midterm reviewer transpo - updated by angel

1 a n g e l ‘ s n o t e sT R A N S P O R T A T I O N L A Wupdated notes of room 405 (2010)

LAWON 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 anequivalent 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 theshuttle 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 toboard the vehicle

* TRAINS – perfected when a person:a. purchased a ticket/ possess sufficient fare with which to pay for his passageb. presented himself at the proper place and in a proper manner to be transportedc. has a bona fide intention to use facilities of the carrier

2. CARRIAGE OF GOODSParties: 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-becomes bound to the contract when 1.) accepted the bill of lading 2.) trying to enforce the bill of lading stipulations

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 fortransportation)

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, forcompensation, 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 good 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 roads4. 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 ownpeople 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 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 timeii. 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 crew—CC 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 thecause was the negligence of the carrier.

Distinction between Common Carriers and Private CarriersCOMMON CARRIER PRIVATE CARRIER

Extraordinary diligence in thevigilance over the goods they carry

Ordinary diligence in the carriage ofgoods will suffice

In case of loss, destruction, ordeterioration of goods, they arepresumed to have been at fault or tohave acted negligently; burden ofproving otherwise rests on them

No such presumption applies toprivate carriers, for whoseoeveralleges damage to or deterioration nof the goods carried has the onus ofproving that the cause was thenegligence of the carrier

Cannot stipulate that it is exemptfrom liability for the negligence of itsagents or employees

May validly enter into such stipulation

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 andits 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 spcial agreement and the carrier does not hold hiself 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 operator’s 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 inthe port

o Record or check all merchandise which may be delivered to said port ant shipsideo 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- Handling og the goods in the wharf between the consignee’s establishment and the ship’s tackle- Extraordinary diligence is needed in arrastre

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.

Line Service- one which offers services to the pgeneral public withour discrimination, has fixed schedules and routes and fixed freight rates- common carrier

Tramp service- no fixed rates, routes or schedule…per contractual basis- contract carrier but may be held as CC depending on the circumstances-

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 Commerceand by special laws.

NATURE OF BUSINESS- Common Carriers exercise a sort of public office- 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 fro 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 thepublic 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 2OBLIGATIONS 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 boardingrules.

No compensation for refusal if it is because of:1. government requisition of the space2. substitution of equipment of lesser capacity when required by operational and or safety and/or other causes beyond the control of the carrier, and3. 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 explosivesii. goods are unfit for transportationiii. acceptance would result in overloadingiv. contrabands or illegal goodsv. goods injurious to healthvi. goods will be exposed to untoward danger like flood, capture by enemies and the likevii. goods like livestock will be exposed to diseasesviii. strikeix. 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;

andiii. 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 thepresence of witnesses, with the shipper and consignee in attendance. If declaration of shipper is true, expenses occasioned by the examination and of repacking thepackages 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 thecontainers, 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 liabilitycannot 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 mustbe 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 haveon 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, withoutright 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 havebeen 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 maynot 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 refundservice fee from the authorized issuing/ticketing office.

Where and to Whom Delivereda. 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 bereturned 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 theshipper.

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 orto 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 can not 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 ticketrefunded 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 costat 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 carrier’s 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

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 cautiouspersons, 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 carrier2. the loss, deterioration, injury or death took place during the existence of the contract

Doctrine of Proximate Cause – there is presumption of negligenceIf the goods are lost, destroyed or deteriorated, common carriers are presumed to have acted negligently, unless they prove that they observed extraordinarydiligence. 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 theyobserved 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 bythe 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 receivethem…ARTICLE 1737. The common carrier’s duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarilyunloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu. (common carrier becomes a warehouseman – ordinarydiligence)

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 atthe 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 otherwisedispose 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 carrierpresents 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 carrier’s premises (station, ticketing office, or waiting room) with the intention of becoming a passenger will ordinarily beviewed 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 notallowed 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 tobe 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 thestatus of a passenger.

* A person riding on a freight train, on a driver’s 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 toboard 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 doso. 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 carrier’s conveyance or had a reasonable opportunity to leave the carriers premises. And what is reasonable time or a reasonable delaywithin 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 otherfactors

- 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 petitioner’s vessel. Webelieve 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 calamity2. Act of the public enemy in war, whether international or civil3. Act or omission of the shipper or owner of the goods4. The character of the goods or defects in the packing or in the containers5. Order or act of competent public authority6. Exercise of extraordinary diligence


Fortuitous Event – to be a valid defense must be established to be the proximate and only 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 will2. It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid3. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner4. 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, thecommon carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in orderthat 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 proofof 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 itspassengers for damages caused by mechanical defects of the conveyance (breakage of a faulty drag-link spring, fracture of the vehicle’s 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 themanufacturer

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 DEFENSES1. 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 – can’t 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 factsindicate that the typhoon was foreseeable and could have been detected through the exercise of reasonable care. Cargoes should have been securedwhile 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 seatednear) 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, astone 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 employedadequate 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 can’t 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 ofnegligence.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 whileon 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 passenger’s bagand wallet while pointing a gun him. Is the bus liable?Answer: No. Hand-carried luggages are governed by necessary deposit. Besides, theft with use of arms or through irresistible force is a force majeurewhich 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 therewas 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 beadjudged from liability if it can be proven that the hijacking was unforeseeable.

Case: Philippine American General Insurance Co. vs. MCG- 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 eye’s 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 carrier’s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act oromission

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. Thenegligence for which a common carrier is held responsible is the negligent omission by the carrier’s employees to prevent the tort from beingcommitted 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 withthat 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 isat 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 tobelligerent 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, duediligence 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 thecarrier 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 b Sea Actprovides that carrier shall not liable for:

1. Wastage in bulk or weight or any damages arising form the inherent defect, quality or vice of goods;2. Insufficiency of packing;3. Insufficiency or inadequacy of the marks, or4. 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 thecontainers, 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 uponordinary observation, it is not relived form 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 defensethat 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 ordinaryobservation. If the carrier accepted the cargo without protests or exception notwithstanding such condition, he is not relived of liability for damageresulting therfrom. 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 authorityhad 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 proofof 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 carrier’s employees, although suchemployees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.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 commoncarrier’s 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 can’t 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 carrier’s own servants.2. The liability of the carrier for the servant’s 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 carrier’s 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 outsuccessful, it is also just that he should suffer the consequences of an unsuccessful appointment, by application of the rule of natural law contained in thepartidas --- 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 acarrier 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 thecontractual 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 carrier’s company.

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

PASSENGER’S 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.

Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible forthem 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, theytake 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 theservants 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 travellers areconstrained 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 irresistibleforce. (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 thecharacter 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. Anystipulation 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 shallbe 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 guestcaused 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 ofarms 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 lossof 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 baggagecompartment of the bus. The non-payment of the charges is immaterial as long as the baggage was received by the carrier for transportation.

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 carrier’s 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 any be able to prove that it exercised extraordinary diligence in handling the goods or in transporting thepassenger.

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 onthe circumstances.

Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being thenegligence 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 thenegligence 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 passenger’s peril, or should have been aware of it in thereasonable 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 toenforce 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 waslikewise 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 conditionsor 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 extensionchair 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 responsibilityfor 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 toslow 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 beguilty of contributory negligence which would mitigate the liability of the driver, since the proximate cause of the accident was the driver’s willful and reckless act inrunning the race with the other bus.

Case: Cesar Isaac vs. A.L. Ammen Transportation Co, Inc.- Where a carrier’s 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 butmust exercise only such care as any ordinary prudent person would exercise under like circumstances and conditions, and the failure on his part toexercise 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 payloader 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 payloader,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 whilemaintaining the efficiency and quality of services rendered. The fixing of just and reasonable rates involves a balancing of investor and the consumer interest.

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 themaximum 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 theconsignor (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 topay 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 receiveafter 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 inan 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 boundto observe a “No Ticket, No Boarding Policy”. The carrier shall collect/ inspect the passenger’s ticket within one hour from vessel’s departure as not to disrupt restingor 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 “theperiod 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 totheir port of destination.

A passenger who failed ot board the vessel can refund or revalidate the ticket subject to surcharges. Revalidation means “the accreditation of the ticket that is notused and intended to be used for another voyage.

(2) Carrier’s 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 ofCommerce:

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 theirconveyance 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 tohim 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 isthe claim for damages for failure to accept delivery. In broad sense, very improper detention of a vessel may be considered a demurrage. Technically, liability fordemurrage 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 withreasonable 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 orconveyances, or their placement for purposes of unloading is often a condition precedent to the right to collect demurrage charges.

CHAPTER 3EXTRAORDINARY DILIGENCE

I. RATIONALEA 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 moderntransportation.

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 roadsand 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 thedamage 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, destruction, or deterioration ofthe 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); and3. 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 bystipulation, by the posting of notices, by statements on tickets, or otherwise. (Note: Absolute; extraordinary at all times.)

Gratuitous passenger – A stipulation limiting the common carrier’s liability for negligence is valid, but not for willful acts of gross negligence. The reduction of faredoes 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 theyboard a common carrier, whether the carrier possesses the necessary papers or that all the carrier’s 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 ofvoyage, fitness of the vessel to store the cargoes and accommodate passengers to be transported and that it is adequately equipped and properlymanned.

- Seaworthiness is that strength, durability and engineering skill made a part of a ship’s construction and continued maintenance, together with acompetent and sufficient crew, which would withstand the vicissitudes and dangers of the elements which might reasonable be expected orencountered 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, andthe 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- 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 notinterfere 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 shipowner 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 becausethe shipowner 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 vessel’s holds were duly inspected and passed scrutiny by the shipper, up to and until the vessel reached itsdestination 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 si done by stevedores employed by him, andtherefore 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 allthe 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 bereimbursed 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 saidadministrative 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 toanother)

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 purchasingare 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 tireis 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 extraordinarydiligence 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. 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 appellant’s bus should not be made to suffer for something over which they had no control, fairness demands that in

measuring a common carrier’s duty towards its passengers, allowance must be given to the reliance that should be reposed on the sense of responsibilityof 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 passenger’s 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 carriedby 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 navigationpurposes, 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 carrier’s 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 shipper’s right to recovery of full value of the package if lost, in the absence of showing of fraud or deceit on the part ofthe 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 ofsuch goods and to insist inspection, if reasonable and practical under the circumstances, as a condition of receiving and transporting such goods. To be subjected tounusual search, other than the routinary inspection procedure customarily undertaken, there must exist proof that would justify cause for apprehension that thebaggage 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 attaché 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 4BILL 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 thereis 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 suppletorily by the Code of Commerce.

KINDS of BILL of LADING

1. Clean Bill ofLading

Does not contain any notation indicating any defect inthe goods.

2. Foul Bill ofLading

One that contains the abovementioned notation.

3. Spent Bill ofLading

The goods are already delivered but the bill of ladingwas not yet returned (upon delivery, the carrier issupposed to retrieve the covering bill of the goods)


4. Through Billof Lading

Issued by a carrier who is obliged to use the facilities ofother carriers as well as his own facilities for thepurpose of transporting the goods from the city of theseller to the city of the buyer, which BOL is honored bythe second and other interested carriers who don’tissue their own BOL.

5. On Board Bill -states that the goods have been received on boardthe vessel which is to carry the goods.-apparently guarantees the certainty of shipping aswell as the seaworthiness of the vessel to carry thegoods.-basically means that the goods are already inside thevessel

6. Received forShipment Bill

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

7. Custody Billof Lading

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

8. Port Bill ofLading

The vessel indicated in the BOL that will transport thegoods 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 ofthe 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 disadvanatge 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, 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 documentremains to be negotiable even if the words “not negotiable” or non negotiable are places thereon

o a. Bearer document- negotiated by deliveryo b. Order document- negotiated by indorsement 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 airline transportation of passengers, please refer to the textbook for the codal pp. 267-275)

PROHIBITED AND LIMITING STIPULATION- Read page 276 of book

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 partiesb. supported by a valuable consideration other than the service rendered by the common carrierc. the stipulation is just, reasonable and not contrary to law.

3. Providing an unqualified limitation of such liability to an agreed valuation - INVALID4. 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 th common carrier. Such stipulation obliges the shipper/consignee to notify the commoncarrier 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 whatsoever2. 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 carrier’s liability in court by filing a case:

a. within 6 year, if no bill of lading has been issued; orb. 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-yearperiod 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 doesnot 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 prot 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; orb. 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 otherwise2. 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 UPON3. 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 andnot to the stipulated amount to be paid.

4. It is unjust and contrary to public policy if the common carrier’s liability for acts committed by thieves, or of robbers who do not act with grave orirresistible 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 diligenceb. The proximate and only cause of the incident is a fortuitous event or force majeurec. The proximate and only cause of the loss is the character of the goods or defects in the packing or in the containersd. 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 AVOIDABLECONSEQUENCES

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- 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 possessionof, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee or to the personwho has the right to receive them

Case: Everett Steamship Corporation vs. CA- Considering that the shipper did not declare a higher valuation it had itself to blame for not complying with the situations- The trial court’s ratiocination that private respondent could not have “fairly and freely” agreed to the limited liability clause in the bill of lading because

the said conditions were printed in small letters does not make the bill of lading invalid

WARSAW CONVENTION of 1929

WHEN APPLICABLE:- Applies to all international transportation of person, baggage or goods performed by aircraft for hire.- “International transportation” means any transportation in which the place of departure and the place of destination are situated either:

o within the territories of two High Contracting Parties regardless of whether or not there be a break in the transportation or transshipment, oro within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, mandate

or authority of another power, even though that power is not a party to the Convention.

Transportation to be performed by several successive air carriers shall be deemed to be one undivided transportation, if it has been regarded by the parties as asingle operation, whether it has been agreed upon under the form of a single contract or of a series of contracts, and it shall not lose its international charactermerely because one contract or a series of contracts is to be performed entirely within a territory subject to the sovereignty, suzerainty, mandate, or authority of thesame High Contracting Party. (Art. 1)

NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in the Philippines since an international law prevails over general law.


WHEN NOT APPLICABLE:1. If there is willful misconduct on the part of the carrier’s employees. The Convention does not regulate, much less exempt, carrier from liability for

damages for violating the rights of its passengers under the contract of carriage (PAL v. CA, 257 SCRA 33). --- if the damage is similarly caused by any agentof the carrier acting within the scope of his employment

2. when it contradicts public policy;3. if the requirements under the Convention are not complied with.

LIABILITY OF CARRIER FOR DAMAGES:1. Death or injury of a passenger if the accident causing it took place on board the aircraft or in the course of its operations; (Art. 17)2. Destruction, loss or damage to any luggage or goods, if it took place during the carriage; (Art. 18) and3. Delay in the transportation of passengers, luggage or goods. (Art. 19)

NOTE: The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it couldexculpate itself completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9)

Remember: The said provisions merely declare the carrier liable for damages in the enumerated cases if the conditions therein specified are present. Neither saidprovisions nor others in the aforementioned Convention regulate or exclude liability for OTHER BREACHES of contract of carrier.

The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s liability, or as an absolute limit of the extent of that liability.

LIMIT OF LIABILITY1. passengers - limited to 250,000 francs;

except: agreement to a higher limit

2. Goods and checked-in baggage - 250 francs/kg except: consigner declared its value and paid a supplementary sum, carrier liable to not more than the declared sum unless it proves the sum is

greater than its actual value.

3. hand-carry baggage - limited to 5,000 francs/passenger

An agreement relieving the carrier from liability or fixing a lower limit is null and void. (Art. 23)Carrier not entitled to the foregoing limit if the damage is caused by willful misconduct or default on its part. (Art. 25)

Case: China Airlines vs. Daniel Chiok- The ticket-issuing airline acts as principal in a contract of carriage and is thus liable for the acts and the omissions of any errant carrier to which it may have

endorsed any sector of the entire, continuous trip.

Place of Destination- within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage, or specifically the ticket between thepassenger and the carrier. It is the destination and not an agreed stopping place that controls for the purpose of ascertaining jurisdiction under the Convention. (Case:Santos III vs. Northwest Orient Airlines and CA)

ACTION FOR DAMAGES1. Condition precedentA written complaint must me made within:

- 3 days from receipt of baggage- 7 days from receipt of goods- in case of delay, 14 days from receipt of baggage/goods

F otherwise the action is barred except in case of fraud on the part of the carrier. (Art. 26)2. Jurisdiction - governed by domestic law3. Venue – at the option of the plaintiff:

a. court of domicile of the carrier;b. court of its principal place of business;c. court where it has a place of business through which the contract has been made;d. court of the place of destination. (Art. 28)

4. Prescriptive period – 2 years from:a. date of arrival at the destinationb. date of expected arrivalc. date on which the transportation stopped. (Art. 29)

5. Rule in case of various successive carriers,a. In case of transportation of passengers – the action is filed only against the carrier in which the accident or delay occurred unless there is an agreement

whereby the first carrier assumed liability for the whole journey.b. In case of transportation of baggage or goods

i. the consignor can file an action against the first carrier and the carrier in which the damage occurredii. the consignee can file an action against the last carrier and the carrier in which the damage occurred. These carriers are jointly and severally liable. (Art. 30)

Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane or international travelCode of Commerce applies to inter-island or domestic travel.


Bill of Lading as Document of Title (page 341)

Bill of lading is a document of title under the Civil Code. It can be a negotiable document of title.

A. Negotiability- It is negotiable if it is deliverable to the bearer, or to the order of any person named in such document. (Art. 1507, Civil Code)

a) Effect of Stamp or Notation “Non-Negotiable” the document remains to be negotiable even if the words “not-negotiable” or “non-negotiable” are placed thereon. - Art. 1510 (Civil Code)

B. How Negotiateda) Bearer document (Art. 1508 and 1511)- may be negotiated be delivery

b) Order document (Sec. 38, NIL and Art. 1509, NCC)- can only be negotiated through the indorsement of the specified person so named.- such indorsement may be in blank, to bearer or to a specified person.

Where a negotiable document of title is transferred for value by delivery, and the endorsement of the transferor is essential for negotiation, the transfereeacquires a right against the transferor to compel him to endorse the document. xxx (Art. 1515, Civil Code)

C. Effects of Negotiation- has the effect of manual delivery so as to constitute the transferee the owner of the goods- results in the transfer of ownership because transfer of document likewise transfers control over the goods- refer to Art. 1513

Chapter 5Actions and Damages in Case of Breach

Cause of action of a passenger and shipper:a) against common carrier – based on culpa contractual or culpa aquilianab) on the part of the driver – based on either culpa delictual or culpa aquiliana

Note: the source of obligation based on culpa contractual is separate and distinct from quasi-delict

Article 1903 (last paragraph) – 2 things are apparent:1. That when an injury is caused by the negligence of a servant or employee there instantly arises a presumption of law that there was negligence on the part

of the master or the employer either in the selection of the servant or employee, or in supervision over him after the selection, or both2. That presumption is juris tantum and not juris et de jure, and consequently may be rebutted

Note however: that Article 1903 of the Civil Code is not applicable to acts of negligence which constitute the breach of contract. It is applicable only to culpacontractual

The fundamental distinction between obligation of extra-contractual and those which arise from contract, rests upon the fact that in cases of non-contractualobligation it is the wrongful or negligent act or omission itself which creates the vinculum juris, whereas in contractual relations the vinculum existsindependently of the breach of the voluntary duty assumed by the parties when entering into the contractual relation.

CONCURRENT CAUSES OF ACTION- There is one action but several causes of action- The same act that breaches the contract may also be tort

Note: the cause of action of a passenger or shipper against the common carrier can be culpa contractual or culpa aquiliana while the basis of liability on the part ofthe driver is either culpa delictual or culpa aquiliana. The driver of the carrier is not liable based on contract because there is NO PRIVITY of contract between him andthe passenger or shipper.

If the negligence of third persons concurs with the breach, the liability of the third person who was driving the vehicle and/or his employer may be based on quasidelict. The driver alone may be held criminally liable and civil liability may be imposed upon him based on delict. In the latter case, the employer is subsidiarily liable.

Remember: it does not make any difference that the liability of one springs from the contract while that of the other arises from quasi-delict. If the owner and driverof the other vehicle is not impleaded, the carrier may implead them by filing a third party complaint.

Solidary liability- In case the negligence of the carrier’s driver and a third person concurs, the liability of the parties – carrier and his driver, third person – is joint and several.

NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD


A. Overland Transportation of Goods and Coastwise Shippinga) When to file a claim with carrier- Art. 366 constitutes a condition precedent to the accrual of a right of action against a carrier for damage caused to the merchandise.

Under Art. 366 of the Code of Commerce, an action for damages is barred if the goods arrived in damaged condition and no claim is filed by the shipperwithin the following period:

1. Immediately if damage is apparent;2. within twenty four (24) hours from delivery if damage is not apparent

- The period does not begin to run until the consignee has received possession of the merchandise that he may exercise over it the ordinary controlpertinent to ownership.

- This provision applies even to transportation by sea within the Phils. or coastwise shipping.- Does NOT apply to misdelivery of goods

Q: Why does it not apply to misdelivery of goods?A: In such cases (misdelivery), there can be no question of claim for damages suffered by the goods while in transport, since the claim for damages arises exclusivelyout of the failure to make delivery.

Case: Monica Roldan vs. Lim Ponzo and Co.- Article 366 of the Commercial Code is limited to cases of claims for damage to goods actually turned over by the carrier and received by the consignee.

But the period prescribed in Art. 366 may be subject to modification by agreement of the parties. The validity of a contractual limitation of time for filing the suit itself against a carrier shorter than the statutory period thereof has generally been upheld as

such stipulation merely affects the shipper’s remedy and does not affect the liability of the carrier.

b) Extinctive Prescription- six (6) years if there is no written contract (bill of lading)- ten (10) years if there is written contract

This rule likewise applies to carriage of passengers for domestic transportation.

B. International Carriage of Goods by Sea A claim must be filed with the carrier within the following period:

1. if the damage is apparent the claim should be filed immediately upon discharge of the goods; or2. within 3 days from delivery if damage is not apparent

Filing of claim is not condition precedent. Thus, regardless of whether the notice of loss or damage has been given, the shipper can still bring an action torecover said loss or damage within one year after the delivery of the goods or the date when the goods should have ben delivered

a) Prescription Action for damages must be filed within a period of one (1) year from discharge of the goods. The period is not suspended by an extra-judicial demand. (why? Transportation of goods by sea should be decided in as short a time as possible)

o Case: Dole Philippines Inc. vs. Maritime Company of the Philippines - the prescriptive period is not tolled or interrupted by a written extra-judicial demand. Article 1155 is NOT applicable.

The period does not apply to conversion or misdelivery. The one (1) year period refers to loss of goods and not to misdelivery.

- Damages arising from delay or late delivery are not the damage or loss contemplated under the COGSA. The goods are not actually lost or damaged. Theapplicable period is ten (10) years.

- Case: Domingo Ang vs. American Steamship Agencies What is to be resolved – in order to determine the applicability of the prescriptive period of one year – is whether or not there was loss of the

goods subject matter of the complaint. Loss contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out

of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered. (note: it is not loss due to misdeliveryor delivery to the wrong person)

This rule applies in collision cases. The one (1) year period starts not from the date of the collision but when the goods should have been delivered, had thecargoes been saved.

Case: Maritime Agencies and Services Inc. vs. CA- When there is two destination of delivery , the one year period should commence when the last item was delivered to the consignee

Insurance The insurer who is exercising its right of subrogation is also bound by the one (1) year prescriptive period. However, it does not apply to the claim against the insurer for the insurance proceeds. The claim against the insurer is based on contract that expires in ten

(10) years.

II. Recoverable Damages


Damages – is the pecuniary compensation, recompense or satisfaction for an injury sustained, or as otherwise expressed, the pecuniary consequenceswhich the law imposes for the breach of some duty or violation of some rights.

A. Extent of Recovery (Contractual Breach: Art. 220, NCC) Carrier in good faith – is liable only to pay for the damages that are the natural and probable consequences of the breach of the obligation and which the

parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. Carrier in bad faith or guilty of gross negligence – liable for all damages, whether the same can be foreseen or not. Those which may be reasonably

attributed to the non-performance of the obligation.

Note: The carrier who may be compelled to pay has the right of recourse against the employee who committed the negligent, willful or fraudulent act.

B. Kinds of Damages

Article 2216 provides that no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages, may be adjudicated. Theassessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. However, proof of pecuniaryloss is necessary if actual or compensatory damages is being claimed.

a) Actual or Compensatory Damages- only for the pecuniary loss suffered by him as he has duly proved- not only the value of the loss suffered, but also that of the profits which the oblige failed to obtain- 2 Kinds:1. the loss of what a person already possesses (daňo emrgente);2. the failure to receive as a benefit that would have pertained to him (lucro cesante).- It should be proven: cannot be decided based on the consideration of the judge; not to be based on the perception, observation and consideration of the

judge- With respect to restorative medical procedure: to be entitled to actual damage, you need to have an EXPERT TESTIMONY. Without such, you cannot

recover.

Damages may be recovered: Art. 2205 (Civil Code)1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury;2) For injury to the plaintiff’s business standing or commercial credit.

Damages cannot be presumed. The burden of proof rests on the plaintiff who is claiming actual damages against the carrier.

In case of goods – the plaintiff is entitled to their value at the time of destruction. The award is the sum of money which plaintiff would have to pay in themarket for identical or essentially similar goods

For personal injury and even death – the claimant is entitled to all medical expenses as well as other reasonable expenses that he incurred to treat his or herrelative’s injuries.

In case of death – the plaintiff is entitled to the amount that he spent during the wake and funeral of the deceased. But, expenses after the burial are notcompensable. Read Art. 2206 (Civil Code):

death caused by a crime or quasi-delict shall be at least P3,000; [The amount of fixed damages is now P50,000.00] the defendant shall be liable for the loss of the earning capacity of the deceased; If deceased is obliged to give support, recipient may demand support from the person causing the death for a period not exceeding five years Spouse, legitimate and illegitimate descendant and descendants may demand moral damages for mental anguish by reason of the death of the

deceased

1) Loss of earning capacity

Net Earning Capacity = Life Expectancy x [Gross Annual Income less Necessary Living Expenses]

Life expectancy – (2/3 x 80 – age at death) Net earnings – based on the gross income of the victim minus the necessary incidental living expenses which the victim would have incurred if he were alive. Amount of living expenses must be established. In the absence of proof, it is fixed at fifty (50%) of the gross income.

Rules on loss of earning applies when the breach of the carrier resulted in the plaintiff’s permanent incapacity.

2) Attorney’s fees- refer to Art. 2208 of the Civil Code- attorney’s fees may be awarded in an action for breach of contract of carriage under par. 1,2,4,5,10 and 11 of Art. 2208.- If awarded exemplary, one is entitled to attorney’s fees- 2 kinds: ordinary (compensation to the lawyer); extraordinary (indemnity as a form of damages suffered due to the breach of contract)- You can be awarded if you show that you were forced to litigate and when you are entitled to exemplary damage- But this award is subject to the discretion of the court (you cannot dictate – usually 10%-15%)

3) Interests 12% per annum – if it constitutes a loan or forbearance of money 6% per annum – if it does not constitute loan or forbearance of money


12% - for final judgment

Note: no interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonably certainty, theinterest shall begin to run form the time the claim is made judicially or extrajudicially.

b) Moral Damages- Includes physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury.- Though incapable of pecuniary computation, moral damages may be recovered if they were the proximate result of the defendant’s wrongful act or omission.- Moral damages are not awarded to punish the defendant but to compensate the victim- May be recovered when there is death or there is malice or bad faith. (in transportation of passengers)- Refer to Art. 2219 and 2220 (enumerates cases when moral damages may be awarded)- Generally, no moral damages may be awarded where the breach of contract is not malicious.- Moral damages may be awarded if the contractual negligence is considered gross negligence.- Subject to three conditions in transportation law:

o Deatho Malice or bad faith (must be done in the performance of the contract of carriage)o Physical Injuries

c) Nominal Damages- Refer to Art. 2221-2223 (Civil Code)- It is adjudicated in order that the right of plaintiff may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by

him- The assessment of nominal damages is left to the discretion of the court according to the circumstances of the case- The award of nominal damages is also justified in the absence of competent proof of the specific amounts of actual damages suffered.- Cannot co-exist with actual damages- There is no loss in nominal damages, unlike in actual and temperate damages, loss is present which is proven and not proven but rather ascertained by the court,

respectively.

Case: Japan Airlines vs. CA- The award of moral damages was justified because JAL failed to make necessary arrangement to transport the plaintiffs on the first available connecting

flight to Manila.- Only Nominal damages were awarded in the absence of proof of actual damages

d) Temperate or Moderate Damages- More than nominal but less than compensatory damages- Art. 2224 provides: may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with

certainty.- cannot co-exist with actual damages- Definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been such loss.

e) Liquidated Damages- Those agreed by the parties to a contract, to be paid in case of breach thereof.- Ordinarily, the court cannot change the amount of liquidated damages agreed upon by the parties. However, Art. 2227 of the Civil Code provides that

liquidated damages, whether intended as an indemnity or a penalty, shall be equitable reduced if they were iniquitous or unconscionable.

f) Exemplary or Corrective Damages- Requisites for the award of exemplary damages:1. They may be imposed by way of example in addition to compensatory damages, and only after the claimant’s right to them has been established.2. They cannot be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the

claimant.3. The act must be accompanied by bad faith or done in wanton, fraudulent, oppressive or malevolent manner.

Note: if gross negligence warrants the award of exemplary damages, with more reason is its imposition justified when the act performed is deliberate, malicious andtainted with bad faith. The rationale behind exemplary or corrective damage is to provide an example or correction fro public good.

The award of exemplary damages in breach of contract of carriage is subject to the provisions under Art. 2232-2235 of the Civil Code.

Case: Air France vs. Rafael Carrascoso and CA- The inference of bad faith is there; it may be drawn from the facts and circumstances set forth therein. The contract was averred to establish the relation

between the parties.- Deficiency in the complaint in stating that there was bad faith, if any, was cured y the evidence.

Case: Philippine Airlines inc. vs. CA- Moral damages are recoverable in a breach of contract of carriage where the air carrier thought its agents acted fraudulently or in bad faith.- The contract of air carriage generates a relation attended with a public duty. Neglect or malfeasance of the carrier’s employees naturally could give ground

for an action for damages.

midterm reviewer transpo - updated by angel

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