transpo tsn (valencia)

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TRANSPORTATION LAW

PART ICIVIL CODE PROVISIONS ON COMMON CARRIERS

CHAPTER ICOMMON CARRIERS IN G ENERAL

LAWS GOVERNING CONTRACTS OF TRANSPORTATION BY LAND, SEA, OR AIR WITHIN THE

PHILIPPINES (1966 & 1969 BAR EXAMS)

1. Transportation by Land

A. Overland Transportationa. Civil Code – primary law b. Code of Commerce – suppletory law

B. Commercial Transportation (object is mercandise!a. Civil Code – primary law b. Code of Commerce – suppletory law

". Transportation by #ea

A. Coastwise

a. Civil Code – primary law b. Code of Commerce – suppletory lawc. CO$#A

Note: CO$#A is not applicable even if te parties e%pressly provide for it.

B. &orei'n orts to ilippine s ortsa. Civil Code – primary law b. Code of Commerce – suppletory lawc. CO$#A

Te law of te ilippines still applies even if te collision

actually ta)es place in forei'n waters

C. &orei'n orts to ilippine s ortsTe laws of te country to wic te 'oods are to be transported

(*astern #ippin' vs. +AC, 1- #C/A 02!

2. Air Transportation

A. 3omestic – Civil CodeB. +nternational – 4arsaw ConventionC. #pecial laws also 'overn particular cases suc as5

1. Te ublic #ervice Act6". Te land Transportation and Traffic Code62. Tariff 7 Customs Code60. Te Civil Aeronautics Act.

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Updated by: Sol Marie Andoy 1



TERMS CONNECTED WITH THE LAW ON TRANSPORTATION

Tr!"#$r%%$! is one wereby a certain person or association of persons obli'ate temselvesto transport persons, tin's, or news form one place to anoter for a fi%ed price.

' INDS OF TRANSPORTATION

A. According to its Object

1. tin's". persons2. news

B. According to place of travel

1. land". water

a. navi'able canals b. la)es or riversc. sea

2. air

PARTIES TO A CONTRACT OF TRANSPORTATION

1. sipper ". carrier or conductor

Transportation of Passengers

1. sipper – wo imself is te person to be transported". carrier

Transportation of Things

1. sipper ". carrier 2. consi'ner

Transportation of News

1. remitter ". carrier 2. consi'nee

S##r $r *$!"+!$r – one wo 'ives rise to te contract of transportation by a'reein' todeliver te tin's or news to be transported, or to present is own person or tose of oter or oters in te case of te transportation of passen'ers

Crrr $r *$!-*%$r – one wo binds imself to transport persons, tin's, or news as tecase may be, or one employed in or en'a'ed in te business of carryin' 'oods for oters for ire. Carriers are eiter common or private.

C$!"+! – te party to wom te carrier is to deliver te tin's to be transported or one towom te carrier may lawfully ma)e delivery in accordance wit its contract of carria'e. Tesipper and te consi'nee may be mer'ed in one person.

Fr+% – te term as been defined as5

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1. te price or compensation paid for te transportation of 'oods by a carrier, at sea, from port to port

". te ire paid for te carria'e of 'oods on land from place to place, or inland streams or la)es

2. te 'oods or mercandise transported at sea, on land or inland streams or la)es

Crrr" . may be defined as persons or corporations wo underta)e to transport or convey'oods, property or persons from one place to anoter, 'ratuitously or for ire and areclassified as private or special carriers and common or public carriers.

Pr/% Crrr" – tose wo transport or underta)e to transport in a particular instance for ire or reward.

C$00$! Crrr – one wo olds itself out as ready to en'a'e in te transportation of 'oodsfor ire as a public employment and not as a casual occupation

DE G2MAN V3 CA18 #C/A 1", 3ecember "", 1988

Art. 1:2" in definin' common carrier carefully avoids ma)in' any distinction between a person or enterprise offerin' transportation service on a re'ular or sceduled basisand one offerin' suc service on occasional, episodic or unsceduled basis. ;eiter does Art1:2" distin'uis between a carrier offerin' its services to te 'eneral public, i.e., te 'eneralcommunity of population, and one wo offers services or solicits business only from a narrowse'ment of te 'eneral population. 4e tin) tat Art 1:2" deliberately refrained from ma)in'suc distinctions.

;otwitstandin' tat a carrier as no certificate of public convenience, it is still acommon carrier. +t is a palpable error to conclude tat a person olds no certificate of publicconvenience is not a common carrier. A certificate of public convenience is not a re<uisite for incurrin' a liability under te Civil Code provisions 'overnin' common carriers. Te liabilityarises te moment a person or firm acts as a common carrier, witout re'ard to weter or notsuc carrier as complied wit te re<uirements of te applicable re'ulatory statute andimplementin' re'ulations and francise. To e%empt private respondent form liabilities of acommon carrier because e as not secured te necessary certificate of public conveniencewould be offensive to sound public policy. Tat would be to reward private respondent precisely for failin' to comply wit applicable statutory re<uirements.

CASES

TATAD /"3 GARCIA, 4R3"02 #C/A 02

+n 1989, 3OTC planned to construct a li't railway transit line alon' *3#A. Only private respondent *3#A L/T Consortium met te re<uirements and <ualified for tefinancin' and implementation of te project.

rivate /espondents sall underta)e and finance te entire project re<uired for acomplete operational li't railway transit system. =pon full or partial completion and

viability tereof, sall operate te same. As a'reed upon, private respondent>s sall deliver te use and possession of te competed portion to 3OTC, wic rentals to be paid by te3OTC on a montly basis, wic basis, wic, in turn sall come from te earnin's of te*3#A L/T +++.

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etitioners #enators Tatad, Orbos and Bia?on as ta%payers <uestioned teconstitutionality of te a'reement contendin' tat based on Article @++ #ection ++ of teconstitution, te operation of a public utility is limited to &ilipinos or &ilipinoCorporations ( of wose capital is owned by &ilipinos! and tat private respondents isadmitted a forei'n corporation wic cannot own and operate te *3#A L/T +++.

+##=*54eter or not *3#A L/T Consortium (*3#A L/T Corp. LT3.! can own a

public utility.

D*L35 ;O.

4at private respondent owns are te rail trac)s, rollin' stoc)s power plant andnot te public utility. 4ile a francise is needed to operate tese facilities, tey do not bytemselves constitute public utility.

Tere is difference between operation of a public utility and ownersip of tefacilities and e<uipment used to serve te public. Only te latter is wat te / e%ercises.

Dence, / can own *3#A L/T ++.

G!r5 R-5 T L7 Pr$8%" !r"$!85 D"*r0!%$! 8 C$00$!Crrr"

Te law re<uires common carriers to carry for all persons, eiter passen'ers or property, for e%actly te same car'e for a li)e or contemporaneous service in tetransportation of li)e )ind of traffic under substantially similar circumstances or conditions.Te law proibits common carriers from subjectin' any person, etc., or locality, or any particular )ind of traffic, to any undue or unreasonable prejudice or discrimination

watsoever.

E:*#%$! W! % *%-5 *$"% $; !5!+ ! %r!"#$r%!+ % "0 " ;;r!%3

Te law did not intend to re<uire common carriers to carry te same )ind of mercandise, even at te same price, under different and unli)e conditions were te actualcost is different.

D%r0!%$! $; 4-"%;85 R;-"5

A common carrier may refuse to carry certain products wic subjects any persons,

locality or te traffic in suc products to an unnecessary, undue, or unreasonable prejudice ordiscrimination wic involves a consideration of

1. te sustainability of te vessels of te company for te transportation of suc products

". te reasonable possibility of dan'er or disaster, resultin' from teir transportation in te form and under te conditions in wic tey are offeredfor carria'es

2. te 'eneral nature of te business done by te carrier 0. all te attendant circumstances wic mi't affect te <uestion of reasonable

necessity by te carrier to underta)e te transportation of tis class of

mercandise.

CASE

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F3C FISHER /"3 YANGCO STEAMSHIP COMPANY<1 PHIL 1

F*%"laintiff is stoc)older in te Ean'co #teamsip Company, te owner of a lar'e

number of steam vessels, duly licensed to en'a'e in te coastwise trade of te ilippine+slands.

Te directors of te company adopted a resolution wic was tereafter ratifiedand affirmed by te sareolders of te company, e%pressly declarin' and providin' tatte classes of mercandise to be carried by te company in its business as a commoncarrier do not include dynamite, powder or oter e%plosives, and e%pressly proibitin' teofficers, a'ents and servants of te company from offerin' to carry, acceptin' for carria'eor carryin' said dynamite, powder or oter e%plosives

/espondent Actin' Collector of Customs demanded and re<uired of te companyte acceptance and carria'e of suc e%plosives6 tat e as refused and suspended te

issuance of te necessary clearance documents of te vessels of te company unless anduntil te company consents to accept suc e%plosives for carria'e6

laintiff is advised and believes tat sould te company decline to accept suce%plosives for carria'e, te respondent AttorneyF$eneral of te ilippine +slands and terespondent prosecutin' attorney of te city of Ganila intend to institute proceedin's under te penal provisions of sections 0, -,and of Act ;o. 98 of te ilippine Commissiona'ainst te company, its man'ers, a'ents and servants, to enforce te re<uirements of teActin' Collector of Customs as to te acceptance of suc e%plosives for carria'e.

I""-1. 4eter or not te refusal of te owners and officers of a steam vessel to accept for

carria'e dynamite, powder or oter e%plosives can be eld to be a lawful act as to teconditions under wic suc e%plosives are offered for carria'e, or as to te suitablenessof te vessel for te transportation of suc e%plosives.". 4eter or not te possibility tat te refusal to accept suc articles of commerce in a particular case may ave te effect of subjectin' any person or locality or te traffic insuc e%plosives to an undue, unreasonable or unnecessary prejudice or discrimination.

H5A refusal to carry e%plosives involves an unnecessary or reasonable preference or

advanta'e to any person, locality or particular )ind of traffic or subjects any person,locality or particular )ind of traffic to an undue or unreasonable prejudice or discrimination is by no means selfFevident, and tat it is a <uestion of fact to be

determined by te particular circumstances of eac case.

4atever may ave been te rule at common law, common carriers in tis jurisdiction cannot lawfully decline to accept a particular class of 'oods for carria'e to te prejudice of te traffic in tose 'oods unless it appears tat for some sufficient reason tediscrimination a'ainst te traffic in suc 'oods is reasonable and necessary. Gere prejudice or wim will not suffice. Te 'rounds of te discrimination must be substantialones, suc as will justify te courts in oldin' te discrimination to ave been reasonableand necessary under all te circumstances of te case.

+t cannot be doubted tat te refusal of a steamsip company, te owner of alar'e number of vessels en'a'ed in te coastwise trade of te ilippine +slands as a

common carrier of mercandise, to accept e%plosives for carria'e on any of its vesselssubjects te traffic in suc e%plosives to a manifest prejudice and discrimination, and ineac case it is a <uestion of fact weter suc prejudice or discrimination is undue,unnecessary or unreasonable.

PANTRANCO VS3 PSC

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: D+L. ""1

Te petitioner as been in te business of transportation passen'ers in te provinces of an'asinan and Tarlac by means of motor veicles. etitioner>s applicationfor autori?ation to operate ten additional Broc)way truc)s was 'ranted.Dowever, e didnot a'ree to te new conditions imposed on te new certificate tat te service can bere<uired by te 'overnment upon payment of te cost price less tan depreciation, and,tat te certificate sall be valid for a definite period of time.

etitioner assails te constitutionality of CA 0-0 autori?in' te imposition of suc condition and prayed to declare te provisions tereof not applicable to valid andsubsistin' certificates issued prior to Hune 8, 1929.

+##=*54eter or not it applies to valid and subsistin' certificates.

D*L35 E*#.

=nder te 0t para'rap of section 1- of CA 10, te power of te #C to prescribe te conditions tat te service can be ac<uired by te Commonwealt of teil. Or by te instrumentality tereof upon payment of te cost price of its usefule<uipment, less reasonable depreciation, and tat te certificate sall be valid only for adefinite period of time is e%pressly made applicable to any e%tension or amendment of certificates actually in force and to autori?ations to renew and increase e<uipment and properties. =pon review tese conditions were purposely made applicable to e%istin'certificates of public convenience.

COMMON CARRIER DEFINITION & CHARACTERISTICS

DEFINITION

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business

of carrying or transporting passengers or goods or both, by land, water, or air, for compensation,

offering their services to the public.

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are

bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the

passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734,

1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is

further set forth in Articles 1755 and 1756.

+n te case of L%0$"$ /"3 D$5!% CA/ :9, te CA discussed te distinctivecaracteristics of common carriers and empasi?ed tat not all carriers <ualify as and aresubject to te strin'ent responsibilities of common carriers also enumerated in te &irstilippine +ndustrial ipeline v. CA 2 #C/A 1

TESTS OF A COMMON CARRIER

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1. De must be en'a'ed in te business of carryin' for oters as a public employment,and must old imself out as ready to en'a'e in te transportation of 'oods for persons 'enerally as a business, and not as casual occupation6

". De must underta)e to carry 'oods of te )ind to wic is business is confined62. De must underta)e to carry by te metods by wic business is conducted and

over is establised roads and0. te transportation must be for ire

Cr*%r"%*" $; C$00$! Crrr

13 Te common carrier underta)es to carry for all people indifferently 6 e isre'arded, in some respects, as a public servant. Tat olds imself out as readyto en'a'e in te transportation of 'oods for persons 'enerally as a business,and not as casual occupation, and tat e underta)es to carry for all personsindifferently witin te limits of is capacity and te spere of te businessre<uired of im so tat e is bound to serve all wo apply, and is liable for

refusal witout sufficient reason to do so.=3 Te carrier cannot lawfully decline to accept a particular class of 'oods for carria'e to te prejudice of te traffic in tose 'oods

<3 ;o monopoly is favored.>3 ublic convenience constitutes anoter caracteristic of a common carrier

P-85* " . use by te public, it is not confined to privile'ed individuals but is open to teindefinite public. +t is tis indefinite or unrestricted <uality tat 'ives it its public caracter.

DISTINCTIONS COMMON CARRIER V3 PRIVATE CARRIER COMMON CARRIER PRIVATE CARRIER

1. Holds itself out to the publicindiscrimintel!"

1. Contrcts #ith prticulrindi$iduls or %roups onl!"

&. E'trordinr! dili%ence isre(uired"

&. Ordinr! dili%ence is re(uires"

). *ub+ect to stte re%ultions" ). Not sub+ect to stte re%ultion",. Prties m! not %ree on limitin%

the crrier-s libilit! e'cept #henpro$ided b! l#"

,. Prties m! limit the crrierslibilit! pro$ide it is not contrr! tol# morls or %ood customs"

/. E'emptin% circumstnces0

- Article 1)) of the Ne# Ci$ilCode0 Pro$e e'trordinr!dili%ence" nd

-Article 1), of the Ne# Ci$ilCode0

. 2lood *torm. Erth(u3eli%htnin% or other nturldisster or clmit!"

b. Act of the public enem! in#r #hether interntionlor ci$il"

c. Act or omission of theshipper or o#ner of %oods"

d. The chrcter of the %oodsor defects in the pc3in%or in the continers"

e. Order or ct of competentpublic uthorit!"

/. 4enerl e'emptin% circumstnce05 Article 11, of the Ne# Ci$il Code0

Cse 2ortuito"

6. There is presumption of fult orne%li%ence.

6. No presumption of fult orne%li%ence.

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IMPORTANCE OF DISTINCTION

+t is important to distin'uis between common and private carriers because distinctand different laws 'overn te ri'ts and obli'ations of common and private carriers. Tede'ree of dili'ence set by law to be observed by common and private carriers in te carria'e

of 'oods or passen'ers is not te same and te validity of te contracts and te stipulationsterein are subject to separate sets of public and le'al restrictions.

LAW PROHIBITS NREASONABLE DISCRIMINATION BY COMMON CARRIERS

Te law re<uires common carriers to carry for all persons eiter passen'ers or property for e%actly te same car'e for a li)e or contemporaneous service in tetransportation of li)e )ind of traffic under substantially similar circumstances or conditions.Te law proibits common carriers from subjectin' any person or locality or any particular )ind of traffic to any undue or unreasonable prejudice or discrimination watsoever. +t iswen te price car'ed is for te purpose of favorin' persons or localities or particular )indsof mercandise tat te law proibits and intervenes.

W! D"*r0!%$! 55$7

• Te law does not proibit te car'in' of a different rate for te

carryin' of passen'ers or property wen te actual cost of andlin' and transportin' te same is different. Te law doesnot proibit te car'in' of a different price for andlin' andsippin' mercandise wen te sipper e%ercises 'reater care in preparin' te same for sipment tereby reducin' te actualcost of andlin' and transportin'.

DETERMINATION OF 4STIFIABLE REFSAL TO CARRY CERTAIN PRODCTS

1. Te suitability of te vessels of te company for tetransportation of suc 'oods

". Te reasonable possibility of dan'er or disaster resultin'from teir transportation in te form and under conditions inwic tey are offered for carria'es

2. All attendant circumstances wic mi't affect te <uestionof te reasonable necessity for te refusal by te carrier tounderta)e te transportation of te class of mercandise

EXTRAORDINARY NEGLIGENCE RE?IRED OF COMMON CARRIERS

Tus , common carrier now must e%ercise e%traordinary dili'ence in te performance of teir contracts of carria'e. +t is not enou' tat tey e%ercise ordinarydili'ence or te dili'ence of a 'ood fater of a family. +t is te nature of te business of common carriers and te e%i'encies of public policy demand tat tey observee%traordinary dili'ence.

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CASES

CALTEX PHILS3 INC /"3 SLPICIO LINES($./. ;o. 1211, #eptember 2, 1999!

Carterer5 Calte%#ip5 GT Iector Owner of te #ip5 Iector #ippin' Corp.3efendant5 #ulpicio Lines

A motor tan)er owned and operated by Iector #ippin' Corp, en'a'ed in te business of transportin' products suc as 'asoline, )erosse, diesel and crude oil. 3urin' a particular voya'e it carried fuel owned by Calte% by virtue of a carter contract betweentem, GI 3oJa is a passen'er and car'o vessel owned and operated by #ulpicio Lines,+nc is also plyin' te waters eaded for Ganila. Te two vessels collided in te open sea.All crew of 3oJa a? died wile " survived from GT Iector. Out of te 0, passen'ers,only "0 survived from GI 3oJa a?

Te board of marine in<uiry after an investi'ation found te GT Iector>sre'istered operator, &rancisco #oriano and its owner and actual operator Iector #ippin'Corp were responsible for its collision wit 3oJa a?.

Teresita Cane?al and er moterFinFlaw, widow and moter of a deceased due tote accident filed a complaint for 3ama'es arisin' from Breac of Contract of Carria'ea'ainst #ulpicio Lines. #ulpicio in te oter and filed a 2rd party complaint a'ainst&rancisco #oriano, Iector #ippin' and Calte% alle'in' tat Calte% cartered GT Iector wit 'ross and evident bad fait despite its bein' unseaworty.

Te trial court rendered a decision dismissin' te tird party complaint a'ainstte petitioner favorin' te complainants of te suit for dama'e. But on appeal to te CA

interposed by #ulpicio, te CA modified te TC>s rulin' and included petitioner as one of tose liable for dama'es. Dence, tis petition.

+ssues5 4eter or not Calte%, te carterer of a sea vessel liable for dama'es resultin'from a collision between te cartered vessel and te passen'er sipK

Deld5 ;o, te Calte% is not liable.

Te carterer as no liability for dama'es under te ilippine Garitime Laws.Te respective ri'ts and duties of te sipper and te carrier depends not on weter tecarrier is a public or private carrier but on weter te contract of carria'e is a bill of ladin', or e<uivalent sippin' document on one and or a cartered party or similar

contract on te oter . etitioner and Iector entered into a contract of affrei'tment also)nown as voya'e carter.

Cr%r #r% – contract by wic te entire sip or principal part is lent by teowner to anoter person for a specified time or use.

C$!%r*% $; A;;r+%0!% – is werein te owner of te sip or oter vessel letste wole or part of er to a mercant or oter person for te conveyance of 'oods, on a particular voya'e in consideration of payment of frei't. +t leaves te 'eneral owner in possession of te sip as owner of te voya'e, te ri'ts and responsibilities of ownersiprest on te owner. Te carterer is free from liability to tird persons in respect of te sip.

Te carterer of te vessel as no obli'ation before transportin' its car'o toensure tat te vessel it cartered complied wit all le'al re<uirements. Te duty restsupon te common carrier for bein' en'a'ed in public service. Te Civil Code demandsdili'ence wic is re<uired by te nature of te obli'ation between Calte% and GT Iector,liability found by CA is witout basis.

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Te relationsip between te parties in case is 'overned by special laws becauseof te implied warranty of seawortiness. #ippers of 'oods, wen transactin' witcommon carriers are not e%pected to in<uire upon te vessel>s seawortiness, 'enuinenessof its licenses and compliance wit all maritime laws. To demand more form te sippersand old tem liable in case of failure e%ibits notin' but te futility of our maritimelaws insofar as te protection of te public 'eneral is concerned.

Tus te nature of te obli'ation of Calte% demands ordinary dili'ence li)e anyoter sipper in sippin' is car'oes.

NITED STATES /"3 TAN PIACO0 D+L 8-2

#aid defendants were car'ed wit a violation of te ublic =tility Law in tattey were operatin' utility witout permission from te ublic =tility Commissioner. Telower court found Tan iaco 'uilty of te crime car'ed.

Apparently, Tan aico rented two automobile truc)s and was usin' tem upon tei'ways of te rovince of Leyte for te purpose of carryin' some passen'ers andfrei't under a special contract in eac case. De ad not eld imself out to carry all passen'ers and all frei't for all persons wo mi't offer passen'ers and frei't.

+ssue54eter or not te appellant was a public utility.

Deld5 ;o.

As te AttorneyF$eneral said, te truc)s furnised service under speciala'reement to carry particular persons and property. Tese passen'ers, or te owners of te

frei't, may ave controlled te wole veicle bot as to content, direction and time of use. 4ic facts, under all circumstances of te case would ta)e away te defendants business from te provisions of te ublic =tility Act.

ublic =tility is ereby define to include individual, co partnersip associationcorporation or joint stoc) company, tat nor or ereafter may own, operate, mana'e or control any common carrier, railroad, street railway, en'a'ed in te transportation of passen'ers, car'o for public use.

ublic use means te same as use by te public. Te essential feature of public useis tat it is not confined to privile'e individuals, but is open to te indefinite public. Teremust be in 'eneral, a ri't tat te law compels te power to 'ive te 'eneral public. +t is

not enou' tat te 'eneral prosperity of te public is promoted. Te true criterion bywic to jud'e of te caracter of te use is weter te public may enjoy it by ri't or only by permission.

NITED STATES /"3 ?INA4ON21 D+L 189

3efendants ascual uinajon and *u'enio uitoriano were car'e violation of Act 98 of te Civil Commission. +t alle'e tat te accused did willfully, unlawfully, andcriminally demand and collect from rovincial Treasurer, for te unloadin' of eac one of te -, 98 sa)s of rice, 1 centavos from it re'ular car'e of centavos.

+##=*54eter or not defendants violated Act 98.

D*L35 E*#.

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Art. 98 of te Civil Commission in portion states tat ;o common carrier sall%%% collect or receive from any persons a 'reater or less compensation for any servicesrendered in te transportation of passen'ers or property %%% under substantially similar conditions and circumstances

+n tis present case tere is no pretense tat it actually cost more to andle te ricefor te province tan it did for te mercants wit wom te special contracts were made.&rom te evidence, it would seem tat tere was a clear discrimination is te tin', wicis specifically proibited and punised under te law.

BASCOS /3 CA""1 #C/A 218

/odolfo Cipriano representin' Cipriano Tradin' *nterprise entered into a aulin'contract wit HB&A+/ #ippin' A'ency Corp., wereby te former bound to aul telatter>s ", mMtons of soya beans meal from Ga'allanes 3rive, del an, Ganila to te

wareouse of urefoods Corp., in Calamba La'una.

To carry out its obli'ation, CipTrade, trou' / Cipriano subcontracted *strellitaBascos to transport and to deliver 0 sac)s of soya bean mea wort 1-,00 from teGanila ort Area to Calamba, La'una at te rate of -, per metric ton.

etitioner failed to deliver te car'o. As a conse<uence Cipriano paid H+B&A+/ for te amount of lost 'oods in accordance wit te contract tey ave a'reed and tat incases of loss due to teft, ijac)in' and of nonFdelivery or dama'es to te car'oC+T/A3* sall be eld liable.

C+/+A;O demanded reimbursement from petitioner but te latter refused. #o a

complaint was filed for a sum of money 7 dama'es wit writ of preliminary attatcmentfor breac of contract of carria'e.

etitioner interposes te ff defenses50. tat tere was no contract of carra'e since C+T/A3* leased er

car'o truc)-. Tat Ciptrade liable to te petitioner of 11 for loadin' te car'o. Tat on te ni't of Oct. "1, 1988 te truc) carryin' te car'o

was ijac)ed and tat te event was immediately reported toCiptrade6 petitioner and te police e%erted all efforts to locate teijac)ed properties

:. te ijac)in' bein' a force majeure, e%culpated petitioner from

any liability

+ssue5 1. 4eter or not etitioner is a common carrier ".. 4eter or not ijac)in' is a force majeure

Deld5@3 Ees, petitioner is a common carrier as defined in Art. 1:2" of te Civil Code. Te

test to determine a common carrier is to weter te 'iven underta)in' is part of te business en'a'ed in by te carrier wic e as eld out to te 'eneral publicas is occupation rater tan te <uantity or te e%tent of is business transacted.+n tis case, te petitioner erself as made te admission tat se was in truc)in' business, offerin' er truc)s to tose wit car'o to move. Hudicial admissions are

conclusive and no evidence is re<uired to prove te same.

63 Dijac)in' does not constitute force majeure wic will e%culpate er fromliability for te loss of 'oods. To e%culpate te carrier from liability arisin' fromijac)in' , e must prove tat te robbers and or te ijac)ers acted wit 'rave or irresistible treat, violence or force in accordance wit Art. 1:0- of te Civil

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Code. +n te instant case, petitioner was not able to overcome te said presumption. Te accusatory affidavits wic se presented were not enou' toovercome te same.

DE G2MAN /"3 CA18 #C/A 1"

B*-5r $; +$$" C$00$! *rrr

Article 1:2" ma)es no distinction between one wose principal business activityis te carryin' of persons or 'oods or bot, and one wo does suc carryin' only as an ancillary activity, nor does it ma)e distinctions between one wo offers te service to te'eneral public population. Terefore, a party wo bac)Fauled 'oods for oter mercants from Ganila to an'asinan, even wen suc activity was only periodical or occasional and was not its principal line of business, or tat te rate it car'es is below tecommercial rate or toes not possess a CC are subject to te responsibilities andobli'ations of a common carrier an te lac) of a CC is not a re<uisite for incurrin'liability under te Civil Code provisions on COGGO; CA//+*/.

FIRST PHILIPPINE PIPELINE CORP3 VS, CA2 #C/A 1

P#5! O#r%$r C$00$! *rrr

A 'rantee of a pipeline concession applied for a Gayor>s permit wit te Office of te Gayor of Batan'as City. +t was transportin' petroleum products trou' its pipelines.Dowever, before te permit could be issued, te City Treasurer re<uired &+C to pay alocal ta% on its 'ross receipts for 1992. &+C protested te payment of te ta% and ar'uedtat it was a pipeline operator en'a'ed in business of transportin' petroleum productsfrom te Batan'as refineries, and as suc, e%empted from payin' te 'ross receipt ta% bein' a common carrier. Te Treasurer denied te protest and claimed tat &+C cannot beconsidered a COGGO; CA//+*/ en'a'ed in te Transportation business, and tuscannot claim e%emption from te payment of ta% onits 'ross receipts. Te issue ere isweter or not &+C is a COGGO; CA//+*/K

Te #C ruled tat &+C is a Common carrier. A Common carrier may be defined broadly as one wo olds imself out to te public as en'a'ed in te business of transportin' person or property from place to place, for compensation, offerin' isservices to te public 'enerally. Te definition of COGGO; CA//+*/ in Article 1:2"of te civil code ma)es no distinction as to te means of transportin', as lon' as it is byland, water or air. &+C is en'a'ed in te business of transportin' or carryin', petroleum product for ire as a public employment.

TRANS ORIENT CONTAINER TERMINAL SERVICES /"3 CAGA/CD 19, ""

Trans Orient is a sole proprietorsip customs bro)er wile =CB is te insurer of #GC =CB brou't as suit as #GC>s subro'ee a'ainst petitioner. Trans Oreintcontends tat it could not be eld liable as it is not a common carrier rater a private one because a s a customs bro)er and wareouseman, se does not discriminately old er services out to te public but only offers te same to select parties wit wom se maycontract in te conduct of er business.

+##=*54et er or not petitioner is a common carrier.

D*L35Article 1:2" ma)es no distinctions between tose wose principal business

activity is te carria'e of persons or 'oods or bot from one wo does suc carryin' only

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as an ancillary activity. +t also avoids ma)in' distinctions between a person r enterpriseofferin' transportation services in a re'ular or sceduled basis and one offerin' sucservice on an occasional basis.

Tere is a 'reater reason for oldin' petitioner to be a common carrier because tetransportation of 'oods is an inte'ral part of er business. To upold Trans Orient

contention would be to deprive tose wit wom se contracts te protection tat te lawaffords tem notwitstandin' te fact tat e obli'ation to carry 'oods for er customersis part and parcel of petitioner>s business.

FIRST MALAYAN LEASING VS CA"9 #C/A 1

Crisostomo Iitu' filed a case a'ainst te defendant, &GL&C to recover dama'esfor pysical injuries, loss of personal effects, and te wrec) of is car as a result of acollision, involvin' is car, anoter car and an +su?u car'o truc) re'istered in te name of &GL&C and driven by one Crispin #icat.

&GL&C denied any liability alle'in' tat it was not te owner of te truc) because it ad sold te same to Iicente Trinidad.

+##=*54eter or not &GL&C sould be eld liable.

D*L35 E*#.

Te court as consistently ruled tat re'ardless of o te actual owner of a motor veicle mi't be, te re'istered owner is te operator of te same wit respect to te public and tird persons, and as suc directly and primarily responsible for te

conse<uence of its operation. +n contemplation of law, te ownerMoperator of record is teemployer of te driver, te actual operator and employer bein' considered merely asa'ent.

HOME INSRANCE CO3 VS3 AMERICAN STEAMSHIP AGENCIES, INC3"2 #C/A "0

Dome +nsurance a eruvian firm sipped fismeal trou' te ## Crow borou'consi'ned to #an Gi'uel Brewery, wic was insured by te Dome +nsurance Co. Tecar'o arrived wit sorta'es, #GB demanded and Dome +nsurance Co. paid 10, insettlement for #GB>s claim. D+C filed for recovery of 10, from Lu?on #tevedorin'and American #teamsip a'encies. Te court absolved Lu?on but ordered American#teamsip to reimburse te 10, . to D+C, declarin' tat Art. -8: of te code of commerce ma)es te sip a'ent civilly liable for dama'es in favor of 2 rd persons due tote conduct of carriers captain and tat te stipulation in te carter owner from liability isa'ainst public policy under Art 1:00 of te ;ew Civil Code. On appeal, te #C eld tatte provisions on COGGO; CA//+*/ sould not apply were te common carrier isnot actin' as suc but as a private carrier. Te #tipulation in te carter party absolvin'te owner from liability for loss due to te ne'li'ence of its a'ent would be void only of strict public policy 'overnin' COGGO; CA//+*/ ids applied. #uc policy as no forcewere te public at lar'e is not involved, as te case of a sip totally cartered for te useof a sin'le party. (As)ed in te 198, 1981, 1980, 198-, 198:, 1991 BA/!

E/! 7%$-% *r%;*% $; #-8* *$!/!!* C$00$! *rrr

LOADSTAR SHIPPING CO3 INC, VS, CA$./. ;o. 121"1, #eptember "8, 1999

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A certificate of public convenience is not a re<uisite for te incurrin' of liabilityunder te Civil Code provisions 'overnin' common carriers. Tat liability arises temoment a person or firm acts as a common carrier, witout re'ard to weter or not succarrier as also complied wit te re<uirements of te applicable re'ulatory statute andimplementin' re'ulations as been 'ranted a certificate of public convenience or oter francise.

Te concept of COGGO; CA//+*/ coincides well wit te notion of publicservice under te ublic #ervice Act (CA 101, as a amended!, wic at least partiallysupplements te law on COGGO; CA//+*/ as set fort in te Civil Code. =nder #ection 12, par. (b! of te #A, public service includes every person tat nor or ereafter may own, operate, man'er, or control in te ilippines , for ire or compensation, wit 'eneral or limited clientele, weter permanent, occasional or accidental, and done for 'eneral business purposes, etc.

LASTIMOSO VS3 DOLIENTE1 #C/A :9

+n te case of 3oliente GMI 3oliente was not eld liable for te deat of abloLastimoso wen a fire occurred because tere was no evidence tat 3oliente was previously en'a'ed in te business of transportin' passen'ers, as te illFfated trip wasmerely a trial run. Dence, it was not re<uired to e%ercise *%traordinary 3ili'ence in tevi'ilance of 'oods and safety of te passen'ers aboard te 3oliente, nor was it was boundto carry te passen'ers safely as far as uman foresi't can provide, usin' te utmostdili'ence of a very cautious person.

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CDAT*/ ++COMMON CARIER OF GOODS

R ESPONSIBILITYVIGILANCE OVER GOODS

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,

unless the same is due to any of the following causes only:

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

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

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

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

(5) Order or act of competent public authority.

Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if

the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or

to have acted negligently, unless they prove that they observed extraordinary diligence as required

in Article 1733.

NATRAL DISASTER FORTITOS EVENT

A fortuitous event covers not only acts of $od (li'tnin', eart<ua)e, sipwrec), etc.! but also act of man (war, #tri)es, omicide, rec)lessness of oter drivers, latent mecanicaldefect etc.! A common carrier liability does not e%tend to dama'es caused by a fortuitousevent as e%pressed in Article 11:0 tat e%cept in cases e%pressly specified by law, or oterwise declared by stipulation, or wen te nature of te obli'ation re<uired teassumption of ris), no person sall be responsible for events wic could not be foreseen, or wic, tou' foreseen, were inevitable. After all, te carrier is not an insurer a'ainst allris)s of travel. +f a common carrier would be an insurer of te passen'er>s safety, it ou't not be liable in case of deat of, or injuries to, passen'ers, altou' not ne'li'ent. But te

common carrier>s liability rests upon ne'li'ence, its failure to e%ercise te utmost dili'encetat te law re<uires.

ART 1734 R!"#S#TS

RE78I*ITE* 2OR 9E2EN*E O2 NAT8RA: 9I*A*TER

1; It must h$e been thepro'imte nd onl! cuse ofthe loss

&; The common crrier must

e'ercise due dili%ence topre$ent or minimi<e the lossbefore durin% nd fter theoccurrence of =ood storm orother nturl dissters.

Thus to be entitled to the bene>ts of thesedoctrine the common crrier should be freefrom ne%li%ence or misconduct b! #hichtht dm%e or loss m! h$e beenoccsioned nd the nturl disster orclmit! must h$e been the pro'imtend onl! cuse of the loss.

ACT* O2 P8?:IC ENEM@

1; The ct ofthe public enem! must h$ebeen the pro'imte nd onl!cuse

&; The commoncrrier must h$e e'ercised

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due dili%ence to pre$ent orminimi<e the loss beforedurin% nd fter the ct ofthe public enem! cusin%the loss destruction ordeteriortion of the %oods

ACT OR OMI**ION O2 THE *HIPPER

The ct must h$e been the pro'imte ndonl! cuse of the loss destruction ordeteriortion of the %oods trnsported

THE CHARACTER O2 THE 4OO9* OR 9E2ECT* IN THE

PACIN4 OR IN THE CONTAINER*

In order to completel! escpe libilit! thecommon crrier must e'ercise duedili%ence to forestll or lessen the loss.

OR9ER OR ACT O2 COMPETENT A8THORIT@

The public uthorit! must h$e the po#er

to issue order other#ise if the oBcer cts#ithout le%l process the common crrier#ill be held lible

R ESPONSIBILITY OF COMMON CARRIERS

+n 'eneral, under Art 1:20, common carriers are responsible for te loss, destructionor deterioration of te 'oods carried by tem. Tis responsibility arises from contract, as terelation between a carrier and its patrons is of contractual nature. A failure on te carrier touse e%traordinary care in carryin' 'oods or passen'ers safely is a breac of contract and

constitutes culpa contractual and culpa a<uiliana.

Te law re<uires tem to e%ercise e%traordinary dili'ence wic means tat tey mustrender service wit te 'reatest s)ill and utmost foresi't. Te e%traordinary dili'encere<uired of carriers in te andlin' of 'oods of te sipper and te consi'nee lasts from tetime te car'oes are loaded in te vessels until tey are discar'ed and delivered to teconsi'nees.

CARRIER HAS DTY TO 'EEP AND CARE FOR GOODS CARRIED

+t is te duty of te carrier to properly and carefully andle, carry, )eep and care for

te 'oods carried and to e%ercise due care to ascertain and consider te nature of te 'oodsoffered for sipment and to use suc metods for teir care durin' te voya'e as teir naturere<uires. A vessel sould not accept car'o unless it can be 'iven te type of stora'e tat itscaracter re<uires.

Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are

unconditionally placed in the possession of, and received by the carrier for transportation until the

same are delivered, actually or constructively, by the carrier to the consignee, or to the person who

has a right to receive them, without prejudice to the provisions of Article 1738.

Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in

full force and effect even when they are temporarily unloaded or stored in transit, unless theshipper or owner has made use of the right of stoppage in transitu.

Art. 1738. The extraordinary liability of the common carrier continues to be operative even during

the time the goods are stored in a warehouse of the carrier at the place of destination, until the

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consignee has been advised of the arrival of the goods and has had reasonable opportunity

thereafter to remove them or otherwise dispose of them.

3 LIABILITY FOR LOSS PRESMPTION OF NEGLIGENCE

CASE

PLANTERS PRODCERS, INC VS CA"" #C/A 0:

Te #C eld tat wat a carrier in te ordinary course of business transports'oods as a common carrier and tereby bound by law to observe e%traordinary dili'ence,te enterin' into a carter party, were te sip captain, its officers and compliments areunder te employ of te sipowner and terefore continue to be under its directsupervision and control, does not transform te carrier into a private carrier for a suc purpose. Tis is because te carterer, a stran'er te crew and te sip, cannot be car'edwit te duty to care for is car'o wen te carterer does not ave any control of te

means of doin' so. A common or public carrier sall remain as suc, notwitstandin' tecarter of te wole or portion of a vessel, provided te carter is limited to te siponly, as in te case of time carter or voya'e carter. +t is only wen te carter includes bot te vessel and its crew, as in te case of time carter or voya'e carter. +t is onlywen te carter includes bot te vessel and its crew, as in a bareboat or demise carter,tat a common carrier becomes private, at least insofar as te particular voya'e coverin'te carter party is concerned.

COMPARISON AND CONTRASTS CARRIAGE OF CARGO & CARRIAGE OF PASSENGERS$arriage o% &ood' $arriage o% (a''enger'

1. In cse of loss destruction nd

deteriortion of the %oods commoncrriers re presumed to be t fultor h$e cted ne%li%entl! unlessthe! pro$e tht the! e'ercisee'trordinr! dili%ence.

1. The sme presumption pplies

&. Mere proof of deli$er! of %oodsin %ood order nd the subse(uentrri$l of the sme %ood t the plceof destintion m3es for primfcie cse %inst the crrierCost#ise :i%hter%e Corp. $s. CA&,/ *VRA D6;.

Reason for the presumption0 As to#hen nd ho# the %oods #etedm%ed in trnsit is mtterpeculirl! #ithin the 3no#led%e of the crrier nd its emplo!eesMirsol $s 9illr /) Phil 1&,;.

&. As lon% s it is sho#n tht theree'ists reltionship bet#een thepssen%er nd the common crriernd tht in+ur! or deth too3 plcedurin% the e'istence of the contrctthe courts need not m3e n e'press>ndin% of fult or ne%li%ence of common crriers. The l# imposes

upon common crriers strict libilit!.

Reason for the presumption0 thecontrct bet#een the pssen%er ndthe crrier imposes on the ltter thedut! to trnsport the pssen%ersfel!" hence the burden of e'plinin% should fll on the crrier.

The doctrine of res ips lo(uitorpplies.

). The cuse of ction isne%li%ence prticulrl! culpcontrctul.

). *me cuse of ction.

Article 1752 of the New Civil Code applies, wherein the law of the country to whichthe goods are to be transported governs the liability in case of their loss, destruction or deterioration.

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PRESMPTION OF NEGLIGENCE

$enerally spea)in' under Article 1:2-, if te 'oods are proved to ave been lost,destroyed or deteriorated, common carriers are presumed to ave been at fault or to ave

acted ne'li'ently, unless tey prove tat tey ave observed te e%traordinary dili'encere<uired by law.

DEFENSES OF A COMMON CARRIER

(1! &lood, storm, eart<ua)e, li'tnin', or oter natural disaster or calamity6("! Act of te public enemy in war, weter international or civil6(2! Act of omission of te sipper or owner of te 'oods6(0! Te caracter of te 'oods or defects in te pac)in' or in te containers6(-! Order or act of competent public autority.

&urtermore , under article 1:2-, in suc cases, common carriers are not presumed to be at fault or to ave acted wit ne'li'ence. +n addition, under Article 1:2-, in cases notcovered by te fore'oin', te common carrier may interpose te defense tat e observed tee%traordinary dili'ence re<uired by law.

WHEN CARRIER S REPONSIBILTY BEGINS

Te e%traordinary responsibility of te carrier be'ins from te time te 'oods aredelivered to te carrier. Te delivery to te carrier must place te 'oods to be transportedunconditionally in te possession of te carrier and te carrier must received tem.

WHEN CARRIER S REPONSIBILTY TERMINATES

Te e%traordinary responsibility of te carrier is terminated at te time te 'oods aredelivered to te consi'nee or te person wo as te ri't to receive tem. #uc delivery tote consi'nee need not be actual and it may be constructive.

NOTICE OF ARRIVAL OF GOODS AMONTS TO CONSTRCTIVE DELIVERY

;otice by te carrier tat te car'o ad already arrived tereby placin' te same at tedisposal of te sipper or te consi'nee amounts to constructive delivery of te car'o wicautomatically releases te carrier of te e%traordinary responsibility for te car'o in pursuanceto Article 1:2 of te Civil Code.

STOPPAGE IN TRANSIT

Te act by wic te unpaid vendor of 'oods stops teir pro'ress and resumes possession of tem wile tey in te course of transit from im to te purcaser and not yetactually delivered to te latter

/i't of stoppa'e in transitu may be e%ercised wen te buyer of te 'oods is or becomes insolvent, te unpaid seller wo as parted wit te possession of te 'oods as teri't of stoppin' tem in transitu .

Te responsibility of te carrier is wen te 'oods bein' transported are temporarilyunloaded or stored in transit by reason of te e%ercise by te vendor of is ri't of stoppa'e intransitu , te responsibility of te common carrier ceases.

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CASES

BAN'ERS AND MANFACTRERS ASSRANCE CORP3 V3 CA"10 #C/A 022

18 cases of copper tubin's were imported by Ali tradin' Company. Te tubin'sinsured by petitioner and arrived in Ganila on board te vessel sMs Oriental Ambassadoron ;ovember 0, 19:8, and turned over to private respondent *. /a?on, te manila arrastreoperator upon discar'e at te waterfront. Te carryin' vessel is represented in teilippines by its a'ent, &. *. Nueli' and Co. +nc. =pon inspection by te importer, tesipment alle'edly, found to ave sustained loses by way of teft and pilfera'e for wic petitioner, as insurer, compensated te importer in te amount of 21, 10..

etitioner, in subro'ation of te importerFconsi'nee and on e basis of wat itasserts ad been already establisedFtat a portion of te sipment was lost trou' teftand pilfera'e.Ffortwit concludes tat te burden of proof of provin' a case of nonFliability sifted to private respondents, one of wom, te carrier, bein' obli'ated toe%ercise e%traordinary dili'ence in te transport and care of te sipment. De implicationof petitioner>s statement is tat private respondents ave not sown wy tey are notliable.

+ssue5 wM; te carrier is liable

/ulin'5 +t must be underscored tat te sipment involved in te case at te bar wascontaineri?ed. Te 'ods under tis arran'ement are stuffed, pac)ed, and loaded by tesipper at a place of its coice, usually is own wareouse, in te absence of te carrier.Conse<uently, te recital of te bill of ladin' for 'oods tus transported ordinary woulddeclare #aid to Contain, sippers Load and Count, full container Load, and teamount or <uantity of 'oods in te container in a particular pac)a'e is only prima facieevidence of te amount or <uantity wic may be overtrown by parol evidence.

+t lo'ically follows tat te case at bar presents no occasion for te necessity of discussin' te dili'ence re<uired of a carrier or te teory of prima facie liability of tecarrier, for from all indications, te sipment did not suffer loss or dama'e wile it wasunder te care, or of te arrastre operator, it must be added.

BELGIAN OVERSEAS CHARTERING & SHIPPING N3V3 /"3 PHIL3 FIRSTINSRANCE CO3 INC3

(282 #C/A "2!

&ACT#5On Hune 12, 199 CGC Tradin' sipped on board te GMI Anan'el #)y atDumbur', $ermany, "0" coils of various rime Cold rolled steel seets to be transportedto Ganila consi'ned to ilippine #teel Tradin' Corporation.

On Huly "8, 199, GMI Anan'el #)y arrived at te port of Ganila, and witinsubse<uent days, discar'ed te subject car'o.

&our (0! coils were found to be in te bad order. &indin' te 0 coils in teir dama'e state to be unfit for te intended purpose.

3espite receipt of a formal demand, defendants appellees refused to submit for teconsi'nee>s claim. Conse<uently, plaintiff appellant paid te consi'nee -, 8.- andwas subro'ated to te latter>s ri'ts and causes of action a'ainst defendantsFappellees.

+n impu'nin' te property of te suit a'ainst tem, defendants appellees imputedtat te dama'e 7Mor loss was due to resipment dama'e, to te inerent nature, vice or defect of te 'oods or to perils, dan'er 7 accidents of te sea, or to insufficiency of

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pac)in' tereof, or to te act of omission of te sipper of te 'oods or teir representatives.

+n addition tereto, defendants also ar'ued tat teir liability, if tere be any,sould not e%ceed te limitations of liability provided for in te bill of ladin' and oter pertinent laws. Tey li)ewise averred tat, in any event, tey e%ercised due dili'ence and

foresi't re<uire by te law to prevent any dama'eMloss to te said sipment.

/TC dismissed te complaint because tey ad failed to overcome te presumption of ne'li'ence imposed on carriers.

+##=*5 4eter petitioners ave overcome te presumption of ne'li'ence of common carrier

/=L+;$5 etitioners contend te common carriers sould not be applied on te basis of te loan testimony offered by private respondents. Tis is =;T*;ABL*.

4ell settled is te rule tat common carriers, from te nature of teir business and

for reasons of public policy, bounded to observe e%traordinary dili'ence and vi'ilancewit respect to te safety of te 'oods and te passen'ers tey transport.

Tus, common carriers are re<uired to render service wit 'reatest s)ill andforesi't and to use al reasonable means to ascertain te nature and caracteristics of te'oods tendered for sipment, and to e%ercise due care in te andlin' and stowa'e,includin' suc metods as teir nature re<uires.

Te e%traordinary responsibility lasts from te time te 'oods are unconditionally placed in te possession of and received for transportation by te carrier until tey aredelivered, actually and constructively, to te consi'nee or to te person wo as ri't toreceive tem. Tis strict re<uirement is justified by te fact tat, te ridin' public enters

into a contract of transportation wit common carriers witout a and or a voice in te preparation suc contract.

Owin' to is i' de'ree of dili'ence re<uired of tem, common carriers, as a'eneral rule, are presume to ave been at fault or ne'li'ent if te 'oods tey transporteddeteriorated or 'ot lost or destroyed. Tat is, unless tey prove tat te e%ercisede%traordinary dili'ence in transportin' te 'oods. +n order to avoid responsibility for anyloss or dama'e terefore, tey ave te burden of provin' tat tey observe sucdili'ence.

Gere proof of delivery of te 'oods in 'ood order to a common carrier and of teir arrival in bad order at teir destination constitutes a prima facie case of fault or

ne'li'ence a'ainst te carrier. +f no ade<uate e%planation is 'iven as to ow tedeterioration, loss or destruction of te 'oods appened, te transported sall be eldresponsible.

+n te case, te petitioner failed to rebut te prima facie presumption of ne'li'ence.

Altou' te words metal envelopes rust stained and sli'tly dented were notedon te bill of ladin', tere is no sowin' tat petitioners e%ercised due dili'ence toforestall or lessen te loss.

Davin' been in te service for several years, te master of te vessel sould ave

)nown at te outset tat metal envelopes in said state would eventually deteriorate wennot properly stored wile in transit. *<uipped wit te proper )nowled'e of te naturesteel seets in coils and of te proper way of transportin' tem, te master of te vesseland is crew sould ave underta)en precautionary measures to avoid possibledeterioration of te car'o. But ;O;* of tese measures were ta)en.

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etitioners contend tat tey are e%empted from te liability under Art. 1:20 (0!of te Civil Code in tat caracter of te 'oods or defect in te pac)in' or te containerswas te pro%imate cause of te dama'e. Te aforesaid e%ception only refers to cases wen'oods are lost or dama'ed wile in transit as a result of natural decay of perisable 'oodsor te fermentation or evaporation of substances liable terefore. ;one of tese is presented in tis case.

&urter even if te fact of improper pac)in' was )nown to te carrier or its crewor was apparent upon ordinary observation, it is ;OT relieved of liability for loses or injury resultin' tere from, one it accepts te 'oods notwitstandin' suc condition.

Tus, petitioners ave ;OT successfully proven te application of any of tementioned e%emption in tis case.

3 EXEMPTION FROM LIABILITYDEFENSE OF COMMON CARRIER

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural

disaster must have been the proximate and only cause of the loss. However, the common carrier

must exercise due diligence to prevent or minimize loss before, during and after the occurrence of

flood, storm or other natural disaster in order that the common carrier may be exempted from

liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon

the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2.

CHARACTERISTICS OF A FORTITOS EVENT

+f a fortuitous event is proved, te carrier is absolved from liability. But te fortuitousevent must not concur wit ne'li'ence6 oterwise, it is no lon'er a defense. +n oter words,

te fortuitous even must be te sole element relied upon as eld in Batan'as Co. v.Ca'uimbal!. +n te case of Eobido v. CA, te #C described te caracteristics of a fortuitousevent as5

1. Te cause of te unforeseen and une%pected occurrence, or failure of tedebtor of comply wit is obli'ations, must be in dependent of uman will6

". +t must be impossible to foresee te event, wic constitutes te caso fortuito62. Te occurrence must be suc as to render it impossible for te debtor to fulfill

is obli'ation in a normal manner6 and0. Te obli'or must be free from any participation in te a''ravation of te injury

resultin' to te creditor.

Based on tese pronouncements, a bus company cannot be e%empted from liabilityfrom a tire blowFout (as discussed earlier! wic cannot be classified simply as a fortuitousevent, in te absence of sowin' tat it as e%ercise te *O3 re<uired of common carrier under te law.

Article 1:29 provides tat wile te defenses under Article 1:20 are available tocommon carrier in order tat te common carrier may be e%empted from responsibility, tenatural disaster must ave been te pro%imate and only cause of te loss. Dowever, tecommon carrier must e%ercise due dili'ence to prevent or minimi?e loss before, durin' andafter te occurrence of te flood, storm, or oter natural disaster in order tat te commoncarrier may be e%empted from liability for te Loss or deterioration of te 'oods. +t need not,

owever, be te immediate cause, it is sufficient if te immediate cause or te final act was setin motion by te natural calamity or disaster 7 followed it in natural continuous se<uence,unbro)en by any efficient intervenin' cause.

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COMMON CARRIER IS STILL LIABLE FOR A LOSS CASE BY A NATRAL DISASTER IN THE

FOLLOWING INSTANCES (19-:, 198:, 7 1998 BA/!5

2! 4en te natural disaster is not te pro%imate and only cause of te loss60! 4en te common carrier failed to e%ercise due dili'ence to prevent or

minimi?e te loss before, durin' and after te occurrence of te ;3 6 and-! 4en te common carrier ne'li'ently incurs in delay in transportin' te'oods.

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural

disaster shall not free such carrier from responsibility.

Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the

goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be

liable in damages, which however, shall be equitably reduced.

Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the

character of the goods, or the faulty nature of the packing or of the containers, the common carrier

must exercise due diligence to forestall or lessen the loss.

Art. 1743. If through the order of public authority the goods are seized or destroyed, the common

carrier is not responsible, provided said public authority had power to issue the order.

Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability

of the former for the loss, destruction, or deterioration of the goods to a degree less than

extraordinary diligence shall be valid, provided it be:

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

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

carrier; and

(3) Reasonable, just and not contrary to public policy.

Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and

contrary to public policy:

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

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

the goods;

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

(4) That the common carrier shall exercise a degree of diligence less than that of a good

father of a family, or of a man of ordinary prudence in the vigilance over the movables

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

employees;

(6) That the common carrier's liability for acts committed by thieves, or of robbers who do

not act with grave or irresistible threat, violence or force, is dispensed with or

diminished;

(7) That the common carrier is not responsible for the loss, destruction, or deterioration of

goods on account of the defective condition of the car, vehicle, ship, airplane or other

equipment used in the contract of carriage.

' INDS OF STIPLATION LIMITING LIABILITY

1. *%emptin' te carrier from any and all liability for loss ordama'e occasioned buy its own ne'li'ence

". Te one providin' for an un<ualified limitation of suc liabilityto an a'reed valuation

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2. Te one limitin' te liability of te carrier to an a'reedvaluation unless te sipper declare a i'er value and pays ai'er rate of frei't

Accordin' to an almost uniform wei't of autority , te first and te second )inds of

stipulations are invalid as bein' contrary to public policy but te tird is valid andenforceable.

STIPLATIONS LIMITING LIABILITY VALID

/e<uisites5

(1! Tat te stipulation be in writin', si'ned by te sipper or owner6("! Tat te stipulation be supported by a valuable consideration oter

tan te service rendered by te common carrier6 and(2! Tat te stipulation be reasonable, just and not contrary to public

policy.

Soe !alid Stipulations "iiting Carrier#s "iability

Te followin' stipulations limitin' te carriers liability are e%pressly made valid by te ;ewCivil Code5

1. An a'reement limitin' te common carrier>s liability for delay on accountof stri)es or riots

". A stipulation tat te common carrier>s liability is limited to te value ofte 'oods appearin' in bill of ladin' unless te sipper or owner declares a'reater value

2. A contract fi%in' te sum tat may be recovered by te owner or sipperfor te loss, destruction or deterioration of te 'oods, if it is reasonableand just under te circumstances and as been fairly and freely a'reedupon.

Ialidity of stipulation in bill of ladin' limitin' liability of carrier

• A stipulation in te bill of ladin' limitin' te common carrier>s liability to te

value of te 'oods appearin' in te bill, unless te sipper or owner declares a

'reater value, is valid and bindin'.• Te insurer wo pays insured on is claim for dama'e is merely subro'ated to

te ri'ts of te insured and terefore said insurer cannot collect from tecarrier more ten wat te insured can collect from te carrier.

• Te obli'ation of te carrier top ay te dama'e be'ins from te date it fails to

deliver te sipment in 'ood condition to te consi'nee.

CASES

THE PHILIPPINE AMERICAN GENERAL INSRANCE CO3, INC3 VS MGGMARINE SERVICES, INC3

G3R3 NO3 1<@6>@, Mr* , ==

#an Gi'uel Corporation insured several bottle cases wit an a''re'ate value of -,82,""".8 wit ilippine American $eneral +nsurance Company (D+LAG$*;!.Te car'o was loaded aboard te GMI eateray atric) $ to be transported fromGandaue City to Bisli', #uri'ao del #ur. Te weater was said to be clam by te start of

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te voya'e. Te followin' day, te said vessel subse<uently sun) off Cawit point, Cortes,#uri'ao del #ur. As a conse<uence, te car'o belon'in' to #an Gi'uel was lost.

#an Gi'uel claimed te amount of lost from D+LAG$*;. =pon re<uest byaforementioned company, Gr. #ayo, a surveyor from Ganila went to pace of sin)in' toinvesti'ate circumstances of loss of car'o. De stated tat te vessel was structurally

sound and concluded tat te pro%imate cause of te listin' and subse<uent sin)in' of tevessel was te siftin' of ballast water from starboard to portside. Tis affected testability of te vessel.

etitioner paid #an Gi'uel te full amount stated in te insurance contract. Assubro'ee of #an Gi'uel, it filed a collection case a'ainst GC$ Garine #ervice s torecover amount it paid to #an Gi'uel.

Geanwile, Te Board of Garine +n<uiry conducted its own investi'ation of tesin)in' of te GMI earteray atric) $. te Board rendered a decision e%oneratin' tecaptain and its crew from any administrative liability. +t found tat te cause of sin)in'was te e%istence of stron' winds and enormous waves a fortuitous event tat could not

ave been foreseen. +t was furter eld tat it is tis fortuitous event tat was te pro%imate cause of sin)in'.

Te /TC of Ga)ati promul'ated a decision findin' respondent solidary liable for te loss of #an Gi'uel Corporation>s car'o and orderin' tem to pay petitioner te fullamount for te lost car'o plus le'al interest, attorney>s fees and cost of suit. GC$ Garineappealed to CA, it reversed rulin' of /TC.

+ssues5 4O; GC$ Garine services sould be liable for te loss of #an Gi'uel>s car'o.

Deld5 ;O, GC$ Garine #ervices could not be eld liable for te loss of te car'o

occurred, as a conse<uence of a fortuitous event and suc event was te pro%imate andonly cause of te loss.

Common carriers, from te nature of teir business and for reasons of public policy are mandated to observe e%traordinary dili'ence in te vi'ilance over te 'oods andfor te safety of te passen'ers transported by tem. 3ue to tis, common carriers as a'eneral rule are presumed to ave been at fault or ne'li'ent if te 'oods transported bytem are lost, destroyed or if te same deteriorated.

Te presumption of fault or ne'li'ence does not arise in te cases enumeratedunder Art. 1:20 of te Civil Code. Common carriers are responsible for te loss,destruction or deterioration of 'oods unless te same is due to any of te followin' causes

only5a. &lood, storm, eart<ua)e, li'tnin' or oter natural disaster or calamity b. On of te public enemy weter international or civil.c. Act or omission of te sipper or owner of te 'oodsd. Caracter of te 'oods or defects in te pac)in' or in te containers.e. Order or act of competent autority.

+n order tat a common carrier is absolved from liability due to natural disaster, itmust be furter sown tat suc natural disaster or calamity was te pro%imate and onlycause of loss, tere must be an entire e%clusion of uman a'ency from te cause of injuryor less.

Te Board or Garine +n<uiry found out tat te loss of car'o was due solely to tee%istence of a fortuitous event, particularly te stron' winds and u'e waves.

An event is said to be fortuitous if te followin' elements concur5a. Cause of te unforeseen and une%pected occurrence, or te failure of te debtor to

comply wit is obli'ations, must be independent of uman will.

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b. Gust be impossible to foresee te event, or it can be foreseen but impossible toavoid.

c. Occurrence must be suc as to render it impossible for te debtor to fulfill isobli'ation in a normal manner.

d. Te obli'or must be free from any participation in te a''ravation of te injuryresultin' to te creditor.

YOBIDO /"3 CORT OF APPEALSOctober 1:, 199:

Tito and Leny Tumboy, to'eter wit teir minor cildren boarded a Eobido busoperated by erein petitioner in Gan'a'oy, #uri'ao del #ur. Leny Tumboy alle'ed tatte bus was overloaded, and te driver was drivin' at a very i' speed, so se cautionedim to slow down. Dowever, e paid attention until te front left tire of te bus blew out,causin' te bus to fall into a ravine were it stuc) into a tree. Te incident caused tedeat of Tito Tumboy. Oter passen'ers of te bus were injured.

Leny Tumboy filed a complaint for breac of contract of carria'e a'ainst Eobido.Eobido contends tat se is not liable because te tire blowFout was a fortuitous eventwic e%empts te carrier from liability. Der witnesses testified tat te tire was installedfive days before te incident, and tat it was of 'ood <uality.

+ssue5

4eter or not te tire blowFout is a fortuitous event was would e%empt Eobidofrom liability arisin' form te contract of carria'e.

Deld5 Eobido is liable.

Te tire blowFput may not be a fortuitous event. Duman fact ors are involved.Te fact tat te tire was new did not imply tat it is entirely free from manufacturin'defects or tat it was properly mounted on te veicle.

Accidents caused eiter by defects of te automobile or trou' te ne'li'ence of te driver is not a fortuitous event.

A common carrier may not be absolved from liability in case of force majeurealone. Te common carrier must still prove tat it was not ne'li'ent in causin' te deator injury resultin' from an accident. +n te case at bar, wile it may be true tat te tiretat blewFup was still 'ood because te 'rooves of te tire were still visible, tis fact alonedoes not ma)e te e%plosion of te tire a fortuitous event. ;o evidence was presented to

sow tat te accident was due to adverse road conditions or tat precautions were ta)en by te jeepney driver to compensate for any conditions liable to cause accidents. Tesudden blowin'Fup, terefore, could ave been caused by too muc air pressure injectedinto te fire coupled by te fact tat te jeepney was overloaded and speedin' at te timeof te accident.

TAN CHIONG SIAN /3 INCHASTI & CO3"" il 1-"

Te defendant received in Ganila from On' Bien' #iap, bundles and cases of 'oods to be conveyed by te steamer #orso'on to $ubat, #orso'on were tey were to betranssipped to anoter vessel of te defendant for transportation to Catarman, #amar,

ten to be delivered to a Cinese sipper, Tan Cion' #ian, wit wom te defendantmade a sippin' contract. Te steamer #orso'on arrived at $ubat wit 'oods, and as telorca ilar was not yet tere, te 'oods were unloaded and stored in te defendant>swareouse.

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#everal days later, te lorca ilar arrived and te 'oods were ta)en aboard.Before ilar could leave for its destination, a storm arose from te acific passin' $ubar and drivin' ilar and its car'o upon te sore and wrec)ed it. Te laborers of tedefendant proceeded to 'ater up te mercandise of te plaintiff, and as it wasimpossible to preserve it, it was sold at public aution for 1,92.2:. laintiff filed anaction for dama'es in te amount of ",.. Lower decided tat te plaintiff was

entitled only to 10,0".2. 3efendant appealed.

+ssue5 4eter or not defendant +ncausti is eld liable for dama'es.

Deld5 +t is a fact not disputed, and admitted by te plaintiff tat ilar was stranded andwrec)ed on te coast of $ubat as a result of a violent storm from te acific, and it is a proven fact tat te loss or dama'e of te 'oods was due to force majeure wic causedte wrec)a'e of said craft. Accordin' to Art. 21 of te Code of Commerce mercandisesall be transported at te ris) and venture of te sipper, unless te contrary be e%presslystipulated. ;o suc stipulation appears on record, terefore, all dama'es and impairmentsuffered by te 'oods by reason of accident, force majeure or by virtue of te nature or defect of articles are for te account and ris) of te sipper. 3efendant, terefore, is not

liable for te dama'e occasioned as a result of te strandin' of ilar because of teurricane tat overtoo) it.

Te record bears no proof tat said loss caused by te destruction of ilar occurred trou' te carelessness or ne'li'ence of te defendant, its a'ents or patron of te lorca. Te defendant as well as its a'ents and patron ad a natural interest in preservin' te craft – an interest e<ual to tat of te plaintiff. Te record disclose tatilar was manned by an e%perienced patron and a sufficient n umber of crewmen plus tefact tat it was fully e<uipped. Te crewmen too) all te precautions tat any dili'entman sould ave ta)en wose duty it was to save te boat and its car'o, and by teinstinct of selfFpreservation, of teir lives. Considerin', terefore, te conduct of te menof te defendant in ilar and of its a'ents durin' te disaster, te defendant as not

incurred any liability watsoever for te loss of te 'oods, inasmuc as suc loss was teresult of a fortuitous event or force majeure, and tere was no ne'li'ence or lac) of careor dili'ence on te part of te defendant or its a'ent.

EASTERN SHIPPING LINES, INC3 /3 IAC1- #C/A 02

Tese two cases, bot for te recovery of te value of te car'o insurance, arosefrom te same incident, te sin)in' of te GM# A#+AT+C wen it cau't fire, resultin' inte total loss of sip and car'o.

+n $./. ;o. 900, te GMs A#+#T+C, a vessel operated by petitioner, loaded at

obe, Hapan for transportation to Ganila, -, pieces of colori?ed lance pipes in "8 pac)a'es valued at "-.29 consi'ned to il. Bloomin' Gills Co., +nc. and : cases of spare parts valued at 9",21.:- consi'ned to Central Te%tiles Gills, +nc. Bot set of 'oods were insured a'ainst marine ris) for teir stated value wit respondent3evelopment +nsurance and #urety Corporation.

+n $./. ;o. :10:8, te same vessel too) on board 1"8 cartons of 'arment fabricsand accessories, in " containers, consi'ned to Gariveles Apparel Corporation, and twocases of surveyin' instruments consi'ned to Aman *nterprises and $eneral Gercandise.Te 1"8 cartons were insured by respondent ;issin &ire 7 Garine +nsurance Co., and3owa &ire 7 Garine +nsurance Co., Ltd.

*nroute for obe, Hapan, to Ganila, te vessel cau't fire and san), resultin' inte total loss of sip and car'o. Te respective respondent +nsurers paid te correspondin'marine insurance values to te consi'nees concerned and were tus subro'ated unto teri'ts of te latter as te insured.

+ssues5

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1. 4ic law sould 'overn – te Civil provisions on Common carriers or teCarria'e of $oods #ea Act (CO$#A!K

". 4o as te burden of proof to sow ne'li'ence on te carrierK

Deld51. Te law of te country to wic te 'oods are to be transported 'overns te liability

of te common carrier in case of teir loss, destruction or deterioration. As tecar'oes in <uestion were transported from Hapan to te i., te liability of te petitioner is 'overned primarily by te Civil Code. Dowever, in all matters notre'ulated by said Code, te ri'ts and obli'ations of common carrier sall be'overned by te Code of Commerce and by special laws. Tus, te CO$#A, a speciallaw is suppletory to te provisions of te Civil Code.

". =nder te Civil Code, common carriers, from te nature of teir business and for reasons of public policy, are bound to observe e%traordinary dili'ence in te vi'ilanceover 'oods, accordin' to all te circumstances of eac case. Common carriers areresponsible for te less, destruction, or deterioration of te 'oods unless te same isdue to any of te followin' causes only (Art. 1:20, ;CC!5

(1! &lood, storm, eart<ua)e, li'tnin' or oter natural disaster or calamity6 %%%

Te carrier claims tat te loss of te vessel by fire e%empts it from liability under te prase natural disaster or calamity. Dowever, fire many not be considered a naturaldisaster or calamity. +t does not fall witin te cate'ory of an act of $od unless caused byli'tnin' or by natural6 disaster or calamity. Tus, under Art. 1:2-, te carrier sall be presumed to ave been at fault or ave acted ne'li'ently, unless it proves tat it asobserved te e%traordinary dili'ence re<uired by law.

+n tis case, te respective +nsurers, as subro'ees of te car'o sippers, ave proven tat te transported 'oods ave been lost. etitioner Carrier as also proven tat

te loss was caused by fire. Te burden ten is upon etitioner Carrier to prove tat it ase%ercised te e%traordinary dili'ence re<uired by law.

Davin' failed to discar'e te burden of provin' tat it ad e%ercised tee%traordinary dili'ence re<uired by law, petitioner cannot escape liability for te loss of te car'o.

MARO GAN2ON /"3 CORT OF APPEALSGay 2, 1988

Te private respondent instituted in te Court of &irst +nstance an action a'ainstte petitioner for dama'es based on culpa contractual.

$elacio Tumambin contract ed te services of Garuo B. $an?on to aul 2- tonsof scrap iron from Gariveles, Bataa, to te port of Ganila on board te li'ter LCTBatman

$elacio Tumambin' delivered te scrap iron to defendant &ilomeno ;i?a, captainof te li'ter. 4en about alf of te scrap iron was already loaded, Gayor HoseAdvincula of Gariveles, Bataan, arrived and demanded -,. from $elacioTumambin'. Te latter owever refused wic resulted to a eated ar'ument betweentem.

On a subse<uent date, Actin' Gayor Basilio /ub, accompanied by tree

policemen, ordered captain &ilomeno ;i?a and is crew to dump te scrap iron were teli'ter was doc)ed.

Later on Actin' Gayor /ub issued a receipt statin' tat te Gunicipality of Gariveles ad ta)en custody of te scrap iron.

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Te respondent court rendered a decision orderin' te petitioner to pay dama'esto erein respondent for te loss of te scrap.

+ssue5 4eter or not petitioner is liable for te loss of te scrap

Deld5 Ees.

Te petitioner as failed to sow tat te loss of te scraps was due to any of tefollowin' causes enumerated in Article 1:20 of te Civil Code.

By reason of tis presumption, te court is not even re<uired to ma)e an e%pressfindin' of fault or ne'li'ence before it could old te petitioner answerable for te breacof te contract of carria'e.

etitioner>s defense5 Te loss of te scraps was due to an order or act of competent public autority

#C said5 Before te appellee $an?on could be absolved from responsibility on

te 'round tat e was ordered by competent public autority to unload te scarp iron, itmust be sown tat Actin' Gayor Basilio /ub ad te power to issue te disputed order,or tat it was lawful, or tat it was issued under le'al process of autority. Te appelleefailed to establis tis.

+ndeed, no autority or power of te actin' mayor to issue suc an order was'iven in evidence. ;eiter as it been sown tat te car'o of scrap iron belon'ed to teGunicipality of Gariveles.

Te order of te actin' mayor did not constitute valid autority for appelle Gauro$anson and is representatives to carry out.

;ow te petitioner is can'in' is teory to caso fortuito. #uc a can'e of teory on appeal we cannot, owever, allow.

+n any case, te intervention of te municipal officials was not of a caracter tatwould render impossible te fulfillment by te carrier of its obli'ation. Te petitioner wasnot duty bound to obey te ille'al order to dump into te sea te scrap iron.

ARADA /"3 CA$./. ;o. 98"02. Huly 1, 199".

Alejandro Arada, erein petitioner, is te proprietor and operator of te firm #out ;e'ros *nterprises wic as been or'ani?ed and establised for more tan ten (1! years.

+t is en'a'ed in te business of small scale sippin' as a common carrier, servicin' teaulin' of car'oes of different corporations and companies wit te five (-! vessels it wasoperatin'.

On Garc "0, 198", petitioner entered into a contract wit private respondent #anGi'uel Corp., to safely transport as a common carrier, car'oes of te latter from #anCarlos City, ;e'ro Occidental to Gandaue City usin' one of petitioner>s vessels, GMLGaya. Te car'oes of private respondent consisted of 9,8"0 cases of beer empties valuedat 1:,8"0.8.

On Garc "0, 198", petitioner tru its crew master, Gr. Iivencio Babao, appliedfor a clearance wit te ilippine Coast 'uard for GML Gaya to leave te port of #an

Carlos City, but due to a typoon, it was denied clearance by #an Carlos City Coast $uard3etacment.

On Garc "-, 198" GML Gaya was 'iven clearance as tere was no storm and tesea was calm. Dence, said vessel left for Gandue City. 4ile it was navi'atin' towards

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Cebu, a typoon developed and said vessel was buffeted on all its sides by bi' waves. +tsrudder was destroyed and it drifted for si%teen (1! ours altou' its en'ine was runnin'.

On Garc ":, 198" at about 05 a.m., te vessel san) wit watever was left of its car'oes. Te crew rescued by a passin' pump boat and was brou't to Caln''aman+sland. Later in te afternoon, tey were brou't to alompon, Leyte, were Iivencion

Babao file a marine protest.

On te basis of suc marine protest, te Board of Garine +n<uiry conducted aearin' of te sin)in' of GML Gaya werein private respondent was duly represented.#aid Board made if findin's and recommended date ;ovember :, 1982, te dispositive portion of wic reads as5

Board of Garine +n<uiry decisionF

P4D*/*&O/*, premises considered, tis Board recommends as its is erebyrecommended tat te ownerMoperator, officers and crew of GML Gaya be e%onerated or absolved from any administration liability on account of tis incident

Te Board>s report containin' its findin's and recommendation was tenforwarded to te ead<uarters of te ilippine Coast $uard for appropriate action. Onte basis of suc report, te Commandant of te ilippin2 Coast $uard rendered adecision dated 3ecember "1, 1980 in #GB+ Adm. Case ;o. 88F8" e%oneratin' teownerMoperator officers and crew of te illFfated GML Gaya from any administrativeliability on account of said incident.

On Garc "-, 1982, private respondent filed a complaint in te /e'ional TrailCourt its first cause of action for te recovery of te value of te car'oes ancored on breac of contract of carria'e. After due earin', said court rendered a decision date Huly18, 1988, te dispositive portion of wic reads –

/TC decision –

4D*/*&O/*, jud'ment is ereby rendered as follows5

(1! 4it respect to te first cause of action, claim of plaintiff is ereby dismissed6

("! =nder te second cause of action, defendant must pay plaintiff te sum of ",.6

(2! +n te tird cause of action, te defendant must pay plaintiff te sum of ",809."6

(0! #ince te plaintiff as witeld te payment of 1",99:.0: due te defendant, te

plaintiff sould deduct te amount of 0,809." from te 1",99:.0: and te balanceof 8,108.": must be paid to te defendant6 and

(-! 3efendant>s counterclaim not avin' been substantiated by evidence is li)ewisedismissed. ;O CO#T#.

+n its decision promul'ated on April 8, 1991, te Court of Appeals reversed tedecision of te court a <uo, te dispositive portion and te dispositive reads as5

Court of Appeals decision –

4D*/*&O/*, tat part of te jud'ment appealed from is /*I*/#*3 and te

appellee Alejandro Arada, doin' business by te name and style, #out ;e'ros*nterprises, ordered to pay unto te appellant #an Gi'uel Corporation te amount of 1:,8"0.8 representin' te value of te car'o lost on board te illFfated vessel, GML

Gaya, wit interest tereon at te le'al rate from date te filin' of te complainton Garc "-, 1982, until fully paid, and te costs.

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+ssue5 4M; petitioner is liable for te value of te lost car'oes.

/ulin'5 Ees, te common carrier is liable for te lost car'oes of #GC.

Tere is no doubt tat petitioner was e%ercisin' its function as a common carrier wen it entered into a contract wit private respondent to carry and transport te latter>scar'oes. Tis fact is best supported bye te admission of petitioner>s son, Gr. *ric Arada,wo testified as te officerFinFcar'e for operations of #out ;'ros *nteprises in CebuCity.

+n te instance case, te appellate court was correct in findin' tat petitioner failedto observe te e%traordinary dili'ence over te car'o in <uestion and e or te master inis employ was ne'li'ent previous to te sin)in' of te carryin' vessel.

/espondent court>s conclusion as te ne'li'ence of petitioner is supported byevidence. +t will be noted tat Iivencion Babao )new of te impendin' typoon on

Garc "0, 198" wen te ilippine Coast 'uard denied GML Gaya te issuance of aclearance to sail. Less tan "0 ours elapsed since te time of te denial of said clearanceand te time and clearance to sail was finally issued on Garc "-, 198". /ecords willsow tat Babao did not ascertain were te typoon was eaded by te use of is vessel>s barometer and radio. ;eiter did te captain of te vessel monitor and record te weater conditions everyday as re<uired by Art. 1" of te Code of Commerce. Dad e done sowile navi'atin' for 21 ours, e could ave anticipated te stron' winds and bi' wavesand ta)en selter.

A common carrier is obli'ed to observe e%traordinary dili'ence and te failure of Babao to ascertain te direction of te storm and te weater condition of te pat teywould be traversin', constitute lac) of foresi't and minimum vi'ilance over its car'oes

ta)in' into account te surroundin' circumstances of te case. 4ile te 'oods are in te possession of te carrier, it is but fair tat it e%ercises e%traordinary dili'ence in protectin'tem from loss or dama'e, and if loss occurs, te law presumes tat it was due to tecarrier>s fault or ne'li'ence6 tat is necessary to protect te interest of te sipper wic isat te mercy of te carrier (Art. 1:-, Civil Code!.

&urtermore, te records sow tat te crew of GML Gaya did not ave tere<uired <ualifications provided for in .3. ;o. 9: or te ilippine Gercant GarineOfficers Law, all of wom were unlicensed. 4ile it its true tat tey were 'iven special permit to man te vessel, suc permit was issued at te ris) and responsibility of teowner.

&inally, petitioner claims tat te factual findin's of te #pecial board of Garine+n<uiry e%oneratin' te ownerMoperator, crew officers of te illFfated vessel GML Gayafrom any administrative liability is bindin' on te court.

+n rejectin' petitioner>s claim, respondent court was correct in rulin' tat suce%oneration was but wit respect to te administrative liability of te ownerMoperator,officers and crew of te illFfate vessel. +t could not ave meant e%oneration of appelleefrom liability as a common carrier for is failure to observe e%traordinary dili'ence in tevi'ilance over te 'oods it was transportin' and for te ne'li'ent acts or omissions of isemployees. #uc is te function of te Court, not te #pecial Board of Garine +n<uiry.

Te appealed decision is affirmed.

PHILIPPINE AMERICAN GENERAL INSRANCE COMPANY, INC3 VS CA""" scra 1--

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On #eptember 10, 198-, te 3avao =nion Gar)etin' Corp. of 3avao City sippedon board te vessel GMI Cra?y Dorse operated by te Transpacific Towa'e, +nc. car'oconsistin' of 9,-: seets o unuion brand $l seets wit a declared value of 1,8,:-. and 8,8 ba's of union o??olan and union ortland Cement wit adeclared value of 0,2,.. Te car'o was consi'ned to te Bicol =nion Center of asacao, Camarines #ur, wit a certain edro Olivan as te ;otifyFarty.

Te vessel arrived on #eptember :, 198-. =pon arrival te sipmaster notifiedte consi'nee>s notifyFparty tat te vessel was already to discar'e te car'o. Tediscar'in' could not be done immediately and continuously because of certain reasons.&irst, te buoys were installed only 9M11M8-6 second, te discar'ed permit was securedonly on 9M12 by te consi'nee6 tird, a wooden catwal) ad to be installed and tee%tension of te warf as to be made, wic was completed only on 9M"6 fourt, tediscar'in' was not continuous because tere were intermittent rains and te stevedoressupplied by te consi'nee deed not wor) durin' te town fiesta.

Te discar'in' of te car'o as to be suspended at 1160 AG on 1M1: due to teeavy downpour, stron' winds and turbulent sea due to te typoon #AL+;$.

Te sipmaster ordered te vessel to be moved a bout 2 meters seaward inorder tat it would not it te catwal) or te wooden brid'e or te warf, or te roc)s.Conse<uently, te vessel cannot be maneuvered on account of te stron' winds and rou'seas. Te vessel>s lines snapped causin' er to be dra''ed a'ainst te roc)s and teancor stopper 'ave way. Te vessel sustained a ole and water filled te en'ine roomand at 51- am te en'ine bro)e down and water filled te en'ine room.

Te sipmaster ad no coice but to order te sip to be abandoned. De told tecrew to secure te vessel wile e went to see te mayor to see) for police assistance to prevent pilfera'e of te vessel and its car'o. De was, owever, unable to 'et anyassistance. 4en e returned to te vessel e found tat it was bein' continuously

pounded by te stron' sea waves a'ainst te roc)s. Tis caused te vessels to brea) intotwo parts and to sic) partially. +n spite te presence of 2 coast 'uards, notin' could bedone about te pilfera'e on te vessel and its car'o. As a result of te incident te car'oof cement was dama'e wile te $+ seets were looted and notin' was left of teundiscar'ed pieces.

Because te car'o was insured by te ilippine American $eneral +nsurance Co.,+nc. paid te sipper 3avao =nion Gar)etin' Corporation te sum of 1,-11,"1..Tereafter, te said insurer made demands upon te Transpacific Towa'e, +nc. for te payment of said amount as subro'ee of te insured, claimin' tat te loss of te car'o wasdirectly and e%clusively brou't about by te ne'li'ence of te sipmaster and te crew of GMI Cra?y Dorse. Because te latter refused to pay te amount demanded, te

ilippine American $eneral +nsurance Co., +nc filed te present complaint.

+ssue5 4eter or not T/A;#AC+&+C TO4A$*, +;C sould be eld liable.

Deld5 ;o.

Te car'o avin' been lost due to te typoon #AL+;$, and te delay incurredin its unloadin' not bein' due to ne'li'ence, private respondent is e%empt from liabilityfor te loss of te car'o, pursuant to Article 1:0 of te Civil Code.

Te records sow tat before, durin' and after te occurrence of typoon #alin', private respondent e%ercised due dili'ence to prevent or minimi?e te loss of te car'o, as

sown by te followin' facts5

1. At -5" am of October 18, 198-, as typoon #alin' continued to batter te asacaoarea, te sipmaster tried to maneuver te vessel amidst stron' winds and rou' seas.

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". 4en water started to enter te en'ine room and later te en'ine bro)e down, tesipmaster ordered sip abandoned, but e sou' police assistance to prevent pilfera'e of te vessel and its car'o.

2. After te vessel bro)e into two parts and san) partially, te sipmaster reported teincident to te ilippine Coast 'uard, but notin' could be done to stop te pilfera'e.

Te dili'ence e%ercised by te sipmaster furter support te e%emption of private respondent from liability for te loss of te car'o, in accordance wit Article 1:29of te Civil Code.

SWEET LINES INC3 VS CA1"1 #C/A :9

rivate /espondents purcased first class tic)ets from petitioner at te latter>soffice in Cebu City. Tey were to board petitioner>s vessel, GMI #weet $race, bound for Catbalo'an, 4estern #amar. +nstead of departin' at te sceduled our of about midni'ton Huly 8, 19:", te vessel set sail at 2 am of Huly 9 only to be towed bac) to Cebu due toen'ine trouble,. Te vessel lifted ancor a'ain on Huly 1 after avin' accomplised te

repairs.

+nstead of doc)in' in te first of call at Catbalo'an, te vessel proceeded direct toTacloban. rivate /espondent ad no recourse but to disembar) and board a ferryboat toCatbalo'an.

Dence, tis suit for dama'es for breac of contract of carria'e.

+ssues5 1. 4eter or not mecanical defects in a common carrier are consideredfortuitous events.

". 4eter or not #weet Lines sould be eld liable.

D*L351. As found by te courts, tere was no fortuitous event or force majeure wic

prevented te vessel from fulfillin' its underta)in' of ta)in' private respondents toCatbalo'an. +n te first place, mecanical defects in te carrier are not considered ascaso fortuito.

Te terms and conditions stated in te passa'e tic)et, as to ri't of sippin'company to refund te tic)et if voya'e cannot be completed for any reason cannot prevail over Arts. 10 and 98 of te Code of Commerce.

". E*#. Te owner of a vessel sall be civilly liable for dama'es arisin' from te act of its captain in by passin' a preFsceduled port of call.

ACT OF PBLIC ENEMY IN WAR WHETHER INTERNATIONAL OR CIVIL

Te act must be te pro%imate and only cause of te loss and tat te carrier must e%ercisedue dili'ence to prevent or minimi?e te loss before, durin' or after te act causin' te loss,deterioration or destruction of te 'oods.

ACT OR OMISSION OF SHIPPER OR OWNER OF THE GOODS

+f te sipper or owner merely contributed to te loss, destruction or deterioration of

te 'oods, te pro%imate cause tereof bein' te ne'li'ence of te carrier, te carrier sallstill be liable for dama'es, but suc sall be e<uitably reduced.

CHARACTER OF THE GOODS OR DEFECTS IN PAC'ING

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*ven if te dama'e sould be caused by te inerent defectMcaracter of te 'oods, tecommon carrier must e%ercise due dili'ence to forestall or lessen te loss.

T/A;# O/+*;T , supra

&or tis provision to apply, te rule is tat if te improper pac)in' or, in tis case, tedefectMs in te container, is are )nown to te carrier or is employee or apparent uponordinary observation, but e neverteless accepts te same witout protest or e%ceptionnotwitstandin' suc condition, e is not relieved of liability for dama'e resultin' tereform.+n tis case, petitioner accepted te car'o witout e%ception despite te apparent defects insome of te container vans. Dence, for failure of petitioner to prove tat se e%ercisede%traordinary dili'ence in te carria'e of 'oods in tis case or tat se is e%empt from liabilityte presumption of ne'li'ence as provided under Art. 1:2- olds.

DRATION OF LIABILITY & WHEN TERMINATED

CASES

SERVANDO ET3 AL3 S3 PHIL, STEAM NAVIGATION11: #C/A 82"

Appellees Clara =y Bico and Amparo #ervando loaded on board te appelant>svessel for carria'e from Ganila to ulupandan, ;e'ros Occidental, car'oes valued at0,9:.- and 1,:.- respectively.

Te car'oes were complete and in 'ood order upon discar'e unto te wareouseof te Bureau of Customs. Tat same day, a fire of un)nown ori'in, destroyin' appellees

car'oes, ra?ed te wareouse. Dowever, =y Bico was able to ta)e delivery of 9: cavansof rice before te fire. Appellant rejected appellees claims for te value of said 'oods.

+ssue5 4eter or not te stipulation in te Bills of Ladin' limitin' te responsibility of te carrier for te loss or dama'e tat may be caused to te sipment is valid.

Deld5 Ees

+n tis Bills of Ladin' issued for te car'oes in <uestion, te parties a'reed tolimit te responsibility of te carrier for te loss or dama'e tat may be caused tesipment. Tere is notin' terein tat is contrary to law, morals or public policy.

Appellee>s contention tat te stipulation does not bind tem because tey did notsi'n te same is untenable. 4ile it may be true tat petitioner ad not si'ned te planetic)et, te provisions tereof neverteless bind im suc provisions ave been eld to be part of te )nowled'e or assent to te re'ulation. +t is wat is )nown as a C$!%r*% $; A"$! werein one party imposes a readyFmade form of contract on te oter, arecontracts not entirely proibited. Te one wo aderes to te contracts is in reality free itentirely6 if e aderes e 'ives is consent.

COMPANIA MARITIMA VS3 INSRANCE COMPANY OF NORTH AMERICA1"#C/A "12

Gacleod and Company of te ilippines contracted te services of Companiamaritime, a sippin' corporation, for te sipment of ". 0- of emp from te former>s#asa private =.#.A on board te #.#. #teel ;avi'ator. Tis contract was confimed by aformal and written boo)in' in compliance wit wic, Compania Garitima sent toGacleod>s private warl LCT ;os. 1"2 and 1"-

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LCT ;o. 1"- san), resultin' in te dama'e or loss of 1.1" bales of emp loadedterein. #aid bales were insured wit +nsurance Co. of ;ort America a'ainst all lossesand dama'es. Gacleod filed a claim for te loss it suffered. Te sum of 0, 18.-- was paid wit a subro'ation a'reement werein te former assi'ned to te latter its ri'ts over te insured and dama'ed car'o. Davin' failed to recover from te carrier, te insurancecompany instituted te present action.

+##=*5 weter or not a Contract of Carria'e e%isted between te carrier and te sipper even if te loss occurred wen te emp was lo added on bar'e owned by te carrier freeof car'e.

D*L35 E*#.

Te fact tat te carrier sent its li'ter free of car'e to ta)e te emp fromGacleod>s warf to its loadin' onto te sip does not in any way impair te contract of carria'e already entered into a between te carrier and te sipper, for tat preparatorystep is but part and parcel of said contract of carria'e.

+n oter words, ere we ave a complete contract of carria'e te consumption of wic as already be'un6 te sipper deliverin' te car'o to te carrier, and te latter ta)in' possession tereof by placin' it on a li'ter manned by its autori?ed employees,under wic Gacleod became entitled to te private secured to im by law for its safetransportation and delivery, and te carrier to te full payment of its frei't uponcompletion of te voya'e.

L DO /3 BINAMIRA11 il. 1", April "", 19-:

3elta Company of ;ew Eor) sipped si% cases of films and poto'rapic suppliesconsi'ned to Binamira. Te sip arrived in Cebu and discar'ed er car'o, placin' it in te

possession and custody of te arrastre operator appointed by te bureau of customs. Tecar'o was cec)ed bot te stevedorin' company as wells as by te arrastre operator of ten port and was found in 'ood. +n te contract of carria'e, owever, it was stipulated tat tecarrier is no lon'er liable for te car'o upon its delivery to te ands of te customsautorities. Te car'o was later delivered to Binamira and a marine surveyor found tat somewere missin' valued at 2"0.2. Lower court eld te carrier liable.

D*L354ile delivery of te car'o to te customs autorities is not delivery to te consi'nee

or te person wo as a ri't to receive tem as contemplated in Art. 1:2-, ;CC because insuc case te 'oods are still in te ands of te 'overnment and te owner cannot e%ercisedominion over tem, owever, te parties may a'ree to limit te liability of te carrier

considerin' tat te 'oods ave still to 'o trou' te inspection of te customs autorities before tey are actually turned over to te consi'nee. Tese stipulations limitin' liability isnot contrary to morals or public policy. Tis is a situation were te carrier loses control of te 'oods because of a custom re'ulation and it is unfair tat it be made responsible for anyloss or dama'e tat may be caused to te 'oods durin' te interre'num.

Hud'ment reversed.

SAMAR MINING CO3, INC3 /3 NORDETSCHER LLOYD12" #C/A -2-, October "2, 1980

Common carrier5 GM# #CD4AB*;#T*+; a vessel owned by defendantFappellant ;O/3=*T#CD*/ LLEO3, (represented in te ilippines by

its a'ent, C.&. #DA/ 7 CO., +;C.!

Consi'nee5 #AGA/ G+;+;$ COGA;E, +;C.$oods5 one (1! crate Optima welded wed'e wire sieves

3estination5 port of loadin'5 Bremen, $ermany ort of discar'e5 3avao

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ort of discar'e from sip5 Ganila

Te case arose from an importation #AGA/ G+;+;$ COGA;E, +;C., of one (1!crate Optima welded wed'e wire sieves trou' te GM# #CD4AB*;#T*+; wic sipmentis covered by Bill of Ladin' ;o. 18 duly issued to consi'nee #GA/ G+;+;$ COGA;E,+;C.

=pon arrival of te aforesaid vessel at te port of Ganila, te aforementionedimportation was unloaded and delivered in 'ood order and condition to te bonded wareouseof AGCEL. Te 'oods were owever never delivered to, nor received by, te consi'nee atte port of destination – 3avao.

Te e%tent of appellant carrier>s responsibility andMor liability in te transsipment of te 'oods in <uestion are spelled out and delineated under #ection 1, para'rap 2 of Bill of Ladin' ;o. 18, to wit5

Te carrier sall not be liable in any capacity watsoever for any delay, loss or dama'eoccurrin' before te 'oods enter sip>s tac)le to be loaded or after te 'oods leave sip>s

tac)le to discar'ed, transsipped or forwarded.

+n #ection 11 of te same bill, wic provides5

Tis carrier, in ma)in' arran'ements for any transsippin' or forwardin' vessels or means of transportation not operated by tis carrier sall be considered solely te forwardin' a'ent of te sippin' and witout any oter responsibility watsoever even tou' te frei't for tewole transport as been collected by imQ.

+##=*5 4eter or not Gr. Lloyd and C.&. #arp 7 Company, +nc. may be eld liable for teloss of te subject 'oods.

D*L35 ;o. Gr. Lloyd and C.&. #arp are not liable for te loss of te 'oods.

Bein' able to discar'e te 'oods in full and 'ood condition unto te custody of AGCEL at te port of discar'e of te sip – Ganila, teir responsibility of te car'o asceased. Te validity of stipulations in bills of ladin' e%emptin' te carrier from liability for loss or dama'e to te 'oods wen te same are not in its actual custody as been upeld.

Art. 1:28 finds no applicability to te instant case. Te said article contemplates asituation were te 'oods ad already reaced teir place of destination and are stored in tewareouse of te carrier. Te subject 'oods were still awaitin' transsipment to teir port of destination, and were stored in te wareouse of a tird party wen last seen andMor eard of.

Dowever, Article 1:2 is applicable to te instant suit. =nder said article, te carrier may be relieved of te responsibility for loss or dama'e to te 'oods upon actual or constructive deliver of te same by te carrier to te consi'nee, or to te person wo as ari't to receive tem.

+t becomes necessary at tis point to dissect te comple% relationsip tat addeveloped between appellant and appelle in te course of te transactions tat 'ave birt to te present suit. Two underta)in' appeared embodied andMor provided for in te bill of Ladin' 19in <uestion. Te first is for te transport of 'oods from Bremen, $ermany to Ganila. Tesecond, te transsipment of te same 'oods from Ganila to 3avao, wit appellant actin' asa'ent of te consi'nee. At te iatus between tese two underta)in's of appellant wic is temoment wen te subject 'oods are discar'ed in Ganila, its personality can'es from tat of

carrier to tat of a'ent of te consi'nee. Tus, te caracter of appellant>s possession alsocan'es, from possession in its own name as carrier, into possession in te name of consi'neeas te latter>s a'ent. #uc bein' te case, tere was, in effect, actual delivery of te 'oodsfrom appellant as carrier to te same appellant as a'ent of te consi'nee.

SAR'IES TORS PHILS3 INC3 VS CA

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"8 #C/A -8

&atima, one of te private respondents, boarded petitioner>s bus on er way toLe'a?pi City. etitioner>s employee elped &atima and er broter load te lu''a'e>s inte bus compartment. Dowever durin' a top over, it was discovered tat &atima>s tin'were missin'. #ome of te passen'ers su''ested retractin' te route of te bus to try torecover te lost items, but te driver i'nored tem.

rivate respondents filed te instant case to recover te value of te remainin' lostitems. Te claimed tat te loss was due to petitioner>s failure to observe e%traordinarydili'ence in te care of &atima>s lu''a'e. etitioner disowned liability on te 'round tat&atima did not declare any e%cess ba''a'e upon boardin' its bus.

+##=*54eter or not petitioner sould be eld liable.

D*L35 E*#.

=nder te Civil Code, common carriers from te nature of teir business and for reasons of public policy are bound to observe e%traordinary dili'ence in te vi'ilance over te 'oods %%% transported by tem, and tis liability lasts from te time te 'oods areunconditionally placed in te possession pf, and received by te carrier for transportationuntil te same are delivered, actually or constructively, by te carrier to %%% te personwo as a ri't to receive tem, unless te loss is due to any of te e%cepted under Art.1:20 tereof.

4ere te common carrier accepted its passen'er>s ba''a'e for transportationand even ad it placed in te veicle by its own employee, its failure to collect te frei'tcar'e is te common carrier>s own loo) out.

Te cause of te loss in te case at bar was petitioner>s ne'li'ence in not ensurin'tat te doors of te ba''a'e compartment were securely fastened. As a result of tis lac) of care, almost te entire lu''a'e was lost to te prejudice of te payin' passen'ers.

AGREEMENT TO LIMIT LIABILITYDILIGENCE R E?IRED AMONT OF

LIABILITY FACTORS AFFECTING AGREEMENTPRESMPTION OF NEGLIGENCEPASSENGER S BAGGAGE

Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or

owner if the common carrier refused to carry the goods unless the former agreed to such

stipulation.

Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or

changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be

availed of in case of the loss, destruction, or deterioration of the goods.

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

riots is valid.

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods

appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,

destruction, or deterioration of the goods is valid, if it is reasonable and just under the

circumstances, and has been fairly and freely agreed upon.

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Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part

thereof, to which the contract refers shall be taken into consideration on the question of whether or

not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with

public policy.

Art. 1752. Even when there is an agreement limiting the liability of the common carrier in thevigilance over the goods, the common carrier is disputably presumed to have been negligent in

case of their loss, destruction or deterioration.

Art. 1753. The law of the country to which the goods are to be transported shall govern the liability

of the common carrier for their loss, destruction or deterioration.

Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is

not in his personal custody or in that of his employee. As to other baggage, the rules in Articles

1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.

LIMITATION OF LIABILITY IN THE CARRIAGE OF GOODS

Article 1:00 of te civil code allows te parties to a contract of 'oods to a'ree to limitliability for te loss destruction or deterioration of te 'oods to a de'ree less tan *O3 provided it is reasonable, just and not contrary to public policy (1:00, 1:-!.

&or e%ample, if te Bill of Ladin' provides tat te common carrier sall be liable to ama%imum liability of only =#R- unless a i'er valuation as been declared, te liability of te common carrier sall not e%ceed said amount because te stipulation is valid.

+t must owever be stressed, tat since te a'reement is premised on freedom of coice or voluntaries, te validity and enforceability of stipulations limitin' te carrier>sliability to an a'reed valuation (Arts. 1:09 7 1:-! is ancored on te free and unamperede%ercise of te sipper>s will in consentin' tereto.

+f a carrier enjoys a monopoly over a certain line or route or a part tereof, te lawenjoins tat suc factor must be ta)en into consideration in determinin' weter testipulation is reasonable, just and conformably wit public policy. Te fact of weter testipulation is reasonable, just and conformably wit public policy. Te fact of monopoly over a certain line or route or a party tereof, te law enjoins tat suc factor must be ta)en intoconsideration in determinin' weter te stipulation is reasonable, just and conformably wit public policy. Te fact of monopoly tends to naturally deprive te sipper of a reasonablefreedom of coice as re<uired under Art. 1:0 tat rendered te a'reement voidable as te

said a'reement may be annulled by te sipper if te common carrier refused to carry te'oods unless te common carrier a'reed to suc stipulation.

#imilarly, te pac)a'e limitation in #ection 0 (-! of te CO$#A (wic is reproducedin some Bill of Ladin'! are eld valid and applicable in te ilippines by te #C in te caseof5

SEALAND SERVICE VS3 IAC1-2 #C/A --",(198:!

On or about Hanuary 8, 1981, #eaFLand, a forei'n sippin' and forwardin'company licensed to do business ion te ilippines, received from #eaborne Tradin'Company in Oa)land, California a sipment consi'ned to #en Diap Din', te businessname, used by aulino cue in te wolesale and retail trade wic e operated.

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Te sipper not avin' declared te value of te sipment, no value was indicatedin te bill of loadin'. Te bill described te sipment only as 8 CT;# on " #+3#F&+L*#. Based on on volume measurements #eaFland car'ed te sipper te totalamount of =#R"9."8 for frei'ta'e and oter car'es. Te sipment was loaded on board te G# atriot, a vessel owned and operated by #eaFLand, for discar'ed at te ortof Cebu.

Te sipment arrived in Ganila on &ebruary 1", 1981, and discar'ed inContainer ;o. 2199 into te custody of te arrastre contractor and te customs and portautorities.

#ometimes between &ebruary 12 and 1, 1981, after te sipment ad beentransferred, alon' wit oter car'oes to Container ;o. 01-8 near wareouse " at ier 2 in#out Darbor, Ganila6 awaitin' transFsipment to Cebu, it was stolen by pilferers and asnever been recovered.

On Garc 1, 1981, aulino Cue, te consi'nee, made formal claim upon #eaFLand for te value of te lost sipment alle'edly amountin' to 1:9,02.08. #eaFLand

offered to settle for =#R0,., or its ten ilippine peso e<uivalent of 2,..Assertin' tat said amount represented its ma%imum liability for te loss of te sipmentunder te pac)a'e limitation clause in te coverin' bill of ladin'.

Cue rejected te offer and tereafter brou't suit for dama'es a'ainst #eaFLand inte ten C&+ of C*B=. #aid Court rendered jud'ment in favor of cue, sentencin' #eaFLand to pay im 18,08. representin' te ilippine currency value of te lost car'o,--,810. for unreali?ed profit wit 1 montly interest from te fillin' of tecomplaint until fully paid, "-,. for attorney>s fees and ",. as liti'atione%penses.

#eaFland appealed to te +AC. Tat Court owever affirmed te decision of te

Trial Court.

I""- 4M; te consi'nee of seaborne frei't is bound by stipulations in te coverin' billof ladin' limitin' to a fi%ed amount te liability of te carrier for loss or dama'e to tecar'o were its value is not declared in te bill.

H5 #ince te liability of a common carrier for loss of or dama'e to 'oods transported by its under a contract of carria'e is 'overned by te laws of te country of destinationand te 'oods in <uestion were sipped from te =nited #tates to te ilippines, teliability of petitioner #eaFLand to te respondent consi'nee is 'overned primarily by teCivil Code, and suppletorily by te Code of Commerce and special laws. One of tesesuppletory special laws is te Carria'e of $oods by #ea Act, =.#. ublic Act ;o. -"1

wic was made applicable to all contracts for te carria'e of 'oods by sea to and fromilippine ports in forei'n trade by Commonwealt Act ;o. -, approved on October "",192. #ec. 0(-! of said Act in part reads5

Neither the carrier nor the ship shall in any event be or becoe liable for any lossor daage to or in connection with the transportation of goods in an aount e$ceeding

%5&& per pac'age lawful oney of the (nited States, or in case of goods not shipped in pac'age, per custoary freight unit, or the e)uivalent of that su in other currency,unless the nature and value of such goods have been declared by the shipper before shipent and inserted in the bill of lading. *his declaration, if ebodied in the bill of

lading, shall be pria facie evidence, but shall not be conclusive on the carrier.

Clause "", first para'rap, of te lon'Fform bill of ladin' customarily issued by#eaFLand to its sippin' clients is a virtual copy of te first para'rap of te fore'oin' provision.

+t seems clear tat even it said section 0(-! of te Carria'e of $oods by #ea Actdid not e%ist, te validity and bindin' effect of te liability limitation clause in te bill of

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ladin' ere are neverteless fully sustainable on te basis alone of te cited Civil Code provisions. Tat said stipulation is just and reasonable is ar'uable form te fact tat itecoes Art. 1:- itself in providin' a limit to liability only if a 'reater value is notdeclared for te sipment in te bill of loadin'. Te just and reasonable caracter of sucstipulation is implicit in it 'ivin' te sipper or owner te option of avoidin' accrual of liability limitation by te simple and surely far from onerous e%pedient of declarin' te

nature and value of te sipment ion te bill of loadin'. And since te sipper ere asnot been eard to complaint of avin' been rused imposed upon ort deceived in anysi'nificant way into a'reein' to sip te car'o under a bill of ladin' carryin' suc astipulation, tere is simply no 'round for assumin' tat its a'reement tereto was not aste law would re<uire, freely and fairly sou' and 'iven.

Te issue of alle'ed deviation is also settled by Clause 12 of te bill of ladin'wic e%pressly autori?es transsipment of te 'oods of any point in te voya'e. Tecarrier or master, in te e%ercise of its or is discretion and altou' transsipment or forwardin' of te 'oods may not ave been contemplated or provided for erein, may at port of discar'e or any oter place watsoever transsip or forward te 'oods or any parttereof by any means at te ris) route, weter witin or outside te scope of te voya'e

or beyond te part of discar'e or destination of te 'oods and witout notice to tesipper nor consi'nee. Te carrier or master may delay suc transsippin' or forwardin'for any reason, includin' but not limited a vessel or oter means of transportation weter by te carrier or oters.

Applyin' te pac)a'e limitation of =#R-Mpac)a'e, #ealand was eld liable inte amount of =#R0, for 8 cartons or pac)a'es since te sipper did not declare tevalue of te sipment in te bill of ladin'.

Dowever, in te case of5

AMERICAN HOME ASSRANCE CO /3 CA("8 #C/A 202!

Te #C, citin' ;ational 3evelopment Co., v CA 10 #C/A -92 (1988! and*astern #ippin' v. +AC 1- 09, (198:!, eld tat COGGO; CA//+*/ cannot limitteir liability for injury or loss of 'oods were suc injury or loss was caused by its ownne'li'ence. +n American Dome +nsurance Company, ;ational Garitime Corporation wasdeemed to ave ypotetically admitted te alle'ation in te complaint tat te loss or dama'e to 1"" bales was due its fault or ne'li'ence wen it did not present proof of e%ercise of *O3 but instead filed a Gotion to 3ismiss. +n ;ational 3evelopment Co., ;3C and its a'ent Garitime Co. of te ils. 4ere eld jointly and severally liable for tevalue of lostMdama'es car'o (consistin' of -- bales of raw cotton and " cartons of sodium lauryl sufate and 1 cases aluminum foil! due to collision of te 3oJa ;ati wit

Hapanese vessel ## Easusima Garu at +#*, Bay, HapanMBot vessels were at fault for not can'in' teir e%cessive speed despite te tic) fo' obstructin' visibility

BELGIAN OVERSEAS CHARTERING AND SHIPPING N3V3#=/A

#imilarly in tis case, defendantsFappellees ar'ued tat teir liability, if tere beany sould not e%ceed te limitations of liability provided for in te bill of ladin' andoter pertinent laws.

+##=*5 4eter te pac)a'e limitation of liability is applicable

D*L35 +t is to be noted tat te Civil Code does not limit te liability of te commoncarrier to a fi%ed amount per pac)a'e. +n all matters not re'ulated by te Civil Code, teri't and te obli'ations of common carriers sall be 'overned by te Code of Commerceand special laws. Tus, te CO$#A, wic is suppletory to te provisions of te McivilCode, supplements te latter by establisin' a statutory provision limitin' carriers liabilityin te absence of a sipper>s declaration of a i'er value in te bill of ladin'. Te

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provisions on limited liability are as muc a part of te bill of ladin' as tou' as pysically it and as tou' placed tere by a'reement of te parties.

+n te case at bar, tere was no stipulation in te Bill ladin' limitin' te carrier>sliability. ;eiter did te sipper declare a i'er valuation of te 'oods to be sipped. Tefact notwitstandin', te insertion of te words LMC ;o. 9M"00:Mcannot be te basis for

petitioner>s liability.

&irst, a notation in te Bill of ladin' wic indicated te amount of te Letter of Credit obtained by te sipper for te importation steel seets did not effect a declarationof te value of te 'oods as re<uired by te bill. Tat notation was made only for teconvenience of te sipper and te ban) processin' te Letter of Credit.

#econd, in en' Dua paper roducts v. Court of Appeals, te #C eld tat a billof ladin' was separate from te Oter Letter of Credit arran'ements. Tus5

(T!e contract of carria'e, as stipulated in te bill of ladin' in te present case,must be treated independently of te contract of sale between te seller and te buyer, and

contract of issuance of a letter of credit between te amount of 'oods described in tecommercial invoice in te contract of sale and te amount allowed in te letter of creditwill not affect te validity and enforceability of te contract of carria'e as embodied in te bill of ladin'. As te ban) cannot be e%pected to loo) beyond te documents presented toit by te seller pursuant to te letter of credit, neiter can te carrier be e%pected to 'o beyond te representations of te sipper in te bill of ladin' and to verify teir accuracyvisFSFvis te commercial invoice and te letter credit. Tus, te discrepancy between teamount of 'oods indicated in te invoice and te amount in te bill of ladin' cannotne'ate petitioner>s obli'ation to private respondent arisin' from te contract of transportation.

+n te li't of te fore'oin' petitioner>s liability sould be computed based on

=#RR- per pac)a'e an d not te per metric ton price declared in te Letter of Credit. +n*astern #ippin' Lines, +nc. v. +ntermediate Appellate Court te #C e%plained temeanin' of pac)a'e5

4en wat would ordinary be considered pac)a'es are sipped in a container supplied by te carried and te number of suc units is disclosed in te sippin'documents, eac of tose units and not te container constitutes te pac)a'e to in teliability limitation provision of Carria'e of $oods by #ea Act.

Ladin' clearly disclosed te contents of te containers. Te number of units, aswell as te nature of te steel seets, te four dama'ed coils sould be considered as tesippin' unit subject tot e =#R- limitation.

EASTERN SHIPPING LINESS-#r

*astern #ippin' was eld liable for te loss of 'oods due to fire and sin)in' of te sip GM# Asiatica (wile en route to ove, Hapan to Ganila! because te fire (wicwas not notice only "0 ours after it started.

On te basis of te rulin' in tis case, fault or ne'li'ence terefore, need not beintentional or rec)less act. +t can be a failure to act wit prudence and reasonablenessunder 'iven circumstances. Be reminded tat te e%istence of suc an a'reement limitin'

te carrier>s liability do not can'e in case of L, 3 7 3 (1:2-!. =nder tesecircumstances, te carrier, in order to escape liability must still affirmatively prove tat itad e%ercised te dili'ence a'reed upon. Te COGGO; CA//+*/ must e%ercise (Art.1:29! even if te lossMdama'es is due to te caracter of te 'oods or its faulty pac)in'(Art. 1:0"!. And also, te COGGO; CA//+*/ cannot also limit its liability if witout

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just cause, it as uncured delay in te transportation of te 'oods or can'es in testipulation or usual route (Art. 1:0:!

PAN AMERICAN WORLD AIRWAYS, INC3 /" IACA-+-"% 11, 199

Tis is a petition filed by an American 4orld Airways see)in' to limit itsliability for lost ba''a'e containin' promotional and advertisin' materials for films to bee%ibited in $uam and te =#, clutc ba's, baron' ta'alon' and personal belon'in's of /ene an'an to te amount specified in te airline tic)et absent a declaration of a i'er valuation and te payment of additional car'es.

On April "-, 19:8, /ene an'an, president and 'eneral mana'er of #otan' Bastosand Arcer roductions entered into an a'reement wit rime &ilms for te e%ibition of is films in te =# and $uam. +t was furter a'ree tat te would provide te necessary promotional and advertisin' materials for is films.

On Gay ":, 19:8, an'an cec)ed in is " lu''a'e containin' te promotional

and advertisin' materials at te tic)et counter of an Ann in Ganila for is fli't to $uam.Dowever is name was not found in te manifest for te economy class tus be bou' afirst class tic)et in order for im to reac $uam on time. 4en e arrived in $uam, islu''a'e did not arrive tus e filled a written complaint wit an Am.

3ue to te failure of an am to communicate teir actions wit an'an, an'aninstituted a complaint wit te court. Te trial court ruled in favor of an'an and awardedim actual dama'es in te amount of 82, plus interest. Tis decision was affirmed byte CA.

etitioner appealed to te #C contendin' tat it is only liable for te amount setfort in te contract of carria'e. On te basis of certain stipulations printed at te bac) of

te tic)et, petitioner said tat its liability for te lost ba''a'e of an'an is limited to (R" % 2 )'s! only as te latter did not declare not declare a i'er value for is ba''a'eand pay te correspondin' additional car'es.

I""- 4eter or not an American is liable only to te amount specified in te planetic)et absent a declaration of i'er valuation and payment of additional car'esK

H5 #C ruled te petitioner>s liability for te lost ba''a'e is limited to R" per )ilo or R only as stipulated at te bac) of te tic)et. Te On' Eiu decision, were te Courtsustained te validity of a printed stipulated at te bac) of an airline tic)et limitin' teliability of te carrier for lost ba''a'e to a specified amount of 1 per ba''a'e andruled tat te carrier>s liability was limited to said amount since te passen'er did not

declared a i'er value, muc less pay additional car'es, is s<uarely applicable in tecase at bar.

Te rulin' in #ewaran vs AL were te court limited te carrier>s liability to aspecified amount because te conditions printed at te bac) of te tic)et were so small andard to read tat tey would not warrants te presumption tat te passen'er was aware of te conditions and ad freely entered tereto is not applicable in tis case because similar fact s tat would ma)e te case fall under te e%ception ave nor been alle'ed or sown toe%ist.

Tis is te stipulation at te bac) of te airline tic)et5

;OT+C* O& BA$$A$* L+AB+L+TTE L+G+TAT+O;#

Liability for loss, delay or dama'e to ba''a'e is limited as follows unless a i'er valuesis declared in advance and additional car'es are paid5 (1! for most international travel toappro%imately R9.: per pound (R" per )ilo! for cec)ed ba''a'e and 0 per passen'er for uncec)ed ba''a'e.

PHILIPPINE AIRLINES /3 CA

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= SCRA 1

3estination5 California, =#AFGanila, il.Carrier5 AL fli't 1:Tin' involved5 Lu''a'e>s (#amsonite suitcase!

laintiff +sidro Co, accompanied is wife and son, arrived at Ganila +nternationalAirport aboard AL fli't ;o. 1: from California, =#.A.

laintiff, upon proceedin' to te ba''a'e retrieval area, was able to claim 8lu''a'e>s, but despite dili'ent searc, e failed to locate is nint lu''a'e.

Te plaintiff>s lost lu''a'e was #amsonite suitcase wort about =#". andcontainin' various personal effects to be wort =#R1,"02.1, in addition to te presentsentrusted to tem by teir friends amountin' from =#R-. to =#R.

+t appeared, owever, tat plaintiff surrendered all te nine claim cec)s

correspondin' to te nine ba''a'e>s, includin' te one tat as missin', to te AL officer.

Co sued te airline for dama'es. Trial court found AL liable. #uc decision wasaffirmed by te Court of Appeals.

I""- 4eter or not AL is liable for dama'esK

H5 Ees

+n A5%5 /"3 IAC, te 4arsaw Convention limitin' te carrier>s liability wasapplied because of a simple loss of ba''a'e witout any improper conduct on te part of te officials or employees of te airline, or oter special injury situated by te passen'ers.

Te petitioners terein did not declare a i'er value for is lu''a'e, muc less did e payan additional transportation car'e.

etitioner contends tat under te 4arsaw convention, its liability, if any, cannote%ceed =# R". based on wei't as private respondent Co did not declare te contentsof is ba''a'e nor pay additional car'es before te fli't.

4e find no merit in tat contention. +n S0r M!!+ C$0#!, I!* /3M$r-%"*r, tis court ruled.

Te liability of te common carrier for te loss, destruction, or- deterioration of 'oods transported from a forei'n country to te ilippines is 'overned primarily by te

;ew Civil Code. +n all matters not re'ulated by said Code, te ri'ts and obli'ations of common carriers sall be 'overned by te Code of Commerce and by #pecial Laws.

Te provisions of te new Civil Code on Common Carriers are Articles1:22,1:2- and 1:-2. #ince te passen'er>s destination in tis cased was te ilippines,ilippine law 'overns te liability of te carrier for te loss of te passen'er>s lu''a'e.

+n tis case, te petitioner failed to overcome, not only te presumption, but moreimportantly, te private respondent>s evidence, provin' tat te carrier>s ne'li'ence waste pro%imate cause of te loss of is ba''a'e. &urtermore, petitioner acted in bad faitin fa)in' a retrieval receipt to bail itself out of avin' to pay Co>s claim.

Te Court of Appeals terefore did not err in disre'ardin' te limits of liabilityunder te 4arsaw convention.

EVERETT STEAMSHIP CORPORATION /3 CA"9: #C/A "9 (1998!

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Te supplier from Hapan to Ganila on board a vessel owned by *verett OrientLines sipped crates of bus spare parts. =pon arrival in Ganila it was discovered tat toneof te crates ma%imum amount as stipulated under Clause 18 of te BML wic limits temissin' 'oods from te common carrier and subse<uently filed a case a'ainst te latter onte vary same BML, e accepts te value.

Contract of adesion werein one party imposes a readyFmade form of contract onte oter are contracts, wic are not entirely proibited. Te one wo aderes to tecontract is in reality free to reject it even entirely6 but it e aderes, e 'ives is consenttereto and sall be bound by suc contract.

Te pac)a'e limitation clause under #ection 0(-! of te CO$#A (limitin' carriersliability not to e%ceed =#R-Mpac)a'e, or if 'oods are nit sipped in pac)a'es, per customary frei't unit, unless te nature and value of suc 'ood ave been declared bysipper and inserted in te bill ladin'!, did not define pac)a'e5 3ifferent courts indifferent jurisdictions 'ive different interpretation of te term pac)a'e, in one rulin', itwas eld tat a container wit 20! cartons of stereo e<uipment in side is a pac)a'e, wicwas reversed, in subse<uent rulin' tat eac of te cartons inside te container is a

pac)a'e.

+n te ilippine case *astern #ippin', eac of te "8 pac)a'es containin' -, pieces of calori?ed lance pipes, : cases of spare parts, " cases of surveyin' instrumentsand 1"8 cartons of 'arment in two ("! containers were considered pac)a'es. Te "containers were not considered pac)a'es.

ONG YI /"3 CAGR L>@9, 4-! =9, 199

etitioner sued private respondent AL for breac of contract of transportation.etitioner>s lu''a'e was overcarried to Ganila instead of to Butuan City. And wen it

was brou't to im by one *milio La'oJo, a driver of a colorum car, petitioner claimedtat important documents necessary for is earin' (as e was a lawyerFbusinessman! andcertain 'ift items for is parentFinFlaw were missin'. /TC found AL to ave acted in badfait wit malice and declared petitioner entitled to 8, moral pay petitioner, only1. – te ba''a'e liability assumed by it under te condition of carria'e printed atte bac) of te tic)et.

I""- 4eter or not, CA correctly concluded tat AL was not 'rossly ne'li'ent andtat it ad not acted fraudulently or in bad fait as to entitle petitioner to an ward of moral7 e%emplary dama'esK

H5 Ees

AL ad not acted in bad fait. Bad fait means a breac of a )nown dutytrou' some motive of interest or ill will. +t was te duty of AL to loo) for petitioner>slu''a'e wic ad been miscarried. AL e%erted due dili'ence in complyin' wit sucduty.+n te absence of a wron'ful act or omission or of fraud or bad fait, petitioner is notentitled to moral dama'es.

;eiter is e entitled to e%emplary dama'es (*3!. +n contracts, as provided inArticle ""2" of Civil Code, *3 can be 'ranted if defendant acted in wanton, fraudulent,rec)less, oppressive, or malevolent manner wic as not been proven in tis case.

#ince petitioner ad failed to declare a i'er value for is ba''a'e, e cannot be permitted a recovery in e%cess 1.. Besides, passen'ers are advised not to placevaluable items inside teir ba''a'e but to avail of our IFCar'o service. (&urtermore!Tere is notin' in te evidence to sow te actual value of te 'oods alle'edly lost by petitioner. Tere is no dispute tat petitioner did not declare any i'er value for islu''a'e, muc less did e pay any additional transportation car'e.

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4ile it may be true tat petitioner ad not si'ned te plane tic)et, e isneverteless bound by te provisions tereof. #uc provisions ave been eld to be a part of te contract of carria'e and valid 7 bindin' upon te passen'er re'ardless of telatter>s lac) of )nowled'e or assent to te re'ulation.+t is wat is )nown as contract of adesion, in re'ards wic, it as been said tatUcontracts of adesion werein one

party imposes a ready made form of contract on te oter, as te plane tic)et in te case at bar – are contracts not entirely proibited.Te one wo aderes to te contract is in realityfree to reject it entirely – if e aderes e 'ives is consent.

A contract limitin' liability upon an a'reed valuation does not offend a'ainst te policy of te law forbiddin' one from contractin' a'ainst is own ne'li'ence.

CATHY PACIFIC AIRWAYS VS CA"19 #C/A -"

/espondent Tomas L. Alcantara was a first class passen'er of petitioner Catay onits fli't from Ganila to Don)on' and onward from Don)in' to Ha)arta.

=pon is arrival in Ha)arta, e discovered te lu''a'e was missin'. De was toldtat is lu''a'e was left beind in Don)on'. &or tis, e was offered R" asinconvenience e money to buy is immediate personal needs until te lu''a'e could bedelivered to im.

=pon te arrival to Ha)arta of is lu''a'e, te latter was not delivered to is otel but e was re<uired by petitioner to pic) up is lu''a'e to'eter wit an official of teilippine *mbassy.

/espondent filed wit te C&+ (nor /TC! of Lanao del ;orte a complaint a'ainst petitioner prayin' for temperate, moral and e%emplary dama'es, plus attorneys fees.

TC rendered its decision orderin' Catay to pay plaintiff ", for moraldama'es, -,. for temperate dama'es, 1, for e%emplary dama'es, and "-,for attorney>s fees, and te costs.

Bot parties appealed to CA.CA decided to affirm te decision of te trail courtwit modification increasin' te moral dama'es to 8,, e%emplary dama'es to", and temperate or moderate dama'es to 1,. Te award of "-, for attorney>s fees was maintained.

+ssue5 4M; te CA erred in oldin' petitioner liable to respondent Alcantara for moral,e%emplary and temperate dama'es as well as attorney>s fees.

Deld5 CA>s decision is affirmed wit te e%ception of te award of temperate dama'eswic is deleted, wile te award of moral dama'es is reduced to 2,.Lu''a'e at te desi'nated place and time, it bein' te obli'ation of a common

carrier to carry its passen'ers and teir lu''a'e safely to teir destination, wic includeste duty not to delay teir etitioner breaced its contract of carria'e wit privaterespondent wen it failed to deliver is transportation, and evidence sows tat petitioner acted fraudulently or in bad fait.

Goral dama'es predicated upon a breac of contract of carria'e may only berecoverable in instances were te misap results in deat of a passen'er or were tecarrier is 'uilty of fraud or bad fait.

Te Catay representative was also rude and insultin' in dealin' wit privaterespondent wen te latter as)ed im about is missin' lu''a'e.

To compound matters, Catay refused to ave te lu''a'e of Alcantara deliveredto im at is otel. =nder te circumstances, it is evident tat petitioner was remiss in its

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duty to provide proper and ade<uate assistance to a payin' passen'er, more so one witfirst class accommodation.

MAERS' LINE VS CA""" #C/A 18

Te #upreme Court eld Gaers) Line liable delay in te delivery of 'oods. Ane%amination of te subject bill of ladin' tat te subject sipment was estimated to arrivein Ganila on April 2, 19::. wile tere was no special contract entered into by te partiesindicatin' te date of arrival, petitioner neverteless, was very well aware of te specificdate wen te 'oods e%pected to arrives as indicated in te bill ladin'.

Tere was delay in te delivery of te 'oods, spannin' a period of " mos. And : days fallsway beyond te realm of reasonableness.

etitioner never even botered to e%plain te cause for delay of more tan " mos. in tedelivery of te 'oods. Te court eld petitioner liable for breac of contract carria'eamountin' to bad fait.

ARTICLES 199 TO =< OF THE NEW CIVIL CODE

Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as

necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that

notice was given to them, or to their employees, of the effects brought by the guests and that, on the

part of the latter, they take the precautions which said hotel-keepers or their substitutes advised

relative to the care and vigilance of their effects. (1783)

Art. 1999. The hotel-keeper is liable for the vehicles, animals and articles which have been introduced

or placed in the annexes of the hotel. (n)

Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury

to the personal property of the guests caused by the servants or employees of the keepers of hotels or

inns as well as strangers; but not that which may proceed from any force majeure. The fact that

travellers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered

in determining the degree of care required of him. (1784a)

Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it

is done with the use of arms or through an irresistible force. (n)

Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, hisfamily, servants or visitors, or if the loss arises from the character of the things brought into the hotel.

(n)

Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that

he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the

guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or

diminished shall be void. (n)

Art. 2004. The hotel-keeper has a right to retain the things brought into the hotel by the guest, as a

security for credits on account of lodging, and supplies usually furnished to hotel guests. (n)

LAWS GOVERNING CONTRACTS OF TRANSPORTATION OF GOODS

Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of

the common carrier for their loss, destruction or deterioration.

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Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall

be governed by the Code of Commerce and by special laws.

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CDAT*/ +++COMMON CARRIER OF PASSENGERS

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care andforesight can provide, using the utmost diligence of very cautious persons, with a due regard for all

the circumstances.

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 prove that they observed extraordinary diligence as

prescribed in Articles 1733 and 1755.

CARRIAGE OF PASSENGERS

A stipulation limitin' te carrier>s liability can only be e%ecuted wit respect tocarria'e of 'oods but not for contracts of carria'e of passen'ers.

CLASSES OF BAGGAGE OF PASSENGERS

1. Ba''a'e in te custody of te passen'ers or teir employees". Ba''a'e in te custody of te carrier (necessary deposit!

BAGGAGE OF PASSENGERS

4it respect to te liability of te COGGO; CA//+*/ to te ba''a'e of passen'erswic is in teir personal custody, te COGGO; CA//+*/ sall be responsible merely asdepositaries, provided tat notice was 'iven to tem, or to teir employees, of teeffectsMba''a'e brou't in by passen'ers and tat on te part of te passen'er, ave ta)en te precautions wic said COGGO; CA//+*/ advised relative tot e care and vi'ilance of teir ba''a'e>s ( Art. 1998 and as)ed in te 199: BA/.!

+esponsibility for acts of eployees , thieves

=nder Art ", as applied to common carriers is responsible as a depositary for te loss of or injury to te ba''a'e in te personal custody of passen'ers or in tat of teir employeescaused by te carrier>s servants or employees but not tose caused by force majeure.

But under Art "1, te act of te tief or robber, wo as entered te common carrier Psveicle is not deemed force majeure, unless it is done wit te use of arms or trou' anirresistible force. =nder Art "", as applied to common carriers , te common carrier is notliable for compensation if te loss of te ba''a'e in te personal custody of te passen'er or in ta't of is employees is due to te acts of passen'ers, is family, servants or visitors or if te loss arises from te caracter of te ba''a'e.

Carrier liable even for nondeclared but accepted cargo

A carrier is liable for te loss of ba''a'e and 'oods of passen'ers altou' not declared andte car'es tereon not paid if it accepted tem for transportation.

PERSONS OF PASSENGERS

4it respect to passen'ers, COGGO; CA//+*/ are bound to carry te passen'erssafely as far as uman care and foresi't can provide, usin' te utmost dili'ence of verycautious persons, wit due re'ard for all te circumstances (1:--!

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PRESMPTION OF NEGLIGENCE

=nder Art.1:-, in case of deat or injuries to te passen'ers, common carriers are presumed to ave been at fault or to ave acted ne'li'ently. And were deat or injury resultsto te passen'er because of ne'li'ence of te common carrier>s employees, te common

carrier is liable notwitstandin' te fact tat e ad e%ercised all te dili'ence of a 'oodfater of a family in te selection and supervision of is employees.

-ow resuption of Negligence is /vercoe

To overcome suc presumption, it must be sown tat te carrier ad observed te re<uirede%traordinary dili'ence wic means tat te carrier must sow te utmost dili'ence of verycautious persons as far as uman care and foresi't can provide or tat te accident wascaused by a fortuitous event .

LAST CLEAR CHANCE RLE NOT APPLICABLE TO CONTRACTS OF CARRIAGE

Te principle of last clear cance applies in a suit between te owners and driver of two collidin' veicles. +t does not apply were a passen'er demands responsibility from tecarrier to enforce its contractual obli'ation. +t would be ini<uitous to e%empt te driver and iemployer on te 'round tat te oter driver was also ne'li'ent.

Carrier not ordinarily liable for in0uries to passengers due to fire e$plosion cause articlesbrought into conveyance by other passengers

+t was eld in ;OC=G vs LA$=;A B=# L+;*# (199! tat it is to be presumed tat passen'er will not ta)e wit im anytin' dan'erous to te lives and limbs of is coF passen'ers, not to spea) of is own. Besides , te ri't to privacy to wic eac passen'er isentitled is not to be li'tly ta)en. De cannot be subjected to any unusual searc wen e protests te innocuousness of is ba''a'e and notin' appears to indicate te contrary.

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 stipulation, by the posting of

notices, by statements on tickets, or otherwise.

Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's

liability for negligence is valid, but not for willful acts or gross negligence.

The reduction of fare does not justify any limitation of the common carrier's liability.

TIC'ETS GIVEN TO A PSSENGER IS A WRIITEN CONTRACT

Te tic)et is in itself a complete written contract by and between te sipper and te passen'er. +t as all te elements of a complete contract 5

1. te consent of te contractin' parties manifested by te fact tat te passen'er boards te sip and te sipper consents or accepts im in te sip for transportation

". cause or consideration wic is te fare paid by te passen'er as stated in tetic)et

2. object, wic is te transportation of te passen'er from te place of departure

to te place of destination wic are stated in te tic)et

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ffect of gratuitous carriage

=nder Art 1:-8, te common carrier and te passen'er may validly stipulate limitin' tecommon carrier>s liability for ne'li'ence were te passen'er is carried 'ratuitously.

ffect of reduction of fare

Te reduction of fare does not justify any limitation of te common carrier>s liability. Astipulation limitin' te carriers liability in writin', si'ned by te parties, supported by asufficient consideration and not contrary to law would be void were te passen'er is notcarried 'ratuitously even were te fare is reduced.

Art. 1759. 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 of the common carriers 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.

Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be

eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or

otherwise.

"iability for negligence or willful acts of eployees

Te common carrier cannot escape liability by interposin' te defense tat its employees incausin' te deat of or injury to a passen'er ave acted witout autority or a'ainst te ordersof te common carrier. Te reason for ma)in' te carrier liable for te misconduct of its

employees done in teir own interest is tat te servant is cloted wit te dele'atedautority and car'ed wit te duty by te carrier to e%ecute is underta)in' to carry te passen'er safely. Te liability of te carrier for te personal violence of its employees or a'ents upon its passen'ers e%tends only to tose acts tat te carrier could foresee or avoidtrou' te e%ercise of te de'ree of dili'ence re<uired of it.

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 common carrier, but the

amount of damages shall be equitably reduced.

Art. 1763. A common carrier is responsible for injuries suffered by a passenger on 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 of a family could have prevented or stopped

the act or omission.

iligence re)uired of passenger

Te law also re<uires te passen'er to observe te dili'ence of a 'ood fater of a family toavoid injury to imself. +n te case of te common carrier, te law re<uires e%traordinarydili'ence wile in case of te passen'er, te law re<uires only ordinary dili'ence or tedili'ence of a 'ood fater of a family.

4ere te pro%imate cause of te deat of or injury to te passen'er is is own ne'li'enceand not tat of te common carrier , te common carrier is e%empted from liability.

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CASES

CALALAS /3 CA$./. ;o. 1""29, Gay 21, "

*li?a Hujeurce $. #un'a, a colle'e fresman majorin' in ysical *ducation atte #iliman =niversity, too) a passen'er jeepney wic was owned and operated by petitioner Iicente Calalas and, as te jeepney was filled to capacity of about "0 passen'ers, #un'a was 'iven by te conductor an e%tension seat.

One te way to oblacion #ibulan, ;e'ros Occidental, te jeepney stopped to let a passen'er off. As *li?a was seated at te rear of te veicle, se 'ave way to te out'oin' passen'er. Hust as se was doin' so, an +su?u truc) wic was driven by +'lecerio Ierenaand owned by &rancisco #alva bumped te left rear portion of te jeepney. As a result,#un'a was injured.

#un'a filed a complaint for dama'es a'ainst Calalas, alle'in' violation of tecontract of carria'e by te former in failin' to e%ercise te dili'ence re<uired of im as acommon carrier.

I""-"1. 4eter or not *li?a is bound by te court rulin' in te said tird party complaint

filed by Calalas findin' te driver and te owner of te truc) liable for <uasiFdelict.

". 4eter or not te common carrier in tis case observed e%traordinary dili'ence for te safety of passen'ers.

H51. ;o, for te followin' reasons5

i. *li?a was never a party to te <ausiFdelict caseii. Te issues in te tird party complaint and in te present case are not

same.

Te issue in tird party compliant was weter #alva and is driver Ierena wereliable for <uasiFdelict for te dama'e caused to petitioner>s jeepney. On te oter and,te issue in tis case is weter petitioner is liable on is contract of carria'e. Te first,<uasiFdelicit, also )nown as culpa a<uiline or culpa e%tra contractual, is premised upon tene'li'ence in te performance of a contractual obli'ation.

+n te tird party complaint (<uasiFdelict!, te ne'li'ence or fault sould beclearly establised because it is te basis of te action, wereas in te present case (breacof contract!, te action can be prosecuted merely by provin' te e%istence of te contract

and te fact tat te obli'or, in tis case te common carrier, failed to transport is passen'er safely to is destination.

Tus, is immaterial tat te pro%imate cause of te collision between te jeepneyand te truc) was te ne'li'ence of te truc) driver. Te doctrine of pro%imate cause isapplicable only in action for <uasiFdelict, not in actions involvin' breac of contract. Tedoctrine is a device for imputin' liability to a person were teis no relation between imand anoter party. +n suc a case, te obli'ation is created by law itself. But, were tereis a pree%istin' contractual relation between te parties, it is te parties temselves wocreate te obli'ation, and te function of te law is merely to re'ulate te relation tuscreated. +nsofar as contracts of carria'e are concerned, some aspects re'ulated by teCivil Code are tose respectin' te dili'ence re<uired of common carriers wit re'ard to

te safety of passen'ers as well as te presumption of ne'li'ence in cases of deat or injury to passen'ers.

". ;o, for te followin' reasons5

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&irst, as found by te Court of Appeals, te jeepney was not properly par)ed, itsrear portion bein' e%posed about two meters from te broad soulders of te i'way, andfacin' te middle of te i'way in a dia'onal an'el. Tis is a violation of te /.A. ;o.012, as amended, or te Land Transportation and Traffic Code.

#econd, it is undisputed tat petitioner>s driver too) in more passen'ers tan te

allowed seatin' capacity of te jeepney, a violation of #2" ("! of te same law. Te facttat #un'a was seated in an e%tension seat placed er in a peril 'reater tan tat towic te oter passen'ers were e%posed.

FORTNE EXPRESS INC VS3 CA2- #C /A 10, Garc 18, 1999.

On ;ovember 18, 1989, a bus of te petitioner met an accident wit a jeepney inauswa'an, Lanao del ;orte resultin' to te deat of several passen'ers, includin' "Garanaos.

Crisanto $eneralao, a volunteer a'ent of te Constabulary /e'ion #ecurity =nit.

;o @ conducted an investi'ation of te accident.De found out tat several maranaos were'oin' to ta)e reven'e by burnin' some of te petioner>s buses.

$eneralao reported tis to #t. Batasa of te ilippine constabulary and in turnreported tis to 3iosdado Bravo, operations mana'er of te company. Bravo assuredBatasa tat e would ta)e te necessary precautions.

On ;ovember "", 1989, 2 armed maranaos pretendin' to be passen'ers sei?ed te bus at Limanon, Lanao del ;orte wilte on its way to +li'an C+TE. Amon' te passen'erswas Atty. Caoran'.

Basier Ganan''olo, leader of te armed men, ordered to stop te bus on te side

of te i'ways ten sot Cabatuan, te driver, in te arm. Tereafter ordered te passen'ers to 'et off te bus and started to pour 'asoline inside te bus. Ten te passen'ers stepped out away from te bus, owever Atty. Caoron' returned inside toretrieve sometin'.

4ile inside, Caoron' pleaded for te life of te driver, wo eventually crawledout te bus, in tat series of event 'unsots were fired, Atty. Caoron' was it. Ten te bus was set on fire. #ome of te passen'ers were able to pull Caoron' out of te burnin' bus and rused im to te ospital, but died wile under'oin' operation.

Ten te private respondent brou't a suit for breac of contract of carria'e in te/TC, Branc I+, +li'an City.

Ten trial court subse<uently dismissed te action declarin' it was witout merit.On appeal, te CA reversed te decision of te trail court, awardin' dama'es and atty>sfees. Dence te appeal, alle'in' tat te CA erred in reversin' te decision, tat te acts of te outlaws as to be re'arded as caso fortuito, and tat tey observed due dili'ence as acommon carrier.

+ssue5 4O; te common carrier is liable for dama'esK

Deld5 Ees, petitioner Bus Company is liable for dama'es arisin' from te deat of Atty.Caoron'.

Te acts of te outlaws cannot be constituted as a fortuitous event as it could ave been prevented if only te petitioner observed te e%tra ordinary dili'ence re<uired for te present circumstances. Te common carrier failed to observe te dili'ence re<uireddespite te reports of armed malefactors were plannin' to set some of its buses on fire.+tfailed to ta)e te necessary precautions needed and was supposed to ave been assured byte operations mana'er.

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Te court eld tat fris)in' of passen'ers would ave been justifiable, and tefailure of te conductor to notice te 'allons of 'asoline is ine%cusable.

SANTOS III /" NORTHWEST AIRLINES"1 #C/A "-

Tis case involves te correct interpretation of Article "8(1! of te 4arsaw Convention, Art."8 – An action ust be brought at the option of the plaintiff, in the territory of one the -igh

Contracting arties, either before the court of the doicile of the carrier or of his principal placeof business, or when he has a place of business through which the contract has been ade or

before the court at the fi$ place of destination.

a. Court of domicile of te Carrier (re'ister! b. rincipal place for business (operate!c. lace of business were contract was made (sale!d. Court at te place of destination (#an &rancisco!

F*%" etitioner wo is a minor and a resident of te ilippines purcased from ;ortwest Orient Airlines (;OA!, a forei'n corporation, a round trip tic)et in #an&rancisco, =#A for is fli't from #an &rancisco to Ganila via To)yo and bac). ;o datewas specified to for is return to #an &rancisco.

On te date of is departure, e was wait listed since accordin' to te airline terewas no reservation made for is fli't from To)yo to Ganila. #ubse<uently after teincident, represented by is fater, e sued ;AO for dama'es before te /TC Ga)ati. ;OA filed for dismissal on te 'round tat te court as no jurisdiction citin' Art "8(1! of 4arsaw Convention. Dence, te complaint was dismissed. Te CA affirmed te decision.Dence tis appeal,

I""- 1. 4eter or not Article "8 of 4arsaw is Constitutional.

". 4eter or not te ilippines as jurisdiction over te case.

H5 1. Ees, it is constitutional

Te / is a party to te Convention for te =nification of Certain /ules /elatin'to +nternational Transportation by Air or te 4arsaw Convention. Te Convention is treatywic is voluntarily assumed by te il. $overnment and suc as a force and effect of law in tis country. Te issue to be resolved involves a <uestion of law, and it is a wellsettled rule tat courts only assume jurisdiction over a constitutional <uestion only if it issown tat te essential re<uisites of a judicial in<uiry are first satisfied. Tis is becauseof te separation of powers doctrine. &urter, te treaty is a joint le'islative e%ecutive act.Te presumption is tat it was carefully studied and determined to be constitutional before

it was adopted and 'iven force of law in tis country.

". ;o, it as no jurisdiction to ear and try te case.

Article "8(1! of te 4arsaw Convention is jurisdictional. +t is not merespecification of venue. Te followin' reasons support te caracteri?ation of te Article as jurisdictional and not as a mere venue provision5

a. Te wordin' of Article 2" of te same treaty, indicates te places were te action for dama'es must be brou't, underscores te mandatory nature of article "8(1!.

b. Te caracteri?ation is consistent wit one of te objectives of te Convention wicis to re'ulate in a uniform manner te conditions of international transportation by air.

c. Te Convention does contain any provision prescribin' rules of jurisdiction oter tanin Article "8(1!, wic means tat te prase rules as to jurisdiction used in Article"8(1!.

+n oter words, were te matter is 'overned by te 4arsaw Convention, jurisdictionta)es on a dual concept

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4APAN AIRLINES V3 CA"90 #C/A 19

PCA#O &O/T=+TO> Contract of transport of passen'er – relationsip imbued wit publicinterest.

F*%" On Hune 12, 1991, rivate /espondents Hose Giranda, *nri<ue A'ana, and Adelia&rancisco erefor Ganila via Hapan Airlines fli't no. 1. As an incentive for travelin'on te said Airlines, bot fli'ts were to ma)e an overni't stop cover at ;arita, Hapan, atte Airlines e%pense, tereafter proceedin' to Ganila te followin' day.

=pon arrival at ;arita, Hapan, private were billeted at Dotel ;i))o for te fli't.Te ne%t day, private respondents on te final le' of teir journey, went to te airport tota)e teir fli't to Ganila. Dowever due to te Gt. inatubo eruption unrelentin' as blan)eted ;inoy A<uino +nternational Airport. Dence te trip was cancelled indefinitely.

Hapan airlines reboo)ed all te Ganila bound passen'ers on fli't no. :01 due to

depart on Hune 1, 1991 and also paid for te otel e%penses for teir une%pectedoverni't stayV On Hune 1, ten fli't to Ganila was a'ain cancelled due to ;A+A>sclosure.

rivate respondents were forced to pay for teir accommodations and meale%penses. rivate respondents filed an action for dama'es before /TC of ue?on Citya'ainst HAL contendin' tat HAL failed to live up to its duty to provide care and comfortto its stranded passen'ers /TC found HAL liable for dama'es on appeal, te CA affirmedte decision of te /TC but lowered te dama'es awarded. 4M; HAL, as common carrier as te obli'ation to soulder te otel and meal e%penses of its stranded passen'er untiltey ave reaced teir final destination, even if te delay were caused by force majeure.

I""- 4eter or not Hapan Airlines is liable for dama'es.

;ominal dama'es – awarded in order tat a ni't of a plaintiff wic as been violence or needed by te defendant, maybe vindicated or reco'ni?ed.

H5 HAL may be eld only for nominal dama'es but not for moral and e%emplarydama'es ;ominal dama'es are adjudicated in order tat a ri't of a plaintiff, wic as been violated or invaded by te defendant, may be vindicated or reco'ni?ed and not for te purpose of indemnifyin' any loss suffered by im.

Tere is no <uestion tat wen a party is unable to fulfill is obli'ation because of force majeure, te 'eneral rule is tat e, can not be eld liable for dama'es for nonF

performance. Te otel and meal e%penses cannot be car'ed to HAL. Eet is it undeniabletat HAL assi'ned te otel e%penses of respondents. assen'er must ta)e suc ris) incident to te mode of travel. After all, common carriers are not te insurer of all ris)s.

Common carriers are not absolutely responsible for all injuries or dama'ed even if te same were caused by a fortuitous.

Tere is no <uestion tat wen a party is unable to fulfill is obli'ation because of force majeure, te 'eneral rule is tat e cannot be eld liable for dama'es for nonF performance.

+f te fortuitous event was accompanied by ne'lect and malfeusanice by te

carriers employee, an action for dama'ed a'ainst te carrier is permissible.

PAN AMERICAL WORLD AIRWAYS INC3 /" 4OSE RAPADAS & CA("9 #C/A :!

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rivate respondent /apadas was en route from $uam to Ganila. 4ile standin'on te line to board te fli't at te $uam airport, e was ordered by an Am>s andcarrycontrol a'ent to cec)Fin is #amsonite attacW case. /apadas protested pointin' to tefact tat oter passen'ers were permitted to andcarry bul)ier ba''a'es.

De stepped out of te line only to 'o bac) at te end of it to try if e can 'et

trou' witout avin' to re'ister is ba''a'e. Dowever, te same andcarry controla'ent ordered im to re'ister is ba''a'e. &or fear tat e would miss te plane, eacceded to cec)in' it in but witout declarin' its contents or te value of its contents. Dewas 'iven a ba''a'e claim ta'.

=pon arrivin' in Ganila, /apadas claimed all is cec)edFin ba''a'es e%cept teattacW case. Dis son, Hor'e, re<uested for te searc of te missin' lu''a'e.

anAm re<uested /apadas to put te re<uest in writin'. /apadas filled in aBa''a'e Claim Blan) &orm. Tereafter, /apadas personally followed up is claim.

/apadas received a letter from te anAm>s counsel offerin' to settle te claim

for te sum of R1, representin' te petitioner>s alle'ed a'reed limit of liability for lossor dama'e to a passen'er>s personal property under te contract of carria'e.

/efusin' to accept tis )ind of settlement, /apadas filed an action for dama'esand alle'ed tat anAm discriminated or sin'led im out in orderin' tat is lu''a'e becec)ed in. De also alle'ed tat anAm ne'lected its duty in te andlin' and safe)eepin'of is attacW case from te point of embar)ation in $uam to is destination in Ganila.Accordin' to im, te loss resulted in is failure to pay certain monetary obli'ations.

anAm, in its answer, ac)nowled'ed responsibility for te loss of te attacW case but asserted tat te claim was subject to te ;otice of Ba''a'e Liability Limitationsalle'edly attaced to and formin' part of te passen'er tic)et. Te same notice was

alle'ed posted conspicuously in its officers for 'uidance of te passen'ers.

At te trial, it was sown tat te attacW case contained is vacation pay moneyR0,:-, oter money consistin' of R1,0 'iven by is son, R2, payment for ta%es,R2 bdat present, includin' contracts, records, letters, drafts of manuscripts, clippin's,memorabilia, auto'raps, commemorative coins and stamps and an arcitect>s plan. (tetotal amount of te claim was R0",02.9!

Te lower court ruled in favor of /apadas after findin' no stipulation 'ivin'notice to te ba''a'e liability limitation but te trial court found for only R-""8.9 and1 paen's. On appeal, te Court of Appeals affirmed te TC>s decision.

/apadas presented te followin' as proofs51. passen'er tic)et and ba''a'e cec) wMc contains te ;otice 7 Conditions of

Contract and te advice to international passen'ers on limitation of liability". @ero% copies of fli't coupon no.2 sowin' te fares paid for trips to prove is

obli'ations wMc remained unpaid because of te loss of money alle'edly placedinside te missin' attacW case

anAm offered as evidence te followin'51. pa'e " of te passen'er tic)ed to proved te notice 7 conditions of te contract of

carria'e". @ero% copy of a ;otice of Ba''a'e Liability Limitations

I""- 4M; a passen'er is bound by te terms of a passen'er tic)et declarin' tat telimitations of liability set fort in te 4arsaw Convention as amended by te Da'uerotocol, sall apply in te case of loss, dama'e or destruction to a re'istered lu''a'e of a passen'er.

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Te ;otice and te Conditions of Contract sould be sufficient notice sowin' teapplicability of te 4arsaw limitations. Te 4arsaw Convention, as amended, specifically provides tat it is applicable to international carria'e defined under Art. 1, and par.".

;owere in te 4arsaw Convention, as amended, is suc a detailed notice of ba''a'e liability limitations re<uired. ;everteless, it sould become a common, safe and

practical custom amon' air carriers to indicate beforeand te precise sums e<uivalent totose fi%ed by Art ""("! of te Convention.

Te #C cited O!+ Y- /" CA and P!A0 /" IAC were it eld tat5 A plane tic'et is what is 'nown as a contract of adhesion, in regard w3c it has

been said that contracts of adhesion wherein one party iposes a ready ade for of

contact on the other, as the plane tic'et in the case at bar. *hese are not entirely prohibited. *he one who adheres to the contract is in reality free to re0ect it entirely, if headheres, he gives his consent. 4hile contracts of adhesion are N/* entirely prohibited,neither is a blind reliance on the encouraged.

Te court finds te provisions in te plane tic)et sufficient to 'overn te

limitations of liabilities of te airline for loss of lu''a'e. Te passen'er, upon contractin'wit te airline and receivin' te plane tic)et, was e%pected to be vi'ilant insofar as islu''a'e is concerned. +f te passen'er fails to adduce evidence to overcome testipulations, e cannot avoid te application of te liability limitations.

Te facts sow tat /apadas actually refused to re'ister is attacW case despiteavin' been ordered by te anAm a'ent to cec) it in. in attemptin' to avoid re'isterin'te lu''a'e by 'oin' bac) to te line, e manifested a disre'ard of airline rules. rudenceof a reasonably careful person also dictates tat cas and jewelry sould be removed fromcec)edFin lu''a'e and placed in one>s poc)ets or in a andFcarried ba' or envelope.

Te Court does not su''est tat passen'ers are always bound to te stipulated

amounts printed on a tic)et, found in a contract of adesion. Te court simply reco'ni?este fact tat te reasons beind te stipulations on liability limitations arise from tedifficulty, if not, impossibly, of establisin' wit a clear preponderance of evidence, tecontents of a lost suitcase.

=nless te contents are declared, it will always be te wor) of te passen'er a'ainst tat of te airline. +f te loss of life or property is caused by te 'ross ne'li'enceor arbitrary acts of te airline or te contents of te lost lu''a'e are proved by satisfactoryevidence oter tan te selfFservin' declarations of one party, te Court will not esitate todisre'ard te fine print in te contract of adesion.

Te lost lu''a'e was declared as wei'in' around 18 lbs or about 8)'. At R" per

)', te petitioner offered to pay R1 as a i'er value was not declared in advance andadditional car'es were not paid. Te amount of R0 per passen'er is allowed for uncec)ed lu''a'e.

#ince te cec)in' in of te lu''a'e was a'ainst te will of /apadas, te Courttreats te lost ba' as parta)in' of involuntary and urriedly cec)edFin lu''a'e andcontinuin' its early status as uncec)ed lu''a'e.

etitioner anAm was ordered by te #C to pay /apadas dama'es in te amountof R0 or its e<uivalent in il currency.

FABRE V3 CAHuly ", 199

etitioners *n'racio &abre, Hr. and is wife were owners of a 198" model Ga?daminibus. Tey used te bus principally in connection wit a bus service for scool

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cildren, wic tey operated in Ganila. Te couple ad a driver, orfirio H. Cabil, womte ired in 1981, after tryin' im out for two wee)s. Dis job was to ta)e scool cildrento and from te #t. #colastica>s Colle'e in Galate, Ganila.

On ;ovember ", 1980 private respondent 4ord for te 4orld Cristian&ellowsip +nc. (44&C! arran'ed wit petitioners for te transportation of 22 members

of its Eoun' Adults Ginistry from Ganila to La =nion and bac) in consideration of wic private respondent paid petitioners te amount of 2,.

Te bus left Getro Ganila at 85 pm. At 1152 tat ni't, petitioner Cabil upon asarp curve on te i'way. Te road was slippery because it was rainin', causin' te bus, wic was runnin' at te speed of - )ilometers per our, to s)id to te left roadsoulder. Te bus it te left traffic steel brace and si'n alon' te road and rammed tefence of one Hesus *scano, ten turned over and landed on its left side, comin' to a fullstop only after a series of impacts. #everal passen'ers were injured includin' AmylineAntonio wo was paraly?ed from te waist down.

Te Lin'ayen police investi'ated te incident te ne%t day, ;ovember 2, 1980.

On te basis of teir findin' tey filed a criminal complaint a'ainst te driver, OrfirioCabil. Te case was later filed wit te L+n'ayen /e'ional Trial Court.

Te trial court found tat no convincin' evidence was sown tat te minibus was properly cec)ed for travel to a lon' distance trip and tat te driver was properlyscreened and tested before bein' admitted for employment. +ndeed, all te evidence presented ave sown te ne'li'ent act of te defendants wic ultimately resulted to teaccident subject of te case. Te trial court and te CA awarded dama'es to privaterespondents wic te petitioners callen'e in te case at bar.

I""- 4eter or not petitioners are ne'li'ent

H5 Ees

Te findin' tat Cabil drove is bus ne'li'ently, wile is employer, te &abres,wo owned te bus, failed to e%ercise te dili'ence of a 'ood fater of te family in teselection and supervision of teir employee is fully supported by te evidence on record.Tese factual findin's of te two courts we re'ard as final and conclusive, supported astey are by te evidence. Te fact tat it was rainin' and te road was slippery, tat it wasdar), tat e drove is bus at - )ilometers an our wen even on a 'ood day te normalspeed was only " )ilometers an our, and tat e was unfamiliar wit te terrain, Cabilwas 'rossly ne'li'ent and sould be eld liable for te injuries suffered by privaterespondent Amyline Antonio.

ursuant to Arts. "1: and "18 of te Civil Code is ne'li'ence 'ave rise to te presumption tat is employers, te &abres, were temselves ne'li'ent in te selectionand supervisions of teir employee. 3ue dili'ence in selection of employees is notsatisfied by findin' tat te applicant possessed a professional driver>s license. Teemployer sould also e%amine te applicant for is <ualifications, e%perience and recordof service. 3ue dili'ence in supervision, on te oter and, re<uires te formulation of rules and re'ulations for te 'uidance of employees and issuance of proper instructions aswell as actual implementation and monitorin' of consistent compliance wit te rules.Tis case actually involves a contract of carria'e. etitioners, te &abres, did not ave to be en'a'ed in te business of public transportation for te provisions of te Civil Code oncommon carriers to apply to tem. As tis Court as eld5

Art. 172. Coon carriers are persons, corporations, firs or association engaged inthe business of carrying or transporting passengers or goods or both, by land, water, or

air for copensation, offering their services to the public.

Te award of dama'es was also proper but since private respondents did not<uestion te award of te trial court as inade<uate, te CA sould not increase it. Te

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award of -, compensatory dama'es to Amyline Antonio made by te trial court issustained.

BALIWAG TRANSIT, INC3 /3 CA"- #C/A :0:

On Huly 21, 198, Leticia $arcia and er five year old son, Allan $arcia boardedBaliwa' Transit Bus. ;o. "2 Bound for Cabanatuan City 3riven by Haime #antia'o.Tey too) te seat beind te driver.

At bout :52 on te eve, in Galimba $apan ;ueva *cija, te bus passen'ers as acar'o truc) par)ed at te soulder of te ;ational Di'way. +ts left rear portion jutted tote outer lane, as te soulder of te road was too narrow to accommodate te woletruc). erosene lamp appeared at te ed'e of te road obviously to serve as a warnin'device. Te truc) driver, Hulio /econstitute and is elper Arturo *scala, were tenreplacin' a flat tire. Te truc) is owned by respondent A 7 H Tradin'.

Bus driver #antia'o was drivin' at a coordinately fast speed and failed to notice

te truc) and te )erosene lamp at te ed'e of te road. #antia'o>s passen'ers ur'ed imto slow down but te road #antia'o>s passen'ers ur'ed im at to slow down but e paidtem no Deed #antia'o even carried animated conversation wit is c oFemployees wiledrivin' wen te dan'er of collision became imminent, te bus passen'ers soutedBaban'a TayoX #antia'o stepped on te bra)e, but it was too late is Bus /ammed into testalled Car'o truc). +t caused te instant deat of #antia'o and *scala, and injury toseveral otera Leticia and Allan $arcia were amon' te injured passen'ers.

Leticia suffered a fracture in er pelvis and ri't le' Allan, on te oter and, bro)e a le' spouses Antonio and Leticia $arcia issued Baliwa' transit, +nc. A7H Tradin'and Hulio /econti<ue for dama'es in te /TC of Bulacan. Leticia sued as an injured passen'ers of Baliwa' and as moter of Allan at te time of te complaint, Allan a minor,

ence te suit initiated by is parents in tis is favor.

Baliwa' A 7 H tradin' and reconstitutes disclaimed responsibility or te misap.Baliwa' alle'ed tat te accident was caused or te Gisap. Baliwa' alle'ed tat teaccident was caused solely by te fault and ne'li'ence of A 7 H tradin' and its 3river,/econti<ue. Baliwa' car'ed tat /econti<ue failed to place an early warnin' device atte corner of te disabled car'o truc) to warn on comin' veicles. ; te oter and, A7Htradin' and /econti<ue alle'ed tat te accident was te result of te ne'li'ence andrec)less drivin' of #antia'o6 Bus 3river of Baliwa'. Te TC found all te dependantsliable. On appeal, te CA modified reducin' te award of Atty>s fees to 1, and lossof earnin's to 2, . and "-, for ospitali?ation and medication.

+ssues5 4eter or not Baliwa' solely liable for te injuries suffered by Leticia and Allan$arcia in te AccidentK

Deld5 As a common carrier, Baliwa' breaced its contract of carria'es wen it failed todeliver its passen'ers, Leticia and Allan $arcia to teir 3estination safe and sound. +n aContract of carria'e, it is presumed tat te common carrier was at fault or was ne'li'entwen a passen'er dies or is injured. =nless te presumption is rebutted, te court need noteven ma)e an e%press findin' of fault or ne'li'ence on te part of te cc.Common carriers are liable for te deat of or injured

LARA /" VALENCIA

10 D+L -

Te deceased (Lara!was an inspector of te Bureau of &orestry in 3avao wowent to classify lo's of defendant in is Cotabato concession. Te wor) of Lara lasted for si% days durin' wic e contracted malaria fever.

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+n te mornin' of Han. 9, 19-0, Lara, wo was ten in a urry to 3avao, as)eddefendant if e could ta)e im in is pic)Fup as tere was no oter means of transportation, to wic defendant a'reed, and in tat same mornin' te pic)Fup leftaran' bound for 3avao ta)in' alon' si% passen'ers, includin' Lara.

Lara sat at te bac) of te veicle on a ba'. Lara, accidentally fell from te pic)F

up and as a result e suffered serious injuries. De, owever, subse<uently died.

C&+ rendered jud'ment orderin' defendant to pay dama'es.

I""- 4M; defendant is liable for dama'es.

H5 No

Te deceased, as well as is companions wo rode in te pic)Fup of defendant,were merely accommodation passen'ers wo paid notin' for te service and so tey can be considered as invited 'uests witin te meanin' of te law. As accommodation passen'ers or invited 'uests, defendant as owner and driver of te pic)Fup owes to tem

merely te duty to e%ercise reasonable care so tat tey may be transported safely to teir destination.

Tus, te rule is establised by te wei't of autority tat te owner or operator of an automobile owes te duty to an invited 'uest to e%ercise reasonable care in itsoperation, and not unreasonably to e%pose im to dan'er and injury by increasin' tea?ards of travels. Te rule is tat an owner of an automobile owes a 'uest te duty toe%ercise ordinary or reasonable care to avoid injurin' im.

#ince one ridin' in an automobile owes because e as)ed for te privile'e of doin' so, te same obli'ation of care is imposed upon te driver as in case of onee%pressly invited to ride. Te e%traordinary dili'ence imposed on common carriers is not

re<uired.

+n te case at bar, deceased imself cose te place were e would sit and e wasalfFasleep wen te accident too) place so tat te incident is attribute to is lac) of careconsiderin' tat te pic)Fup was open and e was ten in a croucin' position. On teoter and, tere is no sowin' tat te defendant as failed to ta)e te precautionnecessary to conduct is passen'ers safely to teir place of destination. 3efendantterefore is not liable for dama'es.

A passen'er must observe te dili'ence of a fater of a fater of a family toavoid injury to imself (Article 1:1, new Civil Code! wic means tat if te injury tote passen'er as been te pro%imately caused by is own ne'li'ence, te carrier cannot

be eld liable.

BRIJAS /3 PEOPLE1"- #C/A 8:

+n te afternoon of Hanuary , 19-:, Huanito $esmundo bou't a train tic)et at terailroad station in Ta')awayan, ue?on for is --FyearFold moter Gartina Bool and is2FyearFold dau'ter *melita $esmund, wo were bound for Barrio Lusacan, Tiaon', same province.

=pon approacin' Barrio La'ala' in Tiaon' at about 85 pm at tat same ni't,te train slowed down and te conductor souted Lusacan. Tereupon, te old woman

wal)ed toward te left front door facin' te direction of Tiaon', carryin' te cild oneand and oldin' er ba''a'e wit te oter.

4en Gartina and *melita were near te door, te train suddenly pic)ed upspeed. As a result, te old woman and te cild stumbled and tey were seen no more. +t

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too) tree minutes more before te train stopped at te ne%t barrio. Lusacan, and tevictims were not amon' te passen'ers wo disembar)ed tereat.

;e%t mornin', te Tiaon' police received a report tat two corpses were foundalon' te railroad trac)s at Barrio La'ala'. /eferrin' to te scene to investi'ate, teyfound te lifeless body of a female cild. Te investi'ators also found te corpse of an old

woman. Blood, pieces of scattered brain and pieces of clotes were at te scene. Later, te bodies were identified as tose of Gartina Bool and *melita $esmundo.

Te C&+ of ue?on affirmed by CA convicted defendant appellant ClementBriJas for double omicide tru rec)less imprudence but ac<uitted Dermo'enesBuencamino and Iictor Gillan.

+ssue5 Te pro%imate cause of te deat of te victims

Deld5 +t is a matter of common )nowled'e and e%perience about common carriers li)etrains and buses tat before reacin' a station or fla'stop tey slow down and tat teconductor announce te name of te place. +t is also a matter of common e%perience tat

as te train or bus slac)ens its speed, some passen'ers usually stand and proceed to tenearest e%it, ready to disembar) as te train or bus comes to a full stop. Tis is especiallytrue of a train because passen'ers feel tat if te train resumes its run before tey are ableto disembar), tere is no way to stop it as a bus may be stopped.

+t was ne'li'ence on te conductor>s part to announce te ne%t fla' stop wen saidstop was still a full tree minutes aead. As te CA observed, te appellant>sannouncement was premature and erroneous

Te pro%imate cause of te deat of te victims was te premature and erroneousannouncement of petitionerFappellant BriJas. Tis announcement prompted te twovictims to stand and proceed to te nearest e%it. 4itout said announcement, te victims

would ave been safely seated in teir respected seats wen te train jer)ed as it pic)ed upspeed. Te connection between te premature and erroneous announcement of petitionerFappellant and te deats of te victims is direct and natural, unbro)en by any intervenin'efficient causes.

etitionerFappellant also ar'ues tat it was ne'li'ence per se for Gartina Bool to'o to te door of te coac wile te train was still in motion and tat it was tisne'li'ence tat was te pro%imate cause of teir deats.

4e ave carefully e%amined te records and we a'ree wit te respondent courttat te ne'li'ence of petitionerFappellant in prematurely and erroneously announcin' tene%t fla' stop was te pro%imate cause of te deats of Gartina Bool and *melita

$esmundo. Any ne'li'ence of te victims was at most contributory and does note%culpate te accused from criminal liability

Hud'ment affirmed wit modification

SINGSON VS CORT OF APPEALS"8" #C/A 109

On Gay "0, 1988 CA/LO# #+;$#O; and is cousin Crescentio Tioin'son bou't from Catay acific Airways, LT3, at its Getro Ganila tic)et outlet two opendated, identically routed round trip tic)ets for te purpose of spendin' teir vacation in te=nited #tates. *ac tic)et consisted of fli't coupons correspondin' to tis itinerary5

1. &li't coupon 1 – Ganila to Don')on'". &li't coupon " – Don')on' to #an &rancisco2. &li't coupon 2 – #an &rancisco to Los An'eles0. &li't coupon 0 – Los An'eles to #an &rancisco-. &li't coupon - – #an &rancisco to Don')on'

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. &li't coupon – Don')on' to Ganila

Te procedure was tat at te start of eac le' of te trip a fli't couponcorrespondin' to te particular sector of te travel would be removed form te tic)et boo)let so tat at te end of te trip no more coupons would be left in te tic)et boo)let.

On Hune , 1988 #+;$#O; and is cousin manila on board CATDAE># &li't ;o. 9". Tey arried safety in Los An'eles and after stayin' tere for about tree wee)stey decided to return to te ilippines. On Hune 2, 1988 tey arran'ed for teir returnfli't at Catay>s Los An'eles office and cose fully 1, 1988, a &/+3AE, for teir departure. 4ile Tion'son easily 'ot a boo)in' for te fli't, #in'son was not as luc)y. +twas discovered tat is tic)et boo)let did not ave coupon number - correspondin' to te#an &rancisco – Don')on' le' of te trip. +nstead, wat was in is boo)let was couponno. 2, wic was supposed to ave been used and removed from te tic)et boo)let. +t wasnot until , 1988 tat CATDAE was finally able to arran'e for is return fli't to Ganila.

#in'son commenced an action for dama'es a'ainst CATDAE claimin' tat einsisted on CATDAE>s confirmation of is return fli't but CATDAE alle'edly sru''ed

off is protestations and arro'antly directed im to 'o to #an &rancisco imself and dosome investi'ation on te matter or purcase a new tic)et subject to refund CATDAE,alle'edly in scornful insolence, simply dismissed im li)e an impertinent brown pest.

CATDAE denied tese alle'ations and averred tat since petitioner was oldin'an openFdated tic)et, tere was no contract of carria'e yet e%istin' suc tat CATDAE>srefusal to immediately boo) im could not be construes as breac of contract of carria'e.

ISSE1. 4eter or not a breat of contract was committed by CATDAE wen it failed to

confirm te boo)in' of petitioner ". 4eter or not te carrier was liable not only foe actual dama'es but also for

moral and e%emplary dama'es.

RLINGTo old tat no contractual breac was committed by CATDAE and totally

absolve it from any liability would in effect put a premium on te ne'li'ence of its a'ents,contrary to te policy of te law re<uirin' common carriers to e%ercise e%traordinarydili'ence.

Te loss of te coupon was attributable to te ne'li'ence of te Catay>s a'entsand was te pro%imate cause of te nonFconfirmation of te petitioner>s return fli't onHuly 1, 1988. +t virtually prevented petitioner form demandin' te fulfillment of tecarrier>s obli'ation under te contract. Dad Caty>s a'ents been dili'ent in double

cec)in' te coupons tey were supposed to detac from te passen'er>s tic)ets, terewould ave been no reason for CATDAE not to confirm petitioner>s boo)in'.

4ere in breacin' te contract of carria'e te defendant airline is sown to aveacted fraudulently, wit malice or in bad fait, te award of moral and e%emplary dan'er,in addition to actual dama'es is proper.

Te circumstances reflect te carrier>s lac) of care and sensitivity to te needs of its passen'ers, clearlyu constitutive of 'ross ne'li'ence, rec)lessness and wantondisre'ard to te ri't of te latter, acts evidently indistin'uisable or no different formfraud, malice and bad fait.

NOCM V3 LTD2 #C/A 9 (199!

Te sceduled fli'ts of HAL from ;arita, Hapan to Ganila were cancelledindefinitely due to te eruption of Gt. inatubo, wic rendered ;A+A inaccessible toairline traffic. To accommodate all te needs of te passen'ers, HAL reboo)ed all manila

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bound passen'ers and paid teir otel e%penses for teir une%pected overni't stay. Teanticipated fli'ts were a'ain cancelled to ;A+A>s indefinite closure. HAL informed its passen'ers tat it would no lon'er passen'ers defray teir otel and accommodatione%penses durin' teir e%tended stay in Hapan. Te passen'ers were ten forced to use teir personal funds to pay teir accommodation durin' te said e%tended stay. +ssue5 4as HALliable for te e%penses incurred by te passen'ers for teir e%tended stay in Hapan.

H5 +t was ruled tat HAL was not liable. Common carrier is not absolutely responsiblefor all injuries or dama'es sustained by its passen'ers caused by a fortuitous event. Airlineall injuries or dama'es sustained by its passen'ers wen caused by fortuitous event.Airline passen'ers must ta)e suc ris) incident tot e mode of travel. +n tis re'ard,adverse weater conse<uence of wic te passen'er assume or e%pect.

DEFENSES AVAILABLE IN CLPA A?ILIANA

D- D5+!* ! % "5*%$! $; 0#5$"

+n Culpa ac<uilina, due dili'ence in selection of employees is not satisfied by a findin'tat te applicant possessed a professional driver>s license. Te employer sould also e%aminete applicant for tis <ualifications, e%perience and record of service. 3ue dili'ence insupervision, on te oter and, re<uires te formulation of rules and re'ulations for te'uidance of employees and issuance of proper instructions as well as actual implementationand monitorin' of consistent compliance wit te rules.

VICTORY LINER, INC3 VS3 HEIRS OF ANDRES MALECDAN$./. ;o. 1-0":8, 3ecember ":, ""

Andres Galecdan was a :- yearFold farmer. On Huly 1-, 1990, at around :5 p.m., wile Andres was crossin' te ;ational Di'way on is way ome from te farm, a

3alm Liner bus on te soutbound lane stopped to allow im an dis way ome from tefarm, a 3alin Liner bus on crossin' te i'way, a bus of petitioner Iictory Liner, driven by /icardo C. Hoson Hr., by passed crossin' te i'way, a bus of petitioner Iictory Liner,driven by /icardo C. Hoson, Hr., by passed te 3alin bus. +n so doin', respondent it teold man and te carabao on wic e was ridin'. As a result, Andres Galecdan wastrown off te carabao, wile te beast toppled over. Te Iictory Liner sped past te oldman, wile te 3alin bus proceeded to its destination witout elpin' im.

Galecdan sustained a wound on is left soulder, from wic bone fra'ments protruded.

De was ta)en by Lorena and anoter person to te Ca'ayan 3istrict Dospital were e

died a few ours after arrival. Te carabao also died soon afterwards.

Iictory Liner, +nc. no lon'er <uestions te findin' of te /e'ional Trial Courttat Andres Galecdan was injured as a result of te 'ross ne'li'ence of tis driver,/icardo Hoson, Hr. 4at petitioner now <uestions is te findin' tat it (petitioner!failed toe%ercise te dili'ence of a 'ood fater of te family in te selection and supervision of itsemployee.

Deld5 Te contention as no merit. Article "1: provides5

4oever by act or omission causes dama'e to anoter, tere bein' fault or ne'li'ence, is obli'ed to pay for te dama'e done. #uc fault or ne'li'ence, if tere is no

preFe%istin' contractual relation between te parties, is called a <uasiFdelict and is'overned by te provisions of tis Capter.

Article "18 provides for te solidary liability of an employer for te <uasiFdelictcommitted by an employee. Te responsibility of employers for te ne'li'ence of teir employers for te ne'li'ence of teir employees in te performance of teir duties is

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primary and terefore, te injured party may recover from te employers directly,re'ardless of te solvency of teir employees. Te rationale for te on vicarious liabilityas been e%plained tus5

4at as emer'ed as te modern justification for vicarious liability is a rule of policy, a deliberate allocation of a ris). Te losses caused by te torts of employees,

wic as a practical matter are sure to occur in te conduct of te employer>s enterprise,are placed upon tat enterprise itself, as a re<uired cost of doin' business. Tey are placed upon te employer arm to oters trou' te tort of employees, and sou't to profit by it, it is just tat e rater tan te innocent injured plaintiff, sould bear tem6and because e is better able to absorb tem and to distribute tem, trou' prices ratesor liability insurance, to te public, and so to sift tem to society, to te community atlar'e. Added to tis is te ma)e wei't ar'ument tat an employer wo is eld strictlyliable in under te 'reatest incentive to be careful in te selection, instruction andsupervision of is servants, and to ta)e every precaution to see tat te enterprise isconducted safely.

*mployers may be relieved of responsibility for te ne'li'ent acts of teir

employees actin' witin te scope of teir assi'ned tas) only if tey can sow tat teyobserved all te dili'ence of a 'ood fater of a family to prevent dama'e. &or tis purpose, tey ave te burden of provin' tat tey ave indeed e%ercised suc dili'ence, bot in te selection of te employee and in te supervision of te performance of isduties.

+n te selection of prospective employees are re<uired to e%amine tem as toteir <ualification, e%perience and services records. 4it respect to te supervision of employees, employers must formulate standard operatin' procedures, monitor teir implementation and impose disciplinary measures for breaces tereof. Tese facts must be sown by concrete proof. +ncludin' documentary evidence.

+n te instant case, petitioner presented te results of Hoson, Hr.>s writtene%amination actual drivin' tests, %Fray e%amination, psycolo'ical e%amination, ;B+clearance, pysical e%amination, ematolo'y e%amination, urinalysis. #tudent driver trainin', sop trainin', birt certificate, i' scool diploma and reports from te $eneralGaintenance Gana'er and te ersonnel Gana'er sowin' tat e ad passed all tetests and trainin' sessions and was ready to wor) as a professional driver. Dowever, aste trial court noted, petitioner did not present proof tat Hoson, Hr. ad nine years drivin'e%perience.

etitioner also presented testimonial evidence tat drivers of te company were'iven seminars on drivin' safety at least twice a year, a'ain, owever, s te trial courtnoted tere is no record of Hoson, Hr. ever attendin' suc a seminar. etitioner li)ewise

failed to establis te speed of its buses durin' its daily trips or to submit in evidence tetrip tic)ets, speed meters and reports of field inspectors. Te findin' of te trial court tat petitioner>s bus was runnin' at a very fast speed wen it overtoo) te 3alin bus and itdeceased was not disputed by ne'li'ent in te supervision of its driver Hoson, Hr.

DEFENSES AVAILABLE IN CLPA CONTRACTAL

(a! roof of ;e'li'ence – under Art. 1:- in ease of deat of or injuries to passen'erscommon carriers are presumed to ave been at fault or to ave acted ne'li'entlyunless tey prove tat tey observed e%traordinary dili'ence (As)ed in 198 7 199:BA/!

(b! +n Bacarro v. Castro, it was eld tat if a passen'er is injured or dies, tereimmediately arises te presumption tat te COGGO; CA//+*/ is ne'li'ent. Tismeans tat te injured passen'er or te eirs of te dead passen'er do not ave to prove te carrier>s ne'li'ence6 all tey ave to prove is te fact of injury or deat inte course of te passen'er>s carria'e, and te law automatically raises te presumption of ne'li'ence.

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(c! Te carrier must rebut tis presumption6 oterwise, it will be liable for dama'es. +n terebuttal of te presumption, te #C eld tat tis presumption may be rebutted byevidence on any one of two points5

(i! &ortuitous event6 or (ii! Contributory of te passen'er, under Art. 1:" and "1:9

FORTNE EXPRESS, SPRA

4as Atty. Caoron' 'uilty of contributoryne'li'enceK

H5 ;o, te incident was not caso fortutito. 3espite te report of te C tat teGaramaos were 'oin' to attac) te buses, &ortune too) no steps to safe'uard te livesand properties of its passen'ers. Tus, assumin' tat te acts of te Garanaos wereindeed 'rave, irresistible, violent, and forceful, te sei?ure of te bus was foreseeable

and, terefore, was not a fortuitous event tat would e%empt &ortune from liability.

Atty. Caoron' was not 'uilty of contributory ne'li'ence because e did not actrec)lessly.atty. Caoron' was playin' te role of te $ood #amaritan. Certainly, tiscannot be considered an act of ne'li'ence, let alone rec)lessness.

SABENA BELGIAN WORLD AIRLINES VS, CA"-- #C/A 28

Te carrier refused to accept liability on te 'round tat te loss of te lu''a'ewas due to te passen'er>s contributory ne'li'ence by failin' to declare te valuables andnot eedin' te warnin' to all passen'ers not to place valuable in teir lu''a'e, and not

retrievin' er undeclared ave valuable lu''a'e at te Brussels Airport since er fli'tfrom Brussels to Ganila would still ave to be confirmed. Te #C eld tat te airlinecompany is liable. Te doctrine of pro%imate cause as its defense cannot in tis particular se<uence, unbro)en by any efficient intervenin' cause, produces injury and witout teresult would not ave occurred.

+t remains undisputed tat te passen'er>s lu''a'e was lost in te custody of teairline company. Te facts sowed tat wen te lu''a'e was first reported missin', itwas subse<uently company. Te facts sowed tat wen te lu''a'e was first reportedmissin', it was subse<uently found and a'ain lost in te custody of te airline company.Te loss of said lu''a'e not only once but twice underscores te wanton companyforeclosed watever ri't it mi't ave ad to te possible limitation of liabilities

enjoyed by international air carriers under te 4arsaw convention.

Contributory ;e'li'ence of assen'ers – is 'overned by Art. 1:" wic provides tat it does not bar recovery dama'es for a passen'ers deat or injury if te pro%imate tereof is te ne'li'ence of te common carrier, but te amount of dama'esall be e<uitably reduced (As)ed in te 1982 BA/!

WARSAW CONVENTION

4it respect to international transportation te 4arsaw Convention may apply. 4at

ten is te 4arsaw Convention – te complete title of 4arsaw Convention is 4arsawConvention for =nification of Certain /ules /elatin' to +nternational Carria'e by Air. +t aste force and effect of law in te ilippines, bein' a treaty commitment assumed by teilippine 'overnment as eld in C% P*;* Ar7" L%3 /3 CA "19 #C/A -" andS!%$" III /3 N$r%7"% Or!% Ar5!" "1 #C/A "- (1992 Bar!.

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+n te case of PAL /3 CA "-: 22 and N$r%7"% Ar5!" /3 CA "80 #C/A 08owever, it was ruled tat te 4A/#A4 convention does not operate as an e%clusiveenumeration of te instances for declarin' a carrier liable for breac of contract of carria'e or as an absolute limit of te e%tends of te liability. *ven te 4C declares te carrier liable for dama'es in te said cases and under certain conditions.

CASE

NORTHWEST VS3 CA"80 #C/A 08

A certain Torres too) ;ortwest Airline fli't from Cica'o to Ganila and before boardin' e presented for inspection two identical lu''a'e, one of wic contained firearmse purcased for te ilippine #enate. =pon arrival in Ganila, Torres was not able to claimte ba''a'e containin' te firearms as it was recalled by ;ortwest for =# Customsverification. Te ;4 personnel in To)yo were te place ad a topFover just 'uessed wic ba''a'e contained te firearms so Torres sued for dama'es after ;4 ar'ued tat 4C and te

contract of carria'e limited its liability to =#R9.: pound, or a total of R0 as te bo%contained : pounds. Te court ruled tat ;4>s liability only to tose cases were te causeof te deat or injury to person, or attended by any willful misconduct. Bad fait,rec)lessness, or oterwise improper conduct on te part of any official or employee for wicte carrier is responsible, and tere is re'ulate or e%lude liability for oter breaces of contract by te carrier.

TWO CATEGORIES OF INTERNATIONAL TRANSPORTATION BY AIR

=nder te 4C, tere are two ("! cate'ories of international transportation by air towit5

1. Tat were te place of departure and te place of destination are situated witin teterritories of two i' contractin' parties (tose wo are si'natories to te 4C andtose wic subse<uently adere to it! re'ardless of weter or not tere be a brea) inte transportation or a transsipment6 and

". Tat were te place of departure and place of destination are witin te territory of asin'le contractin' party if tere is an a'reed stoppin' place witin te territory subjectof te soverei'nty, mandate or autority of anoter power, even tou' te power isnot a party to te convention (M# /3 CA ":- #C/A "8!.

SANTOS III /3 NOA"1 #C/A "-

I""- 4ere sould an action for violation of a contact of international transportation byair be brou'tK

H5 Article "8 (1! of te 4C provides tat an action for dama'e must be brou't atte option of te plaintiff,

1. +n te territory of one of te DC, eiter before te court of te domicide of te

carrier or of is principal of business6 or ". 4ere e as a place of business trou' wic te contact as been made, or2. Before te court at te place of destination.

+n tis case, #antos +++ purcased a round trip tic)et from ;4 in #an &rancisco=#A for is fi't from #& to Ganila via To)yo and bac) #&, ;4 is a forei'n corporationwit principal office in Ginnesota, =#A and licensed to do business in te ilippines. Te

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date bac) to #& was open. 3espite previous confirmation and reFconfirmation, #antos +++was informed tat e ad no reservations for is fli't from To)yo to Ganila and ad to bewaitFlisted. #o upon arrival in Ganila, #antos sued ;4 in Ga)ati. ;4 moved to dismisste complaint for lac) of jurisdiction based on Article "8 (1! of te 4C contendin' tat teilippines was not its domicile, nor its principal place of business, neiter was te tic)et of #antos issued in te ilippine s nor was it is ultimate destination as Ganila sould only

be considered as an a'reed stoppin' place. (e%plain wy based on facts!. Te courtdismissed te case and furter eld tat a citi?en does not necessarily ave te ri't to suein is own courts simply because te defendant as a place of business in is country. Teri't is limited by te provisions of te 4C.

MAPA V3 CA":- #C/A "8

Gapa purcased from T4A " airline tic)ets in Ban')o), Tailand for Los An'elesF ;ew Eor)FBoston #t. Louis –Cica'o, all of te =#A. Te domicide carrier T4A wasansas City, Gissouri =#A, were its principal place of business was li)ewise located.Te place of business of T4O were te contract was made was in Ban')o), Tailand.Te destination was Cica'o, =#A. Te Gapas left Ganila on board AL for LA, tey leftcec)ed in : pieces of lu''a'e>s at te T4A counter at te H& airport but failed to boardte plane because tey went to te wron' 'ate. Tey were owever, allowed to ta)e a later T4A plane to Boston wic was delayed because of a tunderstorm. =pon arrival atBoston, tey were able to retrieve only 2 of delayed because of a tunderstorm. =ponarrival at Boston, tey were able to retrieve only 2 of te : lu''a'e>s wic loss wasimmediately reported to T4A wit a total value of R", -. as constitutin' fullsatisfaction of teir claim wic te Gapas accepted as partial payment for te actual lossof teir ba''a'e>s. tereafter, Gapa filed a case a'ainst T4A in te ilippines and asimilar to te case of #antos +++, T4A moved to dismiss for lac) of jurisdiction based on#ection "8 (1! of te 4C contendin' tat te complaint sould ave been brou't eiter inBan')o) were te contract was entered into, or in Boston wic was te place of

destination or in ansas City wic was te carrier>s domicile and principal place of business. Te Gapa>s claimed tat te 4C was not applicable because te contract is not aninternational transportation as contemplated under te provisions of te 4C. Te courtdismissed te case for lac) of jurisdiction tat was reversed by te #C.

Te #C ruled tat te 4C was not applicable because te contracts did not involvean international transportation based on te two cate'ories (read cate'ories!, Te T4Atic)etsissued to te plaintiffs in Ban')o), Tailand, sow tat teir itinerary was LAF;EFBO#TO;F#T. LO=+#FCD+CA$O. Clearly, te place of departure was LA and tedestination Cica'o are bot witin te territory of te =nited #tates, or sin'le contractin' party and tere was not a'reed stoppin' place witin or under anoter soverei'nty or power neiter can te transaction come witin te purview of te first cate'ory of international

transportation.

2ALAMEA V CA""8 #C/A "2

+t was ruled tat even were overboo)in' of passen'ers is allowed as commercial practice, te airline company would still be <uality of bad fait and still be liable for dama'es if it did not inform te passen'ers tat it could breac te contract of carria'eeven tey were confirmer passen'er.

LFTHANSA GERMAN AIRLINES V CA"28 #C/A "9

Te airline company wic issued a confirmed tic)et to a passen'er coverin' a fiveFle'trip aboard different airlines is te principal airline company wic can be eld liable for dama'es occasioned by te bumpin' off by one of te airlines contracted to carry im to a particular desi'nation of te - le' trip.

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PAL V CA"-- #C/A 08

Te #C eld tat wile te 4arsaw Convention as te force and effect of law inte ilippines, it does not operate as an e%clusive enumeration of te e%tent of liability nor does it preclude te operation of te civil code or oter pertinent laws.

' ABIT SYSTEM

+n te law on transportation we ave wat we call )abit system. +n te case of A85r$ L0 ! E"0%$ G-!!8! /3 CA & D$!%$ H3 G$!K5" , Hanuary 1, "",te court defined te )abit system as an arran'ement wereby a person wo as been 'ranteda certificate of public convenience allows oter persons wo own motor veicles to operatetem under is license, sometimes for a free or percenta'e of te earnin's. Altou' te parties to suc an a'reement are not outri't penali?ed by law , te )abit system is invariablyreco'ni?ed as bein' contrary to public and terefore void and ine%istent under Art. 109 of

te civil code. +n tis case te #C e%plained tat one of te primary reason for te 'rantaccidents caused to te ridin' public may be duly compensated. Te )abit system rendersillusory suc purpose and worse, may still be availed of by te 'rantee to escape liabilitycaused by a ne'li'ence use of a veicle owned by anoter and operated under is license. +f te re'istered owner is allowed to escape liability by provin' wo te supposed owner of teveicle is, it would be easy for im to transfer te subject veicle to anoter wo possesses no property wit wic to respond financially for te dama'e done. Tus for te safety of passen'ers and te public wo may ave been wron'ed and deceived trou' te )abitsystem, te re'istered owner of te veicle is not allowed to prove and deceived trou' te)abit system, te re'istered owner of te veicle is not allowed to prove tat anoter personas become te owner so tat e may tereby relieved of responsibility.

&or e%ample, a person wit certificate of public convenience for - jeepneys as only 0units. A friend attaces is jeepney to te certificate older. +n case of injury to passen'ers of a bus a jeepney so attaced, te rule is tat te person in wose name te CC was issued iste unless tey are considered in pari delicto in wic case, tere is no ri't of recovery aseld in L% E!%r#r"" /3 IAC 1"9 #C/A :9 and B!*%$ /3 IC 18: #C/A -0: (199!.+n te case of first M5! 5"!+ ! ;!!* C$r#3 /3 CA "9 #C/A (199!, te #Cruled tat re'ardless of wo is te actual owner of a motor veicle, te re'istered, tere'istered owner is te operator of te same wit respect tot e public and 2rd persons, and ssuc directly and primarily responsible for te conse<uences of its operation. Le'ally, teownerMoperator of record te employer of te driver, te actual operator an employer bein'

considered as is a'ent. Altou' te re'istered owner is always liable, te operator can beeld solidarily liable wit te owner

LIM AND GNNABAN VS3 CA$./. ;O. 1"-81:. Hanuary 1, ""

4en a passen'er jeepney covered by a certificate of public convenience is soldto anoter wo continues to operate it under te same certificate of public convenienceunder te so called )abit system, and in te course tereof te veicle meets an accidentstrou' te fault of anoter veicle, may te new owner sue for dama'es a'ainst teerrin' veicleK Oterwise stated, does te new owner ave any le'al personality to brin'

te action, or is e te real party in interest in te suit, despite te fact tat e is not ere'istered owner under te certificate of public convenienceK

Ees. +n te early case of DK$! /3 O*%/$ te Court e%plained tat one of te primary factors considered in te 'rantin' of a certificate of public convenience for te business of public transportation is te financial capacity of te older of te licensees, sotat liabilities arisin' from accidents may be duly compensated. Te )abit system renders

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illusory suc purpose and, worse, may still be availed of by te 'rantee to escape civilliability caused by ne'li'ent use of a veicle owned by anoter and operated under islicense. +f a re'istered owner is allowed to escape liability by provin' te supposedowner of te veicles it, it would be easy for im to transfer te subject veicle to anoter wo possesses no property wit wic to respond financially for te dama'e done.Tus, for te safety of passen'ers and te public wo may ave been wron'ed and

deceived trou' te baneful )abit suytem, te re'istered owner of te veicle is notallowed to prove tat anoter pwrson as become te owner so tat e may be terebyrelived of responsibility. #ubse<uent cases affirm suc basic doctrine.

+t would seem ten tat te trust of te law in enjoinin' te )abit system is notso muc as to penali?e te parties but to identify te person upon wom responsibilitymay be fi%ed in case of an accident wit te end view of protectin' te ridin' public. Te policy terefore loss its force if te public lar'e is not deceived, muc less involved.

+n te present case it is at once apparent tat te evil sou't to be prevented inenjoinin' te )abit system does not e%ist. &irst, neiter of te parties to te pernicious)abit system is bein' eld liable for dama'es. #econd, te case arose from te ne'li'ence

of anoter veicle in usin' te public road to wom no representation, or misrepresentation, as re'ards te ownersip and operation of te passen'ers jeepneywere in estoppel for leadin' te public to believe tat te jeepney belon'ed to tere'istered owner. Tird, te ridin' public was not botered nor inconvenience at te veryleast by te ille'al arran'ement. On te contrary, it was te new owner imself wo ad been wron'ed and was see)in' compensation for te dama'e done to im. Certainly, itwould be te ei't of ine<uity to deny im is ri't. Tus, te new owner as te ri'tto proceed a'ainst petitioners for te dama'e caused on is passen'ers jeepneys as wellas on is business.

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CDAT*/ +IDAMAGES RECOVERABLE FROM COMMON CARRIERS

A3 EXTENT OF RECOVERY

Te e%tent of recovery in case of contractual breac is e%pressly provided for inArticle ""1 of te ;ew Civil Code5

Art. ""1. +n contracts and <uasiFcontracts, te dama'es for wic te obli'or woacted in 'ood fait is liable sall be tose tat are te natural and probable conse<uences of te breac of te obli'ation, and wic te parties ave foreseen or could ave reasonablyforeseen at te time te obli'ation was constituted.

+n case of fraud, bad fait, malice or wanton attitude, te obli'or sall be responsible

for all dama'es wic may be reasonably attributed to te nonFperformance of te obli'ation.(11:a!

Applyin' te aboveF<uoted provisions to a contract of carria'e, te carrier in 'oodfait is liable only to pay for te dama'es tat are te natural and probable conse<uences of te breac of te obli'ation, and wic te parties ave foreseen or could ave reasonablyforeseen at te time te obli'ation was constituted. Dowever, if te carrier is in bad fait or was 'uilty of 'ross ne'li'ence te said carrier liable for all dama'es, weter te same can beforeseen or not.

+t sould be noted, owever, tat te carrier wo may be compelled to pay dama'esfor te loss or dama'es to te 'oods or passen'ers as te ri't of recourse a'ainst teemployee wo committed te ne'li'ent willful or fraudulent act.

Art. 2197. Damages may be:

(1) Actual or compensatory;

(2) Moral;

(3) Nominal;

(4) Temperate or moderate;

(5) Liquidated; or

(6) Exemplary or corrective.

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation

only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred

to as actual or compensatory damages.

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three

thousand pesos (at present: Php 50,000), even though there may have been mitigating

circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and

the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be

assessed and awarded by the court, unless the deceased on account of permanent physical

disability not caused by the defendant, had no earning capacity at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of Article 291,

the recipient who is not an heir called to the decedent's inheritance by the law of testate or

intestate succession, may demand support from the person causing the death, for a period

not exceeding five years, the exact duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may

demand moral damages for mental anguish by reason of the death of the deceased.

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B3 'INDS OF DAMAGES

Article "19: of te ;ew Civil Code provides tat dama'es may be5

(1! Actual Compensatory6 ("! Goral6 (2! ;ominal6 (0! Temperate moderate6 (-!

Li<uidated6 and (! *%emplary or Corrective. Article ""1 provides tat no proof of pecuniary loss is necessary in order tat moral, nominal, temperate li<uidatedor e%emplary dama'es, may be adjudicated. Te assessment of suc dama'es,e%cept li<uidated ones, is left to te discretion of te court, accordin' to tecircumstances eac case. Dowever, proof of pecuniary loss in necessary if actualor compensatory dama'es is bein' claimed.

ACTUAL O CO!P"N#ATO$ %A!A&"#

Article "199 of te Civil Code provides tat e%cept as provided by law or bystipulation, one is entitled to an ade<uate compensation only for suc pecuniary loss suffered

by im as e as duly proved. #uc compensation is referred to as actual or compensatorydama'es. Article "" provides tat indemnification for dama'es sall compreend not onlyte value of te loss suffered, but also tat of te profits wic te obli'ee failed to obtain.

Tere are two ("! )inds of actual or compensatory dama'es5 (1! te loss of wat a person already possess (daJo emer'ente!, and ("! te failure to receive as a benefit tat wouldave pertained to im (lucro cesante!. Article ""- of te Civil Code provides5

Art. ""-. 3ama'es may be recovered5

(1! &or loss or impairment of earnin' capacity in cases of temporary or permanent personal injury6

("! &or injury to te plaintiff>s business standin' or commercial credit.

3ama'es cannot be presumed and courts, in 'ivin' an award must point of a specificfacts tat could afford a basis for measurin' watever compensatory of dama'es are borne.Te burden of proof rests on te plaintiff wen us actual dama'es a'ainst te carrier

+n te case of 'ood, te plaintiff is entitled to teir value at te time of destruction. ;ormally, te award is te sum of money wic plaintiff would ave to pay in te mar)et for identical or essentially similar 'ood, plus in proper cases, dama'es for te loss of use durin'te period before replacement. +n case of profit earnin' cattels, wat as to be assessed is tevalue of te cattel to its owner as a 'oin' concern at te time and place of te loss.

On te oter and, personal injury and even deat entitles te claimant to all medicale%penses as well as oter reasonable e%penses tat e incurred to treat is or relative>sinjuries. Gedical e%penses may even include te amount spent for te plastic sur'ery of te plaintiff or any procedure to restore te part of te body tat was affected.

+n case of deat, te plaintiff is entitled to te amount tat e spent durin' te wa)eand funeral of te deceased. Dowever, it as been ruled tat e%penses after te burial are notcompensable. Te eirs to te 9t day, 0t day and 1st year deat anniversaries. Dowever, teeirs of te deceased are entitled to te dama'es specified in Article "" of te Civil Code.

Te amount of fi%ed dama'es as contemplated in te aboveF<uoted statute ad beenrepeatedly increased by te Court and is now -,.. By e%press provision of Article1:0 of te Civil Code, te above <uoted Article "" applies to breac of contract of carria'e.

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(1) L$"" $; r!!+ *#*%

Te amount of loss of earnin' capacity tat sould be awarded in accordance wit para'rap (1! of Article "" of te Civil Code is to be determined on te basis of tefollowin' formula.

;et *arnin' Capacity Y Life *%pectancy % ($ross Annual +ncome Less ;ecessaryLivin' *%penses!

Te first factor, i.e., life e%pectancy is computed by applyin' te formula (" M 2 % 8 – a'e at deat! adopted in te American *%pectancy Table of Gortality or te ActuarialCombined *%perience Table of Gortality.

4it respect to net earnin's, te proper computation sould be based on te 'rossincome of te victim minus te necessary and incidental livin' e%penses wic te victimwould ave incurred if e were alive.

Te amount of te livin' e%penses must also be establised to determine te netearnin'. Dowever, te #upreme Court as consistently ruled tat, te amount tereof is fi%edat fifty percent (-! of te 'ross income in te absence of proof of te amount of livin'e%penses to be deducted from te 'ross income.

+t sould be noted tat te aboveFstated rules on loss of earnin's capacity applies wente breac of te carrier resulted in te plaintiff>s permanent incapacity.

(=) A%%$r!" F"3

;o attorney> s fees can be awarded unless te case fallsFwitin one of te eleven casesspecified in Article ""8 of te Civil Code. Article ""8 provides5

Art. ""8. +n te absence of stipulation, attorney>s fees and e%penses of liti'ation,oter tan judicial costs, cannot be recovered, e%cept5

(1! 4en e%emplary dama'es are awarded6

("! 4en te defendant>s act or omission as compelled te plaintiff to liti'ate tird

persons or to incur e%penses to protect is interest6

(2! +n criminal cases of malicious prosecution a'ainst te plaintiff6

(0! +n case of a clearly unfounded civil action or proceedin' a'ainst te plaintiff6

(-! 4ere te defendant acted in 'ross and evident bad fait in refusin' to satisfy te

plaintiff>s plainly valid, just and demandable claim6

(! +n actions for le'al support

(:! +n actions for te recovery of wa'es of ouseold elpers laborers and s)illed

wor)ers6

(8! +n actions for indemnity under wor)men>s compensation and employer>s liability

laws6

(9! +n a separate civil action to recover civil liability arisin' from a crime6

(1! 4en at least double judicial costs are awarded6

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(11! +n any oter case were te court deems it just and e<uitable tat attorney>s

fees and e%penses of liti'ations sould be recovered.

+n all cases te attorneys fees may be awarded in an action for breac of contract of

carria'e under para'raps 1, ", 0, -, 1, and 11 of Article ""8.

(<) I!%r"%"

Te rules on te award of interest on dama'es was e%plained in Crismina $arments,+nc., vs. Court of Appeals by te #upreme Court.

% % % +n /eformina v. Tomol, Hr., tis Court stressed tat te interest rate under CBCircular ;o. 01 applies to (1! loans6 ("! forbearance of money, 'oods or credits6 or (2! a jud'ment involvin' a loan or forbearance of money, 'ood or credits. Cases beyond te scopeof te laid circular are 'overned by Article ""9 of te Civil Code, wic considers interest a

form of +ndemnity for te delay in te performance of an obli'ator.

+n Castern #ippin' Lines, +nc., v. Court of Appeals 'ave te 'uidelines for teapplication of te proper interest rates5

+. 4en an obli'ation, re'ardless of it source, i.e., law, contracts <uasiFcontract,delicts or <uasiFdelicts is te contravenor can be eld for dama'es. Te provisions under te@I+++ on 3ama'es of te Civil Code 'overn in determinin' te measure of recoverabledama'es.

++. 4it re'ard particularly award in interest in te concept of actual andcompensatory dama'es, te rate of interest, as well as te accrual tereof, is imposed, asfollows5

1. 4en te obli'ation is breaced, and it consists in te payment of a sum ofmoney, i.e., a loan or forbearance of money, te interest due sould be tat wic mayave been stipulated in writin'. &urtermore, te interest due sall itself earn le'alinterest from te time it is judicial demanded. +n te absence of stipulation, te rate of interest sall be 1" per annum to be computed from default, i.e., from judicial or e%traFjudicial demand under and subject to te provisions of Article 119 of te CivilCode.

". 4en an obli'ation, not constitutin' a loan or forbearance of money, is breaced, aninterest on te amount of dama'es awarded may be imposed at te discretion of tecourt at te rate of per annum. ;o interest, owever, sall be adjud'ed onunli<uidated claims or dama'es e%cept wen or until demand can be establised witreasonable certainty. Accordin'ly, were te demand is establised wit reasonablecertainty, te interest sall be'in to run from te time te claim is made judicially or e%traFjudicially (Art. 119, Civil Code! but wen suc certainty cannot be soreasonably establised at te time te demand is made, te interest sall be'in to runonly from te date te jud'ment of te court is made (at wic time te <uantificationof dama'es may be deemed to ave been reasonably ascertained!. Te actual base for te computation of le'al interest sall, in any case, be Q te amount finally adjusted.

2. 4en te jud'ment of te court awardin' a sum of money becomes final ande%ecutory, te rate of le'al interest, weter te case falls under para'rap 1 or para'rap " above, sall be 1" per annum from suc finality until its satisfaction,tis interim period bein' deemed to be by ten an e<uivalent to a forbearance of credit.

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MORAL DAMAGES

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,

besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

Though incapable of pecuniary computation, moral damages may be recovered if they are theproximate result of the defendant's wrongful act for omission.

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court

should find that, under the circumstances, such damages are justly due. The same rule applies to

breaches of contract where the defendant acted fraudulently or in bad faith.

!OAL %A!A&"#

Te Civil Code provides tat moral dama'es includes pysical sufferin', mental an'uis,fri't, serious an%iety, besmirced reputation, wounded feelin's, moral soc), socialumiliation and similar injury. Tou' incapable of pecuniary computation, moral dama'esmay be recovered if tey are te pro%imate result of te defendants wron'ful act for omission.Te award of moral dama'es is desi'ned to compensate te claimants for actual injury and isnot mean to enric te complainant at te e%penses of te defendant. Goral dama'es are notawarded to punis te defendant but to compensate te victim. Te Civil Code allows teaward of moral dama'es not only in favor of te injured passen'ers imself but also to iseirs in te event of is deat.

Articles ""19 and """ of te Civil Code enumerate te cases wen moraldama'es may be awarded by te courts5

Art. ""1. Goral dama'es may be recovered in te followin' and analo'ouscases5

(1! A criminal offense resultin' in pysical injuries6("! uasiFdelicts causin' pysical injuries(2! #eduction, abduction, rape or oter lascivious acts6(0! Adultery or concubina'e6(-! +lle'al or arbitrary detention or arrest6(! +lle'al searc6(:! Libel, slander or any oter form of defamation6(8! Galicious prosecution6(9! Acts mentioned in Article 296(1! Acts and actions referred to in Articles "1, ", ":, "8, "9, 2, 2", 20 and2-

Te parents of te female seduced, abducted, raped, or abused referred to in ;o. 2 of tis article, may also recover moral dama'es.

Te spouse, descendants, ascendants, and broters and sisters may brin' te actionmentioned in ;o. 9 of tis article, in te order named.

Art. """. 4illful injury to property may be a le'al 'round for awardin' moraldama'es if te court sould final tat, under te circumstances, suc dama'es are justly due.

Te same rule applies to breaces of contract were te defendant acted fraudulently or in badfait.

$enerally, no moral dama'es may be awarded were te breac of contract is notmalicious. Te presence of contractual ne'li'ence is insufficient for suc award. Dowever,moral dama'es may be awarded if te contractual ne'li'ence is considered 'ross ne'li'ence.

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Tus, te #upreme Court e%plained in *%pert Travel 7 Tours, +nc., v. Te Don. Court of Appeals and /icardo Lo.

% % % An award of moral dama'es would re<uire certain condition to be met, to wit5(1! &irst, tere must be an injury, weter pysical, mental or psycolo'ical, clearly sustained

by te claimant6 ("! second, tere must be a culpable act or omission factually establised6 (2!tird, te wron'ful act or omission of te defendant is te pro%imate cause of te injurysustainable by te claimant6 and (0! fourt, te award of dama'es is predicated on any of tecases stated in Article ""19. =nder te provisions of tis law, in culpa contractual or breac of contract, moral dama'es may be recovered wen te defendant acted in bad fait or was'uilty of 'ross ne'li'ence (amountin' to bad fait! or in wanton disre'ard of is contractualobli'ation, and e%ceptionally, wen te act of breac of contract itself is constitutive of tortresultin' in pysical injuries. By special rule in Article 1:0, in relation to Article "", of teCivil Code, moral dama'es may also be awarded in case te deat of a passen'er results froma breac of carria'e % % %

Tere are factors specified by law and establised by jurisprudence tat could affect by te amount to be recovered. Tese include5 (1! te e%tent of umiliation may alsodetermine te amount of moral dama'es tat can be awarded. ("! te e%tent of pain andsufferin' li)ewise determine te award6 (2! official, political social and financial standin' of te offended party and te business and financial position of te offender affect te amount of dama'es6 (0! te a'e of te claimant.

NOMINAL DAMAGES

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been

violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of

indemnifying the plaintiff for any loss suffered by him.

NO!'NAL %A!A&"#

Te Code Commission e%plained tat tere are instances wen te vindication or reco'nition of te plaintiff>s ri't is of te utmost important to im, as in te case of trespassupon real property. Te Commission observed tat in tose instances , te awardin' of nominal dama'es does not run counter to te ma%im, 3minimis non curate le%. Te pertinent provisions of te Civil Code on nominal dama'es are as follows5

Art. """1. ;ominal dama'es are adjudicated in order tat a ri't of te plaintiff,wic as been violated or invaded by te defendant, may be vindicated or reco'ni?ed, andnot for te purpose of indemnifyin' te plaintiff for any loss suffered by im.

Art. """". Te court may award nominal dama'es in every obli'ation arisin' from anysource enumerated in Article 11-:, or in every case were property ri't as been invaded.

Art """2. Te adjudication of nominal dama'es sall preclude furter contest upon teri't involved and all necessary <uestions, as between te parties to te suit, or teir respective eirs and assi'ns.

Te assessment of nominal dama'es is left to te discretion of te court accordin' tote circumstances of te case. Te award of nominal dama'es is also justified in te absenceof competent proof of te specific amounts of actual dama'es suffered. &or instances, nominaldama'es were also awarded in Hapan Airlines vs. Court of Appeals were te plaintiffs suedte airline because te latter failed to transport tem to Ganila. Te #upreme Courtac)nowled'ed tat te Gt. inatubo eruption prevented HA+, from proceedin' to Ganila onscedule. Dowever, te award was justified because HAL failed to ma)e necessary

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arran'ement to transport te plaintiffs on te first available connectin' fli't to Ganila. +teven declassified te plaintiff from transit passen'ers to new passen'ers as a result of wic plaintiffs were obli'ated to ma)e te necessary arran'ements temselves. Dowever,only nominal dama'es were awarded in te absence of proof of actual dama'es. #imilarly,nominal dama'es were awarded in ;ortwest Airline, +nc., v. ;icolas L. Cuenca in favor of te

plaintiff wo was te older of a first class tic)et from Ganila to To)yu wo was rudelycompelled by an a'ent of te airlines to move to te tourist class notwitstandin' te a'ent>s)nowled'e tat te plaintiff was a Commissioner of ublic Di'ways of te /epublic of teilippines wo was travelin' in is officials capacity as a dele'ate of te country to aconference in To)yo. Tere was also no proof of actual dama'es in te said case.

TEMPERATE DAMAGES

Art. 2224. Temperate or moderate damages, which are more than nominal but less than

compensatory damages, may be recovered when the court finds that some pecuniary loss has been

suffered but its amount can not, from the nature of the case, be provided with certainty.

T"!P"AT" O !O%"AT" %A!A&"#

Te Civil Code includes provisions allowin' temperate and moderate dama'es.Articles """0 and """- state5

Art. """0. Temperate or moderate dama'es, wic are more tan nominal but lesstan compensatory dama'es, may be recovered wen te court finds tat some pecuniary lossas been suffered but its amount can not, from te nature of care, be provided wit certainty.

Art. """-. Temperate dama'es must be reasonable under te circumstances

Te Code Commission justified te adoption of te aboveF<uoted provisions by citin'te law in te =nited #tates5

+n come #tates of te American =nion, temperate dama'es are allowed. Tere arecases were from te nature of te case, definite proof of pecuniary loss cannot be offered,altou' te court is convinced tat tere as been suc loss. &or instance, injury to one>scommercial credit or to te 'oodwill of a business firm is often ard to sow wit certainty interms of money. #ould dama'es be denied for tat reasonK Te jud'e sould be empoweredto calculate moderate dama'es in suc cases, rater tat te plaintiff sould suffer, witoutredress, from te defendant>s wron'ful act.

LI?IDATED DAMAGES

Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case

of breach thereof.

L'(U'%AT'ON %A!A&"#

Li<uidated dama'es are tose a'reed upon by te parties to a contract to be paid incase of breac tereof. Ordinarily, te court cannot can'e te amount of li<uidated dama'esa'reed upon by te parties. Dowever, Article """: of te Civil Code provides tat li<uidateddama'es, weter intended as an indemnity or a penalty, sall be e<uitably reduced if tey areini<uitous or unconciousnable. +n addition """8 provides tat wen te breac of te contract

committed by te defendant is not te one contemplated by te parties in a'reein' upon teli<uidated dama'es, te law sall determine te measure of dama'es, and not te stipulation.EXEMPLARY DAMAGES

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the

public good, in addition to the moral, temperate, liquidated or compensatory damages. ________________________________________________________________________________________________________________

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")"!PLA$ O CO"CT'*" %A!A&"#

Te re<uisites for te award of e%emplary dama'es are as follows.

1. Tey may be imposed by way of e%ample in addition tocompensatory dama'es, and only after te claimant>s ri't to temas been establised6

". Tey cannot be recovered as a matter of ri't, teir determinationdependin' upon te amount of compensatory dama'es tat mayawarded to te claimant6

2. Te act must be accompanied by bad fait or done in wanton,fraudulent, oppressive or malevolent manner.

Te award of e%emplary dama'es is breac of contract of carria'e is also subject tote followin' Civil Code provisions.

Art. ""2". +n contracts and <uasiFcontracts, te court may award e%emplary dama'es if te defendant acted in a wanton, fraudulent, rec)less, oppressive, or malevolent manner.

Art. ""22. *%emplary dama'es cannot be recovered as a matter of ri't6 te court willdecide weter or not tey sould be adjusted.

Art. ""20. 4ile te amount of te e%emplary dama'es need not be proved, te plaintiff must sow tat e is entitled to moral, temperate or compensator dama'es before tecourt may consider te <uestion of weter or not e%emplary dama'es sould be awarded. +ncase li<uidated dama'es ave been a'reed upon, altou' no proof of loss is necessary inorder tat suc li<uidated dama'es may be recovered, neverteless, before te court mayconsider te <uestion of 'rantin' e%emplary in addition to te li<uidated dama'es, te plaintiff must sow tat e would be entitled to moral, temperate or compensatory dama'eswere it not for te stipulation for li<uidated dama'es.

Art. ""2-. A stipulation wereby e%emplary dama'es to deter te airlines from tecommission of acts of discourtesy to passen'ers. +n anoter case, te #upreme #ourt not onlysustained te award of e%emplary dama'es of te lower court but li)ewise increased te samewere it was establised tat te 'ross ne'li'ence of te carrier>s employees caused tesin)in' of a vessel. Te #upreme Court too) judicial notice of te te dreadful re'ularitywit wic 'rievous maritime disaster occur in ilippine waters wit massive loss of life.Te bul) of te population is too poor to afford domestic air transportation. #o itnotwitstandin' te fre<uent sin)in' of passen'ers vessels in our waters, crowds of peoplecontinue to travel at sea. Dence, te #upreme Court uses te instruments 'iven to it by telaw for securin' te ends of te law and public policy. One of tose instruments is teinstitutin' of e%emplary dama'es6 one of tose ends, of special importance in an arcpela'icstate li)e te ilippines, is te safe and reliable carria'e of people and 'oods by sea.

DAMAGES R ECOVERABLE (SB4ECT TO LIMITATION OF LIABILITY CLASE)

3ama'es tat may be awarded a'ainst a common carrier sall be in accordance witte Civil Code provisions on 3ama'es (Article 1:0! wic may be G*;TAL, moral,e%emplary, nominal temperature, actual or compensatory and li<uidated.

IN CASES OF DEATH

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4en deat occurs, te followin' items of dama'es may be recovered5

1. +ndemnity for te deat of te victim6". An indemnity for loss of earnin' capacity of te deceased52. Goral dama'es6

0. Attorney>s fees and e%penses of liti'ation6 and-. +nterest in proper cases (Br!" /3 P$#5 1=@ SCRA 6!

ATTORNEYS FEES AND LITIGATION EXPENSES

=nder Article ""8, in te absence of stipulations, attorney>s fees and e%penses of liti'ation, oter tan judicial costs, cannot be recovered, e%cept5

1. 4en e%emplary dama'es are awarded6". 4en te defendant>s act or omission compelled te plaintiff to liti'ate wit 2rd

persons or to incure e%penses to protect is interest62. 4en te defendant acted in 'ross or evident bad fait in refusin' to satisfy te

paintiff>s plainly valid, just amd demandable claim60. +n a separate civil action to recover civil liability arisin' from crimes6-. 4en at least double judicial costs are awarded5. +n any oter case were te court deems it just and e<uitable tat attorney>s

fees and e%penses of liti'ation sould be recovered.

+n all cases, te attorney>s fees and e%penses for liti'ation must be reasonable. 4ente award is considered reasonableK 3ependin' on te circumstances of eac case.

AMONT OF INDEMNITY & FACTORS TO BE CONSIDERED IN AWARDING IT

Ar%*5 ==6 applies in case of deat caused by breac of contract by te commoncarrier (Ar%*5 16>! wic fi%es te minimum indemnity for deat at 2, tat te courtsmay increase accordin' to te circumstances. +n P# /3 F5$r" "2: #C/A -2, it fi%ed tedeat indemnity at -, .. +t is in fi%in' a 'reater amount of indemnity tat courts mayconsider te financial capacity of te cc, alon' wit suc oter factors as5

(1! Te life e%pectancy of te diseased or of te beneficiary, wicever is sorter,("! ecuniary loss to te plaintiff or beneficiary(2! Loss of support,(0! Loss of service6(-! Loss of society6(! Gental sufferin' of beneficiaries Pand(:! Gedical and funeral e%penses

DAVILA /3 PAL09 #C/A 09:

AL was eld liable for te deat of 3avila wen te plane cras because te pilot did not follow te route. 4en te Court 'ranted 3avila>s eirs compensatorydama'es te amount of , AL appealed. Te #C eld tat since 3avila was sownto be earnin' :, at te time of is deat and a life e%pectancy of "- more years, te#C increased te compensatory dama'es from , to 1:-, by multiplyin' tedeceased>s yearly income wit is life e%pectancy based on te mortality tables of life

insurance companies in te ilippines.

(a! M$r5 D0+" – as 'eneral rule, moral dama'es are not recoverable in dama'e actions predicated on a breac of contract of transportation in view of te provisions of Ar%*5 ==19! === $; % !7 */5 *$. Te said provisions limited te award of moral dama'es toand """ specifically provided for te dama'es tat are caused by contractual breac, but

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also because te definition of <uasiFdelict in Ar%*5 =1@ e%pressly e%cludes te cases weretere is a preFe%istin' contractual relation between te parties.

Goral dama'es may owever be recovered in an action for breac of contract in tefollowin' cases

i. 4ere te misap resulted in te deat of a passen'er (Ar%3 ==63 C/5 C$!ii. 4en te carrier was 'uilty of fraud or bad fait, even if deat did not result (Ar%3

===, C/5 C$ " 5 ! S8! B5+! W$r5 Ar5!" /3 CA 11 SCRA6=!

LOPE2 VS3 PANAM1 #C/A 021

Iice – resident Lope? wit is wife 7 cildren were transferees to te economyseats instead of te first class seats. Te Lope?es were awarded moral dama'es of 2, and attorney>s fees of 1-, . in view of te person awarded for te ars

Nulueta v. anAm 02 #C/A "9:, moral dama'es of -, was also awardes for tears treatment accorder by te employees of -, of anFAm by callin' im brown mon)ey +n AL v. Giano "0" #C/A "2-, te #C deleted te moral dama'es'ranted by te lower Court altou' tere was no evidence found tat AL>s actuationwas attended by bad fait.

SLPICIO LINES, I!*3 /3 CA"0 #C/A 2:

Tito Tabu<uilde and is dau'ter were passen'ers of te GMI 3oJa Garilyn tatsan) in #mar. Te dau'ter died and Tabu'uilde lost is belon'in'. A claim for dama'esincludin' ":, -8. for te lost belon'in's was filed wit te Court. Hud'ment wasrendered in favor of T, includin' for said lost belon'in'. Te #C reversed te award of actual dama'es and made te followin' pronouncements (1! 'enerally, te findin's of fact of te trial court are entitled to 'reat wei't and not disturbed e%cept for co'entreasons. One of te accepted reasons is wen te wei't and not disturbed e%cept for co'ent reasons. One of te accepted reasons is wen te evidence does not support tefindin's of fact. Corollary to tis is te rule tat actual6 compensatory dama'es, to berecovered, must be proved6 oterwise, if te proof is flimsy, no dama'es will beawarded. +n tis case te trail court merely mentioned te fact of te loss and te value of te contents of te pieces of ba''a'e witout startin' te evidence on wic it based itsfindin's. Tere was no sowin' tat te values of te items were based on te BM or was previously declared by T before e boarded te sip. Dence, tere can be no basis toaward actual dama'es in te amunt of ":, -8.

BRITISH AIRWAYS VS3 CA"8- #C/A 0-

Gatani purcase trou' is travel a'ent a plane tic)et to +ndia and purcased a tic)etfrom BA. #ince BA ad not direct fli'ts from Ganila to Bombay, e ad to ta)e a fli'tto Don')on' via AL and upon arrival + te D, too) te connectin' fli't to Bambayvia BA. Te ba''a'e>s tat G cec)ed wit AL in Ganila was owever lost. 3ama'eswas owever awarded but for purpose of empasis, te court ruled tat BA and al aremembers of te +nternational Air Transport Association werein member airlines arere'arded as a'ents of eac oter in te issuance of te tic)ets and oter matter pertainin'tot eir relationsip. Terefore. al was considered an a'ent BA. Te rule tat carria'e by plane altou' performed by successive carriers is re'arded an a'ent of BA. Te rule tatcarria'e by plane altou' performed by successive considered an a'ent of BA. Te ruletat carria'e by plane altou' performed by successive carriers is re'arded as a sin'lecontract and tat carrier issuin' te passen'er>s tic)et is considered te principal partyand te oter carrier merely subcontracts or a'ents are a settled issue. Terefore, if tea'ent or subcontractor was ne'li'ent in te performance of its functions, it sall be liable

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for te dama'es tat its principal may suffer by reasons of te ne'li'ent act. Te courtere ruled a'ainst BA but stated tat AL could be made liable to BA for te former>sne'li'ent acts.

TAN VS NORTHWEST AIRLINES2"0 #C/A "2

riscilla and Connie Tan boarded ;otwes Airlines fli't "9 in Cica'o, =#A bound for te ilippines, wit a stop over at 3etroit, =#A. =pon teir arrival at ;A+Aon Hune 1, 1990, petitioner and er companion found tat teir ba''a'e>s were missin'.Tey were informed tat teir ba''a'e>s and discovered tjat some of itd contents weredestroyed and soiled. Tey demanded from ;ortwest Airlines for te dama'es teysuffered, /espondent ;ortwest Airlines did not deny tat te ba''a'es of petitionerswere not loaded on ;ortwest fli't "9 because of te wiet and balance restrictions.Dowever, te ba''a'es were loaded in anoter ;ortwest Airlines fli't wic arrived inte evenin' of Hune ", 1990.

I""- 4eter or not respondent is liable for moral and e%emplary dama'es for willful

misconduct and breac of te contract of air carria'e.

H5 ;o.

/espondent was not 'uilty of willful misconduct. &or willful misconduct to e%ist,tere must be a sowin' tat te acts complained of were impelled by an intention toviolate te law, or were in persistent disre'ard of one>s ri'ts. +t must be evidence by afla'rantly or samefully wron' or improper conduct.

4ere in breacin' te contract of carria'e te defendant airline is not sown toave acted fraudulently or in bad fait, liability for dama'es is limited tot e natural and probable acted fraudulently or in bad fait, liability for dama'es is limited to te natural

and probable conse<uences of te breac of obli'ation, wic te parties ad foreseen or could ave reasonably foreseen. +n tat case, suc liability does not include moral ande%emplary dama'es.

SPOSES Y ENG CHO AND FRANCISCO TAO Y VS3 PAN AMERICANWORLD AIRWYAS, INC3

($./. ;o. 1"2-. Garc ":, "!

laintiff Eou *n' Co is te owner of Eoun' Dardware Co. and AcillesGar)etin'. +n connection wit (tis! business, e travels from time to time to Galaysia,Taipei and Don')on'. On Huly 1, 19:, plaintiffs bou't plane tic)ets from defendatCaludia Ta'unicar wo represented erself to be an a'ent of defendant Tourist 4orld#ervices, +nc. (T4#+!. Te destination(s! are Don')on', To)yo, #an &rancisco, =.#.A,for te amount of "-, . per computation of said defendant Caludia Ta'unicar (*%s. C 7 CF1!. Te purpose of tis trip is to 'o to &airfield Hersey =.#.A to buy two("!lines of infared system processin' te%tured plastic article.

A complaint for dama'es was filed by petitioners a'ainst private respondents anAmerican 4orld Airwyas, +nc. (an Am!, Tourist 4orld #ervices, +nc. (T4#+!, HulietaCanilao (Canilao! and Claudia Ta'unicar (Ta'unicar! for e%penses alle'edly incurredsuc as costs of tic)ets and otel accommodations wen petitioners were compelled tostay in Don)on' and ten in To)yo by reason of te nonFconfirmation of teir boo)in'wit anFAm.

Te petitioners are not entitled to dama'es. Tis meritles suit a'ainst an Am becomes more 'larin' wit petitioners inaction after tey were bumped of in To)yo. +f petitioners were of te onest belief tat an Am was responsible for te misfortunewic beset tem, tere is no evidence to sow tat tey lod'ed a protest wit an Am>sTo)yo office immediately after tey were refused passa'e for te fli't to #an &rancisco,or even upon teir arrival in Ganila.

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+t 'rinds a'ainst te 'rain of uman e%perience tat petitioners did not insist tattey be allowed to board, considerin' tat was ten doubly difficult to 'et seats becauseof te on'oin' ;ortwest Airlines stri)e. +t is also perple%in' tat petitioners acceptedwatever te To)yo office ad no to offer as an alternative. +ne%plicably too, no demandwas sent to respondents T4#+. ;or was a demand letter sent to respondent an Am. To

say te least, te motive of petitioners is suin' an Am is suspect.

+t is not sufficient to prove tat an Am did not allow petitioners to board to justify petitioners claim for dama'es. Gere refusal to accede to te passen'er>s wisesdoes not necessarily translate into dama'es in te absence of bad fait. Te settled rule istat te law presumes 'ood fait suc as tat any person wo see)s to be awardeddama'es due to acts of anoter as te burden of provin' tat te latter acted in bad faitor wit ill motive. +n te case at bar, we find te evidence presented by petitionersinsufficient to overcome te presumption of 'ood fait. Tey ave failed to sow anywanton, malevolent or rec)less misconduct imputable to 'ood fait. Tey ave failed tosow any wanton, malevolent or rec)less misconduct imputable to 'ood fait. Tey avefailed to sow any wanton, malevolent or rec)less misconduct imputable to respondent

an Am in its refusal to accommodate petitioners in its refusal to accommodate petitioners in its To)yoF#an &rancisco fli't an Am could not ave acted in bad fait because petitioners did not ave confirmed tic)ets and more importantly, tey were not inte passen'er manifest.

+n te case at bar, petitioners tic)et were on / status. Tey were notconfirmed passen'er and teir names were not listed in te passen'ers manifest. +n oter words, tis is not a case were an Am bound itself to transport petitioners and tereafter rene'ade on its obli'ation. Dence, respondents airline cannot be eld liable for dama'es.

PACIFIC AIRWAYS CORPORATION VS TONDA($./. ;O. 1280:8, ;ovember ", ""!

On Hanuary 11, 1991, plaintiff (/espondent! Hoa<uin Tonda, purcased fromdefendant acific Airways Corporation trou' its travel a'ent Ialderama Travel andTours, +nc. a pac)a'e tour for a party of nine consistin' of round trip airfares to, transfersto and from defendant corporations trou' its travel a'ent Ialderama Travel and Tours,+nc. a pac)a'e corporation>s airstrip at Caticlan, Galay, A)lan and accommodation and brea)fast at Boracay, Galay, A)lan Two receipts were issued wic te travel a'encyadvised would entitle te members of te receipts, plaintiffs, is wife, 2 )ids a nanny, two brotersFinFlaw, and stayed in Boracay up to Hanuary "1, 1991. +n te mornin' of Hanuary"1, 1991, plaintiff and party, lon' wit oter 'uests, left Boracay on board bancas provided tricycles tat loo) tem to defendant corporation>s airstrip at nearby Caticlan.

After plaintiff and is party arrived at te airsip and wile teir lu''a'es were

bein' unloaded from te tricycles, passen'ers informed tem tat tey sould wei'temselves. 4ile plaintiff>s wife Grs. Tonda was wei'in' erself, Gamen', 3efendantCorporation>s employee, unloadin' lu''a'e>s from te tricycles. laintif later as)ed iswife wat transpired inside te ut and se related wei't, and tat se replied by sayin' please wen tal) to me, tal) to me in a never manner. Later, as plaintiff and is partywere about to board te 19Fseater aircraft tat would carry 1 paasen'ers, defendantGamin' approaced Grs, Tonda and as)ed for teir tic)ets. Grs. Tonda obli'ed by'ivin' im te receipts issued by te travel a'ency, but defendant mamin' souted at er,tellin' er tat tose were not tic)ets wen tey left Ganila. laintiff ten butted in andtold Gamin'you don>t ave to tal) to my wife li)e tat. Gamin' wo seemed to be verynervous, pused plaintiff, tellin' im Eou don>t ave bulls (sie! do youK *mployee andalso one of te defendants erein, wo was beind plaintiff>s ri't side and punced im

at te ri't eye causin' it to bleed. Gamin' wo was in front of plaintiff ten slased plaintiff>s left soulder wit a sarp pointed instrument wic could been a ball pencausin' it to bleed and leave a scar measurin' 0 inces by 1" centimeters and plaintiff tofall down. Te oter passen'ers wo ten intervened too) Gamin' and Tolentino away.laintiff immediately aired a verbal complaint at 3efendant Corporation>s office but ewas not e%tended any altou' e was advised to file a formal complaint so it could be

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investi'ated. laintiff tus sou't medical attendance at te Ayala Iilla'e AssociationClinic.

ACO is liable for te ne'li'ence of its employee>s coFpetitioners Gamin' andTolentino, pursuant to Article "18, in connection to Article "1: of te Civil Code, +nfact, te findin' of mere ne'li'ence on te part of petitioners employees is too )ind to

accurately describe wat really appened on Hanuary "1, 1999 to respondent and isfamily. Te treatment accorded respondent and is wife by petitioner ACO>s employeeswas caracteri?ed by a certain viciousness and meanness wic te businessman did notdeserve.6 tis )ind of bad conduct, not viciousness and meanness wic te businessmandid not deserve. Tis )ind of bad conduct, not to mention petitioner ACO# utter lac) of interest in or concern for wat appened, respondents medical condition and e%trajudicialdemand for reimbursement and dama'es, reflects te terrible )ind of service pilosopyor orientation subscribed to by petitioners. Any liability arisin' from suc substandardservice orientation must terefore be borne by tem.

+n view of te fore'oin', we affirm te award by te courts a <uo of 1, asnormal dama'es, in te li't of te injuries6 umiliation and arrowin' e%periences of

respondents. ;o customers, specialty a businessman li)e respondent, deserves to bescreamed at, pused and slased wit a ball pen by te company>s employees, especiallytose of serviceForiented vacation for its customers. Because of te particular obno%iousness of petitioners beavior e%emplary dama'es are increase to 1, .

NEGROS NAVIGATION CO, INC3 VS CA

rivate respondent /amon Giranda purcased from te ;e'ros ;avi'ation four special cabin tic)et for is wife, dau'ter, son an dice wo we 'oin' to Bacolod to attenda family reunion. Te tic)ets were for voya'e of te GMI 3on Huan, leavin' Ganila at15 p.m. on April "", 198. te sip sailed from te port of Ganila on scedule. Tesame day, 3on Huan collided wit GMT Tacloban City, an oil tan)er owned by ;OC. As

a result day, 3on Huan collided wit te GMT Tacloban City, an oil tan)er owned by;OC. As result, GMI 3on Huan san). Te four member of private respondent>s familieswere never found.

rivate respondents filed a complaint a'ainst ;e'ros ;avi'ation, and te ;OCsee)in' dama'es for te deat is family members.

Court rendered jud'ment in favor of plaintiffs, orderin' all te defendants to pay jointly and severally, dama'es as follows.

• Actual dama'es

• Compensatory dama'es

• Goral dama'es

• *%emplary dama'es

• Attorney>s fees

I""- 4eter te dama'es awarded by te appellate court are e%cessive,unreasonable and warranted.

H5 +n te case of victim Ardita Giranda wose a'e at te time of te accident was 08years, er life e%pectancy was computed to be "1.22 years, and terefore, se could avelived up to almost : years old. Der 'ross earnin's for "1.22 years based on 1, ""0. per annum, would be "18, ::.9". 3eductin'terefrom 2 as er livin' e%penses er

net earnin's would be 1-", -0.--, to wic plaintiff /amon Giranda is entitled tocompensatory dama'es for te loss of earnin' capacity of is wife. +n considerin' 2 aste livin' e%penses of Ardita Giranda, te Court ta)es into account te fact tat plaintiff and is wife were supportin' teir dau'ter and son wo were bot colle'e studentsta)in' Gedicine and Law respectively.

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Te accepted formula for determinin' life e%pectancy is "M2 multiplied by (8minus te a'e of te deceased!. +t may be tat in te ilippines te a'e of retirements'enerally is - but, in calculatin' te life e%pectancy of individuals for te purpose of determinin' loss of earnin' s

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Pr% IIMARITIME & ADMIRALTY LAWS CODE OF COMMERCE

CHAPTER IVESSELS IN GENERAL

B3 MARITIME COMMERCE (ARTS3 @<69)

1. V""5" are special )ind of personal property because of teir value and re'istration re<uirements. As eld in

ROBISCO VS3 RIVERA2: D+L#. :"

Te #C caracteri?ed maritime transactions as avin' a real nature in so far astese transactions are similar to transactions over real property wit respect to effectivelya'ainst 2rd persons, wic is done trou' re'istration. +n tis case defendant /iveraac<uired by purcase te pilot boat Ialentina on a date prior to tat of te purcase andadjudication at public auction by plaintiff /obisco. But te sale at public auction to/obisco was reduced in te office of te collector of customers on Han. ":, 191- and inte commercial re'istry on Garc 1:, 191-. te lower court decided for /obisco, ence,/ivera appealed. As ruled, te re<uisite of re'istration in te re'istry of te purcase of avessel is necessary and indispensable in order tat te purcaser>s ri'ts may bemaintained a'ainst a claim filed by a 2 rd person. #uc re'istration is re<uired under Art.-:2 of te Code of Commerce.

CHARACTERISTICS OF VESSELS

1! /eal"! Dypotecary

R+"%r%$! $; V""5" – vessels of more tan tons 'ross used in ilippines 4ater, not bein'a transient of forei'n re'istry, must be re'istered wit e ilippines Coast $uard. =nder *.O. ;o. a"- /eor'ani?ation Act as amended, te function of re'isterin' vessels under teilippine &la' as been transferred to te GA/+;A. Dowever, te C$ as not actuallyrelin<uised its re'istration functions. A similar re'istration of vessels of 2 tons or less isoptional (Tariff and Customs Code!

Iessels of more tan 1- tons of domestics ownersip6 (owned by ilippines citi?ensor domestic corporations or associations at least :- of wose capital stoc) is owned byilippine citi?ens, or if te vessel is for its e%clusive use, pursuant to .3 :1 sallupon re'istration be issued a certificate of ilippine re'ister instead of a certificate of ownersip issued to re'istered vessels of more tan - tons 'ross. Iessel 1- tons 'ross or lessmay obtain a certificate of ilippine re'ister at te owner>s option.

M$ $; *-"%$!" $; /""5" – any means reco'ni?ed by law, purcase and sale, prescription, construction, capture, donation, succession and barter, wic must be in writin'and re'istered in order to affect tird persons.

+t can be ac<uired by possession in 'ood fait for 2 years, wit a 'ood title dulyrecorded. +n te absence of tese, re<uisites, continuous possession for 1 years sall benecessary in order to ac<uire ownersip. Captain cannot ac<uire ownersip by prescription.

2! H#$%*r – under Art. -8:, in case of maritime transaction, te liabilityof te owner is limited to te value of te vessel itself. #o

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if te vessel sin)s, 'enerally, te liability of te owner ise%tin'uised altou' e may ave oter properties. Tisis te essence of te ypotecary nature of maritimecommerce. *ven if te vessel does not sin), te owner may <uestion pertainin' to te meanin' of limited liability

of te #O in maritime transaction as been as)ed severaltimes in te BA/, 190, 198", 1990, 199:, 1999 7 ".

E:*#%$!" %$ % #$%*r !%-r $; 0r%0 %r!"*%$!"

a! 4ill not apply if te #ipFowner is at fault.

HEIRS OF AMPARO DE LOS SANTOS /3 CA & CA & COMPANIA MARITIMA

GMI Gindoro sailed from ier ;ort Darvor, Ganila on ;ovember ", 19: atabout " pm bound for ;ew 4asinton, A)lan wit many passen'ers aboard. +t appearstat said vessel met typoon 4elmin' on te #ibuyan #ea A)lan at about - am of officersand crew were ne'li'ent in operatin' te vessel and imposed upon tem a suspension andor revocation of teir license certificates.

Te CA owever ruled tat Garitma couldn>t be eld6 liable in dama'es baseonce te principle of limited of te sipFowners or sip a'ent under Art. -8: of te Codeof Commerce.

I""-4eter or not Art. -8: is applicable.

H5 ;o, under tis provision, a sipFowner or a'ent as te ri't of amendment and bynecessary solely by te captain. +n cases were te sipFowners is li)ewise to be blamed,

Art. -8: does not apply case, Garitime was eld ne'li'ent.

PHILAM GEN /3 CA$./. 1190 Hune 11, 199:

Te #C eld tat altou' te #A is liable for te ne'li'ent act of te captain in te careof 'oods leaded on te vessel, tis liability can limited trou' amendment of te vessel,its e<uipment and frei'ta'e as provided in Art. -8:. ;one te less tere a e%ceptionalcircumstances werein te #A could still be eld answerable despite te abound meant,as were te loss or injury was due to te fault of te #O and te captain Art. -8: isapplicable only if owever, in

GOVERNMENT /3 INSLAR MARTIIME CO30- D+L. 8-

+t was eld tat te limited liability rule does not apply in caser were teliability was for repair on te vessel as wads completed before e loss

b! +nsurance

+f te vessel at fault dun)s but is insured te insurance ta)es te place of te vessel6ence liability subsists, but only to te e%tent of te insurance proceeds , te e%cess is stillypotecary.

PEDRO VAS?E2 /3 CA

4en te inters land vessel GI ioneer Cebu left te port of Gsanila in teearly mornin' of Gay 1-, 19 bound forCcebu, it ad on board te spouses Alfonso

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Iae<ue? and &ilipinas Ba'aipa and a four year old boy, Gario Garlon Ias<ue?, amon'er Zpassen'ers. Te GMI ioneer Cebu encountered typoon larin' andsubse<uently sun). Te aforementioned passen'ers were uneard firm sine ten.

laintiffs are te immediate families of te victims, seein' for te recovery of dama'es.

3efendant alle'ed tat te sin)in' of te vessel was caused by force majeure,and tat te defendant>s liability been e%tin'uised by te total loss of te vessel.

I""- 4eter or not te liability of defendant ad been e%tin'uised by te total lossof te vessel.

H5 Article -8: of te Code of Commerce states tat e liability of a sipFowners islimited to te value of te vessel or te te insur'ence tereon.

3espite te total loss of te vessel terefore, its insurance answers for tedama'es tat an sipFowner or a'ent may be eld liable by reason O& TD* 3*ATD O&

+T# A##*;$*/#.

c! L85% -!r L8$r C$ – te #C in A8-+ /3 S! 3ie'o :: il>s. 2" eld, tatte wor)men>s compensation is an e%ception to te ypnoterapy nature of maritimetransactions considerin' tat te 4C was enacted subse<uent to te Code of Commerce. Dence, in case considerin' tat te 4C law was enacted subse<uent teCode of Commerce. Dence, in case of conflict te later law will prevail as it woulddeemed an amendment to a prior law and considerin' tat 4C Law is a sacrifice lawwile te Code of Commerce is a 'eneral law.

d! C%%5 M$r%++ $; S# F #ec. " of 3 1-"1 (#ip Gort'a'e 3ecree! autori?e for

purposes of financin' te construction, ac<uittin' purcase of vessel or initialoperations of e<uipment wit any ban) or oter financin' institution. +n order to bevalid te mort'a'e must be re'ister wit te C$ (#ec. 2 te mort'a'ed lien on tevessel sall ave priority over all claims e%cepts e%penses and fees allowed and coststa%ed by te court and ta%es due to te 'overnment, crews wa'es, 'eneral avera'e,salva'e, maritime liens arisin' out of tort and preferred mort'a'e re'istered prior intime #ec. 1: e%pressly provides tat if te proceeds of te sale sould not be sufficientto pay all creditors, te unpaid portion sall be enforceable by personal actiona'ainst te debtor.

e! +n case te voya'e is not maritime but only river, bay or 'ulf

f! *%penses for e<uippin' repairin' or provisions of te vessel competed before its loss(" BA/!

'! Iessel is a private carrier

! +n case te vessel totally sun) become a total loss to te fault of te #ip owner.

". Pr"$! 7$ % #r% ! 0r%0 *$00r*3

a. S#$7!r" ! S# A+!%" – #O and #A are liable or acts done or

contracts made by te captain (1! wen duly autori?ed or ("! even wenunautori?ed, for sip repairs or for e<uippin' or provisionin' te vessel, wenactually invested terein, as well as for indemnities in favor of tird personswic arise from te conduct of te captain in case te 'oods wic te vesselcarries, subject to te rules of abandonment (Ar%"3 @@6@!.

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A "# +!% is a person particularly entrusted wit te provisionin' of te vessel, or wo represents er in te port were se appens to be ( Ar%3 @6!6 represents teownersip of te vessel, and e may, in te capacity and in is own name ta)e judicialand e%traFjudicial measures in all tat relates to commerce (Ar%3 @9@!6 is solidarityliable wit is principal for any loss or dama'e to te car'o for wic te vessel is

responsible witout prejudice to is ri'ts a'ainst te #O to te e%tend of te value of te vessel, its e<uipment and te frei't (N%$!5 D/3 C$3 / CA!

83 C#%! ! M"%r" $; V""5", $;;*r" ! *r7 $; % /""5, "-#r*r+$(! *r+ $; 0!"%r%/ 0%%r"), !+!r"3

2. S#*5 C$!%r*%" ! Mr%0 C$00r*

CASES

Y ENG CHO VS PAN AMERICAN AIRWAYS, "-#r

an Am and T4#+ sould not eld liable as principals. +t is a settled rule tat persons dealin' wit an assumed a'ent are bound at teir peril. +f tey would old te principal liable to ascertain not only te fact of a'ency but also te nature and e%tent of autority, and in case eiter is controverter, te burden of proof is upon tem to establisit.

+n te case at bar, petitioners rely on te affidavit of respondent Ta'unicar. #aidaffidavit aw wee) probative value in li't of respondent Ta'unicar>s testimony in courtto te contrary.

INTERORIENT MARITIME ENTERPRISES VS3 NLRC

rivate respondent /i?alino Tayon', a licensed master mariner wit e%perience incommandin' oceanF'oin' vessels, was employed on Huly , 1989 by petitioners Trenda4orld #ippin' and #ea Dorse #ip trou' petitioner +nterFOrient as master of tevessel GMI Oceanic Gindoro, for a period of one year, as evidence by an employementcontract.

Captain Tayon' instituted a complaint for ille'al dismissal before te O*A,claimin' is unpaid salary for te une%pired of te written employment contract, plusattorney>s fees.

I""- 4eter or not te dismissal was valid5

H5 ;o, it is well settled in tis jurisdiction tat confidential and mana'erial employeescannot be arbitrary dismissed at any time, and witout cause as reasonably establised inan appropriate investi'ation.

Te captain of a vessel is a confidential and mana'erial employees witin temeanin' of te above doctrine. A master or captain, for purposes of maritime commerce,is one wo as command of a vessel.

A captain commonly performs tree (2! distinct roles5(1! e is a 'eneral a'ent of te sipowner6("! e is also commander and tecnical director of te vessel6 and

(2! e is a representative of te country under wose fla' e navi'ates.

C3 CONTRACT OF CARRIAGE OF CARGO NDER THE CODE OF COMMERCE

O/r5! ! *$"%7" Tr!"#$r%%$! (Ar%3 <>9<9)

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B55 $; L!+

+n 'eneral, te best evidence of te contract of carria'e of car'o is te bill of ladin', or in te case of an airplane, waybill, but car'o can be transported even

witout it. =nder Article 1:2, from te time car'o is unconditionally delivered tote carrier and received by te carrier for transportation, te liability of te carrier arises.

+t may also be defined as a written ac)nowled'ement of te receipt of 'oods andan a'reement to transport and to deliver tem at a specified place to a personnamed or on is order.

Nature of 6ill of "ading

+t is tus seen tat a bill of ladin' is a contract in itself and te parties are

bound by its terms and it is also a receipt and a symbol of 'oods covered by it.

WHAT ARE THE FNCTIONS OF THE BILL LADING

=nder Article 2- and : of te code of commerce, tere are tree important roles tat a bill of ladin' plays5

a! te best evidence of te e%istence of te contract of carria'e of car'o6 b! te importance of te role it plays as a commercial document wereof, if ne'otiable,

ownersip may be transferred by ne'otiation. =nder Article 12 of te civil code te bill of ladin' is mentioned as a documents of title6

c! receipt of te car'o (per CO$#A!

A BILL OF LADING is bot and a contract. As a contract, its terms and conditions areconclusive on te parties, includin' te consi'nee, as te route, destination, frei't rates or car'es6 and stipulates te ri'ts and obli'ations assumed by te parties (Telen'tanBroters 7 #ons, +nc. CA "2 #C/A 1:!.

+n #aludo Hr. v. CA ": #C/A 098, it is also a written ac)nowled'ement of tereceipt of te 'oods and an a'reement to transport and deliver tem at a specific placeto a person named or on is order6 acceptance tereof witout dissent tem at aspecific place to a person named or on is order, acceptance tereof witout dissentraises te resumption tat all terms terein were brou't to te )nowled'e of tesipper and a'reed to by im and stops im tereafter from denyin' te same.

Te carrier may refuse to accept 'oods unfit for transportation and may, for wellFfounded suspicious on te correctness of te declaration over te contents of te pac)a'e, e%amine te same in te presence of te sipper or te consi'nee or a notaryif te former does not appear. +f te carrier accepts improperly pac)ed 'oods, wicare apparent upon inspection, te carrier can be eld liable. (#outern Lines, +nc. CA 0#C/A "-8!

CLASSES OF BILLS OF LADING

(1! ;*$OT+ABL* B+LL O& LA3+;$

One in wic it is stated tat te 'oods referred to terein will bedelivered to te bearer, or to te order of any person named in suc document

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("! ;O;F ;*$OT+ABL* B+LL O& LA3+;$

One in wic it is stated tat te 'oods referred to terein will bedelivered to a specified person . ;onFne'otiable bills of ladin' are also )nown as

strai't or flat bills of ladin'.

(2! CL*A; A;3 &O=L B+LL O& LA3+;$

A foul bill of ladin' is one wic contains a notation tereon indicatin'tat te 'oods covered by it are in bad condition. A clean bill of ladin' is onewic does not indicate any defect on te 'oods.

(0! #*;T B+LL O& LA3+;$

One wic covers 'oods tat ave already been delivered by te carrier

witout a surrender of a si'ned copy of te ladin'.

(-! TD/O=$D B+LL O& LA3+;$

One issued by a carrier wo is obli'ed to use te facilities of oter carriers as well as is own facilities for te purpose of transportin' te 'oods fromte city of te seller to te city of te buyer wic bill of ladin' is onored by tesecond and oter interested carriers wo do not issue teir own ladin's

(! O ; BOA/3 B+LL O& LA3+;$

One in wic it is stated tat te 'oods ave been received on board tevessels wic is to carry te 'oods

(:! / *C*+I*3F&O/ F#D+G*;T B+LL O& LA3+;$

One in wic it is stated tat te 'oods ave been received for sipmentwit or witout specifyin' te vessel by wic te 'oods are to be sipped./eceivedFforFsipment bills of ladin' are issued wen ever conditions are notnormal and tere is an insufficiency of sippin' space.

(8! C=#TO3E B+LL O& LA3+;$

One wic is issued by te carrier to wom te 'oods ave beendelivered for sipment but te steamer indicated in te bill of ladin' wic is tocarry te 'oods as not yet reaced te port were te 'oods are eld for sipment.

(9! O/T B+LL O& LA3+;$

One wic is issued by te carrier to wom te 'oods ave beendelivered for sipment but te steamer indicated in te bill of ladin' by wic te'oods are to be sipped is already in te port were te 'oods are eld for sipment.

CALTEX (PHILIPPINE), INC3 /"3 SLPICIO LINES,3 INC3$./. ;o. 1211, #eptember 2, 1999

Calte% entered into a contract of affrei'tment, particularly a voya'e carter,wit GT Iector, a common carrier, +n te course of te voya'e, GT Iector collided wit#ulpicio Line>s passen'er sip GI 3oJa a?

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I""- +s te cartener (Calte%! of a sea vessel liable for dama'es tird persons resultin'from a collision between te cartered vessel (GT Iector! a passen'er sip (GI 3oJaa?!K

H5 Te carter as no liability for dama'es under ilippine Garitime laws. Te

respective ri'ts and duties of a sipper and te carrier depends not on wter te carrier is public or private, but on weter te contract of carria'e is a bill of ladin' or e<uivalent sippin' public or private, but on weter te contract of carria'e is bill of ladin' or e<uivalent sippin' documents on te one and, or a carter party or similar contract on te oter. Calte% and Iector entered into s contract of affrei'tment, also)nown as a voya'e carter. +n tis )ind of contract, te 'eneral owner is left in possessionof te sip a owner for te voya'e, te ri'ts and responsibilities of ownersip rest on teowner. Te carter is free from liability to tird persons in respect of te sip.

WHEN DOES THE CONTRACT OF CARRIAGE OF GOODS END

SAMAR MINING CO VS3 NORDETSCHER LLYOD12" #C/A -"9

Te bill ladin' coverin' te 'oods transported provided tat it was effective onlyfor te transport of te 'oods from $ermany to Ganila. &rom Ganila, te 'oods were to be furter transported to 3avao. Te carriers ad unloaded and delivered te 'oods in te bonded wareouse in Ganila. Tey never reaced 3avao. Te issue was weter or notte carrier was liable for te loss of te 'oodsK Te #C ruled tat wen te carrier under te terms of te bill of ladin' ad delivered te 'oods at te port of destination, at te point, e merely becomes te a'ent of te consi'nee and cases to be liable as carrier for loss or dama'e of te 'oods transported proved cannot sustain a claim for dama'e a'ainstte carria'e.

1. S#0!% . te carrier sip te 'oods at te time and manner stipulated or on tefirst available sipment.

". C50" . A claim for dama'e or avera'e a'ainst te carrier be made immediatelyif te dama'e or avera'e is apparent, and witin "0 ours if it is latent (Art. 2!6oterwise te claim is barred. Tis rule is inapplicable to misdelivery or conversion were te ordinary perspective periods would apply or wen te ri'tto te periods is waved.

A re<uest by te consi'nee of 'oods for a bad order e%amination tolls te period for te filin' of a formal claim and wen formal claim is filed, it sall ave te effect of retroactin' to te date of te re<uest for a bad order e%amination. (;ew Nealand+nsurance Co., +nc. v. +AC 121 #C/A 08"!

+n case of successive carriers by a'reement for combined services, te carriersdeliverin' te 'oods assumes te obli'ations of te precedin' carrier reservin' its owncourse of action a'ainst te defaultin' carrier (Art. 2:2!

2. D5/r . te delivery sall be made witin a reasonable time. +t te consi'neerefuses to accept or to pay te due compensation or cannot be located te carrier may ma)e consi'nation, any of te parties wo defaults can eld liable for dama'es (Art. 28F2:"!

+f te carrier delays delivery, te consi'nee cannot refuse delivery 6 is remedy is tosee) dama'es, but if te delay is unreasonable, abandonment or conversion is proper (Art.2:1!

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TABACALERA INSRANCE VS NORTH FRONT SHIPPING

Te dama'e to te 'oods witout proper e%planation on te part of te carrier would necessarily lead to te conclusion tat te carrier as not complied wit itsobli'ation to observe e%traordinary dili'ence. ;everteless, te consi'nee would be'uilty of contributory ne'li'ence, wen it is sown tat it was seasonably notified of tearrival of te bar'e but did not immediately start te unloadin' operations, and witout proper e%planation of te delays in unloadin'. Te fact sow tat te loss could ave been completely avoided or at least minimi?ed ad unloadin' been commencedimmediately. &or its contributory ne'li'ence, te consi'nee sould sare at least 0 of te loss.

O%r *""

1. Liability of te owner of a vessel for injuries suffered by a nonFpassen'er

SMITH BELL DODWELL SHIPPING AGENCY COPORATION VS, BOR4A($./. ;o. 1028, Hune 1, ""!

On #eptember "2, 198:, #mit Bell (erein petitioner! filed a written re<uestwit te Bureau of Custoims for te attendance of te latter>s inspection team on vesselGMT in' &amily wic was due to arrive at te port of Ganila on #eptember "0, 198:.te said vessel contained :- metric tons l)yl ben?ene and metyl metacrylatemonomer. On te same day, #upervisin' Customs +nspector Ganuel Ga. 3. ;al'aninstructed (/espondent Catalino Borja to board said vessel and perform is duties asinspector upon te vessel>s arrival until its departure.

At about 11 o>cloc) in te mornin' on #eptember "0, 198:, wile GMt in'

&amily was unloadin' cemicals unto two ("! bar'es owned (/esondent! +TTC, a suddene%plosion occurred settin' te vessel afire. =pon earin' te e%plosion, (Borja!, wo wasat tat time inside te cabin preparin' reports, ran reports, ran outside to cec) watappended. A'ain, anoter e%plosion was eard.

#eein' te fire and fearin' for is life, (Borja! urriedly jumped over to saveimself. Dowever, te (water! (was! li)ewise on fire due mainly to te spilled cemicals.3espite te tremendous eat, (Borja! swam is way for one (1! our until e was rescued by te people livin' in te s<uatters area and sent to #an Huan 3e 3ios Dospital.

After wee) of intyernsive care at te ospitals, is attendin' pysician dia'nosed(Borja! to be permanently disabled due to te incident. (Borja! made demands a'ainst

#mit Bell and +TTC for te dama'es caused by te e%plosion. Dowever, bot deniedliabilities and attributed to eac oter ne'li'ence.

I""- 4eter petitioner sould be eld liable for te injuries of /espondent CatalinoBorja.

H5 Ees because te petitioner was ne'li'ent.

;e'li'ence is conduct tat creates undue ris) of arm to anoter. +t is te failureto observe tat de'ree of care, precaution and vi'ilance tat te circumstances justlydemand, wereby tat oter person suffers injury. etitioners vessel carryin' cemicalcar'oUal)yl ben?ene and metyl metarcylate monomer. 4ile )nowein' tat teir

vessel was carryin' dan'erous inflambL* cemicals, its offcers and crew failed to ta)eall necessary precautions to prevent an accident. etitioners was, before, ne'li'ent.

Te owner or te person in possession and control of a vessel is liable for all natural and pro%imate dama'es caused to persons and property by reason of

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ne'li'ence in its mana'ement or account te net income of te victim at te time deatU of te incident in tis case and tat persons probale life e%pectancy.

". 3octrine of ro%imate Cause5 ;ot Applicable

CALALAS VS, CA$./. ;o. 1""29, Gay 21, "

&acts5 a jeep owned by Calalas was bumped by a truc) driven by Ierena and owned by#alva. #un'a a passen'er of te jeep, sustained injurties by a reason of te misap.Conse<uently,. Civil code Case ;o, 209 was filed by Calalas a'ainst Ierana and #alvato recover indemnity for dama'es caused to te jeep. +n te said civil case, it was ruled tte ne'li'ence of Ierena was te pro%imate cause of te accident. Ierena, te truc) driver and #alva, te truc) owner, were found liable for <uasiFde)lict. Accordin'ly,Calalas contended tat #un'a is bound by te rulin' in te said civil case in as muc aste pro%imate cause of te collision between te jeepney and te truc) was te ne'li'enceof te truc) driver. Calalasd furter cont ended tat te bumpin' of t jeep by te truc) was a caso fortuito, ence e is not liable to #un'a, te passen'er of is jeep.

+ssue54eter or not te doctrine of pro%imate cause is applicable in actions involvin'

breac of contract.

+t is applicable only in actions for <uasiFdelict. Te doctrine is a device for imoutin' liability to a person were tere is no relation between and anoter party. +nsuc a case, law itself creates te obli'ation, but, were tere is a preFe%istin' contractualrelation between te parties, it is te parties temselves wo create te obli'ation, and tefunction of te law is merely to re'ulate te relation tus created. +nsofar as contracts of carria'e are concerned, some aspects re'ulated by te Civil Code are tose respectin' tedili'ence re<uired of common carriers wit re'ard to te safety of passen'ers as well aste presumption of deat or injury to passen'ers. +n te case at bar, upon te appenin'of te accident, te presumption of ne'li'ence at once arose, and it become te duty of Calalas to prove tat e ad to observe e%traordinary dili'ence in te care of is passen'ers.

2. Applicability of te 3octrine of /es +psa Lo<uitur

LDO AND LYM CORPORATION /3 CA$./. ;o. 1"-082, &ebruary 1, "1

etitioner Ludo 7 Luym Corporation is a domestic corporation en'a'ed in copra processin' wit plant and business offices in Cebu City. rivate /espondent $abisan#ippin' Lines was te re'istered owner and operator of te motor vessel GI Gi'uela,wile toe oter private used by vessels for loadin' and unloadin' of copra and oter processed products. Amon' its warf>s facilities are fender pile clusters for doc)in' andmoorin'.

On Gay "1, 199 at around 152 .G, wile GI Gi'uela was doc)in' at petitioner>s warf, it rammed and destroyed a fender pile cluster. etitioner demandeddama'es from private respondents. Te latter refused. Dence, petitioner filed a complaintfor dama'es.

etitioners evidence durin' trial sowed tat on Gay "1, 199, at 152 .G. GIGi'uela came to doc) at petitioner warf. +reneo naval, etitioner>s employee, 'uided tevessel to its doc)in' place. After te 'uide (small rope! was trown from te vessel andwile te petitioner>s security 'uard was pullin' te bi' rope to be tied to te bolar, GIGi'uela did not slow down. Te crew did not release te vessel already rammed te pilecluster. Te impact disinclined te pile cluster and deformed te cable wire wound

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around it. ;aval immediately informed te vessel>s captain and its cief mate of teincident was reported to Atty. 3u, petitioners viceFpresidents for le'al was supportedwile tow oters were loosened and tat te pile cluster was learnin' soreward. 3e'amoired s)in diver Garvin Alfere?, wo found tat one post was bro)en at about : incesfrom te seabed and two oter posts rose and crac)ed at te bottom. Based on tesefindin's, 3e'amo concluded tat te two raised were also bro)en under te seabed and

estimated te cost of repair and replacement at 9-, ..

+s te doctrine of res ipsa lo<uitur applicable to tis caseK

etitioner ar'ues tat te Court of Appeals erred wen it reversed te trial courtfor te latter>s eavy reliance on ;ava>s Testimony. Te appellate court over loo)ed tefact tat aside from ;aval>s testimony, te trial court also relied on te principle of resipsa lo<uitur to establis private respondents> ne'li'ence.

Te doctrine of res ipsa lo<uitur was e%plained in Bati<uin vs. Court of Appeals,"-8 #C/A 220 (199! , tus5

4ere te tin' wic causes injury is sown to be under te mana'ement of tedefendant, and te accident is suc as in te ordinary course of tin's does not appen if tosewo ave te mana'ementuse proper care, it affords reasonable evidence, in te absence of ane%planation by te defendant, tat te accident from want of care.

Te doctrine reco'ni?e tat parties may establis prima facie ne'li'ence witout direct proof and allows te principle to substitute for specific proof of ne'li'ence. Tis is invo)edwen under te circumstances6 direct evidence is absent and not readily available.

+n our view, all te re<uisites for resources to tis doctrine e%ist, &irst, GI Gi'uelawas under te e%clusive control of its officers and crew. etitioner did not ave direct

evidence on wat transpired witin as te officers and crew maneuvered te vessel to its bertin' place. 4e note te Court of Appeals findin' tat ;aval and *spina were not)nowled'eable on te vessel>s maneuverin', and could not testify on te ne'li'ence of teofficers and crew. #econd, aside from te testimony tat GI Gi'uela rammed te cluster pile, private respondent did not sow persuasively oter possible causes of te damam'e.

Applyin' now te above, tere e%ists a presumption of ne'li'ence a'ainst privaterespondent, wic we opine te latter failed to overcome. Additionally, petitioner presentedtan'ible proof tat demonstrated private respondents ne'li'ence. As testified by Capt.Olasiman, from command of slow aead to stop en'ine5 wen te vessel was only - metersfrom pier. &urter, e testified tat before te vessel is put to slow astern, te en'ine as to be

restarted, owever, Olasiman can not estimate ow lon' it ta)es before te en'ine 'oes toslow astern after te en'ine is restarted . from tese declarations, te concusion is tat it wasalready too late wen te captain ordered reverse. By ten, te vessel was nly 0 meters fromte pier, and tus rammed it.

/espondent company>s ne'li'ence consists incompetent crew to man its vessel. Assown also by petitioner, bot Captain Olasiman and Cief Gate $abisan did not ave aformal trainin' in marine navi'ation. Te former was a mere elementary 'raduate wile telatter is a i' scool, 'raduate. Teir e%perience in navi'ation only as a watcman and a<uartermaster, respectively.

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CDAT*/ ++CHARTER PARTY

VALEN2ELA HARDWOOD VS3 CA

($./. ;O. 1"21 Hune 199:!

A stipulation in a carter party tat te owners sall not be resaponsible for teloss split sort leadin' brea)'es and any )ind dama'e to te car'o is not invalid as bein'contrary to public policy as e%pressed in Art. 1:0- of te civil code, wen it is clear fromte arran'ement tat te carrier acted as a private carrier under te terms of te carter paerty. +n a contract of private carria'e, te parties may validly stipulate from llaiblity for loss of or damam'es to te car'o caused evenby te ne'li'ence of te sip captain.

A private carrier as been less re'ulated, leavin' te partiesd more freedom towor) out teir arra'emenents in teir individual contract. As we ave earlier discussed,te provisions of te civil code and CO$#A do not apply e%proprio Ii'ore. +n case of

dispute arisin' out of suc a'reement, wic li)e any contractual terms, call our for judicial interpretation, te provisions of te civil code or C$#A do not apply for teir own force but are incorporated into a maritime contract by refernce, tey do not ave astatue ran) but are considered merely part of te contract li)e any oter contractualarran'ements.

COASTWISE LIGHTERAGE V3 CA"0- #C/A :9

Te #C made a distinction a contract of affrei'tment and a bareboat or demisecarter in determinin' te liability of te carrier. +n tis case, a contract was entered for te transportation of molasses, wic was dama'ed. Te carrier refused to ac)nowled'ed

liability on te 'round tat te contract transformed te carrier into a private carrier, andfor wic it as e%ercised ordinary dili'ence to avoid liability. +t was eld tat under tedemise or bareboat carter of te vessel, te carterer is 'enerally re'arded as te owner for te voya'e or services stipulated6 te catterer mans te vessel wit is own peopleand becomes te owner pro ac vice, subject to liability to oters for dama'es caused byne'li'ence. To create demise, te owner of a vessel must completely and e%clusivelyrelin<uis possession, command and navi'ation tereof to te carterer, anytin' sort of suc a complete transfer is a contract of affrei'tment or time or voya'e carter.

NATIONAL FOOD ATHORITY VS CA$./. ;o. 90-2, Au'ust 0, 1999

D;r+% car'o not loaded is considered as deadfrei't. +t is te amount paid by or recoverable from a carterer of a sip for te portion of te sip>s capacity te latter contracted but failed to occupy. *%plicit and succinct is te law tat te liability for deadfrei't is on te carterer.

5 +s te cartered (;&A! wo contracted to transport ", ba's, more or less, of corn'rains liable for deadfrei't wen only 1, :98 ba's were actually unloadedK

A5 Ees, Te words more of less wen used in relation to <uantity or distance are word of safety and caution, intended to cover some sli't or unimportant inaccuracy. +t allows anadjustment to te demands of circumstances, wic do not wea)en or destroy te statements

of distance and <uantity wen no oter 'uides are available. Te law in point is Article 8 of te Code of Commerce tat provides.

Ar% 63 *r%r 7$ $" !$% *$0#5% % ;-55 *r+$ 8$-! %$ "# "55# % ;r+%+ $; % 0$-!% ;5" %$ "#, ; % *#%! $" !$% % $%r

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Jeneath Kingco




;r+% %$ *$0#5% % 5$ $; % /""5, ! 7* *" % ;r"% *r%rr "55 # %;;r!*, "$-5 %r 8 !3

D0-rr+ te sum fi%ed by te contract of carria'e wic is allowed, as remuneration to teowner of te sip for te detention of is vessel beyond te number of days allowed by te

carter party for loadin' or unloadin' or for sailin'. Liability for demurra'e usin' te wordin its strict tecnical sense e%ist only wen e%pressly stipulated in te contract. Te law in point its Article - of te code of Commerce tat provides.

Ar%*5 6@63 I; ! % *r%r #r% % %0 ! 7* % 5$!+ $r -!5$!+ r% #5* " !$% "%%, % -"+" $; % #$r% 7r %" *%" r %$ % #5* "55 8$8"r/3 A;%r % "%#-5% *-"%$0r #r$ " #"", ! %r " !$ :#r"" %$0! 0-rr+ ;$r % 5 " ! :%r 5 " 7* 0 / 5#" !5$!+ ! -!5$!+3

5 4en te contract of affrei'tment contains a provisions 3emurra'eM3ispatc5 ;O;* is

te carterer (;&A! liable

A5 ;o. Te provision 3emurra'eM3ispatc. ;O;* can be interpreted as a waiver by tecarterer (Don'fil! of te ri't to claim for demurra'es. As Don'fil freely entered subjectcarter party, it cannot escape te inevitable conse<uence of its inability to collect demurra'e.4ellFsettled is te doctrine tat a contract between parties wic is not contrary to law,morals, 'ood customs, public order or public policy is te law bindin' on bot of tem.

Goreover, delay in loadin' or unloadin' to be deemed as a demurra'e, runs a'ainstte carterer as soon as te vessel is detained for an unreasonable len't of time from tearrival of te vessel because no available bertin' space was provided for te vessel due tote ne'li'ence of te carterer or by reason of circumstances caused by te default of tecarterer. +n te case of ;&A, te delay sued upon was still witin a reasonable time6 ence, ;&A could not be eld liable for demurra'e.

CALTEX (PHILIPPINES), INC. /. SLPICIO LINES, INC3($./. ;o. 1211, #eptember 2, 1999!

Calte% entered into a contract of affrei'tment, particularly a voya'e carter,wit GT Iector, a common carrier. +n te course of te voya'e. GT Iector collided wit#ulpicio Lines passen'er>s sip GI 3oJa a?.

+ssues5 +s te carterer (Calte%! of a sea vessel liable for dama'es to tird persons resultin' froma collision between te cartered vessel (GT Iector! and a passen'er sip (GI 3oJaa?!K

+s Calte% liable for dama'es under te Civil Code by reason of its failures to in<uire intote seawortiness of GT IectorK

/ulin'5 ;o.

=nder te Carria'e of $oods by #ea Act5

#ea 2 (1! Te carrier sall be bound before and at te be'innin' of te voya'e toe%ercise due dili'ence to

(a! Ga)e te sip seaworty6(b! roperly man, e<uip, and supply te sip6

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Jeneath Kingco




Tus, te carriers are deemed to warrant impliedly te seawortiness of te sip. &or avessel. To be seaworty, it must be ade<uately e<uipped for te voya'e and manned wita seaworty condition te vessel involved in its contract of carria'e is a clear breac of itsduty prescribed in Article 1:-- of te Civil Code.

#pecial laws in tis case 'overn te relationsip between te parties . because of

te implied warranty of seawortiness, sippers of 'oods, wen transactin' wit commoncarriers, are not e%pected to in<uire into te vessel>s seawortiness, 'enuiness of itslicenses and compliance wit all maritime laws. To demand more from sippers and oldtem liable in case of failure e%ibits notin' laws. To demand more for sippers andold tem liable in case of failure e%ibits notin' but te futility of our maritime laws inso far as te protection of te public in 'eneral is concerned. #uc a practice would be anabsurdity in a business were time is always of te essence. Considerin' te nurse of tetransportation business, passen'ers in its operation. Tus, te nature of te obli'ation of Calte% demands ordinary dili'ence li)e any oter sipper in sippin' is car'oes.

Calte% and Iector #ippin' doin' business for about " years before te tra'ic incidentoccurred. ast services rendered sowed no reason for Calte% ad te ri't to presume

tat te sip was sea worty as even te ilippines Coast $uard itself was convinced of its seawortiness.

TABACALERA INSRANCE CO3 VS NORTH FRONT SHIPPING, "-#r

#upreme Court eld tat respondent sippin' company could be eld liable. Tecarter party a'reement between ;ort &ront #ippin' and /epublic &lour GillsCorporation did not in any way convert te common carrier into a private carrier.

A carter party is defined as a contract by wic an entire sip, or some principaltereof, is let by te owner to anoter person for a specified time or use6 a contract of affrei'tment by wic te owner of a sip or oter vessel lets te wole or part of er to

a mercant or oter person for te conveyance of 'oods, on a particular voya'e, inconsideration of te payment of frei't.

Contract of affrei'tment may eiter be time carter, werein te vessel is leasedto te carterer for a fi%ed period of time, or voya'e carter, werein te sip is leasedfor a sin'le voya'e. +n te bot cases, te carter party provides for te ire of te vesselonly, eiter for a determine period of time or for a sin'le or consecutive voya'e, te sipowner to supply te sip>s store, pay for te wa'es of te master of te crew or defray tee%penses for te maintenance of te sip.

transpo tsn (valencia)

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