Transpo Digest Pool

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CHAPTER 1: GENERAL CONCEPTS I. Concept of COMMON CARRIER 1.1 Definition

1) Crisostomo vs Court of Appeals

FACTS: A travel agency is not an entity engaged in the business of transporting either passengers

or goods and is therefore, neither a private nor a common carrier. Respondent did not undertake to transport petitioner from one place to another since its covenant with its customers is simply to make travel arrangements in their behalf. Respondent’s services as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours. It is in this sense that the contract between the parties in this case was an ordinary one for services and not one of carriage.

Petitioner Estela L. Crisostomo contracted the services of respondent Caravan Travel and Tours

International, Inc. to arrange and facilitate her booking, ticketing, and accommodation in a tour dubbed “Jewels of Europe”. A 5% discount on the total cost of P74,322.70 which included the airfare was given to the petitioner. The booking fee was also waived because petitioner’s niece, Meriam Menor, was respondent’s ticketing manager.

On June 12, 1991, Menor went to her aunt’s residence to deliver petitioner’s travel documents and plane tickets. In return, petitioner gave the full payment for the package tour. Menor then told her to be at the NAIA on Saturday, June 15, 1991, two hours before her flight on board British Airways. Without checking her travel documents, petitioner went to NAIA and to her dismay, she discovered that the flight she was supposed to take had already departed the previous day. She learned that her plane ticket was for the flight scheduled on June 14, 1991. She called up Menor to complain and Menor suggested upon petitioner to take another tour – “British Pageant”. Petitioner was asked anew to pay US$785.00. Petitioner gave respondent US$300 as partial payment and commenced the trip. ISSUE: Whether or not respondent Caravan did not observe the standard of care required of a common carrier when it informed the petitioner wrongly of the flight schedule.

HELD: The petition was denied for lack of merit. The decision of the Court of Appeals was affirmed.

A common carrier is defined under Article 1732 of the Civil Code as 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, affecting their services to the public. It is obvious from the above definition that respondent is not an entity engaged in the business of transporting either passengers or goods and is therefore, neither a private nor a common carrier. Respondent did not undertake to transport petitioner from one place to another since its covenant with its customers is simply to make travel arrangements in their behalf. Respondent’s services as a travel agency include procuring tickets and facilitating travel permits or visas as well as booking customers for tours. It is in this sense that the contract between the parties in this case was an ordinary one for services and not one of carriage.

The standard of care required of respondent is that of a good father of a family under Article 1173 of the Civil Code. This connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar situation. It is clear that respondent performed its prestation under the contract as well as everything else that was essential to book petitioner for the tour. Had petitioner exercised due diligence in the conduct of her affairs, there would have been no reason for her to miss the flight. Needless to say, after the travel papers were delivered to petitioners, it became incumbent upon her to take ordinary care of her concerns. This undoubtedly would require that she at least read the documents in order to assure herself of the important details regarding the trip.

1.2 Tests and Characteristics 1) De Guzman v. Court of Appeals 2) Calvo v. UCPB General Insurance Co. FACTS:

Petitioner Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole proprietorship customs broker. Petitioner entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the Port Area in

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Compound, Romualdez St., Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc. The shipment in question, contained in 30 metal vans, arrived in Manila on board "M/V Hayakawa Maru" and, after 24 hours, were unloaded from the vessel to the custody of the arrastre operator, Manila Port Services, Inc. Petitioner then withdrew the cargo from the arrastre operator and delivered it to SMC's warehouse in Ermita, Manila Thereafter, the goods were inspected by Marine Cargo Surveyors, who found that 15 reels of the semi-chemical fluting paper were "wet/stained/torn" and 3 reels of kraft liner board were likewise torn. The damage was placed at P93,112.00. SMC collected payment from respondent UCPB under its insurance contract for the aforementioned amount. In turn, respondent, as subrogee of SMC, brought suit against petitioner in the Regional Trial Court, Branch 148, Makati City, which, on December 20, 1995, rendered judgment finding petitioner liable to respondent for the damage to the shipment.

ISSUE:

Whether or not petitioner is a common carrier HELD:

Yes. The transportation of goods is an integral part of her business. To uphold petitioner's contention would be to deprive those with whom she contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for her customers, as already noted, is part and parcel of petitioner's business.

3) Loadstar Shipping Corporation v. Sourt of Appeals Facts: Loadstar received on board its vessel M/V

Cherokee an amount of hardwood, tilewood and mouldings worth 6Million. The goods were insured with MIC against various risks including TOTAL LOSS BY TOTAL LOSS OF THE VESSEL. On its way from the port of Agusan Del Norte, the vessel sank off Limasawa Island allegedly due to strong waves brought by 2 typhoons.

MIC paid 6Million to the consignee and was issued a subrogation receipt. MIC then filed a complaint against LOADSTAR alleging that the sinking of the vessel was due to the fault and negligence of LOADSTAR and its employees. LOADSTAR denied any liability for the loss of

the shipper’s goods and claimed that the sinking of its vessel was due to force majeure. LOADSTAR submits that the vessel was a private carrier because it was not issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only “one shipper, one consignee for a special cargo.”

Issue: 1. WON M/V Cherokee is a private or common carrier?

WON M/V Cherokee is liable?

TC: Loadstar is liable to pay MIC the amount of 6Million.

CA: Loadstar is liable to pay MIC the amount of 6Million. TC Decision affirmed.

SC: 1. M/V Cherokee is a common carrier. The records do not disclose that the M/V “Cherokee,” on the date in question, undertook to carry a special cargo or was chartered to a special person only. There was no charter party. The bills of lading failed to show any special arrangement, but only a general provision to the effect that the M/V “Cherokee” was a “general cargo carrier.” Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers.

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 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

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of the general population.

2. M/V “Cherokee” was not seaworthy when it embarked on its voyage on 19 November 1984. The vessel was not even sufficiently manned at the time. “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. LOADSTAR was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch as the wind condition in the area where it sank was determined to be moderate.

SYLLABUS: ABANDONMENT

4) First Philippine Industrial v. Court of Appeals FACTS:

Petitioner is a grantee of a pipeline concession under RA 387 to contract, install and operate oil pipelines. The original pipeline concession was granted in 1967 and was renewed by the Energy Regulatory Board (ERB) in 1992. In January 1995, petitioner applied for a mayor’s permit in Batangas City. Respondent City Treasurer required petitioner to pay a local tax based on its gross receipts for the fiscal year in 1993 pursuant to the Local Government Code before the permit could be issue. In order not to hamper its operations, petitioner paid the tax under protest amounting to ₱ 239,019.01 for the first quarter of 1993. Petitioner filed a letter-protest and states that FPIC is a pipeline operator with a government concession granted engaged in transporting petroleum products from the Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals. As such, it is exempt from paying tax on gross receipts. Moreover, Transportation contractors are not included in the enumeration of contractors under Section 131, Paragraph (h) of LGC. City Treasurer denied the protest contending that petitioner cannot be considered engaged in the transportation business, thus it cannot claim exemption.

Petitioner filed with RTC a complaint for tax refund with prayer for writ of preliminary injunction against respondents. Traversing the complaint, respondents argued that petitioner could not be

exempt from taxes as said exemption applies only to transportation contractors and persons engaged in the transportation by hire and common carriers by air, land and water. They also assert that pipelines are not included in the term common carrier which refers solely to ordinary carriers such as trucks, trains, ships and the like. They further posit that common carrier pertains to the mode or manner by which a product is delivered to its destination.

TC: Dismissed the complaint. Exemption to tax has become unclear. Tax exemption granted under Sec 133 (j.) encompasses only common carriers so as not to overburden the riding public or commuters with taxes. FPIC is not a common carrier but a special carrier extending its services and facilities to a single specific or special customer under special contract. Moreover, even franchise grantees are taxed as well as contractors.

CA: affirming TC’s dismissal of petitioner’s complaint. MFR was also denied.

SC: At first, petition was denied. Petitioner moved for a reconsideration which was granted. Petition was reinstated.

ISSUE:

Whether or not petitioner is a common carrier.

HELD:

A common carrier is 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. Article 1732 of the Civil Code defines 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.

The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier. There is no doubt that petitioner 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. As correctly pointed out by petitioner, 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

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common carriers.

With regard to the other issue in the case at bar regarding the tax exemption, it is clear that 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." Petitioner is already paying 3% common carrier's tax on its gross sales/earnings under the National Internal Revenue Code. To tax petitioner again on its gross receipts in its transportation of petroleum business would defeat the purpose of the Local Government Code.

NOTES:

TEST for determining whether a party is a common carrier of goods:

1. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation;

2. He must undertake to carry goods of the kind to which his business is confined;

3. He must undertake to carry by the method by which his business is conducted and over his established roads; and

4. The transportation must be for hire.

5) Asia Lighterage and Shipping Inc v. Court of Appeals

PARTIES TO THE CASE:

PETITIONER: carrier tasked to transport goods to brgy. Ugong PRIVATE RESPONDENT: Insurer of said goods. FACTS: On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk was shipped by Marubeni American Corporation of Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-26 for delivery to the consignee, General Milling Corporation in Manila, evidenced by Bill of Lading No. PTD/Man-4.The shipment was insured by the private respondent Prudential Guarantee and Assurance, Inc. against loss or damage under Marine Cargo Risk Note RN 11859/90. On July 25, 1990, the carrying vessel arrived in Manila and the cargo was transferred to the custody

of the petitioner Asia Lighterage and Shipping, Inc. The petitioner was contracted by the consignee as carrier to deliver the cargo to consignee's warehouse at Bo. Ugong, Pasig City. However, cargo did not reach its destination because said cargo was suspended due to a warning of an incoming typhoon. The petitioner proceeded to pull the barge to Engineering Island off Baseco to seek shelter from the approaching typhoon. A few days after, the barge developed a list because of a hole it sustained after hitting an unseen protuberance underneath the water. Eventually, the said barge completely sank, resulting to the total loss of the remaining cargoes that was not salvaged to the other barges. consignee sent a claim letter to the petitioner, and another letter dated September 18, 1990 to the private respondent for the value of the lost cargo. On July 3, 1991, the private respondent filed a complaint against the petitioner for recovery of the amount of indemnity, attorney's fees and cost of suit. LOWER COURT’S RULING: The Regional Trial Court ruled in favor of the private respondent. Petitioner contends that it is not a common carrier but a private carrier. Allegedly, it has no fixed and publicly known route, maintains no terminals, and issues no tickets. It points out that it is not obliged to carry indiscriminately for any person. It is not bound to carry goods unless it consents. In short, it does not hold out its services to the general public.The appellate court affirmed the decision of the trial court with modification.

ISSUE: Is the petitioner a common carrier?

HELD: YES. Art. 1732 defines common carriers as 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. 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. The Court also did not distinguish 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. In the case at bar, the principal business of the petitioner is that of lighterage and drayage and it offers its barges to the public for carrying or transporting goods by water for compensation. Petitioner is clearly a common carrier.

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carrying of goods is done on an irregular rather than scheduled manner, and with an only limited clientele. A common carrier need not have fixed and publicly known routes. Neither does it have to maintain terminals or issue tickets.

6) FGU Insurance v. GP Sarmiento Trucking Co Parties of the case:

FGU Insurance Corporation (FGU), insurer of the shipment, petitioner

G.P. Sarmiento Trucking Corporation (GPS), carrier, respondent

Lambert M. Eroles, driver of G.P Sarmiento Trucking Corporation, respondent

Facts:

 G.P. Sarmiento Trucking Corporation, respondent, undertook to deliver 30 units of Condura S.D. white refrigerators from the plant site of Concepcion Industries Inc. to Central Luzon Appliances in Quezon City. However, it collided with an unidentified truck, causing it to fall into a deep canal, damaging the cargoes.

 FGU Insurance, petitioner and insurer of the shipment paid to Concepcion Carrier the value of the covered cargoes amounting to P204,450. FGU in turn sought reimbursement from GPS and filed a complaint for damages and breach of contract of carriage against GPS and its driver Lambert Eroles with the Regional Trial Court, Branch 66, of Makati City. Respondent, GPS, however, asserted that it was the exclusive hauler of Concepcion, that it was not engaged in business as a common carrier and that the cause of the damage was purely accidental. Accordingly, it filed a motion to dismiss.

 The RTC of Makati ruled in favour of respondent GPS and granted the motion to dismiss explaining that FGU did not present evidence that would prove that the former is a common carrier. In view of that, the

application of law on common carriers is neither warranted nor is the presumption of fault or negligence on the part of a common carrier in case of loss, damage or deterioration of goods during transport under 1735 of the Civil Code not availing. Consequently, the laws governing the contract between the owner of the cargo to whom the plaintiff was subrogated and the owner of the vehicle which transports the cargo are the laws on obligation and contract of the Civil Code as well as the law on quasi-delicts.

 The Court of Appeals rejected the appeal of petitioner-appellant FGU and ruled in favor of GPS contending that because petitioner-appellant insists that the latter can still be considered as a common carrier despite its “limited clientele,” it follows that it has the burden of proving the same. Unfortunately, appellant failed to do so, the dismissal of the complaint by the trial court is justified.

Issue:

Whether or not respondent GPS is a common carrier?

Ruling:

No. The Supreme Court held that GPS being an exclusive contractor and hauler of Concepcion Industries, rendering or offering its services to no other individual or entity cannot be considered a common carrier. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for hire or compensation, offering their services to the public, whether to the public in general or to a limited clientele in particular, but never on an exclusive basis. The true test of a common carrier is the carriage of passengers or goods, providing space for those who opt to avail themselves of its transportation service for a fee. Given accepted standards, GPS scarcely falls within the term “common carrier.” (The Supreme Court affirmed the decision of the Court of Appeals insofar as respondent Eroles is concerned but reversed as to GPS ordering the latter to pay for lost cargoes and damages.)

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Facts:

Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latter’s 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted with petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force majeure. The trial court ruled against petitioner.

Issues:

(1) Was petitioner a common carrier?

(2) Was the hijacking referred to a force majeure? Held:

(1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or 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." The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted." In this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same.

(2) Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must

prove that it exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the presumption conclusive against her.

8) Fabre v. Court of Appeals Facts:

Petitioners Fabre and his wife were owners of a minibus which they used principally in connection with a bus service for school children which they operated. The couple had a driver, Porfirio Cabil, whom they hired after trying him out for two weeks. His job was to take school children to and from the St. Scholastica’s College.

On November 2, 1984, private respondent Word for the World Christian Fellowship Inc. arranged with petitioners for the transportation of 33 members from Manila to La Union and back in consideration of which they paid P3,000 to petitioners.

The group left at 8:00 in the evening, petitioner Cabil drove the minibus. The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, so that petitioner Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to take a detour through the town of Ba-ay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, running on a south to east direction. The road was slippery because it was raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left traffic steel brace and sign along the road and rammed the fence of one Jesus Escano, then turned over and landed on its left side, coming to a full stop only after a series of impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its front portion.

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

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Cabil. Amyline Antonio was found to be suffering from paraplegia and is permanently paralyzed from the waist down. The RTC ruled in favor of respondents. Mr. & Mrs. Fabre and Cabil were ordered to pay jointly and severally actual, moral and exemplary damages, and as well as amount of loss of earning capacity of Antonio and attorney’s fees. The Court of Appeals affirmed the decision of the trial court with modification on the award of damages.

Issues:

1. Whether or not petitioners were negligent. 2. Whether or not petitioners were liable for the

injuries suffered by private respondents. 3. Whether or not damages can be awarded and

in the positive, up to what extent. Held:

SC affirmed the decision of the CA but reverted the amount of the award of damages to that ordered by the RTC.

1. The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus, failed to exercise the diligence of a good father of the family in the selection and supervision of their employee is fully supported by the evidence on record. Indeed, it was admitted by Cabil that on the night in question, it was raining, and, as a consequence, the road was slippery, and it was dark. However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per hour and only slowed down when he noticed the curve some 15 to 30 meters ahead. Given the conditions of the road and considering that the trip was Cabil’s first one outside of Manila, Cabil should have driven his vehicle at a moderate speed. There is testimony that the vehicles passing on that portion of the road should only be running 20 kilometers per hour, so that at 50 kilometers per hour, Cabil was running at a very high speed. Cabil was grossly negligent and should be held liable for the injuries suffered by private respondent Amyline Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers, the Fabres, were themselves negligent in the selection and supervision of their employee. Due diligence in selection of employees is not satisfied by finding that the applicant possessed a professional driver’s license. The

employer should also examine the applicant for his qualifications, experience and record of service. In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not consider the fact that Cabil had been driving for school children only, from their homes to the St. Scholastica’s College in Metro Manila. They had hired him only after a two-week apprenticeship. 2. This case involves a contract of carriage.

Petitioners, the Fabres, did not have to be engaged in the business of public transportation for the provisions of the Civil Code on common carriers to apply to them.

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. The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity. 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. As common carriers, the Fabres were bound to exercise “extraordinary diligence” for the safe transportation of the passengers to their destination. This duty of care is not excused by proof that they exercised the diligence of a good father of the family in the selection and supervision of their employee.

As Art. 1759 of the Code provides: Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

1.3 Distinguished from Private Carrier, Towage, Arrastre and Stevedoring

1) Home Insurance Co. v. American Steamship Facts:

Consorcio Pasquero Del Perse of South America shipped a freight of 21,740 jute bags of Peruvian fish meal through the SS Crowborough

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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 carrier’s 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.

2) Planters Products Inc v Court of Appeals PARTIES:

Planters Products, Inc.

Mitsubishi International Corporation – Shipper/Charterer

Kyosei Kisen Kabushiki Kaisha (KKKK) – Carrier/Ship-owner

Soriamont Steamship Agencies (SSA) – KKKK’s Agent FACTS: Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which MITSUBISHI shipped in bulk aboard the cargo vessel M/V "Sun Plum" owned by Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union,

Philippines. Prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General Charterwas entered into between Mitsubishi as shipper/charterer and KKKK as ship-owner, in Tokyo, Japan.

Before loading the fertilizer aboard the vessel, 4 of her holds were all inspected by the charterer's representative and found fit to take a load of urea in bulk pursuant to the charter-party. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire voyage since it can only be opened by the vessel’s boom. Upon arrival, the steel pontoon hatches were opened and unloaded into its steel-bodied dump trucks. The hatches remained open throughout the duration of the discharge. Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the consignee's warehouse located some fifty (50) meters from the wharf. The port area was windy, certain portions of the route to the warehouse were sandy and the weather was variable, raining occasionally while the discharge was in progress.

It took eleven (11) days for PPI to unload the cargo. A private marine and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped, by taking draft readings of the vessel prior to and after discharge. The survey report submitted by CSCI to the consignee (PPI) revealed a shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt. The same results were contained in a Certificate of Shortage/Damaged Cargo prepared by PPI which showed that the cargo delivered was indeed short of 94.839 M/T and about 23 M/T were rendered unfit for commerce, having been polluted with sand, rust and dirt.

Consequently, PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in the goods shipped and the diminution in value of that portion said to have been contaminated with dirt. KKKK denied said claim arguing that the strict public policy governing common carriers does not apply to them because they have become

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charter-party.

CFI RULING: CFI of Manila sustained the claim of the PPI against the KKKK for the value of the goods lost or damaged. “A common carrier is presumed negligent in case of loss or damage of the goods it contracts to transport, all that a shipper has to do in a suit to recover for loss or damage is to show receipt by the carrier of the goods and to delivery by it of less than what it received. After that, the burden of proving that the loss or damage was due to any of the causes, which exempt him from liability, is shifted to the carrier, common or private he may be. Even if the provisions of the charter-party are deemed valid, and the defendants considered private carriers, it was still incumbent upon them to prove that the shortage or contamination sustained by the cargo is attributable to the fault or negligence on the part of the shipper or consignee in the loading, stowing, trimming and discharge of the cargo. This they failed to do. By this omission, coupled with their failure to destroy the presumption of negligence against them, the defendants are liable.”

CA RULING: On appeal, CA reversed CFI and absolved the carrier from liability for the value of the cargo that was lost or damaged. CA ruled that the cargo vessel M/V "Sun Plum" owned by KKKK was a private carrier and not a common carrier by reason of the time charter-party. Accordingly, the Civil Code provisions on common carriers which set forth a presumption of negligence do not find application in the case at bar. Thus, in the absence of such presumption, it was incumbent upon the PPI to adduce sufficient evidence to prove the negligence of the defendant carrier as alleged in its complaint. It is an old and well-settled rule that if the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a satisfactory manner the facts upon which he bases his claim; the defendant is under no obligation to prove his exception or defense. But, the record shows that the plaintiff-appellee dismally failed to prove the basis of its cause of action—the alleged negligence of defendant carrier.

ISSUES: (1) Does a charter-party between a ship-owner and a charterer transform a common carrier into a private one as to negate the civil law presumption of negligence in case of loss or damage to its cargo? (2) Should the respondents be held liable for damages of the cargo?

SC RULING: (1) NO. 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. 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. This is true in the present case.

It is not disputed that KKKK, in the ordinary course of business, operates as a common carrier, transporting goods indiscriminately for all persons. When PPI chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of KKKK (the ship-owner) and therefore continued to be under its direct supervision and control. Hardly then can we charge MITSUBISHI (the charterer), a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were screened, chosen and hired by KKKK (the ship-owner).

A "charter-party" is defined as 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 by which the owner of a ship or other vessel lets the whole or a 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; Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants. Contract of affreightment may either be time charter, wherein the 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

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determinate period of time or for a single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship.

Upon the other hand, the distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier. Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should observe extraordinary diligence in the vigilance over the goods they carry. In the case of private carriers, however, the exercise of ordinary diligence in the carriage of goods will suffice. Moreover, in the case of loss, destruction or deterioration of the goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests on them. On the contrary, no such presumption applies to private carriers, for whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause was the negligence of the carrier.

(2) NO. Even requiring the extraordinary diligence of a common carrier, KKKK has sufficiently overcome, by clear and convincing proof, the prima facie presumption of negligence. Indeed, the bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather condition prevalent during its unloading. This is a risk the shipper or the owner of the goods has to face. Clearly, KKKK has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. The evidence of KKKK also showed that it was highly improbable for sea water to seep into the vessel's holds during the voyage since the hull of the vessel was in good condition and her hatches were tightly closed and firmly sealed, making the M/V "Sun Plum" in all respects seaworthy to carry the cargo she was chartered for. If there was loss or contamination of the cargo, it was more likely to have occurred while the same was being transported from the ship to the dump trucks and finally to the consignee's warehouse. On the other hand, no proof was adduced by the petitioner

showing that the carrier was remise in the exercise of due diligence in order to minimize the loss or damage to the goods it carried.

3) National Steel Corporation v. Court of Appeals 4) Valenzuela Hardwood and Industrial Supply Inc v. Court of Appeals

1.4 Governing Laws

1) Samar Mining Co, Inc v. Nordeutscher Lloyd 2) Eastern Shipping Lines v. IAC

3) National Development Co. v. Court of Appeals 1.5 Government Regulation of Common Carrier’s Cusiness

1.5.1 Nature of Business

1) Fisher v. Yangco Steamship Co. Parties of the case:

FC Fisher: stockholder of Yangco Streamship Company

Yangco Steamship Company: Owner of a larger stream vessel, duly licensed to engage in coastwise trade.

J.S. Stanley: Acting Collector of Customs of the Philippines

Facts:

The directors of Yangco Steamship Company adopted a resolution that declares and provides that goods that are to be carried by their vessels shall not include dynamite, powder or other explosives.

J.S Stanley however demanded and required the company to accept to accept and carry such explosives for carriage. That despite the demands of FC Fisher, other managers and agents of the company decline and refuse to cease the carriage of explosives, on the ground that by reason of the severity of the penalties with which they are threatened upon failure to carry such explosives. FC Fisher contends further

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construed the provisions of Act 98 in holding that they require the company to accept and carry such explosives despite the resolution.

Act No. 98 Sec. 2 provides that it shall ne unlawful for common carrier engaged in the transportation of passenger of property to make or give unnecessary or unreasonable preference or advantage to any particular person, company, firm, corporation or locality, or any particular traffic in any respect whatsoever, or to subject any person to any undue and unreasonable prejudice or discrimination.

Fisher prays that a writ of prohibition restraining Yangco Steamship Company from carrying dynamite, powder or other explosive substance in accordance with the resolution of the board of directors and of shareholders of said company and that another writ of prohibition be issued to enjoin Stanley from obligating Yangco to carry such prohibited substances.

Issue:

May Yangco Steamship Company be prohibited from carrying dynamite, powder or other explosives pursuant to the resolution adopted by the directors of the company. And if such prohibition shall cause unnecessary or unreasonable advantage or preference.

Held:

The said provision which provides that no common carrier shall under the pretense whatsoever, fail or refuse to receive for carriage any person or property is not to be construed in its literal sense and without regard to the context, so as to impose an imperative duty to all common carriers to accept and carry all and any kind of freight which may be offered for carriage without regard to their facilities.

The statute more so does not require of a common carrier, as a condition to the continuing in said business, that he must carry anything and everything”, and thereby “renders useless the facilities he may have for the carriage of certain types of freight. The prayer for petition cannot be granted. It cannot be doubter that the refusal of the said

company, owner of a large number of vessels engaged in trade to receive for carriage such explosives in any of their vessels would subject the traffic of such goods to manifest prejudice and discrimination. Such prejudice and discrimination being unnecessary and unreasonable given the fact that it has not been alleged that “dynamite, gunpowder, and other explosives” cannot be transported with reasonable safety on board a vessel engaged in the business of common carriers. Further, it has not been alleged that the company’s vessels are unsound for such purposes.

The mere fact that violent and destruct can be obtained by the use of dynamite would not be sufficient in itself to justify the refusal of the vessel, duly licensed as common carrier of merchandise to accept if for carriage. If it can not be proven that the condition which it is to be transported offers real danger to the carriage or that there be reasonable fear that the vessel will be exposed to unnecessary risks then such refusal is a violation of the prohibition against discrimination prohibited by the Act.

2) KMU Labor Center v. Garcia, Jr. 1.5.2 Registered Owner Rule 1) Gelisan v. Alday

PARTIES: Gelisan- owner of freight truck; Alday- trucking operator, Espiritu- truck operator; Celso Henson- checker

FACTS: In this case, Bienvenido Gelisan is the owner of a freight truck. On January 31, 1962, Gelisan and Roberto Espiritu hired the same freight truck for the purpose of hauling rice, sugar, flour and fertilizer at the price of 18.00 pesos within the limits of the City of Manila provided that the loads shall not exceed 200 sacks. It is also agreed that Espiritu shall bear and pay all the losses and damages attending the carriage of goods to be hauled by him. Benito Alday, a trucking operator, and who owns about 15 freight trucks, had known Roberto Espiritu since 1948 as a truck operator. Alday had a contract to haul the fertilizers of the Atlas Fertilizer Corporation from Pier 4, North Harbor, to its Warehouse in Mandaluyong. Espiritu offered the use of his truck to Alday with the driver and helper at 9 centavos per bag of fertilizer. The offer was accepted. He instructed his checker, Celso Henson to let Espiritu haul the fertilizer. Espiritu made two haul of 200 bags of fertilizer per trip. Espiritu, however, did not deliver

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Mandaluyong. Roberto Espiritu was later arrested and booked for theft. Alday saw the truck in question in Sto. Cristo St. and he notified the Manila Police Department and it was impounded by the police. It was claimed by Bienvenido Gelisan from the Police Department but as he could not produce at the time the registration papers, the police would not release the truck.

Alday was compelled to pay the value of 400 bags of fertilizer in the amount of P5, 397.33 to Atlas Fertilizer Corporation. Alday filed a complaint against Roberto Espiritu and Bienvenido Gelisan with the CFI of Manila. Espiritu failed to file an answer. Gelisan, on the other hand, disowned the responsibility. He claimed that he had no contractual relations with Espiritu as regards the delivery of 400 bags of fertilizer mentioned in complaint. In addition, it was expressly provided in the written contract of hire with Espiritu that the latter will bear and pay all losses and damages attending the carriage of goods to be hauled by Roberto Espiritu. LOWER COURT RULING: The CFI Manila ruled that Espiritu alone was liable to Benito Alday since Gelisan was not privy to the contract between Espiritu and Alday.

ISSUE: WON Gelisan is likewise liable.

HELD: On appeal, the CA found that Gelisan is also liable for being the registered owner of the truck. The lease contract executed by Gelisan and Espiritu is not binding upon Alday for not having been previously approved by the Public Service Commission. It is settled in our jurisprudence that if the property covered by a franchise is transferred or leased to another without obtaining the requisite approval, the transfer is not binding upon the public and third persons. It sentenced Gelisan to pay jointly and severally with Roberto Espiritu, Benito Alday the amount of P5, 397.33 with legal interest and to pay the costs. Roberto Espiritu, in turn, was ordered to pay or refund Gelisan whatever amount the latter may have paid to Benito Alday. Gelisan has a right to be indemnified by Espiritu since the lease contract in question, although not effective against the public for not having been approved by Public Service Commission, is valid and binding between the contracting parties.

2) Benedicto v. IAC FACTS:

Sometime in May 1980, private respondent bound itself to sell and deliver to Blue Star Mahogany, Inc., ("Blue Star") 100,000 board feet of sawn lumber with the understanding that an initial delivery would be made on 15 May 1980. 1 To effect its first delivery, private respondent's resident manager in Maddela, Dominador Cruz, contracted Virgilio Licuden, the driver of a cargo truck to transport its sawn lumber to the consignee Blue Star in Valenzuela, Bulacan. This cargo truck was registered in the name of petitioner Ma. Luisa Benedicto, the proprietor of Macoven Trucking. But the lumber did not reach the consignee and Blue Star was constrained to order from another supplier. On 25 June 1980, after confirming the above with Blue Star and after trying vainly to persuade it to continue with their contract, private respondent Greenhill's filed Criminal Case No. 668 against driver Licuden for estafa. Greenhills also filed against petitioner Benedicto Civil Case No. D-5206 for recovery of the value of the lost sawn lumber plus damages before the RTC of Dagupan City.

In her answer, 6 petitioner Benedicto denied liability alleging that she was a complete stranger to the contract of carriage, the subject truck having been earlier sold by her to Benjamin Tee, on 28 February 1980 as evidenced by a deed of sale. 7 She claimed that the truck had remained registered in her name notwithstanding its earlier sale to Tee because the latter had paid her only P50,000.00 out of the total agreed price of P68,000.00 However, she averred that Tee had been operating the said truck in Central Luzon from that date (28 February 1980) onwards, and that, therefore, Licuden was Tee's employee and not hers. ISSUE

Is Luisa Benedicto liable for the recovery and damages of the lost sawn lumber?

HELD

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 already have been transferred to another person. This 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

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as a practical matter, for members of the general public to enforce the rights of action that they may have for injuries inflicted by the vehicles being negligently operated if they should be required to prove who the actual owner is. 11 The registered owner is not allowed to deny liability by proving the identity of the alleged transferee. Thus, contrary to petitioner's claim, private respondent is not required to go beyond the vehicle's certificate of registration to ascertain the owner of the carrier. In this regard, the letter presented by petitioner allegedly written by Benjamin Tee admitting that Licuden was his driver, had no evidentiary value not only because Benjamin Tee was not presented in court to testify on this matter but also because of the aforementioned doctrine. To permit the ostensible or registered owner to prove who the actual owner is, would be to set at naught the purpose or public policy which infuses that doctrine.

In fact, private respondent had no reason at all to doubt the authority of Licuden to enter into a contract of carriage on behalf of the registered owner. It appears that, earlier, in the first week of May 1980, private respondent Greenhills had contracted Licuden who was then driving the same cargo truck to transport and carry a load of sawn lumber from the Maddela sawmill to Dagupan City. 12 No one came forward to question that contract or the authority of Licuden to represent the owner of the carrier truck. 3) Philtranco Service Enterprises, Inc v. Court of Appeals

1.5.3 Kabit System 1) Santos v. Sibug Facts:

Vicente Vidad was a duly authorized passenger jeepney operator. Petitioner Adolfo Santos was the owner of a passenger jeep without a certificate of public convenience. Santos transferred his jeepney to Vidad in an agreement called the “kabit system”, and Vidad executed a re-transfer document presumably to be registered when they decide that the jeepney be withdrawn from the arrangement. On April 26, 1963, private respondent Abraham Sibug was bumped by the jeepney driven by Severo Gragas. Sibug filed a complaint against Vidad and Gragas with Branch XVII of the Court of First Instance in Manila. Judgment was

rendered sentencing the defendants to pay P506.20 as actual damages, P3,000 as moral damages, and P500 as attorney’s fees and costs. On April 10, 1964, the sheriff levied on the motor vehicle and scheduled an auction sale. On April 11, petitioner submitted a third-party complaint, alleging that he was the real owner of the jeepney. Sibug submitted a bond to the sheriff to save the latter from liability if he were to proceed with the sale and the third-party complaint would be ultimately upheld. On April 22, petitioner instituted with CFI Branch X an action for Damages and Injunction, with Preliminary Mandatory Injunction against Sibug, Vidad and the sheriff. The complaint was amended to include the bonding company. On May 11, Branch X issued a restraining order enjoining the sheriff from conducting the auction sale. On October 14, 1965, Branch X upheld petitioner’s ownership. Sibug appealed from the decision of Branch X. The Court of Appeals nullified the appealed decision. Issues:

(1) Whether the CFI has jurisdiction to issue an injunction restraining the execution sale of the jeepney levied upon by a judgment creditor in another CFI (2) Whether the third-party claimant has a right to vindicate his claim to the vehicle levied upon through a separate action

Held:

In asserting his rights of ownership to the vehicle in question, SANTOS candidly admitted his participation in the illegal and pernicious practice in the transportation business known as the kabit system. Although SANTOS, as the kabit, was the true owner as against VIDAD, the latter, as the registered owner/operator and grantee of the franchise, is directly and primarily responsible and liable for the damages caused to SIBUG, the injured party, as a consequence of the negligent or careless operation of the vehicle. This ruling is based on the principle that the operator of record is considered the operator of the vehicle in contemplation of law as regards the public and third persons even if the vehicle involved in the accident had been sold to another where such sale had not been approved by the then Public Service Commission.

The levy on execution against said vehicle should be enforced so that the judgment in the BRANCH XVII

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the secret ownership of the vehicle belonged to another. SANTOS, as the kabit, should not be allowed to defeat the levy on his vehicle and to avoid his responsibilities as a kabit owner for he had led the public to believe that the vehicle belonged to VIDAD. This is one way of curbing the pernicious kabit system that facilitates the commission of fraud against the travelling public. SANTOS' remedy, as the real owner of the vehicle, is to go against VIDAD, the actual operator who was responsible for the accident, for the recovery of whatever damages SANTOS may suffer by reason of the execution. In fact, if SANTOS, as the kabit, had been impleaded as a party defendant in the BRANCH XVII CASE, he should be held jointly and severally liable with VIDAD and the driver for damages suffered by SIBUG, as well as for exemplary damages.

Contrary to the rationale in the Decision of respondent Court, it was appropriate, as a matter of procedure, for SANTOS, as an ordinary third-party claimant, to vindicate his claim of ownership in a separate action under Section 17 of Rule 39. And the judgment rendered in his favor by Branch X, declaring him to be the owner of the property, did not as a basic proposition, constitute interference with the powers or processes of Branch XVII which rendered the judgment, to enforce which the jeepney was levied upon. And this is so because property belonging to a stranger is not ordinarily subject to levy. While it is true that the vehicle in question was in custodia legis, and should not be interfered with without the permission of the proper Court, the property must be one in which the defendant has proprietary interest. Where the Sheriff seizes a stranger's property, the rule does not apply and interference with his custody is not interference with another Court's Order of attachment.

However, as a matter of substance and on the merits, the ultimate conclusion of respondent Court nullifying the Decision of Branch X permanently enjoining the auction sale, should be upheld. Legally speaking, it was not a "stranger's property" that was levied upon by the Sheriff pursuant to the judgment rendered by Branch XVII. The vehicle was, in fact, registered in the name of VIDAD, one of the judgment debtors. And what is more, the aspect of public service, with its effects on the riding public, is involved. Whatever legal technicalities may be invoked, we find the judgment of respondent Court of Appeals to be in consonance with justice.

2) Lita Enterprises, Inc v. Court of Appeals 3) Teja Marketing v. IAC

Facts: On May 9, 1975, the defendant bought from the plaintiff a motorcycle with complete accessories and a sidecar in the total consideration of P8,000.00. Defendant gave a downpayment of P1,700.00 with a promise that he would pay plaintiff the balance within sixty days. The defendant, failed to comply with his promise and so upon his own request, the period of paying the balance was extended to one year in monthly installments until January 1976 when he stopped paying.

The records of the LTC show that the motorcycle sold to the defendant was first mortgaged to the Teja Marketing by Angel Jaucian though the Teja Marketing and Angel Jaucian are one and the same, because it was made to appear that way only as the defendant had no franchise of his own and he attached the unit to the plaintiff's MCH Line. The agreement also of the parties here was for the plaintiff to undertake the yearly registration of the motorcycle with the Land Transportation Commission.

The plaintiff, however failed to register the motorcycle on that year on the ground that the defendant failed to comply with some requirements such as the payment of the insurance premiums and the bringing of the motorcycle to the LTC for stenciling.

The court finds that defendant purchased the motorcycle in question, particularly for the purpose of engaging and using the same in the transportation business and for this purpose said trimobile unit was attached to the plaintiffs transportation line who had the franchise, so much so that in the registration certificate, the plaintiff appears to be the owner of the unit.

Lower Court Ruling: The City Court rendered judgment in favor of petitioner.

Issue: Whether or not respondent court erred in applying the doctrine of "pari delicto."

Ruling: The parties herein operated under an arrangement, commonly known as the "kabit system" whereby a person who has been granted a certificate of public convenience allows another person who owns motor vehicles to operate under such franchise for a fee. A certificate of public convenience is a special privilege conferred by the government.

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root causes of the prevalence of graft and corruption in the government transportation offices.

Although not outrightly penalized as a criminal offense, the kabit system is invariably recognized as being contrary to public policy and, therefore, void and in existent under Article 1409 of the Civil Code. It is a fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave both where it finds them.

4) Abelardo Lim v. Court of Appeals FACTS:

On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman. Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in three feet of water. Gelacio Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under the captain's supervision. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The latter resisted the shakedown and after a heated argument between them, Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing who sustained injuries. After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio Rub, accompanied by three policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked. The rest was brought to the compound of NASSCO. Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the

scrap iron.

Tumabing sued Ganzon; the latter alleged that the goods have not been unconditionally placed under his custody and control to make him liable. The trial court dismissed the case but on appeal, respondent Court rendered a decision reversing the decision of the trial court and ordering Ganzon to pay damages. ISSUE:

Whether or not a contract of carriage has been perfected.

HELD: Yes.

By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier, and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the petitioner-carrier's extraordinary responsibility for the loss, destruction or deterioration of the goods commenced. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded. Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron was accumulated by the appellant through separate purchases here and there from private individuals. The fact remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown Tumambing for P5,000.00. The order of the acting mayor did not constitute valid authority for Ganzon and his representatives to carry out.

1.5.4 Boundary System 1) Magboo v. Bernardo 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 petitioner’s 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