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What are common carriers? Calvo v. UCPB General Insurance G.R. No. 148496 March 19, 2002 Facts: Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), and a custom broker, entered into a contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the port area to the Tabacalera Compound, Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc. On July 14, 1990, contained in 30 metal vans, arrived in Manila on board “M/V Hayakawa Maru”. After 24 hours, they were unloaded from vessel to the custody of the arrastre operator, Manila Port Services, Inc. From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and delivered it to SMC’s warehouse in Manila. On July 25, the goods were inspected by Marine Cargo Surveyors, reported that 15 reels of the semi-chemical fluting paper were “wet/stained/torn” and 3 reels of kraft liner board were also torn. The damages cost P93,112.00. SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on the other hand, as a subrogee of SMC, brought a suit against petitioner in RTC, Makati City. On December 20, 1995, the RTC rendered judgment finding petitioner liable for the damage to the shipment. The decision was affirmed by the CA. Issue: Whether or not Calvo is a common carrier? Held: In this case the contention of the petitioner, that he is not a common carrier but a private carrier, has no merit. 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 ancillary activity. 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 distinction. (De Guzman v. CA, 68 SCRA 612) The concept of “common carrier” under Article 1732 coincide with the notion of “public service”, under the Public Service Act which partially supplements the law on common carrier. Under Section 13, paragraph (b) of the Public Service Act, it includes: “ x x x 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 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. x x x” What are legal consequences of a Certificate of Public Convenience? Philippine Airlines, Inc. vs. Civil Aeronautics Board (270 SCRA 538) Facts: ​Grand Air applied for a Certificate of Public Convenience and Necessity with the Civil Aeronautics Board (CAB). The Chief Hearing Officer issued a notice of hearing directing Grand Air to serve a copy of the application and notice to all scheduled Philippine Domestic operators. Grand Air filed its compliance and requested for a Temporary Operating Permit (TOP). PAL filed an opposition to the application on the ground that the CAB had no jurisdiction to hear the application until Grand Air first obtains a franchise to operate from Congress. The Chief Hearing Officer denied the opposition and the CAB approved the issuance of the TOP for a period of 3

months. The opposition for the TOP was likewise denied. The CAB justified its assumption of jurisdiction over Grand Air’s application on the basis of Republic Act 776 which gives it the specific power to issue any TOP or Certificate of Public Convenience and Necessity. Issue: Whether or not the CAB can issue a Certificate of Public Convenience and Necessity or TOP even though the prospective operator does not have a legislative franchise? Held: Yes, as mentioned by the CAB, it is duly authorized to do so under Republic Act 776 and a legislative franchise is not necessary before it may do so, since Congress has delegated the authority to authorize the operation of domestic air transport services to the CAB, an administrative agency. The delegation of such authority is not without limits since Congress had set specific standard and limitations on how such authority should be exercised. Public convenience and necessity exists when the proposed facility will meet a reasonable want of the public and supply a need which the existing facilities do not adequately afford. Thus, the Board should be allowed to continue hearing the application, since it has jurisdiction over it provided that the applicant meets all the requirements of the law. LIABILITY OF A COMMON CARRIER FOR DEATH OR INJURIES TO PASSENGERS DUE TO ACTS OF ITS EMPLOYEES AND OTHER PASSENGERS OR STRANGER

FOR ACTS OF ITS EMPLOYEES

FOR ACTS OF OTHER PASSENGERS OR STRANGERS

Required diligence and defense Extraordinary diligence

Ordinary diligence Nature of liability

Tort; however, The employee must Not absolute; limited by Art. 1763 be on duty at the time of the act. (Maranan v. Perez) The carrier is liable when its personnel allowed a passenger to drive the vehicle causing it to collide with another vehicle resulting to the injuries suffered by the other passengers. (MRR vs. Ballesteros, 16 SCRA 641) Defense of the PUV owner in case his vehicle figure in the accident: 1. Exercise of extraordinary diligence 2. Caso fortuito

Action for breach of contract of carriage vs. quasi-delict: Calalas vs CA G.R. No. 122039 May 31, 2000 Mendoza, J:. FACTS: 1. Eliza Sunga (private respondent) took a passenger jeepney owned and operated by Calalas. As the jeepney was filled to capacity (24 passengers), Sunga was given by the conductor an ‘extension seat’, a wooden stool at the back of the door at the end of the vehicle. 2. The jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzutruck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rearportion of the jeepney. 3. As a result, Sunga was injured. She sustained a fracture of the “distal third of the lefttibia-fibula with severe necrosis of the underlying skin.” 4. Sunga filed a complaint for damages against Calalas, alleging violation of the contractof carriage by the former in failing to exercise the diligence required of him as acommon carrier. Calalas, on the other hand, filed a third-party complaint againstFrancisco Salva, the owner of the Isuzu truck. 5. RTC: judgment against Salva as third party defendant and absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible for theaccident. It took cognizance of another case (Civil Case No. 3490), filed by Calalasagainst Salva and Verena, for quasi-delict 6. CA: Reversed. Cause of action was based on a contract of carriage, not quasi-delict,and that the common carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed the third party complaint against Salva andadjudged Calalas liable for damages to Sunga. 7. Calalas: the bumping of the jeepney by the truck owned by Salva was a caso fortuito.Petitioner further assails the award of moral damages to Sunga

on the ground that it is not supported by evidence.a. in Civil Case No. 3490: the negligence of Verena was the proximate cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an insurer of the safety of its passengers ISSUE: Whether or not taking the extension seat was an implied assumption of risk? HELD: No. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. Quasi-delict / culpa aquiliana / culpa extra contractual 1. Has as its source the negligence of the tortfeasor 2. negligence or fault should be clearly established because it is the basis of the action 3. doctrine of proximate cause is applicable (device for imputing liability to a person where there is no relation between him and another party, obligation is created by law itself) Breach of contract / culpa contractual 1. premised upon the negligence in the performance of a contractual obligation 2. action can be prosecuted merely by proving the existence of the contract and the fact that the obligor (here, the common carrier) failed to transport his passenger safely to his destination 3. not available; it is the parties themselves who create the obligation and the function of the law is merely to regulate the relation thus created In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof.

Hence, Vicente Calalas (operator) is liable since he did not exercise utmost diligence. 1. Jeepney was not properly parked; 2. Overloading of passengers. What is ​EXTRAORDINARY CONCERNING IT?

DILIGENCE,

AND

APPLICABLE

RULE

PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. vs. MGG MARINE SERVICES, INC. (G.R. No. 135645, March 8, 2002) FACTS: On March 1, 1987, San Miguel Corporation insured several beer bottle cases with petitioner Philippine American General Insurance Company. The cargo were loaded on board the M/V Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao del Sur. After having been cleared by the Coast Guard Station in Cebu the previous day, the vessel left the port of Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The weather was calm when the vessel started its voyage. The following day, M/V Peatheray Patrick-G listed and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel Corporation was lost. Petitioner paid San Miguel Corporation the full amount of the cargo pursuant to the terms of their insurance contract, and as subrogee filed with the Regional Trial Court (RTC) of Makati City a case for collection against private respondents to recover the amount it paid. Meanwhile, the Board of Marine Inquiry conducted its own investigation and found that the cause of the sinking of the vessel was the existence of strong winds and enormous waves in Surigao del Sur, a fortuitous event that could not have been for seen at the time the M/V Peatheray Patrick-G left the port of Mandaue City. It was further held by the Board that said fortuitous event was the proximate and only cause of the vessel's sinking. ISSUE: Whether or not respondent MGG should be held liable. HELD: No. [Common carriers, from the nature of their business and for

reasons of public policy, are mandated to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods transported by them are lost, destroyed or if the same deteriorated. However, this presumption of fault or negligence does not arise in the cases enumerated under Article 1734 of the Civil Code: 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.] In order that a common carrier may be absolved from liability where the loss, destruction or deterioration of the goods is due to a natural disaster or calamity, it must further be shown that the such natural disaster or calamity was the proximate and only cause of the loss; there must be "an entire exclusion of human agency from the cause of the injury of the loss."Moreover, even in cases where a natural disaster is the proximate and only cause of the loss, a common carrier is still required to exercise due diligence to prevent or minimize loss before, during and after the occurrence of the natural disaster, for it to be exempt from liability under the law for the loss of the goods. If a common carrier fails to exercise due diligence--or that ordinary care which the circumstances of the particular case demand -- to preserve and protect the goods carried by it on the occasion of a natural disaster, it will be deemed to have been negligent, and the loss will not be considered as having been due to a natural disaster under Article 1734 (1). [In the case at bar, the issues may be narrowed down to whether the loss of the cargo was due to the occurrence of a natural disaster, and if so, whether such natural disaster was the sole and proximate cause of the loss or whether private respondents were partly to blame for failing to exercise due diligence to prevent the loss of the cargo. The parties do not dispute that on the day the M/V Peatheray Patrick-G

sunk, said vessel encountered strong winds and huge waves ranging from six to ten feet in height. The vessel listed at the port side and eventually sunk at Cawit Point, Cortes, Surigao del Sur. The Court of Appeals, citing the decision of the Board of Marine Inquiry in the administrative case against the vessel's crew (BMI--646-87), found that the loss of the cargo was due solely to the existence of a fortuitous event, particularly the presence of strong winds and huge waves at Cortes, Surigao del Sur on March 3, 1987:] Common carriers not responsible for destruction:

Arada v. CA Facts: Alejandro Arada doing business under the name and style South Negros Enterprises is engaged in the business of small scale shipping as a common carrier, servicing the hauling of cargoes of different corporations and companies with 5 vessels it was operating. It entered into a contract with San Miguel Corporation to transport as a common carrier cargoes of the latter from San Carlos City Negros Occidental to Mandaue City Using one of its vessels M/L Maya. The cargoes of San Mig Corp valued at 176, 824. 80.The master crew applied for clearance to sail which was denied by the Phil Coast Guard due to a typhoon.However, the next day, it was granted clearance as there was no storm and the sea was calm. So, ML Maya leftfor Mandaue City. While it was navigating towards Cebu, a typhoon developed and said vessel sank with whatever was left if its cargoes. The crew was rescued. The Board of Marine Inquiry exonerated Arada and his crew from administrative liability.Meanwhile, San Miguel Corporation filed with the RTC for the recovery of the value of its cargoes anchored on breach of contract of carriage.The RTC rendered its decision dismissing the claim of San Miguel for recovery of the value of its cargoes. Onappeal, the CA reversed the decision of the RTC.Hence, this petition. Issue: WON Arada is liable for the loss of the cargo of San Miguel Corporation.

Held: Yes. South Negros Enterprises was exercising its function as a common carrier when it entered into acontract with San Miguel Corp to carry and transport the latter’s cargoes. A common carrier both from thenature of its business and for insistent reasons of public policy is burdened by law with the duty of exercisingextraordinary diligence not only in ensuring the safety of passengers, but in caring for the goods transported byit. The loss, or deterioration or destruction of goods turned over to the common carrier for the conveyance to adesignated destination raises instantly a presumption of fault or negligence on the part of the carrier, save onlyin cases where such loss, destruction or deterioration arises from extreme circumstances such as a naturaldisaster or calamity. In order that a common carrier may be exempted from responsibility, the natural disaster must have been the proximate cause of the loss. However, the common carrier must exercise due diligence to prevent or minimizethe loss before, during and after the occurrence of the flood, storm or other natural disaster in order that the common carrier may be exempted from liability from the destruction or deterioration of the goods.In the case at bar, Southern Negros failed to observe extraordinary diligence over the cargo in question was negligent previous to the sinking of the carrying vessel. The master crew knew that there was a typhoon coming before his departure but did not check where it was. He should have verified first where the typhoon was before departing. The master crew did not ascertain where the typhoon was headed by the use of his vessel’s barometer and radio. Neither did the captain of the vessel monitor and record the weather conditions as required under Art.612 of the Code of Commerce.A common carrier is obliged to observed extraordinary diligence and the failure of the master crew to ascertainthe direction of the storm and the weather condition of the path they would be traversing, constitute lack of foresight and minimum vigilance over its cargoes taking into account the surrounding circumstances of the case. Transportation Case Navigation Co. (1982)

Digest:

G.R. No. L-36481-2 October 23, 1982

Servando

V.

Philippine

Steam

Lessons Applicable: Contract of Adhesion (Transportation) Laws Applicable: Article 1736, Article 1174 FACTS: Clara Uy Bico (1,528 cavans of rice worth P40,907.50) and Amparo Servando (44 cartons of colored paper toys and general merchandise worth P1,070.50) loaded on board Philippine Steam Navigation Co.'s vessel, FS-176 for carriage from Manila to Pulupandan, Negros Occidental Bill of Lading: Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ... Upon arrival of the vessel at Pulupandan, in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs 2 pm: warehouse was razed by fire Before the fire, 907 cavans of rice were delivered by Uy Bico Uy Bico and Servando filed a claim for the value but was rejected by Philippine Steam CFI: favored UY Bico and Sercando delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736 ISSUE: W/N Philippine Steam should not be liable because of the stipulation in the bill of lading exempting it from fortuitous event HELD: YES. set aside Agreement was in iteration of Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. 'caso fortuito' presents the following essential characteristics: (1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor

to comply with his obligation, must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor." 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. nothing in the record to show that appellant carrier ,incurred in delay in the performance of its obligation.

TELENGTAN BROTHERS and SONS vs. UNITED STATES LINES G.R.No. 132284 February 28,2006 FACTS: Petitioner is a domestic corporation while US Lines is a foreign corporation engaged in overseas shipping. It was made applicable that consignees who fail to take delivery of their containerized cargo within the 10-day free period are liable to pay demurrage charges. On June 22, 1981, US Lines filed a suit against petitioner seeking payment of demurrage charges plus interest and damages. Petitioner incurred P94,000 which the latter refused to pay despite repeated demands. Petitioner disclaims liability alleging that it has never entered into a contract nor signed an agreement to be bound by it. RTC ruled that petitioner is liable to respondent and all be computed as of the date of payment in accordance with Article 1250 of the Civil Code. CA affirmed the decision. ISSUE: Whether the re-computation of the judgment award in accordance with Article 1250 of the Civil Code proper RULING: The Supreme Court found as erroneous the trial court’s decision as affirmed y the Court of Appeals. The Court holds that there has been an extraordinary inflation within the meaning of Article 1250 of the Civil Code. There is no reason for ordering the payment of an obligation in an amount different from what has been agreed upon because of the purported supervention of an extraordinary inflation.

The assailed decision is affirmed with modification that the order for re-computation as of the date of payment in accordance with the provisions of Article 1250 of New Civil Code is deleted. Telentan ​long version: FACTS:

Private respondent K-Line is a foreign shipping company doing biz in PH, its shipping agent is respondent Smith, Bell & Co., Inc. It is a member of the Far East Conference, the body which fixes rates by agreement of its member-shipowners. The conference is registered with the U.S. Federal Maritime Commission. Van Reekum Paper, Inc. entered into a contract of affreightment with the K-Line for the shipment of 468 rolls of container board liners from Georgia to Manila, consigned to herein petitioner La Suerte Cigar. The contract of affreightment was embodied in Bill of Lading issued by the carrier to the shipper. The expenses of loading and unloading were for the account of the consignee (La Suerte). The shipment was packed in 12 container vans. At Tokyo, the cargo was transhipped on two vessels of the K-Line. Ten (10) container vans were loaded on the 1st vessel, while two (2) were loaded on another vessel. On June 11, the first vessel arrived at the port of Manila. La Suerte was notified in writing of the ship's arrival, together with information that container demurrage would be charged unless the consignee took delivery of the cargo within ten (10) days. On June 21, the other vessel arrived and was discharged of its contents the next day. On the same day the shipping agent Smith, Bell & Co. released the Delivery Permit for twelve (12) containers to the broker upon payment of freight charges on the bill of lading. On June 22, La Suerte’s broker presented the shipping documents to the Bureau of Customs. But the latter refused to act on them because the manifest of the 1st vessel covered only 10 containers, whereas the bill of lading covered 12 containers. The broker therefore sent back the manifest to Smith, Bell & Co with the

request that the manifest be amended. Smith, Bell & Co. refused on the ground that an amendment would violate the Tariff and Customs Code relating to unmanifested cargo. Later however, it agreed to add a footnote reading "Two container vans carried by other vessel to complete the shipment of twelve containers under the bill of lading." The manifest was approved for release only on July 3. On July 11, when the broker tried to secure the release of the cargo, it was informed by Smith, Belle, & Co. that the free time for removing the containers from the container yard had expired on June 26 for the first vessel, and on July 9, in the case of the 2nd vessel, and that demurrage charges had begun to run a day after the free time, respectively. On July 13, La Suerte paid P47,680 representing the total demurrage charges on all the containers, but it was not able to obtain its goods. It was able to obtain only a partial release of the cargo because of the breakdown of the arrastre's equipment at the container yard. On July 16, La Suerte sent a letter to Smith, Bell & Co. requesting reconsideration of the demurrage charges, but was refused. Subsequently, La Suerte refused to pay any more demurrage charges on the ground that the delay in the release of the cargo was not due to its fault but to the breakdown of the equipment at the container yard. La Suerte filed this suit in the RTC for specific performance to compel respondents to release 7 container vans consigned to it free of charge. In their answer, private respondents claimed that they were not free to waive these charges because under the United States Shipping Act of 1916 it was unlawful for any common carrier engaged in transportation involving the foreign commerce to charge or collect a greater or lesser compensation that the rates and charges specified in its tariffs on file with the Federal Maritime Commission. RTC dismissed petitioner's complaint. It cited the bill of lading which provided: 23. The ocean carrier shall have a lien on the goods, which shall survive

delivery, for all freight, dead freight, demurrage, damages, loss, charges, expenses and any other sums whatsoever payable or chargeable to or for the account of the Merchant under this bill of lading . . . . RTC likewise invoked clause 29 of the bill of lading which provided: 29. . . .The terms of the ocean carrier's applicable tariff, including tariffs covering intermodal transportation on file with the Federal Maritime Commission and the Interstate Commission or any other regulatory body which governs a portion of the carriage of goods, are incorporated herein. 18. The RTC held that the bill of lading was the contract between the parties and, therefore, petitioner was liable for demurrage charges. It rejected petitioner's claim of force majeure in such a way that the delay in the delivery of the containers was caused by the breaking down of the equipment of the arrastre operator. The Court reasoned that still plaintiff has to pay the corresponding demurrage charges. The possibility that the equipment would break down was not only foreseeable, but actually, foreseen, and was not caso fortuito. CA affirmed.

ISSUE: Whether or not La Suerte is liable for demurrage for delay in removing its cargo from the containers - YES but only for the period July 3 13, 1979 with respect to ten containers and from July 10 - July 13, 1979, in respect of two other containers

HELD:

Payment of demurrage La Suerte's contention is that the bill of lading does not provide for the payment of container demurrage, as Clause 23 of the bill of lading only says "demurrage," i.e., damages for the detention of vessels. Here there is no detention of vessels. It invokes a case where SC defined "demurrage" as follows: Demurrage, in its strict sense, is the compensation provided for in the contract of affreightment for the detention of the vessel beyond the time agreed on for loading and unloading. Essentially, demurrage is the claim for

damages for failure to accept delivery… Whatever may be the merit of petitioner's contention, the fact is that clause 29(a) also of the bill of lading, in relation to Rule 21 of the Far East Conference Tariff , specifically provides for the payment by the consignee of demurrage for the detention of containers and other equipment after the so-called "free time." A bill of lading is both a receipt and a contract. As a contract, its terms and conditions are conclusive on the parties, including the consignee. The enforcement of the rules of the Far East Conference and the Federal Maritime Commission is in accordance with R.A. 1407 which declares that the Philippines, in common with other maritime nations, recognizes the international character of shipping in foreign trade and existing international practices in maritime transportation and that it is part of the national policy to cooperate with other friendly nations in the maintenance and improvement of such practices. Period of Demurrage With respect to the period of La Suerte’s liability, La Suerte cannot be held liable for demurrage starting June 27 on the 10 containers because the delay in obtaining release of the goods was not due to its fault. The evidence shows that the Bureau of Customs refused to give an entry permit to petitioner because the manifest issued by K-Line stated only 10 containers whereas the bill of lading also issued by the K-Line showed there were 12 containers. For this reason, petitioner's broker had to see Smith, Bell & Co. on June 22, but the latter did not immediately do something to correct the manifest. Smith, Bell & Co. was asked to "amend" the manifest, but it refused to do so on the ground that this would violate the law. It was only on June 29 that it thought of adding instead a footnote, by which time the "free time" had already expired. Now June 29 was a Friday. Again it is probable the correct manifest was presented to the Bureau of Customs only on Monday, July 2, and therefore it was only on July 3 that it was approved. It was therefore only from July 3 that La Suerte could have claimed its cargo and charged for any delay With respect to the other two containers, demurrage was properly considered to have accrued on July 10 since the "free time" expired on July 9. The period of delay, however, for all the 12 containers must be deemed to have stopped on July 13, because on this date petitioner paid P47,680.00. If it was not able to get its cargo from the container vans, it was because of the breakdown of the shifter or cranes of the arrastre service operation. It would be unjust to charge demurrage after

July 13, since the delay in emptying the containers was not due to the fault of La suerte In sum, we hold that petitioner can be held liable for demurrage only for the period July 3-13, 1979 and that in accordance with the stipulation in its bill of lading. Home Insurance vs. American Steamship Case Digest 23 SCRA 24 Facts: The Consorcio Pesquero del Peru of South America shipped jute bags of Peruvian fishmeal through SS Crowborough, consigned to San Miguel Brewery, Inc. The cargo, which was insured by Home Insurance Company, arrived at the port of Manila and was discharged to the lighters of the Luzon Stevedoring Corporation. When the same was delivered to the consignee, there were shortages amounting to P 12, 033.85, prompting the latter to pay against Luzon Stevedoring Co. Because the others denied liability, Home Insurance paid San Miguel the insurance value loss. This cost was brought by the former to recover indemnity from Luzon Stevedoring and the ship owner. Luzon Stevedoring raised the defense that it deliver with due diligence in the same from the carrier. Mexican Steamship Agencies denied liability on the ground that the charter party referred to in the bills of lading, the charter, not the ship owner, was responsible for any loss or damage of the cargo. Furthermore, it claimed to have exercised due diligence in stowing the goods and as a mere forwarding agent, it was not responsible for losses or damages to the cargo. Issue: Whether or not the stipulation in the charter party to owner’s non-liability was valid as to absolve the American Steamship from liability loss? Held: The Civil Code provision on common carriers should not be applied where the carrier is not acting as such but as a private carrier. The stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent is void only if the strict public policy governing common carriers is applied. Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party. Long version:

HOME INSURANCE COMPANY vs. AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING CORPORATION G.R. No. L-25599 April 4, 1968 FACTS: “Consorcio Pesquero del Peru of South America” shipped freight pre-paid at Peru, jute bags of Peruvian fish meal through SS Crowborough, covered by clean bills of lading. The cargo, consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and insured by Home Insurance Company arrived in Manila and was discharged into the lighters of Luzon Stevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc., there were shortages causing the latter to lay claims against Luzon Stevedoring Corporation, Home Insurance Company and the American Steamship Agencies (shipowner), owner and operator of SS Crowborough. Because the others denied liability, Home Insurance Company paid SMBI the insurance value of the loss, as full settlement of the claim. Having been refused reimbursement by both the Luzon Stevedoring Corporation and American Steamship Agencies, Home Insurance Company, as subrogee to the consignee, filed against them before the CFI of Manila a complaint for recovery of the payment paid with legal interest, plus attorney’s fees. In answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods in the same quantity and quality that it had received the same from the carrier. The CFI, after trial, absolved Luzon Stevedoring Corporation, having found the latter to have merely delivered what it received from the carrier in the same condition and quality, and ordered American Steamship Agencies to pay Home Insurance Company the amount demanded with legal interest plus attorney’s fees. Disagreeing with such judgment, American Steamship Agencies appealed directly to Us.

ISSUE: Is the stipulation in the charter party of the owner’s non-liability valid so as to absolve the American Steamship Agencies from liability for loss? HELD: The judgment appealed from is hereby reversed and appellant is absolved from liability to plaintiff. YES The bills of lading, covering the shipment of Peruvian fish meal provide at the back thereof that the bills of lading shall be governed by and subject to the terms and conditions of the charter party, if any, otherwise, the bills of lading prevail over all the agreements. On the bills are stamped “Freight prepaid as per charter party. Subject to all terms, conditions and exceptions of charter party dated London, Dec. 13, 1962.” Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods caused by personal want of due diligence on its part or its manager to make the vessel in all respects seaworthy and to secure that she be properly manned, equipped and supplied or by the personal act or default of the owner or its manager. Said paragraph, however, exempts the owner of the vessel from any loss or damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some other person employed by the owner on board, for whose acts the owner would ordinarily be liable except for said paragraph.. The provisions of our Civil Code on common carriers were taken from Anglo-American law. Under American jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special person only, becomes a private carrier. As a private carrier, a stipulation exempting the owner from liability for the negligence of its agent is not against public policy, and is deemed valid. Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. The stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent would be void only if the strict public policy governing common carriers is applied. Such policy has no force where the public at large is not involved, as in the case of a ship

totally chartered for the use of a single party. And furthermore, in a charter of the entire vessel, the bill of lading issued by the master to the charterer, as shipper, is in fact and legal contemplation merely a receipt and a document of title not a contract, for the contract is the charter party. The consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. Accordingly, the consignees under the bills of lading must likewise abide by the terms of the charter party. And as stated, recovery cannot be had thereunder, for loss or damage to the cargo, against the shipowners, unless the same is due to personal acts or negligence of said owner or its manager, as distinguished from its other agents or employees. In this case, no such personal act or negligence has been proved. BA Finance Corp vs. CA GR 61464, May 28 1988 FACTS: Augusto Yulo secured a loan from the petitioner in the amount of P591,003.59 as evidenced by a promissory note he signed in his own behalf and as a representative of A&L Industries. Augusto presented an alleged special power of attorney executed by his wife, Lily Yulo, who managed the business and under whose name the said business was registered, purportedly authorized the husband to procure the loan and sign the promissory note. 2months prior the procurement of the loan, Augusto left Lily and their children which in turn abandoned their conjugal home. When the obligation became due and demandable, Augusto failed to pay the same. The petitioner prayed for the issuance of a writ of attachment alleging that said spouses were guilty of fraud consisting of the execution of Deed of Assignment assigning the rights, titles and interests over a construction contract executed by and between the spouses and A. Soriano Corporation. The writ hereby prayed for was issued by the trial court and not contented with the order, petitioner filed a motion for the examination of attachment debtor alleging that the properties attached by the sheriff were not sufficient to secure the satisfaction of any judgment which was likewise granted by the court.

ISSUE: WON A&L Industries can be held liable for the obligations contracted by the husband. HELD: A&L Industries is a single proprietorship, whose registered owner is Lily Yulo. The said proprietorship was established during the marriage and assets were also acquired during the same. Hence, it is presumed that the property forms part of the conjugal partnership of the spouses and be held liable for the obligations contracted by the husband. However, for the property to be liable, the obligation contracted by the husband must have redounded to the benefit of the conjugal partnership. The obligation was contracted by Augusto for his own benefit because at the time he incurred such obligation, he had already abandoned his family and left their conjugal home. He likewise made it appear that he was duly authorized by his wife in behalf of the company to procure such loan from the petitioner. Clearly, there must be the requisite showing that some advantage accrued to the welfare of the spouses. Thus, the Court ruled that petitioner cannot enforce the obligation contracted by Augusto against his conjugal properties with Lily. Furthermore, the writ of attachment cannot be issued against the said properties and that the petitioner is ordered to pay Lily actual damages amouting to P660,000.00. Bascos v. CA Facts: Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latter’s 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted with petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force majeure. The trial court ruled against petitioner.

Issues: (1) Was petitioner a common carrier? (2) Was the hijacking referred to a force majeure? Held: (1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association 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 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 this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same. (2) Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the presumption conclusive against her. PHILIPPINE AIRLINES, INC. vs. COURT OF APPEALS and PEDRO ZAPATOS G.R. No. L-82619 September 15, 1993 BELLOSILLO, J.: Facts: On 25 November 1976, private respondent filed a complaint for

damages for breach of contract of carriage2 against Philippine Airlines, Inc. (PAL), before the then Court of First Instance. Zapatos purchased a ticket from Philippine Air Lines (PAL) wherein it was agreed that the latter would transport him to Ozamiz City. The plane’s route was from Cebu-Ozamiz-Cotabato. However, due to unfavoarable weather conditions and the fact that PAL did nothave an all-weather airport, PAL had bypassed Ozamiz City. PAL then informed Zapatos ofhis options, to return to Cebu on the same day, or take the next flight to Cebu the followingday, or to take the next available flight to Ozamiz City. Zapatos chose to return to OzamizCity on the same day. However, there were only six (6) seats available and, the seats weregiven to the passengers according to their check-in sequence at Cebu. Consequently,Zapatos was stranded in Cotabato City, where a battle between the government and theMuslims was ongoing.During his stay in Cotabato City, PAL also failed to provide accomodations for Zapatos. Italso refused to have the latter hitch a ride with its employees on a ford truck bound for the City. It also failed to return Zapatos’ luggage. This prompted Zapatos to file a complaint for damages against Philippine Air Lines forbreach of contract.PAL claimed that it should not be charged with the task of looking after the passengers'comfort and convenience because the diversion of the flight was due to a fortuitous event,and that if made liable, an added burden is given to PAL which is over and beyond its dutiesunder the contract of carriage Issue:​ Is PAL liable for the breach of contract of carriage? Held: YES. Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence did not terminate PAL's contract with its passengers. Being in the business of air carriage and the sole one to operate in the country, PAL is deemed equipped to deal with situations as in the case at bar. What we said in one case once again must be stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at the port of destination and has left the carrier's premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination. On this score, PAL grossly failed considering the then ongoing battle between government forces and Muslim rebels in Cotabato City and the fact that the private respondent was a stranger to the place. While we find PAL remiss in

its duty of extending utmost care to private respondent while being stranded in Cotabato City, there is no sufficient basis to conclude that PAL failed to inform him about his non-accommodation on Flight 560, or that it was inattentive to his queries relative thereto.

VICTORY LINER, INC. vs. GAMMAD G.R. No. 159636 | November 25, 2004 FACTS: Marie Grace Gammad was a passenger of petitioner’s bus when it fell on a ravine, which resulted to her death. Hence, heirs of the deceased Marie Grace filed a case for damages against Victory Liner, Inc. for breach of contract of carriage. Rosalito Gammad, husband of deceased, completed his testimony and was scheduled for cross-examination. However, counsel of peritioner failed to appear even after a reschedule, and thus the court deemed the petitioner to have waived cross-examination. The petitioner’s counsel also failed to appear at the presentation of evidence. The court already deemed the case submitted for resolution when it received belatedly the telegram of petitioner’s counsel requesting for postponement. ISSUE: (1) Is the petitioner bound by the negligence of the counsel? (2) Is the petitioner liable for breach of contract of carriage? (3) Is the award of damages proper? RULING: (1) Yes. As a general rule, client is bound by negligence of counsel. Any act performed by a counsel within the scope of his general or implied authority is regarded as an act of his client. Consequently, the mistake or negligence of counsel may result in the rendition of an unfavorable judgment against the client. However, exceptions have been recognized by the court in cases where reckless or gross negligence of counsel deprives the client of due process of law, or when its application will result in outright deprivation of the clients liberty or property or where the interests of justice so require, and accord relief to the client who suffered by reason of the lawyers gross or palpable mistake or negligence. The exceptions, however, are not present in this case. Petitioners claim that

it was denied due process lacks basis. Petitioner too is not entirely blameless. (2) Petitioner was correctly found liable for breach of contract of carriage. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard to all the circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need not even make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence. In the instant case, there is no evidence to rebut the statutory presumption that the proximate cause of Marie Grace’s death was the negligence of petitioner. Hence, the courts below correctly ruled that petitioner was guilty of breach of contract of carriage. (3) Nevertheless, the award of damages should be modified. Article 1764 in relation to Article 2206, holds the common carrier in breach of its contract of carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral damages. In the present case, respondent heirs of the deceased are entitled to indemnity for the death of Marie Grace which under current jurisprudence is fixed at P50,000.00. The award of compensatory damages for the loss of the deceased’s earning capacity should be deleted for lack of basis. As a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the deceased is self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the deceased’s line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.

Here, the award of compensatory damages for loss of earning capacity was based only on the testimony of respondent Rosalito. No other evidence was presented. The award is clearly erroneous because the deceased’s earnings does not fall within the exceptions. However, the fact of loss having been established, temperate damages in the amount of P500,000.00 should be awarded to respondents. Under Article 2224, temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. Anent the award of moral damages, the same cannot be lumped with exemplary damages because they are based on different jural foundations. These damages are different in nature and require separate determination. In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort that results in physical injuries. By special rule in Article 1764 in relation to Article 2206, moral damages may also be awarded in case the death of a passenger results from a breach of carriage. On the other hand, exemplary damages, which are awarded by way of example or correction for the public good may be recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the deceased resulting from the petitioner’s breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the extraordinary diligence required for common carriers, it is presumed to have acted recklessly. Thus, the award of exemplary damages is proper. Under the circumstances, we find it reasonable to award respondents the amount of P100,000.00 as moral damages and P100,000.00 as exemplary damages. For actual damages, only substantiated and proven expenses or those that appear to have been genuinely incurred in connection with the death, wake or burial of the victim will be recognized. Hence, actual damages should be further reduced to P78,160.00, which was the amount supported by official receipts.

Pursuant to Article 2208, attorney’s fees may also be recovered in the case at bar where exemplary damages are awarded. The Court finds the award of attorneys fees equivalent to 10% of the total amount adjudged against petitioner reasonable. Finally, when an obligation, regardless of its source (i.e., law, contracts, quasi-contracts, delicts or quasi-delicts) is breached, the contravenor can be held liable for payment of interest in the concept of actual and compensatory damages, subject to the following rules: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169, Civil Code. 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then

an equivalent to a forbearance of credit. In the instant case, petitioner should also be held liable for payment of interest as damages for breach of contract of carriage. Considering that the amounts payable by petitioner has been determined with certainty only in the instant petition, the interest due shall be computed upon the finality of this decision at the rate of 12% per annum until satisfaction. NOTE: Legal interest rate is now fixed at 6%.