1

LAW ON TRANSPORTATION AND PUBLIC UTILITIES Contract of Transportation person obligates himself to transport persons or property from one place to another for a consideration. 2 KINDS: 1. CARRIAGE OF PASSENGERS Parties: common carrier & passenger (carried gratuitously or not) Passenger one who travels in a public conveyance by virtue of contract, express or implied, with the carrier as to the payment of fare or that which is accepted as an equivalent thereof Perfection: 2 types of contracts of carriage of PASSENGERS: > Contract to carry (agreement to carry the passenger at some future date) consensual contract and perfected by mere consent * AIRCRAFT perfected even without issuance of ticket as long as there was already meeting of minds with respect to the subject matter and consideration > Contract of Carriage Real contract; not until the facilities of the carrier are actually used can the carrier be said to have assumed the obligation of the carrier; perfected by actual use. * AIRCRAFT perfected if it was established that the passenger had checked in at the departure counter, passed through customs and immigration, boarded the shuttle bus and proceeded to the ramp of the aircraft and baggage already loaded to the aircraft. * Public Utility Bus or Jeepneys or Street Cars once it stops it is in effect making a continuous offer to riders; perfected when passenger is already attempting to board the vehicle * TRAINS perfected when a person:

A. purchased a ticket/ possess sufficient fare with which to pay for his passage B. presented himself at the proper place and in a proper manner to be transported C. has a bona fide intention to use facilities of the carrier

2. CARRIAGE OF GOODS Parties: shipper & carrier Shipper the person who delivers the goods to the carrier for transportation; pays the consideration or on whose behalf payment is made Consignee person to whom the goods are to be delivered. May be the shipper himself or a third person who is not actually a party to the contract Perfection: > Contract to carry goods consensual > Contract of carriage - act of delivery of goods (goods are unconditionally placed in the possession and control of the carrier and upon their receipt by the carrier for transportation) CARRIER: Common carriers (CC) (1732)

Persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or

both, by land, water, or air, for compensation, offering their services to the public. (NOT the means of transportation)

One that holds itself out as ready to engage in the transportation of goods for hire as a public employment and not as a casual occupation.

Tests for determining WON a party is a common carrier of goods:

1. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for persons generally as a business and not as a casual occupation.

2. He must undertake to carry well of the kind to which his business is confined.

3. He must undertake to carry by the method by which his business is conducted and over his established roads.

4. Transportation must be for hire. Characteristics of Common carriers (CC):

no distinction between one whose principal business is the transportation of persons/goods and one who does such as an ancillary business (sideline)

no distinction between regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled business

still a CC even if services offered to a limited clientele (between the general public and a narrow segment of the general population)

Still considered a CC even if he did not secure a Certificate of Public Convenience

No distinction as to the means of transporting, as long as it is by land, water or air

The Civil Code does not provide that the transportation should be by motor vehicle

Still a CC even if he has no fixed and publicly know route, maintains no terminals, and issues no tickets

pipeline operators are CCs not necessarily motor vehicles (Case: First Philippine Industrial Corp. vs. CA)

Case: Jose Mendoza vs. Philippine Airlines Inc.

- The test of whether one is a common carrier by air is whether he holds out that he will carry for hire, so long as he has room, goods of everyone bringing goods to him for carriage, not whether he is carrying as a public employment or whether he carries to a fixed place

CHARTER PARTY: - Contract by which an entire ship or some principal part

thereof is let by the owner to another person for a specified time or use.

Q: What is the effect of charter party. A: It may transform a common carrier into a private carrier. However, it must be a bareboat or demise charter where the charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or service stipulated 2 types:

1. Contract of Affreightment - involves the use of shipping space on vessels leased

by the owner in part or as a whole, to carry goods for another

- CC = observe extraordinary diligence; in case of loss, deterioration or destruction of goods of goods, CCs

2

are presumed to be at fault or have acted negligently

- 2 types i. Time charter: vessel is leased to the

charterer for a fixed period of time ii. Voyage charter: ship is leased for a single

voyage

2. Charter by demise/ Bareboat Charter - Whole vessel is let to the charterer with a transfer

to him of its entire command and possession and consequent control over its navigation including the master and the crew who are his servants.

- charter includes both vessel and crewCC becomes private carrier (PC) insofar as that particular voyage is concerned

- if it is already a PC- ordinary diligence in the carriage of goods will suffice

- PC = undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee; NO presumption of negligence applies whosoever alleges damage to or deterioration of the goods carried has the burden of proving that the cause was the negligence of the carrier.

Distinction between Common Carriers and Private Carriers

COMMON CARRIER PRIVATE CARRIER

Extraordinary diligence in the vigilance over the goods they carry

Ordinary diligence in the carriage of goods will suffice

In case of loss, destruction, or deterioration of goods, they are presumed to have been at fault or to have acted negligently; burden of proving otherwise rests on them

No such presumption applies to private carriers, for whosoever alleges damage to or deterioration n of the goods carried has the onus of proving that the cause was the negligence of the carrier

Cannot stipulate that it is exempt from liability for the negligence of its agents or employees

May validly enter into such stipulation

Factors to be considered whether a carrier is common/private:

Law applicable o Common Civil Code o Private contract

Diligence required o Common extraordinary diligence o Private diligence of a good father of a family

Burden of proof in relation to negligence o Common the carrier o Private on the party having a claim against the

carrier Case: Planters Products, Inc. vs. CA

- It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when the charter includes both the vessel and its crew that a common carrier becomes private

True Test of Common Carrier Is the carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportation service for a fee Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public Case: Estela Crisostomo vs. CA and Caravan Travel and Tours International

- By definition, a contract of carriage is one whereby a certain person or association of persons obligate themselves to transport person, thing or new from one place to another for a fixed price

- It is obvious from the above definition that respondent is not an entity engaged in the business of transporting either passengers or goods and is therefore, neither a private nor a common carrier. Its covenant with its customers is simply to make travel arrangements in their behalf.

- It is in this sense that the contract between the parties in this case was an ordinary one for services and not one of carriage; it is thus not bound under the law to observe extraordinary diligence in the performance of its obligation.

COMMON CARRIERS vs. TOWAGE, ARRASTRE AND STEVEDORING Towage

- A vessel is hired to bring another vessel to another place - e.g. a tugboat may be hired by CC to bring the vessel to a port

(operator of tugboat not CC) - in maritime law: towing for the mere purpose of expediting

her voyage without reference to any circumstances of danger Arrastre

- Arrastre operators functions has nothing to do with the trade and business of navigation nor to the use or operation of vessels

- Services are not maritime - Functions of Arrastre operator:

o Receive, handle, care for, and deliver all merchandise imported and exported, upon or passing over Government-owned wharves and piers in the port

o Record or check all merchandise which may be delivered to said port ant shipside

o Furnish light, and water services and other incidental service in order to undertake its Arrastre service

- Such service is in face, no different from those of a depositary or warehouseman

Stevedoring

- Involves the loading and unloading of coastwise vessels calling at the port.

>>> Common carriers are public utilities, impressed with public interest and concern subject to regulation by the state. GOVERNING LAWS

- read summary of rules on page 40 of book

Article 1766 (Civil Code). In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.

NATURE OF BUSINESS - Common Carriers exercise a sort of public office

3

- Consequently, common carriers are subject to regulation by the State

REGISTERED OWNER RULE/REGISTRATION LAWS

- Governed by the Land Transportation and Traffic Code and administered by the Land Transportation Office

- The registered owner of a vehicle is liable from any damage caused by the negligent operation of the vehicle although the same was already sold or conveyed to another person at the time of the accident.

- The registered owner is liable to the injured party subject to his right of recourse against the transferee or the buyer

- Applicable in case of lease - Registered owner not liable if vehicle was taken form him

without his knowledge and consent. Q: what is the purpose of such law. A: The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual the registered owner. KABIT SYSTEM - The registered owner rule is applicable to people involved on a

kabit system - arrangement whereby a person who has been granted a certificate

of public convenience allows other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the earnings --- contrary to public policy (thus VOID and INEXISTENT)

- parties to the kabit system cannot invoke the same as against each other either to enforce their illegal agreement or to invoke the same to escape liability --- pari delicto rule

- having entered into an illegal contract, neither can seek relief from the courts and each must bear the consequences of his acts

- Also applicable to aircrafts and vessels basic rule that no person can operate a common carrier without securing a certificate of public convenience and necessity.

Case: Dizon vs. Octavio

- the primary factors considered in the granting of a certificate of public convenience for the business of public transportation is the financial capacity of the holder of the license, so that liabilities arising from accidents may be duly compensated

- Thus, for the safety of passengers and the public who may have been wronged and deceived through the baneful kabit system, the registered owner of the vehicle is not allowed to prove that another person has become the owner so that he may be thereby relived of responsibility

CHAPTER 2 OBLIGATIONS OF THE PARTIES

I. Obligations of the carrier

A. DUTY TO ACCEPT - A common carrier granted a certificate of public convenience

is duty bound to accept passengers or cargo without any discrimination.

- It is illegal for domestic ship operators to refuse to accept or carry passengers or cargo without just cause. (Section 16, RA 9295)

Note: In air transportation, passengers with confirmed tickets who were not allowed to board are provided with denied boarding compensation and priority boarding rules. No compensation for refusal if it is because of:

1. government requisition of the space 2. substitution of equipment of lesser capacity when required by

operational and or safety and/or other causes beyond the control of the carrier, and

3. If arrangements have been made for the passenger to take another flight in a comparable air transportation which will arrive not later than three hours after the time of flight on which the confirmed space is held is supposed to arrive. (Civil Aeronautics Board Economic Regulation)

Grounds for Valid Refusal to Accept Goods

- GR: common carriers cannot lawfully decline to accept a particular class of goods

- EXC: it appears that for some sufficient reason the discrimination against the traffic in such goods is reasonable and necessary:

i. dangerous objects or substances including dynamites and other explosives

ii. goods are unfit for transportation iii. acceptance would result in overloading iv. contrabands or illegal goods v. goods injurious to health

vi. goods will be exposed to untoward danger like flood, capture by enemies and the like

vii. goods like livestock will be exposed to diseases viii. strike

ix. failure to tender goods on time

Case: Fisher v. Yangco - factors in determining reasonable discrimination include:

i. suitability to the vessel for the transportation of such products;

ii. reasonable possibility of danger or disaster resulting from their transportation in the form and under the conditions in which they are offered for carriage; and

iii. The general nature of the business done by the carrier. (1) Hazardous and Dangerous Substances

- Carrier not properly equipped to transport dangerous chemicals or explosives may validly refuse to accept the same for transport.

- Those which are not authorized by the Maritime Industry Authority to carry such goods may also validly refuse the same for transport.

- There must be a Special Permit to Carry from the MARINA. (accept only if the said cargoes are covered by the necessary clearance from appropriate government agencies)

(2) Unfit for Transport

- Carriers may refuse to accept goods that are unfit for transportation

- These goods may by nature be unfit for transportation or are unfit because of improper packaging or defect in their containers.

- However, carriers may accept the goods and limit its liability by stipulation.

If by reason of well-founded suspicion of falsity in the declaration as to the contents of the package carrier should decide to examine and investigate it in the presence of witnesses, with the shipper and consignee in attendance. If declaration of shipper is true, expenses

4

occasioned by the examination and of repacking the packages shall be for the account of the carrier Even if the cause of the loss, destruction or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.

B. DUTY TO DELIVER THE GOODS

Time of Delivery - Where a carrier has made an express contract, the goods must be

delivered within a specified time otherwise he is liable for any delay (indemnity for damages).

- In the absence of any agreement, goods must be delivered at its destination within a reasonable time (depending on the attending circumstances, nature of the goods; expected date of arrival in the BOL may be considered).

- In the absence of a special contract, a carrier is NOT an insurer against delay in transportation of goods

Consequences/Effects of Delay - Excusable delays in carriage suspend, but do not generally

terminate, the contract of carriage; when the cause is removed, the master must proceed with the voyage and make delivery.

- During the detention or delay, vessel continues to be liable as a common carrier, not a warehouseman, and remains duty bound to exercise extraordinary diligence.

Article 1740 (NCC). If common carrier negligently delays in transporting the goods, a natural disaster shall not free it from responsibility. Article 1747 (NCC). If common carrier delays , without just cause, in transporting the goods or changes the stipulated or usual route, the contract limiting its liability cannot be availed of in case of the loss, destruction, or deterioration of the goods. Note: read page 72 of book for other provisions. (1) Abandonment

- In case of delay through the fault of the carrier, the consignee may refuse to accept the goods or may leave the goods in the hands of the carrier. It must be communicated to the carrier in writing.

- This right must be exercised between the time of delay and before the arrival of the goods at its destination.

- The carrier must pay the full value of the goods as if they had been lost or mislaid.

Note: If abandonment is not made, indemnification for the losses and damages by reason of the delay cannot exceed the current price which the goods would have on the day and at the place they are to be delivered. The value of the goods which the carrier must pay in case of loss or misplacement shall be that what is declared in the bill of lading. Consignee must not defer the payment of the expenses and transportation charges of the goods otherwise carrier may demand the judicial sale of the goods. Case: Magellan Mfg. Marketing Corp. vs. CA

- Abandonment may also be made by virtue of stipulation or agreement between parties

(2) Rights of Passengers in Case of Delay

- As to the rights and duties of the parties strictly arising out of delay, the Civil Code is silent. However, the Code of Commerce provides for such a situation:

ARTICLE 698. 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 of 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. Note: the carrier is liable for any loss or damage, including any pecuniary loss or loss of profit, which the passenger may have suffered by reason thereof. In case the vessel is not able to depart on time and the delay is unreasonable, the passenger may opt to have his/her ticket immediately refunded without any refund service fee from the authorized issuing/ticketing office.

Where and to Whom Delivered a. Place Goods should be delivered to the consignee in the

place agreed upon by the parties. The shipper may change the consignment of the goods provided that at the time of ordering the change of the consignee the bill of lading signed by the carrier be returned to him, in exchange for another wherein the novation of the contract appears. The expenses occasioned by the change shall be for the account of the shipper.

b. Consignee Delivery must generally be made to the owner or consignee or to someone lawfully authorized by him to receive the goods for his account or to the holder of the negotiable instrument.

c. Delay to Transport Passengers A carrier is duty bound to

transport the passenger with reasonable dispatch Effects of delayed and unfinished voyage in inter-island vessels:

vessel cannot continue or complete her voyage for any cause carrier is under obligation to transport the passenger to his/her destination at the expense of the carrier including free meals and lodging before the passenger is transported to his/her destination; the passenger may opt to have his/her ticket refunded in full if the cause of the unfinished voyage is due to the negligence of the carrier or to an amount that will suffice to defray transportation cost at the shortest possible route if the cause of the unfinished voyage is fortuitous event.

vessel is delayed in arrival at the port of destination free meals during mealtime

delay in departure at the point of origin due to carriers negligence; fortuitous event - free meals during mealtime; carrier not obliged to serve free meals

carrier is not obliged to inform passengers of sailing schedule of the vessel

C. DUTY TO EXERCISE EXTRAORDINARY DELIGENCE

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

- Read page 79-80 for provisions

5

ARTICLE 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. (Civil Code) - Presumption of Negligence

- Two conditions for the birth of the presumption of negligence: 1. there exists a contract between the passenger or the shipper

and the common carrier 2. the loss, deterioration, injury or death took place during the

existence of the contract Doctrine of Proximate Cause there is presumption of negligence If the goods are lost, destroyed or deteriorated, common carriers are presumed to have acted negligently, unless they prove that they observed extraordinary diligence. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. - Duration of Duty:

(1) Carriage of Goods

- Due diligence should be exercised the moment the goods are delivered to the carrier.

- Goods are deemed delivered to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them

ARTICLE 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them ARTICLE 1737. The common carriers duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu. (Common carrier becomes a warehouseman ordinary diligence) ARTICLE 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place if destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.

(2) Carriage of Passengers By trains the extraordinary responsibility of common carrier commences the moment the person who purchases the ticket (or a token or card) from the carrier presents himself at the proper place and in a proper manner to be transported with a bona fide intent to ride the coach. * Mere purchase of a ticket does not of itself create the relation of carrier and passenger but it is an element in the inception of the relation. * A proper person who enters upon the carriers premises (station, ticketing office, or waiting room) with the intention of becoming a

passenger will ordinarily be viewed as assuming the status of a passenger. * One who goes to the railroad station to inquire as to the possibility of securing passage on a freight train, which he knows, by the rules of the company, is not allowed to carry passengers, and to secure passage thereon if possible, is not entitled to the rights of a passenger but is a mere trespasser. * One who rides upon any part of the vehicle or conveyance which is unsuitable or dangerous, or which he knows is not intended for passengers, is not presumed to be a passenger. * One who secures free passage by fraud or stealth is precluded from recovery for injuries sustained through the negligence of the carrier, for he has not assumed the status of a passenger. * A person riding on a freight train, on a drivers pass or similar arrangement, to look after livestock being transported and as incident to such transportation is, generally regarded as a passenger for hire. Motor vehicles like jeepneys and buses are duty bound to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they do so. Once a public utility bus or jeepney stops, it is making a continuous offer to bus riders. Case: Dangwa Transportation Company vs. CA

- When the bus is not in motion there is no necessity for a person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to bus riders

- The premature acceleration of the bus in this case was a breach of such duty

Case: La Mallorca vs. CA

- Duty to exercise utmost diligence with respect to passengers will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carriers conveyance or had a reasonable opportunity to leave the carriers premises. And what is reasonable time or a reasonable delay within this rule is to be determined from all the circumstances.

Case: Aboitiz Shipping Corporation vs. CA - Same ruling with La Mallorca vs. CA - That reasonableness 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

- The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioners vessel. We believe there exists such a justifiable cause (baggage were left)

DEFENSES OF COMMON CARRIERS Article 1734 (No other defense may be raised: exclusive or closed list)

1. Flood, storm, earthquake, lightning, or other natural disaster or calamity

2. Act of the public enemy in war, whether international or civil 3. Act or omission of the shipper or owner of the goods 4. The character of the goods or defects in the packing or in the

containers

6

5. Order or act of competent public authority 6. Exercise of extraordinary diligence

Fortuitous Event to be a valid defense must be established to be the proximate cause of the loss Note: Since common carrier is presumed is to be negligent, it has been observed that the DOCTRINE of PROXIMATE CAUSE is INAPPLICABLE to a contract of carriage. The injured passenger or owner of goods need not prove causation to establish his case. The absence of causal connection is only a matter of defense. Requisites of Fortuitous Event:

1. The cause of the unforeseen and the 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 his obligation in a normal manner

4. The obligor (debtor) must be free from any participation in or the aggravation of the injury resulting to the creditor

In order for the common carrier to be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. Fire not considered as a natural calamity or disaster Fire caused by lightning a natural calamity Hijacking does not fall under the categories of exempting causes; the common carrier is presumed to be at fault or to have acted negligently unless there is a proof of extraordinary diligence on its part Mechanical defects damage or injury resulting from mechanical defects is not a damage or injury that was caused by fortuitous event; carrier is liable to its passengers for damages caused by mechanical defects of the conveyance (breakage of a faulty drag-link spring, fracture of the vehicles right steering knuckle, defective breaks)

- One of the reason why carrier is made liable despite the presence of mechanical defect is the absence of privity between the passenger and the manufacturer

Case: Juntilla v. Fontanar

- Tire-blowouts was not considered as fortuitous event although it was alleged that the tires were in good condition; no evidence was presented to show that the evidence were due to adverse road conditions the carrier must prove all angles.

- The explosion could have been caused by too much air pressure injected into the tires and the fact that the jeepney was overloaded and speeding at the time of the accident.

OTHER INVALID DEFENSES

1. Damage to cargo due to EXPLOSION of another cargo not attributable to peril of the seas or accidents of navigation.

2. Damage by WORMS and RATS resulting to damage to cargoes cant be cited as an excuse by the carrier.

3. Damage by WATER through a port which had been left open or insufficiently fastened on sailing.

4. Carrier cannot escape liabilities to third persons if damage was caused by BARRATRY where the master or crew of the ship committed unlawful acts contrary to their duties includes theft and fraudulently running the ship ashore.

Cases:

1. Problem: A carrier bus on its way to its destination encountered an engine failure, thus, it has to be repaired for 2 days. And while in the repair shop, a typhoon came resulting to the spoilage of cargoes. Answer: A typhoon although a natural disaster, is not a valid defense if it is shown that it was not the only cause of the loss. Especially when the facts indicate that the typhoon was foreseeable and could have been detected through the exercise of reasonable care. Cargoes should have been secured while the bus was being repaired for 2 days.

2. Problem: A passenger told the driver that he has valuable

items in his bag which was placed under his feet and he asked the driver (to which he is seated near) to watch for the bag while he is asleep. (a) There have been incidents of throwing of stones at

passing vehicles in the North Express Way. While the bus was traversing the super highway, a stone hurled from the overpass and hit the passenger resulting to injuries. Can the passenger hold the bus liable for damages. Answer: Yes. The incident was foreseeable due the prior incidents of stone hurling. The bus should have exercised utmost diligence and employed adequate precautionary measures to secure safety of passengers since the incident was foreseeable. . HOWEVER, if the stone throwing was entirely unforeseeable and the carrier exercised the utmost diligence, then, the bus cant be held liable. Nonetheless, the burden of proof is on the carrier to prove such exercise of diligence. It is up to the carrier to overthrow the presumption of negligence. If the passenger decides to file a case, al the passenger has to do is to prove that she was a passenger of the bus and that she suffered injuries while on board the bus.

(b) Supposing that there were armed men who staged a hold-up while the bus was speeding along the highway. One of them stole the passengers bag and wallet while pointing a gun him. Is the bus liable. Answer: No. Hand-carried luggage are governed by necessary deposit. Besides, theft with use of arms or through irresistible force is a force majeure which exempts carriers from liability.

3. Hi-jacking cannot exculpate the carrier from liability if it is shown that the employees of the carrier were not overwhelmed by the hijackers and that there was no showing of irresistible force. Since, there were 4 employers while there were only 2 hijackers and only one of them was armed with bladed weapon. ON THE OTHER HAND, a hijacking by 3 armed men is an event which is considered to be beyond the control of the carrier. Thus, the carrier may be adjudged from liability if it can be proven that the hijacking was unforeseeable.

Case: Philippine American General Insurance Co. vs. MCG

7

- Even in cases where a natural disaster is the proximate and only cause of the loss, a common carrier is still required to exercise due diligence to prevent or minimize loss before, during and after the occurrence of the natural disaster, for it to be exempt from liability under the law for the loss of the goods

Case: Pilapil vs. CA

- Facts: a bystander alongside national highway hurled a stone at the left side of the bus, hitting petition above his left eye which resulted to partial loss of the left eyes vision

- SC: A common carrier does not give its consent to become an insurer of any and all risks to passengers and goods. It merely undertakes to perform certain duties to the public as the law imposes, and holds itself liable for any breach thereof.

- The law does not make the carrier an insurer of the absolute safety of its passengers

- Article 1763: A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carriers employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission

o Clearly, a tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier. The negligence for which a common carrier is held responsible is the negligent omission by the carriers employees to prevent the tort from being committed when the same could have been foreseen and prevented by them

Case: Franklin Gacal vs. PAL

- It is therefore not enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid.

- The mere difficulty to foresee the happening is not the impossibility to foresee the same

PUBLIC ENEMY

- Presupposes a state of war and refers to the government of a foreign nation at war with the country to which the carrier belongs, though not necessarily with that to which the owner of the gods owes allegiance.

- Thieves, rioter, and insurrectionists are not included. They are merely private depredators for whose acts a carrier is answerable.

- Rebels in insurrection against their own government are generally not embraced in the definition of public enemy. However, if the rebels hold a portion of territory, they have declared their impendence, cast off their allegiance and has organized armed hostility to the government, and the authority of the latter is at the time overthrown, such an uprising may take on the dignity of a civil war, and so matured and magnified, the parties are belligerent and are entitled to belligerent rights.

- Depredation by pirates (which are enemy of all civilized nation) excuses the carrier from liability.

- Common carriers may be exempted from responsibility only if the act of the public enemy has been the proximate and only cause of the loss. Moreover, due diligence must be exercised to prevent or at least minimize the loss before, during and after the performance of the act of the public enemy in order that the carrier may be exempted from liability for the loss, destruction, or deterioration of the goods.

IMPROPER PACKING Character of the goods and defects in the packaging or in the containers are defenses available to the common carrier. Similarly, the Carriage of Good by Sea Act provides that carrier shall not liable for:

1. Wastage in bulk or weight or any damages arising from the inherent defect, quality or vice of goods;

2. Insufficiency of packing; 3. Insufficiency or inadequacy of the marks, or 4. Latent defects no discoverable by due diligence.

However, NCC likewise provides: Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or the containers, the common carrier must exercise due diligence to forestall or lessen the loss. Thus, if the carrier accepted the goods knowing the fact of improper packing or even if the carrier does not know but the defect was nonetheless apparent upon ordinary observation, it is not relived from liability for loss or injury to goods resulting therefrom. Cases:

1. Problem: A carrier knowing that some of a cargo of sacks of rice had big holes and others had openings just loosely tied with strings resulting to the spillage of rice during the trip. Thus, there was shortage in the delivery of the cargoes. When sued due to the shortage, the carrier interposed a defense that it was not liable since the shortage was due to the defective condition of the sacks. Decide. Answer: Carrier must still exercise extraordinary diligence if the fact of improper packing is known to the carrier or its servants, or apparent upon ordinary observation. If the carrier accepted the cargo without protests or exception notwithstanding such condition, he is not relived of liability for damage resulting therefrom. Apply Article 1742.

ORDER OF PUBLIC AUTHORITY

Art. 1743. If through the order of public authority the goods

are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue order. Cases:

1. Carrier was not excused from liability since the order of an acting mayor was not considered as a valid order of a public authority. It is required that public authority who issued the order must be duly authorized to issue the order.

2. Carriage of Goods by Sea Act provides that carrier shall not responsible for loss or damage resulting from arrest or restraint of princes, rulers, or people, or seizure under legal process and from quarantine restrictions.

DEFENSES IN CARRIAGE OF PASSENGERS - Primary defense of carrier is exercise of extraordinary diligence in transporting passengers. Even if there is a fortuitous event, the carriers must also present proof of exercise of extraordinary diligence. Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the carriers employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

8

The liability does not cease even upon proof that they exercised diligence in the selection and supervision of their employees. Art. 1763. Carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carriers employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

a. Employees - Carrier is liable for the acts of its employees. It cant escape

liability by claiming that it exercised due diligence in supervision and selection of its employees (unlike in quasi-delicts).

Reasons for the rule: 1. Undertaking of the carrier requires that its passenger that full

measure of protection afforded by the exercise of high degree of care prescribed by law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carriers own servants.

2. The liability of the carrier for the servants violation of duty to performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with utmost care prescribed by law.

3. As between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of the carriers employees against passenger, since it, and not the passenger, has the power to select and remove them.

Rationale: On the other hand, if the ship owner derives profits from the results of the choice of the captain and the crew, when the choice turns out successful, it is also just that he should suffer the consequences of an unsuccessful appointment, by application of the rule of natural law contained in the partidas --- that he who enjoys the benefits derived from a thing must likewise suffer the losses that ensue therefrom

- Note: Willful acts of the employees include theft

b. Other Passengers and Third Persons

- With respect to acts of strangers and other passengers resulting in injury to a passenger, the availability of such defense is also subject to the exercise of a carrier of due diligence to prevent or stop the act or omission.

- Negligence of the carrier need not be the sole cause of the damage or injury to the passenger or the goods. The carrier would still be liable even if the contractual breach concurs with the negligent act or omission of another person.

Remember: the negligence of the other river in a collision is NOT a prejudicial question to an action against the carriers company.

Article 1759. Common carriers are liable for the death of or injuries to passenger through the negligence or willful acts of the formers employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. PASSENGERS BAGGAGES

- The term baggage has been defined to include whatever articles a passenger usually takes with him for his own personal use, comfort and convenience

- Rules that are applicable to goods that are being shipped are also applicable to baggage delivered to the custody of the carrier. Arts. 1733. 1734 and 1736 of Civil Code are applicable.

- However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall apply.

Distinction: W/N the baggage is in the personal custody of the passenger. If yes, hand carried baggage If no, checked-in baggage Art. 1998. The deposit of effects made by the travelers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. (1783)

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

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

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

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

Cases: 1. Despite the fact that the carrier gave notice that it shall not be

liable for baggage brought in by passengers, the carrier is still liable for lost hand-carried luggage since it is governed by rules on necessary deposits. Under Art. 20000, the responsibility of the depositary includes the loss of property of the guest caused by strangers but not that which may proceed from force majeure. Moreover, article 2001 considers theft as force majeure if it is done with use of arms or through irresistible force.

2. Even if the passenger did not declare his baggage nor pay its charges contrary to the regulations of the bus company, the carrier is still liable in case of loss of the baggage. Since, it has the duty to exercise extraordinary diligence over the baggage that was turned over to the carrier or placed in the baggage compartment of the bus. The non-payment of the charges is immaterial as long as the baggage was received by the carrier for transportation.

9

II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER

A. NEGLIGENCE OF SHIPPER OR PASSENGER - The obligation to exercise due diligence is not limited to the

carrier. The shipper is obliged to exercise due diligence in avoiding damage or injury.

- Nevertheless, contributory negligence on the part of the shipper/ passenger would only mitigate the carriers liability; it is not a total excuse.

- However, if the negligence of the shipper/ passenger is the proximate and only cause of the loss, then, the carrier shall not be liable. The carrier may overcome the presumption of negligence and may be able to prove that it exercised extraordinary diligence in handling the goods or in transporting the passenger.

The carrier may be able to prove that the only cause of the loss of the goods is any of the following: 1. Failure of the shipper to disclose the nature of the goods; 2. Improper marking or direction as to the destination; 3. Improper loading when he assumes such responsibility.

The shipper must likewise see to it that the goods are properly

packed; otherwise, liability of the carrier may either be mitigated or barred depending on the circumstances. Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.

Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.

Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.

a. Last Clear Chance

A negligent carrier is liable to a negligent passenger in placing himself in peril, if the carrier was aware of the passengers peril, or should have been aware of it in the reasonable exercise of due care, had in fact an opportunity later than that of the passenger to avoid an accident.

Last clear chance applies in a suit between the owners and drivers of colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the carrier and its owner on the ground that the other driver was likewise guilty of negligence.

b. Assumption of Risk

Passengers must take such risks incident to the mode of travel. Carriers are not insurers of the lives of their passengers. Thus, in air travel, adverse weather conditions or extreme climatic changes are some of the perils involved in air travel, the consequence of which the passenger must assume or expect.

However, there is no assumption of risk in a case wherein a passenger boarded a carrier that was filled to capacity. The act of the passenger in taking the extension chair does not amount to implied assumption of risk. Note: there is also no assumption of risk by the mere fact that the carrier posted notices against such liability Problem: Although, there is a sign in the bus that says: do not talk to the driver while the bus is in motion, otherwise, the company would not assume responsibility for any accident: Nonetheless, the passengers dared the driver to race with another bus, as the bus speeds up in the attempt to overtake the other bus, it failed to slow down. As a result, the bus turns turtle causing the death and injuries to passengers. Is the bus company liable. Answer: Yes. The bus company is obligated to exercise utmost diligence in carrying passengers. This liability cannot be eliminated or limited by simply posting notices. The passenger cannot be said to have assumed the risk of being injured when he urged the driver to accept the dare. At most, the passengers can only be said to be guilty of contributory negligence which would mitigate the liability of the driver, since the proximate cause of the accident was the drivers willful and reckless act in running the race with the other bus. Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc.

- Where a carriers employee is confronted with a sudden emergency, the fact that he is obliged to act quickly and without a chance for deliberation must be taken into account, and he is not led to the same degree of care that he would otherwise be required to exercise in the absence of such emergency but must exercise only such care as any ordinary prudent person would exercise under like circumstances and conditions, and the failure on his part to exercise the best judgment the case renders possible does no establish lack of care and skill on his part which renders the company liable.

Case: Compania Maritima vs. CA and Vicente Concepcion

- While the act of private respondent in furnishing petitioner with an inaccurate with of the pay loader cannot successfully be used as an excuse by petitioner to avoid liability to the damage thus caused, said act constitutes a CONTRIBUTORY CIRCUMSTANCE to the damage caused on the pay loader, which mitigates the liability for damages of petitioner in accordance with Article 1741.

Case: Philippine National Railways vs. CA

- While petitioner failed to exercise extraordinary diligence as required by law, it appears that the deceased was chargeable with contributory negligence.

- Since he opted to sit on the open platform between the coaches of the train, he should have held tightly and tenaciously on the upright metal bar found at the side of said platform to avoid falling off from the speeding train

B. FREIGHT

a. Amount to be Paid

The regulation of rates is founded upon the valid exercise of the Police Power of the state in order to protect the public from arbitrary and excessive rates while maintaining the efficiency and quality of services rendered. The fixing of just and reasonable rates involves a balancing of investor and the consumer interest.

10

Although the consideration that should be paid to the carrier is still subject to the agreement between parties, what can be agreed upon should not be beyond the maximum amount fixed by appropriate government agency.

b. Who will pay

Although either of the shipper or the consignor may pay the freight before or at time the goods are delivered to the carrier for shipment, nonetheless, it is the consignor (whom the contract of carriage is made) who is primarily liable for the payment of freight whether or not he is the owner of the goods. The obligation to pay is implied from the mere fact that the consignor has placed the goods with the carrier for the purpose of transportation.

c. Time to pay

Code of Commerce provides that in the absence of any agreement, the consignee who is supposed to pay must do so within 24-hours from the time of delivery. Article 374. The consignees to whom the shipment was made may not defer the payment of the expenses and transportation charges of the goods they receive after the lapse of twenty-four hours following their delivery; and in case of delay in this payment, the carrier may demand the judicial sale of the goods transported in an amount necessary to cover the cost of transportation and the expenses incurred.

(1) Carriage of Passengers by Sea With respect to carriage of goods by sea, the tickets are purchased in advance. Carriers are not supposed to allow passengers without tickets --- the carrier is bound to observe a No Ticket, No Boarding Policy. The carrier shall collect/ inspect the passengers ticket within one hour from vessels departure as not to disrupt resting or sleeping passengers. If the vessel is not able to depart on time and the delay is unreasonable, the passenger may opt to have his/ her ticket refunded without refund service fee. Delayed voyage means late departure of the vessel from its port of origin and/ or late arrival of the vessel to its port of destination. Unreasonable delay means the period of time that has lapsed without just cause and is solely attributable to the carrier which has prejudiced the transportation of the passenger and/ or cargoes to their port of destination. A passenger who failed to board the vessel can refund or revalidate the ticket subject to surcharges. Revalidation means the accreditation of the ticket that is not used and intended to be used for another voyage.

(2) Carriers Lien If consignor or the consignee fails to pay the consideration for the transportation of goods, the carrier may exercise his lien in accordance with Art. 375 of Code of Commerce: ARTICLE 375. The goods transported shall be especially bound to answer for the cost of transportation and for the expenses and fees incurred for them during their conveyance and until the moment of their delivery. This special right shall prescribe eight days after the delivery has been made, and once prescribed, the carrier shall have no other action than that corresponding to him as an ordinary creditor. DEMURRAGE

Demurrage is the compensation provided for the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. It is the claim for damages for failure to accept delivery. In broad sense, very improper detention of a vessel may be considered a demurrage. Technically, liability for demurrage exists only when expressly stipulated in the contract. Using the term in broader sense, damages in the nature of demurrage are recoverable for a breach of the implied obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed and only against on who is a party to the shipping contract. Notice of arrival of vessels or conveyances, or their placement for purposes of unloading is often a condition precedent to the right to collect demurrage charges.

CHAPTER 3

EXTRAORDINARY DILIGENCE I. RATIONALE

A common carrier is bound to carry the passengers safely as far a human care and foresight provide, using the utmost diligence of very cautious persons, with due regard for all circumstances.

Extraordinary diligence: Calculated to protect the passengers from the tragic mishaps that frequently occur in connection with rapid modern transportation. II. HOW DUTY IS COMPLIED WITH

- There is no hard and fast rule in the exercise of extraordinary diligence

- Common carrier binds itself to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances.

- The duty even extends to the members of the crew or complement operating the carrier

Case: Kapalaran Bus Lines vs. Coronado

- If common carriers carefully observed 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

A reasonable man or a good father of a family in the position of the carrier must exercise extraordinary diligence in the performance of his contractual obligation.

- Generally, what should be determines is whether or not a reasonable man, exercising extraordinary diligence, could have foreseen and prevented the damage or loss that occurred.

III. EFFECT OF STIPULATION A. GOODS

- The parties cannot stipulate that the carrier will NOT exercise ANY diligence in the custody of goods

- The law allows a stipulation whereby the carrier will exercise a degree of diligence which is less than extraordinary with respect to goods.

Art. 1744. A stipulation between the common carrier and the shipper owner limiting the liability of the former for the loss,

11

destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: 1. In writing, signed by the shipper/owner; 2. Supported by a valuable consideration other than the service rendered by the common carrier (Note: Typically fare/freight); and 3. Reasonable, just and contrary to public policy.

B. PASSENGERS

- There can be no stipulation lessening the utmost diligence that is owed to passengers.

Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Arts. 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise. (Note: Absolute; extraordinary at all times.)

Gratuitous passenger A stipulation limiting the common carriers liability for negligence is valid, but not for willful acts of gross negligence. The reduction of fare does not justify any limitation. Case: Lara vs. Valencia

- Diligence owed to accommodation passengers is only ordinary diligence

- However, this case is not controlling with respect to common carriers because the defendant in the said case was not a common carrier

IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA A. SEAWORTHINESS

a. Warranty of Seaworthiness of Ship

- This is the first step that should be undertaken - Extraordinary diligence requires that the ship which will

transport the passengers and goods is seaworthy. - Seaworthiness of the vessel is impliedly warranted. - The carrier shall be bound before and at the beginning of

the voyage to exercise due diligence to make the ship seaworthy.

b. No duty to inquire - Because of the implied warranty of seaworthiness,

shippers of goods, when transacting with common carriers, are not expected to inquire into the vessels seaworthiness, genuineness of its licenses and compliance with all maritime laws. Passengers cannot be expected to inquire everytime they board a common carrier, whether the carrier possesses the necessary papers or that all the carriers employees are qualified.

- It is the carrier that carries such burden of proving that the ship is seaworthy.

- Sufficient evidence must be submitted and the presentation of certificates of seaworthiness is not sufficient to overcome the presumption of negligence.

c. Meaning of Seaworthiness

- A vessel must have such degree of fitness which an owner who is exercising extraordinary diligence would require his vessel to have at the commencement of the voyage, having regard to all the probable circumstances of it. This includes fitness of the vessel itself to withstand the rigors

of voyage, fitness of the vessel to store the cargoes and accommodate passengers to be transported and that it is adequately equipped and properly manned.

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

Example: The carrier was able to establish that the ship itself was seaworthy because the records reveal that the vessel was dry-docked and inspected by the Phil. Coast Guard before its first destination. A warranty of seaworthiness requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurtenances and equipment. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:

1. Make the ship seaworthy; 2. Properly man, equip, and supply the ship; 3. Make all parts of the ship in which goods are carried, fit and safe for their reception, carriage, and preservation.

The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. Note: Seaworthiness is relative it its construction and its application depends on the facts of a particular case (ex. Length and nature of the voyage) Fitness of the Vessel Itself

- It is necessary that the vessel can be expected to meet the normal hazards of the journey

- General Test of Seaworthiness: Whether the ship and its appurtenances are reasonably fit to perform the service undertaken.

The ship must be cargoworthy

- Even if the vessel was properly maintained and is free from defect, the carrier must not accept the goods that cannot properly be transported in the ship

- The ship must be efficiently strong and equipped to carry the particular kind of cargo which she has contracted to carry and her cargo must be so loaded that it is safe for her to proceed on her voyage.

The vessel must be adequately equipped and properly manned. - On top of regular maintenance and inspection, Captains,

masters or patrons of vessels must prove the skill, capacity, and qualifications necessary to command and direct the vessel.

- If the owner of a vessel desires to be the captain without having the legal qualifications, he shall limit himself to the financial administration of the vessel and shall entrust the navigation to a qualified person.

Note: It is not an excuse that the carrier cannot afford the salaries of competent and licensed crew or that latter is unavailable. Adequate Equipment

12

- With respect to vessels that carries passengers, the Maritime Industry Authority prescribes rules which provide for indispensable equipment and facilities

- ex. Exit doors, life boats, live vests B. OVERLOADING

- Duty to exercise due diligence likewise includes the duty to take passengers or cargoes that are within the carrying capacity of the vessel.

C. PROPER STORAGE

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

Cargo must generally not be placed on deck. The carrying of deck cargo raises the presumption of unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper management of the ship. D. NEGLIGENCE OF CAPTAIN AND CREW

- Failure on the part of the carrier to provide competent captain and crew should be distinguished from the negligence of the said captain and crew, because the latter is covered by the Limited Liability Rule (liability of the ship-owner may be limited to the value of the vessel).

- If the negligence of the captain and crew can be traced to the fact that they are really incompetent, the Limited Liability Rule cannot be invoked because the ship-owner may be deemed negligent.

Rules on passenger safety

- Negligence on the part of the captain and crew as well as the operator includes failure to comply with the regulation issued by the Maritime Industry Authority (MARINA) on the safety of the passengers

- Memorandum Circular No. 112: passengers do not merely contract for transportation because they have the right to be treated by the carrier and its employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal conduct, injurious language, indignities and abuses from the said carrier and its employees

- Read Memorandum Circular No. 114: p. 204 Case: Planters Products Inc. vs. CA

- The period during which private respondent was to observe the degree of diligence required of it as a public carrier began from the time the cargo was unconditionally placed in its charge after the vessels holds were duly inspected and passed scrutiny by the shipper, up to and until the vessel reached its destination and its hull was re-examined by the consignee, but prior to unloading

- A ship owner is liable for damage to the cargo resulting from improper stowage ONLY when the stowing is done by stevedores employed by him, and therefore under his control and supervision, not when the same is done by the consignee or stevedores under the employ of the latter

E. DEVIATION AND TRANSSHIPMENT 1. Deviation

- If there is an agreement between the shipper and the carrier as to the road over which the conveyance is to be made (subject to the approval by the Maritime Industry Authority), the carrier may not change the route, unless it be by reason of force majeure. Without this cause, he shall be liable for all the losses which the goods may suffer, aside from paying the sum stipulated for that case.

- When on account of the force majeure, the carrier had to take another route which resulted to an increase in transportation charges, he shall be reimbursed upon formal proof.

Note: With respect to carriers by sea, the routes are subject to approval by MARINA and the same cannot generally be changed without the authorization from said administrative agency

2. Transshipment

- The act of taking cargo out of one ship and loading it into another; to transfer goods from the vessel stipulated in the contract of affreightment to another vessel before the place of destination named in the contract has been reached.

- Transshipment of freight without legal excuse is a violation of the contract and subjects the carrier to liability if the freight is lost even by a cause otherwise excepted.

Note: there is transshipment whether or not the same person, firm or entity owns the vessels (what matters is the actual physical transfer of cargo from one vessel to another) V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND A. CONDITION OF VEHICLE

- Common carriers that offer transportation by land are similarly required to make sure that the vehicles that they are using are in good order and condition.

Rule on Mechanical Defects If the carriers will replace certain parts of the motor vehicle, they are duty bound to make sure that the parts that they are purchasing are not defective. Hence, it is a long-standing rule that a carrier cannot escape liability by claiming that the accident that resulted because of a defective break or tire is due to a fortuitous event. This is true even if it can be established that the tire that was subject of a blow-out is brand new. The duty to exercise extraordinary diligence requires the carrier to purchase and use vehicle parts that are not defective. B. TRAFFIC RULES

- The carrier fails to exercise extraordinary diligence if it will not comply with basic traffic rules. The Civil Code provides for a presumption of negligence in case the accident occurs while the operator of the motor vehicle is violating traffic rules.

In cases involving breach of contract of carriage, proof of violation of traffic rules confirms that the carrier failed to exercise extraordinary diligence. Case: Mallari Sr and Jr vs. CA

- The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety

C. DUTY TO INSPECT - There is no unbending duty to inspect each and every package

or baggage that is being brought inside the bus or jeepney.

13

The carrier is duty bound to conduct such inspection depending on the circumstances.

Case: Nocum vs. Laguna Tayabas Bus Company

- While it is true the passengers of appellants bus should not be made to suffer for something over which they had no control, fairness demands that in measuring a common carriers duty towards its passengers, allowance must be given to the reliance that should be reposed on the sense of responsibility of all the passengers in regard to their common safety.

- It is to be presumed that a passenger will not take with him anything dangerous to the lives and limbs of his co-passengers not to speak of his own.

- Not to be lightly considered is the right to privacy to which each passenger is entitled

- In other words, inquiry may be verbally made as to the nature of a passengers baggage when such is not outwardly perceptible, but beyond this, constitutional boundaries are already in danger of being transgressed

- SC held that carrier has succeeded in rebutting the presumption of negligence by showing that it has exercised extraordinary diligence for the safety of its passenger, according to the circumstances of each case

Note: although overland transportation are not bound nor empowered to make an examination on the contents of packages or bags particularly those hand carried by passengers, such is different with regards to an airline company. VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR

- The aircraft must be in such a condition that it must be able to withstand the rigors of flight.

Airworthiness An aircraft, its engines propellers, and other components and accessories, are of proper design and construction, and are safe for air navigation purposes, such design and construction being consistent with accepted engineering practice and in accordance with aerodynamic laws and aircraft science. Proof of airworthiness is not by itself sufficient to prove exercise of extraordinary diligence. Case: Japan Airlines vs. CA

- The fact that the flight was cancelled due to fortuitous event does not mean that the carriers duty already ended. The carrier is still obligated to look after the convenience and comfort of the passenger

- Thus the carrier was obligated to make the necessary arrangements to transport the passenger on the first available flight.

A. INSPECTION

- It is the duty of the carrier to make inquiry as to the general nature of the articles shipped and of their value before it consents to carry them; and its failure to do so cannot defeat the shippers right to recovery of full value of the package if lost, in the absence of showing of fraud or deceit on the part of the shipper.

Where a common carrier has reasonable ground to suspect that the offered goods are of a dangerous character, the carrier has the right to know the character of such goods and to insist inspection, if reasonable and practical under the circumstances, as a condition of receiving and transporting such goods. To be subjected to unusual search, other than

the routinely inspection procedure customarily undertaken, there must exist proof that would justify cause for apprehension that the baggage is dangerous as to warrant exhaustive inspection, or even refusal to accept carriage of the same. Case: Northwest Airlines vs. Laya

- The fact that the plaintiff was greatly inconvenienced by the fact that his attach case was subjected to further inspection does not warrant imposition of liability because he was not singled out and discriminated by the employees of the carrier

- Protection of passengers must take precedence over convenience

- Nevertheless, the implementation of security measures must be attended by basic courtesies

CHAPTER 4 BILL OF LADING

I. CONCEPTS, DEFINITION AND KINDS Bill of Lading (BOL)

- A written acknowledgement, signed by the master of a vessel or other authorized agent of the carrier that he has received the described goods from the shipper, to be transported on the expressed terms to be described the place of destination, and to be delivered to the designated consignees of the parties.

- It operates as a (1) RECEIPT (2) as a CONTRACT (3) as a DOCUMENT OF TITLE.

A BOL is not necessary for the perfection of a contract of carriage. Thus, the obligation to exercise extraordinary diligence by the carrier is still required even if there is no bill of lading. In the absence of the bill of lading, disputes shall be determined on the basis of the provisions in the New Civil Code and suppletory by the Code of Commerce. KINDS of BILL of LADING:

1. Clean Bill of Lading

Does not contain any notation indicating any defect in the goods.

2. Foul Bill of Lading

One that contains the abovementioned notation.

3. Spent Bill of Lading

The goods are already delivered but the bill of lading was not yet returned (upon delivery, the carrier is supposed to retrieve the covering bill of the goods)

4. Through Bill of Lading

Issued by a carrier who is obliged to use the facilities of other carriers as well as his own facilities for the purpose of transporting the goods from the city of the seller to the city of the buyer, which BOL is honored by the second and other interested carriers who dont issue their own BOL.

5. On Board Bill

-states that the goods have been received on board the vessel which is to carry the goods. -apparently guarantees the certainty of shipping as well as the seaworthiness of the vessel to carry the goods. -basically means that the goods are already inside the vessel

14

6. Received for Shipment Bill

-states that the goods have been received for shipment with or without specifying the vessel by which the goods are to be shipped. -issued when conditions are not normal and there is insufficiency of shipping space.

7. Custody Bill of Lading

The goods are already received by the carrier but the vessel indicated therein has not yet arrived in the port.

8. Port Bill of Lading

The vessel indicated in the BOL that will transport the goods is already in the port.

Note: A party to a maritime contract would require an on board bill of lading because of its apparent guaranty of certainty of shipping as well as the seaworthiness of the vessel which is to carry the goods. Effectivity of BOL

- Upon its delivery to and acceptance by the shipper. - The acceptance of the bill without dissent raises the

presumption that all the terms therein were brought to the knowledge of the shipper and agreed to by him, and in the absence of fraud or mistake, he is stopped thereafter from denying that he assented to such claims (whether he reads the bill or not)

THE 3-FOLD NATURE OF THE BILL OF LADING

- The three fold nature of a bill of lading is obviously applicable only to carriage of goods

- As receipt and document of title: issued for goods - As contract: applies to tickets issued to passengers

I. RECEIPT

- As comprehending all methods of transportation, a BOL may be defined as a written acknowledgement of the receipt of goods and an agreement to transport and to deliver them at a specified place to a person named or on his order.

- Other terms, shipping receipts, forwarders receipts, and receipts for transportation.

- (SC) the designation however is not material, and neither is the form of the instrument. If it contains an acknowledgement by the carrier of the receipt of goods for transportation it is, in legal effect a BOL.

- The issuance of a bill of lading carries the presumption that the goods were delivered to the carrier issuing the bill, for immediate shipment, and it is nowhere questioned that a bill of lading is prima facie evidence of the receipt of the goods by the carrier

II. CONTRACT

- It expresses the terms and conditions of the agreement between the parties; names the parties; includes consignees etc. It is the law between the parties bound by its terms and conditions.

Contracts of Adhesion

- It is to be construed liberally in favor of the shipper who adhered to such bill as it is a contract of adhesion. The only participation of the party is the signing of his signature or his adhesion thereto.

- The shipper or passenger is bound by the terms and conditions if there is no occasion to speak of ambiguities or obscurities

- If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former

ART. 24 (NCC). 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 and other handicap, the court must be vigilant for his protection. Parole Evidence Rule

- BOL is covered by the parol evidence rule, that the terms of the contract are conclusive upon the parties and evidence aliunde is not admissible to vary or contradict a complete enforceable agreement, subject to well defined exceptions

- The mistake contemplated as an exception to the parol evidence rule is one which is a mistake of fact mutual to the parties.

- Note that if such is not raised inceptively in the complaint or in the answer, a party cannot later on be permitted to introduce parol evidence thereon

Bill of Lading as Evidence

- The BOL is the legal evidence of the contract and the entries thereof constitutes prima facie evidence of the contract.

- All the essential elements of a valid contract (cause, consent, and object) are present when such bill are issued.

III. ACTIONABLE DOCUMENT/DOCUMENT OF TITLE

- In a contractual obligation, the bill of lading can be categorized as an actionable document under the Rules of Court. Hence, the bill of lading must be properly pleaded either as causes of action or defenses

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

- If the document of title contains the required words of negotiability to make the instrument negotiable under Article 1507 of the NCC, the document remains to be negotiable even if the words not negotiable or nonnegotiable are places thereon

o a. Bearer document- negotiated by delivery o b. Order document- negotiated by endorsement of

the specified person so named

- Effects of negotiation. Negotiation of the document has the effect of manual delivery so as to constitute the transferee the owner of the goods.

BASIC STIPULATIONS - Provided for in the Code of Commerce - (for overland transportation, maritime commerce and

electronic documents, please refer to the textbook for the codal pp. 203-210)

PROHIBITED AND LIMITING STIPULATION

1. Exempting the carrier from any and all liability for loss or damage occasioned by its own negligence - INVALID as it is contrary to public policy.

2. Parties may stipulate that the diligence to be exercised by the carrier for the carriage of goods be less than extraordinary diligence if it is:

a. in writing and signed by both parties b. supported by a valuable consideration other than

the service rendered by the common carrier

15

c. The stipulation is just, reasonable and not contrary to law.

3. Providing an unqualified limitation of such liability to an agreed valuation - INVALID

4. Limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight- VALID and ENFORCEABLE.

Note: the purpose of limiting stipulations in the bill of lading is to protect the common carrier. Such stipulation obliges the shipper/consignee to notify the common carrier of the amount that the latter may be liable for in case of loss of the goods Remember:

1. The parties cannot stipulate so as to totally exempt the carrier from exercising any degree of diligence whatsoever

2. The parties cannot stipulate that the common carrier shall exercise diligence less than the diligence of a good father of a family

RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF GOODS: 1. Inter-island - if goods arrived in damaged condition (Art. 366): a. If damage is apparent, the shipper must file a claim immediately (it

may be oral or written); b. If damage is not apparent, he should file a claim within 24 hours from

delivery. The filing of claim under either (1) or (2) is a condition precedent for recovery. If the claim is filed, but the carrier refuses to pay: enforce carriers liability in court by filing a case:

A. within 6 year, if no bill of lading has been issued; or B. within 10 years, if a bill of lading has been issued.

2. Overseas where goods arrived in a damaged condition from a foreign port to a Philippine port of entry: (COGSA) A. upon discharge of goods, if the damage is apparent, claim should be

filled immediately; B. if damage is not apparent, claim should be filled within 3 days from

delivery. Filing of claim is not a condition precedent, but an action must be filed against the carrier within a period of 1 year from discharge; if there is no delivery, the one-year period starts to run from the day the vessel left port (in case of undelivered or lost cargo), or from delivery to the Arrastre (in case of damaged cargo). Where there was delivery to the wrong person, the prescriptive period is 10 years because there is a violation of contract, and the carriage of goods by sea act does not apply to misdelivery. (Ang v. American SS Agencies (19 SCRA 631) CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)

- Applies suppletorily to the Civil Code if the goods are to be shipped form a foreign port to the Philippines

- COGSA is applicable in international maritime commerce. It can be applied in domestic sea transportation if agreed upon by the parties. (paramount clause)

- Under the Sec. 4 (5), the liability limit is set at $500 per package unless the nature and value of such goods is declared by the shipper. This is deemed incorporated in the bill of lading even if not mentioned in it (Eastern Shipping v. IAC, 150 SCRA 463).

- If by agreement, another maximum amount than that mentioned may be fixed provided that such maximum shall

not be less than $500 and in no event shall the carrier be liable for more than the amount of damage actually sustained

Note that Art. 1749 of the NCC applies to inter-island trade. Meaning of Package

- If the goods are shipped in cartons, each carton is considered a package even if they are stored in container vans

- When what 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.

Prescriptive periods - Suit for loss or damage to the cargo should be brought within

one year after: a. delivery of the goods; or b. The date when the goods should be delivered. (Sec.

3[6]) The one-year prescriptive period is suspended by:

1. express agreement of the parties (Universal Shipping Lines, Inc. v. IAC, 188 SCRA 170)

2. When an action is filed in court until it is dismissed. (Stevens & Co. v. Nordeutscher Lloyd, 6 SCRA 180)

Things to Remember:

1. Article 1757 provides that the responsibility of a common carrier to exercise utmost diligence for the safety of PASSENGERS CANNOT be dispensed with or lessened by stipulation or statement on tickets or otherwise

2. Article 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 FAIRLY AND FREELY AGREED UPON

3. It is unfair to deny the shipper the right to declare the actual value of his cargos and to recover such true value in case of loss or damage Note: it has been suggested that the signature of the shipper in the bill of lading with regards to the limitation applies only to reduction of diligence and not to the stipulated amount to be paid.

4. It is unjust and contrary to public policy if the common carriers liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished

5. The common carrier may EXEMPT itself from liability if he can prove that:

a. He observed extraordinary diligence b. The proximate and only cause of the incident is a

fortuitous event or force majeure c. The proximate and only cause of the loss is the

character of the goods or defects in the packing or in the containers

d. The proximate and only cause of the loss is the order or act of competent public authority

Note: to limit its liability or at least mitigate the same, the carrier can cite CONTRIBUTORY NEGLIGENCE of the plaintiff and the DOCTIRNE OF AVOIDABLE CONSEQUENCES

Case: Sea-Land Service Inc. vs. IAC

- Liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage is governed by the laws of the country of destination

16

- COGSA is applicable up to the final port of destination and that the fact that transshipment was made on an interisland vessel did not remove the contract of carriage of goods from the operation of said Act.

Case: Citadel Lines Inc. vs. CA

- The duty of the consignee is to prove merely that the goods were lost. Thereafter, the burden is shifted to the carrier to prove that it has exercised the extraordinary diligence required by law. And, its extraordinary responsibility lasts from the times that goods are unconditionally placed in the possession of, and received by the carrier for transporta