Transportation and maritime law

(5) Order or act of competent public authority.
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Art. 1733.
Art. 1745. Any of the ff. or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:

xxx

(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;

(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755.
4 Agbayani:
Extraordinary diligence required of common carriers.-- The law requires CC to exercise extra-ordinary diligence which means that they must render service with the greatest skill and utmost foresight. The extra-ordinary diligence required of carriers in the handling of the goods of the shippers and consignees last from the time the cargoes are loaded in the vessels until they are discharged and delivered to the consignees.
Reasons for requiring extra-ordinary diligence.-- The nature of the business of common carriers and the exigencies of public policy demand that they observe extra-ordinary diligence; the business of CC is impressed with a special public duty and therefore subject to control and regulation by the state. The public must of necessity rely on the care and skill of CC in the vigilance over the goods and safety of the passengers
Rigorous law on common carriers not applicable to special employment as carrier.-- The laws applicable to CC are rigorous and should not be extended to a person who has neither expressly assumed that character, nor by his conduct and from the nature of his business justified the belief on the part of the public that he intended to assume it.
Registered owner primarily and solidarily liable with driver, under the "kabit system."-- Registered owner is primarily and solidarily liable for the damage caused by the vehicle registered in his name, even if the said vehicle had already been sold, leased or transferred to another person who was, at the time of the accident, actually operating the vehicle. The operator of record continues to be the operator of the vehicle in contemplation of law, as regards the public and third persons, and as such is responsible for the consequences incident to its operation; such owner/operator of record is held in contemplation of law as the employer of the driver.
Kabit system.-- One whereby a person who has been granted a certificate of public convenience allows other persons who own vehicles to operate them under such license, for a fee or percentage of the earnings. This is contrary to public policy, and therefore, void and inexistent; "this is a pernicious system that cannot be too severely condemned; it constitutes an imposition upon the good faith of the govt."
Reason for holding registered owner liable.-- The law does not relieve the registered owner directly of the responsibility that the law fixes and places upon him as an incident or consequence of registration -- where a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him by collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person or to one who possesses no property with which to respond financially for the damage or injury done; in case of an accident, the registered owner should not be allowed to disprove his ownership to the prejudice of the person injured or to be relieved from responsibility

Cangco vs MRR, 38 Phil 768
F: Jose Cangco, an employee of MRR, was riding on its train. As it drew up to the station, the plaintiff made his exit. As he alighted, his foot stepped on a sack of watermelons causing him to slip and his right arm was crushed. This happened between 7 and 8 p.m. and as the railroad station was lighted dimly by a single light, objects on the platform were difficult to see.
Issue : WON MRR is liable to pay damages for the acts of its EEs.
Held : YES.

It cannot be doubted that the EEs of the railroad co. were guilty of negligence in piling sacks on the platform; their presence constituted an effective legal cause of the injuries sustained by Cangco.

It is impt. to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of defendant to exercise due care in its performance. Its liability is direct and immediate (culpa contractual), differing essentially, from that presumptive responsibility for the negligence of its servants, which can be rebutted by proof of the exercise of due care in the selection and supervision of EEs (culpa aquiliana).

The liability of masters and employers for the negligent acts or omissions of their servants or agents, when such act or omissions cause damage which amount to the breach of a contract, is not based upon a mere presumption of the master's negligence in their selection or control, and proof of exercise of the utmost diligence and care in this regard does not relieve the master of his liability for the breach of his contract. When the facts averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that plaintiff has failed or refused to perform the contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of the contract is due to wilful fault or to negligence on the part of the defendant, or of his servants or agents. Proof of the contract and of its nonperformance is sufficient prima facie to warrant recovery.

The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe means of entering and leaving its trains. That duty, being contractual, was direct and immediate, and its nonperformance could not be excused by proof that the fault was morally imputable to defendant's servants.

Medina vs Cresencia, 99 Phil 506
F: A passenger jeepney driven by Brigido Avorque smashed into a Meralco post resulting in the death of Vicenta Medina, one of its passengers. In a criminal case of homicide through reckless imprudence, Avorque pleaded guilty. The right to file a separate action for damages was reserved. Cresencia was still the registered operator of the jeepney in the records of the Motor Vehicles Office and the PSC, while Rosario Avorque was the owner at the time of the accident.
Issue: WON Cresencia is liable for breach of the contract of carriage. YES.
Ratio: The law requires the approval of the PSC, in order that a franchise, or any privilege pertaining thereto, may be sold or leased without infringing the certificate issued to the grantee; and that if property covered by the franchise is transferred or leased without this requisite approval, the transfer is not binding against the public or the PSC; and in contemplation of law, the grantee of record continues to be responsible under the franchise in relation to the PSC and to the public. Since a franchise is personal in nature, any transfer or lease thereof should be notified to the PSC so that the latter may take proper safeguards to protect the interest of the public.

Plaintiff's action is based on the breach of the carrier's contractual obligation to carry his passengers safely to their destination (culpa contractual). The liability of the carrier is direct and immediate.

Isaac vs A.L. Ammen Trans. Co., 101 Phil 1046
F: Plaintiff boarded defendant's bus as a paying passenger from Albay. The bus collided with a pick-up truck which was coming from the opposite direction trying to swerve from a pile of gravel. As a result, his left arm was completely severed. Plaintiff chose to hold defendant liable on its contractual obligation. Plaintiff brought this action for damages which the lower court dismissed holding the driver of the pick-up negligent and not that of the bus.
Issue : WON defendant observed extra-ordinary diligence or the utmost diligence of a very cautious person in avoiding the collision. YES.
Held : The facts of the case show that the bus and the pick-up were approaching each other head-on. The bus swerved to the right and went over a pile of stones and gravel. Despite the efforts of the bus driver, the pick up car still hit the rear left side of the bus. The sense of caution one should observe cannot always be expected from one who is placed suddenly in a predicament where he is not given enough time to take the proper course of action under ordinary circumstances. Furthermore, plaintiff is guilty of contributory negligence since he placed his left elbow outside the window.
Ratio: A CC is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all circumstances. This extra-ordinary diligence required of common carriers is calculated to protect the passengers from the tragic mishaps that frequently occur in connection with rapid modern transportation. This high standard of care is imperatively demanded by the preciousness of human life and by the consideration that every person must in every way be safeguarded against all injury.

Principles as to liability of CC:

(1) the liability of a carrier is contractual and arises upon breach of its obligation; there is breach if it fails to exert extra-ordinary diligence accdg. to all the circumstances of each case

(2) a carrier is obliged to carry its passenger with the utmost diligence of a very cautious person, having due regard for all the circumstances

(3) a carrier is presumed to have been at fault or to have acted negligently in case of death of, or injury to, passengers, it being it duty to prove that it exercised extra-ordinary diligence

(4) the carrier is not an insurer against all risks of travel.

Fores vs Miranda, 105 Phil 266
F: Respondent, a professor of Fine Arts, was a passenger of a jeep registered in the name of Fores but actually operated by Carmen Sackerman. While the jeep was descending at Sta. Mesa bridge at excessive speed, the driver lost control of it causing it to swerve and hit the bridge wall resulting to injuries to its passengers including respondent who suffered a fracture of the upper right humerus. In an action for damages, the CFI awarded actual damages. The CA reduced the actual damages and added moral damages and attorney's fees.
Issue : WON the approval of the PSC is necessary for the sale of a public service vehicle even without conveying therewith the authority to operate the same. YES.
Held : A transfer made without the requisite approval of the PSC is not effective and binding in so far as the responsibility of the grantee under the franchise in relation to the public is concerned. The law was designed primarily for the protection of the public interest.
Issue : WON moral damages may be awarded.
Held : In case of breach of contract (including one of transportation), proof of bad faith or fraud, i.e., wanton or deliberately injurious conduct, is essential to justify an award of moral damages. The exception to this is when a mishap results in the death of a passenger, in which a CC is liable to pay moral damages for the mental anguish by reason of the death of the passenger. So where the injured passenger does not die, moral damages are not recoverable unless it is proved that the carrier was guilty of malice or bad faith.

Under the law, the presumption is that common carriers acted negligently but not maliciously. The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong doing and negligence (as mere carelessness) is too fundamental in our law to be ignored. A carrier's bad faith is not to be lightly inferred from a mere finding that the contract was breached through negligence of the carrier's employees.

Phil. Rabbit Bus Lines vs IAC, 189 SCRA 159
F: Several passengers boarded the jeepney owned by spouses Mangune and driven by Manalo at Dau, Pampanga bound for Carmen, Rosales, Pangasinan. Their contract with Manalo was P24 for the trip. Upon reaching Tarlac, the right wheel of the jeepney was detached, so it was running in an unbalanced position. Manalo stepped on the brake, making a sudden U-turn and encroaching on the right of way of the other vehicles. The Phil. Rabbit bus bumped from behind the jeepney. As a result of the collision, 3 persons died while the others sustained injuries. Cases were filed against the spouses Mangune, Manalo, Phil. Rabbit and De los Reyes (driver).
Issue: Who should be held liable? the Mangunes and Filriters Guaranty Assurance Corp. (Insurance co.)
Ratio: The principle of last clear chance would call for application in a suit between the owners and drivers of two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the ground that the other driver was likewise guilty of negligence.

On the presumption that the drivers who bump the rear of another vehicle are guilty and the cause of the accident, unless contradicted by other evidence, the SC held that the jeep made a sudden U-turn which was so abrupt that the other driver de los Reyes did not anticipate the sudden U-turn.

The proximate cause of the accident was the negligence of Manalo and the spouses Mangune. In culpa contractual, the carrier is presumed to have been at fault or to have acted negligently, and this disputable presumption may only be overcome by evidence that he had observed extra-ordinary diligence or that the death or injury of the passenger was due to a fortuitous event.

The driver cannot be held jointly liable with the owners of the jeep in case of breach of the contract of carriage. The contract of carriage is between the carrier and the passenger, and in the event of contractual liability, the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the negligence of the driver. To make the driver jointly liable would make the carrier's liability personal instead of merely vicarious and consequently, the victim is entitled to recover only the share which corresponds to the driver.

4. Classes of common carriers
Art. 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.
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5,6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all circumstances.

5. Laws 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.
4 Agbayani:
New Civil Code primarily governs common carriers.-- The Provisions of the Civil Code [1732-1766] primarily govern common carriers and the provisions of the Code of Commerce [Overland Transportation and Maritime Commerce] and special laws [Carriage of Goods by Sea Act; Salvage Act] have only subsidiary application to common carriers.

Art. 1753, NCC. 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 provisions of the NCC primarily govern contracts of carriage of goods from foreign ports to Philippine ports
Eastern Shipping Lines vs IAC 150 SCRA 463
F: These two cases, both for the recovery of value of cargo insurance, arose from the same incident, the sinking of the M/S ASIATICA when it caught fire, resulting in the total loss of ship and cargo.

In the first case, the M/S ASIATICA, a vessel operated by petitioner Eastern Shipping Lines, loaded at Kobe, Japan for transportation to Manila 5,000 pieces of colorized lance pipes in 28 packages valued at P256,039 consigned to Phil. Blooming Mills and 7 cases of spare parts valued at P92,361.75 consigned to Central Textile Mills. Both sets of goods were insured against marine risk for their stated value with respondent Devt. Insurance and Surety Corporation.

In the second case, the same vessel took on board 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation, and 2 cases of surveying instruments consigned to Aman Enterprises and General Merchandise. The 128 cartons were insured by respondent Nisshin Fire and Marine Insurance Co. and Dowa Fire & Marine Insurance Co.

En route for Manila, the ship caught fire and sank. The insurers paid the corresponding marine insurance values and were subrogated to the rights of the latter as the insured. They filed suits against the petitioner Carrier and won (affirmed by the CA). Petitioner carrier denies liability on the ff. grounds:

(a) that the loss was due to an extraordinary fortuitous even which is an exempting circumstance under Sec. 4(2)(b) of the Carriage of Goods by Sea Act (COGSA);

(b) that when fire is established, the burden of proving negligence is shifted to the cargo shipper.

Issues: (1)Which law should govern : the Civil Code or the Carriage of Goods by Sea Act.

(2)Who has the burden of proof to show negligence of the carrier.

Ratio : (1) The law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. As the cargoes in question were transported from Japan to the Philippines, the liability of Petitioner Carrier is governed primarily by the Civil Code. However, in all matters not regulated by said Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and special laws. Thus, the COGSA, a special law, is suppletory to the provisions of the Civil Code.
(2) Under the Civil Code, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extra-ordinary diligence in the vigilance over goods, accdg. to all the circumstances of each case. Common carriers are responsible for the loss, destruction, or deterioration of the goods unless the same is due to any of the ff. causes only (Art. 1734, NCC):

"(1) Flood, storm, earthquake, lightning or other natural disaster or calamity; xxx"

The Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase "natural disaster or calamity." However, we are of the opinion that fire may not be considered a natural disaster or calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier.

As the peril of fire is not comprehended within the exceptions in Article 1734, then Article 1735 provides that in all cases other than those mentioned in Art. 1734, the CC shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extra-ordinary diligence required by law.

In this case, the respective Insurers, as subrogees of the cargo shippers, have proven that the transported goods have been lost. Petitioner carrier has also proven that the loss was caused by fire. The burden then is upon Petitioner carrier to prove that it has exercised the extra-ordinary diligence required by law.

Having failed to discharge the burden of proving that it had exercised the extra-ordinary diligence required by law, Petitioner Carrier can not escape liability for the loss of the cargo.

And even if fire were to be considered a natural disaster within the meaning of Art. 1734, it is required under Art. 1739 of the same Code that the natural disaster must have been the proximate and only cause of the loss, and that the carrier has exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. This petitioner carrier has also failed to establish satisfactorily.

Nor may Petitioner Carrier seek refuge from liability under the COGSA. It is provided therein that:

"Sec.4 (2). Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from: (b) Fire, unless caused by the actual fault or privity of the carrier."

In this case, both the TC and the CA, in effect, found, as a fact, that there was "actual fault" of the carrier shown by lack of diligence in that when the smoke was noticed, the fire was already big; that the fire must have started 24 hrs before the same was noticed; and that after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage.

The foregoing suffices to show that the circumstances under which the fire originated and spread are such as to show that Petitioner carrier or its servants were negligent in connection therewith. Consequently, the complete defense afforded by the COGSA when the loss results from fire is unavailing to petitioner carrier.

B. Common Carriers
1. Liability and presumption of negligence
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5,6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.
(read discussion under [3] Nature and basis of liability)
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: