Transportation Law

Case 1:

Everett Steamship Corporation vs. C.A., G.R. No. 122494

Facts:

Hernandez Trading Co. imported three crates of bus spare parts from
Maruman Trading Company, Ltd. (Maruman Trading), a foreign
corporation based in Inazawa, Aichi, Japan. The crates were shipped
from Nagoya, Japan to Manila on board ADELFAEVERETTE, a
vessel owned by Everett Steamship Corporation’s principal, Everett
Orient Lines. The said crates were covered by Bill of Lading No.
NGO53MN.

Upon arrival at the port of Manila, it was discovered that the crate
marked MARCO C/No. 14 was missing. This was confirmed and
admitted by petitioner in its letter of January 13, 1992 addressed to
private respondent, which thereafter made a formal claim upon
petitioner for the value of the lost cargo amounting to One Million
Five Hundred Fifty Two Thousand Five Hundred (Y1,552,500.00) Yen,
the amount shown in an Invoice No. MTM-941, dated November 14,
1991. However, petitioner offered to pay only One Hundred Thousand
(Y100,000.00) Yen, the maximum amount stipulated under Clause
18 of the covering bill of lading which limits the liability of petitioner.

Private respondent rejected the offer and thereafter instituted a suit

for collection.

the trial court rendered judgment[2] in favor of private respondent,

ordering petitioner to pay: (a) Y1,552,500.00; (b) Y20,000.00 or its
peso equivalent representing the actual value of the lost cargo and
the material and packaging cost; (c) 10% of the total amount as an
award for and as contingent attorneys fees; and (d) to pay the cost
of the suit.

The Court subscribes to the provisions of Article 1750 of the

New Civil Code -
Art. 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has
been fairly and freely agreed upon.
It is required, however, that the contract must be reasonable and just
under the circumstances and has been fairly and freely agreed
upon. The requirements provided in Art. 1750 of the New Civil Code
must be complied with before a common carrier can claim a limitation
of its pecuniary liability in case of loss, destruction or deterioration of
the goods it has undertaken to transport.

The Court of Appeals deleted the award of attorneys fees but affirmed
the trial courts findings with the additional observation that private
respondent can not be bound by the terms and conditions of the bill
of lading because it was not privy to the contract of carriage.

Issues:

I.

Whether or not the consent of the consignee to the terms and

conditions of the bill of lading is necessary to make such stipulations
binding upon it

II

Whether or not the carriers limited package liability as stipulated in

the bill of lading is applicable

III.

Whether or not private respondent can fully recover the full alleged
value of its lost cargo

Ruling:

I.

Yes. In Sea-Land Service, Inc. vs. Intermediate Appellate

Court (supra), we held that even if the consignee was not a signatory
to the contract of carriage between the shipper and the carrier, the
consignee can still be bound by the contract. Speaking through Mr.
Chief Justice Narvasa, we ruled:
To begin with, there is no question of the right, in principle, of
a consignee in a bill of lading to recover from the carrier or
shipper for loss of, or damage to goods being transported
under said bill, although that document may have been- as in
 practice it oftentimes is-drawn up only by the consignor and
the carrier without the intervention of the consignee. x x x.
x x x the right of a party in the same situation as respondent
here, to recover for loss of a shipment consigned to him under
a bill of lading drawn up only by and between the 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 some stipulation is made in said
contract, and who becomes a party thereto when he demands
fulfillment of that stipulation, in this case the delivery of the
goods or cargo shipped. In neither capacity can he assert
personally, in bar to any provision of the bill of lading, the
alleged circumstance that fair and free agreement to such
provision was vitiated by its being in such fine print as to be
hardly readable. Parenthetically, it may be observed that in
one comparatively recent case (Phoenix Assurance Company
vs. Macondray & Co., Inc., 64 SCRA 15) where this Court found
that a similar package limitation clause was printed in the
smallest type on the back of the bill of lading, it nonetheless
ruled that the consignee was bound thereby on the strength
of authority holding that such provisions on liability limitation
are as much a part of a bill of lading as though physically in it
and as though placed therein by agreement of the parties.

II.
Yes. A stipulation in the bill of lading limiting the common carriers
liability for loss or destruction of a cargo to a certain sum, unless the
shipper or owner declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code which provide:
ART. 1749. A stipulation that the common carriers liability is
limited to the value of the goods appearing in the bill of lading,
unless the shipper or owner declares a greater value, is
binding.
ART. 1750. A contract fixing the sum that may be recovered
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been freely and fairly agreed
upon.
It is required that the stipulation limiting the common carriers
liability for loss must be reasonable and just under the circumstances,
and has been freely and fairly agreed upon.
The bill of lading subject of the present controversy specifically
provides, among others:
 18. All claims for which the carrier may be liable shall be
adjusted and settled on the basis of the shippers net invoice
cost plus freight and insurance premiums, if paid, and in no
event shall the carrier be liable for any loss of possible profits
or any consequential loss.
The carrier shall not be liable for any loss of or any damage to
or in any connection with, goods in an amount exceeding One
Hundred Thousand Yen in Japanese Currency (Y100,000.00)
or its equivalent in any other currency per package or
customary freight unit (whichever is least) unless the value of
the goods higher than this amount is declared in writing by the
shipper before receipt of the goods by the carrier and inserted
in the Bill of Lading and extra freight is paid as
required. (Emphasis supplied)
The above stipulations are, to our mind, reasonable and just. In
the bill of lading, the carrier made it clear that its liability would only
be up to One Hundred Thousand (Y100,000.00) Yen. However, the
shipper, Maruman Trading, had the option to declare a higher
valuation if the value of its cargo was higher than the limited liability
of the carrier. Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the stipulations.
The trial courts ratiocination that private respondent could not
have fairly and freely agreed to the limited liability clause in the bill
of lading because the said conditions were printed in small letters
does not make the bill of lading invalid.
Greater vigilance, however, is required of the courts when dealing
with contracts of adhesion in that the said contracts must be carefully
scrutinized in order to shield the unwary (or weaker party) from
deceptive schemes contained in ready-made covenants,[8] such as
the bill of lading in question. The stringent requirement which the
courts are enjoined to observe is in recognition of Article 24 of the
Civil Code which mandates that (i)n all contractual, property or other
relations, when one of the parties is at a disadvantage on account of
his moral dependence, ignorance, indigence, mental weakness,
tender age or other handicap, the courts must be vigilant for his
protection.
The shipper, Maruman Trading, we assume, has been extensively
engaged in the trading business. It can not be said to be ignorant of
the business transactions it entered into involving the shipment of its
goods to its customers. The shipper could not have known, or should
know the stipulations in the bill of lading and there it should have
declared a higher valuation of the goods shipped. Moreover,
Maruman Trading has not been heard to complain that it has been
deceived or rushed into agreeing to ship the cargo in petitioners
vessel. In fact, it was not even impleaded in this case.
III.

No. the liability of petitioner for the loss of the cargo is limited to One
Hundred Thousand (Y100,000.00) Yen, pursuant to Clause 18 of the
bill of lading.

Case 2:

MOF Company, Inc. vs. Shin Yang, G.R. No. 172822

Facts:

Halla Trading Co., a company based in Korea, shipped to Manila

secondhand cars and other articles on board the vessel Hanjin Busan.
The bill of lading covering the shipment, i.e., Bill of Lading No.
HJSCPUSI14168303, which was prepared by the carrier Hanjin
Shipping Co., Ltd. (Hanjin), named respondent Shin Yang Brokerage
Corp. (Shin Yang) as the consignee and indicated that payment was
on a "Freight Collect" basis, i.e., that the consignee/receiver of the
goods would be the one to pay for the freight and other charges in
the total amount of P57,646.00.

The shipment arrived in Manila Thereafter, petitioner MOF Company,

Inc. (MOF), Hanjin’s exclusive general agent in the Philippines,
repeatedly demanded the payment of ocean freight, documentation
fee and terminal handling charges from Shin Yang. The latter,
however, failed and refused to pay contending that it did not cause
the importation of the goods, that it is only the Consolidator of the
said shipment, that the ultimate consignee did not endorse in its favor
the original bill of lading and that the bill of lading was prepared
without its consent.

Issue:

Whether or not Shin Yang Brokerage Corporation is bound to the

stipulations on the bill of lading.

Ruling:

In the instant case, there was on acceptance on the part of Shin Yang
Brokerage Corp. as the party to the bill of lading. It consistently
denied in all of its pleadings that it authorized Halla Trading, Co. to
ship the goods on its behalf; or that it got hold of the bill of lading
covering the shipment or that it demanded the release of the cargo.
In order to have a valid acceptance on the bill of lading and therefore
bound the stipulations provided therein, the following requisites must
be present.

a) There exist an agency between the consignee and the shipper

or carrier;
b) When the consignee demanded the fulfilment of the stipulation
in the bill of lading and
c) There is unequivocal acceptance of the bill of lading delivered
to him with full knowledge of the contents

None of the above requisites were present in the case.

Case 3:

Dangwa Transportation Co., vs. C.A., 202 SCRA 574

Facts:

INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDO

CUDLAMAT, MARRIETA CUDIAMAT, NORMA CUDIAMAT, DANTE
CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of
the late Pedrito Cudiamat represented by Inocencia Cudiamat, filed a
complaint for damages against Dangwa Transportation Co. for the
death of Pedrito Cudiamat due to a vehicular accident which occurred
on March 25, 1985 at Sapid, Mankayan, Benguet. It was alleged that
petitioner Theodore Lardizabal was driving a passenger bus belonging
to petitioner corporation in a reckless and imprudent manner and
without due regard to traffic rules and regulation, as well as safety to
persons and property. It ran over its passenger, deceased Pedro
Cudiamat. It was further alleged that instead of bringing deceased
Pedrito immediately to the nearest hospital, the said driver first
brought his other passengers and cargo to their respect destinations.

Petitioners however alleged that they had observed and continuously

observed the extraordinary diligence required in the operation of the
transportation company and the supervision of the employees.
Petitioner likewise averred that it was the victim’s own carelessness
and negligence which gave rise to the subject incident. Petitioners
averred that the deceased did not inform petitioner driver that the
latter wished to board the bus, and yet the latter continued to
recklessly board into the moving vehicle.

The trial court however ruled in favor of respondents. The Court of

Appeals reversed the decision. Hence this petition.
Issue:

Whether or not petitioner is guilty of negligence.

Ruling:

The Court held in affirmative.

The testimonies of the witnesses showed that that the bus was at full
stop when the victim boarded the same. They further confirmed the
conclusion that the victim fell from the platform of the bus when it
suddenly accelerated forward and was run over by the rear right tires
of the vehicle. Under such circumstances, it cannot be said that the
deceased was guilty of negligence.

It is not negligence per se, or as a matter of law, for one attempt to

board a train or streetcar which is moving slowly. An ordinarily
prudent person would have made the attempt board the moving
conveyance under the same or similar circumstances. The fact that
passengers board and alight from slowly moving vehicle is a matter
of common experience both the driver and conductor in this case
could not have been unaware of such an ordinary practice.

Further, the victim herein, by stepping and standing in the platform

of the bus, is already considered a passenger and is entitled all the
right and protection pertaining to such a contractual relation. Hence
it has been held that that duty to which the carrier passenger owes
to tis patrons extends to persons boarding cars as well as those
alighting therefrom.

Common carriers, from the nature of their business and reasons of

public policy, are bound to observe extraordinary diligence for the
safety of the passengers transported by the according to all the
circumstances of each case. A common carrier is bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence very cautious persons, with a due regard
for all the circumstances.

It has also been repeatedly held that in an action based on a contract

of carriage, the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to
pay the 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 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 the carrier. This is an exception to the general rule that
negligence must be proved, and it is therefore incumbent upon the
carrier to prove that it has exercised extraordinary diligence as
prescribed in Articles 1733 and 1755 of the Civil Code.

Case 4:

Korean Airlines Co. Vs. C.A., 234 SCRA 717

Facts:

Juanito C. Lapuz was contracted for employment in Jeddah, Saudi

Arabia for a period of one year. Lapuz was supposed to leave on
November 8, 1980, via Korean Airlines (KAL). Initially, he was "wait-
listed," which meant that he could only be accommodated if any of
the confirmed passengers failed to show up at the airport before
departure. When two of such passengers did not appear, Lapuz and
another person by the name of Perico were given the two unclaimed
seats.

Lapuz was allowed to check in his belongings at the check-in counter

of KAL. He passed through the customs, immigration, and check-up,
was cleared for departure, and even rode in the shuttle bus for
boarding. However, when he was at the third or fourth rung of the
stairs, a KAL officer pointed to him and shouted "Down! Down!" and
was thus barred from taking the flight. When he later asked for
another booking, his ticket was cancelled by KAL. Consequently, he
was unable to report for his work in Saudi Arabia within the stipulated
2-week period and so lost his employment.

KAL, on the other hand, alleged that Pan Pacific Recruiting Services
Inc. coordinated with KAL for the departure of 30 contract workers,
of whom only 21 were confirmed and 9 were wait-listed passengers.
One of the seats was given to Perico, who was one of the supervisors
of the hiring company in Saudi Arabia, while the other seat was won
through lottery by Lapuz. However, only one seat became available
and so, Perico alone was allowed to board.

The Regional Trial Court (RTC) adjudged KAL as liable for damages.

The Court of Appeals (CA) affirmed the judgment with modifications.

Issue:

Whether or not there was a breach of contract of carriage between

KAL and Lapuz.
Ruling:

The status of Lapuz as standby passenger was changed to that of a

confirmed passenger when his name was entered in the passenger
manifest of KAL. His clearance through immigration and customs
clearly shows that he had indeed been confirmed as a passenger. KAL
thus committed a breach of the contract of carriage between them
when it failed to bring Lapuz to his destination.

This Court has held that a contract to transport passengers is

different in kind and degree from any other contractual relation. The
business of the carrier is mainly with the travelling public. It invites
people to avail themselves of the comforts and advantages it offers.
The contract of air carriage generates a relation attended with a
public duty. Passengers have the right to be treated by the carrier's
employees with kindness, respect, courtesy and due consideration.
They are entitled to be protected against personal misconduct,
injurious language, indignities and abuses from such employees. So
it is that any discourteous conduct on the part of these employees
toward a passenger gives the latter an action for damages against
the carrier.

The evidence presented by Lapuz shows that he had indeed checked

in at the departure counter, passed through customs and immigration,
boarded the shuttle bus and proceeded to the ramp of KAL's aircraft.
In fact, his baggage had already been loaded in KAL's aircraft, to be
flown with him to Jeddah. The contract of carriage between him and
KAL had already been perfected when he was summarily and
insolently prevented from boarding the aircraft.

Case 5:

LRTA vs. Navidad, G.R. 145804

Facts:

On 14 October 1993, about half an hour past seven o’clock in the

evening, Nicanor Navidad, then drunk, entered the EDSA LRT station
after purchasing a "token" (representing payment of the fare). While
Navidad was standing on the platform near the LRT tracks, Junelito
Escartin, the security guard assigned to the area approached Navidad.
A misunderstanding or an altercation between the two apparently
ensued that led to a fist fight. At the exact moment that Navidad fell,
an LRT train, operated by petitioner Rodolfo Roman, was coming in.
Navidad was struck by the moving train, and he was killed
instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent
Marjorie Navidad, along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the
death of her husband. LRTA and Roman filed a counterclaim against
Navidad and a cross-claim against Escartin and Prudent. Prudent, in
its answer, denied liability and averred that it had exercised due
diligence in the selection and supervision of its security guards.

Issue:

Whether or not a contract of carriage had already existed when the

victim entered the place where passengers were supposed to be after
paying the fare and getting the corresponding token therefor.

Ruling:

Yes.
Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened
with the duty of exercising utmost diligence in ensuring the safety of
passengers.4 The Civil Code, governing the liability of a common
carrier for death of or injury to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all
the circumstances.
"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."

"Article 1759. Common carriers are liable for the death of or injuries
to passengers through the negligence or willful acts of the former’s
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.

"This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees."

"Article 1763. A common carrier is responsible for injuries suffered

by a passenger on account of the willful acts or negligence of other
passengers or of strangers, if the common carrier’s employees
through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission."
Such duty of a common carrier to provide safety to its passengers so
obligates it not only during the course of the trip but for so long as
the passengers are within its premises and where they ought to be in
pursuance to the contract of carriage.

The foundation of LRTA’s liability is the contract of carriage and its

obligation to indemnify the victim arises from the breach of that
contract by reason of its failure to exercise the high diligence required
of the common carrier.

Synthesis:

Limited liability of carriers and a contract of carriage are the two

common denominators among the five case summaries.
In Everett Steamship Corporation vs. C.A., the Court ruled that:
A stipulation in the bill of lading limiting the common carriers liability
for loss or destruction of a cargo to a certain sum, unless the shipper
or owner declares a greater value, is sanctioned by law, particularly
Articles 1749 and 1750 of the Civil Code which provide:
ART. 1749. A stipulation that the common carriers liability is
limited to the value of the goods appearing in the bill of lading,
unless the shipper or owner declares a greater value, is
binding.
ART. 1750. A contract fixing the sum that may be recovered
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been freely and fairly agreed
upon.
In MOF Company, Inc. vs. Shin Yang, it was held that in order to have
a valid acceptance on the bill of lading and therefore bound the
stipulations provided therein, the following requisites must be
present.

d) There exist an agency between the consignee and the shipper

or carrier;
e) When the consignee demanded the fulfilment of the stipulation
in the bill of lading and
f) There is unequivocal acceptance of the bill of lading delivered
to him with full knowledge of the contents

In Dangwa Transportation Co., vs. C.A., the Court held that in an

action based on a contract of carriage, the court need not make an
express finding of fault or negligence on the part of the carrier in
order to hold it responsible to pay the 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 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 the
carrier. This is an exception to the general rule that negligence must
be proved, and it is therefore incumbent upon the carrier to prove
that it has exercised extraordinary diligence as prescribed in Articles
1733 and 1755 of the Civil Code.

In Korean Airlines Co. Vs. C.A., the Court ruled that a contract to
transport passengers is different in kind and degree from any other
contractual relation. The business of the carrier is mainly with the
travelling public. It invites people to avail themselves of the comforts
and advantages it offers. The contract of air carriage generates a
relation attended with a public duty. Passengers have the right to be
treated by the carrier's employees with kindness, respect, courtesy
and due consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities and abuses from
such employees. So it is that any discourteous conduct on the pasrt
of these employees toward a passenger gives the latter an action for
damages against the carrier.

Finally, in LRTA vs. Navidad, it was held that the contract of carriage
and its obligation to indemnify the victim arises from the breach of
that contract by reason of its failure to exercise the high diligence
required of the common carrier.

Thus, the bottom line of all of the issues would be the definition of a
contract itself. Article 1305 of the New Civil Code provides:

Art. 1305. A contract is a meeting of minds between two persons

whereby one binds himself, with respect to the other, to give
something or to render some service. (1254a)

Furthermore, Article 1318 of the New Civil Code provides:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established. (1261)

Lest we forget, the basics - the law on obligations and contracts in

studying Transportation Law.