Transpo Midterms Notes

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS PART I - COMMON CARRIERS CHAPTER I. DEFINITION AND CONCEPT OF COMMON CARRIER 1. ARTICLE 1732, CIVIL CODE; BROAD CONCEPT Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public. COMMON CARRIER; DEFINITION; The Civil Code defines "common carriers" in the following terms: "Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public." The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions. (De Guzman vs CA) LAW ON COMMON CARRIERS SUPPLEMENTED BY THE PUBLIC SERVICE ACT; SCOPE OF PUBLIC SERVICE. — So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes: ". . . every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine ENGR. ARIEL MARK PILOTIN

repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services . . ." 1.1 De Guzman vs. CA( Junk Dealer- Cendena) ISSUE 1: Is it a common carrier even if the carriage was only ancillary to its main business? HELD. Yes. Xxx although such backhauling was done on a periodic or occasional rather than regular or scheduled manner, and even though private respondent's principal occupation was not the carriage of goods for others. There is no dispute that private respondent charged his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant here. Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). 1.2 Cruz vs Sun Holidays Inc (Newly Weds- Puerto Galera-Coco Beach) ISSUE: Is M/B Coco Beach a common carrier even if it is not available to the general public as they are only for resort guests and crew members? HELD. YES. Xxx Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions. Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly considered ancillary thereto. The constancy of respondent's ferry services in its resort operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public. 1.3 First Phil. Industrial Corp vs CA (Pipeline) ISSUE: Is a pipeline a common carrier? Held. YES. The civil code does not make a distinction as to the means of transporting, as long as it is by land, water, or air. It does not provide that the transportation of the passengers or goods should be by motor vehicle. 1

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS Petitioner is engaged in the business of transporting or carrying goods (petroleum products) for hire as a public employment. It undertakes to carry all persons indifferently, that is, to all persons who choose to employ its services,and transports the goods by land and for compensation. Under Petroleum Act of the Phil (Sec 86 of RA 387), Petitioner is a common carrier. 1.4 Calvo vs UCPB General Insurance (Customs Broker and Warehouseman) ISSUE: Is the petitoner as a customs broker and warehouseman who does not indiscriminately hold her services out to the public but only offers the same to select parties with whom she may contract in the conduct of her business a common carrier? HELD. YES. There is greater reason for holding petitioner to be a common carrier because the transportation of goods is an integral part of her business. To uphold petitioner's contention would be to deprive those with whom she contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for her customers, as already noted, is part and parcel of petitioner's business. 1.5 Asia Lighterage and Shipping vs CA ISSUE: Petitioner alleges it has no fixed and publicly known route, maintains no terminals, and issues no tickets. It points out that it is not obliged to carry indiscriminately for any person. It is not bound to carry goods unless it consents. In short, it does not hold out its services to the general public. Is it a common carrier? HELD. Yes. We therefore hold that petitioner is a common carrier whether its carrying of goods is done on an irregular rather than scheduled manner, and with an only limited clientele. A common carrier need not have fixed and publicly known routes. Neither does it have to maintain terminals or issue tickets. The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted." In the case at bar, the petitioner admitted that it is engaged in the business of shipping and lighterage, offering its barges to the public, despite its limited clientele for carrying or transporting goods by water for compensation. 1.6 Asian Terminals Inc vs Daehan Fire and Marine Insurance 1.7 Sps Perena vs Sps Zarate (School service- PNR collision) ISSUE: Is the school service a common carrier? ENGR. ARIEL MARK PILOTIN

HELD. YES. The true test for a common carrier is not the quantity or extent of the business actually transacted, or the number and character of the conveyances used in the activity, but whether the undertaking is a part of the activity engaged in by the carrier that he has held out to the general public as his business or occupation. If the undertaking is a single transaction, not a part of the general business or occupation engaged in, as advertised and held out to the general public, the individual or the entity rendering such service is a private, not a common, carrier. Applying these considerations to the case before us, there is no question that the Pereñas as the operators of a school bus service were: (a) engaged in transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers over established roads by the method by which the business was conducted; and (c) transporting students for a fee. Despite catering to a limited clientèle, the Pereñas operated as a common carrier because they held themselves out as a ready transportation indiscriminately to the students of a particular school living within or near where they operated the service and for a fee. E 2. CHARACTERISTICS; TEST TEST TO DETERMINE WHETHER A PARTY IS A COMMON CARRIER OF GOODS (FIRST PHIL. INDUSTRIAL CORPORATION V. CA) [K-E-H-M berlush] (1) He must be engaged in the business of carrying goods for others as a public employment and must hold himself as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation. (2) He must undertake to carry goods of the kind to which his business is confined; (3) He must undertake to carry by the method by which his business is conducted and over his established roads; and (4) The transportation must be for hire. 2.1. Fisher v. Yangco Steamship (Dynamite delivery) ISSUE: Board Resolution ordered the refusal of delivery of dynamites, but such violates Act. No. 98. Can state interfere? HELD. YES. CONTROL AND REGULATION OF CARRIERS. — The nature of the business of a common carrier as a public employment is such that it is clearly within the power of the state to impose such just and reasonable regulations thereon in the interest of the public as the legislator may deem proper. The right to enter the public employment as a common carrier and to offer one's services to the 2

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS public for hire does not carry with it the right to conduct that business as one pleases, without regard to the interests of the public, and free from such reasonable and just regulations as may be prescribed for the protection of the public from the reckless or careless indifference of the carrier as to the public welfare and for the prevention of unjust and unreasonable discriminations of any kind whatsoever in the performance of the carrier's duties as a servant of the public. 2.2 US vs Quinajon (Delivery Price for Provincial Govt is higher) ISSUE: Can a common carrier charge higher price for the same service? HELD. No. Common carriers are allowed to fix rates byt not undue discrimination. Act No. 98 does not prohibit the charging of a different rate for the carrying of passengers or property when the actual cost of handling and transporting the same is different. Common carriers can not make a different rate to different persons for carrying persons or merchandise, unless the actual cost of handling and shipping is different. It is when the price charged is for the purpose of favoring persons or localities or particular kinds of merchandise, that the law intervenes and prohibits. It is favoritism and discrimination which the law prohibits. If the services are alike and contemporaneous, discrimination in the price charged is prohibited. 2.3 Loadstar Shipping Co. Vs CA It is not necessary that a common carrier be issued a certificate of public convenience, and this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers.That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations and has been granted a cpc or other franchise. 2.4 National Steel Corp. Vs CA (Special Contract) Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. The most typical, although not the only form of private carriage, is the charter party, a maritime contract by which the charterer, a party other than the shipowner, obtains the use and service of all or some part of a ship for a period of time or voyage or voyages. In the case at bar, VSI did not offer its services to the general public but only to passengers under a special contract of charter party. ENGR. ARIEL MARK PILOTIN

2.5 Certificate of Public Convenience A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the operation of land transportation services for public use as required by law. Pursuant to Section 16(a) of the Public Service Act, as amended, the following requirements must be met before a CPC may be granted, to wit: (i) the applicant must be a citizen of the Philippines, or a corporation or co-partnership, association or joint-stock company constituted and organized under the laws of the Philippines, at least 60 per centum of its stock or paid-up capital must belong entirely to citizens of the Philippines; (ii) the applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its operation; and (iii) the applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. It is understood that there must be proper notice and hearing before the PSC can exercise its power to issue a CPC. De Guzman vs. CA ( Junk dealer- Cendena) ISSUE 2. Is he a common carrier even if he does not posses CPC? HELD. YES. Certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations and has been granted a certificate of public convenience or other franchise. To exempt private respondent from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience, would be offensive to sound public policy; that would be to reward private respondent precisely for failing to comply with applicable statutory requirements. The business of a common carrier impinges directly and intimately upon the safety and well being and property of those members of the general community who happen to deal with such carrier. The law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their services and the law cannot allow a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the necessary permits and authorizations.

2.6 Ownership of Vehicle Used as Carrier 3

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS 2.6.1. Registered owner rule 2.6.2 Cebu Salvage Corporation vs. Philippine Home Assurance Corp ISSUE: May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does not own? HELD. YES. It had control over what vessel it would use. All throughout its dealings with MCCII, it represented itself as a common carrier. The fact that it did not own the vessel it decided to use to consummate the contract of carriage did not negate its character and duties as a common carrier. The MCCII (respondent's subrogor) could not be reasonably expected to inquire about the ownership of the vessels which petitioner carrier offered to utilize. As a practical matter, it is very difficult and often impossible for the general public to enforce its rights of action under a contract of carriage if it should be required to know who the actual owner of the vessel is. In fact, in this case, the voyage charter itself denominated petitioner as the "owner/operator" of the vessel. 2.6.3 NONVESSEL OPERATING COMMON CARRIER (NVOCC) Non-Vessel Operating Common Carrier (NVOCC) refers to an entity, which may or may not own or operate a vessel that provides a point-to-point service which may include several modes of transport and/or undertakes group age of less container load (LCL) shipments and issues the corresponding transport document| || 3. DISTINGUISH FROM PRIVATE CARRIER A carrier is a person or corporation who undertakes to transport or convey goods or persons from one place to another, gratuitously or for hire. The carrier is classified either as a private/special carrier or as a common/public carrier. PRIVATE CARRIER COMMON CARRIER A private carrier is A common carrier is one who, without making a person, corporation, the activity a vocation, or firm or association without holding himself or engaged in the business of itself out to the public as carrying or transporting ready to act for all who passengers or goods or may desire his or its both, by land, water, or services, undertakes, by air, for special agreement in a compensation, offering particular instance such services to the only, to transport goods or public. persons from one place to another either gratuitously or for hire. Governed by provisions on ordinary contracts of ENGR. ARIEL MARK PILOTIN

governed by the provisions on common carriers of

the Civil Code

Diligence required is only ordinary, that is, the diligence of a good father of the family.

the Civil Code, the Public Service Act, and other special laws relating to transportation. -required to observe extraordinary diligence, and is presumed to be at fault or to have acted negligently in case of the loss of the effects of passengers, or the death or injuries to passengers.

3.1 PLANTERS PRODUCT INC. VS CA (Charter Party) ISSUE: Does a charter-party between a shipowner and a charterer transform a common carrier into a private one as to negate the civil law presumption of negligence in case of loss or damage to its cargo? HELD. NO. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner. 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 persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. -------------------------------------------------------------A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment by which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight;

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TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants. Contract of affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of the ship. 3.2 SAN PABLO VS PANTRANCO (Open Sea not continuation of Highway) The contention of private respondent PANTRANCO that its ferry service operation is as a private carrier, not as a common carrier for its exclusive use in the ferrying of its passenger buses and cargo trucks is absurd. PANTRANCO does not deny that it charges its passengers separately from the charges for the bus trips and issues separate tickets whenever they board the M/V "Black Double" that crosses Matnog to Allen, PANTRANCO cannot pretend that in issuing tickets to its passengers it did so as a private carrier and not as a common carrier. SEPARATE CERTIFICATE OF PUBLIC CONVENIENCE MUST BE SECURED. — Respondent PANTRANCO should secure a separate CPC for the operation of an interisland or coastwise shipping service in accordance with the provisions of law. Its CPC as a bus transportation cannot be merely amended to include this water service under the guise that it is a mere private ferry service. Thus the Court holds that the water transport service between Matnog and Allen is not a ferryboat service but a coastwise or interisland shipping service. Before private respondent may be issued a franchise or CPC for the operation of the said service as a common carrier, it must comply with the usual requirements of filing an application, payment of the fees, publication, adducing evidence at a hearing and affording the oppositors the opportunity to be heard, among others, as provided by law.

ENGR. ARIEL MARK PILOTIN

3.3 Limited Clientele 3.3.1 Philippine American General Insurance Co. vs PKS Shipping Company ISSUE: Is PKS Shipping company a common carrier albeit its limited clientele? HELD. YES. Respondent PKS Shipping Corp transported the 75,000 bags of cement of petitioner DUMC in a barge. The bags of cement sank together with the barge when the latter was being towed by a tug boat. SC declared that PKS was a common carrier because it was engaged in the business of carrying goods for others for a fee. The regularity of its activities in this area indicates more than just a casual activity on its part. Neither can the concept of a common carrier change merely because individual contracts are executed or entered into with patrons of the carrier. Such restrictive interpretation would make it easy for a common carrier to escape liability by the simple expedient of entering into those distinct agreements with clients. 3.3.2. FGU Insurance Corp. Vs G.P. Sarmiento Trucking Corp. (Exception: Limited Clientele) ISSUE: Is GPS a private carrier for having a limited clientele as evidenced by a special contract? HELD. Yes. GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no other individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for hire or compensation, offering their services to the public, whether to the public in general or to a limited clientele in particular, but never on an exclusive basis. The true test of a common carrier is the carriage of passengers or goods, providing space for those who opt to avail themselves of its transportation service for a fee. Given accepted standards, GPS scarcely falls within the term "common carrier." 3.4 LINE SERVICE VS TRAMP SERVICE Cargo operations may be classified into two types, line services and tramp services. (a) LINE SERVICE [ Common Carrier] - carries “general cargoes”, whatever is offered is accepted for shipment. - the operation of a common carrier which publicly offers services without discrimination to any user, has regular ports of call/destination, fixed sailing schedules and frequencies and published freight rates and attendant charges and usually carries multiple consignments.(RA 9515) 5

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS (b) TRAMP SERVICES [ “Contract carrier”, but may be considered a common carrier] -usually gets a full cargo loaded by a single shipper and such cargoes are most often in bulk or in standard packages and standard packages and typically consist of raw materials, fuels and unprocessed foods so vital to the world economy. -operation of a contract carrier which has no regular and fixed routes and schedules but accepts cargo wherever and whenever the shipper desires, is hired on a contractual basis, or chartered by anyone or few shippers under mutually agreed terms and usually carries bulk or break bulk cargoes. 4. CONTRACT OF CARRIAGE DISTINGUISHED FROM OTHER TRANSACTIONS 4.1 Towage Baer Senior & Co. Vs La Compania Maritima ISSUE: Is there a presumption of negligence in a contract to tow? HELD. No. A general ship carrying goods for hire, whether employed in internal, in coasting, or in foreign commerce, is a common carrier; and the ship and her owners, in the absence of a valid agreement to the contrary, are liable to the owners of the goods carried as insurers against all losses, excepting only such irresistible causes as the act of God and public enemies. But a tug and her owners are subject to no such liability to the owners of the vessels towed, or of the cargoes can not maintain any action for the loss of either against the tug of her owners, without proving negligence on her part. As was said by Mr. Justice Strong, and repeated by the present Chief Justice: "An engagement to tow does not impose either an obligation to insure or the liability of common carriers. The burden is always upon him who alleges the breach of such a contract to show either that there has been no attempt at performance, or that there has been negligence or unskillfulness to his injury in the performance. Unlike the case of common carriers, damage sustained by the tow does not ordinarily raise a presumption that the tug has been in fault.” 4.2 Stevedoring - refers to the handling of the cargo in the holds of the vessel or between the ship’s tackle an the holds of the vessel. -ltn. “stipare” meaning “to stuff” - directly from Spanish “escribador” or Portugese “estivador” which means a man who stuffs in the sense of a man who loads ships. - the function of stevedores involves the loading and unloading of coastwise vessels calling at the port. Mindanao Terminal and Brokerage Service Ince. Vs Pheonix Assurance Company of New York/Mcgee &Co. ISSUE: Whether Mindanao Terminal, as a stevedoring company, is under obligation to observe the same ENGR. ARIEL MARK PILOTIN

extraordinary degree of diligence in the conduct of its business as required by law for common carriers and warehousemen. HELD. NO. Mindanao Terminal, a stevedoring company which was charged with the loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely as a labor provider in the case at bar. There is no specific provision of law that imposes a higher degree of diligence than ordinary diligence for a stevedoring company or one who is charged only with the loading and stowing of cargoes. We therefore conclude that following Article 1173, Mindanao Terminal was required to observe ordinary diligence only in loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau. DISTINCTION BETWEEN ARRASTRE AND STEVEDORE; Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf or between the establishment of the consignee or shipper and the ship's tackle. The responsibility of the arrastre operator lasts until the 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 the vessel. The responsibility of the stevedore ends upon the loading and stowing of the cargo in the vessel. STEVEDORES ARE NOT COMMON CARRIERS; A stevedore is not a common carrier for it does not transport goods or passengers; it is not akin to a warehouseman for it does not store goods for 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 public is adequately protected by our laws on contract and on quasi-delict. The public policy considerations in legally imposing upon a common carrier or a warehouseman a higher degree of diligence is not present in a stevedoring outfit which mainly provides labor in loading and stowing of cargoes for its clients.

4.3 Arrastre/ Terminal Operator -refers to the hauling of cargo,comprehends the handling of cargo on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. -Arrastre’s services are not different from those of depositary and warehouseman. Asian Terminals Inc. Vs Daehan Fire and Marine Insurance ISSUE: Is petitioner arrastre operator liable? HELD..YES. The relationship, therefore, between the consignee and the arrastre operator must be examined. This relationship is

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TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS akin to that existing between the consignee and/or the owner of the shipped goods and the common carrier, or that between a depositor and warehouseman. In the performance of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a warehouseman. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.

Asian Terminals vs FIrst Lepanto- Taisho Insurance Co.

In a claim for loss filed by the consignee, the burden of proof to show compliance with the obligation to deliver the goods to the appropriate party devolves upon the arrastre operator. Since the safekeeping of goods is its responsibility, it must prove that the losses were not due to its negligence or to that of its employees. To avoid liability, the arrastre operator must prove that it exercised diligence and due care in handling the shipment. 4.4 Freight Forwarding -refers to a firm holding itself out to the general public to provide transportation of property for compensation and, in the ordinary course of its business. Freight Forwarder refers to a local entity that acts as a cargo intermediary and facilitates transport of goods on behalf of its client without assuming the role of a carrier, which can also perform other forwarding services, such as booking cargo space, negotiating freight rates, preparing documents, advancing freight payments, providing packing/crating, trucking and warehousing, engaging as an agent/representative of a foreign non-vessel operating as a common carrier/cargo consolidator named in a master bill of lading as consignee of a consolidated shipment, and other related undertakings.||| Unsworth Transport International Inc. vs CA A freight forwarders liability is limited to damages arising from its own negligence, including negligence in choosing the carrier; however, where the forwarder contracts to deliver goods to their destination instead of merely arranging for their transportation, it becomes liable as a common carrier for loss or damage to goods. A freight forwarder assumes the responsibility of a carrier, which actually executes the transport, even though the forwarder does not carry the merchandise itself. 4.5 Travel Agency -not a common carrier. Crisostomo vs CA ISSUE: Is the Caravan Travels, a travel agency, a common carrier? HELD. NO. Travel agencies are not entities engaged in the business of transporting either passengers or goods and ENGR. ARIEL MARK PILOTIN

is therefore, nether a private nor a common carrier. Caravan did not undertake to transport petitioner from one place to another since its convenant with its customers is simply to make travel arrangements. The object of the contractual relation woth Caravam Travels is the service of arranging and facilitating petitioners booking, ticketing and accomodation in the package tour. In contrast, the object of a contract of carriage is the transportation of passengers or goods. 4.6 TRANSPORT NETWORK COMPANIES (TNS) VS TRANSPORTATION NETWORK VEHICLE SERVICE (TNVS) LTFRB MEMORANDUM CIRCULAR NO. 2015-015 Transportation Network Company (TNC) shall mean as an "organization whether a corporation, partnership, or sole proprietor, that provides pre-arranged transportation services for compensation using an internet-based technology application or digital platform technology to connect passengers with drivers using their personal vehicles."||| Transport Network Vehicle Services (TNVS) is the official term used to describe vehicle owners who provide services via the Uber or Grabcar application, according to Memorandum Circulars #2015-017 to 018 of the Land Transportation Franchising & Regulatory Board or LTFRB. TNC -does not require Certificate of public convenience -The internet-based digital technology app that provides services by connecting available registered vehicles with registered customers who request rides. (Uber, Grabcar)

TNVS -required to secure a Certificate of Public Convenience -the registered vehicle to which the TNC connects a passenger to.

----> Surge Pricing (Alternate Surge Pricing) 5. GOVERNMENT REGULATION OF COMMON CARRIER’S BUSINESS; PUBLIC POLICIES 5.1 Public Interest Doctrine KMU Labor Center vs Garcia “Public utilities are privately owned and operated businesses whose service are essential to the general public. They are enterprises which specially cater to the needs of the public and conduce to their comfort and convenience. As such, public utility services are impressed with public interest and concern. The same is true with respect to the business of common carrier which holds such a peculiar relation to the public interest that there is superinduced upon it the right of public regulation when private properties are affected with public interest, hence, they cease to be juris 7

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS privati only. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect grants to the public an interest in that use, and must submit to the control by the public for the common good, to the extent of the interest he has thus created. 5.2 Tatad vs Garcia Jr. OPERATION OF PUBLIC UTILITY AND OWNERSHIP OF FACILITIES, DISTINGUISHED. — In law, there is a clear distinction between the "operation" of a public utility and the ownership of the facilities and equipment used to serve the public. Ownership is defined as a relation in law by virtue of which a thing pertaining to one person is completely subjected to his will in everything not prohibited by law or the concurrence with the rights of another. The exercise of the rights encompassed in ownership is limited by law so that a property cannot be operated and used to serve the public as a public utility unless the operator has a franchise. The operation of a rail system as a public utility includes the transportation of passengers from one point to another point, their loading and unloading at designated places and the movement of the trains at pre-scheduled times. The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a public utility without owning the facilities used to serve the public. The devotion of property to serve the public may be done by the owner or by the person in control thereof who may not necessarily be the owner thereof BUILD-OPERATE-AND-TRANSFER (BOT) SCHEME; BUILD-AND-TRANSFER (BT) SCHEME; DEFINED AND DISTINGUISHED. — The BOT scheme is expressly defined as one where the contractor undertakes the construction and financing of an infrastructure facility, and operates and maintains the same. The contractor operates the facility for a fixed period during which it may recover its expenses and investment in the project plus a reasonable rate of return thereon. After the expiration of the agreed term, the contractor transfers the ownership and operation of the project to the government. In the BT scheme, the contractor undertakes the construction and financing of the facility, but after completion, the ownership and operation thereof are turned over to the government. The government, in turn, shall pay the contractor its total investment on the project in addition to a reasonable rate of return. If payment is to be effected through amortization payments by the government infrastructure agency or local government unit concerned, this shall be made in accordance with a scheme proposed in the bid and ENGR. ARIEL MARK PILOTIN

incorporated in the contract (R.A. No. 6957, Sec. 6). Emphasis must be made that under the BOT scheme, the owner of the infrastructure facility must comply with the citizenship requirement of the Constitution on the operation of a public utility. No such a requirement is imposed in the BT scheme. 5.3 REGISTERED OWNER RULE -RA 4136, “ The Land Transportation and Traffic Code” -the person who is the registered owner of a vehicle is liable for any damage caused by the negligent operation of the vehicle although the same was already sold or conveyed to another person at the time of the accident. 5.3.1 Gelisan vs Alday ISSUE: Should owner be liable for damages caused by a leasee of his public vehicle and that there is a stipulation in the lease contract that he shall not be liable for damages to third persons? HELD. Yes. The claim of the petitioner that he is not liable in view of the lease contract executed by and between him and Roberto Espiritu which exempts him from liability to third persons, cannot be sustained because it appears that the lease contract, adverted to, had not been approved by the Public Service Commission. It is settled in our jurisprudence that if the property covered by a franchise is transferred or leased to another without obtaining the requisite approval, the transfer is not binding upon the public and third persons. REASON: Since a franchise is PERSONAL in nature any transfer or lease thereof should be notified to the Public Service Commission so that the latter may take proper safeguards to protect the interest of the public. In fact, the law requires that, before the approval is granted, there should be a public hearing, with notice to all interested parties, in order that the Commission may determine if there are good and reasonable grounds justifying the transfer or lease of the property covered by the franchise, or if the sale or lease is detrimental to public interest. Such being the reason and philosophy behind this requirement, it follows that if the property covered by the franchise is transferred, or leased to another without obtaining the requisite approval the transfer is not binding against the Public Service Commission and in contemplation of law the grantee continues to be responsible under the franchise in relation to the Commission and to the Public. Since the lease of the jeepney in question was made without such approval, the only conclusion that can be drawn is that Marcelino Ignacio still continues to be its operator in contemplation of law, and as such is responsible for the consequences incident to its operation, one of them being the collision under consideration." 8

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS 5.3.2 Benedicto vs Intermediate Appellate Court ISSUE: Should petitioner be held liable for undelivered or loss cargo by the buyer of a vehicle registered under her name? HELD. YES. There is no dispute that petitioner Benedicto has been holding herself out to the public as engaged in the business of hauling or transporting goods for hire or compensation. Petitioner Benedicto is, in brief, a common carrier. The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier, even though the specific vehicle involved may already have been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law, the public has the right to assume that the registered owner is the actual or lawful owner thereof. It would be very difficult and often impossible as a practical matter, for members of the general public to enforce the rights of action that they may have for injuries inflicted by the vehicles being negligently operated if they should be required to prove who the actual owner is. The registered owner is not allowed to deny liability by proving the identity of the alleged transferee. Thus, contrary to petitioner's claim, private respondent is not required to go beyond the vehicle's certificate of registration to ascertain the owner of the carrier. To permit the ostensible or registered owner to prove who the actual owner is, would be to set at naught the purpose or public policy which infuses that doctrine 5.3.3 Erezo vs Jepte The registered owner of any vehicle, even if not used for a public service, should primarily be responsible to the public or to third persons for injuries caused the latter while the vehicle is being driven on the highways or streets. MOTOR VEHICLES OFFICE; REGISTRATION REQUIRED AS PERMISSION TO USE PUBLIC HIGHWAY. — Registration is required not to make said registration the operative act by which ownership in vehicles is transferred as in land registration cases, because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties, but to permit the use and operation of the vehicle upon any public highway AIM OR PURPOSE OF MOTOR VEHICLE REGISTRATION. — The main aim of motor vehicle registration is to identify the owner so that if any accidents happens, or that any damage or injury is caused, by the vehicle on the public highways, ENGR. ARIEL MARK PILOTIN

responsibility therefor can be fixed on a definite individual, the registered owner. EVIDENCE; REGISTERED OWNER NOT ALLOWED TO PROVE ACTUAL OWNER OF VEHICLE; POLICY OF THE LAW. — The law does not allow the registered owner to prove who the actual owner is; the law, with its claim and policy in mind, does not relieve him directly of the responsibility that the law fixes and places upon him as an incident or consequence of registration. Were the registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person. or to one who possesses no property with which to respond financially for the damage or injury done. 5.4. KABIT SYSTEM -is an arrangement whereby a person who has been granted a certificate of public convenience allows another person who own motor vehicles to operate the under his license, sometimes for a fee, or percentage of the earnings. - A certificate of public convenience is a special privilege conferred by the government. Abuse of this privilege by the grantees thereof cannot be countenanced. The "kabit system" has been identified as one of the root causes of the prevalence of graft and corruption in the government transportation offices. -In the words of Chief Justice Makalintal, (Dizon vs. Octavio, 51 O.G. 4059) "this is a pernicious system that cannot be too severely condemned. It constitutes an imposition upon the good faith of the government." 5.4.1 Santos vs. Sibug ISSUE: Can Santos annul the levy on a vehicle registered under the name of Vidad, the operator, with the claim that he is the real owner? HELD. NO. SANTOS had fictitiously sold the jeepney to VIDAD, who had become the registered owner and operator of record at the time of the accident. It is true that VIDAD had executed a re-sale to SANTOS, but the document was not registered. Although SANTOS, as the kabit, was the true owner as against VIDAD, the latter, as the registered owner/operator and grantee of the franchise, is directly and primarily responsible and liable for the damages caused to SIBUG, the injured party, as a consequence of the negligent or careless operation of the vehicle. This ruling is based on the principle that the operator of record is considered the operator of the vehicle in contemplation of law as regards the public and third persons even if the vehicle involved in the accident had been sold to another where such sale had not been approved by the then Public Service Commission. 9

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS SANTOS, as the kabit, should not be allowed to defeat the levy on his vehicle and to avoid his responsibilities as a kabit owner for he had led the public to believe that the vehicle belonged to VIDAD. This is one way of curbing the pernicious kabit system that facilitates the commission of fraud against the travelling public. 5.4.2 Lita Enterprises vs IAC (Taxi cars, renting of franchise) "Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] ISSUE: Can parties to a Kabit System” seek the aid of the court in resolving their disputes (demand for the return of certificates of registration)? HELD. NO. It is a fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave them both where it finds them. Upon this premise, it was flagrant error on the part of both the trial and appellate courts to have accorded the parties relief from their predicament. Article 1412 of the Civil Code denies them such aid. The principle of in pari delicto states that: "The proposition is universal that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or damages for its violation. The rule has sometimes been laid down as though it was equally universal, that where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other." 5.4.3 Teja Marketing vs IAC ISSUE: Can petitioner seek the aid of the court for the return of a motor vehicle purchased by respondent but failed to pay in full, when it is stated that the same is still registered in the name of petitioner and was operated under the latter’s franchise? HELD. No. The court ruled that it will not aid either party to enforce an illegal contract. 5.4.4 Abelardo Lim vs CA ISSUE:When a passenger jeepney covered by a CPC is sold to another who continues to operate it under the same CPC under the kabit system, and the vehicle meets an accident through the fault of another vehicle, may the new owner sue for damages against the erring vehicle? HELD. YES. In the present case it is at once apparent that the evil sought to be prevented in enjoining the kabit system does not exist. First, neither of the parties to the perniciouskabit system is being held liable for damages. Second, the case arose from the negligence of another vehicle in using the public road to whom no ENGR. ARIEL MARK PILOTIN

representation, or misrepresentation, as regards the ownership and operation of the passenger jeepney was made and to whom no such representation, or misrepresentation, was necessary. Thus it cannot be said that private respondent Gonzales and the registered owner of the jeepney were in estoppel for leading the public to believe that the jeepney belonged to the registered owner. Third, the riding public was not bothered nor inconvenienced at the very least by the illegal arrangement. On the contrary, it was private respondent himself who had been wronged and was seeking compensation for the damage done to him. Certainly, it would be the height of inequity to deny him his right. In light of the foregoing, it is evident that private respondent has the right to proceed against petitioners for the damage caused on his passenger jeepney as well as on his business. KABIT SYSTEM; DEFINED AND CONSTRUED AS BEING CONTRARY TO PUBLIC POLICY; RATIONALE. — In the early case of Dizon v. Octavio the Court explained that one of the primary factors considered in the granting of a certificate of public convenience for the business of public transportation is the financial capacity of the holder of the license, so that liabilities arising from accidents may be duly compensated. The kabit system renders illusory such purpose and, worse, may still be availed of by the grantee to escape civil liability caused by a negligent use of a vehicle owned by another and operated under his license. If a registered owner is allowed to escape liability by proving who the supposed owner of the vehicle is, it would be easy for him to transfer the subject vehicle to another who possesses no property with which to respond financially for the damage done. Thus, for the safety of passengers and the public who may have been wronged and deceived through the baneful kabit system, the registered owner of the vehicle is not allowed to prove that another person has become the owner so that he may be thereby relieved of responsibility. Subsequent cases affirm such basic doctrine. It would seem then that the thrust of the law in enjoining the kabit system is not so much as to penalize the parties but to identify the person upon whom responsibility may be fixed in case of an accident with the end view of protecting the riding public. The policy therefore loses its force if the public at large is not deceived, much less involved. 5.5 BOUNDARY SYSTEM 5.5.1 Magboo vs Bernardo An employer-employee relationship exists between a jeepney-owner and a driver under a "boundary system" — namely, the fact that the driver does not receive a fixed wage but gets only the excess 10

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS of the amount of fares collected by him over the amount he pays to the jeep-owner, and that the gasoline consumed by the jeeps is for the account of the driver — are not sufficient to withdraw the relationship between them from that of employer and employee. Consequently, the jeepney-owner is subsidiary liable as employer in accordance with Art. 103, Revised Penal Code. 5.5.2 Sps. Hernandez vs Sps Dolor Employers are solidarily liable with their employees for quasi-delicts. The Hernandez spouses maintained that Julian Gonzales is not their employee since their relationship relative to the use of the jeepney is that of a lessor and a lessee. They argue that Julian Gonzales pays them a daily rental of P150.00 for the use of the jeepney. In essence, petitioners are practicing the "boundary system" of jeepney operation albeit disguised as a lease agreement between them for the use of the jeepney. SC held that an employer-employee relationship exists between the Hernandez spouses and Julian Gonzales. Indeed to exempt from liability the owner of a public vehicle who operates it under the "boundary system" on the ground that he is a mere lessor would be not only to abet flagrant violations of the Public Service Law, but also to place the riding public at the mercy of reckless and irresponsible drivers — reckless because the measure of their earnings depends largely upon the number of trips they make and, hence, the speed at which they drive; and irresponsible because most if not all of them are in no position to pay the damages they might cause. 6. GOVERNING LAW ON COMMON CARRIERS -Art 1766 of CC expresses the primacy of the Code over the laws that were in force prior to its enactment. -Art 1766 states that “In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. 6.1 Applicable Laws -Philippine laws apply if the goods are to be transported from Japan to the Philippines. 6.2 Conflicts Rule (Art 1753 NCC) The law of the country to which the goods are to be transported governs the liability of the common carriers in case of their loss, destruction or deterioration.xxx However, in all matters not regulated by civil code, the rights and obligations of common cariers shall be governed by the Code of Commerce and by special laws. Thus COGSA, a special law, is suppletory to the provisions of the Civil Code. 6.3 Eastern Shipping Lines vs IAC ISSUE:(1) which law should govern — the Civil Code provisions on Common carriers or the Carriage of ENGR. ARIEL MARK PILOTIN

Goods by Sea Act? HELD. The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. As the cargoes in question were transported from Japan to the Philippines, the liability of Petitioner Carrier is governed primarily by the Civil Code. However, in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code. 6.4 National Development Co. Vs CA ISSUE: Which law should govern? HELD. In the case at bar, it has been established that the goods in question are transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost or damaged due to a collision which was found to have been caused by the negligence or fault of both captains of the colliding vessels. Under the above ruling, it is evident that the laws of the Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan. 7. OBLIGATIONS OF COMMON CARRIER, IN GENERAL - the duties of the common carrier are: (1) to accept passengers and goods without discrimination; (2) To seasonably deliver the goods or to bring the passenger to the destination; (3) To deliver the goods to the proper person; and (4) To exercise extraordinary diligence in the performance of dutiesl (5) To transfer goods to the proper destination. 7.1 Commencement - “from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation” -Art 1736 7.2 Duty to ACCEPT; Exceptions - A common carrier granted a CPC is duty bound to accept passengers or cargo without any discrimination. Art 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration. (FC Fisher vs Yangco Steamship Co.) EXCEPTIONS (Valid Grounds for Non-acceptance) (1) When the goods sought to be transported are dangerous objects, ro substances including dynamites and other explosives; (2) The goods are unfit for transportation; (3) Acceptance would result in overloading; (4) The goods are considered contrabands or illegal goods; (5) Goods are injurious to health; 11

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS (6) Goods will be exposed to untoward danger like flood, capture by enemies and the like; (7) Goods like livestock will be exposed to diseases; (8) Strike; and (9) Failure to tender goods on time. 7.2.1 International Maritime Dangerous Goods (IMDG) Code 7.2.2 MARINA Circular No. 1 Series of 2008 (Carriage of Dangerous Goods in Domestic Trade 7.3 Duty to Deliver -duty bound to deliver within the time agreed upon to the designated consignee. - “a carrier is not an insurer against delay in the transportation of goods. When a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered at destination within a reasonable time, in the absence, of any agreement as to the time of delivery.” (Saludo Jr. Vs CA) 7.3.1 Actual vs Constructive Delivery 7.3.2 Code of Commerce Provisions on Delay 7.3.3 Where and to Whom Delivered Code of Commerce. Art 368. The carrier must deliver to the consignee, without any delay or obstruction, the goods which he may have received, by the mere fact of being named in the bill of lading to receive them; and if he does not do so, he shall be liable for the damages which may be caused thereby. Art 369. If the consignee cannot be found at the residence indicated in the bill of lading, or if he refuses to pay the transportation charges and expenses, or If he refuses to receive the goods, the municipal judge, where there is none of the first instance, shall provide for their deposit at the disposal of the shipper, this deposit producing all the effects of delivery without prejudice to third parties with a better right. 7.3.3.1 Place Code of Commerce. Art 360. The shipper, without changing the place where the delivery is to be made, may change the consignment of the goods which he delivered to the carrier, provided that at the time of ordering the change of consignee the bill of lading signed by the carrier, if one has been issued, be returned to him, in exchange for another wherein the novation of the contract appears. The expenses which this change of consignment occasions shall be for the account of the shipper.

perfected by mere consent (See Article 1356, Civil Code of the Philippines) and b) the contract 'of carriage' or 'of common carriage' itself which should be considered as a real contract for not until the carrier is actually used can the carrier be said to have already assumed the obligation of a carrier. (British Airways vs CA) 8.1.1 British Airways Inc. Vs CA ISSUE: Is there a perfected contract of carriage existing between them as no ticket was ever issued to private respondent’s contract workers? HELD. Yes. In the instant case, the contract 'to carry' is the one involved, which is consensual and is perfected by the mere consent of the parties. "There is no dispute as to the appellee's consent to the said contract 'to carry' its contract workers from Manila to Jeddah. The appellant's consent thereto, on the other hand, was manifested by its acceptance of the PTA or prepaid ticket advice that ROLACO Engineering has prepaid the airfares of the appellee's contract workers advising the appellant that it must transport the contract workers on or before the end of March, 1981 and the other batch in June, 1981. 8.2 Carriage of Goods -parties: (1) Shipper-the person who pays the consideration or on whose behalf payment is made. (2) Carrier- person who delivers the goods for transportation (3) Consignee-the person to whom the goods are to be delivered. 8.3 Carriage of Passengers (1) Passenger- one who travels in a public conveyance by virtue of contract, express or implied, with the carrier as to the payment of fare or that which is accepted as an equivalent thereof. 8.3.1 Manay vs Cebu Air

7.3.3.2 Consignee 7.4 Duty to Exercise Extra-ordinary diligence

When a common carrier, through its ticketing agent, has not yet issued a ticket to the prospective passenger, the transaction between them is still that of a seller and a buyer. The obligation of the airline to exercise extraordinary diligence commences upon the issuance of the contract of carriage. Ticketing, as the act of issuing the contract of carriage, is necessarily included in the exercise of extraordinary diligence.

8. PERFECTION OF CONTRACTOF COMMON CARRIAGE 8.1 Aspects of Contract of Carriage There are two (2) aspects of the same, namely: (a) the contract 'to carry (at some future time),' which contract is consensual and is necessarily

In this case, both parties stipulated that the flight schedule stated on the nine (9) disputed tickets was the 10:05 a.m. flight of July 22, 2008. According to the contract of carriage, respondent's obligation as a common carrier was to transport nine (9) of the petitioners safely on the 10:05 a.m.

ENGR. ARIEL MARK PILOTIN

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TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS flight of July 22, 2008. CHAPTER II. CONTRACT OF COMMON CARRIAGE A. VIGILANCE OVER GOODS 1. EXTRAORDINARY DILIGENCE REQUIRED OF COMMON CARRIER Art 1733. Common Carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them, according to all circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, an 1745, Nos. 5,6,and 7, while the extraordinary diligence for safety of the passengers is further set forth in Articles 1755 and 1756. 1.1 Definition and Reason for the Policy With respect to carriage of goods, Extraordinary diligence is the extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property rights. The extraordinary diligence required of common carriers is calculated to protect the passengers from the tragic mishaps that frequently occur in connection with rapid modern transportation. A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage. 1.1.1 Republic vs Lorenzo Shipping Corp ISSUE: Should common carrier be liable even upon evidence of exercise of extraordinary diligence, when the bill of lading is still in the hands of the petitioner? Held. No. In case of loss of goods in transit, the common carrier is presumed undue the law to have been at fault or negligent. However, the presumption of fault or negligence, may be overturned by competent evidence showing that the common carrier has observed extraordinary diligence over the goods. The bill of lading is not necessary. The carrier asked for the certified true copies of the bills of ENGR. ARIEL MARK PILOTIN

lading and was signed by the subordinates of the shipper. 1.1.2 Doctrine for Non-delegable Duty as applied to Common Carriers 1.2 Carriage by Sea 1.2.1 Seaworthiness; Meaning -fit or safe for voyage. Seaworthiness is that strength, durability and engineering skill made a part of a ship's construction and continued maintenance, together with a competent and sufficient crew, which would withstand the vicissitudes and dangers of the elements which might reasonably be expected or encountered during her voyage without loss or damage to her particular cargo. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a suffucent crew. Failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Art 1755 of CC. 1.2.1.1 Case Law Standard Vacuum Oil Company vs Luzon Stevedoring ISSUE: Has defendant proven that its failure to deliver the gasoline to its place of destination is due to accident or force majeure or to a cause beyond its control? HELD. No. The fact that the tugboat was a surplus property, has not been dry-docked, and was not provided with the requisite equipment to make it seaworthy, shows that defendant did not use reasonable diligence in putting the tugboat in such a condition as would make its use safe for operation. In the present case, the gasoline was delivered in accordance with the contract but defendant failed to transport it to its place of destination, not because of accident or force majeure or cause beyond its control, but due to the unseaworthiness of the tugboat towing the large carrying the gasoline, lack of necessary spare parts on board, and deficiency or incompetence in the man power of the tugboat. The loss was also caused because the defendant did not have in readiness any tugboat sufficient in tonnage and equipment to attend to the rescue. Under the circumstances, defendant is not exempt from liability under the law. Loadstar Shipping vs CA M/V "Cherokee" was not seaworthy when it embarked on its voyage on 19 November 1984. The vessel was not even sufficiently manned at the time. "For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition its vessel 13

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code." 1.2.1.2 Statutes in Pari Materia COGSA

life-saving, communication, safety and other equipment, operated and maintained in accordance with the standards set by MARINA, and manned by duly licensed and competent vessel crew.

SECTION 3. (1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to —

1.2.3 Does Presumption of Fault Translate to Presumption of Unseaworthiness?

(a) Make the ship seaworthy; (b) Properly man, equip, and supply the ship; (c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation. INSURANCE CODE Sec 116. A warranty of seaworthiness extends not only to the condition of the structure of the ship itself, but requires that it be properly laden, and provided with a competent master, a sufficient number of competent officers and seamen, and the requisite appurtenances and equipment, such as ballasts cables and anchors, cordage and sails, food, water, fuel and light, and other necessary or proper stores and implements for the voyage. Sec 119. A ship which is seaworthy for the purpose of an insurance upon the ship may, nevertheless, by reason of being unfitted to receive the cargo, be unseaworthy for the purpose of insurance upon the cargo. 1.2.2 When Should a Ship be Seaworthy? 1.2.2.1 COGSA Sec 3(1) of COGSA, provides that ship should be seaworthy before and at the beginning of the voyage 1.2.2.2 Common Law; Doctrine of Stages It is well to emphasize that an absolute obligation of the carrier of goods by sea to provide a seaworthy ship is not continuous under common law. It requires, for example, that the ship must be fit to receive her cargo at the commencement of loading only as a ship for the ordinary perils of lying afloat in harbour and need not be fit for sailing. Then on the completion of each stage she must have the degree of fitness which is required for the next stage. Thus absolute common law undertaking of seaworthiness is not continuous one but applies at the beginning of each separate stage of voyage, while stages are marked either by the completion of a particular operation, e.g. loading, or by changes in the nature of the operation to be performed, e.g. river transit or ocean transit. 1.2.2.3 Domestic Shipping (R.A No. 9295) SECTION 9. Safety Standards. — All vessels operated by domestic ship operators shall at all times be in seaworthy condition, properly equipped with adequate ENGR. ARIEL MARK PILOTIN

1.2.4. Presumption of Unseaworthiness in Certain Cases A vessel is not required to be in perfect condition to be seaworthy. Moreover, the mere happening of an accident aboard a vessel does not raise a presumption the vessel was unseaworthy. However, a presumption of unseaworthiness does arise if the vessel's equipment fails under normal use. A presumption of unseaworthiness also arises if the vessel sinks without explanation in fair weather and calm seas. A certificate from a classification society or marine surveyor is not conclusive as to a vessel's seaworthiness. 1.2.5. Cargoworthiness; Meaning -means that the vessel must be sufficiently strong and equipped to carry the particular kind of cargo which she has contracted to carry the particular kind of cargo which se has contracted to carry and her cargo must be so loaded that it is safe for her to proceed on her voyage. 1.2.5.1 Santiago Lighterage Corp. V CA In examining what is meant by seaworthiness we must bear in mind the dual nature of the carrier's obligations under a contract of affreightment. To satisfy these duties the vessel must (a) be efficient as an instrument of transport and (b) as a storehouse for her cargo. The latter part of the obligation is sometimes referred to as cargoworthiness. A ship is efficient as an instrument of transport if its hull, tackle and machinery are in a state of good repair, if she is sufficiently provided with fuel and ballast, and is manned by an efficient crew. And a vessel is cargoworthy if it is sufficiently strong and equipped to carry the particular kind of cargo which she has contracted to carry, and her cargo must be so loaded that it is safe for her to proceed on her voyage. A mere right given to the charterer to inspect the vessel before loading and to satisfy himself that she was fit for the contracted cargo does not free the shipowner from his obligation to provide a cargoworthy ship. 1.2.5.2 Sec3 (1)(c) of COGSA 1.2.6 Sufficient Freeboard (See 1.1.1.1 International Convention on Load Lines 1.2.6.1 Compulsory marking of International Load Lines (Plimsoll line)

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TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS 1.2.6.2. Plimsoll line must not be Submereged 1.2.7 Warranty against improper deviation Art 359 of Code of Commerce. If there is an agreement between the hipper and the carrier as to the road over which the conveyance is to be made, the carrier may not change the route, unless it be by reason of force majeure; and should he do so without this cause, he shall be liable for all the losses which the goods he transports may suffer from any othe cause, beside paying the sum which may have been stipulated for such case. When on account of said cause of force majeure, the carrier had to take another route which produced an increase in transportation charges, he shall be reimbursed for such icrease upon formal proof thereof. - improper deviation may be a valid ground to deny a marine insurance claim under the Insurance Code. 1.2.8 Survey or Inspection of Cargo on Reasonable Grounds -duty of a carrier to inspect depends on the circumstances. - It is the duty of the carrier to make inquiry as to the general nature of the articles shipped and of their value before it consents to carry them; and its failure to do so cannot defeat the shipper’s right to recovery of the full value of the package if lost, in the absence of showing of fraud or deceit on the part of the shipper. -To be subjected to unsusual search, other than the routinary inspection procedure customarily undertaken, there must exist proof that would justify cause for apprehension that the baggage is dangerous as to warrant exhaustive inspection, or even refusal to accept carriage of the same; and it is the failure of the carrier to act accordingly in the face of suchproof that constitutes the basis of the common carrier’s liability. 1.3 CARRRIAGE BY LAND 1.3.1 Roadworthiness vs Railworthiness Roadworthiness or streetworthiness is a property or ability of a car, bus, truck or any kind of automobile to be in a suitable operating condition or meeting acceptable standards for safe driving and transport of people, baggage or cargo in roads or streets, being therefore street-legal. Railworthiness is the property or ability of a locomotive, passenger car, freight car, train or any kind of railway vehicle to be in proper operating condition or to meet acceptable safety standards of project, manufacturing, maintenance and railway us e for transportation of persons, luggage or cargo. Railworthiness is the condition of the rail system and its suitability for rail operations in that it has been designed, constructed, maintained and operated to ENGR. ARIEL MARK PILOTIN

approved standards and limitations by competent and authorised individuals, who are acting as members of an approved organisation and whose work is both certified as correct and accepted on behalf of the rail system owner. 1.3.2. Motor Vehicle Must be in Good Condition - Carrier cannot be excused from liability on the ground that the tire blow-out was due to a fortuitous event when it was shown that the passengers were injured because the floor of the bus give way. 1.3.3. Warranty Against Defective Vehicle Parts - if carrier replaces certain parts of the motor vehicle, they are duty bound to make sure that the parts that they are purchasing are not defective. -they are duty bound to exercise extraordinary diligence in the purchasing and use of vehicle parts that are not defective. 1.3.4 Compliance with Traffic Regulations -Carrier fails to exercise Extraordinary diligence if it will not comply with traffic rules (Art 2185) -Doctrine of Negligence Per Se -Negligence per se is a doctrine whereby an act is considered negligent because it violates a statute 1.3.5. Prohibition Against Improper Deviation 1.3.6 Duty to Inspect Cargo on Reasonable Grounds 1.4 CARRIAGE BY AIR 1.4.1 Airworthiness - Sec 3(z), Civil Aviation Authority Act “Airworthiness" means that an aircraft, its engines, propellers, and other components and accessories, are of proper design and construction, and are safe for air navigation purposes, such design and construction being consistent with accepted engineering practice and in accordance with aerodynamic laws and aircraft science. 1.4.2 Competence and Fitness of Ce 1.4.3 Warranty Against Improper Deviation 1.4.4 Duty to Inspect Cargo and Baggage (Sec 8, RA 6235 or Anti Hijacking Law) Section 8. Aircraft companies which operate as public utilities or operators of aircraft which are for hire are authorized to open and investigate suspicious packages and cargoes in the presence of the owner or shipper, or his authorized representatives if present; in order to help the authorities in the enforcement of the provisions of this Act: Provided, That if the owner, shipper or his representative refuses to have the same opened and inspected, the airline or air carrier is authorized to refuse the loading thereof. 1.5 CARRIAGE OF DANGEROUS GOODS (DG) 1.5.1 Safe Carriage of Dangerous Goods 1.5.2 Duty to Discharge or Destroy DG - Sec 4(6), COGSA (6) Goods of an inflammable, explosive, or dangerous nature to the shipment whereof, the carrier, master or 15

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS agent of the carrier, has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average if any. ch 1.5.3 Acceptance, Shipping and Handling of DG in Accordance with the 2012 International Maritime Dangerous Goods Code (IMDG) and MARINA Memo Circular No. 1 Series of 2008 1.5.4 Duty to Secure DG from Unauthorized Access 1.5.5 Proper Training in Handling DG 1.5.6 Survey or Inspection of Cargo to Enforce Compliance with IMDG and Other Regulations 2. LIABILTY OF CARRIERS FOR LOSS, DESTRUCTION AND DETERIORATION OF GOODS SUBSECTION 2. Vigilance Over Goods Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733. Article 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in article 1734, No. 2.

Article 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility. Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced. Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss. Article 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order. 2.1 Presumption of Negligence A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage. Regional Container vs Netherland ISSUE: Should the RCL and EDSA be liable for the loss of goods due to fluctuations in the temperature in their cargo which occured after the cargo was already removed from the vessel? Held. Yes. In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods they transported. Indeed, there is sufficient evidence showing that the fluctuation of the temperature in the refrigerated container van, as recorded in the temperature chart, occurred after the cargo had been discharged from the vessel and was already under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the condenser fan — which caused the fluctuation of the temperature in the refrigerated container — was not damaged while the cargo was being unloaded from the ship. 2.2 COMMON CARRIER DEFENSES; EXCLUSIVE?(No)

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TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS 2.2.1 Acts of God [Arts 1734 (1), 1739, and 1740] The principle embodied in the act of God doctrine strictly requires that the act must be occasioned solely by the violence of nature. Human intervention is to be excluded from creating or entering into the cause of the mischief. When the effect is found to be in part the result of the participation of man, whether due to his active intervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rules applicable to the acts of God. 2.2.1.1 2013 Heavy Weather Guidelines (PCG Memorandum Memorandum Circular No. 02-2013) Policies A. No vessel of any type or tonnage shall be allowed to sail except to take shelter, as the situation may warrant, when Public Storm Warning Signal (PSWS) Number 1 or higher is hoisted within its point of origin, the intended route, and point of destination. Xxx G.

Public Storm Warning Signal (PSWS) Nr. 1 — declared if winds of 30-60 kph (approximately 16-32 knots) are expected in the locality in at least 36 hours.

2.2.1.2 Eastern Shipping Lines vs IAC [fire] ISSUE: Can carrier disclaim liability from the loss on account that fire exempts it from liability under “natural disaster or calamity”? HELD. No. Fire may not be considered a natural disaster or calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God UNLESS caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier. As the peril of fire is not comprehended within the exceptions in Article 1734, Article 1735 of the Civil Code provides that in all cases other than those mentioned in Article 1734, the common carrier shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary diligence required by law. PROXIMATE AND ONLY CAUSE And even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the Civil Code, it is required under Article 1739 of the same Code that the "natural disaster" must have been the "proximate and only cause of the loss," and that the carrier has "exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster." This Petitioner Carrier has also failed to establish satisfactorily.

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2.2.1.3 Eastern Shipping Lines vs CA [ Monsoon, not fortuitous] ISSUE: CAN PETITIONER DISCLAIM LIABILITY FOR LOSS DUE TO THE MONSOON? HELD. NO. Plainly, the heavy seas and rains referred to in the master's report were not caso fortuito, but normal occurrences that an ocean going vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a voyage. That rain water (not sea water) found its way into the holds of the Jupri Venture is a clear indication that care and foresight did not attend the closing of the ship's hatches so that rain water would not find its way into the cargo holds of the ship. Moreover, under Article 1733 of the Civil Code, common carriers are bound to observe 'extra-ordinary vigilance over goods . . . according to all circumstances of each case,' 2.2.1.4 Schmitz Transport & Brokerage Corp. Vs Transport Venture ISSUE: Can carrier disclaim liability on account of the Storm, when they did not unload the cargo promptly then Storm came and the barge sank with the cargo? Held. No. Human intervention in the form of contributory negligence by all the defendants resulted to the loss of the cargoes. The proximate cause of the loss of the cargoes. Had the barge been towed back promptly to the pier, the deteriorating sea conditions notwithstanding, the loss could have been avoided. But the barge was left floating in open sea until big waves set in at 5:30 a.m., causing it to sink along with the cargoes. The loss thus falls outside the "act of God doctrine." 2.2.1.5 Phil. Am Gen Insurance vs PKS Shipping Company ISSUE: Can carrier disclaim liability on the loss due to a storm, when evidence shows they exercised extraordinary diligence? HELD: Yes. Testimonies of respective vessel masters of Limar I and MT Iron Eagle, provide that there was no way by which the barge's or the tugboat's crew could have prevented the sinking of Limar I. The vessel was suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet and buffeted by strong winds of 1.5 knots resulting in the entry of water into the barge's hatches. The official Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise 17

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS Load Line Certificate would attest to the seaworthiness of Limar I and should strengthen the factual findings of the appellate court. 2.2.1.6 Central Shipping Co. Vs Insurance Company of North America [Monsoos , fortuitous] ISSUE: Can carrier disclaim responsibility for the loss of the cargo and M/V Central Bohol by claiming the occurrence of a southwestern monsoon under Article 1734(1)? Normally expected on sea voyages, however, were such monsoons, during which strong winds were not unusual.PAGASA representative testified that a thunderstorm occurred in the midst of a southwest monsoon. According to her. Storm; Definition According to PAGASA, a storm has a wind force of 48 to 55 knots, equivalent to 55 to 63 miles per hour or 10 to 11 in the Beaufort Scale. The second mate of the vessel stated that the wind was blowing around force 7 to 8 on the Beaufort Scale. Consequently, the strong winds accompanying the southwestern monsoon could not be classified as a "storm." Such winds are the ordinary vicissitudes of a sea voyage. Even if the weather encountered by the ship is to be deemed a natural disaster under Article 1739 of the Civil Code, petitioner failed to show that such natural disaster or calamity was the proximate and only cause of the loss. Human agency must be entirely excluded from the cause of injury or loss. In other words, the damaging effects blamed on the event or phenomenon must not have been caused, contributed to, or worsened by the presence of human participation. The defense of fortuitous event or natural disaster cannot be successfully made when the injury could have been avoided by human precaution. The loss of the vessel was caused not only by the southwestern monsoon, but also by the shifting of the logs in the hold. Such shifting could been due only to improper stowage 2.2.1.7 Transimex Co. Vs Mafre Asian Insurance Corp ISSUE: Whether there is sufficient proof that the loss or damage incurred by the cargo was caused by a "storm" or a "peril of the sea." HELD. NO. American jurisprudence generally limit the application of the phrase “perils of the sea” to weather that is "so unusual, unexpected and catastrophic as to be beyond reasonable expectation." In this case, the documentary and testimonial evidence cited by petitioner indicate that M/V ENGR. ARIEL MARK PILOTIN

Meryem Ana faced winds of only up to 40 knots while at sea. This wind force clearly fell short of the 48 to 55 knots required for "storms" under Article 1734 (1) of the Civil Code based on the threshold established by PAGASA. Petitioner also failed to prove that the inclement weather encountered by the vessel was unusual, unexpected, or catastrophic. 2.2.2 Acts of Public Enemy - presupposes the (1) existence of an actual state of war, and (2) refers to the government of a foreign nation at war with the country to which the carrier belongs, though not necessarily with that to which the owner of the goods owes allegiance. 2.2.2.1 Existence of War Prize Cases War has been well defined to be, "That state in which a nation prosecutes its right by force." The parties belligerent in a public war are independent nations. But it is not necessary, to constitute war, that both parties should be acknowledged as independent nations or sovereign States. A war may exist where one of the belligerents claims sovereign rights as against the other. Insurrection against a government may or may not culminate in an organized rebellion, but a civil war always begins by insurrection against the lawful authority of the Government. A civil war is never solemnly declared; it becomes such by its accidents -- the number, power, and organization of the persons who originate and carry it on. When the party in rebellion occupy and hold in a hostile manner a certain portion of territory, have declared their independence, have cast off their allegiance, have organized armies, have commenced hostilities against their former sovereign, the world acknowledges them as belligerents, and the contest a war. They claim to be in arms to establish their liberty and independence, in order to become a sovereign State, while the sovereign party treats them as insurgents and rebels who owe allegiance, and who should be punished with death for their treason. As a civil war is never publicly proclaimed, eo nomine, against insurgents, its actual existence is a fact in our domestic history which the Court is bound to notice and to know. The true test of its existence is, "When the regular course of justice is interrupted by revolt, rebellion, or insurrection, so that the Courts of Justice cannot be kept open, civil war exists, and hostilities may be prosecuted on the same footing as if those 18

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS opposing the Government were foreign enemies invading the land." 2.2.2.2 Piracy PIRATES on the high seas -considered the enemies of all civilized nations and indeed of human race, and consequently their depradations on a common carrier will excuse them from liability. 2.2.2.3 Rebels as Public Enemy REBELS, not included. -rebels in insurrection against their own government. EXCEPT, when in such a magnitude as to constitute a CIVIL WAR. 2.2.3 Shipper or Owner’s Fault 2.2.3.1 Who are Considered Shipper and/or owner 2.2.3.2 Sole and Proximate vs Contributory Only 2.2.3.3. Campania Maritima vs CA ISSUE: Can Carrier disclaim liability for loss of goods due to misdeclaration of the correct tonnage by the Shipper? HELD. No. It mitigates the liability. Shippers act of furnishing petitioner with an inaccurate weight of the payloader cannot be used by the as an excuse to avoid liability for the damage caused, as the same could have been avoided had petitioner utilized the "jumbo" lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes. Even if petitioner chose not to take the necessary precaution to avoid damage by checking the correct weight of the payloader, extraordinary care and diligence compel the use of the "jumbo" lifting apparatus as the most prudent course for petitioner. CONTRIBUTORY ACT MITIGATES THE LIABILITY The act of shipper in furnishing carrier with an inaccurate weight of the payloader constitutes a contributory circumstance to the damage caused on the payloader, which mitigates the liability for damages of petitioner in accordance with Article 1741 of the Civil Code, to wit: Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced. 2.2.3.4 Delsan Transport Lines vs American Home Asssurance Co. [Ship sank for no reason] The Court weighed the testimonies and evidence presented and gave more credence to the weather bulleting report from PAGASA saying that the weather was normal rather than the testimony of the captain and the chief mate. Thus, petitioner’s vessel, MT ENGR. ARIEL MARK PILOTIN

Maysun, sank with its entire cargo for the reason that it was not seaworthy. There was no squall or bad weather or extremely poor sea condition in the vicinity when the said vessel sank. 2.2.3.5 “Shipper’s Load and Count” Arrangement Marina Port Services vs American Home Assurance At any rate, the goods were shipped under "Shipper's Load and Count" arrangement. Thus, protection against pilferage of the subject shipment was the consignees lookout. At any rate, MPSI cannot just the same be held liable for the missing bags of flour since the consigned goods were shipped under "Shipper's Load and Count" arrangement. "This means that the shipper was solely responsible for the loading of the container, while the carrier was oblivious to the contents of the shipment. Protection against pilferage of the shipment was the consignee's lookout. The arrastre operator was, like any ordinary depositary, duty-bound to take good care of the goods received from the vessel and to turn the same over to the party entitled to their possession, subject to such qualifications as may have validly been imposed in the contract between the parties. The arrastre operator was not required to verify the contents of the container received and to compare them with those declared by the shipper because, as earlier stated, the cargo was at the shipper's load and count. The arrastre operator was expected to deliver to the consignee only the container received from the carrier." All told, the Court holds that MPSI is not liable for the loss of the bags of flour 2.2.4 Inherent Vice 2.2.4.1 Belgian Overseas Chartering and Shipping vs Phil First Insurance ISSUE: Can carrier escape liability on account of the alleged defect in the packing on the containers, citing the notation “metal envelopes rust stained and slightly dented” on the Bill of Lading? HELD. No From the evidence on record, it cannot be reasonably concluded that the damage to the four coils was due to the condition noted on the Bill of Lading. The exception in Art 1734 refers to cases when goods are lost or damaged while in transit as a result of the natural decay of perishable goods or the fermentation or evaporation of substances liable therefor, the 19

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS necessary and natural wear of goods in transport, defects in packages in which they are shipped, or the natural propensities of animals.None of these is present in the instant case. Further, even if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once it accepts the goods notwithstanding such condition. 42 Thus, petitioners have not successfully proven the application of any of the aforecited exceptions in the present case 2.2.4.2 Asian Terminals Inc vs Simon Enterprises [Soybean; moisture] ISSUE: Should ATI be liable for shortage in the delivery of Soybeans? HELD.NO.It should be noted that the shortage being claimed by the respondent is minimal. Moisture is perhaps the most important single factor affecting storage of soybeans and soybean meal. Soybeans contain moisture ranging from 12% to 15% (wet basis) at harvest time. Taking this into consideration, 10% more or less than the contracted shipment, and the fact that the alleged shortage is only 6.05% of the total quantity of 3,300 metric tons, the alleged percentage loss clearly does not exceed the allowable 10% allowance for loss. The alleged loss, if any, not having exceeded the allowable percentage of shortage, the respondent then has no cause of action to claim for shortages. 2.2.4.3 Planters Products Inc. vs CA [Urea] The dissipation of quantities of fertilizer, or its deterioration in value, is caused either by an extremely high temperature in its place of storage, or when it comes in contact with water. When Urea is drenched in water, either fresh or saline, some of its particles dissolve. But the salvaged portion which is in liquid form still remains potent and usable although no longer saleable in its original market value. The probability of the cargo being damaged or getting mixed or contaminated with foreign particles was made greater by the fact that the fertilizer was transported in "bulk," thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of equipment used in transporting and hauling it. 2.2.5. DEFECTS IN THE PACKAGING OR IN THE CONTAINER 2.2.5.1 Regional Container Lines of Singapore vs Netherlands RCL and EDSA Shipping failed to satisfy this standard of evidence and in fact offered no evidence at all on this ENGR. ARIEL MARK PILOTIN

point; a reversal of a dismissal based on a demurrer to evidence bars the defendant from presenting evidence supporting its allegations. 2.2.5.2 Philippine Charter Insurance Cor. Vs Unknown owner of M/V National Honor [Wooden Crates] - Loss was due solely to the inherent defect and weakness of the materials used in the fabrication of said crate. "Defect" is the want or absence of something necessary for completeness or perfection; a lack or absence of something essential to completeness; a deficiency in something essential to the proper use for the purpose for which a thing is to be used. On the other hand, inferior means of poor quality, mediocre, or second rate. A thing may be of inferior quality but not necessarily defective. In other words, "defectiveness" is not synonymous with "inferiority." The cargo fell while it was being carried only at about 5 feet high above the ground. It would not have so easily collapsed had the cargo been properly packed. The shipper should have used materials of stronger quality to support the heavy machines. Not only did the shipper fail to properly pack the cargo, it also failed to indicate an arrow in the middle portion of the cargo where additional slings should be attached. At any rate, the issue of negligence is factual in nature and in this regard, it is settled that factual findings of the lower courts are entitled to great weight and respect on appeal, and, in fact, accorded finality when supported by substantial evidence. 2.2.5.3 Southern Lines vs CA If the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury resulting therefrom. Appellant (petitioner) itself frankly admitted that the strings that tied the bags of rice were broken; some bags were with holes and plenty of rice were spilled inside the hull of the boat, and that the personnel of the boat collected no less than 26 sacks of rice which they had distributed among themselves." 2.2.5.4 Calvo vs UCPB If the improper packing or, in this case, the defects in the container, are known to the carrier or his employees or apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for damage resulting therefrom In this case, carrier accepted the cargo withoit exception despite the apparent defects in some of the container vans. Hence, failure of petitioner to prove that she exercised extraordinary diligence in the 20

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS carriage of goods in this case or that she is exempt from liability, the presumptionof negligence as provided under Art 1735 holds. 2.2.6 ACTS OF PUBLIC AUTHORITY -Defense is not available if (1) the public authority had no authority to issue the subject order, or (2) If the public authority exceeded his authority. Art 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order. 2.2.6.1 Ganzon vs CA [Mayor] Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron was accilmillated by the appellant through separate purchases here and there from private individuals. The fact remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown the appellant for P5,000.00. The order of the acting mayor did not constitute valid authority for appellee Mauro Ganzon and his representatives to carry out. 2.2.7 Extraordinary Diligence 2.2.7.1 Republic vs Lorenzo Shipping Article 1733 of the Civil Code demands that a common carrier observe extraordinary diligence over the goods transported by it. Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property or rights. This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment. Hence, in case of loss of goods in transit, the common carrier is presumed under the law to have been at fault or negligent. However, the presumption of fault or negligence, may be overturned by competent evidence showing that the common carrier has observed extraordinary diligence over the goods.

quo that the respondent adequately proved that it exercised extraordinary diligence. Although the original bills of lading remained with petitioner, respondent’s agents demanded from Abdurahman the certified true copies of the bills of lading. They also asked the latter and in his absence, his designated subordinates, to sign the cargo delivery receipts. 2.2.7.2 De Guzman vs CA Applying Articles 1734 and 1735, — the hijacking of the carrier's truck — does not fall within any of the 5 categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the private respondent as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however, may be overthrown by proof of extraordinary diligence on the part of private respondent. The precise issue that we address here relates to the specific requirements of the duty of extraordinary diligence in the vigilance over the goods carried in the specific context of hijacking or armed robbery. Under Article 1745 (6), a common carrier is held responsible — and will not be allowed to divest or to diminish such responsibility — even for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat, violence or force." In the instant case, armed men held up the second truck owned by private respondent which carried petitioner's cargo. Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but also kidnapped the driver and his helper. In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. 2.2.8 FORTUITOUS EVENTS In order, to be considered a fortuitous event, however, (1) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply with his obligation, must be independent of human will; (2) it must be impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen it must be impossible to avoid;

In the instant case, we agree with the court a ENGR. ARIEL MARK PILOTIN

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TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in any manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor. 2.2.8.1 Casus Fortuitos Nemo Prestat; Impossibilum Nulla Obligatio Est -principle that the law does not require the performance of an impossible act (impossibilum nulla obligatio est). -"caso fortuito" is "an event that takes place by accident and could not been have foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers."||| 2.2.8.2 De Guzman vs CA 2.2.8.3 Ganzon vs CA 2.2.8.4 Bascos vs CA 2.2.8.5 Loadmaster Customs Services vs Glodel Brokerage Corp 2.2.8.6 Torres-Madrd Brokerage vs FEB Mitsui Marine Insurance || 2.2.8.7 Servando vs Philippine Steam Navigation {fire} In the case at bar, the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant. The latter could not have foreseen the event.||| There is nothing in the record to show that appellant carrier incurred in delay in the performance of its obligation. It appears that appellant had not only notified appellees of the arrival of their shipment, out had demanded that the same be withdrawn. In fact, pursuant to such demand, appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse. Nor can the appellant or its employees be charged with negligence. The storage of the goods in the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with their knowledge and consent. Since the warehouse belonged to and was maintained by the government, it would be unfair to impute negligence to the appellant, the latter having no control whatsoever over the same. 2.2.9 PARTIAL DEFENSE; SHIPPER/CONSIGNEE’S CONTRIBUTORY FAULT OR NEGLIGENCE 2.2.9.1 Tabacalera Insurance vs North Front Shipping Services(CORN) North Front Shipping Services, Inc., proved that the vessel was inspected prior to actual loading by representatives of the shipper and was found fit to take a load of corn grains. They were also issued Permit to Sail by the Coast Guard. The master of the vessel testified that the corn grains were farm wet when ENGR. ARIEL MARK PILOTIN

loaded. However, this testimony was disproved by the clean bill of lading issued by North Front Shipping Services, Inc., which did not contain a notation that the corn grains were wet and improperly dried. Having been in the service since 1968, the master of the vessel would have known at the outset that corn grains that were farm wet and not properly dried would eventually deteriorate when stored in sealed and hot compartments as in hatches of a ship. Equipped with this knowledge, the master of the vessel and his crew should have undertaken precautionary measures to avoid or lessen the cargo's possible deterioration as they were presumed knowledgeable about the nature of such cargo. But none of such measures was taken.| However, we cannot attribute the destruction, loss or deterioration of the cargo solely to the carrier. We find the consignee Republic Flour Mills Corporation guilty of contributory negligence. It was seasonably notified of the arrival of the barge but did not immediately start the unloading operations. No explanation was proffered by the consignee as to why there was a delay of six (6) days. Had the unloading been commenced immediately the loss could have been completely avoided or at least minimized. As testified to by the chemist who analyzed the corn samples, the mold growth was only at its incipient stage and could still be arrested by drying. The corn grains were not yet toxic or unfit for consumption. For its contributory negligence, Republic Flour Mills Corporation should share at least 40% of the loss. 2.2.9.2 Compania Maritima vs CA 3. COMMENCEMENT, DURATION AND TERMINATION OF CARRIER’S RESPONSIBILITY OVER THE GOODS Art 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for the transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. Art. 1737. The common carrier’s duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu. Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise.

22

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS 3.1 Unconditionally Placed in the Possession of and Received by the Carrier - if actually no goods are received there can be no contract. The liability and responsibility of the carrier under a contract for the carriage of goods commence on their actual delivery to, or receipt by, the carrier or an authorized agent. -The test as to whether the relation of shipper and carrier had been established is, had the control and possession of the goods been completely surrendered by the shipper to the carrier? Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper, then it can be said with certainty that the relation of shipper and carrier has been established. 3.1.1 Compania Maritima vs Insurance Co. Of North America ISSUE. (1) IS CARRIER LIABLE FOR LOSS OF GOODS WHILE STILL IN THE LIGHTER AND HAS YET TO BE LOADED ON THE ACTUAL SHIP? HELD. YES. The claim that there can be no contract of affreightment because the hemp was not actually loaded on the ship that was to take it from Davao City to Manila is of no moment, for, as already stated, the delivery of the hemp to the carrier's lighter is in line with the contract. In fact, the receipt signed by the patron of the lighter that carried the hemp stated that he was receiving the cargo "in behalf of S.S. Bowline Knot in good order and condition. 3.1.2. Ganzon vs CA ISSUE: Was there an unconditional delivery albeit only part of the goods have been loaded? HELD. YES. By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common carrier, and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected. Consequently, the petitioner-carrier's extraordinary responsibility for the loss, destruction, or determination of the goods commenced. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded. 3.2 Bill of Lading as Evidence of Delivery to the Carrier A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to transport and deliver them at a specified place to a person named or ENGR. ARIEL MARK PILOTIN

on his order. Such instrument may be called a shipping receipt, forwarder's receipt and receipt for transportation. The designation, however, is immaterial. It has been held that freight tickets for bus companies as well as receipts for cargo transported by all forms of transportation, whether by sea or land, fall within the definition. Under the Tariff and Customs Code, a bill of lading includes airway bills of lading. TWO FOLD CHARACTER OF A BILL OF LADING (1) it is a receipt as to the quantity and description of the goods shipped; and (2) a contract to transport the goods to the consignee or other person therein designated, on the terms specified in such instrument. 3.2.1. Saludo vs CA ISSUE: Does the issuance of Bill of lading constitute delivery? And does it estop the carrier from denying the liability? HELD. NO. NO. Logically, since a bill of lading acknowledges receipt of goods to be transported, delivery of the goods to the carrier normally precedes the issuance of the bill; or, to some extent, delivery of the goods and issuance of the bill are regarded in commercial practice as simultaneous acts. However, except as may be prohibited by law, there is nothing to prevent an inverse order of events, that is, the execution of the bill of lading even prior to actual possession and control by the carrier of the cargo to be transported. Ordinarily, a receipt is not essential to a complete delivery of goods to the carrier for transportation but, when issued, is competent and prima facie, but not conclusive, evidence of delivery to the carrier.

as between the shipper and the carrier, when no goods have been delivered for shipment no recitals in the bill can estop the carrier from showing the true facts . . .. Between the consignor of goods and a receiving carrier, recitals in a bill of lading as to the goods shipped raise only a rebuttable presumption that such goods were delivered for shipment. As between the consignor and a receiving carrier, the fact must outweigh the recital." 3.3 Temporary Unloading and Storage in Transit 3.3.1. Effect of Stoppage in Transitu -Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or 23

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance of the goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti. (Saludo vs CA) 3.4 ACTUAL OR CONSTRUCTIVE DELIVERY Carrier may be relieved from the responsibility for loss or damage to the goods upon actual or constructive delivery of the same by the carrier to the consignee or to the person who has the right to receive them. (a) ACTUAL DELIVERY -There is actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. (b) CONSTRUCTIVE DELIVERY (c) When are the goods deemed delivered? When the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. When such delivery has thus been accepted by the carrier, the liability of the carrier commences eo instanti. 3.4.1 To the Consignee 3.4.2 To the Person who has Right to Receive Cargo 3.4.2.1 Lu Do & Lu vs Binamira ISSUE: Is carrier liable for loss that occurs during when goods are delivered to customs? GR. Yes. Σ. It may be stipulated. -while delivery of the cargo to the customs authorities is not delivery to the consignee, or "to the person who has a right to receive them", contemplated in Article 1736, because in such case the goods are still in the hands of the Government and the owner cannot exercise dominion over them, we believe however that the parties may agree to limit the liability of the carrier considering that the goods have still to go through the inspection of the customs authorities before they are actually turned over to the consignee. This is a situation where we may say that the carrier loses control of the goods because of a custom regulation and it is unfair that it be made responsible for what may happen during the interregnum. 3.4.2.2 Nedlloyd Lijnen BV Rotterdam vs Glow Laks Enterprises ISSUE. Is carrier liable for loss due to misdelivery by ENGR. ARIEL MARK PILOTIN

fraudulent bill of lading when it was already turned over to National Port Authority in Panama? HELD. In this case, there is no dispute that the custody of the goods was never turned over to the consignee or his agents but was lost into the hands of unauthorized persons who secured possession thereof on the strength of falsified documents. The loss or the misdelivery of the goods in the instant case gave rise to the presumption that the common carrier is at fault or negligent. 3.4.2.3 Macam vs CA ISSUE: Goods were delivered to the notify party and not the consignee. 3.5 CUSTODY OVER CARGO DURING UNLOADING It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier (Regional Container Lines v. Netherlands) 3.5.1 Regional Container Lines v. Netherlands Insurance co. ISSUE: Liability of Carrier over cargoes while being unloaded? Held. Carrier is liable. RCL and EDSA Shipping could have offered evidence before the trial court to show that the damage to the condenser fan did not occur: (1) while the cargo was in transit; (2) while they were in the act of discharging it from the vessel; or (3) while they were delivering it actually or constructively to the consignee. They could have presented proof to show that they exercised extraordinary care and diligence in the handling of the goods, but they opted to file a demurrer to evidence 3.5.2 Philippine First Insurance vs Wallem Phils. Shipping Lines ISSUE HELD. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. In the instant case, the damage or losses were incurred during the discharge of the shipment while under the supervision of the carrier. Consequently, the carrier is liable for the damage or losses caused to the shipment. 3.6 DUTY TO SHIP VS DUTY TO TRANSHIP "transship" means: "to transfer for further transportation from one ship or conveyance to another" 3.6.1 Samar Mining vs Nordeutscher Lloyd FACTS Goods

were

to

be

transshipped

from 24

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS Nordeutscher Lloyd to AMCYL in Davao, the goods were lost after delivery by Nordeutscher in Davao in good condition. Bill of lading stipulates that Nordeutcher cannot be held liable for any loss during transshipment. ISSUE: Can Nordeutscher Lloyd be held liable? HELD. No. the moment when the subject goods are discharged in Manila, its personality changes from that of carrier to that of agent of the consignee. Thus, the character of appellant's possession also changes, from possession in its own name as carrier, into possession in the name of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards. This is the full import of Article 1736, as applied to the case before Us.

4. STIPULATIONS LIMITING CARRIER’S LIABILITY 4.1 Articles 1744-1748, 1751 and 1752 of NCC Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy. Art 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper; (2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods; (3) That the common carrier need not observe any diligence in the custody of goods; (4) That the common carrier shall exercise a degree of diligence less than a good father of a family, or of man of ordinary prudence in the vigilance over the movables transported; (5) That the common carrier not be responsible for the acts or omission of his or its employees; (6) That the common carrier’s liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; (7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship airplane or other equipment used in the contract ENGR. ARIEL MARK PILOTIN

of carriage. Art 1746. An agreement limiting the common carrier’s liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation. Art 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carriers liability cannot be availed of in case of loss, destruction, or deterioration of the goods. Art 1748. An agreement limiting the common carrier’s liability for delay on account of strikes or riots is valid. Art 1751. The fact that the common carrier has no competitor along the line or route, or part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier’s liability is reasonable, just and in consonance with public policy. Art 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration. 4.2. Minimum Degree of Diligence required 4.3 Void Stipulations (Art 1745 NCC) 4.3.1 Sweet Lines vs Teves Issue: Is the stipulation on which court an action may be filed valid? Held. No. It is void for being contrary to public policy. The Court may declare the agreement as to venue to be in effect contrary to public policy, — despite that in general, changes and transfers of venue by written agreement of the parties are allowable — whenever it is shown that a stipulation as to venue works injustice by practically denying to the party concerned designated by the rules. It is void and unenforceable for the following reasons — first, under circumstances obtaining in the inter-island shipping industry, it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets, on which Condition No. 14 is printed in fine letters, and second, Condition No. 14 subverts the public policy on transfer of venue of proceedings of this nature, since the same will prejudice rights and interests of innumerable passengers in different parts of the country who, under Condition No. 14, will have to file suits against petitioner only in the City of Cebu. 4.4. Reasonable Time in Delivery of Goods 25

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and persons are not vested with the right to prompt delivery, unless such common carriers previously assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at least be made within a reasonable time. Maersk Line vs CA DELAY FOR A PERIOD OF MORE THAN TWO (2) MONTHS IN BEYOND THE REALM OF REASONABLENESS. — An examination of the subject bill of lading shows that the subject shipment was estimated to arrive in Manila on April 3, 1977. While there was no special contract entered into by the parties indicating the date of arrival of the subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no need to execute another contract for the purpose as it would be a mere superfluity. In the case before us, we find that a delay in the delivery of the goods spanning a period of two (2) months and seven (7) days falls way beyond the realm of reasonableness. Described as gelatin capsules for use in pharmaceutical products, subject shipment was delivered to, and left in, the possession and custody of petitioner-carrier for transport to Manila via Oakland, California. But through petitioner's negligence was mishipped to Richmond, Virginia. Petitioner's insistence that it cannot be held liable for the delay finds no merit. 4.5. LIMITATIONS ON THE AMOUNT OF LIABILITY Art 1749. A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Art 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon. 4.5.1 Ad Valorem B/L - payment in proportion to the estimated value of the goods to be transported. 4.5.2 Ysmael vs Barretto ISSUE: Can common carrier limit liability for loss caused by its own negligence? HELD. No. The clause in question provides that the carrier shall not be liable for loss or damage from any cause or for any reason to an amount in excess of P300 "for any single package of silk or other valuable cargo." By the weight of modern authority, the carrier cannot limit its liability for injury to or loss of goods ENGR. ARIEL MARK PILOTIN

shipped where such injury or loss was caused by its own negligence. The rule rests on consideration of public policy, as the contract of the carrier is to carry and deliver the goods, and a contract that undertakes to relieve the carrier from any liability for loss or damage accruing or arising from its own negligence would in legal effect nullify the contract. 4.5.3. Shewaram vs PAL Issue: Whether or not the limitation of pecuniary liability clause printed at the back of the ticket stubs is binding upon plaintiff-appellee? Held: In the instant case, the fact that the conditions are printed at the back of the ticket stub in letters so small that they are hard to read would not warrant the presumption that the appellee was aware of those conditions such that he had "fairly and freely agreed" to those conditions. Appellee, therefore, is not and cannot be bound, by the conditions of carriage found at the back of the ticket stub issued to him when he made the flight on appellant's plane on November 23, 1959. 4.5.4 Ong Yiu vs CA ISSUE: Can shipper be bound by the stipulation limiting liability printed on his plane ticket when he did not sign such? HELD. Yes. While it may be true that petitioner had not signed the plane ticket , he is nevertheless bound by the provisions thereof. "Such provisions have been held to be a part of the contract of carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the regulation". It is what is known as a contract of "adhesion", in regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent. And as held in Randolph v. American Airlines, "a contract limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against his own negligence." Considering, therefore, that petitioner had failed to declare a higher value for his baggage, he cannot be permitted a recovery in excess of P100.00. Besides, passengers are advised not to place valuable items inside their baggage but "to avail of our V-cargo service" (Exh. "1"). It is likewise to be noted that there is nothing in the evidence to show the actual value of the goods allegedly lost by petitioner. L 4.5.5. Sea-land Services vs IAC ISSUE: Whether or not the CONSIGNEE of seaborne freight is bound by stipulations in the covering bill of lading limiting to a fixed amount the liability of the carrier for loss or damage to the cargo where its value is 26

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS not declared in the bill.||| HELD. YES. what is a just and reasonable, and a fair and free, stipulation, in this wise: ". . . That said stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the justice and fairness of that law itself, and this the private respondent does not pretend to do. But over and above that consideration, the just and reasonable character of such stipulation is implicit in it giving the shipper or owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient of declaring the nature and value of the shipment in the bill of lading. And since the shipper here has not been heard to complain of having been 'rushed,' imposed upon or deceived in any significant way into agreeing to ship the cargo under a bill of lading carrying such a stipulation — in fact, it does not appear that said party has been heard from at all insofar as this dispute is concerned — there is simply no ground for assuming that its agreement thereto was not as the law would require, freely and fairly sought and given." 4.5.6 Citadel Lines vs CA ISSUE: Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee||| HELD. Yes. The CONSIGNEE itself admits in its memorandum that the value of the goods shipped does not appear in the bills of lading. 16 Hence, the stipulation on the carrier's limited liability applies. ||| 4.5.7 Everett Steamship Corp vs CA A stipulation in the bill of lading limiting the common carrier's liability for loss or destruction of a cargo to a certain sum, unless the shipper or owner declares a greater value, is sanctioned by law, particularly Articles 1749 and 1750 of the Civil Code. Such limited-liability clause has also been consistently upheld by this Court in a number of cases. Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common carrier's liability for loss must be "reasonable and just under the circumstances, and has been freely and fairly agreed upon." IN THE CASE AT BAR. — In the bill of lading, the carrier made it clear that its liability would only be up to One Hundred Thousand (¥100,000.00) Yen. However, the shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. SC held that petitioner should be liable for the full value of the lost cargo. In fine, the liability of petitioner ENGR. ARIEL MARK PILOTIN

for the loss of the cargo is limited to One Hundred Thousand (¥100,000.00) Yen, pursuant to Clause 18 of the bill of lading.||| 4.5.8 British Airways vs CA ISSUE: Is the benefit from limited liability waivabe? HELD. YES. Benefits of limited liability are subject to waiver such as when the air carrier failed to raise timely objections during the trial when questions and answers regarding the actual claims and damages sustained by the passenger were asked. Given the foregoing postulates, the inescapable conclusion is that BA had waived the defense of limited liability when it allowed Mahtani to testify as to the actual damages he incurred due to the misplacement of his luggage, without any objection. It is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse party to be inadmissible for any reason, the latter has the right to object. However, such right is a mere privilege which can be waived. Necessarily, the objection must be made at the earliest opportunity, lest silence when there is opportunity to speak may operate as a waiver of objections. BA has precisely failed in this regard. To compound matters for BA, its counsel failed, not only to interpose a timely objection, but even conducted his own cross-examination as well.||| 4.5.9 H.E. Heacock vs Macondary Three kinds of stipulation have often been made in a bill of lading. The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence. The second is one providing for an unqualified limitation of such liability to an agreed valuation. And the third is one limiting the liability of the carrier to an agreed valuation unless the shipper declare a higher value and pays a higher rate of freight. According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceable. A stipulation in a bill of lading which either exempts the carrier from liability for loss or damage occasioned by its negligences or provides for an unqualified limitation of such liability to an agreed valuation, is invalid as being contrary to public policy. But a stipulation in such bill of lading which limits the liability of the carrier to a specified amount unless the shipper declares a higher value and pays a higher rate of freight, is valid and enforceable. Thus, if a common carrier gives to a shipper the choice of two rates, the lower of them conditioned upon his agreeing to a stipulated valuation of his property in case of loss, even by the carrier's negligence, if the shipper makes the choice understandingly and freely, and names his valuation, he cannot thereafter recover more than the value which he thus places upon his property. ||| 27

TRANSPORTATION NOTES BASED ON ATTY PADILLA’S SYLLABUS 5. PASSENGER’S BAGGAGES Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger’s baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable. BAGGAGE- includes whatever articles a passenger usually takes with him for his own personal use, comfort, and convenience according to the habits or wants of the particular class to which he belongs, either with reference to his immediate necessities or to the ultimate purpose of his journey. 5.1 Checked-in vs Hand-carried Baggages Checked-In Hand-Carried -bags delivered to the -bags brought by carrier passengers but did not deliver to the carrier -requires extraordinary diligence by carrier 5.2 Quisumbing Sr. vs CA The Court opined that since the plaintiffs "did not notify defendant or its employees that they were in possession of the cash, jewelries, and the wallet they are now claiming," the very provision of law invoked by them, Article 1998 of the Civil Code, denies them any recourse against PAL. The Court also pointed out that — ". . . while it is true that the use of arms was not taken advantage of by the robbers in gaining entrance to defendant's ill-fated plane, the armed robbery that took place constitutes force majeure for which defendant is not liable because the robbers were able to gain entrance to the plane with the guns they used already in their possession, which fact could not have been prevented nor avoided by the defendant since it was not authorized to search its passengers for firearms and deadly weapons as shown in Exhibits '6,' '7,' '8,' and '8-A.' As its robbery constitutes force majeure, defendant is not liable.

amount lost, the trial court found for only US$5,228.90 and 100 paengs. The court had doubts as to the total claim. The lost luggage was declared as weighing around 18 pounds or approximately 8 kilograms. At $20.00 per kilogram, the petitioner offered to pay $160.00 as a higher value was not declared in advance and additional charges were not paid. We note, however, that an amount of $400.00 per passenger is allowed for unchecked luggage. Since the checking-in was against the will of the respondent, we treat the lost bag as partaking of involuntarily and hurriedly checked-in luggage and continuing its earlier status as unchecked luggage. The fair liability under the petitioner's own printed terms is $400.00. Since the trial court ruled out discriminatory acts or bad faith on the part of Pan Am or other reasons warranting damages, there is no factual basis for the grant of P20,000.00 damages.||| 5.5 Alitalia vs IAC In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some special species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointed — a breach of its contract of carriage, to be sure — with the result that she was unable to read the paper and make the scientific presentation (consisting of slides, autoradiograms or films, tables and tabulations) that she had painstakingly labored over, at the prestigious international conference, to attend which she had traveled hundreds of miles, to her chagrin and embarrassment and the disappointment and annoyance of the organizers. She felt, not unreasonably, that the invitation for her to participate at the conference, extended by the Joint FAO/IAEA Division of Atomic Energy in Food and Agriculture of the United Nations, was a singular honor not only to herself, but to the University of the Philippines and the country as well, an opportunity to make some sort of impression among her colleagues in that field of scientific activity. The opportunity to claim this honor or distinction was irretrievably lost to her because of Alitalia's breach of its contract.|||

5.3. Pan American Airlines vs Rapadas In Pan American World Airways, Inc. v. I.A.C., the Warsaw Convention was applied as regards the limitation on the carrier's liability, there being a simple loss of baggage without any otherwise improper conduct on the part of the officials or employees of the airline or other special injury sustained by the passenger.||| 5.4. British Airways vs CA LIABILITY ON LOST UNCHECKED LUGGAGE; RULE; CASE AT BAR. — The attache case was originally handcarried does not beg the conclusion that the amount of $4,750.00 in cash could have been placed inside. It may be noted that out of a claim for US$42,403.90 as the ENGR. ARIEL MARK PILOTIN

28