Arteche Transpo Digests

Transportation*for*Atty.*Abano*by*Jason*Arteche*

Feel*free*to*use*and*share*this*digest*with*anyone*who*needs*it*Dont*ask*me*anymore,*Ill*just*say*Yes*! *

1*

Bascos vs. CA Facts Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short) entered into a hauling contract with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latter's soya bean meal. To carry out its obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted with Estrellita Bascos (petitioner) to transport and to deliver 400 sacks of soya bean meal. Petitioner failed to deliver the said cargo. As a consequence of that failure, Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with the contract. In her answer, petitioner interposed the following defenses:

1. that there was no contract of carriage since CIPTRADE leased her cargo truck to load the cargo from Manila Port Area to Laguna;

2. that the truck carrying the cargo was hijacked; that the hijacking was immediately reported to CIPTRADE and that petitioner and the police exerted all efforts to locate the hijacked properties; that after preliminary investigation, an information for robbery and carnapping were filed against Jose Opriano, et al.; and that hijacking, being a force majeure, exculpated petitioner from any liability to CIPTRADE.

Issue Whether or not petitioner is a common carrier. Held Common carrier. The Court of Appeals, in holding that petitioner was a common carrier, found that she admitted in her answer that she did business under the name A.M. Bascos Trucking and that said admission dispensed with the presentation by private respondent, Rodolfo Cipriano, of proofs that petitioner was a common carrier. Moreover, both courts appreciated the following pieces of evidence as indicators that petitioner was a common carrier:

1. the fact that the truck driver of petitioner, Maximo Sanglay, received the cargo consisting of 400 bags of soya bean meal as evidenced by a cargo receipt signed by Maximo Sanglay;

2. the fact that the truck helper, Juanito Morden, was also an employee of petitioner; and the fact that control of the cargo was placed in petitioner's care.

In disputing the conclusion of the trial and appellate courts that petitioner was a common carrier, she alleged in this petition that the contract between her and Rodolfo A. Cipriano, representing CIPTRADE, was lease of the truck. She cited as evidence certain affidavits which referred to the contract as "lease". These affidavits were made by Jesus Bascos and by petitioner herself. She further averred that Jesus Bascos confirmed in his testimony his statement that the contract was a lease contract. She also stated that: she was not catering to the general public. Thus, in her answer to the amended complaint, she said that she does business under the same style of A.M. Bascos Trucking, offering her trucks for lease to those who have cargo to move, not to the general public but to a few customers only in view of the fact that it is only a small business. We agree with the respondent Court in its finding that petitioner is a common carrier. In this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same. But petitioner argues that there was only a contract of lease because they offer their services only to a select group of people and because the private respondents, plaintiffs in the lower court, did not object to the presentation of affidavits by petitioner where the transaction was referred to as a lease contract.



2*

Regarding the first contention, the holding of the Court in De Guzman vs. Court of Appeals is instructive. The above article 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. We think that Article 1732 deliberately refrained from making such distinctions.



3*

FGU Insurance vs. Sarmiento1 Facts G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu truck from the plant site of Concepcion Industries, Inc. to the Central Luzon Appliances in Dagupan City. While the truck was traversing the road it collided with an unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes. FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the covered cargoes. FGU, in turn, being the subrogee of the rights and interests of Concepcion Industries, Inc., sought reimbursement of the amount it had paid to the latter from GPS. Since the trucking company failed to heed the claim, FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver. In its answer, respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was not so engaged in business as a common carrier. Respondents further claimed that the cause of damage was purely accidental. Issue Whether or not GPS is a common carrier. Held Not a common carrier. GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no other individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for hire or compensation, offering their services to the public, whether to the public in general or to a limited clientele in particular, but never on an exclusive basis. The true test of a common carrier is the carriage of passengers or goods, providing space for those who opt to avail themselves of its transportation service for a fee. Given accepted standards, GPS scarcely falls within the term "common carrier."

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!1!Offering!services!to!1!customer!exclusively,!even!if!on!a!regular!basis,!doesnt!make!one!a!common!



4*

Schmitz vs. Transport Venture Facts SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V Alexander Saveliev steel sheets in coil. The cargoes, which were to be discharged at the port of Manila in favor of the consignee, Little Giant Steel Pipe Corporation (Little Giant), were insured against all risks with Industrial Insurance Company Ltd. (Industrial Insurance). The vessel arrived at the port of Manila. Schmitz Transport engaged the services of TVI to send a barge and tugboat at shipside. TVIs tugboat Lailani towed the barge Erika V to shipside. The tugboat, after positioning the barge alongside the vessel, left and returned to the port terminal. Arrastre operator Ocean Terminal Services Inc. commenced to unload 37 of the 545 coils from the vessel unto the barge. The weather condition had become inclement due to an approaching storm, the unloading unto the barge of the 37 coils was accomplished. No tugboat pulled the barge back to the pier, however. Due to strong waves, the crew of the barge abandoned it and transferred to the vessel. The barge pitched and rolled with the waves and eventually capsized, washing the 37 coils into the sea. Earnest efforts on the part of both the consignee Little Giant and Industrial Insurance to recover the lost cargoes proved futile. Little Giant thus filed a formal claim against Industrial Insurance. Industrial Insurance later filed a complaint against Schmitz Transport, TVI, and Black Sea through its representative Inchcape (the defendants) for the recovery of the amount it paid to Little Giant plus adjustment fees, attorneys fees, and litigation expenses. Industrial Insurance faulted the defendants for undertaking the unloading of the cargoes while typhoon signal No. 1 was raised in Metro Manila. Issue Whether or not petitioner is a common carrier. Held Common carrier. Petitioner undertook to transport the cargoes from the shipside of M/V Alexander Saveliev to the consignees warehouse at Cainta, Rizal. As the appellate court put it, as long as a person or corporation holds [itself] to the public for the purpose of transporting goods as [a] business, [it] is already considered a common carrier regardless if [it] owns the vehicle to be used or has to hire one. That petitioner is a common carrier, the testimony of its own Vice-President and General Manager Noel Aro that part of the services it offers to its clients as a brokerage firm includes the transportation of cargoes reflects so. It is settled that under a given set of facts, a customs broker may be regarded as a common carrier. And in Calvo v. UCPB General Insurance Co. Inc., this Court held that as the transportation of goods is an integral part of a customs broker, the customs broker is also a common carrier. For to declare otherwise would be to deprive those with whom [it] contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers, is part and parcel of petitioners business.



5*

Crisostomo vs. CA Facts Petitioner Estela L. Crisostomo contracted the services of respondent Caravan Travel and Tours International, Inc. to arrange and facilitate her booking, ticketing and accommodation in a tour dubbed Jewels of Europe. Pursuant to said contract, Menor, respondents ticketing manager and petitioners niece, delivered petitioners travel documents and plane tickets. Petitioner, in turn, gave Menor the full payment for the package tour. Menor then told her to be at the Ninoy Aquino International Airport (NAIA) on Saturday. Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for the first leg of her journey from Manila to Hongkong. To petitioners dismay, she discovered that the flight she was supposed to take had already departed the previous day. She learned that her plane ticket was for the flight scheduled on June 14, 1991. She thus called up Menor to complain. Subsequently, Menor prevailed upon petitioner to take another tour the British Pageant. For this tour package, petitioner was asked anew to pay more, which she did, and commenced the trip. Upon petitioners return from Europe, she demanded from respondent reimbursement representing the difference between the sum she paid for Jewels of Europe and the amount she owed respondent for the British Pageant tour. Despite several demands, respondent company refused to reimburse the amount, contending that the same was non-refundable. Petitioner was thus constrained to file a complaint against respondent for breach of contract of carriage and damages. Issue Whether or not respondent is a common carrier. Held Not a common carrier. Respondent is not an entity engaged in the business of transporting either passengers or goods and is therefore, neither a private nor a common carrier. Respondent did not undertake to transport petitioner from one place to another since its covenant with its customers is simply to make travel arrangements in their behalf. Respondents services as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours. While petitioner concededly bought her plane ticket through the efforts of respondent company, this does not mean that the latter ipso facto is a common carrier. At most, respondent acted merely as an agent of the airline, with whom petitioner ultimately contracted for her carriage to Europe. Respondents obligation to petitioner in this regard was simply to see to it that petitioner was properly booked with the airline for the appointed date and time. Her transport to the place of destination, meanwhile, pertained directly to the airline. The object of petitioners contractual relation with respondent is the latters service of arranging and facilitating petitioners booking, ticketing and accommodation in the package tour. In contrast, the object of a contract of carriage is the transportation of passengers or goods. It is in this sense that the contract between the parties in this case was an ordinary one for services and not one of carriage. Petitioners submission is premised on a wrong assumption.



6*

Occidental Transport vs. CA Facts The case began with the collision of a Ford Fiera and a passenger bus. As a result of this, the Ford Fiera was thrown into the canal on the right side of the road. Its driver was killed. Trencio Almedilla, the owner of the Fiera which was registered under Sevilla Line, and Alberto Pingkian were likewise in the Fiera and suffered various injuries as a result of the incident. Neither the driver nor the passengers of the bus stopped to assist the victims, but rather the bus proceeded towards Sapang Dalaga.

The owner of the Carina passenger bus, Occidental Land Transportation Company filed a case for damages against Sevilla Line and/or William Sevilla, the registered owner of the Ford Fiera before the Court of First Instance, Branch III, Oroquieta City. Trencio Almedilla and Alberto Pingkian also filed a civil suit for damages against Occidental Land Transportation Company, Inc. and the driver of the Carina bus. This case was docketed before the Regional Trial Court of Zamboanga del Norte, Branch VI, Dipolog City. Issue Whether or not damages should be awarded to Trencio. Held Awarded. Petitioner alleges that the Ford Fiera did not belong to Trencio Almedilla, but to its registered owner Sevilla Lines, and therefore the grant of damages for its repair was improperly awarded to private respondent Almedilla. This factual matter has already been decided upon in the trial court. The fact that the Fiera was owned by Almedilla though registered with Sevilla Line, will not alter the conclusion arrived at by the lower court. The party who stands to benefit or suffer from the decision is admittedly private respondent Almedilla and not Sevilla Lines. William Sevilla admitted that the real owner of the vehicle was Trencio Almedilla, in the case for damages by Occidental Land Transportation against Sevilla Lines and/or William Sevilla. Having thus been settled in the lower court, petitioner is now no longer in any position to question the ownership of the Fiera or the award of damages to private respondent Almedilla.



7*

Equitable vs. Suyon Facts A Fuso Road Tractor driven by Raul Tutor rammed into the house cum store of Myrna Tamayo. A portion of the house was destroyed and causing death/injuries to the respondents. Tutor was charged with and later convicted of reckless imprudence resulting in multiple homicide and multiple physical injuries. Upon verification with the Land Transportation Office, respondents were furnished a copy of Official Receipt and Certificate of Registration showing that the registered owner of the tractor was Equitable Leasing Corporation/leased to Edwin Lim. Respondents filed against Raul Tutor, Ecatine Corporation (Ecatine) and Equitable Leasing Corporation (Equitable) a Complaint for damages. Petitioner alleged that the vehicle had already been sold to Ecatine and that the former was no longer in possession and control thereof at the time of the incident. It also claimed that Tutor was an employee, not of Equitable, but of Ecatine. Issue Whether or not petitioner is liable for damages to respondents. Held Liable. Petitioner contends that it should not be held liable for the damages sustained by respondents that arose from the negligence of the driver of the Fuso Road Tractor, which it had already sold to Ecatine at the time of the accident. Not having employed Raul Tutor, the driver of the vehicle, it could not have controlled or supervised him. We are not persuaded. In the instant case, respondents -- having failed to recover anything in the criminal case -- elected to file a separate civil action for damages, based on quasi delict under Article 2176 of the Civil Code. The evidence is clear that the deaths and the injuries suffered by respondents and their kins were due to the fault of the driver of the Fuso tractor. The Lease Agreement between petitioner and Edwin Lim stipulated that it is the intention of the parties to enter into a FINANCE LEASE AGREEMENT. Under such scheme, ownership of the subject tractor was to be registered in the name of petitioner, until the value of the vehicle has been fully paid by Edwin Lim. Further, in the Lease Schedule, the monthly rental for the tractor was stipulated, and the term of the Lease was scheduled to expire on December 4, 1992. After a few months, Lim completed the payments to cover the full price of the tractor. Thus, on December 9, 1992, a Deed of Sale over the tractor was executed by petitioner in favor of Ecatine represented by Edwin Lim. However, the Deed was not registered with the LTO. We hold petitioner liable for the deaths and the injuries complained of, because it was the registered owner of the tractor at the time of the accident. The Court has consistently ruled that, regardless of sales made of a motor vehicle, the registered owner is the lawful operator insofar as the public and third persons are concerned; consequently, it is directly and primarily responsible for the consequences of its operation. In contemplation of law, the owner/operator of record is the employer of the driver, the actual operator and employer being considered as merely its agent. The same principle applies even if the registered owner of any vehicle does not use it for public service. Since Equitable remained the registered owner of the tractor, it could not escape primary liability for the deaths and the injuries arising from the negligence of the driver.



8*

The finance-lease agreement between Equitable on the one hand and Lim or Ecatine on the other has already been superseded by the sale. In any event, it does not bind third persons. Further, petitioners insistence on FGU Insurance Corp. v. Court of Appeals is misplaced. First, in FGU Insurance, the registered vehicle owner, which was engaged in a rent-a-car business, rented out the car. In this case, the registered owner of the truck, which is engaged in the business of financing motor vehicle acquisitions, has actually sold the truck to Ecatine, which in turn employed Tutor. Second, in FGU Insurance, the registered owner of the vehicle was not held responsible for the negligent acts of the person who rented one of its cars, because Article 2180 of the Civil Code was not applicable. We held that no vinculum juris as employer and employee existed between the owner and the driver. In this case, the registered owner of the tractor is considered under the law to be the employer of the driver, while the actual operator is deemed to be its agent. Thus, Equitable, the registered owner of the tractor, is -- for purposes of the law on quasi delict -- the employer of Raul Tutor, the driver of the tractor. Ecatine, Tutors actual employer, is deemed as merely an agent of Equitable. True, the LTO Certificate of Registration, dated 5/31/91, qualifies the name of the registered owner as EQUITABLE LEASING CORPORATION/Leased to Edwin Lim. But the lease agreement between Equitable and Lim has been overtaken by the Deed of Sale on December 9, 1992, between petitioner and Ecatine. While this Deed does not affect respondents in this quasi delict suit, it definitely binds petitioner because, unlike them, it is a party to it.



9*

Delsan Transport vs. CA Facts The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment with the petitioner, Delsan Transport Lines, Inc., for a period of one year whereby the said common carrier agreed to transport Caltexs industrial fuel oil from the Batangas-Bataan Refinery to different parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun, 2 industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The shipment was insured with the private respondent, American Home Assurance Corporation. MT Maysun set sail from Batangas for Zamboanga City. Unfortunately, the vessel sank taking with it the entire cargo of fuel oil. Subsequently, private respondent paid Caltex the sum representing the insured value of the lost cargo. Exercising its right of subrogation, the private respondent demanded of the petitioner the same amount it paid to Caltex. Due to its failure to collect from the petitioner despite prior demand, private respondent filed a complaint for collection of a sum of money. Issue Whether or not petitioner is liable for damages. Held Liable. The payment made by the private respondent for the insured value of the lost cargo operates as waiver of its (private respondent) right to enforce the term of the implied warranty against Caltex under the marine insurance policy. However, the same cannot be validly interpreted as an automatic admission of the vessels seaworthiness by the private respondent as to foreclose recourse against the petitioner for any liability under its contractual obligation as a common carrier. Additionally, the exoneration of MT Maysuns officers and crew by the Board of Marine Inquiry merely concerns their respective administrative liabilities. It does not in any way operate to absolve the petitioner common carrier from its civil liability arising from its failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of its employees, the determination of which properly belongs to the courts. In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, petitioner attributes the sinking of MT Maysun to fortuitous event or force majeure. From the testimonies of Jaime Jarabe and Francisco Berina, captain and chief mate, respectively of the ill-fated vessel, it appears that a sudden and unexpected change of weather condition occurred, a squall (unos) carrying strong winds and big waves repeatedly buffeted MT Maysun causing it to tilt, take in water and eventually sink with its cargo. This tale of strong winds and big waves by the said officers of the petitioner however, was effectively rebutted and belied by the weather report from PAGASA. The government report showed there was no squall or bad weather or extremely poor sea condition in the vicinity when the said vessel sank. Thus, as the appellate court correctly ruled, petitioners vessel, MT Maysun, sank with its entire cargo for the reason that it was not seaworthy. Neither may petitioner escape liability by presenting in evidence certificates that tend to show that at the time of dry-docking and inspection by the Philippine Coast Guard, the vessel MT Maysun, was fit for voyage. These pieces of evidence do not necessarily take into account the actual condition of the vessel at the time of the commencement of the voyage. The certificates issued do not negate the presumption of unseaworthiness triggered by an unexplained sinking. Seaworthiness relates to a vessels actual condition. Neither the granting of classification or



10*

the issuance of certificates establishes seaworthiness. Authorities are clear that diligence in securing certificates of seaworthiness does not satisfy the vessel owners obligation. Also securing the approval of the shipper of the cargo, or his surveyor, of the condition of the vessel or her stowage does not establish due diligence if the vessel was in fact unseaworthy, for the cargo owner has no obligation in relation to seaworthiness. In the case at bar, petitioner is liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the presumption of fault or negligence as common carrier occasioned by the unexplained sinking of its vessel, MT Maysun, while in transit.



11*

Philamgen vs. PKS Shipping Facts Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company (PKS Shipping) for the shipment to Tacloban City of bags of cement. DUMC insured the goods for its full value with petitioner Philippine American General Insurance Company (Philamgen). The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping. While Limar I was being towed by respondents tugboat, MT Iron Eagle, the barge sank a couple of miles off the coast bringing down with it the entire cargo of 75,000 bags of cement. DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly made payment; it then sought reimbursement from PKS Shipping of the sum paid to DUMC but the shipping company refused to pay, prompting Philamgen to file suit against PKS Shipping with the Makati RTC. Petitioner avers that typhoon "APIANG" has not entered the Philippine area of responsibility and that, even if it did, respondent would not be exempt from liability because its employees, particularly the tugmaster, have failed to exercise due diligence to prevent or minimize the loss. Issue Whether or not respondent is not liable for damages. Held Not liable. The appellate court ruled, gathered from the testimonies and sworn marine protests of the respective vessel masters of Limar I and MT Iron Eagle, that there was no way by which the barges or the tugboats crew could have prevented the sinking of Limar I. The vessel was suddenly tossed by waves of extraordinary height and buffeted by strong winds resulting in the entry of water into the barges hatches. The official Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness of Limar I and should strengthen the factual findings of the appellate court.



12*

Lorenzo Shipping vs. BJ Mathel Facts Lorenzo Shipping Corp. is a domestic corporation engaged in coastwise shipping. It used to own the cargo vessel M/V Dadiangas Express. BJ Marthel International, Inc. is an importer and distributor of different brands of engines and spare parts. BJ Marthel supplied Lorenzo Shipping with parts for the latters marine engines. Respondent sent Lorenzo Shipping a quotation of prices of spare parts. The quotation also stated that delivery of the parts would be within 2 months after receipt of firm order. Lorenzo Shipping subsequently issued to BJ Marthel a purchase order for the procurement of one set of cylinder liner to be used for M/V Dadiangas Express. A second purchase order was issued. Both purchase orders did not state the date of the cylinders delivery. BJ Marthel delivered the cylinder liners at petitioners warehouse 6 months after the date on the quotation, instead of the 2 months stated. Petitioner failed to pay for the cylinder liners. Hence, BJ Marthel sent a demand letter. Instead of heeding the demand for the full payment, Lorenzo Shipping offered to pay less claiming that the cylinders were delivered late and due to the scrapping of the M/V Dadiangas Express, they had to sell the cylinder liners in Singapore. Due to the failure of the parties to settle, respondent filed an action for sum of money and damages before the RTC. Lorenzo Shipping, on the other hand, claims that time was of the essence in the delivery of the cylinder liners and that the delivery was late as respondent committed to deliver the items within 2 months after receipt of firm order. Issue Whether or not there was late delivery of the subjects of the contract of sale to justify petitioner to disregard the terms of the contract considering that time was of the essence thereof. Held No late delivery. Petitioner insists that although its purchase orders did not specify the dates when the cylinder liners were supposed to be delivered, nevertheless, respondent should abide by the term of delivery appearing on the quotation it submitted to petitioner. Petitioner theorizes that the quotation embodied the offer from respondent while the purchase order represented its (petitioner's) acceptance of the proposed terms of the contract of sale. We cannot subscribe to the position of petitioner that the documents, by themselves, embody the terms of the sale of the cylinder liners. One can easily glean the significant differences in the terms as stated in the formal quotation and Purchase Order 1 with regard to the due date of the down payment for the first cylinder liner and the date of its delivery as well as Purchase Order 2 with respect to the date of delivery of the second cylinder liner. While the quotation provided by respondent evidently stated that the cylinder liners were supposed to be delivered within two months from receipt of the firm order of petitioner and that the 25% down payment was due upon the cylinder liners' delivery, the purchase orders prepared by petitioner clearly omitted these significant items. The petitioner's Purchase Order 1 made no mention at all of the due dates of delivery of the first cylinder liner and of the payment of 25% down payment. Its Purchase Order 2 likewise did not indicate the due date of delivery of the second cylinder liner. Notably, petitioner was the one who caused the preparation of Purchase Orders 1 and No. 2 yet it utterly failed to adduce any justification as to why said documents contained terms which are at variance with those stated in the quotation provided by respondent. The only plausible reason for such failure on the part of petitioner is that the parties had, in fact, renegotiated the proposed terms of the contract of sale.



13*

In such cases, the delivery must be made within a reasonable time. The law implies that if no time is fixed, delivery shall be made within a reasonable time, in the absence of anything to show that an immediate delivery intended. We, therefore, hold that in the subject contracts, time was not of the essence. The delivery of the cylinder liners on 20 April 1990 was made within a reasonable period of time considering that respondent had to place the order for the cylinder liners with its principal in Japan and that the latter was, at that time, beset by heavy volume of work.



14*

Coastwise Ligherage vs. CA Facts Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise. Upon reaching Manila Bay, while approaching Pier 18, one of the barges, "Coastwise 9", struck an unknown sunken object. As a consequence, the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the consignee, Pag-asa Sales, Inc. to reject the shipment of molasses as a total loss. Thereafter, Pag-asa Sales, Inc. filed a formal claim with the insurer of its lost cargo, herein private respondent, Philippine General Insurance Company (PhilGen, for short) and against the carrier, herein petitioner, Coastwise Lighterage. Coastwise Lighterage denied the claim and it was PhilGen which paid the consignee, Pag-asa Sales, Inc., the amount of P700,000.00, representing the value of the damaged cargo of molasses. In turn, PhilGen then filed an action against Coastwise Lighterage seeking to recover the amount which it paid to Pag-asa Sales, Inc. for the latter's lost cargo. Issue Whether or not petitioner is a common carrier. Held Common carrier. On the first issue, petitioner contends that the RTC and the Court of Appeals erred in finding that it was a common carrier. It stresses the fact that it contracted with Pag-asa Sales, Inc. to transport the shipment of molasses as a "charter agreement". It then proceeds to cite the case of Home Insurance Company vs. American Steamship Agencies, Inc. wherein this Court held: ". . . a common carrier undertaking to carry a special cargo or chartered to a special person only becomes a private carrier." Petitioner's reliance on the aforementioned case is misplaced. In its entirety, the conclusions of the court are as follows: Accordingly, the charter party contract is one of affreightment over the whole vessel, rather than a demise. As such, the liability of the shipowner for acts or negligence of its captain and crew, would remain in the absence of stipulation. The distinction between the two kinds of charter parties (i.e. bareboat or demise and contract of affreightment) is more clearly set out in the case of Puromines, Inc. vs. Court of Appeals, wherein we ruled: Under the demise or bareboat charter of the vessel, the charterer will generally be regarded as the owner for the voyage or service stipulated. To create a demise, the owner of a vessel must completely and exclusively relinquish possession, command and navigation thereof to the charterer, anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all. On the other hand a contract of affreightment is one in which the owner of the vessel leases part or all of its space to haul goods for others. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession, command and navigation of the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment of the charter hire. . . . . . . . . An owner who retains possession of the ship though the hold is the property of the charterer, remains liable as carrier and must answer for any breach of duty as to the care, loading and unloading of the cargo. . . .



15*

Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment on account of the aforementioned distinctions between the two. Petitioner admits that the contract it entered into with the consignee was one of affreightment. We agree. Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to another, but the possession, command and navigation of the vessels remained with petitioner Coastwise Lighterage. Next, the law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. It follows then that the presumption of negligence that attaches to common carriers, once the goods it transports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case. Petitioner's assertion is belied by the evidence on record where it appeared that far from having rendered service with the greatest skill and utmost foresight, and being free from fault, the carrier was culpably remiss in the observance of its duties. Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates this rule. It cannot safely claim to have exercised extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. Had the patron been licensed, he could be presumed to have both the skill and the knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its exercise of extraordinary diligence.



16*

Maersk Lines vs. CA Facts Respondent Efren Castillo of Ethegal Laboratories ordered from Eli Lilly. Inc. of Puerto Rico empty gelatin capsules. Through a Memorandum of Shipment, the shipper Eli Lilly, Inc. of Puerto Rico advised private respondent as consignee that the empty gelatin capsules were already shipped on board MV "Anders Maerskline." In said Memorandum, shipper Eli Lilly, Inc. specified the date of arrival to be April 3, 1977. For reasons unknown, said cargo of capsules were misshipped and diverted to Richmond, Virginia, USA and then transported back Oakland, Califorilia. The goods finally arrived in the Philippines two (2) months from the date specified in the memorandum. As a consequence, private respondent as consignee refused to take delivery of the goods on account of its failure to arrive on time. Private respondent alleging gross negligence and undue delay in the delivery of the goods, filed an action before the court a quo for rescission of contract with damages against petitioner and Eli Lilly, Inc. as defendants. Denying that it committed breach of contract, petitioner alleged in its that answer that the subject shipment was transported in accordance with the provisions of the covering bill of lading2 and that its liability under the law on transportation of good attaches only in case of loss, destruction or deterioration of the goods as provided for in Article 1734 of Civil Code. Issue Whether or not the petitioner is not liable for delay. Held Liable for delay. Nonetheless, petitioner maintains that it cannot be held for damages for the alleged delay in the delivery since it acted in good faith and there was no special contract under which the carrier undertook to deliver the shipment on or before a specific date. On the other hand, private respondent claims that during the period before the specified date of arrival of the goods, he had made several commitments and contract of adhesion. Therefore, petitioner can be held liable for the damages suffered by private respondent for the cancellation of the contracts he entered into. It is not disputed that the bill of lading, in fine print, is a contract of adhesion. Generally, contracts of adhesion are considered void since almost all the provisions of these types of contracts are prepared and drafted only by one party, usually the carrier. Nonetheless, settled is the rule that bills of lading are contracts not entirely prohibited. One who adheres to the contract is in reality free to reject it in its entirety; if he adheres, he gives his consent. It is a long standing jurisprudential rule that a bill of lading operates both as a receipt and as contract to transport and deliver the same as therein stipulated. It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or improper conduct, known to the shipper, and he is generally bound by his acceptance whether he reads the bill or not. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!2!(1)!The!Carrier!does!not!undertake! that! the!goods! shall! arive!at! the!port!of!discharge!or! the!place!of!delivery!at!any!particular!time!or!to!meet!any!particular!market!or!use!and!save!as!is!provided!in!clause!4!the!Carrier! shall! in!no! circumstances!be! liable! for! any!direct,! indirect! or! consequential! loss! or!damage!caused!by!delay.!If!the!Carrier!should!nevertheless!be!held!legally!liable!for!any!such!direct!or!indirect!or!consequential!loss!or!damage!caused!by!delay,!such!liability!shall!in!no!event!exceed!the!freight!paid!for!the!transport!covered!by!this!Bill!of!Lading.!



17*

However, the aforequoted ruling applies only if such contracts will not create an absurd situation as in the case at bar. The questioned provision in the subject bill of lading has the effect of practically leaving the date of arrival of the subject shipment on the sole determination and will of the carrier. While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at least be made within a reasonable time. The oft-repeated rule regarding a carrier's liability for delay is that in the absence of a special contract, a carrier is not an insurer against delay in transportation of goods. When a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered at destination within a reasonable time, in the absence, of any agreement as to the time of delivery. But where a carrier has made an express contract to transport and deliver properly within a specified time, it is bound to fulfill its contract and is liable for any delay, no matter from what cause it may have arisen. An examination of the subject bill of lading shows that the subject shipment was estimated to arrive in Manila on April 3, 1977. While there was no special contract entered into by the parties indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no need to execute another contract for the purpose as it would be a mere superfluity. In the case before us, we find that a delay in the delivery of the goods spanning a period of two (2) months and seven (7) days falls was beyond the realm of reasonableness.



18*

FGU Insurance vs. CA Facts Evidence shows that Anco Enterprises Company (ANCO) owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as common carriers. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it to move from one place to another. San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on board the D/B Lucio, for towage by M/T ANCO, cases of Pale Pilsen and Cerveza Negra. The D/B Lucio was towed by the M/T ANCO all the way from Mandaue City to San Jose, Antique. The vessels arrived at San Jose, Antique. The tugboat M/T ANCO left the barge immediately after reaching San Jose, Antique. When the barge and tugboat arrived at San Jose, Antique, the clouds over the area were dark and the waves were already big. The arrastre workers unloading the cargoes of SMC on board the D/B Lucio began to complain about their difficulty in unloading the cargoes. SMCs District Sales Supervisor requested ANCOs representative to transfer the barge to a safer place because the vessel might not be able to withstand the big waves. ANCOs representative did not heed the request because he was confident that the barge could withstand the waves. This, notwithstanding the fact that at that time, only the M/T ANCO was left at the wharf of San Jose, Antique, as all other vessels already left the wharf to seek shelter. With the waves growing bigger and bigger, only some cases of beer were discharged into the custody of the arrastre operator. Later, the crew of D/B Lucio abandoned the vessel because the barges rope attached to the wharf was cut off by the big waves. At around midnight, the barge run aground and was broken and the cargoes of beer in the barge were swept away. As a result, ANCO failed to deliver to SMCs consignee all the cases of Pale Pilsen and Cerveza Negra. As a consequence of the incident, SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO. Issue Whether or not ANCO was negligent. Held ANCO was negligent. ANCOs representatives failed to exercise the extraordinary degree of diligence required by the law to exculpate them from liability for the loss of the cargoes. First, ANCO admitted that they failed to deliver to the designated consignee the cases of Pale Pilsen and cases of Cerveza Negra. Second, it is borne out in the testimony of the witnesses on record that the barge D/B Lucio had no engine of its own and could not maneuver by itself. Yet, the patron of ANCOs tugboat M/T ANCO left it to fend for itself notwithstanding the fact that as the two vessels arrived at the port of San Jose, Antique, signs of the impending storm were already manifest. Petitioners Estate of Ang Gui and Co To, in their Memorandum, asserted that the contention of respondents SMC and FGU that the crewmembers of D/B Lucio should have left port at the onset of the typhoon is like advising the fish to jump from the frying pan into the fire and an advice that borders on madness.



19*

The argument does not persuade. The records show that the D/B Lucio was the only vessel left at San Jose, Antique, during the time in question. The other vessels were transferred and temporarily moved to Malandong, 5 kilometers from wharf where the barge remained. Clearly, the transferred vessels were definitely safer in Malandong than at the port of San Jose, Antique, at that particular time, a fact which petitioners failed to dispute. ANCOs arguments boil down to the claim that the loss of the cargoes was caused by the typhoon Sisang, a fortuitous event (caso fortuito), and there was no fault or negligence on their part. In fact, ANCO claims that their crewmembers exercised due diligence to prevent or minimize the loss of the cargoes but their efforts proved no match to the forces unleashed by the typhoon which, in petitioners own words was, by any yardstick, a natural calamity, a fortuitous event, an act of God, the consequences of which petitioners could not be held liable for. In this case, the calamity which caused the loss of the cargoes was not unforeseen nor was it unavoidable. In fact, the other vessels in the port of San Jose, Antique, managed to transfer to another place, a circumstance which prompted SMCs District Sales Supervisor to request that the D/B Lucio be likewise transferred, but to no avail. The D/B Lucio had no engine and could not maneuver by itself. Even if ANCOs representatives wanted to transfer it, they no longer had any means to do so as the tugboat M/T ANCO had already departed, leaving the barge to its own devices. The captain of the tugboat should have had the foresight not to leave the barge alone considering the pending storm. While the loss of the cargoes was admittedly caused by the typhoon Sisang, a natural disaster, ANCO could not escape liability to respondent SMC. The records clearly show the failure of petitioners representatives to exercise the extraordinary degree of diligence mandated by law. To be exempted from responsibility, the natural disaster should have been the proximate and only cause of the loss. There must have been no contributory negligence on the part of the common carrier. Therefore, as correctly pointed out by the appellate court, there was blatant negligence on the part of M/T ANCOs crewmembers, first in leaving the engine-less barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to heed the request of SMCs representatives to have the barge transferred to a safer place, as was done by the other vessels in the port; thus, making said blatant negligence the proximate cause of the loss of the cargoes.



20*

DRS-Senator vs. Federal Facts Berde Plants, Inc. (Berde Plants) delivered artificial trees to C.F. Sharp and Company, Inc. (C.F. Sharp), the General Ship Agent of DSR-Senator Lines, a foreign shipping corporation, for transportation and delivery to the consignee, Al-Mohr International Group, in Riyadh, Saudi Arabia. The cargo was loaded in M/S Arabian Senator. Federal Phoenix Assurance Company, Inc. (Federal Phoenix Assurance) insured the cargo against all risks. The M/S Arabian Senator left the Manila South Harbor for Saudi Arabia with the cargo on board. When the vessel arrived in Khor Fakkan Port, the cargo was reloaded on board DSR-Senator Lines feeder vessel, M/V Kapitan Sakharov, bound for Port Dammam, Saudi Arabia. However, while in transit, the vessel and all its cargo caught fire. DSR-Senator Lines informed Berde Plants that M/V Kapitan Sakharov with its cargo was gutted by fire and sank. Consequently, Federal Phoenix Assurance paid Berde Plants P941,429.61 corresponding to the amount of insurance for the cargo. Federal Phoenix Assurance sent a letter to C.F. Sharp demanding payment. C.F. Sharp denied any liability on the ground that such liability was extinguished when the vessel carrying the cargo was gutted by fire. Thus, Federal Phoenix Assurance filed a complaint for damages against DSR-Senator Lines and C.F. Sharp. Issue Whether or not C.F. Sharp is liable for damages. Held Liable. Fire is not one of those enumerated under Art. 1734 which exempts a carrier from liability for loss or destruction of the cargo. In Eastern Shipping Lines, Inc. vs. Intermediate Appellate Court, we ruled that since the peril of fire is not comprehended within the exceptions in Article 1734, then the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law. Even if fire were to be considered a natural disaster within the purview of Article 1734, it is required under Article 1739 of the same Code that the natural disaster must have been the proximate and only cause of the loss, and that the carrier has exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. We have held that a common carriers duty to observe the requisite diligence in the shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for transportation until delivered to or until the lapse of a reasonable time for their acceptance by the person entitled to receive them. When the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the



21*

presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. Respondent Federal Phoenix Assurance raised the presumption of negligence against petitioners. However, they failed to overcome it by sufficient proof of extraordinary diligence



22*

Central Shipping vs. Ins Facts Petitioner received on board its vessel, the M/V Central Bohol, 376 pieces [of] Philippine Apitong Round Logs and undertook to transport said shipment to Manila for delivery to Alaska Lumber Co., Inc. The shipment was insured. Upon completion of loading of the cargo, the vessel left Palawan and commenced the voyage to Manila. While enroute to Manila, the vessel listed about 10 degrees starboardside, due to the shifting of logs in the hold. After the listing of the vessel had increased to 15 degrees, the ship captain ordered his men to abandon ship and the vessel completely sank. Due to the sinking of the vessel, the cargo was totally lost. Respondent alleged that the total loss of the shipment was caused by the fault and negligence of the [petitioner] and its captain and as direct consequence thereof the consignee suffered damage. The consignee, Alaska Lumber Co. Inc., presented a claim for the value of the shipment to the [petitioner] but the latter failed and refused to settle the claim, hence [respondent], being the insurer, paid said claim and now seeks to be subrogated to all the rights and actions of the consignee as against the petitioner. Petitioner, while admitting the sinking of the vessel, interposed the defense that the vessel was fully manned, fully equipped and in all respects seaworthy; that all the logs were properly loaded and secured; that the vessels master exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the storm. It raised as its main defense that the proximate and only cause of the sinking of its vessel and the loss of its cargo was a natural disaster, a tropical storm which neither [petitioner] nor the captain of its vessel could have foreseen. Issue Whether or not petitioner is liable for damages. Held Liable. In the present case, petitioner disclaims responsibility for the loss of the cargo by claiming the occurrence of a storm under Article 1734(1). It attributes the sinking of its vessel solely to the weather condition. Established is the fact that the M/V Central Bohol encountered a southwestern monsoon in the course of its voyage. Having made such factual representation, petitioner cannot now be allowed to retreat and claim that the southwestern monsoon was a storm. Normally expected on sea voyages were such monsoons, during which strong winds were not unusual. It would not be sufficient to categorize the weather condition at the time as a storm within the absolutory causes enumerated in the law. Significantly, no typhoon was observed within the Philippine area of responsibility during that period. The strong winds accompanying the southwestern monsoon could not be classified as a storm. Such winds are the ordinary vicissitudes of a sea voyage. Even if the weather encountered by the ship is to be deemed a natural disaster under Article 1739 of the Civil Code, petitioner failed to show that such natural disaster or calamity was the proximate and only cause of the loss. Human agency must be entirely excluded from the cause of injury or loss. The defense of fortuitous event or natural disaster cannot be successfully made when the injury could have been avoided by human precaution.



23*

However, the loss of the vessel was caused not only by the southwestern monsoon, but also by the shifting of the logs in the hold. Such shifting could been due only to improper stowage. The vessel felt the strain because the logs in the bodega shifted and there were already seawater that seeped inside. Had the logs not shifted, the ship could have survived and reached at least the port of El Nido. Being clearly prone to shifting, the round logs should not have been stowed with nothing to hold them securely in place. Each pile of logs should have been lashed together by cable wire, and the wire fastened to the side of the hold. Considering the strong force of the wind and the roll of the waves, the loose arrangement of the logs did not rule out the possibility of their shifting. By force of gravity, those on top of the pile would naturally roll towards the bottom of the ship. The evidence indicated that strong southwest monsoons were common occurrences during the month of July. Thus, the officers and crew of M/V Central Bohol should have reasonably anticipated heavy rains, strong winds and rough seas. They should then have taken extra precaution in stowing the logs in the hold, in consonance with their duty of observing extraordinary diligence in safeguarding the goods. But the carrier took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now escape responsibility for the loss.



24*

Cruz vs. Sun Holidays Facts Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) for damages arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on board the boat M/B Coco Beach III that capsized. As it was still windy, Matute (a scuba instructor) and 25 other Resort guests including petitioners son and his wife trekked to the other side of the Coco Beach mountain that was sheltered from the wind where they boarded M/B Coco Beach III, which was to ferry them. Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt from side to side and the captain to step forward to the front, leaving the wheel to one of the crew members. The waves got more unwieldy. After getting hit by two big waves which came one after the other, M/B Coco Beach III capsized putting all passengers underwater. The passengers, who had put on their life jackets, struggled to get out of the boat. Upon seeing the captain, Matute and the other passengers who reached the surface asked him what they could do to save the people who were still trapped under the boat. The captain replied Iligtas niyo na lang ang sarili niyo (Just save yourselves). Help came after about 45 minutes when two boats passed by the capsized M/B Coco Beach III. Eight passengers, including petitioners son and his wife, died during the incident. At the time of Ruelitos death, he was 28 years old and employed as a contractual worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly salary of $900. Petitioner demanded indemnification from respondent for the death of their son in the amount of at least P4,000,000. Replying, respondent denied any responsibility for the incident which it considered to be a fortuitous event. It nevertheless offered, as an act of commiseration, the amount of P10,000 to petitioners upon their signing of a waiver. As petitioners declined respondents offer, they filed the Complaint, as earlier reflected, alleging that respondent, as a common carrier, was guilty of negligence in allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by PAGASA as early as 5:00 a.m. The RTC and CA ruled in favor of Sun Holidays. On appeal to the SC, Sun Holidays was held liable. Issue Whether or not respondent is negligent. Held Negligent. The evidence shows that PAGASA issued 24-hour public weather forecasts and tropical cyclone warnings for shipping advising of tropical depressions in Northern Luzon which would also affect the province of Mindoro. By the testimony of Dr. Frisco Nilo, supervising weather specialist of PAGASA, squalls are to be expected under such weather condition.

A very cautious person exercising the utmost diligence would thus not brave such stormy weather and put other peoples lives at risk. The extraordinary diligence required of common carriers demands that they take care of the goods or lives entrusted to their hands as if they were their own. This respondent failed to do. Respondents insistence that the incident was caused by a fortuitous event does not impress either. The elements of a "fortuitous event" are:

(a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtors to comply with their obligations, must have been independent of human will;



25*

(b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid;

(c) the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal manner; and

(d) the obligor must have been free from any participation in the aggravation of the resulting injury to the creditor.

To fully free a common carrier from any liability, the fortuitous event must have been the proximate and only cause of the loss. And it should have exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the fortuitous event.

Respondent cites the squall that occurred during the voyage as the fortuitous event that overturned M/B Coco Beach III. As reflected above, however, the occurrence of squalls was expected under the weather condition. Moreover, evidence shows that M/B Coco Beach III suffered engine trouble before it capsized and sank. The incident was, therefore, not completely free from human intervention.



26*

PAL vs. CA Facts Respondent Co accompanied by his wife and son, arrived at the Manila International Airport aboard defendant airline's PAL Flight from San Francisco, California, U.S.A. Soon after his embarking (sic), plaintiff proceeded to the baggage retrieval area to claim his checks in his possession. Plaintiff found eight of his luggage, but despite diligent search, he failed to locate his ninth luggage. He then immediately notified defendant company. The printed form known as a Property Irregularity Report was filled out acknowledging one of the plaintiff's luggages to be missing and signed after asking respondent himself to sign the same document. In accordance with this procedure in cases of this nature, PAL asked plaintiff to surrender the nine claim checks corresponding to the nine luggages, i.e., including the one that was missing. The incontestable evidence further shows that plaintiff lost luggage was a Samsonite suitcase measuring about 62 inches in length, worth about US$200.00 and containing various personal effects purchased by plaintiff and his wife during their stay in the United States and similar other items sent by their friends abroad to be given as presents to relatives in the Philippines. Plaintiff's invoices evidencing their purchases show their missing personal effects to be worth US$1,243.01, in addition to the presents entrusted to them by their friends which plaintiffs testified to be worth about US$500.00 to US$600.00. Plaintiff on several occasions unrelentingly called at defendant's office in order to pursue his complaint about his missing luggage but no avail. Thus, plaintiff wrote a demand letter to defendant company. PAL never found plaintiff's missing luggage or paid its corresponding value. Consequently, on May 3, 1985, respondent filed his present complaint against said petitioner. Issue Whether or not the Warsaw Convention on limits of liability should be disregarded. Held Disregarded. In Alitalia vs. IAC, the Warsaw Convention limiting the carrier's liability was applied because of a simple loss of baggage without any improper conduct on the part of the officials or employees of the airline, or other special injury sustained by the passengers. The petitioner therein did not declare a higher value for his luggage, much less did he pay an additional transportation charge. Petitioner contends that under the Warsaw Convention, its liability, if any, cannot exceed US $20.00 based on weight as private respondent Co did not declare the contents of his baggage nor pay traditional charges before the flight. We find no merit in that contention. The liability of the common carrier for the loss, destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. In all matters not regulated by said Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by Special Laws. Since the passenger's destination in this case was the Philippines, Philippine law governs the liability of the carrier for the loss of the passenger's luggage. In this case, the petitioner failed to overcome, not only the presumption, but more importantly, the private respondent's evidence, proving that the carrier's negligence was the proximate cause of the loss of his baggage. Furthermore, petitioner acted in bad faith in faking a retrieval receipt to bail itself out of having to pay Co's claim.



27*

The Court of Appeals therefore did not err in disregarding the limits of liability under the Warsaw Convention. As stated in the Cathay Pacific case, although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carriers employees is found or established.



28*

Transasia Shipping vs. CA Facts Respondent, a public attorney, bought a ticket from petitioner for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on November 12, 1991. Plaintiff boarded the M/V Asia Thailand vessel. At that instance, plaintiff noticed that some repair works [sic] were being undertaken on the engine of the vessel. The vessel departed with only one (1) engine running. After an hour of slow voyage, the vessel stopped near Kawit Island and dropped its anchor thereat. After half an hour of stillness, some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to, Cagayan de Oro City. The captain acceeded [sic] to their request and thus the vessel headed back to Cebu City. At Cebu City, plaintiff together with the other passengers who requested to be brought back to Cebu City, were allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff, the next day, boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of defendant. On account of this failure of defendant to transport him to the place of destination on November 12, 1991, plaintiff filed before the trial court a complaint for damages against defendant. Issue Whether or not a common carrier is liable for damages to a passenger who disembarked from the vessel upon its return to the port of origin, after it suffered engine trouble and had to stop at sea, having commenced the contracted voyage on one engine. Held Not liable. Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the vessel's engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime after it had run its course, it conked out. This caused the vessel to stop and remain a drift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. The Court of Appeals did not grant the private respondent actual or compensatory damages, reasoning that no delay was incurred since there was no demand, as required by Article 1169 of the Civil Code. This article, however, finds no application in this case because, as found by the respondent Court, there was in fact no delay in the commencement of the contracted voyage. If any delay was incurred, it was after the commencement of such voyage, more specifically, when the voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only functioning engine conked out. As to the rights and duties of the parties strictly arising out of such delay, the Civil Code is silent. However, as correctly pointed out by the petitioner, Article 698 of the Code of Commerce specifically provides for such a situation. It reads: In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account. This article applies suppletorily pursuant to Article 1766 of the Civil Code.



29*

Of course, this does not suffice for a resolution of the case at bench for, as earlier stated, the cause of the delay or interruption was the petitioner's failure to observe extraordinary diligence. Article 698 must then be read together with Articles 2199, 2200, 2201, and 2208 in relation to Article 21 of the Civil Code. So read, it means that the petitioner is liable for any pecuniary loss or loss of profits which the private respondent may have suffered by reason thereof. For the private respondent, such would be the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not. As he and some passengers resolved not to complete the voyage, the vessel had to return to its port of origin and allow them to disembark. The private respondent then took the petitioner's other vessel the following day, using the ticket he had purchased for the previous day's voyage. Any further delay then in the private respondent's arrival at the port of destination was caused by his decision to disembark. Had he remained on the first vessel, he would have reached his destination at noon of 13 November 1991, thus been able to report to his office in the afternoon. He, therefore, would have lost only the salary for half of a day. But actual or compensatory damages must be proved,

which the private respondent failed to do. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused.



30*

Calalas vs. CA Facts Private respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of the vehicle. Along the way, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured. Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck. The lower court took cognizance of another case filed by Calalas against Salva and Verena, for quasi-delict, in which Salva and his driver Verena were held jointly liable to Calalas for the damage to his jeepney. Issue Whether or not the decision in the civil case finding Salva and his driver liable for damage to petitioner is binding on Sunga. Held The decision isnt binding. The argument that Sunga is bound by the ruling in Civil Case finding the driver and the owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle of res judicata does not apply. Nor are the issues in Civil Case and in the present case the same. The issue in Civil Case was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioners jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. There is, thus, no basis for the contention that the ruling in Civil Case finding Salva and his driver Verena liable for the damage to petitioners jeepney, should be binding on Sunga. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract.3 The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, law itself creates the obligation. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury to passengers. Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances? We do not think so. Several factors militate against petitioners contention. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!3!Statement!not!absolute,!see!Bataclan!vs.!Medina!



31*

First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle. Second, it is undisputed that petitioners driver took in more passengers than the allowed seating capacity of the jeepney. The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting passengers. We find it hard to give serious thought to petitioners contention that Sungas taking an "extension seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioners contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable. This requires that the following requirements be present:

1. The cause of the breach is independent of the debtors will; 2. The event is unforeseeable or unavoidable; 3. The event is such as to render it impossible for the debtor to fulfill his obligation in a normal

manner, and 4. The debtor did not take part in causing the injury to the creditor.

Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the highway.



32*

Japan Airlines vs. CA Facts Private respondents boarded JAL flight in San Francisco, California bound for Manila. As an incentive for travelling on the said airline, the flight was to make an overnight stopover at Narita, Japan, at the airlines expense, thereafter proceeding to Manila the following day. On June 14, 1991, upon arrival at Narita, Japan, private respondents were billeted at Hotel Nikko Narita for the night. The next day, private respondents, on the final leg of their journey, went to the airport to take their flight to Manila. However, due to the Mt. Pinatubo eruption, unrelenting ashfall blanketed Ninoy Aquino International Airport (NAIA), rendering it inaccessible to airline traffic. Hence, private respondents trip to Manila was cancelled indefinitely. To accommodate the needs of its stranded passengers, JAL rebooked all the Manila-bound passengers on flight No. 741 due to depart on June 16, 1991 and also paid for the hotel expenses for their unexpected overnight stay. On June 16, 1991, much to the dismay of the private respondents, their long anticipated flight to Manila was again cancelled due to NAIAs indefinite closure. At this point, JAL informed the private respondents that it would no longer defray their hotel and accommodation expense during their stay in Narita. Since NAIA was only reopened to airline traffic on June 22, 1991, private respondents were forced to pay for their accommodations and meal expenses from their personal funds from June 16 to June 21, 1991. Their unexpected stay in Narita ended on June 22, 1991 when they arrived in Manila on board JL flight No. 741. Obviously, still reeling from the experience, private respondents, commenced an action for damages against JAL. To support their claim, private respondents asserted that JAL failed to live up to its duty to provide care and comfort to its stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to 21, 1991 at Narita, Japan. On the other hand, JAL denied this allegation and averred that airline passengers have no vested right to these amenities in case a flight is cancelled due to force majeure. Issue Whether or not JAL, as a common carrier has the obligation to shoulder the hotel and meal expenses of its stranded passengers until they have reached their final destination, even if the delay were caused by force majeure. Held No obligation. While we sympathize with the private respondents plight, we are unable to accept this contention. Common carriers are not absolutely responsible for all injuries or damages even if the same were caused by a fortuitous event. To rule otherwise would render the defense of force majeure, as an exception from any liability, illusory and ineffective. When a party is unable to fulfill his obligation because of force majeure, the general rule is that he cannot be held liable for damages for non-performance. Corollarily, when JAL was prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo eruption, whatever losses or damages in the form of hotel and meal expenses the stranded passengers incurred, cannot be charged to JAL. Yet it is undeniable that JAL assumed the hotel expenses of respondents for their unexpected overnight stay on June 15, 1991. Indeed, to hold JAL, in the absence of bad faith or negligence, liable for the amenities of its stranded passengers by reason of a fortuitous event is too much of a burden to assume. Furthermore, it has been held that airline passengers must take such risks incident to the mode of travel. In this regard, adverse weather conditions or extreme climatic changes are some of the perils involved in air travel, the



33*

consequences of which the passenger must assume or expect. After all, common carriers are not the insurer of all risks. Paradoxically, the Court of Appeals, despite the presence of force majeure, still ruled against JAL relying in our decision in PAL v. Court of Appeals. The reliance is misplaced. The factual background of the PAL case is different from the instant petition. In that case there was indeed a fortuitous event resulting in the diversion of the PAL flight. However, the unforeseen diversion was worsened when private respondents (passenger) was left at the airport and could not even hitch a ride in a Ford Fiera loaded with PAL personnel, not to mention the apparent apathy of the PAL station manager as to the predicament of the stranded passengers. In light of these circumstances, we held that if the fortuitous event was accompanied by neglect and malfeasance by the carriers employees, an action for damages against the carrier is permissible. Unfortunately, for private respondents, none of these conditions are present in the instant petition. We are not prepared, however, to completely absolve petitioner JAL from any liability. While JAL was no longer required to defray private respondents living expenses during their stay in Narita on account of the fortuitous event, JAL had the duty to make the necessary arrangements to transport private respondents on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation to look after the comfort and convenience of its passengers when it declassified private respondents from transit passengers to new passengers as a result of which private respondents were obliged to make the necessary arrangements themselves for the next flight to Manila. We are not oblivious to the fact that the cancellation of JAL flights to Manila from June 15 to June 21, 1991 caused considerable disruption in passenger booking and reservation. Nevertheless, this does not excuse JAL from its obligation to make the necessary arrangements to transport private respondents on its first available flight to Manila. After all, it had a contract to transport private respondents from the United States to Manila as their final destination. Consequently, the award of nominal damages is in order.



34*

Aboitiz Shipping vs. CA Facts Anacleto Viana boarded the vessel M/V Antonia, owned by petitioner, at the port at San Jose, Occidental Mindoro, bound for Manila, having purchased a ticket. 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. The crane owned by the third party petitioner 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. Private respondents Vianas filed a complaint for damages against petitioner corporation (Aboitiz, for brevity) for breach of contract of carriage. In its answer. Aboitiz denied responsibility contending that at the time of the accident, the vessel was completely under the control of respondent Pioneer Stevedoring Corpora

Documents

Arteche Transpo Digests