DEFINITION OF COMMON CARRIER the vessel.

The responsibility of the stevedore ends upon the loading and

stowing of the cargo in the vessel.
STEVEDORE NOT A COMMON CARRIER
In the present case, Mindanao Terminal, as a stevedore, was only charged
Article 1173 of the Civil Code is very clear that if the law or contract does with the loading and stowing of the cargoes from the pier to the ships cargo
not state the degree of diligence which is to be observed in the hold; it was never the custodian of the shipment of Del Monte Produce. A
performance of an obligation then that which is expected of a good father stevedore is not a common carrier for it does not transport goods or
of a family or ordinary diligence shall be required. Mindanao Terminal, a passengers; it is not akin to a warehouseman for it does not store goods for
stevedoring company which was charged with the loading and stowing the profit. The loading and stowing of cargoes would not have a far reaching
public ramification as that of a common carrier and a warehouseman; the
cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely as a
public is adequately protected by our laws on contract and on quasi-delict.
labor provider in the case at bar. There is no specific provision of law that The public policy considerations in legally imposing upon a common carrier
imposes a higher degree of diligence than ordinary diligence for a or a warehouseman a higher degree of diligence is not present in a
stevedoring company or one who is charged only with the loading and stevedoring outfit which mainly provides labor in loading and stowing of
stowing of cargoes. It was neither alleged nor proven by Phoenix and cargoes for its clients.
McGee that Mindanao Terminal was bound by contractual stipulation to
observe a higher degree of diligence than that required of a good father of As admitted by Phoenix and McGee in their Comment before us, the latter is
a family. We therefore conclude that following Article 1173, Mindanao merely a stevedoring company which was tasked by Del Monte to load and
Terminal was required to observe ordinary diligence only in loading and stow the shipments of fresh banana and pineapple of Del Monte Produce
aboard the M/V Mistrau. How and where it should load and stow a shipment
stowing the cargoes of Del Monte Produce aboard M/V Mistrau. in a vessel is wholly dependent on the shipper and the officers of the vessel.
In other words, the work of the stevedore was under the supervision of the
x x x The relationship therefore between the consignee and the arrastre shipper and officers of the vessel. Even the materials used for stowage, such
operator must be examined. This relationship is much akin to that existing as ropes, pallets, and cardboards, are provided for by the vessel.
between the consignee or owner of shipped goods and the common carrier,
or that between a depositor and a warehouseman. In the performance of its NOT CONVERTED BY CHARTER TO PRIVATE CHARTER
obligations, an arrastre operator should observe the same degree of
diligence as that required of a common carrier and a warehouseman as
Article 1732. Common carriers are persons, corporations, firms or
enunciated under Article 1733 of the Civil Code and Section 3(b) of the
associations engaged in the business of carrying or transporting passengers
Warehouse Receipts Law, respectively. Being the custodian of the goods
or goods or both, by land, water, or air, for compensation, offering their
discharged from a vessel, an arrastre operator's duty is to take good
services to the public.
care of the goods and to turn them over to the party entitled to their
possession. (Emphasis supplied)
Petitioner is a corporation engaged in the business of transporting cargo by
water and for compensation, offering its services indiscriminately to the
There is a distinction between an arrastre and a stevedore. Arrastre, a
public. Thus, without doubt, it is a common carrier. However, petitioner
Spanish word which refers to hauling of cargo, comprehends the handling of
entered into a voyage-charter with the Northern Mindanao Transport
cargo on the wharf or between the establishment of the consignee or shipper
Company, Inc. Now, had the voyage-charter converted petitioner into a
and the ship's tackle. The responsibility of the arrastre operator lasts until the
private carrier?
delivery of the cargo to the consignee. The service is usually performed by
longshoremen. On the other hand, stevedoring refers to the handling of the
cargo in the holds of the vessel or between the ship's tackle and the holds of
We think not. The voyage-charter agreement between petitioner and (3) Act or omission of the shipper or owner of the goods;
Northern Mindanao Transport Company, Inc. did not in any way convert the
common carrier into a private carrier. (4) The character of the goods or defects in the packing or in the
containers; and
It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more (5) Order or act of competent public authority
persons, provided the charter is limited to the ship only, as in the case of a
time-charter or voyage-charter. It is only when the charter includes both the EXTRAORDINARY DILIGENCE
vessel and its crew, as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular voyage covering the
ART. 1733. Common carriers, from the nature of their business and for
charter-party is concerned. Indubitably, a shipowner in a time or voyage
reasons of public policy, are bound to observe extraordinary diligence in the
charter retains possession and control of the ship, although her holds may,
vigilance over the goods and for the safety of the passengers transported by
for the moment, be the property of the charterer.
them according to all the circumstances of each case.
As a common carrier, petitioner is required to observe extraordinary diligence
Such extraordinary diligence in the vigilance over the goods is further
in the vigilance over the goods it transports. When the goods placed in its
expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the
care are lost, petitioner is presumed to have been at fault or to have acted
extraordinary diligence for the safety of the passengers is further set forth in
negligently. Petitioner therefore has the burden of proving that it observed
articles1755 and 1756.
extraordinary diligence in order to avoid responsibility for the lost cargo.
ART. 1734. Common carriers are responsible for the loss, destruction, or
it is incumbent upon the common carrier to prove that the loss, deterioration
deterioration of the goods, unless the same is due to any of the following
or destruction was due to accident or some other circumstances inconsistent
causes only:
with its liability
1) Flood, storm, earthquake, lightning, or other natural disaster or
The extraordinary diligence in the vigilance over the goods tendered for
calamity;
shipment requires the common carrier to know and to follow the required
precaution for avoiding damage to, or destruction of the goods entrusted to it
for safe carriage and delivery. It requires common carriers to render service 2) Act of the public enemy in war, whether international or civil;
with the greatest skill and foresight and "to use all reasonable means to
ascertain the nature and characteristics of goods tendered for shipment, and 3) Act of omission of the shipper or owner of the goods;
to exercise due care in the handling and stowage, including such methods as
their nature requires."16 4) The character of the goods or defects in the packing or in the
containers;
Article 1734 enumerates the instances when a carrier might be exempt from
liability for the loss of the goods. These are: 5) Order or act of competent public authority.

(1) Flood, storm, earthquake, lightning, or other natural disaster or ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and 5 of
calamity; the preceding article, if the goods are lost, destroyed, or deteriorated,
common carriers are presumed to have been at fault or to have acted
(2) Act of the public enemy in war, whether international or civil; negligently, unless they prove that they observed extraordinary diligence as
required by article 1733.
ART. 1736. The extraordinary responsibility of the common carrier lasts from ART. 1756. In case of death of or injuries to passengers, common carriers are
the time the goods are unconditionally placed in the possession of, and presumed to have been at fault or to have acted negligently, unless they
received by the carrier for transportation until the sane are delivered, actually prove that they observed extraordinary diligence as prescribed in articles
or constructively, by the carrier to the consignee, or to the person who has a 1733 and 1755.
right to receive them, without prejudice to the provisions of articles 1738.
In accord with the above provisions, Celyrosa Express, a common carrier,
ART. 1738. The extraordinary liability of the common carrier continues to be through its driver, respondent De Borja, and its registered owner, respondent
operative even during the time the goods are stored in a warehouse of the Callejas, has the express obligation "to carry the passengers safely as far as
carrier at the place of destination, until the consignee has been advised of the human care and foresight can provide, using the utmost diligence of very
arrival of the goods and has had reasonable opportunity thereafter to remove cautious persons, with a due regard for all the circumstances," 11 and to
them or otherwise dispose of them. observe extraordinary diligence in the discharge of its duty. The death of the
wife of the petitioner in the course of transporting her to her destination gave
ART. 1742. Even if the loss, destruction, or deterioration of the goods should rise to the presumption of negligence of the carrier. To overcome the
be caused by the character of the goods, or the faulty nature of the packing presumption, respondents have to show that they observed extraordinary
or of the containers, the common carrier must exercise due diligence to diligence in the discharge of their duty, or that the accident was caused by a
forestall or lessen the loss. fortuitous event.

A common carrier is presumed to have been negligent if it fails to prove that it While the law requires the highest degree of diligence from common carriers
exercised extraordinary vigilance over the goods it transported. 8 When the in the safe transport of their passengers and creates a presumption of
goods shipped are either lost or arrived in damaged condition, a presumption negligence against them, it does not, however, make the carrier an insurer of
arises against the carrier of its failure to observe that diligence, and there the absolute safety of its passengers.
need not be an express finding of negligence to hold it liable. 9
1avvphi1

Article 1755 of the Civil Code qualifies the duty of extraordinary care,
To overcome the presumption of negligence, the common carrier must vigilance and precaution in the carriage of passengers by common carriers to
establish by adequate proof that it exercised extraordinary diligence over the only such as human care and foresight can provide. What constitutes
goods. It must do more than merely show that some other party could be compliance with said duty is adjudged with due regard to all the
responsible for the damage. circumstances.

CASE #4 Article 1756 of the Civil Code, in creating a presumption of fault or negligence
on the part of the common carrier when its passenger is injured, merely
ART. 1733. Common carriers, from the nature of their business and for relieves the latter, for the time being, from introducing evidence to fasten the
reasons of public policy, are bound to observe extraordinary diligence in the negligence on the former, because the presumption stands in the place of
vigilance over the goods and for the safety of the passengers transported by evidence. Being a mere presumption, however, the same is rebuttable by
them, according to all the circumstances of each case. proof that the common carrier had exercised extraordinary diligence as
required by law in the performance of its contractual obligation, or that the
injury suffered by the passenger was solely due to a fortuitous event.
ART. 1755. A common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for all the circumstances. Thus, it is clear that neither the law nor the nature of the business of a
transportation company makes it an insurer of the passenger's safety, but
that its liability for personal injuries sustained by its passenger rests upon its
negligence, its failure to exercise the degree of diligence that the law requisite for any person to even enjoy the privilege of putting a vehicle on
requires. public roads.

REGISTERED OWNER RULE The main aim of motor vehicle registration is to identify the owner so that if
CASE #5 any accident happens, or that any damage or injury is caused by the vehicle
on the public highways, responsibility therefor can be fixed on a definite
individual, the registered owner. Instances are numerous where vehicles
Under Section 5 of Republic Act No. 4136,18 as amended, all motor vehicles running on public highways caused accidents or injuries to pedestrians or
used or operated on or upon any highway of the Philippines must be other vehicles without positive identification of the owner or drivers, or with
registered with the Bureau of Land Transportation (now Land Transportation very scant means of identification. It is to forestall these circumstances, so
Office) for the current year.19 Furthermore, any encumbrances of motor inconvenient or prejudicial to the public, that the motor vehicle registration is
vehicles must be recorded with the Land Transportation Office in order to be primarily ordained, in the interest of the determination of persons responsible
valid against third parties.20 for damages or injuries caused on public highways.

In accordance with the law on compulsory motor vehicle registration, this In this case, petitioner admits that it is the registered owner of the oil tanker
Court has consistently ruled that, with respect to the public and third persons, that figured in an accident causing the death of Loretta. As the registered
the registered owner of a motor vehicle is directly and primarily responsible owner, it cannot escape liability for the loss arising out of negligence in the
for the consequences of its operation regardless of who the actual vehicle operation of the oil tanker. Its liability remains even if at the time of the
owner might be.21 Well-settled is the rule that the registered owner of the accident, the oil tanker was leased to BG Hauler and was being driven by the
vehicle is liable for quasi-delicts resulting from its use. Thus, even if the latters driver, and despite a provision in the lease contract exonerating the
vehicle has already been sold, leased, or transferred to another person at the registered owner from liability.
time the vehicle figured in an accident, the registered vehicle owner would
still be liable for damages caused by the accident. The sale, transfer or lease CASE #6
of the vehicle, which is not registered with the Land Transportation Office, will
not bind third persons aggrieved in an accident involving the vehicle. The However, the registered owner of the vehicle driven by a negligent driver may
compulsory motor vehicle registration underscores the importance of still be held liable under applicable jurisprudence involving laws on
registering the vehicle in the name of the actual owner. compulsory motor vehicle registration and the liabilities of employers for
quasi-delicts under the Civil Code.
1avvphi1

The policy behind the rule is to enable the victim to find redress by the
Registration is required not to make said registration the operative act by
expedient recourse of identifying the registered vehicle owner in the records
which ownership in vehicles is transferred, as in land registration cases,
of the Land Transportation Office. The registered owner can be reimbursed
because the administrative proceeding of registration does not bear any
by the actual owner, lessee or transferee who is known to him. Unlike the
essential relation to the contract of sale between the parties, but to permit the
registered owner, the innocent victim is not privy to the lease, sale, transfer or
use and operation of the vehicle upon any public highway (section 5 [a], Act
encumbrance of the vehicle. Hence, the victim should not be prejudiced by
No. 3992, as amended.) The main aim of motor vehicle registration is to
the failure to register such transaction or encumbrance. As the Court held in
identify the owner so that if any accident happens, or that any damage or
PCI Leasing:
injury is caused by the vehicle on the public highways, responsibility therefor
can be fixed on a definite individual, the registered owner. Instances are
The burden of registration of the lease contract is minuscule compared to the numerous where vehicles running on public highways caused accidents or
chaos that may result if registered owners or operators of vehicles are freed injuries to pedestrians or other vehicles without positive identification of the
from such responsibility. Petitioner pays the price for its failure to obey the owner or drivers, or with very scant means of identification. It is to forestall
law on compulsory registration of motor vehicles for registration is a pre- these circumstances, so inconvenient or prejudicial to the public, that the
motor vehicle registration is primarily ordained, in the interest of the A registered owner who has already sold or transferred a vehicle has the
determination of persons responsible for damages or injuries caused on recourse to a third-party complaint, in the same action brought against him to
public highways. recover for the damage or injury done, against the vendee or transferee of
the vehicle. The inconvenience of the suit is no justification for relieving him
"'One of the principal purposes of motor vehicles legislation is identification of of liability; said inconvenience is the price he pays for failure to comply with
the vehicle and of the operator, in case of accident; and another is that the the registration that the law demands and requires.
knowledge that means of detection are always available may act as a
deterrent from lax observance of the law and of the rules of conservative and In synthesis, we hold that the registered owner, the defendant-appellant
safe operation. Whatever purpose there may be in these statutes, it is herein, is primarily responsible for the damage caused to the vehicle of the
subordinate at the last to the primary purpose of rendering it certain that the plaintiff-appellee, but he (defendant-appellant) has a right to be indemnified
violator of the law or of the rules of safety shall not escape because of lack of by the real or actual owner of the amount that he may be required to pay as
means to discover him.' The purpose of the statute is thwarted, and the damage for the injury caused to the plaintiff-appellant.
displayed number becomes a 'snare and delusion,' if courts would entertain
such defenses as that put forward by appellee in this case. No responsible For damage or injuries arising out of negligence in the operation of a motor
person or corporation could be held liable for the most outrageous acts of vehicle, the registered owner may be held civilly liable with the negligent
negligence, if they should be allowed to place a 'middleman' between them driver either 1) subsidiarily, if the aggrieved party seeks relief based on a
and the public, and escape liability by the manner in which they recompense delict or crime under Articles 100 and 103 of the Revised Penal Code; or 2)
their servants." solidarily, if the complainant seeks relief based on a quasi-delict under
Articles 2176 and 2180 of the Civil Code. It is the option of the plaintiff
With the above policy in mind, the question that defendant-appellant poses is: whether to waive completely the filing of the civil action, or institute it with the
should not the registered owner be allowed at the trial to prove who the criminal action, or file it separately or independently of a criminal action; his
actual and real owner is, and in accordance with such proof escape or evade only limitation is that he cannot recover damages twice for the same act or
responsibility and lay the same on the person actually owning the vehicle? omission of the defendant.
We hold with the trial court that the law does not allow him to do so; the law,
with its aim and policy in mind, does not relieve him directly of the In case a separate civil action is filed, the long-standing principle is that the
responsibility that the law fixes and places upon him as an incident or registered owner of a motor vehicle is primarily and directly responsible for
consequence of registration. Were a registered owner allowed to evade the consequences of its operation, including the negligence of the driver, with
responsibility by proving who the supposed transferee or owner is, it would respect to the public and all third persons. In contemplation of law, the
be easy for him, by collusion with others or otherwise, to escape said registered owner of a motor vehicle is the employer of its driver, with the
responsibility and transfer the same to an indefinite person, or to one who actual operator and employer, such as a lessee, being considered as merely
possesses no property with which to respond financially for the damage or the owner's agent. This being the case, even if a sale has been executed
injury done. A victim of recklessness on the public highways is usually without before a tortious incident, the sale, if unregistered, has no effect as to the
means to discover or identify the person actually causing the injury or right of the public and third persons to recover from the registered owner. The
damage. He has no means other than by a recourse to the registration in the public has the right to conclusively presume that the registered owner is the
Motor Vehicles Office to determine who is the owner. The protection that the real owner, and may sue accordingly.
law aims to extend to him would become illusory were the registered owner
given the opportunity to escape liability by disproving his ownership. If the
Thus, the rule remains the same: a sale, lease, or financial lease, for that
policy of the law is to be enforced and carried out, the registered owner
matter, that is not registered with the Land Transportation Office, still does not
should not be allowed to prove the contrary to the prejudice of the person
bind third persons who are aggrieved in tortious incidents, for the latter need
injured, that is, to prove that a third person or another has become the owner,
only to rely on the public registration of a motor vehicle as conclusive
so that he may thereby be relieved of the responsibility to the injured person.
evidence of ownership.30 A lease such as the one involved in the instant case
is an encumbrance in contemplation of law, which needs to be registered in In the present case it is at once apparent that the evil sought to be prevented
order for it to bind third parties.31 Under this policy, the evil sought to be in enjoining the kabit system does not exist. First, neither of the parties to the
avoided is the exacerbation of the suffering of victims of tragic vehicular pernicious kabit system is being held liable for damages. Second, the case
accidents in not being able to identify a guilty party. A contrary ruling will not arose from the negligence of another vehicle in using the public road to
serve the ends of justice. The failure to register a lease, sale, transfer or whom no representation, or misrepresentation, as regards the ownership and
encumbrance, should not benefit the parties responsible, to the prejudice of operation of the passenger jeepney was made and to whom no such
innocent victims. representation, or misrepresentation, was necessary. Thus it cannot be said
that private respondent Gonzales and the registered owner of the jeepney
KABIT SYSTEM were in estoppel for leading the public to believe that the jeepney belonged to
CASE #7 the registered owner. Third, the riding public was not bothered nor
inconvenienced at the very least by the illegal arrangement. On the contrary,
The kabit system is an arrangement whereby a person who has been granted it was private respondent himself who had been wronged and was seeking
a certificate of public convenience allows other persons who own motor compensation for the damage done to him. Certainly, it would be the height of
vehicles to operate them under his license, sometimes for a fee or inequity to deny him his right.
percentage of the earnings.9 Although the parties to such an agreement are
not outrightly penalized by law, the kabit system is invariably recognized as In light of the foregoing, it is evident that private respondent has the right to
being contrary to public policy and therefore void and inexistent under Art. proceed against petitioners for the damage caused on his passenger jeepney
1409 of the Civil Code. as well as on his business. Any effort then to frustrate his claim of damages
by the ingenuity with which petitioners framed the issue should be
In the early case of Dizon v. Octavio10 the Court explained that one of the discouraged, if not repelled.
primary factors considered in the granting of a certificate of public
convenience for the business of public transportation is the financial capacity CASE #8
of the holder of the license, so that liabilities arising from accidents may be
duly compensated. The kabit system renders illusory such purpose and, In Filcar Transport Services v. Espinas, we held that the registered owner is
worse, may still be availed of by the grantee to escape civil liability caused by deemed the employer of the negligent driver, and is thus vicariously liable
a negligent use of a vehicle owned by another and operated under his under Article 2176, in relation to Article 2180, of the Civil Code. Citing
license. If a registered owner is allowed to escape liability by proving who the Equitable Leasing Corporation v. Suyom, the Court ruled that in so far as third
supposed owner of the vehicle is, it would be easy for him to transfer the persons are concerned, the registered owner of the motor vehicle is the
subject vehicle to another who possesses no property with which to respond employer of the negligent driver, and the actual employer is considered
financially for the damage done. Thus, for the safety of passengers and the merely as an agent of such owner. Thus, whether there is an employer-
public who may have been wronged and deceived through the baneful kabit employee relationship between the registered owner and the driver is
system, the registered owner of the vehicle is not allowed to prove that irrelevant in determining the liability of the registered owner who the law
another person has become the owner so that he may be thereby relieved of holds primarily and directly responsible for any accident, injury or death
responsibility. Subsequent cases affirm such basic doctrine. 11 caused by the operation of the vehicle in the streets and highways.

It would seem then that the thrust of the law in enjoining the kabit system is Generally, when an injury is caused by the negligence of a servant or
not so much as to penalize the parties but to identify the person upon whom employee, there instantly arises a presumption of law that there was
responsibility may be fixed in case of an accident with the end view of negligence on the part of the master or employer either in the selection of the
protecting the riding public. The policy therefore loses its force if the public at servant or employee (culpa in eligiendo) or in the supervision over him after
large is not deceived, much less involved. the selection (culpa vigilando), or both. The presumption is juris tantum and
not juris et de jure; consequently, it may be rebutted. Accordingly, the general
rule is that if the employer shows to the satisfaction of the court that in the A carrier is a person or corporation who undertakes to transport or convey
selection and supervision of his employee he has exercised the care and goods or persons from one place to another, gratuitously or for hire. The
diligence of a good father of a family, the presumption is overcome and he is carrier is classified either as a private/special carrier or as a common/public
relieved of liability. However, with the enactment of the motor vehicle carrier. A private carrier is one who, without making the activity a vocation, or
registration law, the defenses available under Article 2180 of the Civil Code - without holding himself or itself out to the public as ready to act for all who
that the employee acts beyond the scope of his assigned task or that it may desire his or its services, undertakes, by special agreement in a
exercised the due diligence of a good father of a family to prevent damage particular instance only, to transport goods or persons from one place to
are no longer available to the registered owner of the motor vehicle, because another either gratuitously or for hire. The provisions on ordinary contracts of
the motor vehicle registration law, to a certain extent, modified Article 2180. the Civil Code govern the contract of private carriage.The diligence required
of a private carrier is only ordinary, that is, the diligence of a good father of
Under the civil law principle of unjust enrichment, the registered owner of the the family. In contrast, a common carrier is a person, corporation, firm or
motor vehicle has a right to be indemnified by the actual employer of the association engaged in the business of carrying or transporting passengers
driver; and under Article 2181 of the Civil Code, whoever pays for the or goods or both, by land, water, or air, for compensation, offering such
damage caused by his dependents or employees may recover from the latter services to the public. Contracts of common carriage are governed by the
what he has paid or delivered in satisfaction of the claim. provisions on common carriers of the Civil Code, the Public Service Act, and
other special laws relating to transportation. A common carrier is required to
COMMON CARRIER LIABILITIES observe extraordinary diligence, and is presumed to be at fault or to have
IN CARRIAGE OF PASSENGERS: PRESUMPTION OF FAULT AND acted negligently in case of the loss of the effects of passengers, or the death
NEGLIGENCE or injuries to passengers.

CASE #9 "Public use" is the same as "use by the public". The essential feature of the
public use is not confined to privileged individuals, but is open to the
What is clear from the records is that there existed a contract of carriage indefinite public. It is this indefinite or unrestricted quality that gives it its
between G & S, as the owner and operator of the Avis taxicab, and Jose public character. In determining whether a use is public, we must look not
Marcial, as the passenger of said vehicle. As a common carrier, G & S "is only to the character of the business to be done, but also to the proposed
bound to carry [Jose Marcial] safely as far as human care and foresight can mode of doing it. If the use is merely optional with the owners, or the public
provide, using the utmost diligence of very cautious persons, with due regard benefit is merely incidental, it is not a public use, authorizing the exercise of
for all the circumstances." However, Jose Marcial was not able to reach his the jurisdiction of the public utility commission. There must be, in general, a
destination safely as he died during the course of the travel. "In a contract of right which the law compels the owner to give to the general public. It is not
carriage, it is presumed that the common carrier is at fault or is negligent enough that the general prosperity of the public is promoted. Public use is not
when a passenger dies or is injured. In fact, there is even no need for the synonymous with public interest. The true criterion by which to judge the
court to make an express finding of fault or negligence on the part of the character of the use is whether the public may enjoy it by right or only by
common carrier. This statutory presumption may only be overcome by permission.
evidence that the carrier exercised extraordinary diligence." Unfortunately, G
& S miserably failed to overcome this presumption. Both the trial court and Nonetheless, the concept of a common carrier embodied in Article 1732 of
the CA found that the accident which led to Jose Marcials death was due to the Civil Code coincides neatly with the notion of public service under the
the reckless driving and gross negligence of G & S driver, Padilla, thereby Public Service Act, which supplements the law on common carriers found in
holding G & S liable to the heirs of Jose Marcial for breach of contract of the Civil Code. Public service, according to Section 13, paragraph (b) of the
carriage. Public Service Act, includes:

CASE #10
x x x every person that now or hereafter may own, operate, manage, or The common carriers standard of care and vigilance as to the safety of the
control in the Philippines, for hire or compensation, with general or limited passengers is defined by law. Given the nature of the business and for
clientle, whether permanent or occasional, and done for the general reasons of public policy, the common carrier is bound "to observe
business purposes, any common carrier, railroad, street railway, traction extraordinary diligence in the vigilance over the goods and for the safety of
railway, subway motor vehicle, either for freight or passenger, or both, with or the passengers transported by them, according to all the circumstances of
without fixed route and whatever may be its classification, freight or carrier each case." Article 1755 of the Civil Code specifies that the common carrier
service of any class, express service, steamboat, or steamship line, pontines, should "carry the passengers safely as far as human care and foresight can
ferries and water craft, engaged in the transportation of passengers or freight provide, using the utmost diligence of very cautious persons, with a due
or both, shipyard, marine repair shop, ice-refrigeration plant, canal, irrigation regard for all the circumstances." To successfully fend off liability in an action
system, gas, electric light, heat and power, water supply and power upon the death or injury to a passenger, the common carrier must prove his
petroleum, sewerage system, wire or wireless communications systems, wire or its observance of that extraordinary diligence; otherwise, the legal
or wireless broadcasting stations and other similar public services. x x x. presumption that he or it was at fault or acted negligently would stand. No
device, whether by stipulation, posting of notices, statements on tickets, or
Given the breadth of the aforequoted characterization of a common carrier, otherwise, may dispense with or lessen the responsibility of the common
the Court has considered as common carriers pipeline operators, custom carrier as defined under Article 1755 of the Civil Code.
brokers and warehousemen, and barge operators even if they had limited
clientle. The test by which to determine the existence of negligence in a particular
case has been aptly stated in the leading case of Picart v. Smith, thuswise:
As all the foregoing indicate, the true test for a common carrier is not the
quantity or extent of the business actually transacted, or the number and The test by which to determine the existence of negligence in a particular
character of the conveyances used in the activity, but whether the case may be stated as follows: Did the defendant in doing the alleged
undertaking is a part of the activity engaged in by the carrier that he has held negligent act use that reasonable care and caution which an ordinarily
out to the general public as his business or occupation. If the undertaking is a prudent person would have used in the same situation? If not, then he is
single transaction, not a part of the general business or occupation engaged guilty of negligence. The law here in effect adopts the standard supposed to
in, as advertised and held out to the general public, the individual or the entity be supplied by the imaginary conduct of the discreet paterfamilias of the
rendering such service is a private, not a common, carrier. The question must Roman law. The existence of negligence in a given case is not determined by
be determined by the character of the business actually carried on by the reference to the personal judgment of the actor in the situation before him.
carrier, not by any secret intention or mental reservation it may entertain or The law considers what would be reckless, blameworthy, or negligent in the
assert when charged with the duties and obligations that the law imposes. man of ordinary intelligence and prudence and determines liability by that.

Applying these considerations to the case before us, there is no question that The question as to what would constitute the conduct of a prudent man in a
the Pereas as the operators of a school bus service were: (a) engaged in given situation must of course be always determined in the light of human
transporting passengers generally as a business, not just as a casual experience and in view of the facts involved in the particular case. Abstract
occupation; (b) undertaking to carry passengers over established roads by speculation cannot here be of much value but this much can be profitably
the method by which the business was conducted; and (c) transporting said: Reasonable men govern their conduct by the circumstances which are
students for a fee. Despite catering to a limited clientle, the Pereas before them or known to them. They are not, and are not supposed to be,
operated as a common carrier because they held themselves out as a ready omniscient of the future. Hence they can be expected to take care only when
transportation indiscriminately to the students of a particular school living there is something before them to suggest or warn of danger. Could a
within or near where they operated the service and for a fee. prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take precautions
to guard against that harm. Reasonable foresight of harm, followed by the
ignoring of the suggestion born of this prevision, is always necessary before The law requires common carriers to carry passengers safely using the
negligence can be held to exist. Stated in these terms, the proper criterion for utmost diligence of very cautious persons with due regard for all
determining the existence of negligence in a given case is this: Conduct is circumstances. Such duty of a common carrier to provide safety to its
said to be negligent when a prudent man in the position of the tortfeasor passengers so obligates it not only during the course of the trip but for so
would have foreseen that an effect harmful to another was sufficiently long as the passengers are within its premises and where they ought to be in
probable to warrant his foregoing the conduct or guarding against its pursuance to the contract of carriage. The statutory provisions render a
consequences. common carrier liable for death of or injury to passengers (a) through the
negligence or wilful acts of its employees or b) on account of wilful acts or
CASE #11 negligence of other passengers or of strangers if the common carriers
employees through the exercise of due diligence could have prevented or
stopped the act or omission. In case of such death or injury, a carrier is
Law and jurisprudence dictate that a common carrier, both from the nature of presumed to have been at fault or been negligent, and by simple proof of
its business and for reasons of public policy, is burdened with the duty of injury, the passenger is relieved of the duty to still establish the fault or
exercising utmost diligence in ensuring the safety of passengers. 4 The Civil negligence of the carrier or of its employees and the burden shifts upon the
Code, governing the liability of a common carrier for death of or injury to its carrier to prove that the injury is due to an unforeseen event or to force
passengers, provides: majeure. In the absence of satisfactory explanation by the carrier on how the
accident occurred, which petitioners, according to the appellate court, have
failed to show, the presumption would be that it has been at fault, an
"Article 1755. A common carrier is bound to carry the passengers safely as
exception from the general rule that negligence must be proved.
far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
The foundation of LRTAs liability is the contract of carriage and its obligation
to indemnify the victim arises from the breach of that contract by reason of its
"Article 1756. In case of death of or injuries to passengers, common carriers
failure to exercise the high diligence required of the common carrier. In the
are presumed to have been at fault or to have acted negligently, unless they
discharge of its commitment to ensure the safety of passengers, a carrier
prove that they observed extraordinary diligence as prescribed in articles
may choose to hire its own employees or avail itself of the services of an
1733 and 1755."
outsider or an independent firm to undertake the task. In either case, the
common carrier is not relieved of its responsibilities under the contract of
"Article 1759. Common carriers are liable for the death of or injuries to carriage.
passengers through the negligence or willful acts of the formers employees,
although such employees may have acted beyond the scope of their authority
CASE #12
or in violation of the orders of the common carriers.
"a common carrier is bound to carry the passengers safely as far as human
"This liability of the common carriers does not cease upon proof that they
care and foresight can provide, using the utmost diligence of very cautious
exercised all the diligence of a good father of a family in the selection and
persons, with a due regard for all the circumstances." 19
supervision of their employees."
In a contract of carriage, it is presumed that the common carrier is at fault or
"Article 1763. A common carrier is responsible for injuries suffered by a
is negligent when a passenger dies or is injured. In fact, there is even no
passenger on account of the willful acts or negligence of other passengers or
need for the court to make an express finding of fault or negligence on the
of strangers, if the common carriers employees through the exercise of the
part of the common carrier. This statutory presumption may only be overcome
diligence of a good father of a family could have prevented or stopped the act
by evidence that the carrier exercised extraordinary diligence.
or omission."
CARGO DAMAGE Neither the carrier nor the ship shall in any event be or become liable for any loss
or damage to or in connection with the transportation of goods in an amount
Charter Party - contract by which an entire ship, orsome principal part thereof, is exceeding $500 per package lawful money of the United States, or in case of
let by the owner to another person for a specified time or use; a contract of goods not shipped in packages, per customary freight unit, or the equivalent of
affreightment by which the owner of a ship or other vessel lets the whole or a part that sum in other currency, unless the nature and value of such goods have been
of her to a merchant or other person for the conveyance of goods, on a particular declared by the shipper before shipment and inserted in the bill of lading. This
voyage, in consideration of the payment of freight. declaration, if embodied in the bill of lading shall be prima facieevidence, but shall
be conclusive on the carrier.
A charter party has two types.
1. contract of affreightment - whereby the use of shipping space on vessels is Hence, when there is a loss/damage to goods covered by contracts of carriage
leased in part or as a whole, to carry goods for others. The charter-party provides from a foreign port to a Philippine port and in the absence a shippers declaration
for the hire of vessel only, either for a determinate period of time (time charter) or of the value of the goods in the bill of lading, as in the present case, the foregoing
for a single or consecutive voyage (voyage charter). The shipowner supplies the provisions of the COGSA shall apply
ships stores, pay for the wages ofthe master and the crew, and defray the
expenses for the maintenance of the ship. The voyage remains under the The carrier cannot be held responsible for any discrepancy if the description in
responsibility of the carrier and it is answerable for the loss of goods received for the bill of lading is different from the actual contents of the container.
transportation. The charterer is free from liability to third persons in respect of the
ship. DURATION OF LIABILITY

2. charter by demise or bareboat charter under which the whole vessel is let to Common carriers are bound to observe extraordinary diligence in the vigilance
the charterer with a transfer to him of its entire command and possession and over the goods transported by them. They are presumed to have been at fault or
consequent control over its navigation, including the master and the crew, who to have acted negligently if the goods are lost, destroyed or deteriorated. To
are his servants. The charterer mans the vessel with his own people and overcome the presumption of negligence in case of loss, destruction or
becomes, in effect, the owner for the voyage or service stipulated and hence deterioration of the goods, the common carrier must prove that it exercised
liable for damages or loss sustained by the goods transported. extraordinary diligence. There are, however, exceptions to this rule. Article 1734
of the Civil Code enumerates the instances when the presumption of negligence
"[C]ommon carriers, from the nature of their business and for reasons of public does not attach:
policy, are bound to observe extraordinary diligenceand vigilance with respect to
the safety of the goods and the passengers they transport. Thus, common
carriers are required to render service with the greatest skill and foresight and to Art. 1734. Common carriers are responsible for the loss, destruction, or
use all reasonable means to ascertain the nature and characteristics of the goods deterioration of the goods, unless the same is due to any of the following causes
tendered for shipment, and toexercise due care in the handling and stowage, only:
including such methods as their nature requires."
1) Flood storm, earthquake, lightning, or other natural disaster or calamity;
"[C]ommon carriers, as a general rule, are presumed to have been at fault or
negligent if the goods they transported deteriorated or got lost or destroyed. That 2) Act of the public enemy in war, whether international or civil;
is, unless they provethat they exercised extraordinary diligence in transporting
the goods. Inorder to avoid responsibility for any loss or damage, therefore, they 3) Act or omission of the shipper or owner of the goods;
have the burden of proving that they observed such diligence." Further, under
Article 1742 of the Civil Code, even if the loss, destruction, or deterioration of the
4) The character of the goods or defects in the packing or in the containers;
goods should be caused by the faulty nature of the containers, the common
carrier must exercise due diligence to forestall or lessen the loss.
5) Order or act of competent public authority.
To be sure, the extraordinary responsibility of common carrier lasts from the time to how the deterioration, loss, or destruction of the goods happened, the
the goods are unconditionally placed in the possession of, and received by, the transporter shall be held responsible.
carrier for transportation until the same are delivered, actually or constructively,
by the carrier to the consignee, or to a person who has the right to receive them. According to the New Civil Code, the law of the country to which the goods
are to be transported shall govern the liability of the common carrier for their
The discharging of oil products to Caltex Bulk Depot has not yet been finished, loss, destruction or deterioration. The Code takes precedence as the primary
Delsan still has the duty to guard and to preserve the cargo. The carrier still has law over the rights and obligations of common carriers with the Code of
in it the responsibility to guard and preserve the goods, a duty incident to its Commerce and COGSA applying suppletorily.
having the goods transported.
The New Civil Code provides that a stipulation limiting a common carriers
Common carriers, from the nature of their business and for reasons of public
liability to the value of the goods appearing in the bill of lading is binding,
policy, are bound to observe extraordinary diligence in vigilance over the goods
unless the shipper or owner declares a greater value. In addition, a contract
and for the safety of the passengers transported by them, according to all the
circumstances of each case. The mere proof of delivery of goods in good order to
fixing the sum that may be recovered by the owner or shipper for the loss,
the carrier, and their arrival in the place of destination in bad order, make out a destruction, or deterioration of the goods is valid, if it is reasonable and just
prima facie case against the carrier, so that if no explanation is given as to how under the circumstances, and has been fairly and freely agreed upon.
the injury occurred, the carrier must be held responsible. It is incumbent upon the
carrier to prove that the loss was due to accident or some other circumstances COGSA, on the other hand, provides under Section 4, Subsection 5 that an
inconsistent with its liability. amount recoverable in case ofloss or damage shall not exceed US$500.00
per package or per customary freight unless the nature and value of such
LIMIT OF LIABILITY TO VALUE OF GOODS goods have been declared by the shipper before shipment and inserted in the
bill of lading.
Common carriers, from the nature of their business and on public policy
considerations, are bound to observe extra ordinary diligence in the vigilance In line with these maritime law provisions, paragraph 13 of bills of lading
over the goods transported by them. Subject to certain exceptions issued by ESLI to the shipper specifically provides a similar restriction.
enumerated under Article 1734 of the Civil Code, common carriers are
responsible for the loss, destruction, or deterioration of the goods. The There is no question about the declaration of the nature, weight and
extraordinary responsibility of the common carrier lasts from the time the description of the goods on the first bill of lading.
goods are unconditionally placed in the possession of, and received by the
carrier for transportation until the same are delivered, actually or The bills of lading represent the formal expression of the parties rights, duties
constructively, by the carrier to the consignee, or to the person who has a and obligations. It is the best evidence of the intention of the parties which is
right to receive them. to be deciphered from the language used in the contract, not from the
unilateral post facto assertions of one of the parties, or of third parties who
In maritime transportation, a bill of lading is issued by a common carrier as a are strangers to the contract. Thus, when the terms of an agreement have
contract, receipt and symbol of the goods covered by it. If it has no notation
1wphi1
been reduced to writing, it is deemed to contain all the terms agreed upon
of any defect ordamage in the goods, it is considered as a "clean bill of and there can be, between the parties and their successors in interest, no
lading." A clean bill of lading constitutes prima facie evidence of the receipt by evidence of such terms other than the contents of the written agreement.
the carrier of the goods as therein described.
As to the non-declaration of the value of the goods on the second bill of
Mere proof of delivery of the goods in good order to a common carrier and of lading, we see no error on the part of the appellate court when it ruled that
their arrival in bad order at their destination constitutes a prima faciecase of there was a compliance of the requirement provided by COGSA. The
fault or negligence against the carrier. If no adequate explanation is given as declaration requirement does not require that all the details must be written
down on the very bill of lading itself. It must be emphasized that all the due to the fault of the shipowner or to the concurrent negligence of the
needed details are in the invoice, which "contains the itemized list of goods shipowner and the captain. In which case, the shipowner shall be liable to the
shipped to a buyer, stating quantities, prices, shipping charges," and other full-extent of the damage. We thus find it necessary to clarify now the
details which may contain numerous sheets. Compliance can be attained by applicability here of the decision in Monarch.
incorporating the invoice, by way of reference, to the bill of lading provided
that the former containing the description of the nature, value and/or payment From the nature of their business and for reasons of public policy, common
of freight charges is as in this case duly admitted as evidence. carriers are bound to observe extraordinary diligence over the goods they
transport according to all the circumstances of each case. In the event of
In Unsworth Transport International(Phils.), Inc. v. Court of Appeals the Court loss, destruction or deterioration of the insured goods, common carriers are
held that the insertion of an invoice number does not in itself sufficiently and responsible, unless they can prove that the loss, destruction or deterioration
convincingly show that petitioner had knowledge of the value of the cargo. was brought about by the causes specified in Article 1734 of the Civil Code.
However, the same interpretation does not squarely apply if the carrier had In all other cases, common carriers are presumed to have been at fault or to
been advised of the value of the goods as evidenced by the invoice and have acted negligently, unless they prove that they observed extraordinary
payment of corresponding freight charges. It would be unfair for ESLI to diligence. Moreover, where the vessel is found unseaworthy, the shipowner is
invoke the limitation under COGSA when the shipper in fact paid the freight also presumed to be negligent since it is tasked with the maintenance of its
charges based on the value of the goods. In Adams Express Company v. vessel. Though this duty can be delegated, still, the shipowner must exercise
Croninger, it was said: "Neither is it conformable to plain principles of justice close supervision over its men.
that a shipper may understate the value of his property for the purpose of
reducing the rate, and then recover a larger value in case of loss. Nor does a In the present case, petitioner has the burden of showing that it exercised
limitation based upon an agreed value for the purpose of adjusting the rate extraordinary diligence in the transport of the goods it had on board in order
conflict with any sound principle of public policy." Conversely, but for the to invoke the limited liability doctrine. Differently put, to limit its liability to the
same reason, it is unjust for ESLI to invoke the limitation when it is informed amount of the insurance proceeds, petitioner has the burden of proving that
that the shipper paid the freight charges corresponding to the value of the the unseaworthiness of its vessel was not due to its fault or negligence.
goods. Considering the evidence presented and the circumstances obtaining in this
case, we find that petitioner failed to discharge this burden. It initially
DOCTRINE OF LIMITED LIABILITY (LIMITED TO VALUE OF VESSEL) attributed the sinking to the typhoon and relied on the BMI findings that it was
not at fault. However, both the trial and the appellate courts, in this case,
CASE #16 found that the sinking was not due to the typhoon but to its unseaworthiness.
Evidence on record showed that the weather was moderate when the vessel
It bears stressing that this Court has variedly applied the doctrine of limited sank. These factual findings of the Court of Appeals, affirming those of the
liability to the same incident the sinking of M/V P. Aboitiz on October 31, trial court are not to be disturbed on appeal, but must be accorded great
1980. Monarch, the latest ruling, tried to settle the conflicting weight. These findings are conclusive not only on the parties but on this Court
pronouncements of this Court relative to the sinking of M/V P. Aboitiz. In as well.
Monarch, we said that the sinking of the vessel was not due to force majeure,
but to its unseaworthy condition. Therein, we found petitioner concurrently Where the shipowner fails to overcome the presumption of negligence, the
negligent with the captain and crew. But the Court stressed that the doctrine of limited liability cannot be applied. Therefore, we agree with the
circumstances therein still made the doctrine of limited liability applicable. appellate court in sustaining the trial courts ruling that petitioner is liable for
the total value of the lost cargo.
Our ruling in Monarch may appear inconsistent with the exception of the
limited liability doctrine, as explicitly stated in the earlier part of the Monarch
decision. An exception to the limited liability doctrine is when the damage is
CASE #17 Art. 587. The ship agent shall also be civilly liable for the indemnities in favor
of third persons which may arise from the conduct of the captain in the care
Following the doctrine of limited liability, however, the Court declared in the of the goods which he loaded on the vessel; but he may exempt himself
1993 GAFLAC case that claims against Aboitiz arising from the sinking of therefrom by abandoning the vessel with all her equipment and the freight it
M/V P. Aboitiz should be limited only to the extent of the value of the vessel. may have earned during the voyage.
Thus, the Court held that the execution of judgments in cases already
resolved with finality must be stayed pending the resolution of all the other Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of
similar claims arising from the sinking of M/V P. Aboitiz. Considering that the their interests in the common fund for the results of the acts of the captain
claims against Aboitiz had reached more than 100, the Court found it referred to in Art. 587.
necessary to collate all these claims before their payment from the insurance
proceeds of the vessel and its pending freightage. As a result, the Court Each co-owner may exempt himself from this liability by the abandonment,
exhorted the trial courts before whom similar cases remained pending to before a notary, of the part of the vessel belonging to him.
proceed with trial and adjudicate these claims so that the pro-rated share of
each claim could be determined after all the cases shall have been decided. 32 Art. 837. The civil liability incurred by shipowners in the case prescribed in
this section, shall be understood as limited to the value of the vessel with all
In the 1993 GAFLAC case, the Court applied the limited liability rule in favor its appurtenances and freightage served during the voyage.
of Aboitiz based on the trial courts finding therein that Aboitiz was not
negligent. The Court explained, thus: These articles precisely intend to limit the liability of the shipowner or agent to
the value of the vessel, its appurtenances and freightage earned in the
x x x In the few instances when the matter was considered by this Court, we voyage, provided that the owner or agent abandons the vessel. 35 When the
have been consistent in this jurisdiction in holding that the only time the vessel is totally lost in which case there is no vessel to abandon,
Limited Liability Rule does not apply is when there is an actual finding of abandonment is not required. Because of such total loss the liability of the
negligence on the part of the vessel owner or agent x x x. The pivotal shipowner or agent for damages is extinguished.36 However, despite the total
question, thus, is whether there is finding of such negligence on the part of loss of the vessel, its insurance answers for the damages for which a
the owner in the instant case. shipowner or agent may be held liable.37

A careful reading of the decision rendered by the trial court in Civil Case No. Nonetheless, there are exceptional circumstances wherein the ship agent
144425 as well as the entirety of the records in the instant case will show that could still be held answerable despite the abandonment of the vessel, as
there has been no actual finding of negligence on the part of petitioner. where the loss or injury was due to the fault of the shipowner and the captain.
xxx The international rule is to the effect that the right of abandonment of vessels,
as a legal limitation of a shipowners liability, does not apply to cases where
The ruling in the 1993 GAFLAC case cited the real and hypothecary doctrine the injury or average was occasioned by the shipowners own fault. 38
in maritime law that the shipowner or agents liability is merely co-extensive Likewise, the shipowner may be held liable for injuries to passengers
with his interest in the vessel such that a total loss thereof results in its notwithstanding the exclusively real and hypothecary nature of maritime law if
extinction. "No vessel, no liability" expresses in a nutshell the limited liability fault can be attributed to the shipowner.
rule.
As a general rule, a ship owners liability is merely co-extensive with his
In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 interest in the vessel, except where actual fault is attributable to the
and 837 under Book III of the Code of Commerce, thus: shipowner. Thus, as an exception to the limited
liability doctrine, a shipowner or ship agent may be held liable for damages Explicit is the rule under Article 1736 of the Civil Code that the extraordinary
when the sinking of the vessel is attributable to the actual fault or negligence responsibility of the common carrier begins from the time the goods are
of the shipowner or its failure to ensure the seaworthiness of the vessel. The delivered to the carrier. This responsibility remains in full force and effect
29

instant petitions cannot be spared from the application of the exception to the even when they are temporarily unloaded or stored in transit, unless the
doctrine of limited liability in view of the unanimous findings of the courts shipper or owner exercises the right of stop page in transitu, and terminates
below that both Aboitiz and the crew failed to ensure the seaworthiness of the only after the lapse of a reasonable time for the acceptance, of the goods by
M/V P. Aboitiz. the consignee or such other person entitled to receive them. 30

MISDELIVERY It was further provided in the samestatute that the carrier may be relieved
from the responsibility for loss or damage to the goods upon actual or
CASE #18 constructive delivery of the same by the carrier to the consignee or to the
person who has the right to receive them. In sales, actual delivery has been
31

Under the New Civil Code, common carriers, from the nature of their defined as the ceding of the corporeal possession by the seller, and the
business and for reasons of public policy, are bound to observe extraordinary actual apprehension of the corporeal possession by the buyer or by some
diligencein the vigilance over goods, according to the circumstances of each person authorized by him to receive the goods as his representative for the
case. Common carriers are responsible for loss, destruction or deterioration
23 purpose of custody or disposal. By the same token, there is actual delivery
32

of the goods unless the same is due to flood, storm, earthquake or other in contracts for the transport of goods when possession has been turned over
natural disaster or calamity. Extraordinary diligence is that extreme care and to the consignee or to his duly authorized agent and a reasonable time is
caution which persons of unusual prudence and circumspection use for given him to remove the goods. 33

securing or preserving their own property or rights. This expecting

standardimposed on common carriers in contract of carrier of goods is In this case, there is no dispute that the custody of the goods was never
intended to tilt the scales in favor of the shipper who is at the mercy of the turned over to the consignee or his agents but was lost into the hands of
common carrier once the goods have been lodged for the shipment. Hence, unauthorized persons who secured possession thereof on the strength of
in case of loss of goods in transit, the common carrier is presumed under the falsified documents. The loss or the misdelivery of the goods in the instant
law to have been in fault or negligent. case gave rise to the presumption that the common carrier is at fault or
negligent.
Article 1736 and Article 1738 are the provisions in the New Civil Code which
define the period when the common carrier is required to exercise diligence A common carrier is presumed to have been negligent if it fails to prove that it
lasts, viz: exercised extraordinary vigilance over the goods it transported. When the
34

goods shipped are either lost or arrived in damaged condition, a presumption

Article 1736. The extraordinary responsibility of the common carrier lasts from arises against the carrier of its failure to observe that diligence, and there
the time the goodsare unconditionally placed in the possession of, and need not be an express finding of negligence to hold it liable. To overcome
35

received by the carrier for transportation until the same are delivered, actually the presumption of negligence, the common carrier must establish by
or constructively, by the carrier to the consignee, or to the person who has a adequateproof that it exercised extraordinary diligence over the goods. It36

right to receive them, without prejudice to the provisions of article 1738. must do more than merely show that some other party could be responsible
for the damage. 37

Article 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 In the present case, petitioners failed to prove that they did exercise the
carrier at the place of destination, until the consignee has been advised of the degree of diligence required by law over the goods they transported. Indeed,
arrival of the goods and has had reasonable opportunity thereafter to remove aside from their persistent disavowal of liability by conveniently posing an
them or otherwise dispose of them. excuse that their extraordinary responsibility isterminated upon release of the
goods to the Panamanian Ports Authority, petitioners failed to adduce Petitioners could have offered evidence before the trial court to show that
sufficient evidence they exercised extraordinary care to prevent unauthorized they exercised the highest degree of care and caution even after the goods
withdrawal of the shipments. Nothing in the New Civil Code, however, was turned over to the custom authorities, by promptly notifying the
suggests, even remotely, that the common carriers responsibility over the consignee of its arrival at the P01i of Cristobal in order to afford them ample
goods ceased upon delivery thereof to the custom authorities. To the mind of opportunity to remove the cargoes from the port of discharge. We have
this Court, the contract of carriage remains in full force and effect even after scoured the records and found that neither the consignee nor the notify paiiy
the delivery of the goods to the port authorities; the only delivery that was informed by the petitioners of the arrival of the goods, a crucial fact
releases it from their obligation to observe extraordinary care is the delivery indicative of petitioners' failure to observe extraordinary diligence in handling
to the consignee or his agents. Even more telling of petitioners continuing the goods entrusted to their custody for transport. They could have presented
liability for the goods transported to the fact that the original bills of lading up proof to show that they exercised extraordinary care but they chose in vain,
to this time, remains in the possession of the notify party or consignee. full reliance to their cause on applicability of Panamanian law to local
Explicit on this point is the provision of Article 353 of the Code of Commerce jurisdiction. It is for this reason that we find petitioners liable for the
which provides: misdelivery of the goods. It is evident from the review of the records and by
the evidence adduced by the respondent that petitioners failed to rebut the
Article 353. The legal evidence of the contract between the shipper and the prima facie presumption of negligence. We find no compelling reason to
carrier shall be the bills of lading, by the contents of which the disputes which depa1i from the ruling of the Court of Appeals that under the contract of
may arise regarding their execution and performance shall be decided, no carriage, petitioners are liable for the value of the misdelivcred goods.
exceptions being admissible other than those of falsity and material error in
the drafting. LIABILITY AGAINST THAT OF ARRASTRE OPERATOR

After the contract has been complied with, the bill of lading which the carrier CASE #19
has issued shall be returned to him, and by virtue of the exchange of this title
with the thing transported, the respective obligations and actions shall be Common carriers, from the nature of their business and for reasons of public
considered cancelled, unless in the same act the claim which the parties may policy, are bound to observe extraordinary diligence in the vigilance over the
wish to reserve be reduced to writing, with the exception of that provided for goods transported by them. Subject to certain exceptions enumerated under
in Article 366. Article 1734 of the Civil Code, common carriers are responsible for the loss,
destruction, or deterioration of the goods. The extraordinary responsibility of
In case the consignee, upon receiving the goods, cannot return the bill of the common carrier lasts from the time the goods are unconditionally placed
lading subscribed by the carrier, because of its loss or of any other cause, he in the possession of, and received by the carrier for transportation until the
must give the latter a receiptfor the goods delivered, this receipt producing same are delivered, actually or constructively, by the carrier to the consignee,
the same effects as the return of the bill of lading. or to the person who has a right to receive them.

While surrender of the original bill of lading is not a condition precedent for For marine vessels, Article 619 of the Code of Commerce provides that the
the common carrier to bedischarged from its contractual obligation, there ship captain is liable for the cargo from the time it is turned over to him at the
must be, at the very least, an acknowledgement of the delivery by signing the dock or afloat alongside the vessel at the port of loading, until he delivers it
delivery receipt, if surrender of the original of the bill of lading is not possible.
38 on the shore or on the discharging wharf at the port of unloading, unless
There was neither surrender of the original copies of the bills of lading nor agreed otherwise. In Standard Oil Co. of New York v. Lopez Castelo, the
was there acknowledgment of the delivery in the present case. This leads to Court interpreted the ship captains liability as ultimately that of the shipowner
the conclusion that the contract of carriage still subsists and petitioners could by regarding the captain as the representative of the shipowner.
be held liable for the breach thereof.
Lastly, Section 2 of the COGSA provides that under every contract of carriage term "international transportation," as defined in Article I(2) of the Warsaw
of goods by sea, the carrier in relation to the loading, handling, stowage, Convention. As provided therein, a contract is one of international transportation
carriage, custody, care, and discharge of such goods, shall be subject to the only if
responsibilities and liabilities and entitled to the rights and immunities set
forth in the Act. Section 3 (2) thereof then states that among the carriers according to the contract made by the parties, the place of departure
responsibilities are to properly and carefully load, handle, stow, carry, keep, and the place of destination, whether or not there be a break in the
care for, and discharge the goods carried. transportation or a transshipment, are situated either within the
territories of two High Contracting Parties, or within the territory of a
On the other hand, the functions of an arrastre operator involve the handling single High Contracting Party, if there is an agreed stopping place
of cargo deposited on the wharf or between the establishment of the within a territory subject to the sovereignty, mandate or authority of
consignee or shipper and the ship's tackle. Being the custodian of the goods another power, even though that power is not a party to this
discharged from a vessel, an arrastre operator's duty is to take good care of convention.
the goods and to turn them over to the party entitled to their possession.
There are then two categories of international transportation, viz., (1) that
Handling cargo is mainly the arrastre operator's principal work so its where the place of departure and the place of destination are situated within
drivers/operators or employees should observe the standards and measures the territories of two High Contracting Parties regardless of whether or not
necessary to prevent losses and damage to shipments under its custody. there be a break in the transportation or a transshipment; and (2) that where
the place of departure and the place of destination are within the territory of a
The legal relationship between the consignee and the arrastre operator is single High Contracting Party if there is an agreed stopping place within a
akin to that of a depositor and warehouseman. The relationship between the territory subject to the sovereignty, mandate, or authority of another power,
consignee and the common carrier is similar to that of the consignee and the even though the power is not a party of the Convention.
arrastre operator. Since it is the duty of the ARRASTRE to take good care of
the goods that are in its custody and to deliver them in good condition to the The High Contracting Parties referred to in the Convention are the signatories
consignee, such responsibility also devolves upon the CARRIER. Both the thereto and those which subsequently adhered to it.
ARRASTRE and the CARRIER are therefore charged with and obligated to
deliver the goods in good condition to the consignee. (Emphasis supplied) The contracts of transportation in this case are evidenced by the two TWA
(Citations omitted) tickets, No. 015:9475:153:304 and No. 015:9475:153:305, both purchased
and issued in Bangkok, Thailand. On the basis alone of the provisions
The liability of the arrastre operator was reiterated in Eastern Shipping Lines, therein, it is obvious that the place of departure and the place of destination
Inc. v. Court of Appeals with the clarification that the arrastre operator and the are all in the territory of the United States, or of a single High Contracting
carrier are not always and necessarily solidarily liable as the facts of a case Party. The contracts, therefore, cannot come within the purview of the first
may vary the rule. category of international transportation. Neither can it be under the second
category since there was NO agreed stopping place within a territory subject
CARRIAGE OF GOODS: THE LAW OF THE COUNTRY OF DESTINATION to the sovereignty, mandate, or authority of another power.
SHALL APPLY
The only way to bring the contracts between Purita and Carmina Mapa, on
CASE #20 the one hand, and TWA, on the other, within the first category of "international
transportation" is to link them with, or to make them an integral part of, the
It appears clear to us that TWA itself, the trial court, and the Court of Appeals Manila-Los Angeles travel of Purita and Carmina through PAL aircraft. The
impliedly admit that if the sole basis were the two TWA tickets for Los Angeles- "linkages" which have been pointed out by the TWA, the trial court, and the
New York-Boston-St. Louis-Chicago, the contracts cannot be brought within the Court of Appeals are (1) the handwritten notations, viz., INT'L TKT # 079-
4402956821-2 and INT'L TKT # 079-4402956819, on the two TWA tickets; been regarded by the parties as a single operation,
and (2) the entries made by petitioners Purita and Carmina Mapa in column whether it had been agreed upon under the form of a
YOUR COMPLETE ITINERARY in TWA's Passenger Property Questionnaire, single contract or of a series of contracts, and it shall
wherein they mentioned their travel from Manila to Los Angeles in flight PR not lose its international character merely because
102. one contract or a series of contracts is to be
performed entirely within a territory subject to the
The alleged "international tickets" mentioned in the notations in conjunction sovereignty, suzerainty, mandate, or authority of the
with which the two TWA tickets were issued were not presented. Clearly then, same High Contracting Party.
there is at all no factual basis of the finding that the TWA tickets were issued
in conjunction with the international tickets, which are even, at least as of It also points to Article 15 of the IATA Recommend Practice 1724, which
now, non-existent. provides: Carriage to be performed by a several successive carriers under
one ticket, or under a ticket and any conjunction ticket issued in connection
As regards the petitioner's entry in YOUR COMPLETE ITINERARY column of therewith, is regarded as a single operation." 30
the Passenger Property Questionnaire wherein they included the Manila-Los
Angeles travel, it must be pointed out that this was made on 4 September The flaw of respondent's position is the presumption that the parties have
1990 27 by petitioners Purita and Carmina Mapa, and only in connection with their "regarded" as an "undivided carriage" or as a "single operation" the carriage
claim for their lost pieces of baggage. The loss occurred much earlier, or on 27 from Manila to Los Angeles through PAL then to New York-Boston-St. Louis-
August 1990. The entry can by no means be considered as a part of, or Chicago through TWA. The dismissal then of the second Amended Complaint
supplement to, their contracts of transportation evidenced by the TWA tickets by the trial court and the Court of Appeals' affirmance of the dismissal were
which covered transportation within the United States only. not based on indubitable facts or grounds, but no inferences without
established factual basis.
It must be underscored that the first category of international transportation
under the Warsaw Convention is based on "the contract made by the FIRE DOES NOT EXEMPT CARGO CARRIER FROM RESPONSIBILITY
parties." TWA does not claim that the Manila-Los Angeles contracts of
transportation which brought Purita and Carmina to Los Angeles were also its Article 1734 of the Civil Code provides:
contracts. It does not deny the assertion of the petitioners that those
contracts were independent of the TWA tickets issued in Bangkok, Thailand.
"Art. 1734. Common carriers are responsible for the loss, destruction, or
No evidence was offered that TWA and PAL had an agreement concerning
deterioration of the goods, unless the same is due to any of the following
transportation of passengers from points of departures not served with
causes only:
aircrafts of one or the other. There could have been no difficulty for such
agreement, since TWA admitted without qualification in paragraph 1 of its
Answer 28 to the second Amended Complaint the allegation in paragraph 1.1 of (1)Flood, storm, earthquake, lightning, or other natural disaster or
the latter 29 that TWA "is a foreign corporation licensed to do business in the calamity;
Philippines with office address at Ground Floor, Saville Building, Sen. Gil. J.
Puyat Avenue, corner Paseo de Roxas, Makati, Metro Manila." (2) Act of the public enemy in war, whether international or civil;

TWA relies on Article I(3) of the Convention, which provides as follows: (3) Act or omission of the shipper or owner of the goods;

3. A carriage to be performed by several successive (4) The character of the goods or defects in the packing or in the
air carriers is deemed, for the purposes of this containers;
Convention, to be one undivided carriage, if it has
 (5) Order or act of competent public authority." 24-HR PERIOD TO CLAIM FOR DAMAGE/AVERAGE AGAINST CARRIER
(ART.366, CODE OF COMMERCE)
Fire is not one of those enumerated under the above provision which
exempts a carrier from liability for loss or destruction of the cargo. On the second issue, we affirm the findings of the lower courts that petitioner
Lorenzo Shipping was negligent in its care and custody of the consignees
In Eastern Shipping Lines, Inc. vs. Intermediate Appellate Court, 9 we ruled goods.
that since the peril of fire is not comprehended within the exceptions in Article
1734, then the common carrier shall be presumed to have been at fault or to The steel pipes, subject of this case, were in good condition when they were
have acted negligently, unless it proves that it has observed the extraordinary loaded at the port of origin (Manila) on board petitioner Lorenzo Shippings
diligence required by law. M/V Lorcon IV en route to Davao City. Petitioner Lorenzo Shipping issued
clean bills of lading covering the subject shipment. A bill of lading, aside from
Even if fire were to be considered a natural disaster within the purview of being a contract38 and a receipt,39 is also a symbol40 of the goods covered by
Article 1734, it is required under Article 1739 10 of the same Code that the it. A bill of lading which has no notation of any defect or damage in the goods
natural disaster must have been the proximate and only cause of the loss, is called a "clean bill of lading." 41 A clean bill of lading constitutes prima facie
and that the carrier has exercised due diligence to prevent or minimize the evidence of the receipt by the carrier of the goods as therein described. 42
loss before, during or after the occurrence of the disaster.
The case law teaches us that mere proof of delivery of goods in good order to
We have held that a common carriers duty to observe the requisite diligence a carrier and the subsequent arrival in damaged condition at the place of
in the shipment of goods lasts from the time the articles are surrendered to or destination raises a prima facie case against the carrier. 43 In the case at bar,
unconditionally placed in the possession of, and received by, the carrier for M/V Lorcon IV of petitioner Lorenzo Shipping received the steel pipes in good
transportation until delivered to or until the lapse of a reasonable time for their order and condition, evidenced by the clean bills of lading it issued. When the
acceptance by the person entitled to receive them. When the goods shipped cargo was unloaded from petitioner Lorenzo Shippings vessel at the Sasa
either are lost or arrive in damaged condition, a presumption arises against Wharf in Davao City, the steel pipes were rusted all over. M/V San Mateo
the carrier of its failure to observe that diligence, and there need not be an Victory of respondent Gearbulk, Ltd, which received the cargo, issued Bills of
express finding of negligence to hold it liable. 11 s
1awphi1.nt
Lading Nos. DAV/OAK 1 to 7 and Nos. DAV/SEA 1 to 6 covering the entire
shipment, all of which were marked "ALL UNITS HEAVILY RUSTED." R.J.
Common carriers are obliged to observe extraordinary diligence in the Del Pan Surveyors found that the cargo hold of the M/V Lorcon IV was
vigilance over the goods transported by them. Accordingly, they are flooded with seawater, and the tank top was rusty, thinning and perforated,
presumed to have been at fault or to have acted negligently if the goods are thereby exposing the cargo to sea water. There can be no other conclusion
lost, destroyed or deteriorated. There are very few instances when the than that the cargo was damaged while on board the vessel of petitioner
presumption of negligence does not attach and these instances are Lorenzo Shipping, and that the damage was due to the latters negligence. In
enumerated in Article 1734. In those cases where the presumption is applied, the case at bar, not only did the legal presumption of negligence attach to
the common carrier must prove that it exercised extraordinary diligence in petitioner Lorenzo Shipping upon the occurrence of damage to the cargo. 44
order to overcome the presumption. 12 More so, the negligence of petitioner was sufficiently established. Petitioner
Lorenzo Shipping failed to keep its vessel in seaworthy condition. R.J. Del
Pan Surveyors found the tank top of M/V Lorcon IV to be "rusty, thinning, and
Respondent Federal Phoenix Assurance raised the presumption of with several holes at different places." Witness Captain Pablo Fernan,
negligence against petitioners. However, they failed to overcome it by Operations Manager of respondent Transmarine Carriers, likewise observed
sufficient proof of extraordinary diligence. the presence of holes at the deck of M/V Lorcon IV. 45 The unpatched holes
allowed seawater, reaching up to three (3) inches deep, to enter the flooring
of the hatch of the vessel where the steel pipes were stowed, submerging the
latter in sea water.46 The contact with sea water caused the steel pipes to The twenty-four-hour period prescribed by Art. 366 of the Code of Commerce
rust. The silver nitrate test, which Toplis and Harding employed, further within which claims must be presented does not begin to run until the
verified this conclusion.47 Significantly, petitioner Lorenzo Shipping did not consignee has received such possession of the merchandise that he may
even attempt to present any contrary evidence. Neither did it offer any proof exercise over it the ordinary control pertinent to ownership. 51 In other words,
to establish any of the causes that would exempt it from liability for such there must be delivery of the cargo by the carrier to the consignee at the
damage.48 It merely alleged that the: (1) packaging of the goods was place of destination.52 In the case at bar, consignee Sumitomo has not
defective; and (2) claim for damages has prescribed. received possession of the cargo, and has not physically inspected the same
at the time the shipment was discharged from M/V Lorcon IV in Davao City.
To be sure, there is evidence that the goods were packed in a superior Petitioner Lorenzo Shipping failed to establish that an authorized agent of the
condition. John M. Graff, marine surveyor of Toplis and Harding, examined consignee Sumitomo received the cargo at Sasa Wharf in Davao City.
the condition of the cargo on board the vessel San Mateo Victory. He testified Respondent Transmarine Carriers as agent of respondent Gearbulk, Ltd.,
that the shipment had superior packing "because the ends were covered with which carried the goods from Davao City to the United States, and the
plastic, woven plastic. Whereas typically they would not go to that bother ... principal, respondent Gearbulk, Ltd. itself, are not the authorized agents as
Typically, they come in with no plastic on the ends. They might just be contemplated by law. What is clear from the evidence is that the consignee
banded, no plastic on the ends ..."49 received and took possession of the entire shipment only when the latter
reached the United States shore. Only then was delivery made and
On the issue of prescription of respondent Chubb and Sons claim for completed. And only then did the 24-hour prescriptive period start to run.
damages, we rule that it has not yet prescribed at the time it was made.
Finally, we find no merit to the contention of respondents Gearbulk and
Art. 366 of the Code of Commerce states: Transmarine that American law governs the contract of carriage because the
U.S.A. is the country of destination. Petitioner Lorenzo Shipping, through its
M/V Lorcon IV, carried the goods from Manila to Davao City. Thus, as against
Within the twenty-four hours following the receipt of the merchandise,
petitioner Lorenzo Shipping, the place of destination is Davao City. Hence,
the claim against the carrier for damage or average, which may be
Philippine law applies.
found therein upon the opening of the packages, may be made,
provided that the indications of the damage or average which gives
rise to the claim cannot be ascertained from the outside part of such WARSAW CONVENTION
package, in which case the claim shall be admitted only at the time of
the receipt. CASE#23

After the periods mentioned have elapsed, or transportation charges The Warsaw Convention to which the Republic of the Philippines is a party
have been paid, no claim shall be admitted against the carrier with and which has the force and effect of law in this country applies to all
regard to the condition in which the goods transported were delivered. international transportation of persons, baggage or goods performed by an
aircraft gratuitously or for hire. 5 As enumerated in the Preamble of the
A somewhat similar provision is embodied in the Bill of Lading No. T-3 which Convention, one of the objectives is "to regulate in a uniform manner the
reads:50 conditions of international transportation by air". 6 The contract of carriage
entered into by the private respondent with Singapore Airlines, and
subsequently with the petitioner, to transport him to nine cities in different
NOTE: No claim for damage or loss shall be honored twenty-four (24) countries with New York as the final destination is a contract of international
hours after delivery. transportation and the provisions of the Convention automatically apply and
exclusively govern the rights and liabilities of the airline and its passengers. 7
(Ref. Art. 366 C Com.)
This includes section 28 (1) which enumerates the four places where an Transportation to be performed by several successive carriers shall
action for damages may be brought. be deemed, for the purposes of this convention, to be one undivided
transportation, if it has been regarded by the parties as a single
The threshold issue of jurisdiction of Philippine courts under Art 28 (1) must operation, whether it has been agreed upon under the form of a
first be resolved before any pronouncements may be made on the liability of single contract or a series of contracts, and it shall not lose its
the carrier thereunder. 8 The objections raised by the private respondent that international character merely because one contract or series of
this case is released from the terms of the Convention because the incident contracts is to be performed entirely within the territory subject of the
on which this action is predicated did not occur in the process of embarking sovereignty, suzerainty, mandate or authority of the same High
and disembarking from the carrier under Art 17 9 and that the employees of Contracting Party.
the petitioner airline acted with malice and bad faith under Art 25 (1) 10 pertain
to the merits of the case which may be examined only if the action has first The contract of carriage between the private respondent and Singapore
been properly commenced under the rules on jurisdiction set forth in Art. 28 Airlines although performed by different carriers under a series of airline
(1). tickets, including that issued by the petitioner, constitutes a single operation.
Members of the IATA are under a general pool partnership agreement
Art 28 (1) of the Warsaw Convention states: wherein they act as agent of each other in the issuance of tickets 11 to
contracted passengers to boost ticket sales worldwide and at the same time
Art 28 (1) An action for damages must be brought at the option of the provide passengers easy access to airlines which are otherwise inaccessible
plaintiff, in the territory of one of the High Contracting Parties, either in some parts of the world. Booking and reservation among airline members
before the court of the domicile of the carrier or of his principal place are allowed even by telephone and it has become an accepted practice
of business or where he has a place of business through which the among them. 12 A member airline which enters into a contract of carriage
contract has been made, or before the court at the place of consisting of a series of trips to be performed by different carriers is
destination. authorized to receive the fare for the whole trip and through the required
process of interline settlement of accounts by way of the IATA clearing house
an airline is duly compensated for the segment of the trip serviced. 13 Thus,
There is no dispute that petitioner issued the ticket in Geneva which was
when the petitioner accepted the unused portion of the conjunction tickets,
neither the domicile nor the principal place of business of petitioner nor the
entered it in the IATA clearing house and undertook to transport the private
respondent's place of destination.
respondent over the route covered by the unused portion of the conjunction
tickets, i.e., Geneva to New York, the petitioner tacitly recognized its
The question is whether the contract of transportation between the petitioner commitment under the IATA pool arrangement to act as agent of the principal
and the private respondent would be considered as a single operation and contracting airline, Singapore Airlines, as to the segment of the trip the
part of the contract of transportation entered into by the latter with Singapore petitioner agreed to undertake. As such, the petitioner thereby assumed the
Airlines in Manila. obligation to take the place of the carrier originally designated in the original
conjunction ticket. The petitioner's argument that it is not a designated carrier
Petitioner disputes the ruling of the lower court that it is. Petitioner's main in the original conjunction tickets and that it issued its own ticket is not
argument is that the issuance of a new ticket in Geneva created a contract of decisive of its liability. The new ticket was simply a replacement for the
carriage separate and distinct from that entered by the private respondent in unused portion of the conjunction ticket, both tickets being for the same
Manila. amount of US$2,760 and having the same points of departure and
destination. 14 By constituting itself as an agent of the principal carrier the
We find the petitioner's argument without merit. petitioner's undertaking should be taken as part of a single operation under
the contract of carriage executed by the private respondent and Singapore
Art 1(3) of the Warsaw Convention which states: Airlines in Manila.
The quoted provision of the Warsaw Convention Art. 1(3) clearly states that a Nevertheless, this Court notes that jurisprudence in the Philippines and the
contract of air transportation is taken as a single operation whether it is United States also recognizes that the Warsaw Convention does not
founded on a single contract or a series of contracts. The number of tickets "exclusively regulate" the relationship between passenger and carrier on an
issued does not detract from the oneness of the contract of carriage as long international flight. This Court finds that the present case is substantially
as the parties regard the contract as a single operation. The evident purpose similar to cases in which the damages sought were considered to be outside
underlying this Article is to promote international air travel by facilitating the the coverage of the Warsaw Convention.
procurement of a series of contracts for air transportation through a single
principal and obligating different airlines to be bound by one contract of In United Airlines v. Uy,18 this Court distinguished between the (1) damage to
transportation. Petitioner's acquiescence to take the place of the original the passengers baggage and (2) humiliation he suffered at the hands of the
designated carrier binds it under the contract of carriage entered into by the airlines employees. The first cause of action was covered by the Warsaw
private respondent and Singapore Airlines in Manila. Convention which prescribes in two years, while the second was covered by
the provisions of the Civil Code on torts, which prescribes in four years.
The third option of the plaintiff under Art 28 (1) of the Warsaw Convention
e.g., to sue in the place of business of the carrier wherein the contract was Similar distinctions were made in American jurisprudence. In Mahaney v. Air
made, is therefore, Manila, and Philippine courts are clothed with jurisdiction France,19 a passenger was denied access to an airline flight between New
over this case. We note that while this case was filed in Cebu and not in York and Mexico, despite the fact that she held a confirmed reservation. The
Manila the issue of venue is no longer an issue as the petitioner is deemed to court therein ruled that if the plaintiff were to claim damages based solely on
have waived it when it presented evidence before the trial court. the delay she experienced for instance, the costs of renting a van, which
she had to arrange on her own as a consequence of the delay the
CASE #24 complaint would be barred by the two-year statute of limitations. However,
where the plaintiff alleged that the airlines subjected her to unjust
The Warsaw Convention applies to "all international transportation of discrimination or undue or unreasonable preference or disadvantage, an act
persons, baggage or goods performed by any aircraft for hire." It seeks to punishable under the United States laws, then the plaintiff may claim purely
accommodate or balance the interests of passengers seeking recovery for nominal compensatory damages for humiliation and hurt feelings, which are
personal injuries and the interests of air carriers seeking to limit potential not provided for by the Warsaw Convention. In another case, Wolgel v.
liability. It employs a scheme of strict liability favoring passengers and Mexicana Airlines,20 the court pronounced that actions for damages for the
imposing damage caps to benefit air carriers.16 The cardinal purpose of the "bumping off" itself, rather than the incidental damages due to the delay, fall
Warsaw Convention is to provide uniformity of rules governing claims arising outside the Warsaw Convention and do not prescribe in two years.
from international air travel; thus, it precludes a passenger from maintaining
an action for personal injury damages under local law when his or her claim In the Petition at bar, private respondents Complaint alleged that both PAL
does not satisfy the conditions of liability under the Convention. 17 and Singapore Airlines were guilty of gross negligence, which resulted in his
being subjected to "humiliation, embarrassment, mental anguish, serious
Article 19 of the Warsaw Convention provides for liability on the part of a anxiety, fear and distress."21 The emotional harm suffered by the private
carrier for "damages occasioned by delay in the transportation by air of respondent as a result of having been unreasonably and unjustly prevented
passengers, baggage or goods." Article 24 excludes other remedies by from boarding the plane should be distinguished from the actual damages
further providing that "(1) in the cases covered by articles 18 and 19, any which resulted from the same incident. Under the Civil Code provisions on
action for damages, however founded, can only be brought subject to the tort,22 such emotional harm gives rise to compensation where gross
conditions and limits set out in this convention." Therefore, a claim covered negligence or malice is proven.
by the Warsaw Convention can no longer be recovered under local law, if the
statute of limitations of two years has already lapsed. The instant case is comparable to the case of Lathigra v. British Airways.23
In Lathigra, it was held that the airlines negligent act of reconfirming the Private respondents Complaint was filed with the RTC on 15 August 1997,
passengers reservation days before departure and failing to inform the latter which was less than four years since PAL received his extrajudicial demand
that the flight had already been discontinued is not among the acts covered on 25 January 1994. Thus, private respondents claims have not yet
by the Warsaw Convention, since the alleged negligence did not occur during prescribed and PALs Motion to Dismiss must be denied.
the performance of the contract of carriage but, rather, days before the
scheduled flight. Moreover, should there be any doubt as to the prescription of private
respondents Complaint, the more prudent action is for the RTC to continue
In the case at hand, Singapore Airlines barred private respondent from hearing the same and deny the Motion to Dismiss. Where it cannot be
boarding the Singapore Airlines flight because PAL allegedly failed to endorse determined with certainty whether the action has already prescribed or not,
the tickets of private respondent and his companions, despite PALs the defense of prescription cannot be sustained on a mere motion to dismiss
assurances to respondent that Singapore Airlines had already confirmed their based on what appears to be on the face of the complaint. 24 And where the
passage. While this fact still needs to be heard and established by adequate ground on which prescription is based does not appear to be indubitable, the
proof before the RTC, an action based on these allegations will not fall under court may do well to defer action on the motion to dismiss until after trial on
the Warsaw Convention, since the purported negligence on the part of PAL the merits.25
did not occur during the performance of the contract of carriage but days
before the scheduled flight. Thus, the present action cannot be dismissed LAST CLEAR CHANCE DOCTRINE
based on the statute of limitations provided under Article 29 of the Warsaw
Convention. CASE #25

Had the present case merely consisted of claims incidental to the airlines The records of the instant case show that both the RTC and the CA carefully
delay in transporting their passengers, the private respondents Complaint examined the factual circumstances surrounding the case, and we find no
would have been time-barred under Article 29 of the Warsaw Convention. cogent reason to disturb the same. It is, however, worthy to emphasize that
However, the present case involves a special species of injury resulting from petitioner was found negligent because of its failure to provide the necessary
the failure of PAL and/or Singapore Airlines to transport private respondent safety device to ensure the safety of motorists in crossing the railroad track.
from Singapore to Jakarta the profound distress, fear, anxiety and As such, it is liable for damages for violating the provisions of Article 2176 of
humiliation that private respondent experienced when, despite PALs earlier the New Civil Code, viz:
assurance that Singapore Airlines confirmed his passage, he was prevented
from boarding the plane and he faced the daunting possibility that he would Article 2176. Whoever, by act or omission, causes damage to another, there
be stranded in Singapore Airport because the PAL office was already closed. being fault or negligence, is obliged to pay for the damage done. Such fault
or negligence, if there is no pre-existing contractual relation between the
These claims are covered by the Civil Code provisions on tort, and not within parties, is called a quasi-delict and is governed by the provisions of this
the purview of the Warsaw Convention. Hence, the applicable prescription Chapter.
period is that provided under Article 1146 of the Civil Code:
In a long line of cases, the Court held that in order to sustain a claim based
Art. 1146. The following actions must be instituted within four years: on quasi-delict, the following requisites must concur: (1) damage to plaintiff;
(2) negligence, by act or omission, of which defendant, or some person for
(1) Upon an injury to the rights of the plaintiff; whose acts he must respond was guilty; and (3) connection of cause and
effect between such negligence and damage. 53 Applying the foregoing
(2) Upon a quasi-delict. requisites, the CA correctly made the following conclusions:
It was clearly established that plaintiffs-appellees (respondents herein) In view of the foregoing, we affirm the factual findings of the CA as well as its
sustained damage or injury as a result of the collision. That there was conclusion on petitioners negligence.
negligence on the part of PNR is, likewise, beyond cavil. Considering the
circumstances prevailing at the time of the fatal accident, the alleged safety As to whether or not Mercelita was guilty of contributory negligence, we
measures installed by the PNR at the railroad crossing is not only inadequate agree with petitioner. Contributory negligence is conduct on the part of the
but does not satisfy well-settled safety standards in transportation. x x x injured party, contributing as a legal cause to the harm he has suffered, which
falls below the standard to which he is required to conform for his own
xxxx protection.59 To hold a person as having contributed to his injuries, it must be
shown that he performed an act that brought about his injuries in disregard of
x x x An examination of the photographs of the railroad crossing at Moncada, warning or signs of an impending danger to health and body. 60 To prove
Tarlac presented as evidence by PNR itself would yield the following: (1.) contributory negligence, it is still necessary to establish a causal link,
absence of flagbars or safety railroad bars; (2.) inadequacy of the installed although not proximate, between the negligence of the party and the
warning signals; and (3.) lack of proper lighting within the area. Thus, even if succeeding injury. In a legal sense, negligence is contributory only when it
there was a flagman stationed at the site as claimed by PNR (petitioner), it contributes proximately to the injury, and not simply a condition for its
would still be impossible to know or see that there is a railroad occurrence.61
crossing/tracks ahead, or that there is an approaching train from the
Moncada side of the road since ones view would be blocked by a cockpit The court below found that there was a slight curve before approaching the
arena. x x x54 tracks; the place was not properly illuminated; ones view was blocked by a
cockpit arena; and Mercelita was not familiar with the road. Yet, it was also
Moreover, the CA held that a vehicle coming from the Moncada side would established that Mercelita was then driving the Mercedes Benz at a speed of
have difficulty in knowing that there is an approaching train because of the 70 km/hr and, in fact, had overtaken a vehicle a few yards before reaching
slight curve, more so, at an unholy hour as 2:00 a.m. Thus, it is imperative on the railroad track. Mercelita should not have driven the car the way he did.
the part of the PNR to provide adequate safety equipment in the area. 55 However, while his acts contributed to the collision, they nevertheless do not
negate petitioners liability. Pursuant to Article 2179 62 of the New Civil Code,
It may broadly be stated that railroad companies owe to the public a duty of the only effect such contributory negligence could have is to mitigate liability,
exercising a reasonable degree of care to avoid injury to persons and which, however, is not applicable in this case, as will be discussed later. 1wphi1

property at railroad crossings, which duties pertain both in the operation of

trains and in the maintenance of the crossings.56 Moreover, every corporation As to whether or not the doctrine of last clear chance is applicable, we rule in
constructing or operating a railway shall make and construct at all points the negative. The doctrine of last clear chance states that where both parties
where such railway crosses any public road, good, sufficient, and safe are negligent but the negligent act of one is appreciably later than that of the
crossings and erect at such points, at a sufficient elevation from such road as other, or where it is impossible to determine whose fault or negligence
to admit a free passage of vehicles of every kind, a sign with large and caused the loss, the one who had the last clear opportunity to avoid the loss
distinct letters placed thereon, to give notice of the proximity of the railway, but failed to do so, is chargeable with the loss. Stated differently, the
and warn persons of the necessity of looking out for trains. 57 antecedent negligence of plaintiff does not preclude him from recovering
damages caused by the supervening negligence of defendant, who had the
This Court has previously determined the liability of the PNR for damages for last fair chance to prevent the impending harm by the exercise of due
its failure to put a cross bar, or signal light, flagman or switchman, or diligence.63 The proximate cause of the injury having been established to be
semaphores. Such failure is evidence of negligence and disregard of the the negligence of petitioner, we hold that the above doctrine finds no
safety of the public, even if there is no law or ordinance requiring it because application in the instant case.
public safety demands that said device or equipment be installed. 58
CASE #26 Furthermore, in petitions for review on certiorari, only questions of law may
be put into issue. Questions of fact cannot be entertained. 21 To distinguish
Article 2176 of the New Civil Code prescribes a civil liability for damages one from the other, a question of law exists when the doubt or difference
caused by a person's act or omission constituting fault or negligence. It centers on what the law is on a certain state of facts. A question of fact, on
states: the other hand, exists if the doubt centers on the truth or falsity of the alleged
facts.22 Certainly, the finding of negligence by the RTC, which was affirmed by
Article 2176. Whoever by act or omission causes damage to another, there the CA, is a question of fact which this Court cannot pass upon as this would
being fault or negligence, is obliged to pay for the damage done. Such fault entail going into the factual matters on which the negligence was based. 23
or negligence, if there was no pre-existing contractual relation between the Moreover, it was not shown that the present case falls under any of the
parties, is called quasi-delict and is governed by the provisions of this recognized exceptions24 to the oft repeated principle according great weight
chapter. and respect to the factual findings of the trial court and the CA.

In Layugan v. Intermediate Appellate Court,17 negligence was defined as the At any rate, the records bear out that the factual circumstances of the case
omission to do something which a reasonable man, guided by considerations were meticulously scrutinized by both the RTC and the CA before arriving at
which ordinarily regulate the conduct of human affairs, would do, or the doing the same finding of negligence on the part of the petitioners, and we found no
of something which a prudent and reasonable man would not do. It is the compelling reason to disturb the same. Both courts ruled that the petitioners
failure to observe for the protection of the interests of another person, that fell short of the diligence expected of it, taking into consideration the nature of
degree of care, precaution, and vigilance which the circumstances justly its business, to forestall any untoward incident. In particular, the petitioners
demand, whereby such other person suffers injury. 18 To determine the failed to install safety railroad bars to prevent motorists from crossing the
existence of negligence, the time-honored test was: Did the defendant in tracks in order to give way to an approaching train. Aside from the absence of
doing the alleged negligent act use that reasonable care and caution which a crossing bar, the "Stop, Look and Listen" signage installed in the area was
an ordinarily prudent person would have used in the same situation? If not, poorly maintained, hence, inadequate to alert the public of the impending
then he is guilty of negligence. The law here in effect adopts the standard danger. A reliable signaling device in good condition, not just a dilapidated
supposed to be supplied by the imaginary conduct of the discreet "Stop, Look and Listen" signage, is needed to give notice to the public. It is
paterfamilias of the Roman law. The existence of negligence in a given case the responsibility of the railroad company to use reasonable care to keep the
is not determined by reference to the personal judgment of the actor in the signal devices in working order. Failure to do so would be an indication of
situation before him. The law considers what would be reckless, negligence.25 Having established the fact of negligence on the part of the
blameworthy, or negligent in the man of ordinary intelligence and prudence petitioners, they were rightfully held liable for damages.
and determines liability by that. 19
There was no contributory negligence on the part of the respondents.
In the instant petition, this Court is called upon to determine whose
negligence occasioned the ill-fated incident. The records however reveal that As to whether there was contributory negligence on the part of the
this issue had been rigorously discussed by both the RTC and the CA. To respondents, this court rule in the negative. Contributory negligence is
emphasize, the RTC ruled that it was the petitioners failure to install conduct on the part of the injured party, contributing as a legal cause to the
adequate safety devices at the railroad crossing which proximately caused harm he has suffered, which falls below the standard which he is required to
the collision. This finding was affirmed by the CA in its July 21, 2009 conform for his own protection. It is an act or omission amounting to want of
Decision. It is a well-established rule that factual findings by the CA are ordinary care on the part of the person injured which, concurring with the
conclusive on the parties and are not reviewable by this Court. They are defendants negligence, is the proximate cause of the injury. 26 Here, we
entitled to great weight and respect, even finality, especially when, as in this cannot see how the respondents could have contributed to their injury when
case, the CA affirmed the factual findings arrived at by the trial court. 20 they were not even aware of the forthcoming danger. It was established
during the trial that the jeepney carrying the respondents was following a ten-
wheeler truck which was only about three to five meters ahead. When the [I]t may broadly be stated that railroad companies owe to the public a duty of
truck proceeded to traverse the railroad track, Reynaldo, the driver of the exercising a reasonable degree of care to avoid injury to persons and
jeepney, simply followed through. He did so under the impression that it was property at railroad crossings, which duties pertain both to the operation of
safe to proceed. It bears noting that the prevailing circumstances immediately trains and to the maintenance of the crossings. Moreover, every corporation
before the collision did not manifest even the slightest indication of an constructing or operating a railway shall make and construct at all points
imminent harm. To begin with, the truck they were trailing was able to safely where such railway crosses any public road, good, sufficient, and safe
cross the track. Likewise, there was no crossing bar to prevent them from crossings, and erect at such points, at sufficient elevation from such road as
proceeding or, at least, a stoplight or signage to forewarn them of the to admit a free passage of vehicles of every kind, a sign with large and
approaching peril. Thus, relying on his faculties of sight and hearing, distinct letters placed thereon, to give notice of the proximity of the railway,
Reynaldo had no reason to anticipate the impending danger. 27 He proceeded and warn persons of the necessity of looking out for trains. The failure of the
to cross the track and, all of a sudden, his jeepney was rammed by the train PNR to put a cross bar, or signal light, flagman or switchman, or semaphore
being operated by the petitioners. Even then, the circumstances before the is evidence of negligence and disregard of the safety of the public, even if
collision negate the imputation of contributory negligence on the part of the there is no law or ordinance requiring it, because public safety demands that
respondents. What clearly appears is that the accident would not have said device or equipment be installed.29
happened had the petitioners installed reliable and adequate safety devices
along the crossing to ensure the safety of all those who may utilize the same. The responsibility of the PNR to secure public safety does not end with the
installation of safety equipment and signages but, with equal measure of
At this age of modern transportation, it behooves the PNR to exert serious accountability, with the upkeep and repair of the same. Thus, in Cusi v.
efforts to catch up with the trend, including the contemporary standards in Philippine National Railways,30 we held:
railroad safety. As an institution established to alleviate public transportation,
it is the duty of the PNR to promote the safety and security of the general Jurisprudence recognizes that if warning devices are installed in railroad
riding public and provide for their convenience, which to a considerable crossings, the travelling public has the right to rely on such warning devices
degree may be accomplished by the installation of precautionary warning to put them on their guard and take the necessary precautions before
devices. Every railroad crossing must be installed with barriers on each side crossing the tracks. A need, therefore, exists for the railroad company to use
of the track to block the full width of the road until after the train runs past the reasonable care to keep such devices in good condition and in working order,
crossing. To even draw closer attention, the railroad crossing may be or to give notice that they are not operating, since if such a signal is
equipped with a device which rings a bell or turns on a signal light to signify misunderstood it is a menace. Thus, it has been held that if a railroad
the danger or risk of crossing. It is similarly beneficial to mount advance company maintains a signalling device at a crossing to give warning of the
warning signs at the railroad crossing, such as a reflectorized crossbuck sign approach of a train, the failure of the device to operate is generally held to be
to inform motorists of the existence of the track, and a stop, look and listen evidence of negligence, which maybe considered with all the circumstances
signage to prompt the public to take caution. These warning signs must be of the case in determining whether the railroad company was negligent as a
erected in a place where they will have ample lighting and unobstructed matter of fact. 31
visibility both day and night. If only these safety devices were installed at the
Tiaong railroad crossing and the accident nevertheless occurred, we could The maintenance of safety equipment and warning signals at railroad
have reached a different disposition in the extent of the petitioners liability. crossings is equally important as their installation since poorly maintained
safety warning devices court as much danger as when none was installed at
The exacting nature of the responsibility of railroad companies to secure all. The presence of safety warning signals at railroad crossing carries with it
public safety by the installation of warning devices was emphasized in the presumption that they are in good working condition and that the public
Philippine National Railways v. Court of Appeals,28 thus: may depend on them for assistance. If they happen to be neglected and
inoperative, the public may be misled into relying on the impression of safety
they normally convey and eventually bring injury to themselves in doing so.
The doctrine of last clear chance is not applicable. Raynera, being the driver of the rear vehicle, had full control of the situation
as he was in a position to observe the vehicle in front of him. The trailer truck
Finally, the CA correctly ruled that the doctrine of last clear chance is not therein did not make a sudden left turn as in the case at bar. Thus, the theory
applicable in the instant case. The doctrine of last clear chance provides that that drivers of vehicles "who bump the rear of another vehicle" are presumed
where both parties are negligent but the negligent act of one is appreciably to be the cause of the accident is, as in this case, sufficiently contradicted by
later in point of time than that of the other, or where it is impossible to evidence, which is the sudden left turn made by Reynaldo which proximately
determine whose fault or negligence brought about the occurrence of the caused the collision.
incident, the one who had the last clear opportunity to avoid the impending
harm but failed to do so, is chargeable with the consequences arising While we agree with the trial court that Ray was likewise guilty of contributory
therefrom. Stated differently, the rule is that the antecedent negligence of a negligence as defined under Article 2179 of the Civil Code, we find it
person does not preclude recovery of damages caused by the supervening equitable to increase the ratio of apportionment of damages on account of
negligence of the latter, who had the last fair chance to prevent the the victims negligence.
impending harm by the exercise of due diligence. 32 To reiterate, the proximate
cause of the collision was the petitioners negligence in ensuring that Article 2179 reads as follows:
motorists and pedestrians alike may safely cross the railroad track. The
unsuspecting driver and passengers of the jeepney did not have any When the plaintiffs negligence was the immediate and proximate cause of
participation in the occurrence of the unfortunate incident which befell them. his injury, he cannot recover damages. But if his negligence was only
Likewise, they did not exhibit any overt act manifesting disregard for their contributory, the immediate and proximate cause of the injury being the
own safety. Thus, absent preceding negligence on the part of the defendants lack of due care, the plaintiff may recover damages, but the
respondents, the doctrine of last clear chance cannot be applied. courts shall mitigate the damages to be awarded.

CONTRIBUTORY NEGLIGENCE The underlying precept on contributory negligence is that a plaintiff who is
partly responsible for his own injury should not be entitled to recover
CASE #27 damages in full but must bear the consequences of his own negligence. The
defendant must thus be held liable only for the damages actually caused by
Clearly, the abrupt and sudden left turn by Reynaldo, without first establishing his negligence.15 The determination of the mitigation of the defendants
his right of way, was the proximate cause of the mishap which claimed the life liability varies depending on the circumstances of each case. The Court had
of Ray and injured Sergio. Proximate cause is defined as that which, in the sustained a mitigation of 50% in Rakes v. AG & P;1620% in Phoenix
natural and continuous sequence, unbroken by any efficient, intervening Construction, Inc. v. Intermediate Appellate Court17 and LBC Air Cargo, Inc. v.
cause, produces the injury, and without which the result would not have Court of Appeals;18 and 40% in Bank of the Philippine Islands v. Court of
occurred.11 The cause of the collision is traceable to the negligent act of Appeals19 and Philippine Bank of Commerce v. Court of Appeals.20 1awphi1.nt

Reynaldo for, as the trial court correctly held, without that left turn executed
with no precaution, the mishap in all probability would not have happened.12 In the case at bar, it was established that Ray, at the time of the mishap: (1)
was driving the motorcycle at a high speed; (2) was tailgating the Tamaraw
Petitioner misunderstood our ruling in Raynera v. Hiceta.13 That case also jeepney; (3) has imbibed one or two bottles of beer; and (4) was not wearing
involved a motorcycle crashing into the left rear portion of another vehicle, a protective helmet.21 These circumstances, although not constituting the
and we declared therein that drivers of vehicles "who bump the rear of proximate cause of his demise and injury to Sergio, contributed to the same
another vehicle" are presumed to be "the cause of the accident, unless result. The contribution of these circumstances are all considered and
contradicted by other evidence".14 In Raynera, the death of the victim was determined in terms of percentages of the total cause. Hence, pursuant to
solely attributable to his own negligence in bumping the rear of the trailer Rakes v. AG & P, the heirs of Ray Castillon shall recover damages only up to
truck which was traveling ahead of him at 20 to 30 kilometers per hour.
50% of the award. In other words, 50% of the damage shall be borne by the
private respondents; the remaining 50% shall be paid by the petitioner.