TRANSPORTATION LAWS PROBLEMS AND ANSWERS IN THE BOOK

(Essentials of Transportation and Public Utilities Law)

PAGE TOPIC QUESTION and ANSWER

12 General X bought seven (7) sacks of palay to the PNR. he paid its freight charges and was issued
Principles Way Bill no.1. The cargo was loaded on the freight wagon of the train. Without any
permission, X boarded the freight wagon and not the passenger coach. Shortly after the
train started, it was derailed. The freight wagon fell on its side, killing X. There is no
evidence that X bought a ticket or paid his fare at the same time that he paid the freight
charges for his cargo. Is X a passenger of PNR?

No, X was not a “passenger”. X was a “stowaway”. A “stowaway” was a mere

trespasser. Hence, X has been held to assume the risk of damage and that the
carrier assumes no duty of care in favor of X.

City Railways, Inc. (CRI) provides train service, for a fee, to commuters from Manila to
Calamba, Laguna. Commuters are required to purchase tickets and then proceed to the
designated loading and unloading facilities to board the train. Ricardo Santos purchased
a ticket for Calamba and entered the train station. While waiting, he had an altercation
with the security guards of CRI leading to a fistfight. Ricardo Santos fell on the railway
just as a train was entering the station. Ricardo Santos was run over by the train. He
died. In the action for damages filed by the heirs of Ricardo Santos, CRI interposed lack
of cause of action, contending that the mishap occurred before Ricardo Santos boarded
the train and that it was not guilty of negligence. Decide.

City Railways, Inc. is liable. A contract of carriage was created from the moment
Ricardo Santos purchased a ticket and entered the station. The duty of a common
carrier like the City Railways, Inc. is to provide safety to its passengers, not only
during the course of the trip, but as long as such passengers are within its
premises and where they ought to be in pursuance to the contract of carriage.
Furthermore, a common carrier is liable for the death of or injuries to passengers
through the negligence or wilful act of its employees, pursuant to Art. 1759 of the
Civil Code.

31 Characteristics AM Trucking, a small company, operates two trucks for hire on selective basis. It caters
of Common only a few customers, and its trucks do not make regular or scheduled trips. It does not
Carriers even have a certificate of public convenience. On one occasion, Reynaldo contracted
AM to transport, for a fee, 100 sacks of rice from Manila to Tarlac. However, AM failed
to deliver the cargo, because its truck was hijacked when the driver stopped in Bulacan
to visit his girlfriend. May Reynaldo hold AM as a common carrier?

Yes. Reynaldo may be held liable as common carrier. Article 1732 of the Civil Code
makes no distinction between one whose principal business activity is the
carrying of persons or goods or both and one who does such carrying only as an
ancillary activity. Article 1732 does not make any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither
does Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services or
solicits business only from a narrow segment of the general population. This is
also consistent with the definition of public service under the Public Service Act.

32 Petitioners Engarcio Fabre Jr. and his wife were owners of a 1982 model Mazda
minibus. They used the bus principally in connection with a bus service for school
children which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom
they hired in 1981, after trying him out for two weeks. His job was to take school children
to and from the St. Scholastica’s College in Malate, Manila. On November 2, 1984 private
respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with the
petitioners for the transportation of 33 members of its Young Adults Ministry from Manila
to La Union and back in consideration of which private respondent paid petitioners the
amount of P3,000 through the petitioner’s minibus. The group was scheduled to leave
on November 2, 1984, at 5:00 o'clock in the afternoon. However, as several members of
the party were late, the bus did not leave the Tropical Hut at the corner of Ortigas Avenue
and EDSA until 8:00 o'clock in the evening. Petitioner Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan. However, the
bridge at Carmen was under repair, so that petitioner Cabil, who was unfamiliar with the
area (it being his first trip to La Union), was forced to take a detour through the town of
Baay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp
curve on the highway, running on a south to east direction, which he described as "siete."
The road was slippery because it was raining, causing the bus, which was running at the
speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left
traffic steel brace and sign along the road and rammed the fence of one Jesus Escano,
then turned over and landed on its left side, coming to a full stop only after a series of
impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and
smashed its front portion.

Several passengers were injured. Private respondent Amyline Antonio was thrown
on the floor of the bus and pinned down by a wooden seat which came down by a
wooden seat which came off after being unscrewed. It took three persons to safely
remove her from this portion. She was in great pain and could not move.

The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He
said he was not familiar with the area and he could not have seen the curve despite the
care he took in driving the bus, because it was dark and there was no sign on the road.
He said that he saw the curve when he was already within 15 to 30 meters of it. He
allegedly slowed down to 30 kilometers per hour, but it was too late.

Are the petitioners operating as common carriers during the time of the accident?

Yes. It does not matter that the bus carried the passengers based on a special
agreement and that the passengers are limited to a certain group. Article 1732 of
the Civil Code makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732
also carefully avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis and one offering
such service on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services or
solicits business only from a narrow segment of the general population. Article
1732 deliberately refrained from making such distinctions.

As common carriers, the Fabres were found to exercise "extraordinary

diligence" for the safe transportation of the passengers to their destination. This
duty of care is not excused by proof that they exercise the diligence of a good
father of the family in the selection and supervision of their employee. Article 1759
of the Code provides that common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former's employees
although such employees may have acted beyond the scope of their authority or
in violation of the orders of the common carriers. This liability of the common
carriers does not cease upon proof that they exercised all the diligence of a good
father of a family in the selection and supervision of their employees.

[Petitioners argue that they are not liable because (1) an earlier departure (made
 impossible by the congregation's delayed meeting) could have averted the mishap
and (2) under the contract, the WWCF was directly responsible for the conduct of
the trip. Neither of these contentions hold water. The hour of departure had not
been fixed. Even if it had been, the delay did not bear directly on the cause of the
accident.]

33 On November 12, 1984, Cebu Salvage Corporation (CSC) and Maria Cristina
Chemicals Industries, Inc. (MCCII) entered into a voyage charter wherein petitioner was
to load 800 to 1,100 metric tons of silica quartz on board the M/T espiritu Santo at
Ayungon, Negros Occidental for transport to and discharge at Tagoloan, Misamis
Oriental to consignee Ferrochrome Phils. Inc. Pursuant to the contract, on December
23, 1984, petitioner received and loaded 1,100 metric tons of silica quartz on board the
M/T Espiritu Santo which left Ayungon for Tagoloan the next day. The shipment never
reached its destination, however, because the M/T Espiritu Santo sank in the afternoon
of December 24, 1984 off the beach of Opol, Misamis Oriental, resulting in the total loss
of the cargo. MCCII filed a claim for the loss of the shipment with its insurer, respondent
Philippine Home Assurance Corporation. Respondent paid the claim in the amount of
P211,500 and was subrogated to the rights of MCCII. Thereafter, it filed a case in the
RTC against CSC for reimbursement of the amount it paid MCCII. CSC claims that it is
not liable insisting that the agreement was merely a contract of hire wherein MCCII hired
the vessel from its owner, ALS Timber Enterprises (ALS). Not being the owner of the
M/T Espiritu Santo, petitioner did not have control and supervision over the vessel, its
master and crew. Thus, it could not be held liable for the loss of the shipment caused by
the sinking of a ship it did not own. Will the action prosper?

Yes, the action will prosper. There is a contract of carriage of goods between
CSC and MCCII; the cargo was loaded on board the vessel; loss or non-delivery
of the cargo was proven; and petitioner failed to prove that it exercised
extraordinary diligence to prevent such loss or that it was due to some casualty
or force majeure. The voyage charter here being a contract of affreightment, the
carrier was answerable for the loss of the goods received for transportation.

CSC was the one which contracted with MCCII for the transport of the cargo. It
had control over what vessel it would use. All throughout its dealings with MCCII,
it represented itself as a common carrier. The fact that it did not own the vessel it
decided to use to consummate the contract of carriage did not negate its character
and duties as a common carrier. The MCCII (respondent’s subrogor) could not be
reasonably expected to inquire about the ownership of the vessels which
petitioner carrier offered to utilize. As a practical matter, it is very difficult and
often impossible for the general public to enforce its rights of action under a
contract of carriage if it should be required to know who the actual owner of the
vessel is. In fact, in this case, the voyage charter itself denominated the petitioner
as the "owner/operator" of the vessel.

The bill of lading was merely a receipt issued by ALS to evidence the fact that
the goods had been received for transportation. It was not signed by MCCII, as in
fact it was simply signed by the supercargo of ALS. This is consistent with the
fact that MCCII did not contract directly with ALS. While it is true that a bill of
lading may serve as the contract of carriage between the parties, it cannot prevail
over the express provision of the voyage charter that MCCII and petitioner
executed.

Finally, petitioner asserts that MCCII should be held liable for its own loss since
the voyage charter stipulated that cargo insurance was for the charterer’s
account. This deserves scant consideration. This simply meant that the charterer
would take care of having the goods insured. It could not exculpate the carrier
from liability for the breach of its contract of carriage. The law, in fact, prohibits it
and condemns it as unjust and contrary to public policy.
 The idea proposed by petitioner is not only preposterous, it is also dangerous.
It says that a carrier that enters into a contract of carriage is not liable to the
charterer or shipper if it does not own the vessel it chooses to use. MCCII never
dealt with ALS and yet petitioner insists that MCCII should sue ALS for
reimbursement for its loss. Certainly, to permit a common carrier to escape its
responsibility for the goods it agreed to transport (by the expedient of alleging
non-ownership of the vessel it employed) would radically derogate from the
carrier's duty of extraordinary diligence. It would also open the door to collusion
between the carrier and the supposed owner and to the possible shifting of liability
from the carrier to one without any financial capability to answer for the resulting
damages.

38 Common Tirso Molina charters a vessel owned and operated by Star Shipping Co., a common
Carrier carrier, for the purpose of transporting two tractors to his logging concession. The crane
distinguished operator of the shipping company somehow negligently puts the tractors in a place where
from Private they would tilt each other. During the trp, a strong wind hits the vessel, causing severe
Carrier
damage to the tractors. Tirso Molina sues the shipping company for damages. The latter
cites a stipulation in the charter agreement exempting the company from liability for loss
or damage arising from the negligence of its agents. Tirso Molina countered by stating
that the aforementioned stipulation is against public policy and therefore, null and void.
Is the stipulation valid? Would you hold the shipping company liable?

Yes. The stipulation is valid if there was a bareboat charter. A common carrier that
undertakes to carry a special cargo or charter to a special person only, becomes
a private carrier. As a private carrier, a stipulation exempting the owner from
liability for the negligence of its agent is valid, being not against public policy.
Hence, Star Shipping Company is not liable.

During the elections last May, AB, a congressional candidate in Marinduque, chartered
the helicopter owned by Lobe Mining Corporation (LMC) for use in the election
campaign. AB paid LMC the same rate normally charged by companies regularly
engaged in the plane chartering business. In the charter agreement between LMC and
AB, LMC expressly disclaimed any responsibility for the acts or omissions of its pilot or
for the defective condition of the plane’s engine. The helicopter crashed killing AB.
Investigations disclose that the pilot’s error was the cause of the accident. LMC now
consults you on its possible liability for AB’s death in the light of the above findings. How
would you reply to LMC’s query?

I would reply to LMC that it may not be held liable for the death of AB. A stipulation
with a private carrier that would disclaim responsibility for simple negligence of
the carrier’s employees is a valid stipulation. Such stipulation, however, will not
hold in case of liability for gross negligence or bad faith.

39 C Co. shipped 20,000 bags of soy beans through S/S Melon, owned and operated by
X Shipping Lines, consigned to the Toyo Factory and insured by the Surety Insurance
Co., against all risks. C Co. hired the entire vessel, with the option to go north or south,
loading, stowing, and discharging at its risks and expense. The owner and the shopper
agree on a stipulation exempting the owner from liability for the negligence of its agents.

When the cargo was delivered to the consignee, there were shortages amounting to
P10,500. The insurance company paid for the damage and sought reimbursement from
the X Shipping Lines as a carrier. Is the carrier liable?

X Shipping Lines is not liable if there was a bareboat charter. X Shipping Lines
agreed to carry a special cargo or chartered to a special person only, becomes a
private carrier. Hence, the New Civil Code provisions on common carriers cannot
be applied where the carrier is not acting as such but as a private carrier. As a
private carrier, a stipulation exempting the ship owner from liability for the
 negligence of its agents is not against policy and is deemed valid.

40 Towage While at sea, the captain of vessel A received distress signals from vessel B, and vessel
A responded and found vessel B with engine failure and drifting off course. Upon
acceptance by vessel B of vessel A’s offer, vessel A connected two lines to vessel B and
towed it safely to port. There was no grave marine peril because the sea was smooth
and vessel B was far from the rocks. In a suit for compensation for towage, who are
entitled to recover, the owner, the crew, or both? Give brief reasons.

In the present case, what is involved is a towage and not salvage. As such, only
the shipowner of the towing vessel, to the exclusion of the crew of the said vessel,
may be entitled to compensation. Hence, the contract is only between the owner
of the towing vessel and the shipowner of the vessel that is being towed. Services
are rendered by the towing vessel for which it is entitled to compensation.

It would be different if the case involves salvage where the members of the
crew of the vessel that performed the salvage are entitled to compensation.
However, the towage in question cannot be considered as salvage of vessel B,
since there was no marine peril which would endanger the said vessel.

44 Arrastre Mr. S shipped metal containers to the Philippines through M/V XX, a vessel owned cy C
Corp. CS Corp. is the consignee. The metal containers were unloaded by the arrastre
operator, A Inc using a defective crane. All the containers sustained damages as a
consequence. The containers were received by CS Corp. but the latter immediately
made a claim against C Corp. and A Inc. for the damages sustained by the containers.
C Corp. argued that it is no longer liable because it was A Inc. that was actually unloading
the containers and that A nc. Was the one that was negligent. Is the argument tenable?

No, the argument of C Corp. is not tenable. C Corp. as a common carrier, is

contractually bound to exercise extraordinary diligence in its vigilance over the
goods. Its duty lasts from the time the goods are unconditionally placed in the
possession of the carrier, up to the time the goods are delivered to the consignee
or to the person who has a right to receive them. Negligence on the part of C Corp.
is presumed if the goods are not delivered in good order. In the present case, C
Corp. must exercise extraordinary diligence up to the time the goods are delivered
to the consignee, CS Corp. Negligence of C Corp. is presumed because the goods
were received in damaged condition. The fact that the arrastre operator was the
one that actually negligently unloaded the containers does not excuse C Corp.
from its obligation. It will only make the liability solidary because their concurrent
negligence proximately caused the damage to the containers. Hence, C Corp. is
liable for breach of contract of carriage.

45 KMC shipped 197 metal containers of tin-free steel from Japan to the Philippines through
M/V Harvest, a vessel owned by WS. S Corp. is the consignee and S Corp. insured the
goods with U Insurance against all risk. The metal containers were unloaded and
discharged to the custody of the arrastre operator, A Inc. When the containers were
being unloaded by A Inc., 6 containers sustained dents and punctures from the forklift
used by the stevedore, O Inc. The ship agent of the vessel, BS, issued a bad order
receipt. OF, the customs broker, as part of its business, retrieved the containers and
transported and delivered all the 197 containers to S Corp. At the time of receipt by S
Corp., it was discovered that an additional 9 containers were also damaged. S Corp.
made a claim from and was duly paid by U Insurance. U Insurance is now making a
claim against WS, A Inc., O Inc. and OF. These persons argue that they have no privity
with U Insurance and that there is no cause of action against them. Will the claim
prosper?

Yes, the claim will prosper. The law provides that in property insurance, the
insurer is subrogated to the rights of the insured upon payment to the latter of the
insurance proceeds. In this case, U Insurance already paid the insured, S Corp.,
 hence, U Insurance is subrogated to the rights of S Corp. including the right to
recover for the damages caused to the goods.

The claim against WS will prosper. WS is the carrier and as such is

contractually bound to exercise extraordinary diligence in its vigilance over the
goods. Its duty lasts from the time the goods are unconditionally placed in the
possession of the carrier, WS, up to the time the goods are delivered to the
consignee or to the person who has a right to receive them. Negligence on the
part of WS is presumed if the goods are not delivered in good order. In the present
case, WS must exercise extraordinary diligence up to the time the goods are
delivered to the consignee, S Corp. Negligence of WS is presumed because the
goods were received in damaged condition. The fact that other persons like the
stevedore, arrastre operator, and the customs broker were negligent does not
excuse WS from its obligation. Hence, WS is liable ex contractu.

A Inc. is liable for the damage to the 6 containers. As an arrastre operator, its
liability is akin to a warehouseman under the Warehouse Receipts Law. Hence, A
Inc. must exercise extraordinary diligence in unloading the goods. In the present
case, the arrastre operator was in charge of unloading of the 6 containers, hence,
it may be held solidarily liable to the consignee together with WS.

O Corp., as a stevedore, must exercise the diligence of a good father of a family

in the performance of its functions. Even in the absence of a contract with the
consignee or the shipper, it may be held liable based on quasi-delict if it did not
exercise due diligence and such failure resulted in the damage to the goods. In
this case, the goods were damaged by the forklift of the stevedore while the goods
were being unloaded. Hence, it appears that due diligence was not exercised by
O Corp. and for which it should be made liable for the damage to the 6 containers.

OF, the customs broker, is also liable as a carrier. A carrier holds himself out
and offers its services to the public as engaged in the business of transporting
goods or passengers for compensation. Although OF is a customs broker, part of
its business is to transport goods for compensation. Hence, it is a common carrier
and such must exercise extraordinary diligence up to the time the goods are
delivered to the consignee, S Corp. In this case, 9 additional containers were
already damaged when the containers were delivered to S Corp. As a common
carrier, negligence on the part of OF is presumed, hence, OF is liable to S Corp.
for the damage caused to the containers delivered to S Corp. The liability as joint
tortfeasor is solidary.

46 Suppose that in the previous problem, the customs broker, OF, noted in the bill of lading
that the “receipt was in good order,” is the consignee barred from recovering from the
carrier and the arrastre operator?

No, the consignee is not barred even if the customs broker made such notation.
At most, such notation is prima facie only and may be rebutted by evidence to the
contrary. In this case, the fact that the damage resulted while the goods were
being unloaded by the arrastre operator was duly established. Hence, the claim
for damages can still prosper against the carrier and the arrastre operator.

Mr. S shipped soybean meals to the Philippines through M/V XX, a vessel owned by C
Corp. CS Corp. is the consignee. The soybean meals were unloaded by the arrastre
operator, A Inc., using one of its equipment. The unloading was halted because a portion
of the equipment cracked because it was hit by a steel bar that was among the soybean
meal that came from the cargo hold. When a claim is made against C Corp., the latter
claimed that it is not liable because the steel bar came from the cargo and not from the
vessel. On the other hand, A Inc. claims that negligence is presumed on the part of C
Corporation as a carrier and that C Corp. did not exercise extraordinary diligence. Should
the claim prosper?
 Yes, the claim should prosper. Initially, it should be pointed out that the claim
of A Inc. cannot be based on the contract of carriage. There is no such contract
between A Inc., the arrastre operator, and C Corp. Hence, C Corp. was not
contractually bound to exercise extraordinary diligence in relation to the
equipment of A Inc. However, C Corp. may be liable for quasi-delict if it was
negligent, that is, if it did not exercise the diligence of a good father of a family,
and the same negligence caused damage to A Inc.

In the present case, the negligence of A Inc. is presumed using the doctrine of
res ipsa loquitur. The steel bar that caused damage to the equipment of A Inc. was
found with the soybean meals inside the cargo hold which was within the
exclusive control of C Corp. The damage would not have been caused if not for
the instrumentality that was in control of C Corp. Hence, C Corp. is liable for its
negligence that caused damage to the equipment.

67 Registered A is the registered owner of a truck for hire. He sold the truck to B and possession was
Owner Rule immediately delivered to B who operated the same. The truck however, remained
registered in the name of A. While operating the truck, B’s driver ran over a child who
died thereafter. The heirs of the child sued A for damages. A’s defense is that he cannot
be held liable as he had already sold the truck to B and it was B’s driver who was
responsible for the accident. Decide with reasons.

A is liable to the heirs of the victim. Under the registered owner rule, the registered
owner remains to be liable to third persons without knowledge of the transfer. As
to third persons, the registered owner of a motor vehicle is its true owner
regardless of any unregistered sale of the vehicle.

68 A was driving a jeepney registered in the name of B. The jeepney, while being driven
negligently by A, hit and injured X, so X sued B for damages. The defense of B was that
he sold the jeepney to C and that X should sue C. Rule on B’s defense with reasons.

The defense of B is untenable and he is liable to X. Under the registered owner

rule, the registered owner remains to be liable to third persons without knowledge
of the transfer. As to third persons, the registered owner of a motor vehicle is its
true owner regardless of any unregistered sale of the vehicle. Hence, B, being the
registered owner, continues to be the owner of the vehicle as regards the public
and third persons.

Mr. Villa, a franchise holder and registered owner of a truck for hire, entered into a lease
contract with Mrs. Santos for the lease by the latter of said truck. The lease contract was
not brought to the knowledge of the LFTRB and was therefore not approved by the
LFTRB. One stormy night, the said truck was speeding along EDSA, skidded and ran
over X who died on the spot. The parents of X brought an action for damages against
Mr. Villa for the death of their son.

a) Will the action against Mr. Villa prosper? Reasons.

Yes, the action against Mr. Villa will prosper. Under the registered owner rule, the
registered owner remains to be liable to third persons without knowledge of the
transfer. As to third persons, the registered owner of a motor vehicle is its true
owner regardless of any unregistered sale of the vehicle. This is especially true in
cases involving holders of franchises. The holders of franchises are liable to the
public even if their vehicles are leased to another without prior approval of the
appropriate government agency.

b) What recourse, if any, does X have?

An action for quasi-delict can also be maintained by the heirs of X against Mrs.
 Santos and/or the driver of the vehicle. The driver may also be charged criminally
liable for reckless imprudence resulting in homicide.

Johnny owns a Sarao jeepney. He asked his neighbor Van if he could operate the
said jeep under Van’s certificate of public convenience. Van agreed and, accordingly,
Johnny registered his jeep in Van’s name.

On June 10, 1990, one of the passenger jeepneys operated by Van bumped Tomas.
Tomas was injured and in due time, he filed a complaint for damages against Van and
his driver for the injuries he suffered. The court rendered judgment in favor of Tomas
and ordered Van and his driver, jointly and severally liable, to pay Tomas actual and
moral damages, attorney’s fees and costs.

The sheriff levied on the jeepney belonging to Johnny but registered in the name of
Van. Johnny filed a third-party claim with the sheriff alleging ownership of the jeepney
levied upon and stating that the jeepney was registered in the name of Van merely to
enable Johnny to make use of Van’s certificate of public convenience.

May the Sheriff proceed with the public auction of Johnny’s jeepney?

Yes, the sheriff may proceed with the auction sale of the jeepney. The vehicle
remains to be the property of the registered owner despite the alleged transfer to
another. As regards to the public and third persons, the vehicle is considered the
property of the registered operator.

79 Reasonable A, in Manila, shipped on board a vessel of B, chairs to be used in the movie house of
Time consignee C in Cebu. No date for delivery or indemnity for delay was stipulated. The
chairs, however, were not claimed promptly by C and were shipped by mistake back to
Manila, where it was discovered and re-shipped to Cebu. By the time the chairs arrived,
the date of inauguration of the movie house passed by and it had to be postponed. C
brings action for damages against B, claiming loss of profits during the Christmas season
when he expected the movie house to be opened. Decide the case with reasons.

C, may bring action for damages against B for loss of profits. The obligation of the
carrier to carry cargo includes the duty not to delay their transportation, so that if
the carrier is guilty of delay in the shipment of the cargo, causing damages to the
consignee, it will be liable.

84 Place of If a shipper, without changing the place of delivery changes the consignment of
Delivery consignee of the goods (after said goods had been delivered to the carrier), under what
condition will the carrier be required to comply with the new orders of the shipper?

If the shipper should change the consignee of the goods, without changing their
destination, the carrier shall comply with the new order provided the shipper
returns to the carrier the bill of lading and a new one is issued showing the
novation of the contract. All expenses for the change must be paid by the shipper.

108 Extraordinary Maria boarded a passenger truck owned by the Metro Transit and driven by Juan. While
Diligence the truck was proceeding to its destination, it fell into a ravine and several passengers,
(Carriage of including Maria were killed. The truck was insured under a Common Carrier’s policy with
Passenger) Island Insurance Company.State the liabilities, if any, of Metro Transit to the heirs of
Maria.

Metro Transit is liable to the heirs of Maria for breach of contract of carriage. It is
clear that there was a breach of contract of carriage because the passenger died
while riding the carrier. The fact that death or injury was caused gives rise to the
presumption of negligence.

A shipped 100 pieces of plywood from Davao City to Manila. He took a marine insurance
 policy to insure the shipment against loss or damage due to “perils of the sea, barratry,
fire, jettison, pirates and other such perils.” When the ship left the port of Davao, the
shipman in charge forgot to secure one of the portholes, through which sea water seeped
during the voyage, damaging the plywood. A filed a claim against the insurance company
which refused to pay on the ground that the loss or damage was not due to a peril of the
sea or any of the risks covered by the policy. It was admitted that the sea was reasonably
calm during the voyage and that no strong winds or waves were encountered by the
vessel. How would you decide the case? Explain.

I would decide in favor of the insured A because the insurer was guilty of breach
of the implied warranty of seaworthiness. The Insurance Code provides that in
every contract of marine insurance, there is a warranty that the ship is seaworthy
at the commencement of the risk. Seaworthiness refers not only to the structure
of the ship but also as to its being properly laden. In other words, a ship which is
seaworthy for the insurance on the ship, may, by reason of being unfit to receive
the cargo, be unseaworthy for the purpose of insurance upon the cargo. In this
case, the fact that the porthole was not secured at the port of departure made the
ship unseaworthy as far as the cargo of plywood was concerned. Thus, the insurer
should be liable for the damage thereto although the loss was not one due to perils
insured against.

The insurer may validly refuse to pay because the proximate cause of the damage
to the plywood was not the perils or risks insured against but rather the
negligence of the shipman in charge in forgetting to secure one of the portholes
of the ship. However, A can recover his damages from the shipowner or ship agent
of said vessel, for not having exercised extraordinary diligence on vigilance over
goods.

112 Presumption of Peter hailed a taxicab owned and operated by Jimmy Cheng and driven by Hemie
Negligence Cortez. Peter asked Cortez to take him to his office in Malate. On the way to Malate, the
taxicab collided with a passenger jeepney, as a result of which Peter was injured, i.e.,
he fractured his left leg. Peter sued Jimmy for damages, based upon a contract of
carriage, and Peter won. Jimmy wanted to challenge the decision before the SC on the
ground that the trial court erred in not making an express finding as to whether or not
Jimmy was responsible for the collision and, hence, civilly liable to Peter. He went to see
you for advice. What will you tell him? Explain your answer.

I will counsel Jimmy to desist from challenging the decision. The cause of action
of Peter being based on culpa contractual, the carrier’s negligence is presumed
upon the breach of contract. The presumption arises because there is no question
that there was a contract of carriage between Peter and the carrier and Peter was
injured while under the care of the said carrier. The burden of proof instead would
lie on Jimmy to establish that despite an exercise of utmost diligence the collision
could not have been avoided.

113 In an action grounded on the contract of carriage, is there a need for the court to make
an express finding of fault or negligence on the part of the carrier in order to hold it liable
for claims in behalf of the injured or deceased passengers? Explain.

In case of death or injuries to passengers, common carriers are presumed to have

been at fault or to have acted negligently, unless they prove that they observed
the utmost diligence of very cautious persons, with a due regard for all
circumstances.

In a court case involving claims for damages arising from death and injury of bus
passengers, counsel for the bus operator files a demurrer to evidence arguing that the
complaint should be dismissed because the plaintiffs did not submit any evidence that
the operator or its employees were negligent. If you were the judge, would you dismiss
the complaint?
No, I will not dismiss the complaint provided that there was proof of the death of
and/or injury to passengers. Negligence on the part of the carrier is presumed the
moment the passenger with whom the carrier had a contract is injured. The burden
is on the common carrier to prove that he has a valid defense.

No. In the carriage of passengers, the failure of the common carrier to bring the
passengers safely to their destination immediately raises the presumption that
such failure is attributable to the carrier’s fault or negligence. In the case at bar,
the fact of death and injury of the bus passengers raises the presumption of fault
or negligence on the part of the carrier. The carrier must rebut such presumption.
Otherwise, the conclusion can be properly made that the carrier failed to exercise
extraordinary diligence as required by law.

Plaintiff alleges that he is the owner and consignee of two cases of books, shipped in
good order and condition at New York, U.S.A., on board the defendant’s steamship
President Garfield, for transport and delivery to the plaintiff in the City of Manila, all freight
charges paid. The two cases arrived in Manila on September 1, 1927, in bad order and
damaged condition, resulting in the total loss of one case and a partial loss of the other.
The loss in one case is P1,630, and the other P700, for which he filed his claims, and
defendant has refused and neglected to pay, giving as its reason that the damage in
question “was caused by sea water.” Is the defendant liable to the plaintiff?

Yes, the defendant is liable. The defendant having received the two boxes in
good condition, its legal duty was to deliver them to the plaintiff in the same
condition in which it received them. From the time of their delivery to the
defendant in New York until they are delivered to the plaintiff in Manila, the boxes
were under the control and supervision of the defendant and beyond the control
of the plaintiff. The defendant having admitted that the boxes were damaged while
in transit and in its possession, the burden of proof then shifted, and it devolved
upon the defendant to both allege and prove that the damage was caused by
reason of some fact which exempted it from liability. As to how the boxes were
damaged, when or where, was a matter peculiarly and exclusively within the
knowledge of the defendant and in the very nature of things could not be in the
knowledge of the plaintiff. To require the plaintiff to prove as to when and how the
damage was caused would force him to call and rely upon the employees of the
defendant's ship, which in legal effect would be to say that he could not recover
any damage for any reason. That is not the law.

Shippers who are forced to ship goods on an ocean liner or any other ship have
some legal rights, and when goods are delivered on board ship in good order and
condition, and the shipowner delivers them to the shipper in bad order and
condition, it then devolves upon the shipowner to both allege and prove that the
goods were damaged by the reason of some fact which legally exempts him from
liability; otherwise, the shipper would be left without any redress, no matter what
may have caused the damage.

And the evidence for the defendant shows that the damage was largely caused
by "sea water," from which it contends that it is exempt under the provisions of
its bill of lading and the provisions of the article 361 of the Code of Commerce.

In the final analysis, the cases were received by the defendant in New York in
good order and condition, and when they arrived in Manila, they were in bad
condition, and one was a total loss. The fact that the cases were damaged by "sea
water," standing alone and within itself, is not evidence that they were damaged
by force majeure or for a cause beyond the defendant's control. The words "perils
of the sea," as stated in defendant's brief apply to "all kinds of marine casualties,
such as shipwreck, foundering, stranding," and among other things, it is said:
 "Tempest, rocks, shoals, icebergs and other obstacles are within the expression,"
and "where the peril is the proximate cause of the loss, the shipowner is excused."
"Something fortuitous and out of the ordinary course is involved in both words
'peril' or 'accident'."

114 It appears that sometime in the evening of 10 March 1995, at the Manila Domestic
Airport, the late Jose Marcial K. Ochoa boarded and rode a taxicab with Plate No. PKR-
534, a passenger vehicle for hire owned and operated by defendant corporation under
the business name “Avis Coupon Taxi” (Avis) and driven by its employee and authorized
driver Bibiano Padlla Jr. on his way home to Teacher’s Village, Diliman, Quezon City. At
about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos Avenue [EDSA],
in front of Camp Aguinaldo in Quezon City at high speed. While going up the Boni
Serrano (Santolan) fly-over, it overtook another cab driven by Pablo Clave and tried to
pass another vehicle, a ten-wheeler cargo truck. Because of the narrow space between
the left side railing of the fly-over and the ten-wheeler truck, the Avis cab was unable to
pass and because of its speed, its driver (Padilla) was unable to control it. To avoid
colliding with the truck, Padilla turned the wheel to the left causing his taxicab to ram the
railing throwing itself off the fly-over and fell on the middle surface of EDSA below. The
forceful drop of the vehicle on the floor of the road broke and split it into two parts. Both
driver Padilla and passenger Jose Marcial K. Ochoa were injured and rushed to the
hospital. At the East Avenue Medical Center, Ochoa was not as lucky as Padilla who
was alive. He was declared dead on arrival from the accident. The death certificate
issued by the Office of the Civil Registrar of Quezon City cited the cause of his death as
vehicular accident. G&S argues that it is not liable because the collision was allegedly
unforeseen since its driver had every right to expect that the delivery van would just
overtake him and not hit the side of the taxi. Is G&S liable?

Yes, G&S is liable to the heirs of Jose Marcial. What is clear from the records is
that there existed a contract of carriage between G & S, as the owner and operator
of the Avis taxicab, and Jose Marcial, as the passenger of said vehicle. As a
common carrier, G & S "is bound to carry [Jose Marcial] safely as far as human
care and foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances." However, Jose Marcial was
not able to reach his destination safely as he died during the course of the travel.
"In a contract of carriage, it is presumed that the common carrier is at fault or is
negligent when a passenger dies or is injured. In fact, there is even no need for
the court to make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence
that the carrier exercised extraordinary diligence." Unfortunately, G & S miserably
failed to overcome this presumption. Both the trial court and the CA found that
the accident which led to Jose Marcial’s death was due to the reckless driving and
gross negligence of G & S’ driver, Padilla, thereby holding G & S liable to the heirs
of Jose Marcial for breach of contract of carriage.

121 Extraordinary S shipped goods from Australia on board a foreign vessel owned and operated by X
Diligence shipping company, based in Australia and represented in the Philippines by R. The
(Carrier of goods were consigned to T of Manila and insured by U against all risks. Upon arrival in
Goods) Manila Bay, the goods were discharged from the vessel to a lighter owned by the Bay
Brokerage Co. When delivered to and received by “T”, the goods were found to have
sustained losses or damages. Evidence disclosed that the damage occurred while the
goods were in the custody of the carrier. The insurance company paid the amount of the
loss but sought reimbursement from “X” and/or “R”. “R” disclaimed any liability alleging
that he is a mere agent of “X”, and having acted as agent of a disclosed principal is,
therefore, not liable. What is the liability, if any, of Bay Brokerage Co.?

Bay Brokerage Co. has no liability. The facts indicate that the goods were not yet
delivered to the brokerage company when they were damaged. Even if the said
company can be considered a common carrier, its duty starts only upon delivery
of the goods.
The Bay Brokerage Co. is not liable. The evidence disclosed that the damage
occurred while the goods were yet in the custody of the carrier, before that goods
were discharged from the vessel to a lighter owned by the Bay Brokerage Co.

Star Shipping Lines accepted 100 cartons of sardines from Master to be delivered to 555
Company in Manila. Only 88 cartons were delivered, however, these were in bad
condition. 555 Company claimed from Star Shipping Lines the value of the missing
goods, as well as the damaged goods. Star Shipping Lines refused because the former
failed to present a bill of lading. Resolve with reasons the claim of 555 Company.

The claim of 555 Company is meritorious, even if it fails to present a bill of lading.
Although a bill of lading is the best evidence of the contract of carriage for cargo,
nevertheless such contract can exist even without a bill of lading. Like any other
contract, a contract of carriage is a meeting of minds that gives rise to an
obligation on the part of the carrier to transport the goods. Jurisprudence has held
that the moment the carrier receives the cargo for transport, then its duty to
exercise extraordinary diligence arises.

Delsan received on board MT Larusan a shipment consisting of 1,986.627 k/l Automotive

Diesel Oil (diesel oil) at the Bataan Refinery Corporation for transportation and delivery
to the bulk depot in Bacolod City of Caltex Phils. Inc. (Caltex). On August 7, 1984, the
shipment arrived in Bacolod City. Immediately thereafter, unloading operations
commenced. The discharging of the diesel oil started at about 1:30 PM of the same day.
However, at about 10:30 PM, the discharging had to be stopped on account of the
discovery that the port bow mooring of the vessel was intentionally cut or stolen by
unknown persons. Because there was nothing holding it, the vessel drifted westward,
dragged and stretched the flexible rubber hose attached to the riser, broke the elbow
into pieces, severed completely the rubber hose connected to the tanker from the main
delivery line at sea bed level and ultimately caused the diesel oil to spill into the sea. To
avoid further spillage, the vessel’s crew tried water flushing to clear the line of the diesel
oil but to no avail. In the meantime, the shore tender, who was waiting for the completion
of the water flushing, was surprised when the tanker signaled a "red light" which meant
stop pumping. Unaware of what happened, the shore tender, thinking that the vessel
would, at any time, resume pumping, did not shut the storage tank gate valve. As all the
gate valves remained open, the diesel oil that was earlier discharged from the vessel
into the shore tank backflowed. Due to non-availability of a pump boat, the vessel could
not send somebody ashore to inform the people at the depot about what happened. After
almost an hour, a gauger and an assistant surveyor from the Caltex’s Bulk Depot Office
boarded the vessel. It was only then that they found out what had happened. Thereafter,
the duo immediately went ashore to see to it that the shore tank gate valve was closed.
The loss of diesel oil due to spillage was placed at 113.788 k/l while some 435,081 k/l
thereof backflowed from the shore tank. As a result of spillage and backflow of diesel oil,
Caltex sought recovery of the loss from Delsan, but the latter refused to pay. Delsan’s
argued that it should not be held liable for the loss of diesel oil due to backflow because
the same had already been actually and legally delivered to Caltex at the time it entered
the shore tank. Is the argument tenable?

No. Delsan’s argument that it should not be held liable for the loss of diesel oil
due to backflow because the same had already been actually and legally delivered
to Caltex at the time it entered the shore tank holds no water. It had been settled
that the subject cargo was still in the custody of Delsan because the discharging
thereof has not yet been finished when the backflow occurred. Since the
discharging of the cargo into the depot has not yet been completed at the time of
the spillage when the backflow occurred, there is no reason to imply that there
was actual delivery of the cargo to the consignee. Delsan is straining the issue by
insisting that when the diesel oil entered into the tank of Caltex on shore, there
was legally, at that moment, a complete delivery thereof to Caltex. To be sure, the
extraordinary responsibility of common carrier lasts from the time the goods are
 unconditionally placed in the possession of, and received by, the carrier for
transportation until the same are delivered, actually or constructively, by the
carrier to the consignee, or to a person who has the right to receive them. The
discharging of oil products to Caltex Bulk Depot has not yet been finished, Delsan
still has the duty to guard and to preserve the cargo. The carrier still has in it the
responsibility to guard and preserve the goods, a duty incident to its having the
goods transported.

123 On 4 April 1989, BM shipped on board the vessel Nen Jiang, owned and operated by
CO Shipping Co. represented by its agent WALLEM. 3,500 boxes of watermelons valued
at US$5,950.00 covered by Bill of Lading No. HKG 99012 and exported through Letter
of Credit No. HK 1031/30 issued by National Bank of Pakistan and 1,611 boxes of fresh
mangoes with a value of US$14,273.46 covered by Bill of Lading No. HKG 99013 and
exported through Letter of Credit No. HK 1032/30 also issued by PAKISTAN BANK. The
Bills of Lading contained the following pertinent provision: "One of the Bills of Lading
must be surrendered duly endorsed in exchange for the goods or delivery order. The
shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great
Prospect Company of Kowloon, Hongkong (hereinafter GPC) as notify party.`` The
goods were delivered to GPC without the bills of lading.

a) Can carrier validly deliver the goods to GPC?

Yes , the goods can be validly delivered to GPC. The extraordinary responsibility
of the common carriers lasts until actual or constructive delivery of the cargoes
to the consignee or to the person who has a right to receive them. PAKISTAN
BANK was indicated in the bills of lading as consignee whereas GPC was the
notify party. However, in the export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such in his demand letter to
respondent WALLEM and in his complaint before the trial court. This premise
draws us to conclude that the delivery of the cargoes to GPC as buyer/importer
which, conformably with Art. 1736 had, other than the consignee, the right to
receive them was proper.

b) Did the common carrier validly deliver the goods without the bill of lading or bank
guarantee?

Yes. The carrier submitted in evidence a telex dated 5 April 1989 as basis for
delivering the cargoes to GPC without the bills of lading and bank guarantee. The
telex instructed delivery of various shipments to the respective consignees
without need of presenting the bill of lading and bank guarantee per the respective
shipper's request since "for prepaid shipt ofrt charges already fully paid."
Petitioner was named therein as shipper and GPC as consignee with respect to
Bill of Lading Nos. HKG 99012 and HKG 99013. Conformably, to implement the
said telex instruction, the delivery of the shipment must be to GPC, the notify party
or real importer/buyer of the goods and not the Pakistani Bank since the latter can
very well present the original Bills of Lading in its possession. Likewise, if it were
the Pakistani Bank to whom the cargoes were to be strictly delivered, it will no
longer be proper to require a bank guarantee as a substitute for the Bill of Lading.
To construe otherwise will render meaningless the telex instruction. After all, the
cargoes consist of perishable fresh fruits and immediate delivery thereof to the
buyer/importer is essentially a factor to reckon with. Besides, GPC is listed as one
among the several consignees in the telex (Exhibit 5-B) and the instruction in the
telex was to arrange delivery of A/M shipment (not any party) to respective
consignees without presentation of OB/L and bank guarantee.

127 Commencement X, an 80-year old epileptic, boarded the S/S Tamaraw in Manila going to Mindoro. To
of duty in
disembark, the passengers have to walk through a gang plant. While negotiating the
Carriage of
Passengers gang plank, X slipped and fell into the waters. X was saved from drowning, brought to a
hospital but after a month died from pneumonia. Except for X, all the passengers were
 able to walk through the gangplank. What is the liability of the owner of S/S Tamaraw?

The owner of S/S Tamaraw is liable for the death of X in failing to exercise
utmost diligence in the safety of passengers. Evidently, the carrier did not take
the necessary precautions in ensuring the safety of passengers in the boarding
of and disembarking from the vessel. Unless shown to the contrary, a common
carrier is presumed to have been negligent in cases of death or injury to its
passengers. Since X has not completely disembarked yet, the obligation of the
shipowner to exercise utmost diligence still subsists and he can still be held liable.

Moreover, it is well-settled that if, in the use of a gangplank, a passenger falls

off and is injured, the carrier is liable for the injuries sustained irrespective of the
cause of the fall if a sufficient gangplank would have prevented the injury.

128 A bus of GL Transit on its way to Davao stopped to enable a passenger to alight. At that
moment, Santiago, who had been waiting for a ride, boarded the bus. However, the bus
driver failed to notice Santiago who was still standing on the bus platform, and stepped
on the accelerator. Because of the sudden motion, Santiago slipped and fell down,
suffering serious injuries. May Santiago hold GL Transit liable for breach of contract of
carriage?

Yes. Santiago may hold GL Transit liable for breach of contract. It is well-settled
that motor vehicles like passenger jeepneys and buses are duty bound to stop
their conveyances a reasonable length of time in order to afford passengers an
opportunity to board and enter, and they are liable for injuries suffered by
boarding passengers resulting from the sudden starting up or jerking of the
conveyances while they do so. Obviously, the driver of the bus did not exercise
utmost diligence in affording Santiago a reasonable opportunity to board the bus.

On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor
Navidad, then drunk, entered the EDSA LRT station (operated by LRTA) after
purchasing a “token” (representing payment of the fare). While Navidad was standing on
the platform near the LRT tracks, Junelito Escartin, the security guard assigned to the
area (who was an employee of Prudent Security Agency) approached Navidad. A
misunderstanding or an altercation between the two apparently ensued that led to a fist
fight. No evidence, however, was adduced to indicate how the fight started or who,
between the two, delivered the first blow or how Navidad later fell on the LRT tracks. At
the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo Roman,
was coming in. Navidad was struck by the moving train, and he was killed
instantaneously. Are LRTA and Prudent liable?

LRTA is liable but Prudent is not liable. he law requires common carriers to
carry passengers safely using the utmost diligence of very cautious persons with
due regard for all circumstances. Such duty of a common carrier to provide safety
to its passengers so obligates it not only during the course of the trip but for so
long as the passengers are within its premises and where they ought to be in
pursuance to the contract of carriage. The statutory provisions render a common
carrier liable for death of or injury to passengers (a) through the negligence or
wilful acts of its employees or b) on account of wilful acts or negligence of other
passengers or of strangers if the common carrier’s employees through the
exercise of due diligence could have prevented or stopped the act or omission. In
case of such death or injury, a carrier is presumed to have been at fault or been
negligent, and by simple proof of injury, the passenger is relieved of the duty to
still establish the fault or negligence of the carrier or of its employees and the
burden shifts upon the carrier to prove that the injury is due to an unforeseen
event or to force majeure. In the absence of satisfactory explanation by the carrier
on how the accident occurred, which petitioners, according to the appellate court,
have failed to show, the presumption would be that it has been at fault, an
exception from the general rule that negligence must be proved.
 The foundation of LRTA’s liability is the contract of carriage and its obligation
to indemnify the victim arises from the breach of that contract by reason of its
failure to exercise the high diligence required of the common carrier. In the
discharge of its commitment to ensure the safety of passengers, a carrier may
choose to hire its own employees or avail itself of the services of an outsider or
an independent firm to undertake the task. In either case, the common carrier is
not relieved of its responsibilities under the contract of carriage.

With respect to Prudent, if at all, that liability could only be for tort under the
provisions of Article 2176 and related provisions, in conjunction with Article 2180
of the Civil Code. The premise, however, for the employer’s liability is negligence
or fault on the part of the employee. Once such fault is established, the employer
can then be made liable on the basis of the presumption juris tantum that the
employer failed to exercise diligentissimi patris families in the selection and
supervision of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the employee.
Unfortunately, there is nothing to link Prudent to the death of Nicanor Navidad, for
the reason that the negligence of its employee, Escartin, has not been duly proven.
Hence, Prudent cannot be made liable.

129 On 13 May 1985, private respondents filed a complaint for damages against
petitioners for the death of Pedrito Cudiamat as a result of a vehicular accident which
occured on at Marivic, Sapid, Mankayan, Benguet. Among others, it was alleged that on
said date, while petitioner Theodore M. Lardizabal was driving a passenger bus
belonging to petitioner corporation in a reckless and imprudent manner and without due
regard to traffic rules and regulations and safety to persons and property, it ran over its
passenger, Pedrito Cudiamat. However, instead of bringing Pedrito immediately to the
nearest hospital, the said driver, in utter bad faith and without regard to the welfare of
the victim, first brought his other passengers and cargo to their respective destinations
before banging said victim to the Lepanto Hospital where he expired.

The place of the accident and the place where one of the passengers alighted were
both between Bunkhouses 53 and 54, hence the bus was at full stop when the victim
boarded the same. The victim fell from the platform of the bus when it suddenly
accelerated forward and was run over by the rear right tires of the vehicle, as shown by
the physical evidence on where he was thereafter found in relation to the bus when it
stopped.

The contention of petitioners that the driver and the conductor had no knowledge that
the victim would ride on the bus, since the latter had supposedly not manifested his
intention to board the same. Is the argument tenable? Is the carrier liable?

The carrier is liable. The contention of petitioners that the driver and the
conductor had no knowledge that the victim would ride on the bus, since the latter
had supposedly not manifested his intention to board the same, does not merit
consideration. 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.

Hence, it becomes the duty of the driver and the conductor, every time the bus
stops, to do no act that would have the effect of increasing the peril to a passenger
while he was attempting to board the same. The premature acceleration of the bus
in this case was a breach of such duty.

It is the duty of common carriers of passengers, including common carriers by

railroad train, streetcar, or motorbus, to stop their conveyances a reasonable
length of time in order to afford passengers an opportunity to board and enter,
 and they are liable for injuries suffered by boarding passengers resulting from the
sudden starting up or jerking of their conveyances while they are doing so.

Further, even assuming that the bus was moving, the act of the victim in
boarding the same cannot be considered negligent under the circumstances.

In this case, the bus had "just started" and "was still in slow motion" at the
point where the victim had boarded and was on its platform.

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

The victim herein, by stepping and standing on the platform of the bus, is
already considered a passenger and is entitled all the rights and protection
pertaining to such a contractual relation. Hence, it has been held that the duty
which the carrier passengers owes to its patrons extends to persons boarding
cars as well as to those alighting therefrom.

Moreover, the circumstances under which the driver and the conductor failed
to bring the gravely injured victim immediately to the hospital for medical
treatment is a patent and incontrovertible proof of their negligence. It defies
understanding and can even be stigmatized as callous indifference.

131 On 20 December 1953, at about noontime, plaintiffs, husband and wife, together with
their minor daughters, namely, Milagros, 13 years old, Raquel, about 4 years old, and
Fe, over 2 years old, boarded the Pambusco Bus No. 352, bearing plate TPU No. 757
(1953 Pampanga), owned and operated by the defendant, at San Fernando, Pampanga,
bound for Anao, Mexico, Pampanga. At the time, they were carrying with them four
pieces of baggages containing their personal belongings. The conductor of the bus, who
happened to be a half-brother of plaintiff Mariano Beltran, issued three tickets covering
the full fares of the plaintiff and their eldest child, Milagros. No fare was charged on
Raquel and Fe, since both were below the height at which fare is charged in accordance
with the appellant's rules and regulations.

After about an hour's trip, the bus reached Anao whereat it stopped to allow the
passengers bound therefor, among whom were the plaintiffs and their children to get off.
With respect to the group of the plaintiffs, Mariano Beltran, then carrying some of their
baggages, was the first to get down the bus, followed by his wife and his children.
Mariano led his companions to a shaded spot on the left pedestrians side of the road
about four or five meters away from the vehicle. Afterwards, he returned to the bus in
controversy to get his other bayong, which he had left behind, but in so doing, his
daughter Raquel followed him, unnoticed by her father. While said Mariano Beltran was
on the running board of the bus waiting for the conductor to hand him his bayong which
he left under one of its seats near the door, the bus, whose motor was not shut off while
unloading, suddenly started moving forward, evidently to resume its trip, notwithstanding
the fact that the conductor has not given the driver the customary signal to start, since
said conductor was still attending to the baggage left behind by Mariano Beltran.
Incidentally, when the bus was again placed into a complete stop, it had travelled about
ten meters from the point where the plaintiffs had gotten off.

Sensing that the bus was again in motion, Mariano Beltran immediately jumped from
the running board without getting his bayong from the conductor. He landed on the side
of the road almost in front of the shaded place where he left his wife and children. At that
precise time, he saw people beginning to gather around the body of a child lying prostrate
on the ground, her skull crushed, and without life. The child was none other than his
daughter Raquel, who was run over by the bus in which she rode earlier together with
her parents.

Is the carrier liable?

Yes, the carrier is liable for damages for the death of the child, Racquel Beltran.
It may be pointed out that although it is true that respondent Mariano Beltran, his
wife, and their children (including the deceased child) had alighted from the bus
at a place designated for disembarking or unloading of passengers, it was also
established that the father had to return to the vehicle (which was still at a stop)
to get one of his bags or bayong that was left under one of the seats of the bus.
There can be no controversy that as far as the father is concerned, when he
returned to the bus for his bayong which was not unloaded, the relation of
passenger and carrier between him and the petitioner remained subsisting. For,
the relation of carrier and passenger does not necessarily cease where the latter,
after alighting from the car, aids the carrier's servant or employee in removing his
baggage from the car. The issue to be determined here is whether as to the child,
who was already led by the father to a place about 5 meters away from the bus,
the liability of the carrier for her safety under the contract of carriage also
persisted.

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

In the present case, the father returned to the bus to get one of his baggages
which was not unloaded when they alighted from the bus. Raquel, the child that
she was, must have followed the father. However, although the father was still on
the running board of the bus awaiting for the conductor to hand him the bag or
bayong, the bus started to run, so that even he (the father) had to jump down from
the moving vehicle. It was at this instance that the child, who must be near the
bus, was run over and killed. In the circumstances, it cannot be claimed that the
carrier's agent had exercised the "utmost diligence" of a "very cautious person"
required by Article 1755 of the Civil Code to be observed by a common carrier in
the discharge of its obligation to transport safely its passengers. In the first place,
the driver, although stopping the bus, nevertheless did not put off the engine.
Secondly, he started to run the bus even before the bus conductor gave him the
signal to go and while the latter was still unloading part of the baggages of the
passengers Mariano Beltran and family. The presence of said passengers near the
bus was not unreasonable and they are, therefore, to be considered still as
passengers of the carrier, entitled to the protection under their contract of
carriage.

But even assuming arguendo that the contract of carriage has already
terminated, herein petitioner can be held liable for the negligence of its driver, as
ruled by the Court of Appeals, pursuant to Article 2180 of the Civil Code. The
 plaintiffs sufficiently pleaded the culpa or negligence upon which the claim was
predicated when it was alleged in the complaint that "the death of Raquel Beltran,
plaintiffs' daughter, was caused by the negligence and want of exercise of the
utmost diligence of a very cautious person on the part of the defendants and their
agent." This allegation was also proved when it was established during the trial
that the driver, even before receiving the proper signal from the conductor, and
while there were still persons on the running board of the bus and near it, started
to run off the vehicle. The presentation of proof of the negligence of its employee
gave rise to the presumption that the defendant employer did not exercise the
diligence of a good father of the family in the selection and supervision of its
employees. And this presumption, as the Court of Appeals found, petitioner had
failed to overcome. Consequently, petitioner must be adjudged pecuniarily liable
for the death of the child Raquel Beltran.

133 The evidence disclosed that on 11 May 1975, Anacleto Vana boarded the vessel M/V
Antonia, owned by defendant, at the port at San Jose, Occidental Mindoro, bound for
Manila, having purchased a ticket (No. 117932) in the sum of P23.10 (Exh B). On May
12, 1975, said vessel arrived at Pier 4, North Harbor, Manila, and the passengers therein
disembarked, a gangplank having been provided connecting the side of the vessel to the
pier. Instead of using said gangplank Anacleto Viana disembarked on the third deck
which was on the level with the pier. After said vessel had landed, the Pioneer
Stevedoring Corporation took over the exclusive control of the cargoes loaded on said
vessel pursuant to the Memorandum of Agreement dated July 26, 1975 (Exh. '2')
between the third party defendant Pioneer Stevedoring Corporation and defendant
Aboitiz Shipping Corporation.

The crane owned by the third party defendant and operated by its crane operator
Alejo Figueroa was placed alongside the vessel and one (1) hour after the passengers
of said vessel had disembarked, it started operation by unloading the cargoes from said
vessel. While the crane was being operated, Anacleto Viana who had already
disembarked from said vessel obviously remembering that some of his cargoes were
still loaded in the vessel, went back to the vessel, and it was while he was pointing to the
crew of the said vessel to the place where his cargoes were loaded that the crane hit
him, pinning him between the side of the vessel and the crane. He was thereafter brought
to the hospital where he later expired three (3) days thereafter, on May 15, 1975, the
cause of his death according to the Death Certificate being "hypostatic pneumonia
secondary to traumatic fracture of the pubic bone lacerating the urinary bladder". Is the
carrier liable? Was Viana still a passenger at the time of the accident?

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

The victim Anacleto Viana was still a passenger at the time of the incident.
When the accident occurred, the victim was in the act of unloading his cargoes,
which he had every right to do, from petitioner's vessel. As earlier stated, a carrier
is duty bound not only to bring its passengers safely to their destination but also
 to afford them a reasonable time to claim their baggage. Even if he had already
disembarked an hour earlier, his presence in petitioner's premises was not
without cause. The victim had to claim his baggage which was possible only one
(1) hour after the vessel arrived since it was admittedly standard procedure in the
case of petitioner's vessels that the unloading operations shall start only after that
time. Consequently, under the foregoing circumstances, the victim Anacleto Viana
is still deemed a passenger of said carrier at the time of his tragic death.

There is no showing that petitioner was extraordinarily diligent in requiring or

seeing to it that said precautionary measures were strictly and actually enforced
to subserve their purpose of preventing entry into the forbidden area. By no
stretch of liberal evaluation can such perfunctory acts approximate the "utmost
diligence of very cautious persons" to be exercised "as far as human care and
foresight can provide" which is required by law of common carriers with respect
to their passengers.

148 Seaworthiness Do syndicated Ores have the right to insist that the vessel carry the cargo to the U.S.
per bill of lading, or that the shipowner hire a substitute vessel to complete the contracted
voyage in accordance with the “extraordinary diligence” required of common carriers in
the carriage of goods?

It depends. If during the voyage the vessel should become unseaworthy, the
captain shall be obliged to charter at his expense another one in good condition
to carry the cargo to its destination, U.S. If the captain should not furnish through
indolence or malice, a vessel to take the cargo to its destination, the shippers may
charter one at the expense of the captain/shipowner.

While in Hongkong, X shipped on the S/S Burma Maru for Manila 500 cages of fine
yellow colored canaries which he intended to sell in his pet shop here. The shipment is
worth P4,000. Due to lack of proper facilities in the hold of the ship, all the birds died
during the trip. Under the provisions of the COGSA, what is the liability of the carrier?
The owner of S/S Burma Maru is liable for the damages caused by the death of the
birds during the trip. Section 3 of COGSA provides that the carrier is obligated to
make the holds of the ship fit for the cargo that it is accepting. Obviously, the
carrier failed to comply with such obligation.

157 Transshipment JRT Inc. entered into a contract with C Company of Japan to export anahaw fans
valued at $23,000.00. As payment thereof, a letter of credit was issued to JRT, Inc. by
the buyer. The letter of credit required the issuance of an on-board bill of lading and
prohibited the transshipment. The President of JRT then contracted a shipping agent to
ship the anahaw fans through O Containers Lines, specifying the requirements of the
letter of credit. However, the bill of lading issued by the shipping lines bore the notation
“received for shipment” and contained an entry indicating transshipment in Hongkong.
The President of JRT personally received and signed the bill of lading and despite the
entries, he delivered the corresponding check in payment of the freight.

The shipment was delivered at the port of discharge but the buyer refused to accept
the anahaw fans because there was no on-board bill of lading, and there was
transshipment since the goods were transferred in Hongkong from MV Pacific, the feeder
vessel, to MV Oriental, a mother vessel. JRT argued that the same cannot be considered
transshipment because both vessels belong to the same shipping company.

a) Was there transshipment?

Yes, there was transshipment. Transshipment, in maritime law, is defined as “the

act of taking cargo out of one ship and loading it in another,” or “the transfer of
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,; or “the
transfer for further transportation from one ship or conveyance to another.”
 Clearly, either in its ordinary or its strictly legal acceptation, it does not matter
whether both vessels belong to one and the same person.

b) JRT further argued that assuming that there was transshipment, it cannot be
deemed to have agreed thereto even if it signed the bill of lading containing such
entry because it was made known to the shipping lines from the start that
transshipment was prohibited under the letter of credit and that, therefore, it had
no intention to allow transshipment of the subject cargo. Is the argument tenable?
Reason.

No, the argument is not tenable. JRT, Inc. accepted the bill of lading, hence, it is
bound by the terms and conditions thereof. Since the bill of lading allows
transshipment, JRT can no longer complain that such transshipment occurred.

172 Duty to Inspect Marino was a passenger on a train. Another passenger, Juancho, had taken a gallon of
gasoline placed in a plastic bag into the same coach where Marino was riding. The
gasoline ignited and exploded causing injury to Marino who filed a civil suit for damages
against the railway company claiming that Juancho should have been subjected to
inspection by its conductor. The railway company disclaimed liability resulting from the
explosion contending that it was unaware of the contents of the plastic bag and invoking
the right of Juancho to privacy.

a) Should the railway company be held liable for damages?

No. The railway company is not liable for damages. This is subject to the
qualification that the company should prove that it, through the exercise of
extraordinary diligence, cannot detect the presence of gasoline. It should be noted
that in overland transportation, the common carrier is not bound nor empowered
to make an examination on the contents of packages or bags, particularly those
handcarried by passengers.

b) If it were an airline company involved, would your answer be the same? Explain
briefly

No, my answer would not be the same. If it were an airline company, the common
carrier should be made liable. It was a duty of an airline company to inspect each
and every cargo that is brought into the aircraft. Exercise of extraordinary
diligence would therefore result in the discovery of the gasoline.

A, as paying passenger, boarded a plane of X & Co., a duly authorized air carrier bound
from Manila to Cebu. On the way, the plane exploded in mid-air, and crashed, causing
the death of all persons on board. It was determined that the mid-air explosion was due
to the explosive device contained in a suitcase by another passenger in the ill-fated
aircraft. If you are the judge, how will you rule?

I will make the carrier liable. The carrier is bound to exercise extraordinary
diligence in carrying its passengers. It is presumed to be negligent when its
passengers died when the aircraft exploded. Moreover, the negligence of the
carrier is apparent because an explosive device was brought into the carrier
without being detected by the employees. Under R.A. 6235, the carrier is bound to
inspect and investigate suspicious packages that are being brought into the
aircraft. This duty was not complied with because the explosive device was not
detected by the carrier’s personnel.

188 Carriage by On the night of October 5, 1963, plaintiffs-appellees attended a birthday party inside the
Train United Housing Subdivision in Paranaque, Rizal. After the party which broke up at about
11 o'clock that evening, the plaintiffs-appellees proceeded home in their Vauxhall car
with Victorino Cusi at the wheel. Upon reaching the railroad tracks, finding that the level
crossing bar was raised and seeing that there was no flashing red light, and hearing no
 whistle from any coming train, Cusi merely slackened his speed and proceeded to cross
the tracks. At the same time, a train bound for Lucena traversed the crossing, resulting
in a collision between the two. The impact threw the plaintiffs-appellees out of their car
which was smashed. One Benjamin Franco, who came from the same party and was
driving a vehicle right behind them, rushed to their aid and brought them. to San Juan
de Dios Hospital for emergency treatment. Later, the plaintiffs-appellees were
transferred to the Philippine General Hospital. A week later, Mrs. Cusi transferred to the
Manila Doctors Hospital where Dr. Manuel Rivera, head of the Orthopedic and Fracture
Service of the Philippine General Hospital performed on her a second operation and
continued to treat her until her discharge from the hospital on November 2, 1963.
Thereafter, Dr. Rivera treated her as an out-patient until the end of February, 1964
although by that time the fractured bones had not yet healed. Mrs. Cusi was also
operated on by Dr. Francisco Aguilar, Director of the National Orthopedic Hospital, in
May, 1964 and in August, 1965, after another operation in her upper body from the chest
to the abdomen, she was placed in cast for some three (3) months and her right arm
immobilized. Is the railway company liable?

The railway company is liable because the circumstances attendant to the

collision shows negligence on its part. “Undisputably, the warning devices
installed at the railroad crossing were manually operated; there were only 2 shifts
of guards provided for the operation thereof — one, the 7:00 A.M. to 3:00 P. M.
shift, and the other, the 3:00 P.M. to 11:00 P.M. shift. On the night of the accident,
the train for Lucena was on an unscheduled trip after 11:00 P.M. During that
precise hour, the warning devices were not operating for no one attended to them.
Also, as observed by the lower court, the locomotive driver did not blow his
whistle, thus: "... he simply sped on without taking an extra precaution of blowing
his whistle from a distance of 50 to 10 meters from the crossing. That the train
was running at full speed is attested to by the fact that notwithstanding the
application of the emergency brakes, the train did not stop until it reached a
distance of around 100 meters."

These facts assessed together show the inadequacy, nay, the absence, of
precautions taken by the defendant-appellant to warn the travelling public of the
impending danger. It is clear to Us that as the signal devices were wholly
manually-operated, there was an urgent need for a flagman or guard to man the
crossing at all times. As it was, the crossing was left unattended to after eleven
o'clock every night and on the night of the accident. We cannot in all reason justify
or condone the act of the defendant-appellant allowing the subject locomotive to
travel through the unattended crossing with inoperative signal devices, but
without sending any of its employees to operate said signal devices so as to warn
oncoming motorists of the approach of one of its locomotives. It is not surprising
therefore that the in operation of the warning devices created a situation which
was misunderstood by the riding public to mean safe passage. Jurisprudence
recognizes that if warning devices are installed in railroad crossings, the travelling
public has the right to rely on such warning devices to put them on their guard
and take the necessary precautions before crossing the tracks. A need, therefore,
exists for the railroad company to use reasonable care to keep such devices in
good condition and in working order, or to give notice that they are not operating,
since if such a signal is misunderstood it is a menace. Thus, it has been held that
if a railroad company maintains a signalling device at a crossing to give warning
of the approach of a train, the failure of the device to operate is generally held to
be evidence of negligence, which maybe considered with all the circumstances of
the case in determining whether the railroad company was negligent as a matter
of fact.

189 The incident involved transpired on May 10, 1931. At about 7 o'clock on the morning of
May 10, 1931, the plaintiff, his wife Sonja Maria Lilius, and his 4-year old daughter Brita
Marianne Lilius, left Manila in their Studebaker car — driven by the said plaintiff Aleko
E. Lilius — for the municipality of Pagsanjan, Province of Laguna, on a sight-seeing trip.
It was the first time that he made said trip although he had already been to many places,
driving his own car, in and outside the Philippines. Where the road was clear and
unobstructed, the plaintiff drove at the rate of from 19 to 25 miles an hour. Prior thereto,
he had made the trip as far as Calauan, but never from Calauan to Pagsanjan, via
Dayap. He was entirely unacquainted with the conditions of the road at said points and
had no knowledge of the existence of a railroad crossing at Dayap. Before reaching the
crossing in question, there was nothing to indicate its existence and inasmuch as there
were many houses, shrubs and trees along the road, it was impossible to see an
approaching train. At about seven or eight meters from the crossing, coming from
Calauan, the plaintiff saw an autotruck parked on the left side of the road. Several
people, who seemed to have alighted from the said truck, were walking on the opposite
side. He slowed down to about 12 miles an hour and sounded his horn for the people to
get out of the way. With his attention thus occupied, he did not see the crossing but he
heard two short whistles. Immediately afterwards, he saw a huge black mass fling itself
upon him, which turned out to be locomotive No. 713 of the defendant company's train
coming eastward from Bay to Dayap station. The locomotive struck the plaintiff's car right
in the center. After dragging the said car a distance of about ten meters, the locomotive
threw it upon a siding. The force of the impact was so great that the plaintiff's wife and
daughter were thrown from the car and were picked up from the ground unconscious
and seriously hurt. In spite of the efforts of engineer Andres Basilio, he was unable to
stop the locomotive until after it had gone about seventy meters from the crossing. Aleko,
Sonja and Brita Marianne suffered extensive injuries as a consequence of the incident.
Is the train operator liable?

Yes. The Court concluded that the railway company was negligent explaining
that “prior to the accident, there had been no notice nor sign of the existence of
the crossing, nor was there anybody to warn the public of approaching trains. The
flagman or switchman arrived after the collision, coming from the station with a
red flag in one hand and a green one in the other, both of which were wound on
their respective sticks. The said flagman and switchman had many times absented
himself from his post at the crossing upon the arrival of a train. The train left Bay
station a little late and therefore travelled at great speed”.

Upon examination of the oral as well as of the documentary evidence which the
parties presented at the trial in support of their respective contentions, and after
taking into consideration all the circumstances of the case, this court is of the
opinion that the accident was due to negligence on the part of the defendant-
appellant company, for not having had on that occasion any semaphore at the
crossing at Dayap, to serve as a warning to passers-by of its existence in order
that they might take the necessary precautions before crossing the railroad; and,
on the part of its employees — the flagman and switchman, for not having
remained at his post at the crossing in question to warn passers-by of the
approaching train; the stationmaster, for failure to send the said flagman and
switchman to his post on time; and the engineer, for not having taken the
necessary precautions to avoid an accident, in view of the absence of said
flagman and switchman, by slackening his speed and continuously ringing the
bell and blowing the whistle before arriving at the crossing. Although it is probable
that the defendant-appellant entity employed the diligence of a good father of a
family in selecting its aforesaid employees, however, it did not employ such
diligence in supervising their work and the discharge of their duties because,
otherwise, it would have had a semaphore or sign at the crossing and, on previous
occasions as well as on the night in question, the flagman and switchman would
have always been at his post at the crossing upon the arrival of a train. The
diligence of a good father of a family, which the law requires in order to avoid
damage, is not confined to the careful and prudent selection of subordinates or
employees but includes inspection of their work and supervision of the discharge
of their duties.
191 Rhonda Brunty, daughter of respondent Ethel Brunty and an American citizen, came to
the Philippines for a visit sometime in January 1980. Prior to her departure, she, together
with her Filipino host Juan Manuel M. Garcia, travelled to Baguio City on board a
Mercedes Benz sedan with plate number FU 799, driven by Rodolfo L. Mercelita. It was
about 12:00 midnight, January 25, 1980. By then, PNR Train No. T-71, driven by Alfonso
Reyes, was on its way to Tutuban, Metro Manila as it had left the La Union station at
11:00 p.m., January 24, 1980. By 2:00 a.m., Rhonda Brunty, Garcia and Mercelita were
already approaching the railroad crossing at Barangay Rizal, Moncada, Tarlac.
Mercelita, driving at approximately 70 km/hr, drove past a vehicle, unaware of the
railroad track up ahead and that they were about to collide with PNR Train No. T-71.
Mercelita was instantly killed when the Mercedes Benz smashed into the train; the two
other passengers suffered serious physical injuries. A certain James Harrow brought
Rhonda Brunty to the Central Luzon Doctor’s Hospital in Tarlac, where she was
pronounced dead after ten minutes from arrival. Garcia, who had suffered severe head
injuries, was brought via ambulance to the same hospital. He was transferred to the
Manila Doctors Hospital, and later to the Makati Medical Center for further treatment. Is
the PNR liable?

Yes, PNR is liable. It was clearly established that Ethel Brunty and Juan Manuel
Garcia sustained damage or injury as a result of the collision. That there was
negligence on the part of PNR is, likewise, beyond cavil. Considering the
circumstances prevailing at the time of the fatal accident, the alleged safety
measures installed by the PNR at the railroad crossing is not only inadequate but
does not satisfy well-settled safety standards in transportation.

An examination of the photographs of the railroad crossing at Moncada, Tarlac

presented as evidence by PNR itself would yield the following: (1.) absence of
flagbars or safety railroad bars; (2.) inadequacy of the installed warning signals;
and (3.) lack of proper lighting within the area. Thus, even if there was a flagman
stationed at the site as claimed by PNR (petitioner), it would still be impossible to
know or see that there is a railroad crossing/tracks ahead, or that there is an
approaching train from the Moncada side of the road since one’s view would be
blocked by a cockpit arena.

A vehicle coming from the Moncada side would have difficulty in knowing that
there is an approaching train because of the slight curve, more so, at an unholy
hour as 2:00 a.m. Thus, it is imperative on the part of the PNR to provide adequate
safety equipment in the area.

This Court has previously determined the liability of the PNR for damages for
its failure to put a cross bar, or signal light, flagman or switchman, or semaphores.
Such failure is evidence of negligence and disregard of the safety of the public,
even if there is no law or ordinance requiring it because public safety demands
that said device or equipment be installed.

The Supreme Court ruled that the liability of PNR should be mitigated because
there was contributory negligence. It was established that Mercelita was then
driving the Mercedes Benz at a speed of 70 km/hr and, in fact, had overtaken a
vehicle a few yards before reaching the railroad track. Mercelita should not have
driven the car the way he did.

204 Hand Carried X boarded an airconditioned Pantranco Bus bound for Baguio. X was given notice that
Luggage the carrier is not liable for baggage brought in by passengers. X kept in his custody his
attache’ case containing $10,000. In Tarlac, all the passengers, including X, were told to
get off and to take their lunch, the cost of which is included in the ticket. X left his attaché
case on his seat as the door of the bus was locked. After lunch and when X returned to
the bus, he discovered that his attaché case was missing. A vendor said that a man
picked the lock of the door, entered the bus and ran away with the attaché case. What,
 if any, is the liability of the carrier?

Hand-carried pieces of luggage of passengers are governed by the rules on

necessary deposit. Under Article 2000 of the Civil Code the responsibility of the
depository shall, among other cases, include the loss of property of the guest
caused by strangers but not that which may proceed from force majeure. Article
2001 of the same Code considers an act of a thief as not one of force majeure
unless done with the use of arms or through an irresistible force. Accordingly, the
carrier may, given the factual setting in the problem, still be held liable.

X took the Benguet Bus from Baguio going to Manila. He deposited his maleta in the
baggage compartment of the bus common to all passengers. He did not declare his
baggage nor pay its charges contrary to the regulations of the bus company. When X
got off, he could not find his baggage which obviously was taken by another passenger.
Determine the liability of the bus company.

The bus company is liable for the loss of the maleta. The duty of extraordinary
diligence in the vigilance over the goods is due on such goods as are deposited
or surrendered to the common carrier for transportation. The fact that the maleta
was not declared nor the charges paid thereon, would not be material so long as
it was received by the carrier for transportation.

Antonio, a paying passenger, boarded a bus bound for Batangas City. He chose a seat
at the front row, near the bus driver, and told the bus driver that he had valuable items
in his hand carried bag which he then placed beside the driver’s seat. Not having slept
for 24 hours, he requested the driver to keep an eye on the bag should he doze off during
the trip. While Antonio was asleep, another passenger took the bag away and alighted
at Calamba, Laguna. Could the common carrier be held liable by Antonio for the loss?

Yes, the common carrier is liable to Antonio for the loss of his bag. Hand-
carried pieces of luggage of passengers are governed by the rules on necessary
deposit. Under Article 2000 of the Civil Code the responsibility of the depository
shall, among other cases, include the loss of property of the guest caused by
strangers but not that which may proceed from force majeure. Article 2001 of the
same Code considers an act of a thief as not one of force majeure unless done
with the use of arms or through an irresistible force.

Ordinarily, the common carrier is not liable for acts of other passengers. But
the common carrier cannot relieve itself from liability if the common carrier’s
employees could have prevented the act or omission by exercising due diligence.
In this case, the passenger asked the driver to keep an eye on the bag which was
placed beside the driver’s seat. If the driver exercised due diligence, he could have
prevented the loss of the bag.

221 Defenses in While docking his vessel, “Taurus”, the master, through negligence, damaged the wharf
Carriage of and the merchandise loaded on the deck. The owner of the wharf and the damaged
Passengers merchandise sued the owner of the vessel and the master of the vessel for the damage.
Does the defense of the exercise of diligence of a good father of a family lie? Reason.

No with respect to the damage to the merchandise, but Yes with respect to the
damage to the wharf. The defense of exercise of the diligence of a good father of
a family is not available in breach of contract but is available in quasi-delict cases.
The cause of action by the owner of the merchandise against the carrier is breach
of contract. Hence, the defense of the exercise of due diligence of a good father
of a family is not available. The carrier is supposed to exercise extraordinary
diligence in transporting the goods and the said carrier cannot be deemed to
exercise this degree of diligence if its captain or employees were negligent.

However, the defense of due diligence in the selection and supervision of the
 carrier’s employees is available against the owner of the wharf. The cause of
action against the carrier is quasi-delict and the carrier is being sued for his
vicarious liability. Hence, the defense of exercise of the diligence of a good father
of a family in the selection and supervision of his employees is available under
Article 2180 of the Civil Code.

The vessel M/V Sweet Perceptions, commanded by Kapitan, its captain, was unloading
goods at a private wharf in Naval, Leyte, when the ship bumped the wharf of the pier
causing it to collapse in the sea. It turned out that Kapitan failed to drop the vessel’s bow
anchors and to fasten the vessel property to the pier. The vessel was pushed by the
combined action of the currents in the Biliran Island Strait and the usual southwest
monsoon winds of the season. As a result, Pantalan, the owner of the wharf, lost not
only the wharf but also the goods that had just been unloaded on the pier pending their
delivery to him. Pantalan sued both the owner of the M/V Sweet Perceptions and kapitan
for the loss of the cargoes and the destruction of the wharf of the pier. The vessel’s
owner, who is in Manila, states that he exercised due diligence in the selection and
supervision of Kapitan. Can the vessel’s owner and Kapitan be held liable for the loss of
the wharf and the cargoes? Explain.

Yes, the vessel’s owner may be held liable with respect to the damage to
cargoes but he is not liable with respect to the damage to the wharf. The cause of
action by the owner of the cargoes against the carrier is culpa contractual. Hence,
negligence is presumed the moment the goods were damaged before the same is
delivered. However, the defense of due diligence in the selection and supervision
of the carrier’s employees is available against the owner of the wharf. If the same
can be established, the carrier is not liable. The cause of action against the carrier
is culpa aquiliana and the carrier is being sued for his vicarious liability. Hence,
the defense of exercise of the diligence of a good father of a family in the selection
and supervision of his employees is available under Article 2180 of the Civil Code.

On the other hand, Kapitan can be held liable for the loss of the wharf and
cargoes. The liability is based on culpa aquiliana because his negligent act or
omission caused the damage or injury. In fact, the action against him may even
be to enforce his civil liability arising from criminal negligence.

239 Fortuitous Philip Mauricio shipped a box of cigarettes to a dealer in Naga City through Bicol Bus
Event Company (BBC). When the bus reached Lucena City, the bus developed engine trouble.
The driver brought the bus to a repair shop in Lucena where he was informed by the
mechanic that an extensive repair was necessary, which would take at least 2 days.
While the bus was in the repair shop, Typhoon Coring lashed Quezon Province. The
cargoes inside the bus, including Mauricio’s cigarettes, got wet and were totally spoiled.
Mauricio sued BBC for damage to his cargoes.

The Bicol Bus Company (BBC) is liable for damages to the cargoes lost by
Mauricio. A natural disaster, such as a typhoon, would relieve liability if it is the
proximate and only cause of the damage. The carrier itself, in this case, had been
negligent. The presumption of negligence in culpa contractual is not overcome by
engine trouble which does not preclude its having been due to the fault of the
common carrier. The fact that an extensive repair work was necessary which, in
fact, took two (2) days to complete somehow justifies an impression that the
engine trouble could have been detected, if not already known, well before the
actual breakdown.

Pasahero, a paying passenger, boarded a Victory Liner bus bound for Olongapo. He
chose a seat at the front near the bus driver. Pasahero told the bus driver that he had
valuable items in his bag which was placed near his feet. Since he had not slept 24
hours, he requested the driver to keep an eye on the bag should he doze off during the
trip.
 a) There have been incidents of unknown persons throwing stones at passing
vehicles from the overpasses in the North Expressway. While the bus was
traversing the superhighway, a stone hurled from the Sto. Domingo overpass
smashed the front windshield and hit Pasahero in the face. Pasahero lost an eye
and suffered other injuries. Can Pasahero hold the bus company liable for
damages? Explain.

Pasahero can hold the bus company liable. This is because of the company’s
failure to exercise utmost diligence in securing the safety of its passengers. Since
incidents of stone-throwing had earlier been known, it is a responsibility upon the
common carrier to warn its passengers sitting close to the windshield or to
provide other precautionary measures for its passengers.

b) Supposing the two armed men staged a hold-up while the bus was speeding
along the North Expressway. One of them pointed a gun at Pasahero and stole
not only his bag but also his wallet as well. Is Victory Liner liable to Pasahero?
Explain.

Pasahero may not hold the carrier liable. Hand carried luggage are governed by
the rules on necessary deposit. Under Article 2001 of the Civil Code, an act of a
thief is not considered force majeure unless done with the use of arms or through
an irresistible force. There was use of arms in the given problem, hence, Pasahero
may not hold Victory Liner liable.

240 Mariter, a paying passenger, was hit above her left eye by a stone hurled at the bus by
an unidentified bystander as the bus was speeding through the National Highway. The
bus owner’s personnel lost no time in bringing Mariter to the provincial hospital where
she was confined and treated. Mariter wants to sue the bus company for damages and
seeks your advice whether she can legally hold the bus company liable. What will you
advise her?

I will advise Mariter that she cannot legally hold the bus company liable. There is
no showing that any such incident previously happened so as to impose an
obligation on part of the personnel of the bus company to warn the passengers
and to take the necessary precaution. Such hurling of a stone constitutes a
fortuitous event in this case. If Mariter decides to file a case in court, all that she
will prove is that she was a passenger and she was injured while on board the
bus.

M. Dizon Trucking (Dizon) entered into a hauling contract with Fairgoods Corporation
(Fairgoods) whereby the former bound itself to haul the latter’s 2000 sacks of Soya bean
meal from Manila Port Area to Calamba, Laguna. To carry out faithfully its obligation
Dizon subcontracted with Enrico Reyes the delivery of 400 sacks of the Soya bean meal.
Aside from the driver, three male employees of Reyes rode on the truck with the cargo.
While the truck was on its way to Laguna two strangers suddenly stopped the truck and
hijacked the cargo. Investigation by the police disclosed that one of the hijackers was
armed with a bladed weapon while the other was unarmed. For failure to deliver the 400
sacks, Fairgoods sued Dizon for damages. Dizon in turn set up a 3rd party complaint
against Reyes which the latter registered on the ground that the loss was due to force
majeure. Did the hijacking constitute force majeure to exculpate Reyes from any liability
to Dizon? Discuss fully.

No, the hijacking cannot exculpate Reyes from liability. The hijacking in this case
cannot be considered force majeure. Only one of the two hijackers was armed with
a bladed weapon. As against the 4 male employees of Reyes, 2 hijackers, with only
one of them being armed with a bladed weapon, cannot be considered force
majeure. The hijackers did not act with grave or irresistible threat, violence or
force.
241 AM Trucking, a small company, operates two trucks for hire on selective basis. It caters
only to a few customers, and its trucks do not make regular or scheduled trips. It does
not even have a certificate of public convenience. On one occasion, Reynaldo contracted
AM to transport for a fee, 100 sacks of rice from Manila to Tarlac.However, AM failed to
deliver the cargo, because its truck was hijacked when the driver stopped in Bulacan to
visit his girlfriend. May AM set up the hijacking as a defense to defeat Reynaldo’s claim?

No, AM Trucking may not set up the hijacking as a defense to defeat Reynaldo’s
claim. A common carrier is presumed to be negligent and it is said that the carrier
has to prove the exercise of extraordinary diligence. The facts given do not
indicate that the same was attended by the use of grave or irresistible threat,
violence, or force. It would appear that the truck was left unattended by its driver
and was taken while he was visiting his girlfriend.

Alejandro Camalig of Alegria, Cebu, is engaged in buying copra, charcoal, firewood, and
used bottles and in reselling them in Cebu City. He uses two big ISUZU Trucks for the
purpose; however he has no certificate of public convenience or franchise to do business
as a carrier. On return trip to Alegria, he loads his trucks with various merchandise of
other merchants in Alegria and the neighboring municipalities of BADIAN and
GINATILAN. While passing the zigzag road between CARCAR and BARILI, Cebu which
is midway between Cebu City and Alegria, the truck was hijacked by three armed men
who took all the boxes of sardines and kidnapped the driver and his helper, releasing
them in Cebu City only two (2) days later. Pedro Rabor sought to recover from Alegria
the value of the sardines. The latter contends that he is not liable therefore because [of
the] concurrence of the loss was due to a cause beyond his control. If you were the
judge, would you sustain the contention of Alejandro?

If I were the judge, I would sustain the contention of Alejandro that he is not liable
for the loss of the goods provided that he can prove that he exercised
extraordinary diligence. The hijacking by three armed men of the truck used by
Alejandro is one of the causes which is beyond the control of the carrier. Thus, if
the carrier can prove that the hijacking was not foreseeable, the carrier may be
adjudged free from liability.

242 On March 1, 1987, San Miguel Corporation insured several beer bottle cases with an
aggregate value of P5,836,222.80 with petitioner Philippine American General Insurance
Company. The cargo were loaded on board the M/V Peatheray Patrick-G to be
transported from Mandaue City to Bislig, Surigao del Sur. After having been cleared by
the Coast Guard Station in Cebu the previous day, the vessel left the port of Mandaue
City for Bislig, Surigao del Sur on March 2, 1987. The weather was calm when the vessel
started its voyage. The following day, March 3, 1987, M/V Peatheray Patrick-G listed
and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a consequence
thereof, the cargo belonging to San Miguel Corporation was lost. Subsequently, San
Miguel Corporation claimed the amount of its loss from the petitioner. Upon petitioner's
request, on March 18, 1987, Mr. Eduardo Sayo, a surveyor from the Manila Adjusters
and Surveyors Co., went to Taganauan Island, Cortes, Surigao del Sur where the vessel
was cast ashore, to investigate the circumstances surrounding the loss of the cargo. In
his report, Mr. Sayo stated that the vessel was structurally sound and that he did not see
any damage or crack thereon. He concluded that the proximate cause of the listing and
subsequent sinking of the vessel was the shifting of ballast water from starboard to
portside. The said shifting of ballast water allegedly affected the stability of the M/V
Peatheray Patrick-G. Thereafter, petitioner paid San Miguel Corporation the full amount
of P5,836,222.80 pursuant to the terms of their insurance contract. PMGIC thereafter
filed a claim against the carrier as subrogee of SMC. Is the carrier liable?

No, the carrier is not liable. M/V Peatheray Patrick-G, the vessel that sank,
encountered strong winds and huge waves ranging from six to ten feet in height.
The vessel listed at the port side and eventually sank at Cawit Point, Cortes,
Surigao del Sur. In the case at bar, it was adequately shown that before the M/V
 Peatheray Patrick-G left the port of Mandaue City, the Captain confirmed with the
Coast Guard that the weather condition would permit the safe travel of the vessel
to Bislig, Surigao del Sur. Thus, he could not be expected to have foreseen the
unfavorable weather condition that awaited the vessel in Cortes, Surigao del Sur.
It was the presence of the strong winds and enormous waves which caused the
vessel to list, keel over, and consequently lose the cargo contained therein.

That the vessel was granted SOLAS clearance by the Philippine Coast Guard
on March 1, 1987 to depart from Mandawe City for Bislig, Surigao del Sur as
evidenced by a certification issued to D.C. Gaerlan Oil Products by Coast Guard
Station Cebu dated December 23, 1987. Based on the foregoing circumstances,
"LCT Peatheray Patrick-G" should be considered a seaworthy vessel at the time
she undertook that fateful voyage on March 2, 1987.

243 Petitioner-plaintiff Jose Pilapil, a paying passenger, boarded respondent-defendant's

bus bearing No. 409 at San Nicolas, Iriga City on 16 September 1971 at about 6:00 P.M.
While said bus No. 409 was in due course negotiating the distance between Iriga City
and Naga City, upon reaching the vicinity of the cemetery of the Municipality of Baao,
Camarines Sur, on the way to Naga City, an unidentified man, a bystander along said
national highway, hurled a stone at the left side of the bus, which hit petitioner above his
left eye. Petitioner lost partially his left eye’s vision and sustained a permanent scar
above the left eye. Was the carrier able to rebut the presumption of negligence imposed
on common carriers?

Yes, contrary facts are established proving either that the carrier had exercised
the degree of diligence required by law or the injury suffered by the passenger
was due to a fortuitous event. Where, as in the instant case, the injury sustained
by the petitioner was in no way due to any defect in the means of transport or in
the method of transporting or to the negligent or willful acts of private
respondent's employees, and therefore involving no issue of negligence in its
duty to provide safe and suitable cars as well as competent employees, with the
injury arising wholly from causes created by strangers over which the carrier had
no control or even knowledge or could not have prevented, the presumption is
rebutted and the carrier is not and ought not to be held liable. To rule otherwise
would make the common carrier the insurer of the absolute safety of its
passengers which is not the intention of the lawmakers.

While as a general rule, common carriers are bound to exercise extraordinary

diligence in the safe transport of their passengers, it would seem that this is not
the standard by which its liability is to be determined when intervening acts of
strangers is to be determined directly cause the injury, while the contract of
carriage Article 1763 governs:

Article 1763. A common carrier is responsible for injuries suffered by a

passenger on account of the wilful acts or negligence of other passengers or of
strangers, if the common carrier's employees through the exercise of the diligence
of a good father of a family could have prevented or stopped the act or omission.

Clearly under the above provision, a tort committed by a stranger which causes
injury to a passenger does not accord the latter a cause of action against the
carrier. The negligence for which a common carrier is held responsible is the
negligent omission by the carrier's employees to prevent the tort from being
committed when the same could have been foreseen and prevented by them.
Further, under the same provision, it is to be noted that when the violation of the
contract is due to the willful acts of strangers, as in the instant case, the degree
of care essential to be exercised by the common carrier for the protection of its
passenger is only that of a good father of a family.
 Although the suggested precaution could have prevented the injury
complained of, the rule of ordinary care and prudence is not so exacting as to
require one charged with its exercise to take doubtful or unreasonable
precautions to guard against unlawful acts of strangers. The carrier is not charged
with the duty of providing or maintaining vehicles as to absolutely prevent any
and all injuries to passengers. Where the carrier uses cars of the most approved
type, in general use by others engaged in the same occupation, and exercises a
high degree of care in maintaining them in suitable condition, the carrier cannot
be charged with negligence in this respect. 6

Finally, petitioner contends that it is to the greater interest of the State if a

carrier were made liable for such stone-throwing incidents rather than have the
bus riding public lose confidence in the transportation system.

Sad to say, we are not in a position to so hold; such a policy would be better
left to the consideration of Congress which is empowered to enact laws to protect
the public from the increasing risks and dangers of lawlessness in society.

244 On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in
Kauswagan, Lanao del Norte, resulting in the death of several passengers of the
jeepney, including two Maranaos. Crisanto Generalao, a volunteer field agent of the
Constabulary Regional Security Unit No. X, conducted an investigation of the accident.
He found that the owner of the jeepney was a Maranao residing in Delabayan, Lanao
del Norte and that certain Maranaos were planning to take revenge on the petitioner by
burning some of its buses. Generalao rendered a report on his findings to Sgt. Reynaldo
Bastasa of the Philippine Constabulary Regional Headquarters at Cagayan de Oro.
Upon the instruction of Sgt. Bastasa, he went to see Diosdado Bravo, operations
manager of petitioner, its main office in Cagayan de Oro City. Bravo assured him that
the necessary precautions to insure the safety of lives and property would be taken.

At about 6:45 P.M. on November 22, 1989, three armed Maranaos who pretended to
be passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on its way
to Iligan City. Among the passengers of the bus was Atty. Caorong. The leader of the
Maranaos, identified as one Bashier Mananggolo, ordered the driver, Godofredo
Cabatuan, to stop the bus on the side of the highway. Mananggolo then shot Cabatuan
on the arm, which caused him to slump on the steering wheel. The one of the
companions of Mananggolo started pouring gasoline inside the bus, as the other held
the passenger at bay with a handgun. Mananggolo then ordered the passenger to get
off the bus. The passengers, including Atty. Caorong, stepped out of the bus and went
behind the bushes in a field some distance from the highway.

However, Atty. Caorong returned to the bus to retrieve something from the overhead
rack. at that time, one of the armed men was pouring gasoline on the head of the driver.
Cabatuan, who had meantime regained consciousness, heard Atty. Caorong pleading
with the armed men to spare the driver as he was innocent of any wrong doing and was
only trying to make a living. The armed men were, however, adamant as they repeated
the warning that they were going to burn the bus along with its driver. During this
exchange between Atty. Caorong and the assailants, Cabatuan climbed out of the left
window of the bus and crawled to the canal on the opposite side of the highway. He
heard shots from inside the bus. Larry de la Cruz, one of the passengers, saw that Atty.
Caorong was hit. Then the bus was set on fire. Some of the passengers were able to
pull Atty. Caorong out of the burning bus and rush him to the Mercy Community Hospital
in Iligan City, but he died while undergoing operation.

a) Is the carrier liable?

Yes, the carrier is liable. Despite warning by the Philippine Constabulary at

Cagayan de Oro that the Maranaos were planning to take revenge on the petitioner
 by burning some of its buses and the assurance of petitioner's operation manager,
Diosdado Bravo, that the necessary precautions would be taken, petitioner did
nothing to protect the safety of its passengers. Had petitioner and its employees
been vigilant they would not have failed to see that the malefactors had a large
quantity of gasoline with them. Under the circumstances, simple precautionary
measures to protect the safety of passengers, such as frisking passengers and
inspecting their baggages, preferably with non-intrusive gadgets such as metal
detectors, before allowing them on board could have been employed without
violating the passenger's constitutional rights.

b) Was there contributory negligence on the part of the injured party?

No, Atty. Caorong was not guilty of contributory negligence in returning to the bus
to retrieve his property. It should be pointed out that the intended targets of the
violence were petitioners and its employees, not its passengers. The assailant's
motive was to retaliate for the loss of life of two Maranaos as a result of the
collision between petitioner's bus and the jeepney in which the two Maranaos
were riding. Mananggolo, the leader of the group which had hijacked the bus,
ordered the passengers to get off the bus as they intended to burn it and its driver.
The armed men actually allowed Atty. Caorong to retrieve something from the bus.
What apparently angered them was his attempt to help the driver of the bus by
pleading for his life. He was playing the role of the good Samaritan. Certainly, this
act cannot be considered an act of negligence, let alone recklessness.

245 On February 27, 1918, the defendant was the owner of a public garage in the town of
San Fernando, La Union, and engaged in the business of carrying passengers for hire
from the one point to another in the Province of La Union and the surrounding provinces.
On the date mentioned, he undertook to convey the plaintiffs from San Fernando to
Currimao, Ilocos Norte, in a Ford automobile. On leaving San Fernando, the automobile
was operated by a licensed chauffeur, but after having reached the town of San Juan,
the chauffeur allowed his assistant, Remigio Bueno, to drive the car. Bueno held no
driver's license, but had some experience in driving, and with the exception of some
slight engine trouble while passing through the town of Luna, the car functioned well until
after the crossing of the Abra River in Tagudin, when, according to the testimony of the
witnesses for the plaintiffs, defects developed in the steering gear so as to make
accurate steering impossible, and after zigzagging for a distance of about half a
kilometer, the car left the road and went down a steep embankment. Was there a
fortuitous event?

No. There was no fortuitous event. Some extraordinary circumstance

independent of the will of the obligor, or of his employees, is an essential element
of a caso fortuito. Turning to the present case, it is at once apparent that this
element is lacking. It is not suggested that the accident in question was due to an
act of God or to adverse road conditions which could not have been foreseen. As
far as the records shows, the accident was caused either by defects in the
automobile or else through the negligence of its driver. That is not a caso fortuito.

neither under the American nor Spanish law is a carrier of passengers an

absolute insurer against the risks of travel from which the passenger may protect
himself by exercising ordinary care and diligence. The case of Alba vs. Sociedad
Anonima de Tranvias, Jurisprudencia Civil, vol. 102, p. 928, cited by the defendant
in support of his contentions, affords a good illustration of the application of this
principle. In that case Alba, a passenger on a street car, was standing on the
platform of the car while it was in motion. The car rounded a curve causing Alba
to lose his balance and fall off the platform, sustaining severe injuries. In an action
brought by him to recover damages, the supreme court of Spain held that
inasmuch as the car at the time of the accident was travelling at a moderate rate
of speed and there was no infraction of the regulations, and the plaintiff was
 exposed to no greater danger than that inherent in that particular mode of travel,
the plaintiff could not recover, especially so since he should have been on his
guard against a contingency as natural as that of losing his balance to a greater
or less extent when the car rounded the curve.

But such is not the present case; here the passengers had no means of
avoiding the danger or escaping the injury.

246 Plaintiffs Franklin G. Gacal and his wife, Corazon M. Gacal, Bonifacio S. Anislag and
his wife, Mansueta L. Anislag, and the late Elma de Guzman, were then passengers
boarding defendant's BAC 1-11 at Davao Airport for a flight to Manila, not knowing that
on the same flight, Macalinog, Taurac Pendatum known as Commander Zapata, Nasser
Omar, Liling Pusuan Radia, Dimantong Dimarosing and Mike Randa, all of Marawi City
and members of the Moro National Liberation Front (MNLF), were their co-passengers,
three (3) armed with grenades, two (2) with .45 caliber pistols, and one with a .22 caliber
pistol. Ten (10) minutes after take off at about 2:30 in the afternoon, the hijackers
brandishing their respective firearms announced the hijacking of the aircraft and directed
its pilot to fly to Libya. With the pilot explaining to them especially to its leader,
Commander Zapata, of the inherent fuel limitations of the plane and that they are not
rated for international flights, the hijackers directed the pilot to fly to Sabah. With the
same explanation, they relented and directed the aircraft to land at Zamboanga Airport,
Zamboanga City for refueling. The aircraft landed at 3:00 o'clock in the afternoon of May
21, 1976 at Zamboanga Airport. When the plane began to taxi at the runway, it was met
by two armored cars of the military with machine guns pointed at the plane, and it
stopped there. The rebels thru its commander demanded that a DC-aircraft take them to
Libya with the President of the defendant company as hostage and that they be given
$375,000 and six (6) armalites, otherwise they will blow up the plane if their demands
will not be met by the government and Philippine Air Lines. Meanwhile, the passengers
were not served any food nor water and it was only on May 23, a Sunday, at about 1:00
o'clock in the afternoon that they were served 1/4 slice of a sandwich and 1/10 cup of
PAL water. After that, relatives of the hijackers were allowed to board the plane but
immediately after they alighted therefrom, an armored car bumped the stairs. That
commenced the battle between the military and the hijackers which led ultimately to the
liberation of the surviving crew and the passengers, with the final score of ten (10)
passengers and three (3) hijackers dead on the spot and three (3) hijackers captured.

City Fiscal Franklin G. Gacal was unhurt. Mrs. Corazon M. Gacal suffered injuries in
the course of her jumping out of the plane when it was peppered with bullets by the army
and after two (2) hand grenades exploded inside the plane. She was hospitalized at
General Santos Doctors Hospital, General Santos City, for two (2) days, spending
P245.60 for hospital and medical expenses, Assistant City Fiscal Bonifacio S. Anislag
also escaped unhurt but Mrs. Anislag suffered a fracture at the radial bone of her left
elbow for which she was hospitalized and operated on at the San Pedro Hospital, Davao
City, and therefore, at Davao Regional Hospital, Davao City, spending P4,500.00. Elma
de Guzman died because of that battle.

Whether or not hijacking or air piracy during martial law and under the circumstances
obtaining herein, is a caso fortuito or force majeure which would exempt an aircraft from
payment of damages to its passengers whose lives were put in jeopardy and whose
personal belongings were lost during the incident.

Yes. There was force majeure. the failure to transport petitioners safely from
Davao to Manila was due to the skyjacking incident staged by six (6) passengers
of the same plane, all members of the Moro National Liberation Front (MNLF),
without any connection with private respondent, hence, independent of the will of
either the PAL or of its passengers.

Under normal circumstances, PAL might have foreseen the skyjacking incident
 which could have been avoided had there been a more thorough frisking of
passengers and inspection of baggages as authorized by R.A. No. 6235. But the
incident in question occurred during Martial Law where there was a military take-
over of airport security including the frisking of passengers and the inspection of
their luggage preparatory to boarding domestic and international flights.
Otherwise stated, these events rendered it impossible for PAL to perform its
obligations in a nominal manner and obviously it cannot be faulted with
negligence in the performance of duty taken over by the Armed Forces of the
Philippines to the exclusion of the former.

253 Improper Archipelago Lines, Inc., a carrier, accepted for shipment from Iloilo to Manila a cargo
Packing consisting of 800 sacks of rice, knowing that some sacks had big holes and others had
their openings just loosely tied with strings. Due to spillage of the rice during the trip,
there was a shortage in the rice delivered by the carrier to the consignee. When sued,
Archipelago Lines, Inc. interposed the defense that the carrier was not liable because
the spillage was due to the defective condition of the sacks. As a judge, how would you
rule on the liability of the carrier? Reasons.

I would rule that the carrier is liable for the shortage of the rice delivered to the
consignee. If the fact of improper packing is known to the carrier or its servants,
or apparent upon ordinary observation, but the carrier accepts the goods
notwithstanding such condition, it is not relieved of liability for loss or injury
resulting therefrom.

254 Because of spillage of the rice during the trip from Davao to Manila due to the bad
condition of the sacks, there was a shortage in the rice delivered by the Provident Lines
Inc. to the consignee XYZ Import and Export Corporation. The carrier accepted the
shipment, knowing that the sacks had holes and some had broken strings. When sued,
Provident Lines, Inc. alleged that the loss was caused by the spillage of the rice on
account of the defective condition of the sacks, at the time it received the shipment, and
therefore, it cannot be held liable. Decide. Give reasons.

Provident Lines, Inc. is liable. Where the fact of improper packing is known to the
carrier or its servants, or apparent upon ordinary observations, but the carrier
accepts the goods notwithstanding such conditions, it is not relieved of liability
for loss or injury resulting therefrom. The carrier must exercise due diligence in
forestalling or lessening the loss.

Is a maritime carrier liable for loss of several sacks of rice due to improper packing and
the holes in many bags which appear apparent upon ordinary observation at the time of
the acceptance of the shipment by the carrier? Reason.

Yes. It is a well-settled fact that if the fact of improper packing is known to the
carrier or its servants, or apparent upon ordinary observations, but the carrier
accepts the goods notwithstanding such conditions, it is not relieved of liability
for loss or injury resulting therefrom. The carrier must exercise due diligence in
forestalling or lessening the loss.

255 Order of Public On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B.
Authority Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on
board the lighter LCT "Batman" (Exhibit 1, Stipulation of Facts, Amended Record on
Appeal, p. 38). Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman"
to Mariveles where it docked in three feet of water. On December 1, 1956, Gelacio
Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of the lighter,
for loading which was actually begun on the same date by the crew of the lighter under
the captain's supervision. When about half of the scrap iron was already loaded, Mayor
Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio
Tumambing. The latter resisted the shakedown and after a heated argument between
them, Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing. The gunshot
 was not fatal but Tumambing had to be taken to a hospital in Balanga, Bataan, for
treatment. After sometime, the loading of the scrap iron was resumed. But on December
4, 1956, Acting Mayor Basilio Rub, accompanied by three policemen, ordered captain
Filomeno Niza and his crew to dump the scrap iron (t.s.n., June 16, 1972, pp. 8-9) where
the lighter was docked. The rest was brought to the compound of NASSCO. Later on
Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken
custody of the scrap iron. Petitioner maintains that he is exempt from any liability
because the loss of the scraps was due mainly to the intervention of the municipal
officials of Mariveles which constitutes a caso fortuito as defined in Article 1174 of the
Civil Code. Is the position of the petitioner tenable?

The position of the petitioner is not tenable. There was no caso fortuito. Before
the appellee Ganzon could be absolved from responsibility on the ground that he
was ordered by competent public authority to unload the scrap iron, it must be
shown that Acting Mayor Basilio Rub had the power to issue the disputed order,
or that it was lawful, or that it was issued under legal process of authority. The
appellee failed to establish this. Indeed, no authority or power of the acting mayor
to issue such an order was given in evidence. Neither has it been shown that the
cargo of scrap iron belonged to the Municipality of Mariveles. What we have in the
record is the stipulation of the parties that the cargo of scrap iron was
accumulated by the appellant through separate purchases here and there from
private individuals (Record on Appeal, pp. 38-39). The fact remains that the order
given by the acting mayor to dump the scrap iron into the sea was part of the
pressure applied by Mayor Jose Advincula to shakedown the appellant for
P5,000.00. The order of the acting mayor did not constitute valid authority for
appellee Mauro Ganzon and his representatives to carry out.

Now the petitioner is changing his theory to caso fortuito. Such a change of
theory on appeal we cannot, however, allow. In any case, the intervention of the
municipal officials was not In any case, of a character that would render
impossible the fulfillment by the carrier of its obligation. The petitioner was not
duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover,
there is absence of sufficient proof that the issuance of the same order was
attended with such force or intimidation as to completely overpower the will of the
petitioner's employees. The mere difficulty in the fulfilment of the obligation is not
considered force majeure. We agree with the private respondent that the scraps
could have been properly unloaded at the shore or at the NASSCO compound, so
that after the dispute with the local officials concerned was settled, the scraps
could then be delivered in accordance with the contract of carriage.

There is no incompatibility between the Civil Code provisions on common

carriers and Articles 361 and 362 of the Code of Commerce which were the basis
for this Court's ruling in Government of the Philippine Islands vs. Ynchausti & Co.
and which the petitioner invokes in tills petition. For Art. 1735 of the Civil Code,
conversely stated, means that the shipper will suffer the losses and deterioration
arising from the causes enumerated in Art. 1734; and in these instances, the
burden of proving that damages were caused by the fault or negligence of the
carrier rests upon him. However, the carrier must first establish that the loss or
deterioration was occasioned by one of the excepted causes or was due to an
unforeseen event or to force majeure. Be that as it may, insofar as Art. 362 appears
to require of the carrier only ordinary diligence, the same is deemed to have been
modified by Art. 1733 of the Civil Code.

263 Fortuitous Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and
Events operated by Pascual Perez when he was stabbed and killed by the driver, Simeon
(Carriage of Valenzuela. Is Pascual Perez, the operator, liable?
Passengers)
Yes, the operator is liable. The killing was perpetrated by the driver of the very
 cab transporting the passenger, in whose hands the carrier had entrusted the duty
of executing the contract of carriage. In other words, the killing of the passenger
here took place in the course of duty of the guilty employee and when the
employee was acting within the scope of his duties. Common carriers are liable
for the death of or injuries to passengers through the negligence or willful acts of
the former's employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common carriers.

264 That at about 7:30 a.m., on the morning of April 1, 1946, Lieut. Tomas Gillaco, husband
of the plaintiff, was a passenger in the early morning train of the Manila Railroad
Company from Calamba, Laguna to Manila. When the train reached the Paco Railroad
station, Emilio Devesa, a train guard of the Manila Railroad Company assigned in the
Manila-San Fernando, La Union Line, happened to be in said station waiting for the same
train which would take him to Tutuban Station, where he was going to report for duty.
Emilio Devesa had a long standing personal grudge against Tomas Gillaco, the same
dating back during the Japanese occupation. Because of this personal grudge, Devesa
shot Gillaco with the carbine furnished to him by the Manila Railroad Company for his
use as such train guard, upon seeing him inside the train coach. Tomas Gillaco died as
a result of the would which he sustained from the shot fired by Devesa. Devesa was
convicted of homicide by final judgment of the Court of Appeals. Is MRC liable?

Manila Road Company is not liable. The act of guard Devesa in shooting
passenger Gillaco (because of a personal grudge nurtured against the latter since
the Japanese occupation) was entirely unforeseeable by the Manila Railroad Co.
The latter had no means to ascertain or anticipate that the two would meet, nor
could it reasonably foresee every personal rancor that might exist between each
one of its many employees and any one of the thousands of eventual passengers
riding in its trains. The shooting in question was therefore "caso fortuito" within
the definition of article 105 of the old Civil Code, being both unforeseeable and
inevitable under the given circumstances; and pursuant to established doctrine,
the resulting breach of appellant's contract of safe carriage with the late Tomas
Gillaco was excused thereby.

No doubt that a common carrier is held to a very high degree of care and
diligence in the protection of its passengers; but, considering the vast and
complex activities of modern rail transportation, to require of appellant that it
should guard against all possible misunderstanding between each and every one
of its employees and every passenger that might chance to ride in its conveyances
at any time, strikes us as demanding diligence beyond what human care and
foresight can provide.

Another very important consideration that must be borne in mind is that, when
the crime took place, the guard Devesa had no duties to discharge in connection
with the transportation of the deceased from Calamba to Manila. The stipulation
of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned to
guard the Manila-San Fernando (La Union) trains, and he was at Paco Station
awaiting transportation to Tutuban, the starting point of the train that he was
engaged to guard. In fact, his tour of duty was to start at 9:00 a.m., two hours after
the commission of the crime. Devesa was therefore under no obligation to
safeguard the passenger of the Calamba-Manila train, where the deceased was
riding; and the killing of Gillaco was not done in line of duty. The position of
Devesa at the time was that of another would be passenger, a stranger also
awaiting transportation, and not that of an employee assigned to discharge any of
the duties that the Railroad had assumed by its contract with the deceased. As a
result, Devesa's assault cannot be deemed in law a breach of Gillaco's contract of
transportation by a servant or employee of the carrier.

The only good reason for making the carrier responsible for the misconduct
 of the servant perpetrated in his own interest, and not in that of his employer, or
otherwise within the scope of his employment, is that the servant is clothed with
the delegated authority, and charge with the duty by the carrier, to execute his
undertaking with the passenger. And it cannot be said, we think, that there is any
such delegation to the employees at a station with reference to passenger
embarking at another or traveling on the train. Of course, we are speaking only of
the principle which holds a carrier responsible for wrong done to passenger by
servants acting in their own interest, and not in that of the employer. That principle
is not the ordinary rule, respondent superior, by which the employer is held
responsible only for act or omissions of the employee in the scope of his
employment; but the only reason in our opinion for a broader liability arises from
the fact that the servant, in mistreating the passenger wholly for some private
purpose of his own, in the very act, violates the contractual obligation of the
employer for the performance of which he has put the employee in his place. The
reason does not exist where the employee who committed the assault was never
in a position in which it became his duty to his employer to represent him in
discharging any duty of the latter toward the passenger. The proposition that the
carrier clothes every employee engaged in the transportation business with the
comprehensive duty of protecting every passenger with whom he may in any way
come in contact, and hereby makes himself liable for every assault committed by
such servant, without regard to the inquiry whether or not the passenger has come
within the sphere of duty of that servant as indicated by the employment, is
regarded as not only not sustained by the authorities, but as being unsound and
oppressive both to the employer and the employee.

266 On August 1, 1980, Bus No. 800 owned by Bachelor Express, Inc. and driven by
Cresencio Rivera was the situs of a stampede which resulted in the death of passengers
Ornominio Beter and Narcisa Rautraut. The evidence shows that the bus came from
Davao City on its way to Cagayan de Oro City passing Butuan City; that while at Tabon-
Tabon, Butuan City, the bus picked up a passenger; that about fifteen (15) minutes later,
a passenger at the rear portion suddenly stabbed a PC soldier which caused commotion
and panic among the passengers; that when the bus stopped, passengers Ornominio
Beter and Narcisa Rautraut were found lying down the road, the former already dead as
a result of head injuries and the latter also suffering from severe injuries which caused
her death later. The passenger assailant alighted from the bus and ran toward the
bushes but was killed by the police. Thereafter, the heirs of Ornominio Beter and Narcisa
Rautraut, private respondents herein (Ricardo Beter and Sergia Beter are the parents of
Ornominio while Teofilo Rautraut and Zoetera [should be Zotera] Rautraut are the
parents of Narcisa) filed a complaint for "sum of money" against Bachelor Express, Inc.
its alleged owner Samson Yasay and the driver Rivera. In their answer, the petitioners
denied liability for the death of Ornominio Beter and Narcisa Rautraut. They alleged that
... the driver was able to transport his passengers safely to their respective places of
destination except Ornominio Beter and Narcisa Rautraut who jumped off the bus
without the knowledge and consent, much less, the fault of the driver and conductor and
the defendants in this case; the defendant corporation had exercised due diligence in
the choice of its employees to avoid as much as possible accidents; the incident on
August 1, 1980 was not a traffic accident or vehicular accident; it was an incident or
event very much beyond the control of the defendants; defendants were not parties to
the incident complained of as it was an act of a third party who is not in any way
connected with the defendants and of which the latter have no control and supervision;
..." What was the proximate cause of the loss?

The running amuck of the passenger was the proximate cause of the incident
as it triggered off a commotion and panic among the passengers such that the
passengers started running to the sole exit shoving each other resulting in the
falling off the bus by passengers Beter and Rautraut causing them fatal injuries.
The sudden act of the passenger who stabbed another passenger in the bus is
within the context of force majeure. However, in order that a common carrier may
 be absolved from liability in case of force majeure, it is not enough that the
accident was caused by force majeure. The common carrier must still prove that
it was not negligent in causing the injuries resulting from such accident. The
circumstances show that the petitioner common carrier was negligent in the
provision of safety precautions so that its passengers may be transported safely
to their destinations.

The petitioners have failed to overcome the presumption of fault and

negligence found in the law governing common carriers. The bus driver did not
immediately stop the bus at the height of the commotion; the bus was speeding
from a full stop; the victims fell from the bus door when it was opened or gave
way while the bus was still running; the conductor panicked and blew his whistle
after people had already fallen off the bus; and the bus was not properly equipped
with doors in accordance with law.

The petitioners' argument that the petitioners "are not insurers of their
passengers" deserves no merit in view of the failure of the petitioners to prove
that the deaths of the two passengers were exclusively due to force majeure and
not to the failure of the petitioners to observe extraordinary diligence in
transporting safely the passengers to their destinations as warranted by law.

271 Contributory A and his classmates took a bus from UP to Quiapo. On the way, another Quiapo-bound
Negligence bus tries to overtake them. A and his classmates dare the bus driver to run faster and
race with the other bus. The driver takes their dare, to the delight of A and his friends
who cheered him. On rounding the curve, the bus driver fails to slow down and the bus
turns turtle, resulting in the death of A and injuries to the other passengers. The bus
carried the following sign: “Do not talk to driver while bus is on motion, otherwise the
company will not assume liability for any accident.” Explain briefly the extent of the
liability, if any, of the bus company, giving the legal provisions and principles involved.

The bus company is liable for damages to A’s heirs and to all the injured
passengers. Under the Civil Code, a common carrier is duty bound to exercise
extraordinary diligence in carrying its passengers through the negligence or
willful acts of its employees even if the latter have acted beyond the scope of their
authority or in violation of their orders. This liability cannot be eliminated or
limited by stipulation or by posting notices. Although it may be urged that A was
guilty of contributory negligence, such an argument loses its force in the face of
the driver’s recklessness in taking the dare. And even if such argument would be
accepted, at most it can only mitigate the amount of damages, since the proximate
cause of the accident was the driver’s willful and reckless act in running a race
with the other bus.

272 A.L. Ammen Transportation Co., Inc. (AATCI) is a corporation engaged in the
business of transporting passengers by land for compensation in the Bicol provinces and
one of the lines it operates is the one connecting Legaspi City, Albay with Naga City,
Camarines Sur. One of the buses which defendant was operating is Bus No. 31. On May
31, 1951, plaintiff boarded said bus as a passenger paying the required fare from Ligao,
Albay bound for Pili, Camarines Sur, but before reaching his destination, the bus collided
with a motor vehicle of the pick-up type coming from the opposite direction, as a result
of which plaintiff's left arm was completely severed and the severed portion fell inside
the bus.

In the case initiated by the plaintiff, AATCI set up as special defense that the injury
suffered by plaintiff was due entirely to the fault or negligence of the driver of the pick-
up car which collided with the bus driven by its driver and to the contributory negligence
of plaintiff himself. AATCI further claims that the accident which resulted in the injury of
plaintiff is one which defendant could not foresee or, though foreseen, was inevitable.

a) Did the defendant observe extraordinary diligence or the utmost diligence of

 every cautious person, having due regard for all circumstances, in avoiding the
collision which resulted in the injury caused to the plaintiff?

Yes, the defendant exercised extraordinary diligence. It appears that Bus No.
31, immediately prior to the collision, was running at a moderate speed because
it had just stopped at the school zone of Matacong, Polangui, Albay. The pick-up
car was at full speed and was running outside of its proper lane. The driver of the
bus, upon seeing the manner in which the pick-up was then running, swerved the
bus to the very extreme right of the road until its front and rear wheels have gone
over the pile of stones or gravel situated on the rampart of the road. Said driver
could not move the bus farther right and run over a greater portion of the pile, the
peak of which was about 3 feet high, without endangering the safety of his
passengers. And notwithstanding all these efforts, the rear left side of the bus was
hit by the pick-up car.

This is also a matter of appreciation of the situation on the part of the driver.
While the position taken by appellant appeals more to the sense of caution that
one should observe in a given situation to avoid an accident or mishap, such
however can not always be expected from one who is placed suddenly in a
predicament where he is not given enough time to take the course of action as he
should under ordinary circumstances. One who is placed in such a predicament
cannot exercise such coolness or accuracy of judgment as is required of him
under ordinary circumstances and he cannot therefore be expected to observe the
same judgment, care and precaution as in the latter. For this reason, authorities
abound where failure to observe the same degree of care that as ordinary prudent
man would exercise under ordinary circumstances when confronted with a
sadden emergency was held to be warranted and a justification to exempt the
carrier from liability. Thus, it was held that "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 held to the
some degree of care that he would otherwise be required to exercise in the
absence of such emergency but must exercise only such care as any ordinary
prudent person would exercise under like circumstances and conditions, and the
failure on his part to exercise the best judgement the case renders possible does
not establish lack of care and skill on his part which renders the company, liable.
Considering all the circumstances, we are persuaded to conclude that the driver
of the bus has done what a prudent man could have done to avoid the collision
and in our opinion this relieves appellee from legibility under our law.

b) What was the proximate cause of the injury?

It appears that the negligence of the appellant was the proximate cause of the loss.
When the appellant boarded the bus in question, he seated himself on the left side
thereof resting his left arm on the window sill but with his left elbow outside the
window, this being his position in the bus when the collision took place. It is for
this reason that the collision resulted in the severance of said left arm from the
body of appellant thus doing him a great damage. It is therefore apparent that
appellant is guilty of contributory negligence. Had he not placed his left arm on
the window sill with a portion thereof protruding outside, perhaps the injury would
have been avoided as is the case with the other passenger. It is to be noted that
appellant was the only victim of the collision.

273 Private respondent Vicente E. Concepcion, a civil engineer doing business under the
name and style of Consolidated Construction with office address at Room 412, Don
Santiago Bldg., Taft Avenue, Manila, had a contract with the Civil Aeronautics
Administration (CAA) sometime in 1964 for the construction of the airport in Cagayan de
Oro City Misamis Oriental.
 Being a Manila — based contractor, Vicente E. Concepcion had to ship his
construction equipment to Cagayan de Oro City. Having shipped some of his equipment
through petitioner and having settled the balance of P2,628.77 with respect to said
shipment, Concepcion negotiated anew with petitioner, thru its collector, Pacifico
Fernandez, on August 28, 1964 for the shipment to Cagayan de Oro City of one (1) unit
payloader, four (4) units 6x6 Reo trucks and two (2) pieces of water tanks. He was issued
Bill of Lading 113 on the same date upon delivery of the equipment at the Manila North
Harbor.

These equipment were loaded aboard the MV Cebu in its Voyage No. 316, which left
Manila on August 30, 1964 and arrived at Cagayan de Oro City in the afternoon of
September 1, 1964. The Reo trucks and water tanks were safely unloaded within a few
hours after arrival, but while the payloader was about two (2) meters above the pier in
the course of unloading, the swivel pin of the heel block of the port block of Hatch No. 2
gave way, causing the payloader to fall. The payloader was damaged and was thereafter
taken to petitioner's compound in Cagayan de Oro City.

On September 7, 1964, Consolidated Construction, thru Vicente E. Concepcion,

wrote Compañia Maritima to demand a replacement of the payloader which it was
considering as a complete loss because of the extent of damage. Consolidated
Construction likewise notified petitioner of its claim for damages. Unable to elicit
response, the demand was repeated in a letter dated October 2, 1964.

Meanwhile, petitioner shipped the payloader to Manila where it was weighed at the
San Miguel Corporation. Finding that the payloader weighed 7.5 tons and not 2.5 tons
as declared in the B-111 of Lading, petitioner denied the claim for damages of
Consolidated Construction in its letter dated October 7, 1964, contending that had
Vicente E. Concepcion declared the actual weight of the payloader, damage to their ship
as well as to his payloader could have been prevented.

Issue: Whether or Not the act of private respondent Vicente E. Concepcion in

furnishing petitioner Compañia Maritima with an inaccurate weight of 2.5 tons instead of
the payloader's actual weight of 7.5 tons was the proximate and only cause of the
damage on the Oliver Payloader OC-12 when it fell while being unloaded by petitioner's
crew, as would absolutely exempt petitioner from liability for damages under paragraph
3 of Article 1734 of the Civil Code.

No. The same representation was only contributory not the proximate cause of
the loss. Petitioner, upon the testimonies of its own crew, failed to take the
necessary and adequate precautions for avoiding damage to, or destruction of,
the payloader entrusted to it for safe carriage and delivery to Cagayan de Oro City,
it cannot be reasonably concluded that the damage caused to the payloader was
due to the alleged misrepresentation of private respondent Concepcion as to the
correct and accurate weight of the payloader. As found by the respondent Court
of Appeals, the fact is that petitioner used a 5-ton capacity lifting apparatus to lift
and unload a visibly heavy cargo like a payloader. Private respondent has,
likewise, sufficiently established the laxity and carelessness of petitioner's crew
in their methods of ascertaining the weight of heavy cargoes offered for shipment
before loading and unloading them, as is customary among careful persons.

It must be noted that the weight submitted by private respondent Concepcion

appearing at the left-hand portion of Exhibit 8 as an addendum to the original
enumeration of equipment to be shipped was entered into the bill of lading by
petitioner, thru Pacifico Fernandez, a company collector, without seeing the
equipment to be shipped. Mr. Mariano Gupana, assistant traffic manager of
petitioner, confirmed in his testimony that the company never checked the
information entered in the bill of lading. Worse, the weight of the payloader as
entered in the bill of lading was assumed to be correct by Mr. Felix Pisang, Chief
 Officer of MV Cebu.

The weights stated in a bill of lading are prima facie evidence of the amount
received and the fact that the weighing was done by another will not relieve the
common carrier where it accepted such weight and entered it on the bill of lading.
Besides, common carriers can protect themselves against mistakes in the bill of
lading as to weight by exercising diligence before issuing the same.

While petitioner has proven that private respondent Concepcion did furnish it
with an inaccurate weight of the payloader, petitioner is nonetheless liable, for the
damage caused to the machinery could have been avoided by the exercise of
reasonable skill and attention on its part in overseeing the unloading of such a
heavy equipment. And circumstances clearly show that the fall of the payloader
could have been avoided by petitioner's crew. Evidence on record sufficiently
show that the crew of petitioner had been negligent in the performance of its
obligation by reason of their having failed to take the necessary precaution under
the circumstances which usage has established among careful persons, more
particularly its Chief Officer, Mr. Felix Pisang, who is tasked with the over-all
supervision of loading and unloading heavy cargoes and upon whom rests the
burden of deciding as to what particular winch the unloading of the payloader
should be undertaken. While it was his duty to determine the weight of heavy
cargoes before accepting them. Mr. Felix Pisang took the bill of lading on its face
value and presumed the same to be correct by merely "seeing" it. Acknowledging
that there was a "jumbo" in the MV Cebu which has the capacity of lifting 20 to 25
ton cargoes, Mr. Felix Pisang chose not to use it, because according to him, since
the ordinary boom has a capacity of 5 tons while the payloader was only 2.5 tons,
he did not bother to use the "jumbo" anymore.

In that sense, therefore, private respondent's act of furnishing petitioner with

an inaccurate weight of the payloader upon being asked by petitioner's collector,
cannot be used by said petitioner as an excuse to avoid liability for the damage
caused, as the same could have been avoided had petitioner utilized the "jumbo"
lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes. It
is a fact known to the Chief Officer of MV Cebu that the payloader was loaded
aboard the MV Cebu at the Manila North Harbor on August 28, 1964 by means of a
terminal crane. Even if petitioner chose not to take the necessary precaution to
avoid damage by checking the correct weight of the payloader, extraordinary care
and diligence compel the use of the "jumbo" lifting apparatus as the most prudent
course for petitioner.

While the act of private respondent in furnishing petitioner with an inaccurate

weight 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 of the Civil Code.

276 At the time of the occurrence which gave rise to this litigation the plaintiff, Jose
Cangco, was in the employment of Manila Railroad Company in the capacity of clerk,
with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of
Rizal, which is located upon the line of the defendant railroad company; and in coming
daily by train to the company's office in the city of Manila where he worked, he used a
pass, supplied by the company, which entitled him to ride upon the company's trains free
of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose from his
seat in the second class-car where he was riding and, making, his exit through the door,
took his position upon the steps of the coach, seizing the upright guardrail with his right
hand for support.

On the side of the train where passengers alight at the San Mateo station there is a
cement platform which begins to rise with a moderate gradient some distance away from
the company's office and extends along in front of said office for a distance sufficient to
cover the length of several coaches. As the train slowed down another passenger,
named Emilio Zuñiga, also an employee of the railroad company, got off the same car,
alighting safely at the point where the platform begins to rise from the level of the ground.
When the train had proceeded a little farther the plaintiff Jose Cangco stepped off also,
but one or both of his feet came in contact with a sack of watermelons with the result
that his feet slipped from under him and he fell violently on the platform. His body at once
rolled from the platform and was drawn under the moving car, where his right arm was
badly crushed and lacerated. It appears that after the plaintiff alighted from the train the
car moved forward possibly six meters before it came to a full stop.

The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad
station was lighted dimly by a single light located some distance away, objects on the
platform where the accident occurred were difficult to discern especially to a person
emerging from a lighted car.

The explanation of the presence of a sack of melons on the platform where the
plaintiff alighted is found in the fact that it was the customary season for harvesting these
melons and a large lot had been brought to the station for the shipment to the market.
They were contained in numerous sacks which has been piled on the platform in a row
one upon another. The testimony shows that this row of sacks was so placed of melons
and the edge of platform; and it is clear that the fall of the plaintiff was due to the fact
that his foot alighted upon one of these melons at the moment he stepped upon the
platform. His statement that he failed to see these objects in the darkness is readily to
be credited. What was the proximate cause of the injury?

The negligence of the carrier was the proximate cause. There was no
contributory negligence on the part of the plaintiff.

It can not be doubted that the employees of the railroad company were guilty
of negligence in piling these sacks on the platform in the manner above stated;
that their presence caused the plaintiff to fall as he alighted from the train; and
that they therefore constituted an effective legal cause of the injuries sustained
by the plaintiff. It necessarily follows that the defendant company is liable for the
damage thereby occasioned unless recovery is barred by the plaintiff's own
contributory negligence.

The only fact from which a conclusion can be drawn to the effect that plaintiff
was guilty of contributory negligence is that he stepped off the car without being
able to discern clearly the condition of the platform and while the train was yet
slowly moving. In considering the situation thus presented, it should not be
overlooked that the plaintiff was, as we find, ignorant of the fact that the
obstruction which was caused by the sacks of melons piled on the platform
existed; and as the defendant was bound by reason of its duty as a public carrier
to afford to its passengers facilities for safe egress from its trains, the plaintiff had
a right to assume, in the absence of some circumstance to warn him to the
contrary, that the platform was clear. The place, as we have already stated, was
dark, or dimly lighted, and this also is proof of a failure upon the part of the
defendant in the performance of a duty owing by it to the plaintiff; for if it were by
any possibility concede that it had right to pile these sacks in the path of alighting
passengers, the placing of them adequately so that their presence would be
revealed.

As pertinent to the question of contributory negligence on the part of the

plaintiff in this case the following circumstances are to be noted: The company's
platform was constructed upon a level higher than that of the roadbed and the
surrounding ground. The distance from the steps of the car to the spot where the
 alighting passenger would place his feet on the platform was thus reduced,
thereby decreasing the risk incident to stepping off. The nature of the platform,
constructed as it was of cement material, also assured to the passenger a stable
and even surface on which to alight. Furthermore, the plaintiff was possessed of
the vigor and agility of young manhood, and it was by no means so risky for him
to get off while the train was yet moving as the same act would have been in an
aged or feeble person. In determining the question of contributory negligence in
performing such act — that is to say, whether the passenger acted prudently or
recklessly — the age, sex, and physical condition of the passenger are
circumstances necessarily affecting the safety of the passenger, and should be
considered. Women, it has been observed, as a general rule are less capable than
men of alighting with safety under such conditions, as the nature of their wearing
apparel obstructs the free movement of the limbs. Again, it may be noted that the
place was perfectly familiar to the plaintiff as it was his daily custom to get on and
of the train at this station. There could, therefore, be no uncertainty in his mind
with regard either to the length of the step which he was required to take or the
character of the platform where he was alighting. Our conclusion is that the
conduct of the plaintiff in undertaking to alight while the train was yet slightly
under way was not characterized by imprudence and that therefore he was not
guilty of contributory negligence.

278 The appellant, the Manila Electric Company, is engaged in operating street cars in
the City for the conveyance of passengers; and on the morning of November 18, 1925,
one Teodorico Florenciano, as appellant's motorman, was in charge of car No. 74
running from east to west on R. Hidalgo Street, the scene of the accident being at a point
near the intersection of said street and Mendoza Street. After the car had stopped at its
appointed place for taking on and letting off passengers, just east of the intersection, it
resumed its course at a moderate speed under the guidance of the motorman. The car
had proceeded only a short distance, however, when the plaintiff, Ignacio del Prado, ran
across the street to catch the car, his approach being made from the left. The car was
of the kind having an entrance and existed at either end, and the movement of the
plaintiff was so timed that he arrived at the front entrance of the car at the moment when
the car was passing.

The testimony of the plaintiff and of Ciriaco Guevara, one of his witnesses, tends to
shows that the plaintiff, upon approaching the car, raised his hand as an indication to the
motorman of his desire to board the car, in response to which the motorman eased up a
little, without stopping. Upon this the plaintiff seized, with his hand, the front
perpendicular handspot, at the same time placing his left foot upon the platform.
However, before the plaintiff's position had become secure, and even before his raised
right foot had reached the platform, the motorman applied the power, with the result that
the car gave a slight lurch forward. This sudden impulse to the car caused the plaintiff's
foot to slip, and his hand was jerked loose from the handpost, He therefore fell to the
ground, and his right foot was caught and crushed by the moving car. The next day the
member had to be amputated in the hospital.

a) Is the carrier liable?

The carrier is liable. Although the motorman claimed that he did not accelerate the
speed of the car as claimed and that he in fact knew nothing of the incident until
after the plaintiff had been hurt and someone called to him to stop, a motorman
operating this car could not have failed to see a person boarding the car under the
circumstances revealed in this case. The direct and proximate cause of the injury
was the act of the appellant's motorman in putting on the power prematurely.

b) Was there contributory negligence?

There was contributory negligence on the part of the plaintiff. It is obvious that the
 plaintiff's negligence in attempting to board the moving car was not the proximate
cause of the injury. The direct and proximate cause of the injury was the act of the
appellant's motorman in putting on the power prematurely. A person boarding a
moving car must be taken to assume the risk of injury from boarding the car under
the conditions open to his view, but he cannot fairly be held to assume the risk
that the motorman, having the situation in view, will increase his peril by
accelerating the speed of the car before he is planted safely on the platform.
Again, the situation before us is one where the negligent act of the company's
servant succeeded the negligent act of the plaintiff, and the negligence of the
company must be considered the proximate cause of the injury. The rule here
applicable seems to be analogous to, if not identical with that which is sometimes
referred to as the doctrine of "the last clear chance." In accordance with this
doctrine, the contributory negligence of the injured party will not defeat the action
if it can be shown that the defendant might, by the exercise of reasonable care
and prudence, have avoided the consequences of the negligence of the injured
party. The negligence of the plaintiff was, however, contributory to the accident
and must be considered as a mitigating circumstance.

279 The facts show that on September 10, 1972, at about 9:00 o'clock in the evening,
Winifredo Tupang, husband of plaintiff Rosario Tupang, boarded 'Train No. 516 of
appellant at Libmanan, Camarines Sur, as a paying passenger bound for Manila. Due to
some mechanical defect, the train stopped at Sipocot, Camarines Sur, for repairs, taking
some two hours before the train could resume its trip to Manila. Unfortunately, upon
passing Iyam Bridge at Lucena, Quezon, Winifredo Tupang fell off the train resulting in
his death.The train did not stop despite the alarm raised by the other passengers that
somebody fell from the train. Instead, the train conductor Perfecto Abrazado, called the
station agent at Candelaria, Quezon, and requested for verification of the information.
Police authorities of Lucena City were dispatched to the Iyam Bridge where they found
the lifeless body of Winifredo Tupang.

a) Is the carrier liable?

Yes. The train boarded by the deceased Winifredo Tupang was so over-crowded
that he and many other passengers had no choice but to sit on the open platforms
between the coaches of the train. It is likewise undisputed that the train did not
even slow down when it approached the Iyam Bridge which was under repair at
the time, Neither did the train stop, despite the alarm raised by other passengers
that a person had fallen off the train at lyam Bridge. The petitioner has the
obligation to transport its passengers to their destinations and to observe
extraordinary diligence in doing so. Death or any injury suffered by any of its
passengers gives rise to the presumption that it was negligent in the performance
of its obligation under the contract of carriage. Thus, as correctly ruled by the
respondent court, the petitioner failed to overthrow such presumption of
negligence with clear and convincing evidence.

b) Was there Contributory Negligence?

Yes, 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. Such contributory negligence, while
not exempting the PNR from liability, nevertheless justified the deletion of the
amount adjudicated as moral damages. By the same token, the award of
exemplary damages must be set aside. Exemplary damages may be allowed only
in cases where the defendant acted in a wanton, fraudulent, reckless, oppressive
or malevolent manner. There being no evidence of fraud, malice or bad faith on
the part of the petitioner, the grant of exemplary damages should be discarded.

290 Claim in X shipped several boxes of goods from Manila to Cebu on board a vessel owned by
 overland Mabuhay Lines, Inc., the consignee, several boxes externally appeared to have been
transportation damaged. The proprietor of Y Dry Goods, Inc. paid the freight charges upon receipt of
and coastwise the goods. However, when the boxes were opened 2 days later, it was discovered that
shipping the contents of all the boxes had been damaged. The proprietor of Y Dry Goods, Inc.
seeks your advice on whether he may proceed against the carrier for damages. State
your answers with reasons.

No action for damages to the goods may be maintained against the carrier.

With respect to a claim arising from damages caused to the goods contained
in the boxes where the damage was ascertainable from the outside part of the
packages, Article 366 of the Code of Commerce requires that the claim against the
carrier must be made at the time of the receipt.

With respect to the goods contained in the boxes where the damage was not
ascertainable from the outside part of the packages and such damage was only
ascertainable upon the opening of the boxes, the claim against the carrier must
be made within 24 hours following receipt of the merchandise.

It does not appear that the proprietor of Y Dry Goods, Inc. made any claim for
damages to the goods within the periods set forth in Article 366. Moreover, as he
paid the freight charges upon his receipt of the goods shipped, it is too late for
the proprietor of Y Dry Goods Inc. to make a claim against the carrier for damages
to the goods.

291 Mr. R shipped 2,244 packages of sugar from his hacienda to Iloilo through P Transport
Company. Out of the total, only 1,022 packages were delivered. No notice of claim was
filed by Mr. R and he directly filed a case in court to recover the undelivered packages
or their value. The case was dismissed by the trial court on the ground that it was neither
alleged nor proven that the plaintiff had complied with the provisions of Section 366 of
the Commercial Code requiring the filing of a claim. Was the dismissal proper?

The dismissal was not proper. Article 366 of the Commercial Code is limited to
cases of claims for damage goods actually turned over by the carrier and received
by the consignee, whether those damages be apparent from the examination of
the packages in which the goods are delivered, or of such a character that the
nature and extent of the damage is not apparent until the packages are opened
and the contents examined. Clearly it has no application in such cases wherein
the goods entrusted to the carrier are not delivered by the carrier to the consignee.
In such cases there can be no question of a claim for damages suffered by the
goods while in transport, since the claim for damages arises exclusively out of the
failure to make delivery.

It is very clear, then, that in so far as this action seeks to recover damages for
defendant's failure to deliver 1,222 packages or bayones of sugar, the failure to
make claim for such damages under the provisions of article 366 of the
Commercial Code in no wise affects the respective rights of the parties.

In so far as this action is founded on a claim for damages resulting from the
wetting of the 1,022 packages of sugar which were saved from the wreck, it seems
clear that if these 1,022 packages of sugar were delivered by the carrier and
received by the consignee under and in pursuance of the terms of the contract,
this claim for damages would be defeated by the plaintiff's failure to make claim
therefor in accordance with the terms of article 366 of the Code.

The necessity for the presentation of claims under this article arises only in
those cases wherein the carrier makes delivery and the consignee receives the
goods in pursuance of the terms of the contract.
 Until the defendant has had an opportunity to submit his evidence it is
impossible to determine under what conditions these 1,022 packages of sugar
came into the possession of the plaintiff, or to determine whether his claim for
damages by the wetting of this sugar, if well founded in every other respect, is or
should be defeated by his failure to make claim for such damages in the manner
and form indicated in article 366 of the Commercial Code.

We conclude that the judgment entered in the court below should be reversed
and the record remanded to the court below for new trial upon all the issues raised
by the pleadings, it being expressly understood, however, that the evidence
already in the record may be considered as submitted at the new trial, without
prejudice to the right of either party to offer such additional evidence as he may
deem proper in support of the allegations set forth in the pleadings. No costs will
be taxed in this instance.

296 Prescription What is the prescriptive period for actions involving lost or damaged cargo under the
Carriage of Goods by Sea Act?

Section 3[6] of the Carriage of Goods by Sea Act provides a prescriptive period of
one year from the time of delivery of the goods or the date when the goods should
have been delivered.

A local consignee sought to enforce judicially a claim against the carrier for loss of a
shipment of drums of lubricating oil from Japan under the Carriage of Goods by Sea Act
(COGSA) after the carrier had rejected its demand. The carrier pleaded in its Answer the
affirmative defense of prescription under the provisions of said Act inasmuch as the suit
was brought by the consignee after one (1) year from the delivery of the goods. In turn,
the consignee contended that the period of prescription was suspended by the written
extrajudicial demand it had made against the carrier within the one-year period, pursuant
to Article 1155 of the Civil Code providing that the prescription of actions is interrupted
when there is a written extrajudicial demand by the creditors.

a) Has the action, in fact, prescribed? Why?

The action taken by the consignee has prescribed. The prescriptive period under
the Carriage of Goods by Sea Act (COGSA) is one year from the time of delivery
of the goods or the date when the goods should have been delivered. The period
of one year under the Carriage of Goods by Sea Act (COGSA) is not interrupted
by a written extrajudicial demand. The provisions of Art 1155 of the NCC merely
apply to prescriptive periods provided for in said Code and not to special laws
such as COGSA except when otherwise provided.

b) Is the case filed beyond the prescriptive period if the consignee’s action were
predicated on misdelivery or conversion of the goods? Explain briefly.

The action has not prescribed if the consignee’s action were predicated on
misdelivery or conversion of the goods. If the consignee’s action were predicated
on misdelivery or conversion of goods, the provisions of the COGSA would be
inapplicable. In these cases, the NCC prescriptive periods, including Art 1155 of
the NCC will apply.

297 Under COGSA, what is the effect of a provision inserted in the bill of lading that the
carrier shall not be liable for loss or damage to the cargo unless written notice thereof is
given to the carrier within 30 days after receipt of the cargo by the shipper or consignee?
Reason out your answer.

The provision is null and void and without any effect. Under COGSA, the lack of
notice is not a bar to the filing of a suit for damages within one year from receipt
 of the cargo. It is believed that any provision in the contract which has the effect
of reducing said one year period is null and void.

298 Under the provisions of Section 3 of the Carriage of Goods by Sea Act, notice must be
given of loss or damage to the goods.

a) Within what period must notice be given, if the loss or damage is not apparent?

Notice of loss must be given within three days from the delivery of the goods, if
the loss is not apparent.

b) Does the term “loss” in this Act cover delivery to the wrong person? Explain.

The term “loss” under COGSA does not cover misdelivery or delivery to the wrong
person. “Loss” involves cases where no delivery at all was made to the shipper
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.

RC imported computer motherboards from the United States and had them shipped to
Manila aboard an ocean going cargo ship owned by BC Shipping Company. When the
cargo arrived at Manila seaport and delivered to RC, the crate appeared intact; but upon
inspection of the contents, RC discovered that the items inside had all been badly
damaged. He did not file any notice of damage or anything with anyone, least of all with
BC Shipping Company. What he did was to proceed directly to your office to consult you
about whether he should have given a notice of damage and how long a time he had to
initiate a suit under the provisions of the Carriage of Goods by Sea Act (CA 65). What
would your advice be?

My advice would be that RC should give notice of the damage sustained by the
cargo within 3 days and that he has to file the suit to recover the damage sustained
by the cargo within one year from the date of the delivery of the cargo to him.

AA entered into a contract with BB for the latter to transport ladies wear from Manila to
France with transhipment via Taiwan. Somehow the goods were not loaded in Taiwan
on time, hence, these arrived in France "off-season." AA was only paid for one half (1/2)
the value by the buyer. AA claimed damages from BB. BB invoked prescription as a
defense under the Carriage of Goods by Sea Act. Considering the "loss of value" of the
ladies wear as claimed by AA, should the prescriptive period be one year under the
Carriage of Goods by Sea Act, or ten years under the Civil Code? Explain.

The applicable prescriptive period is 10 years under the Civil Code. The one year
prescriptive period in the Carriage of Goods of Sea Act applies only in case the
goods were not delivered or were delivered in a damaged or deteriorated
condition. It does not apply to damaged or deteriorated conditions. It does not
apply to damages as a result of delay in the delivery of the goods. In the present
case, the shipment of ladies’ wear was actually delivered.

334 Bill of Lading On July 19, 1990, Cardia Limited (CARDIA) shipped on board the vessel M/V Pakarti
(Stipulations) Tiga at Shanghai Port China, 8,260 metric tons or 165,200 bags of Grey Portland
Cement to be discharged at the Port of Manila and delivered to its consignee, Heindrich
Trading Corp. (HEINDRICH). The subject shipment was insured with respondents, FGU
Insurance Corp. (FGU) and Pioneer Insurance and Surety Corp. (PIONEER), against all
risks under Marine Open Policy No. 062890275 for the amount of P18,048,421.00. The
subject vessel is owned by P.T. Pakarti Tata (PAKARTI) which it chartered to Shinwa
Kaiun Kaisha Ltd. (SHINWA). Representing itself as owner of the vessel, SHINWA
entered into a charter party contract with Sky International, Inc. (SKY), an agent of Kee
Yeh Maritime Co. (KEE YEH), which further chartered it to Regency Express Lines S.A.
(REGENCY). Thus, it was REGENCY that directly dealt with consignee HEINDRICH,
and accordingly, issued Clean Bill of Lading. On July 23, 1990, the vessel arrived at the
 Port of Manila and the shipment was discharged. However, upon inspection of
HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV), agent of CARDIA, it was
found that out of the 165,200 bags of cement, 43,905 bags were in bad order and
condition. Unable to collect the sustained damages in the amount of P1,423,454.60 from
the shipper, CARDIA, and the charterer, REGENCY, the respondents, as co-insurers of
the cargo, each paid the consignee, HEINDRICH, the amounts of P427,036.40 and
P284,690.94, respectively, and consequently became subrogated to all the rights and
causes of action accruing to HEINDRICH. Thus, on August 8, 1991, respondents filed a
complaint for damages against the following defendants: "REGENCY EXPRESS LINES,
S.A./ UNKNOWN CHARTERER OF THE VESSEL 'PAKARTI TIGA'/ UNKNOWN
OWNER and/or DEMIFE (sic) CHARTERER OF THE VESSEL 'PAKARTI TIGA', SKY
INTERNATIONAL, INC. and/or ACE NAVIGATION COMPANY, INC." Maintaining that it
was not a party to the bill of lading, ACENAV asserts that it cannot be held liable for the
damages sought to be collected by the respondents. It also alleged that since its
principal, CARDIA, was not impleaded as a party-defendant/respondent in the instant
suit, no liability can therefore attach to it as a mere agent. Who are the parties in the bill
of lading?

As a contract, the Bill of Lading names the contracting parties, which include the
consignee, fixes the route, destination, and freight rates or charges, and stipulates
the rights and obligations assumed by the parties. As such, it shall only be binding
upon the parties who make them, their assigns and heirs. In this case, the original
parties to the bill of lading are: (a) the shipper CARDIA; (b) the carrier PAKARTI;
and (c) the consignee HEINDRICH. However, by virtue of their relationship with
PAKARTI under separate charter arrangements, SHINWA, KEE YEH and its agent
SKY likewise became parties to the bill of lading. In the same vein, ACENAV, as
admitted agent of CARDIA, also became a party to the said contract of carriage.
However, ACENAV, as a mere agent is not label based on the provisions of the
New Civil Code.

310 Bill of Lading On December 15, 2003, Luwalhati and Eliza, who were in the Philippines, sent several
(Contract of Citibank checks to Veronica Z. Sison (Sison), who was based in New York for the
Adhesion) payment of monthly charges and for the payment of real estate taxes. The checks were
sent by Luwalhati through FedEx. The package was addressed to Sison who was tasked
to deliver the checks payable to Maxwell-Kates, Inc. and to the New York County
Department of Finance. Sison allegedly did not receive the package, resulting in the non-
payment of Luwalhati and Eliza's obligations and the foreclosure of the Unit. It appears
that the checks were misdelivered. One of the defenses raised by the carrier is that the
respondents violated the terms of the Air Waybill by shipping checks. Ita adds that this
violation exempts it from liability. The provision that was allegedly violated states “Items
Not Acceptable for Transportation. We do not accept transportation of money
(including but not limited to coins or negotiable instruments equivalent to cash such as
endorsed stocks and bonds). We exclude all liability for shipments of such items
accepted by mistake. Other items may be accepted for carriage only to limited
destinations or under restricted conditions. We reserve the right to reject packages
based upon these limitations or for reasons of safety or security. You may consult our
Service Guide, Standard Conditions of Carriage, or any applicable tariff for specific
details.” The Supreme Court rejected the argument.

The prohibition has a singular object: money. What follows the phrase
"transportation of money" is a phrase enclosed in parentheses, and commencing
with the words "including but not limited to." The additional phrase, enclosed as
it is in parentheses, is not the object of the prohibition, but merely a postscript to
the word "money." Moreover, its introductory words "including but not limited to"
signify that the items that follow are illustrative examples; they are not qualifiers
that are integral to or inseverable from "money." Despite the utterance of the
enclosed phrase, the singular prohibition remains: money.
 Money is "what is generally acceptable in exchange for goods." It can take
many forms, most commonly as coins and banknotes. Despite its myriad forms,
its key element is its general acceptability. Laws usually define what can be
considered as a generally acceptable medium of exchange. In the Philippines,
Republic Act No. 7653, otherwise known as The New Central Bank Act, defines
"legal tender" as follows:

All notes and coins issued by the Bangko Sentral shall be fully guaranteed by
the Government of the Republic of the Philippines and shall be legal tender in the
Philippines for all debts, both public and private: Provided, however, That, unless
otherwise fixed by the Monetary Board, coins shall be legal tender in amounts not
exceeding Fifty pesos (P50.00) for denomination of Twenty-five centavos and
above, and in amounts not exceeding Twenty pesos (P20.00) for denominations
of Ten centavos or less.

It is settled in jurisprudence that checks, being only negotiable instruments,

are only substitutes for money and are not legal tender; more so when the check
has a named payee and is not payable to bearer. In Philippine Airlines, Inc. v. Court
of Appeals, this Court ruled that the payment of a check to the sheriff did not
satisfy the judgment debt as checks are not considered legal tender. This has
been maintained in other cases decided by this Court. In Cebu International
Finance Corporation v. Court of Appeals, this Court held that the debts paid in a
money market transaction through the use of a check is not a valid tender of
payment as a check is not legal tender in the Philippines. Further, in Bank of the
Philippine Islands v. Court of Appeals, this Court held that "a check, whether a
manager's check or ordinary check, is not legal tender."

The Air Waybill's prohibition mentions "negotiable instruments" only in the

course of making an example. Thus, they are not prohibited items themselves.
Moreover, the illustrative example does not even pertain to negotiable instruments
per se but to "negotiable instruments equivalent to cash."

The checks involved here are payable to specific payees, Maxwell--Kates, Inc.
and the New York County Department of Finance. Thus, they are order
instruments. They are not payable to their bearer, i.e., bearer instruments. Order
instruments differ from bearer instruments in their manner of negotiation:

Under Section 30 of the [Negotiable Instruments Law], an order instrument

requires an indorsement from the payee or holder before it may be validly
negotiated. A bearer instrument, on the other hand, does not require an
indorsement to be validly negotiated.

There is no question that checks, whether payable to order or to bearer, so long

as they comply with the requirements under Section 1 of the Negotiable
Instruments Law, are negotiable instruments. The more relevant consideration is
whether checks with a specified payee are negotiable instruments equivalent to
cash, as contemplated in the example added to the Air Waybill's prohibition.

This Court thinks not. An order instrument, which has to be endorsed by the
payee before it may be negotiated, cannot be a negotiable instrument equivalent
to cash. It is worth emphasizing that the instruments given as further examples
under the Air Waybill must be endorsed to be considered equivalent to cash:

Items Not Acceptable for Transportation. We do not accept transportation of

money (including but not limited to coins or negotiable instruments equivalent to
cash such as endorsed stocks and bonds). ... (Emphasis in the original)

What this Court's protracted discussion reveals is that petitioner's Air Waybill
 lends itself to a great deal of confusion. The clarity of its terms leaves much to be
desired. This lack of clarity can only militate against petitioner's cause.

The contract between petitioner and respondents is a contract of adhesion; it

was prepared solely by petitioner for respondents to conform to. Although not
automatically void, any ambiguity in a contract of adhesion is construed strictly
against the party that prepared it. Accordingly, the prohibition against
transporting money must be restrictively construed against petitioner and
liberally for respondents. Viewed through this lens, with greater reason should
respondents be exculpated from liability for shipping documents or instruments,
which are reasonably understood as not being money, and for being unable to
declare them as such.

Ultimately, in shipping checks, respondents were not violating petitioner's Air

Waybill. From this, it follows that they committed no breach of warranty that would
absolve petitioner of liability.

334 Juan, a paying passenger, noted the stipulation at the back of the bus ticket stating that
the liability of the bus company is limited to P1, 000 in case of injuries to its passengers
and P500 in case of loss or damage to baggage caused by the negligence or willful acts
of its employees. Upon arrival at his destination, Juan got into an altercation with the
ticket conductor, who pulled out a knife and inflicted several wounds on Juan. The bus
driver intervened, heaping abusive language on Juan and completely destroying Juan’s
baggage which contained expensive goods worth P3, 000. The hospital expenses for
Juan would probably amount to at least P6, 000. Give the extent of liability of the bus
company, with reasons.

The bus company is liable to Juan for damages in the amount of P3, 000 for the
loss of his good and P6, 000 for his hospital expenses, as well as, other damages
that can establish including loss of earning capacity, moral damages, exemplary
damages, and attorney’s fees. The stipulation at the back of the bus ticket stating
that the liability is limited to P1, 000 in case of injuries to its passengers caused
by negligence or willful acts of its employees is void under Article 1757 of the Civil
Code. Article 1757 provides that the responsibility of a common carrier to exercise
utmost diligence for the safety of passengers cannot be dispensed with or
lessened by stipulation or statement on tickets or otherwise.

The stipulation in the ticket that the carrier is liable only up to P500 in case of
loss or damage to baggage caused by negligence or willful acts of its employees
is likewise void. Article 1750 of the Civil Code provides that a contract fixing the
sum that may be recovered by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just under the
circumstances and has been fairly and freely agreed upon. It is believed that the
stipulation involved is not just and reasonable under the circumstances.

335 Mabuhay Lines, Inc. a common carrier, entered into a contract with Company X, whereby
it agreed to furnish Company X, for a fixed amount, a bus for a company excursion on
its anniversary day. It was agreed that Company X would have the use of the bus and
its driver from 7:00 am to 7:00 pm on the stipulated date, and that the bus driver would
be obliged to follow the instructions of the company’s general manager as to the places
to be visited. Company X agreed to bear the cost of the gasoline consumed. The
transportation contract signed by Company X contained a stipulation that Mabuhay
Lines, Inc. would be exempt from liability on account of acts or omissions of its
employees. On the return trip from the excursion site, the bus had an accident and
several employees of Company X were injured. State the liability, if any, of Mabuhay
Lines, Inc.

Mabuhay Lines, Inc. is liable for the injuries of several employees of Company X.
It is submitted that Mabuhay Lines, Inc. remains a common carrier although the
 bus was hired to carry the employees for a fixed amount. The carrier, through its
driver who was still in control of the bus, was still required to exercise
extraordinary diligence. Consequently, the responsibility of Mabuhay Lines, Inc.
for the safety of passengers, cannot be dispensed with or lessened by stipulation.

A takes a plane from Manila bound for Cagayan de Oro via Cebu, where there was a
change of planes. A arrived Cagayan de Oro safely, but to his dismay, his two suitcases
were left behind in Cebu. The airline company assured him that the suitcases would
come in the next flight, but they never did. A claims P1, 000 damages for the loss of both
suitcases, but the airline is willing to pay only P400 on the ground that the airline ticket
stipulates that unless a higher value is declared, any claim for loss cannot exceed P200
for each piece of luggage. A had not declared a greater value, despite the fact that the
clerk had called his attention to the stipulation in the ticket. Is A entitled to P1, 000 or
only P400? Explain.

A is entitled to only P400. Under the Civil Code, a stipulation limiting a common
carrier’s liability to the value of the goods as stated on the bill of lading unless the
shipper declares a greater value, is binding. This provision applies to baggage
that are checked in or under the custody of the carrier. Hence, the stipulation
limiting the carrier’s liability to P400 is binding because A did not declare a greater
value.

336 Dona Buding checked in at the PAL counter of the Manila Domestic Airport on a flight to
Bacolod. Noticing that Dona Buding had two big baggages being checked in, the counter
clerk called her attention to the stipulation in the plane ticket and asked if she was going
to make any declaration on the value of the same, but Dona Buding just looked at him
and did not say anything. The plane arrived in Bacolod, but the two baggages could
nowhere be found. PAL promised to deliver the two baggages the next day, but it never
did. Dona Buding sued PAL, claiming P10, 000 damages for the loss of the two
baggages. PAL answered that it was liable only for P200 for the plane ticket clearly
stipulated that: “That total liability of the carrier for lost or damaged baggage is limited to
P100 per baggage, unless the passenger declares a higher valuation in excess of P100
but not in excess, however, of a total valuation of P1, 000, and unless additional charges
are paid pursuant to Carrier’s Tariffs.” The trial court ruled in favor of PAL. Comment on
the legality of the court’s decision.

The ruling of the trial court against Dona Buding is legal, being in accordance with
the New Civil Code on Common Carriers. As stipulation that the common carrier’s
liability is limited to the value of the goods appearing in the bill of lading, unless
the shipper or owner declares a greater value, is binding. This provision applies
to baggage that are checked in or under the custody of the carrier. Hence, the
stipulation limiting the carrier’s liability to P200 is binding because Dona Buding
did not declare a greater value.

X shipped thru M/V Kalayaan, spare parts worth P500,000. The bill of lading limits the
liability of the carrier to P50,000 and contains a notation indicating the amount of the
letter of credit (i.e. P500,000) which X obtained from a bank to import the spare parts.
The spare parts were not delivered to X so X sued the carrier for P500,000. Decide.

X can recover the value of his actual loss, P500,000. The limit of liability stipulated
in the bill of lading is subordinated to a declaration therein of the actual value of
the goods. Since the bill of lading itself contains a notation indicating the true
value of the goods shipped (supported by the letter of credit), X can sue the carrier
on the basis of such true value.

337 Martin Nove shipped an expensive video equipment to a friend in Cebu. Martin had
bought the equipment from Hong Kong for U.S. $5,000. The equipment was shipped
through M/S Lapu-Lapu under a bill of lading which contained the following provision in
big bold letters: “The limit of the carrier’s liability for any loss or damage to cargo shall
 be P200 regardless of the actual value of such cargo, whether declared by shipper or
otherwise.” The cargo was totally damaged before reaching Cebu. Martin Nove claimed
for the value of his cargo ($5,000 or about P100,000) instead of just P200 as per the
limitation on the bill of lading. Is there any legal basis for Nove’s claim?

There is legal basis for the claim of Martin Nove. The stipulation limiting the
carrier’s liability up to a certain amount “regardless of the actual value of such
cargo, whether declared by its shipper or otherwise,” is violative of the
requirement of the Civil Code that such limiting stipulations should be fairly and
freely agreed upon (Arts. 1749-1750 Civil Code). A stipulation that denies to the
shipper the right to declare the actual value of his cargoes and to recover, in case
of loss or damage, on the basis would be invalid.

In the plane ticket stub of Air Manila Inc. (AMI), there appears a statement that the liability
“if any loss or damage of checked baggage or for delay in the delivery thereof” of the
AMI “is limited to its value and unless the passenger declares I advance a higher
valuation and pays an additional charge therefore, the value shall be conclusively
deemed not to exceed P100 for each ticket.” A passenger whose baggage was lost in
transit from Manila to Cebu sued for a higher amount, i.e. P5,000. May AMI successfully
claim that the above statement precludes the plaintiff from asking more than P100?
Decide. Give reasons for your answer.

No. AMI may not successfully claim that the plaintiff was precluded from asking
more than P100 for each ticket. The liability of a common carrier may by contract
be limited to a fixed amount, but said agreement must be in writing and signed by
the shipper or owner of the goods, besides the other requirements of the law, but
said requirements have not been shown to have been met by the carrier, AMI.

338 A, in Holland, shipped on board a vessel owned by B, 500 cases of canned milk to
consignee C in Iloilo. Upon arrival, the vessel discharged the canned milk into the
custody and possession of the arrastre operator appointed by the Bureau of Customs.
In the Bill of Lading, it was stipulated that the vessel is no longer liable for the cargo upon
its delivery to the hands of the customs authorities. The cargo checker of the arrastre
found the cargo to be in good order. Upon delivery to the consignee, a marine surveyor
found 20 cases of milk missing. C sued B for the value of the 20 missing cases on the
ground that under the contract of carriage B was obliged to deliver the cargo safely to
the consignee and that the stipulation limiting the liability of the carrier is contrary to
morals and public policy. B disclaims liability for short delivery. Decide the dispute, with
reasons.

B may disclaim liability for short delivery. The stipulation is valid because nothing
therein is contrary to morals or public policy, said stipulation being adopted to
mitigate the responsibility of the carrier. It is just and reasonable to stipulate that
B is no longer responsible when the goods are delivered to customs authorities.

Discuss whether or not the following stipulations in a contract of carriage of a common

carrier are valid:

a) a stipulation limiting the sum that may be recovered by the shipper or owner to
90% of the value of the goods in case of loss due to theft.

The stipulation is invalid. Article 1745 of the Civil Code states that a stipulation is
unreasonable, 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 or
irresistible threat, violence or force, is dispensed with or diminished.” The
stipulation involved diminishes liability for theft without distinction if there is
grave or irresistible threat, violation or force.

b) a stipulation that in the event of loss, destruction or deterioration of goods on

 account of the defective condition of the vehicle used in the contract of carriage,
the carrier’s liability is limited to the value of the goods appearing in the bill of
lading unless the shipper or owner declares a higher value.

The stipulation is valid. A stipulation limiting the carrier’s liability to the value of
the goods appearing in the bill of lading unless the shipper or owner declares a
higher value, is expressly recognized in Article 1749 of the Civil Code. Thus, it is
binding.

Suppose A was riding on an airplane of a common carrier when the accident happened
and A suffered serious injuries. In an action by A against the common carrier, the latter
claimed that: 1) there was a stipulation in the ticket issued to A absolutely exempting the
carrier from liability from the passenger’s death or injuries ad notices were posted by the
common carrier dispensing with the extraordinary diligence of the carrier, and 2) A was
given a discount on his plane fare thereby reducing the liability of the common carrier
with respect to A in particular.

a) Are those defenses valid?

The defenses are not valid. The responsibility of a common carrier for the safety
of passengers cannot be dispensed with or lessened by stipulation, by posting of
notices, by statements on tickets, or otherwise. The law require extraordinary
diligence in the carriage of passengers.

b) What are the defenses available to any common carrier to limit or exempt it from
liability?

The common carrier may exempt itself from liability if he can prove that: (1) he
observed extraordinary diligence, (2) the proximate and only cause of the incident
is a fortuitous event, (3) the proximate and only cause of the loss was an act or
omission of the shipper or owner of the goods, (4) the proximate and only cause
of the loss is the character of the goods or defects in the packing or in the
containers, and (5) the proximate and only cause of the loss order or act of
competent public authority. To limit its liability or at least mitigate the same, the
carrier can cite contributory negligence of the plaintiff and the doctrine of
avoidable consequences.

339 On December 19, 2000, Novartis Consumer Health Philippines, Inc. (NOVARTIS)
imported from Jinsuk Trading Co. Ltd., (JINSUK) in South Korea, 19 pallets of 200 rolls
of Ovaltine Power 18 Glaminated plastic packaging material. In order to ship the goods
to the Philippines, JINSUK engaged the services of Protop Shipping Corporation
(PROTOP), a freight forwarder likewise based in South Korea, to forward the goods to
their consignee, NOVARTIS. Based on Bill of Lading No. PROTAS 200387 issued by
PROTOP, the cargo was on freight prepaid basis and on "shipper’s load and count"
which means that the "container [was] packed with cargo by one shipper where the
quantity, description and condition of the cargo is the sole responsibility of the shipper."
Likewise stated in the bill of lading is the name Sagawa Express Phils., Inc., (SAGAWA)
designated as the entity in the Philippines which will obtain the delivery contract.
PROTOP shipped the cargo through Dongnama Shipping Co. Ltd. (DONGNAMA) which
in turn loaded the same on M/V Heung-A Bangkok V-019 owned and operated by Heung-
A Shipping Corporation, (HEUNG-A), a Korean corporation, pursuant to a ‘slot charter
agreement’ whereby a space in the latter’s vessel was reserved for the exclusive use of
the former. Wallem Philippines Shipping, Inc. (WALLEM) is the ship agent of HEUNG-A
in the Philippines. NOVARTIS insured the shipment with Philam Insurance Company,
Inc. (PHILAM, now Chartis Philippines Insurance, Inc.) under All Risk Marine Open
Insurance Policy No. MOP-0801011828 against all loss, damage, liability, or expense
before, during transit and even after the discharge of the shipment from the carrying
vessel until its complete delivery to the consignee’s premises. The vessel arrived at the
port ofManila, South Harbor, on December 27, 2000 and the subject shipment contained
in Sea Van Container No. DNAU 420280-9 was discharged without exception into the
possession, custody and care of Asian Terminals, Inc. (ATI) as the customs arrastre
operator. The shipment was thereafter withdrawn on January 4, 2001, by NOVARTIS’
appointed broker, Stephanie Customs Brokerage Corporation (STEPHANIE) from ATI’s
container yard. The shipment reached NOVARTIS’ premises on January 5, 2001. Upon
inspection, it was discovered that the boxes of the shipment were wet and damp. The
boxes on one side of the van were in disarray while others were opened or damaged
due to the dampness. Parts of the container van were damaged and rusty. There were
also water droplets on the walls and the floor was wet. Since the damaged packaging
materials might contaminate the product they were meant to hold, the entire shipment
was rejected. Chemical analysis showed that the cause of wetting in the carton boxes
and kraft paper/lining materials as well as the aluminum foil laminated plastic packaging
material, was salt water. The issues that were resolved are as follows: (a) Whether
HEUNG-A, WALLEM and PROTOP are liable for the damage to the shipment; and if so
(b) Whether HEUNG-A’s liability can be limited to US$500 per package pursuant to the
COGSA.

a) HEUNG-A and the ship agent WALLEM are liable for the damage sustained
while the shipment was in the possession HEUNG-A. The uncontested
results of the inspection survey conducted by Manila Adjusters Surveyors
Company showed that sea water seeped into the panels/sidings and
roofing of the container van. This was confirmed by the examination
conducted by Hernandez, the chemist of PRECISION, on samples from the
cartons, boxes, aluminum foil and laminated plastic packaging materials.
Based on the laboratory examination results, the contents of the van were
drenched by sea water, an element which is highly conspicuous in the high
seas. It can thus be reasonably concluded that negligence occurred while
the container van was in transit, in HEUNG-A’s possession, control and
custody as the carrier.

Although the container van had defects, they were not, however, so severe
as to accommodate heavy saturation of sea water. The holes were tiny and
the rusty portions did not cause gaps or tearing. Hence, the van was still in
a suitable condition to hold the goods and protect them from natural
weather elements or even the normal flutter of waves in the seas.

The scale of the damage sustained by the cargo inside the van could have
been only caused by large volume of sea water since not a single package
inside was spared. Aside from the defective condition of the van, some
other circumstance or occurrence contributed to the damages sustained
by the shipment. Since the presence of sea water is highly concentrated in
the high seas and considering HEUNG-A’s failure to demonstrate how it
exercised due diligence in handling and preserving the container van while
in transit, it is liable for the damages sustained thereby.

As the carrier of the subject shipment, HEUNG-A was bound to exercise

extraordinary diligence in conveying the same and its slot charter
agreement with DONGNAMA did not divest it of such characterization nor
relieve it of any accountability for the shipment. Clearly then, despite its
contract of affreightment with DONGNAMA, HEUNG-A remained
responsible as the carrier, hence, answerable for the damages incurred by
the goods received for transportation. Here, HEUNG-A failed to rebut this
prima facie presumption when it failed to give adequate explanation as to
how the shipment inside the container van was handled, stored and
preserved to forestall or prevent any damage or loss while the same was in
its possession, custody and control.

PROTOP is solidarily liable with HEUNG-A for the lost/damaged shipment

 in view of the bill of lading the former issued to NOVARTIS. "A bill of lading
is 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 or her order. It operates both as a receipt and as a contract. It is a receipt
for the goods shipped and a contract to transport and deliver the same as
therein stipulated." PROTOP breached its contract with NOVARTIS when it
failed to deliver the goods in the same quantity, quality and description as
stated in the Bill of Lading.

b) The rule on Package Liability Limitation under COGSA applies. The

Philippine law applies because the Philippines is the country of
destination. Hence, when there is a loss/damage to goods covered by
contracts of carriage from a foreign port to a Philippine port and in the
absence a shipper’s declaration of the value of the goods in the bill of
lading, as in the present case, the foregoing provisions of the COGSA shall
apply. HEUNG-A, WALLEM and PROTOP’s liability is limited to $500 per
package or pallet. HEUNG-A, WALLEM and PROTOP are liable only for the
lost/damaged 17 pallets instead of 19 pallets stated in the bill of lading.

354 Actions and While docking his vessel, “Taurus”, the master, thru negligence, damaged the wharf and
Damages in the merchandise loaded on the deck. The owner of the wharf and the damaged
case of Breach merchandise sued the owner of the vessel and the master of the vessel for the damage.

a) What is the basis of the liability of the owner of the vessel with respect to the
damage to the wharf?

The owner of the vessel may be made liable based on quasi-delict under Article
2176 of the Civil Code with respect to the damaged wharf. There was damage due
to negligence without any preexisting contractual relations between the parties.

b) With respect to the damage to the merchandise?

The shipowner may be made liable for breach of contract for the damage to the
merchandise. The carrier has an obligation to carry the goods safely to their
destination. The carrier failed to do so because of the negligence of his employee.

356 Loss X, a businessman boarded a PANTRANCO bus bound for Dagupan City where he would
meet Y, to arrange a business transaction. Somewhere in San Fernando, Pampanga, Z,
the Deputy Sheriff of Pampanga, intercepted and seized the PANTRANCO but at the
instance of W who had earlier obtained from the court a writ of attachment. As a result
of the seizure by the Sheriff, X failed to reach Dagupan City where he was supposed to
transact business. Feeling aggrieved by the loss of an otherwise juicy transaction, sued
PANTRANCO for breach of contract. Decide with reasons.

X cannot recover for the alleged loss of a juicy transaction. The alleged loss is
only speculative and does not appear to be an actual loss. Moreover, even the loss
is not speculative, the carrier cannot be liable for the alleged loss because it was
not attended by fraud, bad faith, malice or wanton attitude on the part of the
carrier. Article 2201 of the Civil Code provides that in contracts, the damages for
which the obligor who acted in good faith is liable shall be those that are the
natural and probable consequences of the breach of the obligation which the
parties have foreseen or could have reasonably foreseen at the time the obligation
was constituted.

438 Obligations of A, as paying passenger, boarded a plane of X & Co., a duly authorized air carrier bound
Carrier in Air from Manila to Cebu. On the way, the plane exploded in mid-air and crashed causing
Transportation the death of all persons on board. It was determined that the id-air explosion was due to
the explosive device contained in a suitcase by another passenger in the ill-fated aircraft.
If you were the judge, how will you rule?
 I will make the carrier liable. The carrier is bound to exercise extraordinary
diligence in carrying its passengers. It is presumed to be negligent when its
passengers died when the aircraft exploded. Moreover, the negligence of the
carrier is apparent because an explosive device was brought into the carrier
without being detected by the employees. Under R.A. 6235, the carrier is bound to
inspect and investigate suspicious packages that are being brought into the
aircraft. This duty was not complied with because the explosive device was not
detected by the carrier’s personnel.

453 Warsaw On September 1, 1983, Korean Air Lines (KAL) Flight 007, while on its way to New York,
Convention strayed off-course into the airspace of the then Union of Soviet Socialist Republic
(USSR). The USSR military sot it down over the sea of Japan thereby resulting to the
death of 269 passengers. It was established that the crew was repeatedly made aware
of the deviation but elected not to report the deviation, continued the flight and continued
to report being on course. Was there willful misconduct that is contemplated under the
Warsaw Convention?

Yes. The magnitude and duration of the deviation, supported by the inference that
the crew realized the deviation so tie prior to the last position report, showed that
the crew was repeatedly made aware of the deviation but elected not to report the
deviation, continued the flight and continued to report being on course. The
crew’s decision to conceal the error, rather than simply correct it, was an
intentional act. There was sufficient evidence that the crew knew that flying over
the USSR was prohibited and that it was dangerous. It was solely KAL’s
misconduct that put the plane in the vulnerable position.

464 PR purchased from S Airlines in Manila conjunction tickets for Manila-Singapore-Athens-

Larnaca-Rome-Turin-Zurich-Geneva-Copenhagen-New York. The petitioner was not a
participating airline in any of the segments in the itinerary under the said conjunction
tickets. In Geneva the P decided to forego his trip to Copenhagen and to go straight to
New York and in the absence of a direct flight under his conjunction tickets from Geneva
to New York, the PR on June 7, 1989 exchanged the unused portion of the conjunction
ticket for a one-way ticket from Geneva to New York from the petitioner airline. X Airline
issued its own ticket to PR in Geneva and claimed the value of the unused portion of the
conjunction ticket from the IATA clearing house in Geneva. Later, PR filed an action for
damages before the regional trial court of Cebu for the alleged embarrassment and
mental anguish he suffered at the Geneva Airport when the petitioner's security officers
prevented him from boarding the plane, detained him for about an hour and allowed him
to board the plane only after all the other passengers have boarded. One of the defenses
relied upon by X Airline is that the case cannot be filed in Manila because the ticket was
issued in Geneva and no part of the flight of X Airline occurred in Manila. Is such defense
tenable?

No, the defense is not tenable. The case against X Airline can be filed in Manila.
The contract of carriage between the PR and S Airlines although performed by
different carriers under a series of airline tickets, including that issued by the X
Airline, constitutes a single operation. Thus, when X Airline accepted the unused
portion of the conjunction tickets, entered it in the IATA clearing house and
undertook to transport the private respondent over the route covered by the
unused portion of the conjunction tickets, i.e., Geneva to New York, the petitioner
tacitly recognized its commitment under the IATA pool arrangement to act as
agent of the principal contracting airline, S Airlines, as to the segment of the trip
X Airline agreed to undertake. As such, X Airline thereby assumed the obligation
to take the place of the carrier originally designated in the original conjunction
ticket. X Airline’s argument that it is not a designated carrier in the original
conjunction tickets and that it issued its own ticket is not decisive of its liability.
The new ticket was simply a replacement for the unused portion of the conjunction
ticket, both tickets being for the same amount of US$2,760 and having the same
 points of departure and destination. By constituting itself as an agent of the
principal carrier X Airline's undertaking should be taken as part of a single
operation under the contract of carriage executed by the PR and S Airlines in
Manila.

489 Maritime Law Pablo Esparadon, a duly-licensed ship captain of the M/V Don Jose was drunk while he
was on duty as such, and while M/V Don Jose was sailing from Manila to the Visayas.
As a consequence thereof, the M/V Don Jose rammed another vessel near Correigidor,
causing both vessel to sink completely and thus become total losses. The cargo owners
of both sunken vessels sued the owner of the M/V Don Jose for their losses. Is the
shipowner of M/V Don Jose liable? Explain your answer.

No. The shipowner of M/V Don Jose is not liable because of the total loss of the
vessel. Generally, the shipowner is liable for the negligence of the captain in
collision cases. However, the liability is limited to the value of the vessel. The civil
liability of the shipowner of a vessel, in maritime collision which is caused by the
fault of the captain, as in this problem (being drunk), is merely co-existent with his
interest in the vessel (M/V Don Jose), such that the total loss thereof, results in
the extinction of such liability.

Toni, a copra dealer, loaded 1000 sacks of copra on board the vessel MV Tonichi (a
common carrier engaged in coastwise trade owned by Ichi) for shipment from Puerto
Galera to Manila. The cargo did not reach Manila because the vessel capsized and sank
with all its cargo. When Toni sued Ichi for damages based on breach of contract, the
latter invoked the “limited liability rule.”

a) What do you understand of the “rule” invoked by Ichi?

By “limited liability rule” is meant that the liability of a shipowner for damages in
case of loss is limited to the value of the vessel involved. If the ship is totally lost,
his liability is extinguished. If the ship or part thereof still exists, he can escape
liability by abandoning the vessel, its appurtenances and its freight. His other
properties cannot be reached by the parties entitled to damages.

b) Are there exceptions to the “limited liability rule”?

Yes, there are exceptions. The exceptions to the limited liability rule are: (1) where
the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain; (2) where the vessel
is insured; (3) in workmen’s compensation claims; and (4) expenses for repairs
and provisioning of the ship prior to the departure thereof.

490 X, a rich trader, boarded the M/V Cebu, a small vessel with a value of P3 M and owned
by Y, plying the route Cotabato to Pagadian City. X had in his possession a diamond
worth P5 M. the vessel had a capacity of 40 passengers. Near Pagadian, the vessel met
squally weather and was hit by a six foot waves every three seconds. Soon, water
entered the engine room and the hull of the vessel. The patron of the vessel ordered the
distribution of life belts to the passengers. He told them the vessel was sinking and for
them to take care of themselves. The vessel turned out to be overloaded by 20
passengers and had no sufficient life belts. X failed to get a life belt and died when the
vessel totally sunk. The heirs of X sued Y for P10 M damages. Y raised as a defense of
limited liability. Decide.

Y cannot invoke the defense of limited liability. The doctrine of limited liability
does not apply when death or injury or damage sustained is attributable to the
fault or negligence of the shipowner or ship agent or to concurring fault or
negligence of the shipowner or ship agent or captain (or patron) of the vessel.
Undoubtedly, the shipowner himself, was guilty of such fault or negligence in not
making certain that the passenger vessel is not overload, as well as and is having
 failed to provide sufficient life belts on board the vessel.

Captain Hook, the ship captain of M.V. Peter Pan, overloaded the M.V. Peter Pan, as a
consequence of which the vessel sank in the middle of the Sulu Sea, and nothing
whatsoever was recovered. The owners of the cargo and the heirs of the three
passengers of the vessel filed an action for damages in the amount of P500,000 against
Mr. Wendy, the owner. Will the action prosper? Reasons.

The action will not prosper. The shipowner can escape liability by abandoning the
vessel. This right of abandonment likewise applies to collisions and shipwreck
but in the latter case only for unpaid wages. However, if the shipowner or ship
agent knew or are expected to know the overloading, then the limited liability rule
cannot be applied.

X Shipping Company spent almost a fortune in refitting and repairing its luxury passenger
vessel, the MV Marina, which plied the inter-island routes of the company from La Union
in the north to Davao City in the south. The MV Marina met an untimely fate during its
post-repair voyage. It sank off the coast of Zambales while en route to La Union from
Manila. The investigation showed that the captain alone was negligent. There were no
casualties in that disaster. Faced with a claim for the payment of the refitting and repair,
X Shipping company asserted exemption from liability on the basis of the hypothecary
or limited liability rule under Article 587 of the Code of Commerce. Is X Shipping
Company’s assertion valid? Explain

No. The assertion of X Shipping Company is not valid. The total destruction of the
vessel does not affect the liability of the ship owner for repairs on the vessel
completed before its loss. Hence, the limited liability rule does not apply.

491 MV Mariposa, one of five passenger ships owned by Marina Navigation Co, sank off the
coast of Mindoro while en route to Iloilo City. More than 200 passengers perished in the
disaster. Evidence showed that the ship captain ignored typhoon bulletins issued by
Pag-asa during the 24-hour period immediately prior to the vessel’s departure from
Manila. The bulletins warned all types of sea crafts to avoid the typhoon’s expected path
near Mindoro. To make matters worse, he took more load than was allowed for the ship’s
rated capacity. Sued for damages by the victim’s surviving relatives, Marina Nav Co
contended 1) that its liability, if any, had been extinguished with the sinking of MV
Mariposa; and 2) that assuming it had not been so extinguished, such liability should be
limited to the loss of the cargo. Are these contentions meritorious in the context of
applicable provisions of the Code of Commerce?

No. The contentions of Marina Nav. Co., are not meritorious. The problem states
that there was already a PAGASA bulletin within one day before the departure of
the vessel. In addition, there was also overloading. It is therefore believed that the
shipowner itself did not exercise extraordinary diligence. It is believed that the
negligence cannot be ascribed entirely to the captain. Although the captain of MV
Mariposa was negligent in ignoring the typhoon bulletins issued by PAGASA and
in overloading the vessel, it is believed that the shipowner cannot escape a finding
negligence. Therefore, the shipowner cannot invoke the doctrine of limited
liability.

492 Protest Two vessels figured in a collision along the Straits of Guimaras resulting in considerable
loss of cargo. The damaged vessels were safely conducted to the Port of Iloilo.
Passenger A failed to file a maritime protest. B, a non-passenger but a shipper who
suffered damage to his cargo, likewise did not file a maritime protest at all.

a) What is a maritime protest?

Protest is the written statement by the master of a vessel or any authorized officer,
attested by proper officer or a notary, to the effect that damages has been suffered
 by the ship. In cases of collisions, the maritime protest must be made within 24
hours after a collision and the circumstances of the collision are declared or made
known before a competent authority at the point of accident or the first port of
arrival if in the Philippines or the Philippine consul in a foreign country.

b) Can A and B successfully maintain an action to recover losses and damages

arising from the collision? Reason briefly.

A, the passenger, is required to file a maritime protest since being a passenger of

the vessel at the time of the collision, was expected to know the circumstances of
the collision; thus, A cannot successfully maintain an action to recover losses and
damages. B, the shipper, can successfully maintain an action to recover since he
wasn’t there when the collision happened and he is not privy to the circumstances
of the collision.

503 Vessels On February 10, 1927, the plaintiff, who is a resident of the municipality of Silay,
Occidental Negros, was desirous of embarking upon the interisland steamer San Jacinto
in order to go to Iloilo. This boat was at the time in the anchoring-ground of the port of
Silay, some half a mile distant from the port. The plaintiff therefore embarked at the
landing in the motor boat Jison, which was then engaged in conveying passengers and
luggage back and forth from the landing to boats at anchor, and which was owned and
operated by the defendant Albino Jison, with Juan Duruelo as patron. The engineer
(maquinista) aboard on this trip was one Rodolin Duruelo, a boy of only 16 years of age.
He is alleged to have been a mere novice without experience in the running of motor
boats; and the day of the occurrence now in contemplation is said to have been the third
day of his apprenticeship in this capacity. It is alleged that the Jison, upon this trip, was
grossly overladen, having aboard fourteen passengers, while its capacity was only for
eight or nine.

As the motor boat approached the San Jacinto in a perfectly quiet sea, it came too
near to the stern of the ship, and as the propeller of the ship had not yet ceased to turn,
the blades of the propeller struck the motor boat and sank it at once. It is alleged in the
complaint that the approach of the Jison to this dangerous proximity with the propeller
of the San Jacinto was due to the fault, negligence and lack of skill of the defendant Juan
Duruelo, as patron of the Jison. As the Jison sank, the plaintiff was thrown into the water
against the propeller, and the revolving blades inflicted various injuries upon him,
consisting of a bruise in the breast, two serious fractures of the bones of the left leg, and
a compound fracture of the left femur. As a consequence of these injuries the plaintiff
was kept in bed in a hospital in the City of Manila from the 28th of February until October
19 of the year 1927, or approximately eight months. The plaintiff then filed an action for
damages against the defendant. The defendant moved to dismiss the complaint on the
ground that the complaint does not allege that a protest had been presented by the
plaintiff, within 24 hours after the occurrence, to the competent authority at the port where
the accident occurred in accordance to Article 835 of the Code of Commerce. Is protest
under Article 835 necessary?

No, protest is not necessary. The word "vessel" (Spanish "buque," "nave"), used
in the Article 835 referred to was not intended to include all ships, craft or floating
structures of every kind without limitation, and the provisions of that section
should not be held to include minor craft engaged only in river and bay traffic.
Vessels which are licensed to engage in maritime commerce, or commerce by sea,
whether in foreign or coastwise trade, are no doubt regulated by Book III of the
Code of Commerce. Other vessels of a minor nature not engaged in maritime
commerce, such as river boats and those carrying passengers from ship to shore,
must be governed, as to their liability to passengers, by the provisions of the Civil
Code or other appropriate special provisions of law.

568 Persons who X Mining Co. shipped a cargo of machineries on board the S/S Good Ship which was
take part in chartered by the Able Shipping Co., a foreign corporation represented in the Philippines
 Maritime by its agent, Best Lines, Inc. When the goods were delivered to the consignee, Y
Commerce Corporation, they were found to have sustained losses. The insurer, Sunshine Insurance
(shipowner and Co., paid for the losses, thereby subrogating itself to the rights of X Mining Company or
ship agent) Y Corporation vis-à vis the shipping company and the shipping agent.

Upon arrival of the S/S Good Ship in Manila, Best Lines, Inc. took charge of the
following: (a) unloading of the cargo and issuing of cargo receipts in its own name for
the purpose of evidencing the condition and discharge of the cargo from the vessel to
the arrastre operator and/or unto the barge lighters; (b) filing and processing of claims
against the vessel S/S Good Ship for damages/ losses sustained by the cargo.

When Sunshine Insurance Co. sued both Able Shipping Co. and and Best Lines, Inc.
the latter contended that it was a disclosed agent and could not therefore be held liable,
despite the insolvency of Able Shipping Co.

Rule on the contention of Best Lines, Inc., with reasons.

Best Lines, Inc.’s contention lacks merit. The Code of Commerce provides that the
ship agent shall be liable for indemnities in favor of third persons which arise from
the conduct of the captain in the care of the goods which the vessel carried. The
insolvency of Able Shipping Co. has no bearing insofar as his liability of Best
Lines, Inc. is concerned. The law does not make the liability of the ship agent
dependent upon the solvency or insolvency of the ship owner. Best Lines, Inc., as
ship agent, is liable solidarily with its principal, Able Shipping Co., for the amount
of the losses damages sustained by the goods.

569 “S” shipped goods from Australia on boar a foreign vessel owned and operated by
“X”, a shipping company, based in Australia and represented in the Philippines by “R”.
The goods were consigned to “T” of Manila and insured by “U” against all risks. Upon
arrival in Manila Bay, the goods were discharged from the vessel to a lighter owned by
the Bay Brokerage Co.

When delivered to and received by “T”, the goods were found to have sustained
losses or damages. Evidence disclosed that the damage occurred while the goods were
in the custody of the carrier.

The insurance company paid the amount of the loss but sought reimbursement from
“X” and/or “R”. “R” disclaimed any liability alleging that he is a mere agent of “X”, and
having acted as agent of a disclosed principal is, therefore, not liable.

Can the insurance company recover from “R”? Reasons.

Yes, the insurance company can recover from “R”. A ship agent (“R”) under the
Code of Commerce is liable solidarily with its principal (X), in an amount
representing the value of the good lost or damaged.

Under a charter party, XXO Trading Company shipped sugar to Coca-Cola Company
through SS Negros Shipping Corp., insured by Capitol Insurance Company. The cargo
arrived but with shortages. Coca-Cola demanded from Capitol Insurance Co. P500.000
in settlement for XXO Trading. The MM Regional Trial Court, where the civil suit was
filed, "absolved the insurance company, declaring that under the Code of Commerce,
the shipping agent is civilly liable for damages in favor of third persons due to the conduct
of the carrier's captain, and the stipulation in the charter party exempting the owner from
liability is not against public policy. Coca-Cola appealed. Will its appeal prosper? Reason
briefly.

No. The appeal of Coca-Cola will not prosper. Under Article 587 of the Code of
Commerce, the shipping agent is civilly liable for damages in favor of third
persons due to the conduct of the carrier's captain, and the shipping agent can
 exempt himself therefrom only by abandoning the vessel with all his equipment
and the freight he may have earned during the voyage.

Assuming that there is bareboat charter, the stipulation in the charter party
exempting the owner from liability is not against public policy because the public
at large is not involved.

On the other hand, the appeal will prosper if the charter is a time or voyage
charter. The shipowner and the ship agent would still be liable be liable because
the stipulation exempting the shipowner from liability is not valid.

591 Captain X owns the ship M/V Aguinaldo. He bareboat chartered the ship to Y who appointed all
its crew members from the captain down to its last official. Y then transported a shipment
of 10,000 bags of sugar belonging to Z. Thru the negligence of the ship captain, half of
the sugar was damaged due to sea water. Since Y is bankrupt, Z sued the captain and
X. Will the suit succeed?

The action could prosper against the captain whose negligence caused the
damage but not against X who merely was a lessor of the vessel and who was
neither a party to the contract for the shipment of the goods nor an employer of
the captain. The bareboat charterer becomes the owner pro hac vice hence, he is
responsible for the acts of his captain. The shipowner is not liable because the
contract is between the bareboat charterer and Y.

X chartered the ship of Y to transport his logs from Zamboanga to Manila. In the course
of their voyage, the ship met a storm and had to dock in Cebu for 3 days. Z, the captain
of the ship, borrowed P20,000 from X on the pretext that he would need the money for
the repair of the ship. Z misappropriated the money and converted it to his own benefit.
What is the liability of Y, if any?

A shipowner would only be liable for contracts made by the captain (a) when duly
authorized or (b) even when unauthorized, for ship repairs, or for equipping or
provisioning the vessel when the proceeds are invested therein. Since the loan by
the captain from X does not fall under any of the foregoing cases, the amount
borrowed shall be considered a personal liability of Z, the captain, and Y, the
shipowner, cannot thus be held liable.

Private respondent Captain Rizalino Tayong, a licensed Master Mariner with

experience in commanding ocean-going vessels, was employed on 6 July 1989 by
petitioners Trenda World Shipping (Manila), Inc. and Sea Horse Ship Management, Inc.
through petitioner Inter-Orient Maritime Enterprises, Inc. as Master of the vessel M/V
Oceanic Mindoro, for a period of one (1) year, as evidenced by an employment contract.
On 15 July 1989, Captain Tayong assumed command of petitioners' vessel at the port
of Hongkong. His instructions were to replenish bunker and diesel fuel, to sail forthwith
to Richard Bay, South Africa, and there to load 120,000 metric tons of coal.

On 16 July 1989, while at the Port of Hongkong and in the process of unloading cargo,
Captain Tayong received a weather report that a storm code-named "Gordon" would
shortly hit Hongkong. Precautionary measures were taken to secure the safety of the
vessel, as well as its crew, considering that the vessel's turbo-charger was leaking and
the vessel was fourteen (14) years old.

On 21 July 1989, Captain Tayong followed-up the requisition by the former captain
of the Oceanic Mindoro for supplies of oxygen and acetylene, necessary for the welding-
repair of the turbo-charger and the economizer. This requisition had been made upon
request of the Chief Engineer of the vessel and had been approved by the shipowner.

On 25 July 1989, the vessel sailed from Hong Kong for Singapore. In the Master's
sailing message, Captain Tayong reported a water leak from M.E. Turbo Charger No. 2
Exhaust gas casing. He was subsequently instructed to blank off the cooling water and
maintain reduced RPM unless authorized by the owners.

On 29 July 1989, while the vessel was en route to Singapore, Captain Tayong
reported that the vessel had stopped in mid-ocean for six (6) hours and forty-five (45)
minutes due to a leaking economizer. He was instructed to shut down the economizer
and use the auxiliary boiler instead.

On 31 July 1989 at 0607 hrs., the vessel arrived at the port of Singapore. The Chief
Engineer reminded Captain Tayong that the oxygen and acetylene supplies had not
been delivered. Captain Tayong inquired from the ship's agent in Singapore about the
supplies. The ship agent stated that these could only be delivered at 0800 hours on
August 1, 1989 as the stores had closed.

Captain Tayong called the shipowner, Sea Horse Ship Management, Ltd., in London
and informed them that the departure of the vessel for South Africa may be affected
because of the delay in the delivery of the supplies.

Sea Horse advised Captain Tayong to contact its Technical Director, Mr. Clark, who
was in Tokyo and who could provide a solution for the supply of said oxygen and
acetylene.

On the night of 31 July 1989, Mr. Clark received a call from Captain Tayong informing
him that the vessel cannot sail without the oxygen and acetylene for safety reasons due
to the problems with the turbo charger and economizer. Mr. Clark responded that by
shutting off the water to the turbo chargers and using the auxiliary boiler, there should
be no further problems. According to Mr. Clark, Captain Tayong agreed with him that the
vessel could sail as scheduled on 0100 hours on 1 August 1989 for South Africa.

According to Captain Tayong, however, he communicated to Sea Horse his

reservations regarding proceeding to South Africa without the requested supplies, and
was advised by Sea Horse to wait for the supplies at 0800 hrs. of 1 August 1989, which
Sea Horse had arranged to be delivered on board the Oceanic Mindoro. At 0800 hours
on 1 August 1989, the requisitioned supplies were delivered and Captain Tayong
immediately sailed for Richard Bay.

When the vessel arrived at the port of Richard Bay, South Africa on 16 August 1989,
Captain Tayong was instructed to turn-over his post to the new captain. He was
thereafter repatriated to the Philippines, after serving petitioners for a little more than two
weeks. He was not informed of the charges against him.

Was there a valid ground to dismiss Captain Tayag?

No. According to the report of Mr. Robert Clark, Technical Director of petitioner
Sea Horse Ship Management, Inc., the Oceanic Mindoro had stopped in mid-ocean
for six (6) hours and forty-five (45) minutes on its way to Singapore because of its
leaking economizer.

Hence, it cannot be said that Captain Tayong's decision (arrived at after

consultation with the vessel's Chief Engineer) to wait seven (7) hours in Singapore
for the delivery on board the Oceanic Mindoro of the requisitioned supplies
needed for the welding-repair, on board the ship, of the turbo-charger and the
economizer equipment of the vessel, constituted merely arbitrary, capricious or
grossly insubordinate behavior on his part.

Clearly, petitioners were angered at Captain Tayong's decision to wait for

delivery of the needed supplies before sailing from Singapore, and may have
changed their estimate of their ability to work with him and of his capabilities as a
 ship captain. Assuming that to be petitioners' management prerogative, that
prerogative is nevertheless not to be exercised, in the case at bar, at the cost of
loss of Captain Tayong's rights under his contract with petitioners and under
Philippine law.

593 Private respondents purchased first- class tickets from petitioner at the latter's office in
Cebu City. They were to board petitioner's vessel, M/V Sweet Grace, bound for
Catbalogan, Western Samar. Instead of departing at the scheduled hour of about
midnight on July 8, 1972, the vessel set sail at 3:00 A.M. of July 9, 1972 only to be towed
back to Cebu due to engine trouble, arriving there at about 4:00 P.M. on the same day.
Repairs having been accomplished, the vessel lifted anchor again on July 10, 1972 at
around 8:00 A.M. Instead of docking at Catbalogan, which was the first port of call, the
vessel proceeded direct to Tacloban at around 9:00 P.M. of July 10, 1972. Private
respondents had no recourse but to disembark and board a ferryboat to Catbalogan. Is
the carrier liable to the private respondent?

Yes, the carrier is liable. The voyage to Catbalogan was "interrupted" by the
captain upon instruction of management. The "interruption" was not due to
fortuitous event or for majeure nor to disability of the vessel. Having been caused
by the captain upon instruction of management, the passengers' right to
indemnity is evident. The owner of a vessel and the ship agent shall be civilly
liable for the acts of the captain.

Article 614 of the Code of Commerce provides that a captain who, having
agreed to make a voyage, fails to fulfill his undertaking, without being prevented
by fortuitous event or force majeure, shall indemnify all the losses which his
failure may cause, without prejudice to criminal penalties which may be proper.
Article 698 provides that in case of interruption of a voyage already begun, the
passengers shall only be obliged to pay the fare in proportion to the distance
covered, without right to recover damages if the interruption is due to fortuitous
event or force majeure, but with a right to indemnity, if the interruption should
have been caused by the captain exclusively. If the interruption should be caused
by the disability of the vessel, and the passenger should agree to wait for her
repairs, he may not be required to pay any increased fare of passage, but his living
expenses during the delay shall be for his own account. Articles 614 and 698 are
applicable in this case.

There was no fortuitous event or force majeure which prevented the vessel
from fulfilling its undertaking of taking private respondents to Catbalogan. In the
first place, mechanical defects in the carrier are not considered a caso fortuito
that exempts the carrier from responsibility.

Even granting arguendo that the engine failure was a fortuitous event, it
accounted only for the delay in departure. When the vessel finally left the port of
Cebu on July 10, 1972, there was no longer any force majeure that justified by-
passing a port of call. The vessel was completely repaired the following day after
it was towed back to Cebu. In fact, after docking at Tacloban City, it left the next
day for Manila to complete its voyage.

The reason for by-passing the port of Catbalogan, as admitted by petitioner's

General Manager, was to enable the vessel to catch up with its schedule for the
next week. The record also discloses that there were 50 passengers for Tacloban
compared to 20 passengers for Catbalogan, so that the Catbalogan phase could
be scrapped without too much loss for the company.

629 Charter Parties In a contract dated 26 April 1983, respondent was appointed as the exclusive
Philippine indent representative of Richco Rotterdam B.V. (Richco), a foreign
corporation, in the sale of the latter’s commodities. Under one of the terms of the
contract, respondent was to assume the liabilities of all the Philippine buyers, should
 they fail to honor the commitments on the discharging operations of each vessel,
including the payment of demurrage and other penalties. In such instances, Richco shall
have the option to debit the account of respondent corresponding to the liabilities of the
buyers, and respondent shall then be deemed to be subrogated to all the rights of Richco
against these defaulting buyers.

Sometime in 1987, petitioner purchased Canadian barley and soybean meal from
Richco. The latter thereafter chartered four (4) vessels to transport the products to the
Philippines. Each of the carrier bulk cargoes was covered by a Contract of Sale executed
between respondent as the seller and duly authorized representative of Richco and
petitioner as the buyer. The four contracts specifically referred to the charter party in
determining demurrage or dispatch rate. The contract further provided that petitioner
guarantees to settle any demurrage due within one (1) month from respondent’s
presentation of the statement.

Upon delivery of the barley and soybean meal, petitioner failed to discharge the
cargoes from the four (4) vessels at the computed allowable period to do so. Thus, it
incurred a demurrage amounting to a total of US$193,937.41.

On numerous occasions, on behalf of Richco, respondent demanded from petitioner

the payment of the demurrage, to no avail. Consequently, on 20 October 1991, Richco
sent a communication to respondent, informing it that the demurrage due from petitioner
had been debited from the respondent’s account.

The respondent argued that Richco had no right to debit the account because Richco
is not the shipowner and only the shipowner is entitled to the payment of demurrage. Is
the argument tenable?

The argument is not tenable. The delay incurred by petitioner in discharging

the cargoes from the vessels was due to its own fault. Its obligation to demurrage
is established by the Contracts of Sale it executed, wherein it agreed to the
conditions to provide all discharging facilities at its expense in order to effect the
immediate discharge of cargo; and to place for its account all discharging costs,
fees, taxes, duties and all other charges incurred due to the nature of the
importation.

Meanwhile, respondent unequivocally established that Richco charged to it the

demurrage due from petitioner. Thus, at the moment that Richco debited the
account of respondent, the latter is deemed to have subrogated to the rights of
the former, who in turn, paid demurrage to the ship owner. It is therefore
immaterial that respondent is not the ship owner, since it has been able to prove
that it has stepped into the shoes of the creditor.

Subrogation is either "legal" or "conventional." Legal subrogation is an

equitable doctrine and arises by operation of the law, without any agreement to
that effect executed between the parties; conventional subrogation rests on a
contract, arising where "an agreement is made that the person paying the debt
shall be subrogated to the rights and remedies of the original creditor.” The case
at bar is an example of legal subrogation, the petitioner and respondent having no
express agreement on the right of subrogation. Thus, it is of no moment that the
Contracts of Sale did not expressly state that demurrage shall be paid to
respondent. By operation of law, respondent has become the real party-in-interest
to pursue the payment of demurrage.

650 The Sand Dev Co enters into a voyage charter with XYZ over the latter’s vessel, the MV
Lady Love. Before the Sand could load it, XYZ sold Lady Love to Oslob Maritime Co
which decided to load it for its own account.
 a) May XYZ Shipping Co validly ask for the rescission of the charter party? If so,
can Sand recover damages? To what extent?

XYZ may ask for the rescission of the charter party if, as in this case, it sold the
vessel before the charterer has begun to load the vessel and the purchaser loads
it for his own account. Sand may recover damages to the extent of its losses

b) If Oslob did not load it for its own account, is it bound by the charter party?

Yes. Article 689 of the Code of Commerce provides that if the new owner of the
vessel should not load her for his own account the charter party shall be
respected, and the vendor shall indemnify the purchaser if the former did not
inform him of the charter pending at the time of making the sale. Hence, if Oslob
did not load Lady Love for its own account, it would be bound by the charter party,
but XYZ would have to indemnify Oslob if it was not informed of the Charter Party
at the time of sale.

c) Explain the meaning of “owner pro hac vice of the vessel.” In what kind of charter
party does this obtain?

The term “Owner Pro Hac Vice of the Vessel,” is generally understood to be the
charterer of the vessel who entered into a Charter Party with the shipowner that is
in the nature of a bareboat or demise charter. The charterer is an “owner pro hac
vice” because he controls the ship with his own set of captain and crew thereby
effectively becoming the owner for the voyage or service stipulated.

651 O'Farrel y Cia, operating under the trade name Malaysian Navigation Company, entered
into an agreement with the Manila Electric Company whereby the Malaysian Navigation
Company undertook to transport seventy-five thousand tons of coal (10 percent more or
less), from Hongay to Manila at the freight rate of four pesos and fifty centavos (P4.50),
per ton of 1,016 kilos, less a rebate of 1 per cent. The agreement provides that “loading
to be for account and risk of shippers according to customary quick despatch subject to
turn of mines.” The practice followed by the parties in the performance of contract was
that, upon the receipt of information in Manila by the defendant company by the coal
company, advising that a cargo of coal was, or soon would be available in Hongay, the
massage was turn over to O'Farrel y Cia., and the later company made the arrangements
for the sending of a boat to Hongay. But delay in the taking on of coal occurred in
Hongay, owing to the inability of the coal company to deliver the coal to the waiting boats.
The preponderance of the proof shows that this delay was due to the fact that the cranes
of the coal company at Hongay were defective and often out order. At any rate the result
was that the plaintiff's boats were frequently kept waiting in the port; and it in fact appears
that altogether they were held there idle one hundred twenty-three days, to say nothing
at of the time occupied in the lading of the ships after their turn had come for taking
cargo. There can be no doubt that these delays were attributable to the coal company.
Malaysian Navigation Company is now demanding payment of demurrage from the
Manila Electric Company. Will the claim prosper?

No, the claim will not prosper. The expression "subject to turn of mines" should
be interpreted, we think, to mean that the lading of vessels should be subject to
the output of the mines and that vessels should take their turn in taking on the
coal. It results that the lading of coal was dependent upon the output of the mines
and the order of ships seeking cargo at the loading places. The expression
"subject to turn of mines" was no doubt inserted in the contract in lieu of a
stipulation for demurrage. The insertion of that expression in clause 3 made the
Malaysian ships dependent upon the loading facilities of the coal company at
Hongay, and relieved the defendant from any liability for demurrage by reason of
delays that might occur in that port incident to the obtaining and loading of the
coal.
 Article 656 provides of the Code of Commerce provides that if in the chapter
party the time in which the loading and unloading is to take place is not stated,
the customs of the port where these acts take place shall be observed. After the
period stipulated or the customary one has passed, and should there not be in the
freight contract an express clause fixing the indemnification for the delay, the
captain shall be entitled to demand demurrage for the usual and extra lay days
which may have elapsed in loading and unloading.

However, the stipulation of the contract making the loading of coal subject to
the turn of mines renders article 656 inapplicable, this being a special stipulation
determining the order of loading. It results that the defendant cannot be held
responsible for the delay that occurred.

652 On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00
p.m., enroute to Masbate, loaded with 8,800 barrels of petroleum products shipped by
petitioner Caltex. MT Vector is a tramping motor tanker owned and operated by Vector
Shipping Corporation, engaged in the business of transporting fuel products such as
gasoline, kerosene, diesel and crude oil. During that particular voyage, the MT Vector
carried on board gasoline and other oil products owned by Caltex by virtue of a charter
contract between them. On December 20, 1987, at about 6:30 a.m., the passenger ship
MV Doña Paz left the port of Tacloban headed for Manila with a complement of 59 crew
members including the master and his officers, and passengers totaling 1,493 as
indicated in the Coast Guard Clearance. The MV Doña Paz is a passenger and cargo
vessel owned and operated by Sulpicio Lines, Inc. plying the route of Manila/ Tacloban/
Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week.

At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea
within the vicinity of Dumali Point between Marinduque and Oriental Mindoro. All the
crewmembers of MV Doña Paz died, while the two survivors from MT Vector claimed
that they were sleeping at the time of the incident.

The MV Doña Paz carried an estimated 4,000 passengers; many indeed, were not in
the passenger manifest. Only 24 survived the tragedy after having been rescued from
the burning waters by vessels that responded to distress calls. Among those who
perished were public school teacher Sebastian Cañezal (47 years old) and his daughter
Corazon Cañezal (11 years old), both unmanifested passengers but proved to be on
board the vessel.

On September 15, 1992, the trial court rendered judgment making Sulpicio Lines
liable. The Court of Appeal modified the trial court's ruling and included petitioner Caltex
as one of the those liable for damages thereby making said petitioner Caltex and Vector
Shipping Co. equally liable under the third party complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. of the above-mentioned damages, attorney's fees and
costs which the latter is adjudged to pay plaintiffs, the same to be shared half by Vector
Shipping Co. (being the vessel at fault for the collision) and the other half by Caltex
(Phils.), Inc. (being the charterer that negligently caused the shipping of combustible
cargo aboard an unseaworthy vessel). One of the arguments of Vector Shipping is that
MT Vector was a private carrier and as such is not liable to third parties. Caltex is the
one allegedly liable. Decide with reasons.

MT Vector is a common carrier. The charter party agreement did not convert the
common carrier into a private carrier. The parties entered into a voyage charter,
which retains the character of the vessel as a common carrier. If the charter is a
contract of affreightment, which leaves the general owner in possession of the
ship as owner for the voyage, the rights and the responsibilities of ownership rest
on the owner. The charterer is free from liability to third persons in respect of the
ship.
681 Averages MV SuperFast, a passenger-cargo vessel owned by SF Shipping Company plying the
inter-island routes, was on its way to Zamboanga City from the Manila port when it
accidentally, and without fault or negligence of anyone on the ship, hit a huge floating
object. The accident caused damage to the vessel and loss of an accompanying crated
cargo of passenger PR. In order to lighten the vessel and save it from sinking and in
order to avoid risk of damage to or loss of the rest of the shipped items (none of which
was located on the deck), some had to be jettisoned. SF Shipping had the vessel
repaired at its port of destination. SF Shipping thereafter filed a complaint demanding all
the other cargo owners to share in the total repair costs incurred by the company and in
the value of the lost and jettisoned cargoes. In answer to the complaint, the shippers’
sole contention was that, under the Code of Commerce, each damaged party should
bear its or his own damage and those that did not suffer any loss or damage were not
obligated to make any contribution in favor of those who did. Is the shippers’ contention
valid? Explain.

No. The shippers’ contention is not valid. The owners of the cargo jettisoned, to
save the vessel from sinking and to save the rest of the cargoes, are entitled to
contribution. The jettisoning of said cargoes constitutes general average loss
which entitles the owners thereof to contribution from the owner of the vessel and
also from the owners of the cargoes saved. SF Shipping is not entitled to
contribution/ reimbursement for the costs of repairs on the vessel from the
shippers.

682 The S S "San Antonio", vessel owned and operated by plaintiff, left Manila on October
6, 1949, bound for Basco, Batanes, vis Aparri, Cagayan, with general cargo belonging
to different shippers, among them the defendant. The vessel reached Aparri on the 10th
of that month, and after a day's stopover in that port, weighed anchor to proceed to
Basco. But while still in port, it ran aground at the mouth of the Cagayan river, and,
attempts to refloat it under its own power having failed, plaintiff have it refloated by the
Luzon Stevedoring Co. at an agreed compensation. Once afloat the vessel returned to
Manila to refuel and then proceeded to Basco, the port of destination. There the cargoes
were delivered to their respective owners or consignees, who, with the exception of
defendant, made a deposit or signed a bond to answer for their contribution to the
average. Is the cost of refloating considered a general average?

No. The facts presented do not make out a case for general average. The
requisites for general average contribution are as follows: First, there must be a
common danger. This means, that both the ship and the cargo, after has been
loaded, are subject to the same danger, whether during the voyage, or in the port
of loading or unloading; that the danger arises from the accidents of the sea,
dispositions of the authority, or faults of men, provided that the circumstances
producing the peril should be ascertained and imminent or may rationally be said
to be certain and imminent. This last requirement exclude measures undertaken
against a distant peril; Second, that for the common safety part of the vessel or of
the cargo or both is sacrificed deliberately; Third, that from the expenses or
damages caused follows the successful saving of the vessel and cargo; and
Fourth, that the expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority.

With respect to the first requisite, the evidence does not disclose that the
expenses sought to be recovered from defendant were incurred to save vessel
and cargo from a common danger. The vessel ran aground in fine weather inside
the port at the mouth of a river, a place described as "very shallow". It would thus
appear that vessel and cargo were at the time in no imminent danger or a danger
which might "rationally be sought to be certain and imminent." It is, of course,
conceivable that, if left indefinitely at the mercy of the elements, they would run
the risk of being destroyed. But as stated at the above quotation, "this last
requirement excludes measures undertaken against a distant peril." It is the
 deliverance from an immediate, impending peril, by a common sacrifice, that
constitutes the essence of general average. In the present case there is no proof
that the vessel had to be put afloat to save it from imminent danger. What does
appear from the testimony of plaintiff's manager is that the vessel had to be
salvaged in order to enable it "to proceed to its port of destination." But as was
said in the case just cited it is the safety of the property, and not of the voyage,
which constitutes the true foundation of the general average.

It follows that the second and third requisites are also absent. The expenses in
question were not incurred for the common safety of vessel and cargo, since they,
or at least the cargo, were not in imminent peril. The cargo could, without need of
expensive salvage operation, have been unloaded by the owners if they had been
required to do so. Although the cargo was saved, they were not saved from a
common danger.

691 By contract of character dated February 8, 1915, Manuel Lopez Castelo, as owner,
let the small interisland steamer Batangueño for the term of one year to Jose Lim
Chumbuque for use in the conveying of cargo between certain ports of the Philippine
Islands. In this contract it was stipulated that the officers and crew of
the Batangueño should be supplied by the owner, and that the charterer should have no
other control over the captain, pilot, and engineers than to specify the voyages that they
should make and to require the owner to discipline or relieve them as soon as possible
in case they should fail to perform the duties respectively assigned to them.

While the boat was being thus used by the charterer in the interisland trade, the
standard Oil Company delivered to the agent of the boat in Manila a quantity of petroleum
to be conveyed to the port of Casiguran, in the Province of Sorsogon. For this
consignment a bill of lading of the usual form was delivered, with the stipulation that
freight should be paid at the destination. Said bill of lading contained no provision with
respect to the storage of the petroleum, but it was in fact placed upon the deck of the
ship and not in the hold.

While the boat was on her way to the port mentioned, and off the western coast of
Sorsogon, a violent typhoon passed over that region, and while the storm was at its
height the captain was compelled for the safety of all to jettison the entire consignment
of petroleum consisting of two hundred cases. When the storm abated the ship made
port, and thirteen cases of the petroleum were recovered, but the remainder was wholly
lost.

a) Was there a general average loss?

Yes, there was general average loss. The loss of this petroleum is a general and
not a special average, with the result that the plaintiff is entitled to recover in some
way and from somebody an amount bearing such proportion to its total loss as
the value of both the ship and the saved cargo bears to the value of the ship and
entire cargo before the jettison was effected.

b) Did the carrier validly comply with the procedure required under Article 852 of the
Code of Commerce?

No. Now, by article 852 of the Code of Commerce the captain is required to initiate
the proceedings for the adjustment, liquidation, and distribution of any gross
average to which the circumstances of the voyage may have given origin; and it
is therefore his duty to take the proper steps to protect any shipper whose goods
may have been jettisoned for the general safety. In ordinary practice this, we
supposed, would be primarily accomplished by requiring the consignees of other
cargo, as a condition precedent to the delivery of their goods to them, to give a
sufficient bond to respond for their proportion of the general average. But it is not
 necessary here to inquire into details. It is sufficient to say that the captain is
required to take the necessary steps to effect the adjustment, liquidation, and
distribution of the general average. In the case before us the captain of the vessel
did not take those steps; and we are of the opinion that the failure of the captain
to take those steps gave rise to a liability for which the owner of the ship must
answer.

c) Can the shipper recover from the shipowner if the captain failed to comply with
the procedure prescribed under Article 852 of the Code of Commerce?

Yes. The defendant is not correct in arguing that the liquidation of the general
average is, under article 852 and related provisions, a condition precedent to the
liability of the defendant, and that at any rate the defendant, as owner of the ship,
should only be held liable for his proportion of the general average. This argument
involves a misconception of the true import of the provisions relating to the
adjustment and liquidation of general average. Clearly, for one thing, those
provisions are intended to supply the shipowner, acting of cause in the person of
the captain, with a means whereby he may escape bearing the entire burden of the
loss and may distribute it among all the persons who ought to participate in
sharing it; but the making of the liquidation is not a condition precedent to the
liability of the shipowner of the shipper whose property has been jettisoned.

It is true that if the captain does not comply with the article relating to the
adjustment, liquidation, and distribution of the general average, the next article
(852) gives to those concerned — whether shipowner (naviero) or shipper — the
right to maintain an action against the captain for indemnification for the loss; but
the recognition of this right of action does not by any means involve the
suppression of the right of action which is elsewhere recognized in the shipper
against the ship's owner. The shipper may in our opinion go at once upon the
owner and the latter, if so minded, may have his recourse for indemnization
against his captain.

In considering the question now before us it is important to remember that the

owner of the ship ordinarily has vastly more capital embarked upon a voyage than
has any individual shipper of cargo. Moreover, the owner of the ship, in the person
of the captain, has complete and exclusive control of the crew and of the
navigation of the ship, as well as of the disposition of the cargo at the end of the
voyage. It is therefore proper that any person whose property may have been cast
overboard by order of the captain should have a right of action directly against
the ship's owner for the breach of any duty which the law may have imposed on
the captain with respect to such cargo. To adopt the interpretation of the law for
which the appellant contends would place the shipowner in a position to escape
all responsibility for a general average of this character by means of the
delinquency of his own captain. This cannot be permitted. The evident intention
of the Code, taken in all of its provisions, is to place the primary liability upon the
person who has actual control over the conduct of the voyage and who has most
capital embarked in the venture, namely, the owner of the ship, leaving him to
obtain recourse, as it is very easy to do, from other individuals who have been
drawn into the venture as shippers.

716 Collisions Two vessels coming from the opposite directions collided with each other due to fault
imputable to both. What are the liabilities of the two vessels with respect to the damage
caused to them and their cargoes? Explain.

Each vessel must bear its own damage. Article 827 of the Code of Commerce
provides that if the collision is imputable to both vessels, each one shall be liable
for his own damages, and both shall be solidarily responsible for the losses and
damages occasioned to their cargoes.
 Vessel “U” and “V” collided with each other causing damage to both vessels. Vessel “U”
had the last clear chance to avoid the collision but failed to do so. Is the doctrine of last
clear chance in tort applicable to collisions of vessels at sea under the Code of
Commerce? Which vessel should shoulder liability for the damage suffered by both
vessels and by the cargo?

The doctrine of last clear chance in tort is not applicable to collision of vessels at
sea under the Code of Commerce, and the case is deemed as if the collision is
imputable to both vessels; thus, each one of the vessels shall suffer her own
damage, and both shall be solidarily liable for the damages occasioned to their
cargoes.

717 Vessel “U” and “V” collided with each other causing damage to both vessels. Vessel “U”
had the last clear chance to avoid the collision but failed to do so. Assume that the
negligence of the captain of vessel “U” was the proximate cause of collision, while the
negligence of the captain of vessel “V” was merely contributory. To which vessel should
the collision be deemed imputable?

The collision shall be deemed imputable also to both vessels. Since the “doctrine
of contributory negligence” in tort is not also applicable to collisions of vessel at
sea under the Code of Commerce, the case is deemed as if the collision is
imputable to both vessels.

If it cannot be determined which of the two vessels was at fault resulting in the collision,
which party should bear the damage caused to the vessels and the cargoes? Explain.

Each of them should bear their respective damages. Since it cannot be determined
as to which vessel is at fault. This is the doctrine of “inscrutable fault.”

There was a severe typhoon when the vessel M/V Fortuna collided with M/V Suerte. It
is conceded that the typhoon was a major cause of the collision, although there was a
strong possibility that it could have avoided if the captain of M/V Fortuna was not asleep
at the time of the collision. Who should bear the damages to the vessels and their
cargoes?

Under the doctrine of inscrutable fault, neither of the carriers may go after the
other. The shippers may claim damages against the shipowners and the captains
of both vessels, having been both negligent. Their liability is solidary. The
shipowners have the right to recover damages from the master of the vessels who
were both guilty of negligence. The presence of a typhoon in the area had in fact
warranted a greater degree of alertness on their part.

In a collision between M/T Manila, a tanker, and M/V Don Claro, an inter-island vessel,
Don Claro sank and many of its passengers drowned and died. All its cargoes were lost.
The collision occurred at nighttime but the sea was calm, the weather fair and visibility
was good. Prior to the collision and while still 4 nautical miles apart, Don Claro already
sighted Manila on its radar screen. Manila had no radar equipment. As for speed, Don
Claro was twice as fast as Manila. At the time of the collision, Manila failed to follow Rule
19 of the International Rules of the Road which requires 2 vessels meeting head on to
change their course by each vessel steering to starboard (right) so that each vessel may
pass on the port side (left) of the other. Manila signaled that it would turn to the port side
and steered accordingly, thus resulting in the collision. Don Claro’s captain was off-duty
and was having a drink at the ship’s bar at the time of the collision. Who would you hold
liable for the collision?

I can hold the 2 vessels liable. In the problem given, whether on the basis of the
factual settings or under the doctrine of inscrutable fault, both vessels can be said
to have been guilty of negligence. The liability of the 2 carriers for the death or
injury of passengers and for the loss of or damage to the goods arising from the
 collision is solidary. Neither carrier may invoke the doctrine of last clear chance
which can only be relevant, if at all, between the two vessels but not on the claims
made by passengers or shippers.

718 In the morning of April 2, 1977, the South-bound FS-90 belonging to William Lines, Inc.
reached the waters of the Verde island Passage. About the same time, the M.S. General
Del Pilar, another interisland vessel owned by the General Shipping, was likewise in the
same waters, steaming northward to Manila. The vessels, coming from the opposite
directions and towards each other, suddenly collided at a certain point of the passage
which resulted in the sinking of FS-190, together with all its cargoes, part of which
belonged to Tanya, who was a paying passenger and Rafael, who was a shipper. Tanya
and Rafael brought an action in court to recover for their losses and for damages arising
from the collision. Were they under obligation to file a maritime protest for a successful
maintenance of the action? Why?

No, Tanya and Rafael are not under obligation to file maritime protest. Art. 835 of
the Code of Commerce states that “the action for recovery of damages and losses
arising from collisions cannot be admitted without a previous protest or
declaration presented by the captain within 24 hours before the competent
authority of the point where the collision took place, or of the first port of arrival.”
Therefore, a marine protest is required to be made by the master of the vessel not
by the passenger or shipper.

On September 13, 1962, defendant NDC as the first preferred mortgagee of three ocean
going vessels including one with the name 'Dona Nati' appointed defendant MCP as its
agent to manage and operate said vessel for and in its behalf and account. Thus, on
February 28, 1964 the E. Philipp Corporation of New York loaded on board the vessel
"Dona Nati" at San Francisco, California, a total of 1,200 bales of American raw cotton
consigned to the order of Manila Banking Corporation, Manila and the People's Bank
and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company,
Inc., who represents Riverside Mills Corporation. Also loaded on the same vessel at
Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of
Manila Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10
cases of aluminum foil. En route to Manila the vessel Dona Nati figured in a collision at
6:04 a.m. on April 15, 1964 at Ise Bay, Japan with a Japanese vessel 'SS Yasushima
Maru' as a result of which 550 bales of aforesaid cargo of American raw cotton were lost
and/or destroyed, of which 535 bales as damaged were landed and sold on the authority
of the General Average Surveyor for Yen 6,045,-500 and 15 bales were not landed and
deemed lost. The damaged and lost cargoes was worth P344,977.86 which amount, the
plaintiff as insurer, paid to the Riverside Mills Corporation as holder of the negotiable
bills of lading duly endorsed. Also considered totally lost were the aforesaid shipment of
Kyokuto, Boekui Kaisa Ltd., consigned to the order of Manila Banking Corporation,
Manila, acting for Guilcon, Manila, The total loss was P19,938.00 which the plaintiff as
insurer paid to Guilcon as holder of the duly endorsed bill of lading. Thus, the plaintiff
had paid as insurer the total amount of P364,915.86 to the consignees or their
successors-in-interest, for the said lost or damaged cargoes. Hence, plaintiff filed this
complaint to recover said amount from the defendants-NDC and MCP as owner and ship
agent respectively, of the said 'Dona Nati' vessel.

a) What laws apply to the given problem?

The law of the country to which the goods are to be transported governs the
liability of the common carrier in case of their loss, destruction or deterioration.
For cargoes transported from Japan to the Philippines, the liability of the carrier
is governed primarily by the Civil Code and in all matters not regulated by said
Code, the rights and obligations of common carrier shall be governed by the Code
of Commerce and by laws. Since collision falls among matters not specifically
regulated by the Civil Code, Articles 826 to 839 of the Code of Commerce, which
deal exclusively with collision of vessels shall apply. More in point to the instant
 case is Article 827 of the same Code, which provides that if the collision is
imputable to both vessels, each one shall suffer its own damages and both shall
be solidarily responsible for the losses and damages suffered by their cargoes.

b) Is MCP liable?

Yes. NDC appointed MCP as Agent, a term broad enough to include the concept
of Ship-agent in Maritime Law. In fact, MCP was even conferred all the powers of
the owner of the vessel, including the power to contract in the name of the NDC.
Consequently, under the circumstances, MCP cannot escape liability.

It is well settled that both the owner and agent of the offending vessel are liable
for the damage done where both are impleaded; that in case of collision, both the
owner and the agent are civilly responsible for the acts of the captain; that while
it is true that the liability of the naviero in the sense of charterer or agent, is not
expressly provided in Article 826 of the Code of Commerce, it is clearly deducible
from the general doctrine of jurisprudence under the Civil Code but more specially
as regards contractual obligations in Article 586 of the Code of Commerce.
Moreover, the Court held that both the owner and agent (Naviero) should be
declared jointly and severally liable, since the obligation which is the subject of
the action had its origin in a tortious act and did not arise from contract.
Consequently, the agent, even though he may not be the owner of the vessel, is
liable to the shippers and owners of the cargo transported by it, for losses and
damages occasioned to such cargo, without prejudice, however, to his rights
against the owner of the ship, to the extent of the value of the vessel, its
equipment, and the freight.

c) MCP argues that the law on averages should be applied in determining their
liability. Is the argument tenable?

MCP’s contention is devoid of merit. The declared value of the goods was stated
in the bills of lading and corroborated no less by invoices offered as evidence '
during the trial. Besides, common carriers, in the language of the court in Juan
Ysmael & Co., Inc. v. Barrette et al., (51 Phil. 90 [1927]) "cannot limit its liability for
injury to a loss of goods where such injury or loss was caused by its own
negligence." Negligence of the captains of the colliding vessel being the cause of
the collision, and the cargoes not being jettisoned to save some of the cargoes
and the vessel, the law on averages are therefore not applicable.

720 The steamer Subic, owned by the defendant, collided with the lunch Euclid owned by
the plaintiff, in the Bay of Manila at an early hour on the morning of January 9, 1911, and
the Euclid sank five minutes thereafter. This action was brought to recover the value of
the Euclid. The court below held from the evidence submitted that the Euclid was worth
at a fair valuation P10,000; that both vessels were responsible for the collision; and that
the loss should be divided equally between the respective owners, P5,000 to be paid the
plaintiff by the defendant, and P5,000 to be borne by the plaintiff himself. Is the decision
of the trial court correct?

No. the decision of the trial court is not correct and should be reversed. It will
be seen that the trial judge was of opinion that the vessels were jointly liable for
the loss resulting from the sinking of the launch. But actions for damages
resulting from maritime collisions are governed in this jurisdiction by the
provisions of section 3, title 4, Book III of the Code of Commerce, and among these
provisions we find the following: “ART. 827. If both vessels may be blamed for the
collision, each one shall be liable for its own damages, and both shall be jointly
responsible for the loss and damages suffered by their cargoes.”

In disposing of this case the trial judge apparently had in mind that portion of
 the section which treats of the joint liability of both vessels for loss or damages
suffered by their cargoes. In the case at bar, however, the only loss incurred was
that of the launch Euclid itself, which went to the bottom soon after the collision.
Manifestly, under the plain terms of the statute, since the evidence of record
clearly discloses, as found by the trail judge, that "both vessels may be blamed
for the collision," each one must be held may be blamed for it own damages, and
the owner of neither one can recover from the other in an action for damages to
his vessel.

In cases of a disaster arising from the mutual negligence of two parties, the
party who has a last clear opportunity of avoiding the accident, notwithstanding
the negligence of his opponent, is considered wholly responsible for it under the
common-law rule of liability as applied in the courts of common law of the United
States. But this rule (which is not recognized in the courts of admiralty in the
United States, wherein the loss is divided in cases of mutual and concurring
negligence, as also where the error of one vessel has exposed her to danger of
collision which was consummated by he further rule, that where the previous
application by the further rule, that where the previous act of negligence of one
vessel has created a position of danger, the other vessel is not necessarily liable
for the mere failure to recognize the perilous situation; and it is only when in fact
it does discover it in time to avoid the casualty by the use of ordinary care, that it
becomes liable for the failure to make use of this last clear opportunity to avoid
the accident. (See cases cited in Notes, 7 Cyc., pp. 311, 312, 313.) So, under the
English rule which conforms very nearly to the common-law rule as applied in the
American courts, it has been held that the fault of the first vessel in failing to
exhibit proper lights or to take the proper side of the channel will relieve from
liability one who negligently runs into such vessels before he sees it; although it
will not be a defense to one who, having timely warning of the danger of collision,
fails to use proper care to avoid it. (Pollock on Torts, 374.) In the case at bar, the
most that can be said in support of plaintiff's contention is that there was
negligence on the part of the officers on defendant's vessel in failing to recognize
the perilous situation created by the negligence of those in charge of plaintiff's
launch, and that had they recognized it in time, they might have avoided the
accident. But since it does not appear from the evidence that they did, in fact,
discover the perilous situation of the launch in time to avoid the accident by the
exercise of ordinary care, it is very clear that under the above set out limitation to
the rule, the plaintiff cannot escape the legal consequences of the contributory
negligence of his launch, even were we to hold that the doctrine is applicable in
the jurisdiction, upon which point we expressly reserve our decision at this time.

733 Salvage On the 26th day of September, 1905, the sailing vessel Alta was wrecked and
stranded upon the coast of Cavite Province. The certain of the ship removed the cargo
and after working ten or twelve days in attempts to float the ship made a contract, in
writing, with the plaintiffs, which is as follows:

"MANILA, November 1, 1905.

"Mr. CHARLES S. ROBINSON, Manila

"DEAR SIR: Referring to your offer of 31st ultimo, re the raising of the ship Alta — viz,
to put her into Cavite and in such condition that it will admit of her being sailed to
Hongkong or other port, subject to being passed by Lloyds’ surveyor — for the sum of
fifteen thousand pesos (P15,000), Philippine currency, I accept the same and shall
esteem it a favor if you will commence the work with the least possible delay. Should
you not be successful, it is distinctly understood that no money whatever is to be paid
for any work done or appliances used.

"Yours, faithfully, (Sgd.) "W. THONAGEL.

 "P.S. — It is understood that by ’other port’ is meant Singapore.

(Sgd.) "W. T."

The plaintiffs went to work immediately upon the vessel, raised it, and towed it to
Cavite on the 10th day of December, 1905. It was at once decided to put her into the dry
dock or slip there for the purpose of examining her hull and ascertaining the extent of
the damages. This could not be done until the 18th day of January, owing to other
demands upon the dock company. On that day she was put upon the slip, was examined,
and again taken off. The exact day on which she came off from the slip does not appear,
but it probably was the 19th day of January. On the 20th day of January plaintiffs
removed all of their machinery, tackle, and utensils from the ship and did no more work
upon her.

The plaintiffs, on the 30th day of December, 1905, were paid by the defendants the
sum of 3,000 pesos on account of the contract. They brought this action against the ship
and her master on the 27th day of February, 1906, claiming to recover the reasonable
worth and value of the services performed by them, which they fixed at 15,000 pesos.

a) Is the contract binding on the salvor?

Yes, the salvor is bound by the contracts which they may have made. The
contract appears to have been entered into openly and fairly in all respects, and
there is no principle or authority upon which the court can disregard it, or make a
new contract for the parties. It must, therefore, be enforced as it stands.

Where an agreement fixing the amount of the remuneration to be paid for

salvage services has been deliberately entered into, at the time of the
commencement of the danger, between perfectly competent parties, the court will
not allow the agreement to be set aside merely because the execution of it has
turned out more difficult than was anticipated at the time of making the contract.

b) Is the salvor entitled to full compensation?

No. The salvor is not entitled to the full amount of compensation agreed upon in
the contract. That part of the contract which required the plaintiffs to bring the
ship to Cavite they performed, but that part of it which required them to put her in
condition to be sailed to Hongkong they never performed. They should have
continued performing the contract even if it would have cost the plaintiffs 22,000
pesos to do what they had agreed in the contract to do for 15,000 pesos. The case
may be hard one for the plaintiffs but when parties have voluntarily entered into a
contract they can disregard it if it turns out to be unprofitable to them, and can
recover as if no contract had been made.

751 On September 13, 1914, the British steamer Bengloe owned by W. Thompson & co.,
while en route from Manila to European ports, stranded on the Mayone shoal in the Sulu
sea some twenty-five miles from Brook's Point on the Island of Palawan. At this time,
Jose Fernandez, O. N. Holmsen, and M. A. Macleod, now plaintiffs, were residents of
Palawan. On learning of the abandonment of the Bengloe by her crew, these gentlemen
formed a partnership, with a capital of P1,500, for the purpose of salving the vessel and
cargo. They hired the launch Florence of between thirty and forty tons capacity from the
provincial authorities of Puerto Princesa, and with a number of laborers proceeded to
the wreck to ascertain its condition, where they arrived on October 7. They immediately
took possession of the vessel and removed 14.937 kilos of copra and certain furniture
and effects, of the approximate value of P2,500. Holmes and Fernandez proceeded with
the launch to Brook's Point, the copra and other effects were stored in the Government
warehouse. The copra being perishable was later sold by an order of court and the
 proceeds amounting to P2,051.63 deposited with the clerk of court. The other articles
were left in the custody of the provincial treasurer of Palawan. Holmsen and Fernandez
began negotiations with various owners of vessels in Manila, including the Neil
Macleod and one of the Pujalte boats. Neither of these boats, however, was ever
chartered or placed at the disposition of the plaintiffs.

In the meantime, the London Salvage Association acting in the interest of the
underwriters of the ship and the cargo, and with the consent of the ship's agents,
engaged Ker & Co. to take charge of the salvage operations. The latter firm in its turn
employed William Swan, an engineer and marine surveyor, to conduct the work. Swan
left Manila on the Coast Guard Cutter Polillo on October 6 for the scene of the wreck.
On the way there, the Polillo intercepted the Paglima, which had the captain and
members of the crew of the Bengloe on board, and took them back to the wreck. Swan,
the captain of the Bengloe, and their assistants arrived at the wreck on October 9, that
is, two days after the arrival of Fernandez, Holmsen, and Macleod, and after the copra
and other effects had been removed. Macleod and the two laborers found on board were
shown scant hospitality by the second party, and were pointedly given to understand that
their presence was not desired. Against his vigorous protest, MaCleod was finally forced
to leave the vessel by the captain of the Polillo and a lieutenant of the Constabulary sent
to the wreck with constabulary soldiers to protect it from plunder. When the other
plaintiffs Holmsen and Fernandez, returned on the launch, they were prevented from
taking any further part in the salvage operations.

a) Were the first salvors (Fernandez, Holmsen, and Macleod) properly compelled
to leave the vessel?

Yes. The first set of salvors had no right to retain the derelict. The first set of
salvors had no right to exclude the second set from saving the merchandise in the
vessel, the first set not having at the time the means to save it.

b) Were the first salvors entitled to full salvage compensation?

No. The only equipment actually in the possession of the plaintiffs for salving
the Bengloe and the cargo was a small launch and some baskets and sacks. This
was the best salvage equipment available in Puerto Princesa on the Island of
Palawan. The services rendered by the plaintiffs contributed immediately to the
preservation of a small amount of property on the stranded vessel, but as an
actual fact, their further exertions, however meritorious they were intended to be
were not successful in any degree and cannot be compensated in damages.

763 COGSA On August 11, 1962, a certain cargo insured with plaintiff corporation was shipped in
New York, U.S. aboard "M/S TOREADOR", of which the general agent in the Philippines
is appellee Macondray & Co., Inc. (hereinafter referred to as Macondray). The cargo,
with an invoice value of $3,539.61 CIF Cebu, was consigned to the order of the importer
Atlas Consolidated Mining and Development Corporation. Inasmuch as the final port of
call of the " M/S TOREADOR" was Manila, the carrier, in accepting the cargo at the point
of shipment, agreed to transship the same, after its discharge in Manila, aboard an inter-
island vessel to its destination in Cebu. On September 18, 1962, the " M/S TOREADOR"
arrived at the port of Manila and on the same date discharged the cargo in question.
Pursuant to the arrangement the cargo was subsequently loaded aboard the "SS
SIQUIJOR", an inter-island vessel. The shipment was finally discharged in Cebu on
September 24, 1962. When the consignee took delivery of the shipment it was found to
be short of two (2) pieces of tractor parts. When a case was filed against Macondray, it
oved to dismiss the amended complaint against it on the ground that plaintiff’s action
had already prescribed under the provisions of the Carriage of Goods by Sea Act
because the reckoning date was allegedly the date of discharge in Manila. Isa the
contention tenable?
 No, the contention is not tenable. The prescriptive period started when the goods
were discharged in Cebu. The transshipment of the cargo from Manila to Cebu
was not a separate transaction from that originally entered into by Macondray, as
general agent for the "M/S TOREADOR". It was part of Macondray's obligation
under the contract of carriage and the fact that the transshipment was made via
an inter-island vessel did not operate to remove the transaction from the operation
of the Carriage of Goods by Sea Act.

783 Public Utilities WWW Communications Inc. is an e-commerce company whose present business
(Public Service activity is limited to providing its clients with all types of information technology hardware.
Regulations) It plans to re-focus its corporate direction of gradually converting itself into a full
convergence organization. Toward this objective, the company has been aggressively
acquiring telecommunications businesses and broadcast media enterprises, and
consolidating their corporate structures. The ultimate plan is to have only two
organizations: one to own the facilities of the combined businesses and to develop and
produce content materials, and another to operate the facilities and provide mass media
and commercial telecommunications services. WWW Communications will be the
flagship entity which will own the facilities of the conglomerate and provide content to
the other new corporation which, in turn, will operate those facilities and provide the
services. WWW Communications seeks your professional advice on whether or not its
reorganized business activity would be considered a public utility requiring a franchise.
What will be your advice? Explain.

The reorganized business activity would not be considered a public utility. Hence,
WWW Communications Inc. does not require a franchise or certificate or any other
form of authorization before it can operate. Although the company acquired
telecommunications businesses and broadcast media enterprises, this may mean
that it is a shareholder in the corporations conducting the business. On the other
hand, the plan to own the facilities does not convert the company into a public
utility. It is only when the company will operate the business that a franchise is
necessary.

The private respondent is the owner of the facilities necessary to operate the EDSA LRT
III but it is not enfranchised to operate a public utility. In view of this incapacity, private
respondent and DOTC agreed that on completion date, private respondent will
immediately deliver possession of the LRT system by way of lease for 25 years, during
which period DOTC shall operate the same as a common carrier and private respondent
shall provide technical maintenance and repair services to DOTC. Technical
maintenance consists of providing (1) repair and maintenance facilities for the depot and
rail lines, services for routine clearing and security; and (2) producing and distributing
maintenance manuals and drawings for the entire system. Private respondent shall also
train DOTC personnel for familiarization with the operation, use, maintenance and repair
of the rolling stock, power plant, substations, electrical, signaling, communications and
all other equipment as supplied in the agreement. By the end of the three-year
construction period and upon commencement of normal revenue operation, DOTC shall
be able to operate the EDSA LRT III on its own and train all new personnel by itself.
Fees for private respondent’s services shall be included in the rent, which likewise
includes the project cost, cost of replacement of plant equipment and spare parts,
investment and financing cost, plus a reasonable rate of return thereon. Since DOTC
shall operate the EDSA LRT III, it shall assume all the obligations and liabilities of a
common carrier. For this purpose, DOTC shall indemnify and hold harmless private
respondent from any losses, damages, injuries or death which may be claimed in the
operation or implementation of the system, except losses, damages, injury or death due
to defects in the EDSA LRT III on account of the defective condition of equipment or
facilities or the defective maintenance of such equipment facilities. Is it required for the
private respondent to meet the minimum 60% capitalization requirements under the
Constitution?

No. The nationalization requirement applies only if the private respondent will
 operate the public utility. In this case, private respondent will not run the light rail
vehicles and collect fees from the riding public. It will have no dealings with the
public and the public will have no right to demand any services from it.

784 Philippine Gaming Management Corporation (PGMC) entered into a Contract of Lease
with Philippine Charity Sweepstakes Office (PCSO) prescribed under the charter of the
PCSO. In the contract of lease, PGMC, the lessor obligate itself to build, at its own
expense, all the facilities necessary to operate and maintain a nationwide online lottery
system from whom PCSO was to lease the facilities and operate the same. Upon due
examination of the contract, the Court found that PGMC’s participation was not confined
to the construction and setting up of the online lottery system. It spilled over to the actual
operation thereof, becoming indispensable to the pursuit, conduct, administration, and
control of the highly technical and sophisticated lottery system. Assuming for the sake
of argument that the activity is a nationalized activity, is it required for PGMC to meet the
minimum Filipino capitalization requirement?

Yes. This case involves not only ownership of the facilities that will be used in the
operation. In effect, the PCSO leased out its franchise to PGMC that actually
operated and managed the same. What was entered into was actually a
collaboration or joint venture agreement whereby the operation of the business
will be undertaken by PGMC.

796 Non-Delegation The Philippine Railway Co. applied that its present rates be considered the maximum,
and that it be allowed to fix lower rates whenever in its opinion it would be to its
advantage of the Railway Company to do so. The Public Service Commission granted
Philippine Railway Co. the power of altering its freight rates whenever it should find it
necessary to do so in order to meet the competition of road trucks and autobuses, or to
change its freight rates at will, or to regard its present rates as maximum rates, and to
fix lower rates whenever in the opinion of the Philippine Railway Co. it would be to its
advantage to do so. Is the authority given to Philippine Railway Co. valid?

No. The authority given to Philippine Railway Co. is not valid. The legislature
has delegated to the Public Service Commission the power of fixing the rates of
public services, but it has not authorized the Public Service Commission to
delegate that power to common carrier or other public service. The rates of public
services like the Philippine Railway Co. have been approved or fixed by the Public
Service Commission and any change in such rates must be authorized or
approved by the Public Service Commission after they have been shown to be just
and reasonable. The public service may, of course, propose new rates, as the
Philippine Railway Co. did in case No. 31827, but it cannot lawfully make said new
rates effective without the approval of the Public Service Commission, and the
Public Service Commission itself cannot authorize a public service to enforce
rates without the prior approval of said rates by the commission. The commission
must approve new rates when they are submitted to it, if the evidence shows them
to be just and reasonable, otherwise it must disapprove them. Clearly, the
commission cannot determine in advance whether or not the new rates of the
Philippine Railway Co, will be just and reasonable, because it does not know what
those rates will be.

In the present case the Philippine Railway Co. in effect asked for permission to
change its freight rates at will. It may change them every day or every hour,
whenever it deems it necessary to do so in order to meet competition or whenever
in its opinion it would be to its advantage. Such a procedure would create a most
unsatisfactory state of affairs and largely defeat the purposes of the public service
law.

797 On December 14, 1990, the LTFRB authorized provincial bus operators to collect a
P0.37 centavo per kilometer fare for ordinary buses. At the same time, they were
allowed to impose and collect a fare range of plus or minus 15% over the authorized
 rate. Thus P0.37 centavo per kilometer authorized fare plus P0.05 centavos (which is
15% of P0.37 centavos) is equivalent to P0.42 centavos, the allowed rate in 1990.
Supposing the LTFRB grants another five (P0.05) centavo increase per kilometer in
1994, then, the base or reference for computation would have to be P0.47 centavos
(which is P0.42 + P0.05 centavos). If bus operators will exercise their authority to impose
an additional 20% over and above the authorized fare, then the fare to be collected shall
amount to P0.56 (that is, P0.47 authorized LTFRB rate plus 20% of P0.47 which is
P0.29). In effect, commuters will be continuously subjected, not only to a double fare
adjustment but to a compounding fare as well. On their part, transport operators shall
enjoy a bigger chunk of the pie. Aside from fare increase applied for, they can still collect
an additional amount by virtue of the authorized fare range.

Mathematically, the situation translates into the following:

Year LTFRB authorized Fare Range Fare to be rate collected per

kilometer

1990 P0.37 15% (P0.05) P0.42

1994 P0.42 + 0.05 = 0.47 20% (P0.09) P0.56
1998 P0.56 + 0.05 = 0.61 20% (P0.12) P0.73
2002 P0.73 + 0.05 = 0.78 20% (P0.16) P0.94

Was the authority given to the bus operators valid?

No. The authority given by the LTFRB to the provincial bus operators to set a fare
range over and above the authorized existing fare, is illegal and invalid as it is
tantamount to an undue delegation of legislative authority. The power of the
LTFRB to regulate rates is a delegated power. What the Congress has delegated
cannot be delegated by the LTFRB.

850 Certificate of Acme Transportation Co. has a certificate of public convenience to operate buses in
Public southern Luzon and the Eastern Visayas, including the Manila-Bicol-Samar-Leyte route.
Convenience In order to get to Samar, its buses take a ferry from Matnog, Sorsogon, across the
Babuyan Channel, an 8-kilometer ride more or less to the coastal town of Allen Samar.
Acme Transportation Co. finds that the fees it pays for the ferry come to quite a
substantial amount each year and it calculates that it will be more economical to have
its own ferry to transport its buses. It therefore applies for an authorization to operate
such ferry as an additional unit of equipment for the exclusive use of its buses on the
Manila-Leyte route.

X Lighterage Service Co. which has been operating a ferry service on the said route
for the past six years, objects on the following grounds: (a) the certificate of public
convenience of Acme is to operate a land transportation and this does not include ferry
service which is already inter-island shipping. It therefore needs anew certificate of public
convenience to operate inter-island transportation, a mere authority to acquire and
operate an additional unit not being sufficient, and (b) granting that the operation of said
ferry is within Acme's certificate of public convenience, X Lighterage Service Co. is a
prior proprietor, and since it is giving adequate service, there is no need for an additional
service on said route. In fact Acme Transportation Co. has been availing itself of the ferry
service of X Lighterage Service Co. for several years. Decide with reasons.

Acme transportation may not be given the permit it seeks. The objection of X
Lighterage Service Co. is tenable because a Certificate of Public Convenience is
necessary in order to operate the service covered by Acme’s application. Since
the “ferry” will cross open seas, the service is not merely a ferry service but it is
actually coastwise shipping.

851 A was granted by the Board of Transportation a certificate of public convenience to

operate 50 provincial buses, plying between Ilocos Norte and Manila, passing through
 Rizal Avenue Extension then right on Doroteo Jose. Because of traffic congestion
between hours of 7 and 9 o'clock in the morning, and 4 to 8o'clock in the evening, a
municipal ordinance, was passed prohibiting provincial buses from entering Manila on
these hours but allowing them to use one shuttle bus for every five buses. A challenged
the validity of the ordinance, on the ground that it infringes on his certificate of public
convenience, and that he acquired a vested right to enter Manila at anytime of the day,
through the aforementioned route. Decide with reasons.

The ordinance is valid. There is no infringement on the certificate of public

convenience. The City of Manila has the power, under its Charter, to regulate the
use of its streets. This charter is a special law and therefore prevails over the
Public Service Act. Consequently, the power of the LTFRB to grant certificates is
subject to this provision of the charter of Manila. A has thus not acquired any
vested right as alleged by him.

852 Pepay, a holder of a certificate of public convenience, failed to register the complete
number of units required by her certificate. However, she tried to justify such failure by
the accidents that allegedly befell her, claiming that she was shocked and burdened by
the successive accidents and misfortunes that she did not know what she was doing,
she was confused and thrown off tangent momentarily, although she always had the
money and financial ability to buy new trucks or repair the destroyed one.

Are the reasons given by Pepay sufficient grounds to excuse her from completing her
units? Explain.

No. The reasons given by Pepay are not sufficient grounds to excuse her from
completing her units. Even assuming that she really suffered misfortunes, the
same could not prevent her from authorizing her representatives from performing
the required acts.

Mr. Mangasiwa applied for a certificate of public convenience to operate 5 jeepneys

from Batasang Pambansa area to Cubao, Quezon City. The application was opposed
by Hallelujah Transit and Kingdom Bus Co., which were already serving the area. They
invoked the “prior or old operator rule” in their opposition. Mangasiwa, in turn, invoked
the “prior applicant rule”.

Discuss the “prior or old operator rule” and the limitations or provisos on its
application. In case of conflict between the “prior or old operator rule” and the “prior
applicant rule”, which rule shall prevail? Explain.

The “prior or old operator rule” allows an existing franchised operator to invoke
preferential right to render the public service within the authorized territory as
long as he does so satisfactorily and economically. In case of conflict between the
“prior or old operator rule” and the “prior applicant rule”, the former will apply as
long as again the operator is able to render satisfactory and economically service.

Robert is a holder of a certificate of public convenience to operate a taxicab service

in Manila and suburbs. One evening, one of his taxicab units was boarded by 3 robbers
as they escaped after staging a hold-up. Because of said incident, the LTFRB revoked
the certificate of public convenience of Robert on the ground that said operator failed to
render safe, proper and adequate service as required under Section 19(a) of the Public
Service Act.

Was the revocation of the certificate of public convenience of Robert justified?

Explain.

The revocation was not justified. It is true that a certificate may be revoked if the
operator failed to render safe, proper, and adequate service. However, unsafe,
improper, or inadequate service cannot be established just by citing a single hold-
 up incident. This may be sufficient only if Robert was involved in the criminal act
but the same does not appear in the problem.

853 Antonio was granted a Certificate of Public Convenience (CPC) in 1986 to operate a
ferry between Mindoro and Batangas using the motor vessel "MV Lotus". He stopped
operations in 1988 due to unserviceability of the vessel. In 1989, Basilio was granted a
CPC for the same route. After a few months, he discovered that Carlos was operating
on his route under Antonio's CPC. Because Basilio filed a complaint for illegal operations
with the Maritime Industry Authority, Antonio and Carlos jointly filed an application for
sale and transfer of Antonio's CPC and substitution of the vessel "MV Lotus" with another
owned by Carlos.

Should Antonio's and Carlos' joint application be approved? Give you reasons.

The joint application of Antonio and Carlos for the sale and transfer of Antonio's
CPC and substitution of the vessel MV Lotus with another vessel owned by the
transferee should not be approved. The certificate of public convenience and "MV
Lotus" are inseparable. The Unserviceability of the vessel covered by the
certificate had likewise rendered ineffective the certificate itself, and the holder
thereof may not legally transfer the same to another.

The City of Manila passed an ordinance banning provincial buses from the city. The
ordinance was challenged as invalid under the Public Service Act by X who had a
certificate of public convenience to operate auto-trucks with fixed routes from certain
towns in Bulacan and Rizal to Manila and within Manila. Firstly, he claimed that the
ordinance was null and void because, among other things, it in effect amends his
certificate of public convenience, a thing which only the Public Service Commission can
do under Sec 16 (m) of the Public Service Act. Under said section, the Commission is
empowered to amend, modify, or revoke a certificate of public convenience after notice
and hearing. Secondly, he contended that even if the ordinance was valid, it is only the
Commission which can require compliance with its provisions under Sec 17 (j) of said
Act and since the implementation of the ordinance was without sanction or approval of
the Commission, its enforcement was unauthorized and illegal.

a) May the reliance of X on Section 16 (m) of the Public Service Act be sustained?
Explain.

No. Reliance of X on Section 16 (m) of the Public Service Act is not justified. The
power of the City of Manila is anchored on its Charter that is a special law. Hence,
the power vested in the Public Service Commission and its successor agency
under Section 16 (m) is subordinate to the authority of the City of Manila. A special
law prevails over a general law.

b) Was X correct in his contention that under Section 17 (j) of the Public Service Act
it is only the Commissioner which can require compliance with the provisions of
the ordinance? Explain.

No. The powers conferred by law upon the Public Service Commission were not
designed to deny or supersede the regulatory power of local governments over
motor traffic in the streets subject to their control.