Concept of Common Carrier

No. L-47822. December 22, 1988.

*

PEDRO DE GUZMAN, petitioner, vs. COURT OF APPEALS and
ERNESTO CENDAA, respondents.

Common Carriers; Definition of; Art. 1732 of the Civil Code
makes no distinctions between a person or enterprise offering
transportation service on a regular or scheduled basis and such
service on an occasional, episodic or unscheduled basis.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 (in local idiom, as a
sideline). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on
a regular or scheduledbasis and one offering such service on
an occasional, episodic or unscheduled basis. Neither does Article
1732 distinguish between a carrier offering its services to the
general public, i.e., the general community or population, and
one who offers services or solicits business only from a
narrow segment of the general population. We think that Article
1733 deliberately refrained from making such distinctions.
Same; Same; Same; The concept of common carrier under
Art. 1732 coincides with the notion of Public Service under the
Public Service Act (CA No. 1416).So understood, the concept of
common carrier under Article 1732 may be seen to coincide
neatly with the notion of public service, under the Public Service
Act (Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in the
Civil Code. Under Section 13, paragraph (b) of the Public Service
Act, public service includes: x x x every person that now or
hereafter may own, operate, manage, or control in the Philippines,
for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction
railway, subway motor vehicle, either for freight or passenger, or
both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or
both, shipyard, marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas, electric light, heat
and power, water supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or wireless
broadcasting stations and other similar public services. x x x.
Same; Same; Same; Same; A certificate of public convenience
is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers.The Court of Appeals
referred to the fact that private respondent held no certificate of
public convenience, and concluded he was not a common carrier.
This is palpable error. 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 private respondent 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 private respondent precisely for failing to
comply with applicable statutory requirements. The business of a
common carrier impinges directly and intimately upon the safety
and well being and property of those members of the general
community who happen to deal with such carrier. The law imposes
duties and liabilities upon common carriers for the safety and
protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely
facultative by simply failing to obtain the necessary permits and
authorizations.
Same; Same; Same; Liability of common carriers in case of
loss, destruction or deterioration or destruction of goods they
carry; Extraordinary diligence, required; Exceptions.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. The specific import of extraordinary diligence in the
care of goods transported by a common carrier is, according to
Article 1733, further expressed in Articles 1734, 1735 and 1745,
numbers 5, 6 and 7 of the Civil Code. 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. It
is important to point out that the above list of causes of loss,
destruction or deterioration which exempt the common carrier for
responsibility therefor, is a closed list. Causes falling outside the
foregoing list, even if they appear to constitute a species of force
majeure, fall within the scope of Article 1735.
Same; Same; Same; Same; Same; The hijacking of the
carriers truck does not fall within any of the five (5) categories of
exempting causes in Art. 1734.Applying the above-quoted
Articles 1734 and 1735, we note firstly that the specific cause
alleged in the instant casethe hijacking of the carriers truck
does not fall within any of the five (5) categories of exempting
causes listed in Article 1734. It would follow, therefore, that the
hijacking of the carriers vehicle must be dealt with under the
provisions of Article 1735, in other words, that the private
respondent as common carrier is presumed to have been at fault or
to have acted negligently. This presumption, however, may be
overthrown by proof of extraordinary diligence on the part of
private respondent.
Same; Same; Same; Same; Same; Under Art. 1745(6), a
common carrier is held responsible even for acts of strangers like
thieves or robbers except where such thieves or robbers acted
with grave or irresistible threat, violence or force.As noted
earlier, 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, numbers 4, 5
and 6. Article 1745 provides in relevant part: Any of the following
or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy: xxx xxx xxx (5) that the common carrier
shall not be responsible for the acts or omissions of his or its
employees; (6) that the common carriers liability for acts
committed by thieves, orof 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 responsibilityeven 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.
Same; Same; Same; Same; Same; Common carriers are not
made absolute insurers against all risks of travel and of transport
of goods and are not liable for fortuitous events; Case at bar.In
these circumstances, we hold that 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
Cendaa is not liable for the value of the undelivered merchandise
which was lost because of an event entirely beyond private
respondents control.
Characteristics

[No. 8095. November 5, 1914, and March 31, 1915.]
F C. FISHER, plaintiff, vs. YANGCO STEAMSHIP COMPANY, J.
S. STANLEY, as Acting Collector of Customs of the Philippine
Islands, IGNACIO VILLAMOR, as AttorneyGeneral of the
Philippine Islands, and W. H. BISHOP, as prosecuting
attorney of the city of Manila, respondents.
1. 1.COMMON CARRIERS; PREFERENCES AND
DISCRIMINATIONS.Whatever may have been the rule at
common law, common carriers in this jurisdiction cannot
lawf ully decline to accept a particular class of goods for
carriage to the prejudice of the traffic in those goods
unless it appears that for some sufficient reason the
discrimination against the traffic in such goods is
reasonable and necessary. Mere prejudice or whim will not
suffice. The grounds of the discrimination must be
substantial ones, such as will justify the courts in holding
the discrimination to have been reasonable and necessary
under all the circumstances of the case.
1. 2.ID.; ID.; PENAL PROVISIONS OF ACT No. 98.The
penalties prescribed for violations of Act No. 98 of the
Philippine Commission are neither excessive nor cruel and
unusual in the sense in which those words are used in the
organic legislation in force in the Islands.
1. 3.ID. ; ID. ; ID.There is nothing in that statute which
would deprive any person of his liberty "by requiring him
to engage in business against his will." The prohibition of
the statute against undue, unnecessary, or unreasonable
preferences and discriminations are merely the reasonable
regulations which the legislator has seen fit to prescribe for
the conduct of the business in which the carrier is engaged
of his own free will and accord.
1. 4.ID.; CONTROL AND REGULATION OF CARRIERS,The
nature of the business of a common carrier as a public
employment is such that it is clearly within the power of
the state to impose such just and reasonable regulations
thereon in the interest of the public as the legislator may
deem proper. Of course such regulations must not have
the effect of depriving an owner of his property without
due course of law, nor of confiscating or appropriating
private property without just compensation, nor of limiting
or prescribing irrevocably vested rights or privileges
lawfully acquired under a charter or franchise. But aside
from such constitutional limitations, the determination of
the nature and extent of the regulations which should be
prescribed rests in the hands of the legislator.
1. 5.ID. ; ID.The right to enter the public employment as a
common carrier and to offer one's services to the public for
hire does not carry with it the right to conduct that
business as one pleases, without regard to the interests of
the public, and free from such reasonable and just
regulations as may be prescribed for the protection of the
public from the reckless or careless indifference of the
carrier as to the public welfare and for the prevention of
unjust and unreasonable discriminations of any kind
whatsoever in the performance of the carrier's duties as a
servant of the public.
1. 6.ID.; ID.; JUDICIAL INTERFERENCE.The judiciary ought
not to interfere with such regulations established under
legislative sanction unless they are so plainly and palpably
unreasonable as to make their enforcement equivalent to
the taking of property for public use without such
compensation as under all the circumstances is just both
to the owner and to the public; that is, judicial interference
should never occur unless the case presents, clearly and
beyond all doubt, such a flagrant attack upon the rights of
property under the guise of regulations as to compel the
court to say that the regulations in question will have the
effect to deny just compensation for private property taken
for the public use.
1. 7.ID. ; ID.When one devotes his property to a use in
which the public has an interest, he, in effect, grants to the
public an interest in that use and must submit to be
controlled by the public for the common good to the extent
of the interest he has thus created. He may withdraw his
grant by discontinuing the use, but so long as he maintains
the use he must submit to control,
1. 8.ID. ; ID. ; EXERCISE OF POWER THROUGH BOARDS OF
COMMISSIONERS.So far beyond question is this right of
regulation that it is -well settled that the power of the
state to exercise legislative control over railroad companies
and other common carriers "in all respects necessary to
protect the public against danger, injustice and
oppression" may be exercised through boards of
commissioners.
1. 9.ID.; ID.; ACT No. 98; STATUTORY PROVISIONS.
Correctly construed
,
the provisions of the Philippine statute
(Act No. 98) do not force a common carrier to engage in
any business against his will or to make use of his facilities
in a manner or for a purpose for which they are not
reasonably adapted. It is only when he offers his facilities
as a common carrier to the public for hire, that the statute
steps in and prescribes that he must treat all alike, that he
may not pick and choose which customer he will serve,
and, specifically, that he shall not make any undue or
unreasonable preferences or discriminations whatsoever to
the prejudice not only of any person or locality, but also of
any particular kind of traffic.
1. 10.ID.; PREFERENCES AND
DISCRIMINATIONS;EXPLOSIVES.It cannot be doubted
that the refusal of a "steamship company, the owner of a
large number of vessels" engaged in the coastwise trade of
the Philippine Islands as a common carrier of merchandise,
to accept explosives for carriage on any of its vessels
subjects the traffic in such explosives to a manifest
prejudice and discrimination, and in each case it is a
question of fact whether such prejudice or discrimination is
undue, unnecessary or unreasonable.
1. 11.ID.; ID.; ID.; CONSIDERATION OF ATTENDANT
CIRCUMSTANCES.The making of a finding as to whether
a refusal, by a steamship company engaged in the
coastwise trade in the Philippine Islands as a common
carrier, to carry such products subjects any person,
locality, or the traffic in such products to an unnecessary,
undue or unreasonable prejudice or discrimination,
involves a consideration of the suitability of the vessels of
the company for the transportation of such products; the
reasonable possibility of danger or disaster resulting from
their transportation in the form and under the conditions in
which they are offered for carriage; the general nature of
the business done by the carrier, and, 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.
1. 12.ID.; ID.; ID.; ID.The mere fact that violent and
destructive explosions can be obtained by the use of
dynamite under certain conditions is not sufficient in itself
to justify the refusal of a vessel, duly licensed as a
common carrier of merchandise, to accept it for carriage, if
it can be proven that in the condition in which it is offered
for carriage there is no real danger to the carrier nor
reasonable ground to fear that his vessel or those on board
his vessel will be exposed to unnecessary or unreasonable
risks in transporting it, having in mind the nature of his
business as a common carrier engaged in the coastwise
trade in the Philippine Islands, and his duty as a servant of
the public.engaged in a public employment.
1. 13.ID.; ID.; ID.; ID.If by the exercise of due diligence,
taking all reasonable precautions, the danger of explosions
can be eliminated, the carrier would not be justified in
subjecting the traffic in this commodity to prejudice or
discrimination by proof that there would be a possibility of
danger from explosion when no such precautions are
taken.
1. 14.ID. ; ID.; ID.; ID.The traffic in dynamite, gunpowder
and other explosives is vitally essential to the material and
general welf are of the inhabitants of these Islands, and if
these products are to continue in general use throughout
the Philippines they must be transported by water from
port to port in the various islands which make up the
Archipelago. It follows that the refusal by a particular
vessel engaged as a common carrier of merchandise in the
coastwise trade in the Philippine Islands to accept such
explosives for carriage constitutes a violation of the
prohibitions against discrimination penalized under the
statute, unless it can be shown that there is so real and
substantial a danger of disaster necessarily involved in the
carriage of any or all of these articles of merchandise as to
render such ref usal a due or a necessary or a reasonable
exercise of prudence and discretion on the part of the
shipowner.
[No. 8686. July 30, 1915.]
THE UNITED STATES, plaintiff and appellee, vs.PASCUAL
QUINAJON and EUGENIO QUITORIANO, defendants and
appellants.
1. 1.COMMON CARRIERS; WHO ARE COMMON CARRIERS;ACT
No. 98 CONSTRUED.A common carrier is a person or
corporation whose regular business is to carry passengers
or property for all persons who may choose to employ and
remunerate him. A common carrier is a person or
corporation who undertakes to carry goods or persons for
hire. Act No. 98 of the United States Philippine Commission
is an Act to regulate commerce in the Philippine Islands.
1. 2.ID.; PREFERENCES AND DISCRIMINATIONS.Act No. 98
provides that no common carrier shall, directly or
indirectly, by any special rate, rebate, drawback, or other
device, charge, demand, collect, or receive from any
person or persons a greater or less compensation for any
services rendered in the transportation of passengers or
property, between points in the Philippine Islands, than he
charges, demands, collects, or receives from any other
person or persons, for doing a like or contemporaneous
service, under substantially similar conditions or
circumstances. A common carrier cannot, under the law,
give any unnecessary or unreasonable preference or
advantage to any particular person, company, firm,
corporation or locality, or any particular kind of traffic, or
subject any particular person, company, firm, or
corporation or locality, or any particular kind of traffic, to
any undue or unreasonable prejudice or discrimination
whatsoever.
1. 3.ID. ; ID.Said Act No. 98 does not require that the same
charge shall be made for carrying passengers or property,
unless all the conditions are alike and contemporaneous. It
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. Common
carriers can not make a different rate to different persons
for carrying persons or merchandise, unless the actual cost
of handling and shipping is different. It is when the price
charged is for the purpose of favoring persons or localities
or particular kinds of merchandise, that the law intervenes
and prohibits. It is favoritism and discrimination which the
law prohibits. If the services are alike and
contemporaneous, discrimination in the price charged is
prohibited.
G.R. No. 131621. September 28, 1999.
*

LOADSTAR SHIPPING CO., INC., petitioner, vs. COURT OF
APPEALS and THE MANILA INSURANCE CO., INC.,
respondents.

Contracts; Common Carriers; Damages; The law imposes
duties and liabilities upon common carriers for the safety and
protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely
facultative by simply failing to obtain the necessary permits and
authorizations.The Court of Appeals referred to the fact that
private respondent held no certificate of public convenience, and
concluded he was not a common carrier. This is palpable error. 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
private respondent 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
private respondent precisely for failing to comply with applicable
statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and
property of those members of the general community who happen
to deal with such carrier. The law imposes duties and liabilities
upon common carriers for the safety and protection of those who
utilize their services and the law cannot allow a common carrier to
render such duties and liabilities merely facultative by simply
failing to obtain the necessary permits and authorizations.
Same; Same; Same; For a vessel to be seaworthy, it must be
adequately equipped for the voyage and manned with a sufficient
number of competent officers and crew.Moving on to the second
assigned error, we find that the M/V Cherokee was not seaworthy
when it embarked on its voyage on 19 November 1984. The vessel
was not even sufficiently manned at the time. For a vessel to be
seaworthy, it must be adequately equipped for the voyage and
manned with a sufficient number of competent officers and crew.
The failure of a common carrier to maintain in seaworthy condition
its vessel involved in a contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code.
Same; Same; Same; Since it was remiss in the performance
of its duties, LOADSTAR cannot hide behind the limited liability
doctrine to escape responsibility for the loss of the vessel and its
cargo.Neither do we agree with LOADSTARs argument that the
limited liability theory should be applied in this case. The doctrine
of limited liability does not apply where there was negligence on
the part of the vessel owner or agent. LOADSTAR was at fault or
negligent in not maintaining a seaworthy vessel and in having
allowed its vessel to sail despite knowledge of an approaching
typhoon. In any event, it did not sink because of any storm that
may be deemed as force majeure, inasmuch as the wind condition
in the area where it sank was determined to be moderate. Since it
was remiss in the performance of its duties, LOADSTAR cannot hide
behind the limited liability doctrine to escape responsibility for
the loss of the vessel and its cargo.
Same; Same; Same; A stipulation reducing the one-year
period for filing the action for recovery is null and void and must be
struck down.Neither is there merit to the contention that the
claim in this case was barred by prescription. MICs cause of action
had not yet prescribed at the time it was concerned. Inasmuch as
neither the Civil Code nor the Code of Commerce states a specific
prescriptive period on the matter, the Carriage of Goods by Sea Act
(COGSA)which provides for a one-year period of limitation on
claims for loss of, or damage to, cargoes sustained during transit
may be applied suppletorily to the case at bar. This one-year
prescriptive period also applies to the insurer of the goods. In this
case, the period for filing the action for recovery has not yet
elapsed. Moreover, a stipulation reducing the one-year period is
null and void; it must, accordingly, be struck down.

G.R. No. 125948. December 29, 1998.
*

FIRST PHILIPPINE INDUSTRIAL CORPORATION,
petitioner, vs. COURT OF APPEALS, HONORABLE PATERNO V.
TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in
her official capacity as City Treasurer of Batangas,
respondents.

Contracts; Common Carriers; A common carrier is 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.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. Article 1732 of the Civil Code defines a common carrier
as any person, corporation, firm or association engaged in the
business of carrying or transporting passengers or goods or both,
by land, water, or air, for compensation, offering their services to
the public.
Same; Same; Test for determining whether a party is a
common carrier of goods.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.
Same; Same; The fact that petitioner has a limited clientele
does not exclude it from the definition of a common carrier.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.
Same; Same; Words and Phrases; 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.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.
Same; Same; Taxation; Legislative intent in excluding from
the taxing power of the local government unit the imposition of
business tax against common carriers is to prevent a duplication of
the so-called common carriers tax.It is clear that the legislative
intent in excluding from the taxing power of the local government
unit the imposition of business tax against common carriers is to
prevent a duplication of the so-called common carriers tax.
Petitioner is already paying three (3%) percent common carriers
tax on its gross sales/earnings under the National Internal Revenue
Code. To tax petitioner again on its gross receipts in its
transportation of petroleum business would defeat the purpose of
the Local Government Code.


G.R. No. 148496. March 19, 2002.
*

VIRGINES CALVO doing business under the name and style
TRANSORIENT CONTAINER TERMINAL SERVICES, INC.,
petitioner, vs. UCPB GENERAL INSURANCE CO., INC.
(formerly Allied Guarantee Ins. Co, Inc.), respondent.

Common Carriers; Customs Brokers; A customs broker is a
common carrierthe concept of common carrier under Article
1732 of the Civil Code may be seen to coincide nearly with the
notion of public service, under the Public Service Act
(Commonwealth Act No. 1416) which at least partially supplements
the law on common carriers set forth in the Civil Code.Petitioner
contends that contrary to the findings of the trial court and the
Court of Appeals, she is not a common carrier but a private carrier
because, as a customs broker and warehouseman, she does not
indiscriminately hold her services out to the public but only offers
the same to select parties with whom she may contract in the
conduct of her business. The contention has no merit. In De
Guzman v. Court of Appeals, the Court dismissed a similar
contention and held the party to be a common carrier, thusThe
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 . . . Article 1732
also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a
carrier offering its services to the general public, i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population.
We think that Article 1732 deliberately refrained from making such
distinctions. So understood, the concept of common carrier under
Article 1732 may be seen to coincide neatly with the notion of
public service, under the Public Service Act (Commonwealth Act
No. 1416, as amended) which at least partially supplements the
law on common carriers set forth in the Civil Code.
Same; Same; There is greater reason for holding a person
who is a customs broker to be a common carrier because the
transportation of goods is an integral part of her business.There
is greater reason for holding petitioner to be a common carrier
because the transportation of goods is an integral part of her
business. To uphold petitioners contention would be to deprive
those with whom she contracts the protection which the law affords
them notwithstanding the fact that the obligation to carry goods for
her customers, as already noted, is part and parcel of petitioners
business.
Same; Same; Words and Phrases; Extraordinary Diligence,
Explained; 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 such case.As to petitioners liability, Art. 1733 of the Civil Code
provides: 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. . . . In Compania Maritima v. Court of Appeals, the
meaning of extraordinary diligence in the vigilance over goods
was explained thus: The extraordinary diligence in the vigilance
over the goods tendered for shipment requires the common carrier
to know and to follow the required precaution for avoiding damage
to, or destruction of the goods entrusted to it for sale, carriage and
delivery. It requires common carriers to render service with the
greatest skill and foresight and to use all reasonable means to
ascertain the nature and characteristic of goods tendered for
shipment, and to exercise due care in the handling and stowage,
including such methods as their nature requires.
Same; Same; To prove the exercise of extraordinary
diligence, a customs broker must do more than merely show the
possibility that some other party could be responsible for the
damage.Anent petitioners insistence that the cargo could not
have been damaged while in her custody as she immediately
delivered the containers to SMCs compound, suffice it to say that
to prove the exercise of extraordinary diligence, petitioner must do
more than merely show the possibility that some other party could
be responsible for the damage. It must prove that it used all
reasonable means to ascertain the nature and characteristic of
goods tendered for [transport] and that [it] exercise[d] due care in
the handling [thereof]. Petitioner failed to do this.
Same; Same; If the improper packing or the defects in the
container are known to the carrier or his employees or apparent
upon ordinary observation, but he nevertheless accepts the same
without protest or exception notwithstanding such condition, he is
not relieved of liability for damage resulting therefrom.The rule is
that if the improper packing or, in this case, the defect/s in the
container, is/are known to the carrier or his employees or apparent
upon ordinary observation, but he nevertheless accepts the same
without protest or exception notwithstanding such condition, he is
not relieved of liability for damage resulting therefrom. In this
case, petitioner accepted the cargo without exception despite the
apparent defects in some of the container vans. Hence, for failure
of petitioner to prove that she exercised extraordinary diligence in
the carriage of goods in this case or that she is exempt from
liability, the presumption of negligence as provided under Art. 1735
holds

G.R. No. 149038. April 9, 2003.
*

PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY,
petitioner, vs. PKS SHIPPING COMPANY, respondent.

Common Carriers; Actions; Appeals; Questions of
Fact;Questions of Law; Words and Phrases; Conclusions derived
from factual findings are not necessarily just matters of fact as
when they are so linked to, or inextricably intertwined with, a
requisite appreciation of the applicable law, in which instance, the
conclusions made could well be raised as being appropriate issues
in a petition for review before the Supreme Court; An issue
whether a carrier is private or common on the basis of the facts
found by a trial court or the appellate court can be a valid and
reviewable question of law.The findings of fact made by the Court
of Appeals, particularly when such findings are consistent with
those of the trial court, may not at liberty be reviewed by this
Court in a petition for review under Rule 45 of the Rules of Court.
The conclusions derived from those factual findings, however, are
not necessarily just matters of fact as when they are so linked to,
or inextricably intertwined with, a requisite appreciation of the
applicable law. In such instances, the conclusions made could well
be raised as being appropriate issues in a petition for review before
this Court. Thus, an issue whether a carrier is private or common
on the basis of the facts found by a trial court or the appellate
court can be a valid and reviewable question of law.
Same; Article 1732 of the Civil Code 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, and neither does it 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.The prevailing
doctrine on the question is that enunciated in the leading case
of De Guzman vs. Court of Appeals Applying Article 1732 of the
Code, in conjunction with Section 13(b) of the Public Service Act,
this Court has held: 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 (in local idiom, as 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.
We think that Article 1732 deliberately refrained from making such
distinctions. So understood, the concept of common carrier under
Article 1732 may be seen to coincide neatly with the notion of
public service, under the Public Service Act (Commonwealth Act
No. 1416, as amended) which at least partially supplements the
law on common carriers set forth in the Civil Code.
Same; Words and Phrases; Much of the distinction between a
common or public carrier and a private or special carrier lies in
the character of the business, such that if the undertaking is an
isolated transaction, not a part of the business or occupation, and
the carrier does not hold itself out to carry the goods for the
general public or to a limited clientele, although involving the
carriage of goods for a fee, the person or corporation providing
such service could very well be just a private carrier; The concept
of a common carrier does not change merely because individual
contracts are executed or entered into with patrons of the carrier
such restrictive interpretation would make it easy for a common
carrier to escape liability by the simple expedient of entering into
those distinct agreements with clients.Much of the distinction
between a common or public carrier and a private or special
carrier lies in the character of the business, such that if the
undertaking is an isolated transaction, not a part of the business or
occupation, and the carrier does not hold itself out to carry the
goods for the general public or to a limited clientele, although
involving the carriage of goods for a fee, the person or corporation
providing such service could very well be just a private carrier. A
typical case is that of a charter party which includes both the
vessel and its crew, such as in a bareboat or demise, where the
charterer obtains the use and service of all or some part of a ship
for a period of time or a voyage or voyages and gets the control of
the vessel and its crew. Contrary to the conclusion made by the
appellate court, its factual findings indicate that PKS Shipping has
engaged itself in the business of carrying goods for others,
although for a limited clientele, undertaking to carry such goods for
a fee. The regularity of its activities in this area indicates more
than just a casual activity on its part. Neither can the concept of a
common carrier change merely because individual contracts are
executed or entered into with patrons of the carrier. Such
restrictive interpretation would make it easy for a common carrier
to escape liability by the simple expedient of entering into those
distinct agreements with clients.
Same; Extraordinary Diligence; Article 1733 of the Civil Code
requires common carriers to observe extraordinary diligence in the
vigilance over the goods they carry.Addressing now the issue of
whether or not PKS Shipping has exercised the proper diligence
demanded of common carriers, Article 1733 of the Civil Code
requires common carriers to observe extraordinary diligence in the
vigilance over the goods they carry. In case of loss, destruction or
deterioration of goods, common carriers are presumed to have
been at fault or to have acted negligently, and the burden of
proving otherwise rests on them. The provisions of Article 1733,
notwithstanding, common carriers are exempt from liability for
loss, destruction, or deterioration of the goods due to any of the
following causes: (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.
Evidence; Appeals; Findings of fact of the Court of Appeals
generally conclude the Supreme Court; Exceptions.Findings of
fact of the Court of Appeals generally conclude this Court; none of
the recognized exceptions from the rule(1) when the factual
findings of the Court of Appeals and the trial court are
contradictory; (2) when the conclusion is a finding grounded
entirely on speculation, surmises, or conjectures; (3) when the
inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible; (4) when there is a
grave abuse of discretion in the appreciation of facts; (5) when the
appellate court, in making its findings, went beyond the issues of
the case and such findings are contrary to the admissions of both
appellant and appellee; (6) when the judgment of the Court of
Appeals is premised on a misapprehension of facts; (7) when the
Court of Appeals failed to notice certain relevant facts which, if
properly considered, would justify a different conclusion; (8) when
the findings of fact are themselves conflicting; (9) when the
findings of fact are conclusions without citation of the specific
evidence on which they are based; and (10) when the findings of
fact of the Court of Appeals are premised on the absence of
evidence but such findings are contradicted by the evidence on
recordwould appear to be clearly extant in this instance.

G.R. No. 147246. August 19, 2003.
*

ASIA LIGHTERAGE AND SHIPPING, INC.,
petitioner, vs.COURT OF APPEALS and PRUDENTIAL
GUARANTEE AND ASSURANCE, INC., respondents.

Civil Law; Contracts; Common Carriers; Definition.The
definition of common carriers in Article 1732 of the Civil Code
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. We also did not distinguish
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. Further, we ruled that
Article 1732 does not distinguish between a carrier offering its
services to the general public, and one who offers services or
solicits business only from a narrow segment of the general
population.
Same; Same; Same; Determination of a common carrier.
The test to determine a common carrier is whether the given
undertaking is a part of the business engaged in by the carrier
which he has held out to the general public as his occupation rather
than the quantity or extent of the business transacted.
Same; Same; Same; Presumption of Negligence; Common
carriers are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated.
Common carriers are bound to observe extraordinary diligence in
the vigilance over the goods transported by them. They are
presumed to have been at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated. To overcome the
presumption of negligence in the case of loss, destruction or
deterioration of the goods, the common carrier must prove that it
exercised extraordinary diligence. There are, however, exceptions
to this rule. Article 1734 of the Civil Code enumerates the instances
when the presumption of negligence does not attach.

G.R. No. 186312. June 29, 2010.
*

SPOUSES DANTE CRUZ and LEONORA CRUZ, petitioners, vs.
SUN HOLIDAYS, INC., respondent.

Civil Law; Common Carriers; Definition of Common Carriers.
As De Guzman instructs, Article 1732 of the Civil Code defining
common carriers has deliberately refrained from making
distinctions on whether the carrying of persons or goods is the
carriers principal business, whether it is offered on a regular basis,
or whether it is offered to the general public. The intent of the law
is thus to not consider such distinctions. Otherwise, there is no
telling how many other distinctions may be concocted by
unscrupulous businessmen engaged in the carrying of persons or
goods in order to avoid the legal obligations and liabilities of
common carriers.
Same; Same; Degree of Diligence Required; From the
nature of their business and for reasons of public policy, common
carriers are bound to observe extraordinary diligence for the safety
of the passengers transported by them, according to all the
circumstances of each case.Under the Civil Code, common
carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence for the safety
of the passengers transported by them, according to all the
circumstances of each case. They 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 due
regard for all the circumstances.
Same; Same; Negligence; Presumption of Negligence;
When a passenger dies or is injured in the discharge of a contract
of carriage, it is presumed that the common carrier is at fault or
negligent.When a passenger dies or is injured in the discharge of
a contract of carriage, it is presumed that the common carrier is at
fault or negligent. In fact, there is even no need for the court to
make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome
by evidence that the carrier exercised extraordinary diligence.
Same; Same; Same; Fortuitous Event; Element of a
Fortuitous Event.The elements of a fortuitous event are: (a)
the cause of the unforeseen and unexpected occurrence, or the
failure of the debtors to comply with their obligations, must have
been independent of human will; (b) the event that constituted
the caso fortuito must have been impossible to foresee or, if
foreseeable, impossible to avoid; (c) the occurrence must have
been such as to render it impossible for the debtors to fulfill their
obligation in a normal manner; and (d) the obligor must have been
free from any participation in the aggravation of the resulting
injury to the creditor.
Same; Same; Same; Same; To fully free a common carrier
from any liability, the fortuitous event must have been the
proximate and only cause of the loss.To fully free a common
carrier from any liability, the fortuitous event must have been
the proximate and only cause of the loss. And it should have
exercised due diligence to prevent or minimize the loss before,
during and after the occurrence of the fortuitous event.
Same; Same; Same; Damages; Liability of a common
carrier in breach of its contract of carriage resulting in the death of
a passenger.Article 1764 vis--vis Article 2206 of the Civil Code
holds the common carrier in breach of its contract of carriage that
results in the death of a passenger liable to pay the following: (1)
indemnity for death, (2) indemnity for loss of earning capacity and
(3) moral damages

Distinguished from Private Carrier
No. L-25599. April 4, 1968.
HOME INSURANCE COMPANY, plaintiff-
appellee, vs.AMERICAN STEAMSHIP AGENCIES, INC. and
LUZON STEVEDORING CORPORATION, defendants,
AMERICAN STEAMSHIP AGENCIES, INC., defendant-
appellant.
Code of Commerce; Charter party; Civil Code on common
carriers does not apply to charter party.The Civil Code provisions
on common carriers should not apply where the common carrier is
not acting as such but as a private carrier. Under American
jurisprudence, a common carrier undertaking to carry a special
cargo or chartered to a special person only, becomes a private
carrier. As a private carrier, a stipulation exempting the owner
from liability for the negligence of its agent is valid.
Same; Same, Stipulation on absolving owner from liability for
loss due to negligence of its agent is valid.The stipulation in the
charter party absolving the owner from liability for loss due to the
negligence of its agent would be void only if the strict public policy
governing common carriers is applied. Such policy has no force
where the public at large is not involved, as in the case of a ship
totally chartered for the use of a single party. The stipulation
exempting the owner from liability for the negligence of its agent is
not against public policy and is deemed valid.
Civil Code; Common carriers; Origin of provisions.The
provisions of our Civil Code on common carriers were taken from
Anglo-American law.
Code of Commerce; Bill of lading; Nature; Not the contract in
a charter party.In a charter of the entire vessel, the bill of lading
issued by the master to the charterer, as shipper, is in fact and
legal contemplation merely a receipt and a document of title, not a
contract, for the contract is the charter party.

Nos. L-61461 & 61501. August 21, 1987.
*


EPITACIO SAN PABLO, (Substituted by Heirs of E. San
Pablo), petitioners, vs. PANTRANCO SOUTH EXPRESS, INC.,
respondent.
CARDINAL SHIPPING CORPORATION,
petitioner, vs.HONORABLE BOARD OF TRANSPORTATION
AND PANTRANCO SOUTH EXPRESS, INC., respondents.

Transportation; Public Utilities; Matnog and Allen are
separated by an open sea it cannot be considered as a continuation
of highway.Considering the environmental circumstances of the
case, the conveyance of passengers, trucks and cargo from Matnog
to Allen is certainly not a ferryboat service but a coastwise or
interisland shipping service. Under no circumstance can the sea
between Matnog and Allen be considered a continuation of the
highway. While a ferryboat service has been considered as a
continuation of the highway when crossing rivers or even lakes,
which are small body of waters separating the land, however, when
as in this case the two terminals, Matnog and Allen are separated
by an open sea it can not be considered as a continuation of the
highway. Respondent PANTRANCO should secure a separate CPC
for the operation of an interisland or coastwise shipping service in
accordance with the provisions of law. Its CPC as a bus
transportation cannot be merely amended to include this water
service under the guise that it is a mere private ferry service.
Same; Same; Considering that the authority granted to
Pantranco is to operate a private ferry, it can assert that it cannot
be held to account as a common carrier which situation will
jeopardize the safety and interest of its passengers and cargo
owners.The contention of private respondent PANTRANCO that its
ferry service operation is as a private carrier, not as a common
carrier for its exclusive use in the ferrying of its passenger buses
and cargo trucks is absurd. PANTRANCO does not deny that it
charges its passengers separately from the charges for the bus
trips and issues separate tickets whenever they board the M/V
"Black Double" that crosses Matnog to Allen, PANTRANCO cannot
pretend that in issuing tickets to its passengers it did so as a
private carrier and not as a common carrier. The Court does not
see any reason why inspite of its amended franchise to operate a
private ferryboat service it cannot accept walk-in passengers just
for the purpose of crossing the sea between Matnog and Allen.
Indeed evidence to this effect has been submitted. What is even
more difficult to comprehend is that while in one breath respondent
PANTRANCO claims that it is a private carrier insofar as the
ferryboat service is concerned, in another breath it states that it
does not thereby abdicate from its obligation as a common carrier
to observe extraordinary diligence and vigilance in the
transportation of its passengers and goods. Nevertheless,
considering that the authority granted to PANTRANCO is to operate
a private ferry, it can still assert that it cannot be held to account
as a common carrier towards its passengers and cargo. Such an
anomalous situation that will jeopardize the safety and interests of
its passengers and the cargo owners cannot be allowed.
Same; Same.Thus the Court holds that the water transport
service between Matnog and Allen is not a ferryboat service but a
coastwise or interisland shipping service. Before private respondent
may be issued a franchise or CPC for the operation of the said
service as a common carrier, it must comply with the usual
requirements of filing an application, payment of the fees,
publication, adducing evidence at a hearing and afffording the
oppositors the opportunity to be heard, among others, as provided
by law.
G.R. No. 112287. December 12, 1997.
*

NATIONAL STEEL CORPORATION, petitioner, vs.COURT OF
APPEALS AND VLASONS SHIPPING, INC., respondents.
G.R. No. 112350. December 12, 1997.
*

VLASONS SHIPPING, INC., petitioner, vs. COURT OF
APPEALS AND NATIONAL STEEL CORPORATION,
respondents.

Common Carriers; Private Carriers; Ships and Shipping; It has
been held that the true test of a common carrier is the carriage of
passengers or goods, provided it has space, for all who opt to avail
themselves of its transportation service for a fee.Article 1732 of
the Civil Code defines a common carrier as 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. It has been
held that the true test of a common carrier is the carriage of
passengers or goods, provided it has space, for all who opt to avail
themselves of its transportation service for a fee. A carrier which
does not qualify under the above test is deemed a private carrier.
Generally, private carriage is undertaken by special agreement
and the carrier does not hold himself out to carry goods for the
general public. The most typical, although not the only form of
private carriage, is the charter party, a maritime contract by which
the charterer, a party other than the shipowner, obtains the use
and service of all or some part of a ship for a period of time or a
voyage or voyages.
Same; Same; Same; The rights and obligations of a private
carrier and a shipper, including their respective liability for damage
to the cargo, are determined primarily by stipulations in their
contract of private carriage or charter party.In the instant case, it
is undisputed that VSI did not offer its services to the general
public. As found by the Regional Trial Court, it carried passengers
or goods only for those it chose under a special contract of charter
party. As correctly concluded by the Court of Appeals, the MV
Vlasons I was not a common but a private carrier. Consequently,
the rights and obligations of VSI and NSC, including their
respective liability for damage to the cargo, are determined
primarily by stipulations in their contract of private carriage or
charter party.
Same; Same; Same; Evidence; Burden of Proof; Code of
Commerce; In an action against a private carrier for loss of, or
injury to, cargo, the burden is on the plaintiff to prove that the
carrier was negligent or unseaworthy, and the fact that the goods
were lost or damaged while in the carriers custody does not put
the burden of proof on the carrier.This view finds further support
in the Code of Commerce which pertinently provides: Art.
361.Merchandise shall be transported at the risk and venture of the
shipper, if the contrary has not been expressly
stipulated. Therefore, the damage and impairment suffered by the
goods during the transportation, due to fortuitous event, force
majeure, or the nature and inherent defect of the things, shall be
for the account and risk of the shipper. The burden of proof of
these accidents is on the carrier. Art. 362. The carrier, however,
shall be liable for damages arising from the cause mentioned in the
preceding article if proofs against him show that they occurred on
account of his negligence or his omission to take the precautions
usually adopted by careful persons, unless the shipper committed
fraud in the bill of lading, making him to believe that the goods
were of a class or quality different from what they really were.
Because the MV Vlasons I was a private carrier, the shipowners
obligations are governed by the foregoing provisions of the Code of
Commerce and not by the Civil Code which, as a general rule,
places the prima facie presumption of negligence on a common
carrier. It is a hornbook doctrine that: In an action against a
private carrier for loss of, or injury to, cargo, the burden is on the
plaintiff to prove that the carrier was negligent or unseaworthy,
and the fact that the goods were lost or damaged while in the
carriers custody does not put the burden of proof on the carrier.
Same; Same; Same; Where the factual findings of both the
trial court and the Court of Appeals coincide, the same are binding
on the Supreme Court.These questions of fact were threshed out
and decided by the trial court, which had the firsthand opportunity
to hear the parties conflicting claims and to carefully weigh their
respective evidence. The findings of the trial court were
subsequently affirmed by the Court of Appeals. Where the factual
findings of both the trial court and the Court of Appeals coincide,
the same are binding on this Court. We stress that, subject to
some exceptional instances, only questions of lawnot questions of
factmay be raised before this Court in a petition for review under
Rule 45 of the Rules of Court.
Same; Same; Same; Only questions of lawnot questions of
factmay be raised before the Supreme Court in a petition for
review under Rule 45 of the Rules of Court; Exceptions.Fuentes
v. Court of Appeals, G.R. No. 109849, pp. 6-8, February 26, 1997,
per Panganiban, J., enumerated the following instances: (1) When
the factual findings of the Court of Appeals and the trial court are
contradicttory; (2) When the conclusion is a finding grounded
entirely on speculation, surmises, or conjectures; (3) When the
inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd, or impossible; (4) When there is a
grave abuse of discretion in the appreciation of facts; (5) When the
appellate court, in making its findings, went beyond the issues of
the case, and such findings are contrary to the admissions of both
appellant and appellee; (6) When the judgment of the Court of
Appeals is premised on a misapprehension of facts; (7) When the
Court of Appeals failed to notice certain relevant facts which, if
properly considered, would justify a different conclusion; (8) When
the findings of fact are themselves conflicting; (9) When the
findings of fact are conclusions without citation of the specific
evidence on which they are based; and (10) When the findings of
fact of the Court of Appeals are premised on the absence of
evidence but such findings are contradicted by the evidence on
record.
Same; Same; Same; Stevedoring Service; A Stevedore
company engaged in discharging cargo has the duty to load the
cargo in a prudent manner, and it is liable for injury to, or loss of,
cargo caused by its negligence and where the officers and
members and crew of the vessel do nothing and have no
responsibility in the discharge of cargo by stevedores the vessel is
not liable for loss of, or damage to, the cargo caused by the
negligence of the stevedores.The fact that NSC actually accepted
and proceeded to remove the cargo from the ship during
unfavorable weather will not make VSI liable for any damage
caused thereby. In passing, it may be noted that the NSC may
seek indemnification, subject to the laws on prescription, from the
stevedoring company at fault in the discharge operations. A
stevedore company engaged in discharging cargo x x x has the
duty to load the cargo x x x in a prudent manner, and it is liable for
injury to, or loss of, cargo caused by its negligence x x x and where
the officers and members and crew of the vessel do nothing and
have no responsibility in the discharge of cargo by stevedores x x x
the vessel is not liable for loss of, or damage to, the cargo caused
by the negligence of the stevedores x x x as in the instant case.
Evidence; Hearsay Rule; Entries in official records made in the
performance of a duty by a public officer of the Philippines, or by a
person in the performance of a duty specially enjoined by law, are
prima facie evidence of the facts therein stated.We find,
however, that Exhibit 11 is admissible under a well-settled
exception to the hearsay rule per Section 44 of Rule 130 of the
Rules of Court, which provides that (e)ntries in official records
made in the performance of a duty by a public officer of the
Philippines, or by a person in the performance of a duty specially
enjoined by law, are prima facieevidence of the facts therein
stated. Exhibit 11 is an original certificate of the Philippine Coast
Guard in Cebu issued by Lieutenant Junior Grade Noli C. Flores to
the effect that the vessel VLASONS I was drylocked x x x and
PCG Inspectors were sent on board for inspection x x x. After
completion of drydocking and duly inspected by PCG Inspectors,
the vessel VLASONS I, a cargo vessel, is in seaworthy condition,
meets all requirements, fitted and equipped for trading as a cargo
vessel, was cleared by the Philippine Coast Guard and sailed for
Cebu Port on July 10, 1974. (sic) NSCs claim, therefore, is
obviously misleading and erroneous.
Ships and Shipping; Words and Phrases; Demurrage and
Laytime, Explained.The Court defined demurrage in its strict
sense as the compensation provided for in the contract of
affreightment for the detention of the vessel beyond the laytime or
that period of time agreed on for loading and unloading of cargo. It
is given to compensate the shipowner for the nonuse of the vessel.
On the other hand, the following is well-settled: Laytime runs
according to the particular clause of the charter party. x x x If
laytime is expressed in running days, this means days when the
ship would be run continuously, and holidays are not expected. A
qualification of weather permitting excepts only those days when
bad weather reasonably prevents the work contemplated.
Same; Same; Same; Where laytime is qualified as
WWDSHINC or weather, working days Sundays and holidays, the
running of laytime is made subject to the weather, and would
cease to run in the event unfavorable weather interferes with the
unloading of cargo.In this case, the contract of voyage charter
hire provided for a four-day laytime; it also qualified laytime as
WWDSHINC or weather, working days Sundays and holidays
included. The running of laytime was thus made subject to the
weather, and would cease to run in the event unfavorable weather
interfered with the unloading of cargo. Consequently, NSC may not
be held liable for demurrage as the four-day laytime allowed it did
not lapse, having been tolled by unfavorable weather condition in
view of the WWDSHINC qualification agreed upon by the parties.
Clearly, it was error for the trial court and the Court of Appeals to
have found and affirmed respectively that NSC incurred eleven
days of delay in unloading the cargo. The trial court arrived at this
erroneous finding by subtracting from the twelve days, specifically
August 13, 1974 to August 24, 1974, the only day of unloading
unhampered by unfavorable weather or rain, which was August 22,
1974. Based on our previous discussion, such finding is a reversible
error. As mentioned, the respondent appellate court also erred in
ruling that NSC was liable to VSI for demurrage, even if it reduced
the amount by half.
Attorneys Fees; The mere fact that a party was compelled to
litigate to protect its rights will not justify an award of attorneys
fees under Article 2208 of the Civil Code when no sufficient
showing of bad faith would be reflected in the other partys
persistence in a case other than an erroneous conviction of the
righteousness of his cause. VSI assigns as error of law the Court
of Appeals deletion of the award of attorneys fees. We disagree.
While VSI was compelled to litigate to protect its rights, such fact
by itself will not justify an award of attorneys fees under Article
2208 of the Civil Code when x x x no sufficient showing of bad
faith would be reflected in a partys persistence in a case other
than an erroneous conviction of the righteousness of his cause x x
x. Moreover, attorneys fees may not be awarded to a party for
the reason alone that the judgment rendered was favorable to the
latter, as this is tantamount to imposing a premium on ones right
to litigate or seek judicial redress of legitimate grievances.
G.R. No. 101503. September 15, 1993.
*

PLANTERS PRODUCTS, INC., petitioner, vs. COURT OF
APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI
KISEN KABUSHIKI KAISHA, respondents.

Words and Phrases; Shipping; Charter Party defined.A
charter-party is defined as a contract by which an entire ship, or
some principal part thereof, is let by the owner to another person
for a specified time or use; a contract of affreightment by which
the owner of a ship or other vessel lets the whole or a part of her
to a merchant or other person for the conveyance of goods, on a
particular voyage, in consideration of the payment of freight;
Charter parties are of two types: (a) contract of affreightment
which involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for others; and, (b)
charter by demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to him of its
entire command and possession and consequent control over its
navigation, including the master and the crew, who are his
servants. Contract of affreightment may either be time charter,
wherein the vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for a single
voyage. In both cases, the charter-party provides for the hire of
the vessel only, either for a determinate period of time or for a
single or consecutive voyage, the shipowner to supply the ships
stores, pay for the wages of the master and the crew, and defray
the expenses for the maintenance of the ship.
Same; Same; Common Carrier defined.Upon the other
hand, the term common or public carrier is defined in Art. 1732
of the Civil Code. The definition extends to carriers either by land,
air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for
compensation as a public employment and not as a casual
occupation. The distinction between a common or public carrier
and a private or special carrier lies in the character of the
business, such that if the undertaking is a single transaction, not a
part of the general business or occupation, although involving the
carriage of goods for a fee, the person or corporation offering such
service is a private carrier.
Shipping; Transportation; Evidence; Common carriers required
to observe extraordinary diligence and presumed at fault; no such
presumption applies to private carriers.Article 1733 of the New
Civil Code mandates that common carriers, by reason of the nature
of their business, should observe extraordinary diligence in the
vigilance over the goods they carry. In the case of private carriers,
however, the exercise of ordinary diligence in the carriage of goods
will suffice. Moreover, in case of loss, destruction or deterioration
of the goods, common carriers are presumed to have been at fault
or to have acted negligently, and the burden of proving otherwise
rests on them. On the contrary, no such presumption applies to
private carriers, for whosoever alleges damage to or deterioration
of the goods carried has the onus of proving that the cause was the
negligence of the carrier.
Same; Same; Same; In a time or voyage charter, in contrast
to a bareboat charter, the ship remains a common or public
carrier.It is therefore imperative that a public carrier shall remain
as such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited to
the ship only, as in the case of a time-charter or voyage-charter. It
is only when the charter includes both the vessel and its crew, as in
a bareboat or demise that a common carrier becomes private, at
least insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a shipowner in a time or voyage charter
retains possession and control of the ship, although her holds may,
for the moment, be the property of the charterer.
Same; Same; Same; In the common carriage of highly soluble
goods, like fertilizer, it is the shipper or owner of the goods that
commonly face risk of loss or damage.Indeed, we agree with
respondent carrier that bulk shipment of highly soluble goods like
fertilizer carries with it the risk of loss or damage. More so, with a
variable weather condition prevalent during its unloading, as was
the case at bar. This is a risk the shipper or the owner of the goods
has to face. Clearly, respondent carrier has sufficiently proved the
inherent character of the goods which makes it highly vulnerable to
deterioration; as well as the inadequacy of its packaging which
further contributed to the loss. On the other hand, no proof was
adduced by the petitioner showing that the carrier was remiss in
the exercise of due diligence in order to minimize the loss or
damage to the goods it carried.


Government Regulation of Common
Carriers Business
G.R. No. 115381. December 23, 1994.
*

KILUSANG MAYO UNO LABOR CENTER, petitioner, vs.HON.
JESUS B. GARCIA, JR., the LAND TRANSPORTATION
FRANCHISING AND REGULATORY BOARD, and the
PROVINCIAL BUS OPERATORS ASSOCIATION OF THE
PHILIPPINES, respondents.

Public Utilities; Common Carriers; Words and Phrases; When
one devotes his property to a use in which the public has an
interest, he, in effect grants to the public an interest in that use,
and must submit to the control by the public for the common good,
to the extent of the interest he has thus created.Public utilities
are privately owned and operated businesses whose services are
essential to the general public. They are enterprises which specially
cater to the needs of the public and conduce to their comfort and
convenience. As such, public utility services are impressed with
public interest and concern. The same is true with respect to the
business of common carrier which holds such a peculiar relation to
the public interest that there is superinduced upon it the right of
public regulation when private properties are affected with public
interest, hence, they cease to be juris privati only. When,
therefore, one devotes his property to a use in which the public has
an interest, he, in effect grants to the public an interest in that use,
and must submit to the control by the public for the common good,
to the extent of the interest he has thus created.
Same; Same; Judicial Review; Parties; Words and
Phrases;Judicial Power, Defined .The requirement of locus
standiinheres from the definition of judicial power. In Lamb v.
Phipps, we ruled that judicial power is the power to hear and
decide causes pending between parties who have the right to sue
in the courts of law and equity. Corollary to this provision is the
principle of locus standi of a party litigant. One who is directly
affected by, and whose interest is immediate and substantial in the
controversy has the standing to sue. The rule therefore requires
that a party must show a personal stake in the outcome of the case
or an injury to himself that can be redressed by a favorable
decision so as to warrant an invocation of the courts jurisdiction
and to justify the exercise of the courts remedial powers in his
behalf.
Same; Same; Same; Same; The KMU, whose members had
suffered and continue to suffer grave and irreparable injury and
damage from the implementation of certain government
memoranda, circulars and orders affecting common carriers, has
the standing to sue to question the same.At the outset, the
threshold issue of locus standi must be struck. Petitioner KMU has
the standing to sue. In the case at bench, petitioner, whose
members had suffered and continue to suffer grave and irreparable
injury and damage from the implementation of the questioned
memoranda, circulars and/or orders, has shown that it has a clear
legal right that was violated and continues to be violated with the
enforcement of the challenged memoranda, circulars and/or
orders. KMU members, who avail of the use of buses, trains and
jeepneys everyday, are directly affected by the burdensome cost of
arbitrary increase in passenger fares. They are part of the millions
of commuters who comprise the riding public. Certainly, their rights
must be protected, not neglected nor ignored.
Same; Same; Same; Same; The Supreme Court is ready to
brush aside a procedural infirmity when the issues raised are of
transcendental importance.Assuming arguendo that petitioner is
not possessed of the standing to sue, this court is ready to brush
aside this barren procedural infirmity and recognize the legal
standing of the petitioner in view of the transcendental importance
of the issues raised. And this act of liberality is not without judicial
precedent. As early as the Emergency Powers Cases, this Court had
exercised its discretion and waived the requirement of proper
party.
Same; Same; Political Law; Administrative Law; Delegation of
Powers; Power of Subordinate Legislation; The Legislature has
delegated to the defunct Public Service Commission, and presently
the LTFRB, the power of fixing the rates of public services.Under
the foregoing provision, the Legislature delegated to the defunct
Public Service Commission the power of fixing the rates of public
services. Respondent LTFRB, the existing regulatory body today, is
likewise vested with the same under Executive Order No. 202
dated June 19, 1987. Section 5(c) of the said executive order
authorizes LTFRB to determine, prescribe, approve and
periodically review and adjust, reasonable fares, rates and other
related charges, relative to the operation of public land
transportation services provided by motorized vehicles.
Same; Same; Same; Same; Same; Same; Given the task of
determining sensitive and delicate matters as route-fixing and rate-
making for the transport sector, the responsible regulatory body is
entrusted with the power of subordinate legislation, under which
such administrative body may implement broad policies laid down
in a statute by filling in the details which the Legislature may
neither have
time nor competence to provide.Such delegation of legislative
power to an administrative agency is permitted in order to adapt to
the increasing complexity of modern life. As subjects for
governmental regulation multiply, so does the difficulty of
administering the laws. Hence, specialization even in legislation has
become necessary. Given the task of determining sensitive and
delicate matters as route-fixing and rate-making for the transport
sector, the responsible regulatory body is entrusted with the power
of subordinate legislation. With this authority, an administrative
body and in this case, the LTFRB, may implement broad policies
laid down in a statute by filling in the details which the
Legislature may neither have time nor competence to provide.
However, nowhere under the aforesaid provisions of law are the
regulatory bodies, the PSC and LTFRB alike, authorized to delegate
that power to a common carrier, a transport operator, or other
public service.
Same; Same; Same; Same; Same; The authority given by the
LTFRB to the provincial bus operators to set a fare range over and
above the authorized existing fare, is illegal and invalid as it is
tantamount to an undue delegation of legislative authority;
Potestas delegata non delegari potest.In the case at bench, the
authority given by the LTFRB to the provincial bus operators to set
a fare range over and above the authorized existing fare, is illegal
and invalid as it is tanta-mount to an undue delegation of
legislative authority. Potestas delegata non delegari potest. What
has been delegated cannot be delegated. This doctrine is based on
the ethical principle that such a delegated power constitutes not
only a right but a duty to be performed by the delegate through
the instrumentality of his own judgment and not through the
intervening mind of another. A further delegation of such power
would indeed constitute a negation of the duty in violation of the
trust reposed in the delegate mandated to discharge it directly.
Same; Same; Same; Same; Same; Rate Fixing; Rate making
or rate fixing is a delicate and sensitive government function that
requires dexterity of judgment and sound discretion with the
settled goal of arriving at a just and reasonable rate acceptable to
both the public utility and the public.Moreover, rate making or
rate fixing is not an easy task. It is a delicate and sensitive
government function that requires dexterity of judgment and sound
discretion with the settled goal of arriving at a just and reasonable
rate acceptable to both the public utility and the public. Several
factors, in fact, have to be taken into consideration before a
balance could be achieved. A rate should not be confiscatory as
would place an operator in a situation where he will continue to
operate at a loss. Hence, the rate should enable public utilities to
generate revenues sufficient to cover operational costs and provide
reasonable return on the investments. On the other hand, a rate
which is too high becomes discriminatory. It is contrary to public
interest. A rate, therefore, must be reasonable and fair and must
be affordable to the end user who will utilize the services.
Same; Same; Same; Same; Same; Same; Due Process; The
government must not relinquish the important function of rate-
fixing; The people deserve to be given full opportunity to be heard
in their opposition to any fare increase.Given the complexity of
the nature of the function of rate-fixing and its far-reaching effects
on millions of commuters, government must not relinquish this
important function in favor of those who would benefit and profit
from the industry. Neither should the requisite notice and hearing
be done away with. The people, represented by reputable
oppositors, deserve to be given full opportunity to be heard in their
opposition to any fare increase.
Same; Same; Certificates of Public Convenience (CPC); Words
and Phrases; CPC, Explained; Requisites before a CPC may be
granted.A certificate of public convenience (CPC) is an
authorization granted by the LTFRB for the operation of land
transportation services for public use as required by law. Pursuant
to Section 16(a) of the Public Service Act, as amended, the
following requirements must be met before a CPC may be granted,
to wit: (i) the applicant must be a citizen of the Philippines, or a
corporation or co-partnership, association or joint-stock company
constituted and organized under the laws of the Philippines, at
least 60 per centum of its stock or paid-up capital must belong
entirely to citizens of the Philippines; (ii) the applicant must be
financially capable of undertaking the proposed service and
meeting the responsibilities incident to its operation; and (iii) the
applicant must prove that the operation of the public service
proposed and the authorization to do business will promote the
public interest in a proper and suitable manner. It is understood
that there must be proper notice and hearing before the PSC can
exercise its power to issue a CPC.
Same; Same; Same; Administrative Law; Statutory
Construction; In case of conflict between a statute and an
administrative order, the former must prevail.The above-quoted
provision is entirely incompatible and inconsistent with Section
16(c)(iii) of the Public Service Act which requires that before a CPC
will be issued, the applicant must prove by proper notice and
hearing that the operation of the public service proposed will
promote public interest in a proper and suitable manner. On the
contrary, the policy guideline states that the presumption of public
need for a public service shall be deemed in favor of the applicant.
In case of conflict between a statute and an administrative order,
the former must prevail.
Same; Same; Same; Same; Evidence; Presumptions; The
existence or non-existence of public convenience and necessity is a
question of fact that must be established by evidence in a public
hearing conducted for that purpose.By its terms, public
convenience or necessity generally means something fitting or
suited to the public need. As one of the basic requirements for the
grant of a CPC, public convenience and necessity exists when the
proposed facility or service meets a reasonable want of the public
and supply a need, which the existing facilities do not adequately
supply. The existence or non-existence of public convenience and
necessity is therefore a question of fact that must be established
by evidence, real and/or testimonial; empirical data; statistics and
such other means necessary, in a public hearing conducted for that
purpose. The object and purpose of such procedure, among other
things, is to look out for, and protect, the interests of both the
public and the existing transport operators. Verily, the power of a
regulatory body to issue a CPC is founded on the condition that
after full-dress hearing and investigation, it shall find, as a fact,
that the proposed operation is for the convenience of the public.
Same; Same; Same; Same; Same; Same; Separation of
Powers;Supreme Court; The establishment of a presumption of
public need in favor of an applicant for CPC reverses well-settled
and institutionalized judicial, quasi-judicial and administrative
procedures, and would in effect amend the Rules of Court by
adding another disputable presumption under Rule 131; Only the
Supreme Court is mandated by law to promulgate rules concerning
pleading, practice and procedure.Other-wise stated, the
establishment of public need in favor of an applicant reverses well-
settled and institutionalized judicial, quasi-judicial and
administrative procedures. It allows the party who initiates the
proceedings to prove, by mere application, his affirmative
allegations. Moreover, the offending provisions of the LTFRB
memorandum circular in question would in effect amend the Rules
of Court by adding another disputable presumption in the
enumeration of 37 presumptions under Rule 131, Section 5 of the
Rules of Court. Such usurpation of this Courts authority cannot be
countenanced as only this Court is mandated by law to promulgate
rules concerning pleading, practice and procedure.
Same; Same; Police Power; Deregulation; Advocacy of
liberalized franchising and regulatory process is tantamount to an
abdication by the government of its inherent right to exercise
police power, of the right to regulate public utilities for protection
of the public and the utilities themselves.Deregulation, while it
may be ideal in certain situations, may not be ideal at all in our
country given the present circumstances. Advocacy of liberalized
franchising and regulatory process is tantamount to an abdication
by the government of its inherent right to exercise police power,
that is, the right of government to regulate public utilities for
protection of the public and the utilities themselves.

G.R. No. 114222. April 6, 1995.
*

FRANCISCO S. TATAD, JOHN H. OSMEA and RODOLFO G.
BIAZON, petitioners, vs. HON. JESUS B. GARCIA, JR., in his
capacity as the Secretary of the Department of
Transportation and Communications, and EDSA LRT
CORPORATION, LTD., respondents.

Public Utilities; Administrative Law; What constitutes a public
utility is not their ownership but their use to serve the public.The
phrasing of the question is erroneous; it is loaded. What private
respondent owns are the rail tracks, rolling stocks like the coaches,
rail stations, terminals and the power plant, not a public utility.
While a franchise is needed to operate these facilities to serve the
public, they do not by themselves constitute a public utility. What
constitutes a public utility is not their ownership but their use to
serve the public (Iloilo Ice & Cold Storage Co. v. Public Service
Board, 44 Phil. 551, 557-558 [1923]).
Constitutional Law; Franchise; Public Utilities; Constitution
does not require a franchise before one can own the facilities
needed to operate a public utility so long as it does not operate
them to serve the public.The Constitution, in no uncertain terms,
requires a franchise for the operation of a public utility. However, it
does not require a franchise before one can own the facilities
needed to operate a public utility so long as it does not operate
them to serve the public.
Same; Same; Same; There is distinction between operation
of a public utility and ownership of the facilities used to serve the
public.In law, there is a clear distinction between the operation
of a public utility and the ownership of the facilities and equipment
used to serve the public.
Same; Same; Same; Ownership Defined.Ownership is
defined as a relation in law by virtue of which a thing pertaining to
one person is completely subjected to his will in everything not
prohibited by law or the concurrence with the rights of another
(Tolentino, II Commentaries and Jurisprudence on the Civil Code of
the Philippines 45 [1992]).
Same; Same; Same; The operation of a rail system as a public
utility includes the transportation of passengers from one point to
another point, their loading and unloading at designated places and
the movement of the trains at prescheduled times.The exercise
of the rights encompassed in ownership is limited by law so that a
property cannot be operated and used to serve the public as a
public utility unless the operator has a franchise. The operation of a
rail system as a public utility includes the transportation of
passengers from one point to another point, their loading and
unloading at designated places and the movement of the trains at
prescheduled times (cf. Arizona Eastern R.R. Co. v. J.A. Matthews,
20 Ariz 282, 180 P. 159, 7 A.L.R. 1149 [1919]; United States Fire
Ins. Co. v. Northern P.R. Co., 30 Wash 2d. 722, 193 P. 2d 868, 2
A.L.R. 2d 1065 [1948]).
Same; Same; Same; Right to operate a public utility may exist
independently and separately from the ownership of the facilities
thereof.The right to operate a public utility may exist
independently and separately from the ownership of the facilities
thereof. One can own said facilities without operating them as a
public utility, or conversely, one may operate a public utility
without owning the facilities used to serve the public. The devotion
of property to serve the public may be done by the owner or by the
person in control thereof who may not necessarily be the owner
thereof.
Same; Same; Same; Mere owner and lessor of the facilities
used by a public utility is not a public utility.Indeed, a mere
owner and lessor of the facilities used by a public utility is not a
public utility (Providence and W.R. Co. v. United States, 46 F. 2d
149, 152 [1930]; Chippewa Power Co. v. Railroad Commission of
Wisconsin, 205 N.W. 900, 903, 188 Wis. 246 [1925]; Ellis v.
Interstate Commerce Commission, Ill. 35 S. Ct. 645, 646, 237 U.S.
434, 59 L. Ed. 1036 [1914]). Neither are owners of tank,
refrigerator, wine, poultry and beer cars who supply cars under
contract to railroad companies considered as public utilities (Crystal
Car Line v. State Tax Commission, 174 P. 2d 984, 987 [1946]).
Same; Same; Same; Mere formation of public utility
corporation does not ipso facto characterize the corporation as one
operating a public utility. It becomes so when it applies for a
franchise, certificate or any other form of authorization for that
purpose.Even the mere formation of a public utility corporation
does notipso facto characterize the corporation as one operating a
public utility. The moment for determining the requisite Filipino
nationality is when the entity applies for a franchise, certificate or
any other form of authorization for that purpose (People v. Quasha,
93 Phil. 333 [1953]).
Administrative Law; Public Utilities; Build-Operate-Transfer
(BOT) Scheme; Build-operate-and-transfer (BOT) scheme is
defined as one where the contractor undertakes the construction
and financing of an infrastructure facility, and operates and
maintains the same.The BOT scheme is expressly defined as one
where the contractor undertakes the construction and financing of
an infrastructure facility, and operates and maintains the same.
The contractor operates the facility for a fixed period during which
it may recover its expenses and investment in the project plus a
reasonable rate of return thereon. After the expiration of the
agreed term, the contractor transfers the ownership and operation
of the project to the government.
Same; Same; Build-and-Transfer (BT) Scheme; In build-and-
transfer (BT) scheme, contractor undertakes the construction and
financing of facility, but after completion, ownership and operation
thereof are turned over to the government.In the BT scheme, the
contractor undertakes the construction and financing of the facility,
but after completion, the ownership and operation thereof are
turned over to the government. The government, in turn, shall pay
the contractor its local investment on the project in addition to a
reasonable rate of return. If payment is to be effected through
amortization payments by the government infrastructure agency or
local government unit concerned, this shall be made in accordance
with a scheme proposed in the bid and incorporated in the contract
(R.A. No. 6957, Sec. 6).
Same; Same; BOT Scheme; Under the BOT scheme, owner of
the infrastructure facility must comply with the citizenship
requirement under the Constitution.Emphasis must be made that
under the BOT scheme, the owner of the infrastructure facility
must comply with the citizenship requirement of the Constitution
on the operation of a public utility. No such a requirement is
imposed in the BT scheme.
Same; Same; Contracts; Lease Purchase
Agreement; Stipulation that title to leased premises shall be
transferred to the lessee at the end of the lease period upon
payment of agreed sum, the lease becomes a lease-purchase
agreement.A lease is a contract where one of the parties binds
himself to give to another the enjoyment or use of a thing for a
certain price and for a period which may be definite or indefinite
but not longer than 99 years (Civil Code of the Philippines, Art.
1643). There is no transfer of ownership at the end of the lease
period. But if the parties stipulate that title to the leased premises
shall be transferred to the lessee at the end of the lease period
upon the payment of an agreed sum, the lease becomes a lease-
purchase agreement.
Same; Same; Same; P.D. No. 1594; Section 5 of BOT Law in
relation to Presidential Decree No. 1594 allows the negotiated
award of government infrastructure projects.Contrary to the
comments of then Executive Secretary Drilon, Section 5 of the BOT
Law in relation to Presidential Decree No. 1594 allows the
negotiated award of government infrastructure projects.
Same; Same; Same; Same; P.D. No. 1594 is the general law
on government infrastructure contracts while BOT Law governs
particular arrangements or schemes aimed at encouraging private
sector participation in government infrastructure projects.Indeed,
where there is a lack of qualified bidders or contractors, the award
of government infrastructure contracts may be made by
negotiation. Presidential Decree No. 1594 is the general law on
government infrastructure contracts while the BOT Law governs
particular arrangements or schemes aimed at encouraging private
sector participation in government infrastructure projects. The two
laws are not inconsistent with each other but are in pari
materia and should be read together accordingly.
Same; Same; Same; Same; Section 3 of R.A. 7718 authorizes
government infrastructure agencies, government-owned or
controlled corporations and local government units to enter into
contract with any duly prequalified proponent.Petitioners claim
that the BLT scheme and direct negotiation of contracts are not
contemplated by the BOT Law has now been rendered moot and
academic by R.A. No. 7718. Section 3 of this law authorizes all
government infrastructure agencies, government-owned and
controlled corporations and local government units to enter into
contract with any duly prequalified proponent for the financing,
construction, operation and maintenance of any financially viable
infrastructure or development facility through a BOT, BT, BLT, BOO
(Build-own-and-operate), BTO (Build-transfer-and-operate), CAO
(Contract-add-operate), DOT (Develop-operate-and-transfer), ROT
(Rehabilitate-operate-and-transfer), and ROO (Rehabilitate-own-
operate) (R.A. No. 7718, Sec. 2 [b-j]).
Statutory Construction; Curative Statute; Curative statute
makes valid that which before enactment of the statute was
invalid.Republic Act No. 7718 is a curative statute. It is intended
to provide financial incentives and a climate of minimum
government regulations and procedures and specific government
undertakings in support of the private sector (Sec. 1). A curative
statute makes valid that which before enactment of the statute was
invalid. Thus, whatever doubts and alleged procedural lapses
private respondent and DOTC may have engendered and
committed in entering into the questioned contracts, these have
now been cured by R.A. No. 7718 (cf.Development Bank of the
Philippines v. Court of Appeals, 96 SCRA 342 [1980]; Santos v.
Duata, 14 SCRA 1041 [1965]; Adong v. Cheong Seng Gee, 43 Phil.
43 [1922]).
Public Officials; Regularity of Performance of
Function;Government officials are presumed to perform their
functions with regularity and strong evidence is necessary to rebut
this presumption.Government officials are presumed to perform
their functions with regularity and strong evidence is necessary to
rebut this presumption. Petitioners have not presented evidence on
the reasonable rentals to be paid by the parties to each other. The
matter of valuation is an esoteric field which is better left to the
experts and which this Court is not eager to undertake.
Administrative Law; Public Utilities; DOTC has the power,
authority and technical expertise to determine whether or not a
specific transportation or communications project is necessary,
viable and beneficial to the people.Definitely, the agreements in
question have been entered into by DOTC in the exercise of its
governmental function. DOTC is the primary policy, planning,
programming, regulating and administrative entity of the Executive
branch of government in the promotion, development and
regulation of dependable and coordinated networks of
transportation and communications systems as well as in the fast,
safe, efficient and reliable postal, transportation and
communications services (Administrative Code of 1987, Book IV,
Title XV, Sec. 2). It is the Executive department, DOTC in
particular, that has the power, authority and technical expertise to
determine whether or not a specific transportation or
communications project is necessary, viable and beneficial to the
people. The discretion to award a contract is vested in the
government agencies entrusted with that function (Bureau Veritas
v. Office of the President, 205 SCRA 705 [1992]).
FELICIANO,J., Dissenting:
Administrative Law; Contracts; Public Biddings; Public
Utilities; R.A. 6957; R.A No. 6957 in connection with BOT and BLT
type of contracts imposed an unqualified requirement of public
bidding.Republic Act No. 6957 and Republic Act No. 7718 must
be held, in my view, to be special statutes applicable to a more
limited field of infrastructure projects than the wide-ranging
scope of application of the general statute, i.e., Presidential Decree
No. 1594. Thus, the high relevance of the point made by Mr.
Justice Davide that Republic Act No. 6957 in specific connection
with BOT-and BLT-type of contracts imposed
an unqualified requirement of public bidding set out in Section 5
thereof.
Same; Same; Same; Same; Same; R.A. No. 6957 made no
mention of negotiated contracts being permitted to displace the
requirement of public bidding.It must, upon the one hand, be
noted that the special law Republic Act No. 6957 made
absolutely no mention of negotiated contracts being permitted to
displace the requirement of public bidding. Upon the other hand,
Section 5-a, inserted in Republic Act No. 6957 by the amending
statute Republic Act No. 7718, does not purport to authorize direct
negotiation of contracts except in four (4) situations where there is
a lack of pre-qualified contractors or complying bidders. Thus, even
under the amended special statute, entering into contracts by
negotiation is not permissible in the other two (2) categories of
cases referred to in Section 4 of Presidential Decree No. 1594, i.e.,
in exceptional cases where time is of the essence and when
there is conclusive evidence that greater economy and efficiency
would be achieved through these arrangements, etc.
Same; Same; Same; Same; Public bidding is the method by
which a government keeps contractors honest and is able to assure
itself that it would be getting the best possible value for its money
in any construction or similar project.Public bidding is the normal
method by which a government keeps contractors honest and is
able to assure itself that it would be getting the best possible value
for its money in any construction or similar project. It is not for
nothing that multilateral financial organizations like the World Bank
and the Asian Development Bank uniformly require projects
financed by them to be implemented and carried out by public
bidding. Public bidding is much too important a requirement
casually to loosen by a latitudinarian exercise in statutory
construction.
DAVIDE, JR.,J., Dissenting Opinion:
Contracts; Public Bidding; Public Utilities; Challenged contract
is void for being an ultra-vires act of the Department of
Transportation and Communications (DOTC) and entered into
without complying with the mandatory requirement of public
bidding.I most respectfully submit that the challenged contract is
void for at least two reasons: (a) it is an ultra-vires act of the
Department of Transportation and Communications (DOTC) since
under R.A. 6957 the DOTC has no authority to enter into a Build-
Lease-and-Transfer (BLT) contract; and (b) even assuming
arguendo that it has, the contract was entered into without
complying with the mandatory requirement of public bidding.
Same; Same; R.A. 6957; Contractual Arrangements; Contract
was entered into under R.A. 6957 which recognizes only two (2)
kinds of contractual arrangements, which are (a) the Build-
Operate-and-Transfer (BOT) scheme and (b) the Build-and-
Transfer (BT) scheme.Respondents admit that the assailed
contract was entered into under R.A. 6957. This law, fittingly
entitled An Act Authorizing the Financing, Construction, Operation
and Maintenance of Infrastructure Projects by the Private Sector,
and For Other Purposes, recognizes only two (2) kinds of
contractual arrangements between the private sector and
government infrastructure agencies: (a) the Build-Operate-and-
Transfer (BOT) scheme and (b) the Build-and-Transfer (BT)
scheme. This conclusion finds support in Section 2 thereof which
defines only the BOT and BT schemes, in Section 3 which explicitly
provides for said schemes.
Same; Same; Same; Build-Lease-and-Transfer (BLT) scheme
is not authorized under R.A. 6957.A Build-Lease-and-Transfer
(BLT) scheme is not authorized under the said law, and none of the
aforesaid prior acts and negotiations were designed for such
unauthorized scheme. Hence, the DOTC is without any power or
authority to enter into the BLT contract in question.
Same; Same; Same; BLT scheme was never intended as a
permissible variation within the context of the BOT and BT
schemes.The majority opinion maintains, however, that since
[t]here is no mention in the BOT Law that the BOT and the BT
schemes bar any other arrangement for the payment by the
government of the project cost, then [t]he law must not be read
in such a way as to rule out or unduly restrict any variation within
the context of the two schemes. This interpretation would be
correct if the law itself provides room for flexibility. We find no such
provision in R.A. No. 6957. If it intended to include a BLT scheme,
then it should have so stated, for contracts of lease are not
unknown in our jurisdiction, and Congress has enacted several laws
relating to leases. That the BLT scheme was never intended as a
permissible variation within the context of the BOT and BT
schemes is conclusively established by the passage of R.A. No.
7718.
Administrative Law; Contracts; Public Biddings; Public
Utilities; Any government contract entered into without the
required bidding is null and void and cannot adversely affect the
rights of third parties.The requirement of public bidding is not an
idle ceremony. It has been aptly said that in our jurisdiction public
bidding is the policy and medium adhered to in Government
procurement and construction contracts under existing laws and
regulations. It is the accepted method for arriving at a fair and
reasonable price and ensures that overpricing, favoritism and other
anomalous practices are eliminated or minimized. And any
Government contract entered into without the required bidding is
null and void and cannot adversely affect the rights of third
parties. (Bartolome C. Fernandez, Jr., A TREATISE ON
GOVERNMENT CONTRACTS UNDER PHILIPPINE LAW 25 [rev. ed.
1991], citing Caltex vs. Delgado Bros., 96 Phil. 368 [1954]).
Same; Same; Same; Same; It is null and void as the law itself
does not recognize or allow negotiated contracts.The Office of the
President, through then Executive Secretary Franklin Drilon
correctly disapproved the contract because no public bidding in
strict compliance with Section 5 of R.A. No. 6957 was conducted.
Secretary Drilon further bluntly stated that the provision of the
Implementing Rules of said law authorizing negotiated contracts
was of doubtful legality. Indeed, it is null and void because the law
itself does not recognize or allow negotiated contracts.
Same; Same; Same; Same; Section 5 mandates that BOT or
BT contract should be awarded to the lowest complying bidder,
which means that there must at least be two (2) bidders.
However, the majority opinion posits the view that since only
private respondent EDSA LRT was prequalified, then a public
bidding would be an absurd and pointless exercise. I submit that
the mandatory requirement of public bidding cannot be legally
dispensed with simply because only one was qualified to bid during
the prequalification proceedings. Section 5 mandates that the BOT
or BT contract should be awarded to the lowest complying bidder,
which logically means that there must at least be two (2) bidders.
If this minimum requirement is not met, then the proposed bidding
should be deferred and a new prequalification proceeding be
scheduled. Even those who were earlier disqualified may by then
have qualified because they may have, in the meantime, exerted
efforts to meet all the qualifications.
Same; Statutes; Retroactivity; R.A. No. 7718 cannot be given
retroactive effect as it does not provide that it should be given
retroactive to pre-existing contracts.Can this amendment be
given retroactive effect to the challenged contract so that it may
now be considered a permissible negotiated contract? I submit that
it cannot be. R.A. No. 7718 does not provide that it should be given
retroactive effect to preexisting contracts. Section 18 thereof says
that it shall take effect fifteen (15) days after its publication in at
least two (2) newspapers of general circulation. If it were the
intention of Congress to give said act retroactive effect then it
would have so expressly provided. Article 4 of the Civil Code
provides that [l]aws shall have no retroactive effect, unless the
contrary is provided.
Same; Same; Presumption is that all laws operate
prospectively, unless the contrary clearly appears or is clearly,
plainly, and unequivocably expressed or necessarily implied. The
presumption is that all laws operate prospectively, unless the
contrary clearly appears or is clearly, plainly, and unequivocably
expressed or necessarily implied. In every case of doubt, the doubt
will be resolved against the retroactive application of laws. (Ruben
E. Agpalo, STATUTORY CONSTRUCTION 225 [2d ed. 1990]).
MENDOZA,J., Concurring:
Political Law; Taxpayers Suit; Taxpayer has no standing to
question legality of contract where it did not involve a
disbursement of public funds.The building to the lessor, did not
involve a disbursement of public funds so as to give a taxpayer
standing to question the legality of the contract. I see no
substantial difference, as far as the standing of taxpayers to
question public contracts is concerned, between the contract there
and the build-lease-transfer (BLT) contract being questioned by
petitioners in this case.
Same; Same; Petitioners have no standing to bring the suit as
citizens.In the cases in which citizens were authorized to sue,
this Court found standing because it thought the constitutional
claims pressed for decision to be of transcendental importance,
as in fact it subsequently granted relief to petitioners by
invalidating the challenged statutes or governmental actions. Thus
in the Lotto case relied upon by the majority for upholding
petitioners standing, this Court took into account the paramount
public interest involved which immeasurably affect[ed] the social,
economic, and moral well-being of the people ... and the counter-
productive and retrogressive effects of the envisioned on-line
lottery system. Accordingly, the Court invalidated the contract for
the operation of lottery.
Same; Same; Finding petitioners substantive contentions to
be without merit, they must be held to be without standing. The
holding that petitioners did not have standing followed from the
finding that they did not have a cause of action.In the case at
bar, the Court precisely finds the opposite by finding petitioners
substantive contentions to be without merit. To the extent
therefore that a partys standing is affected by a determination of
the substantive merit of the case or a preliminary estimate thereof,
petitioners in the case at bar must be held to be without standing.
This is in line with our ruling in Lawyers League for a Better
Philippines v. Aquino and In reBermudez where we dismissed
citizens actions on the ground that petitioners had no personality
to sue and their petitions did not state a cause of action. The
holding that petitioners did not have standing followed from the
finding that they did not have a cause of action.
Same; Same; Citizens actions may be allowed if a party
shows that he has personally suffered some actual or threatened
injury as a result of the alleged illegal conduct of the
government.In order that citizens actions may be allowed a
party must show that he personally has suffered some actual or
threatened injury as a result of the allegedly illegal conduct of the
government; the injury is fairly traceable to the challenged action;
and the injury is likely to be redressed by a favorable action.

Governing Law
No. L-28673. October 23, 1984.
*

SAMAR MINING COMPANY, INC., plaintiff-
appellee, vs.NORDEUTSCHER LLOYD and CF. SHARP &
COMPANY, INC., defendants-appellants.

Contracts; Common Carriers; Bill of Lading both a receipt and
a contract.The issue at hand demands a close scrutiny of Bill of
Lading No. 18 and its various clauses and stipulations which should
be examined in the light of pertinent legal provisions and settled
jurisprudence. This undertaking is not only proper but necessary as
well, because of the nature of the bill of lading which operates both
as a receipt for the goods; and more importantly, as a contract to
transport and deliver the same as stipulated therein. Being a
contract, it is the law between the parties thereto, who are bound
by its terms and conditions provided that these are not contrary to
law, morals, good customs, public order and public policy.
Same; Same; A stipulation in the bill of lading exempting the
carrier from liability for loss of goods not in its actual custody, i.e.,
after their discharge from the ship, is valid.We find merit in
appellants stand. The validity of stipulations in bills of lading
exempting the carrier from liability for loss or damage to the goods
when the same are not in its actual custody has been upheld by Us
in PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22
SCRA 674 (1968). Said case matches the present controversy not
only as to the material facts but more importantly, as to the
stipulations contained in the bill of lading concerned. As if to
underline their awesome likeness, the goods in question in both
cases were destined for Davao, but were discharged from ship in
Manila, in accordance with their respective bill of lading.
Same; Same; Liability of international common carriers
governed primarily by New Civil Code.The liability of the common
carrier for the loss, destruction or deterioration of goods
transported from a foreign country to the Philippines is governed
primarily by the New Civil Code. In all matters not regulated by
said Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by special laws.
Same; Same; Art. 1738 of N.C.C. makes a carrier liable for
loss of goods even after ship discharge only if such goods were
deposited in a warehouse of the carrier.There is no doubt that
Art. 1738 finds no applicability to the instant case. The said article
contemplates a situation where the goods had already reached
their place of destination and are stored in the warehouse of the
carrier. The subject goods were still awaiting transshipment to their
port of destination, and were stored in the warehouse of a third
party when last seen and/or heard of.
Same; Same; Art. 1736 of N.C.C. applies to case at bar. Said
article relieves a carrier of responsibility upon actual or
constructive delivery of goods to consignee.However, Article
1736 is applicable to the instant suit. Under said article, the carrier
may be relieved of the responsibility for loss or damage to the
goods upon actual or constructive delivery of the same by the
carrier to the consignee, or to the person who has a right to
receive them. In sales, actual delivery has been defined as the
ceding of corporeal possession by the seller, and the actual
apprehension of corporeal possession by the buyer or by some
person authorized by him to receive the goods as his
representative for the purpose of custody or disposal. By the same
token, there is actual delivery in contracts for the transport of
goods when possession has been turned over to the consignee or
to his duly authorized agent and a reasonable time is given him to
remove the goods. The court a quo found that there was actual
delivery to the consignee through its duly authorized agent, the
carrier.
Same; Same; Agency; Appellants liability as a common
carrier was effective only for the transport of goods from Germany
to Manila, the point of discharge. From Manila to Davao, upon
transshipment of the same goods the carrier is transformed into an
agent of the consignee and ceases to be liable as a carrier for loss
or damage to goods transshipped.It becomes necessary at this
point to dissect the complex relationship that had developed
between appellant and appellee in the course of the transactions
that gave birth to the present suit. Two undertakings appeared
embodied and/or provided for in the Bill of Lading in question. The
first is FOR THE TRANSPORT OF GOODS from Bremen, Germany to
Manila. The second, THE TRANSSHIPMENT OF THE SAME GOODS
from Manila to Davao, with appellant acting as agent of the
consignee. At the hiatus between these two undertakings of
appellant which is the moment when the subject goods are
discharged in Manila, its personality changes from that of carrier to
that of agent of the consignee. Thus, the character of appellants
possession also changes, from possession in its own name as
carrier, into possession in the name of consignee as the latters
agent. Such being the case, there was, in effect, actual delivery of
the goods from appellant as carrier to the same appellant as agent
of the consignee. Upon such delivery, the appellant, as erstwhile
carrier, ceases to be responsible for any loss or damage that may
befall the goods from that point onwards. This is the full import of
Article 1736, as applied to the case before Us.
Same; Same; Same; After a common carriers status has
passed from that of carrier to that of agent of consignee, loss of
goods in its hands for cause beyond its control and without its
negligence being proved, relieves carrier of civil liability for such
loss or damage.But even as agent of the consignee, the appellant
cannot be made answerable for the value of the missing goods. It
is true that the transshipment of the goods, which was the object
of the agency, was not fully performed. However, appellant had
commenced said performance, the completion of which was
aborted by circumstances beyond its control. An agent who carries
out the orders and instructions of the principal without being guilty
of negligence, deceit or fraud, cannot be held responsible for the
failure of the principal to accomplish the object of the agency.
Same; Same; Same; Same.The actions of appellant carrier
and of its representative in the Philippines being in full faith with
the lawful stipulations of Bill of Lading No. 18 and in conformity
with the provisions of the New Civil Code on common carriers,
agency and contracts, they incur no liability for the loss of the
goods in question.

Eastern Shipping Lines vs. Court of Appeals


No. L-49407. August 19, 1988.
*

NATIONAL DEVELOPMENT COMPANY, petitioner-appel-
lant, vs. THE COURT OF APPEALS and DEVELOPMENT
INSURANCE & SURETY CORPORATION, respondents-
appellees.
No. L-49469. August 19, 1988.
*

MARITIME COMPANY OF THE PHILIPPINES, petitioner-
appellant, vs. THE COURT OF APPEALS and DEVELOPMENT
INSURANCE & SURETY CORPORATION, respondents-
appellees.

Civil Law; Common carriers; Carriage of Goods by Sea
Act;Rule that for cargoes transported from Japan to the Philippines,
the liability of the carrier in case of loss, destruction or
deterioration of goods is governed primarily by the Civil Code, but
on all other matters, the Code of Commerce and special laws shall
apply; The Carriage of Goods by Sea Act is suppletory to the Civil
Code.This issue has already been laid to rest by this Court in
Eastern Shipping Lines Inc. v. IAC (150 SCRA 469-470 [1987])
where it was held under similar circumstances that 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 (Article 1753, Civil Code). Thus, the rule was
specifically laid down that for cargoes transported from Japan to
the Philippines, the liability of the carrier is governed primarily by
the Civil Code and in all matters not regulated by said Code, the
rights and obligations of common carrier shall be governed by the
Code of Commerce and by special laws (Article 1766, Civil Code).
Hence, the Carriage of Goods by Sea Act, a special law, is merely
suppletory to the provisions of the Civil Code.
Same; Same; Same; Same; The laws of the Philippines will
apply in case at bar and it is immaterial whether the collision
actually occurred in foreign waters.In the case at bar, it has been
established that the goods in question are transported from San
Francisco, California and Tokyo, Japan to the Philippines and that
they were lost or damaged due to a collision which was found to
have been caused by the negligence or fault of both captains of the
colliding vessels. Under the above ruling, it is evident that the laws
of the Philippines will apply, and it is immaterial that the collision
actually occurred in foreign waters, such as Ise Bay, Japan.
Same; Same; Same; Extraordinary Diligence; Common carriers,
are bound to observe extraordinary diligence in the vigilance over
the goods and for the safety of passengers transported by them
according to all circumstances of each case.Under Article 1733 of
the Civil Code, 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 circumstances of
each case. Accordingly, under Article 1735 of the same Code, in all
cases other than those mentioned in Article 1734 thereof, the
common carrier shall be presumed to have been at fault or to have
acted negligently, unless it proves that it has observed the
extraordinary diligence required by law.
Same; Same; Same; Code of Commerce; Carriage of Goods by
Sea Act restricts its application to all contracts for the carriage of
goods by sea to and from Philippine ports in foreign trade; The Act
recognizes the existence of the Code of Commerce and does not
repeal nor limit its application.There is, therefore, no room for
NDCs interpretation that Code of Commerce should apply only to
domestic trade and not to foreign trade. Aside from the fact that
the Carriage of Goods by Sea Act. (Com. Act No. 65) does not
specifically provide for the subject of collision, said Act in no
uncertain terms, restricts its application to all contracts for the
carriage of goods by sea to and from Philippine ports in foreign
trade. Under Section 1 thereof, it is explicitly provided that
nothing in this Act shall be construed as repealing any existing
provision of the Code of Commerce which is now in force, or as
limiting its application. By such incorporation, it is obvious that
said law not only recognizes the existence of the Code of
Commerce, but more importantly does not repeal nor limit its
application.
Same; Same; Same; Insurance; Since the insurer paid the con-
signees for the loss or damage of the insured cargo, the insurer
has a cause of action to recover from the defendant-appellant.
The records show that the Riverside Mills Corporation and Guilcon,
Manila are the holders of the duly endorsed bills of lading covering
the shipments in question and an examination of the invoices in
particular, shows that the actual consignees of the said goods are
the aforementioned companies. Moreover, no less than MCP itself
issued a certification attesting to this fact. Accordingly, as it is
undisputed that the insurer, plaintiff-appellee paid the total amount
of P364,915.86 to said consignees for the loss or damage of the
insured cargo, it is evident that said plaintiff-appellee has a cause
of action to recover (what it has paid) from defendant-appellant
MCP (Decision, CA-G.R. No. 46513-R, p. 10; Rollo, p. 43).
Same; Same; Obligations; Solidary liability; Defendant-appel-
lant is liable solidarily with the NDC being NDCs agent which
includes the concept of ship agent in maritime law.As found by
the trial court and by the Court of Appeals, the Memorandum
Agreement of September 13, 1962 (Exhibit 6, Maritime) shows that
NDC appointed MCP as Agent, a term broad enough to include the
concept of Ship-agent in Maritime Law. In fact, MCP was even
conferred all the powers of the owner of the vessel, including the
power to contract in the name of the NDC (Decision, CA, G.R. No.
46513, p. 12; Rollo, p. 40). Consequently, under the
circumstances, MCP cannot escape liability.
Same; Same; Same; Same; Liability of owner and agent of
vessel; The agent even though he was not the owner of the vessel,
is liable to the shippers and owners of cargo transported by it, for
losses and damages to the cargo without prejudice to his rights
against the owner of the ship.It is well settled that both the
owner and agent of the
offending vessel are liable for the damage done where both are
impleaded (Philippine Shipping Co. v. Garcia Vergara, 96 Phil. 281
[1906]); that in case of collision, both the owner and the agent are
civilly responsible for the acts of the captain (Yueng Sheng
Exchange and Trading Co. v. Urrutia & Co., supra citing Article 586
of the Code of Commerce; Standard Oil Co. of New York v. Lopez
Castelo, 42 Phil. 256, 262 [1921]); that while it is true that the
liability of the naviero in the sense of charterer or agent, is not
expressly provided in Article 826 of the Code of Commerce, it is
clearly Reducible from the general doctrine of jurisprudence under
the Civil Code but more specially as regards contractual obligations
in Article 586 of the Code of Commerce. Moreover, the Court held
that both the owner and agent (Naviero) should be declared jointly
and severally liable, since the obligation which is the subject of the
action had its origin in a tortious act and did not arise from
contract (Verzosa and Ruiz, Rementeria y Cia v. Lim, 45 Phil. 423
[1923]). Consequently, the agent, even though he may not be the
owner of the vessel, is liable to the shippers and owners of the
cargo transported by it, for losses and damages occasioned to such
cargo, without prejudice, however, to his rights against the owner
of the ship, to the extent of the value of the vessel, its equipment,
and the freight (Behn, Meyer Y. Co. v. McMicking et al. 11 Phil. 276
[1908]).
Same; Same; Same; Common carriers cannot limit their liability
for injuries to loss of goods where such injury or loss was caused
by their own negligence; Law on averages, not applicable in case at
bar.MCPs contention is devoid of merit. The declared value of
the goods was stated in the bills of lading and corroborated no less
by invoices offered as evidence during the trial. Besides, common
carriers, in the language of the court in Juan Ysmael & Co., Inc. v.
Barretto et al., (51 Phil. 90 [1927]) cannot limit its liability for
injury to a loss of goods where such injury or loss was caused by
its own negligence. Negligence of the captains of the colliding
vessel being the cause of the collision, and the cargoes not being
jettisoned to save some of the cargoes and the vessel, the trial
court and the Court of Appeals acted correctly in not applying the
law on averages (Articles 806 to 818, Code of Commerce).
Same; Same; Same; Both pilots of the colliding vessels were at
fault for not changing their excessive speed despite the thick fog
obstructing their visibility.MCPs claim that the fault or negligence
can only be attributed to the pilot of the vessel SS Yasushima Maru
and not to the Japanese Coast pilot navigating the vessel Doa
Nati, need not be discussed lengthily as said claim is not only at
variance with NDCs posture, but also contrary to the factual
findings of the trial court affirmed no less by the Court of Appeals,
that both pilots were at fault for not changing their excessive speed
despite the thick fog obstructing their visibility.
Same; Same; Same; Prescription, not a case of; The bills of
lading issued allow transhipment of cargo; Meaning of
transhipment of cargo; Complaint in case at bar seasonably filed,
which was long before the one year period from the date the lost or
damaged cargo should have been delivered.Finally on the issue
of prescription, the trial court correctly found that the bills of lading
issued allow transshipment of the cargo, which simply means that
the date of arrival of the ship Dona Nati on April 18, 1964 was
merely tentative to give allowances for such contingencies that said
vessel might not arrive on schedule at Manila and therefore, would
necessitate the transshipment of cargo, resulting in consequent
delay of their arrival. In fact, because of the collision, the cargo
which was supposed to arrive in Manila on April 18, 1964 arrived
only on June 12, 13, 18, 20 and July 10, 13 and 15, 1964. Hence,
had the cargoes in question been saved, they could have arrived in
Manila on the above-mentioned dates. Accordingly, the complaint
in the instant case was filed on April 22, 1965, that is, long before
the lapse of one (1) year from the date of the lost or damaged
cargo should have been delivered in the light of Section 3, sub-
paragraph (6) of the Carriage of Goods by Sea Act.
Registered Owner Rule
No. L-30212. September 30, 1987.
*

BIENVENIDO GELISAN, petitioner, vs. BENITO ALDAY,
respondent.

Civil Law; Transportation; Motor Vehicles; Damages; A
registered owner of a public service vehicle is responsible for
damages that may arise from consequences incident to its
operation or that may be caused to any of the passengers therein
The Court has invariably held in several decisions that the
registered owner of a public service vehicle is responsible for
damages that may arise from consequences incident to its
operation or that may be caused to any of the passengers therein.
Same; Same; Same; Same; Franchise; If the properties
covered by a franchise is transferred or leased to another without
the requisite approval of the Public Service Commission, the
transfer is not binding upon the public and third persons.The
claim of the petitioner that he is not liable in view of the lease
contract executed by and between him and Roberto Espiritu which
exempts him from liability to third persons, cannot be sustained
because it appears that the lease contract, adverted to, had not
been approved by the Public Service Commission. It is settled in
our jurisprudence that if the property covered by a franchise is
transferred or leased to another without obtaining the requisite
approval, the transfer is not binding upon the public and third
persons.
Same; Same; Same; Same; Same; Same; Rationale for the
rule.We also find no merit in the petitioner's argument that the
rule requiring the previous approval by the Public Service
Commission of the transfer or lease of the motor vehicle, may be
applied only in cases where there is no positive identification of the
owner or driver, or where there are very scant means of
identification, but not in those instances where the person
responsible for damages has been fixed or determined beforehand,
as in the case at bar. The reason for the rule we reiterate in the
present case, was explained by the Court in Montoya vs.
Ignacio, thus: The law really requires the approval of the Public
Service Commission in order that a franchise, or any privilege
pertaining thereto, may be sold or leased without infringing the
certificate issued to the grantee. The reason is obvious. Since a
franchise is personal in nature any transfer or lease thereof should
be notified to the Public Service Commission so that the latter may
take proper safeguards to protect the interest of the public. In fact,
the law requires that, before the approval is granted, there should
be a public hearing, with notice to all interested parties, in order
that the Commission may determine if there are good and
reasonable grounds justifying the transfer or lease of the property
covered by the franchise, or if the sale or lease is detrimental to
public interest, Such being the reason and philosophy behind this
requirement, it follows that if the property covered by the franchise
is transferred, or leased to another without obtaining the requisite
approval, the transfer is not binding against the Public Service
Commission and in contemplation of law the grantee continues to
be responsible under the franchise in relation to the Commission
and to the Public.
Same; Same; Same; Same; Registered owner has the right to
be indemnified for the amount he may be required to pay as
damages for the injury caused to a third person, since the lease
contract although not effective against the public is valid and
binding between the contracting parties.Bienvenido Gelisan, the
registered owner, is not however without recourse. He has a right
to be indemnified by Roberto Espiritu for the amount that he may
be required to pay as damages for the injury caused to Benito
Alday, since the lease contract in question, although not effective
against the public for not having been approved by the Public
Service Commission, is valid and binding between the contracting
parties.
Same; Same; Same; Same; Registered owner/operator of a
public service vehicle, is jointly and severally liable with the driver
for damages incurred by passengers or third persons as a
consequence of injuries sustained in the operation of said vehicle.
We also find no merit in the petitioner's contention that his liability
is only subsidiary. The Court has consistently considered the
registered owner/operator of a public service vehicle to be jointly
and severally liable with the driver for damages incurred by
passengers or third persons as a consequence of injuries sustained
in the operation of said vehicles.

G.R. No. 70876. July 19, 1990.
*

MA. LUISA BENEDICTO, petitioner, vs. HON. INTERMEDIATE
APPELLATE COURT and GREENHILLS WOOD INDUSTRIES
COMPANY, INC.respondents.

Civil Law; Common Carriers; Petitioner Benedicto holding
herself out to the public as engaged in the business of hauling or
transporting goods for hire or compensation is a common carrier.
There is no dispute that petitioner Benedicto has been holding
herself out to the public as engaged in the business of hauling or
transporting goods for hire or compensation. Petitioner Benedicto
is, in brief, a common carrier.
Same; Same; The prevailing doctrine on common carriers
makes the registered owner liable for consequences flowing from
the operations of the carrier even though the specific vehicle
involved may lready have been transferred to another
person; Reason.The prevailing doctrine on common carriers
makes the registered owner liable for consequences flowing from
the operations of the carrier, even though the specific vehicle
involved may already have been transferred to another person.
This doctrine rests upon the principle that in dealing with vehicles
registered under the Public Service Law, the public has the right to
assume that the registered owner is the actual or lawful owner
thereof.
Same; Same; Same; Registered owner not allowed to deny
liability by proving the identity of the alleged transferee.The
registered owner is not allowed to deny liability by proving the
identity of the alleged transferee. Thus, contrary to petitioners
claim, private respondent is not required to go beyond the vehicles
certificate of registration to ascertain the owner of the carrier.
Same; Same; Same; Same; Considerations both of public
policy and of equity require that she bear the consequences flowing
from registered ownership of the subject vehicle.Moreover,
assuming the truth of her story, petitioner Benedicto retained
registered ownership of the freight truck for her own benefit and
convenience, that is, to secure the payment of the balance of the
selling price of the truck. She may have been unaware of the legal
security device of chattel mortgage; or she, or her buyer, may
have been unwilling to absorb the expenses of registering a chattel
mortgage over the truck. In either case, considerations both of
public policy and of equity require that she bear the consequences
flowing from registered ownership of the subject vehicle.
Same; Same; Amount of diligence required; A common carrier
is burdened by law with the duty of exercising extraordinary
diligence not only in ensuring the safety of passengers but also in
caring for goods transported by it. Loss or destruction or
deterioration of goods turned over to the common carrier for
conveyance raises instantly a presumption of fault or negligence on
the part of the carrier.A common carrier, both from the nature of
its business and for insistent reasons of public policy, is burdened
by the law with the duty of exercising extraordinary diligence not
only in ensuring the safety of passengers but also in caring for
goods transported by it. The loss or destruction or deterioration of
goods turned over to the common carrier for conveyance to a
designated destination, raises instantly a presumption of fault or
negligence on the part of the carrier, save only where such loss,
destruction or damage arises from extreme circumstances such as
a natural disaster or calamity or act of the public enemy in time of
war, or from an act or omission of the shipper himself or from the
character of the goods or their packaging or container.
Same; Same; Same; Same; Presumption may be overcome
only by proof of extraordinary diligence on the part of the carrier.
This presumption may be overcome only by proof of extraordinary
diligence on the part of the carrier. Clearly, to permit a common
carrier to escape its responsibility for the passengers or goods
transported by it by proving a prior sale of the vehicle or means of
transportation to an alleged vendee would be to attenuate
drastically the carriers duty of extraordinary diligence. It would
also open wide the door to collusion between the carrier and the
supposed vendee and to shifting liability from the carrier to one
without financial capability to respond for the resulting damages. In
other words, the thrust of the public policy here involved is as
sharp and real in the case of carriage of goods as it is in the
transporting of human beings. Thus, to sustain petitioner
Benedictos contention, that is, to require the shipper to go behind
a certificate of registration of a public utility vehicle, would be
utterly subversive of the purpose of the law and doctrine.
Same; Same; Driver Licuden is in law regarded as the
employee and agent of the petitioner for whose acts petitioner
must respond.Once more, we are not persuaded by petitioners
arguments which appear to be a transparent attempt to evade
statutory responsibilities. Driver Licuden was entrusted with
possession and control of the freight truck by the registered owner
(and by the alleged secret owner, for that matter). Driver Licuden,
under the circumstances, was clothed with at least implied
authority to contract to carry goods and to accept delivery of such
goods for carriage to a specified destination. That the freight to be
paid may not have been fixed before loading and carriage, did not
prevent the contract of carriage from arising, since the freight was
at least determinable if not fixed by the tariff schedules in
petitioners main business office. Put in somewhat different terms,
driver Licuden is in law regarded as the employee and agent of the
petitioner, for whose acts petitioner must respond. A contract of
carriage of goods was shown: the sawn lumber was loaded on
board the freight truck; loss or non-delivery of the lumber at Blue
Stars premises in Valenzuela, Bulacan was also proven; and
petitioner has not proven either that she had exercised
extraordinary diligence to prevent such loss or non-delivery or that
the loss or non-delivery was due to some casualty or force majeure
inconsistent with her liability.

G.R. No. 120553. June 17, 1997.
*

PHILTRANCO SERVICE ENTERPRISES, INC. and
ROGACIONES MANILHIG, petitioner, vs. COURT OF APPEALS
and HEIRS OF THE LATE RAMON ACUESTA, respondents.

Civil Law; Quasi-Delict; Damages; The liability of the
registered owner of a public service vehicle, like petitioner
Philtranco, for damages arising from the tortious acts of the driver
is primary, direct, and joint and several or solidary with the
driver.We have consistently held that the liability of the
registered owner of a public service vehicle, like petitioner
Philtranco, for damages arising from the tortious acts of the driver
is primary, direct, and joint and severally or solidary with the
driver. x x x Since the employers liability is primary, direct and
solidary, its only recourse if the judgment for damages is satisfied
by it is to recover what it has paid from its employee who
committed the fault or negligence which gave rise to the action
based on quasi-delict.
Same; Same; Same; Award as indemnity for loss of earning
capacity, the same must be struck out for lack of basis.We
concur with petitioners view that the trial court intended the award
of P200,000.00 as death indemnity not as compensation for loss
of earning capacity. Even if the trial court intended the award is
indemnity for loss of earning capacity, the same must be struck out
for lack of basis. There is no evidence on the victims earning
capacity and life expectancy.
Same; Same; Same; Moral damages are emphatically not
intended to enrich a plaintiff at the expense of the defendant.
Moral damages are emphatically not intended to enrich a plaintiff
at the expense of the defendant. They are awarded only to allow
the former to obtain means, diversion, or amusements that will
serve to alleviate the moral suffering he has undergone due to the
defendants culpable action and must, perforce, be proportional to
the suffering inflicted. In light of the circumstances in this case, an
award of P50,000 for moral damages is in order.
Same; Same; Same; In quasi-delicts, exemplary damages
may be awarded if the party at fault acted with gross negligence.
The award of P500,000 for exemplary damages is also excessive.
In quasi-delicts, exemplary damages may be awarded if the party
at fault acted with gross negligence. The Court of Appeals found
that there was gross negligence on the part of petitioner Manilhig.
Under Article 2229 of the Civil Code, exemplary damages are
imposed by way of example or correction for the public good, in
addition to the moral, temperate, liquidated, or compensatory
damages. Considering its purpose, it must be fair and reasonable in
every case and should not be awarded to unjustly enrich a
prevailing party. In the instant case, an award P50,000 for the
purpose would be adequate, fair, and reasonable.
Same; Same; Same; Attorneys Fees; The general rule is that
attorneys fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to
litigate.Finally, the award of P50,000 for attorneys fees must be
reduced. The general rule is that attorneys fees cannot be
recovered as part of damages because of the policy that no
premium should be placed on the right to litigate. Stated
otherwise, the grant of attorneys fees as part of damages is the
exception rather than the rule, as counsels fees are not awarded
every time a party prevails in a suit. Such attorneys fees can be
awarded in the cases enumerated in Article 2208 of the Civil Code,
and in all cases it must be reasonable.

G.R. No. 143360.September 5, 2002.
*

EQUITABLE LEASING CORPORATION, petitioner, vs.LUCITA
SUYOM, MARISSA ENANO, MYRNA TAMAYO and FELIX
OLEDAN, respondents.

Civil Law; Negligence; Quasi-delict; Requisites to sustain a
claim for quasi delict.To sustain a claim based on quasi delict, the
following requisites must be proven: (a) damage suffered by the
plaintiff, (b) fault or negligence of the defendant, and (c)
connection of cause and effect between the fault or negligence of
the defendant and the damage incurred by the plaintiff.
Same; Same; Same; Offended party cannot recover damages
twice for the same act or omission or under both causes.These
two causes of action (ex delicto or ex quasi delicto) may be availed
of, subject to the caveat that the offended party cannot recover
damages twice for the same act or omission or under both causes.
Since these two civil liabilities are distinct and independent of each
other, the failure to recover in one will not necessarily preclude
recovery in the other.
Same; Same; Same; Damages; Motor Vehicle Law; Petitioner
held liable for the deaths and the injuries complained of, because it
was the registered owner of the tractor at the time of the accident
on July 17, 1994; Regardless of sales made of a motor vehicle, the
registered owner is the lawful operator insofar as the public and
third persons are concerned; In contemplation of law, the owner I
operator of record is the employer of the driver, the actual operator
and employer being considered as merely its agent.We hold
petitioner liable for the deaths and the injuries complained of,
because it was the registered owner of the tractor at the time of
the accident on July 17, 1994. The Court has consistently ruled
that, regardless of sales made of a motor vehicle, the registered
owner is the lawful operator insofar as the public and third persons
are concerned; consequently, it is directly and primarily responsible
for the consequences of its operation. In contemplation of law, the
owner/operator of record is the employer of the driver, the actual
operator and employer being considered as merely its agent. The
same principle applies even if the registered owner of any vehicle
does not use it for public service.


Kabit System
No. L-26815. May 26, 1981.
*

ADOLFO L. SANTOS, petitioner, vs. ABRAHAM SIBUG and
COURT OF APPEALS, respondents.

Judgment; Jurisdiction; Injunction; The public sale by the
sheriff of properties on execution cannot be restrained by another
court or a branch of the same court.No public sale was conducted
on May 8, 1964. On May 11, 1964, Branch X issued a Restraining
Order enjoining the Sheriff from conducting the public auction sale
of the motor vehicle levied upon. The Restraining Order was issued
wrongfully. Under the provisions of Section 17, Rule 39, the action
taken by the Sheriff cannot be restrained by another Court or by
another Branch of the same Court. The Sheriff has the right to
continue with the public sale on his own responsibility, or he can
desist from conducting the public sale unless the attaching creditor
files a bond securing him against the third-party-claim. But the
decision to proceed or not with the public sale lies with him.
Same; Same; Same.It appears from the above that if the
attaching creditor should furnish an adequate bond, the Sheriff has
to proceed with the public auction. When such bond is not filed,
then the Sheriff shall decide whether to proceed, or to desist from
proceeding, with the public auction If he decides to proceed, he will
incur personal liability in favor of the successful third-party
claimant.
Same; Suretyship; Where Sheriffs sale did not proceed
because it was restrained, the liability of the bonding company of
the judgment-creditor does not become effective.The judgment
in the BRANCH X CASE appears to be quite legally unpalatable. For
instance, since the undertaking furnished to the Sheriff by the
BONDING COMPANY did not become effective for the reason that
the jeep was not sold, the public sale thereof having been
restrained, there was no reason for promulgating judgment against
the BONDING COMPANY. It has also been noted that the Complaint
against VIDAD was dismissed.
Same; Same; It is proper for a third-party claimant in an
execution sale to file a separate action to vindicate his ownership of
the levied property.Applied to the case at bar, it will have to be
held that, contrary to the rationale in the Decision of respondent
Court, it was appropriate, as a matter of procedure, for SANTOS,
as an ordinary third-party claimant, to vindicate his claim of
ownership in a separate action under Section 17 of Rule 39. And
the judgment rendered in his favor by Branch X, declaring him to
be the owner of the property, did not as a basic proposition,
constitute interference with the powers or processes of Branch
XVII which rendered the judgment, to enforce which the jeepney
was levied upon. And this is so because property belonging to a
stranger is not ordinarily subject to levy. While it is true that the
vehicle in question was in custodia legis, and should not be
interfered with without the permission of the proper Court, the
property must be one in which the defendant has proprietary
interest. Where the Sheriff seizes a strangers property, the rule
does not apply and interference with his custody is not interference
with another Courts Order of attachment.
Same; Same; Same; Where a jeepney is registered in the
name of an authorized public utility operator but is actually owned
by another (a so called kabit operator) and the same bumped
somebody thru the negligence of its driver, such a jeepney can be
sold at public auction to satisfy the courts award. It cannot be
considered a strangers property.However, as a matter of
substance and on the merits, the ultimate conclusion of respondent
Court nullifying the Decision of Branch X permanently enjoining the
auction sale, should be upheld. Legally speaking, it was not a
strangers property that was levied upon by the Sheriff pursuant
to the judgment rendered by Branch XVII. The vehicle was, in fact,
registered in the name of VIDAD, one of the judgment debtors.
And what is more, the aspect of public service, with its effects on
the riding public, is involved. Whatever legal technicalities may be
invoked, we find the judgment of respondent Court of Appeals to
be in consonance with justice.

No. L-65510. March 9, 1987.
*

TEJA MARKETING AND/OR ANGEL JAUCIAN,
petitioner, vs. HONORABLE INTERMEDIATE APPELLATE
COURT
**
AND PEDRO N. NALE, respondents.

Civil Law; Contracts; Maxim that no action arises out of illicit
bargain; A party having entered into an illegal contract, neither of
the parties can seek relief from the courts, and each must bear the
consequences of his acts." 'Ex pacto illicito' non oritur actio' (No
action arises out of illicit bargain) is the time-honored maxim that
must be applied to the parties in the case at bar. Having entered
into an illegal contract, neither can seek relief from the courts, and
each must bear the consequences of his acts." (Lita Enterprises vs.
IAC, 129 SCRA 81.)
Same; Same; Common Carriers; Kabit system, concept
of; Kabit system, one of the root causes of the prevalence of graft
and corruption in government transportation offices.
Unquestionably, the parties herein operated under an
arrangement, commonly known as the "kabit system" whereby a
person who has been granted a certificate of public convenience
allows another person who owns motor vehicles to operate under
such franchise for a fee. A certificate of public convenience is a
special privilege conferred by the government. Abuse of this
privilege by the grantees thereof cannot be countenanced. The
"kabit system" has been identified as one of the root causes of the
prevalence of graf t and corruption in the government
transportation offices.
Same; Same; Same; Same; Kabit system, although not
outrightly penalized as a criminal offense, is contrary to public
policy, and is void and inexistent; Principle that the court will not
aid either party to enforce an illegal contract.Although not
outrightly penalized as a criminal offense, the kabit system is
invariably recognized as being contrary to public policy and,
therefore, void and inexistent under Article 1409 of the Civil Code.
It is a fundamental principle that the court will not aid either party
to enforce an illegal contract, but will leave both where it finds
them. Upon this premise it would be error to accord the parties
relief from their predicament. Article 1412 of the Civil Code denies
them such aid.
Same; Same; Same; Same; Defect of inexistence of a
contract is permanent and cannot be cured by ratification or by
prescription.The defect of inexistence of a contract is permanent
and cannot be cured by ratification or by prescription. The mere
lapse of time cannot give efficacy to contracts that are null and
void.


Boundary System

No. L-16790. April 30, 1963.
URBANO MAGBOO and EMILIA C. MAGBOO, plaintiffs-
appellees, vs. DELFIN BERNARDO, defendant-appellant.

Boundary system; Nature of relationship between owner of
vehicle and driver; Liability of vehicle-owner.An employer-
employee relationship exists between a jeepney-owner and a driver
under a boundary system arrangement. The features which
characterize the boundary system namely, the fact that the
driver does not receive a fixed wage but gets only the excess of the
amount of fares collected by him over the amount he pays to the
jeep-owner, and that the gasoline consumed by the jeep is for the
account of the driver are not sufficient to withdraw the
relationship between them from that of employer and employee.
Consequently, the jeepney-owner is subsidiarily liable as employer
in accordance with Art. 103, Revised Penal Code.


II. TRANSPORTATION OF GOODS
Extraordinary Diligence
570 SUPREME COURT REPORTS ANNOTATED
Eastern Shipping Lines, Inc. vs. Court of Appeals
G.R. No. 94151. April 30, 1991.
*

EASTERN SHIPPING LINES, INC., petitioner, vs. THE COURT
OF APPEALS and THE FIRST NATIONWIDE ASSURANCE
CORPORATION, respondents.

Commercial Laws; Carriage of Goods by Sea
Act; Carriers;Damages; Common carriers are bound to observe
extra-ordinary vigilance over goods x x x according to all
circumstances of each case.Moreover, under Article 1733 of the
Civil Code, common carriers are bound to observe extra-ordinary
vigilance over goods xx xx xx according to all circumstances of
each case, and Article 1735 of the same Code states, to wit: 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 article 1733.
Same; Same; Same; Same.A common carrier is required to
exercise the highest degree of care in the discharge of its business.

G.R. No. 127897. November 15, 2001.
*

DELSAN TRANSPORT LINES, INC., petitioner,vs.THEHON.
COURT OF APPEALS and AMERICAN HOME ASSURANCE
CORPORATION, respondents.

Insurance; Marine Insurance; Common Carriers; While the
payment by the insurer for the insured value of the lost cargo
operates as a waiver of the insurers right to enforce the term of
the implied warranty against the assured under the marine
insurance policy, the same cannot be validly interpreted as an
automatic admission of the vessels seaworthiness by the insurer
as to foreclose recourse against the common carrier for any liability
under the contractual obligation as such common carrier.The
payment made by the private respondent for the insured value of
the lost cargo operates as waiver of its (private respondent) right
to enforce the term of the implied warranty against Caltex under
the marine insurance policy. However, the same cannot be validly
interpreted as an automatic admission of the vessels
seaworthiness by the private respondent as to foreclose recourse
against the petitioner for any liability under its contractual
obligation as a common carrier. The fact of payment grants the
private respondent subrogatory right which enables it to exercise
legal remedies that would otherwise be available to Caltex as
owner of the lost cargo against the petitioner common carrier.
Same; Same; Same; Subrogation; Equity; The right of
subrogation has its roots in equityit is designed to promote and
to accomplish justice and is the mode which equity adopts to
compel the ultimate payment of a debt by one who in justice and
good conscience ought to pay.The right of subrogation has its
roots in equity. It is designed to promote and to accomplish justice
and is the mode which equity adopts to compel the ultimate
payment of a debt by one who in justice and good conscience
ought to pay. It is not dependent upon, nor does it grow out of,
any privity of contract or upon written assignment of claim. It
accrues simply upon payment by the insurance company of the
insurance claim. Consequently, the payment made by the private
respondent (insurer) to Caltex (assured) operates as an equitable
assignment to the former of all the remedies which the latter may
have against the petitioner.
Same; Same; Same; In the event of loss, destruction or
deterioration of the insured goods, common carriers shall be
responsible unless the same is brought about, among others, by
flood, storm, earthquake, lightning or other natural disaster or
calamity, and in all other cases, 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.From the nature of their business and for
reasons of public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods and for the
safety of passengers transported by them, according to all the
circumstances of each case. In the event of loss, destruction or
deterioration of the insured goods, common carriers shall be
responsible unless the same is brought about, among others, by
flood, storm, earthquake, lightning or other natural disaster or
calamity. In all other cases, 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.
Same; Same; Same; Certificates tending to show that at the
time of dry-docking and inspection by the Philippine Coast Guard,
the vessel was fit for voyage do not necessarily take into account
the actual condition of the vessel at the time of the commencement
of the voyage.Neither may petitioner escape liability by
presenting in evidence certificates that tend to show that at the
time of dry-docking and inspection by the Philippine Coast Guard,
the vessel MT Maysun, was fit for voyage. These pieces of evidence
do not necessarily take into account the actual condition of the
vessel at the time of the commencement of the voyage. As
correctly observed by the Court of Appeals: At the time of dry-
docking and inspection, the ship may have appeared fit. The
certificates issued, however, do not negate the presumption of
unseaworthiness triggered by an unexplained sinking. Of
certificates issued in this regard, authorities are likewise clear as to
their probative value, (thus): Seaworthiness relates to a vessels
actual condition. Neither the granting of classification or the
issuance of certificates establishes seaworthiness. (2-A Benedict on
Admiralty, 7-3, Sec. 62) And also: Authorities are clear that
diligence in securing certificates of seaworthiness does not satisfy
the vessel owners obligation. Also securing the approval of the
shipper of the cargo, or his surveyor, of the condition of the vessel
or her stowage does not establish due diligence if the vessel was in
fact unseaworthy, for the cargo owner has no obligation in relation
to seaworthiness.
Same; Same; Same; Exoneration of the vessels officers and
crew by the Board of Marine Inquiry merely concerns their
respective administrative liabilitiesit does not in any way operate
to absolve the common carrier from its civil liability arising from its
failure to observe extraordinary diligence in the vigilance over the
goods it was transporting and for the negligent acts or omissions of
its employees, the determination of which properly belongs to the
courts.Additionally, the exoneration of MT Maysuns officers and
crew by the Board of Marine Inquiry merely concerns their
respective administrative liabilities. It does not in any way operate
to absolve the petitioner common carrier from its civil liability
arising from its failure to observe extraordinary diligence in the
vigilance over the goods it was transporting and for the negligent
acts or omissions of its employees, the determination of which
properly belongs to the courts. In the case at bar, petitioner is
liable for the insured value of the lost cargo of industrial fuel oil
belonging to Caltex for its failure to rebut the presumption of fault
or negligence as common carrier occasioned by the unexplained
sinking of its vessel, MT Maysun, while in transit.
Same; Same; Same; Subrogation; Evidence; Presentation in
evidence of the marine insurance policy is not indispensable before
the insurer may recover from the common carrier the insured value
of the lost cargo in the exercise of its subrogatory rightthe
subrogatory receipt, by itself, is sufficient to establish not only the
relationship of the insurer and the assured shipper of the lost
cargo, but also the amount paid to settle the insurance claim.
Anent the second issue, it is our view and so hold that the
presentation in evidence of the marine insurance policy is not
indispensable in this case before the insurer may recover from the
common carrier the insured value of the lost cargo in the exercise
of its subrogatory right. The subrogation receipt, by itself, is
sufficient to establish not only the relationship of herein private
respondent as insurer and Caltex, as the assured shipper of the
lost cargo of industrial fuel oil, but also the amount paid to settle
the insurance claim. The right of subrogation accrues simply upon
payment by the insurance company of the insurance claim.

G.R. No. 161833. July 8, 2005.
*

PHILIPPINE CHARTER INSURANCE CORPORATION,
petitioner, vs. UNKNOWN OWNER OF THE VESSEL M/V
NATIONAL HONOR, NATIONAL SHIPPING CORPORATION
OF THE PHILIPPINES and INTERNATIONAL CONTAINER
SERVICES, INC., respondents.

Actions; Appeals; Only questions of law may be entertained by
the Supreme Court in a petition for review on
certiorari; Exceptions.The well-entrenched rule in our jurisdiction
is that only questions of law may be entertained by this Court in a
petition for review on certiorari. This rule, however, is not ironclad
and admits certain exceptions, such as when (1) the conclusion is
grounded on speculations, surmises or conjectures; (2) the
inference is manifestly mistaken, absurd or impossible; (3) there is
grave abuse of discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact are conflicting;
(6) there is no citation of specific evidence on which the factual
findings are based; (7) the findings of absence of facts are
contradicted by the presence of evidence on record; (8) the
findings of the Court of Appeals are contrary to those of the trial
court; (9) the Court of Appeals manifestly overlooked certain
relevant and undisputed facts that, if properly considered, would
justify a different conclusion; (10) the findings of the Court of
Appeals are beyond the issues of the case; and (11) such findings
are contrary to the admissions of both parties.
Common Carriers; Words and Phrases; The extraordinary
diligence in the vigilance over the goods tendered for shipment
requires the common carrier to know and to follow the required
precaution for avoiding damage to, or destruction of the goods
entrusted to it for sale, carriage and deliveryit requires common
carriers to render service with the greatest skill and foresight and
to use all reasonable means to ascertain the nature and
characteristics of goods tendered for shipment, and to exercise due
care in the handling and stowage, including such methods as their
nature requires.We agree with the contention of the petitioner
that common carriers, from the nature of their business and for
reasons of public policy, are mandated to observe extraordinary
diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances
of each case. The Court has defined extraordinary diligence in the
vigilance over the goods as follows: The extraordinary diligence in
the vigilance over the goods tendered for shipment requires the
common carrier to know and to follow the required precaution for
avoiding damage to, or destruction of the goods entrusted to it for
sale, carriage and delivery. It requires common carriers to render
service with the greatest skill and foresight and to use all
reasonable means to ascertain the nature and characteristic of
goods tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their nature
requires.
Same; When the goods shipped are either lost or arrive in
damaged condition, a presumption arises against the carrier of its
failure to observe that diligence, and there need not be an express
finding of negligence to hold it liable; The enumeration in Article
1734 of the New Civil Code which exempts the common carrier for
the loss or damage to the cargo is a closed list.The common
carriers duty to observe the requisite diligence in the shipment of
goods lasts from the time the articles are surrendered to or
unconditionally placed in the possession of, and received by, the
carrier for transportation until delivered to, or until the lapse of a
reasonable time for their acceptance, by the person entitled to
receive them. When the goods shipped are either lost or arrive in
damaged condition, a presumption arises against the carrier of its
failure to observe that diligence, and there need not be an express
finding of negligence to hold it liable. To overcome the presumption
of negligence in the case of loss, destruction or deterioration of the
goods, the common carrier must prove that it exercised
extraordinary diligence. However, under Article 1734 of the New
Civil Code, the presumption of negligence does not apply to any of
the following causes: 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. It bears stressing that the enumeration
in Article 1734 of the New Civil Code which exempts the common
carrier for the loss or damage to the cargo is a closed list. To
exculpate itself from liability for the loss/damage to the cargo
under any of the causes, the common carrier is burdened to prove
any of the aforecited causes claimed by it by a preponderance of
evidence. If the carrier succeeds, the burden of evidence is shifted
to the shipper to prove that the carrier is negligent.
Same; Words and Phrases; Defect is the want or absence of
something necessary for completeness or perfection, a lack or
absence of something essential to completeness, a deficiency in
something essential to the proper use for the purpose for which a
thing is to be used; Inferior means of poor quality, mediocre, or
second rate; A thing may be of inferior quality but not necessarily
defectivedefectiveness is not synonymous with inferiority.
Defect is the want or absence of something necessary for
completeness or perfection; a lack or absence of something
essential to completeness; a deficiency in something essential to
the proper use for the purpose for which a thing is to be used. On
the other hand, inferior means of poor quality, mediocre, or second
rate. A thing may be of inferior quality but not necessarily
defective. In other words, defectiveness is not synonymous with
inferiority.
Same; Bills of Lading; The statement in the Bill of Lading, that
the shipment was in apparent good condition, is sufficient to
sustain a finding of absence of defects in the merchandise, but
such statement will create a prima facie presumption only as to the
external condition and not to that not open to inspection.The
petitioner failed to adduce any evidence to counter that of
respondent ICTSI. The petitioner failed to rebut the testimony of
Dauz, that the crates were sealed and that the contents thereof
could not be seen from the outside. While it is true that the crate
contained machineries and spare parts, it cannot thereby be
concluded that the respondents knew or should have known that
the middle wooden batten had a hole, or that it was not strong
enough to bear the weight of the shipment. There is no showing in
the Bill of Lading that the shipment was in good order or condition
when the carrier received the cargo, or that the three wooden
battens under the flooring of the cargo were not defective or
insufficient or inadequate. On the other hand, under Bill of Lading
No. NSGPBSML512565 issued by the respondent NSCP and
accepted by the petitioner, the latter represented and warranted
that the goods were properly packed, and disclosed in writing the
condition, nature, quality or characteristic that may cause
damage, injury or detriment to the goods. Absent any signs on the
shipment requiring the placement of a sling cable in the mid-
portion of the crate, the respondent ICTSI was not obliged to do
so. The statement in the Bill of Lading, that the shipment was in
apparent good condition, is sufficient to sustain a finding of
absence of defects in the merchandise. Case law has it that such
statement will create aprima facie presumption only as to the
external condition and not to that not open to inspection.

G.R. No. 95536. March 23, 1992.
*

ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO,
LEOPOLDO G. SALUDO and SATURNINO G. SALUDO,
petitioners, vs. HON. COURT OF APPEALS, TRANS WORLD
AIRLINES, INC., and PHILIPPINE AIRLINES, INC.,
respondents.

Remedial Law; Appeals; Petition for review on certiorari;
Exceptions to rule on conclusiveness of Court of Appeals findings of
fact.At the outset and in view of the spirited exchanges of the
parties on this aspect, it is to be stressed that only questions of law
may be raised in a petition filed in this Court to review on certiorari
the decision of the Court of Appeals. This being so, the factual
findings of the Court of Appeals are final and conclusive and cannot
be reviewed by the Supreme Court. The rule, however, admits of
established exceptions, to wit: (a) where there is grave abuse of
discretion; (b) when the finding is grounded entirely on
speculations, surmises or conjectures; (c) when the inference
made is manifestly mistaken, absurd or impossible; (d) when the
judgment of the Court of Appeals was based on a misapprehension
of facts; (e) when the factual findings are conflicting; (f) when the
Court of Appeals, in making its findings, went beyond the issues of
the case and the same are contrary to the admissions of both
appellant and appellee; (g) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and
which, if properly considered, would justify a different conclusion;
and (h) where the findings of fact of the Court of Appeals are
contrary to those of the trial court, or are mere conclusions without
citation of specific evidence, or where the facts set forth by the
petitioner are not disputed by the respondent, or where the
findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted by the evidence on
record.
Transportation Law; Common Carriers; Bill of Lading.A bill of
lading is a written acknowledgment of the receipt of the goods and
an agreement to transport and deliver them at a specified place to
a person named or on his order. Such instrument may be called a
shipping receipt, forwarders receipt and receipt for transportation.
The designation, however, is immaterial. It has been held that
freight tickets for bus companies as well as receipts for cargo
transported by all forms of transportation, whether by sea or land,
fall within the definition. Under the Tariff and Customs Code, a bill
of lading includes airway bills of lading. The two-fold character of a
bill of lading is all too familiar; it is a receipt as to the quantity and
description of the goods shipped and a contract to transport the
goods to the consignee or other person therein designated, on the
terms specified in such instrument.
Same; Same; Same; A bill of lading, when properly executed
and delivered to a shipper, is evidence that the carrier has received
the goods described therein for shipment.Ordinarily, a receipt is
not essential to a complete delivery of goods to the carrier for
transportation but, when issued, is competent and prima facie, but
not conclusive, evidence of delivery to the carrier. A bill of lading,
when properly executed and delivered to a shipper, is evidence
that the carrier has received the goods described therein for
shipment. Except as modified by statute, it is a general rule as to
the parties to a contract of carriage of goods in connection with
which a bill of lading is issued reciting that goods have been
received for transportation, that the recital being in essence a
receipt alone, is not conclusive, but may be explained, varied or
contradicted by parol or other evidence.
Same; Same; Observance of extraordinary diligence, when it
commences.Explicit is the rule under Article 1736 of the Civil
Code that the extraordinary responsibility of the common carrier
begins from the time the goods are delivered to the carrier. This
responsibility remains in full force and effect even when they are
temporarily unloaded or stored in transit, unless the shipper or
owner exercises the right of stoppage in transitu, and terminates
only after the lapse of a reasonable time for the acceptance of the
goods by the consignee or such other person entitled to receive
them. And, there is delivery to the carrier when the goods are
ready for and have been placed in the exclusive possession,
custody and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted them.
Where such a delivery has thus been accepted by the carrier, the
liability of the common carrier commences eo instanti. Hence, while
we agree with petitioners that the extraordinary diligence
statutorily required to be observed by the carrier instantaneously
commences upon delivery of the goods thereto, for such duty to
commence there must in fact have been delivery of the cargo
subject of the contract of carriage. Only when such fact of delivery
has been unequivocally established can the liability for loss,
destruction or deterioration of goods in the custody of the carrier,
absent the excepting causes under Article 1734, attach and the
presumption of fault of the carrier under Article 1735 be invoked.
Same; Same; Right of carrier to require good faith on the part
of shipper; Duty of carrier to make general inquiry as to nature of
articles shipped.It is the right of the carrier to require good faith
on the part of those persons who deliver goods to be carried, or
enter into contracts with it, and inasmuch as the freight may
depend on the value of the article to be carried, the carrier
ordinarily has the right to inquire as to its value. Ordinarily, too, it
is the duty of the carrier to make inquiry as to the general nature
of the articles shipped and of their value before it consents to carry
them; and its failure to do so cannot defeat the shippers right to
recovery of the full value of the package if lost, in the absence of
showing of fraud or deceit on the part of the shipper. In the
absence of more definite information, the carrier has the right to
accept shippers marks as to the contents of the package offered
for transportation and is not bound to inquire particularly about
them in order to take advantage of a false classification and where
a shipper expressly represents the contents of a package to be of a
designated character, it is not the duty of the carrier to ask for a
repetition of the statement nor disbelieve it and open the box and
see for itself. However, where a common carrier has reasonable
ground to suspect that the offered goods are of a dangerous or
illegal character, the carrier has the right to know the character of
such goods and to insist on an inspection, if reasonable and
practical under the circumstances, as a condition of receiving and
transporting such goods.
Same; Same; Interpretation of contracts.The hornbook rule
on interpretation of contracts consecrates the primacy of the
intention of the parties, the same having the force of law between
them. When the terms of the agreement are clear and explicit, that
they do not justify an attempt to read into any alleged intention of
the parties, the terms are to be understood literally just as they
appear on the face of the contract. The various stipulations of a
contract shall be interpreted together and such a construction is to
be adopted as will give effect to all provisions thereof. A contract
cannot be construed by parts, but its clauses should be interpreted
in relation to one another. The whole contract must be interpreted
or read together in order to arrive at its true meaning. Certain
stipulations cannot be segregated and then made to control;
neither do particular words or phrases necessarily determine the
character of a contract. The legal effect of the contract is not to be
determined alone by any particular provision disconnected from all
others, but in the ruling intention of the parties as gathered from
all the language they have used and from their contemporaneous
and subsequent acts.
Same; Same; Carriers liability for delay.The oft-repeated
rule regarding a carriers liability for delay is that in the absence of
a special contract, a carrier is not an insurer against delay in
transportation of goods. When a common carrier undertakes to
convey goods, the law implies a contract that they shall be
delivered at destination within a reasonable time, in the absence of
any agreement as to the time of delivery. But where a carrier has
made an express contract to transport and deliver property within
a specified time, it is bound to fulfill its contract and is liable for
any delay, no matter from what cause it may have arisen. This
result logically follows from the well-settled rule that where the law
creates a duty or charge, and the party is disabled from performing
it without any default in himself, and has no remedy over, then the
law will excuse him, but where the party by his own contract
creates a duty or charge upon himself, he is bound to make it good
notwithstanding any accident or delay by inevitable necessity
because he might have provided against it by contract. Whether or
not there has been such an undertaking on the part of the carrier is
to be determined from the circumstances surrounding the case and
by application of the ordinary rules for the interpretation of
contracts.
Same; Same; Acceptance of bill of lading without dissent.
There is a holding in most jurisdictions that the acceptance of a bill
of lading without dissent raises a presumption that all terms
therein were brought to the knowledge of the shipper and agreed
to by him, and in the absence of fraud or mistake, he is estopped
from thereafter denying that he assented to such terms. This rule
applies with particular force where a shipper accepts a bill of lading
with full knowledge of its contents, and acceptance under such
circumstances makes it a binding contract. In order that any
presumption of assent to a stipulation in a bill of lading limiting the
liability of a carrier may arise, it must appear that the clause
containing this exemption from liability plainly formed a part of the
contract contained in the bill of lading. A stipulation printed on the
back of a receipt or bill of lading or on papers attached to such
receipt will be quite as effective as if printed on its face, if it is
shown that the consignor knew of its terms. Thus, where a shipper
accepts a receipt which states that its conditions are to be found on
the back, such receipt comes within the general rule, and the
shipper is held to have accepted and to be bound by the conditions
there to be found.
Same; Same; Contracts of adhesion.Granting arguendo that
Condition No. 5 partakes of the nature of a contract of adhesion
and as such must be construed strictly against the party who
drafted the same or gave rise to any ambiguity therein, it should
be borne in mind that a contract of adhesion may be struck down
as void and unenforceable, for being subversive of public policy,
only when the weaker party is imposed upon in dealing with the
dominant bargaining party and is reduced to the alternative of
taking it or leaving it, completely deprived of the opportunity to
bargain on equal footing. However, Ong Yiu vs. Court of Appeals,
et al.instructs us that contracts of adhesion are not entirely
prohibited. The one who adheres to the contract is in reality free to
reject it entirely; if he adheres, he gives his consent. Accordingly,
petitioners, far from being the weaker party in this situation, duly
signified their presumed assent to all terms of the contract through
their acceptance of the airway bill and are consequently bound
thereby. It cannot be gainsaid that petitioners were not without
several choices as to carriers in Chicago with its numerous airways
and airlines servicing the same.

G.R. No. 145483. November 19, 2004.
*

LORENZO SHIPPING CORP., petitioner, vs. BJ MARTHEL
INTERNATIONAL, INC., respondent.

Contracts; Interpretation of Contracts; In determining whether
time is of the essence in a contract, the ultimate criterion is the
actual or apparent intention of the parties and before time may be
so regarded by a court, there must be a sufficient manifestation,
either in the contract itself or the surrounding circumstances of
that intention; It is a cardinal rule in interpretation of contracts
that if the terms thereof are clear and leave no doubt as to the
intention of the contracting parties, the literal meaning shall
control.In determining whether time is of the essence in a
contract, the ultimate criterion is the actual or apparent intention
of the parties and before time may be so regarded by a
court, there must be a sufficient manifestation, either in the
contract itself or the surrounding circumstances of that intention.
Petitioner insists that although its purchase orders did not specify
the dates when the cylinder liners were supposed to be delivered,
nevertheless, respondent should abide by the term of delivery
appearing on the quotation it submitted to petitioner. Petitioner
theorizes that the quotation embodied the offer from respondent
while the purchase order represented its (petitioners) acceptance
of the proposed terms of the contract of sale. Thus, petitioner is of
the view that these two documents cannot be taken separately as
if there were two distinct contracts. We do not agree. It is a
cardinal rule in interpretation of contracts that if the terms thereof
are clear and leave no doubt as to the intention of the contracting
parties, the literal meaning shall control. However, in order to
ascertain the intention of the parties, their contemporaneous and
subsequent acts should be considered. While this Court recognizes
the principle that contracts are respected as the law between the
contracting parties, this principle is tempered by the rule that the
intention of the parties is primordial and once the intention of the
parties has been ascertained, that element is deemed as an
integral part of the contract as though it has been originally
expressed in unequivocal terms.
Same; A contract undergoes three distinct stagespreparation
or negotiation, its perfection, and finally, its consummation.In
the case of Bugatti v. Court of Appeals, we reiterated the principle
that [a] contract undergoes three distinct stagespreparation or
negotiation, its perfection, and finally, its
consummation.Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract and ends
at the moment of agreement of the parties. The perfection or birth
of the contract takes place when the parties agree upon the
essential elements of the contract. The last stage is
the consummation of the contract wherein the parties fulfill or
perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.
Same; When the time of delivery is not fixed or is stated in
general and indefinite terms, time is not of the essence of the
contract. We find the case of Smith, Bell & Co., Ltd. v.
Matti,instructive. There, we held thatWhen the time of delivery is
not fixed or is stated in general and indefinite terms, time is not of
the essence of the contract. . . . In such cases, the delivery must
be made within a reasonable time. The law implies, however, that
if no time is fixed, delivery shall be made within a reasonable time,
in the absence of anything to show that an immediate delivery
intended. . . .
Same; Even where time is of the essence, a breach of the
contract in that respect by one of the parties may be waived by the
other partys subsequently treating the contract as still in force.
As an aside, let it be underscored that [e]ven where time is of the
essence, a breach of the contract in that respect by one of the
parties may be waived by the other partys subsequently treating
the contract as still in force. Petitioners receipt of the cylinder
liners when they were delivered to its warehouse on 20 April 1990
clearly indicates that it considered the contract of sale to be still
subsisting up to that time. Indeed, had the contract of sale been
cancelled already as claimed by petitioner, it no longer had any
business receiving the cylinder liners even if said receipt was
subject to verification. By accepting the cylinder liners when
these were delivered to its warehouse, petitioner indisputably
waived the claimed delay in the delivery of said items.
Same; Rescission; It must be understood that the act of a
party in treating a contract as cancelled or resolved on account of
infractions by the other contracting party must be made known to
the other and is always provisional, being ever subject to scrutiny
and review by the proper courtthe party who deems the contract
violated may consider it resolved or rescinded, and act accordingly,
without previous court action, but it proceeds at its own risk.
There having been no failure on the part of the respondent to
perform its obligation, the power to rescind the contract is
unavailing to the petitioner. Article 1191 of the New Civil Code runs
as follows: The power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is
incumbent upon him. The law explicitly gives either party the right
to rescind the contract only upon the failure of the other to perform
the obligation assumed thereunder. The right, however, is not an
unbridled one. This Court in the case of University of the
Philippines v. De los Angeles, speaking through the eminent civilist
Justice J.B.L. Reyes, exhorts: Of course, it must be understood that
the act of a party in treating a contract as cancelled or resolved on
account of infractions by the other contracting party must be made
known to the other and is always provisional, being ever subject to
scrutiny and review by the proper court. If the other party denied
that rescission is justified, it is free to resort to judicial action in its
own behalf, and bring the matter to court. Then, should the court,
after due hearing, decide that the resolution of the contract was
not warranted, the responsible party will be sentenced to damages;
in the contrary case, the resolution will be affirmed, and the
consequent indemnity awarded to the party prejudiced. (Emphasis
supplied) In other words, the party who deems the contract
violated may consider it resolved or rescinded, and act accordingly,
without previous court action, but itproceeds at its own risk. For it
is only the final judgment of the corresponding court that will
conclusively and finally settle whether the action taken was or was
not correct in law. But the law definitely does not require that the
contracting party who believes itself injured must first file suit and
wait for a judgment before taking extrajudicial steps to protect its
interest. Otherwise, the party injured by the others breach will
have to passively sit and watch its damages accumulate during the
pendency of the suit until the final judgment of rescission is
rendered when the law itself requires that he should exercise due
diligence to minimize its own damages.

G.R. No. 167363. December 15, 2010.
*

SEALOADER SHIPPING CORPORATION, petitioner, vs.GRAND
CEMENT MANUFACTURING CORPORATION, JOYCE LAUNCH &
TUG CO., INC., ROMULO DIANTAN & JOHNNY PONCE,
respondents.
G.R. No. 177466. December 15, 2010.
*

TAIHEIYO CEMENT PHILIPPINES, INC. (Formerly Grand
Cement Manufacturing Corporation), petitioner, vs.SEA-
LOADER SHIPPING CORPORATION, JOYCE LAUNCH & TUG
CO., INC., ROMULO DIANTAN & JOHNNY PONCE,
respondents.

Appeals; Certiorari; Questions of Fact; The matter of
negligence of either or both parties to a case is a question of fact
since a determination of the same would entail going into factual
matters on which the finding of negligence would be based.
Generally, questions of fact should not be raised in a petition for
review.The matter of negligence of either or both parties to a
case is a question of fact since a determination of the same would
entail going into factual matters on which the finding of negligence
was based. Generally, questions of fact should not be raised in a
petition for review. Section 1, Rule 45 of the Rules of Court
explicitly states that a petition filed thereunder shall raise only
questions of law, which must be distinctly set forth.
Same; Same; Same; Jurisprudence has provided for
exceptions to this rule, one of which is when the findings of fact of
the Court of Appeals are contrary to those of the trial court.
Jurisprudence has provided for exceptions to this rule, however,
one of which is when the findings of fact of the Court of Appeals
are contrary to those of the trial court. As will be further elaborated
upon, this exception is present in the instant case as the RTC and
the Court of Appeals issued contrary findings of fact as to the
negligence of Grand Cement. Thus, an examination of the evidence
adduced by the parties is warranted under the circumstances.
Civil Law; Contributory Negligence; Words and Phrases;
Contributory negligence is conduct on the part of the injured party,
contributing as a legal cause to the harm he has suffered, which
falls below the standard to which he is required to conform for his
own protection.Article 2179 of the Civil Code defines the concept
of contributory negligence as follows: Art. 2179. When the
plaintiffs own negligence was the immediate and proximate cause
of his injury, he cannot recover damages. But if his negligence was
only contributory, the immediate and proximate cause of the injury
being the defendants lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be
awarded. Contributory negligence is conduct on the part of the
injured party, contributing as a legal cause to the harm he has
suffered, which falls below the standard to which he is required to
conform for his own protection.
Common Carriers; Negligence; Damages; The Court holds that
Sealoader had the responsibility to inform itself of the prevailing
weather conditions in the areas where its vessel was set to sail.
Petitioner cannot merely rely on other vessels for weather updates
and warnings on approaching storms, as what happened in this
case.The Court holds that Sealoader had the responsibility to
inform itself of the prevailing weather conditions in the areas where
its vessel was set to sail. Sealoader cannot merely rely on other
vessels for weather updates and warnings on approaching storms,
as what apparently happened in this case. Common sense and
reason dictates this. To do so would be to gamble with the safety
of its own vessel, putting the lives of its crew under the mercy of
the sea, as well as running the risk of causing damage to the
property of third parties for which it would necessarily be liable.