Art. 587.
The ship agent shall also be civilly liable for the
P ART I - COMMON CARRIERS
Art 1732- Common Carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both,
by land, water, or air, for compensation, offering their services to the public.
Common Carrier one that holds itself out as ready to engage in the
transportation of goods for hire as a public employment and not as a casual
occupation. (De Guzman v. CA, G.R. No. L-47822, 22 December 1988)
Definition of Contract of Transportation
The movement of persons or things from one place to another, by a carrier.
(Blacks Law Dictionary)
A contract of transportation is whereby a certain person or association of
persons obligate themselves to transport persons, things, news from one place
to another for a fixed price. It is the removal of goods or persons from one
place to another.
Does not presume that the carrier is a common carrier.
Laws and Jurisprudence:
R.A 4136: land Transportation and Traffic Code
Section 3. Words and phrases defined. - As used in this Act:
(a) "Motor Vehicle" shall mean any vehicle propelled by any power other than
muscular power using the public highways, but excepting road rollers, trolley
cars, street-sweepers, sprinklers, lawn mowers, bulldozers, graders, fork-lifts,
amphibian trucks, and cranes if not used on public highways, vehicles which run
only on rails or tracks, and tractors, trailers and traction engines of all kinds
used exclusively for agricultural purposes.
Trailers having any number of wheels, when propelled or intended to be
propelled by attachment to a motor vehicle, shall be classified as separate
motor vehicle with no power rating.
Is a freight forwarder liable as a common carrier?
Unsworth Transportation International v. CA
The term "freight forwarder" refers to a firm holding itself out to the general
public (other than as a pipeline, rail, motor, or water carrier) to provide
transportation of property for compensation and, in the ordinary course
of its business, (1) to assemble and consolidate, or to provide for assembling
and consolidating, shipments, and to perform or provide for break-bulk and
distribution operations of the shipments; (2) to assume responsibility for the
transportation of goods from the place of receipt to the place of destination;
and (3) to use for any part of the transportation a carrier subject to the federal
law pertaining to common carriers.
A freight forwarder's liability is limited to damages arising from its own
negligence, including negligence in choosing the carrier; however, where the
forwarder contracts to deliver goods to their destination instead of merely
arranging for their transportation, it becomes liable as a common carrier for loss
or damage to goods. A freight forwarder assumes the responsibility of a carrier,
which actually executes the transport, even though the forwarder does not
carry the merchandise itself.
Real and Hypothecary or Limited Liability Rule -
May the Charterer invoke the Limited Liability Rule against the owner?
Agustin Dela Torre v. CA
With respect to petitioners position that the Limited Liability Rule under the
Code of Commerce should be applied to them, the argument is misplaced. The
said rule has been explained to be that of the real and hypothecary doctrine in
maritime law where the shipowner or ship agents liability is held as merely
co-extensive with his interest in the vessel such that a total loss thereof results
in its extinction. In this jurisdiction, this rule is provided in three articles of the
Code of Commerce. These are:
indemnities in favor of third persons which may arise from the conduct of
the captain in the care of the goods which he loaded on the vessel; but he
may exempt himself therefrom by abandoning the vessel with all her
equipment and the freight it may have earned during the voyage.
--
Art. 590. The co-owners of the vessel shall be civilly liable in the
proportion of their interests in the common fund for the results of the acts
of the captain referred to in Art. 587.
Each co-owner may exempt himself from this liability by the
abandonment, before a notary, of the part of the vessel
belonging to him.
---
Art. 837. The civil liability incurred by shipowners in the case
prescribed in this section, shall be understood as limited to the
value of the vessel with all its appurtenances and freightage
served during the voyage.
Article 837 specifically applies to cases involving collision which
is a necessary consequence of the right to abandon the vessel given to the
shipowner or ship agent under the first provision Article 587. Similarly,
Article 590 is a reiteration of Article 587, only this time the situation is that
the vessel is co-owned by several persons. Obviously, the forerunner of the
Limited Liability Rule under the Code of Commerce is Article 587. Now, the
latter is quite clear on which indemnities may be confined or restricted to
the value of the vessel pursuant to the said Rule, and these are the
indemnities in favor of third persons which may arise from the conduct of
the captain in the care of the goods which he loaded on the vessel. Thus,
what is contemplated is the liability to third persons who may have dealt
with the shipowner, the agent or even the charterer in case of demise or
bareboat charter.
In the present case, the charterer and the sub-charterer through their
respective contracts of agreement/charter parties, obtained the use and
service of the entire LCT-Josephine. The vessel was likewise manned by the
charterer and later by the sub-charterers people. With the complete and
exclusive relinquishment of possession, command and navigation of the
vessel, the charterer and later the sub-charterer became the vessels
owner pro hac vice. Now, and in the absence of any showing that
the vessel or any part thereof was commercially offered for use to the public,
the above agreements/charter parties are that of a private carriage where
the rights of the contracting parties are primarily defined and governed by
the stipulations in their contract.[34]
Parties
1.1 Carriage of Passengers / Contract to Carry Passenger
1. Passenger - one who travels in a public conveyance by virtue of
contract, express or implied, with the carrier as to the payment of fare
or that which is accepted as an equivalent thereof.
(Nueca v. Manila Railroad Co., )
2. Common Carrier - one that holds itself out as ready to engage in the
transportation of goods for hire as a public employment and not as a
casual occupation.
(De Guzman v. CA, G.R. No. L-47822, 22
December 1988)
1.2 Carriage of Goods/ Contract to carry Goods
Shipper is the person who delivers the goods to the carrier for
transportation. He is the person who pays the consideration or on
whose behalf payment is made.
Consignee is the person to whom the goods are to be delivered.
May be the shipper himself where the goods will be delivered to one
of the branch offices of the shipper, or
May be a third person who is not actually a party to the contract.
Carrier
Laws and Jurisprudence:
Release of claims
Baliwag Transit Corporation v CA
Held: Release of Claims executed by him, as the injured party, discharging
Fortune Insurance and Baliwag from any and all liability is valid. He was then
of legal age, a graduating student of Agricultural Engineering, and had the
capacity to do acts with legal effect (Article 37 in relation to Article 402, Civil
Code). Thus, he could sue and be sued even without the assistance of his
parents.
Significantly, the contract of carriage was actually between George, as the
paying passenger, and Baliwag, as the common carrier. As such carrier, Baliwag
was bound to carry its passengers safely as far as human care and foresight
could provide, and is liable for injuries to them through the negligence or wilful
acts of its employees (Articles 1755 and 1759, Civil Code). Thus, George had the
right to be safely brought to his destination and Baliwag had the correlative
obligation to do so. Since a contract may be violated only by the parties thereto,
as against each other, in an action upon that contract, the real parties in
interest, either as plaintiff or as defendant, must be parties to said contract
(Marimperio Compania Naviera, S.A. vs. Court of Appeals, No. L-40234,
December 14, 1987, 156 SCRA 368).
A real party-in-interest -plaintiff is one who has a legal right while a real
party-in-interest-defendant is one who has a correlative legal obligation whose
act or omission violates the legal right of the former (Lee vs. Romillo, Jr., G.R.
No. 60973, May 28, 1988). In the absence of any contract of carriage between
Baliwag and George's parents, the latter are not real parties-in-interest in an
action for breach of that contract.
Limited Liability in the Bill of Lading
Consignee, when bound in the stipulation in Bill of Lading
Everett Steamship Corp. v. CA
Held: A stipulation in the bill of lading limiting the common carriers liability for
loss or destruction of a cargo to a certain sum, unless the shipper or owner
declares a greater value, is sanctioned by law, particularly Articles 1749 and
1750 of the Civil Code which provide:
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.
Such limited-liability clause has also been consistently upheld by this Court in a
number of cases.
Whether or not private respondent, as consignee, who is not a signatory to the
bill of lading is bound by the stipulations thereof.
Again, in Sea-Land Service, Inc. vs. Intermediate Appellate
Court (supra), we held that 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. When Hernandez formally claimed
reimbursement for the missing goods from Everett and subsequently filed a
case against the it 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.
Perfection
Passengers
1st Type: CONTRACT TO CARRY an agreement to carry the passenger at
some future date.
(CONSENSUAL IN NATURE hence, PERFECTED BY MERE CONSENT.
2nd Type: CONTRACT OF CARRIAGE OR OF COMMON CARRIAGE
(A REAL CONTRACT for not until the facilities of the carrier are
actually used can the carrier be said to have already assumed the
obligation as a carrier)
Goods
1st Type: CONTRACT TO CARRY an agreement to carry and transport
goods at some future date.
CONSENSUAL IN NATURE hence, PERFECTED BY MERE CONSENT.
2nd Type: CONTRACT OF CARRIAGE OR OF COMMON CARRIAGE (Mauro
Ganzon v. CA )
By the act of delivery of the goods, that is, when the goods are
unconditionally placed in the possession and control of the carrier,
and upon their receipt by the carrier for transportation, the contract
of carriage is perfected.
1. AIRCRAFT
A) If contract to carry passengers, there is perfection even if no tickets have
been issued to said passengers so long as there was already a meeting of minds
with respect to the subject matter and the consideration.
(British Airways v. CA )
B) If contract of carriage, there is perfection if it can be established that the
passenger had checked in at the departure counter, passed through customs
and immigration, boarded the shuttle bus and proceeded to the ramp of the
aircraft and that his baggage had already been loaded in the aircraft to be
flown with the passenger to his destination
(Korean Airlines Co. ltd v. CA)
2. BUSES, JEEPNEYS, STREET CARS (Dangwa Transportation Co., Inc.
v CA)
A) Once a public utility bus or jeepney stops, it is in effect making a continuous
offer to the passengers. Hence, it is the duty of the drivers to stop their
conveyances for a reasonable length of time in order to afford passengers an
opportunity to board and enter.
B) Passenger is deemed to be accepting the offer if he is already attempting to
board the conveyances and the contract of carriage is perfected from that
point.
C) Any injury suffered by the passenger resulting from the sudden starting up
of the carrier is already based on contract.
3. TRAINS
a) There is perfection when a person with a bona fide
intention to use the facilities of the carrier and possessing sufficient fare
with which to pay for his passage, has presented himself to the carrier
for transportation in the place and manner provided.
b) Where a person has already purchased a LRT token and
while waiting on the platform designated for boarding fell thereon and
hit by the train, he was deemed a passenger.
(LRTA, et.al. Vs. Marjorie Navidad, et.al., G.R. No. 145804, 06 February
2003)
Common carrier
Public service Includes every person who may own, operate, manage, or
control in the Philippines for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, fraction
railway, subway motor vehicle, steamboat, or steamship line ferries, and water
craft, shipyard, ice plant, electric light, heat and power or any other public
utility. [Sec. 13(b), Act. 146] (De Guzman v. CA)
Article 1732 of the New Civil Code - 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.
Commonwealth Act No. 146 section 13 par. b as amended
Tests:
First Philippine Industrial Corporation v. CA
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.[15]
Estrellita M. Bascos v. CA
(1) 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."
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.
FGU Insurance Corporation v. G. P. Sarmiento Trucking Corporations
FACTS:
D/B Lucio was towed by the M/T ANCO arrived and M/T ANCO left the barge
immediately. The clouds were dark and the waves were big so SMCs District
Sales Supervisor, Fernando Macabuag, requested ANCOs representative to
transfer the barge to a safer place but it refused so around the midnight, the
barge sunk along with 29,210 cases of Pale Pilsen and 500 cases of Cerveza
Negra totalling to P1,346,197
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;
xxx
Art. 1739. xxx.. 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 . . .
Caso fortuito or force majeure
extraordinary events not foreseeable or avoidable, events that could not be
foreseen, or which though foreseen, were inevitable not enough that the
event should not have been foreseen or anticipated, as is commonly believed
but it must be one impossible to foresee or to avoid - not in this case
other vessels in the port of San Jose, Antique, managed to transfer to another
place
To be exempted from responsibility, the natural disaster should have been
the proximate and only cause of the loss. There must have been no
contributory negligence on the part of the common carrier.
Sps. Teodoro and Nanette Perena v. Sps Teresita Phil. Nicolas, et al.
Held:
As all the foregoing indicate, the true test for a common carrier is not the
quantity or extent of the business actually transacted, or the number and
character of the conveyances used in the activity, but whether the undertaking
is a part of the activity engaged in by the carrier that he has held out to the
general public as his business or occupation. If the undertaking is a single
transaction, not a part of the general business or occupation engaged in, as
advertised and held out to the general public, the individual or the entity
rendering such service is a private, not a common, carrier. The question must be
determined by the character of the business actually carried on by the carrier,
not by any secret intention or mental reservation it may entertain or assert
when charged with the duties and obligations that the law imposes.21
Applying these considerations to the case before us, there is no question that
the Pereas as the operators of a school bus service were:
(a) engaged in transporting passengers generally as a business, not just as a
casual occupation;
(b) undertaking to carry passengers over established roads by the method by
which the business was conducted; and
(c) transporting students for a fee.
Despite catering to a limited clientle, the Pereas operated as a common
carrier because they held themselves out as a ready transportation
indiscriminately to the students of a particular school living within or near
where they operated the service and for a fee.
National Steel Corporation v. CA
VSI did not offer its services to the general public. As found by the RTC, it
carried passengers or goods only for those it chose under a "special contract of
charter party." The MV Vlasons I "was not a common but a private carrier.
Consequently, the rights and obligations of VSI and NSC, including their
respective liability for damage to the cargo, are determined primarily by
stipulations in their contract of private carriage or charter party.
Sps Cruz v. Holiday
Indeed, respondent is a common carrier. Its ferry services are so
intertwined with its main business as to be properly considered ancillary
thereto. The constancy of respondent's ferry services in its resort
operations is underscored by its having its own Coco Beach boats. And the
tour packages it offers, which include the ferry services, may be availed
of by anyone who can afford to pay the same. These services are thus
available to the public. That respondent does not charge a separate fee or
fare for its ferry services is of no moment. It would be imprudent to suppose
that it provides said services at a loss. The Court is aware of the practice of
beach resort operators offering tour packages to factor the transportation
fee in arriving at the tour package price. That guests who opt not to avail
of respondent's ferry services pay the same amount is likewise
inconsequential. These guests may only be deemed to have overpaid.
Characteristics
CHARACTERISTICS OF COMMON CARRIER
Guiding Principles
The law 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.
Does not matter if issued with a Certificate of Public Convenience
No distinction whether by land, sea, or air
Does not necessitate the use of motorvehicle
Even if no fixed or publicly known route, even if no terminal, or no ticket is
issued
National Steel Corporation v. CA
The true test of a CC is the carriage of goods or passengers, provided it has
space for all who opt to avail themselves of its transportation for a fee.
Limited clientele
Asia Lighterage and Shipping, Inc. v. CA
The principal business of the petitioner is that of lighterage and drayage
and it offers its barges to the public for carrying or transporting goods by
water for compensation. Petitioner is clearly a common carrier, whether its
carrying of goods is done on an irregular rather than scheduled manner, and
with an only limited clientele. A common carrier need not have fixed and
publicly known routes. Neither does it have to maintain terminals or issue
tickets. 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." In the case at bar, the petitioner
admitted that it is engaged in the business of shipping and
lighterage, offering its barges to the public, despite its limited clientele for
carrying or transporting goods by water for compensation.
Fabre, Jr. v. CA
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union,
apparently did not consider the fact that Cabil had been driving for school
children only, from their homes to the St. Scholasticas College in Metro
Manila. They had hired him only after a two-week apprenticeship. They
had tested him for certain matters, such as whether he could remember the
names of the children he would be taking to school, which were irrelevant
to his qualification to drive on a long distance travel, especially considering
that the trip to La Union was his first. The existence of hiring procedures
and supervisory policies cannot be casually invoked to overturn the
presumption of negligence on the part of an employer.
As common carriers, the Fabres were bound to exercise extraordinary
diligence for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they exercised
the diligence of a good father of the family in the selection and supervision of
their employee.
Phil. American general insurance Company v. PKS Shipping Co.
DOCTRINE: Art. 587 of the Code of Commerce is NOT applicable to the case at
bar. Simply put, the ship agent is liable for the negligent acts of the captain in
the care of goods loaded on the vessel. This liability however can be limited
through abandonment of the vessel, its equipment and freightage as provided
in Art. 587. Nonetheless, there are exceptional circumstances wherein the ship
agent could still be held answerable despite the abandonment, as where the
loss or injury was due to the fault of the shipowner and the captain. The
international rule is to the effect that the right of abandonment of vessels, as a
legal limitation of a shipowners liability, does not apply to cases where the
injury or average was occasioned by the shipowners own fault. It must be
stressed at this point that Art. 587 speaks only of situations where the fault or
negligence is committed solely by the captain. Where the shipowner is likewise
to be blamed, Art. 587 will not apply, and such situation will be covered by the
provisions of the Civil Code on common carrier.
Virgines Calvo v. UCPB General Insurance Co.,
H: Petitioner contends that contrary to the findings of the trial court and the Court
of Appeals, she is not a common carrier but a private carrier because, as a customs
broker and warehouseman, she does not indiscriminately hold her services out to
the public but only offers the same to select parties with whom she may contract
in the conduct of her business.
There is greater reason for holding petitioner to be a common carrier because
the transportation of goods is an integral part of her business. To uphold
petitioner's contention would be to deprive those with whom she contracts the
protection which the law affords them notwithstanding the fact that the obligation
to carry goods for her customers, as already noted, is part and parcel of
petitioner's business.
Charterers liability as common carrier
Caltex(phil) v. Sulpicio Lines
The charterer has no liability for damages under Philippine Maritime laws.
Petitioner and Vector entered into a contract of affreightment, also known as a
voyage charter. A charter party is a contract by which an entire ship, or some
principal part thereof, is let by the owner to another person for a specified time
or use; a contract of affreightment is one by which the owner of a ship or other
vessel lets the whole or part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of the payment
of freight. A contract of affreightment may be either time charter, wherein the
leased vessel is leased to the charterer for a fixed period of time, or voyage
charter, wherein the ship is leased for a single voyage. In both cases, the
charter-party provides for the hire of the vessel only, either for a determinate
period of time or for a single or consecutive voyage, the ship owner to supply
the ships store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship. If the charter is a contract of
affreightment, which leaves the general owner in possession of the ship as
owner for the voyage, the rights and the responsibilities of ownership rest on
the owner. The charterer is free from liability to third persons in respect of the
ship.
Second: MT Vector is a common carrier
The charter party agreement did not convert the common carrier into a private
carrier. The parties entered into a voyage charter, which retains the character of
the vessel as a common carrier. It is imperative that a public carrier shall remain
as such, notwithstanding the charter of the whole or portion of a vessel by one
or more persons, provided the charter is limited to the ship only, as in the case
of a time-charter or voyage charter. It is only when the charter includes both the
vessel and its crew, as in a bareboat or demise that a common carrier becomes
private, at least insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a ship-owner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be
the property of the charterer. A common carrier is a person or corporation
whose regular business is to carry passengers or property for all persons who
may choose to employ and to remunerate him. 16 MT Vector fits the definition
of a common carrier under Article 1732 of the Civil Code.
Ancillary business
Loadstar Shipping Co. v. Pioneer Asia Insurance
LOADSTAR is a common carrier. It is not necessary that the carrier be issued a
certificate of public convenience, and this public character is not altered by the
fact that the carriage of the goods in question was periodic, occasional, episodic
or unscheduled.
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.
Home Assurance Corp.
Parties entered into a "voyage charter," also known as a contract of
affreightment wherein the ship was leased for a single voyage for the
conveyance of goods, in consideration of the payment of freight. Under a
voyage charter, the shipowner retains the possession, command and
navigation of the ship, the charterer or freighter merely having use of the
space in the vessel in return for his payment of freight. An owner who
retains possession of the ship remains liable as carrier and must answer for
loss or non-delivery of the goods received for transportation.
SC DISAGREES! Based on the agreement signed by the parties and the
testimony of CSCs operations manager, it is clear that it was a contract of
carriage.
There is no dispute that CSC was a common carrier. At the time of the loss of
the cargo, it was engaged in the business of carrying and transporting goods
by water, for compensation, and offered its services to the public.
Planters v. CA
(1) A "charter-party" is defined as a contract by which an entire ship, or
some principal part thereof, is let by the owner to another person for a
specified time or use; Charter parties are of two types:
a) contract of affreightment which involves the use of shipping
space on vessels leased by the owner in part or as a whole, to
carry goods for others; and,
b) charter by demise or bareboat charter, by the terms of which
the whole vessel is let to the charterer with a transfer to him of
its entire command and possession and consequent control
over its navigation, including the master and the crew, who are
his servants. Contract of affreightment may either be time
charter, wherein the vessel is leased to the charterer for a fixed
period of time, or voyage charter, wherein the ship is leased for
a single voyage.
The distinction between a "common or public carrier" and a "private or
special carrier" lies in the character of the business, such that if the
undertaking is a single transaction, not a part of the general business or
occupation, although involving the carriage of goods for a fee, the person or
corporation offering such service is a private carrier. Article 1733 of the New
Civil Code mandates that common carriers, by reason of the nature of their
business, should observe extraordinary diligence in the vigilance over the
goods they carry. In the case of private carriers, however, the exercise of
ordinary diligence in the carriage of goods will suffice. Moreover, in case of
loss, destruction or deterioration of the goods, common carriers are
presumed to have been at fault or to have acted negligently, and the burden
of proving otherwise rests on them. On the contrary, no such presumption
applies to private carriers, for whosoever alleges damage to or deterioration
of the goods carried has the onus of proving that the cause was the
negligence of the carrier.
When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its
officers and compliment were under the employ of the shipowner and
therefore continued to be under its direct supervision and control. Hardly
then can we charge the charterer, a stranger to the crew and to the ship,
with the duty of caring for his cargo when the charterer did not have any
control of the means in doing so. This is evident in the present case
considering that the steering of the ship, the manning of the decks, the
determination of the course of the voyage and other technical incidents of
maritime navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner. It is only when the charter
includes both the vessel and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as the particular voyage
covering the charter-party is concerned.
A.F Sanchez Brokerage Inc. v. CA,
Principle: Customs broker is engaged in the business of transportation as a
common carrier as it obliges itself to undertake to deliver goods to the
warehouse for consideration

while it is true that AF Sanchez is principally engaged as a broker, it cannot be
denied from the evidence presented that part of the services it offers to its
customers is the delivery of the goods to their respective consignees.
Addendum:
Doctrine of Foul Bill of Lading reservation or protest on a shipment or goods
improperly packed.
AF Sanchez claimed that the proximate cause of the damage is improper packing.
Under the CC, improper packing of the goods is an exonerating circumstance. But
in this case, the SC held that though the goods were improperly packed, since AF
Sanchez knew of the condition and yet it accepted the shipment without protest
or reservation, the defense is deemed waived.
Effect of Charter Party.
Cebu Salvage Corporation v. Philippine Home Assurance Corp.
Principle: Petitioner was the one which contracted with MCCII for the transport of
the cargo. It had control over what vessel it would use. All throughout its dealings
with MCCII, it represented itself as a common carrier. The fact that it did not own
the vessel it decided to use to did not negate its character and duties as a common
carrier. The MCCII (respondents subrogor) could not be reasonably expected to
inquire about the ownership of the vessels which petitioner carrier offered to
utilize.
The cargo was loaded on board the vessel; loss/non-delivery of the cargo was
proven; and petitioner failed to prove that it exercised extraordinary diligence to
prevent such loss or that it was due to some casualty or force majeure. The voyage
charter here being a contract of affreightment, the carrier was answerable for
the loss of the goods received for transportation.
Common carrier v. Private Carrier.
Valenzuela Hardwood and Industrial Supply, Inc. v. CA
Principle: In a contract of private carriage, the parties may validly stipulate that
responsibility for the cargo rests solely on the charterer, exempting the shipowner
from liability for loss of or damage to the cargo caused even by the negligence of
the ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is valid
because it is freely entered into by the parties and the same is not contrary to law,
morals, good customs, public order, or public policy. Indeed, their contract of
private carriage is not even a contract of adhesion.
We stress that in a contract of private carriage, the parties may freely stipulate
their duties and obligations which perforce would be binding on them. Unlike in a
contract involving a common carrier, private carriage does not involve the general
public. Hence, the stringent provisions of the Civil Code on common carriers
protecting the general public cannot justifiably be applied to a ship transporting
commercial goods as a private carrier.
Loadmasters Customs Services, Inc. Glodel Brokerage Corporation
Common Carrier - Customs Broker
Under Article 1732 of the Civil Code, common carriers are persons, corporations,
firms, or associations engaged in the business of carrying or transporting
passenger or goods, or both by land, water or air for compensation, offering their
services to the public. Loadmasters is a common carrier because it is engaged in
the business of transporting goods by land, through its trucking service. It is a
common carrier as distinguished from a private carrier wherein the carriage is
generally undertaken by special agreement and it does not hold itself out to carry
goods for the general public. Glodel is also considered a common carrier within the
context of Article 1732. For as stated and well provided in the case of Schmitz
Transport & Brokerage Corporation v. Transport Venture, Inc., a customs broker is
also regarded as a common carrier, the transportation of goods being an integral
part of its business.
Common carrier v. Other contracts.
Cargolift Shipping Inc. V. L. Actuario Marketing Co. and Skyland Brokerage
Common Carrier v Contract of Towage
a tug and its owners must observe ordinary diligence in the performance of its
obligation under a contract of towage. The negligence of the obligor in the
performance of the obligation renders him liable for damages for the resulting
loss suffered by the obligee. Fault or negligence of the obligor consists in his
failure to exercise due care and prudence in the performance of the obligation as
the nature of the obligation so demands.
In the case at bar, the exercise of ordinary prudence by petitioner means
ensuring that its tugboat is free of mechanical problems. While adverse
weather has always been a real threat to maritime commerce, the least that
petitioner could have done was to ensure that the M/T Count or any of its
other tugboats would be able to secure the barge at all times during the
engagement. This is especially true when considered with the fact that
Acuarios barge was wholly dependent upon petitioners tugboat for
propulsion. The barge was not equipped with any engine and needed a tugboat
for maneuvering.
Common Carrier v Contract of Stevedoring
Mindanao Terminal and Brokerage services v. Phoenix Assurance Co.
Mindanao Terminal, a stevedoring company which was charged with the
loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau,
had acted merely as a labor provider in the case at bar. There is no specific
provision of law that imposes a higher degree of diligence than ordinary
diligence for a stevedoring company or one who is charged only with the
loading and stowing of cargoes.
The public policy considerations in legally imposing upon a common carrier or
a warehouseman a higher degree of diligence is not present in a stevedoring
outfit which mainly provides labor in loading and stowing of cargoes for its
clients.
Cebu Arrastre Services v. CIR
Common Carrier v Arrastre
Cebu Arrastre Services v. Collector of Internal Revenue
'The Cebu Arrastre Service is dedicated itself solely to the loading and
unloading of cargoes on the boats . . .' It is true that the President and
Counsel corrected this description in the memorandum on appeal to the
effect that laborers of the corporation do not, except on rare occasions,
engage in loading or unloading the boat but limit their work on loading or
unloading pele-mele. the slings of the boats under contract with the Arrastre
Service, but in the opinion of the Board this amendment is not nearer to the
truth than the original version which was corroborated by the official who
investigated the case by order of the Collector of Internal Revenue.
Crisostomo v. CA
Common Carrier v Travel Agency
a travel agency is not an entity engaged in the business of transporting either
passengers or goodsand is therefore, neither a private nor a common carrier.
Article 1732-1766 NCC.
Art. 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering their services to the
public.
Article 1733. Extra-Ordinary Diligence.
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.
Art. 1735. Common Carriers are PRESUMED to be at FAULT.
Art. 1736. Responsibility starts from the receipt or possession of the carrier
for transportation until delivered, actually or constructively, to the
consignee.
Art. 1737. Right of stoppage in transitu. Observance of extra-ordinary
diligence may stop.
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. 1742. Even if the loss, destruction, or deterioration of the goods should be
caused by the character of the goods, or the faulty nature of the packing or of the
containers, the common carrier must exercise due diligence to forestall or lessen
the loss.
Art. 1744. Usually in a form of "contract of adhesion". This contract is
generally legally valid.
Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction,
or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the
custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less
than that of a good father of a family, or of a man of ordinary
prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or
omission 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;
(7) That the common carrier is 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.
Art. 1747. If the common carrier, without just cause, delays the transportation of
the goods or changes the stipulated or usual route, the contract limiting the
common carrier's liability cannot be availed of in case of the loss, destruction, or
deterioration of the goods.
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.
Art. 1752. Even when there is an agreement limiting the liability of the common
carrier in the vigilance over the goods, the common carrier is disputably
presumed to have been negligent in case of their loss, destruction or
deterioration.
Art. 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.
SUBSECTION 3. - Safety of Passengers
Art. 1755. A common carrier is bound to carry the passengers 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.
Art. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as prescribed in Articles 1733 and
1755.
Art. 1757. The responsibility of a common carrier for the safety of passengers as
required in Articles 1733 and 1755 cannot be dispensed with or lessened by
stipulation, by the posting of notices, by statements on tickets, or otherwise.
Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the
common carrier's liability for negligence is valid, but not for wilful acts or gross
negligence.
The reduction of fare does not justify any limitation of the common carrier's
liability.
Art. 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
Governing Laws:
1.3 Article 1766 of the New Civil Code(NCC).
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
Application of Art. 1753NCC.
National Dev. Company v. CA
In a previously decided case, it was held that the law of the country to which
the goods are to be transported governs the liability of the common carrier in
case of their loss, destruction or deterioration pursuant to Article 1753 of the
Civil Code. It is immaterial that the collision actually occurred in foreign waters,
such as Ise Bay, Japan.It appears, however, that collision falls among matters
not specifically regulated by the Civil Code, hence, we apply Articles 826 to 839,
Book Three of the Code of Commerce, which deal exclusively with collision of
vessels.
Mapa v. CA
When Is there International Transportation
When:
1. The place of departure and the place of destination are within the territories
of two high contracting parties, regardless of whether or not there was a break
in the transportation or transshipment.
2. The place of departure and the place of destination are within the territory
of a single contracting party if there is an agreed stopping place within a
territory subject to the sovereignty, mandate or authority of another power,
even though the power is not a party to the convention.
Alitalia v. Intermediate Appellate Court
Warsaw Convention
Held:
(1) Under the Warsaw Convention, an air carrier is made liable for damages
for:
a. The death, wounding or other bodily injury of a passenger if the accident
causing it took place on board the aircraft or I the course of its operations of
embarking or disembarking;
b. The destruction or loss of, or damage to, any registered luggage or goods, if
the occurrence causing it took place during the carriage by air; and
c. Delay in the transportation by air of passengers, luggage or goods.
The 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 is considered to be equivalent to
wilful misconduct. The Convention does not thus operate as an exclusive
enumeration of the instances of an airline's liability, or as an absolute limit of
the extent of that liability. 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.
Application of COGSA
Philippine Charter Insurance Corpo v. Neptune Orient Lines
Limited liability
While common carriers are liable to pay for loss or destruction of goods
transported by them, if they failed to prove that they observe extraordinary
diligence in the vigilance over the goods, a stipulation in the bill of lading
limiting their liability for such loss or destruction to a certain sum is
sanctioned by law (Art. 1749 and 1750, Civil Code), unless the shipper or
owner declares a greater value. This is the rule applied in this case of NOL, a
shipping company based in Hong Kong and owner of the vessel M/V Baltimar
Orion.
 Section 4 par. 5 of the COGSA which also pertinently provides that neither
the carrier nor the ship shall in any event be or become liable for any loss or
damage to or in connection with the transportation of goods in an amount not
exceeding $500 per package unless the nature and value of such goods have
been declared by the shipper before the shipment and inserted in the B/L
In this case the B/L submitted by the PCIC did not show that the shipper
(LTGMC) declared the actual value of the goods insured by FMC before shipment
and that said value was inserted in the B/L. In fact no additional charges were paid.
Hence the stipulation in the B/L that the carriers liability shall not exceed US$500
per package applies (Philippine Charter Insurance Corporation vs. Neptune Orient
Lines etc., G.R. 145044, June 12, 2008)
1.4 RA 9497.
2. Nature of business.
3. Registered owner rule and Kabit System.
3.1 Registration laws.
Compulsory registration of motor vehicles RA 4136
Registered owner rule.
PCI leasing and finance, Inc. v. UCPB General Insurance Co.
The non-registration of the financial lease precludes the enjoyment of the benefits
of Section 12 of RA 8556
Registration is required not to make said registration the operative act by which
ownership in vehicles is transferred, as in land registration cases, because the
administrative proceeding of registration does not bear anyessential relation to
the contract of sale between the parties (Chinchilla vs. Rafael and Verdaguer, 39
Phil. 888), but to permit the use and operation of the vehicle upon any public
highway (section 5 [a], Act No. 3992, asamended.) The main aim of motor vehicle
registration is to identify the owner so that if any accident happens, orthat any
damage or injury is caused by the vehicle on the public highways, responsibility
therefor can be fixed on adefinite individual, the registered owner. Instances are
numerous where vehicles running on public highwayscaused accidents or injuries
to pedestrians or other vehicles without positive identification of the owner or
drivers,or with very scant means of identification. It is to forestall
these circumstances, so inconvenient or prejudicial tothe public, that the motor
vehicle registration is primarily ordained, in the interest of the determination of
personsresponsible for damages or injuries caused on public highways.
A sale, lease, or financial lease, for that matter, that is not registered with the Land
Transportation Office, still does not bind third persons who are aggrieved in
tortious incidents, for the latter need only to rely on the public registration of
amotor vehicle as conclusive evidence of ownership. A lease such as the one
involved in the instant case is anencumbrance in contemplation of law, which
needs to be registered in order for it to bind third parties. Under thispolicy, the evil
sought to be avoided is the exacerbation of the suffering of victims of tragic
vehicular accidents in notbeing able to identify a guilty party. A contrary ruling will
not serve the ends of justice. The failure to register a lease,sale, transfer or
encumbrance, should not benefit the parties responsible, to the prejudice of
innocent victims.
Equitable Leasing Corporation v. Lucita Suyon,
The Lease Agreement between petitioner and Edwin Lim stipulated that it is the
intention of the parties to enter into a finance lease agreement. Ownership of the
subject tractor was to be registered in the name of petitioner, until the value of
the vehicle has been fully paid by Edwin Lim.
Lim completed the payments to cover the full price of the tractor. Thus, a Deed of
Sale over the tractor was executed by petitioner in favor of Ecatine represented
by Edwin Lim. However, the Deed was not registered with the LTO. Petitioner is
liable for the deaths and the injuries complained of, because it was the registered
owner of the tractor at the time of the accident.The Court has consistently ruled
that, regardless of sales made of a motor vehicle, the registered owner is the
lawful operator insofar as the public and third persons are concerned.
Since Equitable remained the registered owner of the tractor, it could not
escape primary liability for the deaths and the injuries arising from the
negligence of the driver.
May registered owner prove the actual owner to escape liability?
Aguilar v. Commercial Savings Bank
We hold with the trial court that the law does not allow the registered owner
to prove who the actual and real owner is, and in accordance with such proof
escape or evade responsibility and lay the same on the person actually owning
the vehicle to do so; the law, with its aim and policy in mind, does not relieve
him directly of the responsibility that the law fixes and places upon him as an
incident or consequence of registration. Were a registered owner allowed to
evade responsibility by proving who the supposed transferee or owner is, it
would be easy for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or
injury done. A victim of recklessness on the public highways is usually without
means to discover or identify the person actually causing the injury or
damage. He has no means other than by a recourse to the registration in the
Motor Vehicles Office to determine who is the owner. The protection that the
law aims to extend to him would become illusory were the registered owner
given the opportunity to escape liability by disproving his ownership. If the
policy of the law is to be enforced and carried out, the registered owner should
not be allowed to prove the contrary to the prejudice of the person injured,
that is, to prove that a third person or another has become the owner, so that
he may thereby be relieved of the responsibility to the injured person.
Perez v. Gutierrez
The question that is posed, therefore, is how should the holder of the
certificate of public convenience Tamayo participate with his transferee
operator Rayos, in the damages recoverable by the heirs of the deceased
passenger, if their liability is not that of joint tortfeasors in accordance with
Article 2194 of the Civil Code. The following considerations must be borne in
mind in determining this question. As Tamayo is the registered owner of the
truck, his responsibility to the public or to any passenger riding in the vehicle or
truck must be direct, for the reasons given in our decision in the case of Erezo
vs. Jepte, supra, as quoted above. But as the transferee, who operated the
vehicle when the passenger died, is the one directly responsible for the
accident and death, he should in turn be made responsible to the registered
owner for what the latter may have been adjudged to pay. In operating the
truck without transfer thereof having been approved by the Public Service
Commission, the transferee acted merely as agent of the registered owner
and should be responsible to him (the registered owner), for any damages
that he may cause the latter by his negligence."
3.2 Kabit system.
Aberlardo Lim, et al. v. CA
Yes. Private respondent has the right to proceed against petitioners for the
damage caused on his passenger jeepney as well as on his business. Although
petitioners' attempt to illustrate that an affirmance of the appealed decision
could be supportive of the pernicious kabit system does not persuade, the evil
sought to be prevented in enjoining the kabit system does not exist. The kabit
system is an arrangement whereby a person who has been granted a
certificate of public convenience allows other persons who own motor
vehicles to operate them under his license, sometimes for a fee or
percentage of the earnings.Although the parties to such an agreement are
not outrightly penalized by law, the kabit system is invariably recognized as
being contrary to public policy and therefore void and inexistent under Art.
1409 of the Civil Code. The thrust of the law in enjoining the kabit system is
not so much as to penalize the parties but to identify the person upon whom
responsibility may be fixed.
In the present case, 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.
Kabit system- definition, liability of owner and driver
Lita Enterprises, Inc. v. IAC
kabit system
system whereby a person who has been granted a certificate of convenience allo
ws another person who owns motors vehicles to operate under such franchise for
a fee; contrary to public policy and, therefore, void and inexistent underArticle
1409 of the Civil Code; as a result, the court will not aid either party to enforce
anillegal contract, but will leave them both where it finds them (pari delicto rule)
Liability of a registered owner of a vehicle
Mariano C Mendoza and Lim v. SPS Gomez and Gomez
The registered owner is deemed the employer of the negligent driver, and is thus
vicariously liable under Article 2176, in relation to Article 2180, of the Civil Code.
The registered owner of the motor vehicle is the employer of the negligent driver,
and the actual employer is considered merely as an agent of such owner. Thus,
whether there is an employer-employee relationship between the registered
owner and the driver is irrelevant in determining the liability of the registered
owner who the law holds primarily and directly responsible for any accident, injury
or death caused by the operation of the vehicle in the streets and highways
As such, there can be no other conclusion but to hold Lim vicariously liable with
Mendoza.
This does not mean, however, that Lim is left without any recourse against
Enriquez and Mendoza. Under the civil law principle of unjust enrichment, the
registered owner of the motor vehicle has a right to be indemnified by the actual
employer of the driver; and under Article 2181 of the Civil Code, whoever pays for
the damage caused by his dependents or employees may recover from the latter
what he has paid or delivered in satisfaction of the claim.
[Supplementary Notes:]
Pari Delicto Rule.
Kabit System: In Pari Delicto
Teja Marketing v. IAC
The "kabit system" has been identified as one of the root causes of theprevalence
of graft and corruption in the government transportation offices.Although not out
rightly penalized as a criminal offense, the kabit system isinvariably recognized as
being contrary to public policy and, therefore, void and inexistent under Article
1409 of the Civil Code. It is a fundamentalprinciple that the court will not aid either
party to enforce an illegal contract, but will leave both where it finds then. Upon
this premise it would be error toaccord the parties relief from their predicament.
Aircrafts and vessels.
Estela Crisostomo v. CA
Boundary System.
Gregorio George Amante and Vicente Amante vs. Bibiano Serwelas
(useless case, no principle related to transportation except presumption of
ownership)
Facts: Danilo Bicomong was the registered owner of a 1990 Isuzu Jitney. He was
employed as plant supervisor of Amante Motors. Bicomong sold the vehicle
for P200,000 to respondent in a deed of absolute sale. On October 7, 1992,
respondent had the vehicle registered in his name, as shown in certificate of
registration no. 14058314.[4] He then operated it as a common carrier on a
boundary system.
On December 9, 1993, the vehicle was seized by the police highway patrol group
in General Mariano Alvarez, Cavite without a warrant, upon the request of
petitioner Gregorio Amante, the manager of Amante Motors.
Xxx
Respondents ownership of the vehicle was proven by the certificate of registration
in his name. Petitioner Vicente Amante, on the otherhand, could not present any
certificate of registration to support his claim. Between one who is armed with a
certificate of registration clearly establishing his ownership and another whose
claim is supported only by unconvincing allegations, we do not hesitate to rule for
the former.
A certificate of registration of a motor vehicle creates a strong presumption of
ownership in favor of one in whose name it is issued, unless proven otherwise.
In this case, we have not found sufficient proof to destroy the presumption.
Petitioners seek to dispel the presumption by alleging that the vehicle was
stolen by Bicomong from them and therefore the respondent was a buyer in
bad faith. There is no clear indication that the vehicle was stolen by Bicomong,
much less that respondent had knowledge thereof. Hence, the presumption of
ownership created by respondents certificate of registration stands.
xxx
Oscar Villarama Jr v. CA
Registered Owner/Boundary System
Under the boundary-hulog scheme, a dual juridical relationship is created;
that of employer- employee and vendor-vendee. The Kasanduan did not
extinguish the employer employee relationship of the parties existing before
the execution of said deed.
a. Under this system the owner/operator exercises control and supervision
over the driver. It is unlike in lease of chattels where the lessor loses complete
control over the chattel leased but the lessee is still ultimately responsible for
the consequences of its use. The management of the business is still in the
hands of the owner/operator, who, being the holder of the certificate of public
convenience, must see to it that the driver follows the route prescribed by the
franchising and regulatory authority, and the rules promulgated with regard to
the business operations.
b. The driver performs activities which are usually necessary or desirable in the
usual business or trade of the owner/operator. Under the Kasunduan,
respondent was required to remit Php 550 daily to petitioner, an amount
which represented the boundary of petitioner as well as respondents partial
payment (hulog) of the purchase price of the jeepney. Thus, the daily
remittances also had a dual purpose: that of petitioners boundary and
respondents partial payment (hulog) for the vehicle.
c. The obligation is not novated by an instrument that expressly recognizes the
old one, changes only the terms of payment and adds other obligations not
incompatible with the old provisions or where the contract merely
supplements the previous one.
d. The existence of an employment relation is not dependent on how the
worker is paid but on the presence or absence of control over the means and
method of the work. The amount earned in excess of the boundary hulog is
equivalent to wages and the fact that the power of dismissal was not
mentioned in the Kasunduan did not mean that private respondent never
exercised such power, or could not exercise such power.
OTHER NOTES:
(1) The rule is that the nature of an action and subject matter thereof, as well
as, which court or agency of the government has jurisdiction and the character
of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to
any or all of such reliefs.
(2) Not every dispute between an employer and employee involves matters
that only the Labor Arbiter and the NLRC can resolve in the exercise of their
adjudicatory or quasi-judicial powers. Actions between employers and
employees where the employer-employee relationship is merely incidental is
within the exclusive original jurisdiction of the regular courts.
Martin Lantaco et al. v. City Judge Francisco R. Llamas
Boundary System-not lease, EE-Er Relationship
there is employer-employee relation between jeepney owners/operators
and jeepney drivers under the boundary system arrangement, and
enunciated:
"The main question to determine is whether there exists a relationship of
employer-employee between the drivers of the jeeps and the owner
thereof.
Xxx (principles same as other cases referring to dinglasan case)
xxx
Not having any interest in the business because they did not invest anything
in the acquisition of the jeeps and did not participate in the management
thereof, their service as drivers of the jeeps being their only contribution to
the business, the relationship of lessor and lessee cannot be sustained [In the
matter of the Park Floral Company, etc., 19 NLRB 403; Radley et al. vs.
Commonwealth, 161 SW (2d) 417; Jones vs. Goodson et al., 121 Fed. Rep. (2d)
176; Mitchel vs. Gibbson et al., 172 Fed. Rep. (2d) 970]. In the lease of chattels
the lessor loses complete control over the chattel leased although the lessee
cannot make bad use thereof, for he would be responsible for damages to
the lessor should he do so. In this case there is a supervision and a sort of control
that the owner of the jeeps exercises over the drivers. It is an attempt by
ingenious scheme to withdraw the relationship between the owner of the jeeps
and the drivers thereof from the operation of the labor laws enacted to promote
industrial peace." (98 Phil. 650, 651-53).
On April 30, 1963, this Court reiterated this doctrine in Magboo, et al. vs. Bernardo
(L-16790, 7 SCRA 952) and stated:
"Appellant assails said decision, assigning three errors which boil down to the
question of whether or not an employer-employee relationship exists between
a jeepney-owner and a driver under a 'boundary system'
arrangement. Appellant contends that the relationship is essentially that
of lessor and lessee.
"A similar contention has been rejected by this Court in several cases. In National
Labor Union v. Dinglasan, 52 O.B., No. 4, 1933, it was held that the features which
characterize the 'boundary system' - namely, the fact that the driver does not
receive a fixed wage but gets only the excess of the receipt of fares collected by
him over the amount he pays to the jeep-owner and that the gasoline consumed
by the jeep is for the account of the driver -- are not sufficient to withdraw the
relationship between them from that of employer and employee. The ruling was
subsequently cited and applied in Doce v. Workmen's Compensation
Commission, L-9417, December 22, 1958, which involved the liability of a bus
owner for injury compensation to a conductor working under the 'boundary
system.' " (7 SCRA 953-54).
Isabelo Doce v. WCC and Dadao Jadao
EMPLOYER AND EMPLOYEE; OWNER OF BUS AND CONDUCTOR UNDER
BOUNDARY SYSTEM
Not lessor-lessee
1. EMPLOYER AND EMPLOYEE; OWNER OF BUS AND CONDUCTOR UNDER
BOUNDARY SYSTEM. The relationship of employer and employee exists
between the owner of a bus and its conductor operating under the boundary
system within the meaning of the law and as such the case comes under the
jurisdiction of the Court of Industrial Relations.
The Defendants claim relationship is lessor lessee
"The only features that would make the relationship of lessor and lessee between
the respondent, owner of the jeeps, and the drivers, members of the petitioner
union, are the fact that he does not pay them any fixed wage but their
compensation is the excess of the total amount of fares earned or collected by
them over and above the amount of P7.50 which they agreed to pay to the
respondent, and the fact that the gasoline burned by the jeeps is for the account
of the drivers. These two features are not, however, sufficient to withdraw the
relationship between them from that of employer-employee, because the
estimated earnings for fares must be over and above the amount they agreed to
pay to the respondent for a ten-hour shift or ten-hour a day operation of the jeeps.
Not having any interest in the business because they did not invest anything in the
acquisition of the jeeps and did not participate in the management thereof, their
service as drivers of the jeeps being their only contribution to the business, the
relationship of lessor and lessee cannot be sustained."
The contention of petitioner that the relation that existed between him and the
respondent is only one of lessor and lessee cannot therefore be sustained.
Rodolfo J. Serrano v. Severino Santos Transit and/or Severino Santos
Boundary System - SIL, retirement benefits, not field employees
ISSUE: Whether or not petitioner is entitled to the computation of retirement pay
as given by RA 7641
Employees engaged on task or contract basis or paid on purely commission basis
are not automatically exempted from the grant of service incentive leave, unless,
they fall under the classification of field personnel. As a general rule, [field
personnel] are those whose performance of their job/service is not supervised by
the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable
certainty; hence, they are paid specific amount for rendering specific service or
performing specific work. If required to be at specific places at specific times,
employees including drivers cannot be said to be field personnel despite the
fact that they are performing work away from the principal office of the
employee.
Probationary Status of Fixed Term
Obligation of the Carrier
Philam Insurance Co. v. Heung A
A charter party has been defined as a contract by which an entire ship, orsome
principal part thereof, is let by the owner to another person for a specified
time or use; a contract of affreightment by which the owner of a ship or other
vessel lets the whole or a part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of the payment
of freight. A charter party has two types. First, it could be a contract of
affreightment whereby the use of shipping space on vessels is leased in part or
as a whole, to carry goods for others. The charter-party provides for the hire
of vessel only, either for a determinate period of time (time charter) or for a
single or consecutive voyage (voyage charter). The ship owner supplies the
ships stores, pay for the wages of the master and the crew, and defray the
expenses for the maintenance of the ship. The voyage remains under the
responsibility of the carrier and it is answerable for the loss of goods received
for transportation. The charterer is free from liability to third persons in
respect of the ship. Second, charter by demise or bareboat charter under
which the whole vessel is let to the charterer with a transfer to him of its entire
command and possession and consequent control over its navigation, including
the master and the crew, who are his servants. The charterer mans the vessel
with his own people and becomes, in effect, the owner for the voyage or
service stipulated and hence liable for damages or loss sustained by the goods
transported.
Gregorio Anuran, Maria Maligaya v. Buno et al
The principle about the "last clear chance" would call for application in a
suit between the owners and drivers of the two colliding vehicles. It does
not arise where a passenger demands responsibility from the carrier to
enforce its contractual obligations. For it would be inequitable to exempt
the negligent driver of the jeepney and its owners on the ground that the
other driver was likewise guilty of negligence.
Applicability of the doctrine of last clear chance
Under the doctrine of last clear chance, when both parties involved in the
accident were both negligent, the negligence of the party will not be
considered the proximate cause if the other party has the last clear chance of
avoiding the injury. Thus, if the plaintiff has the last clear chance of avoiding
the injury, the defendant may no longer be held liable. In such case, the
negligence of the plaintiff which is not just contributory negligence will be
considered an efficient intervening cause.
Atty. Capanas: The doctrine of last clear chance does not apply to the contract
of carriage because the basis of a contract of carriage because the basis of a
contract of carriage is the contract between the passenger and the common
carrier. The doctrine of last clear chance applies only if there is no preexisting
contract.
Duty to accept
FC Fisher v. Yangco Steamship Co.
Common carrier in the jurisdiction cannot lawfully decline to accept a
particular class of goods, unless it appears that for some sufficient reason
the discrimination is reasonalble and necessary. Yangco Steamships
Company has not met those conditions.
The nature of the business of a common carrier as a public
employment is such that it is within the power of the state to impose such
just regulation in the interest of the public as the legistalors may deem
proper.
Valid grounds for non- acceptance
When the goods ought to be transported are dangerous object or
substance including dynamites and other explosives
The goods are unfit for transportation
Acceptance would result in overloading
 The goods are considered contraband or illegal goods
Goods are injurious to health
Goods will be exposed to untoward danger like flood, capture by
enemies and the like
Goods like livestock will be exposed to diseases
Strike
Failure to tender goods on time
Article 356-357-358 of the Code of Commerce(COC)
ARTICLE 356. Carriers may refuse packages which appear unfit for
transportation; and if the carriage is to be made by railway, and the shipment is
insisted upon, the company shall transport them, being exempt from all
responsibility if its objections, is made to appear in the bill of lading.
ARTICLE 357. If by reason of well-founded suspicion of falsity in the
declaration as to the contents of a package the carrier should decide to
examine it, he shall proceed with his investigation in the presence of witnesses,
with the shipper or consignee in attendance.
If the shipper or consignee who has to be cited does not attend, the
examination shall be made before a notary, who shall prepare a memorandum
of the result of the investigation, for such purposes as may be proper.
If the declaration of the shipper should be true, the expense occasioned by the
examination and that of carefully repacking the packages shall be for the
account of the carrier and in a contrary case for the account of the shipper.
ARTICLE 358. If there is no period fixed for the delivery of the goods the
carrier shall be bound to forward them in the first shipment of the same or
similar goods which he may make point where he must deliver them; and should
he not do so, the damages caused by the delay should be for his account.
Article 1742 of the NCC
Art. 1742. Even if the loss, destruction, or deterioration of the goods
should be caused by the character of the goods, or the faulty nature
of the packing or of the containers, the common carrier must
exercise due diligence to forestall or lessen the loss
Duty to deliver goods
Consequences of delay
Article 1740 NCC - If a common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free such carrier
from responsibility.
Article 1747 NCC - If a common carrier, without just cause, delays the
transportation of the goods or changes the stipulated or usual route,
the contract limiting the common carriers liability cannot be availed of
in case of loss, destruction, or deterioration of the goods.
ARTICLE 370 Code of Commerce. -If a period has been fixed for the
delivery of the goods, it must be made within such time, and, for failure
to do so, the carrier shall pay the indemnity stipulated in the bill of
lading, neither the shipper nor the consignee being entitled to anything If the interruption should be caused by the disability of the vessel and a
else. passenger should agree to await the repairs, he may not be required to pay any
increased price of passage, but his living expense during the stay shall be for his
If no indemnity has been stipulated and the delay exceeds the time account. Consequently, the carrier is liable for any loss or damage, including
fixed in the bill of lading, the carrier shall be liable for the damages pecuniary loss or loss of profit, which the passenger may have
which the delay may have caused. suffered by reason thereof.
ARTICLE 371 Code of Commerce. -In case of delay through the fault of
the carrier, referred to in the preceding articles, the consignee may
leave the goods transported in the hands of the former, advising him
thereof in writing before their arrival at the point of destination.
When this abandonment takes place, the carrier shall pay the full value
of the goods as if they had been lost or mislaid.
If the abandonment is not made, the indemnification for losses and
damages by reason of the delay cannot exceed the current price which
the goods transported would have had on the day and at the place in
which they should have been delivered; this same rule is to be observed
in all other cases in which this indemnity may be due.
ARTICLE 372 Code of Commerce. -The value of the goods which the
carrier must pay in cases if loss or misplacement shall be determined
in accordance with that declared in the bill of lading, the shipper not
being allowed to present proof that among the goods declared
therein there were articles of greater value and money.
Horses, vehicles, vessels, equipment and all other principal and
accessory means of transportation shall be especially bound in favor
of the shipper, although with respect to railroads said liability shall
be subordinated to the provisions of the laws of concession with
respect to the property, and to what this Code established as to the
manner and form of effecting seizures and attachments against said
companies.
ARTICLE 373 Code of Commerce. -The carrier who makes the
delivery of the merchandise to the consignee by virtue of combined
agreements or services with other carriers shall assume the
obligations of those who preceded him in the conveyance, reserving
his right to proceed against the latter if he was not the party directly
responsible for the fault which gave rise to the claim of the shipper
or consignee.
The carrier who makes the delivery shall likewise acquire all the
actions and rights of those who preceded him in the conveyance.
The shipper and the consignee shall have an immediate right of
action against the carrier who executed the transportation contract,
or against the other carriers who may have received the goods
transported without reservation.
However, the reservation made by the latter shall not relieve them
from the responsibilities which they may have incurred by their own
acts.
ARTICLE 374 Code of Commerce. - The consignees to whom the
shipment was made may not defer the payment of the expenses
and transportation charges of the goods they receive after the lapse
of twenty-four hours following their delivery; and in case of delay in
this payment, the carrier may demand the judicial sale of the goods
transported in an amount necessary to cover the cost of
transportation and the expenses incurred.
Rights of passengers in case of delay
Art 698COC. If the voyage has already begun, the passengers shall be obliged to
pat the fare in proportion to the distance covered, without right to recover for
losses and damages if interruption is due to fortuitous event or force majeure,
but with the right of indemnity if the interruption should have been caused by
the captain exclusively.
Marina regulation Mem. Circular no. 112
In case the vessel is not able to depart on time and the delay is unreasonable,
the passenger may opt to have his ticket immediately refunded without any
refund service fee from the authorized issuing/ticketing office.
Trans-asia Shipping Lines, Inc. v. CA
SC: The stoppage was not to start and synchronized [sic] the engines of the
vessel as claimed by defendant-appellee. It was because one of the engines
of the vessel broke down; it was because of the disability of the vessel which
from the very beginning of the voyage was known to defendant-appellee.
Defendant-appellee from the very start of the voyage knew for a fact that the
vessel was not yet in its sailing condition because the second engine was still
being repaired. Inspite of this knowledge, defendant-appellee still proceeded to
sail with only one engine running.
Defendant-appellee at that instant failed to exercise the diligence which all
common carriers should exercise in transporting or carrying passengers. The
law does not merely require extraordinary diligence in the performance of the
obligation. The law mandates that common carrier[s] should exercise utmost
diligence in the transport of passengers
Place of delivery
Place
The goods should be delivered to the consignee in the place agreed
upon by the parties. If specific place or warehouse is designated in
the bill of lading, the goods must be delivered in such place even if it
is not the usual place of delivery in the place of destination.
A. 360 COC The shipper, without changing the place where the
delivery is to be made, may change the consignment of the goods
which he delivered to the carrier, provided that at the time of
ordering the change of consignee the bill of lading signed by the
carrier, if one has been issued, be returned to him, in exchange for
another wherein the novation of the contract appears.
The expenses which this change of consignment occasions shall be
for the account of the shipper
To whom delivered
To whom
consignee or
any other person to whom the bill of lading was validly
transferred or negotiated.
Delivery must generally be made to the owner or consignee or to
someone lawfully authorized by him to receive the goods for his
account.
A. 368 COC -The carrier must deliver to the consignee, without any
delay or obstruction, the goods which he may have received, by
the mere fact of being named in the bill of lading to receive them;
and if he does not do so, he shall be liable for the damages which
may be caused thereby.
A. 369 COC: if the consignee cannot be found at the residence
indicated in the BOL or if he refuses to pay the transportation
expenses or if he refuses to receive the goods
Delay to transport Passengers
A carrier is duty bound to transport the passenger with reasonable dispatch. The
carrier shall be made liable when the vessel
or vehicle is unreasonably delayed. A carrier must commence its trip within a
reasonable time.
Marina Memorandum Circular no. 112 December 15, 1995
Xx
3. DELAYED AND UNFINISHED VOYAGE
3.1 In case the vessel can not continue or complete her voyage for any cause,
the carrier is under obligation to transport the passenger to his/her destination
at the expense of the carrier including free meals and lodging before the said
passenger is transported to his/her destination. A passenger may opt to have
his/her ticket refunded in full if the cause of the unfinished voyage is due to the
negligence of the carrier, or, to an amount that will suffice to defray
transportation cost at the shortest possible route towards his/her destination if
the cause of the unfinished voyage is a fortuitous event.
3.2 The carrier shall provide meals, free of charge, during meal time in case
the vessel is delayed in the arrival at the port of destination.
3.3 In case of delay in the departure at the port of origin due to the carriers
negligence, the carrier is also under obligation to provide meals, free of
charge, during meal time to ticketed passengers for the particular voyage. If
the cause of the delay is a fortuitous event, the carrier is under no obligation
to serve free meals to the passengers.
3.4 The carrier is under obligation to duly inform the passengers of the
change in sailing schedule of the vessel(s).
Duty to Exercise Extra-ordinary Diligence
1.1 Commencement of Duty in Carriage of Passengers
Application of Article 1733 , Artilc 1755 and 1756 of
NCC(Presumption of negligence)
Mariano v. Calleja
Facts:
Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr.
Frelinda Mariano who was a passenger of a Celyrosa Express bus bound for
Tagaytay when she met her death. Respondent Ildefonso C. Callejas is the
registered owner of Celyrosa Express, while respondent Edgar de Borja was
the driver of the bus on which the deceased was a passenger.
The Celyrosa Express bus, carrying Dr. Mariano as its passenger,
collided with an Isuzu truck with trailer. The passenger bus was bound for
Tagaytay while the trailer truck came from the opposite direction, bound for
Manila. The trailer truck bumped the passenger bus on its left middle
portion. Due to the impact, the passenger bus fell on its right side on the
right shoulder of the highway and caused the death of Dr. Mariano and
physical injuries to four other passengers. Dr. Mariano was 36 years old at
the time of her death. She left behind three minor children, aged four, three
and two years.
The respondent said that the proximate cause of the accident
was the recklessness of the driver of the trailer truck which bumped their
bus while allegedly at a halt on the shoulder of the road in its rightful
lane. Thus, respondent Callejas filed a third-party complaint against the
trailer truck, for indemnity in the event that he would be held liable for
damages to petitioner.
Respondents owner and driver appealed to the Court of Appeals,
contending that the trial court erred in holding them guilty of breach of
contract of carriage.
Held:
The following are the provisions of the Civil Code pertinent to the
case at bar:
ART. 1733. Common carriers, from the
nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in
the vigilance over the goods and for the safety of the
passengers transported by them, according to all the
circumstances of each case.
ART. 1755. A common carrier is bound to
carry the passengers 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.
ART. 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755.
This Court interpreted the above quoted provisions in
Pilapil v. Court of Appeals.[12] We elucidated:
While the law requires the highest degree of diligence from
common carriers in the safe transport of their passengers and
creates a presumption of negligence against them, it does not,
however, make the carrier an insurer of the absolute safety of
its passengers.
Article 1755 of the Civil Code qualifies the duty of extraordinary care,
vigilance and precaution in the carriage of passengers by common
carriers to only such as human care and foresight can provide. What
constitutes compliance with said duty is adjudged with due regard to
all the circumstances.
Article 1756 of the Civil Code, in creating a presumption of fault or
negligence on the part of the common carrier when its passenger is
injured, merely relieves the latter, for the time being, from
introducing evidence to fasten the negligence on the former,
because the presumption stands in the place of evidence. Being a
mere presumption, however, the same is rebuttable by proof that
the common carrier had exercised extraordinary diligence as
required by law in the performance of its contractual obligation, or
that the injury suffered by the passenger was solely due to a
fortuitous event.
In fine, we can only infer from the law the intention of the Code
Commission and Congress to curb the recklessness of drivers and
operators of common carriers in the conduct of their business.
Thus, it is clear that neither the law nor the nature of the business of
a transportation company makes it an insurer of the passenger's
safety, but that its liability for personal injuries sustained by its
passenger rests upon its negligence, its failure to exercise the degree
of diligence that the law requires.
In the case at bar, petitioner cannot succeed in his contention that
respondents failed to overcome the presumption of negligence against
them. The totality of evidence shows that the death of petitioners spouse was
caused by the reckless negligence of the driver of the Isuzu trailer truck which
lost its brakes and bumped the Celyrosa Express bus, owned and operated by
respondents.
Duration of Duty in Carriage of Goods (Article 1736, 1737,1738)
CC must exercise ED from the time the goods are unconditionally placed in the
possession of, and received by the carrier for until they
are delivered to the consignee, or to the person who has a right to receive them.
(Art 1736 Ganzon v. CA G.R. No. L-48757 May 30, 1998)
CC must still exercise ED:
even when the goods are temporarily unloaded or stored in transit unless the
shipper or owner has made use of the right of stoppage in transitu. (1737)
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 or otherwise dispose of
them. (1738)
The New Civil Code is explicit when it comes to the duration of extraordinary
responsibility with respect to goods. Due diligence should be exercised the
moment the goods are delivered to the carrier. (1736)
The goods are deemed to be delivered to the carrier when the goods are ready for
and have been placed in the exclusive possession, custody and control of the
carrier for the purpose of their immediate transportation and the carrier has
accepted them
Application of Article 1736 of the NCC
Belgian Overseas Chartering and Shipping v. Phil. First Ins. Co.,
Proof of the delivery of goods in good order to a common carrier and of their
arrival in bad order at their destination constitutes prima facie fault or
negligence on the part of the carrier. If no adequate explanation is given as to
how the loss, the destruction or the deterioration of the goods happened, the
carrier shall be held liable therefor.
That petitioners failed to rebut the prima facie presumption of negligence is
revealed in the case at bar by a review of the records and more so by the
evidence adduced by respondent.[25]
First, as stated in the Bill of Lading, petitioners received the subject shipment in
good order and condition in Hamburg, Germany.[26]
Second, prior to the unloading of the cargo, an Inspection Report[27] prepared
and signed by representatives of both parties showed the steel bands broken,
the metal envelopes rust-stained and heavily buckled, and the contents
thereof exposed and rusty.
Third, Bad Order Tally Sheet No. 154979[28] issued by Jardine Davies
Transport Services, Inc., stated that the four coils were in bad order and
condition. Normally, a request for a bad order survey is made in case there is
an apparent or a presumed loss or damage.[29]
Fourth, the Certificate of Analysis[30] stated that, based on the sample
submitted and tested, the steel sheets found in bad order were wet with
fresh water.
Fifth, petitioners -- in a letter[31] addressed to the Philippine Steel Coating
Corporation and dated October 12, 1990 -- admitted that they were aware of
the condition of the four coils found in bad order and condition. These facts
were confirmed by Ruperto Esmerio, head checker of BM Santos Checkers
Agency. All these conclusively prove the fact of shipment in good order and
condition and the consequent damage to the four coils while in the
possession of petitioner,[33] who notably failed to explain why.[34]
Further, petitioners failed to prove that they observed the
extraordinary diligence and precaution which the law requires a common
carrier to know and to follow, to avoid damage to or destruction of the
goods entrusted to it for safe carriage and delivery.[35]
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\
Saludo v. CA
Facts:
Plaintiff herein together with Pomierski and Son Funeral Home of
Chicago brought the remains of plaintiffs mother to Continental Mortuary Air
Services which booked the shipment of the remains from Chicago to San
Francisco by Trans World Airways (TWA) and from San Francisco to Mania with
Philippine Airlines (PAL). The remains were taken to the Chicago Airport, but it
turned out that there were 2 bodies in the said airport. Somehow the 2 bodies
were switched, and the remains of plaintiffs mother was shipped to Mexico
instead. The shipment was immediately loaded on another PAL flight and it
arrived the day after the expected arrival. Plaintiff filed a claim for damages in
court. The lower court absolved both airlines and upon appeal it was affirmed
by the court.
Issue:
Whether or not the 2 airlines should be held liable for damages.
Held: Verily, no amount of inspection by respondent airline companies could
have guarded against the switching that had already taken place. Or, granting
that they could have opened the casket to inspect its contents, private
respondents had no means of ascertaining whether the body therein contained
was indeed that of Crispina Saludo except, possibly, if the body was that of a
male person and such fact was visually apparent upon opening the casket.
However, to repeat, private respondents had no authority to unseal and open
the same nor did they have any reason or justification to resort thereto.
It is the right of the carrier to require good faith on the part of those persons
who deliver goods to be carried, or enter into contracts with it, and inasmuch
as the freight may depend on the value of the article to be carried, the carrier
ordinarily has the right to inquire as to its value. Ordinarily, too, it is the duty of
the carrier to make inquiry as to the general nature of the articles shipped and
of their value before it consents to carry them; and its failure to do so cannot
defeat the shipper's right to recovery of the full value of the package if lost, in
the absence of showing of fraud or deceit on the part of the shipper. In the
absence of more definite information, the carrier has a the right to accept
shipper's marks as to the contents of the package offered for transportation
and is not bound to inquire particularly about them in order to take advantage
of a false classification and where a shipper expressly represents the contents
of a package to be of a designated character, it is not the duty of the carrier to
ask for a repetition of the statement nor disbelieve it and open the box and see
for itself.
However, where a common carrier has reasonable ground to suspect that the
offered goods are of a dangerous or illegal character, the carrier has the right
to know the character of such goods and to insist on an inspection, if
reasonable and practical under the circumstances, as a condition of receiving and
transporting such goods.
Code of commerce provisions
Republic of the Philippines v. Lorenzo Shipping
Article 17338 of the Civil Code demands that a common carrier observe
extraordinary diligence over the goods transported by it. Extraordinary
diligence is that extreme measure of care and caution which persons of unusual
prudence and circumspection use for securing and preserving their own
property or rights.9 This exacting standard imposed on common carriers in a
contract of carriage of goods is intended to tilt the scales in favor of the shipper
who is at the mercy of the common carrier once the goods have been lodged
for shipment. Hence, in case of loss of goods in transit, the common carrier is
presumed under the law to have been at fault or negligent.10 However, the
presumption of fault or negligence, may be overturned by competent evidence
showing that the common carrier has observed extraordinary diligence over the
goods.
working well. However, goods were damaged because temperature in the ref
fluctuated to 33 degree C allegedly because of burnt condenser more of the ref
container Temic claimed from Netherlands, Netherlands paid the insurance
claim Netherlands filed a complaint for subrogation of insurance settlement
against RCL RCL and agent EDSA Shipping denied any negligence in the
shipment, and that there is no valid subrogation
ISSUE/S:
W/N RCL and EDSA Shipping is liable as CC under the theory of presumption of
negligence?
HELD:
YES. SC held CC is presumed to have been negligent if it fails to prove that it
exercised extraordinary vigilance over the goods it transported. When the
goods shipped are either lost or arrived in damaged condition, a presumption
arises against the carrier of its failure to observe that diligence, and there need
not be an express finding of negligence to hold it liable.

In the instant case, we agree with the court a quo that the respondent
adequately proved that it exercised extraordinary diligence. Although the
original bills of lading remained with petitioner, respondents agents demanded
from Abdurahman the certified true copies of the bills of lading. They also asked
the latter and in his absence, his designated subordinates, to sign the cargo
delivery receipts.
This practice, which respondents agents testified to be their standard
operating procedure, finds support in Article 353 of the Code of Commerce:
ART. 353. . . .
RCL and EDSA Shipping failed to prove that they did exercise that degree of
diligence required by law over the goods they transported. Indeed, there is
sufficient evidence showing that the fluctuation of the temperature in the
refrigerated container van, as recorded in the temperature chart, occurred
after the cargo had been discharged from the vessel and was already under the
custody of the arrastre operator, ICTSI. This evidence, however, does not
disprove that the condenser fan which caused the fluctuation of the
temperature in the refrigerated container was not damaged while the cargo
was being unloaded from the ship. It is settled in maritime law jurisprudence
that cargoes while being unloaded generally remain under the custody of the
carrier;RCL and EDSA Shipping failed to dispute this. BURDEN OF PROOF HAS
SHIFTED TO THE SHIPPER.

After the contract has been complied with, the bill of lading which the carrier
has issued shall be returned to him, and by virtue of the exchange of this title Defenses of Common Carriers
with the thing transported, the respective obligations and actions shall be In carriage of goods(1734):
considered cancelled, . 1. Flood, storm, earthquake, lightning, or other natural disaster or calamity
(Fortuitous event)
In case the consignee, upon receiving the goods, cannot return the bill of FORTUITOUS EVENT
lading subscribed by the carrier, because of its loss or of any other cause, he The following requisites must be present before fortuitous events can be
must give the latter a receipt for the goods delivered, this receipt producing properly invoked as a defense by the carrier:
the same effects as the return of the bill of lading. (Emphasis supplied) 1. The cause of the unforeseen and unexpected occurrence, or of the failure of
the debtor to comply with his obligation, must be independent of the human
Conformably with the aforecited provision, the surrender of the original bill of will
lading is not a condition precedent for a common carrier to be discharged of its 2. It must be impossible to foresee the event which constitute caso fortuito, or
contractual obligation. If surrender of the original bill of lading is not possible, if it can be foreseen, it must be impossible to avoid
acknowledgment of the delivery by signing the delivery receipt suffices. This is 3. the occurrence must be such as to render it impossible for the debtor to
what respondent did. fulfill his obligation in a normal manner
4. the obligor must be free from any participation in or the aggravation of the
injury resulting to the credito
We also note that some delivery receipts were signed by Abdurahmans 2. Act of the public enemy in war, whether international or civil (Public
subordinates and not by Abdurahman himself as consignee. Further, delivery enemy)
checkers Rogelio and Ismael testified that Abdurahman was always present at Presupposes of an existence of an actual state of war
the initial phase of each delivery, although on the few occasions when - Thieves, rioters, robbers, and insurrectionists, though at war with social order,
Abdurahman could not stay to witness the complete delivery of the shipment, are not in the legal sense classed as public enemies; acts of which, the CC is
he authorized his subordinates to sign the delivery receipts for him. This, to our liable
mind, is sufficient and substantial compliance with the requirements. - PIRATES ON THE HIGH SEAS are an exception
3. Act or omission of the shipper or owner of the goods (Improper Packing)
Article of 1737 of the NCC - The common carrier's duty to observe (planters v ca)
extraordinary diligence over the goods remains in full force and effect even 4. The character of the goods or defects in the packing or in the containers
when they are temporarily unloaded or stored in transit, unless the shipper or Rule: if the carrier accepts the goods KNOWING the fact of improper packing of
owner has made use of the right of stoppage in transitu. the goods upon ordinary observation or notwithstanding such condition, it is
NOT relieved of liability for loss or injury
Application of Art of 1738 of the NCC - Defense: the defect was already existing at the time it was accepted; received
Regional Container Lines v. Netherlands Insurance Co the goods in protest; noted in the BOL
- The carrier would be liable if the damage to the packaging is due to the
Epoxy Molding Compound (the merchandise) was to be shipped from SG to Manila. cargos unfitness for transport was made when it was in the custody of the
The merchandise is temperature sensitive thus it is refrigerated in transit at O carrier
degrees Celsius. Unloaded from the ship in good condition, refrigerator was
5. Order or act of competent public authority In carriage of (Order of Public
Authority)
If the public authority who issued the order is DULY AUTHORIZED to issue the
order
- Defense is not available if: (1) the public authority has no authority; or (2) if the
public authority exceeded his authority
Defense in Carriage of Passengers
Passenger:
Exercise of extraordinary and utmost diligence
Proximate Causation
Doctrine of Proximate Cause
The CC is presumed negligent the moment he fails to deliver the goods to its
destination or the moment the passenger did not reach his destination while riding
the carrier. The injured passenger or owner of goods need not prove causation to
establish his case.
NEGLIGENCE IS PRESUMED.
New Civil Code Provisions
Acts of Employees
Art. 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of
the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that they exercised
all the diligence of a good father of a family in the selection and supervision of
their employees.
Art. 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the willful acts or negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the diligence of a good father
of a family could have prevented or stopped the act or omission.
---
The carrier is liable for the acts of its employees. Unlike in quasidelict, the carrier
cannot escape liability by claiming that he exercised due diligence in the selection
and supervision of the employee. It is no defense that the employee acted beyond
the scope of his authority because the riding public is not expected to inquire from
time to time before they board the carrier whether or not the driver or any other
employee is authorized to drive the vehicle or said driver is acting within the scope
of his authority and observing the existing rules and regulations required of him by
management
Sabena Belgian World Airlines vs. CA
Doctrine:
Art. 1733 of the [Civil] Code provides that from the very nature of their business
and by reasons of public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods transported by them.
Art. 1735 establishes the presumption that 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 had observed extraordinary
diligence as required in Article 1733.
The Warsaw Convention 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.
Leopoldo Poblete vs. Donato Fabros
[I]t is such a firmly established principle, as to have virtually formed part of the law
itself, that the negligence of the employee gives rise to the presumption of
negligence on the part of the employer. This is the presumed negligence in the
selection and supervision of the employee. The theory of presumed
negligence, in contrast with the American doctrine of respondent superior,
where the negligence of the employee is conclusively presumed to be the
negligence of the employer, is clearly deducible from the last paragraph of
Article 2180 of the Civil Code which provides that the responsibility therein
mentioned shall cease if the employers prove that they observed all the
diligence of a good father of a family to prevent damages.
Collin A. Morris vs. CA
a contract to transport passengers is quite different kind and degree from any
other contractual relations, and this is because relation, which an air carrier
sustains with the public. Its business is mainly with the travelling public. It
invites people business is mainly with the traveling public. It invites people to
avail [themselves] of the comforts and advantages it offers. The contract of air
carriage, therefore, generates a relation attended with a pubic duty. Neglect or
malfeasance of the carrier's employees naturally could give ground for an
action for damages."
"In awarding moral damages for breach of contract of carriage, the breach
must be wanton and deliberately injurious or the one responsible acted
fraudulently or with malice or bad faith." "Where in breaching the contract of
carriage the defendant airline is not shown to have acted fraudulently or in bad
faith, liability for damages is limited to the natural and probable consequences
of the breach of obligation which the parties had foreseen or could have
reasonably foreseen. In that case, such liability does not include moral and
exemplary damages." "Moral damages are generally not recoverable in culpa
contractual except when bad faith had been proven. However, the same
damages may be recovered when breach of contract of carriage results in the
death of a passenger."
Antonia Maranan vs. Pascual Perez, et al,
Under Art. 1739 of the Civil Code, a common carrier are liable for
the death of or injuries to passengers through the negligence or willful acts of
the formers employees, although such employees may have ached beyond the
scope of their authority or in violation of the order of the common carrier.
It is the carriers strict obligation to select its drivers and similar
employees with due regard not only to technical competence but also to this
total personality, their behavior and thus moral fiber.
Act of Other Passengers and 3rd persons
Jose Pilapil vs. CA
A passenger was injured because a bystander outside the bus hurled a stone. Is
the bus company liable?
No. There is no showing that any such incident previously happened so as to
impose an obligation on the part of the personnel of the bus company to warn
the passengers and to take the necessary precaution. Such hurling of a stone
constitutes fortuitous event in this case. The bus company is not an insurer of
the absolute safety of its passengers. (Pilapil v. CA, G.R. No. 52159, Dec. 22,
1989) (1994 Bar Question)
Passengers Baggage
Art. 1754. The provision of Article 1733 to 1753 shall apply to passengers
baggage which is not in his personal custody or that of his
employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be
applicable.
Define baggage
BAGGAGE includes whatever articles a passenger usually takes with him for his
own personal use, comfort, and convenience according to the habits or wants
of the particular class to which he belongs, either with reference to his
immediate necessities or to the ultimate purpose of his journey

Checked-in-Baggage
checked in or delivered to the carrier o extraordinary diligence
the rules that are applicable to goods that are being
shipped are applicable to baggage delivered to the
custody of the carrier.
Hand Carried baggage
hand carried luggage
considered as necessary deposits and carriers shall be
depositaries.
See credit transactions Arts. 1998-2003
Philippine Airlines Inc. vs. CA
The award of damages for death is computed on the life expectancy of the
deceased and not of the beneficiary. Artcle 1764 of the Civil Code provides that
article 2206 shall also applu to death of passenger caused by the breach of
contract by the common carrier. The manner of computing damages is taken from
Davila vs. CA. Net yearly income multiplied by the Life Expectancy of the deceased.
The Life Expectancy is based on the American Expectancy Table of Mortality
formula (2/3x[80-30]) cited from Villa Rey Transit Inc. vs. CA.
The income and salary of Nicanor Padilla is evidenced by witnesses, the auditor
and manager of Allied Overseas Trading, pay rolls of the companies and his income
tax returns.
His NET INCOME is thus, 13,900 with a life expectancy of 30 years. (Net income x
Life Expectancy) is Php417, 000. This is the amount of indemnity his mother is to
receive.
This includes a legal rate of interest of 6% annum from
date of judgment on 31August1973 until fully paid.
British Airways vs. CA
Facts:
On April 6, 1989, Mahtani decided to visit his relative in Bombay,
India. In anticipation of his visit, he obtained the services of a certain Mr. Gemar
to prepare his travel plan. Since british Airways had no ticket flights from Manila
to Bombay, Maktani had to take a connecting flight to Bombay on board British
Airways. Prior to his departure, Maktani checked in the PAL counter in Manila his
two pieces of luggage containing his clothing and personal effects, confident that
upon reaching Hong Kong, the same would be transferred to the BA flight bound
for Bombay, Unfortunately, when Maktani arrived in Bombay, he discovered that
his luggage was missing and that upon inquiry from the BA representatives, he was
told that the same might have been diverted to London. After plaintiff waiting for
his luggage for one week, BA finally advised him to file a claim accomplishing the
property.
Issue:
Whether or not defendant BA is liable for compulsory damages and
attorneys fee, as well as the dismissal of its third party complaint
against PAL
Held:
The contract of transportation was exclusively between Maktani and
BA. The latter merely endorsing the Manila to Hong Kong log of the formers
journey to PAL, as its subcontractor or agent. Conditions of contacts was one of
continuous air transportation from Manila to Bombay. The Court of Appeals
should have been cognizant of the well-settled rule that an agent is also
responsible for any negligence in the performance of its function and is liable for
damages which the principal may suffer by reason of its negligent act. Since the
instant petition was based on breach of contract of carriage, Maktani can only sue
BA and not PAL, since the latter was not a party in the contract.
Philippine Airlines Inc. vs. Hon. Adriano Savillo, et. al.,
If cause of action claims moral damages, not covered by Warsaw Convention.
Article 19 of the Warsaw Convention provides for liability on the part of a
carrier for damages occasioned by delay in the transportation by air of
passengers, baggage or goods. Article 24 excludes other remedies by further
providing that (1) in the cases covered by articles 18 and 19, any action for
damages, however founded, can only be brought subject to the conditions and
limits set out in this convention. Therefore, a claim covered by the Warsaw
Convention can no longer be recovered under local law, if the statue of
limitations of two years has elapsed.
Nevertheless, this Court notes that jurisprudence in the Philippines and the
United States also recognizes that the Warsaw Convention does not
exclusively regulate the relationship between passenger and carrier on an
international flight.
In U.S. v. Uy, this Court distinguished between the (1) damage to the
passengers baggage and (2) humiliation he suffered at the hands of the
airlines employees. The First cause of action was covered by the Warsaw
Convention which prescribes in two years, while the second was covered by
the provisions of the Civil Code on torts, which prescribes in four years.
In Mahaney v. Air France (US case), the court therein ruled that if the plaintiff
were to claim damages based solely on the delay she experienced- for
instance, the costs of renting a van, which she had to arrange on her own as a
consequence of the delay the complaint would be barred by the twoyear
statute of limitations. However, where the plaintiff alleged that the airlines
subjected her to unjust discrimination or undue or unreasonable preference or
disadvantage, an act punishable under the US law, then the plaintiff may claim
purely nominal compensatory damages for humiliation and hurt feelings,
which are not provided for by the Warsaw Convention.
In the Petition at bar, Savillos Complaint alleged that both PAL and Singapore
Airlines were guilty of gross negligence, which resulted in his being subjected
to humiliation, embarrassment, mental anguish, serious anxiety, fear and
distress therefore this case is not covered by the Warsaw Convention.
When the negligence happened before the performance of the contract of
carriage, not covered by the Warsaw Convention. Also, this case is comparable
to Lathigra v. British Airways. In that case, it was held that the airlines
negligent act of reconfirming the passengers reservation days before
departure and failing to inform the latter that the flight had already been
discontinued is not among the acts covered by the Warsaw Convention, since
the alleged negligence did not occur during the performance of the contract of
carriage but, rather, days before the scheduled flight.
In the case at hand, Singapore Airlines barred Savillo from boarding the
Singapore Airlines flight because PAL allegedly failed to endorse the tickets of
private respondent and his companions, despite PALs assurances to Savillo
that Singapore Airlines had already confirmed their passage. While this fact still
needs to heard and established by adequate proof before the RTC, an action
based on these allegations will not fall under the Warsaw Convention, since
the purported negligence on the party of PAL did not occur during the
performance of the contract of carriage but days before the scheduled flight.
Thus, the present action cannot be dismissed based on the Statue of
Limitations provided under Article 29 of the Warsaw Convention.
Obligations of Shipper, Consignee and Passenger
The shipper or the passenger is bound to the contractual
obligation
pay the freight or fare
Exercise due diligence to avoid damage or injury
Negligence of Shipper or Passenger
The obligation to exercise due diligence is not limited to the carrier. The
shipper is obliged to exercise due diligence in avoiding damage or injury.
Contributory negligence on the part of the passenger is not a defense that
will excuse the carrier from liability. It will only mitigate such liability.
Negligence of the shipper or the passenger may be the proximate and only
cause of the loss, in which case, the carrier should not be made liable. The carrier
may be able to overcome the presumption of negligence.

LAST CLEAR CHANCE

Under the doctrine of last clear chance a negligent defendant is held liable to a
negligent plaintiff or even to a plaintiff who has been grossly negligent in placing
himself in peril if he, aware of the plaintiffs peril, or according to some authorities,
should have been aware of the reasonable exercise of due care, had in fact an
opportunity later than that of the plaintiff to avoid an accident.

Payment of Freight
Amount to be Paid
Common carriers are subject to heavy regulations with respect to rates they are
charging to the public. The regulation of rates of public utilities is founded upon
the police power of the State and statutes prescribing rules for the control and
regulation of public utilities are a valid exercise thereof. Although the
consideration that should be paid to the carrier is still subject to the agreement of
the parties, what can be agreed upon should not be beyond the maximum amount
fixed by the appropriate government agency like the LTFRB, MARINA and Civil
Aeronautics Board.

Who will pay the freight

The shipper may pay the necessary freight before or at the time he delivers the
goods to the carrier for shipment. However, the parties may stipulate that the
freight will be paid by the consignee at the point of destination. The consignee is
bound by the stipulation by the moment he accepts the goods.

Time to pay the freight

- NCC does not provide the time to pay
- But in the Code of Commerce, in the absence of any agreement, the consignee
who is supposed to pay must do so within 24 hours from the time of delivery
Carriers lien
Art. 375. The goods transported shall especially be bound to answer for the cost of
transportation and for the expenses and fee incurred for them during their
conveyance and until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and
once prescribed, the carrier shall have no other action than that corresponding to
him as an ordinary creditor.
Payment of Demurrage
- the compensation provided for in the contract of affreightment for the detention
of the vessel beyond the time agreed on for loading and unloading.
- Essentially, demurrage is the claim for damages for failure to accept delivery.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or
deterioration of the goods, the proximate cause thereof being the negligence of
the common carrier, the latter shall be liable in damages, which however, shall be
equitably reduced.
Art. 1761. The passenger must observe the diligence of a good father of a family to
avoid injury to himself.
Art. 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the negligence
of the com