection must be made at the earliest opportunity, in case of silence when there is opportunity to spea& may operate as a waiver of ob)ections.
F.LIABILITY OF SUCCESSIVE AIR CARRIERS CLM ROYAL DUTCH AIRLINES VS CA (60 SCRA -.1# F$%&': 2pouses 6endoDa approached 6r. ,eyes, the branch manager of Philippine %ravel 1ureau, for consultation about a world tour which they were intending to ma&e with their daughter and niece. %hree segments of the trip, the longest, was via G96. ,espondents decided that one of the routes they will ta&e was a 1arcelona-9ourdes route with &nowledge that only one airline, Aer 9ingus, served it. ,eyes made the necessary reservations. %o this, G96 secured seat reservations for the 6endoDa5s and their companions from the carriers which would ferry them throughout their trip, which the e'ception of Aer 9ingus. @hen the 6endoDa5s left the Philippines, they were issued G96 tic&ets for the entire trip. 7owever, their coupon for Aer 9ingus was mar&ed >on re8uest?.
@hen they were in :ermany, they went to the G96 office and obtained a confirmation from Aer 9ingus. At the airport in 1arcelona, the 6endoDas and their companions chec&ed in for their flight to 9ourdes. 7owever, although their daughter and niece were allowed to ta&e the flight, the spouses 6endoDas were off loaded on orders of the Aer 9ingus manager, who brus8uely shoved them aside and shouted at them. 2o the spouses 6endoDas too& a train ride to 9ourdes instead. %hus, they filed a complaint for damages against G96 for breach of contract of carriage. %he trial court decided in favor of the 6endoDas. On appeal, the !A affirmed the decision. 7ence, G96 brings this petition to the 2upreme !ourt. G96 cites Art 3; of the @arsaw !onvention, which states= the passenger or his representatives can ta&e action only against the carrier who performed the transportation during which the accident or delay occurred. Also, G96 avers that the front cover of each tic&et reads= that liability of the carrier for damages shall be limited to occurrences on its own line. I''(): @hether or not G96 is liable for breach of contract of carriageA H)*+: %he applicability of Art. 3; of the @arsaw !onvention cannot be sustained. %he article presupposes the occurrence of delay or accident. @hat is manifest here is that the Aer 9ingus refused to transport the spouses 6endoDas to their planned and contracted destination. As the airline which issued the tic&ets, G96 was chargeable with the duty and responsibility of specifically informing the spouses of the conditions prescribed in their tic&ets or to ascertain that the spouses read them before they accepted their passage tic&ets. %he 2upreme !ourt held that G96 cannot be merely assumed as a tic&et-issuing agent for other airlines and limit its liability to untoward occurrences on its own line. %he court found, that the passage tic&ets provide that the carriage to be performed therein by several successive carriers is to be regarded as a >single operation?. FRANCISCO ORTIGAS 2R. VS. LUFTHANSA GERMAN AIRLINES (G.R. NO. LB-"11. 2UNE .0 1!10# F$%&': Hirect appeals of both parties plaintiff, Brancisco Ortigas, and defendant 9uthansa :erman Airlines, from the decision of the !ourt of Birst $nstance of 6anila 1ranch C, >condemning the defendant to pay plaintiff the amount of P1;;,;;; as moral damages, P3;,;;; as e'emplary or corrective damages, with interest of both sums at the legal rate from the commencement of this suit until fully paid, P ;,;;; as attorney5s fees and the costs? for the former failure to >comply with its obligation to give first accommodation to "the latter# a "Bilipino# passenger holding a first class tic&et,? aggravated by the giving of the space instead to a 1elgian and the improper conduct of its agents in dealing with him during the occasion of such discriminatory violence of its contract of carriage. I''(): @hether 9ufthansa is liable for damagesA H)*+: %he court said that when it comes to contracts of common carriage, inattention and lac& of care on the part of the carrier resulting in the failure of the passenger to be accommodated in class contracted for amounts to bad faith and fraud which entitles the passenger to the award of moral damages in accordance with the ; of the !ivil !ode. 1ut in the instant case, the breach appears to the graver nature, since the preference given to the 1elgian passenger over plaintiff was done willfully and in wanton disregard of plaintiff5s rights and his dignity as a human being and as a Bilipino, who may not be discriminated against with impunity, as found by the court below what worsened the
situation of Ortigas was that 9ufthansa succeeded in &eeping him as its passenger by assuring him that he would be given first class accommodation at !airo, the ne't 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 ta&e nitroglycerine pills to ward off a possible heart attac&, Ortigas hardly had any choice, since his luggage was already in the plane. %o his disappointment, when the plane reached !airo, he was told by 9ufthansa office there that no word at all had been received from ,ome and they had no space for him in first class. @orse, similar false representations were made to him at Hharham and !alcutta. $t was only at 1ang&o& 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 1ang&o& to 7ong Gong. %his Ortigas re)ected, if only to ma&e patent his displeasure and indignation at being so inconsiderately treated in the earlier part of his )ourney. $n the light of all foregoing, there can be no doubt as to the right of Ortigas to damages, both moral and e'emplary. Precedents we have consistently adhere to so dictate. CHINA AIRLINES VS. CHIOC (-. 2ULY -00.# F$%&': Haniel !hio& purchased from !hina Airlines a passenger tic&et for air transportation covering 6anila-%aipei-7ong Gong-6anila. %he said tic&et was e'clusively endorsable to PA9. 1efore !hio& his trip, the trips covered by the tic&et were pre-scheduled and confirmed by the former. @hen petitioner arrived in %aipei, he went to !A9 to confirm his 7ong Gong- 6anila trip on board PA9. %he !A9 office attached a yellow stic&er indicating the status was OG. @hen !hio& reached 7ong Gong, he then went to PA9 office to confirm his flight bac& to 6anila. %he PA9 also confirmed the status of his tic&et and attached a tic&et indicating a status OG. !hio& proceeded to 7ong Gong airport for his trip to 6anila. 7owever, upon reaching the PA9 counter, he was told that the flight to 6anila was cancelled due to typhoon. 7e was informed that all confirmed flight tic&et holders of PA9 were automatically boo&ed for the ne't flight the following day. %he ne't day, !hio& was not able to board the plane because his name did not appear on the computer as passenger for the said flight to 6anila. I''(): @hether or not !A9 is liable for damagesA H)*+: %he contract of air transportation between the petitioner and respondent, with the former endorsing PA9 the segment of !hio&5s )ourney. 2uch contract of carriage has been treated in this )urisprudence as a single operation pursuant to @arsaw !onvention, to which the Philippines is a party. $n the instant case, PA9 as the carrying agent of !A9, the latter cannot evade liability to respondent, !hio&, even though it may have been only a tic&et issuer for 7ong Gong- 6anila sector. III. CODE OF COMMERCE PROVISIONS ON OVERLAND TRANSPORTATION (B?nless ot1er6#se #n4#cate4, reference #s to Co4e of Commerce" ARTS. ./! J .1! CODE OF COMMERCE BILL OF LADING %he written ac&nowledgment of the receipt of goods, and the agreement to transport them to a specific place to a person named or to his order. $t is not indispensable for the creation of a contract of carriage. (Compan#a 8ar#t#ma v. 3nsurance Co. of Nort1 Amer#ca 2 %C&A 2 $ ' !(4)"
T=3B@3*+ CA$6$%&)6 3@ $ B7** 3@ L$+75?: 1. $t is receipt of the goods to be transported* and . $t constitutes a contract of carriage of the goods. F(5%&735': 1. 1est evidence of the e'istence of the contract of carriage of cargo (Art. $/$ Co4e of Commerce"* . !ommercial document whereby, if negotiable, ownership may be transferred by negotiation* and 3. ,eceipt of cargo. L747&$&735' $' &3 &A) C$667)6'I L7$;7*7&<: A stipulation in the 1ill of 9ading limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight is valid. 7owever, the carrier cannot limit its liability for in)ury to, or loss of, goods shipped where such in)ury or loss was caused by its own negligence. o %he surrender of the original bill of lading is not a condition precedent for a common carrier to be discharged of its contractual obligation. $f surrender of the original bill of lading is not possible, ac&nowledgment of the delivery by signing the delivery receipt suffices. (&0 v. Lorenzo %1#pp#n,, 2ebruar7 7, 255/"
C75+' 3@ B7** 3@ L$+75?: 1. 2n *oard - issued when the goods have been actually placed aboard the ship with very reasonable e'pectation that the shipment is as good as on its way. . -eceived - one in which it is stated that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped. 3. $egotia"le - one in which it is stated that the goods referred to therein will be delivered to the bearer or to the order of any person named therein. <. $on&$egotia"le - One in which it is stated that the goods referred to therein will be delivered to a specified person. 4. Clean C One which does not indicate any defect in the goods. /. 3o!l K One which contains a notation thereon indicating that the goods covered by it are in bad condition. 7. 4pent K One which covers goods that already have been delivered by the carrier without a surrender of a signed copy of the bill. -. Thro!gh K One issued by the carrier who is obliged to use the facilities of other carriers as well as his own facilities for the purpose of transporting the goods from the city of the seller to the city of the buyer, which bill of lading is honored by the second and other interested carriers who do not issue their own bills. .. C!stody K One wherein the goods are already received by the carrier but the vessel indicated therein has not yet arrived in the port. 1;. #ort K One which is issued by the carrier to whom the goods have been delivered, and the vessel indicated in the bill of lading by which the goods are to be shipped is already in the port where the goods are held for shipment. O5BB3$6+ B7** 3@ L$+75? 8. R)%)78)+ @36 SA7:4)5& B7** 3@ L$+75?: An >O5 B3$6+ B7** 3@ L$+75?? is one in which it is stated that the goods have been received on
board the vessel which is to carry the goods. An on board bill of lading is issued when the goods have been actually placed aboard the ship with every reasonable e'pectation that the shipment is as good as on its way. $t is, therefore, understandable that a party to a maritime contract would re8uire an on board bill of lading because of its apparent certainty of shipping as well as the seaworthiness of the vessel which is to carry the goods. (8a,ellan 8f,.,etc. v. Court of Appeals, 25 %C&A (7' !! )" A >R)%)78)+ @36 SA7:4)5& B7** 3@ L$+75? ? is one which it is stated that the goods have been received for shipment without specifying the vessel by which the goods are to be shipped. ,eceived for shipment bills of lading are issued wherever conditions are not normal and there is insufficiency of shipping space. (8a,ellan 8f,., etc. v. Court of Appeals,25 %C&A (" OBLIGATIONS OF THE CARRIER A. D(&< &3 A%%):& &A) G33+' )eneral -!le% A common carrier cannot ordinarily refuse to carry a particular class of goods. .,ception% Bor some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary. (2#s1er vs. Dan,co %teams1#p Co. $ 01#l ' ! /)". I5'&$5%)' =A)5 &A) %$667)6 4$< 8$*7+*< 6)@(') &3 $%%):& &A) ?33+': 1. :oods sought to be transported are dangerous ob)ects, or substances including dynamite and other e'plosives* . :oods are unfit for transportation* 3. Acceptance would result in overloading* <. !ontrabands or illegal goods* 4. :oods are in)urious to health* /. :oods will be e'posed to untoward danger li&e flood, capture by enemies and the li&e* 7. :oods li&e livestoc& will be e'posed to disease* -. 2tri&e* .. Bailure to tender goods on time. $n case of carriage by railway, the carrier is e'empted from liability if carriage is insisted upon by the shipper, provided its ob)ections are stated in the bill of lading. o 7owever, when a common carrier accepts cargo for shipment for valuable consideration, it ta&es the ris& of delivering it in good condition as when it was loaded. (0AL vs. CA, 22( %C&A 42$ "
o
*. +!ty to deliver the goods +ot only to transport the goods safely but to deliver the same to the person indicated in the bill of lading. %he goods should be delivered to the consignee or any other person to whom the bill of lading was validly transferred or negotiated. TIME OF DELIVERY S&7:(*$&)+ 75 C35&6$%&9B7** 3@ L$+75? !arrier is bound to fulfill the contract and is liable for any delay* no matter from what cause it may have arisen.
N3 '&7:(*$&735
1. .
@ithin a reasonable time. !arrier is bound to forward them in the 1st shipment of the same or similar goods which he may ma&e to the point of delivery. (Art. 351 Code of Commerce)
.ffects of 4ela7E 1. 6erely suspends and generally does not terminate the contract of carriage. . !arrier remains duty bound to e'ercise e'traordinary diligence. 3. +atural disaster shall not free the carrier from responsibility (Art.17/6, Civil Code) <. $f delay is without )ust cause, the contract limiting the common carrier5s liability cannot be availed of in case of loss or deterioration of the goods (Art.17/7, Civil Code) C. D(&< &3 )F)6%7') )F&6$36+75$6< +7*7?)5%) o $n8uiry may be made as to the nature of passengers5 baggage, but beyond this constitutional boundaries are already in danger of being transgressed . (Nocum vs. La,una -a7abas +us Co., $5 %C&A (8#Rthis doctrine is not applicable to aircrafts because of 2ection - of Anti7i)ac&ing 9aw (-A '235)7 RIGHT OF CONSIGNEE TO ABANDON GOODS I5'&$5%)': 1. Partial non-delivery, where the goods are useless without the others (Art. $($, Co4e of Commerce"* . :oods are rendered useless for sale or consumption for the purposes for which they are properly destined (Art. $(/, Co4e of Commerce"* and 3. $n case of delay through the fault of the carrier (Art. $7 , Co4e of Commerce". NOTICE OF DAMAGE R)K(7'7&)' @36 A::*7%$;7*7&<: 1. HomesticEinter-islandEcoastwise transportation . 9andEwaterEair transportation 3. !arriage of goods <. :oods shipped are damaged (Art. $((, Co4e of Commerce" R(*)': a. Patent damage= shipper must file a claim against the carrier immediately upon delivery "it may be oral or written# b. 9atent damage= shipper should file a claim against the carrier within < hours from delivery. o %hese rules do not apply to misdelivery of goods. (&ol4an vs. L#m 0onzo" o %he filing of notice of claim is a condition precedent for recovery. P(6:3') 3@ N3&7%): %o inform the carrier that the shipment has been damaged, and it is charged with liability therefore, and to give it an opportunity to ma&e an investigation and fi' responsibility while the matter is fresh. P6)'%67:&78) P)673+ +ot provided by Article 3//. %hus, in such absence, !ivil !ode rules on prescription apply. $f despite the notice of claim, the carrier refuses to pay, action must be filed in court. 1. $f no bill of lading was issued= within 6 <)$6' . $f bill of lading was issued= within 10 <)$6'. COMBINED CARRIER AGREEMENT )eneral -!le% $n case of a contract of transportation of several legs, each carrier is responsible for its particular leg in the contract. (Art. $7$, Co4e of Commerce"
.,ception% A combined carrier agreement where a carrier ma&es itself liable assuming the obligations and ac8uiring as well the rights and causes of action of those which preceded it. SECTION .(6# (COGSA# Applica"ility 1. HomesticEinter1. $nternationalEoverseasEf islandEcoastwise oreign "from foreign country to transportation. Philippines#. . 9and, water, air transportation. sub)ect to the rule on 3. !arriage of goods. 0aramount Clause <. 6aritime transportation. . @aterEmaritime transportation 3. !arriage of goods $otice of damage 1. Biling of notice of claim for the 1. Biling of a notice of claim for the damages is a condition damages is not a condition precedent precedent . <-hour period for claiming . 3-day period for claiming latent latent damage. damage. #rescriptive period +one provided* !ivil !ode One year from the date of delivery applies. "delivered but damaged goods#, or date when the vessel left port or from the date of delivery to the arrastre "non-delivery or loss#. MANNER OF RECOVERY FROM DAMAGES OF GOODS I5&)6BI'*$5+ K if goods arrived in damaged condition= 1. $f damage is apparent, the shipper must file a claim immediately* or . $f damages are not apparent, he should file a claim within twenty-four hours from delivery. %he filing of claim under either "a# or "b# is a condition precedent for recovery. $f the claim is filed, but the carrier refuses to pay, enforce carrier5s liability in court by filing a case= 1. @ithin si' "/# years, if no bill of lading has been issued* or . @ithin ten "1# years, if a bill of lading has been issued. ARTICLE .66 (COC#
@ritten demand within twenty-four " <# hours is necessary only when the pac&age does not show e'terior signs of damage but when there are e'terior signs of damage, a verbal claim made immediately is sufficient compliance with law. (8apaso Gol4f#el4s v. Compan#a 8ar#t#ma 'CA), 2 .G $57"
Payment of the transportation charge precludes the presentation of any claim against the carrier.
O8)6')$' K where goods arrived in a damaged condition from a foreign port to a Philippine port of entry= a. (pon discharge of goods, if the damage is apparent, claim should be filed immediately* or b. $f the damage is not apparent, claim should be filed within three days from delivery.
%he filing of notice of claim is not a condition precedent for recovery. 7owever, an action must
be filed within one year from discharge. $f there is no delivery action should be filed from the day of the goods5 supposed delivery. @here there was delivery to the wrong person, the prescriptive period is ten years because there is a violation of contract, and the !arriage of :oods by 2ea Act "!O:2A# does not apply to cases of misdelivery. D3%&675) 3@ C355)%&75? C$667)6' %he original carrier that entered into the contract of carriage shall be liable for damages caused by its connection carrier. (Art. $7$ Co4e of Commerce" IV. ADMIRALTY AND MARITIME COMMERCE ARTS. 01. B "6! CODE OF COMMERCE CA$6$%&)67'&7%' 3@ M$67&74) T6$5'$%&735: 1. REAL - similar to transactions over real property with respect to effectively against third persons which is done through registration as shown by the limitation of the liability of the agents to the actual value of the vessel and the freight money* and the right to retain the cargo and embargo and detention of the vessel* and . HYPOTHECARY - the liability of the owner is limited to the value of the vessel itself (+octrine of 8imited 8ia"ility). o %he real and hypothecary nature of maritime law simply means that the liability of the carrier in connection with losses related to maritime contracts is confined to the vessel, which stands as the guaranty for their settlement. (Abo#t#z %1#pp#n, Corp. vs. General Acc#4ent 2#re an4 L#fe Assurance Corp. 2 7 %C&A $/!" PREFERENCE OF CREDITS 6ortgage of a vessel properly registered becomes preferred mortgage lien which shall have priority over all claims against the vessel in an e'tra)udicial foreclosure for= 1. !redit in favor of the public treasury* . 3udicial costs of the proceedings* 3. Pilotage and tonnage charges and other sea and port charges* <. 2alaries of depositaries &eepers of the vessel* 4. !aptain and crews5 wages* /. :eneral average* 7. 2alvage, including contract salvage* -. 6aritime liens arising prior in time to the recording of the preferred mortgage* .. Hamages arising out of tort* and 1;. Preferred mortgage registered prior in time. MERCHANT VESSEL Fessel engaged in maritime commerce, whether foreign or otherwise. !onstitutes property which may be ac8uired and transferred by any of the means recogniDed by law. %hey shall continue to be considered as personal property. (Arts. 573, 515 Code of Commerce) o 2usceptible to mar#t#me l#ens such as for the repair, e8uipping and provisioning of the vessel in the preparation of a voyage, as well as mortgage liabilities, in satisfaction of which a vessel may be validly arrested and sold. (%1#p 8ort,a,e Decree of !78"
DOCTRINE OF LIMITED LIABILITY (9:#2T9.CA-: -;8.) )eneral -!le% %he liability of shipowner and ship agent is limited to the amount of interest in said vessel such that where vessel is entirely lost, the obligation is e'tinguished. (Luzon %teve4or#n, v. <scano, /( %C&A (!' !87)". %he interest e'tends to= 1. %he vessel itself* . 08uipments* 3. Breightage* and <. $nsurance proceeds. (C1ua v. 3AC, (( %C&A 8$' !88)" .,ceptions% WA)5 53& $::*7%$;*)L 1. %he voyage is not maritime, but only in river, bay or gulf. . $n case of e'pense for e8uipping, repairing or provisioning of the vessel. 3. $n case the vessel is not common but a special carrier. <. $n case the vessel would totally sin& or get lost by reason of the ship owner or ship agents fault. 4. @hen the in)ury to or death of a passenger is due either to the fault of the ship owner and the captain. /. @hen the vessel is insured "to the e'tent of the insurance proceeds#* or 7. $n wor&men5s compensation claims. (Dan,co v. Laserna 7$ 01#l. $$5" o @hen shipowner was e8ually negligent, it cannot escape liability by virtue of the limited liability rule (Central %1#pp#n, Co. vs. 3nsurance Co. of N. Amer#ca, G.&. No. /57/ . %eptember 25, 2554" %he limited liability doctrine applies not only to the goods but also in all cases li&e death or in)ury to passengers. (;e#rs of Amparo Delos %antos vs. CA, 8( %C&A (4!"
$f the vessel is not entirely lost, the hypothecary nature will not apply, unless the shipowner or the ship agent abandons the vessel.
WA)5 A::*7%$;*): 1. !ivil 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. 517, Code of Commerce) . !ivil liability arising from collisions. (Art. 137, Code of Commerce) 3. (npaid wages of the captain and the crew if the vessel and its cargo are totally lost by reason of capture or shipwrec&. (Art. '/3, Code of Commerce) R(*)' 35 P675%7:*) 3@ L747&)+ L7$;7*7&< 3@ &A) SA7:3=5)6 $5+ SA7: A?)5& o @here the shipowner or ship agent validly e'ercised his right of abandonment of >the vessel with all her e8uipment and the freightage earned during the voyage,? the abandonment amounts to an offer to the in)ured party of the value of the vessel, of her e8uipment, and the freight money earned during the voyage. (01#l. %1#pp#n, Co. v. Garc#a-:er,ara !( 01#l 25 " o $n conse8uence of the limited liability rule, the shipowner5s property, other than his vessel and freightage earned during the voyage, cannot be made to answer for his liability arising from the collision with other vessels. (01#l. %1#pp#n, Co. v. Garc#a-:er,ara, G.&. No. L- (55, Aune , !5(" %his is not to say, however, that the limited liability rule is without e'ceptions, namely= (1# where the in)ury or death to a passenger is due either to the fault of the shipowner, or to the concurring
negligence of the shipowner and the captain. (01#l. Am. Gen. 3nsurance Co., 3nc. v. CA, 27$ %C&A (4!,27 ' !!7)"< (-# where the vessel is insured* and (.# in wor&men5s compensation claims. (8onarc1 3nsurance Co., 3nc. v. CA, $$$ %C&A 7 '2555)" o !ontrary to the theory that the limited liability rule has been rendered obsolete by the advances in modern technology, which considerably lessen the ris&s involved in maritime trade, this !ourt continues to apply the said rule in appropriate cases. (8onarc1 3nsurance Co., 3nc. v. CA, $$$ %C&A 7 '2555)"
ABANDONMENT Abandonment of the vessel is necessary to limit the liability of the shipowner. %he only instance were abandonment is dispensed with is when the vessel is entirely lost (Luzon %teve4or#n, vs. CA /( %C&A (!' !87)". S$&7'@$%&735 3@ C*$74' U5+)6 &A) L747&)+ L7$;7*7&< 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* . +o claimant should be given preference over the others. 0'ecution of )udgment in earlier completed cases, even those already final and e'ecutory, must be stayed pending completion of all cases caused by the sub)ect sin&ing. (Abo#t#z %1#pp#n, v. Gen. Acc#4ent 2#re an4 L#fe 3nsurance, 2 7 %C&A $/! ' !!$)" A;$5+354)5&L WA3 M$< EF)6%7') 1. 2hipowner . 2hip agent

7owever, in cases of co-ownership of a vessel, its part owner may e'empt himself from liability by the abandonment. (Art. 5=6, Code of Commerce) A charterer cannot ma&e an abandonment as the charterer cannot be regarded as being in the place of the owner or agents in matters relating to the responsibility pertaining to ownership and possession of the vessel. (Duen, %1en, <Fc1an,e v. ?rrut#a, 2 01#l. 747' !5!)"
I5'&$5%)' =A)5 &A) SA7:3=5)6 36 A?)5& M$< EF)6%7') &A) R7?A& &3 A;$5+35 V)'')*: 1. Bor civil liability to 3 rd persons arising from the conduct of the captain in the vigilance over the goods which the vessel carried. . Bor the proportionate contribution of co-owners of the vessel to a common fund for the acts of the captain. 3. Bor civil liability incurred by the shipowner in case of collision. <. $n case of lea&age of at least X of the contents of a cargo containing li8uids* and 4. $n case of constructive loss of the vessel. R)K(7'7&)' @36 A;$5+354)5& 75 M$67&74) C344)6%) 1. Actual relin8uishment of claim of ownership* . !onstructive total loss "loss, in)ury or e'penses suffered should be more then X of the value of the thing abandoned#* 3. Abandonment must be neither partial nor conditional* <. Abandonment done within reasonable time after receipt of reliable information of constructive total loss* 4. 0'plicit notice to the insurer, whether orally or in writing, specifying the cause of abandonment*
/. $f notice done orally, a written notice must be given within 7 days from such oral notice.
P)6'35' P$6&7%7:$&75? I5 M$67&74) C344)6%) 1. 2hipowners and ship agents . !aptains and masters of the vessel 3. Officers and crew of the vessel <. 2upercargoes 4. 0ngineer SHIPOWNERS AND SHIP AGENTS SA7:3=5)6 (proprietario) - Person who has possession, control and management of the vessel and the conse8uent right to direct her navigation and receive freight earned and paid, while his possession continues. SA7: A?)5& ($aviero) & Person entrusted with provisioning and representing the vessel in the port in which it may be found* also includes the shipowner. (C1ua ;e@ Don, vs. 3AC, (( %C&A 8$"
+ot a mere agent under civil law* he is solidarily liable with the ship owner.
P3=)6' $5+ @(5%&735' 3@ $ SA7: A?)5&: 1. !apacity to trade* . Hischarge duties of the captain, sub)ect to Art./;.* 3. !ontract in the name of the owners with respect to repairs, details of e8uipment, armament, provisions of food and fuel, and freight of the vessel, and all that relate to the re8uirements of navigation* <. Order a new voyage, ma&e a new charter or insure the vessel after obtaining authoriDation from the shipowner or if granted in certificate of appointment. C787* L7$;7*7&7)' 3@ &A) SA7:3=5)6 A5+ SA7: A?)5& 1. All contracts of the captain, whether authoriDed or not, to repair, e8uip and provision the vessel* (Art. /8(, Co4e of Commerce" . 9oss and damage to the goods loaded on the vessel without pre)udice to their right to free themselves from liability by abandoning the vessel to the creditors. (Art. /87, Co4e of Commerce" 3. $ndemnities in favor of third persons arising from the conduct of the captain in the care of the goods loaded in the vessel* <. Hamages suffered by a third person for tort committed by the captain* and 4. Hamages in case of collision due to fault or negligence or want of s&ill of the captain. D(&< 3@ SA7: A?)5& &3 D7'%A$6?) &A) C$:&$75 $5+ M)4;)6' 3@ &A) C6)= $f the seamen contract is not for a definite period or voyage, he may discharge them at his discretion. (Art. (5$, Co4e of Commerce" $f for a definite period, he may not discharge them until after the fulfillment of their contracts, e'cept on the following grounds= - $nsubordination in serious matters* - ,obbery* - %heft* - 7abitual drun&enness* - Hamage caused to the vessel or to its cargo through malice or manifest or proven
negligence. (Art. (5/, Co4e of Commerce" CAPTAINS AND MASTERS %hey are the chiefs or commanders of ships. %he terms have the same meaning, but are particularly used in accordance with the siDe of the vessel governed and the scope of transportation, i.e., large and overseas, and small and coastwise, respectively. N$&(6) 3@ P3'7&735 3@ C$:&$75' $5+ M$'&)6' (.BF3*+ %A$6$%&)6#: 1. :eneral agent of the shipowner* . %echnical director of the vessel* 3. ,epresentative of the government of the country under whose flag he navigates. E($*7@7%$&735' 3@ C$:&$75 $5+ M$'&)6': 1. Bilipino citiDen* . 9egal capacity to contract* 3. 6ust have passed the re8uired physical and mental e'aminations re8uired for licensing him as such. (Art. (5!, Co4e of Commerce" I5A)6)5& :3=)6' 3@ C$:&$75': 1. Appoint crew in the absence of ship agent* . !ommand the crew and direct the vessel to its port of destination* 3. $mpose correctional punishment on those who, while on board vessel, fail to comply with his orders or are wanting in discipline* <. 6a&e contracts for the charter of vessel in the absence of ship agent. 4. 2upply, e8uip, and provision the vessel* and /. Order repair of vessel to enable it to continue its voyage. (Art. ( 5, Co4e of Commerce" D(&7)' 3@ C$:&$75': 1. 1ring on board the proper certificate and documents and a copy of the !ode of !ommerce* . Geep a 9og 1oo&, Accounting 1oo& and Breight 1oo&* 3. 0'amine the ship before the voyage* <. 2tay on board during the loading and unloading of the cargo* 4. 1e on dec& while leaving or entering the port* /. Protest arrivals under stress and in case of shipwrec&* 7. Bollow instructions of and render an accounting to the ship agent* -. 9eave the vessel last in case of wrec&* .. 7old in custody properties left by deceased passengers and crew members* 1;. !omply with the re8uirements of customs, health, etc. at the port of arrival* 11. Observe rules to avoid collision* 1 . Hemand a pilot while entering or leaving a port. (Art. ( 2, Co4e of Commerce" N3 *7$;7*7&< @36 &A) @3**3=75?: 1. Hamages caused to the vessel or to the cargo by force ma)eure* . Obligations contracted for the repair, e8uipment, and provisioning of the vessel unless he has e'pressly bound himself personally or has signed a bill of e'change or promissory note in his name. (Art. (25, Co4e of Commerce"
S3*7+$6< L7$;7*7&7)' 3@ &A) SA7: A?)5&9SA7:3=5)6 @36 A%&' D35) ;< &A) C$:&$75 &3=$6+' P$'')5?)6' $5+ C$6?3)' 1. Hamages to vessel and to cargo due to lac& of s&ill and negligence* . %hefts and robberies of the crew* 3. 9osses and fines for violation of laws* <. Hamages due to mutinies* 4. Hamages due to misuse of power* /. Bor deviations* 7. Bor arrivals under stress* -. Hamages due to non-observance of marine regulations. (Art. ( 8, CoC" OFFICERS AND CREW 1. 2ailing 6ateEBirst 6ate . 2econd 6ate 3. 0ngineers <. !rew N3 *7$;7*7&< (5+)6 &A) @3**3=75? %76%(4'&$5%)': 1. $f, before beginning voyage, captain attempts to change it, or a naval war with the power to which the vessel was destined occurs* . $f a disease brea&s out and be officially declared an epidemic in the port of destination* 3. $f the vessel should change owner or captain. (Art. (47, Co4e of Commerce" S$7*75? M$&)9F76'& M$&): 2econd chief of the vessel who ta&es the place of the captain in case of absence, sic&ness, or death and shall assume all of his duties, powers and responsibilities. (Art. (27, Co4e of Commerce" S)%35+ M$&): %a&es command of the vessel in case of the inability or dis8ualification of the captain and the sailing mate, assuming in such case their powers and responsibilities. "%hird in command# E5?75))6': Officers of the vessel but have no authority e'cept in matters referring to the motor apparatus. @hen two or more are hired, one of them shall be the chief engineer. C6)=: %he aggregate of seamen who man a ship, or the ship5s company. 7ired by the ship agent, where he is present and in his absence, the captain hires them, preferring Bilipinos, and in their absence, he may ta&e in foreigners, but not e'ceeding 1E4 of the crew. (Art. ($4, Co4e of Commerce" 2('& C$(')' @36 &A) D7'%A$6?) 3@ S)$4$5 WA7*) C35&6$%& S(;'7'&' 1. Perpetration of a crime* . ,epeated insubordination, want of discipline* 3. ,epeated incapacity and negligence* <. 7abitual drun&enness* 4. Physical incapacity* /. Hesertion. (Art. ($7, Co4e of Commerce" R(*)' 75 C$') 3@ D)$&A 3@ $ S)$4$5 %he seaman5s heirs are entitled to payment as follows= 1. I@ D)$&A I' N$&(6$*: a. compensation up to time of death if engaged on wage* b. if by voyage - half of amount if death occurs on voyage out* and full, if on voyage in*
c. if by shares - none, if before departure* full, if after departure* . I@ D)$&A 7' D() &3 D)@)5') 3@ V)'')* - full payment* 3. I@ C$:&(6)+ 75 D)@)5') 3@ V)'')* - full payment* <. I@ C$:&(6)+ D() &3 C$6)*)''5)'' - wages up to the date of the capture. (Art. (4/, Co4e of Commerce" COMPLEMENT OF THE VESSEL All persons on board, from the captain to the cabin boy, necessary for the management, maneuvers, and service, thus including the crew, the sailing mates, engineers, sto&ers and other employees on board not having specific designations. Hoes not include the passengers or the persons whom the vessel is transporting. SUPERCARGOES Persons who discharge administrative duties assigned to them by ship agent or shippers, &eeping an account and record of transaction as re8uired in the accounting boo& of the captain. (Art. '/=, Code of Commerce) PILOT A person duly 8ualified, and licensed, to conduct a vessel into or out of ports, or in certain waters.

%he term generally connotes a person ta&en on board at a particular place for the purpose of conducting a ship through a river, road or channel, or from a port. 6aster pro 1ac v#ce "for the time being# in the command and navigation of the ship.
L7$;7*7&< 3@ P7*3& )eneral -!le% On compulsory pilotage grounds, the 7arbor Pilot is responsible for damage to a vessel or to life or property due to his negligence. .,ceptions% 1. Accident caused by force ma)eure or natural calamity provided the pilot e'ercised prudence and e'tra diligence to prevent or minimiDe damages. . !ountermand or overrule by the master of the vessel in which case the registered owner of the vessel is liable. (%ec. , Art.333 01#l#pp#ne 0orts Aut1or#t7 A4m#n#strat#ve .r4er 5$-8/" DESERTION An act by which a seaman deserts and abandons a ship or vessel before the e'piration of his term of duty without leave and without intention to return. (%#n,a %1#p 8ana,ement 01#ls. v. NL&C 27( %C&A 25 ' !!7)" CAUSES OF REVOCATION OF VOYAGE 1. @ar or interdiction of commerce* . 1loc&ade* 3. Prohibition to receive cargo at destination* <. 0mbargo* 4. $nability of the vessel to navigate. (Art. (45, Co4e of Commerce" T)64': 1. I5&)6+7%&735 3@ C344)6%) K A governmental prohibition of commercial intercourse intended to bring about an entire cessation for the time being of all trade whatever. . B*3%H$+) K 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. E4;$6?3 K A proclamation or order of a state, usually issued in time of war or threatened hostilities, prohibiting the departure of ships or goods from some or all the ports of such state until further order. V)'')*' LOPE, VS. DURUELO 0- PHIL --! F$%&': On Bebruary 1;, 1. 7, plaintiff Augusto 9opeD was desirous of embar&ing upon the interisland steamer 2an 3acinto in order to go to !ebu, the plaintiff embar&ed at the landing in the motorboat 3ison which was engaged in conveying passengers and luggage bac& and forth from the landing to the boats at anchor. As the motorboat approached 2an 3acinto in a perfectly 8uiet 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 struc&ed the motorboat and san& it at once. As it san&, the plaintiff was thrown into the water against the propeller, and the revolving blades inflicted various in)uries upon him. %he plaintiff was hospitaliDed. 7e filed a complaint see&ing to recover damages from the defendant. %he 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 -34 of the !ode of !ommerce. I''(): @hether the motorboat 3ison is a vessel provided for by Article -34 of the !ode of !ommerceA H)*+: %he word vessel as used in the third section of tile $F, 1oo& $$$ of the !ode of !ommerce, dealing with collisions, does not include all ships, craft or floating structures of any &ind without limitation. %he said section does not apply to minor craft engaged in a river and bay traffic.%herefore, a passenger on boat li&e the 3ison, is not re8uired to ma&e protest as a condition precedent to his right of action for the in)ury suffered by him in the collision described in the complaint.Article -34 of the !ode of !ommerce does not apply. 1. N$&(6) $5+ %A$6$%&)67'&7% 3@ M$67&74) &6$5'$%&735' A6&'. 0"0 0"1 RUBISO VS. RIVERA (-1PHIL1-# :.,. +o. 9- 11<;7 October 3;, 1.17 F$%&': %he counsel of plaintiff brought a suit alleging that his clients were the owners of the pilot boat named Falentine, which has been in bad condition and on the date of the complaint, was stranded in the place called %ingly, of the municipality of 1attings. %he defendant ,ivera too& charge or too& possession of the said boat without the &nowledge or consent of the plaintiff and refused to deliver it to them, under the claim that he was the owner thereof. %he refusal on the part of the defendant has caused the plaintiff damages because they were unable to derive profit from the voyages for which the said pilot boat was customarily used. %he defendant, on the other hand, alleged that they purchased the sub)ect pilot boat. %he plaintiff alleged that the sale on behalf of the defendant ,ivera was prior to that made at public auction to ,ubio, but the registration of this latter sale was prior to the sale made to the defendant. I''(): @hether or not, the plaintiff still has the better right over the sub)ect vesselA H)*+: (nder the !ode of !ommerce, Art 473 provides=
6erchant vessels constitute property that may be ac8uired and transferred by any of the means recogniDed by law. %he ac8uisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if not recorded in the commercial registry. %he re8uisite of registration in the registry of the purchase of a vessel is necessary and indispensable in order that the purchaser5s rights may be maintained against a claim filed by third person. $t is undeniable that ,ivera5s right cannot prevail over those ac8uired by ,ubiso in the ownership of the pilot boat, thought the latter5s ac8uisition of the vessel at public auction was subse8uent to its purchase by the defendant, ,ivera. LU,ON STEVEDORING CORPORATION VS. COURT OF APPEALS (106 SCRA 16!# F$%&': A maritime collision occurred between the tan&er !AF$%0 owned by 92!O and 6F Bernando 0scano "a passenger ship# owned by 0scano, as a result the passenger ship sun&. An action in admiralty was filed by 0scano against 9uDon. %he trial court held that 92!O !avite was solely to blame for the collision and held that 9uDon5s claim that its liability should be limited under Article -37 of the !ode of !ommerce has not been established. %he !ourt of Appeals affirmed the trial court. %he 2! also affirmed the !A. (pon two motions for reconsideration, the 2upreme !ourt gave course to the petition. I''(): @hether or not in order to claim limited liability under Article -37 of the !ode of !ommerce, it is necessary that the owner abandon the vessel H)*+: Ces, 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. 7owever, if the in)ury was due to the ship owner5s fault, the ship owner may not avail of his right to avail of limited liability by abandoning the vessel. %he real nature of the liability of the ship owner or agent is embodied in the !ode of !ommerce. Articles 4-7, 4.; and -37 are intended to limit the liability of the ship owner, provided that the owner or agent abandons the vessel. Although Article -37 does not specifically provide that in case of collision there should be abandonment, to en)oy such limited liability, said article is a mere amplification of the provisions of Articles 4-7 and 4.; which ma&es it a mere superfluity. %he e'ception to this rule in Article -37 is when the vessel is totally lost in which case there is no vessel to abandon, thus abandonment is not re8uired. 1ecause of such loss, the liability of the owner or agent is e'tinguished. 7owever, they are still personally liable for claims under the @or&men5s !ompensation Act and for repairs on the vessel prior to its loss. $n case of illegal or tortious acts of the captain, the liability of the owner and agent is subsidiary. $n such cases, the owner or agent may avail of Article -37 by abandoning the vessel. 1ut if the in)ury is caused by the owner5s fault as where he engages the services of an ine'perienced captain or engineer, he cannot avail of the provisions of Article -37 by abandoning the vessel. 7e is personally liable for such damages. $n this case, the !ourt held that the petitioner is a t fault and since he did not abandon the vessel, he cannot invo&e the benefit of Article -37 to limit his liability to the value of the vessel, all appurtenances and freightage earned during the voyage.
YANGCO VS. LASERNA (1. PHIL ..0# F$%&': On the afternoon of 6ay /, 1. 7, the steamer 22 +egros left the port of ,omblon on its return trip to 6anila. %yphoon signal no. was then up and in fact, the passengers duly advised the captain before sailing. %he boat was overloaded. After hours of sailing, the boat encountered strong winds and rough seas between the islands of 1anton and 2imara. @hile in the act of maneuvering, the vessel was caught sidewise by a big wave which caused it to capsiDe and sin&. 6any of the passengers died on the mishap. !ivil actions were instituted in the !B$ of !apiD, the petitioner sought to abandon the vessel to the plaintiffs in three cases. I''(): @hether the shipowner or agent is liable for damages for the conse8uent death of its passengers notwithstanding the total loss of the vesselA H)*+: %he petitioner is absolved from all complaints. (nder Article 4-7 K >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* 1(% he may e'empt himself therefrom by abandoning the vessel with all her e8uipment and the freight he may have earned during the voyage.? @hether the abandonment of the vessel sought by the petitioner in the case was in accordance with the law or not, is immaterial. %he vessel having totally perished, any act of abandonment would be idle ceremony. >+O F02209, +O 9$A1$9$%C.? MANILA STEAMSHIP CO. INC. VS. INSA ABDULHAMAN (100 PHIL .-# F$%&': $nsa Abdulhaman together with his wife and five children boarded 6E9 !onsuelo F in Tamboanga !ity. %he said ship was bound for 2io&on under the command of Baustino 6acrohon. On that same night, 6E2 1owline Gnot was navigating from 6ari)oboc towards Tamboanga. Around .=3; to 1;=;; in the evening of 6ay <, 1.<-, while some of the passengers of the 6E9 !onsuelo F were then sleeping and some lying down awa&e, a shoc&ing collision suddenly occurred. %he ship that collided was later on identified as the 6EF 1owline Gnot. 6E9 !onsuelo F capsiDed that resulted to the death of . passengers and the loss of the cargoes on board. %he !ourt held the owners of both vessels solidarily liable to plaintiff for damages caused to the latter under Article - 7 of the !ode of !ommerce but e'empted defendant 9im 7ong %o from liability due to the sin&ing and total loss of his vessel. @hile 6anila steamship, owner of the 1owline Gnot was ordered to pay all of plaintiff5s damages. Petitioner 6anila 2teamship !o. pleads that it is e'empt from any liability under Article 1.;3 of the !ivil !ode because it had e'ercised the diligence of a good father of a family in the selection of its employees, particularly the officer in command of the 6E2 1owline Gnot. I''(): @hether or not petitioner 6anila 2teamship !o. is e'empt from any liability under Art. 1.;3 of the !ivil !odeA H)*+= +O. Petitioner is not e'empted from liabilities. @hile it is true that plaintiff5s action against petitioner is based on a tort or 8uasi delict, the tort in 8uestion is not a civil tort under the !ivil !ode but a maritime tort resulting in a collision at sea, governed by Articles - /-.3. of the !ode of
!ommerce. (nder Art. - 7 of the !ode of !ommerce, in case of collision between two vessels imputable to both of them, each vessel shall suffer her own damage and both shall be solidarily liable for the damages occasioned to their cargoes. %he shipowner is directly and primarily responsible in tort resulting in a collision at sea, and it may not escape liability on the ground that e'ercised due diligence in the selection and supervision of the vessel5s officers and crew. VASEUE, VS. CA (1." SCRA 00.# FACTS: %he litigation involves a claim for damages for the loss at sea of petitioners5 respective children after the shipwrec& of 6F Pioneer !ebu due to typhoon >Glaring? in 6ay of 1.//. @hen the inter-island vessel 6F Pioneer !ebu left the Port of 6anila in the early morning of 6ay 14, 1.// bound for !ebu, it had on board the spouses Alfonso Fas8ueD and Bilipinas 1agaipo and a four-year old boy, 6ario Fas8ueD, among her passengers. %he 6F Pioneer !ebu encountered typhoon Glaring and struc& a reef on the southern part of 6alapascua $sland, located somewhere north of island of !ebu and subse8uently sun&. %he aforementioned passengers were unheard from since then. Hue to the loss of their children, petitioners sued for damages before the !ourt $nstance of 6anila. ,espondent defended on the plea of force ma)eure, and e'tinction of its liability by the actual loss of the vessel. After proper proceedings, the trial court awarded damages. On appeal, respondent !ourt reversed )udgment and absolved private respondent from any liability. 7ence, this Petition for ,eview on !ertiorari. I''(): @hether the shipowner5s liability is e'tinguished despite of the loss of the shipA H)*+= @ith respect for the private respondent5s submission that the total loss of the vessel e'tinguished its liability pursuant to Article 4-7 of the !ode of !ommerce as construed in Cangco vs. 9aserna, 73 Phil. 33; "1.<1#, 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, Hespite the total loss of the vessel therefore, its insurance answers for the damages that the shipowner5s agent may be held liable for by reason of the death of its passengers. 3udgment of the !B$ reinstated. ABUEG VS. SAN DIEGO (11 PHIL .-# F$%&': %he 6E2 2an Hiego $$ and the 6E2 1artolome, while engaged in fishing operations around 6indoro $sland on Oct. 1, 1.<1 were caught by a typhoon as a conse8uence of which they were sun& and totally lost. Amado +uQeD, Fictoriano 2alvacion and Brancisco Oching while acting in their capacities perished in the shipwrec&. !ounsel for the appellant cite article 4-7 of the !ode of !ommerce which provides that if the vessel together with all her tac&le and freight money earned during the voyage are abandoned, the agentJs liability to third persons for tortious acts of the captain in the care of the goods which the ship carried is e'tinguished* article -37 of the same code which provides that in cases of collision, the ship ownersJ liability is limited to the value of the vessel with all her e8uipment and freight earned during the voyage "Philippine 2hipping company vs. :arcia, / Phil., -1#, and article /<3 of the same !ode which provides that if the vessel and freight are totally lost, the agentJs liability for wages of the crew is e'tinguished. Brom these premises counsel draw the conclusion that appellantJs liability, as owner of the two motor ships lost or sun& as a result of the typhoon that lashed the island of 6indoro on October 1, 1.<1, was e'tinguished. I''(): @hether the liability of the shipowner is e'tinguished by the total loss of the shipA
H)*+: %he provisions of the !ode of !ommerce invo&ed by appellant have no room in the application of the @or&menJs !ompensation Act which see&s to improve, and aims at the amelioration of, the condition of laborers and employees. $t is not the liability for the damage or loss of the cargo or in)ury to, or death of, a passenger by or through the misconduct of the captain or master of the ship* nor the liability for the loss of the ship as result of collision* nor the responsibility for wages of the crew, but a liability created by a statute to compensate employees and laborers in cases of in)ury received by or inflicted upon them, while engaged in the performance of their wor& or employment, or the heirs and dependents and laborers and employees in the event of death caused by their employment. 2uch compensation has nothing to do with the provisions of the !ode of !ommerce regarding maritime commerce. $t is an item in the cost of production which must be included in the budget of any wellmanaged industry. $t has been repeatedly stated that the @or&menJs !ompensation Act was enacted to abrogate the common law and our !ivil !ode upon culpable acts and omissions, and that the employer need not be guilty of neglect or fault, in order that responsibility may attach to him and that shipowner was liable to pay compensation provided for in the @or&menJs !ompensation Act, notwithstanding the fact that the motorboat was totally lost. D3%&675) 3@ L747&)+ L7$;7*7&< A6&. 0"1 ABOITI, SHIPPING VS. GENERAL ACCIDENT FIRE AND LIFE (GR NO. 100//6 2ANUARY -1 1!!.# F$%&': Petitioner is a corporation engaged in the business of maritime trade as a carrier. As such, it owned and operated the 6EF PE A1O$%$T, a common carrier that san& on voyage from 7ong Gong to 6anila. Private respondent :AB9A! is a foreign insurance company pursuing its remedy as a subrogee of several cargo consignees whose respective cargo san& with the said vessel and for which it has priory paid. %he sin&ing of vessel gave rise to filling of suit to recover the lost cargo either by shippers, their successors-in-interest, or the cargo insurers li&e :AB9A! as subrogees. %he sin&ing was initially investigated by the 1oard of 6arine $n8uiry, which found that such sin&ing was due to fortuitous event. I''(): @hether or not the doctrine of limited liability is applicable to the caseA H)*+: %he 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. $t has its origin by reason of the conditions and ris&s attending maritime trade in its earliest years when such trade was replete with innumerable and un&nown haDards since vessels had to go through largely uncharted waters to ply their trade. %hus, the liability of the vessel owner and agent arising form the operation of such vessel were confined to the vessel itself, its e8uipment, freight and insurance, if any, which limitation served to induce capitalist into effectively wagering their resources against consideration of the large attainable in the trade. AMERICAN HOME ASSURANCE VS. CA (-0" SCRA ./.# F$%&': On or about 3une 1., 1..-, !heng 7wa Pulp !orp. shipped 4,;;; bales of bleached &raft pulp from 7aulien, %aiwan on board >22 Gaunlaran? "owned by +ational 6arine !orporation#. %he shipment was consigned to 6ayleen Paper, $nc. which insured the same with American 7ome Assurance !o. On 3une , 1..-, the shipment arrived in manila and was discharged onto the
custody of the 6arina Port 2ervices, $nc. 7owever, upon delivery to 6ayleen Paper $nc., it was found that 1 bales had either been damaged or lost with the value of P/1, /3.<1. 6ayleen Paper $nc, duly demanded indemnification from +6! but was not heeded. 6ayleen then sought recovery from American 7ome Assurance, the insurer, which was ad)usted to P31, 4;/.74. As subrogee, American 7ome then filed a suit against +6! for the recovery of the said amount. +6! filed a motion to dismiss on the ground that there was no cause of action based on Art -<- of the !ode of !ommerce which provides >that claims for averages shall not be admitted if they do not e'ceed 4O of the interest which the claimant may have in the vessel or in the cargo if it be gross average and 1O of the goods damaged if particular average, deducting in both cases the e'penses of appraisal, unless there is an agreement to the contrary. +6! contended that based on the allegations of the complaint, the loss sustained in the case was P34, 4;/.74 which is only .1-O of P17.< ;.;;;.;;, the total value of the cargo. %he trial court dismissed the case for lac& of cause of action. American 7ome then filed a petition for certiorari with the !ourt of Appeals which later dismissed as constituting plain errors of law. 7ence, this petition. I''()= @hether or not the law on averages applies when there is negligenceA H)*+= +O. !ommon carriers cannot limit their liability for in)ury or loss of goods where such in)ury or loss was caused by its own negligence. Otherwise stated, the law on averages under the !ode of !ommerce cannot be applied in determining liability where there is negligence. $t is reasonable to conclude that the issue of negligence must first be addressed before the proper provisions of the !ode of !ommerce on the e'tent of liability may be applied. $nstead of presenting proof of the e'ercise of e'traordinary diligence as re8uires by law, +6! filed its motion to dismiss, hypothetically admitting the truth of the facts alleged in the complaint to the effect that the loss or damage to the 1 bales was due to the negligence or fault of +6!. PHILIPPINE HOME ASSURANCE VS. CA (-01 SCRA /6"# F$%&': 0astern 2hipping 9ines, $nc. "029$# loaded on board 22 0astern 0'plorer in Gobe, 3apan, a shipment for carriage to 6anila and !ebu freight prepaid and in good order and condition. @hile the vessel is off O&inawa, 3apan, a small flame was detected on the acetylene cylinder located in the main dec& level. As the crew was trying to e'tinguish the fire, the acetylene cylinder suddenly e'ploded sending a flash of flame throughout the accommodation area, thus causing death and severe in)uries to the crew and instantly setting fire to the whole superstructure of the vessel. %he incident forces the master and the crew to abandon the ship. %hereafter, 22 0astern 0'plorer was found to be constructive total loss and its voyage was declared abandoned. 2everal hours later, a tugboat under the control of Bu&uda 2alvage !o. arrived near the vessel and commenced to tow the vessel for the port of +aha, 3apan. After the fire was e'tinguished, the cargoes which were saved were loaded to another vessel for delivery for their original of port of destination. 029$ charged the consignees several amounts corresponding to additional freight and salvage charges. %he charges were all paid by Philippine 7ome Assurance !orporation "P7A!# under protest for and in behalf of the consignees. P7A!, as subrogee of the consignees, thereafter filed a complaint before the ,egional %rial !ourt of 6anila, 1ranch 3., against 029$ 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 andEor breach of contract of 029$. $n its answer, 029$ contended that it e'ercised the diligence re8uired 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 1ill of 9ading, and that salvage charges are properly collectible under Act. +o. /1/, &nown as the 2alvage 9aw. %he trial court dismissed the P7A!5s complaint and ruled in favor of 029$. %he court said that the 2upreme !ourt has ruled in 0rlanger and :alinger vs. 2wedish 0ast Asiatic !o., 9td., 3< Phil. 17-, that three elements are "1# a marine peril " # service voluntary rendered when not re8uired as an e'isting duty or from a special contract and "3# success in whole or in part, or that the service rendered contributed to such success. %he court said that the above elements are all present in the instant case. 2alvage charges may thus be assessed on the cargoes saved from the vessel. As provided for in 2ection 13 of the 2alvage 9aw, >%he e'penses of salvage, as well as the reward for salvage or assistance shall be a charge on the things salvaged or their value.? $n 6anila ,ailroad !o. vs. 6acondray !o., 37 Phil. 4-3. $t was also held that >@hen a ship and its cargo are saved together, the salvage allowance should be charged against the ship and the cargo in the proportion of their respective values, the same as in the case of general averageY? %hus, the >compensation to be paid by the owner of the cargo is in proportion to the value of the vessel and the value of the cargo saved.? On appeal to the !ourt of Appeals, respondent court affirmed the trial court5s findings and conclusion* hence, the present petition for review before this !ourt on the following error, among others= I''(): @hether or not the respondent !ourt erroneously adopted with approval the %rial !ourt5s conclusion that the e'penses or averages incurred in saving the cargo constitute general averageA H)*+: On the issue whether or not respondent court committed an error in concluding that the e'penses incurred in saving the cargo are considered general average, we rule in the affirmative. As a rule, general or gross averages include all damages and e'penses which are deliberately caused in order to save vessels, its cargo or both at the same time, from a real and &nown ris&. @hile the instant case may technically fall within the purview of the said provision, the formalities prescribed under Article -13 and -1< of the !ode of !ommerce in order to incur the e'penses and cause the damage corresponding to gross average were not complied with. !onse8uently, respondent 029$5s claim for contribution from the consignees of the cargo at the time of the occurrence of the average turns to naught. %he !ourt reversed and set aside the )udgment of the respondent court and ordered respondent 0astern 2hipping 9ines. $nc. to return to petitioner Philippine 7ome Assurance !orporation the amount it paid under protest in behalf of the consignees. SALVAGE LAW (ACT NO. -616# Provides a compulsory reward to those who save cargo by re8uiring the owner of the property to give a reward e8uivalent to the ma'imum of 4;O of the value of the property saved. SALVAGE (T=3 C35%):&'# 1. 2ervice one person renders to the owner of a ship or goods, by his own labor, preserving the goods or the ship which the owner or those entrusted with the care of them have either abandoned in distress at sea, or are unable to protect or secure.
. !ompensation allowed to persons by whose voluntary assistance a ship at sea or her cargo or both have been saved in whole or in part from impending sea peril, or such property recovered from actual peril or loss, as in cases of shipwrec&, derelict or recapture. -e !isites% 1. Falid ob)ect of salvage* valid ob)ect of salvage* that the vessel is shipwrec&ed beyond the control of the crew or shall have been abandoned* . Ob)ect must have been e'posed to marine peril "not perils of the ship#* 3. 2ervices rendered voluntarily "neither an e'isting duty nor out of a pre-e'isting contract#* <. 2ervices are successful, total or :$6&7$*. S(;G)%&' 3@ S$*8$?): 1. 2hip itself* . 3etsam K goods which are cast into the sea, and there sin& and remain under water* 3. Bloatsam or Blotsam K goods which float upon the sea when cast overboard* <. 9igan or 9agan K goods cast into the sea tied to a buoy, so that they may be found again by the owners (D#az, Notes on -ransportat#on La6, p. 7$". P)6'35' WA3 H$8) N3 R7?A& &3 $ R)=$6+ @36 S$*8$?) = 1. !rew of the vessel saved* . Person who commenced 2alvage in spite of opposition of the !aptain or his representative* 3. $n accordance with 2ec. 3 of the 2alvage 9aw, a person who fails to deliver a salvaged vessel or cargo to the !ollector of !ustoms.
DERELICT A ship or her cargo which is abandoned and deserted at sea by those who are in charge of it, without any hope of recovering it, or without any intention of returning to it. R(*)' 35 S$*8$?) R)=$6+ 1. %he reward is fi'ed by the ,%! )udge in the absence of agreement or where the latter is e'cessive. (%ec. !, Act No. 2( (" . %he 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. $f sold "no claim being made within 3 months from publication#, the proceeds, after deducting e'penses and the salvage claim, shall go to the owner* if the latter does not claim it within 3 years, 4;O of the said proceeds shall go to the salvors, who shall divide it e8uitably, and the other half to the government. (%ecs. - 2, Act. No 2( (" <. $f a vessel is the salvor, the reward shall be distributed as follows= a. 4;O to the shipowner* b. 4O to the captain* and c. 4O to the officers and crew in proportion to their salaries. (%ec. $, Act No. 2( (" 4. 0'penses 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 motoriDed, pulls another, whether loaded or not with
merchandise, from one place to another, for a compensation. $t is a contract for services rather than a contract of carriage. BARRIOS VS. GO THONG M CO. (1 SCRA 0.0# F$%&': 7onorio 1arrios was the captain and master of the 6F 7enry $ operated by @illiam 9ines, $nc. which plied the route from !ebu to Havao !ity. On its voyage on 6ay 1, 1.4- the 6F 7enry $ intercepted an 2O2 signal from the 6F Hon Alfredo owned and operated by :o %hong N !o. ,esponding to the 2O2, 7enry $ approached the Hon Alfredo and found out that the Hon Alfredo was suffering from engine failure. After agreeing to assist the disabled ship, the crew of 7enry $ attached tow lines and proceeded to tow the Hon Alfredo heading towards the port of Humaguete !ity. %he following morning, they encountered a sister ship of Hon Alfredo, the 6F 9u'. (pon the re8uest of the captain of the Hon Alfredo, the crew of the 7enry $ released the towlines and continued on their voyage. After the incident, 1arrios as captain of 6F 7enry $ claimed entitlement to compensation under the salvage law which was opposed by :o %hong and !o. who claimed that what occurred was only mere towage. %he trial court dismissed the claim. I''(): @hether the rescue of the 6F Hon Alfredo should be classified as a salvage, thus entitling 1arrios et al. to rewardA H)*+: +o. +ot all the re8uisites were present for the rescue to be considered as salvage under the law. %he claim of 1arrios is anchored on the provisions of the 2alvage 9aw that stipulates that a ship that is lost or abandoned at sea is considered as a derelict and the proper sub)ect of salvage. A ship in a desperate condition with passengers and persons on board but who are unable to do anything for their own safety may be considered a 8uasi-derelict. Burther, the 2alvage 9aw provides that those assisting in saving a vessel in its cargo from shipwrec& shall be entitled to a reward. %here are three elements that are necessary for a salvage claim= 1. the e'istence of a marine peril . service is voluntarily rendered when not re8uired as an e'isting duty or a special contract* and 3. success in whole or in part, or that the service rendered contributed to such success. $t is therefore imperative to establish whether the 6F Hon Alfredo was e'posed to any form of marine peril when it was assisted by the 6F 7enry $. %he 2upreme !ourt however noted that the nature of its disability and the circumstances surrounding it could be construed as a marine peril as contemplated in the 2alvage 9aw. @hen the engine failure occurred the seas were calm and the weather was clear. $n fact the ship did not drift too far from the location where its engines failed. Burther, the captain and crew of the 6F Hon Alfredo did not find it necessary to )ettison the vessel5s cargo as a safety measure. %herefore the 6F Hon Alfredo cannot even be considered as a 8uasi derelict. Although the service of the defendant did not constitute as salvage, it can be considered as a 8uasi contract of towage. 7owever in a contract of towage, only the owner of the towing vessel is
entitled to remuneration. $t is noteworthy that the owner of 6F 7enry $, @illiam 9ines, $nc., already waived its claim for compensation. SPECIAL CONTRACTS OF MARITIME COMMERCE 1. !harter party . 1ill of lading 3. !ontract of transportation of passengers on sea voyages <. 9oan on bottomry 4. 9oan on respondentia /. 6arine insurance A. CHARTER PARTY A contract by virtue of which the owner or agent binds himself to transport merchandise or persons for a fi'ed price. A contract by which an entire ship, or some principal part thereof is letEleased by the owner to another person for a specified time or use. (0lanters 0ro4ucts, 3nc. vs. CA, 22( %C&A 47(" P$6&7)' &3 $ %A$6&)6 :$6&<: 1. 2hip owner or ship agent* and . !harterer F364 3@ CA$6&)6 P$6&< 1. 6ust be in duplicate . 2igned by the contracting parties, and when either does not &now how or is unable to do so, by two witnesses at his re8uest. (Art. (/2, Co4e of Commerce" C35&)5&' 3@ CA$6&)6 P$6&< A?6))4)5& 1esides the condition freely stipulated, it shall include the following= 1. Gind, name and tonnage of the vessel* . 7er flag and port of registry* 3. +ame, surname and domicile of the captain* <. +ame, surname and domicile of the ship agent, and if the latter should ma&e the carter party* 4. +ame, surname and domicile of the charterer, and if he states that he is acting by commission, that of the person for whose account he ma&es the contract* /. Port of loading and unloading* 7. !apacity, the number or tons or weight, or measure which they respectively bind themselves to load and transport, or whether it is the total cargo* -. Breightage to be paid* .. Amount of primage to be paid by the captain* 1;. Hays agreed upon for loading and unloading* 11. 9ay Hays and e'tra lay days to be allowed and the rate of demurrage. C*$'')' 3@ CA$6&)6 P$6&<:
1.
*are"oat 2r +emise %he charterer provides crew, food and fuel. %he charterer is liable as if he were the owner, e'cept when the cause arises from the unworthiness of the vessel. %he shipowner leases to the charterer the whole vessel, transferring to the latter the entire command, possession and conse8uent control over the vessel5s navigation, including the master and the crew, who thereby become the charter5s servants. $t transforms a common carrier into a private carrier.
2. Contract of Affreightment J A contract whereby the owner of the vessel leases part or all of its space to haul goods for others. C75+' 3@ C35&6$%& 3@ A@@6)7?A&4)5&: $. Time Charter K vessel is chartered for a fi'ed period of time or duration of voyage. ;. >oyage or trip charter K the vessel is leased for one or series of voyages usually for purposes of transporting goods for charterer. -e !isites of a >alid Charter #arty 1. !onsent of the contracting parties . 0'isting vessel which should be placed at the disposition of the shipper 3. Breight <. !ompliance with Art. /4 of the !ode of !ommerce C*$(')' WA7%A M$< B) I5%*(+)+ I5 $ CA$6&)6 P$6&< . Aason Clause A stipulation in a charter party that in case of a maritime accident for which the shipowner is not responsible by law, contract or otherwise, the cargo shippers, consignees or owners shall contribute with the shipowner in general average. 2. Clause 0aramount or 0aramount Clause A clause in a charter party providing that the !O:2A shall apply, even though the transportation is domestic, sub)ect to the e'tent that any term of the bill of lading is repugnant to the !O:2A or applicable law, then to the e'tent thereof the provision of the bill of lading is void. R7?A&' $5+ O;*7?$&735' 75 $ CA$6&)6 P$6&< A.
1. . 3. <. 4. /. 7.
B.
1. . 3. <. 4.
O@ &A) O=5)6 36 SA7: A?)5&: $f the vessel is chartered wholly, not to accept cargo from others* %o observe represented capacity* %o unload cargo clandestinely placed* %o substitute another vessel if load is less than 3E4 of capacity* %o leave the port if the charterer does not bring the cargo within the lay days and e'tra lay days allowed* %o place in a vessel in a condition navigate* and %o bring cargo to nearest neutral port in case of war or bloc&ade. " Art.((!-(78, Co4e of Commerce" O@ &A) CA$6&)6)6: %o pay the agreed charter price* %o pay freightage on unboarded cargo* %o pay losses to others for loading uncontracted cargo or illicit cargo* %o wait if the vessel needs repair* %o pay e'penses for deviation. (Art. '7=&'17, Code of Commerce)
R)'%7''735 3@ $ CA$6&)6 P$6&< A. At Charterer?s -e !est% 1. 1y abandoning the charter and paying half of the freightage* . 0rror in tonnage or flag*
3. Bailure to place the vessel at the charterer5s disposal* <. ,eturn of the vessel due to pirates, enemies or bad weather* 4. Arrival at a port for repairs. B. At 4hipowner?s -e !est% 1. $f the e'tra lay days terminate without the cargo being placed alongside the vessel* . 2ale by the owner of the vessel before loading the charterer. 3ort!ito!s ca!ses% 1. . 3. <. 4. @ar* 1loc&ade* Prohibition to receive cargo* 0mbargo* and $nability of the vessel to navigate.
C.
PRIMAGE: 1onus to be paid to the captain after the successful voyage. DEMURRAGE: %he sum fi'ed in the charter party as a remuneration to the owner of the ship for the detention of his vessel beyond the number of days allowed by the charter party for loading or unloading or for sailing. DEADFREIGHT: %he amount paid by or recoverable from a charterer of a ship for the portion of the ship5s capacity the latter contracted for but failed to occupy. LAY DAYS = Hays allowed to charter parties for loading and unloading the cargo. EDTRA LAY DAYS: Hays which follow after the lay days have elapsed. BILL OF LADING @ritten ac&nowledgment of receipt of goods and agreement to transport them to a specific place to a person named or to his order. (Compan#a 8ar#t#ma v. 3nsurance Comp. of Nort1 Amer#ca, 2 %C&A 2 $" %he consignee and the shipper who accepts a bill of lading even without signing are bound by the terms and conditions thereof. (Gen, ;ua 0aper 0ro4ucts v. CA 28( %C&A 2/7' !!8)" Acceptance of the consignee is implied if he claims reimbursement for missing goods and files a case based on the bill of lading. (+el,#an .verseas C1arter#n, v. 01#l. 2#rst 3nsurance, $8$ %C&A 2$ '2552)"
USUAL FORMS OF CONSUMMATING CONTRACTS 1. C.O.D J collect on delivery $f the goods are mar&ed !.O.H., the carrier acts for the seller in collecting the purchase price. %he buyer must pay for the goods before he can obtain possession. !.O.H. terms do not prevent title from passing to the buyer on delivery to the carrier where they are solely intended as security for the purchase price. . C.I.F. J cost, ins!rance and freight %hey signify that the price fi'ed covers not only the cost of the goods, but the e'pense of the freight and insurance to be paid by the seller up to the point of destination. %itle passes to the buyer at the moment of delivery to the point especially named. 3. F.O.B. B free on "oard
At the place of destination 2eller must pay the freight since the contract states >free on board till destination.? <. F.A.S. B free alongside ship %he property passes as soon as the goods are delivered aboard the carrier or alongside the vessel, and that the buyer as the owner of the goods is to bear all e'penses after they are so delivered. (De Leon, Comments an4 Cases on %ales, 2552 <4#t#on, pa,e 2$4"

TRANSSHIPMENT OF GOODS %he act of ta&ing cargo out of one ship and loading it in another, or the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached, or the transfer for further transportation from one ship or conveyance to another. LOAN ON BOTTOMRY 9oan made by shipowner or ship agent guaranteed by the vessel itself and repayable upon arrival of vessel at destination. LOAN ON RESPONDENTIA 9oan ta&en on security of cargo laden on a vessel and repayable upon safe arrival of cargo at destination. C34435 E*)4)5&' 3@ L3$5' 35 B3&&346< $5+ R)':35+)5&7$: 1. %he captain may not borrow on bottomry or respondentia e'cept on his own interest or portion thereof, otherwise, the contract is void* . %hese contracts must at least be in writing, otherwise, they cannot be the basis of )udicial action. $n order to affect third persons and entitle it to preferential credit treatment, the contract should be inscribed in the certificate of registry and seconded in the registry of vessels* 3. 2hould the goods upon which the money is ta&en not be the ris&, the contract shall be considered a simple loan* <. 6ore recent loans are preferred than prior loans* 4. %he usury laws are inapplicable to these contracts* /. 0'posure of security to marine peril* 7. Obligation of the debtor conditioned only upon safe arrival of the security at the point of destination. WA3 4$< C35&6$%& 1. 1ottomry= the owner* if owner is absent K captain. . ,espondentia= only the owner of he cargo. B3&&346< 36 R)':35+)5&7$ 1. +ot sub)ect to (sury 9aw. . 9iability of the borrower is contingent on the safe arrival of the vessel or cargo at destination. 3. %he last lender is a preferred creditor. O6+75$6< L3$5 (M(&((4# 1. 2ub)ect to (sury 9aw . +ot sub)ect to any contingency "absolute liability#. 3. %he first lender is a preferred creditor.
WA)5 L3$5 O5 B3&&346< O6 R)':35+)5&7$ R)?$6+)+ A' S74:*) L3$5
1. 9ender loaned an amount larger than the value of the ob)ect due to fraudulent means employed by the borrower. (Art. 72(, Co4e of Commerce" . Bull amount of the loan is not used for the cargo or given on the goods if all of them could not have been loaded, the balance will be considered a simple loan. (Art.727, Co4e of Commerce" 3. $f the effects on which the money is ta&en is not sub)ected to any ris&. (Art.72!, Co4e of Commerce"
%he parties to a loan, whether ordinary or maritime, may agree on any rate of interest (C+ C#rcular !5/"* provided the same is not contrary to law, morals, good customs, public order or public policy (Art. $5(, C#v#l Co4e"
O;*7?$&735 35 B3&&346< L3$5 7' EF&75?(7'A)+ =A)5: 1. %he loss of the vessel is based on the ris& agreed upon* and . ,is& occurred during the voyage. HYPOTHECARY NATURE OF BOTTOMRY AND RESPONDENTIA )eneral -!le% %he obligation of the borrower to pay the loan is e'tinguished if the goods given as security are absolutely lost by reason of an accident of the sea, during the voyage designated, and if it is proven that the goods were on board. .,ceptions% 1. 9oss due to inherent defect* . 9oss due to the barratry on the part of the captain* 3. 9oss due to the fault or malice of the borrower* <. %he vessel was engaged in contraband* 4. %he cargo loaded on the vessel be different in from that agreed upon. RISCS DAMAGES AND ACCIDENTS IN MARITIME COMMERCE 1. Averages . Arrival (nder 2tress 3. !ollision <. 2hipwrec& A. AVERAGE An e'traordinary or accidental e'pense incurred during the voyage in order to preserve the cargo, vessel or both, and all damages or deterioration suffered by the vessel from departure to the port of destination, and to the cargo from the port of loading to the port of consignment. (Art. 85(, Co4e of Commerce" CLASSES OF AVERAGES: 1. :ross or :eneral Average . Particular or 2imple Average
@here 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 0'penses incurred to refloat a vessel, which accidentally ran aground, in order to continue its voyage, do not constitute general average. +ot only is there absence of a marine peril, common safety factor, and deliberateness. $t is the safety of the property, and not the voyage, which constitutes the true foundation of general average. (A. 8a,sa7sa7, 3nc. vs. A,an, !(7 01#l /54 ' !//)"
G63'' 36 G)5)6$* A8)6$?) $ncludes all damages and e'penses, which are deliberately caused in order to save the vessel andEor its cargo from real and &nown ris& resulting in a common benefit. %hese e'penses and damages shall be borne ratably among all those having interest in the vessel and cargo at the time of the occurrence of the average. (Art. 85(, 858, 8 Co4e of Commerce" R)K(7'7&)' 3@ G63'' 36 G)5)6$* A8)6$?): 1. !ommon danger* . Heliberate sacrifice* 3. 2uccess* and <. Proper formalities and legal steps. P$6&7%(*$6 36 S74:*) A8)6$?) Hamages and e'penses that do not inure to the common benefit or are not the result of a deliberate sacrifice. %hese e'penses and damages are borne by those who suffer them. (%ee Art. 85(, 857-8 5 Co4e of Commerce" %he owner of the goods who gave rise to the e'pense or suffered the damage shall bear this average. G33+' N3& C38)6)+ B< G)5)6$* A8)6$?) E8)5 I@ S$%67@7%)+ 1. :oods carried on dec&. (Art. 8//, Co4e of Commerce" . :oods not recorded in the boo&s or records of the vessel. (Art. 8//'2), Co4e of Commerce" 3. Buel for the vessel if there is more than sufficient fuel for the voyage. 2)&&7'35 B the act of throwing cargo overboard in order to lighten the vessel. O6+)6 3@ ?33+' &3 ;) %$'& 38)6;3$6+: 1. %hose which are on the dec&, preferring the heaviest one with the least utility and value* . %hose which are below the upper dec&, beginning with the one with greatest weight and smallest value. (Art. 115, Code of Commerce)

3ettisoned goods are not res nullius nor deemed >abandoned? within the meaning of civil law so as to be the ob)ect of occupation by salvage. $n order that the )ettisoned goods may be included in the gross or general average, the e'istence of the cargo on board should be proven by means of the bill of lading. (Art. 8 (, Co4e of Commerce" (nder the Dor@-Ant6erp &ules, dec& cargo is permitted in !oastwise 2hipping but prohibited in Overseas 2hipping. 1. $f dec& cargo is located with the consent of the shipper on overseas trade, it must always contribute to general average, but should the same be )ettisoned, it would not be entitled to reimbursement because there is a violation of the Cor&-Antwerp ,ules. . $f the dec& cargo is located with the consent of the shipper on coastwise shipping, it must always contribute to general average and if )ettisoned would be entitled to reimbursement. (nternational D)%H %$6?3 7' 53& $**3=)+ P$6&7%(*$6 $8)6$?)
+omestic D)%H %$6?3 7' $**3=)+ @ith shipper?s consent G)5)6$* $8)6$?)
@itho!t shipper?s consent C$:&$75 7' *7$;*) B. C$:&$75 7' *7$;*)
ARRIVAL UNDER STRESS %he arrival of a vessel at the nearest and most convenient port instead of the port of destination, if during the voyage the vessel cannot continue the trip to the port of destination, due to= 1. 9ac& of provisioning* . @ell-founded fear of seiDure, of privateers or pirates* or 3. An accident of the sea disabling the vessel to navigate. (Art. 8 !, Co4e of Commerce" $n such arrival the captain must file a protest which is merely a disclaimer.
WA)5 NOT L$=@(* 1. 9ac& of provisions due to negligence to carry according to usage and customs* . ,is& of enemy not well &nown or manifest* 3. Hefect of vessel due to improper repair* and <. 6alice, negligence, lac& of foresight or s&ill of captain. WA3 B)$6' EF:)5')' )eneral -!le% %he shipowner bears all the e'penses for arrival under stress. .,ception% @hen arrival under stress is unlawful, the ship owner also answers for damages to the owners of the cargo and the passengers. 1. %he shipowner or ship agent is liable in case of unlawful arrival under stress. 1ut they shall not be liable for the damages caused by reason of a lawful arrival. . %he captain shall be liable for damages caused by his delay if after the cause of the arrival under stress has ceased he should not continue the voyage. > $t is the duty of the captain to continue the voyage without delay after the cause of the arrival under stress has ceased failing in such duty renders him liable. 7owever, in case the cause has been ris& of enemies, there must first be an assembly before departure. (Art. 82/, Co4e of Commerce" C. COLLISION %he impact of two moving vessels. ,35)' 3@ T74) 75 &A) C3**7'735 3@ V)'')*': a. 1st Aone K all time up to the moment when ris& of collision begins* b. 2nd Aone K time between moment when ris& of collision begins and the moment it becomes a practical certainty* and c. 3rd Aone K time when collision has become a practicable certainty to the point of actual impact. All#s#on - (mpact "etween a moving vessel and a stationary one. R(*)' 35 C3**7'735 3@ V)'')*' 1. %he collision may be due to the fault, negligence or lac& of s&ill of the captain, sailing mate, or any other member of the complement of the vessel. %he owner of the vessel at fault may be liable for losses or damages. (Art. 82(, Co4e of Commerce" . %he collision may be due to the fault of both vessels. 0ach vessel shall suffer its own losses, but as regards the owner of cargoes both vessels shall be )ointly and severally liable. (Art.827, Co4e of Commerce"
3. $f it cannot be determined which vessel is at fault, each vessel shall also suffer its own losses and both shall be solidarily liable for losses or damages on the cargoes. (Art. 828, Co4e of Commerce" <. %he vessels may collide with each other through fortuitous event or force ma)eure. $n this case, each shall bear its own damage. 4. %wo vessels may collide with each other without their fault by reason of a third vessel. %he third vessel will be liable for losses and damages. (Art. 8$ , Co4e of Commerce" /. A vessel which is properly anchored and moored may collide with those nearby, by reason of storm or other cause of force ma)eure. %he vessel run into shall suffer its own damage and e'pense. (Art. 8$2, Co4e of Commerce" N$(&7%$* R(*)' &3 D)&)6475) N)?*7?)5%) 1. @hen two vessels are about to enter a port, the farther one must allow the nearer to enter first* if they collide, the fault is presumed to be imputable to the one who arrived later, unless it can be proved that there was no fault on its part. . @hen two vessels meet, the smaller should give the right of way to the larger one. 3. A vessel leaving port should leave the way clear for another which may be entering the same port. <. %he vessel which leaves later is presumed to have collided against one which has left earlier. 4. %here is a presumption against the vessel which sets sail in the night. /. %here is a presumption against the vessel with spread sails which collides with another which is at anchor and cannot move, even when the crew of the latter has received word to lift anchor, when there was no sufficient time to do so or there was fear of a greater damage or other legitimate reason. 7. %here is a presumption against an improperly moored vessel. -. %here is a presumption against a vessel which has no buoys to indicate the location of its anchors to prevent damage to vessels which may approach it. .. Fessels must have >proper loo&-outs? or persons trained as such and who have no other duty aside therefrom. (4mith *ell v. CA 1=7 4C-A 261) N$(&7%$* R(*)' $' &3 S$7*75? V)'')* $5+ S&)$4'A7: 1. @here a steamship and a sailing vessel are approaching each other from opposite directions, or on intersecting lines, the steamship from the moment the sailing vessel is seen, shall watch with the highest diligence her course and movements so as to be able to adopt such timely means of precaution as will necessarily prevent the two boats from coming in contact. . %he sailing vessel is re8uired to &eep her course unless the circumstances re8uire otherwise. E6636 75 EF&6)47' 2udden movement made by a faultless vessel during the third Done of collision with another vessel which is at fault during the nd Done. 0ven if such sudden movement is wrong, no responsibility will fall on said faultless vessel. (?rrut#a an4 Co. v. +aco &#ver 0lantat#on Co., 2( 01#l. ($2" R(*)' 35 L7$;7*7&< 75 C3**7'735 $5+ A**7'735 C35')K()5&7$* D$4$?)' C38)6)+: 1. Hamages caused to vessel . Hamages caused to the passenger 3. Hamages caused to the cargo
-!le% 1. O5) 8)'')* $& @$(*& Fessel at fault is liable for damage caused to the vessel, passenger, and cargoes of both vessels. (Art. 82(, CoC" -. B3&A V)'')*' A& F$(*& 0ach 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" .. V)'')* $& @$(*& 53& H53=5 0ach vessel must bear its own loss, but both shall be solidarily liable for losses and damages on the cargoes. (Art. 828, CoC" D3%&675) 3@ I5'%6(&$;*) F$(*& $n 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. /. TA76+ 8)'')* $& @$(*& %he third vessel will be liable for all the losses and damages. (Art. 131, Code of Commerce) 0. F36&(7&3(' )8)5&9@36%) 4$G)(6) +o liability. 0ach party shall bear its own loss. 7owever, due diligence must be e'ercised by the carrier to lessen the damages before, during, and after the impact (Art. 136, Code of Commerce). %he doctrine of res ipsa lo8uitur applies in case a moving vessel stri&es a stationary ob)ect, such as a bridge post, doc&, or navigational aid. (2ar <astern %1#pp#n, v. CA, 2!7 %C&A $5 * Luzon %teve4or#n, vs. CA, /( %C&A (!"
D3%&675) 3@ L$'& C*)$6 CA$5%) and R(*) 35 C35&67;(&36< N)?*7?)5%) cannot be applied in collision cases where both vessels are at fault because under Art. - 7 of the !ode of !ommerce, both vessels shall suffer its own loss, and at the same time shall be solidarily liable for the damages to the passenger and cargoes of both vessels.
$n case of collision, there must be a maritime protest to recover collision damage* in such a case, the marine protest is a condition sine 8ua non and not merely a disclaimer unli&e in the arrival under stress or shipwrec&. MARITIME PROTEST $t is a written statement made under oath by the captain of a vessel after the occurrence of an accident or disaster in which the vessel or cargo is lost or damaged, with respect to the circumstances attending such occurrence, for the purpose of recovering losses and damages.
0'cuses for not filing protest= 1# where the interested person is not on board the vessel* and # on collision time, need not be protested. (Art. 8$(, Co4e of Commerce"
M$67&74) P63&)'& 7' $::*7%$;*) 75 &A) @3**3=75? %$')': 1. !ollision (Art. 8$/, Co4e of Commerce"* . Arrival under stress (Art. ( 2(8", Co4e of Commerce"*
3. 2hipwrec&s (Arts. ( 2( /", 84$, Co4e of Commerce"* <. @here the vessel has gone through a hurricane or when the captain believes that the cargo has suffered damages or averages (Art. (24, Co4e of Commerce". P6)BR)K(7'7&)' @36 R)%38)6<: 1. 6aritime protest should be made within < hours before the competent authority at the point of collision or at the first port of arrival, if in the Philippines* and to the Philippine consul, if the collision too& place abroad. (Art. 8$/ Co4e of Commerce" . %he lac& of protest does not pre)udice such action to recover in respect to damages caused to persons or cargo whose owners were not on board the vessel or who were not in a condition to ma&e their wishes &nown. (Art. 8$( CoC" D. SHIPWRECC $t is the loss of the vessel at sea as a conse8uence of its grounding, or running against an ob)ect in sea or on the coast. $t occurs when the vessel sustains in)uries due to a marine peril rendering her incapable of navigation. $f the wrec& was due to malice, negligence or lac& of s&ill of the captain, or because the vessel put to sea was insufficiently repaired and e8uipped* the owner of the vessel may demand indemnity from said captain. (Art. 84 , Co4e of Commerce"
%he rules on collision or allision, as may be pertinent, can e8ually apply to shipwrec&s LITON2UA SHIPPING VS. NATIONAL SEAMEN BOARD (116 SCRA 1"!# F$%&': Petitioner 9iton)ua is the duly appointed local crewing 6anaging Office of the Bairwind 2hipping !orporation "JBairwind#. %he 6EF Hufton 1ay is an ocean-going vessel of foreign registry owned by the ,.H. 6ullion 2hip 1ro&ing Agency 9td. "I6ullionI#. On 11 2eptember 1.7/, while the Hufton 1ay was in the port of !ebu and while under charter by Bairwind, the vesselJs master contracted the services of, among others, private respondent :regorio !andongo to serve as %hird 0ngineer for a period of twelve "1 # months with a monthly wage of (2M4;;.;;. %his agreement was e'ecuted before the !ebu Area 6anning (nit of the +21. %hereafter, private respondent boarded the vessel. On - Hecember 1.7/, before e'piration of his contract, private respondent was re8uired to disembar& at Port Gelang, 6alaysia, and was returned to the Philippines on 4 3anuary 1.77. %he cause of the discharge was described in his 2eamanJs 1oo& as Jby ownerJs arrangeI. 2hortly after returning to the Philippines, private respondent filed a complaint before public respondent +21, which complaint was doc&eted as +21-1331-77, for violation of contract, against 6ullion as the shipping company and petitioner 9iton)ua as agent of the shipowner and of the charterer of the vessel. I''()'= @hether or no the admiralty law as embodied in the Philippine !ode of !ommerce fastens liability for payment of the crewJs wages upon the ship owner, and not the charterer. H)*+: %he first basis is the charter party which e'isted between 6ullion, the shipowner, and Bairwind, the charterer. $n modern maritime law and usage, there are three "3# distinguishable types of charter parties= "a# the IbareboatI or IdemiseI charter* "b# the ItimeI charter* and "c# the IvoyageI or ItripI charter. A bareboat or demise charter is a demise of a vessel, much as a lease of an unfurnished house is a demise of real property. %he shipowner turns over possession of his vessel to the charterer, who then underta&es to provide a crew and victuals and supplies and fuel for her during the
term of the charter. %he shipowner is not normally re8uired by the terms of a demise charter to provide a crew, and so the charterer gets the Ibare boatI, i.e., without a crew. 2ometimes, of course, the demise charter might provide that the shipowner is to furnish a master and crew to man the vessel under the chartererJs direction, such that the master and crew provided by the shipowner become the agents and servants or employees of the charterer, and the charterer "and not the owner# through the agency of the master, has possession and control of the vessel during the charter period. A time charter, upon the other hand, li&e a demise charter, is a contract for the use of a vessel for a specified period of time or for the duration of one or more specified voyages. $n this case, however, the owner of a time-chartered vessel "unli&e the owner of a vessel under a demise or bare-boat charter#, retains possession and control through the master and crew who remain his employees. @hat the time charterer ac8uires is the right to utiliDe the carrying capacity and facilities of the vessel and to designate her destinations during the term of the charter. A voyage charter, or trip charter, is simply a contract of affreightment, that is, a contract for the carriage of goods, from one or more ports of loading to one or more ports of unloading, on one or on a series of voyages. $n a voyage charter, master and crew remain in the employ of the owner of the vessel. $t is well settled that in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel, the charterer assuming in large measure the customary rights and liabilities of the shipowner in relation to third persons who have dealt with him or with the vessel. $n such case, the 6aster of the vessel is the agent of the charterer and not of the shipowner. %he charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for the e'penses of the voyage including the wages VALEN,UELA HARDWOOD VS. CA (.0 2UNE 1!!1 -1/ SCRA 6/.# F$%&': On 3anuary 1/, 1.-<, plaintiff entered into an agreement with 2even 1rothers 2hipping corporation whereby the latter undertoo& to load on board its vessel 6EF 2even Ambassadors .<; 9auan round logs for shipment from $sabela to 6anila. On 3anuary ;, plaintiff insured the cargo with 2outh 2ea 2urety and $nsurance for two million pesos. 7owever on 3anuary 4, 1.-<, the 6EF 2even Ambassador san&, resulting in the loss of petitioners5 logs. Pursuant to the loss, petitioner filed a claim with 2outh 2ea 2urety and $nsurance for the insured amount of the logs, but the latter refused, denying liability under the policy. Petitioner li&ewise filed a formal claim against 2even 1rothers 2hipping !orporation for the value of the lost logs, but the latter li&ewise denied their claim. %he trial court found for the plaintiff, holding 2outh 2ea and 2even 1rothers liable for the loss. On appeal, the !ourt of Appeals affirmed in part the decision of the trial court. %he !ourt of Appeals affirmed the liability of 2outh 2ea 2urety and Assurance but e'onerated 2even 1rothers, stating that the latter is a private carrier therefore the provisions on common carriers is not applicable to their contract. 7ence the present appeal. I''(): @hether or not respondent !ourt of Appeals committed a reversible error in upholding the validity of the stipulation in the charter party e'ecuted between petitioner and 2even 1rothers e'empting the latter from liability of loss arising from the negligence of its captain. H)*+: %he decision of the !ourt of appeals is correct. %he contract between petitioner and 2even 1rothers is one of Private !arriage hence the provisions on common carriage do not apply. $n a contract of private carriage parties are free to stipulate that the responsibility for the cargo rests solely in the charterer, such stipulations are valid because they are freely entered into by the parties and the same is not contrary to law, morals, good custom, public order or public policy.
SWEET LINES VS. CA (1-1 SCRA 16!# F$%&': 7erein private respondents purchased first-class tic&ets from petitioner at the latter5s office in !ebu !ity. %hey were to board 6EF 2weet :race bound for !atbalogan, @estern 2amar. $nstead of departing at the scheduled hour of about midnight on 3uly -, 1.7 , the vessel set sail at 3=;; am of 3uly ., 1.7 only to be towed bac& to !ebu due to engine trouble, arriving there on the same day at about <=;; pm. %he vessel lifted anchor again on 3uly 1;, 1.7 at around -=;; am. $nstead of doc&ing at !atbalogan "the first port of call#, the vessel proceeded direct to %acloban. Private respondents had no recourse but to disembar& and board a ferry boat to !atbalogan. 7ence, the suit for breach of contract of carriage. I''(): @hether or not the mechanical defect constitutes a fortuitous event which would e'empt the carrier from liabilityA H)*+: +o. As found by the trial court and the !ourt of Appeals, there was no fortuitous event or force ma)eure which prevented the vessel from fulfilling its underta&ing of ta&ing the private respondents to !atbalogan. $n the first place, mechanical defects in the carrier are not considered a caso fortuito that e'empts the carrier from responsibility. $n the second place, even granting arguendo that the engine failure was a fortuitous event, it accounted on for the delay of departure. @hen the vessel finally left the port, there was no longer any force ma)eure that )ustified by-passing a port of call. TRANSBASIA SHIPPING VS. CA (-0/ SCRA -60# F$%&': Plaintiff "herein private respondent Atty. ,enato Arroyo# bought a tic&et from herein petitioner for the voyage of 6EF Asia %hailand Fessel to !agayan de Oro from !ebu !ity. Arroyo boarded the vessel in the evening of +ovember 1 , 1..1 at around 4=3;. At that instance, plaintiff noticed that some repair wor&s were being underta&en on the evening of the vessel. %he vessel departed at around 11=;; in the evening with only one engine running. After an hour of slow voyage, vessel stopped near Gawit $sland and dropped its anchor threat. After an hour of stillness, some passenger demanded that they should be allowed to return to !ebu !ity for they were no longer willing to continue their voyage to !agayan de Oro !ity. %he captain acceded to their re8uest and thus the vessel headed bac& to !ebu !ity. At !ebu !ity, the plaintiff together with the other passengers who re8uested to be brought bac& to !ebu !ity was allowed to disembar&. %hereafter, the vessel proceeded to !agayan de Oro !ity. Plaintiff, the ne't day boarded the 6EF Asia 3apan for its voyage to !agayan de Oro !ity, li&ewise a vessel of the defendant. On account of this failure of defendant to transport him to the place pf destination on +ovember 1 , 1..1, plaintiff filed before the trial court a complaint for damages against the defendant. I''(): @hether 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 dutyA H)*+: (ndoubtedly, there was, between the petitioner and private respondent a contract of carriage. (nder Article 1733 of the !ivil !ode, the petitioner was bound to observed e'traordinary diligence in ensuring the safety of the private respondent. %hat meant that the petitioner was pursuant to the Article 1744 off the said !ode, 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. $n this case, the 2upreme !ourt is in full accord with the !ourt of Appeals that the petitioner failed or discharged this obligation. 1efore commencing the contact of voyage, the petitioner undertoo& some repairs on the cylinder head of one of the vessel5s engines. 1ut 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. 6oreover, even the lone functioning engine was not in perfect condition at sometime after it had run its course, in con&ed out. @hich cause the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsiDing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage begun. Bor the vessel to be seaworthy, it must be ade8uately e8uipped for the voyage and manned with the sufficient number of competent officers and crew. %he Bailure 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 1744 of the !ivil !ode. C$667$?) 3@ G33+' ;< S)$ A%& (C34435=)$*&A A%&. N3. 60L P(;*7% A%& N3. 0-1 1/ &A US C35?6)''# D34)'&7% T6$+): !ivil !ode and !ode of !ommerce applies. F36)7?5 T6$+): !O:2A applies.
%he !ivil !ode and the !ode of !ommerce is suppletory to !O:2A in the carriage of goods from foreign ports to the Philippines. %he law of the country to which the goods are to be transported shall govern the liability of the common carrier for loss, destruction or deterioration of the goods. " Art 7/$, NCC" %he !ivil !ode is the primary law on goods that are being shipped from a foreign port to the Philippines. 7owever, !O:2A remains to be a suppletory law for international shipping.
F36 COGSA TO BE APPLICABLE the transportation must be= 1. @aterEmaritime transportation* . for the carriage of goods* and 3. overseasEinternationalEforeign "from foreign port to Philippine port#.
$t can be applied in domestic sea transportation if agreed upon by the parties. "!lause Paramount or Paramount !lause#
A43(5& 3@ C$667)6I' L7$;7*7&< (nder the 2ec. <"4#, the liability limit is set at M4;; per pac&age or customary freight unit unless the nature and value of such goods is declared by the shipper. %his is deemed incorporated in the bill of lading even if not mentioned in it. (<astern %1#pp#n, vs. 3AC, /5 %C&A 4($" $2T.% Art.17<. of the !ivil !ode applies to $nter-$sland %rade. N3&7%) 3@ D$4$?) a. P$&)5& D$4$?)% shipper should file a claim with the carrier immediately upon delivery b. L$&)5& D$4$?)% shipper should file a claim with the carrier within three days from delivery. %he filing of a notice of claim is not a condition precedent. PRESCRIPTIVE PERIOD 1. C3$'&=7') 36 =7&A75 &A) PA7*7::75)'
@hen to file a claim with carrier K condition precedent K if goods arrived in damaged condition, claim must be filed by the shipper within the following period otherwise recovery is barred= a. $mmediately K if damage is apparent* or b. @ithin < hours from delivery K if damage is not apparent. @hen to file a case in co!rt K prescriptive period= a. @ithin / years, if no bill of lading has been issued* or b. @ithin 1; years, if bill of lading has been issued.
-.
I5&)65$&735$* %$667$?) @634 @36)7?5 :36& &3 &A) PA7*7::75)' (C$667$?) 3@ G33+' ;< S)$ A%&# @hen to file a claim with carrier J not condition precedent. a. (pon discharge of goods, if the damage is apparent, claim should be filed immediately* or b. $f damage is not apparent, claim should be filed within 3 days from delivery.
WA)5 T3 F7*) A C$') I5 C3(6& @ithin a period of 1 year from discharge.
(nder the !O:2A, suits for loss or damage to the cargo should be brought =7&A75 35) <)$6 $@&)6: 1. Helivery of the goods* or . %he date when goods should have been delivered. %he one-year prescriptive period is '(':)5+)+ by= 1. %he e'press agreement of the parties* . %he filing of an action in court until it is dismissed. %he one-year period shall run from delivery of the last pac&age and is not suspended by e'tra)udicial demand. -easons% 1. 6atters affecting transportation of goods by sea should be decided at the shortest time possible. . %he !ivil !ode does not apply to a special law li&e !O:2A. %he insurer e'ercising its right of subrogation is bound by the one-year prescriptive period. 7owever, it does not apply to the claim against the insurer for the insurance proceeds because the claim against the insurer is based on contract, it e'pires in 1; years. %he period does not apply to conversions or misdeliveries. $t contemplates a situation where no delivery at all was made because the goods had perished, gave out of commerce, or disappeared in such a way that their e'istence is un&nown or cannot be recovered. $t starts from delivery to the arrastre operator, not consignee. A stipulation reducing the one year period is null and void but a written agreement to suspend it is valid. %he 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.
S)%&735 .(6# 3@ &A) COGSA :6387+)': (nless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier of his agent at the port of discharge or at the time of the removal of the goods into the custody of the person entitled to delivery by the carrier of the goods as described in the bill of lading.
$f the loss or damage is not apparent, the notice must be given within three days of delivery. 2aid notice of loss or damage may be endorsed on the receipt of the goods given by the person ta&ing delivery thereof. %he notice in writing need not be given if the state of the goods has at the time of their receipt, been the sub)ect of )oint survey or inspection.
%he carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered* provided, that, if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or pre)udice the right of the shipper to bring suit within one year after the delivery of the goods or that date when the goods should have been delivered. $n the case of any actual or apprehended loss or damage, the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. (+el,#an .verseas C1arter#n, an4 %1#pp#n, N.:. v. 01#l#pp#ne 2#rst 3nsurance Co., 3nc. $8$ %C&A 2$ '2552)" As stated in the same provision, a failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within one year. (:#tu,, 0an4ect of Commerc#al La6 an4 Aur#spru4ence, $r4 e4., !!7, p. $$$" %his one year prescriptive period also applies to the shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading. (2#l#p#no 8erc1ants 3nsurance Co., 3nc. v. AleHan4ro, 4/ %C&A 42" $n 9oadstar 2hipping !o., $nc. v. !A ($ / %C&A $$!", the 2! ruled that a claim is not barred by prescription as long as the one year period has not lapsed. (+el,#an .verseas C1arter#n, an4 %1#pp#n, N.:. v. 01#l#pp#ne 2#rst 3nsurance Co., 3nc. $8$ %C&A 2$ '2552)"
TACCLE TO TACCLE RULE %he shipper shall be responsible for the goods the moment it passes through one side of the ship for the purpose of loading until it passes through the other side for discharging. %here are two tac&les involved in the operation* one for loading, the other for unloading. ANG VS. AMERICAN STEAMSHIP AGENCIES (1! SCRA 6.1# F$%&': Cau Cue !ommercial 1an& of 7ong&ong agreed to sell 1<; pac&ages of galvaniDed steel durDinc sheets to 7erminio %eves for M3 ,<4-. /. 2aid agreement was sub)ect to the following terms= the purchase price should be covered by a ban& draft which should be paid by %eves in e'change for the delivery to him of the bill of lading to be deposited with hon&ing and 2hanghai 1an& of 6anila* that %eves would present said bill of lading to carrier5s agent, American 2teamship Agencies which would then issue the >permit to deliver imported articles? to be presented to the 1ureau of customs to obtain the release of the articles. Cau Cue shipped the articles aboard 2.2. %ensai 6aru owned by +issho 2hipping !o., of which the American 2hipping is the agent in the Philippines. @hen the Articles arrived in manila, 7on&ong 2hanghai5s 1an& notified %eves of the arrival of the goods and re8uested for the payment of the demand draft. %eves, however, failed to pay the
demand draft. 2o, the ban& returned the bill of lading and the demand draft to Cau Cue which endorsed the bill of lading to Homingo Ang. Hespite his non-payment, %eves was able to obtain a ban& guarantee in favor of the American 2teamship Agencies, the carrier5s agent. %hus, %eves succeeded in securing a > permit to deliver imported articles? from the carrier5s agent, which he presented to the 1ureau of !ustoms, that released the said articles to him. 2ubse8uently, Homingo Ang claimed the articles from American 2teamship, by presenting the indorsed bill of lading, but he was informed that it had delivered the articles to %eves. Ang filed a complaint in the !ourt of Birst $nstance of 6anila against American shipping agencies, for having wrongfully delivered the goods. %he American 2teamship filed for a motion to dismiss, citing the carriage of :oods by 2ea Act, section 3 paragraph <, 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. %hus, the lower court dismissed the action, on the ground of prescription. I''(): @hether or not the !arriage of :oods by 2ea Act 2ection 3, Paragraph <, applies to the case at barA H)*+: %he provision of the law spea&s of >loss or damage?. 1ut there was no damage caused to the goods which were delivered intact to 7erminio %eves. As defined by the !ivil !ode and as applied to section 3, paragraph <, of the !arriage of :oods 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 e'istence is un&nown or they cannot be recovered. $t does not include a situation where there was indeed delivery, but delivery to the wrong person. %he applicable rule on prescription is that found in the !ivil !ode, either= ten years for breach of contract or four years for 8uasi-delict. $n either case, the plaintiff5s cause of action has not yet prescribed. %hus, the case is remanded to the court a 8uo for further proceedings. MERCHANTS INSURANCE COMPANY VS. ALE2ANDRO (1/0 SCRA /-# F$%&': Plaintiff !hoa %ie& 2eng filed a complaint against the petitioner before the then !ourt of Birst $nstance of 6anila for recovery of a sum of money under the marine insurance policy on cargo. 6r. !hoa alleged that the goods he insured with the petitioner sustained loss and damage in the amount of P34, .-7. /. %he said goods were delivered to the arrastre operator 0. ,aDon, $nc., on Hecember 17, 1.7/ and on the same date were received by the consignee-plaintiff. Petitioner disclaims liability and imputes against plaintiff the commission of fraud. A similar complaint was filed by 3oseph 1enDon !hua against the petitioner for recovery under the marine insurance policy for cargo alleging that the goods insured with the petitioner sustained loss and damage in the sum of P44,../.<.. %he goods were delivered to the plaintiff-consignee on or about 3anuary 4- -, 1.77.
Petitioner filed third-party complaints against private respondents for indemnity, subrogation, or reimbursement in the event that it is held liable to the plaintiff. %he private respondents, carriers Brota Oceanica 1rasiliera and Australia-@est Pacific 9ine alleged in their separate answers that the petitioner is already barred from filing a claim because under the !arriage of :oods by 2ea Act, the suit against the carrier must be filed within one year after delivery of the goods or the date when the goods should have been delivered Petitioner contended that provision relied upon by the respondents applies only to the shipper and not to the insurer of the goods. ,espondent )udge dismissed both third-party complaints. I''(): @hether or not the one-year period within which to file a suit against the carrier and the ship, in case of damage or loss as provided for in the !arriage of :oods by 2ea Act applies to the insurer of the goods. H)*+: %he coverage of the Act includes the insurer of the goods. Otherwise, what the Act intends to prohibit after the lapse of the one-year prescriptive period can be done indirectly by the shipper or owner of the goods by simply filing a claim against the insurer even after the lapse of one year. %his would be the result if we follow the petitionerJs argument that the insurer can, at any time, proceed against the carrier and the ship since it is not bound by the time-bar provision. $n this situation, the one-year limitation will be practically useless. %his could not have been the intention of the law which has also for its purpose the protection of the carrier and the ship from fraudulent claims by having Imatters affecting transportation of goods by sea be decided in as short a time as possibleI and by avoiding incidents which would Iunnecessarily e'tend the period and permit delays in the settlement of 8uestions affecting the transportation.I $n the case at bar, the petitionerJs action has prescribed under the provisions of the !arriage of :oods by 2ea Act. 7ence, whether it files a third-party complaint or chooses to maintain an independent action against herein respondents is of no moment. MAYER STEEL PIPE CORP. VS. CA (1! CIME 1!!1# F$%&': 7ong&ong :overnment 2upplies Hepartment henceforth, 7ong Gong contracted petitioner 6ayer 2teel Pipe !orp to manufacture and supply various steel pipes and fittings from August to October 1.-3, 6ayer shipped the said items to 7ong Gong. Prior to shipment the items were insured against all ris&s with respondent 2outh 2ea 2urety and $nsurance !o. and !harter $nsurance !orp for M 1 ,77 .;. with 2outh 2ea and M1<.,<7; with !harter. Petitioner5s )ointly appointed $ndustrial $nspection $nc as 3 rd party inspector to e'amine the items to see if they were in accordance with the contract. %hey certified it as such prior to shipment. 7owever, when they reached 7ong Gong it was revealed that a substantial portion was damaged. Petitioner5s now claim for damages against the respondents for indemnity under the insurance contract. ,espondents paid part of the petitioner5s demand but declined the rest claiming that the insurance surveyor5s report allegedly showed that the damage was a factory defect and hence not covered by the insurance policies. %he lower court ruled in favor of the petitioner finding the damage not caused by manufacturing defects. $t also noted that the insurance contract insured against >all
ris&s? or all causes of conceivable loss or damage save those caused by fraud or intentional misconduct. At the court of appeals the !A found the >all ris&s? provision covered the damage endured but set aside the decision because the complaint had been bared by prescription. 2ec 3"/# of the !O:2A specifically bared it because it had been more than 1 year since the damage had been done before the demand was made. H)*+: %he cause of action had not yet prescribed. ,atio= 2ec 3"/# of the !O:2A covers only the liability of the carrier which is e'tinguished if no suit is brought within a period of one year. 7owever, the liability of the insurer is not e'tinguished because the !O:2A governs the relationship between carrier and shipper, and consignee and insurer. $t defines a contract of carriage. %he relationship at bar is properly governed by the $nsurance code. %hus the !A5s finding of prescription as per the !O:2A is overturned. SHEWARAM VS PAL (11 SCRA 606 (1!66# F$%&': A PA9 tic&et, on the reverse side, stated in fine print that if the value of baggage is not stated, and the baggage is lost, the ma'imum liability of PA9 is P1;;.;; if value in e'cess of P1;;.;; is stated, PA9 will charge e'tra because PA9 is being held liable for an amount e'ceeding P1;;.;;. 2hewaram, a 7indu from Havao, boarded a PA9 plane for 6anila. Among his baggage was a camera with P-;;.;; and it was lost. PA9 offered to pay P1;;.;;. 2hewaram wanted full payment of P-;;.;;. I''(): @hether the limited liability rule shall apply in the case at barA H)*+: %he limited liability rule shall not apply. 2ince this is a stipulation on 8ualified liability, which operates to reduce the liability of the carrier, the carrier and the shipper must agree thereupon. Otherwise, the carrier will be liable for full. PA9 is fully liable "for full# because 2hewaran did not agree to the stipulation on the tic&et, as manifested by the fact that 2hewaram did not sign the tic&et. %ic&et should have been signed. ONG YUI VS. CA (!1 SCRA --.# F$%&': On august /, 1./7, Ong Ciu was a fare paying passenger of respondent PA9 from 6actan, !ebu to 1utuan !ity wherein he was scheduled to attend a trial. As a passenger, he chec&ed in one piece of luggae, blue maleta for which he was issued a claim tic&et. (pon arrival at 1utuan !ity, petitioner claimed his luggage but it could not be found. PA9 1utuan sent a message to PA9 !ebu which in turn sent a message to PA9 6anila that same afternoon. PA9 6anila advised PA9 !ebu that the luggage has been overcarried to 6anila and that it would be forwarded to PA9 !ebu that same day. PA9 !ebu then advised PA9 1utuan that the luggage will be forwarded the following day, on scheduled morning flight. %his message was not received by PA9 1utuan as all the personnel had already gone for the day. 6eanwhile, Ong Ciu was worried about the missing luggage because it contained vital documents needed for the trial the ne't day so he wired PA9 !ebu demanding delivery of his luggage before noon that ne't day or he would hold PA9 liable for damages based on gross negligence. 0arly morning, petitioner went to the 1utuan Airport to in8uire about the luggage but did not wait for the arrival of the morning flight at 1;=;;am. which carried his luggage. A certain Hagorro, a driver of a colorum car, who also used to drive the petitioner volunteered to ta&e the luggage to the petitioner. 7e revelaed that the documents were lost. Ong Ciu demanded from PA9 !ebu actual and compensatory damages as an incident of breach of contract of carriage.
I''(): @hether or not PA9 is guilty of only simple negligence and not gross negligenceA @hether the doctrine of limited liability doctrine applies in the instant caseA H)*+: PA9 had not acted in bad faith. $t e'ercised due diligence in loo&ing for petitioner5s luggage which had been miscarried. 7ad 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. $n the absence of a wrongful act or omission or fraud, the petitioner is not entitled to moral damages. +either is he entitled to e'emplary damages absent any proof that the defendant acted in a wanton, fraudulent, rec&less manner. %he limited liability applies in this case. On the presumed negligence of PA9, its liability for the loss however, is limited on the stipulation written on the bac& of the plane %ic&et which is P1;; per baggage. %he petitioner not having declared a greater value and not having called the attention of PA9 on its true value and paid the tariff therefore. %he stipulation is printed in reasonably and fairly big letters and is easily readable. 6oreso, petitioner had been a fre8uent passenger of PA9 from !ebu to 1utuan !ity and bac& and he being a lawyer and a businessman, must be fully aware of these conditions. V. PUBLIC SERVICE ACT (COMMONWEALTH ACT NO. 1/6# PUBLIC SERVICE - $ncludes 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. (%ec. $b, CA 4(" %he Public 2ervice !ommission created under the Public 2ervice 9aw has already been abolished under P.H. +o. 1 and other issuances. $t has been replaced by the following government agencies= 9%O* 9%B,1* A%O* 1O0* +%!* +0A* 0,1* +@,!* !A1* and 6arina. TA6))BF3*+ P(6:3'): 1. %o protect the public against unreasonable charges and poor, inefficient service* . %o protect and secure investments in public services* 3. %o prevent ruinous competition. AUTHORITY TO OPERATE PUBLIC SERVICES )eneral -!le% +o public service shall operate without having been issued a certificate of public convenience or a certificate of public convenience and necessity. .,ceptions% 1. @arehouses* . Animal drawn vehicles and bancas moved by oar or sail* 3. Airships, e'cept for the fi'ing of ma'imum rates for fare and freight* <. ,adio companies, e'cept for rates fi'ing* 4. Public services owned or operated by the government, e'cept as to rates fi'ing* /. $ce plants* and 7. Public mar&ets. PUBLIC UTILITIES
- Privately owned and operated business whose services are essential to the general public. A foreigner can own a public utility. %he right to operate a public utility may e'ist independently and separately from the ownership of the facilities thereof. One can own facilities without operating them as utility, or conversely, one may operate a public utility without owning the facilities used to serve the public. %he !onstitution re8uires a franchise for the operation of public utility but it does not re8uire a franchise before one can own the facilities needed to operate a public utility. (-ata4 vs. Garc#a, 24$ %C&A 4$("
3-A$C9(4. A$+ C.-T(3(CAT. 23 #;*8(C C2$>.$(.$C. %he trend is not to re8uire a legislative franchise. 7owever, even if there was already a delegation of authority to a specific administrative agency to issue certificates of public convenience, it does not follow that a legislative franchise is no longer necessary. $t would still depend on the enabling law creating or authoriDing the administrative body, which may still re8uire a legislative franchise. A certificate of public convenience is not necessary for the issuance of a legislative franchise. C)6&7@7%$&) 3@ P(;*7% C358)57)5%): An authoriDation issued by the appropriate government agency for the operation of public services for which no franchise, either municipal or legislative, is re8uired by law, e.g., common carriers. C)6&7@7%$&) 3@ P(;*7% C358)57)5%) A5+ N)%)''7&<: An authoriDation issued by the appropriate government agency for the operation of public service for which a prior franchise is re8uired by law* e.g. telephone and other services. A !ertificate of Public !onvenience or a !ertificate of Public !onvenience and +ecessity constitutes neither a franchise nor a contract, confers no property right, and is a mere license or a privilege. %he holder of said certificate does not ac8uire a property right in the route covered thereby. +or does it confer upon the holder any proprietary right or interest or franchise in the public highways. ,evocation of this certificate deprives him of no vested right. +ew and additional burdens, alteration of the certificate, or even revocation or annulment thereof is reserved to the 2tate. (Lu=ue vs. :#lle,as, $5 %C&A 458". FRANCHISE $s a special privilege and its terms and conditions are specifically prescribed by !ongress. %hus, the manner of granting the franchise, to whom it may be granted, the mode of conducting the business, the character and 8uality of the service to be rendered and the duty of the grantee to the public in e'ercising the franchise are defined in clear and une8uivocal language by the legislature. %hese conditionalities are made more stringent when the franchise involves the operation of a game played for bets, such as )ai-alai, which is conceded as a menace to morality. Branchises are granted in accord with this universal principle. (Del 8ar v. 0AGC.& $/8 %C&A 77/" An $(&A367&< or :)647& is a license or provisional authority granted to a public utility to operate as an implementation of a legislative enactment. $n fine, an authority or permit is a detailed implementation of a legislative franchise. (?.%. v. Almon4 ( 01#l. $5!"
C35+7&735' &A$& M('& C35%(6 75 &A) G6$5& 3@ C)6&7@7%$&) 3@ P(;*7% C358)57)5%) $5+ C)6&7@7%$&) 3@ P(;*7% C358)57)5%) $5+ N)%)''7&<: Applicant must be a citiDen of the Philippines or a corporation or entity /;O of the stoc& or paid-up capital of which is owned by such citiDens* Applicant must prove public necessity* Applicant must prove that the operation of the public service proposed and the authoriDation to do business will promote the public interest on a proper and suitable manner* Applicant must have sufficient financial capability to underta&e the proposed services and meeting the responsibilities incident to its operation. Primordial considerations are public interest, necessity and convenience.
G63(5+' @36 R)83%$&7359C$5%)**$&735 3@ &A) C)6&7@7%$&) 3@ P(;*7% C358)57)5%): @here the holder is a mere dummy* @here the operator ceased operation and placed his buses on storage* @here the operator abandons totally the service. clear (nder section 1/ "n# of Public 2ervice Act, the power of the !ommission to suspend or revo&e any certificate may only be e'ercised whenever the holder thereof has violated or willfully and contumaciously refused to comply with any order, rule or regulation of the !ommission or any provision of the Act. )eneral -!le% Prior notice and hearing. .,ception% @hen it is necessary to avoid serious and irreparable damage or inconvenience to the public or private interest, in which case, a suspension not more than 3; days may be ordered, prior to the hearing. P3=)6' R)K(7675? N3&7%) $5+ H)$675? $ssuance of !ertificate of Public !onvenience or !ertificate of Public !onvenience and +ecessity* Bi'ing of rates, tolls, and charges* 2etting up of standards and classifications* 0stablishment of rules to secure accuracy of all meters and all measuring appliances* $ssuance of orders re8uiring establishment or maintenance of e'tension of facilities* ,evocation, or modification of !ertificate of Public !onvenience or !ertificate of Public !onvenience and +ecessity* 2uspension of !ertificate of Public !onvenience or !ertificate of Public !onvenience and +ecessity, e'cept when it is necessary to avoid serious and irreparable damage or inconvenience to the public or private interest, in which case, a suspension not more than 3; days may be ordered, prior to the hearing. P3=)6' EF)6%7'$;*) W7&A3(& P6736 N3&7%) $5+ H)$675? $nvestigation of any matter concerning public service* ,e8uiring operators to furnish safe, ade8uate, and proper service* ,e8uiring public services to pay e'penses of investigation* Faluation of properties of public utilities* 0'amination and test of measuring appliances* :rant of special permits to ma&e e'tra or special trips in territories specified in the certificate* (niform accounting system and furnishing of annual reports*
!ompelling compliance with the laws and regulations.
ACTS REEUIRING PRIOR APPROVAL 0stablish and maintain individual or )oint rates* 0stablish and operate new units* $ssue free tic&ets* $ssue any stoc& or stoc& certificates representing an increase of capital* !apitaliDe any franchise in e'cess of the amount actually paid to the :overnment* 2ell, alienate, mortgage or lease property, certificates or franchise UNLAWFUL ACTS OF PUBLIC UTILITY COMPANIES 0ngagement in public service business without first securing the proper certificate* Providing or maintaining unsafe, improper or inade8uate service as determined by the proper authority* !ommitting any act of unreasonable and un)ust preferential treatment to any particular person, corporation or entity as determined by the proper authority* ,efusing or neglecting to carry public mail upon re8uest. PRIOR OPERATOR RULE - %he rule allowing an e'isting franchised operator to invo&e a preferential right as against a second operator within the authoriDed territory as long as he renders ade8uate and economical service. P(6:3'): %o prevent ruinous and wasteful competition in order that the interests of the public would be conserved and preserved. %he policy is not to issue a certificate to a second operator to cover the same field and in competition with a first operator who is rendering sufficient, ade8uate and satisfactory service. %he prior operator must first be given an opportunity to improve its service, if inade8uate or deficient. %he granting of preference to an old operator applies only when said operator has made as offer to meet the increase in traffic or demand for service and not when another operator, even a new one, has made the offer to serve the new line or increase the service on said line. %he rule of preference protects only those who are vigilant, in meeting the needs of the traveling public. #-2T.CT(2$ 23 ($>.4T0.$T -;8. %he 9aw aims to protect not only the public, but the operations as well. $t is the government5s duty to protect the investment of the operators of public utilities from unfair, un)ustified 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. $f it turns out, after the hearing, that the circumstances between the two applicants are more or less e8ual, then the applicant who applied ahead of the other, will be granted the certificate. REGISTERED OWNER RULE %he registered owner of a certificate of public convenience is liable to the public for the in)uries or damages suffered by third persons caused by the operation of said vehicle, even though the same
had been transferred to a third person. %he registered owner is not allowed to escape responsibility by proving that a third person is the actual and real owner R)$'35: $t would be easy for him, by collusion with others or otherwise, to transfer the responsibility to an indefinite person, or to one who possesses no property with which to respond financially for the damage or in)ury done. (<rezo, et al. vs. Aepte 52 01#l 5$) A registered owner is the lawful operator insofar as the public and third persons are concerned* conse8uently, it is directly and primarily responsible for the conse8uences of its operation. $n contemplation of law, the ownerEoperator of record is the employer of the driver, the actual operator and employer being considered as merely its a,ent. %he same principle applies even if the registered owner of any vehicle does not use it for public service, (<=u#table Leas#n, Corp vs. %u7om, $88 %C&A 44/ '2552)), or otherwise stated, to privately-owned vehicles. RATEBFIDING POWER %he rate to be fi'ed must be )ust, founded upon conditions which are fair and reasonable to both the owner and the public. A rate is )ust and reasonable if it conforms to the following re8uirements= One which yields to the carrier a fair return upon the value of the property employed in performing the service* and One which is fair to the public for the service rendered. EF%):&735' &3 C$;7& '<'&)4: > @hen neither of the parties to the pernicious &abit system is being held liable for damages. > @hen 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 )eepney was made > @hen the riding public was not bothered or inconvenienced at the very least by the illegal arrangement. (L#m vs. CA, $7$ %C&A $!4" %he policy, which prohibits the >Gabit 2ystem?, may also be applied to vessels and aircrafts that are covered by certificates of public convenience and necessity. Persons who do not have such certificates cannot circumvent the law by using the certificate of another. " %ec. 2$, 0ubl#c %erv#ce Act" BOUNDARY SYSTEM F)$&(6)': %he driver does not receive a fi'ed wage but gets only the e'cess of the receipt of the fares collected by him over the amount he pays to the )eep owner. %he gasoline consumed by the )eep is for the account of the driver. %hese two features are not sufficient to withdraw the relationship between the owner and the driver from that of employer and employee. %he )eepney owner is subsidiarily liable as employer in accordance with Art.1;3 of ,P! (8a,boo vs. +ernar4o, 7 %C&A !/2" CILUSANG MAYO UNO LABOR CENTER VS GARCIA
-.! SCRA 0." (1!!/# F$%&': %he Gilusang 6ayo (no 9abor !enter "G6(# assails the constitutionality and validity of a memorandum which, among others, authoriDe provincial bus and )eepney operators to increase or decrease the prescribed transportation fares without application therefore with the 9%B,1, and without hearing and approval thereof by said agency. I''(): @hether or not the absence of notice and hearing and the delegation of authority in the increase or decrease of transportation fares to provincial bus and )eepney operators is illegalA H)*+: (nder 2ection 1/ "c# of the Public 2ervice Act, as amended, the legislature delegated to the defunct Public 2ervice !ommission the power of fi'ing the rates of public services. 9%B,1, the e'isting regulatory body today, is li&ewise vested with the same under 0'ecutive Order ; . %he authority given by the 9%B,1 to the bus operators to set fares over and above the authoriDed e'isting fare is illegal and invalid, as it is tantamount to undue delegation of legislative authority. (nder the ma'im potestas delegate non delegari potest K >what has been delegated cannot be delegated.? %he policy allowing provincial bus operators to change and increase their fares would result not only to a chaotic situation but to an anarchic state of affairs. %his would leave the riding public at the mercy of transport operators who may increase fares, every hour, every day, every month or every year, whenever it pleases them or whenever they deem it necessary to do so. Burthermore, under the 2ection 1/ "a# of Public 2ervice Act, there must be proper notice and hearing in the fi'ing of rates, to arrive at a )ust and reasonable rate acceptable to both the public utility and the public. PHILIPPINE AIRLINES INC. VS. CIBIL AERONAUTICS BOARD (-10 SCRA 0."# F$%&': :rand Air applied for a !ertificate of Public !onvenience and +ecessity with the !ivil Aeronautics 1oard "!A1#. %he !hief 7earing Officer issued a notice of hearing directing :rand Air to serve a copy of the application and notice to all scheduled Philippine Homestic operators. :rand Air filed its compliance and re8uested for a %emporary Operating Permit "%OP#. PA9 filed an opposition to the application on the ground that the !A1 had no )urisdiction to hear the application until :rand Air first obtains a franchise to operate from !ongress. %he !hief 7earing Officer denied the opposition and the !A1 approved the issuance of the %OP for a period of 3 months. %he opposition for the %OP was li&ewise denied. %he !A1 )ustified its assumption of )urisdiction over :rand Air5s application on the basis of ,epublic Act 77/ which gives it the specific power to issue any %OP or !ertificate of Public !onvenience and +ecessity. I''(): @hether or not the !A1 can issue a !ertificate of Public !onvenience and +ecessity or %OP even though the prospective operator does not have a legislative franchiseA H)*+: Ces, as mentioned by the !A1, it is duly authoriDed to do so under ,epublic Act 77/ and a legislative franchise is not necessary before it may do so, since !ongress has delegated the authority to authoriDe the operation of domestic air transport services to the !A1, an administrative agency. %he delegation of such authority is not without limits since !ongress had set specific standard and limitations on how such authority should be e'ercised.
Public convenience and necessity e'ists when the proposed facility will meet a reasonable want of the public and supply a need which the e'isting facilities do not ade8uately afford. %hus, the 1oard should be allowed to continue hearing the application, since it has )urisdiction over it provided that the applicant meets all the re8uirements of the law. TATAD VS. GARCIA (-/. SCRA /.6 GR. NO. 11/---. APRIL 6 1!!0# F$%&': HO%! planned to construct a light railway transit line along 0dsa. 0H2A 9,% !orporation, 9td., a foreign corporation was awarded the contract to build, lease and transfer the said light railway. %he said award was 8uestioned by the petitioners on the basis that a foreign corporation cannot own the 0H2A 9,% $$$, a public utility as it violates the !onstitution. I''(): @hether or not an owner and lessor of the facilities used by a public utility constitute a public utilityA H)*+: 0H2A 9,% !orporation, 9td. $s admittedly a foreign corporation >duly incorporated and e'isting under the laws of 7ong Gong?. 7owever, there is no dispute that once the 0H2A 9,% $$$ is constructed, the private respondent, as lessor, will turn it over to HO%! as lessee, for the latter to operate the system and pay rentals for the said use. @hat private respondent owns are the rail trac&s, rolling stoc&s, rail stations, terminals and the power plant, not a public utility. @hile a franchise is needed to operate these facilities to serve the public, they do not themselves constitute a public utility. @hat constitutes a public utility in not their ownership but their use to serve the public. %he !onstitution, in no uncertain terms, re8uires a franchise for the operation of a public utility. 7owever, it does not re8uire 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. $n law, there is a clear distinction between the >operation? of a public utility and the ownership of the facilities and the e8uipment used to serve the public. ALBANO VS. REYES (110 SCRA -6/# F$%&': On April ;, 1.-7, the PPA " Philippine Ports Authority # 1oard adopted its ,esolution +o. -4; directing PPA management to prepare the $nvitation to 1id and all relevant documents and technical re8uirements necessary for the public bidding of the development, management and operation for the 6$!% " leasing as well as to implement this pro)ect. ,espondent 2ecretary ,eyes created a 7 man >2pecial 6$!% 1idding !ommittee? charged with all bid proposals. After evaluation of the seven companies that submitted bids, the committee recommended the award of the contract to $!%2$ for having offered the best technical and financial proposal. 7owever, before the 6$!% contract could be signed, cases were filed against respondents which assailed the legality and regularity of the bidding. 1ut on 6ay 1-, 1.--, the President of the Philippines approved the proposed 6$!% !ontract with specific directives on the part of the PPA and the contractor $!%2$. 6eanwhile, ,odolfo Albano, the petitioner filed a petition assailing the award of the 6$!% contract to $!%2$ claiming that the former is a public utility and therefore needs a legislative franchise before it can legally operate as a public utility, pursuant to Article 1 , 2ec 11 of the 1.-7 !onstitution.
I''(): @hether or not the 6$!% needs a legislative franchise from !ongress to legally operate as a public utilityA H)*+: +O. 0O +o. 3; dated 3uly1/, 1.-/ provides for the immediate recall of the franchise granted to the 6anila $nternational Port %erminals $nc., and authoriDe the PPA to ta&e over, manage and operate the 6anila $nternational Port !omple' at +orth 7arbor, 6anila and underta&e the provision of cargo handling and port related services thereat, in accordance with PH -47 and other applicable laws and regulations. 2ec. / of PH -47 otherwise &nown as the ,evised !harter of the PPA provides as one of the corporate duties of the PPA is to provide services " whether on its own, by contract, or otherwise # within the Port Histricts and the approaches thereof including but not limited toY As stated above, PPA has been tas&ed under 0O +o. 3;, with the management and operation of the 6anila $nternational Port !omple' in accordance with PH -47 and other applicable laws and regulations. 7owever, PH -47 itself authoriDes the PPA to perform the service by itself, by contracting it out, or through other means. ,eading 0O +o. 3; and PH -47 together, the inescapable conclusion is that the lawma&er has empowered the PPA to underta&e by itself the operation and management of the 6$!P or to authoriDe its operation and management by another by contract or other means at its option. %he latter power having been delegated to the PPA, a franchise from !ongress to authoriDe an entity other than the PPA to operate and manage the 6$!P becomes unnecessary. %herefore, PPA5s act of privatiDing the 6$!% and awarding the !ontract to $!%2$ are wholly within its )urisdiction under its !harter which empowers the PPA to >supervise, control, regulate, construct, maintain, operate and provide such facilities necessary in the ports vested?. LITIMCO VS. LA MALLORCA (1" MAY 1!6-# F$%&: %omas 9itimco filed a petition with the Public 2ervice !ommission praying for the authority to operate a bus service between 6anila and 6alolos via 2ta. $sabel using 1; buses. 2everal operators filed their opposition however none of them submitted their evidence to support their opposition. %he petition was then submitted for decision. 7owever, 9a 6allorca, another bus operator, moved for the re-opening of the case claiming that if the petition of 9itimco was to be granted it would wor& to its pre)udice. %he motion was granted but when re8uested to present evidence to support its opposition, 9a 6allorca moved for postponement only to file its own application to operate the same line. %he P2! approved the application of 9a 6allorca from which 9itimco appealed. I''(): @hether the award of the franchise in favor of 9a 6allorca was properA H)*+: +o. %he 2upreme !ourt held that since there was no doubt that 9itimco was the first to apply for the service in the territory in 8uestion and its financial capability was proven, its application should be granted. %he !ourt pointed out that if an applicant is 8ualified financially, and is able to underta&e the service, he should be given the preference as a matter of fairness and )ustice. %he priority in the filing of the application for a certificate of public convenience is, other conditions being e8ual, an important factor in determining the rights of the public service companies. $t is only in cases when the incapacity or incapability of the first applicant is established may the other applicants be considered. HALILI VS. CRU, (-1 2UNE 1!6"#
F$%&': 7erein respondent filed, on 2eptember 1., 1./1, with the Public 2ervice !ommission an application, praying for the grant of a certificate of public convenience to operate, under P(1 denomination, ten buses between +orDagaray "1ulacan# and Piers "6anila#. Petitioner, in his opposition alleged, substantially, that he was an operator of a bus service on the line applied for, enumerating at the same time the other lines he operated which were traversed by the route mentioned in respondentJs application* that his service, as well as that of other bus operators on the route, was more than ade8uate to meet the demands of the traveling public* that the grant of the application would merely result in wasteful and ruinous competition, and that the respondent was not financially capable of operating and maintaining the service proposed by him. %he Public 2ervice !ommission rendered a decision on Bebruary 13, 1./3, granting a certificate of public convenience to respondent ,uperto !ruD to operate ten buses under P(1 denomination of the line +orDagaray "1ulacan# - Piers "6anila# passing through the routes for. $t is the above-mentioned decision of the Public 2ervice !ommission that is now sought to be reviewed by this !ourt. Petitioner contends that= 1. I%he finding of the Public 2ervice !ommission that there was a public need for the operation by respondent of ten buses on the line +orDagaray "1ulacan# - Piers "6anila# is not supported by the evidence* . I%he Public 2ervice !ommission erred when it did not recogniDe the fact that petitioner-appellant was rendering sufficient and ade8uate service on the line in 8uestion* and 3. I%he Public 2ervice !ommission erred in failing to give petitioner-appellant the right of protection to investment to which petitioner-appellant is entitled.I $n support of his first two contentions petitioner argues that the 4;; passengers found by the !ommission as commuting daily from +orDagaray to 6anila could easily be accommodated in the buses of e'isting operators* that the e'isting operators were authoriDed to operate 31 buses which made around 1;; round trips a day* that since a bus could accommodate about 4; passengers, the e'isting authoriDed services could easily accommodate not only the 4;; but even 4;;; passengers a day. Petitioner also asserted that the !ommission failed to consider that ;; of the 4;; commuters wor&ed in the ,epublic !ement Bactory located at +orDagaray and so there were really only 3;; commuters daily traveling on the +orDagaray - 6anila line. Petitioner further claimed that the new terminal proposed in the application was not based on actual need, because there were no importing firms, or business establishments, or manufacturing concerns, in +orDagaray, whose employees had to ma&e trips to the piers at the south harbor in 6anila. On the 8uestion of public necessity, petitioner pointed out that the evidence presented by the respondent consisted only of the testimony of two witnesses who did not ma&e any formal or systematic study of the movement and fre8uency of public utility buses, so that their testimonies were based only on casual observations. On the other hand, as petitioner pointed out, the oppositors presented five witnesses, two of whom made meticulous, systematic and daily observations on the line applied for. Petitioner li&ewise asserted that public necessity did not re8uire the operation of the ten buses applied for by the respondent because of the fact that on Hecember ;, 1./1, the Public 2ervice !ommission granted to herein petitioner, in !ase +o. /1-4-;7, authority to operate only 1; buses on the line +orDagaray - 6anila, even if he had applied for ; buses* and that out of the many
applications to operate buses from Paradise Barms "1ulacan# to 6anila, only 1; buses were authoriDed. I''(): @hether or not preference over common carrier5s interest will prevail over public convenienceA H)*+: %he decision of the Public 2ervice !ommission is affirmed. I@hile it is the duty of the government as far as possible to protect public utility operators against unfair and un)ustified competition, it is nevertheless obvious that public convenience must have the first consideration. . . .I %he public convenience is properly served if passengers who ta&e buses at points in one part of a line are able to proceed beyond those points without having to change buses. On this point this !ourt said= I$t is the convenience of the public that must be ta&en into account, other things being e8ual, and that convenience would be effectuated by passengers who ta&e buses at points in one part of a line being able to proceed beyond those points without having to change buses and to wait the arrival of buses of a competitive operator. @e can perceive how under such conditions one public utility could gain business at the e'pense of a rival.I !ertainly the Public 2ervice !ommission has power to grant a certificate of public convenience to a new operator, and the old operator cannot with reason complain that it had not been given opportunity to improve its e8uipment and service, if it is shown that the old operator has not placed in the service all the units of e8uipment that it had been authoriDed to operate, and also when the old operator has violated, or has not complied with, important conditions in its certificate. 13 $n the instant case, it has been shown that petitioner had not operated all the units that it was authoriDed to operate.

A. What Is A "Common Carrier"?: December 22, 1988)

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A. What Is A "Common Carrier"?: December 22, 1988)

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TRANSPORTATION LAW 1

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!ompelling compliance with the laws and regulations.

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