Haystacks
Transportation Law
Michael Vernon Guerrero Mendiola 2004
Shared under Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Philippines license.
Caltex vs. Sulpicio Lines (GR 131166, 30 September 1999) …... 1
First Philippine Industrial Corp. vs. CA (GR 125948, 29 December 1998) …... 4
Arada vs. CA (GR 98243, 1 July 1992) …... 6
Sabena Belgian World Airlines vs. CA (GR 104685, 14 March 1996) …... 8
Philippine National Railways (PNR) vs. CA (GR L-55347, 4 October 1985) …... 11
Eastern Shipping Lines vs. CA (GR 97412, 12 July 1994) …... 13
Metro Port Services vs. CA (GR L-57582, 24 August 1984) …... 15
Home Insurance Co. vs. American Steamship Agencies (GR L-25599, 4 April 1968) …... 16
Lastimosa vs. Doliente …... [unavailable] National Steel vs. CA (GR 112287, 12 December 1997) …... 18
De Villata vs. JS Stanley (GR 8154, 20 December 1915) …... 24
US vs. Quinajon (GR 8686, 30 July 1915) …... 31
De Guzman vs. CA (GR L-47822, 22 December 1988) …... 35
Planters Products vs. CA (GR 101503, 15 September 1993) …... 39
Bascos vs. CA (GR 101089, 7 April 1993) …... 43
Mendoza vs. PAL (GR L-3678, 29 February 1952) …... 45
Coastwise Lighterage Corp. vs. CA (GR 114167, 12 July 1995) …... 49
Benedicto vs. IAC (GR 70876, 19 July 1990) …... 51
Teja Marketing vs. IAC (GR L-65510, 9 March 1987) …... 53
BA Finance vs. CA (GR 98275, 13 November 1992) …... 55
Vargas vs. Langkay …... [unavailable] Nocum vs. Laguna Tayabas Bus Co. (GR L-23733, 31 October 1969) …... 57
Tamayo vs. Aquino, et.al. (GR L-12634 & L-12720, 29 May 1959) …... 60
Erezo vs. Jepte (GR L-9605, 30 September 1957) …... 62
Zamboanga Transportation Co. vs. CA (GR L-25292, 29 November 1969) …... 64
Santos vs. Sibog (GR L-26815, 26 May 1981) …... 66
PAL vs. NLRC (GR L-62961, 2 September 1983) …... 70
Vasquez vs. CA (GR L-42926, 13 September 1985) …... 71
Dangwa Transportation vs. CA (GR 95582, 7 October 1991) …... 73
Delsan Transport Lines vs. CA (GR 127897, 15 November 2001) …... 76
Loadstar Shipping vs. CA (GR 131621, 28 September 1999) …... 79
Metro Manila Transit Corporation vs. CA (GR 104408, 21 June 1993) …... 81
Kapalaran Bus vs. Coronado (GR 85331, 25 August 1989) …... 86
Trans-Asia Shipping Lines vs. CA (GR 118126, 4 March 1996) …... 90
Belgian Overseas Chartering and Shipping vs. Philippine First Insurance Co. Inc. (GR 143133, 5 June 2002) …... 93
Yobido vs. CA (GR 113003, 17 October 1997) …... 96
Tan Liam Grocery. vs. De La Rama Steamship …... [unavailable] National Development Co. vs. CA (GR L-49407, 19 August 1988) …... 99
Ganzon vs. CA (GR L-48757, 30 Mary 1988) …... 102
Mirasol vs. Robert Dollar Co. (GR 29721, 27 March 1929) …... 104
Eastern Shipping Lines vs. IAC (GR L-69044, 29 May 1987) …... 106
Kui Pai & Co. vs. Dollar Steamship Line (GR 30019, 2 March 1929) …... 112
Compania Maritima vs. Insurance Co. of North America (GR L-18965, 30 October 1964) …... 114
Government vs. Inchausti (GR 6957, 14 February 1913) …... 117
Samar Mining Co. vs. Nordeutscher Lloyd (GR L-28673, 23 October 1984) …... 119
Macam vs. CA (GR 125524, 25 August 1999) …... 122
Saludo vs. CA (GR 95536, 23 March 1992) …... 125
Delgado Bros. vs. CA (GR L-15654, 29 December 1960) …... 134
Eastern Shipping Lines vs. CA (GR 80936, 17 October 1990) …... 136
International Department Store vs. Jabellana …... [unavailable]
Compania Maritima vs. CA (GR L-31379, 29 August 1988) …... 150
HE Heacock vs. Macondray (GR 16598, 3 October 1921) …... 153
St. Paul Fire & Marine Insurance vs. Macondray (GR L-27795, 25 March 1976) …... 155
Valenzuela Hardwood and Industrial vs. CA (GR 102316, 30 June 1997) …... 157
Sweet Line vs. Teves (GR L-37750, 19 May 1978) …... 161
Eastern and Australian Steamship vs. Great American Insurance (GR L-37604, 23 October 1981) …... 164
Sea-land Service vs. IAC (GR 75118, 31 August 1987) …... 165
Aboitiz Shipping vs. CA (GR 89757, 6 August 1990) …... 170
Everett Steamship Corp. vs. CA (GR 122494, 8 October 1998) …... 173
Shewaram vs. PAL (GR L-20099, 7 July 1966) …... 177
Ong Yiu vs. CA (GR L-40597, 29 June 1979) …... 179
British Airways vs. CA (GR 121824, 29 January 1998) …... 182
PAL vs. CA (GR 92501, 6 March 1992) …... 185
Robles vs. Santos …... [unavailable] Quisumbing vs. CA (GR 50076, 14 September 1990) …... 187
PanAm World Airways vs. Rapadas (GR 60673, 19 May 1992) …... 189
PAL vs. CA (GR 120262, 17 July 1997) …... 193
Baliwag Transit vs. CA (GR 116110, 15 May 1996) …... 196
Mecenas vs. CA (GR 88052, 14 December 1989) …... 199
PAL vs. CA (GR L-46558, 31 July 1981) …... 204
Pilapil vs. CA (GR 52159, 22 December 1989) …... 208
Fortune Express vs. CA (GR 119756, 18 March 1999) …... 211
Landingin vs. Pangasinan Transportation (GR L-28014-15, 29 May 1970) …... 214
California Lines vs. de los Santos (GR L-13254, 30 December 1961) …... 216
Estrada vs. Consolacion (GR L-40948, 29 June 1976) …... 217
Lara vs. Valencia (GR L-9907, 30 June 1958) …... 220
Bayasen vs. CA (GR L-25785, 26 February 1981) …... 222
Cervantes vs. CA (GR 125138, 2 March 1999) …... 223
De Gillaco vs. Manila Railroad Co. (GR L-8034, 18 November 1955) …... 225
Maranan vs. Perez (GR L-2272, 26 June 1967) …... 227
Lasam vs. Smith (GR 19495, 2 February 1924) …... 230
Sweet Lines vs. CA (GR L-46340, 28 April 1983) …... 232
Magboo vs. Bernardo (GR L-16790, 30 April 1963) …... 234
Isaac vs. AL Ammen Transportation (GR L-9671, 23 August 1957) …... 235
Sanez vs. Samala …... [unavailable] Panay Autobus vs. Pastor (GR 47933, 29 July 1942) …... 238
Del Prado vs. Meralco (GR 29462, 7 March 1929) …... 238
Cangco vs. Manila Railroad (GR 12191, 14 October 1918) …... 241
De Guia vs. Manila Electric Railroad & Light Co. (GR 14335, 28 January 1920) …... 248
Calalas vs. CA (GR 122039, 31 May 2000) …... 251
Jesusa Vda. De Nueca vs Manila Railroad …... [unavailable] Light Rail Transit Authority vs. Navidad (GR 145804, 6 February 2003) …... 253
La Mallorca vs. CA (GR L-20761, 27 July 1966) …... 256
Aboitiz Shipping Corp. vs. CA (GR 84458, 6 November 1989) …... 258
Bachelor Express vs. CA (GR 85691, 31 July 1990) …... 261
Bacarro vs. Castano (HR L-34597, 5 November 1982) …... 265
Fisher vs. Yangco Steamship (GR 8095, 31 March 1915) …... 280
Maritime Co. of the Philippines vs. CA (GR 47004, 8 March 1989) …... 282
Gatchalian vs. Delim (GR 56487, 21 October 1991) …... 284
American Home Assurance vs. CA (GR 94149, 5 May 1992) …... 288
Eastern Shipping Lines vs. Margarine-Verkaufs-Union GmbH (GR L-31087, 27 September 1979) …... 290
Magellan Manufacturing Marketing vs. CA (GR 95529, 22 August 1991) …... 292
Reyma Brokerage vs. Philippine Home Assurance Corp. (GR 93464, 7 October 1991) …... 296
Keng Hua Paper Products vs. CA (GR 116863, 12 February 1998) …... 298
Ysmael vs. Barretto (GR 28028, 25 November 1927) …... 301
Maersk Line vs. CA (GR 94761, 17 May 1993) …... 304
New Zealand Insurance Co. vs. IAC (GR L-66596, 28 August 1984) …... 307
Mariano Uy Chaco Sons & Co. vs. Admiral Line (GR 22134, 17 October 1924) …... 308
Standard Vacuum Oil Co. vs. Luzon Stevedoring Co. (GR L-5203, 18 April 1956) …... 310
Tan Chiong Sian vs. Inchausti (GR 6092, 8 March 1912) …... 313
World Fire vs. Macondray …... [unavailable] Heacock’s Aklam vs. Aboitiz …... [unavailable] New Zealand Insurance vs. Chua Joy (GR L-7311, 30 September 1955) …... 318
E. Razon vs, CA (GR L-50242, 21 May 1988) …... 320
Pernito Arrastre Services vs. Mendoza (GR L-53492, 29 December 1986) …... 322
Tan Pho vs. Dalamal (GR 45598, 26 April 1939) …... 327
Baer Senior & Co. vs. La Compania Maritima (GR 1963, 30 April 1906) …... 328
Lopez vs. Duruelo (GR 29166, 22 October 1928) …... 330
Philippine Refining v. Jarque (GR 41506, 25 March 1935) …... 333
McMicking vs. El Banco Espanol-Filipino (GR 5029, 1 April 1909) …... 334
Ivancich vs. Odlin (GR 924, 1 May 1902) …... 337
Heath vs. Steamer San Nicolas (GR L-3066, 25 February 1907) …... 339
Manila Steamship vs. Insa Abdulhaman (GR L-9534, 29 September 1956) …... 343
Chua Yek Hong vs. IAC (GR L-74811, 30 September 1988) …... 345
Commissioner vs. US Lines (GR L-16850, 30 May 1962) …... 348
Madrigal Shipping vs. Ogilve (GR L-8431, 30 October 1958) …... 350
Garcia vs. Ruiz (GR 923, 16 January 1903) …... 353
Yaptico vs. Anderson (GR 9366, 1 August 1916) …... 355
Yu Con vs. Ipil (GR 10195, 29 December 1916) …... 356
US vs. Steamship “Islas Filipinas” (GR 8746, 30 October 1914) …... 360
Ohta Development Co. vs. Steamship Pompey (GR 24658, 31 March 1926) …... 363
Triton Insurance vs. Jose (GR 10381 and 10714, 14 January 1916) …... 364
USA vs. Steamship Rubi (GR 9235, 17 November 1915) …... 365
International Harvester Co. in Russia vs. Hamburg-American Line (GR 11515, 29 July 1918) …... 370
Compagnie Franco-Indochinoise vs. Deutsch Australische Dampschiffs Gesselschaft (GR 11169, 31 March 1917) …... 374
Guzman vs. William X (GR L-3649, 24 October 1907) …... 378
US vs. Bacho (GR L-4091, 25 March 1908) …... 380
Vir-Jen Shipping and Marine Services, NLRC (GR L-58011-12, 20 July 1982) …... 381
Wallem Phil. Shipping vs. Minister of Labor (GR L-50734-37, 20 February 1981) …... 387
Abueg vs. San Diego (CA-773-775, 17 December 1946) …... 390
Murillo vs. Mendoza (GR 46020, 8 December 1938) …... 392
Macondray vs. Delgado Bros. (GR L-13118, 28 April 1960) …... 397
Bryan vs. Eastern & Australian SS (GR 9403, 4 November 1914) …... 398
Ouano vs. CA (GR 95900, 23 July 1992) …... 411
NFA vs. CA (GR 96453, 4 August 1999) …... 414
Market Developers vs. IAC (GR 74978, 8 September 1989) …... 418
Marimperio Compania Naviera vs. CA (GR L-40234, 14 December 1987) …... 421
O’Farrel vs. Meralco (GR 31222, 29 October 1929) …... 424
Overseas Factors Inc. vs. South Sea Shipping (GR L-12138, 27 February 1962) …... 426
Phoenix Assurance Co. Ltd. vs. US Lines GR L-24033, 22 February 1968) …... 431
Telengtan Bros. & Sons. Vs. CA (GR 110581, 21 September 1994) …... 434
De la Riva vs. Lizarraga Hermanos (GR L-2464, 7 January 1907) …... 438
Banco Agricola y Pecuario v. El Dorado Trading …... [unavailable] PC Ailment v. Macondray …... [unavailable] Litton v. PNB …... [unavailable] Oriental Commercial v. La Naviera Filipina …... [unavailable] Philippine Home Assurance vs. CA (GR 106999, 20 June 1996) …... 439
A. Magsaysay Inc. vs. Agan (GR L-6393, 31 January 1955) …... 441
Austria vs. CA (GR 133323, 9 March 2000) …... 443
Smith Bell vs. CA (GR 56294, 20 May 1991) …... 445
Manila vs. Atlantic Gulf and Pacific Co. (GR 4510, 19 December 1908) …... 450
Marine Trading vs. Government (GR 13422, 8 November 1918) …... 451
A. Urrutia & Co. vs. Baco River Plantation (GR 7675, 25 March 1913) …... 452
Versoza vs. Lim (GR 20145, 15 November 1923) …... 458
Government vs. Philippine Steamship Co. (GR 18957, 16 January 1923) …... 461
Picart vs. Smith (GR L-12219, 15 March 1918) …... 462
US vs. Smith Bell (GR 1876, 30 September 1905) …... 464
Philippine Shipping Co. vs. Vergara (GR 1600, 1 June 1906) …... 465
Chin Guan vs. Compania Maritima (GR 45070, 28 November 1938) …... 467
Manila Railroad vs. Macondray (GR L-12475, 21 March 1918) …... 468
Standard Oil Co. of New York vs. Lopez Castelo (GR 13695, 18 October 1921) …... 470
Jarque vs. Smith Bell (GR 32986, 11 November 1930) …... 473
Taxicab Operators v. The Board of Transportation [GR L-59234, 30 September 1982] …... 475
Napocor vs. CA (GR 113103, 13 June 1997) …... 476
GMCR vs. Bell Telecoms (GR 126496, 30 April 1997) …... 480
Maceda vs. ERB (GR 95203-05, 18 December 1990) …... 485
Lagman vs. Manila (GR L-23305, 30 June 1966) …... 488
Philippine Global Communications vs. Relova (GR L-52819, 2 October 1980) …... 491
Philippine Global vs. Relova (GR L-60548, 10 November 1986) …... 492
PLDT vs. NTC (GR 88404, 18 October 1990) …... 496
RCPI vs. Rodriguez (GR 83768, 28 February 1990) …... 502
Telefast Communications vs. Castro (GR 73867, 29 February 1988) …... 505
RCPI vs. CA (GR 79578, 13 March 1991) …... 507
Zulueta vs. Pan American World Airways (GR L-28589, 8 January 1973); Res. …... 509
Lopez vs. Pan American World Airways (GR L-22415, 30 March 1966) …... 516
Pan American World Airways vs. IAC (GR L-70462, 11 August 1988) …... 521
Luna vs. CA (GR 100374-75, 27 November 1992) …... 524
Santos vs. Northwest Orient Airlines (GR 101538, 23 June 1992) …... 526
Tan vs. Northwestern Airlines (GR 135802, 3 March 2000) …... 532
American Airlines vs. CA (GR 116044-45, 9 March 2000) …... 533
The American Insurance Co. vs. Compania Maritima (GR L-24515, 18 November 1967) …... 541
Mitsui vs. CA (GR 119571, 11 March 1998) …... 542
Mayer Steel Pipe vs. CA (GR 124050, 19 June 1997) …... 544
Barrios vs. Go Thong (GR L-17192, 30 March 1963) …... 545
Wallace vs. Pujalte Co. (GR 10019, 29 March 1916) …... 547
Atlantic Gulf & Pacific Co. vs. Uchida Kisen Kaisha (GR 15871, 7 November 1921) …... 549
Erlanger & Galinger vs. Swedish East Asiatic (GR 10051, 9 March 1916) …... 552
Pestano vs. Sumayang (GR 139875, 4 December 2000) …... 561
This collection contains one hundred ninety eight (198) out of two hundred nine (209) assigned cases
summarized in this format by
Michael Vernon M. Guerrero (as a junior law student) during the First Semester, school year 2004-2005
in the Transportation Law class under Atty. Porfirio Panganiban
at the Arellano University School of Law (AUSL). Compiled as PDF, July 2011.
Berne Guerrero entered AUSL in June 2002 and eventually graduated from AUSL in 2006.
He passed the Philippine bar examinations immediately after (April 2007).
www.berneguerrero.com
[1], also [173]
Caltex vs. Sulpicio Lines (GR 131166, 30 September 1999)
First Division, Pardo (J): 3 concur, 1 took no part
Facts: MT Vector is a tramping motor tanker owned and operated by Vector Shipping Corporation, which is
engaged in the business of transporting fuel products such as gasoline, kerosene, diesel and crude oil. On the other hand, the MV Doña Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week. On 19 December 1987, motor tanker MT Vector left Limay, Bataan, enroute to Masbate, loaded with 8,800 barrels of petroleum products shipped by Caltex, by virtue of a charter contract between Vector Shipping and Caltex. The next day, the passenger ship MV Doña Paz left the port of Tacloban headed for Manila with a complement of 59 crew members including the master and his officers, and passengers totaling 1,493 as indicated in the Coast Guard Clearance, but possibly carrying an estimated 4,000 passengers. At about 10:30 p.m. of 20 December 1987, the two vessels collided in the open sea within the vicinity of Dumali Point between Marinduque and Oriental Mindoro. All the crewmembers of MV Doña Paz died, while the two survivors from MT Vector claimed that they were sleeping at the time of the incident. Only 24 survived the tragedy after having been rescued from the burning waters by vessels that responded to distress calls. Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both unmanifested passengers but proved to be on board the vessel. On 22 March 1988, the board of marine inquiry after investigation found that the MT Vector, its registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault and responsible for its collision with MV Doña Paz.
On 13 February 1989, Teresita and Sotera Cañezal, filed with the RTC Manila, a complaint for “Damages Arising from Breach of Contract of Carriage” against Sulpicio Lines, Inc. Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector Shipping Corporation and Caltex (Philippines), Inc. On 15 September 1992, the trial court rendered decision dismissing the third party complaint against Caltex.
On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc. (CA-GR CV 39626), on 15 April 1997, the Court of Appeal modified the trial court’s ruling and included petitioner Caltex as one of the those liable for damages. Hence the petition.
The Supreme Court granted the petition and set aside the decision of the Court of Appeals, insofar as it held Caltex liable under the third party complaint to reimburse/indemnify Sulpicio Lines, Inc. the damages the latter is adjudged to pay plaintiffs-appellees. The Court affirmed the decision of the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal damages as set forth therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages, attorneys’ fees and costs the latter is adjudged to pay plaintiffs-appellees in the case.
1. The respective rights and duties of a carrier depends on the nature of the contract of carriage
The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter party or similar contract on the other. In the case at bar, Caltex and Vector entered into a contract of affreightment, also known as a voyage charter.
2. Charter party and contract of affreightment defined
A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment is one by which the owner of a
ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight.
3. Kinds of contract of affreightment
A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ship’s store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship.
4. Charterer’s liability: Bareboat charter vs. Contract of affreightment
Under a demise or bareboat charter, the charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or service stipulated, subject to liability for damages caused by negligence. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.
5. Categories of charter parties
Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage charter.
6. Bareboat, but not voyage charter, transforms common carrier into private carrier
Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment (Coastwise Lighterage Corp. vs. CA) A public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. (Planters Products vs. CA). In the case at bar, the charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyage charter, which retains the character of the vessel as a common carrier.
7. Common carrier defined
A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and to remunerate him. In the case at bar, MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code (Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers for passengers or goods or both, by land, water, or air for compensation, offering their services to the public).
8. Article 1732, Common carrier, construed
Article 1732 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 services on a an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the “general public,” i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. Article 1733 deliberately refrained from making such distinctions.
Under Section 3 of the Carriage of Goods by Sea Act, (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to (a) Make the ship seaworthy; (b) Properly man, equip, and supply the ship; among others. Carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code.
10. Article 1173 of the New Civil Code
Article 1173 of the Civil Code provides that “the fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Article 1171 and 2201 paragraph 2, shall apply. If the law does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.”
11. Negligence defined
Negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of care, precaution, and vigilance, which the circumstances justly demand, or the omission to do something which ordinarily regulate the conduct of human affairs, would do (Southeastern College vs. CA).
12. Reason for the applicability of Section 3 COGSA, and Article 1755 NCC to carriers, not shipper and passengers; Ordinary diligence required of shippers
The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness. The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in “public service.” The Civil Code demands diligence which is required by the nature of the obligation and that which corresponds with the circumstances of the persons, the time and the place. Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common carriers, are not expected to inquire into the vessel’s seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is concerned. By the same token, passengers cannot be expected to inquire every time they board a common carrier, whether the carrier possesses the necessary papers or that all the carrier’s employees are qualified. Such a practice would be an absurdity in a business where time is always of the essence. Considering the nature of transportation business, passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation. In the case at bar, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes.
13. Caltex not liable for damages
Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic incident occurred in 1987. Past services rendered showed no reason for Caltex to observe a higher degree of diligence. Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness. All things considered, we find no legal basis to hold petitioner liable for damages.
[2], also [10]
First Philippine Industrial Corp. vs. CA (GR 125948, 29 December 1998)
Second Division , Martinez (J): 3 concur
Facts: First Philippine Industrial Corporation (FPIC) is a grantee of a pipeline concession under RA 387, as
amended, to contract, install and operate oil pipelines. The original pipeline concession was granted in 1967 and renewed by the Energy Regulatory Board in 1992. Sometime in January 1995, FPIC applied for a mayor’s permit with the Office of the Mayor of Batangas City. However, before the mayor’s permit could be issued, the City Treasurer required FPIC to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to the Local Government Code. The City Treasurer assessed a business tax on the petitioner amounting to P956,076.04 payable in four installments based on the gross receipts for products pumped at GPS-1 for the fiscal year 1993 which amounted to P181,681,151.00. In order not to hamper its operations, FPIC paid the tax under protest in the amount of P239,019.01 for the first quarter of 1993. On 8 March 1994, the City Treasurer denied the protest contending that petitioner cannot be considered engaged in transportation business, thus it cannot claim exemption under Section 133 (j) of the Local Government Code. On 15 June 1994, FPIC filed with the RTC Batangas City a complaint for tax refund with prayer for writ of preliminary injunction against the City of Batangas and Adoracion Arellano in her capacity as City Treasurer (Civil Case 4293). On 3 October 1994, the trial court rendered a decision dismissing the complaint.
PFIC assailed the aforesaid decision before the Supreme Court via a petition for review. On 27 February 1995, the Supreme Court referred the case to the Court of Appeals for consideration and adjudication (CA-GR SP 36801). On 29 November 1995, the CA rendered a decision affirming the trial court’s dismissal of petitioner’s complaint. FPIC’s motion for reconsideration was denied on 18 July 1996. Hence, the petition for review on certiorari.
At first, the petition was denied due course in a Resolution dated 11 November 1996. FPIC moved for a reconsideration which was granted by the Supreme Court in a Resolution of 22 January 1997. Thus, the petition was reinstated. Finally, the Supreme Court granted the petition, and thus reversed and set aside the decision of the Court of Appeals.
1. Common Carrier defined (broad definition)
A “common carrier” may be defined, broadly, as one who holds himself out to the public as engaged in the business of transporting persons or property from place to place, for compensation, offering his services to the public generally.
2. Common Carrier defined (Article 1732)
Article 1732 of the Civil Code defines a “common carrier” as “any person, corporation, firm or association 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.”
3. Test for determining whether a party is a common carrier of goods
a. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation;
b. He must undertake to carry goods of the kind to which his business is confined;
c. He must undertake to carry by the method by which his business is conducted and over his established roads; and
4. FPIC is a common carrier
Based on the definitions and requirements, FPIC is a common carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation.
5. The fact that FPIC has a limited clientele does not exclude it from the definition of a common carrier
Article 1732 of the Civil Code makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as a ‘sideline’). Article 1732 . . . 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 1877 deliberately refrained from making such distinctions. (De Guzman vs. CA)
6. Common Carrier under Article 1732 coincides neatly with notion of Public Service
The concept of ‘common carrier’ under Article 1732 may be seen to coincide neatly with the notion of “public service,” under the Public Service Act (Commonwealth Act 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, ‘public service’ includes “every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system gas, electric light heat and power, water supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services.”
7. Oil pipeline operators are common carriers; Motor vehicle not required
The definition of “common carriers” in the Civil Code makes no distinction as to the means of transporting, as long as it is by land, water or air. It does not provide that the transportation of the passengers or goods should be by motor vehicle. In fact, in the United States, oil pipe line operators are considered common carriers.
8. Pipeline concessionaire as common carrier (RA 387)
Under the Petroleum Act of the Philippines (Republic Act 387), FPIC is considered a “common carrier.” Thus, Article 86 thereof provides that “Pipe line concessionaire as common carrier. — A pipe line shall have the preferential right to utilize installations for the transportation of petroleum owned by him, but is obliged to utilize the remaining transportation capacity pro rata for the transportation of such other petroleum as may be offered by others for transport, and to change without discrimination such rates as may have been approved by the Secretary of Agriculture and Natural Resources.”
9. Petroleum operation regarded as public utility (RA 387)
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7 thereof provides “that everything relating to the exploration for and exploitation of petroleum . . . and everything relating to the manufacture, refining, storage, or transportation by special methods of petroleum, is hereby declared to be a public utility.”
10. Pipeline concessionaire a common carrier (BIR Ruling 069-83)
The Bureau of Internal Revenue likewise considers FPIC a “common carrier.” In BIR Ruling 069-83, it declared that “. . . since (petitioner) is a pipeline concessionaire that is engaged only in transporting petroleum products, it is considered a common carrier under Republic Act No. 387 . . . Such being the case, it is not subject to withholding tax prescribed by Revenue Regulations No. 13-78, as amended.”
11. FPIC is a common carrier and is thus exempt from the business tax provided in Section 133 (j) LGC
FPIC is a “common carrier” and, therefore, exempt from the business tax as provided for in Section 133 (j), of the Local Government Code. Section 133 (j) provides that “(Common Limitations on the Taxing Powers of Local Government Units) Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: xxx (j.) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code.”
12. Non-imposition of business tax against common carriers to prevent duplication of “common carrier’s tax”
The legislative intent in excluding from the taxing power of the local government unit the imposition of business tax against common carriers is to prevent a duplication of the so-called “common carrier’s tax.” The legislature thus provided an exception under Section 125 (now Section 137) that a province may impose this tax at a specific rate. In the case at bar, FPIC is already paying 3% common carrier’s tax on its gross sales/earnings under the National Internal Revenue Code. To tax FPIC again on its gross receipts in its transportation of petroleum business would defeat the purpose of the Local Government Code.
[3]
Arada vs. CA (GR 98243, 1 July 1992)
Second Division, Paras (J): 3 concur
Facts: Alejandro Arada is the proprietor and operator of the firm South Negros Enterprises which has been
organized and established for more than 10 years. It is engaged in the business of small scale shipping as a common carrier, servicing the hauling of cargoes of different corporations and companies with the five vessels it was operating. On 24 March 1982, Arada entered into a contract with San Miguel Corporation (SMC) to safely transport as a common carrier, cargoes of the latter from San Carlos City, Negros Occidental to Mandaue City using one of Arada’s vessels, M/L Maya. On 24 March 1982, Arada thru its crew master, Mr. Vivencio Babao, applied for a clearance with the Philippine Coast Guard for M/L Maya to leave the port of San Carlos City, but due to a typhoon, it was denied clearance by SNI Antonio Prestado PN who was then assigned at San Carlos City Coast Guard Detachment. On 25 March 1982 M/L Maya was given clearance as there was no storm and the sea was calm. Hence, said vessel left for Mandaue City. While it was navigating towards Cebu, a typhoon developed and said vessel was buffeted on all its sides by big waves. Its rudder was destroyed and it drifted for 16 hours although its engine was running. On 27 March 1982 at about 4:00 a.m., the vessel sank with whatever was left of its cargoes. The crew was rescued by a passing pump boat and was brought to Calanggaman Island. Later in the afternoon, they were brought to Palompon, Leyte, where Vivencio Babao filed a marine protest. On the basis of such marine protest, the Board of Marine Inquiry conducted a hearing of the sinking of M/L Maya wherein SMC was duly represented. Said Board made it findings and recommendation dated 7 November 1983, absolving the owner/operator, officers and crew of M/L Maya from any administrative liability. The Board’s report containing its findings and recommendation was then forwarded to the headquarters of the Philippine Coast Guard for appropriate action. On the basis of such report, the Commandant of the Philippine Coast Guard rendered a decision dated 21 December 1984 in SBMI Adm. Case No. 88-82 exonerating the owner/operator officers and crew of the ill-fated M/L Maya from any administrative liability on account of said incident.
On 25 March 1983, SMC filed a complaint in the RTC its first cause of action being for the recovery of the value of the cargoes anchored on breach of contract of carriage. After due hearing, said court rendered a decision dated 18 July 1988, where (1) With respect to the first cause of action, claim of plaintiff is hereby dismissed; (2) Under the second cause of action, defendant must pay plaintiff the sum of P2,000.00; (3) In the third cause of action, the defendant must pay plaintiff the sum of P2,849.20; (4) Since the plaintiff has withheld the payment of P12,997.47 due the defendant, the plaintiff should deduct the amount of P4,849.20 from the P12,997.47 and the balance of P8,148.27 must be paid to the defendant; and (5) Defendant’s counterclaim not having been substantiated by evidence, is likewise dismissed. NO COSTS.” (Orig. Record, pp. 193-195).
Thereafter, SMC appealed the decision to the Court of Appeals (CA-GR CV 20597). In its decision promulgated on 8 April 1991, the Court of Appeals reversed the decision of the lower court, and thereupon ordered Arada to pay unto the SMC the amount of P176,824.80 representing the value of the cargo lost on board the ill-fated vessel, M/L Maya, with interest thereon at the legal rate from date of the filing of the complaint on 25 March 1983, until fully paid, and the costs. Hence, the petition for review on certiorari. On 20 November 1991, the Supreme Court gave due course to the petition. Finally, it affirmed the appealed decision.
1. Common carriers defined
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. 1732 of the New Civil Code). In the case at bar, there is no doubt that Arada was exercising its function as a common carrier when it entered into a contract with SMC to carry and transport the latter’s cargoes. This fact is best supported by the admission of petitioner’s son, Mr. Eric Arada, who testified as the officer-in-charge for operations of South Negros Enterprises in Cebu City.
2. Duty of common carrier to exercise extraordinary diligence; Fortuitous event
A common carrier, both from the nature of its business and for insistent reasons of public policy is burdened by law with the duty of exercising extraordinary diligence not only in ensuring the safety of passengers, but in caring for the goods transported by it. The loss or destruction or deterioration of goods turned over to the common carrier for the conveyance to a designated destination raises instantly a presumption of fault or negligence on the part of the carrier, save only where such loss, destruction or damage arises from extreme circumstances such as a natural disaster or calamity.(Benedicto v. IAC, G.R. No. 70876,
July 19, 1990, 187 SCRA 547)
3. Natural disaster must be the proximate and only cause of the loss to exempt common carrier from liability
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 the 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 destruction or deterioration of the goods (Article 1739, New Civil Code).
4. Failure to ascertain the location and direction of typhoon shows negligence
Vivencio Babao, the ship’s captain, knew of the impending typhoon on 24 March 1982 when the Philippine Coast Guard denied M/L Maya the issuance of a clearance to sail. Less than 24 hours elapsed since the time of the denial of said clearance and the time a clearance to sail was finally issued on 25 March 1982. Records will show that Babao did not ascertain where the typhoon was headed by the use of his vessel’s barometer and radio. Neither did the captain of the vessel monitor and record the weather conditions everyday
as required by Art. 612 of the Code of Commerce. Had he done so while navigating for 31 hours, he could have anticipated the strong winds and big waves and taken shelter.
5. PAG-ASA’s records as per March 25-27, 1982 on conditions prevailing in the vicinity of Catmon, Cebu
As per official records of the Climatological Division of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAG-ASA) issued by its Chief of Climatological Division, Primitivo G. Ballan, Jr. as to the weather and sea conditions that prevailed in the vicinity of Catmon, Cebu during the period March 25-27, 1982, the sea conditions on March 25, 1982 were slight to rough and the weather conditions then prevailing during those times were cloudy skies with rainshowers and the small waves grew larger and larger.
6. Circumstances constitute lack of foresight and minimum vigilance over the cargoes
A common carrier is obliged to observe extraordinary diligence and the failure of Babao to ascertain the direction of the storm and the weather condition of the path they would be traversing, constitute lack of foresight and minimum vigilance over its cargoes taking into account the surrounding circumstances of the case.
7. Carrier’s fault or negligence presumed
While the goods are in the possession of the carrier, it is but fair that it exercises extraordinary diligence in protecting them from loss or damage, and if loss occurs, the law presumes that it was due to the carrier’s fault or negligence; that is necessary to protect the interest of the shipper which is at the mercy of the carrier (Art. 1756, Civil Code, Aboitiz Shipping Corporation v. Court of Appeals, G.R. No. 89757, Aug. 6,
1990, 188 SCRA 387).
8. Crew of M/L Maya did not have the required qualifications
The records show that the crew of M/L Maya did not have the required qualifications provided for in PD 97 or the Philippine Merchant Marine Officers Law, all of whom were unlicensed. While it is true that they were given special permit to man the vessel, such permit was issued at the risk and responsibility of the owner.
9. Exoneration from administrative liability does not mean exoneration from liability as common carrier
The exoneration made by the Special Board of Marine Inquiry was but with respect to the administrative liability of the “owner/operator, officers and crew of the ill-fated” vessel. It could not have meant exoneration of Arada from liability as a common carrier for his failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of his employees. Such is the function of the Court, not the Special Board of Marine Inquiry.”
10. Jurisdiction of the Board of Marine Inquiry and the Special Board of Marine Inquiry
The Philippine Merchant Marine Rules and Regulations particularly Chapter XVI thereof entitled “Marine Investigation and Suspension and Revocation Proceedings” prescribes the Rules governing maritime casualties or accidents, the rules and procedures in administrative investigation of all maritime cases within the jurisdiction or cognizance of the Philippine Coast Guard and the grounds for suspension and revocation of licenses/certificates of marine officers and seamen (1601 — SCOPE); clearly, limiting the jurisdiction of the Board of Marine Inquiry and Special Board of Marine Inquiry to the administrative aspect of marine casualties in so far as it involves the shipowners and officers.
[4], also [101]
First Division: Vitug (J): 4 concur
Facts: On 21 August 1987, Ma. Paula San Agustin was a passenger on board flight SN 284 of Sabena Belgian
World Airlines originating from Casablanca to Brussels, Belgium. She was issued Tag 77143 on her valuables, namely: jewelries valued at $2,350.00; clothes $1,500.00 shoes/bag $150; accessories $75; luggage itself $10.00; or a total of $4,265.00. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. When she arrived at Manila International Airport on 2 September 1987 and immediately submitted her Tag to facilitate the release of her luggage but the luggage was missing. She was advised to accomplish and submitted and filed on the same day. She followed up her claim on 14 September 1987 but the luggage remained to be missing. On 15 September 1987, she filed her formal complaint with the office of Ferge Massed, the airlines’s Local Manager, demanding immediate attention. On 30 September 1987, on the Occasion of San Agustin’s following up her luggage claim, she was furnished copies of the airlines’s telexes with and information that the Brussel’s Office of defendant found the luggage and that they have assured by the airline that it has notified its Manila Office 1987. But unfortunately San Agustin was informed that the luggage was lost for the second time.
At the time of the filling of the complaint, the luggage was its content has not been found. San Agustin demanded from the defendant the money value of the luggage and its contents amounting to $4,265.00 or its exchange value, but the airline refused to settle the claim. After trial, the trial court rendered judgment ordering Sabena Belgian World Airlines to pay Ma. Paula San Agustin (a) US$4,265.00 or its legal exchange in Philippine pesos; “(b) P30,000.00 as moral damages; (c) P10,000.00 as exemplary damages; (d) P10,000.00. attorney’s fees; and (e) (t)he cost of the suit.
Sabena appealed the decision of the Regional Trial Court to the Court of Appeals. The appellate court, in its decision of 27 February 1992, affirmed in toto the trial court’s judgment. Hence, the petition for review. The Supreme Court affirmed the appealed decision, with costs against Sabena Belgian World Airlines.
1. Fault or negligence; Rule in contracts and common carriers
Fault or negligence consists in the omission of that diligence which is demanded by the nature of an obligation and corresponds with the circumstances of the person, of the time, and of the place. When the source of an obligation is derived from a contract, the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. This rule is not different in the case of common carriers in the carriage of good father of a family but that of “extraordinary” care in the vigilance over the goods.
2. Extraordinary diligence required on carriers
Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reason of public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. This extraordinary responsibility, according to Art. 1736, lasts from the time the goods are unconditionally placed in the possession of and received by the consignee or person who has the right to receive them. Art 1737 states that the common carrier’s duty to observe extraordinary diligence in the vigilance over the goods transported by them remains in full force and effect even when they are temporarily unloaded or stored in transits.’ And Art. 1735 establishes the presumption that if the goods are lost, destroyed or deteriorate, common carrier are presumed to have been at fault or to have acted negligently, unless they prove that they had observed extraordinary diligence as required in Article 1733.
3. Exceptions to extraordinary diligence requirement
The only exceptions to the foregoing extraordinary responsibility of the common carrier is when the loss, destruction, or deterioration of the goods is due to any of the following causes:
(2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers; (5) Order or act of excepted causes obtains in the case.
4. Tort doctrine not a defense in failure to observe extraordinary diligence
The rules as to the extraordinary diligence required in carriers remain basically unchanged even when the contract is breached by tort (on the ground that Section 5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol of 1955, generally observed by International carriers, stating among other things, that: “Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, Fragiles or perishable articles, money, jewelry, precious metals, negotiable papers, securities or other valuable”) although noncontradictory principles on quasi-delict may then be assimilated as also forming part of the governing law. The airline company is not thus entirely off track when it has likewise raised in its defense the tort doctrine cannot support its case.
5. Proximate cause defined
Proximate cause is that which, in natural and continues sequence, unbroken by any efficient intervening cause, produces injury and without which the result would not have occurred.
6. Proximate legal cause defined
The proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessors, the final event in the chain immediately affecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the event should, as an ordinarily prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom.
7. Loss of baggage twice shows gross negligence
It remained undisputed that San Agustin’s luggage was lost while it was in the custody of Sabena Belgian World Airlines. It was supposed to arrive on the same flight that San Agustin took in returning to Manila on 2 September 1987. On 23 October 1987, she was advised that her luggage had finally been found, with its contents intact; only to be told later that her luggage had been lost for the second time. Thus, Sabena Belgian World Airlines is ultimately guilty of “gross negligence” in the handling of San Agustin’s luggage, for the “loss of said baggage not only once by twice underscore the wanton negligence and lack of care “ on the part of the carrier.
8. Warsaw convention denies the carrier availment of provisions limiting liability if damage is caused by willful misconduct or default
The Warsaw Convention denies to the carrier availment “of the provisions which exclude or limit his liability if the damage is caused by his willful; misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to willful misconduct,” or “if the damage is (similarly) caused by any agent of the carrier acting within the scope of his employment.” The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, and declaring the stated limits of liability not applicable “if it is proved that the damage resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result.” The same deletion was effected by the Montreal Agreement of 1966, with the result that a passenger could recover unlimited damages upon proof of wilful misconduct. The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s liability, or as an absolute limit of the extent of that liability. Slight reflection readily leads to the conclusion that it should be deemed a limit of
liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and the carrier’ or misconduct of its employees, or for some Particular or exceptional type of damage. (Alitalia vs. IAC)
9. Philippines is country of destination; No error in application of usual rules on extent of recoverable damages beyond the Warsaw limitations
There is no error in the preponderant application to the case of the usual rules on the extent of recoverable damages beyond the Warsaw limitations. Under domestic law and jurisprudence (the Philippines being the country of destination), the attendance of gross negligence (given the equivalent of fraud or bad faith) holds the common carrier liable for all damages which can be reasonably attribute, although unforeseen, to the non-performance of the obligation, including moral and exemplary damages.
[5]
Philippine National Railways (PNR) vs. CA (GR L-55347, 4 October 1985)
Second Division, Escolin (J): 3 concur
Facts: On 10 September 1972, at about 9:00 p.m., Winifredo Tupang, husband of Rosario Tupang, boarded
Train 516 of the Philippine National Railways at Libmanan, Camarines Sur, as a paying passenger bound for Manila. Due to some mechanical defect, the train stopped at Sipocot, Camarines Sur, for repairs, taking some two hours before the train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon, Winifredo Tupang fell off the train resulting in his death. The train did not stop despite the alarm raised by the other passengers that somebody fell from the train. Instead, the train conductor, Perfecto Abrazado, called the station agent at Candelaria, Quezon, and requested for verification of the information. Police authorities of Lucena City were dispatched to the Iyam Bridge where they found the lifeless body of Winifredo Tupang. As shown by the autopsy report, Winifredo Tupang died of cardio-respiratory failure due to massive cerebral hemorrhage due to traumatic injury. Tupang was later buried in the public cemetery of Lucena City by the local police authorities.
Upon complaint filed by the deceased’s widow, Rosario Tupang, the then CFI Rizal, after trial, held the PNR liable for damages for breach of contract of carriage and ordered it to pay Rosario Tupang the sum of P12,000.00 for the death of Winifredo Tupang, plus P20,000.00 for loss of his earning capacity, and the further sum of P10,000.00 as moral damages, and P2,000.00 as attorney’s fees, and cost.
On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not exercise the utmost diligence required by law of a common carrier. It further increased the amount adjudicated by the trial court by ordering PNR to pay the Rosario Tupang an additional sum of P5,000,00 as exemplary damages. Moving for reconsideration of the above decision, the PNR raised for the first time, as a defense, the doctrine of state immunity from suit. The motion was denied. Hence the petition for review.
The Supreme Court modified the decision of the appellate court by eliminating therefrom the amounts of P10,000.00 and P5,000.00 adjudicated as moral and exemplary damages, respectively; without costs.
1. PNR created under RA 4196; PNR may sue and be sued like any other corporation
The PNR was created under A 4156, as amended. Section 4 of the said Act provides that “the Philippine National Railways shall have the following powers: (a) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to the attainment of the purpose of the corporation; and (b) Generally, to exercise all powers of a corporation under the Corporation Law.” Under the foregoing section, the PNR has all the powers, the characteristics and attributes of a corporation under the
Corporation Law. PNR may sue and be sued and may be subjected to court processes just like any other corporation.
2. PNR funds subject to garnishment or execution
In Philippine National Railways v. Union de Maquinistas, et al., then Justice Fernando, later Chief Justice, said that the main issue posed in said proceeding, i.e. “whether or not the funds of the Philippine National Railways could be garnished or levied upon on execution”, was resolved in two recent decisions, the Philippine National Bank v. Court of Industrial Relations [81 SCRA 314] and Philippine National Bank v. Hon. Judge Pabalan [83 SCRA 595], where the Court ruled that there was no legal bar to garnishment or execution. The argument based on non-suability of a state allegedly because the funds are governmental in character was unavailing.
3. Other cases as to garnishment of GOCC funds
a. Philippine National Bank v. Court of Industrial Relations: “The premise that the funds could be
spoken of as public in character may be accepted in the sense that the People’s Homesite and Housing Corporation was a government-owned entity. It does not follow though that they were exempt from garnishment. “
b. National Shipyard and Steel Corporation v. Court of Industrial Relations: A government-owned
and controlled corporation has a personality of its own, distinct and separate from that of the Government.
4. By engaging in a particular business as a corporation, government divests itself pro hac vice of its sovereign character; Doctrine of non-suability cannot be legally set up
As held in Manila Hotel Employees Association v. Manila Hotel Co., when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation. By engaging in a particular business through the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations. In Prisco v. CIR, it was held that “when the government engages in business, it abdicates part of its sovereign prerogatives and descends to the level of a citizen” In the case at bar, PNR cannot legally set up the doctrine of non-suability as a bar to the Tupang’s suit for damages.
5. PNR has obligation to observe extraordinary diligence in transporting passengers to their destinations
PNR has the obligation to transport its passengers to their destinations and to observe extraordinary diligence in doing so. Death or any injury suffered by any of its passengers gives rise to the presumption that it was negligent in the performance of its obligation under the contract of carriage. PNR failed to overthrow such presumption of negligence with clear and convincing evidence, inasmuch as PNR does not deny, (1) that the train boarded by the deceased Winifredo Tupang was so overcrowded that he and many other passengers had no choice but to sit on the open platforms between the coaches of the train, (2) that the train did not even slow down when it approached the Iyam Bridge which was under repair at the time, and (3) that neither did the train stop, despite the alarm raised by other passengers that a person had fallen off the train at Iyam Bridge.
6. Contributory negligence of Tupang warrants deletion of moral damages
While PNR failed to exercise extraordinary diligence as required by law, it appears that the deceased was chargeable with contributory negligence. Since he opted to sit on the open platform between the coaches of the train, he should have held tightly and tenaciously on the upright metal bar found at the side of said platform to avoid falling off from the speeding train. Such contributory negligence, while not exempting the PNR from liability, nevertheless justified the deletion of the amount adjudicated as moral damages.
The award of exemplary damages must be set aside. Exemplary damages may be allowed only in cases where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. There being no evidence of fraud, malice or bad faith on the part of PNR, the grant of exemplary damages should be discarded.
[6], also [51]
Eastern Shipping Lines vs. CA (GR 97412, 12 July 1994)
En Banc, Vitug (J): 13 concur, 1 took no part
Facts: On 4 December 1981, 2 fiber drums of riboflavin were shipped from Yokohama, Japan for delivery
vessel “SS Eastern Comet” owned by Eastern Shipping Lines under Bill of Lading YMA-8. The shipment was insured under Mercantile Insurance Company’s Marine Insurance Policy 81/01177 for P36,382,466.38. Upon arrival of the shipment in Manila on 12 December 1981, it was discharged unto the custody of Metro Port Services, Inc. The latter excepted to one drum, said to be in bad order, which damage was unknown to Mercantile Insurance. On 7 January 1982, Allied Brokerage Corporation received the shipment from Metro Port Service, one drum opened and without seal. On January 8 and 14, 1982, Allied Brokerage made deliveries of the shipment to the consignees’ warehouse. The latter excepted to one drum which contained spillages, while the rest of the contents was adulterated/fake. Due to the losses/damage sustained by said drum, the consignee suffered losses totaling P19,032.95, due to the fault and negligence of the shipping company, arrastre operator and broker-forwarder. Claims were presented against them who failed and refused to pay the same. As a consequence of the losses sustained, Mercantile Insurance was compelled to pay the consignee P19,032.95 under the aforestated marine insurance policy, so that it became subrogated to all the rights of action of said consignee against the shipping company, etc.
After trial, the trial court rendered judgment (1) ordering the shipping company, the arrastre operator and the broker-forwarder to pay Mercantile Insurance, in solidum, the amount of P19,032.95 with the present legal interest of 12% per annum from October 1, 1982, the date of filing of this complaints, until fully paid (the liability of defendant Eastern Shipping, Inc. shall not exceed US$500 per case or the CIF value of the loss, whichever is lesser, while the liability of defendant Metro Port Service, Inc. shall be to the extent of the actual invoice value of each package, crate box or container in no case to exceed P5,000.00 each, pursuant to Section 6.01 of the Management Contract); P3,000.00 as attorney’s fees, and costs; and dismissing the counterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation.
Dissatisfied, Eastern Shipping Lines appealed to the Court of Appeals. The Court of Appeal affirmed in toto the judgment of the court a quo.
The Supreme Court partly granted the petition. The Court affirmed the appealed decision with the modification that the legal interest to be paid is 6% on the amount due computed from the decision, dated 3 February 1988, of the court a quo. A 12% interest, in lieu of 6%, shall be imposed on such amount upon finality of this decision until the payment thereof.
1. Duration of common carrier’s duty to observe requisite diligence
The common carrier’s 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 (Arts. 1736-1738, Civil Code; Ganzon vs. Court of Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 Phil. 863).
2. Presumption of carrier’s negligence in case of loss, damage of goods; None of the exclusive exceptions can be applied
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 (Art. 1735, Civil Code; Philippine National Railways vs. Court of Appeals, 139 SCRA 87; Metro Port Service vs. Court of Appeals, 131 SCRA 365). There are, of course, exceptional cases when such presumption of fault is not observed but these cases, enumerated in Article 1734 1 of the Civil Code, are exclusive, not one of which can be applied to the case at bar.
3. The rationale why the carrier and arrastre operator are made liable in solidum
In Fireman’s Fund Insurance vs. Metro Port Services (182 SCRA 455), the Court has explained in holding the carrier and the arrastre operator liable in solidum, in the manner that “The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). 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. Both the Arrastre and the Carrier are therefore charged with the obligation to deliver the goods in goods condition to the consignee.” The pronouncement, however, does not imply that the arrastre operator and the customs broker are themselves always and necessarily liable solidarily with the carrier, or vice-versa, nor that attendant facts in a given case may not vary the rule.
4. First group of cases on variances on the Court’s ruling on legal interest
In the cases of the cases of Reformina v. Tomol (1985), Philippine Rabbit Bus Lines v. Cruz (1986), Florendo v. Ruiz (1989) and National Power Corporation v. angas (1992), the basic issue focus on the application of either the 6% (under the Civil Code) or 12% (under the Central Bank Circular) interest per annum. It is easily discernible in these cases that there has been a consistent holding that the Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance 16 of money, goods or credits, as well as to judgments involving such loan or forbearance of money, goods or credits, and that the 6% interest under the Civil Code governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach of a delay in the performance of obligations in general. Observe, too, that in these cases, a common time frame in the computation of the 6% interest per annum has been applied, i.e., from the time the complaint is filed until the adjudged amount is fully paid.
5. Second group of cases on variances on the Court’s ruling on legal interest
The cases of Malayan Insurance Company v. Manila Port Service (1969), Nakpil and Sons v. Court of Appeals (1988), and American Express International v. Intermediate Appellate Court (1988), did not alter the pronounced rule on the application of the 6% or 12% interest per annum, depending on whether or not the amount involved is a loan or forbearance, on the one hand, or one of indemnity for damage, on the other hand. Unlike, however, the “first group” which remained consistent in holding that the running of the legal interest should be from the time of the filing of the complaint until fully paid, the “second group” varied on the commencement of the running of the legal interest. Malayan held that the amount awarded should bear legal interest from the date of the decision of the court a quo, explaining that “if the suit were for damages, ‘unliquidated and not known until definitely ascertained, assessed and determined by the courts after proof,’ then, interest ‘should be from the date of the decision.’” American Express International v. IAC, introduced a different time frame for reckoning the 6% interest by ordering it to be “computed from the finality of (the) decision until paid.” The Nakpil and Sons case ruled that 12% interest per annum should be imposed from the finality of the decision until the judgment amount is paid. The factual circumstances may have called for different applications, guided by the rule that the courts are vested with discretion, depending on the equities of each case, on the award of interest.
