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Subject: Transportation

Professor: Atty. Ampil


By: Butch Ramiro

Note: This reviewer/case digest compilation has complete digests from Week 5 onwards. For Article 1733. Common carriers, from the nature of their business and for reasons of public
the first 4 weeks, however, only the doctrines are included. Good luck, enjoy, and memorize the policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the
Beaufort Windscale in the finals for maximum awesomeness. safety of the passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the
WEEK 1 passengers is further set forth in articles 1755 and 1756.

Article 1732. Common carriers are persons, corporations, firms or associations engaged in the This article says that the standard of diligence of common carriers, whether it be for goods
business of carrying or transporting passengers or goods or both, by land, water, or air, for or passengers, is extraordinary diligence.
compensation, offering their services to the public.
It is the duty of the carrier ―to properly and carefully handle, carry, keep and care for the
Article contains the definition of a CC as per the law goods carried‖ and ―to exercise due care to ascertain and consider the nature of the goods
offered for shipment and to use such methods for their care during the voyage as their
Parties to a contract of transportation of goods nature require‖

Shipper: The one sends goods for shipment, by packaging, labeling, and arranging for See cases below.
transit, or who coordinates the transport of goods
Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the
Carrier: The one who transports the goods goods, unless the same is due to any of the following causes only:

Consignee: The party to who the carrier is to deliver the things being transported. (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

What is a bill of lading? (2) Act of the public enemy in war, whether international or civil;

A bill of lading is a document the carrier delivers to the shipper, through which the former (3) Act or omission of the shipper or owner of the goods;
admits the receipt of goods from the latter in order to transport them to a certain port.
(4) The character of the goods or defects in the packing or in the containers;
The Bill of lading is usually issued on the goods loading or after loading them on board the
ship, as a proof of the loading act itself and as a confirmation of the transporter‘s receipt of (5) Order or act of competent public authority.
the goods.
Three causes of action against a common carrier in the carriage of goods
Functions of a bill of lading
1) LOSS
1) The Bill of lading is evidence that the carrier has received the goods. 2) DESTRUCTION
2) The Bill of lading is a device that confirms the maritime transportation contract of 3) DETERIORATION
goods.
3) The Bill of lading is a title deed to the loaded goods. If any of the events occurs in Art 1734, will it exempt the CC from liability?

Distinguish a common carrier from a private carrier. Yes, it is a complete defense. There are different requisites for each event, as provided for
in the succeeding sections.
COMMON CARRIER PRIVATE CARRIER
Holds himself out in common to all persons Agrees in some special case with some Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding
who choose to employ him, as ready to private individual to carry for hire. article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have
carry for hire been at fault or to have acted negligently, unless they prove that they observed extraordinary
Bound to carry for all who offer such goods Not bound to carry for any reason unless it diligence as required in article 1733.
as it is accustomed to carry and demand for enters into a special agreement in doing so
reasonable compensation for carrying them If the goods are lost, destroyed or deteriorated and common carriers are PRESUMED to
Public service and subject to regulation Not subject to regulation have been at fault or to have acted negligently.
Standard of diligence: extraordinary Standard of diligence: Diligence agreed
diligence upon, and in default, ordinary diligence. To rebut the presumption, the burden is on the common carrier to show that it exercised
extraordinary diligence.
1
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Does this mean that if the CC presents evidence to show extraordinary diligence, it When the carrier‘s ship docks at its place of destination, it may store the goods it is
will already win? transporting in its warehouse. During this time, still has the duty to exercise ED over the
goods
No. According to the codal provision, a showing of extraordinary diligence will merely rebut
the presumption of negligence or fault on the part of the CC. Evidence still has to be Until when? Until the consignee has been 1) ADVISED of the arrival of the goods AND
presented by both parties. has had 2) reasonable opportunity to REMOVE or OTHERWISE DISPOSTE of them.

Article 1736. The extraordinary responsibility of the common carrier lasts from the time the Article 1739. In order that the common carrier may be exempted from responsibility, the natural
goods are unconditionally placed in the possession of, and received by the carrier for disaster must have been the proximate and only cause of the loss. However, the common carrier
transportation until the same are delivered, actually or constructively, by the carrier to the must exercise due diligence to prevent or minimize loss before, during and after the occurrence
consignee, or to the person who has a right to receive them, without prejudice to the provisions of flood, storm or other natural disaster in order that the common carrier may be exempted from
of article 1738. 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.
Article 1737. The common carrier's duty to observe extraordinary diligence over the goods
remains in full force and effect even when they are temporarily unloaded or stored in transit, What are the requisites to use the complete defense of NATURAL DISASTER and
unless the shipper or owner has made use of the right of stoppage in transitu. ACT of the PUBLIC ENEMY in WAR? [in relation to 1734(1) and (2)]

1) There must indeed be a natural disaster or a war


Article 1738. The extraordinary liability of the common carrier continues to be operative even
2) The disaster/act of the enemy must be the PROXIMATE and ONLY cause of the loss
during the time the goods are stored in a warehouse of the carrier at the place of destination,
3) The CC must exercise DUE DILIGENCE BEFORE, DURING and AFTER the occurrence
until the consignee has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of them
Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a
natural disaster shall not free such carrier from responsibility.
Is a contract of transportation a consensual contract?

Yes it is a consensual contract, perfected by the mere agreement of the parties. This article The general rule therefore is that if the carrier negligently occurs in delay in transporting the
talks about when the DUTY BEGINS and not when the CONTRACT IS PERFECTED. goods, it cannot use the defense of a natural disaster when the goods are L/D/D.

GENERALLY, when does the duty of extraordinary diligence over the goods begin? HOWEVER mere delay to transport the goods or a refusal to transport them does not
necessarily render the CC liable in the event of the L/D/D of the goods. As the article says,
BEGINS AT: the time the goods are unconditionally placed in the possession of and the CC must be guilty of a WILFUL and NEGLIGENT act, in incurring in delay.
received by the carrier for transportation
Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration
ENDS: at the time the goods are delivered, actually or constructively, by the carrier of the goods, the proximate cause thereof being the negligence of the common carrier, the latter
either to the 1) consignee, or to the 2) person who has a right to receive them. shall be liable in damages, which however, shall be equitably reduced.

Intervening Factors: If the shipper or owner is guilty of contributory negligence but the CC is still the proximate
cause of the L/D/D, then the CC shall still be liable for damages, which shall be equitably
A) Art 1737: reduced [This is in relation to 1734 (3)]
The goods may be temporarily unloaded or stored in transit and the duty of ED still remains
in effect. However, the shipper/owner may exercise his right of stoppage in transit. THUS, for the CC to use the defense under Art 1734(3), it must show that the act or
omission of the shipper or owner was the proximate cause of the loss.
Stoppage in transitu: When the buyer of the goods is or becomes insolvent, the unpaid
seller who has parted possession with the goods has the right of stopping them in transitu. Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
In effect, the seller may resume possession of such goods. 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.
Effect: the duty of ED ceases. The carrier only holds such goods in the capacity of a
warehouseman/bailee (―such care in regard to them as a reasonable careful owner of
For the CC to use the defense under Art 1734(4), it must show that it exercised DUE
similar goods would exercise‖)
DILIGENCE to lessen the loss.
B) Art 1738:
2
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Article 1743. If through the order of public authority the goods are seized or destroyed, the Reason for annulling a stipulation limiting liability: CC refused to carry goods unless
common carrier is not responsible, provided said public authority had power to issue the order the shipper/owner agreed to such stipulation

Article 1744. A stipulation between the common carrier and the shipper or owner limiting the Article 1747. If the common carrier, without just cause, delays the transportation of the goods or
liability of the former for the loss, destruction, or deterioration of the goods to a degree less than changes the stipulated or usual route, the contract limiting the common carrier's liability cannot
extraordinary diligence shall be valid, provided it be: be availed of in case of the loss, destruction, or deterioration of the goods.

(1) In writing, signed by the shipper or owner; Article 1748. An agreement limiting the common carrier's liability for delay on account of strikes
or riots is valid.
(2) Supported by a valuable consideration other than the service rendered by the common
carrier; and Article 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.
(3) Reasonable, just and not contrary to public policy.
Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the
Note: A CC may be held to be liable for the L/D/D to the goods because of its breach of the
loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the
contract of carriage. However, although the CC is liable, it may still be upheld as regards its
circumstances, and has been fairly and freely agreed upon.
stipulation limiting its liability.

Requisites of a stipulation limiting CC’s liability Article 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
1) In writing, signed by shipper or owner whether or not a stipulation limiting the common carrier's liability is reasonable, just and in
2) Supported by valuable consideration other than service rendered by the CC consonance with public policy.
3) Reasonable, just and not contrary to public policy.
Article 1752. Even when there is an agreement limiting the liability of the common carrier in the
Article 1745. Any of the following or similar stipulations shall be considered unreasonable, vigilance over the goods, the common carrier is disputably presumed to have been negligent in
unjust and contrary to public policy: case of their loss, destruction or deterioration.

(1) That the goods are transported at the risk of the owner or shipper; Article 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.
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the
goods;
Article 1754. The provisions of articles 1733 to 1753 shall apply to the passenger's baggage
(3) That the common carrier need not observe any diligence in the custody of the goods; 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
(4) That the common carrier shall exercise a degree of diligence less than that of a good father applicable.
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 Baggage of passengers in their personal custody or in the personal custody of the
employees; passenger‘s employees shall be regarded as necessary deposits. Thus, CC shall be
responsible for such baggage as depositaries provided 1) it was given notice of the
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act baggage brought and that 2) the passengers take precautions which the CC advised
with grave or irresistible threat, violence or force, is dispensed with or diminished;
A CC is responsible for the loss/damage to the baggage in the personal custody of
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods passengers if such loss/damage is caused by the CC‘s servants or employees.
on account of the defective condition of the car, vehicle, ship, airplane or other equipment used
in the contract of carriage. o E.G. conductor mishandles the bag of one bus-rider CC liable

Article 1746. An agreement limiting the common carrier's liability may be annulled by the A CC is NOT responsible for loss/damage to the baggage in the personal custody of its
shipper or owner if the common carrier refused to carry the goods unless the former agreed to passengers if such loss or damage is caused by force majeure
such stipulation.
o E.G. lightning destroys the baggage

3
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

The act of a thief or robber counts as force majeure if it is done with use of arms or
irresistible force THEREFORE, if a heavily armed robber takes away the bag of a
passenger in a jeep, the CC is NOT liable.

A CC is NOT responsible IF the loss/damage is due to the acts of the passengers, his
family, servants, visitors or if loss arises from the character of the baggage.

A CC cannot free himself from liability by posting notices to the effect that he is not liable
for the baggage brought by the passengers. Such stipulation is void.

4
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 2: public and third persons, and as such, directly and primarily responsible for the consequences of
its operation‖
1.MENDOZA V. PAL 2) In this case, since the registered owner was held liable, can he ask for reimbursement from
the actual owner responsible?
Facts: Mendoza contracted PAL (carrier of passengers) to deliver a can of film just in time to
show it for a fiesta. However, PAL failed to deliver the film late and Mendoza failed to capitalize YES. 2 remedies: a) 3rd party complaint if the actual owner is not yet impleaded or b) cross-claim
on the fiesta. Mendoza sued PAL for lost profits. if the actual owner already impleaded
Held: Common carriers are not obligated by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt delivery unless such common carriers
6. BA FINANCE V. CA
previously assume the obligation. Said rights and obligations are created by a specific
Facts: BA Finance was leasing a truck to ROCK COMPONENT. The truck was however, still
contract entered into by the parties. Hence,
registered in its name. The driver of ROCK COMPONENT figured in an accident which caused
death and injuries.
2. M ARITIME COMPANY V. CA
Held: Since BA Finance was the registered owner, it can be held responsible. BA Finance may
Facts: A ship carrying the goods a shipper collided with another ship, resulting to damage to the ask for reimbursement from ROCK COMPONTENT.
goods. It was argued that it the Code of Commerce or Carriage of Goods by Sea Act should
apply because under these provisions, the CC would be relieved from liability.
7. DE GUZMAN V. CA
Held: The New Civil Code was held to be applicable because the collision involved common
Facts: DE GUZMAN contracted with CENDENA for the hauling of Liberty filled milk from a
carriers. Therefore, collision will not relieve it of liability
warehouse of GENERAL MILK in Makati to DE GUZMAN‘S establishment in Urdaneta. Some of
the milk did not reach the establishment because one of CENDENA‘S trucks was hi-jacked by
3. MEDINA V. CRESENCIA armed men. CENDENA denied that he was a common carrier because he only transported the
milk as an incident to his junk dealership and argued that the hi-jacking relieved him from any
Facts: A jeep, owned by CRESENCIA being driven by driver AVORQUE smashed into a post liability
which resulted into death of one of the passengers. The heirs of the deceased passengers sued
CRESENCIA, the owner for damages. CRESENCIA argued that he was not liable because he Held:
already sold the jeep.
A) CENDENA is a common carrier.
Held: Since the sale of the jeep was without the approval of the PUBLIC SERVICE
COMMISSION, Cresencia, being the registered owner, continued to be liable to the public. Art 1732 makes no distinction between one whose principal business activity is the carrying of
Basically, this case holds that if the transfer of a franchise is not approved, the transferor persons or goods or both, and one who does such carrying only as an ancillary activity (in local
continues to be the considered owner. idiom, as "a sideline").

4. BENEDICTO V. IAC Article 1732 also carefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an
Held: Registered owner is liable even if sold to another if registration is not transferred in the occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a
transferee‘s name (same as Medina v. Cresencia) carrier offering its services to the "general public," i.e., the general community or population, and
one who offers services or solicits business only from a narrow segment of the general
5. FIRST M ALAYAN LEASING V. CA population. (basically: the fact that a person has a limited clientele does not exclude it from the
definition of a common carrier.)
Facts: VITUG‘s car was hit by an ISUZU TRUCK that was registered in the name of FIRST
MALAYAN LEASING, but at that time, was already sold to TRINIDAD. VITUG sued FIRST B) HOWEVER, CENDENA is not liable for the loss of the goods.
MALAYAN.
The limits of the duty of extraordinary diligence in the vigilance over the goods carried are
Held: reached where the goods are lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force. In other words, the hi-jacking was a fortuitous event which
1) First Malayan, as REGISTERED OWNER is still liable. ―Regardless of who the actual owner exempted Cendena from liability.
of a motor vehicle might be, the registered owner is the operator of the same with respect to the

5
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

8. BASCOS V. CA
11. Home Insurancce v. American Steamship
Facts: In this case, CIPRIANO agreed to transport the goods of JIBFAIR. CIPRIANO
subcontracted with BASCOS to deliver a part of the goods. However, BASCOS failed to deliver Held: As a private carrier, a stipulation exempting the owner from liability for the negligence of
the goods because the truck was hi-jacked. In turn, CIPRIANO had to pay JIBFAIR for the value its agents is not against public policy, and is deemed valid. Moreover, it is not bound to exercise
of the goods lost. CIPRIANO then sued BASCOS for reimbursement. extraordinary diligence over the goods.

Held: 12. VALENZUELA HARDWOOD V. CA


BASCOS argued that it was not a common carrier because it only offered its services to a select Held: The stipulation making only the charterer liable in case of loss or damage to cargoes is
group of people. valid (meaning, the private carrier will not be liable) because it is freely entered into by private
individuals. Since private carriage does not involve the general public, the stringent provisions
Test to determine w/n a person is a common carrier: governing common carriers do not apply.

The test to determine a common carrier is whether the given undertaking is a part of the Note: Contract of affreightment: private carrier // Bareboat Charter: common carrier
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, Bascos made the 13. NATIONAL STEEL CORP V. CA
judicial admission that she was in the trucking business.
Facts: NSC (shipper/charterer) entered into a contract of affreightment with Vlasons Shipping, a
9. FIRST PHIL INDUSTRIAL CORP V. CA carrier. The goods were damaged during the voyage.

Held: FPIC, as a grantee of a pipeline concession to contract, install and operate an oil pipeline, Held:
is considered a COMMON CARRIER. Why?
VSI was a private carrier considering that there was a special contract of charter party with a
It is engaged in the business of transporting or carrying goods, petroleum products, charterer, a party other than the shipowner who obtains the use and service of all or some part
for hire as a public employment. of a ship for a period of time or a voyage or voyages. Therefore, it does not have the duty to
It undertakes to carry for all persons indifferently, that is, to all persons who choose exercise extraordinary diligence.
to employ its services, and
It transports the goods by land and The provisions of the Code of Commerce govern, hence, as a general rule, merchandise shall
It transports for compensation. be transported at the risk and venture of the shipper who cannot proceed against the shipowner
The definition of common carriers in the NCC makes no distinction as to the means arising from force majeure or the nature and inherent defect of the things.
of transporting, as long as it is by land, water, or air. It does not provide that the
transportation of the passengers or goods should by motor vehicle 14. FGU INSURANCE V. GP SARMIENTO

10. CALVO V. UCPB Facts: GP Sarmiento Trucking undertook to deliver 30 units of refrigerators from the plant site of
Concepcion Industries. However, the truck collided with another truck, resulting to damage to the
Facts: Calvo is the owner of TCTSI, a sole proprietorship customs broker. It contracted with goods. GP Sarmiento argues that it was not a CC because it was the exclusive hauler of
SMC for the transfer of goods from the Port Area to SMC‘s warehouse. Pursuant to the contract, Concepcion industries.
Calvo withdrew the cargo from the arrastre operator and delivered it to SMC‘s warehouse.
However, the goods were found to be damaged. Calvo was sued. Held: While GPS is not a common carrier because it did not hold itself out to the public as such.
However, its negligence resulted to a breach of its contract of transportation. It is still liable as a
Held: private carrier.

Article 1732 distinguish between a carrier offering its services to the ―general public,‖ i.e., the 15. LOADSTAR SHIPPING V. CA
general community or population, and one who offers services or solicits business only from a
narrow segment of the general population. Facts: Loadstar transported certain goods through it ship, MV Cherokee. However, the vessel
sank. It was sued. It argues that it was not a COMMON CARRIER.
Moreover, As to Calvo‘s claims that the shipment was not yet under her custody when the same
were damaged, suffice it to say that when her employees withdrew the cargo from the arrastre Held:
operator, they did so without exception or protest either with regard to the condition of container
vans or their contents. a) Loadstar is a CC
6
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

It is not necessary that a carrier be issued a certificate of public convenience, and this public That the rain water (not sea water) found its way into the ship is a clear indication that care and
character is not altered by the fact that the carriage of the goods in question was periodic, foresight did not attend the closing of the ship‘s hatches so that rain water would not find its way
occasional, episodic or unscheduled. The records do not diclose that MV Cherokee undertook into the cargo, Since Eastern has failed to establish any fortuitous event, the presumption of fault
to carry a special cargo or was chartered to a special person only. Therefore, it is a CC. or negligence applies.

b) Limited Liability not applicable if CC is negligent 18. DELSAN V. CA


The doctrine of limited liability does not apply where there was negligence on the part of the Held: A CC‘s vessel sank and caused loss of the goods allegedly due to strong winds. However,
vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthy CC is liable because PAGASA weather reports showed otherwise
vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In
any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch
19. BANKERS AND M ANUFACTURERS ASSURANCE V. CA
as the wind condition in the area where it sank was determined to be moderate. Since it was
remiss in the performance of its duties, LOADSTAR cannot hide behind the ―limited liability‖
Held: If the shipment does not suffer loss or damage under the care or custody of the COMMON
doctrine to escape responsibility for the loss of the vessel and its cargo.
CARRIER, then there is no need to discuss its prima facie liability.
c) 3 kinds of stipulations in a bill of lading
20. SARKIES TOURS V. CA
Three kinds of stipulations have often been made in a bill of lading.
Facts: The CC (Sarkies Tours) lost the bags of its passengers
The first is one exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence. Held: CC must also exercise vigilance over goods of its passengers from receipt until delivery.
The second is one providing for an unqualified limitation of such liability to an agreed
valuation.
The third is one limiting the liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of freight.

According to an almost uniform weight of authority, the first and second kinds of
stipulations are invalid as being contrary to public policy, but the third is valid and
enforceable

16. ARADA V. CA
Facts; The CC was initially denied clearance, but was allowed to sail the next day. When it did
sail, a typhoon developed and the ship ultimately sank.

Held: Even if typhoon caused the loss, the carrier was still remiss in its duty in exercising due
diligence in mitigating the loss before, during and after the occurrence of the typhoon. This is
because the shipmaster did not ascertain the direction of the typhoon and did not consistently
check for weather reports. Hence, the CC cannot use the complete defense of fortuitous event.

17. EASTERN SHIPPING V. CA


Facts: The lower hatch of the vessel was flooded with fresh water due to heavy rains. It caused
loss and damage to the cargo of the CC.

Held: The heavy seas and rains referred to in the master‘s report were not fortuitous events, but
normal occurrences that an ocean going vessel, particularly in the month of September which, in
our area, is a month of rains and heavy seas would encounter as a matter of routine. They are
not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would
encounter and provide for, in the ordinary course of voyage.
7
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 3: unload the cargo and it also had the duty to ascertain the capability of the equipment it used.
Therefore, it is liable for the damage.
1. KEEP V. CHAN GIOCO
6. SOUTHERN LINES V. CA
Facts: CC was contracted to transport cavans of rice. The ship sank allegedly due to strong
winds so CC put up the defense of fortuitous event. Facts: Southern Lines, a CC, shipped sacks of rice owned by NARIC. Upon arrival, there was a
shortage. The CC argued that the packaging was defective and this was the cause of the
Held: There was no fortuitous event. The wind was not strong enough to sink a properly damage.
equipped boat managed by a capable crew. In effect, the court ruled that the blowing of strong
winds must be anticipated. Held: CC is still liable because it accepted the goods with the knowledge of its improper
packaging. Moreover, it was also negligent in not tying up the sacks properly.
2. PHILAMGEN V. MCG
7. GANZON V. CA
Facts: When the CC left the dock, the weather was still calm. However, a day after, it sank due
to strong winds and huge waves. Facts: Tumambing contracted Ganzon to haul scrap iron from Bataan to Manila. While the
loading was underway, he acting mayor arrived with police and seized the cargo. Some cargo
Held: There was a fortuitous event that suffices to relieve the CC from liability. Moreover, was dumped and the others were brought to a compound.
emergency measures were taken by the crew to save the vessel by bailing out the water.
Held: Ganzon as CC was still held to be liable for the following reasons:
Requisites of Fortuitous Event
a) The duty of extraordinary diligence already began as Ganzon was already placed in
a) Independent of the human will the possession of the iron
b) Impossible to foresee or if foreseeable, impossible to avoid b) The acting mayor had NO AUTHORITY to seize the goods
c) Event must render it impossible for the common carrier to fulfil his obligation c) There was also no FORTUITOUS EVENT as there was no force intimidation to render
d) CC must be free from any participation it impossible for Ganzon to carry out his obligation

3. PHIAMGEN V. CA 8. COMPANIA M ARITIMA V. INSURANCE COMPANY

Facts: There was a delay in unloading the cargo because of the town fiesta and the delay of Facts: The CC used its barges to transfer the goods (hemp) of the shipper from the shipper‘s
issuance of permits. Thus, there was no unloading done for 40 days. While the vessel was warehouse to its own ship. En route to its ship, the barges sank and caused damage to the
waiting, a typhoon arrived and it caused the ship to sink. The villagers looted the goods that goods.
washed up ashore.
Held: The CC is liable because when it loaded the goods into its barge, the duty to exercise ED
Held: The SC held that the delay in unloading was due to a fortuitous event. Several factors already commenced as it was already placed in unconditional possession of the goods.
were a) the natural conditions of the port b) the customs of the place and the )typhoon
9. SERVANDO V. PHIL. STEAMSHIP
Moreover, the CC also exercised due diligence during and after the loss as the coastguard and
policemen were informed to avoid the looting. However, they still did not arrive. Therefore, the Facts: Uy Bico and Servando loaded goods in the ship of Phil Steamship for transportation to
CC is not liable. Manila. Upon arrival of the goods, they were stored in the customs warehouse. The consignees
were notified about the arrival of the shipment and demanded them to remove the same. The
4. MAERSK LINE V. CA warehouse burned resulting to the destruction of the goods.

Held: Even if persons are not vested with the right to prompt delivery unless stipulated, delivery Held: The SC absolved the CC of liability because of the following:
must still be within a reasonable time.
a) The Bill of Lading (B/L) stipulation that states that ―goods are at the risk of the
5. COMPANIA M ARITIMA V. CA owner unless the loss or destruction is due to the shipowner’s negligence‖ is
valid and not contrary to public policy.
Facts: Conception contracted Compania Maritima to ship his construction equipment. While b) There is nothing in the record to show that the CC,incurred in delay in the
unloading, the payloader fell and it was damaged. He sued CM. performance of its obligation. The CC had not only notified consignees of the arrival
of their shipment, but had demanded that the same be withdrawn
Held: During unloading, the CC still had the duty to exercise extraordinary diligence in the care c) The CC‘s or its employees CANNOT be charged with negligence. The storage of the
of the goods transported. It could‘ve used equipment with better capabilities (A JUMBO) to goods in the Customs warehouse pending withdrawal thereof by the consignees was
8
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

undoubtedly made with their knowledge and consent. Since the warehouse belonged The foregoing information, without more, in effect makes respondent CMI for all practical
to and was maintained by the government, it would be unfair to impute negligence to intents and purposes the party named and ordered to receive the goods.
the CC, the latter having no control whatsoever over the same.
The carrier, not being privy to any transaction between HSBC and CMI, cannot be expected to
10. SAMAR MINING V. NORDEUTSCHER LLOYD look beyond what is contained on the face of the bill of lading in question and guess which of the
many banks in Metro Manila or some other unrevealed corporation could possibly be the
Facts: The goods sank during transhipment1. The owner of the goods sued the CC for the loss. consignee. To consider otherwise would not be sound business practice as petitioner would be
forced to wait for the real owner of the goods to show up, perhaps in vain.
Held:
Therefore, its duty to exercise extraordinary diligence already ceased when it delivered the
a) The B/L had a stipulation which stated that ―the CC is not liable if goods are damaged goods to the ―person with the right to receive them‖ as per Art 1736.
or lost when not in its custody‖ Thus, the CC parted with the possession and control of
the goods when it received the goods for transhipment as at that point, it was merely Note: It appears that both CMI and HSBC dealt with the CC in bad faith. The dispositive portion
acting as the consignee’s agent. held that the decision was w/o prejudice to any action HSBC may have against CMI.

11. LU DO V. BINAMIRA 13. MACAM V. CA

Facts: The CC transported goods of Delta Photo. The CC hired Cebu Stevedoring to unload the Facts: Macam shipped fruits through Wallem, consigned to Pakistan Bank with GPC as notify
cargo. It was deposited in the customs warehouse. The cargo was pilfered when it was in the party. However, CC delivered the goods directly to GPC and not to Pakistan Bank. Pakistan
possession of the customs warehouse. Bank sued Wallem.

Held: Held: Wallem is not liable because the export invoices indicated that the BUYER of the goods
was GPC. Thus, it was a party ―with a right to receive‖ the goods. Therefore, upon delivery by
b) The B/L stipulation that CC is not liable if goods not in its actual custody are Wallem to such party, its duty of extraordinary diligence ceased and it cannot be anymore held
lost/damaged/destroyed is valid and not contrary to public policy liable.
c) THEREFORE since the pilferage occurred while in the custody of customs, the CC is
not liable for such pilferage. 14. METROPORT V. CA

12. EASTERN SHIPPING V. CA Facts: Union Sales imported goods from Belgium, to be transported by Universal Shipping.
Goods arrived in Manila and turned over to the arrastre operator, Metroport. However, 1050
Facts: Nanyo Corporation shipped goods through Eastern Shipping, consigned to CMI. The B/L bags were received in bad order condition.
was consigned to ―shipper‘s order with address arrival notice to CMI‖ Eastern Shipping released
the cargo to CMI even without the presentation of the Bill of Lading by CMI. HSBC then claimed Held: Both the CC and the arrastre are proportionally liable. 619 bags were damaged in the
the goods because it had a lien over the same. HSBC then sued Eastern Shipping. It argues that custody of the CC and 431 were damaged in the custody of the arrastre.
Eastern Shipping should have ascertained if CMI indeed had a right to the goods.
15. FIREMEN’S FUND V. METROPORT
Held;
ARRASTRE OPERATOR: Duty is to haul cargo either from the wharf or from the ship
At the outset, the Bill of Lading which was issued by the carrier but contained articles furnished of the CC to the CONSIGNEE. RESPONSIBILITY lasts until DELIVERY to the
by the Shipper, shows on its face that the Shipment is consigned "TO SHIPPER'S ORDER" with consignee.
"ADDRESS ARRIVAL NOTICE CMI‖
STEVEDORE: Duty is to handle the cargo in the holds of the vessel or between ship‘s
Nowhere did the Bill of Lading refer to respondent HSBC as the consignee or the one to be tackle and the holds of a vessel. RESPONSIBILITY lasts until LOADING/STOWING is
notified. complete.

1 The legal relationship between the consignee and the arrastre operator is akin to that
Transshipment or Transhipment is the shipment of goods or containers to an intermediate
of a depositor and warehouseman.
destination, and then from there to yet another destination.
The relationship between the consignee and the common carrier is similar to that of
One possible reason is to change the means of transport during the journey (for example from
the consignee and the arrastre operator.
ship transport to road transport), known as transloading. Another reason is to combine small
shipments into a large shipment, dividing the large shipment at the other end. Transshipment
usually takes place in transport hubs.
9
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Since it is the duty of the ARRASTRE to take good care of the goods that are in its The right of a party in the same situation as consignee here, to recover for loss of a
custody and to deliver them in good condition to the consignee, such responsibility shipment consigned to him under a bill of lading drawn up only by and between the
also devolves upon the CARRIER. shipper and the carrier, springs from either a relation of agency that may exist
between him and the shipper or consignor, or his status as stranger in whose favor
o Both the ARRASTRE and the CARRIER are therefore charged with and some stipulation is made in said contract, and who becomes a party thereto when he
obligated to deliver the goods in good condition to the consignee. demands fulfillment of that stipulation,

The liability of the arrastre operator was reiterated in Eastern Shipping Lines, Inc. v. In this case the delivery of the goods or cargo shipped. In neither capacity can he
Court of Appeals with the clarification that the arrastre operator and the carrier are not assert personally, in bar to any provision of the bill of lading, the alleged circumstance
always and necessarily solidarily liable as the facts of a case may vary the rule. that fair and free agreement to such provision was vitiated by its being in such fine
print as to be hardly readable. .
16. HE HEACOCK V. MACONDRAY
There can, therefore, be no doubt or equivocation about the validity and enforceability
Facts: Heacock shipped clocks to Manila through Macondray. However, the clocks were not of freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting the
delivered to the consignee. The issue was the validity of the B/L stipulation limiting liability. liability of the carrier to an agreed valuation unless the shipper declares a higher value
and inserts it into said contract or bill.
Held: A clause in a bill of lading limiting the liability of the carrier to a certain amount unless the
shipper declares a higher value and pays a higher rate of freight, is valid and enforceable. 18. CITADEL V. CA

17. ST. PAUL FIRE V. MACONDRAY Facts: CC was found to be liable for the loss of the goods but its liability was deemed to be
lessened due to the stipulation in the B/L
Held:
Held:
The purpose of the bill of lading is to provide for the rights and liabilities of the parties
in reference to the contract to carry. The award of damages in the amount of P312,800.00 for the value of the goods lost,
based on the alleged market value thereof, is erroneous.
The stipulation in the bill of lading limiting the common carrier's liability to the
value of the goods appearing in the bill, unless the shipper or owner declares a It is clearly and expressly provided under Clause 6 of the aforementioned bills
greater value, is valid and binding. This limitation of the carrier's liability is of lading issued by the CARRIER that its liability is limited to $2.00 per kilo.
sanctioned by the freedom of the contracting parties to establish such stipulations,
clauses, terms, or conditions as they may deem convenient, provided they are not Basic is the rule, long since enshrined as a statutory provision, that a
contrary to law, morals, good customs and public policy. stipulation limiting the 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
A stipulation fixing or limiting the sum that may be recovered from the carrier binding.
on the loss or deterioration of the goods is valid, provided it is
Further, a contract fixing the sum that may be recovered by the owner or shipper
(a) reasonable and just under the circumstances, and 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.
(b) has been fairly and freely agreed upon
The CONSIGNEE itself admits in its memorandum that the value of the goods shipped
18. SEA LAND SERVICE V. IAC (SAME DOCTRINE) does not appear in the bills of lading. Hence, the stipulation on the carrier's limited
liability applies. There is no question that the stipulation is just and reasonable under
In this case, it was held that even if the consignee was not a signatory to the the circumstances and have been fairly and freely agreed upon
contract of carriage between the shipper and the carrier, the consignee can still
be bound by the contract. 19. EVERETT V. CA

To begin with, there is no question of the right, in principle, of a consignee in a bill of Held: To defeat the carrier‘s limited liability, the aforecited Clause 18 of the bill of lading requires
lading to recover from the carrier or shipper for loss of, or damage to goods being that the shipper should have declared in writing a higher valuation of its goods before receipt
transported under said bill, although that document may have been- as in practice it thereof by the carrier and insert the said declaration in the bill of lading, with the extra freight
oftentimes is-drawn up only by the consignor and the carrier without the intervention of paid. These requirements in the bill of lading were never complied with by the shipper, hence,
the consignee the liability of the carrier under the limited liability clause stands

10
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

20. REGIONAL CONTAINER V. NETHERLANDS INSURANCE

Held: If damage occurred during unloading, the CC is presumed to be liable for the loss.

21. MINDANAO TERMINAL V. PHOENIX ASSURANCE

Held: Stevedores, being mere labor providers, are not treated as CCs provided they remain
under the supervision of the CC and provided they do not possess any of the requirements of a
CC.

11
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 4: o 1) that absolutely exempts the carrier from liability from the passenger‘s
death/injuries
o 2) lessening the extraordinary diligence required by law
Article 1755. A common carrier is bound to carry the passengers safely as far as human care The rule is different when it comes to carriage of goods as Art 1744 provides that a
and foresight can provide, using the utmost diligence of very cautious persons, with a due regard stipulation between the CC and the shipper/owner of the goods limiting liability for L/D/D of
for all the circumstances. goods to a degree less than extraordinary is valid provided it is 1) in writing 2) supported by
a valuable consideration other than service rendered by CC and 3) reasonable, just and not
contrary to public policy.
This provision deals with carriage of passengers, as opposed to carriers of goods. It follows o When it comes to passengers, it is absolute; the responsibility of ED
then that if passengers are involved, this subsection applies. cannot be lessened.
A high degree of care and extraordinary diligence is required of a carrier with respect to its In contrast, private carriers are not governed by extraordinary diligence as its liability is
passengers. This is emphasized by the fact that it is charged to act with due regard to all primarily governed by its contract with the passenger/s.
the circumstances.
This relation is contractual in nature as represented by the contract of carriage.
Article 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.
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. The reduction of fare does not justify any limitation of the common carrier's liability.

As in the case of carriage of goods, when passengers suffer injuries or die, the carrier will The rule in Art 1757, however, also comes with an exception, that is, when a passenger is
be presumed to have acted negligently and consequently be held liable for damages. carried gratuitously (for free), the CC and passenger may validly agree on a stipulation
o When will the presumption be overcome? limiting the CC‘s liability for negligence.
Further, a reduction of fare will not limit the CC‘s liability.
When CCs prove that they exercised extraordinary diligence It follows
therefore that the burden of proof is on the carrier to show that it exercised ED. Article 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.
It also worth noting that as provided for by Art. 1733, the issue of whether or not the CC
exercised extraordinary diligence will be determined according to the circumstances of
each case. 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.
Article 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 CC‘s are liable for death/injuries to passengers caused by either the 1) negligence or 2)
notices, by statements on tickets, or otherwise. wilful acts of its employees
o EVEN IF
Such employees acted beyond the scope of their authority
In other words, this article provides that the responsibility of extraordinary diligence on the Or if they acted in violation of the orders of the common carriers
part of the CC is not dispensed with or lessened by: Example: Bus conductor of Philippine Rabbit picks a fight with a passenger and throws him
o Stipulation out of the bus, causing him injury. Philippine Rabbit, as employer, is civilly liable for the
o Posting of Notices injuries to the passenger even if the conductor violated the order of the CC (which is to take
o Statement on tickets (or other means) care of the passengers etc)
Whenever a passenger boards a ship/vehicle of a carrier, he is normally issued a ticket Difference from CC when it comes employer’s liability: Moreover, the CC cannot
which in turn, contains the terms and conditions. This ticket is a complete written contract interpose the defense that it exercised ordinary diligence in the selection and supervision of
by the carrier and the passenger to wit: its employees.
o Consent: passenger boards and the carrier consent or accepts him for o This is different from the general rule provided for in Art 2180 (vicarious liability)
transportation which states that employers will not be liable for damages caused by their
o Object: transportation of the passenger from the place of departure to the place employees once they prove that they exercised ordinary diligence in selection
of destination and supervision.
o Cause: the fare paid by the passenger
As provided for in the article the CC and the passenger cannot enter into agreement

12
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

o This is because the basis of carrier‘s liability is the contract of carriage (culpa IF HE WANTS TO SUE BUS A: Breach of contract of carriage.
contractual). On the other hand, Art 2180 is applicable in cases of quasi-delict
(culpa aquiliana) IF HE WANTS TO SUE BUS B; Quasi delict (2176/2180) This is because he does not
have a contractual relationship with BUS B.
If plaintiff sues CC on the basis of tort or quasi delict, who would be the defendant?

The defendant would be the carrier. The basis is Art 2180 (vicarious liability for the Article 1760. The common carrier's responsibility prescribed in the preceding article cannot be
negligent of its employer) Available defense of CC: Ordinary diligence in selection and eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or
supervision otherwise.

If CC is sued under Art 2180, is there a presumption of negligence? The liability for the death or injuries caused by the CCs employees also cannot be limited
by stipulations, notices and statements on the tickets or otherwise.
No.
This article further protects the passengers and enables them to recover notwithstanding
If plaintiff sues the driver, what is his cause of action? such stipulations.
Art 2176, quasi-delict. There is also no presumption of negligence in this instance.
Article 1761. The passenger must observe the diligence of a good father of a family to avoid
If plaintiff sues CC on the basis of the contract of carriage, what is his cause of injury to himself.
action?

The cause of action is the BREACH of the contract of carriage. In this case, the carrier This article shows that the law, in imposing extraordinary diligence on CC, is not one sided
CANNOT raise the defense of diligence in selection and supervision of its employees. This as passengers are also required to exercise ordinary diligence to avoid injury to
is because its liability as CC is direct and immediate. himself when on board the vehicle.
o Failure to exercise such diligence will preclude recovery for injuries/death.
If plaintiff sues under the contract of carriage, is there a presumption of fault or Example: X was on a bus and he persisted on sticking his head out of the window even if
negligence? there was a sign that warned them not to do so. X hit his head on a post. In this case, as
long as there was no negligence on the CC‘s part, then it is not liable.
Yes. As per the codal provision.
Article 1762. The contributory negligence of the passenger does not bar recovery of damages
Can the plaintiff sue the CC under Art 2180 and the driver under Art 2176 at the same for his death or injuries, if the proximate cause thereof is the negligence of the common carrier,
time? but the amount of damages shall be equitably reduced.
Yes.
This article qualifies Art 1761. When the PC of the death or injury is the CC, the
Can the plaintiff sue the CC under Art 2180 and alternatively, for a breach of the contributory negligence of the passenger will not bar recovery, albeit reduced.
contract of carriage? Example: In the same example above, if the reason why X‘s head hit the post was
because the driver of the bus was speeding or was driving recklessly, then the PC of the
Yes. Plaintiff may sue under alternative causes of action. injury can be attributed to the driver and the contributory negligence of X will only mitigate,
but not bar, his recovery.
Can the victim also sue for a criminal action? What is the effect on the CC?

Yes, he can charge the driver. In this case, the employer will only be subsidiarily liable Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of
under the RPC. However, the employer/CC cannot go to jail because subsidiary liability is the wilful acts or negligence of other passengers or of strangers, if the common carrier's
only civil employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.
Is an administrative case also possible?
In this article, the CC is responsible for injuries suffered by a passenger due to negligence
Yes. For the revocation of a certificate of public convenience.
or wilful acts of his co-passengers or a stranger if the injury could have been prevented by
the exercise of ordinary diligence.
X was a passenger of BUS A. BUS B hit BUS A which caused injuries to X. If X wants to
sue BUS A, what must his cause of action be?
13
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

However, if the injury to the passenger could not have been avoided by the exercise of The new CC now contains provisions on common carriers. Consequently, there is now no
ordinary diligence, the CC is NOT LIABLE. distinction between a transportation contract of a common carrier under the Civil Code and
a transportation contract under the Code of Commerce. However, the CC did not repeal the
provisions of the Code of Commerce on overland transportation. Instead, these code of
SUBSECTION 4. Common Provisions
commerce provisions are suppletory to the provisions of the new civil code.
Order: 1) Civil Code 2) Code of Commerce 3) Special laws
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Articles do not apply to private carrier. Governed by the contract of the parties (oblicon)
Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common carrier.

Damage, injury and damages:


o Injury is the illegal invasion of a legal right;
o Damage is the loss, hurt, or harm which results from the injury; and
o Damages are the recompense or compensation awarded for the damage
suffered.
Under Art 2197, damages may be: (available for culpa contractual and aquiliana)
o Actual or compensatory: an adequate compensation only for such pecuniary
loss suffered by him
o Moral: physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendant's wrongful act for omission
o Nominal : recognize technical violation of right
o Temperate: some pecuniary loss has been suffered but its amount cannot, from
the nature of the case, be provided with certainty
o Liquidated: agreed upon by the parties, to be paid in case of breach
o Exemplary : corrective damages, to serve as an example to others
Art 2206 provides for
o Minimum amount of damages to be paid in case of death of the passenger (now
PhP50,000 as per jurisprudence)
o Liability for loss of earning capacity, if applicable
o Liability to give support if deceased was obliged to give support to one who is not
an heir called to decedent‘s inheritance (testate/intestate)
o Liability for moral damages for mental anguish to be claimed by spouse,
legitimate and illegitimate ascendants and descendants.

Article 1765. The Public Service Commission may, on its own motion or on petition of any
interested party, after due hearing, cancel the certificate of public convenience granted to any
common carrier that repeatedly fails to comply with his or its duty to observe extraordinary
diligence as prescribed in this Section.

This article governs the cancellation of the certificate of public convenience to any common
carrier
The PSC may act on its own initiative or petition of any interested party.
After due hearing, the PSC may then cancel the certificate on the ground that the CC
repeatedly fails to comply with his or its duty to observe ED (e.g. multiple accidents)

Article 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.
14
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 5: COMMON CARRIERS; CARRIAGE OF PASSENGERS 2. ISAAC V. AL AMMEN TRANSPORTATION (SEVERED LEFT ARM CASE)

1. CANGCO V. M ANILA RAILROAD (SACKS OF WATERMELON CASE, RIGHT ARM Doctrines:


AMPUTATION)
If the passenger‘s negligence was the proximate cause of his injury, he is precluded from
Doctrines: recovering from the common carrier. However, in determining his negligence, the standard
is whether or not he exercised ordinary diligence.
The liability of masters and employers for the negligent acts or omissions of their servants
Facts:
or agents, when such acts or omissions cause damages which amount to the breach of a
contact, is not based upon a mere presumption of the master's negligence in their selection
or control, and proof of exercise of the utmost diligence and care in this regard does not Isaac boarded one of AL Ammen‘s buses (ALAT) bound for Camarines Sur. During the
voyage, however, the bus collided with a pick-up truck. As a result, his left arm was
relieve the master of his liability for the breach of his contract
completely severed and the severed portion fell inside the bus.
A common carrier is directly liable under the contract of carriage when its passenger
Isaac then sued the bus company claiming that the driver was negligent. His basis was the
suffers injury due to its negligence. The breach is a case of culpa contractual.
breach of contract of carriage. In its defense, the bus company argued that the accident
Facts: was due to a fortuitous event, hence it is not liable.

Issue: Is the bus company liable? NO


Jose Cangco, a clerk of Manila Railroad was on his way home by train, using a pass
supplied by his company which allowed him to ride for free. As he was about to disembark
at San Mateo station, he jumped off the train when it had not yet slowed down to a The bus is not liable. It was running at a moderate speed because it had just stopped at a
school zone. On the other hand, the pick-up truck was at full speed and was running
complete halt.
outside of its lane.
When he landed, he hit a sack of watermelons. He fell, rolled under the platform and got
The bus driver did everything he could to avoid the pick-up truck by swerving to the very
dragged, resulting to injuries to his arm. Because of this, his arm had to be amputated.
extreme right of the road and even with that effort, it was still hit by the truck.
In turn, he sued Manila Railroad due to the negligence of its employees in placing the
sacks in the platform. In its defense, Manila Railroad argues that Cangco was guilty of Moreover, Isaac is guilty of contributory negligence because he placed his left arm on the
window with a portion protruding outside. If he did not do that, then he would not have
contributory negligence.
suffered his severe injury. Because his negligence was the proximate cause of the injury,
Issue: Is Manila Railroad liable? Yes he is precluded from recovery. CC wins.

RQ:
The legal liability of Manila Railroad, a common carrier, is founded on the contract of
carriage. As a CC, it had the duty to safely carry its passengers and in turn, provide safe In the American case where the person threw his cigar outside the window of the train,
means of entering and leaving its trains. Manila Railroad is therefore directly liable based was the arm injured or only the hand? Only the hand (?)
on a breach of contract and cannot use the defense that it exercised due diligence in the
selection and supervision of its employees. This is because such defense is only available 3. NOCUM V. LAGUNA TAYABAS (FIRECRACKERS INSIDE THE BUS)
in actions under Art 2180 (vicarious liability)
Moreover, the proximate cause of the injury was the negligence of Manila Railroad‘s Doctrine:
employees.
o They should not have left the sack of watermelons on the platform when Cangco A common carrier is required to exercise extraordinary diligence with a due regard for all
had the right to assume that the platform was clear. the circumstances. However, such extraordinary diligence should not extend as to
o The platform was dimly lit and poorly constructed transgress constitutional rights to privacy.
Cangco won.
Facts:
RQ:
Was Cangco young or old? Young. Nocum was a passenger in a Laguna Tayabas Bus #120. During the trip, he was injured as
What was his job? Clerk a consequence of the explosion of firecrackers. The firecrackers were contained in a box
How many lights lit the platform? Not stated. Just said dimly lit. and the box was placed under a seat, with the owner declaring that it merely contained
Before he alighted, did he hold the railing with one arm? Left arm or right arm? Yes. Right. clothes and miscellaneous items.
How many times was he brought to the hospital? Twice. Nocum sued Laguna Tayabas based on a breach of the contract of carriage.
A witness, Severino Andaya, testified that the box was indeed placed under the seat and
the conductor, Sancho Mendoza, testified that there was no indication that the box
contained any explosives.
15
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

The trial court held Laguna Tayabas liable because 1) the defense of fortuitous event is Third, Phil Rabbit could not have avoided the collision. Following the theory that the driver
unavailing and 2) the employees of the company should have inspected the box. was running at the speed of 80kph, its driver only had 2.025 seconds to react to the jeep.
Fourth, the defense of fortuitous event will not lie when it is caused by defects in the
Issue: is the bus company liable? NO automobile. (in this case, the rear end of the jeep)
However, only Mangunes (not the driver) should be held liable, since the contract of
The conductor inquired as to the contents of the box. However, if the conductor insisted on carriage was between Mangunes and the complainants.
opening the box, company policy required him to call the police.
Moreover, it is to be presumed that a passenger will not take with him anything dangerous 5. LASAM V. SMITH (FAULTY STEERING GEAR)
to his life and his other co-passengers. He cannot be subjected to any unusual search if
his baggage, on its face, is not suspicious as to invite further inquiry. This is to Doctrine:
protect the Constitutional right of its passengers. Thus, the SC found that the CC was not
liable because its employees exercised extraordinary diligence in inquiring as to the For the defense of fortuitous event to prosper, there should be some extraordinary
contents of the box. circumstance independent of the will of the CC, or of his employees,
However, the defense of fortuitous event was not ruled upon because the SC found that the
common carrier exercised ED for the safety of its passengers. Facts:

4. PHILIPPINE RABBIT V. IAC (DETACHED JEEP THEN HIT BY A BUS) Frank Smith was a common carrier. He undertook to convey Lasam and others from San
Fernando to Ilocos Norte in a Ford automobile. The driver, upon reaching San Juan,
Doctrines: allowed his assistant, Bueno, who had no driver‘s license, to drive the car.
Initially, the trip went smoothly until defects developed in the steering gear. This eventually
Last clear chance is inapplicable in breaches of contract of carriage by CC. led to the car zigzagging then going off the road and down an embankment. Lasam and his
Defense of fortuitous event is inapplicable if the injury/death was due to defects in the wife were injured. Thus, Lasam sued Smith for damages due to breach of the contract of
vehicle. carriage.
Smith alleges that the injury was due to a fortuitous event.
Facts:
Issue: Is Smith liable? YES
Catalina Pascua, along with others, boarded a jeep owned by spouses Mangune. The jeep
was driven by Manalo and was bound for Pangasinan. However, during the trip, the right Smith breached the contract of carriage by failing to safely transport his passengers to their
rear of the jeepney detached. This prompted the driver to put on the brakes which in turn destination.
caused the jeep to land on the opposite side of the road. As to the defense of fortuitous event, the element of an independent circumstance
The jeep blocked the southbound lane and was thereafter bumped at the rear by the bus of independent of the will of the CC and his employee is absent. In this case, the accident was
Philippine Rabbit, driven by de los Reyes. 3 passengers (of the jeep) died and others were caused either by #1) defects in the automobile or #2) through the driver‘s negligence.
injured. Therefore, the Smith, as CC, is liable.
As a result, Manalo was convicted of multiple homicide but de los Reyes was acquitted.
Thereafter, Mangunes, Manalo, Philippine Rabbit and de los Reyes were sued for Note: this case shows that fortuitous event is a complete defense and does not merely
damages. The CA eventually found Philippine Rabbit and de los Reyes liable for damages. rebut the presumption
The CA applied 1) doctrine of last clear chance and 2) presumption of fault on the one who
bumps the rear (―tailgate‖) 6. NECESITO V. PARAS (FRACTURE OF RIGHT STEERING KNUCKLE, CARRYING
VEGETABLES)
Issue: Who should be liable? Spouses Mangunes only. #1) last clear chance #2) presumption of
guilt in tailgater not applicable #3) collision unavoidable
Doctrines:
First, the doctrine of last clear chance is inapplicable when the passenger sues under
breach of contract of carriage. It is only applicable in a suit between the owners and drivers American law: a passenger may recover damages from a carrier for an injury resulting from
a defect in an appliance bought from a manufacturer, whenever it appears that the defect
of vehicles. (it would have been applicable if the case was between the jeep suing the bus
would have been discovered by the carrier if it had exercised extraordinary diligence. For
under QD, or CC v. CC)
purposes of this doctrine, the manufacturer is considered as being in law the agent of the
Second, the presumption of guilt on the rear vehicle is inapplicable because this only
carrier, as far as regards the work of constructing the appliance.
applies when the rear vehicle is following the other vehicle. This is because it is the rear
The rationale of the carrier‘s liability is the fact that the passenger has no control or choice
vehicle is the one in control of the situation. In this case, the bus was not following the jeep
over the carrier in the selection and use of equipment used by the carrier. Having no
from the rear. It was on the other lane.
remedy against the manufacturer, the passenger may validly sue the carrier. The carrier in
turn, may sue the manufacturer.
16
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

DAMAGES: as to damages being too excessive, the court held that the injuries suffered by
Facts Precillano are incapable of pecuniary estimation. However, as to moral damages, the court
held that under the NCC, in case of accident due to a carrier‘s negligence, the heirs of the
Severina Garces and her one year old son, Precillano Necesito, carrying vegetables, deceased passenger may recover moral damages even though a passenger who is injured,
boarded bus/truck #199 of the Philippine Rabbit Bus Lines at Pangasinan, bound for but manages to survive, is not entitled to them.
Manila. On the way to Manila, however, the driver lost control and fell on its right side into a
creek. 8. LA M ALLORCA V. DE JESUS (LEFT FRONT TIRE BLOWOUT)
As a result, Severina drowned and Precillano suffered a fracture. In turn, Precillano,
through his father, sued Phil Rabbit. Doctrine:
The TC ruled in favor of PRBL on the basis of fortuitous event. It found that the bus was
only proceeding slowly due to the bad road condition and that the accident was caused by In some cases, tire blow-outs may be considered fortuitous events if there is no finding of
the fracture of the right steering knuckle which was defective. Its center was ―bubbled and any specific acts of negligence on the part of the defendant/common carrier.
cellulous‖. This condition could not have been ascertained despite visual inspections every However, if the cause of a tire blow-out is known and could have been prevented with the
30 days. exercise of extraordinary diligence, then such does not qualify as a fortuitous event.
Issue: Is the CC liable? YES Facts:

The only test applied to the steering knuckle is a purely visual inspection every 30 days, to Lolita de Jesus, the 20 year old daughter of Valentin and the wife of Manolo, was riding in
see if any cracks developed. The carrier or the manufacturer did not test the knuckle and La Mallorca‘s bus. The bus collided with a freight truck because the driver of the bus lost
see if its strength is up to standard. The carrier should have been aware of the importance control when its left front tire suddenly exploded.
of the strength of the knuckle as its failure would result to a loss of balance. As a result, La Mallorca was held liable for actual and moral damages. La Mallorca
Thus, the visual inspection did not measure up to the legal standard of utmost diligence of appealed, arguing that the blow-out of the tire was due to a fortuitous event.
very cautious persons. The failure of the knuckle cannot be considered a fortuitous event.
Issue: Is La Mallorca liable? Yes
Random questions:
Were moral damages awarded? No. PRBL did not act in bad faith The inner tube of the left front tire was pressed between the inner circle of the left
Indemnity awarded: 5,000 for Precillano in form of actual damages and 15,000 consisting of wheel and the rim which had slipped out of the wheel. This mechanical defect was
burial expenses, lost income for the death of Severina. Part of justification of this award is the easily discoverable had the bus been subjected to a more thorough check-up before it took
deprivation of her ―protection, guidance and company‖ the road.
Injury: left femur Moreover, the bus was running quite fast before the accident occurred and the tire was not
new (described as ―not so very worn out‖)
Lastly, petitioner is also liable for moral damages because the death of a passenger is due
7. NECESITO V. PARAS (MR) to a breach of the contract of carriage (Art 1764 in relation to 2206)

Doctrine: 9. LANDINGIN V. PANGASINAN TRANSPORTATION (OPEN BUS IN EXCURSION,


DEFECTIVE CROSS JOINT)
Under the NCC, in case of accident due to a carrier‘s negligence, the heirs of the deceased
passenger may recover moral damages even though a passenger who is injured, but Doctrine:
manages to survive, is not entitled to them (In other words, death indemnity may be
awarded to the heirs of the mother under Art 1764 and Art 2206) The mere fact that the bus was inspected only recently and found to be in order would not
exempt the carrier from liability unless it is shown that the particular circumstances under
MR: which the bus would travel were also considered
An accident caused by defects in the automobile is not a fortuitous event.. The rationale of
EVIDENCE: This is the MR of PRBL. It seeks to introduce new evidence however, it was the carrier's liability is the fact that "the passenger has neither the choice nor control over
denied because the proposed proof was available when the original trial was held. Hence, the carrier in the selection and use of the equipment and appliances in use by the carrier."
such evidence is not newly discovered.
MECHANICAL DEFECTS: carrier is liable to its passengers for damages caused by Facts:
mechanical defects. In Son v. Cebu Autobus SC held that CC is liable in damages to a
passenger for injuries caused by an accident due to the breakage of a faulty drag-link Leonila Landingin and Estrella Garcia were passengers in the bus driven by Oligan and
spring owned by Pantranco. They were on an excursion trip (from Dagupan to Baguio)

17
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

The bus was open on one side and closed on another. While on Kennon Road, the bus sued for breach of contract against Fontanar, Banzon and Camoro. The three were held
suddenly swerved and the girls were then thrown out of the bus. This resulted to their liable. However, this was reversed on the ground that the bursting of the tire was a
death. fortuitous event.
In its defense, Pantranco alleges that the bus was driving at a slow speed (10kph) and that
after hearing a sound from the rear end of the bus, the girls jumped out even after the Issue: Is the CC liable? YES, #1 high speed, #2 overloaded #3 too much air pressure
warnings given to them.
The TC concluded that the accident was caused by a fortuitous event. However, The jeep was #1) running at a very high speed before the accident. It would not have
PANTRANCO was still ordered to pay 6,500 as an expression of goodwill. jumped into a ditch even with a blown tire if it was running at a reasonable speed.
The jeep was also #2) overloaded. It had 14 passengers in the rear and 3 in the front.
Issue: Is the CC liable? YES Moreover, 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
Pantranco was guilty of a breach of the contract of carriage by failing to exercise conditions liable to cause accidents. The sudden blowing-up, therefore, could have
extraordinary diligence. The cross-joint of the bus broke which resulted to the been caused by too much air pressure injected into the tire coupled by the fact that
malfunctioning of the motor. This in turn caused the passengers to panic. the jeepney was overloaded and speeding at the time of the accident.
Even if the bus was inspected before the day of the trip, the CC should have expected that Common carriers should teach their drivers not to overload their vehicles, not to exceed
the mechanical parts of the bus would be taxed heavier than usual. In this respect, the CC safe and legal speed limits, and to know the correct measures to take when a tire blows up
failed to give due regard for all circumstances in connection with the inspection. Therefore, thus insuring the safety of passengers at all times. Thus, the CC is liable for its negligence.
it is liable.
As regards the issue of a fortuitous event, the SC held that defects in the automobile do not RQ:
constitute a fortuitous event.
What was the plate # of the jeep? PUJ-71-7
Random Questions: What was the value of the Omega Wrist watch? PhP852.7

What was the award? Ordered PANTRANCO to pay 6,500 and 3,500 respectively (initially 11. GATCHALIAN V. DELIM (SNAPPING SOUND WAS HEARD, FOREHEAD SCAR)
efforts to settle)
What was Leonila’s educational attainment? 3rd year commerce student at FEU Doctrines:
What was Estrella’s educational attainment? 4th year HS at dagupan Colleges
How many passengers were injured? 2 To exempt a common carrier from liability for death or physical injuries to passengers upon
the ground of force majeure, the carrier must clearly show not only that the efficient cause
10. JUNTILLA V. FONTANAR (RIGHT REAR TIRE EXPLOSION, MISSING OMEGA of the injury was entirely independent of the human will, but also that it was impossible to
WATCH) avoid. Any participation by the common carrier in the occurrence of the injury will defeat the
defense of force majeure.
Doctrine:
Facts:
Common carriers should teach their drivers not to overload their vehicles, not to exceed
safe and legal speed limits, and to know the correct measures to take when a tire blows up Reynalda Gatchalian boarded Delim‘s ―Thames‖ mini-bus in La Union. While the bus was
thus insuring the safety of passengers at all times. Failure to do so would make them liable running along the highway in Barrio Payocpoc, a ―snapping sound‖ was heard at one part
for death/injuries. of the bus and shortly thereafter, the vehicle bumped a cement flower pot, went off the
The carrier, while not an insurer of the safety of his passengers, should nevertheless be road, turned turtle and fell into a ditch. As a result, Gatchalian and others were injured.
held to answer for the flaws of his equipment if such flaws were at all discoverable. They were hospitalized. Delim‘s wife went to them, paid for their medical expenses and
A common carrier may not be absolved from liability in case of fortuitous event alone. It made them sign quitclaims (Joint Affidavit). This notwithstanding, Gatchalian still filed a
must also prove that it was not negligent in causing death or injury (free from human complaint to recover damages.
participation) Gatchalian alleges that due to the accident, she had a conspicuous white scar measuring 1
by 1/2 inches on the forehead, generating mental suffering and an inferiority complex on
Facts: her part; and that as a result, she had to retire in seclusion and stay away from her friends.
She also alleged that the scar diminished her facial beauty and deprived her of
Juntilla was riding a jeep to Cebu. The jeep was driven by Camoro, under the franchise of opportunities for employment
Fontanar and was owned by Banzon. During the course of the trip, the right rear tire In his defense, Delim alleges that the accident was due to a fortuitous event.
exploded and the vehicle turned turtle and jumped into a ditch.
Juntilla was thrown out of the jeep and momentarily lost consciousness. He suffered Issue: Is Delim, as CC, liable? YES
injuries and he also lost his Omega wrist watch. As a result of his injury and his loss, he
18
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

The Court held that to exempt a common carrier from liability for death or physical injuries Hence, the explosion was a fortuitous event completely independent of the will of the
to passengers upon the ground of force majeure, the carrier must clearly show not only that carrier
the efficient cause of the injury was entirely independent of the human will, but also that it
was impossible to avoid. Any participation by the common carrier in the occurrence of the Issue: Is the Carrier liable? Yes
injury will defeat the defense of force majeure.
In this case, however, participation of the CC is present. When the snapping sound was The explosion of the tire cannot be considered a FE. This is because there were human
heard, the driver merely said that ―it was only normal‖ as it had been heard on previous factors involved in the situation. The fact that the tire was new did not imply it was entirely
occasions. This means that the bus was not checked to determine what was causing the free from either #1) manufacturing defects or #2) improper mounting on the vehicle.
sound. The driver didn‘t even stop to check the bus. Moreover, a common carrier may not be absolved from liability in case of fortuitous event
All these circumstances show that there was also negligence (and hence, participation) on alone. It must also prove that it was not negligent in causing death or injury (free from
the part of the CC and therefore, it cannot avail of the defense of fortuitous event. human participation) In his case, the evidence shows that the bus was running too fast
Gatchalian won. notwithstanding the road conditions. In fact, the driver was even told to slow down but he
still didn‘t.
RQ: The CC failed to rebut the presumption of its negligence with clear and convincing evidence
of its exercise of extraordinary diligence. Therefore, it is liable for damages.
Plate number of the bus? Plate No. 52-222 PUJ Phil. 73 o Death indemnity under Art 1764 and Art 2206 in the amount of 50k is awarded
Were damages for plastic surgery for scar removal awarded? Yes. 15k for the death of Tito. 20k in Exemplary damages also awarded because the
What was the job Gatchalian was supposed to interview for? Substitute teacher job. driver was driving recklessly.
Where did the accident occur? Barrio payocpoc Norte, Bauang
RQ:
12. YOBIDO V. CA (FIVE-DAY OLD LEFT FRONT TIRE EXPLODED) Road condition: winding road, not cemented and wet due to the rain

Doctrines: 13. M. RUIZ HIGHWAY TRANSIT V. CA (REAR TIRE EXPLOSION RESULTING TO A


HOLE IN THE FLOOR)
Requisites of defense of FE
1. Cause must be independent of the human will Doctrine:
2. Cause was impossible to foresee and if it can be foreseen, must be impossible to
avoid Defense of CC against liability: lack of contract of carriage
3. Cause must render it impossible for the debtor to fulfill his obligation in a normal A CC will be held liable if it fails to provide a safe floor.
manner The carrier is liable for moral damages to the parents of a child who died while a passenger
4. Debtor must be free from any participation in any of the carrier‘s vehicle
A common carrier may not be absolved from liability in case of fortuitous event alone. It
must also prove that it was not negligent in causing death or injury (free from human Facts:
participation
Quantum of evidence required to rebut presumption of negligence in case of death or Victoria, a 4 year old girl , was riding with her parents in a bus (#102) owned by M. Ruiz
injury: clear and convincing evidence. Highway Transit. Martin Buena was driving. During the trip, a rear tire exploded, blasting a
It is not relevant w/n the manufacturer is reputable hole in the very place where Victoria was standing (rear). As a result, the child fell through
the hole and died.
Facts: Thus, parents of Victoria sued the CC and the driver. However, the TC dismissed on the
ground of 1) fortuitous event and 2) a signed quitclaim by the spouses attesting to receipt of
Tito and Leny Yumboy, and their children, at 3pm, boarded a Yobido Liner Bus bound for PhP150.
Davao. During the voyage, the left front tire of the bus exploded. The bus fell into a ravine 3 The CA, on appeal, reversed. It awarded death indemnity, moral damages and attorneys
feet from the road. Tito died and the other passengers were injured. Thus, Leny and her fees.
children sued Alberta Yobido, the owner, and Crescencio Yobido, the driver.
o According to Leny‘s testimony, the bus was running fast even though the road Issue: Is the CC liable? Yes #1) defective floor #2) overspeeding #3) tires not regularly checked
was not cemented and was wet due to rain.
Defendant, on the other hand, argues that the accident was due to a fortuitous event. It The child died because the floor of the bus gave way. This reinforces the presumption of
argued that the bus was running at a speed of ―60 to 50‖ and that the left front tire negligence on the part of the CC. No evidence of extraordinary diligence was shown to
(Goodyear) was a brand new tire that was bought 5 days before the incident. rebut the presumption.
The TC dismissed the complaint and ruled that La Mallorca (where the carrier was held In fact, the bus was overspeeding, overcrowded and the tires were not regularly checked. A
liable) wasn‘t applicable because in this case, the cause of the explosion was not known. combination of these instances was the reason of the explosion of the tire.
19
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Even if the tire explosion was fortuitous, the CC can still be held liable on account of its 15. BATANGAS TRANSPORTATION V. CAGUIMBAL (BIÑAN BUS HIT BTCO BUS
defective floor. WHICH WAS NOT PARKED PROPERLY)
Thus, the CC is liable. As for moral damages, the carrier is liable therefor to the parents of
a child who died while a passenger in any of the carrier‘s vehicle. Doctrine:

RQ: In an action based on a contract of carriage, the court does not have to make an express
Where did accident occur? Sta. Rosa finding of fault or negligence on the part of the carrier in order to hold it liable.
Destination of bus? Antipolo When a passenger dies or is injured while under the custody of the CC, it is incumbent
upon the carrier to prove that it exercised extraordinary diligence to overthrow the
14. ROQUE V. BUAN (PROTRUDING RIGHT ARM, DETACHED WINDOW GRILL) presumption of negligence on its part.
Where a passenger of a CC is injured as a result of the negligence of another CC, the
Doctrine: former is still liable to the passenger if it created a hazardous situation for its passenger.

Negligence on the part of the CC is presumed if a passenger suffers injuries. Facts:


Unless it is proven that the CC, in violating the contract of carriage, acted fraudulently or in
bad faith, no moral damages can be awarded where the breach did not result to death, but Pedro Caguimbal was a paying passenger of a bus owned by Batangas Transportation
merely injuries. Company (BTCO)
When the BTCO bus was slowing down to a halt in order to drop off a passenger, a bus
Facts: owned by Biñan Transportation (Biñan), which was going really fast from the opposite
direction, tried to overtake the Calesa in front of it and in turn, hit the BTCO bus and the
Antonio Roque rode a Philippine Rabbit Bus bound for Pampanga. This bus was driven by calesa. Point of impact: left side of the BTCO bus, let front corner of its body. As a
Celestino Soliman. All along the way, the speed of the bus was 60km/h. It then started to result, Caguimbal died.
cross a bridge. Thus, Caguimbal‘s heirs sued BTCO. BTCO in turn, filed a 3rd party complaint against
To avoid a truck coming from the opposite direction, the driver swerved the bus to the right, Biñan and its driver. Subsequently, Biñan and its driver were also impleaded by
which however, sideswiped the railing of the bridge. As a result, Roque injured his right arm Caguimbal‘s heirs.
when the window grills got detached due to the impact. The TC held that only Biñan was liable. However, CA reversed and held that BTCO was
o In its defense, the defendant CC alleges that #1) the bus was not running at a solidarily liable with Biñan and its driver.
high speed (10km/h) and #2) Roque was injured because he let his arm protrude
out of the window and that‘s why it was hit. When asked why, Roque answered Issue: Is BTCO liable for damages? Yes. Improperly parked.
that he fell asleep.
The SC found that BTCO was also liable because its driver, before dropping off its
Issue: Was CC liable? YES #1) unreasonable speed #2) cause of injury was the impact due to passenger, did not completely drive the bus to the shoulder as part of it was still on the
the overspeeding road. He should have completely parked the bus on the shoulder. He should have seen the
calesa and must have known that the Biñan bus would try to overtake it.
#1) The bus was running at an unreasonable speed when it crossed the bridge. If it was It is true that the driver of the Biñan bus was also reckless in overtaking, but it was BTCO
true that the speed of the bus was only 10kms, then sideswiping the railing at such a low which had the obligation to Caguimbal to exercise extraordinary diligence in transporting
speed would not result into substantial damage to the bus. However, the evidence shows him. This includes avoiding situations which are hazardous to the passengers.
that the bus was severely damaged (iron grills were detached) It was BTCO‘s responsibility and not Biñan‘s. Therefore, it is solidarily liable with Biñan.
#2) Roque was not injured because he let his right arm protrude outside the grills. It was
the high speed of the bus that caused damage to the grills, and in turn, injured Roque. The RQ:
part of the bus where Roque was sitting was the part that directly hit the railing. Plate # of BTCO bus? TPU-507 driven by Tomas Perez
As can be seen, the CC did not exercise ED. Hence, it is liable. However, no moral Plate # of Biñan bus? TPU-820 driven by Marciano Ilagan
damages may be awarded. Owner of Calesa? Benito Makahiya his horse died

RQ: 16. BACARRO V. CASTAÑO (JEEP RACED WITH A TRUCK AND IT FELL INTO A DITCH)
What is the name of the bridge? Sulipan Bridge in Apalit, Pampanga. Doctrine:

It cannot be contended by the CC that another vehicle was the proximate cause of the
accident as long as it can be shown that the CC failed to exercise extraordinary diligence in

20
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

transporting its passengers safely. Thus, once a passenger dies or is injured in the course The TC convicted Briñas for double homicide through reckless imprudence but acquitted
of travel, the carrier and the driver are presumed to be at fault. the engineman (Millan) and the assistant conductor (Buencamino) Briñas was ordered to
pay death indemnity to the heirs of the deceased.
Facts: o Note: during the pendency of the criminal case, a separate civil action was filed
by Gesmundo against Manila Railroad company
Gerundo Castaño boarded a jeep driven by Montefalcon that was bound for Misamis
Occidental. The jeep was filled to capacity, with 12 passengers in all. Issue:
While approaching the Sumasap bridge, there was a cargo truck coming from behind that
blew its horn for right of way. The jeep gave way but did not change speed (the jeep raced 1) Is criminally liable Briñas liable? YES
with the truck for 20 meters) The truck sideswiped the jeep so the driver lost control and 2) Was the judgment awarding indemnity errenous because a separate civil action was already
the jeep fell into a ditch. As a result, Castaño‘s left leg got broken. He then sued filed? NO
Montefalcon and the owner of the jeep.
In its defense, the jeep owner and driver allege that the truck was the one that was reckless 1) Criminal liability of Brinas
because it sideswiped the jeep while it was overtaking. It was negligence on the part of the conductor to announce the next flag stop when the stop
was still a full three minutes ahead. In this case, Briñas‘ announcement was too early and
Issue: Is the CC (jeep) liable? YES wrong. It was made while the train was still in Bario Lagalag.
It can be seen therefore that the proximate cause of the death of the victims was the
Montefalcon, the driver, did not slow down but instead continued to race with the truck for announcement. If it was not for the announcement, the victims would not have prepared to
20 meters. He even shouted at the driver of the truck. If the driver slowed down, there alight near the exit and they would not have fallen when the train suddenly picked up
would have been no contact. regular speed.
Further, it is contended that the proximate cause of the accident was the negligence of the 2) Difference of civil indemnity award in crim case v. separate civil action against employer
truck driver. However, the fact is that there was a contract of carriage between the owner Briñas further argues that the TC had no more jurisdiction to award civil liability in its
and Castano which required ED on the owner‘s part. conviction as a separate civil action had already been filed.
Clearly, Montefalcon failed to exercise ED in transporting the passengers by racing with the SC held that the source of the obligation in the civil case is contractual (breach of contract)
truck and not slowing down. CC liable. CC lost. and not a crime. Furthermore, the action is against Manila Railroad, not Briñas. Culpa
contractual and culpa criminal are 2 distinct sources of obligation.
RQ: Thus the TC acted within its jurisdiction when despite the filing of the separate civil action
Bridge? Sumasap Bridge against manila railroad, it still awarded death indemnity in the judgment of conviction.
Truck details? Owned by Te Tiong Alias Chinggim, Driven by Nicostrato Digal. The indemnity for loss of earning capacity, moral damages, exemplary damages, atty‘s
Injury? Right leg shorter by 1.5 inches because of the accident fees and interests are recoverable separately from the death indemnity. The indemnity
arising from the fact of death due to a crime is fixed whereas the others are still subject to
17. BRINAS V. PEOPLE (CONDUCTOR’S PREMATURE ANNOUNCEMENT OF STOP) the determination of the court based on the evidence presented.
Judgment: award of death indemnity increased to 12k each for Bool and Emelita.
Doctrines: Subsidiary imprisonment deleted.

It is criminal negligence on the conductor‘s part to announce the next stop when it is still a RQ:
full 3 minutes away. Whose head was crushed? The baby‘s
There is no error in awarding civil damages (death indemnity) against the conductor in a Was the grandmother‘s body found whole or severed? Severed
criminal case where a separate civil action is filed against the employer by the heir of the Was a ticket found at the place where the body was found? Yes. Pocket of grandmother
deceased train passengers.

Facts:

Juanito Gesmundo bought a train ticket in Quezon for his 55 year old mother Martina Bool
and her 3 year old daughter Emelita. The train was bound for Barrio Lusacan. Upon
approaching Barrio Lagalag, the train slowed down and the conductor (Briñas) shouted
―Lusacan, Lusacan‖
Thereupon, Bool and Emelita got ready to alight from the train. When they were near the
door, the train suddenly picked up speed and they were not seen anymore. They fell from
the train and were run over by it.

21
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

18. BATANGAS LAGUNA TAYABAS BUS CO. V. IAC (NEGLIGENT OVERTAKING OF 19. CALALAS V. CA (EXTENSION SEAT, CONTRACT OF CARRIAGE V. TORT)
A FORD FIERA)
Doctrine:
Doctrine:
In QD, the negligence of fault should be clearly established because it is the basis of the
In an action based on a contract of carriage, the court need not make an express finding of action
fault or negligence on the part of the carrier to hold it liable to the passenger. This is o The principle of proximate cause is only applicable in tort cases and is not
because the CC is presumed to be negligent for the death/injuries suffered by its available in breach of contract cases.
passengers. In breach of contract, the action can be prosecuted merely by proving the existence of the
Art 2176 is a viable remedy in going after the driver of the CC, if it can be shown that he contract and the fact that the CC (obligor) failed to transport his passenger safely to his
was negligent. destination

Facts: Facts:

Bus #1046 of Batangas Laguna Tayabas (BLTB) driven by Pon and Bus #404 of Eliza Sunga took a passenger jeepney owned and operated by Calalas. Sunga was given
Superlines driven by Dasco collided in Tayabas Quezon. This collision resulted to the death an ‗exension seat‘, a wooden stool inside the jeep placed near its rear. This is because the
of Rosales, Pamfilo, Neri and injuries to Rosales and Sales. They were all passengers of jeep was already filled to capacity with 24 passengers.
the BLTB bus. On the way to Poblacion Sibulan, the jeep stopped to let a passenger off. Sunga gave way
o The accident was due to the faulty overtake of the BLTB bus. to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Verena and
Thus, the heirs of the victims instituted separate cases against BLTB and Superlines (and owned by Salva, bumped the left rear portion of the jeepney. As a result, Sunga was
their drivers) injured.
The defendants denied liability, interposed counterclaims and crossclaims against each Thus, Sunga filed a complaint for damages against Calalas, based on a violation of the
other. The TC exonerated Superlines and Dasco and attributed sole responsibility to BLTB. contract of carriage. Calalas then filed a 3rd party complaint against Salva. The TC held
CA affirmed. Salva liable. It took cognizance of a tort case filed by Calalas against Salva and Verena in
BLTB appealed the decision, alleging that the IAC (CA) erred in adjudging that the actions which Salva was held to be liable as the proximate cause of the accident
of the victims were based on culpa contractual (breach of contract) It contends that CA reversed on the ground that Sunga‘s cause of action was based on contract of carriage,
Superlines should also be liable because the action that was filed was based on culpa not quasi-delict. Calalas was held to be solely liable.
aquliana or tort and it was against all the defendants (Superlines included)
Issue: Is Calalas liable? Yes
Issue: What was the basis of BLTB‘s liability? Contract of carriage.
1) Different Causes of Action
BLTB and the driver‘s liability were based on both breach of contract and tort albeit Sunga is not bound by the ruling in the tort case filed by calalas. The principle of res
separately. The IAC found that BLTB‘s driver was negligent in #1) overtaking a Ford Fiera judicata does not apply to Sunga. The issue in this case is w/n Calalas is liable under the
as he was negotiating a bend and #2) despite the fact that there was a continuous yellow contrat of carriage. This is because QD and breach of contract rest on two different
line (no overtaking) BLTB‘s driver thus failed to act with the requisite diligence. foundations.
As to liability, IAC found that the driver is primarily liable under Art 2176 (tort) while the o Moreover, the finding that Salva‘s truck was the proximate cause is not
liability of BLTB is also direct and is under its breach of the contract of carriage. Because applicable in this case because the action is anchored on breach of contract.
BLTB failed to rebut the presumption of negligence by a showing of extraordinary diligence,
it is liable. 2) Negligence of Calalas
In the case at bar, upon the happening of the accident, a presumption of negligence on the
part of Calalas arose, and it became the duty of Calalas to rebut that presumption.
Several factors show that Calalas did not exercise ED in transporting his passengers.
These are the following:
o #1) jeep was improperly parked as its rear was exposed from the shoulder
o #2) jeep took more passengers than allowed
o #3) taking of extension seat is not an implied assumption of risk
Hence, Calalas is liable.

3) Moral damages

22
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

CA erred in awarding moral damages. As a general rule, moral damages are not Evidence shows that Mallari indeed tried to overtake while negotiating a curve. His
recoverable in actions for damages based on breach of contract for it is not enumerated testimony shows that he saw the van coming right at him but he miscalculated the speed..
under Art 2219. As an exception, moral damages are recoverable: The act of overtaking was clearly against traffic rules and regulations.
o #1) in cases in which the mishap results in the death of the passenger (Art The rule is settled that a driver abandoning his proper lane for purposes of overtaking
1763 Art 2206 another vehicle has the duty to see that the road is clear. In this case, Mallari still overtook
o #2) in cases where CC is guilty of fraud or bad faith despite the oncoming van. Clearly, his negligence was proximate cause of the accident.
In this case, there is no showing that there was bad faith. The fact that it was the driver of It follows that Mallari Sr., as the owner, is liable for the breach of the contract of carriage. In
the Isuzu truck who helped Sunga get to the hospital does not imply bad faith. an action for breach of contract of carriage, the court does not have to make an express
finding of fault on the part of the carrier. CA decision affirmed.
RQ:
education of Sunga? College freshman majoring in physical education in siliman RQ:
did she shift after the injury? Yes
injury? Fracture on the distal 3rd of the left tibia-fibula 3 months crutch Specifics of the accident? point of collision left rear portion of the jeep and the left front side
of the delivery van. The 2 right wheels of the van were on the right shoulder. The jeepney fell on
20. M ALLARI V. CA (OVERTAKE ACCIDENT: LEFT FRONT PORTION OF VAN HIT its left side
LEFT REAR PORTION OF JEEP)
21. ANURAN V. BUÑO (IMPROPERLY PARKED JEEP)
Doctrine:
Doctrine:
A driver abandoning his proper lane for purposes of overtaking another vehicle has the duty
to see that the road is clear. The principle of last clear chance is inapplicable as it only applies in a suit between owners
In an action based on a contract of carriage, the court need not make an express finding of and drivers of 2 colliding vehicles. It does not apply where a passenger demands
fault or negligence on the part of the carrier in order to hold it responsible to pay the responsibility from the carrier to enforce its contractual obligation
damages sought by the passenger. By contract of carriage, the carrier assumes the
express obligation to transport the passenger to his destination safely and observe Facts:
extraordinary diligence with a due regard for all the circumstances, and any injury that
might be suffered by the passenger is right away attributable to the fault or negligence of At noon of January 12, a passenger jeep was parked on the road to Taal, Batangas. It was
the carrier. This is an exception to the general rule that negligence must be proved, and it is parked so that one of the passengers could alight. However, the jeep was parked in such a
therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence way that ½ of its width was on the road and the other half on the shoulder.
as prescribed in Articles 1733 and 1755 of the Civil Code 5 minutes later, a speeding water truck, owned by Maligaya and Aro, bumped the jeep,
Facts: causing it to turn turtle into a ditch.
Thus, 3 passengers died and 2 suffered injuries. The driver and owners of both the jeep
At around 5am, a passenger jeep driven by Mallari Jr, owned by Mallari Sr., collided with and the truck were sued by the victims (Anuran etc). The TC, however, absolved the driver
the delivery van of Bulletin Publishing along the national Highway in Bgy. San Pablo (Buño) and owner of the jeep (Pedro Gahol and Luisa Alcantara)
Bataan. Thus, the victims appealed, alleging that the owner/driver of the jeep should also be held
Mallari Jr. testified that he overtook a Blue Fiera while negotiating a curve. This resulted in liable.
the collision. The impact caused the jeepney to fall and this resulted to injuries to the
passengers. Israel Reyes, a passenger of the jeep, died due to the injuries Issue: Should the owner and driver of the jeep be held liable? YES #1) improper parking #2)
o Point of impact: left rear portion of jeep and left front side of van overloaded
Thus, his widow, Claudia, filed a complaint against the Mallaris, Bulletin, its driver (Angeles)
Claudia alleges that both drivers were negligent. TC found that the proximate cause was The obligation of the CC to transport its passengers safely requires utmost diligence. The
Angeles considering the fact that the left front portion of the delivery truck hit the left rear driver was at fault because he parked the jeep improperly. Therefore, because of the
portion of the jeep. driver‘s negligence, the CC is liable.
CA reversed and held that Mallari, Jr. was responsible because of his faulty overtake. The principle of last clear chance is inapplicable as it only applies in a suit between owners
Mallari Jr and Sr. solidarily held liable for loss of earning capacity, death indemnity and and drivers of 2 colliding vehicles. It does not apply where a passenger demands
atty‘s fees. responsibility from the carrier to enforce its contractual obligation.

Issue: Who is liable? Mallari #1) illegal overtaking RQ:

Plate of jeep? TPU-13548


Driver of jeep? Pepito Buño
23
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Plate of water truck? T-17526


# of passengers? 14 excluding the driver or 16 capacity: 11

24
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Was the foot replaced? Yes. Artificial


WEEK 6: COMMON CARRIERS; CARRIAGE OF PASSENGERS Other specifics? Del prado grasped the front handpost, which was to the left side of the
motorman. The motorman can‘t make the excuse that he didn‘t see del Prado
1. DEL PRADO V. MRR (MAN TRIED TO BOARD THE TRAIN WHILE IT WAS MOVING;
AMPUTATED RIGHT FOOT) 2. DANGWA TRANSPORTATION V. CA (M AN FELL FROM THE BUS WHILE HE WAS
CLOSING HIS UMBRELLA AND HE GOT RAN OVER)

Doctrine:

When the bus is not in motion there is no necessity for a person who wants to ride the
same to signal his intention to board. A public utility bus, once it stops, is in effect
making a continuous offer to bus riders. Hence, it becomes the duty of the driver and
the conductor, every time the bus stops, to not do anything that would increase the peril to
a passenger while he is attempting to board the bus
Doctrine: It is the duty of common carriers of passengers, including common carriers by railroad train,
It is the carrier‘s duty not to do anything that would increase the peril of a passenger streetcar, or motorbus, to stop their vehicles for a reasonable length of time in order to
attempting to board its vehicle. afford passengers an opportunity to board and enter, and they are liable for injuries
Once a person places his left foot on the platform of a CC and even before he secures his suffered by boarding passengers resulting from the sudden starting up or jerking of their
position, that person is already considered a passenger and the duty of ED of the CC conveyances while they are doing so.
begins. It is not negligent per se to try to board a vehicle which is moving slowly. It is a matter of
common experience.
Facts: The victim, by stepping and standing on the platform of the bus, is already considered a
In the morning of Nov 18, 1925, Florenciano, as motorman of Manila Electric Company passenger and is entitled all the rights and protection pertaining to such a contractual
(MEC), was in charge of car #74 running from east to west on R. Hidalgo Street. relation. Hence, it has been held that the duty which the carrier passengers owes to its
Del Prado, coming from the left, ran and jumped inside the train and signaled to the patrons extends to persons boarding cars as well as to those alighting therefrom
motorman that he wanted to board. The motorman slowed down a little. When Del Prado
placed his left foot on the platform and before he secured his position, the motorman Facts:
suddenly sped up.
As a result, he fell to the ground then his right foot was crushed by the moving car. It had to The heirs of Cudiamat filed a complaint for damages against Dangwa allegedly due to its
be amputated. Thus, he sued MEC for damages. negligence that then led to the death of Pedrito Cudiamat.
MEC argues that it used ordinary diligence in selection and supervision of its employees In the RTC, Cudiamat was found to be negligent in trying to board a moving bus owned by
and that del Prado was guilty of contributory negligence. Dangwa Transportation without even telling the driver/conductor that he wanted to board.
The CC was also found to be negligent for leaving the door open while it was moving
Issue: Is MEC liable? YES In the CA, however, it was found that that the bus was at full stop when Cudiamat tried to
board the bus. The accident occurred when Cudiamat was closing his umbrella on the
Although the motorman of the car was not bound to stop to let del Prado on, it was his duty platform on the bus and the bus suddenly jerked because the driver accelerated the
to not do anything that would increase del Prado‘s peril as he was attempting to board the bus even before Cudiamat was seated. Cudiamat fell and got ran over by the bus. He
car. He breached his duty when he suddenly sped up even if del Prado was not yet fully eventually died.
secured. Thus, he is negligent. The CA found that it was the driver‘s negligence that caused the accident because he did
#1) defense of selection and supervision: The SC further held that a contract of carriage not wait for Cudiamat to take a seat. Furthermore, the platform was slippery and wet at that
existed between del Prado and MEC and this was breached because of the motorman‘s time.
negligence. Once del Prado stepped on the train, the duty of MEC of ED began. Therefore, Thus, Dangwa Transportation went to the SC assailing the CA findings alleging that #1)
the defense of diligence in selection and supervision cannot be used (because that defense the bus was at initially at full stop and Cudiamat tried to board while it was moving #2)
is available only under Art 2180) Cudiamat was guilty of contributory negligence #3) no contract of carriage
#2) As to contributory negligence: the contributory negligence of del Prado was not the
proximate cause of the accident so it should only serve to mitigate MEC‘s liability (under Art Issue: Is the CC liable? YES
1762) as the PC of the injury was the premature speeding up of the motorman.
MEC liable, but award reduced due to contributory negligence. #1) As to the bus being in full stop: Yes, the bus was really in full stop. When the bus is
not in motion there is no necessity for a person who wants to ride the same to signal his
Notes: intention to board. A public utility bus, once it stops, is in effect making a continuous
offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time
25
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

the bus stops, to not do anything that would increase the peril to a passenger while he is Issue: Is La Mallorca liable for the death of the child? YES
attempting to board the bus. The premature acceleration of the bus in this case was a
breach of such duty. #1) As to existence of breach of contract: There was a breach of contract because the
#2) As to contributory negligence: Even assuming the bus was moving, Cudiamat‘s act relation of carrier and passenger lasts until the passenger has had a reasonable
cannot be considered negligent. It is not negligent per se to try to board a vehicle which is opportunity to leave the carrier‘s premises. In the present case, the driver and conductor
moving slowly. It is a matter of common experience. The driver should not have suddenly did not exercise utmost diligence while Mario was getting his bag
jerked the bus. o First, the engine was left running
#3) As to protection under contract of carriage: Cudiamat, by stepping on the platform o Second, bus driver ran the bus even if the unloading was not yet finished
of the bus, is already considered a passenger and can claim for breach of the contract of The presence of Raquel near the bus was not unreasonable and
carriage. The duty to exercise ED already began. hence she is still considered a passenger of the carrier. Hence, La
CC lost. Liable under contract of carriage. Mallorca breached its contract of carriage when it failed to exercise
utmost diligence.
Notes #2) As to liability or QD: even assuming there was no contract, La Mallorca also liable
under Art 2180 (vicarious liability for acts of its employees) because of the alternative
Other things that show negligence: When Cudiamat was ran over, the driver did not allegation of negligence by Beltran.
immediately bring him to the hospital. It allowed a passenger to alight and even delivered a o Though, QD and breach of contract are incompatible, they can be alleged
refrigerator. alternatively. Under Art 2180, La Mallorca was entitled to a defense of ordinary
Where was the body found? At the rear of the bus. diligence and selection and supervision. However, it failed to show any evidence
Where did the incident happen? Between bunkhouse 53 and 54 at Marivic, Sapid, Mankayan, of such.
Benguet CC lost. This is because the CC still had the duty to exercise ED with regard to passengers
Name of driver? Theodore Lardizabal who still have a justified reason to stay in its premises.

3. LA M ALLORCA V. CA (LITTLE GIRL RAN OVER WHILE FATHER WAS GETTING A Notes:
conductor is half brother of Mariano
BAG FROM THE BUS) bag was left under one of the seats near the door
time of accident: around noontime
Doctrine: plate number of the bus TPU No. 757
The relation of carrier and passenger does not necessarily cease where the passenger, Raquel was 4 ½ years old
after alighting from the car, aids the carrier's servant or employee in removing his baggage
from the car
The relation of carrier and passenger does not cease at the moment the passenger alights 4. ABOITIZ SHIPPING V. CA (VIANA WAS HIT BY A CRANE)
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 Doctrine:
leave the carrier's premises
Though, QD and breach of contract are incompatible, they can be alleged alternatively. The The rule is that the relation of carrier and passenger continues until the passenger has
defense of ordinary diligence in s&s is available if Art 2180 is used against carrier while been landed at the port of destination and has left the vessel owner's dock or premises.
such defense is not available in breach of contract. 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
Facts: opportunity to leave the carrier's premises.
Mariano Beltran boarded a Pambusco bus together with his wife and daughters at San All persons who remain on the premises a reasonable time after leaving the conveyance
Fernando Pampanga. They were carrying four bags. The conductor of the bus issued 3 are to be deemed passengers, and what is a reasonable time or a reasonable delay within
tickets covering the full fares of the family. No tickets were issued for minors Raquel and Fe this rule is to be determined from all the circumstances, and includes a reasonable time to
because of their height. see after his baggage and prepare for his departure.
After an hour, the Beltran family got off. They went to the pedestrian lane. However, o The carrier-passenger relationship is not terminated merely by the fact that the
Mariano forgot one of his bags so he went back. Raquel followed him. Beltran was standing person transported has been carried to his destination if, for example, such
on the running board while waiting for his bag. The driver left the motor running. person remains in the carrier's premises to claim his baggage.
Unfortunately, Raquel was found dead once Mariano got his bag and alighted from the bus. The test to determine w/n a person is still a passenger of the CC: Was his presence in the
Thus, Beltran sued La Mallorca CC‘s premises still justified/reasonable? If yes, then he is still considered a passenger.
In its defense, La Mallorca claimed that there was no breach of contract because Raquel
Facts:
was no longer a passenger when she was run over. However, it was still found to be liable
for quasi delict.

26
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Viana boarded M/V Antonia owned by Aboitiz at the port in Occidental Mindoro. When it As a consolation, he was issued a free ticket to Iligan. Zapatos was not given
arrived in manila, the passengers disembarked through a gangplank. Viana did not use the transportation, food or accommodation for his stay in Cotabato City. He never recovered
gangplank and instead alighted from the third deck. his belongings.
One hour after all the passengers disembarked, a crane operated by Pioneer Stevedoring Zapatos then sued PAL for damages. PAL argues that it did not have any duty to take care
was used to unload the cargo from the vessel. At this point, Viana went back to the vessel of Zapatos as he got stuck due to a fortuitous event.
and while he was pointing to the crew of the crane where his cargo was, the crane hit him
and pinned him against the vessel. He died 3 days later. Thus, Viana‘s heirs sued Aboitiz. Issue: Is PAL liable for damages? YES
In turn, Aboitiz sued Pioneer. Aboitiz was held to be liable and Pioneer was eventually held
to be free of any liability. #1) Negligence of PAL: PAL was negligent in caring for its stranded passenger. It was
shown by evidence that PAL indeed did not even offer transportation or accommodation to
Issue: Is Aboitiz liable? YES, reasonable cause to justify Viana‘s presence. Hence duty of ED Zapatos when he got stranded.
remained on the part of the CC (Aboitiz) #2) As regards its duty to take care of its passengers: Even if the flight was diverted
due to a fortuitous event, this did not necessarily mean that PAL did not have the duty to
#1) Was he still a passenger? In the case at bar, even though 1 hour had elapsed before attend to Zapatos. This is because such fortuitous event did not terminate PAL’s
the accident, there existed a reasonable cause to justify Viana‘s presence on or near contract with Zapatos as his stay in the premises was still justified and reasonable.
Aboitiz‘s vessel. This is because by nature of Aboitiz as a shipper, the passengers are He was still considered a passenger. Being in the business of air carriage, PAL is deemed
given more time to disembark. A passenger usually needs an hour to disembark and claim equipped to deal with situations as in this case.
his baggage. o PAL necessarily would still have the duty to exercise extraordinary
o Therefore, Viana was still considered a passenger when the accident occurred diligence in safeguarding the comfort, convenience and safety of its
as he was still claiming his baggage. stranded passengers until they have reached their final destination.
#2) Was Aboitiz negligent? The evidence did not show that there was a cordon of drums On this score, PAL grossly failed considering the then ongoing battle
around the perimeter of the crane. The presence of warning signs were also not proven. between government forces and Muslim rebels in Cotabato City
Thus, Abotitiz was negligent in not sufficiently warning its passengers that it was dangerous and the fact that the private respondent was a stranger to the place.
to enter the baggage unloading area. Hence, it breached its contract of carriage by failing #3) However, as to the failure of Zapatos to be accommodated for the stop-over at Cebu,
to exercise ED. PAL is not liable. This is because Zapatos‘ request to be given priority was unreasonable
Aboitiz lost. It‘s solely liable. given the circumstances. In fact, he had to stay longer at the Cotabato airport because he
kept on arguing with the PAL personnel
Notes: PAL won but damages awarded reduced.
Pioneer was not held to be liable because it was able to show that it exercised sufficient
diligence. It is not bound to exercise ED like Aboitiz. Notes:
La Mallorca case was cited and it was applied in this case also. The test of reasonableness was Zapatos‘ testimony that he had a scheduled business "transaction of shark liver oil supposedly
used. to have been consummated on August 3, 1975 in the morning" and that "since (private
Crane operator? Alejo Figueroa respondent) was out for nearly two weeks I missed to buy about 10 barrels of shark liver
oil," are purely speculative.
5. PAL V. CA (FLIGHT GOT DIVERTED, PASSENGER GOT STUCK, HE WAS NOT Flight that got diverted? Flight 477
Flight that he wanted to get on? Flight 560, coming from Manila
CARED FOR AND HIS BAGGAGE WAS LOST)

Doctrine:
In cases of diversion of flights, an air carrier would necessarily would still have to exercise
extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded
passengers until they have reached their final destination

Facts:
In 1976, Pedro Zapatos was a passenger of a PAL flight from Cebu to Ozamiz. The routing
was Cebu-Ozamiz-Cotabato. 15 minutes before landing, the pilot was told to proceed
directly to Cotabato instead due to heavy rains.
PAL informed the passengers that a flight would stop over to Cebu but there were only 6
seats available and the basis of the priority would be the check-in sequence. Zapatos,
despite asking for priority, was not given a seat because he was 9 th. Zapata still tried to
stop the departure of this flight as his personal belongings, including a camera that he was
supposed to deliver.
27
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

6. JAPAN AIRLINES V. CA (STRANDED IN JAPAN BECAUSE OF MT. PINATUBO) 7. BACHELOR EXPRESS V. CA (SOLDIER WAS STABBED IN THE BUS, RESULTING
STAMPEDE KILLED 2 MEN)
Doctrine:
If the fortuitous event (that prevented consummation of transportation contract) was Doctrine:
accompanied by neglect and malfeasance by the carrier's employees, an action for In order that a carrier may be relieved from liability in case of FE, it is not enough that the
damages against the carrier is permissible accident was caused by such FE. The CC must still prove that it was not negligent in
Petitioner JAL reneged on its obligation to look after the comfort and convenience of its causing the injuries resulting from such FE. In other words, it must be exclusively without
passengers when it declassified private respondents from "transit passengers" to "new human intervention.
passengers" as a result of which private respondents were obliged to make the necessary Requisites of defense of FE
arrangements themselves for the next flight to Manila 1. Cause must be independent of the human will
Adverse weather conditions or extreme climatic changes are some of the perils involved in 2. Cause was impossible to foresee and if it can be foreseen, must be impossible to
air travel, the consequences of which the passenger must assume or expect. After all, avoid
common carriers are not the insurer of all risks. 3. Cause must render it impossible for the carrier to fulfill his obligation in a normal
manner
Facts: 4. Carrier must be free from any participation

On June 1991, Miranda boarded JAL Flight JL 001 in San Francisco bound for Manila.
Likewise, on the same day, Agana and Francisco left LA for Manila via flight JL 061. As an Article 1763. A common carrier is responsible for injuries suffered by a passenger on
incentive, they were to make an overnight stopover at Narita Japan at the airlines‘ expense. account of the wilful acts or negligence of other passengers or of strangers, if the common
Upon arrival in Narita, the passengers were billeted at Hotel Nikko Narita for the night. They carrier's employees through the exercise of the diligence of a good father of a family could
were unable to go home to Manila because of the Mt. Pinatubo eruption. Because of this have prevented or stopped the act or omission. In this case, this provision was not
NAIA had to be indefinitely closed. applied because the act/omission could not have been stopped since it was a fortuitous
To accommodate the passengers, JAL rebooked all the Manila-bound passengers to a event.
flight to Manila for June 16, 1991. Hotel expenses were also paid for. However, the flight
was still cancelled. JAL then informed the passengers that they would not pay for the hotels Facts:
anymore. A bus owned by Bachelor Express (#800) was on its to way to Cagayan de Oro from
Thus, the passengers (respondents) had to pay for their expenses from their own money Davao. During the trip, a passenger at the rear portion ran amuck and stabbed a soldier
from June 16-June 21. When they got home, the respondents sued JAL for damages, which caused panic. When the bus stopped, Beter was found dead and Rautraut died
asserting that JAL failed its duty to provide care and comfort for its stranded passengers by shortly after. They allegedly died as a result of the stampede.
refusing to pay for their expenses from June 16-June 21. Thus, the heirs of Beter and Rautraut sued Bachelor Express, its owner Yasay and the
The CA held JAL liable for moral and exemplary damages and applied PAL v. CA. driver Rivera. Bachelor Express primarily argues that the #1) proximate cause of the deaths
was the act of the passenger in stabbing the soldier and #2) that it was a fortuitous event
Issue: Is JAL liable for damages? Yes. But JAL was not obliged to pay for their expenses until
June 21. Issue: Is Bachelor Express liable? YES

#1) Why PAL v. CA not applied: The SC held that reliance on the PAL case is misplaced. #1) What was the PC? The PC was the passenger who stabbed the soldier. This incident
This is because in the PAL case, although there was a fortuitous event that caused the led to the stampede.
diversion, it was accompanied by neglect on the part of PAL‘s employees. In this case, #2) Fortuitous event: The sudden act of the passenger in stabbing the soldier comes
there was no neglect on the part of JAL as it paid for accommodations on the night of the within the ambit of a fortuitous event. However, in order that a carrier may be relieved
delayed flight. from liability in case of FE, it is not enough that the accident was caused by such FE.
#2) Liability of JAL: JAL however, is still liable because it had the duty to make necessary The CC must still prove that it was not negligent in causing the injuries resulting
arrangements to transport the stranded passengers on their first available flight to Manila. from such FE. In other words, it must be exclusively without human intervention.
JAL reneged its obligation to look after the comfort and convenience of the passengers #3) Negligence of CC: SC held that these were the instances that showed negligence
when it declassified them from ―transit passengers‖ to ―new passengers‖ as a result of o A) At the height of the commotion, however, the bus driver did not immediately
which, the respondents were placed on the waiting list and had to make arrangements for stop the bus. In fact, it was estimated to still be running at 30-40 miles/48-65km
their flight to Manila themselves. at the time of the commotion. It is logical to assume that the victims then fell off
Thus, nominal damages are awarded. Nominal damages are awarded for a technical the bus when the door gave way due to the stampede.
violation of a right, and not for the purpose of indemnity. o B) The bus was not properly equipped with doors in accordance with law
Technically, JAL won because moral and exemplary damages were deleted. Therefore, the deaths of the two passengers were not exclusively due to a fortuitous event.
Bachelor express was negligent and thus, it breached its contract of carriage.

28
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

8. FORTUNE EXPRESS V. CA (M ARANAOS HI-JACKED AND BURNED THE BUS) prepare for such eventuality. Thus, the event can be properly characterized as foreseeable
and avoidable. Hence, it is not a fortuitous event.
Doctrine:
A common carrier can be held liable for failing to prevent a hijacking by frisking passengers #3) Contributory Negligence
and inspecting their baggages. Atty. Caorong was not guilty of contributory negligence. He was in fact allowed to retrieve
Article 1763. A common carrier is responsible for injuries suffered by a passenger on his bag because the beef of the Maranaos were with the bus company. He was only shot
account of the wilful acts or negligence of other passengers or of strangers, if the common because he pleaded for the driver‘s life. He was being a good Samaritan.
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. In this case, employees could have 9. GILLACO V. MRR (GUARD OF RAILROAD COMPANY SHOT A PASSENGER)
prevented the hi-jacking if it exercised ordinary diligence in inspecting the Maranaos’ bags
In Pilapil v. Court of Appeals, it was held that a common carrier is not liable for failing to Doctrine:
install window grills on its buses to protect the passengers from injuries caused by rocks The only good reason for making the carrier responsible for the misconduct of the servant
hurled at the bus by lawless element perpetrated in his own interest, and not in that of his employer, or otherwise within the
In De Guzman v. Court of Appeals, it was ruled that a common carriers is not responsible scope of his employment, is that the servant is clothed with the delegated authority, and
for goods lost as a result of a robbery which is attended by grave or irresistible threat, charge with the duty by the carrier, to execute his undertaking with the passenger.
violence, or force Article 1759. Common carriers are liable for the death of or injuries to passengers through
o Cited cases not applicable for defense of FE to prosper because in this case the the negligence or wilful acts of the former's employees, although such employees may
hi-jacking was foreseeable 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
Facts; employees. article not applied because #1) this provision was not yet existent #2)
A bus of Fortune Express figured in an accident with a jeepney, owned by a Maranao which because of the unforeseeability of Devesa’s act
in turn caused the deaths of 2 other Maranaos. It was discovered by the PC thereafter that
certain Maranaos were planning to take revenge on Fortune Express by burning 5 of its
buses. This was made known to the operations manager of Fortune Express Facts:
4 days later, 3 armed Maranaos pretending to be passengers seized Fortune‘s bus and At about 730am, Lt. Gillaco was a passenger in the train of Manila Railroad Company.
shot the driver on the arm. The passengers were made to exit the bus and then the hi- When the train reached the Paco railroad station, Devesa, a train guard of Manila Railroad,
jackers started pouring gasoline in the bus. happened to be waiting in the station because he was en route to Tutuban station, where
However, Atty Caorong went back to the bus to retrieve something from the overhead rack. he was going to report for duty.
Atty Caorong was shot and the bus was eventually burned. Atty. Caorong was pulled out of Devesa had a grudge against Gillaco, dating back to the Japanese occupation. Upon
the bus but he eventually died. seeing him, Devesa shot Gillaco with his carbine. Gillaco died as a result. Devesa was
Thus, his heirs sued Fortune Express for breach of contract of carriage. The TC dismissed convicted of homicide.
the complaint. The CA eventually held Fortune Express liable for negligence because it Thus, the wife of Gillaco sued Manila Railroad based on breach of contract. Manila
failed to take the proper precautions. Fortune argues #1) it was not negligent as it did not Railroad was held liable for breach of contract of transportation.
have the duty to assign security guards and #2) the hi-jacking was a fortuitous event
Issue: Is Manila Railroad liable? No. #1) unforeseeable #2) not in the line of duty (considered a
Issue: Is Fortune Express liable? YES #1) negligent in failing to prevent #2) not a fortuitous stranger) Manila railroad won.
event #3) no contributory negligence
#1) FE
#1) Negligence The act of Devesa in shooting Gillaco because of a personal grudge was entirely
Despite warning by the PC that there was a plot against Fortune Express, it did not do unforeseeable by the railroad company. It had no means to anticipate that the two would
anything to protect the safety of its passengers. The employees of Fortune Express were meet. Thus it is a fortuitous event, which holds Manila Railroad free from liability.
negligent as it let 3 passengers carry large amounts of gasoline in the bus. They should
have frisked the passengers and inspected their bags, preferably with non-intrusive #2) Devesa not performing his duty
gadgets. At the time he shot Gillaco, Devesa was not yet on duty because he was to report for duty
It follows then that the employees failed to prevent the hi-jacking because they did not in Tutuban. His tour of duty was to start at 9am, Thus, the killing was not done in the line of
exercise the diligence of a good father of a family. duty. Gillaco is merely considered a stranger also awaiting transportation. There was no
breach of the contract of transportation.
#2) Fortuitous event
The seizure of the bus is not a FE. This is because the PC informed the manager
beforehand of the threats to attack the bus. It should have taken special precautions to

29
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

10. M ARANAN V. PEREZ (CAB DRIVER SHOT PASSENGER) (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or
negligence of the carrier's employees against passengers, since it, and not the passengers, has
Doctrine: power to select and remove them.
Under Art 1759, it is enough that the assault happens within the course of the
employee's duty. It is no defense for the carrier that the act was done in excess of 11. M ANILA RAILROAD V. BALLESTEROS (AUDITOR TOOK THE WHEEL WHILE
authority or in disobedience of the carrier's orders. The carrier's liability here is absolute in DRIVER WAS CHANGING SPARKPLUG; ACCIDENT)
the sense that it practically secures the passengers from assaults committed by its own
employees.
Art 1759: CC‘s are liable for death/injuries to passengers caused by either the 1)
negligence or 2) wilful acts of its employees
Different proximate causes: #1) employee #2) passenger #3) stranger legal
consequences are different on each case

Facts:
Corachea was a passenger in a taxi owned by Perez. He was stabbed and killed by the
driver, Valenzuela. Corachea was convicted of homicide.
Thereafter, Corachea‘s mother (Maranan) filed a civil action against Perez and
Valenzuela.In his defense, Perez argues that Corachea was killed in self-defense as he
was the one who first attacked Valenzuela. The TC dismissed the claim as to Valenzuela
and ordered Perez to pay damages.
In his appeal, Perez relies mainly on Gillaco, arguing that the carrier not liable for assaults Doctrine:
of its employees upon the passengers.
Article 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
Issue: Is Perez liable? YES #1) in the course of his duty #2) Art 1759 applicable
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 applicable because the driver could have
Gillaco is inapplicable in this case for two reasons:
prevented the accident had he taken control of the bus but he didn’t.
o FIRST: In Gillaco, the passenger was killed by the employee who was outside
Otherwise put, a CC is liable if its driver lets another person drive and that person causes
the scope of his duty and was not performing his duty. However, in this case, the
injuries to the passengers as long as it can be shown that the driver could have prevented
killing was done by the driver of the cab transporting the passenger .The driver
such situation had it exercised ordinary diligence. in this case, negligence was on the
was performing his duty by driving the cab. Notwithstanding that, the
part of the employee in that he failed to prevent the act or omission that led to the injury
unforeseeability of Devesa‘s act further exempted the railroad from liability.
o SECOND: Art 1759 was not yet enacted. In this case however, Art 1759 is now
Facts
applicable in the case at bar. This provision follows the second view that it is
enough that the assault happens within the course of the employee‘s duty. The respondents were passengers of Manila Railroad‘s bus. The driver, Anastacio stopped
the bus to replace a spark plug. While he was doing this, Abello, an auditor assigned to the
In the case at bar, it is clear that the driver attacked Corachea while he
was performing his duty. Under Art 1759 therefore, the carrier Perez is company by the Government, took the wheel and told the driver to sit somewhere else.
liable. Abello did not want to give the wheel back to Anastacio.
While negotiating a bend, a truck on the right side tried to avoid potholes so it swerved to
CC lost.
the middle of the road and in turn, smashed the left side of the bus. This resulted to injuries
to the passengers (respondents)
Notes: 3 reasons for Art 1759
Thus, the passengers sued Manila Railroad for the injuries.
As its defense, Manila Railroad argues that Abello was not its employee so it should not be
1) the special undertaking of the carrier requires that it furnish its passenger that full measure of
held responsible for his acts.
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,
Issue: Is the carrier liable? YES #1) Art 1763 #2) Abello had no professional license
from the acts of the carrier's own servants charged with the passenger's safety;

(2) said liability of the carrier for the servant's violation of duty to passengers, is the result of the Art 1763 is applicable in the case at bar. The CC is responsible for injuries suffered by a
formers confiding in the servant's hands the performance of his contract to safely transport the passenger on account of the wilfull acts/negligence of other passengers or strangers, if the
passenger, delegating therewith the duty of protecting the passenger with the utmost care common carrier‘s employees could have prevented the act or omission with ordinary
prescribed by law; and diligence.
Moreover, the motor vehicle law provides:
30
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

PAL argues that there shouldn‘t be reinstatement because pilots are required to follow the
Sec. 48(b). No professional chauffeur shall permit any unlicensed person to drive the motor manual in order to protect the interests of both the company and the public. It further
vehicle under his control, or permit a person, sitting beside him or in any other part of the car, to argues that Gempis is a risk and a liability and his reinstatement would necessarily
interfere with him in the operation of the motor vehicle, by allowing said person to take hold of endanger the passengers.
the steering wheel, or in any other manner take part in the manipulation or control of the car
Issue: Should Gempis be reinstated? NO
In this case, the driver had two chances to take over as Mr. Abello stopped for 2 times. The
fact that the driver failed to take back control constitute recklessness on his part. SC discussed the importance of having disciplined employees because once passengers
suffer injuries, CC are presumed to be negligent.
12. VDA DE ABETO V. PAL (PLANE CRASH) Extraordinary measures and diligence should be exercised by PAL for the safety of its
passengers and their belongings because it is a CC.
Doctrine: Thus, a pilot must be sober all the time for he may be called to fly a plane even before his
When injuries/death are suffered by a CC‘s passengers, the CC is presumed to be at fault. regular service hours. It would be unjust for an employer to be compelled to continue with
In an action based on a contract of carriage, the court need not make an express finding of the employment of a person whose continuance in service is contrary to its interests.
fault or negligence on the part of the carrier PAL wins. Given clearance to terminate.
Case involved an act of an employee in violating the CC‘s orders regarding the route.
Because of the violation of the order, the plane crash occurred. Therefore, the CC is liable. 14. PILAPIL V. CA, ALATCO TRANSPORTATION (RANDOM MAN THREW A STONE
INSIDE THE BUS)
Facts:
About 530pm, Judge Abeto (passenger #18) boarded the PAL plane bound for Manila from Doctrine:
Iloilo. The plane did not reach its destination and it was thereafter ascertained that the In consideration of the right granted to it by the public to engage in the business of
plane crashed at Mt. Baco in Romblon. Judge Abeto‘s bag was recovered in the crash. transporting passengers and goods, a common carrier does not give its consent to become
In response, Juddge Abeto‘s wife instituted an action to recover damages from PAL. PAL, an insurer of any and all risks to passengers and goods. It merely undertakes to perform
in its defense, tried to prove that the crash was beyond the pilot‘s control by showing that certain duties to the public as the law imposes, and holds itself liable for any breach
there was only #1) navigational error, #2) that the plane was airworthy as it was thoroughly thereof.
inspected and #3) that the deviation from the route was due to bad weather. The presumption of fault or negligence against the carrier is only a disputable presumption.
It gives in where contrary facts are established proving either that the carrier had exercised
Issue: Is PAL liable? YES Pilot did not follow the route orders #1) the degree of diligence required by law or #2) the injury suffered by the passenger was
due to a fortuitous event
The prescribed route of the plane was Iloilo-Romblon-Manila, denominated as ―Amber I‖ It as a general rule, common carriers are bound to exercise extraordinary diligence in the
was discovered however, the pilot did not take the route indicated/ordered to him. In fact, safe transport of their passengers, it would seem that this is not the standard by which its
the weather was clear. The pilot clearly violated air traffic rules. Moreover, if the pilot did not liability is to be determined when intervening acts of strangers is to be determined directly
deviate, the accident would not have happened. cause the injury
In any case, when injuries/death are suffered by a CC‘s passengers, the CC is presumed to A tort committed by a stranger which causes injury to a passenger does not accord the
be at fault. In an action based on a contract of carriage, the court need not make an latter a cause of action against the carrier. The negligence for which a common carrier is
express finding of fault or negligence on the part of the carrier. held responsible is the negligent omission by the carrier's employees to prevent the tort
from being committed when the same could have been foreseen and prevented by them.
13. PAL V. NLRC (PILOT FORCED TWO FIRST OFFICERS TO DRINK) When the violation of the contract is due to the willful acts of strangers, as in the instant
case, the degree of care essential to be exercised by the common carrier for the protection
Doctrine: of its passenger is only that of a good father of a family.
CC are liable for the willful acts of its employees if this results into injury or death to the
passengers Facts: (Stranger caused the injury)
CC are presumed to be negligent when its passengers suffer injury or death Jose Pilapil, a paying passenger, boarded Alatco‘s bus (409) While the bus was near the
vicinity of the cemetery in Camarines Sur, an unidentified man hurled a stone at the left
Facts: side of the bus, which then hit Pilapil above his left eye.
Gempis, a pilot of PAL, was charged with serious misconduct for forcing first officers Pilapil was taken to the hospital where he was treated for another week. He went to
Barcebal and Ranches to drink 3 bottles of beer each within 30 minutes. The two failed to another doctor but despite treatment, he partially lost vision in his left eye. Thus he sued
drink the beers on time so they were punched in the stomach. The incident occurred at ALATCO.
1030pm and Germpis knew that the two had duties at 7:00am and 12:00pm the next day.
Gempis was initially dismissed by PAL but on appeal, the NLRC held that the penalty Issue: Is Alatco liable? NO
should be just 6 months demotion and ordered his reinstatement.
31
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

In this case, the SC first discussed that the presumption of negligence on the part of the o #3) PAL could not perform its obligations in a normal manner: In the same
carrier if its passengers are injured is merely a disputable presumption. vein, the military take-over prevented PAL from performing its duty to inspect the
This presumption was disputed because in this case, the injury arose solely from the bags
causes created by the strangers over which the carrier had no control over. o #4) Free from participation: clearly PAL did not in any way participate
Moreover, though as a general rule, CC are bound to exercise ED in the safe transport of In this case therefore, fortuitous event exempted PAL from any liability.
its passengers, this is not the standard by which its liability is to be determined when
intervening acts of strangers cause the injury. In this case, there was no way that the CC Note:
could have foreseen or avoided the incident, even with the exercise of ordinary or Passengers given ¼ of a sandwich and 1/10 cup of water
extraordinary diligence.
Although mesh-work grills could have prevented the injury, the CC is not charged with the 16. QUISUMBING V. CA (HOLD-UP OF A PLANE)
duty of providing or maintaining vehicles as to absolutely prevent any and all injures to
passengers.
Doctrine:
CC wins.
A fortuitous event, such as hi-jacking, will exempt the CC from liability as long as all the
requisites are complied with.
15. GACAL V. PAL (MNLF HI-JACKED A PAL PLANE) A common carrier‘s failure to take certain steps that a passenger in hindsight believes
should have been taken is not the negligence or misconduct which mingles with force
Doctrine: majeure as an active and cooperative cause

Elements of FE Facts:
1. Cause must be independent of the human will Norberto Quisimbing Sr and Gunther Leoffler were among the PAL‘s ―Fokker Friendship
2. Cause was impossible to foresee and if it can be foreseen, must be impossible to avoid plane which was bound for Manila. During the flight, NBI agent Villarin noticed ―Zaldy‖, who
3. Cause must render it impossible for the carrier to fulfill his obligation in a normal manner was a suspect for killing a certain Judge Valdez. Zaldy was seated at the front seat near
4. Carrier must be free from any participation the cockpit.
Villarin discovered that Zaldy used the alias ―Cardente‖ and that he had 3 companions.
Villarin then wrote a note to the captain and asked him to contact NBI agents in Manila to
Facts: (this happened during martial law) meet him in the airport. He asked for about 6 agents.
City Fiscal Franklin Gacal and his wife, Anislag and his wife and the late Elma de Guzman After receiving then note, the captain told Villarin that he couldn‘t send the message
were passengers boarding PAL‘s flight bound to Manila. Heavily armed members of the because it would be heard by all ground aircraft stations. Soon thereafter, a shootout
MNLF (total of 6 led by Commander Zapata) were also on board. They hi-jacked the plane ensued between Villarin and Zaldy. Villarin and his companions then held up the
and told the pilot to fly to Libya. passengers, including Quisimbing and Gunther. Once the plane landed, they were able to
When they were told that the plane did not have enough fuel for that flight, the pilot was just escape.
told to land at Zamboanga. Once there, they demanded money and 6 armalites. The Thereafter, Quisimbing and Loefller sued PAL for damages.
military then attacked the plane resulting to the death of 10 passengers and 3 hi-jackers.
The petitioners were injured and thus, filed a complaint against PAL for damages. It was Issue: Is PAL liable for damages? NO, for three reasons.
dismissed because of force majeure. On their appeal, petitioners argue that the main cause
of the hi-jacking was the negligence of the PAL‘s employees to frisk the MNLF members #1) The hi-jacking was a case of force majeure. It could not have been prevented by PAL
and discover their weapons. because it was not authorized to search its firearms and deadly weapons.
#2) There was irresistible force which prevented PAL from safely transporting its
Issue: IS PAL liable? NO. Fortuitous event. passengers (the armed men)
#3) There was no lack of diligence on the part of PAL, as it complied with applicable
It is true that CCs are presumed negligent if the passengers suffer injuries or die, however, regulations and procedures to prevent hijacking.
this presumption can be disputed by a showing that the cause of the injury/death was due
Moreover, PAL's "failure to take certain steps that a passenger in hindsight believes should
to a fortuitous event.
have been taken is not the negligence or misconduct which mingles with force majeure as
o #1) Independent of the will of PAL: failure of PAL to transport the passengers
an active and cooperative cause."
safely was due to the hi-jacking of the MNLF members. Further, the rescue
PAL wins.
attempt was purely a government operation.
o #2) Foreseeable/Avoidable In this case, the hi-jacking could‘ve been avoided
with more thorough inspection. However, airport security was being controlled by
the military as this incident occurred during martial law.

32
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

17. BATACLAN V. MEDINA (BUS OVERTURNED, RESCUERS BROUGHT A TORCH, BUS 18. BALIWAG TRANSIT V. CA (SPEEDING DRIVER BUMPED A PARKED TRUCK)
BURNED DOWN, PROXIMATE CAUSE)

Doctrine:
That cause, which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have
occurred

Facts:
Shortly after midnight, bus #30 of Medina Transportation, left the town of Cavite en route to
Pasay City. Among the passengers were Bataclan, Lara and Visaya.
At about 2am, one of the front tires burst and the vehicle began to zig-zag until it fell into a
ditch to the right side of the road and turned turtle. The three, however, could not get out of
the overturned bus. Gasoline leaked out of the bus. Doctrine:
After a while, ten men, one carrying a lit torch, approached the bus to help out but almost
immediately, a far broke out and burned everyone in the bus. In a contract of carriage, it is presumed that the common carrier was at fault or was
The heirs of the passengers sued the CC. The CC argued that the proximate cause of the negligent when a passenger dies or is injured. Unless the presumption is rebutted, the
accident was the men carrying the torch. court need not even make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence that the
Issue: Is the CC liable? Yes carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the
Civil Code.
The CC was negligent. Its driver was speeding at the time of the blow-out. When the tires
Facts:
blew out, the driver had to step on the breaks but this in turn caused the bus to travel 150
more meters before it fell into the canal. Bus driver Santiago of a Baliwag Bus failed to notice a truck owned by A&J parked at the
shoulder (tire change) even if there was a kerosene lamp at the end of the road to serve as
As to the proximate cause of Bataclan‘s death, the SC held that the proximate cause
a warning device.
was the overturning of the bus, which in turn set all the other events in motion. The
rescuers had to carry a torch with them because it was dark. They merely approached the The driver was at driving at a very high speed and was even talking to some of his co-
bus because they wanted to help. employees. He failed to see the kerosene lamp and as a result, he failed to slow down on
o Moreover, the driver and conductor were just on the road walking back and forth. time and hit the truck. Allan and Leticia Garcia were injured.
They did not warn the rescuers that gas may have leaked from the bus. The parents of the Garcias sued Baliwag Transit, A&J Trading and Recontique (driver of
Evidence also shows that the tires were old and that Medina had been asking the driver to A&J) for damages.
change the tires but the driver did not. The blow-out would not have occurred if the driver Baliwag alleged that the accident was due to A&J‘s fault because the driver failed to place
changed the tires. an EWD. The CA eventually absolved A&J from liability
CC lost.
Issue: Should the CC be held liable for damages? YES
Note:
The presumption of negligence on the part of Baliwag was not overcome by evidence
Bataclan seated to the right of the driver
showing extraordinary diligence. In fact, the evidence shows that the driver was negligent
Lara seated to the right bataclan
as he was driving very fast despite the darkness and the drizzle. The driver also smelled of
Visaya seated to the left of the driver.
liquor.
Prosecution against the driver was initially dismissed but the SC ordered that it should be
The kerosene lamp/torch placed at the edge of the road substantially complied with traffic
pursued.
regulations as what is only required is an ―appropriate parking light or flares visible 100m
away‖ The EWD doesn‘t necessarily have to be the triangular reflector device.
CC Baliwag loses. But award of damages for hospitalization reduced.

Note:
Leticia Garcia, one of the passengers, suffered a fracture in her pelvis and right leg. She was
taken to two hospitals.
Allan Garcia broke a leg.

33
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

19. LARA V. VALENCIA (M ALARIA MAN FELL FROM PICK UP TRUCK) Facts:
Word for the World Christian Fellowship (WWCF) arranged with Fabre for the
Doctrine: transportation of its 33 members from Manila to La Union. The meeting was place Tropical
that the owner or operator of an automobile owes the duty to an invited guest to exercise Hut.
reasonable care in its operation, and not unreasonably to expose him to danger and injury Cabil took a route he was unfamiliar with as he was forced to make a detour. At 1130, he
by increasing the hazard of travel. This rule, as frequently stated by the courts, is that an came upon a sharp curve on the highway, running on a south to east direction (―siete‖) he
owner of an automobile owes a guest the duty to exercise ordinary or reasonable was running at 50km/h. Since the road was slippery, the bus skidded to the left road
care to avoid injuring him. On the other hand, the passenger is also tasked to exercise shoulder, hit a brace, rammed a fence then turned over and landed on its left side. A
ordinary diligence to avoid any injury to himself. coconut tree also fell on its front portion.
Several passengers were injured. One of the passengers was Amyline, who got paralyzed
Facts: from the waist down. As a result, the passengers sued Fabre and the driver Cabil for
Valencia was in the business of exporting logs while the deceased, Lara was an inspector damages
of the Bureau of Forestry. Lara went to Valencia‘s premises to classify his logs.. As a result
of his stay, he contracted malaria. Issue: Are Fabre and Cabil liable? YES
He then asked Valencia if he could be taken to a hospital in Davao. Valencia agreed. In the
pick-up truck, Valencia was driving and Lara was made to sit on a bag in the middle of the Fabre and Cabil were sued under the rules of QD. Fabre was sued under Art 2180
back of the pick up truck. There were also other passengers with them. They were all not (vicarious liability) while Cabil was sued under Art 2176 (QD)
charged a fee and were merely accommodated. In this case, Cabil was negligent because was driving at 50km/h despite the darkness and
During the trip, Lara suddenly fell from the pick-up and he suffered injuries. He eventually the road conditions. He should have driven at a slower speed.
died. In the case of Fabre, he is also liable as Cabil‘s negligence gave rise to the presumption
that Fabre, as employer, was also negligent in the selection and supervision of his
Issue: #1) was Valencia a common carrier? NO #2) If not, did he exercise the requisite employees.
diligence? YES o Evidence shows that Cabil was only a school bus driver and he was only a 2
week apprentice.
#1) Valencia was not a CC. Lara, along with the others, were merely accommodation Moreover, the SC held that Fabre was a CC so it was bound to exercise ED for the
passengers who paid nothing for the service so they can be considered as invited guests. transportation of its passengers. The same circumstances also justify finding Fabre guilty of
Thus, the degree of diligence required from him is only ordinary diligence breach of contract of carriage.
#2) Valencia was not negligent. There is nothing to indicate such negligence. In fact, CC loses. Solidarily liable with driver.
Valencia was not even duty bound to take Lara and he only did so because he was sick.
Furthermore, Lara was invited to sit in front (beside the driver) but he refused to. Note: (optional but very instructive)
The accident can be attributed to the fact that Lara was asleep during the accident and
merely fell when the truck ran over some stones. Moreover, he is also negligent in avoiding As above stated, the decision of the Court of Appeals can be sustained either on the theory
injury to himself as he was then in a crouching position. of quasi delict or on that of breach of contract. The question is whether, as the two courts below
Valencia wins. held, petitioners, who are the owners and driver of the bus, may be made to respond jointly and
severally liable.
20. FABRE V. CA (FIELD TRIP OF WWCF, QUASI DELICT)
We hold that they may be.
Doctrine:
In Dangwa Trans. Co. Inc. v. Court of Appeals, on facts similar to those in this case, this Court
Due diligence in selection of employees is not satisfied by finding that the applicant
held the bus company and the driver jointly and severally liable for damages for injuries suffered
possessed a professional driver‘s license. The employer should also examine the applicant
by a passenger.
for his qualifications, experience and record of service.
Due diligence in supervision, on the other hand, requires the formulation of rules and
Again, in Bachelor Express, Inc. v. Court of Appeals a driver found negligent in failing to stop the
regulations for the guidance of employees and the issuance of proper instructions as well
bus in order to let off passengers when a fellow passenger ran amuck, as a result of which the
as actual implementation and monitoring of consistent compliance with the rules
passengers jumped out of the speeding bus and suffered injuries, was held also jointly and
[A] person who hires a public automobile and gives the driver directions as to the place to severally liable with the bus company to the injured passengers.
which he wishes to be conveyed, but exercises no other control over the conduct of the
driver, is not responsible for acts of negligence of the latter or prevented from recovering for The same rule of liability was applied in situations where the negligence of the driver of the bus
injuries suffered from a collision between the automobile and a train, caused by the on which plaintiff was riding concurred with the negligence of a third party who was the driver of
negligence either of the locomotive engineer or the automobile driver another vehicle, thus causing an accident. In Anuran v. Buño, Batangas Laguna Tayabas Bus

34
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Co. v. Intermediate Appellate Court, and Metro Manila Transit Corporation v. Court of Appeals, 22. HERMININO M ARIANO V. CALLEJAS
the bus company, its driver, the operator of the other vehicle and the driver of the vehicle were
jointly and severally held liable to the injured passenger or the latter‘s heirs. Doctrine:
To overcome the presumption of negligence, CCs have to show that they observed
extraordinary diligence in the discharge of their duty, or that the accident was caused by a
21. SULPICIO LINES V. CA (STEVEDORES DIED FROM GAS POISONING) fortuitous event

Doctrine: Facts:
CC are still liable to persons such as cargadors/stevedores who board its ship as long as it Dr. Mariano was a passenger of a Celyrosa Express bus, owned by Callejas, which was
is with its full consent and knowledge. This is notwithstanding the absence of a passenger- bound for Tagaytay. At about 630pm, along Aguinaldo Highway, the bus collided with an
carrier relationship between the two. Isuzu trailer truck (plate # PJH 906 and TRH 531). The truck allegedly lost its brakes.
The trailer truck hit the bus on its left middle portion. Due to the impact, the bus fell on its
Facts: right side on the right shoulder and caused the death of Dr. Mariano.
ALC contracted Sulpico lines to transport its timber. Sulpico sent its tugboat MT Edmun and Thus, her husband sued Celyrosa Express/Callejas for breach of contract of carriage. In its
its barge (Solid VI) to fetch the timber. ALC then hired several stevedores of CBL, which defense, the CC argues that the PC of the accident was the recklessness of the driver of
then boarded Sulipico‘s barge (Solid VI) (to presumably load the timber) the trailer truck. The CC filed a 3rd party complaint against the owner of the truck the TC
The stevedores were warned not enter the storeroom because of the gas and heat found Callejas, the bus driver and the truck owner solidarily liable for damages. The CA
generated by the copra stored in the ship. However, three stevedores still went side. One of however reversed thus Mariano appealed.
them, Pamalaran, lost consciousness and eventually died.
Heirs of Pamalaran sued Sulpico, CBL and ALC. All were held solidarily liable to heirs of Issue: Is the CC liable? No
Pamalaran by both TC and CA.

Issue: Is Sulpico liable? YES In the case at bar, petitioner cannot succeed in his contention that respondents failed to
overcome the presumption of negligence against them. The totality of evidence
Although Pamalaran was not Sulpico‘s passenger, it was still liable as common carrier for shows that the death of petitioner’s spouse was caused by the reckless negligence
his death. The stevedores were there to load the lumber of ALC and their presence was of the driver of the Isuzu trailer truck which lost its brakes and bumped the Celyrosa
consented to by Sulpico. It is of common knowledge that a shipper will also need to hire Express bus, owned and operated by respondents. Evidence shows that the collision took
stevedores to load its shipment in the boat of the carrier. Therefore, Sulpico is responsible place because the truck had a faulty brake.
for their safety while on board the barge. It was found that the Isuzu truck was 500 meters away from the point of impact due to the
Moreover, it was not enough that the stevedores were warned after the hatch was open. It brakes.
was the responsibility of Sulpico‘s employee to ensure that no one could just easily enter In fine, the evidence shows that before the collision, the passenger bus was cruising on its
the hatch. Thus, Sulpico was liable for ―failing to exercise due diligence in the supervision rightful lane along the Aguinaldo Highway when the trailer truck coming from the opposite
of its employees direction, on full speed, suddenly swerved and encroached on its lane, and bumped the
Sulpico loses. CA affirmed. passenger bus on its left middle portion.
Respondent driver De Borja had every right to expect that the trailer truck coming from the
opposite direction would stay on its proper lane. He was not expected to know that the
trailer truck had lost its brakes. The swerving of the trailer truck was abrupt and it was
running on a fast speed as it was found 500 meters away from the point of
collision. Secondly, any doubt as to the culpability of the driver of the trailer truck ought to
vanish when he pleaded guilty to the charge of reckless imprudence resulting to multiple
slight physical injuries and damage to property in Criminal Case No. 2223-92, involving the
same incident.
CC wins.

35
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 7 (COMMON CARRIERS, DAMAGES) to another airline if such passenger had to buy the ticket as a consequence of the
breach of contract of carriage‖
Art. 2197. Damages may be: o Second: If the same person missed work that same day (and for other days to
(1) Actual or compensatory; come), then the lost wages can be claimed as unrealized profits
(2) Moral; Can the amount of actual damages be limited by agreement or by contract? Yes.
(3) Nominal; Liquidated damages.
(4) Temperate or moderate;
(5) Liquidated; or Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good
(6) Exemplary or corrective. faith is liable shall be those that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably foreseen at the time
Under Art 2197, damages may be: (available for culpa contractual and aquiliana) the obligation was constituted.
o Actual or compensatory: an adequate compensation only for such pecuniary
loss suffered by him In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
o Moral: physical suffering, mental anguish, fright, serious anxiety, besmirched damages which may be reasonably attributed to the non-performance of the obligation. (1107a)
reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if This article provides for two instances (note: negligence is not the same as bad faith =
they are the proximate result of the defendant's wrongful act for omission NEGLIGENCE is not the same as RECKLESSNESS)
o Nominal : damages awarded to recognize a technical violation of right o IF debtor-obligor is in GOOD FAITH: then he will only be liable for the
o Temperate: some pecuniary loss has been suffered but its amount cannot, from damages that are the #1) natural and probable consequences of the breach and
the nature of the case, be provided with certainty are #2) foreseeable by the parties at the time the obligation was constituted
o Liquidated: agreed upon by the parties, to be paid in case of breach of contract Example: If driver of the bus was merely negligent (jurisprudence has
o Exemplary : corrective damages, to serve as an example to the public held that ―mere carelessness of the carrier's driver does not per
se constitute of justify an inference of malice or bad faith on the part of
Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate the carrier‖ ) which in turn caused injuries to a passenger , then the CC
compensation only for such pecuniary loss suffered by him as he has duly proved. Such may be held liable for the medical expenses that the passenger had to
compensation is referred to as actual or compensatory damages. shoulder because there was a breach of the contract of transportation
and such injuries are obviously consequences of such breach and
such was also foreseeable
This article gives the definition of actual or compensatory damages. o IF debtor-obligor is in BAD FAITH: then he will be responsible for all damages
To seek recovery of actual damages, it is necessary to prove with a preponderance of which may be reasonably attributed to the non-performance of the obligation
evidence the actual amount of the loss suffered by the claiming party. Jurisprudence Example: If the CC is shown to have been in bad faith, then the
has even held that courts must point out specific facts which show a basis for the amount standard for the damages to be awarded is lowered to all damages
of actual damages to be awarded. that can be reasonably attributed. In the same example above, moral
In general, to collect actual damages, one must and exemplary damages may be awarded.
o 1) plead or allege the loss Tan v. Northwest Airlines:: Where in breaching the contract of carriage the defendant airline
o 2) pray for relief that the claim for loss be granted and is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the
o 3) prove the loss natural and probable consequences of the breach of obligation which the parties had
The issue of w/n a person is liable for damages is different from the issue of how much a foreseen or could have reasonably foreseen. In that case, such liability does not include
person is liable for damages moral and exemplary damages

Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a
but also that of the profits which the obligee failed to obtain. (1106) family to minimize the damages resulting from the act or omission in question.

Art 2200 illustrates that there are two kinds of actual or compensatory damages to wit: This provision simply means that the plaintiff (party who incurred loss or suffered injury)
o One is for the loss of what a person already possesses also has the concurrent obligation to mitigate the damages resulting from the alleged act or
o Another is the failure to receive as a benefit that would have pertained to him omission in question. this is considered to be contributory negligence
(also known as unrealized profits) lucrum cessans In connection with the law on transportation, the passenger who was injured should have
Examples of both: also exercised ordinary diligence after the accident caused by the CC. As an example, if a
o First: If a person riding a cab suffers injury and has to pay medical expenses at person is injured from an accident and instead of going to the hospital to treat his injuries,
the hospital, then such expenses can be claimed as actual damages. Moreover, he instead goes on a drinking spree, then damages awarded may be reduced.
in the case Alitalia Airways, it was held that: ―a passenger is entitled to be
reimbursed (actual damages) for the cost of the tickets he had to buy for a flight
36
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

. This article provides for the instances when the court may mitigate (lessen) the damages to
Art. 2205. Damages may be recovered: be awarded to the plaintiff. This article contemplates the situation wherein damage was
indeed suffered but the damages awarded may be still be lessened.
(1) For loss or impairment of earning capacity in cases of temporary or permanent personal This rests upon the sound discretion of the court
injury;
Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate,
(2) For injury to the plaintiff's business standing or commercial credit. liquidated or exemplary damages, may be adjudicated. The assessment of such damages,
except liquidated ones, is left to the discretion of the court, according to the circumstances of
This article provides that actual damages for loss of earning capacity and injury to plaintiff‘s each case.
business standing/commercial may be awarded. This is of course provided that they are
duly proven. When proof of pecuniary loss is not required:
LOSS/IMPAIRTMENT OF EARNING CAPACITY: Jurisprudence will show that victims of o Moral damages
accidents who had jobs at the time of the accident will may be awarded actual damages for o Nominal damages
the loss of their earning capacity due to their injury. Oftentimes, these victims were unable o Temperate damages
to work anymore because of the injuries. o Liquidated damages
INJURY TO BUSINESS STANDING/COMMERCIAL CREDIT: if a bank wrongfully o Exemplary damages
dishonors a check and as a result, the drawer‘s transaction was botched and his reputation The amount to be awarded is left to the discretion of the court in accordance with the
was besmirched, then damage can be awarded. circumstances.
Liquidated damages are synonymous with obligations with a penal clause. It saves the
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the court the trouble of determining itself how much to award in case of breach.
insurance company for the injury or loss arising out of the wrong or breach of contract Can moral damages be awarded w/o actual damages? For example, in a case, no
complained of, the insurance company shall be subrogated to the rights of the insured against evidence was adduced to prove actual damages, but entitlement to moral damages was
the wrongdoer or the person who has violated the contract. proven? Yes. Inability to award actual damages is not a bar to awarding moral damages.
(e.g. in oral defamation suits, moral damages may be awarded alone)
If the amount paid by the insurance company does not fully cover the injury or loss, the Can nominal damages be awarded alone? Yes
aggrieved party shall be entitled to recover the deficiency from the person causing the loss or Can exemp be awarded alone? No.
injury. Can atty‘s fees be awarded alone? No.

This article provides for the right of subrogation of the insurer of a person‘s PROPERTY. Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
Applied in transportation, if P hired a common carrier to transport apples and P insured besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
such cargo with I, and such cargo was lost due to the carrier‘s negligence, then the insurer Though incapable of pecuniary computation, moral damages may be recovered if they are the
may be subrogated to the rights of P after it pays the indemnity and go after the carrier. proximate result of the defendant's wrongful act for omission.
However, if the amount paid to P does not fully cover the loss of the apples, then P can still
go after the common carrier to recover the deficiency. Moral damages are not punitive in nature but are designed to compensate the physical
In the cases, if the insurance company is already the plaintiff, it presumes therefore that the suffering, mental anguish etc.
insurance has already paid the proceeds to the plaintiff and therefore steps in the shoes of Villanueva v. Salvador: the conditions for awarding moral damages are:
the injured party. o (a) there must be an injury, whether physical, mental, or psychological, clearly
substantiated by the claimant;
Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the o (b) there must be a culpable act or omission factually established;
damages under circumstances other than the case referred to in the preceding article, as in the o (c) the wrongful act or omission of the defendant must be the proximate cause of
following instances: the injury sustained by the claimant; and
o (d) the award of damages is predicated on any of the cases stated in Article 2219
(1) That the plaintiff himself has contravened the terms of the contract; and 2220 of the Civil Code.
(2) That the plaintiff has derived some benefit as a result of the contract; Corporations may only be awarded moral damages if it suffered besmirched reputation
(3) In cases where exemplary damages are to be awarded, that the defendant acted upon the
advice of counsel; Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the
(4) That the loss would have resulted in any event; court should find that, under the circumstances, such damages are justly due. The same rule
(5) That since the filing of the action, the defendant has done his best to lessen the plaintiff‘s applies to breaches of contract where the defendant acted fraudulently or in bad faith.
loss or injury.

37
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Two other grounds for awarding moral damages (this is however qualified by the For example, reckless driving on the part of the driver that leads to an accident and injuries
requirement that the ―court should find that they are justly due‖) to passengers, will entitle such passengers to exemplary damages.
o Willful injury to property Fraudulent is deceit
o Breaches of contract where defendant acted with fraud or bad faith Wanton connotes a disregard for the consequences of one‘s own actions
In the second instance, it can be seen that if a common carrier is proven to have acted in Reckless connotes an extreme lack of care of a person without thinking
bad faith in breaching the contract of transportation (e.g. failing to take the passenger Oppressive: abuse of authority
safely to his destination resulting to injury and the driver is reckless [not merely negligent]), Malevolent: different from being oppressive, connotes cruelty and spitefulness
then moral damages may be awarded.
Miranda v. Fores, PRBL v. Esguerra: Moral damages are not recoverable in actions for Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide
damages predicated on a breach of the contract of transportation, as in the instant case, in whether or not they should be adjudicated.
view of the provisions of Articles 2219 and 2220 of the New Civil Code. The exceptions are
(1) where the mishap results in the death of a passenger, (the heirs may recover moral
In a case, it was held that: [1) not a matter of right 2) amount need not proven but there must
damages for mental anguish) and (2) where it is proved that the carrier was guilty of fraud
still be basis (wanton, fraudulent, etc) 3) prayer for exemplary does not need to be
or bad faith, even if death does not result
alleged/pleaded]
Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in that exemplary damages may be imposed by way of example or correction only in addition,
case of breach thereof. among others, to compensatory damages, but they could not be recovered as a matter of
right, their determination depending upon the discretion of the court.
The amount of liquidated damages agreed upon by the parties answers for the damages It further appears that the amount of exemplary damages need not be proven, because its
suffered by the obligee. These damages take the nature of penalties. A penal clause is an determination depends upon the amount of compensatory damages that may be awarded
accessory undertaking to assume a greater liability in case of a breach. to the claimant. If the amount of exemplary damages need not be proven, it need not also
In case liquidated damages have been agreed upon, no proof of loss is necessary in order be alleged, and the reason is obvious because it is merely incidental or dependent upon
that such may be recovered. The stipulation is intended to avoid controversy on the amount what the court may award as compensatory damages.
of the damages. Unless and until the above premises is determined and established, what may be claimed
as exemplary damages would amount to a mere surmise or speculation.
Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for It follows as a necessary consequence that the amount of exemplary damages need
the public good, in addition to the moral, temperate, liquidated or compensatory damages. not be pleaded in the complaint because the same cannot be predetermined by the
court if in the cause of discretion the same is warranted by the evidence.
Also known as punitive damages, exemplary damages are intended to serve as a deterrent
to serious wrongdoings. Its rationale is to provide an example for the public good. Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must
Requisites of award of exemplary damages: show that he is entitled to moral, temperate or compensatory damages before the court may
1. Imposed by way of example or correction only in addition to actual damages, consider the question of whether or not exemplary damages should be awarded.
moral, temperate, and liquidated and cannot be recovered as a matter of right
(2233) In case liquidated damages have been agreed upon, although no proof of loss is necessary in
2. Claimant must establish his right to either moral, temperate, liquidated or order that such liquidated damages may be recovered, nevertheless, before the court may
compensatory damages consider the question of granting exemplary in addition to the liquidated damages, the plaintiff
3. The wrongful act must be accompanied by bad faith (wanton, fraudulent, must show that he would be entitled to moral, temperate or compensatory damages were it not
reckless, oppressive or malevolent) (2232) for the stipulation for liquidated damages.
Though exemplary damages may not be awarded as a matter of right, they need not be
proved. Plaintiff must prove entitlement to either moral, temperate or compensatory damages
In the cases below, exemplary damages are awarded to passengers of airlines who were before the issue of exemplary damages may be taken.
ill-treated by the latter in various ways (e.g. intentionally bumping off, discriminating, rude This is also the case even if liquidated damages were agreed upon.
treatment)
Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the void.
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
Public policy demands that exemplary damages not be allowed to be renounced in
This article plainly shows that in contracts of transportation, the court may be award advance because it goes against the purpose of exemplary damages (courts should not be
exemplary damages if the CC acted in bad faith. This is one of the elements of granting hindered from making an example for the public good)
exemplary damages.

38
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

39
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 7 CASES 2. PANTRANCO V. LEGASPI (PRODUCTION OF LEDGERS SANCTIONED TO PROVE


FINANCIAL CAPACITY OF COMMON CARRIER IN ORDER TO AWARD HIGHER ACTUAL
1. CARIAGA V. LTB (UST MED STUDENT ACCIDENT, ACTUAL DAMAGES AWARDED DAMAGES)
BASED ON THE POSSIBILITY THAT HE ACTUALLY BECAME A DOCTOR)
Doctrine:
Doctrine: Under the law, independently of its financial capacity, the common carrier, if liable, must be
―Under Art 2201, the damages for which the obligor who acted in good faith is liable shall made to pay the minimum amount as provided for in Art 2206. But if its financial ability is
be those that are the natural and probable consequences of the breach of the obligation, such that it can pay a greater amount of indemnity as demanded by the circumstances of
and which the parties have foreseen or could have reasonably foreseen at the time the the case, then certainly it should be made to pay more than P3,000. Its financial standing in
obligation was constituted.‖ In this case, the possibility that Edgardo would not have been such a case is material and therefore, it can be ordered to produce its ledgers under the
able to finish his studies as a result of the accident is considered to have been foreseeable Rules of discovery.
at the time he boarded the bus. Therefore, the income which he could have earned as a
doctor may be awarded as actual damages. Facts:

Facts: Pua Pian sued Pantranco for the death of his daughter and wife as a result of an accident
due to the alleged negligence of its driver in negotiating a blind curve. In his complaint, he
th
Edgardo Cariaga, a 4 year UST med student, rode a Laguna Tayabas Bus (LTB) to go to alleged that ―Pantranco is financially well-established, having enormous assets and huge
Laguna. The bus however bumped a passing train as the highway crossed a railroad track. income‖
As a result, Edgardo was severely injured. He had to be taken to two hospitals and During the trial, Pua Pian asked the court to order Pantranco‘s office manager to produce
underwent two operations. the company‘s general ledger for examination under the Rules of Discovery. Pantranco
LTB paid for all hospital, medical and miscellaneous expenses and even paid for Edgardo‘s opposed this motion on the ground that the general ledgers were immaterial to the issue of
stay in a private house. However, a suit was still filed against LTB and MRR (the train negligence but its opposition was denied.
company) to recover 312k as actual, moral and exemplary damages.
It is argued by LTB that MRR is liable because it failed to provide cross-tracks and that its Issue: Should the production of the general ledger be allowed? YES
employees failed to sound the whistle on time. The TC found only LTB to be negligent and
awarded only 10,000 as actual damages and denied the prayer for moral damages The applicable law in determining whether or not Pantranco‘s financial standing is Art 2206
of the CC which fixes the minimum indemnity (3k) for death caused by a crime or quasi-
Issue: #1) Who is liable? #2) Was the award sufficient? #3) Should moral damages be delict. Such minimum indemnity may be increased by the courts according to the
awarded? circumstances and in such a situation, the courts may look into the financial capacity o the
common carrier to determine w/n it should award a greater amount.
As to negligence: LTB It therefore follows that such financial standing is relevant to the issue.
o SC affirmed the finding that the whistle was sounded 4 times as the train was
300m from the crossing and that it was in fact the driver of the bus who was Dissent:
negligent as another LTB bus heeded the whistle.
As to award of actual damages: increased ― I must dissent in so far as the decision implies that inquiries into the resources of a defendant
o The damages awarded were insufficient. As a result of Edgardo‘s injuries, all of would be permissible whenever damages, pecuniary or moral, are sought . We cannot lose sight
the right frontal lobe of his brain had to removed. As a result, he could no of the fact that the purpose of moral damages is essentially indemnity or reparation, not
longer finish his studies and even needs help just to walk. He approximately lost punishment or correction. Moral damages are emphatically not intended to enrich a complainant
50% of his intelligence. at the expense of a defendant; they are awarded only to enable the injured party to obtain
o Therefore, the income which Edgardo could earn if he should finish his medical means, diversions or amusements that will serve to alleviate the moral suffering he has
course and pass the board examinations must be deemed to be in the ambit of undergone, by reason of the defendant's culpable action‖
―damages that can be foreseen at the time the obligation was constituted‖
o The SC awarded damages based on PhP300 monthly income Edgardo could “To recapitulate: compensatory and moral damages can only be awarded to indemnify
have received. The damages awarded were increased to 25,000 the victim or his relatives for the prejudice suffered, and the financial standing of the
As to award of moral damages: disallowed person responsible is irrelevant to their evaluation. The omission in the Civil Code of any
o The award of moral damages cannot be allowed because: reference to the defendant's pecuniary ability, as was heretofore done by Commonwealth Act
#1) the situation is not under any of the instances provided under Art No. 284, confirms this thesis. The ruling in Alcantara vs. Surro, 93 Phil. 472, is predicated
2219 and precisely on that Commonwealth Act, and not on the Civil Code now in force, and is inapplicable.
#2) there was no bad faith so there can be no recovery of moral In so far as the award exceeds indemnification, it trenches on the sphere of corrective damages
damages under Art 2210 that are justified by other special circumstances set out by the Civil Code.‖
Who won? TC affirmed in all respects except actual damages so LTB lost.
40
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

3. VILLA REY TRANSIT V. CA (COMPUTATION OF ACTUAL DAMAGES) 4. DAVILA, TIRO V. PAL (PLANE CRASH)
Doctrine: Doctrine:
The determination of such actual damages (resulting from death due to breach of contract
of carriage) depends, mainly upon two (2) factors, namely: (1) the number of years on the According to Article 2206, paragraph (1), of the Civil Code, "the defendant shall be liable for
basis of which the damages shall be computed and (2) the rate at which the losses the loss of the earning capacity of the deceased and indemnity shall be paid to the heirs of
sustained should be fixed the latter." This Article, while referring to "damages for death caused by crime or quasi-
Formula for life expectancy: (2/3 * [80 – age at time of death]) delict," is expressly made applicable by Article 1764 "to the death of a passenger caused
Although the formula of life expectancy is not the sole element of determining damages to by the breach of contract by a common carrier."
be awarded to the heirs of the deceased, it is still an important element.
LOST Earning capacity (to be awarded as actual damages) Net earning capacity = life Facts:
expectancy * (gross annual income – necessary expenses for decedent‘s own living) Pedro Davila was a passenger in a PAL flight that crashed to the west of Mt. Baco,
o In addition to this, add to this the ―real‖ actual damages like medical expenses, Mindoro. His parents filed a suit against PAL and were awarded compensatory damages
funeral expenses, etc. for his death and for his lost earning capacity.
PAL appealed, arguing it was not negligent and that the award of damages was improper.
Facts:
Quintos rode a bus owned by Villa Rey. During the trip, the bus hit the rear of a bullcart Issue: Was PAL negligent? Was the award proper?
filled with hay. As a result, the end of a bamboo pole placed on top of the hayload
penetrated the bus and landed on Quintos‘ face. He eventually died from the injuries. As to negligence
Quintos‘ heirs sued Villa Rey to recover damages. The trial court awarded 63,750 in actual o PAL was negligent as its pilot failed to follow the established flight plan along the
damages for breach of the contract of carriage. This was affirmed by the CA airway ―Amber I‖ The pilot wanted to fly a straight line to Manila and this deviation
was a violation of air traffic rules.
Issue: Was the award proper? Not entirely. Damagtes reduced. As to actual damages:
o Death indemnity: modified from 6k to 12k as per current jurisprudence
The determination of such amount depends, mainly upon two (2) factors, namely: (1) the o Job:
number of years on the basis of which the damages shall be computed and (2) the rate at Radio station manager: 8.4k a year
which the losses sustained by said respondents should be fixed. Lawyer in his father‘s law office: 3,600 a year
o As to first: LIFE EXPECTANCY: considered as 30 years old Farming: 3,000 a year
Formula applied was (2/3 * [80-30]) = life expectancy (33 1/3) Gross earnings: 15k annually
o As to the second: RATE o LE: (used Villa Rey formula to compute LE) 30 years old when he died so his LE
The rate was properly fixed at 2,184.00 a year, the annual salary of was 33 1/3. However, medical history shows he had back problems and chest
Quintos at the time of his death, working as a young training assistant pains so his LE was reduced to 25.
in a Cement company. o From LE, living expenses of 7,200 a year was deducted from gross income. So
The court further explained the FULL formula for computing the award which is: the yearly income was reduced to 7.8k. 7.8k * 25 = 195k proper actual
o Net earning capacity = [2/3 * (80 – age at death) * (gross annual income – damages for earning capacity to be awarded.
reasonable and necessary living expenses) o Other actual damages: rolex watch, pistol, burial expenses, cemetery lot
o ―it has been consistently held that earning capacity, as an element of damages to As to moral damages: awarded due to anguish caused by the death
one's estate for his death by wrongful act is necessarily his net earning capacity o Under Article 2206, in relation to Article 1764, of the Civil Code, the parents of
or his capacity to acquire money, "less the necessary expense for his own living. the deceased are entitled to moral damages for their mental anguish. The trial
Ruling: Formula used, award reduced to 48k court awarded P10,000.00 in this concept, and We find no justification to change
the award, considering the long period of uncertainty and suffering the plaintiffs
underwent from November 23, when the plane crash occurred, to December 19,
when they received a letter from the defendant's president confirming the death
of their son, and again to the following December 29, when his body was finally
recovered and taken back to them.
As to exemplary: no exemplary because there was no bad faith.

41
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

5. PAL V. CA, PADILLA subsidiary and, at bottom, arises from the same culpa, the insurance proceeds should be
credited in favor of the errant driver.
Facts:
Nicanor Padilla, a lawyer, died in a PAL flight (same flight as in Davila) when the plane he 7 DE LIMA V. LAGUNA TAYABAS (INTEREST, DEATH INDEMNITY)
was riding crashed in Minodoro. As a result of his death, his mother, Mrs. Padilla, filed a
complaint against PAL demanding payment of actual and ex damages + attorney‘s fees. Doctrine:
o Note: He was also president of padilla shipping (where he received 1.5k monthly) As an exception to the general rule, the said heirs who did not appeal the judgment, should
and VP of allied overseas trading (where he also received salary), member of be afforded equitable relief by the courts as it must be vigilant for their protection. The
jaycees claim for legal interest and increase in the indemnity should be entertained in spite of the
After four stipulations of facts, wherein Davila v. PAL was also cited, the TC proceeded with failure of the claimants to appeal the judgment
trial and awarded Mrs Padilla 477k as award for expected income of Nicanor, moral Facts:
damages and attorneys fees. Affirmed by CA.
PAL appealed, arguing that the life expectancy should be computed on the basis of Mrs. A passenger bus of LTB and a truck of 7-up Bottling Co collided which resulted in the death
Padilla‘s life expectancy and not Nicanor‘s. It pointed to foreign jurisprudence which held of Petra de la Cruz, and injures to de Lima and Flores, all passengers of LTB. 3
that the LE should be computed based on the decedent‘s LE or the recipient/beneficiary, consolidated suits were filed against LTB.
whichever is shorter The TC ruled against LTB and Claro Samonte ordering them to pay the following:
o To de Lima: loss of money, medical expenses, lost earnings, atty‘s fees
Issue: Was the award of damages proper? METHOD CORRECT, BUT AMOUNT IMPROPER o To heirs of de la Cruz: death indemnity, funeral expense, lost money, funeral
expenses, loss of earning capacity
Following the procedure used by the Supreme Court in the case of Davila vs. PAL, 49 o To Flores: loss of earning capacity and atty‘s fees
SCRA 497, the trial court determined the victims gross annual income to be P23,100 based But interest was not included in the judgment. Flores filed a motion to
on his yearly salaries of P18,000 from the Padilla Shipping Company and P5,100 from the include interest but it was not acted upon.
Allied Overseas Trading Corporation. Only the defendants appealed to the CA because the victims already wanted to get the
Considering that he was single, the court deducted P9,200 as yearly living expenses, money. The petitioners (victims) filed a motion in the CA, seeking for an immediate decision
resulting in a net income of P13,900 (not P15,900 as erroneously stated in the decision). of the appeal, with a prayer that legal interest be granted from the date of the TC decision
Since Nicanor Padilla was only 29 years old and in good health, the trial court and for the increase of the death indemnity.
allowed him a life expectancy of 30 years. Multiplying his annual net income of P13,900 The CA however, held that interest was to be counted from the date of its decision until
by his life expectancy of 30 years, the product is P417,000 (not P477,000) which is the actual payment because the defendants failed to appeal the TC decision. Hence, the
amount of death indemnity due his mother and only forced heir petitioners appealed.

DE CALISTON V. CA (PENSION AS LOST INCOME) Issue: Should interest be granted from the date of TC‘s decision or the CA‘s decision?

Doctrine: Legal interest of (6%) should be granted from the time of the TC‘s decision and not the
A decedent‘s pension for 1 year may be awarded as actual damages CA‘s decision.
Moreover, it is the general rule that a party who does not appeal from the decision may not
Facts: obtain any affirmative relief from the appellate court other than what he has obtained from
While driving a bus, Dalmacio ran over Darrocha, a USVA pensioner. Darrocha died the lower court, if any, whose decision is brought up on appeal. However, in this case,
instantly and was survived by her only child, Gloria. Flores was able to file a motion but it was not acted upon. The CA was correct in granting
Dalmacio was convicted for homicide through reckless imprudence and was ordered to pay interest.
15k for death, 5k as moral, 5k for burial and 10k for loss of pension. This was, however, Under the circumstances of this case, where the heirs of the victim in the traffic accident
revered. chose not to appeal in the hope that the transportation company will pay the damages
awarded by the lower court but unfortunately said company still appealed to the Court of
Issue: Should the pension be awarded? YES. Appeals, which step was obviously dilatory and oppressive of the rights of the said
claimants: that the case had been pending in court for about 30 years from the date of the
The pension of the decedent being a sure income that was cut short by her death for which accident in 1958 so that as an exception to the general rule aforestated, the said heirs who
Dalmacio was responsible, the surviving heir of the former is entitled to the award of P did not appeal the judgment, should be afforded equitable relief by the courts as it must be
10,000.00 which is just equivalent to the pension the decedent would have received for one vigilant for their protection. The claim for legal interest and increase in the indemnity
year if she did not die should be entertained in spite of the failure of the claimants to appeal the judgment.
On the other hand, the P5,000.00 paid to Gloria by the insurer of the passenger bus which Death indemnity awarded also increased to 30k pursuant to prevailing jurisprudence.
figured in the accident may be deemed to have come from the bus owner who procured the Petitioners de lima et al. win
insurance. Since the civil liability (ex-delicto) of the CC for the death caused by his driver is
42
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 8 (COMMON CARRIERS, DAMAGES) SC further explained exemplary damages. It held that exemplary
damages may be imposed by way of example or correction only in
1. Marchan v. Mendoza (Bus fell into a ditch, exemplary and actual damages0 addition (among others) to actual damages.
They cannot be recovered as a matter of right and its
Doctrine: determination is upon the discretion of the court.
when plaintiffs prayed in their complaint for such other relief and remedies that may be The amount of exemplary damages need not be proved
availed of under the premises, in effect, therefore, the court is called upon the exercise and because they depend on the actual damages awarded.
use its discretion whether the imposition of punitive or exemplary damages even though not If it doesn‘t have to be proven, then it doesn‘t have to be
expressly prayed or pleaded in the plaintiffs' complaint specifically alleged, since it depends on the w/n actual
Characteristics of exemplary damages: damages should be awarded anyway.
o They cannot be recovered as a matter of right and its determination is upon the Ruling: CA affirmed, Mendozas entitled to interest on actual damages from date of TC
discretion of the court. decision and legal interest on exemplary damages from the date of the CA decision.
o The amount of exemplary damages need not be proved because they depend on
the actual damages awarded. 2. FORES V. MIRANDA (CC MUST BE IN BAD FAITH FOR IT TO BE LIABLE FOR MORAL
o If it doesn‘t have to be proven, then it doesn‘t have to be specifically alleged, DAMAGES)
since it depends on the w/n actual damages should be awarded anyway.
If there is no death or no bad faith attending the breach of the contract of the carriage, Doctrine:
moral damages cannot be awarded. To sue for moral damages under a breach of a contract of transportation,
o 1) it must be proven that the common carrier acted in bad faith (in relation to the
Facts: breach of the contract in other words, bad faith attended the accident and
o 2) if the passenger died moral damages to the ascendants and descendants
A passenger bus of Phil Rabbit (PRBL) being driven by Marchan fell into a ditch because
Marchan sped up recklessly and had to make a hard brake to avoid a parked truck. Facts:
Several passengers were injured. Aresenio Mendoza, his wife and child were also injured
as a result of being thrown out of the ground. Arsenio got paralyzed and it was opined that Miranda was a passenger in a jeepney, owned by Fores and driven by Luga. The jeepney
he may never walk again. got into an accident while descending the Sta. Mesa Bridge as a high speed and it then hit
As a result, Marchan was convicted for causing injuries due to reckless imprudence. The the bridge wall. Miranda got injured and he got a fracture and was unable to use his right
Mendoza family sought to recover damages against Marchan and Buan, the owner of arm
PRBL. It was predicated on a breach of contract of carriage and on account of criminal o Fores was a painter by profession and was a fine arts professor
negligence of Marchan. TC found PRBL liable and held it to pay 40k in actual damages. Fores was criminally charged and was held to be guilty. TC awarded 10k in actual
and 30k in exemplary damages. CA affirmed. damages. The CA, however, reduced the sum to 2k. It however, upheld the award of moral
damages to be paid to Miranda
Issue: 1) is PRBL liable under the contract of carriage?? 2) Was award of damages proper?
Issue: Is Fores liable for moral damages? No.
As to liability: Yes. It was undisputed that Marchan was then at the steering wheel of the
bus and the riding public is not expected to inquire before they board the bus w/n the driver The general rule is that under Art 1764 (in relation to 2206), the provision entitles the heirs
is authorized. In fact, ―common carriers cannot escape liability "for the death of or injuries to of the deceased passenger to ―demand moral damages by reason of the death of the
passengers through the negligence and willful acts of the former's employees, although deceased‖
such employees may have acted beyond the scope of their authority or in violation of the But the rule of Art 1764 holds that where the injured passenger does not die, moral
orders..." damages are only recoverable if it can be proven that the carrier is guilty of bad faith.
As to the damages: However, in this case, it was only shown the carrier was merely negligent and was not in
o ACTUAL: 40k was reasonable given that Arsenio, 26 at that time, was paralyzed bad faith. To award moral damages for breach of contract, therefore, without proof of bad
and also had a steady job as an assistant supervisor. (note: formula to compute faith or malice on the part of the defendant, as required by Art. 2220, would be to violate
life expectancy was not used) The SC upheld the CA‘s discretion in affirming the the clear provisions of the law, and constitute unwarranted judicial legislation.
award of damages. Actual damages, however, were still awarded.
o EXEMPLARY:
PRBL, Marchan argued that exemplary damages shouldn‘t have been
awarded because it was not specifically prayed for. However, in the
complaint, the Mendoza family ―prayed for other relief that the court
may deem just and equitable‖ This prayer was held to be enough for
the court to exercise its discretion in awarding exemplary damages.

43
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

3. PRBL, NICASIO DE LOS REYES V. ESGUERRA 4. CHINA AIRLINES V. IAC


Doctrine: Doctrine:
Moral damages are not recoverable in actions for damages predicated on a breach of the (repeated doctrine as with PRBL)
contract of transportation, as in the instant case, in view of the provisions of Articles 2219 To justify award of exemplary damages, the CC must be in bad faith in breaching the
and 2220 of the New Civil Code. The exceptions are (1) where the mishap results in the contract of carriage.
death of a passenger, and (2) where it is proved that the carrier was guilty of fraud or bad
faith, even if death does not result Facts:
After a 4 day delay due an engine malfunction, Osorio and others boarded a China airlines
Facts: flight for Taipei. From there, they were supposed to go to LA, but because of the delay,
China Airlines instead paid for their accommodations and agreed to bring them to SAN
Esguerra was a passenger of PRBL. He sat at the left end of the 4 th row behind the driver FRANCISCO instead, where they will be furnished an immediate flight to LA.
close to the window. During the trip, the bus sideswiped a freight truck owned by Transport However, when they arrived in SF, they were not immediately issued tickets because the
Contractors. As a result, Esguerra‘s left forearm was injured and it had to be amputated. instructions (via TELEX) from Manila did were not received on time. While stuck in SF, they
PRBL, Reyes and Transport Contractors were held liable for moral damages (5k) and were not provided accommodations and food as transit passengers by Dennis Cheng, a
attorney‘s fees to Esguerra, due to an accident. Thus, PRBL and Reyes went to the SC to China Airlines employee based in SF. Due to this refusal, they all walked out without
assail the award of moral damages. leaving a contact address. Thus, when word from Manila came at 6:45 p.m. authorizing the
issuance of tickets for LA, they could not be found.
Issue: Should moral damages be awarded? No. It was only on the following day, after spending a night at the YMCA, that they learned that
their tickets and luggage were ready for pick up. However, Osorio chose to go to LA with a
Moral damages are not recoverable in actions for damages predicated on a breach of the Western Airlines Ticket.
contract of transportation, as in the instant case, in view of the provisions of Articles 2219 Osorio sued China Airlines and was only awarded the amounts she spent as an
and 2220 of the New Civil Code. The exceptions are (1) where the mishap results in the involuntarily rerouted passenger in SF and the money she paid for her Western Air tickets.
death of a passenger, and (2) where it is proved that the carrier was guilty of fraud or bad CA, however reversed and ordered payment of actual, moral and exemplary damages.
faith, even if death does not result.
The Court of Appeals found that the two vehicles sideswiped each other at the middle of Issue: 1) Was there a breach of contract of carriage? 2) Should moral damages be awarded?
the road. In other words. both vehicles were in their respective lanes and that they
did not invade the lane of the other. It cannot be said therefore that there was fraud As to breach:
or bad faith on the part of the carrier's driver. This being the case, no moral damages o The records show that Osorio was assured of an immediate flight connection
are recoverable. from SF to LA. Due to the delay of the receipt of instruction however, the
However, with respect to attorney's fee of P2,000.00, the same need not be proved as promised immediate flight connection was not made. Indeed, there was a breach
herein petitioners contended. The same is allowed in the discretion of the court after of contract in failing to secure an immediate flight connection. CC‘s are duty
considering several factors which are discernible from the facts brought out during the trial. bound to carry passengers to their destination as far as human care and
In this case, plaintiff was compelled to litigate and incur expenses in order to protect his foresight can provide.
interest. As to moral damages:
o The breach however, was not attended by bad faith. The Manila office had no
other choice but to use TELEX because phone communication was not the
practice due to the time difference.
o Moreover, Dennis Cheng did not act in bad faith for his refusal to give
accommodations, food and issue the ticket was precisely because of the fact that
the instructions were not yet received.
The breach of contract under consideration having been incurred in good faith, petitioner
airlines is liable for damages which are the natural and probable consequences of said
breach and which the parties have foreseen at the time the obligation was constituted.
These damages consist of the actual damages awarded by the trial court.
Exemplary deleted because as it was not shown that China Airlines was in bad faith in
breaching the contract of carriage.
Judgment modified with respect to moral and exemplary.

44
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

5. PAL V. MIANO (LUGGAGE NOT IMMEDIATELY DELIVERED TO PASSENGER BUT


Issue: Is NW liable for moral and exemplary damages? No.
WAS TRACED AND FOUND, NO BAD FAITH, NO MORAL DAMAGES)

Doctrine: There was no bad faith on the part of NW because due to weight restrictions, the baggage
had to be transported on a different flight that was expected to arrive at the same time as
In breach of contract of carriage by air, moral damages are awarded only if the defendant
that of the Tans‘ plane.
acted fraudulently or in bad faith
It is admitted that respondent failed to deliver petitioner's luggages on time. However, there
was no showing of malice in such failure. By its concern for safety, respondent had to ship
Facts:
the baggages in another flight with the same date of arrival. Hence, there was no bad faith.
Miano took a PAL flight for Germany. He had an immediate connecting flight to Vienna. At
NAIA, he checked in out brought suitcase, allegedly containing money, a Nikkon Camera Where in breaching the contract of carriage the defendant airline is not shown to have
acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
and clothes. However, upon arriving at Vienna, his luggage was missing.
consequences of the breach of obligation which the parties had foreseen or could have
o After 11 days, his suitcase was delivered to him in his hotel. He claimed he was
reasonably foreseen. In that case, such liability does not include moral and exemplary
forced to borrow money to buy some clothes, lost his camera and had to pay for
damages
the transportation of his luggage.
He wrote a demand letter but since it went unheeded, he sued PAL for damages before
How does a tracer telex work?
RTC Makati. RTC granted actual moral, exemplary and atty‘s fees.

Issue: Is the award of moral damages justified? No. 8. LTB V. CORNISTA (RECKLESS DRIVING + FAILURE TO INSTALL SAFEGUARDS
FOR PASSENGERS = BAD FAITH = MORAL DAMAGES)
In breach of contract of carriage by air, moral damages are awarded only if the defendant
acted fraudulently or in bad faith. There was no bad faith on the part of PAL as it Facts:
immediately coordinated with its Central Baggage Services to trace the suitcase and Juliet Cornista sued LTB alleging that she sustained injuries due to the negligence of LTB‘s
succeeded in finding it. driver. The driver was driving fast on a curve. Moreover, the right side of the bus was not
At the hearing, PAL‘s Manager for Administration of Airport Services Department Miguel covered by any safeguard to prevent passengers from falling.
Ebio testified that their records disclosed that Manila, the originating station, did not receive She was awarded moral damages in addition to actual damages. Thus, LTB sought a
any tracertelex. A tracer telex, an airline lingo, is an action of any station that the airlines review to set aside moral damages.
operate from whom a passenger may complain or have not received his baggage upon his
arrival. It was reasonable to presume that the handling of the baggage was normal Issue: Should moral damages be granted? Yes
and regular. Upon inquiry from their Frankfurt Station, it was however discovered
that the interline tag of private respondent's baggage was accidentally taken off. Regarding petitioner's contention that no award of moral damages should have been made
We can neither sustain the award of exemplary damages. The prerequisite for the award of in favor of the injured passenger, it must be borne in mind that the court of origin not only
exemplary damages in cases of contract or quasi-contract is that the defendant acted in found petitioner's driver guilty of reckless driving, but also found petitioner itself guilty of
wanton, fraudulent, reckless, oppressive, or malevolent manner. negligence because "the right side of said bus is not covered nor protected by any bar to
safeguard passengers sitting at the extreme ends of the seats on the right side from falling
6. TAN V. NORTHWEST AIRLINES (LUGGAGE NOT DELIVERED ON TIME BECAUSE IT therefrom."
HAD TO BE TRANSFERRED TO ANOTHER PLANE DUE TO WEIGHT RESTRICTIONS) Under the provisions of Art. 2220 of the New Civil Code, in cases of breach of contract
(including one of transportation or carriage), either fraud or bad faith, that is, wanton and
deliberately injurious conduct on the part of the carrier is necessary to justify an award of
Doctrine:
moral damages. Petitioner's negligence consisting in its failure to cover the right side of the
Where in breaching the contract of carriage the defendant airline is not shown to have
bus in question with a bar or some other contrivance to safeguard or protect passengers
acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
falls within this category of misconduct. Moral damages upheld.
consequences of the breach of obligation which the parties had foreseen or could have
reasonably foreseen. In that case, such liability does not include moral and exemplary
damages

Facts:
The Tans boarded NW bound for Philippines from Chicago with a stop-over at Detroit.
Upon arrival at PH, their baggage was missing and were informed that their baggage might
still be in another plane in Japan. The baggage, which was loaded in another NW plane,
was recovered but the contents were destroyed/soiled.
They sued NW for damages. NW argues that the baggage could not be carried on the
same flight because of ―weight restrictions‖ TC awarded actual, moral and exemplary.
45
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

9. DR. ARMOVIT V. CA, NORTHWEST (FAMILY BUMPED OFF THE PLANE BECAUSE o When he began to protest, one of the TWA employees, a certain Mr. Braam,
rudely threatened him with the words "Don't argue with me, I have a very bad
THE AIRLINE MADE THE MISTAKE IN CONFIRMING WHAT TIME THE FLIGHT WAS)
temper‖
o As a result, he had to take the economy seat and was given a refund application.
Doctrine:
While waiting for departure however, Vinluan saw that Caucasians were given
Gross negligence may amount to bad faith and it will justify the award of moral damages in priority in 1st class for no show passengers.
cases of breach of contract of carriage
Thus, Vinluan sued TWA alleging breach and bad faith. He was awarded actual damages,
Nominal damages cannot co-exist with actual damages. moral damages (500k), exemp (300k) and 100k (atty‘s fees) In its defense, LWA argues
that it had to use a smaller plane so 1st class accommodations were less.
Facts:
The Armovit family decided to spend their xmas in Philippines so they bought 3 roundtrip Issue: Were the award of damages proper? Yes.
tickets from US to PH and back. On their ticket, there was a statement by the sales agent
that their flight from Manila to Tokyo was at 1030am. This was reconfirmed by the family The tickets were reconfirmed twice. He was arrogantly threatened and the white people
with the office. were given priority. This attitude and discrimination shows bad faith so the award of moral
They arrived at NAIA at 9:15am. However, they were rudely informed that they cannot and exemplary were justified. Moreover, the plane switch showed that TWA was willing to
board because the flight time was actually at 915 and 1030 was wrong. Thus, they sued sacrifice its 1st class passengers‘ comforts.
NW and were awarded actual, moral, nominal and exemplary damages. The CA, however, However, the moral damages were reduced to 300k and exemp reduced to 200k
deleted the award for nominal moral damages and reduced the award for exemplary (500k-
100k) due to their failure to testify on their ―sleepless nights, etc‖
11. ALITALIA AIRWAYS V. CA
Issue: Should moral damages be awarded? Yes.
Spouses Julianos arrived at Rome in order to board an Alitalia Airways flight to Hong Kong.
Court cited Air France wherein damages were awarded for the gross negligence of the However, the flight left without them. When he arrived, he returned to his employer Bristol-
airline which amounted to bad faith. In this case, there was indeed bad faith as 1) the airline Myers (where he was VP), the unused Rome-HK ticket. However, the cost of the Thai
did not correct the entries and 2) they were rudely informed that they were bumped off Airways ticket that they had to buy in lieu of Alitalia was not refunded by the office.
They only failed to take the witness stand and testify on the matter. It overlooked however, The apparent cause why they were not able to board was because they were marked as no
that the failure of the petitioner to appear in court to testify was explained by them. The shows. The spouses on the other hand allege they arrived on time but they had to take a
assassination of Senator Benigno Aquino, Jr. on August 21, 1983 following the year they long line because there was no individual check in counters for Alitalia passengers. They
were bumped off caused a turmoil in the country. This turmoil spilled over to the year 1984 noticed that some passengers were entertained ahead of the line for them to check in but
when they were scheduled to testify. However, the violent demonstrations in the country they were not given the same assistance.
were sensationalized in the U.S. media so petitioners were advised to refrain from returning o They even found another Filipino who was similarly treated.
to the Philippines at the time. Thus, the spouses sued Alitalia Airways and it was held liable for actual damages, moral
However, Dr. Armovit‘s brother (Atty. Armovit) testimony sufficed as he was with them damages (400k) and exemplary (50k) The CA lowered the awards and held that the
when they checked in up to their departure. spouses were not entitled to a refund (for Alitalia tickets)
Moral damages awarded but only 100k because NW accommodated them and boarded
them on the same day Issue: Should actual, moral and exemp damages be awarded?
Exemplary damages: 100k sufficient as example for public good.
When an airline issues a ticket to a passenger confirmed on a particular flight, on a certain
Nominal damages: should be deleted because it cannot co-exist with actual damages.
date, a contract of carriage arises, and the passenger has every right to expect that he
would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit
10. TRANS WORLD AIRLINES V. CA (LAWYER DOWNGRADED TO ECONOMY, for breach of contract of carriage.
TREATED RUDELY) That Alitalia had no intention to accommodate all who had confirmed their flight
reservations could be seen in the absence of any measure to contact all possible
Facts: passengers for each flight who might be within the airport premises As a result, some
Rogelio Vinluan (ACCRA partner) had to travel to Europe and US to attend to some passengers would really be left behind in the long and disorderly queue at the check-in
matters for clients. He bought first class tickets from Manila to Tokyo, Moscow, Paris, counter.
Hamburg, Zurich, NY, LA and Hawaii and back to Manila. As held in Trans World Airlines v. Court of Appeals, such inattention to and lack of care
While in Paris, he went to the office of Trans World (TWA) and secured a confirmed [by the petitioner airline] for the interest of its passengers who are entitled to its
reservation for 1st class from NY to SF. He then reconfirmed it. Upon checking in however, utmost consideration, particularly as to their convenience, amount to bad faith which
he was informed that there was no first class seat available and the TWA employees gave entitles the passenger to the award of moral damages. Ergo, we affirm the respondent
no reason. court's award of moral damages at P200.000.00. This award should be sufficient to

46
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

indemnify the Julianos for the delay, inconvenience, humiliation, and embarrassment they 13. ZALAMEA V. CA (OVERBOOKING AMOUNTS TO BAD FAITH)
suffered.
Likewise the award of exemplary damages is well-grounded. With dismay, we note, that the Doctrine:
imposition of substantial amounts of damages notwithstanding, international carriers have When an airline issues a ticket to a passenger confirmed on a particular flight, on a
not been dissuaded from repeating similar derogatory acts. certain date, a contract of carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date. If he does not, then the carrier
12. PAL V. CA (2 CONFIRMED PASSENGERS BUMPED OFF FOR THE COMPANIONS opens itself to a suit for breach of contract of carriage. Where an airline had deliberately
OF 2 POLITICIANS) overbooked, it took the risk of having to deprive some passengers of their seats in case all
of them would show up for the check in. For the indignity and inconvenience of being
Doctrine: refused a confirmed seat on the last minute, said passenger is entitled to an award
Intentionally bumping off 2 confirmed passengers for 2 politicians who were unconfirmed of moral damages.
passengers shows bad faith on the part of the CC. Did the CC refund the original unused tickets bought from TWA? No. But the CC refunded
The award of moral and exemplary damages in an aggregate amount may not be the usual the American Airlines tickets.
way of awarding said damages. However, there can be no question that the entitlement to
moral damages having been established, exemplary damages may be awarded; and Facts:
exemplary damages may be awarded even though not so expressly pleaded in the The Zalamea family bought 3 tickets from the Manila Agent of Transworld Airlines (TWA)
complaint nor proved for a flight from NY-LA. They were all confirmed reservations. 2 tickets were bought at a
The amount of exemplary damages need not be pleaded in the complaint because the discount and one was bought for its full price.
same cannot be predetermined. One can merely ask that it be determined by the court as Once in NY, they reconfirmed the flight. However, 1 hour before the departure, they were
the evidence may warrant and be awarded at its discretion. This is exactly what private placed on the wait-list because the plane was apparently full. Only the father was able to
respondents did. board because he mistakenly presented his daughter‘s full fare ticket.
The wife and daughter were not accommodated in the next flight because it was apparently
Facts: full so they bought 2 tickets from American Airlines. TWA overbooked the flights and gave
Bagadiong and Sto. Tomas bought 2 tickets from PAL in order to go to Manila from Naga. priority to the ones who bought full-fare tickets.
Their flight was confirmed by PAL. In the airport, PAL‘s employees got their tickets Upon arrival, they sued PAL for breach of contract of carriage. They were awarded actual
supposedly to issue them a boarding pass but before departure, their tickets were not given and moral damages.
back and they were not allowed to board. They were merely refunded their tickets. The
similar thing was done to Santos. In effect, the passengers were bumped off. Issue: Was there bad faith on the part of PAL?
Thus, they sued PAL for damages and the TC found PAL guilty of breach of the contract of
carriage and awarded actual, moral and exemplary damages. PAL, in its defense, alleged 1) When an airline issues a ticket to a passenger confirmed on a particular flight, on
that the bumping off was due to a heavy booking of passengers due to the coming of the a certain date, a contract of carriage arises, and the passenger has every right to
Pope and because of the ―unlawful acts‖ of 2 companions of Gov. Alberto and Mayor expect that he would fly on that flight and on that date. If he does not, then the carrier
Antonio opens itself to a suit for breach of contract of carriage. Where an airline had deliberately
overbooked, it took the risk of having to deprive some passengers of their seats in case all
Issue: Should moral damages be awarded? Yes. of them would show up for the check in. For the indignity and inconvenience of being
refused a confirmed seat on the last minute, said passenger is entitled to an award of moral
It was discovered that PAL‘s employees knew there was a heavy booking and that it still damages.
accommodated the 2 companions of Governor Alberto and Mayor Antonio, who were not o (disregard for recitation, inserting because it was originally an assigned case)
confirmed passengers, to the detriment of the respondent passengers. Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, where private
The PAL employees knew that by not allowing petitioners to take the flight to Naga, they respondent was not allowed to board the plane because her seat had already
were violating the contract of carriage the defendant had. Even granting all the mistakes been given to another passenger even before the allowable period for
advanced by the defendant, still there would at least be negligence so gross and reckless passengers to check in had lapsed despite the fact that she had a confirmed
that it amounts to malice or bad faith in its breach of contract with the plaintiffs ticket and she had arrived on time, this Court held that petitioner airline acted in
The alleged fortuitous event, supposedly consisting of the unlawful acts of Governor bad faith in violating private respondent's rights under their contract of carriage
Alberto and Mayor Antonio, is not independent of the will of herein petitioner as the obligor and is therefore liable for the injuries she has sustained as a result.
but was caused by the very act of its agents in allowing the governor and the mayor to 2) Even on the assumption that overbooking is allowed, respondent TWA is still
board Flight 296R in excess of the number of passengers allotted to them and with full guilty of bad faith in not informing its passengers beforehand that it could breach
knowledge that the said flight for Manila was fully booked. the contract of carriage even if they have confirmed tickets if there was overbooking.
Grant of moral and exemplary damages upheld even if it was lumped together. Respondent TWA should have incorporated stipulations on overbooking on the tickets
issued or to properly inform its passengers about these policies so that the latter would be
prepared for such eventuality or would have the choice to ride with another airline.

47
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

3) Moreover, respondent TWA was also guilty of not informing its passengers of its The roundtrip ticket issued by Cathay to Singson was a perfected contract and was even
alleged policy of giving less priority to discounted tickets. While the petitioners had partially executed.
checked in at the same time, and held confirmed tickets, yet, only one of them was allowed Moreover, it appears that Cathay was responsible for the loss of the important coupon. Two
to board the plane ten minutes before departure time because the full-fare ticket he was things could‘ve happened. First, US Air (cathay‘s agent) mistakenly detached the wrong
holding was given priority over discounted tickets. The other two petitioners were left coupon or the booking agent really did not include such coupon upon its issuance of the
behind. ticket. Thus, in either case, Cathay was the proximate cause of the breach of the contract
In the previously cited case of Alitalia Airways v. Court of Appeals, this Court explicitly held of carriage.
that a passenger is entitled to be reimbursed for the cost of the tickets he had to buy for a As to moral damages, These are the reasons why the breach was attended with bad faith:
flight to another airline. Thus, instead of simply being refunded for the cost of the unused 1) Cathay is liable because it was the cause of the loss/non-issuance of the coupon. 2)
TWA tickets, petitioners should be awarded the actual cost of their flight from New York to Cathay‘s employees could‘ve easily ascertained Singon‘s reservations with its computer
Los Angeles. but it did not do so. 3) Cathay even told Singson to look for the SF coupon and verify it
Did the CC refund the original unused tickets bought from TWA? No. But the CC refunded himself with Cathay‘s SF‘s office. Breach of contract attended with bad faith, but moral and
the American Airlines tickets. exemp damages reduced.

14. SINGSON V. CA (FLIGHT COUPON LOST DUE TO NEGLIGENCE OF CATHAY’S 15. LTB V. DIASANTA (RECKLESS DRIVING = BAD FAITH)
EMPLOYEES)
Facts:
Doctrine: On 1958, Diasanta boarded an LTB bus bound for Manila. The driver, Betito, drove the bus
―However, the P500,000.00 moral damages and P400,000.00 exemplary damages recklessly and as a result, the bus went off the asphalted part and on to the shoulder. The
awarded by the trial court have to be reduced. The well-entrenched principle is that the bus jumped up and down so violently that Diasanta suffered a fractured vertebrate. She
grant of moral damages depends upon the discretion of the court based on the was put in a cast for several months.
circumstances of each case. This discretion is limited by the principle that the "amount The TC awarded actual, moral and exemplary. CA, however, reduced the lumped award of
awarded should not be palpably and scandalously excessive" as to indicate that it was the 3k for moral and exemp to 1k.
result of prejudice or corruption on the part of the trial court. 17 Damages are not intended
to enrich the complainant at the expense of the defendant. They are awarded only to Issue: Is LTB liable for the damages? Yes.
alleviate the moral suffering that the injured partly had undergone by reason of the
defendant's culpable action. As regards the exemplary damages, Article 2232 of the Civil Code of the Philippines
Example of acts which show bad faith attending the breach of the K of carriage. provides that, in contracts and quasi-contracts the court may award exemplary damages if
the defendant acted in a "wanton, fraudulent,reckless, oppressive or malevolent manner."
Facts: In the case at bar, petitioner's driver and, hence, its agent, has been found guilty of
recklessness..
On 1988 Singson and his cousin Tiongson, bought a Cathay ticket for 2 open-dated, It may not be amiss to note, also, that courts have discretion to grant or not to grant
identically routed, roundtrip plane tickets (from Manila to US) exemplary damages and that the circumstances obtaining in this case do not warrant
o Each ticket consisted of six (6) flight coupons corresponding to this itinerary: interference with the exercise of such discretion by the lower courts
flight coupon no. 1 — Manila to Hongkong; flight coupon no. 2 — Hongkong to
San Francisco; flight coupon no. 3 — San Francisco to Los Angeles; flight 16. MUNSAYAC V. DE LARA (CC NOT LIABLE FOR EXEMP IF IT DID NOT RATIFY
coupon no. 4 — Los Angeles back to San Francisco; flight coupon no. 5 — San RECKLESS DRIVING THAT AMOUNTS TO BAD FAITH)
Francisco to Hongkong; and, finally, flight coupon no. 6 — Hongkong to Manila.
The procedure was that at the start of each leg of the trip a flight coupon Doctrine:
corresponding to the particular sector of the travel would be removed from the Owners of CC‘s cannot be held liable for exemplary damages unless it is shown that it
ticket booklet so that at the end of the trip no more coupon would be left in the authorized or ratified its driver‘s reckless driving which resulted to the breach of the contract
ticket booklet. (MNL-HK-SF-LA-SF-HK-MNL) of carriage. SC held that it should be the driver that should be liable for such damages.
After spending time in LA, they decided to go back home to MNL. In Cathay‘s LA office,
Singson could not get a flight back to MNL because the flight coupon corresponding to SF- Facts:
HK was not there. Instead, what was left was the SF-LA (an earlier flight he already took) Munsayac was a passenger on a jeep owned and operated by de Lara. Munsayac suffered
When he tried to talk to Cathay, Cathay just told him to go look for the missing coupon injuries because the driver drove at high speed even if the road was under repair and even
himself. if the passengers asked him to slow down.
Singson sued Cathay for damages, alleging it was in bad faith. De Lara was sued and was ordered to pay actual and exemplary damages and atty‘s fees.
de Lara appealed. Exemplary damages were awarded because despite of Munsayac’s
Issue: Was Cathay in bad faith? Yes. extra-judicial demands for damages, de Lara still did not pay

48
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Issue: Is de lara liable for exemplary damages? No. the demonstrative tolerance or approval of the owners they themselves can be held at fault
and their fault is of the character described in article 2232 of the Civil Code.‖
It is difficult to conceive how the defendant in a breach of contract case could be held to In this case, there is no showing that Sarkies acted in a wanton, reckless or malevolent
have acted in a wanton, fraudulent, reckless, oppressive or violent manner within the manner as a CC nor was there a showing that it ratified the acts of Mendoza.
meaning of Article 2232 for something he did or did not do after the breach, which had no Dispositve: exemplary damages deleted, moral damages reduced, Mendoza ordered to
causal connection therewith. The law does not contemplate a vicarious liability on his part: reimburse Sarkies, Mendoza still liable.
the breach is his as party to the contract, and so if he is to be held liable at all for exemplary
damages by reason of the wrongful act of his agent, it must be shown that he had 18. R TRANSPORT V. PANTE (ACCIDENT, A/M/E DAMAGES)
previously authorized or knowingly ratified it thereafter, in effect making him a co-
participant. Doctrine:
From the decision under review, however, there is nothing to show previous authority or This case shows that moral damages may be awarded even if there was injury
subsequent ratification by de Lara insofar as the recklessness of the driver was concerned.
The mere statement that the defendant failed, even refused, to placate the suffering Facts:
of the plaintiff, necessitating the filing of the action, is too tenuous a basis to warrant
Pante rode an RL bus owned by Lamzon (RL Transport) in Cubao in order to go to Nueva
the conclusion that the defendant approved of the wrongful act of his servant with Ecija. While traveling along Bulacan, the bus hit a tree and a house due to the fast and
full knowledge of the facts. reckless driving of the driver, Johnny. As a result, Pante sustained injuries such as a
It is not enough to say that an example should be made, or corrective measures employed, fracture on his right arm. He underwent two operations and afterwards, his employer
for the public good, especially in accident cases where public carriers are involved. For the (Goldilocks) refused to accept him because of his disability.
causative negligence in such cases is personal to the employees actually in charge
He sued RL Transport and was awarded actual, moral, exemplary and atty‘s fees. CA
of the vehicles, and it is they who should be made to pay this kind of damages by affirmed.
way of example or correction, unless by the demonstrated tolerance or approval of
the owners they themselves can be held at fault and their fault is of the character Issue: Is RL transport liable for damages?
described in Article 2232 of the Civil Code. Otherwise there would be practically no
difference between their liability for exemplary damages and their liability for compensatory
Yes. In this case, the testimonial evidence of respondent showed that petitioner, through its
damages, which needs no proof of their negligence since the suit is predicated on breach
bus driver, failed to observe extraordinary diligence, and was, therefore, negligent in
of contract and due diligence on their part does not constitute a defense.
transporting the passengers of the bus safely to Nueva Ecija since the bus bumped a tree
and a house, and caused physical injuries to respondent.
17. SARKIES TOURS V. IAC (CORREGIDOR TRIP, CHILD DROWNED, EXEMPLARY Actual: The award of actual damages based on a statement of account issued by the
DAMAGES) hospital is justified. Jurisprudence has held that this is admissible evidence of hospital
expenses that were incurred.
Facts: Moral: The Court of Appeals correctly sustained the award of moral damages, citing
Sarkies Tours advertised its tours to Corregidor on Independence day for PhP10 per Spouses Ong v. Court of Appeals, which awarded moral damages to paying passengers,
person including boat fare, shrine fee and tour. Thus, the spouses Dizon (Dizons) bought 6 who suffered physical injuries on board a bus that figured in an accident. Spouses Ong
tickets from Sarkies for them and their children. Two kinds of tickets were issued (one blue held that a person is entitled to the integrity of his body and if that integrity is violated,
ticket and one white ticket where the word ―EDISCO‖ was handwritten) so white: boat damages are due and assessable. Thus, the usual practice is to award moral damages for
and blue: bus physical injuries sustained.
They were transported by the Sarkies bus to Pasig River where they boarded M/V Edisco, Exemplary: The award is proper because it was shown that the driver was reckless in
which was owned by Mendoza, to go to Corregidor. The boat was an oversized banca not driving at a high speed and this in turn caused the injury.
licensed to ferry passengers or operate as a watercraft. It was also overloaded. Petitioner lost.
On the return trip, the boat capsized and as a result, they lost their belongings and one of
their children, Merceditas, died.
Thus, Dizons sued Sarkies and Mendoza in CFI. CFI exonerated Sarkies from liability
because it was merely a booking agent. The CA, however, held Sarkies and Mendoza both
liable and ordered them to pay among other things, exemplary damages. Sarkies appealed,
taking exception to the exemplary damages.

Issue: Is Sarkies liable together with Mendoza, the boat owner, for exemplary damages?

As to exemplary damages, SC cited Munsayac v. de Lara, which held the general rule that
the driver/employee of the CC should be directly liable for exemplary damages ―unless by

49
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

19. SULPICIO V. CURSO (DIED IN FERRY ACCIDENT, COLLATERALS CANNOT ASK deceased passenger to demand moral damages for mental anguish by reason of the death
of the deceased.
FOR MORAL DAMAGES)

Doctrine: 20. PHILIPPINE HAWK V. TAN LEE


If a person dies due to a breach of K of carriage, his brothers and sisters cannot claim for
moral damages. This is based on Art 2206. Moreover, the law provides that Article 2206 Doctrine:
shall also apply to the death of a passenger caused by the breach of contract by a Whenever an employee’s negligence causes damage or injury to another, there
common carrier. instantly arises a presumption that the employer failed to exercise the due diligence
o Article 2206. The amount of damages for death caused by a crime or quasi-delict of a good father of the family in the selection or supervision of its employees. The
shall be at least three thousand pesos, even though there may have been defense under 2180 is that the CC exercised ordinary diligence in selection and supervision
mitigating circumstances. In addition: ―(3) The spouse, legitimate and of its employees.
illegitimate descendants and ascendants of the deceased may demand As a rule, documentary evidence should be presented to substantiate the claim for
moral damages for mental anguish by reason of the death of the deceased.‖ damages for loss of earning capacity.
the conditions for awarding moral damages are: (a) there must be an injury, whether o By way of exception, damages for loss of earning capacity may be awarded
physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be despite the absence of documentary evidence when:
a culpable act or omission factually established; (c) the wrongful act or omission of the (1) the deceased is self-employed and earning less than the minimum
defendant must be the proximate cause of the injury sustained by the claimant; and (d) the wage under current labor laws, in which case, judicial notice may be
award of damages is predicated on any of the cases stated in Article 2219 of the Civil taken of the fact that in the deceased's line of work no documentary
Code. evidence is available; or
(2) the deceased is employed as a daily wage worker earning less than
Facts: the minimum wage under current labor laws
Dr. Curso boarded MV Dona Marilyn owned by Sulpicio lines bound for Tacloban.
Unfortunately, in sank while at sea due to a typhoon (Unsang). Dr. Curso died. Facts:
His heirs, consisting of his siblings, sued Sulpicio to claim damages based on breach of Vivian and her husband Silvino was riding in their motorcycle. It was alleged by Vivian that
contract. Sulpicio denied liability on the ground of fortuitous event (typhoon) and averred they when they were about to make a turn, they saw a bus, owned by Phil Hawk and driven
that the boat was seaworthy in all respects. RTC dismissed but CA reversed and granted by Avila at high speed coming toward them. The bus hit a jeep and their motorcycle. This
damages because it found Sulpicio to be negligent as its officers still chose to set sail resulted to her injuries and the death of her husband, Silvino.
despite the oncoming typhoon. Death indemnity, loss of earning capacity and moral As a result, Vivian Tan Lee filed a complaint against Philippine Hawk and Avila for
damages were awarded. damages based on quasi-delict, It was alleged that Vivian was hospitalized at St. Lukes
Sulpicio appealed, arguing that it was not liable for moral damages. and that her husband was operating a Caltex Gas station and it earned 1M a year in
revenue.
Issue: Is Sulpicio lines liable for moral damages? No. The bus driver testified that it was the motorcycle that cut the path of the bus which in turn
caused the collision. Phil Hawk testified that it exercised ordinary diligence in selection and
The omission from Article 2206 (3) of the brothers and sisters of the deceased passenger supervision.
reveals the legislative intent to exclude them from the recovery of moral damages for The TC ordered Phil Hawk (under 2180) and Avila (2176) to solidarily pay Vivian 745k
mental anguish by reason of the death of the deceased. actual damages and 50k as moral damages.
the conditions for awarding moral damages are: (a) there must be an injury, whether o The trial court found that before the collision, the motorcycle was on the left side
physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be of the road, just as the passenger jeep was. Prior to the accident, the motorcycle
a culpable act or omission factually established; (c) the wrongful act or omission of the was in a running position moving toward the right side of the highway. The trial
defendant must be the proximate cause of the injury sustained by the claimant; and (d) the court agreed with the bus driver that the motorcycle was moving ahead of the
award of damages is predicated on any of the cases stated in Article 2219 of the Civil bus from the left side of the road toward the right side of the road, but disagreed
Code. that the motorcycle crossed the path of the bus while the bus was running on the
right side of the road.
It is true that they succeeded intestate to Dr. Curso as collaterals but Article 2219
circumscribes the instances in which moral damages may be awarded. The provision does Phil Hawk appealed but the CA affirmed and awarded (added) temperate damages and
not include succession in the collateral line as a source of the right to recover moral death indemnity, and separate actual damages for funeral and medical expenses, and
damage separate awards for loss of earning capacity.
In fine, moral damages may be recovered in an action upon breach of contract of carriage
only when: (a) where death of a passenger results, or (b) it is proved that the carrier was Issue: Is Phil Hawk liable? Yes. Was CA correct in awarding more damages? Yes.
guilty of fraud and bad faith, even if death does not result. Article 2206 of the Civil Code
entitles the descendants, ascendants, illegitimate children, and surviving spouse of the petitioner‘s bus driver, Margarito Avila, was guilty of simple negligence as affirmed by the
appellate court. Foreseeability is the fundamental test of negligence. To be negligent, a

50
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

defendant must have acted or failed to act in such a way that an ordinary reasonable man
would have realized that certain interests of certain persons were unreasonably subjected
to a general but definite class of risks.
In this case, the bus driver, who was driving on the right side of the road, already saw the
motorcycle on the left side of the road before the collision. However, he did not take the
necessary precaution to slow down, but drove on and bumped the motorcycle, and also the
passenger jeep parked on the left side of the road, showing that the bus was negligent in
veering to the left lane, causing it to hit the motorcycle and the passenger jeep.
o Whenever an employee’s negligence causes damage or injury to another,
there instantly arises a presumption that the employer failed to exercise the
due diligence of a good father of the family in the selection or supervision
of its employees. To avoid liability for a quasi-delict committed by his employee,
an employer must overcome the presumption by presenting convincing proof that
he exercised the care and diligence of a good father of a family in the selection
and supervision of his employee.
The Court upholds the finding of the trial court and the Court of Appeals that Phil Hawk is
liable to Vivian, since it failed to exercise the diligence of a good father of the family in the
selection and supervision of its bus driver, Margarito Avila, for having failed to sufficiently
inculcate in him discipline and correct behavior on the road. Indeed, petitioner‘s tests were
concentrated on the ability to drive and physical fitness to do so. It also did not know that
Avila had been previously involved in sideswiping incidents.

As to damages awarded: As regards the issue on the damages awarded, petitioner


contends that it was the only one that appealed the decision of the trial court with respect to
the award of actual and moral damages; hence, the Court of Appeals erred in awarding
other kinds of damages in favor of Vivian. It is wrong. The CA review matters which TC
overlooked to arrive at a just decision.
o Loss of earning capacity: The indemnity for loss of earning capacity of the
deceased is provided for by Article 2206 of the Civil Code. Compensation of this
nature is awarded not for loss of earnings, but for loss of capacity to earn money.
Thus the award was justified as per the computation as Vivian was able to
present proof
o Death indemnity: As to the 50k death indemnity, it was also justified as being
sanctioned by jurisprudence.
o Temperate damages: The award of the temperate damages is also justified
because there was damage to the motorcycle, but it could not be proved with
certainty.
o Moral damages: also sanctioned because of the death of Vivian‘s husband
Therefore, the Court of Appeals correctly awarded civil indemnity for the death of
respondent’s husband, temperate damages, and moral damages for the physical
injuries sustained by respondent in addition to the damages granted by the trial
court to respondent. The trial court overlooked awarding the additional damages. The
appellate court is clothed with ample authority to review matters, even if they are not
assigned as errors in the appeal, if it finds that their consideration is necessary in arriving at
a just decision of the case.

51
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 9 (WARSAW CONVENTION)


Art. 30 of the WC does not apply because there was no accident or delay. In this case, the
1. KLM Royal Dutch Airlines v. CA (World Tour, Airline that issued tickets for ALL legs of a 3 manager of Aer Lingus simply refused to transport the spouses to their contracted
leg trip, with 2 legs to be serviced by different airlines, is liable for the acts of the employees destination.
of other airlines in breaching the contract of carriage)
The ticket provision also cannot be given any credence since the provision was so small
Doctrine: that one had to use a magnifying glass to read the words.
Article 36 of the WC does not apply if there is no accident or delay. In this case, the
manager of the airline breached the contract of carriage by preventing the passengers from As the airline which issued those tickets with the knowledge that the spouses would be
boarding the plane. flown on the various legs of their journey by different air carriers, KLM was chargeable
If the passage tickets of the spouses provide that the carriage to be performed by with the duty and responsibility of specifically informing the spouses of conditions
successive carriers would be regarded as a single operation, then it simply means that prescribed in their tickets or, in the very least, to ascertain that the spouses read
the passengers do not enter into individual contracts with each of the carriers that transport them before they accepted their passage tickets
them.
If the printed provisions at the back of the ticket are so small and hard to read, then it will
not bind the passenger. Moreover, the passage tickets of the spouses provide that the carriage to be
performed by successive carriers would be regarded as a single operation.
Facts Therefore, the spouses did not enter into individual contracts with each of the carriers that
Spouses Mendoza approached Tirso Reyes, a manager of the Philippine Travel Bureau (a ferried them.
travel agency), for consultation about a world tour they intended to take with their daughter
and niece. Lastly, the spouses dealt exclusively with the KLM which issued the tickets for the entire
trip. These tickets guaranteed to them that they would surely have space in the Aer Lingus
They were given a proposed itinerary, wherein they would fly on three different airlines for flight. In the legal sense, the KLM had indorsed and in effect guaranteed the
three segments of the trip, the longest segment of which would be via KLM. Since they performance of its principal engagement to carry out the spouses’ scheduled
wanted to visit Lourdes, France, they decided to take the Barcelona (Spain)- itinerary previously and mutually agreed upon between the parties.
Lourdes(France) route with knowledge that only one airline, Aer Lingus, serviced it.
Damages awarded: actual, moral and attorney‘s fees
The spouses approved the itinerary and asked Reyes to make the necessary reservations.
Reyes, in turn, went to KLM to arrange the flights. KLM thereafter, secured seat 2. Pan American World Airways v. IAC (stipulation limiting liability, lost profits)
reservations for the spouses and their two companions from the carriers which
would ferry them throughout their trip. Doctrine:
Stipulations on the ticket that limit the carrier‘s liability for its negligence are VALID so long
They were issued KLM tickets for the entire trip (ticket issuing agent) However, their as it is not so small as to require a magnifying class and that efforts were made by the CC
coupon for the Aer Lingus portion was marked ―RQ‖, which meant ―on request‖ After to ascertain w/n the passenger read the ticket.
sightseeing in U.S. and Europe, they went to Germany wherein they obtained a
confirmation from Aer Lingus of their seat reservation. When they got to Barcelona to board While in San Francisco, Rene Pangan, president of Sotang Bastos and Archer Production,
the flight to Lourdes, the spouses were denied boarding while the daughter and the niece entered into an agreement where Pangan agreed to supply Primo Quesada with 3 films
were allowed. The Aer Lingus manager brushed them aside and shouted ―Conos! ('Ang Mabait, Masungit at ang Pangit,' 'Big Happening with Chikiting and Iking,' and
Ignorantes Filipinos!‖ 'Kambal Dragon') for exhibition in the United States. Pangan also contracted with
Slutchnick for the exhibition of films in Guam.
Thus, the spouses were forced to take the train to Lourdes and had to incur extra
expenses. Therefore, they sued KLM, as principal of Aer Lingus, for breach of It was agreed in both contracts that PANGAN would supply the promotional materials.
contract of carriage. To return to Guam, Pangan bought an economy class ticket from PAN AM‘s OFFICE
through a travel agency
KLM argues that 1) according to Art. 36 of the WC, the passenger may only take action
against the carrier who performed the transportation during which the accident or the delay 2 hours before departure time, PANGAN checked in 2 luggages which contained the
occurred. 2) ticket provision was printed expressly limited KLM‘s liability for damages only advertising and promotional materials. Subsequently, Pangan was informed that his name
to occurrences in its own airline 3) that all it did was to request seat reservations from other was not in the manifest so he instead had to buy a first class ticket to be in Guam on time.
airlines and that the spouses entered into independent contracts with each of the carriers However, when PANGAN arrived in Guam, his two luggages did not arrive with his flight
that would fly them (Aer Lingus in particular) and as a consequence, his agreements with QUESADA and SLUTCHNICK were
cancelled.
Issue: Is KLM liable? YES
52
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Thus, PANGAN sued PAN-AM for damages due to breach of contract for the loss of his It is true that said ticket was marked "W/L," but Cuenca‘s attention was not called thereto.
luggage and his lost profits. PAN-AM principally argues that liable only for the amount Much less was he advised that "W/L" meant "wait listed."
stipulated in the ticket ($600)
Liability for damages: moral and nominal (because of the rude treatment of employees
Issue: Does the printed stipulation limiting PAN-AM‘s liability apply? YES with knowledge that he was a public official, court also considered this as exemplary)

In this case, PANGAN did not declare any higher value for his luggage and he did not pay a 4. Alitalia v. IAC (UP professor to present in Italy but ALITALIA lost her bag, SC granted
higher rate of freight. Even if PANGAN did not sign the ticket, he is nevertheless bound by nominal damages as a result of the lost bag, did not apply WC to limit damages awarded)
its provisions. It is a contract of adhesion and these kinds of contracts are not entirely
prohibited, as the one who adheres to the contract is in reality free to reject it entirely. Doctrine:
The WC articles should be deemed a limit of liability only in those cases where the cause
The SC further held that Northwest v. Cuenca (next case) did not hold that the WC of the death or injury to person, or destruction, loss or damage to property or delay in its
provisions allowing stipulations limiting liability is contrary to public policy. transport is NOT ATTRIBUTABLE to or attended by any wilful misconduct, bad faith,
recklessness, or otherwise improper conduct on the part of any official or employee for
Lastly, PANGAN is not entitled to the lost profits due to the cancelled contract. This is which the carrier is responsible, and there is otherwise no special or extraordinary form of
because PANGAN did not inform PAN-AM of the special circumstances of the luggage that resulting injury.
required its prompt delivery.
Facts
Carrier won: only liable for $600 (lost luggage) Dr. Felipa Pablo, a UP professor was invited to take part at a meeting in Italy due to her
specialized knowledge in ―foreign substances in food and agriculture environment‖
3. Northwest Airlines v. Cuenca
She accepted the invitation thus she was scheduled to read a paper as the SECOND
Doctrine SPEAKER on the FIRST DAY of the CONFERENCE. The topic was ―The fate of
Arts 17, 18 and 19 of the WC merely declare the carrier liable for damages in the Radioactive Fusion Products Contaminating Vegetable Crops‖ Thus, she booked a flight
enumerated cases, if the conditions therein specified are present. Neither said provisions with ALITALIA. However, upon arrival in Italy, she was informed that her luggage was
nor others in the aforementioned Convention regulate or exclude liability for other breaches delayed. Her 2 suitcases contained clothes and her presentation materials.
of contract by the carrier
She tried to locate her suitcases but she could not find it so she simply returned to Manila
Facts without attending the meeting. She subsequently found out that her suitcases were located
In this case, Cuenca sued Northwest Airlines for damages due to a breach of contract of and delivered to Ispra, Italy, but only on the day after he scheduled appearance. The
carriage. Cuenca, who was then Commissioner of Public Highways of the Philippines, suitcases were eventually returned to her.
boarded Northwest‘s plane with a first class ticket to Tokyo. However, upon arrival in
Okinawa (stop-over), he was rudely asked to move to the tourist section under the threat of ALITALIA argues that the WC should‘ve been applied to limit its liability.
being left in Okinawa. This is because of the marking on the ticket (―W/L‖) which meant
waitlisted. Issue: Should the WC apply to limit ALITALIA‘s liability? NO

Thus, Cuenca sued Northwest. The lower court ruled in Cuenca‘s favor, awarding him The Convention does not thus operate as an exclusive enumeration of the instances of an
actual and nominal damages. airline's liability, or as an absolute limit of the extent of that liability.

In its appeal, Northwest argues that pursuant to Arts 17, 18, 19 of the WC, an air carrier is In this case, there is no bad faith or improper conduct attributable to the employees of
liable only in the event of death/injury of a passenger, destruction or loss of his checked ALITALIA. ALITALIA merely misplaced her baggage and failed to deliver it to her at the
baggage or any goods, or of delay in the transportation by air of passengers. time appointed with the result that she unable to read the paper and make her presentation.
The bag was even returned to her. NEVERTHELESS, ALITALIA breached its contract of
Issue: Is an air carrier liable only in cases specified in the WC? NO carriage with DR. PABLO. She underwent distress and anxiety and she was unable to
present and take part in the convention
The 3 articles merely declare the carrier liable for damages in the enumerated cases, if the
conditions therein specified are present. Neither said provisions nor others in the o In this case therefore, the compensation for the injury suffered by Dr. Pablo
aforementioned Convention regulate or exclude liability for other breaches of contract by cannot under the circumstances be limited to that prescribed by the
the carrier. Under NORTHWEST’s theory, an air carrier would be exempt from any Warsaw Convention for delay in the transport of her baggage. Ergo she
liability for damages in the event of its absolute refusal, in bad faith, to comply with a should be awarded nominal damages.
contract of carriage, which is absurd.

53
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

The WC articles should be deemed a limit of liability only in those cases where the cause Since the passenger's destination in this case was the Philippines, Philippine law governs
of the death or injury to person, or destruction, loss or damage to property or delay in its the liability of the carrier for the loss of the passenger's luggage. Thus, the articles on
transport is NOT ATTRIBUTABLE to or attended by any wilful misconduct, bad faith, presumption of negligence in case of loss applies.
recklessness, or otherwise improper conduct on the part of any official or employee for
which the carrier is responsible, and there is otherwise no special or extraordinary form of In this case, PAL failed to overcome, not only the presumption, but more importantly,
resulting injury. Co’s evidence proving that the carrier's negligence was the proximate cause of the
loss of his baggage. Furthermore, PAL acted in bad faith in faking a retrieval receipt to
o In this case, the employees of ALITALIA were not in bad faith. In fact, as bail itself out of having to pay Co's claim. THEREFORE, the CA did not err in not applying
aforesaid, her luggage was returned to her, albeit tardily. Therefore, Dr. Pablo is the WC.
not entitled to be compensated for the loss or damage to her luggage. In effect,
the WC limiting liability of carriers was applied. 6. Luna v. CA
.
CA affirmed. ALITALIA loses. Doctrine:
The application of the WC must not be construed to preclude the operation of the Civil
5. PAL v. CA (lost bag, WC inapplicable if CC in bad faith) Code and other pertinent laws

Doctrine: Facts:
The liability of the common carrier for the loss, destruction or deterioration of goods On 1989, petitioners Luna, Alonso and Rodriguez boarded a Northwest flight bound for
transported from a foreign country to the Philippines is governed primarily by the New Seoul South Korea for a Rotary Convention. They checked in one bag each. However,
Civil Code. In all matters not regulated by said Code, the rights and obligations of common upon boarding, they were asked to disembark due to engine trouble and board a Korean
carriers shall be governed by the Code of Commerce and by Special Laws. Since Airlines plane instead.
Philippines was the destination, then PH law should apply and it should be applied over the
Warsaw Convention. Upon arrival in Seoul, they discovered that their personal belongings were nowhere to be
This case is authority to the effect that if the CC was not in bad faith, then the WC limiting found as their bags were allegedly flown to Seattle. It was only 4 days later that they were
liability can apply. If the CC is in bad faith, then PH law may apply and the limits of liability able to retrieve their bags from Northwest. By then, the convention was already over.
under the WC cannot be used as a defense by the CC.
Petitioners argue that they filed claims with Northwest before filing a complaint in
Facts: accordance with the Warsaw Convention. Nevertheless, their actions were dismissed
At about 530am, Isidro Co accompanied by his wife and son, arrived at the airport on board due to non-compliance with the requirement.
PAL‘s flight from San Francisco. He only found 8 out of his 9 checked in luggage. PAL‘s
employee was notified of the problem and filled up a form acknowledging the missing Moreover, petitioners argue that Art. 26 of the Warsaw Convention which prescribes the
luggage. In turn, Co surrendered all (including the one for his lost bag) of his claim checks reglementary period within which to file a claim cannot be invoked if damage is caused
as per PAL procedure. by the carrier's willful misconduct, as provided by Art. 25 of the same Warsaw
Convention.
The luggage was a Samsonite suitcase measuring about 62 inches in length and was worth
around $200. It contained various items such as ―pasalubong‖ and personal effects. In spite Issue: Is Northwest liable for damages? YES
of repeated demands, PAL never recovered the luggage or paid its value. Thus, Co sued
PAL for damages. The application of the Convention must not be construed to preclude the operation of the
Civil Code and other pertinent laws.
PAL was held liable for actual and exemplary damages. TC found that it even fabricated a
―retrieval receipt‖. CA affirmed. It appealed arguing that the Warsaw Convention limits its Hence, petitioners' alleged failure to file a claim with the common carrier as mandated by
liability to checked in baggage to $20 based on weight the provisions of the Warsaw Convention should not be a ground for the summary
dismissal of their complaints since Northwest may still be held liable for breach of other
Issue: Should the Warsaw convention apply? No relevant laws which may provide a different period or procedure for filing a claim.
(e.g. CIVIL CODE provisions on negligence of CC)
The liability of the common carrier for the loss, destruction or deterioration of goods
transported from a foreign country to the Philippines is governed primarily by the New As to argument on applicability of Art 25.
Civil Code. In all matters not regulated by said Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by Special Laws. We are unable to agree however with petitioners that Art. 25 of the Convention operates to
exclude the other provisions of the Convention if damage is caused by the common
carrier's willful misconduct. This is because Art. 25 refers only to the monetary ceiling
on damages found in Art. 22 should damage be caused by the carrier's willful
54
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

misconduct. Hence, only the provisions of Art. 22 limiting the carrier's liability and
imposing a monetary ceiling in case of willful misconduct on its part that the carrier cannot Issue: 1) Were the contracts entered into contracts of international transportation? NO 2) IF yes,
invoke. does the RTC have jurisdiction? Did not answer

In this case, the failure of Northwestto deliver their luggage at the designated time and There are then two categories of international transportation, viz., (1) that where the place
place amounted ipso facto to willful misconduct. For willful misconduct to exist, there must of departure and the place of destination are situated within the territories of two High
be a showing that the acts complained of were impelled by an intention to violate the law, Contracting Parties regardless of whether or not there be a break in the transportation or a
or were in persistent disregard of one's rights. It must be evidenced by a flagrantly or transshipment; and (2) that where the place of departure and the place of destination are
shamefully wrong or improper conduct. within the territory of a single High Contracting Party if there is an agreed stopping place
within a territory subject to the sovereignty, mandate, or authority of another power, even
7. Mapa v. CA though the power is not a party to the Convention.

Petitioners Cornelio Mapa and Purita Mapa are both established and respectable members The contracts of transportation in this case are evidenced by the two TWA tickets, On the
of society., while their daughter Carmina was a student in Boston U. While in Bangkok, they basis alone of its provisions, it is obvious that the place of departure and the place of
bought a ticket from Trans-World Airlines (TWA) to go from LA to Chicago (LA-NY- destination are all in the territory of the United States, or of a single High Contracting
BOSTON-ST.LOUIS-CHICAGO) Purita and her daughter went to LA from MANILA (but on Party. The contracts, therefore, cannot come within the purview of the first category
a PAL flight of international transportation. Neither can it be under the second category since there
was NO agreed stopping place within a territory subject to the sovereignty, mandate,
o NOTE: TWA‘s domicile and principal place of business is at KANSAS, or authority of another power.
MISSOURI (USA) The contracts (tickets) were perfected in BANGKOK. The
destination is CHICAGO The Manila-LA flight does not make the whole contract international because the basis of
the FIRST CATEGORY is based on ―the contract made by the parties‖ The Manila-LA flight
Upon arrival at the NY airport to go to Boston, Puritan and Carmina checked in SEVEN is INDEPENDENT of the TWA tickets issued in Bangkok. Moreover, the Manila-LA flight
bags. They were instructed to proceed to gate 35 for boarding. However, they were and the LA-Boston flight were not regarded as an ―undivided carriage‖ or as a ‖single
informed that the flight was really boarding in gate 1. When they reached gate 1, they were operation‖
informed that the flight had just departed. They were told that they could use the same
boarding pass for another flight scheduled to leave in 30 minutes. TC incorrect in dismissing. MAPAs win. Case remanded for trial.

Upon arrival in BOSTON, they only found 3 out of the 7 bags they checked in. However, 8. PAL v CA, Chua Min (CC failed to present baggage check in evidence, therefore it
TWA could NOT find their bags. They were asked to list down the items inside the bags to cannot use WC provisions limiting its liability to an amount per kg)
help with the search. However, the bags still could not be found.
Facts
The Mapas wrote a demand letter so TWA offered transportation credit/cash settlement Chua Min boarded PAL‘s flight from HK to Manila and checked in 4 bags. Upon arrival,
and the Mapas accepted the travel credit. However, TWA disregarded this and unilaterally Chua Min was unable to locate her two bags containing cinematographic films. In
declared the payment of $2.5k as full satisfaction of the claim. response, Chua Min sued Pal for the loss of the baggage (20k value)

THUS, the MAPAS sued TWA in the RTC for damages. TWA filed a motion to dismiss on In its defense, PAL argues that its liability is limited as per the WC and that Chua Min does
the following grounds: not have personality to file the case because it was owned by the Hongkong firm of
"Loong Kee Pen Co., Film Exchange Dept‖
o NO JURISDICTION: accdg to WC, can only file in KANSAS (domicile/principal
place), BANGKOK (perfection) or BOSTON (destination) Issue: May PAL use the Warsaw Convention to limit its liability? NO
o LIMITED LIABILITY: liability limited to $20 per kilo
PAL failed to present the baggage check in evidence. Consequently, it cannot capitalize
On the other hand, MAPAS insist that the WARSAW CONVENTION is not applicable to on the limited liability clause under Article 22 (2) of the Warsaw Convention because of the
their case because of the following: unequivocal condition set forth under the second sentence of Article 4, paragraph 4 that:
o Contracts of carriage did not involve international transportation because their ". . . if the carrier accepts baggage without a baggage check having been delivered, or if the
itinerary was PURELY within the US. baggage check does not contain the particulars set out at (d), (f), and (h) above, the carrier
o Annotation on the ticket ―INT‘L TKT‖ did not make the transportation contract shall not be entitled to avail himself of those provisions of the Convention which exclude or
INTERNATIONAL limit his liability."
TC dismissed for lack of jurisdiction. Thus, Mapas appealed to the SC.
55
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

9. Cathay Pacific v. CA (CC lost passenger‘s bag, he was treated rudely and was given $20 to misconduct on the part of the carrier's employees is found or established, which is
buy clothing for an executive conference) especially the case at bar. In fact, the WC especially provides that:

Doctrine: Art 25(1) The carrier shall not be entitled to avail himself of the provisions of this convention
The WC must not be construed to preclude the operation of the Civil Code and other which exclude or limit his liability, if the damage is caused by his wilfull misconduct or by
pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages such default on his part as, in accordance with the law of the court to which the case is
for violating the rights of its passengers under the contract of carriage, especially if wilfull submitted, is considered to be equivalent to wilfull misconduct."
misconduct on the part of the carrier's employees is found or established
When CATHAY airline misplaced ALCANTARA‘s luggage and failed to deliver it to its
Facts: passenger at the appointed place and time, some special species of injury must have
Tomas Altcantara was a 1st class passenger of Cathay from Manila-HK (flight cx-900) and been caused to him. For sure, the latter underwent profound distress and anxiety, and the
HK-Jakarta (CX-711) The purpose of the trip was to attend a conference with the Director fear of losing the opportunity to fulfill the purpose of his trip. In fact, for want of appropriate
General of Trade of Indonesia. He checked in his luggage containing his clothes and clothings for the occasion brought about by the delay of the arrival of his luggage, to his
documents. embarrassment and consternation respondent Alcantara had to seek postponement of his
pre-arranged conference with the Director General of Trade of the host country.
Upon arrival in Jakarta, he discovered his bag was missing. He was informed that his bag
was left behind in HK. He was offered $20 in convenience money so he can buy his clothes Cathay loses.
while cathay was looking for the bag. When his bag arrived in HK, it was not immediately
delivered to his HOTEL. Cathay instead required that the bag be picked up by a member of 10. Sabena Belgian World Airlines v. CA, Paula San Agustin (passenger‘s bag was lost
the Philippine embassy. TWICE)

Alcantara sued CATHAY for damages due to the breach of contract. He was awarded by Doctrine:
the TC 20k moral, 5k, temperate, 10k exemplary. CA affirmed and increased. Thus, Cathay
appealed, arguing 1) that it was not liable for moral damages and that 2) WC convention Facts
should apply San Agustin was a passenger of Sabena in a CASABLANCA – BRUSSELS, BELGIUM
flight. She was on her way to Manila. Upon arrival in BRUSSELS, she checked in her bags
Issue: 1) Is CATHAY liable for the damages? YES 2) Should the WC operate to limit its liability? containing valuables. Upon arrival in Manila, however, she found out that her bag was
NO missing.

1) Moral Damages Sabena informed San Agustin that her bag was found and the locks were broken for
CATHAY breached its contract of carriage with Alcantara when it failed to deliver his identification. She was assured that her bag would be returned shortly. However, the bag
luggage at the designated place and time, it being the obligation of a common carrier to was lost for the SECOND TIME.
carry its passengers and their luggage safely to their destination, which includes the duty
not to delay their transportation, and the evidence shows that CATHAY acted fraudulently Thus, San Agustin sued Sabena and was awarded actual, moral, exemplary damages. In
or in bad faith. its defense, Sabena argues that San Agustin was guilty of contributory negligence for
leaving her bag even if her flight was not yet confirmed and that WC provisions limiting its
CATHAY was grossly negligent when it failed to deliver the luggage on time. It was liability to $20 per kilo unless a higher value is declared APPLIED.
unaware that Alcantara‘s bags were left behind. Moreover, the CATHAY representative
was indifferent, impatient, rude and insulting. He simply advised Alcantara to buy Issue: Is Sabena liable for damages? Does the WC apply?
anything he wanted. But even that was not sincere because the representative knew
that the passenger was limited only to $20.00 which, certainly, was not enough to Sabena is liable for damages. It was the proximate cause of the loss which occurred while
purchase comfortable clothings appropriate for an executive conference. the bags were in its custody. It is grossly negligent for losing the bag twice.

To compound matters, CATHAY refused to have the luggage of Alcantara delivered to him Since it was grossly negligent, it cannot seek refuge under the limitation on liability
at his hotel; instead, he was required to pick it up himself and an official of the Philippine provision under the WC. Under domestic law and jurisprudence (the Philippines being the
Embassy. THEREFORE, moral and exemplary damages are justified. country of destination), the attendance of gross negligence (given the equivalent of fraud
or bad faith) holds the common carrier liable for all damages which can be reasonably
2) WC LIABILITY attributed, although unforeseen, to the non-performance of the obligation, including
moral and exemplary damages.
The WC must not be construed to 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 wilfull
56
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

of action — an action for damages arising from the misconduct of the airline
11. United Airlines v. Uy employees and the violation of respondent's rights as passenger — clearly is not.

Doctrine: Consequently, insofar as the first cause of action is concerned, Uy‘s failure to file his
If the CC employs DELAYING TACTICS, the 2 year time bar under the WC to file a complaint within the two (2)-year limitation of the Warsaw Convention does not bar his
complaint CANNOT be used by such CC. action since United may still be held liable for breach of other provisions of the Civil
CCs may be held liable for breaches of other provisions of the CC which provide for a Code which prescribe a different period or procedure for instituting the action,
different reglementary period (tort: 4 years) specifically, Art. 1146 thereof which prescribes four (4) years for filing an action
based on torts.
Facts
Uy was a revenue passenger in a United Airlines flight from San Francisco to Manila. In SF, As for UY‘s second cause of action, indeed the travaux preparatories of the Warsaw
he checked in together with his luggage. However, 1 piece was found to be overweight. Convention reveal that the delegates thereto intended the two (2)-year limitation
United Airlines‘ employee rebuked him and told him he should‘ve known that the limit was incorporated in Art. 29 as an absolute bar to suit and not to be made subject to the
70kgs. He was told by the employee in a loud voice to transfer some of his items to his various tolling provisions of the laws of the forum. This therefore forecloses the
other bags. However, the bags were still overweight. application of PH rules on interruption of prescriptive periods.

He offered to pay overweight charges with an MCO (miscellaneous charge order/pre-paid Article 29, par. (2), was intended only to let local laws determine whether an action had
credit) but it was refused. Thus, he paid for the overweight charges. Upon his arrival in been commenced within the two (2)-year period, and within our jurisdiction an action shall
Manila, he discovered that one of his bags had been slashed and its contents were stolen. be deemed commenced upon the filing of a complaint. Since it is indisputable that
respondent filed the present action beyond the two (2)-year time frame his second cause of
On OCT 16, 1989, He wrote United Airlines to complain about what happened and he was action must be barred. Nonetheless, it cannot be doubted that respondent exerted
merely sent a check. In response, he sent 2 more letters (1/4/90 and 10/28/91) demanding efforts to immediately convey his loss to petitioner, even employed the services of
an out of court settlement of 1M through his lawyer, Atty. Ramon Ampil. two (2) lawyers to follow up his claims, and that the filing of the action itself was
delayed because of Cathay’s evasion.
On JUNE 1992, he sued United Airlines for damages due to 1) shabby treatment and 2)
slashing of his bags. United Airlines moved to dismiss the complaint on the ground that Verily, respondent filed his complaint more than two (2) years later, beyond the period of
Uy‘s cause of action has prescribed as per Art. 29 the WC (action must be brought within 2 limitation prescribed by the Warsaw Convention for filing a claim for damages. However, it
years reckoned from the date of arrival at the destination) is obvious that UY was forestalled from immediately filing an action because UNITED
gave him the runaround, answering his letters but not giving in to his demands.
o In response, Uy argues that par. 2 of Art 29 must be reconciled with par 1. Par. 2
states that the method of calculating the period of limitation must is to be o Hence, despite the express mandate of Art. 29 of the Warsaw Convention that an
determined by the law of the court where the case is filed. In this particular case, action for damages should be filed within two (2) years from the arrival at the
he alleges that the period was interrupted because of the 3 letters he sent. place of destination, such rule shall not be applied in the instant case
because of the delaying tactics employed by petitioner airline itself. Thus,
However, TC still dismissed, on the ground of prescription. private respondent's second cause of action cannot be considered as time-
barred under Art. 29 of the Warsaw Convention.
Issue: Has Uy‘s cause of action prescribed? 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. Thus, we have ruled that
the Convention's provisions do not regulate or exclude liability for other breaches of
contract by the carrier or misconduct of its officers and employees, or for some particular or
exceptional type of damage.

Uy is suing on two (2) causes of action: (a) the shabby and humiliating treatment he
received from United‘s employees at the San Francisco Airport which caused him extreme
embarrassment and social humiliation; and, (b) the slashing of his luggage and the loss of
his personal effects.

While his second 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 first cause

57
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

12. Lufthansa v. CA (intentional bumping off is not the ―delay‖ contemplated by the WC) transportation insofar as the contract deals with that part of the transportation which is
performed under his supervision.
Doctrine:
The issuance of a confirmed Lufthansa ticket in favor of Antiporda covering his entire five- (2) In the case of transportation of this nature, the passenger or his representative
leg trip abroad successive carriers serves as proof that Lufthansa, in effect guaranteed that can take action only against the carrier who performed the transportation during
the successive carriers, such as Air Kenya would honor his ticket; assure him of a space which the accident or the delay occurred, save in the case where, by express
therein and transport him on a particular segment of his trip agreement, the first carrier has assumed liability for the whole journey. (Emphasis supplied)

does not contemplate the instance of "bumping-off" but merely of simple delay. THUS it
Facts cannot provide an excuse for Lufthansa as to exculpate it from any liability to Antiporda.
Antiporda was a consultant of ADB. He was then contracted by SGV to be a financial The payment of damages is, thus, deemed warranted by this Court.
specialist for the Development Bank of Malawi in Africa. He was provided a round-trip
economy ticket from MANILA to BLANTYRE. On Sept 17, 1984, LUFTHANSA (airline) Entitled to Moral and Exemplary
issued a ticket for ANTIPORDA‘s flight to BLANTYRE, AFRICA. (Manila-SG-Bombay- Bad faith attended the performance of the contract of carriage, for even while Antiporda
Nairobi-Lilongwe-BLANTYRE) was in Bombay, representatives of Lufthansa already tried to evade liability

While waiting for his connecting flight from Bombay to Nairobi, he was told by MATIAS, o first, by claiming that the contract of carriage between Lufthansa and Antiporda
Lufthansa‘s officer, that his seat going to NAIROBI via AIR KENYA was given to a ―very ceased at Bombay airport, even if Antiporda was holding a Lufthansa ticket for
important person of BOMBAY who was attending a religious function in Nairobi‖ Thus, he the entire five-leg trip;
got stranded and was not able to arrive in NAIROBI as per his schedule.
o second, despite the manager‘s knowledge that Antiporda's seat was allowed to
Thus, ANTIPORDA sued Lufthansa for damages. Lufthansa argues the following 1) since be given to another passenger, he suppressed the information, presenting
AIR KENYA was engaged to transport ANTIPORDA during that particular leg of the trip, it altogether another reason why Antiporda was not listed in the manifest, i.e. that
was merely a ticket-issuing agent and 2) the WC provisions provide that the passenger can Air Kenya Boeing 707 was overbooked, notwithstanding clear proof that
only SUE the AIRLINE that was responsible for the DELAY (Air Kenya) Lufthansa in Manila confirmed his reservation for said flight
.
Issue: Was Lufthansa the proper party to sue? YES Is Lufthansa liable for damages? YES As to exemplary damages, it is clear that Lufthansa, through its representatives in
Bombay, acted in a reckless and malevolent manner in dealing with Antiporda. MATIAS
Liability of Lufthansa maltreated ANTIPORDA by throwing his ticket on his lap and telling him to go to the
basement while carrying his 3 heavy bags.
The SC rejected Lufthansa's theory that from the time another carrier was engaged to
transport Antiporda on another segment of his trip, it merely acted as a ticket-issuing agent 13. British Airways v. CA
in behalf of said carrier. In the very nature of their contract,
Doctrines
Lufthansa is clearly the principal in the contract of carriage with Antiporda and The rule that carriage by plane although performed by successive carriers is regarded as a
remains to be so, regardless of those instances when actual carriage was to be single operation and that the carrier issuing the passenger's ticket is considered the
performed by various carriers. principal party and the other carrier merely subcontractors or agent, is a settled issue.
An agent is also responsible for any negligence in the performance of its function and is
The issuance of a confirmed Lufthansa ticket in favor of Antiporda covering his entire five- liable for damages which the principal may suffer by reason of its negligent act. Hence, the
leg trip abroad successive carriers serves as proof that Lufthansa, in effect guaranteed that Court of Appeals erred when it opined that BA, being the principal, had no cause of
the successive carriers, such as Air Kenya would honor his ticket; assure him of a space action against PAL, its agent or sub-contractor
therein and transport him on a particular segment of his trip.
Facts:
Warsaw Convention On 1989, Mahtani decided to visit his relatives in BOMBAY, INDIA. His friend, Mr. GUMAR
prepared his travel plans and bought a ticket from BRITISH AIRWAYS (MNL-HK-BOMBAY)
Section 2, Article 30 of the Warsaw Convention which provides the following:
o MNL-HK (through PAL) HK – BOM (through BA)
Art. 30 (1). In the case of transportation to be performed by various successive carriers and
falling within the definition set out in the third paragraph of Article I, each carrier who Mahtani checked in his 2 bags in the PAL counter. When he arrived in BOMBAY, he found
accepts passengers, baggage, or goods shall be subject to the rules set out in the out that his luggage was missing and that upon inquiry from BA representatives, he was
convention, and shall be deemed to be one of the contracting parties to the contract of told that the same might have been diverted to LONDON

58
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Back in the PH, Mahtani sued BA and Mr. GUMAR for damages. BA also filed a 3 rd party negligence was the proximate cause of Mahtani's unfortunate experience, instead of totally
complaint against PAL. PAL denies any liability. TC held BA liable for actual damages both absolving PAL from any liability.
for the CONTENTS of the luggage and the value of the LUGGAGE itself.
14. American Airlines v. CA, Democrito Mendoza (AA exchanged the unused ticket with its own
o BA in its appeal, argues that the WC limiting its liability for lost luggage should be ticket. Because of this, he became an agent of SGA)
applicable and that the 3rd party complaint should not be dismissed.
Doctrine:
Issue: Should the liability be limited? Should the 3rd party complaint be dismissed? 4 PLACES where ACTION FOR DAMAGES may be BROUGHT:
o 1) domicile of the carrier;
Limited Liability Defense under WC subject to waiver o 2) the carrier‘s principal place of business;
o 3) the place where the carrier has a place of business through which the contract
It is the position of BA that there should have been no separate award for the luggage and was made;
the contents thereof since Mahtani failed to declare a separate higher valuation for the o 4) the place of destination
luggage, and therefore, its liability is limited, at most, only to the amount stated in the ticket.
Facts:
Though, admittedly, in a contract of air carriage a declaration by the passenger of a higher Mendoza bought conjunction tickets from Singapore Airlines for Manila-SG-Athens-
value is needed to recover a greater amount. Article 22(1) of the Warsaw Convention Lamaca-Rome-Turin-Zurich-Geneva-Copenhagen-NY. AMERICAN AIRLINES was not a
provides for this participating airline any of the segments

o American jurisprudence provides that an air carrier is not liable for the loss of Mendoza decided to forego his trip to Copenhagen and go straight to NY so he exchanged
baggage in an amount in excess of the limits specified in the tariff which was filed the unused tickets for a one-way ticket from GENEVA-NY with AA. AA in turn, issued its
with the proper authorities, such tariff being binding, on the passenger regardless own ticket to Mendoza. It also submitted the unused portion to the IATA clearing house.
of the passenger's lack of knowledge thereof or assent thereto. This doctrine is
recognized in this jurisdiction. However, at the GENEVA airport, AA‘s security officers prevented him from boarding the
plane and was only allowed to enter after all the passengers already boarded the plane.
Notwithstanding the foregoing, the SC has ruled against blind reliance on adhesion
contracts where the facts and circumstances justify that they should be disregarded. THUS, Mendoza sued AA for damages in RTC Cebu. In response, AA filed a motion to
Moreover, the defense of limited liability is subject to WAIVER. dismiss, arguing that the PH courts did not have jurisdiction to entertain the claim. This is
because the ticket it issued to Mendoza in GENEVA was a separate and distinct contract of
o In this case, BA had waived the defense of limited liability when it allowed carriage from that entered into by Mendoza and SG airlines in MANILA.
Mahtani to testify as to the actual damages he incurred due to the misplacement
of his luggage, without any objection. Moreover, it even cross-examined Issue: Can the contract of transportation between MENDOZA and AA be considered as a single
MAHTANI. operation and part of the contract of transportation entered into by MENDOZA with SG AIR
(thereby granting PH courts jurisdiction)?
As to 3rd party complaint
The contract of carriage between MENDOZA and Singapore Airlines although performed
3rd party complaint should NOT have been dismissed. Mahtani is entitled to damages from by different carriers under a series of airline tickets, including that issued by AA, constitutes
BA, in view of their contract of carriage. Yet, BA and PAL are blaming each other as to who a single operation.
is at fault so BA wants to sue PAL.
Members of the IATA are under a general pool partnership agreement wherein they
In resolving this issue, it is worth observing that the contract of air transportation was act as agent of each other in the issuance of tickets to contracted passengers to
exclusively between Mahtani and BA, the latter merely endorsing the Manila to Hongkong boost ticket sales worldwide and at the same time provide passengers easy access to
leg of the former's journey to PAL, as its subcontractor or agent. airlines which are otherwise inaccessible in some parts of the world

o Since the instant petition was based on breach of contract of carriage, Mahtani A member airline which enters into a contract of carriage consisting of a series of trips to be
can only sue BA alone, and not PAL, since the latter was not a party to the performed by different carriers is authorized to receive the fare for the whole trip and
contract. HOWEVER, this is not to say that PAL is relieved from any liability due through the required process of interline settlement of accounts by way of the IATA clearing
to any of its negligent acts. This is because PAL, as agent, may also be held house an airline is duly compensated for the segment of the trip serviced.
liable for its own negligence.
o Thus, when AA accpted the unused portion of the conjunction tickets, entered it
Accordingly, the court should have allowed the 3rd party complaint. It is but logical, fair and in the IATA clearing house and undertook to transport MENDOZA over the route
equitable to allow BA to sue PAL for indemnification, if it is proven that the latter's covered by the unused portion of the conjunction tickets, i.e., Geneva to New
59
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

York, AA tacitly recognized its commitment under the IATA pool Issue: IS CAL liable even if it is only a ticket issuing carrier? Is it liable for damages? YES to
arrangement to act as agent of the principal contracting airline, Singapore both
Airlines, as to the segment of the trip AA agreed to undertake.
First reason: Guarantee of ticket-issuing carrier
o As such, AA thereby assumed the obligation to take the place of the carrier Yes. CAL is liable even if PAL was the one that would perform/had performed the contract
originally designated in the original conjunction ticket. The new ticket was of carriage. The issuance of a confirmed CAL ticket in favor of CHIOK guaranteed that the
simply a replacement for the unused portion of the conjunction ticket, both tickets carrier (PAL) would honor his ticket, assure him of space and transport him.
being for the same amount of US$ 2,760 and having the same points of
departure and destination. By constituting itself as an agent of the principal Second reason: “single operation”, PAL as agent and CAL as principal
carrier AA’s undertaking should be taken as part of a single operation Moreover, it is significant to note that the contract of air transportation was between CAL
under the contract of carriage executed by the private respondent and and CHIOK, with CAL endorsing to PAL the Hong Kong-to-Manila segment of the
Singapore Airlines in Manila. journey. Such contract of carriage has always been treated in this jurisdiction as a single
operation.
THUS, the third option of MENDOZA under Art 28 (1) of the Warsaw Convention e.g., to
sue in the place of business of the carrier wherein the contract was made, is therefore, o In this particular case the ticket-issuing airline is the PRINCIPAL (CAL) in a
Manila, and Philippine courts are clothed with jurisdiction over this case. contract of carriage, while the endorsee-airline is the AGENT (PAL). PAL
o We note that while this case was filed in Cebu and not in Manila the issue of therefore acted as agent of CAL, and PAL‘s bad faith can also CAL liable even if
venue is no longer an issue as AA is deemed to have waived it when it presented it was only a ticket-issuer for the HK-Manila trip.
evidence before the trial court.
Damages:
15. China Airlines v. Daniel Chiok
It is relevant to point out that the employees of PAL were utterly insensitive to his need to
Doctrine: be in Manila on November 25, 1981, and to the likelihood that his business affairs in the
Ticket issuing carrier guarantees to the passenger that the endorsee carrier would honor city would be jeopardized because of a mistake on their part.
the ticket, assure him of space, and transport him,
It was that mistake that had caused the omission of his name from the passenger list
Facts: despite his confirmed flight ticket. By merely looking at his ticket and validation sticker, it is
Chiok purchased from China Airlines (CAL) a ticket covering Manila-Taipei-HK-Manila. The evident that the glitch was the airline‘s fault. However, no serious attempt was made by
ticket was exclusively endoreseable to PAL. Chiok took his trip from Manila to Taipei using PAL to secure the all-important transportation of respondent to Manila on the
the CAL ticket. following day. To make matters worse, PAL allowed a group of non-revenue passengers,
who had no confirmed tickets or reservations, to board the re-booked flight.
Upon arriving in Taipei, he went to the CAL office and confirmed his HK-Manila trip on
board a PAL flight. When he reached HK, he confirmed his flight back to Manila. However, Since the status of CHIOK in the 1st flight was "OK," as a matter of right testified to by
the flight got cancelled due to a typhoon. PAL‘s witness, he should have been automatically transferred to and allowed to board
Flight 307 the following day. Clearly resulting from negligence on the part of PAL was its
PAL then announced that all the passengers on the cancelled flight were automatically claim that his name was not included in its list of passengers for the first flight and,
re-booked in the next flight scheduled to leave on the next day. Chiok informed PAL consequently, in the list of the replacement flight P. Since he had secured confirmation
that he needed to be in Manila on NOV 25, 1981 for a business meeting. of his flight -- not only once, but twice -- by personally going to the carrier’s offices
where he was consistently assured of a seat thereon -- PAL’s negligence was so
However, on the day of the rebooked flight, Chiok was not allowed to board by CARMEN, gross and reckless that it amounted to bad faith.
PAL‘s terminal supervisor, as he did not appear in the list of passengers. To make matters
worse, one of Chiok‘s bags containing cosmetics worth $14k HKD was missing. When THUS moral and exemplary damages should be awarded (note: only CAL held liable, as
Chiok went to PAL‘s HK office, he was told that his name was actually on the list. PAL was not impleaded)

Thus, Chiok had no choice but to buy another CAL ticket. It was again CARMEN who
attended him at the check-in counter (because the CAL ticket was booked on board a PAL
flight) At this time, Chiok already placed his clutch bag on top of the counter. Thereafter,
CARMEN directed PAL personnel to transfer counters and in the ensuing commotion,
Chiok lost his clutch bag containing money and jewelry (tie clip with a garnet birthstone)

Thus, CHIOK sued PAL and CAL for damages, alleging the failure of PAL to transport him
on the rebooked flight and for the actions of CARMEN in ridiculing and humiliating him.
60
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

16. Federal Express v. American Home (condition precedent not complied with) 17. PAL v. Savillo (late for golf tournament, emotional harm not covered by the WC)

Doctrine: Doctrine:
Notice in accordance with the W/C or in accordance with the stipulations on an AIRWAY The emotional harm suffered by a passenger as an incident of a breach of a contract of
BILL. carriage should be distinguished from the actual damages which resulted from the same
incident.
Facts: Actual damages caused by the delay is covered by the W/C reglementary period for filing a
SMITHKLINE of Nebraska, USA, delivered to Burlington Air Express, an agent of Federal claim while the emotion harm suffered by the passenger as an incident of the delay (breach
Express (FEDEX) a shipment of 109 cartons of veterinary biologicals for delivery to of contract) is not covered by the W/C. It is governed by the prescriptive period on torts
SMITHKLINE in Makati. The shipment was covered BURLINGON AIRWAYBILL (AWB)
with the words ―refrigerate when not in transit‖ and ―perishable Facts:
Grino was invited to participate in the 1993 ASEAN Seniors Golf tournament in Jakarta.
The next day, BURLINGTON transferred the cargo to FEDEX, which transported it to Thus, he purchased a MNL-SG-JAKARTA-SG-Manila. PAL would carry him from MNL-Sg
Manila. The shipment was stored in a warehouse of CARGOHAUS. However, it was while Singapore Airlines would carry him from SG-Jakarta.
discovered that they were stored only in a room with 2 air-conditioners running to cool the
lace. As a result, the biologicals (vaccines) deteriorated. As a consequence, SMITHKLINE Upon arrival in SG, they proceeded to check-in for their flight to Jakarta. However, SG
declared a total loss and claimed from the insurer. Airlines rejected his ticket because it was not endorsed by PAL. He got stranded for a few
hours and was forced to buy tickets from GARUDA AIRLINES. He eventually arrived in
The insurer, AMERICAN HOME, then sued FEDEX and CARGOHAUS for negligence. TC Jakarta but he got sick so he was unable to play in the tournament
found them solidarily liable
When he got back, he sent a demand letter to PAL and to SGA. Both airlines denied liability
FEDEX maintains that 1) American Home does not have personality to sue and 2) the and blamed each other. He sued PAL and SGA but it filed a motion to dismiss on the
claim has prescribed because the consignee (SMITHKLINE) never filed a written ground of PRESCRIPTION.
claim/demand within the period prescribed by the warsaw convention and/or in the airway
bill. Issue: Has the claim prescribed? No.

Issue: Has the claim prescribed? Yes, because no notice was filed/given In this case, GRINO‘s complaint alleged that both PAL and SGA were guilty of gross
negligence which resulted in his being subject to humiliation, embarrassment, mental
The filing of a claim with the carrier within the time limitation therefor constitutes a condition anguish, etc.
precedent to the accrual of a right of action against a carrier for loss of or damage to the
goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it The emotional harm suffered by GRINO as a result of having been unreasonably and
fails to do so, no right of action against the carrier can accrue in favor of the former. unjustly prevented from boarding the plane should be distinguished from the actual
The aforementioned requirement is a reasonable condition precedent; it does not damages which resulted from the same incident. Under the Civil Code provisions on
constitute a limitation of action tort, such emotional harm gives rise to compensation where gross negligence or malice is
proven. THEREFORE, the claim is not barred by the 2 year period under the WC because
When an airway bill -- or any contract of carriage for that matter -- has a stipulation that it is covered by the rules on TORT
requires a notice of claim for loss of or damage to goods shipped and the stipulation is not
complied with, its enforcement can be prevented and the liability cannot be imposed Had the present case merely consisted of claims incidental to the airlines' delay in
on the carrier. To stress, notice is a condition precedent, and the carrier is not liable transporting their passengers, the private respondent's Complaint would have been time-
if notice is not given in accordance with the stipulation. Failure to comply with such a barred under Article 29 of the Warsaw Convention. However, the present case involves a
stipulation bars recovery for the loss or damage suffered. special species of injury resulting from the failure of PAL and/or Singapore Airlines
to transport private respondent from Singapore to Jakarta - the profound distress,
Being a condition precedent, the notice must precede a suit for enforcement.In the fear, anxiety and humiliation that private respondent experienced when, despite
present case, there is neither an allegation nor a showing of AMERICAN PAL's earlier assurance that Singapore Airlines confirmed his passage, he was
HOME/SMITHKLINE‘s compliance with this requirement within the prescribed period. While prevented from boarding the plane and he faced the daunting possibility that he
they may have had a cause of action then, they cannot now enforce it for their failure to would be stranded in Singapore Airport because the PAL office was already closed.
comply with the aforesaid condition precedent.

FEDEX freed from liability

61
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

18. Lhuillier v. British Airways

Doctrine:

Facts:
Lhuillier was a passenger of BA in its flight from LONDON-ROME. Once on board, she
requested one of the flight attendants (HALLIDAY) to assist her in placing her hand-carried
luggage in the overhead bin. HALLIDAY refused and sarcastically remarked that ―If I were
to help all 300 passengers in this flight, I would have a broken back!‖

Moreover, once the plane was about to land, another attendant, KERRIGAN, singled her
out from among all the passengers in the business class section to lecture on plane safety,
making her look stupid.

Upon arrival in ROME, Lhuiller complaint to the ground manager but was told that the
attendants were ―only doing their job‖ THUS, LHUILLER filed a claim for damages (moral,
nominal and exemplary. BA filed a motion to dismiss on the ground of lack of jurisdiction
because only LONDON or ROME has jurisdiction. RTC granted the motion to dismiss.
Thus, Lhuiller appealed.

Issue: Does the court have jurisdiction? NO.

The Warsaw Convention applies because the air travel/where the alleged tortious conduct
occurred, was between the UK (London) and Italy, which are both signatories to the
Warsaw Convention.

In the case at bench, LHUILLER‘s place of departure was London, United Kingdom while
her place of destination was Rome, Italy. As such, the transport of the petitioner is deemed
to be an "international carriage" within the contemplation of the Warsaw Convention.

Since the warsaw convention applies, LHUILLER only had FOUR options (domicile of
carrier, principal business of carrier, branch of carrier where contract was made, court of
place of destination)

o ROME, ITALY: because the ticket was issued there and because that was the
destination.
o LONDON: BA‘s principal place of business and domcile of CC

HENCE, the complaint should be dismissed.

62
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 10 CODE OF COMMERCE [AGBAYANI BASED] Art. 350, in a nutshell enumerates the contents of a bill of lading. However, it has been held
that the form of a bill of lading is not material. As long as it contains an acknowledgement
TITLE VII – Commercial Contracts for Transportation Overland by the carrier of the receipt of goods for transportation, it is a bill of lading.

ARTICLE 349. A contract of transportation by land or water ways of any kind shall be ARTICLE 351. In transportation made by railroads or other enterprises subject to regulation
considered commercial: rate and time schedules, it shall be sufficient for the bills of lading or the declaration of shipment
furnished by the shipper to refer, with respect to the cost, time and special conditions of the
1. When it has for its object merchandise or any article of commerce. carriage, to the schedules and regulations the application of which he requests; and if the
2. When, whatever its object may be, the carrier is a merchant or is habitually engaged in shipper does not determine the schedule, the carrier must apply the rate of those which appear
transportation for the public. to be the lowest, with the conditions inherent thereto, always including a statement or reference
to in the bill of lading which he delivers to the shipper.
Because of the passage of the civil code, there is now no distinction between a
transportation contract of a CC under the civil code and under the code of commerce. This article concerns the contents of a bill of lading. It provides that circumstances relative
However, the civil code did NOT repeal the code of commerce provisions on overland to price, term, and conditions of carriage may be omitted and simple reference to be made
transportation to the regulations under which the transportation is to be made.
Instead, the code of commerce provisions are SUPPLETORY to the new civil code.
As held in Mendoza v. PAL, a contract of transportation by air may also be regarded as However, it is provided her that if the shipper does not determine the schedule, the carrier
commercial. This was only not included in the code of commerce because at the time of its must apply the rate that appears to be the lowest.
promulgation, air transportation was not yet known.
ARTICLE 352. The bills of lading, or tickets in cases of transportation of passengers, may be
ARTICLE 350. The shipper as well as the carrier of merchandise or goods may mutually diverse, some for persons and others for baggage; but all of them shall bear the name of the
demand that a bill of lading be made, stating: 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
1. The name, surname and residence of the shipper. be considered necessary for their easy identification.
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 This article provides that the bills of lading (for goods) and tickets (for passengers) may be
to be sent or whether they are to be delivered to the bearer of said bill. diverse.
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. Common requirement for bills of lading and tickets:
5. The cost of transportation.
6. The date on which shipment is made. o It should bear the name of the carrier
7. The place of delivery to the carrier. o It should bear the date of shipment/transportation
8. The place and the time at which delivery to the consignee shall be made. o Date of shipment
9. The indemnity to be paid by the carrier in case of delay, if there should be any agreement o Points of departure and arrival
on this matter. o The cost
o IF baggage the number and weight of the packages.
What is a bill of lading?

o It is a written acknowledgement of a receipt of goods


o It is an agreement to transport and to deliver the goods at a specified place to a
person named or on his order.
o Like warehouse receipts, it is a document of title, and if negotiable in form, they
can constitute a negotiable document of title (e.g. when it is stated that the goods
referred to therein will be delivered to the bearer, or to the order of any person
named in the document)

What are the functions of a bill of lading?

o It is a contract
o It is a receipt
o It is a symbol of the goods covered by it /represents the goods

63
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

ARTICLE 353. The legal evidence of the contract between the shipper and the carrier shall be bill of lading. (e.g. it objected to transport the goods because it appeared to be unfit for
the bills of lading, by the contents of which the disputes which may arise regarding their transportation)
execution and performance shall be decided, no exceptions being admissible other than those of
falsity and material error in the drafting. 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
After the contract has been complied with, the bill of lading which the carrier has issued shall be investigation in the presence of witnesses, with the shipper or consignee in attendance.
returned to him, and by virtue of the exchange of this title with the thing transported, the If the shipper or consignee who has to be cited does not attend, the examination shall be made
respective obligations and actions shall be considered cancelled, unless in the same act the before a notary, who shall prepare a memorandum of the result of the investigation, for such
claim which the parties may wish to reserve be reduced to writing, with the exception of that purposes as may be proper.
provided for in Article 366.
If the declaration of the shipper should be true, the expense occasioned by the examination and
In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by that of carefully repacking the packages shall be for the account of the carrier and in a contrary
the carrier, because of its loss or of any other cause, he must give the latter a receipt for the case for the account of the shipper.
goods delivered, this receipt producing the same effects as the return of the bill of lading.
If it seems that the shipper lied about what he was going to ship, the carrier may examine
Emphasize the package (open it)

The bill of lading is the legal evidence of the contract between the shipper and carrier. If However, examination must be made either in the presence of the shipper or consignee or
there is controversy regarding the execution or performance, no other evidence is if both are not present, in the presence of a notary.
admissible.
ARTICLE 358. If there is no period fixed for the delivery of the goods the carrier shall be bound
EXCEPTION: 1) FALSITY and 2) MATERIAL ERROR in DRAFTING (in other words, in to forward them in the first shipment of the same or similar goods which he may make point
these cases, other evidence may be introduced to explain/vary the terms of the bill of where he must deliver them; and should he not do so, the damages caused by the delay should
lading) be for his account.

The consignee must return the bill of lading when the goods consigned are delivered to ARTICLE 359. If there is an agreement between the shipper and the carrier as to the road over
him. If the consignee cannot return the B/L, then he must issue a receipt. It has the same which the conveyance is to be made, the carrier may not change the route, unless it be by
effect as returning the B/L. 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
ARTICLE 354. In the absence of a bill of lading, disputes shall be determined by the legal which may have been stipulated for such case.
proofs which the parties may present in support of their respective claims, according to the
general provisions established in this Code for commercial contracts. 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
A contract of transportation is a consensual contract. Hence, even in the absence of a bill formal proof thereof.
of lading, it does not exclude the existence of the contract of transportation.
ARTICLE 360. The shipper, without changing the place where the delivery is to be made, may
ARTICLE 355. The responsibility of the carrier shall commence from the moment he receives change the consignment of the goods which he delivered to the carrier, provided that at the time
the merchandise, personally or through a person charged for the purpose, at the place indicated of ordering the change of consignee the bill of lading signed by the carrier, if one has been
for receiving them. issued, be returned to him, in exchange for another wherein the novation of the contract
appears.
Same principle as that of Art 1736. Basically, responsibility lasts until the goods are
delivered to the consignee personally or to a person authorized to receive such goods. The expenses which this change of consignment occasions shall be for the account of the
shipper.
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 The shipper may tell the carrier that the goods be delivered to someone else other than the
transport them, being exempt from all responsibility if its objections, is made to appear in the bill one named in the bill of lading. The carrier must sign this. However, the shipper must return
of lading. to the carrier the B/L and the carrier must make a new one.

If the carriage is to be made by railway, and the shipper insists that his goods that appear
to be unfit for transportation be transported, then the CC is still obliged to transport them.
HOWEVER, the CC shall be exempt from any responsibility if its objections appear on the

64
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

ARTICLE 361. The merchandise shall be transported at the risk and venture of the shipper, if ARTICLE 364. If the effect of the damage referred to in Article 361 is merely a diminution in
the contrary has not been expressly stipulated. 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.
As a consequence, all the losses and deteriorations which the goods may suffer during the
transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of ARTICLE 365. If, in consequence of the damage, the goods are rendered useless for sale and
the goods, shall be for the account and risk of the shipper. consumption for the purposes for which they are properly destined, the consignee shall not be
bound to receive them, and he may have them in the hands of the carrier, demanding of the
Proof of these accidents is incumbent upon the carrier. latter their value at the current price on that day.

Is this article consistent with Art 1735? 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
Yes. When the codal says ―at the risk and venture of the shipper‖, it simply means that the consignee shall receive those which are sound, this segregation to be made by distinct and
shipper will suffer for the loss/deterioration/destruction if the same was due to fortuitous separate pieces and without dividing a single object, unless the consignee proves the
event, force majeure and inherent nature/defect of the goods. impossibility of conveniently making use of them in this form.

The presumption of negligence in case of L/D/D on the part of the carrier/shipowner still The same rule shall be applied to merchandise in bales or packages, separating those parcels
stands. which appear sound.

ARTICLE 362. Nevertheless, the carrier shall be liable for the losses and damages resulting 1st par: If apples were supposed to be delivered to the consignee and during the voyage,
from the causes mentioned in the preceding article if it is proved, as against him, that they arose these apples were damaged, then the consignee may demand that the carrier pay their
through his negligence or by reason of his having failed to take the precautions which usage has value at the current price on the day of delivery. So if the apples were priced at PHP10 a
established among careful persons, unless the shipper has committed fraud in the bill of lading, crate, and 10 crates were damaged, then the carrier must pay PHP100
representing the goods to be of a kind or quality different from what they really were.
2nd par: If some make it and some don‘t, then the consignee may choose to abandon the
If, notwithstanding the precautions referred to in this article, the goods transported run the risk of damaged goods and accept the ones in good condition.
being lost, on account of their nature or by reason of unavoidable accident, there being no time
for their owners to dispose of them, the carrier may proceed to sell them, placing them for this ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise, the claim
purpose at the disposal of the judicial authority or of the officials designated by special against the carrier for damage or average be found therein upon opening the packages, may be
provisions. made, provided that the indications of the damage or average which gives rise to the claim
cannot be ascertained from the outside part of such packages, in which case the claim shall be
The carrier can still be held liable even if the loss was due to FE/inherent nature effect if it admitted only at the time of receipt.
is proven that it could have avoided the injury with the exercise of extraordinary diligence
(failure to take precautions) After the periods mentioned have elapsed, or the transportation charges have been paid, no
claim shall be admitted against the carrier with regard to the condition in which the goods
2nd paragraph provides that the carrier may minimize injury by selling the goods transported transported were delivered.

ARTICLE 363. Outside of the cases mentioned in the second paragraph of Article 361, the Emphasize
carrier shall be obliged to deliver the goods shipped in the same condition in which, according to
the bill of lading, they were found at the time they were received, without any damage or This article speaks of conditions precedent for the consignee to sue the carrier (cause
impairment, and failing to do so, to pay the value which those not delivered may have at the of action)
point and at the time at which their delivery should have been made. If the damage is ascertainable only by opening the package, the claim against the carrier
must be made within 24 hours following the delivery of the merchandise
If those not delivered form part of the goods transported, the consignee may refuse to receive If the damage is ascertainable by just looking at the package, the claim for damages
the latter, when he proves that he cannot make use of them independently of the others. must be made at the time of receipt.

2nd paragraph: it may happen that a part of a shipment may be delivered but a part may
have been destroyed during the voyage. In such a case, the consignee may refuse to
receive the shipment that made it if he cannot make use of it independently.
o Example: S contracted C to ship 10 different engine parts for the construction of
a car engine. Only 5 were delivered to the consignee. The consignee may refuse
to accept the whole shipment because he can‘t make use of the remaining 5
parts without the others.
65
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

ARTICLE 367. If doubts and disputes should arise between the consignee and the carrier with property, and to what this Code established as to the manner and form of effecting seizures and
respect to the condition of the goods transported at the time their delivery to the former is made, attachments against said companies.
the goods shall be examined by experts appointed by the parties, and, in case of disagreement,
by a third one appointed by the judicial authority, the results to be reduced to writing; and if the ARTICLE 373. The carrier who makes the delivery of the merchandise to the consignee by
interested parties should not agree with the expert opinion and they do not settle their virtue of combined agreements or services with other carriers shall assume the obligations of
differences, the merchandise shall be deposited in a safe warehouse by order of the judicial those who preceded him in the conveyance, reserving his right to proceed against the latter if he
authority, and they shall exercise their rights in the manner that may be proper. was not the party directly responsible for the fault which gave rise to the claim of the shipper or
consignee.
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 The carrier who makes the delivery shall likewise acquire all the actions and rights of those who
receive them; and if he does not do so, he shall be liable for the damages which may be caused preceded him in the conveyance.
thereby.
The shipper and the consignee shall have an immediate right of action against the carrier who
ARTICLE 369. If the consignee cannot be found at the residence indicated in the bill of lading, executed the transportation contract, or against the other carriers who may have received the
or if he refuses to pay the transportation charges and expenses, or if he refuses to receive the goods transported without reservation.
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 However, the reservation made by the latter shall not relieve them from the responsibilities which
prejudice to third parties with a better right. they may have incurred by their own acts.

ARTICLE 370. If a period has been fixed for the delivery of the goods, it must be made within The article refers to a case where several carriers successively transport the goods. If A
such time, and, for failure to do so, the carrier shall pay the indemnity stipulated in the bill of ships apples in CARRIER A (from Manila to Cebu) and CARRIER B will transport the
lading, neither the shipper nor the consignee being entitled to anything else. goods from Cebu to Davao, CARRIER B will assume responsibility to the shipper.
However, CARRIER B may go after CARRIER A if CARRIER A was the one actually at
If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of lading, the fault. CARRIER B may also go after the shipper if the shipper was at fault.
carrier shall be liable for the damages which the delay may have caused.
ARTICLE 374. The consignees to whom the shipment was made may not defer the payment
ARTICLE 371. In case of delay through the fault of the carrier, referred to in the preceding of the expenses and transportation charges of the goods they receive after the lapse of twenty-
articles, the consignee may leave the goods transported in the hands of the former, advising him four hours following their delivery; and in case of delay in this payment, the carrier may demand
thereof in writing before their arrival at the point of destination. the judicial sale of the goods transported in an amount necessary to cover the cost of
transportation and the expenses incurred.
When this abandonment takes place, the carrier shall pay the full value of the goods as if they
had been lost or mislaid. 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
If the abandonment is not made, the indemnification for losses and damages by reason of the the moment of their delivery.
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 This special right shall prescribe eight days after the delivery has been made, and once
other cases in which this indemnity may be due. prescribed, the carrier shall have no other action than that corresponding to him as an ordinary
creditor.
The consignee may abandon the goods transported in case of delay of delivery. However,
it must be made between the time the fault of the carrier produces a delay and the arrival of This article creates a lien in favor of the carrier over the goods transported. However, the 8
the goods at the place of delivery. In case the consignee abandons, the carrier must pay day period from delivery is now 30 days.
the full value of the goods.
ARTICLE 376. The preference of the carrier to the payment of what is owed him for the
ARTICLE 372. The value of the goods which the carrier must pay in cases if loss or transportation and expenses of the goods delivered to the consignee shall not be cut off by the
misplacement shall be determined in accordance with that declared in the bill of lading, the bankruptcy of the latter, provided it is claimed within the eight days mentioned in the preceding
shipper not being allowed to present proof that among the goods declared therein there were article.
articles of greater value and money.
ARTICLE 377. The carrier shall be liable for all the consequences which may arise from his
Horses, vehicles, vessels, equipment and all other principal and accessory means of failure to comply with the formalities prescribed by the laws and regulations of the public
transportation shall be especially bound in favor of the shipper, although with respect to railroads administration, during the whole course of the trip and upon arrival at the point of destination,
said liability shall be subordinated to the provisions of the laws of concession with respect to the except when his failure arises from having been led into error by falsehood on the part of the

66
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

shipper in the declaration of the merchandise. If the carrier has acted by virtue of a formal order ARTICLE 587. The ship agent shall also be civilly liable for the indemnities in favor of third
of the shipper or consignee of the merchandise, both shall become responsible. persons which may arise from the conduct of the captain in the care of the goods which he
loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all
ARTICLE 378. Agents for transportation shall be obliged to keep a special registry, with the her equipments and the freight it may have earned during the voyage.
formalities required by Article 36, in which all the goods the transportation of which is undertaken
shall be entered in consecutive order of number and dates, with a statement of the Art. 587 includes the SHIP OWNER.
circumstances required in Article 350 and others following for the respective bills of lading.
SHIP OWNER and SHIP AGENT are liable for the following:
ARTICLE 379. The provisions contained in Articles 349 and following shall be understood as
equally applicable to those who, although they do not personally effect the transportation of the o For the acts of the captain
merchandise, contract to do so through others, either as contractors for a particular and definite o For contracts entered into by captain for repair
operation, or as agents for transportations and conveyances. o For damages in favor of 3rd persons which may arise from the conduct of the
captain in the care of the goods transported, as well as of the safety of
In either case they shall be subrogated in the place of the carriers themselves, with respect to passengers
the obligations and responsibility of the latter, as well as with regard to their rights.
The liability of a ship agent/owner is limited to the value of the vessel or its insurance in
(Articles 573-651) view of the real and hypothecary nature of maritime law. This is clear from the right of
the ship agent to abandon the vessel with all his equipment and the freightage
ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by earned during the voyage. However, the limited liability under this article is NOT
any of the means recognized by law. The acquisition of a vessel must appear in a written applicable when NO abandonment is made.
instrument, which shall not produce any effect with respect to third persons if not inscribed in the
registry of vessels. The doctrine of limited liability applies in situations where the fault or negligence is
imputed to the captain. If it is alleged that the shipowner was at fault, then the doctrine of
The ownership of a vessel shall likewise be acquired by possession in good faith, continued for limited liability is inapplicable.
three years, with a just title duly recorded. In the absence of any of these requisites, continuous
possession for ten years shall be necessary in order to acquire ownership. EXCEPTIONS to LIMITED LIABILITY RULE (when it will not apply)
A captain may not acquire by prescription the vessel of which he is in command. o Expenses for repairs of the vessel made PRIOR to the loss of the vessel
rd
o Workmen‘s Compensation claims
The acquisition of a vessel must be registered so that it may bind 3 parties. o Where the vessel is insured
o Where the injury or death to a passenger is due either to the fault of the ship
When the code speak of vessels, they refer solely and exclusively to merchant ships. owner, or to the concurring negligence of the ship owner and the captain
These include vessels which are engaged in the transportation of passengers and goods
from one port to another. ARTICLE 588. Neither the shipowner nor the ship agent shall be liable for the obligations
contracted by the captain, if the latter exceeds the powers and privileges pertaining to him by
o However, vessels such as river boats, and those carrying passengers from ship reason of his position or conferred upon him by the former.
to shore must be governed by the Civil Code. They are not vessels under the
Code of Commerce (see Lopez v. Duruelo and Yu Con v. Ipil below) Nevertheless, if the amounts claimed were invested for the benefit of the vessel, the
responsibility therefor shall devolve upon its owner or agent.
Vessels are considered personal property.
Shipowner/agent not liable for obligations contracted by the captain if he exceeds his
ARTICLE 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain authority, unless the amounts claimed were invested for the benefit of the vessel.
and for the obligations contracted by the latter to repair, equip, and provision the vessel,
provided the creditor provides that the amount claimed was invested for the benefit of the same. However, this rule is inapplicable to carriage of passengers. Under Art 1759, the shipowner
is liable for the death/injuries to the passengers which are caused by the negligence or
By ship agent is understood the person entrusted with provisioning or representing the vessel in wilful acts of his employees although such employees may have acted beyond the scope of
the port in which it may be found. their authority/in violation of the orders of the ship owner.

Who is the ship agent? It is the person undertaking the voyage. There can be one ship
owner and many ship agents. For example, a shipowner can be based in JAPAN. But he
can have ship agents in DIFFERENT COUNTRIES.

67
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

ARTICLE 609. Captains, masters or patrons of vessels must be Filipinos, have legal capacity to ARTICLE 618. The captain shall be civilly liable to the ship agent, and the latter to the third
contract in accordance with this code, and prove the skill, capacity, and qualifications necessary persons who may have made contracts with the former;
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 1. For all the damages suffered by the vessel and its cargo by reason of want of skill or
the position. negligence on his part. If a misdemeanor or crime has been committed, he shall be liable in
accordance with the Penal Code.
If the owner of a vessel desires to be the captain thereof, without having the legal qualifications
therefor, he shall limit himself to the financial administration of the vessel, and shall entrust the 2. For all the thefts committed by the crew, reserving his right of action against the guilty parties.
navigation to a person possessing the qualifications required by said ordinances and
regulations. 3. For the losses, fines, and confiscations imposed an account of violation of customs, police,
health, and navigation laws and regulations.
3 functions of a captain:
o General agent of the shipowner 4. For the losses and damages caused by mutinies on board the vessel or by reason of faults
o Technical director of the vessels committed by the crew in the service and defense of the same, if he does not prove that he
o Represents the government of the country under whose flag he navigates made timely use of all his authority to prevent or avoid them

Select Duties of captain (before, during and after arrival) 5. For those caused by the misuse of the powers and the non-fulfillment of the obligations
o To have a copy of the code of commerce on board pertaining to him in accordance with Articles 610 and 612.
o To remain constantly on board the vessel with the crew while the cargo is being
taken on board 6. For those arising by reason of his going out of his course or taking a course which he should
o To have three books: log book, accounting book and freight book not have taken without sufficient cause, in the opinion of the officers of the vessel, at a meeting
o To remain on board, in case the vessel is in danger, until all hope to save it is with the shippers or supercargoes who may be on board.
lost.
o To be on deck on reaching land and to take command on entering and leaving No exceptions whatsoever shall exempt him from this obligation.
ports
7. For those arising by reason of his voluntarily entering a port other than that of his destination,
ARTICLE 615. Without the consent of the agent, the captain cannot have himself substituted by outside of the cases or without the formalities referred to in Article 612.
another person; and should he do so, besides being liable for all the acts of the substitute and
bound to the indemnities mentioned in the foregoing articles, the captain as well as the 8. For those arising by reason of non-observance of the provisions contained in the regulations
substitute may be discharged by the ship agent. on situation of lights and maneuvers for the purpose of preventing collisions.

The ship agent must consent before the captain may be substituted. The ship agent is civilly liable to 3rd persons who may have made contracts with the captain
for the enumerated acts. However, the agent may go after the captain himself.
ARTICLE 617. The captain may not contract loans on respondentia secured by the cargo, and
should he do so, the contracts shall be void.

Neither may he borrow money on bottomry for his own transactions, except on the portion of the
vessel he owns, provided no money has been previously borrowed on the whole vessel, and
there does not exist any other kind of lien or obligation chargeable against the vessel. If he may
do so, he must state what interest he has in the vessel.

In case of violation of this article, the principal, interest and costs shall be for the personal
account of the captain, and the ship agent may furthermore discharge him.

68
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Art 624. A captain whose vessel has gone through a hurricane or who believes that the cargo
has suffered damages or averages, shall make a protest thereon before the competent authority
at the first port he touches, within 24 hours following his arrival and shall ratify it within the same
period when he arrives at his destination, immediately proceeding with the proof of the facts, and
he may not open the hatches until after this has been done.

The captain shall proceed in the same manner if the vessel having been wrecked, he is saved
alone or with part of his crew, in which case he shall appear before the nearest authority, and
make a sworn statement of facts.

The authority or the consul shall verify the said facts receiving sworn statements of the members
of the crew and passengers who may have been saved; and taking such other steps as may
assist in arriving at the facts he shall make a statement of the result of the proceedings in the log
book and in that of the sailing mate, and shall deliver to the captain the original record of the
proceedings, stamped and folioed, with a memorandum of the folios, which he must rubricate, in
order that it may be presented to the judge or court of the port of destination.

The statement of the captain shall be accepted if it is in accordance with those of the crew and
passengers; if they disagree, the latter shall be accepted, always saving proof of the contrary.

FORMALITIES if vessel goes through a hurricane/captain believes that the cargo suffered
damage: P-24-R-P
o Captain must make a PROTEST before the competent authority at the first port
he touches
o PROTEST must be made within 24 HOURS of arrival
o Captain must RATIFY the protest within the same period
o Captain must immediately proceed with the PROOF OF THE FACTS

69
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 12 (OVERLAND TRANSPORTATION; VESSELS; REAL AND HYPOTHECARY


NATURE OF M ARITIME LAW)
2. Abelardo Lim v. CA, Gonzales (Kabit System; Operator figured in an accident but he was
using the franchise of another, Operator allowed to sue)
1. Lita Enterprises v. IAC (Kabit System; No relief to both parties)
Doctrine
Doctrine:
When the operator in a kabit system gets into an accident and the one at fault is a 3rd party,
Parties to a kabit system cannot ask the court for relief in case of disputes regarding their
the operator has standing to sue the negligent party/party in fault.
contract because such contract is void.
Facts:
Facts:
In 1982, GONZALES bought an Isuzu passenger jeep from VALLARTA, who was then a
Spouses Ocampo bought in installment 5 Toyota Corona cars from Delta Motor Sales
holder of a public convenience for the operation of Spublic utility vehicles (PUVs) on the
Corporation to be used as taxicabs. Since they had no franchise to operate, they
MONUMENTO-BULACAN ROUTE.
contracted with LITA ENTERPRISES so that they can use its certificate of public
convenience. In the set-up, they would pay LITA rentals for the use of the certificate.
After buying the jeep, GONZALES continued to operate the route, but he did not register
the jeep in his name nor did he get a certificate of public convenience.
Pursuant to the agreement, the cabs were registered in LITA‘s name but were operated by
the spouses but maintained the trade name of LITA (ACME TAXI)
In 1990, the jeepney collided with a 10 wheeler truck owned by LIM. The driver took
responsibility, admitting the truck lost its brakes. LIM offered to repair the jeep and when
A year later, one of the cabs figured in an accident with a motorcycle driver who died. LITA
GONZALES refused, LIM offered to pay the assessed damage (20k, as estimated by a
was sued by the heirs of the victim. It was held liable for damages. Pursuant to the
mechanic). It was again refused. GONZALES wanted a brand new jeep.
judgment, 2 cars of the spouses ocampo were levied upon and sold.
GONZALES then sued LIM for damages. LIM argues that since the set up between
Thereafter, Ocampo decided to register the cabs in his name so he requested LITA to turn
GONZALES and VALLARTA was under a KABIT SYSTEM, VALLARTA remained as the
over the registration papers of the cabs to him but it refused. Hence, Ocampo sued LTIA for
owner of the jeep and therefore, he was the one who was the real party in interest, and
reconveyance. LITA was ordered to transfer the registration certificate to Ocampo.
NOT GONZALES.
Issue: Should the parties have been given relief by the court? NO. KABIT SYSTEM.
Issue: May Gonzales sue Lim, given that he did not register the jeep in his name nor did he
procure a franchise? YES
Unquestionably, the parties herein operated under an arrangement, commonly known as
the "kabit system", whereby a person who has been granted a certificate of
The kabit system is illegal. It allows holders of franchises to simply transfer their vehicles to
convenience allows another person who owns motors vehicles to operate under
one who has no property so that when the vehicle figures in an accident, the franchisee will
such franchise for a fee.
be able to escape liability.
Although not outrightly penalized as a criminal offense, the "kabit system" is recognized as o Thus, for the safety of passengers and the public who may have been wronged
being contrary to public policy and, therefore, void and inexistent under Article 1409 of the
and deceived through the baneful kabit system, the registered owner of the
Civil Code,
vehicle is not allowed to prove that another person has become the owner so that
he may be freed from liability.
It is a fundamental principle that the court will not aid either party to enforce an illegal
contract, but will leave them both where it finds them. THEREFORE it was incorrect for the o Therefore, the evil that the principle seeks to prevent is the DECEIT.
lower court to have given parties relief from their predicament.. Moreover, where the parties
are in pari delicto (both at fault), no affirmative relief of any kind will be given to one against
In this case, the evil that is sought to be prevented in enjoining the kabit system does not
the other
exist (for the following reasons)
Case dismissed. BOTH lost. o FIRST: Neither of the parties to the kabit system is being held liable. In fact, it is
one of the parties (GONZALES) who is trying to sue LIM.
o SECOND: The case was due to the negligence of another vehicle Thus it cannot
be said that private respondent Gonzales and the registered owner of the
jeepney were in estoppel for leading the public to believe that the jeepney
belonged to the registered owner.
70
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

o THIRD: the public was not inconvenienced by the illegal arrangement. In fact, is
GONZALES, one of the parties to the illegal arrangement, who was wronged
(damage due to negligence)
4. Perez v. Gutierrez (TC erred in holding the operator liable instead of the registered owner)
In light of the foregoing, it is evident that GONZALES has the right to proceed against LIM
for the damage caused on his passenger jeepney as well as on his business. (GONZALES Doctrine
WON) Registered owner is directly liable.

3. Tamayo v. Aquino (Registered owner may ask for reimbursement from the operator) Facts:

Doctrine PEREZ, together with 9 other co-teachers, was a passenger of an AC (auto-calesa) Jeep
It is true that the registered owner of a vehicle is directly liable for injuries caused by such registered in the name of GUITERREZ. Due to the reckless driving of the driver, the jeep
vehicle even if he has already sold or transferred it. However, he may ask for figured in an accident that resulted to the injury of PEREZ. PEREZ thus sued GUITERREZ,
reimbursement from the transferee for whatever amount he was adjudged to pay. the registered owner.

Facts: GUITERREZ alleged that he should not be held liable because he already sold the jeep to
ALAJAR. He therefore filed a 3rd party complaint against ALAJAR. GUITERREZ further
TAMAYO was a holder of a certificate of public convenience to operate 2 trucks. While alleged that under the deed of sale, ALAJAR assumed all responsibilities for the operation
EPIFANIA was riding one of the trucks, it figured into an accident, resulting to EPIFANIA‘s of the vehicle.
death. THUS, INOCENCIO AQUINO, the husband, sued TAMAYO for damages.
The trial court held ALAJAR liable for actual damages to PEREZ and moral damages to
In his defense, TAMAYO alleged that he already sold the truck to RAYOS. TAMAYO then GUITERREZ. PEREZ appealed, arguing that it should be the registered owner who should
filed a 3rd party complaint against RAYOS. TAMAYO and RAYOS were held solidarily be held liable for damages resulting from a breach of contract.
liable. TAMAYO appealed, alleging that he shouldn‘t be held liable because RAYOS was
the one who owned and operated the ill-fated truck. Issue: Was the TC correct in directly holding ALAJAR liable? No, because it is the registered
owner who should be held directly liable.
CA affirmed, but held that TAMAYO and RAYOS were not solidarily liable as the action was
based on breach of contract of carriage, and not on quasi-delict. To bind the public with the sale of the property covered by a franchise, the sale must be
first approved by the Public Service Commission. Without this approval, the transferor
Issue: Is TAMAYO, as the holder of the franchise, liable? YES If yes, can he hold RAYOS liable continues to be the owner in the contemplation of the law.
also? YES.
it is quite clear therefore that the TC erred in holding ALAJAR, rather than GUTIERREZ, as
The registered owner of a public service vehicle is responsible for damages that may be the one directly liable to PEREZ for the her injuries and the corresponding damages
caused to any of the passengers therein, even if the said vehicle had already been sold, incurred.
leased or transferred to another person who was, at the time of the accident, actually
operating the vehicle. THUS, Tamayo, as the registered owner, is directly liable. Moreover, that the court below inexplicably failed to hold the driver whom it found guilty of
reckless imprudence, jointly and solidarily liable with GUITERREZ to Fe Perez in
HOWEVER, the transferee, RAYOS, is also liable to reimburse TAMAYO for what he will accordance with the provisions of article 2184 in relation to article 2180 of the new Civil
be adjudged to pay. This is because, in operating the truck without transfer thereof having Code.
been approved by the Public Service Commission, the transferee acted merely as agent of
the registered owner and should be responsible to him (the registered owner), for any However, ALAJAR is liable to GUITERREZ for such amount that the latter may pay to
damages that he may cause the latter by his negligence PEREZ

Tamayo wins.

71
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

5. Juaniza v. Jose (―Live in‖ partner of registered owner mistakenly held liable with the latter)
o For its part, JAGUAR alleges that it secured 3rd party liability insurance from
Doctrine FEDERAL INSURANCE. Therefore, it filed a 4th party complaint against
Only the registered owner of a public service vehicle is responsible for damages that may FEDERAL INSURANCE and its agent.
arise from consequences incident to its operation, or caused to any of the passengers
therein. Issue: Who is liable? MYC AGRO

Facts: SC affirmed the TC finding that the lease contract was merely a simulated contract to
shift liability from MYC to JAGUAR. JAGUAR is considered as merely a dummy or conduit.
EUGENIO JOSE was the registered owner and operator of a jeep involved in a collision Moreover, MYC in reality, enjoyed all the rights of ownership over the trucks that were
with a freight train of Phil National Railways (PNR) The injured passengers and the heirs of ostensibly leased.
the dead passengers sued JOSE.
More importantly, jurisprudence holds that "[t]he registered owner/operator of a passenger
o At that time of the accident, JOSE was legally married to RAMOS, but had been vehicle is jointly and severally hable with the driver for damages incurred by passengers or
cohabiting with ARROYO for 16 years third persons as a consequence of injuries (or death) sustained in the operation of said
vehicles. ... Regardless of who the actual owner of a vehicle is, the operator of record
The TC held JOSE and ARROYO solidarily liable for damages. ARROYO questions her continues to be the operator of the vehicles as regards the public and third persons, and as
liability because she was not the legal wife of JOSE. such is directly and primarily responsible for the consequences incident to its operation, so
that, in contemplation of law, such owner/operator of record is the employer of the driver,
Issue: Can ARROYO be held liable? NO. the actual operator and employer being considered merely as his agent."

Under the CIVIL CODE, the jeepney belongs to the conjugal partnership of JOSE and his THEREFORE, MYC is held liable (MYC lost)
legal wife, RAMOS. There is therefore no basis for the liability of Arroyo for damages
arising from the death of, and physical injuries suffered by, the passengers of the jeepney 7. Jereos v. CA, Pardorla
which figured in the collision.
Doctrine
Moreover, ARROYO, who is not the registered owner of the jeep, cannot be held liable for recovery by the registered owner or operator may be made in any form-either by a cross-
damages caused by its operation. It is settled in jurisprudence that only the registered claim, third-party complaint, or an independent action
owner of a public service vehicle is responsible for damages that may arise from
consequences incident to its operation, or maybe caused to any of the passengers therein. Facts:
PARDORLA is a holder of a franchise for an operation of a jeep line in Iloilo City. One of
6. MYC Agro-Industrial v. Vda de Caldo (Registered owner liable) the jeeps, however, was operated by JEREOS. This jeep hit JUDGE RODRIGUEZ and
his wife, causing the death of JUDGE RODRIGUEZ.
Doctrine:
Liability of registered owner upheld because though it leased the truck to another entity, o Driver was convicted under the RPC for criminal negligence.
such entity was merely a dummy corporation.
Thus, the heirs of RODRIGUEZ sued PARDORLA. In this defense, he argues that
Facts: JEREOS was the operator of the jeep when the accident happened. The TC exonerated
At about 430pm, a TOYOTA TRUCK owned by MYC AGRO and operated by AREVALO hit JEREOS from liability.
the right center side of a jeep, owned by SILLA and operated by RODOLFO. As a
consequence, the jeep turned turtle and causing death and injuries to the 15 passengers (7 Issue: Is JEREOS, as operator, liable? YES.
died, 8 injured)
In this case, the jeep was registered under the ―kabit system‖, wherein JEREOS will
o Moreover, upon impact, the jeep also hit and damages a cement fence, owned operate the jeep under the franchise of PARDORLA. Evidence showed that JEREOS
by REYES. engaged PARDORLA for the ―kabit‖ set-up because his jeep was previously involved in an
accident. He did it so that it would not be attached in case of any finding of the court of
REYES and the victims sued MYC-AGRO, AREVALO and KATIGBAK, the GM of MYC- liability.
AGRO.
It follows therefore that because JEREOS was the actual operator of the jeep, he can be
o In its answer, MYC AGRO admitted ownership but alleged that the truck involved held liable to reimburse PARDORLA for any amount he is adjudged to pay to
was leased to JAGUAR TRANSPORTATION. Therefore, MYC filed a 3rd party RODRIGUEZ. JEREOS lost.
complaint against JAGUAR.
72
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

8. Yu Con v. Ipil Since IPIL was the master of the banca (vessel), he is considered the captain, as he was
person in charge. Moreover, in this case, since LAURON was the shipowner and since the
Doctrine theft was not committed by a person not belonging to the craft, he should also be held
A small vessel used for the transportation of merchandise by sea and for the making of liable solidarily with IPIL and SOLAMO.
voyages from one port to another, equipped and victualed for this purpose by its owner, is a
vessel, within the purview of the Code of Commerce, for the determination of the character Quoting the SC:
and effect of the relations created between the owners of the merchandise laden on it and
its owner. The Code of Commerce in force omits the declaration of non-liability contained in the old
It is well and good that the shipowner be not held criminally liable for such crimes or quasi code, and clearly makes the shipowner liable civilly for the loss suffered by those who
crimes; but the cannot be excused from liability for the damage and harm which, in contracted with the captain, in consequence of the misdemeanors and crimes committed by
consequence of those acts, may be suffered by the third parties who contracted with the the latter or by the members of the crew.
captain, in his double capacity of agent and subordinate of the shipowner himself. In
maritime commerce, the shippers and passengers in making contracts with the captain do Check original on the circumstances of the theft. It will be asked as a follow up question.
so through the confidence they have in the shipowner who appointed him; they presume
that the owner made a most careful investigation before appointing him, and, above all, Sailing Mate v. Second Mate
they themselves are unable to make such an investigation, and even though they should do Primage v. Demurrage
so, they could not obtain complete security, inasmuch as the shipowner can, whenever he Shipowner v. Ship Agent
sees fit, appoint another captain instead What are lay days?
Allision
Facts: Inscrutable fault
Yu Con, a merchant who sold cloth, contracted Ipil, Solamo and Lauron to transport
merchandise and money (P450) from the port of Cebu to the town of Catmon through Ipil‘s 9. Lopez v. Duruelo
craft (a banca named Maria)
Doctrine
o Shipmaster: Ipil, Supercargo: Solamo Boat owner: Lauron Art 835 does not apply to small boats engaged in river and bay traffic. This articles apply to
merchant vessels
However, before the ship set sail, the money could not be found. Thus, Yu Con sued Ipil, When the mercantile codes speak of vessels, they refer solely and exclusively to merchant
Solamo and Lauron arguing that the disappearance was through their ships, as they do not include war ships furthermore, they almost always refer to craft which
negligence/abandonment. All 3 were held liable for negligence (Ipil and Solamo were are not accessory to another as is the case of launches, lifeboats, etc.
allegedly sleeping when the alleged theft occurs) thus they separately appealed. Moreover, the mercantile laws, in making use of the words ship, vessels, boat,
embarkation, etc., refer exclusively to those which are engaged in the transportation
o Lauron argues that under the Code of Commerce, he should not be held liable of passengers and freight from one port to another or from one place to another; in a
because there is evidence to showing the possibility that one of the cabin boys word, they refer to merchant vessels and in no way can they or should they be
committed the theft. Instead, it should be the captain who should be held liable. understood as referring to pleasure craft, yachts, pontoons, health service and
harbor police vessels, floating storehouses, warships or patrol vessels, coast guard
Issue: Are all 3 liable? Yes. vessels, fishing vessels, towboats, and other craft destined to other uses.
Ipil and Solamo, as master and supercargo respectively, are liable. They were entrusted Facts:
as depositaries of the lost money and it was through their negligence that it was lost.
Therefore, they should be liable LOPEZ wanted to come aboard the inter-island steamer SAN JACINTO so he rode the
motor boat JISON (incidentally, owned by ALBINO JISON), which ferried passengers to
Thereafter, the SC, in determining the liability of LAURON (shipowner) and in and from the boat (from land)
determining w/n there was a contract of carriage, first held that the banca (Maria) was a
vessel within the purview of the Code of Commerce. The engineer of the boat (a.k.a. driver) was JUAN DURUELO, a 16 year old novice without
experience in running motor boat, who was then in his 3rd day of apprenticeship. Moreover,
o Blanco, the commentator on mercantile law, in referring to the grammatical the boat was overloaded. As the JISON approached the SAN JACINTO, it came too near
meaning of the word "ship" and "vessels," says, in his work aforecited, that these so it was hit by the propeller. As a result, LOPEZ was thrown off and was injured by the
terms designate every kind of craft, large or small, whether belonging to the propeller.
merchant marine or to the navy. It is also any ―floating apparatus used in the
service of an industry or in that of maritime commerce‖

73
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Thus, LOPEZ sued JISON and DURUELO‘s guardian. In response, the defendants sought it was not seaworthy) THEREFORE, it was negligence on the part of LUZON
to dismiss the complaint as LOPEZ did not file a protest within 24 hourst in accordance with STEVEDORING to have used the tugboat in its operation without taking all the
Art. 835 of the Code of Commerce, therefore a condition precedent was not complied with. precautions.

Issue: Was protest necessary? No. o While the breaking of the idler may be due to an accident, or to something
unexpected, the cause of the disaster which resulted in the loss of the gasoline
Art. 835 is found in the section dealing with collisions of sea-going vessels, and is not can only be attributed to the negligence or lack of precaution to avert it on the
applicable to small boats engaged in river and bay traffic. Moreover, this section was part of LUZON STEVEDORING.
intended to define the law relative to merchant vessels and marine shipping.

o To reiterate, the use of the word ―vessel‖ was not intended to include all ships,
craft, or floating structures of every kind without limitation and thus, the 11. YU BIAO SONTUA & CO v. Ossorio (Explosion in motor boat, Ship agent/Owner held liable
provisions of the section where Art. 835 is found in should not be held to include for negligence of his employees)
minor craft engaged only in river and bay traffic.
Doctrine
o THEREFORE, other vessels of a minor nature not engaged in maritime The doctrines having reference to the relations between principal and agent cannot be
commerce, such as river boats and those carrying passengers from ship to applied in the case of ship agents and ship owners
shore, must be governed, as to their liability to passengers, by the provisions of
the Civil Code or other appropriate special provisions of law. Facts:

Thus, it follows that the complaint cannot be dismissed on the ground of the failure to On 1920, a fire broke out on board the motor boat Alfonso, which was loaded with a
protest, as the code of commerce provisions are inapplicable considerable amount of gasoline. The fire spread to the steamer Y. Sontua, owned by YU
BIAO SONTUA & CO (Yu Biao) Thus, Yu Biao sued OSSORIO, the owner and ship agent
10. Standard Vacuum v. Luzon Stevedoring of Alfonso. OSSORIO denied any liability.

Doctrine However, the TC found that OSSORIO‘s employees were liable in causing the explosion
that resulted in the fire. As a result, OSSORIO was also held liable.
Facts:
Issue: Was there negligence? Is OSSORIO liable?
Standard Vacuum contracted Luzon Stevedoring to transport gasoline from Manila to Iloilo.
The gasoline was placed in Luzon Stevedoring‘s barge. Luzon‘s tugboat (SNAPPER) Issue of negligence:
picked up the barge and towed it. However, shortly afterwards, the engine of the tugboat Yes. The explosion was found to have been imputable to the negligence of the persons
died due to a broken idler. having charge of the ship and under whose direction the loading of the gasoline was
performed.
The tugboat got stuck and then the weather worsened. The tugboat sank and the barge
where the gasoline was loaded was damaged and as a consequence, much of the gasoline Issue of w/n OSSORIO is liable for the acts of his agents/employees.
already leaked out.
Yes. OSSORIO is liable. This is because the persons responsible for the fire were HIS
THUS, Standard Vacuum sued Luzon Stevedoring for breach of contract of carriage. employees. ―Where the vessel is one of freight, a public concern or public utility, its owner
or agent is liable for tortious acts of his employees.
Issue: Is Luzon Stevedoring liable? Yes.
THEREFORE, OSSORIO, as ship owner/ship agent, is liable for the tortious acts of his
SC first determined the applicable law by stating the LUZON STEVEDORING is a public employees
utility. THEREFORE, it comes under the provisions of the Code of Commerce. The
applicable provision is Art. 361, which holds that the carrier is not liable if the loss was due o With regard to the allegation that the obligations enumerated in article 612 of our
to fortuitous event. Code of Commerce are inherent in the master such inherent duties do not
limit to the master the civil liability arising from their nonfulfillment, but
SC found that the defense of fortuitous event will not lie primarily because of its while the master is responsible to the ship agent, the ship agent, in turn, is
contributory negligence as shown by the following facts: responsible to third persons, as is clearly provided in article 618 of said Code, in
which express mention is made, is subsections 5 and 7, of the duties
o It bought the tugboat and used it without submitting it to dry-dock overhaul and enumerated in the said article 612.
inspection. It also did not have the necessary permits and equipment. (basically,
74
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

12. Rubiso v. Rivera (damages must have basis) the FERNANDO ESCANO sank. ESCANO sued LUZON STEVEDORING. In the course of
the trial, commissioners were appointed to determine the value of ―CAVITE‖ (180k)
Facts:
TC ruled that ―CAVITE‖ was at fault, thus ordering payment to the insurance company (of
RIVERA allegedly acquired the pilot boat VALENTINA on JAN 4, but he did not register ESCANO INC) and ESCANO INC itself (68k)
such purchase. Subsequently, however, RUBISO bought the pilot boat in a sale at public
auction on JAN 23 and he registered it. RIVERA sued for recovery of possession of the o In its defense, LUZON argues that its liability is limited to the value of ―CAVITE‖
boat but the trial court ruled in favor of RUBISO. (its ship) and freight earned, in accordance with Art. 837 of the Code of
Commerce.
A writ of execution was issued, which allowed RUBISO to salvage the pilot boat, which at o ART. 837. The civil liability incurred by the shipowners in the cases prescribed in
the time was stranded in BATANGAS. However, when the ship was delivered to RUBISO, it this section, shall be understood as limited to the value of the vessel with all
was in a damaged condition. THUS, RUBISO sued RIVERA for damages to the boat, which her appurtenances and freight earned during the voyage
was allegedly caused by the negligence of RIVERA and his employees
Issue: Should liability of LUZON be limited to the value of the CAVITE? No.
The TC dismissed the action for damages primarily because the boat was already
destroyed, so there was no basis for the damages. In case of collision of vessels, in order to avail of the benefits of Article 837 of the Code of
Commerce the shipowner or agent must abandon the vessel. In such case the civil
Issue: Should damages be awarded? NO liability shall be limited to the value of the vessel with all the appurtenances and freight
earned during the voyage. However, where the injury or average is due to the ship-
Preliminarily, the court held that RUBISO had a better right because he was able to register owner's fault, the shipowner may not avail of his right to limited liability by
the sale. abandoning the vessel.

Evidence shows that even before RUBISO bought the boat, it was already seriously IN THIS CASE, there is no question that the action arose from a collision and the one at
damaged due to a storm. Basically, by the time RUBISO bought the boat, it had no more fault is ―CAVITE‖. Undeniably LUZON has not abandoned the vessel. Hence LUZON
legal value. In fact, it was stranded for over 10 months before RUBISO was declared to be cannot invoke the benefit of the provisions of Article 837 of the Code of Commerce
the owner of the boat. THEREFORE, there is no sufficient proof to prove that RUBISO to limit its liability to the value of the vessel, all the appurtenances and freightage
indeed suffered any damage. earned during the voyage

13. Luzon Stevedoring v. CA (Rule on Collision, applicability of Art 837) Note: (for annotation)

Doctrine We reiterate what We said in previous decisions that the real and hypothecary nature of the
liability of the shipowner or agent is embodied in the provisions of the Maritime Law, Book III,
The rule is that in case of collision there should be abandonment of the vessel by the Code of Commerce. Articles 587, 590 and 837 of the same code are precisely intended to limit
shipowner or agent in order to enjoy the limited liability provided for under said Article 837, the liability of the shipowner or agent to the value of the vessel, its appurtenances and freightage
o The exception to this rule is when the vessel is totally lost in which case there is earned in the voyage, provided that owner or agent abandons the vessel. Although it is not
no vessel to abandon so abandonment is not required. Because of such total specifically provided for in Article 837 of the same code that in case of collision there should be
loss the liability of the shipowner or agent for damages is extinguished. such abandonment to enjoy such limited liability, said article on collision of vessels is a mere
Nevertheless, the shipowner or agent is personally liable for claims under amplification of the provisions of Articles 587 and 590 of same code where abandonment of the
the Workmen's Compensation Act and for repairs of the vessel before its vessel is a pre-condition. Even without said article, the parties may avail of the provisions of
loss. Articles 587 and 590 of same code in case of collision. This is the reason why Article 837 of the
In case of illegal or tortious acts of the captain the liability of the shipowner and agent is same code is considered a superfluity
subsidiary. In such instance the shipowner or agent may avail of the provisions of Article
837 of the Code by abandoning the vessel.
However, if the injury or damage is caused by the shipowner's fault as where he engages
the services of an inexperienced and unlicensed captain or engineer, he cannot avail of the
provisions of Article 837 of the Code by abandoning the vessel. He is personally liable for
the damages arising thereby.

Facts:

On 1968, at past 6am, the tanker CAVITE owned by LUZON STEVEDORING and MV
―FERNANDO ESCANO‖, a passenger ship owned by ESCANO INC., collided. As a result,
75
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

14. Chua Yek Hong v. IAC, Guno and Olit [private respondents]
Notes:
Facts
The term "ship agent" as used in Art 587 is broad enough to include the ship owner.
Chua Yek Hong is a copra dealer. He contracted with GUNO and OLIT, the OWNERS of Pursuant to said provision, therefore, both the ship owner and ship agent are civilly and
MV LUZVIMINDA 1, a COMMON CARRIER, for the transport of 1,000 sacks of copra to directly liable for the indemnities in favor of third persons, which may arise from the conduct
Manila. However, the cargo did not reach Manila because it sank. of the captain in the care of goods transported, as well as for the safety of passengers.

Thus, CHUA sued the owners based on breach of contract of carriage. The owners argue However, under the same Article (Art 587), this direct liability is moderated and limited by
however that since their vessel was totally lost, their liability was already extinguished. the ship agent's or ship owner's right of abandonment of the vessel and earned freight. This
expresses the universal principle of limited liability under maritime law. The most
o TC awarded damages but CA reversed, ruling that the owners‘ liability, as ship fundamental effect of abandonment is the cessation of the responsibility of the ship
owners, for the loss of the cargo is merely co-extensive with their interest in the agent/owner. In other words, the ship owner's or agent's liability is merely co-extensive with
vessel such that the total loss of such vessel results in its extinction. Therefore, his interest in the vessel such that a total loss thereof results in its extinction. "No vessel, no
their liability is extinguished (basically, no ship, no liability) liability" expresses in a nutshell the limited liability rule. The total destruction of the vessel
extinguishes maritime liens as there is no longer any res to which it can attach
o Basis:
EXCEPTIONS TO LIMITED LIABILITY RULE: The limited liability rule, however, is not
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third without exceptions, namely:
persons which may arise from the conduct of the captain in the care of the goods
which he loaded on the vessel; but he may exempt himself therefrom by abandoning (1) where the injury or death to a passenger is due either to the fault of the ship owner, or
the vessel with all the equipments and the freight it may have earned during the to the concurring negligence of the ship owner and the captain
voyage.
(2) where the vessel is insured;
Issue: Are the owners still liable? NO.
(3) in workmen's compensation claims
To recite:
(4) expenses for repair of vessel prior to the loss
The SC applied the principle of limited liability of vessels. In accordance with this
principle, the ship owner/agent‘s liability is merely co-extensive with his interest in his In this case, there is nothing in the records to show that the loss of the cargo was due to
vessel such that a total loss thereof results in its extinction. Basically, the general rule is the fault of the private respondent as shipowners, or to their concurrent negligence with the
that if the vessel is destroyed, the owners will not be held liable. captain of the vessel.

THEREFORE, it will have to be held that since the ship agent's or ship owner's liability is
merely co-extensive with his interest in the vessel such that a total loss thereof results in its
extinction and none of the exceptions to the rule on limited liability being present, the
liability of the owners for the loss of the cargo of copra must be deemed to have been
extinguished. There is no showing that the vessel was insured in this case.

In relation to the CIVIL CODE and COMMON CARRIERS, the SC explained that the
presumption of negligence in case of loss, destruction or deterioration still applies.
However, the liability is limited by Art 587. Since the Civil Code contains no provisions
regulating liability of ship owners or agents in the event of total loss or destruction of the
vessel, it is the provisions of the Code of Commerce, more particularly Article 587, that
govern in this case. [note: remember, the issue of w/n a CC is liable is different to the
extent of its liability, in this case there was NO finding of negligence on the part of the ship
owner OR its employees/agents]

HENCE, owners are not liable. CHUA loses.

76
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

o Thus, execution of judgment in earlier completed cases, even those already


15. Aboitiz Shipping v. General Accident Fire (Hypothecary nature) final and executory, must be stayed pending completion of all cases
occasioned by the subject sinking. Then and only then can all such claims be
Doctrine: simultaneously settled, either completely or pro-rata should the insurance
The real and hypothecary nature of maritime law simply means that the liability of the proceeds and freightage be not enough to satisfy all claims
carrier in connection with losses related to maritime contracts is confined to the vessel,
which is hypothecated for such obligations or which stands as the guaranty for their o However, in fairness to the claimants and as a matter of equity, the total
settlement proceeds of the insurance and pending freightage should now be
Unseaworthiness may also pertain to the captain and its crew, and may operate to deposited in trust.
exonerate the shipowner from liability
GR is that the limited liability rule will be applied if there is no showing of negligence on 16. Monarch Insurance v. CA
the part of the shipowner.
Doctrine
Facts: in cases involving the limited liability of shipowners, the initial burden of proof of negligence
or unseaworthiness rests on the claimants. However, once the vessel owner or any party
The vessel M/V P. Aboitiz, owned by ABOITIZ (a common carrier), shipped from HK to asserts the right to limit its liability, the burden of proof as to lack of privity or knowledge on
Manila TWO shipments consisting of apparel totalling to about $140k. These were its part with respect to the matter of negligence or unseaworthiness is shifted to it.
consigned to PHIL. APPARENT INC and insured with GENERAL ACCIDENT FIRE AND
LIFE ASSURANCE [GAFLAC] Facts:

However, en route to Manila, the vessel sank and it was declared LOST with all its cargo. The ship M/V P. Aboitiz (the same ship as in the previous case) sank during its voyage
The insured paid the consignee and then sued ABOITIZ for damages, alleging that the loss from HK to Manila. Seeking indemnification, insurers of the cargo sued Aboitiz. 2 of these
was due to the negligence of Aboitiz, the master, and the crew of the vessel. The lower insurers are MONARCH and TABACLERA (petitioners in this case) All in all, there were
courts found that the ship was not seaworthy. over 110 claimants against Aboitiz.

o On the other hand, other cases have resulted in findings that the vessel was Aboitiz was held to be liable for damages in the cases filed by MONARCH and
SEAWORTHY and that the sinking was NOT due to force majeure TABACLERA. Consequently, they moved for the execution of the judgment and thus, writs
of execution were issued. However, ABOITIZ filed a motion to quash, alleging that since its
o This notwithstanding, GAFLAC filed a motion for execution of the judgment in its liability is limited to the value of the vessel, which was insufficient to satisfy the aggregate
favor. ABOITIZ opposes this on the ground that the limited liability rule should claims of all 110 claimants, to indemnify MONARCH and TABACLERA ahead of the others
govern to prevent the immediate impairment of the other claimants‘ share. would be prejudicial to them. The writs were quashed.

Issue: Should the limited liability rule apply? YES And consequently, should execution be Issue: is the limited liability rule applicable in favor of Aboitiz to stay the execution of judgments?
stayed? YES. YES, but ABOITIZ still guilty of negligence.

The limited liability rule applies because there was no negligence on the part of Aboitiz. FIRST OFF, in light of conflicting rulings of the Court as regards the negligence of Aboitiz,
The court found that the finding of unseaworthiness by the lower court was NOT as to the Court gave credence to the evidence showing the sinking of the ship was due to the
the structural condition of the vessel, but to the condition that it was in at the time of leakage of water inside the ship. THUS, Aboitiz was NEGLIGENT and it failed to show that
the sinking, which condition was due to the acts of the captain and the crew. it exercised extraordinary diligence. It was NOT SEAWORTHY due to the NEGLIGENCE
of its OWNER, CAPTAIN and CREW. (this in effect reverses the view in the previous
There being no negligence, then the limited liability rule can therefore apply. That being the case)
case, the rights of claimants to claim against an agent or owner of a vessel may be
compared to those of creditors against an insolvent corporation whose assets are o HOWEVER, it cannot be said that the limited liability rule will not be applied. The
insufficient to satisfy all claims. While each creditor may prove their claim, it does not peculiar circumstances demand that there should be no strict adherence to
automatically mean that they shall ALL be allowed to fully recover (basically, SC is saying procedural rules if it will result to the frustration of the claims of the
it‘s not first come first served) shippers/insurers. THUS, the claimants will still be treated as creditors of an
insolvent corporation who does not have enough assets to satisfy all claims.
In the instant case, there is, therefore, a need to collate all claims preparatory to their
satisfaction from the insurance proceeds on the vessel M/V P. Aboitiz and its
pending freightage at the time of its loss. No claimant can be given precedence over the
others because it filed first.
why is the scheme of first come first served unfair?
77
serve justice, limited resources to satisfy all claims, so proportioning of the payments
should be done
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro who won in this case?

17. Phil-Am general Insurance v. CA part of the shipowner could have prevented this fatal miscalculation. As such, FELMAN
was equally negligent. It cannot therefore escape liability through the expedient of
Doctrine filing a notice of abandonment of the vessel by virtue of Art. 587 of the Code of
The rule is to the effect that the right of abandonment of vessels, as a legal limitation of a Commerce.
shipowner's liability, does not apply to cases where the injury or average was
occasioned by the shipowner's own fault. Under Art 1733 of the Civil Code, "(c)ommon carriers, from the nature of their business and
Art. 587 speaks only of situations where the fault or negligence is committed solely by the for reasons of public policy, are bound to observe extraordinary diligence in the vigilance
captain. Where the shipowner is likewise to be blamed, Art. 587 will not apply, and such over the goods and for the safety of the passengers transported by them, according to all
situation will be covered by the provisions of the Civil Code on common carrier. the circumstances of each case . . ." In the event of loss of goods, common carriers are
presumed to have acted negligently. FELMAN, the shipowner, was not able to rebut this
Facts presumption. Hence, it is liable.

Coca Cola loaded on board MV ASILDA (owned by FELMAN), 7500 cases of 1-liter coke 18. Negros Navigation v. CA
bottles to be transported to CEBU. The shipment was insured with PHILAMGEN. However,
45 minutes after leaving the port, the ship sank, and the entire cargo was lost. Doctrine
a shipowner may be held liable for injuries to passengers notwithstanding the exclusively
PHILAMGEN paid the claim of Coca-cola and thereafter sued FELMAN, alleging that the real and hypothecary nature of maritime law if fault can be attributed to the shipowner.
ship sank because of the vessel‘s unseaworthiness. In its defense, FELMAN invoked the
limited liability rule provided for in Art. 587 of the Code of Commerce and asserted that the Facts:
vessel was seaworthy.
In 1980, RAMON MIRANDA bought 4 special cabin tickets from Negros Navigation for his
Issue: Was the vessel unseaworthy? Is Art. 587 applicable? family in order to attend a family reunion at Bacolod. They were on board the MV DON
JUAN. However, the ship collided with the M/T TACLOBAN CITY, an oil tanker owned by
As to unseaworthiness PNOC. As a result, DON JUAN sank. All 4 members of his family died (he did not
The court found that as per the Adjusters, the proximate cause of the sinking of the ship accompany them)
was its being top-heavy. The ship carried deck-cargo (placed 2,500 cases on its deck) and
it is settled that carrying deck-cargo raises the presumption of unseaworthiness unless it As a result, RAMON MIRANDA sued NEGROS NAVIGATION and PNOC. In its defense,
can be shown that the deck cargo will not interfere with the proper management of the ship. NEGROS NAVIGATION alleged that the 4 members did not board the vessel as their
In this case, it was found that the ship was NOT designed to carry such deck-cargo. bodies were never recovered and that its crew was not negligent.

Applicability of Art. 587 o Meanwhile, PNOC and NEGROS NAVIGATION entered into a compromise
agreement where NEGROS assumed liability for all claims arising out of the
Art. 587 of the Code of Commerce is not applicable to the case at bar. Simply put, the ship collision.
agent is liable for the negligent acts of the captain in the care of goods loaded on the
vessel. This liability however can be limited through abandonment of the vessel, its Subsequently, TC found NEGROS liable for moral, actual and exemplary damages.
equipment and freightage as provided in Art. 587. Nonetheless, there are exceptional
circumstances wherein the ship agent could still be held answerable despite the Issue: Is NEGROS NAVIGATION liable? YES.
abandonment, as where the loss or injury was due to the fault of the shipowner and
the captain. As to w/n the deceased really were on board: Ramon Miranda testified that he
personally took his family and his niece to the vessel on the day of the voyage and stayed
The international rule is to the effect that the right of abandonment of vessels, as a legal with them on the ship until it was time for it to leave. There is no reason he should claim
limitation of a shipowner's liability, does not apply to cases where the injury or average was members of his family to have perished in the accident just to maintain an action
occasioned by the shipowner's own fault.
As to negligence: Petitioner Negros Navigation is equally negligent with M/T Tacloban
It must be stressed at this point that Art. 587 speaks only of situations where the fault or City in tolerating the playing of mahjong by the ship captain and other crew members while
negligence is committed solely by the captain. Where the shipowner is likewise to be on board the ship and failing to keep the M/V Don Juan seaworthy so much so that the ship
blamed, Art. 587 will not apply, and such situation will be covered by the provisions of the sank within 10 to 15 minutes of its impact with the M/T Tacloban City. Moreover, the DON
Civil Code on common carrier. JUAN was overloaded.
.
It was already established at the outset that the sinking of "MV Asilda" was due to its As to application of limited liability rule:
unseaworthiness even at the time of its departure from the port of Zamboanga. It was top-
heavy as an excessive amount of cargo was loaded on deck. Closer supervision on the
78
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

The rule is well-entrenched in our jurisprudence that a shipowner may be held liable for for the damages that a shipowner or agent may be held liable for by reason of the
injuries to passengers notwithstanding the exclusively real and hypothecary nature of death of its passengers.
maritime law if fault can be attributed to the shipowner. As aforesaid, NEGROS Heirs of Vasquez wins.
NAVIGATION was found to be negligent due to several circumstances.
20. Aboitiz Shipping v. New India Assurance
Note: Before this case, SC promulgated Mecenas v. IAC, wherein NEGROS was found to
be liable for the same exact accident. SC anchored its findings of negligence on that Doctrine
particular case.
Facts:
19. Vasquez v. CA, Filipinas Pioneer Lines
Societe Francaise Des Colloides (French Company) loaded a cargo of textiles in M/V P.
Doctrine Aboitiz (same ship as in the previous cases) The shipment was consigned to GENERAL
the liability of a shipowner is limited to the value of the vessel or to the insurance thereon. TEXTILE. However, the ship sank due to a typhoon which resulted to the loss of all its
Despite the total loss of the vessel therefore, its insurance answers for the damages that a cargo.
shipowner or agent may be held liable for by reason of the death of its passengers
Findings of fact of BMI are not binding on the trial courts GENERAL TEXTILE lodged a claim with ABOITIZ for the value of the loss. However, since
it was denied, GENERAL TEXTILE claimed from NEW INDIA ASSURANCE, which was
Facts: subrogated to its rights. The insurance company then sued ABOITIZ. ABOITIZ alleged that
the ship was seaworthy, and that in accordance with the real and hypothecary nature of
Vasquez, his wife, and nephew were on board MV PIONEER CEBU (owned by FILIPINAS) maritime law, the sinking of the ship extinguished its liability.
On its way to CEBU, the ship encountered typhoon KLARING and struck a reef. It
subsequently sank. Vasquez and his family were not found. THUS, the heirs of Vasquez o The TC ruled in favor of NEW INDIA, citing the CA decision in General Accident
sued FILIPINAS for the deaths of their relatives. and Life Assurance v. Aboitiz. Thus, Aboitiz was held to be liable for the total
value of the cargo.
FILIPINAS, in its defense, argued that since the loss was due to force majeure, its liability
has been extinguished. Moreover, it brought up the defense under Art. 587. o Aboitiz appealed, arguing that Monarch should apply and thus, the claim for
damages must only be against the insurance proceeds and limited to the
o TC ruled in favor of the heirs, ruling that the loss was not due to a fortuitous claimant‘s pro-rata share, in view of the doctrine of limited liability.
event since even before the vessel left on its voyage, the officer and crew
were already aware of the typhoon brewing in the general direction of their Issue: Is Monarch applicable in the present case? NO
destination. However, CA exonerated FILIPINAS from liability.
In Monarch, it was held that the sinking of the vessel was not due to force majeure, but to
Issue: Is FILIPINAS liable? YES its unseaworthy condition. Aboitiz was found concurrently negligent with the captain and
crew. But the Court stressed that the ―peculiar‖ circumstances therein still made the
Under the circumstances, while, indeed, the typhoon was an inevitable occurrence, yet, doctrine of limited liability applicable.
having been kept posted on the course of the typhoon by weather bulletins at intervals of
six hours, the captain and crew were well aware of the risk they were taking. THUS, it can The ruling in Monarch may appear inconsistent with the exception of the limited liability
be said that they failed to exercise the extraordinary diligence required from common doctrine, as explicitly stated in the earlier part of the Monarch decision. An exception to the
carriers limited liability doctrine is when the damage is due to the fault of the shipowner or to the
concurrent negligence of the shipowner and the captain. In which case, the shipowner shall
While the Board of Marine Inquiry, which investigated the disaster, exonerated the captain be liable to the full-extent of the damage. THUS, the SC sought to clarify such ruling to wit:
from any negligence, it was because it had considered the question of negligence as "moot
and academic," the captain having "lived up to the true tradition of the profession." While In the present case, ABOITIZ, in accordance with Art 1734 (CIVI LCODE PROVISIONS)
we are bound by the Board's factual findings, we disagree with its conclusion since it has the burden of showing that it exercised extraordinary diligence in the transport of the
obviously had not taken into account the legal responsibility of a common carrier towards goods it had on board in order to invoke the limited liability doctrine. Differently put, to limit
the safety of the passengers involved. its liability to the amount of the insurance proceeds, ABOITIZ has the burden of proving that
the unseaworthiness of its vessel was not due to its fault or negligence. Considering the
With respect to FILIPINAS‘ submission that the total loss of the vessel extinguished its evidence presented and the circumstances obtaining in this case, ABOITIZ failed to
liability pursuant to Article 587 of the Code of Commerce as construed in Yangco vs. discharge this burden.
Laserna, 73 Phil. 330 [1941], suffice it to state that even in the cited case, it was held
that the liability of a shipowner is limited to the value of the vessel or to the It initially attributed the sinking to the typhoon and relied on the BMI findings that it was not
insurance thereon. Despite the total loss of the vessel therefore, its insurance answers at fault. However, both the trial and the appellate courts, in this case, found that the sinking
79
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

was not due to the typhoon but to its unseaworthiness. Evidence on record showed that the In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 and 837 under
weather was moderate when the vessel sank. These factual findings of the Court of Book III of the Code of Commerce, thus:
Appeals, affirming those of the trial court are not to be disturbed on appeal, but must be
accorded great weight. These findings are conclusive not only on the parties but on this Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third
Court as well. persons which may arise from the conduct of the captain in the care of the goods which he
loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with
Where the shipowner fails to overcome the presumption of negligence, the doctrine all her equipment and the freight it may have earned during the voyage.
of limited liability cannot be applied. (Aboitiz liable for actual value of the cargo)
Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of their interests
21. Aboitiz Shipping v. CA in the common fund for the results of the acts of the captain referred to in Art. 587.

Doctrine Each co-owner may exempt himself from this liability by the abandonment, before a notary,
of the part of the vessel belonging to him.
Facts:
Art. 837. The civil liability incurred by shipowners in the case prescribed in this section,
The three petitions in this case stemmed from some of the several suits filed shall be understood as limited to the value of the vessel with all its appurtenances and
against Aboitiz before different regional trial courts by shippers or insurers or the recovery freightage served during the voyage.
of the monetary value of the cargoes lost, or by the insurers for the reimbursement of
whatever they paid. The claims are based on the sinking of the M/V P. ABOITIZ.
These articles precisely intend to limit the liability of the shipowner or agent to the value of
Equitable, Malayan and Asia Traders are insurers who filed with the TCs the the vessel, its appurtenances and freightage earned in the voyage, provided that the owner
aforementioned claims. They alleged that ABOITIZ was negligent. In its defense, ABOITIZ or agent abandons the vessel. When the vessel is totally lost in which case there is no
argues that the loss was due to a fortuitous event, its ship was seaworthy, and the limited vessel to abandon, abandonment is not required. Because of such total loss the liability
liability rule should apply. of the shipowner or agent for damages is extinguished. However, despite the total loss
of the vessel, its insurance answers for the damages for which a shipowner or agent may
Issue: Should the limited liability rule apply? NO. Because ABOITIZ was NEGLIGENT. be held liable.

RECIT VERSION Nonetheless, there are exceptional circumstances wherein the ship agent could still be held
answerable despite the abandonment of the vessel, as where the loss or injury was due to
The Court UPHELD the ruling in NEW INDIA and held that as a general rule, a ship the fault of the shipowner and the captain. The international rule is to the effect that the
owner‘s liability is merely co-extensive with his interest in the vessel, except where actual right of abandonment of vessels, as a legal limitation of a shipowner’s liability, does
fault is attributable to the shipowner. not apply to cases where the injury or average was occasioned by
the shipowner’s own fault. Likewise, the shipowner may be held liable for injuries to
o Thus, as an exception to the limited liability doctrine, a shipowner or passengers notwithstanding the exclusively real and hypothecary nature of maritime law if
ship agent may be held liable for damages when the sinking of the vessel is fault can be attributed to the shipowner.
attributable to the actual fault or negligence of the shipowner or its failure
to ensure the seaworthiness of the vessel. Aboitiz‘s contention, that with the sinking of M/V P. Aboitiz, its liability to the cargo shippers
and shippers should be limited only to the insurance proceeds of the vessel absent any
o The instant petitions cannot be spared from the application of the exception to finding of fault on the part of Aboitiz, is not supported by the record. Thus, Aboitiz is not
the doctrine of limited liability in view of the unanimous findings of the entitled to the limited liability rule and is, therefore, liable for the value of the lost
courts below that both Aboitiz and the crew failed to ensure the cargoes as so duly alleged and proven during trial
seaworthiness of the M/V P. Aboitiz.
In Monarch Insurance, the Court deemed it fit to settle once and for all this factual issue by
Aboitiz‘s contention, that with the sinking of M/V P. Aboitiz, its liability to the cargo shippers declaring that the sinking of M/V P. Aboitiz was caused by the concurrence of
and shippers should be limited only to the insurance proceeds of the vessel absent any the unseaworthiness of the vessel and the negligence of both Aboitiz and the vessel‘s crew
finding of fault on the part of Aboitiz, is not supported by the record (because as aforesaid, and master and not because of force majeure. Notwithstanding this finding, the Court
there was finding of fault). Thus, Aboitiz is not entitled to the limited liability rule and did not reverse but reiterated instead the pronouncement in GAFLAC to the effect
is, therefore, liable for the value of the lost cargoes as so duly alleged and proven that the claimants be treated as “creditors in an insolvent corporation whose assets
during trial are not enough to satisfy the totality of claims against it. The Court explained that the
peculiar circumstances warranted that procedural rules of evidence be set aside to prevent
LONG VERSION (very helpful in understanding what happened in case #15, 16, 17 and 20) frustrating the just claims of shippers/insurers. Thus, the Court in Monarch Insurance
ordered Aboitiz to institute the necessary limitation and distribution action before
80
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

the proper RTC and to deposit with the said court the insurance proceeds of and the
freightage earned by the ill-fated ship.

However, subsequently, the Court rendered a decision in Aboitiz Shipping Corporation v.


New India Assurance Company, Ltd. (New India), reiterating the well-settled principle that
the exception to the limited liability doctrine applies when the damage is due to the fault of
the shipowner or to the concurrent negligence of the shipowner and the captain. Where
theshipowner fails to overcome the presumption of negligence, the doctrine of limited
liability cannot be applied. In New India, the Court clarified that the earlier
pronouncement in Monarch Insurance was not an abandonment of the doctrine of
limited liability and that the circumstances therein still made the doctrine applicable

o In New India, the Court declared that Aboitiz failed to discharge its burden of
showing that it exercised extraordinary diligence in the transport of the goods it
had on board in order to invoke the limited liability doctrine. Thus, the Court
rejected Aboitiz’s argument that the award of damages to respondent
therein should be limited to its pro rata share in the insurance proceeds
from the sinking of M/V P. Aboitiz.

As a general rule, a ship owner‘s liability is merely co-extensive with his interest in the
vessel, except where actual fault is attributable to the shipowner.

o Thus, as an exception to the limited liability doctrine, a shipowner or


ship agent may be held liable for damages when the sinking of the vessel is
attributable to the actual fault or negligence of the shipowner or its failure
to ensure the seaworthiness of the vessel.

o The instant petitions cannot be spared from the application of the exception to
the doctrine of limited liability in view of the unanimous findings of the
courts below that both Aboitiz and the crew failed to ensure the
seaworthiness of the M/V P. Aboitiz.

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Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 13 (persons in maritime law; maritime accidents) Issue: Is GAVINO liable for his negligence? Is KAVANKOV liable for his negligence?

1. Far Eastern Shipping v. CA Gavino negligent

Doctrine: Pursuant to an ADMIN ORDER requiring compulsory pilotage, Capt. GAVINO was
assigned to pilot MV Pavlodar into the port. Upon assuming such office as compulsory pilot,
A pilot, in maritime law, is a person duly qualified, and licensed, to conduct a vessel into or Capt. Gavino is held to the universally accepted high standards of care and diligence
out of ports, or in certain waters. In a broad sense, the term "pilot" includes both (1) those required of a pilot, whereby he assumes to have skill and knowledge in respect to
whose duty it is to guide vessels into or out of ports, or in particular waters and (2) those navigation in the particular waters over which his license extends superior to and
entrusted with the navigation of vessels on the high seas. However, the term "pilot" is more more to be trusted than that of the master
generally understood as a person taken on board at a particular place for the purpose of
conducting a ship through a river, road or channel, or from a port In this case, the Court found that GAVINO was negligent because he was late in ordering
the dropping of the anchor. Moroever, when he realized that the anchor did not attach
Under English and American authorities, generally speaking, the pilot supersedes the properly, Gavino ordered merely "half-astern". It took Gavino another minute to order a
master for the time being in the command and navigation of the ship, and his orders must "full-astern". By then, it was too late. The vessel's momentum could no longer be slowed
be obeyed in all matters connected with her navigation. He becomes the master pro hac and, barely a minute thereafter, the bow of the vessel hit the apron of the pier
vice and should give all directions as to speed, course, stopping and reversing
anchoring, towing and the like. And when a licensed pilot is employed in a place where Kavankov also negligent
pilotage is compulsory, it is his duty to insist on having effective control of the vessel,
or to decline to act as pilot. Under certain systems of foreign law, the pilot does not take The master is not wholly absolved from his duties while a pilot is on board his vessel, and
entire charge of the vessel, but is deemed merely the adviser of the master, who retains may advise with or offer suggestions to him. He is still in command of the vessel, except so
command and control of the navigation even in localities where pilotage is compulsory far as her navigation is concerned, and must cause the ordinary work of the vessel to be
properly carried on and the usual precaution taken.
The master is not wholly absolved from his duties while a pilot is on board his vessel, and
may advise with or offer suggestions to him. He is still in command of the vessel, except so In this case, while the pilot Gavino may indeed have been charged with the task of docking
far as her navigation is concerned, and must cause the ordinary work of the vessel to be the vessel in the berthing space the master of the vessel had the corresponding duty to
properly carried on and the usual precaution taken. He does not cede his authority when a countermand any of the orders made by the pilot, and even maneuver the vessel
pilot is onboard pursuant to compulsory pilotage. himself, in case of imminent danger to the vessel and the port. This, KAVANKOV
failed to do.
Even though the pilot is compulsory, if his negligence was not the sole cause of the injury,
but the negligence of the master or crew contributed thereto, the owners are liable. But the Liability of Shipowners
liability of the ship in rem does not release the pilot from the consequences of his own
negligence. The rationale for this rule is that the master is not entirely absolved of Even though the pilot is compulsory, if his negligence was not the sole cause of the injury,
responsibility with respect to navigation when a compulsory pilot is in charge but the negligence of the master or crew contributed thereto, the owners are liable. But the
liability of the ship in rem does not release the pilot from the consequences of his own
Facts: negligence. The rationale for this rule is that the master is not entirely absolved of
responsibility with respect to navigation when a compulsory pilot is in charge.
The MV PAVLODAR (from USSR), owned by Far Eastern Shipping (FESC) arrived at the
Port of Manila. Senen GAVINO was tasked by the Manila Pilot‘s Association to conduct
docking maneuvers for the safe berthing of the vessel (berthing = parking the boat in the
pier) KAVANKOV, the ship‘s master, was there to brief him and to relay his orders.
the captain as a generalist, is it proper to counter the pilot (a specialist)?
o Note: GAVINO piloted the boat pursuant to compulsory pilotage expanded jurisdiction of the SC is problematic
When the boat was near the berthing station, GAVINO ordered the anchor to be dropped.
However, the anchor did not take hold as expected and the boat did not slow down. The
boat eventually hit the pier and damaged it.

The Manila Port Authority sued MPA, FESC and GAVINO for the damage to the pier. The
trial court held all the defendants solidarily liable for the damages. Thus, FESC appealed,
arguing that GAVINO, the pilot under compulsory pilotage, was the one at fault

82
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

2. National Steel Corporation v. CA o A stevedore company engaged in discharging cargo has the duty to load the
cargo in a prudent manner, and it is liable for injury to, or loss of, cargo caused
Doctrine: by its negligence and where the officers and members and crew of the vessel do
A stevedore company engaged in discharging cargo has the duty to load the cargo in a nothing and have no responsibility in the discharge of cargo by stevedores the
prudent manner, and it is liable for injury to, or loss of, cargo caused by its negligence and vessel is not liable for loss of, or damage to, the cargo caused by the negligence
where the officers and members and crew of the vessel do nothing and have no of the stevedores‖
responsibility in the discharge of cargo by stevedores, the vessel is not liable for loss of,
or damage to, the cargo caused by the negligence of the stevedores Optional (demurrage)

Facts: The Court defined demurrage in its strict sense as the compensation provided for in the
contract of affreightment for the detention of the vessel beyond the laytime or that period of
Vlason‘s Shipping owns MV Vlasons I, a vessel which renders tramping service and as time agreed on for loading and unloading of cargo. It is given to compensate the shipowner
such, does not transport for the general public. Its services are available only to specific for the nonuse of the vessel
persons. It entered into a contract of affreightment/contract of voyage charter hire with
National Steel Corporation (NSC), wherein Vlasons was tasked to transport tin plates and Laytime runs according to the particular clause of the charter party. . . . If laytime is
hot rolled sheets to Manila. expressed in "running days," this means days when the ship would be run continuously,
and holidays are not excepted. A qualification of "weather permitting" excepts only those
o The charter party provides that the shipowner shall not be responsible for days when bad weather reasonably prevents the work contemplated.
damage to the goods unless caused by the negligence of the master and crew.
In this case, the contract of voyage charter hire provided for a four-day laytime; it also
Upon arrival in Manila, it was found that the cargo was wet and rusty. It was found that the qualified laytime as WWDSHINC or weather working days Sundays and holidays included.
rusting was due to contact with SEA WATER sustained while on board the vessel. THUS, The running of laytime was thus made subject to the weather, and would cease to
NSC sued Vlasons for the damage to the cargo. Vlasons argue that the SEA WATER run in the event unfavorable weather interfered with the unloading of cargo.
seeped in because of rough seas, and not because of the negligence of its master and Consequently, NSC may not be held liable for demurrage as the four-day laytime allowed it
crew, hence it should not be held liable. did not lapse, having been tolled by unfavorable weather condition

The TC ruled that the damage was due to a fortuitous event, that the damage was due to Vlasons won, NSC lost
the inherent nature of the goods and that the stevedores were the ones liable for being
negligent. Thus, NSC appealed. Do Tin Plates Sweat? Yes, due to moisture outside the boat. However, in this case the
damage to the tinplates was occasioned not by airborne moisture but by contact with rain
Issue: Were the officers/crew of VLASONS negligent? NO and seawater.

Shipowners not liable 3. Switzerland General Insurance v. Ramirez2

The court found that the ship used old tarpaulin to cover the hatches, but only in addition Doctrine:
to the new ones used primarily to make the hatches of the ship watertight. Due The ship agent is solidarily liable with the shipowner for the damage caused to the goods
diligence was exercised by the officers and the crew of the MV Vlasons I. It was due to the negligence of the captain and crew.
demonstrated by the fact that, despite encountering rough weather twice, the new tarpaulin
did not give way and the ship's hatches and cargo holds remained waterproof. Facts:

NSC failed to discharge its burden to show negligence on the part of the officers and the On 1974, 60k bags of urea nitrogen were shipped from Japan to Manila by CITADEL
crew of MV Vlasons I. On the contrary, the records reveal that it was the stevedores of LINES (local agent of OYAMA LINES). The goods were discharged by MABUHAY
NSC who were negligent in unloading the cargo from the ship. The stevedores employed BROKERAGE. However, when the consignee, BORDEN INTERNATIONAL, received the
only a tent-like material to cover the hatches when strong rains occasioned by a passing goods, they were found to have been damaged (the bags were torn)
typhoon disrupted the unloading of the cargo. This tent-like covering, however, was clearly
inadequate for keeping rain and seawater away from the hatches of the ship. SWITZERLAND GEN INSURANCE (SGI) paid BORDEN the value of the goods and in turn
sued OYAMA, CITADEL and MABUHAY BROKERAGE.
The fact that NSC actually accepted and proceeded to remove the cargo from the ship
during unfavorable weather will not make VSI liable for any damage caused thereby. In
passing, it may be noted that the NSC may seek indemnification, subject to the laws on
prescription, from the stevedoring company at fault in the discharge operations.
2
Read the annotation by Domingo Lucenario. Will be asked in recitation.
83
IMPORTANT!!!
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

o CITADEL argued that it was not liable since it was merely an AGENT of
OYAMA and not a ship agent. OYAMA alleged that the claim could not be 4. Sweet Lines v. CA, Bacatan, Quintos, Cabras, Veloso (private respondents)
entertained because it was already been declared insolvent by a court in Japan.
Doctrine:
The TC found OYAMA to be liable, and exonerated CITADEL and MABUHAY In this case, the voyage to Catbalogan was "interrupted" by the captain upon instruction of
BROKERAGE. Hence, the insurer appealed. management. The "interruption" was not due to fortuitous event or for majeure nor to
disability of the vessel. Having been caused by the captain upon instruction of
management, the passengers' right to indemnity from the ship owner. The owner of a
Issue: Should CITADEL, the local agent, also be held liable? YES. It is a ship agent. vessel and the ship agent shall be civilly liable for the acts of the captain.
Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract
Considering the relationship of the parties, respondent Citadel Lines, Inc. cannot be where the defendant acted fraudulently or in bad faith. In this case there was bad faith as
considered as a "mere agent" under the civil law on agency as distinguished from a ship the shipowner did not give notice to the respondents as to the change in schedule and in
agent, within the context of the Code of Commerce. fact bypassed them to comply with its schedule. However, no exemplary damages were not
awarded.
o This is because in Yu Biao Sontua & Co. v. Ossorio, it was held that the The owner of a vessel is liable in damages arising from the act of its captain in by-passing
doctrines having reference to the relations between principal and agent a pre-scheduled port of call
cannot be applied in the case of ship agents and ship owners. Mechanical defects in a common carrier (e.g. boats, vehicles) are not considered fortuitous
events.
In this case, CITADEL is clearly the ship agent of OYAMA. As provided in the law, a ship
agent is the person entrusted with the provisioning of a vessel or who represents her in the Facts:
port in which she happens to be. CITADEL took charge of the unloading of the goods and
issued cargo receipts in its own name. Therefore, it is clear that CITADEL is the ship The 4 private respondents in this case bought 4 first class tickets from SWEET LINES to go
agent. to CATBALOGAN, SAMAR. The boat failed to leave on the stated time (12MN) and instead
left at 8AM due to engine trouble.
Being a ship agent, it is liable for the indemnities in favor of 3 rd persons which arise from
the conduct of the captain in the care of the goods (Art 587 and 618) It is therefore The boat did not dock at CATBALOGAN, the first port of call and instead proceeded to
solidarily liable with OYAMA for the value of the goods paid for by the insurer. TACLOBAN. The respondents had no choice but to disembark at TACLOBAN and they had
to board a ferryboat to CATBALOGAN. Hence, they sued SWEET LINES for damages.
Moreover, the insolvency of Oyama Lines has no bearing on the case insofar as the liability
of Citadel is concerned. The law does does not make the liability of the ship agent Issue: Is Sweet Lines liable for damages? YES
dependent upon the solvency or insolvency of the ship owner.
Pertinent Provisions
Note: As to the liability of charterer
ART. 614. A captain who, having agreed to make a voyage, fails to fulfill his undertaking, without
In this case, the charterer represented itself on the face of the bill of lading as the carrier. being prevented by fortuitous event or force majeure, shall indemnify all the losses which his
The vessel owner and the charterer did not stipulate in the Charter party on their separate failure may cause, without prejudice to criminal penalties which may be proper.
respective liabilities for the cargo. The loss/damage to the cargo was sustained while it was
still on board or under the custody of the vessel. As the charterer was itself the carrier, it ART. 698. In case of interruption of a voyage already begun, the passengers shall only be
was made liable for the acts of the ship captain who was responsible for the cargo while obliged to pay the fare in proportion to the distance covered, without right to recover damages if
under the custody of the vessel. 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
As for the charterer's agent, the evidence showed that it represented the vessel when it caused by the disability of the vessel, and the passenger should agree to wait for her repairs, he
took charge of the unloading of the cargo and issued cargo receipts (or tally sheets) in its may not be required to pay any increased fare of passage, but his living expenses during the
own name. Claims against the vessel for the losses/damages sustained by that cargo were delay shall be for his own account.
also received and processed by it. As a result, the charterer's agent was also considered a
ship agent and so was held to be solidarily liable with its principal. As found by both Courts below, there was no fortuitous event or force majeure which
prevented the vessel from fulfilling its undertaking of taking private respondents to
Catbalogan. In the first place, mechanical defects in the carrier are not considered
if the common carrier is liable, is it automatic that the ship agent is also a caso fortuito that exempts the carrier from responsibility
liable?
Vice versa? In the second place, even granting arguendo that the engine failure was a fortuitous event,
it accounted only for the delay in departure. When the vessel finally left there was no longer
Where does the command responsibility stop?
84
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

anyforce majeure that justified by-passing a port of call. The vessel was completely The captain of a vessel is a confidential and managerial employee within the meaning of
repaired the following day. the above doctrine. Hence, he cannot be dismissed without just cause.

The reason for by-passing the port of Catbalogan, as admitted by SWEET LINE‘s General Moreover, a master or captain, for purposes of maritime commerce, is one who has
Manager, was to enable the vessel to catch up with its schedule for the next week. The command of a vessel. A captain commonly performs three (3) distinct roles: (1) he is a
record also discloses that there were 50 passengers for Tacloban compared to 20 general agent of the shipowner; (2) he is also commander and technical director of the
passengers for Catbalogan, so that the Catbalogan phase could be scrapped without vessel; and (3) he is a representative of the country under whose flag he navigates. The
too much loss for the company. most important role has to do with the operation and preservation of the vessel during its
voyage.
In this case, the voyage to Catbalogan was "interrupted" by the captain upon instruction of
management. The "interruption" was not due to fortuitous event or for majeure nor to In this case, the captain was dismissed without due process. More importantly, there is no
disability of the vessel. Having been caused by the captain upon instruction of basis for terminating him. A captain must be accorded a reasonable measure of
management, the passengers' right to indemnity from the ship owner is evident. The discretionary authority to decide to promote the safety of the ship and its crew. In this case,
owner of a vessel and the ship agent shall be civilly liable for the acts of the captain. TAYONG was convinced that the ship should not sail unless the economizer and tubro-
charger were completely repaired. There being no basis to terminate him, it follows that he
was illegally dismissed3
6. Tabacalera Insurance v. North Front

Doctrine:
5. Inter-orient v. NLRC A charter party between a shipper and a carrier does not convert the carrier into a private
carrier.
Doctrine: Failure on the part of the consignee to start unloading operations upon notice constitutes
Compagnie de Commerce vs. Hamburg is instructive and wherein the Court recognized the contributory negligence
discretionary authority of the master of a vessel and his right to exercise his best judgment,
with respect to navigating the vessel he commands Facts:
The captain has control of all departments of service in the vessel, and reasonable
discretion as to its navigation On August 1990, 20k sacks of corn grains were shipped on board NORTH FRONT 777, a
A captain commonly performs three (3) distinct roles: (1) he is a general agent of the ship owned by NORTH FRONT SHIPPING. It was consigned to REPUBLIC FLOUR
shipowner; (2) he is also commander and technical director of the vessel; and (3) he is a MILLS, and insured with TABACALERA insurance.
representative of the country under whose flag he navigates. The most important role has
to do with the operation and preservation of the vessel during its voyage. When the cargo reached its destination, it was found that the merchandise was already
moldy and deteriorating. It was found that the goods were damaged due to contact with
Facts: SALT WATER. The insurers paid REPUBLIC FLOUR the value of the goods and thereafter
sued NORTH FRONT SHIPPING for damages.
CAPTAIN TAYONG was employed by TRENDA WORLD SHIPPING through INTER-
ORIENT MARITIME ENTERPRISES for 1 year. On 1989, he assumed command of the o The TC dismissed the complaint on the ground that the contract entered into was
vessel of TRENDA with instructions to sail to SOUTH AFRICA to load 120k tons of coal. a charter-party agreement. As such, only ordinary diligence was required of
NORTH FRONT. The inspection of the barge by the shipper and the
TAYONG encountered problems during the voyage, such as the lack of oxygene and representatives of the shipping company before actual loading, coupled with
acetylene. These were necessary for the welding repair of the turbo-charger and the
economizer. He was not immediately given these supplies and instead ordered to shut 3
IMPORTANT: A "turbo-charger" is a centrifugal blower driven by exhaust gas turbines and
down the economizer, and instead use the auxiliary boilers. TAYONG decided to not used to supercharge an engine, or to supply a charge to the intake of an internal-combustion
immediately proceed to S.A. until the supplies were eventually delivered. engine at a pressure higher than that of the surrounding atmosphere (Webster's New World
Dictionary (1974), p. 1532.
The supplies eventually arrived after 7 hours and the ship was able to proceed to S.A.
However, upon arrival, TAYONG was relieved of his position and thereafter repatriated for An "economizer" is a device in which water is heated preliminary to entering the boiler proper.
not following orders. He then filed a complaint for illegal dismissal with the POEA. The The heat which was used in raising the temperature of the water contained in the boiler to boiling
POEA granted his claim and awarded him his unpaid salary. point is utilized, instead of being wasted, for the purpose of raising the water in the economizer
to a high temperature before it enters the boiler. An increase in the feed water temperature will
Issue: Was there sufficient basis to dismiss TAYONG? No. raise boiler efficiency. (Ithaca Traction Corp. vs. Traveler's Indemnity Co., 177 N.Y.S. 753
[1919]).

85
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

the Permit to Sail issued by the Coast Guard, sufficed to meet the degree of
diligence required of the carrier.
Facts:
o CA affirmed but found that NORTH FRONT was a common carrier and it
complied with its duty to exercise extraordinary diligence. SS Antonio was owned and operated by A. MAGSAYSAY It was bound for BATANES and
APARRI with general cargo belonging to different shippers (with AGAN among one of
Issue: Was NORTH FRONT a COMMON CARRIER? Yes. them)

NORTH FRONT is a COMMON CARRIER When the vessel reached APARRI, the ship ran aground at the mouth of the river due to
the shifting of sandbars. It had to be refloated by Luzon Stevedoring for an agreed amount.
The charter-party agreement between North Front Shipping Services, Inc., and Republic The cargoes were eventually delivered to their owners, except for AGAN, who was the only
Flour Mills Corporation did not in any way convert the common carrier into a private carrier one who did not make a deposit to answer for its contribution to the average.
North Front Shipping Services, Inc., is a corporation engaged in the business of
transporting cargo and offers its services indiscriminately to the public. It is without doubt a THUS, A. MAGSAYSAY sued AGAN for his contribution to the average. AGAN argued that
common carrier. As such it is required to observe extraordinary diligence in its he should not be held liable as the stranding of the vessel was due to the negligence of the
vigilance over the goods it transports. ship‘s master.

Extraordinary diligence was NOT exercised Issue: Should a general average be allowed for floating a vessel that was accidentially
stranded? In other words, should AGAN contribute to the average?
North Front Shipping Services, Inc., proved that the vessel was inspected prior to actual
loading by representatives of the shipper and was found fit to take a load of corn grains.. The law on averages is contained in the Code of Commerce. Under that law, averages are
However, having been in the service since 1968, the master of the vessel should have classified into simple or particular and general or gross.
known at the outset that corn grains that were farm wet and not properly dried would
eventually deteriorate when stored in sealed and hot compartments as in hatches of Generally speaking, simple or particular averages include all expenses and damages
a ship. caused to the vessel or cargo which have not inured to the common benefit (Art. 809), and
are, therefore, to be borne only by the owner of the property gave rise to same (Art.
With this knowledge, the master of the vessel and his crew should have undertaken 810); while general or gross averages include "all the damages and expenses which are
precautionary measures to avoid or lessen the cargo's possible deterioration as they deliberately caused in order to save the vessel, its cargo, or both at the same time, from a
were presumed knowledgeable about the nature of such cargo. But none of such real and known risk" (Art. 811). Being for the common benefit, gross averages are to be
measures was taken. borne by the owners of the articles saved (Art. 812).

However, the consignee REPUBLIC FLOUR is also guilty of contributory negligence. In this case, the The requisites for general and gross averages are as follows: :
It was seasonably notified of the arrival of the goods but it did not immediately start
unloading operations. This led to the further deterioration of the goods in question. First, there must be a common danger. This means, that both the ship and the cargo,
after has been loaded, are subject to the same danger, whether during the voyage, or in
Insurers win. the port of loading or unloading; that the danger arises from the accidents of the sea,
dispositions of the authority, or faults of men, provided that the circumstances producing
7. A. Magsaysay v. Agan the peril should be ascertained and imminent or may rationally be said to be certain and
imminent. This last requirement exclude measures undertaken against a distant peril.
Doctrine:
Second, that for the common safety part of the vessel or of the cargo or both is
Requisites for gross/general averages: sacrificed deliberately.
(1) there must be a common danger. Third, that from the expenses or damages caused follows the successful saving of
the vessel and cargo.
(2), that for the common safety part of the vessel or of the cargo or both is sacrificed
deliberately. Fourth, that the expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority
(3), the ship and cargo are saved after the expenses and damage caused.
In this case, the 1st requisite was not fulfilled as the evidence does not show that the
(4), that the expenses or damages should have been incurred or inflicted after taking expenses sought to be recovered were incurred to save the ship. The vessel ran aground
proper legal steps and authority in fine weather and merely at the mouth of the river, which was very shallow. It is the
86
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

deliverance from an immediate, impending peril, by a common sacrifice, that constitutes the CASTELO, the shipowner. CASTELO argues that the loss was a particular loss that should
essence of general average. In the present case there is no proof that the vessel had be borne solely by STANDARD OIL.
to be put afloat to save it from imminent danger. What does appear from the testimony
of plaintiff's manager is that the vessel had to be salvaged in order to enable it "to proceed Issue: Is the loss of the petrol a particular loss or a general average loss? General Average
to its port of destination." But as was said in the case just cited it is the safety of the
property, and not of the voyage, which constitutes the true foundation of the general Petrol is not allowed to be stored in the hold. Hence, it is legal to carry such product on the
average ship‘s deck. Since it was legal to carry such petrol on the deck of the ship and the captain
had to jettison the goods to save the ship and the other goods loaded on board, it follows
The 2nd requisite was also not fulfilled as the cargo did not have to be sacrificed. It could‘ve that the loss of the petrol is a GENERAL AVERAGE.
been unloaded by the owners if they were required to do so.
HENCE, STANDARD OIL may recover from the OWNER of the ship (also against the
With respect to the third requisite, the salvage operation, was a success. But as the captain). This is because it is universally recognized that the captain is primarily the
sacrifice was for the benefit of the vessel — to enable it to proceed to destination — representative of the owner; and article 586 of the Code of Commerce expressly
and not for the purpose of saving the cargo, the cargo owners are not in law bound to declares that both the owner of the vessel and the charterer, shall be civilly liable for
contribute to the expenses. the acts of the master and the owner of the vessel is civilly liable for the acts of the
captain; and he can only escape from this civil liability by abandoning his property in
The 4th requisite has not been proved, for it does not appear that the expenses here in the ship and any freight that he may have earned on the voyage
question were incurred after following the procedure laid down in article 813 et seq.
Moreover, the captain is required to take the necessary steps to effect the adjustment,
In conclusion A. MAGSAYSAY has not made out a case for general average, with the liquidation, and distribution of the general average. In this case, the captain of the vessel
result that its claim for contribution against the defendant cannot be granted did not take those steps; consequently, the failure of the captain to take those steps gave
rise to the shipowner‘s liability.
IF you are a shipper, and your goods are jettisoned, why do you want a general
average loss? General average loss is a rule of equity. So that others (other shipper and Shipowner ordered to contribute. Shipowner loses.
ship owner) will pay you for your loss
9. Phil Home Assurance v. CA, Eastern Shipping
8. Standard Oil v. Castelo
Doctrine:
Doctrine: Where the formalities prescribed under Articles 813 and 814 of the Code of Commerce in
the captain is primarily the representative of the owner; and article 586 of the Code of order to incur the expenses and cause the damage corresponding to gross average were
Commerce expressly declares that both the owner of the vessel and the charterer, not complied with, the carrier cannot claim for contribution from the consignees for
shall be civilly liable for the acts of the master and the owner of the vessel is civilly additional freight and salvage charges
liable for the acts of the captain; and he can only escape from this civil liability by Fire is generally not a fortuitous event
abandoning his property in the ship and any freight that he may have earned on the
voyage Facts:
In this case, Sir will ask again for the requisites of general average. What happens if there
is no general average loss? Then it will be a simple/particular average. It‘s a fancy way of While in KOBE, JAPAN, Eastern Shipping (ESLI) loaded to it ship engine parts to WILLIAM
saying that the shipper will bear his own loss. LINES, ammonium chloride to ORCA‘s COMPANY, glue consigned to PAN ORIENTAL and
garments consigned to DING VELAYO.
Facts:
While the vessel was off OKINAWA, JAPAN, the acetylene cylinder in the accommodation
CASTELO (owner) leased his interisland steamer Batangueno to CHUMBUQUE area of the ship exploded and this explosion set fire to the whole ship. As a result, the
(charterer) for use in the conveying of cargo within the PH. In this contract, it was stipulated master and crew had to abandon the ship. The cargoes of the consignees were saved and
that the officers and crew of the Batangueño should be supplied by the owner, and that the they were subsequently charged for additional freight and salvage costs. These charges
charterer should have no other control over the captain, pilot, and engineers than to were all paid by PHAC, the insurer of all the consignees
specify the voyages that they should make and to require the owner to discipline or
relieve them as soon as possible in case they should fail to perform the duties PHAC in turn sued ESLI, alleging that the money it paid to the consignees were actually
respectively assigned to them. damages caused by the fault and negligence of ESLI. ESLI argued that the fire was due to
a fortuitous event. The complaint was dismissed by the RTC on the ground of fortuitous
The boat was hired by STANDARD OIL to deliver petroleum to Sorsogon. The petrol was event. Further, it added that the expenses incurred in saving the cargo were considered
placed on the deck of the ship and not on the hold. During its voyage, the boat encountered general average so the consignees must contribute. CA affirmed.
a storm. The captain was forced to jettison the petroleum. Thus, STANDARD OIL sued
87
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Issue: Was the fire a fortuitous event? NO Was the loss a general average? NO to realize that, with such maneuvers, they will collide. They executed inadequate
maneuvers and were too late in reacting to avoid collision.
There is sufficient evidence to show that that the cylinder caught fire because of the
fault/negligence of ESLI, its master and its crew. The cylinder should not have been near o Moreover, it was found that the CAPTAIN was playing mah-jong up to the time of
the engine room as the heat generated therefrom could cause an explosion. It follows the collision and that the DON JUAN was carrying more passengers than it was
therefore that the loss was not caused by a fortuitous event. allowed to carry (864, when the limit was 810)

As a rule, general or gross averages include all damages and expenses which are Under these circumstances, a presumption of gross negligence on the part of the vessel
deliberately caused in order to save the vessel, its cargo, or both at the same time, (her officers and crew) and of its ship-owner arises; this presumption was never rebutted by
from a real and known risk (Art. 811) NEGROS NAVIGATION. HENCE, NEGROS and its captain are grossly negligent and
should be held liable.
While the instant case may technically fall within the purview of Art 811, the formalities
prescribed under Articles 813 1and 814 of the Code of Commerce in order to incur As to the issue of damages, RTC merely made the mistake of lumping all damages
the expenses and cause the damage corresponding to gross average were not together. They must be separated. SC granted actual, moral and exemplary and atty‘s fees.
complied with. Consequently, ESLI's claim for contribution from the consignees of NEGROS lost.
the cargo at the time of the occurrence of the average must be denied.
11. Smith Bell v. CA (look-out)
It follows therefore that the cargo consignees cannot be made liable to the carrier for
additional freight and salvage charges. Consequently, carrier must refund to the insurer the Doctrine:
amount it paid under protest for additional freight and salvage charges in behalf of the Failure to provide a look-out constitutes negligence on the part of the shipowner.
consignees. Carrier loses. The doctrine of last clear chance is inapplicable in maritime navigation

10. Mecenas v. CA (mah-jong) Facts:

Doctrine: In the early morning of MAY 1970, a collision took place between the MV DON CARLOS,
A captain is grossly negligent if he is discovered to have been playing mah-jong at the time owned by GO THONG and MS YOTAI MARU, a Japanese merchant vessel. The collision
of his ship‘s collision. It does not matter w/n he was off-duty at that time. This in turn entitles caused damage to the cargo of YOTAI MARU. The insurance companies paid the
the victims of the collision to ACTUAL, MORAL and EXEMPLARY damages. consignees of the cargo in YOTAI MARU and in turn sued GO THONG (2 separate cases)4

Facts: o Starboard: right / Portside: left

The M/T Tacloban City, a barge-type oil tanker owned by PNOC, headed towards Bataan. Both judges found the crew of DON CARLOS to be negligent. GO THONG was held liable
During its voyage, it collided with M/V DON JUAN, owned by NEGROS NAVIGATION. The for damages. THUS, GO THONG appealed to the SC5
DON JUAN rammed the TACLOBAN near the starboard bow. Due to the collision, the MV
DON JUAN sank and hundreds of its passengers died. Issue: Was MV DON CARLOS the proximate cause of the accident? YES. 1) faulty overtake 2)
no look-out
Two of the victims were the spouses MECENAS. Thus, their children sued NEGROS
NAVIGATION and the captain of DON JUAN. Evidence shows that YOTAI MARU‘s headlights indicated that both vessels were sailing on
exactly opposite paths. Despite this, the course of DON CARLOS was changed by 5
NEGROS and CAPTAIN SANTISTEBAN were found to be liable for the deaths and the TC degrees to the left instead of to the right to overtake another vessel, the DON
awarded 400,000 for ―the death of their parents‖ This was affirmed by the CA but the CA FRANCISCO. THIS was the cause of the collision.
reduced the damages to 100k as ―actual damages‖ The Mecenas children appealed,
assailing the reduction of damages and praying for the award of exemplary damages. Moreover, another indicator of negligence was the fact that DON CARLOS failed to have a
proper look out as required by the Rules. The look-out‘s purpose is precisely that, to look
Issue: Was NEGROS NAVIGATION and its captain grossly negligent? YES out for other vessels.

The evidence shows that both M/T TACLOBAN and M/V DON JUAN were equally at fault
in the collision. M/ V Don Juan and Tacloban City became aware of each other's presence
in the area by visual contact at a distance of 6 miles from each other. They were fully aware 4
One case was filed by SMITH BELL and another and the other by SMITH BELL also, with
that if they continued on their course, they will meet head on. Don Juan - steered to the TOKYO MARINE in separate RTCs. The TOKYO Marine Case was handled by then Judge
right; Tacloban City continued its course to the left. There can be no excuse for them not Serafin Cuevas
5
It‘s a long and complicated case concerning res judicata. Check orig if you want.
88
allision
inscrutable fault
time zones
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

A "proper look-out" is one who has been trained as such and who is given no other duty solidarily liable for the damages occasioned to their cargoes. This direct responsibility
save to act as a look-out and who is stationed where he can see and hear best and is recognized in Article 618 of the Code of Commerce under which the captain shall be
maintain good communication with the officer in charge of the vessel, and who must, of civilly liable to the ship agent, and the latter is the one liable to third persons,
course, be vigilant
LIM TONG TO should not be exonerated because as shipowner, he was also
In the case at bar, the failure of the "Don Carlos" to recognize in a timely manner the risk of negligent. Limitation of liability is inapplicable.
collision with the "Yotai Maru" coming in from the opposite direction, was at least in part
due to the failure of the "Don Carlos" to maintain a proper look-out. In this case, both the master and the engineer of the motor launch ―Consuelo V‖ were not
duly licensed as such. The right of abandonment of vessels, as a legal limitation of a
It follows therefore that DON CARLOS was the sole and proximate cause of the collision shipowner‘s liability, does not apply to cases where the injury or the average is due to
and it should be held liable to the insurers. shipowner‘s own fault. LIM TONG TO and MANILA STEAMSHIP solidarily liable.

12. Manila Steamship v. Abdulhaman 13. Caltex v. Sulpicio

Doctrine: Doctrine:
In maritime torts, the shipowner‘s liability is direct. It cannot use the defense of ordinary
diligence in selection and supervision A charter party is a contract by which an entire ship, or some principal part thereof, is let by
The owner of a vessel who had caused the same to sail without licensed officers is liable the owner to another person for a specified time or use; a contract of affreightment is one
for the injuries caused by the collision over and beyond the value of his vessel; hence, he by which the owner of a ship or other vessel lets the whole or part of her to a merchant or
cannot escape liability because of the sinking of the vessel. (Limitation of liability does not other person for the conveyance of goods, on a particular voyage, in consideration of the
apply) payment of freight.
A contract of affreightment may be either time charter, wherein the leased vessel is leased
Facts: 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,
On the evening of MAY 1948, the ML CONSUELO V, owned by LIM TONG TO was either for a determinate period of time or for a single or consecutive voyage, the ship owner
carrying ABDULHAMAN and his family. will supply the ship's store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship.
During its voyage, the ML CONSUELO collided with M/S BOWLINE KNOT, owned by Under a demise or bareboat charter on the other hand, the charterer mans the vessel with
MANILA STEAMSHIP. As a result, the boat capsized and the family of ABDULHAMAN his own people and becomes, in effect, the owner for the voyage or service stipulated,
died. subject to liability for damages caused by negligence. It is only when the charter
includes both the vessel and its crew, as in a bareboat or demise that a common
Therefore, ABDULHAMAN sued LIM TONG TO for damages. The TC found both the ML carrier becomes private, at least insofar as the particular voyage covering the
CONSUELO and ML BOWLINE KNOT were negligent and they were ordered to solidarily charter-party is concerned
pay ABDULHAMAN damages. However, LIM TONG TO was exempted from liability by If the charter is a contract of affreightment, which leaves the general owner in possession
reason of the sinking and the total loss of the vessel. of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on
the owner. The charterer is free from liability to third persons in respect of the ship.
MANILA STEAMSHIP appealed, arguing that that it exercised ordinary diligence in the The charterer is not liable for damages to 3rd persons under a contract of
selection and supervision of its employees. affreightment (voyage charter/time charter)

Issue: Is Manila Steamship liable? YES. Should LIM TONG TO be held liable also? YES.
Facts:
Manila Steamship’s Liability for the MARITIME TORT is DIRECT, under the CODE OF
COMMERCE ON DEC 1987, the MT VECTOR, owned by VECTOR SHIPPING left for MASBATE. It was
loaded w/ petrol products shipped by CALTEX by virtue of a charter party. During its
MANILA STEAMSHIP‘s defense of diligence in selection and supervision is untenable. voyage, it collided with MV DONA PAZ, owned by SULPICIO. At the time of the collision,
While it is true that ABDULHAMAN’s action against MANILA STEAMSHIP is based on a the DONA PAZ was carrying 4,000 passengers. All the crew members MV DONA PAZ died
tort or quasi-delict, the tort in question is not a civil tort under the Civil Code but a and only 24 passengers survived.
maritime tort resulting in a collision at sea, governed by Articles 826-939 of the Code
of Commerce. The heirs of the deceased sued SULPICIO, based on breach of contract of carriage.
SULPICIO in turn filed a third party complaint against VECTOR due to the finding of the
Under Article 827 of the Code of Commerce, in case of collision between two vessels BMI that VECTOR was negligent and its negligence was the proximate cause of the
imputable to both of them, each vessel shall suffer her own damage and both shall be collision.
89
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

clear breach of its duty prescribed in Article 1755 of the Civil Code Caltex won,
o SULPICIO also sued CALTEX under the 3rd party complaint, alleging that exonerated from liability, VECTOR did not appeal so its liability was affirmed.
Caltex chartered MT Vector with gross and evident bad faith knowing fully
well that MT Vector was improperly manned, ill-equipped, unseaworthy and a 14. NDC v. CA
hazard to safe navigation; as a result, it rammed against MV Doña Paz in the
open sea setting MT Vector's highly flammable cargo ablaze Doctrine:
Under the provisions of the Code of Commerce, particularly Articles 826 to 839, the
o RTC dismissed the 3rd party complaint but CA modified, ordering VECTOR and shipowner or carrier, is not exempt from liability for damages arising from collision due to
CALTEX to reimburse SULPICIO for whatever it may be ordered to pay to the the fault or negligence of the captain. Primary liability is imposed on the shipowner or
heirs of the victims. Hence, CALTEX appealed. carrier in recognition of the universally accepted doctrine that the shipmaster or
captain is merely the representative of the owner who has the actual or constructive
Issue: Should CALTEX, as charterer, also be held liable? NO. Does a charter party convert a control over the conduct of the voyage
common carrier to a private carrier? No. Before the COGSA can be applied, Civil Code provisions should be applied first, then the
Code of Commerce. (CC CODE OF COMMERCE COGSA)
The charterer has no liability for damages under Philippine Maritime laws .
Facts:
The respective rights and duties of a shipper and the carrier depends not on whether the
carrier is public or private, but on whether the contract of carriage is a bill of lading or NDC, as the mortgagee of DONA NATI, appointed Maritime Company of the PH (MCP) as
equivalent shipping documents on the one hand, or a charter party or similar contract on its agent to manage and operate the aforesaid vessel. Thus, on 1964, the E PHILIPP
the other. Corporation loaded a total of 1200 bales of raw cotton in the DONA NATI. The shipment
was consigned to Manila Banking Corporation. Other cargoes were also loaded for
CALTEX and Vector entered into a contract of affreightment, also known as a voyage consignment to persons in the PH
charter. If the charter is a contract of affreightment, which leaves the general owner in
possession of the ship as owner for the voyage, the rights and the responsibilities of En route to Manila from SAN FRANCISCO, the DONA NATI collided with YASUSHIMA
ownership rest on the owner. The charterer is free from liability to third persons in respect MARU, a japanese vessel. As a result, 550 bales of cotton were damaged and lost. The
of the ship. In this case, therefore, CALTEX should not be held liable to 3rd persons. other cargoes were also damaged. Consequently, the insurers paid the consignees. In turn,
they sued NDC and MCP for damages.
Moreover, the charterer of a vessel has no obligation before transporting its cargo to
ensure that the vessel it chartered complied with all legal requirements. The duty rests NDC and MCP were held solidarily liable for the damage as it found that the DONA NATI
upon the common carrier simply for being engaged in "public service." Only VECTOR was the one at fault. The RTC based its findings on the rules of collision under the CODE
should be held liable. OF COMMERCE. CA affirmed so both appealed to the SC. NDC argues that the COGSA
should apply and not the Civil Code or Code of Commerce.
The contract of affreightment did not turn VECTOR into a private carrier
o Under Section 4 (2) of said Act, the carrier is not responsible for the loss or
A common carrier shall remain as such, notwithstanding the charter of the whole damage resulting from the "act, neglect or default of the master, mariner,
portion of a vessel of one or more persons, provided the charter is limited to the ship pilot or the servants of the carrier in the navigation or in the management
only, as in the case of a time-charter or the voyage charter. of the ship."

It is only when the charter includes both the vessel and its crew, as in a bareboat or o Thus, NDC insists that based on the findings of the lower courts that both pilots
demise that a common carrier becomes private, at least insofar as the particular of the colliding vessels were at fault and negligent, NDC should be relieved of
voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or liability under the Carriage of Goods by Sea Act.
voyage charter retains possession and control of the ship, although her holds may, for the
Issue: Should the COGSA apply? No
moment, be the property of the charterer. In this case, since the contract was one of
affreightment, it follows that VECTOR remained to be a common carrier, and hence, it had
the duty to exercise extraordinary diligence. The law of the country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration" (Article 1753, Civil Code).
In this case, since the goods were intended to be transported to the Philippines, the
As a common carrier, VECTOR is deemed to warrant impliedly the seaworthiness of the
liability of the carrier is governed primarily by the Civil Code and in all matters not
ship. For a vessel to be seaworthy, it must be adequately equipped for the voyage and
regulated by said Code, the rights and obligations of common carrier shall be
manned with a sufficient number of competent officers and crew. The failure of a common
governed by the Code of commerce (first) and (then) by special laws (Article 1766,
carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a
Civil Code).

90
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

o THEREFORE, the Carriage of Goods by Sea Act, a special law, is merely Thus, on 1985, the KRAMERS sued TRANS-ASIA for damages. TRANS-ASIA filed a
suppletory to the provision of the Civil Code. It is immaterial that the collision motion to dismiss on the ground of prescription.
occurred in foreign waters.
it was argued that under Article 1146 of the Civil Code, the prescriptive period for instituting
It appears, however, that collision falls among matters not specifically regulated by a Complaint for damages arising from a quasi-delict like a maritime collision is four years.
the Civil Code, so the CA did not err in its application to the case at bar of Articles 826 to He maintained that the petitioners should have filed their Complaint within four years from
839 which deal exclusively with collision of vessels. the date when their cause of action accrued (1976, date of collision)

More specifically, Article 826 of the Code of Commerce provides that where collision is Issue: What is the reckoning point for the prescriptive period for filing claims based on maritime
imputable to the personnel of a vessel, the owner of the vessel at fault, shall indemnify the collisions?
losses and damages incurred after an expert appraisal. But more in point to the present
case is Article 827 of the same Code, which provides that if the collision is imputable to
both vessels, each one shall suffer its own damages and both shall be solidarily Under Article 1146 of the Civil Code, an action based upon a quasi-delict must be instituted
responsible for the losses and damages suffered by their cargoes. within four (4) years. The prescriptive period begins from the day the quasi-delict is
committed.
Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to
839, the shipowner or carrier, is not exempt from liability for damages arising from collision The prescriptive period must be counted when the commission of an act or omission
due to the fault or negligence of the captain. Primary liability is imposed on the violative of the right of the plaintiff, which is the time when the cause of action arises.
shipowner or carrier in recognition of the universally accepted doctrine that the
shipmaster or captain is merely the representative of the owner who has the actual It is therefore clear that in this action for damages arising from the collision of two (2)
or constructive control over the conduct of the voyage vessels the four (4) year prescriptive period must be counted from the day of the collision.
The aggrieved party need not wait for a determination by an administrative body like a
There is, therefore, no room for NDC's interpretation that the Code of Commerce Board of Marine Inquiry, that the collision was caused by the fault or negligence of the other
should apply only to domestic trade and not to foreign trade. Aside from the fact that party before he can file an action for damages. The ruling in Vasquez does not apply in this
the Carriage of Goods by Sea Act (Com. Act No. 65) does not specifically provide for the case. Immediately after the collision the aggrieved party can seek relief from the courts by
subject of collision, said Act in no uncertain terms, restricts its application "to all contracts alleging such negligence or fault of the owners, agents or personnel of the other vessel.
for the carriage of goods by sea to and from Philippine ports in foreign trade." Under
Section I thereof, it is explicitly provided that "nothing in this Act shall be construed as In this case, since the collision took place on 1976, and the complaint was only filed on
repealing any existing provision of the Code of Commerce which is now in force, or as 1985, the cause of action has prescribed. KRAMER lost.
limiting its application." By such incorporation, it is obvious that said law not only recognizes
the existence of the Code of Commerce, but more importantly does not repeal nor limit its
application. MDC loses, insurers win

15. Kramer v. CA

Doctrine:

in an action for damages arising from the collision of two (2) vessels, the four (4) year
prescriptive period must be counted from the day of the collision. The aggrieved party
need not wait for a determination by an administrative body like a Board of Marine Inquiry,
that the collision was caused by the fault or negligence of the other party before he can file
an action for damages.
4 kinds of maritime accidents: 1) general average 2) shipwreck (derelict) 3) collision 4)
arrival under stress (ship can still sail)

Facts:

ON 1976, the F/B MARJOLEA, owned by the KRAMERS, collided with MV ASIA
PHILIPPINES owned by TRANS-ASIA. As a result, the MARJOELA sank. On 1981 The
BMI found that the cause of the collision was the negligence of the employees of TRANS-
ASIA.

91
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 14 (MARITIME CONTRACTS)


1. Peralta de Guerrero v. Madrigal Shipping Co. 2. Planters v. CA (take note of this case for finals)

Doctrine: Doctrine:
The ticket issued to a passenger represents the contract of carriage between such Time-charter party does not transform the carrier into a private carrier.
passenger and the carrier. (Note: Ticket is not necessary for perfection of contract of
carriage) Facts:

Facts: Planter‘s Products ordered urea (fertilizer) from MITSUBISHI in Japan. MITSUBISHI, in
behalf of PLANTERS, made arrangements to ship the urea in ―bulk‖ to the PH by entering
PACIFICO ACACIO entered into a contract of carriage with MADRIGAL SHIPPING wherein into a TIME-CHARTER party with KKKK (in Japan)
MADRIGAL obliged itself to carry ACACIO from Zamboanga to Manila. However, the ship
sank, causing ACACIO‘s death Upon arrival, PLANTERS unloaded the cargo onto its dump trucks within 11 days.
However, upon inspection, it was discovered that there was a shortage in the cargo and
Hence, his heirs (wife and daughter) sued MADRIGAL SHIPPING for damages due to the some of the urea was also damaged and unfit for commerce.
alleged negligence of its captain and crew.
PLANTERS sued SSI, the ship agent of KKKK for the value of the damaged and lost cargo
o In response, MADRIGAL filed a motion to dismiss, alleging that the cause of but the RTC dismissed, holding that KKKK was a private carrier, hence the duty of
action has prescribed because the case should‘ve been filed within 6 years from extraordinary diligence did not apply.
the breach of contract. Since the complaint was filed more than 7 years from
ACACIO‘s death, the complaint was filed out of time. Issue: Was KKKK a private carrier? No, it was a common carrier Time-charter party did not
make KKKK a common carrier. Was KKKK able to overcome the presumption of negligence?
o The trial court dismissed the complaint, as it treated the complaint as merely a YES
complaint for damages and not a complaint based on a written contract.
Charter parties are of two types:
Issue: Is the complaint barred by prescriptive? No. Cause of action predicated on breach of
contract as embodied by the ticket. (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,
The cause of action is based on a written contract. It is of common knowledge that
whenever a passenger boards a ship for transportation, he is issued a ticket by the shipper, (b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to
wherein the terms of the contract are specified. . 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.
This ticket is in itself a complete 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 It is only when the charter includes both the vessel and its crew, as in a bareboat or
contracting parties manifested by the fact that the passenger boards the ship and the demise that a common carrier becomes private, at least insofar as the particular
shipper consents or accepts him in the sip for transportation; (2) cause or consideration voyage covering the charter-party is concerned. A shipowner in a time or voyage
which is the fare paid by the passenger as stated in the ticket; and (3) object, which is the charter retains possession and control of the ship, although her holds may, for the moment,
transportation of the passenger from the place of departure to the place of destination be the property of the charterer
which are stated in the ticket case should not have been dismissed. Carrier loses.
In this case, what was entered into was a contract of affreightment. When PLANTERS
chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were
under the employ of the shipowner and therefore continued to be under its direct
supervision and control. Hence, the charter-party did not transform KKKK into a private
carrier.

However, KKKK was able to overcome to presumption of negligence. The probability of the
cargo being damaged or getting mixed or contaminated with foreign particles was made
greater by the fact that the fertilizer was transported in "bulk," thereby exposing it to the
inimical effects of the elements and the grimy condition of the various pieces of equipment
used in transporting and hauling it.

92
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

o The evidence of respondent carrier also showed that it was highly improbable for 4. Maritime Agencies and Services v. CA
sea water to seep into the vessel's holds during the voyage since the hull of the
vessel was in good condition and her hatches were tightly closed and firmly Doctrine:
sealed. THUS it is not liable for damages. Carrier wins. A charterer may be held liable to the consignee if under the charter party, it stipulates that it
is responsible for loading, stowage and unloading at the ports visited
3. Coastwise Lighterage v. CA
3 significant reasons why it is important to know why a carrier is private or common
Doctrine: o Diligence required
Under the demise or bareboat charter of the vessel, the charterer will generally be regarded o Presumption of negligence
as the owner for the voyage or service stipulated. The charterer mans the vessel with his o Stipulations limiting liability
own people and becomes the owner pro hac vice, subject to liability to others for damages
caused by negligence. Facts:
To create a demise, the owner of a vessel must completely and exclusively
relinquish possession, command and navigation thereof to the charterer, anything TRANSCONTINENTAL FERTILIZER COMPANY (TFM charterer) chartered a vessel
short of such a complete transfer is a contract of affreightment (time or voyage named HONGKONG ISLAND from HONGKONG ISLAND SHIPPING (HKIS carrier) for
charter party) or not a charter party at all. In this case, there was no demise, and only a the shipment of bagged urea (from USSR to the PH) The shipment was consigned to
contract of affreightment. Hence, the carrier was not transformed into a private carrier. ATLAS.

Facts: o TFM‘s agent is MARITIME AGENCIES while HKIS‘s agent is MACONDRAY

PAG-ASA SALES INC contracted COASTWISE (contract of affreightment) to transport Upon arrival however, it was discovered that there was a shortage in the shipment. The
molasses from Negros to Manila, using the latter‘s (COASTWISE) barges. However, upon consignee was able to claim from its insurer, which in turn, sued HKIS, MARITIME and
reaching Manila Bay, one of the barges struck an unknown sunken object (later on MACONDRAY. However, only the charterer and its agent (TFM and MARITIME) were
discovered to be a submerged vessel). As a result, the molasses were damaged. found liable. Maritime argues that it should not be held liable, because it was merely the
charterer‘s agent.
The insurer, PHILGEN, paid for the damage and consequently, it sued PAG-ASA. PAG-
ASA argues that due to its ‗charter agreement‘ with PAG-ASA, it was transformed into a Issue: May the charterer be held liable? Yes, by virtue of the stipulation in the charter.
private carrier, hence it is not bound to exercise extraordinary diligence.
A voyage charter is a contract for the hire of a vessel for one or a series of voyages
Issue: Was COASTWISE turned into private carrier? No. It was a contract of affreightment. usually for the purpose of transporting goods for the charterer. The voyage charter is a
contract of affreightment.
A contract of affreightment is one in which the owner of the vessel leases part or all of its
space to haul goods for others. It is a contract for special service to be rendered by the o A voyage charter being a private carriage, the parties may freely contract
shipowner and under such contract the shipowner retains the possession, command respecting liability for damage to the goods and other matters. The basic
and navigation of the ship, The charterer or freighter merely has use of the space in the principle is that "the responsibility for cargo loss falls on the one who
vessel in return for his payment of the charter hire. (this case cites Puromines, case #6) agreed to perform the duty involved" in accordance with the terms of most
voyage charters
In this case, what was entered into was a contract of affreightment and not a demise. Pag-
asa Sales, Inc. only leased three vessels of COASTWISE, in order to carry cargo from one o In this case, the charter party is a voyage charter where the charterer was
point to another, but the possession, command and navigation of the vessels responsible for loading, stowage and discharging at the ports visited, while the
remained with COASTWISE. owner was responsible for the care of the cargo during the voyage. These
responsibilities are provided for under the charter. Therefore, the charterer
Since COASTWISE is a common carrier, it is presumed to be negligent if there is damage may be held liable.
to the goods that it is transporting. It was unable to overcome this presumption. Evidence
showed that carrier was negligent as it employed an unlicensed patron (much like a As regards the shipowner, it may also be held liable. As the bags were in good order when
captain). Carrier loses, liable for damages received in the vessel, the presumption is that they were damaged or lost during the
voyage as a result of their negligent improper stowage. For this the ship owner should be
held liable.

Dispositive Portion: Charterer‘s Agent (MARITIME) and shipowner and its agent both
held liable

93
charter party is just a lease of the ship or a space in a ship
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

5. Litonjua Shipping v. National Seamen’s Board 6. Puromines v. CA

Doctrine: Doctrine:
in a demise or bare boat charter, the charterer is treated as owner pro hac vice of the In cases of bareboat charter, the charterer is considered the shipowner pro hac vice (for
vessel. The charterer assumes the customary rights and liabilities of the shipowner in that voyage only), and will be liable as such to 3rd persons for damage to the cargo
relation to third persons who have dealt with him or with the vessel. In such case, the Under the demise or bareboat charter of the vessel, the charterer will generally be
Master of the vessel is the agent of the charterer and not of the shipowner. The considered as owner for the voyage or service stipulated. The charterer mans the vessel
charterer or owner pro hac vice (for that particular voyage), and not the general with his own people and becomes, in effect, the owner pro hac vice, subject to liability to
owner of the vessel, is held liable for the expenses of the voyage including the others for damages caused by negligence. To create a demise the owner of a vessel
wages of the seamen. must completely and exclusively relinquish possession, command and navigation
thereof to the charterer; anything short of such a complete transfer is a contract of
Facts: affreightment (time or voyage charter party) or not a charter party at all.
On the other hand, a contract of affreightment is one in which the owner of the vessel
LITONJUA is the local crewing officer of FAIRWIND. The M/V DUFTON BAY is a ship of leases part or all of its space to haul goods for others. It is a contract for a special
foreign registry owned by MULLION. Fairwind chartered the DUFTON BAY. service to be rendered by the owner of the vessel and under such contract the
general owner retains the possession, command and navigation of the ship, the
On 1976, while the ship, DUFTON BAY was in CEBU and while under the charter by charterer or freighter merely having use of the space in the vessel in return for his
FAIRWIND, the vessel‘s master hired CANDONGCO to serve as 3rd engineer for 12 payment of the charter hire. If the charter is a contract of affreightment, which leaves the
months. However, before the contract expired, CANDONGCO was terminated (reason: general owner in possession of the ship as owner for the voyage, the rights, responsibilities
―owner‘s arrange‖) of ownership rest on the owner and the charterer is usually free from liability to third
persons in respect of the ship
o THUS, he sued MULLION (ship owner) and LITONJUA (the agent of the
charterer, FAIRWIND) in the National Seamen Board (NSB) NSB held Facts:
LITONJUA, as PH agent of FAIRWIND, liable.
Puromines entered into a contract with PHILLIP BROTHERS OCEANIC (PBO) for the sale
LITONJUA went to the SC, alleging that it was NOT the employer of CANDONGO. Instead, of UREA. PBO, in turn chartered M/V LILIANA DIMITROVA (shipowner and its PH
the employer was MULLION, the shipowner. AGENT, MARITIME FACTORS, not impleaded in the SC petition) to transport the UREA
to the PH.
Issue: May LITONJUA, as agent of the CHARTERER, be considered the employer of
CANDONGCO? YES. o In the sales contract, it was agreed upon that in case of any dispute for the loss
of the cargo, etc, the case will be referred to arbitration.
It is well settled that in a demise or bare boat charter, the charterer is treated as owner pro
hac vice of the vessel. The charterer assumes the customary rights and liabilities of the However, the UREA arrived in Manila in bad order and condition (caking, hardening,
shipowner in relation to third persons who have dealt with him or with the vessel. In such wetting, melting), allegedly due to improper storage and ventilation. Thus, Puromines sued
case, the Master of the vessel is the agent of the charterer and not of the MARITIME FACTORS and PBO (the charterer) for breach of contract of carriage. The TC
shipowner. The charterer or owner pro hac vice (for that particular trip), and not the denied the motion to dismiss of PBO but the CA reversed, holding that it must respect the
general owner of the vessel, is held liable for the expenses of the voyage including arbitration clause.
the wages of the seamen.
Issue: Is the charterer liable assuming that its liability is based on the contract of carriage? It
In this case, Litonjua did not place into the record of this case a copy of the charter party depends on the kind of charter.
covering the M/V Dufton Bay. As such, it was assumed by the SC that what was
entered into between the charterer and the ship owner was a bareboat charter. Since Responsibility to third persons for goods shipped on board a vessel follows the vessel's
LITONJUA was the agent of the charterer, it can be held liable for the contract of possession and employment; and if possession is transferred to the charterer by virtue of a
employment entered into by the captain of the ship and CANDONGCO. LITONJUA lost demise, the charterer, and not the owner, is liable as carrier on the contract of
affreightment made by himself or by the master with third persons, and is
answerable for loss, damage or nondelivery of goods received for transportation.

o An owner who retains possession of the ship, though the hold is the property of
the charterer, remains liable as carrier and must answer for any breach of duty
as to the care, loading or unloading of the cargo.

94
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Assuming that in the present case, the charter party is a demise or bareboat charter, then is necessary. In this particular case, the fact that RAFOLS violated the prohibition on
PBO is liable to Puromines, Inc., subject to the terms and conditions of the sales contract. SUBLEASE did NOT grant OUANO a cause of action against MADE and SMCSI
On the other hand, if the contract between PBO and the shipowner MV "Liliana Dimitrova"
was merely that of affreightment, then it cannot be held liable for the damages caused The charter agreement was a bareboat charter. Hence, the owner did not have a lien over the
by the breach of contract of carriage, the evidence of which is the bills of lading. cargo.

In any case, whether the liability of PBO should be based on the sales contract or that of In a bareboat/demise charter, (the one in the case at bar), the owner of the ship transfers
the bill of lading, the parties are nevertheless obligated to respect the arbitration provisions possession and control to the charterer. The owner loses his lien for freight, and the lien
on the sales contract and/or the bill of lading. Since PUROMINES is a signatory and party operates in favor of the CHARTERER, who substitutes the owner for that particular voyage.
to the sales contract, it cannot escape from his obligation under the arbitration clause as
stated therein. o Therefore, where the charter constitutes a demise of the ship and the charterer is
the owner for the voyage, and that is the kind of charter party involved in the
7. Julius Ouano v. CA instant case, the general owner has no lien on the cargo for the hire of the
vessel, in the absence of an express provision.
Doctrine:
In a demise charter, the maritime lien over the goods transported operates in favor of the Moreover, even assuming that OUANO had a lien on the cargo for unpaid freight, it was
CHARTERER and not the SHIP OWNER. deemed waived when the goods were unconditionally released to the consignee at
Pursuant to the principle of relativity of contracts, the shipowner can only sue the charterer the port of destination. A carrier has such a lien only while it retains possession of the
even if the charterer violated the prohibition on sub-lease by sub-leasing the vessel to goods, so that delivery of the goods to the consignee or a third person terminates, or
another person constitutes a waiver of, the lien OWNER LOSES.

Facts: Optional: (another reason why the lien lapsed, assuming there was a lien)

OUANO is the registered owner and operator of MV DON JULIO OUANO. He leased the Furthermore, under Article 667 of the Code of Commerce, the period during which the lien shall
vessel to RAFOLS under a charter party. It was stipulated that the charterer was not subsist is twenty (20) days. During this period, the sale of the goods may be requested, even
allowed to sublease the vessel without the knowledge and consent of the owner. though there are other creditors and even if the shipper or consignee is insolvent.

RAFOLS, however, contracted with Market Developers INC (MADE) under an agreement But, this right may not be made use of where the goods have been delivered and were
denominated as a ―fixture note‖ to transport cement from ILIGAN to GENSAN, with the turned over to a third person without malice on the part of the third person and for a
shipment consigned to SMCSI. OUANO‘s consent was not obtained. During the voyage to valuable consideration.
GENSAN, Rafols had on board his sobre cargo (his employee)
In the present case, the cargo of cement was unloaded from the vessel and delivered to
Subsequently, OUANO asked MADE not to pay RAFOLS until RAFOLS has paid him the the consignee on October 23, 1980, without any oral or written notice or demand having
first freight installment. However, MADE still paid RAFOLS. The cargo was eventually been made on SMCSI for unpaid freight on the cargo. Consequently, after the lapse of thirty
delivered to SMSCI. There was no demand made by OUANO before the delivery. (30) days from the date of delivery, the cargo of cement had been released from any maritime
lien for unpaid freight
o However, OUANO eventually sued MADE (shipper), SMCSI (consignee) and
RAFOLS (charterer) to pay for the freightage of the cement cargo. It was
eventually ruled that only RAFOLS, as charterer, was liable to OUANO, the
owner of the ship. THUS, Ouano appealed.

Issue: Should MADE (shipper) and SMCSI (consignee) be made liable to OUANO for the
freightage of the cement cargo? NO (relativity of contracts) Did OUANO have a lien over the
goods transported? NO

Relativity of Contracts; Ouano’s cause of action was against RAFOLS only, the charterer and
the one he contracted with

The obligation of contracts is limited to the parties making them and, ordinarily, only those
who are parties to contracts are liable for their breach. Parties to a contract cannot thereby
impose any liability on one who, under its terms, is a stranger to the contract, and, in any
event, in order to bind a third person contractually, an expression of assent by such person
95
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

8. Loadstar v. Pioneer Asia Insurance Issue: Are the freight tickets bills of lading subject to DST? YES

Doctrine: Bills of Lading, in modern jurisprudence, are not those issued by masters of vessels alone;
Voyage-charter does not transform carrier into a private one they now comprehend all forms of transportation, whether by sea or land, and includes the
receipts for cargo transported
Facts:
As comprehending all methods of transportation, a bill of lading may be defined as a written
LOADSTAR is the owner and operator of MV Weasel. It entered into a voyage charter with acknowledgment of the receipt of goods and an agreement to transport and to deliver them
NORTHERN MINDANAO TRANSPORT COMPANY (NMTC) for the carriage of cement at a specified place to a person named or on his order. Such instruments are sometimes
from ILIGAN to MANILA. called 'shipping receipts,' 'forwarders' receipts,' and 'receipts for transportation."

o The shipper was ILIGAN CEMENT and the consignee was MARKET The designation, however, is not material, and neither is the form of the instrument. If it
DEVELOPERS (MADE) contains an acknowledgment by the carrier of the receipt of goods for
transportation, it is, in legal effect, a bill of lading. It follows therefore that the freight
During the voyage, the master of the vessel ordered the vessel to be forced aground. tickets are also bills of lading that require payment of DST. Carrier lost
Consequently, the cement was destroyed due to exposure to seawater. The consignee
recovered from the insurance company. The insurance company sued LOADSTAR, 10. Macondray v. Commissioner of Customs (bill of lading v. cargo manifest)
alleging that the ship was not seaworthy and that it was negligent in selection and
supervision of its employees. Doctrine:
While a bill of lading is ordinarily merely a convenient commercial instrument designed to
o LOADSTAR argued that the voyage-charter converted it into a private carrier and protect the importer or consignee, a manifest (just a list of cargo) of the cargo is
that the loss was caused by a fortuitous event essential to the exportation or importation of property in all vessels.

Issue: Did the voyage-charter convert LOADSTAR into a private carrier? NO Did a fortuitous Facts:
event cause the loss? NO
MACONDRAY is the local agent of the vessel SS TAI PING. On NOV 2, 1962, the ship
LOADSTAR remains a common carrier notwithstanding the existence of the charter arrived in Manila from San Francisco conveying various shipments of merchandise (mostly
agreement with NMTC since the said charter is limited to the ship only and does not carbon steel, 3 different items) The inward cargo manifest, however, did not reflect the
involve both the vessel and its crew. As elucidated in Planters Products, its charter is whole shipment as required by the customs code. It only stated “one coil carbon
only a voyage-charter, not a bareboat charter. steel” However, the bill of lading reflected the whole shipment.

Records show that in the evening of June 24, 1984, the sea and weather conditions in the The consignee asked MACONDRAY to correct the manifest so it can take delivery of the
vicinity of Negros Occidental were calm. The records reveal that LOADSTAR took a shipment. Meanwhile, the Collector of Customs ordered MACONDRAY to pay an
shortcut route, instead of the usual route, which exposed the voyage to unexpected administrative fine for failing to declare the cargo. In fact, the Collector commented that
hazard. LOADSTAR has only itself to blame for its misjudgment. Carrier lost MACONDRAY‘s vessels regularly fail to completely declare the cargo it carries.

9. Mindanao Bus v. Collector of Internal Revenue MACONDRAY protested the fine on the ground that the bill of lading already reflected the
whole shipment so it should not be held liable for violation of the customs code.
Doctrine:
As long as a ticket contains a written acknowledgement by the carrier of the receipt of Issue: Should MACONDRAY be held liable?
goods and an agreement to transport the same to a specified person or to the order of a
specified person, it is a bill of lading. The inclusion of the undeclared cargoes in the Bill of Lading does not satisfy the
requirement of the TACC. Moreover, nowhere in the said section is the presentation of a
Facts: Bill of Lading required, but only the presentation of a Manifest containing a true and
accurate description of the cargoes. This is for the simple reason that while a manifest
Mindanao Bus is a common carrier engaged in transporting passengers and freight by is a declaration of the entire cargo, a bill of lading is but a declaration of a specific
means of buses. Sometime in 1953, its books were examined and it was discovered that part of the cargo and is a matter of business convenience based exclusively on a
the freight tickets used by it do not contain the required documentary stamp tax (DST) contract.
Thus, it was assessed to pay DST.
While a bill of lading is ordinarily merely a convenient commercial instrument designed to
Mindanao Bus appealed, alleging that the freight tickets it issued are not bills of lading protect the importer or consignee, a manifest of the cargo is essential to the
subject to DST. exportation or importation of property in all vessels. This is because its evident intent
96
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

and object is to impose upon the owners and officers of such vessel an obligation to submit However, MMMC lost the case and was even ordered to pay freightage and demurrage
lists of the entire loading of the ship in the prescribed form, to facilitate the labors of the for the trip back to manila. The RTC dismissed the complaint on the ground that MMMC
customs and immigration officers and to defeat any attempt to make use of such vessels to had given its consent to the contents of the bill of lading where it is clearly indicated that
secure the unlawful entry of persons or things into the country. there will be transhipment.

It follows therefore that MACONDRAY should still be held liable for the administrative fine o Thus, MMMC went to the SC, alleging that there was NO TRANS-SHIPMENT:
for failing to comply with the TACC carrier lost considering that there was no actual transhipment of the Anahaw fans, then there
is no occasion under which MMMC can agree to the transhipment of the Anahaw
11. Magellan Mfg. Marketing v. CA fans because there is nothing like that to agree to" and "(i)f there is no actual
transhipment but there appears to be a transhipment in the bill of lading,
Doctrine: then there can be no possible reason for it but a mistake on the part of the
The acceptance of the bill without dissent raises the presumption that all the terms therein OOCL and Zuellig
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. Issue: Was there transshipment? YES Should MMMC be allowed to explain the possibility that
Demurrage, in its strict sense, is the compensation provided for in the contract of the fact that transshipment appeared on the B/L was merely a mistake on the part of the carrier?
affreightment for the detention of the vessel beyond the time agreed on for loading and NO Is MMMC liable for demurrage? NO
unloading. Essentially, demurrage is the claim for damages for failure to accept delivery. In
a broad sense, every improper detention of a vessel may be considered a demurrage. There was transshipment
There is no transshipment if the owner of both ships are one and the same
Transhipment, in maritime law, is defined as "the act of taking cargo out of one ship and
Facts: loading it in another. Clearly, there was transshipment in this case as there unmistakably
appears on the face of the bill of lading the entry "Hong Kong" in the blank space labeled
Magellan Mfg. Marketing Corp (MMMC) entered into a contract with CHOJU of Japan "Transhipment," which can only mean that transhipment actually took place.
(buyer) to export 136k anahaw fans. MMMC was to be paid by CHOJU through a letter of
credit. MMMC then contracted ZUELLIG, a shipping agent, to ship the fans through Orient Since MMMC, as shipper, received and accepted the B/L, it is bound by such B/L. It cannot
Overseas Container Lines (OOCL) argue that it did not agree to the fact of transhipment

o It was specified that there was a need for an on-board bill of lading6 and that A bill of lading usually becomes effective upon its delivery to and acceptance by the
transshipment was not allowed under the letter of credit. shipper. It is presumed that the stipulations of the bill were, in the absence of fraud,
concealment or improper conduct, known to the shipper, and he is generally bound
The bank did not pay MMMC because there was no on-board bill of lading and that there by his acceptance whether he reads the bill or not.
was transshipment. Moreover, the buyer did not accept because of the violation of the
terms of the L/C. The goods were then returned to Manila and were thereafter abandoned The acceptance of the bill without dissent raises the presumption that all the terms therein
by MMMC.7. Thus, MMMC sued ZUELLIG and OOCL because the bill of lading issued by were brought to the knowledge of the shipper and agreed to by him and, in the absence of
the latter bore the notation "received for shipment" and contained an entry indicating fraud or mistake, he is estopped from thereafter denying that he assented to such terms.
transhipment in Hongkong.8 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
6
An on board bill of lading is one in which it is stated that the goods have been received on
board the vessel which is to carry the goods, whereas a received for shipment bill of lading is In the light of the series of events that transpired in the case at bar, there can be no
one in which it is stated that the goods have been received for shipment with or without logical conclusion other than that MMMC had full knowledge of, and actually
specifying the vessel by which the goods are to be shipped. Received for shipment bills of lading consented to, the terms and conditions of the bill of lading thereby making the same
are issued whenever conditions are not normal and there is insufficiency of shipping conclusive as to it, and it cannot now be heard to deny having assented thereto
space. 29 An on board bill of lading is issued when the goods have been actually placed aboard carrier lost
the ship with every reasonable expectation that the shipment is as good as on its way. It is,
therefore, understandable that a party to a maritime contract would require an on board Demurrage
bill of lading because of its apparent guaranty of certainty of shipping as well as the
seaworthiness of the vessel which is to carry the goods. The carrier unequivocally offered MMMC the option of paying the shipping and demurrage
7
Name of the ship was MV PACIFIC DESPATCHER charges in order to take delivery of the goods or of abandoning the same so that the carrier
8
MMMC in effect saying that it was OOCL‘s fault why the buyer did not accept because of the could sell them at public auction and thereafter apply the proceeds in payment of the
violation of the terms of the L/C. He’s saying he did not agree to the transhipment as per the shipping and other charges. Moreover, the carrier belatedly informed MMMC of the arrival
B/L.
97
what are the 3 functions of a bill of lading? How is it a document of title?
what is demurrage?
What is the diff bet bill of lading and a charter party?
Why is the bill of lading also serves as s document of title?

Subject: Transportation what is the diff bet a bill of lading and contract of carriage? Can the bill of lading
Professor: Atty. Ampil be the contract of carriage also? in case of conflict, which should be given
By: Butch Ramiro priority?

of the returned anahaw fans. HENCE, MMMC was well within its right to abandon the 13. Keng Hua Paper Products v. CA, Sea Land Service, Inc.
goods and not pay demurrage.
Doctrine:
12. Telengtan Brothers & Sons (Business name: LA SUERTE) v. CA A bill of lading serves two functions. First, it is a receipt for the goods shipped. Second, it is
a contract by which three parties, namely, the shipper, the carrier, and the consignee
Doctrine: undertake specific responsibilities and assume stipulated obligations10
A bill of lading operates both as a receipt and a contract. As a contract, it names the A bill of lading delivered and accepted constitutes the contract of carriage even though not
contracting parties which include the consignee, fixes the route, destination, freight rate signed, because the acceptance of a paper containing the terms of a proposed contract
or charges, and stipulates the right and obligations assumed by the parties generally constitutes an acceptance of the contract and of all of its terms and conditions of
which the acceptor has actual or constructive notice
Facts:
Facts:
On 1979, VAN REEKUM PAPER, contracted Kawasaki (K-LINE) for the shipment of board
liners from SAVANNAH to MANILA. The shipment was consigned to LA SUERTE CIGAR. SEA LAND SERVICE received at its HK terminal a container containing unsorted waste
The contract of transportation was embodied in a bill of lading. paper for shipment to KENG HUA. The shipper was HO KEE. SEA LAND issued a bill of
lading. The shipment was eventually transported to MANILA.
o The cargo was shipped to Tokyo then transhipped in two different vessels (10
vans in SS FAR EAST FRIENDSHIP, while 2 vans were in SS HANGANG KENG HUA was notified of the arrival of the shipment but it failed to discharge the
GLORY) shipment from the container during the ―free time‖/grace period. The shipment remained in
the container for 481 days, thus, demurrage charges accrued.
o The arrival of SS FAR EAST FRIENDSHIP was announced in Bulletin Today and
was made known to LA SUERTE. The second ship, HANGANG GLORY, KENG HUA refused to pay so SEA LAND sued for demurrage. KENG HUA argues that the
arrived 10 days later. However, customs refused to release the goods because shipment was wrong as it contained more than what was agreed upon so it had the right to
the manifest of FAR EAST FRIENDSHIP covered only 10 containers, while the refuse to discharge the shipment. SEA LAND won and was awarded demurrage.
bill of lading covered 12 containers. This caused delay on the part of the
consignee to receive the cargo. Issue: IS KENG HUA, as consignee, liable for demurrage? YES

As a result of the delay, LA SUERTE was made liable to pay demurrage charges to secure The bill of lading was a valid and perfected contract between the shipper (Ho Kee), the
the release of the cargo. consignee (Petitioner Keng Hua), and the carrier (Private Respondent Sea-Land). Section
17 of the bill of lading provided that the shipper and the consignee were liable for the
o THUS, it filed a complaint for specific performance for the release of the payment of demurrage charges for the failure to discharge the containerized
remaining 7 container vans and for the refund of demurrage charges. It alleges shipment beyond the grace period allowed by tariff rules
that the B/L does not provide for the payment of demurrage.
A bill of lading delivered and accepted constitutes the contract of carriage even though not
Issue: Is the bill of lading indicating the payment of demurrage binding on LA SUERTE? YES signed, because the acceptance of a paper containing the terms of a proposed contract
generally constitutes an acceptance of the contract and of all of its terms and conditions of
Whatever may be the merit of LA SUERTE‘s contention as to the meaning of the word which the acceptor has actual or constructive notice.
"demurrage" in the bill of lading, the fact is that another clause of the bill of lading, in
relation to Rule 21 of the Far East Conference Tariff No. 12, as quoted above, specifically In this case, the bill of lading was received by KENG HUA. It had the opportunity to
provides for the payment by the consignee of demurrage for the detention of examine the document but it did not immediately object to it. It was only 6 months after
containers and other equipment after the so-called "free time."9 receipt that KENG HUA informed SEA LAND that it could not accept the shipment. It can
be inferred from the 6 month delay that KENG HUA accepted the terms of the bill of lading.
It must be remembered that a bill of lading is both a receipt and a contract. As a contract,
its terms and conditions are conclusive on the parties, including the consignee. 10
Compare to the 3 functions Sir gave us:
Therefore, LA SUERTE is liable to pay demurrage charges.
Functions of a bill of lading

1) The Bill of lading is evidence that the carrier has received the goods.
2) The Bill of lading is a device that confirms the maritime transportation contract of
goods.
3) The Bill of lading is a title deed to the loaded goods.
9
―Free time‖/Grace period under Far East Conference Tariff #12 to unload: 10 days
98
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

the cargo for determining the rights and obligations of the ship agent, of the captain and of
o THEREFORE, having accepted the terms of the bill of lading, it is clear that the charterer‖
KENG HUA is liable under the bill of lading for payment of demurrage
this is what happened—>there was a second contract overturning the first; This provision means that the charter party may be oral, in which case the
Optional as to interest on demurrage (which were reduced) not signed hence charter party na oral siya so pwede/valid still—> in such a terms thereof, not having been reduced to writing, shall be those embodied
case then the BOL will be basis for det rights and oblig and nothing therein
was stated that demurrage meron in the bill of lading
The case before us involves an obligation not arising from a loan or forbearance of money; thus, pursuant to
Article 2209 of the Civil Code, the applicable interest rate is six percent per annum. Since the bill of lading did Regarding the bill of lading, an examination thereof will reveal that there is no
not specify the amount of demurrage, and the sum claimed by private respondent increased as the days went
by, the total amount demanded cannot be deemed to have been established with reasonable certainty until
condition or requirement therein for the payment of demurrage charges. Under the
the trial court rendered its judgment. Indeed, "(u)nliquidated damages or claims, it is said, are those which are afore-quoted Article 653 of the Code of Commerce, therefore, there was no reason to read
not or cannot be known until definitely ascertained, assessed and determined by the courts after presentation any stipulation for demurrage into the second contract.
of proof. " 32 Consequently, the legal interest rate is six percent, to be computed from September 28, 1990,
the date of the trial court's decision. And in accordance with Philippine National Bank 33 and Eastern Even assuming that the original agreement for demurrage had been carried over in the
Shipping, 34the rate of twelve percent per annum shall be charged on the total then outstanding, from the time second contract, there is no acceptable evidence of the delay allegedly incurred by MADE
the judgment becomes final and executory until its satisfaction
in the unloading of its cargo in Roxas City.
14. Market Developers v. IAC
Uy's testimony on this matter is self-serving, let alone the fact that he admittedly
was not present at the unloading. His corroboration is hearsay. This consisted
Doctrine:
merely of Exhibits B and C, 15 the so-called statement of facts regarding the
The charter party may be oral, in which case the terms thereof, not having been unloading of the cargo from the barge, prepared by the barge patron, a certain
reduced to writing, shall be those embodied in the bill of lading
Ding Julian. This person was not presented at the trial to testify on his report and
could therefore not be subjected to cross examination carrier lost
Facts:
15. Reyma Brokerage v. Phil. Home Assurance
On 1978, MARKET DEVELOPERS (MADE) entered into a written barging contract
(contract of affreightment) with UY for the shipment of its cargo from ILIGAN to KALIBO. In Doctrine:
the original contract, MADE agreed to pay 5k per day of delay in the loading/unloading of Where the carrier of the containerized cargo makes an explicit admission as to the
the goods in the barge. weight, measurement marks, numbers, quality contents, and value, etc, in the bill of
lading, such admission is deemed prima facie evidence of the receipt by the carrier
Upon completion of the loading, the parties verbally agreed to divert the barge to CULASI, of the goods as therein described. Thus, the arrastre operator prima facie received
ROXAS CITY with the cargo being consigned to MODERN HARDWARE. However, this the quantity of the goods as stated in the B/L. Therefore, it if it cannot explain the
new agreement was not written. The shipment was eventually received by the consignee. shortage, it will be liable for such.
There was some dispute as to the time spent for unloading but 6 months later, UY sued Facts:
MADE for demurrage for an alleged delay of 8 days and 4/25 hours. The lower courts ruled
in favor of UY, holding that the written agreement was still controlling. CRAIG MOSTYN & CO of Australia (CRAIG) shipped aboard MS MALMROS MONSOON
a shipment of hard frozen boneless beef to Manila. The shipment was consigned to RFM
Issue: IS MADE liable for demurrage? NO. CORP. Upon arrival, the ship discharged the shipment to the REYMA BROKERAGE, the
arrastre operator. The shipment was eventually delivered to RFM
The oral agreement superseded the original agreement. The terms of the oral agreement were
considered to be embodied in the bill of lading, which did not specify payment of demurrage. However, upon inspection, it was discovered that there was shortage (what they received
was less than what was indicated in the bill of lading). Thus RFM claimed from it insurer,
The lower courts erred in holding that the original agreement was still in effect. What it PHIL HOME ASSURANCE, which in turn, sued REYMA BROKERAGE for the shortage.
should have held instead was that the first written contract had been cancelled and
replaced by the second verbal contract because of the change in the destination of the Issue: Should REYMA BROKERAGE be held liable for the shortage? YES
cargo.
In this particular case, the carrier signified in the bill of lading that such bill of lading was a
While the code of commerce clearly shows that a contract of affreightment must be in receipt of the number of packages as shown. Thus, the carrier admitted that the
writing, Article 653 just as clearly provides that: ―If the cargo should be received without a shipments HAD the number of packages declared by the shipper (CRAIG) in the bill
charter party having been signed, the contract shall be understood as executed in of lading. The bill of lading also detailed the weight, marks, quantity of the shipment.
accordance with what appears in the bill of lading, the sole evidence of title with regard to

99
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

It follows therefore that the arrastre (REYMA) prima facie received the quantity of the meat
as reflected in the bill of lading (as admitted by the carrier), REYMA had the burden to
overthrow such presumption. Evidence shows that it failed to do so. HENCE, it is liable for
the shortage. REYMA lost.

16. Sweet Lines v. Hon. Teves, Tandog and Tiro is a contract of adhesion construed liberally against one party?
duties of the captain - from the code of commerce
Doctrine: line of command
A condition at the back of the ticket requiring passengers who intend to sue the carrier difference bet arrival under stress, shipwreck
based on the ticket to file at a specified venue is VOID for being against public policy. collisions, inscrutable fault
Facts: doc of last clear chance - not applicable in maritime collisions
pieces of paper either represent ownership or debt
Atty. TANDOG and TIRO (private respondents) bought tickets from SWEET LINES in order incorporeal - deed of assignment
to go to TAGBILARAN, BOHOL. Because the vessel they boarded was already filled to tangible - deed of sale
capacity, they were forced to hide at the cargo inspection to avoid Coastguard inspection

Thus, they sued SWEET LINES in MISAMIS ORIENTAL. They alleged that they were
exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn
grits," and that the tickets they bought for Tagbilaran were not honored and they were
constrained to pay for other tickets

o SWEET LINES filed a motion to dismiss on the ground of improper venue, as the
ticket (CONDITION 14, specifically) provided that actions concerning the ticket
were to be filed in CEBU. This was denied so SWEET LINES went the SC.

Issue: Is the condition at the back of the ticket regarding the venue of actions valid? NO.

There was indeed a contract of carriage as embodied in the tickets that were purchased. It
should be borne in mind, however, that CONDITION No 14 which is printed at the back of
the passage tickets, are commonly known as contracts of adhesion. Its validity will have to
be determined by the peculiar circumstances of each case.

Condition No. 14 printed at the back of the passage tickets should be held as void and
unenforceable for the following reasons:

o First, it is unfair to bind passengers to the terms of the conditions printed at the
back of the passage tickets, on which Condition No. 14 is printed in fine letters,
and

o Second, Condition No. 14 subverts the public policy on transfer of venue of


proceedings of this nature, since it will prejudice rights and interests of many
passengers in different parts of the country who, under Condition No. 14, will
have to file suits against petitioner only in the City of Cebu.

Considering the expense and trouble a passenger residing outside of


Cebu City would incur to prosecute a claim in the City of Cebu, he
would most probably decide not to file the action at all. The condition
will thus defeat, instead of enhance, the ends of justice.

100
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 15 (COGSA) Preliminaries


The COGSA applies to both foreign trade and domestic trade
The COGSA does not repeal any CODE OF COMMERCE provision.
Be it enacted by the National Assembly of the Philippines: If the both the civil code and the code of commerce do not provide for any pertinent point
in question, the COGSA applies. (COGSA applies suppletorily)
As per jurisprudence, it was held that the CIVIL CODE itself does not limit the liability of the
Section 1. That the provisions of Public Act Numbered Five hundred and twenty-one of the common carrier to a fixed amount per package. It merely allows the stipulation limiting
Seventy-fourth Congress of the United States, approved on April sixteenth, nineteen hundred liability. Thus, the COGSA supplements the CIVIL CODE by establishing a statutory
and thirty-six, be accepted, as it is hereby accepted to be made applicable to all contracts for provision limiting the carrier‘s liability (500USD per package, see below)
the carriage of goods by sea to and from Philippine ports in foreign trade: Provided, That
nothing in the Act shall be construed as repealing any existing provision of the Code of
Commerce which is now in force, or as limiting its application. RISKS

Section 2. This Act shall take effect upon its approval. Section 2. Subject to the provisions of section 6, under every contract of carriage of goods by
sea, the carrier in relation to the loading handling, stowage, carriage, custody, care, and
discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the
Approved: October 22,1936. rights and immunities hereinafter set forth.

An Act Relating to the Carriage of Goods by Sea. The section provides that the carrier is responsible for the loading, handling, stowage,
carriage and discharge of the goods.
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled, That every bill of landing or similar document of title which is evidence of RESPONSIBILITIES AND LIABILITIES
a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade,
shall have effect subject to the provisions of the Act.
Section 3.
TITLE I
(1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due
diligence to —
Section 1. When used in this Act —

(a) Make the ship seaworthy;


(a) The term "carrier" includes the owner or the charterer who enters into a contract of (b) Properly man, equip, and supply the ship;
carriage with a shipper. (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.
(b) The term "contract of carriage" applies only to contracts of carriage covered by a
bill of lading or any similar document of title, insofar as such document relates to the (2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and
carriage of goods by sea, including any bill of lading or any similar document as discharge the goods carried.
aforesaid issued under or pursuant to a charter party from the moment at which such
bill of lading or similar document of title regulates the relations between a carrier and a (3) After receiving the goods into his charge the carrier, or the master or agent of the carrier,
holder of the same. shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things

(c) The term "goods" includes goods, wares, merchandise, and articles of every kind (a) The leading marks necessary for identification of the goods as the same are
whatsoever, except live animals and cargo which by the contract of carriage is stated furnished in writing by the shipper before the loading of such goods starts, provided
as being carried on deck and is so carried. such marks are stamped or otherwise shown clearly upon the goods if uncovered, or
on the cases or coverings in which such goods are contained, in such a manner as
(d) The term "ship" means any vessel used for the carriage of goods by sea. should ordinarily remain legible until the end of the voyage.

(b) Either the number of packages or pieces, or the quantity or weight, as the case
(e) The term "carriage of goods" covers the period from the time when the goods are may be, as furnished in writing by the shipper.
loaded on to the time when they are discharged from the ship.

101
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

(c) The apparent order and condition of the goods: Provided, That no carrier, (8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship
master, or agent of the carrier, shall be bound to state or show in the bill of lading any from liability for loss or damage to or in connection with the goods, arising from negligence, fault,
marks, number, quantity, or weight which he has reasonable ground for suspecting not or failure in the duties and obligations provided in this section, or lessening such liability
accurately to represent the goods actually received, or which he has had no otherwise than as provided in this Act, shall be null and void and of no effect. A benefit of
reasonable means of checking. insurance in favor of the carrier, or similar clause, shall be deemed to be a clause relieving the
carrier from liability.
(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: Provided, Sec 3(6)
That nothing in this Act shall be construed as repealing or limiting the application of any part of
the Act, as amended, entitled "An Act relating to bills of lading in interstate and foreign Of particular importance in this section is SEC 3(6), which provides for a prescriptive
commerce," approved August 29, 1916 (U. S. C. title 49, secs. 81-124), commonly known as the period to file a claim against a CARRIER.
"Pomerene Bills of Lading Act."
o In case of loss or damage, the plaintiff must file the case against the carrier
(5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of within 1 year
shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall a) after delivery of the goods applies when there is delivery
indemnify the carrier against all loss damages, and expenses arising or resulting from b) the date when the goods should have been delivered applies
inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit when the goods were NOT delivered at all
his responsibility and liability under the contract of carriage or to any person other than the
shipper. o Moreover, as long as it is claimed that the losses or damages suffered by the
shipper/consignee were due to the arrival of the goods in damaged condition, the
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in action is still basically one for damage to the goods.
writing to the carrier or his agent at the port of discharge before or at the time of the removal of
the goods into the custody of the person entitled to delivery thereof under the contract of HOWEVER cases of misdelivery or conversion are NOT covered.
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods Instead, what applies are the civil code rules (4 years: Quasi-delict, 10
as described in the bill of lading. If the loss or damage is not apparent, the notice must be given years: contract)
within three days of the delivery.
o The first part of paragraph 6 provides that if the person entitled to the goods
Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the takes delivery thereof, it shall be prima facie evidence of delivery.
person taking delivery thereof.
o Generally, a notice of loss/damage must be given within 3 days after delivery.
The notice in writing need not be given if the state of the goods has at the time of their receipt However, even if it is not given, this does not bar recovery as long as a suit is
been the subject of joint survey or inspection. filed within 1 year.

In any event the carrier and the ship shall be discharged from all liability in respect of loss or Section 3(8): Stipulations limiting liability for negligence/responsibilities provided for in COGSA
damage unless suit is brought within one year after delivery of the goods or the date when the
goods should have been delivered: Provided, That if a notice of loss or damage, either apparent A carrier cannot limit its liability in a manner contrary to what is provided for in the COGSA.
or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the Thus, for example, a carrier cannot base its defense on a stipulation wherein it will be
right of the shipper to bring suit within one year after the delivery of the goods or the date when relieved of liability for damage to the cargo notwithstanding its fault or negligence,
the goods should have been delivered

In the case of any actual or apprehended loss or damage the carrier and the receiver shall give
all reasonable facilities to each other for inspecting and tallying the goods.

(7) After the goods are loaded the bill of lading to be issued by the carrier, master, or agent of
the carrier to the shipper shall, if the shipper so demands, be a "shipped" bill of lading Provided,
That if the shipper shall have previously taken up any document of title to such goods, he shall
surrender the same as against the issue of the "shipped" bill of lading, but at the option of the
carrier such document of title may be noted at the port of shipment by the carrier, master, or
agent with name or name the names of the ship or ships upon which the goods have been
shipped and the date or dates of shipment, and when so noted the same shall for the purpose of
this section be deemed to constitute a "shipped" bill of lading.

102
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

RIGHTS AND IMMUNITIES (p) Latent defects not discoverable by due diligence; and

Section 4. (q) Any other cause arising without the actual fault and privity of the carrier and
without the fault or neglect of the agents or servants of the carrier, but the burden of
(1) Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from proof shall be on the person claiming the benefit of this exception to show that neither
unseaworthiness unless caused by want of due diligence on the part of the carrier to make the the actual fault or privity of the carrier nor the fault or neglect of the agents or servants
ship seaworthy, and to secure that the ship is properly manned, equipped, and supplied, and to of the carrier contributed to the loss or damage.
make to the holds, refrigerating and cool chambers, and all other parts of the ship in which
goods are carried fit and safe for their reception, carriage, and preservation in accordance with (3) The shipper shall not be responsible for loss or damage sustained by the carrier or the ship
the provisions of paragraph (1) of section 3. arising from any cause without the act, fault, or neglect of the shipper, his agents, or servants.

Whenever loss or damage has resulted from unseaworthiness, the burden of proving the (4) Any deviation in saving or attempting to save life or property at sea, or any reasonable
exercise of due diligence shall be on the carrier or other persons claiming exemption under the deviation shall not be deemed to be an infringement or breach of this Act or of the contract of
section. carriage, and the carrier shall not be liable for any loss or damage resulting therefrom:
Provided, however, That if the deviation is for the purpose of loading cargo or unloading cargo
(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting or passengers it shall, prima facie, be regarded as unreasonable.
from —
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in to or in connection with the transportation of goods in an amount exceeding $500 per package
the navigation or in the management of the ship; lawful money of the United States, or in case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other currency, unless the nature and value of such
(b) Fire, unless caused by the actual fault or privity of the carrier; goods have been declared by the shipper before shipment and inserted in the bill of lading. This
declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be
(c) Perils, dangers, and accidents of the sea or other navigable waters; conclusive on the carrier.

(d) Act of God; By agreement between the carrier, master, or agent of the carrier, and the shipper another
maximum amount than that mentioned in this paragraph may be fixed: Provided, That such
(e) Act of war, maximum shall not be less than the figure above named. In no event shall the carrier be liable
for more than the amount of damage actually sustained.
(f) Act of public enemies;
Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in
(g) Arrest or restraint of princes, rulers, or people, or seizure under legal process; connection with the transportation of the goods if the nature or value thereof has been knowingly
and fraudulently misstated by the shipper in the bill of lading.
(h) Quarantine restrictions;
(6) Goods of an inflammable, explosive, or dangerous nature to the shipment whereof the
(i) Act or omission of the shipper or owner of the goods, his agent or representative; carrier, master or agent of the carrier, has not consented with knowledge of their nature and
character, may at any time before discharge be landed at any place or destroyed or rendered
(j) Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether innocuous by the carrier without compensation, and the shipper of such goods shall be liable for
partial or general; Provided, That nothing herein contained shall be construed to all damages and expenses directly or indirectly arising out of or resulting from such shipment. If
relieve a carrier from responsibility for the carrier's own acts; any such goods shipped with such knowledge and consent shall become a danger to the ship or
cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by
(k) Riots and civil commotions the carrier without liability on the part of the carrier except to general average, if any.

(l) Saving or attempting to save life or property at sea;

(m) Wastage in bulk or weight or any other loss or damage arising from inherent
defect, quality, or vice of the goods;

(n) Insufficiency of packing;

(o) Insufficiency of inadequacy of marks;

103
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

SURRENDER OF RIGHTS AND IMMUNITIES AND INCREASE OF RESPONSIBILITIES AND (b) when issuing such bills of lading, either in the surrender of any of the carrier's rights and
LIABILITIES immunities or in the increase of any of the carrier's responsibilities and liabilities pursuant to
section 6, title I, of this Act or (c) in any other way prohibited by the Shipping Act, 1916, s
Section 5. A carrier shall be at liberty to surrender in whole or in part all or any of his rights and amended.
immunities or to increase any of his responsibilities and liabilities under this Act, provided such
surrender or increase shall be embodied in the bill of lading issued to the shipper. Section 10. Section 25 of the Interstate Commerce Act is hereby amended by adding the
following proviso at the end of paragraph 4 thereof: "Provided, however, That insofar as any bill
The provisions of this Act shall not be applicable to charter parties; but if bills of lading are of lading authorized hereunder relates to the carriage of goods by sea, such bill of lading shall
issued in the case of a ship under charter party, they shall comply with the terms of this Act. be subject to the provisions of the Carriage of Goods by Sea Act."
Nothing in this Act shall be held to prevent the insertion in a bill of lading of any lawful provision
regarding general average. Section 11. Where under the customs of any trade the weight of any bulk cargo inserted in the
bill of lading is a weight ascertained or accepted by a third party other than the carrier or the
SPECIAL CONDITIONS shipper, and the fact that the weight is so ascertained or accepted is stated in the bill of lading,
then, notwithstanding any thing in this Act, the bill of lading shall not be deemed to be prima
Section 6. Notwithstanding the provisions of the preceding sections, a carrier, master or agent facie evidence against the carrier of the receipt of goods of the weight so inserted in the bill of
of the carrier, and a shipper shall, in regard to any particular goods be at liberty to enter into any lading, and the accuracy thereof at the time of shipment shall not be deemed to have been
agreement in any terms as to the responsibility and liability of the carrier for such goods, and as guaranteed by the shipper.
to the rights and immunities of the carrier in respect of such goods, or his obligation as to
seaworthiness (so far as the stipulation regarding seaworthiness is not contrary to public policy), Section 12. Nothing in this Act shall be construed as superseding any part of the Act entitled
or the care or diligence of his servants or agents in regard to the loading, handling stowage, "An act relating to navigation of vessels, bills of lading, and to certain obligations, duties, and
carriage, custody, care, and discharge of the goods carried by sea: Provided, That in this case rights in connection with the carriage of property," approved February 13,1893, or of any other
no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a law which would be applicable in the absence of this Act, insofar as they relate to the duties,
receipt which shall be a non-negotiable document and shall be marked as such. responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded
on or after the time they are discharged from the ship.
Any agreement so entered into shall have full legal effect: Provided, That this section shall not
apply to ordinary commercial shipments made in the ordinary course of trade but only to other Section 13. This Act shall apply to all contracts for carriage of goods by sea to or from ports of
shipments where the character or condition of the property to be carried or the circumstances, the United States in foreign trade. As used in this Act the term "United States" includes its
terms, and conditions under which the carriage is to be performed are such as reasonably to districts, territories, and possessions: Provided, however, That the Philippine legislature may by
justify a special agreement. law exclude its application to transportation to or from ports of the Philippine Islands. The term
"foreign trade" means the transportation of goods between the ports of the United States and
Section 7. Nothing contained in this Act shall prevent a carrier or a shipper from entering into ports of foreign countries. Nothing in this Act shall be held to apply to contracts for carriage of
any agreement, stipulation, condition, reservation, or exemption as to the responsibility and goods by sea between any port of the United States or its possessions, and any other port of the
liability of the carrier or the ship for the loss or damage to or in connection with the custody and United States or its possession: Provided, however, That any bill of lading or similar document of
care and handling of goods prior to the loading on and subsequent to the discharge from the title which is evidence of a contract for the carriage of goods by sea between such ports,
ship on which the goods are carried by sea. containing an express statement that it shall be subject to the provisions of this Act, shall be
subjected hereto as fully as if subject hereto as fully as if subject hereto by the express
Section 8. The provisions of this Act shall not affect the rights and obligations of the carrier provisions of this Act: Provided, further, That every bill of lading or similar document of title which
under the provisions of the Shipping Act, 1916, or under the provisions of section 4281 to 4289, is evidence of a contract for the carriage of goods by sea from ports of the United States, in
inclusive, of the Revised Statutes of the United States, or of any amendments thereto; or under foreign trade, shall contain a statement that it shall have effect subject to the provisions of this
the provisions of any other enactment for the time being in force relating to the limitation of the Act.
liability of the owners of seagoing vessels.
Section 14. Upon the certification of the Secretary of Commerce that the foreign commerce of
TITLE II the United States in its competition with that of foreign nations is prejudiced the provisions, or
any of them, of Title I of this Act, or by the laws of any foreign country or countries relating to the
Section 9. Nothing contained in this Act shall be construed as permitting a common carrier by carriage of goods by sea, the President of the United States, may, from time to time, by
water to discriminate between competing shippers similarly place in time and circumstances, proclamation, suspend any or all provisions of Title I of this Act for such periods of time or
either indefinitely as may be designated in the proclamation. The President may at any time rescind
such suspension of Title I hereof, and any provisions thereof which may have been suspended
(a) with respect to the right to demand and receive bills of lading subject to the provisions of this shall thereby be reinstated and again apply to contracts thereafter made for the carriage of
Act; or goods by sea. Any proclamation of suspension or rescission of any such suspension shall take
effect on a date named therein, which date shall be not less than ten days from the issue of the
proclamation.
104
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Any contract for the carriage of goods by sea, subject to the provisions of this Act, effective
during any period when title I hereof, or any part thereof, is suspended, shall be subject to all
provisions of law now or hereafter applicable to that part of Title I which may have thus been
suspended.

Section 15. This Act shall take effect ninety days after the date of its approval; but nothing in
this Act shall apply during a period not to exceed one year following its approval to any contract
for the carriage of goods by sea, made before the date on which this Act is approved, nor to any
bill of lading or similar document of title issued, whether before or after such date of approval in
pursuance of any such contract as aforesaid.

Section 16. This Act may be cited as the "Carriage of Goods by Sea Act."

105
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

before the same was noticed; and that after the cargoes were stored in the hatches, no
1. Eastern Shipping v. IAC (vessel caught fire and sank) regular inspection was made as to their condition during the voyage."

Doctrine: o The foregoing suffices to show that the circumstances under which the fire
COGSA applies suppletorily to the Civil Code provisions on common carriers originated and spread are such as to show that Petitioner Carrier or its
Fire is an exempting circumstance under COGSA. However, if fault is shown on the part of servants were negligent in connection therewith. Consequently, the complete
the carrier, it will still be held liab.e defense afforded by the COGSA when loss results from fire is unavailing
COGSA provisions on limited liability form part of the bill of lading. Carrier lost.

Facts: 2. Aboitiz Shipping v. CA

Sometime in 1977, the MS ASIATICA, owned by Eastern Shipping, loaded at KOBE, Doctrine:
JAPAN, for transportation to Manila, several cargoes11 consigned to different persons. En Under COGSA, if a higher value is declared by the shipper in the B/L, then the carrier is
route to Manila, the vessel caught fire and sank, resulting to the total loss of the cargo. bound to pay for the actual value of the goods lost, destroyed or damaged.
The package/container contemplated by the law to limit the liability of the carrier should be
The insurers paid the consignees and in turn sued EASTERN SHIPPING . It was held sensibly related to the unit in which the shipper packed the goods and described
liable for the value of the goods. It then appealed and argued that the fire which caused them, not a large metal object, functionally a part of the ship, in which the carrier used
the sinking of the ship was an exempting circumstance under Section 4(2)(b) of COGSA them to be contained (in other words, the word container doesn’t mean the big rectangular
containers. It means the boxes inside those containers wherein the goods are contained)
Issue: What law should apply? Is EASTERN SHIPPING exempt from liability under COGSA?
Facts:
COGSA applicable in a suppletory manner
On OCT 1990, the vessel MV P. Aboitiz took on board in HK for shipment to Manila some
The law of the country to which the goods are to be transported governs the liability of the cargo consisting of one 20 foot container holding apparel and one forty foot container
common carrier in case of their loss, destruction or deterioration. As the cargoes in holding other goods. The total value of the goods amount to 40k USD and 94k USD
question were transported from Japan to the Philippines, the liability of Petitioner Carrier is respectively. Both were insured by the CONSIGNEES with GAFLAC.
governed primarily by the Civil Code. However, in all matters not regulated by said Code,
the rights and obligations of common carrier shall be governed by the Code of Commerce On its way to Manila, the vessel sank and was declared lost. Thus, GAFLAC paid the
and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is consignees the value of the goods. GAFLAC in turn sued ABOITIZ, alleging the loss was
suppletory to the provisions of the Civil Code due to negligence.

COGSA will not exempt Carrier from Liability because the fire was shown to have been caused ABOITIZ was held to be liable for the value of the goods. One of the assigned errors of
by the carrier ABOITIZ is the decision to hold it liable for the full value of the goods. It argues that the
liability should be fixed at 500 USD per container/package/customary freight, as per the bill
COGSA provides: Sec. 4(2). Neither the carrier nor the ship shall be responsible for loss or of lading.
damage arising or resulting from
Issue: Should liability be limited to 500 USD per container? No. Actual value declared in b/l
xxxx
While it is true that the B/L has a stipulation limiting liability of the carrier, there is an
(b) Fire, unless caused by the actual fault or privity of the carrier. exception, that is, when the nature and the value of the goods have been declared by
shipper BEFORE shipment and INSERTED in the BILL OF LADING.12
In this case, there was a finding of actual fault on the part of the carrier as when the smoke
was noticed, the fire was already big; that the fire must have started twenty-four (24) hours
12
COGSA Section 4(5)
11
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to
1. 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to or in connection with the transportation of goods in an amount exceeding $500 per package of
Philippine Blooming Mills Co., Inc., and 7 cases of spare parts valued at P92,361.75, consigned lawful money of the United States, or in case of goods not shipped in packages, per customary
to Central Textile Mills, Inc freight unit, or the equivalent of that sum in other currency, unless the nature and value of
2. 128 cartons of garment fabrics and accessories, in two (2) containers, consigned to Mariveles such goods have been inserted in the bill of lading. This declaration, if embodied in the bill of
Apparel Corporation, and two cases of surveying instruments consigned to Aman Enterprises lading, shall be prima facie evidence, but shall not be conclusive on the carrier.
and General Merchandise
106
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

higher than $500.00 per package. In the case at bar, it is apparent that there had been no
In this case the description of the nature and the value of the goods shipped were agreement between the parties, and hence, the bill of lading shall prevail.
declared and reflected in the bills of lading. Thus, it is the basis of the liability of the
carrier as the actual value of the loss. 4. Stevens & Co. v. Nordeutscher Lloyd

Moreover, it is absurd to interpret "container," as provided in the bill of lading to be valued Doctrine:
at US$500.00 each, to refer to the container which is the modern substitute for the hold of The 1 year period under COGSA is interrupted by a judicial demand (filing of a case)
the vessel. The package/container contemplated by the law to limit the liability of the The 1 year period under the COGSA to sue the carrier is reckoned from the delivery of the
carrier should be sensibly related to the unit in which the shipper packed the goods goods or the date when the goods should have been delivered
and described them, not a large metal object, functionally a part of the ship, in which
the carrier used them to be contained. Such "container" must be given the same Facts:
meaning and classification as a "package" and "customary freight unit." Carrier lost
On MARCH 1959, Stevens & Co shipped from HAMBURG to MANILA aboard MS
3. Eastern & Australian v. Great American Schwabenstein (owned by Lloyd), 2,000 pieces of prismatical thermometers. On MAY 21,
1959, Lloyd notified Stevens of the arrival of the thermometers in Manila.
Doctrine:
The COGSA does not prevent the shipper and carrier from agreeing to a LESSER amount Upon examination however, it turned out that about 1,000 pieces were missing or
as regards the value of the goods. The COGSA does not set the minimum as it only sets destroyed. Thus, on APRIL 27, 1960, it sued Lloyd for the value of the missing cargo in the
the MAXIMUM amount recoverable by the shipper. Municipal Trial Court. This was dismissed on the ground of lack of jurisdiction on JUNE 13,
1960
Facts:
On JUNE 24, 1960, Stevens filed an appropriate suit in the CFI (RTC). LLOYD moved to
On DEC 1971, SYDNEY shipped from Australia to MANILA, one case of impellers for dismiss on the ground of prescription alleging that the action was filed out of time, it being
warman pump on board the SS CHITRAL, a vessel owned by EASTERN AND filed beyond 1 year after MAY 1959 (notification)13 It was granted.
AUSTRALIAN STEAMSHIP (carrier) The case was consigned to BENGUET
CONSOLIDATED. Issue: has the cause of action prescribed? NO.

On the same month, the ship arrived in MANILA but failed to discharge the shipment. The The first action was commenced by STEVENS in the MTC of Manila on April 27, 1960
insurer thus paid the consignee and in turn sued the carrier. (within 1 year) It was dismissed June 13, 1960, or over twenty (20) days after the expiration
of the period of one (1) year, beginning from May 21, 1959, within which plaintiff's action
The carrier argues that its liability for the loss of the shipment is only limited to L100 could be brought pursuant to COGSA.
Sterling or its peso equivalent of P1,544.40 as per stipulation in the Bill of Lading. On the
other hand, the insurer argues that the carrier‘s liability should be 500 USD, as per Under the law, the period within which could initiate the present case was renewed,
COGSA. therefore, for another year, beginning from June 14, 1960. Therefore, the CFI case was
NOT filed out of time.
Issue: What value is the carrier liable for? L100 Sterling.
This is because according to the CIVIL CODE, the prescription of actions is interrupted
There is no inconsistency between Section 4 (5) of the Carriage of Goods by Sea Act and when they are filed before the court, when there is a written extrajudicial demand by the
the Bill of Lading. The first part of the provision of Section 4 (5) of the Carriage of Goods by creditors, and when there is any written acknowledged judgment of the debt by the debtor.
Sea Act limits the MAXIMUM amount that can be recovered by the shipper. Said provision carrier lost.
DOES NOT prescribe the minimum and hence, it could be any amount which is below
$500.00.

The second paragraph of Section 4 (5) of the Carriage of Goods by Sea Act prescribing the
maximum amount (melee) shall not be less than $500.00 refers to a situation where
there is an agreement other than set forth in the Bill of Lading providing for a melee,
13
Section 3 (6) COGSA: In any event the carrier and the ship shall be discharged from all
By agreement between the carrier, master or agent of the carrier, and the shipper another liability in respect of loss or damage unless suit is brought within one year after delivery of
maximum amount than that mentioned in this paragraph may be fixed: Provided, that such the goods or the date when the goods should have been delivered: Provided, That if a
maximum shall not be less than the figure above named. In no event shall the carrier be liable notice of loss or damage, either apparent or concealed, is not given as provided for in this
for more than the amount of damage actually sustained. section, that fact shall not affect or prejudice the right of the shipper to bring suit within one year
after the delivery of the goods or the date when the goods should have been delivered
107
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

6. American Insurance v. Compania Maritima

Doctrine:
5. Dole v. Maritime Company The fact that transshipment was made does not remove a transaction from the ambit of the
COGSA
Doctrine:
A written extra-judicial demand DOES NOT toll the period of prescription (to sue the carrier) Facts:
under the COGSA
On 1962, certain cargo consisting of tractor parts insured with AMERICAN INSURANCE
Facts: (insurer) was shipped from NY to the PH by MACONDRAY. The cargo was consigned to
ATLAS.
Dole was the consignee of a shipment transported by MARITIME COMPANY (carrier) The
cargo was discharged to the carrier on DEC 18, 1971. (discharge) When the ship arrived in MANILA, MACONDRAYcontracted COMPANIA MARITIMA to
transship the cargo to CEBU, its agreed destination. When the consignee, ATLAS, took
ON MAY 4, 1972, DOLE filed a claim the carrier for the damages sustained by the cargo. delivery of the goods on SEPT 24, 1962, it discovered that there was a shortage.
(extrajudicial demand/claim)
The consignee was paid by AMERICAN INSURANCE and it in turn initially sued
On JUNE 11, 1973, DOLE filed a complaint against MARITIME COMPANY for the MARITIME COMPANY on SEPT 24, 1963. However, on NOV 6, 1964, it moved to amend
damage. In response, the carrier moved to dismiss on the ground of prescription. It was to complaint to also implead MACONDRAY. This amended complaint was admitted on
granted. NOV 14, 1964.

Issue: Has DOLE‘s cause of action prescribed? Yes. The extrajudicial claim DID NOT toll the Macondray moved to dismiss the compliant on the ground of prescription. In response,
prescriptive period AMERICAN INSURANCE argues that the civil code should apply instead of COGSA (which
provides for a 1 year prescriptive period) because the cargo was ―transshipment cargo‖ and
The SC ruled that a written extra-judicial demand does not toll the prescriptive period under that MACONDRAY was merely a forwarding agent.14
the COGSA. It cited a case (Chua Kuy v. Everett Steamship) that held that in a case
governed by COGSA, the rules of interruption under the Civil Code DO NOT APPLY. Issue: has the cause of action against MACONDRAY prescribed? Yes. Since COGSA applies,
the 1 year prescriptive period bars suit against MACONDRAY.
Moreover, no different result would obtain even if the Court were to accept the proposition
that a written extrajudicial demand does toll prescription under the Carriage of Goods by The action is based on the contract of carriage up to the final port of destination, which
Sea Act. The demand in this instance would be the claim for damage-filed by Dole with was Cebu City, for which the corresponding freight had been prepaid.
Maritime on May 4, 1972.
The transshipment of the cargo from Manila to Cebu was not a separate transaction from
The effect of that demand would have been to renew the one- year prescriptive period from that originally entered into by Macondray. It was part of Macondray's obligation under
the date of its making. Stated otherwise, under Dole's theory, when its claim was received the contract of carriage and the fact that the transshipment was made via an inter-
by Maritime, the one-year prescriptive period was interrupted — "tolled" would be the more island vessel did not operate to remove the transaction from the operation of the
precise term — and began to run anew from May 4, 1972, affording Dole another period of Carriage of Goods by Sea Act. Macondray (carrier) won.
one (1) year counted from that date within which to institute action on its claim for damage.
Unfortunately, Dole let the new period lapse without filing action. It instituted only on
June 11, 1973, more than one month after that period has expired and its right of
action had prescribed..

14
Argument as per the original: Plaintiff avers that the one year prescriptive period provided
for in the Carriage of Goods by Sea Act does not apply in this case, which should be governed
by the statute of limitations in the Civil Code. In support of this contention it is pointed out that
the cargo in question was transshipment cargo; that the discharge thereof in Manila terminated
the obligation of Macondray as carrier; and that its obligation to transship the cargo to Cebu was
merely that of a "forwarding agent" of the shipper.

108
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

7. Aetna Insurance v. Barber Steamship


Issue: Has the complaint prescribed? No, extension agreed upon
Doctrine:
CLAIMS against the CARRIER under COGSA must be filed within 1 year from delivery. The COGSA provision on prescription admits of an exception: if the parties agree to
suspend the 1 year period.
Facts:
In this case, the exchange of correspondence between the parties shows that they mutually
Manila Trading Supply was the consignee of a cargo of truck parts shipped by BARBER agreed to extend the time to file the suit, even if it is beyond the 1 year period. When the
STEAMSHIP, the carrier. When the goods arrived on FEB 25, 1964, it was discovered that insurer filed the suit, it was still within the 1 year period. Carrier lost.
damage was caused to the cargo so the insurer paid the consignee.
9. Union Carbide v. Manila Railroad
The insurer in turn sued BARBER STEAMSHIP and Luzon Stevedoring on FEB 2, 1965.
On APRIL 7, 1965, an amended complaint was filed by the insurer, on the ground that it Delivery under COGSA means delivery to the arrastre operator, and not the consignee
should be BARBER FAR EAST LINE SERVICE that should have been impleaded. The
judge DISMISSED the complaint on the ground that the amended complaint was filed Facts:
beyond one year from the date of delivery (COGSA)
The vessel DAISHIN MARU arrived in Manila on DEC 18, 1961. The cargo of resin was
Issue: Has the action prescribed? YES, Barber Far East impleaded for first time. consigned to GENERAL BASE METALS and was later sold to UNION CARBIDE. The
cargo was delivered to the arrastre operator on DEC 19, 1961.
The one-year statutory and contractual prescriptive period had already expired when the
insurance company filed on April 7, 1965 its action against Barber Line Far East Service. On JAN 20 and FEB 6&8, 1962, the resin was delivered by the customs broker to the
The one year period commenced on February 25, 1964 when the damaged cargo was consignee, UNION CARBIDE. It was discovered that there was damage to the cargo.
delivered to the consignee.
o A formal claim was filed on JUNE 11, 1962. As the claims were not paid, UNION
It must be reiterated that the original complaint impleaded BARBER STEAMPSHIP. In this CARBIDE sued MANILA PORT SERVICE (arrastre) under a management
case, BARBER FAR EAST was only impleaded for the first time. Since it was impleaded for contract and AMERICAN STEAMSHIP AGENCIES (agent of the carrier), under
the first time BEYOND the 1 year period provided for in COGSA and the B/L, then it follows the COGSA [joinder of cause of action] on DEC 21, 1962.
that the action has prescribed. Insurer lost, Carrier won.
o The case was dismissed as to the carrier‘s agent on the ground of prescription.
8. Universal Shipping v. IAC The period was counted from delivery to the arrastre operator (DEC 19, 1962)

Doctrine: o Pertinent provision of law: Sec 3(6) COGSA: In any event the carrier and the ship
The parties may extend the 1 year period to file suit against the carrier under the COGSA shall be discharged from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date when the goods
Facts: should have been delivered:

SEVALCO, owned and operated by UNIVERSAL SHIPPING shipped from Netherlands Issue: Should the period be reckoned from delivery to the arrastre operator? YES, for practical
to Thailand 2 cargoes of State R Brand carton black. It was consigned to S LERSEN and reasons
MUANG NGARM (one cargo per consignee) It was insured. When the ship arrived in
Bangkok, the cargo was delivered to MUANG NGARM but with shortages and nothing was The sensible and practical interpretation is that delivery within the meaning of section 3(6)
delivered to S LERSEN allegedly due to the fact that it dissolved due to contact with of COGSA means delivery to the arrastre operator. That delivery is evidenced by tally
seawater. sheets which show whether the goods were landed in good order or in bad order, a fact
which the consignee or shipper can easily ascertain through the customs broker.
The insurer (who does not do business in the PH) paid the consignees and sued in Manila.
It impleaded UNIVERSAL SHIPPING and Carlos Go Thong, its Manila Agent. Both were To use as basis for computing the one-year period the delivery to the consignee would be
held solidarily liable. On appeal however, GO THONG was absolved from liability. Thus, unrealistic and might generate confusion between the loss or damage sustained by
only UNIVERSAL SHIPPING was held to be liable. Among other things, UNIVERSAL the goods while in the carrier's custody and the loss or damage caused to the goods
SHIPPING argues that the complaint has prescribed. while in the arrastre operator's possession.

o In this case, the TC correctly reckoned the date on DEC 19. Therefore, the cause
of action against the CARRIER‘s AGENT has prescribed. Carrier won.

109
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

10. Ang v. American steamship It follows that for suits predicated not upon loss or damage but on alleged misdelivery (or
conversion) of the goods, the applicable rule on prescription is that found in the Civil Code,
Doctrine: namely, either ten years for breach of a written contract or four years for quasi-delict.
(Arts. 1144[1], 1146, Civil Code) In either case, plaintiff's cause of action has not vet
If the carrier wrongfully delivers the goods to another person, the 1 year period to file suit prescribed, since his right of action would have accrued at the earliest on May 9, 1961
under COGSA does not apply. (Sec 3[6]) In this case, the provisions of the Civil Code apply when the ship arrived in Manila and he filed suit on October 30, 1963. Carrier lost, action
(quasi-delict: 4 years/written contract: 10 years) has not yet prescribed.
Reason for 1 year period under COGSA: Said one-year period of limitation is designed to
meet the exigencies of maritime hazards. In a case where the goods shipped were neither 11. Ang v. Compania Maritima
lost nor damaged in transit but were, on the contrary, delivered in port to someone who
claimed to be entitled thereto, the situation is different, and the special need for the short Doctrine:
period of limitation in cases of loss or damage caused by maritime perils does not obtain.
Facts:
Facts:
Domingo Ang (the same person from the previous case) was the assignee of a bill of lading
Yau Yue (a bank) agreed to sell galvanized steel to TEVES. The agreement essentially initially held by YAU YUE Bank. He sued this time, COMPANIA MARITIMA, MARITIME
provided: COMPANY (MCP) and CL Diokno.

a) the purchase price should be covered by a bank draft for the corresponding amount ANG faults them as carriers (and representatives) for the misdelivery of the goods to
which should be paid by TEVES in exchange for the delivery to him of the corresponding TEVES. In response, the defendants moved to dismiss on the ground of prescription.
bill of lading to be deposited with a local bank, the Hongkong & Shanghai Bank of
Manila (HSBM) Issue: Has the action prescribed? No.

(b) upon arrival of the articles in Manila, TEVES would be notified and he would have to In the American Steamship Agencies cases, it was held that the action of Ang is based
pay the amount called for in the corresponding demand draft, after which the bill of lading on misdelivery of the cargo which should be distinguished from loss thereof. The one-year
would be delivered to him; and period provided for in section 3 (6) of the Carriage of Goods by Sea Act refers to loss of the
cargo. What is applicable is the four-year period of prescription for quasi-delicts prescribed
(c) TEVES would present said bill of lading to the carrier's agent, American Steamship in article 1146 (2) of the Civil Code or ten years for violation of a written contract as
Agencies, Inc. which would then issue the corresponding permit so that the shipment will provided for in article 1144 (1) of the same Code.
be released
As Ang filed the action less than three years from the date of the alleged misdelivery of the
The shipment was transported from JAPAN to MANILA by NISSHO SHIPPING (Manila cargo, it has not yet prescribed. Ang, as indorsee of the bill of lading, is a real party in
Agent: American Steamship) with TEVES as the party to be notified. interest with a cause of action for damages. carrier lost.

Upon arrival on MAY 9, 1961, TEVES was notified of the shipment‘s arrival. However,
TEVES did not pay HSBM. TEVES was still able to get the shipment from AMERICAN
STEAMSHIP due to a bank guaranty. TEVES did NOT present the indorsed bill of lading.

Subsequently, DOMINGO ANG, an assignee of YAU YUE, claimed the shipment by


presenting the indorsed bill of lading. However, he was informed that the shipment was
already delivered to TEVES. THUS, on OCT 30 1963 ANG sued AMERICAN STEAMSHIP
for having wrongfully delivered the shipment. His action was dismissed due to prescription.

Issue: Has the action prescribed? No. There was no loss. Only misdelivery.

As defined in the Civil Code and as applied to Section 3 (6) of COGSA, "loss"
contemplates merely a situation where no delivery at all was made by the shipper of the
goods because the same had perished, gone out of commerce, or disappeared that their
existence is unknown or they cannot be recovered. It does not include a situation where
there was indeed delivery — but delivery to the wrong person, or a misdelivery, as alleged
in the complaint in this case.
110
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

12. Mitsui v. CA 13. Fil. Merchants v. Alejandro

Doctrine: Doctrine:

Damages arising from late delivery are not within the ambit of the 1 year prescriptive period The 1 year period to file a complaint against the carrier applies to the INSURER also. The
under the COGSA. 3rd party complaint of the insurer cannot be said to have been filed on the date of the MAIN
ACTION of the consignee.
Facts:
Facts:
MITSUI OSK agreed to transport the goods of LAVINE LOUNGEWEAR from Manila to
France through MEISTER, a freight forwarder (MITSUI will transport from MANILA to CHOA TIEK SENG, as consignee filed a complaint against FIL MERCHANTS, the insurer
TAIWAN, while MEISTER will transport from TAIWAN to FRANCE) On JULY 24, 1991, of the cargo, for the loss/damage that its shipment contained. In response, FIL
MITSUI loaded the container in its vessel for delivery. However, the shipment arrived late in MERCHANTS filed a 3rd party complaint against respondents FROTA (carrier) and RAZON
France on NOV 14, 1991. (arrastre)

Because of this15, LAVINE was not paid in full. Thus, LAVINE sued MEISTER, The respondents argue that the claim has prescribed since the 1 year period has elapsed.
MAGSAYSAY (as agent of MITSUI OSK) for the balance on APRIL 14, 1992. LAVINE The case was thereafter dismissed. FIL MERCHANTS argues that the 1 year period does
amended its complaint on MAY 20, 1993 to replace the agent with MITSUI. not apply to it as INSURER.

MITSUI alleges prescription as a defense. He argues that the 1 year period applies. On the Issue: Does the 1 year period under COGSA apply to the INSURER? YES
other hand, it is argued by LAVINE that the ―late‖ delivery is not the ―loss/damage‖
contemplated by COGSA Clearly, the coverage of the Act includes the insurer of the goods. Otherwise, what the Act
intends to prohibit after the lapse of the one-year prescriptive period can be done indirectly
Issue: Has the complaint prescribed? NO by the shipper or owner of the goods by simply filing a claim against the insurer even after
the lapse of one year.
The claim of LAVINE is not due to damage or loss to the goods. Its claim is based on the
carrier‘s POTENTIAL liability for the damages it has caused in the general sense (e.g. by This would be the result if we follow FIL MERCHANT’s argument that the insurer
being late) HENCE, COGSA is not applicable. It is the CIVIL CODE which is applicable. can, at any time, proceed against the carrier and the ship since it is not bound by the
time-bar provision.
Therefore, the suit filed by LAVINE is NOT for "loss or damage" to goods contemplated in
§3(6), the question of prescription of action is governed not by the COGSA but by Art. 1144 In this situation, the one-year limitation will be practically useless. This could not have been
of the Civil Code which provides for a prescriptive period of ten years. Carrier lost the intention of the law which has also for its purpose the protection of the carrier and the
ship from fraudulent claims by having "matters affecting transportation of goods by sea be
decided in as short a time as possible" and by avoiding incidents which would
"unnecessarily extend the period and permit delays in the settlement of questions affecting
the transportation." carrier won, insurer lost.

15
The consignee allegedly paid only half the value of the said goods on the ground that they did
not arrive in France until the "off season" in that country.

111
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

14. Mayer Steel Pipe v. CA 15. Belgian Overseas v. Phil. First Insurance

Doctrine: Doctrine:
The basis of the insurer‘s liability is the insurance contract. Therefore, the 1 year period the notice of claim does not have to be given if the state of the goods, at the time of their
under COGSA does not apply to suits against the INSURER. receipt by the consignee, has been the subject of a joint inspection PRIOR to unloading.
a failure to file a notice of claim within 3 days will not bar recovery if it is nonetheless filed
Facts: within 1 year. This 1 year period applies to the shipper, consignee, insurer of the goods or
any legal holder of the B/L.
Hongkong Government (HONGKONG) contracted MAYER to manufacture steel pipes. the insertion of the words "L/C No. 90/02447 cannot be the basis for carrier‘s liability. This
Prior to shipping, MAYER insured the pipes ―against all risks‖ with SOUTH SEA and is because the L/C transaction is separate from the BILL OF LADING.
CHARTER. The pipes were inspected prior to shipping
On June 1990, CMC Trading shipped on board MV ANANGEL SKY ,owned by BELGIAN
When the goods reached HK, it was found that the pipes were allegedly damaged due to OVERSEAS Cold Rolled Sheets for transportation to Manila. The shipment was consigned
factory defects. Thus, the insurer CHARTER paid HONGKONG. MAYER also claimed from to PHILIPPINE STEEL. Upon arrival, 4 coils were found to be in bad order.
the insurer but the insurers denied the claim. Thus, MAYER sued the insurers.
The insurer paid PHIL STEEL and in turn sued the carrier.
The trial court ruled in favor of MAYER. It found that the damage to the goods is not due to
manufacturing defects. It also noted that the insurance contracts executed by petitioner o (1) In its defense, the carrier alleges that the damage was due to PRE-
Mayer and private respondents are "all risks" policies which insure against all causes of SHIPMENT damage.
conceivable loss or damage. This ruling was reversed on the ground of prescription since o (2) Moreover, the carrier claims that pursuant to Section 3(6)16 of COGSA, the
the action was filed 2 years AFTER the goods were unloaded in HK. CONSIGNEE should have filed its Notice of Loss within three days from delivery.
o (3) Lastly, the carrier claims that its liability is limited
Issue: Has the action prescribed?
Issue: 1) Was the carrier negligent? 2) Should the notice of loss have been filed within 3 days
The Filipino Merchants case is different from the case at bar. In Filipino Merchants, it was from delivery? 3) Should liability be limited?
the insurer which filed a claim against the carrier for reimbursement of the amount it paid to
the shipper. In the case at bar, it was the shipper which filed a claim against the insurer.
16
The basis of the shipper's claim is the "all risks" insurance policies. (basically, this case is "Unless notice of loss or damage and the general nature of such loss or damage be given in
SHIPPER v. INSURER) writing to the carrier or his agent at the port of discharge or at the time of the removal of the
goods into the custody of the person entitled to delivery thereof under the contract of carriage,
Moreover, the ruling in Filipino Merchants should apply only to suits against the such removal shall be prima facie evidence of the delivery by the carrier of the goods as
carrier filed either by the shipper, the consignee or the insurer. described in the bill of lading.

When the court said in Filipino Merchants that Section 3(6) of the Carriage of Goods by If the loss or damage is not apparent, the notice must be given within three days of
Sea Act applies to the insurer, it meant that the insurer, like the shipper, may no longer file delivery.
a claim against the carrier beyond the one-year period provided in the law.
"Said notice of loss or damage may be endorsed upon the receipt for the goods given by the
But it does not mean that the shipper may no longer file a claim against the insurer person taking delivery thereof.
because the basis of the insurer's liability is the insurance contract. An insurance
contract is a contract whereby one party, for a consideration known as the premium, agrees "The notice in writing need not be given if the state of the goods has at the time of their receipt
to indemnify another for loss or damage which he may suffer from a specified peril. 11 An been the subject of joint survey or inspection.
"all risks" insurance policy covers all kinds of loss other than those due to willful and
fraudulent act of the insured. insurer lost. "In any event the carrier and the ship shall be discharged from all liability in respect of loss or
damage unless suit is brought within one year after delivery of the goods or the date when the
goods should have been delivered; Provided, That, if a notice of loss or damage, either apparent
or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the
right of the shipper to bring suit within one year after the delivery of the goods or the date when
the goods should have been delivered.

"In the case of any actual or apprehended loss or damage, the carrier and the receiver shall give
all reasonable facilities to each other for inspecting and tallying the goods

112
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

Carrier was negligent 16. Philippines First Insurance v. Wallem

The presumption of negligence was not rebutted. Under the B/L, the goods were received Doctrine:
by the shipper in GOOD ORDER condition. Moreover, the goods were thoroughly Under the COGSA, the carrier is obliged to carefully unload/discharge the goods carried. If
inspected before being unloaded from the ship upon arrival. True, the words "metal damage is done to the cargo during unloading/discharge, then the carrier will be held liable
envelopes rust stained and slightly dented" were noted on the Bill of Lading; however, there for such damage.
is no showing that the carrier exercised due diligence to forestall or lessen the loss.
Facts:
Notice of claim filed within 1 year.
LG Atkimson, the consignee, received a shipment of sodium sulfate transported by an
FIRST, Section 3(6) of COGSA provides that the notice of claim does not have to be given unknown carrier/charterer (and represented by WALLEM in the PH). Upon discharge, from
if the state of the goods, at the time of their receipt by the consignee, has been the subject carrier it was discovered that 2k bags were in bad order. This was evidenced by the report
of a joint inspection PRIOR to unloading. of the arrastre operator, ASIAN TERMINALS.

SECOND, a failure to file a notice of claim within 3 days will not bar recovery if a suit is filed ASIA STAR FREIGHT delivered the goods to the consignee. The damage (spillage) to the
within 1 year. This 1 year period applies to the shipper, consignee, insurer of the goods or goods was confirmed by another inspection conducted by the consignee. Thus, LG
any legal holder of the B/L. ATKIMSON claimed from the insurer (PHIL FIRST INSURANCE, petitioner herein). The
insurer in turn sued WALLEM and ASIAN TERMINALS.
However, liability is limited to 500USD per package as there was no declaration of a higher
value (only the L/C arrangement was expressed on the B/L) Both were held solidarily liable for the damage.

In this case before us, there was no stipulation in the Bill of Lading limiting the carrier's Issue: Was the carrier negligent in discharging the goods? YES If yes, should it be solely liable?
liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This YES
fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for
petitioners' liability. Section 2 of the COGSA provides that under every contract of carriage of goods by sea,
the carrier in relation to the loading, handling, stowage, carriage, custody, care, and
o This is because first, a notation in the Bill of Lading which indicated the amount discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to
of the Letter of Credit obtained by the shipper for the importation of steel sheets the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among
did not effect a declaration of the value of the goods as required by the bill. That the carriers‘ responsibilities are to properly and carefully load, handle, stow, carry,
notation was made only for the convenience of the shipper and the bank keep, care for, and discharge the goods carried
processing the Letter of Credit.
Moreover, it is settled in maritime law jurisprudence that cargoes while being unloaded
o Second, a B/L is separate and independent from the L/C transaction generally remain under the custody of the carrier. In the instant case, the damage or losses
were incurred during the discharge of the shipment while under the supervision of the
o In the light of the foregoing, petitioners' liability should be computed based on carrier. Consequently, the carrier is liable for the damage or losses caused to the
US$500 per package and not on the per metric ton price declared in the Letter of shipment. Carrier lost, ARRASTRE free from liability
Credit. Carrier lost (declared negligent) but won because its liability was
limited to $2,000

113
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

WEEK 16 (Salvage Law, PSA, Prior Operator Rule, CPC/CPCN) As to the amount of the award, ERLANGER contends that the expenses incurred by it
should be deducted from the entire amount of the salved property and the remainder be
1. Erlanger v. Swedish Asiatic divided as a reward for the services rendered.

Doctrine: o This contention has no basis in the law of salvage compensation.


Salvage may be defined as a service which one person renders to the owner of a ship or
goods, by his own labor, preserving the goods or the ship which the owner or those o The expenses incurred by the salvor must be borne by them. It is true that the
entrusted with the care of them have either abandoned in distress at sea, or are unable to award should be liberal enough to cover the expenses and give an extra amount
protect and secure as a reward for the services rendered but the expenses are used in no other way
Three elements are necessary to a valid salvage claim: as a basis for the final award.

(1) A marine peril. o A part of the risk that the salvor incurred was that the goods salved would not
(2) Service voluntarily rendered when not required as an existing duty or from a special pay them for the amount expended in salving them. They knew this risk and they
contract. should not have spent more money than their reasonable share of the proceeds
(3) Success, in whole or in part, or that the service rendered contributed to such success. would amount to under any circumstances.

A derelict is defined as "A ship or her cargo which is abandoned and deserted at sea by 2. Barrios v. Go Thong
those who were in charge of it, without any hope of recovering it (sine spe recuperandi),
or without any intention of returning to it (sine animo revertendi) A ship must be a Doctrine:
derelict (lost/abandoned at sea) before it can be salved. The distinction between salvage and towage is of importance to the crew of the salvaging
ship, for the following reasons: If the contract for towage is in fact towage, then the crew
Facts: does not have any interest or rights in the remuneration pursuant to the contract. But if the
owners of the respective vessels are of a salvage nature, the crew of the salvaging ship is
The steamship Nippon, which was carrying various cargo, was on its way to Singapore entitled to salvage, and can look to the salvaged vessel for its share [Salvage – crew can
when it went aground on Scarborough Reef. The captain and the crew left the ship and collect, Towage – only shipowner can collect]
went to the coast.
Facts:
The Manchuria went by the reef and saved the captain and the crew. The Mindoro arrived
shortly after and removed the baggage of the officers/crew, which were on the deck of the Barrios was the captain of the MV Henry of William Lines. During the voyage, he
ship. intercepted a distress signal from MV Don Alfredo (owned by GO THONG) The Don
Alfredo could not move due to engine failure and loss of its propeller.
ERLANGER applied to charter a coast guard cutter for the purpose of proceeding to the
Nippon. The Mindoro was chartered to it. It then took possession of the NIPPON and To aid the ship, Barrios had the ship tied to his own ship. The MV Henry then towed the
shipped the cargo to Manila for delivery to the consignees/sale. Don Alfredo towards DUMAGUETE. Barrios made a claim for compensation for salvage.

Thereafter, ERLANGER sued the insurance companies of the cargo. It is suing for salvage, Issue: Is Barrios entitled to salvage? If not, was he entitled to towage?
to which it argues it is entitled to.
Barrios was not entitled to salvage. This is because there was no marine peril. Though
Issue: Is ERLANGER entitled to salvage? YES the ship was at a helpless condition due to engine failure, it did not drift too far from the
place where it was. Moreover, the weather was fair, clear, and good. The waves were
There are 3 requisites before a valid claim for salvage can be made to wit: 1) marine peril small and too slight, so much so, that there were only ripples on the sea, which was quite
2) service voluntarily rendered when not required as an existing duty 3) success, in whole smooth. During the towing of the vessel on the same night, there was moonlight. Although
or in part, or the service contributed to such success said vessel was drifting towards the open sea, there was no danger of it floundering or
being stranded,
In this case, the evidence proves that the Nippon was in peril; that the captain left in order
to protect his life and the lives of the crew; that the intent of returning was slight. o Second, the ship was not a derelict/quasi-derelict. All that the vessel's crew
members could not do was to move the vessel on its own power. That did not
The argument of the insurers to the effect that the ship was in no danger is incorrect make the vessel a quasi-derelict, considering that even before Barrios extended
because of the statement of the captain that she would sink with the first gale, coupled with the help to the distressed ship, a sister vessel was known to be on its way to help
the fact that a typhoon was the cause of her stranding. it

114
Subject: Transportation
Professor: Atty. Ampil
By: Butch Ramiro

However, in this case, there was TOWAGE. A quasi-contract was created when the o Third, a bigger launch could not have been used to salvage Nieva because it was
shipowner of the DON ALFREDO consented to the towage of the ship by the ship manned at the time traversing shallow waters.
by Barrios. In the particular instance of towage however, only the shipowner can collect.
Barrios lost