VOL 2. 2019 BEDAN RED BOOK - reconsideration (Sun Life Office, Ltd. v. Court of Appeals, G.R. No. 89741, March 13, 1991). 3. If there is no stipulation or the stipulation is void, the insured may bring the action within 10 years in case the contract is written (CIVIL CODE, Art. 1144). 4, A suit for damages, either with the proper court or with the Insurance Commissioner, should be filed within one (1) year from the date of the denial of the claim by the insurer; otherwise, claimant's right of action shall prescribe (INSURANCE CODE, Sec. 397). 5. In CMVLI, the written notice of claim must be filed within 6 months from the date of the accident; otherwise, the claim is deemed waived even if the same is brought within one year from its rejection (Vda. De Gabriel v. CA, G.R. No. 103883, November 14, 1996). IV. TRANSPORTATION LAW A. COMMON CARRIERS Concept of Common Carriage Q: What is a common carrier? ANS: Common carriers are persons, corporations}! firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to'the public (CIVIL CODE, Art. 1732). Q: What are the tests in determining whether one is a common carrier or not? ANS: The court may.use the following test to determine if a person.is a common carrier: 1. Part of:General Business Test. (Asia Lighterage and Shipping, Inc. v. CA, et.al, G.R. No. 147246, August 19; 2003). 2. Public Representation Test (National Siee!'Co! 112287, December 12, 1997). vsCourtoF Appeals, G.R. No. ALT. ANS: The 4-fold test of a common carrier of goods is as follows: (EK-MeH) 41. He must be Engaged in the businessvoficarrying goods for others as a public employment, and must hold. himself :out» as.,ready to engage in the transportation of goods for persons ‘generally as a business and rot as a casual occupation; 2. He must undertake to carry goods of the Kind to which his business is confined; 3. He must undertake to carry by the Method by which his business is conducted and over his established roads; and 4. The transportation must be for Hire (First Philippine Industrial Corp. v. CA, G.R. No. 125948, December 25, 1998). Q: What is the “Part of General Business Test? ANS: The “Part of the General Business” asks the question “Is the carriage of persons or cargo an isolated undertaking or singular transaction or is it part of the general business of the carrier?” 1. The test is based on the first part of Article 1732 which provides that "common carriers are persons engaged in the business of carrying or transporting passengers or goods, or both, by land, water, or air, for compensation, offering their services to the public’ (CIVIL CODE, Art. 1732). 2. The test is whether the given undertaking 1s a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted (Asia Lighterage and Shipping, Inc. v. CA, et.al., supra). 55 q i =e = z < G [4 any ps {GADGET ay 3:3 a. Common carriage is not determined by the quantity or extent of the business actually transacted. Even a “one-time” transaction may be deemed to be a contract of common carriage if entered into by a Person engaged in the business of common carriage (Sps. Fabre v. Court of Appeals, G.R. No. 111127, July 26, 1996). b. The number and character of the conveyances used in the activity does not make a carrier a common carrier. Even if a person makes several or regular conveyances of persons or cargo, he does not becorne ipso facto a common carrier if he is not in the business of common carriage (FGU Insurance Corp. v. G.P. Sarmiento Trucking Corp, G.R. No. 141910, August 6, 2002). 3. If the undertaking is a single transaction and not a part of the general business or occupation engaged in, as advertised and held out to the general public, the individual or the entity rendering such service is a private carrier (/d.). 4, The question must be determined by the character of the business actually carried on by the carrier, not.by.any. secret intention or mental reservation it may entertain or assert When charged withthe duties and obligations that the law imposes (Spolises'Rerefia v. Spouses*Zarate, G.R. No. 157917, August 29, 2012), 7<\ [ > vi NY Q: What is the “Public Representation Test"?- ~~ \ aN ANS: The “Publio' Representation Test” asks the question Did the parson hold himself out to the general publio’as updertaking to engage in the activity of carrying persons or cargo as a business oroccupation? | \Os 1. The testis based on the second part of Ayticle 1732, 7 riers \are ‘persons engaged in the business of carrying or transporting! passerigers or goods, or both, by land;—Water, or air, for compensation, offering their services to the public? (CIVIL CODE, Art. 1732). 2. Genefallys private carriage is undertaken by special dgreentent and the carrier does not hold himséif out to carry goods for the general public (National Stee! Corp. ¥, Court of Appeals, supra. SIS /f / \ , / Q Are pipelines that transport. petroleum) products’ from séfineries to another ich provides that included in the term‘common.carrier?” 7 ANS: Yes, the definition. of “comma carriers"-inthe Civil Codé makes no distinction as to the means of transporting, as fong as)it is by land) water or air. It does not provide that the transportation of the”passengers:orgoods-stiould be by motor vehicle (First Philippine Industrial Corporation v. CA, supra): Q: Must carriage of goods or passengers be the principal business of a person for him to be considered as a common carrier? ANS: No, a carrier may still be considered as a common carrier even if it is not principally in the business of carrying passengers or cargo. The law does not distinguish between one whose principal business activity is the carrying of goods and one who undertakes this task only as an ancillary activity (Torres-Madrid Brokerage, Inc. v. FEB Mitsui Marine Insurance Co,, Inc., G.P. No. 194121, July 11, 2016). Common Carrier v. Private Carrier Q: Who is a private carrier? ANS: A private carrier is one who, without making the activity a vocation, or without holding himself or itself out to the public as ready to act for all who may desire his or its services, undertakes, by special agreement in a particular instance only, to transport goods or persons from one place to another either gratuitously or for hire (Spouses Perefia v. Spouses Zarate, supra) 56VOL 2. 2019 BEDAN RED BOOK Q: What are the distinctions between a common carrier and a private carrier? ANS: A common carrier is distinguished from a private carrier as follows: Coenen Gat cecum eet Law on obligations and contracts. Contracts with particular individuals or groups only. Holds himself out for all people indiscriminately. No presumption of ,fault or negligence arises upon mere breach. Breach oj contract gives rise to presumption of fault or negligence. , FIN Caso fortuito, under, Code. ite Prove extraordinary diligence and Ar. 1734 of the Civil Code. + As to Stipulation Lintiting Liability Parties may limit» the carrier's liability, Parties may not agree on limiting the carrier's liability except when provided by law. It cannot stipulate that it is exempt from liability for provided it is not contrary to law, morals or good customs. It can stipulate that it is exempt from liability for the negligence of its employees or agents. the negligence of its employees or agents, being contrary to public policy. (AQUINO & HERNANDO, Transportation Law, supra at 29; CIVIL CODE, Art. 1745). Diligence. Requir Q: What is the diligence required of common carriers? ANS: Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case (CIVIL CODE, Art. 1733) Q: What is extraordinary diligence? ANS: Extraordinary Diligence is the rendition of service with the greatest skill and utmost foresight (Davao Stevedore Co. v. Fernandez, 54 O.G. No. 5, 1957) 57 SS Kd ai ta = = F Pd CS} 4 io >=RED BOOK Q: Is a private carrier also required to observe extraordinary diligence? ANS: No. The diligence required of a private carrier is only ordinary, that is, the diligence of a good father of the family (Spouses Perefia v. Spouses Zarate, supra). Q: How is extraordinary diligence applied in the carriage of persons? ANS: Simple precautionary measures to protect the safety of passengers, such as frisking passengers and inspecting their baggage, preferably with non-intrusive gadgets such as metal detectors, before allowing them on board could have been employed without violating the passenger's constitutional rights (Fortune Express Inc. v. Court of Appeals, G.R. No. 119756, March 18, 1999). While JAL was no longer required to defray private respondents’ living expenses during their stay in Narita on account of the fortuitous event, JAL had the duty to make the Necessary arrangements to transport private respondents on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation to look after the comfort and convenience of its passengers.(Japan Airlines v. Court of Appeals, G.R. No. 118664, August 7, 1998). = Q: Hew is extraordinary diligence applied in the carriage of goods? ANS: The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common Carrier-to know and to follow.the required precaution for avoiding damage to, or destrlction 6f tHe goods entrusted to it for sale carriage, and delivery. It requires common cairiers "to use all reasonable means to ascertain the nature and characteristic of goods,tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires” (Calvo v. UCPB, G.R. No. 148496, March-19, 2002). Q: Should the Common cartier still exercise due diligence to prevent or lessen loss even if the loss of the goods is caused by the character of the goods? ANS: Yes. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty natute of the packing of of the containers, the common carrier must‘exercise due-diligence:to at least forestall or lessen the loss (CIVIL CODE, Art.'1742). Q: Should the common carrier still exercise due diligence to prevent or minimize loss even if there is a fortuitous event? r ANS: Yes. The common carriér must exercise due diligénice to prevent or minimize loss before, during, and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy (CIVIL CODE, Art. 1739). Q: Are common carriers also required to exercise extraordinary diligence for the benefit of third persons? ANS: Yes, for it the common carriers carefully observed the statutory standard of extraordinary diligence in respect of their own passengers, they cannot help but simultaneously benefit pedestrians and the owners and passengers of other veliicles who are equally entitled to the safe and convenient use of our roads and highways (Cangco v. Manila Road Company, G.R. No. L-12191, October 14, 1918) 58> BEDAN.RED BOOK VOL 2. 2019 B. OBLIGATIONS AND LIABILITIES Vigilance over goods Q: When do the duties of the common carrier in the carriage of goods commence and when does it end? ANS: In carriage of goods, the extraordinary responsibility of the common carrier starts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation. Meanwhile, the duty to exercise extraordinary diligence in the carriage of goods ends at the time the goods are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them (CIVIL CODE, Art. 1736). Q: What are the obligations of a common carrier in the carriage of goods? ‘ANS: The following are the obligations of a common carrier in the carriage of goods: (PASTE) _ Duty to deliver the goods to the Proper person; Duty to Accept the goods; Duty to Seascnably deliver the goods to the destination; Duty to Transport the goods safely'to the agreed destination; and Duty to exercise Extraordinary diligence (AQUINO AND HERNANDO, Transportation, supra at 56). Fe OhON @: What are the valid grounds for non-acceptance of goods for transportation? ANS: The instances when the carrier may velidly refuse to’ accept goods include the following: (D?UO-CITES) \ 1. The goods are Dangerous objects, or substances jincluding dynamites and other explosives; fi \ 2. The goods will be exposed to, untoward Danger like flood, ‘capture by enemies, and the like; fe . The goods are Unfit for transportation; = Acceptance would result in Overloading; = “The goods are considered Contrabands or illegal goods; The goods are Injurious to healthy. Failure to tender goods on Time; The goods like livestock will be Exposed to diseases; and Strike (AQUINO AND HERNANDO, Essentials of Transportation and Public Utilities Law (2016), p. 59). CONDAAS @: Is the common carrier's duty to observe extraordinary diligence suspended when the goods are temporarily unloaded or stored in transit? ANS: The common carrier's duty to observe extraordinary diligence in the vigilance over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu (CIVIL CODE, Art. 1737). Q: Do obligations of the common carrier of goods cease upon the arrival of the goods at their destination? ANS: The extraordinary liability of the common carrier continues to be operative even during the lime the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had a reasonable opportunity thereafter to remove them or otherwise dispose of them (CIVIL CODE, Art. 1738). 59 Ks tu = = Fa Rg 1S) [oa rt eaDAN RED BOO Q: What is the rule on a carrier's liability for delay? ANS: In the absence of a special contract, a carrier is not an insurer against delay in transportation of goods. When a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered to its destination within a reasonable ti in the absence of any agreement as to the time of delivery. But where a carrier has made an express contract to transport and deliver properly within a specified time, it is bound to fulfil ts contract and is liable for any delay, no matter from what cause it may have arisen (Saludo Jr. v. CA, G.R. No. 95536, March 23, 1992). Q: What are the consequences of delay in carriage of goods? ANS: The following are the consequences of delay: 1. Incase of excusable delay: a. Excusable delay in carriage merely suspends but generally does not terminate the contract of carriage. When the cause is removed, the master must proceed with the voyage and make delivery. 5. During the detention.or-delay, the vessel continues to be liable as a common cartier;“not a warehousemen, and remains duty bound to exercise extraordinary diligencé\(70 Am, Jur. 2d 939) 2. Incase of inexcusable delay: eid a. The carrier'remains duty bound to"exercise extraordinary diligence; b. The cartier is still lable ever if a-niatural disaster causes the damage (CIVIeCODE/Art. 1740); Veh c. The" stipulation limiting the liability of the ‘common carrier cannot be availed of in/case of loss or deterioration of:goods (CIVIL CODE, Art. 1747); | 1 \ | ‘The carrier ig liable for the damages caused py the delay (CODE OF COMMERCE, Art. 368; Saludo ur. v. GA, supra)and e. | The. iconsianée ercise his/ fight td abandon (CODE OF COMMERCE, Art. UINO 7. HERNANDO,-Transportation, supra \at's€). Safety of Passengers SS / Q: What are the obligations of a. common cairier in the carriage of passengers? ANS: The foliowing. are the “obligations of a-commoi-cafrier in the carriage of passengers: (U-STAB) oe SAN 1. Duty to observe Utmost diligence to passéngers:” 2. Duty to Seasonably bring the passenger-to the destination; 3. Duty to Transport the passenger safely to the agreed destination; 4. Duly to Accept passengers without discrimination; and 5 Duty to take care of the passengers’ Baggage (AQUINO & HERNANDO, Transportation, supra at 44). Q: When does the duty to exercise extraordinary diligence in the carriage of person commence and when does it end? ANS: With respect to carriage of passengers, the extraordinary responsibility of common carriers commences the moment he presents himself at the proper place and in a proper manner to be transported with a bona fide intent to ride the coach (Light Rail Transit Authority v. Navidau, G.R. No. 145003, February 6, 2003). The duty of a common carrier to provide safety to its passengers so obligates it not only during the course of the trip, but for so long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage (id.) 60BEDAN RED BOOK It is well-settled that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or reasonable opportunity to leave the carrier's premises (La Mallorca v. Court of Appeals and Beltran, et. al,, G.R. No. L-20761, July 27, 1966) and to look after his baggage and prepare for his departure (Aboitiz Shipping v. CA, G.R. No. 84458, November 6, 1989). Se USS EAN Q: What is the Continuing Offer Rule? ANS: A public utility bus, once it stops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to a passenger while he was attempting to board the same (Dangwa Transportation Co., Inc. and Theodore Lardizabal v. Court of Appeals, G.R. No.95552, October 7,191). i It is the duty of common carriers of passengers to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so (Id.). Q: Does the common carrier's failure to take precautionary measures to protect the safety of its passengers constitute negligence? ANS: Yes. In one case, the bus company did*nothing:to protect the safety of its passengers despite the warning by the Philippine Constabulary. Had the bus company and its employees been vigilant, they would not have failed tc See that the malefactors had a large quantity of gasoline with them. Under the ‘circumstances, simple precautionary measures to~protect the’safety of passengers, such as frisking passengers and inspecting their baggage, preferably with non-intrusive gadgets such as metal detectors, before.allowing them onsboard could’ have been employed without violating the passenger's constitutional rights. It is evident,that, the. employees failed to prevent the attack on one of the buses because they did not exercise the diligence of a good father of a family (Fortune Express Inc: v. CA, supra). : Q: What is the extent of a common carrier's liability in the carriage of persons? ANS: The principles governing the liability ofa common carrier: 4. The liability of a carrier is contractual and arises upon breach of its obligation. There is breach if it fails to exert extraordinary diligence according to all circumstances of each case; 2. The carrier is obliged to carry its passenger with the utmost diligence of a very cautious person, having due regard for ail the circumstances; 3. The carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to, passe:.gers, it being its duty to prove that it exercised extraordinary diligence; and 4, The carrier is not an insurer against all risks of travel (Isaac v. A.L. Ammen Transportation, G.R. No. L-9671, August 23, 1957). Q: Distinguish the liability of a common carrier for the acts of its employees and from its liability for the acts of other passengers or strangers. ANS: A common carrier is expected to exercise extraordinary diligence with respect to the acts and omissions of his employees, even when such employees act beyond the scope of their authority or in violation of the common carrier's orders (CIVIL CODE, Art. 1759). However, with respect to the acts of other passengers or strangers, the carrier will be liable only if the common carrier and his employees, could have prevented the injury by the exercise of the diligence of a good father of the family (CIVIL CODE, Art. 1763) 61BEDAN RED-BOOK Jen Q: Is a common carrier liable for injuries sustained by a passenger caused by an unidentified pedestrian who hurls a stone which hits the passenger? ANS: No, A common carrier does not consent to become an insurer of any and all risks to passengers and goods. A tort committed by a stranger which causes injury to a Passenger does not immediately accord the passenger a cause of action against the carrier. The injury shall be deemed the result of the carrier's negligence, or his employee's negligence, only when the same could have been foreseen and prevented by them. (Pilapil v. CA, G.R. No. 52159, December 22, 1989). C DEFENSES AVAILABLE TO COMMON: CARRIERS Proof of Negligence Q: What is the presumption in case of death of or injuries to passengers? ANS: In case of death of or injuries to passengers, common carriers are presumed ‘o have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Art..1733 and 1755 (CIVIL CODE, Art. 1756). Q: Can a common carrier dispose with or lessen its responsibility for the safety of passengers? ANS: No. The responsibility ofa common cartier. or the Safety of passengers as required in Art. 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets or otherwise (CIVIL CODE, Art. 1757). Q: What is the effect of loss, destruction, or deterioration of goods during carriage? ANS: A presumption that common carriers have been at fault or havelacted negligently if the goods are lost, destroyed or deteriorated (GIVIL CODE, Art-1735). However, there are exceptions, which are the following causes only (FAS-CO): y 1. Elood, storm; earthquake, lightning, or other natural disaster or calamity; 2. Act ofthe public enemy in war, whether international or civil; 3. Act or omission of the Shipper or owner of the goods; 4. The Character of the goods or defects in the packing or in the containers: 5. Order or act of competent public authority (CIVIL CODE, Art. 1734). Note: This list is EXCLUSIVE.» y Q: Can the parties stipulate a lesser degree of diligence in the carriage of goods? ANS: Yes, A stipulation between the common carrier-and the shipper or owner limiting the liability of the former for the l08s;"destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (WCoRe) 1. In Writing, signed by the shipper or owner; 2. Supported oy a valuable Consideration other than the service rendered by the common carrier; ana 3. Reasonable, just, and not contrary to public policy (CIVIL CODE, Art. 1744). They may agree to limit the liability of the carrier in the carriage of goods by stipulating the same in the bill of lading (Lu Do & Lu Yum Corporation v. 1.V. Binamira, G.R. No. L- 9840, April 22, 1957). ©: Are common carriers liable for the death of or injuries to passengers through the negligence or willful acts of their employees? ANS: Yes. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the the carrier's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers (CIVIL CODE, Art. 1759). 62VOL 2. 2019 = BEDAN RED BOOK. Note: This liability of the common carriers cannot be resisted by proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees (CIVIL CODE, Art. 1759). Q: Are common carriers responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers? ANS: Yes, provided that the common carrier's employees could have prevented or stopped the act or omission of such third person through the exercise of the diligence of a good father of a family (CIVIL CODE, Art. 1763). Q: Will the common carrier be held responsible if the gocds were seized or destroyed through the order of public authority? ANS: The answer must be qualified. The common carrier will not_be responsible provided said public authority had power to issue the order (CIVIL CODE, Art. 1743). Q: Is a common carrier responsible for the consequent loss of baggage after having accepted it and placing it inside the vehicle? ANS: Yes. Where a common carrier accepted its passengers’ baggage for transportation and even had it piaced in the, vehicle, it is responsible for the consequent loss of the baggage (Sarkies Tours Phil, Ine. v. Intermediate Appellate Court, G.R. No. L-63723, September 2, 1983). Due Diligence Q: When may an employer use the due diligence in the sélection and supervision of employees as a defense? { ANS: In order that the defense of due ciligence in the selection and supervision of employees may be deemed sufficient and'plausible, it isnot enough to emptily invoke the existence of s7'd company guidelines 4d policies on/hiring and supervision. As the negligence of the employee gives rise’to the presumption of negligence on the part of the employer; the latter has the burden of proving thatit has beentdiligent not only in the selection f employees. but also. in the actual supervision®of their work. The mere allegation of thesexistence of hiring procedures and supervisory policies, without anything more, is decidedly not sufficient fo overcome such presumption (Metro Manila Transit Corporation vs Court of Appeals, G.R°Nor104408, June 21, 1993). Q; Is due diligence in selection and supervision satisfied when an employer hires a driver with a valid professional driver's license? ANS: No, it is not satisfied by the mere finding that the applicant possessed a professional driver's license. The employer should also examine the applicant for his qualifications, experience and record of service. Due diligence in supervision, on the other hand, requires the formulation of rules and regulations for the guidance of employees and the issuance of proper insiructions as well as actual implementation and monitoring of consistent compliance with the rules (Spouses Fabre v. Court of Appeals, supra), Q: Is proof of ordinary diligence in the selection and supervision always enough to exonerate a common carrier from liability? ‘ANS: No. The liability of common carriers does not cease upon mere proof that they exercised all the diligence of a good father of a family the selection and supervision of their employees because they must also prove that they exercised the extraordinary diligence required of them on their other obligations in the contract of carriage as prescribed under Articles 1733 and 1755 (Sanico v. Colipano, G.R. No. 209969, September 27, 2017) = Ed ai “ld = = z Ui. rae [rt aBEDAN RED BOOK Q: What is the extent of the liability of the carrier and the driver? ANS: The carrier and driver are solidarily liable as joint tortfeasors (CIVIL CODE, Art. 2180). Q: Since common carriers are liable for the negligence and willful acts of their employees, does the liability cease upon proof that they exercised due diligence in the selection and supervision of their employees? ANS: No, common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees (CIVIL CODE, Art. 1759). Fortuitous Event Q: What are the requisites of a fortuitous-event? ANS: The requisites of a fortuitous event aré ag follows: (Im-INA) 1. It must be Impossible to foresee the event that constitutes the case fortuito, or if it can be foreseen, it must be impessible to avoid. 2, 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 will 3. The occurrence must be stich as to render it impossible.for,the debtor to 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 creditor (Servando v. Philippine, Steam Navigation, G.R. No. L-36481-2, October 23, 1982), f ~ Q: When can a(common carrier raise the. defense. of fortuitous event to escape ligbility? ANS: In order toibe a valid defense, it, must be“established that the fortuitous event be the proximate cause of the'loss (Asia Lighterage and Shipping, Inc.v. CA, et.al., supra) Ifthe common carrier negligently incurs in-delay in transporting the goods, that fact that the delay was partly due to/a natural disaster shall not free such carrier from responsibility (CIVIL CODE, Art, 1740) Q: Are fortuitous events under Article 1174 of the NCC limited to natural calamities? ANS: No, it may involve events that involve human intervention. Article 1174 of the NCC provides that “except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of tisk, no person shall be responsible for those events which, could not be foreseen, or which, though foreseen, were inevitable.” Thus, fortuitous event may be produced by two general causes, that is by nature and by acts of man (AQUINO AND HERNANDO, Essentials of Transportation and Public Utilities Law (2016), p.186-187) Q: Can the explosion of a new tire be considered a fortuitous event? ANS: No. The fact that the tire was new did not imply tnat it was entirely free from manufacturing defects or that it was properly mounted on the vehicle. Neither may the fact that the tire bought and used is of a brand name noted for quality, resulting in the Conclusion ihat it could not explode within five day's use. It is settled that an accident caused either by defects in the automobile or through the negligence of its driver is not a caso fortuito (Yobido v. CA, G.R. No. 1130C3. Ociober 17, 1997). 64- BEDAN RED.BOOK VOL 2. 2019 Q: Are mechanical defects considered as a fortuitous event? ANS: No. Damage or injury that can be traced to mechanical defects is not considered caused by fortuitous event. A passenger is entitled to recover damages from a carrier for an injury resulting from defeat in an appliance purchased from a manufacturer, whenever it appears that the defect would have been discovered by the carrier if it had exercised the degree of care required with regard to inspection and application of the necessary tests (Necesito v. Paras, G.R. No. L-10605, June 30, 1958). Q: Is hijacking considered a fortuitous event as to absolve the liability of the common carrier? ANS: No, common carriers are not absolved from liability from acts committed by thieves and robbers unless the latter acted with grave or irresistible threat, violence, or force (Guzman v. CA, G.R. No. L-147822, December 22, 1988). Q: Is fire considered a fortuitous event? ANS: No, fire is not considered a natural, disaster or calamity that would relieve the carrier from the presumption of negligence (Eastern Shipping Lines v. IAC, G.R. No. L- 69044, May 29, 1987) Contributory Negligence Q: What is contributory negligence? e gy ANS: Contributory negligence is conduct on the part of the:injured party, contributing as legal cause to the harm: he-has suffered, wiich falls below the, standard to which he is require to conform for his own protection (Sealoader Shipping Corporation v. Grand Cement Manufacturing Corp., et al:, G.R. Not. 167363 and 177466, December 15, 2010). =f in| Q: May a passenger still recover damages for his death or injuries even if there was contributory negligence on his part?) SERRE ANS: Yes. 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 ‘common carrier, but the amount of damages shall be equitably reduced (CIVIL CODE, Art. 1762). ones Q: Can contributory negligence on the part of the shipper be a defense to excuse the carrier from liability? ANS: No, it will only mitigate such liability. 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 (CIVIL CODE, Art. 1741). Q: Are the passengers bound to observe due diligence to avoid injury? ANS: Yes, the passenger must observe the diligence of a good father of a family to avoid injury to himself (CIVIL CODE, Art. 1761), This is the doctrine of avoidable consequences in which it states that even if the passenger is also required to lessen the damage or injury (CIVIL CODE, Art. 220%). Q: What is an assumption of risk? ANS: It is a rule that passengers must take such risks incident to the mode of travel because carriers are not insurers of the lives of their passengers (Japan Airlines v. Court of Appeals, G.R. No. 118664, August 7, 1988). Carriers are not liable for injuries caused by risks knowingly assumed by the passenger (Calalas v. CA, G.R. No. 122039, May 31, 2000). 65 = | uu = = Fa ma ma uu b=~BEDAN RED BOOK Doctrine of Last Clear Chance VOL 2. Vf 33 Q: What is the doctrine of last clear chance? ANS: When both parties involved in the accident were both negligent, the negligence of the party will not be considered the proximate cause if the other party has the last clear chance of avoiding the injury. Thus, if the plaintiff has the last clear chance of avoiding ihe injury, the negligence of the Plaintiff — which is not just contributory negligence — will be considered efficient intervening cause (AQUINO & HERNANDO, Transportation, ‘supra at 230). Q: Can the doctrine of last clear chance be raised as a defense against a passenger claiming damages? ANS: No. The principle of last clear chance only applies in a suit between the owners and drivers of colliding vehicles. It does not arise where a passenger demands Fesponsibility from the cartier to enforce its contractual obligations (Philippine Rabbit Bus Lines, inc. v. Intermediate Appellate Cour, et al, G.R. Nos. 6102-04, August 30, 1990). _ D. EXTENT OF LIABILITY. Recoverable damage Q: What are the kinds of damages? ANS: The kinds of damiagés are as follows: . Actual or compensatory; Moral; Nominal; Temperate’ or moderate: Liquidated; and, Exemplary of Corrective (CIVIL CODE, Art 2197). Pasene Q: In contract of carriage of persons, what damages are recoverable in case of injury to or death of a passenger? ANS: Damages in.cases comprised in this Section (Section on Common Carriers] shall be awarded in accordance with Title XVIII of this Book Book IV of the Civil Code], concerning Damages. Article 2206. shall also apply to the death of a passenger caused by the breach of contract, by a common’ carrier. (CIVIL CODE, Art. 1764) [annotations ours]. . 1. As such, a passenger injured by breach of a contract of carriage of persons or baggage may recover the following damage in accordance with the general law on Damages: a. Actual damages b. P75,000 for death of a passenger (as increased in People v. Jugueta, GR. No. 202124, April 5, 2016) Loss of Earning Capacity Moral damages Nominal or Temperate damages Liquidated damages Exemplary damages Allomney's fees (PAL v. Lac Lim et al., G.R. No. 168987, October 17, 2012). za-eao Q: What is the formula for loss of earning capacity? ANS: The following is the formula: 1. Loss of Earning Capacity = Life Expectance x Net annual income 2. Life Expectancy = (2/3) x (80-Age of deceased) 3. Net Annual Income = Gross Annual Income — Living Expenses 66VOL. 2079 2 BEDAN RED BOOK. 4. If no actual proof of living expenses is presented, it shall be presumed to be 50% of the Gross Annual Income. (People v. Lagat, G.R. No. 187044, September 14, 2011). Q: What is the extent of recovery of damages in case of contractual breach? ANS: As applied to common carriers, the cartier in good faith is liabie only to pay for the damages that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen as the time of the obligation was constituted. However, if the carrier is in Dad faith or guilty cof negligence, the carrier is liable for all damages, whether foreseen or not (CIVIL CODE, Art 2201). Note: The carrier who may be compelled to pay damages for the loss or damage to the goods or passengers has the right of recourse against the employee who committed the negligent, intentional, or fraudulent act (Sarkies Tours Philippines, Inc. v. Intermediate Appellate Court, G.R. No. 63723, September 2, 1983). Q: Can the act that breaches the contract be likewise considered a tort or quasi- delict? ANS: Yes. Although the relation of passenger and carrier is contractual both in origin and nature, nevertheless, the act that breaks the contract may also be a tort. Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, colirlesy and due consideration (Air France v. Carrascoso, G.R. No. L-21438, September 28, 1966). Q: X rode the bus of Y driven by Z. During the course of the,trip, the bus collided with the jeep of A, driven. by B. X suffered injuries. Against whom should X file a complaint for damages? je \ ANS: Either or both of the carriers. In the: case of injury to a passenger due to the negligence of the driver of the bus in which the passenger was riding and of the driver of another vehicle, the drivers as well as the owners of the two Vehicles are jointly and severally liable for damages. It should not make any difference that the liability of the bus owner springs from a contract while that of the driver springs from quasi-delict (Tiu v. Arriesgado, G.R. No. 138060 September 1, 2004). Stipulation Limiting Liability Q: What is the purpose of limiting stipulations? ANS: It is for the protection of the common carrier. Such stipulation obliges the shippericonsignee to notify the common carrier of the amount that the latter may be liable for in case of luss of the goods. Unscrupulous shippers may undervalue the goods in order to avail the lower rate of freight at the expense of the carrier and claim the real value of the goods if these goods are damaged (Edgar Cokaliong Shipping Lines, Inc. v. UCPB General Insurance Co., G.R. No. 146018, June 25, 2003) Q: May the parties stipulate that the common carrier shall exercise diligence that is less than extraordinary? ANS: The answer must be qualified. !n the carriage of goods, the carrier and shipper may agree on the observance of diligence to a degree less than extraordinary (but not total exemption or diligence less than ordinary) (Arts. 1744-1745 (3), NCC). In the carriage of passengers, tie responsibility of common carriers cannot be dispensed with or lessened by stipulation. The rule appiies notwithstanding reduction of fare. But when. the passenger is carried gratuitously, a stipulation limiting liability for negligence is valid, except for willful acts or gross negligence (Arts 1757-1758, NCC). 67 =e SI nat = = = 3 i = (ea SgEDAN RED BOOK Q: When is a stipulation limiting the liability of the common carrier considered valid? ANS: A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (WCoRe) 1. In Writing, signed by the shipper or owner; 2. Supported by a valuable Consideration other than the service rendered by the ‘common carrier; and 3. Reasonable, just, and not contrary to public policy (CIVIL CODE, Art. 1744). Note: An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid (CIVIL CODE, Art. 1748). Q: What stipulations limiting liability are deemed void for being unreasonable, unjust, or contrary to public policy? ANS: Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (GRiL-TED?) 1. That the common carrier Shalliexercise a degree of diligence less than that of a Good father of-a family, or of a man of ordinary prudence in the vigilance over the movables transported;— That the goods are,transported at the Risk of the owner or shipper; That the comman-éarrier-will not~be-liable- for ‘any “Loss, destruction, or deterioration of the gdods; ; 4. That the commen carriers liability for acts commmitted by Thieves, or of robbers who do not act with'grave or irresistible threat, violence/or force, is dispensed with or diminished; | 7 \ 5. That the-common carrier shall not be responsible for the acts or omission of his of its Employees}, = 6. That the common cafrier need not observe any Diligence in the custody of the goods; | 7. That the! common‘ carrier is not: responsible for ‘the loss, destruction, or deterioration of.goods of account of the Defective condition of the car, vehicle, ship, airplane or, other equipment-Used. in thecontract of carriage (CIVIL CODE, Art, 1745) ex Q: Suppose the common carrier has-no-competitor along the line or route, may such fact be considered in determining whether-the limitation of the liability of the carrier is reasonable? ~o ANS: Yes. The fact that the common Garrier has no competitor aiong the line or route, or @ part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common caisier’s liability is reasonable, just and in consonance with public policy (CIVIL CODE, Art. 1751). Q: Does the limitation on the liability of the common carrier remove the disputable presumption of negligence on its part? ANS: No. Even when there is an agreement limiting the liability of the commion carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration (CIVIL CODE, Art. 1752) Q: Can a common carrier be barred fiom benefitting from a stipulation limiting his liability? ANS: Yes. If a common carrier, without just cause, delays the transportation of the goods or changed the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods (CIVIL CODE, Art. 1747)VOL 2. 2019 ~ BEDAN RED BOOK Q: What happens when the common carrier refuses to carry the goods of the shipper? ‘ANS: The agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation (CIVIL CODE, Art. 1746). Q; Is it valid for the common carrier to limit its liability to the value of the goods appearing in the bill of lading? ANS: Yes. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares 2 greater value, is valid and binding (CIVIL CODE, Art. 1749). Limitation of Liability under the Carriage of Goods by Sea Acts (COGSA) Q: When is the Carriage of Goods by Sea Act applicable? ANS: The COGSA is applicable when the following are present: 4. Water/maritime transportation; “> 2. Carriage of goods; and 3. Overseas/international/foreign trade to and from Philippine ports (Cua v. m Philippines Shipping, IncxG.R. No. 171337, July 11, 2012) Q: Does COGSA apply to misdelivery onucljea cele ANS: No. The COGSA does NOT apply to misdelivery-and, delayed delivery. it only applies to non-delivery.and damaged, goods (Ang v. Ameri¢an Steamship Agencies. Inc., G.R. No. L-22491, Jan.,27, 1967). /i 3 fi Q: Under COGSA, what is thé Value of limited liability of the carrier? ANS: Neither the arrier nor the"ship.snallin any event bé or fecome liable for any loss or damage to.6r in connection with the trdngportation offgoods in ah amount exceeding $500 per package in lawful money.of the United States; Oninicaserof goods not shipped in packages, per customary freight unit, of the equive: sntof that sum in other currency, unless the naturé-and value'of such goods have been declared by the shipper before shipment and inserted in the bill of lading, This declaration, if embodied in the bill of iading, shaii be prima facie evidence, but shall:fiotibe conclusive on the carrier (COGSA, Sec. 4(5)). a Q: What is the limitation on the liability when the. shipper fails to declare the value of the goods in the bill of lading? ANS: Under, Sec. 4(5) of the COGSA, when the shipper fails to declare the value of the goods in the bill of lading, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding US$500 per package (Philam Insurance Co., Inc. v. Heung-A Shipping Corp., G.R. No. 187701, July 23, 2014). Q: As regards to the previous question, what if the invoice was incorporated, by way of reference, to the bill of lading? ANS: The carrier shall be liable for the entire amount of damages sustained where all the needed detaits were in the invoice which contained the itemized list of goods shipped to the buyer, static the quantities, prices, shipping charges, and all oiher details (Eastern Shipping Line, Inc. v. BP/MS Insurance Corp., G.R. No. 182864, January 12, 2015). cs [ety = Fe ee ‘S} (wa wi[_BEDANRED BOOK /4m Q: Under COGSA, can the maximum value of limited liability of the carrier be fixed by the parties? ANS: Yes. By agreement between the carrier, master or agent of the carrier, and the shipper another maximum amount other than that mentioned in Sec. 4(5) of the COGSA may be fixed: Provided, that 1. Such maximum shall not be less $500 per package or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading; and 2. In no event shall the carrier be liable for more than the amount of damage actually sustained. (COGSA, Sec. 4(5)). : What is the prescriptive period in bringing a suit against the carrier under the coGsa? ANS: The suit must be brought within one (1) year after the delivery of goods or the date when the goods should have been. delivered. Otnerwise, the carrier and the ship shall be discharged from all liability in respect of losS or damage (COGSA, Sec. 3(6)). : Can the parties, by Stipulation, shorten the prescriptive period provided under ie COGSA? ANS: No. The 1-year petiod cannot be shortened-(Id.). Q: Does extrajudicial démand ioll the prescriptive period.in bringing a suit against the carrier under COGSA? | 1 \¢p\ ANS: No, the extrajudicial demand does not toll thé prescriptive period. It is desirable that matters affecting transportation of goods by sea be decided in as short a time as Possible; the application of the provisions of Article 1155 of the-new Civil Code would unnecessarily ‘extend) the period and permit célays inthe settlement of questions affecting transportation, contrary to the clear intent and purpose of the law (Dole Phil. v. Maritime Co., G.R/ No) L-61352 February 27, 1997). The one-year period shall run from delivery of the last package. . ; Q: What are the acts that Suspend the one-year prescriptive period? ANS: The following suspend the prescriptive period: 1. The express agreement of the: parties"(Universal Shipping Lines, Inc. v. IAC, GR. No. 74125, July 31, 1990);.and~ 2. The filing of an action in court’ until it-is dismissed (Stevens & Co. v. Nordeutscher Lloyd, G.R. No. L-17730, September 29, 1962). Lis 1s Under the Warsaw Convention Q: What is the Warsaw Convention (WC)? ANS: The Warsaw Convention is an agreement among sovereign countries concerning the regulation in a uniform manner of the conditions of international transportation by air in respect of the documents used for such transportation and the liability of the carrier. It was signed on October 12, 1929 in Warsaw, Poland. What does “international carriage” mean for the purposes of WC? ANS: It means any carriage in which, according to the contract made by the parties the place of departure and the place of destination: 1. Whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Partie: 2. Within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to this Convention (WARSAW CONVENTION, Art 1) 70VOL 2. 2019 A carriage without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is not deemed to be international for the purposes of this Convention (Lhuillier v. British Ainways, G.R. No. 171092, March 1, 2010). Q: What are the liabilities of an air carrier in general? ANS: The carrier is liable for damage sustained in the event of: 1. Death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking, 2. Destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air. Note: “carriage by air” comprises the period during which the luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case ofa landing outside an aerodrome, in any place whatsoever. 3 3. Delay in the carriage by air. of passengers, luggage or goods (AQUINO & HERNANDO, Transportation, supra at 391). Q: When is international carrier liable for a passeng ANS: The carrier is liable if the passenger's injury wa 1. On Board the aircraft; or 2. Inthe course of any of the operations of Embarking; or 3. _ Inthe course of Disembarking; or i 4. When there was or because of Delay (AQUINO & HERNANDO, Transportation, supra at 396). t \ Q: Where may’ the plaintiff bring the’action for.damages{under the Warsaw Convention? fa E ANS: The plaintiff may bring the action for damages in: (D-PED) The court where the carrier is Domiciled, The court where the carrier has its Prinéipal place of business; The court where the carrier has af Establishment by which the contract has been made; or . 4, The court of the place of Destination (Lhuillier v. British Airways, supra) eR Q: What is the limitation on the amount of liability of the carrier against passengers under the Warsaw Convention? ANS: As a general rule, a carrier shall be liable for 250,000 francs per passenger. However, an exception is when there has been an agreement to increase the liability of the carrier (AQUINO & HERNANDO, Transportation, supra at 396). Q: What is the limitation on the amount of liability of the carrier with respect to hand-carried baggage under the Warsaw Convention? ANS: The limitation of the liability of the carrier against hand-carried baggage is 5,000 francs per passenger (WARSAW CONVENTION, Sec. 22(3)). Q: What is the limitation on the amount of liability of the carrier against checked- in baggage or cargo under the Warsaw Convention? ANS: As a general rule, a carrier shall be liable for 250 francs per kilogram. However, an exception is when there is a special declaration of value and payment of a supplementary sum by the consignor. In such a case, the carrier is liable to pay not more than the declared sum, unless it proves the sum is greater than actual value (WARSAW CONVENTION, Sec. 22(2)). 71 MERCANTILE LAW lDAN RED'BOO Q: What are the exceptions of limitation of liability for hand-carried baggage? ANS: The limit of liability is not applicable in case of: (W-MAGE) If there was Waiver on the part of the carrier; Willful Misconduct; ‘Absence of baggage check; Gross negligence; and If the carrier is Estopped from invoking the provision on limit of liability (AQUINO & HERNANDO, Transportation, supra at 398). geena! Q: Has the Warsaw Convention been invariably held inapplicable, or as not restrictive of the carrier's liability, where there was satisfactory evidence of malice or bad faith attributable to its officers and employees? ANS: Yes, the Hague Protocol amended the WC by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, and declaring the stated limits of liability not applicable. The same deletion was affected by the Montreal Agreement of 1966, withthe result that a passenger could recover Unlimited damages upon proof-of willful misconduct-(Altaia v. Intermediate Appellate Court, G.R. No. 71929, Decémber4, 1990. oy \ V. THE C égsttss c EOF HE PHILIPPINES a SA BILANG:68)\ ye A. GENERAL PRINCPLE: Ss ' Q: What is a orporation? \ ANS: A corporation i an arial being, created by opéralion of Taw: faving the right of succession, and the powers,-atiributes, and properties. expressty:authorized by law or incident te its eXistenee (CORPORATION CODE, See. 2) Q: What are the ‘attributes ofa corporation? f ANS: The altributes of the corporation are: (ALSE) Itis an Artificial being with separate and juridicat personality; Itis a creaturéof the Law; =~ It enjoys the rightof Succession; and’. It has the powers, attributes, and properties’ Expressly authorized by law or incident to its existence (CORPORATION CODE, Sec. 2). BEN! yw are corporations created? ANS: Corporations are created through: 1. General Law — private corporations are generally created under the provisions of the Corporation Code. This is done by filing the appropriate Articles of Incorporation with the Securities and Exchange Commission; the life of the corporations starts from the issuance of the Certificate of Incorporation. 2. Special Law — public corporations are created through special laws calted charters. Private corporations cannot be created by special laws. Exceptions: Government owned or controlled corporations which are actually private corporations. (SUNDIANG & AQUINO, Reviewer, supra at 184-185). Q: May a corporation be incorporated by mere consent? ANS: No. Corporations cannot come into existence by mere agreement of the parties as in the case of partnerships. They require special authority or grant from the State. This power is exercised by the State through the legislature, either by a special incorporation law or charter which directly creates the corporation or by means of a general 72