Thea E !study Group: Chapter 1: General Concepts

TheAWESOME!
study group
1
CaluagCelles Chavez Chua Haulo Lucero Marquez Millete Rico Uy
CHAPTER 1: GENERAL CONCEPTS

Chapter 1 General Concepts
1) Definition and Concept
a) Contract of Transportation
i) when a person obligates himself to transfer person or property from
one place to another for a consideration
ii) May involve carriage of passengers or goods
iii) May be a common carrier or private carrier
2) Parties
a) Carriage of Passengers
i) Parties:
(1) common carrier
(2) passenger one who travels in a public conveyance by virtue of
contract, express or implied with the carrier for an equivalent fare
*still a passenger if carried gratuitously or on reduced fare

Case: Baliwag Transit v. Court of Appeals
Facts:
1) George, of legal age, a paying passenger of Baliwag Transit suffered multiple
serious physical injuries when he was thrown off the bus being driven in a
careless negligent manner by the authorized driver Leonardo Cruz. Causing him
to incur medical expenses of P200,000 and other incidental expenses of
P10,000 borne by his parents. Thus his parents and George files a claim for
damages arising from breach of contract.
2) Baliwag then filed a Third-party complaint against Fortune Insurance &Surety
Co. for the amount of P50,000 but the company claimed limited liability subject
to schedule of indemnities.
3) Fortune and Baliwag each filed a Motion to Dismiss in the ground that George
in consideration of the sum of P8,020.50 executed a release claim which he
signed in the presence of his Engineer brother.
4) The father of George by way of opposition to their affirmative defense claimed
that George is a student and living with them totally dependent for support and
that they paid for the hospital bills and that they were not the ones who paid
for the Release of Claim.
5) The Trial Court discharged Baliwag and Fortune Insurance based on the
Release of Claim.
6) On appeal, the appellate court ruled that that it cannot be a valid ground for
the dismissal of the case because Georges parents have substantial interest
and they would be prejudiced by the judgment of the sizable amount they
spent for their sons hospitalization. That the amount of P8,020.50 is for
liability of Fortune Insurance and not for the purpose of releasing Baliwag from
its liability.
Issue: Is the Release of Claims valid?
Held:
Ruling:
1) Since this is a case for breach of contract of carriage the Release of Claims is
valid. George was also of legal age and have the capacity to do acts with legal
effects without his parents assistance.
2) It is also George who is the real party-in-interest-plaintiff who has a legal right
and Baliwag the real party-in-interest-defendant who has the correlative legal
obligation whose acts or omission violates the former. They are thus the only
required parties in the contract, Georges parents not being real party-of-
interest.
3) The general rule of the common law is that every action must be brought in
the name of the party whose legal right has been invaded or infringed.
4) The Release of Claim is genuine and duly notarized public document that
clearly stipulates that for the amount in consideration George release and
forever discharges Fortune and Baliwag from any and all liabilities or cause of
action.
5) The ruling of the Apellate court that the amount in consideration was for third
party claim for bodily injury only is rejected because the terms of the contract
is clear.
6) The Release of Claims has the effect of a compromise agreement. A
compromise agreement is a contract whereby parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced.

B. Carriage of Goods
1) Parties:
a) Shipper the person who delivers the good to the carrier for
transportation; person who pays the consideration or on whose behalf
payment is made.
b) Consignee person to whom the goods are to be delivered; may be the
shipper as when the goods are to be delivered to one of its branch offices;
may be a third person not party to the contract
c) Third-party consignee bound by contract Where it is established that he
accepted the terms and conditions of bill of lading and is trying to enforce
the agreement.
TheAWESOME!study group
2
C. Perfection (2 types)
1. Contract to carry agreement to carry passengers at some future
date; consensual, perfected by mere consent
2. Contract of Carriage or of common carriage itself considered a
contract when the facilities of the carrier is actually used and thus
have assumed the obligation.
*Same distinction with respect to carriage of goods
a) Aircraft
Perfected contract to carry even without tickets issued as long as
there was already a meeting of the minds with respect to subject
matter and the consideration.
Also when the passenger is checked in the departure counter,
passed through customs and immigration, on the shuttle bus and
proceeded on to the aircrafts ramp. And when his baggage has
already been loaded in the aircraft.
b.) Buses, Jeepneys and Street Cars
When it stops it makes a continuous offer to riders
Hence it is their duty to stop their conveyance for a reasonable
time and allow passengers to board for they are liable for the
injuries resulting from their sudden starting up.
The passenger has accepted the offer if he is already attempting
to board the conveyance which perfects the contract of carriage
at that point.
c.) Trains
To be considered a passenger must purchase a ticket and must
present himself at the proper place and manner to be transported
with the bona fide intention to use the facilities of the carrier.
In the Cse of LRT vs Natividad, Mr. Natividad who has
purchased a token and fell while he was waiting at the
platform waiting for a train and struck by it causing his death
was considered a passenger.

Case: British Airways, Inc. v. CA
Facts:
1. First International and General Services Co., (FIGS)is a recruitment and
placement agency which upon the orders from its principal ROLACO Engineering
and Contracting Services in Jeddah, Saudi Arabia recruited Filipino workers.
2. ROLACO then paid for the airline tickets of the 93 contract workers in Jeddah.
British Airways after having confirmed of the prepaid ticket that it has forwarded
the 93 prepaid tickets. The private respondent (FIGS) then ordered its local travel
agent to book the 93 workers. But the Airlines wasnt able to fly them compelling
them to borrow P304, 416 to fly the workers through another airline because their
Visas are only for 45 days thus the need to fly them immediatley.
3. Again the Airlines was contracted for the flight of 27 workers. However they were
beset by various delays without prior notice and only 21 workers were able to fly
separately due to cancellations and rebooking.
4. FIGS then sent a letter demanding for damages in the amount of P350,000 for
unrealized profits. They also received a letter from Jeddah cancelling the hiring of
the remaining workers because of the delay.
5. A case was then filed in the trial court which ordered the Airlines to pay for the
actual, moral, exemplary attorneys fee to FIGS as a result of their delays. This was
also affirmed by the CA.
Issue: Is the contention that there is no cause of action because there is no perfect
contract of carriage valid?
Held: No. There is a cause of action (which is a n act or omission of one party in
violation of the legal right/s of the other)
Ruling:
1. The repeated failure to transport FIGS workers constitutes breach of contract and
bad faith on its part.
2. In the present case the contract of carriage arises from the contract to carry
which is consensual and is perfected by the mere consent of the parties. It is
evidenced by the Airlines acceptance of the PTA or prepaid ticket advice.
3. The PTA although merely an advice from the sponsor that an airline is authorized
to issue a ticket and thus no ticket was yet issued, the fact remains that the passage
had already been paid and accepted by the appellant-airlines.
4. The third essential requisite of the contract that is an object certain is also. In this
contract to carry, such an object is the transport of the passengers from the place of
departure to the place of destination. This was clear in the oral contract imposing
reciprocal obligations on both parties.
5. The Airlines was clearly remiss in its obligation. They clearly know that time is of
the essence and they should have refused acceptance of the PTA or at least inform
FIGS it could not accommodate is contract workers.
6. Even though it was ROLACO Eng. That advanced the payment it still involved the
appellee-FIGS as the recruiter. The involvement in the contract to carry was
clearly demonstrated when upon receipt of the PTA, the Airlines advised FIGS
thereof.
3
7. Since the expenses of FIGS have been reimbursed albeit in a staggered basis by
their principal, the SC finds no justification granting actual damages to private
respondent.

II. Carrier
One that holds itself out as ready to engage in the transportation of goods
for hire as public employment and not as a casual obligation
Common carrier coincides with public service under Public Service Act
which partially supplements law on common carrier of the Civil Code.
A. Tests for determining to be a Common Carrier:
1. Must be engaged in the business of carrying goods for others as 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
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.
4. The transportation must be for hire.
In Natl Steel Corp vs CA, SC held that true test of common carrier is the
carriage of goods or passengers, provided it has space for all who opt to
avail themselves of its transportation for a fee.
B. Characteristics
Art 1732 makes no distinction to one whose principal activity is the
carrying of persons or goods or it is only his ancilliary activity.
Avoids making distinction between a person or enterprise who offer
transport service on a regular or scheduled basis from one who offers it on
occasional, episodic or unscheduled basis.
Does not distinguish from one who offer service to general public and one
who solicits business from a narrow segment of the general population.
Still a common carrier even without the Certificate of Public Convenience
Transportation need not be only by motor vehicle
May be a common carrier even without fixed and publicly known route,
no terminals and issues no tickets
Need not be engages in the business of public transpo for provisions of
Civil Code on common carriers to apply to them.
a. Ancilliary business - One who does so as a sideline, as held in De
Guzman vs CA, even though the principal business was junk, said
respondent was considered as a private carrier.
b. Limited Clinetele - a person may be declared as a common carrier
even though one does not indiscriminately hold out his services to
the public but offers the same to select parties.
c. Means of Transportaion As taken in the case of First Phil.
Industrial Corp v. CA, pipeline operators are common carriers that
are subject to business taxes on common carriers. Such are
common carriers even the oil or petroleum products being
transported not through motor vehicles but through pipelines.
C. Effect of Charter Party
Charter Party may transform a common carrier into a private carrier. But
it must be a bareboat or a demise charter where the charter mans the
vessel with his own people.
Not transformed into a private carrier if the charter party is a contract
of affreightment like a voyage charter or time charter.

III. Distinguished from Private Carrier
Private carrier or Special Carrier if a person or corporation is undertaking a single
transaction, not part of a general business or occupation, although involving the
carriage of the goods for a fee.
Example: If a person agrees to carry another to the airport using his
own car
A private carrier is owes only diligence of a good father of a family.
A private carrier may exempt itself from liability for the negligence of
its agents or employees.

CASES:
Mr. and Mrs. Engracio Fabre et.al. v. Court of Appeals
Facts:
1. Spouses Fabre owns a minibus used for bus service of school children. They
hired Cabil as drive whom they first tried for two weeks.
2. However, In November 1984, private respondent Word for the World
Christian Fellowship (WWCF) arranged with the Fabres for transportation
of its 33 members.
3. The trip met an accident caused by the heavy rainfall, slippery road and the
unfamiliarity of the driver to the area where they detoured.
4. The trial Court and with the appellate Court affirming, that Cabil and
Spouses Fabre are jointly and severally liable for the damages.
5. Among the contention of the Fabres is that the WWCF , as the contract
stipulates, is responsible for the trip.
4
Issue: Is the case involve a contract of carriage thus rendering Fabres liable for
damages?
Held/Rationale:
Yes. Petitioners need not to be engaged in public transportation in order
to come within the provision of common carriers. Article 1732 does not make
distinction as to whether the principal activity is carrying persons or goods, or
carrying it as a sideline or ancillary. It also makes no distinction as to a person
offering transportation services on a regular basis or only on episodic basis.
Moreover, there is no distinction as to its services is for public or only for a narrow
segment of the population.
Thus found be common carriers, they have to exercise extraordinary
diligence which was found in the case, they failed to do so. Note that liability of
common carriers does not cease upon proof of diligence as a good father. Common
Carriers are liable for the death of or injuries to passengers through negligence or
willful acts of the formers employees may have acted beyond the scope of their
authority.

Estrelita Bascos v. CA and Rodolfo Cipriano
Facts:
1. Cipriano representing CIPTRADE entered into a hauling contract with Jibfair
Shipping Agency Corporation where the former is bound to hauls the
latters soya beans from Manila to Laguna.
2. CIPTRADE subcontracted with petitioner Bascos for the transport.
3. The cargo however was not delivered prompting Cipriano to pay Jibfair as
part of his obligation in the contract.
4. Now Ciprtiano demanded eimbursement from petitioner but petitioner
refused.
Issue: Was the petitioner a common carrier?
Held/Rationale:
Yes. 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.
Likewise, common carriers are obliged to observe extraordinary diligence
in the vigilance over the goods transported by them.
- Accordingly, they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. Note
guidelines set by De Guzman v. Court of Appeal.

FGU Insurance Corporation v. G.P. Sarmiento
Facts:
1. G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver thirty (30)
units refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles.
2. While the truck was traversing it collided with an unidentified truck
resulting in damage to the cargoes.
3. FGU Insurance Corporation (FGU), an insurer of the shipment, paid to
Concepcion Industries, Inc., the value of the covered cargoes. FGU, in turn,
sought reimbursement of the amount, from GPS.
4. Since GPS failed to heed the claim, FGU filed a complaint for damages and
breach of contract of carriage against GPS and its driver with the Regional
Trial Court, Branch 66, of Makati City.
5. In its answer, respondents asserted that GPS was the exclusive hauler only
of Concepcion Industries, Inc., since 1988, and it was not so engaged in
business as a common carrier. Respondents further claimed that the cause
of damage was purely accidental.
Issue:
1. Is GPS a common carrier?
2. Can GPS still be liable?
Held/Rationale:
1. No. It being shown that GPS was exclusively contractor and hauler of
Conception Industry, rendering services to no other persons or entities,
GPS cannot be considered as a common carrier engaged in the
transportation business for hire offering its services to the public in
general.
- Common carriers are persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers or goods or both,
offering their services to the public, whether to the public in general or to
a limited clientele in particular, but never on an exclusive basis.
2. YES. GPS is liable culpa contractual. The mere proof of existence of
contract of carriage and the failure to comply therewith, justify, prima
facie, corresponding right of relief.

5
Asia Lighterage and Shipping Inc. v. Court of Appeals and Prudential Guarantee
and Assurance Inc.

Facts:
1. Tons of Better Western White Wheat in bulk, was shipped by Marubeni
American Corporation of Portland, Oregon on board the vessel M/V NEO
CYMBIDIUM V-26 for delivery to the consignee, General Milling
Corporation in Manila. The shipment was insured by the private
respondent Prudential Guarantee and Assurance, Inc. against loss or
damage.
2. The carrying vessel arrived in Manila and the cargo was transferred to the
custody of the petitioner Asia Lighterage and Shipping, Inc. The petitioner
was contracted by the consignee as carrier to deliver the cargo to
consignee's warehouse at Bo. Ugong, Pasig City.
3. The cargo did not reach its destination.
4. It appears that there was a suspension of shipment due to a warning of
typhoon. After few days, the barge developed a list because of a hole it
sustained after hitting an unseen protuberance underneath the water. It
was mended however, upon reaching the Sta. Mesa spillways, the barge
again ran aground due to strong current. The towing bits of the barge
broke the next day. It sank completely, resulting in the total loss of the
remaining cargo.
5. Private respondent indemnified the consignee but the recovery sought to
petitioners was not given.
Issue: Is the petitioner a common carrier?
Held/Rationale:
Yes. Petitioner comes within the definition of common carrier as defined
in De Guzman v. Court of Appeals Case.
- 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.
- Another test is the one laid in BAsco v. Court of Appeals which 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. 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.

Estela Crisostomo v. The Court of Appeals and Caravan Travel & Tours
International Inc.
Facts:
1. Petitioner Estela Crisostomo contracted the services of respondent
Caravan Travel and Tours International, to arrange and facilitate her
booking, ticketing, and accommodation in a tour called Jewels of Europe.
She was given a 5% discount and a waived booking fee because her niece,
Meriam Menor, was the companys ticketing manager.
2. Menor went to her aunts residence to deliver Crisostomos travel
documents and plane tickets and get her payment. Menor told her to be in
NAIA on Saturday.
3. When Crisostomo got to the airport on Saturday, she discovered that the
flight she was supposed to take had already departed the previous day.
She complained to Menor, and was urged by the latter to take another
tour, instead British Pageant.
4. Upon returning from Europe, Crisostomo demanded P61,421.70 from
CaravanTours, representing the difference between the sum she paid for
Jewels and the amount she owed the company for British Pageant.
Caravan refused.
5. Thus, Crisostomo filed a complaint against Caravan for breach of contract
of carriage and damages.
Issue: Is the respondent a common carrier?
Held/Rationale:
No. Respondent is not engaged in the business of transporting either passengers of
goods and is therefore not a common carrier. Respondents services as a travel
agency include procuring tickets and facilitating travel permits or visas as well as
booking customers for tours.
A contract of carriage or transportation is one whereby a certain person or
association of persons obligate themselves to transport persons, things, or news
from one place to another for a fixed price.
Thus, Caravan is a travel agency, it is not bound to observe extraordinary diligence
in the performance of its obligations but only that of a good father of a family.

IV. Distinguished from Towage, Arrastre and Stevedoring
Towage:
- One vessel is hired to bring another vessel to another place;
- service rendered o a vessel by towing for the mere purpose of
expediting the voyage without reference to any circumstances of
danger;
6
- confined to vessels that have received no injury or damage
Arrastre:
- Tasks include (1) receive handle, care for and deliver all merchandise,
(2) record/check merchandise which may be delivered to the port and
(3) furnish light or waer services or other incidental services to
undertake its arrastre service
- Nothing to do with trade and business nor the use/operation of
vessels
- Not maritime
Stevedores:
- Loads and unloads coastwise vessels calling at the port.

V. Governing Laws:

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.

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.

Philippine Laws is applied to:
- Goods to be transported to the Philippines from other countries
- In case of collision and goods are to be transported to the Philippines

International Air transportation- the place of departure and place of
destination are within the territories of 2 contracting countries regardless of
WON there was a break in the transportation; the place of departure and
destination are within the territory of single country if there is an agreed
stopping place within a territory subject to he sovereignty, mandate or
authority of another power even not a party to the Convention.

Summary of Rules:
a. Coastwise shipping:
1. New Civil Code (1732-1736)- Primary law
2. Code of Commerce- suppletory
b. Carriage from Foreign ports to Philippine Ports
1. New Civil Code - Primary law
2. Code of Commerce- all matters not regulated by the Civil Code
3. Carriage of goods by Sea Act- suppletory to NCC
c. Carriage from Philippine Ports to Foreign Ports
1. Laws of the land to where goods are to be transported
d. Overload Transportation
1. New Civil Code- Primary law
2. Code of Commerce- suppletory
e. Air Transportation
1. New Civil Code
2. Code of Commerce
3. Warsaw Convention for international carriage

VI. Nature of Business:
Business of Common Carriers are:
- Public utilities
- Enterprise that specially cater to the needs of the public and conduce to
their comfort and convenience
- Impinges directly and intimately upon the safety, well being and property
of the mebers of the general community who happen to deal with such
carrier

VII. Registered Owner Rule and Kabit System
A. Registration Laws:
- Governned by RA 4136 or The Land Transportation and Traffic Code
- Administered by the Land Transportation Office
- Some Provisions:
o (5)Compulsory Registration:
all motor vehicles must be registered in current year.
Dates of Annual registration be based on scheme
provided by Bureau of Land transportation
Dealers submit report concerning sale/transfer/any other
transaction involving motor vehicle.
Unauthorized repair or change of engine serial number:
Only if satisfactorily explained
Mortgages, attachments ad other encumbrances and
even cancellation of such should be recorded to the
Bureau before it becomes valid.
o (14) Issuance of certificates and registrations: properly
numbered certificate issued after due inspection
7
o (15) Use and authority certificate of registration:
certificate shall be preserved and carried in the car
certificate of registration be the authority for the
operation of such motor vehicle (valid, effective and has
not been revoked)
No motor vehicle be allowed to travel in public highways
placing it on a large registration fee than that stated in
Certificate of registration
o (16) Suspension of Registration:
If any motor vehicle is found to be unsightly, unsafe,
overloaded, improperly marked or equipped, or
otherwise unfit to be operated, or capable of causing
excessive damage to the highways, or not conforming to
minimum standards and specifications
If during any twelve-month period more than three
warnings for violations of this Act have been given or
owner has been convicted by a competent court more
than once for violation of such laws, period of suspension
is not more than 90 days and require the immediate
surrender of the number plates.
For underweight vehicles, he owner thereof shall pay the
difference in the registration fees corresponding to the
shortage in weight plus a fifty per cent surcharge. Until
payment is made, Certificate is suspended.
2 suspension= re-registration for one year denied
o (17) Number plates, preparation and issuance:
number plates to be prepared and issued with charging a
fee of four pesos for each pair including the numerals
indicating the year of registry
In case no available plates, Commissioner or his deputies
may issue, without charge, a written permit temporarily
authorizing the operation of any motor vehicles with
other means of identification
Those exempted from fee bear plates so designed and
painted with different colors to distinguish one class
from another and have them until the extinguishment of
their exemption. Upon extinguishment of exemption or
after transferring the vehicle to a non exempt owner, he
shall return such plates to the Land Transportation
Commission within a period of seven working days.
Transfer of motor vehicle plates- fine of 5000 or
imprisonment for 6 mos.
For renewals, Director or his deputies shall issue
validating tags and stickers indicating the year of registry
o (18) Use of Number plates
Placement of plates: conspicuous places, one in front and
one in the rear
Should be visible and legible and kept clean and cared for
No transfer of motor vehicle plate to another
No dealers plate be used after the vehicle has been
transferred to a purchaser; such plate is also prohibited
to be sed on any other vehicle after its sale and delivery
to purchaser

B. Registered Owner Rule
- Person who is registered owner of the vehicle is liable for any damage
caused by the negligent operation of the vehicle even though the same has
already been sold or conveyed to another person at the time of accident
- Registered owner is liable to injured party subject t his recourse against
the buyer/transferee
- Erezo v. Jepte:
o (Principle behind registered owner rule)The public has the right to
assume or presumed that the registered owner is the actual
owner thereof, for it would be difficult with the public to enforce
the actions that they may have for injuries caused to them by the
vehicles being negligently operated if the public should be
required to prove who actual the owner is.
o Not only are vehicles to be registered and that no motor vehicles
are to be used or operated without being properly registered
from the current year, furnish the Motor Vehicle Office a report
showing the name and address of each purchaser of motor
vehicle during the previous month and the manufacturer's serial
number and motor number.
o Registration is required not to make said registration the
operative act by which ownership in vehicles is transferred but to
permit the use and operation of the vehicle upon any public
highway.
8
o He (victim of injury) 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.
o A registered owner who has already sold or transferred a vehicle
has the recourse to a third-party complaint, in the same action
brought against him to recover for the damage or injury done,
against the vendee or transferee of the vehicle.

C. Kabit System
It is an arrangement whereby a person who has been granted a certificate
of public convenience allows other person who own motor vehicles to
operate them under is license, sometimes for a fee or percentage of the
earnings
It is recognized as contrary to public policy and therefore void and
inexistent under art 1409 of the CC
The thrust of the law in enjoining the kabit sytem is not so much as to
penalize the parties but to identify the person upon whom responsibility
may be fixed in case of an accident with the end view of protecting the
riding public.
a. Pari Delicto Rule
People who are parties to the kabit system cannot invoke the same as
against each other to enforce their illegal agreement or to invoke the same
to escape liability.
Time-honored doctrine maxim ex pacto illicit non oritur action. No action
arises out of an illicit bargain
having entered into an illegal contract, neither can seek relief from the
courts, and each must bear the consequence of his acts.
b. Aircraft and vessels
The policy which prohibits the kabit system applies to vessels and aircrafts
that are covered by certificates of public convenience and necessity.
Persons who do not have such certificate cannot circumvent the law by
using the certificate of another.
No permits or certificates can be transferred without the permission of the
government agency concerned.
With respent to aircrafts, the Civil Aeronautics Act provides that the
conveyance therof is not a valid except to the parties and other persons
who have notice until the transfer is registered with the Civil Aeronautics
Board.

CASES:
Adolfo L Santos vs Abraham Sibug and CA
Short facts:
Before the date of accident,Vidad was a duly authorized passenger jeepney
operator and Santos was the owner of a passenger jeep but he had no
certificate of public convenience for the operation of the public passenger
jeep.
Santos transferred his jeep to the name of vidad so that it could be
operated under the latters certificate of public convenience. In other
words, Santos became a kabit operator.
On the accident date,private respondent Sibug was bumped by a
passenger jeepn operated by vidad and driven by Gragas. As a result an
action was filed by Sibug for damages
Sibug won and the motor vehicle was levied
Santos opposed such sale because he was the rightful owner of the motor
vehicle
Issue: does the claimnant has the right to vindicate his claim to ht vehicle levied
upon through a separate action?
Held: yes
Rationale:
The right of a person who claims to be the owner of property levied upon
on execution to file a third-party claim with the sheriff is not exclusive and
he may file an action to vindicate his claim even if the judgment creditor
files an indemnity bond in favor of the sheriff to answer fro any damages
that may be suffered by the third party claimant. By action as stated in the
Rule, what is meant is a separate and independent action

Baliwag Transit Inc. vs Hon of CA
Simple facts:
1. Two passenger bus line with similar buses and similar routes were being
operated by firm names Baliwag Transit and Baliwag Transit Inc. (BTI)
2. The former was owned and operated by the late Pascual Tuazon while the
latter was owned by Petitioner Corporation incorporated. Both bus lines
operate under different grants of franchise by the Public Service
Commission.
9
3. Ramon Martinez , private respondent claims to be an employee of both
bus lines with one ID number ,filed a petition with Social Security
Commission (SSC) to compel BTI to remit SSS private respondents SSS
premium contribution. He was only remitted from June 1963 to 1966.
4. BTI denied the having employed the private respondent and that he was
employed by pascual under the trade name Baliwag Transit which was
separate and distinct from the business operated by the petitioner
company owned by Mrs Victoria Vda. De Tengco.
5. In SSC ,the petition was dismissed because there exist no employer-
employee relationship. CA reversed the decision because Pascual Tuazon
operated under the kabit system
Issue: is the issuance by the social security system of one SSS-ID-Number to two bus
lines necessarily indicates that one of them, operates kabit system?
Held: no
Rationale:
Kabit system is where a person who has been granted a certificate of
public convenience allows other person who own motor vehicles to
operate them under is license, sometimes for a fee.
The determining factor is the possession of a franchise to operate which
negates the existence of the kabit system and not the issuance of one SSS
ID number for both bus lines
Supported by 7 witnesses presented by the petitioner and with SSS
witness, both bus lines operated under separate franchise to operate
There was an employer- employee relationship between the late Pascual
Tuazon and private respondent having been establish, the remittance of
SSS contribution of the latter ,is the responsibility of his employer Tuazon,
regardless of the existence or non-existence of the kabit system.

Lita Enterprise Inc. vs Second Civil case division
Simple facts:
1. Spouses Ocampo and Francisco Garcia, private respondents, purchased 5
toyota corona standard in installment from the Delta Motor Sales
Corporation.
2. Since they had no franchise to operate taxicabs, they contracted with
petitioner Lita Enterporse Inc. through its representative, Manuel
Concordia, for the use of the latters certificate of public convenience in
consideration of an initial payment of P1000 and a monthly rental of P200
per taxicab unit.
3. To effectuate the agreement, the cars were registered under the name of
the petitioner.
4. However the spouses ocampo operated and maintained the taxi under
Acme taxi, petitioners trade name
5. About a year later, one of the said taxicabs driven by their employee
Enerterio Martin collided with a motorcycle driven by Florente Galvez died
from the head injuries sustained.
6. The petitioner filed a civil action against the petitioner and won. The later
on a writ of execution was issued where it levied on one of the taxi cabs.
7. Ocampo then decided to register his taxicab in his name but Lita Enterprise
refused so. Ocampo then filed a case against the Lita Enterprise. Where
the complaint is dismissed.
Issue: was the decision of the lower court correct?
Held: no
Rationale:
Kabit system is a person who has been granted a certificate of public
convenience allows other person who own motor vehicles to operate them
under is license, sometimes for a fee.
Kabit system has been identified as one of the root causes of this
prevalence of graft and corruption in the government transportation
offices. In the words of Justice Makalintal this is a pernicious system that
cannot be too severely condemned. It constitutes an imposition upon the
good faith of the government.
Such system is void and inexistent and against public policy. It is a
fundamental principle that the court will not aid wither party to enforce an
illegal contract.
The defec of inexistence of a contract is permanent and incurable and
cannot be cured by ratification or by prescription. The mere lapse pf time
cannot give efficacy to contracts that null and void.
The prinple of Pari Delicto applies

CHAPTER 2: OBLIGATIONS OF PARTIES
I. Obligation of the Carrier
A. Duty to Accept.
A common carrier that is granted a certificate of public convenience is
duty bound to accept passengers or cargo without any discrimination.
The present laws forbid failures or refusal to unreasonable or unnecessary
preference or advantage to any person, locality or particular kind of
10
traffic, or of subjecting any person locality or particular kind of traffic to
any undue or unreasonable.
With respect to passengers, it has bee explained that a vessel generally
engaged as a common carrier of passengers is bound to receive for
carriage without discrimination all proper persons who desire it and
properly offer to become passengers unless some sufficient excuse for
refusing them.
In connection with air transportation, the applicable rule for passengers
with confirmed tickets who were not allowed to board is Civil Aeronautic
Boards Economic Regulation No. 7
It should be noted that the said rules provide for liquidated
damages as a result of the carriers failure to provide the
passenger with confirmed reserved space.
No compensation is required if the reasons for the refusal are (1)
government requisition of the space (2) or safety and/or other
causes beyond the control of the carrier and (3) if arrangements
have been made for the passenger to take another flight in a
comparable air transportation which will arrive no later than
three hours after the time the flight on which the confirmed space
is held is supposed to arrive.
a. Ground for valid refusal to accept goods.
1. When the goods sought to be transported are dangerous object or
substance including dynamites and other explosivs.
2. The goods are unfit for transportation
3. Acceptance would result in overloading
4. The goods are considered contrabands or illegal goods
5. Goods are injurious to health
6. Goods will be exposed to untoward danger like flood, capture by enemies
and the like
7. Goods like livestock will be exposed to diseases
8. Strike
9. Failure to render goods on time.
(1) Hazardous and Dangerous Substances.
Carriers may be granted the authority to cary good that are by nature
dangerous or hazardous.
Certificated of public convenience granted to a carrier may in fact include
the authority to transport explosives or dangerous chemicals.
A carrier which is not properly equipped to transport dangerous chemicals
or explosives may validly refuse to accept the same transport.
Memorandum circular no 105, disallows the carriage of hazardous goods if
there is no Special permit to carry from the Marina.
Circular contains: III. classification of dangerous/hazardous
cargoes goods.
1. Class 1- explosives
2. Class 2- gases,compressed, liquefied or dissolved under pressure.
3. Class 3- inflammable liquid
4. Class 4- inflammable solids or substance
4.1 inflammble solid
4.2 Inflammable solids or substances liable to spontaneous
combustion.
5. Class 5
5.1- Oxidizing Substance
5.2 Organic peroxide
6. Class 6-
6.1- poisonous substances
6.2- infectious substances
7. Class 7- radioactive substance
8. Class 8- corrosives
9. Class 9- Miscellaneous dangerous substances
IV documentary requirements
1. Letter of intent
2. PPA clearance on packaging, marking and labeling of cargoes
or goods in package forms
3. Cargo stowage plan

V . exemption
Vessels specially designed/ built to carry
dangerous/hazardous cargoes/good and had been issued
the appropriate certificate of inspection to carry the
same are exempted.
(2) Unfit for transport
Carrier may refuse to accept goods that are unfit for
transportation
These goods may by nature be unfit for transportation or
are unfit because of improper packaging or defect in
their containers.
However, the carrier may choose to transport such goods
and limit its liability by stipulation
11
Code of commerce provides
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.

However in art 1742 of the Civil Code provides that even if the loss
destruction or deterioration of the goods should be the caused by the character
of the goods of the faculty nature of packing or of the containers, the common
carrier must exercise due diligence to forestall or lessen the loss

B. Duty to Deliver the Goods:
a. Time of Delivery

RULE in carriers liability for delay:
(1) In the absence of special contract- a carrier is not an insurer against delay
in transportation of goods.
BUT
(2) When there is an express contract to transport and deliver property
within a specified time- he is bound to fulfil the contract and is liable for
any delay, no matter what cause it may have arisen.

In the absence of any agreement on the time of delivery-the law implies a contract
that they shall be delivered at destination within a reasonable time.

Determination if delivery is made within reasonable time:
1) Expected date of arrival reflected in the bill of lading;
2) Depend upon the nature of goods i.e. if it is perishable;

Code of Commerce:
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.

b. Consequences of Delay:

Excusable delays in carriage suspend the contract of carriage but the master of
the carriage must proceed with the voyage exercising extraordinary diligence and
make delivery when the cause of the delay has been removed.

Civil Code:
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. 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.

(1) Code of Commerce:

ARTICLE 370. 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 else.
If no indemnity has been stipulated and the delay exceeds the time fixed in the bill
of lading, the carrier shall be liable for the damages which the delay may have
caused.

12
ARTICLE 371. 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.

(2) Abandonment:

Art. 371- confers upon the consignee an exceptional but limited right to abandon
the goods transported during the period intervening between the moment when
the fault of the carrier produces delay which is the generative cause of action, until
the moment just before the arrival of the goods at the place of delivery, by
communicating such abandonment to the carrier in writing; and when these
conditions do not concur, the refusal to accept cannot be effective.
This provision also applies to marine transportation.

Magellan Mfg. Marketig Corp. v CA
Abandonment may also be made by virtue of stipulation or agreement between
the parties.

Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract with
Choju Co. of Yokohama, Japan to export anahaw fans. MMMC then contracted F.E.
Zuellig, a shipping agent to ship the anahaw fans through the other appellee, Orient
Overseas Container Lines, Inc., (OOCL). But was refused by the buyer to accept
because there was no on-board bill of lading, and there was a transhipment of
goods. Anahaw fans were shipped back to Manila and was abandoned by MMMC as
payment to OOCL for freight and demurrage charges for the shipment.

HELD: It will be remembered that in overland transportation, an unreasonable delay
in the delivery of transported goods is sufficient ground for the abandonment of
goods. By analogy, this can also apply to maritime transportation. Further, with
much more reason can petitioner in the instant case properly abandon the goods
not only because of the unreasonable delay in its delivery but because of the option
(option of paying the shipping and demurrage charges in order to take delivery of
the goods or of abandoning the same so that OOCL could sell them at public auction
and apply the proceeds in payment of the shipping and other charges) ) which was
categorically granted to and exercised by it as a means of settling its liability for the
cost and expenses of reshipment. And, said choice having been duly communicated,
the same is binding upon the parties on legal and equitable considerations of
estoppel.

(3) Right of Passengers in case of Delay:

Art. 698. In case of voyage already begun should be interrupted, the passengers
shall be obliged to pay the fare in proportion to the distance covered, without
right to recover for losses or damages if the interruption is due to fortuitous event
or force majeure, but with a right to indemnity if the interruption should have
been caused by the captain exclusively. If the interruption should be caused by the
disability of the vessel and a passenger should agree to await the repairs, he may
not be required to pay any increased price of passage but his living expenses
during the stay shall be for his own account.

Trans- Asia Shipping Lines Inc, v CA

A vessel going to Cagayan de Oro was running slow and because of stillness
in an island, some of the passengers demanded that they should be allowed to
return to Cebu but they were no longer willing to continue their voyage to CDO. The
vessel headed back to Cebu but some passengers were allowed to disembark. The
complainant boarded another vessel of the same company but he demands
payment for his loss of income after the vessel was running slow the other day.

HELD:
The carrier would have been liable for loss of income if the plaintiff was unable to
report to his office on that day he supposed to arrive were it not for that delay and
stayed in the vessel but he did not. Consequently, any further delay then in the
private respondent's arrival at the port of destination was caused by his decision to
disembark. Had he remained on the first vessel, he would have reached his
destination at noon of that day, thus been able to report to his office in the
afternoon. He, therefore, would have lost only the salary for half of a day.
13
C. Where and to whom Delivered

a. Place: delivered to the consignee in the place agreed upon by the shipper
and carrier.
If the specific place 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.

ARTICLE 360. 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.

b. Consignee- delivery must generally made to the owner or the consignee
or to someone lawfully authorized by him to receive the goods for his
account.

ARTICLE 368.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.

ARTICLE 369.If the consignee cannot be found at the residence indicated in the bill
of lading, or if he refuses to pay the transportation charges and expenses, or if he
refuses to receive the goods, the municipal judge, where there is none of the first
instance, shall provide for their deposit at the disposal of the shipper, this deposit
producing all the effects of delivery without prejudice to third parties with a better
right.

Art. 1513. A person to whom a negotiable document of title has been duly
negotiated acquires thereby:

(1) Such title to the goods as the person negotiating the document to him had or
had ability to convey to a purchaser in good faith for value and also such title to the
goods as the person to whose order the goods were to be delivered by the terms of
the document had or had ability to convey to a purchaser in good faith for value;
and

(2) The direct obligation of the bailee issuing the document to hold possession of
the goods for him according to the terms of the document as fully as if such bailee
had contracted directly with him. (n)

C. Delay to Transport Passengers:

A carrier is duty bound to transport passengers within reasonable dispatch. The
carrier shall be liable when the vessel or vehicle is unreasonably delayed.

Memorandum Circular No. 112- Delayed or unfinished voyage:
The carrier should transport the passenger to his destination at the
expense of the carrier including free meals and lodging before the
transportation.
Passenger may opt to have his ticket refunded if the cause of the delay is
carriers negligenc.
Carrier need to inform passengers of the sailing schedule of the vessel.

D. Duty to Exercise Extraordinary Diligence:

- Goods should be delivered in the same condition that they were received
and transport passengers without encountering any harm or loss.

Art. 1733 and Art. 1755
Common carriers, from the nature of their business and for reasons of public policy
are:

a) bound to observe extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by them:

b) bound to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons.

Code of Commerce:

ARTICLE 363- the carrier shall be obliged to deliver the goods shipped in the same
condition:
In which they were found at the time they were received, without any
14
damage or impairment.

Failing to do so: to pay the value which those not delivered may have at the point
and at the time at which their delivery should have been made.

ARTICLE 364. If the effect of the damage referred to in Article 361 is merely a
diminution in the value of the goods, the obligation of the carrier shall be reduced
to the payment of the amount which, in the judgment of experts, constitutes such
difference in value.

ARTICLE 365.The consignee shall not be bound to receive the goods delivered:
If, in consequence of the damage, the goods are rendered useless for sale
and consumption for the purposes for which they are properly destined.
Wherein, he may demand the carrier for the value at the current price on
that day.
If among the damaged goods there should be some pieces in good condition and
without any defect:
the foregoing provision shall be applicable with respect to those damaged
and the consignee shall receive those which are sound, this segregation to
be made by distinct and separate pieces and without dividing a single
object, unless the consignee proves the impossibility of conveniently
making use of them in this form.

a. Presumption of Negligence:

ART. 1735 and 1756:In case of loss of effects or cargo or passengers or death or
injuries to passengers, the common carrier is presumed to be at fault or have acted
negligently unless he had observed extraordinary diligence in the vigilance thereof.

The Court imposes liability upon common carriers as long as:
1) There exist a contract between the passenger or shipper and the common
carrier;
2) That the loss, detoriation, or injury took place during the existence of the
contract.

AmandoMirasol v Robbery Dollary Co.

Mirasol alleges that he is the owner and consignee of two cases of books, shipped
in good order and condition at New York, U.S.A., on board the defendant's
steamship President Garfield, all freight charges paid for transport and delivery to
him in Manila. But the two cases arrived in Manila in bad order and damaged
condition, resulting in the total loss of one case and a partial loss of the other.
Hence, he filed his claims and defendant has refused and neglected to pay, giving as
its reason that the damage in question "was caused by sea water."

HELD:Shippers who are forced to ship goods on an ocean liner or any other ship
have some legal rights, and when goods are delivered on board ship in good order
and condition, and the shipowner delivers them to the shipper in bad order and
condition, it then devolves upon the shipowner to both allege and prove that the
goods were damaged by the reason of some fact which legally exempts him from
liability; otherwise, the shipper would be left without any redress, no matter what
may have caused the damage.The fact that the cases were damaged by "sea water,"
standing alone and within itself, is not evidence that they were damaged by force
majeure or for a cause beyond the defendant's control.

b. Duration of Duty:
(1) Carriage of Goods:

The extraordinary responsibility of the common carrier:
1) Lasts from the time the goods are unconditionally placed in the possession
of, and received by the carrier for transportation until the same are
deliveredby the carrier to the consignee. (Art. 1736)

2) Remains in full force and effect even when they are temporarily unloaded
or stored in transit, unless the shipper or owner has made use of the right
of stoppage in transitu.(Art. 1737)

3) Continues to be operative even during the time the goods are stored in a
warehouse of the carrier at the place of destination, until the consignee
has been advised of the arrival of the goods and has had reasonable
opportunity to remove them or otherwise dispose of them.(Art. 1738)

Benito Macam v CA

Benito Macam, doing business (Ben-Mac Enterprises), shipped on board the vessel
Nen Jiang, owned and operated by respondent China Ocean Shipping Co., through
local agent Wallem Philippines Shipping, Inc. boxes of watermelons andof fresh
15
mangoes. The Bills of Lading contained the following pertinent provision: "One of
the Bills of Lading must be surrendered duly endorsed in exchange for the goods or
delivery order. The shipment was bound for Hongkong with PAKISTAN BANK as
consignee and Great Prospect Company of Kowloon, Hongkong (GPC) as notify
party. Upon arrival in Hongkong, the shipment was delivered by respondent
WALLEM directly to GPC, not to PAKISTAN BANK, and without the required bill of
lading having been surrendered. Macam sought collection of the value of shipment
from respondents based on the delivery of the shipment to GPC without
presentation of the bills of lading and bank guarantee.

HELD: We emphasize that the extraordinary responsibility of the common carriers
lasts until actual or constructive delivery of the cargoes to the consignee or to the
person who has a right to receive them. PAKISTAN BANK was indicated in the bills
of lading as consignee whereas GPC was the notify party. However, in the export
invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC
as such in his demand letter to respondent WALLEM and in his complaint before the
trial court. This premise draws us to conclude that the delivery of the cargoes to
GPC as buyer/importer which, conformably with Art. 1736 had, other than the
consignee, the right to receive them was proper.

(2) Carriage of Passengers:

Carriage of passengers:

By trains- extraordinary responsibility of commono carriers commences the
moment the person who purchases the ticket (or a token or card) from the carrier
presents himself at the proper place and in proper manner to be transported with
the bona fide intent to ride the coach.

By sea- duty of carrier commences as soon as person with bona fide intention of
taking passage places himself in the care of the carriers or its employees and is
accepted as passenger.

By motor vehicles (jeepneys and buses)- duty bound to stop their conveyance for a
reasonable length of time in order to afford passengers an opportunity to board
and enter and shall be liable if ijuries suffered by boarding passengers resulting
from sudden stating up of the vehicle.

Duty of diligence will not terminate until the passenger:
has reached his destination;
safely alighted from the carriers conveyance/had a reasonable
opportunity to leave the carriers premises.

LRT v Marjorie Natividad
NicanorNavidad, then drunk, entered the EDSA LRT station after purchasing a
"token". While Navidad was standing on the platform near the LRT tracks,
JunelitoEscartin, the security guard approached Navidad which led to a fist fight.
Navidad later fell on the LRT tracks, at that exact moment an LRT train was coming
in. Navidad was struck by the moving train, and he was killed instantaneously.

HELD: The foundation of LRTAs liability is the contract of carriage and its obligation
to indemnify the victim arises from the breach of that contract by reason of its
failure to exercise the high diligence required of the common carrier. Duty of a
common carrier to provide safety to its passengers is not only during the course of
the trip but for so long as the passengers are within its premises and where they
ought to be in pursuance to the contract of carriage. The statutory provisions
render a common carrier liable for death of or injury to passengers (a) through the
negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carriers employees
through the exercise of due diligence could have prevented or stopped the act or
omission. In case of such death or injury, a carrier is presumed to have been at fault
or been negligent.

P. 96-123 By Marian
(I just copy-pasted these doctrines from a site with compiled case doctrines)
Dangwa Transportation Company vs. CA
It is the duty of common carriers of passengers to stop their conveyances a
reasonable length of time in order to afford passengers an opportunity to board
and enter, and they are liable for injuries suffered by boarding passengers resulting
from the sudden starting up or jerking of their conveyances while they are doing so.
La Mallorca vs. CA
It has been recognized as a rule that the relation of carrier and passenger
does not cease at the moment the passenger alights from the carrier's vehicle at a
place selected by the carrier at the point of destination, but continues until the
passenger has had a reasonable time or a reasonable opportunity to leave the
16
carrier's premises. And, what is a reasonable time or a reasonable delay within this
rule is to be determined from all the circumstances.

Aboitiz Shipping Co. vs. CA
The rule is that the relation of carrier and passenger continues until the
passenger has been landed at the port of destination and has left the vessel owner's
dock or premises. Once created, the relationship will not ordinarily terminate until
the passenger has, after reaching his destination, safely alighted from the carrier's
conveyance or had a reasonable opportunity to leave the carrier's premises. All
persons who remain on the premises a reasonable time after leaving the
conveyance are to be deemed passengers, and what is a reasonable time or a
reasonable delay within this rule is to be determined from all the circumstances,
and includes a reasonable time to see after his baggage and prepare for his
departure. The carrier-passenger relationship is not terminated merely by the fact
that the person transported has been carried to his destination if, for example, such
person remains in the carrier's premises to claim his baggage.

Defenses of Common Carriers
ARTICLE 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 or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers; meriee
(5) Order or act of competent public authority.
NOTE: This is an exclusive enumeration. If not one is present, carrier is liable!
ARTICLE 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.
ARTICLE 1743. If through the order of public authority the goods are seized or
destroyed, the common carrier is not responsible, provided said public authority
had power to issue the order.
NOTES:
- Common carrier presumed negligent the moment there is failure to deliver
goods to its destination
- Therefore, doctrine of proximate cause is inapplicable to a contract of
carriage
- BUT! It is not correct to state that causation is not important consideration
- WHY? What the law means is that absence of causal connection is only a
matter of defense
- In other words, the passenger has no burden of proving that his injury was
caused by the carriers negligence
- BUT! The common carrier may prove that the loss or damage to any act of
the said carrier (DISPUTABLE PRESUMPTION)
- The carrier is not an insurer of the passengers safety, but his liability rests
upon negligence.

ARTICLE 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.
NOTES:
- It is believed that the defenses like fortuitous event may be invoked
against the passenger, provided that utmost diligence is exercised.
- HOWEVER! The presumption under Article 1756 applies
*Please read the sample problems on page 109-110.

a. Fortuitous Event
(1) Requisites
- The cause must be independent of the human will
- Impossible to foresee / Impossible to avoid if can be foreseen
- Will render it impossible for the debtor to fulfill his obligation in a normal
manner
- Obligor/Debtor does not cause or aggravate the injury resulting to the
creditor.

NOTES:
- For fortuitous event to be a valid defense, it must be established to be the
proximate cause of the loss
- Lasam vs. Smith:
CASO FORTUITO: An event that takes place by accident and could not
have been foreseen. (floods, shipwrecks, lightning, insurrections,
destruction of buildings by unforeseen accidents)
Essential Characteristics: (See above requisites)

17
(2) Participation of the Carrier
ARTICLE 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.
NOTES:
- The act of God must be the sole cause!
- If there is still negligence, then he is still responsible
- Tan Chiong Sian vs. Inchausti: One who has accepted responsibility for pay
can not weakly fold his hands and say that he was prevented from meeting
that responsibility
- (1
st
Supposition) When it is not only the cause, he still incurs the blame
because there is still sufficient connection between it and the
consequences to cause them to be imputed
- In other words, there is lacking the circumstance indispensable to
exemption on account of accident.
- (2
nd
Supposition) The blame has an objective aspect; Due diligence may be
lacking but does not extend to the point of involving responsibility.
- WHY? No results are produced.
- Therefore, the condition of inevitability can not be absolute!
- Presumption against the existence of accident = Presumption of Blame..
IF!!! In the absence of proof to overcome it
- Proof of Accident must include these: 1) The occurrence of the event, 2)
The bearing it has upon breach of the obligation, and 3) The concurrence
of unexpectedness and inevitability.
- Take Note: Proof of accident is related to proof of the blame!
- Also in Manresa, exemption from responsibility in accidents established by
Article 1105 has two exceptions: 1) event may be plainly proven, 2) be
unforeseen and unavoidable and still not produce exemption (when
execution is stipulated in the contract/ expressly mentioned by the law)
- REMEMBER: In order to relieve the obligor of his obligation, occurrence of
the event does not suffice, but that the impossibility of fulfilling the
obligation must be the direct consequences of the accident.

(3) Fire

NOTES:
- Fire is NOT a natural disaster/calamity
- Force majeure generally applies to a natural accident such as by lightning,
earthquake

(4) Hijacking

NOTES:
- DOES NOT fall among the five categories of exempting causes
- De Guzman vs. CA: Therefore, it must be dealt with under Art. 1735, that
the private respondent as common carrier is presumed to have been at
fault or have acted negligently (but this presumption may be overthrown)
- Bascos vs. CA: non-first hand account affidavits were not enough to
overcome presumption even if there was lack of objection on the part of
the respondents.

(5) Mechanical Defects

NOTES:
- NOT a damage or injury caused by a fortuitous event!
- Example: Defective breaks, fracture of vehicles steering knuckle
- WHY? Curable and preventable
- Necesito vs. Paras: Rationale of the Carriers liability the passenger has
neither choice nor control over the carrier in the selection and use of the
equipment and appliances in use by the carrier
- REMEMBER: The absence of privity between the passenger and the
manufacturer is not a bar for the former to sue the latter.
- WHY? Article 97 of the Consumer Act of the Philippines, AND the
manufacturer is actually liable for negligence (Coca-Cola Bottlers Phils. Vs.
CA)

(b) Other Invalid Defenses
1. Explosion
o Damage to cargo from explosion of another cargo is not ordinarily
attributable to peril of the sea or accidents of navigation.
o Particularly where it occurs after the vessel has ended its voyage and is
finally moored to unload.
18
2. Worms and Rats
o Damage by worms - Same cannot be cited as an excuse by the carrier
o Same is true with respect to damage of cargo by rats whether directly
damage by rats or by water let in through holes
3. Water Damage
o Damage by sea water is not valid excuse where the water gains entrance
through a port which had been left open or insufficiently fastened on
sailing.
4. Barratry
o It is an act committed by the master or crew of the ship for some unlawful
or fraudulent purpose, contrary to their duty to the owner
o Intentional fraud or breach of trust or willful violation of law is necessary to
constitute barratry
o Includes theft by the pursuer of specie shipped on board and fraudulently
running the shio ashore

CASES:

The Philippine American General Insurance Co Inc. vs. MCG Marine Services
Inc.And DoroteoGaerlan. Gr No. 135645, March 8, 2002
(Ship sank with San Miguel Beer Bottles)

FACTS:
1. On March 1, 1987, San Miguel Corporation insured several beer bottle cases
with petitioner Philippine American General Insurance Company.
2. The cargo were loaded on board the M/V Peatheray Patrick-G to be
transported from Mandaue City to Bislig, Surigao del Sur.
3. After having been cleared by the Coast Guard Station in Cebu the previous day,
the vessel left the port of Mandaue City for Bislig, Surigaodel Sur on March 2,
1987. The weather was calm when the vessel started its voyage.
4. The following day, M/V Peatheray Patrick-G listed and subsequently sunk off
Cawit Point, Cortes, Surigaodel Sur. As a consequence thereof, the cargo
belonging to San Miguel Corporation was lost.
5. Petitioner paid San Miguel Corporation the full amount of the cargo pursuant
to the terms of their insurance contract, and as subrogee filed with the
Regional Trial Court (RTC) of Makati City a case for collection against private
respondents to recover the amount it paid.
6. Upon petitioner's request, on March 18, 1987, Mr. Eduardo Sayo, a surveyor
from the Manila Adjusters and Surveyors Co., investigatde the circumstances
surrounding the loss of the cargo. In his report, Mr. Sayo stated that the vessel
was structurally sound and that he did not see any damage or crack thereon.
He concluded that the proximate cause of the listing and subsequent sinking
of the vessel was the shifting of ballast water from starboard to portside. The
said shifting of ballast water allegedly affected the stability of the M/V
Peatheray Patrick-G.
7. Meanwhile, the Board of Marine Inquiry conducted its own investigation and
found that the cause of the sinking of the vessel was the existence of strong
winds and enormous waves in Surigaodel Sur, a fortuitous event that could
not have been for seen at the time the M/V Peatheray Patrick-G left the port of
Mandaue City.

ISSUE: Whether or not respondent MCG Marine Services, Inc. should be held liable.
NO

HELD:
1. No.

General Principles and Doctrine
2. Common carriers, from the nature of their business and for reasons of public
policy, are mandated to observe extraordinary diligence in the vigilance over
the goods and for the safety of the passengers transported by them.
3. Owing to this high degree of diligence required of them, common carriers, as a
general rule, are presumed to have been at fault or negligent if the goods
transported by them are lost, destroyed or if the same deteriorated.
4. However, this presumption of fault or negligence does not arise in the cases
enumerated under Article 1734 of the Civil Code:
5. 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 or omission of
the shipper or owner of the goods;(4) The character of the goods or defects in
the packing or in the containers;(5) Order or act of competent public authority.]
6. In order that a common carrier may be absolved from liability where the loss,
destruction or deterioration of the goods is due to a natural disaster or
calamity.
7. It must further be shown that the such natural disaster or calamity was the
proximate and only cause of the loss; there must be "an entire exclusion of
human agency from the cause of the injury of the loss."
19
8. Moreover, even in cases where a natural disaster is the proximate and only
cause of the loss, a common carrier is still required to exercise due diligence to
prevent or minimize loss before, during and after the occurrence of the natural
disaster, for it to be exempt from liability under the law for the loss of the
goods.
9. If a common carrier fails to exercise due diligence--or that ordinary care which
the circumstances of the particular case demand -- to preserve and protect the
goods carried by it on the occasion of a natural disaster, it will be deemed to
have been negligent, and the loss will not be considered as having been due
to a natural disaster under Article 1734 (1).
10.
Application to the Case
11. In the case at bar, the issues may be narrowed down to whether the loss of the
cargo was due to the occurrence of a natural disaster, and if so, whether such
natural disaster was the sole and proximate cause of the loss or whether
private respondents were partly to blame for failing to exercise due diligence to
prevent the loss of the cargo.
12. The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk,
said vessel encountered strong winds and huge waves ranging from six to ten
feet in height.
13. The Court of Appeals, citing the decision of the Board of Marine Inquiry in the
administrative case against the vessel's crew (BMI--646-87), found that the loss
of the cargo was due solely to the existence of a fortuitous event, particularly
the presence of strong winds and huge waves at Cortes, Surigao del Sur on
March 3, 1987

What is fortuitous event?
Fortuitous event has been defined as one which could not be foreseen, or which
though foreseen, is inevitable. An event is considered fortuitous if the following
elements concur:
(a) the cause of the unforeseen and unexpected occurrence, or the failure of
the debtor to comply with his obligations, must be independent of human
will;
(b) it must be impossible to foresee the event which constitutes the
casofortuito, or if it can be foreseen, it must be impossible to avoid;
(c) the occurrence must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner; and
(d) the obligor must be free from any participation in the aggravation of the
injury resulting to the creditor.

When is a vessel seaworthy?
To be seaworthy, a vessel must:
1. not only be staunch and fit in the hull for the voyage to be undertaken
2. but also must be properly equipped and for that purpose there is a duty
upon the owner to
3. provide a competent master and a crew adequate in number and
4. competent for their duty and equals in disposition and seamanship to the
ordinary in that calling.

PILAPIL vs. COURT OF APPEALS
GR No. 52159, December 22, 1989
(Bus- Stone Throwing)

FACTS:
1. Jose Pilapil, a paying passenger, boarded Alatco Transportation Co.s bus
bearing number 409 at San Nicolas, Iriga City on 16 September 1971 at about
6:00 P.M.
2. While said bus 409 was in due course negotiating the distance between Iriga
City and Naga City, upon reaching the vicinity of the cemetery of the
Municipality of Baao, Camarines Sur, on the way to Naga City, an unidentified
man, a bystander along said national highway, hurled a stone at the left side
of the bus, which hit Pilapil above his left eye.
3. Alatcos personnel lost no time in bringing Pilapil to the provincial hospital in
Naga City where he was confined and treated.
4. Considering that the sight of his left eye was impaired, Pilapil was taken to Dr.
Malabanan of Iriga City where he was treated for another week.
5. Since there was no improvement in his left eyes vision, Pilapil went to V. Luna
Hospital, Quezon City where he was treated by Dr. Capulong.
6. Despite the treatment accorded to him by Dr. Capulong, Pilapil lost partially
his left eyes vision and sustained a permanent scar above the left eye.
7. Thereupon, Pilapil instituted before the CFI of Camarines Sur, Branch I an
action for recovery of damages sustained as a result of the stone-throwing
incident.

ISSUE:Is Alatco Transportation Co liable for the injury inflicted to Pilapil? NO.

20
HELD:
1. A common carrier does not give its consent to become an insurer of any and
all risks to passengers and goods.
2. Under Article 1733 of the Civil Code, common carriers are required to observe
extraordinary diligence for the safety of the passenger transported by them,
according to all the circumstances of each case.
3. Further, in case of death of or injuries to passengers, the law presumes said
common carriers to be at fault or to have acted negligently.
4. 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.
5. 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.
6. Common carrier not an insurer of all risks to passenger and goods
o In consideration of the right granted to it by the public to engage in the
business of transporting passengers and goods, a common carrier does not
give its consent to become an insurer of any and all risks to passengers and
goods. It merely undertakes to perform certain duties to the public as the
law imposes, and holds itself liable for any breach thereof.
o Neither the law nor the nature of the business of a transportation company
makes it an insurer of the passengers 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
7. Presumption of fault or negligence merely a disputable presumption

8. Standard of extraordinary diligence does not determine liability when acts of
strangers directly caused the injury
o While as a general rule, common carriers are bound to exercise extraordinary
diligence in the safe transport of their passengers, it would seem that this is
not the standard by which its liability is to be determined when intervening
acts of strangers directly cause the injury, while the contract of carriage
exists.
9. Article 1763 provides that a common carrier is responsible for injuries
suffered by a passenger on account of the wilful acts or negligence of other
passengers or of strangers, if the common carriers employees through the
exercise of the diligence of a good father of a family could have prevented or
stopped the act or omission.
10. A tort committed by a stranger which causes injury to a passenger does not
accord the latter a cause of action against the carrier. The negligence for which
a common carrier is held responsible is the negligent omission by the carriers
employees to prevent the tort from being committed when the same could
have been foreseen and prevented by them. Further, under the same
provision, it is to be noted that when the violation of the contract is due to the
wilful acts of strangers the degree of care essential to be exercised by the
common carrier for the protection of its passenger is only that of a good father
of a family.
11. The carrier is not charged with the duty of providing or maintaining vehicles as
to absolutely prevent any and all injuries to passengers. Where the carrier uses
cars of the most approved type, in general use by others engaged in the same
occupation, and exercises a high degree of care in maintaining them in suitable
condition, the carrier cannot be charged with negligence in this respect.
12. Herein, Pilapil contends that it is to the greater interest of the State if a carrier
was made liable for such stone-throwing incidents rather than have the bus
riding public lose confidence in the transportation system. Such a policy would
be better left to the consideration of Congress which is empowered to enact
laws to protect the public from the increasing risks and dangers of lawlessness
in society.

Fortune Express, Inc vs. Court of Appeals
GR 119756, 18 March 1999
(Bus got burned because of angry Maranaos)

FACTS:
1. FortuneExpressInc. is a bus company in northern Mindanao.
2. On 18 November 1989, FortuneExpress bus figured in an accident with a
jeepney in Kauswagan, Lanaodel Norte, resulting in the death of several
passengers of the jeepney, including two Maranaos.
3. Upon investigation, a certain Maranaos were planning to take revenge on
FortuneExpress by burning some of its buses.
4. Upon the instruction of Sgt. Bastasa he went to see Diosdado Bravo,
operations manager of petitioner, at its main office in Cagayan de Oro City.
21
Bravo assured him that the necessary precautions to insure the safety of lives
and property would be taken.
5. November 22 1989, 3 armed Maranaos who pretended to be passengers,
seized a bus of FortuneExpress at Linamon, Lanaodel Norte while on its way
to Iligan City.
6. Among the passengers of the bus was Atty. TalibCaorong. The leader of the
Maranaos, identified as one BashierMananggolo, ordered the driver,
GodofredoCabatuan, to stop the bus on the side of the highway. Mananggolo
then shot Cabatuan on the arm, which caused him to slump on the steering
wheel. Then one of the companions of Mananggolo started pouring gasoline
inside the bus, as the other held the passengers at bay with a handgun.
7. Mananggolo then ordered the passengers to get off the bus.
8. Atty. Caorong returned to the bus to retrieve something from the overhead
rack. At that time, one of the armed men was pouring gasoline on the head of
the driver.
9. Atty. Caorong pleading with the armed men to spare the driver as he was
innocent of any wrong doing and was only trying to make a living
10. During this exchange between Atty. Caorong and the assailants, Cabatuan
climbed out of the left window of the bus and crawled to the canal on the
opposite side of the highway. He heard shots from inside the bus. Larry de la
Cruz, one of the passengers, saw that Atty. Caorong was hit. Then the bus was
set on fire.
11. He died while undergoing operation.
12. PaulieCaorong, the widow of Atty. Caorong, and their minor children brought a
suit for breach of contract of carriage

ISSUE: Is Fortune Express Inc. liable for the death of Atty. Caorong? YES.

HELD:
1. It is clear that because of the negligence of Fortune Express employees, the
seizure of the bus by Mananggolo and his men was made possible.
2. Despite warning by the Philippine Constabulary that the Maranaos were
planning to take revenge on Fortune Express by burning some of its buses and
the assurance of petitioners operation manager, Diosdado Bravo, that the
necessary precautions would be taken, Fortune Express did nothing to protect
the safety of its passengers.
3. Had Fortune Express and its employees been vigilant they would not have
failed to see that the malefactors had a large quantity of gasoline with them.
4. Under the circumstances, simple precautionary measures to protect the safety
of passengers, such as frisking passengers and inspecting their baggages,
preferably with non-intrusive gadgets such as metal detectors, before
allowing them on board could have been employed
5. As the Court intimated in Gacal v. Philippine Air Lines, Inc.,a common carrier
can be held liable for failing to prevent a hijacking by frisking passengers and
inspecting their baggages.
6. In Vasquez v. Court of Appeals, it was held that the common carrier was liable
for its failure to take the necessary precautions against an approaching
typhoon, of which it was warned, resulting in the loss of the lives of several
passengers.
7. Herein, despite the report of PC agent Generalao that the Maranaos were
going to attack its buses, Fortune Express took no steps to safeguard the lives
and properties of its passengers. The seizure of the bus of Fortune Express was
foreseeable and, therefore, was not a fortuitous event which would exempt
Fortune Express from liability.
8. Pilapil vs. CA and De Guzman vs. CAdo not apply
o In Pilapil and De Guzman, the respondents therein were not negligent in
failing to take special precautions against threats to the safety of passengers
which could not be foreseen, such as tortious or criminal acts of third
persons.
9. Herein, this factor of unforeseeability (the second requisite for an event to be
considered force majeure) is lacking, i.e. despite the report of PC agent
Generalao that the Maranaos were planning to burn some of petitioners buses
and the assurance of Fortune Express operations manager (Diosdado Bravo)
that the necessary precautions would be taken, nothing was really done by
Fortune Express to protect the safety of passengers.
10. Deceased not guilty of contributory negligence, let alone recklessness
o Herein, Atty. Caorong did not act recklessly. The intended targets of the
violence were Fortune Express and its employees, not its passengers.
o What apparently angered them washis attempt to help the driver of the
bus by pleading for his life. He was playing the role of the good Samaritan.
Certainly, this act cannot be considered an act of negligence, let alone
recklessness.

When is there force majeure?

In Yobido v. Court of Appeals, the Court held that to be considered as force
majeure, it is necessary that:
22
(1) the cause of the breach of the obligation must be independent of the human
will;
(2) the event must be either unforeseeable or unavoidable;
(3) the occurrence must be such as to tender it impossible for the debtor to
fulfill the obligation in a normal manner; and
(4) the obligor must be free of participation in, or aggravation of, the injury to
the creditor.

The absence of any of the requisites mentioned above would prevent the obligor
from being excused from liability.

ROBERTO JUNTILLA, vs. CLEMENTE FONTANAR, FERNANDO BANZON and BERFOL
CAMORO
G.R. No. L-45637 May 31, 1985
(Passenger got thrown out of the Jeep and lost his Omega Watch)
FACTS:

1. Roberto Juntillawas a passenger of the public utility jeepney on the course of
the trip from Danao City to Cebu City.
2. The jeepney was driven by defendant BerfolCamoro. It was registered under
the franchise of defendant Clemente Fontanar but was actually owned by
defendant Fernando Banzon.
3. When the jeepneyreached Mandaue City, the right rear tire exploded causing
the vehicle to turn turtle.
4. Juntillawho was sitting at the front seat was thrown out of the vehicle. Upon
landing on the ground, the plaintiff momentarily lost consciousness.
5. When he came to his senses, he found that he had a lacerated wound on his
right palm. Aside from this, he suffered injuries on his left arm, right thigh and
on his back.
6. Because of his shock and injuries, he went back to Danao City but on the way,
he discovered that his "Omega" wrist watch was lost.
7. Upon his arrival in Danao City, he immediately entered the Danao City Hospital
to attend to his injuries, and also requested his father-in-law to proceed
immediately to the place of the accident and look for the watch.
8. He later filed a civil case for breach of contract with damages against Clemente
Fontanar, Fernando Banzon and BerfolCamoro.
9. The respondents filed their answer, alleging inter alia that the accident that
caused losses to the petitioner was beyond the control of the respondents
taking into account that the tire that exploded was newly bought and was only
slightly used at the time it blew up.

ISSUE:Is the blowing out of tire a fortuitous event? NO.

HELD:
1. The CFI relied on the ruling of the CA in Rodriguez v. Red Line Transportation
Co., where the CA ruled that: A tire blow-out does not constitute negligence
unless the tire was already old and should not have been used at all.
2. Indeed, this would be a clear case of fortuitous event.
3. The foregoing conclusions of the CFI are based on a misapprehension of
overall facts from which a conclusion should be drawn.
4. In La Mallorca and Pampanga Bus Co. v. De Jesus, et al. we held that:
Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to
no liability for negligence, citing the rulings of the Court of Appeals in Rodriguez
v. Red Line Transportation Co. and People v. Palapad. These rulings, however,
not only are not binding on this Court but were based on considerations quite
different from those that obtain in the case at bar. The appellate court there
made no findings of any specific acts of negligence on the partof the
defendants and confined itself to the question of whether or not a tire blow-
out, by itself alone and without a showing as to the causative factors, would
generate liability.
5. In the case at bar, there are specific acts of negligence on the part of the
respondents. The records show that the passenger jeepney turned turtle and
jumped into a ditch immediately after its right rear tire exploded.
6. The evidence shows that the passenger jeepney was running at a very fast
speed before the accident. We agree with the observation of the petitioner
that a public utility jeep running at a regular and safe speed will not jump into a
ditch when its right rear tire blows up.
7. There is also evidence to show that the passenger jeepney was overloaded at
the time of the accident. The petitioner stated that there were 3 passengers in
the front seat and 14 passengers in the rear.
8. While it may be true that the tire that blew-up was still good because the
grooves of the tire were still visible, this fact alone does not make the explosion
of the tire a fortuitous event.
9. No evidence was presented to show that the accident was due to adverse
road conditions or that precautions were taken by the jeepney driver to
compensate for any conditions liable to cause accidents.
23
10. The sudden blowing-up, therefore, could have been caused by too much air
pressure injected into the tire coupled by the fact that the jeepneywas
overloaded and speeding at the time of the accident.
11. In the case at bar, the cause of the unforeseen and unexpected occurrence
was not independent of the human will.
12. The accident was caused either through the negligence of the driver or
because of mechanical defects in the tire.
13. Relative to the contingency of mechanical defects, we held in Necesito, et al.
v. Paras, et al. that: The preponderance of authority is in favor of the
doctrine that a passenger is entitled to recover damages from a carrier for an
injury resulting from a defect in an appliance purchased from a manufacturer,
whenever it appears that the defect would have been discovered by the
carrier if it had exercised the degree of care which under the circumstances
was incumbent upon it, with regard to inspection and application of the
necessary tests. For the purposes of this doctrine, the manufacturer is
considered as being in law the agent or servant of the carrier, as far as
regards the work of constructing the appliance. According to this theory, the
good repute of the manufacturer will not relieve the carrier from liability'

HONORIO LASAM, ET AL., vs. FRANK SMITH, JR.,
February 2, 1924, G.R. No. L-19495
(Chauffer giving the steering wheel to assistant resulted to accident)

FACTS:
1. On 27 February 1918, FrankSmith Jr. was of San Fernando, La Union, and
engaged in the business of carrying passengers for hire from one point to
another in the Province of La Union and the surrounding provinces.
2. He undertook to convey HonrionLasam and Joaquina Sanchez-Lasam from San
Fernando to Currimao, Ilocos Norte, in a Ford automobile.
3. On leaving San Fernando, the automobile was operated by a licensed
chauffeur, but after having reached the town of San Juan, the chauffeur
allowed his assistant, RemigioBueno, to drive the car.
4. Bueno held to drivers license, but had some experience in driving, and with the
exception of some slight engine trouble while passing through the town of
Luna, the car functioned well until after the crossing of the Abra River in
Tagudin, when defects developed in the steering gear so as to make accurate
steering impossible, and after zigzagging for a distance of about half a
kilometer, the car left the road and went down a steep embankment.
5. In going over the bank of the road, the automobile was overturned and the
spouses pinned down under it.
6. Mr. Lasam escaped with a few contusions and a dislocated rib, but his wife,
Joaquina Sanchez, received serious injuries, among which was a compound
fracture of one of the bones in her left wrist. She also appears to have suffered
a nervous breakdown from which she had not fully recovered at the time of the
trial.
7. The Spouses brought the action, one and a half year after the occurrence, to
recover damages in the sum of P20,000 for physical injuries sustained by
them in an automobile accident.

ISSUE: Is Smith liable for the injury sustained by the petitioners? YES.

HELD:
1. The cause of action rests on Smiths breach of the contract of carriage and that,
consequently, articles 1101-1107 of the Civil Code, and not article 1903, are
applicable. Herein, the source ofSmiths legal liability is the contract of
carriage; the by entering into that contract he bound himself to carry the
spouses safely and securely to their destination; and that having failed to do
so he is liable in damages unless he shows that the failure to fulfill his
obligation was due to causes mentioned in article 1105 of the Civil Code
2. Upon the facts stated, the defendants liability, if any, is contractual, is well
settled by previous decisions of the court, beginning with the case of Rakes vs.
Atlantic, Gulf & Pacific Co. (7 Phil., 359), and the distinction between extra-
contractual liability and contractual liability has been so ably and exhaustively
discussed in various other cases, that nothing further need be said upon that
subject.
3. Casofortuito, events which cannot be foreseen and which having been
foreseen, are inevitable; Spanish construction
4. CasoFortuito: An event that takes place by accident and could not have been
foreseen, Examples of this are destruction of houses, unexpected fire,
shipwreck, violence of robbers. . . .)
5. Casofortuito defined; Escriche
Escriche defines casofortuito as an unexpected event such as floods,
torrents, shipwrecks, conflagrations, lightning, compulsion, insurrections,
destruction of buildings by unforeseen accidents and other occurrences of a
similar nature.
6. Casofortuito defined; EnciclopediaJuridica Espanola
24
In discussing and analyzing the term casofortuito the EnciclopediaJuridica
Espaola says: In a legal sense and, consequently, also in relation to contracts,
a casofortuito presents the following essential characteristics:
(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 will.
(2) It must be impossible to foresee the event which constitutes the
casofortuito, or if it can be foreseen, it must be impossible to avoid.
(3) The occurrence must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner. And
(4) the obligor (debtor) must be free from any participation in the aggravation
of the injury resulting to the creditor.

7. Extraordinary circumstance independent of obligors will an essential element
of casofortuito
8. It is at once apparent that this elements is lacking. It is not suggested that the
accident in question was due to an act of God or to adverse road conditions
which could not have been foreseen. As far as the record shows, the accident
was caused either by defects in the automobile or else through the
negligence of its driver. That is not a casofortuito.
FRANKLIN G. GACAL and CORAZON M. GACAL, vs. PHILIPPINE AIR LINES, INC.,
G.R. No. L-55300 March 15, 1990
(Airplane Hijacking by MNLF)

FACTS:
1. Franklin G. Gacal and his wife, Corazon M. Gacal along with three others were
then passengers boarding defendants BAC 1-11 at Davao Airport for a flight to
Manila, not knowing that on the same flight were members of the MNLF
armed with grenades and pistols.
2. Ten minutes after takeoff, the MNLF announced the hijacking of the aircraft
and directed its pilot to fly to Libya. With the pilot explaining to them of the
fuel limitations of the plane, the hijackers directed the pilot to fly to Sabah. So
they landed in Zamboanga Airport to refuel.
3. At the Zamboanga Airport, there ensued hostilities between the military and
the hijackers. As a result of such faceoff, the wives of Gacal and Anislag
suffered injuries.
4. Now, Spouses Gacal is claiming for damages averring that PAL exercised
negligence, finding basis on its breach of contract of carriage.
5. There was a failure to frisk the passengers adequately in order to discover
hidden weapons in the bodies of the hijackers. Despite the prevalence of
skyjacking, PAL did not use a metal detector which is the most effective means
of discovering potential skyjackers among the passengers.
6. PAL invokes the defense of force majeure or casofortuito.

ISSUE: Can PAL invoke the defense of force majeure? YES.

HELD:
1. The existence of force majeure has been established exempting respondent
PAL from the payment of damages to its passengers who suffered death or
injuries in their persons and for loss of their baggages.
2. The source of a common carriers legal liability is the contract of carriage, and
by entering into said contract, it binds itself to carry the passengers safely as
far as human care and foresight can provide.
3. There is breach of this obligation if it fails to exert extraordinary diligence
according to all the circumstances of the case in exercise of the utmost
diligence of a very cautious person.
4. The failure to transport petitioners safely from Davao to Manila was due to the
skyjacking incident, all members of the MNLF, without any connection with
private respondent, hence, independent of the will of either the PAL or of its
passengers.
5. Under normal circumstances, PAL might have foreseen the skyjacking incident
which could have been avoided had there been a more thorough frisking of
passengers and inspection of baggages as authorized by R.A. No. 6235.
6. But the incident in question occurred during Martial Law where there was a
military take-over of airport security including the frisking of passengers and
the inspection of their luggage preparatory to boarding domestic and
international flights.
7. The security checks and measures and surveillance precautions in all flights,
including the inspection of baggages and cargo and frisking of passengers at the
Davao Airport were performed and rendered solely by military personnel who
under appropriate authority had assumed exclusive jurisdiction over the
same in all airports in the Philippines.
8. Otherwise stated, these events rendered it impossible for PAL to perform its
obligations in a nominal manner and obviously it cannot be faulted with
negligence in the performance of duty taken over by the Armed Forces of the
Philippines to the exclusion of the former

25
C. PUBLIC ENEMY
What is public enemy? (Based on Professor Francisco)
o presupposes the existence of an actual state of war
o refers to the government of a foreign nation at war with the country to
which the carrier belongs, though not necessarily with that to which the
owner of the goods owes allegiance
o Thieves, rioters, robbers and insurrectionists though at war with social
order, are not in a legal sense as public enemies but merely private
depredators for whose acts a carrier is answerable, whether they occur on
land or water and though the force by which the carrier is opposed is
overwhelming, as If an irresistible multitude of people should be rob him.
o Pirates on the high seas, is an exception to this rule.
o Pirates are considered the enemies of all civilized nations common carrier
will excuse him from liability
o The generally accepted definition of a public enemy does not embrace
rebels in insurrectionagainst their own government when the parties in
rebellion occupy and hold in a hostile manner a certain territory, when they
have declared their independence cast off their allegiance and have in the
field a regularly organized force armed hostility to the government, and the
authority of the latter is for the time overthrown, such as uprising may take
on the dignity of a civil war, and when so magnified and matured, the parties
are belligerents and respectively entitled to belligerent rights.
o War, therefore, may either international or civil, foreign or domestic and
when ever an armed contest assumes such proportions, the combatants
therein come within the legal comprehension of the term public enemy

- Article 1739: in order the common carrier may be exempted, the natural
disaster must have been the proximate and only cause of the loss
- Sam provision, 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 be exempted
- Same duty is incumbent where the act involved is that of public enemy
referred in Article 1734(2)

D. IMPROPER PACKING
- Article 1734 (4) specifies the character of the goods or defects in the packing
or in the containers as a defense
- Carriage of Goods by Sea Act provides that the carrier shall not be liable for:
(1) Wastage in bulk or weight or any loss or damage arising from inherent
defect, quality or vice of goods
(2) Insufficiency in packing
(3) Insufficiency or inadequacy of the marks
(4) Latent defects not discoverable by due diligence

- Article 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.

- If the carrier accepts the goods knowing the fact of improper packing of the
goods upon ordinary observation not relieved of liability for loss or injury

Southern Lines Inc. vs. CA
- More than a thousand sacks of rice were shipped through the vessel of
Southern Lines
- There was shortage when the sacks were delivered to consignee
- It was alleged that the shortage was due to shrinkage, leakage or spillage of
the rice on account of bad condition of the sacks
- Petitioner was made liable because it was aware of the condition of the sacks
when it received the goods.

VirginesCalvo vs. UCPB General Insurance Co. Inc.
- Article 1734 (4) which excuses the carrier in the loss due to the character of
the goods and defects in the packaging, cannot apply where the carrier
accepted the goods despite such defects
- For this provision to apply, the rule is that if the improper packing or, in this
case, the defect/s in the container, is/are known to the carrier or his
employees or apparent upon ordinary observation, but he nevertheless
accepts the same without protest or exception notwithstanding such
condition, he is not relieved of liability for damage resulting therefrom.
- In this case, petitioner accepted the cargo without exception despite the
apparent defects in some of the container vans. Hence, for failure of
petitioner to prove that she exercised extraordinary diligence in the carriage
of goods in this case or that she is exempt from liability, the presumption of
negligence as provided under Art. 1735 holds.
26

Belgian Overseas Chartering & Shipping NV vs. Philippine First Insurance Co.
- Petitioner tried to escape liability by contending that they are exempted
form the liability under Article 1734(4) of the CC.
- They cite the notation metal envelopes rust stained and slightly dented
printed on the Bill of Lading as evidence that the character of the good or
defects in the packaging or containers was the proximate cause of the
damage.
- The Supreme Court rejected the argument:
From the evidence on record, it cannot be reasonably concluded that
the damage to the four coils was due to the condition noted on the Bill
of Lading.
The aforecited exception refers to cases when goods are lost or
damaged while in transit as a result of the natural decay of perishable
goods or the fermentation or evaporation of substances liable therefor,
the necessary and natural wear of goods in transport, defects in
packages in which they are shipped, or the natural propensities of
animals.
None of these is present in the instant case.
Further, even if the fact of improper packing was known to the carrier
or its crew or was apparent upon ordinary observation, it is not relieved
of liability for loss or injury resulting therefrom, once it accepts the
goods notwithstanding such condition
Thus, petitioners have not successfully proven the application of any of
the aforecitedexceptions in the present case.

e. Order of Public Authority

Article 1743. If through the order of public authority the goods are seized or
destroyed, the common carrier is not responsible, provided said public authority
had power to issue the order.

Ganzon v. Court of Appeals: Supreme Court requires that the public authority who
issued the order must be duly authorized to issue the order as provided for in the
proviso in Article 1743.

Carriage of Goods by Sea Act: neither the carrier not the ship shall be responsible
for the loss or damage resulting from arrest or restraint of princes, rulers, or
people, or seizure under legal process and from quarantine restrictions.

CASES
Mauro Ganzon vs Court of Appeals and Gelacio E. Tumambing
GR No. L-48757, 30 May 1988

Facts:
1. On November 28, 1965, private respondent Tumambing contracted the
services of petitioner Ganzon to haul 305 tons of scrap iron from
Mariveles, Bataan on board the latters lighter. Pursuant to their
agreement, private respondent delivered the scrap iron to the captain for
loading.
2. When half of the scrap iron was loaded, Mayor Advincula demanded
P5,000.00 from private respondents, which the latter refused to give,
prompting the Mayor to draw his gun and shoot at him. The gunshot was
not fatal but he had to be taken to a hospital.
3. Thereafter, the loading of the scrap iron was resumed.
4. The Acting Mayor Basilio Rub, accompanied by three policemen, ordered
the captain and his crew to dump the scrap iron. The rest were brought to
Nassco Compound. A receipt was issued stating that the Municipality of
Mariveles had taken custody of the scrap iron.

Issues:
1. Was the scrap iron unconditionally placed in the custody and control of the
petitioner, thereby making him liable?
2. Is the petitioner exempt from liability because the intervention of the
municipal officials of Mariveles, constituting caso fortuito?

Held:
1. Yes, petitioner is guilty of breach of the contract of transportation.
the scraps were delivered by respondent to the captain of
petitioners lighter
By the said act of delivery, the scraps were unconditionally placed
in the possession and control of the common carrier, and upon
their receipt by the carrier for transportation, the contract of
carriage was deemed perfected.
27
Consequently, the petitioner- carriers extraordinary responsibility
for the loss, destruction or deterioration of the goods
commenced.
Pursuant to Article 1736, such extraordinary responsibility would
cease only upon the delivery, actual or constructive, by the carrier
to the consignee, or to the person who has a right to receive
them.
The fact that part of the shipment had not been loaded on board
the lighter did not impair the said contract of transportation as
the goods remained in the custody and control of the carrier,
albeit still unloaded.
Petitioner failed to show that the loss of the scraps was due to
any of the causes enumerated in Article 1734 of the Civil Code.

2. No, the present case is not one of caso fortuito.
petitioners defense: loss of scraps was due to an order or act of
competent public authority
the petitioner failed to establish the power of the Acting Mayor to
issue such an order (e.g. to dump the scrap iron), or that it was
lawful, or that it was issued under legal process of authority.
petitioner was not duty bound to obey the illegal order to dump
into the sea the scrap iron
o no force or intimidation was shown to have attended the
order
mere difficulty in the fulfilment of the obligation is not considered
force majeure

Decision: petition is DENIED.

Melencio-Herrera, J. Dissenting:
- petitioner cannot be held liable in damages for the loss and destruction of
the scrap iron
- loss of said cargo was due to an excepted cause: an order or act of
competent public authority.
- petitioner had no control over the situation
- how could have the captain of the lighter and his crew defy the order of
the Acting Mayor>
- the scrap iron dumped into the sea was destroyed while the rest were
seized, as evidenced by the receipt issued by the Acting Mayor.
- seizure and destruction of the goods was done under legal process or
authority
o petitioner should be freed from responsibility

F. Defenses in Carriage of Passengers
primary defense of the carrier in transporting passengers: exercise of
extraordinary diligence
o even if there is a fortuitous event, the carrier must also present
proof of exercise of extraordinary diligence

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 wilful 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.

a. Employees
Carrier: liable for the acts of its employees
o cannot escape liability by claiming that he exercised due
diligence in the selection and supervision of the
employee

Reasons for this Rule:
1. the special undertaking of the carrier requires that it furnish its
passenger that full measure of protection afforded by the exercise
of the high degree of care prescribed by the law, inter alia from
violence and insults at the hands of strangers and other
passengers, but above all, from the acts of the carriers own
servants charged with the passengers safety.
2. said liability of the carrier for the servants violation of duty to
passengers is the result of the formers confiding in the servants
28
hands the performance of his contract to safely transport the
passenger, delegating therewith the duty of protecting the
passenger with the utmost care prescribed by law
3. as between the carrier and the passenger, the former must
bear the risk of wrongful acts or negligence of the carriers
employees against passengers, since it, and not the passengers,
has the power to selct and remove them.

Theft: considered a wilful act of the employees

Code of Commerce: expressly provides that the captain shall be
civilly liable to the naviero and the latter to third persons for all
the thefts committed by the crew, reserving the right of action
against the guilty party.

Yu Con vs. Ipil: Shipowner should not be held criminally liable for
such crimes or quasi-crimes
o shipowner cannot be excused from liability for the
damage and harm which, in consequence of those acts,
may be suffered by the third parties who contracted with
the captain, in his double capacity of agent and
subordinate of the shipowner himself.

b. Other Passengers and Third Persons
- with respect to acts of strangers and other passengers resulting
in injury to a passenger, the availability of such defense is also
subject to the exercise of a carrier of due diligence to prevent or
stop the act or omission.
- negligence of the carrier need not be the sole cause of the
damage or injury to the passenger or the goods
- carrier would still be liable even if the contractual breach
concurs with the negligent act or omission of another persons

J.B.L. Reyes: concurrent negligence of a third person will not
exempt the appellant from responsibility.

Antonia Maranan v. Pascual Perez et. al.
GR No. L-22272, June 26, 1967

Facts:
1. Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab
owned and operated by Pascual Perez when he was stabbed and killed by
the driver, Simeon Valenzuela.
2. Valenzuela was prosecuted for homicide in the Court of First Instance of
Batangas and was found guilty.
3. While appeal was pending in the Court of Appeals, Antonia Maranan,
Rogelio's mother, filed an action to recover damages.
4. The court decided in plaintiffs favor. Hence the instant petition.

Issue:
1. Whether or not defendant-operators could be held liable for damages?

Held:
1. Yes, the defendant-operators may be held liable.
Defendant-appellant relies solely on the ruling enunciated in
Gillaco v. Manila Railroad Co., that the carrier is under no absolute
liability for assaults of its employees upon the passengers.
o The attendant facts and controlling law of that case and
the one at bar are very different however.
o In the Gillaco case, the passenger was killed outside the
scope and the course of duty of the guilty employee.
o Now here, the killing was perpetrated by the driver of
the very cab transporting the passenger, in whose hands
the carrier had entrusted the duty of executing the
contract of carriage.
o In other words, unlike the Gillaco case, the killing of the
passenger here took place in the course of duty of the
guilty employee and when the employee was acting
within the scope of his duties.
o Moreover, the Gillaco case was decided under the
provisions of the Civil Code of 1889 which, unlike the
present Civil Code, did not impose upon common carriers
29
absolute liability for the safety of passengers against
wilful assaults or negligent acts committed by their
employees. The death of the passenger in the Gillaco
case was truly a fortuitous event which exempted the
carrier from liability.
The Civil Code provisions on the subject of Common Carriers are new
and were taken from Anglo-American Law.
o There, the basis of the carrier's liability for assaults on
passengers committed by its drivers rests either on:
(1) the doctrine of respondeat superior minority
view
carrier is liable only when the act of the
employee is within the scope of his
authority and duty
not sufficient that the act be within the
course of employment only
(2) the principle that it is the carrier's implied duty to
transport the passenger safely. majority view
enough that the assault happens within the
course of the employee's duty.
no defense for the carrier that the act was
done in excess of authority or in
disobedience of the carrier's orders.
The carrier's liability here is
absolute in the sense that it practically
secures the passengers from assaults
committed by its own employees.
Accordingly, it is the carrier's strict obligation to select its drivers and
similar employees with due regard not only to their technical
competence and physical ability, but also, no less important, to their
total personality, including their patterns of behavior, moral fibers,
and social attitude.
Applying this stringent norm to the facts in this case, therefore, the
lower court rightly adjudged the defendant carrier liable pursuant to
Art. 1759 of the Civil Code.
The dismissal of the claim against the defendant driver was also
correct.
o Plaintiff's action was predicated on breach of contract of
carriage and the cab driver was not a party thereto.
o His civil liability is covered in the criminal case wherein he
was convicted by final judgment.

Decision: Decision is Affirmed, except with respect to increase of damages.

Cornelia A. De Gillaco, et. al. vs. Manila Railroad Company
GR No. L-8034, 1955 November 18

Facts:
1. Lieut. Tomas Gillaco, husband of the plaintiff, was a passenger in the early
morning train of the Manila Railroad Company from Calamba, Laguna to
Manila.
2. When the train reached the Paco Railroad station, Emilio Devesa, a train
guard of the Manila Railroad Company happened to be in said station
waiting for the same train which would take him to Tutuban Station, where
he was going to report for duty.
3. Emilio Devesa had a long standing personal grudge against Tomas Gillaco.
Because of this, Devesa shot Gillaco with the carbine furnished to him by
the Manila Railroad Company for his use as such train guard, upon seeing
him inside the train coach.
4. Tomas died. Devesa was convicted of homicide.
5. A complaint for damages was filed by the victims widow.
6. Damages were awarded to the plaintiff, hence the instant petition.
7. Appellant's contention is that no liability attaches to it as employer of the
Emilio Devesa because the crime was not committed while the slayer was
in the actual performance of his ordinary duties and service and that no
negligence on appellant's part was shown.

Issue:
1. Whether or not appellant could be held liable for the acts of its employee?

Held:
1. No, appellant cannot be held liable for the acts of his employee.
While a passenger is entitled to protection from personal violence
by the carrier or its agents or employees, since the contract of
transportation obligates the carrier to transport a passenger
safely to his destination, the responsibility of the carrier extends
only to those acts that the carrier could foresee or avoid through
the exercise of the degree of care and diligence required of it.
30
In the present case, the act of the train guard of the Manila
Railroad Company in shooting the passenger (because of a
personal grudge nurtured against the latter since the Japanese
occupation) was entirely unforseeable by the Manila Railroad Co.
The latter had no means to ascertain or anticipate that the two
would meet, nor could it reasonably forsee every personal rancor
that might exist between each one of its many employees and any
one of the thousands of eventual passengers riding in its trains.
The shooting in question was therefore "caso fortuito" within the
definition of Art. 1105 of the old Civil Code (which is the law
applicable), being both unforeseeable and inevitable under the
given circumstances; and pursuant to established doctrine, the
resulting breach of the company's contract of safe carriage with
the deceased was excused thereby.

Decision: Dismissed

Bachelor Express, Incorporated and Crescencio Rivera v. The Honorable Court of
Appeals (Sixth Division), et. al.
GR No. 85691, July 31, 1990

Facts:
1. The bus owned by Petitioners came from Davao City on its way to Cagayan
de Oro City passing Butuan City.
2. While at Tabon-Tabon, Butuan City, the bus picked up a passenger, that
about fifteen minutes later, a passenger at the rear portion suddenly
stabbed a PC soldier which caused commotion and panic among the
passengers.
3. When the bus stopped, passengers Ornominio Beter and Narcisa Rautraut
were found lying down the road, the former already dead as a result of
head injuries and the latter also suffering from severe injuries which
caused her death later.
4. The passenger assailant alighted from the bus and ran toward the bushes
but was killed by the police.
5. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut, private
respondents herein filed a complaint for "sum of money" against Bachelor
Express, Inc., its alleged owner and the driver Rivera.
6. The lower court dismissed the complaint.
7. CA reversed the decision, hence the instant petition.

Issue:
1. Whether or not petitioner is negligent?

Held:
1. Yes, the petitioner is negligent.
The liability, if any, of the petitioners is anchored on culpa
contractual or breach of contract of carriage.
o Art. 1732, 1733, 1755 and 1756 are applicable.
There is no question that Bachelor is a common carrier.
Hence, Bachelor is bound to carry its 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.
In the case at bar, Ornominio Beter and Narcisa Rautraut were
passengers of a bus belonging to Bachelor and, while passengers
of the bus, suffered injuries which caused their death.
Consequently, pursuant to Article 1756 of the Civil Code, Bachelor
is presumed to have acted negligently unless it can prove that it
had observed extraordinary diligence in accordance with Articles
1733 and 1755 of the New Civil Code.
Bachelor denies liability for the death of Beter and Rautraut in
that their death was caused by a third person who was beyond its
control and supervision.
In effect, the petitioner, in order to overcome the presumption of
fault or negligence under the law, states that the vehicular
incident resulting in the death of passengers Beter and Rautraut
was caused by force majeure or caso fortuito over which the
common carrier did not have any control.
o The running amuck of the passenger was the proximate
cause of the incident as it triggered off a commotion and
panic among the passengers such that the passengers
started running to the sole exit shoving each other
resulting in the falling off the bus by passengers Beter
and Rautraut causing them fatal injuries.
o The sudden act of the passenger who stabbed another
passenger in the bus is within the context of force
majeure.
31
o However, in order that a common carrier may be
absolved from liability in case of force majeure, it is not
enough that the accident was caused by force majeure.
o The common carrier must still prove that it was not
negligent in causing the injuries resulting from such
accident.
In this case, Bachelor was negligent.
factual findings of the Court of Appeals:
o the bus driver did not immediately stop the bus at the height
of the commotion
o the bus was speeding from a full stop
o the victims fell from the bus door when it was opened or gave
way while the bus was still running
o the conductor panicked and blew his whistle after people had
already fallen off the bus; and the bus was not properly
equipped with doors in accordance with law
it is clear that the petitioners have failed to
overcome the presumption of fault and negligence
found in the law governing common carriers.
The petitioners' argument that the petitioners "are
not insurers of their passengers" deserves no merit
in view of the failure of the petitioners to prove that
the deaths of the two passengers were exclusively
due to force majeure and not to the failure of the
petitioners to observe extraordinary diligence in
transporting safely the passengers to their
destinations as warranted by law.

Decision: Affirm CA

G. Passengers Baggages

Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's
baggage which is not in his personal custody or in 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.

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 or delivered to the carrier: governed by the rules discussed above
requiring extraordinary diligence
- rules that are applicable to goods that are being shipped are applicable to
baggage delivered to the custody of the carrier
hand carried luggage: rules under Articles 1998, 2000 to 2003 of the Civil Code
apply.

Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also
be regarded as necessary. The keepers of hotels or inns shall be responsible for
them as depositaries, provided that notice was given to them, or to their
employees, of the effects brought by the guests and that, on the part of the latter,
they take the precautions which said hotel-keepers or their substitutes advised
relative to the care and vigilance of their effects. (1783)

Art. 2000. The responsibility referred to in the two preceding articles shall include
the loss of, or injury to the personal property of the guests caused by the servants
or employees of the keepers of hotels or inns as well as strangers; but not that
which may proceed from any force majeure. The fact that travellers are
constrained to rely on the vigilance of the keeper of the hotels or inns shall be
considered in determining the degree of care required of him. (1784a)

Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed
force majeure, unless it is done with the use of arms or through an irresistible
force. (n)

Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the
acts of the guest, his family, servants or visitors, or if the loss arises from the
character of the things brought into the hotel. (n)

Art. 2003. The hotel-keeper cannot free himself from responsibility by posting
notices to the effect that he is not liable for the articles brought by the guest. Any
stipulation between the hotel-keeper and the guest whereby the responsibility of
the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be
void. (n)

32
II. Obligations of Shipper, Consignee and Passenger

A. Negligence of Shipper or Passenger
obligation of due diligence is not limited to the carrier
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
o it will only mitigate such liability

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.

carriage of passengers: said passengers are likewise bound to observe
due diligence to avoid injury

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 common carrier, but the amount of damages shall be equitably reduced.

if the negligence of the shipper or the passenger is the proximate and
only cause of the loss, the carrier should not be made liable
o carrier should overcome the presumption of negligence and
prove that it exercised due diligence in handling the goods or
in transporting the passenger
o cause of the loss of the goods may the following acts of the
shipper:
1. failure of the shipper to disclose the nature of the
goods
2. improper marking or direction as to destination
3. improper loading when he assumes such
responsibility
shipper must see to it that the goods are
properly packed, otherwise, the liability of
the carrier may either be mitigated or
barred depending on the circumstances
doctrine of avoidable consequences: even if the carrier is responsible
for the loss or injury, the passenger is also required to lessen the
damage or injury.

a. Last Clear Change
o 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
it in the reasonable exercise of due care, had in fact an
opportunity later than that of the plaintiff to avoid an accident

Philippine Rabbit Bust Lines, Inc. vs. Intermediate Appellate Court:
principle of last clear chance applies in a suit between
the owners and drivers of 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.

b. Assumption of Risk
Japan Airlines vs Court of Appeals: passengers must tale such risks incident
to the mode of travel.
carriers are not insurers of the lives of their passengers

Calalas vs Court of Appeals: no assumption of risk in case the passenger
voluntarily boarded a carrier that was filled with capacity

o no assumption of risk by the mere fact that the carrier posted
notices against such liability.

33
Cesar L. Isaac vs A.L. Ammen Transportation Co., Inc.
GR No. L-9671, August 23, 1957

Facts:
1. Plaintiff boarded defendants bus as paying passenger from Albay.
2. The bus collided with a pick-up truck which was coming from opposite
direction trying to swerve from a pile of gravel. As a result, his left arm
was completely severed.
3. Plaintiff chose to hold defendant liable on its contractual obligation.
4. Plaintiff brought an action for damages which the lower court dismissed
holding the driver of the pick-up car negligent and not that of the bus.

Issue:
1. Whether or not the common carrier was negligent?

Held:
1. The common carrier was negligent.
The bus was running at a moderate speed.
The driver of the bus upon the speeding pick-up truck swerved
the bus to the very extreme right of the road.
Said driver would not move the bus further without endangering
the safety of his passengers.
Notwithstanding all these efforts, the rear left side was hit. This
finding of the lower court was sustained.
Also, of the carriers employee is confronted with a sudden
emergency, he is not held to the same degree of care he would
otherwise, he required in the absence of such emergency.
By placing his left arm on the window, petitioner is guilty of
contributory negligence
o however, this fact cannot relieve the carrier of its liability
but can only reduce it(ART. 1762),

Note: Principle governing the liability of a common carrier:
1) The liability of a carrier is contractual and arises upon
breach of its obligation. There is breach if it fails to exert
extraordinary diligence according to all the
circumstances of each case.
2) A carrier is obliged to carry its passenger with the utmost
diligence of a very cautious person, having due regard for
all the circumstances.
3) A carrier is presumed to be at fault or to have acted
negligently in case of death of, or injury to, passengers, it
being its duty to prove that it exercised extraordinary
diligence.
4) The carrier is not an insurer against all risks of travel.

Compania Maritima v. Court of Appeals and Vicente Concepcion
GR No. L-31379, August 29, 1988

Facts:
Private Respondent: Vicente Concepcion, a civil engineer doing business
under the name and style of Consolidated Construction. He had a contract
with the Civil Aeronautics Administration (CAA) for the construction of the
airport in Cagayan De Oro City, Misamis Oriental.
Petitioner: Compania Maritima. The private respondent availed the
services of the company in order to ship the construction equipments from
Manila.
The equipments include (1) unit payloader, (4) units 6X6 Reo trucks and (2)
pieces of water tanks.
The equipments were then loaded aboard the MV Cebu. While the Reo
trucks and water tanks were safely loaded, the payloader was damaged
when it fell during unloading.
Vicente Concepcion demanded for the replacement of the payloader. He
argues that their company had to replace the payloader and that they
suffered for a period of 97 days since they were not able to employ a
payloader in the construction job. Unable to elicit response, the demand
was repeated in a letter.
Petitioner denies the claim for damages of Consolidated Construction. The
petitioner contends that the private respondent did not declare the actual
weight of the payloader. The payloader actually weighed 7.5 tons and not
2.5 tons. Had the actual weight been declared, the damage could have
been prevented.
TC: The complaint was dismissed stating that the proximate cause of the
fall of the payloader was the private respondents act or omission in having
misrepresented the weight of the payloader. It intended to defraud
Compania Maritima of the freight charges.
34
CA: Decision was reversed. Compania Maritima was compelled to pay the
damages.
Issue: WON the act of the private respondet of furnishing Compania Maritima with
an inaccuarate weight the proximate cause of the damage on the payloader?
Held: No, it cannot be an excuse to avoid the liability of the petitioner for the
damage caused.
Ratio:
General Rule (Art. 1735 and 1752 of the CC): Common carriers are presumed to
have been at fault or to have acted negligently in the case the goods transported by
them are lost, destroyed, or had deteriorated.
Compania Maritima failed to prove that the loss, deterioration or
destruction of the good was due to accident or some other
circumstances inconsistent with their liability.
Extraordinary diligence is requires the Compania Maritima to know an d to follow
the required precaution for avoiding damage to or destruction of the goods.
In the case at hand, the weight of the payloader was entered in the Bill
of Lading without seeing the equipment to be shipped.
Extraordinary diligence also compels the petitioner to use their
jumbo which has the capacity to lift 20 to 25 tons of cargoes. The
company did not bother to use it.
Contributory circumstance mitigates the liability
Furnishing the petitioner with an inaccurate weight cannot be an
excuse for the petitioner to avoid extraordinary diligence. It only
serves as a mitigation circumstance.

Jose Cangco v. Manila Railroad Co.
GR No. 12191, October 14, 1918
Facts:
Jose Cangco was an employee of the Manila Railroad Company as a
clerk. Using a pass, he is entitled to ride upon the companys train free
of charge.
Returning home from work, the petitioner was riding the train. He
arose from his seat when he reached the station in San Mateo. He
made his exit through the door, took his position upon the steps of the
coach, seizing the upright guardrail with his right hand for support.
The train slowed down. As it went a little further, the petitioner
stepped off the train. He came into contact with a sack of
watermelons. His feet slipped from under him and fell violently on the
platform and he was drawn under a moving car. The petitioners right
arm was badly injured. (The accident happend between 7 and 8 PM.
The railroad was lighted dimly by a single light)
The petitioner instituted a petition to recover damages due to the
negligence of the servants and employees of the defendant in placing
the sacks of melons upon the platform.

Issue: WON the private respondent is held liable in the case at hand.

Held: Yes, the railroad company is liable for breach of positive duty (culpa
contractual)

Ratio:
The contract of defendant to transport plaintiff carried with it the duty to carry him
in safety and to provide safety means of entering and leaving its trains. That duty
being contractual was direct and immediate and its non-performance could not be
excused by proof that the fault was morally imputable to defendants servants.

Contributory Circumstance: The place was familiar to the plaintiff as it was his daily
custom to get on and off the train at the station. The court held that the conduct of
the plaintiff was not characterized by imprudence and that there is no contributory
negligence on his part.

Ignacio Del Prado v Manila Electric Co
GR No. 29462 March 07, 1929
Facts:
Appellant, Manila Electric Co. Is engaged in operating street cars in the City
of Manila for the conveyance of the passengers. Teodorico Florenciano
was in charge of driving car no. 74.
Running from east to west of R. Hidalgo St., the car then stopped at its
appointed place for taking on and letting off passengers. It resumed on its
moderate speed.
Ignacio del Prado tried to run after the car. His movement was timed that
he arrived at the front entrance of the car at the moment the car was
passing.
The motorman eased up without stopping after Del Prado showed his
desire to board the car.
Before Del Prado could even secure his position, the motorman applied the
power making the car lurch forward. Del Prados foot slipped making him
35
fell to the ground, and his right foot was caught and crushed by the moving
car.

Issue: WON the respondent is liable.

Held: Yes.

Ratio:
The relation between the carrier of passengers for hire and its patrons is of
a contractual nature and a failure on the part of the carrier ti use due care
in carrying its passengers isa breach of duty (culpa contractual).
o This duty extends to persons boarding or alighting from the car.
The negligence of the company is the proximate cause of the injury
o The negligent act of the companys servant succeeded the
negligent act of the plaintiff
o A person boarding a moving car must be taken to assume the risk
of injury from boarding the car under the conditions open to his
view but he cannot fairly be held to assume the risk that the
motorman, having the situation in view , will increase his peril by
accelerating speed of the car before he is planted safely on the
platform.

B. FREIGHT.
a. Amount to be paid
Common carriers are subject to regulation with respect to the
rates they are charging the public. It is within the police power of
the State. (Regulation is for the promotion of common good)
Juris Privati- this is when the private property is used for a public
purpose and is affected with public interest.
As long as the property is being used, the same is subject to public
regulation.
Power to regulate
o The power to regulate does not give the State the right
to prescribe rates so low as to deprive the public utility of
reasonable return on investment.
o The rates must yield a fair return on the public utility
upon the value of the property performing the service
and one that is reasonable to the public for service
rendered.
o Land Transportation and Franchising Regulatory Board,
Maritime Industry Authority and the Civil Aeronautics
Board fix the maximum amount to be paid.
b. Who will pay
The consignor is primary liable for the payment of the freight
charges whether or not he is the owner of the goods.
The obligation to pay is implied from the mere fact that the
consignor placed the goods with thr carrier for the purpose of
transportation.
On the other hand, passengers are contractually bound to pay the
fare within such time as prescribed by regulations or by the
carrier.
c. Time to pay
The NCC does not provide for the period within which payment of
the freight charges should be made to the carrier for the carriage
of goods.
However, in the absence of any agreement, the consignee who is
supposed to pay must do within 24 hours from the time of
delivery. Article 374 of the Code of Commerce provides:
Article 374. 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 the 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.
(1) Carriage of Passenger by Sea
Tickets are purchased in advance from ticket outlets or booking
offices that are required to be set up in every ports of call of the
vessel.
No ticket, No Boarding Policy
Tickets shall be collected or inspected within 1 hour from the
vessels departure.
The passenger may opt to refundhis/her ticker whenever the
vessel is not able to depart on time and the delay is unreasonable.
However, this is without any refund service fee
Delayed voyage- late departure of the vessel from its port of origin and/or
late arrival of the vessel to its port destination.
36
Unreasonable delay- the period of time that has lapsed without just cause
and is solely attributable to the carrier which has prejudiced the
transportation of passengers and/or cargoes to their point of destination.
Revalidation- the accreditation of the ticket that is not used and intended
to be used for another voyage.
(2) Carriers Lien
If the consignor or consignee failed to pay the consideration for the
transportation of goods, the carrier may exercise his lien:
Article 375. The goods transported shall be especially bound to
answer for the cost of transportation and for the expenses and
fees 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.
C. DEMURRAGE
It is the compensation provided for in the contract of affreightment for the
detention of the vessel beyond the time agreed on for loading and unloading.
Claim for damage for failure to accept delivery
*Liability for demurrage exists only when expressly stipulated in the
contract

37

TRANPORTATION- CHAPTER 3
EXTRAORDINARY DILIGENCE

Rationale of Extraordinary Diligence:
Protect the passengers from the tragic mishaps that frequently occur in
connection with the rapid modern transportation.
It is demanded by preciousness of human life and by consideration that
every person must be safeguarded against all injury.
The law compels the common carries of the highest possible degree of
diligence and presumption of negligence for them to curb the recklessness
of their drivers.
It benefits also pedestrians and the owners and passengers of other
vehicles who are equally entitled to the safe and convenient use of our
roads and highways.
Seeks to stop and prevent destruction of property.

How Duty of Extraordinary Diligence is complied with:
To carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of a very cautious person, with a due
regard for all the circumstances.

Extraordinary Diligence is primarily owed to the passengers and the goods
that are being transported. BUT the duty even extends to the members of
the crew or complement operating the carrier.

EFFECTS OF STIPULATION:

A. GOODS:
Parties cannot stipulate that the carrier will not exercise any diligence in
the custody of goods. Neither can it be stipulated that the goods are at the
shippers risk but the law allows:
Art. 1744. A stipulation between the common carrier and the shipper or
owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary diligence
shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered
by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

B. PASENGERS:
There can be no stipulation lessening the utmost diligence that is owed to
the passengers.

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.

a. Gratuitous passenger

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.

LARA v VALENCIA

FACTS: Valencia accommodated Lara that upon reaching barrio Samoay,
the passengers would alight and transfer to a bus that regularly makes
trip to Davao but there was none at that time so Lara again requested the
defendant to drive them to Davao. During the trip, Lara accidentally fell
and died.

ISSUE: Is Valencia liable even if Lara is a passenger carried gratuitously?

HELD: No, the vehicle was not a common carrier but a private carrier.
And Lara is merely accommodation passenger who paid nothing for the
service and so they can be considered as invited guest. But here, the
negligence of Lara was the proximate cause of the loss.
38

c. Meaning of Seaworthiness
no provision in the Civil Code or Code of Commerce that defines
seaworthiness
Supreme Court explained it, though
SEAWORTHINESS: that strength, durability and engineering skill made a
part of a ships construction and continued maintenance, together with a
competent and sufficient crew, which would withstand the vicissitudes and
dangers of the elements which might reasonably be expected or
encountered during her voyage without loss or damage to her particular
cargo

Insurance Code of the Philippines:
SECTION 116. A warranty of seaworthiness extends not only to the
condition of the structure of the ship itself, but requires that:
it be properly laden,
and provided with a competent master,
a sufficient appurtenances and equipment, such as ballasts,
cables and anchors, cordage and sails, food, water, fuel and
lights,
and other necessary or proper stores and implements for the
voyage.

SECTION 119. A ship which is seaworthy for the purpose of an insurance
upon the ship may, nevertheless, by reason of being unfitted to receive the
cargo, be unseaworthy for the purpose of insurance upon the cargo.

Section 3, paragraphs 1 and 2 of the Carriage of Goods by Sea Act:
SECTION 3. (1) The carrier shall be bound before and at the beginning of
the voyage to exercise due diligence to
a. Make the ship seaworthy;
b. Properly man, equip, and supply the ship;
c. Make the holds, refrigerating and cooling chambers, and all other parts
of the ship in which goods are carried, fit and safe for their reception,
carriage, and preservation.

(2) The carrier shall properly and carefully load, handle, stow, carry, keep,
care for, and discharge the goods carried

TO BE SEAWORTHY: A vessel must have such degree of fitness which an owner who
is exercising extraordinary diligence would require his vessal to have at the
commencement of her voyage, having regard to all the probale circumstances of it
- seaworthiness includes fitness of the vessel itself to withstand the rigors of
the voyage, fitness of the vessel to store the cargoes and accommodate
passengers to be transported and that it is adequately equipped and
properly manned.
- seaworthiness is relative in its construction and its application depends on
the facts of a particular case
o the length and the nature of the voyage may be considered so
that a ship may be seaworthy for one voyage and not so for
another

(1) Fitness of the vessel itself.
- necessary that the vessel can be expected to meet the normal hazards of
the journey
- GENERAL TEST OF SEAWORTHINESS: Whether the ship and its
appurtenances are reasonably fit to perform the service undertaken.
- UNSEAWORTHINESS OF A SHIP: May be established by the fact that it did
not withstand the natural and inevitable action of the sea
o a seaworthy ship will not normally sink if the sea is moderate or if
the carrier and its employees were not negligent

(2) The ship must be cargoworthy.
- it being cargoworthy is as important as it being seaworthy
- even if the vessel was properly maintained and is free from defect, the
carrier must not accept goods that cannot properly be transported in the
ship
- the ship must be an efficient storehouse for her cargo
- CARGOWORTHINESS: vessel must be sufficiently strong and equipped to
carry the particular kind of cargo which she has contracted to carry and her
cargo must be so loaded that it is safe for her to proceed on her voyage

(3) The vessel must be adequately equipped and properly manned.
- for a vessel to be seaworthy, it must be adequately equipped for the
voyage and manned with a sufficient number of competent officers and
crew
- Article 609of the Code of Commerce requires the competence of the
captain, masters or patrons of vessels
39

Article 609. Captains, masters or patrons of vessels must be:
- Filipinos,
- have legal capacity to contract in accordance with this code,
- and prove the skill, capacity, and qualifications necessary to
command and direct the vessel, as established by marine or
navigation laws, ordinances, or regulations,
- and must not be disqualified according to the same for the
discharge of the duties of the position.

If the owner of a vessel desire to be the captain thereof, without having
the legal qualifications therefor, he shall limit himself to the financial
administration of the vessel, and shall instruct the navigation to a person
possessing the qualifications required by said ordinances and regulations.

- a carrier cannot claim to have exercised extraordinary diligence by placing
a person whose navigational skills are questionable, at the helm of the
vessel
o a person without license to navigate lacks not just the skill to do
so, but also the utmost familiarity with the usual and safe routes
taken by seasoned and legally authorized ones
- it is not an excuse that the carrier cannot afford the salaries of competent
and licensed crew or the latter is unavailable
o by operating with an unlicensed master, the carrier deliberately
increases the risk to which the passengers and the shippers of
cargo would be subjected

(4) Adequate equipment.
- Maritime Industry Authority: prescribes rules which provide for
indispensable equipment and facilities for vessels that carries passengers
- the rules include the requirement that there are adequate exit doors, life
boats, life vests and other similar items

B. OVERLOADING
- duty to exercise due diligence includes the duty to take passengers and
cargoes that within the carrying capacity of the vessel

C. PROPER STORAGE
- the vessel itself may be suitable for the cargo but this is not enough
because the cargo must also e properly stored

D. NEGLIGENCE OF CAPTAIN AND CREW
- failure on the part of the carrier to provide competent captain and crew
should be distinguished from the negligence of said captain and crew
- this distinction is important because of the Limited Liability Rule
- LIMITED LIABILITY RULE: The liability of the shipowner may be limited to
the value of the Bessel
o if the negligence of the captain or crew can be traced to the fact
that they are really incompetent, the Limited Liability Rule cannot
be invoked because the shipowner may be deemed negligent

a. Rules on Passenger Safety
- negligence on the part of the captain and crew as well as the operate
includes failure to comply with the regulations issued by the Maritime
Industry Authority (MARINA) on the safety of the passengers
- Memorandum Circular No. 112: carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the most
diligence of a very cautious person, with due regard to all circumstances
o not good enough that the carrier shall exercise ordinary diligence
or the diligence of a good father, but must render service with the
greatest skill and utmost foresight
o passengers do not merely contract for transportation because
they have the right to be treated by the carrier and its employees
with kindness, respect, courtesy and due consideration. They are
entitled to be protected against personal conduct, injurious
language, indignities and abuses from the said carrier and its
employees.

MEMORANDUM CIRCULAR NO. 114

TO : ALL SHIPOWNERS/OPERATORS OF PASSENGER LINER VESSELS AND OTHERS
CONCERNED
SUBJECT : PREVENTIVE SAFETY MEASURES AND OTHER CONCERNS

Basis: declared national policy to enhance the safety and quality of shipping
services in the interisland trade , and consistent with the mandate to provide for
the effective supervision, regulation and rationalization of the organizational
40
management, ownership and operation of all water transport utilities, as set forth
under P.D. 474 and enunciated further in E.O 125/125-A and E.O 185

Directed to: Philippine-registered vessels duly documented to carry passengers in
the domestic trade

I. AREAS OF CONCERN:
1. Means of Escape an emergency Exits:
a. 2 means of exit be provided in general area; a pre-designed
crew ensures no obstruction to passage going to the exit
b. No locking doors except crash doors or locking devices
capable of being forced to open in an emergency;
Permanent/conspicuous notice to this effect should be
posted on both side of doors
c. Locking of doorways during ticket inspection/passenger
counting is absolutely prohibited. Passageways be cleared of
obstruction (loose cargo, handcarried luggage or furniture)
d. Segregation thorugh permanent closure of access doors
between different types of accommodation (1
st
, 2
nd
, 3
rd
, class)
is prohibited.
2. Handling/Storage of Handcarried Luggage
a. Safe and convenient storage be provided
b. Luggage must not block stairways, means of escape/exit,
passageways, lifesaving and firefighting equipment
c. 1 crew should be assigned during passenger
embarkation/disembarkation to caution/handle/supervise
the storage/retrieval of luggage
3. Storage of Lifevests/Life Jackets
a. Lifevests imprinted with vessels name; conspicuously stored
in a locker capable of being forced to open and must be
readily accessible for use
4. Closure Of Watertight Doors, Portholes, Ramps And Manholes
a. The master shall ensure that all watertight doors, portholes,
ramps and manholes shall be securely
fastened/locked/checked prior to leaving port and during the
voyage.
5. Wearing Of The Proper Prescribed Uniform By The Ships Officers And
Crew.
a. Purpose: easy identification and ready access by passengers
needing info/assistance
b. All crew should wear prescribed uniform and ID (while on
duty) even the security personnel
6. Other Safety Measures:
a. Institutionalization of crew and passenger safety awareness
program (by shipping companies); Vessel emergency plan is
to be submitted to MARINA by ship/company
owner/operator within 90 days
b. Vessel sketches showing the location of the liferafts/boats
and lifejackets/lifevests displayed in conspicuous places:
i. passenger lounge(for third class accommodation)
ii. inside the cabin/suites(in the case of first and second
class accommodations).
Lifeboats (imprinted with vessels name) should be readily accessible
c. No obstruction to The prescribed location of firefighting
equipment like the fire hose, fire ax and fire extinguisher.
d. There must be luminous stickers indicating the direction of
exits, visible to the passenger
e. Emergency lights in all passengers accommodations,
passageways, alleyways, and stairways, which should
automatically switch on in case of power/generator failure,
must be installed
f. Emergency exits must be provided with the independent red
blinking lights to guide/assist the passengers on their way out

II. RESPONSIBILITY OF MASTER (of vessel)
- ensure strict adherence to the directives of this Circular, at all
times and under penalty

III. SANCTIONS/PENALTIES
- after due notice and hearing consistent with the provisionsof
Memorandum Circular 74-A, series of 1995:
i. Master:
1. First Infraction - Five Thousand(P5,000.00) pesos
2. Second Infraction - Ten
Thousand(P10,000.00)pesos
3. Third Infraction - Twenty-five
Thousand(P25,000.00) Pesos and/or
41
suspension/revocation of his Seafarers
Identification And Record Book(SIRB) and/or
STCW Endorsement Certificate
ii. Ship woner/operator/agent
1. First Infraction - Ten Thousand(P10,000.00)
Pesos/vessel
2. Second Infraction - Twenty
Thousand(P20,000.00) Pesos/vessel
3. Third Infraction - Twenty-five
Thousand(P25,000.00) Pesos/vessel and/or
cancellation of the Provisional Authority (PA) or
Certificate of Public Convenience (CPC) to
operate the vessel

IV. ENFROCEMENT
- Enforcement Office(EO) and the Maritime Regional Offices(MROs)
are directed to strictly monitor compliance with this Circular
- Non Compliance should be reported within 48 hours to
Franchising Office/MROs
- enforcers shall not be obstructed or hindered from lawfully
boarding vessels and inspecting

V. REPEALING CLAUSE
- Any provisions of existing MARINA rules and regulations, circulars
or orders which are inconsistent with this Circular are hereby
repealed or modified accordingly.

VI. EFFECTIVITY
- 15 days after publication
Manila, Philippines, 19 December 1995

STANDARD VACUUM OIL COMPANY v. LUZON STEVEDORING CO., INC.

Facts: This is a case about the vessel Snapper which was carrying barges and
barrels of bulk gasoline. It was stranded due to broken idler. When the weather
became worse, the barges were destroyed piece by piece, gasoline leaked and
eventually, the vessel sank. The defendants radio station in Manila called up
shipping companies to ask if they had any vessel in the vicinity where the Snapper is
stalled, but these companies replied negative. They eventually radioed a tugboat.
When the vessel/tugboat, which is supposed to rescue the Snapper, arrived the
gasoline has leaked. Note, plaintiff here entered into a contract with defendant on
transporting the said gasoline from Manila to Nin Bay, Iloilo.

Issue: Is the failure to deliver due to accident or force majeure?

Held: NO. The defendants lack precaution and diligence. First, the Snapper was not
submitted to an overhaul in a dry dock before it was operated, knowing the vessel
is a surplus property. It has not been certified to be adequately equipped to be
seaworthy. Boat also fails to carry necessary spare parts.

Doctrine/s:

Where owner buys old tug, licensed coastwise, and equips it for ocean going, it is
negligence to send tug out without stability test, where history and performance
with respect to crankiness and tenderness are matters of official record.

Seaworthiness defined: is that strength, durability and engineering skill made a
part of a ship's construction and continued maintenance, together with a
competent and sufficient crew, which would withstand the vicissitudes and dangers
of the elements which might reasonably be expected or encountered during her
voyage without loss or damage to her particular cargo.

PLANTERS PRODUCTS, INC. V. COURT OF APPEALS, SORIAMONT STEAMSHIP
AGENCIES and KYOSEI KISEN KABUSHIKI KAISHA
Facts:Plaintiff purchased from Mitsubishi International Corporation fertilizer which
the latter shipped in bulk on board the cargo vessel M/V Sun Plum owned by
Kyosei Kisen Kabushiki Kaisha (KKKK) from Alaska, USA, to Poro Point, San
Fernando, La Union. Prior to its voyage, a time charter-party on the vessel M/V Sun
Plum pursuant to the Uniform General Charter was entered into between
Mitsubishi as shipper/charterer and KKKK as shipowner. Before loading the fertilizer
aboard the vessel, 4 of her holds were all presumably inspected by the charterers
representative and found fit to take a load of urea in bulk pursuant to the charter-
party. The hatches remained closed and tightly sealed throughout the entire
voyage. PPI unloaded the cargo from the holds into its steel-bodied dump trucks
which were parked alongside the berth. A private marine and cargo surveyor, Cargo
Superintendents Company Inc. (CSCI), was hired by PPI to determine the outturn
of the cargo shipped, by taking draft readings of the vessel prior to and after
42
discharge. The survey report submitted by CSCI to the consignee revealed a
shortage in the cargo and that a portion of the fertilizer approximating was
contaminated with dirt.
Issue: Does a common carrier becomes a private carrier by reason of a charter-
party?
Held: Not at all times. In this case, NO. Kyosei Kisen Kabushiki Kaisha, in the
ordinary course of business, operates as a common carrier, transporting goods
indiscriminately for all persons. 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, the charterer is a
stranger to the crew and to the ship. Thus, extraordinary diligence is expected from
the KKKK since, it remains a common carrier.
Doctrine/s:
Thus, 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. Indubitably, a
shipowner 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.
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.
Charter Party defined: 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. 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 shipowner to supply the ships stores, pay for the wages of
the master and the crew, and defray the expenses for the maintenance of the ship.

Jose P. Mecenas, et al. vs. Hon. Court of Appeals, et. al.
GR No. 88052 December 14, 1989
180 SCRA 83
This case is about the collision of M/T Tacloban City and M/S Don Juan
wherein the latter sank leading to the death of hundreds of passengers.

The Supreme Court held that Capt. Santisteban and Negros Navigation, the operator
of Don Juan are properly held liable for gross negligence in connection with the
collision. While Capt. Santistebans behaviour as the master of the vessel was
unacceptable, Don Juan was negligent in failing to take preventive action and in
allowing the two vessels to come to such close quarters as to render the collision
inevitable.

There is no necessity for passing upon the degree of negligence or culpability
properly attributable to PNOC or the master of Tacloban City since they were
never impleaded in the case.

E. DEVIATION AND TRANSSHIPMENT
a. Deviation.
Article 359 of the Code of Commerce:
If there is an agreement between the shipper and the carrier as to the road over
which the conveyance is to be made, the carrier may not change the route, unless it
be by reason of force majeure; and should he do so without this cause, he shall be
liable for all the losses which the goods he transports may suffer from any other
cause, beside paying the sum which may have been stipulated for such case.
When on account of said cause of force majeure, the carrier had to take another
route which produced an increase in transportation charges, he shall be
reimbursed for such increase upon formal proof thereof.
Maritime Industry Authority
Routes of common carriers by sea are now approved by the appropriate
government agency.
Improper deviation may be a valid ground to deny mariner insurance claim
under the Insurance Code.
b. Transshipment
Definition:
The act of taking cargo out of one ship and loading it in another.
The transfer of goods from the vessel stipulated in the contract of
affreightment to another vessel before the place of destination in the
contract has been reached.
43
Transhipment of freights without legal excuse is a violation of the
contract and an infringement of the right of the shipper and
subjects the carrier to liability if the freight is lost even by a cause
otherwise accepted.

V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
A. CONDITION OF VEHICLE
Common carriers that offer transportation by land are similarly required to
make sure that the vehicles that they are using are in good order and
condition
Carrier will not be excused from liability on the ground that the tire blow-
out was due to fortuitous event when it shown that the passengers were
injured because the floor of the bus gave way.
The carrier would still be liable for not keeping the floor safe
It should be noted that explosion of tires are not considered fortuitous
event.
This rule follows the rule on mechanical defects
If the carriers will replace certain parts of the motor vehicle, they are duty
bound to make sure that the parts they are purchasing are not defective
It is long standing rule that a carrier cannot escape liability by claiming that
the accident that resulted because of a defective brake or tire is due to
fortuitous event.
This is true if it can be established that the tire that was subject of blow-
out is brand new.

B. TRAFFIC RULES
The carrier fails to exercise extraordinary diligence if it will not comply with
basic traffic rules.
It should be recalled hat Civil Code even provides for a presumption of
negligence the accident occurs while the operator of the motor vehicle is
violating traffic rules.
However, the application of the presumption is not even necessary with
respect to common carriers.
For the presumption to operate under Article 2185, there must be proof of
violation of traffic rules.
For the presumption of negligence under Article 1756 to operate, all that is
required I proof of death or injury to a passenger.
The basic traffic rules that must be complied with included those provided
for under

- Land Transportation and Traffic Code, Republic Act No. 4136
- Other rules embodied in the ordinances issued by local government
and Metro Manila Development Authority

Land Transportation and Traffic Code (Republic Act No. 4136)
A. What is the care a driver need to observe while driving on a highway?
Any person driving a motor vehicle on a highway shall drive
- the same at a careful and prudent speed, not greater nor less
than is reasonable and proper,
- having due regard for the traffic, the width of the highway, and of
any other condition then and there existing; and
- no person shall drive any motor vehicle upon a highway at such a
speed as to endanger the life, limb and property of any person,
nor at a speed greater than will permit him to bring the vehicle to
a stop within the assured clear distance ahead. [Section 35 A]

B. What are the maximum allowable speeds? [Section 35 B]
MAXIMUM
ALLOWABLE
SPEEDS
Passengers
Cars and Motorcycle
Motor trucks and buses
1. On open
country roads,
with no "blinds
corners" not
closely
bordered by
habitations.
80 km. per hour 50 km. per hour
2. On "through
streets" or
boulevards,
clear of traffic,
with no " blind
corners," when
so designated.
44
3. On city and
municipal
streets, with
light traffic,
when not
designated
"through
streets".
4. Through
crowded
streets,
approaching
intersections at
"blind corners,"
passing school
zones, passing
other vehicles
which are
stationery, or
for similar
dangerous
circumstances.

C. Are there any exceptions on the application of the maximum allowable speeds
indicated above?

The rates of speed hereinabove prescribed shall not apply to the following: [Section
35 C]
(PAWA-CLEF)
(1) A physician or his driver when the former responds to emergency calls;
(2) The driver of a hospital ambulance on the way to and from the place of
accident or other emergency;
(3) Any driver bringing a wounded or sick person for emergency treatment
to a hospital, clinic, or any other similar place;
(4) The driver of a motor vehicle belonging to the Armed Forces while in
use for official purposes in times of riot, insurrection or invasion;
(5) The driver of a vehicle, when he or his passengers are in pursuit of a
criminal;
(6) A law-enforcement officer who is trying to overtake a violator of traffic
laws; and
(7) The driver officially operating a motor vehicle of any fire department,
provided that exemption shall not be construed to allow unless or
unnecessary fast driving of drivers aforementioned.

D. Are the speed limits applicable anywhere in the Philippines?

Yes. No provincial, city or municipal authority shall enact or enforce any ordinance
or resolution specifying maximum allowable speeds other than those provided in
this Act. [Section 36]

E. What should be the manner of passing through a car or overtaking a car be
done?

Every person operating a motor vehicle or an animal-drawn vehicle on a
highway shall
- pass to the right when meeting persons or vehicles coming
toward him,
- left when overtaking persons or vehicles going the same
direction, and
- every vehicle shall be conducted to the right of the center of the
intersection of the highway when turning to the left in going
from one highway to another,
EXCEPT:
- Unless a different course of action is required
a. in the interest of the safety and the security of life, person or
property, or
b. because of unreasonable difficulty of operation in compliance
herewith [Section 37]

F. What are the duties of provincial board, municipal board or city council in
classifying of highways?
1. Public highways shall be properly classified for traffic purposes by the
provincial board, municipal board or city council having jurisdiction over
them, and said
2. Provincial board, municipal board or city council shall provide appropriate
signs therefor, subject to the approval of the Commissioner.
45
3. It shall be the duty of every provincial, city and municipal secretary to
certify to the Commissioner the names, locations, and limits of all
"through streets" designated as such by the provincial board, municipal
board or council [Section 38]

G. How to overtake a vehicle?
The driver of any motor vehicle overtaking another vehicle proceeding in
the same direction shall pass at a safe distance to the left thereof, and
shall not again drive to the right side of the highway until safety clear of
such overtaken vehicle EXCEPTION:
the driver of a vehicle may overtake and pass another vehicle on
the right
Where?
(1) on a highway, within a business or residential district, having two or
more lanes for the movement of traffic in one direction
Nothing in this section shall be construed to prohibit a driver overtaking
and passing, upon the right, another vehicle which is making or about to
make a left turn. [Section 39]

H. What should the driver of a vehicle about to be overtaken do?
The driver of a vehicle about to be overtaken and passed by another
vehicle approaching from the rear
1. shall give way to the overtaking vehicle on suitable and audible
signal being given by the driver of the overtaking vehicle, and
2. shall not increase the speed of his vehicle until completely passed by
the overtaking vehicle. [Section 40]

I. What are the restrictions on overtaking and passing?

(a) The driver of a vehicle shall not drive to the left side of the center line of
a highway in overtaking or passing another vehicle proceeding in the
same direction,
EXCEPTION:
- unless such left side is clearly visible, and is free of oncoming
traffic for a sufficient distance ahead to permit such overtaking or
passing to be made in safety.

(b) The driver of a vehicle shall not overtake or pass another vehicle
proceeding in the same direction,
1. when approaching the crest of a grade,
2. not upon a curve in the highway, where the driver's view along the
highway is obstructed within a distance of five hundred feet ahead,

EXCEPTION: except on a highway having 2 or more lanes for movement of traffic in
one direction where the driver of a vehicle may overtake or pass another vehicle:
Provided, That on a highway within a business or residential district, having two or
more lanes for movement of traffic in one direction, the driver of a vehicle may
overtake or pass another vehicle on the right.

(c) The driver of a vehicle shall not overtake or pass any other vehicle
proceeding in the same direction,
- at any railway grade crossing, not at any intersection of highways
unless such intersection or crossing is controlled by traffic signal,
or unless permitted to do so by a watchman or a peace officer,
EXCEPTION: except on a highway having 2 or more lanes for movement of traffic in
one direction where the driver of a vehicle may overtake or pass another vehicle on
the right. Nothing in this section shall be construed to prohibit a driver overtaking
or passing upon the right another vehicle which is making or about to make a left
turn.

(d) The driver of a vehicle shall not overtake or pass, or attempt to pass, any
other vehicle, proceeding in the same direction,
- between any points indicated by the placing of official
temporary warning or caution signs indicating that men are
working on the highway.

(e) The driver of a vehicle shall not overtake or pass, or attempt to overtake
or pass, any other vehicle proceeding in the same direction in any "no-
passing or overtaking zone." [Section 41]

J. When is Right of Way applicable?
[Section 42]
VEHICLE APPLICABLE RIGHT OF WAY
a. When two vehicles approach
or enter an intersection at
approximately the same time,
the driver of the vehicle on the left shall
yield the right of way to the vehicle on
the right except as otherwise
46
hereinafter provided.
o The driver of any vehicle
traveling at an unlawful speed
shall forfeit any right of way
which he might otherwise have
hereunder.
b. The driver of a vehicle
approaching but not having
entered an intersection
shall yield the right of way to a vehicle
within such intersection or turning
therein to the left across the line of
travel of such first-mentioned vehicle,
provided the driver of the vehicle
turning left has given a plainly visible
signal of intention to turn as required
in this Act.
c. The driver of any vehicle upon
a highway within a business or
residential district

Every pedestrian crossing a
highway within a business or
residential district, at any point
other than a crosswalk
shall yield the right of way to a
pedestrian crossing such highway
within a crosswalk,
o EXCEPTION: at intersections
where the movement of traffic
is being regulated by a peace
officer or by traffic signal.

shall yield the right of way to vehicles
upon the highway.

d. The driver of a vehicle upon a
highway shall bring to a full
stop such vehicle before
traversing any "through
highway" or railroad crossing
Provided, That when it is apparent that
no hazard exists, the vehicle may be
slowed down to five miles per hour
instead of bringing it to a full stop

K. What are the exceptions of right of way rule?
[Section 43]
VEHICLE APPLICABLE RIGHT OF WAY
a. The driver of a vehicle entering a
highway from a private road or
drive
shall yield the right of way to all
vehicles approaching on such
highway.
b. The driver of a vehicle upon a
highway
shall yield the right of way to police or
fire department vehicles and
ambulances when such vehicles are
operated on official business and the
drivers thereof sound audible signal
of their approach.
c. The driver of a vehicle entering a
"through highway" or a "stop
intersection"
shall yield the right of way to all
vehicles approaching to either
direction on such "through highway":

Provided, That nothing in this
subsection shall be construed as
relieving the driver of any vehicle
being operated on a "through
highway" from the duty of driving
with due regard for the safety of
vehicles entering such "through
highway" nor as protecting the said
driver from the consequence of an
arbitrary exercise off such right of
way.

L. What are the proper steps in signaling on starting, stopping or turning?
The driver of any vehicle upon a highway, before starting, stopping or turning from
a direct line,
1. Shall first see that such movement can be made in safety
2. If any pedestrian may be affected by such movement, shall give a clearly
audible signal by sounding the horn, and
3. Whenever the operation of any other vehicle approaching or following
may be affected by such movement, shall give a signal plainly visible to
the driver of such other vehicles of the intention to make such
movement.
What is the sign on starting, stopping or turning?
- The signal herein required shall be given by means of extending
the hand and arm beyond the left side of the vehicle, or by an
approved mechanical or electrical signal device. [Section 44]

M. What are the proper ways on turning at intersection?
[Section 45]
47
VEHICLE
a. The drive of a vehicle intending to
run to the right at an intersection
shall approach such intersection in the
lane for traffic nearest to the right-
hand side of the highway and, in
turning,

shall keep as close as possible to the
right-hand curb or edge of the
highway.
b. The driver of a vehicle intending
to turn to the left
shall approach such intersection in the
lane for traffic to the right of and
nearest to the center line of the
highway, and, in turning,

shall pass to the left of the center of
the intersection, except that, upon
highways laned for traffic and upon
one-way highways, a left turn shall be
made from the left lane of traffic in
the direction in which the vehicle is
proceeding.

For the purpose of this section, the center of the intersection shall mean the
meeting point of the medial lines of the highways intersecting one another,
except when it is occupied by a monument, grass plot or any permanent structure,
other than traffic control device.
N. Which places are prohibited for parking?
No driver shall park a vehicle, or permit it to stand, whether attended or
unattended, upon a highway in any of the following places:

(a) Within an intersection
(b) On a crosswalk
(c) Within 6 meters of the intersection of curb lines.
(d) Within 4 meters of the driveway entrance to and fire station.
(e) Within 4 meters of fire hydrant
(f) In front of a private driveway
(g) On the roadway side of any vehicle stopped or parked at the curb or edge
of the highway
(h) At any place where official signs have been erected prohibiting parking.
[Section 46]

O. What should a driver do when in parking?
Whenever a motor vehicle is parked unattended on any highway, the driver thereof
1. must turn off the ignition switch and
2. stop the motor and
3. notch effectively the hand brake.
[Section 47]

P. What is reckless driving?
No person shall operate a motor vehicle on any highway recklessly or without
reasonable caution considering the width, traffic, grades, crossing, curvatures,
visibility and other conditions of the highway and the conditions of the atmosphere
and weather, or so as to endanger the property or the safety or rights of any person
or so as to cause excessive or unreasonable damage to the highway. [Section 48]

Q. What should be done when any police or fire department vehicle, or of an
ambulance approach?
The driver of every other vehicle shall immediately
1. drive the same to a position as near as possible and parallel to the right-
hand edge or curb of the highway,
2. clear of any intersection of highways, and
3. shall stop and remain in such position, unless otherwise directed by a
peace officer, until such vehicle shall have passed. [Section 49]

R. Tampering with vehicles. - No unauthorized person shall sound the horn,
handle the levers or set in motion or in any way tamper with a damage or
deface any motor vehicle. [Section 5]

S. Is hitching to a vehicle allowed?
No person shall hang on to, ride on, the outside or the rear end of any
vehicle, and
no person on a bicycle, roller skate or other similar device, shall hold fast
to or hitch on to any moving vehicle, and
no driver shall knowingly permit any person to hang on to or ride, the
outside or rear end of his vehicle or allow any person on a bicycle, roller
skate or other similar device to hold fast or hitch to his vehicle.
[Section 51]

48
T. What are the other restriction in driving under RA 4136 Article V
1. No person shall drive or park a motor vehicle upon or along any
sidewalk, path or alley not intended for vehicular traffic or parking.
[Driving or parking on sidewalk. - Section 52]
2. No person shall drive a motor vehicle while under the influence of liquor
or narcotic drug. [Driving while under the influence of liquor or narcotic
drug.- Section 53]
3. No person shall drive his motor vehicle in such a manner as to obstruct
or impede the passage of any vehicle, nor, while discharging or taking
on passengers or loading or unloading freight, obstruct the free passage
of other vehicles on the highway. [Obstruction of traffic.- Section 54]

U. What are the duties of driver during an accident? [Section 55]
In the event that any accident should occur as a result of the operation of a motor
vehicle upon a highway, the driver present, shall show
a. his driver's license,
b. give his true name and address and
c. also the true name and address of the owner of the motor vehicle.

No driver of a motor vehicle concerned in a vehicular accident shall leave the scene
of the accident without aiding the victim, except under any of the following
circumstances:
1. If he is in imminent danger of being seriously harmed by any person or
persons by reason of the accident;
2. If he reports the accident to the nearest officer of the law; or
3. If he has to summon a physician or nurse to aid the victim.
Clemente Brinas v. People, et al.
GR No. L-30309, November 5, 1983

Facts:
1) On January 6, 1957 Juanito Gesmundo bought a train ticket at the Tagkawayan
Station in Quezon province for his 55-year old mother, Martina Bool, and his 3-
year old daughter, Emelita Gesmundo. Both passengers are bound to alight at
Lusacan Station in Tiaong, Quezon.
2) The train left Tagkawayan at around 2:00 pm. Six hours have passed, and upon
reaching Barrio Lagalag, the conductor, Clemente Brinas (petitioner-appellant),
shouted Lusacan, Lusacan, announcing that the train is already near Lusacan
station. This prompted Martina and Emelita to proceed to the exit.
3) However, when the two passengers are already near the door, the train
suddenly increased its speed. As a result, the two of them stumbled and fell out
of the door. It took three minutes after the conductor made his announcement
before the train finally arrived at Lusacan station.
4) The next morning, the Tiaong police received reports of two decapitated
corpses sprawled along the railroad tracks in Barrio Lagalag, which were later
identified to be that of Martina Bool and Emelita Gesmundo.
5) The victims heirs charged conductor Brinas and two other men in charge of the
train with double homicide through reckless imprudence. The trial court
convicted Brinas for the said charge, but the other two were acquitted. The
decision was affirmed by the Court of Appeal, modified only with respect to
damages.
6) It was found, however, that during the pendency of the criminal case, the
victims heirs filed a separate civil action for damages against Manila Railroad
Company. Along with the affirmation of the decision of the criminal case,
Brinas contested this matter in a petition before the Supreme Court.

Issue/s:
Is the conviction rendered by the trial court against Brinas correct?
Is the trial court correct in including civil liability in the criminal charge
against Brinas, despite the existence of a separate civil action for damages
pursued by the victims heirs against Manila Railroad Company?

Held:
Issue 1: YES
Issue 2: YES

Ratio:
Issue 1
It was found that the proximate cause of death of the victims was the
premature and erroneous announcement of conductor Brinas.
Brinas announced that the train was approaching Lusacan station three
minutes before it actually reached the station. This premature
announcement prompted the victims to proceed to the exit and ultimately,
to their demise, as caused by the sudden increase of the trains speed
which in turn, was not explained by Brinas.
Any negligence on the part of the victims was at most contributory in
nature. Such cannot exculpate the accused from criminal liability.

49
Issue 2
In the separate civil action for damages pursued during the pendency of
the criminal case, it was Manila Railroad Company who was named as the
defendant in the civil case, and not Brinas.
The victims heirs have the right to pursue a separate action for damages
against Manila Railroad Company, apart from the criminal case against
Brinas.

Decision: Court of Appeals decision AFFIRMED.

Batangas Laguna Tayabas Bus Co. v. IAC, Armando Pon, et al.
GR Nos. 74387-90, November 14, 1988

Facts:
1) Bus No. 1046 of Batangas Laguna Tayabas Bus Co. (BLTB Co.; petitioner) collided
with Bus No. 404 of Superlines Transportation (Superlines) along a highway in
Barangay isabong, Tayabas, Quezon. Bus No. 1046 was driven by Armando Pon
(private respondent).
2) The collision was a result of BLTB Bus No. 1046s attempt to overtake a Ford
Fiera while attempting to bend a curve on the highway. The move resulted into
a collision with Superlines Bus No. 404, which was traversing the other side of
the highway at that time. Bus No. 404 was driven by Ruben Dasco.
3) The collision claimed the lives of Aniceto Rosales, Francisco Pamfilo, and Romeo
Neri. It also caused several injuries to Nena Rosales (wife of Aniceto) and Baylon
Sales. All were passengers of BLTB Co.s Bus No. 1046.
4) Due to the incident, the victims and their heirs filed separate civil actions against
BLTB Co. and Superlines. Criminal charges were also filed against the drivers of
the two buses.
5) Both BLTB Co. and Superlines denied the charges against them, passing onto
each other the blame.
6) The trial court rendered judgment, exonerating Superlines and its driver Dasco
from any liability. This made BLTB Co. and its driver Pon liable for the incident.
BLTB Co. and Pon appealed the decision, but it was affirmed by the appellate
court and modified with respect to wages.
7) BLTB Co. and Pon elevated this case by way of a petition for certiorari before the
Supreme Court. Both contended that the appellate court erred in holding that
their actions are based on culpa contractual.

Issue/s:
Was the appellate court wrong in holding that BLTB Co. and Pons actions
are based on culpa contractual?

Held: NO

Ratio:
A close reading of the appellate courts decision would reveal that the
actions committed by BLTB Co. and Pon are based both on culpa
contractual (breach of contract of carriage) and culpa aquiliana (tort).
Pons act of overtaking the Ford Fiera while bending a curve on the
highway was a dangerous act. Such did not merit any exercise of
extraordinary diligence on Pons part.
Both BLTB Co. and Pon are primarily liable over the incident. BLTB Co.s
liability stems from contract (culpa contractual), while Pons is that of
quasi-delict (culpa aquiliana).
Pons negligence in driving the bus is the proximate cause of the collision
that caused injuries and death to the victims.
By culpa contractual, BLTB Co. has assumed full responsibility in
transporting its passengers to their destinations safely. Any injury that
might be suffered by the passengers is attributable right away to the fault
or negligence of the carrier, BLTB Co.

Decision: Petition DENIED.

Batangas Transportation Co. v. Gregorio Caguimbal, et al.
GR No. L-22985, January 24, 1968

Facts:
1) A bus operated by Batangas Transportation Co. (BTCO; petitioner), driven by
50
Tomas Perez, collided with a bus operated by Binan Transporation Co. (Binan)
driven by Marciano Ilagan.
2) The collision was a result of Ilagans attempt to overtake a calesa. Ilagans bus,
which was north bound, collided with Perez bus when it went in between the
calesa and Perez bus, which was at the opposite side of the highway heading
south bound, in an overtaking attempt. At that time, Perez bus was parked at
the side of the highway to allow one of its passengers to disembark.
3) The collision resulted in the deaths of BTCOs passengers, Pedro Caguimbal and
Guillermo Tolentino. BTCOs bus suffered heavy damage as a result of the
collision.
4) Caguimbals heirs instituted an action against the BTCO and Binan. The trial
court dismissed the complaint against BTCO and its driver, without prejudice to
any right to sue Binan and its driver.
5) On appeal by the Caguimbals, the BTCO, Binan, and their respective drivers
were rendered jointly and severally liable for damages.
6) The BTCO filed an appeal against the appellate courts decision, saying that it
should not be liable for any damages on the ground that it exercised
extraordinary diligence.

Issue/s:
Was the appellate court wrong in holding BTCO liable for damages?

Held: NO

Ratio:
A closer look at the facts would reveal that when BTCOs bus, driven by
Perez, stopped to allow one of its passengers to disembark, the bus was
positioned partly at the asphalted portion of the road, with the other half
at the shoulder part.
In order to say that Perez has indeed exercised extraordinary diligence, he
should have stopped the bus entirely outside the asphalted portion of the
road and fully within the shoulder part. In that way, the collision may have
been avoided, giving Binans bus more room to overtake. In exercising
extraordinary diligence, it is Perez responsibility to foresee the upcoming
danger in the event that the driver of the Binan bus decides to overtake
the calesa.

Decision: Appellate court decision AFFIRMED.

Mallari Sr. and Alfredo Jr v CA and Bulleting Publishing
January 31, 2000

FACTS:
1) Passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned
by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of
respondent Bulletin Publishing Corp. along the National Highway in
Barangay San Pablo, Dinalupihan, Bataan.
2) The collision occurred after Mallari Jr. overtook the Fiera while
negotiating a curve in the highway.
3) The impact caused the jeepney to turn around and fall on its left side
resulting in injuries to its passengers one of whom was Israel Reyes
who eventually died due to gravity of his injuries.
4) The complaint alleged that the collisions resulted in the death of Israel
Reyes was caused by the fault and negligence of both drivers.

ISSUE: Who is the proximate cause of the collision?

RULING: Alfredo Mallari Jr.

a) The rule is settled that a driver abandoning his proper lane for the
purpose of overtaking another vehicle in an ordinary situation has the
duty to see to it that the road is clear and not to proceed if he cannot
do so in safety.
b) When a motor vehicle is approaching or rounding a curve, there is
special necessity for keeping to the right side of the road and the
driver does not have the right to drive on the left hand side relying
51
upon having time to turn to the right if a car approaching from the
opposite direction comes into view.
c) By his own admission, petitioner Mallari Jr. already saw that the
BULLETIN delivery van was coming from the opposite direction and
failing to consider the speed thereof since it was still dark at 5:00
o'clock in the morning mindlessly occupied the left lane and overtook
two (2) vehicles in front of it at a curve in the highway.
d) Under Art. 2185 of the Civil Code, unless there is proof to the contrary,
it is presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap he was violating a traffic
regulation. As found by the appellate court, petitioners failed to
present satisfactory evidence to overcome this legal presumption.
e) The negligence and recklessness of the driver of the passenger
jeepney is binding against petitioner Mallari Sr., who admittedly was
the owner of the passenger jeepney engaged as a common carrier

DUTY TO INSPECT:
There is no unbending duty to inspect each and every package or baggage
that is being brought inside the bus or jeepney.

NOCUM v LAGUNA TAYABAS BUS COMPANY- A carrier is not liable for injuries
to passengers from fires or explosions caused by articles brought into its
conveyance by other passengers, in the absence of any evidence that the
carrier, through its employees, was aware of the nature of the article of had
any reason to anticipate danger therefrom.

VI. Extraordinary Diligence in Carriage by Air
Airworthiness: An aircraft, its engines, propellers, and other components
and accessories, are of proper design and construction, and are safe for air
navigation purposes, such design and construction being consistent with
accepted engineering practice and in accordance with aerodynamic laws
and aircraft science
- HOWEVER! Proof of airworthiness is not by itself sufficient to prove
exercise of extraordinary diligence.
Ex: Carrier must provide competent and well trained crew
- Likewise, it is deemed to have failed to exercise extraordinary
diligence if the plane did not take the designated route and the tragic
accident could have been avoided had it taken said designated route
- Failure to take care of baggage: liability of carriers where the baggage
of the passengers are either damaged, transported to another place,
or are delayed or are otherwise lost altogether
Duty with respect to passengers: Because the passengers in a contract of
carriage do not contract merely for transportation, they have a right to be
treated with kindness, respect, courtesy and consideration. After all,
common carriers such as airline companies are in the business of rendering
public service, which is the primary reason for their enfranchisement and
recognition in our law.
Risks of Airline passengers: Adverse weather conditions or extreme
climactic changes are some of the perils involved in air travel, the
consequences of which the passenger must assume or expect
Fortuitous Event: The fact that the flight was cancelled due to fortuitous
event does not mean that the carriers duty already ended

A. Inspection
Duty of the carrier to inspect the cargo and/or baggage:

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
Ordinarily, 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
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
NORTHWEST AIRLINES V. LAYA
- Protection of passengers must take precedence over convenience
- Nevertheless, the implementation of security measures must be
attended by basic courtesies
- The fact that the plaintiff was greatly inconvenienced by the fact that
his attach case was subjected to further inspection does not warrant
imposition of liability because he was not singled out
52
- The carrier was made liable not for implementing the security
measures but for treating the plaintiff as a rude, brusque, arrogant
and domineering manner that caused humiliation

REPUBLIC ACT No. 6235
AN ACT PROHIBITING CERTAIN ACTS INIMICAL TO CIVIL AVIATION, AND FOR
OTHER PURPOSES.
Section 1. It shall be unlawful for any person to compel a change in the course
or destination of an aircraft of Philippine registry, or to seize or usurp the
control thereof, while it is in flight. An aircraft is in flight from the moment all
its external doors are closed following embarkation until any of such doors is
opened for disembarkation.
It shall likewise be unlawful for any person to compel an aircraft of foreign
registry to land in Philippine territory or to seize or usurp the control thereof
while it is within the said territory.
Section 2. Any person violating any provision of the foregoing section shall be
punished by an imprisonment of not less than twelve years but not more than
twenty years, or by a fine of not less than twenty thousand pesos but not more
than forty thousand pesos.
The penalty of imprisonment of fifteen years to death, or a fine of not less than
twenty-five thousand pesos but not more than fifty thousand pesos shall be
imposed upon any person committing such violation under any of the following
circumstances:
1. Whenever he has fired upon the pilot, member of the crew or passenger of
the aircraft;
2. Whenever he has exploded or attempted to explode any bomb or explosive
to destroy the aircraft; or
3. Whenever the crime is accompanied by murder, homicide, serious physical
injuries or rape.
Section 3. It shall be unlawful for any person, natural or juridical, to ship, load
or carry in any passenger aircraft operating as a public utility within the
Philippines, and explosive, flammable, corrosive or poisonous substance or
material.
Section 4. The shipping, loading or carrying of any substance or material
mentioned in the preceding section in any cargo aircraft operating as a public
utility within the Philippines shall be in accordance with regulations issued by
the Civil Aeronautics Administration.
Section 5. As used in this Act
(1) "Explosive" shall mean any substance, either solid or liquid, mixture or
single compound, which by chemical reaction liberates heat and gas at high
speed and causes tremendous pressure resulting in explosion. The term shall
include but not limited to dynamites, firecrackers, blasting caps, black powders,
bursters, percussions, cartridges and other explosive materials, except bullets
for firearm.
(2) "Flammable" is any substance or material that is highly combustible and
self-igniting by chemical reaction and shall include but not limited to acrolein,
allene, aluminum dyethyl monochloride, and other aluminum compounds,
ammonium chlorate and other ammonium mixtures and other similar
substances or materials.
(3) "Corrosive" is any substance or material, either liquid, solid or gaseous,
which through chemical reaction wears away, impairs or consumes any object.
It shall include but not limited to alkaline battery fluid packed with empty
storage battery, allyl chloroformate, allytrichlorosilane, ammonium dinitro-
orthocresolate and other similar materials and substances.
(4) "Poisonous" is any substance or materials, except medicinal drug, either
liquid, solid or gaseous, which through chemical reactions kills, injuries or
impairs a living organism or person, and shall include but not limited to allyl
isothiocyanate, ammunition (chemical, non-explosive but containing Class A, B
or poison), aniline oil, arsine, bromobenzyle cyanide, bromoacetone and other
similar substances or materials.
Section 6. Any violation of Section three hereof shall be punishable by an
imprisonment of at least five years but not more than ten years or by a fine of
not less than ten thousand pesos but not more than twenty thousand
pesos: Provided, That if the violation is committed by a juridical person, the
penalty shall be imposed upon the manager, representative, director, agent or
employee who violated, or caused, directed, cooperated or participated in the
violation thereof: Provided, further, That in case the violation is committed in
the interest of a foreign corporation legally doing business in the Philippines,
53
the penalty shall be imposed upon its resident agent, manager, representative
or director responsible for such violation and in addition thereto, the license of
said corporation to do business in the Philippines shall be revoked.
Any violation of Section four hereof shall be an offense punishable with the
minimum of the penalty provided in the next preceding paragraph.
Section 7. For any death or injury to persons or damage to property resulting
from a violation of Sections three and four hereof, the person responsible
therefor may be held liable in accordance with the applicable provisions of the
Revised Penal Code.
Section 8. Aircraft companies which operate as public utilities or operators of
aircraft which are for hire are authorized to open and investigate suspicious
packages and cargoes in the presence of the owner or shipper, or his
authorized representatives if present; in order to help the authorities in the
enforcement of the provisions of this Act: Provided, That if the owner, shipper
or his representative refuses to have the same opened and inspected, the
airline or air carrier is authorized to refuse the loading thereof.
Section 9. Every ticket issued to a passenger by the airline or air carrier
concerned shall contain among others the following condition printed thereon:
"Holder hereof and his hand-carried luggage(s) are subject to search for, and
seizure of, prohibited materials or substances. Holder refusing to be searched
shall not be allowed to board the aircraft," which shall constitute a part of the
contract between the passenger and the air carrier.
Section 10. The Civil Aeronautics Administration is hereby directed to
promulgate within one month after the approval of this Act such regulations as
are provided in Section four hereof and cause the publication of such rules and
regulations in the Official Gazette and in a newspaper of national circulation for
at least once a week for three consecutive weeks. Such regulations shall take
effect fifteen days after publication in the Official Gazette.
Section 11. This Act shall take effect after the publication mentioned in the
preceding section.
Approved: June 19, 1971

Philippine Airlines, Inc. v. CA and Pedro Zapatos
September 15, 1993

Facts:
1) On Aug. 2, 1976 Pedro Zapanta (respondent) was one of the 21 passengers of
PAL who took off from Ceby to Ozamiz City.
2) 15 minutes before landing the pilot received a radio that the airport was closed
because of the inclement weather and they were diverted instead to Cotabato
City.
3) The passengers were given choices on which flight to take, there was one flight
that was going back to Cebu but Pedro was not accommodated, despite his
insistence on being given priority, because only six are available and the basis
was the check-in number, to which he was 9
th
.
4) He then tried to stop the departure of the Plane because his personal belongings
which contain a camera he was to deliver was still on board but to no avail. He
was given instead a free ticket to Iligan City which he accepted under protest.
5) He was left at the airport, not provided with any transportation to the city, not
even accommodated in the Fiera loaded with PAL passengers, without food nor
accommodation for his stay in Cotabato City.
6) Next day he purchased a ticket to Iligan City and didnt use the free ticket
because he was filing a case against PAL. In Iligan airport he had to travel by car
to Kolambugan, Lanao del Norte and reached Ozamiz by crossing the bay in a
launch. His personal effects, including the camera was lost amounting to P2,000.
7) PAL denied that it unjustifiably refused to accommodate Pedro, that they were
courteous in dealing with him, that the baggages of the Ozamiz passengers were
removed from the aircraft and raising the defense of force majeure a s a valid
justification of the planes diversion to Cotabato.
8) The judgment of the trial court was affirmed by the CA and likewise affirmed by
the SC with modifications on the amount of damages.

Issue:
In case of force majeure, does the contract of extra-ordinary diligence extend to the
stranded passengers of an airline?

Held:
Yes. PAL was remiss in its duty of extending utmost care to private respondent.

Ruling:
1) Pedro as a result of their refusal to accommodate on the plane back to Cebu was
against his will stranded and exposed to peril and dangers of muslim rebels and
54
suffered great mental sufferings.
2) The contract of air carriage is a peculiar one being imbued with public interest,
the law requires common carriers to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of a very cautios
person, with due regard for all circumstance.
3) The planes diversion due to a fortuitous event did not terminate the PALs
contract with the passengers, considering that they are sole common carrier to
operate in the country. The relation of the carrier and the passengers extend
until the latter has landed at the port of destination and has left the carriers
premises.
4) PAL should have exercised extra ordinary diligence in safeguarding the comfort,
convenience and safety of its stranded passengers. They even failed to consider
that there was an ongoing battle in Cotabato and Pedro was a stranger to the
place.
5) If the cause of the non-fulfillment of the contracts is due to a fortuitous event it
has to be the sole and only cause, the SC finds PAL remiss in its duty to extend
utmost care to Pedro while stranded.
6) With regard to actual damages the court cannot rely on mere speculation,
conjecture or guesswork as to the fact and amount of damages. There must be
competent proof that they were suffered and on evidence the actual amount.
Thus the P5,000 actual damages was removed.

Conrada vda. De Abeto et al. vs PAL
July 30, 1982

Facts:
1) Judge Abeto a passenger in PAL flight from Iloilo to Manila was killed
when the plane crashed at Mt. Baco, Province of Romblon.
2) Conrada (plaintiff) was assigned administratrix of the estate filed a case
after PAL wouldnt hear demands for settlement of damages.
3) PAL contends that the plane was airworthy, certified by the Civil
Aeronautics Administration (CAA). That there was navigational error
but no negligence or malfeasance on the part of the pilot and that it
had undergone many other checks (pre-flight, thorough, terminating,
after-maintenance) as quality control.
4) PAL claimed that the deviation was due to the bad weather conditions.
5) The trial court rendered a decision finding that PAL did not exercise
extraordinary diligence or prudence as far as human foresight can
provide.. and showed negligence and indifference, and was ordered
to pay the plaintiff and heirs of Judge Abeto.
6) It was found out that: first, during the flight, the pilot disobeyed by not
following the route Amber 1 prescribed in the CAA, second, they failed
to perform pre-flight test, third, that a student Officer on training was
allowed and fourth when the pilot failed to report his position over
Romblon.

Issue:
Is the defendant guilty for violation of its contract of carriage?

Held:
Yes. In an absence of satisfactory explanation by the appellant as to how
the accident occurred, the
Presumption is, it is at fault.

Ruling:
1) Art. 1756 fixes the burden of proof by providing that in case of death
or injuries to passengers, common carriers are presumed to have been
at fault, or to have acted negligently, unless they prove that they
observed extra ordinary diligence.
2) Witness Ramons Pedroza, administrative assistant of PAL testified that
the crash wouldnt have happened if the pilot followed the route
indicated because they were 30miles to the west when they crashed.
3) The weather was also clear and he was supposed to take the Amber 1
route but instead made a straight flight to Manila.
4) In an absence of satisfactory explanation by the appellant as to how
the accident occurred, the presumption is, it is at fault.
5) In an action based on a contract of carriage the court need not make
an express finding of fault or negligence on the part of the carrier to
hold it responsible.

55

CHAPTER 4
BILL OF LADING AND OTHER FORMALITIES

I. CONCEPTS
ARTICLE 354. In the absence of a bill of lading, disputes shall be
determined by the legal proofs which the parties may present in
support of their respective claims, according to the general
provisions established in this Code for commercial contracts.

A bill of lading or ticket
- Is not necessary for the perfection of a contract of carriage
- Obligation of the carrier to exercise extraordinary diligence in
transporting the goods or passengers is present even if no bill of
lading or ticket was issued by the carrier.
- In absence of any bill of lading, disputes shall be determined on the
basis of the provisions of the New Civil Code and suppletorily by the
Code of Commerce.
- Electronic Commerce Act (RA 8792) likewise governs with respect to
electronic commerce.
o Section 25 and 26 allow data messages or electronic
documents to be used in lieu of transport documents in
writing or paper documents

A. DEFINITION
A bill of lading is
- A written acknowledgement
- Signed by the master of a vessel other authorized agent of the
carrier
- That he has received the described goods from the shipper
- To be transported on the expressed terms to the described place of
destination, and
- To be delivered there to the designated consignee or parties

B. KINDS
(1) Negotiable or Non-negotiable
(2) Clean bill of Lading or Foul bill of lading
(3) On board bill or Received for shipment Bill
(4) Spent Bill of Lading
(5) Through Bill of Lading
(6) Custody Bill of Lading
(7) Port Bill of Lading

a. Clean bill of Lading and Foul bill of lading
Clean bill of Lading Foul bill of lading
Is one which does not contain
any notation indicating any
defects in the goods
Is one that contains such
notation

b. Spent Bill of Lading
- Where the goods are already delivered by the carrier, the carrier is
supposed to have retrieved the covering bill of lading that he issued
for the goods.
- If the goods were already delivered but the bill of lading was not
returned, the bill of lading is called a spent bill of lading
c. Through Bill of Lading
- Is one issued by a carrier who is obliged to use the facilities of other
carrier as well as his own facility for the purpose of transporting the
goods from the city of the seller to the city of the buyer
- The bill of lading is honored by the second or other interested
carriers who do not issue their own lading.
56

d. On board bill or Received for shipment Bill
On board bill Received for shipment Bill
Is one in which it is stated that
the goods have been received
on board the vessel which is to
carry the goods
Is one which it is stated that
the goods have been received
for shipment with or without
specifying the vessel by which
the goods are to be shipped

Issued when the goods have
been actually placed aboard the
ship with every reasonable
expectation that the shipment
is as good as on its way

Issued whenever conditions
are not normal and there is
insufficiency of shipping space
It is therefore understandable
that a party to maritime
contract would require an on
board bill of lading because of
its apparent guaranty of
certainty of shipping as well as
seaworthiness of the vessel
which is to carry the goods.

e. Custody Bill of Lading
- In this type of bill of lading, the goods are already received by the
carrier but the vessel indicated therein has not yet arrived in the
port

f. Port Bill of Lading
- The vessel indicated in the bill of lading that will transport the goods
is already in the port

II. NATURE OF BILL OF LADING
(1) As a receipt can only be applied to bill of ladings issued for goods
(2) As a contract Applies to tickets issued to passengers
(3) It is a document title can only be applied to bill of ladings issued for
goods
- It is a receipt of goods and a contract to transport and deliver the
same as therein stipulated
- As a contract it stipulates the rights and obligations assumed by the
parties
o Being a contract, it is the law between the parties who are
bound by its terms and conditions provided that they are
not contrary to law, morals, good customs, public order and
public policy.

III. WHEN EFFECTIVE
- Effective upon its delivery to and acceptance of the shipper
- It is presumed that the stipulations of the bill were, in absence of
fraud, concealment or improper conduct, known to the shipper, and
he is generally bound by his acceptance whether he read the bill or
not
- A shipper who receives a bill of lading without objection after an
opportunity to inspect it, and permits the carrier to act on it by
proceeding with the shipment is presumed to have accepted it as
correctly stating the contract and to have assented to its terms.
- The acceptance of the bill without dissent raise the presumption
that all terms therein were brought to the knowledge of the
shipper and agreed to by him and, in the absence of fraud or
mistake, he is estopped from thereafter denying that he assented
to such terms
57
- This rule applies with particular force where a shipper accepts a bill
of lading with full knowledge of its contents and acceptance under
such circumstances makes it a binding contract.

IV. BILL OF LADING AS CONTRACT
- The three-fold nature of Bill of lading is obviously applicable only to
carriage of goods
- See NATURE OF BILL OF LADING discussion
- The Supreme Court explained in one of the case that the name is
given to a document is not important.
The term 'bill of lading' is frequently defined, especially by the
older authorities as
a writing signed by the master of a vessel
acknowledging the receipts of goods on board to be
transported to a certain port and there delivered to a
designated person or on his order.
This definition was formulated at a time when goods
were principally transported by sea and, while adequate
in view of the conditions existing at that early day, is too
narrow to suit present conditions.
As comprehending all methods of transportation, a bill
of lading may be defined as a
written acknowledgment of the receipt of goods
and an agreement to transport and to deliver them
at a specified place to a person named or on his
order.
Such instruments are sometimes called 'shipping
receipts,' 'forwarders' receipts,' and 'receipts for
transportation."
The designation, however, is not material, and
neither is the form of the instrument.
If it contains an acknowledgment by the carrier of
the receipt of goods for transportation, it is, in legal
effect, a bill of lading."

A. CONTRACT OF ADHESION
- Bill of ladings, as well as tickets, constitutes a class of contracts of
adhesion
- They are normally construed liberally in favor of the passenger or
shipper who adhered to such bill of lading or ticket.
- The validity and/or enforceability of a bill of lading will have to be
determined by the peculiar circumstances obtaining in each case
and nature of the condition or terms sought to be enforced
- What are contract of adhesion?
o Generally, stipulations in a contract come about after
deliberate drafting by the parties thereto, there are certain
contracts almost all the provisions of which have been
drafted only by one party, usually a corporation
o Only the participation of the party is the signing of hi
signature or his adhesion thereto
o The passenger or shipper cannot change the contract and
they are this made to adhere thereto on the take-it or
leave it basis
- Thus, certain guidelines in the determination of their validity and/or
enforceability have been formulated in order that justice and fair
play characterize the relationship of the contracting parties
- Qua CheeGan v. Law Union and Rock Insurance and Fieldman
Insurance v. Vargas held:

The courts cannot ignore that nowadays monopolies, cartels
and concentrations of capital, endowed with overwhelming
economic power, manage to impose upon parties dealing with
them cunningly prepared "agreements" that the weaker party
may not change one whit, his participation in the "agreement"
being reduced to the alternative to take it or leave it" labelled
since Raymond Baloilles" contracts by adherence" (con
58
tractsd'adhesion), in contrast to these entered into by parties
bargaining on an equal footing, such contracts (of which policies
of insurance and international bills of lading are prime
examples) obviously call for greater strictness and vigilance on
the part of courts of justice with a view to protecting the
weaker party from abuses and imposition, and prevent their
becoming traps for the unwarry

- The new Civil Code also contains provisions to same effect and
import

Article 24. In all contractual, property or other relations, when
one of the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender
age or other handicap, the courts must be vigilant for his
protection.

- OngYiu vs. CA reiterated in Servando et al. vs. Philippine Steam
Navigation Co. : plane tickets as well as bills of lading are contracts
not entirely prohibited.
o The one who adheres to the contract is in reality free to
reject it entirely,
o If he adheres, he gives his consent
o When the shipper or passenger receives the bill of lading, it
is tantamount to the passenger or shippers adherence to
the terms and conditions embodied.
- Consequently, the parties, whether the carrier or shipper, cannot
escape liability by advertising to the bill of lading as a contract of
adhesion, if the bill of lading is clear on its face.
- The shipper or passenger is bound by the terms and conditions if
there is no occasion to speak of ambiguity whatsoever
- This happens when all of its terms and conditions are plainly
worded and commonly understood by those in business
- Magellan Manufacturing Corp vs. CA
o Petitioner argued that assuming that there was
transshipment, it cannot be deemed to have agreed even
if it signed the bill of lading containing such entry it had
allegedly made known to private respondent from the
start that the transshipment was prohibited under the
letter of credit, that therefore it had no intention to allow
transshipment of the subject cargo
o The Supreme Court rejected the argument stating that
In support of its stand, petitioner relies on the second
paragraph of Article 1370 of the Civil Code which states
that "(i)f the words appear to be contrary to the evident
intention of the parties, the latter shall prevail over the
former," as well as the supposed ruling in Caltex Phil., Inc.
vs. Intermediate Appellate Court, et al.
25
that "where the
literal interpretation of a contract is contrary to the
evident intention of the parties, the latter shall prevail."

As between such stilted thesis of petitioner and the
contents of the bill of lading evidencing the intention of
the parties, it is irremissible that the latter must prevail.
Petitioner conveniently overlooks the first paragraph of
the very article that he cites which provides that
- "(i)f the terms of the contract are clear and leave
no doubt upon the intention of the contracting
parties, the literal meaning of the stipulations
shall control."
- In addition, Article 1371 of the same Code
provides that "(i)n order to judge the intention of
the contracting parties, their contemporaneous
and subsequent acts shall be principally
considered."
59

The terms of the contract as embodied in the bill of
lading are clear and thus obviates the need for any
interpretation.
The intention of the parties which is the carriage of
the cargo under the terms specified thereunder and
the wordings of the bill of lading do not contradict
each other.
The terms of the contract being conclusive upon the
parties and judging from the contemporaneous and
subsequent actuations of petitioner, to wit, personally
receiving and signing the bill of lading and paying the
freight charges, there is no doubt that petitioner
must necessarily be charged with full knowledge and
unqualified acceptance of the terms of the bill of
lading and that it intended to be bound thereby.

B. PAROL EVIDENCE RULE
- Under this rule, the terms of a contract are rendered conclusive
upon the parties, and evidence aliunde [from a source extrinsic to
the matter, document, or instrument under consideration] is not
admissible to vary or contradict a complete and enforceable
agreement embodied in a document.
- Based on the consideration that when the parties have reduced
their agreement on a particular matter into writing, all their
previous and contemporaneous agreements on the matter are
merged therein.
- Accordingly, evidence prior or contemporaneous verbal agreement
is generally not admissible to vary, contradict, or defeat the
operation of a valid instrument
- The mistake contemplated as an exception to the parol evidence
rule is one which is mistake of fact mutual to parties.
- Furthermore, the rules on evidence, require that in order that parol
evidence may be admitted, said mistake must be put in issue by the
pleadings, such that if not raised inceptively in the complaint or in
the answer, as the case maybe, a party cannot later on be permitted
to introduce parol evidence.
- When parol evidence cannot be admitted?
o Where the mistake adverted to was supposedly committed
by one party only and was raised by the former rather
belatedly.
o Courts will not admit evidence to prove or explain the
alleged mistake in documentation imputed by one party to
another of there was failure to comply even only with the
procedural requirements on parol evidence.
C. BILL OF LADING AS EVIDENCE
- A bill of lading is a contract and as such it expresses the terms and
conditions of the agreement between the parties
a. it names the parties, which includes the consignee
b. Fixes the route , destination and freight rates and charges
c. Stipulates the rights and obligations assumed by the parties
- Being a contract, it is law between the parties who are bound by its
terms and conditions
- The fact that the bill of lading is the legal evidence of the contract is
recognized in the code of commerce

ARTICLE 353. The legal evidence of the contract between the
shipper and the carrier shall be the bills of lading, by the contents
of which the disputes which may arise regarding their execution and
performance shall be decided, no exceptions being admissible other
than those of falsity and material error in the drafting.

60
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 with the thing transported, the respective
obligations and actions shall be considered cancelled, unless in the
same act the claim which the parties may wish to reserve be
reduced to writing, with the exception of that provided for in Article
366.

In case the consignee, upon receiving the goods, cannot return the
bill of lading subscribed by the carrier, because of its loss or of any
other cause, he must give the latter a receipt for the goods
delivered, this receipt producing the same effects as the return of
the bill of lading.

- Similarly, the Code of Commerce provisions on maritime commerce
provides that

Article 709. A bill of lading drawn up in accordance with the
provisions of this title shall be proof as between all those interested
in the cargo and between the latter and the insurers, proof to the
contrary being reserved for the latter.

- Moreover, under Article 710 of the Code of Commerce if the bills of
lading are contradictory and no change or erasure can be observed
in any of them,
o Those possessed by the shipper or consignee signed by the
captain shall be proof against the captain or ship agent in
favor of the consignee or shipper,
o Those possessed by the captain or ship agent signed by the
shipper shall be proof against the shipper or consignee in
favor of the captain or ship agent
- On the other hand, the Carriage of Goods by Sea Act provides that
entries in the bill of lading constitute a prima facie proof
Sec. 3.

(4) Such a bill of lading shall be prima facie evidence of the receipt
by the carrier of the goods as therein described in accordance
with paragraphs (3) (a), (b), and (c), of this section: (The rest of
the provision is not applicable to the Philippines).

(5) The shipper shall be deemed to have guaranteed to the carrier
the accuracy at the time of shipment of the marks, number,
quantity, and weight, as furnished by him; and the shipper shall
indemnify the carrier against all loss, damages, and expenses
arising or resulting from inaccuracies in such particulars. The
right of the carrier to such indemnity shall in no way limit his
responsibility and liability under the contract of carriage to any
person other than the shipper.

- Whenever there is a valid contract of carriage entered into by the
carrier and passenger or shipper and passage tickets or bills of
lading have been issued upon which the latter based his complaint,
the tickets and bills are the best evidence of the contract between
them.
- All the essential elements of a valid contract [(1) consent; (2) cause
or consideration; (3) object] are present when such bill or ticket
issued.
- Peralta de Guerrero v Madrigal Shipping Co. Inc.
It is a matter of common knowledge that whenever a
passenger boards a ship for transportation from one place to
another he is issued a ticket by the shipper wherein the terms
of the contract are specified.
According to appellants, "This ticket is in itself a complete
61
written contract by and between the shipper and the
passenger.
It has all the elements of a complete contract, namely:
(1) the consent of the contracting parties manifested by the fact
that the passenger board the ship and the shipper consents or
accepts him in the sip for transportation;
(2) cause or consideration which is the fare paid by the passenger as
stated in the ticket; and (3) object, which is the transportation of
the passenger from the place of departure to the place of
destination which are stated in the ticket."

BILL OF LADING AS ACTIONABLE DOCUMENT:
The bill of lading must be properly pleaded either as causes of
action or defenses when a shipper enforces a contractual obligation
under the contract of carriage under the bill of lading which must be
categorize as an actionable document.
The genuineness and due execution of which are deemed admitted
unless specifically denied under oath by the adverse party.
The rules on actionable documents cover and apply to both cause of
action or defense based on said documents.

BASIC STIPULATIONS:
The stipulations must be stated in the bill of lading are provided for
in the Code of Commerce.

OVERLAND TRANSPORTATION:

ART. 350: the shipper as well as the carrier of merchandise or goods may
mutually demand that a bill of lading be made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to whom or to whose
order the goods are to be sent or whether they are to be delivered to the
bearer of said bill.
4. The description of the goods, with a statement of their kind, of their
weight, and of the external marks or signs of the packages in which they are
contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the consignee shall be
made.
9. The indemnity to be paid by the carrier in case of delay, if there should
be any agreement on this matter.

ARTICLE 351. In transportation made by railroads or other enterprises
subject to regulation rate and time schedules:
bills of lading or the declaration of shipment furnished by the
shipper to refer to the schedules and regulations the application of
which he requests with respect to the cost, time and special
conditions of the carriage.
if the shipper does not determine the schedule:
the carrier must apply the rate of those which appear to be the
lowest always including a statement or reference to in the bill of
lading which he delivers to the shipper with the conditions inherent
thereto.

ARTICLE 352. The bills of lading, or tickets in cases of transportation of
passengers shall bear:
the name of the carrier,
the date of shipment,
the points of departure and arrival,
the cost, and, with respect to the baggage,
the number and weight of the packages, with such other
manifestations which may be considered necessary for their easy
identification.

MARITIME COMMERCE:
62

Art. 706: The captain of the vessel and the shipper have the obligation of
drawing up the bill of lading in which shall be stated:
1. the name, registry, and tonnage of vessel
2. name of the captain and his domicile
3. port of loading and unloading
4. name of the shipper
5. name of the consignee
6. quantity, quality, number of packages
7. freightage and the primage stipulated.

Bill of lading may be issued to bearer or to order or in the name of specified
person, and must be signed within 24hours after the cargo has been
received.

Art. 707: Four True copies of the original bill of lading must be made:

The shipper shall keep and send another to the consignee
The captain shall take two- one for himself and another for the
ship agent.

Art. 708: Bills of lading issued to bearer and sent to the consignee shall be
transferrable by actual delivery of the instrument; and those issued to
order, by virtue of an indorsement.

Art. 710: If the bills of lading do not agree, and no change or erasure can be
observed in any of them:

Those possessed by the shipper or consignee signed by the captain shall be
proof against the captain or ship agent in favor of the consignee or shipper;
Those possessed by the captain or ship agent signed by the shipper shall be
signed by the shipper shall be proof against the shipper or consignee in
favor of the captain.

Art. 712: The captain may not by himself change the destination of the
merchandise.

Art. 714: If before the vessel puts to sea the captain should die or should
cease to hold his position through any cause, the shippers shall have the
right of demand of the new captain the ratification of the first bill of
lading.

Art. 715: Bills of lading will give rise to a most summary action or judicial
compulsion according to case, for the delivery of the cargo and the payment
of the freightage and the expenses thereby incurred.

Art. 716: If several persons should present bills of lading issued to bearer or
to order, indorsed in favor, demanding the same merchandise, the captain
shall prefer, in making delivery the person who presents the copy first
issued.

When only second subsequent copies are issued and are presented: the
captain shall apply to the court or judge so that he may order the deposit of
the merchandise and their delivery.

Art. 718: After the cargo has been delivered the bill of lading which the
captain signed shall be returned to him, with the receipt of the
merchandise.

The delay on the part of the consignee shall make him liable for the
damages which such delay may cause the captain.

CARRIAGE OF GOODS BY SEA ACT:

(a) The loading marks necessary for identification of the goods as the same
are furnished in writing by the shipper before the loading of such goods
starts, provided such marksare stamped or otherwise shown clearly upon
the goods if uncovered,in such a manner as should ordinarily remain legible
until the end of the voyage..
(b) Either the number of packages or pieces, or the quantity or weight, as
63
the casemaybe, as furnished in writing by the shipper.
(c) The apparent order and conditions of the goods: Provided, that no
carrier, master, or agent of the carrier, shall be bound to state or show in
the bill of lading any marks, number, quantity, or weight which he has
reasonable ground for suspecting not accurately to represent the good
actually received or which he has had no reasonable means of checking.

AIRLINE TRANSPORTATION OF PASSENGERS AND GOODS- provides basic
contents of the Passenger Ticket, the baggage check as well as the Airway
Bill:

1. For the carriage of passengers the carrier must deliver a passenger
ticket which shall contain the following particulars:-
(a) the place and date of issue;
(b) the place of departure and of destination;
(c) the agreed stopping places, provided that the carrier may reserve the
right to alter the stopping places in case of necessity, and that if he
exercises that right, the alteration shall not have the effect of depriving the
carriage of its international character;
(d) the name and address of the carrier or carriers;
(e) a statement that the carriage is subject to the rules relating to liability
established by this Convention.
2. The absence, irregularity or loss of the passenger ticket does not affect
the existence or the validity of the contract of carriage, which shall none the
less be subject to the rules of this Convention. Nevertheless, if the carrier
accepts a passenger without a passenger ticket having been delivered he
shall not be entitled to avail himself of those provisions of this Convention
which exclude or limit his liability.

Article 4
1. For the carriage of luggage, other than small personal objects of which
the passenger takes charge himself, the carrier must deliver a luggage
ticket.
2. The luggage ticket shall be made out in duplicate, one part for the
passenger and the other part for the carrier.
3. The luggage ticket shall contain the following particulars:-
(a) the place and date of issue;
(b) the place of departure and of destination;
(c) the name and address of the carrier or carriers;
(d) the number of the passenger ticket;
(e) a statement that delivery of the luggage will be made to the bearer of
the luggage ticket;
(f) the number and weight of the packages;
(g) the amount of the value declared in accordance with Article 22(2);
(h) astatement that the carriage is subject to the rules relating to liability
established by this Convention.
4. The absence, irregularity or loss of the luggage ticket does not affect the
existence or the validity of the contract of carriage, which shall none the
less be subject to the rules of this Convention. Nevertheless, if the carrier
accepts luggage without a luggage ticket having been delivered, or if the
luggage ticket does not contain the particulars set out at (d), (f) and (h)
above, the carrier shall not be entitled to avail himself of those provisions of
the Convention which exclude or limit his liability.

SECTION III- AIR WAYBILL:

Article 5: 1. Every carrier of goods has the right to require the consignor to
make out and hand over to him a document called an "air consignment
note"; every consignor has the right to require the carrier to accept this
document.
2. The absence, irregularity or loss of this document does not affect the
existence or the validity of the contract of carriage which shall, subject to
the provisions of Article 9, be none the less governed by the rules of this
Convention.
Article 6: 1. The air consignment note shall be made out by the consignor in
three original parts and be handed over with the goods.
2. The first part shall be marked "for the carrier," and shall be signed by the
consignor. The second part shall be marked "for the consignee"; it shall be
signed by the consignor and by the carrier and shall accompany the goods.
64
The third part shall be signed by the carrier and handed by him to the
consignor after the goods have been accepted.
3. The carrier shall sign on acceptance of the goods.
4. The signature of the carrier may be stamped; that of the consignor may
be printed or stamped.
5. If, at the request of the consignor, the carrier makes out the air
consignment note, he shall be deemed, subject to proof to the contrary, to
have done so on behalf of the consignor.
Article 7: The carrier of goods has the right to require the consignor to make
out separate consignment notes when there is more than one package.

Article 11: The air consignment note is prima facie evidence of the
conclusion of the contract, of the receipt of the goods and of the
conditions of carriage.

PROHIBITED AND LIMITING STIPULATIONS:
F. Prohibited and Limiting Stipulations
Three kinds of stipulations often made in bill of ladings:
1. Exempts the carrier from any and all liability for loss or damage
occasioned by its own negligence
2. One providing for an unqualified limitation of such liability to an agreed
valuation
3. Limiting the liability if the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of freight.

Nos. 1 and 2 are invalid as contrary to public policy
Only no.3 is valid and enforceable
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. 1746. An agreement limiting the common carrier's liability may
be annulled by the shipper or owner if the common carrier refused
to carry the goods unless the former agreed to such stipulation.
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. 1748. An agreement limiting the common carrier's liability for
delay on account of strikes or riots is valid.
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.
65
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. 1751. The fact that the common carrier has no competitor
along the line or route, or a part thereof, to which the contract
refers shall be taken into consideration on the question of whether
or not a stipulation limiting the common carrier's liability is
reasonable, just and in consonance with public policy.
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.

(1) Purpose
To protect the common carrier
Obliges the shipper/consignee to notify the common carrier of the
amount he may be liable in case of loss of goods
o Common carrier may take measures such as insurance to
cover or protect itself
Shipper or consignee who undervalues the worth of goods he seeks
to transport commits a fraudulent act when he seeks to make the
common carrier liable for more than the amount declared in bill of
lading
(2) Stipulation reducing diligence
Cannot stipulate total exemption of any degree of diligence
Cannot stipulate diligence less than a good father of a family
May stipulate less than extraordinary diligence in the carriage of
goods, provided:
o Stipulation be in writing signed by the parties
o Stipulation supported by a valuable consideration other
than the service rendered by the common carrier
o Reasonable, just and not contrary to law.
Distinguished from Art. 1750 which involves the stipulation of the
amount that may be recovered, requires:
o Reasonable and just under the circumstances
o Fairly and freely agreed upon
Prohibits such stipulations for carriage of passengers

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.

Carriage of Goods by Sea Acts (COGSA)
Suppletory to the Civil Code if goods shipped from foreign port to the
Philippines.
the liability of the carries is $500/package in the absence of the
shippers declaration of a higher value in the bill of lading
condition is considered part if bill of lading even if not expressly
stipulated.
Meaning of Package
each carton is considered a package even if stored in vans
*when the number of units are disclosed in the shipping document,
each of the units shall be constituted as package.
66
In Belgian Overseas Chartering v. Phil. First Co. - the Letter of Credit
indicates the per metric ton price of the coils. Upon discovery of 4
damaged coils and reaching the Courts. The SC applied COGSA and ruled
that each coil should be considered a package and awarde $500 each or
a total of $2,000.
CASES:
H. E. Heacock Company v. Macondray& Company, Inc.
GR No. L-16598, October 3, 1921

Facts:
H.E. Heacock Company (petitioner) shipped on board the steamship
Bolton Castle four cases of merchandise, one of which contains
Edmond clocks. The merchandise was brought from New York to
Manila.
Invoice value of Edmond clocks Php22; market value in Manila at
time of arrival Php240
Bill of lading contained the following clauses:
o Clause 1: Value of the goods receipted does not exceed
$500 per freight ton, unless the value be expressly stated
herein and ad valorem freight paid thereon.
o Clause 9: For short delivery or damage to cargo, carriers
liability is limited to not more than the net invoice price plus
freight and insurance, and damages proportional to the said
basis.
The clocks, however, exceeded $500 per freight ton. No declaration
was made and no ad valorem tax was tendered by the shipper.
The carrier tendered payment to the shipper only the equivalent
freight ton value of the clocks.
Judgment was rendered in favor of the shipper, ordering the carrier
to pay not only the equivalent freight ton value, but also the freight
and insurance.
Both parties appealed.

Issue/s:
Plaintiff: May a common carrier, by way of stipulation, limit its
liability for loss or damage to cargo?
Defendant: Are the clauses in the bill of lading the basis of
defendants liability?

Held:
Issue 1: YES
Issue 2: YES

Ratio:
Issue 1
A limitation of liability based upon an agreed value to obtain a lower
rate does not conflict with any sound principle of public policy. The
said clauses are not contrary to public order.

Issue 2
The stipulations shall be reasonably construed against defendants
benefit, as expressly stated in Clause 9 of the bill of lading.

Decision: Lower court decision AFFIRMED.

Agustino B. OngYiu v. CA, Philippine Airlines
GR Nos. 40597, June 29, 1979

Facts:
OngYiu rode a plane of Philippines Airlines (PAL) from Mactan to
Butuan. He checked in a blue bag containing documents inside
needed for his trial the following day.
It turns out that the bag was missing and is nowhere to be found.
OngYiu threatened to sue PAL for damages.
The telegram was received by the Cebu PAL supervisor, but did not
67
opt to wire OngYiu that the package is already coming since he
assumed that by then, the baggage would have already arrived.
It was discovered that the bag was opened with authorization.
OngYiu charged PAL for that matter. The trial court held that PAL
acted in bad faith and in malice.

Issue/s:
Did PAL act in bad faith?

Held: NO

Ratio:
There is no bad faith on the part of PAL. No motive of interest or ill
will was found.
Thus, the absence of bad faith lifts the entitlement of OngYiu to
moral and exemplary damages.

Decision: Lower court decision AFFIRMED.

Citadel Lines Inc. v CA
Gr No. 88092; April 25 1990

Facts:
1. Petitioner Citadel Inc. (Carrier) is the general agent of the vessel
while the respondent Manila Wine Merchants (consignee) is the
importer of the subject shipment of Dunhill cigarettes from England.
2. The vessel loaded on board at Southampton England for carriage to
Manila 180 filibrite cartons of mixed British manufactured cigarettes
called Dunhill International Filter and Dunhill International
Menthol
3. The shipment arrived at the port of Manila on April 18 1979 and it
was received by E. RazonInc ( Arrastre)
4. On April 30 1979, the container van which contained two shipment
was stripped. One shipment was delivered and the other shipment
consisting of the imported British manufactured cigarettes was
palletized.
5. Due to lack of space at the Special Cargo Coral, the said cigarettes
were placed in two containers with two pallets in container No.
BENU 204860-9 the original container and four pallets in container
No. BENU 201009-9, with both containers duly padlocked and
sealed by the representative of the CARRIER.
6. In the morning of May 1 1979, the Carriers headhecker discovered
that the container van No BENU 201009-9 had different padlock and
the seal was tampered worth. It was found that 90 cases of
imported British manufractured cigarettes were missing. This was
confirmed in the investigation. Per investigation conducted by the
arrastre, it was revealed that the cargo was not formally turned
over by the carrier but was kept inside container van no BENU
201009-9 which was padlocked and sealed by the representatives of
the carrier without any participation of the arrastre.
7. The consignee then filed a formal a complaint for damages. The
lower court exonerating the arrastre of any liability on the ground
that the subject container van was not formally turned over to its
custody and rendered that the carrier was liable. The CA affirmed
the lower courts decision but deleted that attys fee.
Issue:
(1) Whether the loss occurred in the custody of the cargo?
(2) Whether the stipulation limiting the liability of the carrier contained
in the bill lading is binding on the consignee?
Held: both YES
Rationale:
1.
The subject cargo was placed in a container van,padlocked and
sealed by the representative of the carrier was still in its possession
and control when the loss occurred, there having been formal
turnover of the cargo to the arrastre.
The common carried is liable for the loss and failed to prove that
the loss was occasioned by an excepted cause, the inescapable
conclusion is that the carrier was negligent
68
A common carrier because of the nature of the business and for
reason 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 and they are presumed negligent if they are loss,
destruction or deterioration.
2. Basic is the rule, long since enshrined as a statutory provision, that a
stipulation limiting liability of the carrier to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares
a greater value, is binding.
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.
The consignee itself admits in its memorandum that the value
of the goods shipped does not appear in the bills of lading.
Hence, the stipulation on the carriers limited liability applies.
Sea-Land Service Inc. IAC explained what is a just and
reasonable and fair and free, stipulation the said stipulation is
just and reasonable arguable from the fact that it echoes Art.
1750 itself in providing a limit to a liability only if a greater value
is not declared for the shipment in the bill of lading. To hold
otherwise would amount to questioning the justice and fairness
of that law itself and this the private respondent does not
pretend to do. But over and above that consideration that the
just and reasonable character of such stipulation is implicit in it
giving the shipper or owner the option of avoiding accrual of
liability the nature and value of the shipment in the bill of
lading.

Sea-land inc.vs IAC
GR no. 75118 ; Aug 31 1987
(ni summarize kolang 2)
Facts:
1. Sea- land, a foreign shipping and forwarding company licensed to do
business in the Philippines received from Seaborne Trading
Company ,a shipment consigned to Sep HiapHing business owned
by Paulino Cue.
2. The shipper not having declared the value of the shipment, no
value was indicated in the bill of lading. The bill described the
shipment only as 8 CTNCS on SKIDS- FILES. The shipment was
loaded on board the MS patriot for discharged at the por of Cebu
3. The shipment arrived in Manila on Feb 12 1981 and there discharge
into the custody of the arrastrecontracto and the customs and port
authorites. Sometime between Feb 13 and 16 , after the shipment
had been transferred along with other cargoes to container no.
40158 near warehouse 3 at pier 3 in south harbor Manila, awaiting
trans-shipment to Cebu, it was stolen by pilferers and had never
been recovered.
4. Paulino Cue, consignee, made a formal claim upon Sea-Land for the
value of the lost shipment allegedly amounting to P179 643.48. Sea-
Land offered to settle for $ 4000 or its then Philippine peso
equivalent of P30 600. Asserting that the said amount represented
its maximum liability
5. The lower court ruled in favor of Cue and was affirmed by IAC
Main issue: whether or not the consignee of seaborne freight is bound by
stipulations in the covering bill of lading limiting to a fixed amount the
liability of the carrier for loss or damage to the cargo where its value is not
declared in the bill?
Held: yes
Rationale:
Following the doctrine in Mendoza vs PAL concerning the consignee
even if, his right to prompt delivery of the can of film at the Phil.
Air Port Stems and is derived from the contract of carriage under
which contract. The PAL undertook to carry.take away the
contract and the obligation to carry and to deliver and right to
prompt delivery is extinguish.when he, Mendoza, appeared at the
Phil Air Port armed with the copy of the Air Way Bill demanding the
delivery of the shipment to him, he thereby made himself a party to
69
the contract of transportation.
the said stipulation is just and reasonable arguable from the fact
that it echoes Art. 1750 itself in providing a limit to a liability only if
a greater value is not declared for the shipment in the bill of lading.
To hold otherwise would amount to questioning the justice and
fairness of that law itself and this the private respondent does not
pretend to do. But over and above that consideration that the just
and reasonable character of such stipulation is implicit in it giving
the shipper or owner the option of avoiding accrual of liability the
nature and value of the shipment in the bill of lading

Everett Steamship Corporation vs. Court of Appeals and Hernandez
Trading Co. Inc.
GR No. 122494 October 8, 1998
Facts:
Hernandez Trading Co. Imported three crates of bus spare parts
(MARCO C/No. 12, MARCO C/No.13, MARCO C/No. 14) from
supplier Maruman Trading Company, Ltd.
These crates were shipped from Nagoya, Japan to Manila on board
ADELFAEVERETTE, a vessel owned by Everett Steamship
Corporations principal, Everett Orient Lines.
It was covered by Bill of Lading No. NGO53MN which states that:
The carrier shall not be liable for any loss or any damages.... ....
unless the value of the good higher than this amount is declared in
writing by the shipper before receipt of the goods by the carrier and
inserted in the Bill of Lading and extra freight paid as required.
Upon arrival at the port of Manila, MARCO C/No. 14 was missing.
The respondent made a formal claim upon petitioner for the value
of the lost cargo amounting to Y1, 552, 500.00 (yen). However, the
petitioner only offered to pay Y100, 000.00 as stipulated under
Clause 18 of the Bill of Lading limiting the liability of the petitioner.
Private respondent rejected the petitioners offer. It filed a suit for
collection.
TC: In favour of private respondent. The court considered the
defendant (now petitioner) categorical admission and its failure to
overcome the presumption of negligence and fault.
CA: On the extent of liability: It affirmed the trial courts findings
with the additional observation that private respondent cannot be
bound by the terms and conditions of the bill of lading because it
was not privy to the contract of carriage.

Issue: Can the carriers limited package liability stipulated in the bill of
lading apply in the case at hand?
Is the private respondent bound by the whole stipulation in the bill
of lading?

Held: Yes, the validity and binding effect of the liability limitation clause in
the bill of lading are fully sustainable.

Ratio:
The stipulation limiting the common carriers liability for loss must
be reasonable and just under the circumstances and has been
freely and fairly agreed upon.
o The stipulations, in this case, are just and reasonable.
o Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the
stipulation
Just because the conditions were printed in small letters does not
make the bill of lading invalid.
o Contract of adhesion- a ready-made contract of carriage
which is valid and binding upon the passenger regardless of
the latters lack of knowledge or assent to the regulation.
o If he adheres, he gives consent.
Private respondent is bound by the whole stipulations in the bill of
lading.
o When the private respondent formally claimed
reimbursement for the missing goods and filed a case
against the petitioner on the basis of the bill of lading, he
70
accepted the provisions of the contract and made himself a
party thereto.

c. International Air Transportation of Passenger Goods

Liability of the carrier in international air transportation as provided by the
Warsaw Convention on Air Transportation:

Art. 17 The carrier shall be liable for damage sustained in the event of death
or woundingof a passenger or any other bodily injury suffered by a
passenger if the accident which caused the damage so sustained took place
on board the aircraft or in the course of any operations of embarking and
disembarking.

Art. 18 (1) The carrier shall be liable for damage sustained in the event of
destruction or loss of, or damage to, any checked baggage, or any goods, if
the occurrence which caused the damage so sustained took place during
the transportation by air.

(2) The transportation by air within the meaning of the preceding
paragraph shall comprise the period during which the baggage or goods are
in charge of the carrier, whether in an airport or on board an aircraft, or, in
the case of a landing outside an airport, in any place whatsoever.

(3) The period of transportation by air shall not extend to any
transportation by land, by sea, or by river performed outside an airport. If,
however, such transportation by air, for the purpose of loading, delivery, or
transhipment, any damage is presumed, subject to proof to the contrary, to
have been the result of an event which took place during transportation
by air.

Art. 19 The carrier shall be liable for damage occasioned by delay in
transportation by air of passengers, baggage or goods.

The Convention purports to limit the liability of the carriers in the ff manner:
1.) Liability of the carrier in the carriage of passengers is limited to the
sum of 250,000 francs.
Note: Special Contract: The carrier and passenger may agree to a higher
limit of liability.

2.) a.) Liability of the carrier in the carriage of registered baggage and
of cargo is limited to a sum of 250 francs per kilogramme.
Unless: the passenger or consignor has made a special declaration of
interest in delivery at the destination and has paid a supplementary sum if
the case so requires.

b.) Liability of the carrier in case of loss, damage or delay of part of
registered baggage or cargo is limited only to the total weight of the
package or packages concerned.

3.) Liability of the carrier in the carriage of objects which the passenger
takes charge himself is limited to 5,000 frances per passenger.
4.) The limits prescribed shall not prevent the court from awarding, in
accordance with its own laws, in addition, the whole or part of the
court costs and of the other expenses of litigation incurred by the
plaintiff.

Note: Warsaw Convention denies to the carrier the 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.
Northwest Airlines, Inc. vs Nicolas L. Cuenca and CA
GR No. L-22425 August 31, 1965

Facts:
71
The respondent, in this case, held office of Commissioner of Public
Highways of the Republic of the Philippines. He boarded the
petitioners plane in Manila with a first class ticket to Tokyo.
Upon arrival at Okinawa, he was asked to transfer to the tourist
class compartment.
Although he revealed that he was in an official business as a
delegate of the Philippines to a conference in Tokyo, an agent of the
petitioner rudely compelled him to move to the tourist class.
o In order to reach the conference on time, he had no choice
but to comply.
An action of breach of contract was filed in CFI Manila. Judgement:
sentencing Northwest Airlines, Inc.
CA: affirmed the decision of CFI Manila

Issue:
Do the provisions stated in the Convention regulate or exclude liability for
other breaches of contract by carrier?

Held:
No. To exempt an air carrier from any liability for damages in the event of its
absolute refusal, in bad faith, to comply with a contract of carriage is
absurd.

Ratio:
The first class accommodation given to the respondent as he took
the petitioners plane in Manila made him believe that this was a
confirmation of a first class reservation and that he would keep the
same until his ultimate destination.
The offense was committed with full knowledge that the
respondent is an official delegate of the Republic of the Philippines
o The petitioners agent acted in wanton, reckless, and
oppressive manner.

Northwest Airlines, Inc. vs. Nicolas Cuenca and CA

FACTS:
Cuenca, who was the holder of a first class ticket from Manila to Tokyo, was
rudely compelled by an agent of the petitioner airline to move to the tourist
class. His ticket, though having paid the first class fare in full, was marked
W/L, but he was not advised that it meant wait listed. This was done
notwithstanding its knowledge that Cuenca, as Commissioner of Public
Highways of the Republic of the Philippines was travelling in his official
capacity as a delegate of the country to the conference in Tokyo.

ISSUE:
Is the petitioners contention of an air carrier is liable only in the even of
death of a passenger or injury suffered by him tenable, and that nominal
damages cannot co-exist with compensatory damages?

RULING: No.
First: This pretense is not borne out by the language of said Articles. Neither
said provisions nor others in the Warsaw Convention regulate or exclude
liability for other breaches of contract by carrier. Such theory then is absurd.
Second: The court found special reasons for considering P20,000 as
nominal. Also, there was no such compensatory, moral and exemplary
damages granted to Cuenca.

Alitalia vs. IAC and Felipa Pablo

FACTS:
Dr. Pablo filed an action for damages when she failed to attend the United
Nations meeting in Italy because her luggage containing her luggage,
personal items and research materials were only forwarded to Italy after
her scheduled appearance and participation at the UN meeting.

ISSUE:
Is the petitioners contention that the Warsaw Convention should have
72
been applied to limit its liability and is Dr. Pablo entitled to nominal
damages?

RULING:
First: No bad faith or otherwise improper conduct may be ascribed to the
employees of petitioner airline, and Dr. Pablo's luggage was eventually
returned to her, belatedly, it is true, but without appreciable damage. The
fact is, nevertheless, that some species of injury was caused to Dr. Pablo
because petitioner misplaced her baggage and failed to deliver it to her at
the time appointed - a breach of its contract of carriage. Certainly, the
compensation for the injury suffered by Dr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention
for delay in the transport of baggage.
Second: She is not, of course, entitled to be compensated for loss or
damage to her luggage. She is however entitled to nominal damages which,
as the law says, is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated and
recognized, and not for the purpose of indemnifying the plaintiff that for
any loss suffered.

Pan American World Airways, Inc. vs. IAC

FACTS:
Pan Am sought to limit its liability for the two lost luggages, containing
promotional and advertising materials for films to be exhibited. Apparently,
when Rene Pangan, president and general manager of SotangBastos and
Archer Productions arrived in Guam, such luggages did not arrive with his
flight, and as a consequence his agreements with Slutchnick and Quesada
for the exhibition of the films in Guam and in the US were cancelled
ISSUE:
Is the petitioners contention that the liability must be controlled by the
amount specified in the airline ticket absent a declaration of a higher
valuation and the payment of additional charges correct, and is it liable for
damages?

RULING:
First: There is no dispute that the plaintiff did not declare higher value for
his luggage; much less did he pay any additional transportation charge. The
ruling applied the principle of contract of adhesion, which means that
although the plaintiff had not signed the plane ticket, he is nevertheless
bound by the provisions thereof.
Second: Petitioner is not liable for damages, since the evidence reveals that
the proximate cause of the cancellation of the contracts was Pangans
failure to deliver the promotional and advertising materials on the dates
agreed upon. Pan Am was not privy to his contracts nor was its attention
called to the condition therein requiring delivery of the promotional and
advertising materials on or before a certain date.

CHINA AIRLINES v. DANIEL CHIOK
G.R. No. 152122;July 30, 2003

Facts:
1. A ticket from China Airlines Ltd. (CAL) covering Manila-Taipei-Hong
Kong-Manila was purchased by Daniel Chiok, herein petitioner.
2. It was exclusively endorsable to Philippine Airlines (PAL). He took a
trip from Manila to Taipei and before he left for the said trips, the
trips covered by the ticket were pre-scheduled and confirmed.
3. In Taipei, Chiok went to CAL office to confirm his Hong Kong-Manila
flight. CAL attached a yellow sticker, indicating that flight status was
ok. Upon reaching Hongkong, Chiok went to PAL office to confirm
his Manila flight.
4. PAL confirmed and attached its own sticker. He later found out that
the scheduled flight bound to Manila was cancelled due to a
typhoon. All confirmed ticket holders were booked automatically
for its next flight (next day).
5. However on the following day, a PAL employee informed Chiok that
his name did not appear in PALs computer list of passengers and
73
therefore could not be permitted to board PAL flight.
6. The plaintiff instituted complaint for charges. The Regional Trial
Court held that CAL and PAL jointly and severely liable to
correspondent, affirmed by Court of Appeals.

Issue:
1. Which is the principal and which is the agent carrier
2. Is there liability arising from China Airlines?

Held/Rationale:
1. The ticket-issuing airline is the principal in a contract of carriage,
while the endorsee-airline is the agent.
a. This is for cases of general pool partnership agreement
b. A general pool partnership agreement wherein they act as
agent of each other in the issuance of tickets to contracted
passengers to boost ticket sales worldwide and at the same
time provide passengers easy access to airlines which are
otherwise inaccessible in some parts of the world.
c. By constituting itself as an agent of the principal carrier the
petitioners undertaking should be taken as part of a single
operation under the contract of carriage executed

2. YES. The obligation of the ticket-issuing airline remained and did not
cease, regardless of the fact that another airline had undertaken to
carry the passengers to one of their destinations.
a.

Decision: Petition Denied

Note the following:
Article 1, Section 3 of the Warsaw Convention states:
"Transportation to be performed by several successive air carriers shall be
deemed, for the purposes of this Convention, to be one undivided
transportation, if it has been regarded by the parties as a single operation,
whether it has been agreed upon under the form of a single contract or of a
series of contracts, and it shall not lose its international character merely
because one contract or a series of contracts is to be performed entirely
within a territory subject to the sovereignty, suzerainty, mandate, or
authority of the same High Contracting Party."

Article 15 of IATA-Recommended Practice similarly provides:
"Carriage to be performed by several successive carriers under one ticket, or
under a ticket and any conjunction ticket issued therewith,is regarded as a
single operation."

Augusto Benedicto Santos III vs. Northwest Orient Airlines
G.R. No. 101538; June 23, 1992
Facts :
1. In this case the parties are: a minor and a resident of the
Philippines, purchased from private and the respondent is the
Northwest Orient Airlines (NOA), a foreign corporation with
principal office in Minnesota, U.S.A. and licensed to do business and
maintain a branch office in the Philippines.
2. A round-trip ticket in San Francisco. U.S.A., for his flight from San
Francisco to Manila via Tokyo and back was purchased by the
petitioner.
3. However, the scheduled departure date from Tokyo was December
20, 1986 and no date was specified for his return to San Francisco.
4. When the petitioner checked in at the NOA counter in the San
Francisco airport for his scheduled departure to Manila [despite a
previous confirmation and re-confirmation] he was informed that
he had no reservation for his flight from Tokyo to Manila. He
therefore had to be wait-listed.
5. This prompted the petitioner to sue NOA for damages in the
Regional Trial Court of Makati.
6. NOA moved to dismiss the complaint on the ground of lack of
jurisdiction invoking Article 28 (1) of the Warsaw Convention.
a. Art. 28. (1) An action for damage must be brought at the
74
option of the plaintiff, in the territory of one of the High
Contracting Parties, either before the court of the domicile
of the carrier or of his principal place of business, or where
he has a place of business through which the contract has
been made, or before the court at the place of destination.
7. Northwest Orient Airlines argues that the Philippines was not its
domicile nor was this its principal place of business. Neither was the
petitioner's ticket issued in this country nor was his destination
Manila but San Francisco in the United States.
Issue/s:
1. Is Article 28 of Warsaw Convention constitutional?
2. Does the provision of Article 28 of Warsaw convention talk of venue
or jurisdiction?
Held/Rationale:
1. YES. The Warsaw Convention is a treaty commitment voluntarily
assumed by the Philippine government and, as such, has the force
and effect of law in this country.
a. Convention was concurred by the Senate through Res. No.
19 on May 16, 1950; became applicable on Feb.9. 1950 and
on Sept.23, 1955, Proclamation No. 201 was issued by
Pres.Magsaysay as formal adherence thereto.
b. Given that this is a joint legislative-executive act, there is a
presumption that it was first carefully studied and
determined to be constitutional before it was adopted and
given the force of law in this country. Petitioner failed to
overcome this presumption.
2. Jurisdiction.
a. First, the wording of Article 32, which indicates the places
where the action for damages "must" be brought,
underscores the mandatory nature of Article 28(1). Second,
this characterization is consistent with one of the objectives
of the Convention, which is to "regulate in a uniform
manner the conditions of international transportation by
air." Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1),
which means that the phrase "rules as to jurisdiction" used
in Article 32 must refer only to Article 28(1).
b. Where the matter is governed by the Warsaw Convention,
jurisdiction takes on a dual concept. Jurisdiction in the
international sense must be established in accordance with
Article 28(1) of the Warsaw Convention, following which
the jurisdiction of a particular court must be established
pursuant to the applicable domestic law. Only after the
question of which court has jurisdiction is determined will
the issue of venuebe takenup. This second question shall be
governed by the law of the court to which the case is
submitted.
c. On Place of Destination: The place of destination, within
the meaning of the Warsaw Convention, is determined by
the terms of the contract of carriage or, specifically in this
case, the ticket between the passenger and the carrier.
Examination of the petitioner's ticket shows that his
ultimate destination is San Francisco. Although the date of
the return flight was left open, the contract of carriage
between the parties indicates that NOA was bound to
transport the petitioner to San Francisco from Manila.
Manila should therefore be considered merely an agreed
stopping place and not the destination.
d. The domicile of the carrier is only one of the places where
the complaint is allowed to be filed under Article 28(1). By
75
specifying the three other places, to wit, the principal place
of business of the carrier, its place of business where the
contract was made, and the place of destination, the article
clearly meant that these three other places were not
comprehended in the term "domicile."
Decision: Denied
Notes:
International Transportation, Defined: Shall mean any transportation in
which, according to the contract made by the parties, the place of departure
and the place of destination, whether or not there be a break in the
transportation or a transshipment, are situated [either] within the
territories of two High Contracting Parties (Article 2 par.1); determined by
the contract of the parties, which in the case of passengers is the ticket.
When the contract of carriage provides for the transportation of the
passenger between certain designated terminals "within the territories of
two High Contracting Parties," the provisions of the Convention
automatically apply and exclusively govern the rights and liabilities of the
airline and its passenger.

United Airlines vs. Willie J. Uy
GR No. 127768; November 19, 1999
FACTS:
1. October 13, 1989: respondent Uy, a passenger of United Airlines,
checked in together with his luggage one piece of which was found
to be overweight at the airline counter.
2. To his utter humiliation, an employee of petitioner rebuked him
saying that he should have known the maximum weight allowance
per bag and that he should have packed his things accordingly.
3. Then, in a loud voice in front of the milling crowd, she told
respondent to repair his things and transfer some of them to the
light ones. Respondent acceded but his luggage was still overweight.
4. Petitioner billed him overweight charges but its employee reused to
honor the miscellaneous charges under MCD which he offered to
pay with. Not wanting to leave without his luggage, he paid with his
credit card.
5. Upon arrival in Manila, he discovered that one of his bags had been
slashed and its contents stolen.
6. In a letter dated October 16, 1989, he notified petitioner of his loss
and requested reimbursement. Petitioner paid for his loss based on
the maximum liability per pound. Respondent considered the
amount grossly inadequate.
7. He sent two more letters to petition but to no avail.
8. June 9, 1992: respondent filed a complaint for damages against
petitioner Airline.
9. Petitioner moved to dismiss the complaint invoking the provisions
of Article 29 of the Warsaw Convention.
10. Respondent countered that according to par. 2 of Article 29, the
method of calculating the period of limitation shall be determined
by the law of the court to which the case is submitted.
ISSUE:
1. Does the Warsaw Convention preclude the operation of the Civil
Code and other pertinent laws?
2. Has the respondents cause of action prescribed?
HELD:
1. No.
Within our jurisdiction we have held that the Warsaw
Convention can be applied, or ignored, depending on the
peculiar facts presented by each case.
Convention provisions do not regulate or exclude liabilities
for other breaches of contract by the carrier or misconduct
of its officers and employees, or for some particular or
exceptional type of damage.
o Neither may the Convention be invoked to justify
the disregard of some extraordinary type of
damage.
76
o Neither may the Convention be invoked to justify
the disregard of some extraordinary sort of damage
resulting to a passenger and preclude recovery
therefore3 beyond the limits et by said convention.
o the Convention does not preclude the operation of
the Civil Code and other pertinent laws.
It does not regulate, much less exempt, the carrier from
liability for damages for violating the rights of its passengers
under the contract of carriage, especially if willful
misconduct on the part of the carriers employees is found
or established.

2. No.
While his 2nd cause of action (an action for damages arising
from theft or damage to property or goods) is well within
the bounds of the Warsaw convention, his 1st cause of
action (an action for damages arising from the misconduct
of the airline employees and the violation of respondents
rights as passengers) clearly is not.
The 2-yr limitation incorporated in Art. 29 of the Warsaw
Convention as an absolute bar to suit and not to be made
subject to the various tolling provisions of the laws of the
forum, forecloses the application of our own rules on
interruption of prescriptive periods. (Art. 29, par. 2 was
indented only to let local laws determine whether an action
shall be deemed commenced upon the filing of a
complaint.)
o Since, it is indisputable that respondent filed the
present action beyond the 2-yr time frame his 2nd
cause of action must be barred.
However, it is obvious that respondent was forestalled from
immediately filing an action because petitioner gave him
the runaround, answering his letters but not giving in to his
demands.
True, respondent should have already filed an action at the
first instance when petitioner denied his claims but the
same could only be due to his desire to make an out-of-
court settlement for which he cannot be faulted.
Hence, despite the express mandate of Article 29 of the
Warsaw Convention that an action for damages should be
filed within 2 years from the arrival at the place of
destination, such rule shall not be applied in the instant
case because of the delaying tactics employed by petitioner
airlines itself.
Thus, respondents 2nd cause of action cannot be
considered as time barred.
DOCTRINE: Applicability of the Warsaw Convention see HELD 1

V. BILL OF LADING AS RECEIPT
the issuance of a bill of lading carries the presumption that the
goods were delivered to the carrier issuing the bill, for immediate
shipment, and it is nowhere questioned that a bill of lading is prima
facie evidence of the receipt of the goods by the carrier
in the absence of convincing testimony establishing mistake, recitals
in the bill of lading showing that the carrier received the goods for
shipment on a specified date control
Saludo, Jr. vs Court of Appeals
o BILL OF LADING: written acknowledgment of the receipt of
the goods and an agreement to transport and deliver them
at a specified place to a person named or on his order
may be called shipping receipt, forwarders receipt
and receipt for transportation
designation is immaterial
when properly executed and delivered to shipper, it
is evidence that the carrier has received the goods
described
77
may contain constituent elements of estoppels and
thus become something more than a contract
between the shipper and the carrier
between the shipper and the carrier, when
no goods have been delivered for shipment
no recitals in the bill can estop the carrier
from showing the true facts
between the consignor of goods and
receiving carrier, recitals in the bill of lading
as to the goods shipped raise only a
rebuttable presumption that such goods
were delivered for shipment
o the fact must outweigh the recital
o TWO FOLD CHARACTER OF A BILL OF LADING:
receipt as to the quantity and description of the
goods shipped and a contract
contract to transport the goods to a consignee or
other person therein designated, on the terms
specified in such instrument
the carrier may be allowed to present proof that he received the
cargo on a date different from the date of the bill of lading

VI. BILL OF LADING AS DOCUMENT OF TITLE
- bill of lading is a document of title as contemplated under the Civil
Code
- such bill of lading can be negotiable document of title
- it is the symbol of the period of transit and voyage
- the indorsement and delivery of the bill of lading operates as a
symbolic delivery of the cargo
- for the purpose of passing such property in the goods and
completing the title of the indorsee to full possession thereof, the
bill of lading, until complete delivery of the cargo has been made on
the shore to someone rightfully claiming under it, remains in force
as a symbol, and carries with it not only the full ownership of the
goods, but also all rights created by the contract of carriage
between the shipper and shipowner
- it is the key which in the hands of a rightful owner is intended to
unlock the door of the warehouse, floating or fixed, in which the
goods may chance to be

A. NEGOTIABILITY
presence of words of negotiability makes the document of title
negotiable

Art. 1507. A document of title in which it is stated that the goods referred to
therein will be delivered to the bearer, or to the order of any person named
in such document is a negotiable document of title. (n)

a. Effect of Stamp of Notation Non-Negotiable.
if the document of title contains the required words of negotiability
to make the instrument negotiable under Article 1507 of the Civil
Code, the document remains to be negotiable even if the words
not negotiable or non-negotiable are placed thereon.
Art. 1510. If a document of title which contains an undertaking by a carrier,
warehouseman or other bailee to deliver the goods to bearer, to a specified
person or order of a specified person or which contains words of like
import, has placed upon it the words "not negotiable," "non-negotiable" or
the like, such document may nevertheless be negotiated by the holder and
is a negotiable document of title within the meaning of this Title. But
nothing in this Title contained shall be construed as limiting or defining the
effect upon the obligations of the carrier, warehouseman, or other bailee
issuing a document of title or placing thereon the words "not negotiable,"
"non-negotiable," or the like. (n)

78
B. HOW NEGOTIATED
a. Bearer Document
- rules regarding bearer documents of title are provided for in Articles
1508 and 1511 of the Civil Code
Art. 1508. A negotiable document of title may be negotiated by delivery:

(1) Where by the terms of the document the carrier, warehouseman or
other bailee issuing the same undertakes to deliver the goods to the bearer;
or

(2) Where by the terms of the document the carrier, warehouseman or
other bailee issuing the same undertakes to deliver the goods to the order
of a specified person, and such person or a subsequent endorsee of the
document has indorsed it in blank or to the bearer.

Where by the terms of a negotiable document of title the goods are
deliverable to bearer or where a negotiable document of title has been
indorsed in blank or to bearer, any holder may indorse the same to himself
or to any specified person, and in such case the document shall thereafter
be negotiated only by the endorsement of such endorsee. (n)

Art. 1511. A document of title which is not in such form that it can be
negotiated by delivery may be transferred by the holder by delivery to a
purchaser or donee. A non-negotiable document cannot be negotiated and
the endorsement of such a document gives the transferee no additional
right. (n)

b. Order Document
document is an order document if it states that the goods are to be
delivered to the order of a person named therein.
it can only be negotiated through the endorsement of the specified
person so named
the rules are provided for in Section 38 of the NIL and Article 1509
of the New Civil Code
the transferee may also convert the plain transfer to negotiation by
compelling the transferor to complete the negotiation process
Art. 1509. A negotiable document of title may be negotiated by the
endorsement of the person to whose order the goods are by the terms
of the document deliverable. Such endorsement may be in blank, to
bearer or to a specified person. If indorsed to a specified person, it may
be again negotiated by the endorsement of such person in blank, to
bearer or to another specified person. Subsequent negotiations may be
made in like manner. (n)

SECTION 38. Negotiation of negotiable receipt by indorsement. A
negotiable receipt may be negotiated by the indorsement of the person to
whose order the goods are, by the terms of the receipt, deliverable. Such
indorsement may be in blank, to bearer or to a specified person. If indorsed
to a specified person, it may be again negotiated by the indorsement of
such person in blank, to bearer or to another specified person. Subsequent
negotiation may be made in like manner.

Art. 1515. Where a negotiable document of title is transferred for value by
delivery, and the endorsement of the transferor is essential for negotiation,
the transferee acquires a right against the transferor to compel him to
endorse the document unless a contrary intention appears. The negotiation
shall take effect as of the time when the endorsement is actually made. (n)

C. EFFECTS OF NEGOTIATION
79
negotiability of an instrument merely indicates that in the passage
of the document of title through the channels of commerce, the law
regards the property which the document describes as following
them
negotiation of the document has the effect of manual delivery so as
to constitute the transferee the owner of the goods
Philippine Trust Co. vs National Bank
o the execution of the promissory notes and the pledging of
the quedans, or warehouse receipts, as collateral, and the
describing of them in the notes, and the manual delivery of
the quedan, ore warehouse receipt itself, carries with it not
only the title, but the legal possession of the property
under the Civil Code, the ownership of the thing sold is acquired by
the vendee from the moment it is delivered to him
negotiation of the instrument results in the same transfer of
ownership because transfer of the document likewise transfers
control over the goods
o Article 1513: direct obligation of the bailee issuing the
document to hold possession of the goods is owed to the
transferee from the moment of negotiation

Art. 1513. A person to whom a negotiable document of title has been duly
negotiated acquires thereby:

(1) Such title to the goods as the person negotiating the document to him
had or had ability to convey to a purchaser in good faith for value and also
such title to the goods as the person to whose order the goods were to be
delivered by the terms of the document had or had ability to convey to a
purchaser in good faith for value; and

(2) The direct obligation of the bailee issuing the document to hold
possession of the goods for him according to the terms of the document as
fully as if such bailee had contracted directly with him. (n)

Thea E !study Group: Chapter 1: General Concepts

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Thea E !study Group: Chapter 1: General Concepts

Diunggah oleh

Hak Cipta:

Format Tersedia

TheAWESOME!

Anda mungkin juga menyukai