4663623 tr4663623-transpo-reviewer

8/13/2019 4663623 Tr4663623-Transpo-Reviewer

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TRANSPORTATION AND MARITIME LAW

Based on the outline of Prof. Rodrigo Quimbo

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I. General Considerations

A. Public Utilities

1. Article XII, 1!" Constitution

Art. XII, Section 11. No franchise,certificate or any other for of a!thori"ation forthe o#eration of a #!$%ic !ti%ity sha%% $e &rante'e(ce#t to citi"ens of the Phi%i##ines or tocor#orations or associations or&ani"e' !n'erthe %a)s of the Phi%i##ines at %east *+ of)hose ca#ita% is o)ne' $y s!ch citi"ens, norsha%% s!ch franchise, certificate or a!thori"ation$e e(c%!si-e in character or for a %on&er #erio'than fifty years. Neither sha%% any franchise or

ri&ht $e &rante' e(ce#t !n'er the con'ition thatit sha%% $e s!$ect to aen'ent, a%teration orre#ea% $y the /on&ress )hen the coon &oo'so re0!ires. The State sha%% enco!ra&e e0!ity#artici#ation in #!$%ic !ti%ities $y the &enera%#!$%ic. The #artici#ation of forei&n in-estors inthe &o-ernin& $o'y of any #!$%ic !ti%ityenter#rise sha%% $e %iite' to their#ro#ortionate share in its ca#ita%, an' a%% thee(ec!ti-e an' ana&in& officers of s!chcor#oration or association !st $e citi"ens ofthe Phi%i##ines.

Section 1. In ties of nationa%eer&ency, )hen the #!$%ic interest sore0!ires, the State ay, '!rin& the eer&encyan' !n'er reasona$%e ters #rescri$e' $y it,te#orari%y ta2e o-er or 'irect the o#eration ofany #ri-ate%y o)ne' #!$%ic !ti%ity or $!sinessaffecte' )ith #!$%ic interest.

Section 13. The State ay, in theinterest of nationa% )e%fare or 'efense,esta$%ish an' o#erate -ita% in'!stries an', !#on#ayent of !st co#ensation, transfer to#!$%ic o)nershi# !ti%ities an' other #ri-ateenter#rises to $e o#erate' $y the 4o-ernent.

Section 15. The State sha%% re&!%ate or

#rohi$it ono#o%ies )hen the #!$%ic interest sore0!ires. No co$inations in restraint of tra'eor !nfair co#etition sha%% $e a%%o)e'.

#a$ %hat is a &ublic utilit'(

A public utility is a business or ser)iceengaged in regularl' su&&l'ing the &ublic *ith somecommodit' or ser)ice of &ublic conse+uence such aselectricit', gas, *ater, trans&ortation, tele&hone ortelegra&h ser)ice. A&art from statutes *hich definethe &ublic utilities that are *ithin the &ur)ie* of suchstatutes, it *ould be difficult to construct a definitionof a &ublic utilit' *hich *ould fit e)er' concei)ablecase. As its name indicates, ho*e)er, the term &ublicutilit' im&lies a &ublic use and ser)ice to the &ublic.#Am. ur. -d . /0, &.0.$ #Albano )s Re'es$

#b$ %hat is a &ublic ser)ice(

2he Public 3er)ice Act #CA 4o. 10/ asamended$ &ro)ides that the term &ublic ser)ice5includes e)er' &erson that no* or hereafter ma' o*n,o&erate, manage, or control in the Phili&&ines, for hireor com&ensation, *ith general or limited clientele,*hether &ermanent, occasional or accidental, and

done for general business &ur&oses, an' commoncarrier, railroad, street rail*a', traction rail*a', sub6*a' motor )ehicle, either for freight or &assenger, orboth *ith or *ithout fi7ed route and *hate)er ma' beits classification, freight or carrier ser)ice or an' class,e7&ress ser)ice, steamboat, or steamshi& line,&ontines, ferries, and *ater craft, engaged in thetrans&ortation of &assengers and freight or both,shi&'ard, marine re&airsho&, 8*arehouse9, *harf ordoc:, ice &lant, ice refrigeration &lant, canal, irrigations'stem, gas, electric light, heat and &o*er, *atersu&&l' and &o*er, &etroleum, se*erage s'stem, *ireor *ireless communications s'stem, *ire or *irelessbroadcasting stations and other similar &ublicser)ices...5 83ec. 1;#b$9 #Albano )s Re'es$

Albano )s Re'es 1" 3CRA -/0

n -? A&ril 1!", the Phil. Ports Authorit'#PPA$ ado&ted a resolution directing mgmt. to &re&arethe In)itation to Bid and all rele)ant biddingdocuments necessar' for the &ublic bidding of thede)elo&ment, mgmt., and o&eration of the @anila Intl.Container 2erminal #@IC2$ and authoried the Board

Chairman 3ecretar' Re'es to o)ersee and im&lementthe &roect.

3ecretar' Re'es created a "6man @IC2 BiddingCommittee to e)aluate all bids and recommend to theBoard the best bid. 2he PPA &ublished the In)itation toBid *ith the reser)ation that it had the right to reectan' bid and to acce&t such bid it ma' deemad)antageous to the go)t.

3e)en com&anies submitted bids. 2heCommittee recommended that the contract bea*arded to Intl. Container 2erminal 3er)ices #IC23I$ onthe ground that it offered the best technical andfinancial &ro&osal. 3ecretar' Re'es a*arded thecontract to IC23I. Before the contract could be signed,t*o cases *ere filed +uestioning the legalit' orregularit' of the bidding. 2he first *as a s&ecial actionfor &rohibition *ith &relim inunction filed b' Alo, aconcerned ta7&a'er. 2he second *as a ci)il case for&rohibition *ith &ra'er for 2R> filed b' 3har& Co.*hich acti)el' &artici&ated in the bidding.

2he President a&&ro)ed the &ro&osed @IC2contract. 2he PPA and IC2. Petition dismissed.A franchise s&eciall' granted b' Congress is

not necessar' for the o&eration of the @IC2 b' a&ri)ate entit'. A contract entered into b' the PPA andsuch entit' is substantial com&liance *ith the la*. 1.D7ecuti)e >rder 4o. ;? authoried the PPA to ta:eo)er, manage and o&erate the @IC2 in accordance*ith PE !" #Re)ised Charter of the PPA$. PE !"e7&ressl' em&o*ers the PPA to &ro)ide ser)ices *ithinPort Eistricts 5*hether on its o*n, b' contract orother*ise.5 2herefore, under D> ;? and PE !", thePPA ma' contract *ith IC23I for the mgmt., o&erationand de)t. of the @IC2.-. D)en if the @IC2 be considered a &ublic utilit' or a&ublic ser)ice on the theor' that it is a *harf or a doc:as contem&lated b' the Public 3er)ice Act, itso&eration *ould not necessaril' call for a legislati)efranchise. Fegislati)e franchises are not re+uiredbefore each and e)er' &ublic utilit' ma' o&erate. 2hela* has granted certain administrati)e agencies the&o*er to grant licenses for or to authorie theo&eration of certain &ublic utilities.

2hat the Consti &ro)ides that the issuance of afranchise for the o&eration of a &ublic utilit' shall besubect to amendment, alteration or re&eal b'


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Congress does not necessaril' im&l' that onl'Congress has the &o*er to grant such authoriation.2here are se)eral la*s granting s&ecified agencies inthe D7ecuti)e Ee&t. the &o*er to issue suchauthoriation for certain classes of &ublic utilities. 8 1.F2


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cor#oration, )hether 'oestic or forei&n, their%essees, tr!stees, or recei-ers, as )e%% as any!nici#a%ity, #ro-ince, city, 4OO/, or a&ency ofthe &o-t. of the Phi%i##ines, an' )hate-er other#erson or entities that ay o)n or #ossess oro#erate #!$%ic ser-ices.

Section 1?. The ff. are e(e#te' fro

the #ro-isions of the #rece'in& section 9


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connection )ith any #ri-ate si'etrac2 )hichay $e constr!cte' $y any shi##er to connect)ith the rai%roa', street rai%)ay or tractionco#any %ine )here, in the !'&ent of thecoission, s!ch connection is reasona$%e an'#ractica$%e, an' can $e #!t in )ith safety, an')i%% f!rnish s!fficient $!siness to !stify theconstr!ction an' aintenance of the sae.


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Nothin& herein containe' sha%% $e constr!e' to#re-ent the ho%'in& of shares %a)f!%%y ac0!ire'.

&erator Rule

Eifference bet*een CPC and CPC4 = A CPC4 is issuedb' the P3C to a &ublic ser)ice to *hich an' &oliticalsubdi)ision has granted a franchise under Act //"

after the P3C has a&&ro)ed the same under 3ection1/#b$. A CPC is an' authoriation to o&erate a &ublicser)ice issued b' the P3C. A CPC is an authoriationissued b' the Commission for the o&eration of &ublicser)ices for *hich no franchise, either munici&al orlegislati)e, is re+uired b' la* #e.g. auto6truc:s andmotor )ehicles$. A CPC4 is an authoriation issued b'the P3C for the o&eration of &ublic ser)ices for *hich afranchise is re+uired b' la* #e.g. electric, tele&honeser)ices$.

4ature of certificate = It constitutes neither a franchisenor a contract, confers no &ro&ert' rights and is amere license or &ri)ilege, and such &ri)ilege is

forfeited *hen the grantee fails to com&l' *ith hiscommitments behind *hich lies the &aramountinterest of the &ublic, for &ublic necessit' cannot bemade to *ait, nor sacrificed for &ri)ate con)enience.

o*e)er, certificates re&resent &ro&ert' rightsto the e7tent that if the rights *hich an' &ublic utilit'is e7ercising &ursuant to la*ful orders of the P3C hasbeen in)aded b' another &ublic utilit', in a&&ro&riatecases actions ma' be maintained b' the com&lainant&ublic utilit'. >*ners of &ublic utilities ha)e the rightto maintain a&&ro&riate actions against other &ublicutilities not authoried to o&erate in com&etition *iththe com&lainant.

Certificates are considered as &ro&ert' as usedin Ci)il Procedure as the' ha)e material )alue and are

material assets. 2he' are subect to attachment andseiure b' legal &rocess, and ma' be ac+uired b'&urchase.

Eetermination of %>4 an issuance of a certificate isfor &ublic con)enience 6 #1$ financial res&onsibilit' ofthe a&&licant, #-$ reliabilit' of the a&&licant, #;$&riorit' of filing the a&&lication for a certificate, and#0$ &riorit' of o&eration

Prior o&erator rule 6 to carr' out the &ur&ose andintent for *hich the P3C *as created the la*contem&lates that the first licensee *ill be &rotectedin his in)estment and *ill not be subected to a

ruinous com&etition. It is not therefore the &olic' ofthe la* for the P3C to issue a CPC to a secondo&erator to co)er the same field and in com&etition*ith a first o&erator *ho is rendering sufficient,ade+uate and satisfactor' ser)ice, and *ho in allthings and res&ects is com&l'ing *ith the rules andregulations of the P3C. Accordingl', a CPC or CPC4ought not to be granted *here there is no com&laintas to e7isting rates and the co. in the field is renderingade+uate ser)ices.6 regular o&erators are &referred o)er irregularo&erators

6 &rior o&erator is gi)en o&&ortunit' to im&ro)e ser)ice6 &rior o&erator gi)en o&&ortunit' to e7tend lines6 basis of rule = to &re)ent ruinous and *astefulcom&etition in order that the interests of the &ublic*ould be conser)ed and &reser)ed so long as theo&erator com&lied *ith the terms and conditions of thelicense and the reasonable demands of the &ublic, it isthe dut' of the P3C to &rotect rather than to destro'

its in)estment

Ra'mundo )s Funeta @otor ! Phil !!

4 a &ro&ert' can be attached and soldu&on e7ecution is *hether the udgment debtor hassuch a beneficial interest therein that he can sell orother*ise dis&ose of it for )alue. 2he Public 3er)iceFa* &ermits the P3C to a&&ro)e the sale, alienation,mortgaging, encumbering or leasing of &ro&ert',franchises, &ri)ileges, or rights or an' &art thereof. Ifthe holder of a certificate can )oluntar' sell it, there isno reason *h' the same cannot be sold in)oluntaril'&ursuant to court &rocess.

CPCs ha)e considerable material )alue. 2he'are )aluable assets. 2he' are subect to being sold for

consideration as much as an' other &ro&ert'. 2he' aree)en more )aluable than ordinar' &ro&erties, ta:inginto consideration that the' are not granted to e)er'one *ho a&&lies for them but onl' to those *hounderta:e to furnish satisfactor' and con)enientser)ice to the &ublic. 2hough intangible, the' are of)alue and are considered &ro&erties *hich can beseied through legal &rocess.

Batangas 2rans&ortation Co. )s >rlanes - Phil 0

rlanes sought to ha)e a CPC to o&erate a lineof auto truc:s *ith fi7ed times of de&arture bet*een

2aal and Bantilan, *ith the right to recei)e &assengersand freight from intermediate &oints. 2he e)idence isconclusi)e that at the time of his a&&lication, >rlanes*as an irregular o&erator bet*een Bantilan and 2aal,and that B2C *as a regular o&erator bet*eenBatangas and Rosario. >rlanes sought to ha)e hisirregular o&eration changed into a regular o&eration,and to set aside and nullif' the &rohibition against himin his CPC that he shall not ha)e or recei)e an'&assengers or freight at an' of the &oints ser)ed b'the B2C *hich holds a &rior license from the P3C. is&etition is based on the fact that to com&l' *ith the

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gro*ing demands of the &ublic, the B2C a&&lied for a&ermit to increase the no. of tri& hours at and bet*eenthe same &laces and for an order that all irregularo&erators be &rohibited from o&erating unless the'should obser)e an inter)al of - hours before or onehour after the regular hours of the B2C. 2he P3Cgranted the &etition of >rlanes.

Issue = %>4 a CPC should be issued to a secondo&erator in a field *here, and in com&etition *ith, afirst o&erator *ho is alread' o&erating a sufficient,ade+uate and satisfactor' ser)ice.

eld = 4>. Eecision of P3C is re)o:ed.An autobus line is a &ublic utilit', and as such,

is a common carrier and an im&t. factor in thebusiness affairs of the communit'.

2he P3C has the &o*er to s&ecif' and definethe terms and conditions u&on *hich an' &ublic utilit'shall o&erate and to ma:e reasonable rules andregulations for its o&eration, and to fi7 thecom&ensation that it shall recei)e for its ser)ice to the&ublic, and for good cause ma' sus&end or e)en

re)o:e a license granted.It is not the &olic' of the la* for the P3C to

issue a CPC to a second o&erator to co)er the samefield and in com&etition *ith a first o&erator *ho isrendering sufficient, ade+uate and satisfactor' ser)ice,and *ho in all things and res&ects is com&l'ing *iththe rules and regulations of the P3C.

2he &o*er of the P3C to issue a CPC is foundedon the condition &recedent that after a full hearing andin)estigation, it shall find as a fact that the &ro&osedo&eration is for the con)enience of the &ublic.

3o long as the first o&erator :ee&s and&erforms his terms and conditions of its license andcom&lies *ith the reasonable demands of the &ublic, it

has more or less of a )ested and &referential righto)er another *ho see:s to ac+uire a later license too&erate o)er the same route.

2o carr' out the &ur&ose and intent for *hichthe P3C *as created, the la* contem&lates that thefirst license *ill be &rotected in his in)estment and *illnot be subected to ruinous com&etition.

2he &rimar' &ur&ose of the P3C is to secureade+uate, sustained ser)ice for the &ublic at the least&ossible cost and to &rotect and conser)e in)estments*hich ha)e alread' been made for that &ur&ose. ACPC4 for the o&eration of an auto truc: line inoccu&ied territor' should not be granted *here thereis no com&laint as to e7isting rates and the co. in thefield is rendering ade+uate ser)ice. It is the dut' of

the P3C to &rotect rather than to destro' thein)estment of a &ublic utilit'.

2he &olic' of regulation u&on *hich the&resent &ublic utilit' commission &lan is based and*hich tends to do a*a' *ith com&etition among &ublicutilities as the' are natural mono&olies, is at once thereason that the regulation of an e7isting s'stem oftrans&ortation, *hich is &ro&erl' ser)ing a gi)en field,or ma' be re+uired to do so, is to be &referred tocom&etition among se)eral inde&endent s'stems.%hile re+uiring a &ro&er ser)ice from a single s'stemfor a territor' in consideration for &rotecting it as amono&ol' for all the ser)ice re+uired and in conser)ingits resources, no economic *aste results and ser)ice

ma' be furnished at a minimum cost.

Carmelo )s @onserrat Phil /00

riol then a&&lied to the P3C fora CPC to o&erate a ta7icab ser)ice *ithin @anila.@onserrat o&&osed. 2he P3C denied the a&&lication.

eld = 2here is no )alid, legal reason *h' @onserratshould ha)e the e7clusi)e right of o&erating a ta7icabser)ice. In the granting and refusal of a CPC, the+uestion is *hat is for the best interest of the &ublic.

2ested b' that rule, it is hard to concei)e ho* it *ouldbe for the best interests of the &ublic to ha)e oneta7icab ser)ice onl', and ho* the &ublic *ould beinured b' the granting of the certificate in +uestion,for it must be conceded that t*o com&anies in thefield *ould stimulate the business, and the &ublic*ould much sooner and much easier becomeeducated in the use of ta7i.

@onserrat does not ha)e a )ested right in thebusiness of an' &erson that might *ant the use of ata7i, for the sim&le reason that the use of an' ta7i isthe sole discretion of the customer. 2his is unli:e theB2C case *hich dealt *ith an autobus ser)ice *ithfi7ed schedules and routes.

3an Pablo )s Pantranco 3outh D7&ress, Inc. 1; 3CRA1

4 a land trans&o co.can be authoried to o&erate a ferr' ser)ice orcoast*ise or interisland shi&&ing ser)ice along itsauthoried route as an incident to its franchise *ithoutthe need of filing a se&arate a&&lication for the same.eld = 2he *ater trans&ort ser)ice bet*een @atnogand Allen is not a ferr'boat ser)ice but a coast*ise orinterisland shi&&ing ser)ice. Before &ri)ateres&ondent ma' be issued a franchise or CPC for the

o&eration of the said ser)ice as a common carrier, itmust com&l' *ith the usual re+ts. of filing ana&&lication, &a'ment of the fees, &ublication, adducinge)idence at a hearing and affording the o&&ositors theo&&ortunit' to be heard.

Considering the en)ironmental circumstancesof the case, the con)e'ance of &assengers from@atnog to Allen is not a ferr'boat ser)ice but acoast*ise or interisland shi&&ing ser)ice. Under nocircumstances can the sea bet*een @atnog and Allenbe considered a continuation of the high*a'. %hile aferr'boat ser)ice has been considered as a

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continuation of the high*a' *hen crossing ri)ers ore)en la:es, *hich are small bod' of *aters se&aratingthe land, ho*e)er, *hen as in this case the t*oterminals are se&arated b' an o&en sea, it cannot beconsidered a continuation of the high*a'. Pantrancomust secure a se&arate CPC for the o&eration of aninterisland or coast*ise shi&&ing ser)ice. Its CPCcannot be merel' amended to include this *ater

ser)ice under the guise that it is a mere &ri)ate ferr'ser)ice.Pantranco does not den' that it charges its

&assengers se&aratel' from the charges for the bustri&s and issues se&arate tic:ets *hene)er the' boardthe @ Blac: Eouble. It cannot &retend that it issuedtic:ets as a &ri)ate carrier and not as a commoncarrier. It in fact acce&ts *al: in &assengers duringthe tri&s. It cannot claim that it is both a &ri)atecarrier and a common carrier at the same time.

In the case of a)ellana )s P3C, the Courtdifferentiated bet*een ferr' ser)ice and interisland orcoast*ide ser)ice.


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(g) issue certificates of publicconvenience for the operation of public land andrail transportation utilities and services;


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#b$ Fand

#i$ Fand 2rans&ortation>fficeD> 1-6A

Section 5. Assistant Secretaries an'

Ser-ice /hiefs(((e= Office of the Assistant Secretary for

Lan' Trans#ortation

Section 11. ((( The #resent Re&iona%Offices of the Lan' Trans#ortation /oissionare here$y a$o%ishe' an' their f!nctions aretransferre' to the res#ecti-e De#artentRe&iona% offices for Lan' Trans#ortation. (((

Section 1;


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$y the Presi'ent (((. e sha%% ha-e the ran2,sa%ary an' #ri-i%e&es of a De#t. Ser-ice /hief.e sha%% assist the Foar' in the #erforance ofits #o)ers an' f!nctions.

The Foar' sha%% $e s!##orte' $y theTechnica% E-a%!ation Di-ision, Le&a% Di-ision,Mana&eent Inforation Di-ision,A'inistrati-e Di-ision an' Hinance Di-ision.

Sec. 13. The Secretary of Trans#ortationan' /o!nications sha%% e(ercisea'inistrati-e s!#er-ision an' contro% o-er theFoar'.

Sec. 15. Po)ers an' f!nctions of theFoar'9

1. #rescri$e an' re&!%ate ro!tes (((@. iss!e, aen', re-ise, s!s#en', or

cance% /P/s or #erits, (((@;. 'eterine, #rescri$e, a##ro-e an'

#erio'ica%%y re-ie) an' a'!st reasona$%e fares(((@

?. iss!e in!nctions (((@B. #!nish for conte#t of the Foar' (((@*. iss!e s!$#oena an' s!$#oena '!ces

tec! an' to s!on )itnesses (((@. con'!ct in-esti&ations an' hearin&s of

co#%aints for -io%ation of the #!$%ic ser-ice%a)s on %an' trans#ortation (((@

3. re-ie) ot! #ro#rio the 'ecisions,actions of the Re&iona% Hranchisin& an'Re&!%atory Offices (((@

5. #ro!%&ate r!%es an' re&!%ations&o-ernin& #rocee'in&s $efore the Foar' an' theRe&iona% Hranchisin& an' Re&!%atory Office (((@

1+. fi(, i#ose an' co%%ect, an'

#erio'ica%%y re-ie) an' a'!st reasona$%e fees,an' other re%ate' char&es for ser-icesren'ere'@

11. for!%ate, #ro!%&ate, a'inister,i#%eent an' enforce r!%es an' re&!%ations on%an' trans#ortation (((@

1. coor'inate an' coo#erate )ith other&o-t. a&encies an' entities concerne' )ith anyas#ect in-o%-in& #!$%ic %an' trans#ortationser-ices (((@

1;. #erfor s!ch other f!nctions an''!ties as ay $e #ro-i'e' $y %a), or as ay $enecessary, or #ro#er or inci'enta% to the#!r#oses an' o$ecti-es of the De#t.

Sec. +. The Foar' sha%% ((( sit an''eci'e en $anc@ conc!rrence an' si&nat!re of at%east e$ers@ 'ecision sha%% $e a##ea%a$%eto the Secretary )ithin ;+ 'ays fro recei#t ofthe 'ecision@ the Secretary ay ot! #ro#riore-ie) any 'ecision or action of the Foar'$efore it $ecoes fina%.

Sec. 1. Re&iona% Hranchisin& an'Re&!%atory Offices 6 hear an' 'eci'e!nconteste' a##%ications: #etitions for ro!tes(((@

Sec. . 'ecisions of the Re&iona%

Hranchisin& an' Re&!%atory Offices sha%% $ea##ea%a$%e to the Foar' )ithin ;+ 'ays frorecei#t of the 'ecision.

#c$ %ater

#i$ @aritime Industr'Authorit'

D> 1-, 3ec. 10 as amended b' D> 1-6A, 3ec. ;

The Maritie In'!stry A!thority ishere$y retaine' an' sha%% ha-e the ff. f!nctions9

a. 'e-e%o# an' for!%ate #%ans, #o%icies,#roects ((( &eare' to)ar' the #rootion an''e-t. of the aritie in'!stry, the &ro)th an'effecti-e re&!%ation of shi##in& enter#rises, an'for the nationa% sec!rity o$ecti-es of theco!ntry@

$. esta$%ish, #rescri$e an' re&!%atero!tes, "ones an':or areas of o#eration of#artic!%ar o#erators of #!$%ic )ater ser-ices@

c. iss!e /P/s for the o#eration of'oestic an' o-erseas )ater carriers@

'. re&ister -esse%s as )e%% as iss!ecertificates, %icenses or 'oc!ent necessary orinci'ent thereto@

e. !n'erta2e the safety re&!%atoryf!nctions #ertainin& to -esse% constr!ction an'o#eration inc%!'in& the 'eterination orannin& %e-e%s an' iss!ance of certificates ofco#etency to seaen@

f. enforce %a)s, #rescri$e an' enforcer!%es an' re&!%ations, inc%!'in& #ena%ties for

-io%ations thereof, &o-ernin& )atertrans#ortation an' the Phi%. erchant arine(((@

&. !n'erta2e the iss!ance of %icenses to0!a%ifie' seaen an' har$or, $ay an' ri-er#i%ots@

h. 'eterine, fi(, #rescri$e char&es:rates#ertinent to the o#eration of #!$%ic )atertrans#ort !ti%ities (((@

i. accre'it arine s!r-eyors an'aritie enter#rises en&a&e' in shi#$!i%'in&,shi# re#air (((@

. iss!e an' re&ister the contin!o!s'ischar&e $oo2 of Hi%i#ino seaen@

2. esta$%ish an' #rescri$e r!%es an're&!%ations, stan'ar's an' #roce'!res for theefficient an' effecti-e 'ischar&e of the a$o-ef!nctions@

%. #erfor s!ch other f!nctions as ayno) or hereafter $e #ro-i'e' $y %a).

II. Common Carriers

A. In 4enera%

1. Eefinitions essential elements

Art. 1;. /oon carriers are #ersons,cor#orations, firs or associations en&a&e' inthe $!siness of carryin& or trans#ortinassen&ers or &oo's or $oth, $y %an', )ater orair, for co#ensation, offerin& their ser-ices tothe #!$%ic.

Aguedo


12/108


#1$ shipper or consignor.-- &erson to betrans&orted one *ho gi)es rise to the contract oftrans&ortation b' agreeing to deli)er the things orne*s to be trans&orted, or to &resent his o*n &ersonor those of other or others in the case oftrans&ortation of &assengers

#-$ carrier or conductor.-- one *ho bindshimself to trans&ort &ersons, things, or ne*s as the

case ma' be one em&lo'ed in or engaged in thebusiness of carr'ing goods for other for hire#;$ consignee.--the &art' to *hom the carrier

is to deli)er the things being trans&orted one to*hom the carrier ma' la*full' ma:e deli)er' inaccordance *ith its contract of carriage #but theshi&&er and the consignee ma' be one &erson$

Hrei&ht 'efine'.66 2he terms has been defined as=#1$ the &rice or com&ensation &aid for thetrans&ortation of goods b' a carrier, at sea, from &ortto &ort. But the term is also used to denote #-$ thehire &aid for the carriage of goods on land from &laceto &lace, or on inland streams or la:es. 2he name isalso a&&lied to #;$ the goods or merchandise

trans&orted at sea, on land, or inland streams or la:es.2hus the term is used in - senses= to designate the&rice for the carriage, also called freightage, or todesignate the goods carried.

/ontracts thro!&h trans#ortation a&ents.66 Acontract of trans&ortation is not changed, altered oraffected b' the mere fact that the obligor a)ails ofother &arties to effect the trans&ortation agreed u&on,as in the case of trans&ortation agents.

/arriers 'efine'.66 Persons or cor&orations *hounderta:e to trans&ort or con)e' goods, &ro&ert' or&ersons, from one &lace to another, gratuitousl' or for

hire, and are classified as &ri)ate or s&ecial carriers,and common or &ublic carriers

Pri-ate carriers 'efine'.662hose *ho trans&ort orunderta:e to trans&ort in a &articular instance for hireor re*ard

/oon carriers -s Pri-ate carriers9

#1$ the common carrier holds#1$ the &ri)ate carrier agrees

himself out in common, that is,in some s&ecial case *ith some

to all &ersons *ho choose to em6&ri)ate indi)idual to carr'

&lo' him, as read' to carr' forfor hire

hire no one can be a commoncarrier unless he has held himselfout to the &ublic as a carrier insuch a manner as to render himliable to an action if he shouldrefuse to carr' for an'one *ho*ished to em&lo' him

#-$ a common carrier is bound to#-$ a &ri)ate carrier is not

carr' all *ho offer such goods asbound to carr' for an' reason,

it is accustomed to carr' andunless it enter into a s&ecial

tender reasonable com&ensationagreement to do so

for carr'ing them

#;$ a common carrier is a &ublic ser)ice#;$ a &ri)ate carrier does not

and is therefore subect to regulationhold itself out as engaged in

the business for the &ublic,

and is therefore not subect

to regulation as a common carrier

Test for a coon carrier9

#1$ e must be engaged in the business ofcarr'ing goods for others as a &ublic em&lo'ment, andmust hold himself out as read' to engage in thetrans&ortation of goods for &ersons generall' as abusiness, and not a casual occu&ation.

#-$ e must underta:e to carr' goods of the:ind to *hich his business is confined.

#;$ e must underta:e to carr' b' the methodsb' *hich his business is conducted, and o)er hisestablished roads.

#0$ 2he trans&ortation must be for hire.2he true test is *hether the gi)en underta:ing

is a &art of the business engaged in b' the carrier*hich he has held out to the general &ublic as hisoccu&ation rather than the +uantit' or e7tent of the

business actuall' transacted, or the no. and characterof the con)e'ances used in the em&lo'ment #the testis therefore the character of the business actuall'carried on b' the carrier.$

Case = an air&lane o*ner is a common carrier *herehe underta:es for hire to carr' all &ersons *ho a&&l'for &assage indiscriminatel' as long as there is roomand no legal e7cuse for refusing airlines engaged inthe &assenger ser)ice on regular schedules on definiteroutes, *ho solicit &atronage of the tra)eling &ublic,ad)ertise schedules for routes, times of lea)ing andrates of fare, and ma:e the usual sti&ulation as tobaggage are common carriers

/haracteristics of coon carriers9

#1$ 2he common carrier underta:es to carr' forall &eo&le indifferentl' he holds himself out as read'to engage in the trans&ortation of goods for hire as a&ublic em&lo'ment and not as a casual occu&ation,and he underta:es to carr' for all &ersons indifferentl',*ithin the limits of his ca&acit' and the s&here of thebusiness re+uired of him, so that he is bound to ser)eall *ho a&&l' and is liable for refusal, *ithout sufficientreason, to do so

#-$ 2he common carrier cannot la*full' declineto acce&t a &articular class of goods for carriage to the

&reudice of the traffic in those goodsD7ce&tion = for some sufficient reason, *here

the discrimination in such goods is reasonable andnecessar' #substantial grounds$

#;$ 4o mono&ol' is fa)ored 6 the Commissionhas the &o*er to sa' *hat is a reasonablecom&ensation to the utilit' and to ma:e reasonablerules and regulations for the con)enience of thetra)eling &ublic and to enforce them

#0$ Public con)enience 6 for the best interestsof the &ublic

Meanin& of P!$%ic !se.66 It is not confined to&ri)ileged indi)iduals, but is o&en to the indefinite

&ublic there must be a right *hich the la* com&elsthe o*ner to gi)e to the general &ublic. Public use isnot s'non'mous *ith &ublic interest. 2he true criterionis *hether the &ublic ma' eno' it b' right or onl' b'&ermission

The %a) #rohi$its !nreasona$%e 'iscriination$y coon carriers.66 2he la* re+uires commoncarriers to carr' for all &ersons, either &assengers or&ro&ert', for e7actl' the same charge for a li:e orcontem&oraneous ser)ice in the trans&ortation of li:e:ind of traffic under substantiall' similar

PAGE 12


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circumstances or conditions. 2he la* &rohibitscommon carriers #CC$ from subecting an' &erson, etc.or localit', or an' :ind of traffic, to an' undue orunreasonable &reudice or discrimination *hatsoe)er.

D7ce&tion= %hen the actual cost of handlingand trans&orting is different, then different rates ma'be charged

Cases = #1$ merchandise of li:e +uantit' ma' not beconsidered ali:e 6 the +uantit', :ind and +ualit' ma'be e7actl' the same, and 'et not be ali:e, so far as thecost of trans&ortation is concerned

#-$ shi&ments ma' be ali:e althoughcom&osed of different classes of merchandise 6difference in the charge for handling and trans&ortingma' onl' be made *hen the difference is based u&onactual cost

Deterination of !stifia$%e ref!sa%9

2his in)ol)es a consideration of the follo*ing66

#1$ suitabilit' of the )essels of the com&an' forthe trans&ortation of such &roducts

#-$ reasonable &ossibilit' of danger or disaster,resulting from their trans&ortation in the form andunder the conditions in *hich the' are offered forcarriage

#;$ the general nature of the business done b'the carrier

#0$ all the attendant circumstances *hichmight affect the +uestion of the reasonable necessit'for the refusal b' the carrier to underta:e thetrans&ortation of this class of merchandise

Case= 2he mere fact that the carriage of d'namites

ma' lead to destructi)e e7&losions is not sufficient toustif' refusal if it can be &ro)en that in the conditionin *hich it is offered for carriage there is no realdanger to the carrier nor reasonable ground to fearthat the )essel and those on board *ill be e7&osed tounnecessar' or unreasonable ris:s

U3 )s 2an Piaco, 0? Phil !;

.

eld= 2here is no &ublic use. 2he truc:s *ere usedunder s&ecial agreements to carr' &articular &ersonsand &ro&ert'.

Under the Public 3er)ice Fa*, t*o things arenecessar' = #1$ the indi)idual, co6&artnershi&, etc.must be a &ublic utilit' and #-$ the business in *hich

such indi)idual, co6&artnershi&, etc. is engaged mustbe for &ublic use. 5Public use5 means the same as5use b' the &ublic.5 2he essential feature of &ublic useis that it is not confined to &ri)ileged indi)iduals, butis o&en to the indefinite &ublic. In determining *hethera use is &ublic, *e must loo: not onl' to the characterof the business to be done, but also to the &ro&osedmode of doing it. If the use is merel' o&tional *ith theo*ners, or the &ublic benefit is merel' incidental, it isnot a &ublic use, authoriing the e7ercise of theurisdiction of the &ublic utilit' commission. 2heremust be, in general, a right *hich the la* com&els the

o*ner to gi)e to the general &ublic. It is not enoughthat the general &ros&erit' of the &ublic is &romoted.Public use is not s'non'mous *ith &ublic interest. Thetrue criterion by which to judge the character of theuse is whether the public may enjoy it by right or onlyby permission.

ome Insurance Co. )s American 3teamshi& Agencies,-; 3CRA -0

n the return tri& toPangasinan, he *ould load his )ehicles *ith cargo*hich )arious merchants *anted deli)ered toPangasinan.


14/108


cartons of mil: *ere deli)ered. 2he @il: Co. sued toclaim the )alue of the lost merchandise based on analleged contract of carriage. Cendana denied that he*as a common carrier and contended that he couldnot be liable for the loss since it *as due to forcemajeure. 2he 2C ruled that he *as a common carrier.2he CA re)ersed.

Issue = %>4 Cendana is a common carrier. KD3.

eld = Cendana is &ro&erl' characteried as a commoncarrier e)en though he merel' bac:hauled goods forother merchants, and e)en if it *as done on a &eriodicbasis rather than on a regular basis, and e)en if his&rinci&al occu&ation *as not the carriage of goods.

Art. 1";- ma:es no distinction bet*een one*hose &rinci&al business acti)it' is the carr'ing of&ersons or goods or both, and one *ho does suchcarr'ing onl' as an ancillar' acti)it'. It also a)oidsma:ing a distinction bet*een a &erson or enter&riseoffering trans&ortation ser)ices on a regular orscheduled basis and one offering ser)ice on anoccasional, e&isodic or unscheduled basis. 4either

does it ma:e a distinction bet*een a carrier offeringits ser)ices to the general &ublic and one *ho offersser)ices or solicits business onl' from a narro*segment of the &o&ulation.

2he fact that Cendana does not hold a CPC isno e7cuse to e7em&t him from incurring liabilities as aCC. >ther*ise, it *ould be to re*ard &ersons *ho failto com&l' *ith a&&licable statutor' re+ts. and *ouldbe offensi)e to &ublic &olic'. 2he liabilit' arises themoment a &erson or firm acts as a common carrier,*ithout regard to *hether or not such carrier has alsocom&lied *ith the re+uirements of the a&&licableregulator' statute and im&lementing regulations.

Issue = %>4 Cendana ma' be held liable for the loss ofthe mil:. 4>.

eld= Common carriers b' the )er' nature of theirbusiness and for reasons of &ublic &olic' are held to a)er' high degree of care and diligence #e7tra6ordinar'diligence$ in the carriage of goods as *ell as&assengers. Article 1";0 establishes the general rulethat CC are res&onsible for the loss, destruction, ordeterioration of the goods *hich the' carr' unless thesame is due to the causes enumerated therein. 3uchenumeration is a closed list. Causes falling outsidethe list, e)en if the' are force maeure, fall *ithin thesco&e of Art. 1"; *hich &ro)ides that CC are&resumed to ha)e been at fault or to ha)e acted

negligentl', unless the' &ro)e that the' obser)ede7traordinar' diligence re+uired under Art. 1";;.

o*e)er, Art. 1"0 &ro)ides that a CC cannotbe allo*ed to di)est or diminish his res&onsibilit' e)enfor acts of strangers li:e thie)es or robbers, e7ce&t*here such thie)es or robbers acted *ith gra)e orirresistible threat, )iolence or force. 2he limits ofe7traordinar' diligence are reached *here there isgra)e or irresistible threat, )iolence or force. In thiscase, the loss *as +uite be'ond the control of the CC.D)en CC are not made absolute insurers against allris:s of tra)el and of trans&ort of goods, and are notliable for acts or e)ents *hich cannot be foreseen orare ine)itable, &ro)ided that the' shall ha)e com&lied

*ith the rigorous standard of e7traordinar' diligence.

Planters Products )s CA, G.R. 1?1?; #3e&t. 1, 1;$

.

eld = A charter-partyis a contract b' *hich an entireshi&, or some &rinci&al &art thereof, is let b' the o*nerto another &erson for a s&ecified time or use. 2hereare - :inds= #1$ contract of affreightment *hichin)ol)es the use of shi&&ing s&ace or )essels leased b'the o*ner in &art or as a *hole, to carr' goods forothers and #-$ charter by demise or bareboat charter*here the *hole )essel is let to the charterer *ith a

transfer to him of its entire command and &ossessionand conse+uent control o)er its na)igation, includingthe master and the cre*, *ho are his ser)ants.

It is not dis&uted that the carrier o&erates as aCC in the ordinar' course of business. %hen PPIchartered the )essel, the shi& ca&tain, its officers andcre* *ere under the em&lo' of the shi&o*ner andtherefore continued to be under its direct su&er)isionand control. 2hus it continued to be a &ublic carrier.

It is therefore im&erati)e that a &ublic carriershall remain as such, not*ithstanding the charter ofthe *hole or &ortion of a )essel, &ro)ided the charteris limited to the shi& onl', as in the case of a time6charter or a )o'age6charter. It is onl' *hen the

charter includes both the )essel and the cre*, as in abareboat or demise that a CC becomes &ri)ate, insofaras such &articular )o'age is concerned.

Issue = %>4 the carrier is liable for damages. 4>.

eld = 2he &resum&tion of negligence on the &art ofres&ondent carrier has been o)ercome b' the sho*ingof e7traordinar' eal and assiduit' e7ercised b' thecarrier in the care of the cargo. >n the other hand, no&roof *as adduced b' the &etitioner sho*ing that thecarrier *as remiss in the e7ercise of due diligence inorder to minimie the loss or damage to the goods itcarried.

Coast*ise Fighterage Cor&. )s. CA, GR 4o. 1101/",ul' 1-, 1


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In turn, Phil6gen filed an action agsintCoast*ise bef. R2C6@la. see:ing to reco)er theP"??,??? it &aid to Pag6asa. R2C ruled in fa)or ofPhilgen. CA affirmed the R2C decision. ence, this&etition.

RUFI4G3= #1$ Bareboat charter and contract ofaffreightment, difference; oastwise, by the contract

of affreightment, was not converted into a privatecarrier, but remained a common carrier.-- Under thedemise or bareboat charter of the )essel, the charterer*ill generall' be regarded as the o*ner of the )o'ageor ser)ice sti&ulated. 2he charterer mans the )essel* his o*n &eo&le and becomes the o*ner pro hacvice, subect to liabilit' to others for damages causedb' negligence. To create a demise, the owner of avessel must completely and exclusively relin!uishpossession, command and navigation thereof to thecharterer; anything short of such a complete transferis a contract of affreightment "time or voyage charterparty# or not a charter party at all.

A contract of affreightment is one in *c theo*ner of the )essel leases &art or all of its s&ace to

haul goods for others. It is a contract for s&ecialser)ice to be rendered b' the o*ner of the )essel andunder such contract the general o*ner retains the&ossession, command and na)igation of the shi&s, thecharterer or freighter merel' ha)ing use of the s&acein the )essel in return for his &a'ment of the charterhire. 777

777Although a charter &art' ma' transform a

common carrier into a &ri)ate one, the same, ho*e)er,is not true in a contract of affreightment on account ofthe aforementioned distinctions bet. the t*o.

Petitioner admits that the contract it enteredinto * the consignee *as one of afreightment. %e

agree. Pag6asa onl' leased ; of &etitionerHs )essels, inorder to carr' cargo from one &oint to another, but the&ossession, command and na)igation of the )esselsremained * &etitioner.

#-$ $etitioner is liable for breach of contract ofcarriage, having failed to overcome the presumptionof negligence w% the loss and destruction of goods ittransported, by proof of its exercise of extraordinarydiligence.-- @ere &roof of deli)er' of goods to a carrierand the subse+uent arri)al of the same goods at the&lace of destination in bad order ma:es for a &rimafacie case against the carrier. esus Constantino, the&atron of the )essel 5Coast*ise 5 admitted that he*as not licensed. 2his )iolates the rule in the Code of

Commerce #Art. /?$ *c re+uires that &atrons must5ha)e the legal ca&acit' to contract in accordance *this code, and &ro)e the s:ill, ca&acit' and+ualifications necessar' to command and direct the)essel 777 and must be +ualified 777 for the dischargeof the duties of the &osition. 7775 Coast*ise cannotsafel' claim to ha)e e7traordinar' diligence, b'&lacing a &erson *hose na)igational s:ills are+uestionable, at the helm of the )essel *c e)entuall'met the fateful accident. 777 ad the &atron beenlicensed, he could be &resumed to ha)e both the s:illand the :no*ledge that *ould ha)e &re)ented the)esselHs hitting the sun:en derelict shi& that la' ontheir *a' to Pier !. RAM.

-. 4ature of business &o*er of 3tateto regulate

Art. 1*B. The 7P!$%ic Ser-ice/oission8 Foar' of Trans#ortation ay, on itso)n otion or on #etition of any intereste'#arty, after '!e hearin&, cance% the certificateof #!$%ic con-enience &rante' to any cooncarrier that re#eate'%y fai%s to co#%y )ith his

or its '!ty to o$ser-e e(traor'inary 'i%i&ence as#rescri$e' in this Section.

0 Agba'ani=

/oon carriers are s!$ect to %e&is%ati-ere&!%ation.662he business of a common carrier holdssuch a &eculiar relation to the &ublic interest that

there is su&erinduced u&on it the right of &ublicregulation. 2he business of a common carrier isaffected *ith &ublic interest. %hen, therefore, onede)otes his &ro&ert' to a use in *hich the &ublic hasan interest, he, in effect, grants to the &ublic aninterest in that use, and must submit to be controlledb' the &ublic for the common good, to the e7tent ofthe interest he had thus created.

Liitation on #o)er to re&!%ate.66 3uchregulations must not ha)e the effect of de&ri)ing ano*ner of his &ro&ert' *ithout due &rocess of la*, norof confiscating, or a&&ro&riating &ri)ate &ro&ert'*ithout ust com&ensation, nor of limiting or&rescribing irre)ocabl' )ested rights or &ri)ileges

la*full' ac+uired under a charter or franchise 8ustcom&ensation, due &rocess of la*9

When !'iciary ay interfere )ith %e&is%ati-ere&!%ation of coon carriers.66 2he udiciar'ought not to interfere *ith legislati)e regulationsunless the' are so &lainl' and &al&abl' unreasonableas to ma:e their enforcement e+ui)alent to the ta:ingof &ro&ert' for &ublic use *ithout such com&ensationas under all circumstances is ust both to the o*nerand to the &ublic.

Pantranco )s P3C, "? Phil --1


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either as im&airing the obligation of contracts, ta:ing&ro&ert' *ithout due &rocess, or den'ing the e+ual&rotection of the la*s, es&eciall' inasmuch as the+uestion %>4 &ri)ate &ro&ert' shall be de)oted to a&ublic use and the conse+uent burdens assumed isordinaril' for the o*ner to decide and if he )oluntaril'&laces his &ro&ert' in &ublic ser)ice he cannotcom&lain that it becomes subect to the regulator'

&o*ers of the state. 2his is more so in the light ofauthorities *hich hold that a CPC constitutes neither afranchise nor a contract, confers no &ro&ert' rightsand is a mere license or &ri)ilege.

;. 4ature and Basis of Fiabilit'

Art. 1;;. /oon carriers, fro thenat!re of their $!siness an' for reasons of#!$%ic #o%icy, are $o!n' to o$ser-ee(traor'inary 'i%i&ence in the -i&i%ance o-er the&oo's an' for the safety of the #assen&erstrans#orte' $y the, accor'in& to thecirc!stances of each case.

S!ch e(traor'inary 'i%i&ence in the

-i&i%ance o-er the &oo's is f!rther e(#resse' inArtic%es 1;?, 1;B, an' 1?B, Nos. B,*, an' ,)hi%e the e(traor'inary 'i%i&ence for the safetyof the #assen&ers is f!rther set forth in Artic%es1BB an' 1B*.

Art. 1;?. /oon carriersare res#onsi$%e for the %oss,'estr!ction, or 'eterioration ofthe &oo's, !n%ess the sae is '!eto any of the fo%%o)in& ca!seson%y9


17/108


Reason for ho%'in& re&istere' o)ner %ia$%e.662hela* does not relie)e the registered o*ner directl' ofthe res&onsibilit' that the la* fi7es and &laces u&onhim as an incident or conse+uence of registration 66*here a registered o*ner allo*ed to e)aderes&onsibilit' b' &ro)ing *ho the su&&osed transfereeor o*ner is, it *ould be eas' for him b' collusion *ith

others or other*ise, to esca&e said res&onsibilit' andtransfer the same to an indefinite &erson or to one*ho &ossesses no &ro&ert' *ith *hich to res&ondfinanciall' for the damage or inur' done in case of anaccident, the registered o*ner should not be allo*edto dis&ro)e his o*nershi& to the &reudice of the&erson inured or to be relie)ed from res&onsibilit'

Cangco )s @RR, ;! Phil "/!

4 Cresencia is liable for breach of thecontract of carriage. KD3.

Ratio= 2he la* re+uires the a&&ro)al of the P3C, inorder that a franchise, or an' &ri)ilege &ertainingthereto, ma' be sold or leased *ithout infringing thecertificate issued to the grantee and that if &ro&ert'co)ered b' the franchise is transferred or leased*ithout this re+uisite a&&ro)al, the transfer is notbinding against the &ublic or the P3C and incontem&lation of la*, the grantee of record continuesto be res&onsible under the franchise in relation to theP3C and to the &ublic. 3ince a franchise is &ersonal innature, an' transfer or lease thereof should be notifiedto the P3C so that the latter ma' ta:e &ro&er

safeguards to &rotect the interest of the &ublic.PlaintiffHs action is based on the breach of the

carrierHs contractual obligation to carr' his &assengerssafel' to their destination #culpa contractual$. 2heliabilit' of the carrier is direct and immediate.

Isaac )s A.F. Ammen 2rans. Co., 1?1 Phil 1?0/

4 defendant obser)ed e7tra6ordinar'diligence or the utmost diligence of a )er' cautious&erson in a)oiding the collision. KD3.

eld = 2he facts of the case sho* that the bus and the&ic:6u& *ere a&&roaching each other head6on. 2hebus s*er)ed to the right and *ent o)er a &ile of stonesand gra)el. Ees&ite the efforts of the bus dri)er, the&ic: u& car still hit the rear left side of the bus. 2hesense of caution one should obser)e cannot al*a's bee7&ected from one *ho is &laced suddenl' in a

&redicament *here he is not gi)en enough time tota:e the &ro&er course of action under ordinar'circumstances.


18/108


#;$ a carrier is &resumed to ha)e been at faultor to ha)e acted negligentl' in case of death of, orinur' to, &assengers, it being it dut' to &ro)e that ite7ercised e7tra6ordinar' diligence

#0$ the carrier is not an insurer against all ris:sof tra)el.

)erland

PAGE 18


19/108


2rans&ortation and @aritime Commerce9 and s&ecialla*s 8Carriage of Goods b' 3ea Act 3al)age Act9 ha)eonl' subsidiar' a&&lication to common carriers.

Art. 1B;, N//. The %a) of the co!ntry to)hich the &oo's are to $e trans#orte' sha%%&o-ern the %ia$i%ity of the coon carrier for

their %oss, 'estr!ction or 'eterioration.

2he &ro)isions of the 4CC &rimaril' go)erncontracts of carriage of goods from foreign &orts toPhili&&ine &orts

Dastern 3hi&&ing Fines )s IAC 1? 3CRA 0/;

G3A$

#b$ that *hen fire is established, the burden of

&ro)ing negligence is shifted to the cargo shi&&er.

Issues= #1$%hich la* should go)ern = the Ci)il Code orthe Carriage of Goods b' 3ea Act.

#-$%ho has the burden of &roof to sho*negligence of the carrier.

Ratio = #1$ 2he la* of the countr' to *hich the goodsare to be trans&orted go)erns the liabilit' of thecommon carrier in case of their loss, destruction ordeterioration. As the cargoes in +uestion *eretrans&orted from a&an to the Phili&&ines, the liabilit'of Petitioner Carrier is go)erned &rimaril' b' the Ci)ilCode. o*e)er, in all matters not regulated b' said

Code, the rights and obligations of common carriersshall be go)erned b' the Code of Commerce ands&ecial la*s. 2hus, the C>G3A, a s&ecial la*, issu&&letor' to the &ro)isions of the Ci)il Code.

#-$ Under the Ci)il Code, common carriers,from the nature of their business and for reasons of&ublic &olic', are bound to obser)e e7tra6ordinar'diligence in the )igilance o)er goods, accdg. to all thecircumstances of each case. Common carriers areres&onsible for the loss, destruction, or deterioration

of the goods unless the same is due to an' of the ff.causes onl' #Art. 1";0, 4CC$=

5#1$ G3A. It is &ro)ided therein that=

53ec.0 #-$. 4either the carrier nor the shi&shall be res&onsible for loss or damage arising orresulting from= #b$


20/108


trans#orte' $y the, accor'in& to thecirc!stances of each case.

S!ch e(traor'inary 'i%i&ence in the-i&i%ance o-er the &oo's is f!rther e(#resse' inArtic%es 1;?, 1;B, an' 1?B, Nos. B,*, an' ,)hi%e the e(traor'inary 'i%i&ence for the safetyof the #assen&ers is f!rther set forth in Artic%es1BB an' 1B*.

#read discussion under 8;9 4ature and basis ofliabilit'$

Art. 1;?. /oon carriers areres#onsi$%e for the %oss, 'estr!ction, or'eterioration of the &oo's, !n%ess the sae is'!e to any of the fo%%o)in& ca!ses on%y9


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trans&ortation of &assengers from all &ossible &erils.A CC is not an insurer of the safet' of the &assengersand is not absolutel' and at all e)ents to carr' themsafel' and *ithout inur'.

Knchausti 3teamshi& Co. )s Ee7ter 01 Phil -!

n another occasion, the Go)t. also sent /cases of Coc: brand mineral oil, ten gallons to thecase. 2he goods *ere deli)ered b' the shi&&er to thecarrier *hich accordingl' recei)ed them, and toe)idence the contract of trans&ortation, the &artiesdul' e7ecuted and deli)ered *hat is &o&ularl' calledGo)t. bill of lading, *hereb' it *as sti&ulated that thecarrier, Knchausti, recei)ed the abo)e6mentionedsu&&lies in a&&arent good condition, obliging itself to

carr' said su&&lies to the &lace agreed u&on.Both shi&ments arri)ed *ith one case missing

&er shi&ment. Knchausti denied negligence. o*e)er,u&on in)estigation, the Insular Auditor decided thatthe lea:ages *ere due to KnchaustiHs negligence. 2heInsular Auditor deducted the amount of the lost goodsfrom the entire amount &a'able to Knchausti.Petitioner refused to acce&t the *arrant. ence, thisaction *as filed.

Issue = Is Knchausti liable for the loss( KD3.

Ratio = 3ec. /0/ of the Administrati)e Code &ro)idedthat *hen Go)t. &ro&ert' is transmitted from one

source to another b' carrier, it shall be u&on &ro&erbill of lading or recei&t, from such carrier and it shallbe the dut' of the consignee or his re&resentati)e toma:e all notation of an' e)idence of loss, shortage, ordamage, on the bill of lading or recei&t beforeaccom&lishing it. It is admitted b' &etitioner that theconsignee, at the time the goods *ere deli)ered,noted the losses in the res&ecti)e bill of ladings. 3uchnotation made in obedience to the code, is com&etente)idence to sho* that the shortage did e7ist.Inasmuch as the fact of loss *as &ro)en, it results inthe &resum&tion that the &etitioner *as to blame forthe loss and it *as incumbent u&on the &etitioner torebut that &resum&tion b' &ro)ing that the loss *asnot due to an' fault or negligence of the &etitioner.

The mere proof of delivery of goods in goodorder to a carrier, and of their arrival at the place ofdestination in bad order, ma'es out a prima facie caseagainst the carrier, so that if no explanation is givenas to how the injury occurred, the carrier must be heldresponsible. It is incumbent u&on the carrier to &ro)ethat the loss *as due to accident or some othercircumstance inconsistent *ith its liabilit'. Indeed, ifthe Go)t. had instituted an action in court against&etitioner to reco)er the )alue of the oil lost, it *ould,based on the facts, be entitled to udgment. In theabsence of &roof sho*ing that the carrier *as not atfault for the loss, the Insular Auditor *as entitled to*ithhold the amount admittedl' due to the &etitioner

for the freight charges, a sum sufficient to co)er the)alue of the oil lost in transit.

@irasol )s Eollar ; Phil 1-0

4 Eollar ma' be held liable. KD3.

Ratio= 2here *as no claim or &retense that @irasolsigned the bill of lading or that he :ne* of itscontents. In that situation, he *as not legall' bound b'the clause limiting EollarHs liabilit'. &here it appearsthat a bill of lading was issued to a shipper containinga clause limiting the carrier)s liability, printed in fineletters on the bac' of the bill of lading, which theshipper did not sign and of which he was not advised,the shipper is not bound by the clause limiting liabilityand the stipulation is void or against public policy.

3hi&&ers *ho are forced to shi& goods in anocean liner ha)e legal rights. %hen the goods aredeli)ered on board the shi& in good order andcondition and the carrier deli)ers them to the shi&&erin bad order and condition, in an action for damages,the burden of &roof shifted and it de)ol)es u&on thecarrier to both allege and &ro)e that the goods *eredamaged b' reason of some act *hich legall' e7em&tsit from liabilit'.

a)ing recei)ed the bo7es in good condition,its legal dut' *as to deli)er them in the samecondition as recei)ed. Eollar, ha)ing admitted thatthe goods *ere damaged *hile in transit and in its&ossession, the burden of &roof then shifted and it

de)ol)ed u&on him to allege and &ro)e that thedamage *as caused b' reason of some fact *hiche7em&ted it from liabilit'. As to *hen and ho* thegoods *ere damaged in transit is a matter &eculiarl'*ithin the :no*ledge of the carrier and its em&lo'ees.2o re+uire @irasol to &ro)e such, *ould force him torel' u&on the DDs of EollarHs shi&, *hich in legal effect*ould be to sa' that he could not reco)er damages atall.

3ince Eollar *as not e)en able to &ro)e thatthe goods *ere *et *ith sea *ater due to a fortuitouse)ent, it must be &resumed that the carrier *as liable.

-. D7em&tion from liabilit'

Proof of the deli)er' of the goods in good orderto a carrier, and of their arri)al at the &lace ofdestination short or in bad order, ma:es aprima faciecase it is incumbent on the carrier, in order toe7onerate itself, to &ro)e that the loss or inur' *asdue to some circumstances inconsistent *ith itsliabilit'

#a$ 4atural disaster

Art. 1;?. /oon carriers areres#onsi$%e for the %oss, 'estr!ction, or'eterioration of the &oo's, !n%ess the sae is

'!e to any of the ff. ca!ses on%y9


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carrier ma' be e7em&ted from liabilit' for the loss,destruction, or deterioration of the goods. 2he samedut' is incumbent u&on the common carrier in case ofan act of the &ublic enem' referred to in Art. 1";0 #-$.

Art. 1?+. If the // ne&%i&ent%y inc!rs in'e%ay in trans#ortin& the &oo's, a nat!ra%'isaster sha%% not free s!ch carrier fro

res#onsi$i%ity.

Art. ;*1. Merchan'ise sha%% $etrans#orte' at the ris2 an' -ent!re of theshi##er, if the contrary has not $een e(#ress%ysti#!%ate'.

As a conse0!ence, a%% the %osses an''eteriorations )hich the &oo's ay s!ffer'!rin& the trans#ortation $y reason offort!ito!s e-ent, force ae!re, or the inherentnat!re an' 'efect of the &oo's, sha%% $e for theacco!nt an' ris2 of the shi##er.

Proof of these acci'ents is inc!$ent!#on the carrier. 4 the carrier is liable for the loss of the

cargo and for failure to deli)er the same at the &laceof destination. 4>.Ratio= #1$ It is a &ro)en fact that the loss or damage tothe goods shi&&ed on the said lorcha *as due to theforce majeure *hich caused the *rec: of the saidcraft. Accdg. to Art. ;/1 of the Code of Commerce,merchandise shall be trans&orted at the ris: and)enture of the shi&&er, unless the contrar' bee7&ressl' sti&ulated. 4o such sti&ulation a&&ears ofrecord, therefore, all damages and im&airmentsuffered b' the goods in trans&ortation, b' reason ofaccident, force maeure, or b' )irtue of the nature ordefect of the articles, are for the account and ris: ofthe shi&&er. 2he carrier is e7em&t from liabil it' if he is

able to &ro)e, as he did &ro)e, that the loss ordestruction of the merchandise *as due to accidentand force maeure and not to fraud, fault or negligenceon the &art of the ca&tain or o*ner of the shi& 66 thatthe loss *as a result of the stranding of Pilar becauseof the hurricane that o)ertoo: it.

#-$ 2he record bears no &roof that said losscaused b' the destruction of Pilar occurred through thecarelessness or negligence of the defendant, itsagents or &atron of the lorcha. 2he defendant as *ellas its agents and &atron had a natural interest in&reser)ing the craft 66 an interest e+ual to that of the&laintiff. 2he record discloses that Pilar *as mannedb' an e7&erienced &atron and a sufficient number of

cre*men &lus the fact that it *as full' e+ui&&ed. 2hecre*men too: all the &recautions that an' diligentman should ha)e ta:en *hose dut' it *as to sa)e theboat and its cargo, and b' the instinct of self6&reser)ation of their li)es. Considering, therefore, theconduct of the men of the defendant Pilar and of itsagents during the disaster, the defendant has notincurred an' liabilit' *hatsoe)er for the loss of thegoods, inasmuch as such loss *as the result of afortuitous e)ent or force majeure, and there *as nonegligence or lac: of care or diligence on the &art ofthe defendant or its agents.

Foss of a shi& and of its cargo, in a *rec: dueto accident or force majeure must, as a general rule,

fall u&on their res&ecti)e o*ners, e7ce&t in cases*here the *rec:ing or stranding of the )essel occurredthrough malice, carelessness or lac: of s:ill on the&art of the ca&tain or because the )essel &ut to sea isinsufficientl' re&aired and &re&ared. #Art. !01, Code ofCommerce$

@artini Ftd. )s @acondra' M Co., ; Phil ;0


23/108


Phili&&ines b' @acondra', -1 cases of chemicals forLobe, a&an. U&on arri)al in Lobe, it *as disco)eredthat the shi&ment *as damaged b' rain and sea *ater.@artini claims that it *as the shi&Hs dut' to sto* thecargo in the hold and not to &lace it on the dec:e7&osed to the elements. @acondra' denied an'res&onsibilit' on the ground that the contract ofaffreightment clearl' states that the cargo *as to be

carried on dec: at shi&&erHs ris: as e)idenced b' the*ords 5on dec: at shi&&erHs ris:5 stam&ed on the bill oflading.

>rdinaril', *hen a shi&&er *ishes to a)ail ofs&ace on board a shi&, he first obtains a shi&&ing orderfrom the shi& o*ner. 2his shi&&ing order is authorit'for the shi&Hs officers to acce&t the shi&&erHs cargo.%hen signed b' the shi&Hs mate, this *ould constitutethe mateHs recei&t sho*ing that the cargo has beenta:en aboard. 2he shi&&er *ould then &resent thisrecei&t to the agent of the shi&Hs com&an' *ho *ouldthen issue the bill of lading. o*e)er, in this case,the shi&&er obtained the bill of lading *ithout first&resenting the mateHs recei&t #so as to e7&edite thenegotiation of the bill *ith the ban:s$. B' doing so, the

shi&&er entered into a *ritten guarant', bindinghimself to abide b' the terms of the mateHs recei&t*hich in this case obtained a sti&ulation that the cargoshall be shi&&ed on or under the dec: at the o&tion ofthe shi& and at shi&&erHs ris:.

In this case, &laintiff &rotested thearrangement but *hen the defendant informed themthat the cargo could be discharged if the' *eredissatisfied, &laintiff did not order its discharge. 2heC4 &laintiff consented to ha)ing thecargo carried on dec:. KD3.

#-$ %>4 defendant *as negligent and thus

liable for the damage to the cargo. 4>.

Ratio= %hile @artini *ould ha)e greatl' &referred forthe cargo to be carried under the hatches, the'ne)ertheless consented for it to go on dec:. Codina,an DD of @artini, if attenti)e to the interests of hiscom&an', must ha)e :no*n from the tenor of theguarant' *hich he signed that defendant had reser)edthe right to carr' the cargo on dec:. 2he bill of lading&lainl' sho*ed that the cargo *ould be so carried.2he &laintiff *as dul' notified as to the manner b'*hich *as the cargo *as to be shi&&ed. 2he' onl'&rotested after the bill had been negotiated at theban: and e)en *hen there *as time to sto& theshi&ment, the' failed to gi)e the necessar'

instructions thereb' manifesting ac+uiescence.In e)er' contract of affreightment, losses b'

dangers of the seas are e7ce&ted from the ris: *hichthe carrier ta:es u&on himself *hether the e7ce&tionis e7&ressed in contract or not. 2he e7ce&tion is madeb' la* and falls *ithin the general &rinci&le that noone is res&onsible for fortuitous e)ents. But then thisgeneral la* is subect to the e7ce&tion that *hen theine)itable accident is &receded b' fault of the carrier,*ithout *hich it *ould not ha)e ha&&ened, then hebecomes res&onsible for it.

2he carrier is res&onsible for safe and &ro&erstorage of the cargo, and there is no doubt that b' thegeneral maritime la* he is bound to secure the cargo

safel' under dec:. If he carries the goods on dec:*ithout the consent of the shi&&er and the goods aredamaged or lost in conse+uence of being e7&osed, thecarrier cannot &rotect himself b' sho*ing that the'*ere damaged or lost b' the dangers of the sea.%hen the shi&&er consents to his goods being carriedon dec:, he ta:es the ris: u&on himself.

If goods shi&&ed are found to ha)e beendamaged, the burden of &roof is on the carrier to sho*that the damage *as due to fortuitous e)ents. But,e)en if the damage is caused b' one of the e7ce&tedcauses, the carrier is still res&onsible if the inur'

might ha)e been a)oided b' the e7ercise ofreasonable s:ill and attention on their &art. o*e)er,in this case, *here the shi&&er consented to theconditions of carriage, the burden of &roof is shifted tothe shi&&er.

As there is no allegation or &roof of negligenceon the &art of the carrier in &rotecting the cargo fromrain or sea *ater and as the com&laint clearl'

indicates that the damage *as due to it being :e&t ondec:, and such manner of carriage ha)ing beenconsented to b' the &laintiff, the defendant isabsol)ed. It is not &ermissible for the court, in theabsence of an' allegation or &roof of negligence, toattribute negligence to the shi&Hs em&lo'ees in thematter of &rotecting the goods from rains and storms.

Dastern 3hi&&ing Fines )s IAC, 1? 3CRA 0/;

Issue= 3hould &etitioner be e7em&ted from liabilit'under Art. 1";0 on the ground that the loss of the)essel b' fire comes under the &hrase 5naturaldisaster or calamit'(5 4>.

Ratio= G3A since fire is onl'an e7em&ting circumstance if not caused b' actualfault or &ri)it' of the carrier.

Issue= >n the N?? Per Pac:age Fimitation

Ratio= Petitioner carrier a)ers that its liabilit' shouldnot e7ceed N?? &er &ac:age as &ro)ided in 3ection0#$ of the C>G3A, *hich reads=

5#$ 4either the carrier nor the shi& shall inan' e)ent be or become liable for an' loss or damageto or in connection *ith the trans&ortation of goods inan amount e7ceeding N?? &er &ac:age 777 or in caseof goods not shi&&ed in &ac:ages, &er customar'freight unit, or the e+ui)alent of that sum in othercurrenc', unless the nature and )alue of such goodsha)e been declared b' the shi&&er before shi&mentand inserted in the bill of lading.5

Article 1"0, 4CC also allo*s the limitations ofliabilit' in that it &ro)ides that 5a sti&ulation that theCCHs liabilit' is limited to the )alue of the goodsa&&earing in the bill of lading, unless the shi&&er oro*ner declares a greater )alue, is binding.5

It is to be noted that the Ci)il Code does not ofitself limit the liabilit' of the CC to a fi7ed amount &er&ac:age, although the Code e7&ressl' &ermits asti&ulation limiting such liabilit'. 2hus, the C>G3A,*hich is su&&letor' to the Ci)il Code, ste&s in andsu&&lements the Code b' establishing a statutor'

PAGE 23


24/108


&ro)ision limiting the carrierHs liabilit' in the absenceof a declaration of a higher )alue of the goods b' theshi&&er in the bill of lading. 2he &ro)isions of theC>G3A on limited liabilit' are as much a &art of a billof lading as though &h'sicall' in it and as much a &artthereof as though &laced therein b' agreement of the&arties.

In these cases, there is no sti&ulation in the

res&ecti)e bills of lading limiting the carrierHs liabilit'for the loss or destruction of the goods. 4or is there adeclaration of a higher )alue of the goods. ence,&etitioner carrierHs liabilit' should not e7ceed N?? &er&ac:age, or its &eso e+ui)alent, at the time of the&a'ment of the )alue of the goods lost, but in no case5more than the amount of damage actuall' sustained.5

2he liabilit' *as com&uted as= 1-! cartons#shi&&ing unit$ 7 N?? O N/0,???. 2he cartons and notthe containers should be considered as the shi&&ingunit.

Eissenting = Ka&, .2here is no e)idence that the containers *ere

carrier6 su&&lied. 2he shi&&er must ha)e sa)ed onfreight charges b' using containers for shi&ment. 2hecontainers should be considered as the shi&&ing unit.

#b$ Act of &ublic enem'

Art. 1;?. /oon carriers areres#onsi$%e for the %oss, 'estr!ction, or'eterioration of the &oo's, !n%ess the sae is'!e to any of the fo%%o)in& ca!ses on%y9

(((


25/108


*as no negligence on its &art, the tiles beingdischarged b' handlabor and not b' mechanicalde)ice.

Issue = %>4 the terms and conditions of the bill oflading *ere binding u&on the &laintiff. KD3.

Ratio= 2he defendant &laced said stam& u&on the bill

of lading before the &laintiff shi&&ed the tiles, and thatha)ing shi&&ed the tiles under said bill, *ith the termsand conditions of carriage stam&ed thereon, the go)t.must be deemed to ha)e assented to said terms andconditions. 2he binding effect of the conditionsstam&ed on the bill of lading did not &roceed from theCollector of Customs, but from the actual contract*hich the &arties made. Dach bill of lading is acontract and the &arties thereto are bound b' itsterms.

2he defendant, to free itself from liabil it', *asonl' obliged to &ro)e that the damages suffered b' thetile *ere b' )irtue of the nature or defect of thearticles. 2he &laintiff, to hold the defendant liable, *asobliged to &ro)e that the damage to the tiles, b' )irtue

of their nature, occurred on account of the defendantHsnegligence or because the latter did not ta:e&recaution usuall' ado&ted b' careful &ersons.

2he defendant &ro)ed,and the &laintiff did notattem&t to dis&ute that the tiles *ere of a brittle andfragile nature and that the' *ere deli)ered to thedefendant *ithout an' &ac:ing or &rotecti)e co)ering.2he &laintiff, not ha)ing &ro)ed negligence on the &artof the defendant, is not entitled to reco)er damages.

3outhern Fines )s CA, 0 3CRA -/

4 &etitioner is liable for the loss orshortage. KD3.

Ratio= Under Art. ;/1 of the Code of Commerce, thecarrier, in order to free itself from liabilit', *as onl'obliged to &ro)e that the damage suffered b' thegoods *ere b' )irtue of defects of the articles. Under

Art. ;/-, the &laintiff in order to hold the carrier liable,*as obliged to &ro)e that the damage to the goods b')irtue of their nature, occurred on account of thecarrierHs negligence or because the carrier did not ta:ethe &recaution ado&ted b' careful &ersons.

Petitioner claims e7em&tion based on the factthat the sac:s *ere in bad condition and that rice *asim&ro&erl' &ac:ed causing a lot of s&illage of the rice*hile it *as being loaded.

3outhern FinesH contention is untenable, for ifthe fact of im&ro&er &ac:ing is :no*n to the carrier orits ser)ants or a&&arent u&on ordinar' obser)ation,but it acce&ts the goods not*ithstanding suchcondition, it is not relie)ed of liabilit' for loss or inur'

resulting therefrom. rder of com&etentauthorit'

Art. 1;?. /oon carriers areres#onsi$%e for the %oss, 'estr!ction, or'eterioration of the &oo's, !n%ess the sae is

'!e to any of the fo%%o)in& ca!ses on%y9(((


26/108


im&ossible the fulfillment b' the carrier of itsobligation. 2he &etitioner *as not dut' bound to obe'the illegal order to dum& into the sea the scra& iron.2here is absence of sufficient &roof that the issuanceof the order *as attended *ith such force orintimidation as to com&letel' o)er&o*er the *ill of thecarrierHs DDs.

@elencio6errera, *issenting= 2hrough the order oract of com&etent &ublic authorit', the &erformance ofthe contract *as rendered im&ossible. 2he ca&tain hasno control o)er the situation ust as 2umambing had nocontrol o)er the situation.

;. Euration of D7traordinar'Res&onsibilit'

Art. 1;*. The e(traor'inaryres#onsi$i%ity of the coon carrier %asts frothe tie the &oo's are !ncon'itiona%%y #%ace' inthe #ossession of, an' recei-e' $y the carrierfor trans#ortation !nti% the sae are 'e%i-ere',act!a%%y or constr!cti-e%y, $y the carrier to the

consi&nee, or to the #erson )ho has a ri&ht torecei-e the, )itho!t #re!'ice to the#ro-isions of Art. 1;3.

Art. 1;. The coon carrierGs '!ty too$ser-e e(tra6or'inary 'i%i&ence in the -i&i%anceo-er the &oo's reains in f!%% force an' effecte-en )hen they are te#orari%y !n%oa'e' orstore' in transit, !n%ess the shi##er or o)nerhas a'e !se of the ri&ht of sto##a&e intransit!.

Art. 1;3. The e(tra6or'inary %ia$i%ity ofthe coon carrier contin!es to $e o#erati-e

e-en '!rin& the tie the &oo's are store' in a)areho!se of the carrier at the #%ace of'estination !nti% the consi&nee has $eena'-ise' of the arri-a% of the &oo's an' hasreasona$%e o##ort!nity thereafter to reo-ethe or other)ise 'is#ose of the.

0 Agba'ani=

When carrierGs res#onsi$i%ity $e&ins.66 Under Art.1";!, the e7tra6o res&onsibilit' of the CC begins fromthe time the goods are deli)ered to the carrier. 2hedeli)er' to the CC must &lace the goods to betrans&orted unconditionall' in the &ossession of theCC and the CC must recei)e them. >ther*ise, the

e7tra6ordinar' res&onsibilit' of the CC *ill notcommence.

When carrierGs res#onsi$i%ity terinates.66Under 1";!, the e7tra6ordinar' res&onsibilit' of the CCis terminated at the time the goods are deli)ered tothe consignee or the &erson *ho has a right to recei)ethem #actual or constructi)e deli)er'$.

Constructi)e deli)er'= 4otice b' the CC thatthe cargo had alread' arri)ed, &lacing them at thedis&osal of the shi&&er or consignee releases CC frome7tra6ordinar' res&onsibilit'. nce the goods are deli)ered, the e7tra6ordinar' res&onsibilit' of the CC ceases.

Lia$i%ity of shi##er for 'e%ay in o$tainin&'e%i-ery of &oo's, 'e!rra&e.66 2he shi&&er isliable for lost earnings occasioned b' the unnecessar'dela' in the use of the )ehicles belonging to the

carrier, due in turn to the failure of the former, u&onrecei&t of notice of the arri)al of the goods at the &laceof destination, to unload forth*ith and ta:e a*a' thecargo from the )ehicles. 2his is a charge fordemurrage #addtl. ser)ice &ro)ided b' CC$

Effect of storin& in transit.66 Under 1";", thetem&orar' unloading or storage of the goods during

the time that the' are being trans&orted does notinterru&t the e7tra6ordinar' res&onsibilit' of the CCD7ce&tion= %here the shi&&er or o*ner

e7ercises its right of stoppage in transitu #the act b'*hich the un&aid )endor of goods sto&s their &rogressand resumes &ossession of them, *hile the' are in thecourse of transit from him to the &urchaser, and not'et actuall' deli)ered to the latter. 2his is e7ercised*hen the bu'er is or becomes insol)ent.$

Res#onsi$i%ity of carrier )hen ri&ht e(ercise'.662he e7tra6ordinar' res&onsibilit' of the CC ceases*hen the goods being trans&orted are tem&oraril'unloaded or stored in transit be reason of the e7erciseof the right of stoppage in transitu b' the un&aid

seller. 2he CC holds the goods in the ca&acit' of anordinar' bailee or *arehouseman u&on the theor' thatthe e7ercise of the right of stoppage in transituterminates the contract of carriage #ordinar' diligenceis re+uired$

Effect of stora&e in )areho!se of carrier.66Under 1";!, the e7tra6ordinar' res&onsibilit' of the CCdoes not cease not*ithstanding the fact that thegoods being trans&orted are stored in the *arehouseof the CC at the &lace of destination. D7tra6ordinar'res&onsibilit' ceases onl' after the consignee hasbeen ad)ised of the arri)al of the goods and has hadreasonable o&&ortunit' to remo)e them or other*ise

dis&ose of them.Fiabilit' as a *arehouseman #ordinar'diligence$ arises onl' *hen the consignee has beenad)ised of the arri)al of the goods and has hadreasonable o&&ortunit' to remo)e them or other*isedis&ose of them

Cia @aritima )s Insurance Co. of 4orth America, 1-3CRA -1;

ne of the lighters sun:. 2he insurance co.

&aid @acleod and filed to collect from CC. CC deniedliabilit' on the grounds that the hem& *as loaded on abarge o*ned b' the CC free of charge, that there *asno bill of lading issued thereb' resulting to thenone7istence of a contract of carriage, that the sin:ing*as due to a fortuitous e)ent, and that the insuranceco. has no &ersonalit' to sue.

eld= 2here *as a com&lete contract of carriage theconsummation of *hich has alread' begun *hen theshi&&er deli)ered the cargo to the carrier and thelatter too: &ossession of the same b' &lacing it on alighter manned b' its DDs, under *hich @acleodbecame entitled to the &ri)ilege secured to him b' la*

for its safe trans&ortation and deli)er', and the carrierto the full &a'ment of its freight u&on com&letion ofthe )o'age. 2he barges or lighters *ere merel'em&lo'ed as the first ste& of the )o'age, *hich is &artof the contract.

2he recei&t of the goods b' the carrier hasbeen said to lie at the foundation of the contract tocarr' and deli)er, and if no goods are recei)ed therecan be no such contract. 2he liabilit' andres&onsibilit' of the carrier under a contract for thecarriage of goods commence on their actual deli)er'to, or recei&t b' the carrier or an authoried agent, of

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the goods. 2he test as to *hether the relation ofshi&&er and carrier had been established is= +ad thecontrol and possession of the goods been completelysurrendered by the shipper to the . %hene)er thecontrol and &ossession of goods &asses to the carrierand nothing remains to be done b' the shi&&er, then itcan be said *ith certaint' that the relation of shi&&erand carrier has been established.

2he bill of lading is not indis&ensable to acontract of carriage. It is merel' documentar' &roof ofthe agreement of the &arties.

2here *as no force majeure. 2he reason forthe damage or the loss *as lac: of ade+uate&rotections and measures ta:en b' the carrier to&re)ent the loss.

Fu Eo )s Binamira, 1?1 Phil 1-?

G3A is merel' su&&letor' to the &ro)isions of the4CC *hich go)ern the contract.

0. Agreement Fimiting Fiabilit'

#a$ As to diligence re+uired

Art. 1??. A sti#!%ation $et)een thecoon carrier an' the shi##er or o)ner

%iitin& the %ia$i%ity of the forer for the %oss or'estr!ction, or 'eterioration of the &oo's to a'e&ree %ess than e(tra6or'inary 'i%i&ence sha%%$e -a%i', #ro-i'e' it $e9


28/108


ng Kiu )s CA, 1 3CRA --;

ng Kiu *ith the&romise to in)estigate the matter. Plaintiff sued and*as a*arded moral and e7em&lar' damages. CA

re)ersed holding that PAF *as guilt' of sim&lenegligence and denied moral and e7em&lar' damagesbut ordered PAF to &a' P1??, the baggage liabilit'assumed b' it under the condition of carriage &rintedon the bac: of the tic:et.

eld= PAF incurred dela' in the deli)er' of &etitionerHsluggage. o*e)er, there *as no bad faith. 2he liabilit'of PAF *as limited to the sti&ulations &rinted on thebac: of the tic:et.

&hile the passenger had not signed the planetic'et, he is nevertheless bound by the provisionthereof; such provisions have been held to be part ofthe contract of carriage and valid and binding upon

the passenger regardless of the latter)s lac' of'nowledge or assent to the regulation. It is *hat is:no*n as a contract of adhesion *herein one &art'im&oses a read' made form of contract on the other itis not entirel' &rohibited. The one who adheres to thecontract is in reality free to reject it entirely; if headheres, he gives his consent. A contract limitingliabilit' u&on an agree )aluation does not offendagainst the &olic' of the la* forbidding one fromcontracting against his o*n negligence.

Considering that &etitioner had failed todeclare a higher )alue for his baggage, he cannot be

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&ermitted a reco)er' in e7cess of P 1??.??. Besides,&assengers are ad)ised not to &lace )aluable itemsinside their baggage. Also, there is nothing in thee)idence to sho* the actual )alue of the goodsallegedl' lost b' &etitioner.

PA4 A@ )s IAC, 1/0 3CRA -/!

ng Kiu )s CA. 3uch case iss+uarel' a&&licable in this case. 2he ruling in

3he*aram )s PAF is ina&&licable since it *as &remisedon the fact that the conditions &rinted at the bac: ofthe tic:et *ere so small and hard to read.

Fiabilit' is limited to N/?? as sti&ulated at thebac: of the tic:et.

2he 3C re)ersed the CA ruling a*ardingres&ondent damages for lost &rofits. 2he rule laiddo*n in @endoa )s PAF &ro)ides that before damagescan be a*arded for loss of &rofits on account of dela'or failure of deli)er', it must ha)e a&&eared that CChad notice at the time of deli)er' to him of the&articular circumstances attending the shi&ment, and*hich &robabl' *ould lead to such s&ecial loss if hedefaulted. In the absence of a sho*ing that Pan AmHs

attention *as called to the s&ecial circumstancesre+uiring &rom&t deli)er' of the luggage, it cannot beheld liable for the cancellation of res&ondentHscontracts as it could not ha)e foreseen such ane)entualit' *hen it acce&ted the luggage for transit.

Pan Am )s Ra&adas, -? 3CRA /"


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&ro)ed b' satisfactor' e)idence other than the self6ser)ing declarations of one &art', the Court *ill nothesitate to disregard the fine &rint in a contract ofadhesion. >ther*ise, the Court is constrained to rulethat *e ha)e to enforce the contract as it is the onl'reasonable basis to arri)e at a ust a*ard.

#c$ IE

-. sti&ulation &ro)iding for an un+ualified

limitation of such liabilit' to an agreed sti&ulation 6>IE

;. sti&ulation limiting the liabilit' of the CC toan agreed )aluation unless the shi&&er declares ahigher )alue and &a's a higher rate of freight 66 AFIEand D4RCDABFD

When sti#!%ation %iitin& %ia$i%ity -a%i'.66 Under1"00, the shi&&er or o*ner and the CC ma' sti&ulateto limit the liabilit' of the CC for the loss, destructionor deterioration of goods to a degree less than e7tra6ordinar' diligence =

1. the sti&ulation must be in *riting andsigned b' both &arties

-. the sti&ulation must be su&&orted b')aluable consideration other than the ser)ice renderedb' the CC

;. the sti&ulation must be reasonable, ust andnot contrar' to &ublic &olic'. 2his a&&lies onl' *henthe CC is acting as such but not *hen it acts as a&ri)ate carrier 8in ome Insurance )s American3teamshi& Co., the 3C held that the Ci)il Code&ro)isions on CC should not be a&&lied *here the CCis not acting as such but as a &ri)ate carrier such&olic' has no force *here the &ublic at large is notin)ol)ed9

2he &arties ma' sti&ulate that the diligence tobe e7ercised b' the CC be less than e7tra6ordinar'diligence, &ro)ided that the re+uirements under Article1"00 are com&lied *ith. o*e)er, the &arties cannotreduce the diligence to less than that of a good fatherof a famil'. Art. 1"0 &ro)ides for " sti&ulations *hichshall be considered unreasonable, unust and contrar'to &ublic &olic'.

/onstr!ction of sti#!%ations %iitin& cooncarrierGs %ia$i%ity.66 An e7em&tion in general *ordsnot e7&ressl' relating to negligence, e)en though the*ords are *ide enough to include loss b' negligenceor default of CCHs ser)ants, must be construed aslimiting the liabilit' of the CC as assurer, and not asrelie)ing him from the dut' of e7ercising reasonables:ill and careEffect of %ac2 of co#etitor to coon carrier.66Under 1"1, the lac: of com&etition of the CC shall beconsidered in determining %>4 a sti&ulation limitingCCHs liabilit' is reasonable, ust and in consonance*ith &ublic &olic'.

E(a#%es of -a%i' sti#!%ations91. 1"0! 6 an agreement limiting the CCHs

liabilit' for dela' on account of stri:es or riots-. 1"0, eacoc: )s @acondra' 6 a sti&ulation

that the CCHs liabilit' is limited to the )alue of thegoods a&&earing in bill of lading unless the shi&&er oro*ner declares a greater )alue

;. 1"? 6 a contract fi7ing the sum that ma' bereco)ered b' the o*ner or shi&&er for the loss,destruction or det

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