Transpo Tsn - Prelim Sr2016-2017.output.docx

Transportation Law – First Exam Coverage 2016-2017 2.

BALGOA November 19, 2016 Part 1 of 2

Transportation by Sea A.

The Law on Transportation is subject to governing laws. A common carrier is imbued with public interest and is therefore subject to government regulations. The laws that provide regulations for common carriers are the public service laws provided by public service commissions. The public service commissions now are supplanted by various government agencies.

Coastwise (vessels traveling within waters under Philippine jurisdiction) a. Civil Code – primary law b. Code of Commerce – suppletory law Note: COGSA is not applicable even if the parties expressly provide for it; applies only in international seas

A contract of transportation involves the carriage of goods and passengers from one place to another place of destination subject to payment of fare or freight; it must be for hire or subject to compensation; and must be for public use. The mode of transportation may be on land, sea, or air.

B.

Foreign Ports to Philippine s Ports a. Civil Code – primary law b. Code of Commerce – suppletory law c. COGSA (Carriage of Goods by Sea Act) Eastern Shipping v. IAC: The law of the Philippines still applies even if the collision actually takes place in foreign waters because the destination is Philippine waters

GOVERNEMNT AGENCIES REGULATING LAND, SEA, AND AIR TRANSPORTATIONS LAND 1. 2. 3.

4.

WATER 1. 2. 3. 4.

Department of Transportation and Communication LTFRB – has jurisdiction over applications for certificate of public convenience; franchises LTO – registration of motor vehicles, issuances of licenses, and enforcement of land transportation rules and regulations; the rule is that whoever is the registered owner, regardless of whether or not the registered owner is the true owner, the person liable would always be registered owner MMDA – in Manila; created by RA 7924; to set policies concerning traffic in Metro Manila and to enforce all traffic rules and regulations in Metro Manila. MARINA (Maritime Industry Authority) – regulatory authority regarding vessels; similar to LTFRB POEA (Philippine Overseas Employment Administration) – to regulate manning agencies; to issue licenses for manning agencies PPA (Philippine Ports Authority) –power to streamline and improve operation of ports and port facilities PCG (Philippine Coast Guard) – registration and licensing of vessels; safety regulatory functions for vessel construction and licensing of vessels; safety regulatory functions on vessel construction and operations and supervisions and preparation of licenses for certificates of marine officers and seamen

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

C.

Philippine ports to Foreign ports a. Civil Code – primary law b. Code of Commerce – suppletory law 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration. The law of the country to which the goods are to be transported shall apply under the provision of 1753 (Eastern Shipping vs. IAC, 150 SCRA 463)

3.

Air Transportation A. Domestic – Civil Code B. International – Warsaw Convention C. Special laws also govern particular cases such as: 1. 2. 3. 4.

The Public Service Act; The land Transportation and Traffic Code; Tariff & Customs Code; The Civil Aeronautics Act.

GENERAL PRINCIPLES

AIR 1.

2.

CAAP (Civil Aviation Authority of the Philippines) – power to issue or cancel certificates of public convenience; permits for air transportation; fixes rates; investigates violations; has jurisdiction over all airline transportations ATO (Air Transportation Office) – undertakes the operation and maintenance of national airports, air transportation, and other similar facilities

TELECOMMUNICATIONS 1. DOTC (Department of Transportation and Communication)  NTC (National Telecommunication Commission) – has jurisdiction over communication activities and services, radio stations, cable networks… 2. ERB (Energy Regulatory Board) 3. NWRB (National Water Resources Board) – waterworks; under the administrative supervision of the Department of Public Works and the National Communication Authority LAWS GOVERNING CONTRACTS OF TRANSPORTATION BY LAND, SEA, OR AIR WITHIN THE PHILIPPINES 1. Transportation by Land A.

Overland Transportation a. Civil Code – primary law b. Code of Commerce – suppletory law

B.

Commercial Transportation (object merchandise) a. Code of Conmerce – primary law b. Civil Code – suppletory law

is

WHY IS IT IMPORTANT TO DISTINGUISH BETWEEN COMMON CARRIERS AND PRIVATECARRIERS? (1) The rights and obligations of common carriers and private carriers are governed by distinct and different laws. (2) There is a difference in the degree of diligence required. Common carriers are required to exercise extraordinary diligence, while private carriers are only required to exercise the ordinary diligence required of a good father of a family. (3) The validity of contracts and stipulations are subject to separate sets of public policies and restrictions. (4) As to the applicability of laws—a common carrier is subject to the stringent provisions if the code of commerce while in a private carrier the parties are free to stipulate First Philippine Pipeline Corporation: The test for determining whether a party is a common carrier of goods is: 1. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; 2. He must undertake to carry goods of the kind to which his business is confined; 3. He must undertake to carry by the method by which his business is conducted and over his established roads; and 4. The transportation must be for hire. THE LAW PROHIBITS UNREASONABLE DISCRIMINATION BY COMMON CARRIERS. The law requires common carriers to carry for al persons, either passengers or property, for exactly the same charge, for a like or contemporaneous service in the transportation of like kind traffic under substantially similar circumstances or conditions. If the

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Transportation Law – First Exam Coverage 2016-2017 services are alike and contemporaneous, discrimination in the price charged is prohibited. GENERAL RULE: Common Carrier cannot unreasonably discriminate. EXCEPTION: The law does not prohibit the charging of a different rate for the carrying of passengers or property when the actual cost of handling and transporting the same is different. (ie: when a carrier does not have a suitable area to store the cargo, especially when it involves perishables, because the carrier would be held liable in case of damages) DETERMINATION OF JUSTIFIABLE REFUSAL (1) Suitability of the vessels of the company for the transportation of such products; (2) The reasonable possibility of danger or disaster, resulting from their transportation in the form and under the conditions in which they are offered for carriages; (3) The general nature of the business done by the carrier; and (4) All the attendant circumstances which might affect the question of the reasonable necessity for the refusal by the carrier to undertake the transportation of this class of merchandise. (Fisher v. Yangco Steamship)

1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. Article 1732 provides for the definition of a common carrier. “Engaged in the business” means operational everyday or regularly. BUT in the case of De Guzman v. CA, SC expanded the meaning of a common carrier: Art. 1732 in defining common carrier 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 occasional, episodic or unscheduled basis. Neither does Art 1732 distinguish between a carrier offering its services to the general public, i.e., the general community of population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Art 1732 deliberately refrained from making such distinctions. Notwithstanding that a carrier has no certificate of public convenience, it is still a common carrier. It is a palpable error to conclude that a person holds no certificate of public convenience is not a common carrier. A certificate of public convenience is not a requisite for incurring a liability under the Civil Code provisions governing common carriers. The liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has complied with the requirements of the applicable regulatory statute and implementing regulations and franchise. To exempt private respondent form liabilities of a common carrier because he has not secured the necessary certificate of public convenience would be offensive to sound public policy. That would be to reward private respondent precisely for failing to comply with applicable statutory requirements. In First Philippine Pipeline Corporation v. CA: Pipeline Operator: Common carrier. A grantee of a pipeline concession applied for a Mayor’s permit with the Office of the Mayor of Batangas City. It was transporting petroleum products through its pipelines. However, before the permit could be issued, the City Treasurer required FPIC to pay a local tax on its gross receipts for 1993. FPIC protested the payment of the tax and argued that it was a pipeline operator engaged in business of transporting petroleum products from the Batangas refineries, and as such, exempted from paying the gross receipt tax being a common carrier. The Treasurer denied the protest and claimed that FPIC cannot be considered a COMMON CARRIER engaged in the Transportation business, and thus cannot claim exemption from the payment of tax onits gross receipts. The issue here is whether or not FPIC is a COMMON CARRIER?

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

The SC ruled that FPIC is a Common carrier. A Common carrier may be defined broadly as one who holds himself out to the public as engaged in the business of transporting person or property from place to place, for compensation, offering his services to the public generally. The definition of COMMON CARRIER in Article 1732 of the civil code makes no distinction as to the means of transporting, as long as it is by land, water or air. FPIC is engaged in the business of transporting or carrying, petroleum product for hire as a public employment. The controlling jurisprudence now as far as how a common carrier is defined is the case of De Guzman that the law does not make any distinction as to the means of transporting, as long as it is by land, water, or air.

Moreover, a certificate of public convenience is not a requisite for a carrier to be considered as a common carrier. In the case of Loadstar Shipping Co. v. CA: A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing regulations has been granted a certificate of public convenience or other franchise. The concept of COMMON CARRIER coincides well with the notion of “public service” under the Public Service Act (CA 1416, as a amended), which at least partially supplements the law on COMMON CARRIER as set forth in the Civil Code. Under Section 13, par. (b) of the PSA, “public service” includes every person that nor or hereafter may own, operate, manger, 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, etc. In the case of Lastimoso v. Doliente: M/V Doliente was not held liable for the death of Pablo Lastimoso when a fire occurred because there was no evidence that Doliente was previously engaged in the business of transporting passengers, as the ill-fated trip was merely a trial run. Hence, it was not required to exercise Extraordinary Diligence in the vigilance of goods and safety of the passengers aboard the Doliente, nor was it was bound to carry the passengers safely as far as human foresight can provide, using the utmost diligence of a very cautious person. In the case of Planters Producers Inc. v. CA: The SC held that “what a carrier in the ordinary course of business transports goods as a common carrier and thereby bound by law to observe extraordinary diligence, the entering into a charter party, where the ship captain, its officers and compliments are under the employ of the ship-owner and therefore continue to be under its direct supervision and control, does not transform the carrier into a private carrier for a such purpose. This is because the charterer, a stranger the crew and the ship, cannot be charged with the duty to care for his cargo when the charterer does not have any control of the means of doing so. A common or public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel, provided the charter is limited to the ship only, as in the case of time charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in the case of time charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise charter, that a common carrier becomes private, at least insofar as the particular voyage covering the charter party is concerned.

ROBLE November 19, 2016 Part 2of 2

So as what was provided in Art. 1744, one of the circumstances where the common carrier shall not be liable is that the loss or deterioration is caused by natural disasters or fortuitous events. I disagree that these are acts of God; these are natural forces such as gravity diba. (Hehe ka-cute ni mam)

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Transportation Law – First Exam Coverage 2016-2017 It also covers acts of man, like strikes, homicide, recklessness, or latent mechanical defects meaning ang deperensya nasa loob, defects which cannot be seen by the naked eye or in the external. Of course common carriers liability does not extend to damages caused by FE, basis is under art. 1174 of the Civil Code. For example in insurance companies, you assure that in case of FE, you assure that you shall assume the risk in the form of payment. What is the rationale of the exemption? It is that the common carrier is not absolutely sure of the risk. You are not an insurer against all risks of travel. It also not ought to be liable in the death of passengers if there is negligence. But if there is negligence, or failure to exercise utmost diligence that the law requires, then that will now make the common carrier liable. If a fortuitous event is proven, then the CC shall not be liable, it may be absolved from liability. But what is the restriction? The FE must not concur with negligence. No negligence must intervene; otherwise it is no longer a defense. The FE must be a sole element relied upon and has caused In the case of Yubido vs CA, the SC described the characteristics of a FE. It says that the cause of the unforeseen and unexpected occurrence or failure of the carrier to comply with its obligation must be independent of the human will. 1. must be impossible to foresee the event which constitutes the caso fortuito 2. the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner 3. and that the obligor must be free from participation of the injury resulting to the creditor. So based on these pronouncements, as in this case, a bus company cannot be exempted from liability for a tire blow-out, kasi kelangan may preventive maintenance. This is not a fortuitious event, because this is a part of exercising the diligence required by law to conduct preventive maintenance to the vehicle. 1739: In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. While the defenses in 1734, these are circumstances classified as Fortuitous Event (FE). What is required? The natural disaster must be the sole, proximate, and only cause of the loss, destruction, or deterioration. However, the common carrier must exercise due diligence to prevent or minimize the loss before, during, and after the occurrence of the flood or storm or other natural disaster in order that the common carrier may be exempt from liability, however, the FE need not be the immediate cause. What is sufficient is that the immediate cause or the final act was set in motion by the natural calamity or disaster and followed by continuous and sequenced event, not followed by any efficient intervening cause. Now, what would be the circumstances that would not exempt the common carrier even if the loss, destruction, or deterioration was caused by a FE? 1. When the natural disaster is not the only and proximate cause of the loss; 2. When the common carrier failed to exercise due diligence to prevent or minimize the loss before during, and after the occurrence of the natural disaster; 3. When the common carrier negligently incurs delay in transporting the goods. So even in your ObliCon diba, if there is delay, you can no longer hide behind 1174, kasi may delay na caused by the common carrier. So even if FE under 1734, the common carrier may still be held liable even if the loss, destruction or deterioration was caused by a FE if the natural disaster is not the proximate and only cause, there was negligence therewith, and that the common carrier failed to exercise the diligence required by law. With respect to the exercise of extraordinary diligence, one of the requirements is that the law vests upon the common carrier the authority to exercise diligence in the selection and supervision of its

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

employees because of the requirement that common carrier have to exercise due diligence. So piliin talaga nila sino ang ka-kontrata nila. So, what is this case of Davao Stevedore Terminal vs Fernandez? Anyone? Kindly read what is in the book.

*from Agbayani: The plaintiff is a domestic corporation doing business in Davao City. It was engaged in the stevedoring and dockhandling of outgoing and incoming cargoes for interisland vessels docking at the Sta. Ana Wharf in Davao City. Pursuant to a verbal contract entered into between the plaintiff and the carrier Compania Maritima, the former handled the dockhandling work of the vessels owned and operated by the Compania Maritima which called at the port of Davao City, consisting of receiving the cargoes discharged from the jold of the vesselsfrom the sling in the wharf and piling them at the wharf, which cargoes were then taken by the consignees, and also those from the truck of the shippers to the sling in the wharf where they were loaded in the hold of the ship. To comply with the above duties, the plaintiff utilized the services of the members of the Davao Stevedores Mutual Benefit Association, a labor organization duly registered with the department of Labor, with which it had a closed shop agreement, the shippers and the consignees, most of whom were Chinese, were the one paying the plaintiff for the dockhandling services. It appears that as early as January of 1951, there were already signs that the carrier Compania Maritima was not satisfied with the services being rendered by plaintiff-appellant. Cargoes discharged from the vessels of the carrier were not being safeguarded adequately and were allowed to be exposed to the elements at the Sta. Ana wharf for considerable length of time that the carrier brought to the attention of plaintiff the deplorable situation obtaining at the wharf. In answer, plaintiff advised the Compania Maritima thaty cargoes while piled at the wharf were under the care and responsibility of the carrier. After putting up, for some time, with sad state of affairs at the wharf, the plaintiff was notified by the Compania Maritima of the termination of their verbal contract. Efforts were then made by the Compania Maritima to look for another party who would be satisfactory to the carrier. The Davao Port Laborers Association was organized and registered a s a labor union. And then it was hired by the defendant and the Compania Martitima in turn ientered into a contract with defendant to succeed the plaintiff in dockhandling and stevedoring the cargoes discharged from its vessels. Plaintiff contends that this was unfair competition. Held: The SC does not agree with plaintiff. Common carriers assume a heavy responsibility in the care and vigilance over the goods transported by them. Th law requires them to exercise extraordinary diligence which means that they must render services with the greatest skill and utmost foresight. The extraordinary diligence required of carriers in the handling of the goods of the shippers and consignees lasts from the time the cargoes are loaded in the vessels until they are discharged and delivered to the consignees. To comply with this weighty obligation, it is only meet and proper that carriers should be afforded the right of having a wide discretion on the selection and supervision of persons who will handle the goods. Courts cannot withhold from the carriers this right without committing grave injustice. The act of the carrier, therefore, in entering into a contract with the defendant for the latter to handle the stevedoring and dockhandling appears to us to be well within the right of the carrier to exercise. Nor can the defendant be held engaging in unfair competition simply because he offered his services to the Compania Maritima which accepted the offer and formalized their agreement in a written contract. Moreover, there is wanting in evidence acts of the defendant that will show unfair competition. A good deal of the act attributed to defendant and regarded by appellant as unfair competition were performed by the Compania Maritima. So because common carriers are required to exercise due diligence in the selection of its employees as mandated by law, common carrier is given that right because one of the circumstances that they will have to show is that they exercised the diligence required of them in the selection and supervision of their employees. In the case of vs CA, the facts of the case shown here is that the jeep owned by was bumped by a truck driven by Serena (?) and owned by Zalda (?) so the passenger sustained injuries by reason of the accident, so consequently a civil case was filed by the passenger against the driver and his employer for the damages caused to him. In the Civil case, it was ruled that the negligence of the

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Transportation Law – First Exam Coverage 2016-2017 driver was the proximate cause of the accident. The truck driver and the truck owner were found liable for quasi-delict. Culpa-acquiliana. However the truck driver contended that the bumping was a caso fortuito therefore it should not be held liable. SC said this is a different type of contract kaya culpa-acquiliana kasi wala naman kasunduan na banggain ng truck ang jeep. So the contract was only between the passenger and the jeepney driver. So the issue brought to the SC was whether the bumping of the jeepney by the truck constitutes a Fortuitous event. Sc said no. a caso fortuito is an event which could not be foreseen, or if can be foreseen, is inevitable. But in this case, the jeepney was not properly parked, based on the evidence presented, its rear portion was exposed about 2 meters from the shoulders of the road, and facing the middle of the highway in a diagonal angle, so the driver should have foreseen the danger caused by his parking. Similarly, this is a familiar scene noh. Mga taxi or jeep magkuha ng pasahero sa gitna ng kalsada. In the case of Phil. American General Insurance Company vs MM Marine Services, GR 135645. San Miguel Corporation here insured several beer bottle cases with an aggregate value of 5 Million, and 800 plus, with Philippine American Insurance Company. Of course, part of the contract of transportation is insurance, i-insure mo talaga especially if your cargo is valuable. So the cargo was loaded onboard to be transported from Mandaue to Bislig. After having been cleared by the coastguard stationed in Cebu, the vessel left the port of Mandaue for Bislig. The following day, the MV tilted and subsequently sunk off Ankawa (?) point in Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel Corporation was lost. Subsequently, SMC claimed the amount of its loss from petitioner insurance company. So a surveyor from the assessors of the insurance company came to evaluate the accident before they would pay. They went to where the vessel was cast ashore, in their report they said that the vessel was structurally sound and that they did not see any damage or crack. He concluded that the proximate cause of the sinking of the vessel was the shifting of the water from one point to another (Starborne?), so ang alon. Because of the irregular movement of the ballast water, the vessel sunk. Study the parts of the vessel you have a working knowledge on how a vessel operates. So SMC demanded for the full amount of the 5 million 800 plus. Sometime in November, the petitioner, as subrogee, subrogee kasi binayaran nila ang SMC; another person in behalf of the petitioner insurance company is now claiming from SMC the amount na binayaran nila in behalf of the corporation for the loss of the cargo. Meanwhile, the Board of Marine Inquiry (BMI) conducted its own investigation of the sinking of the vessel to determine whether the captain and crew of the vessel should be held responsible for the incident. The Board exonerated the captain and crew for any administrative liability. It found that the sinking of the vessel was the existence of strong winds and enormous waves in Surigao del Sur, a FE that could not have been foreseen at the time it left the port of Mandaue city. The FE was the proximate and only cause of the sinking. So what was the issue? Whether the loss of the cargo was due to the occurrence of a natural disaster, and if so, whether such natural disaster was the proximate cause, and whether private respondent were partly to blame for failing to exercise the diligence to prevent the loss of the cargo. SC said that common carriers, from the nature of their business, under Art. 1733 are mandated to exercise extraordinary diligence. Thus, they are presumed to be negligent if the goods transported by them are lost, destroyed, or has deteriorated. However, the presumption does not arise in cases enumerated under 1734. The parties do not dispute that the vessel encountered waves 6-10 feet in height. These were indeed fortuitous event. Also, before the vessel left Mandaue for Surigao, the captain assured that the weather is suitable for safe travel. He could not have foreseen the unfavorable weather changes. There was no negligence. But although the BMI ruled only on the admin. Liability of the captain and the crew, it had to conduct a further investigation about the circumstances with regard to the safety of the vessel and the loss in order to determine their responsilibilty. It was then indicated that the loss was solely due to fortuitous event. So the MV MGG was exempted from liability. No negligence intervened, nor was there administrative negligence.

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman MASANGUID November21, 2016

Is it a contract between the consignor and consignee only? Who will deliver the goods? Are there only two parties in a contract of transportation of goods? You are only mentioning the consignor and consignee. Who is the third party? -It is the COMMON CARRIER. Is the consignor interchangeably?

the

shipper

also?

Are

the

terms

used

-YES; the one who sends the goods via the common carrier. Who is the consignee? The one who receives the goods. Can the consignor and consignee be the same? YES. The consignor can send the goods and will receive it by himself in some future day. Who are the parties insofar as the contract of transportation is concerned? –Consignor and common carrier only. Because the agreement is between the shipper and the common carrier that the goods shipped by the shipper will be delivered to the consignee, the person who will receive it at some future time either actually or constructively. Would the consignee be a party to that contract of transportation? Is the consignee bound by the contract of transportation? If the goods are lost or destroyed, who has the right to file an action against the common carrier? Is the consignee a signatory to the bill of lading? Can the consignee be bound? Who has the right to file an action? -Consignor, against the common carrier. Why? Because the contract of transportation is between the consignor/shipper and the common carrier. And the obligation of the common carrier is to deliver the cargos of the consignor/shipper in the same condition that it received it to the consignee. So, the presumption is there may be a contract between a consignor and consignee. The consignee probably ordered a particular item from the consignor. Iba yung contract between consignor and consignee. The consignor now, to respond to the delivery of the cargo to the consignee, engages the services of the common carrier in order to deliver the cargo to the consignee based on the agreement between the consignor and consignee. So, the consignee is not a party to the contract of transportation but merely a beneficiary of that contract. How is the common carrier compensated by the consignor/shipper? -the shipper pays the corresponding freight. Basis of freight? The basis would be the value of the goods, the distance from the place of departure to the place of destination, the nature of the goods (whether the goods are perishable or not), manner of how the goods are to be handled. But what is the most basic? WEIGHT. If with respect to carriage of passengers, who are the parties? -Passenger and Common Carrier What is the compensation? FARE; The fare will depend on whether promo rate ba yan, place of destination, etc. How does the law define a common carrier? ARTICLE 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public “Offering their services to the public” Based on that definition provided by Art. 1732, that a common corporation is engaged as a public employment offering their services to the public. But we said there are two kinds of carrier, the common carrier and private carrier. Is the distinction important? Yes. Why?

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Transportation Law – First Exam Coverage 2016-2017 Based on the Lectures of AJTO TY C.ELYN VALENCIA II Sanchez Roman

(1) Law applicable As a general rule, in order to determine whether a carrier is common or private, you said that we first have to determine what law is applicable. What is the law applicable to common carriers? With respect to private carriage, what is the law to be applied? Common carriers – the applicable law is the provision on common carriers under the Civil Code. Private carriers – still the Civil Code but based on the provisions of the contract entered into. (2) Diligence required Common carriers – extraordinary diligence Private carriers – diligence of a good father (3) Burden of Proof Common carriers – there is a presumption of negligence; the law establishes a presumption in case of lost, destruction or deterioration of the goods, the common carrier is negligent. The burden of proof is upon the common carrier that it exercised extraordinary diligence and the lost, destruction or deterioration was caused by any of those mentioned under Article 1734 as exonerating causes. Private carriers – the burden of proof is upon the plaintiff or the complainant that there was a breach of contract. The court will determine on the basis of the provisions, terms and conditions incorporated by the parties in the contract.

(2) (3) (4)

goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; He must undertake to carry goods of the kind to which his business is confined; He must undertake to carry by the method by which his business is conducted and over his established roads; and The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier. As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no distinction as to the means of transporting, as long as it is by land, water or air. It does not provide that the transportation of the passengers or goods should be by motor vehicle. In fact, in the United States, oil pipe line operators are considered common carriers. What do you understand by the term unreasonable discrimination?

FIRST PHILIPPINE PIPELINE CORPORATION VS. CA FACTS: Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install and operate oil pipelines. The original pipeline concession was granted in 1967 1 and renewed by the Energy Regulatory Board in 1992. Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the Mayor of Batangas City. However, before the mayor's permit could be issued, the respondent City Treasurer required petitioner to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to the Local Government Code Petitioner protested, arguing that it is engaged in the business of transporting petroleum products from the Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals. As such, our Company is exempt from paying tax on gross receipts under Section 133 of the Local Government Code of 1991. The respondent City Treasurer denied the protest contending that petitioner cannot be considered engaged in transportation business, thus it cannot claim exemption under Section 133 (j) of the Local Government Code - that petitioner cannot be exempt from taxes under Section 133 (j) of the Local Government Code as said exemption applies only to "transportation contractors and persons engaged in the transportation by hire and common carriers by air, land and water." Respondents assert that pipelines are not included in the term "common carrier" which refers solely to ordinary carriers such as trucks, trains, ships and the like. Respondents further posit that the term "common carrier" under the said code pertains to the mode or manner by which a product is delivered to its destination. ISSUE: Whether or not Petitioner is a common carrier. HELD: There is merit in the petition. A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged in the business of transporting persons or property from place to place, for compensation, offering his services to the public generally. The test for determining whether a party is a common carrier of goods is: (1) He must be engaged in the business of carrying

-The law requires common carriers to carry for all persons, either passengers or property, for exactly the same charge for a like or contemporaneous service in the transportation of like kind of traffic under substantially similar circumstances or conditions. Example of an unreasonable discrimination -Thus bus company allows the transportation of students then prohibits the elderly people to be one of the passengers. There is unreasonable discrimination. But what if the bus is full? – Then there is justifiable refusal. If the vessel does not have the facility to carry/transport the goods, can the common carrier justifiably refuse the transportation of a certain product? –YES Under what circumstances can discrimination by common carrier be allowed? The following are to be considered: (1) The sustainability of the vessels of the company for the transportation of the products; (2) The reasonable possibility of danger or disaster, resulting from their transportation in the form and under the conditions in which they are offered for carriages; (3) The general nature of the business done by the carrier; and (4) In a word, all the attendant circumstances which might affect the question of the reasonable necessity for the refusal by the carrier to undertake the transportation of this class of merchandise. DE GUZMAN vs. CA FACTS: Cendaña, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan. He utilized two (2) six-wheeler trucks which he owned for hauling the material to Manila. On the return trip to Pangasinan, Cendaña would load his vehicles with cargo which various merchants wanted delivered to differing establishments in Pangasinan. For that service, respondent charged freight rates which were commonly lower than regular commercial rates. In November 1970, De Guzman, a merchant and authorized dealer of General Milk Company (Philippines), Inc. in Pangasinan, contracted with Cendaña for the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati to De Guzman’s establishment in Pangasinan.

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Transportation Law – First Exam Coverage 2016-2017 Based on the Lectures of AJTO TY C.ELYN VALENCIA II Sanchez Roman

Thus, Cendaña loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by him, while 600 cartons were placed on the other truck which was driven by Cendaña’s driver and employee. Unfortunately, only 150 boxes of Liberty filled milk were delivered to De Guzman since the other truck was hijacked somewhere along MacArthur Highway, Tarlac by armed men who took with them the truck, its driver, his helper and the cargo. On 6 January 1971, De Guzman filed an action action against Cendaña demanding payment of P22,150, the claimed value of the lost merchandise, plus damages and attorney's fees alleging that: 

Cendaña, being a common carrier, and having failed to exercise the extraordinary diligence required of him by the law, should be held liable for the value of the undelivered goods.

Cendaña denied that he was a common carrier and argued that he could not be held responsible for the value of the lost goods, such loss having been due to force majeure. CFI: Found Cendaña to be a common carrier and holding him liable for the value of the undelivered goods (P22,150.00) as well as for P4,000.00 as damages and P2,000.00 as attorney's fees. CA: Reversed. It held that Cendaña had been engaged in transporting return loads of freight "as a casual occupation — a sideline to his scrap iron business" and not as a common carrier. ISSUE: 1. 2.

Whether or not Cendaña is a common carrier. YES. Whether or not Cendaña is liable for the loss. NO.

HELD: The Civil Code defines "common carriers" in the following terms: Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public. The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (a sideline). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. It appears to the Court that Cendaña is properly characterized as a common carrier even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such back-hauling was done on a periodic or occasional rather than regular or scheduled manner, and even though Cendaña’s principal occupation was not the carriage of goods for others. There is no dispute that Cendaña charged his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant here. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing

regulations and has been granted a certificate of public convenience or other franchise. To exempt Cendaña from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience, would be offensive to sound public policy; that would be to reward Cendaña precisely for failing to comply with applicable statutory requirements. 2. Common carriers, by the nature of their business and for reasons of public policy, are held to a very high degree of care and diligence (extraordinary diligence) in the carriage of goods as well as of passengers. Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or deterioration of the goods which they carry, "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; and 5. Order or act of competent public authority. Causes falling outside the foregoing list, even if they appear to constitute a species of force majeure fall within the scope of Article 1735, which provides as follows: In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733. Applying the provision, the specific cause alleged was the hijacking of the carrier's truck and does not fall within any of the 5 categories of exempting causes listed in Article 1734. It would follow, therefore, that the Cendaña, as common carrier is presumed to have been at fault or to have acted negligently based on Article 1735. This presumption, however, may be overthrown by proof of extraordinary diligence on the part of private respondent. The duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given additional specification not only by Articles 1734 and 1735 but also by Article 1745 (4, 5, 6): Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (5) that the common carrier shall not be responsible for the acts or omissions of his or its employees; (6) that the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; and (7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods on account of the defective condition of the car vehicle, ship, airplane or other equipment used in the contract of carriage. Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to divest or to diminish such responsibility — even for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat, violence or force." In the instant case, armed men held up the second truck. The record shows that an information for robbery in band

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Transportation Law – First Exam Coverage 2016-2017 was filed. The accused were charged with willfully and unlawfully taking and carrying away with them the second truck. The decision of the trial court shows that the accused acted with grave, if not irresistible, threat, violence or force. Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but also kidnapped the driver and his helper, detaining them for several days and later releasing them in another province (in Zambales). The hijacked truck was subsequently found by the police in Quezon City. The Court of First Instance convicted all the accused of robbery, though not of robbery in band. Therefore, the occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence. We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendaña is not liable for the value of the undelivered merchandise which was lost because of an event entirely beyond private respondent's control.

CANDOLITA November 28, 2016

What do we understand about the registered owner rule? What is its significance? Because we said, that in this jurisdiction, the law provides that common carriers, by the nature of their business, since it is imbued with public interest, the nature is that of public employment and that they cannot refuse to accept any passenger or cargo without any justification, so the registered owner rule is very significant, in so far as damage to goods is concerned, and for injuries sustained by any person in the public highways so that the public can easily identify the owner of the vehicle through what office? LTO (Land Transportation Office). So the rule is the registered owner is primarily responsible for any damage caused by the vehicle registered in his name, even if said vehicle had already been sold, transferred or leased to another person, and which at the time of accident, was actually operating said vehicle. The registered owner can run of course after the transferee pursuant to a deed of conveyance for example a bill of sale. Example, a vehicle that has already been leased. So the owner is the lessor and the one using the vehicle is the lessee. How will the lessor be protected in the event of any accident? So the registered owner may annotate the Contract of Lease in the Certificate of Registration of that vehicle. Dapat naka-annotate sya with the LTO. And that will exempt him from liability. If that lease is not annotated, he will be liable primarily in the event of an accident. But he has a right of action against the transferee. But syempre, maha-hassle na sya, need nya pa magfile ng third- party complaint. In the case of Duavit vs CA 173 s 490, the issue with respect to the annotation as held also in the case of BA Finance vs CA, the ruling of the SC is that in order that the registered owner be free from liability, the Contract of Lease be annotated in the Certificate of Registration which will serve as notice to third parties that the lessee and not the registered owner who is in possession and operating the vehicle. If there is no annotation, third parties will not be affected and it will only be between lessor and lessee. The registered owner was not held liable because he was able to prove that the vehicle was stolen from his garage. It was stolen and an accident occurred. What do we understand about the Kabit system? It is an arrangement wherein a person who has been granted a certificate of public convenience, allows other persons who own motor vehicles to operate them under his license or franchise for a fee or percentage of the earnings. Kabit is the term. Although the parties to

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

this agreement are not outrightly penalized by the law but the contract is illicit and is against public policy under Article 1409 of the Civil Code and therefore considered as void and inexistent. The parties, having entered into this illicit agreement, are considered as in pari delicto so they could not run after each other. The court will leave them as they are. No action arises out of an illicit transaction or contract. Again, in a kabit system, why is it penalized? It is for the protection of the third party. Since the passengers or the third parties, are infract defrauded by the misrepresentation of the operator who uses the vehicle of another. The pasahero would think na legal itong sinasakyan ko, na kung hindi ako ihatid sa puntahan ko, I can run after it under the law, pero ang nangyari, hindi pala sya ang may-ari ng franchise, so hahabulin ko pa ang franchisee. So what is now the relevance of the case of Abelardo Lim vs Gonzalez? Anyone who has read it? ABELARDO LIM VS GONZALES Facts: Private respondent herein purchased an Isuzu passenger jeepney from Gomercino Vallarta, a holder of a certificate of public convenience for the operation of a public utility vehicle. He continued to operate the public transport business without transferring the registration of the vehicle to his name. Thus, the original owner remained to be the registered owner and operator of the vehicle. Unfortunately, the vehicle got involved in a road mishap which caused it severe damage. The ten-wheeler-truck which caused the accident was owned by petitioner Lim and was driven by co-petitioner Gunnaban. Gunnaban admitted responsibility for the accident, so that petitioner Lim shouldered the costs of hospitalization of those wounded, compensation for the heirs of the deceased passenger and the restoration of the other vehicle involved. He also negotiated for the repair of the private respondent's jeepney but the latter refused and demanded for its replacement. Hence, private respondent filed a complaint for damages against petitioners. Meanwhile, the jeepney was left by the roadside to corrode and decay. The trial court decided in favor of private respondent and awarded him his claim. On appeal, the Court of Appeals affirmed the decision of the trial court. Hence, petitioner filed this petition. Issue: Whether or not an operation under the Kabit System could not sue without the registered owner of the vehicle as his principal. Held: In the present case it is at once apparent that the evil sought to be prevented in enjoining the kabit system does not exist. First, neither of the parties to the pernicious kabit system is being held liable for damages. Second, the case arose from the negligence of another vehicle in using the public road to whom no representation, or misrepresentation, as regards the ownership and operation of the passenger jeepney was made and to whom no such representation, or misrepresentation, was necessary. Thus it cannot be said that private respondent Gonzales and the registered owner of the jeepney were in estoppel for leading the public to believe that the jeepney belonged to the registered owner. Third, the riding public was not bothered nor inconvenienced at the very least by the illegal arrangement. On the contrary, it was private respondent himself who had been wronged and was seeking compensation for the damage done to him. Certainly, it would be the height of inequity to deny him his right. Hence, the private respondent has the right to proceed against petitioners for the damage caused on his passenger jeepney as well as on his business.

Q: Is this a case of culpa contractual or culpa aquilana? A: Culpa aquilana kasi wala naman silang pre-existing contract. So available yung defense na exercised diligence in the selection of employees. Actually in short, the implication in this case is WON Kabit System is applicable in this case. The answer is NO. The case is between Lim and Gonzales, about sa damage dun sa vehicle, sino magshoulder sa cost. Hindi naman party si Lim sa transaction between Vallarta and Gonzales. Wala namang misrepresentation as to the owner of the vehicle, walang problema sa pagbayad sa third parties na na-injure at sa heirs nung deceased. Binayaran na ni Lim, walang third party na involved.

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Transportation Law – First Exam Coverage 2016-2017 LITA ENTERPRISES VS IAC Facts: Spouses Nicasio Ocampo and Francisca Garcia purchased in installment from the Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to be used as taxi. Since they had no franchise to operate taxicabs, they contracted with petitioner Lita Enterprise, Inc., through its representative Manuel Concordia, for the use of the latter’s certificate of public convenience for a consideration of P1, 00.00 and a monthly rental of P200.00/taxicab unit. For the agreement to takeeffect, the cars were registered in the name of Lita Enterprises, Inc. The possession, however, remains with spouses Ocampo and Garcia who operated and maintained the same under Acme Taxi, petitioner’s trade name. A year later, one of the taxicabs, driven by their employee, Emeterio Martin, collided with a motorcycle. Unfortunately the driver of the motorcycle, Florante Galvez died from the injuries it sustained. A Criminal case was filed against Emeterio Martin, while a civil case was filed by the heir of the victim against Lita Enterprises. In the decision of the lower court Lita Enterprises was held liable for damages for the amount of P25, 000.00 and P7, 000.00 for attorney’s fees. A writ of execution for the decision followed, 2 of the cars of the respondent’s spouses were levied and were sold to a public auction. On March 1973, respondent Ocampo decided to register his taxicabs in his own name. The manager of petitioner refused to give him the registration papers. Thus, making spouses file a complaint against petitioner. In the decision, Lita Enterprise was ordered to return the three certificate of registration not levied in the prior case. Petitioner now prays that private respondent be held liable to pay the amount they have given to the heir of Galvez. Issue: Whether or not petitioner can recover from private respondent, knowing they are in an arrangement known as “kabit system”. Held: “Kabit system” is defined as, when a person who has been granted a certificate of convenience allows another person who owns a motor vehicle to operate under such franchise for a fee. This system is not penalized as a criminal offense but is recognized as one that is against public policy; therefore it is void and inexistent. It is fundamental that the court will not aid either of the party to enforce an illegal contract, but will leave them both where it finds them. Upon this premise, it was flagrant error on the part of both trial and appellate courts to have accorded the parties relief from their predicament. Specifically Article1412 states that: “If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed: “when the fault, is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other’s undertaking.” The principle of in pari delicto is evident in this case. “the proposition is universal that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to sold or delivered, or damages for its property agreed to be sold or delivered, or damages for its violation.” The parties in this case are in pari delicto, therefore no affirmative relief can be granted to them. So as we have previously discussed, we said that common carriers by the nature of their business are mandated by the law to exercise extraordinary diligence. When should this duty commence? As provided in 1736, it commences and lasts: “From the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of Article 1738.’’ Where is there actual delivery? If you say door-to-door delivery, that is actual. Pano pag constructive delivery? Yan yung notice sa consignee that cargo has arrived, na example “Andito na yung kotse, pwede mo na makuha yung kotse’’ That would be constructive delivery, that you inform the consignee that the goods are available for release. Once you notify the consignee of the arrival of the cargo in the place of destination, that would terminate the duty of the carrier to exercise

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extraordinary diligence without prejudice to Article 1738 which provides that:

Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them What do we understand by stoppage in transit? Who are the parties? Consignor –Shipper –Consignee The shipper shipped a partciular kind of good, tapos wala pa naabot kay consignee, nahibaw-an niya na wala na diay kwarta si consignee, so he can stop the transit of the goods. So when the shipper exercises this right, the transaction between the shipper and carrier is now one of bailor-bailee. He holds the goods in trust for the consignor/shipper. Hindi na extraordinary diligence ang required.

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2.

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

Art 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. However, the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declare; or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract; or (3) When demand would be useless, as when the obligor has rendered it beyond his power to perform So delay. Once there is already a demand, dapat ideliver today, di mo nadeliver and there’s a demand for you to deliver, henceforth you are considered in delay. For example, nagpadeliver ka ng cake kasi birthday, tapos hindi dumating yung cake, bukas pa dineliver, eh di mo na birthday. Delay should be determined kung excusable or inexcusable, Kung excusable, suspended lang, na-hold lang yung cargo, so di sya maconsider na delay. After the reason for the delay ceases, he may proceed with the voyage and with the delivery. The vessel continues to be liable as common carrier and remains duty-bound to exercise extraordinary diligence. But if inexcusable, it will have the following effects (1) liable ang common carrier even if the natural disaster was the proximate cause of the damage kasi may delay na. (2) Stipulation limiting liability of carrier is inoperative as provided in 1744. (3) Consignee may exercise the right to abandon, pwede mo na hindi tanggapin yung goods. What happens if shipper contributed to the loss? But the proximate cause is still the negligence of the common carrier? The common carrier is still liable for damages, but considering shipper is contributory, damages will be equitably reduced. Considered sya na mitigating circumstance. We will continue next meeting.

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Transportation Law – First Exam Coverage 2016-2017 Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

FULGAR December 5,2016

Republic Act No. 9515 December 19, 2008 AN ACT DEFINING THE LIABILITY OF SHIP AGENTS IN THE TRAMP SERVICE AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:: Section 1. Definition of Terms. - As used in this Act: (a) "Ship Agent" shall mean the person entrusted with the provisioning or representing the vessel in the port in which it may be found; (b) "General Agent" shall mean a ship agent appointed by the ship owner or carrier in the liner service for all voyages and covered by a General Agency Agreement whereby the agent assumes the role and responsibility of its principal within the Philippine territory including but not limited to solicitation of cargo and freight, payment of discharging or loading expenses, collection of shipping charges and issuing/releasing bills of lading and cargo manifest; (c) "Tramp Agent" shall mean a ship agent appointed by the ship owner, charterer or carrier iti the tramp service for one particular voyage whose authority is limited to the customary and usual procedures and formalities required for the facilitation of the vessel’s entry, stay and departure in the port and does not include the assumption of the ship owner’s, charterer’s, or carrier’s obligations with the shipper or receiver for the goods carried by the ship; (d) "Tramp Service" shall mean the operation of a contract carrier which has no regular and fixed routes and schedules but accepts cargo wherever and whenever the shipper desires, is hired on a contractual basis, or chartered by any one or few shippers under mutually agreed terms and usually carries bulk or break bulk cargoes; and (e) "Liner Service" shall mean the operation of a common carrier which publicly offers its services without discrimination to any user, has regular ports of call/destination, fixed sailing schedules and frequencies and published freight rates and attendant charges and usually carries multiple consignments. Section 2. Liabilty of the Ship Agent, General Agent and Tramp Agent. - The responsibility or liability, if any, of the ship agent, general agent and tramp agent shall continue to be governed by the pertinent provisions of the Code of Commerce: Provided, that in the case of the tramp agent, his liability shall not extend to the obligations assumed by the ship owner, charterer or carrier with the shipper or receiver for the goods carried by the ship: Provided, further, That it is the duty of the tramp agent, however, to assist the shipper or receiver in making cargo liability claims against the ship owner, charterer or carrier: Provided, finally, That failure or inaction to perform the aforesaid duty shall subject the tramp agent to applicable administrative sanctions based on the Implementing Rules and Regulations (IRR) to be formulated thereon by the Maritime Industry Authority (MARINA) under the Depatment of Transportation and Communication (DOTC) and by the Philippine Shippers Bureau (PSB) under the Department of Trade and Industry (DTI). Section 3. Repealing Clause. - All applicable laws, decrees, executive orders, rules and regulations which are inconsistent with this Act are hereby amended or modified accordingly. Section 4 Effectivity. - This Act shall take effect fifteen (15) days following the completion of its publication in two (2) national newspaper of general circulation. Q: Are we saying that tramp services law is limited to vessels? Can there be a tramping service for land vehicles? So the law (referring to its Whereas clause) is silent as to its applicability. It did not specifically state that it is limited only to vessels. There is a case related to tramping services, that is the case of National Steel Corporation. That is the case referred to wherein the Supreme Court ruled on whether the vessel was a tramp service.

Essentially, the tramp service is a private carrier and not subject to the stringent provisions of the common carrier. But can it still be considered or transformed as a common carrier? Is that absolute? Since it is considered as a private transaction because a tramp service does not offer to the public, it can refuse, and it has no fixed routes. If you base it on a common carrier, there is a franchise to traverse this particular route, yun lang yung kanilang route. But when it comes to tramp service pwede silang pumunta kahit saan. They do not need a franchise to operate. So how is a tramp service registered? Where is it registered? Kasi for land transportation, if it is not a common carrier, they register with the LTO. But when it becomes a common carrier, it secures a franchise from the LTFRB. So with respect to a carrier, a vessel, operating in tramp service, where is that vessel registered? In the maritime industry authority.

How is a private carrier transformed into a common carrier? See National Steel Corporation case. In this case, Vlason was claiming that they cannot be held liable as a common carrier because they had a special transaction with National Steel. Meaning to say, they had a charter party agreement. There are three kinds of charter party: is a bareboat charter, a voyage charter and a time charter. Meaning to say (referring to time charter) there is a contract of time voyage. The particular with National Steel falls under a bareboat charter party, which means that the control and the transaction were specific only for particular routes. That the shipper has control over the captain and the crew, parang in the meantime the shipper is the owner pro hac vice – meaning, in the mean time that the agreement was entered into si shipper ang owner. The real ship owner, the charter party, the cargo owner is the owner of the vessel, and the said owner is only assumes the responsibility of ensuring that the vessel is sea worthy. Yan lang ang responsibility ng shipowner under the bareboat agreement, because the control of the ship is under the control of the charterer, who charted the vessel. So siya yung captain, siya yung nagdidirect, the staff is under his control. So walang control si ship owner except insofar as the seaworthiness of the vessel is concerned. In this case, the common carrier becomes a private carrier because it only carried a particular cargo for this particular shipper. Of course there will be confusion, because Vlason is claiming here they are into the tramp service. However, the Supreme Court said that while it may be a tramping service, a tramp service, being a private carrier, may also be considered a common carrier depending on the circumstances of each case. What is important here is the distinction between a private and common carrier. Vlasons here claim that they don’t need to exercise extraordinary diligence because this is a private carriage, and therefore ordinary diligence , and it no longer has the burden of proof kasi wala na yung presumption of negligence because it is a private carrier. The burden of proof is with the aggrieved party to show that the carrier did not exercise the diligence required of him, and that it was his fault. Based on the National Steel case, the fault was attributed to the sailors - in the stevedoring. Within what period is the common carrier required to exercise extraordinary diligence? What is the duration of the liability of the common carrier to exercise extraordinary diligence? How is actual delivery made? As evidenced by what? How can the common carrier say that the goods were actually delivered? Sign on the acknowledgement. And the original bill of lading is returned to the common carrier. That is proof that the goods have been delivered. Because if the original bill of lading is still in your possession, ibig sabihin the goods have not yet been received. You can file an action for that because that is an actionable document in the event that the goods had not yet arrived. That is proof that the goods were sent but not delivered to you. Once it is delivered to you, usually hinihingi ni common carrier yung original or else they make you sign because that is proof of actual delivery. When you say constructive delivery?

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Transportation Law – First Exam Coverage 2016-2017 Who is the recipient her? What do we call the recipient? Consignee. Use the proper terms. Who are the parties to a contract of transportation? Shipper, common carrier, consignee, diba? You use that. What is stoppage in transit? What is the relation of the exercise of a stoppage in transit vis-a-vis the obligation of the common carrier to exercise extra ordinary diligence? Who is the unpaid seller? Consigner or Shipper. You said the shipper gives notice to the common carrier, and he exercises stoppage in transit because he knew that the consignee has become insolvent, and therefore, to protect his interest, while the cargo is still in transit, he gives notice to the common carrier to what? How is notice given? If the vessel is in the middle of the sea? What is the notice given by the consigner to the common carrier as would terminate the responsibility of the common carrier to exercise extraordinary diligence? A notice to the common carrier to no longer deliver the goods! So once that notice is given, the common carrier is no longer required to exercise extraordinary diligence, but only ordinary diligence, and the contract of carriage is converted to a contract of deposit. Who are now the parties to the contract of deposit? Bailor and bailee. The bailor is shipper, and the bailee is the common carrier. So there is now a contract of deposit, where responsibility of the common carrier to exercise extraordinary diligence ceases. What is a stipulation limiting liability?

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There is a presumption by law that in the event of loss, destruction, or deterioration, or injuries to the passenger, the common carrier is presumed to be at fault. However, the common carrier can be exempted in the loss, destruction or injuries by any of the exempting circumstances under Article 1734. So, in order for them to be exempt from liability, the force majeure, if it is the cause for the loss, destruction or deterioration, must be the proximate and only cause, and that the common carrier can so prove that they exercised the diligence required of it to prevent and minimize the loss provided before, during and after the occasion of the loss, destruction or deterioration. Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act of omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. However, the law provides under 1744, of course, we said that the exemption of the exculpatory causes and that is not applicable in the event that there is negligence, the common carrier is in delay. Even if saying that the provision of 1744 is available to common carrier as basis to be exempted it will not mean that the common carrier can be exempted from liability in view of the delay or the intervention of any negligence.

What liability being limited here? To limit the liability of the common carrier to a degree less than extraordinary diligence because of the nature of the business of common carriers. In case of loss, destruction and deterioration, the common carrier is presumed to be negligent, and therefore, the burden of proof is upon the common carrier to show that the loss, destruction or deterioration was due to the circumstances enumerated under Article 1734. That he exercised extraordinary diligence but there was a fortuitous event. But it does not end there. The cause or the natural disaster, if the cause was a natural disaster, is the proximate cause of the loss destruction or deterioration, and that the common carrier exercised extraordinary diligence to prevent the loss destruction or deterioration before, during, and after the occurrence of the loss, destruction or deterioration.

Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy.

However, 1734 grants to the party the opportunity that they may enter into a contract to limit liability of the common carrier to exercise a degree of diligence less than extraordinary diligence.

However, the SC before provides for a way for the parties to enter into a stipulation limiting the liability of the common carrier to exercise the degree of diligence less than extraordinary, provided that the stipulation limiting liability is signed by the parties, it is supported by a valuable consideration other than the service rendered, and that the stipulation was just and reasonable and not contrary to public policy. So, it must be stressed is premised on freedom of choice or voluntariness, we said that 1749 and 1750 provides that the validity and enforceability of the stipulation limiting the liability at an agreed valuation shall be taken into consideration or will be based only on the unhampered choice of the shipper and that in case of dispute that may arise, the court will take into consideration the stipulation if just and reasonable especially if the carrier has monopoly of the route for a particular area. That’s why the law provides that that stipulation may be annulled by the shipper, if the shipper was forced to enter into such stipulation limiting the liability of the common carrier. The court will take that into consideration whether or not naging material ba yung monopoly of the carrier that forced the shipper to enter into that stipulation. So the court will determine that stipulation is just and reasonable despite the fact that the common carrier has the monopoly to the route of that particular area.

What are the requirements? It must be in writing, signed by the parties, for a valuable consideration other than the service that is going to be rendered by the common carrier, and must be reasonable (just and not contrary to public policy). What do you understand about the valuable consideration other than the services to be rendered? The shipper has to declare the value of the cargo of goods, or a higher amount, and will pay that value. What generally are the stipulations in a stipulation limiting liability, other than to exercise a degree of diligence less than extraordinary, that are just and reasonable? Take note that Article 1745 provides for stipulations that are considered unreasonable, unjust, and contrary to public policy. So what is the rational behind article 1746? A contract with stipulations limiting liability is anchored on voluntariness between the parties, therefore if there is force or intimidation it can be annulled by the shipper. The contract will be voidable and may be annulled at the option of the shipper. But of course, the validity and enforceability of the said contract will depend upon the circumstances to be determined by the court.

The exercise of extraordinary diligence is mandated and it starts from the time that the common carrier unconditionally receives the goods, it is operative even if the goods are temporarily stored, until it is delivered to the shipper or consignee, actually or constructively and, of course, it exercises its right of stoppage in transitu.

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.

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Transportation Law – First Exam Coverage 2016-2017 Based on the Lectures of AJTO TY C.ELYN VALENCIA II Sanchez Roman

Of course, we mentioned also the package xx as with respect to the liability of the common carrier. We said that the amount of US$500 which is reproduced in the bill of lading is taken from Sec. 4 Article 5 of the Carriage of Goods by Sea Act. Why was that incorporated there? Because there is no provision under the Civil Code which provide for a limitation on the liability of the common carrier. Based on 1766 which provides that in all matters not regulated by the Civil Code provisions and the provisions of the Code of Commerce, such that special laws are applicable. Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. Any Volunteer for the case of EDGAR COKALIONG? EDGAR COKALIONG SHIPPING V UCPB DOCTRINE: The liability of a common carrier for the loss of goods may, by stipulation in the bill of lading, be limited to the value declared by the shipper. On the other hand, the liability of the insurer is determined by the actual value covered by the insurance policy and the insurance premiums paid therefor, and not necessarily by the value declared in the bill of lading. FACTS: Shipper: Zosima Mercardo, Nestor Angelia Carrier: EDGAR COKALIONG SHIPPING LINES, INC. Vessel: M/V Tandag Insurer: UCPB General Insurance Co. Inc. (Feliciana Legaspi insured the cargoes) Event: FIRE Edgar did not pay UCPB. UCPB filed a complaint. RTC absolved Edgar of any liability. CA affirmed. ISSUE: 1. 2.

W/N Edgar is liable What is the basis of liability? Amount in the bill of lading or actual amount?

RULING: 1. Yes. The uncontroverted findings of the Philippine Coast Guard show that the M/V Tandag sank due to a fire, which resulted from a crack in the auxiliary engine fuel oil service tank. Fuel spurted out of the crack and dripped to the heating exhaust manifold, causing the ship to burst into flames. The crack was located on the side of the fuel oil tank, which had a mere two-inch gap from the engine room walling, thus precluding constant inspection and care by the crew. Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure. May refer toEastern Shipping Lines, Inc. v. Intermediate Appellate Court. A stipulation that limits liability is valid as long as it is not against public policy. ‘Art. 1749. A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.’ ‘Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely and fairly agreed upon.’ 2. Bill of lading. The bill of lading subject of the present controversy specifically provides, among others: ’18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the shipper’s net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. ‘The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount exceeding One Hundred Thousand Yen in Japanese Currency (¥100,000.00) or its equivalent in any other currency per package or customary freight unit (whichever is least) unless the value of the goods higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is paid as

required.’ In the present case, the stipulation limiting petitioner’s liability is not contrary to public policy. In fact, its just and reasonable character is evident. The shippers/consignees may recover the full value of the goods by the simple expedient of declaring the true value of the shipment in the Bill of Lading. Other than the payment of a higher freight, there was nothing to stop them from placing the actual value of the goods therein. In fact, they committed fraud against the common carrier by deliberately undervaluing the goods in their Bill of Lading, thus depriving the carrier of its proper and just transport fare. It is well to point out that, for assuming a higher risk (the alleged actual value of the goods) the insurance company was paid the correct higher premium by Feliciana Legaspi; while petitioner was paid a fee lower than what it was entitled to for transporting the goods that had been deliberately undervalued by the shippers in the Bill of Lading. Between the two of them, the insurer should bear the loss in excess of the value declared in the Bills of Lading. Who is Feliciana Legaspi? What is her relation to Mercado and Angelia? So Feliciana Legaspi is the supplier. So there are two separate cargoes here. For how much? For Angelia, it was P110,056 and for Mercado is P99,000. There was a fire. Because of? A crack in the auxiliary engine. Dun sa crack, lumalabas yung oil or fuel. In so far as the first issue, whether or not the common carrier is liable the SC said that the common carrier is liable for its failure to prove that it exercised the diligence required to conduct the necessary requisite inspection of the engine, and the engine crude, etc. So, if then, considering that the burden of proof is on the part of the common carrier, as the common carrier here was not able the show proof that it exercised the diligence required of it to prevent the occurrence of the fire. And besides, based on Article 1734, the fire is not considered a fortuitous event. It is because of the intervention of negligence on the part of the common carrier. There is negligence. With respect to the extent of liability, UCPB already paid Legaspi for the value of what was insured. What right now has UCPB to run after Cokaliong? Because UCPB paid Legaspi, UCPB now is subrogated of the right of Legaspi to claim what it (UCPB) paid Legaspi. UCPB is now claiming to Cokaliong the value of the insurance proceeds of P100,000+ which it paid to Legaspi. Cokaliong was saying that they cannot be held liable for the amount paid to Legaspi but only the amount as declared by Mercado and Angelia based on the bill of lading. So, in whose favor is a stipulation limiting liability would be? It is on the common carrier Ma’am. Why? The SC held here Ma’am that the purpose of the limiting stipulation in the Bill of Lading is to protect the common carrier. Such stipulation obliges the shipper/consignee to notify the common carrier of the amount that the latter may be liable for in case of loss of the goods. So that the common carrier can then take appropriate measures -- getting insurance, if needed, to cover or protect itself. This precaution on the part of the carrier is reasonable and prudent. So, the SC here said that, in so far as the liability of the losses concerned Cokaliong was liable and with respect to the extent of liability, the liability of the common carried will be based on what is provided under the bill of lading. The SC said that there was no proof that was shown that the stipulation limiting the liability of the common carrier to what is indicated in the bill of lading is not just, contrary to public policy. So, that’s why the SC said that it is but proper that the basis for the liability bill of lading considering that the common carrier is not a party to the insurance. The insurance agreement between Legaspi and UCPB is entirely a different contract. It is only between Legaspi, the insurer, and UCPB, the insurance company. On the other hand, in the bill of lading Legaspi is not a party, even UCPB is not a party to the bill of lading but the bill of lading is between whom? The shipper and the common carrier. So a stipulation limiting liability is in favor of the common carrier so that the common carrier can get an insurance (nag-iinsurance din yan sila) to cover what is the liability that is declared by the shipper in the event of loss, destruction, deterioration. Hindi yung bang na-bulaga na lang yung common carrier na ito pala yung liability dba? So, actually, a stipulation in this regard is in favor of the common carrier so that it

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Transportation Law – First Exam Coverage 2016-2017 Based on the Lectures of AJTO TY C.ELYN VALENCIA II Sanchez Roman

can be prepared to pay the amount in the event of loss, destruction, deterioration. What about the case of Sealand Service?

Petitioners refused to submit to the consignee's claim. Consequently, respondent paid the consignee and was subrogated to the latter's rights. Subsequently, respondent instituted this complaint for recovery of the amount paid by them, to the consignee as insured.

SEA-LAND SERVICE, INC. vs. IAC Facts: Sea-land, a foreign shipping and forwarding company licensed to do business in the Philippines, received from Seaborne Trading Company in California a shipment consigned to Sen Hiap Hing. The shipper not having declared the value of the shipment, no value was indicated in the BOL. The shipment was discharged in Manila, and while awaiting transshipment to Cebu the cargo was stolen and never recovered. The lower court sentences Sea-land to pay Cue the value of the lost cargo, the unrealized profit and attorneys fees. The CA affirmed the decision, hence the petition. Issue: Whether or not the consignee of seaborne freight is bound by stipulations in the covering bill of lading limiting to a fixed amount the liability of the carrier for loss or damage to the cargo where its value is not declared in the bill. Held: Yes. There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for loss of, or damage to, goods being transported under said bill, although that document may have been drawn up only by the consignor and the carrier without the intervention of the consignee Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage so governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65. Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation clause in the bill of lading here are fully substantial on the basis alone of Article 1749 and 1750 of the Civil Code. The justices of such stipulation is implicit in its giving the owner or shipper the option of avoiding accrual of liability limitation by the simple expedient of declaring the value of the shipment in the bill of lading. The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered by said rule to US$500 per package unless the shipper declares the value of the shipment and pays additional charges is valid and binding on Cue. You said that there was no declaration of the value? Yes Ma’am. But it is stated in the bill of lading ma’am that in case of loss or deterioration during the transportation of the goods, it should not exceed US$600. The basis of the liability would be the peso conversion during the time the action was filed and not the present peso conversion and the basis would be the US$500 per package. So the peso equivalent per US$ was P3 then. So that would serve as basis for the amount to be paid which was the value at the time of delivery when the case was filed. What about the case of Belgian? What is the connection with this case?

Petitioners imputed that the damage and/or loss was due to preshipment damage. In addition thereto, they argued that their liability, if there be any, should not exceed the limitations of liability provided for in the bill of lading and other pertinent laws. Finally, they averred that, in any event, they exercised due diligence and foresight required by law to prevent any damage/loss to said shipment. RTC dismissed the Complaint because respondent had failed to prove its claims. In reversing the trial court, the CA ruled that petitioners were liable for the loss or the damage of the goods shipped, because they had failed to overcome the presumption of negligence imposed on common carriers. Issue #1: Whether or not a notation in the bill of lading at the time of loading is sufficient to show pre-shipment damage and to exempt herein defendants from liability. Held: NO. Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration, the loss or the destruction of the goods happened, the transporter shall be held responsible. Petitioners failed to rebut the prima facie presumption of negligence in the case at bar. True, the words "metal envelopes rust stained and slightly dented" were noted on the Bill of Lading; however, there is no showing that petitioners exercised due diligence to forestall or lessen the loss. Having failed to discharge the burden of proving that they have exercised the extraordinary diligence required by law, petitioners cannot escape liability for the damage to the four coils. Issue #2: Whether or not the consignee/plaintiff filed the required notice of loss within the time required by law. Held: YES. Pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act (COGSA), a failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within one year. This one-year prescriptive period also applies to the shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading. In the present case, the cargo was discharged on July 31, 1990, while the Complaint was filed by respondent on July 25, 1991, within the one-year prescriptive period. Issue #3: Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of COGSA is applicable. Held: YES. In the case before us, there was no stipulation in the Bill of Lading limiting the carrier's liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for petitioners' liability. A notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation of steel sheets did not effect a declaration of the value of the goods as required by the bill. In the light of the foregoing, petitioners' liability should be computed based on US$500 per package and not on the per metric ton price declared in the Letter of Credit.

BELGIAN OVERSEAS CHARTERING V PHILIPPINE FIRST Facts: On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg, Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. On July 28, 1990, M/V Anangel Sky arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad order. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading Corporation declared the same as total loss.

So with respect to the issue on whether the bill of lading is a contract of adhesion, how was that ruled upon? I think that’s on Everett Steamship v CA case. (There’s no ruling about a contract of carriage being a contract of adhesion in the Belgian case). So what about the Everett Steamship v CA case? EVERETT STEAMSHIP V CA FACTS Hernandez trading company imported three crates of bus spare parts marked as Marco 12, Marco 13, Marco 14 from its supplier Maruman

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Transportation Law – First Exam Coverage 2016-2017 Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

trading company. Said crates were shipped from Japan to Manila on noard the vessel owned by Everette Orient Lines. Upon arrival in Manila, it was discovered that Marco 14 was missing. Hernandez makes a formal claim to Everette in an amount of 1 mill ++ Yen, which is the amount of the cargo lost. However, Everett offers an amount of 100k because it is the amount that was stipulated in its Bill of Lading. Hernandez files a case at the RTC of Caloocan, RTC rules in favor of Hernandez holding Everett liable for the amount of !mill ++ Yen. THE CA affirmed the RTC’s ruling and made an additional observation that since Hernandez is not a privy to the contract in the bill of lading (the contract was entered by Everett and Maruman trading [shipper]), and so the 100k limit stipulated will not bind Hernandez making Everett liable for the full amount of 1mill ++ Yen. ISSUE 1. 2.

Is Everett liable for the full amount or the amount that was stipulated in the contract?- what was stipulated in the contract Is Hernandez a privy to the contract which says that Petitioner is liable only for 100k? Yes

RULING 1. Controlling provisions for this issue would be 1749 and 1750 of the Civil Code. In Sea Land Service, Inc. vs Intermediate Appellate Court That said stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the justness and fairness of the law itself, and this the private respondent does not pretend to do. But over and above that consideration, the just and reasonable character of such stipulation is implicit in it giving the shipper or owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient of declaring the nature and value of the shipment in the bill of lading The clause of the contract goes: “The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount exceeding One Hundred Thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in any other currency per package or customary freight unit (whichever is least) unless the value of the goods higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is paid as required.” (Emphasis supplied) The shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. The trial court’s ratiocination that private respondent could not have “fairly and freely” agreed to the limited liability clause in the bill of lading because the said conditions were printed in small letters does not make the bill of lading invalid. In Ong Yiu VS. CA the court said that “ contracts of adhesion wherein one party imposes a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited A contract limiting liability upon an agreed valuation does not offend against the policy of the law forbidding one from contracting against his own negligence The shipper, Maruman Trading, we assume, has been extensively engaged in the trading business. It cannot be said to be ignorant of the business transactions it entered into involving the shipment of its goods to its customers. The shipper could not have known, or should know the stipulations in the bill of lading and there it should have

declared a higher valuation of the goods shipped. Moreover, Maruman Trading has not been heard to complain that it has been deceived or rushed into agreeing to ship the cargo in petitioner’s vessel. 2. Even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier. The consignee can still be bound by the contract. private respondent (Hernandez) formally claimed reimbursement for the missing goods from petitioner and subsequently filed a case against the latter based on the very same bill of lading, it (private respondent) accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Thus, private respondent cannot now reject or disregard the carrier’s limited liability stipulation in the bill of lading. In other words, private respondent is bound by the whole stipulations in the bill of lading and must respect the same. What about the issue with respect to whether the bill of lading binding upon the consignee? The SC said that when the consignee formally claimed reimbursement for the missing goods from carrier and subsequently filed a case against the latter based on the very same bill of lading, it accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Because? What did the consignee use as basis for filing the case? It used the bill of lading Ma’am. While the consignee is not a party signatory to the bill of lading (because we said the stipulations limiting liability must be signed by the parties and the bill of lading was signed only by the consignor and the common carrier, the consignee have not signed), the bill of lading can bind the consignee considering that the consignee used the bill of lading as basis of his claim. And with respect to a contract of adhesion? Is a bill of lading considered a contract of adhesion? Because the bill of lading is prepared by the shipper and the terms and condition are written in very very fine letters. In this case Ma’am, the SC said that although the bill of lading is considered a contract of adhesion, in this case, it is not considered invalid considering that The Maruman Trading has been extensively engaged in the trading business. The SC said that it cannot be said to be ignorant of the business transactions it entered into involving the shipment of its goods to its customers. The shipper could have known, or should know the stipulations in the bill of lading and there it should have declared a higher valuation of the goods shipped. Moreover, Maruman Trading has not been heard to complain that it has been deceived or rushed into agreeing to ship the cargo in petitioner’s vessel. In fact, it was not even impleaded in this case. So Generally, a contract of adhesion (which is when we say contract of adhesion, it is a ready-made form prepared by one party) is not prohibited because the party who adheres may reject. Of course, if he adheres to it, then he is bound by the contract. He is free to reject it. So, any questions in so far as stipulation limiting liability is concerned? So we go now to baggages. There are two kinds of baggages. Before that, in 1753, we said that The law of the country to which the goods are to be shipped or the place of destination shall govern the liability of the common carrier for their loss, destruction or deterioration. Now, in 1754, there are two kinds of baggages. 1. In the custody of the common carrier, which means checked-in baggages. What law shall govern? The law on common carriers because it is not baggeges once checkedin is in the possession and custody of the common carrier in which case the provisions of 1733 to 1753 shall apply. 2. In the custody of the passenger. Yung hand-carry. So what law shall govern? Article 1998, 2000 to 2003 of the Civil Code which shall be considered Necessary deposits. What are common carriers here considered? As hotel-keepers which shall considered the goods in the passenger as necessary deposits. So the common-carrier shall be liable as depositary with respect to baggages in the custody of the passenger. Provided what? Provided that notice was given to them (common carrier), or to their employees, of the effects brought by the guests and that, on the part of the latter (passenger), they take the precautions which said common carrier or their substitutes advised relative to the care and vigilance of their effects. Article 2000, Common

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Transportation Law – First Exam Coverage 2016-2017 carrier is liable for the damage caused by their employees and servants but not by force majeure. Art. 2001 The act of a thief or robber is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. Art. 2002 The hotel-keeper is not liable for compensation if the loss is due to the acts of the passenger, his family, servants or visitors, or if the loss arises from the character of the things brought by the passenger. Art. 2003 The common carrier cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the passenger. Any stipulation between the common carrier and the passenger whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void.

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

M: Surrender? S: Deposit it to the common carrier or any of his employees. M: So it is no longer in the custody of the passenger? S: Notify, I mean. The passenger should notify the common carrier that he has the said baggage. And also that it turn into effect as a necessary deposit, the common carrier turn into a hotel keeper as provided in article 1998 M: So what will happen if the passenger turn over the baggage to the common carrier? S: Different provisions shall apply: Article 1733. M: What is 1733? S: the common carrier shall exercise extraordinary diligence in the safe keeping of the baggages of the passenger

UGDANG January 9, 2017

M: (What is the responsibility of the common carrier) with respect to the baggages in the personal custody of the passenger? S: …. M: (relating the question to the discussion (last year)) S: they are considered as necessary deposits… M: What do you mean by ‘necessary deposits’? My question is “what is the responsibility of a common carrier with respect to those baggages”? S: the common carrier should exercise due diligence in the safe keeping of the baggages. M: Is that the responsibility? M: Responsible as what? Responsibility as what? S: as a depositary… M: What is that? That is the effect: as a depositary, but insofar as its responsibility, what is it referred to? To what responsibility is that referred to? Under what provision of law? S: it is under the Chapter 3 of the Civil Code, the necessary deposits… Article 2000, Q: So responsibility as what? The effect would be as depositaries…responsibility not as common carrier, as what? They are not common carriers, what are they referred to? S: As hotel keepers. M: Ok, as hotel keepers, governed by what provision? S: Article 2000 of the civil code. “Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the personal property of the guests caused by the servants or e mployees of the keepers of hotels or inns as well as strangers; but not that which may proceed from any force majeure. The fact that travelers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required of him. (1784a)” M: What are the two preceding articles? S: article 1998, 1999. Art. 1998. The deposit of effects made by the travelers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. Art. 1999. The hotel-keeper is liable for the vehicles, animals and articles which have been introduced or placed in the annexes of the hotel. M: So you summarize that in your own words. S: (article 2000) if it (baggage) is with the custody of the passenger the previous 2 articles shall be applied (article 1998 and 1999). It means that if the baggage is in their (passenger’s) custody, the passenger should notify first the carrier that he has the said baggage, and that he should surrender it to the common carrier…

M: So what will happen if there is loss, destruction, or deterioration? S: in case of loss, destruction or deterioration of baggages (or goods) the common carrier shall be liable for the said loss, destruction, or deterioration of said baggage M: so what is required of the common carrier with that regard? S: The common carrier shall exercise extraordinary diligence in safekeeping and/or transporting the baggages or goods of the passengers. Except if there is fortuitous event. M: So what is the presumption of the law in case of loss, destruction, or deterioration (L/D/D )of goods? S: The law presumes that the common carrier is negligent. M: so in case of loss, destruction, or deterioration, the common carrier is presumed to have been at fault or negligent. So who now has the burden of proof to overcome such presumption? S: The burden of proof lies with the common carrier that he has exercised extraordinary diligence in the transportation or safekeeping of the goods. M: So, will that exempt him from liability? Just with the fact that he has exercised extraordinary diligence in case of loss? What would be the intervening factor for the common carrier to prove that it exercised extraordinary diligence and therefore should be exempted from the L/D/D of the goods? S: The intervening factor is that there is a fortuitous event… M: that the cause of the loss was due to a fortuitous event and despite the exercise of the extraordinary diligence the fortuitous event was a circumstance that is beyond the control of the common carrier. So other than the loss was due to fortuitous event what else should the common carrier do? Other than the exercise of the extraordinary diligence, what else should the common carrier show to be exempted from liability? S: The common carrier should also show that the fortuitous event was the proximate and sole cause of the Loss. M: What else? The common carrier may say the under Article 1734 because of the fortuitous event common carrier should be exempted; is that sufficient ? No it is not sufficient. Even if it is caused by fortuitous event it must prove that: 1. that he exercised extraordinary diligence; 2. that the fortuitous event was the proximate and only cause of that loss…What else? 3. that the common carrier exercise due diligence to prevent the loss before, during, and after the occurrence of the fortuitous event M:assuming all these are present there is one circumstance that would not exempt the common carrier from that responsibility. S: In case the common carrier is already in delay. M:Ok, that will not exempt the carrier from the liability for the loss of the cargo or the baggage as a result of a fortuitous event. Of course the delay here should be based on different circumstances of each case. If the delay is caused by fortuitous event, that can serve as an exemption on the part of the common carrier, because it was not his fault. But the delay should be what? Attributable to the fault of the common carrier, otherwise, the common carrier is not exempted from the liability for damages.

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Transportation Law – First Exam Coverage 2016-2017 M: How about acts of strangers, insofar as baggages in the personal custody of the passenger? A: Incases of baggages in the personal custody of the passenger, its loss if caused by strangers, the common carrier would not be held liable. M: Absolutely? S: Except if the common carrier could have prevented the loss by exercising the diligence required of it. M: are you sure? That is article 2001 Art. 2001:The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. S: Under Article 2001, the common carrier would not be held liable if for example there is theft or robbery, and then such can be considered as fortuitous event which would exempt the common carrier from liability if it occurs with the use of force or violence. M:What occurred? Who used violence? S: The stranger M: The thieves and the robber. So, if there is no irresistible force or any use of arms? S:the common carrier would be held liable. M: So the common carrier would still be held liable unless the thieves or the robbers used arms or irresistible force. That is the ruling in the case of DE GUZMAN under Art.1732, where the supreme court added that these can be considered as fortuitous event if the hijackers, thieves, or robbers in particular instance use arms and employed irresistible force.it could be considered as a caso fortuito as would exempt the common carrier from liability for damages. However if it (the loss) is caused by the relative of the passenger? S: Under article 2002: Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of th e things brought into the hotel. S: If the loss is caused by the passenger’s relatives, his friends or visitors, the common carrier is not liable. M: What you understand from contributory negligence? S: Contributory negligence should be attributed to the passenger if the passenger contributed to the damages happened to him. M: Contributed to the damages? S: or injury to his person or to his baggages. M: give me an example where there is contributory negligence on the part of the passenger insofar as the baggages. S: If the passenger is not so prudent in guarding his baggages. If he leaves it without attending to it, so it is prone to… M:so he leaves the baggage, then somebody picked it up? So? Is the common carrier liable? S: The common carrier would not be held liable if the common carrier posted notice… M:are you sure? S: It is not an absolute exception.. M: You mean the common carrier will not be held liable? Assuming there is posting of notice? The posting of notice exempt the common carrier from liability in the event of loss? What does the law provide? S: it is not absolute, it can’t be eliminated. M: What do you mean eliminated? A: The responsibility of the carrier M? So how? Eliminated, you mean, hindi na siya liable? The common carrier cannot be held liable? ESTRADA VS. CONSOLACION Facts: the wife of the petitioner died. During that time Recto was a two-way street. There were 2 colliding vehicles in the intersection that hit the AC jeep. The AC jeep was ran off course. The wife of the petitioner (passenger of AC jeep) died. The petitioner filed a case against the driver and the carrier. But the defendant contended that he can’t be held liable because what happened was a fortuitous event.

Issue: whether or not it was a fortuitous event.

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

Held: The court ruled that it was a fortuitous event because there are factors for it to be considered as a fortuitous event: (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the obligor to fulfill his obligation in a normal manner; and (3) the obligor must be free of a concurrent or contributory fault or negligence. In the case, the (evidence?) degree to prove that it was a fortuitous event as stated in the affidavits . Since they were free from contributory negligence they were not held liable… M: In the RTC level, why did Estrada file a case against the judge? Why was there a petition for prohibition? What was the order of the court? S: … M: So Estrada opposed the order of judge Consolacion for granting the summary judgment. So the common carrier filed a motion for summary judgment on the grounds that? S: … M: How do we relate it now with the presumption based on this case? The law established presumption of negligence, so based on this case, the common carrier filed a motion for summary judgment based on the fact annexes saying that the fault was due to 2 colliding vehiclesit is not because ‘it is not his fault,’ so, why would Estrada oppose that: the motion for summary judgment? S:… M: It is a matter of procedure on the matter on what the law requires. How could you overcome the presumption of negligence if you just file a motion for summary judgment attaching documents that the cause of the accident was the fault of 2 colliding vehicles? What about the breach of contract? You have this breach of contract, but the law provides under 1755 that the common carrier is bound to carry the passengers to a place as far as human care and foresight can provide, with utmost diligence of a very cautious person under all circumstances. So the law provides that the common carrier should rebut the presumption of negligence, in this case the death of the passenger. What would then be the effect? How can you reconcile this? S:… M:so what will happen now to the case of Estrada against the common carrier, if the common carrier is saying that based on the summary judgment the liability is attributable to the 2 colliding vehicles? So where should Estrada go if there is no ruling on whether or not it is exempted? S:… M: that is the reason why Estrada opposed the summary judgment and raised it before the SC for certiorari and prohibition, because Estrada here will be lost. Paano tong’ sinasabi na di siya liable? San’ xa ngayon pupunta? So he will file again a case against the 2 colliing vehicles, so hindi na siya Breach of contract. It will now be based on Culpa Aquiliana and the presumption of law is no longer available. The contract of carriage is only between Estrada and the common carrier. So the common carrier should be held liable for the death of Estrada(‘s wife), although, whether there is a presumption of negligence has still proof but insofar as the breach of contract is concerned he has to show proof that he was not negligent. That he exercised extraordinary diligence and that the cause of the death was due to the collision of 2 vehicles which was beyond his control which could be considered as fortuitous event. He still has to prove that in order for Estrada to be able to claim damages…babayaran parin siya for damages nung’ carrier but the carrier has a cause of action against the 2 colliding vehicles to recover from them what has been paid to Estrada. That’s is why he opposed the motion for summary judgment, because, sabi ni Estrada “san’ ako pupunta ngayon, Magfafile ako sa kanila ng case because the common carrier will no longer pay me, because of the fact that it was not his fault? Still hindi siya liable, but he has to pay for damages which the common carrier can claim against the 2 colliding vehicles in a 3rd-party complaint, kase may 3rd party complaint diba? Estrada against common carrier, The common carrier can file a third party compliant against the owners of the 2 colliding vehicles. Para makacliam si Estrada Against these 2 colliding vehicles. There should be a ruling on the breach of contract.

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CALIFORNIA LINES INC. VS. DELOS SANTOS: Facts: The parties are: California lines and Amparo Santos Regalado sought to recover from defendant California Lines damages. Q: Regalado is a passenger of what bus? S: of California Lines When she was onboard California lines, it collided with the Ricalinda Bus. California lines interposed cross-claim against Ricalinda bus M: there was a complaint filed by Regalado against California Lines for breach of contract. Your cause of action is breach of contract. Why? S: Because California lines failed to safely delivered Regalado as far as human care and foresight can provide to her destination due to accident. M: Regalado Filed a Case against California lines. California lines filed a case against Ricalinda Bus, saying that the collision was due to its (Ricalinda) driver’s negligence. S: the cross claim was saying that Ricalinda bus showed reimbursed California lines whatever it will be ordered to by the court to pay Regalado. Ricalinda Bus alleged that the accident was due to the negligence of the driver of the California lines and pry that cross claim be granted. After hearing there was an amicable settlement between Regalado and Ricalinda Bus. M: So Regalado because there is breach of contract, o Regalado against California lines, and California lines 3rd party complaint against Ricalinda bus. So Ricalinda bus settled with Regalado insofar as the damages that Regalado sustained as a result of the accident. S: so court dismissed the case since there was already and amicable settlement. The California lines defendant of the original case said that to make the dismissal without prejudice in relation to the claim of California lines, against the Ricalinda bus. It sought to recover damages against Ricalinda bus for the collision that took place that because of the collision there was damages of the California lines have suffered and because of the damages and because of the needed repairs the bus was no longer be operated by the California Lines in the regular cause of its business and because of that they suffered damages. That they are entitles to collect from Ricalinda bus. However The Ricalinda Bus said that if there were damages it was caused due to the fault/negligence or lack of prudence of California Lines. M: Who was filing for dismissal? S: This time it was Ricalinda Bus saying that what happened was due to the lack of prudence on the part of the driver of the California lines M: The dismissal was based on the fact that there was already a settlement. The Ricalinda moved to dismiss the complaint of California lines in view of the settlement. So the issue is whether or not the case was settled? Is there already a settlement? So what was settled here is only insofar as the claim of Regalado is concerned, but insofar as the damage that the (California) bus has sustained because of the accident that has not yet settled. That cannot be dismissed kase may issue pa insofar as the damages for the counterclaim of California Lines. What was settled is only with respect to the claim of Regalado. So that is only a part of the case. What was not yet settled is the damages that was caused to the bus of California Lines.

ESTILLORE January 11, 2017

Q: What is the principle of last clear chance? A: A negligent plaintiff can nonetheless recover if he is able to show that the defendant had the last opportunity to avoid the accident. Q: When is it applicable as a defense? A: This applies in a suit between the owners and drivers of two colliding vehicles. Q: Is it applicable to common carrier with respect to breach of a contract of carriage? A: No, it doesn’t apply where a passenger demands responsibility from the carrier to enforce its contractual obligation. It would be iniquitous to exempt the driver and his employer on the ground that the other driver was also negligent. (Agbayani) The relationship of the passenger and the common carrier is based on a contract and

therefore the common carrier has this responsibility to deliver the passenger safely to its place of destination. Q: What are the exempting circumstances which may exempt the common carrier from responsibility? A: When it is due to fortuitous event which is the proximate and only cause of the injury or damage to the passenger. Q: Is there a need for the court to declare or make an express finding that a common carrier is negligent? A: No. 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 for 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 extra ordinary diligence with due regard for all 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. (Agbayani) Q: Is the rule on stipulation limiting the liability of the common carrier applicable to contracts of carriage of passenger? A: In general, the extraordinary diligence required for the carriage of passengers cannot be dispensed with or lessened by stipulation, by the posting of notices, by statement on the tickets, or otherwise. The common carrier and the passenger cannot enter into agreement: 1. Absolutely exempting the carrier from liability from the passenger’s death or injuries; 2. Nor into an agreement lessening the extraordinary diligence required by law, say to the diligence of a good father of a family. (Agbayani) Q: Is this absolute? A: No. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid. (Article 1758). Q: Is there an exception to the exception? A: If it is due to the willful act or gross negligence of the common carrier. The common carrier cannot hide behind a stipulation limiting its liability in so far as gratuitous passenger is concerned.

MARANAN vs. PEREZ FACTS: CORACHEA was a passenger in a taxicab owned and operated by Perez when he was stabbed and killed by the driver, Valenzuela. The latter was found guilty for homicide. While on appeal, MARANAN, CORACHEA’s mother, filed an action to recover damages from owner and driver for the death of her son. PEREZ asserted that the deceased was killed in self-defense, since he first assaulted the driver by stabbing him from behind. Also, the death was a caso fortuito for which the carrier was not liable. CA: PEREZ liable to MARANAN but the case against VALENZUELA was dismissed. ISSUE: WON PEREZ IS LIABLE. Yes. PEREZ: He alleged that the carrier is under no absolute liability for assaults of its employees upon the passengers. UNTENABLE. The killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands the carrier had entrusted the duty of executing the contract of carriage. The killing of the passenger here took place in the course of duty of the guilty employee and when the employee was acting within the scope of his duties. The new Civil Code of the Philippines expressly makes the common carrier liable for intentional assaults committed by its employees upon its passengers, by the wording of Art. 1759 which categorically states that Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's

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employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

SANTOS purchased from NOA a round-trip ticket in San Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back.

As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows the rule based on the principle that it is the carrier's implied duty to transport the passenger safely. Under this view, it is enough that the assault happens within the course of the employee's duty. It is no defense for the carrier that the act was done in excess of authority or in disobedience of the carrier's orders. The carrier's liability here is absolute in the sense that it practically secures the passengers from assaults committed by its own employees.

SANTOS checked in at the NOA counter in the San Francisco airport for his scheduled departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no reservation for his flight from Tokyo to Manila. He therefore had to be wait-listed. SANTOS sued NOA for damages in the RTC of Makati. NOA moved to dismiss the complaint on the ground of lack of jurisdiction. It contended that the complaint could be instituted only in the territory of one of the High Contracting Parties, before: 1. the court of the domicile of the carrier; 2. the court of its principal place of business; 3. the court where it has a place of business through which the contract had been made; 4. the court of the place of destination.

At least three very cogent reasons underlie this rule: 1. the special undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of the high degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier's own servants charged with the passenger's safety; 2. said liability of the carrier for the servant's violation of duty to passengers, is the result of the formers confiding in the servant's hands the performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed by law; and 3. as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of the carrier's employees against passengers, since it, and not the passengers, has power to select and remove them.

ISSUE: WON THE PHILIPPINE COURTS HAS JURISDICTION OVER THE CASE. No. HELD: SANTOS claims that the lower court erred in not ruling that under Article 28(1) of the Warsaw Convention, this case was properly filed in the Philippines, because Manila was the destination of SANTOS.

Accordingly, it is the carrier's strict obligation to select its drivers and similar employees with due regard not only to their technical competence and physical ability, but also, no less important, to their total personality, including their patterns of behavior, moral fibers, and social attitude.

The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier. Examination of the SANTOS’ ticket shows that his ultimate destination is San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties indicates that NOA was bound to transport SANTOS to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and not the destination.

Applying this stringent norm to the facts in this case, therefore, PEREZ is liable pursuant to Art. 1759 of the Civil Code. The dismissal of the claim against VILLANUEVA driver was also correct. MARANAN’s action was predicated on breach of contract of carriage and the cab driver was not a party thereto. His civil liability is covered in the criminal case wherein he was convicted by final judgment.

Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is the "destination" and not an "agreed stopping place" that controls for purposes of ascertaining jurisdiction under the Convention.

Q: What is the complete name of the Warsaw Convetion? A: The Convention for the Unification of certain rules relating to international carriage by air.

The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination."

Q: Why is the Warsaw binding to the Philippines? A: Because it is a treaty commitment entered into by the Philippines that’s why it has the force and effect of the law in our country. Q: What are the categories of the international transportation by air under the Warsaw Convention? 1. Where the place of departure and the place of destination is situated within the territory of two high contracting parties regardless of whether there is a break in the transportation or transshipment. SANTOS III vs. NORTHWEST ORIENT AIRLINE FACTS: This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention, reading as follows: Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination. Facts: SANTOS is a minor and a resident of the Philippines. Northwest Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office in the Philippines.

2.

The place of departure and the place of destination is within the territory of the place of a single high contracting party if there is an agreed stopping place under the power of another country. MAPA vs. CA FACTS: Mapa entered into contract of air transportation with TWA purchased in Bangkok, Thailand. Said TWA tickets are for Los Angeles-New York-Boston-St. Louis-Chicago. The place of destination is Chicago, USA. Upon arriving in Boston, PURITA and CARMINA proceeded to the carousel to claim their baggages and found only three out of the seven they checked in. MAPA then filed with the trial court a complaint for damages, It has been shown by the defendant that the domicile of the

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defendant Trans World Airlines, Inc. is Kansas City, Missouri, its principal place of business is also in Kansas City, Missouri, the carrier's place of business through which the contracts were made is Bangkok and the place of destination was Boston. The Philippines not being one of the places specified in Art. 28(1) above-quoted where the complaint may be instituted, this Court therefore, does not have jurisdiction over the present case. ISSUE: DOES THE PHILIPPINE COURT HAVE JURISDICTION TO TRY THE PRESENT CASE IN THE LIGHT OF THE PROVISION OF ART. 28(1)? No. HELD: No, since this transportation.

case

does

not

involve

international

Under Art. 28(1) supra, a complaint for damages against an air carrier can be instituted only in any of the following places/courts: (1) The court of the domicile of the carrier; (2) The court of its principal place of business; (3) The court where it has a place of business through which the contract had been made; (4) The court of the place of destination. Whether the contracts were of international transportation is to be solely determined from the TWA tickets issued to them in Bangkok, Thailand, which showed that their itinerary was Los Angeles-New York-Boston-St. Louis-Chicago. Accordingly, since the place of departure (Los Angeles) and the place of destination (Chicago) are both within the territory of one High Contracting Party, with no agreed stopping place in a territory subject to the sovereignty, mandate, suzerainty or authority of another Power, the contracts did not constitute international transportation as defined by the convention. ISSUE: WON THE CONTRACTS OF TRANSPORTATION BETWEEN MAPA AND TWA WERE CONTRACTS OF INTERNATIONAL TRANSPORTATION UNDER THE WARSAW CONVENTION. No. HELD: It appears clear to us that TWA itself, if the sole basis were the two TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago, the contracts cannot be brought within the term international transportation, as defined in Article I(2) of the Warsaw Convention. As provided therein, a contract is one of international transportation only if according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the transportation or a transshipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power, even though that power is not a party to this convention. There are then two categories of international transportation. 1. that where the place of departure and the place of destination are situated within the territories of two High Contracting Parties regardless of whether or not there be a break in the transportation or a transshipment; and 2. that where the place of departure and the place of destination are within the territory of a single High Contracting Party if there is an agreed stopping place within a territory subject to the sovereignty, mandate, or authority of another power, even though the power is not a party to the Convention.

The High Contracting Parties referred to in the Convention are the signatories thereto and those which subsequently adhered to it. The contracts of transportation in this case are evidenced by the two TWA tickets both purchased and issued in Bangkok, Thailand. On the basis alone of the provisions therein, it is obvious that the place of departure and the place of destination are all in the territory of the United States, or of a single High Contracting Party. The contracts, therefore, cannot come within the purview of the first category of international transportation. Neither can it be under the second category since there was NO agreed stopping place within a territory subject to the sovereignty, mandate, or authority of another power. The only way to bring the contracts between MAPA, on the one hand, and TWA within the first category of international transportation is to link them with, or to make them an integral part of, the Manila-Los Angeles travel of MAPA through PAL aircraft. The Mapa case will only fall under the definition of international transportation (second category) if it has an agreed stopping over in a different territory or sovereignty although the place of departure and place of destination is only within the territory of a single high contracting party. Q: Is this absolute? Is there an exception? SABENA BELGIAN WORLD AIRLINES vs. CA FACTS: Plaintiff was a passenger on board Flight SN 284 of SABENA airline originating from Casablanca to Brussels, Belgium on her way back to Manila. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. When plaintiff arrived at Manila she discovered that her baggage was lost. She filed her formal complaint with the local office of SABENA demanding immediate attention The Brussels Office of SABENA found the luggage and that they have broken the locks for identification. Plaintiff was assured by the defendant that it has notified its Manila Office that the luggage will be shipped to Manila on October 27, 1987. But unfortunately plaintiff was informed that the luggage was lost for the second time . SABENA asserts that the loss of the luggage was due to plaintiffs sole if not contributory negligence; that she did not declare the valuable items in her checked-in luggage at the flight counter when she checked in for her flight from Casablanca to Brussels; that Section 9(a), Article IX of General Conditions of carriage requiring passengers to collect their checked baggage at the place of stopover, plaintiff neglected to claim her baggage at the Brussels Airport; that plaintiff should have retrieved her undeclared valuables from her baggage at the Brussels Airport since her flight from Brussels to Manila will still have to visit for confirmation inasmuch as only her flight from Casablanca to Brussels was confirmed; that defendant incorporated in all Sabena Plane Tickets, including Sabena Ticket No. 08242272502241 issued to plaintiff in Manila on August 21, 1987, a warning that Items of value should be carried on your person and that some carriers assume no liability for fragile, valuable or perishable articles and that further information may he obtained from the carrier for guidance; that granting without conceding that defendant is liable, its liability is limited only to US $20.00 per kilo due to plaintiffs failure to declare a higher value on the contents of her checked in luggage and pay additional charges thereonPetitioner airline company, in contending that the alleged negligence of private respondent should be considered the primary cause for the loss of her luggage, avers that, despite her awareness that the flight ticket had been confirmed only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not retrieve the luggage upon arrival in Brussels. Petitioner insists that private respondent, being a seasoned international traveler, must have likewise been familiar with the standard provisions contained in her flight ticket that items of value are required to be hand-carried by the passenger and that the liability of the airline or loss, delay or damage to baggage would be

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limited, in any event, to only US$20.00 per kilo unless a higher value is declared in advance and corresponding additional charges are paid thereon. At the Casablanca International Airport, private respondent, in checking in her luggage, evidently did not declare its contents or value. Petitioner cites Section 5(c), Article IX, of the General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol of 1955, generally observed by International carriers, stating, among other things, that: “Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable papers, securities or other valuables.”

International Transportation by Air and the Philippines has no jurisdiction pursuant to Art. 28 (1) of the Warsaw Convention, because the Philippines is not the domicile or place of business of the carrier and it is not where the ticket was purchased. So the case was dismissed because of lack of jurisdiction.

ISSUE: WHETHER OR NOT THE AIRLINE CAN AVAILM OF THE PROVISIONS WHICH EXCLUDE OR LIMIT HIS LIABILITY BASED ON THE WARSAW CONVENTION. No

This was illustrated in the case of Mapa wherein Mapa purchased a ticket in Bangkok for travel to LA, New York, Boston and to Chicago. And all these places are within the United States kaya single High Contracting Party. However, Mapa’s luggage was lost so she filed a case in the Philippines. The airline argued that the Philippines does not have proper jurisdiction.

HELD: The Warsaw Convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the court seized of the case, is considered to be equivalent to willful misconduct, or if the damage is (similarly) caused by any agent of the carrier acting within the scope of his employment. The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, and declaring the stated limits of liability not applicable if it is proved that the damage resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result. The same deletion was effected by the Montreal Agreement of 1966, with the result that a passenger could recover unlimited damages upon proof of wilful misconduct. The Convention does not thus operate as an exclusive enumeration of the instances of an airlines liability, or as an absolute limit of the extent of that liability. Moreover, slight reflection readily leads to the conclusion that it should be deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. The Contentions provisions, in short, do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of its officers and employees, or for some particular or exceptional type of damage. Otherwise, an air carrier would be exempt from any liability for damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd. Nor may it for a moment be supposed that if a member of the aircraft complement should inflict some physical injury on a passenger, or maliciously destroy or damage the latters property, the Convention might successfully be pleaded as the sole gauge to determine the carriers liability to the passenger. Neither may the Convention be invoked to justify the disregard of some extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond the limits set by said Convention. It is in this sense that the Convention has been applied, or ignored, depending on the peculiar facts presented by each case. Q: Who are high contracting parties? A: Countries or states who have signed or ratified the Warsaw Convention.

The second category under the Warsaw Convention is that where the place of departure and the place of destination is situated within the territory of a single High Contracting Party if there is an agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power, even though the power is not a party to the Convention.

Does Philippines have jurisdiction over the case under the circumstances? YES, because the travel of Mapa is not considered an International Transportation by Air. There was no agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power. It was merely a travel within a single High Contracting Party. Therefore, the Warsaw Convention cannot be made operative. We also discussed the case of Sabena Belgian World Airlines where the luggage was lost twice, and the SC said that this underscores the negligence of Sabena Airlines. The SC also said that the provisions of the Warsaw Convention is not an exclusive enumeration of when the common carrier may be held liable if the proximate and only cause is the negligence of the common carrier. If negligence on the part of the common carrier intervened, then the common carrier cannot seek relief from the provisions of the Warsaw Convention. So under the Civil Code, from where shall obligations arise? Art. 1157. Obligations arise from: (1) (2) (3) (4) (5)

Law; Contracts; Quasi-contracts; Acts or omissions punished by law; and Quasi-delicts.

What would be the remedies available to the passenger whose cause of action is being injured during a vehicular accident? The passenger in a culpa contractual is entitled to file an action for breach of contract against the common carrier for failure to deliver the passenger safely. What would be the quantum of evidence required? Preponderance of evidence. And what would be the liability of the common carrier? Primary liability. Who has the burden of proof? The passenger. What does the passenger have to prove?

SINGANON January 16, 2017

The first category under the Warsaw Convention is that where the place of departure and the place of destination is situated within the territory of two High Contracting Parties regardless of whether there was a break in the transportation or in the transshipment. In the case of Santos, Santos purchased a ticket from San Francisco via Tokyo, stop-over sa Philippines, then back to San Francisco. So he was in Bangkok. And he filed a complaint for breach of contract for failure to board on the date of travel. And the airline company filed a motion to dismiss because the travel of Santos was considered an

That the common carrier failed to carry the passenger 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. In case of death or injury to the passenger, what does the common carrier have to prove? That it exercised extraordinary diligence and the accident resulted from negligence on the part of the passenger, or a third person, or a fortuitous event, and it is the proximate and only cause of the accident.

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Transportation Law – First Exam Coverage 2016-2017 Can a common carrier in a culpa contractual use the defense of extraordinary diligence in the selection and supervision of its employees? Yes, but it is not a complete defense. It will only mitigate the liability of the common carrier. The only exculpatory circumstances are those mentioned in Art. 1734. We said that as a result of the accident, we have what you call culpa contractual, and we may also have culpa aquiliana, for example when a person who is not a passenger is injured by a collision of vehicles. Or a culpa criminal. So if a passenger were to elect whether to file an action either for culpa contractual or culpa aquiliana, what would be the difference? What would be the advantage in a culpa contractual action which is not per se in a culpa aquiliana? In a culpa contractual, the law already establishes a presumption of negligence on the part of the common carrier, in case of breach of contract and the passenger dies or suffers injuries. In a culpa aquiliana, there is no such presumption. The burden of proving the negligence of the common carrier rests on the claiming party. In a culpa criminal, the prosecution must prove beyond reasonable doubt that the common carrier is guilty of reckless imprudence resulting to death or physical injuries. In the case of culpa criminal, against whom should the case be filed? And what will be the liability? The action shall be filed against the driver, whose liability is primary and direct. And what will be the liability of the common carrier? The common carrier will be subsidiarily liable in case the driver cannot pay for the claims or in case he will be declared insolvent.

2. 3. 4. 5. 6. 7. 8. 9.

mental anguish fright serious anxiety besmirched reputation wounded feelings moral shock social humiliation, and similar injury.

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Nominal Damages Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

Insolvent by Sheriff’s Return of Judgment in Execution.

Note: This may be awarded even if no actual and exemplary damages is awarded as long as there is a showing that the right of the passenger has been violated.

What is the basis of the common carrier’s subsidiary liability?

Temperate or Moderate Damages

Art. 103. Subsidiary civil liability of other persons. — The subsidiary liability established in the next preceding article shall also apply to employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.

Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty.

Where will you file an action to invoke the common carrier’s subsidiary liability?

Art. 2225. Temperate damages must be reasonable under the circumstances.

In the same court.

Liquidated Damages

What would be your basis in running after civil damages?

Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.

What would be the document or evidence that the driver is insolvent?

Art. 100. Civil liability of a person guilty of felony. — Every person criminally liable for a felony is also civilly liable. DAMAGES Art. 2197. Damages may be: (MENTAL) (1) (2) (3) (4) (5) (6)

Actual or compensatory; Moral; Nominal; Temperate or moderate; Liquidated; or Exemplary or corrective.

Moral Damages Art. 2217. Moral damages include: 1.

physical suffering

Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. Art. 2228. When the breach of the contract committed by the defendant is not the one contemplated by the parties in agreeing upon the liquidated damages, the law shall determine the measure of damages, and not the stipulation. Exemplary Damages Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. In the computation of the indemnification for damages, what are the two factors that need to be determined? Fortune Express vs CA

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Transportation Law – First Exam Coverage 2016-2017 Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

Facts: Petitioner is a bus company in northern Mindanao. Private respondents are the widow of Atty. Caorong and their children. On November 18, 1989, a bus of petitioner figured in an accident with a jeepney in Kauswagan, Lanao del Norte, resulting in the death of several passengers of the jeepney, including two Maranaos. During investigation it was discovered that the owner of the jeepney was a Maranao and that certain Maranaos were planning to take revenge on the petitioner by burning some of its buses. Upon the instruction of Sgt. Bastasa, the officer went to see Diosdado Bravo, operations manager of petitioner, at its main office. Bravo assured him that the necessary precautions to insure the safety of lives and property would be taken. Four days thereafter, three armed Maranaos who pretended to be passengers, seized a bus of petitioner at Linamon, Lanao del Norte while on its way to Iligan City. Among the passengers of the bus was Atty. Caorong. The leader of the Maranaos, Mananggolo, ordered the driver, Cabatuan, to stop the bus on the side of the highway. Then one of the companions of Mananggolo started pouring gasoline inside the bus, as the other held the passengers at bay with a handgun. Mananggolo then ordered the passengers to get off the bus. The passengers, including Atty. Caorong, stepped out of the bus and went behind the bushes in a field some distance from the highway. However, Atty. Caorong returned to the bus to retrieve something from the overhead rack. At that time, one of the armed men was pouring gasoline on the head of the driver. Cabatuan heard Atty. Caorong pleading with the armed men to spare the driver as he was innocent of any wrong doing and was only trying to make a living. The armed men were, however, adamant as they repeated their warning that they were going to burn the bus along with its driver. During this exchange between Atty. Caorong and the assailants, Cabatuan climbed out of the left window of the bus and crawled to the canal on the opposite side of the highway. He heard shots from inside the bus. Larry de la Cruz, one of the passengers, saw that Atty. Caorong was hit. Then the bus was set on fire. Some of the passengers were able to pull Atty. Caorong out of the burning bus and rush him to the Mercy Community Hospital in Iligan City, but he died while undergoing operation. The private respondents brought this suit for breach of contract of carriage. Issues: 1. 2. 3. 4.

WON there was breach of contract of carriage on the part of petitioner WON the seizure of petitioner’s bus was a fortuitious event for which petitioner could not be held liable WON the deceased is guilty of contributory negligence WON the petitioner is liable to private respondent for damages

carrier can be held liable for failing to prevent a hijacking by frisking passengers and inspecting their baggages.

From the foregoing, it is evident that petitioner’s employees failed to prevent the attack on one of petitioners buses because they did not exercise the diligence of a good father of a family. Hence, petitioner should be held liable for the death of Atty. Caorong. 2.

NO.

Art. 1174 of the Civil Code defines a fortuitous even as an occurrence which could not be foreseen or which though foreseen, is inevitable. In Yobido v. Court of Appeals, we held that to be considered as force majeure, it is necessary that: (1) the cause of the breach of the obligation must be independent of the human will; (2) the event must be either unforeseeable or unavoidable; (3) the occurrence must be such as to render it impossible for the debtor to fulfill the obligation in a normal manner; and (4) the obligor must be free of participation in, or aggravation of, the injury to the creditor. The absence of any of the requisites mentioned above would prevent the obligor from being excused from liability. Art. 1755 of the Civil Code provides that a common carrier is bound to carry the passengers as far as human care and foresight can provide, using the utmost diligence of very cautious person, with due regard for all the circumstances. Thus, we held in Pilapil and De Guzman that the respondents therein were not negligent in failing to take special precautions against threats to the safety of passengers which could not be foreseen, such as tortious or criminal acts of third persons. In the present case, this factor of unforeseeablility (the second requisite for an event to be considered force majeure) is lacking. As already stated, despite the report of PC agent Generalao that the Maranaos were planning to burn some of petitioners buses and the assurance of petitioner’s operations manager (Diosdado Bravo) that the necessary precautions would be taken, nothing was really done by petitioner to protect the safety of passengers. 3.

NO.

The petitioner contends that Atty. Caorong was guilty of contributory negligence in returning to the bus to retrieve something. But Atty. Caorong did not act recklessly. It should be pointed out that the intended targets of the violence were petitioner and its employees, not its passengers. The assailants motive was to retaliate for the loss of life of two Maranaos as a result of the collision between petitioner’s bus and the jeepney in which the two Maranaos were riding. Mananggolo, the leader of the group which had hijacked the bus, ordered the passengers to get off the bus as they intended to burn it and its driver. The armed men actually allowed Atty. Caorong to retrieve something from the bus. What apparently angered them was his attempt to help the driver of the bus by pleading for his life. He was playing the role of the good Samaritan. Certainly, this act cannot be considered an act of negligence, let alone recklessness. 4.

YES.

Held: 1.

YES.

Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a passenger on account of the wilful acts of other passengers, if the employees of the common carrier could have prevented the act the exercise of the diligence of a good father of a family. In the present case, it is clear that because of the negligence of petitioner’s employees, the seizure of the bus by Mananggolo and his men was made possible. Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take revenge on the petitioner by burning some of its buses and the assurance of petitioners operation manager, Diosdado Bravo, that the necessary precautions would be taken, petitioner did nothing to protect the safety of its passengers. Had petitioner and its employees been vigilant they would not have failed to see that the malefactors had a large quantity of gasoline with them. Under the circumstances, simple precautionary measures to protect the safety of passengers, such as frisking passengers and inspecting their baggages, preferably with non-intrusive gadgets such as metal detectors, before allowing them on board could have been employed without violating the passengers constitutional rights. As this Court intimated in Gacal v. Philippine Air Lines, Inc., a common

Indemnity for Death. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides for the payment of indemnity for the death of passengers caused by the breached of contract of carriage by a common carrier. Initially fixed in Art. 2206 at P3,000.00, the amount of the said indemnity for death has through the years been gradually increased in view of the declining value of the peso. It is presently fixed at P50,000.00. Private respondents are entitled to this amount. Actual damages. Art. 2199 provides that Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. The trial court found that the private respondents spent P30,000.00 for the wake and burial of Atty. Caorong. Since petitioner does not question this finding of the trial court, it is liable to private respondents in the said amount as actual damages. Moral Damages. Under Art. 2206, the spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. The trial court found that private respondent Paulie Caorong suffered pain from the death of her husband and worry on how to provide support for their minor children, private respondents Yasser King, Rose Heinni, and Prince Alexander. The petitioner likewise does not question this finding of the trial court. Thus, in accordance with recent decisions of this Court, we hold that the

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Transportation Law – First Exam Coverage 2016-2017 petitioner is liable to the private respondents in the amount of P100,000.00 as moral damages for the death of Atty. Caorong.

Based on the Lectures of AJTO TY C.ELYN VALENCIA II SanchezRoman

Exemplary Damages. Art. 2232 provides that in contracts and quasicontracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. In the present case, the petitioner acted in a wanton and reckless manner. Despite warning that the Maranaos were planning to take revenge against the petitioner by burning some of its buses, and contrary to the assurance made by its operations manager that the necessary precautions would be taken, the petitioner and its employees did nothing to protect the safety of passengers. Under the circumstances, we deem it reasonable to award private respondents exemplary damages in the amount of P100,000.00. Attorneys Fees. Pursuant to Art. 2208, attorneys fees may be recovered when, as in the instant case, exemplary damages are awarded. In the recent case of Sulpicio Lines, Inc. v. Court of Appeals, we held an award of P50,000.00 as attorneys fees to be reasonable. Hence, the private respondents are entitled to attorneys fees in that amount. Compensation for Loss of Earning Capacity. Art. 1764 of the Civil Code, in relation to Art. 2206 thereof, provides that in addition to the indemnity for death arising from the breach of contract of carriage by a common carrier, the defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter. The formula established in decided cases for computing net earning capacity is as follows: Gross Necessary Net earning = Life x Annual - Living Capacity Expectancy Income Expenses Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of eighty (80) and the age of the deceased. Since Atty. Caorong was 37 years old at the time of his death, he had a life expectancy of 28 2/3 more years. His projected gross annual income, computed based on his monthly salary of P11,385.00 as a lawyer in the Department of Agrarian Reform at the time of his death, was P148,005.00. allowing for necessary living expenses of fifty percent (50%) of his projected gross annual income, his total earning capacity amounts to P2,121,404.90. Hence, the petitioner is liable to the private respondents in the said amount as compensation for loss of earning capacity.

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