Professional Documents
Culture Documents
141314
April 9, 2003
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY ENERGY
REGULATORY BOARD, petitioner,
vs.
MANILA ELECTRIC COMPANY, respondent.
RESOLUTION
PUNO, J.:
The business and operations of a public utility are imbued with
public interest. In a very real sense, a public utility is engaged in
public service-- providing basic commodities and services
indispensable to the interest of the general public. For this reason,
a public utility submits to the regulation of government authorities
and surrenders certain business prerogatives, including the amount
of rates that may be charged by it. It is the imperative duty of the
State to interpose its protective power whenever too much profits
become the priority of public utilities.
For resolution is the Motion for Reconsideration filed by respondent
Manila Electric Company (MERALCO) on December 5, 2002 from the
decision of this Court dated November 15, 2002 reducing
MERALCO's rate adjustment in the amount of P0.017 per
kilowatthour (kwh) for its billing cycles beginning 1994 and further
directing MERALCO to credit the excess average amount of P0.167
per kwh to its customers starting with MERALCO's billing cycles
beginning February 1994.1
First, we leapfrog through the facts. On December 23, 1993,
MERALCO filed with the Energy Regulatory Board (ERB) an
application for revised rates, with an average increase of P0.21 per
kwh in its distribution charge. On January 28, 1994 the ERB granted
a provisional increase of P0.184 per kwh subject to the
condition that in the event the ERB determines that MERALCO is
entitled to a lesser increase in rates, all excess amounts collected
by MERALCO shall be refunded to its customers or credited in their
favor. The Commission on Audit (COA) conducted an examination of
the books of accounts and records of MERALCO and thereafter
recommended, among others, that: (1) income taxes paid by
MERALCO should not be included as part of MERALCO's operating
expenses and (2) the "net average investment method" or the
"number of months use method" should be applied in determining
P 30,059,614,00010
to Return
12% return thereon
Add: Total Operating expenses
P 3,607,154,000
P 38,260,420,00011
P 41,867,573,000
Actual Revenue
P 44,315,951,000
Excess Revenue
P 2,448,378,000
8.15%
Invested Capital
Authorized Rate of Return
12.00%
20.15%
14,640,094,000
P 30,059,614,000
P 3,607,154,000
P 40,396,059,00013
Computed Revenue
P 44,003,213,000
Actual Revenue
P 44,315,951,000
Excess Revenue
Percent of Excess Revenue to Invested Capital
Authorized Rate of Return
P 312,738,000
1.04%
12.00%
At the onset, it is clear that the UFR does not seek to determine
which accounting method will be used by the ERC for
determination of rate base or the items of expenses that may be
recovered by a public utility from its customers. The UFR only seeks
to prescribe a uniform system or format to standardize or facilitate
the process of unbundling of rates mandated by the EPIRA. At best,
the UFR prescribes the set of raw data or figures to be disclosed by
a distribution facility that the ERC will need to determine the
authorized rates that a distribution facility may charge. The UFR
does not, in any way, determine the manner by which the set of
data or figures indicated in the rate application will be evaluated by
the ERC for rate determination purposes.
II
MERALCO also challenges the use of the "net average investment
method" or the "number of months use method" on the ground that
MERALCO and the Public Service Commission (PSC) have been
consistently applying the "average investment method" or "simple
average", which it alleged was also affirmed by this Court in the
case of MERALCO v. PSC23 and Republic v. Medina.24
It is true that in MERALCO v. PSC,25 the issue of the proper
valuation method to be used in determining the value of
MERALCO's utility plants for rate fixing purposes was brought to
fore. In the said case, MERALCO applied the "average investment
method" or "simple average" by obtaining the average value of the
utility plants, using its values at the beginning and at the end of the
test year. In contrast, the General Auditing Office used the
"appraisal method" which fixes the value of the utility plants by
ascertaining the cost of production per kilowatt and multiplying the
same by the total capacity of said plants, less the corresponding
depreciation.26 In upholding the "average investment method"
used by MERALCO, this Court adopted the findings of the PSC for
being "by and large, supported by the records of the case."27 This
Court did not make an independent assessment of the validity or
applicability of the average investment method but simply did not
disturb the findings of the PSC for being supported by substantial
evidence. To conclude that the said decision "affirmed" the use of
the "average investment method" thereby implying that the said
Thus, this Court finds no reversible error on the part of the COA and
the ERB in adopting the "net average investment method" or the
"number of months use method" for property valuation purposes in
the cases at bar.
III
MERALCO also rants against the retroactive application of the rate
adjustment ordered by the ERB and affirmed by this Court. In its
decision, the ERB, after authorizing MERALCO to adopt a rate
adjustment in the amount of P0.017 per kwh, directed MERALCO to
refund or credit to its customers' future consumption the excess
average amount of P0.167 per kwh from its billing cycles beginning
February 199433 until its billing cycles beginning February
1998.34 In the decision appealed from, this Court likewise ordered
that the refund in the average amount of P0.167 per kwh be made
to retroact from MERALCO's billing cycles beginning February 1994.
MERALCO contends that the refund cannot be given retroactive
effect as the figures determined by the ERB only apply to the test
year or the period subject of the COA Audit, i.e., February 1, 1994
to January 31, 1995. It reasoned that the amounts used to
determine the proper rates to be charged by MERALCO would vary
from year to year and thus the computation of the excess average
charge of P0.167 would hold true only for the test year. Thus,
MERALCO argues that if a refund of P0.167 would be uniformly
applied to its billing cycles beginning 1994, with respect to periods
after January 31, 1995, there will be instances wherein its operating
revenues would fall below the 12% authorized rate of return.
MERALCO therefore suggests that the dispositive portion be
modified and order that "the refund applicable to the periods after
January 31, 1995 is to be computed on the basis of the excess
collection in proportion to the excess over the 12% return."35
The purpose of the audit procedures conducted in a rate application
proceeding is to determine whether the rate applied for will
generate a reasonable return for the public utility, which, in
accordance with settled laws and jurisprudence, is 12% on rate
base or the present value of the assets used in the operations of a
public utility. For audit purposes, however, there is a need to obtain
a sample set of data-- usually derived from figures within a
designated period of time-- to determine the amount of returns
subsequent refund of P0.167 per kwh ordered by the ERB was ever
implemented or executed by MERALCO.37 Accordingly, from
January 28, 1994 MERALCO imposed on its customers a charge that
is P0.167 in excess of the proper amount. In fact, any application
for rate adjustment that may have been applied for and/or granted
to MERALCO during the intervening period would have to be
reckoned from rates increased by P0.184 per kwh as these were the
rates prevailing at the time any application for rate adjustment was
made by MERALCO.
While we agree that the amounts used to determine the utility's
rate of return would vary from year to year, we are unable to
subscribe to the view that the refund applicable to the periods after
January 31, 1995 should be computed on the basis of the excess
collection in proportion to the excess over the 12% return.
MERALCO's contention that the refund for periods after January 31,
1995 should be computed on the basis of revenue of each year in
excess of the 12% authorized rate of return calls for a year-by-year
computation of MERALCO's revenues and assets which would be
contrary to the essence of an audit examination of a public utility
based on a test year. To grant MERALCO's prayer would, in effect,
allow MERALCO the benefit of a year-by-year adjustment of rates
not normally enjoyed by any other public utility required to adopt a
subsequent rate modification. Indeed, had the ERB ordered
an increase in the provisional rates it previously granted, said
increase in rates would apply retroactively and would not have
varied from year to year, depending on the variable amounts used
to determine the authorized rates that may be charged by
MERALCO. We find no significant circumstance prevailing in the
cases at bar that would justify the application of a yearly
adjustment as requested by MERALCO.
WHEREFORE, in view of the foregoing, the petitioner's Motion for
Reconsideration is DENIED WITH FINALITY.
SO ORDERED.
corporation when in reality, as the accused well knew, such was not
the case, the truth being that the owner of the portion of the capital
stock subscribed to by Baylon and the money paid thereon were
American citizen whose name did not appear in the article of
incorporation, and that the purpose for making this false statement
was to circumvent the constitutional mandate that no corporation
shall be authorize to operate as a public utility in the Philippines
unless 60 per cent of its capital stock is owned by Filipinos.
Found guilty after trial and sentenced to a term of imprisonment
and a fine, the accused has appealed to this Court.
The essential facts are not in dispute. On November 4,1946, the
Pacific Airways Corporation registered its articles of incorporation
with the Securities and Exchanged Commission. The article were
prepared and the registration was effected by the accused, who
was in fact the organizer of the corporation. The article stated that
the primary purpose of the corporation was to carry on the
business of a common carrier by air, land or water; that its capital
stock was P1,000,000, represented by 9,000 preferred and 100,000
common shares, each preferred share being of the par value of
p100 and entitled to 1/3 vote and each common share, of the par
value of P1 and entitled to one vote; that the amount capital stock
actually subscribed was P200,000, and the names of the
subscribers were Arsenio Baylon, Eruin E. Shannahan, Albert W.
Onstott, James O'Bannon, Denzel J. Cavin, and William H. Quasha,
the first being a Filipino and the other five all Americans; that
Baylon's subscription was for 1,145 preferred shares, of the total
value of P114,500, and for 6,500 common shares, of the total par
value of P6,500, while the aggregate subscriptions of the American
subscribers were for 200 preferred shares, of the total par value of
P20,000, and 59,000 common shares, of the total par value of
P59,000; and that Baylon and the American subscribers had
already paid 25 per cent of their respective subscriptions.
Ostensibly the owner of, or subscriber to, 60.005 per cent of the
subscribed capital stock of the corporation, Baylon nevertheless did
not have the controlling vote because of the difference in voting
power between the preferred shares and the common shares. Still,
with the capital structure as it was, the article of incorporation were
SANDOVAL-GUTIERREZ, J.:
All powers need some restraint; practical adjustments rather than
rigid formula are necessary.1 Superior strength the use of force
cannot make wrongs into rights. In this regard, the courts should be
vigilant in safeguarding the constitutional rights of the citizens,
specifically their liberty.
Chief Justice Artemio V. Panganibans philosophy of liberty is thus
most relevant. He said: "In cases involving liberty, the scales
of justice should weigh heavily against government and in
favor of the poor, the oppressed, the marginalized, the
dispossessed and the weak." Laws and actions that restrict
fundamental rights come to the courts "with a heavy presumption
against their constitutional validity."2
These seven (7) consolidated petitions for certiorari and prohibition
allege that in issuing Presidential Proclamation No. 1017 (PP 1017)
and General Order No. 5 (G.O. No. 5), President Gloria MacapagalArroyo committed grave abuse of discretion. Petitioners contend
that respondent officials of the Government, in their professed
efforts to defend and preserve democratic institutions, are actually
trampling upon the very freedom guaranteed and protected by the
Constitution. Hence, such issuances are void for being
unconstitutional.
Once again, the Court is faced with an age-old but persistently
modern problem. How does the Constitution of a free people
combine the degree of liberty, without which, law becomes
tyranny, with the degree oflaw, without which, liberty becomes
license?3
On February 24, 2006, as the nation celebrated the 20th
Anniversary of the Edsa People Power I, President Arroyo issued PP
1017 declaring a state of national emergency, thus:
NOW, THEREFORE, I, Gloria Macapagal-Arroyo, President of the
Republic of the Philippines and Commander-in-Chief of the Armed
Forces of the Philippines, by virtue of the powers vested upon me
by Section 18, Article 7 of the Philippine Constitution which states
that: "The President. . . whenever it becomes necessary, . . . may
call out (the) armed forces to prevent or suppress. . .rebellion. . .,"
and in my capacity as their Commander-in-Chief, do hereby
command the Armed Forces of the Philippines, to maintain
3) No
government should
initiate
a
constitutional
dictatorship without making specific provisions for its
termination
4) all uses of emergency powers and all readjustments in
the organization of the government should be effected in
pursuit of constitutional or legal requirements
5) no dictatorial institution should be adopted, no right
invaded, no regular procedure altered any more than is
absolutely necessary for the conquest of the particular crisis
...
6) The measures adopted in the prosecution of the a
constitutional dictatorship should never be permanent in
character or effect
7) The dictatorship should be carried on by persons
representative of every part of the citizenry interested in the
defense of the existing constitutional order. . .
8) Ultimate responsibility should be maintained for every
action taken under a constitutional dictatorship. . .
9) The decision to terminate a constitutional dictatorship,
like the decision to institute one should never be in the
hands of the man or men who constitute the dictator. . .
10) No constitutional dictatorship should extend beyond the
termination of the crisis for which it was instituted
11) the termination of the crisis must be followed by a
complete return as possible to the political and
governmental conditions existing prior to the initiation of the
constitutional dictatorship99
Rossiter accorded to legislature a far greater role in the oversight
exercise of emergency powers than did Watkins. He would secure
to Congress final responsibility for declaring the existence or
termination of an emergency, and he places great faith in the
effectiveness of congressional investigating committees.100
Scott and Cotter, in analyzing the above contemporary theories in
light of recent experience, were one in saying that, "the
suggestion that democracies surrender the control of
government to an authoritarian ruler in time of grave
danger to the nation is not based upon sound constitutional
theory." To appraise emergency power in terms of constitutional
nature and scope, and any act done contrary to its command
is ultra vires.
Justice Mendoza further stated that specifically, (a) arrests and
seizures without judicial warrants; (b) ban on public assemblies; (c)
take-over of news media and agencies and press censorship; and
(d) issuance of Presidential Decrees, are powers which can be
exercised by the President as Commander-in-Chief only where
there is a valid declaration of Martial Law or suspension of the writ
of habeas corpus.
Based on the above disquisition, it is clear that PP 1017 is not a
declaration of Martial Law. It is merely an exercise of President
Arroyos calling-out power for the armed forces to assist her in
preventing or suppressing lawless violence.
Second Provision: "Take Care" Power
The second provision pertains to the power of the President to
ensure that the laws be faithfully executed. This is based on Section
17, Article VII which reads:
SEC. 17. The President shall have control of all the executive
departments, bureaus, and offices. He shall ensure that the
laws be faithfully executed.
As the Executive in whom the executive power is vested,115 the
primary function of the President is to enforce the laws as well as to
formulate policies to be embodied in existing laws. He sees to it
that all laws are enforced by the officials and employees of his
department. Before assuming office, he is required to take an oath
or affirmation to the effect that as President of the Philippines, he
will, among others, "execute its laws."116 In the exercise of such
function, the President, if needed, may employ the powers attached
to his office as the Commander-in-Chief of all the armed forces of
the country,117 including the Philippine National Police118 under
the Department of Interior and Local Government.119
Petitioners, especially Representatives Francis Joseph G. Escudero,
Satur Ocampo, Rafael Mariano, Teodoro Casio, Liza Maza, and
Josel Virador argue that PP 1017 is unconstitutional as it arrogated
upon President Arroyo the power to enact laws and decrees in
violation of Section 1, Article VI of the Constitution, which vests the
power to enact laws in Congress. They assail the clause "to
enforce obedience to all the laws and to all decrees, orders
so. Clearly, they did not intend that Congress should first authorize
the President before he can declare a "state of national
emergency." The logical conclusion then is that President Arroyo
could validly declare the existence of a state of national emergency
even in the absence of a Congressional enactment.
But the exercise of emergency powers, such as the taking over of
privately owned public utility or business affected with public
interest, is a different matter. This requires a delegation from
Congress.
Courts have often said that constitutional provisions in pari
materia are to be construed together. Otherwise stated, different
clauses, sections, and provisions of a constitution which relate to
the same subject matter will be construed together and considered
in the light of each other.123 Considering that Section 17 of Article
XII and Section 23 of Article VI, previously quoted, relate to national
emergencies, they must be read together to determine the
limitation of the exercise of emergency powers.
Generally, Congress is the repository of emergency powers.
This is evident in the tenor of Section 23 (2), Article VI authorizing it
to delegate such powers to the President. Certainly, a body
cannot delegate a power not reposed upon it. However,
knowing that during grave emergencies, it may not be possible or
practicable for Congress to meet and exercise its powers, the
Framers of our Constitution deemed it wise to allow Congress to
grant emergency powers to the President, subject to certain
conditions, thus:
(1) There must be a war or other emergency.
(2) The delegation must be for a limited period only.
(3) The delegation must be subject to such restrictions
as the Congress may prescribe.
(4) The emergency powers must be exercised to carry out
a national policy declared by Congress.124
Section 17, Article XII must be understood as an aspect of the
emergency powers clause. The taking over of private business
affected with public interest is just another facet of the emergency
powers generally reposed upon Congress. Thus, when Section 17
states that the "the State may, during the emergency and
under reasonable terms prescribed by it, temporarily take
880 as it was not even known whether petitioner David was the
leader of the rally.147
But what made it doubly worse for petitioners David et al. is that
not only was their right against warrantless arrest violated, but also
their right to peaceably assemble.
Section 4 of Article III guarantees:
No law shall be passed abridging the freedom of speech, of
expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances.
"Assembly" means a right on the part of the citizens to meet
peaceably for consultation in respect to public affairs. It is a
necessary consequence of our republican institution and
complements the right of speech. As in the case of freedom of
expression, this right is not to be limited, much less denied, except
on a showing of a clear and present danger of a substantive evil
that Congress has a right to prevent. In other words, like other
rights embraced in the freedom of expression, the right to
assemble is not subject to previous restraint or censorship. It may
not be conditioned upon the prior issuance of a permit or
authorization from the government authorities except, of course, if
the assembly is intended to be held in a public place, a permit for
the use of such place, and not for the assembly itself, may be
validly required.
The ringing truth here is that petitioner David, et al. were arrested
while they were exercising their right to peaceful assembly. They
were not committing any crime, neither was there a showing of a
clear and present danger that warranted the limitation of that right.
As can be gleaned from circumstances, the charges of inciting to
sedition and violation of BP 880 were mere afterthought. Even
the Solicitor General, during the oral argument, failed to justify the
arresting officers conduct. In De Jonge v. Oregon,148 it was held
that peaceable assembly cannot be made a crime, thus:
Peaceable assembly for lawful discussion cannot be made a crime.
The holding of meetings for peaceable political action cannot be
proscribed. Those who assist in the conduct of such meetings
cannot be branded as criminals on that score. The question, if the
rights of free speech and peaceful assembly are not to be
preserved, is not as to the auspices under which the meeting was
July 4, 2007
Proposed Rates
0-10 cu. m.
P125.00(min. charge)
11-20 cu. m.
21-30 cu. m.
31-40 cu. m.
41-50 cu. m.
51-60 cu. m.
61-70 cu. m.
71-100 cu. m.
having vested the same to local legislative bodies and the Local
Water Utilities Administration (LWUA).
Sections 6 and 7 of P.D. 198, as amended, state:
SECTION 6. Formation of District. This Act is the source
of authorization and power to form and maintain a
district. Once formed, a district is subject to the provisions of this
Act and not under the jurisdiction of any political subdivision. For
purposes of this Act, a district shall be considered as a quasi-public
corporation performing public service and supplying public wants.
As such, a district shall exercise the powers, rights and privileges
given to private corporations under existing laws, in addition to the
powers granted in, and subject to such restrictions imposed, under
this Act. To form a district, the legislative body of any city,
municipality or province shall enact a resolution containing
the following:
(a) The name of the local water district, which shall include
the name of the city, municipality, or province, or region
thereof, served by said system, followed by the words
"Water District".
(b) A description of the boundary of the district. In the case
of a city or municipality, such boundary may include all
lands within the city or municipality. A district may include
one or more municipalities, cities or provinces, or portions
thereof: Provided, That such municipalities, cities or
provinces, or portions thereof, cover a contiguous area.
(c) A statement completely transferring any and all
waterworks and/or sewerage facilities managed, operated
by or under the control of such city, municipality or province
to such district upon the filing of resolution forming the
district.
(d) A statement identifying the purpose for which the district
is formed, which shall include those purposes outlined in
Section 5 above.
(e) The names of the initial directors of the district with the
date of expiration of the term of office for each which shall
be on the 31st of December of first, second, or third evennumbered year after assuming office, as set forth in Section
11 hereof.
10
percent;
(b)
Management/Organizational capability 30 percent; and (c)
Financial capability 30 percent; and (d) Technical capability 30
percent (Rollo, p. 122).
On April 3, 1991, the Committee, charged under the BOT Law with
the formulation of the Implementation Rules and Regulations
thereof, approved the same.
After evaluating the prequalification, bids, the PBAC issued a
Resolution on May 9, 1991 declaring that of the five applicants,
only the EDSA LRT Consortium "met the requirements of garnering
at least 21 points per criteria [sic], except for Legal Aspects, and
obtaining an over-all passing mark of at least 82 points" (Rollo, p.
146). The Legal Aspects referred to provided that the BOT/BT
contractor-applicant meet the requirements specified in the
Constitution and other pertinent laws (Rollo, p. 114).
Subsequently, Secretary Orbos was appointed Executive Secretary
to the President of the Philippines and was replaced by Secretary
Pete Nicomedes Prado. The latter sent to President Aquino two
letters dated May 31, 1991 and June 14, 1991, respectively
recommending the award of the EDSA LRT III project to the sole
complying bidder, the EDSA LRT Consortium, and requesting for
authority to negotiate with the said firm for the contract pursuant
to paragraph 14(b) of the Implementing Rules and Regulations of
the BOT Law (Rollo, pp. 298-302).
In July 1991, Executive Secretary Orbos, acting on instructions of
the President, issued a directive to the DOTC to proceed with the
negotiations. On July 16, 1991, the EDSA LRT Consortium submitted
its bid proposal to DOTC.
Finding this proposal to be in compliance with the bid requirements,
DOTC and respondent EDSA LRT Corporation, Ltd., in substitution of
the EDSA LRT Consortium, entered into an "Agreement to Build,
Lease and Transfer a Light Rail Transit System for EDSA" under the
terms of the BOT Law (Rollo, pp. 147-177).
Secretary Prado, thereafter, requested presidential approval of the
contract.
In a letter dated March 13, 1992, Executive Secretary Franklin
Drilon, who replaced Executive Secretary Orbos, informed Secretary
Prado that the President could not grant the requested approval for
the following reasons: (1) that DOTC failed to conduct actual public
bidding in compliance with Section 5 of the BOT Law; (2) that the
law authorized public bidding as the only mode to award BOT
projects, and the prequalification proceedings was not the public
bidding contemplated under the law; (3) that Item 14 of the
Implementing Rules and Regulations of the BOT Law which
authorized negotiated award of contract in addition to public
bidding was of doubtful legality; and (4) that congressional
approval of the list of priority projects under the BOT or BT Scheme
provided in the law had not yet been granted at the time the
contract was awarded (Rollo, pp. 178-179).
In view of the comments of Executive Secretary Drilon, the DOTC
and private respondents re-negotiated the agreement. On April 22,
1992, the parties entered into a "Revised and Restated Agreement
to Build, Lease and Transfer a Light Rail Transit System for EDSA"
(Rollo, pp. 47-78) inasmuch as "the parties [are] cognizant of the
fact the DOTC has full authority to sign the Agreement without
need of approval by the President pursuant to the provisions of
Executive Order No. 380 and that certain events [had] supervened
completion of the EDSA LRT III and upon opening of normal revenue
operation, DOTC shall have in their employ personnel capable of
undertaking training of all new and replacement personnel (Revised
and Restated Agreement, Annex E Sec. 5.1). In other words, by the
end of the three-year construction period and upon commencement
of normal revenue operation, DOTC shall be able to operate the
EDSA LRT III on its own and train all new personnel by itself.
Fees for private respondent' s services shall be included in the rent,
which likewise includes the project cost, cost of replacement of
plant equipment and spare parts, investment and financing cost,
plus a reasonable rate of return thereon (Revised and Restated
Agreement, Sec. 1; Rollo, p. 54).
Since DOTC shall operate the EDSA LRT III, it shall assume all the
obligations and liabilities of a common carrier. For this purpose,
DOTC shall indemnify and hold harmless private respondent from
any losses, damages, injuries or death which may be claimed in the
operation or implementation of the system, except losses,
damages, injury or death due to defects in the EDSA LRT III on
account of the defective condition of equipment or facilities or the
defective maintenance of such equipment facilities (Revised and
Restated Agreement, Secs. 12.1 and 12.2; Rollo, p. 68).
In sum, private respondent will not run the light rail vehicles and
collect fees from the riding public. It will have no dealings with the
public and the public will have no right to demand any services
from it.
It is well to point out that the role of private respondent as lessor
during the lease period must be distinguished from the role of the
Philippine Gaming Management Corporation (PGMC) in the case
of Kilosbayan Inc. v. Guingona, 232 SCRA 110 (1994). Therein, the
Contract of Lease between PGMC and the Philippine Charity
Sweepstakes Office (PCSO) was actually a collaboration or joint
venture agreement prescribed under the charter of the PCSO. In the
Contract of Lease; PGMC, the lessor obligated itself to build, at its
own expense, all the facilities necessary to operate and maintain a
nationwide on-line lottery system from whom PCSO was to lease
the facilities and operate the same. Upon due examination of the
contract, the Court found that PGMC's participation was not
confined to the construction and setting up of the on-line lottery
A
contractual arrangement whereby the contractor
undertakes the construction including financing, of a
given infrastructure facility, and the operation and
maintenance thereof. The contractor operates the
facility over a fixed term during which it is allowed to
charge facility users appropriate tolls, fees, rentals
and charges sufficient to enable the contractor to
recover its operating and maintenance expenses and
its investment in the project plus a reasonable rate of
return thereon. The contractor transfers the facility to
the government agency or local government unit
concerned at the end of the fixed term which shall
A
contractual
arrangement whereby a project proponent is
authorized to finance and construct an infrastructure
or development facility and upon its completion turns
it over to the government agency or local
government unit concerned on a lease arrangement
for a fixed period after which ownership of the facility
is automatically transferred to the government unit
concerned.
Section 5-A of the law, which expressly allows direct negotiation of
contracts, provides:
Direct Negotiation of Contracts. Direct negotiation
shall be resorted to when there is only one complying
bidder left as defined hereunder.
(a) If, after advertisement, only one contractor
applies for prequalification and it meets the
prequalification requirements, after which it is
required to submit a bid proposal which is
subsequently found by the agency/local government
unit (LGU) to be complying.
(b) If, after advertisement, more than one contractor
applied for prequalification but only one meets the
prequalification requirements, after which it submits
bid/proposal which is found by the agency/local
government unit (LGU) to be complying.
(c) If, after prequalification of more than one
contractor only one submits a bid which is found by
the agency/LGU to be complying.
The Issues
In its petition[7] and memorandum,[8] NSC raises the following
questions of law and fact:
Questions of Law
1. Whether or not a charterer of a vessel is liable for
demurrage due to cargo unloading delays caused by
weather interruption;
2. Whether or not the alleged seaworthiness certificates
(Exhibits 3, 4, 5, 6, 7, 8, 9, 11 and 12) were admissible
in evidence and constituted evidence of the vessels
seaworthiness at the beginning of the voyages; and
3. Whether or not a charterers failure to insure its cargo
exempts the shipowner from liability for cargo damage
Questions of Fact
1. Whether or not the vessel was seaworthy and cargoworthy;
2. Whether or not vessels officers and crew were negligent
in handling and caring for NSCs cargo;
3. Whether or not NSCs cargo of tinplates did sweat during
the voyage and, hence, rusted on their own; and
(4) Whether or not NSCs stevedores were negligent and
caused the wetting[/]rusting of NSCs tinplates.
Q: Is the beam that was placed in the hatch opening covering the
whole hatch opening?
A: No, sir.
Q: How many hatch beams were there placed across the opening?
A: There are five beams in one hatch opening.
ATTY DEL ROSARIO
Q: And on top of the beams you said there is a hatch board. How
many pieces of wood are put on top?
A: Plenty, sir, because there are several pieces on top of the hatch
beam.
Q: And is there a space between the hatch boards?
A: There is none, sir.
Q: They are tight together?
A: Yes, sir.
Q: How tight?
A: Very tight, sir.
Q: Now, on top of the hatch boards, according to you, is the canvas
cover. How many canvas covers?
A: Two, sir. [29]
That due diligence was exercised by the officers and the crew
of the MV Vlasons I was further demonstrated by the fact that,
despite encountering rough weather twice, the new tarpaulin did
not give way and the ships hatches and cargo holds remained
waterproof. As aptly stated by the Court of Appeals, xxx we find no
reason not to sustain the conclusion of the lower court based on
overwhelming evidence, that the MV VLASONS I was seaworthy
when it undertook the voyage on August 8, 1974 carrying on board
thereof plaintiff-appellants shipment of 1,677 skids of tinplates and
92 packages of hot rolled sheets or a total of 1,769 packages from
NSCs pier in Iligan City arriving safely at North Harbor, Port Area,
Manila, on August 12, 1974; xxx. [30]
Indeed, NSC failed to discharge its burden to show negligence
on the part of the officers and the crew of MV Vlasons I. On the
contrary, the records reveal that it was the stevedores of NSC who
were negligent in unloading the cargo from the ship.
The stevedores employed only a tent-like material to cover the
hatches when strong rains occasioned by a passing typhoon
disrupted the unloading of the cargo. This tent-like covering,
however, was clearly inadequate for keeping rain and seawater
in fact the water enter and soak into the canvas and tinplates.
A: Yes, sir, the second time I went there, I saw it.
Q: As owner of the vessel, did you not advise the National Steel
Corporation [of] the procedure adopted by its stevedores in
discharging the cargo particularly in this tent covering of the
hatches?
A: Yes, sir, I did the first time I saw it, I called the attention of the
stevedores but the stevedores did not mind at all, so, I called the
attention of the representative of the National Steel but nothing
was done, just the same. Finally, I wrote a letter to them.[31]
NSC attempts to discredit the testimony of Angliongto by
questioning his failure to complain immediately about the
stevedores negligence on the first day of unloading, pointing out
that he wrote his letter to petitioner only seven days later.[32] The
Court is not persuaded. Angliongtos candid answer in his
aforequoted testimony satisfactorily explained the delay.Seven
days lapsed because he first called the attention of the stevedores,
then the NSCs representative, about the negligent and defective
procedure adopted in unloading the cargo. This series of actions
constitutes a reasonable response in accord with common sense
and ordinary human experience. Vicente Angliongto could not be
blamed for calling the stevedores attention first and then the NSCs
representative on location before formally informing NSC of the
negligence he had observed, because he was not responsible for
the stevedores or the unloading operations. In fact, he was merely
expressing concern for NSC which was ultimately responsible for
the stevedores it had hired and the performance of their task to
unload the cargo.
We see no reason to reverse the trial and the appellate courts
findings and conclusions on this point, viz:
In the THIRD assigned error, [NSC] claims that the trial court erred
in finding that the stevedores hired by NSC were negligent in the
unloading of NSCs shipment. We do not think so. Such negligence
according to the trial court is evident in the stevedores hired by
[NSC], not closing the hatch of MV VLASONS I when rains occurred
during the discharging of the cargo thus allowing rain water and
seawater spray to enter the hatches and to drift to and fall on the
cargo. It was proven that the stevedores merely set up temporary
tents or canvas to cover the hatch openings when it rained during
of
Certificates
Proving
determined not only by the actual costs but also by the risks and
burdens assumed by the shipper in regard to possible loss or
damage to the cargo. In recognition of such factors, the parties
even stipulated that the shipper should insure the cargo to protect
itself from the risks it undertook under the charter party. That NSC
failed or neglected to protect itself with such insurance should not
adversely affect VSI, which had nothing to do with such failure or
neglect.
WHEREFORE, premises considered, the instant consolidated
petitions are hereby DENIED. The questioned Decision of the Court
of Appeals is AFFIRMED with the MODIFICATION that the demurrage
awarded to VSI is deleted. No pronouncement as to costs.
SO ORDERED.
Act (Com. Act No. 65) does not specifically provide for the subject
of collision, said Act in no uncertain terms, restricts its application
"to all contracts for the carriage of goods by sea to and from
Philippine ports in foreign trade." Under Section I thereof, it is
explicitly provided that "nothing in this Act shall be construed as
repealing any existing provision of the Code of Commerce which is
now in force, or as limiting its application." By such incorporation, it
is obvious that said law not only recognizes the existence of the
Code of Commerce, but more importantly does not repeal nor limit
its application.
On the other hand, Maritime Company of the Philippines claims that
Development Insurance and Surety Corporation, has no cause of
action against it because the latter did not prove that its alleged
subrogers have either the ownership or special property right or
beneficial interest in the cargo in question; neither was it proved
that the bills of lading were transferred or assigned to the alleged
subrogers; thus, they could not possibly have transferred any right
of action to said plaintiff- appellee in this case. (Brief for the
Maritime Company of the Philippines, p. 16).
The records show that the Riverside Mills Corporation and Guilcon,
Manila are the holders of the duly endorsed bills of lading covering
the shipments in question and an examination of the invoices in
particular, shows that the actual consignees of the said goods are
the aforementioned companies. Moreover, no less than MCP itself
issued a certification attesting to this fact. Accordingly, as it is
undisputed that the insurer, plaintiff appellee paid the total amount
of P364,915.86 to said consignees for the loss or damage of the
insured cargo, it is evident that said plaintiff-appellee has a cause
of action to recover (what it has paid) from defendant-appellant
MCP (Decision, CA-G.R. No. 46513-R, p. 10; Rollo, p. 43).
MCP next contends that it can not be liable solidarity with NDC
because it is merely the manager and operator of the vessel Dona
Nati not a ship agent. As the general managing agent, according to
MCP, it can only be liable if it acted in excess of its authority.
As found by the trial court and by the Court of Appeals, the
Memorandum Agreement of September 13, 1962 (Exhibit 6,
Maritime) shows that NDC appointed MCP as Agent, a term broad
enough to include the concept of Ship-agent in Maritime Law. In
fact, MCP was even conferred all the powers of the owner of the
vessel, including the power to contract in the name of the NDC
(Decision, CA G.R. No. 46513, p. 12; Rollo, p. 40). Consequently,
under the circumstances, MCP cannot escape liability.
It is well settled that both the owner and agent of the offending
vessel are liable for the damage done where both are impleaded
(Philippine Shipping Co. v. Garcia Vergara, 96 Phil. 281 [1906]); that
in case of collision, both the owner and the agent are civilly
responsible for the acts of the captain (Yueng Sheng Exchange and
Trading Co. v. Urrutia & Co., supra citing Article 586 of the Code of
Commerce; Standard Oil Co. of New York v. Lopez Castelo, 42 Phil.
256, 262 [1921]); that while it is true that the liability of
the naviero in the sense of charterer or agent, is not expressly
provided in Article 826 of the Code of Commerce, it is clearly
deducible from the general doctrine of jurisprudence under the Civil
Code but more specially as regards contractual obligations in
Article 586 of the Code of Commerce. Moreover, the Court held that
both the owner and agent (Naviero) should be declared jointly and
severally liable, since the obligation which is the subject of the
action had its origin in a tortious act and did not arise from contract
(Verzosa and Ruiz, Rementeria y Cia v. Lim, 45 Phil. 423 [1923]).
Consequently, the agent, even though he may not be the owner of
the vessel, is liable to the shippers and owners of the cargo
transported by it, for losses and damages occasioned to such
cargo, without prejudice, however, to his rights against the owner
of the ship, to the extent of the value of the vessel, its equipment,
and the freight (Behn Meyer Y Co. v. McMicking et al. 11 Phil. 276
[1908]).
As to the extent of their liability, MCP insists that their liability
should be limited to P200.00 per package or per bale of raw cotton
as stated in paragraph 17 of the bills of lading. Also the MCP argues
that the law on averages should be applied in determining their
liability.
MCP's contention is devoid of merit. The declared value of the
goods was stated in the bills of lading and corroborated no less by
invoices offered as evidence ' during the trial. Besides, common
carriers, in the language of the court in Juan Ysmael & Co., Inc. v.
Barrette et al., (51 Phil. 90 [1927]) "cannot limit its liability for
injury to a loss of goods where such injury or loss was caused by its
own negligence." Negligence of the captains of the colliding vessel
being the cause of the collision, and the cargoes not being
jettisoned to save some of the cargoes and the vessel, the trial
court and the Court of Appeals acted correctly in not applying the
law on averages (Articles 806 to 818, Code of Commerce).
MCP's claim that the fault or negligence can only be attributed to
the pilot of the vessel SS Yasushima Maru and not to the Japanese
Coast pilot navigating the vessel Dona Nati need not be discussed
lengthily as said claim is not only at variance with NDC's posture,
but also contrary to the factual findings of the trial court affirmed
no less by the Court of Appeals, that both pilots were at fault for
not changing their excessive speed despite the thick fog
obstructing their visibility.
Finally on the issue of prescription, the trial court correctly found
that the bills of lading issued allow trans-shipment of the cargo,
which simply means that the date of arrival of the ship Dona Nati
on April 18,1964 was merely tentative to give allowances for such
contingencies that said vessel might not arrive on schedule at
Manila and therefore, would necessitate the trans-shipment of
cargo, resulting in consequent delay of their arrival. In fact,
because of the collision, the cargo which was supposed to arrive in
Manila on April 18, 1964 arrived only on June 12, 13, 18, 20 and July
10, 13 and 15, 1964. Hence, had the cargoes in question been
saved, they could have arrived in Manila on the above-mentioned
dates. Accordingly, the complaint in the instant case was filed on
April 22, 1965, that is, long before the lapse of one (1) year from
the date the lost or damaged cargo "should have been delivered" in
the light of Section 3, sub-paragraph (6) of the Carriage of Goods
by Sea Act.
PREMISES CONSIDERED, the subject petitions are DENIED for lack
of merit and the assailed decision of the respondent Appellate
Court is AFFIRMED.
SO ORDERED.
this Court. In a Resolution dated June 2, 1995, this Court denied the
petition
of
South
Sea. 7 There the Court found no reason to reverse the factual
findings of the trial court and the Court of Appeals that Chua was
indeed an authorized agent of South Sea when he received
Valenzuela's premium payment for the marine cargo insurance
policy which was thus binding on the insurer. 8
The Court is now called upon to resolve the petition for review filed
by Valenzuela assailing the CA Decision which exempted Seven
Brothers from any liability for the lost cargo.
The Issue
Petitioner Valenzuela's arguments resolve around a single issue:
"whether or not respondent Court (of Appeals) committed a
reversible error in upholding the validity of the stipulation in the
charter party executed between the petitioner and the private
respondent exempting the latter from liability for the loss of
petitioner's logs arising from the negligence of its (Seven Brothers')
captain." 9
The Court's Ruling
The petition is not meritorious.
Validity of Stipulation is Lis Mota
The charter party between the petitioner and private respondent
stipulated that the "(o)wners shall not be responsible for loss, split,
short-landing, breakages and any kind of damages to the
cargo." 10 The validity of this stipulation is the lis mota of this case.
It should be noted at the outset that there is no dispute between
the parties that the proximate cause of the sinking of M/V Seven
Ambassadors resulting in the loss of its cargo was the "snapping of
the iron chains and the subsequent rolling of the logs to the
portside due to the negligence of the captain in stowing and
securing the logs on board the vessel and not due to fortuitous
event." 11 Likewise undisputed is the status of Private Respondent
Seven Brothers as a private carrier when it contracted to transport
the cargo of Petitioner Valenzuela. Even the latter admits this in its
petition. 12
The trial court deemed the charter party stipulation void for being
contrary to public policy, 13citing Article 1745 of the Civil Code
which provides:
"exempts the owner of the vessel from any loss or damage or delay
arising from any other source, even from the neglect or fault of the
captain or crew or some other person employed by the owner on
board, for whose acts the owner would ordinarily be liable except
for said paragraph." 22Undoubtedly, Home Insurance is applicable
to the case at bar.
The naked assertion of petitioner that the American rule enunciated
in Home Insurance is not the rule in the Philippines 23 deserves
scant consideration. The Court there categorically held that said
rule was "reasonable" and proceeded to apply it in the resolution of
that case. Petitioner miserably failed to show such circumstances or
arguments which would necessitate a departure from a well-settled
rule. Consequently, our ruling in said case remains a binding
judicial precedent based on the doctrine of stare decisis and Article
8 of the Civil Code which provides that "(j)udicial decisions applying
or interpreting the laws or the Constitution shall form part of the
legal system of the Philippines."
In fine, the respondent appellate court aptly stated that "[in the
case of] a private carrier, a stipulation exempting the owner from
liability even for the negligence of its agents is valid."24
Other Arguments
On the basis of the foregoing alone, the present petition may
already be denied; the Court, however, will discuss the other
arguments of petitioner for the benefit and satisfaction of all
concerned.
Articles 586 and 587, Code of Commerce
Petitioner Valenzuela insists that the charter party stipulation is
contrary to Articles 586 and 587 of the Code of Commerce which
confer on petitioner the right to recover damages from the
shipowner and ship agent for the acts or conduct of the
captain. 25 We are not persuaded. Whatever rights petitioner may
have under the aforementioned statutory provisions were waived
when it entered into the charter party.
Article 6 of the Civil Code provides that "(r)ights may be waived,
unless the waiver is contrary to law, public order, public policy,
morals, or good customs, or prejudicial to a person with a right
recognized by law." As a general rule, patrimonial rights may be
waived as opposed to rights to personality and family rights which
cargo carrier.[14] Further, the bare fact that the vessel was carrying
a particular type of cargo for one shipper, which appears to be
purely coincidental, is not reason enough to convert the vessel
from a common to a private carrier, especially where, as in this
case, it was shown that the vessel was also carrying passengers.
Under the facts and circumstances obtaining in this case,
LOADSTAR fits the definition of a common carrier under Article
1732 of the Civil Code. In the case of De Guzman v. Court of
Appeals,[15] the Court juxtaposed the statutory definition of
common carriers with the peculiar circumstances of that case, viz.:
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 (in local idiom, as a sideline. Article 1732 also
carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a
carrier offering its services to the general public, i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We
think that Article 1733 deliberately refrained from making such
distinctions.
xxx
It appears to the Court that private respondent is properly
characterized as a common carrier even though he merely backhauled goods for other merchants from Manila to Pangasinan,
although such backhauling was done on a periodic or occasional
rather than regular or scheduled manner, and even though private
respondents principal occupation was not the carriage of goods for
others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that that fee frequently fell
below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent
held no certificate of public convenience, and concluded he was not
a common carrier. This is palpable error. 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 and has been granted a certificate of
public convenience or other franchise.To exempt private
respondent 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 private
respondent precisely for failing to comply with applicable statutory
requirements. The business of a common carrier impinges directly
and intimately upon the safety and well being and property of
those members of the general community who happen to deal with
such carrier. The law imposes duties and liabilities upon common
carriers for the safety and protection of those who utilize their
services and the law cannot allow a common carrier to render such
duties and liabilities merely facultative by simply failing to obtain
the necessary permits and authorizations.
Moving on to the second assigned error, we find that the M/V
Cherokee was not seaworthy when it embarked on its voyage on 19
November 1984. The vessel was not even sufficiently manned at
the time. For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a sufficient number of
competent officers and crew. The failure of a common carrier to
maintain in seaworthy condition its vessel involved in a contract of
carriage is a clear breach of its duty prescribed in Article 1755 of
the Civil Code.[16]
Neither do we agree with LOADSTARs argument that the
limited liability theory should be applied in this case. The doctrine
of limited liability does not apply where there was negligence on
the part of the vessel owner or agent.[17] LOADSTAR was at fault or
goods were insured against marine risk for their stated value with
respondent Development Insurance and Surety Corporation.
In G.R. No. 71478, during the same period, the same vessel took on
board 128 cartons of garment fabrics and accessories, in two (2)
containers, consigned to Mariveles Apparel Corporation, and two
cases of surveying instruments consigned to Aman Enterprises and
General Merchandise. The 128 cartons were insured for their stated
value by respondent Nisshin Fire & Marine Insurance Co., for US
$46,583.00, and the 2 cases by respondent Dowa Fire & Marine
Insurance Co., Ltd., for US $11,385.00.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank,
resulting in the total loss of ship and cargo. The respective
respondent Insurers paid the corresponding marine insurance
values to the consignees concerned and were thus subrogated unto
the rights of the latter as the insured.
G.R. NO. 69044
On May 11, 1978, respondent Development Insurance & Surety
Corporation (Development Insurance, for short), having been
subrogated unto the rights of the two insured companies, filed suit
against petitioner Carrier for the recovery of the amounts it had
paid to the insured before the then Court of First instance of Manila,
Branch XXX (Civil Case No. 6087).
Petitioner-Carrier denied liability mainly on the ground that the loss
was due to an extraordinary fortuitous event, hence, it is not liable
under the law.
On August 31, 1979, the Trial Court rendered judgment in favor of
Development Insurance in the amounts of P256,039.00 and
P92,361.75, respectively, with legal interest, plus P35,000.00 as
attorney's fees and costs. Petitioner Carrier took an appeal to the
then Court of Appeals which, on August 14, 1984, affirmed.
Petitioner Carrier is now before us on a Petition for Review on
Certiorari.
G.R. NO. 71478
On June 16, 1978, respondents Nisshin Fire & Marine Insurance Co.
NISSHIN for short), and Dowa Fire & Marine Insurance Co., Ltd.
(DOWA, for brevity), as subrogees of the insured, filed suit against
Petitioner Carrier for the recovery of the insured value of the cargo
lost with the then Court of First Instance of Manila, Branch 11 (Civil
Case No. 116151), imputing unseaworthiness of the ship and nonobservance of extraordinary diligence by petitioner Carrier.
Petitioner Carrier denied liability on the principal grounds that the
fire which caused the sinking of the ship is an exempting
circumstance under Section 4(2) (b) of the Carriage of Goods by
Sea Act (COGSA); and that when the loss of fire is established, the
burden of proving negligence of the vessel is shifted to the cargo
shipper.
On September 15, 1980, the Trial Court rendered judgment in favor
of NISSHIN and DOWA in the amounts of US $46,583.00 and US
$11,385.00, respectively, with legal interest, plus attorney's fees of
P5,000.00 and costs. On appeal by petitioner, the then Court of
Appeals on September 10, 1984, affirmed with modification the
Trial Court's judgment by decreasing the amount recoverable by
DOWA to US $1,000.00 because of $500 per package limitation of
liability under the COGSA.
Hence, this Petition for Review on certiorari by Petitioner Carrier.
Both Petitions were initially denied for lack of merit. G.R. No. 69044
on January 16, 1985 by the First Division, and G. R. No. 71478 on
September 25, 1985 by the Second Division. Upon Petitioner
Carrier's Motion for Reconsideration, however, G.R. No. 69044 was
given due course on March 25, 1985, and the parties were required
to submit their respective Memoranda, which they have done.
On the other hand, in G.R. No. 71478, Petitioner Carrier sought
reconsideration of the Resolution denying the Petition for Review
and moved for its consolidation with G.R. No. 69044, the lowernumbered case, which was then pending resolution with the First
Division. The same was granted; the Resolution of the Second
Division of September 25, 1985 was set aside and the Petition was
given due course.
At the outset, we reject Petitioner Carrier's claim that it is not the
operator of the M/S Asiatica but merely a charterer thereof. We note
that in G.R. No. 69044, Petitioner Carrier stated in its Petition:
There are about 22 cases of the "ASIATICA" pending
in various courts where various plaintiffs are
represented by various counsel representing various
consignees or insurance companies. The common
In this case, the Bill of Lading (Exhibit "A") disclosed the following
data:
2 Containers
(128) Cartons)
Men's Garments Fabrics and Accessories Freight
Prepaid
Say: Two (2) Containers Only.
Considering, therefore, that the Bill of Lading clearly disclosed the
contents of the containers, the number of cartons or units, as well
as the nature of the goods, and applying the ruling in
the Mitsui and Eurygenes cases it is clear that the 128 cartons, not
the two (2) containers should be considered as the shipping unit
subject to the $500 limitation of liability.
True, the evidence does not disclose whether the containers
involved herein were carrier-furnished or not. Usually, however,
containers are provided by the carrier. 19 In this case, the
probability is that they were so furnished for Petitioner Carrier was
at liberty to pack and carry the goods in containers if they were not
so packed. Thus, at the dorsal side of the Bill of Lading (Exhibit "A")
appears the following stipulation in fine print:
11. (Use of Container) Where the goods receipt of
which is acknowledged on the face of this Bill of
Lading are not already packed into container(s) at the
time of receipt, the Carrier shall be at liberty to pack
and carry them in any type of container(s).
The foregoing would explain the use of the estimate "Say: Two (2)
Containers Only" in the Bill of Lading, meaning that the goods could
probably fit in two (2) containers only. It cannot mean that the
shipper had furnished the containers for if so, "Two (2) Containers"
appearing as the first entry would have sufficed. and if there is any
ambiguity in the Bill of Lading, it is a cardinal principle in the
construction of contracts that the interpretation of obscure words or
stipulations in a contract shall not favor the party who caused the
obscurity. 20 This applies with even greater force in a contract of
adhesion where a contract is already prepared and the other party
merely adheres to it, like the Bill of Lading in this case, which is
draw. up by the carrier. 21
Court of Appeals, the Court held that hijacking, not being included
in the provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate the
carrier from liability arising from hijacking, he must prove that the
robbers or the hijackers acted with grave or irresistible threat,
violence, or force. This is in accordance with Article 1745 of the
Civil Code which provides: "Art. 1745. Any of the following or
similar stipulations shall be considered unreasonable, unjust and
contrary to public policy . . . (6) That the common carrier's liability
for acts committed by thieves, or of robbers who do not act with
grave or irresistible threat, violences or force, is dispensed with or
diminished"; In the same case, the Supreme Court also held that:
"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 of
irresistible threat, violence of 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."
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE.
In this case, petitioner herself has made the admission that she
was in the trucking business, offering her trucks to those with cargo
to move. Judicial admissions are conclusive and no evidence is
required to prove the same.
5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A
FACT. Petitioner presented no other proof of the existence of the
contract of lease. He who alleges a fact has the burden of proving
it.
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF
AFFIANTS AVAILABLE AS WITNESSES. While the affidavit of
Juanito Morden, the truck helper in the hijacked truck, was
presented as evidence in court, he himself was a witness as could
be gleaned from the contents of the petition. Affidavits are not
considered the best evidence if the affiants are available as
witnesses.
was also an employee of petitioner; and the fact that control of the
cargo was placed in petitioner's care.
In disputing the conclusion of the trial and appellate courts that
petitioner was a common carrier, she alleged in this petition that
the contract between her and Rodolfo A. Cipriano, representing
CIPTRADE, was lease of the truck. She cited as evidence certain
affidavits which referred to the contract as "lease". These affidavits
were made by Jesus Bascos 8 and by petitioner herself. 9 She
further averred that Jesus Bascos confirmed in his testimony his
statement that the contract was a lease contract. 10 She also
stated that: she was not catering to the general public. Thus, in her
answer to the amended complaint, she said that she does business
under the same style of A.M. Bascos Trucking, offering her trucks
for lease to those who have cargo to move, not to the general
public but to a few customers only in view of the fact that it is only
a small business. 11
We agree with the respondent Court in its finding that petitioner is
a common carrier.
Article 1732 of the Civil Code defines a common carrier as "(a)
person, corporation or firm, or association engaged in the business
of carrying or transporting passengers or goods or both, by land,
water or air, for compensation, offering their services to the public."
The test to determine a common carrier is "whether the given
undertaking is a part of the business engaged in by the carrier
which he has held out to the general public as his occupation rather
than the quantity or extent of the business transacted." 12 In this
case, petitioner herself has made the admission that she was in the
trucking business, offering her trucks to those with cargo to move.
Judicial admissions are conclusive and no evidence is required to
prove the same. 13
But petitioner argues that there was only a contract of lease
because they offer their services only to a select group of people
and because the private respondents, plaintiffs in the lower court,
did not object to the presentation of affidavits by petitioner where
the transaction was referred to as a lease contract.
Regarding the first contention, the holding of the Court in De
Guzman vs. Court of Appeals 14 is instructive. In referring to Article
1732 of the Civil Code, it held thus:
be dealt with under the provisions of Article 1735 and thus, the
common carrier is presumed to have been at fault or negligent. To
exculpate the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in accordance with
Article 1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished;"
In the same case, 21 the Supreme Court also held that:
"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."
To establish grave and irresistible force, petitioner presented her
accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito
Morden's 24 "Salaysay". However, both the trial court and the Court
of Appeals have concluded that these affidavits were not enough to
overcome the presumption. Petitioner's affidavit about the hijacking
was based on what had been told her by Juanito Morden. It was not
a first-hand account. While it had been admitted in court for lack of
objection on the part of private respondent, the respondent Court
had discretion in assigning weight to such evidence. We are bound
by the conclusion of the appellate court. In a petition for review on
certiorari, We are not to determine the probative value of evidence
but to resolve questions of law. Secondly, the affidavit of Jesus
Bascos did not dwell on how the hijacking took place. Thirdly, while
the affidavit of Juanito Morden, the truck helper in the hijacked
truck, was presented as evidence in court, he himself was a witness
as could be gleaned from the contents of the petition. Affidavits are
luggage. The loss of said baggage not only once by twice, said the
appellate court, underscores the wanton negligence and lack of
care on the part of the carrier.
The above findings, which certainly cannot be said to be without
basis, foreclose whatever rights petitioner might have had to the
possible limitation of liabilities enjoyed by international air carriers
under the Warsaw Convention (Convention for the Unification of
Certain Rules Relating to International Carriage by Air, as amended
by the Hague Protocol of 1955, the Montreal Agreement of 1966,
the Guatemala Protocol of 1971 and the Montreal Protocols of
1975). In Alitalia vs. Intermediate Appellate Court,[8] now Chief
Justice Andres R. Narvasa, speaking for the Court, has explained it
well; he said:
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 wilful 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 wilful misconduct, or if the damage
is (similarly) caused x x x 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.Such a proposition is not borne out by the
language of the Convention, as this Court has now, and at an
earlier time, pointed out. 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,