Cases Applying Articles 1732, 1733 and 1766 of the New Civil Code

Articles Applied: General Provisions on Common Carriers

Art. 1732. 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 compensation, offering their services to the public.

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.

Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.Pedro de Guzman v. Court of Appeals

G.R. No. L-47822

Facts:

Herein respondent Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan. Normally, after collection respondent would bring such material to Manila for resale. He utilized (2) two six-wheelers trucks which he owned for the purpose. Upon returning to Pangasinan, he would load his vehicle with cargo belonging to different merchants to different establishments in Pangasisnan which respondents charged a freight fee for.

Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of General Milk Company Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by hijackers along Marcos Highway. Hence, petitioners commenced an action against private respondent.

In his defense, respondent argued that he cannot be held liable due to force majuere, and that he is not a common carrier and hence is not required to exercise extraordinary diligence.

Issues:

1. Whether or not respondent can be held liable for loss of the cartons of milk due to force majeure.

2. Whether or not respondent is a common carrier.

Held:

1. The court ruled the affirmative. The circumstances do not fall under the exemption from liability as enumerated in Article 1734 of the Civil Code. The general rule is established by the article that common carriers are responsible for the loss, destruction or deterioration of the goods which they carry, unless the same is due to any of the following causes only:

a. Flood, storm, earthquake, lightning or other natural disasters;

b. Act of the public enemy, whether international or civil;

c. Act or omission of the shipper or owner of the goods;

d. Character of the goods or defects in the packing;

e. Order or act of competent public authority.

2. The court ruled the affirmative. Article 1732 of the New Civil Code avoids any 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. It also avoids a distinction between a person or enterprise offering transportation services on a regular or scheduled basis and one offering such services on an occasional, episodic, and unscheduled basis.

Planters Products, Inc. v. Court of Appeals

G.R. No. 101503

Facts:

Planters Products (Planters) purchased from Mitsubishi International Corporation of USA of 9,000 metric tons of urea fertilizer which the latter shipped abroad the cargo vessel owned by private respondent Kyosei Kisin Kabushiki Kaisha (KKKK) from America to La Union. Prior to its voyage, a time charter party was entered into between Mitusbishi as shipper/charterer and KKKK as ship-owner. After the Urea fertilizer was loaded in bulk by stevedored hired by the shipper, the steel hatches were closed with heavy iron lids which remained closed during the entire journey.

Upon arrival of the vessel, the hatches were opened with the use of the vessel boom. Planters unloaded the cargo from the holders into the steel bodied dump trucks. Each time the dump trucks were filled up, its load of urea was covered with tarpaulin before it was transported to the consignees warehouse located some (50) fifty meteres from the wharf. It took (11) eleven days from planters to unload the cargo. The report submitted by private marine and cargo surveyors revealed a shortage in the cargo, and some portion in the cargo was contaminated with dirt, rendering the same unfit for commerce. Planters filed an action for damages bu the appellate court absolved the carrier from liability.

Issues:

1. Whether or not the respondent is a common carrier.

2. Whether or not the respondent is liable for damages.

Held:

1. The court rules the affirmative as to the respondent being a common carrier. The term common carrier is defined in Article 1732 of the Civil Code. The definition refers to carriers either by land, water, or air which holds themselves out as ready to engage in carrying goods on transporting passengers or both for compensation as a public employment and not as a casual occupation; if the undertaking is a single transaction, not a part of the general business or corporation, although involving the carriage of goods for a fee, then the person or corporation offering such services is a private carrier. In the case at bar respondent carrier transports goods indiscriminately for all persons. Being such, he is a common carrier.

2. The court rules the negative. True, being a common carrier, respondent must have observed extraordinary diligence over the goods it carries. In the case at bar it has been proven that the respondent has sufficiently overcome this, by clear and convincing proof, the prima facie presumption of negligence, due to the manner of storage of the goals during the vogyage. In fact, it was pointed out that there was a risk in shipping the urea due to its character.

F.C. Fisher v. Yangco Steamship Company

G.R. No. L-8095

Facts:

On June 10, 1912, the directors of Yangco Steamship Company which is duly licensced to engage in the coastwise trade in the Philippines, adopted a resolution which was thereafter ratified and affirmed by the shareholders of the company expressly declaring and providing that the classes of merchandise to be carried by the company in its business as a common carrier to include dynamite, power or other explosives and other expressly prohibiting the officers, agents, and servatnts of the company from offering to carry or accepting to carry said articles.

In view of the resolution passed the collector of customs suspended the issuance of clearances for the vessles unless they allow the carriage of such articles. Hence, herein petitioner a major stockholder filed a petition for prohibition.

Issue:

Whether or not the resolution of Yanco is justified.

Held:

The court rules the negative. Common carrier in the jurisdiction cannot lawfully decline to accept a particular class of goods, unless it appears that for some sufficient reason the discrimination is reasonalble and necessary. Yangco Steamships Company has not met those conditions.

The nature of the business of a common carrier as a public employment is such that it is within the power of the state to impose such just regulation in the interest of the public as the legistalors may deem proper.

United States v. Quinajon

G.R. No. 8686

Facts:

Herein defendants were charged with the violation of Act No. 98. The accused herein have been engaged for more than (4) four years in the transportation of passengers and merchandise in the port of Curimao, in the loading and unloading of passengers and merchandise by means of voyages from the shore. The facts state that sometime in September 1912, the said accused, by means of voyages, unloaded 5,986 sacks of rice belonging to the provincial government of Ilocos Norte where they regularly charge 6 cents for the unloading and loading of each package of merchandise.

Issue:

Whether or not the provincial government was prejudiced by the preferential privileges in favor of the shippers.

Held:

The court rules the affirmative. Sec. 5 of Act No. 98, provides that any person or corporation who may be damaged by the common carrier of any matter or things prohibited shall be entitled to sue or recover all damges so incurred. It is not believed that that law prohibits common carrier from making special rates for handling merchandise when the same are made for the purpose of increasing the business which are regarded as sound. That does not require absolute equality in all cases; it only applies where the services perfomed in the different cases are substantially the same and conditions similar.

Loadstar Shipping Co. Inc. v. Court of Appelas

G.R. No. 131621

Facts:

On November 19, 1984 herein petitioner shipping company carried, a shipment of (3) three bulk items on board its M/V Cherokee, which amounted to P6,067,178.00, the same being insured by the Manila Insurance Co. (MIC). The vessel in turn was insured by Prudential Guarantee and Assurance, Inc. of P4 million. Unfortunately the ship sank in the are of Limasawa.

MIC settled the insurance with the consignee and asked for the subrogation receipt, then MIC filed a claim against Loadstar. PGAI alleging the sinking was due to the fault and negligence of Loadstar. In their defense, Loadstar set up the argument of force majuere. PGAI was dropped from the case afer proving MIC had no locus standi against them. Inter alia all other defenses, Loadstar argues that it cannot be considered a common carrier because it was issued a certificate of public convenience and that it carried a particular type of cargo for a particular shipper.

Issues:

1. Whether or not Loadstars Cherokee is a common carrier;

2. Wheter or not, considering the type of carriage the M/V is, the required amount of diligence was observed;

Held:

1. The court rules the affirmative that the M/V Cherokee is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience and their public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic, or unscheduled. Additionally, the second argument of Loadstar must fail; that the M/V Cherokee was carrying a particular type of cargo for one shipper which appears to be purely coincidental is not reason enough to convert a vessel that is a common carrier to a private one, especially where, as in the case, it was shown that the vessel was also carrying passengers.

2. The court rules the negative. Loadstar should have exercised extraordinary diligence since it is a common carrier; and the fact that it still allowed the voyage despite the knowledge of a typhoon present counters their exercise of extra ordinary diligence required.

First Philippine Industrial Corp. v. Court of Appeals

G.R. No. 125948

Facts:

Herein petitioner applied for a mayors permit to operate its pipeline concession. Before such permit was issued, the City treasurer required petitioner to pay local tax. In order not to hamper its operations, petitioner paid the tax under protest.

Then the petitioner filed a letter protest addressed to the treasurer claiming exemption from payment of the tax because according to the Local Government Code of 1991, transportation contractors are not included in the enumeration of contractors which are liable to pay taxes. The city treasurer denied the protest. The petitioner filed a case before the trial court for tax refund, however it was subsequently dismissed. Hence, this petition.

Issue:

Whether or not the petitioner is a common carrier as contemplated to be exempted under the law.

Held:

The court rules the affirmative. The court enunciated the (4) tests in determining whether the carrier is that of a common carrier:

a. must be engaged int eh business of carrying goods for other as a public employment and must hold itself out as ready to engage in the transportation of goods generally as a business and not a casual occupation

b. it must undertake to carry goods of the kind which its business is confined;

c. it must undertake the method by which his business is conducted and over its established roads;

d. the transportation must be for hire.

In the case at bar, the court categorically ruled that the transporting of oil through pipelines is still considered to be an activity of a common carrier. The petitioner is a common carrier because it is engaged in the business of transporting passengers or goods; like petroleum. It undertakes to carry for all persons indifferently. The fact that the petitioner has limited clientele does not exclude it from the definition of common carrier. Under the petroleum act of the Philippines, the petitioner is considered a common carrier even if it is a pipeline concessionaire.

And even as regards the petroleum operation, it is of public utility. Specifically, the Bureau of Internal Revenue considers petitioners as common carrier not subject to withholding tax.

Home Insurance Co. v American Steamship Agencies

23 SCRA 24April 4, 1968

Facts:

Consorcio Pasquero Del Perse of South America shipped a freight of 21,740 jute bags of Peruvian fish meal through the SS Crowborough consigned to the Sam Miguel Brewery and insured by Home Insurance Company for $202,505.00. It arrived in Manila on March 7, 1963 and was loaded into the lighters of Luzon Stevedoring Company. However, it arrived with shortages. Thus SMB demanded that Home Insurance pay the claim of P14,000.00. Home Insurance on the other hand filed for the recovery of the P14,000.00 from Luzon Stevedoring. The Court of First Instance absolved Luzon Stevedoring, but ordered the American Steamship Agencies to reimburse the amount to Home Insurance, basing the ruling on Art. 587 of the Code of Commerce which makes the ship agent civilly liable for damages in favor of third persons due to conduct of carriers captain and that the stipulation in the charter party exempting the owner from liability is against public policy under Article 1744 of the New Civil Code.

Issue:

Between the provisions of the New Civil Code and the Code of Commerce, which should apply.

Held:

The court rules the affirmative as to the non-applicability of the prohibition of the exemption of the carrier from liability. The provisions of our Civil Code on common carriers were taken from Anglo-American Law. Under American Jurisprudence, a common carrier undertakes to carry a special cargo or chartered to a special person only, becomes a private carrier. And thus, as a private carrier, a stipulation exempting the owner from liability for the negligence of its agent is not against public policy. The reason is that there is no strict public policy applied.

San Pablo v. PANTRANCO South Express

G.R. No. L-61461

Facts:

Defendant PANTRANCO planned to operate a ferryboat service between Matnog and Allen as a common carrier. It requested authority from the MARINA to purchase the vessel M/V Black Double in accordance with the procedure provided for by law on such application for a certificate of public convenience (CPC). Its request was denied as the said routes are adequately serviced by existing authorized operators such as the Cardinal Shipping Company. However, the defendant continued to purchase the vessel and started operating. Defendant contends that what it proposed was to operate a PRIVATE FERRY BOAT service across a small body of water specially for its buses and trucks from Matnog to Allen, Tacloban for the purpose of continuing the highway. Thus, the ferry is merely an incident to its franchise to convey passengers and cargo from Pasay to Tacloban and need not secure a separate CPC. Defendants also contend that they are not a PUBLIC FERRY BOAT as they do not accept walkins. The Board of Transportation (BOT) enjoined PANTRANCO from operating the ferry. The petitioner along with Cardinal Shipping interposed their opposition as they are able to service the riding public.BOT sought for the opinion of then Minister of Justice Ricardo Puno that rendered and affirmative opinion in favor of PANTRACO. Justice Puno gave an opinion to the effect that there is no need for bus operators to secure a separate CPC to operate a ferryboat service. BOT rendered its decision holding that the ferry boat service is part of its CPC to operate from Pasay to Samar/Leyte by amending PANTRANCO's CPC. Petitioners filed for motions of consideration and were denied by BOT.

Issue:

Whether or not the water transport service is a ferry service for purpose of continuing the highway or a coastwise/ interland service.

Held:

The court holds that the water transport service between Matnog and Allen is not a ferryboat service but a coastwise or interland shipping service. Under no circumstance can the sea between Matnog and Allen be considered a continuation of the highway. While a ferry boat service has been considered as a continuation of the highway when crossing rivers or even lakes, which are small body of waters - separating the land, however, Matnog and Allen are separated by an open sea it can not be considered as a continuation of the highway. Respondent PANTRANCO should secure a separate CPC for the operation of an interisland or coastwise shipping service in accordance with the provisions of law. Its CPC as a bus transportation cannot be merely amended to include this water service under the guise that it is a mere private ferry service.

Argumento, PANTRANCO is a a ferry service, it is absurd to be called a Private ferry service. It is confusing that respondent PANTRANCO claims that it is a private carrier in relation to its ferry service but it affirms its obligation as a common carrier to observe extraordinary diligence and vigilance in the transportation of its passengers and goods. By considering that the authority granted to PANTRANCO is to operate a private ferry, it can still assert that it cannot be held to account as a common carrier towards its passengers and cargo. Such an anomalous situation that will jeopardize the safety and interests of its passengers and the cargo owners cannot be allowed.

National Steel Corporation v. Court of Appeals

G.R. Nos. 112287/112350

Facts:

Herein petitioner of G.R. No. 112350, Vlasons Shipping entered into a contract of afreightment on contract of vogage4 charter line with the petitioner of the other consolidated case, National Steel Corporation (NSC), whereby the latter hired Vlasons vessel, the M/V Vlasons I to make a voyage to load steel products from Ilagan City to Manila. Under the agreement, the loading and unloading of the cargoes are the responsibility of the charter and the owner shall no be liable of the loss or damage of the cargo arising from the unseaworthiness unless counsel by want of diligence on the part of the owners to make the vessel seaworthy and to secure that it is properly manned, equipped and supplied.

Upon arrival on August 12, 1974, it was found that nearly all the tin plates and hot rolled sheets were wet and rusty. The cargo was unloaded by the charterer Hence the petitioner filed for a claim of damages amounting to P941,145.58, alleging the negligence of the master and crew of the ship.

Issue:

Whether or not Vlasons Shipping is made liable notwithstanding the Charter Party stipulations.

Held:

The courts rule the negative. At bottom, this appeal really hinges on a factual issue as to then, how, and who caused the damages to the cargo. Ranged against NSC are two formidable truhs. First, it was found that such damage was brought about during the unloading process when the rain seeped into the cargo due to the negligence of the stevedores employed by it.

Second and more importantly, the agreement between the parties The Contact of Voyage Charter Party for Hire placed the burden of proof of such loss or damage upon the shipper, not upon the ship owner. Such stipulation, while disadvantageous to the NSC, is valid because the parties entered into a contract of private charter, not one of common carriage.

Basic too is the doctrine that courts cannot relieve a party from the effects of a private contract fully entered into, on the ground that it is allegedly one-sided or unfair to the plaintiff. It has been held that the true test of a common carrier of passengers/goods is the carriage of the same, provided it has space, for all who opt to avail for its transportation service for a fee.

Kilusang Mayo Uno Labor Center vs. Garcia Jr.

G.R. No. 115381

Facts:

Petition for certiorari assails the constitutionality and validity of circulars released by the Land Transportation Franchising and Regulatory Board (LTFRB). Such circulars authorized provincial bus and jeepney operators to increase or decrease the prescribed transportation fares without application with the LTFRB fro a period of one year. Likewise, it established a presumption of public need for certificates of public convenience (CPC). Petitioner KMU claims however that the authority given by LTFRB to provincial bus operators to set a fare range is unconstitutional, invalid and illegal. Also, the establishment of the presumption of public need for a proposed transport service without having to prove public necessity, is likewise illegal it being violative of Public Service Act and the Rules of Court.

Issue:

Whether or not such circulars released by the LTFRB is valid.

Held:

The Supreme Court held that 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. This is tantamount to an undue delegation of legislative authority. The policy of allowing the provincial bus operators to change and increase their fares would result not only to a chaotic situation but also to an anarchic state of affairs. This would leave the riding public at the mercy of transport operators who may change fares every hour, every day, every month as he may wish to do so. The Supreme Court held that rate-fixing is a delicate and sensitive government function that requires dexterity of judgment with a settled goal of arriving at a just and reasonable rate accepted by both the public and the utility. With regard to the presumption of public need, CPC is an authorization granted by the LTFRB for the operation of land transportation services for public use as required by law. Public convenience or necessity generally means something fitting for public need. Thus in the case at bar, it was founded that the LTFRB committed grave abuse of discretion is issuing orders to regulate the transport sector. Such circulars are deemed null and void and of no force or effect.

Tatad v. Garcia

G.R. No. 114222Facts:

EDSA LRT Consortium, a foreign corporation, was awarded with the construction of Light Rail Transit III (LRT III) as the only bidder who has qualified with the requirements provided by the PBAC. The said foreign corporation will construct the LRT III in a Built-Lease-Transfer agreement that such public utility will be leased by the government through the Department of Transportation and Communication (DOTC) and then it would be subsequently sold by the corporation to the government. An objection was raised by the petitioner stating that the awarding of the bid to the said corporation is against the Constitution. It was provided in the Constitution that only Filipinos are entitled to operate a public utility such as the LRT III.

Issue:

Whether or not the awarding of the bid to EDSA LRT Consortium is against the Constitution.

Held:

The Court held that there is a distinction in the operation of a public utility and ownership in the facilities and equipment to serve the public. The EDSA LRT Consortium fall under the latter because the said corporation will not operate the public utility. The said corporation will only own the facilities and equipment such as the train carts, the railings and the booths. In addition, such ownership will then be subsequently transferred to the government under Built-Lease-Transfer agreement. With that said, the operation of the public utility will fall to the Filipinos through its government. Therefore, the awarding of the bid to EDSA LRT Consortium is not against the provisions of the Constitution.

Samar Mining Co. v. Nordeutscher Lloyd & C.F. Sharp & Co. Inc.

G.R. No. L-28673

Facts:

Herein petitioner and defendant entered into a contract where the former agreed to ship a crate of optima wielded wedge wire sleeves, with the Bill of Lading indicated the effective transportation from Germany to Manila only.

From Manila, the crate was to be further transported to Davao. The carrier had unloaded and delivered the goods in the rouded warehouse in Manila.

Unfortunately, the goods were lost and never reached Davao City.

Issue:

Whether or not herein petitioner is liable for the loss.

Held:

The court rules the negative, when the carrier under the terms of the Bill of Lading had delivered the goods at the port of destination, at that point he merely becomes the agent of the consignee and ceases to be liable for any loss a damage of goods transported.

Furthermore, there is no applicability of Article 1738 of the New Civil Code, which contemplates liability of the carrier of the shipment of goods while stored in the warehouse of the carrier. However, in the present case, the warehouse belonged to a third person.

Eastern Shipping Lines vs. IAC

150 SCRA 463

Facts:

In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe, Japan for Manila:

(1) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc.,

(2) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.

Both sets of goods were insured for their value with Development Insurance and Surety Corporation.

In GR 71478, the same vessel took on board :

1. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation

2. two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured.

Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest, plus P35,000.00 as attorneys fees and costs. Eastern Shipping took an appeal to the then Court of Appeals which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a petition for review on certiorari.

Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the recovery of the insured value of the cargo lost imputing unseaworthiness of the ship and non-observance of extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established, the burden of proving negligence of the vessel is shifted to the cargo shipper. Trial Court rendered judgment in favor of Nisshin and Dowa. CA affirmed decision. Hence this petition on certiorari.

Issue:

Whether or not the carrier exercised extraordinary diligence.

Held:

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

The evidence of the defendant did not show that extraordinary diligence was observed by the vessel to prevent the occurrence of fire at hatches nos. 2 and 3. Defendants evidence did not likewise show the amount of diligence made by the crew, on orders, in the care of the cargoes. What appears is that after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. The complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping. The Carriage of Goods by Sea Act (COGSA), a special law, is merely suppletory to the provisions of the Civil Code The fire may not be considered a natural disaster or calamity, as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier.

National Development Company v. Court of Appeals

164 SCRA 593

Facts:

In accordance with a memorandum entered into between defendants National Development Company (NDC) and Maritime Company of the Philippines (MCP) on September 13, 1962, defendant NDC as the first preferred mortgagee of three ocean-going vessels including one the name Doa Nati appointed defendant MCP as its agent to manage and operate said vessels in its behalf.The E. Phillipp Corporation of the New York loaded on board the vessel Doa Nati at San Francisco, California, a total of 1,200 bales of American raw cotton consigned to Manila Banking Corporation, Manila and the Peoples Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation.The vessel figured in a collision at Ise Bay, Japan with a japanese vessel as a result of which 550 bales of aforesaid cargo were lost and/or destroyed The damage and lost cargo was worth P344,977.86 which amount, the plaintiff Development Insurance and Surety Corporation as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed.The insurer filed before the CFI of Manila an action for the recovery of said amount from NDC and MCP.

Issue:

Whether or not the law of country or port of destination shall apply.

Held:

In Easter Shipping Lines, Inc., v. IAC, 150 SCRA 469 (1987), we held under similar circumstances that 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. Thus, the rule was specifically laid down that 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 especial laws (Article 1766, Civil Code). Hence, the carriage of Goods by Sea Act, a special law, is merely suppletory to the provisions of the Civil Code. The goods in question were being transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost or damaged due to a collision which was found to have been caused by negligence or fault of both captains of the colliding vessels.Under the above ruling, it is evident that laws of the Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan. It appears, however, that collision falls among matters not specifically regulated by the Civil Code, so that no reversible error can be found in respondent courts application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels. Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel, the owner of the vessel at fault shall indemnify the losses and damages incurred after an expert appraisal. But more in point to the instant case in 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.There is, therefore, no room for NDCs interpretation that the Code of Commerce should apply only to domestic trade and not to foreign trade.MCP next contends that it cannot be liable solidarily with NDC because it is merely the manager and operator of the vessel Doa Nati, nor a ship agent. As the general managing agent, according, to MCP, it can only be liable if it acted in excess of its authority. The Memorandum Agreement of September 13, 1962 shows that 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.

Articles Applied: Vigilance Over Goods of Common Carriers

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act of omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733.

Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of Article 1738.

Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu.

Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2.

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.

Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.

Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order.

Gelisan v. Alday

154 SCRA 388

Facts:

Herein petitioner is Bienvenido Gelisan, is the owner of a freight truck. He and Roberto Espiritu entered into a contract under which Espiritu hired the freight truck Gelisan for the purpose of hauling sugar, flour, and fertilizers. It also stipulated that Espiritu shall bear the loss and damage attending the goods to be hauled by him.

Benito Alday, a trucking operator who knew of Espiritu, had a contract to haul the fertilizers of Atlas Fertilizer Corporation from Pier 4, North Harborn, to Mandaluyong.

Alday met Espiritu at the gate of Pier 4 and the latter offered the use of his truck with the driver and helper. Alday accepted and instructed the checker to let Espiritu hau fertilizer.

Espiritu managed 200 bags of fertilizer per trip. The fertilizer was delivered to the driver and maid with the necessary way bill receipt. However, Espiritu never delivered the fertilizer to the Atlas Fertilizer bodega in Mandaluyong.

Hence, Alday was compelled to pay for the loss of 400 tags to Atlas Fertilizer Corporation and filed a complaint against Espiritu and Gelisan with the CFI Manila.

While the CFI ruled that Espiritu alone is liable, the Court of Appeals ruled to include Gelisan.

Issue:

Whether or not Gelisan be held solidarily liable with Espiritu.

Held:

The court rules the affirmative, Gelisan being the registered owner of the truck. The court has held invariably in several decisions that the registered owner of a public service vehicle is responsible for damages that may arise from consequences incidental to its operation or that may be caused by any of the passengers therein.

The claim that the petitioner is not liable in view of the lease contract executed by and between him and Roberto Espiritu which exempts him from liability to third persons cannot be sustained because it appears that the lease contract, adverted to, had not been approved by the Public Dercric Commision.

It is settled in our jurisprudence that if a property covered by a franchise is transferred or leased to another without the requisite approval, the transfer is not binding upon the public and third persons,

However, Gelisan is not without recourse as he may be indemnified by Espiritu the amount he many have been udered to pay for the damages.

Benedicto v. Intermediate Appellate Court

187 SCRA 547

Facts:

Herein private respondent Greenhills Wood Industries Co., Inc. operates saw hill in Quirino. Sometime in May 1980, private respondents bound itself to sell and deliver to Blue Star Mahogany, Inc. (Blue Star), a company in Bulacan 100,000 board feet of sawn lumber with the understanding that an initial delivery would be made on May 15, 1980. to effect its first delivery, private respondents resident manager, Dominador Cruz, contracted Virgitio Licuden, the drivear of a cargo truck to transport its sawn lumber to the consignee, Blue Star, in Valenzuela, Bulacan. The cargo truck was registered in the name of herein petitioner Luisa Benedicto, the proprietor of Macorem Trucking, a business enterprise engaged in hauling freight.

On May 15, 1980, Cruz in the presence and with the consent of the driver Licuden, supervised the loading of san lumber with invoice aboard the cargo truck. Thereafter, the manager of Blue Star called up the manager of Greenhills informing the former that the sawn lumber had not yet arrived in Bulacan. The manager of Greenhills was this informed. Still, Blue Star was constrained to look for other suppliers.

Thus Greenhills filed a criminal case against Luciden for Estafa and also against Benedicto for recovery of the value of the lost sawn lumber plus damages. The RTC ruled against Benedicto and Luciden. Hence this petition from the IAC.

Issue:

Whether or not Benedicto, being the registered owner of the truck should be held liable for the value of the undelivered or lost sawn lumber.

Held:

The court rules the affirmative. There is no dispute that petitioner Benedicto has been holding herself out to the public as engaged in the business of hauling or transporting goods for hire or compensation. In sum, Benedicto is a common carrier.

The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier , even though the specific vehicle involved may have already been transferred to another person. The doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to assume that the registered owner is the actual or lawful owner thereof.

It would be very difficult and often impossible as a practical matter, for members of the general public to enforce their right of action against those that may have inflicted injuries should they be required to prove who the actual owner is. The registered owner is not allowed to deny liability by proving the identity of the alleged transferee.

Philtranco Service Enterprise v. Court of Appeals

273 SCRA 563

Facts:

The victim herein, Ramon Asuesta was riding in his easy rider tricycle along Calbayog City. Also in the city, herein defendant Philtrancos bus was driven by defendant Rogasiones Dolira Manilbing was being pushed by some persons in order to start its engine. As the bus was pushed, its engine started thereby the bus continued on its running motion and it occurred at the time when Ramon Asuesta, who was still riding on his bicycle was directly (was) in front of the said bus. Due to the abrupt start of the bus engine, it thereby bumped on the victim Ramon. As a result, he fell and was run over by the bus

Still, the bus did not halt after hitting the victim. Thereafter P/Sgt. Yabao, who was then jogging approached the driver defendant and signaled him to stop, but the driver only stopped when the former introduced himself as a police officer. The trial court rendered a decision ordering the petitioner (Philtranco) to jointly and severally pay the private respondents. On appeal, the CA affirmed the decision.

Issue:

Whether or not the court erred in holding Philtranco liable being the registered owner of a public service for the tortuous act of the driver.

Held:

The courts ruled the negative. The Appellate court was correct in holding herein petitioner liable. Article 2176 of the New Civil Code provides that whoever by act or omission causes damage to another, these being fault or negligence, is obligated to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties is called a quasi-delict. Further, Article 2180 of the Civil Code states that The obligation imposed by Article 2176 is demandable not only for ones owns acts or omissions, but for whom one is responsible.

In the case at bar, the liability of the registered owner of a public service vehicle, like petitioner Philtranco, for damages arising from the tortuous acts of the driver are primary, direct and joint and solidary, its only recourse if the judgement for damages is satisfied by it is to be recovered what it has paid from its employee who committed the fault or negligence which gave rise to the action based on the quasi-delict.

Santos v. Sibug

G.R. No. L-26815

Facts:

Santos, who owns a jeep, entered into an arrangement with Vivad that the latter will fictitiously purchase the jeep so that Santos may use the Certificate of Public Convenience (CPC) of Vivad. Subsequently, the Sibug was bumped by the said jeep. Damages was then awarded to Sibug against Vivad and his driver. The Sheriff of Manila then levied the jeep and sold it in a public auction. Santos then files of the third-party claim with the Sheriff stating that he owns the jeep and such sale is null and void because the property levied is not owned by Vivad.

Issue:Whether or not the levy and auction sale made on the jeep is null and void.

Held:

The Court held that the agreement entered into by Santos and Vivad is a Kabit System, which is prohibited by law. Such system was not approved by the Public Service Commission (PSC) therefore Vivad is the owner of the jeep in legal contemplation. Since Vivad is the owner of the jeep according to law, then it cannot be said that the Sheriff seized the property belonging to a stranger. The auction sale is still valid according to the Court.

Lita Enterprises, Inc. v. IAC

G.R. No. L-64693

Facts: Spouse ocampo purchased 5 toyota standard cars from delta motors in installments to be used as taxi cabs. However, since they do not have any franchise to operate a taxicabs, they entered in an agreement with lita enterprises for the use of the latters certificate of public convenience, commonly known as Kabit system. Later on, the taxi collided into a motorcycle resulting to the deathof the driver of the motorcycle Emeterio Martin. Lita enterprises were adjudged liable and two of the taxicabs were levied upon and sold at a public auction. Thereafter the spouses ocampo decided to register the taxicabs in their own name and ask Lita enterprise to return the papers but the latter refused. Hence this petition.Issue:

Whether or not the agreement between the parties is valid.Held:The Court held that the agreement between the parties is not valid.Under the arrangement of kabit system, whereby a person who has been granted a certificate of convenience allows another person who owns motor vehicles to operate under such for a fee. The Kabit System has been identifies as one of the root causes of prevalence of graft and corruption in the government transportation offices. It is void being contrary to public policy. And the parties have no right of action against each other because they are in pari delicto, the court will leave them both where it finds them.

Teja Marketing vs. IAC148 SCRA 347

Facts:

Respondent purchased from petitioner a tiyajle. Such tiyalje amounted to a total value of P800. Respondent was able to pay the purchase price but however left a balance of P1, 700. Subsequently, a chattel mortgage was executed over the said balance. It was found by the court that the defendant purchased the motorcycle for the purpose of engaging and using the same for transportation business. To be able to use the vehicle, the tricycle was attached to the plaintiffs transportation line, which had the franchise. In effect, the registration certificate is under petitioners name. It appeared that they agreed that the petitioner would undertake the yearly registration of the unit in the Land Transportation Commission.

Issue:

Whether or not relief may be granted to any of the parties.

Held:

The Supreme Court held that neither of the two parties are entitled for relief. Both parties have entered into an illegal contract, thus no action arises out from any illicit transaction. The parties operated under an agreement known as the Kabit System. Such system operates when a person who has been granted a certificate of public convenience allows another person who owns a motor vehicle to operate under such franchise for a fee. A certificate of public convenience is a special privilege which cannot be countenanced. This illegitimate arrangement has been recognized as one of the root causes of the frequency of graft and corruption in the government transportation affairs. It is declared void it being against public policy. It is a fundamental principle that the court will not aid either party to enforce an illegal contract and will leave both where it finds them. The defects of the contract are permanent and cannot be ratified. Thus, both parties are culpable of their illicit indenture.

Magboo v. Bernardo

G.R. No. L-16790

Facts:

The petitioners filed an action against the respondent who is the owner of the jeep and who is being claimed to be responsible for the death of the petitioners 8 year old child in a vehicular accident. The respondent denies being liable for the death of the said child because he claimed that there was no employer-employee relationship between him and the driver of the said jeep because of the boundary system that they are following. The respondent claims that only the driver should be liable because the relationship between the two is that of a lessor-lessee. Respondent also claims that he should not be held subsidiary liable because the driver of the jeep pleaded guilty to a criminal case without respondents knowledge.

Issue:

Whether or not the respondent is liable for the death of the child of the petitioners.

Held:

The Court held that the respondent should be liable because the lease he made with the driver of the jeep was not approved by the Public Service Commission (PSC). Since the lease was made without such approval, the owner continued to be the operator of the jeep in legal contemplation and such was responsible for the consequences of his operation. The Court also held that the claim of the respondent in stating that he did not know of the plea made by the driver, which prevented him from proving his innocence, was raised too late in the case therefore the respondent is estopped from enforcing any claim regarding to that matter.

Eastern Shipping Lines vs. IAC

150 scra 463

Facts:

In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe, Japan for Manila:

1.) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc.,

2.) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.

Both sets of goods were insured for their value with Development

Insurance and Surety Corporation.

In GR 71478, the same vessel took on board :

3. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation

4. two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured.

Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest, plus P35,000.00 as attorneys fees and costs. Eastern Shipping took an appeal to the then Court of Appeals which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a petition for review on certiorari.

Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the recovery of the insured value of the cargo lost imputing unseaworthiness of the ship and non-observance of extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established, the burden of proving negligence of the vessel is shifted to the cargo shipper. Trial Court rendered judgment in favor of Nisshin and Dowa. CA affirmed decision. Hence this petition on certiorari.

Issue:

Whether or not the carrier exercised extraordinary diligence.

Held:

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

The evidence of the defendant did not show that extraordinary diligence was observed by the vessel to prevent the occurrence of fire at hatches nos. 2 and 3. Defendants evidence did not likewise show the amount of diligence made by the crew, on orders, in the care of the cargoes. What appears is that after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. The complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping. The Carriage of Goods by Sea Act (COGSA), a special law, is merely suppletory to the provisions of the Civil Code The fire may not be considered a natural disaster or calamity, as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier.

Ganzon v. Court of Appeals

161 SCRA 646

Facts:

Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron. The contract was for the petitioner to transport the scrap iron to Manila from Bataan. Tumambing delivered the scrap iron to Niza, captain of the lighter LCT Batman, to board it on the same. The crew of the Batman started to load the iron, and when they were about halfway through, Mayor Advincula arrived and demanded P5,000 from Tumambing. The latter resisted and a heated argument started. Mayor Advincula drew his gun and fired at Tumambing. He was brought to the hospital for treatment, lucky for him the wound was not fatal.

A few days after this incident, the loading of the scrap metal was resumed. However, the acting Mayor this time went to the port where the Batman was docked. He was accompanied by 3 policemen and he ordered Captain Niza to dump the scrap iron where the lighter was docked. What was left or the iron was confiscated by the Acting Mayor and brought to NASSCO. A receipt was issued showing that the municipality had taken custody of the scraps or iron.

Tumambing filed a case in order to recover damages for the loss that he sustained. The lower court rendered a decision in favor of Ganzon. However, on appeal the Court of Appeals reversed the decision ordering Ganzon to pay Tumambing P5,895 as actual damages, P5,000 for exemplary damages and attorneys fees as well. Hence this petition by Ganzon.

Issue:

Whether or not Ganzon is liable for the loss that Tumambing sustained.

Held:

The Court held that Ganzon is liable for the loss of Tumambing. The defense that the scraps of iron were not unconditionally placed in his custody and control is untenable. Petitioner herein admits that the scraps of iron were delivered to Captain Niza by Tumambing in order to load the same on the lighter Batman. The employees of Ganzon received the scraps of iron on his behalf, therefore the scraps of metal were placed in his custody and control. Upon the receipt of the scraps by the carrier in order transport the same, the contract of carriage was perfected. Upon perfection of the contract, the exercise of extraordinary diligence in caring for the goods shall also commence to begin.

Article 1738 of the NCC provides that the exercise of extraordinary diligence shall cease only upon delivery to the consignee or to the person who has the right to receive the same. In this case, there was no delivery made to the consignee, therefore the carrier should have exercised extraordinary diligence in taking care of the scraps of iron. It is irrelevant that the scraps of iron were only partially loaded on the lighter. The scraps of iron were already under the custody and control of the carrier, therefore he shall be liable for its loss.

Eastern Shipping Lines, Inc. vs. Court of Appeals

196 SCRA 570

Facts:

SS Eastern Comet, owned by defendant Eastern Shipping Lines was engaged in the business of shipment from Japan to the Philippines. Through the SS Eastern Comet, two fiber drums of riboflavin were shipped from Yokohama to Manila. The shipment was discharged upon arrival into the custody of defendant Metro Port Service, Inc. However, the latter refused to one drum after claiming that such unwanted drum was in bad order. Defendant Allied Brokerage Corporation received the shipment from Metro Port and detected that one drum was opened and without seal. The goods were then delivered to the consignees warehouse. The latter noted that one drum contained spillages, while the rest of the contents were adulterated. As a consequence of the damage Mercantile Insurance Company paid the consignee under its marine policy insurance and instituted civil action against defendants as subrogee. The Court of Appeals affirmed judgment holding the common carrier, arrastre operator, and customs brokers jointly and severally liable.

Issue:

Whether Eastern Shipping Lines, Inc. can be held severally and jointly liable with Metro Port and Allied brokerage.

Held:

The Supreme Court held that Esatern Shipping Lines, Inc can be held liable. As what was already decided in Firemans Fund Isurance, Co. vs Metro Port Service, Inc, the legal relationship between the consignee and the arrastre operator is analogous to that of a depositor and a warehouseman. Further explained, the relationship between the consignee and the common carrier is comparable to that of the consignee and the arrastre operator. Since it is the duty of the Arrastre to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the carrier. The duty of the consignee to guard the goods and shelter it from destruction or impairment is also shouldered by the common carrier. Both are therefore charged with the obligation to deliver the goods in good condition to the consignee.

Sarkies Tours Philipines, Inc. vs. CA

G.R. No. 108897

Facts:

Fatima Fortades was a passenger of one of the buses of petitioner Sarkies Tours bound for Legazpi City. She had onboard luggages which contained important documents and personal belongings. Her belongings were kept in the baggage compartment of the bus, but during a stopover at Daet, it was discovered that only one bag remained in the open compartment. The others, including Fatima's things, were missing and might have dropped along the way. Despite the suggestion of the passengers to retrace its route in order to recover their luggage, the driver nevertheless neglected them and continued driving. Consequently, respondents filed a case to recover the value of the remaining lost items, as well as moral and exemplary damages, attorney's fees and expenses of litigation. They claimed that the loss was due to petitioner's failure to observe extraordinary diligence in the care of Fatima's luggage and that petitioner dealt with them in bad faith from the start. Petitioner, on the other hand, disowned any liability for the loss on the ground that Fatima allegedly did not declare any excess baggage upon boarding its bus.

Issue:

Whether or not Sarkies is liable for damages for lost propery of its passengers.

Held:

The Supreme Court held that Sarkies is liable for the loss. The cause of the loss was petitioner's negligence in not ensuring that the doors of the baggage compartment of its bus were securely fastened. As a result of this lack of care, almost the entire luggage was lost, to the prejudice of the paying passengers. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. This liability 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 person who has a right to receive them. The awarding of actual damages to respondents is just because their efforts in recovering the lost items must be well compensated. Moral and exemplary damages must also be awarded in the presence of bad faith and negligence on the part of the common carrier.

Valenzuela Hardwood & Industrial Supply v. Court of Appeals

274 SCRA 642

Facts:

Valenzuela Hardwood & Industrial Supply (VHIS), plaintiff herein, hired the services of Seven Brothers Shipping Corporation (SBC) to transport 940 round logs. VHIS shipped the logs at the port in Isabella and said logs were placed on the M/V Seven Ambassador owned by SBC for transport. VHIS insured the logs against loss or damage with South Sea Surety and Insurance Co. for the amount of P2,000,000. Subsequently the M/V Seven Ambassador sank which resulted in the loss of the logs on board the same. The plaintiff then filed a claim with the insurance company and the SBC. However both claims were denied. The insurance company denied liability under the policy and SBC denied liability claiming that they are a private carrier and that they cannot be held liable due to the stipulation that the owners shall not be responsible for the loss, split, short-landing, breakages and any kind of damages to the cargo.

Plaintiff filed a case in order to claim damages for the loss it incurred. The lower court rendered a decision in favor of the plaintiff and ordered the insurance company and SBC to pay the plaintiff. On appeal, the Court of Appeals affirmed the decision but set aside the decision against SBC holding that the stipulation between the parties is valid. Hence this petition.

Issue:

1. Whether or not the stipulation between the parties is valid.2. Whether or not SBC is liable for the loss of VHIS. Held:

The Court held that the stipulation between the parties is valid. It is clear in this case that the SBC is a private carrier and therefore a stipulation between the parties limiting the liability of the carrier is valid. In a contract of private carriage, the parties may validly stipulate that the responsibility of the cargo rests solely on the charterer. Such stipulations shall be valid as long as they are not contrary to law, morals, good customs, public order and public policy.

It is a fact that the loss of the logs was due to the sinking of the M/V Seven Ambassador. The sinking of the vessel was caused by the snapping of the iron chains holding the logs. Said snapping was the consequence of the negligence of the captain in securing the logs. However, since there is a stipulation between the parties regarding the responsibility of the loss of the cargo, the SBC cannot be held liable for the loss of the logs.

Yobido v. Court of Appeals

281 SCRA 1

Facts:

The spouses Tumboy and their minor children boarded a bus operated by the Yobido Bus Liner to Davao City. On the way to their destination, the front left tire of the bus exploded which led to the bus falling into a ravine and causing the death of Tito Tumboy and physical injuries to the other passengers. The defendants then filed a case against the petitioner for breach of the contract of carriage. The petitioner claims that it is not liable because the tire explosion is a caso fortuito.

Issue:

Whether or not the petitioner is liable for the accident.

Held:

The Court held that the tire explosion cannot be considered as a fortuitous event. The reason is that the common carrier has the burden of proof that it exercised extraordinary diligence in the carriage of the passengers. There is always a presumption of negligence on the common carrier in cases of death or injury and that the carrier needs to present contrary evidence that it was not negligent and that it exercised the required diligence of the law. The carrier cannot rely on the defense that the tire was brand new or that it had daily check ups regarding the parts of the bus.

Compania Maritima v. Insurance Co. of North America

12 SCRA 213

Facts:

Macleod & Co., contracted, first by telephone and later confirmed by a formal written booking issued by Macleod & Co., the services of the petitioner Comapania Maritima for the shipment of bales of lamp from Davao to Manila. Two lighters of the petitioners loaded the said cargo from Macleods wharf at Davao awaiting the arrival of another vessel of the petitioner for reloading. One of the lighters sunk of which Macleod suffered a total of P64,018. Respondent insurers of said cargo paid Macleod, and being subrogated to Macleods right, filed a claim to collect from the petitioner the amount it paid to Macleod. Petitioner denied liability on the grounds that there was no bill of lading issued thereby resulting to be non-existence of the contract; that the sinking was due to a fortuitous event and the respondent has no personality.Issue:

Whether or not there was a contract and whether or not there was a fortuitous event.

Held:

There was complete contract of carriage the consummation of which has already begun when the shipper delivered the cargo to the carrier and the latter took possession of the same by placing it on a lighter manned by its two authorized employers under which Macleod become entitled to the privilege of law. The responsibility of the carrier commenced on the actual delivery and receipt by, the carrier or its authorized agent of the goods. The barges or lighters were merely employed as the first step of the voyage. As to the issuance of the bill of lading, it is not required or essential to the contract, although it may become obligatory by reason of regulations or as a condition injured in the contract by the agreement of the parties themselves.

Lu Do v. Binamara

101 PHIL 120

Facts:

Delta Company of New York shipped 6 cases of film and photographic supplies to respondent herein. Having arrived at the Cebu port, it discharged her cargo placing it in the custody of the arrastre operator appointed by the Bureau of Customs. The cargo was checked and found to be in good order. Later on the goods were delivered to Binamara. After inspection it was found out that some cargo were missing. Binamara demanded from the carrier indemnity for the loss it sustained. However, the carrier denied liability relying on the stipulation in the contract of carriage. It provides that the carrier is no longer liable for the cargo after delivery of the same to the customs authorities. The lower court rendered a decision in favor of Binamara. Hence this petition.

Issue:

Whether or not the common carrier is liable for the lost cargo.

Held:

The Court held that the carrier is no longer liable for the loss of the goods. The general rule is that delivery must be made to the consignee or the person authorized to receive the goods, without such delivery the carrier shall be liable for the loss or destruction of goods while in their custody. However, parties may agree to limit the liability of the carrier considering that the goods have to go through the inspection of the customs authorities before they are actually turned over to the authorities. The stipulation in this case is binding upon the parties it being not contrary to law, morals, or public policy.

American President Lines, Ltd. Vs. Klepper110 Phil 243Facts:

Klepper on board SS Pre. Cleveland and Yokohama, Japan and lift van containing personal and household effects. Upon its arrival in Manila and while the lift van was being unloaded by crane, it fell on the pier and its contents were spilled and scattered, as a result of which, Klepper bought an action for damages against the carrier. While the carrier does not dispute liability, it, however, contends that the same cannot exceed $500, invoking in its favor the bill of lading and Sec. 4(5) of the carriage of goods by Sea Act (COGSA). The trial Court ordered the carrier to pay Klepper with a right to reimbursement from Delgado Brothers, the operator of the crane. The CA affirmed the said decision. The carrier appealed.

Issue:

Whether or not the carrier can be held liable beyond that stated in the bill of lading and that provided in COGSA.

Held:

The carrier should only pay Klepper the sum of $500. The shipper who accepted the bil of lading impliedly id bound by its items. While regard to the contention of the carrier that COGSA should control in this case, the same is of as moment. Art. 1763 of the New Civil Code provides that the laws of the country to which the goods are transported shall govern the liability of the common carrier in case of loss, destruction and deterioration. This means that the law of the Philippines on the New Civil Code. Under 1766 of NCC, in all mater not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by Special Laws. Art. 1736-1738, NCC govern said rights and obligations. Therefore, although Sec 4(5) of COGSA states that the carrier shall not be liable in an amount exceeding $500 per package unless the value of the goods had been declared by the shipper and asserted in the bill of lading, said section is merely supplementary to the provisions of the New Civil Code.

Servando v. Philippine Steam Navigation Co.

117 SCRA 832

Facts:

Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage from Manila to Pulupandan, Negros Occidental cargoes of cavans of rice and cartons of colored paper which were evidenced by bills of lading.

Upon arrival of the vessel at Pulupandan the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice Appellees' claims for the value of said goods were rejected by the appellant. Issue:

Whether or not carrier is liable for the loss of the cargo.

Held:

The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. "

It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation: Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ...

The Court sustains the validity of the above stipulation. There is nothing therein that is contrary to law, morals or public policy. Therefore, the carrier is no longer liable for the loss of the goods.Saludo, Jr. v. Court of Appeals

207 SCRA 498

Facts:

Plaintiff herein together with Pomierski and Son Funeral Home of Chicago brought the remains of plaintiffs mother to Continental Mortuary Air Services which booked the shipment of the remains from Chicago to San Francisco by Trans World Airways (TWA) and from San Francisco to Mania with Philippine Airlines (PAL). The remains were taken to the Chicago Airport, but it turned out that there were 2 bodies in the said airport. Somehow the 2 bodies were switched, and the remains of plaintiffs mother was shipped to Mexico instead. The shipment was immediately loaded on another PAL flight and it arrived the day after the expected arrival. Plaintiff filed a claim for damages in court. The lower court absolved both airlines and upon appeal it was affirmed by the court.

Issue:

Whether or not the 2 airlines should be held liable for damages.

Held:

Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti. Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked.

As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby, private respondents cannot be held liableMacam v. Court of Appeals

313 SCRA 77Facts:

Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company is the consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as consignee and GPC as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the carrier directly to GPC and not to Pakistan Bank and without surrendering the bill of lading.

Issue:

Whether or not there was a valid delivery.

Held:

The extraordinary responsibility of common carriers last until actual or constructive delivery of the cargo to the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party. However, in the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as such in his demand letter to respondent and his complaint before the court. This premise brings into conclusion that the deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore, there was a valid delivery.

Articles Applied: Vigilance Over Goods of Common Carriers

Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:

(1) That the goods are transported at the risk of the owner or shipper;

(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;

(3) That the common carrier need not observe any diligence in the custody of the goods;

(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported;

(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;

(6) That 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;

(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation.

Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.

Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid.

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. 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.

Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy.

Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration.

Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.

Juan Ysmael & Co. v. Barreto & Co.51 PHIL 90

Facts:

Plaintiff seeks to recover from defendant the alleged value of the four cases of merchandise which it delivered to the steamship ANDRES on October 23, 1922, at Manila, to be shipped to Surogao. Said shipment was never delivered to the consignee. The defendants rely only on clause 7 of the bill of lading whereby it was provided that action not brought within 610 days from the time the cause of action accrued still be barred, and on clause 12 which provided that the defendants are not liable for any package in excess of P300 unless the value and contracts of such package are correctly stated in the bill of lading at the time of the shipment. The goods in question were shipped from Manila on October 25, 1922, or a little less that 6 months after the shipment was made.

Issue:

Whether or not the action was brought within a reasonable time.

Held:

The action was brought within a reasonable time as those words are specified and defined in the authorities sited. It is true that both the plaintiff and the defendants are residents of the City of Manila, but it is also true that Surigao where the goods in question were to be delivered is one of the most distant places from Manila in the Philippine Islands. In the very nature of things, plaintiff would not want to commence its action until such time as it had made a full and careful investigation of all of the material facts and even the law of the case, so as to determine whether or not defendants were liable for its loss.

Clause 12 places a limit of P300 for any single package of silk. The evidence of each case very near P2,500. In this situation, the limit of defendants liability for each package of silk for loss or damage from any cause of for any reason, would put it in the power of the defendant to have taken the whole cargo of 64 cases of silk at a valuation of P300 of each case, or less than 1/8 of its actual value. If that rule of law should be sustained, no silk would ever be shipped from one island to another in the Philippines. Such a limitation in value is valid as against public policy.

Shewaram v. Philippine Airlines17 SCRA 606Facts:

Shewaram, petitioner herein, is a Hindu from Davao. He boarded a PAL plane for a trip to Manila. He checked in 3 pieces of baggage, a suitcase 2 other pieces. One of the suitcases were mistagged by the defendant and as a result the said suitcase did not arrive with him in Manila. He was shown a similar bag, but the contents did not belong to him. Among his things in the suitcase was a Rollflex camera and Transistor Radio 7. His baggage was later on returned but the camera and radio were missing. He demanded indemnity for his loss from PAL. The latter offered to pay P100 for his loss but Shewaram. Defendant herein claimed that the PAL ticket, on the reverse side, stated in fine print that if the value of baggage is not stated, and the baggage is lost, the maximum liability of PAL is P100.00. If value in excess of P100.00 is stated, PAL will charge extra because PAL is being held liable for an amount exceeding P100.00. Shewaram rejected the offer and demanded full payment of P800.00 for the amount of the things he lost. PAL refused to do so.

Issue:

Whether the stipulation limiting the liability of PAL shall apply in the case at bar.

Held:

The Court held that PAL is liable for the loss of the petitioner herein. The stipulation in at the back of the ticket shall not be binding against the petitioner. Article 1750 of the NCC provides that Article 1750 the pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is required, however, that the contract must be "reasonable and just under the circumstances and has been fairly and freely agreed upon." In this case, the court believes that the requirements of said article have not been met. It cannot be said that the petitioner had actually entered into a contract with the PAL, embodying the conditions as printed at the back of the ticket stub that was to the petitioner. The fact that those conditions are printed at the back of the ticket stub in letters so small that they are hard to read would not warrant the presumption that the petitioner was aware of those conditions such that he had "fairly and freely agreed" to those conditions.Sea-Land Service, Inc. v. Intermediate Appellate Court153 SCRA 552

Facts:

Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines, received from Sea-borne Trading Company in California, a shipment consigned to Sen Hiap Hing, the business name used by Cue. The shipper not having declared the value of the shipment , no value was indicated in the bill of lading. The shipment was discharged in Manila, and while awaiting transshipment to Cebu, the cargo was stolen and never recovered.

The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency value of the lost cargo, P55, 814 for unrealized profit and P25,000 for attorneys fees. CA affirmed the trial courts decision.

Issue:

Whether or not Sea-Land is liable to pay Cue.

Held:

There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for loss of, or damage to, goods being transported under said bill, although that document may have been drawn up only by the consignor and the carrier without the intervention of the consignee.

Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage os governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65.

Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation clause in the bill of lading here are fully substantial on the basis alone of Article 1749 and 1750 of the Civil Code. The justices of such stipulation is implicit in its giving the owner or shipper the option of avoiding accrual of liability limitation by the simple expedient of declaring the value of the shipment in the bill of lading.

The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered by said rule to US$500 per package unless the shipper declares the value of the shipment and pays additional charges is valid and binding on Cue.

Citadel Lines, Inc. v. Court of Appeals

184 SCRA 544

Facts:

Citadel Lines, Inc., petitioner herein is the general agent of the vessel "Cardigan Bay/Strait Enterprise" . Manila Wine Merchants, Inc. (Consignee) is the importer of the subject shipment of Dunhill cigarettes from England. The said vessel loaded on board Filbrite cartons of manufactured cigarettes called "Dunhill International Filter" and "Dunhill International Menthol". The shipment arrived at the Port of Manila in a container. The said container was received by Metro Port Service, Inc., respondent herein. Subsequently the container van, which contained two shipments was stripped. One shipment was delivered and the other shipment containing cigarettes was palletized. Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were placed in two containers