Notes On Chapter 2.doc

NOTES, CHAPTER 2 of Aquino book Obligations of the Parties Obligations of the Carrier  Duty to accept  Duty to deliver o Time of delivery o Consequences of delay o Where and to whom delivered  Place  Consignee  Delay to transport passengers  Duty to exercise extraordinary diligence o Presumption of negligence o Duration of duty Defenses  Fortuitous event  Participation of the carrier  Fire  Hijacking  Mechanical defects  Other invalid defenses (see below) Other invalid defenses (p. 123)  Explosion  Worms and rats  Water damage  Barratry – an act committed by the master or crew of the ship for some unlawful or fraudulent purpose, contrary to their duty to the owner. Necessary: intentional fraud or breach of trust or willful violation. Includes theft by the purser of a specie shipped on board and fraudulently running the ship ashore (note problems on p. 124-126) Defenses in carriage of passengers  Employees  Other passengers  Third persons Negligence of shipper or passenger  Last clear chance doctrine  Assumption of risk concept Freight – amount to be paid, who will pay, time to pay Duty to accept – without discrimination

merchandise to be carried by the company in its business as a common carrier to include dynamite, power or other explosives and other expressly prohibiting the officers, agents, and servatnts of the company from offering to carry or accepting to carry said articles. In view of the resolution passed the collector of customs suspended the issuance of clearances for the vessles unless they allow the carriage of such articles. Hence, herein petitioner a major stockholder filed a petition for prohibition. Issue: Whether or not the resolution of Yanco is justified. Held: The court rules the negative. Common carrier in the jurisdiction cannot lawfully decline to accept a particular class of goods, unless it appears that for some sufficient reason the discrimination is reasonalble and necessary. Yangco Steamships Company has not met those conditions. The nature of the business of a common carrier as a public employment is such that it is within the power of the state to impose such just regulation in the interest of the public as the legistalors may deem proper. When carrier may validly refuse to accept goods: 1. when the goods sought to be transported are dangerous objects, or 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 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 9. failure to tender goods on time ARTICLE 356. Carriers may refuse packages which appear unfit for transportation; and if the carriage is to be made by railway, and the shipment is insisted upon, the company shall transport them, being exempt from all responsibility if its objections, is made to appear in the bill of lading. ARTICLE 357. If by reason of well-founded suspicion of falsity in the declaration as to the contents of a package the carrier should decide to examine it, he shall proceed with his investigation in the presence of witnesses, with the shipper or consignee in attendance. If the shipper or consignee who has to be cited does not attend, the examination shall be made before a notary, who shall prepare a memorandum of the result of the investigation, for such purposes as may be proper. If the declaration of the shipper should be true, the expense occasioned by the examination and that of carefully repacking the packages shall be for the account of the carrier and in a contrary case for the account of the shipper.

F.C. Fisher v. Yangco Steamship Company G.R. No. L-8095

Duty to deliver the goods – carrier is not insurer against delay in transportation of goods

Facts: On June 10, 1912, the directors of Yangco Steamship Company which is duly licensced to engage in the coastwise trade in the Philippines, adopted a resolution which was thereafter ratified and affirmed by the shareholders of the company expressly declaring and providing that the classes of

Reasonable time in the absence of agreement as to time of delivery ARTICLE 358. If there is no period fixed for the delivery of the goods the carrier shall be bound to forward them in the first shipment of the

same or similar goods which he may make point where he must deliver them; and should he not do so, the damages caused by the delay should be for his account.

Consequences of delay  do not terminate the contract of carriage  vessel continues to be liable as common carrier, not warehouseman  remains duty bound to exercise extraordinary diligence Abandonment ARTICLE 371. In case of delay through the fault of the carrier, referred to in the preceding articles, the consignee may leave the goods transported in the hands of the former, advising him thereof in writing before their arrival at the point of destination. When this abandonment takes place, the carrier shall pay the full value of the goods as if they had been lost or mislaid. If the abandonment is not made, the indemnification for losses and damages by reason of the delay cannot exceed the current price which the goods transported would have had on the day and at the place in which they should have been delivered; this same rule is to be observed in all other cases in which this indemnity may be due.

Magellan Mfg. Mrketing Corp v. CA – “In overland transportation, an unreasonable delay in the delivery of transported goods is sufficient ground for the abandonment of goods. By analogy, this can be applied to maritime transportation.” Right of passengers in case of delay – Art. 698, Code of Commerce. In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the fare in proportion to the distance covered, without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs, he may not be required to pay any increased price of passage, but his living expenses during the stay shall be for his own account. Trans-Asia v. CA FACTS: Respondent bought a ticket from petitioner for its voyage to Cagayan de Oro from Cebu. Upon boarding, respondent noticed some repairs being made on the engine of the vessel, later that night, it departed but with only one vessel running. After an hour of slow voyage, it dropped its anchor on Kawit Island. After 30 minutes of stillness, some passengers demanded that they be allowed to return to Cebu and not anymore continue their voyage. The captain acceded, thus, the vessel headed back to Cebu, allowed the passengers to disembark and headed to Cagayan de Oro. The following day, respondent boarded a vessel of the defendant heading for Cagayan de Oro. For failure to transport him to the place of destination at the first instance, respondent filed a claim for damages against petitioner. ISSUE: Whether or not respondent must be awarded damages and what factors must be considered for such an award.

RULING: Yes, the respondent must be awarded damages because the petitioner did not observe extraordinary diligence as required by law of a common carrier. The vessel departed even though it was not seaworthy thus causing delay in the arrival of the passengers to their place of destination. Considering Article 698 of the Code of Commerce and Articles 1766, 2199, 2200, 2201 and 2208 of the Civil Code, the court held that petitioner is liable for any pecuniary loss which the respondent may have suffered like the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. This, however, assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage; but he did not. Rather, he decided not to complete the voyage, the vessel had to return to its port of origin and him and the others to disembark. The respondent then took the petitioner's other vessel the following day, using the ticket he had purchased for the previous day's voyage which caused more delay since if he decided not to disembark, then he would have only lost his salary for half a day. But respondent failed to prove actual damages like that he did not receive any salary for the day of delay. Respondent is entitled to moral and exemplary damages despite petitioner's contention that the part of the sea where the vessel dropped anchor was calm, therefore, the passengers' safety was not at stake. The court ruled otherwise and stated that said contention only shows the lack of genuine concern of the common carrier for the safety of its passengers. The sea is an unfamiliar zone for the passengers, that it is nighttime and considering the many tragedies occurring at sea causing the lives of many due to common carriers failure to exercise extraordinary diligence, therefore, petitioner may not be expect its passengers to act in the manner it desires. Attorney's fees were not granted in this case. Respondent failed to prove an actual damage which is the basis for attorney's fees and it was not specifically prayed for. Where and to whom delivered ARTICLE 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.

Consignee ARTICLE 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. ARTICLE 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. Art. 1513. A person to whom a negotiable document of title has been duly negotiated acquires thereby: (1) Such title to the goods as the person negotiating the document to him had or had ability to convey to a purchaser in good faith for value and also such title to the goods as the person to whose order the goods were to be delivered by the terms of the document had or had ability to convey to a purchaser in good faith for value; and

(2) The direct obligation of the bailee issuing the document to hold possession of the goods for him according to the terms of the document as fully as if such bailee had contracted directly with him. (n)

Duty to exercise extraordinary diligence ARTICLE 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Paitdo Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. ARTICLE 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Presumption of negligence – common carrier presumed to be at fault or have acted negligently unless he had observed extraordinary diligence in the vigilance thereof Mirasol vs. Robert Dollar (GR 29721, 27 March 1929) Second Division, Johns (J): 5 concur Facts: Amando Mirasol alleged that he is the owner and consignee of two cases of books shipped in good order and condition at New York, USA, on board Robert Dollar Co.’s steamship President Garfield, for transport and delivery to Mirasol in the City of Manila, all freight charges paid; that the two cases arrived in Manila on 1 September 1927, in bad order and damaged condition, resulting in the total loss of one case and a partial loss of the other; that the loss in one case is P1,630, and the other P700, for which he filed his claims, and Robert Dollar has refused and neglected to pay, giving as its reason that the damage in question “was caused by sea water”; that Mirasol never entered into any contract with the Robert Dollar limiting the latter’s liability as a common carrier, and when he wrote the letter of 3 September 1927, he had not then ascertained the contents of the damaged case, and could not determine their value; that he never intended to ratify or confirm any agreement to limit the liability of the defendant; and that on 9 September 1927, when the other case was found, Mirasol filed a claim for the real damage of the books therein named in the sum of $375. Mirasol prayed for corresponding judgment, with legal interest from the filing of the complaint and costs. For answer, Robert Dollar made a general and specific denial, and as a separate and special defense alleged that the steamship President Garfield at all the times alleged was in all respects seaworthy and properly manned, equipped and supplied, and fit for the voyage; that the damage to Robert Dollar’s merchandise, if any, was not caused through the negligence of the vessel, its master, agent, officers, crew, tackle or appurtenances, nor by reason of the vessel being unseaworthy or improperly manned, “but that such damage, if any, resulted from faults or errors in navigation or in the management of said vessel.” As a second separate and special defense, Robert Dollar alleged that in the bill of lading, it was agreed in writing that Robert Dollar should not be “held liable for any loss of, or damage to, any of said merchandise resulting from any of the following causes, to wit: Acts of God, perils of the sea or other waters,” and that Mirasol’s damage, if any, was caused by “Acts of God” or “perils of the sea.” As a third special defense, Robert Dollar quoted clause 13 of the bill of lading, in which it is stated that in no case shall it be held liable “for or in respect to said merchandise or property beyond the sum of 250 dollars for any piece package or any article not enclosed in a package, unless a higher value is stated herein and ad valorem freight paid or assessed thereon,” and that there was no other agreement; that on 3 September 1927 Mirasol wrote Robert Dollar a letter which reads “Therefore, I wish to file claim of damage to the meager maximum value that your bills of lading will indemnify me, that is $250 as per condition 13.” As a fourth special defense, Robert Dollar alleged that the damage, if any, was caused by “sea water,” and that the bill of lading exempts defendant from liability for that cause. That damage by “sea water” is a shipper’s risk, and that Robert Dollar is not liable. As a result of the trial upon such issues, the lower court rendered judgment for Mirasol for P2,080, with

legal interest thereon from the date of the final judgment, with costs. Both parties appealed. The Supreme Court modified the judgment of the lower court, so as to give Mirasol legal interest on the amount of his judgment from the date of its rendition in the lower court, and in all other respects affirmed, with costs. 1. Mirasol entitled to P400, not P700, for his Encyclopedia Britannica The evidence shows that with the P400 (not P700 as claimed) which the court allowed, Mirasol could buy a new set of Encyclopedia Britannica which would contain all of the material and subject matter of the one which he lost. 2. Mirasol entitled to legal interest from date of judgment rendered by lower court Under all of the authorities, Mirasol is entitled to legal interest from the date of his judgment rendered in the lower court and not the date when it becomes final. 3. Worth of damage sustained by evidence; Manner of proving proper The lower court found that Mirasol’s damage was P2,080, and that finding is sustained by the evidence. There was a total loss of one case and a partial loss of the other, and in the very nature of things, Mirasol could not prove his loss in any other way or manner than he did prove it, and the trial court who heard him testify must have been convinced of the truth of his testimony. 4. Mirasol not legally bound by clause limiting the carrier’s liability There is no claim or pretense that Mirasol signed the bill of lading or that he knew of its contents at the time it was issued. In that situation he was not legally bound by the clause which purports to limit Robert Dollar’s liability. That question was squarely met and decided by the Supreme Court in banc in Juan Ysmael & Co., vs. Gabino Barretto & Co. (51 Phil., 90; see numerous authorities there cited). 5. Restriction of liability of steamship company against own negligence against public policy; Case of The Kesington applies Restrictions of the liability of a steamship company for its own negligence or failure of duty toward a passenger, being against the public policy enforced by the courts of the United States, will not be upheld, though the ticket was issued and accepted in a foreign country and contained a condition making it subject to the law thereof, which sustain such stipulations. A stipulation in a steamship passenger’s ticket, which compels him to value his baggage, at a certain sum, far less than it is worth, or, in order to have a higher value put upon it, to subject it to the provisions of the Harter Act, by which the carrier would be exempted from all liability therefor from errors in navigation or management of the vessel or other negligence, is unreasonable and in conflict with public policy. An arbitrary limitation of 250 francs for the baggage of any steamship passenger, unaccompanied by any right to increase the amount by adequate and reasonable proportional payment, is void as against public policy. 6. Goods, when delivered to carrier, are under its control and supervision; Burden of proof against damages shifts to carrier Shippers who are forced to ship goods on an ocean liner or any other ship have some legal rights, and when goods are delivered on board ship in good order and condition, and the shipowner delivers them to the shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove that the goods were damaged by reason of some fact which legally exempts him from liability; otherwise, the shipper would be left without any redress, no matter what may have caused the damage. Herein, Robert Dollar having received the two boxes in good condition, its legal duty was to deliver them to Mirasol in the same condition in which it received them. From the time of their delivery to Robert Dollar in New York until they were delivered to Mirasol in Manila, the boxes were under the control and supervision of Robert Dollar and beyond the control of Mirasol. Robert Dollar having admitted that the boxes were damaged while in transit and in its possession, the burden of proof then shifted, and it devolved upon Robert Dollar to both allege and prove that the damage was caused by reason of some fact which exempted it from liability. As to how the boxes were damaged, when or where, was a matter peculiarly and exclusively within the knowledge of Robert Dollar, and in the very nature of things could not be in the knowledge of Mirasol. To require Mirasol to prove as to when and how the damage was caused would force him to call and rely upon the employees of Robert Dollar’s ship, which in legal effect would be to say that he could not recover any damage for any reason. That is not the law. 7. Article 361 of the Code of Commerce

Merchandise shall be transported at the risk and venture of the shipper, if the contrary was not expressly stipulated. Therefore, all damages and impairment suffered by the goods during the transportation, by reason of accident, force majeure, or by virtue of the nature or defect of the articles, shall be for the account and risk of the shipper. The proof of these accidents is incumbent on the carrier.” 8. Damage by “sea water” not evidence that goods damaged by force majeure; Perils of sea The fact that the cases were damaged by “sea water,” standing alone and within itself, is not evidence that they were damaged by force majeure or for a cause beyond the carrier’s control. The words “perils of the sea” apply to “all kinds of marine casualties, such as shipwreck, foundering, stranding,” and among other things, it is said: “Tempest rocks, shoals, icebergs and other obstacles are within the expression,” and “where the peril is the proximate cause of the loss, the shipowner is excused.” “Something fortuitous and out of the ordinary course is involved in both words ‘peril’ or ‘accident.’” 9. Government vs. Ynchausti not in point The case of Government of the Philippine Islands vs. Ynchausti & Company (40 Phil., 219) and the present case are very different and, hence, it is not in point. In the present case, there is no claim or pretense that the two cases were not in good order when received on board the ship, and it is admitted that they were in bad order on their arrival at Manila. Hence, they must have been damaged in transit. In the very nature of things, if they were damaged by reason of a tempest, rocks, icebergs, foundering, stranding or the perils of the sea, that would be a matter exclusively within the knowledge of the officers of Robert Dollar’s ship, and in the very nature of things would not be within Mirasol’s knowledge, and upon all of such questions, there is a failure of proof.

Duration of duty – Due diligence should be exercised the moment the goods are delivered to the carrier. Macam vs. CA The extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to receive them was proper. The real issue is whether respondents are liable to petitioner for releasing the goods to GPC without the bills of lading or bank guarantee. From the testimony of petitioner, we gather that he has been transacting with GPC as buyer/importer for around two (2) or three (3) years already. When mangoes and watermelons are in season, his shipment to GPC using the facilities of respondents is twice or thrice a week. The goods are released to GPC. It has been the practice of petitioner to request the shipping lines to immediately release perishable cargoes such as watermelons and fresh mangoes through telephone calls by himself or his "people." In transactions covered by a letter of credit, bank guarantee is normally required by the shipping lines prior to releasing the goods. But for buyers using telegraphic transfers, petitioner dispenses with the bank guarantee because the goods are already fully paid. In his several years of business relationship with GPC and respondents, there was not a single instance when the bill of lading was first presented before the release of the cargoes.

Carriage of passengers Passenger – one who travels in a public conveyance by virtue of a contract, express or implied, with the carrier as to the payment of fare, or that which is accepted as an equivalent thereof Light Rail Transit Authority vs. Navidad (GR 145804, 6 February 2003) First Division, Vitug (J): 4 concur Facts: On 14 October 1993, about half an hour past 7:00 p.m., Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing a “token” (representing payment of the fare). While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to the area approached Navidad. A misunderstanding or an altercation between the two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how the fight started or who, between the two, delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by Rodolfo Roman, was coming in.Navidad was struck by the moving train, and he was killed instantaneously. On 8 December 1994, the widow of Nicanor, Marjorie Navidad, along with her children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent. Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection and supervision of its security guards. The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in his assigned task. On 11 August 1998, the trial court rendered its decision, ordering Prudent Security and Escartin to jointly and severally pay Navidad (a) (1) Actual damages of P44,830.00; (2) Compensatory damages of P443,520.00; (3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00; (b) Moral damages of P50,000.00; (c) Attorney’s fees of P20,000; and (d) Costs of suit. The court also dismissed the complaint against LRTA and Rodolfo Roman for lack of merit, and the compulsory counterclaim of LRTA and Roman. Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its decision exonerating Prudent from any liability for the death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and severally liable. The appellate court modified the judgment ordering Roman and the LRTA solidarily liable to pay Navidad (a) P44,830.00 as actual damages; (b) P50,000.00 as nominal damages; (c) P50,000.00 as moral damages; (d) P50,000.00 as indemnity for the death of the deceased; and (e) P20,000.00 as and for attorney’s fees. The appellate court denied LRTA’s and Roman’s motion for reconsideration in its resolution of 10 October 2000. Hence, the appeal. The Supreme Court affirmed the assailed decision of the appellate court with modification that (a) the award of nominal damages is deleted and that (b) Roman is absolved from liability; without costs. 1. Common carrier burdened with duty of exercising utmost diligence Law and jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the safety of passengers. 2. Civil Code provisions governing liability of Common carrier; Articles 1755, 1756, 1759, and 1763 The Civil Code, governing the liability of a common carrier for death of or injury to its passengers. (1) Article 1755 provides that “A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.” (2) Article 1756 provides that “In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755.” (3) Article 1759 provides that “Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their

employees.” (4) Article 1763 provides that “A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier’s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.” 3. Utmost diligence of very cautious persons; Duty to observe as long as passengers are within its premises The law requires common carriers to carry passengers safely using the utmost diligence of very cautious persons with due regard for all circumstances. Such duty of a common carrier to provide safety to its passengers so obligates it not only during the course of the trip but for so long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage. 4. Liability of common carrier The statutory provisions render a common carrier liable for death of or injury to passengers (a) through the negligence or wilful acts of its employees or b) on account of wilful acts or negligence of other passengers or of strangers if the common carrier’s employees through the exercise of due diligence could have prevented or stopped the act or omission. 5. Presumption of negligence; Proof In case of death or injury, a carrier is presumed to have been at fault or been negligent, and by simple proof of injury, the passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen event or to force majeure. In the absence of satisfactory explanation by the carrier on how the accident occurred, the presumption would be that it has been at fault, an exception from the general rule that negligence must be proved. 6. Common carrier not relieve of responsibility when it hires its own employees or avails itself of services of an outsider or independent firm to undertake task ensuring safety of pasengers The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of that contract by reason of its failure to exercise the high diligence required of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a carrier may choose to hire its own employees or avail itself of the services of an outsider or an independent firm to undertake the task. In either case, the common carrier is not relieved of its responsibilities under the contract of carriage. 7. Premise for employer’s liability for tort The premise for employer’s liability for tort (under the provisions of Article 2176 and related provisions, in conjunction with Article 2180 of the Civil Code) is negligence or fault on the part of the employee. Once such fault is established, the employer can then be made liable on the basis of the presumption juris tantum that the employer failed to exercise diligentissimi patris familias in the selection and supervision of its employees. The liability is primary and can only be negated by showing due diligence in the selection and supervision of the employee. Herein, such a factual matter that has not been shown. 8. Liability for tort may arise even under a contract A contractual obligation can be breached by tort and when the same act or omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194 of the Civil Code can well apply. In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract. Stated differently, when an act which constitutes a breach of contract would have itself constituted the source of a quasi-delictual liability had no contract existed between the parties, the contract can be said to have been breached by tort, thereby allowing the rules on tort to apply. 9. Negligence of Prudent’s employee not proved; Prudent not liable The liability of the common carrier, on the one hand, and an independent contractor, on the other hand, can be described as solidary. However, regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad, there is nothing to link Prudent to the death of Nicanor Navidad, for the reason that the negligence of its employee, Escartin, has not been duly proven. 10. Guilt of Roman of any culpability not shown; Roman not liable There being no showing that Rodolfo Roman himself is guilty of any culpable act or omission, he must also be absolved from liability. Needless to say, the contractual tie between the LRT and Navidad is not itself a juridical relation

between the latter and Roman; thus, Roman can be made liable only for his own fault or negligence. 11. Purpose of nominal damages; Nominal damages cannot co-exist with compensatory damages Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. It is an established rule that nominal damages cannot co-exist with compensatory damages. Dangwa Transportation vs. CA (GR 95582, 7 October 1991) Second Division, Regalado (J): 4 concur Facts: On 25 March 1985 at Marivic, Sapid, Mankayan, Benguet, Theodore M. Lardizabal was driving a passenger bus belonging to Dangwa Transportation Co. in a reckless and imprudent manner and without due regard to traffic rules and regulations and safety to persons and property, it ran over its passenger, Pedrito Cudiamat. However, instead of bringing Pedrito immediately to the nearest hospital, the said driver, in utter bad faith and without regard to the welfare of the victim, first brought his other passengers and cargo to their respective destinations before bringing said victim to the Lepanto Hospital where he expired. On 13 May 1985, Inocencia Cudiamat, Emilia Cudiamat Bandoy, Fernando Cudiamat, Marrieta Cudiamat, Norma Cudiamat, Dante Cudiamat, Samuel Cudiamat and Ligaya Cudiamat (heirs of Pedrito Cudiamat, and represented by Inocencia Cudiamat) filed a complaint for damages against petitioners for the death of Pedrito Cudiamat as a result of a vehicular accident which occurred. On 29 July 1988, the trial court rendered a decision, pronouncing that Pedrito Cudiamat was negligent, which negligence was the proximate cause of his death. Nonetheless, Lardizabal and Dangwa Transportation, in equity, were hereby ordered to pay the heirs of Pedrito Cudiamat the sum of P10,000.00 which approximates the amount Lardizabal and Dangwa Transportation initially offered said heirs for the amicable settlement of the case; without costs. The Cudiamats appealed to the Court of Appeals which, in a decision (CA-GR CV 19504) promulgated on 14 August 1990, set aside the decision of the lower court, and ordered Dangwa and Lardizabal to pay the Cudiamats (1) the sum of P30,000.00 by way of indemnity for death of the victim Pedrito Cudiamat; (2) the sum of P20,000.00 by way of moral damages; (3) the sum of P288,000.00 as actual and compensatory damages; and (4) the costs of the suit. Dangwa’s and Lardizabal’s motion for reconsideration was denied by the Court of Appeals in its resolution dated 4 October 1990. Hence, the petition. The Supreme Court affirmed the challenged judgment and resolution of the Court of Appeals, with modifications. 1. Factual findings of the Court of Appeals generally final; Exceptions It is an established principle that the factual findings of the Court of Appeals as a rule are final and may not be reviewed by this Court on appeal. However, this is subject to settled exceptions, one of which is when the findings of the appellate court are contrary to those of the trial court, in which case a reexamination of the facts and evidence may be undertaken. Herein, the trial court and the Court of Appeals have discordant positions as to who between Dangwa Transportation and the victim is guilty of negligence. Perforce, the Court has had to conduct an evaluation of the evidence in this case for the proper calibration of their conflicting factual findings and legal conclusions. 2. Findings of the trial court Pedrito Cudiamat was negligent in trying to board a moving vehicle, especially with one of his hands holding an umbrella; and, without having given the driver or the conductor any indication that he wishes to board the bus. Dangwa Transportation can also be found wanting of the necessary diligence. In this connection, it is safe to assume that when the deceased Cudiamat attempted to board the bus, the vehicle’s door was open instead of being closed. This should be so, for it is hard to believe that one would even attempt to board a vehicle (i)n motion if the door of said vehicle is closed. Here lies the defendant’s lack of diligence. Under such circumstances, equity demands that there must be something given to the heirs of the victim to assuage their feelings. This, also considering that initially, the common carrier had made overtures to amicably settle the case. It did offer a certain monetary consideration to the victim’s heirs. 3.

Findings of the appellate court

The subject bus was at full stop when the victim Pedrito Cudiamat boarded the same as it was precisely on this instance where a certain Miss Abenoja alighted from the bus. Moreover, the victim did indicate his intention to board the bus when he declared that Pedrito Cudiamat was no longer walking and made a sign to board the bus when the latter was still at a distance from him. It was at the instance when Pedrito Cudiamat was closing his umbrella at the platform of the bus when the latter made a sudden jerk movement as the driver commenced to accelerate the bus. The incident took place due to the gross negligence of the driver in prematurely stepping on the accelerator and in not waiting for the passenger to first secure his seat especially so when we take into account that the platform of the bus was at the time slippery and wet because of a drizzle. The company utterly failed to observe its duty and obligation as common carrier to the end that they should observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to the circumstances of each case (Article 1733, New Civil Code). 4. Findings of the appellate court supported by witnesses’ testimony; Deceased not guilty of negligence The Supreme Court finds no reason to disturb the holding of the Court of Appeals. Its findings are supported by the testimony of Dangwa Transportation’s own witnesses, Virginia Abalos, and its the bus conductor, Martin Anglog. The testimonies show that the place of the accident and the place where one of the passengers alighted were both between Bunkhouses 53 and 54, hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is correct. They further confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward and was run over by the rear right tires of the vehicle, as shown by the physical evidence on where he was thereafter found in relation to the bus when it stopped. Under such circumstances, it cannot be said that the deceased was guilty of negligence. 5. When bus not in motion; Duty of driver and conductor When the bus is not in motion there is no necessity for a person who wants to ride the same to signal his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act that would have the effect of increasing the peril to a passenger while he was attempting to board the same. Herein, the premature acceleration of the bus was a breach of such duty. 6. Duty of common carriers of passengers It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so. 7. Even assuming bus moving, deceased still not negligent Even assuming that the bus was moving, the act of the victim in boarding the same cannot be considered negligent under the circumstances. It is not negligence per se, or as a matter of law, for one to attempt to board a train or streetcar which is moving slowly. An ordinarily prudent person would have made the attempt to board the moving conveyance under the same or similar circumstances. The fact that passengers board and alight from a slowly moving vehicle is a matter of common experience and both the driver and conductor could not have been unaware of such an ordinary practice. 8. When contractual obligation of common carrier starts The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger and is entitled to all the rights and protection pertaining to such a contractual relation. Hence, it has been held that the duty which the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to those alighting therefrom. 9. Diligence required of common carriers Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence for the safety of the passengers transported by them, according to all the circumstances of each case. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. 10. Negligence must be proved; Exception in ontract of carriage In an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought by the passenger. By the contract of

carriage, the carrier assumes the express obligation to transport the passenger to his destination safely and to observe extraordinary diligence with a due regard for all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier. This is an exception to the general rule that negligence must be proved, and it is therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. 11. Failure to bring injured immediately to hospital patent proof of negligence The circumstances under which the driver and the conductor failed to bring the gravely injured victim immediately to the hospital for medical treatment is a patent and incontrovertible proof of their negligence. It defies understanding and can even be stigmatized as callous indifference. The evidence shows that after the accident the bus could have forthwith turned at Bunk 56 and thence to the hospital, but its driver instead opted to first proceed to Bunk 70 to allow a passenger to alight and to deliver a refrigerator, despite the serious condition of the victim. 12. Rule as to amount recoverable in tort The rule is that the amount recoverable by the heirs of a victim of a tort is not the loss of the entire earnings, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross earnings, are to be considered, that is, the total of the earnings less expenses necessary in the creation of such earnings or income and minus living and other incidental expenses. 13. Actual award of damages to be given The deductible living and other expense of the deceased may fairly and reasonably be fixed at P500.00 a month or P6,000.00 a year. In adjudicating the actual or compensatory damages, the appellate court found that the deceased was 48 years old, in good health with a remaining productive life expectancy of 12 years, and then earning P24,000.00 a year. Using the gross annual income as the basis, and multiplying the same by 12 years, it accordingly awarded P288,000. Applying the rule on computation based on the net earnings, said award must be rectified and reduced to P216,000.00. However, in accordance with prevailing jurisprudence, the death indemnity is hereby increased to P50,000.00.

La Mallorca vs. CA The liability of the carrier for the child, who was already led by the father to a place about 5 meters away from the bus for her safety under the contract of carriage, persists. The relation of carrier and passenger does not necessarily cease where the latter, after alighting from the car, aids the carrier's servant or employee in removing his baggage from the car. It has been recognized as a rule that the relation of carrier and passenger does not cease at the moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. Aboitiz Shipping Co. vs. CA The rule is that the relation of carrier and passenger continues until the passenger has been landed at the port of destination and has left the vessel owner's dock or premises. Once created, the relationship will not ordinarily terminate until the passenger has, after reaching his destination, safely alighted from the carrier's conveyance or had a reasonable opportunity to leave the carrier's premises. All persons who remain on the premises a reasonable time after leaving the conveyance are to be deemed passengers, and what is a reasonable time or a

reasonable delay within this rule is to be determined from all the circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. The carrierpassenger relationship is not terminated merely by the fact that the person transported has been carried to his destination if, for example, such person remains in the carrier's premises to claim his baggage. When the accident occurred, the victim was in the act of unloading his cargoes, which he had every right to do, from petitioner's vessel. Even if he had already disembarked an hour earlier, his presence in petitioner's premises was not without cause. The victim had to claim his baggage which was possible only one hour after the vessel arrived since it was admittedly standard procedure in the case of petitioner's vessels that the unloading operations shall start only after that time. 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; meriee (5) Order or act of competent public authority. 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. Defenses 1. flood, storm, earthquake, lightning and other natural disaster and calamity 2. acts of the public enemy at war, whether international or civil 3. act or omission of the shipper or owner of the goods 4. character of the packing of the goods in the packing or in the containers 5. order or act of the competent authority 6. exercise of extraordinary diligence Note: defense of exercise of due diligence in the selection and supervision of employees (in tort), not available (note Taurus and Kapitan problems on pp. 109-110) Requisites for fortuitous event: 1. the cause of the breach of the obligation must be independent of the will of the debtor; 2. the event must be either unforeseeable or unavoidable;

3. 4.

the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and the debtor must be free from any participation in, or aggravation of the injury to the creditor.

PHIL. AMERICAN GENERAL INSURANCE CO., INC. vs. COURT OF APPEALS, ET AL. G.R. No. 116940 AN INSURANCE LAW CASE. BY C Y. Below this digest is the full case. FACTS. 1. On 6 July 1983 Coca-Cola Bottlers Philippines, Inc., loaded on board "MV Asilda," a vessel owned and operated by respondent Felman Shipping Lines (FELMAN for brevity), 7,500 cases of 1-liter Coca-Cola softdrink bottles to be transported from Zamboanga City to Cebu City for consignee Coca-Cola Bottlers Philippines, Inc., Cebu. The shipment was insured with petitioner Philippine American General Insurance Co., Inc. 2. MV Asilda left the port of Zamboanga in fine weather and sank in the water of Zamboanga Del Norte the following day bringing with her its entire cargoe including the 7500 cases of 1-liter of Coca-cola the subject matter of this case. 3. The consignee Coca-Cola Bottlers Philippines, Inc., Cebu plant, filed a claim with respondent FELMAN for recovery of damages it sustained as a result of the loss of its softdrink bottles that sank with "MV Asilda." Respondent denied the claim thus prompting the consignee to file an insurance claim with PHILAMGEN which paid its claim of P755,250.00. 3. Subrogated in the place of the insured, PHILAMGEN. Sought recourse against the respondent who deny any liability so the petitioner filed a complaint against respondent FELMAN before the trial court alleging that the sinking of MV Asilda was due to its unseaworthiness as it was put in to the sea in an unstable condition and the gross negligense of its officers but respondent FELMAN file a motion to dismiss claiming that no right of subrogation was transfered by the shipper to the petitioner. 4. The Trial Court dismiss the complaint of the petitioner and ruled that the vessel was seaworthy when it left the port of Zamboanga and assuming "MV Asilda" was unseaworthy, still PHILAMGEN could not recover from FELMAN since the assured (Coca-Cola Bottlers Philippines, Inc.) had breached its implied warranty on the vessel's seaworthiness so the payment made by PHILAMGEN to the insured was a mistake so there was no right of subrogation on its part. 5. The Court of appeals ruled that the vessel was unseaworthy when it was put to the sea as it was overloaded but held that PHILAMGEN was not subrogated on the right of the insured because of its failure to comply with the assured implied warranty of seaworthiness.

ISSUE. WHETHER OR NOT, PHILAMGEN WAS SUBROGATED IN THE RIGHT OF THE SHIPPER AND WHETHER THE MV ASILDA WAS UNSEAWORTHY WHEN IT WAS PUT TO THE SEA. ACCORDING TO THE SUPREME COURT, the distribution of the cargoe on board of MV ASILDA was done in such a manner that it was in top heavy condition from the time of its departure rendering it unstable and unseaworthy for the voyage and with regards the issue of subrogation, the Supreme court held that under Art. 2207 of the civil code, it provides that ”If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. WHEREFORE, the petition is GRANTED. Respondent FELMAN SHIPPING LINES is ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. Other passengers and third persons JBL Reyes in Bacarro v. Castano – “the concurrent negligence of a 3rd person will not exempt the appellant from responsibility”