*Albano vs. Reyes 175 SCRA 264

*PLDT vs. NTC 190 SCRA 717

*Luzon Brokerage vs. PSC 70 Phil 148

...*Lusteveco vs. PSC 93 Phil 736

*Halili vs. Cruz 23 SCRA 1174

*San Pablo vs. PSEP 153 SCRA 199

*de Guzman vs. CA 104 SCRA 520

*Jercos vs. CA 117 SCRA 612

*Santos vs. Sibug 104 SCRA 612

pantranco vs. PSC (70 Phil 221

Transportation Law: Santos vs. Sibog (GR L-26815, 26 May 1981)

Posted by Berne Guerrero under (a) oas , haystacks 

Santos vs. Sibog (GR L-26815, 26 May 1981)First Division, Melencio-Herrera (J): 3 concur, 1 concur in result, 1 designated to sit in first division, 1 on leave

Facts: Vicente U. Vidad was a duly authorized passenger jeepney operator, while Adolfo L. Santos was the owner of a passenger jeep, but he had no certificate of public convenience for the operation of the vehicle as a public passenger jeep. Santos then transferred his jeep to the name of Vidad so that it could be operated under the latter’s certificate of public convenience. In other words, Santos became what is known in ordinary parlance as a kabit operator. For the protection of Santos, Vidad executed a re-transfer document to the former, which was to be a private document presumably to be registered if and when it was decided that the passenger jeep of Santos was to be withdrawn from the kabit arrangement. On 26 April 1963, Abraham Sibug was bumped by a passenger jeepney operated by Vidad and driven by Severo Gragas.

As a result thereof, Sibug filed a complaint for damages against Vidad and Gragas with the Court of First Instance of Manila (Branch XVII, then presided by Hon. Arsenio Solidum). On 5 December 1963, a judgment was rendered by the trial court sentencing Vidad and Gragas, jointly and severally, to pay Sibug the sums of P506.20 as actual damages; P3,000.00 as moral damages; P500.00 as attorney’s fees, and costs.

On 10 April 1964, the Sheriff of Manila levied on a motor vehicle (PUJ-343-64), registered in the name of Vidad, and scheduled the public auction sale thereof on 8 May 1964. On 11 April 1964, Santos presented a third-party claim with the Sheriff alleging actual ownership of the motor vehicle levied upon, and stating that registration thereof in the name of Vidad was merely to enable Santos to make use of Vidad’s Certificate of Public Convenience. After the third-party complaint was filed, Sibug submitted to the Sheriff a bond issued by the Philippine Surety Insurance Company, to save the Sheriff from liability if he were to proceed with the sale and if Santos’ third-party claim should be ultimately upheld.

On 22 April 1964, before the scheduled sale of 8 May 1964, Santos instituted an action for Damages and Injunction with a prayer for Preliminary Mandatory Injunction against Sibug; Vidad; and the Sheriff (Civil Case 56842 of Branch X, of the same CFI of Manila). The complaint was later amended to include the Philippine Surety as a party defendant although its bond had not become effective. No public sale was conducted on 8 May 1964. On 11 May 1964, Branch X  issued a Restraining Order enjoining the Sheriff from conducting the public auction sale of the motor vehicle levied upon. On 14 October 1965, Branch X affirmed Santos’ ownership of the jeepney in question based on the evidence adduced, and decreed that the Sibug, Vidad and the Sheriff are enjoined from proceeding with the sale of the vehicle in question and ordering its return to Santos and furthermore sentencing Sibug to pay Santos the sum of P15.00 a day from 10 April 1964 until the vehicle is returned to him, and P500.00 as attorney’s fees as well as the costs. This was subsequently amended on 5 December 1965, upon motion for reconsideration filed by Santos, to include the Philippine Surety as jointly and severally liable with Sibug, provided that the liability of the Philippine Surety shall in no case exceed P6,500.00. The Court further ordered Sibug to pay the Philippine Surety, the same sums it is ordered to pay under the decision.”

From the judgment in the Branch X case, Sibug appealed. Meanwhile, Santos moved for immediate execution. Sibug opposed it on the ground that Branch X had no jurisdiction over the Branch XVII case, and that Branch X had no power to interfere by injunction with the judgment of Branch XVII, a Court of concurrent or coordinate jurisdiction. On 13 November 1965, Branch X released an Order authorizing immediate execution on the theory that the Branch X case is “principally an action for the issuance of a writ of prohibition to forbid the Sheriff from selling at public auction property not belonging to the judgment creditor (sic) and there being no attempt in this case to interfere with the judgment or decree of another court of concurrent jurisdiction.”

Without waiting for the resolution of his Motion for Reconsideration, Sibug sought relief from the Appellate Court in a Petition for Certiorari with Preliminary Injunction. On 18 November 1965, the Court of Appeals enjoined the

enforcement of the Branch X Decision and the Order of execution issued by said Branch.  On 28 September 1966, the Court of Appeals rendered the herein challenged Decision nullifying the judgment rendered in the Branch X Case and permanently restraining Branch X from taking cognizance of the Branch X case filed by Santos. Hence, the petition for review on certiorari filed by Santos on 14 December 1966.

The Supreme Court dismissed the petition for review on certiorari filed by Santos, with costs against Santos.

1.    Restraining order wrongfully issued by Branch XUnder the provisions of Section 17, Rule 39, the action taken by the Sheriff cannot be restrained by another Court or by another Branch of the same Court. The Sheriff has the right to continue with the public sale on his own responsibility, or he can desist from conducting the public sale unless the attaching creditor files a bond securing him against the third-party claim. But the decision to proceed or not with the public sale lies with him.

2.    Powers of the sheriff; Uy Piaoco vs. OsmenaAs said in Uy Piaoco vs. Osmeña, 9 Phil. 299, 307, “the powers of the Sheriff involve both discretional power and personal liability.”

3.    Discretional power and personal liability of the sheriff; Planas vs. MadrigalThe discretional power and personal liability have been further elucidated in Planas and Verdon vs. Madrigal & Co., et al., 94 Phil. 754, where it was held, “the duty of the Sheriff in connection with the execution and satisfaction of judgment of the court is governed by Rule 39 of the Rules of Court. Section 15 thereof provides for the procedure to be followed where the property levied on execution is claimed by a third person. If the third-party claim is sufficient, the sheriff, upon receiving it, is not bound to proceed with the levy of the property, unless he is given by the judgment creditor an indemnity bond against the claim (Mangaoang vs. Provincial Sheriff, 91 Phil., 368). Of course, the sheriff may proceed with the levy even without the indemnity bond, but in such case he will answer for any damages with his own personal funds (Waite vs. Peterson, et al., 8 Phil., 419; Alzua, et al. vs. Johnson, 21 Phil., 308; Consulta No. 341 de los abogados de Smith, Bell & Co., 48 Phil., 565). And the rule also provides that nothing therein contained shall prevent a third person from vindicating his claim to the property by any proper action (Sec. 15 of Rule 39).”

4.    Attaching creditor should furnish bond; If bond not filed, discretion comes in; When sheriff proceedsIt appears from the above that if the attaching creditor should furnish an adequate bond, the Sheriff has to proceed with the public auction. When such bond is not filed, then the Sheriff shall decide whether to proceed, or to desist from proceeding, with the public auction. If he decides to proceed, he will incur personal liability in favor of the successful third-party claimant.

5.    No court can interfere by injunction judgment of concurrent or coordinate jurisdiction, exceptions; Arabay vs. SalvadorThe Court, in Arabay, Inc. vs. Hon. Serafin Salvador, succinctly held that “generally, the rule, that no court has authority to interfere by injunction with the judgments or decrees of a concurrent or coordinate jurisdiction having equal power to grant the injunctive relief, is applied in cases, where no third-party claimant is involved, in order to prevent one court from nullifying the judgment or process of another court of the same rank or category, a power which devolves upon the proper appellate court. xxx  When the sheriff, acting beyond the bounds of his authority, seizes a stranger’s property, the writ of injunction, which is issued to stop the auction sale of that property, is not an interference with the writ of execution issued by another court because the writ of execution was improperly implemented by the sheriff. Under the writ, he could attach the property of the judgment debtor. He is not authorized to levy upon the property of the third-party claimant (Polaris Marketing Corporation vs. Plan, L-40666, January 22, 1976, 69 SCRA 93, 97; Manila Herald Publishing Co., Inc. vs. Ramos, 88 Phil. 94, 102).”

6.    Courts; Jurisdiction; Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction (Abiera vs. CA)“No court has power to interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction having equal power to grant the relief sought by injunction.”

7.    Courts; Jurisdiction; Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction; When applicable (Abiera vs. CA)“For this doctrine to apply, the injunction issued by one court must interfere with the judgment or decree issued by another court of equal or coordinate jurisdiction and the relief sought by such injunction must be one which could be granted by the court which rendered the judgment or issued the decree.”

8.    Courts; Jurisdiction; Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction; Exception; Judgment rendered by another court in favor of a third person who claims property levied upon on execution (Abiera vs. CA)“Under Section 17 of Rule 39 a third person who claims property levied upon on execution may vindicate such claim by action. A judgment rendered in his favor — declaring him to be the owner of the property — would not constitute interference with the powers or processes of the court which rendered the judgment to enforce which the execution was levied. If that be so — and it is so because the property, being that of a stranger, is not subject to levy — then an interlocutory order, such as injunction, upon a claim and prima facie showing of ownership by the claimant, cannot be considered as such interference either.”

9.    Execution; Where property levied on claimed by third person; ‘Action’ in section 17, Rule 39 of the Rules of Court, interpreted (Abiera vs. CA)“The right of a person who claims to be the owner of property levied upon on execution to file a third-party claim with the sheriff is not exclusive, and he may file an action to vindicate his claim even if the judgment creditor files an indemnity bond in favor of the sheriff to answer for any damages that may be suffered by the third party claimant. By ‘action’ as stated in the Rule, what is meant is a separate and independent action.”

10.    Santos has right to vindicate claim of ownership in a separate action; Interference with sheriff’s custody not an interference with another court’s order of attachmentIt was appropriate, as a matter of procedure, for Santos, as an ordinary third-party claimant, to vindicate his claim of ownership in a separate action under Section 17 of Rule 39. The judgment rendered in his favor by Branch X , declaring him to be the owner of the property, did not as a basic proposition, constitute interference with the powers or processes of Branch XVII  which rendered the judgment, to enforce which the jeepney was levied upon. And this is so because property belonging to a stranger is not ordinarily subject to levy. While it is true that the vehicle in question was in custodia legis, and should not be interfered with without the permission of the proper Court, the property must be one in which the defendant has proprietary interest. Where the Sheriff seizes a stranger’s property, the rule does not apply and interference with his custody is not interference with another Court’s Order of attachment.

11.    Judgment of Branch X legally unpalatableThe judgment in the Branch X case appears to be quite legally unpalatable. For instance, since the undertaking furnished to the Sheriff by the Philippine Surety did not become effective for the reason that the jeep was not sold, the public sale thereof having been restrained, there was no reason for promulgating judgment against the Philippine Surety. It has also been noted that the Complaint against Vidad was dismissed. Most important of all, the judgment against Sibug was inequitable. In asserting his rights of ownership to the vehicle in question, Santos candidly admitted his participation in the illegal and pernicious practice in the transportation business known as the kabit system.

12.    Section 20 (g) of the Public Service ActSection 20 (g) of the Public Service Act, then the applicable law, specifically provided that “it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had — (g) to sell, alienate, mortgage, encumber or lease its property, franchise, certificates, privileges, or rights, or any part thereof.”

13.    Registered owner/operator and grantee of franchise directly and primarily liable for damages against SibugHerein, Santos had fictitiously sold the jeepney to Vidad, who had become the registered owner and operator of record at the time of the accident. It is true that Vidad had executed a re-sale to Santos, but the document was not registered. Although Santos, as the kabit, was the true owner as against Vidad, the latter, as the registered

owner/operator and grantee of the franchise, is directly and primarily responsible and liable for the damages caused to Sibug, the injured party, as a consequence of the negligent or careless operation of the vehicle. This ruling is based on the principle that the operator of record is considered the operator of the vehicle in contemplation of law as regards the public and third persons even if the vehicle involved in the accident had been sold to another where such sale had not been approved by the then Public Service Commission.

14.    Property levied not “stranger’s”Legally speaking, it was not a “stranger’s property” that was levied upon by the Sheriff pursuant to the judgment rendered by Branch XVII. The vehicle was, in fact, registered in the name of Vidad, one of the judgment debtors. And what is more, the aspect of public service, with its effects on the riding public, is involved. Whatever legal technicalities may be invoked, the Court finds the judgment of the Court of Appeals to be in consonance with justice. The ultimate conclusion of the appellate court, nullifying the Decision of Branch X, permanently enjoining the auction sale, should be upheld.

15.    Kabit cannot be allowed to defeat levy of his vehicleFor the same basic reason, as the vehicle here in question was registered in Vidad’s name, the levy on execution against said vehicle should be enforced so that the judgment in the Branch XVII case may be satisfied, notwithstanding the fact that the secret ownership of the vehicle belonged to another. Santos, as the kabit, should not be allowed to defeat the levy on his vehicle and to avoid his responsibilities as a kabit owner for he had led the public to believe that the vehicle belonged to Vidad. This is one way of curbing the pernicious kabit system that facilitates the commission of fraud against the travelling public.

16.    Proper remedy of Santos; Erezo caseAs indicated in the Erezo case, Santos’ remedy, as the real owner of the vehicle, is to go against Vidad, the actual operator who was responsible for the accident, for the recovery of whatever damages Santos may suffer by reason of the execution. In fact, if Santos, as the kabit, had been impleaded as a party defendant in the Branch XVII case, he should be held jointly and severally liable with Vidad and the driver for damages suffered by Sibug, as well as for exemplary damages.

Wed 29 Sep 2004

Transportation Law: Aboitiz Shipping Corp. vs. CA (GR 84458, 6 November 1989)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Aboitiz Shipping Corp. vs. CA (GR 84458, 6 November 1989)Second Division, Regalado (J): 4 concur

Facts: Anacleto Viana was only 40 years old and was in good health. His average annual income as a farmer or a farm supervisor was 400 cavans of palay annually. His parents, Antonio and Gorgonia Viana, had been recipient of 20 cavans of palay as support or P120.00 monthly. On 11 May 1975, Anacleto Viana boarded the vessel M/V Antonia, owned by Aboitiz Shipping Corp., at the port at San Jose, Occidental Mindoro, bound for Manila, having purchased a ticket (117392) in the sum of P23.10. On 12 May 1975, said vessel arrived at Pier 4, North Harbor, Manila, and the passengers therein disembarked, a gangplank having been provided connecting the side of the vessel to the pier. Instead of using said gangplank, Viana disembarked on the third deck which was on the level with the pier. After said vessel had landed, the Pioneer Stevedoring Corporation took over the exclusive control of the cargoes loaded on said vessel pursuant to the Memorandum of Agreement dated 26 July 1975 between the Pioneer Stevedoring Corporation and Aboitiz. The crane owned by Pioneer and operated by its crane operator Alejo Figueroa was placed alongside the vessel and 1 hour after the passengers of said vessel had disembarked, it started operation by unloading the cargoes from said vessel. While the crane was being operated, Viana who had already disembarked from said vessel obviously remembering that some of his cargoes were still loaded in the vessel, went back to the vessel, and it was while he was pointing to the crew of the said vessel to the place where his cargoes were loaded that the crane hit him, pinning him between the side of the vessel and the crane. He was thereafter brought to the hospital where he later expired 3 days thereafter, on 15 May 1975, the cause of his death according to the Death Certificate being “hypostatic pneumonia secondary to traumatic fracture of the pubic bone lacerating the urinary bladder.” For his hospitalization, medical, burial and other miscellaneous expenses, Anacleto’s wife, Lucila C. Viana, spent a total of P9,800.00. Because of Anacleto’s death, the deceased’s parents and spouse suffered mental anguish and extreme worry or moral damages. For the filing of the case, they had to hire a lawyer for an agreed fee of P10,000.00.

The Vianas filed a complaint for damages against Aboitiz for breach of contract of carriage. Aboitiz, on the other hand, filed a third-party complaint against Pioneer. In a decision rendered on 17 April 1980 by the trial court, Aboitiz was ordered to pay the Vianas for damages incurred (the sum of P12,000.00 for the death of Anacleto Viana; P9,800.00 as actual damages; P533,200.00 value of the 10,664 cavans of palay computed at P50.00 per cavan; P10,000.00 as attorney’s fees; P5,000.00, value of the 100 cavans of palay as support for 5 years for deceased’s

parents, Antonio and Gorgonia Viana computed at P50.00 per cavan; P7,200.00 as support for deceased’s parents computed at P120.00 a month for 5 years pursuant to Article 2206 [2] of the Civil Code; P20,000.00 as moral damages, and costs), and Pioneer was ordered to reimburse Aboitiz for whatever amount the latter paid the Vianas.  Both Aboitiz and Pioneer filed separate motions for reconsideration. In an order dated 27 October 1982,  the trial court absolved Pioneer from liability for failure of the Vianas and Aboitiz to preponderantly establish a case of negligence against the crane operator. The court thus ordered Aboitiz to pay the Vianas the damages incurred.

Not satisfied with the modified judgment of the trial court, Aboitiz appealed the same to the Court of Appeals which affirmed the findings of the trial court except as to the amount of damages awarded to the Vianas.  The Court therein ordered Aboitiz to pay the Vianas the amount of P30,000.00 for the death of Anacleto Viana; actual damages of P9,800.00; P160,000.00 for unearned income; P7,200.00 as support for deceased’s parents;-P20,000.00 as moral damages; P10,000.00 as attorney’s fees; and to pay the costs. Hence, the appeal by certiorari.

The Supreme Court denied the petition, and affirmed the judgment appealed from in toto.

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

2.    Doctrine in the case of La MallorcaIt has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier’s vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier’s premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. Thus, a person who, after alighting from a train, walks along the station platform is considered still a passenger. So also, where a passenger has alighted at his destination and is proceeding by the usual way to leave the company’s premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the protection of the railroad company and its agents.

3.    Determination of reasonableness of time; Existence of reasonable cause a primary factorReasonableness of time should be made to depend on the attending circumstances of the case, such as the kind of common carrier, the nature of its business, the customs of the place, and so forth, and therefore precludes a consideration of the time element per se without taking into account such other factors. In La Mallorca, It is of no moment that there was no appreciable interregnum for the passenger therein to leave the carrier’s premises. Herein, an interval of 1 hour had elapsed before the victim met the accident. The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near Aboitiz’ vessel.

4.    A carrier is duty bound not only to bring its passengers safely to their destination but also to afford them a reasonable time to claim their baggageIt is of common knowledge that, by the very nature of Aboitiz’ business as a shipper, the passengers of vessels are allotted a longer period of time to disembark from the ship than other common carriers such as a passenger bus. With respect to the bulk of cargoes and the number of passengers it can load, such vessels are capable of accommodating a bigger volume of both as compared to the capacity of a regular commuter bus. Consequently, a ship passenger will need at least an hour as is the usual practice, to disembark from the vessel and claim his baggage whereas a bus passenger can easily get off the bus and retrieve his luggage in a very short period of time. Verily, Aboitiz cannot categorically claim, through the bare expedient of comparing the period of time entailed in getting the passenger’s cargoes, that the ruling in La Mallorca is inapplicable to the present case. On the contrary, if the doctrine enunciated therein is applied to the present petition, the victim Anacleto Viana was still a passenger at the time of the incident. When the accident occurred, the victim was in the act of unloading his cargoes, which he had every right to do, from Aboitiz’ vessel.

5.    Victim not proved to have disembarked from vessel; Victim deemed passenger at time of deathIt is not definitely shown that 1 hour prior to the incident, the victim had already disembarked from the vessel. Aboitiz failed to prove this. What is clear is that at the time the victim was taking his cargoes, the vessel had already docked an hour earlier. In consonance with common shipping procedure as to the minimum time of 1 hour allowed for the passengers to disembark, it may be presumed that the victim had just gotten off the vessel when he went to retrieve his baggage. Yet, even if he had already disembarked an hour earlier, his presence in Aboitiz’ premises was not without cause. The victim had to claim his baggage which was possible only 1 hour after the vessel arrived since it was admittedly standard procedure in the case of Aboitiz’ vessels that the unloading operations shall start only after that time. Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a passenger of said carrier at the time of his tragic death.

6.    Common carriers bound to observe extraordinary diligence as to goods, utmost diligence of very cautious persons as to passengersUnder the law, common carriers are, from the nature of their business and for reasons of public policy, bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

More particularly, 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.

7.    Common carrier presumed negligent when passenger dies or injured; Proof required of plaintiffWhere a passenger dies or is injured, the common carrier is presumed to have been at fault or to have acted negligently. This gives rise to an action for breach of contract of carriage where all that is required of plaintiff is to prove the existence of the contract of carriage and its non-performance by the carrier, that is, the failure of the carrier to carry the passenger safely to his destination, which, in the present case, necessarily includes its failure to safeguard its passenger with extraordinary diligence while such relation subsists.

8.    Burden of proof to negate presumptionThe presumption is established by law that in case of a passenger’s death or injury the operator of the vessel was at fault or negligent, having failed to exercise extraordinary diligence, and it is incumbent upon it to rebut the same. This is in consonance with the avowed policy of the State to afford full protection to the passengers of common carriers which can be carried out only by imposing a stringent statutory obligation upon the latter. Concomitantly, the Supreme Court has likewise adopted a rigid posture in the application of the law by exacting the highest degree of care and diligence from common carriers, bearing utmost in mind the welfare of the passengers who often become hapless victims of indifferent and profit-oriented carriers. Herein, Aboitiz failed to rebut the presumption against it.

9.    Aboitiz had inadequately complied with the required degree of diligence to prevent the accident from happeningThe evidence does not show that there was a cordon of drums around the perimeter of the crane. The fact that the alleged presence of visible warning signs in the vicinity was disputable and not indubitably established. The victim and other passengers were not sufficiently warned that merely venturing into the area in question was fraught with serious peril. Even assuming the existence of the supposed cordon of drums loosely placed around the unloading area and the guard’s admonitions against entry therein, these were at most insufficient precautions which pale into insignificance if considered vis-a-vis the gravity of the danger to which the deceased was exposed. There is no showing that Aboitiz was extraordinarily diligent in requiring or seeing to it that said precautionary measures were strictly and actually enforced to subserve their purpose of preventing entry into the forbidden area.

10.    Aboitiz’ negligence proximate and direct cause of victim’s deathWhile the victim was admittedly contributorily negligent, still Aboitiz’s failure to exercise extraordinary diligence was the proximate and direct cause of, because it could definitely have prevented, the former’s death.

11.    Pioneer absolved of liabilityNo excepting circumstance being present, the Court is bound by lower court’s declaration that there was no negligence on the part of Pioneer Stevedoring Corporation, a confirmation of the trial court’s finding to that effect, hence the Court’s conformity to Pioneer’s being absolved of

any liability. Pioneer had taken the necessary safeguards insofar as its unloading operations were concerned, a fact which appears to have been accepted by the Vianas by not impleading Pioneer as a defendant, and likewise inceptively by Aboitiz by filing its third-party complaint only after 10 months from the institution of the suit against it. Parenthetically, Pioneer is not within the ambit of the rule on extraordinary diligence required of, and the corresponding presumption of negligence foisted on, common carriers like Aboitiz. This, of course, does not detract from what the Court has said that no negligence can be imputed to Pioneer but, that on the contrary, the failure of Aboitiz to exercise extraordinary diligence for the safety of its passenger is the rationale for the Court’s finding on its liability.

Wed 29 Sep 2004

Transportation Law: Eastern Shipping Lines vs. IAC (GR L-69044, 29 May 1987)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Eastern Shipping Lines vs. IAC (GR L-69044, 29 May 1987)Eastern Shipping Lines vs. Nisshin Fire and Marine Insurance Co. (GR L-71478)First Division, Melencio-Herrera (J): 4 concur

Facts: In GR 69044, sometime in or prior to June 1977, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe, Japan for transportation to Manila, 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc., and 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. Both sets of goods were insured against marine risk for their stated value with Development Insurance and Surety Corporation. In GR 71478, during the same period, the same vessel took on board 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation, and two cases of surveying instruments consigned to Aman Enterprises and General Merchandise. The 128 cartons were insured for their stated value by Nisshin Fire & Marine Insurance Co., for US$46,583.00, and the 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured.

[GR 69044] On 11 May 1978, Development Insurance, having been subrogated unto the rights of the two insured companies, filed suit against Eastern Shipping for the recovery of the amounts it had paid to the insured before the then Court of First Instance of Manila (Branch XXX, Civil Case 116087). Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event, hence, it is not liable under the law. On 31 August 1979, the Trial Court rendered judgment in favor of Development Insurance in the amounts of P256,039.00 and

P92,361.75, respectively, with legal interest, plus P35,000.00 as attorney’s fees and costs. Eastern Shipping took an appeal to the then Court of Appeals which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a petition for review on certiorari.

[GR 71478] On 16 June 1978, Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the recovery of the insured value of the cargo lost with the then Court of First Instance of Manila (Branch II, Civil Case 116151), imputing unseaworthiness of the ship and non-observance of extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established, the burden of proving negligence of the vessel is shifted to the cargo shipper. On 15 September 1980, the Trial Court rendered judgment in favor of Nisshin and Dowa in the amounts of US$46,583.00 and US$11,385.00, respectively, with legal interest, plus attorney’s fees of P5,000.00 and costs. On appeal by Eastern Shipping, the then Court of Appeals on 10 September 1984, affirmed with modification the Trial Court’s judgment by decreasing the amount recoverable by Dowa to US$1,000.00 because of $500 per package limitation of liability under the COGSA. Hence, the petition for review on certiorari by Eastern Shipping.

Both Petitions were initially denied for lack of merit. GR 69044 on 16 January 1985 by the First Division, and GR 71478 on 25 September 1985 by the Second Division. Upon Eastern Shipping’s Motion for Reconsideration, however, GR 69044 was given due course on 25 March 1985, and the parties were required to submit their respective Memoranda, which they have done. On the other hand, in GR 71478, Eastern Shipping sought reconsideration of the Resolution denying the Petition for Review and moved for its consolidation with GR 69044, which was then pending resolution with the First Division. The same was granted; the Resolution of the Second Division of 25 September 1985 was set aside and the Petition was given due course.

The Supreme Court modified the judgment in GR 69044, in that Eastern Shipping shall pay the Development Insurance the amount of P256,039 for the 28 packages of calorized lance pipes, and P71,540 for the 7 cases of spare parts, with interest at the legal rate from the date of the filing of the Complaint on 13 June  1978, plus P5,000 as attorney’s fees, and the costs. The Court, on the other hand, in GR 71478, affirmed the judgment.

1.    Admission of Eastern Shipping as operator of vesselAs a general rule, the facts alleged in a party’s pleading are deemed admissions of that party and binding upon it.  And an admission in one pleading in one action may be received in evidence against the pleader or his successor-in-interest on the trial of another action to which he is a party, in favor of a party to the latter action.  Herein, although Eastern Shipping claimed that it is not the operator of the M/S Asiatica but merely a charterer thereof, it, in fact, stated in its petition in GR 69044 that “there are about 22 cases of the ‘ASIATICA’ pending in various courts where various plaintiffs are represented by various counsel representing various consignees or insurance companies. The common defendant in these cases is petitioner herein, being the operator of said vessel.” Eastern Shipping should thus be held bound to said admission.

2.    Law ApplicableThe law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. Herein, as the cargoes in question were transported from Japan to the Philippines, the liability of Eastern Shipping is governed primarily by the Civil Code. However, in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code.

3.    Common carriers liable for loss; Natural disaster or calamity an exceptionUnder the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over goods, according to all the circumstances of each case. Common carriers are responsible for the loss, destruction, or deterioration of the goods unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning or other natural disaster or calamity; xxx”

4.    Fire not a natural disaster or calamityEaster Shipping claims that the loss of the vessel by fire exempts it from liability under the phrase “natural disaster or calamity.” However, fire may not be considered a natural disaster or calamity, as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning   or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier.

5.    Construction of Article 1680 as to fire as an extraordinary fortuitous eventArticle 1680 of the Civil Code, which considers fire as an extraordinary fortuitous event refers to leases of rural lands where a reduction of the rent is allowed when more than one-half of the fruits have been lost due to such event, considering that the law adopts a protective policy towards agriculture.

6.    Fire not comprehended within exceptions in Article 1734; Carrier presumed at fault unless it proves otherwiseAs the peril of fire is not comprehended within the exceptions in Article 1734, Article 1735 of the Civil Code provides that in all cases other than those mentioned in Article 1734, the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law. Herein, the respective Insurers, as subrogees of the cargo shippers, have proven that the transported goods have been lost. Eastern Shipping has also proven that the loss was caused by fire. The burden then is upon Eastern Shipping to prove that it has exercised the extraordinary diligence required by law. Having failed to discharge the burden of proving that it had exercised the extraordinary diligence required by law, Eastern Shipping cannot escape liability for the loss of the cargo.

7.    Natural disaster must be proximate and only cause of the loss, and that carrier has exercised due diligence to prevent or minimize lossEven if fire were to be considered a “natural disaster” within the meaning of Article 1734 of the Civil Code, it is required under Article 1739 of the same Code that the “natural disaster” must have been the “proximate and only cause of the loss,” and that the carrier has “exercised due

diligence to prevent or minimize the loss before, during or after the occurrence of the disaster.” Herein, Eastern Shipping has also failed to establish satisfactorily.

8.    Section 4 (2) of COGSA; Relief in COGSA unavailing as Eastern shipping actually at fault due to lack of diligenceSection 4(2) of COGSA provides that “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from. xxx (b) Fire, unless caused by the actual fault or privity of the carrier. xxx” Herein, there was “actual fault” of the carrier shown by “lack of diligence” in that “when the smoke was noticed, the fire was already big; that the fire must have started 24 hours before the same was noticed;” and that “after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage.” The foregoing suffices to show that the circumstances under which the fire originated and spread are such as to show that Eastern Shipping or its servants were negligent in connection therewith. Consequently, the complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping.

9.    Section 4(5) of COGSASection 4(5) of the COGSA, reads:”(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in bill of lading. This declaration if embodied in the bill of lading shall be prima facie evidence, but all be conclusive on the carrier. By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained. xxx”

10.    Article 1749 NCCArticle 1749 of the New Civil Code also allows the limitations of liability in this wise, “A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.”

11.    Civil Code does not limit liability of common carrier; COGSA suppletory to provisions of Civil CodeThe Civil Code does not of itself limit the liability of the common carrier to a fixed amount per package although the Code expressly permits a stipulation limiting such liability. Thus, the COGSA, which is suppletory to the provisions of the Civil Code, steps in and supplements the Code by establishing a statutory provision limiting the carrier’s liability in the absence of a declaration of a higher value of the goods by the shipper in the bill of lading. The provisions of the Carriage of Goods by Sea Act on limited liability are as much a part of a bill of lading as though physically in it and as much a part thereof as though placed therein by agreement of the parties.

12.    Eastern Shipping’s liability should not exceed US$500 per packageIn GR 69044, there is no stipulation in the respective Bills of Lading limiting the carrier’s

liability for the loss or destruction of the goods. Nor is there a declaration of a higher value of the goods. Hence, Eastern Shipping’s liability should not exceed US$500 per package, or its peso equivalent, at the time of payment of the value of the goods lost, but in no case “more than the amount of damage actually sustained.”

13.    Actual liability of Eastern Shipping in GR 69044In GR 69044, (1) the actual total loss for the 5,000 pieces of calorized lance pipes was P256,039, which was exactly the amount of the insurance coverage by Development Insurance, and the amount affirmed to be paid by the Court. The goods were shipped in 28 packages. Multiplying 28 packages by $500 would result in a product of $14,000 which, at the current exchange rate of P20.44 to US$1, would be P286,160, or “more than the amount of damage actually sustained.” Consequently, the amount of P256,039 should be upheld.  (2) With respect to the 7 cases of spare parts, their actual value was P92,361.75, which is likewise the insured value of the cargo  and which amount was affirmed to be paid by the Court. However, multiplying 7 cases by $500 per package at the present prevailing rate of P20.44 to US$1 (US$3,500 x P20.44) would yield P71,540 only, which is the amount that should be paid by Eastern Shipping for those spare parts, and not P92,361.75.

14.    Actual liability of Eastern Shipping in GR 71478In GR 71478, in so far as the 2 cases of surveying instruments are concerned, the amount awarded to Dowa which was already reduced to $1,000 by the Appellate Court following the statutory $500 liability per package, is in order. In respect of the shipment of 128 cartons of garment fabrics in 2 containers and insured with Nisshin, the Appellate Court also limited Eastern Shipping’s liability to $500 per package and affirmed the award of $46,583 to Nisshin. It multiplied 128 cartons (considered as COGSA packages) by $500 to arrive at the figure of $64,000, and explained that “since this amount is more than the insured value of the goods, that is $46,583, the Trial Court was correct in awarding said amount only for the 128 cartons, which amount is less than the maximum limitation of the carrier’s liability. The 128 cartons and not the 2 containers should be considered as the shipping unit.

15.    Mitsui vs. American Export LinesIn Mitsui & Co., Ltd. vs. American Export Lines, Inc. 636 F 2d 807 (1981), the consignees of tin ingots and the shipper of floor covering brought action against the vessel owner and operator to recover for loss of ingots and floor covering, which had been shipped in vessel-supplied containers. The U.S. District Court for the Southern District of New York rendered judgment for the plaintiffs, and the defendant appealed. The United States Court of Appeals, Second Division, modified and affirmed holding that: “When what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of such units is disclosed in the shipping documents, each of those units and not the container constitutes the ‘package’ referred to in liability limitation provision of Carriage of Goods by Sea Act. [Carriage of Goods by Sea Act, 4(5), 46 U.S.C.A. 1304(5)]. Even if language and purposes of Carriage of Goods by Sea Act left doubt as to whether carrier-furnished containers whose contents are disclosed should be treated as packages, the interest in securing international uniformity would suggest that they should not be so treated. [Carriage of Goods by Sea Act, 4(5), 46 U.S.C.A. 1304(5)]. After quoting the statement in Leather’s Best, supra, 451 F 2d at 815, that treating a container as a

package is inconsistent with the congressional purpose of establishing a reasonable minimum level of liability [Judge Beeks wrote, 414 F. Supp. at 907].

16.    Courts to construe and apply statute as enacted; Congress alone must be the one to modernize or reconstitute itThe approach gives needed recognition to the responsibility of the courts to construe and apply the statute as enacted, however great might be the temptation to ‘modernize’ or reconstitute it by artful judicial gloss. If COGSA’s package limitation scheme suffers from internal illness, Congress alone must undertake the surgery. There is, in this regard, obvious wisdom in the Ninth Circuit’s conclusion in Hartford that technological advancements, whether or not forseeable by the COGSA promulgators, do not warrant a distortion or artificial construction of the statutory term ‘package.’ A ruling that these large reusable metal pieces of transport equipment qualify as COGSA packages — at least where they were carrier-owned and supplied — would amount to just such a distortion.

17.    Individual crates or cartons considered packages although in a carrier’s containersIf the individual crates or cartons prepared by the shipper and containing his goods can rightly be considered ‘packages’ standing by themselves, they do not suddenly lose that character upon being showed in a carrier’s container. These containers are likened to detachable stowage compartments of the ship. They simply serve to divide the ship’s overall cargo stowage space into smaller, more serviceable loci. Shippers’ packages are quite literally ’stowed’ in the containers utilizing stevedoring practices and materials analogous to those employed in traditional on board stowage.

18.    Yeramex Internation vs. SS Tando (US)In Yeramex International v. S.S. Tando, 1977 A.M.C. 1807 (E.D. Va.), rev’d on other grounds, 595 F 2d 943 (4 Cir. 1979), another district with many maritime cases followed Judge Beeks’ reasoning in Matsushita and similarly rejected the functional economics test. Judge Kellam held that when rolls of polyester goods are packed into cardboard cartons which are then placed in containers, the cartons and not the containers are the packages.

19.    Smithgreyhound vs. M/V Eurygenes (US)The case of Smithgreyhound v. M/V Eurygenes  followed the Mitsui test, holding therein “Eurygenes concerned a shipment of stereo equipment packaged by the shipper into cartons which were then placed by the shipper into a carrier-furnished container. The number of cartons was disclosed to the carrier in the bill of lading. Eurygenes followed the Mitsui test and treated the cartons, not the container, as the COGSA packages. However, Eurygenes indicated that a carrier could limit its liability to $500 per container if the bill of lading failed to disclose the number of cartons or units within the container, or if the parties indicated, in clear and unambiguous language, an agreement to treat the container as the package.”

20.    Bill of lading disclosed contents of containers; Mitsui and Eurygenes cases appliedConsidering that the Bill of Lading clearly disclosed the contents of the containers, the number of cartons or units, as well as the nature of the goods, and applying the ruling in the Mitsui and Eurygenes cases it is clear that the 128 cartons, not the 2 containers should be considered as the shipping unit subject to the $500 limitation of liability.

21.    “Say: Two (2) Containers Only” construed; Obscure words or stipulations in contract construed against party who caused obscurity, especially in a contract of adhesionIn light of the stipulation in fine print in the dorsal side of the Bill of lading (“[Use of Container] Where the goods receipt of which is acknowledged on the face of this Bill of Lading are not already packed into container[s] at the time of receipt, the Carrier shall be at liberty to pack and carry them in any type of container[s]”), the use of the estimate “Say: Two (2) Containers Only” in the Bill of Lading, means that the goods could probably fit in 2 containers only. It cannot mean that the shipper had furnished the containers for if so, “Two (2) Containers” appearing as the first entry would have sufficed and if there is any ambiguity in the Bill of Lading, it is a cardinal principle in the construction of contracts that the interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. This applies with even greater force in a contract of adhesion where a contract is already prepared and the other party merely adheres to it, like the Bill of Lading, which is drawn up by the carrier.

22.    No Denial of Opportunity to Present Deposition of Its Witnesses (in GR 69044 only); What due process abhorsHerein, Eastern Shipping was given full opportunity to present its evidence but it failed to do so. Since after 6 November 1978, to 27 August 1979, not to mention the time from 27 June 1978, when its answer was prepared and filed in Court, until 26 September 1978, when the pre-trial conference was conducted for the last time, Eastern Shipping had more than 9 months to prepare its evidence. Its belated notice to take deposition on written interrogatories of its witnesses in Japan, served upon Development Insurance on August 25th, just two days before the hearing set for August 27th, knowing fully well that it was its undertaking on July 11th that the deposition of the witnesses would be dispensed with if by next time it had not yet been obtained, only proves the lack of merit of Eastern Shipping’s motion for postponement, for which reason it deserves no sympathy from the Court in that regard. Eastern Shipping has told the Court since 16 February 1979, that it was going to take the deposition of its witnesses in Japan. Why did it take until 25 August 1979, or more than 6 months, to prepare its written interrogatories. Only Eastern Shipping itself is to blame for its failure to adduce evidence in support of its defenses. Thus, Eastern Shipping was afforded ample time to present its side of the case.  It cannot complain now that it was denied due process when the Trial Court rendered its Decision on the basis of the evidence adduced. What due process abhors is absolute lack of opportunity to be heard.

23.     Award of Attorney’s FeesCourts being vested with discretion in fixing the amount of attorney’s fees, it is believed that the amount of P5,000.00 would be more reasonable in GR 69044. The award of P5,000.00 in GR 71478 was affirmed.

Wed 29 Sep 2004

Transportation Law: Belgian Overseas Chartering and Shipping vs. Philippine First Insurance Co. Inc. (GR 143133, 5 June 2002)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Belgian Overseas Chartering and Shipping vs. Philippine First Insurance Co. Inc. (GR 143133, 5 June 2002)Third Division, Panganiban (J): 2 concur, 1 on leave

Facts: On 13 June 1990, CMC Trading A.G. shipped on board the M/V ‘Anangel Sky’ at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On 28 July 1990, M/V Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. 4 coils were found to be in bad order (BO Tally sheet 154974). Finding the 4 coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss. Despite receipt of a formal demand, Belgian Overseas Chartering and Shipping NV (BOCSNV) and Jardine Davies Transport Services Inc.  (JDTSI) refused to submit to the consignee’s claim. Consequently, Philippine First Insurance Co. Inc.  (PFIC) paid the consignee P506,086.50, and was subrogated to the latter’s rights and causes of action against BOCSNV and JDTSI.

PFCI instituted a complaint for recovery of the amount paid by them, to the consignee as insured. The Regional Trial Court of Makati City (Branch 134) rendered judgment, dismissing the complaint, as well as the defendants’ counterclaim.

On appeal, and on 15 July 1998, reversed and set aside the decision of the trial court, and ordered BOCSNV and JDTSI jointly and severally pay PFIC P451,027.32 as actual damages, representing the value of the damaged cargo, plus interest at the legal rate from the time of filing of the complaint on 25 July 1991, until fully paid; attorney’s fees amounting to 20% of the claim, and costs of suit. BOCSNV and JDTSI’s motion for reconsideration was denied. Hence, the petition for review.

The Supreme Court partially granted the Petition, and modified the assailed Decision. The Court reduced BOCSNV and JDTSI’s liability is reduced to US$2,000 plus interest at the legal rate of 6% from the time of the filing of the Complaint on 25 July 1991 until the finality of this Decision, and 12% thereafter until fully paid. No pronouncement as to costs.

1.    Extraordinary diligence required of common carriers; Period as to when observance of extraordinary responsibility lastsWell-settled is the rule that common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport. Thus, common carriers are required to render service with the greatest skill and foresight and “to use all reasonable means to ascertain the nature and characteristics of the goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.” The extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of and received for transportation by the carrier until they are delivered, actually or constructively, to the consignee or to the person who has a right to receive them.

2.    Rationale why extraordinary diligence requiredThis strict requirement is justified by the fact that, without a hand or a voice in the preparation of such contract, the riding public enters into a contract of transportation with common carriers. Even if it wants to, it cannot submit its own stipulations for their approval. Hence, it merely adheres to the agreement prepared by them.

3.    Common carrier presumed to have been at fault or negligent; Burden of proofOwing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such diligence.

4.    When presumption of fault or negligence will not arise; ExclusiveThe presumption of fault or negligence will not arise if the loss is due to any of the following causes: (1) flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) an act of the public enemy in war, whether international or civil; (3) an act or omission of the shipper or owner of the goods; (4) the character of the goods or defects in the packing or the container; or (5) an order or act of competent public authority. This is a closed list. If the cause of destruction, loss or deterioration is other than the enumerated circumstances, then the carrier is liable therefor.

5.    Prima facie case of fault of negligenceMere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible. Herein, (1) as stated in the Bill of Lading, BOCSNV and JDTSI received the subject shipment in good order and condition in Hamburg, Germany; (2) prior to the unloading of the cargo, an Inspection Report prepared and signed by representatives of both parties showed the steel bands broken, the metal envelopes rust-stained and heavily buckled, and the contents thereof exposed and rusty; (3) Bad Order Tally Sheet 154979 issued by JDTSI, stated that 4 coils were in bad order and condition. Normally, a request for a bad order survey is made in case there is an apparent or a presumed loss or damage; (4) the Certificate of Analysis stated that, based on the sample submitted and tested, the steel sheets found in bad order were wet with fresh water; (5) BOCSNV and JDTSI — in a letter addressed to the Philippine Steel Coating Corporation and dated 12 October 1990 — admitted that they were aware of the condition of the 4 coils found in bad order and condition. All these conclusively prove the fact of shipment in good order and condition and the consequent damage to the 4 coils while in the possession of petitioner, who notably failed to explain why.

6.    Common carrier should observe precaution to avoid damage or destruction of the goods entrusted to it for safe carriage and deliveryThe words “metal envelopes rust stained and slightly dented” were noted on the Bill of Lading; however, there is no showing that BOCSNV and JDTSI exercised due diligence to forestall or lessen the loss. Having been in the service for several years, the master of the vessel should have known at the outset that metal envelopes in the said state would eventually deteriorate when not

properly stored while in transit. Equipped with the proper knowledge of the nature of steel sheets in coils and of the proper way of transporting them, the master of the vessel and his crew should have undertaken precautionary measures to avoid possible deterioration of the cargo. But none of these measures was taken. Having failed to discharge the burden of proving that they have exercised the extraordinary diligence required by law, BOCSNV and JDTSI cannot escape liability for the damage to the 4 coils.

7.    Improper packing does not relieve common carrier from liability per seEven if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once it accepts the goods notwithstanding such condition. Thus, BOCSNV and JDTSI have not successfully proven the application of any of the exceptions in the present case.

8.    Section 3, paragraph 6 COGSA; Notice of claim need not be given at time of receipt if subject of a joint inspection or surveySection 3, paragraph 6 of COGSA provides that the notice of claim need not be given if the state of the goods, at the time of their receipt, has been the subject of a joint inspection or survey. Herein, prior to unloading the cargo, an Inspection Report as to the condition of the goods was prepared and signed by representatives of both parties.

9.    Section 3, paragraph 6 COGSA; Failure to file notice of claim does not bar recovery A failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within 1 year. This one-year prescriptive period also applies to the shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading.

10.    Claim not barred by prescription as long as 1 year period not lapsed; Loadstar Shipping vs. CAIn Loadstar Shipping Co., Inc. v. Court of Appeals, the Court ruled that a claim is not barred by prescription as long as the one-year period has not lapsed. Inasmuch as neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter, COGSA — which provides for a one-year period of limitation on claims for loss of, or damage to, cargoes sustained during transit — may be applied suppletorily.

11.    Functions of bill of ladingA bill of lading serves two functions. First, it is a receipt for the goods shipped. Second, it is a contract by which three parties — namely, the shipper, the carrier, and the consignee — undertake specific responsibilities and assume stipulated obligations. In a nutshell, the acceptance of the bill of lading by the shipper and the consignee, with full knowledge of its contents, gives rise to the presumption that it constituted a perfected and binding contract.

12.    Limited Liability clause sanctioned by law; Conditions required; Rationale of the ruleA stipulation in the bill of lading limiting to a certain sum the common carrier’s liability for loss or destruction of a cargo — unless the shipper or owner declares a greater value  — is sanctioned by law. There are, however, two conditions to be satisfied: (1) the contract is reasonable and just under the circumstances, and (2) it has been fairly and freely agreed upon by the parties. The

rationale for this rule is to bind the shippers by their agreement to the value (maximum valuation) of their goods.

13.    Civil Code does not limit liability of the common carrier to a fixed amount per package; Suppletory application of Code of Commerce and COGSAThe Civil Code does not limit the liability of the common carrier to a fixed amount per package. In all matters not regulated by the Civil Code, the right and the obligations of common carriers shall be governed by the Code of Commerce and special laws. Thus, the COGSA, which is suppletory to the provisions of the Civil Code, supplements the latter by establishing a statutory provision limiting the carrier’s liability in the absence of a shipper’s declaration of a higher value in the bill of lading. The provisions on limited liability are as much a part of the bill of lading as though physically in it and as though placed there by agreement of the parties.

14.    The insertion of the words “L/C 90/02447 cannot be the basis for BOCSNV and JDTSI ’s liabilityA notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation of steel sheets did not effect a declaration of the value of the goods as required by the bill. That notation was made only for the convenience of the shipper and the bank processing the Letter of Credit.

15.    Keng Hua Paper Products vs. CA; Bill of lading separate from other letter of credit arrangementsIn Keng Hua Paper Products v. Court of Appeals, the Court held that a bill of lading was separate from the Other Letter of Credit arrangements. Therein, the contract of carriage, as stipulated in the bill of lading, must be treated independently of the contract of sale between the seller and the buyer, and the contract of issuance of a letter of credit between the amount of goods described in the commercial invoice in the contract of sale and the amount allowed in the letter of credit will not affect the validity and enforceability of the contract of carriage as embodied in the bill of lading. As the bank cannot be expected to look beyond the documents presented to it by the seller pursuant to the letter of credit, neither can the carrier be expected to go beyond the representations of the shipper in the bill of lading and to verify their accuracy vis-a-vis the commercial invoice and the letter of credit. Thus, the discrepancy between the amount of goods indicated in the invoice and the amount in the bill of lading cannot negate the obligation arising from the contract of transportation.

16.    BOCSNV and JDTSI’s liability should be computed based on US$500 per package; Eastern Shipping Line vs. IAC, meaning of packageBOCSNV and JDTSI’s liability should be computed based on US$500 per package and not on the per metric ton price declared in the Letter of Credit. In Eastern Shipping Lines, Inc. v. Intermediate Appellate Court, the Court explained the meaning of package, i.e. “when what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of such units is disclosed in the shipping documents, each of those units and not the container constitutes the ‘package’ referred to in the liability limitation provision of Carriage of Goods by Sea Act.” Herein, considering the ruling in Eastern Shipping Lines and the fact that the Bill of Lading clearly disclosed the contents of the containers, the number of units, as well as the

nature of the steel sheets, the 4 damaged coils should be considered as the shipping unit subject to the US$500 limitation.

Wed 29 Sep 2004

Transportation Law: Trans-Asia Shipping Lines vs. CA (GR 118126, 4 March 1996)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Trans-Asia Shipping Lines vs. CA (GR 118126, 4 March 1996)Third Division, Davide Jr. (J): 4 concur

Facts: Atty. Renato Arroyo, a public attorney, bought a ticket Trans-Asia Shipping Lines Inc., a corporation engaged in inter-island shipping, for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on 12 November 1991. At around 5:30p.m of the said day, Arroyo boarded the M/V Asia Thailand vessel. At that instance, Arroyo noticed that some repair work were being undertaken on the engine of the vessel. The vessel departed at around 11:00 p.m. with only 1 engine running. After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded [sic] to their request and thus the vessel headed back to Cebu City. At Cebu City, Arroyo, together with the other passengers who requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Arroyo, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of Trans-Asia.

On account of the failure of Trans-Asia to transport him to the place of destination on 12 November 1991, Arroyo filed before the trial court a complaint for damages against Trans-Asia. After due trial, the trial court rendered its decision and ruled that the action was only for breach of contract, with Articles 1170, 1172, and 1173 of the Civil Code as applicable law — not Article 2180 of the same Code. The Court dismissed the complaint as it did not appear that Arroyo was left in the Port of Cebu because of the fault, negligence, malice or wanton attitude of Trans-Asia’s employees; and likewise dismissed Trans-Asia’s counterclaim is likewise dismissed it not appearing also that filing of the case by Arroyo was motivated by malice or bad faith.

Unsatisfied, Arroyo appealed to the Court of Appeals (CA-GR CV 39901). In its decision of 23 November 1994, the Court of Appeals reversed the trial court’s decision by applying Article 1755 in relation to Articles 2201, 2208, 2217, and 2232 of the Civil Code and, accordingly, awarded (1) P20,000.00 as moral damages; (2) P10,000.00 as exemplary damages; (3) P5,000.00 as attorney’s fees; and (4) Cost of suit. Trans-Asia instituted the petition for review on certiorari.

The Supreme Court denied the petition, and affirmed the challenged decision of the Court of Appeals, subject to the modification as to the award for attorney’s fees which is set aside; with costs against Trans-Asia.

1.    Laws applicableUndoubtedly, there was, between Trans-Asia and Arroyo, a contract of common carriage. The laws of primary application then are the provisions on common carriers under Section 4, Chapter 3, Title VIII, Book IV of the Civil Code, while for all other matters not regulated thereby, the Code of Commerce and special laws.

2.    Article 1733 NCC, Extraordinary diligence; Article 1755, Utmost diligence of very cautious personsUnder Article 1733 of the Civil Code, Trans-Asia was bound to observe extraordinary diligence in ensuring the safety of Arroyo. That meant that Trans-Asia was, pursuant to Article 1755 of the said Code, bound to carry Arroyo safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. Herein, Trans-Asia failed to discharge this obligation.

3.    Vessel was unseaworthy even before voyage began; Unseaworthiness defined, a clear breach of duty of carrierBefore commencing the contracted voyage, Trans-Asia undertook some repairs on the cylinder head of one of the vessel’s engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. For a vessel to be seaworthy’, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code.

4.    Article 1764 NCC; Liability for damagesAs to its liability for damages, Article 1764 of the Civil Code expressly provides that “Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by common carrier. The damages comprised in Title XVIII of the Civil Code are actual or compensatory, moral, nominal, temperate or moderate, liquidated, and exemplary.”

5.    Actual and compensatory damagesActual or compensatory damages represent the adequate compensation for pecuniary loss suffered and for profits the obligee failed to obtain.

6.    Damages resulting in contracts or quasi-contractsIn contracts or quasi-contracts, the obligor is liable for all the damages which may be reasonably attributed to the non- performance of the obligation if he is guilty of fraud, bad faith, malice, or wanton attitude.

7.    Moral damagesMoral damages include moral suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, or similar injury. They may be recovered in the cases enumerated in Article 2219 of the Civil Code, likewise, if they are the proximate result of, as herein, Trans-Asia’s breach of the contract of carriage. Anent a breach of a contract of common carriage, moral damages may be awarded if the common carrier acted fraudulently or in bad faith.

8.    Exemplary damages; not a matter of rightExemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. In contracts and quasi-contracts, exemplary damages may be awarded if the defendant acted in a wanton fraudulent, reckless, oppressive or malevolent manner. It cannot, however, be considered as a matter of right; the court having to decide whether or not they should be adjudicated. Before the court may consider an award for exemplary damages, the plaintiff must first show that he is entitled to moral, temperate or compensatory damages; but it is not necessary that he prove the monetary value thereof.

9.    Article 1169 not applicableThe Court of Appeals did not grant Arroyo actual or compensatory damages, reasoning that no delay was incurred since there was no demand, as required by Article 1169 of the Civil Code. This article, however, finds no application in the case because, as there was in fact no delay in the commencement of the contracted voyage. If any delay was incurred, it was after the commencement of such voyage, more specifically, when the voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only functioning engine conked out.

10.    Article 698 of the Code of Commerce applies suppletorily to Article 1766 NCC; Rights and duties of parties arising out of delayAs to the rights and duties of the parties strictly arising out of such delay, the Civil Code is silent. However, as correctly pointed out by the petitioner, Article 698 of the Code of Commerce specifically provides for such a situation. It reads “In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account.” This article applies suppletorily pursuant to Article 1766 of the Civil Code.

11.    Article 698 of the Code of Commerce must be read with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 NCC; Arroyo not entitled to actual or compensatory damagesThe cause of the delay or interruption was Trans-Asia’s failure to observe extraordinary diligence. Article 698 must then be read together with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. In so reading, it means that Trans-Asia is liable for any pecuniary loss or loss of profits which Arroyo may have suffered by reason thereof. For Arroyo,

such would be the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not. As he and some passengers resolved not to complete the voyage, the vessel had to return to its port of origin and allow them to disembark. Arroyo then took Trans-Asia’s other vessel the following day, using the ticket he had purchased for the previous day’s voyage. Any further delay then in Arroyo’s arrival at the port of destination was caused by his decision to disembark. Had he remained on the first vessel, he would have reached his destination at noon of 13 November 1991, thus been able to report to his office in the afternoon. He, therefore, would have lost only the salary for half of a day. But actual or compensatory damages must be proved, which Arroyo failed to do. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused.

12.    Trans-Asia is liable for moral and exemplary damagesTrans-Asia is liable for moral and exemplary damages. In allowing its unseaworthy M/V Asia Thailand to leave the port of origin and undertake the contracted voyage, with full awareness that it was exposed to perils of the sea, it deliberately disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith and in a wanton and reckless manner.

13.    Trans-Asia’s assertion shows lack of genuine concern for safety of passengers; Trans-Asia cannot expect passengers to act in manner it desiredTrans-Asia’s assertions that the safety of the vessel and passengers was never at stake because the sea was “calm” in the vicinity where it stopped as faithfully recorded in the vessel’s log book demonstrates beyond cavil Trans-Asia’s lack of genuine concern for the safety of its passengers. It was, perhaps, only providential than the sea happened to be calm. Even so, Trans-Asia should not expect its passengers to act in the manner it desired. The passengers were not stoics; becoming alarmed, anxious, or frightened at the stoppage of a vessel at sea in an unfamiliar zone a nighttime is not the sole prerogative of the faint-hearted. More so in the light of the many tragedies at sea resulting in the loss of lives of hopeless passengers and damage to property simply because common carriers failed in their duty to exercise extraordinary diligence in the performance of their obligations.

14.    Article 2208 NCCArticle 2208 of the Civil Code provides that “ In the absence of stipulation, attorney’ s fees and expenses of litigation, other than judicial costs cannot be recovered except: (1) When exemplary damages are awarded; (2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.”

15.    Award of attorney’s fees not justifiedUnder Article 2208 of the Civil Code, Attorney’s fees are recoverable only in the concept of actual damages, not as moral damages nor judicial costs. Hence, to merit such an award, it is settled that the amount thereof must be proven. Moreover, such must be specifically prayed for and may not be deemed incorporated within a general prayer for “such other relief and remedy as the court may deem just and equitable. The statement that the “plaintiff was forced to litigate in order that he can claim moral and exemplary damages for the suffering he incurred” does not  satisfy the benchmark of “factual, legal and equitable justification” needed as basis for an award

of attorney’s fees. In sum, for lack of factual and legal basis, the award of attorney’s fees must be deleted.

Wed 29 Sep 2004

Transportation Law: Metro Manila Transit Corporation vs. CA (GR 104408, 21 June 1993)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Metro Manila Transit Corporation vs. CA (GR 104408, 21 June 1993)Second Division, Regalado (J): 2 concur, 1 on leave

Facts: At about 6:00 a.m. of 28 August 1979, p Nenita Custodio boarded as a paying passenger a public utility jeepney with plate No. D7 305 PUJ Pilipinas 1979, then driven by Agudo Calebag and owned by Victorino Lamayo, bound for her work at Dynetics Incorporated located in Bicutan, Taguig, Metro Manila, where she then worked as a machine operator earning P16.25 a day. While the passenger jeepney was travelling at a fast clip along DBP Avenue, Bicutan, Taguig, Metro Manila another fast moving vehicle, a Metro Manila Transit Corp. (MMTC) bus bearing plate 3Z 307 PUB (Philippines) ‘79 driven by Godofredo C. Leonardo was negotiating Honeydew Road, Bicutan, Taguig, Metro Manila bound for its terminal at Bicutan. As both vehicles approached the intersection of DBP Avenue and Honeydew Road they failed to slow down and slacken their speed; neither did they blow their horns to warn approaching vehicles. As a consequence, a collision between them occurred, the passenger jeepney ramming the left side portion of the MMTC bus. The collision impact caused Custodio to hit the front windshield of the passenger jeepney and she was thrown out therefrom, falling onto the pavement unconscious with serious physical injuries. She was brought to the Medical City Hospital where she regained consciousness only after 1 week. Thereat, she was confined for 24 days, and as a consequence, she was unable to work for 3 ½ months.

A complaint for damages was filed by Custodio, who being then a minor was assisted by her parents, against all of therein named defendants following their refusal to pay the expenses incurred by the former as a result of the collision. Said defendants denied all the material allegations in the complaint and pointed an accusing finger at each other as being the party at fault.  The reorganized trial court, in its decision of 1 August 1989, found both drivers of the colliding vehicles concurrently negligent for non-observance of appropriate traffic rules and regulations and for failure to take the usual precautions when approaching an intersection. As joint tortfeasors, both drivers (Calebag and Leonardo), as well as Lamayo, were held solidarily liable for damages sustained by Custodio, i.e. (a) the sum of P10,000.00 by way of medical expenses; (b) the sum of P5,000.00 by way of expenses of litigation; (c) the sum of P15,000.00 by way of moral damages; (d) the sum of P2,672.00 by way of loss of earnings; (e) the sum of P5,000.00 by way of exemplary damages; (f) the sum of P6,000.00 by way of attorney’s fees;

and (g) costs of suit. MMTC, on the bases of the evidence presented was, however, absolved from liability for the accident.

As Custodio’s motion to have that portion of the trial court’s decision absolving MMTC from liability reconsidered  having been denied for lack of merit, an appeal was filed by her with appellate court. After consideration of the appropriate pleadings on appeal and finding the appeal meritorious, the Court of Appeals modified the trial court’s decision by holding MMTC solidarily liable with the other defendants for the damages awarded by the trial court because of their concurrent negligence. The Court of Appeals was resolute in its conclusion and denied the motions for reconsideration of Custodio and MMTC in a resolution dated 17 February 1982,  thus prompting MMTC to file the present petition.

The Supreme Court affirmed the impugned decision of the Court of Appeals.

1.    Filing of petition timely; Section 1, Rule 45 of the Rules of CourtThe decision of the Court of Appeals, dated 31 October 1991, was received by MMTC on 18 November 1991  and it seasonably filed a motion for the reconsideration thereof on 28 November 1991. Said motion for reconsideration was denied by the court in its resolution dated 17 February 1992, which in turn was received by MMTC on 9 March 1992.    Therefore, it had, pursuant to Section 1, Rule 45 of the Rules of Court, 15 days therefrom or up to 24 March 1992 within which to file a petition for review on certiorari. Anticipating, however, that it may not be able to file said petition before the lapse of the reglementary period therefor, MMTC filed a motion on 19 March 1992 for an extension of 30 days to file the present petition, with proof of service of copies thereof to the court and the adverse parties. The Court granted said motion, with the extended period to be counted from the expiration of the reglementary period. Consequently, it had 30 days from 24 March 1992 within which to file its petition, or up to 23 April 1992, and the eventual filing of said petition on 14 April 1992 was well within the period granted by the Court.

2.    Reglementary period in a petition for review on certiorari; Effect of motion for reconsideration and motion for extension of timeIn the case of a petition for review on certiorari from a decision rendered by the Court of Appeals, Section 1, Rule 45 of the Rules of Court, which has long since been clarified in Lacsamana vs. The Hon. Second Special Cases Division of the Intermediate Appellate Court, et al., allows the same to be filed “within 15 days from notice of judgment or of the denial of the motion for reconsideration filed in due time, and paying at the same time the corresponding docket fee.” In other words, in the event a motion for reconsideration is filed and denied, the period of 15 days begins to run all over again from notice of the denial resolution. Otherwise put, if a motion for reconsideration is filed, the reglementary period within which to appeal the decision of the Court of Appeals to the Supreme Court is reckoned from the date the party who intends to appeal received the order denying the motion for reconsideration. Furthermore, a motion for extension of time to file a petition for review may be filed with this Court within said reglementary period, paying at the same time the corresponding docket fee.

3.    Factual findings of trial court may be reversed by Court of AppealsFactual findings of the trial court may be reversed by the Court of Appeals, which is vested by

law with the power to review both legal and factual issues, if on the evidence of record, it appears that the trial court may have been mistaken, particularly in the appreciation of evidence, which is within the domain of the Court of Appeals.

4.    Findings of facts of Court of Appeals conclusive upon the Supreme Court; ExceptionsThe general rule laid down in a plethora of cases is that such findings of fact by the Court of Appeals are conclusive upon and beyond the power of review of the Supreme Court. While the findings of fact of the Court of Appeals are entitled to great respect, and even finality at times, that rule is not inflexible and is subject to well established exceptions, to wit: (1) when the conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition, as well as in the petitioner’s main and reply briefs, are not disputed by the respondents; and (10) when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and are contradicted by the evidence on record.

5.    Drivers negligent, jeepney owner solidarily liableThere is no dispute as to the finding of concurrent negligence on the part of Calebag, the driver of the passenger jeepney, and Leonardo, the bus driver of MMTC, both of whom were solidarily held liable with Lamayo, the owner of the jeepney, the Court is spared the necessity of determining the sufficiency of evidence establishing the fact of negligence.

6.    Party to prove his own affirmative assertion; Preponderance of evidence in civil casesIt is procedurally required for each party in a case to prove his own affirmative assertion by the degree of evidence required by law. In civil cases, the degree of evidence required of a party in order to support his claim is preponderance of evidence, or that evidence adduced by one party which is more conclusive and credible than that of the other party. It is therefore, incumbent on the plaintiff who is claiming a right to prove his case. Corollarily, defendant must likewise prove its own allegation to buttress its claim that it is not liable. In fine, the party, whether plaintiff or defendant, who asserts the affirmative of the issue has the burden of presenting at the trial such amount of evidence required by law to obtain a favorable judgment.  It is entirely within each of the parties discretion, consonant with the theory of the case it or he seeks to advance and subject to such procedural strategy followed thereby, to present all available evidence at its or his disposal in the manner which may be deemed necessary and beneficial to prove its or his position, provided only that the same shall measure up to the quantum of evidence required by law. In making proof in its or his case, it is paramount that the best and most complete evidence be formally entered.

7.    Oral evidence without object or documentary evidence not sufficiently persuasive proofWhile there is no rule which requires that testimonial evidence, to hold sway, must be corroborated by documentary evidence, or even object evidence for that matter, inasmuch as the

witnesses’ testimonies dwelt on mere generalities, the Court cannot consider the same as sufficiently persuasive proof that there was observance of due diligence in the selection and supervision of employees. Herein, MMTC’s attempt to prove its diligentissimi patris familias in the selection and supervision of employees through oral evidence must fail as it was unable to buttress the same with any other evidence, object or documentary, which might obviate the apparent biased nature of the testimony.

8.    MMTC short of required evidentiary quantum; Central Taxicab vs. Ex-Meralco Employees TransportationThe evidence for MMTC falls short of the required evidentiary quantum as would convincingly and undoubtedly prove its observance of the diligence of a good father of a family has its precursor in the underlying rationale pronounced in the earlier case of Central Taxicab Corp. vs. Ex-Meralco Employees Transportation Co., et al., set amidst an almost identical factual setting. Therein, it was held that “there is no hard-and-fast rule on the quantum of evidence needed to prove due observance of all the diligence of a good father of a family as would constitute a valid defense to the legal presumption of negligence on the part of an employer or master whose employee has by his negligence, caused damage to another. The failure of the company to produce in court any “record” or other documentary proof tending to establish that it had exercised all the diligence of a good father of a family in the selection and supervision of its drivers and buses, notwithstanding the calls therefor by both the trial court and the opposing counsel, argues strongly against its pretensions.

9.    Case covered by Articles 2176 and 2177, in relation to Article 2180, of the Civil Code; Elements of quasi-delictsThe present case isy within the coverage of Articles 2176 and 2177, in relation to Article 2180, of the Civil Code provisions on quasi-delicts, as all the elements thereof are present, to wit: (1) damages suffered by the plaintiff, (2) fault or negligence of the defendant or some other person for whose act he must respond, and (3) the connection of cause and effect between fault or negligence of the defendant and the damages incurred by plaintiff.

10.    Article 2180 NCCThe pertinent parts of Article 2180 provide that  “The obligation imposed by article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. xxx Employers shall be liable for damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. xxx The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.”

11.    Basis of employer’s vicarious liabilityThe basis of the employer’s vicarious liability has been explained: “The responsibility imposed by this article arises by virtue of a presumption juris tantum of negligence on the part of the persons made responsible under the article, derived from their failure to exercise due care and vigilance over the acts of subordinates to prevent them from causing damage. Negligence is imputed to them by law, unless they prove the contrary. Thus, the last paragraph of the article says that such responsibility ceases if it is proved that the persons who might be held responsible

under it exercised the diligence of a good father of a family (diligentissimi patris familias) to prevent damage. It is clear, therefore, that it is not representation, nor interest, nor even the necessity of having somebody else answer for the damages caused by the persons devoid of personality, but it is the non-performance of certain duties of precaution and prudence imposed upon the persons who become responsible by civil bond uniting the actor to them, which forms the foundation of such responsibility.”

12.    Diligentissimi patris familias applicable when there is an employer-employee relationship; Diligence of a good father of family under Article 2180 refers to due diligence in selection and supervision of employeesThe rule is applicable only where there is an employer-employee relationship, although it is not necessary that the employer be engaged in business or industry. Whether or not engaged in any business or industry, the employer under Article 2180 is liable for torts committed by his employees within the scope of their assigned tasks. But, it is necessary first to establish the employment relationship. Once this is done, the plaintiff must show, to hold the employer liable, that the employee was acting within the scope of his assigned task when the tort complained of was committed. It is only then that the defendant, as employer, may find it necessary to interpose the defense of due diligence in the selection and supervision of employees. The diligence of a good father of a family required to be observed by employers to prevent damages under Article 2180 refers to due diligence in the selection and supervision of employees in order to protect the public.

13.    Presumption that employer negligent when employee causes damage due to his own negligenceWith the allegation and subsequent proof of negligence against the driver and of an employer-employee relation between him and MMTC, the case is undoubtedly based on a quasi-delict under Article 2180. When the employee causes damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a family. For failure to rebut such legal presumption of negligence in the selection and supervision of employees, the employer is likewise responsible for damages, the basis of the liability being the relationship of  pater familias or on the employer’s own negligence.

14.    Drivers and vehicle owners directly and solidarily liable; Gutierrez vs. GutierrezAs early as the case of Gutierrez vs. Gutierrez, and thereafter, the Court has consistently held that where the injury is due to the concurrent negligence of the drivers of the colliding vehicles, the drivers and owners of the said vehicles shall be primarily, directly and solidarily liable for damages and it is immaterial that one action is based on quasi-delict and the other on culpa contractual, as the solidarity of the obligation is justified by the very nature thereof.

15.    Admonition as to selection of employees; Cambo vs. CamaroteThe legal obligation of employers to observe due diligence in the selection and supervision of employees is not to be considered as an empty play of words or a mere formalism, as appears to be the fashion of the times, since the non-observance thereof actually becomes the basis of their vicarious liability under Article 2180.  On the matter of selection of employees, the case of Cambo vs. Camarote lays down the admonition that “in order that the owner of a vehicle may be

considered as having exercised all diligence of a good father of a family, he should not have been satisfied with the mere possession of a professional driver’s license; he should have carefully examined the applicant for employment as to his qualifications, his experience and record of service. These steps the vehicle owner failed to observe; he has therefore, failed to exercise all due diligence required of a good father of a family in the choice or selection of driver.”

16.    Scope of due diligence in supervision of employeesDue diligence in the supervision of employees includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business of and beneficial to their employer.  To this, the Court adds that actual implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer, acting through dependable supervisors who should regularly report on their supervisory functions.

17.    When defense of due diligence in selection and supervision of employees deemed sufficientIn order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible, it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and supervision. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer, the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual supervision of their work. The mere allegation of the existence of hiring procedures and supervisory policies, without anything more, is decidedly not sufficient to overcome such presumption.

18.    Warning of the Court to employersThe Court emphatically reiterates its holding, as a warning to all employers, that “the mere formulation of various company policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising from negligence of its employees. It is incumbent upon petitioner to show that in recruiting and employing the erring driver the recruitment procedures and company policies on efficiency and safety were followed.”  Paying lip-service to these injunctions or merely going through the motions of compliance therewith will warrant stern sanctions from the Court.

19.    Rationale for the requirement of highest possible degree of diligence from common carriersThe Court feels it is necessary to stress the following rationale behind these all-important statutory and jurisprudential mandates, for it has been observed that despite its pronouncement in Kapalaran Bus Line vs. Coronado, et al., there has been little improvement in the transport situation in the country: “In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence against them, the law compels them to curb the recklessness of their drivers. While the immediate beneficiaries of the standard of extraordinary diligence are, of course, the passengers and owners of the cargo carried by a common carrier, they are not the only persons that the law seeks to benefit. For if common carriers carefully

observe the statutory standard of extraordinary diligence in respect of their own passengers, they cannot help but simultaneously benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways. The law seeks to stop and prevent the slaughter and maiming of people (whether passengers or not) and the destruction of property (whether freight or not) on our highways by buses, the very size and power of which seem often to inflame the minds of their drivers. . . ..”

20.    No interest due as such has not been prayed in the complaint; Article 2211 NCCThe appellate court acted in the exercise of sound discretion when it affirmed the trial court’s award, without requiring the payment of interest thereon as an item of damages just because of delay in the determination thereof, especially since Custodio did not specifically pray therefor in her complaint. Article 2211 of the Civil Code provides that in quasi-delicts, interest as a part of the damages may be awarded in the discretion of the court, and not as a matter of right. There have been no intentional dilatory maneuvers or any special circumstances which would justify that additional award.

Wed 29 Sep 2004

Transportation Law: US vs. Quinajon (GR 8686, 30 July 1915)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

US vs. Quinajon (GR 8686, 30 July 1915)En Banc, Johnson (J): 4 concur, 1 dissents

Facts: Pascual Quinajon and Eugenio Quitoriano, acting as representatives of the Union Obrera, established at the port of Currimao, Ilocos Norte, and engaged by means of virayes as common carriers of passengers and in loading and unloading freight from steamers anchoring at said port, to the shore or to the warehouses, and vice versa, have regularly collected, during the last four years, 6 centavos for each sack of rice loaded or unloaded by said association. Quinajon and Quitoriano, representing the same association, collected from the provincial government of Ilocos Norte 10 centavos for each of the 5,986 sacks of rice which they unloaded from the steamers during the months of June, July, and September, as property belonging to the said government, a price which differed from the usual charge of 6 centavos made to other shippers of said commodity.

Quinajon and Quitoriano were charged with a violation of the provisions of Act 98. A complaint was presented in the court of the justice of the peace on 11 November 1912. A preliminary examination was had and Quinajon and Quitoriano were held for trial in the Court of First Instance of the Province of Ilocos Norte. On 17 November 1912, the prosecuting attorney of the Province of Ilocos Norte presented a complaint. Upon that complaint Quinajon and Quitoriano

were duly arraigned, tried, found guilty of the crime charged, and sentenced by the Honorable Dionisio Chanco, judge, to pay a fine of $100 (P200) and costs, and to return to the provincial government of the Province of Ilocos Norte the sum of P359.16.

From that sentence, Quinajon and Quitoriano appealed to the Supreme Court.

The Supreme Court affirmed the judgment of the lower court, with modification. The Court ordered Quinajon and Quitoriano to the Province of Ilocos Norte the sum P239.44, for which sum a judgment is ordered to be entered against them, for which execution may issue when this judgment becomes final, in case the same is not paid. With costs.

1.    Quinajon and Quitoriano collected 6 centavos per packageHerein, Quinajon and Quitoriano collected 6 centavos for each package, of whatever kind of merchandise, large or small, heavy or light, from those merchants only with whom they had a special contract. From other merchants, with whom they had not made said special contract, as well as the Province of Ilocos Norte, they collected a different rate. They collected from the Province of Ilocos Norte 10 centavos for each sack of rice which they unloaded from the steamers during the months of June, July, and September.

2.    Simplified facts of the case(1) The defendants, as common carriers, charged and collected from some shippers and merchants, a certain price for each package of merchandise, loaded or unloaded, according to a certain schedule. The prices fixed in the schedule depended upon the size and weight of the package. (2) The defendants entered into a special contract with certain merchants, under and by virtue of the terms of which they charged and collected, for loading and unloading merchandise in said port, the sum of 6 centavos for each package, without reference to its size or weight.

3.    Act 98 and Act of Congress of 4 February 1887 are similar; Adoption of interpretation  by US Federal courts justifiedAct 98 was largely borrowed from the Act of Congress of 4 February 1887. The language of the two Acts, so far as they relate to the present case, is practically the same. Said Act of Congress has been construed by the Federal courts of the United States in several decisions. In view of the similarity of the two Acts, we feel justified in adopting the interpretation given by the Federal courts of the United States to said Act of Congress.

4.    Section 1, Act 98“No person or corporation engaged as a common carrier of passengers or property shall directly or indirectly by any special rate, rebate,, drawback or other device, charge, demand, collect or receive from any person or persons, a greater or less compensation for any service rendered in the transportation of passengers or property on land or water between any points in the Philippine Islands than such common carriers charges, demands, collects or receives from any other person or persons from doing for him a like or contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, and any such unjust discrimination is hereby prohibited and declared to be lawful.”

5.    Section 2, Act of Congress, 4 February 1887“That if any common carrier subject to the provision of this Act shall, directly, or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or less compensation for any service rendered, or to be rendered, in the transportation of passengers or property, subject to the provisions of this Act, than it charges, demands, collects, or receives from any person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared to be unlawful.”

6.    Section 2, Act 98“It shall be unlawful for any common carrier engaged in the transportation of passengers or property as above set forth to make or give any unnecessary or unreasonable preference or advantage to any particular person, company, firm, corporation or locality, or any particular kind of traffic in any respect whatsoever, or to subject any particular person, company, firm, corporation or locality or any kind of traffic, to any undue or unreasonable prejudice or discrimination is also hereby prohibited and declared to be unlawful.”

7.    Section 3, Act of Congress, 4 February 1887“That it shall be unlawful for any common carrier subject to the provision of this Act to make or give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic, to any undue or unreasonable prejudice or disadvantage in any respect whatsoever.”

8.    Purpose of Act 98; ScopeAct 98 is “An Act to regulate commerce in the Philippine Islands.” Its purpose, so far as it is possible, is to compel common carriers to render to all persons exactly the same or analogous service for exactly the same price, to the end that there may be no unjust advantage or unreasonable discrimination. It applies to persons or corporations engaged as common carriers of passengers or property.

9.    Common Carriers definedA common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and remunerate him. A common carrier is a person or corporation who undertakes to carry goods or persons for hire. Herein, Quinajon and Quitoriano admit that they are common carriers.

10.    What Act 98 provides and what it prohibits(1) The law provides that no common carrier shall directly or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons, a greater or less compensation for any service rendered in the transportation of passengers or property, between points in the Philippine Islands, than he charges, demands, collects, or receives from any other person or persons, for doing a like or contemporaneous service, under substantially similar conditions or circumstances.(2) The law prohibits any common carrier from making or giving any unnecessary or unreasonable preference or advantage to any particular person, company, firm, corporation or

locality, or any particular kind of traffic, or to subject any particular person, company, firm, corporation, or locality, or any particular kind of traffic, to any undue or unreasonable prejudice or discrimination whatsoever.Or simply,(1) The law requires common carriers to carry for all persons, either passengers or property, for exactly the same charge for a like or contemporaneous service in the transportation of like kind of traffic under substantially similar circumstances or conditions. (2) The law prohibits common carriers from subjecting any person, etc., or locality, or any particular kind of traffic, to any undue or unreasonable prejudice or discrimination whatsoever.

11.    What Act 98 does not require, and what it does not prohibit(1) The law does not require that the same charge shall be made for the carrying of passengers or property, unless all the conditions are alike and contemporaneous.(2) It is not believed that the law prohibits the charging of a different rate for the carrying of passengers or property when the actual cost of handling and transporting the same is different.(3) It is not believed that the law intended to require common carriers to carry the same kind of merchandise, even at the same price, under different and unlike conditions and where the actual cost is different. The actual cost of handling and transporting the same quantity of rice, for example, might be different, depending upon the form of the package or other conditions. It would cost more to handle and transport rice packed in open boxes or baskets, for example, than it would to handle and transport the same quantity of rice neatly packed in sacks. It would cost more to handle and transport hemp, when it is unbaled and loose, than it would when it is baled. It might cost more to handle and transport household goods uncrated than when they are crated.(4) It is not believed that the law prohibits the charging of a different price for handling and shipping merchandise when the shipper exercises greater care in preparing the same for shipment, thereby reducing the actual cost of handling and transporting. If the shipper puts his merchandise in a condition which costs less to handle and transport, he is certainly entitled to a better rate. The difference in the charge to different merchants or shippers must be based upon the actual cost of handling and transporting.(5) The law does not require common carriers to perform different services for the same price, unless the actual cost is the same. It is when the price charged is for the purpose of favoring persons by localities or particular kinds of merchandise, that the law intervenes and prohibits.(6) It is not believed that the law prohibits common carriers from making special rates for the handling and transporting of merchandise, when the same are made for the purpose of increasing their business, and to manage their important interests upon the same principles which are regarded as sound, and adopted in other trades and pursuits.(7) It is not believed that the law requires absolute equality in all cases. Circumstances and conditions may make it injurious to the carrier. Absolute equality, under certain circumstances and conditions, may give some shippers an advantage over others.

12.    The law prohibits favoritism and discriminationIt is favoritism and discrimination which the law prohibits. The difference in charge must not be made to favor one merchant, or shipper, or locality, to the disadvantage of another merchant, or shipper, or locality. If the services are alike and contemporaneous, discrimination in the price charged is prohibited.

13.    Merchandise may be alike in kind or quantity but not as to cost of transportation; ExampleFor the purposes of the law, it is not sufficient always to say that merchandise is alike, simply because it is of a like kind or quantity. The quantity, kind, and quality may be exactly the same, and yet not be alike, so far as the cost of transportation is concerned. For example, A and B are each shippers of bananas between the same points. A delivers his bananas to the carrier in separate bundles or bunches, without a wrapper or any kind of protection, while B delivers exactly the same number of bunches of bananas, but they are neatly packed in a few boxes or baskets. It does not require much argument to convince men conversant with the shipping of merchandise, in such a case, that the actual cost of handling and shipping would be different and would, therefore, not be “alike,” although contemporaneous, perhaps.

14.    Shipments not rendered unlike because shipment composed of different classes of merchandise; ExampleNeither is it believed that shipments may be rendered unlike by the fact that the total shipment is composed of different kinds or classes of merchandise. For example, A is a shipper of rice and hemp and B is a shipper of rice alone. Both A and B prepare their rice for shipment in exactly the same form of package. It is not believed that the carrier is permitted, under the law, to carry A’s rice for a less price than he carries B’s rice, simply because A is also a shipper of hemp.

15.    Difference in charge of handing may depend on actual cost, actual cost may depend upon quantity; ExamplesA difference in the charge for handling and transporting may only be made when the difference is based upon actual cost. The actual cost may depend upon quantity. For example, A man who ships freight by the car-load, by reason of the actual cost of handling and shipping, may be entitled, under certain conditions, to a better rate than the man who ships a single article or package of the same class or kind of merchandise. As another example, a train-load of cattle might be shipped from Dagupan to Manila at less cost per head than it would cost to ship just a few head, less than a car-load.

16.    Actual cost depend upon and settled upon proof; Difference in charge must be difference in costThe actual cost of each shipment must necessarily depend upon and be settled by its own proof. This rule, however, does not prohibit the making of general schedules, providing they are made applicable to all. The difference in the charge made by the common carrier cannot be made for the purpose of favoring any person or locality, to the prejudice or disadvantage of another person or locality. A common carrier may discriminate between shippers when the amount of goods shipped by one actually costs less to handle and transport, but he cannot discriminate upon the ground simply that he carries all of the goods of one shipper, while he does not carry all of the goods of another. The difference in the charge must be the difference in the cost.

17.    Common carriers competent to enter into special agreements for handling and transporting merchandiseIt is competent for a common carrier under the law to enter into special agreements for handling and transporting merchandise, whereby advantage may accrue to individuals, when it is made clearly to appear that by such agreements the common carrier has only its interests and the

legitimate increase of its profits in view, and when the consideration given to the individual is for the interest of the common carrier alone, and when the common carrier gives all shippers exactly the same rate, under the same conditions.

18.    Law prohibits unjust, undue, and unreasonable discrimination; Circumstances may intervene in determining rate of compensationIt is only unjust, undue, and unreasonable discrimination which the law forbids. The law of equality is in force only where the services performed in the different cases are substantially the same, and the circumstances and conditions are similar. Many considerations may properly enter into the agreement for the carriage or shipment rate, such as the quantity carried, its nature, its risks, the expense of carriage at different periods of time, and the like. Numerous circumstances may intervene, which bear upon the cost and expense of transportation, and it is but just to the carrier that he be permitted to take these circumstances into consideration, in determining the rate or amount of his compensation. A question of fact is raised in each case for the courts to decide.

19.    Quinajon and Quitoriano discriminated against the provinceHerein, there is no pretense that it actually cost more to handle the rice for the province than it did for the merchants with whom the special contracts were made. From the evidence it would seem that there was a clear discrimination made against the province. Discrimination is the thing which is specifically prohibited and punished under the law.

20.    Section 5 of Act 98Section 5 of Act 98 provides that any person or corporation, who may be damaged by reason of the doing by a common carrier of any matters and things prohibited, shall be entitled to sue for and recover all damages so incurred, etc.

21.    Quinajon and Quitoriano required to return overpayment of P239.44Quinajon and Quitoriano had a right to charge the provincial government 6 centavos for each sack of rice unloaded. They unloaded for the province 5,986 sacks, for which they charged the sum of P598.60. They had a right to collect 6 centavos, or the sum of P359.16. Quinajon and Quitoriano collected from the province more than they had a right to collect, the difference between P598.60 and P359.16, or P239.44. They should be required to return to the province the excess which they collected, or the sum of P239.44.

Tue 28 Sep 2004

Transportation Law: Santos vs. Sibog (GR L-26815, 26 May 1981)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Santos vs. Sibog (GR L-26815, 26 May 1981)First Division, Melencio-Herrera (J): 3 concur, 1 concur in result, 1 designated to sit in first division, 1 on leave

Facts: Vicente U. Vidad was a duly authorized passenger jeepney operator, while Adolfo L. Santos was the owner of a passenger jeep, but he had no certificate of public convenience for the operation of the vehicle as a public passenger jeep. Santos then transferred his jeep to the name of Vidad so that it could be operated under the latter’s certificate of public convenience. In other words, Santos became what is known in ordinary parlance as a kabit operator. For the protection of Santos, Vidad executed a re-transfer document to the former, which was to be a private document presumably to be registered if and when it was decided that the passenger jeep of Santos was to be withdrawn from the kabit arrangement. On 26 April 1963, Abraham Sibug was bumped by a passenger jeepney operated by Vidad and driven by Severo Gragas.

As a result thereof, Sibug filed a complaint for damages against Vidad and Gragas with the Court of First Instance of Manila (Branch XVII, then presided by Hon. Arsenio Solidum). On 5 December 1963, a judgment was rendered by the trial court sentencing Vidad and Gragas, jointly and severally, to pay Sibug the sums of P506.20 as actual damages; P3,000.00 as moral damages; P500.00 as attorney’s fees, and costs.

On 10 April 1964, the Sheriff of Manila levied on a motor vehicle (PUJ-343-64), registered in the name of Vidad, and scheduled the public auction sale thereof on 8 May 1964. On 11 April 1964, Santos presented a third-party claim with the Sheriff alleging actual ownership of the motor vehicle levied upon, and stating that registration thereof in the name of Vidad was merely to enable Santos to make use of Vidad’s Certificate of Public Convenience. After the third-party complaint was filed, Sibug submitted to the Sheriff a bond issued by the Philippine Surety Insurance Company, to save the Sheriff from liability if he were to proceed with the sale and if Santos’ third-party claim should be ultimately upheld.

On 22 April 1964, before the scheduled sale of 8 May 1964, Santos instituted an action for Damages and Injunction with a prayer for Preliminary Mandatory Injunction against Sibug; Vidad; and the Sheriff (Civil Case 56842 of Branch X, of the same CFI of Manila). The complaint was later amended to include the Philippine Surety as a party defendant although its bond had not become effective. No public sale was conducted on 8 May 1964. On 11 May 1964, Branch X  issued a Restraining Order enjoining the Sheriff from conducting the public auction sale of the motor vehicle levied upon. On 14 October 1965, Branch X affirmed Santos’ ownership of the jeepney in question based on the evidence adduced, and decreed that the Sibug, Vidad and the Sheriff are enjoined from proceeding with the sale of the vehicle in question and ordering its return to Santos and furthermore sentencing Sibug to pay Santos the sum of P15.00 a day from 10 April 1964 until the vehicle is returned to him, and P500.00 as attorney’s fees as well as the costs. This was subsequently amended on 5 December 1965, upon motion for reconsideration filed by Santos, to include the Philippine Surety as jointly and severally liable with Sibug, provided that the liability of the Philippine Surety shall in no case exceed P6,500.00. The Court further ordered Sibug to pay the Philippine Surety, the same sums it is ordered to pay under the decision.”

From the judgment in the Branch X case, Sibug appealed. Meanwhile, Santos moved for immediate execution. Sibug opposed it on the ground that Branch X had no jurisdiction over the Branch XVII case, and that Branch X had no power to interfere by injunction with the judgment of Branch XVII, a Court of concurrent or coordinate jurisdiction. On 13 November 1965, Branch X released an Order authorizing immediate execution on the theory that the Branch X case is “principally an action for the issuance of a writ of prohibition to forbid the Sheriff from selling at public auction property not belonging to the judgment creditor (sic) and there being no attempt in this case to interfere with the judgment or decree of another court of concurrent jurisdiction.”

Without waiting for the resolution of his Motion for Reconsideration, Sibug sought relief from the Appellate Court in a Petition for Certiorari with Preliminary Injunction. On 18 November 1965, the Court of Appeals enjoined the enforcement of the Branch X Decision and the Order of execution issued by said Branch.  On 28 September 1966, the Court of Appeals rendered the herein challenged Decision nullifying the judgment rendered in the Branch X Case and permanently restraining Branch X from taking cognizance of the Branch X case filed by Santos. Hence, the petition for review on certiorari filed by Santos on 14 December 1966.

The Supreme Court dismissed the petition for review on certiorari filed by Santos, with costs against Santos.

1.    Restraining order wrongfully issued by Branch XUnder the provisions of Section 17, Rule 39, the action taken by the Sheriff cannot be restrained by another Court or by another Branch of the same Court. The Sheriff has the right to continue with the public sale on his own responsibility, or he can desist from conducting the public sale unless the attaching creditor files a bond securing him against the third-party claim. But the decision to proceed or not with the public sale lies with him.

2.    Powers of the sheriff; Uy Piaoco vs. OsmenaAs said in Uy Piaoco vs. Osmeña, 9 Phil. 299, 307, “the powers of the Sheriff involve both discretional power and personal liability.”

3.    Discretional power and personal liability of the sheriff; Planas vs. MadrigalThe discretional power and personal liability have been further elucidated in Planas and Verdon vs. Madrigal & Co., et al., 94 Phil. 754, where it was held, “the duty of the Sheriff in connection with the execution and satisfaction of judgment of the court is governed by Rule 39 of the Rules of Court. Section 15 thereof provides for the procedure to be followed where the property levied on execution is claimed by a third person. If the third-party claim is sufficient, the sheriff, upon receiving it, is not bound to proceed with the levy of the property, unless he is given by the judgment creditor an indemnity bond against the claim (Mangaoang vs. Provincial Sheriff, 91 Phil., 368). Of course, the sheriff may proceed with the levy even without the indemnity bond, but in such case he will answer for any damages with his own personal funds (Waite vs. Peterson, et al., 8 Phil., 419; Alzua, et al. vs. Johnson, 21 Phil., 308; Consulta No. 341 de los abogados de Smith, Bell & Co., 48 Phil., 565). And the rule also provides that nothing therein contained shall prevent a third person from vindicating his claim to the property by any proper action (Sec. 15 of Rule 39).”

4.    Attaching creditor should furnish bond; If bond not filed, discretion comes in; When sheriff proceedsIt appears from the above that if the attaching creditor should furnish an adequate bond, the Sheriff has to proceed with the public auction. When such bond is not filed, then the Sheriff shall decide whether to proceed, or to desist from proceeding, with the public auction. If he decides to proceed, he will incur personal liability in favor of the successful third-party claimant.

5.    No court can interfere by injunction judgment of concurrent or coordinate jurisdiction, exceptions; Arabay vs. SalvadorThe Court, in Arabay, Inc. vs. Hon. Serafin Salvador, succinctly held that “generally, the rule, that no court has authority to interfere by injunction with the judgments or decrees of a concurrent or coordinate jurisdiction having equal power to grant the injunctive relief, is applied in cases, where no third-party claimant is involved, in order to prevent one court from nullifying the judgment or process of another court of the same rank or category, a power which devolves upon the proper appellate court. xxx  When the sheriff, acting beyond the bounds of his authority, seizes a stranger’s property, the writ of injunction, which is issued to stop the auction sale of that property, is not an interference with the writ of execution issued by another court because the writ of execution was improperly implemented by the sheriff. Under the writ, he could attach the property of the judgment debtor. He is not authorized to levy upon the property of the third-party claimant (Polaris Marketing Corporation vs. Plan, L-40666, January 22, 1976, 69 SCRA 93, 97; Manila Herald Publishing Co., Inc. vs. Ramos, 88 Phil. 94, 102).”

6.    Courts; Jurisdiction; Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction (Abiera vs. CA)“No court has power to interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction having equal power to grant the relief sought by injunction.”

7.    Courts; Jurisdiction; Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction; When applicable (Abiera vs. CA)“For this doctrine to apply, the injunction issued by one court must interfere with the judgment or decree issued by another court of equal or coordinate jurisdiction and the relief sought by such injunction must be one which could be granted by the court which rendered the judgment or issued the decree.”

8.    Courts; Jurisdiction; Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction; Exception; Judgment rendered by another court in favor of a third person who claims property levied upon on execution (Abiera vs. CA)“Under Section 17 of Rule 39 a third person who claims property levied upon on execution may vindicate such claim by action. A judgment rendered in his favor — declaring him to be the owner of the property — would not constitute interference with the powers or processes of the court which rendered the judgment to enforce which the execution was levied. If that be so — and it is so because the property, being that of a stranger, is not subject to levy — then an interlocutory order, such as injunction, upon a claim and prima facie showing of ownership by the claimant, cannot be considered as such interference either.”

9.    Execution; Where property levied on claimed by third person; ‘Action’ in section 17, Rule 39 of the Rules of Court, interpreted (Abiera vs. CA)“The right of a person who claims to be the owner of property levied upon on execution to file a third-party claim with the sheriff is not exclusive, and he may file an action to vindicate his claim even if the judgment creditor files an indemnity bond in favor of the sheriff to answer for any damages that may be suffered by the third party claimant. By ‘action’ as stated in the Rule, what is meant is a separate and independent action.”

10.    Santos has right to vindicate claim of ownership in a separate action; Interference with sheriff’s custody not an interference with another court’s order of attachmentIt was appropriate, as a matter of procedure, for Santos, as an ordinary third-party claimant, to vindicate his claim of ownership in a separate action under Section 17 of Rule 39. The judgment rendered in his favor by Branch X , declaring him to be the owner of the property, did not as a basic proposition, constitute interference with the powers or processes of Branch XVII  which rendered the judgment, to enforce which the jeepney was levied upon. And this is so because property belonging to a stranger is not ordinarily subject to levy. While it is true that the vehicle in question was in custodia legis, and should not be interfered with without the permission of the proper Court, the property must be one in which the defendant has proprietary interest. Where the Sheriff seizes a stranger’s property, the rule does not apply and interference with his custody is not interference with another Court’s Order of attachment.

11.    Judgment of Branch X legally unpalatableThe judgment in the Branch X case appears to be quite legally unpalatable. For instance, since the undertaking furnished to the Sheriff by the Philippine Surety did not become effective for the reason that the jeep was not sold, the public sale thereof having been restrained, there was no reason for promulgating judgment against the Philippine Surety. It has also been noted that the Complaint against Vidad was dismissed. Most important of all, the judgment against Sibug was inequitable. In asserting his rights of ownership to the vehicle in question, Santos candidly admitted his participation in the illegal and pernicious practice in the transportation business known as the kabit system.

12.    Section 20 (g) of the Public Service ActSection 20 (g) of the Public Service Act, then the applicable law, specifically provided that “it shall be unlawful for any public service or for the owner, lessee or operator thereof, without the approval and authorization of the Commission previously had — (g) to sell, alienate, mortgage, encumber or lease its property, franchise, certificates, privileges, or rights, or any part thereof.”

13.    Registered owner/operator and grantee of franchise directly and primarily liable for damages against SibugHerein, Santos had fictitiously sold the jeepney to Vidad, who had become the registered owner and operator of record at the time of the accident. It is true that Vidad had executed a re-sale to Santos, but the document was not registered. Although Santos, as the kabit, was the true owner as against Vidad, the latter, as the registered owner/operator and grantee of the franchise, is directly and primarily responsible and liable for the damages caused to Sibug, the injured party, as a consequence of the negligent or careless operation of the vehicle. This ruling is based on the principle that the operator of record is considered the operator of the vehicle in contemplation of

law as regards the public and third persons even if the vehicle involved in the accident had been sold to another where such sale had not been approved by the then Public Service Commission.

14.    Property levied not “stranger’s”Legally speaking, it was not a “stranger’s property” that was levied upon by the Sheriff pursuant to the judgment rendered by Branch XVII. The vehicle was, in fact, registered in the name of Vidad, one of the judgment debtors. And what is more, the aspect of public service, with its effects on the riding public, is involved. Whatever legal technicalities may be invoked, the Court finds the judgment of the Court of Appeals to be in consonance with justice. The ultimate conclusion of the appellate court, nullifying the Decision of Branch X, permanently enjoining the auction sale, should be upheld.

15.    Kabit cannot be allowed to defeat levy of his vehicleFor the same basic reason, as the vehicle here in question was registered in Vidad’s name, the levy on execution against said vehicle should be enforced so that the judgment in the Branch XVII case may be satisfied, notwithstanding the fact that the secret ownership of the vehicle belonged to another. Santos, as the kabit, should not be allowed to defeat the levy on his vehicle and to avoid his responsibilities as a kabit owner for he had led the public to believe that the vehicle belonged to Vidad. This is one way of curbing the pernicious kabit system that facilitates the commission of fraud against the travelling public.

16.    Proper remedy of Santos; Erezo caseAs indicated in the Erezo case, Santos’ remedy, as the real owner of the vehicle, is to go against Vidad, the actual operator who was responsible for the accident, for the recovery of whatever damages Santos may suffer by reason of the execution. In fact, if Santos, as the kabit, had been impleaded as a party defendant in the Branch XVII case, he should be held jointly and severally liable with Vidad and the driver for damages suffered by Sibug, as well as for exemplary damages.

Tue 28 Sep 2004

Transportation Law: Fisher vs. Yangco Steamship (GR 8095, 31 March 1915)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Fisher vs. Yangco Steamship (GR 8095, 31 March 1915)En Banc, Carson (J): 3 concur

Facts: The case has been decided by the Supreme Court on 5 November 1914, where the court sustained the demurrer on the ground that the original complaint did not set forth facts sufficient to constitute a cause of action. The case is before the Supreme Court once again upon a demurrer

interposed by the officials of the Philippine Government to an amended complaint filed after publication of the court’s decision sustaining the demurrer to the original complaint. The amended complaint filed on 14 November 1914, is substantially identical with the original complaint, except that it charges the officials, as of the date of the amended complaint, with the unlawful exercise of authority or intent to exercise unlawful authority which should be restrained, and substitutes the names of the officers holding the offices of Collector of Customs (JS Stanley, acting), Attorney-General (Ignacio Villamor) and prosecuting attorney of the city of Manila (WH Bishop) for those of the official holding those offices at the date of the filing of the original complaint.

The Supreme Court ordered that the complaint be dismissed after 20 days at the costs of FC Fisher, unless in the meantime it is amended so as to disclose a right upon the part of Fisher to invoke the original jurisdiction of this court without first proceeding in one of the CFIs.

1.    5 November 1914 Decision; Act 98 validThe validity of the statute (Act 98), which was attacked by counsel of Fisher was, when rightly construed, a valid and constitutional enactment.

2.    5 November 1914 Decision; Common carrier cannot decline to accept a particular class of goods (e.g. dynamite, gunpowder, etc.)Whatever may have been the rule at the common law, common carriers in this jurisdiction cannot lawfully decline to accept a particular class of goods for carriage, to the prejudice of the traffic in those goods, unless it appears that for some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary. Mere prejudice or whim will not suffice. The grounds of the discrimination must be substantial ones, such as will justify the courts in holding the discrimination to have been reasonable and necessary under all the circumstances of the case. The traffic in dynamite, gunpowder and other explosives is vitally essential to the material and general welfare of the people of these Islands. If dynamite, gunpowder and other explosives are to continue in general use throughout the Philippines, they must be transported by water from port to port in the various islands which make up the Archipelago. The refusal by a particular vessel, engaged as a common carrier of merchandise in the coastwise trade of the Philippine Islands, to accept any or all of these explosives for carriage would constitute a violation of the prohibitions against discriminations penalized under the statute unless it can be shown by affirmative evidence that there is so real and substantial a danger of disaster necessarily involved in the carriage of any or all of these articles of merchandise as to render such refusal a due or a necessary or a reasonable exercise of prudence and discretion on the part of the ship owner.

3.    5 November 1914 Decision; Allegations of complaint does not constitute a cause of actionTherein, the allegations of the complaint, which in substance alleged merely that the public officials were coercing the steamship company to carry explosives upon some of their vessels, under authority of, and in reliance upon the provisions of the Act, did not set forth facts constituting a cause of action; or in other words, that the allegations of the complaint even if true, would not sustain a finding that the public officials were acting “without or in excess of their jurisdiction” and lawful authority in the premises.

4.    Allegations do not pose question as to validity of statute, but on the valid exercise of authority by the officialsThe allegations raise no question as to the validity or constitutionality of any statute; that the real question which plaintiff seeks to submit to this court in original prohibition proceedings is whether the respondent officials of the Government are correctly exercising the discretion and authority with which they have been clothed; and that his contention in the amended complaint is not, as it was in the original complaint, that these officials are acting without authority, and in reliance upon an invalid and unconstitutional statute, but rather that they are exercising their authority improvidently, unwisely or mistakenly.

5.    Prohibition; Sections 226 and 516 of Code of Civil ProcedureUnder the provisions of sections 226 and 516 of the Code of Civil Procedure jurisdiction in prohibition proceedings is conferred upon the courts when the complaint alleges “the proceedings of any inferior tribunal, corporation, board, or person, whether exercising functions judicial or ministerial, were without or in excess of the jurisdiction of such tribunal, corporation, board or person.” Herein, it is manifest that the allegations of the amended complaint, even if true, will not sustain the issuance of a writ of prohibition without further amendment unless they be construed to be in effect a charge that the officials are abusing the discretion conferred upon them in the exercise of their authority in such manner that the acts complained of should be held to be without or in excess of their jurisdiction.

6.    Doctrine in Ex Parte Young cannot be invoked to support right of actionIt may well be doubted whether the doctrine of the case Ex parte Young can properly be invoked in support of a right of action predicated upon such premises; so also, since the acts complained of in the amended complaint are alleged to have been done at a date subsequent to the enactment of the statutes creating the Board of Public Utility Commissioners, it may well be doubted whether the courts should entertain prohibition proceedings seeking to restrain alleged abuses of discretion on the part of officers and officials of the Government, and of public service corporations with regard to the rules under which such corporations are operated, until and unless redress for the alleged wrong has been sought at the hands of the Board.

7.    Supreme Court clothed with original jurisdiction in prohibition proceedings, but jurisdiction concurrent with CFIAlthough the Supreme Court is clothed with original jurisdiction in prohibition proceedings (section 516, Act 190), this jurisdiction is concurrent with the original jurisdiction of the various Courts of First Instance throughout the Islands, except in cases where the writ runs to restrain those courts themselves, when of course it is exclusive.

8.    Intention of legislator does not require Supreme Court to assume original jurisdiction in all casesIt could not have been the intention of the legislator to require the Supreme Court to assume original jurisdiction in all cases wherein the plaintiff elects to invoke it. Such a practice might result in overwhelming the court with the duty of entertaining and deciding original proceedings which from their nature could much better be adjudicated in the trial courts; and in unnecessarily diverting the time and attention of the court from its important appellate functions to the settlement of controversies of no especial interest to the public at large, in the course of which it

might become necessary to take testimony and to make findings touching complicated and hotly contested issues of fact.

9.    Court may decline to permit its original jurisdiction to be involved in prohibition proceedings; Spelling, on Injunctions and Other Extraordinary RemediesUnless special reasons appear therefor, the Supreme Court should decline to permit its original jurisdiction to be involved in prohibition proceedings, and this especially when the adjudication of the issues raised involves the taking of evidence and the making of findings touching controverted facts, which, as a rule, can be done so much better in the first instance by a trial court than an appellate court organized as is the Supreme Court. Spelling, on Injunctions and Other Extraordinary Remedies (vol. 2, p. 1493), in discussing the cases in which the appellate courts in the United States permit their original jurisdiction to be invoked where that jurisdiction is concurrent with that of some inferior court, says “Of the plan of concurrent jurisdiction West Virginia may be taken as an illustration. The Supreme Court of Appeals of that State has concurrent original jurisdiction with the circuit courts in cases of prohibition, but by a rule adopted by the former court it will not take such original jurisdiction unless special reasons appear therefor.”

10.    Assumption of court of jurisdiction in original complaint, denial of assumption of jurisdiction in amended complaintThe amended complaint presents for adjudication in original prohibition proceedings in the Supreme Court questions of a wholly different character from those submitted in the original complaint. While the Court deemed it proper to assume jurisdiction to adjudicate and decide the issues raised by the rulings on the original complaint, involving as they did a question as to the validity of a public statute of vital interest to shippers and ship owners generally as also to the public at large, and presenting for determination no difficult or complicated questions of fact; the Court declined to take jurisdiction of the matters relied upon in the amended complaint in support of plaintiff’s prayer for the writ.

11.    Action should be brought in CFIThe question of the construction and validity of the statute having been disposed of in the Court’s ruling on the demurrer to the original complaint, it must be apparent that if the allegations of the amended complaint are sufficient to maintain the plaintiff’s action for a writ of prohibition, a question as to which the Court expressly reserved its opinion, the action should be brought in one of the Courts of First Instance.

Tue 28 Sep 2004

Transportation Law: Everett Steamship Corp. vs. CA (GR 122494, 8 October 1998)

Posted by Berne Guerrero under (a) oas , haystacksNo Comments

Everett Steamship Corp. vs. CA  (GR 122494, 8 October 1998)Second Division, Martinez (J): 4 concur

Facts: Hernandez Trading Co. Inc. imported three crates of bus spare parts marked as MARCO C/No. 12, MARCO C/No. 13 and MARCO C/No. 14, from its supplier, 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 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 Everett Steamship in its letter of 13 January 1992 addressed to Hernandez Trading, which thereafter made a formal claim upon petitioner for the value of the lost cargo amounting to Y 1,552,500.00 Yen, the amount shown in an Invoice MTM-941, dated 14 November 1991. However, Everett Steamship offered to pay Y100,000.00, the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of Everett Steamship.

Hernandez Trading rejected the offer and thereafter instituted a suit for collection (Civil Case C-15532), against Everett Shipping before the RTC of Caloocan City (Branch 126). At the pre-trial conference, both parties manifested that they have no testimonial evidence to offer and agreed instead to file their respective memoranda. On 16 July 1993, the trial court rendered judgment in favor of Hernandez Trading, ordering Everett Steamship 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 attorney’s fees; and (d) to pay the cost of the suit.

On appeal, and on 14 June 1995,  the Court of Appeals deleted the award of attorney’s fees but affirmed the trial court’s findings with the additional observation that Hernandez Trading can not be bound by the terms and conditions of the bill of lading because it was not privy to the contract of carriage.  Everett Steamship filed a petition for review.

The Supreme Court reversed and set aside the decision of the Court of Appeals.

1.    Limited liability clause sanctioned by lawA stipulation in the bill of lading limiting the common carrier’s 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.

2.    Article 1749 NCCArticle 1749 of the Civil Code provides that “A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.”

3.    Article 1750 NCCArticle 1750 of the Civil Code provides that “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.”

4.    Limited liability clause upheld by Court; Sea Land vs. IACSuch limited-liability clause has also been consistently upheld by this Court in a number of cases. Thus, in Sea Land Service, Inc. vs. IAC, the Court ruled that “It seems clear that even if said section 4 (5) of the Carriage of Goods by Sea Act did not exist, the validity and binding effect of the liability limitation clause in the bill of lading here are nevertheless fully sustainable on the basis alone of the cited Civil Code Provisions. That said stipulation is just and reasonable is arguable from the fact that it echoes Article 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the justness and fairness of the law itself, and this the private respondent does not pretend to do. But over and above that consideration, the just and reasonable character of such stipulation is implicit in it giving the shipper or owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient of declaring the nature and value of the shipment in the bill of lading . . .”

5.    Conditions for the validity of limited liability clausePursuant to the provisions of law, it is required that the stipulation limiting the common carrier’s liability for loss must be “reasonable and just under the circumstances, and has been freely and fairly agreed upon.”

6.    Contents of bill of lading (clause 18)The bill of lading specifically provides, among others, “(18) All claims for which the carrier may be liable shall be adjusted and settled on the basis of the shipper’s 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.”7.    Stipulations are reasonable and justThe stipulations are reasonable and just. In the bill of lading, the carrier made it clear that its liability would only be up to Y100,000.00. 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.

8.    Contracts of adhesion not invalid per se; PAL vs. CAAs ruled in PAL, Inc. vs. Court of Appeals, the “jurisprudence on the matter reveals the consistent holding of the court that contracts of adhesion are not invalid per se and that it has on numerous occasions upheld the binding effect thereof.”

9.    Contracts of adhesion; Consent by adheringIn Philippine American General Insurance Co., Inc. vs. Sweet Lines, Inc. the Court held that “Ong Yiu vs. Court of Appeals, et al., instructs us that ‘contracts of adhesion wherein one party imposes a ready-made form of contract on the other . . . are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres he gives his

consent. . . Not even an allegation of ignorance of a party excuses non-compliance with the contractual stipulations since the responsibility for ensuring full comprehension of the provisions of a contract of carriage devolves not on the carrier but on the owner, shipper, or consignee as the case may be.”

10.    Contract of adhesion; Ong Yiu vs. CAAs further explained in Ong Yiu vs. Court of Appeals, stipulations in contracts of adhesion are valid and binding.  While it may be true that the plane ticket was not signed. . ., he is nevertheless bound by the provisions thereof. Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation. It is what is known as a contract of ”adhesion,” in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. . . ., a contract limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against his own negligence.

11.    Greater vigilance required of courts when dealing with contracts of adhesion; Article 24 NCCGreater 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,” such as the bill of lading. The stringent requirement which the courts are enjoined to observe is in recognition of Article 24 of the Civil Code which mandates that “in all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.”

12.    Shipper extensively engaged in trading business, cannot be said to be ignorant of transactions as to shipmentThe shipper, Maruman Trading, 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 Everett Steamship’s vessel. In fact, it was not even impleaded in the case.

13.    Consignee may be bound by contract of carriage although not a signatory thereto (Agency); Sea Land vs. IACIn Sea-Land Service, Inc. vs. IAC, the Court 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. 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. . . .  . . . the right of a party 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, such as the delivery of the goods or cargo shipped.

14.    Consignee may be bound by contract of carriage although not a signatory thereto and even if stipulations in fine print; Phoenix Assurance Co. vs. MacondrayIn 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 the 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.

15.    Act of consignee that effected acceptance of provisions of contract of carriageWhen Hernandez Trading formally claimed reimbursement for the missing goods from Everett Steamship and subsequently filed a case against the latter based on the very same bill of lading, the former accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Thus, Hernandez Trading cannot now reject or disregard the carrier’s limited liability stipulation in the bill of lading. In other words, Hernandez Trading is bound by the whole stipulations in the bill of lading and must respect the same.

16.    Bill of lading proves carrier unaware of contents, quantity and value of cratesThe bill of lading confirms the fact that Everett Steamship that it does not know of the contents, quantity and value of “the shipment which consisted of three pre-packed crates described in Bill of Lading NGO-53MN (Cases Spare Parts). To defeat the carrier’s limited liability, Clause 18 of the bill of lading requires that the shipper should have declared in writing a higher valuation of its goods before receipt thereof by the carrier and insert the said declaration in the bill of lading, with the extra freight paid. These requirements in the bill of lading were never complied with by the shipper, hence, the liability of the carrier under the limited liability clause stands. The commercial Invoice MTM-941 does not in itself sufficiently and convincingly show that Everett Steamship has knowledge of the value of the cargo as contended by Hernandez Trading.

Tue 28 Sep 2004

Transportation Law: Gatchalian vs. Delim (GR 56487, 21 October 1991)

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Gatchalian vs. Delim (GR 56487, 21 October 1991)Third Division, Feliciano (J): 4 concur

Facts: At noon time on 11 July 1973, Reynalda Gatchalian boarded, as a paying passenger, respondent’s “Thames” mini-bus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. On the way, while the bus was running along the highway in Barrio Payocpoc, Bauang, La Union, “a snapping sound” was suddenly heard at one part of the bus and, shortly thereafter, the vehicle bumped a cement flower pot on the side of the road, went off the road, turned turtle and fell into a ditch. Several passengers, including Gatchalian, were injured. They were promptly taken to Bethany Hospital at San Fernando, La Union, for medical treatment. Upon medical examination, Gatchalian was found to have sustained physical injuries on the leg, arm and forehead, specifically described as follows: lacerated wound, forehead; abrasion, elbow, left; abrasion, knee, left; abrasion, lateral surface, leg, left.  On 14 July 1973, while injured passengers were confined in the hospital, Mrs. Adela Delim, wife of Arsenio Delim, visited them and later paid for their hospitalization and medical expenses. She also gave Gatchalian P12.00 with which to pay her transportation expense in going home from the hospital. However, before Mrs. Delim left, she had the injured passengers, including Gatchalian, sign an already prepared Joint Affidavit which stated, among other things, “that we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the extent of helping us to be treated upon our injuries.”

Notwithstanding the document, Gatchalian filed with the then Court of First Instance of La Union an action extra contractu to recover compensatory and moral damages. She alleged in the complaint that her injuries sustained from the vehicular mishap had left her with a conspicuous white scar measuring 1 by 1/2 inches on the forehead, generating mental suffering and an inferiority complex on her part; and that as a result, she had to retire in seclusion and stay away from her friends. She also alleged that the scar diminished her facial beauty and deprived her of opportunities for employment. She prayed for an award of: P10,000.00 for loss of employment and other opportunities; P10,000.00 for the cost of plastic surgery for removal of the scar on her forehead; P30,000.00 for moral damages; and P1,000.00 as attorney’s fees.   After trial, the trial court dismissed the complaint upon the ground that when Gatchalian signed the Joint Affidavit, she relinquished any right of action (whether criminal or civil) that she may have had against Delim and the driver of the mini-bus.

On appeal by petitioner, the Court of Appeals reversed the trial court’s conclusion that there had been a valid waiver, but affirmed the dismissal of the case by denying Gatchalian’s claim for damages. Hence, the petition for review.

The Supreme Court reversed and set aside the Decision of the Court of Appeals dated 24 October 1980, as well as the decision of the then Court of First Instance of La Union dated 4 December 1975; and ordered Delim to pay Gatchalian (1) P15,000.00 as actual or compensatory damages to cover the cost of plastic surgery for the removal of the scar on petitioner’s forehead; (2) P30,000.00 as moral damages; and (3) P1,000.00 as attorney’s fees, the aggregate amount to bear interest at the legal rate of 6% per annum counting from the promulgation of this decision until full payment thereof Costs against Delim.

1.    No valid waiver; Standards provided in Yepes vs. Samar ExpressNo valid waiver of her cause of action had been made by Gatchalian. The relevant language of the Joint Affidavit provides that “we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the extent of helping us to be treated upon our injuries.” A waiver, to be valid and effective, must in the first place be couched in clear and unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which legally pertains to him. A waiver may not casually be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent to abandon a right vested in such person. The degree of explicitness which the Supreme Court has required in purported waivers is illustrated in Yepes and Susaya v. Samar Express Transit. Therein, expressing a ‘desire’ to make the waiver is not the same as making an actual waiver of their right. A waiver must be clear and unequivocal.

2.    Circumstances in signing of affidavit considered; Gatchalian may not understood fully the import of the affidavit signedMoreover, the circumstances under which the Joint Affidavit was signed by Gatchalian need to be considered. Petitioner testified that she was still reeling from the effects of the vehicular accident, having been in the hospital for only 3 days, when the purported waiver in the form of the Joint Affidavit was presented to her for signing; that while reading the same, she experienced dizziness but that, seeing the other passengers who had also suffered injuries sign the document, she too signed without bothering to read the Joint Affidavit in its entirety. Considering these circumstances, there appears substantial doubt whether Gatchalian understood fully the import of the Joint Affidavit (prepared by or at the instance of Delim) she signed and whether she actually intended thereby to waive any right of action against Delim.

3.    Waiver must not be contrary to law, etc.What is involved here is the liability of a common carrier for injuries sustained by passengers in respect of whose safety a common carrier must exercise extraordinary diligence, any such purported waiver must be construed most strictly against the common carrier. For a waiver to be valid and effective, it must not be contrary to law, morals, public policy or good customs. To uphold a supposed waiver of any right to claim damages by an injured passenger, under the present and similar circumstances, would be to dilute and weaken the standard of extraordinary diligence exacted by the law from common carriers and hence to render that standard unenforceable. Such a purported waiver is offensive to public policy.

4.    Duty of exercise extraordinary diligence; Presumption of negligence; Court need not make express finding of fault; Burden of proofA duty to exercise extraordinary diligence in protecting the safety of its passengers is imposed upon a common carrier. In case of death or injuries to passengers, a statutory presumption arises that the common carrier was at fault or had acted negligently “unless it proves that it [had] observed extraordinary diligence as prescribed in Articles 1733 and 1755.”  In fact, because of this statutory presumption, it has been held that a court need not even make an express finding of fault or negligence on the part of the common carrier in order to hold it liable. To overcome this presumption, the common carrier must show to the court that it had exercised extraordinary diligence to present the injuries.

5.    Standard of diligenceThe standard of extraordinary diligence imposed upon common carriers is considerably more demanding than the standard of ordinary diligence, i.e., the diligence of a good paterfamilias established in respect of the ordinary relations between members of society. A common carrier is bound to carry its passengers safely “as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard to all the circumstances”.

6.    Carrier did not prove he had exercised extraordinary diligence to prevent mishapThe records before the Court are bereft of any evidence showing that Delim had exercised the extraordinary diligence required by law. Curiously, Delim did not even attempt, during the trial before the court a quo, to prove that he had indeed exercised the requisite extraordinary diligence. Delim did try to exculpate himself from liability by alleging that the mishap was the result of  force majeure. But allegation is not proof and here again, Delim utterly failed to substantiate his defense of  force majeure.

7.    Exemption upon ground of force majeureTo exempt a common carrier from liability for death or physical injuries to passengers upon the ground of  force majeure, the carrier must clearly show not only that the efficient cause of the casualty was entirely independent of the human will, but also that it was impossible to avoid. Any participation by the common carrier in the occurrence of the injury will defeat the defense of  force majeure.

8.    Caso fortuito defined, examples; Servando vs. Philippine Steam NavigationIn Servando v. Philippine Steam Navigation Company, the Court held  that “where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is exempt from liability for non-performance. The Partidas, the antecedent of Article 1174 of the Civil Code, defines “caso fortuito” as an event that takes place by accident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers.

9.    Characteristics of Caso fortuito; Servando vs. Philippine Steam NavigationIn its dissertation on the phrase “caso fortuito” the Encyclopedia Juridica Española says: “In legal sense and, consequently, also in relation to contracts, a ‘caso fortuito’ presents the following essential characteristics: (1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) It must be impossible to foresee the event which constitutes the ‘caso fortuito’, or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill ms obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor.”

10.    “Snapping sound”; Bus not checked physically and mechanicallyThe record yields affirmative evidence of fault or negligence on the part of the common carrier. Shortly before the vehicle went off the road and into a ditch, a “snapping sound” was suddenly heard at one part of the bus. One of the passengers, an old woman, cried out, “What happened?” (”Apay addan samet nadadaelen?”). The driver replied, nonchalantly, “That is only normal” (”Ugali ti makina dayta”). The driver did not stop to check if anything had gone wrong with the

bus. Moreover, the driver’s reply necessarily indicated that the same “snapping sound” had been heard in the bus on previous occasions. This could only mean that the bus had not been checked physically or mechanically to determine what was causing the “snapping sound” which had occurred so frequently that the driver had gotten accustomed to it. Such a sound is obviously alien to a motor vehicle in good operating condition, and even a modicum of concern for life and limb of passengers dictated that the bus be checked and repaired. The obvious continued failure of Delim to look after the roadworthiness and safety of the bus, coupled with the driver’s refusal or neglect to stop the mini-bus after he had heard once again the “snapping sound” and the cry of alarm from one of the passengers, constituted wanton disregard of the physical safety of the passengers, and hence gross negligence on the part of Delim and his driver.

11.    No award for damage on the basis of loss of earning capacityHerein, at the time of the accident, Gatchalian was no longer employed in a public school since, being a casual employee and not a Civil Service eligible, she had been laid off her employment as a substitute teacher was occasional and episodic, contingent upon the availability of vacancies for substitute teachers. In view of her employment status as such, she could not be said to have in fact lost any employment after and by reason of the accident. Gatchalian has not submitted any basis for overturning the finding of fact of the Court of Appeals, and she may not be awarded damages on the basis of speculation or conjecture.

12.    Cost of plastic surgery for removal of scar recoverable; Amount of claim not unreasonableA person is entitled to the physical integrity of his or her body; if that integrity is violated or diminished, actual injury is suffered for which actual or compensatory damages are due and assessable. In Araneta, et al. vs. Areglado, et al., the Court awarded actual or compensatory damages for, among other things, the surgical removal of the scar on the face of a young boy who had been injured in a vehicular collision.  Herein, Gatchalian is entitled to be placed as nearly as possible in the condition that she was before the mishap. A scar, especially one on the face of the woman, resulting from the infliction of injury upon her, is a violation of bodily integrity, giving raise to a legitimate claim for restoration to her conditio ante. If the scar is relatively small and does not grievously disfigure the victim, the cost of surgery may be expected to be correspondingly modest.  Gatchalian estimated that the cost of having her scar surgically removed was somewhere between P10,000.00 to P15,000.00. Upon the other hand, Dr. Fe Tayao Lasam, a witness presented as an expert by Gatchalian, testified that the cost would probably be between P5,000.00 to P10,000.00. In view of this testimony, and the fact that a considerable amount of time has lapsed since the mishap in 1973 which may be expected to increase not only the cost but also very probably the difficulty of removing the scar, the Court considered that the amount of P15,000.00 to cover the cost of such plastic surgery is not unreasonable.

13.    Award of moral damages due; Claim of attorney’s fees grantedMoral damages may be awarded where gross negligence on the part of the common carrier is shown. Since the common carrier and his driver had been grossly negligent in connection with the bus mishap which had injured Gatchalian and other passengers, and recalling the aggressive maneuvers of Delim, through his wife, to get the victims to waive their right to recover damages even as they were still hospitalized for their injuries, Gatchalian must be held entitled to such moral damages. Considering the extent of pain and anxiety which Gatchalian must have suffered

as a result of her physical injuries including the permanent scar on her forehead, the Court believes that the amount of P30,000.00 would be a reasonable award. Gatchalian’s claim for P1,000.00 as attorney’s fees is in fact even more modest.