Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
BALGOA
November 19, 2016
Part 1 of 2
The Law on Transportation is subject to governing laws.
A common carrier is imbued with public interest and is therefore
subject to government regulations. The laws that provide regulations
for common carriers are the public service laws provided by public
service commissions. The public service commissions now are
supplanted by various government agencies.
A contract of transportation involves the carriage of goods and
passengers from one place to another place of destination subject to
payment of fare or freight; it must be for hire or subject to
compensation; and must be for public use. The mode of
transportation may be on land, sea, or air.
GOVERNEMNT AGENCIES REGULATING LAND, SEA, AND AIR
TRANSPORTATIONS
LAND
1. Department of Transportation and Communication
2. LTFRB has jurisdiction over applications for certificate of
public convenience; franchises
3. LTO registration of motor vehicles, issuances of licenses,
and enforcement of land transportation rules and
regulations; the rule is that whoever is the registered owner,
regardless of whether or not the registered owner is the true
owner, the person liable would always be registered owner
4. MMDA in Manila; created by RA 7924; to set policies
concerning traffic in Metro Manila and to enforce all traffic
rules and regulations in Metro Manila.
WATER
1. MARINA (Maritime Industry Authority) regulatory authority
regarding vessels; similar to LTFRB
2. POEA (Philippine Overseas Employment Administration)
to regulate manning agencies; to issue licenses for manning
agencies
3. PPA (Philippine Ports Authority) power to streamline and
improve operation of ports and port facilities
4. PCG (Philippine Coast Guard) registration and licensing of
vessels; safety regulatory functions for vessel construction
and licensing of vessels; safety regulatory functions on
vessel construction and operations and supervisions and
preparation of licenses for certificates of marine officers
and seamen
AIR
1. CAAP (Civil Aviation Authority of the Philippines) power to
issue or cancel certificates of public convenience; permits
for air transportation; fixes rates; investigates violations;
has jurisdiction over all airline transportations
2. ATO (Air Transportation Office) undertakes the operation
and maintenance of national airports, air transportation, and
other similar facilities
TELECOMMUNICATIONS
1. DOTC (Department of Transportation and Communication)
NTC (National Telecommunication Commission) has
jurisdiction over communication activities and services,
radio stations, cable networks
2. ERB (Energy Regulatory Board)
3. NWRB (National Water Resources Board) waterworks;
under the administrative supervision of the Department of
Public Works and the National Communication Authority
LAWS GOVERNING CONTRACTS OF TRANSPORTATION BY LAND,
SEA, OR AIR WITHIN THE PHILIPPINES
1. Transportation by Land
A. Overland Transportation
a. Civil Code primary law
b. Code of Commerce suppletory law
B. Commercial Transportation (object is
merchandise)
a. Code of Conmerce primary law
b. Civil Code suppletory law
II Sanchez Roman
2. Transportation by Sea
A. Coastwise (vessels traveling within waters under
Philippine jurisdiction)
a. Civil Code primary law
b. Code of Commerce suppletory law
Note: COGSA is not applicable even if the
parties expressly provide for it; applies only in
international seas
B. Foreign Ports to Philippine s Ports
a. Civil Code primary law
b. Code of Commerce suppletory law
c. COGSA (Carriage of Goods by Sea Act)
Eastern Shipping v. IAC: The law of the
Philippines still applies even if the
collision actually takes place in foreign
waters because the destination is
Philippine waters
C. Philippine ports to Foreign ports
a. Civil Code primary law
b. Code of Commerce suppletory law
1753. The law of the country to which the goods
are to be transported shall govern the liability of
the common carrier for their loss, destruction or
deterioration.
The law of the country to
which the goods are to be transported
shall apply under the provision of 1753
(Eastern Shipping vs. IAC, 150 SCRA
463)
3. Air Transportation
A. Domestic Civil Code
B. International Warsaw Convention
C. Special laws also govern particular cases such as:
1. The Public Service Act;
2. The land Transportation and Traffic
Code;
3. Tariff & Customs Code;
4. The Civil Aeronautics Act.
GENERAL PRINCIPLES
WHY IS IT IMPORTANT TO DISTINGUISH BETWEEN COMMON
CARRIERS AND PRIVATECARRIERS?
(1) The rights and obligations of common carriers and private
carriers are governed by distinct and different laws.
(2) There is a difference in the degree of diligence required.
Common carriers are required to exercise extraordinary
diligence, while private carriers are only required to exercise
the ordinary diligence required of a good father of a family.
(3) The validity of contracts and stipulations are subject to
separate sets of public policies and restrictions.
(4) As to the applicability of lawsa common carrier is subject
to the stringent provisions if the code of commerce while in
a private carrier the parties are free to stipulate
First Philippine Pipeline Corporation: The test for determining whether
a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for
others as a public employment, and must hold himself out
as ready to engage in the transportation of goods for person
generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his
business is confined;
3. He must undertake to carry by the method by which his
business is conducted and over his established roads; and
4. The transportation must be for hire.
THE LAW PROHIBITS UNREASONABLE DISCRIMINATION BY
COMMON CARRIERS. The law requires common carriers to carry for al
persons, either passengers or property, for exactly the same charge,
for a like or contemporaneous service in the transportation of like kind
traffic under substantially similar circumstances or conditions. If the
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services are alike and contemporaneous, discrimination in the price
charged is prohibited.
GENERAL RULE: Common Carrier cannot unreasonably discriminate.
EXCEPTION: The law does not prohibit the charging of a different rate
for the carrying of passengers or property when the actual cost of
handling and transporting the same is different. (ie: when a carrier
does not have a suitable area to store the cargo, especially when it
involves perishables, because the carrier would be held liable in case
of damages)
DETERMINATION OF JUSTIFIABLE REFUSAL
(1) Suitability of the vessels of the company for the
transportation of such products;
(2) The reasonable possibility of danger or disaster, resulting
from their transportation in the form and under the
conditions in which they are offered for carriages;
(3) The general nature of the business done by the carrier; and
(4) All the attendant circumstances which might affect the
question of the reasonable necessity for the refusal by the
carrier to undertake the transportation of this class of
merchandise. (Fisher v. Yangco Steamship)
1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public.
Article 1732 provides for the definition of a common carrier. Engaged
in the business means operational everyday or regularly.
BUT in the case of De Guzman v. CA, SC expanded the meaning of a
common carrier:
Art. 1732 in defining common carrier carefully avoids making any
distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such
service on occasional, episodic or unscheduled basis. Neither
does Art 1732 distinguish between a carrier offering its services
to the general public, i.e., the general community of population,
and one who offers services or solicits business only from a
narrow segment of the general population. We think that Art 1732
deliberately refrained from making such distinctions.
Notwithstanding that a carrier has no certificate of public
convenience, it is still a common carrier. It is a palpable error to
conclude that a person holds no certificate of public convenience
is not a common carrier. A certificate of public convenience is
not a requisite for incurring a liability under the Civil Code
provisions governing common carriers. The liability arises the
moment a person or firm acts as a common carrier, without
regard to whether or not such carrier has complied with the
requirements of the applicable regulatory statute and
implementing regulations and franchise. To exempt private
respondent form liabilities of a common carrier because he has
not secured the necessary certificate of public convenience
would be offensive to sound public policy. That would be to
reward private respondent precisely for failing to comply with
applicable statutory requirements.
In First Philippine Pipeline Corporation v. CA: Pipeline Operator:
Common carrier.
A grantee of a pipeline concession applied for a Mayors permit
with the Office of the Mayor of Batangas City. It was transporting
petroleum products through its pipelines. However, before the
permit could be issued, the City Treasurer required FPIC to pay a
local tax on its gross receipts for 1993. FPIC protested the
payment of the tax and argued that it was a pipeline operator
engaged in business of transporting petroleum products from the
Batangas refineries, and as such, exempted from paying the
gross receipt tax being a common carrier. The Treasurer denied
the protest and claimed that FPIC cannot be considered a
COMMON CARRIER engaged in the Transportation business, and
thus cannot claim exemption from the payment of tax onits
gross receipts. The issue here is whether or not FPIC is a
COMMON CARRIER?
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
The SC ruled that FPIC 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 person or
property from place to place, for compensation, offering his
services to the public generally. The definition of COMMON
CARRIER in Article 1732 of the civil code makes no distinction as
to the means of transporting, as long as it is by land, water or air.
FPIC is engaged in the business of transporting or carrying,
petroleum product for hire as a public employment.
The controlling jurisprudence now as far as how a common carrier is
defined is the case of De Guzman that the law does not make any
distinction as to the means of transporting, as long as it is by land,
water, or air.
Moreover, a certificate of public convenience is not a requisite for a
carrier to be considered as a common carrier. In the case of Loadstar
Shipping Co. v. CA:
A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person or
firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the
applicable regulatory statute and implementing regulations has
been granted a certificate of public convenience or other
franchise.
The concept of COMMON CARRIER coincides well with the notion of
public service under the Public Service Act (CA 1416, as a amended),
which at least partially supplements the law on COMMON CARRIER as
set forth in the Civil Code. Under Section 13, par. (b) of the PSA,
public service includes every person that nor or hereafter may own,
operate, manger, 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, etc.
In the case of Lastimoso v. Doliente:
M/V Doliente was not held liable for the death of Pablo Lastimoso
when a fire occurred because there was no evidence that Doliente
was previously engaged in the business of transporting
passengers, as the ill-fated trip was merely a trial run. Hence, it
was not required to exercise Extraordinary Diligence in the
vigilance of goods and safety of the passengers aboard the
Doliente, nor was it was bound to carry the passengers safely as
far as human foresight can provide, using the utmost diligence of
a very cautious person.
In the case of Planters Producers Inc. v. CA:
The SC held that what a carrier in the ordinary course of
business transports goods as a common carrier and thereby
bound by law to observe extraordinary diligence, the entering into
a charter party, where the ship captain, its officers and
compliments are under the employ of the ship-owner and
therefore continue to be under its direct supervision and control,
does not transform the carrier into a private carrier for a such
purpose. This is because the charterer, a stranger the crew and
the ship, cannot be charged with the duty to care for his cargo
when the charterer does not have any control of the means of
doing so. A common or public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel,
provided the charter is limited to the ship only, as in the case of
time charter or voyage charter. It is only when the charter
includes both the vessel and its crew, as in the case of time
charter or voyage charter. It is only when the charter includes
both the vessel and its crew, as in a bareboat or demise charter,
that a common carrier becomes private, at least insofar as the
particular voyage covering the charter party is concerned.
ROBLE
November 19, 2016
Part 2 of 2
So as what was provided in Art. 1744, one of the circumstances where
the common carrier shall not be liable is that the loss or deterioration
is caused by natural disasters or fortuitous events. I disagree that
these are acts of God; these are natural forces such as gravity diba.
(Hehe ka-cute ni mam)
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It also covers acts of man, like strikes, homicide, recklessness, or
latent mechanical defects meaning ang deperensya nasa loob, defects
which cannot be seen by the naked eye or in the external.
Of course common carriers liability does not extend to damages
caused by FE, basis is under art. 1174 of the Civil Code.
For example in insurance companies, you assure that in case of FE,
you assure that you shall assume the risk in the form of payment.
What is the rationale of the exemption? It is that the common carrier is
not absolutely sure of the risk. You are not an insurer against all risks
of travel. It also not ought to be liable in the death of passengers if
there is negligence.
But if there is negligence, or failure to exercise utmost diligence that
the law requires, then that will now make the common carrier liable.
If a fortuitous event is proven, then the CC shall not be liable, it may be
absolved from liability. But what is the restriction? The FE must not
concur with negligence. No negligence must intervene; otherwise it is
no longer a defense. The FE must be a sole element relied upon and
has caused
In the case of Yubido vs CA, the SC described the characteristics of a
FE. It says that the cause of the unforeseen and unexpected
occurrence or failure of the carrier to comply with its obligation must
be independent of the human will.
1. must be impossible to foresee the event which constitutes
the caso fortuito
2. the occurrence must be such as to render it impossible for
the debtor to fulfill his obligation in a normal manner
3. and that the obligor must be free from participation of the
injury resulting to the creditor.
So based on these pronouncements, as in this case, a bus company
cannot be exempted from liability for a tire blow-out, kasi kelangan
may preventive maintenance. This is not a fortuitious event, because
this is a part of exercising the diligence required by law to conduct
preventive maintenance to the vehicle.
1739: In order that the common carrier may be exempted from
responsibility, the natural disaster must have been the proximate and
only cause of the loss. While the defenses in 1734, these are
circumstances classified as Fortuitous Event (FE).
What is required? The natural disaster must be the sole, proximate,
and only cause of the loss, destruction, or deterioration. However, the
common carrier must exercise due diligence to prevent or minimize
the loss before, during, and after the occurrence of the flood or storm
or other natural disaster in order that the common carrier may be
exempt from liability, however, the FE need not be the immediate
cause.
What is sufficient is that the immediate cause or the final act was set
in motion by the natural calamity or disaster and followed by
continuous and sequenced event, not followed by any efficient
intervening cause.
Now, what would be the circumstances that would not exempt the
common carrier even if the loss, destruction, or deterioration was
caused by a FE?
1. When the natural disaster is not the only and proximate
cause of the loss;
2. When the common carrier failed to exercise due diligence to
prevent or minimize the loss before during, and after the
occurrence of the natural disaster;
3. When the common carrier negligently incurs delay in
transporting the goods.
So even in your ObliCon diba, if there is delay, you can no longer hide
behind 1174, kasi may delay na caused by the common carrier.
So even if FE under 1734, the common carrier may still be held liable
even if the loss, destruction or deterioration was caused by a FE if the
natural disaster is not the proximate and only cause, there was
negligence therewith, and that the common carrier failed to exercise
the diligence required by law.
With respect to the exercise of extraordinary diligence, one of the
requirements is that the law vests upon the common carrier the
authority to exercise diligence in the selection and supervision of its
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
employees because of the requirement that common carrier have to
exercise due diligence. So piliin talaga nila sino ang ka-kontrata nila.
So, what is this case of Davao Stevedore Terminal vs Fernandez?
Anyone? Kindly read what is in the book.
*from Agbayani: The plaintiff is a domestic corporation doing
business in Davao City. It was engaged in the stevedoring and dock-
handling of outgoing and incoming cargoes for interisland vessels
docking at the Sta. Ana Wharf in Davao City. Pursuant to a verbal
contract entered into between the plaintiff and the carrier Compania
Maritima, the former handled the dockhandling work of the vessels
owned and operated by the Compania Maritima which called at the
port of Davao City, consisting of receiving the cargoes discharged
from the jold of the vesselsfrom the sling in the wharf and piling them
at the wharf, which cargoes were then taken by the consignees, and
also those from the truck of the shippers to the sling in the wharf
where they were loaded in the hold of the ship. To comply with the
above duties, the plaintiff utilized the services of the members of the
Davao Stevedores Mutual Benefit Association, a labor organization
duly registered with the department of Labor, with which it had a
closed shop agreement, the shippers and the consignees, most of
whom were Chinese, were the one paying the plaintiff for the
dockhandling services.
It appears that as early as January of 1951, there were already signs
that the carrier Compania Maritima was not satisfied with the services
being rendered by plaintiff-appellant. Cargoes discharged from the
vessels of the carrier were not being safeguarded adequately and
were allowed to be exposed to the elements at the Sta. Ana wharf for
considerable length of time that the carrier brought to the attention of
plaintiff the deplorable situation obtaining at the wharf. In answer,
plaintiff advised the Compania Maritima thaty cargoes while piled at
the wharf were under the care and responsibility of the carrier. After
putting up, for some time, with sad state of affairs at the wharf, the
plaintiff was notified by the Compania Maritima of the termination of
their verbal contract. Efforts were then made by the Compania
Maritima to look for another party who would be satisfactory to the
carrier. The Davao Port Laborers Association was organized and
registered a s a labor union. And then it was hired by the defendant
and the Compania Martitima in turn ientered into a contract with
defendant to succeed the plaintiff in dockhandling and stevedoring
the cargoes discharged from its vessels. Plaintiff contends that this
was unfair competition.
Held: The SC does not agree with plaintiff. Common carriers assume a
heavy responsibility in the care and vigilance over the goods
transported by them. Th law requires them to exercise extraordinary
diligence which means that they must render services with the
greatest skill and utmost foresight. The extraordinary diligence
required of carriers in the handling of the goods of the shippers and
consignees lasts from the time the cargoes are loaded in the vessels
until they are discharged and delivered to the consignees. To comply
with this weighty obligation, it is only meet and proper that carriers
should be afforded the right of having a wide discretion on the
selection and supervision of persons who will handle the goods.
Courts cannot withhold from the carriers this right without committing
grave injustice. The act of the carrier, therefore, in entering into a
contract with the defendant for the latter to handle the stevedoring
and dockhandling appears to us to be well within the right of the
carrier to exercise. Nor can the defendant be held engaging in unfair
competition simply because he offered his services to the Compania
Maritima which accepted the offer and formalized their agreement in a
written contract. Moreover, there is wanting in evidence acts of the
defendant that will show unfair competition. A good deal of the act
attributed to defendant and regarded by appellant as unfair
competition were performed by the Compania Maritima.
So because common carriers are required to exercise due diligence in
the selection of its employees as mandated by law, common carrier is
given that right because one of the circumstances that they will have
to show is that they exercised the diligence required of them in the
selection and supervision of their employees.
In the case of __________vs CA, the facts of the case shown here is that
the jeep owned by ____ was bumped by a truck driven by Serena (?)
and owned by Zalda (?) so the passenger sustained injuries by reason
of the accident, so consequently a civil case was filed by the
passenger against the driver and his employer for the damages
caused to him. In the Civil case, it was ruled that the negligence of the
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 Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
driver was the proximate cause of the accident. The truck driver and MASANGUID
November 21, 2016
the truck owner were found liable for quasi-delict. Culpa-acquiliana.
Is it a contract between the consignor and consignee only? Who will
However the truck driver contended that the bumping was a caso
deliver the goods? Are there only two parties in a contract of
fortuito therefore it should not be held liable.
transportation of goods?
SC said this is a different type of contract kaya culpa-acquiliana kasi
You are only mentioning the consignor and consignee. Who is the
wala naman kasunduan na banggain ng truck ang jeep. So the
third party?
contract was only between the passenger and the jeepney driver. So
the issue brought to the SC was whether the bumping of the jeepney
-It is the COMMON CARRIER.
by the truck constitutes a Fortuitous event. Sc said no. a caso fortuito
is an event which could not be foreseen, or if can be foreseen, is
Is the consignor the shipper also? Are the terms used
inevitable. But in this case, the jeepney was not properly parked,
interchangeably?
based on the evidence presented, its rear portion was exposed about 2
meters from the shoulders of the road, and facing the middle of the
-YES; the one who sends the goods via the common carrier.
highway in a diagonal angle, so the driver should have foreseen the
Who is the consignee? The one who receives the goods.
danger caused by his parking. Similarly, this is a familiar scene noh.
Mga taxi or jeep magkuha ng pasahero sa gitna ng kalsada.
Can the consignor and consignee be the same? YES. The consignor
can send the goods and will receive it by himself in some future day.
In the case of Phil. American General Insurance Company vs MM
Marine Services, GR 135645. San Miguel Corporation here insured
Who are the parties insofar as the contract of transportation is
several beer bottle cases with an aggregate value of 5 Million, and 800
concerned?
plus, with Philippine American Insurance Company. Of course, part of
the contract of transportation is insurance, i-insure mo talaga
Consignor and common carrier only. Because the agreement is
especially if your cargo is valuable. So the cargo was loaded onboard
between the shipper and the common carrier that the goods shipped
to be transported from Mandaue to Bislig. After having been cleared
by the shipper will be delivered to the consignee, the person who will
by the coastguard stationed in Cebu, the vessel left the port of
receive it at some future time either actually or constructively.
Mandaue for Bislig. The following day, the MV tilted and subsequently
sunk off Ankawa (?) point in Cortes, Surigao del Sur. As a
Would the consignee be a party to that contract of transportation? Is
consequence thereof, the cargo belonging to San Miguel Corporation
the consignee bound by the contract of transportation? If the goods
was lost. Subsequently, SMC claimed the amount of its loss from
are lost or destroyed, who has the right to file an action against the
petitioner insurance company. So a surveyor from the assessors of
common carrier? Is the consignee a signatory to the bill of lading? Can
the insurance company came to evaluate the accident before they
the consignee be bound? Who has the right to file an action?
would pay. They went to where the vessel was cast ashore, in their
report they said that the vessel was structurally sound and that they
-Consignor, against the common carrier. Why? Because the contract
did not see any damage or crack. He concluded that the proximate
of transportation is between the consignor/shipper and the common
cause of the sinking of the vessel was the shifting of the water from
carrier. And the obligation of the common carrier is to deliver the
one point to another (Starborne?), so ang alon.
cargos of the consignor/shipper in the same condition that it received
it to the consignee.
Because of the irregular movement of the ballast water, the vessel
sunk.
So, the presumption is there may be a contract between a consignor
and consignee. The consignee probably ordered a particular item from
Study the parts of the vessel you have a working knowledge on how a
the consignor. Iba yung contract between consignor and consignee.
vessel operates. So SMC demanded for the full amount of the 5 million
The consignor now, to respond to the delivery of the cargo to the
800 plus. Sometime in November, the petitioner, as subrogee,
consignee, engages the services of the common carrier in order to
subrogee kasi binayaran nila ang SMC; another person in behalf of the
deliver the cargo to the consignee based on the agreement between
petitioner insurance company is now claiming from SMC the amount
the consignor and consignee. So, the consignee is not a party to the
na binayaran nila in behalf of the corporation for the loss of the cargo.
contract of transportation but merely a beneficiary of that contract.
Meanwhile, the Board of Marine Inquiry (BMI) conducted its own
investigation of the sinking of the vessel to determine whether the
How is the common carrier compensated by the consignor/shipper?
captain and crew of the vessel should be held responsible for the
incident. The Board exonerated the captain and crew for any
-the shipper pays the corresponding freight.
administrative liability. It found that the sinking of the vessel was the
existence of strong winds and enormous waves in Surigao del Sur, a
Basis of freight? The basis would be the value of the goods, the
FE that could not have been foreseen at the time it left the port of
distance from the place of departure to the place of destination, the
Mandaue city. The FE was the proximate and only cause of the
nature of the goods (whether the goods are perishable or not), manner
sinking.
of how the goods are to be handled. But what is the most basic?
WEIGHT.
So what was the issue? Whether the loss of the cargo was due to the
occurrence of a natural disaster, and if so, whether such natural
If with respect to carriage of passengers, who are the parties?
disaster was the proximate cause, and whether private respondent
were partly to blame for failing to exercise the diligence to prevent the
-Passenger and Common Carrier
loss of the cargo.
What is the compensation? FARE; The fare will depend on whether
SC said that common carriers, from the nature of their business, under
promo rate ba yan, place of destination, etc.
Art. 1733 are mandated to exercise extraordinary diligence. Thus, they
How does the law define a common carrier?
are presumed to be negligent if the goods transported by them are
lost, destroyed, or has deteriorated. However, the presumption does
not arise in cases enumerated under 1734. The parties do not dispute ARTICLE 1732. Common carriers are persons, corporations,
that the vessel encountered waves 6-10 feet in height. These were firms or associations engaged in the business of carrying or
indeed fortuitous event. Also, before the vessel left Mandaue for transporting passengers or goods or both, by land, water, or air,
Surigao, the captain assured that the weather is suitable for safe for compensation, offering their services to the public
travel. He could not have foreseen the unfavorable weather changes.
There was no negligence. But although the BMI ruled only on the Offering their services to the public
admin. Liability of the captain and the crew, it had to conduct a further
investigation about the circumstances with regard to the safety of the Based on that definition provided by Art. 1732, that a common
vessel and the loss in order to determine their responsilibilty. It was corporation is engaged as a public employment offering their services
then indicated that the loss was solely due to fortuitous event. So the to the public. But we said there are two kinds of carrier, the common
MV MGG was exempted from liability. No negligence intervened, nor carrier and private carrier. Is the distinction important?
was there administrative negligence.
Yes. Why?

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(1) Law applicable
As a general rule, in order to determine whether a carrier is common or
private, you said that we first have to determine what law is
applicable. What is the law applicable to common carriers? With
respect to private carriage, what is the law to be applied?
Common carriers the applicable law is the provision on common
carriers under the Civil Code.
Private carriers still the Civil Code but based on the provisions of the
contract entered into.
(2) Diligence required
Common carriers extraordinary diligence
Private carriers diligence of a good father
(3) Burden of Proof
Common carriers there is a presumption of negligence; the law
establishes a presumption in case of lost, destruction or deterioration
of the goods, the common carrier is negligent. The burden of proof is
upon the common carrier that it exercised extraordinary diligence and
the lost, destruction or deterioration was caused by any of those
mentioned under Article 1734 as exonerating causes.
Private carriers the burden of proof is upon the plaintiff or the
complainant that there was a breach of contract. The court will
determine on the basis of the provisions, terms and conditions
incorporated by the parties in the contract.
FIRST PHILIPPINE PIPELINE CORPORATION VS. CA
FACTS:
Petitioner is a grantee of a pipeline concession under
Republic Act No. 387, as amended, to contract, install and
operate oil pipelines. The original pipeline concession was
granted in 1967 1 and renewed by the Energy Regulatory
Board in 1992.
Sometime in January 1995, petitioner applied for a mayor's
permit with the Office of the Mayor of Batangas City.
However, before the mayor's permit could be issued, the
respondent City Treasurer required petitioner to pay a local
tax based on its gross receipts for the fiscal year 1993
pursuant to the Local Government Code
Petitioner protested, arguing that it is engaged in the
business of transporting petroleum products from the
Batangas refineries, via pipeline, to Sucat and JTF Pandacan
Terminals. As such, our Company is exempt from paying tax
on gross receipts under Section 133 of the Local Government
Code of 1991.
The respondent City Treasurer denied the protest contending
that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption
under Section 133 (j) of the Local Government Code - that
petitioner cannot be exempt from taxes under Section 133 (j)
of the Local Government Code as said exemption applies
only to "transportation contractors and persons engaged in
the transportation by hire and common carriers by air, land
and water." Respondents assert that pipelines are not
included in the term "common carrier" which refers solely to
ordinary carriers such as trucks, trains, ships and the like.
Respondents further posit that the term "common carrier"
under the said code pertains to the mode or manner by which
a product is delivered to its destination.
ISSUE: Whether or not Petitioner is a common carrier.
HELD: There is merit in the petition.
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.
The test for determining whether a party is a common carrier
of goods is:
(1) He must be engaged in the business of carrying
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goods for others as a public employment, and must
hold himself out as ready to engage in the
transportation of goods for person generally as a
business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to
which his business is confined;
(3) He must undertake to carry by the method by
which his business is conducted and over his
established roads; and
(4) The transportation must be for hire.
Based on the above definitions and requirements, there is no
doubt that petitioner is a common carrier. It is engaged in the
business of transporting or carrying goods, i.e. petroleum
products, for hire as a public employment. It undertakes to
carry for all persons indifferently, that is, to all persons who
choose to employ its services, and transports the goods by
land and for compensation. The fact that petitioner has a
limited clientele does not exclude it from the definition of a
common carrier.
As correctly pointed out by petitioner, the definition of
"common carriers" in the Civil Code makes no distinction as
to the means of transporting, as long as it is by land, water or
air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle. In fact, in
the United States, oil pipe line operators are considered
common carriers.
What do you understand by the term unreasonable discrimination?
-The law requires common carriers to carry for all persons, either
passengers or property, for exactly the same charge for a like or
contemporaneous service in the transportation of like kind of traffic
under substantially similar circumstances or conditions.
Example of an unreasonable discrimination
-Thus bus company allows the transportation of students then
prohibits the elderly people to be one of the passengers. There is
unreasonable discrimination.
But what if the bus is full? Then there is justifiable refusal.
If the vessel does not have the facility to carry/transport the goods,
can the common carrier justifiably refuse the transportation of a
certain product? YES
Under what circumstances can discrimination by common carrier be
allowed? The following are to be considered:
(1) The sustainability of the vessels of the company for the
transportation of the products;
(2) The reasonable possibility of danger or disaster, resulting
from their transportation in the form and under the
conditions in which they are offered for carriages;
(3) The general nature of the business done by the carrier; and
(4) In a word, all the attendant circumstances which might
affect the question of the reasonable necessity for the
refusal by the carrier to undertake the transportation of this
class of merchandise.
DE GUZMAN vs. CA
FACTS:
Cendaa, a junk dealer, was engaged in buying up used
bottles and scrap metal in Pangasinan. He utilized two (2)
six-wheeler trucks which he owned for hauling the material
to Manila.
On the return trip to Pangasinan, Cendaa would load his
vehicles with cargo which various merchants wanted
delivered to differing establishments in Pangasinan. For that
service, respondent charged freight rates which were
commonly lower than regular commercial rates.
In November 1970, De Guzman, a merchant and authorized
dealer of General Milk Company (Philippines), Inc. in
Pangasinan, contracted with Cendaa for the hauling of 750
cartons of Liberty filled milk from a warehouse of General
Milk in Makati to De Guzmans establishment in Pangasinan.
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Thus, Cendaa loaded in Makati the merchandise on to his
trucks: 150 cartons were loaded on a truck driven by him,
while 600 cartons were placed on the other truck which was
driven by Cendaas driver and employee.
Unfortunately, only 150 boxes of Liberty filled milk were
delivered to De Guzman since the other truck was hijacked
somewhere along MacArthur Highway, Tarlac by armed men
who took with them the truck, its driver, his helper and the
cargo.
On 6 January 1971, De Guzman filed an action action against
Cendaa demanding payment of P22,150, the claimed value
of the lost merchandise, plus damages and attorney's fees
alleging that:
Cendaa, being a common carrier, and having
failed to exercise the extraordinary diligence
required of him by the law, should be held liable
for the value of the undelivered goods.
Cendaa denied that he was a common carrier and argued
that he could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.
CFI: Found Cendaa to be a common carrier and holding him
liable for the value of the undelivered goods (P22,150.00) as
well as for P4,000.00 as damages and P2,000.00 as
attorney's fees.
CA: Reversed. It held that Cendaa had been engaged in
transporting return loads of freight "as a casual occupation
a sideline to his scrap iron business" and not as a
common carrier.
ISSUE:
1. Whether or not Cendaa is a common carrier. YES.
2. Whether or not Cendaa is liable for the loss. NO.
HELD:
The Civil Code defines "common carriers" in the following
terms:
Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary
activity (a sideline). Article 1732 also carefully avoids making
any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of
the general population.
It appears to the Court that Cendaa is properly
characterized as a common carrier even though he merely
"back-hauled" goods for other merchants from Manila to
Pangasinan, although such back-hauling was done on a
periodic or occasional rather than regular or scheduled
manner, and even though Cendaas principal occupation
was not the carriage of goods for others. There is no dispute
that Cendaa charged his customers a fee for hauling their
goods; that fee frequently fell below commercial freight rates
is not relevant here.
A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person
or firm acts as a common carrier, without regard to whether
or not such carrier has also complied with the requirements
of the applicable regulatory statute and implementing
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regulations and has been granted a certificate of public
convenience or other franchise. To exempt Cendaa from the
liabilities of a common carrier because he has not secured
the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward
Cendaa precisely for failing to comply with applicable
statutory requirements.
2. Common carriers, by the nature of their business and for
reasons of public policy, are held to a very high degree of
care and diligence (extraordinary diligence) in the carriage of
goods as well as of passengers.
Article 1734 establishes the general rule that common
carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the same
is due to any of the following causes only:
1. Flood, storm, earthquake, lightning or other
natural disaster or calamity;
2. Act of the public enemy in war, whether
international or civil;
3. Act or omission of the shipper or owner of the
goods;
4. The character-of the goods or defects in the
packing or-in the containers; and
5. Order or act of competent public authority.
Causes falling outside the foregoing list, even if they appear
to constitute a species of force majeure fall within the scope
of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1, 2,
3, 4 and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence as required in Article 1733.
Applying the provision, the specific cause alleged was the
hijacking of the carrier's truck and does not fall within any of
the 5 categories of exempting causes listed in Article 1734.
It would follow, therefore, that the Cendaa, as common
carrier is presumed to have been at fault or to have acted
negligently based on Article 1735. This presumption,
however, may be overthrown by proof of extraordinary
diligence on the part of private respondent.
The duty of extraordinary diligence in the vigilance over
goods is, under Article 1733, given additional specification
not only by Articles 1734 and 1735 but also by Article 1745
(4, 5, 6):
Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public
policy:
(5) that the common carrier shall not be responsible
for the acts or omissions of his or its employees;
(6) that the common carrier's liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished; and
(7) that the common carrier shall not responsible for
the loss, destruction or deterioration of goods on
account of the defective condition of the car
vehicle, ship, airplane or other equipment used in
the contract of carriage.
Under Article 1745 (6) above, a common carrier is held
responsible and will not be allowed to divest or to diminish
such responsibility even for acts of strangers like thieves
or robbers, except where such thieves or robbers in fact
acted "with grave or irresistible threat, violence or force." We
believe and so hold that the limits of the duty of extraordinary
diligence in the vigilance over the goods carried are reached
where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."
In the instant case, armed men held up the second truck.
The record shows that an information for robbery in band
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was filed. The accused were charged with willfully and
unlawfully taking and carrying away with them the second
truck. The decision of the trial court shows that the accused
acted with grave, if not irresistible, threat, violence or force.
Three (3) of the five (5) hold-uppers were armed with
firearms. The robbers not only took away the truck and its
cargo but also kidnapped the driver and his helper, detaining
them for several days and later releasing them in another
province (in Zambales). The hijacked truck was subsequently
found by the police in Quezon City. The Court of First
Instance convicted all the accused of robbery, though not of
robbery in band.
Therefore, the occurrence of the loss must reasonably be
regarded as quite beyond the control of the common carrier
and properly regarded as a fortuitous event. It is necessary to
recall that even common carriers are not made absolute
insurers against all risks of travel and of transport of goods,
and are not held liable for acts or events which cannot be
foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary
diligence.
We, therefore, agree with the result reached by the Court of
Appeals that private respondent Cendaa is not liable for the
value of the undelivered merchandise which was lost
because of an event entirely beyond private respondent's
control.
CANDOLITA
November 28, 2016
What do we understand about the registered owner rule? What is its
significance? Because we said, that in this jurisdiction, the law
provides that common carriers, by the nature of their business, since it
is imbued with public interest, the nature is that of public employment
and that they cannot refuse to accept any passenger or cargo without
any justification, so the registered owner rule is very significant, in so
far as damage to goods is concerned, and for injuries sustained by
any person in the public highways so that the public can easily
identify the owner of the vehicle through what office? LTO (Land
Transportation Office).
So the rule is the registered owner is primarily responsible for any
damage caused by the vehicle registered in his name, even if said
vehicle had already been sold, transferred or leased to another person,
and which at the time of accident, was actually operating said vehicle.
The registered owner can run of course after the transferee pursuant
to a deed of conveyance for example a bill of sale. Example, a vehicle
that has already been leased. So the owner is the lessor and the one
using the vehicle is the lessee. How will the lessor be protected in the
event of any accident? So the registered owner may annotate the
Contract of Lease in the Certificate of Registration of that vehicle.
Dapat naka-annotate sya with the LTO. And that will exempt him from
liability. If that lease is not annotated, he will be liable primarily in the
event of an accident. But he has a right of action against the
transferee. But syempre, maha-hassle na sya, need nya pa magfile ng
third- party complaint.
In the case of Duavit vs CA 173 s 490, the issue with respect to the
annotation as held also in the case of BA Finance vs CA, the ruling of
the SC is that in order that the registered owner be free from liability,
the Contract of Lease be annotated in the Certificate of Registration
which will serve as notice to third parties that the lessee and not the
registered owner who is in possession and operating the vehicle. If
there is no annotation, third parties will not be affected and it will only
be between lessor and lessee.
The registered owner was not held liable because he was able to
prove that the vehicle was stolen from his garage. It was stolen and an
accident occurred.
What do we understand about the Kabit system?
It is an arrangement wherein a person who has been granted a
certificate of public convenience, allows other persons who own motor
vehicles to operate them under his license or franchise for a fee or
percentage of the earnings. Kabit is the term. Although the parties to
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this agreement are not outrightly penalized by the law but the contract
is illicit and is against public policy under Article 1409 of the Civil Code
and therefore considered as void and inexistent. The parties, having
entered into this illicit agreement, are considered as in pari delicto so
they could not run after each other. The court will leave them as they
are. No action arises out of an illicit transaction or contract. Again, in a
kabit system, why is it penalized? It is for the protection of the third
party. Since the passengers or the third parties, are infract defrauded
by the misrepresentation of the operator who uses the vehicle of
another. The pasahero would think na legal itong sinasakyan ko, na
kung hindi ako ihatid sa puntahan ko, I can run after it under the law,
pero ang nangyari, hindi pala sya ang may-ari ng franchise, so
hahabulin ko pa ang franchisee.
So what is now the relevance of the case of Abelardo Lim vs
Gonzalez? Anyone who has read it?
ABELARDO LIM VS GONZALES
Facts:
Private respondent herein purchased an Isuzu passenger jeepney
from Gomercino Vallarta, a holder of a certificate of public
convenience for the operation of a public utility vehicle. He continued
to operate the public transport business without transferring the
registration of the vehicle to his name. Thus, the original owner
remained to be the registered owner and operator of the vehicle.
Unfortunately, the vehicle got involved in a road mishap which caused
it severe damage. The ten-wheeler-truck which caused the accident
was owned by petitioner Lim and was driven by co-petitioner
Gunnaban. Gunnaban admitted responsibility for the accident, so that
petitioner Lim shouldered the costs of hospitalization of those
wounded, compensation for the heirs of the deceased passenger and
the restoration of the other vehicle involved. He also negotiated for the
repair of the private respondent's jeepney but the latter refused and
demanded for its replacement. Hence, private respondent filed a
complaint for damages against petitioners. Meanwhile, the jeepney
was left by the roadside to corrode and decay. The trial court decided
in favor of private respondent and awarded him his claim. On appeal,
the Court of Appeals affirmed the decision of the trial court. Hence,
petitioner filed this petition.
Issue: Whether or not an operation under the Kabit System could not
sue without the registered owner of the vehicle as his principal.
Held: In the present case it is at once apparent that the evil sought to
be prevented in enjoining the kabit system does not exist. First, neither
of the parties to the pernicious kabit system is being held liable for
damages. Second, 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 the
passenger jeepney was made and to whom no such representation, or
misrepresentation, was necessary. Thus it cannot be said that private
respondent Gonzales and the registered owner of the jeepney were in
estoppel for leading the public to believe that the jeepney belonged to
the registered owner. Third, the riding public was not bothered nor
inconvenienced at the very least by the illegal arrangement. On the
contrary, it was private respondent himself who had been wronged
and was seeking compensation for the damage done to him. Certainly,
it would be the height of inequity to deny him his right. Hence, the
private respondent has the right to proceed against petitioners for the
damage caused on his passenger jeepney as well as on his business.
Q: Is this a case of culpa contractual or culpa aquilana?
A: Culpa aquilana kasi wala naman silang pre-existing contract. So
available yung defense na exercised diligence in the selection of
employees.
Actually in short, the implication in this case is WON Kabit System is
applicable in this case. The answer is NO. The case is between Lim
and Gonzales, about sa damage dun sa vehicle, sino magshoulder sa
cost. Hindi naman party si Lim sa transaction between Vallarta and
Gonzales. Wala namang misrepresentation as to the owner of the
vehicle, walang problema sa pagbayad sa third parties na na-injure at
sa heirs nung deceased. Binayaran na ni Lim, walang third party na
involved.
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LITA ENTERPRISES VS IAC
Facts:
Spouses Nicasio Ocampo and Francisca Garcia purchased in
installment from the Delta Motor Sales Corporation five (5) Toyota
Corona Standard cars to be used as taxi. Since they had no franchise
to operate taxicabs, they contracted with petitioner Lita Enterprise,
Inc., through its representative Manuel Concordia, for the use of the
latters certificate of public convenience for a consideration of P1,
000.00 and a monthly rental of P200.00/taxicab unit. For the
agreement to takeeffect, the cars were registered in the name of Lita
Enterprises, Inc.
The possession, however, remains with spouses Ocampo and Garcia
who operated and maintained the same under Acme Taxi, petitioners
trade name. A year later, one of the taxicabs, driven by their employee,
Emeterio Martin, collided with a motorcycle. Unfortunately the driver
of the motorcycle, Florante Galvez died from the injuries it sustained.
A Criminal case was filed against Emeterio Martin, while a civil case
was filed by the heir of the victim against Lita Enterprises. In the
decision of the lower court Lita Enterprises was held liable for
damages for the amount of P25, 000.00 and P7, 000.00 for attorneys
fees. A writ of execution for the decision followed, 2 of the cars of the
respondents spouses were levied and were sold to a public auction.
On March 1973, respondent Ocampo decided to register his taxicabs
in his own name. The manager of petitioner refused to give him the
registration papers. Thus, making spouses file a complaint against
petitioner. In the decision, Lita Enterprise 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 Galvez.
Issue: Whether or not petitioner can recover from private respondent,
knowing they are in an arrangement known as kabit system.
Held: Kabit 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. This system
is not penalized as a criminal offense but is recognized as one that is
against public policy; therefore it is void and inexistent. It 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. Upon this
premise, it was flagrant error on the part of both trial and appellate
courts to have accorded the parties relief from their predicament.
Specifically Article1412 states that: If 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 others
undertaking.
The principle of in pari delicto is evident in this case. the proposition
is universal that no action arises, in equity 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.
The parties in this case are in pari delicto, therefore no affirmative
relief can be granted to them.
So as we have previously discussed, we said that common carriers by
the nature of their business are mandated by the law to exercise
extraordinary diligence. When should this duty commence?
As provided in 1736, it commences and lasts: From the time the
goods are unconditionally placed in the possession of, and received
by the carrier for transportation until the same are delivered, actually
or constructively, by the carrier to the consignee, or to the person who
has a right to receive them, without prejudice to the provisions of
Article 1738.
Where is there actual delivery? If you say door-to-door delivery, that is
actual. Pano pag constructive delivery? Yan yung notice sa consignee
that cargo has arrived, na example Andito na yung kotse, pwede mo
na makuha yung kotse That would be constructive delivery, that you
inform the consignee that the goods are available for release. Once
you notify the consignee of the arrival of the cargo in the place of
destination, that would terminate the duty of the carrier to exercise
Transportation Law First Exam Coverage 2016-2017
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extraordinary diligence without prejudice to Article 1738 which
provides that:
Art. 1738. The extraordinary liability of the common carrier continues
to be operative even during the time the goods are stored in a
warehouse of the carrier at the place of destination, until the
consignee has been advised of the arrival of the goods and has had
reasonable opportunity thereafter to remove them or otherwise
dispose of them
What do we understand by stoppage in transit? Who are the parties?
Consignor Shipper Consignee The shipper shipped a partciular kind
of good, tapos wala pa naabot kay consignee, nahibaw-an niya na
wala na diay kwarta si consignee, so he can stop the transit of the
goods. So when the shipper exercises this right, the transaction
between the shipper and carrier is now one of bailor-bailee. He holds
the goods in trust for the consignor/shipper. Hindi na extraordinary
diligence ang required.
Art. 1739. In order that the common carrier may be exempted from
responsibility, the natural disaster must have been the proximate and
only cause of the loss. However, the common carrier must exercise
due diligence to prevent or minimize loss before, during and after the
occurrence of flood, storm or other natural disaster in order that the
common carrier may be exempted from liability for the loss,
destruction, or deterioration of the goods. The same duty is
incumbent upon the common carrier in case of an act of the public
enemy referred to in Article 1734, No. 2.
Art. 1740. If the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free such carrier
from responsibility.
Art 1169. Those obliged to deliver or to do something incur in delay
from the time the obligee judicially or extrajudicially demands from
them the fulfillment of their obligation. However, the demand by the
creditor shall not be necessary in order that delay may exist:
(1) When the obligation or the law expressly so declare; or
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when
the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the
contract; or
(3) When demand would be useless, as when the obligor has
rendered it beyond his power to perform
So delay. Once there is already a demand, dapat ideliver today, di mo
nadeliver and theres a demand for you to deliver, henceforth you are
considered in delay. For example, nagpadeliver ka ng cake kasi
birthday, tapos hindi dumating yung cake, bukas pa dineliver, eh di mo
na birthday.
Delay should be determined kung excusable or inexcusable, Kung
excusable, suspended lang, na-hold lang yung cargo, so di sya
maconsider na delay. After the reason for the delay ceases, he may
proceed with the voyage and with the delivery. The vessel continues to
be liable as common carrier and remains duty-bound to exercise
extraordinary diligence.
But if inexcusable, it will have the following effects (1) liable ang
common carrier even if the natural disaster was the proximate cause
of the damage kasi may delay na. (2) Stipulation limiting liability of
carrier is inoperative as provided in 1744. (3) Consignee may exercise
the right to abandon, pwede mo na hindi tanggapin yung goods.
What happens if shipper contributed to the loss? But the proximate
cause is still the negligence of the common carrier? The common
carrier is still liable for damages, but considering shipper is
contributory, damages will be equitably reduced. Considered sya na
mitigating circumstance.
We will continue next meeting.
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FULGAR
December 5, 2016
Republic Act No. 9515 December 19, 2008
AN ACT DEFINING THE LIABILITY OF SHIP AGENTS IN THE TRAMP
SERVICE AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled::
Section 1. Definition of Terms. - As used in this Act:
(a) "Ship Agent" shall mean the person entrusted with the provisioning
or representing the vessel in the port in which it may be found;
(b) "General Agent" shall mean a ship agent appointed by the ship
owner or carrier in the liner service for all voyages and covered by a
General Agency Agreement whereby the agent assumes the role and
responsibility of its principal within the Philippine territory including
but not limited to solicitation of cargo and freight, payment of
discharging or loading expenses, collection of shipping charges and
issuing/releasing bills of lading and cargo manifest;
(c) "Tramp Agent" shall mean a ship agent appointed by the ship
owner, charterer or carrier iti the tramp service for one particular
voyage whose authority is limited to the customary and usual
procedures and formalities required for the facilitation of the vessels
entry, stay and departure in the port and does not include the
assumption of the ship owners, charterers, or carriers obligations
with the shipper or receiver for the goods carried by the ship;
(d) "Tramp Service" shall mean the operation of a contract carrier
which has no regular and fixed routes and schedules but accepts
cargo wherever and whenever the shipper desires, is hired on a
contractual basis, or chartered by any one or few shippers under
mutually agreed terms and usually carries bulk or break bulk cargoes;
and
(e) "Liner Service" shall mean the operation of a common carrier which
publicly offers its services without discrimination to any user, has
regular ports of call/destination, fixed sailing schedules and
frequencies and published freight rates and attendant charges and
usually carries multiple consignments.
Section 2. Liabilty of the Ship Agent, General Agent and Tramp Agent.
- The responsibility or liability, if any, of the ship agent, general agent
and tramp agent shall continue to be governed by the pertinent
provisions of the Code of Commerce: Provided, that in the case of the
tramp agent, his liability shall not extend to the obligations assumed
by the ship owner, charterer or carrier with the shipper or receiver for
the goods carried by the ship: Provided, further, That it is the duty of
the tramp agent, however, to assist the shipper or receiver in making
cargo liability claims against the ship owner, charterer or carrier:
Provided, finally, That failure or inaction to perform the aforesaid duty
shall subject the tramp agent to applicable administrative sanctions
based on the Implementing Rules and Regulations (IRR) to be
formulated thereon by the Maritime Industry Authority (MARINA)
under the Depatment of Transportation and Communication (DOTC)
and by the Philippine Shippers Bureau (PSB) under the Department of
Trade and Industry (DTI).
Section 3. Repealing Clause. - All applicable laws, decrees, executive
orders, rules and regulations which are inconsistent with this Act are
hereby amended or modified accordingly.
Section 4 Effectivity. - This Act shall take effect fifteen (15) days
following the completion of its publication in two (2) national
newspaper of general circulation.
Q: Are we saying that tramp services law is limited to vessels? Can
there be a tramping service for land vehicles?
So the law (referring to its Whereas clause) is silent as to its
applicability. It did not specifically state that it is limited only to
vessels.
There is a case related to tramping services, that is the case of
National Steel Corporation. That is the case referred to wherein the
Supreme Court ruled on whether the vessel was a tramp service.
Transportation Law First Exam Coverage 2016-2017
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Essentially, the tramp service is a private carrier and not subject to the
stringent provisions of the common carrier. But can it still be
considered or transformed as a common carrier? Is that absolute?
Since it is considered as a private transaction because a tramp
service does not offer to the public, it can refuse, and it has no fixed
routes. If you base it on a common carrier, there is a franchise to
traverse this particular route, yun lang yung kanilang route. But when
it comes to tramp service pwede silang pumunta kahit saan. They do
not need a franchise to operate.
So how is a tramp service registered? Where is it registered? Kasi for
land transportation, if it is not a common carrier, they register with the
LTO. But when it becomes a common carrier, it secures a franchise
from the LTFRB. So with respect to a carrier, a vessel, operating in
tramp service, where is that vessel registered? In the maritime
industry authority.
How is a private carrier transformed into a common carrier? See
National Steel Corporation case.
In this case, Vlason was claiming that they cannot be held liable as a
common carrier because they had a special transaction with National
Steel. Meaning to say, they had a charter party agreement. There are
three kinds of charter party: is a bareboat charter, a voyage charter
and a time charter. Meaning to say (referring to time charter) there is a
contract of time voyage. The particular with National Steel falls under
a bareboat charter party, which means that the control and the
transaction were specific only for particular routes. That the shipper
has control over the captain and the crew, parang in the meantime the
shipper is the owner pro hac vice meaning, in the mean time that the
agreement was entered into si shipper ang owner. The real ship
owner, the charter party, the cargo owner is the owner of the vessel,
and the said owner is only assumes the responsibility of ensuring that
the vessel is sea worthy. Yan lang ang responsibility ng shipowner
under the bareboat agreement, because the control of the ship is
under the control of the charterer, who charted the vessel. So siya
yung captain, siya yung nagdidirect, the staff is under his control. So
walang control si ship owner except insofar as the seaworthiness of
the vessel is concerned.
In this case, the common carrier becomes a private carrier because it
only carried a particular cargo for this particular shipper. Of course
there will be confusion, because Vlason is claiming here they are into
the tramp service. However, the Supreme Court said that while it may
be a tramping service, a tramp service, being a private carrier, may
also be considered a common carrier depending on the circumstances
of each case.
What is important here is the distinction between a private and
common carrier. Vlasons here claim that they dont need to exercise
extraordinary diligence because this is a private carriage, and
therefore ordinary diligence , and it no longer has the burden of proof
kasi wala na yung presumption of negligence because it is a private
carrier. The burden of proof is with the aggrieved party to show that
the carrier did not exercise the diligence required of him, and that it
was his fault. Based on the National Steel case, the fault was
attributed to the sailors - in the stevedoring.
Within what period is the common carrier required to exercise
extraordinary diligence? What is the duration of the liability of the
common carrier to exercise extraordinary diligence?
How is actual delivery made?
As evidenced by what? How can the common carrier say that the
goods were actually delivered?
Sign on the acknowledgement. And the original bill of lading is
returned to the common carrier. That is proof that the goods have
been delivered. Because if the original bill of lading is still in your
possession, ibig sabihin the goods have not yet been received. You
can file an action for that because that is an actionable document in
the event that the goods had not yet arrived. That is proof that the
goods were sent but not delivered to you. Once it is delivered to you,
usually hinihingi ni common carrier yung original or else they make
you sign because that is proof of actual delivery.
When you say constructive delivery?
Page | 9

Who is the recipient her? What do we call the recipient?
Consignee. Use the proper terms. Who are the parties to a contract of
transportation? Shipper, common carrier, consignee, diba? You use
that.
What is stoppage in transit?
What is the relation of the exercise of a stoppage in transit vis-a-vis
the obligation of the common carrier to exercise extra ordinary
diligence?
Who is the unpaid seller? Consigner or Shipper.
You said the shipper gives notice to the common carrier, and he
exercises stoppage in transit because he knew that the consignee has
become insolvent, and therefore, to protect his interest, while the
cargo is still in transit, he gives notice to the common carrier to what?
How is notice given? If the vessel is in the middle of the sea? What is
the notice given by the consigner to the common carrier as would
terminate the responsibility of the common carrier to exercise
extraordinary diligence?
A notice to the common carrier to no longer deliver the goods! So once
that notice is given, the common carrier is no longer required to
exercise extraordinary diligence, but only ordinary diligence, and the
contract of carriage is converted to a contract of deposit.
Who are now the parties to the contract of deposit? Bailor and bailee.
The bailor is shipper, and the bailee is the common carrier.
So there is now a contract of deposit, where responsibility of the
common carrier to exercise extraordinary diligence ceases.
What is a stipulation limiting liability?
What liability being limited here? To limit the liability of the common
carrier to a degree less than extraordinary diligence because of the
nature of the business of common carriers. In case of loss,
destruction and deterioration, the common carrier is presumed to be
negligent, and therefore, the burden of proof is upon the common
carrier to show that the loss, destruction or deterioration was due to
the circumstances enumerated under Article 1734. That he exercised
extraordinary diligence but there was a fortuitous event. But it does
not end there. The cause or the natural disaster, if the cause was a
natural disaster, is the proximate cause of the loss destruction or
deterioration, and that the common carrier exercised extraordinary
diligence to prevent the loss destruction or deterioration before,
during, and after the occurrence of the loss, destruction or
deterioration.
However, 1734 grants to the party the opportunity that they may enter
into a contract to limit liability of the common carrier to exercise a
degree of diligence less than extraordinary diligence.
What are the requirements? It must be in writing, signed by the parties,
for a valuable consideration other than the service that is going to be
rendered by the common carrier, and must be reasonable (just and not
contrary to public policy).
What do you understand about the valuable consideration other than
the services to be rendered? The shipper has to declare the value of
the cargo of goods, or a higher amount, and will pay that value.
What generally are the stipulations in a stipulation limiting liability,
other than to exercise a degree of diligence less than extraordinary,
that are just and reasonable? Take note that Article 1745 provides for
stipulations that are considered unreasonable, unjust, and contrary to
public policy.
So what is the rational behind article 1746? A contract with
stipulations limiting liability is anchored on voluntariness between the
parties, therefore if there is force or intimidation it can be annulled by
the shipper. The contract will be voidable and may be annulled at the
option of the shipper. But of course, the validity and enforceability of
the said contract will depend upon the circumstances to be
determined by the court.
Transportation Law First Exam Coverage 2016-2017
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DULAY
December 12, 2016
There is a presumption by law that in the event of loss, destruction, or
deterioration, or injuries to the passenger, the common carrier is
presumed to be at fault. However, the common carrier can be
exempted in the loss, destruction or injuries by any of the exempting
circumstances under Article 1734. So, in order for them to be exempt
from liability, the force majeure, if it is the cause for the loss,
destruction or deterioration, must be the proximate and only cause,
and that the common carrier can so prove that they exercised the
diligence required of it to prevent and minimize the loss provided
before, during and after the occasion of the loss, destruction or
deterioration.
Art. 1734. Common carriers are responsible for the loss, destruction,
or deterioration of the goods, unless the same is due to any of the
following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster
or calamity;
(2) Act of the public enemy in war, whether international or
civil;
(3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in
the containers;
(5) Order or act of competent public authority.
However, the law provides under 1744, of course, we said that the
exemption of the exculpatory causes and that is not applicable in the
event that there is negligence, the common carrier is in delay. Even if
saying that the provision of 1744 is available to common carrier as
basis to be exempted it will not mean that the common carrier can be
exempted from liability in view of the delay or the intervention of any
negligence.
Art. 1744. A stipulation between the common carrier and the shipper
or owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
The exercise of extraordinary diligence is mandated and it starts from
the time that the common carrier unconditionally receives the goods,
it is operative even if the goods are temporarily stored, until it is
delivered to the shipper or consignee, actually or constructively and, of
course, it exercises its right of stoppage in transitu.
However, the SC before provides for a way for the parties to enter into
a stipulation limiting the liability of the common carrier to exercise the
degree of diligence less than extraordinary, provided that the
stipulation limiting liability is signed by the parties, it is supported by a
valuable consideration other than the service rendered, and that the
stipulation was just and reasonable and not contrary to public policy.
So, it must be stressed is premised on freedom of choice or
voluntariness, we said that 1749 and 1750 provides that the validity
and enforceability of the stipulation limiting the liability at an agreed
valuation shall be taken into consideration or will be based only on the
unhampered choice of the shipper and that in case of dispute that
may arise, the court will take into consideration the stipulation if just
and reasonable especially if the carrier has monopoly of the route for
a particular area. Thats why the law provides that that stipulation
may be annulled by the shipper, if the shipper was forced to enter into
such stipulation limiting the liability of the common carrier. The court
will take that into consideration whether or not naging material ba
yung monopoly of the carrier that forced the shipper to enter into that
stipulation. So the court will determine that stipulation is just and
reasonable despite the fact that the common carrier has the monopoly
to the route of that particular area.
Art. 1749. A stipulation that the common carrier's liability is limited to
the value of the goods appearing in the bill of lading, unless the
shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered. by the
owner or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the circumstances,
and has been fairly and freely agreed upon.
Page | 10

Of course, we mentioned also the package xx as with respect to the
liability of the common carrier. We said that the amount of US$500
which is reproduced in the bill of lading is taken from Sec. 4 Article 5
of the Carriage of Goods by Sea Act. Why was that incorporated there?
Because there is no provision under the Civil Code which provide for a
limitation on the liability of the common carrier. Based on 1766 which
provides that in all matters not regulated by the Civil Code provisions
and the provisions of the Code of Commerce, such that special laws
are applicable.
Art. 1766. In all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the Code of
Commerce and by special laws.
Any Volunteer for the case of EDGAR COKALIONG?
EDGAR COKALIONG SHIPPING V UCPB
DOCTRINE: The liability of a common carrier for the loss of goods
may, by stipulation in the bill of lading, be limited to the value declared
by the shipper. On the other hand, the liability of the insurer is
determined by the actual value covered by the insurance policy and
the insurance premiums paid therefor, and not necessarily by the
value declared in the bill of lading.
FACTS:
Shipper: Zosima Mercardo, Nestor Angelia
Carrier: EDGAR COKALIONG SHIPPING LINES, INC.
Vessel: M/V Tandag
Insurer: UCPB General Insurance Co. Inc. (Feliciana Legaspi insured
the cargoes)
Event: FIRE
Edgar did not pay UCPB. UCPB filed a complaint. RTC absolved Edgar
of any liability. CA affirmed.
ISSUE:
1. W/N Edgar is liable
2. What is the basis of liability? Amount in the bill of lading or
actual amount?
RULING: 1. Yes. The uncontroverted findings of the Philippine Coast
Guard show that the M/V Tandag sank due to a fire, which resulted
from a crack in the auxiliary engine fuel oil service tank. Fuel spurted
out of the crack and dripped to the heating exhaust manifold, causing
the ship to burst into flames. The crack was located on the side of the
fuel oil tank, which had a mere two-inch gap from the engine room
walling, thus precluding constant inspection and care by the crew.
Having originated from an unchecked crack in the fuel oil service tank,
the fire could not have been caused by force majeure. May refer
toEastern Shipping Lines, Inc. v. Intermediate Appellate Court.
A stipulation that limits liability is valid as long as it is not against
public policy.
Art. 1749. A stipulation that the common carriers liability is limited to
the value of the goods appearing in the bill of lading, unless the
shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the circumstances,
and has been freely and fairly agreed upon.
2. Bill of lading. The bill of lading subject of the present controversy
specifically provides, among others:
18. All claims for which the carrier may be liable shall be adjusted and
settled on the basis of the shippers net invoice cost plus freight and
insurance premiums, if paid, and in no event shall the carrier be liable
for any loss of possible profits or any consequential loss.
The carrier shall not be liable for any loss of or any damage to or in
any connection with, goods in an amount exceeding One Hundred
Thousand Yen in Japanese Currency (100,000.00) or its equivalent in
any other currency per package or customary freight unit (whichever
is least) unless the value of the goods higher than this amount is
declared in writing by the shipper before receipt of the goods by the
carrier and inserted in the Bill of Lading and extra freight is paid as
Transportation Law First Exam Coverage 2016-2017
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II Sanchez Roman
required.
In the present case, the stipulation limiting petitioners liability is not
contrary to public policy. In fact, its just and reasonable character is
evident. The shippers/consignees may recover the full value of the
goods by the simple expedient of declaring the true value of the
shipment in the Bill of Lading. Other than the payment of a higher
freight, there was nothing to stop them from placing the actual value
of the goods therein. In fact, they committed fraud against the
common carrier by deliberately undervaluing the goods in their Bill of
Lading, thus depriving the carrier of its proper and just transport fare.
It is well to point out that, for assuming a higher risk (the alleged
actual value of the goods) the insurance company was paid the
correct higher premium by Feliciana Legaspi; while petitioner was paid
a fee lower than what it was entitled to for transporting the goods that
had been deliberately undervalued by the shippers in the Bill of
Lading. Between the two of them, the insurer should bear the loss in
excess of the value declared in the Bills of Lading.
Who is Feliciana Legaspi? What is her relation to Mercado and
Angelia? So Feliciana Legaspi is the supplier.
So there are two separate cargoes here. For how much? For Angelia, it
was P110,056 and for Mercado is P99,000.
There was a fire. Because of? A crack in the auxiliary engine. Dun sa
crack, lumalabas yung oil or fuel.
In so far as the first issue, whether or not the common carrier is liable
the SC said that the common carrier is liable for its failure to prove
that it exercised the diligence required to conduct the necessary
requisite inspection of the engine, and the engine crude, etc. So, if
then, considering that the burden of proof is on the part of the
common carrier, as the common carrier here was not able the show
proof that it exercised the diligence required of it to prevent the
occurrence of the fire. And besides, based on Article 1734, the fire is
not considered a fortuitous event. It is because of the intervention of
negligence on the part of the common carrier. There is negligence.
With respect to the extent of liability, UCPB already paid Legaspi for
the value of what was insured. What right now has UCPB to run after
Cokaliong? Because UCPB paid Legaspi, UCPB now is subrogated of
the right of Legaspi to claim what it (UCPB) paid Legaspi. UCPB is now
claiming to Cokaliong the value of the insurance proceeds of
P100,000+ which it paid to Legaspi. Cokaliong was saying that they
cannot be held liable for the amount paid to Legaspi but only the
amount as declared by Mercado and Angelia based on the bill of
lading.
So, in whose favor is a stipulation limiting liability would be? It is on
the common carrier Maam. Why? The SC held here Maam that the
purpose of the limiting stipulation in the Bill of Lading is to protect the
common carrier. Such stipulation obliges the shipper/consignee to
notify the common carrier of the amount that the latter may be liable
for in case of loss of the goods. So that the common carrier can then
take appropriate measures -- getting insurance, if needed, to cover or
protect itself. This precaution on the part of the carrier is reasonable
and prudent. So, the SC here said that, in so far as the liability of the
losses concerned Cokaliong was liable and with respect to the extent
of liability, the liability of the common carried will be based on what is
provided under the bill of lading. The SC said that there was no proof
that was shown that the stipulation limiting the liability of the
common carrier to what is indicated in the bill of lading is not just,
contrary to public policy. So, thats why the SC said that it is but
proper that the basis for the liability bill of lading considering that the
common carrier is not a party to the insurance. The insurance
agreement between Legaspi and UCPB is entirely a different contract.
It is only between Legaspi, the insurer, and UCPB, the insurance
company. On the other hand, in the bill of lading Legaspi is not a party,
even UCPB is not a party to the bill of lading but the bill of lading is
between whom? The shipper and the common carrier.
So a stipulation limiting liability is in favor of the common carrier so
that the common carrier can get an insurance (nag-iinsurance din yan
sila) to cover what is the liability that is declared by the shipper in the
event of loss, destruction, deterioration. Hindi yung bang na-bulaga na
lang yung common carrier na ito pala yung liability dba? So, actually, a
stipulation in this regard is in favor of the common carrier so that it
Page | 11

can be prepared to pay the amount in the event of loss, destruction,
deterioration.
What about the case of Sealand Service?
SEA-LAND SERVICE, INC. vs. IAC
Facts: Sea-land, a foreign shipping and forwarding company licensed
to do business in the Philippines, received from Seaborne Trading
Company in California a shipment consigned to Sen Hiap Hing. The
shipper not having declared the value of the shipment, no value was
indicated in the BOL. The shipment was discharged in Manila, and
while awaiting transshipment to Cebu the cargo was stolen and never
recovered. The lower court sentences Sea-land to pay Cue the value
of the lost cargo, the unrealized profit and attorneys fees. The CA
affirmed the decision, hence the petition.
Issue: Whether or not the consignee of seaborne freight is bound by
stipulations in the covering bill of lading limiting to a fixed amount the
liability of the carrier for loss or damage to the cargo where its value is
not declared in the bill.
Held: Yes. There is no question of the right of a consignee in a bill of
lading to recover from the carrier or shipper for loss of, or damage to,
goods being transported under said bill, although that document may
have been drawn up only by the consignor and the carrier without the
intervention of the consignee
Since the liability of a common carrier for loss of or damage to goods
transported by it under a contract of carriage so governed by the laws
of the country of destination and the goods in question were shipped
from the United States to the Philippines, the liability of Sea-Land has
Cue is governed primarily by the Civil Code, and as ordained by the
said Code, supplementary, in all matters not cluttered thereby, by the
Code of Commerce and special laws. One of these supplementary
special laws is the Carriage of goods by Sea Act (COGSA), made
applicable to all contracts for the carriage by sea to and from the
Philippines Ports in Foreign Trade by Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity and binding
effect of the liability limitation clause in the bill of lading here are fully
substantial on the basis alone of Article 1749 and 1750 of the Civil
Code. The justices of such stipulation is implicit in its giving the owner
or shipper the option of avoiding accrual of liability limitation by the
simple expedient of declaring the value of the shipment in the bill of
lading.
The stipulation in the bill of lading limiting the liability of Sea-Land for
loss or damages to the shipment covered by said rule to US$500 per
package unless the shipper declares the value of the shipment and
pays additional charges is valid and binding on Cue.
You said that there was no declaration of the value? Yes Maam. But it
is stated in the bill of lading maam that in case of loss or
deterioration during the transportation of the goods, it should not
exceed US$600.
The basis of the liability would be the peso conversion during the time
the action was filed and not the present peso conversion and the
basis would be the US$500 per package. So the peso equivalent per
US$ was P3 then. So that would serve as basis for the amount to be
paid which was the value at the time of delivery when the case was
filed.
What about the case of Belgian? What is the connection with this
case?
BELGIAN OVERSEAS CHARTERING V PHILIPPINE FIRST
Facts:
On June 13, 1990, CMC Trading A.G. shipped on board the M/V
'Anangel Sky' at Hamburg, Germany 242 coils of various Prime Cold
Rolled Steel sheets for transportation to Manila consigned to the
Philippine Steel Trading Corporation. On July 28, 1990, M/V Anangel
Sky arrived at the port of Manila and, within the subsequent days,
discharged the subject cargo. Four (4) coils were found to be in bad
order. Finding the four (4) coils in their damaged state to be unfit for
the intended purpose, the consignee Philippine Steel Trading
Corporation declared the same as total loss.
Transportation Law First Exam Coverage 2016-2017
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Petitioners refused to submit to the consignee's claim. Consequently,
respondent paid the consignee and was subrogated to the latter's
rights. Subsequently, respondent instituted this complaint for recovery
of the amount paid by them, to the consignee as insured.
Petitioners imputed that the damage and/or loss was due to pre-
shipment damage. In addition thereto, they argued that their liability, if
there be any, should not exceed the limitations of liability provided for
in the bill of lading and other pertinent laws. Finally, they averred that,
in any event, they exercised due diligence and foresight required by
law to prevent any damage/loss to said shipment.
RTC dismissed the Complaint because respondent had failed to prove
its claims. In reversing the trial court, the CA ruled that petitioners
were liable for the loss or the damage of the goods shipped, because
they had failed to overcome the presumption of negligence imposed
on common carriers.
Issue #1:
Whether or not a notation in the bill of lading at the time of loading is
sufficient to show pre-shipment damage and to exempt herein
defendants from liability.
Held: NO.
Mere proof of delivery of the goods in good order to a common carrier
and of their arrival in bad order at their destination constitutes a prima
facie case of fault or negligence against the carrier. If no adequate
explanation is given as to how the deterioration, the loss or the
destruction of the goods happened, the transporter shall be held
responsible. Petitioners failed to rebut the prima facie presumption of
negligence in the case at bar. True, the words "metal envelopes rust
stained and slightly dented" were noted on the Bill of Lading; however,
there is no showing that petitioners exercised due diligence to
forestall or lessen the loss. Having failed to discharge the burden of
proving that they have exercised the extraordinary diligence required
by law, petitioners cannot escape liability for the damage to the four
coils.
Issue #2:
Whether or not the consignee/plaintiff filed the required notice of loss
within the time required by law.
Held: YES. Pursuant to Section 3, paragraph 6 of the Carriage of
Goods by Sea Act (COGSA), a failure to file a notice of claim within
three days will not bar recovery if it is nonetheless filed within one
year. This 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. In the present case, the cargo was discharged on July 31,
1990, while the Complaint was filed by respondent on July 25, 1991,
within the one-year prescriptive period.
Issue #3:
Whether or not the "PACKAGE LIMITATION" of liability under Section 4
(5) of COGSA is applicable.
Held: YES. In the case before us, there was no stipulation in the Bill of
Lading limiting the carrier's liability. Neither did the shipper declare a
higher valuation of the goods to be shipped. This fact
notwithstanding, the insertion of the words "L/C No. 90/02447 cannot
be the basis for petitioners' liability. A notation in the Bill of Lading
which indicated the amount of the Letter of Credit obtained by the
shipper for the importation of steel sheets did not effect a declaration
of the value of the goods as required by the bill. In the light of the
foregoing, petitioners' liability should be computed based on US$500
per package and not on the per metric ton price declared in the Letter
of Credit.
So with respect to the issue on whether the bill of lading is a contract
of adhesion, how was that ruled upon? I think thats on Everett
Steamship v CA case. (Theres no ruling about a contract of carriage
being a contract of adhesion in the Belgian case).
So what about the Everett Steamship v CA case?
EVERETT STEAMSHIP V CA
FACTS
Hernandez trading company imported three crates of bus spare parts
marked as Marco 12, Marco 13, Marco 14 from its supplier Maruman
Page | 12

trading company.
Said crates were shipped from Japan to Manila on noard the vessel
owned by Everette Orient Lines. Upon arrival in Manila, it was
discovered that Marco 14 was missing.
Hernandez makes a formal claim to Everette in an amount of 1 mill ++
Yen, which is the amount of the cargo lost.
However, Everett offers an amount of 100k because it is the amount
that was stipulated in its Bill of Lading.
Hernandez files a case at the RTC of Caloocan, RTC rules in favor of
Hernandez holding Everett liable for the amount of !mill ++ Yen.
THE CA affirmed the RTCs ruling and made an additional observation
that since Hernandez is not a privy to the contract in the bill of lading
(the contract was entered by Everett and Maruman trading [shipper]),
and so the 100k limit stipulated will not bind Hernandez making
Everett liable for the full amount of 1mill ++ Yen.
ISSUE
1. Is Everett liable for the full amount or the amount that
was stipulated in the contract?- what was stipulated in
the contract
2. Is Hernandez a privy to the contract which says that
Petitioner is liable only for 100k? Yes
RULING
1. Controlling provisions for this issue would be 1749 and 1750 of the
Civil Code.
In Sea Land Service, Inc. vs Intermediate Appellate Court
That said stipulation is just and reasonable is arguable from the fact
that it echoes Art. 1750 itself in providing a limit to liability only if a
greater value is not declared for the shipment in the bill of lading. To
hold otherwise would amount to questioning the justness and fairness
of the law itself, and this the private respondent does not pretend to
do. But over and above that consideration, the just and reasonable
character of such stipulation is implicit in it giving the shipper or
owner the option of avoiding accrual of liability limitation by the
simple and surely far from onerous expedient of declaring the nature
and value of the shipment in the bill of lading
The clause of the contract goes:
The carrier shall not be liable for any loss of or any damage to or in
any connection with, goods in an amount exceeding One Hundred
Thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in
any other currency per package or customary freight unit (whichever
is least) unless the value of the goods higher than this amount is
declared in writing by the shipper before receipt of the goods by the
carrier and inserted in the Bill of Lading and extra freight is paid as
required. (Emphasis supplied)
The shipper, Maruman Trading, had the option to declare a higher
valuation if the value of its cargo was higher than the limited liability
of the carrier. Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the stipulations.
The trial courts ratiocination that private respondent could not have
fairly and freely agreed to the limited liability clause in the bill of
lading because the said conditions were printed in small letters does
not make the bill of lading invalid.
In Ong Yiu VS. CA the court said that
contracts of adhesion wherein one party imposes a ready-made
form of contract on the other, as the plane ticket in the case at bar,
are contracts not entirely prohibited
A contract limiting liability upon an agreed valuation does not offend
against the policy of the law forbidding one from contracting against
his own negligence
The shipper, Maruman Trading, we assume, has been extensively
engaged in the trading business. It cannot be said to be ignorant of
the business transactions it entered into involving the shipment of its
goods to its customers. The shipper could not have known, or should
know the stipulations in the bill of lading and there it should have
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
declared a higher valuation of the goods shipped. Moreover,
Maruman Trading has not been heard to complain that it has been
deceived or rushed into agreeing to ship the cargo in petitioners
vessel.
2. Even if the consignee was not a signatory to the contract of
carriage between the shipper and the carrier.
The consignee can still be bound by the contract. private respondent
(Hernandez) formally claimed reimbursement for the missing goods
from petitioner and subsequently filed a case against the latter based
on the very same bill of lading, it (private respondent) accepted the
provisions of the contract and thereby made itself a party thereto, or
at least has come to court to enforce it. Thus, private respondent
cannot now reject or disregard the carriers limited liability stipulation
in the bill of lading. In other words, private respondent is bound by the
whole stipulations in the bill of lading and must respect the same.
What about the issue with respect to whether the bill of lading binding
upon the consignee? The SC said that when the consignee formally
claimed reimbursement for the missing goods from carrier and
subsequently filed a case against the latter based on the very same
bill of lading, it accepted the provisions of the contract and thereby
made itself a party thereto, or at least has come to court to enforce it.
Because? What did the consignee use as basis for filing the case? It
used the bill of lading Maam. While the consignee is not a party
signatory to the bill of lading (because we said the stipulations
limiting liability must be signed by the parties and the bill of lading
was signed only by the consignor and the common carrier, the
consignee have not signed), the bill of lading can bind the consignee
considering that the consignee used the bill of lading as basis of his
claim.
And with respect to a contract of adhesion? Is a bill of lading
considered a contract of adhesion? Because the bill of lading is
prepared by the shipper and the terms and condition are written in
very very fine letters. In this case Maam, the SC said that although the
bill of lading is considered a contract of adhesion, in this case, it is not
considered invalid considering that The Maruman Trading has been
extensively engaged in the trading business. The SC said that it
cannot be said to be ignorant of the business transactions it entered
into involving the shipment of its goods to its customers. The shipper
could have known, or should know the stipulations in the bill of lading
and there it should have declared a higher valuation of the goods
shipped. Moreover, Maruman Trading has not been heard to complain
that it has been deceived or rushed into agreeing to ship the cargo in
petitioners vessel. In fact, it was not even impleaded in this case. So
Generally, a contract of adhesion (which is when we say contract of
adhesion, it is a ready-made form prepared by one party) is not
prohibited because the party who adheres may reject. Of course, if he
adheres to it, then he is bound by the contract. He is free to reject it.
So, any questions in so far as stipulation limiting liability is
concerned?
So we go now to baggages. There are two kinds of baggages. Before
that, in 1753, we said that The law of the country to which the goods
are to be shipped or the place of destination shall govern the liability
of the common carrier for their loss, destruction or deterioration.
Now, in 1754, there are two kinds of baggages.
1. In the custody of the common carrier, which means
checked-in baggages. What law shall govern? The law on
common carriers because it is not baggeges once checked-
in is in the possession and custody of the common carrier in
which case the provisions of 1733 to 1753 shall apply.
2. In the custody of the passenger. Yung hand-carry. So what
law shall govern? Article 1998, 2000 to 2003 of the Civil
Code which shall be considered Necessary deposits. What
are common carriers here considered? As hotel-keepers
which shall considered the goods in the passenger as
necessary deposits. So the common-carrier shall be liable
as depositary with respect to baggages in the custody of the
passenger. Provided what? Provided that notice was given
to them (common carrier), or to their employees, of the
effects brought by the guests and that, on the part of the
latter (passenger), they take the precautions which said
common carrier or their substitutes advised relative to the
care and vigilance of their effects. Article 2000, Common
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 Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
carrier is liable for the damage caused by their employees
and servants but not by force majeure. Art. 2001 The act of M: Surrender?
a thief or robber is not deemed force majeure, unless it is S: Deposit it to the common carrier or any of his employees.
done with the use of arms or through an irresistible force.
Art. 2002 The hotel-keeper is not liable for compensation if M: So it is no longer in the custody of the passenger?
the loss is due to the acts of the passenger, his family, S: Notify, I mean. The passenger should notify the common carrier
servants or visitors, or if the loss arises from the character that he has the said baggage. And also that it turn into effect as a
of the things brought by the passenger. Art. 2003 The necessary deposit, the common carrier turn into a hotel keeper as
common carrier cannot free himself from responsibility by provided in article 1998
posting notices to the effect that he is not liable for the
articles brought by the passenger. Any stipulation between M: So what will happen if the passenger turn over the baggage to the
the common carrier and the passenger whereby the common carrier?
responsibility of the former as set forth in articles 1998 to S: Different provisions shall apply: Article 1733.
2001 is suppressed or diminished shall be void.
M: What is 1733?
S: the common carrier shall exercise extraordinary diligence in the
safe keeping of the baggages of the passenger
UGDANG
January 9, 2017
M: So what will happen if there is loss, destruction, or deterioration?
M: (What is the responsibility of the common carrier) with respect to
S: in case of loss, destruction or deterioration of baggages (or goods)
the baggages in the personal custody of the passenger?
the common carrier shall be liable for the said loss, destruction, or
S: .
deterioration of said baggage
M: (relating the question to the discussion (last year))
M: so what is required of the common carrier with that regard?
S: they are considered as necessary deposits
S: The common carrier shall exercise extraordinary diligence in
safekeeping and/or transporting the baggages or goods of the
M: What do you mean by necessary deposits? My question is what
passengers. Except if there is fortuitous event.
is the responsibility of a common carrier with respect to those
baggages?
M: So what is the presumption of the law in case of loss, destruction,
S: the common carrier should exercise due diligence in the safe
or deterioration (L/D/D )of goods?
keeping of the baggages.
S: The law presumes that the common carrier is negligent.
M: Is that the responsibility?
M: so in case of loss, destruction, or deterioration, the common carrier
M: Responsible as what? Responsibility as what?
is presumed to have been at fault or negligent. So who now has the
S: as a depositary
burden of proof to overcome such presumption?
S: The burden of proof lies with the common carrier that he has
M: What is that? That is the effect: as a depositary, but insofar as its
exercised extraordinary diligence in the transportation or safekeeping
responsibility, what is it referred to? To what responsibility is that
of the goods.
referred to? Under what provision of law?
S: it is under the Chapter 3 of the Civil Code, the necessary deposits
M: So, will that exempt him from liability? Just with the fact that he
Article 2000,
has exercised extraordinary diligence in case of loss? What would be
the intervening factor for the common carrier to prove that it exercised
Q: So responsibility as what? The effect would be as
extraordinary diligence and therefore should be exempted from the
depositariesresponsibility not as common carrier, as what? They are
L/D/D of the goods?
not common carriers, what are they referred to?
S: The intervening factor is that there is a fortuitous event
S: As hotel keepers.
M: that the cause of the loss was due to a fortuitous event and despite
M: Ok, as hotel keepers, governed by what provision?
the exercise of the extraordinary diligence the fortuitous event was a
S: Article 2000 of the civil code.
circumstance that is beyond the control of the common carrier. So
Art. 2000. The responsibility referred to in the two
other than the loss was due to fortuitous event what else should the
preceding articles shall include the loss of, or injury to the
common carrier do? Other than the exercise of the extraordinary
personal property of the guests caused by the servants or e
diligence, what else should the common carrier show to be exempted
mployees of the keepers of hotels or inns as well as
from liability?
strangers; but not that which may proceed from any force
S: The common carrier should also show that the fortuitous event was
majeure. The fact that travelers are constrained to rely on
the proximate and sole cause of the Loss.
the vigilance of the keeper of the hotels or inns shall be
considered in determining the degree of care required of him.
M: What else? The common carrier may say the under Article 1734
(1784a)
because of the fortuitous event common carrier should be exempted;
is that sufficient ? No it is not sufficient. Even if it is caused by
M: What are the two preceding articles?
fortuitous event it must prove that:
S: article 1998, 1999.
1. that he exercised extraordinary diligence;
Art. 1998. The deposit of effects made by the travelers in
2. that the fortuitous event was the proximate and only cause
hotels or inns shall also be regarded as necessary. The
of that lossWhat else?
keepers of hotels or inns shall be responsible for them as
3. that the common carrier exercise due diligence to prevent
depositaries, provided that notice was given to them, or to
the loss before, during, and after the occurrence of the
their employees, of the effects brought by the guests and
fortuitous event
that, on the part of the latter, they take the precautions
which said hotel-keepers or their substitutes advised
M:assuming all these are present there is one circumstance that
relative to the care and vigilance of their effects.
would not exempt the common carrier from that responsibility.
S: In case the common carrier is already in delay.
Art. 1999. The hotel-keeper is liable for the vehicles, animals
and articles which have been introduced or placed in the annexes
M:Ok, that will not exempt the carrier from the liability for the loss of
of the hotel.
the cargo or the baggage as a result of a fortuitous event. Of course
the delay here should be based on different circumstances of each
M: So you summarize that in your own words.
case. If the delay is caused by fortuitous event, that can serve as an
S: (article 2000) if it (baggage) is with the custody of the passenger
exemption on the part of the common carrier, because it was not his
the previous 2 articles shall be applied (article 1998 and 1999). It
fault. But the delay should be what? Attributable to the fault of the
means that if the baggage is in their (passengers) custody, the
common carrier, otherwise, the common carrier is not exempted from
passenger should notify first the carrier that he has the said baggage,
the liability for damages.
and that he should surrender it to the common carrier

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M: How about acts of strangers, insofar as baggages in the personal
custody of the passenger?
A: Incases of baggages in the personal custody of the passenger, its
loss if caused by strangers, the common carrier would not be held
liable.
M: Absolutely?
S: Except if the common carrier could have prevented the loss by
exercising the diligence required of it.
M: are you sure? That is article 2001
Art. 2001:The act of a thief or robber, who has entered the
hotel is not deemed force majeure, unless it is done with the
use of arms or through an irresistible force.
S: Under Article 2001, the common carrier would not be held liable if
for example there is theft or robbery, and then such can be considered
as fortuitous event which would exempt the common carrier from
liability if it occurs with the use of force or violence.
M:What occurred? Who used violence?
S: The stranger
M: The thieves and the robber. So, if there is no irresistible force or any
use of arms?
S:the common carrier would be held liable.
M: So the common carrier would still be held liable unless the thieves
or the robbers used arms or irresistible force. That is the ruling in the
case of DE GUZMAN under Art.1732, where the supreme court added
that these can be considered as fortuitous event if the hijackers,
thieves, or robbers in particular instance use arms and employed
irresistible force.it could be considered as a caso fortuito as would
exempt the common carrier from liability for damages. However if it
(the loss) is caused by the relative of the passenger?
S: Under article 2002:
Art. 2002. The hotel-keeper is not liable for compensation if
the loss is due to the acts of the guest, his family, servants
or visitors, or if the loss arises from the character of th
e things brought into the hotel.
S: If the loss is caused by the passengers relatives, his friends or
visitors, the common carrier is not liable.
M: What you understand from contributory negligence?
S: Contributory negligence should be attributed to the passenger if the
passenger contributed to the damages happened to him.
M: Contributed to the damages?
S: or injury to his person or to his baggages.
M: give me an example where there is contributory negligence on the
part of the passenger insofar as the baggages.
S: If the passenger is not so prudent in guarding his baggages. If he
leaves it without attending to it, so it is prone to
M:so he leaves the baggage, then somebody picked it up? So? Is the
common carrier liable?
S: The common carrier would not be held liable if the common carrier
posted notice
M:are you sure?
S: It is not an absolute exception..
M: You mean the common carrier will not be held liable? Assuming
there is posting of notice? The posting of notice exempt the common
carrier from liability in the event of loss? What does the law provide?
S: it is not absolute, it cant be eliminated.
M: What do you mean eliminated?
A: The responsibility of the carrier
M? So how? Eliminated, you mean, hindi na siya liable? The common
carrier cannot be held liable?
ESTRADA VS. CONSOLACION
Facts: the wife of the petitioner died. During that time Recto was a
two-way street. There were 2 colliding vehicles in the intersection that
hit the AC jeep. The AC jeep was ran off course. The wife of the
petitioner (passenger of AC jeep) died. The petitioner filed a case
against the driver and the carrier. But the defendant contended that he
cant be held liable because what happened was a fortuitous event.
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
Issue: whether or not it was a fortuitous event.
Held: The court ruled that it was a fortuitous event because there are
factors for it to be considered as a fortuitous event:
(1) the event must be independent of the human will;
(2) the occurrence must render it impossible for the obligor to
fulfill his obligation in a normal manner; and
(3) the obligor must be free of a concurrent or contributory fault
or negligence.
In the case, the (evidence?) degree to prove that it was a fortuitous
event as stated in the affidavits . Since they were free from
contributory negligence they were not held liable
M: In the RTC level, why did Estrada file a case against the judge? Why
was there a petition for prohibition? What was the order of the court?
S:
M: So Estrada opposed the order of judge Consolacion for granting the
summary judgment. So the common carrier filed a motion for
summary judgment on the grounds that?
S:
M: How do we relate it now with the presumption based on this case?
The law established presumption of negligence, so based on this case,
the common carrier filed a motion for summary judgment based on
the fact annexes saying that the fault was due to 2 colliding vehicles-
it is not because it is not his fault, so, why would Estrada oppose
that: the motion for summary judgment?
S:
M: It is a matter of procedure on the matter on what the law requires.
How could you overcome the presumption of negligence if you just file
a motion for summary judgment attaching documents that the cause
of the accident was the fault of 2 colliding vehicles? What about the
breach of contract? You have this breach of contract, but the law
provides under 1755 that the common carrier is bound to carry the
passengers to a place as far as human care and foresight can provide,
with utmost diligence of a very cautious person under all
circumstances. So the law provides that the common carrier should
rebut the presumption of negligence, in this case the death of the
passenger. What would then be the effect? How can you reconcile
this?
S:
M:so what will happen now to the case of Estrada against the
common carrier, if the common carrier is saying that based on the
summary judgment the liability is attributable to the 2 colliding
vehicles? So where should Estrada go if there is no ruling on whether
or not it is exempted?
S:
M: that is the reason why Estrada opposed the summary judgment
and raised it before the SC for certiorari and prohibition, because
Estrada here will be lost. Paano tong sinasabi na di siya liable? San
xa ngayon pupunta? So he will file again a case against the 2 colliing
vehicles, so hindi na siya Breach of contract. It will now be based on
Culpa Aquiliana and the presumption of law is no longer available. The
contract of carriage is only between Estrada and the common carrier.
So the common carrier should be held liable for the death of Estrada(s
wife), although, whether there is a presumption of negligence has still
proof but insofar as the breach of contract is concerned he has to
show proof that he was not negligent. That he exercised extraordinary
diligence and that the cause of the death was due to the collision of 2
vehicles which was beyond his control which could be considered as
fortuitous event. He still has to prove that in order for Estrada to be
able to claim damagesbabayaran parin siya for damages nung
carrier but the carrier has a cause of action against the 2 colliding
vehicles to recover from them what has been paid to Estrada. Thats is
why he opposed the motion for summary judgment, because, sabi ni
Estrada san ako pupunta ngayon, Magfafile ako sa kanila ng case
because the common carrier will no longer pay me, because of the
fact that it was not his fault? Still hindi siya liable, but he has to pay for
damages which the common carrier can claim against the 2 colliding
vehicles in a 3rd-party complaint, kase may 3rd party complaint diba?
Estrada against common carrier, The common carrier can file a third
party compliant against the owners of the 2 colliding vehicles. Para
makacliam si Estrada Against these 2 colliding vehicles. There should
be a ruling on the breach of contract.
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CALIFORNIA LINES INC. VS. DELOS SANTOS:
Facts: The parties are: California lines and Amparo Santos
Regalado sought to recover from defendant California Lines damages.
Q: Regalado is a passenger of what bus?
S: of California Lines
When she was onboard California lines, it collided with the Ricalinda
Bus. California lines interposed cross-claim against Ricalinda bus
M: there was a complaint filed by Regalado against California Lines for
breach of contract. Your cause of action is breach of contract. Why?
S: Because California lines failed to safely delivered Regalado as far
as human care and foresight can provide to her destination due to
accident.
M: Regalado Filed a Case against California lines. California lines filed
a case against Ricalinda Bus, saying that the collision was due to its
(Ricalinda) drivers negligence.
S: the cross claim was saying that Ricalinda bus showed reimbursed
California lines whatever it will be ordered to by the court to pay
Regalado. Ricalinda Bus alleged that the accident was due to the
negligence of the driver of the California lines and pry that cross claim
be granted.
After hearing there was an amicable settlement between Regalado
and Ricalinda Bus.
M: So Regalado because there is breach of contract, o Regalado
against California lines, and California lines 3rd party complaint
against Ricalinda bus. So Ricalinda bus settled with Regalado insofar
as the damages that Regalado sustained as a result of the accident.
S: so court dismissed the case since there was already and amicable
settlement. The California lines defendant of the original case said
that to make the dismissal without prejudice in relation to the claim of
California lines, against the Ricalinda bus. It sought to recover
damages against Ricalinda bus for the collision that took place that
because of the collision there was damages of the California lines
have suffered and because of the damages and because of the
needed repairs the bus was no longer be operated by the California
Lines in the regular cause of its business and because of that they
suffered damages. That they are entitles to collect from Ricalinda bus.
However The Ricalinda Bus said that if there were damages it was
caused due to the fault/negligence or lack of prudence of California
Lines.
M: Who was filing for dismissal?
S: This time it was Ricalinda Bus saying that what happened was due
to the lack of prudence on the part of the driver of the California lines
M: The dismissal was based on the fact that there was already a
settlement. The Ricalinda moved to dismiss the complaint of
California lines in view of the settlement. So the issue is whether or
not the case was settled? Is there already a settlement? So what was
settled here is only insofar as the claim of Regalado is concerned, but
insofar as the damage that the (California) bus has sustained because
of the accident that has not yet settled. That cannot be dismissed
kase may issue pa insofar as the damages for the counterclaim of
California Lines. What was settled is only with respect to the claim of
Regalado. So that is only a part of the case. What was not yet settled
is the damages that was caused to the bus of California Lines.
ESTILLORE
January 11, 2017
Q: What is the principle of last clear chance?
A: A negligent plaintiff can nonetheless recover if he is able to show
that the defendant had the last opportunity to avoid the accident.
Q: When is it applicable as a defense?
A: This applies in a suit between the owners and drivers of two
colliding vehicles.
Q: Is it applicable to common carrier with respect to breach of a
contract of carriage?
A: No, it doesnt apply where a passenger demands responsibility
from the carrier to enforce its contractual obligation. It would be
iniquitous to exempt the driver and his employer on the ground that
the other driver was also negligent. (Agbayani) The relationship of
the passenger and the common carrier is based on a contract and
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
therefore the common carrier has this responsibility to deliver the
passenger safely to its place of destination.
Q: What are the exempting circumstances which may exempt the
common carrier from responsibility?
A: When it is due to fortuitous event which is the proximate and only
cause of the injury or damage to the passenger.
Q: Is there a need for the court to declare or make an express finding
that a common carrier is negligent?
A: No. The court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to
pay the damages sought for by the passenger. By the contract of
carriage, the carrier assumes the express obligation to transport the
passenger to his destination safely and to observe extra ordinary
diligence with due regard for all circumstances, and any injury that
might be suffered by the passenger is right away attributable to the
fault or negligence of the carrier. This is an exception to the general
rule that negligence must be proved, and it is therefore incumbent
upon the carrier to prove that it has exercised extraordinary diligence.
(Agbayani)
Q: Is the rule on stipulation limiting the liability of the common carrier
applicable to contracts of carriage of passenger?
A: In general, the extraordinary diligence required for the carriage of
passengers cannot be dispensed with or lessened by stipulation, by
the posting of notices, by statement on the tickets, or otherwise. The
common carrier and the passenger cannot enter into agreement:
1. Absolutely exempting the carrier from liability from the
passengers death or injuries;
2. Nor into an agreement lessening the extraordinary diligence
required by law, say to the diligence of a good father of a
family. (Agbayani)
Q: Is this absolute?
A: No. When a passenger is carried gratuitously, a stipulation limiting
the common carrier's liability for negligence is valid. (Article 1758).
Q: Is there an exception to the exception?
A: If it is due to the willful act or gross negligence of the common
carrier. The common carrier cannot hide behind a stipulation limiting
its liability in so far as gratuitous passenger is concerned.
MARANAN vs. PEREZ
FACTS:
CORACHEA was a passenger in a taxicab owned and operated by
Perez when he was stabbed and killed by the driver, Valenzuela. The
latter was found guilty for homicide.
While on appeal, MARANAN, CORACHEAs mother, filed an action to
recover damages from owner and driver for the death of her son.
PEREZ asserted that the deceased was killed in self-defense, since he
first assaulted the driver by stabbing him from behind. Also, the death
was a caso fortuito for which the carrier was not liable.
CA: PEREZ liable to MARANAN but the case against VALENZUELA
was dismissed.
ISSUE:
WON PEREZ IS LIABLE. Yes.
PEREZ: He alleged that the carrier is under no absolute liability for
assaults of its employees upon the passengers.
UNTENABLE. The killing was perpetrated by the driver of the very cab
transporting the passenger, in whose hands the carrier had entrusted
the duty of executing the contract of carriage. The killing of the
passenger here took place in the course of duty of the guilty employee
and when the employee was acting within the scope of his duties.
The new Civil Code of the Philippines expressly makes the common
carrier liable for intentional assaults committed by its employees
upon its passengers, by the wording of Art. 1759 which categorically
states that
Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former's
Page | 16

employees, although such employees may have acted beyond
the scope of their authority or in violation of the orders of the
common carriers.
As can be gleaned from Art. 1759, the Civil Code of the Philippines
evidently follows the rule based on the principle that it is the carrier's
implied duty to transport the passenger safely. Under this view, it is
enough that the assault happens within the course of the employee's
duty. It is no defense for the carrier that the act was done in excess of
authority or in disobedience of the carrier's orders. The carrier's
liability here is absolute in the sense that it practically secures the
passengers from assaults committed by its own employees.
At least three very cogent reasons underlie this rule:
1. the special undertaking of the carrier requires that it furnish
its passenger that full measure of protection afforded by the
exercise of the high degree of care prescribed by the law,
inter alia from violence and insults at the hands of strangers
and other passengers, but above all, from the acts of the
carrier's own servants charged with the passenger's safety;
2. said liability of the carrier for the servant's violation of duty
to passengers, is the result of the formers confiding in the
servant's hands the performance of his contract to safely
transport the passenger, delegating therewith the duty of
protecting the passenger with the utmost care prescribed
by law; and
3. as between the carrier and the passenger, the former must
bear the risk of wrongful acts or negligence of the carrier's
employees against passengers, since it, and not the
passengers, has power to select and remove them.
Accordingly, it is the carrier's strict obligation to select its drivers and
similar employees with due regard not only to their technical
competence and physical ability, but also, no less important, to their
total personality, including their patterns of behavior, moral fibers, and
social attitude.
Applying this stringent norm to the facts in this case, therefore, PEREZ
is liable pursuant to Art. 1759 of the Civil Code. The dismissal of the
claim against VILLANUEVA driver was also correct. MARANANs
action was predicated on breach of contract of carriage and the cab
driver was not a party thereto. His civil liability is covered in the
criminal case wherein he was convicted by final judgment.
Q: What is the complete name of the Warsaw Convetion?
A: The Convention for the Unification of certain rules relating to
international carriage by air.
Q: Why is the Warsaw binding to the Philippines?
A: Because it is a treaty commitment entered into by the Philippines
thats why it has the force and effect of the law in our country.
Q: What are the categories of the international transportation by air
under the Warsaw Convention?
1. Where the place of departure and the place of destination is
situated within the territory of two high contracting parties
regardless of whether there is a break in the transportation
or transshipment.
SANTOS III vs. NORTHWEST ORIENT AIRLINE
FACTS:
This case involves the Proper interpretation of Article 28(1)
of the Warsaw Convention, reading as follows:
Art. 28. (1) An action for damage must be brought at
the option of the plaintiff, in the territory of one of the
High Contracting Parties, either before the court of the
domicile of the carrier or of his principal place of
business, or where he has a place of business through
which the contract has been made, or before the court
at the place of destination.
Facts:
SANTOS is a minor and a resident of the Philippines.
Northwest Orient Airlines (NOA) is a foreign corporation with
principal office in Minnesota, U.S.A. and licensed to do
business and maintain a branch office in the Philippines.
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
SANTOS purchased from NOA a round-trip ticket in San
Francisco. U.S.A., for his flight from San Francisco to Manila
via Tokyo and back.
SANTOS checked in at the NOA counter in the San Francisco
airport for his scheduled departure to Manila. Despite a
previous confirmation and re-confirmation, he was informed
that he had no reservation for his flight from Tokyo to
Manila. He therefore had to be wait-listed.
SANTOS sued NOA for damages in the RTC of Makati.
NOA moved to dismiss the complaint on the ground of lack
of jurisdiction. It contended that the complaint could be
instituted only in the territory of one of the High Contracting
Parties, before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through
which the contract had been made;
4. the court of the place of destination.
ISSUE:
WON THE PHILIPPINE COURTS HAS JURISDICTION OVER
THE CASE. No.
HELD:
SANTOS claims that the lower court erred in not ruling that
under Article 28(1) of the Warsaw Convention, this case was
properly filed in the Philippines, because Manila was the
destination of SANTOS.
The place of destination, within the meaning of the Warsaw
Convention, is determined by the terms of the contract of
carriage or, specifically in this case, the ticket between the
passenger and the carrier. Examination of the SANTOS
ticket shows that his ultimate destination is San Francisco.
Although the date of the return flight was left open, the
contract of carriage between the parties indicates that NOA
was bound to transport SANTOS to San Francisco from
Manila. Manila should therefore be considered merely an
agreed stopping place and not the destination.
Article 1(2) also draws a distinction between a "destination"
and an "agreed stopping place." It is the "destination" and
not an "agreed stopping place" that controls for purposes of
ascertaining jurisdiction under the Convention.
The contract is a single undivided operation, beginning with
the place of departure and ending with the ultimate
destination. The use of the singular in this expression
indicates the understanding of the parties to the Convention
that every contract of carriage has one place of departure
and one place of destination. An intermediate place where
the carriage may be broken is not regarded as a "place of
destination."
2. The place of departure and the place of destination is within
the territory of the place of a single high contracting party if
there is an agreed stopping place under the power of
another country.
MAPA vs. CA
FACTS:
Mapa entered into contract of air transportation with TWA
purchased in Bangkok, Thailand.
Said TWA tickets are for Los Angeles-New York-Boston-St.
Louis-Chicago. The place of destination is Chicago, USA.
Upon arriving in Boston, PURITA and CARMINA proceeded
to the carousel to claim their baggages and found only three
out of the seven they checked in.
MAPA then filed with the trial court a complaint for
damages,
It has been shown by the defendant that the domicile of the
Page | 17

defendant Trans World Airlines, Inc. is Kansas City, Missouri,
its principal place of business is also in Kansas City,
Missouri, the carrier's place of business through which the
contracts were made is Bangkok and the place of
destination was Boston.
The Philippines not being one of the places specified in Art.
28(1) above-quoted where the complaint may be instituted,
this Court therefore, does not have jurisdiction over the
present case.
ISSUE:
DOES THE PHILIPPINE COURT HAVE JURISDICTION TO TRY
THE PRESENT CASE IN THE LIGHT OF THE PROVISION OF
ART. 28(1)? No.
HELD:
No, since this case does not involve international
transportation.
Under Art. 28(1) supra, a complaint for damages against an
air carrier can be instituted only in any of the following
places/courts:
(1) The court of the domicile of the carrier;
(2) The court of its principal place of business;
(3) The court where it has a place of business
through which the contract had been made;
(4) The court of the place of destination.
Whether the contracts were of international transportation
is to be solely determined from the TWA tickets issued to
them in Bangkok, Thailand, which showed that their itinerary
was Los Angeles-New York-Boston-St. Louis-Chicago.
Accordingly, since the place of departure (Los Angeles) and
the place of destination (Chicago) are both within the
territory of one High Contracting Party, with no agreed
stopping place in a territory subject to the sovereignty,
mandate, suzerainty or authority of another Power, the
contracts did not constitute international transportation as
defined by the convention.
ISSUE:
WON THE CONTRACTS OF TRANSPORTATION BETWEEN
MAPA AND TWA WERE CONTRACTS OF INTERNATIONAL
TRANSPORTATION UNDER THE WARSAW CONVENTION.
No.
HELD:
It appears clear to us that TWA itself, if the sole basis were
the two TWA tickets for Los Angeles-New York-Boston-St.
Louis-Chicago, the contracts cannot be brought within the
term international transportation, as defined in Article I(2) of
the Warsaw Convention.
As provided therein, a contract is one of international
transportation only if according to the contract made by the
parties, the place of departure and the place of destination,
whether or not there be a break in the transportation or a
transshipment, are situated either within the territories of
two High Contracting Parties, or within the territory of a
single High Contracting Party, if there is an agreed stopping
place within a territory subject to the sovereignty, mandate
or authority of another power, even though that power is not
a party to this convention.
There are then two categories of international
transportation.
1. that where the place of departure and the place of
destination are situated within the territories of
two High Contracting Parties regardless of
whether or not there be a break in the
transportation or a transshipment; and
2. that where the place of departure and the place of
destination are within the territory of a single High
Contracting Party if there is an agreed stopping
place within a territory subject to the sovereignty,
mandate, or authority of another power, even
though the power is not a party to the Convention.
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
The High Contracting Parties referred to in the Convention
are the signatories thereto and those which subsequently
adhered to it.
The contracts of transportation in this case are evidenced
by the two TWA tickets both purchased and issued in
Bangkok, Thailand. On the basis alone of the provisions
therein, it is obvious that the place of departure and the
place of destination are all in the territory of the United
States, or of a single High Contracting Party. The contracts,
therefore, cannot come within the purview of the first
category of international transportation. Neither can it be
under the second category since there was NO agreed
stopping place within a territory subject to the sovereignty,
mandate, or authority of another power.
The only way to bring the contracts between MAPA, on the
one hand, and TWA within the first category of international
transportation is to link them with, or to make them an
integral part of, the Manila-Los Angeles travel of MAPA
through PAL aircraft.
The Mapa case will only fall under the definition of international
transportation (second category) if it has an agreed stopping over in a
different territory or sovereignty although the place of departure and
place of destination is only within the territory of a single high
contracting party.
Q: Is this absolute? Is there an exception?
SABENA BELGIAN WORLD AIRLINES vs. CA
FACTS:
Plaintiff was a passenger on board Flight SN 284 of SABENA airline
originating from Casablanca to Brussels, Belgium on her way back to
Manila. She stayed overnight in Brussels and her luggage was left on
board Flight SN 284.
When plaintiff arrived at Manila she discovered that her baggage was
lost.
She filed her formal complaint with the local office of SABENA
demanding immediate attention
The Brussels Office of SABENA found the luggage and that they have
broken the locks for identification. Plaintiff was assured by the
defendant that it has notified its Manila Office that the luggage will be
shipped to Manila on October 27, 1987. But unfortunately plaintiff was
informed that the luggage was lost for the second time .
SABENA asserts that the loss of the luggage was due to plaintiffs sole
if not contributory negligence; that she did not declare the valuable
items in her checked-in luggage at the flight counter when she
checked in for her flight from Casablanca to Brussels; that Section
9(a), Article IX of General Conditions of carriage requiring passengers
to collect their checked baggage at the place of stopover, plaintiff
neglected to claim her baggage at the Brussels Airport; that plaintiff
should have retrieved her undeclared valuables from her baggage at
the Brussels Airport since her flight from Brussels to Manila will still
have to visit for confirmation inasmuch as only her flight from
Casablanca to Brussels was confirmed; that defendant incorporated
in all Sabena Plane Tickets, including Sabena Ticket No. 082422-
72502241 issued to plaintiff in Manila on August 21, 1987, a warning
that Items of value should be carried on your person and that some
carriers assume no liability for fragile, valuable or perishable articles
and that further information may he obtained from the carrier for
guidance; that granting without conceding that defendant is liable, its
liability is limited only to US $20.00 per kilo due to plaintiffs failure to
declare a higher value on the contents of her checked in luggage and
pay additional charges thereonPetitioner airline company, in
contending that the alleged negligence of private respondent should
be considered the primary cause for the loss of her luggage, avers
that, despite her awareness that the flight ticket had been confirmed
only for Casablanca and Brussels, and that her flight from Brussels to
Manila had yet to be confirmed, she did not retrieve the luggage upon
arrival in Brussels. Petitioner insists that private respondent, being a
seasoned international traveler, must have likewise been familiar with
the standard provisions contained in her flight ticket that items of
value are required to be hand-carried by the passenger and that the
liability of the airline or loss, delay or damage to baggage would be
Page | 18

limited, in any event, to only US$20.00 per kilo unless a higher value is
declared in advance and corresponding additional charges are paid
thereon. At the Casablanca International Airport, private respondent,
in checking in her luggage, evidently did not declare its contents or
value. Petitioner cites Section 5(c), Article IX, of the General
Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929,
as amended by the Hague Protocol of 1955, generally observed by
International carriers, stating, among other things, that:
Passengers shall not include in his checked baggage, and the carrier
may refuse to carry as checked baggage, fragile or perishable articles,
money, jewelry, precious metals, negotiable papers, securities or other
valuables.
ISSUE:
WHETHER OR NOT THE AIRLINE CAN AVAILM OF THE PROVISIONS
WHICH EXCLUDE OR LIMIT HIS LIABILITY BASED ON THE WARSAW
CONVENTION. No
HELD:
The Warsaw Convention however denies to the carrier availment of
the provisions which exclude or limit his liability, if the damage is
caused by his willful misconduct or by such default on his part as, in
accordance with the law of the court seized of the case, is considered
to be equivalent to willful misconduct, or if the damage is (similarly)
caused by any agent of the carrier acting within the scope of his
employment. The Hague Protocol amended the Warsaw Convention
by removing the provision that if the airline took all necessary steps to
avoid the damage, it could exculpate itself completely, and declaring
the stated limits of liability not applicable if it is proved that the
damage resulted from an act or omission of the carrier, its servants or
agents, done with intent to cause damage or recklessly and with
knowledge that damage would probably result. The same deletion
was effected by the Montreal Agreement of 1966, with the result that a
passenger could recover unlimited damages upon proof of wilful
misconduct.
The Convention does not thus operate as an exclusive enumeration of
the instances of an airlines liability, or as an absolute limit of the
extent of that liability. Moreover, slight reflection readily leads to the
conclusion that it should be deemed a limit of liability only in those
cases where the cause of the death or injury to person, or destruction,
loss or damage to property or delay in its transport is not attributable
to or attended by any wilful misconduct, bad faith, recklessness or
otherwise improper conduct on the part of any official or employee for
which the carrier is responsible, and there is otherwise no special or
extraordinary form of resulting injury. The Contentions provisions, in
short, do not regulate or exclude liability for other breaches of
contract by the carrier or misconduct of its officers and employees, or
for some particular or exceptional type of damage. Otherwise, an air
carrier would be exempt from any liability for damages in the event of
its absolute refusal, in bad faith, to comply with a contract of carriage,
which is absurd. Nor may it for a moment be supposed that if a
member of the aircraft complement should inflict some physical injury
on a passenger, or maliciously destroy or damage the latters property,
the Convention might successfully be pleaded as the sole gauge to
determine the carriers liability to the passenger. Neither may the
Convention be invoked to justify the disregard of some extraordinary
sort of damage resulting to a passenger and preclude recovery
therefor beyond the limits set by said Convention. It is in this sense
that the Convention has been applied, or ignored, depending on the
peculiar facts presented by each case.
Q: Who are high contracting parties?
A: Countries or states who have signed or ratified the Warsaw
Convention.
SINGANON
January 16, 2017
The first category under the Warsaw Convention is that where the
place of departure and the place of destination is situated within the
territory of two High Contracting Parties regardless of whether there
was a break in the transportation or in the transshipment.
In the case of Santos, Santos purchased a ticket from San Francisco
via Tokyo, stop-over sa Philippines, then back to San Francisco. So he
was in Bangkok. And he filed a complaint for breach of contract for
failure to board on the date of travel. And the airline company filed a
motion to dismiss because the travel of Santos was considered an
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
International Transportation by Air and the Philippines has no
jurisdiction pursuant to Art. 28 (1) of the Warsaw Convention, because
the Philippines is not the domicile or place of business of the carrier
and it is not where the ticket was purchased. So the case was
dismissed because of lack of jurisdiction.
The second category under the Warsaw Convention is that where the
place of departure and the place of destination is situated within the
territory of a single High Contracting Party if there is an agreed
stopping place within a territory subject to the sovereignty, mandate
or authority of another power, even though the power is not a party to
the Convention.
This was illustrated in the case of Mapa wherein Mapa purchased a
ticket in Bangkok for travel to LA, New York, Boston and to Chicago.
And all these places are within the United States kaya single High
Contracting Party. However, Mapas luggage was lost so she filed a
case in the Philippines. The airline argued that the Philippines does
not have proper jurisdiction.
Does Philippines have jurisdiction over the case under the
circumstances? YES, because the travel of Mapa is not considered an
International Transportation by Air. There was no agreed stopping
place within a territory subject to the sovereignty, mandate or
authority of another power. It was merely a travel within a single High
Contracting Party. Therefore, the Warsaw Convention cannot be made
operative.
We also discussed the case of Sabena Belgian World Airlines where
the luggage was lost twice, and the SC said that this underscores the
negligence of Sabena Airlines. The SC also said that the provisions of
the Warsaw Convention is not an exclusive enumeration of when the
common carrier may be held liable if the proximate and only cause is
the negligence of the common carrier. If negligence on the part of the
common carrier intervened, then the common carrier cannot seek
relief from the provisions of the Warsaw Convention.
So under the Civil Code, from where shall obligations arise?
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts.
What would be the remedies available to the passenger whose cause
of action is being injured during a vehicular accident?
The passenger in a culpa contractual is entitled to file an action for
breach of contract against the common carrier for failure to deliver the
passenger safely.
What would be the quantum of evidence required?
Preponderance of evidence.
And what would be the liability of the common carrier?
Primary liability.
Who has the burden of proof?
The passenger.
What does the passenger have to prove?
That the common carrier failed to carry the passenger safely as far as
human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
In case of death or injury to the passenger, what does the common
carrier have to prove?
That it exercised extraordinary diligence and the accident resulted
from negligence on the part of the passenger, or a third person, or a
fortuitous event, and it is the proximate and only cause of the
accident.
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Can a common carrier in a culpa contractual use the defense of
extraordinary diligence in the selection and supervision of its
employees?
Yes, but it is not a complete defense. It will only mitigate the liability of
the common carrier. The only exculpatory circumstances are those
mentioned in Art. 1734.
We said that as a result of the accident, we have what you call culpa
contractual, and we may also have culpa aquiliana, for example when
a person who is not a passenger is injured by a collision of vehicles.
Or a culpa criminal.
So if a passenger were to elect whether to file an action either for
culpa contractual or culpa aquiliana, what would be the difference?
What would be the advantage in a culpa contractual action which is
not per se in a culpa aquiliana?
In a culpa contractual, the law already establishes a presumption of
negligence on the part of the common carrier, in case of breach of
contract and the passenger dies or suffers injuries.
In a culpa aquiliana, there is no such presumption. The burden of
proving the negligence of the common carrier rests on the claiming
party.
In a culpa criminal, the prosecution must prove beyond reasonable
doubt that the common carrier is guilty of reckless imprudence
resulting to death or physical injuries.
In the case of culpa criminal, against whom should the case be filed?
And what will be the liability?
The action shall be filed against the driver, whose liability is primary
and direct.
And what will be the liability of the common carrier?
The common carrier will be subsidiarily liable in case the driver cannot
pay for the claims or in case he will be declared insolvent.
What would be the document or evidence that the driver is insolvent?
Insolvent by Sheriffs Return of Judgment in Execution.
What is the basis of the common carriers subsidiary liability?
Art. 103. Subsidiary civil liability of other persons. The subsidiary
liability established in the next preceding article shall also apply to
employers, teachers, persons, and corporations engaged in any kind of
industry for felonies committed by their servants, pupils, workmen,
apprentices, or employees in the discharge of their duties.
Where will you file an action to invoke the common carriers subsidiary
liability?
In the same court.
What would be your basis in running after civil damages?
Art. 100. Civil liability of a person guilty of felony. Every person
criminally liable for a felony is also civilly liable.
DAMAGES
Art. 2197. Damages may be: (MENTAL)
(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
Moral Damages
Art. 2217. Moral damages include:
1. physical suffering
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
2. mental anguish
3. fright
4. serious anxiety
5. besmirched reputation
6. wounded feelings
7. moral shock
8. social humiliation, and
9. similar injury.
Though incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendant's wrongful
act for omission.
Art. 2219. Moral damages may be recovered in the following and
analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29,
30, 32, 34, and 35.
The parents of the female seduced, abducted, raped, or abused,
referred to in No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may
bring the action mentioned in No. 9 of this article, in the order named.
Nominal Damages
Art. 2221. Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant, may
be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.
Note: This may be awarded even if no actual and exemplary damages
is awarded as long as there is a showing that the right of the
passenger has been violated.
Temperate or Moderate Damages
Art. 2224. Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered
when the court finds that some pecuniary loss has been suffered but
its amount can not, from the nature of the case, be provided with
certainty.
Art. 2225. Temperate damages must be reasonable under the
circumstances.
Liquidated Damages
Art. 2226. Liquidated damages are those agreed upon by the parties to
a contract, to be paid in case of breach thereof.
Art. 2227. Liquidated damages, whether intended as an indemnity or a
penalty, shall be equitably reduced if they are iniquitous or
unconscionable.
Art. 2228. When the breach of the contract committed by the
defendant is not the one contemplated by the parties in agreeing upon
the liquidated damages, the law shall determine the measure of
damages, and not the stipulation.
Exemplary Damages
Art. 2229. Exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages.
In the computation of the indemnification for damages, what are the
two factors that need to be determined?
Fortune Express vs CA
Page | 20

Facts: Petitioner is a bus company in northern Mindanao. Private
respondents are the widow of Atty. Caorong and their children.
On November 18, 1989, a bus of petitioner figured in an accident with
a jeepney in Kauswagan, Lanao del Norte, resulting in the death of
several passengers of the jeepney, including two Maranaos. During
investigation it was discovered that the owner of the jeepney was a
Maranao and that certain Maranaos were planning to take revenge on
the petitioner by burning some of its buses. Upon the instruction of
Sgt. Bastasa, the officer went to see Diosdado Bravo, operations
manager of petitioner, at its main office. Bravo assured him that the
necessary precautions to insure the safety of lives and property would
be taken.
Four days thereafter, three armed Maranaos who pretended to be
passengers, seized a bus of petitioner at Linamon, Lanao del Norte
while on its way to Iligan City. Among the passengers of the bus was
Atty. Caorong. The leader of the Maranaos, Mananggolo, ordered the
driver, Cabatuan, to stop the bus on the side of the highway. Then one
of the companions of Mananggolo started pouring gasoline inside the
bus, as the other held the passengers at bay with a handgun.
Mananggolo then ordered the passengers to get off the bus. The
passengers, including Atty. Caorong, stepped out of the bus and went
behind the bushes in a field some distance from the highway.
However, Atty. Caorong returned to the bus to retrieve something from
the overhead rack. At that time, one of the armed men was pouring
gasoline on the head of the driver. Cabatuan heard Atty. Caorong
pleading with the armed men to spare the driver as he was innocent of
any wrong doing and was only trying to make a living. The armed men
were, however, adamant as they repeated their warning that they were
going to burn the bus along with its driver. During this exchange
between Atty. Caorong and the assailants, Cabatuan climbed out of
the left window of the bus and crawled to the canal on the opposite
side of the highway. He heard shots from inside the bus. Larry de la
Cruz, one of the passengers, saw that Atty. Caorong was hit. Then the
bus was set on fire. Some of the passengers were able to pull Atty.
Caorong out of the burning bus and rush him to the Mercy Community
Hospital in Iligan City, but he died while undergoing operation.
The private respondents brought this suit for breach of contract of
carriage.
Issues:
1. WON there was breach of contract of carriage on the part of
petitioner
2. WON the seizure of petitioners bus was a fortuitious event
for which petitioner could not be held liable
3. WON the deceased is guilty of contributory negligence
4. WON the petitioner is liable to private respondent for
damages
Held:
1. YES.
Art. 1763 of the Civil Code provides that a common carrier is
responsible for injuries suffered by a passenger on account of the
wilful acts of other passengers, if the employees of the common
carrier could have prevented the act the exercise of the diligence of a
good father of a family. In the present case, it is clear that because of
the negligence of petitioners employees, the seizure of the bus by
Mananggolo and his men was made possible.
Despite warning by the Philippine Constabulary at Cagayan de Oro
that the Maranaos were planning to take revenge on the petitioner by
burning some of its buses and the assurance of petitioners operation
manager, Diosdado Bravo, that the necessary precautions would be
taken, petitioner did nothing to protect the safety of its passengers.
Had petitioner and its employees been vigilant they would not have
failed to see that the malefactors had a large quantity of gasoline with
them. Under the circumstances, simple precautionary measures to
protect the safety of passengers, such as frisking passengers and
inspecting their baggages, preferably with non-intrusive gadgets such
as metal detectors, before allowing them on board could have been
employed without violating the passengers constitutional rights. As
this Court intimated in Gacal v. Philippine Air Lines, Inc., a common
Transportation Law First Exam Coverage 2016-2017
Based on the Lectures of ATTY. JOCELYN VALENCIA
II Sanchez Roman
carrier can be held liable for failing to prevent a hijacking by frisking
passengers and inspecting their baggages.
From the foregoing, it is evident that petitioners employees failed to
prevent the attack on one of petitioners buses because they did not
exercise the diligence of a good father of a family. Hence, petitioner
should be held liable for the death of Atty. Caorong.
2. NO.
Art. 1174 of the Civil Code defines a fortuitous even as an occurrence
which could not be foreseen or which though foreseen, is inevitable. In
Yobido v. Court of Appeals, we held that to be considered as force
majeure, it is necessary that: (1) the cause of the breach of the
obligation must be independent of the human will; (2) the event must
be either unforeseeable or unavoidable; (3) the occurrence must be
such as to render it impossible for the debtor to fulfill the obligation in
a normal manner; and (4) the obligor must be free of participation in,
or aggravation of, the injury to the creditor. The absence of any of the
requisites mentioned above would prevent the obligor from being
excused from liability.
Art. 1755 of the Civil Code provides that a common carrier is bound to
carry the passengers as far as human care and foresight can provide,
using the utmost diligence of very cautious person, with due regard for
all the circumstances. Thus, we held in Pilapil and De Guzman that the
respondents therein were not negligent in failing to take special
precautions against threats to the safety of passengers which could
not be foreseen, such as tortious or criminal acts of third persons. In
the present case, this factor of unforeseeablility (the second requisite
for an event to be considered force majeure) is lacking. As already
stated, despite the report of PC agent Generalao that the Maranaos
were planning to burn some of petitioners buses and the assurance of
petitioners operations manager (Diosdado Bravo) that the necessary
precautions would be taken, nothing was really done by petitioner to
protect the safety of passengers.
3. NO.
The petitioner contends that Atty. Caorong was guilty of contributory
negligence in returning to the bus to retrieve something. But Atty.
Caorong did not act recklessly. It should be pointed out that the
intended targets of the violence were petitioner and its employees, not
its passengers. The assailants motive was to retaliate for the loss of
life of two Maranaos as a result of the collision between petitioners
bus and the jeepney in which the two Maranaos were riding.
Mananggolo, the leader of the group which had hijacked the bus,
ordered the passengers to get off the bus as they intended to burn it
and its driver. The armed men actually allowed Atty. Caorong to
retrieve something from the bus. What apparently angered them was
his attempt to help the driver of the bus by pleading for his life. He was
playing the role of the good Samaritan. Certainly, this act cannot be
considered an act of negligence, let alone recklessness.
4. YES.
Indemnity for Death. Art. 1764 of the Civil Code, in relation to Art. 2206
thereof, provides for the payment of indemnity for the death of
passengers caused by the breached of contract of carriage by a
common carrier. Initially fixed in Art. 2206 at P3,000.00, the amount of
the said indemnity for death has through the years been gradually
increased in view of the declining value of the peso. It is presently
fixed at P50,000.00. Private respondents are entitled to this amount.
Actual damages. Art. 2199 provides that Except as provided by law or
by stipulation, one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved. The trial
court found that the private respondents spent P30,000.00 for the
wake and burial of Atty. Caorong. Since petitioner does not question
this finding of the trial court, it is liable to private respondents in the
said amount as actual damages.
Moral Damages. Under Art. 2206, the spouse, legitimate and
illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of
the deceased. The trial court found that private respondent Paulie
Caorong suffered pain from the death of her husband and worry on
how to provide support for their minor children, private respondents
Yasser King, Rose Heinni, and Prince Alexander. The petitioner
likewise does not question this finding of the trial court. Thus, in
accordance with recent decisions of this Court, we hold that the
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 Transportation Law First Exam Coverage 2016-2017
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II Sanchez Roman
petitioner is liable to the private respondents in the amount of
P100,000.00 as moral damages for the death of Atty. Caorong.

Exemplary Damages. Art. 2232 provides that in contracts and quasi-

contracts, the court may award exemplary damages if the defendant
acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner. In the present case, the petitioner acted in a wanton and
reckless manner. Despite warning that the Maranaos were planning to
take revenge against the petitioner by burning some of its buses, and
contrary to the assurance made by its operations manager that the
necessary precautions would be taken, the petitioner and its
employees did nothing to protect the safety of passengers. Under the
circumstances, we deem it reasonable to award private respondents
exemplary damages in the amount of P100,000.00.

Attorneys Fees. Pursuant to Art. 2208, attorneys fees may be

recovered when, as in the instant case, exemplary damages are
awarded. In the recent case of Sulpicio Lines, Inc. v. Court of Appeals,
we held an award of P50,000.00 as attorneys fees to be reasonable.
Hence, the private respondents are entitled to attorneys fees in that
amount.

Compensation for Loss of Earning Capacity. Art. 1764 of the Civil

Code, in relation to Art. 2206 thereof, provides that in addition to the
indemnity for death arising from the breach of contract of carriage by
a common carrier, the defendant shall be liable for the loss of the
earning capacity of the deceased, and the indemnity shall be paid to
the heirs of the latter. The formula established in decided cases for
computing net earning capacity is as follows:

Gross Necessary
Net earning = Life x Annual - Living
Capacity Expectancy Income Expenses

Life expectancy is equivalent to two thirds (2/3) multiplied by the

difference of eighty (80) and the age of the deceased. Since Atty.
Caorong was 37 years old at the time of his death, he had a life
expectancy of 28 2/3 more years. His projected gross annual income,
computed based on his monthly salary of P11,385.00 as a lawyer in
the Department of Agrarian Reform at the time of his death, was
P148,005.00. allowing for necessary living expenses of fifty percent
(50%) of his projected gross annual income, his total earning capacity
amounts to P2,121,404.90. Hence, the petitioner is liable to the private
respondents in the said amount as compensation for loss of earning
capacity.

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