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Art. 587.

The ship agent shall also be civilly liable for the


indemnities in favor of third persons which may arise from the conduct of
the captain in the care of the goods which he loaded on the vessel; but he
P ART I - COMMON CARRIERS may exempt himself therefrom by abandoning the vessel with all her
equipment and the freight it may have earned during the voyage.
--
Art 1732- Common Carriers are persons, corporations, firms or associations Art. 590. The co-owners of the vessel shall be civilly liable in the
engaged in the business of carrying or transporting passengers or goods or both, proportion of their interests in the common fund for the results of the acts
by land, water, or air, for compensation, offering their services to the public. of the captain referred to in Art. 587.
Common Carrier one that holds itself out as ready to engage in the
transportation of goods for hire as a public employment and not as a casual Each co-owner may exempt himself from this liability by the
occupation. (De Guzman v. CA, G.R. No. L-47822, 22 December 1988) abandonment, before a notary, of the part of the vessel
belonging to him.
Definition of Contract of Transportation ---
The movement of persons or things from one place to another, by a carrier. Art. 837. The civil liability incurred by shipowners in the case
(Blacks Law Dictionary) prescribed in this section, shall be understood as limited to the
value of the vessel with all its appurtenances and freightage
A contract of transportation is whereby a certain person or association of served during the voyage.
persons obligate themselves to transport persons, things, news from one place
to another for a fixed price. It is the removal of goods or persons from one Article 837 specifically applies to cases involving collision which
place to another. is a necessary consequence of the right to abandon the vessel given to the
shipowner or ship agent under the first provision Article 587. Similarly,
Does not presume that the carrier is a common carrier. Article 590 is a reiteration of Article 587, only this time the situation is that
the vessel is co-owned by several persons. Obviously, the forerunner of the
Laws and Jurisprudence: Limited Liability Rule under the Code of Commerce is Article 587. Now, the
latter is quite clear on which indemnities may be confined or restricted to
R.A 4136: land Transportation and Traffic Code the value of the vessel pursuant to the said Rule, and these are the
Section 3. Words and phrases defined. - As used in this Act: indemnities in favor of third persons which may arise from the conduct of
(a) "Motor Vehicle" shall mean any vehicle propelled by any power other than the captain in the care of the goods which he loaded on the vessel. Thus,
muscular power using the public highways, but excepting road rollers, trolley what is contemplated is the liability to third persons who may have dealt
cars, street-sweepers, sprinklers, lawn mowers, bulldozers, graders, fork-lifts, with the shipowner, the agent or even the charterer in case of demise or
amphibian trucks, and cranes if not used on public highways, vehicles which run bareboat charter.
only on rails or tracks, and tractors, trailers and traction engines of all kinds In the present case, the charterer and the sub-charterer through their
used exclusively for agricultural purposes. respective contracts of agreement/charter parties, obtained the use and
service of the entire LCT-Josephine. The vessel was likewise manned by the
Trailers having any number of wheels, when propelled or intended to be charterer and later by the sub-charterers people. With the complete and
propelled by attachment to a motor vehicle, shall be classified as separate exclusive relinquishment of possession, command and navigation of the
motor vehicle with no power rating. vessel, the charterer and later the sub-charterer became the vessels
owner pro hac vice. Now, and in the absence of any showing that
the vessel or any part thereof was commercially offered for use to the public,
the above agreements/charter parties are that of a private carriage where
Is a freight forwarder liable as a common carrier?
the rights of the contracting parties are primarily defined and governed by
Unsworth Transportation International v. CA
the stipulations in their contract.[34]
Parties
The term "freight forwarder" refers to a firm holding itself out to the general
1.1 Carriage of Passengers / Contract to Carry Passenger
public (other than as a pipeline, rail, motor, or water carrier) to provide
1. Passenger - one who travels in a public conveyance by virtue of
transportation of property for compensation and, in the ordinary course
contract, express or implied, with the carrier as to the payment of fare
of its business, (1) to assemble and consolidate, or to provide for assembling
or that which is accepted as an equivalent thereof.
and consolidating, shipments, and to perform or provide for break-bulk and
(Nueca v. Manila Railroad Co., )
distribution operations of the shipments; (2) to assume responsibility for the
transportation of goods from the place of receipt to the place of destination;
2. Common Carrier - one that holds itself out as ready to engage in the
and (3) to use for any part of the transportation a carrier subject to the federal
transportation of goods for hire as a public employment and not as a
law pertaining to common carriers.
casual occupation.
(De Guzman v. CA, G.R. No. L-47822, 22
A freight forwarder's liability is limited to damages arising from its own
December 1988)
negligence, including negligence in choosing the carrier; however, where the
forwarder contracts to deliver goods to their destination instead of merely
1.2 Carriage of Goods/ Contract to carry Goods
arranging for their transportation, it becomes liable as a common carrier for loss
or damage to goods. A freight forwarder assumes the responsibility of a carrier,
Shipper is the person who delivers the goods to the carrier for
which actually executes the transport, even though the forwarder does not
transportation. He is the person who pays the consideration or on
carry the merchandise itself.
whose behalf payment is made.
Real and Hypothecary or Limited Liability Rule -
Consignee is the person to whom the goods are to be delivered.
May the Charterer invoke the Limited Liability Rule against the owner?
May be the shipper himself where the goods will be delivered to one
Agustin Dela Torre v. CA
of the branch offices of the shipper, or
May be a third person who is not actually a party to the contract.
With respect to petitioners position that the Limited Liability Rule under the
Carrier
Code of Commerce should be applied to them, the argument is misplaced. The
Laws and Jurisprudence:
said rule has been explained to be that of the real and hypothecary doctrine in
Release of claims
maritime law where the shipowner or ship agents liability is held as merely
Baliwag Transit Corporation v CA
co-extensive with his interest in the vessel such that a total loss thereof results
Held: Release of Claims executed by him, as the injured party, discharging
in its extinction. In this jurisdiction, this rule is provided in three articles of the
Fortune Insurance and Baliwag from any and all liability is valid. He was then
Code of Commerce. These are:
of legal age, a graduating student of Agricultural Engineering, and had the
capacity to do acts with legal effect (Article 37 in relation to Article 402, Civil
Code). Thus, he could sue and be sued even without the assistance of his A) If contract to carry passengers, there is perfection even if no tickets have
parents. been issued to said passengers so long as there was already a meeting of minds
with respect to the subject matter and the consideration.
Significantly, the contract of carriage was actually between George, as the (British Airways v. CA )
paying passenger, and Baliwag, as the common carrier. As such carrier, Baliwag B) If contract of carriage, there is perfection if it can be established that the
was bound to carry its passengers safely as far as human care and foresight passenger had checked in at the departure counter, passed through customs
could provide, and is liable for injuries to them through the negligence or wilful and immigration, boarded the shuttle bus and proceeded to the ramp of the
acts of its employees (Articles 1755 and 1759, Civil Code). Thus, George had the aircraft and that his baggage had already been loaded in the aircraft to be
right to be safely brought to his destination and Baliwag had the correlative flown with the passenger to his destination
obligation to do so. Since a contract may be violated only by the parties thereto, (Korean Airlines Co. ltd v. CA)
as against each other, in an action upon that contract, the real parties in
interest, either as plaintiff or as defendant, must be parties to said contract 2. BUSES, JEEPNEYS, STREET CARS (Dangwa Transportation Co., Inc.
(Marimperio Compania Naviera, S.A. vs. Court of Appeals, No. L-40234, v CA)
December 14, 1987, 156 SCRA 368). A) Once a public utility bus or jeepney stops, it is in effect making a continuous
offer to the passengers. Hence, it is the duty of the drivers to stop their
A real party-in-interest -plaintiff is one who has a legal right while a real conveyances for a reasonable length of time in order to afford passengers an
party-in-interest-defendant is one who has a correlative legal obligation whose opportunity to board and enter.
act or omission violates the legal right of the former (Lee vs. Romillo, Jr., G.R. B) Passenger is deemed to be accepting the offer if he is already attempting to
No. 60973, May 28, 1988). In the absence of any contract of carriage between board the conveyances and the contract of carriage is perfected from that
Baliwag and George's parents, the latter are not real parties-in-interest in an point.
action for breach of that contract. C) Any injury suffered by the passenger resulting from the sudden starting up
of the carrier is already based on contract.
Limited Liability in the Bill of Lading
Consignee, when bound in the stipulation in Bill of Lading 3. TRAINS
Everett Steamship Corp. v. CA a) There is perfection when a person with a bona fide
intention to use the facilities of the carrier and possessing sufficient fare
Held: A stipulation in the bill of lading limiting the common carriers liability for with which to pay for his passage, has presented himself to the carrier
loss or destruction of a cargo to a certain sum, unless the shipper or owner for transportation in the place and manner provided.
declares a greater value, is sanctioned by law, particularly Articles 1749 and b) Where a person has already purchased a LRT token and
1750 of the Civil Code which provide: while waiting on the platform designated for boarding fell thereon and
ART. 1749. A stipulation that the common carriers liability is limited hit by the train, he was deemed a passenger.
to the value of the goods appearing in the bill of lading, unless the (LRTA, et.al. Vs. Marjorie Navidad, et.al., G.R. No. 145804, 06 February
shipper or owner declares a greater value, is binding. 2003)
ART. 1750. A contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction, or deterioration of the
goods is valid, if it is reasonable and just under the circumstances, Common carrier
and has been freely and fairly agreed upon.
Such limited-liability clause has also been consistently upheld by this Court in a Public service Includes every person who may own, operate, manage, or
number of cases. control in the Philippines for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general
Whether or not private respondent, as consignee, who is not a signatory to the business purposes, any common carrier, railroad, street railway, fraction
bill of lading is bound by the stipulations thereof. railway, subway motor vehicle, steamboat, or steamship line ferries, and water
craft, shipyard, ice plant, electric light, heat and power or any other public
Again, in Sea-Land Service, Inc. vs. Intermediate Appellate utility. [Sec. 13(b), Act. 146] (De Guzman v. CA)
Court (supra), we held that even if the consignee was not a signatory to the
contract of carriage between the shipper and the carrier, the consignee can Article 1732 of the New Civil Code - Common carriers are persons,
still be bound by the contract. When Hernandez formally claimed corporations, firms or associations engaged in the business of carrying or
reimbursement for the missing goods from Everett and subsequently filed a transporting passengers or goods or both, by land, water, or air for
case against the it based on the very same bill of lading, it accepted the compensation, offering their services to the public.
provisions of the contract and thereby made itself a party thereto, or at least Commonwealth Act No. 146 section 13 par. b as amended
has come to court to enforce it.
Tests:
Perfection First Philippine Industrial Corporation v. CA
Passengers The test for determining whether a party is a common carrier of goods is:
1st Type: CONTRACT TO CARRY an agreement to carry the passenger at 1. He must be engaged in the business of carrying goods for others as a
some future date. public employment, and must hold himself out as ready to engage in the
(CONSENSUAL IN NATURE hence, PERFECTED BY MERE CONSENT. transportation of goods for person generally as a business and not as a
2nd Type: CONTRACT OF CARRIAGE OR OF COMMON CARRIAGE casual occupation;
(A REAL CONTRACT for not until the facilities of the carrier are 2. He must undertake to carry goods of the kind to which his business is
actually used can the carrier be said to have already assumed the confined;
obligation as a carrier) 3. He must undertake to carry by the method by which his business is
Goods conducted and over his established roads; and
1st Type: CONTRACT TO CARRY an agreement to carry and transport 4. The transportation must be for hire.[15]
goods at some future date.
CONSENSUAL IN NATURE hence, PERFECTED BY MERE CONSENT. Estrellita M. Bascos v. CA
2nd Type: CONTRACT OF CARRIAGE OR OF COMMON CARRIAGE (Mauro
Ganzon v. CA ) (1) Article 1732 of the Civil Code defines a common carrier as "(a) person,
By the act of delivery of the goods, that is, when the goods are corporation or firm, or association engaged in the business of carrying or
unconditionally placed in the possession and control of the carrier, transporting passengers or goods or both, by land, water or air, for
and upon their receipt by the carrier for transportation, the contract compensation, offering their services to the public." The test to determine a
of carriage is perfected. 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
1. AIRCRAFT 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 Indeed, respondent is a common carrier. Its ferry services are so
trucking business, offering her trucks to those with cargo to move. Judicial intertwined with its main business as to be properly considered ancillary
admissions are conclusive and no evidence is required to prove the same. thereto. The constancy of respondent's ferry services in its resort
FGU Insurance Corporation v. G. P. Sarmiento Trucking Corporations operations is underscored by its having its own Coco Beach boats. And the
FACTS: tour packages it offers, which include the ferry services, may be availed
D/B Lucio was towed by the M/T ANCO arrived and M/T ANCO left the barge of by anyone who can afford to pay the same. These services are thus
immediately. The clouds were dark and the waves were big so SMCs District available to the public. That respondent does not charge a separate fee or
Sales Supervisor, Fernando Macabuag, requested ANCOs representative to fare for its ferry services is of no moment. It would be imprudent to suppose
transfer the barge to a safer place but it refused so around the midnight, the that it provides said services at a loss. The Court is aware of the practice of
barge sunk along with 29,210 cases of Pale Pilsen and 500 cases of Cerveza beach resort operators offering tour packages to factor the transportation
Negra totalling to P1,346,197 fee in arriving at the tour package price. That guests who opt not to avail
of respondent's ferry services pay the same amount is likewise
Art. 1734. Common carriers are responsible for the loss, destruction, or inconsequential. These guests may only be deemed to have overpaid.
deterioration of the goods, unless the same is due to any of the following
causes only: Characteristics
CHARACTERISTICS OF COMMON CARRIER
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; Guiding Principles
xxx The law makes no distinction between one whose principal business
Art. 1739. xxx.. However, the common carrier must exercise due diligence to activity is the carrying of persons or goods or
prevent or minimize loss before, during and after the occurrence of flood, both, and one who does such carrying only as an ancillary activity (in local
storm, or other natural disaster in order that the common carrier may be idiom, as "a sideline").
exempted from liability for the loss, destruction, or deterioration of the Article 1732 also carefully avoids making any distinction between a person
goods . . . or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on an
Caso fortuito or force majeure
occasional, episodic or unscheduled basis.
extraordinary events not foreseeable or avoidable, events that could not be
foreseen, or which though foreseen, were inevitable not enough that the Neither does Article 1732 distinguish between a carrier offering its services
event should not have been foreseen or anticipated, as is commonly believed to the "general public," i.e., the general
but it must be one impossible to foresee or to avoid - not in this case community or population, and one who offers services or solicits business only
from a narrow segment of the general
other vessels in the port of San Jose, Antique, managed to transfer to another population.
place Does not matter if issued with a Certificate of Public Convenience
No distinction whether by land, sea, or air
To be exempted from responsibility, the natural disaster should have been Does not necessitate the use of motorvehicle
the proximate and only cause of the loss. There must have been no Even if no fixed or publicly known route, even if no terminal, or no ticket is
contributory negligence on the part of the common carrier. issued

Sps. Teodoro and Nanette Perena v. Sps Teresita Phil. Nicolas, et al. National Steel Corporation v. CA
The true test of a CC is the carriage of goods or passengers, provided it has
Held: space for all who opt to avail themselves of its transportation for a fee.
As all the foregoing indicate, the true test for a common carrier is not the
quantity or extent of the business actually transacted, or the number and Limited clientele
character of the conveyances used in the activity, but whether the undertaking Asia Lighterage and Shipping, Inc. v. CA
is a part of the activity engaged in by the carrier that he has held out to the The principal business of the petitioner is that of lighterage and drayage
general public as his business or occupation. If the undertaking is a single and it offers its barges to the public for carrying or transporting goods by
transaction, not a part of the general business or occupation engaged in, as water for compensation. Petitioner is clearly a common carrier, whether its
advertised and held out to the general public, the individual or the entity carrying of goods is done on an irregular rather than scheduled manner, and
rendering such service is a private, not a common, carrier. The question must be with an only limited clientele. A common carrier need not have fixed and
determined by the character of the business actually carried on by the carrier, publicly known routes. Neither does it have to maintain terminals or issue
not by any secret intention or mental reservation it may entertain or assert tickets. The test to determine a common carrier is "whether the given
when charged with the duties and obligations that the law imposes.21 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
Applying these considerations to the case before us, there is no question that extent of the business transacted." In the case at bar, the petitioner
the Pereas as the operators of a school bus service were: admitted that it is engaged in the business of shipping and
(a) engaged in transporting passengers generally as a business, not just as a lighterage, offering its barges to the public, despite its limited clientele for
casual occupation; carrying or transporting goods by water for compensation.
(b) undertaking to carry passengers over established roads by the method by
which the business was conducted; and Fabre, Jr. v. CA
(c) transporting students for a fee. 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
Despite catering to a limited clientle, the Pereas operated as a common children only, from their homes to the St. Scholasticas College in Metro
carrier because they held themselves out as a ready transportation Manila. They had hired him only after a two-week apprenticeship. They
indiscriminately to the students of a particular school living within or near had tested him for certain matters, such as whether he could remember the
where they operated the service and for a fee. names of the children he would be taking to school, which were irrelevant
National Steel Corporation v. CA to his qualification to drive on a long distance travel, especially considering
VSI did not offer its services to the general public. As found by the RTC, it that the trip to La Union was his first. The existence of hiring procedures
carried passengers or goods only for those it chose under a "special contract of and supervisory policies cannot be casually invoked to overturn the
charter party." The MV Vlasons I "was not a common but a private carrier. presumption of negligence on the part of an employer.
Consequently, the rights and obligations of VSI and NSC, including their
respective liability for damage to the cargo, are determined primarily by As common carriers, the Fabres were bound to exercise extraordinary
stipulations in their contract of private carriage or charter party. diligence for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they exercised
Sps Cruz v. Holiday
the diligence of a good father of the family in the selection and supervision of A certificate of public convenience is not a requisite for the incurring of
their employee. liability under the Civil Code provisions governing common carriers. That
Phil. American general insurance Company v. PKS Shipping Co. liability arises the moment a person or firm acts as a common carrier,
DOCTRINE: Art. 587 of the Code of Commerce is NOT applicable to the case at without regard to whether or not such carrier has also complied with the
bar. Simply put, the ship agent is liable for the negligent acts of the captain in requirements of the applicable regulatory statute and implementing
the care of goods loaded on the vessel. This liability however can be limited regulations and has been granted a certificate of public convenience or
through abandonment of the vessel, its equipment and freightage as provided other franchise.
in Art. 587. Nonetheless, there are exceptional circumstances wherein the ship
agent could still be held answerable despite the abandonment, as where the Home Assurance Corp.
loss or injury was due to the fault of the shipowner and the captain. The Parties entered into a "voyage charter," also known as a contract of
international rule is to the effect that the right of abandonment of vessels, as a affreightment wherein the ship was leased for a single voyage for the
legal limitation of a shipowners liability, does not apply to cases where the conveyance of goods, in consideration of the payment of freight. Under a
injury or average was occasioned by the shipowners own fault. It must be voyage charter, the shipowner retains the possession, command and
stressed at this point that Art. 587 speaks only of situations where the fault or navigation of the ship, the charterer or freighter merely having use of the
negligence is committed solely by the captain. Where the shipowner is likewise space in the vessel in return for his payment of freight. An owner who
to be blamed, Art. 587 will not apply, and such situation will be covered by the retains possession of the ship remains liable as carrier and must answer for
provisions of the Civil Code on common carrier. loss or non-delivery of the goods received for transportation.
Virgines Calvo v. UCPB General Insurance Co.,
H: Petitioner contends that contrary to the findings of the trial court and the Court SC DISAGREES! Based on the agreement signed by the parties and the
of Appeals, she is not a common carrier but a private carrier because, as a customs testimony of CSCs operations manager, it is clear that it was a contract of
broker and warehouseman, she does not indiscriminately hold her services out to carriage.
the public but only offers the same to select parties with whom she may contract
in the conduct of her business. There is no dispute that CSC was a common carrier. At the time of the loss of
the cargo, it was engaged in the business of carrying and transporting goods
There is greater reason for holding petitioner to be a common carrier because by water, for compensation, and offered its services to the public.
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 Planters v. CA
protection which the law affords them notwithstanding the fact that the obligation (1) A "charter-party" is defined as a contract by which an entire ship, or
to carry goods for her customers, as already noted, is part and parcel of some principal part thereof, is let by the owner to another person for a
petitioner's business. specified time or use; Charter parties are of two types:
Charterers liability as common carrier a) contract of affreightment which involves the use of shipping
Caltex(phil) v. Sulpicio Lines space on vessels leased by the owner in part or as a whole, to
The charterer has no liability for damages under Philippine Maritime laws. carry goods for others; and,
Petitioner and Vector entered into a contract of affreightment, also known as a b) charter by demise or bareboat charter, by the terms of which
voyage charter. A charter party is a contract by which an entire ship, or some the whole vessel is let to the charterer with a transfer to him of
principal part thereof, is let by the owner to another person for a specified time its entire command and possession and consequent control
or use; a contract of affreightment is one by which the owner of a ship or other over its navigation, including the master and the crew, who are
vessel lets the whole or part of her to a merchant or other person for the his servants. Contract of affreightment may either be time
conveyance of goods, on a particular voyage, in consideration of the payment charter, wherein the vessel is leased to the charterer for a fixed
of freight. A contract of affreightment may be either time charter, wherein the period of time, or voyage charter, wherein the ship is leased for
leased vessel is leased to the charterer for a fixed period of time, or voyage a single voyage.
charter, wherein the ship is leased for a single voyage. In both cases, the The distinction between a "common or public carrier" and a "private or
charter-party provides for the hire of the vessel only, either for a determinate special carrier" lies in the character of the business, such that if the
period of time or for a single or consecutive voyage, the ship owner to supply undertaking is a single transaction, not a part of the general business or
the ships store, pay for the wages of the master of the crew, and defray the occupation, although involving the carriage of goods for a fee, the person or
expenses for the maintenance of the ship. If the charter is a contract of corporation offering such service is a private carrier. Article 1733 of the New
affreightment, which leaves the general owner in possession of the ship as Civil Code mandates that common carriers, by reason of the nature of their
owner for the voyage, the rights and the responsibilities of ownership rest on business, should observe extraordinary diligence in the vigilance over the
the owner. The charterer is free from liability to third persons in respect of the goods they carry. In the case of private carriers, however, the exercise of
ship. ordinary diligence in the carriage of goods will suffice. Moreover, in case of
loss, destruction or deterioration of the goods, common carriers are
Second: MT Vector is a common carrier presumed to have been at fault or to have acted negligently, and the burden
The charter party agreement did not convert the common carrier into a private of proving otherwise rests on them. On the contrary, no such presumption
carrier. The parties entered into a voyage charter, which retains the character of applies to private carriers, for whosoever alleges damage to or deterioration
the vessel as a common carrier. It is imperative that a public carrier shall remain of the goods carried has the onus of proving that the cause was the
as such, notwithstanding the charter of the whole or portion of a vessel by one negligence of the carrier.
or more persons, provided the charter is limited to the ship only, as in the case When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its
of a time-charter or voyage charter. It is only when the charter includes both the officers and compliment were under the employ of the shipowner and
vessel and its crew, as in a bareboat or demise that a common carrier becomes therefore continued to be under its direct supervision and control. Hardly
private, at least insofar as the particular voyage covering the charter-party is then can we charge the charterer, a stranger to the crew and to the ship,
concerned. Indubitably, a ship-owner in a time or voyage charter retains with the duty of caring for his cargo when the charterer did not have any
possession and control of the ship, although her holds may, for the moment, be control of the means in doing so. This is evident in the present case
the property of the charterer. A common carrier is a person or corporation considering that the steering of the ship, the manning of the decks, the
whose regular business is to carry passengers or property for all persons who determination of the course of the voyage and other technical incidents of
may choose to employ and to remunerate him. 16 MT Vector fits the definition maritime navigation were all consigned to the officers and crew who were
of a common carrier under Article 1732 of the Civil Code. screened, chosen and hired by the shipowner. It is only when the charter
Ancillary business includes both the vessel and its crew, as in a bareboat or demise that a
Loadstar Shipping Co. v. Pioneer Asia Insurance common carrier becomes private, at least insofar as the particular voyage
LOADSTAR is a common carrier. It is not necessary that the carrier be issued a covering the charter-party is concerned.
certificate of public convenience, and this public character is not altered by the A.F Sanchez Brokerage Inc. v. CA,
fact that the carriage of the goods in question was periodic, occasional, episodic Principle: Customs broker is engaged in the business of transportation as a
or unscheduled. common carrier as it obliges itself to undertake to deliver goods to the
warehouse for consideration
In the case at bar, the exercise of ordinary prudence by petitioner means
while it is true that AF Sanchez is principally engaged as a broker, it cannot be ensuring that its tugboat is free of mechanical problems. While adverse
denied from the evidence presented that part of the services it offers to its weather has always been a real threat to maritime commerce, the least that
customers is the delivery of the goods to their respective consignees. petitioner could have done was to ensure that the M/T Count or any of its
other tugboats would be able to secure the barge at all times during the
Addendum: engagement. This is especially true when considered with the fact that
Doctrine of Foul Bill of Lading reservation or protest on a shipment or goods Acuarios barge was wholly dependent upon petitioners tugboat for
improperly packed. propulsion. The barge was not equipped with any engine and needed a tugboat
AF Sanchez claimed that the proximate cause of the damage is improper packing. for maneuvering.
Under the CC, improper packing of the goods is an exonerating circumstance. But Common Carrier v Contract of Stevedoring
in this case, the SC held that though the goods were improperly packed, since AF Mindanao Terminal and Brokerage services v. Phoenix Assurance Co.
Sanchez knew of the condition and yet it accepted the shipment without protest
or reservation, the defense is deemed waived. Mindanao Terminal, a stevedoring company which was charged with the
loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau,
Effect of Charter Party. had acted merely as a labor provider in the case at bar. There is no specific
Cebu Salvage Corporation v. Philippine Home Assurance Corp. provision of law that imposes a higher degree of diligence than ordinary
diligence for a stevedoring company or one who is charged only with the
Principle: Petitioner was the one which contracted with MCCII for the transport of loading and stowing of cargoes.
the cargo. It had control over what vessel it would use. All throughout its dealings The public policy considerations in legally imposing upon a common carrier or
with MCCII, it represented itself as a common carrier. The fact that it did not own a warehouseman a higher degree of diligence is not present in a stevedoring
the vessel it decided to use to did not negate its character and duties as a common outfit which mainly provides labor in loading and stowing of cargoes for its
carrier. The MCCII (respondents subrogor) could not be reasonably expected to clients.
inquire about the ownership of the vessels which petitioner carrier offered to
utilize.

The cargo was loaded on board the vessel; loss/non-delivery of the cargo was
proven; and petitioner failed to prove that it exercised extraordinary diligence to
prevent such loss or that it was due to some casualty or force majeure. The voyage
charter here being a contract of affreightment, the carrier was answerable for
the loss of the goods received for transportation. Cebu Arrastre Services v. CIR
Common Carrier v Arrastre
Common carrier v. Private Carrier. Cebu Arrastre Services v. Collector of Internal Revenue
Valenzuela Hardwood and Industrial Supply, Inc. v. CA 'The Cebu Arrastre Service is dedicated itself solely to the loading and
Principle: In a contract of private carriage, the parties may validly stipulate that unloading of cargoes on the boats . . .' It is true that the President and
responsibility for the cargo rests solely on the charterer, exempting the shipowner Counsel corrected this description in the memorandum on appeal to the
from liability for loss of or damage to the cargo caused even by the negligence of effect that laborers of the corporation do not, except on rare occasions,
the ship captain. Pursuant to Article 1306 of the Civil Code, such stipulation is valid engage in loading or unloading the boat but limit their work on loading or
because it is freely entered into by the parties and the same is not contrary to law, unloading pele-mele. the slings of the boats under contract with the Arrastre
morals, good customs, public order, or public policy. Indeed, their contract of Service, but in the opinion of the Board this amendment is not nearer to the
private carriage is not even a contract of adhesion. truth than the original version which was corroborated by the official who
investigated the case by order of the Collector of Internal Revenue.
We stress that in a contract of private carriage, the parties may freely stipulate Crisostomo v. CA
their duties and obligations which perforce would be binding on them. Unlike in a Common Carrier v Travel Agency
contract involving a common carrier, private carriage does not involve the general
public. Hence, the stringent provisions of the Civil Code on common carriers a travel agency is not an entity engaged in the business of transporting either
protecting the general public cannot justifiably be applied to a ship transporting passengers or goodsand is therefore, neither a private nor a common carrier.
commercial goods as a private carrier.
Loadmasters Customs Services, Inc. Glodel Brokerage Corporation Article 1732-1766 NCC.
Common Carrier - Customs Broker Art. 1732. Common carriers are persons, corporations, firms or associations
Under Article 1732 of the Civil Code, common carriers are persons, corporations, engaged in the business of carrying or transporting passengers or goods or
firms, or associations engaged in the business of carrying or transporting both, by land, water, or air, for compensation, offering their services to the
passenger or goods, or both by land, water or air for compensation, offering their public.
services to the public. Loadmasters is a common carrier because it is engaged in
the business of transporting goods by land, through its trucking service. It is a Article 1733. Extra-Ordinary Diligence.
common carrier as distinguished from a private carrier wherein the carriage is
generally undertaken by special agreement and it does not hold itself out to carry Art. 1734. Common carriers are responsible for the loss, destruction, or
goods for the general public. Glodel is also considered a common carrier within the deterioration of the goods, unless the same is due to any of the following
context of Article 1732. For as stated and well provided in the case of Schmitz causes only:
Transport & Brokerage Corporation v. Transport Venture, Inc., a customs broker is (1) Flood, storm, earthquake, lightning, or other natural disaster
also regarded as a common carrier, the transportation of goods being an integral or calamity;
part of its business. (2) Act of the public enemy in war, whether international or civil;
Common carrier v. Other contracts. (3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
Cargolift Shipping Inc. V. L. Actuario Marketing Co. and Skyland Brokerage containers;
Common Carrier v Contract of Towage (5) Order or act of competent public authority.
a tug and its owners must observe ordinary diligence in the performance of its Art. 1735. Common Carriers are PRESUMED to be at FAULT.
obligation under a contract of towage. The negligence of the obligor in the Art. 1736. Responsibility starts from the receipt or possession of the carrier
performance of the obligation renders him liable for damages for the resulting for transportation until delivered, actually or constructively, to the
loss suffered by the obligee. Fault or negligence of the obligor consists in his consignee.
failure to exercise due care and prudence in the performance of the obligation as Art. 1737. Right of stoppage in transitu. Observance of extra-ordinary
the nature of the obligation so demands. diligence may stop.
Art. 1739. In order that the common carrier may be exempted from
responsibility, the natural disaster must have been the proximate and only
cause of the loss. However, the common carrier must exercise due diligence to employees may have acted beyond the scope of their authority or in
prevent or minimize loss before, during and after the occurrence of flood, violation of the orders of the common carriers.
storm or other natural disaster in order that the common carrier may be This liability of the common carriers does not cease upon proof that they
exempted from liability for the loss, destruction, or deterioration of the exercised all the diligence of a good father of a family in the selection and
goods. supervision of their employees.
The same duty is incumbent upon the common carrier in case of an act of the Governing Laws:
public enemy referred to in Article 1734, No. 2. 1.3 Article 1766 of the New Civil Code(NCC).
Art. 1740. If the common carrier negligently incurs in delay in transporting the Art. 1766. In all matters not regulated by this Code, the rights and obligations
goods, a natural disaster shall not free such carrier from responsibility. of common carriers shall be governed by the Code of Commerce and by special
Art. 1742. Even if the loss, destruction, or deterioration of the goods should be laws
caused by the character of the goods, or the faulty nature of the packing or of the
containers, the common carrier must exercise due diligence to forestall or lessen Application of Art. 1753NCC.
the loss. National Dev. Company v. CA
Art. 1744. Usually in a form of "contract of adhesion". This contract is In a previously decided case, it was held that the law of the country to which
generally legally valid. the goods are to be transported governs the liability of the common carrier in
Art. 1745. Any of the following or similar stipulations shall be considered case of their loss, destruction or deterioration pursuant to Article 1753 of the
unreasonable, unjust and contrary to public policy: Civil Code. It is immaterial that the collision actually occurred in foreign waters,
(1) That the goods are transported at the risk of the owner or shipper; such as Ise Bay, Japan.It appears, however, that collision falls among matters
(2) That the common carrier will not be liable for any loss, destruction, not specifically regulated by the Civil Code, hence, we apply Articles 826 to 839,
or deterioration of the goods; Book Three of the Code of Commerce, which deal exclusively with collision of
(3) That the common carrier need not observe any diligence in the vessels.
custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less Mapa v. CA
than that of a good father of a family, or of a man of ordinary When Is there International Transportation
prudence in the vigilance over the movables transported; When:
(5) That the common carrier shall not be responsible for the acts or 1. The place of departure and the place of destination are within the territories
omission of his or its employees; of two high contracting parties, regardless of whether or not there was a break
(6) That the common carrier's liability for acts committed by thieves, in the transportation or transshipment.
or of robbers who do not act with grave or irresistible threat,
violence or force, is dispensed with or diminished; 2. The place of departure and the place of destination are within the territory
(7) That the common carrier is not responsible for the loss, of a single contracting party if there is an agreed stopping place within a
destruction, or deterioration of goods on account of the defective territory subject to the sovereignty, mandate or authority of another power,
condition of the car, vehicle, ship, airplane or other equipment used even though the power is not a party to the convention.
in the contract of carriage.
Art. 1747. If the common carrier, without just cause, delays the transportation of Alitalia v. Intermediate Appellate Court
the goods or changes the stipulated or usual route, the contract limiting the Warsaw Convention
common carrier's liability cannot be availed of in case of the loss, destruction, or
deterioration of the goods. Held:
Art. 1749. A stipulation that the common carrier's liability is limited to the (1) Under the Warsaw Convention, an air carrier is made liable for damages
value of the goods appearing in the bill of lading, unless the shipper or owner for:
declares a greater value, is binding. a. The death, wounding or other bodily injury of a passenger if the accident
causing it took place on board the aircraft or I the course of its operations of
Art. 1750. A contract fixing the sum that may be recovered. by the owner or embarking or disembarking;
shipper for the loss, destruction, or deterioration of the goods is valid, if it is b. The destruction or loss of, or damage to, any registered luggage or goods, if
reasonable and just under the circumstances, and has been fairly and freely the occurrence causing it took place during the carriage by air; and
agreed upon. c. Delay in the transportation by air of passengers, luggage or goods.
Art. 1752. Even when there is an agreement limiting the liability of the common
carrier in the vigilance over the goods, the common carrier is disputably The convention however denies to the carrier availment of the provisions
presumed to have been negligent in case of their loss, destruction or which exclude or limit his liability, if the damage is caused by his wilful
deterioration. misconduct, or by such default on his part as is considered to be equivalent to
Art. 1753. The law of the country to which the goods are to be transported shall wilful misconduct. The Convention does not thus operate as an exclusive
govern the liability of the common carrier for their loss, destruction or enumeration of the instances of an airline's liability, or as an absolute limit of
deterioration. the extent of that liability. It should be deemed a limit of liability only in those
SUBSECTION 3. - Safety of Passengers 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
Art. 1755. A common carrier is bound to carry the passengers safely as far as by any wilful misconduct, bad faith, recklessness, or otherwise improper
human care and foresight can provide, using the utmost diligence of very conduct on the part of any official or employee for which the carrier is
cautious persons, with a due regard for all the circumstances. responsible, and there is otherwise no special or extraordinary form of
Art. 1756. In case of death of or injuries to passengers, common carriers are resulting injury.
presumed to have been at fault or to have acted negligently, unless they prove Application of COGSA
that they observed extraordinary diligence as prescribed in Articles 1733 and Philippine Charter Insurance Corpo v. Neptune Orient Lines
1755. Limited liability
Art. 1757. The responsibility of a common carrier for the safety of passengers as
required in Articles 1733 and 1755 cannot be dispensed with or lessened by While common carriers are liable to pay for loss or destruction of goods
stipulation, by the posting of notices, by statements on tickets, or otherwise. transported by them, if they failed to prove that they observe extraordinary
Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the diligence in the vigilance over the goods, a stipulation in the bill of lading
common carrier's liability for negligence is valid, but not for wilful acts or gross limiting their liability for such loss or destruction to a certain sum is
negligence. sanctioned by law (Art. 1749 and 1750, Civil Code), unless the shipper or
The reduction of fare does not justify any limitation of the common carrier's owner declares a greater value. This is the rule applied in this case of NOL, a
liability. shipping company based in Hong Kong and owner of the vessel M/V Baltimar
Art. 1759. Common carriers are liable for the death of or injuries to passengers Orion.
through the negligence or wilful acts of the former's employees, although such
Section 4 par. 5 of the COGSA which also pertinently provides that neither Since Equitable remained the registered owner of the tractor, it could not
the carrier nor the ship shall in any event be or become liable for any loss or escape primary liability for the deaths and the injuries arising from the
damage to or in connection with the transportation of goods in an amount not negligence of the driver.
exceeding $500 per package unless the nature and value of such goods have
been declared by the shipper before the shipment and inserted in the B/L May registered owner prove the actual owner to escape liability?
Aguilar v. Commercial Savings Bank
In this case the B/L submitted by the PCIC did not show that the shipper
(LTGMC) declared the actual value of the goods insured by FMC before shipment We hold with the trial court that the law does not allow the registered owner
and that said value was inserted in the B/L. In fact no additional charges were paid. to prove who the actual and real owner is, and in accordance with such proof
Hence the stipulation in the B/L that the carriers liability shall not exceed US$500 escape or evade responsibility and lay the same on the person actually owning
per package applies (Philippine Charter Insurance Corporation vs. Neptune Orient the vehicle to do so; the law, with its aim and policy in mind, does not relieve
Lines etc., G.R. 145044, June 12, 2008) him directly of the responsibility that the law fixes and places upon him as an
incident or consequence of registration. Were a registered owner allowed to
1.4 RA 9497. evade responsibility by proving who the supposed transferee or owner is, it
would be easy for him, by collusion with others or otherwise, to escape said
2. Nature of business. responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or
3. Registered owner rule and Kabit System. injury done. A victim of recklessness on the public highways is usually without
3.1 Registration laws. means to discover or identify the person actually causing the injury or
Compulsory registration of motor vehicles RA 4136 damage. He has no means other than by a recourse to the registration in the
Motor Vehicles Office to determine who is the owner. The protection that the
Registered owner rule. law aims to extend to him would become illusory were the registered owner
PCI leasing and finance, Inc. v. UCPB General Insurance Co. given the opportunity to escape liability by disproving his ownership. If the
policy of the law is to be enforced and carried out, the registered owner should
The non-registration of the financial lease precludes the enjoyment of the benefits not be allowed to prove the contrary to the prejudice of the person injured,
of Section 12 of RA 8556 that is, to prove that a third person or another has become the owner, so that
he may thereby be relieved of the responsibility to the injured person.
Registration is required not to make said registration the operative act by which
ownership in vehicles is transferred, as in land registration cases, because the Perez v. Gutierrez
administrative proceeding of registration does not bear anyessential relation to The question that is posed, therefore, is how should the holder of the
the contract of sale between the parties (Chinchilla vs. Rafael and Verdaguer, 39 certificate of public convenience Tamayo participate with his transferee
Phil. 888), but to permit the use and operation of the vehicle upon any public operator Rayos, in the damages recoverable by the heirs of the deceased
highway (section 5 [a], Act No. 3992, asamended.) The main aim of motor vehicle passenger, if their liability is not that of joint tortfeasors in accordance with
registration is to identify the owner so that if any accident happens, orthat any Article 2194 of the Civil Code. The following considerations must be borne in
damage or injury is caused by the vehicle on the public highways, responsibility mind in determining this question. As Tamayo is the registered owner of the
therefor can be fixed on adefinite individual, the registered owner. Instances are truck, his responsibility to the public or to any passenger riding in the vehicle or
numerous where vehicles running on public highwayscaused accidents or injuries truck must be direct, for the reasons given in our decision in the case of Erezo
to pedestrians or other vehicles without positive identification of the owner or vs. Jepte, supra, as quoted above. But as the transferee, who operated the
drivers,or with very scant means of identification. It is to forestall vehicle when the passenger died, is the one directly responsible for the
these circumstances, so inconvenient or prejudicial tothe public, that the motor accident and death, he should in turn be made responsible to the registered
vehicle registration is primarily ordained, in the interest of the determination of owner for what the latter may have been adjudged to pay. In operating the
personsresponsible for damages or injuries caused on public highways. truck without transfer thereof having been approved by the Public Service
Commission, the transferee acted merely as agent of the registered owner
A sale, lease, or financial lease, for that matter, that is not registered with the Land and should be responsible to him (the registered owner), for any damages
Transportation Office, still does not bind third persons who are aggrieved in that he may cause the latter by his negligence."
tortious incidents, for the latter need only to rely on the public registration of
amotor vehicle as conclusive evidence of ownership. A lease such as the one 3.2 Kabit system.
involved in the instant case is anencumbrance in contemplation of law, which Aberlardo Lim, et al. v. CA
needs to be registered in order for it to bind third parties. Under thispolicy, the evil
sought to be avoided is the exacerbation of the suffering of victims of tragic Yes. Private respondent has the right to proceed against petitioners for the
vehicular accidents in notbeing able to identify a guilty party. A contrary ruling will damage caused on his passenger jeepney as well as on his business. Although
not serve the ends of justice. The failure to register a lease,sale, transfer or petitioners' attempt to illustrate that an affirmance of the appealed decision
encumbrance, should not benefit the parties responsible, to the prejudice of could be supportive of the pernicious kabit system does not persuade, the evil
innocent victims. sought to be prevented in enjoining the kabit system does not exist. The kabit
system is an arrangement whereby a person who has been granted a
Equitable Leasing Corporation v. Lucita Suyon, certificate of public convenience allows other persons who own motor
vehicles to operate them under his license, sometimes for a fee or
percentage of the earnings.Although the parties to such an agreement are
The Lease Agreement between petitioner and Edwin Lim stipulated that it is the not outrightly penalized by law, the kabit system is invariably recognized as
intention of the parties to enter into a finance lease agreement. Ownership of the being contrary to public policy and therefore void and inexistent under Art.
subject tractor was to be registered in the name of petitioner, until the value of 1409 of the Civil Code. The thrust of the law in enjoining the kabit system is
the vehicle has been fully paid by Edwin Lim. not so much as to penalize the parties but to identify the person upon whom
responsibility may be fixed.
Lim completed the payments to cover the full price of the tractor. Thus, a Deed of
Sale over the tractor was executed by petitioner in favor of Ecatine represented In the present case, the evil sought to be prevented in enjoining the kabit
by Edwin Lim. However, the Deed was not registered with the LTO. Petitioner is system does not exist. First, neither of the parties to the pernicious kabit
liable for the deaths and the injuries complained of, because it was the registered system is being held liable for damages. Second, the case arose from the
owner of the tractor at the time of the accident.The Court has consistently ruled negligence of another vehicle in using the public road to whom no
that, regardless of sales made of a motor vehicle, the registered owner is the representation, or misrepresentation, as regards the ownership and operation
lawful operator insofar as the public and third persons are concerned. of the passenger jeepney was made and to whom no such representation, or
misrepresentation, was necessary. Thus it cannot be said that private
respondent Gonzales and the registered owner of the jeepney were in
estoppel for leading the public to believe that the jeepney belonged to the
registered owner. Third, the riding public was not bothered nor inconvenienced at
the very least by the illegal arrangement. On the contrary, it was private A certificate of registration of a motor vehicle creates a strong presumption of
respondent himself who had been wronged and was seeking compensation for the ownership in favor of one in whose name it is issued, unless proven otherwise.
damage done to him. Certainly, it would be the height of inequity to deny him his In this case, we have not found sufficient proof to destroy the presumption.
right. Petitioners seek to dispel the presumption by alleging that the vehicle was
stolen by Bicomong from them and therefore the respondent was a buyer in
Kabit system- definition, liability of owner and driver bad faith. There is no clear indication that the vehicle was stolen by Bicomong,
Lita Enterprises, Inc. v. IAC much less that respondent had knowledge thereof. Hence, the presumption of
kabit system ownership created by respondents certificate of registration stands.
system whereby a person who has been granted a certificate of convenience allo xxx
ws another person who owns motors vehicles to operate under such franchise for Oscar Villarama Jr v. CA
a fee; contrary to public policy and, therefore, void and inexistent underArticle Registered Owner/Boundary System
1409 of the Civil Code; as a result, the court will not aid either party to enforce Under the boundary-hulog scheme, a dual juridical relationship is created;
anillegal contract, but will leave them both where it finds them (pari delicto rule) that of employer- employee and vendor-vendee. The Kasanduan did not
extinguish the employer employee relationship of the parties existing before
Liability of a registered owner of a vehicle the execution of said deed.
Mariano C Mendoza and Lim v. SPS Gomez and Gomez a. Under this system the owner/operator exercises control and supervision
over the driver. It is unlike in lease of chattels where the lessor loses complete
The registered owner is deemed the employer of the negligent driver, and is thus control over the chattel leased but the lessee is still ultimately responsible for
vicariously liable under Article 2176, in relation to Article 2180, of the Civil Code. the consequences of its use. The management of the business is still in the
The registered owner of the motor vehicle is the employer of the negligent driver, hands of the owner/operator, who, being the holder of the certificate of public
and the actual employer is considered merely as an agent of such owner. Thus, convenience, must see to it that the driver follows the route prescribed by the
whether there is an employer-employee relationship between the registered franchising and regulatory authority, and the rules promulgated with regard to
owner and the driver is irrelevant in determining the liability of the registered the business operations.
owner who the law holds primarily and directly responsible for any accident, injury b. The driver performs activities which are usually necessary or desirable in the
or death caused by the operation of the vehicle in the streets and highways usual business or trade of the owner/operator. Under the Kasunduan,
respondent was required to remit Php 550 daily to petitioner, an amount
As such, there can be no other conclusion but to hold Lim vicariously liable with which represented the boundary of petitioner as well as respondents partial
Mendoza. payment (hulog) of the purchase price of the jeepney. Thus, the daily
This does not mean, however, that Lim is left without any recourse against remittances also had a dual purpose: that of petitioners boundary and
Enriquez and Mendoza. Under the civil law principle of unjust enrichment, the respondents partial payment (hulog) for the vehicle.
registered owner of the motor vehicle has a right to be indemnified by the actual c. The obligation is not novated by an instrument that expressly recognizes the
employer of the driver; and under Article 2181 of the Civil Code, whoever pays for old one, changes only the terms of payment and adds other obligations not
the damage caused by his dependents or employees may recover from the latter incompatible with the old provisions or where the contract merely
what he has paid or delivered in satisfaction of the claim. supplements the previous one.
[Supplementary Notes:] d. The existence of an employment relation is not dependent on how the
worker is paid but on the presence or absence of control over the means and
Pari Delicto Rule. method of the work. The amount earned in excess of the boundary hulog is
Kabit System: In Pari Delicto equivalent to wages and the fact that the power of dismissal was not
Teja Marketing v. IAC mentioned in the Kasunduan did not mean that private respondent never
The "kabit system" has been identified as one of the root causes of theprevalence exercised such power, or could not exercise such power.
of graft and corruption in the government transportation offices.Although not out
rightly penalized as a criminal offense, the kabit system isinvariably recognized as OTHER NOTES:
being contrary to public policy and, therefore, void and inexistent under Article (1) The rule is that the nature of an action and subject matter thereof, as well
1409 of the Civil Code. It is a fundamentalprinciple that the court will not aid either as, which court or agency of the government has jurisdiction and the character
party to enforce an illegal contract, but will leave both where it finds then. Upon of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to
this premise it would be error toaccord the parties relief from their predicament. any or all of such reliefs.
(2) Not every dispute between an employer and employee involves matters
Aircrafts and vessels. that only the Labor Arbiter and the NLRC can resolve in the exercise of their
Estela Crisostomo v. CA adjudicatory or quasi-judicial powers. Actions between employers and
employees where the employer-employee relationship is merely incidental is
Boundary System. within the exclusive original jurisdiction of the regular courts.
Gregorio George Amante and Vicente Amante vs. Bibiano Serwelas
(useless case, no principle related to transportation except presumption of Martin Lantaco et al. v. City Judge Francisco R. Llamas
ownership) Boundary System-not lease, EE-Er Relationship
Facts: Danilo Bicomong was the registered owner of a 1990 Isuzu Jitney. He was
employed as plant supervisor of Amante Motors. Bicomong sold the vehicle there is employer-employee relation between jeepney owners/operators
for P200,000 to respondent in a deed of absolute sale. On October 7, 1992, and jeepney drivers under the boundary system arrangement, and
respondent had the vehicle registered in his name, as shown in certificate of enunciated:
registration no. 14058314.[4] He then operated it as a common carrier on a
boundary system. "The main question to determine is whether there exists a relationship of
employer-employee between the drivers of the jeeps and the owner
On December 9, 1993, the vehicle was seized by the police highway patrol group thereof.
in General Mariano Alvarez, Cavite without a warrant, upon the request of
petitioner Gregorio Amante, the manager of Amante Motors. Xxx (principles same as other cases referring to dinglasan case)
xxx
Xxx Not having any interest in the business because they did not invest anything
Respondents ownership of the vehicle was proven by the certificate of registration in the acquisition of the jeeps and did not participate in the management
in his name. Petitioner Vicente Amante, on the otherhand, could not present any thereof, their service as drivers of the jeeps being their only contribution to
certificate of registration to support his claim. Between one who is armed with a the business, the relationship of lessor and lessee cannot be sustained [In the
certificate of registration clearly establishing his ownership and another whose matter of the Park Floral Company, etc., 19 NLRB 403; Radley et al. vs.
claim is supported only by unconvincing allegations, we do not hesitate to rule for Commonwealth, 161 SW (2d) 417; Jones vs. Goodson et al., 121 Fed. Rep. (2d)
the former. 176; Mitchel vs. Gibbson et al., 172 Fed. Rep. (2d) 970]. In the lease of chattels
the lessor loses complete control over the chattel leased although the lessee employees including drivers cannot be said to be field personnel despite the
cannot make bad use thereof, for he would be responsible for damages to fact that they are performing work away from the principal office of the
the lessor should he do so. In this case there is a supervision and a sort of control employee.
that the owner of the jeeps exercises over the drivers. It is an attempt by
ingenious scheme to withdraw the relationship between the owner of the jeeps Probationary Status of Fixed Term
and the drivers thereof from the operation of the labor laws enacted to promote Obligation of the Carrier
industrial peace." (98 Phil. 650, 651-53).
Philam Insurance Co. v. Heung A
On April 30, 1963, this Court reiterated this doctrine in Magboo, et al. vs. Bernardo
(L-16790, 7 SCRA 952) and stated: A charter party has been defined as a contract by which an entire ship, orsome
"Appellant assails said decision, assigning three errors which boil down to the principal part thereof, is let by the owner to another person for a specified
question of whether or not an employer-employee relationship exists between time or use; a contract of affreightment by which the owner of a ship or other
a jeepney-owner and a driver under a 'boundary system' vessel lets the whole or a part of her to a merchant or other person for the
arrangement. Appellant contends that the relationship is essentially that conveyance of goods, on a particular voyage, in consideration of the payment
of lessor and lessee. of freight. A charter party has two types. First, it could be a contract of
affreightment whereby the use of shipping space on vessels is leased in part or
"A similar contention has been rejected by this Court in several cases. In National as a whole, to carry goods for others. The charter-party provides for the hire
Labor Union v. Dinglasan, 52 O.B., No. 4, 1933, it was held that the features which of vessel only, either for a determinate period of time (time charter) or for a
characterize the 'boundary system' - namely, the fact that the driver does not single or consecutive voyage (voyage charter). The ship owner supplies the
receive a fixed wage but gets only the excess of the receipt of fares collected by ships stores, pay for the wages of the master and the crew, and defray the
him over the amount he pays to the jeep-owner and that the gasoline consumed expenses for the maintenance of the ship. The voyage remains under the
by the jeep is for the account of the driver -- are not sufficient to withdraw the responsibility of the carrier and it is answerable for the loss of goods received
relationship between them from that of employer and employee. The ruling was for transportation. The charterer is free from liability to third persons in
subsequently cited and applied in Doce v. Workmen's Compensation respect of the ship. Second, charter by demise or bareboat charter under
Commission, L-9417, December 22, 1958, which involved the liability of a bus which the whole vessel is let to the charterer with a transfer to him of its entire
owner for injury compensation to a conductor working under the 'boundary command and possession and consequent control over its navigation, including
system.' " (7 SCRA 953-54). the master and the crew, who are his servants. The charterer mans the vessel
with his own people and becomes, in effect, the owner for the voyage or
Isabelo Doce v. WCC and Dadao Jadao service stipulated and hence liable for damages or loss sustained by the goods
EMPLOYER AND EMPLOYEE; OWNER OF BUS AND CONDUCTOR UNDER transported.
BOUNDARY SYSTEM Gregorio Anuran, Maria Maligaya v. Buno et al
Not lessor-lessee The principle about the "last clear chance" would call for application in a
suit between the owners and drivers of the two colliding vehicles. It does
1. EMPLOYER AND EMPLOYEE; OWNER OF BUS AND CONDUCTOR UNDER not arise where a passenger demands responsibility from the carrier to
BOUNDARY SYSTEM. The relationship of employer and employee exists enforce its contractual obligations. For it would be inequitable to exempt
between the owner of a bus and its conductor operating under the boundary the negligent driver of the jeepney and its owners on the ground that the
system within the meaning of the law and as such the case comes under the
other driver was likewise guilty of negligence.
jurisdiction of the Court of Industrial Relations.

Applicability of the doctrine of last clear chance


The Defendants claim relationship is lessor lessee Under the doctrine of last clear chance, when both parties involved in the
"The only features that would make the relationship of lessor and lessee between accident were both negligent, the negligence of the party will not be
the respondent, owner of the jeeps, and the drivers, members of the petitioner considered the proximate cause if the other party has the last clear chance of
union, are the fact that he does not pay them any fixed wage but their avoiding the injury. Thus, if the plaintiff has the last clear chance of avoiding
compensation is the excess of the total amount of fares earned or collected by the injury, the defendant may no longer be held liable. In such case, the
them over and above the amount of P7.50 which they agreed to pay to the
negligence of the plaintiff which is not just contributory negligence will be
respondent, and the fact that the gasoline burned by the jeeps is for the account
considered an efficient intervening cause.
of the drivers. These two features are not, however, sufficient to withdraw the
relationship between them from that of employer-employee, because the
estimated earnings for fares must be over and above the amount they agreed to Atty. Capanas: The doctrine of last clear chance does not apply to the contract
pay to the respondent for a ten-hour shift or ten-hour a day operation of the jeeps. of carriage because the basis of a contract of carriage because the basis of a
Not having any interest in the business because they did not invest anything in the contract of carriage is the contract between the passenger and the common
acquisition of the jeeps and did not participate in the management thereof, their carrier. The doctrine of last clear chance applies only if there is no preexisting
service as drivers of the jeeps being their only contribution to the business, the contract.
relationship of lessor and lessee cannot be sustained."
Duty to accept
The contention of petitioner that the relation that existed between him and the
respondent is only one of lessor and lessee cannot therefore be sustained. FC Fisher v. Yangco Steamship Co.

Common carrier in the jurisdiction cannot lawfully decline to accept a


Rodolfo J. Serrano v. Severino Santos Transit and/or Severino Santos
Boundary System - SIL, retirement benefits, not field employees particular class of goods, unless it appears that for some sufficient reason
the discrimination is reasonalble and necessary. Yangco Steamships
ISSUE: Whether or not petitioner is entitled to the computation of retirement pay Company has not met those conditions.
as given by RA 7641 The nature of the business of a common carrier as a public
employment is such that it is within the power of the state to impose such
Employees engaged on task or contract basis or paid on purely commission basis just regulation in the interest of the public as the legistalors may deem
are not automatically exempted from the grant of service incentive leave, unless, proper.
they fall under the classification of field personnel. As a general rule, [field
personnel] are those whose performance of their job/service is not supervised by Valid grounds for non- acceptance
the employer or his representative, the workplace being away from the principal When the goods ought to be transported are dangerous object or
office and whose hours and days of work cannot be determined with reasonable
substance including dynamites and other explosives
certainty; hence, they are paid specific amount for rendering specific service or
The goods are unfit for transportation
performing specific work. If required to be at specific places at specific times,
Acceptance would result in overloading
The goods are considered contraband or illegal goods in all other cases in which this indemnity may be due.
Goods are injurious to health
Goods will be exposed to untoward danger like flood, capture by ARTICLE 372 Code of Commerce. -The value of the goods which the
enemies and the like carrier must pay in cases if loss or misplacement shall be determined
Goods like livestock will be exposed to diseases in accordance with that declared in the bill of lading, the shipper not
Strike being allowed to present proof that among the goods declared
Failure to tender goods on time therein there were articles of greater value and money.
Horses, vehicles, vessels, equipment and all other principal and
Article 356-357-358 of the Code of Commerce(COC) accessory means of transportation shall be especially bound in favor
ARTICLE 356. Carriers may refuse packages which appear unfit for of the shipper, although with respect to railroads said liability shall
transportation; and if the carriage is to be made by railway, and the shipment is be subordinated to the provisions of the laws of concession with
insisted upon, the company shall transport them, being exempt from all respect to the property, and to what this Code established as to the
responsibility if its objections, is made to appear in the bill of lading. manner and form of effecting seizures and attachments against said
companies.
ARTICLE 357. If by reason of well-founded suspicion of falsity in the
declaration as to the contents of a package the carrier should decide to ARTICLE 373 Code of Commerce. -The carrier who makes the
examine it, he shall proceed with his investigation in the presence of witnesses, delivery of the merchandise to the consignee by virtue of combined
with the shipper or consignee in attendance. agreements or services with other carriers shall assume the
obligations of those who preceded him in the conveyance, reserving
If the shipper or consignee who has to be cited does not attend, the his right to proceed against the latter if he was not the party directly
examination shall be made before a notary, who shall prepare a memorandum responsible for the fault which gave rise to the claim of the shipper
of the result of the investigation, for such purposes as may be proper. or consignee.

If the declaration of the shipper should be true, the expense occasioned by the The carrier who makes the delivery shall likewise acquire all the
examination and that of carefully repacking the packages shall be for the actions and rights of those who preceded him in the conveyance.
account of the carrier and in a contrary case for the account of the shipper.
The shipper and the consignee shall have an immediate right of
ARTICLE 358. If there is no period fixed for the delivery of the goods the action against the carrier who executed the transportation contract,
carrier shall be bound to forward them in the first shipment of the same or or against the other carriers who may have received the goods
similar goods which he may make point where he must deliver them; and should transported without reservation.
he not do so, the damages caused by the delay should be for his account.
However, the reservation made by the latter shall not relieve them
Article 1742 of the NCC from the responsibilities which they may have incurred by their own
Art. 1742. Even if the loss, destruction, or deterioration of the goods acts.
should be caused by the character of the goods, or the faulty nature
of the packing or of the containers, the common carrier must ARTICLE 374 Code of Commerce. - The consignees to whom the
exercise due diligence to forestall or lessen the loss shipment was made may not defer the payment of the expenses
and transportation charges of the goods they receive after the lapse
Duty to deliver goods of twenty-four hours following their delivery; and in case of delay in
Consequences of delay this payment, the carrier may demand the judicial sale of the goods
Article 1740 NCC - If a common carrier negligently incurs in delay in transported in an amount necessary to cover the cost of
transporting the goods, a natural disaster shall not free such carrier transportation and the expenses incurred.
from responsibility.
Article 1747 NCC - If a common carrier, without just cause, delays the Rights of passengers in case of delay
transportation of the goods or changes the stipulated or usual route, Art 698COC. If the voyage has already begun, the passengers shall be obliged to
the contract limiting the common carriers liability cannot be availed of pat the fare in proportion to the distance covered, without right to recover for
in case of loss, destruction, or deterioration of the goods. losses and damages if interruption is due to fortuitous event or force majeure,
ARTICLE 370 Code of Commerce. -If a period has been fixed for the but with the right of indemnity if the interruption should have been caused by
delivery of the goods, it must be made within such time, and, for failure the captain exclusively.
to do so, the carrier shall pay the indemnity stipulated in the bill of
lading, neither the shipper nor the consignee being entitled to anything If the interruption should be caused by the disability of the vessel and a
else. passenger should agree to await the repairs, he may not be required to pay any
increased price of passage, but his living expense during the stay shall be for his
If no indemnity has been stipulated and the delay exceeds the time account. Consequently, the carrier is liable for any loss or damage, including
fixed in the bill of lading, the carrier shall be liable for the damages pecuniary loss or loss of profit, which the passenger may have
which the delay may have caused. suffered by reason thereof.

ARTICLE 371 Code of Commerce. -In case of delay through the fault of Marina regulation Mem. Circular no. 112
the carrier, referred to in the preceding articles, the consignee may In case the vessel is not able to depart on time and the delay is unreasonable,
leave the goods transported in the hands of the former, advising him the passenger may opt to have his ticket immediately refunded without any
thereof in writing before their arrival at the point of destination. refund service fee from the authorized issuing/ticketing office.
When this abandonment takes place, the carrier shall pay the full value
of the goods as if they had been lost or mislaid.
If the abandonment is not made, the indemnification for losses and Trans-asia Shipping Lines, Inc. v. CA
damages by reason of the delay cannot exceed the current price which
the goods transported would have had on the day and at the place in SC: The stoppage was not to start and synchronized [sic] the engines of the
which they should have been delivered; this same rule is to be observed vessel as claimed by defendant-appellee. It was because one of the engines
of the vessel broke down; it was because of the disability of the vessel which 3.2 The carrier shall provide meals, free of charge, during meal time in case
from the very beginning of the voyage was known to defendant-appellee. the vessel is delayed in the arrival at the port of destination.
3.3 In case of delay in the departure at the port of origin due to the carriers
Defendant-appellee from the very start of the voyage knew for a fact that the negligence, the carrier is also under obligation to provide meals, free of
vessel was not yet in its sailing condition because the second engine was still charge, during meal time to ticketed passengers for the particular voyage. If
being repaired. Inspite of this knowledge, defendant-appellee still proceeded to the cause of the delay is a fortuitous event, the carrier is under no obligation
sail with only one engine running. to serve free meals to the passengers.
3.4 The carrier is under obligation to duly inform the passengers of the
Defendant-appellee at that instant failed to exercise the diligence which all change in sailing schedule of the vessel(s).
common carriers should exercise in transporting or carrying passengers. The
law does not merely require extraordinary diligence in the performance of the Duty to Exercise Extra-ordinary Diligence
obligation. The law mandates that common carrier[s] should exercise utmost 1.1 Commencement of Duty in Carriage of Passengers
diligence in the transport of passengers
Application of Article 1733 , Artilc 1755 and 1756 of
NCC(Presumption of negligence)
Place of delivery
Place Mariano v. Calleja
The goods should be delivered to the consignee in the place agreed Facts:
Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr.
upon by the parties. If specific place or warehouse is designated in
Frelinda Mariano who was a passenger of a Celyrosa Express bus bound for
the bill of lading, the goods must be delivered in such place even if it
Tagaytay when she met her death. Respondent Ildefonso C. Callejas is the
is not the usual place of delivery in the place of destination.
registered owner of Celyrosa Express, while respondent Edgar de Borja was
the driver of the bus on which the deceased was a passenger.
A. 360 COC The shipper, without changing the place where the The Celyrosa Express bus, carrying Dr. Mariano as its passenger,
delivery is to be made, may change the consignment of the goods collided with an Isuzu truck with trailer. The passenger bus was bound for
which he delivered to the carrier, provided that at the time of Tagaytay while the trailer truck came from the opposite direction, bound for
ordering the change of consignee the bill of lading signed by the Manila. The trailer truck bumped the passenger bus on its left middle
carrier, if one has been issued, be returned to him, in exchange for portion. Due to the impact, the passenger bus fell on its right side on the
another wherein the novation of the contract appears. right shoulder of the highway and caused the death of Dr. Mariano and
physical injuries to four other passengers. Dr. Mariano was 36 years old at
The expenses which this change of consignment occasions shall be the time of her death. She left behind three minor children, aged four, three
for the account of the shipper and two years.
The respondent said that the proximate cause of the accident
was the recklessness of the driver of the trailer truck which bumped their
To whom delivered
bus while allegedly at a halt on the shoulder of the road in its rightful
To whom lane. Thus, respondent Callejas filed a third-party complaint against the
consignee or trailer truck, for indemnity in the event that he would be held liable for
any other person to whom the bill of lading was validly damages to petitioner.
transferred or negotiated.
Delivery must generally be made to the owner or consignee or to Respondents owner and driver appealed to the Court of Appeals,
someone lawfully authorized by him to receive the goods for his contending that the trial court erred in holding them guilty of breach of
account. contract of carriage.

A. 368 COC -The carrier must deliver to the consignee, without any Held:
delay or obstruction, the goods which he may have received, by The following are the provisions of the Civil Code pertinent to the
the mere fact of being named in the bill of lading to receive them; case at bar:
ART. 1733. Common carriers, from the
and if he does not do so, he shall be liable for the damages which
nature of their business and for reasons of public
may be caused thereby.
policy, are bound to observe extraordinary diligence in
A. 369 COC: if the consignee cannot be found at the residence the vigilance over the goods and for the safety of the
indicated in the BOL or if he refuses to pay the transportation passengers transported by them, according to all the
expenses or if he refuses to receive the goods circumstances of each case.
ART. 1755. A common carrier is bound to
Delay to transport Passengers carry the passengers safely as far as human care and
A carrier is duty bound to transport the passenger with reasonable dispatch. The foresight can provide, using the utmost diligence of
carrier shall be made liable when the vessel very cautious persons, with a due regard for all the
or vehicle is unreasonably delayed. A carrier must commence its trip within a circumstances.
reasonable time. ART. 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they
Marina Memorandum Circular no. 112 December 15, 1995
prove that they observed extraordinary diligence as
Xx
prescribed in articles 1733 and 1755.
3. DELAYED AND UNFINISHED VOYAGE
3.1 In case the vessel can not continue or complete her voyage for any cause, This Court interpreted the above quoted provisions in
the carrier is under obligation to transport the passenger to his/her destination Pilapil v. Court of Appeals.[12] We elucidated:
at the expense of the carrier including free meals and lodging before the said
passenger is transported to his/her destination. A passenger may opt to have While the law requires the highest degree of diligence from
his/her ticket refunded in full if the cause of the unfinished voyage is due to the common carriers in the safe transport of their passengers and
negligence of the carrier, or, to an amount that will suffice to defray creates a presumption of negligence against them, it does not,
transportation cost at the shortest possible route towards his/her destination if however, make the carrier an insurer of the absolute safety of
the cause of the unfinished voyage is a fortuitous event. its passengers.
Article 1755 of the Civil Code qualifies the duty of extraordinary care, the metal envelopes rust-stained and heavily buckled, and the contents
vigilance and precaution in the carriage of passengers by common thereof exposed and rusty.
carriers to only such as human care and foresight can provide. What Third, Bad Order Tally Sheet No. 154979[28] issued by Jardine Davies
constitutes compliance with said duty is adjudged with due regard to Transport Services, Inc., stated that the four coils were in bad order and
all the circumstances. condition. Normally, a request for a bad order survey is made in case there is
an apparent or a presumed loss or damage.[29]
Article 1756 of the Civil Code, in creating a presumption of fault or Fourth, the Certificate of Analysis[30] stated that, based on the sample
negligence on the part of the common carrier when its passenger is submitted and tested, the steel sheets found in bad order were wet with
injured, merely relieves the latter, for the time being, from fresh water.
introducing evidence to fasten the negligence on the former, Fifth, petitioners -- in a letter[31] addressed to the Philippine Steel Coating
because the presumption stands in the place of evidence. Being a Corporation and dated October 12, 1990 -- admitted that they were aware of
mere presumption, however, the same is rebuttable by proof that the condition of the four coils found in bad order and condition. These facts
the common carrier had exercised extraordinary diligence as were confirmed by Ruperto Esmerio, head checker of BM Santos Checkers
required by law in the performance of its contractual obligation, or Agency. All these conclusively prove the fact of shipment in good order and
that the injury suffered by the passenger was solely due to a condition and the consequent damage to the four coils while in the
fortuitous event. possession of petitioner,[33] who notably failed to explain why.[34]

In fine, we can only infer from the law the intention of the Code Further, petitioners failed to prove that they observed the
Commission and Congress to curb the recklessness of drivers and extraordinary diligence and precaution which the law requires a common
operators of common carriers in the conduct of their business. carrier to know and to follow, to avoid damage to or destruction of the
Thus, it is clear that neither the law nor the nature of the business of goods entrusted to it for safe carriage and delivery.[35]
a transportation company makes it an insurer of the passenger's
safety, but that its liability for personal injuries sustained by its True, the words metal envelopes rust stained and slightly dented
passenger rests upon its negligence, its failure to exercise the degree were noted on the Bill of Lading; however, there is no showing that
of diligence that the law requires. petitioners exercised due diligence to forestall or lessen the loss\
In the case at bar, petitioner cannot succeed in his contention that Saludo v. CA
respondents failed to overcome the presumption of negligence against
them. The totality of evidence shows that the death of petitioners spouse was Facts:
caused by the reckless negligence of the driver of the Isuzu trailer truck which Plaintiff herein together with Pomierski and Son Funeral Home of
lost its brakes and bumped the Celyrosa Express bus, owned and operated by Chicago brought the remains of plaintiffs mother to Continental Mortuary Air
respondents. Services which booked the shipment of the remains from Chicago to San
Francisco by Trans World Airways (TWA) and from San Francisco to Mania with
Duration of Duty in Carriage of Goods (Article 1736, 1737,1738) Philippine Airlines (PAL). The remains were taken to the Chicago Airport, but it
CC must exercise ED from the time the goods are unconditionally placed in the
turned out that there were 2 bodies in the said airport. Somehow the 2 bodies
possession of, and received by the carrier for until they
were switched, and the remains of plaintiffs mother was shipped to Mexico
are delivered to the consignee, or to the person who has a right to receive them.
(Art 1736 Ganzon v. CA G.R. No. L-48757 May 30, 1998) instead. The shipment was immediately loaded on another PAL flight and it
arrived the day after the expected arrival. Plaintiff filed a claim for damages in
CC must still exercise ED: court. The lower court absolved both airlines and upon appeal it was affirmed
by the court.
even when the goods are temporarily unloaded or stored in transit unless the
shipper or owner has made use of the right of stoppage in transitu. (1737) Issue:
during the time the goods are stored in a warehouse of the carrier at the place Whether or not the 2 airlines should be held liable for damages.
of destination, until the consignee has been advised of the arrival of the goods and
has had reasonable opportunity thereafter to remove or otherwise dispose of Held: Verily, no amount of inspection by respondent airline companies could
them. (1738) have guarded against the switching that had already taken place. Or, granting
that they could have opened the casket to inspect its contents, private
The New Civil Code is explicit when it comes to the duration of extraordinary
respondents had no means of ascertaining whether the body therein contained
responsibility with respect to goods. Due diligence should be exercised the
was indeed that of Crispina Saludo except, possibly, if the body was that of a
moment the goods are delivered to the carrier. (1736)
male person and such fact was visually apparent upon opening the casket.
The goods are deemed to be delivered to the carrier when the goods are ready for However, to repeat, private respondents had no authority to unseal and open
and have been placed in the exclusive possession, custody and control of the the same nor did they have any reason or justification to resort thereto.
carrier for the purpose of their immediate transportation and the carrier has
accepted them It is the right of the carrier to require good faith on the part of those persons
who deliver goods to be carried, or enter into contracts with it, and inasmuch
Application of Article 1736 of the NCC as the freight may depend on the value of the article to be carried, the carrier
Belgian Overseas Chartering and Shipping v. Phil. First Ins. Co., ordinarily has the right to inquire as to its value. Ordinarily, too, it is the duty of
the carrier to make inquiry as to the general nature of the articles shipped and
Proof of the delivery of goods in good order to a common carrier and of their of their value before it consents to carry them; and its failure to do so cannot
arrival in bad order at their destination constitutes prima facie fault or defeat the shipper's right to recovery of the full value of the package if lost, in
negligence on the part of the carrier. If no adequate explanation is given as to
the absence of showing of fraud or deceit on the part of the shipper. In the
how the loss, the destruction or the deterioration of the goods happened, the
absence of more definite information, the carrier has a the right to accept
carrier shall be held liable therefor.
shipper's marks as to the contents of the package offered for transportation
That petitioners failed to rebut the prima facie presumption of negligence is and is not bound to inquire particularly about them in order to take advantage
revealed in the case at bar by a review of the records and more so by the of a false classification and where a shipper expressly represents the contents
evidence adduced by respondent.[25] of a package to be of a designated character, it is not the duty of the carrier to
ask for a repetition of the statement nor disbelieve it and open the box and see
First, as stated in the Bill of Lading, petitioners received the subject shipment in for itself.
good order and condition in Hamburg, Germany.[26] However, where a common carrier has reasonable ground to suspect that the
Second, prior to the unloading of the cargo, an Inspection Report[27] prepared
offered goods are of a dangerous or illegal character, the carrier has the right
and signed by representatives of both parties showed the steel bands broken,
to know the character of such goods and to insist on an inspection, if
reasonable and practical under the circumstances, as a condition of receiving and working well. However, goods were damaged because temperature in the ref
transporting such goods. fluctuated to 33 degree C allegedly because of burnt condenser more of the ref
Code of commerce provisions container Temic claimed from Netherlands, Netherlands paid the insurance
Republic of the Philippines v. Lorenzo Shipping claim Netherlands filed a complaint for subrogation of insurance settlement
against RCL RCL and agent EDSA Shipping denied any negligence in the
Article 17338 of the Civil Code demands that a common carrier observe shipment, and that there is no valid subrogation
extraordinary diligence over the goods transported by it. Extraordinary
diligence is that extreme measure of care and caution which persons of unusual ISSUE/S:
prudence and circumspection use for securing and preserving their own W/N RCL and EDSA Shipping is liable as CC under the theory of presumption of
property or rights.9 This exacting standard imposed on common carriers in a negligence?
contract of carriage of goods is intended to tilt the scales in favor of the shipper
who is at the mercy of the common carrier once the goods have been lodged HELD:
for shipment. Hence, in case of loss of goods in transit, the common carrier is YES. SC held CC is presumed to have been negligent if it fails to prove that it
presumed under the law to have been at fault or negligent.10 However, the exercised extraordinary vigilance over the goods it transported. When the
presumption of fault or negligence, may be overturned by competent evidence goods shipped are either lost or arrived in damaged condition, a presumption
showing that the common carrier has observed extraordinary diligence over the arises against the carrier of its failure to observe that diligence, and there need
goods. not be an express finding of negligence to hold it liable.

RCL and EDSA Shipping failed to prove that they did exercise that degree of
In the instant case, we agree with the court a quo that the respondent diligence required by law over the goods they transported. Indeed, there is
adequately proved that it exercised extraordinary diligence. Although the sufficient evidence showing that the fluctuation of the temperature in the
original bills of lading remained with petitioner, respondents agents demanded refrigerated container van, as recorded in the temperature chart, occurred
from Abdurahman the certified true copies of the bills of lading. They also asked after the cargo had been discharged from the vessel and was already under the
the latter and in his absence, his designated subordinates, to sign the cargo custody of the arrastre operator, ICTSI. This evidence, however, does not
delivery receipts. disprove that the condenser fan which caused the fluctuation of the
temperature in the refrigerated container was not damaged while the cargo
This practice, which respondents agents testified to be their standard was being unloaded from the ship. It is settled in maritime law jurisprudence
operating procedure, finds support in Article 353 of the Code of Commerce: that cargoes while being unloaded generally remain under the custody of the
carrier;RCL and EDSA Shipping failed to dispute this. BURDEN OF PROOF HAS
ART. 353. . . . SHIFTED TO THE SHIPPER.

After the contract has been complied with, the bill of lading which the carrier
has issued shall be returned to him, and by virtue of the exchange of this title Defenses of Common Carriers
with the thing transported, the respective obligations and actions shall be In carriage of goods(1734):
considered cancelled, . 1. Flood, storm, earthquake, lightning, or other natural disaster or calamity
(Fortuitous event)
In case the consignee, upon receiving the goods, cannot return the bill of FORTUITOUS EVENT
lading subscribed by the carrier, because of its loss or of any other cause, he The following requisites must be present before fortuitous events can be
must give the latter a receipt for the goods delivered, this receipt producing properly invoked as a defense by the carrier:
the same effects as the return of the bill of lading. (Emphasis supplied) 1. The cause of the unforeseen and unexpected occurrence, or of the failure of
the debtor to comply with his obligation, must be independent of the human
Conformably with the aforecited provision, the surrender of the original bill of will
lading is not a condition precedent for a common carrier to be discharged of its 2. It must be impossible to foresee the event which constitute caso fortuito, or
contractual obligation. If surrender of the original bill of lading is not possible, if it can be foreseen, it must be impossible to avoid
acknowledgment of the delivery by signing the delivery receipt suffices. This is 3. the occurrence must be such as to render it impossible for the debtor to
what respondent did. fulfill his obligation in a normal manner
4. the obligor must be free from any participation in or the aggravation of the
injury resulting to the credito
We also note that some delivery receipts were signed by Abdurahmans 2. Act of the public enemy in war, whether international or civil (Public
subordinates and not by Abdurahman himself as consignee. Further, delivery enemy)
checkers Rogelio and Ismael testified that Abdurahman was always present at Presupposes of an existence of an actual state of war
the initial phase of each delivery, although on the few occasions when - Thieves, rioters, robbers, and insurrectionists, though at war with social order,
Abdurahman could not stay to witness the complete delivery of the shipment, are not in the legal sense classed as public enemies; acts of which, the CC is
he authorized his subordinates to sign the delivery receipts for him. This, to our liable
mind, is sufficient and substantial compliance with the requirements. - PIRATES ON THE HIGH SEAS are an exception
3. Act or omission of the shipper or owner of the goods (Improper Packing)
Article of 1737 of the NCC - The common carrier's duty to observe (planters v ca)
extraordinary diligence over the goods remains in full force and effect even 4. The character of the goods or defects in the packing or in the containers
when they are temporarily unloaded or stored in transit, unless the shipper or Rule: if the carrier accepts the goods KNOWING the fact of improper packing of
owner has made use of the right of stoppage in transitu. the goods upon ordinary observation or notwithstanding such condition, it is
NOT relieved of liability for loss or injury
Application of Art of 1738 of the NCC - Defense: the defect was already existing at the time it was accepted; received
Regional Container Lines v. Netherlands Insurance Co the goods in protest; noted in the BOL
- The carrier would be liable if the damage to the packaging is due to the
Epoxy Molding Compound (the merchandise) was to be shipped from SG to Manila. cargos unfitness for transport was made when it was in the custody of the
The merchandise is temperature sensitive thus it is refrigerated in transit at O carrier
degrees Celsius. Unloaded from the ship in good condition, refrigerator was
5. Order or act of competent public authority In carriage of (Order of Public negligence on the part of the employer. This is the presumed negligence in the
Authority) selection and supervision of the employee. The theory of presumed
If the public authority who issued the order is DULY AUTHORIZED to issue the negligence, in contrast with the American doctrine of respondent superior,
order where the negligence of the employee is conclusively presumed to be the
- Defense is not available if: (1) the public authority has no authority; or (2) if the negligence of the employer, is clearly deducible from the last paragraph of
public authority exceeded his authority Article 2180 of the Civil Code which provides that the responsibility therein
Defense in Carriage of Passengers mentioned shall cease if the employers prove that they observed all the
Passenger: diligence of a good father of a family to prevent damages.
Exercise of extraordinary and utmost diligence
Proximate Causation Collin A. Morris vs. CA
Doctrine of Proximate Cause a contract to transport passengers is quite different kind and degree from any
The CC is presumed negligent the moment he fails to deliver the goods to its other contractual relations, and this is because relation, which an air carrier
destination or the moment the passenger did not reach his destination while riding sustains with the public. Its business is mainly with the travelling public. It
the carrier. The injured passenger or owner of goods need not prove causation to invites people business is mainly with the traveling public. It invites people to
establish his case. avail [themselves] of the comforts and advantages it offers. The contract of air
NEGLIGENCE IS PRESUMED. carriage, therefore, generates a relation attended with a pubic duty. Neglect or
malfeasance of the carrier's employees naturally could give ground for an
action for damages."

New Civil Code Provisions "In awarding moral damages for breach of contract of carriage, the breach
Acts of Employees must be wanton and deliberately injurious or the one responsible acted
Art. 1759. Common carriers are liable for the death of or injuries to passengers fraudulently or with malice or bad faith." "Where in breaching the contract of
through the negligence or wilful acts of the former's employees, although such carriage the defendant airline is not shown to have acted fraudulently or in bad
employees may have acted beyond the scope of their authority or in violation of faith, liability for damages is limited to the natural and probable consequences
the orders of the common of the breach of obligation which the parties had foreseen or could have
carriers. reasonably foreseen. In that case, such liability does not include moral and
This liability of the common carriers does not cease upon proof that they exercised exemplary damages." "Moral damages are generally not recoverable in culpa
all the diligence of a good father of a family in the selection and supervision of contractual except when bad faith had been proven. However, the same
their employees. damages may be recovered when breach of contract of carriage results in the
death of a passenger."
Art. 1763. A common carrier is responsible for injuries suffered by a passenger on
Antonia Maranan vs. Pascual Perez, et al,
account of the willful acts or negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the diligence of a good father Under Art. 1739 of the Civil Code, a common carrier are liable for
of a family could have prevented or stopped the act or omission. the death of or injuries to passengers through the negligence or willful acts of
--- the formers employees, although such employees may have ached beyond the
The carrier is liable for the acts of its employees. Unlike in quasidelict, the carrier scope of their authority or in violation of the order of the common carrier.
cannot escape liability by claiming that he exercised due diligence in the selection It is the carriers strict obligation to select its drivers and similar
and supervision of the employee. It is no defense that the employee acted beyond employees with due regard not only to technical competence but also to this
the scope of his authority because the riding public is not expected to inquire from total personality, their behavior and thus moral fiber.
time to time before they board the carrier whether or not the driver or any other
employee is authorized to drive the vehicle or said driver is acting within the scope Act of Other Passengers and 3rd persons
of his authority and observing the existing rules and regulations required of him by Jose Pilapil vs. CA
management
A passenger was injured because a bystander outside the bus hurled a stone. Is
Sabena Belgian World Airlines vs. CA the bus company liable?

Doctrine:
No. There is no showing that any such incident previously happened so as to
impose an obligation on the part of the personnel of the bus company to warn
Art. 1733 of the [Civil] Code provides that from the very nature of their business
the passengers and to take the necessary precaution. Such hurling of a stone
and by reasons of public policy, common carriers are bound to observe
constitutes fortuitous event in this case. The bus company is not an insurer of
extraordinary diligence in the vigilance over the goods transported by them.
the absolute safety of its passengers. (Pilapil v. CA, G.R. No. 52159, Dec. 22,
1989) (1994 Bar Question)
Art. 1735 establishes the presumption that if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they had observed extraordinary
diligence as required in Article 1733. Passengers Baggage
Art. 1754. The provision of Article 1733 to 1753 shall apply to passengers
The Warsaw Convention denies to the carrier availment of the provisions which baggage which is not in his personal custody or that of his
exclude or limit his liability, if the damage is caused by his wilful misconduct or by employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003
such default on his part as, in accordance with the law of the court seized of the concerning the responsibility of hotel-keepers shall be
case, is considered to be equivalent to wilful misconduct, or if the damage is applicable.
(similarly) caused x x x by any agent of the carrier acting within the scope of his
employment. Define baggage

BAGGAGE includes whatever articles a passenger usually takes with him for his
Leopoldo Poblete vs. Donato Fabros
own personal use, comfort, and convenience according to the habits or wants
[I]t is such a firmly established principle, as to have virtually formed part of the law of the particular class to which he belongs, either with reference to his
itself, that the negligence of the employee gives rise to the presumption of immediate necessities or to the ultimate purpose of his journey
Philippine Airlines Inc. vs. Hon. Adriano Savillo, et. al.,
Checked-in-Baggage
checked in or delivered to the carrier o extraordinary diligence If cause of action claims moral damages, not covered by Warsaw Convention.
the rules that are applicable to goods that are being Article 19 of the Warsaw Convention provides for liability on the part of a
shipped are applicable to baggage delivered to the carrier for damages occasioned by delay in the transportation by air of
custody of the carrier. passengers, baggage or goods. Article 24 excludes other remedies by further
Hand Carried baggage providing that (1) in the cases covered by articles 18 and 19, any action for
hand carried luggage damages, however founded, can only be brought subject to the conditions and
considered as necessary deposits and carriers shall be limits set out in this convention. Therefore, a claim covered by the Warsaw
depositaries. Convention can no longer be recovered under local law, if the statue of
See credit transactions Arts. 1998-2003 limitations of two years has elapsed.

Nevertheless, this Court notes that jurisprudence in the Philippines and the
United States also recognizes that the Warsaw Convention does not
Philippine Airlines Inc. vs. CA
exclusively regulate the relationship between passenger and carrier on an
The award of damages for death is computed on the life expectancy of the international flight.
deceased and not of the beneficiary. Artcle 1764 of the Civil Code provides that
In U.S. v. Uy, this Court distinguished between the (1) damage to the
article 2206 shall also applu to death of passenger caused by the breach of
passengers baggage and (2) humiliation he suffered at the hands of the
contract by the common carrier. The manner of computing damages is taken from
airlines employees. The First cause of action was covered by the Warsaw
Davila vs. CA. Net yearly income multiplied by the Life Expectancy of the deceased.
Convention which prescribes in two years, while the second was covered by
The Life Expectancy is based on the American Expectancy Table of Mortality
the provisions of the Civil Code on torts, which prescribes in four years.
formula (2/3x[80-30]) cited from Villa Rey Transit Inc. vs. CA.
The income and salary of Nicanor Padilla is evidenced by witnesses, the auditor In Mahaney v. Air France (US case), the court therein ruled that if the plaintiff
and manager of Allied Overseas Trading, pay rolls of the companies and his income were to claim damages based solely on the delay she experienced- for
tax returns. instance, the costs of renting a van, which she had to arrange on her own as a
consequence of the delay the complaint would be barred by the twoyear
His NET INCOME is thus, 13,900 with a life expectancy of 30 years. (Net income x statute of limitations. However, where the plaintiff alleged that the airlines
Life Expectancy) is Php417, 000. This is the amount of indemnity his mother is to subjected her to unjust discrimination or undue or unreasonable preference or
receive. disadvantage, an act punishable under the US law, then the plaintiff may claim
This includes a legal rate of interest of 6% annum from purely nominal compensatory damages for humiliation and hurt feelings,
date of judgment on 31August1973 until fully paid. which are not provided for by the Warsaw Convention.

In the Petition at bar, Savillos Complaint alleged that both PAL and Singapore
Airlines were guilty of gross negligence, which resulted in his being subjected
to humiliation, embarrassment, mental anguish, serious anxiety, fear and
distress therefore this case is not covered by the Warsaw Convention.
British Airways vs. CA
When the negligence happened before the performance of the contract of
Facts: carriage, not covered by the Warsaw Convention. Also, this case is comparable
On April 6, 1989, Mahtani decided to visit his relative in Bombay, to Lathigra v. British Airways. In that case, it was held that the airlines
India. In anticipation of his visit, he obtained the services of a certain Mr. Gemar negligent act of reconfirming the passengers reservation days before
to prepare his travel plan. Since british Airways had no ticket flights from Manila departure and failing to inform the latter that the flight had already been
to Bombay, Maktani had to take a connecting flight to Bombay on board British discontinued is not among the acts covered by the Warsaw Convention, since
Airways. Prior to his departure, Maktani checked in the PAL counter in Manila his the alleged negligence did not occur during the performance of the contract of
two pieces of luggage containing his clothing and personal effects, confident that carriage but, rather, days before the scheduled flight.
upon reaching Hong Kong, the same would be transferred to the BA flight bound
for Bombay, Unfortunately, when Maktani arrived in Bombay, he discovered that In the case at hand, Singapore Airlines barred Savillo from boarding the
his luggage was missing and that upon inquiry from the BA representatives, he was Singapore Airlines flight because PAL allegedly failed to endorse the tickets of
told that the same might have been diverted to London. After plaintiff waiting for private respondent and his companions, despite PALs assurances to Savillo
his luggage for one week, BA finally advised him to file a claim accomplishing the that Singapore Airlines had already confirmed their passage. While this fact still
property. needs to heard and established by adequate proof before the RTC, an action
based on these allegations will not fall under the Warsaw Convention, since
Issue: the purported negligence on the party of PAL did not occur during the
Whether or not defendant BA is liable for compulsory damages and performance of the contract of carriage but days before the scheduled flight.
attorneys fee, as well as the dismissal of its third party complaint Thus, the present action cannot be dismissed based on the Statue of
against PAL Limitations provided under Article 29 of the Warsaw Convention.

Obligations of Shipper, Consignee and Passenger


Held:
The shipper or the passenger is bound to the contractual
The contract of transportation was exclusively between Maktani and
obligation
BA. The latter merely endorsing the Manila to Hong Kong log of the formers
pay the freight or fare
journey to PAL, as its subcontractor or agent. Conditions of contacts was one of
Exercise due diligence to avoid damage or injury
continuous air transportation from Manila to Bombay. The Court of Appeals
Negligence of Shipper or Passenger
should have been cognizant of the well-settled rule that an agent is also
The obligation to exercise due diligence is not limited to the carrier. The
responsible for any negligence in the performance of its function and is liable for
shipper is obliged to exercise due diligence in avoiding damage or injury.
damages which the principal may suffer by reason of its negligent act. Since the
Contributory negligence on the part of the passenger is not a defense that
instant petition was based on breach of contract of carriage, Maktani can only sue
will excuse the carrier from liability. It will only mitigate such liability.
BA and not PAL, since the latter was not a party in the contract.
Negligence of the shipper or the passenger may be the proximate and only
cause of the loss, in which case, the carrier should not be made liable. The carrier
may be able to overcome the presumption of negligence.

LAST CLEAR CHANCE


Under the doctrine of last clear chance a negligent defendant is held liable to a
negligent plaintiff or even to a plaintiff who has been grossly negligent in placing
himself in peril if he, aware of the plaintiffs peril, or according to some authorities,
should have been aware of the reasonable exercise of due care, had in fact an
opportunity later than that of the plaintiff to avoid an accident.

Payment of Freight
Amount to be Paid
Common carriers are subject to heavy regulations with respect to rates they are
charging to the public. The regulation of rates of public utilities is founded upon
the police power of the State and statutes prescribing rules for the control and
regulation of public utilities are a valid exercise thereof. Although the
consideration that should be paid to the carrier is still subject to the agreement of
the parties, what can be agreed upon should not be beyond the maximum amount
fixed by the appropriate government agency like the LTFRB, MARINA and Civil
Aeronautics Board.

Who will pay the freight


The shipper may pay the necessary freight before or at the time he delivers the
goods to the carrier for shipment. However, the parties may stipulate that the
freight will be paid by the consignee at the point of destination. The consignee is
bound by the stipulation by the moment he accepts the goods.

Time to pay the freight


- NCC does not provide the time to pay
- But in the Code of Commerce, in the absence of any agreement, the consignee
who is supposed to pay must do so within 24 hours from the time of delivery
Carriers lien
Art. 375. The goods transported shall especially be bound to answer for the cost of
transportation and for the expenses and fee incurred for them during their
conveyance and until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and
once prescribed, the carrier shall have no other action than that corresponding to
him as an ordinary creditor.
Payment of Demurrage
- the compensation provided for in the contract of affreightment for the detention
of the vessel beyond the time agreed on for loading and unloading.
- Essentially, demurrage is the claim for damages for failure to accept delivery.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or
deterioration of the goods, the proximate cause thereof being the negligence of
the common carrier, the latter shall be liable in damages, which however, shall be
equitably reduced.
Art. 1761. The passenger must observe the diligence of a good father of a family to
avoid injury to himself.
Art. 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the negligence
of the com