A contract of carriage generates a relation attended with public duty, neglect or malfeasance of the carrier’s employees and gives ground for an action for damages.

The liability of common carriers under Article 1759 is demanded by the duty of extraordinary diligence required of common carriers in safely carrying their passengers.

On the other hand, Article 1756 of the Civil Code lays down the presumption of negligence against the common carrier in the event of death or injury of its passenger, viz.:

Article 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.

The presumption of negligence applies so long as there is evidence showing that: (a) a contract exists between the passenger and the common carrier; and (b) the injury or death took place during the existence of such contract. In such event, the burden shifts to the common carrier to prove its observance of extraordinary diligence, and that an unforeseen event or force majeure had caused the injury. (SULPICIO LINES, INC., v. SESANTE G.R. No. 172682 July 27, 2016)

A person or entity is a common carrier and has the obligations of the common carrier under the Civil Code even if he did not secure a Certificate of Public Convenience [De Guzman vs. Court of Appeals, G.R. No. L-47822 (1988)].

The Civil Code does not provide that the transportation should be by motor vehicle [First Philippine Industrial Corporation vs. Court of Appeals, G.R. No. 125948 (1998)]

A person or entity may be a common carrier even if he has no fixed and publicly known route, maintains no terminals, and issues no tickets [Asia Lighterage and Shipping Inc. vs. Court of Appeals, G.R. No. 147246 (2003)]

ApersonneednotbeengagedinthebusinessofpublictransportationfortheprovisionoftheCivil Code on common carriers to apply to them [Fabre Jr. vs. Court of Appeals, G.R. No. 111127 (1996)].

The carrier can also be a common carrier even if the operator does not own the vehicle or vessel that he or she operates [Cebu Salvage Corporation vs. Philippine Home Assurance Corporation, G.R. No. 150403 (2007)].

Carriage of passengers — 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 due regard for all the circumstances. (Sps. Fernando vs. Northwest Airlines, Inc.,G.R. No. 212038, Feb. 08, 2017)

Passengers do not contract merely for transportation; they have a right to be treated by the carrier’s employees with kindness, respect, courtesy and due consideration; they are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees; so it is, that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. (Sps. Fernando vs. Northwest Airlines, Inc.,G.R. No. 212038, Feb. 08, 2017)

Breach of contract — In an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent; all that he has to prove is the existence of the contract and the fact of its non-performance by the carrier. (Sps. Fernando vs. Northwest Airlines, Inc.,G.R. No. 212038, Feb. 08, 2017)

Contract of carriage — The contract of air carriage generates a relation attended with a public duty; neglect or malfeasance of the carrier’s employees, naturally, could give ground for an action for damages. (Sps. Fernando vs. Northwest Airlines, Inc.,G.R. No. 212038, Feb. 08, 2017)

Breach of contract of carriage  

The principle that, in an action for breach of contract of carriage, moral damages may be awarded only in case: 1) an accident results in the death of a passenger; or 2) the carrier is guilty of fraud or bad faith, is pursuant to Art. 1764, in relation to Art. 2206(3) of the Civil Code, and Art. 2220 thereof; exemplary damages, when awarded. (Darines vs. Quiñones, G.R. No. 206468, Aug. 02, 2017)

Contract of carriage 

Common carriers have the obligation to carry passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances; in case of death of or injury to their passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or negligent and this presumption can be overcome only by proof of the extraordinary diligence exercised to ensure the safety of the passengers.  (Sanico vs. Colipano, G.R. No. 209969, Sept. 27, 2017)

Diligence required –– Common carriers should carefully observe the statutory standard of extraordinary diligence in respect of their passengers, such diligence should similarly benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways. (Cacho vs. Manahan, G.R. No. 203081, Jan. 17, 2018)

Extraordinary diligence –– Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property or rights; the Civil Code stipulates that in case of loss or damage to goods, common carriers are presumed to be negligent or at fault, except in the following instances: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority; in all other cases, common carriers must prove that they exercised extraordinary diligence in the performance of their duties, if they are to be absolved of liability; the responsibility of common carriers to exercise extraordinary diligence lasts from the time the goods are unconditionally placed in their possession until they are delivered “to the consignee, or to the person who has a right to receive them”. (Federal Express Corp. vs. Antonino, G.R. No. 199455, June 27, 2018)

A travel agency is not an entity engaged in the business of transporting either passengers or  goods. Its covenant with its customers is simply to make travel arrangements on their behalf. Its  services  include  procuring  tickets  and  facilitating  travel  permits  or  visas  as  well  as  booking  customers for tours. (CRISOSTOMO vs. CA, G.R. No. 138334. 25 August 2003)

The main purpose of vehicle registration is the easy identification of the owner who can be held responsible  for  any  accident,  damage  or  injury  caused  by  the  vehicle.  Easy  identification prevents  inconvenience  and  prejudice  to  a  third  party  injured  by  one  who  is  unknown  or  unidentified.  (NOSTRADAMUS  VILLANUEVA  vs.  PRISCILLA  R.  DOMINGO  and  LEANDRO  LUIS  R.  DOMINGO, G.R. No. 144274.  September 20, 2004)

LAST CLEAR CHANCE

The  doctrine  states  that  where  both  parties  are  negligent  but  the  negligent  act  of  one  is  appreciably  later  than  that  of  the  other,  or  where  it  is  impossible  to  determine  whose  fault  or  negligence  caused  the  loss,  the  one  who  had  the  last  clear  opportunity  to  avoid  the  loss  but  failed  to  do  so,  is  chargeable  with  the  loss. (PHILIPPINE  NATIONAL  RAILWAYS  vs.  BRUNTY,  G.R.  No. 169891, 02 November 2006) The doctrine applies to a suit between the owners and drivers  of two colliding vehicles. It does not apply where a passenger demands responsibility from the  carrier  to  enforce  its  contractual  obligations,  for  it  would  be  inequitable  to  exempt  the  negligent  driver/owner  on  the  ground  that  the  other  driver  was  guilty  of  negligence.  (TIU  vs.  ARRIESGADO, et al., GR 138060, 01 September 2004).

Limited Liability Rule

The liability of the shipowner or agent to the value of the vessel, its appurtenances and freightage earned in the voyage, provided that the owner or agent abandons the vessel. When the vessel is totally lost, in which case abandonment is not required because there is no vessel to abandon, the liability of the shipowner or agent for damages is extinguished. (Phil-Nippon Kyoei, Corp. vs. Gudelosao, 796 SCRA 508, G.R. No. 181375 July 13, 2016)

BILL OF LADING

The 24 hour claim requirement has been construed as a condition precedent to the accrual of a  right  of  action  against  a  carrier  for  loss  of,  or  damage  to,  the  goods.  The  shipper  or  consignee  must allege and prove the fulfillment of the condition. Otherwise, no right of action against the carrier  can  accrue  in  favor  of  the  former.  (UCPB  GENERAL  INSURANCE  vs.  ABOITIZ  SHIPPING  CORP., et al., G.R. No. 168433, 10 February 2009) 

What is a Bill of Lading?

Q39: A written acknowledgement, signed by the master of a vessel or other authorized agent of the carrier, that he has received the described goods from the shipper, to be transported on the expressed terms to the described place of destination, and to be delivered there to the designated consignee or parties [70 Am. Jur. 2d 924].

It is not, however, indispensable for the creation of a contract of carriage. [Cia. Maritima v. Ins. Co. of North America (1964)].

In the absence of a bill of lading, disputes shall be determined by the legal proofs which the parties may present in support of their respective claims, according to the general provisions established in the Code of Commerce for commercial contracts [Art. 354, Code of Commerce].

A bill of lading operates both as a receipt and as a contract. It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated. As a contract, it names the parties, which includes the consignee, fixes the route, destination, and freight rates or charges, and stipulates the rights and obligations assumed by the parties. Being a contract, it is the law between the parties who are bound by its terms and conditions provided that these are not contrary to law, morals, good customs, public order and public policy. Also, being a contract, a bill of lading is subject to the Parol Evidence Rule. [Magellan Manufacturing Marketing Corp. v. CA, G.R. No. 95529 (1991)]

Limit of liability under the COGSA

Under Sec. 4(5) of the COGSA, when the shipper fails to declare the value of the goods in the bill of lading, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding US$500 per package.

This means that the shipper is solely responsible for the loading of the container while the carrier was oblivious to the contents of the shipment. Protection against pilferage of the shipment was the consignee’s lookout. (Marina Port Services v. American Home Assurance Corporation, G.R. No. 201822, August 12, 2015)

Thus, where there is a loss/damage to goods covered by contracts of carriage from a foreign port to a Philippine port and there is an absence of a shipper’s declaration of the value of the goods in the bill of lading, the rule on package limitation liability of US$500 per package shall apply. (Philam Insurance Company, Inc. v. Heung-A Shipping Corporation and Wallem Philippines Shipping, Inc., G.R. No. 187701, July 23, 2014)

Notice requirement under the COGSA

Failure to comply with the notice requirement shall not affect or prejudice the right of the shipper to bring suit within one year after the delivery of the goods. (Philam Insurance Company, Inc. v. Heung-A Shipping Corporation and Wallem Philippines Shipping, Inc., G.R. No. 187701, July 23, 2014)

It is noted that the term “carriage of goods” covers the period from the time when the goods are loaded to the time when they are discharged from the ship; thus, it can be inferred that the period of time when the goods have been discharged from the ship and given to the custody of the arrastre operator is not covered by the COGSA.

The prescriptive period for filing an action for the loss or damage of the goods under the COGSA is found in paragraph (6), Section 3, thus:

Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery.

Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the person taking delivery thereof. 

However, the COGSA does not mention that an arrastre operator may invoke the prescriptive period of one year; hence, it does not cover the arrastre operator. ( INSURANCE COMPANY OF NORTH AMERICA v. ASIAN TERMINALs, INC. G.R. No. 180784 February 15, 2012)

It must be emphasized that not all instances of bad weather may be categorized as “storms” or “perils of the sea” within the meaning of the provisions of the Civil Code and COGSA on common carriers. To be considered absolutory causes under either statute, bad weather conditions must reach a certain threshold of severity. 

According to the New Civil Code, 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 Code takes precedence as the primary law over the rights and obligations of common carriers with the Code of Commerce and COGSA applying suppletorily.

Besides, petitioner itself later conceded in its Reply that the Civil Code provisions on common carriers are primarily applicable to the present dispute, while COGSA only applies in a suppletory manner.

(TRANSIMEX CO. v. MAFRE ASIAN INSURANCE CORP. G.R. No. 190271, September 14, 2016)

Common Carriers

SUBSECTION 1. General Provisions

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.

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

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.

SUBSECTION 2. Vigilance Over Goods

Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only:

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

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.

Article 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733.

Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for 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.

Article 1737. The common carrier’s duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu.

Article 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.

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

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

Article 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.

Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.

Article 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order.

Article 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.

Article 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:

(1) That the goods are transported at the risk of the owner or shipper;

(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;

(3) That the common carrier need not observe any diligence in the custody of the goods;

(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported;

(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;

(6) That the common carrier’s liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished;

(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.

Article 1746. An agreement limiting the common carrier’s liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation.

Article 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier’s liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.

Article 1748. An agreement limiting the common carrier’s liability for delay on account of strikes or riots is valid.

Article 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.

Article 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.

Article 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier’s liability is reasonable, just and in consonance with public policy.

Article 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

Article 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.

Article 1754. The provisions of articles 1733 to 1753 shall apply to the passenger’s baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.

SUBSECTION 3. Safety of Passengers

Article 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.

Article 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.

Article 1757. The responsibility of a common carrier for the safety of passengers as required in articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise.

Article 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier’s liability for negligence is valid, but not for willful acts or gross negligence.

The reduction of fare does not justify any limitation of the common carrier’s liability.

Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

Article 1760. The common carrier’s responsibility prescribed in the preceding article cannot be eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.

Article 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.

Article 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.

Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier’s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

SUBSECTION 4. Common Provisions

Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

Article 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after due hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section.

Article 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.

2015 Bar Exam

III

C. Are common carriers liable for injuries to passengers even if they have observed ordinary diligence and care? Explain. (2%)

(C) Yes, common carriers are liable for injuries to passengers even if the carriers observed ordinary diligence and care, because the obligation imposed upon them by law, is to exercise extraordinary diligence. Common carriers are bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances (Article 1755 of the Civil Code).

2016 Bar Exam

VI.

Nautica Shipping Lines (Nautica) bought a second hand passenger ship from Japan. It modified the design of the bulkhead of the deck of the ship to accommodate more passengers. The ship sunk with its passengers in Tablas Strait due to heavy rains brought by the monsoon. The heirs of the passengers sued Nautica for its liability as a common carrier based on the reconfiguration of the bulkhead which may have compromised the stability of the ship. Nautica raised the defense that the monsoon is a fortuitous event and, at most, its liability is prescribed by the Limited Liability Rule. Decide the reasons. (5%)

SUGGESTED ANSWER

The limited liability rule will not apply in this case because there was contributory negligence on the part of the ship owner. The reconfiguration of the bulkhead of the deck of the ship to accommodate more passengers made the vessel unseaworthy (Philippine American General Insurance Company v. Court of Appeals, G.R. No. 116940, June 11, 1997, 273 SCRA 262).

ALTERNATIVE ANSWER

Monsoon rain have been jurisprudentially considered as force majeure. It being the cause of the accident, the ship owner should not be liable. Reconfiguration of the bulk head to accommodate more passengers per se does not amount to contributory negligence which will bar the ship owner to claim the defense of force majeure provided that it exercised due diligence before, during and after the incident to prevent loss or injury.

2012 Bar Exam

The AAA Bus Company picks up passengers along EDSA. X, the conductor, while on board the bus, drew his gun and randomly shot the passengers inside. As a result, Y, a passenger, was shot and died instantly. Is AAA Bus Company liable?

1. The bus company is not liable for as long as the bus company can show that when they hired X, they did the right selection process.
2. The bus company cannot be held liable because what X did is not part of his responsibility
3. The bus company is liable because common carriers are liable for the negligence or willful act of its employees even though they acted beyond the scope of their responsibility.
4. The bus company is not liable because there is no way that the bus company can anticipate the act of X.

SUGGESTED ANSWER

C. The bus company is liable because common carriers are liable for the negligence or willful act of its employees even though they acted beyond the scope of their responsibility.